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ASSET PURCHASE AGREEMENT
among
MAGNETEK, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.
and
RAIL PRODUCTS INTERNATIONAL, INC.
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Dated as of October , 1994
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SALE OF NEC RAILROAD STRATEGIC BUSINESS UNIT
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions . . . . . . . . . . . . . . . . 7
ARTICLE II CLOSING; PURCHASE PRICE ADJUSTMENT. . . . . . . . . . . . . . 8
2.1 Sale and Transfer of the Assets . . . . . . . . . . . . . . . 8
2.2 Assets Not Transferred. . . . . . . . . . . . . . . . . . . . 9
2.3 Assumed and Excluded Liabilities. . . . . . . . . . . . . . . 11
2.4 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.5 Purchase Price Adjustment; Assignment of Accounts
Receivable. . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.6 Tax Allocation. . . . . . . . . . . . . . . . . . . . . . . . 19
2.7 Sales and Use Tax . . . . . . . . . . . . . . . . . . . . . . 20
ARTICLE III CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . 20
3.1 Buyer's Obligation. . . . . . . . . . . . . . . . . . . . . . 20
3.2 Sellers' Obligation . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MAGNETEK. . . . . . . . . . 22
4.1 Authority; No Conflicts; Governmental Consents. . . . . . . . 22
4.2 Financial Statements. . . . . . . . . . . . . . . . . . . . . 23
4.3 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.4 Assets Other than Real Property Interests . . . . . . . . . . 24
4.5 Real Property . . . . . . . . . . . . . . . . . . . . . . . . 25
4.6 Intellectual Property . . . . . . . . . . . . . . . . . . . . 26
4.7 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.8 Litigation; Decrees . . . . . . . . . . . . . . . . . . . . . 27
4.9 Employee and Related Matters. . . . . . . . . . . . . . . . . 28
4.10 Environmental Matters . . . . . . . . . . . . . . . . . . . . 28
4.11 Employee and Labor Relations. . . . . . . . . . . . . . . . . 29
4.12 Assets of the Railroad SBU. . . . . . . . . . . . . . . . . . 29
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . 30
5.1 Authority; No Conflicts; Governmental Consents. . . . . . . . 30
5.2 Actions and Proceedings, etc. . . . . . . . . . . . . . . . . 31
5.3 Availability of Funds . . . . . . . . . . . . . . . . . . . . 31
5.4 Buyer's Acknowledgment. . . . . . . . . . . . . . . . . . . . 31
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5.5 Exon-Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . 32
5.6 No Knowledge of Sellers' Breach . . . . . . . . . . . . . . . 32
ARTICLE VI COVENANTS OF MAGNETEK . . . . . . . . . . . . . . . . . . . . 33
6.1 Access. . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
6.2 Ordinary Conduct. . . . . . . . . . . . . . . . . . . . . . . 33
6.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 34
6.4 Subdivision of King Avenue Facility . . . . . . . . . . . . . 34
6.5 Acquisition Proposals . . . . . . . . . . . . . . . . . . . . 36
6.6 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 36
6.7 Non-Competition . . . . . . . . . . . . . . . . . . . . . . . 37
6.8 Offsite Assets. . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VII COVENANTS OF BUYER. . . . . . . . . . . . . . . . . . . . . . 38
7.1 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 38
7.2 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 39
7.3 Waiver of Bulk Sales Law Compliance . . . . . . . . . . . . . 40
7.4 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . 40
7.5 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII MUTUAL COVENANTS. . . . . . . . . . . . . . . . . . . . . . . 41
8.1 Permits and Consents. . . . . . . . . . . . . . . . . . . . . 42
8.2 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.3 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 43
8.4 Reasonable Efforts and Further Assurances . . . . . . . . . . 44
8.5 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
8.6 Access to Former Business Records; Cooperation in
Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 45
8.7 Use of Trademarks and Trade Names . . . . . . . . . . . . . . 45
8.8 Required Modifications or Replacements of Products. . . . . . 46
