EXHIBIT 2.1
AMENDED AND RESTATED SHARE AND
LIMITED LIABILITY COMPANY MEMBERSHIP INTEREST
PURCHASE AGREEMENT
THIS AMENDED AND RESTATED SHARE AND LIMITED LIABILITY COMPANY MEMBERSHIP
INTEREST PURCHASE AGREEMENT (this "Agreement") is entered into as of the 23rd
day of August, 2001 by and between TRANSTECHNOLOGY CORPORATION, a Delaware
corporation, with its principal place of business at 000 Xxxxx Xxxx, Xxxxxxx
Xxxxxx, Xxx Xxxxxx 00000 (the "Seller") and KTIN Acquisition, LLC, a Delaware
limited liability company, with its principal place of business at 000 Xxxxx
Xxxxxx, Xxxxx Xxxxx, Xxx Xxxx 00000 (the "Buyer"). The Buyer and Seller are
referred to collectively as the "Parties" and individually as a "Party."
RECITALS
A. Seller is the sole member and owner of all of the limited liability
company membership interest (the "Interest") in TransTechnology Engineered
Components, LLC, a Delaware limited liability company ("TEC").
B. TEC is the sole shareholder and owner of the sole issued and outstanding
share (the "Share") (collectively, the Interest and the Share are referred to as
the "Equity") in TransTechnology Canada Corporation, a corporation organized
under the laws of the Province of Ontario, Canada ("TCC").
C. TEC and TCC, together with the Palnut Assets of Seller that will be
transferred to TEC prior to the Closing (as defined below), constitute the
engineered components division of Seller which is in the business of the design
and manufacture of spring steel fasteners and components, retaining rings,
automotive lighting assemblies, plastic fasteners and related products (the
"Business"). TEC and TCC are sometimes collectively referred to as the
"Company."
D. Seller and Buyer entered into a Share and Limited Liability Company
Membership Interest Purchase Agreement dated as of August 23, 2001 (the
"Original Agreement"), which Original Agreement was terminated on October 26,
2001.
E. Seller now desires to sell the Equity to Buyer and Buyer now desires to
purchase the Equity for the consideration and on the terms set forth in this
Agreement.
F. Definitions of capitalized terms not otherwise defined herein are set
out at Section 10.10.
NOW THEREFORE, in consideration of the mutual promises, covenants,
representations, warranties, conditions and agreements contained herein, but
subject to the Seller executing and delivering to Buyer a counterpart of this
Agreement (which delivery shall be evidenced by Seller delivering its executed
signature page to Buyer's telecopy address specified
in Section 10.2) prior to 12:00 p.m. New York time on Friday, November 16, 2001,
the Parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF INTEREST: CLOSING
Section 1.1 TRANSFER OF EQUITY. Prior to the Closing Date, the Seller shall
cause TEC to distribute the Share to the Seller. On the Closing Date, upon the
terms and subject to the conditions of this Agreement, Seller shall sell,
convey, transfer, assign and deliver to Buyer the Interest and the Share, free
and clear of all Encumbrances or restrictions on transfer or voting and, at the
Closing, Buyer shall acquire the Interest and the Share.
Section 1.2 CLOSING. Subject to Article 5, the closing (the "Closing") of
the transactions contemplated herein shall be held at 10:00 a.m., local time, on
the later of (i) November 30, 2001 and (ii) one (1) business day after the
satisfaction or waiver of all conditions to closing contained in Articles 6 and
7, at the offices of Xxxx Xxxxxx & Parks LLP, 0000 XX Xxxxx, 000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxx 00000, or such other time and/or place as the Parties otherwise
agree (the "Closing Date").
Section 1.3 CLOSING DATE PURCHASE PRICE. Upon the terms and subject to the
conditions contained herein, as consideration for the purchase of the Equity and
in consideration of the agreements and covenants of the Seller contained herein,
Buyer shall pay the Seller in the aggregate, an amount equal to $96,000,000,
subject to further adjustment as provided in Section 1.4 hereof (as adjusted,
the "Purchase Price"), subject to any applicable required withholding.
Section 1.4 PURCHASE PRICE ADJUSTMENT.
(a) As promptly as practicable, and in any event within 45 days after
Closing, the Company shall prepare or cause to prepared a consolidated balance
sheet for the Company as of the close of business on the Closing Date (as
initially prepared, and as subsequently determined in accordance with this
Section 1.4, the "Closing Statement"). The Closing Statement shall be prepared
in accordance with GAAP, and shall be in the form of Exhibit A to the Original
Agreement. The Company shall also prepare and deliver with the Closing Statement
or cause to be prepared and delivered with the Closing Statement a written
statement (as initially prepared, and as subsequently determined in accordance
with this Section 1.4, the "Closing Schedule") calculating the total current
assets of the Company as of the close of business on the Closing Date (which
shall not take into account any matters set forth on Section 2.2(o) of the
Disclosure Schedule) MINUS the total current liabilities of the Company as of
the close of business on the Closing Date, all as reflected on the Closing
Statement (the "Net Working Capital"). The calculation of Net Working Capital
pursuant to this Section 1.4(a) shall not take into account (i) any current
liability of the Company for Taxes described in Section 8.4 hereof or (ii) any
excess of the Company's accounts receivable reserve over the amount of such
reserve as of October 31, 2001.
(b) If the Seller does not agree with the Closing Statement or Closing
Schedule delivered by the Company, then the Seller shall give written notice of
such disagreement to the Company (a "Notice of Disagreement") within 30 days of
delivery of the
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Closing Statement and the Closing Schedule by the Company. Any Notice of
Disagreement shall specify in reasonable detail the nature of any disagreement
so asserted. If no Notice of Disagreement is received by the Company within such
30-day period, then the Closing Statement and the Closing Schedule shall become
final. If a Notice of Disagreement is received by the Company within such 30-day
period, the Company and the Seller shall seek in good faith during the 15 days
after delivery of the Notice of Disagreement to resolve any differences which
they may have with respect to the matters specified in the Notice of
Disagreement. If at the end of such 15-day period, the Company and the Seller
have not resolved all of the matters raised in the Notice of Disagreement, the
unresolved issues shall be submitted to PriceWaterhouseCoopers, LLP, or if such
firm declines to serve, then to another nationally recognized accounting firm
selected upon mutual agreement of the Parties, for resolution within 30 days or
as soon thereafter as reasonably practicable. Such accounting firm shall
determine, only with respect to the remaining differences so submitted, whether
and to what extent, if any, the Closing Statement and/or the Closing Schedule
require adjustment in order to comply with the requirements of Section 1.4(a).
The decision by such accounting firm shall be final and binding on the Parties.
The costs and expenses of such accountants shall be paid equally by the Company
and the Seller. The Company and the Seller shall make available to such
accounting firm all relevant books and records relating to the Closing Statement
and the Closing Schedule and all other information reasonably requested by such
accounting firm.
(c) Upon final determination of the Net Working Capital, either by
agreement between the Company and the Seller or determination in accordance with
Section 1.4(b):
(i) If the Net Working Capital exceeds $26,700,000, the Buyer
shall pay to Seller an amount equal to such excess.
(ii) If the Net Working Capital is less than $20,000,000, the
Seller shall pay to Buyer an amount equal to such difference.
Any amount payable pursuant to this Section 1.4(c) shall be paid within five
business days after final determination of the amounts set forth on the Closing
Statement and the Closing Schedule, and, if made after the applicable due date,
shall bear simple interest at an annual rate of 12%.
(d) The Parties agree to allocate the Purchase Price among the Share
and the Interest, and among the assets of TEC, for all purposes (including
financial accounting and tax purposes) in accordance with an allocation schedule
delivered by the Buyer to the Seller, and reasonably acceptable to Seller, at
least five days prior to the scheduled Closing Date; PROVIDED, HOWEVER, that the
portion of the Purchase Price allocated to the Share shall not be less than
$9,500,000 nor more than $12,667,000.
Section 1.5 CLOSING DELIVERIES BY SELLERS.
(a) To effect the transfer referred to in Section 1.1 hereof and the
delivery of the consideration described in Section 1.3 hereof, at the Closing,
subject to the satisfaction or waiver of the conditions specified in Article 6
below, Seller shall deliver or cause to be delivered to the Buyer, the
following:
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(i) Certificate(s) evidencing the Interest and the Share, duly
endorsed in blank for transfer or accompanied by stock powers or assignment
agreements, as applicable, duly executed in blank;
(ii) All consents, approvals, releases and waivers from the
governmental authorities and other third parties set forth in Section
2.2(c) of the Disclosure Schedule;
(iii) All other documents required to be delivered pursuant to
Article 6 hereof not specifically mentioned above in this Section 1.5.
(b) All instruments and documents executed and delivered to Buyer
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Buyer and its counsel.
Section 1.6 CLOSING DELIVERIES BY BUYER.
(a) To effect the transfer referred to in Section 1.1 hereof and the
delivery of the consideration described in Section 1.3 hereof, at the Closing,
subject to the satisfaction or waiver of the conditions specified in Article 7
below, Buyer shall tender or cause to be tendered, the following:
(i) to Seller, the Purchase Price, by wire transfer of
immediately available funds to such account of which Seller shall have
given notice to Buyer hereunder not later than three (3) business days
prior to the Closing Date;
(ii) all other documents required to be delivered pursuant to
Article 7 hereof and not specifically mentioned above in this Section 1.6.
(b) All instruments and documents executed and delivered to Seller
pursuant hereto shall be in form and substance, and shall be executed in a
manner, reasonably satisfactory to Seller and its counsel.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
Section 2.1 REPRESENTATIONS AND WARRANTIES OF THE SELLER CONCERNING THE
TRANSACTION. The Seller represents and warrants to the Buyer that the statements
contained in this Section 2.1 are correct and complete as of the date of this
Agreement and, except as specifically contemplated by this Agreement, will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 2.1).
(a) ORGANIZATION; QUALIFICATION. The Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware.
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(b) AUTHORIZATION OF TRANSACTION. The Seller has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The board of directors of the Seller has duly authorized the
execution, delivery and performance of this Agreement, and all corporate,
limited liability company and other actions or proceedings to be taken by or on
the part of the Seller and the Company to authorize and permit the execution and
delivery by the Seller of this Agreement and the instruments required to be
executed and delivered by the Seller pursuant hereto, the performance by them of
their respective obligations hereunder, and the consummation by them of the
transactions contemplated hereby, have been duly and properly taken. This
Agreement constitutes the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions; PROVIDED that (i)
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws of general application affecting the rights and
remedies of creditors, and (ii) enforcement may be subject to general principles
of equity, and the availability of remedies of specific performance and
injunctive relief may be subject to the discretion of the court before which any
proceeding for such remedies may be brought.
(c) BROKERS' FEES. The Seller has no liability or obligation to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement for which Buyer could become liable or obligated except for the fees
and expenses payable to Evercore Partners, Inc.
(d) OWNERSHIP OF COMPANY INTEREST AND SHARE. All of the limited
liability company membership interest of TEC is held beneficially and of record
by the Seller and the sole issued and outstanding share of capital stock of TCC
is held beneficially and registered in the name of TEC, in each case, free and
clear of any restrictions on transfer (other than any restrictions under the
Securities Act of 1933, as amended, state and provincial securities laws and
restrictions on transfer contained in TCC's articles of incorporation), taxes,
Encumbrances, options, warrants, purchase rights, contracts, commitments,
equities, claims and demands.
Section 2.2 REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The
Seller represents and warrants to the Buyer that the statements contained in
this Section 2.2 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 2.2) other than changes arising in the Ordinary Course
of Business which are expressly permitted or contemplated by this Agreement. For
purposes of this Section 2.2 (other than Sections 2.2(e) and 2.2(f)), each
reference to "the Company" shall include a reference to the Seller to the extent
that the representation and warranty containing such reference, as applied to
the Seller, addresses events, circumstances or conditions occurring or existing
on or prior to the Closing Date that are applicable or relevant to, or which may
result in any liability, obligation, cost or expense of, or result in any claim
or charge against or restriction on, the Company or the Business.
(a) ORGANIZATION; QUALIFICATION; CORPORATE POWER; AUTHORITY. TEC is a
limited liability company and TCC is a corporation and each is duly organized,
validly existing, and in good standing under the laws of the jurisdiction of its
formation or incorporation. Each of TEC and TCC is authorized to conduct
business and is in good standing under the laws of each
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jurisdiction where such qualification is required, except where the lack of such
qualification would not, individually or in the aggregate, have a Material
Adverse Effect (as hereinafter defined). Section 2.2(a)(i) of the Disclosure
Schedule lists each jurisdiction in which the Company is qualified to do
business. Each of TEC and TCC has full limited liability company or corporate
power and authority, as the case may be, to carry on the Business as presently
conducted. Section 2.2(a)(ii) of the Disclosure Schedule lists the directors and
officers of each of TEC and TCC.
(b) CAPITALIZATION. The entire issued and outstanding limited
liability company membership interest of TEC is represented by the Interest. The
entire authorized capital stock of TCC consists of an unlimited number of common
shares of which one (1) common share is issued and outstanding and which
represents the Share. All of the Equity has been duly authorized, is validly
issued and outstanding, fully paid and nonassessable, and is held beneficially
and of record by or registered in the name of the Seller or the Company, as the
case may be, free and clear of all claims, Encumbrances, taxes and restrictions
whatsoever. There are no outstanding subscriptions, calls, options, warrants,
rights, contracts, or other commitments or undertakings to which the Seller, TEC
or TCC is a party or by which any of the foregoing are bound relating to the
Equity. Except for TCC and the Share, TEC has no subsidiaries or any equity or
other ownership interest in any other Person.
(c) NO CONFLICT OR VIOLATION. Except as set forth in Section 2.2(c) of
the Disclosure Schedule, neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will result in (i)
a violation of or a conflict with any provision of the organizational documents
of the Seller, TEC or TCC (including without limitation any shareholders
agreement applicable to TCC); (ii) a breach of, or a default under, any term or
provision of any contract, commitment or license to which the Seller, TEC or TCC
is a party or by which its assets are bound, which breach or default would,
individually or together with all other such breaches or defaults, have a
material adverse effect on the Business (including, without limitation, its
financial condition or results of operation) or the Parties' ability to
consummate the transactions contemplated by this Agreement ("Material Adverse
Effect"); or (iii) a violation of any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award to which the Seller or
the Company is subject, which violation would, individually or together with all
other such violations, have a Material Adverse Effect. Except as set forth in
Section 2.2(c) of the Disclosure Schedule, no consent, approval or authorization
of, or declaration, filing or registration with, any governmental or regulatory
authority, or any other Person, is required to be made or obtained by the Seller
or the Company in connection with the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby, the
absence of which, or the failure of which to be obtained or made, would not
reasonably be expected, individually or in the aggregate, to have in a Material
Adverse Effect.
(d) BROKERS' FEES. The Company has no liability or obligation to any
broker, finder, or agent with respect to the transactions contemplated by this
Agreement, save for fees and expenses payable to Evercore Partners, Inc. solely
by the Seller from the proceeds of the sale of the Equity.
