EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
AMONG
BENCHMARK HOLDINGS, INC.,
WINCUP HOLDINGS, INC.
AND
XXXXX RIVER PAPER COMPANY, INC.
Dated as of October 31, 1995
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS........................... 10
2.2 EXCLUDED ASSETS....................................... 13
2.3 ASSUMED LIABILITIES................................... 14
2.4 PURCHASE PRICE........................................ 16
2.5 VALUATION OF CURRENT ASSETS........................... 16
ARTICLE III
RELATED AGREEMENTS
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
4.1 ORGANIZATION; QUALIFICATION; CAPITALIZATION OF
BENCHMARK SUB AND THE WINCUP SUB...................... 23
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT.................. 25
4.3 CONSENTS AND APPROVALS................................ 26
4.4 NON-CONTRAVENTION..................................... 26
4.5 COMPLIANCE WITH LAWS.................................. 27
4.6 ENVIRONMENTAL MATTERS................................. 28
4.7 LICENSES AND PERMITS.................................. 29
4.8 LITIGATION............................................ 30
4.9 FINANCIAL STATEMENTS.................................. 30
4.10 UNDISCLOSED LIABILITIES............................... 31
4.11 ABSENCE OF CHANGES.................................... 32
4.12 MEXICAN OPERATIONS.................................... 33
4.13 LEASES................................................ 34
4.14 INVENTORY............................................. 35
4.15 INTELLECTUAL PROPERTY................................. 35
4.16 MATERIAL CONTRACTS.................................... 36
4.17 MAINTENANCE OF THE EQUIPMENT.......................... 38
4.18 SUFFICIENCY OF PURCHASED ASSETS....................... 38
4.19 LABOR AND EMPLOYMENT MATTERS.......................... 38
4.20 EMPLOYEE BENEFIT PLANS................................ 39
4.21 INSIDER INTERESTS..................................... 41
4.22 CERTAIN PRACTICES..................................... 41
4.23 FINDERS............................................... 41
4.24 FULL DISCLOSURE....................................... 42
4.25 PERFORMANCE ALLOWANCES................................ 42
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 ORGANIZATION; QUALIFICATION............................ 42
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT................... 43
5.3 CONSENTS AND APPROVALS................................. 44
5.4 NON-CONTRAVENTION...................................... 44
5.5 LITIGATION............................................. 44
5.6 FINDERS................................................ 45
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONDUCT OF BUSINESS OF THE XXXXXXX BUSINESSES.......... 45
6.2 FORBEARANCES BY SELLERS................................ 46
6.3 NEGOTIATIONS WITH OTHERS............................... 48
6.4 INVESTIGATION OF XXXXXXX BUSINESSES AND PROPERTIES..... 48
6.5 CONFIDENTIALITY........................................ 50
6.6 TAXES AND RECORDING FEES............................... 50
6.7 PRORATION OF RENT, UTILITY CHARGES AND OTHER
PAYMENTS............................................... 51
6.8 ALLOCATION OF PURCHASE PRICE........................... 51
6.9 ACCOUNTS RECEIVABLE.................................... 51
6.10 ACCOUNTS PAYABLE....................................... 52
6.11 BULK SALES LAWS........................................ 53
6.12 MAIL RECEIVED AFTER CLOSING............................ 53
6.13 RETENTION OF BOOKS AND RECORDS......................... 54
6.14 INTENTIONALLY DELETED.................................. 54
6.15 EXPENSES............................................... 54
6.16 PUBLIC ANNOUNCEMENTS................................... 54
6.17 SUBSEQUENT EVENTS...................................... 55
6.18 EFFORTS TO CONSUMMATE.................................. 55
6.19 ENVIRONMENTAL, HEALTH, SAFETY AND PRODUCT
COMPLIANCE MATTERS..................................... 56
6.20 FURTHER ASSURANCES..................................... 58
6.21 ADVICE TO OTHERS....................................... 58
6.22 MOVEMENT OF EQUIPMENT AND INVENTORY.................... 59
6.23 PERFORMANCE ALLOWANCES................................. 59
6.24 ESTABLISHMENT OF SUBSIDIARY............................ 59
6.25 SECTION 338(H)(10) ELECTION............................ 60
6.26 ALLOCATION OF TAXES.................................... 62
ARTICLE VII
EMPLOYEES AND EMPLOYEE MATTERS
7.1 TRANSFERRED EMPLOYEES.................................. 64
7.2 EMPLOYEE BENEFIT PLANS................................. 65
7.3 WORKER'S COMPENSATION.................................. 67
7.4 VACATION PAY........................................... 68
7.5 OTHER LIABILITIES RELATING TO EMPLOYEES................ 68
7.6 ADMINISTRATION......................................... 68
(ii)
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
8.1 REPRESENTATIONS AND WARRANTIES......................... 69
8.2 PERFORMANCE OF THIS AGREEMENT.......................... 69
8.3 CORPORATE AUTHORIZATION................................ 70
8.4 CONSENTS AND APPROVALS................................. 70
8.5 INJUNCTION, LITIGATION, ETC............................ 70
8.6 LEGISLATION............................................ 71
8.7 ESTOPPEL CERTIFICATES, ETC............................. 71
8.8 OPINION OF COUNSEL FOR SELLERS......................... 71
8.9 ABSENCE OF CHANGES..................................... 71
8.10 CONTINUATION OF MEXICAN OPERATIONS..................... 71
8.11 ASSURANCES WITH RESPECT TO CLAIMS OF CREDITORS......... 72
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLERS
9.1 REPRESENTATIONS AND WARRANTIES......................... 73
9.2 PERFORMANCE OF THIS AGREEMENT.......................... 73
9.3 CORPORATE AUTHORIZATION................................ 73
9.4 CONSENTS AND APPROVALS................................. 74
9.5 INJUNCTION, LITIGATION, ETC............................ 74
9.6 LEGISLATION............................................ 74
9.7 OPINION OF COUNSEL FOR BUYER........................... 74
ARTICLE X
CLOSING
10.1 TIME AND PLACE OF CLOSING.............................. 74
10.2 DELIVERIES BY SELLERS.................................. 75
10.3 DELIVERIES BY BUYER.................................... 76
10.4 DELIVERIES BY SELLERS AND BUYER........................ 77
ARTICLE XI
INDEMNIFICATION
11.1 SEVERAL INDEMNIFICATION BY SELLERS..................... 78
11.2 INDEMNIFICATION BY BUYER............................... 79
11.3 THIRD PARTY CLAIMS..................................... 79
11.4 LIMITATIONS ON INDEMNIFICATION......................... 82
11.5 SURVIVAL; INVESTIGATION................................ 83
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION............................................ 84
12.2 EFFECT OF TERMINATION.................................. 85
12.3 AMENDMENT.............................................. 85
12.4 EXTENSION; WAIVER...................................... 85
(iii)
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES................................................ 86
13.2 GOVERNING LAW.......................................... 87
13.3 HEADINGS............................................... 88
13.4 COUNTERPARTS........................................... 88
13.5 SELLERS' SEVERAL LIABILITY............................. 88
13.6 MISCELLANEOUS.......................................... 88
(iv)
Exhibits:
A - Prepaid Expenses and Deferred Charges which are a
Part of the Purchased Assets
B - Transition Services Agreement
C - Agreement not to Compete
D - Opinion of Counsel for Sellers
E - Opinion of Counsel for Buyer
F - Xxxx of Sale and Assignment
G - Instrument of Assumption of Liabilities
H - Benchmark Parent Guaranty
I - Xxxxx River Parent Guaranty
Schedules:
1.1 Sellers' Senior Management for knowledge purposes
2.2 Excluded Assets
2.3(b) Certain Assumed Liabilities for Transferred Employees
4.3 Required Sellers Consents and Approvals
4.4 Non-Contravention
4.5 Noncompliance with Applicable Law, etc.
4.6 Environmental Noncompliance and Environmental Permits
4.7 Required Licenses and Permits; Missing Permits
4.8 Litigation
4.10 Undisclosed Liabilities
4.11 Changes Since July 31, 1995
4.12 Description of U.S. Facilities and Mexican Facilities
4.13 Leases; Required Lessor Consents
4.14 Certain Locations of Inventory
4.15 Intellectual Property
4.16 Material Contracts
4.19 Employment Agreements
4.20 Pension and Welfare Plans
4.20(a) Certain Unfunded Deferred Plans
4.21 Insider Competing Interests
4.25 Performance Allowances
5.3 Required Buyer Consents and Approvals
6.8 Allocation of Values
6.19 Remediation Statement
7.1 Retained Employees
(v)
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of October 31,
1995, is made among BENCHMARK HOLDINGS, INC., a Delaware corporation
("Benchmark"), WINCUP HOLDINGS, INC., a Delaware corporation ("Wincup"); and
XXXXX RIVER PAPER COMPANY, INC., a Virginia corporation ("Buyer").
RECITALS
Wincup and Benchmark (each a "Seller" and collectively, the "Sellers")
desire to sell (a) all of the assets of Benchmark's cutlery business (the
"Cutlery Business"), (b) all of the issued and outstanding shares (the
"Benchmark Sub Shares") of Common Stock, with no par value per share, of
Benchmark Sub, as defined herein, (c) all of the issued and outstanding shares
(the "Wincup Sub Shares") of Common Stock, with no par value per share, of the
Wincup Sub, as defined herein, and (d) all of the assets of Wincup's thermoform
business (the "Thermoform Business"), including, without limitation, all of the
Sellers' assets related to the manufacture, production, distribution and sale of
plastic cutlery, plastic drinking straws, multilayer thermoform plastic cups and
plates, and complimentary products such as steak markers, sword picks and other
bar supplies. Buyer desires to purchase such assets, with the exception of
certain excluded assets hereinafter specified, for cash and the assumption of
certain liabilities subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, and agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
The following terms, as used herein, have the following meanings:
"Accrual Rate" shall mean an overnight government repurchase agreement rate
from Signet Bank/Virginia.
"Affiliate" of a Person means a Person who, directly or indirectly through
one or more intermediaries, controls or is controlled by, or is under common
control with, such Person.
"Applicable Law" means, with respect to any Person, all laws, ordinances,
judgments, decrees, injunctions, writs, orders, rules, regulations,
determinations, licenses and permits of any federal, state, local or foreign
government, political subdivision, agency, board, court, regulatory body or
commission, applicable to or binding upon such Person or any of its property.
"Assumed Leases" has the meaning set forth in Section 2.3(b).
"Assumed Liabilities" has the meaning set forth in Section 2.3(b).
"Assumed Material Contracts" has the meaning set forth in Section 2.3(b).
"Benchmark Sub" has the meaning set forth in Section 6.24.
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"Benchmark Sub and Wincup Sub Balance Sheets" has the meaning set forth in
Section 4.9.
"Benchmark Sub Shares" has the meaning set forth in the Recitals.
"Buyer's Auditors" means Coopers & Xxxxxxx L.L.P.
"Closing" has the meaning set forth in Section 10.1.
"Closing Date" has the meaning set forth in Section 10.1.
"Confidentiality Agreement" shall mean the Confidentiality Agreement dated
March 31, 1994, between Xxxxx River Corporation and Benchmark Corporation of
Delaware t/a Wincup.
"Consumables" has the meaning set forth in Section 2.1(iii).
"Current Assets" means the Inventory, the Consumables and the Prepaid
Expenses.
"Current Asset Amount" shall have the meaning set forth in Section 2.5(b).
"Cutlery Business" has the meaning set forth in the Recitals.
"Distribution Centers" mean the warehouses and distribution centers
historically used (in whole or part) in connection with the Cutlery Business or
the Thermoform Business and located in Phoenix, Arizona, Tinton Falls, New
Jersey and Des Plaines, Illinois.
"Encumbrances" means liens, mortgages, charges, security interests or other
defects in title generally considered to be encumbrances.
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"Environmental Audits" shall have the meaning set forth in Section 6.19.
"Environmental Laws" means federal statutes or regulations intended to
provide protection for public health and the environment, including, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of
1986 ("CERCLA"), the Clean Air Act, the Clean Water Act, the Solid Waste
Disposal Act (including the Resource Conservation and Recovery Act), the Toxic
Substances Control Act, their state and local statutory and regulatory
counterparts, and other substantially similar foreign statutes and regulations,
as the foregoing may be in effect from time to time.
"Environmental Permits" means all governmental licenses, permits, approvals
and authorizations required or issued under or with respect to any Environmental
Laws.
"Equipment" has the meaning set forth in Section 2.1(i).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Estimated Purchase Price" has the meaning set forth in Section 2.4.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Final Closing Statement" has the meaning set forth in Section 2.5(d).
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"Handling Hazardous Substances" means the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
"Hazardous Emissions" means all emissions, releases, leaks, escapes,
dumping, discharges or threatened discharges of Hazardous Substances into the
air, surface water, ground water or the ocean or on or into the land.
"Hazardous Substances" means (i) those substances defined as hazardous by
Section 9601(14) of CERCLA, (ii) all fluids containing polychlorinated
biphenyls, (iii) asbestos and asbestos-containing materials, (iv) nuclear fuel
and waste, (v) petroleum and petroleum products, and (vi) all other substances
regulated under Environmental Laws.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended.
"Intellectual Property" has the meaning set forth in Section 2.1(vi).
"Interim Financial Statements" has the meaning set forth in Section 4.9.
"Inventory" has the meaning set forth in Section 2.1(ii).
"Leases" has the meaning set forth in Section 4.13.
"Legal Action" has the meaning set forth in Section 11.3.
"Licenses and Permits" has the meaning set forth in Section 2.1(v).
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"Material Contracts" has the meaning set forth in Section 4.16.
"Mexican Facilities" means the facilities for the packaging of the Xxxxxxx
Businesses' products located in Anahuac, Mexico, Imuris, Mexico and Ensenada,
Mexico, and described on Schedule 4.12, all of which are owned and operated by
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third parties.
"NYSE" means the New York Stock Exchange.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plans" has the meaning set forth in Section 4.20.
"Permitted Exceptions" means (i) statutory liens for current taxes or
assessments not yet due or delinquent; (ii) mechanics', carriers', workers',
repairers' and other similar liens arising or incurred in the ordinary course of
business relating to obligations as to which there is no default on the part of
a Seller, provided that the same shall be fully discharged of record before the
Closing; (iii) exceptions shown on the surveys furnished by the Sellers to Buyer
on or before the date hereof and agreed to by Buyer; and (iv) such other
Encumbrances which do not materially adversely affect the use or value of the
Xxxxxxx Facilities for the Xxxxxxx Businesses.