ARTICLE IX EMPLOYEE BENEFIT MATTERS. . . . . . . . . . . . . . . . . . . 47
9.1 Employee Retention. . . . . . . . . . . . . . . . . . . . . . 47
9.2 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . . 48
9.3 Employees Covered by Collective Bargaining Agreements . . . . 49
9.4 Bargaining Plans. . . . . . . . . . . . . . . . . . . . . . . 50
9.4 Bargaining Plans. . . . . . . . . . . . . . . . . . . . . . . 50
9.6 Access to Information . . . . . . . . . . . . . . . . . . . . 50
9.7 Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . 50
ARTICLE X INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 51
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10.1 Indemnification by MagneTek . . . . . . . . . . . . . . . . . 51
10.2 Indemnification by Buyer. . . . . . . . . . . . . . . . . . . 53
10.3 Indemnification for Environmental Matters . . . . . . . . . . 54
10.4 Losses Net of Insurance, etc. . . . . . . . . . . . . . . . . 55
10.5 Termination of Indemnification. . . . . . . . . . . . . . . . 56
10.6 Procedures Relating to Indemnification (Other than for Tax
Claims) . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
10.7 Procedures Relating to Indemnification of Tax Claims. . . . . 60
10.8 Survival of Representations . . . . . . . . . . . . . . . . . 60
ARTICLE XI GENERAL PROVISIONS. . . . . . . . . . . . . . . . . . . . . . 61
11.1 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 61
11.2 No Third-Party Beneficiaries. . . . . . . . . . . . . . . . . 62
11.3 Termination . . . . . . . . . . . . . . . . . . . . . . . . . 62
110. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.5 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . 64
11.6 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . 64
11.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.8 Interpretation; Exhibits and Schedules. . . . . . . . . . . . 66
11.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 67
11.10 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 67
11.11 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
11.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 67
11.13 NEC Covenants . . . . . . . . . . . . . . . . . . . . . . . . 68
11.14 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 68
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EXHIBITS
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EXHIBIT A Xxxx of Sale, Assignment and Assumption
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
EXHIBIT B Opinion of Xxxxxx, Xxxx & Xxxxxxxx. . . . . . . . . . . . . . . B-1
EXHIBIT C Opinion of General Counsel of MagneTek. . . . . . . . . . . . . C-1
EXHIBIT D Opinion of Xxxxxxx X. Xxxxxxxx. . . . . . . . . . . . . . . . . D-1
EXHIBIT E Form of Supply Agreement. . . . . . . . . . . . . . . . . . . . E-1
EXHIBIT F Form of Ground Lease. . . . . . . . . . . . . . . . . . . . . . F-1
EXHIBIT G Form of Reciprocal Easement Agreement.. . . . . . . . . . . . . G-1
EXHIBIT H Term Sheet for Subcontract Agreement. . . . . . . . . . . . . . H-1
EXHIBIT I Form of Key Employee Certificate. . . . . . . . . . . . . . . . I-1
EXHIBIT J Form of Services Agreement. . . . . . . . . . . . . . . . . . . J-1
SCHEDULES
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Schedule 1.1(a) December Balance Sheet
Schedule 1.1(b) Railroad SBU Employees
Schedule 2.1(a) Owned Property
Schedule 2.1(b) Leased Property
Schedule 2.1(i) Assets on Retained Property
Schedule 2.2(i) Certain Excluded Assets
Schedule 2.6 Purchase Price Allocation
Schedule 4.1(b) Conflicts (Seller)
Schedule 4.3 Taxes
Schedule 4.4 Liens
Schedule 4.5 Railroad SBU Properties
Schedule 4.6 Intellectual Property
Schedule 4.7 Certain Contracts
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Schedule 4.8 Litigation
Schedule 4.9 Seller Plans
Schedule 4.11 Labor Matters
Schedule 5.1(b) Conflicts (Buyer)
Schedule 6.2 Exceptions to Ordinary Course
Schedule 11.11 Sellers' and Buyer's Brokers and Finders
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of October 31, 1994, among MAGNETEK,
INC., a Delaware corporation ("MagneTek"), MagneTek National Electric Coil Inc.,
a Delaware corporation ("NEC" and together with MagneTek, "Sellers"), and Rail
Products International, Inc., an Ohio corporation ("Buyer").