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(e) TITLE TO ASSETS; SUFFICIENCY. Except as set forth in Section
2.2(e) of the Disclosure Schedule and except with respect to the Palnut Assets
prior to the Closing Date, the Company has good and marketable title to, or a
valid leasehold interest in, all of the properties and assets used to conduct
the Business as presently conducted, free and clear of all Encumbrances, except
for inventory disposed of in the Ordinary Course of Business since the date of
the Most Recent Balance Sheet. Except as set forth on Section 2.2(e) of the
Disclosure Schedule, the assets reflected on the Most Recent Balance Sheet or
leased by the Company pursuant to any agreement described in Sections 2.2(e),
2.2(j)(ii)(a) or 2.2(k)(iv) of the Disclosure Schedule constitute all of the
assets used in or necessary to conduct the Business in accordance with past
practices as of the date of the Most Recent Balance Sheet and as of the date
hereof. Section 2.2(e) of the Disclosure Schedule sets forth all services
rendered to the Company by the Seller or its Affiliates (other than the
Company).
(f) FINANCIAL STATEMENTS. Attached as Exhibit A to the Original
Agreement were the following financial statements (collectively the "Financial
Statements"): (i) the unaudited consolidated balance sheets and statements of
income, and cash flow as of and for the fiscal years ended March 31, 2000 and
2001 (the "Most Recent Fiscal Year End") for the Company; and (ii) unaudited
consolidated balance sheets (the "Most Recent Balance Sheet") and statements of
income, and cash flow (the "Most Recent Financial Statements") as of and for the
three months ended July 1, 2001 (the "Most Recent Fiscal Quarter End") for the
Company. Except as set forth in Section 2.2(f) of the Disclosure Schedule, the
Financial Statements are consistent with the books and records of the Company,
are correct and complete, have been prepared in accordance with GAAP applied on
a consistent basis throughout the periods covered thereby and present fairly the
assets and liabilities of the Company as of such dates and the results of
operations of the Company for such periods. The Company has no material
liability (whether asserted or, to Seller's Knowledge, unasserted, absolute or
contingent, accrued or unaccrued, incurred or consequential or due or, to
Seller's Knowledge, to become due) except for (i) liabilities set forth on the
face of the Most Recent Balance Sheet and (ii) liabilities which have arisen
after the date of the Most Recent Balance Sheet in the Ordinary Course of
Business (none of which liabilities referred to in this clause (ii) results
from, arises out of, relates to, is in the nature of or was caused by any breach
of contract, breach of warranty, tort infringement or violation of law).
(g) EVENTS SUBSEQUENT TO MOST RECENT FISCAL YEAR END. Except as listed
on Section 2.2(g) of the Disclosure Schedule, since the Most Recent Fiscal Year
End, (1) the Business of the Company has operated only in the Ordinary Course of
Business, (2) there has not been any material adverse change in the Business of
the Company taken as a whole and (3) the Company has made the capital
expenditures set forth on Section 2.2(g) of the Disclosure Schedule. Except as
listed on Section 2.2(g) of the Disclosure Schedule, without limiting the
generality of the foregoing, since that date the Company has not:
(i) sold, leased, transferred, or assigned any material assets,
tangible or intangible, other than sales of inventory in the Ordinary
Course of Business;
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(ii) entered into any agreement, contract, lease, or license (or
series of related agreements, contracts, leases or licenses) involving more
than $100,000, nor modified any such existing agreement, contract, lease or
license;
(iii) (nor has any other party thereto) accelerated, terminated,
breached, defaulted under, made material modifications to, or canceled any
material agreement, contract, lease, or license to which the Company is a
party or by which it is bound;
(iv) imposed or suffered the imposition of any Encumbrance upon
any of its assets, tangible or intangible, other than Encumbrances arising
from agreements in place as of the Most Recent Fiscal Year End (none of
which result from any breach or default thereunder);
(v) made or authorized any change in the certificate of
formation, articles of incorporation, charter or bylaws or other
organizational documents;
(vi) experienced any material damage, destruction, or loss
(whether or not covered by insurance) to its property;
(vii) granted any increase in the compensation of, paid any stay,
sale or other form of bonus compensation to, or made any other material
change in the employment terms of, including any Benefit Arrangement
relating to, any of its directors, officers, employees or the TEC
Management Team, excluding, however, normal yearly increases of employees
(other than members of the TEC Management Team) in the Ordinary Course of
Business not exceeding $50,000 in the aggregate;
(viii) committed to make any capital expenditure (or series of
related capital expenditures) after the Closing involving more than $25,000
singly or $100,000 in the aggregate, or failed to make capital expenditures
substantially in compliance with the budget set forth on Section 4.2 of the
Disclosure Schedule;
(ix) delayed or postponed, or changed the terms or any policies
or practices with respect to, the payments of accounts payable and other
liabilities of the Company;
(x) entered into any employment contract or collective bargaining
agreement, written or oral, or modified or changed the terms of any
existing such contract or agreement;
(xi) issued any note, bond or other debt security or created,
incurred, assumed or guaranteed any indebtedness for borrowed money or
capitalized lease obligations;
(xii) issued, sold or disposed of any of its membership interests
or shares of capital stock, or granted any options, warrants or other
rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its membership interests
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or shares of capital stock or entered into a contract or option to create
any additional class of membership interest or shares of capital stock;
(xiii) made any distribution (whether in cash or in kind) or
repurchased, redeemed or retired of any of its membership interests or
shares of capital stock;
(xiv) made or been subject to any material change in its
accounting, pricing, cash management or working capital practices,
policies, procedures or methods; or
(xv) committed to do any of the foregoing.
(h) LEGAL COMPLIANCE. Except as set forth on Section 2.2(h) of the
Disclosure Schedule, the Company is in compliance with, and has complied with,
all applicable laws, rules, regulations, injunctions, judgments, orders, decrees
and rulings thereunder of federal, state, provincial, local, municipal and
foreign governments (and all agencies thereof), except where such noncompliance
will not result, or has not resulted, individually or in the aggregate, in a
Material Adverse Effect.
(i) TAX MATTERS.
(i) Except as set forth on Schedule 2.2(i)(i) of the Disclosure
Schedule, and except with respect to any amended Tax Returns to be filed
and Taxes to be paid by TCC pursuant to Section 8.4 hereof: (A) the Company
(and the Seller, in respect of any interest in the Company) has duly and
timely filed all Tax Returns it was required to file; (B) all such Tax
Returns were correct and complete in all material respects; (C) all Taxes
due and payable by the Company or in respect of any interest in the
Company, whether or not shown on any Tax Return, have been timely paid; (D)
the Company (and the Seller, in respect of any interest in the Company)
currently is not the beneficiary of any extension of time within which to
file any Tax Return; and (E) the Company has maintained appropriate
accruals for Taxes payable by the Company on the Most Recent Financial
Statements.
(ii) Except as set forth on Schedule 2.2(i)(ii) of the Disclosure
Schedule, there is no material dispute or claim concerning any Tax
liability of the Company either (A) claimed or raised by any authority in
writing or (B) as to which the Seller has Knowledge based upon personal
contact with any agent of such authority.
(iii) Section 2.2(i)(iii) of the Disclosure Schedule lists all
the federal, state, provincial, local and foreign Tax Returns filed with
respect to the Company for taxable periods ended on or after December 31,
1999, and except as specified thereon, none of such Tax Returns has been
audited, or is currently the subject of audit. The Seller has permitted the
Buyer to examine all United States and Canadian federal tax returns and has
delivered to the Buyer correct and complete copies of all examination
reports, and statements of deficiencies assessed against, or agreed to by
the Company since December 31, 1999. The Company has not waived any statute
of limitations in respect of Taxes or agreed to any extension of time with
respect to any Tax assessment or
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deficiency. No powers of attorney with respect to Taxes of the Company are
currently in force.
(iv) The Company has not received from any taxing authority any
written notice of proposed adjustment, deficiency, underpayment, assessment
or reassessment of Taxes or any other such notice which has not been
satisfied by payment or been withdrawn, and no claims have been asserted
relating to such Taxes against the Company. No claim has been made by any
taxing authority in a jurisdiction where the Company does not file a Tax
Return that the Company is or may be subject to taxation by that
jurisdiction.
(v) The Company has withheld and paid to the appropriate taxing
authorities all amounts required to be withheld from payments made to
employees, independent contractors, creditors, stockholders, non-residents
or other third parties, and so paid, under state law, provincial law,
foreign law and the applicable provisions of the Code and the Canada Act.
(vi) The Company has remitted all Taxes required to be remitted
to all governmental authorities on behalf of employees, including without
limitation all workers' compensation payments, employment insurance,
employer health tax and other payroll taxes.
(vii) TEC has not elected to be treated as and is not a
corporation for United States federal income tax purposes, and is
disregarded as an entity separate from its owner within the meaning of
Treas. Reg. Section 301.7701-3(b)(1)(ii).
(j) REAL PROPERTY.
(i) Section 2.2(j)(i) of the Disclosure Schedule contains a legal
description of each parcel of real property owned by the Company (the
"Owned Property"). The Company has good and marketable title in and to all
of the Owned Property subject to no Encumbrances, except as described on
such section of the Disclosure Schedule.
(ii) Section 2.2(j)(ii)(a) of the Disclosure Schedule contains a
list of all leases, subleases and other occupancy agreements, including all
amendments, extensions and other modifications (the "Leases") for real
property (the "Leased Property") (the Owned Property and the Leased
Property, collectively the "Real Property") to which the Company is the
"tenant", "subtenant" or other lessee party. The Company has a good and
valid leasehold interest in and to all of the Leased Property, subject to
no Encumbrances on the interest of the Company except as described in such
section of the Disclosure Schedule. Each Lease is in full force and effect
and is enforceable in accordance with its terms and will continue to be in
full force and effect and enforceable in accordance with its terms
following the consummation of the transactions contemplated hereby. Except
as described in Section 2.2(j)(ii)(b) of the Disclosure Schedule, there
exists no default by the Company, or condition which, with the giving of
notice, the passage of time or both, could become a default by the Company,
under any
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Lease or could permit any termination, modification or acceleration of any
rights or obligations thereunder nor, to the Knowledge of the Seller, does
any such default or condition exist with respect to any other person.
Seller has previously delivered to Buyer true and complete copies of all
the Leases. Except as described on Section 2.2(j)(ii)(c) to the Disclosure
Schedule, no consent, waiver, approval or authorization is required from
the landlord under any Lease or from any other third party as a result of
the execution of this Agreement or the consummation of the transactions
contemplated hereby.
(iii) The Real Property constitutes all of the real property
owned, leased, occupied or otherwise utilized in connection with the
Business. Except as set forth in Section 2.2(j)(iii) of the Disclosure
Schedule, the Real Property and all improvements located thereon conform in
all material respects to all applicable building, zoning and other laws,
ordinances, rules and regulations. All material permits, licenses and other
approvals necessary to the current use of the Real Property have been
obtained, are in full force and effect and, to Seller's Knowledge, there
exists no violation of any permit, license or other approval, covenant,
condition, restriction, easement, agreement or order affecting any portion
of the Real Property which could have a Material Adverse Effect; and no
improvement is dependent for its access, operation or utility on any land,
building or other improvement not included in the Real Property except, in
each case, as would not have a Material Adverse Effect on the use of such
Real Property. There is no pending or, to the Knowledge of the Seller, any
threatened condemnation or expropriation proceeding, claim, suit or
administrative action affecting any portion of the Real Property.
(iv) Except as set forth in Section 2.2(j)(iv), there are no
leases, subleases or other occupancy agreements granting to any party or
parties (other than the Company) the right of use or occupancy of the Real
Property or any portion thereof; there are not outstanding options or
rights of first refusal to purchase the Real Property, or any portion
thereof or interest therein; there are no parties (other than the Company)
in possession of the Real Property; and the Company has not assigned,
transferred, or conveyed any interest in the Real Property.
(k) INTELLECTUAL PROPERTY.
(i) Neither the Seller nor the Company has interfered with,
infringed upon, misappropriated, or violated any Proprietary Rights of any
third party and neither the Company nor the Seller has received any
complaint, claim (including any claim that the Company or any of its
Affiliates must license or refrain from using any Proprietary Rights of any
third party), demand, or notice alleging any such interference,
infringement, misappropriation, or violation, except where such
interferences, infringements, misappropriations or violations would not,
individually or in the aggregate, have a Material Adverse Effect. Except as
set forth in Section 2.2(k)(i) of the Disclosure Schedule, to the Knowledge
of the Seller, no third party has interfered with, infringed upon,
misappropriated, or violated any Company Proprietary Rights in any material
respect.
11
(ii) Section 2.2(k)(ii) of the Disclosure Schedule identifies
each patent or registration which has been issued to or acquired by the
Company and which is currently in effect or has lapsed or been cancelled
since December 31, 2000, each of which is included in the Company
Proprietary Rights, identifies each pending registration or application for
patent or registration which the Company has made with respect to any of
the Company Proprietary Rights, and identifies each material license,
agreement, or other permission which the Company has granted to any third
party and which is currently in effect or which has lapsed, terminated or
expired since December 31, 2000, with respect to any of the Company
Proprietary Rights. The Seller has delivered to the Buyer correct and
complete copies of all such patents, registrations, pending applications,
licenses, agreements, written documentation evidencing ownership, and
permissions (as amended to date). Section 2.2(k)(ii) of the Disclosure
Schedule also identifies each material trade name or unregistered trademark
used by the Company.
(iii) With respect to each patent or registration, each material
license, agreement, or other permission which the Company has granted to
any third party with respect to any of the Company Proprietary Rights
identified in Section 2.2(k)(ii) of the Disclosure Schedule:
(A) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge;
(B) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the Knowledge of the
Seller, is threatened, which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(C) none of the Company or any of its Affiliates has agreed to
indemnify any Person for or against any interference, infringement,
misappropriation, or other conflict with respect to the item, except
as listed in Section 2.2(k)(iii) of the Disclosure Schedule.
(iv) Section 2.2(k)(iv) of the Disclosure Schedule identifies
each material item of the Company Proprietary Rights that any third party
owns and that the Company uses pursuant to license, sublicense, agreement,
or permission. The Seller has delivered to the Buyer correct and complete
copies of all such licenses, sublicenses, agreements, and permissions (as
amended to date). With respect to each item of the Company Proprietary
Rights required to be identified in Section 2.2(k)(iv) of the Disclosure
Schedule:
(A) To the Seller's Knowledge, the license, sublicense,
agreement, or permission covering the item is legal, valid, binding,
enforceable, and in full force and effect in all material respects;
(B) To the Seller's Knowledge, no party to the license,
sublicense, agreement, or permission is in material breach or default,
and no event
12
has occurred which with notice or lapse of time would constitute a
material breach or default or permit termination, modification, or
acceleration thereunder.
(C) To the Seller's Knowledge, no party to the license,
sublicense, agreement, or permission has repudiated any material
provision thereof;
(D) The Company has not granted any sublicense or similar right
with respect to the license, sublicense, agreement, or permission; and
(E) To the Seller's Knowledge, no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand is pending
or threatened which challenges the legality, validity, or
enforceability of the item.
(v) The Company owns or has a license to use all Company
Proprietary Rights necessary for the operation of the Business as conducted
as of the Most Recent Fiscal Year End and as currently conducted.
(vi) All of the Seller's employees that have participated in the
development of Company Proprietary Rights have entered into agreements with
the Company assigning all right, title and interest in and to such Company
Proprietary Rights to the Company. Pursuant to such agreements or
applicable law, the Company owns all of the right, title and interest of
its employees in and to any Company Proprietary Rights.
(l) TANGIBLE ASSETS. The buildings, machinery, equipment, and other
tangible assets that the Company owns and leases are and have been maintained in
accordance with the Company's prior practice, and are in good operating
condition and repair (subject to normal wear and tear), considering their age
and operational use.