"Person" means an individual, a corporation, a partnership, an association,
a labor union, a trust or any other entity or organization, including a
government, a governmental body, a political subdivision or an agency or
instrumentality thereof.
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"Post-Closing Operations" means all activities attributable to, or
conducted by, any of the Sellers, the Benchmark Sub or the Wincup Sub during any
period beginning after the Closing.
"Post-Closing Remediation Matters" has the meaning set forth in Section
6.19
"Pre-Closing Operations" means all activities attributable to, or conducted
by, any of the Sellers, the Benchmark Sub or the Wincup Sub during any period
ending on or before the Closing Date.
"Pre-Closing Remediation Matters" has the meaning set forth in Section
6.19.
"Preliminary Closing Statement" has the meaning set forth in Section
2.5(b).
"Prepaid Expenses" has the meaning set forth in Section 2.1(x).
"Purchase Price" has the meaning set forth in Section 2.4.
"Purchased Assets" has the meaning set forth in Section 2.1.
"Related Agreements" has the meaning set forth in Article III.
"SEC" means the Securities and Exchange Commission.
"Section 338(h)(10) Election" means an election for federal income tax
purposes described in Section 338(h)(10) of the Internal Revenue Code with
respect to the stock purchase described in this Agreement, including any
elections under Section 338(g) of the Internal Revenue Code that are required to
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be made under applicable law when making the Section 338(h)(10) Election.
"Section 338 Forms" means all returns, documents, statements and other
forms that are required to be submitted to any federal, state, county or other
governmental authority in connection with the Section 338(h)(10) Election,
including (i) U.S. Internal Revenue Service Form 8023 (together with any
schedules or attachments thereto) that are required pursuant to Treasury
Regulations, including Section 1.338(h)(10)-1, and (ii) any comparable or
similar state, local or other governmental submissions.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Financial Statements" has the meaning set forth in Section 4.9.
"Sellers' Auditors" means Xxxxxx Xxxxxxxx & Co.
"Sellers Tax Liabilities" shall have the meaning set forth in Section 6.26.
"Shares" means the Benchmark Sub Shares and the Wincup Sub Shares
collectively.
"Subsidiary," with respect to any party to this Agreement, means any
corporation or other business entity, whether or not incorporated, of which at
least 50% of the securities or interests having, by their terms, ordinary voting
power to elect members of the Board of Directors, or other persons performing
-8-
similar functions with respect to such entity, is held directly or indirectly by
such party.
"Tax" or "Taxes" means all federal, state, local, and foreign taxes or
assessments, including, without limitation, those relating to net income, gross
receipts, gross income, capital stock, franchise, profits, employees and
payroll, withholding, foreign withholding, social security, unemployment,
disability, real property, personal property, intangibles, stamp, excise, sales,
use, transfer, value added, customs, premium, windfall profits, alternative
minimum or estimated taxes, together with any interest, penalties or additions
to tax or additional amounts with respect to the foregoing, whether disputed or
not.
"to the knowledge of the Sellers" means the knowledge, after due
investigation, of those officers and employees of the Sellers listed in Schedule
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1.1.
---
"Thermoform Business" has the meaning set forth in the Recitals.
"Transferred Employees" has the meaning set forth in Section 7.1.
"U.S. Facilities" means the facilities for the production, fabrication and
packaging of the Xxxxxxx Businesses' products located in Stone Mountain,
Georgia, Houston, Texas, and Los Angeles, California, and described on Schedule
--------
4.12.
----
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"U.S. Facilities Leases" means the leases for the buildings (and related
land, if any) in which the U. S. Facilities are located.
"Welfare Plans" has the meaning set forth in Section 4.20.
"Wincup Sub" has the meaning set forth in Section 6.24.
"Wincup Sub Shares" has the meaning set forth in the Recitals.
"Xxxxxxx Businesses" means the Cutlery Business, the Thermoform Business
and the business of the Benchmark Sub and the Wincup Sub.
"Xxxxxxx Facilities" shall mean the Mexican Facilities, the U. S.
Facilities, the Distribution Centers and such other facilities, buildings or
offices which are used for or in connection with the Xxxxxxx Businesses.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE AND SALE OF ASSETS. At the Closing, the Sellers agree to
sell to Buyer, and Buyer agrees to purchase from the Sellers, the following
listed assets, properties or rights of the Sellers (or either of them), other
than Excluded Assets (the "Purchased Assets"), including, without limitation:
(i) the machinery, equipment, furniture, vehicles, silos, molds,
tools, spare parts, tibars, fixtures and other tangible personal property
(other than the Current Assets but including any construction in process)
which is ordinarily located on, or is in transit to, the Xxxxxxx
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Facilities or is otherwise related principally to the business of the
Xxxxxxx Businesses. These items are hereinafter referred to collectively as
the "Equipment;"
(ii) the raw materials, work-in-process and finished goods which
are located at, or in transit to, the Xxxxxxx Facilities or are otherwise
related principally to the business of the Xxxxxxx Businesses. These items
are hereinafter referred to collectively as the "Inventory;"
(iii) the stores, supplies, fuel, packaging and finishing
materials and other consumable supplies which are located at, or are in
transit to, the Xxxxxxx Facilities or are otherwise related principally to
the business of the Xxxxxxx Businesses. These items are hereinafter
referred to collectively as the "Consumables".
(iv) the Environmental Permits which relate principally to the
business of the Xxxxxxx Businesses and are assignable;
(v) the Licenses and Permits which relate principally to the
business of the Xxxxxxx Businesses and are assignable. The term "Licenses
and Permits" means governmental licenses, permits, approvals and
authorizations, whether federal, state or local, foreign or domestic, other
than Environmental Permits;
(vi) the Intellectual Property. The term "Intellectual Property"
means the intangible assets of the Sellers used principally in the business
of the Xxxxxxx
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Businesses, including its rights and interests in all trade names,
trademarks and service marks, patents (including but not limited to the
spoon straw patents), patent rights, copyrights, whether domestic or
foreign (as well as applications, registrations or certificates for any of
the foregoing), inventions, trade secrets, proprietary processes and
formulae, software and other property rights that relate principally to the
business of the Xxxxxxx Businesses and are generally considered to be
Intellectual Property;
(vii) all rights and interests of the Sellers in, to and under
all Assumed Material Contracts and Assumed Leases;
(viii) all books and records (which term includes computerized
records and associated software and documentation) wherever located, which
are used exclusively in the business of the Xxxxxxx Businesses including,
without limitation, those relating to production, manufacturing, quality
control, sales or marketing, customers and employees of the Xxxxxxx
Businesses who will become Transferred Employees, and a co-ownership
interest in any of the Sellers' books and records which are used only in
part in the business of the Xxxxxxx Businesses, but only to the extent of
such use, provided, however, that the assets and properties referred to in
this Section 2.1(viii) other than those constituting indicia of title, may,
at the option of the Sellers, consist of copies thereof;
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(ix) all purchase orders, forms, labels, stationery, shipping
materials, catalogues, brochures, art work, photographs and advertising
materials;
(x) the prepaid expenses and deferred charges which are listed
on Exhibit A (the "Prepaid Expenses");
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(xi) the Shares; and
(xii) all other tangible and intangible properties of either
Seller, wherever located, which have been used or held for use in
connection with the business of the Xxxxxxx Businesses.
2.2 EXCLUDED ASSETS. The following assets used by the Sellers, Benchmark
Sub or Wincup Sub (or any of them) in the Xxxxxxx Businesses (the "Excluded
Assets") are not included in the Purchased Assets:
(i) all cash and cash equivalents, including cash on hand or in
bank accounts, certificates of deposit, commercial paper and securities
belonging to either of the Sellers;
(ii) all accounts receivable and notes receivable related to the
business of the Xxxxxxx Businesses;
(iii) all prepaid expenses (including prepaid insurance premiums)
and deferred charges other than those listed in Exhibit A;
---------
(iv) all assets held in Pension Plans or Welfare Plans for the
benefit of employees of the Xxxxxxx Businesses;
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(v) the leases for the Distribution Centers listed on Schedule
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2.2; and
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(vi) all other assets listed in Schedule 2.2.
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2.3 ASSUMED LIABILITIES.
(a) Except to the extent set forth in paragraph (b) below, Buyer will
assume no liabilities or obligations of either Seller or the Benchmark Sub or
the Wincup Sub, and no liabilities of or related to the Purchased Assets, the
Xxxxxxx Businesses or their business or the Transferred Employees. Without
limiting the foregoing, Buyer will assume no liabilities for, related to,
arising out of or under or in respect of any of the following: (i) any taxes
incurred by the Sellers or the Benchmark Sub or the Wincup Sub in the conduct of
the business of the Xxxxxxx Businesses prior to the Closing; (ii) any actual or
alleged violation by the Sellers, the Benchmark Sub, the Wincup Sub or by any
previous owner of any of the Purchased Assets, of any Applicable Law; (iii) any
breach by the Sellers, the Benchmark Sub or the Wincup Sub before Closing of any
contract, agreement or commitment, including any Assumed Material Contract or
Assumed Lease; (iv) any litigation, pending or threatened, at the time of
Closing; (v) any contract or agreement, including any Assumed Material Contract
or Assumed Lease, if the rights of the Sellers, the Benchmark Sub or the Wincup
Sub are, for any reason, not transferred to, or the benefits thereunder are not
otherwise made available to, Buyer at the Closing; (vi) severance or separation
pay or employee benefits (under any Pension Plan, Welfare Plan or
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otherwise) for present or former employees of the Sellers or for the Transferred
Employees or for any employees of the Mexican Facilities; (vii) any Hazardous
Substances existing as of the Closing Date on, in or about the Purchased Assets
or the leased premises on which the Purchased Assets are located or any
Hazardous Emissions or Handling Hazardous Substances prior to the Closing Date
at any location (including, without limitation, remote storage, treatment,
recycling or disposal sites); or (viii) the acts, omissions or other past
practices of the Sellers, the Benchmark Sub or the Wincup Sub prior to the
Closing Date with respect to the business of the Xxxxxxx Businesses or the
Purchased Assets.
(b) At Closing, Buyer will assume the following obligations (the
"Assumed Liabilities"):
(i) the obligations arising after the Closing Date under the
Assumed Leases and the Assumed Material Contracts; and
(ii) earned or accrued vacation pay, holiday pay and sick pay
for the Transferred Employees (if any of the foregoing are currently paid under
the Sellers' employment policies) for the current year but not any previous
years in the amounts set forth on Schedule 2.3(b). The "Assumed Leases" shall be
all of the Leases indicated on Schedule 4.13 as being "Assumed Leases" and all
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other Leases listed on Schedule 4.13 which Buyer elects to assume as of Closing.
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The "Assumed Material Contracts" shall be all of the Material Contracts
indicated on Schedule 4.16
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as being "Assumed Material Contracts", all other Material Contracts listed on
Schedule 4.16 which Buyer elects to assume as of Closing, and all other
-------------
contracts, agreements and commitments, other than Material Contracts, which
Buyer elects to assume as of Closing. If Buyer elects to assume any Leases or
contracts, agreements or commitments which are not indicated on Schedules 4.13
--------------
and 4.16 as being, respectively, Assumed Leases or Assumed Material Contracts,
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then Buyer shall do so by providing a list of such Leases and contracts,
commitments and agreements at or before Closing.
2.4 PURCHASE PRICE. The consideration to be paid for the Purchased Assets
(the "Purchase Price"), shall be in cash and shall be equal to the sum of the
following: (i) $39,700,000 and (ii) the value of the Current Assets as
determined in accordance with Section 2.5. As of the date of this Agreement the
Purchase Price, based on information given Buyer by the Sellers, is expected to
be approximately $51,500,000. At the Closing, Buyer will pay the Sellers an
amount (the "Estimated Purchase Price") equal to $49,000,000 based on an
estimated value of $9,300,000 for the Current Assets. The Estimated Purchase
Price shall be paid in the manner hereinafter set forth in Article X.
2.5 VALUATION OF CURRENT ASSETS.
(a) For the purposes of determining the Purchase Price, the value of
the Current Assets shall equal the sum of the following: (i) the amount of the
Prepaid Expenses as of the Closing Date, to the extent such Prepaid Expenses
relate to
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periods after the Closing Date, and (ii) the lesser of the Current Asset Amount
or $11,800,000.
(b) The Sellers shall cause the Sellers' Auditors to conduct a
physical inventory of the Inventory and Consumables on a Saturday and Sunday
commencing before the Closing and occurring within fifteen (15) days of the
Closing. The Sellers' Auditors may be assisted by the Sellers' employees.
Buyer or its representatives, which may be Buyer's Auditors, shall have the
right to observe the taking of the physical inventory. As promptly as
practical, but in any event not more than 30 days after the Closing, the Sellers
shall cause the Sellers' Auditors to prepare on the basis of such physical
inventory and deliver to Buyer a draft of a statement of the "Current Asset
Amount" as of the commencement of business on the date on which the Closing
takes place (the "Preliminary Closing Statement"). "Current Asset Amount" shall
mean the value of the Inventory and the Consumables on hand as of the Closing
Date calculated as set forth in this Section. Inventories on hand at the
Closing Date as determined by the physical inventory referred to above will
include items which have historically been carried on the books of the Sellers
with respect to the Xxxxxxx Businesses and are held for sale in the ordinary
course of business or are in the process of production for such sale.
Consumables on hand at the Closing Date as determined by the physical inventory
referred to above will include items which have historically been carried on the
books (capitalized or expensed) of the Sellers with respect
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to the Xxxxxxx Businesses and are to be currently consumed in the production of
goods to be available for sale or are included in the general stores, supplies
and spare parts. Except for supplies, Inventory and Consumables will be valued
at the lower of cost or market determined on an item basis without regard to
materiality and in accordance with generally accepted accounting principles
applied on a consistent basis. Supplies and spare parts will be valued at the
lower of average cost determined on a specific identification basis or market,
determined on a last purchase price basis without regard to materiality.
Inventory will be reduced for obsolete, slow-moving or damaged inventory. "Slow-
moving inventory" shall mean finished goods as to which the most recent six-
month total of external customer sales are more than 200 and less than 1,800
cases, and that portion of the inventory in excess of the most recent six-month
total shall be valued at 50% of cost. "Obsolete inventory" shall mean all
finished goods as to which: (i) the most recent twelve-month total of external
customer sales are less than 200 cases; or (ii) the product has been
discontinued. Such obsolete inventory shall be valued at 0% of cost and shall be
excluded from the Purchased Assets. "Damaged inventory" shall mean (i) all
finished goods whose shipping container is ripped, torn, defaced, mislabeled,
crushed or soiled; and (ii) any container of work-in-process or finished goods
whose contents are crushed or otherwise damaged so that the goods have no market
value. Such damaged inventory
-18-
shall be valued at 0% of cost and shall be excluded from the Purchased Assets.