NEC, a wholly-owned subsidiary of MagneTek, is engaged, through its NEC
Railroad Strategic Business Unit (the "Railroad SBU"), in the business of
developing, manufacturing, remanufacturing, selling and distributing motors and
motor components for use in electric locomotives. Sellers desire to sell to
Buyer certain assets (other than excluded assets) relating to the Railroad SBU.
Buyer desires to purchase such assets and is willing to assume certain
associated obligations and liabilities.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act by the SEC, as in effect on the date hereof.
"Assets" has the meaning set forth in Section 2.1.
"Assigned Contracts" has the meaning set forth in Section 2.1(f).
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Assumed Litigation" has the meaning set forth in Section 2.3.
"Xxxx of Sale, Assignment and Assumption Agreement" means a Xxxx of
Sale, Assignment and Assumption Agreement in substantially the form attached
hereto as Exhibit A.
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"Business Day" means a day other than a Saturday or a Sunday or other
day on which commercial banks in New York are authorized or required by law to
close.
"Buyer Indemnified Person" has the meaning set forth in Section 10.1.
"Closing Balance Sheet" has the meaning set forth in Section 2.5.
"Closing Date" means the day on which the Closing occurs pursuant to
Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collective Bargaining Agreement" means the Agreement between MagneTek
National Electric Coil, Columbus, Ohio, and International Union of Electrical,
Radio & Machine Workers, AFL-CIO-CLC and its Local No. 545, dated March 4, 1993
and all schedules, appendices and letters of understanding related thereto.
"Contract" means any contract, agreement, license, lease, sales or
purchase order or other legally binding commitment, whether written or oral, to
which MagneTek or NEC is a party and relating exclusively to the Railroad SBU.
"Contractual Obligation" means, as to any Person, any provision of any
note, bond or security issued by such Person or of any mortgage, indenture, deed
of trust, lease, license, franchise, contract, agreement, instrument or
undertaking to which such Person is a party or by which it or any of its
property or assets is subject.
"December Balance Sheet" means the unaudited balance sheet of the
Railroad SBU as of December 31, 1993, attached hereto as Schedule 1.1(a).
"Dublin Road Dispute" means the claim asserted by the Dublin Road
Partnership that it is entitled to recover against MagneTek in respect of
certain contamination allegedly caused by MagneTek (whether or not such
contamination actually occurred or was so caused), as set forth in greater
detail in the correspondence dated July 7, 1993, February 3, 1994 and July 27,
1994 and in the Complaint filed on July 29, 1994.
"Dublin Road Facility" means the facility leased by MagneTek from the
Dublin Road Partnership and located at 0000 Xxxxxx Xxxx, Xxxxxxxx, Xxxx 00000.
0
"Xxxxxx Xxxx Partnership" means 0000 Xxxxxx Xxxx Associates, an Ohio
limited partnership.
"Employee Benefit Arrangements" means each and all pension,
supplemental pension, accidental death and dismemberment, life and health
insurance and benefits (including medical, dental, vision and hospitalization),
disability, holiday, vacation, sick pay, sick leave, tuition refund, service
award and other employee benefit arrangements, plans, contracts or policies
providing employee or executive compensation or benefits to Railroad SBU
Employees, other than the Employee Benefit Plans.
"Employee Benefit Plans" means each and all "employee benefit plans,"
as defined in Section 3(3) of ERISA, maintained or contributed to by either
Seller or in which either Seller participates or participated and which, in each
case, provides benefits to Railroad SBU Employees, including (i) any such plans
that are "employee welfare benefit plans" as defined in Section 3(1) of ERISA
and (ii) any such plans that are "employee pension benefit plans" as defined in
Section 3(2) of ERISA.
"Environmental Law" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, and any other applicable statutes,
regulations, rules, ordinances or codes which relate to the protection of the
environment from the effects of Hazardous Substances.