(m) INVENTORY; PRODUCT WARRANTIES. Except as set forth in Section
2.2(m) of the Disclosure Schedule or as reflected in reserves set forth on the
face of the Most Recent Balance Sheet, the inventory of the Company consists of
raw materials, manufactured and processed parts, work in process and finished
goods, all of which is usable or saleable, as the case may be, in the Ordinary
Course of Business and, in the case of TCC, all of which is of merchantable
quality and reasonably fit for its usual purpose. Except as disclosed on Section
2.2(m) of the Disclosure Schedule, each product manufactured or sold by the
Company has been in conformity with all applicable laws and regulations,
contractual commitments, published specifications and express and implied
warranties, and the Company has no liability for replacement or repair thereof
or other damages in connection therewith, except for such failures to conform or
liabilities as would not in the aggregate reasonably be expected to have a
Material Adverse Effect.
(n) CONTRACTS. Section 2.2(n) of the Disclosure Schedule lists the
following contracts and other agreements, written or oral, to which the Company
is currently a party:
13
(i) any agreement (or group of related agreements) for the
consignment or lease of machinery, equipment or other personal property to
or from any Person providing for lease payments in excess of $100,000 per
annum;
(ii) any agreement (or group of related agreements) for the
purchase of raw materials, products, machinery, equipment or other personal
property, or for the furnishing or receipt of services, the performance of
which will extend over a period of more than one year or involve
consideration in excess of $100,000;
(iii) any agreements (or group of related agreements) for the
sale of the Company's products to customers whose purchases constitute five
percent (5%) or more of the Company's sales for the Most Recent Fiscal
Year;
(iv) any capitalized lease, pledge, conditional sale or title
retention agreement involving the payment of more than $100,000 in the
aggregate;
(v) any agreement concerning a partnership or joint venture;
(vi) any agreement (or group of related agreements) under which
it has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, or under which it has
imposed an Encumbrance on any of its assets, tangible or intangible;
(vii) any agreement concerning confidentiality or noncompetition
or otherwise prohibiting the Company from freely engaging in any business;
(viii) any agreement with any of the Seller, its Affiliates or
any other person or entity described in Section 2.2(v);
(ix) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other material plan or
arrangement for the benefit of its current or former directors, officers,
or employees;
(x) any license, royalty or other agreement relating to the
Company Proprietary Rights;
(xi) any agreement containing commitments of suretyship,
guarantee or indemnification (except for guarantees, warranties and
indemnities provided by the Company in the Ordinary Course of Business
having a contract value, individually or in the aggregate of $100,000 or
less);
(xii) any mortgage, indenture, note, bond or other agreement
relating to indebtedness incurred or provided by the Company;
(xiii) any agreement involving a governmental body;
(xiv) any collective bargaining agreement;
14
(xv) any agreement with any employee, consultant or agent of the
Company which could involve aggregate payments in any one year of in excess
of $100,000 and any agreement with any officer or director of the Company;
(xvi) any agreement (or group of related agreements) under which
the consequences of a default or termination could have a Material Adverse
Effect;
(xvii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $100,000; or
(xviii) any commitment to do any of the foregoing described in
clauses (i) through (xvii).
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in Section 2.2(n) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the material terms and
conditions of each oral agreement referred to in Section 2.2(n) of the
Disclosure Schedule. Except as set forth in Section 2.2(n) of the Disclosure
Schedule, with respect to each such agreement: (A) the agreement is, with
respect to the Company and, to the Seller's Knowledge, each other party thereto,
legal, valid, binding, enforceable, and in full force and effect and will
continue to be so following the Closing; (B) the Company is not now and, to
Seller's Knowledge, no other party is, in material breach or default, and no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or acceleration
under the agreement; and (C) the Company has not and, to Seller's Knowledge, no
other party has repudiated any material provision of the agreement.
(o) NOTES AND ACCOUNTS RECEIVABLE. Except as set forth in Section
2.2(o) of the Disclosure Schedule and except as reflected in reserves set forth
on the face of the Most Recent Balance Sheet, notes and accounts receivable of
the Company have been generated in the Ordinary Course of Business, reflect a
valid obligation due to the Company for the payment of goods or services
provided by the Company and, except as otherwise noted, are reasonably
anticipated to be paid in the normal course without recourse, defense,
deduction, return of goods, counterclaim or offset on the part of the obligor.
(p) INSURANCE. Section 2.2(p) of the Disclosure Schedule identifies
each insurance policy (including policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety arrangements)
with respect to which the Company is a party, a named insured, or otherwise the
beneficiary of coverage. With respect to each such insurance policy: (A) with
respect to the Company and, to the Seller's Knowledge, each other party thereto,
the policy is legal, binding, enforceable, and in full force and effect; (B)
neither the Company nor, to Seller's Knowledge, any other party to the policy is
in material breach or default (including with respect to the payment of premiums
or the giving of notices), and no event has occurred which, with notice or the
lapse of time, would constitute such a material breach or default, or permit
termination, modification, or acceleration, under the policy; and (C) the
Company has not and, to Seller's Knowledge, no other party to the policy has
repudiated any material provision thereof. All claims, if any, made against the
Company that are covered by insurance have been disclosed to and accepted by the
appropriate insurance companies and are
15
being defended by such appropriate insurance companies and are described in
Section 2.2(p) of the Disclosure Schedule and, except as disclosed in Section
2.2(p) of the Disclosure Schedule, no claims have been denied coverage during
the last two years.
(q) LITIGATION. Section 2.2(q) of the Disclosure Schedule sets forth
each instance in which the Company (i) is subject to any outstanding injunction,
judgment, order, decree, ruling or settlement agreement, or (ii) is a party or,
to the Knowledge of the Seller, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, provincial,
local, or foreign jurisdiction or before any arbitrator, none of which would
reasonably be expected, individually or in the aggregate, to have or result in a
Material Adverse Effect.
(r) BOOKS AND RECORDS. The records of the Company accurately reflect
the record and registered ownership of all of the Equity. The other books and
records of the Company, including financial records, minute books and books of
account, are complete and accurate in all material respects and have been
maintained in accordance with sound business practice and, in all material
respects, laws and other requirements.
(s) EMPLOYMENT MATTERS. Except as set out in Schedule 2.2(s) of the
Disclosure Schedule, (i) no current officer or employee of the Company working
in the operations of the Business is a party to any employment agreement or
union or collective bargaining agreement, (ii) no union has been certified or
recognized as the collective bargaining representative of any of such employees
or has attempted to engage in negotiations with the Company regarding terms and
conditions of employment and (iii) no unfair labor practice charge, arbitration,
work stoppage, picketing or other such activity relating to labor matters has
occurred, or is pending or has, to Seller's Knowledge, been threatened. To
Seller's Knowledge, there are no current or threatened attempts to organize or
establish any labor union to represent any employees of the Company working in
the operations of the Business. Except as set out in Schedule 2.2(s) of the
Disclosure Schedule, the Seller is in compliance in all material respects with
all requirements of United States and Canadian federal, state, provincial and
local laws and regulations governing employee relations which may be applicable
to the Business, including without limitation anti-discrimination laws, wage and
hour laws, labor relations laws and occupational safety and health laws, and no
suits, charges or administrative proceedings relating to any such law or
regulation are pending or, to Seller's Knowledge, have been threatened. Neither
the Seller nor the Company is currently delinquent in the payment of wages,
withholding or social security taxes, unemployment insurance or other similar
obligations.
(t) EMPLOYEE BENEFITS. (i) Section 2.2(t) of the Disclosure Schedule
lists each Employee Benefit Plan (including, for avoidance of doubt, each
Benefit Arrangement). Except as set forth on Section 2.2(t) (i) of the
Disclosure Schedule:
(A) Each Employee Benefit Plan (and each related trust, insurance
contract, or fund) complies in form and in operation in all material
respects with the terms of such plan or arrangement and with the
applicable requirements of ERISA, the Code, and other applicable laws
and collective bargaining agreements.
16
(B) All required reports and descriptions (including Form 5500
annual reports, summary annual reports, PBGC-1's, and summary plan
descriptions) have been filed or distributed appropriately with
respect to each Employee Benefit Plan and Seller has provided the most
recent copy of such reports and descriptions to Buyer. The
requirements of Part 6 of Subtitle B of Title I of ERISA and of Code
Section 4980B have been met in all material respects with respect to
each Employee Welfare Benefit Plan with respect to which such
requirements are applicable.
(C) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been
timely paid to each Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing Date
which are not yet due have been paid to each Employee Pension Benefit
Plan or accrued in accordance with the past custom and practice of the
Company and the recommended contribution in any applicable actuarial
report. In the case of each Employee Pension Benefit Plan that is
subject to Title IV of ERISA, except as specifically described in
Section 2.2(t)(i)(C) of the Disclosure Schedule, the net fair market
value of the assets held to fund the Employee Pension Benefit Plan
exceeds the present value (based on actuarial assumptions used by the
Company for funding) of all accrued benefits, both vested and
nonvested under the Employee Pension Benefit Plan. All premiums or
other payments due or obligations incurred for all periods ending on
or before the Closing Date have been paid or appropriately accrued in
accordance with generally accepted accounting principles with respect
to each Employee Welfare Benefit Plan.
(D) Except as specifically described on Schedule 2.2(t)(i)(D),
each Employee Benefit Plan which is intended to meet the requirements
of a "qualified plan" under Code Section 401(a) has received a
favorable determination letter from the Internal Revenue Service and
each Employee Pension Benefit Plan in Canada which is intended to be a
"registered pension plan" has been registered with the Registered
Plans Division of the Canada Customs and Revenue Agency and the
Financial Services Commission of Ontario, and nothing has occurred or
failed to occur since the date of such determination or registration
which could adversely affect the qualification or registration of each
such plan, respectively.
(E) With respect to each Employee Benefit Plan Seller has
delivered to Buyer correct and complete copies of the plan documents
(or to the extent that no such copy exists, a written description),
the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 annual report, financial
statements, if any, and all related trust agreements, insurance
contracts, and other funding agreements which implement each Employee
Benefit Plan.
17
(F) The Company has not incurred any liability for any excise,
income, or other taxes or penalties with respect to any Employee
Benefit Plan, (other than taxes payable in the Ordinary Course of
Business in connection with Employee Benefit Plans administered in
Canada), and no event has occurred and no circumstance exists or has
existed that could reasonably be expected to give rise to any such
liability. There have been no Prohibited Transactions with respect to
any Employee Benefit Plan. No fiduciary has any material liability for
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any
Employee Benefit Plan. No action, suit, proceeding, hearing, or
investigation with respect to the administration or the investment of
the assets of any Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of the Seller, threatened.
To Seller's knowledge, no Employee Benefit Plan is presently under
audit or examination by the Internal Revenue Service, Department of
Labor or any other governmental entity. Neither the Company nor the
Seller has received any notice of any such audit or examination nor
have they received any notice of any matter that is pending with
respect to any Employee Benefit Plan under any IRS, DOL or provincial
program.
(ii) Except as set forth in Section 2.2(t)(ii) of the Disclosure
Schedule, the Company has not incurred any material liability (whether
known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due) to the PBGC (other than
PBGC premium payments) or otherwise under Title IV of ERISA or under the
Code.
(iii) Except as set forth in Section 2.2(t)(iii) of the
Disclosure Schedule, none of the Employee Welfare Benefit Plans provides
medical, health, or life insurance or other welfare-type benefits for
current or future retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Section 4980B) and any
liability for post-retirement benefits has been appropriately accrued on
the financial statements of the Company in accordance with Financial
Account Standards Board No. 106.
(u) ENVIRONMENT, HEALTH, AND SAFETY.
(i) Other than as set forth in Section 2.2(u)(i) of the
Disclosure Schedule, the Company (A) has complied with, and is in
compliance with, in all material respects, all Environmental, Health, and
Safety Laws (and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced
against the Company alleging any such failure to comply), (B) has obtained
and maintained in effect, and been and is in material compliance with all
of the terms and conditions of, all permits, licenses, certificates of
approval and other authorizations which are required under the
Environmental, Health, and Safety Laws, and (C) has complied with, and is
in compliance with, in all material respects, all other limitations,
restrictions,
18
conditions, standards, prohibitions, requirements, obligations, schedules,
and timetables which are contained in the Environmental, Health, and Safety
Laws.
(ii) Other than as disclosed in Section 2.2(u)(ii) of the
Disclosure Schedule, to the Seller's Knowledge, the Company is not subject
to any material liability with respect to Environmental, Health and Safety
Laws.
(iii) Other than as disclosed in Section 2.2(u)(iii) of the
Disclosure Schedule, the Company has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled, or
released any substance, including without limitation any Hazardous
Substance, and, to the Knowledge of the Seller, no property or facility
operated by the Company is contaminated by any substance in a manner, that
has given or would give rise to material liability under any Environmental,
Health and Safety Laws.
(iv) Except as set forth in Section 2.2(u)(iv) of the Disclosure
Schedule, none of the following exists at any Owned Property or Leased
Property: (1) underground storage tanks; (2) asbestos-containing material
in any form or condition; (3) materials or equipment containing
polychlorinated biphenyls; or (4) landfills, surface impoundments or
disposal areas, except for such items that are in compliance in all
material respects with all applicable Environmental, Health and Safety
Laws.
(v) Except as disclosed on Section 2.2(u)(v) of the Disclosure
Schedule, neither this Agreement nor the consummation of the transactions
contemplated hereby will result in any obligations for site investigation
or cleanup, or notification to or consent of government agencies or third
parties, pursuant to any so-called "transaction-triggered" or "responsible
transfer" Environmental, Health and Safety Laws.
(v) TRANSACTIONS WITH AFFILIATES. Except as set out in Schedule 2.2(v)
of the Disclosure Schedule, none of the Company's members, shareholders,
directors, officers, Affiliates or employees, nor any director, officer or
employee of any such member, shareholder or Affiliate, nor any member of the
immediate family of any director, officer or employee described above or any
Affiliate of any of the foregoing Persons is involved in any remunerative
arrangement with the Company (whether written or oral) outside the normal and
customary scope and nature of their respective relationships with the Company
(none of which shall survive the Closing, except as set forth in Section 2.2(v)
of the Disclosure Schedule), or owns any property or right, tangible or
intangible, which is used by the Company or is necessary for the conduct by the
Company of the Business.
(w) INDEBTEDNESS AND GUARANTEES. Except as set forth in the Most
Recent Balance Sheet, the Company has no long-term liabilities or indebtedness
for borrowed money or for the deferred purchase price of property or services
(other than trade payables and other accrued current liabilities incurred in the
Ordinary Course of Business), or capital lease obligations, conditional sale or
other title retention agreements. Except as set forth on Section 2.2(w) of the
Disclosure Schedule, the Company is not a guarantor or otherwise liable for any
liability or obligation of any other Person.