(c) During the 15 days following the receipt by Buyer of the draft of
the Preliminary Closing Statement and the report of the Sellers' Auditors with
respect thereto, Buyer's Auditors shall be permitted to review the working
papers of the Sellers' Auditors relating to the draft of the Preliminary Closing
Statement and shall have such access to the Sellers' personnel as may be
reasonably necessary to permit them to review in detail the manner in which the
draft was prepared. Before the end of such 15-day period, Buyer's Auditors
shall give any comments or objections they have with respect to the draft of the
Preliminary Closing Statement to the Sellers' Auditors. Such comments or
objections, insofar as they relate to the valuation of any assets, shall be
resolved without regard to any materiality standard, and the Final Closing
Statement delivered to Buyer pursuant to the provisions of the next paragraph
shall reflect such resolution.
(d) Within 15 days after the expiration of such 15-day period
described in the preceding paragraph, the Sellers shall deliver to Buyer a Final
Closing Statement (the "Final Closing Statement") accompanied by a definitive
report of the Sellers' Auditors with respect thereto. Within three (3) business
days after receipt of such Final Closing Statement and report, Buyer's Auditors
shall deliver a letter to the Sellers stating whether they concur with such
report and their exceptions thereto, if
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any, together with the reasons therefor. If such objections cannot be resolved
between the Sellers' Auditors and Buyer's Auditors within five (5) business days
after delivery of such letter by Buyer's Auditors, the question or questions in
dispute shall then be submitted, as soon as practicable, to a mutually
acceptable firm of independent public accountants of nationally recognized
standing, the decision of which as to such question or questions in dispute
shall be final and binding upon the parties hereto.
(e) If the Final Closing Statement, after the resolution of all
disputes, indicates that the Estimated Purchase Price was less than the Purchase
Price calculated in accordance with Section 2.4, Buyer shall promptly pay to the
Sellers, in immediately available funds, the balance of the Purchase Price,
together with interest on such balance at the Accrual Rate for the period from
the 30th day after Closing until such balance is paid. If the Final Closing
Statement, after the resolution of all disputes, indicates that the Estimated
Purchase Price exceeded the Purchase Price as calculated in accordance with
Section 2.4, the Sellers shall promptly pay to Buyer, in immediately available
funds the amount of such excess, together with interest on such excess at the
Accrual Rate for the period from the 30th day after Closing until such excess is
paid.
(f) The fees of the Sellers' Auditors and Buyer's Auditors incurred
in connection with the preparation of the Preliminary and Final Closing
Statements shall be borne by the
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Sellers and Buyer, respectively. The fees of any independent accounting firm
appointed pursuant to Section 2.5(d) shall be paid one-half by the Sellers and
one-half by Buyer.
ARTICLE III
RELATED AGREEMENTS
In connection with the sale and purchase of assets contemplated by this
Agreement the Sellers and Buyer will enter, or cause others to enter into, the
following listed agreements:
(i) A transition services agreement in substantially the form
attached hereto as Exhibit B pursuant to which the appropriate Seller will
---------
(A) grant a license to Buyer to use the Distribution Centers, (B) provide
to Buyer, all labor (including but not limited to wages and benefits)
necessary or appropriate for the use of the Distribution Centers by Buyer
and all utilities and other services necessary or appropriate for the
operation of the Distribution Centers, and (C) such other matters as set
forth in the Transition Services Agreement; and
(ii) Non-compete agreements in substantially the form attached
hereto as Exhibit C pursuant to which the Sellers and each of Xxxxxxx
---------
Xxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxxxx and Xxxxxxx Xxxxxxx
(the "Officers") agree not to compete with Buyer for a period of five (5)
years after the Closing Date as set forth therein, and pursuant to which
Buyer shall pay to such listed members of management in the aggregate the
sum of $3,500,000 in
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consideration for such non-compete agreements, allocated as follows: Xxxxxxxxx
- $250,000; Xxxxxxx - $75,000; Xxxxxx -$90,000; Xxxxxxxx - $85,000; Xxxxxxx -
the balance;
(iii) One or more trust agreements, pursuant to which one or more
liquidating trusts will be created to which each Seller shall assign at
Closing, free and clear of liens, all of its receivables related to the
Xxxxxxx Businesses and its rights in any deferred portion of the Purchase
Price payable to Sellers pursuant to Section 2.5(e), and which will assume
at Closing all of the Sellers' payables related to the Xxxxxxx Businesses
and any performance allowances as set forth on Schedule 4.25 which are not
paid at Closing. The receivables and the deferred portion of the Purchase
Price assigned to each such trust shall be sufficient to pay the payables
and performance allowances assumed by such trust and such payables shall be
substantially all of the payables that would, if not paid, subject Buyer or
the Purchased Assets to claims under applicable bulk sales or other similar
laws. A representative of Buyer and of Benchmark or Wincup, as the case
may be, shall be the trustees under each such trust, unless Buyer elects
not to appoint a representative as trustee. All amounts received by each
trust shall be used for payment of the Sellers' payables related to the
Xxxxxxx Businesses, and the trust agreements shall so provide. If Buyer
chooses not to appoint a representative as trustee, each trust shall not
pay any payables except in accordance
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with periodic schedules of payments approved by Buyer, which approval shall
not be unreasonably withheld or delayed. In the event a trust receives
insufficient funds to pay the payables, Benchmark Corporation of Delaware
shall promptly deliver to the trustees such additional funds as are
necessary to pay such unpaid amounts. The terms of the trust agreements
shall be deemed incorporated into this Agreement and shall constitute
covenants of the Sellers under this Agreement to the same extent as if
fully set forth in this Agreement.
The foregoing agreements are hereinafter referred to collectively as the
"Related Agreements."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers severally represent and warrant to Buyer the following:
4.1 ORGANIZATION; QUALIFICATION; CAPITALIZATION OF BENCHMARK SUB AND THE
WINCUP SUB. (a) Each Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has corporate
power and authority to own all of its properties and assets and carry on the
business of the Xxxxxxx Businesses as it is presently being conducted. Each
Seller is duly qualified and in good standing to do business in each
jurisdiction in which the business of the Xxxxxxx Businesses makes such
qualification necessary except where failure to so qualify has no material
-23-
adverse effect on such Seller's financial condition or the conduct of the
Xxxxxxx Businesses. Each Seller has heretofore delivered to Buyer complete and
correct copies of its respective Certificate of Incorporation and Bylaws, as
currently in effect.
(b) The Benchmark Sub and the Wincup Sub are corporations duly
organized, validly existing and in good standing under the laws of the State of
California and each have corporate power and authority to own all of their
respective properties and assets and to carry on their business as now being
conducted. Each of the Benchmark Sub and the Wincup Sub is duly qualified and
in good standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted by it
makes such qualification necessary except in those jurisdictions where the
failure to so qualify has no material adverse effect on the Benchmark Sub's or
the Wincup Sub's respective financial condition or operations. The Sellers have
heretofore delivered to Buyer complete and correct copies of the Articles of
Incorporation and Bylaws of the Benchmark Sub and the Wincup Sub, as currently
in effect.
(c) The Shares constitute all of the issued and outstanding capital
stock of the Benchmark Sub and the Wincup Sub. The Shares have been duly
authorized, are validly issued, fully paid and nonassessable, and were not
issued in violation of any preemptive rights. Neither the Benchmark Sub nor the
Wincup Sub have any commitments to issue or sell any shares of its
-24-
capital stock or any securities or obligations convertible into or exchangeable
for, or giving any person any right to acquire from the Benchmark Sub or the
Wincup Sub, any shares of its capital stock and no such securities or
obligations are outstanding. Upon delivery of the certificates evidencing the
Shares to Buyer pursuant to this Agreement, Buyer will have good title to the
Shares free and clear of all liens, charges, pledges, security interests or
other encumbrances.
4.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Each Seller has corporate power
and authority to execute and deliver this Agreement and the Related Agreements
to which it is a party and to consummate the transactions contemplated hereby
and thereby. The execution and delivery by each Seller of this Agreement and the
Related Agreements to which it is a party, and the consummation by it and the
Benchmark Sub and Wincup Sub of the transactions contemplated hereby and
thereby, have been duly authorized by the Board of Directors of such Seller, the
Benchmark Sub and Wincup Sub and the holders of the requisite percentage of the
outstanding shares of its common stock, and no other corporate proceedings on
the part of either Seller, the Benchmark Sub and Wincup Sub are necessary with
respect thereto. This Agreement constitutes, and the Related Agreements when
executed and delivered by a Seller will constitute, valid and binding
obligations of each Seller, enforceable in accordance with their terms except as
the same may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or
-25-
similar law affecting creditors' rights generally or (ii) general principles of
equity, whether considered in a proceeding in equity or at law.
4.3 CONSENTS AND APPROVALS. Except as set forth in Schedule 4.3, there is
------------
no requirement applicable to a Seller, the Benchmark Sub or the Wincup Sub to
make any filing with, or to obtain any consent or approval of any Person as a
condition to the transfer of the Purchased Assets to Buyer or the consummation
of the transactions contemplated by this Agreement (other than as may be
required by the HSR Act and any applicable "bulk sales" law).
4.4 NON-CONTRAVENTION. Except as set forth in Schedule 4.4, the execution
------------
and delivery by each Seller of this Agreement and the Related Agreements to
which each Seller is a party does not, and subject to the requisite approval of
the shareholders of each Seller, the consummation of the transactions
contemplated hereby and thereby will not (i) violate or result in a breach of
any provision of the Certificate of Incorporation or Bylaws of a Seller, or the
Articles of Incorporation or Bylaws of the Benchmark Sub or the Wincup Sub, (ii)
result in a default, or give rise to any right of termination, modification or
acceleration, or the imposition of any Encumbrance (whether immediately before
or after the giving of notice or the passage of time) under the terms,
conditions or provisions of any note, bond, mortgage, indenture, license,
agreement, lease or other instrument or obligation to which a Seller, the
Benchmark Sub or
-26-
the Wincup Sub is a party or by which a Seller, the Benchmark Sub, the Wincup
Sub, the Shares or any of the Purchased Assets may be bound, or (iii) violate
any law, regulation, judgment, order or decree applicable to a Seller, the
Benchmark Sub, the Wincup Sub, the Shares or any of the Purchased Assets or the
business of the Xxxxxxx Businesses.
4.5 COMPLIANCE WITH LAWS. Except as set forth in Schedule 4.5, and in
------------
addition to the representations and warranties contained in Section 4.6 relating
to environmental matters and in Section 4.7 relating to Licenses and Permits,
the Sellers have operated the Xxxxxxx Businesses, the Benchmark Sub and the
Wincup Sub, in compliance with all laws, regulations, judgments, orders or
decrees of any federal, state, local or foreign court or governmental body
applicable to the Sellers, the Benchmark Sub, the Wincup Sub, the Shares or any
of the Purchased Assets or the business of the Xxxxxxx Businesses including,
without limitation, those related to (i) antitrust and trade matters, (ii) civil
rights, (iii) zoning and building codes, (iv) public health and safety, (v)
worker health and safety, and (vi) labor, employment and discrimination in
employment. Except as is set forth in Schedule 4.5, no investigation or review
------------
is pending with respect to any alleged failure by a Seller, the Benchmark Sub or
the Wincup Sub to comply with any such law, regulation, order, judgment or
decree and no event has occurred or condition exists which, with the giving of
notice or the passage of time, can reasonably be expected to result in any such
allegation.
-27-
4.6 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 4.6 and the Environmental Audits,
------------
to the knowledge of the Sellers, the Sellers have operated the Xxxxxxx
Businesses, the Benchmark Sub and the Wincup Sub, in compliance with all
Environmental Laws.
(b) The Sellers have obtained all Environmental Permits which are
required to conduct the business of the Xxxxxxx Businesses as it is presently
being conducted, and the Benchmark Sub and the Wincup Sub have obtained all
Environmental Permits necessary to conduct its business, including, without
limitation, those which relate to Hazardous Emissions and Handling Hazardous
Substances. Schedule 4.6 contains a complete list of all such Environmental
------------
Permits, all of which are in full force and effect and, except as noted on
Schedule 4.6, all of which are assignable. Except as disclosed on Schedule 4.6,
------------ ------------
to the knowledge of the Sellers, the Sellers have operated the Xxxxxxx
Businesses, and the Benchmark Sub and the Wincup Sub have operated, in
compliance with all of the terms and conditions set forth in such Environmental
Permits.
(c) Except as disclosed in the Environmental Audits, to the knowledge
of the Sellers, there are no Hazardous Substances present on or in the Purchased
Assets, the U.S. Facilities or the Mexican Facilities. To the knowledge of the
Sellers, no Seller, the Benchmark Sub nor the Wincup Sub is obligated, by itself
or jointly with others, to clean up, remedy or otherwise restore to its former
condition any building,
-28-
contaminated surface water, ground water, soil or any natural resources
associated therewith.
(d) To the knowledge of the Sellers, no investigation or review is
pending with respect to any alleged failure of a Seller, the Benchmark Sub or
the Wincup Sub to comply with any of the aforementioned laws or regulations or
the terms and conditions of any of its Environmental Permits, and to the
knowledge of the Sellers, no event has occurred or condition exists which, with
the giving of notice or the passage of time, can reasonably be expected to give
rise to such an allegation or cause a Seller, the Benchmark Sub or the Wincup
Sub to be obligated to take any action described in paragraph (c).
4.7 LICENSES AND PERMITS. Except as set forth in Schedule 4.7, the
------------
Sellers have all Licenses and Permits required to conduct the business of the
Xxxxxxx Businesses as it is presently being conducted and the Benchmark Sub and
the Wincup Sub have all Licenses and Permits required to conduct its business.
Schedule 4.7 contains a complete list of all such Licenses and Permits, all of
------------
which are in full force and effect and, except as noted on Schedule 4.7, all of
------------
which are assignable. Except as disclosed on Schedule 4.7, the Sellers have
------------
operated the business of the Xxxxxxx Businesses, in compliance with all of the
terms and conditions set forth in such Licenses and Permits. Except as set
forth in Schedule 4.7, no investigation or review is pending with respect to any
------------
alleged failure of a Seller, the Benchmark Sub or the Wincup Sub to comply with
the provisions of its Licenses and
-29-
Permits, and no event has occurred or condition exists which, with the
giving of notice or the passage of time, can reasonably be expected to result in
any such allegation.