"Equipment" has the meaning set forth in Section 2.1(c).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the SEC promulgated from
time to time thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.3.
"GAAP" means generally accepted accounting principles in the United
States of America.
3
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Ground Lease" means the Ground Lease to be entered into by NEC and
Buyer in substantially the form of Exhibit F hereto.
"Hazardous Substance" means any substance which is defined as a
hazardous waste or hazardous substance under any Environmental Law.
"Indemnified Person" means, with respect to any Loss, the Person
seeking indemnification hereunder.
"Indemnifying Person" means, with respect to any Loss, the Person from
whom indemnification is being sought hereunder.
"Intellectual Property" has the meaning set forth in Section 2.1(e).
"Inventory" has the meaning set forth in Section 2.1(d).
"Knowledge of Seller" with reference to any of the representations and
warranties of MagneTek means the actual knowledge of any "officer" of MagneTek
as such term is defined in 17 C.F.R. Section 240.16a-1(f), to the extent such
officer had, on the date hereof, responsibility for matters that are the subject
of such representation and warranty; PROVIDED, HOWEVER, that unless such an
officer had (a) actual knowledge to the contrary or (b) direct responsibility at
the Railroad SBU level for the subject matter thereof, such knowledge is based
solely upon information and materials supplied to MagneTek by Railroad SBU
personnel.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any kind
or nature whatsoever (including, without limitation, any conditional sale or
other title retention agreement or any financing lease having substantially the
same economic effect as any of the foregoing).
"Loss" means any loss, liability, claim, damage or expense (including
reasonable attorneys' fees and disbursements and the costs of investigation).
Loss recoverable hereunder is subject to the limitations set forth in
Section 10.4.
4
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, property or condition (financial or other) of the Railroad
SBU, taken as a whole or (b) the ability of Sellers to consummate the
transactions contemplated by this Agreement.
"Owned Property" has the meaning set forth in Section 2.1(a).
"Permits" has the meaning set forth in Section 2.1(g).
"Permitted Liens" has the meaning set forth in Section 4.4.
"Person" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Purchase Price" has the meaning set forth in Section 2.4.
"Railroad SBU Employee" means any employee of MagneTek or NEC working
primarily for the Railroad SBU on the Closing Date or the Termination Date,
including any such employee on vacation or illness leave on either such date.
Schedule 1.1(b) sets forth a list of Railroad SBU Employees as of the date set
forth thereon.
"Railroad SBU Property or Properties" has the meaning set forth in
Section 4.5.
"Reciprocal Easement Agreement" means the Reciprocal Easement Agreement
to be entered into by NEC and Buyer in substantially the form of Exhibit G
hereto.
"Records" has the meaning set forth in Section 2.1(h).
"Required Modification" means, with respect to any product, a
modification, improvement or enhancement which is (a) required by any
Requirement of Law or (b) otherwise necessary or advisable in MagneTek's sole
discretion to permit MagneTek to meet any duty or obligation owing by NEC to
remedy defects or hazards in such products or to provide any warning with
respect to any such defects or hazards. Required Modifications may include, but
shall not be limited to, modifications, improvements or enhancements necessary
to meet industry standards, or to implement design improvements, or
modifications of or supplements to the product's design, quality, components,
safety features, labeling, warnings or
5
instructions. Required Modification shall in no event mean or include any
modification, improvement or enhancement required by any written warranty
covering the relevant product.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"SEC" means the Securities and Exchange Commission.
"Seller Plans" means each and all Employee Benefit Plans and Employee
Benefit Arrangements sponsored or maintained by NEC or MagneTek under which any
Railroad SBU Employee participates or is entitled to receive benefits.
"Services Agreement" means the Agreement between MagneTek and Buyer in
respect of certain services to be rendered by MagneTek personnel at the Dublin
Road Facility in substantially the form of Exhibit J hereto.
"Subcontract Arrangement" means the arrangement relating to NEC's
St. Xxxx, Quebec operations to be entered into by NEC and Buyer as generally
described on Exhibit H hereto.