19
(x) DISTRIBUTORS, CUSTOMERS AND SUPPLIERS. Except as set forth on
Section 2.2(x) of the Disclosure Schedule, since January 1, 2001, neither the
Seller nor the Company has received any threat or notification, in writing or,
to the Knowledge of the Seller, orally, with respect to, and there have not
been, any material distributors, customers or suppliers that have terminated or,
to the Seller's Knowledge, intend to terminate or are considering terminating,
their respective business relationships with the Company or have modified or, to
Seller's Knowledge, intend to modify such relationships with the Company in a
manner which is materially less favorable to the Company, or have agreed not to
or will not agree to do business with the Company on terms and conditions at
least as favorable in all material respects to the Company as the terms and
conditions provided to the Company on the date of the Most Recent Balance Sheet,
and the Seller does not have any Knowledge of any facts which would form the
basis for any such termination or modification. Without limitation of the
foregoing, except as set forth on Section 2.2(x) of the Disclosure Schedule,
since January 1, 2001, (i) no customer of the Company with annual sales in
excess of $1,000,000 has requested any change in the pricing of the Company's
products or the pricing schedules, policies or practices of the Company, (ii) no
customer of the Company has terminated, and the Seller and the Company have no
knowledge that any customer of the Company intends to terminate, either the
production of or the use of the Company's products in any existing or proposed
vehicle platform of such customer for which products are produced or proposed to
be produced or containing or proposed to contain products manufactured by the
Company, and (iii) no customer of the company has reduced in any material
respect the monthly volume of any product purchased by such customer from the
Company, except as such reductions reflect the general decline in manufacturing
activity of customers due to general economic conditions.
(y) NO ILLEGAL PAYMENTS, ETC. Neither the Seller nor the Company, nor
any of their respective directors, officers, employees or, to Seller's
Knowledge, agents, has (a) directly or indirectly given or agreed to give any
gift, contribution, payment or similar benefit to any distributor, supplier,
customer, governmental official or employee or other person who was, is or may
be in a position to help or hinder the Company which is prohibited by applicable
law, or (b) established or maintained any unrecorded fund or asset or made any
false entries on any books or records.
(z) STATUS OF CANADIAN BUSINESS. TEC does not carry on a Canadian
business within the meaning of the Investment Canada Act and the value of the
assets of TCC does not amount to more than fifty percent of the aggregate value
of the combined assets of TEC and TCC. The aggregate value of the assets in
Canada owned by the Seller and any of its affiliates (as such term is defined in
the Competition Act (Canada) (the "CA") and the annual gross revenues from sales
in, from or into Canada by the Seller and any of such affiliates, do not exceed,
in either case, CDN$400 million within the meaning of and as determined by
section 109 of the CA and the Notifiable Transactions Regulations thereunder.
(aa) EXCLUSIVITY OF REPRESENTATIONS. The representations and
warranties made by Seller in this Agreement are in lieu of (and are exclusive
of) any other representations and warranties by Seller, or any officer, employee
or agent of Seller, express or implied. Seller hereby disclaims any such other
representations or warranties (express or implied),
20
notwithstanding any delivery or disclosure of any documents or other information
to Buyer, its officers, directors, employees, agents or representatives or any
other person.
(bb) NO MATERIAL OMISSION. Neither this Agreement nor the Disclosure
Schedule, nor any certificate or other document furnished or to be furnished by
the Seller to Buyer contains or will contain any untrue statement of a material
fact or omits or will omit to state a material fact necessary to make the
statements contained therein and herein not misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Company and Seller as follows:
Section 3.1 ORGANIZATION OF BUYER. Buyer is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite power and authority to conduct its
business as it is presently being conducted and to own and lease its properties
and assets.
Section 3.2 AUTHORIZATION; VALIDITY. Buyer has all necessary power and
authority to enter into this Agreement and has taken all action necessary
(including, without limitation, authorization from its board of advisors) to
consummate the transactions contemplated hereby and to perform its obligations
hereunder. This Agreement has been duly executed and delivered by Buyer and is a
legal, valid and binding obligation of Buyer enforceable against Buyer in
accordance with its terms and conditions; PROVIDED that (i) enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws of general application affecting the rights and remedies of
creditors, and (ii) enforcement may be subject to general principles of equity,
and the availability of remedies of specific performance and injunctive relief
may be subject to the discretion of the court before which any proceeding for
such remedies may be brought.
Section 3.3 NO CONFLICT OR VIOLATION. Neither the execution and delivery of
this Agreement nor the consummation of the transactions contemplated hereby will
result in:
(a) a violation of or a conflict with any provision of the
organizational documents of Buyer;
(b) a breach of, or a default under, any term or provision of any
contract, commitment or license to which Buyer is a party or by which its assets
are bound, which breach or default would have a Material Adverse Effect; or
(c) a violation by Buyer of any statute, rule, regulation, ordinance,
code, order, judgment, writ, injunction, decree or award, which violation would
have a Material Adverse Effect.
Section 3.4 CONSENTS AND APPROVALS. Except as set forth in Section 3.4 of
the Disclosure Schedule, no consent, approval or authorization of, or
declaration, filing or
21
registration with, any governmental or regulatory authority, or any other person
or entity, is required to be made or obtained by Buyer in connection with the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby, except for consents, approvals or
authorizations, declarations, filings or registrations, the failure of which to
obtain would not in the aggregate impair the ability of Buyer to perform its
obligations hereunder.
Section 3.5 NO BROKERS. Neither Buyer nor any Affiliate of Buyer has
entered into or will enter into any agreement, arrangement or understanding with
any person or entity which will result in the obligation of Seller to pay any
finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby.
Section 3.6 STATUS OF BUYER.
(a) No entity is in control of the Buyer as the terms "entity" and
"control" are defined in Section 801.1 of the Premerger Notification Rules
promulgated by the Federal Trade Commission under the HSR Act (the "Rules").
(b) Buyer does not have total assets in excess of Ten Million Dollars
($10,000,000) as "total assets" are determined under Section 801.11 of the Rules
for purposes of the "size-of-the-person test" under the HSR Act.
Section 3.7 CERTAIN LITIGATION. There is no action, proceeding or
investigation pending to which the Buyer is a party or, to the Buyer's
Knowledge, threatened, against the Buyer, which questions the validity of this
Agreement or impairs the ability of the Buyer to consummate the transactions
contemplated hereby.
Section 3.8 NO MATERIAL OMISSION. Neither this Agreement nor the Disclosure
Schedule, nor any certificate or other document furnished by the Buyer to Seller
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statement contained therein and herein not
misleading.
ARTICLE 4
COVENANTS
Section 4.1 ACCESS TO INFORMATION AND RECORDS. Subject to the procedures
set forth below, at and prior to the Closing Date, Buyer and its financing
sources shall be entitled, through their respective representatives and agents,
to make such investigation of the Business of the Company and such examination
of the books, records, Tax Returns, financial condition and operations of the
Company as Buyer or its financing sources may reasonably request. Any such
investigation and examination shall be conducted at reasonable times and under
reasonable circumstances and the Seller shall cooperate fully therein, including
cooperating (i) with the Buyer's accountants, consultants, agents and attorneys
and (ii) with respect to all communications with the Company's customers,
suppliers and employees with the Seller's prior consent by any one of Seller's
Senior Management. Until the Closing and if the Closing shall not occur,
thereafter, Buyer and its Affiliates and financing sources shall keep
confidential and
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shall not use in any manner inconsistent with the transactions contemplated by
this Agreement and after termination of this Agreement, Buyer and its Affiliates
and financing sources shall not disclose, nor use for their own benefit, any
information or documents obtained from the Company concerning its assets,
properties, business and operations, unless (a) readily ascertainable from
public or published information, or trade sources, (b) already known or
subsequently developed by Buyer independently of any investigation of the Seller
or Company, (c) received from a third party not under an obligation to the
Seller or Company to keep such information confidential or (d) required by any
law or order. In the event this transaction does not close for any reason, Buyer
and its Affiliates and financing sources shall return or destroy all such
confidential information and compilations thereof as reasonably requested by the
Company.
Section 4.2 CONDUCT OF BUSINESS. From the date hereof through the
Closing Date, the Seller shall (i) operate or cause the Company to be operated
in the Ordinary Course of Business, (ii) without limiting the generality of the
foregoing, cause the Company to (A) make capital expenditures substantially in
compliance with the budget set forth on Section 4.2 of the Disclosure Schedule,
(B) pay on a timely basis all trade payables except for any items being
contested in good faith, and (C) not undertake any action, fail to take any
action or permit to occur any event, which such action, failure or occurrence,
had it taken place prior to the date hereof, would be required to be disclosed
pursuant to Section 2.2(g), in each case without the prior written consent of
the Buyer, responses to requests for which shall not be unreasonably withheld or
delayed; provided, that if any such event shall occur which is beyond the
control of the Seller, the Seller shall promptly notify the Buyer.
Section 4.3 PRESERVATION OF BUSINESS. From the date hereof through the
Closing Date, the Seller shall use its reasonable best efforts to (i) preserve
intact in all material respects the Business; (ii) keep available the services
of the present officers, employees, consultants and agents of the Company; and
(iii) maintain the present suppliers and customers of the Company; and (iv) to
preserve the Company's goodwill.
Section 4.4 NOTICE OF EVENTS. The Seller shall promptly notify Buyer of (a)
any event, condition or circumstance occurring, or failing to occur, from the
date hereof through the Closing Date, which occurrence or failure to occur would
constitute, or would reasonably be expected to result in a violation or breach
of this Agreement, (b) any event, occurrence, transaction or other item which
would have been required to have been disclosed on any Schedule or statement
delivered hereunder had such event, occurrence, transaction or item existed on
the date hereof.
Section 4.5 NAME; USE OF NAME.
(a) As soon as practicable following the Closing, but in no event
later than the thirtieth (30th) day following the Closing Date, Buyer shall have
filed all documentation necessary or appropriate to effect a change of name of
each of TEC and TCC to eliminate the words "TransTechnology" from such entity's
legal name. Buyer shall provide Seller with written evidence of compliance with
the provisions of this Section no later than the thirtieth (30) day following
the Closing Date.
(b) The Buyer and the Seller recognize that certain labels, packaging
and containers therefor and promotional material being used by the Company may
bear the trade
23
names and/or marks "TransTechnology Engineered Components LLC" or
"TransTechnology," and may bear logos or marks associated therewith, which trade
names, logos and marks are not being assigned or licensed to the Buyer. The
Seller agrees that the Buyer shall be permitted to use such labels, packaging,
containers and promotional material for a period not exceeding nine months after
the Closing Date. Thereafter, internal storage and material handling containers
that currently bear such trade names, logos or marks may continue to be used
only if such trade names, logos or marks are removed or covered so that they
cannot be viewed. In no event shall the Buyer be entitled to the use of the
trade names and untransferred logos and trademarks in advertising any inventory.
The Buyer shall remove the Seller's, and any of its Affiliate's, trade names
and/or marks and untransferred logos and trademarks from signage no later than
six months from the Closing Date.
Section 4.6 SELLER'S COVENANT NOT TO COMPETE. As a significant inducement
to Buyer to enter into and perform its obligations under this Agreement, and in
consideration of the payment of the Purchase Price as provided in Section 1.3,
the Seller agrees as follows:
(a) For a period of four (4) years from and after the Closing Date
(the "Restricted Period"), the Seller will not engage, directly or indirectly,
in the continental United States or Canada, in the management, ownership,
operation or control of any business, venture or activity which competes with
the Business (including parts and accessories therefor) being conducted or
proposed to be conducted on the Closing Date by the Company or relating to
products performing functions similar to the products manufactured and sold by
the Company, PROVIDED, HOWEVER, ownership of less than one percent (1%) of the
outstanding stock of any publicly traded corporation shall not be deemed to
constitute engaging in any such business; PROVIDED, FURTHER, that nothing
contained in this Section 4.6(a) shall prohibit (1) a third party that competes
with the Business from acquiring Seller or any of Seller's assets and continuing
thereafter to so compete, provided that such third party does not use any of
Seller's assets or employees so acquired in such competitive activity, or (2)
Seller from engaging in the manufacture and sale of retaining rings, snap rings
and circlips as currently manufactured and sold by Seller's Engineered Rings
Group.
(b) At all times after the date hereof, the Seller shall keep secret
and retain in confidence, and shall not use for its benefit or the benefit of
others, except in connection with the conduct of the Business in the Ordinary
Course of Business prior to the Closing Date, all Confidential Information and
shall not disclose such Confidential Information to anyone outside of Buyer and
its Affiliates except with the express written consent of the Buyer and except
for Confidential Information which becomes publicly known through no wrongful
act of the Seller as a result of being (a) readily ascertainable from public or
published information, or trade sources, (b) received from a third party not
under an obligation to Buyer or the Company to keep such information
confidential or (c) required by any law or order.
(c) During the Restricted Period, the Seller shall not, without the
prior written consent of the Buyer, directly or indirectly, (A) induce or
attempt to induce any employee of the Company to leave the employ of the
Company, or in any way interfere with the relationship between the Company and
any employee thereof, (B) hire any person within one (1) year of the last day
such person was an employee of the Company except in the event that such
employment
24
is the result of a general advertisement for employment or as a result of the
services of an employment agency in connection with a nondirected solicitation,
or (C) induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Company to cease doing business
with the Company or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company (including,
without limitation, making defamatory statements or communications about the
Company).
(d) If the final award of any arbitration panel (or in the event there
should be a final judgment of a court of competent jurisdiction) declares that
any term or provision of this Section 4.6 is invalid or unenforceable, the
Parties agree that the panel or court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provisions, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
award may be challenged or the judgment may be appealed.
Section 4.7 CONSENTS AND REASONABLE EFFORTS. Buyer and Seller will, as soon
as reasonably practicable after the Execution Date, commence to take all
commercially reasonable actions required to obtain all consents, approvals,
waivers and agreements of, and to give all notices and make all other
registrations or filings with, any third parties, including governmental
authorities, including any such filing required under the HSR Act, or any
similar law of any applicable jurisdiction concerning combinations of a business
(together with the HSR Act, a "Business Combination Law"), necessary, to be
obtained, given or made by the Buyer or the Seller, as the case may be
(including without limitation in the case of the Seller, the items listed on
Section 2.2(c) of the Disclosure Schedule) in order to authorize, approve or
permit the full and complete sale, conveyance, assignment, transfer and delivery
of the Equity and the continuance in full force and effect of the permits,
contracts and other agreements set forth on the Disclosure Schedules, and shall
cooperate with each other with respect thereto. In addition, subject to the
terms and conditions herein provided, each of the Parties covenants and agrees
to use after the Execution Date all commercially reasonable efforts to take, or
cause to be taken, all actions, or do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations, to
consummate and make effective as promptly as practicable the transactions
contemplated hereby (including the satisfaction of the other Party's respective
conditions to closing set forth in Article 6 or Article 7, as the case may be)
and to cause the fulfillment of such Party's obligations hereunder; PROVIDED,
HOWEVER, that no Party shall be obligated to incur any material cost, liability
or expense with respect to the fulfillment of the other Party's obligations
pursuant to this Section 4.7.
Section 4.8 PUBLIC ANNOUNCEMENTS. The timing and content of all
announcements regarding any aspect of this Agreement or the transactions
contemplated hereby to the financial community, government agencies, employees
(except as necessary to further due diligence) or the general public shall be
mutually agreed upon in advance by the Parties hereto; PROVIDED, that each party
hereto may make any such announcement which it in good faith believes, based on
advice of counsel, is necessary in order to comply with any requirement of law
or regulation, it being understood and agreed that each party shall provide the
other parties hereto with prior
25
written notice of, and an opportunity to object to, any such announcement.
Notwithstanding the foregoing, nothing contained herein shall prohibit or
prevent the Buyer or its Affiliates from making any announcement or disclosure
to current or future financing sources provided, that any such announcement or
disclosure prior to the Closing shall be subject to the confidentiality
provisions of Section 4.1 hereof.