4.8 LITIGATION. Except as set forth in Schedule 4.8, there are no
------------
actions, suits, claims, investigations or proceedings (legal, administrative or
arbitrative) pending or, to the knowledge of a Seller, the Benchmark Sub or the
Wincup Sub, threatened against a Seller, the Benchmark Sub or the Wincup Sub,
whether at law or in equity and whether civil or criminal in nature, before any
court, governmental body, commission, agency or arbitrator, domestic or foreign,
nor are there any judgments, orders or decrees of any such court, governmental
body, commission, agency or arbitrator outstanding against a Seller, the
Benchmark Sub or the Wincup Sub which have or can reasonably be expected to
have, directly or indirectly, an adverse effect on the Shares, Purchased Assets
or the earnings, financial condition, operations or prospects of the Xxxxxxx
Businesses, the Benchmark Sub or the Wincup Sub, or which seek specifically to
prevent, restrict or delay consummation of the transactions contemplated hereby
or fulfillment of any of the conditions of this Agreement.
4.9 FINANCIAL STATEMENTS. Each Seller has previously furnished Buyer with
true and complete copies of (i) the audited financial statements for the years
ending December 31, 1994 and December 31, 1993, including the notes thereto (the
"Prior Financial Statements") for the Xxxxxxx Businesses; (ii) unaudited
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financial statements for the Xxxxxxx Businesses for the nine months ending
September 30, 1995 and September 30, 1994 (the "Interim Financial Statements")
and (iii) unaudited balance sheets for the Benchmark Sub and the Wincup Sub as
of the Closing Date (the "Benchmark Sub and Wincup Sub Balance Sheets"). Such
financial statements present fairly the financial position of each Seller, the
Xxxxxxx Businesses, the Benchmark Sub and the Wincup Sub, respectively, as of
such dates and the results of their operations and changes in their financial
position for such periods and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except that in the
case of the Interim Financial Statements, normal year-end adjustments, which in
the aggregate are not material, have not been made.
4.10 UNDISCLOSED LIABILITIES. Except as set forth in Schedule 4.10, no
-------------
Seller has, with respect to the Purchased Assets or the operations of the
Xxxxxxx Businesses, and the Benchmark Sub and the Wincup Sub do not have, any
liabilities (whether matured or unmatured, accrued, contingent or otherwise)
which are not reflected in the Interim Financial Statements or the Benchmark Sub
and Wincup Sub Balance Sheets other than those which were incurred subsequent to
the date of such financial statements in the ordinary course of business and
consistent with past practices and cannot reasonably be expected to materially
and adversely affect the Purchased Assets or the earnings,
-31-
financial condition, operations or prospects of the Xxxxxxx Businesses, the
Benchmark Sub or the Wincup Sub.
4.11 ABSENCE OF CHANGES. Except as set forth in Schedule 4.11, since
-------------
December 31, 1994, with respect to the Sellers, and since the date of
incorporation of the Benchmark Sub and the Wincup Sub with respect to the
Benchmark Sub and the Wincup Sub, there has not been:
(i) any change, or development involving a prospective change,
including, without limitation, any damage, destruction or loss (whether or
not covered by insurance) which adversely affects or, to the knowledge of a
Seller, can reasonably be expected to materially and adversely affect the
Purchased Assets or the earnings, financial condition, operations or
prospects of the Xxxxxxx Businesses, the Benchmark Sub or the Wincup Sub;
(ii) any obligation or liability involving more than $200,000
(whether matured or unmatured, accrued, contingent, or otherwise) incurred
in the aggregate by the Sellers with respect to the Purchased Assets or the
Xxxxxxx Businesses, the Benchmark Sub or the Wincup Sub;
(iii) any general uniform increase in the compensation of the
employees of the Xxxxxxx Businesses (including, without limitation, any
increase pursuant to any bonus, pension, profit sharing or other plan or
commitment);
(iv) any increase (other than normal increases consistent with
past practices and those required by law) in
-32-
the compensation payable to any employee (including officers) of the
Xxxxxxx Businesses;
(v) any amendment to any employment agreement to which any
employee of the Xxxxxxx Businesses is a party;
(vi) any sale of any of the Purchased Assets other than in the
ordinary course of business; or
(vii) any material deterioration of relations between the Xxxxxxx
Businesses, the Benchmark Sub or the Wincup Sub and their suppliers or
customers.
Since the date of the Interim Financial Statements and the Benchmark Sub and the
Wincup Sub Balance Sheets, the Xxxxxxx Businesses, the Benchmark Sub and the
Wincup Sub have been conducted only in the ordinary and usual course and in a
manner consistent with past practices. The Sellers, the Benchmark Sub and the
Wincup Sub have good title to all of the personal property, tangible and
intangible, which is a part of the Purchased Assets, free and clear of
Encumbrances.
4.12 MEXICAN OPERATIONS. None of the Mexican Facilities is owned or
operated by the Sellers and none of the employees thereof is employed by the
Sellers. To the best knowledge of Sellers, no event has occurred and no
circumstances exist which could reasonably be expected to permit state, local or
federal Mexican governmental authorities to seize, put a lien on, or otherwise
obtain control of any of the Purchased Assets located at the Mexican Facilities.
To the knowledge of Sellers, Sellers have taken no action which is reasonably
likely to materially and
-33-
adversely affect any of the Purchased Assets in the Mexican Facilities. The
Sellers have no reason to believe that the demand for products packaged at the
Mexican Facilities will not equal or exceed the minimum requirements of the
contracts under which the Mexican Facilities package Sellers' products.
4.13 LEASES. Schedule 4.13 sets forth a complete list of each lease into
-------------
which each Seller, the Benchmark Sub or the Wincup Sub has entered, whether as
lessor or lessee, on behalf of the Xxxxxxx Businesses, the Benchmark Sub or the
Wincup Sub which relates to either real or personal property, other than monthly
leases of personal property which may be cancelled upon not more than 60 days
notice and require the payment of not more than $100 per month. The leases
listed in Schedule 4.13 are referred to herein as "Leases." No Seller, the
-------------
Benchmark Sub or the Wincup Sub has breached any such Lease and, to the
knowledge of each Seller, the Benchmark Sub or the Wincup Sub, no other party to
any Lease has breached the Lease and no event has occurred or condition exists
which, with the giving of notice or the passage of time, can reasonably be
expected to result in a default under, or permit the termination, modification
or acceleration of any Lease by any party thereto. Each Seller, the Benchmark
Sub and the Wincup Sub has good and valid leasehold title to the real estate
covered by the U. S. Facilities Leases, free and clear of all Encumbrances other
than Permitted Exceptions. Complete copies of all of the Leases have been
delivered to Buyer. Except as disclosed on Schedule 4.13, the Leases can be
-------------
transferred to
-34-
Buyer without the consent of the lessors thereunder or any other Person.
4.14 INVENTORY. The Inventory (i) is usable or saleable in the ordinary
course of the business of the Xxxxxxx Businesses, (ii) is sufficient but not
excessive in kind or amount for the conduct of the business of the Xxxxxxx
Businesses as it is presently being conducted and (iii) is carried on the books
of the Sellers, the Benchmark Sub and the Wincup Sub and reflected on the
Interim Xxxxxxx Businesses Financial Statements and the Benchmark Sub and the
Wincup Sub Balance Sheets at an amount which reflects valuations not in excess
of the lower of cost or market determined in accordance with generally accepted
accounting principles applied on a consistent basis. Schedule 4.14 sets forth
-------------
the locations of Inventory not located on the U. S. Facilities, the Mexican
Facilities or a Distribution Center.
4.15 INTELLECTUAL PROPERTY. Schedule 4.15 sets forth (i) a list of all of
-------------
the Intellectual Property used or held for use in connection with the Xxxxxxx
Businesses which each Seller, the Benchmark Sub and the Wincup Sub owns and (ii)
a list of all of the Intellectual Property used or held for use in connection
with the Xxxxxxx Businesses which each Seller, the Benchmark Sub and the Wincup
Sub does not own but has the right to use. Except as is set forth in Schedule
--------
4.15, each Seller, the Benchmark Sub and the Wincup Sub has the right to use
----
such Intellectual Property free and clear of any restrictions and its right to
the Intellectual Property is assignable. No Seller nor the Benchmark
-35-
Sub and the Wincup Sub is infringing upon the rights of any Person and no Person
is infringing upon the rights of any Seller, the Benchmark Sub or the Wincup Sub
in the Intellectual Property. Sellers have transferred to Buyer pursuant to this
Agreement, all Intellectual Property used in the conduct of the Xxxxxxx
Business, the Benchmark Sub and the Wincup Sub as presently being conducted. All
letters patent, registrations and certificates issued by any governmental agency
relating to the Intellectual Property are valid and subsisting and have been
properly maintained. Complete copies of all documents pursuant to which a Seller
has acquired the right to use, or has licensed or otherwise permitted any other
person to use, any Intellectual Property have been delivered to Buyer.
4.16 MATERIAL CONTRACTS. Schedule 4.16 sets forth a complete and correct
-------------
list of each contract, agreement or commitment of the Sellers, the Benchmark Sub
or the Wincup Sub, other than Leases and bank credit agreements:
(i) upon which any part of the business of the Xxxxxxx
Businesses is dependent or which, if breached, could reasonably be expected
to materially and adversely affect the Purchased Assets or the earnings,
financial condition, operations or prospects of the business of the Xxxxxxx
Businesses;
(ii) which provides for aggregate future payments by or to the
Sellers for the Xxxxxxx Businesses, the Benchmark Sub or the Wincup Sub of
more than $50,000 in any
-36-
year, except for purchase orders or sales orders arising in the ordinary
course of business, in which case they are listed only if any party thereto
may be obligated to make future payments aggregating more than $100,000 in
any year;
(iii) which relates to the Purchased Assets, the Benchmark Sub or
the Wincup Sub, extends more than one year from the date hereof and is not
cancelable by either party on 30 days' notice;
(iv) which provides for the sale or lease or other transfer,
after the date hereof and other than in the ordinary course of business, of
any of the Purchased Assets;
(v) which relates to the employment, retirement or termination
of the services of any employee, officer, former officer or consultant of a
Seller whose employment relates or was related to the business of the
Xxxxxxx Businesses; or
(vi) which contains covenants pursuant to which any person has
agreed not to compete with any business conducted by the Xxxxxxx
Businesses, the Benchmark Sub or the Wincup Sub or not disclose to others
information concerning the Purchased Assets, the business of the Xxxxxxx
Businesses.
Each of the foregoing is referred to in this Agreement as a "Material Contract."
Except as set forth in Schedule 4.16, all of the Material Contracts are in full
-------------
force and effect. No Material Contract has been breached and no event has
occurred or
-37-
condition exists which, with the giving of notice or the passage of time, would
constitute a breach of any such contract by any party thereto. Complete copies
of all the Material Contracts have been delivered to Buyer.
4.17 MAINTENANCE OF THE EQUIPMENT. The Equipment which is a part of the
Purchased Assets has been maintained in good repair in accordance with the usual
practices in the United States of businesses similar to the business conducted
by the Xxxxxxx Businesses, the Benchmark Sub or the Wincup Sub, is in good
condition, ordinary wear and tear excepted, and is useable in the ordinary
course of the business of the Xxxxxxx Businesses as it is presently being
conducted.
4.18 SUFFICIENCY OF PURCHASED ASSETS. The Purchased Assets include all
properties and rights of the Sellers, the Benchmark Sub and the Wincup Sub that
are necessary for the conduct of the business of the Xxxxxxx Businesses and the
Company as it is presently being conducted.
4.19 LABOR AND EMPLOYMENT MATTERS. Except as set forth on Schedule 4.19,
-------------
there are no collective bargaining agreements or any other employment agreements
(other than agreements delivered to Buyer as required by Section 4.16) covering
employees of the Xxxxxxx Businesses to which a Seller is a party or by which it
is otherwise obligated. There are no controversies, claims or grievances
pending, or, to the knowledge of each Seller, threatened between a Seller and
any employees of the Xxxxxxx Businesses which affect, or can reasonably be
expected to have,
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directly or indirectly, an adverse effect on the Purchased Assets or the
earnings, financial condition, operations or prospects of the Xxxxxxx Businesses
or relate to any specific effort to prevent, restrict or delay consummation of
the transactions contemplated by this Agreement.
4.20 EMPLOYEE BENEFIT PLANS.
(a) Schedule 4.20 lists all of the employee benefit plans and programs
-------------
(except the unfunded deferred compensation plans which are listed in Schedule
--------
4.20(a)), including without limitation all retirement, savings and other pension
-------
plans within the meaning of Section 3(2) of ERISA ("Pension Plans"), all health,
severance, insurance, disability, vacation and other employee welfare plans
within the meaning of Section 3(1) of ERISA ("Welfare Plans") and all incentive
and other similar plans that are maintained by each Seller or any Affiliate with
respect to employees of the Xxxxxxx Businesses or to which a Seller or any
Affiliate has contributed or is now contributing on behalf of the employees of
the Xxxxxxx Businesses. No Seller is a party to any multi-employer plan as
defined in Section 3(37) of ERISA.
(b) Each Seller and its Affiliates has complied, in all material
respects, with all applicable laws and regulations in administering the Pension
Plans, including specifically the provisions of ERISA and the qualification
provisions of Section 401 of the Internal Revenue Code. No prohibited
transaction, as defined in Section 4975 of the Internal Revenue Code, has
occurred with respect to any of the Pension Plans and none of the
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Pension Plans is subject to the provisions of Title IV of ERISA or to the
provisions of Section 412 of the Internal Revenue Code. Each Pension Plan
intended to be qualified under Section 401(a) of the Internal Revenue Code has
been amended to satisfy the requirements of the Tax Reform Act of 1986 and
subsequent legislation, and has heretofore been determined by the Internal
Revenue Service to so qualify, and each trust created thereunder has heretofore
been determined by the Internal Revenue Service to be exempt from tax under the
provisions of Section 501(a) of the Internal Revenue Code and, to the knowledge
of each Seller or any Affiliate, nothing has occurred since the date of the most
recent determination that would be reasonably likely to cause any such Pension
Plan or trust to fail to qualify under Section 401(a) or 501(a) of the Internal
Revenue Code.
(c) No Seller has terminated any Pension Plan or incurred any material
liability to the PBGC under Section 4001, et seq., of ERISA, and no condition
exists that could reasonably be expected to cause a Seller to incur any such
liability either singly or as a member of a group of businesses under common
control of, or affiliated with, the Sellers within the meaning of Section 414 of
the Internal Revenue Code.
(d) There are no actions, suits or claims pending, threatened or
anticipated (other than routine claims for benefits) with respect to any
employee benefit plan listed on Schedule 4.20.