"Supply Agreement" means the bilateral supply agreement to be entered
into by NEC and Buyer in substantially the form of Exhibit E hereto.
"Tax" or "Taxes" means, with respect to any Person, any federal, state,
local or foreign net income, gross income, gross receipts, sales, use, ad
valorem, value-added, capital, unitary, intangible, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, transfer,
occupation, premium, property or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any jurisdiction or other taxing authority, on such Person.
"Tax Returns" has the meaning set forth in Section 4.3.
"Termination Date" has the meaning set forth in Section 9.1.
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"Transaction Documents" means (i) this Agreement, (ii) the Xxxx of
Sale, Assignment and Assumption Agreement; (iii) the Supply Agreement; (iv) the
Ground Lease; (v) the Reciprocal Easement Agreement and (vi) the Services
Agreement.
"Transactions" means the transactions contemplated by the Transaction
Documents.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Terms defined in this Agreement in Sections other than
Section 1.1 shall have the meanings as so defined when used in this Agreement.
(b) As used herein, accounting terms not defined or to the
extent not defined, shall have the respective meanings given to them under GAAP.
(c) Unless express reference is made to Business Days,
references to days shall be to calendar days.
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ARTICLE II
CLOSING; PURCHASE PRICE ADJUSTMENT
2.1 SALE AND TRANSFER OF THE ASSETS. Subject to the terms and
conditions of this Agreement, on the Closing Date NEC and, to the extent
applicable, MagneTek, will sell, convey, transfer, assign and deliver to Buyer
all of their respective right, title and interest in and to the following assets
(except the Excluded Assets), to the extent that they are used exclusively in
the operations of the Railroad SBU, as the same shall exist on the Closing Date
(the "Assets"):
(a) a leasehold interest under the Ground Lease in a portion of
the real property (including all buildings, improvements and structures located
on such portion and all rights, privileges, easements and appurtenances thereto)
located at 000 Xxxx Xxxxxx, Xxxxxxxx, Xxxx 00000 (the "King Avenue Facility")
described on Schedule 2.1(a) hereto (the "Owned Property"), subject to the
provisions of Section 6.4 hereof;
(b) all tangible personal property, including, without
limitation, the fixtures, furnishings, furniture, office supplies, vehicles,
rolling stock, tools, tooling and forms, machinery, equipment, computer
equipment (including software), located upon or affixed to or normally located
in, at or upon, even if temporarily removed from, any of the Railroad SBU
Properties or the Dublin Road Facility (collectively, including the fixtures,
the "Equipment");
(c) all inventory, including without limitation, raw materials,
work-in-process, finished goods, packaging materials, spare parts and supplies
(the "Inventory");
(d) any trademarks, trade names, patents, service marks,
copyrights (whether registered or unregistered) and pending applications for the
foregoing listed on Schedule 4.6 (the "Intellectual Property");
(e) all Contracts (including but not limited to all Contracts
listed on Schedule 4.7 and all Contracts entered into by the Railroad SBU
through the Closing Date), except for any Contract that requires the consent to
assignment of a party thereto which consent has not been obtained prior to the
Closing Date pursuant to Section 8.1 (the "Assigned Contracts");
(f) all transferable business licenses and permits used
exclusively in or relating exclusively to the Railroad SBU or the Assets (the
"Permits");
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(g) all books and records (other than historical accounting,
financial and Tax records), drawings, data, plans and specifications, surveys
and title policies relating to the Owned Property, sales literature, market
analysis, product information, documents, manuals, software, employment records
and files and all other information and/or data related to or used by Sellers
exclusively in connection with the Assets and the operation of the Railroad SBU
and located at the King Avenue or Dublin Road Facility; provided that as to the
Dublin Road Dispute, no Records shall be transferred to Buyer (the "Records");
(h) all insurance proceeds paid or payable by any insurance
provider, other than Sellers or any Affiliate of Sellers, for any Asset that is
destroyed or damaged after the date hereof and prior to the Closing;
(i) those assets used by the Railroad SBU Division and currently
located at NEC's facilities at King Avenue, Columbus, Ohio, St. Xxxx, Quebec and
Brownsville, Texas, in each case as set forth on Schedule 2.1(i), respectively;
and
(j) all goodwill appurtenant to the foregoing Assets.