Section 4.9 COMMITMENT LETTER. The Buyer has delivered to the Seller copies
of binding commitment letters (the "Commitment Letters") from institutional
lenders containing terms and conditions reasonably acceptable to Seller which
Commitment Letters provide for funding by such lenders in an amount sufficient
to consummate the transactions contemplated by this Agreement. The Buyer agrees
that from the Execution Date through the Closing Date it will, in good faith,
use all commercially reasonable efforts to satisfy any conditions contained in
such Commitment Letters and to otherwise keep the Commitment Letters in full
force and effect.
Section 4.10 NO SOLICITATION.
(a) The Seller covenants and agrees that, during the period from the
Execution Date and continuing until the earlier of the termination of this
Agreement or the Closing, the Seller will not, and will cause its subsidiaries
and the officers, directors, employees, investment bankers, attorneys,
accountants, consultants and other agents or advisors (collectively, the
"Representatives" ) of the Seller and its subsidiaries not to, directly or
indirectly, (i) take any action to solicit, initiate, facilitate or encourage
the initiation of any inquiries or submission of any proposals regarding any
merger, business combination, reorganization, recapitalization, liquidation,
sale of all or substantially all assets, or other similar transactions involving
the Company or any proposal or offer to acquire, directly or indirectly, any
equity interest in or any voting securities of the Company, other than the
acquisition of the Equity contemplated by this Agreement (any of the foregoing
inquiries or proposals being referred to herein as an "Acquisition Proposal" and
any transaction described above, a "Competing Transaction"), (ii) engage in
negotiations or discussions concerning, or provide or disclose any nonpublic
information or afford access to the books and records of the Seller, the Company
or any other subsidiaries of the Seller to any person considering making, or
that has made, any Acquisition Proposal or (iii) agree to, approve or recommend
any Acquisition Proposal.
(b) From and after the Execution Date, the Seller shall notify the
Buyer immediately, but in no event later than twenty four hours, after (i) the
receipt of any Acquisition Proposal, (ii) the receipt of any indication that a
Person is considering making an Acquisition Proposal, (iii) any receipt of any
modification of or amendment to any Acquisition Proposal or (iv) any request for
nonpublic information relating to the Company or for access to the properties,
books or records of the Company (or of the Sellers relating to the Company) by
any Person that is considering making, or has made, an Acquisition Proposal or
(v) the entering into of discussions with respect to any Acquisition Proposal.
The Seller shall provide such notice in writing and such notice shall identify
the person making such Acquisition Proposal, indication or request.
(c) Upon its execution of this Agreement the Seller shall, and shall
cause the Company, other subsidiaries of the Seller and the Representatives of
the Seller and the Company
26
to, cease immediately and cause to be terminated all existing activities,
discussions or negotiations, if any, with any persons, other than the Buyer and
its Representatives, conducted prior to the Execution Date with respect to any
Acquisition Proposal. The Seller agrees not to release any third party from the
confidentiality provisions of any confidentiality agreement relating to the
Company to which the Seller or the Company is a party.
(d) If the Seller breaches any provision of this Section 4.10 and,
following such breach, terminates this Agreement pursuant to Article 5 (other
than pursuant to Section 5.1(d)) hereof prior to the Closing, and within one (1)
year following such termination consummates a Competing Transaction, the Seller
shall pay to the Buyer an amount equal to (i) $3,000,000 (the "Termination Fee")
plus (ii) the out-of-pocket costs and expenses (including without limitation
reasonable legal and other professional fees and expenses) incurred by the Buyer
and its Affiliates in connection with the transactions contemplated by this
Agreement (the "Buyer Expenses") through the date of such termination. The
Termination Fee, together with the Buyer Expenses, shall be paid by the Seller
to the Buyer by wire transfer in immediately available funds promptly, and in
any event within two (2) business days, of the consummation of such Competing
Transaction.
Section 4.11 TRANSFER TAXES. The Seller and Buyer shall share equally all
sales, use, transfer and documentary taxes and recording filing fees, if any,
including, without limitation, all provincial land transfer taxes, provincial
sales taxes, and any other charges applicable to the transfer of the Equity
contemplated by this Agreement.
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Section 4.12 ISRA APPROVAL.
(a) Seller shall at its own expense seek the ISRA Approval based on
the environmental condition of the Palnut Facility as of the Closing Date and
shall assert its diligent and commercially reasonable efforts in doing so.
(b) It is anticipated in connection with the ISRA Approval for the
Palnut Facility, that Seller may be required to agree to a deed restriction
including either engineering or institutional controls for the Palnut Facility,
or both. In addition, Buyer acknowledges that Seller may request that some or
all of the Palnut Facility be designated a Classification Exception Area
("CEA"). Buyer agrees to accept title subject a deed restriction.
(c) Buyer shall, without cost or undue burden to Buyer, assist Seller,
after Closing, by doing such things as (i) permitting Seller reasonable access
to the Palnut Facility to complete any environmental work required by NJDEP in
connection with the ISRA Approval and (ii) executing such documents as may be
necessary or advisable in Seller's reasonable opinion to comply with ISRA and
which do not in Buyer's reasonable opinion materially and adversely impede
Buyer's use of the Palnut Facility (including, without limitation, Buyer's
preparation and submission of biennial reports confirming the maintenance of any
institutional or engineering controls).
Section 4.13. PAYMENT OF STAY BONUSES. Seller covenants that it shall cause
the Stay Bonuses (as such term is defined on Section 2.2(g) of the Disclosure
Schedule) to be paid prior to the Closing Date, and that at Closing the Company
shall have a positive cash account balance on its balance sheet.
ARTICLE 5
TERMINATION
Section 5.1 TERMINATION. This Agreement may be terminated and the sale and
purchase of the Equity may be abandoned, notwithstanding the approval thereof by
the Seller, at any time prior to Closing:
(a) by mutual written consent of the Seller and Buyer;
(b) by the Buyer, by giving written notice to the Seller at any time
prior to the Closing (i) in the event the Seller has breached any
representation, warranty or covenant contained in this Agreement, the Buyer has
notified the Seller of the breach, and either the breach is not curable or, if
curable, the breach has continued without cure for a period of 30 days after the
notice of breach or (ii) if the Closing shall not have occurred on or before
December 7, 2001 by reason of the failure of any condition precedent under
Article 7 hereof to be satisfied (unless the failure results primarily from the
Buyer itself breaching any representation, warranty or covenant contained in
this Agreement); PROVIDED HOWEVER, that if the Seller notifies the Buyer prior
to December 7, 2001 of the Seller's intent to seek shareholder approval of the
transactions
28
contemplated by this Agreement, and if the Seller thereafter
proceeds actively and in good faith to take all steps reasonably necessary to
obtain such approval, the Buyer may not terminate this Agreement pursuant to
clause (ii) of this Section 5.1(b) prior to January 31, 2002;
(c) by the Seller, by giving written notice to the Buyer at any time
prior to the Closing (i) in the event the Buyer has breached any representation,
warranty, or covenant contained in this Agreement, the Seller has notified the
Buyer of the breach, and either the breach is not curable or, if curable, the
breach has continued without cure for a period of 30 days after the notice of
breach; or (ii) if the Closing shall not have occurred on or before December 7,
2001 by reason of the failure of any condition precedent under Article 6 hereof
to be satisfied (unless the failure results primarily from the Seller itself
breaching any representations, warranty or covenant contained in this
Agreement); PROVIDED, HOWEVER, that if the Seller notifies the Buyer prior to
December 7, 2001 of the Seller's intent to seek shareholder approval of the
transactions contemplated by this Agreement, the Seller may not terminate this
Agreement pursuant to clause (ii) of this Section 5.1(c) prior to January 31,
2002; and
(d) by the Seller, in the event that Buyer fails to maintain the
Commitment Letters in full force and effect or in the event the Commitment
Letters are withdrawn for any reason.
Section 5.2 EFFECT OF TERMINATION. If this Agreement is terminated pursuant
to Section 5.1 hereof, all rights and obligations of the Parties hereunder shall
terminate and no Party shall have any liability to the other Party, except for
obligations of the parties hereto in Sections 4.8, 4.10, 5.3, 5.4 and 10.8,
which shall survive the termination of this Agreement, and except that nothing
herein will relieve any party from liability for any breach of any
representation, warranty, agreement or covenant contained herein prior to such
termination.
Section 5.3 CERTAIN EVENTS OF TERMINATION. If this Agreement is terminated
by the Buyer pursuant to Section 5.1(b) hereof by reason of the failure of the
condition precedent set forth in Section 7.3 hereof to be satisfied, the Seller
shall pay to the Buyer promptly, and in any event within two (2) business days
of the date of such termination, an amount equal to the Buyer Expenses through
such date. If this Agreement is terminated by the Seller pursuant to Section
5.1(c) hereof by reason of the failure of the condition precedent set forth in
Section 6.2 hereof to be satisfied, the Seller shall pay to the Buyer promptly,
and in any event within two (2) business days of the date of such termination,
an amount equal to (i) the Termination Fee plus (ii) the Buyer Expenses through
such date.
Section 5.4 APPROVAL NOT OBTAINED.
(a) If prior to the Closing a court of competent jurisdiction
determines that the approval of the shareholders of the Seller is required
pursuant to Section 271 of the Delaware General Corporation Law (the "DGCL") in
connection with the transactions contemplated by this Agreement and the Seller
does not notify the Buyer within five (5) days after the date of such
determination that the Seller intends to seek such shareholder approval, then
this Agreement
29
shall terminate and the Seller shall pay the Buyer within two (2) business days
of the date of such termination an amount equal to the Buyer Expenses through
such date.
(b) If the Seller notifies the Buyer prior to December 7, 2001 of the
Seller's intent to seek shareholder approval of the transactions contemplated by
this Agreement, and if the Seller thereafter proceeds actively and in good faith
to take all steps reasonably necessary to obtain such approval, this Agreement
shall terminate on the earlier to occur of (i) the date of any shareholders'
meeting at which the shareholders vote not to approve the transaction
contemplated by this Agreement, or (ii) January 31, 2002. In the case of any
such termination described in this Section 5.4(b), Seller shall pay Buyer within
two (2) business days of the date of such termination an amount equal to the
Buyer Expenses incurred through such date.
(c) In the event of the termination of this Agreement pursuant to this
Section 5.4 and within one (1) year following such termination the Seller enters
into an agreement for a Competing Transaction, the Seller shall pay to the Buyer
an amount equal to the Termination Fee.
ARTICLE 6
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to transfer the Equity to Buyer on the Closing
Date are subject, in the discretion of the Seller, to the satisfaction or
waiver, on or prior to the Closing Date, of each of the following conditions:
Section 6.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations
and warranties of Buyer contained in this Agreement shall, if qualified by
materiality, be true and correct and, if not so qualified, be true and correct
in all material respects at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date (and as
though the Closing Date were substituted for the date of this Agreement
throughout Article 3 hereof) and Buyer shall have performed in all material
respects all agreements and covenants required hereby to be performed by it
prior to or at the Closing Date.
Section 6.2 NO INJUNCTION. No injunction, stay or restraining order
prohibiting the consummation of the transactions contemplated by this Agreement
shall be in effect or threatened, and no action, suit, claim or proceeding shall
be pending or be threatened by any shareholder of the Company alleging the
Seller's failure to comply with Section 271 of the DGCL.
Section 6.3 PAYMENTS. Buyer shall have tendered the Closing Date Purchase
Price to Seller.
Section 6.4 CERTIFICATES. Buyer shall have furnished Seller with such
certificates of its officers, directors and others to evidence compliance with
the conditions set forth in this Article 6 as may be reasonably requested by and
satisfactory to Seller and their counsel.
30
Section 6.5 COMPLIANCE WITH BUSINESS COMBINATION LAWS. All requisite
filings under all applicable Business Combination Laws shall have been made and
all applicable waiting periods related to the Business Combination Laws shall
have expired.
Section 6.6 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
have delivered to Seller the following documents, in each case duly executed or
otherwise in proper form:
(a) COMPLIANCE CERTIFICATE. A certificate signed by the chief
executive officer of the Buyer that each of the representations and warranties
made by the Buyer in this Agreement is, if qualified by materiality, true and
correct and, if not so qualified, true and correct in all material respects on
and as of the Closing Date with the same effect as though such representations
and warranties had been made or given on and as of the Closing Date (and as
though the Closing Date were substituted for the date of this Agreement
throughout Article 3 hereof), and that the Buyer has performed the complied in
all material respects with all of its obligations under this Agreement which are
to be performed or complied with on or prior to the Closing Date and that all
conditions to the Seller's obligations set forth in this Article 6 (other than
Sections 6.2 and 6.8) have been met.
(b) CERTIFIED RESOLUTIONS. Certified copies of the resolutions of the
Members or the Managers of the Buyer, as the case may be, or other evidence of
authority reasonably satisfactory to Seller, setting forth the authorization and
approval of this Agreement and the consummation of the transactions contemplated
hereby.
(c) CONSENTS AND APPROVALS. Material consents, if any, of third
parties required to be obtained by the Buyer in order for the Buyer to execute,
deliver and perform this Agreement.
(d) INCUMBENCY CERTIFICATE. Incumbency certificates relating to each
person executing (as corporate officer or otherwise on behalf of another person)
any document executed and delivered to Seller pursuant to the terms hereof.
(e) OTHER DOCUMENTS. All other documents, instruments or writings
required to be delivered to Seller at or prior to the Closing pursuant to this
Agreement and such other certificates of authority and documents as Seller may
reasonably request.
(f) OPINION OF BUYER'S COUNSEL. The written opinion of Ropes & Xxxx,
counsel to the Buyer, dated as of the Closing Date, addressed to Seller, in form
and substance reasonably satisfactory to Seller.
Section 6.7 EATON AGREEMENT. The Buyer and Xxxxx Corporation shall have
executed and delivered an Assignment, Assumption and Release Agreement (the
"Eaton Agreement') reasonably satisfactory to the Buyer and the Seller
containing provisions not inconsistent with the provisions set forth on EXHIBIT
6.7 to the Original Agreement.
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Section 6.8 ISRA APPROVAL. Seller shall have received from the New Jersey
Department of Environmental Protection ("NJDEP") on or prior to Closing either a
"letter of non-applicability", "negative declaration", "no further action
letter", "remediation agreement" or one of the other exemptions, waivers or
approvals (as defined in the Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et
seq. "ISRA") allowing the Palnut Facility to be transferred in compliance with
ISRA ("ISRA Approval").
ARTICLE 7
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to purchase the Equity as provided hereby are
subject, in the discretion of Buyer, to the satisfaction or waiver, on or prior
to the Closing Date, of each of the following conditions:
Section 7.1 REPRESENTATIONS, WARRANTIES AND COVENANTS. All representations
and warranties of Seller contained in this Agreement shall, if qualified by
materiality, be true and correct, and, if not so qualified, be true and correct
in all material respects when made and, except for changes which are permitted
or contemplated by this Agreement, at and as of the Closing Date as if such
representations and warranties were made at and as of the Closing Date (and as
though the Closing Date were substituted for the date of this Agreement
throughout Article 2 hereof), and Seller shall have performed, in all material
respects, all agreements and covenants required hereby to be performed by it
prior to or at the Closing Date.
Section 7.2 CONSENTS; RELEASES. All consents, approvals and waivers from
governmental authorities and other parties set forth in Section 2.2(c) of the
Disclosure Schedule shall have been obtained. Releases reasonably satisfactory
in form and substance to Buyer and its counsel shall have been obtained from all
of the persons and entities set forth in Section 7.2 of the Disclosure Schedule.