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(e) The Sellers have made available to the Buyer full and complete
copies of all Pension Plans, including all amendments thereto and summary plan
descriptions as filed pursuant to ERISA with respect to the Pension Plans.
4.21 INSIDER INTERESTS. Except as set forth in Schedule 4.21, no officer,
-------------
director or holder of more than 5% of the common stock of a Seller, the
Benchmark Sub, the Wincup Sub or Affiliate of a Seller, the Benchmark Sub or the
Wincup Sub (i) competes with, is involved with or has any direct or indirect
interest in any business entity which competes with the business of the Xxxxxxx
Businesses, or (ii) has any interest, direct or indirect, in any property, real
or personal, tangible or intangible, including, without limitation, Intellectual
Property, used in or pertaining to the business of the Xxxxxxx Businesses, the
Benchmark Sub or the Wincup Sub, except as a stockholder or employee of the
Sellers.
4.22 CERTAIN PRACTICES. To the knowledge of each Seller, no shareholder,
director, officer, employee or agent of a Seller, the Benchmark Sub or the
Wincup Sub has, directly or indirectly, made, or agreed to make, any improper or
illegal payment, gift or political contribution to, or taken any other improper
or illegal action, for the benefit of any customer, supplier, governmental
employee or other person who is or may be in a position to assist or hinder the
business of the Xxxxxxx Businesses.
4.23 FINDERS. Except for Alex. Xxxxx & Sons Incorporated, no broker,
finder or investment banker is entitled to any fee or
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commission from a Seller for services rendered on behalf of a Seller in
connection with the transactions contemplated by this Agreement. Notwithstanding
the provisions of Article XI, the Sellers are solely responsible for the fees
and expenses of Alex. Xxxxx & Sons Incorporated.
4.24 FULL DISCLOSURE. Neither this Agreement, nor the financial statements
for the Sellers, the Benchmark Sub, the Wincup Sub and the Xxxxxxx Businesses
described in Section 4.9, contains an untrue statement of a material fact. To
the knowledge of each Seller, no event has occurred or condition exists which,
with the giving of notice or the passage of time, can reasonably be expected to
have a material adverse effect on the Purchased Assets or the earnings,
financial condition, operations or prospects of the business of the Xxxxxxx
Businesses.
4.25 PERFORMANCE ALLOWANCES. Schedule 4.25 contains a complete list of all
-------------
performance allowances and volume incentive payments due from either Seller, the
Benchmark Sub or the Wincup Sub as of the date hereof.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers the following:
5.1 ORGANIZATION; QUALIFICATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the Commonwealth of
Virginia and has corporate power and authority to own all of its properties and
assets and to carry on
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its business as it is presently being conducted. Buyer is duly qualified and in
good standing to do business in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification necessary except where failure to so qualify has no material
adverse effect on Buyer's financial condition. Buyer has heretofore delivered to
the Sellers complete and correct copies of its Articles of Incorporation and
Bylaws, as currently in effect.
5.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Buyer has corporate power and
authority to execute and deliver this Agreement and the Related Agreements to
which it is to be a party and to consummate the transactions contemplated hereby
and thereby. No corporate proceedings on the part of Buyer are necessary with
respect to the execution and delivery of this Agreement and the Related
Agreements and the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and Related Agreements to which it is a
party, when executed and delivered by Buyer, will constitute valid and binding
obligations of Buyer, enforceable in accordance with their terms except as the
same may be limited by (i) any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally
or (ii) general principles of equity, whether considered in a proceeding in
equity or at law.
-43-
5.3 CONSENTS AND APPROVALS. Except as set forth in Schedule 5.3, there is
------------
no requirement applicable to Buyer to make any filing with, or to obtain any
permit, authorization, consent or approval of any Person as a condition to the
consummation of the transactions contemplated by this Agreement or conducting
the business of the Xxxxxxx Businesses under new ownership (other than as may be
required by the HSR Act and any applicable "bulk sales" law).
5.4 NON-CONTRAVENTION. The execution and delivery by Buyer of this
Agreement with the Related Agreements to which it is a party does not, and the
consummation of the transactions contemplated hereby and thereby, will not (i)
violate or result in a breach of any provision of the Articles of Incorporation
or Bylaws of Buyer, (ii) result in a default, or give rise to any right of
termination, modification or acceleration, or the imposition of any Encumbrance
(whether immediately before or after the giving of notice or the passage of
time) under the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement, lease or other instrument or obligation to which
Buyer is a party or by which Buyer or the business conducted by it may be bound,
or (iii) violate any law, regulation, judgment, order or decree applicable to
Buyer or to the businesses conducted by it.
5.5 LITIGATION. There are no actions, suits, claims, investigations or
proceedings (legal, administrative or arbitrative) pending or, to the knowledge
of Buyer, threatened
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against Buyer, whether at law or in equity and whether civil or criminal in
nature, before any court, governmental body, commission, agency or arbitrator,
domestic or foreign, which seek specifically to prevent, restrict or delay
consummation of the transactions contemplated hereby or fulfillment of any of
the conditions of this Agreement.
5.6 FINDERS. No broker, finder or investment banker is entitled to any
fee or commission from Buyer in connection with the transactions contemplated by
this Agreement.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 CONDUCT OF BUSINESS OF THE XXXXXXX BUSINESSES. From the date hereof
until the Closing, each Seller will and will cause the Benchmark Sub and the
Wincup Sub to (i) conduct the business of the Xxxxxxx Businesses only in the
ordinary and usual course and in a manner consistent with past practices, (ii)
maintain in good repair, at its expense, all of the Equipment; and (iii) use its
best efforts to preserve its relationships with licensors, suppliers, dealers,
customers and others having business relationships with the Xxxxxxx Businesses,
the Benchmark Sub and the Wincup Sub. Each Seller's management will meet with
Buyer on a regular and frequent basis to discuss the general status of the
ongoing operations of the Xxxxxxx Businesses, the Benchmark Sub and the Wincup
Sub and any problems relating to the conduct of its business. Each Seller will
notify Buyer (w) of any emergency or change in the normal conduct of the
business or
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operations of the Xxxxxxx Businesses, the Benchmark Sub and the Wincup Sub, (x)
of the threat or initiation of any litigation against a Seller, the Benchmark
Sub or the Wincup Sub which relates to the business or operations of the Xxxxxxx
Businesses, the Benchmark Sub or the Wincup Sub, (y) of the initiation of any
investigation of the Xxxxxxx Businesses, the Benchmark Sub or the Wincup Sub or
its business by any party, whether private or governmental, and (z) of any
budget revisions approved by the Board of Directors of a Seller, the Benchmark
Sub or the Wincup Sub involving any of the Purchased Assets, the Benchmark Sub,
the Wincup Sub, or the business of the Xxxxxxx Businesses and will keep Buyer
fully informed of developments with respect to such events and afford Buyer's
representatives access to all materials in its possession relating thereto.
6.2 FORBEARANCES BY SELLERS. Except as contemplated by this Agreement,
each Seller will not, and will not permit the Benchmark Sub or the Wincup Sub
to, from the date hereof until the Closing, without the written consent of
Buyer:
(i) sell, dispose of, transfer or encumber any of the Purchased
Assets except for Inventory in the ordinary course of business;
(ii) mortgage, pledge or otherwise encumber any of the Purchased
Assets;
(iii) amend, terminate, cancel or assign any Material Contract
or Lease;
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(iv) make any commitments for capital expenditures related to
the Xxxxxxx Businesses, the Benchmark Sub or the Wincup Sub except in the
normal course of business;
(v) increase in any manner the compensation of any Transferred
Employee, pay or agree to pay any pension or retirement benefit not
required by an existing plan or agreement to any Transferred Employee, or
enter into or amend any employment agreement or any incentive compensation,
profit sharing, savings, consulting, deferred compensation, retirement,
pension or other benefit plan or arrangement with or for the benefit of any
Transferred Employee or other person on behalf of the Xxxxxxx Businesses;
(vi) alter in any way the manner in which it has regularly and
customarily maintained the books of account and records of the Xxxxxxx
Businesses, the Benchmark Sub or the Wincup Sub;
(vii) enter into any contract which will require an expenditure
of more than $25,000 by the Xxxxxxx Businesses, the Benchmark Sub or the
Wincup Sub or cannot be cancelled by the Xxxxxxx Businesses, the Benchmark
Sub or the Wincup Sub within one year of the date it is executed;
(viii) declare, set aside or pay any dividend in cash or
property with respect to the capital stock of Benchmark Sub or the Wincup
Sub;
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(ix) split, combine or otherwise similarly change the capital
stock of Benchmark Sub or the Wincup Sub, or redeem any of the capital
stock of the Benchmark Sub or the Wincup Sub;
(x) authorize the creation or issuance of, or issue or sell any
shares of the capital stock of Benchmark Sub or the Wincup Sub or any
securities or obligations convertible into or exchangeable for, or giving
any person any right to acquire from it, any shares of the capital stock of
Benchmark Sub or the Wincup Sub;
(xi) enter into any agreement to do any of the things described
in clauses (i) through (x) above.
6.3 NEGOTIATIONS WITH OTHERS. From the date hereof until the Closing, no
Seller or its Affiliate will, directly or indirectly, without the written
consent of Buyer, initiate discussions or engage in negotiations with any
corporation, partnership, person or entity, other than Buyer, concerning any
proposal regarding the acquisition, other than in the ordinary course of
business, of part or all of the Purchased Assets.
6.4 INVESTIGATION OF XXXXXXX BUSINESSES AND PROPERTIES. From the date
hereof until the Closing, each Seller will and will cause the Benchmark Sub and
the Wincup Sub to, afford Buyer and its authorized representatives, including
its attorneys, accountants, financial advisors and engineers, such access,
during normal business hours, to its books and records, personnel, plants,
offices, warehouses and other facilities as
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Buyer may reasonably request to enable it to make a full investigation of the
Purchased Assets and the business of the Xxxxxxx Businesses. Each Seller will
also cause its employees and advisors, including, without limitation, its
accountants and financial advisors, to furnish to Buyer and its authorized
representatives such financial data and other information, as Buyer may
reasonably request to make such investigation. Such investigations shall be
conducted in such a manner as to minimize interference with the conduct of the
Sellers' operations. Without limiting the foregoing, the Sellers acknowledge
that, as part of Buyer's investigation of the Purchased Assets, the Benchmark
Sub, the Wincup Sub and the Xxxxxxx Businesses, Buyer intends to do the
following:
(a) conduct an engineering review of the Xxxxxxx Businesses'
facilities and equipment, including the condition of machinery and equipment,
the level of repair and the ability to be repaired of the machinery and
equipment, the infrastructure including the roofs and other general maintenance
requirements, technological capability, operating efficiency, and general
compliance with good manufacturing practices and regulatory requirements;
(b) conduct environmental, health and safety audits of the Xxxxxxx
Businesses' facilities and equipment and operations;
(c) conduct an investigation and evaluation of the status of
employment relations at the Xxxxxxx Businesses and assessment of the current
sales, marketing and operations
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management team in order to determine the need for and level of additional
support required from Buyer and its Affiliates;
(d) conduct an investigation of the Mexican operations and their
ongoing ability to contribute to the financial success of the Xxxxxxx
Businesses; and
(e) with the consent and participation of the Sellers, which consent
shall not be unreasonably withheld, conduct discussions with customers of the
Xxxxxxx Businesses regarding the transition from the Sellers' ownership to
Buyer's ownership.
6.5 CONFIDENTIALITY. The information which the authorized representatives
of the parties acquire from making their inspections of the facilities and the
books and records of the other parties, and the information they acquire from
meetings with the employees and advisors of the other parties pursuant to the
provisions of Section 6.4, shall be subject to the Confidentiality Agreement.
6.6 TAXES AND RECORDING FEES. All sales and transfer taxes and fees
(including filing fees, if any) incurred in connection with this Agreement and
the transactions contemplated hereby will be borne by the Sellers. Buyer will
file all necessary tax returns and other documents required to be filed with
respect to all such taxes and filing fees. The Sellers will cooperate with
Buyer to the extent necessary to enable it to make such filings and join in the
execution of any tax returns or other documents as may be necessary to enable
Buyer to comply with the provisions of this Section.
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6.7 PRORATION OF RENT, UTILITY CHARGES AND OTHER PAYMENTS. Any installment
of rent due on any Assumed Lease to which a Seller is a party and any utility or
similar charge payable with respect to the premises under such Assumed Lease for
the period in which the Closing occurs shall be prorated, based on the actual
number of days applicable to pre-Closing and post-Closing occupancy or use.
6.8 ALLOCATION OF PURCHASE PRICE. The values which shall be assigned to
the various assets which constitute the Purchased Assets shall be agreed upon
within 60 days after Closing. The Sellers and Buyer agree that (i) the gross
allocation of values shall be in accordance with Schedule 6.8, (ii) the specific
------------
allocation of the Purchase Price among the various Purchased Assets will be
separately established as a result of good faith bargaining, and (iii) in
reporting the transactions contemplated by this Agreement to the Internal
Revenue Service, as is required by Section 1060 of the Internal Revenue Code,
they will use such specific allocations and cooperate with each other in meeting
the requirements of the Internal Revenue Code and the regulations promulgated
thereunder.
6.9 ACCOUNTS RECEIVABLE. Buyer will afford each Seller access to such of
the records transferred to it as shall be necessary to allow such Seller to
collect any receivable arising prior to the Closing, but Buyer shall not
otherwise be responsible for collecting or seeking to collect any such
receivables. In collecting any such receivables arising prior to Closing, each
Seller shall only use its historical collection
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practices in seeking to collect such accounts and shall not bring any legal
proceedings to collect receivables from ongoing customers of the Xxxxxxx
Businesses without notice to and consultation with Buyer. If a debtor on any
such receivable, who is also a debtor to Buyer for debts incurred at or after
the Closing shall make any remittance on amounts due in respect of the business
of the Xxxxxxx Businesses, whether the debt was incurred prior to or subsequent
to the Closing, such remittance shall be deemed to be on account of the earliest
unpaid invoice unless the debtor specifically designates or otherwise indicates
to the contrary, in which case the payment shall be applied in accordance with
such designation. If payments on any such account are undesignated, then Buyer
shall be entitled to inquire of such customer as to which invoices such payment
should be applied. After the Closing the Sellers will promptly transfer and
deliver (properly endorsed, if necessary) to Buyer any checks or other payments
and deductions (including the cash equivalents of credits due from vendors,
suppliers or shippers) which it receives on account of goods sold or shipped by
Buyer and Buyer shall promptly transfer and deliver (properly endorsed, if
necessary) to the Sellers any checks or other payments (including the cash
equivalents of credits due from vendors, suppliers or shippers) which it
receives on account of goods sold or shipped by the Sellers.