Section 7.3 NO INJUNCTION. No injunction, stay or restraining order
prohibiting the consummation of the transactions contemplated by this Agreement
shall be in effect or threatened, and no action, suit, claim or proceeding shall
be pending or be threatened by any shareholder of the Company alleging the
Seller's failure to comply with Section 271 of the DGCL.
Section 7.4 COMPLIANCE WITH BUSINESS COMBINATION LAWS. All requisite
filings under all applicable Business Combination Laws shall have been made and
all applicable waiting periods related to the Business Combination Laws shall
have expired.
Section 7.5 NO MATERIAL ADVERSE EFFECT. During the period from the date
hereof to the Closing Date, no event shall have occurred or be continuing
(including any litigation) which has had or could reasonably be expected to have
a Material Adverse Effect.
Section 7.6 DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, the Seller
shall have delivered to Buyer the following documents, in each case duly
executed or otherwise in proper form:
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(a) EQUITY CERTIFICATE(S). Limited liability company membership
interest certificates and share certificate(s) representing the Equity, duly
endorsed in blank or otherwise acceptable for transfer, with all restrictive
legends (if any) either removed or properly canceled.
(b) COMPLIANCE CERTIFICATE. A certificate signed by an executive
officer of the Seller that, except as permitted by Section 7.1, each of the
representations and warranties made by the Seller in this Agreement is, if
qualified by materiality, true and correct and, if not so qualified, true and
correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made or given on
and as of the Closing Date (and as though the Closing Date were substituted for
the date of this Agreement throughout Article 2 hereof), and that the Seller has
performed and complied in all material respects with all of its obligations
under this Agreement which are to be performed or complied with on or prior to
the Closing Date and that all conditions to the Buyer's obligations set forth in
this Article 7 (other than Sections 7.8 and 7.14) have been met.
(c) CERTIFIED RESOLUTIONS. Certified copies of the resolutions of the
board of directors authorizing and approving this Agreement and the consummation
of the transactions contemplated hereby.
(d) CONSENTS AND APPROVALS. Material consents, if any, of third
parties necessary for the Seller to execute, deliver and perform this Agreement.
(e) INCUMBENCY CERTIFICATE. Incumbency certificates relating to each
person executing (as corporate officer or otherwise on behalf of another person)
any document executed and delivered to Buyer pursuant to the terms hereof.
(f) RESIGNATIONS. Written resignations of the directors and officers
of the Company.
(g) FAIRNESS/SOLVENCY OPINIONS. A Fairness Opinion and a Solvency
Opinion, in each case in form and substance reasonably satisfactory to Buyer, of
Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Advisors, Inc.
(h) AUDITED FINANCIAL STATEMENTS. Audited consolidated balance sheets
of the Company for the fiscal year ended March 31, 2001 and the related
statements of income and cash flow for the fiscal year of the Company ended on
such date that reflect assets, liabilities, income, losses and expenses that are
each consistent with those set forth on the unaudited financial statements for
the year ended March 31, 2001, except for any inconsistencies that do not, in
the aggregate, have a material adverse effect on the financial condition or
results of operation of the Company and taking into account the item set forth
on Disclosure Schedule 2.2(o). The cost of such audited statements shall be
borne solely by Buyer.
(i) OTHER DOCUMENTS. All other documents, instruments or writings
required to be delivered to Buyer at or prior the Closing pursuant to this
Agreement and such other certificates or authority and documents as Buyer may
reasonably request.
33
(j) OPINION OF SELLER'S COUNSEL. Written opinions of Xxxx Xxxxxx &
Parks LLP and Xxxxxxxx, Xxxxxx & Finger, counsel to the Seller, dated as of the
Closing Date, addressed to Buyer, in form and substance reasonably acceptable to
Buyer.
Section 7.7 ABSENCE OF LITIGATION. No action, suit, investigation or
proceeding shall have been commenced or threatened by a governmental agency or
third party against Buyer, Seller or the Company, or any of the Affiliates,
officers or directors of any of them, with respect to the transactions
contemplated hereby, challenging the rights of the parties hereto to consummate
such transactions or which reasonably could be expected to have a Material
Adverse Effect.
Section 7.8 FINANCING. The Buyer shall have received financing pursuant to
the Commitment Letters on pricing, structural and other terms substantially
similar to those in effect on the date of such Commitment Letters in the
aggregate amount set forth therein.
Section 7.9 RELEASE OF LIENS AND OBLIGATIONS. The Seller's senior lenders,
under the terms of that certain Second Amended and Restated Credit Agreement
dated as of June 30, 1995, as amended and restated as of July 24, 1998, as
further amended and restated as of August 31, 1999, as amended by that certain
Consent and Amendment Agreement No. 1 dated as of August 21, 2000, as further
amended by that certain Amendment Agreement No. 2 dated as of December 29, 2000,
and as further amended by that certain Amendment Agreement No. 3 dated as of
January 31, 2001, and subordinated lenders, under the terms of that certain
Securities Purchase Agreement dated as of August 29, 2000 shall have (i)
released any and all Encumbrances on any assets of the Company, (ii) released
the Company from any guaranty or pledge obligations and (iii) otherwise
consented to the transactions contemplated by this Agreement, in each case by
taking such actions and pursuant to documents and instruments as are in form and
substance reasonably satisfactory to Buyer.
Section 7.10 SUBLEASE. Buyer and Seller shall have entered into a sublease
in form and substance reasonably acceptable to Buyer relating to the use of
reasonable office space by an employee or sales representative of Seller at the
Southfield, Michigan facility of the Company.
Section 7.11 TRANSFER OF ASSETS. All of the Palnut Assets and all
liabilities associated therewith (other than the liabilities set forth on
Section 7.11 of the Disclosure Schedule) shall have been transferred and
assigned to the Company, pursuant to documents and arrangements reasonably
satisfactory in form and substance to Buyer. In addition, all filings and other
actions necessary to record with the United States Patent and Trademark Office
the assignment of intellectual property from Xxxxx Corporation to the Company
contemplated by the Eaton Asset Purchase Agreement, including the Company
Proprietary Rights set forth in Section 2.2(k)(ii) of the Disclosure Schedule
which are shown as owned by TEC, TCC or have an "*" in the registered owner
column (collectively, the "Eaton Patents"), free and clear of all Encumbrances,
shall have been made or taken to the reasonable satisfaction of Buyer.
Section 7.12 EATON AGREEMENT. The Seller and Xxxxx Corporation shall have
executed and delivered the Eaton Agreement.
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Section 7.13 ISRA APPROVAL. The Seller shall have received the ISRA
Approval, and the Buyer shall have approved any deed restriction, CEA
designation or other restriction or limitation imposed in respect of the Palnut
Facility in connection therewith, such approval not to be unreasonably withheld.
Section 7.14 TRANSITION SERVICES AGREEMENT. Seller shall have executed and
delivered a transitional services agreement in form and substance reasonably
acceptable to Buyer pursuant to which Seller will provide for a reasonable
transitional period such services currently provided by Seller to the Company as
Buyer reasonably requests.
Section 7.15 CANADIAN INCOME TAX. TCC shall have filed income Tax Returns
in Canada correcting any prior inaccuracies relating to transfer pricing between
TCC and TEC, and the Seller shall have paid to the appropriate taxing authority
all Taxes required to be paid in connection therewith (whether or not shown on
any such Tax Return).
ARTICLE 8
POST-CLOSING COVENANTS
Section 8.1 FURTHER ASSURANCES. On and after the Closing Date, Seller and
Buyer will take all appropriate action and execute (or cause to be executed) all
documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out any of the provisions hereof.
Section 8.2 TAX MATTERS.
(a) Seller shall be responsible for the payment of any Taxes that may
be imposed on or with respect to the Company with respect to any Pre-Closing
Period. Buyer shall be responsible for the payment of any Taxes that may be
imposed on the Company for any Post-Closing Period. If the Closing Date does not
terminate the Company's current taxable year with respect to any Taxes, then the
Seller shall be responsible for the payment of the portion of the Company's
Taxes attributable to the period on or before the Closing Date, and the Buyer
shall be responsible for the payment of the portion of the Company's Taxes
attributable to the portion of such taxable year beginning after the Closing
Date. For this purpose, Taxes shall be apportioned between the pre-Closing and
post-Closing portions of the Company's current taxable year according to the
period in which the income was actually earned or, in the case of transaction
taxes, the date on which the transaction occurred, except that exemptions,
allowances or deductions that are calculated on an annual basis shall be
allocated to each such portion of the taxable period on a daily basis.
(b) The Seller shall prepare, or cause to be prepared, and file, or
cause to be filed, any Tax Returns of the Company for Tax periods which end on
or before the Closing Date and which have not been filed as of the Closing Date
and Seller shall pay or cause to be paid the Taxes shown to be due on any such
Tax Return. The Buyer shall prepare, or cause to be prepared, and file, or cause
to be filed, any Tax Returns of the Company for Tax periods which begin before
the Closing Date and end after the Closing Date. If the Seller is responsible
for any
35
Taxes with respect to any such Tax Return, the Seller shall pay the amount of
such Taxes to the Buyer within five (5) days of receipt of notice from the Buyer
of the filing of any such Tax Return by the Buyer.
(c) Seller and the Buyer shall each be entitled to all refunds of
Taxes for which each is responsible under Section 8.2 hereof, and each agrees to
remit to the other within five (5) business days of receipt any such refund
received by Buyer or the Seller to which the other is entitled in accordance
with this Section 8.2(c).
(d) Buyer shall, upon request of the Seller, prepare and submit to
Seller such tax data and other information as may be required for the
preparation by Seller of any Tax Return for Seller's taxable year which includes
the Closing Date or which otherwise relates to the Company's pre-Closing
operations. Such data and other information shall be prepared on a basis
consistent with that prepared for prior Pre-Closing Periods and shall be
submitted to the Seller at such time as shall reasonably enable Seller to comply
with applicable Tax Return filing requirements on a timely basis.
(e) Buyer shall permit Seller, and Seller shall permit Buyer to have
full access, at any reasonable time and from time to time after the Closing
Date, to all pre-Closing Tax Returns and all books and records, wherever
located, of the Company, or Seller relating to the Company, relevant to such Tax
Returns. Seller and Buyer shall preserve such information until the expiration
of all applicable statues of limitations (including any waivers or extensions
thereof), and shall make such information available to the other party as may be
reasonably required by the other party in connection with any tax examination of
or preparation of a Tax Return by the other party. If Seller or Buyer (or the
Company) shall receive a notice of a proposed adjustment to Taxes in respect of
any Pre-Closing Period, then Seller or Buyer, as the case may be, shall promptly
furnish to the other a copy of such notice.
(f) In the event that during the applicable statute of limitations
period for any Pre-Closing Period or any period including the Closing Date the
Buyer causes the Company to file any amendment to any Tax Return of the Company
filed with respect to any Pre-Closing Period, or enter into any closing
agreement, settle any tax claim or assessment against the Company, surrender any
right to claim a refund of Taxes, or take any other similar action, in each case
relating to any Tax Return of the Company filed in respect of any Pre-Closing
Period or the payment of any Tax for any Pre-Closing Period (any of the above, a
"Tax Action") which (i) is inconsistent with any Tax Action taken in a
Pre-Closing Period by the Company, (ii) is unrelated to any breach of the
representations and warranties in Section 2.2, and (iii) causes or may cause the
Tax Liability of the Company for any Pre-Closing Period to increase, then Buyer
shall give the Seller prior written notice of, and shall consult with the Seller
prior to the taking of such Tax Action, and the Seller shall have a right to
participate (at its own expense) in any Proceeding arising out of or in
connection with such Tax Action solely to the extent that the matters at issue
in such Proceeding include Taxes that may be imposed on or with respect to the
Company with respect to any Pre-Closing Period.
Section 8.3 EMPLOYEES AND EMPLOYEE BENEFITS
36
(a) The extent to which an Eligible Person, as hereinafter defined,
(either as an individual or as a family member) has satisfied in whole or in
part any Employee Welfare Benefit Plan annual deductible, or has paid any
out-of-pocket expenses pursuant to any Employee Welfare Benefit Plan
co-insurance provision, shall be counted toward the satisfaction of any
applicable deductible or out-of-pocket expense maximum, respectively, under any
Welfare Plans maintained by the Company for the balance of the plan year
following the Closing. For purposes of this Section 8.3, "Eligible Persons"
shall mean (i) each employee of the Company whose employment with the Company is
continued on an uninterrupted basis immediately after the Closing, (ii) any
"qualified beneficiary" as defined under COBRA of any individual who is a
current or former employee of the Company prior to the Closing, and (iii) the
dependents and/or other beneficiaries of employees referred to in clauses (i)
and (ii) who were eligible for welfare benefit coverage under and pursuant to
the Employee Welfare Benefit Plans immediately prior to the Closing or who would
have become so eligible on or after the Closing in accordance with the
eligibility and participation provisions of the Employee Welfare Benefit Plans.
(b) (1) At the Closing, the Buyer shall become a participating
employer under the Seller's defined contribution plan ("Seller's DC Plan") and
shall continue as such until the complete transfer of the account balances under
Seller's DC Plan of the Company's employees to Buyer's DC Plan (as hereinafter
defined), (2) Buyer or the accounts of the Company's employees, as determined by
Buyer, shall be responsible for all fees and expenses incurred after the Closing
by Seller or Seller's DC Plan in connection with the administration of the
accounts of the Company's employees and the portion of the Plan attributable to
such the accounts, and for this purpose, Buyer or the accounts of the Company's
employees, as determined by Buyer, shall be responsible for any increase in
out-of-pocket fees incurred by Seller or Seller's DC Plan that is attributable
to the operation of Seller's DC Plan as a multiple employer plan, (3) in the
event that Buyer takes any action and/or omits to take any action in relation to
Seller's DC Plan that by itself results in the occurrence of a prohibited
transaction (as defined in Section 4975 of the Code) or a violation of ERISA or
solely by reason of its acts or failures to act creates any liability (under
ERISA, the Code or otherwise) for Seller, its officers, directors and agents,
any person serving as a fiduciary of Seller's DC Plan or for any other person
(including, without limitation, Seller's DC Plan) (an "Indemnitee"), Buyer
shall, indemnify and hold harmless the Indemnitee from and against any and all
expenses (including, without limitation, reasonable attorneys' fees),
liabilities, obligations and costs of any sort incurred as a result of Buyer's
act or failure to act, and the forgoing indemnity shall not be subject to the
limitations of Section 9.3(b), nor taken into account for the purpose of
applying the limitations of Section 9.3(b) to other Losses, and (4) in the event
that Buyer and any of Seller, its officers, directors and agents, or any person
serving as a fiduciary of Seller's DC Plan jointly take any action and/or omit
to take any action in relation to Seller's DC Plan that results in a violation
of ERISA, Buyer shall, indemnify and hold harmless Seller's DC Plan from and
against one-half of any and all expenses (including, without limitation,
reasonable attorneys' fees), liabilities, obligations and costs of any sort
incurred as a result of such act or failure to act, and the forgoing indemnity
shall not be subject to the limitations of Section 9.3(b), nor taken into
account for the purpose of applying the limitations of Section 9.3(b) to other
Losses.
37
(c) Seller agrees to amend its defined contribution plan to permit the
Non-Union Employees (including former Non-union Employees) of Buyer who are
resident in the Untied States to continue to participate in such Plan on a
multiple employer basis through March 31, 2002, or such earlier date as may be
determined by Buyer. As of the Closing, and on or before March 31, 2002, Buyer
shall cause the Company to establish a defined contribution plan (the
"Post-Closing Pension Plan") to cover the Non-Union Employees who are resident
in the United States. The Post-Closing Pension Plan shall recognize service with
the Company for all periods prior to the Closing (including service as an
employee of Xxxxx Corporation, its subsidiaries and affiliates) for all purposes
for which service is a criterion in the Post-Closing Pension Plan. The
Post-Closing Plan shall be designed to enable it to accept a transfer of assets
and liabilities from the Employee Pension Benefit Plan in accordance with
applicable legal requirements. On or after March 31, 2002 (or such earlier date
as may be determined by Buyer), and no later than April 30, 2002, pursuant to a
written transfer agreement that is mutually acceptable to Buyer and Seller, the
Seller shall cause the Employee Pension Benefit Plan to transfer and the Buyer
shall cause the Post-Closing Pension Plan to accept such transfer of all assets
and liabilities associated with all Company employees who are participants in
the Employee Pension Benefit Plan, with earnings and/or losses credited to the
account balances of such participants through the date of transfer. The assets
transferred under the preceding sentence shall reflect elective contributions,
matching contributions, profit-sharing contributions and money purchase
contributions accrued under the Employee Pension Benefit Plan through the day
before the transfer. With respect to the portion of the account of a participant
in the Employee Pension Benefit Plan that consists, as of the day before the
Closing, of loans to such participant, the transfer contemplated by this Section
8.3(c) shall be made in the form of an in kind transfer by the Employee Pension
Benefit Plan to the Post-Closing Pension Plan.
(d) With respect to benefit plans maintained by the Company in which
the Seller participates, the Seller shall, on or before the Closing, cause its
employees and former employees (and their dependents) to cease to participate in
such plans.
(e) With respect to the flexible benefits plan (including any medical
reimbursement account and dependent care account) maintained by Seller in which
employees of the Company participate, the Seller shall cause any existing
account balance allocable to such employees to be transferred to the flexible
benefits plan maintained by Buyer and corresponding assets to be transferred to
Buyer and Buyer shall accept such transfers.
(f) Neither the Buyer nor the Seller intend that this Section 8.3
create any rights or interests except as between the Buyer and the Seller and no
present or future employees (or any dependents or beneficiaries of such
employees) of either party or any of their affiliates (including any subsidiary)
will be treated or deemed as third party beneficiaries in or under this
Agreement.
Section 8.4 CANADIAN WITHHOLDING. (i) Within 60 days of the Closing, if
then required pursuant to current interpretations of the CCRA, TCC shall file
amended Tax Returns in Canada correcting any prior inaccuracies in the reporting
and payment of withholding obligations of TCC in respect of payments, loans or
distributions by TCC to TEC, and (ii) Seller shall pay to the appropriate taxing
authority all Taxes required to be paid in respect of such obligations
38
(whether or not shown on any such Tax Returns). The filing of such Tax Returns
and the payment of such Taxes shall be subject to the provisions of Section
8.2(f) herein.
ARTICLE 9
INDEMNIFICATION
Section 9.1 SURVIVAL, REPRESENTATIONS AND WARRANTIES. The representations
and warranties provided for in this Agreement shall survive for eighteen (18)
months beyond the Closing Date, except that the representations and warranties
set forth in (i) Sections 2.1 and 2.2(a), (b) and (d) and Section 3.1, 3.2 and
3.5 shall survive indefinitely; (ii) Sections 2.2(i) and (t) shall survive until
90 days following the expiration of the applicable statute of limitations or
other applicable limitation period and (iii) Section 2.2(u) shall survive until
the fifth anniversary of the Closing Date. The expiration of the term of any
such representations and warranties, however, shall not affect any claim based
on breaches of representations and warranties if written notice thereof
describing the alleged breaches with reasonable particularity based on facts
then known by the party delivering such notice is given to the breaching party
prior to such expiration date. The provisions of this Section 9.1 shall not
limit the Seller's obligations pursuant to Section 9.2(c) hereof or any covenant
or agreement of the parties hereto which, by its terms, contemplates performance
after the Closing Date.
Section 9.2 INDEMNIFICATION OBLIGATION OF SELLER.
(a) The Seller agrees to indemnify Buyer and its Affiliates,
stockholders, officers, directors, employees, agents, representatives and
successors and assigns (collectively, the "Buyer Indemnitees") in respect of,
and save and hold each Buyer Indemnitee harmless against and pay on behalf of or
reimburse each Buyer Indemnitee as and when incurred, any Losses which any Buyer
Indemnitee suffers, sustains or becomes subject to as a result of or by virtue
of, without duplication:
(i) any facts or circumstances which constitute a
misrepresentation or breach by the Seller of any representation or warranty
set forth in this Agreement (including any Schedule), or any certificate
delivered by the Company pursuant to this Agreement as each such
representation or warranty would read if all qualifications as to
materiality (including without limitation the defined term ("Material
Adverse Effect") were deleted therefrom (provided that the Seller is given
written notice of such misrepresentation or breach during the survival
period specified in Section 9.1 above); or
(ii) any nonfulfillment or breach of any covenant of the Seller
set forth in this Agreement.
(b) Notwithstanding the foregoing, the Seller shall not be required to
indemnify the Buyer Indemnitees in respect of any Losses which the Buyer
Indemnitees suffer, sustain or become subject to as a result of or by virtue of
any of the occurrences referred to in Section 9.2(a)(i) above unless the
aggregate amount of all such Losses exceeds $125,000; provided, that in such
event, Seller shall be responsible for the amount of all such Losses in excess
of $125,000. In no event shall the Seller be obligated to indemnify the Buyer
Indemnitees
39
under this Article 9 in respect of any Losses any Buyer Indemnitee
suffers, sustains, or becomes subject to, as a result of or by virtue of any of
the occurrences referred to in Section 9.2(a)(i) above $7,500,000.
(c) Notwithstanding any other provision of this Agreement, and without
limitation of Section 9.2(a) hereof, Seller also agrees to Indemnify the Buyer
Indemnitees in respect of, and save and hold each Buyer Indemnitee harmless
against and pay on behalf of each Buyer Indemnitee or reimburse each Buyer
Indemnitee for, as and when incurred, any Losses which any Buyer Indemnitee
suffers, sustains or becomes subject to arising from or related to any of the
following:
(i) the operation of the business of the Seller, or any
activities or transactions undertaken by the Seller, or any obligations or
liabilities of the Seller (including any obligations or liabilities of the
Seller that become obligations or liabilities of any Buyer Indemnitee under
any theory of successor liability or otherwise by operation of law), in
each case to the extent that the foregoing are not related to, or did not
arise in connection with, the conduct of the Business by the Company;
(ii) the failure of the Company to file on a timely basis correct
and complete Tax Returns with respect to, or to withhold and pay to the
appropriate taxing authority, all Taxes required to be withheld and paid in
respect of any payments, loans or distributions by TCC to TEC made or
transfer pricing related to transactions between TCC and TEC occurring on
or prior to the Closing Date;
(iii) any Pre-Closing Environmental Condition which is required
to be investigated or remediated consistent with the requirements of any
Environmental, Health and Safety Law.
(iv) the failure of the Seller to make all filings and take all
actions necessary, on or within 90 days after August 31, 1999, to record
with the United States Patent and Trademark Office the assignment of the
Xxxxx Patents to the Company;
(v) Seller's not registering with the Securities and Exchange
Commission the offer and sale pursuant to the Seller's DC Plan of common
stock of the Seller and Plan interests;
(vi) the litigation captioned AMERICAN BUMPER & MFG. CO.
TRANSTECHNOLOGY CORP. AND TRW, INC.;
(vii) any action, suit, claim or proceeding alleging the Seller's
failure to comply with Section 271 of the DGCL; and
(viii) any obligation of the Company to provide post-retirement
medical benefits and any obligation to provide mandatory contributions
(excluding any basic contribution paid only to employees employed on the
last day of the plan year) to the Company's defined contribution plans
pursuant to the terms of the Xxxxx Agreement, to
40
the extent that the aggregate of such liabilities, as of the Closing,
exceeds $2,200,000, and for this purpose, the amount of each such liability
shall be determined using such methodologies (including, without
limitation, with respect to the rate of increases in compensation),
interest rates and other factors as are mutually acceptable to Buyer and
Seller in the exercise of their reasonable discretion.
The obligations set forth in this Section 9.2(c) shall not be subject to any of
the provisions of Section 9.2(b).
Section 9.3 INDEMNIFICATION OBLIGATION OF BUYER.
(a) Buyer will indemnify Seller and its Affiliates, stockholders,
officers, managers, directors, employees, agents, representatives and successors
and assigns (collectively, the "Seller Indemnitees") in respect of, and save and
hold each Seller Indemnitee harmless against any Losses which such Seller
Indemnitee suffers, sustains or becomes subject to as a result of or by virtue
of, without duplication:
(i) any facts or circumstances which constitute a
misrepresentation or breach of by Buyer of any representation or warranty
set forth in this Agreement or any certificate delivered by Buyer pursuant
to this Agreement as each such representation or warranty would read if all
qualifications as to materiality (including without limitation the defined
term "Material Adverse Effect") were deleted therefrom (provided that Buyer
is given written notice of such misrepresentation or breach during the
applicable survival period specified in Section 9.1 above); or
(ii) any nonfulfillment or breach of any covenant or agreement of
the Buyer set forth in this Agreement.
(b) Notwithstanding the foregoing, the Buyer shall not be required to
indemnify the Seller Indemnitees in respect of any Losses which the Seller
Indemnitees suffer, sustain or become subject to as a result of or by virtue of
any of the occurrences referred to in Section 9.3(a)(i) above unless the
aggregate amount of all such Losses exceeds $125,000; provided, that in such
event, Buyer shall be responsible for the amount of all such Losses in excess of
$125,000. In no event shall the Buyer be obligated to indemnify the Seller
Indemnities under this Article 9 in respect of any Losses any Seller Indemnitee
suffers, sustains, or becomes subject to, as result of or by virtue of any of
the occurrences referred to in Section 9.3(a)(i) above $7,500,000.
Section 9.4 INDEMNIFICATION PROCEDURES.
(a) Except as provided in subsection (e) below, any Person making a
claim for indemnification pursuant to Section 9.2 or 9.3 above (each, an
"Indemnified Party") must give the party from whom indemnification is sought (an
"Indemnifying Party") written notice of such claim promptly after the
Indemnified Party receives any written notice of any action, lawsuit,
proceeding, investigation or other claim (a "Proceeding") against or involving
the Indemnified Party by any Person or otherwise discovers the liability,
obligation or facts giving rise to such
41
claim for indemnification; provided, that the failure to notify or delay in
notifying an Indemnifying Party will not relieve the Indemnifying Party of its
obligations pursuant to Section 9.2 or 9.3 above, as applicable, except to the
extent that such failure actually xxxxx the Indemnifying Party.
(b) With respect to the defense of any Proceeding against or involving
an Indemnified Party in which any Person in question seeks only the recovery of
a sum of money for which indemnification is provided in Section 9.2 or 9.3
above, at its option an Indemnifying Party may appoint as lead counsel of such
defense any legal counsel selected by the Indemnifying Party unless (i) the
amount at issue in such Proceeding exceeds the amount specified in the last
sentence of Section 9.2(b) or 9.3(b) or (ii) the Indemnified Party objects to
the Indemnifying Party selecting such counsel on the basis of (a) advice of
counsel to the Indemnified Party to the effect than an actual or potential
conflict exists between the Indemnified Party and the Indemnifying Party in
connection with the defense of such Proceeding or (b) the Indemnified Party's
good faith belief that the conduct of such defense by counsel appointed by the
Indemnifying Party would adversely affect the Business or the Company's business
relationships with its current or potential customers, suppliers or distributors
or with other parties material to the conduct of the Business.
(c) Notwithstanding Section 9.4(b) above the Indemnified Party will be
entitled to participate in the defense of such claim and to employ counsel of
its choice for such purpose at its own expense.
(d) The Indemnifying Party must obtain the prior written consent of
the Indemnified Party (which the Indemnified Party will not unreasonably
withhold) prior to entering into any settlement of such claim or Proceeding or
ceasing to defend such claim or Proceeding, provided that any such settlement
shall provide for the full and final release of all claims against each
Indemnified Party.
Section 9.5 PAYMENT. Upon the determination of liability under Article 9 or
otherwise between the parties, the appropriate party shall pay to the other, as
the case may be, within ten (10) business days after such determination, the
amount of any claim for indemnification made hereunder. In the event that the
Indemnified Party is not paid in full for any such claim pursuant to the
foregoing provisions promptly after the other party's obligation to indemnify
has been determined in accordance herewith, it shall have the right,
notwithstanding any other rights that it may have against any other Person, to
setoff the unpaid amount of any such claim against any amounts owed by it under
any instrument or agreement entered into pursuant to this Agreement or
otherwise. Upon the payment in full of any claim, either by setoff or otherwise,
the entity making payment shall be subrogated to the rights of the Indemnified
Party against any Person with respect to the subject matter of such claim.
Section 9.6 ADJUSTMENT TO INDEMNITIES. The amount of indemnity payable
under Section 9.2 or Section 9.3 shall be treated by Buyer and Seller as an
adjustment to the Purchase Price of the Equity, and shall be calculated after
giving effect to (i) any proceeds received from insurance policies covering the
damage, loss, liability or expense that is the subject of the claim for
indemnity, net of any increase in premium as a result of such claim and all
costs and
42
expenses incurred in securing such proceeds from the insurers and (ii) any Tax
benefit to the Indemnified Party resulting from the damage, loss, liability or
expense that is the subject of the indemnity and of the indemnity payment itself
actually recognized by the Indemnified Party in the year in which such Loss is
suffered or incurred and which is without material risk of being disallowed on
audit, PROVIDED, that to the extent that any Tax benefit is recognized in a Tax
year other than the year in which the indemnity is paid, the Indemnified Party
shall make a payment to the Indemnifying Party in the amount of such recognized
Tax benefit in the year in which it is recognized. For purposes of this Section
9.6, a recognized Tax benefit is an actual reduction in Taxes payable or a
refund of Taxes previously paid.
ARTICLE 10
MISCELLANEOUS
Section 10.1 ASSIGNMENT. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by the Seller without the prior written
consent of Buyer, or by Buyer without the prior written consent of Seller
PROVIDED, HOWEVER, that the Buyer may (i) assign any or all of its rights and
interests hereunder to one or more of its Affiliates and designate one or more
of its Affiliates to perform its obligations hereunder, provided, however, that
any such assignment shall not release the Buyer of any of its obligations under
this Agreement, and (ii) after Closing, assign any or all of its rights and
interests hereunder to (A) one or more of the Company's lenders or (B) one or
more transferees of any equity interest in the Company acquired by the Buyer
hereunder, or any transferee (by merger or otherwise) of all or substantially
all of the assets of the Company, and designate one or more of such transferees
to perform its obligations hereunder. Subject to the foregoing, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
successors and permitted assigns. This Agreement shall be for the sole benefit
of the parties hereto and their respective permitted assigns and is not
intended, nor shall be construed, to give any Person, other than the parties
hereto and their respective successors and assigns any legal or equitable right,
remedy or claim hereunder.