6.10 ACCOUNTS PAYABLE. Receivables collected by the Sellers shall be
applied to Sellers' outstanding accounts payable. If,
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within ninety (90) days of Closing, the accounts payable of the Xxxxxxx
Businesses have not been paid in full, then Buyer shall have the right to pay
directly the amounts required for satisfaction of such accounts payable to those
Persons to whom payment is due. Sellers shall comply with all of the terms of
the Trust Agreement.
6.11 BULK SALES LAWS. Notwithstanding the provisions of Article XI, each
Seller will severally indemnify and hold harmless Buyer from any and all claims
made by creditors of that Seller relating to provisions of the "bulk sales laws"
of any state or other jurisdiction which may be applicable to the transactions
contemplated hereby and from all costs (including reasonable attorney's fees)
incurred in the defense of any claims made under such laws.
6.12 MAIL RECEIVED AFTER CLOSING. Following the Closing Buyer may open all
mail, telegrams and other communications and packages they receive which is
addressed to the Sellers, the Benchmark Sub or the Wincup Sub and deal with the
content thereof in their discretion to the extent that the content thereof
relates to the Purchased Assets or the Assumed Liabilities. Buyer agrees to
deliver to each Seller all other such material they receive which is addressed
to a Seller, the Benchmark Sub,
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the Wincup Sub, or Buyer and does not relate to such assets or liabilities. Each
Seller agrees to deliver to Buyer all material they receive which is addressed
to a Seller, the Benchmark Sub, the Wincup Sub or Buyer and relates to the
Purchased Assets or the Assumed Liabilities.
6.13 RETENTION OF BOOKS AND RECORDS. For a period of seven years after the
Closing, the parties shall retain their books or records relating to the
Purchase Assets or the Assumed Liabilities. After such seven-year period, any
party shall provide not less than 45 nor more than 90 days prior written notice
to the other parties of any proposed destruction or disposition of any such
books and records. If the recipient of such notice desires to obtain any of the
documents to be destroyed or disposed of, it may do so by notifying the sender
of such notice, in writing, at any time prior to the scheduled date for such
destruction or disposal. The notice must specify the documents which the
requesting party wishes to obtain. The parties shall then promptly arrange for
the delivery of such documents. All out-of-pocket costs associated with the
delivery of the requested documents shall be paid by the requesting party.
6.14 INTENTIONALLY DELETED.
6.15 EXPENSES. Except as otherwise provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby will be paid by the party incurring such costs and expenses.
6.16 PUBLIC ANNOUNCEMENTS. The parties will consult with one another
before issuing any press releases or otherwise making any public statements or
statements to customers, suppliers or others with respect to this Agreement and
the transactions
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contemplated hereby and will not issue any such press release or make any such
public statement without the consent of the others unless such action is
required by law or by the NYSE. Buyer shall have the right to approve the form
and substance of any such press release or public statement issued by the
Sellers, which consent shall not be unreasonably withheld or delayed.
6.17 SUBSEQUENT EVENTS. If any event shall occur prior to the Closing
which, had it occurred prior to the execution of this Agreement, should have
been disclosed by a party to this Agreement in a representation and warranty or
otherwise, then, upon the happening of such event, such party shall promptly
disclose the happening of such event to the other parties hereto.
6.18 EFFORTS TO CONSUMMATE. Subject to the terms and conditions herein
provided, each of the parties agrees to use its reasonable best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable to consummate, as promptly as practicable, the
transactions contemplated hereby, including, but not limited to, the obtaining
of all necessary consents, approvals or waivers of third parties, whether
governmental or private, required of it to enable it to comply with the
conditions precedent to consummating the transactions contemplated by this
Agreement. Each party agrees to cooperate fully with the other parties in
assisting them to comply with the provisions of this Section and the Sellers
agree to take such steps as may be necessary to remove
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any Encumbrances (other than Permitted Exceptions) which affect the Purchased
Assets.
6.19 ENVIRONMENTAL, HEALTH, SAFETY AND PRODUCT COMPLIANCE MATTERS. Buyer
or its representatives have conducted environmental, occupational health, safety
and product compliance audits of the U.S. Facilities, the Mexican Facilities and
the Purchased Assets, as and to the extent Buyer deemed appropriate (the
"Environmental Audits"). Buyer has provided a copy of such Environmental Audits
to the Sellers after completion of same, together with a statement from Buyer
(the "Remediation Statement") indicating those matters set forth in such audits
and Schedule 4.6 that Buyer, in the exercise of its reasonable judgment, deems
------------
material. A copy of the Remediation Statement is attached hereto as Schedule
--------
6.19. Notwithstanding the foregoing, Issue 11 of the Remediation Statement
----
relating to the sprinkler systems shall not be deemed material, and Sellers
shall not be required to perform any remediation or other action with respect to
such item. In addition, the Remediation Statement indicates which of such
matters, in the reasonable opinion of Buyer or its representatives, can be
practically remediated prior to Closing (the "Pre-Closing Remediation Matters").
Except for the matters indicated on the Remediation Statement as being "Post
Closing Remediation Matters" (as defined below), the Sellers, at their sole
cost, shall remedy all of the Pre-Closing Remediation Matters prior to Closing.
All such remediation performed by the Sellers shall be conducted in accordance
with applicable law and
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a plan and schedule prepared by the Sellers and approved by Buyer and shall be
completed in accordance with such approved plan and schedule. At such time as
the Sellers believe they have completed such remediation in accordance with the
approved plan therefor, they shall notify Buyer. If Buyer believes that such
remediation has not been completed in accordance with the approved plan therefor
or the requirements of applicable law, then Buyer shall object to such work in
writing within 30 days after such notice of completion from the Sellers. The
Sellers shall then correct or complete the incorrect or incomplete portion of
the remediation work specified in Buyer's objection notice within a reasonable
time after receipt of such objection notice. If Buyer fails to object to the
performance of such remediation within thirty (30) days after such notice from
the Sellers, then Buyer shall be deemed to have approved such remediation work.
Notwithstanding the foregoing, Sellers shall have the right and the obligation,
at Seller's sole expense, to complete remediation of those matters indicated on
the Remediation Statement as being Post-Closing Remediation Matters (the "Post-
Closing Remediation Matters"), as soon as reasonably possible after Closing and
in any event within 90 days after the Closing Date. If Sellers fail to complete
remediation of the Post-Closing Matters in accordance with the requirements of
the Remediation Statement and the terms of this Section within such period, then
Buyer shall have the right, at the cost and expense of Sellers, to remediate
such Post-Closing Remediation Matters.
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Buyer shall have the right, at the cost and expense of the Sellers, to remediate
any Pre-Closing Remediation Matters which Sellers fail to remediate prior to
Closing, and any Post-Closing Remediation Matters which Sellers fail to
remediate within the time periods specified above, and the Sellers shall
reimburse Buyer, within fifteen (15) days after demand therefor, for all costs
reasonably incurred by Buyer in completing such remediation, and all fines or
other expenses incurred by Buyer as a result of the Sellers failure to complete
such remediation. In addition, Buyer shall have the right to offset all such
reasonable costs and expenses from any amounts due from Buyer to the Sellers
under this Agreement. No provision contained in this Section 6.19, shall limit
Buyer's ability to make claims or seek indemnification as otherwise provided
pursuant to the terms of this Agreement.
6.20 FURTHER ASSURANCES. Each Seller will use reasonable efforts to
implement the provisions of this Agreement, and for such purpose, at the request
of Buyer will, at or after the Closing, without further consideration, promptly
execute and deliver such additional documents as Buyer may reasonably deem
necessary or desirable in order to consummate more effectively the transactions
contemplated hereby and to vest in Buyer title to the Purchased Assets free and
clear of any Encumbrances.
6.21 ADVICE TO OTHERS. The Sellers and Buyer will promptly advise each
other if they become aware of any information which
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is or may reasonably be expected to be inconsistent with the representations and
warranties made by the other herein.
6.22 MOVEMENT OF EQUIPMENT AND INVENTORY. Prior to Closing, at the
Sellers' expense, the Sellers will (a) move to and, if necessary, install at the
U. S. Facility designated by Buyer all Equipment located in the Distribution
Centers or other locations, (b) to the extent set forth in the Transition
Services Agreement, move certain Inventory located in the Distribution Centers
and elsewhere; and (c) within thirty (30) days after the Closing Date, remove
and dispose of "obsolete" and "damaged" inventory (as defined in Section 2.5)
from the following sites: Los Angeles, California, Houston, Texas, Stone
Mountain, Georgia, Nashville, Tennessee, the Mexican Facilities as listed on
Schedule 4.12 and Griffin, Georgia.
6.23 PERFORMANCE ALLOWANCES. On or before Closing, each Seller will
pay (on a pro-rata basis where appropriate) all performance allowances and
volume incentives associated with the Xxxxxxx Business and payable by it as of
the Closing Date.
6.24 ESTABLISHMENT OF SUBSIDIARY. Prior to Closing, Benchmark shall
establish a newly-formed wholly-owned subsidiary of Benchmark (the "Benchmark
Sub") and Wincup shall establish a newly-formed wholly-owned subsidiary of
Wincup (the "Wincup Sub"), pursuant to organizational documents approved by
Buyer, and shall contribute to the Benchmark Sub and Wincup shall contribute to
the Wincup Sub the tangible personal property owned by Benchmark and Wincup,
respectively, which is included in the
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Purchased Assets and located in the State of California (but no other property).
Such contribution shall be made pursuant to contribution agreements in form and
substance satisfactory to Buyer. In no event shall either Benchmark or Wincup
contribute to, or permit the Benchmark Sub or the Wincup Sub to assume, any
liabilities of Benchmark or Wincup. All Equipment, Inventory, Consumables,
Intellectual Property and other personal property contributed by the Sellers to
the Benchmark Sub and the Wincup Sub shall nevertheless be deemed included
within the definitions of "Equipment", "Inventory", "Consumables" and
"Intellectual Property" for the purposes of the representations made by the
Sellers hereunder, the determination of the Current Asset Amount, the provisions
of Article VI hereof, and any other relevant provisions of this Agreement.
6.25 SECTION 338(h)(10) ELECTION. (a) Buyer and Sellers agree to make
timely, effective and irrevocable Section 338(h)(10) Elections as set forth in
this Agreement, as well as any Section 338(h)(10) Elections (or corresponding or
similar elections) for state, local or foreign purposes, and to file such
elections in accordance with applicable regulations. The provisions of this
Agreement shall apply to any such elections that Buyer makes for state, local or
foreign tax purposes.
(b) Sellers represent that each of them will file a consolidated
federal income tax return with the Benchmark Sub and the Wincup Sub for the tax
year beginning on January 1, 1995 and ending on and including the Closing Date,
and that the Sellers
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are eligible to make an election under Section 338(h)(10) of the Internal
Revenue Code (and any comparable election under state, local or foreign tax law)
with respect to the Benchmark Sub and the Wincup Sub. Buyer and Sellers shall
make or cause to be made the Section 338(h)(10) Elections (and any comparable
election under state, local or foreign tax law) and shall take no position
contrary thereto unless required to do so pursuant to a final determination by
any taxing authority or judicial proceeding.
(c) Sellers shall pay and indemnify and hold Buyer and the
Benchmark Sub and the Wincup Sub harmless from any and all Sellers Tax
Liabilities as defined below in Section 6.26. The indemnification hereunder
shall be without limitation or restriction, notwithstanding any other provision
of this Agreement, including, but not limited to, the limitations set forth
under Section 11.4, and the survival provisions contained in Section 11.5.
(d) Sellers shall be responsible for preparing and filing all
Section 338 Forms in accordance with the terms of this Agreement. Sellers shall
furnish copies of the Section 338 Forms to Buyer for Buyer's approval at least
25 business days before the date such Section 338 Forms are required to be
filed. Buyer shall execute and deliver to Sellers such documents or forms as
Sellers reasonably request to complete the Section 338 Forms, properly and in a
timely fashion.
(e) Buyer and Sellers agree that the deemed sale price of the assets
determined in accordance with Treasury Regulation
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Section 1.338(h)(10)-1(f) will be determined within 60 days after Closing
pursuant to Section 6.8 and the parties will file the forms required under the
Internal Revenue Code and the regulations thereunder in a manner substantially
consistent with the allocation of values pursuant to such Section.
6.26 ALLOCATION OF TAXES. Sellers shall be responsible for and pay (i)
all Taxes resulting from Pre-Closing Operations; (ii) any liability imposed on
the Benchmark Sub or the Wincup Sub pursuant to Treasury Regulation Section
1.1502-6 (or any similar provision of state, local or foreign law) for Taxes
incurred by any Person, other than the Benchmark Sub or the Wincup Sub, for any
taxable period ending after the Closing Date and which includes the Closing
Date, and Sellers agree to hold Buyer, the Benchmark Sub and the Wincup Sub
harmless from any liability for such Taxes or other charges (including
reasonable attorneys' and accountants' fees) arising therefrom; and (iii) any
Taxes resulting from the incorporation of Benchmark Sub or the Wincup Sub, the
transfer of assets thereto and/or the sale or exchange of the stock thereof,
including but not limited to any Taxes attributable to the Section 338(h)(10)
Election, or any similar provision of state, local or foreign law (collectively,
"Sellers Tax Liabilities").
For purposes of this Section 6.26, Sellers Tax Liabilities shall not
include any Taxes resulting from events, elections or transactions occurring at
the direction or under the control of Buyer on the Closing Date, including
sales, exchanges,
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liquidations, or dispositions. Notwithstanding the foregoing sentence, Sellers
Tax Liabilities shall include the following:
(i) All Taxes resulting from any Section 338(h)(10) Election and
all similar elections made under state, local or other law.
(ii) All Taxes relating to operation of the Sellers, the Benchmark
Sub or the Wincup Sub in the ordinary course of their business prior to
and including the Closing.
(iii) Any item of Tax, including the Tax effect of any income, gain,
recapture of deduction or credit, or any similar item with respect to the
Sellers, the Benchmark Sub or the Wincup Sub resulting from any adjustment
in any period ending on or before the Closing necessary to implement a
change of accounting made in any taxable period ending on or before the
Closing.
(iv) Any item of Tax, including the Tax effect of any income, gain,
recapture of deduction or credit, or any similar item with respect to the
Sellers, the Benchmark Sub or the Wincup Sub resulting from the
restoration of any deferred income or gain, the triggering of any credit
or recapture item, or any similar increase in Tax or inclusion in income
subject to tax under applicable law in any period ending on or before the
Closing, including without limitation the federal consolidated return
regulations and similar provisions of state, local, or foreign tax laws by
reason of any transaction contemplated in this Agreement.
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(v) Any item of Tax the liability for which properly accrues on or
before the Closing, regardless of when such tax is properly due and
payable, including without limitation real estate and tangible personal
property taxes.
ARTICLE VII
EMPLOYEES AND EMPLOYEE MATTERS
7.1 TRANSFERRED EMPLOYEES. The Sellers have previously delivered to Buyer
a list of all of the employees of the Sellers who are employed by the Xxxxxxx
Businesses as of the most recent date for which such information is available.
Each Seller has or will afford Buyer's representatives an opportunity, prior to
the Closing, to offer employment with Buyer, after the Closing, to all of such
employees, whether salaried or hourly employees and whether or not they are
covered by one or more of the employment agreement(s) listed in Schedule 4.19,
-------------
except for those employees that Seller desires to retain who are listed on
Schedule 7.1. Such employees who elect to become employees of Buyer are
------------
hereinafter referred to as "Transferred Employees" and shall be deemed to have
become employees of Buyer as of the time the Closing becomes effective.
Notwithstanding the foregoing, Buyer shall have no obligation to offer
employment to any particular employees employed by the Xxxxxxx Businesses or any
particular number of such employees. For clarification purposes, the employees
of the contractors who operate the Mexican Facilities are not employees of the
Sellers and Buyer will not offer
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employment to, or be liable for employment of, any of such employees.
7.2 EMPLOYEE BENEFIT PLANS.
(a) Except as provided in Section 7.2(b), Buyer will permit each
salaried employee and each hourly employee of the Xxxxxxx Businesses who becomes
a Transferred Employee to participate, to the extent appropriate, in the
employee benefit plans and programs regularly made available to the employees of
Buyer. Buyer will treat service by any Transferred Employee prior to the
Closing as service with Buyer for purposes of vesting and participating in (but
not for the purpose of the accrual of benefits under) such plans and programs.
The Transferred Employees' accrual of benefits under plans and programs covering
employees of Buyer shall be based solely on their service with Buyer after the
Closing.
(b) Until January 1, 1996, Buyer will continue the same health
insurance coverage as currently provided by Sellers for the Transferred
Employees who are hourly employees. As of January 1, 1996, Buyer will permit
each Transferred Employee who is an hourly employee to participate in the health
plan regularly made available to the employees of Buyer.
(c) Except as provided in Section 7.2(d), no assets or liabilities
with respect to Transferred Employees shall be transferred, as a result of this
Agreement, from any of the Sellers' employee benefit plans applicable to the
employees of the Xxxxxxx Businesses to any plan maintained or established by
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Buyer, and each Seller shall retain all obligations to fund or otherwise provide
benefits accrued by Transferred Employees under its benefit plans prior to the
Closing. Benefits under the plans retained by the Sellers shall be payable to
the Transferred Employees pursuant to the terms of such plans and shall
constitute the only benefits to which the Transferred Employees are entitled
with respect to their service with the Sellers prior to the Closing.
(d) Assets of the Benchmark Corporation of Delaware 401(k) Savings
and Profit Sharing Plan (the "Benchmark Plan") equal to the account balances of
the Transferred Employees under the Benchmark Plan shall be transferred to the
Xxxxx River Corporation of Virginia StockPlus Investment Plan (the "StockPlus
Plan") as soon as practicable after the Closing Date. Unless made sooner, the
transfer shall be made as of the last business day of the first full calendar
quarter ending after the Closing Date. The transfer shall be made solely in
cash. Any outstanding balances of plan loans to Transferred Employees shall be
transferred with the underlying accounts. The account balances of the
Transferred Employees shall be valued as of the date on which the transfer is
made. The account balances of Transferred Employees in the Benchmark Plan shall
share in the earnings, gains and losses, appreciation and depreciation of the
investment funds in which the accounts are invested for the period between the
Closing Date and the date on which the transfer is made. With respect to the
account balances of
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Transferred Employees under the Benchmark Plan that are transferred to the
StockPlus Plan, the StockPlus Plan shall specifically preserve each "section
411(d)(6) protected benefit" that is provided under the Benchmark Plan as of the
date of which such account balances are transferred. The term "section 411(d)(6)
protected benefit" shall have the meaning provided under Section 411(d)(6) of
the Internal Revenue Code and applicable Treasury Department regulations.
Transferred Employees shall not accrue additional benefits after the Closing
Date under the Benchmark Plan.
(e) The account balances to be credited under the StockPlus Plan for
Transferred Employees as of the transfer date shall not be less than the account
balances of the Transferred Employees under the Benchmark Plan as of the date on
which the transfer is made. Effective on the date of the transfer of Benchmark
Plan assets, (i) the Buyer and the StockPlus Plan shall assume all liabilities
in connection with the account balances of Transferred Employees under the
Benchmark Plan, and (ii) the Sellers and the Benchmark Plan shall have no
further liability with respect to the account balances of Transferred Employees.
The Sellers and its Affiliates shall have no liability with respect to the
StockPlus Plan. The Buyer shall have no liability whatsoever with respect to the
Benchmark Plan.
7.3 WORKER'S COMPENSATION. Buyer will assume the responsibility for all
worker's compensation claims made by Transferred Employees and third parties
arising from events
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occurring after the Closing. Each Seller will retain the responsibility for all
worker's compensation claims made by its employees or former employees (whether
or not Transferred Employees) or third parties that arise from events that occur
before the Closing or events otherwise occurring while the employees are
employed by such Seller.
7.4 VACATION PAY. Buyer will not assume any liability for unpaid vacation
pay, sick pay or holiday pay accrued by Transferred Employees prior to the
Closing except as set forth in Section 2.3.
7.5 OTHER LIABILITIES RELATING TO EMPLOYEES. Except to the extent
specifically addressed in this Article VII, Buyer will not assume any
obligations or liabilities with respect to (i) any Pension Plan, Welfare Plan or
other employee benefit plan or program relating to any present, former or
retired employees of the Sellers or (ii) any severance or separation obligation
which may result from the consummation of the transactions contemplated by this
Agreement.
7.6 ADMINISTRATION. Buyer and each Seller will each make its appropriate
employees available to the other at such reasonable times as may be necessary
for the proper administration by the other of any and all matters relating to
employee benefits and worker's compensation claims affecting Transferred
Employees. If, as a result of the transactions contemplated by this Agreement,
reports are required to be filed
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with respect to any of a Seller's benefit plans, such Seller will file such
reports.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject, to the extent not waived, to the following
conditions.
8.1 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of the Sellers contained in Article IV of this Agreement with respect
to the Benchmark Sub and the Wincup Sub shall be true and correct in all
material respects as of the date of Closing. Each of the other representations
and warranties of the Sellers contained in Article IV of this Agreement, not
relevant to the Benchmark Sub and the Wincup Sub, shall be true and correct in
all material respects as of the date of this Agreement and as of the Closing,
and each Seller shall have delivered to Buyer a certificate to that effect
signed by its Chairman or President.
8.2 PERFORMANCE OF THIS AGREEMENT. Each Seller shall have complied in all
material respects with all of its obligations under this Agreement (including,
without limitation, the completion of all remedial actions required to be taken
by the Sellers prior to Closing under the terms of Section 6.19) and shall have
delivered to Buyer a certificate to that effect signed by its Chairman or
President.
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8.3 CORPORATE AUTHORIZATION. All corporate action required to be taken by
each Seller, Benchmark Sub and Wincup Sub (including, if necessary, receiving
the approval of its shareholders) in connection with the transactions
contemplated by this Agreement shall have been taken, all documents incident
thereto shall be reasonably satisfactory in substance and form to Buyer and
Buyer shall have received such originals or copies of such documents as it may
reasonably request.
8.4 CONSENTS AND APPROVALS. The consents and approvals of all Persons
which (i) each Seller must obtain to transfer the Purchased Assets to Buyer free
and clear of Encumbrances, including, without limitation, the consent of all
parties to the Assumed Material Contracts and the Assumed Leases whose consent
to such transfer is necessary under the terms thereof, and (ii) Buyer must
obtain in order to be able to conduct the business of the Xxxxxxx Businesses in
the ordinary course of business and in accordance with the historical practice
of the Xxxxxxx Businesses, shall have been obtained and all waiting periods
specified by law with respect thereto have passed, including all waiting periods
under the HSR Act.
8.5 INJUNCTION, LITIGATION, ETC. No order of any court or governmental
agency shall be in effect which restrains or prohibits the consummation of the
transactions contemplated by this Agreement, or which would materially limit or
affect the ability of Buyer to own or control the Purchased Assets or to operate
the business of the Xxxxxxx Businesses, and there shall
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not have been threatened, nor shall there be pending, any action or proceeding
by or before any such court or governmental agency seeking to prohibit or delay
or challenging the validity of the transactions contemplated by this Agreement.
8.6 LEGISLATION. No statute, rule or regulation shall have been proposed
or enacted which prohibits or might prohibit, restrict or delay the consummation
of the transactions contemplated by this Agreement.
8.7 ESTOPPEL CERTIFICATES, ETC. The Sellers shall have obtained executed
estoppel certificates, satisfactory in form and substance to Buyer and such
other information with respect to the Assumed Leases as Buyer may reasonably
request.
8.8 OPINION OF COUNSEL FOR SELLERS. Buyer shall have received an opinion
from Duane, Morris & Heckscher, Counsel for the Sellers, in substantially the
form attached hereto as Exhibit D.
---------
8.9 ABSENCE OF CHANGES. Since the date of this Agreement, there shall
have been no material adverse change in the financial condition, results of
operations, liabilities or prospects of the Xxxxxxx Businesses, and each Seller
shall have delivered to Buyer a certificate, signed by the President or
Chairman, dated as of the Closing, to the foregoing effect.
8.10 CONTINUATION OF MEXICAN OPERATIONS. Buyer shall have obtained
agreements, satisfactory to Buyer in the exercise of its reasonable judgment,
assuring Buyer that it will be able to continue the Mexican operations of the
Xxxxxxx Businesses on
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substantially the same terms as such operations currently exist, and that any
agreements related to such Mexican operations shall be assignable to Buyer
without change in the terms thereof and shall remain in full force and effect,
notwithstanding such assignment, for the balance of the term of such agreements.
In addition, Buyer shall have obtained assurances reasonably satisfactory to it
that (i) it will not be liable for any employee-related liabilities for the
employees of the Mexican Facilities, upon their termination or otherwise, in
excess of $10,000 in the aggregate for all employees at each of the Mexican
Facilities, (ii) the Equipment and Inventory located in the Mexican Facilities
has been properly imported in accordance with Mexican custom laws and under a
current and valid Maquiladora program held by the importer of record, (iii) the
Equipment located in the Mexican Facilities is the object of an equipment use
agreement in the United States by and between Wincup Holdings, Inc., and Top
Performance Industries, Inc., and of a Commodatum Agreement in Mexico by and
between Top Performance Industries, Inc., and Mexam de Anahuac, S.A. de C.V.;
and (iv) the Mexican commodatum agreement has in fact been duly recorded in the
Public Registry of Property of the Domicile of the subcontractor in the State of
Tamaulipas, Mexico.
8.11 ASSURANCES WITH RESPECT TO CLAIMS OF CREDITORS. Buyer shall have
obtained agreements, satisfactory to Buyer in the exercise of its reasonable
judgment, that it will not be liable for debts of the Sellers, the Benchmark Sub
or the Wincup Sub
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(other than Assumed Liabilities) or subject to claims arising from such debts.
ARTICLE IX
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of the Sellers to consummate the transactions contemplated
by this Agreement shall be subject, to the extent not waived, to the following
conditions.
9.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Buyer contained in Article V of this Agreement shall be true and correct in all
material respects as of the date of this Agreement and as of the Closing, and
Buyer shall have delivered to the Sellers a certificate to that effect signed by
its Chairman or President.
9.2 PERFORMANCE OF THIS AGREEMENT. Buyer shall have complied in all
material respects with all of its obligations under this Agreement and shall
have delivered to the Sellers a certificate to that effect signed by its
respective Chairman or President.
9.3 CORPORATE AUTHORIZATION. All corporate action required to be taken by
Buyer in connection with the transactions contemplated by this Agreement shall
have been taken, all documents incident thereto shall be reasonably satisfactory
in substance and form to each Seller, and each Seller shall have received all
such originals or copies of such documents as it may reasonably request.
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9.4 CONSENTS AND APPROVALS. The consents and approvals of all Persons
which Buyer must obtain to consummate the transactions contemplated by this
Agreement shall have been obtained by Buyer and all waiting periods specified by
law with respect thereto shall have passed, including all waiting periods under
the HSR Act.
9.5 INJUNCTION, LITIGATION, ETC. No order of any court or governmental
agency shall be in effect which restrains or prohibits the consummation of the
transactions contemplated by this Agreement and there shall not have been
threatened, nor shall there be pending, any action or proceeding by or before
any such court or governmental agency seeking to prohibit or delay or
challenging the validity of the transactions contemplated by this Agreement.
9.6 LEGISLATION. No statute, rule or regulation shall have been proposed
or enacted which does or might prohibit, restrict or delay the consummation of
the transactions contemplated by this Agreement.
9.7 OPINION OF COUNSEL FOR BUYER. The Sellers shall have received an
opinion from McGuire, Woods, Battle & Xxxxxx, LLP, counsel for Buyer, in
substantially the form attached hereto as Exhibit E.
---------
ARTICLE X
CLOSING
10.1 TIME AND PLACE OF CLOSING. The closing (the "Closing") shall take
place at the offices of McGuire, Woods, Battle &
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Xxxxxx, LLP, in Richmond, Virginia, at 10:00 a.m. local time on November 6,
1995, or such other date as may be agreed upon by the parties (any of which
dates is referred to in this Agreement as the "Closing Date").
10.2 DELIVERIES BY SELLERS. At the Closing each Seller shall deliver to
Buyer the following:
(i) properly endorsed title certificates transferring the
motor vehicles which are a part of the Purchased Assets to Buyer;
(ii) a Xxxx of Sale and Assignment in substantially the form
attached hereto as Exhibit F and such other document or documents (in form
---------
satisfactory to Buyer and suitable for filing, registration or recording,
if applicable) as may be necessary to transfer to Buyer the remainder of
the Purchased Assets;
(iii) the Certificates required by Sections 8.1 and 8.2;
(iv) evidence that the corporate action described in Section
8.3 has been taken;
(v) copies of the consents required by Section 8.4;
(vi) the estoppel certificates required by Section 8.7;
(vii) a certificate from the Secretary of State of Delaware of
each Seller's good standing in the State of
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Delaware and other states if applicable as of the most recent date obtainable;
(viii) the Opinion of Counsel required by Section 8.8;
(ix) a guaranty from Benchmark Corporation of Delaware of the
Sellers' indemnification obligations hereunder, in substantially the form
of Exhibit H attached hereto (the "Benchmark Parent Guaranty");
---------
(x) certificates representing all of the Shares and any stock
transfer forms;
(xi) a letter from Xxxxxx Xxxxxxxx indicating that the Seller's
tax losses for the current year and tax loss carryforwards from previous
years will equal or exceed any taxes that would otherwise be payable by the
Sellers as a result of the contribution of assets to the Wincup Sub and
Benchmark Sub and the other transactions contemplated hereby; and
(xii) such additional documents as Buyer may reasonably request.