Section 10.2 NOTICES. Any notice, request, demand, waiver, consent,
approval or other communication which is required or permitted hereunder shall
be in writing. All such notices shall be delivered personally, by telecopier,
receipt confirmed, by certified mail, return receipt requested, by reputable
overnight courier (costs prepaid), and shall be deemed given or made upon
receipt thereof. All such notices are to be given or made to the parties at the
following addresses (or to such other address as any party may designate by a
notice given in accordance with the provisions of this Section):
IF TO THE BUYER: KTIN Acquisition, LLC
c/o Kohlberg & Co.
000 Xxxxx Xxxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxx
Facsimile No. 000-000-0000
COPY (WHICH SHALL NOT
43
CONSTITUTE NOTICE) TO: Xxxxxx X. Xxxxx, Esq.
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Facsimile No. 000-000-0000
IF TO THE SELLER: TransTechnology Corporation
000 Xxxxx Xxxx
Xxxxxxx Xxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
Facsimile No. 000-000-0000
COPY (WHICH SHALL NOT
CONSTITUTE NOTICE) TO: Xxxxxxx X. Xxxxxxx, Esq.
Xxxx Xxxxxx & Parks LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Facsimile No. 000-000-0000
Section 10.3 CHOICE OF LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of Delaware,
without reference to the choice of law or conflicts of law principles thereof.
Section 10.4 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement,
together with all Exhibits and Schedules referenced herein, constitutes the
entire agreement between the Parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the Parties. This Agreement may not be amended or
modified except by an instrument in writing signed on behalf of all of the
Parties. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
Section 10.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 10.6 INVALIDITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Agreement or any other such instrument.
Section 10.7 HEADINGS. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
44
Section 10.8 EXPENSES. Except as otherwise provided herein, Seller will
be liable for the respective costs and expenses of the Seller and the Company
incurred in connection with the negotiation, preparation, execution and
performance of this Agreement and the consummation of the transactions
contemplated hereby.
Section 10.9 DISPUTE RESOLUTION
(a) ARBITRATION. If a dispute, controversy or claim arises out of or
relates to this Agreement or any side agreement entered into in connection with
the transactions contemplated hereby, or any breach or alleged breach hereof or
thereof, and if said dispute cannot be settled through direct discussions
between the Parties, said dispute shall be settled by arbitration administered
by the American Arbitration Association in accordance with its Commercial
Arbitration Rules then if effect, and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction thereof. Discovery
shall be permitted in connection with any such arbitration to the extent
permitted under the Federal Rules of Civil Procedure. Arbitration will be
conducted by a single arbitrator who will be selected by the parties from a
panel provided by the American Arbitration Association and who shall be an
attorney with at least ten (10) years' experience in litigation and commercial
arbitration with respect to corporate transactional matters. The arbitration
shall be conducted in New York New York or such other location to which the
Parties mutually agree.
(b) FEES. All fees and expenses (including transcripts, room rental
and fees of the arbitrators) of arbitration, shall be paid as determined by the
arbitrators. The prevailing party in the arbitration shall be reimbursed by the
nonprevailing party for all reasonable attorney's fees incurred in connection
with the arbitration.
Section 10.10 CERTAIN DEFINED TERMS. As used herein, the terms below shall
have the following meanings:
"ACCOUNTING FIRM" means PriceWaterhouseCoopers LLP.
"AFFILIATE" means, with respect to any Person, any other Person who
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise, and the terms
"controlled" and "controlling" have meanings correlative thereto.
"BENEFIT ARRANGEMENT" means any employment, consulting, severance or
other similar contract, arrangement, practice or policy and each plan, policy,
arrangement, program, agreement or commitment, whether or not written, providing
for insurance coverage (including any self-insured arrangements), workers'
compensation, supplementary unemployment benefits, disability benefits,
retirement benefits, fringe benefits, vacation, life, health, disability or
accident benefits (including, without limitation, any "voluntary employees'
beneficiary association" as defined in Section 501(c)(9) of the Code) or
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, stock purchases or other forms of
45
incentive compensation or post-retirement benefits, compensation or benefits
which (A) is not an Employee Welfare Benefit Plan, an Employee Pension Benefit
Plan or a Multiemployer Plan, (B) is maintained or contributed to by or required
to be maintained or contributed to by Seller or the Company, or within the
preceding six years was maintained or contributed to or had been required to be
maintained or contributed to or for which the Company may have had any liability
(contingent or otherwise) or (C) covers any current or former employee of the
Company.
"BUSINESS" has the meaning specified in Recital C of this Agreement.
"CANADA Act" means the Income Tax Act (Canada), as amended.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time.
"CLOSING" has the meaning specified in Section 1.2 of this Agreement.
"CLOSING DATE" has the meaning specified in Section 1.2 of this
Agreement.
"COMPANY" has the meaning specified in Recital C of this Agreement.
"COMPANY PROPRIETARY RIGHTS" means all Proprietary Rights owned or
used by the Company, along with all income, royalties, damages and payments due
or payable at the Closing or thereafter (including without limitation, damages
and payments for past and future infringements or misappropriations thereof),
the right to xxx and recover for past infringement or misappropriation thereof,
and all corresponding rights that, now or hereafter, may be secured throughout
the world and all copies and tangible embodiments of any such Proprietary Rights
but excluding any rights to the name "TransTechnology," any variation thereof,
the logo associated therewith or the phrase "engineered products for global
partners."
"CONFIDENTIAL INFORMATION" means the confidential affairs and
proprietary information of the Company and its information, observations and
data disclosed to, or developed or obtained by Seller while owning the Company
related to the Business (including, without limitation, the Company's
technology, methods of doing business and supplier and customer information).
"DISCLOSURE SCHEDULE" means the disclosure schedule delivered by the
Seller to the Buyer pursuant to the Original Agreement. The Disclosure Schedule
will be arranged in paragraphs corresponding to the lettered and numbered
paragraphs contained in this Agreement.
"EMPLOYEE BENEFIT PLANS" means all Benefit Arrangements (other than
Multiemployer Plans), Employee Pension Benefit Plans and Employee Welfare
Benefit Plans.
"EMPLOYEE PENSION BENEFIT PLAN" means any "employee pension benefit
plan" as defined in Section 3(2) of ERISA (A) which the Company maintains or
contributes to or within the preceding six years has maintained or contributed
to or with respect to which the Company has any liability (contingent or
otherwise), or (B) which covers any current or former employee of the Company.
46
"EMPLOYEE WELFARE BENEFIT PLAN" means any "employee welfare benefit
plan" as defined in Section 3(1) of ERISA (other than a Multiemployer Plan), (A)
which any Seller or the Company maintains or contributes to or with respect to
which the Company has any liability (contingent or otherwise), or (B) which
covers any current or former employee of the Company.
"ENCUMBRANCE" means any mortgage, pledge, lien, restriction, claim,
demand, encumbrance, charge, or security interest, other than (a) mechanic's,
materialmen's, and similar liens incurred in the Ordinary Course of Business,
(b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is
contesting in good faith through appropriate proceedings and for which adequate
reserves have been established on the Most Recent Financial Statements, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements securing only the subject property or assets, and (d) other liens
arising in the Ordinary Course of Business and not incurred in connection with
the borrowing of money, the violation of any legal requirement or any breach of
warranty or contract or the guarantee of any obligation of any other Person that
do not materially and adversely affect the occupancy, use and value of any of
the affected assets, including, without limitation, any of the Real Property.
"ENVIRONMENTAL CONDITION" means the use, generation, handling,
storage, emission, discharge, processing, reclamation, recycling, release,
transportation or disposal of any Hazardous Substance related to the operation
of the Business, or the presence of any of them in any environmental medium
(air, water, soil, sediments, subsurface strata or groundwater) on, in or under
any real property.
"ENVIRONMENTAL, HEALTH, AND SAFETY LAWS" means all federal, state,
provincial, local and foreign statutes, regulations, ordinances, and other
provisions having the force or effect of law, as well as enforceable written and
publicly available guidelines and policies, all judicial and administrative
orders and determinations, each as amended, and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, noise or radiation.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXECUTION DATE" shall mean the date that Seller executes and delivers
to Buyer a counterpart of this Agreement in accordance with the preamble to this
Agreement.
"FAIRNESS OPINION" means the written opinion of Xxxxxxxx Xxxxx Xxxxxx
& Xxxxx Advisors, Inc. as to the fairness, from a financial point of view, to
the Seller of the consideration to be received by it in connection with the
transactions contemplated by this Agreement.
47
"FINANCIAL STATEMENTS" has the meaning specified in Section 2.2(f) of
the Agreement.
"GAAP" means generally accepted accounting principals as in effect in
the United States on the date of this Agreement, applied on a consistent basis
by the Company.
"HAZARDOUS SUBSTANCE" means any pollutant, contaminant, toxic
substance, hazardous waste or hazardous substance defined in or regulated by any
Environmental, Health and Safety Law.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of
1976, as amended.
"KNOWLEDGE" means actual knowledge of, in the case of the Buyer, any
of the executive management of Buyer, including but not limited to Xxxxxx X.
Xxxxxxx, Xxxxxxxxxxx Xxxxxxxx, and Xxxx X. Xxxxxxxxx or, in the case of the
Seller or the Company, any member of either the TEC Management Team or Seller's
Senior Management, and in either case after such person(s) are assumed to have
made reasonable inquiry of officers or employees having responsibility for those
operations or transactions to which the matter in question relates.
"LOSSES" means any claims, liabilities, losses, damages (including
consequential damages), deficiencies, assessments, judgments, remediations and
costs or expenses (including reasonable attorneys', consultants' and experts'
fees and expenses).
"MATERIAL ADVERSE EFFECT" has the meaning specified in Section 2.2(c)
of this Agreement.
"MOST RECENT BALANCE SHEET" has the meaning specified in Section
2.2(f).
"MOST RECENT FINANCIAL STATEMENTS" has the meaning specified in
Section 2.2(f).
"MOST RECENT FISCAL QUARTER END" has the meaning specified in Section
2.2(f) of this Agreement.
"MOST RECENT FISCAL YEAR END" has the meaning specified in Section
2.2(f) of this Agreement.
"MULTIEMPLOYER PLAN" means any "multiemployer plan," as defined in
Section 4001(a)(3) of ERISA.
"ONTARIO ACT" means the Pension Benefits Act of Ontario, as amended.
"ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice of the Company (including with respect
to quantity, amount and frequency).
48
"PALNUT ASSETS" means all of the properties and assets of Seller used
in or necessary to conduct that portion of the Business conducted at the
facility located at 000 Xxxx Xxxx, Xxxxxxxxxxxx, Xxx Xxxxxx (the "Palnut
Facility"), including without limitation contract rights and the Palnut
Facility.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERSON" means an individual, partnership, corporation, limited
liability company, joint stock company, unincorporated organization or
association, trust, joint venture, association or other organization, whether or
not a legal entity, or a governmental authority.
"POST-CLOSING PERIOD" means any taxable period beginning upon or after
the Closing Date.
"PRE-CLOSING ENVIRONMENTAL CONDITION" means the presence as of the
Closing of any hazardous substance, hazardous waste or toxic substance, as
defined under any Environmental, Health or Safety Law, as existing and in effect
as of the Closing, in any environmental medium (air, water, soil, sediments,
subsurface strata or groundwater) on, in or under the real property located at
000 Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx, including all adjacent and appurtenant
parcels (the "Facility") or off the Facility as a result of migration from the
Facility.
"PRE-CLOSING PERIOD" means any taxable period ending on or before the
Closing Date.
"PROHIBITED TRANSACTION" has the meaning set forth in Section 406 of
ERISA and Section 4975 of the Code.
"PROPRIETARY RIGHTS" means all (i) patents, patent applications, and
patentable inventions, (ii) trademarks, service marks, trade names, logos, and
corporate names, and registrations and applications for registration thereof,
(iii) copyrights, (iv) computer software, and (v) trade secrets, know-how,
processes, techniques, research and development information, drawings,
specifications and designs.
"SELLER'S SENIOR MANAGEMENT" means Xxxxxxx X. Xxxxxxxxx, Xxxxxx X.
Xxxxxx and Xxxxxx X. Xxxxxxx.
"SOLVENCY OPINION" means the written opinion of Xxxxxxxx Xxxxx Xxxxxx
& Xxxxx Advisors, Inc. to the board of directors of the Seller as to whether,
assuming the transactions contemplated by this Agreement have been consummated
as proposed, immediately after and giving effect to such transactions: (a) on a
pro forma basis, the fair value and present fair saleable value of the Seller's
assets would exceed the Seller's stated liabilities and identified contingent
liabilities; (b) the Seller should be able to pay its debts as they become
absolute and mature; and (c) the capital remaining in the Seller after such
transactions would not be unreasonably small for the business in which the
Seller is engaged, as Seller's management has indicated it is now conducted and
is proposed to be conducted following the consummation of such transactions.
49
"TAX" means any federal, state, provincial, local, or foreign income,
capital gross receipts, license, payroll, employment, unemployment, Canada
Pension Plan, health, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Section 59A of the Code), custom
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, goods and services, registration, value added, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever, including any
interest, penalty, or addition thereto, whether disputed or not, and any amounts
payable pursuant to the determination or settlement of an audit.
"TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TEC MANAGEMENT TEAM" means Xxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxx
Xxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxx Xxxxxxx, Xxxx Xxxxxxxx, Xxxxxxx
Xxxxxx and Xxxxxx Xxxxxxx.
Section 10.11 INTERPRETATION. Unless otherwise indicated to the contrary
herein by the context or use thereof: (i) the words, "herein," "hereof" and
words of similar import refer to this Agreement as a whole and not to any
particular Section or paragraph hereof; (ii) the word "including" means
"including, but not limited to"; (iii) the masculine gender shall also include
the feminine and neutral genders, and vice versa; and (iv) words importing the
singular shall also include the plural, and vice versa.
Section 10.12 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Disclosure Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
Section 10.13 BUSINESS DAYS. Whenever the last day for the exercise of any
privilege or the discharge of any duty hereunder shall fall upon any day which
is not a business day, the party having such privilege or duty may exercise such
privilege or discharge such duty on the next succeeding business day.
Section 10.14 CONSTRUCTION; DISCLOSURE. The Parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any Party has breached any representation, warranty or covenant
contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant. The disclosure of an item in
one Section of the Disclosure Schedule as an exception to a particular
representation or warranty shall be deemed adequately disclosed on another
Section of the Disclosure Schedule as an exception to the representation and
warranty corresponding thereto to the extent that the relevance of such item to
such other representation and warranty is reasonably apparent on the face of
such item.
50
Section 10.15 SALE OF SELLER ASSETS. If, following the Closing, the Seller
shall sell or transfer all or substantially all of its assets (by merger or
otherwise), then the Seller shall require as a condition of such sale or
transfer that the purchaser or transferee of such assets assume in full the
Seller's obligations pursuant to this Agreement (including without limitation
the Seller's obligations pursuant to Article 9 hereof).
Section 10.16 NO THIRD-PARTY BENEFICIARIES OR RIGHT TO RELY.
Notwithstanding anything to the contrary in this Agreement, (a) nothing in this
Agreement is intended to or shall create for or grant to any third party
(including without limitation to any former, current or future employees or
officers of any Party) any rights whatever, as a third party beneficiary or
otherwise, (b) no third party is entitled to rely on any of the representations,
warranties, covenants or agreements contained herein, and (c) no Party hereto
shall incur any liability or obligation to any third party because of any
reliance by such third party on any representation, warranty, covenant or
agreement herein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
TRANSTECHNOLOGY CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Chairman, President & CEO
KTIN Acquisition, LLC
By: /s/ Xxxx Xxxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Authorized Manager