10.3 DELIVERIES BY BUYER. At the Closing Buyer shall deliver to the
Sellers or the other parties noted below, the following:
(i) $49,000,000, in immediately available funds;
(ii) $3,500,000, in immediately available funds, to the Persons
indicated in Section 3(ii);
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(iii) an instrument of assumption of liabilities in
substantially the form attached hereto as Exhibit G pursuant to which Buyer
---------
assumes the Assumed Liabilities as required by this Agreement;
(iv) the certificates required by Sections 9.1 and 9.2;
(v) evidence that the corporate action described in Section 9.3
has been taken;
(vi) copies of the consents required by Section 9.4.
(vii) a certificate from the State Corporation Commission of
Virginia as to the good standing of Buyer in the Commonwealth of Virginia
(and other applicable jurisdictions) as of the most recent date obtainable;
(viii) the Opinion of Counsel required by Section 9.7;
(ix) a guaranty from Buyer's parent, Xxxxx River Corporation of
Virginia, of Buyer's indemnification obligations hereunder in substantially
the form of Exhibit I attached hereto (the "Xxxxx River Parent Guaranty");
---------
and
(x) such additional documents as the Sellers may reasonably
request.
10.4 DELIVERIES BY SELLERS AND BUYER. At the Closing each Seller and Buyer
shall each execute and deliver to the appropriate parties copies of the Related
Agreements to which they are parties.
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ARTICLE XI
INDEMNIFICATION
11.1 SEVERAL INDEMNIFICATION BY SELLERS.
(a) Subject to the limitations contained in this Article XI, Wincup
will indemnify and hold Buyer harmless from any damage, loss, liability or
expense (including, without limitation, reasonable expenses of investigation and
litigation and reasonable attorneys', accountants' and other professional fees)
arising out of:
(i) a breach of any representation or warranty made by Wincup
in this Agreement;
(ii) a breach of any agreement of Wincup contained in this
Agreement (but not the Related Agreements, each one of which will stand on
its own); or
(iii) any liability or obligation of Wincup not assumed by Buyer
pursuant to this Agreement.
(b) Subject to the limitations contained in this Article XI,
Benchmark will indemnify and hold Buyer harmless from any damage, loss,
liability or expense (including, without limitation, reasonable expenses of
investigation and litigation and reasonable attorneys', accountants' and other
professional fees) arising out of:
(i) a breach of any representation or warranty made by Benchmark
in this Agreement;
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(ii) a breach of any agreement of Benchmark contained in this
Agreement (but not the Related Agreements, each one of which will stand on
its own); or
(iii) any liability or obligation of Benchmark not assumed by
Buyer pursuant to this Agreement.
11.2 INDEMNIFICATION BY BUYER. Subject to the limitations contained in
this Article XI, Buyer will indemnify and hold each Seller harmless from any
damage, loss, liability or expense (including, without limitation, reasonable
expenses of investigation and litigation and reasonable attorney's, accountants'
and other professional fees) arising out of:
(i) a breach of any representation or warranty made by Buyer in
this Agreement; and
(ii) a breach of any agreement of Buyer contained in this
Agreement (but not the Related Agreements, each one of which will stand on
its own); and
(iii) the Assumed Liabilities.
11.3 THIRD PARTY CLAIMS. The obligation of an indemnifying party to
indemnify another party to this Agreement under the provisions of this Article
XI with respect to claims resulting from the assertion of liability by those not
parties to this Agreement (including governmental claims for penalties, fines
and assessments) shall be subject to the following terms and conditions:
(i) The indemnified party shall give prompt written notice to the
indemnifying party of any assertion of
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liability by a third party which might give rise to a claim for
indemnification based on the foregoing provisions of this Article XI, which
notice shall state the nature and basis of the assertion and the amount
thereof, to the extent known, provided, however, that no delay on the part
of the indemnified party in giving notice shall relieve the indemnifying
party of any obligation to indemnify unless (and then solely to the extent
that) the indemnifying party is prejudiced by such delay;
(ii) If any action, suit or proceeding (a "Legal Action") is brought
against an indemnified party with respect to which the indemnifying party
may have liability under the foregoing provisions of this Article XI, the
Legal Action shall be defended (such defense to include all proceedings for
appeal or review which counsel for the indemnified party shall deem
appropriate) by the indemnifying party;
(iii) Notwithstanding the provisions of the previous subsection of
this Agreement, until the indemnifying party shall have assumed the defense
of any such Legal Action, the defense shall be handled by the indemnified
party. Furthermore, (w) if the indemnified party shall have reasonably
concluded that there are likely to be defenses available to the indemnified
party that are different from or in addition to those available to the
indemnifying party; (x) if the indemnifying party fails to provide the
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indemnified party with evidence reasonably acceptable to the indemnified
party that the indemnifying party has sufficient financial resources to
defend and fulfill its indemnification obligation with respect to the Legal
Action; (y) if the Legal Action involves other than money damages and seeks
injunctive or other equitable relief; or (z) if a judgment against the
indemnified party in the Legal Action will, in the good faith opinion of
the indemnified party, establish a custom or precedent which will be
materially adverse to the best interest of its continuing business, the
indemnifying party shall not be entitled to assume the defense of the Legal
Action and the defense shall be handled by the indemnified party. If the
defense of the Legal Action is handled by the indemnified party under the
provisions of this subsection, the indemnifying party shall pay all legal
and other expenses reasonably incurred by the indemnified party in
conducting such defense;
(iv) In any Legal Action initiated by a third party and defended by
the indemnifying party (w) the indemnified party shall have the right to be
represented by advisory counsel and accountants, at its own expense, (x)
the indemnifying party shall keep the indemnified party fully informed as
to the status of such Legal Action at all stages thereof, whether or not
the indemnified party is represented by its own counsel, (y) the
indemnifying party shall make available to the indemnified party, and its
attorneys,
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accountants and other representatives, all books and records of the
indemnifying party relating to such Legal Action and (z) the parties shall
render to each other such assistance as may be reasonably required in order
to ensure the proper and adequate defense of such Legal Action.
(v) In any Legal Action initiated by a third party and defended by
the indemnifying party, the indemnifying party shall not make any
settlement of any claim without the written consent of the indemnified
party, which consent shall not be unreasonably withheld. Without limiting
the generality of the foregoing, it shall not be deemed unreasonable to
withhold consent to a settlement involving injunctive or other equitable
relief against the indemnified party or its assets, employees or business,
or relief which the indemnified party reasonably believes could establish a
custom or precedent which will be materially adverse to the best interests
of its continuing business.
11.4 LIMITATIONS ON INDEMNIFICATION.
(a) Notwithstanding the foregoing provisions of this Article XI,
Benchmark and Wincup shall not be liable to Buyer under Section 11.1(a)(i) and
Section 11.1(b)(i), respectively, and Buyer shall not be liable to either of the
Sellers under Section 11.2(i), (i) with respect to any single claim, or series
of claims arising from a single occurrence, unless and to the extent the
liability under such claim or series of claims exceeds $50,000, and thereafter
the indemnified party shall be entitled
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to indemnification thereunder only for the aggregate amount of such liability in
excess of $50,000 or (ii) except as set forth in clause (i), unless and to the
extent the aggregate amount of liability under such Section (including any
amounts for which liability is determined under clause (i) above) exceeds
$250,000, and thereafter the indemnified party shall be entitled to
indemnification thereunder only for the aggregate amount of such liability in
excess of $250,000. For the purposes of determining whether the $50,000 and
$250,000 limitations set forth above have been reached (and for all other
purposes under this Section), the parties agree that claims against WinCup and
Benchmark shall be added together.
(b) All damages to which an indemnified party may be entitled
pursuant to the provisions of this Article XI shall be net of any insurance
coverage with respect thereto.
11.5 SURVIVAL; INVESTIGATION. The representations and warranties of the
parties contained in this Agreement shall survive any investigation by any party
and shall not terminate (i) until the fifth (5th) anniversary of the Closing
Date with respect to the representations and warranties set forth in Section 4.6
and (ii) until eighteen (18) months after the Closing Date with respect to all
other representations and warranties contained herein. Notwithstanding the
provisions of the preceding sentence, any representation or warranty in respect
of which indemnification may be sought under Sections 11.1(a)(i), 11.1(b)(i) or
11.2(i) shall survive the applicable termination
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date set forth in the preceding sentence if written notice, given in good faith,
of a specific breach thereof is given to the indemnifying party on or before
such termination date, whether or not liability has actually been incurred.
ARTICLE XII
TERMINATION, AMENDMENT AND WAIVER
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing;
(i) by mutual consent of the Boards of Directors or Executive
Committees of the Sellers and Buyer.
(ii) by the Sellers if there has been a material breach by Buyer
of a representation, warranty or agreement contained herein or if any of
the conditions set forth in Article IX are not satisfied.
(iii) by Buyer if there has been a material breach by the
Sellers of any representation, warranty or agreement contained herein or
any of the conditions set forth in Article VIII are not satisfied.
(iv) by Buyer if any change has occurred since the date of this
Agreement which has or can reasonably be expected to have a material and
adverse effect upon the Purchased Assets or the earnings, financial
condition, operations or prospects of the Xxxxxxx Businesses.
(v) by the Sellers or Buyer if (a) there shall have occurred any
general suspension of trading on the NYSE, (b) a banking moratorium shall
have been declared by the
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United States or (c) the United States shall have become involved in a war
or armed hostilities;
(vi) by Buyer or the Sellers if the Closing has not occurred by
11:59 p.m. Richmond, Virginia, time, November 15, 1995; or
(vii) by the Sellers if the Closing has not occurred by 11:59
p.m. Richmond, Virginia, time December 31, 1995.
12.2 EFFECT OF TERMINATION. If this Agreement is terminated as provided
in Section 12.1, it shall become wholly void and of no further force and effect
and there shall be no further liability or obligation on the part of any party
hereto except to pay such expenses as are required of it and to comply with the
confidentiality provisions of Section 6.5, but such termination shall not
constitute a waiver by any party of any claim it may have for damages caused by
reason of a willful and material breach of a representation, warranty or
agreement made by another party hereto.
12.3 AMENDMENT. This Agreement and the Exhibits and Schedules hereto may
be amended at any time prior to Closing; provided that any such amendment is
approved in writing by each of the parties hereto. All representations and
warranties which are true and correct as modified and approved shall be deemed
true and correct for the purposes of Sections 8.1 and 9.1.
12.4 EXTENSION; WAIVER. At any time prior to the Closing any party to
this Agreement which is entitled to the benefits
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thereof may (i) extend the time for the performance of any of the obligations of
another party hereto, (ii) waive a breach of a representation as warranty of
another party hereto, or (iii) waive compliance of another party hereto with any
of the Agreements or conditions contained herein. Any such extension or waiver
shall be valid if set forth in a written instrument signed by the party giving
the extension or waiver.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices and other communications given to the parties
hereunder shall be in writing. Notices shall be effective when delivered, if
delivered personally. Otherwise, they shall be effective, as follows, when sent
to the parties at the addresses or numbers listed below: (i) on the business
day delivered (or the next business day following delivery if not delivered on a
business day) if sent by a local or long distance courier, or by prepaid
telegram, telefax or other facsimile transmission, or (ii three days after
mailing if mailed by registered or certified U.S. mail, postage prepaid and
return receipt requested.
If to the Sellers to:
Benchmark Holdings, Inc. and
Wincup Holdings, Inc.
000 Xxxxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telefax No.: (000)000-0000
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with a copy to:
Duane, Morris & Heckscher
Xxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Telefax No.: (000)000-0000
If to Buyer to:
Xxxxx River Corporation
X.X. Xxx 0000
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxx 00000-0000
Attention: Xxx X. Xxxx
Telefax No: (000)000-0000
with a copy to:
Xxxxx River Corporation
X.X. Xxx 0000
Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: General Counsel
Telefax No.: (000)000-0000
and a copy to:
McGuire, Woods, Battle & Xxxxxx, LLP
One Xxxxx Center
000 X. Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telefax No.: (000)000-0000
Any Person may change the address or number to which notices are to be delivered
to him, her or it by giving the other Persons named above notice in the manner
set forth above. Similarly, any individual may change the address or number to
which his or her copies of notices are to be delivered.
13.2 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware without regard to its choice of law rules.
13.3 HEADINGS. The headings contained in this Agreement are
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for reference purposes only and shall not affect the meaning or interpretation
of the Agreement.
13.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
13.5 SELLERS' SEVERAL LIABILITY. All covenants, representations and
warranties made in this Agreement by, and all obligations binding hereunder
upon, each of the Sellers shall be deemed to have been made severally by Wincup
and Benchmark and to be severally binding upon them.
13.6 MISCELLANEOUS. This Agreement (i) constitutes the entire agreement
and supersedes all other prior agreements and understandings, both written and
oral, among the parties with respect to the subject matter hereof; (ii) is not
intended to and shall not confer upon any other person or business entity, other
than the parties hereto, any rights or remedies with respect to the subject
matter hereof; and (iii) shall not be assigned by operation of law or otherwise
(except that Buyer may assign its rights hereunder to another of its
Subsidiaries);
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed and their corporate seals to be hereto affixed and attested by their
duly authorized officers.
WINCUP HOLDINGS, INC.
By [SIGNATURE APPEARS HERE]
-------------------------------
Title Chairman
Corporate Seal:
Attest:
[SIGNATURE APPEARS HERE]
------------------------
Ass't Secretary
BENCHMARK HOLDINGS, INC.
By [SIGNATURE APPEARS HERE]
-------------------------------
Title Chairman
Corporate Seal:
Attest:
[SIGNATURE APPEARS HERE]
------------------------
Secretary
XXXXX RIVER PAPER COMPANY, INC.
By [SIGNATURE APPEARS HERE]
-------------------------------
Title Senior Vice President,
Treasurer
Corporate Seal:
Attest:
[SIGNATURE APPEARS HERE]
------------------------
Secretary
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(EXHIBITS AND SCHEDULES OMITTED)
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