2.2 ASSETS NOT TRANSFERRED. Notwithstanding anything herein to the
contrary, the following assets are not included in the Assets and shall be
retained by Sellers (the "Excluded Assets"):
(a) all cash and cash equivalent items (except as described in
Section 2.1(i) and except for deposits and prepaid expenses reflected on the
Closing Balance Sheet and relating to Assumed Liabilities) of Sellers,
including, without limitation, checking accounts, bank accounts, lock box files,
certificates of deposit, time deposits, securities, and the proceeds of accounts
receivable, including uncashed checks in payment thereof received by Sellers on
or prior to the Closing Date, in each case whether or not relating to the
Railroad SBU;
(b) all rights, properties, and assets which have been used or
held for use in connection with the Railroad SBU and which shall have been
transferred (including transfers by way of sale) or otherwise disposed of prior
to the Closing, provided such transfers and disposals shall have been in the
ordinary course of the business of the Railroad SBU as conducted at the date
hereof;
(c) rights to or claims for refunds or rebates of Taxes and
other governmental charges for periods ending on
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or prior to the Closing Date and the benefit of net operating loss
carryforwards, carrybacks or other credits of Sellers, whether or not
attributable to the Railroad SBU;
(d) claims or rights against third parties, except those arising
with respect to events or breaches occurring after the Closing Date under the
Assigned Contracts; PROVIDED, HOWEVER, that any rights of indemnification,
contribution or reimbursement that may exist under the Assigned Contracts in
respect of Excluded Assets or Excluded Liabilities hereunder shall be Excluded
Assets;
(e) except as set forth in Section 2.1(h), all insurance
policies and rights thereunder, including but not limited to, rights to any
cancellation value as of the Closing Date;
(f) proprietary or confidential business or technical
information, records and policies that relate generally to Sellers or any of its
Affiliates and are not used exclusively in the Railroad SBU, including, without
limitation, organization manuals and strategic plans but excluding the software
program developed for and used by NEC and the Railroad SBU;
(g) subject to the limited rights granted in Section 8.7, all
"MagneTek" and "NEC" marks, including any and all trademarks or service marks,
trade names, slogans or other like property relating to or including the names
"MagneTek or NEC," the xxxx MagneTek or NEC, or any derivative thereof, and the
MagneTek or NEC logo or any derivative thereof, and Sellers' proprietary
computer programs or other software, including but not limited to Sellers'
proprietary data bases, accounting and reporting formats, systems and
procedures;
(h) all Records relating to the Dublin Road Dispute;
(i) those assets described in Schedule 2.2(i);
(j) all accounts receivable of the Railroad SBU in existence as
of the Closing Date which accounts receivable, as of October 2, 1994, aggregated
approximately $3,315,000;
(k) the lease in respect of the Dublin Road Facility (the
"Retained Lease");
(l) all other assets of Sellers not expressly included in the
Assets to be sold hereunder, including but not limited to assets used by Sellers
or their Affiliates in other businesses of Sellers or their Affiliates and
assets used
10
primarily in connection with Sellers' corporate functions (including but not
limited to the corporate charter, taxpayer and other identification numbers,
seals, minute books and stock transfer books), whether or not used for the
benefit of the Railroad SBU.
2.3 ASSUMED AND EXCLUDED LIABILITIES. On the Closing Date, Buyer
shall execute and deliver to Sellers the Xxxx of Sale, Assignment and Assumption
Agreement pursuant to which Buyer shall assume and agree to pay, perform and
discharge when due, all the liabilities and obligations of Sellers arising out
of the business of the Railroad SBU, of any kind or nature, whether absolute,
contingent, accrued or otherwise, and whether arising before or after the
Closing including, without limitation, all liabilities (i) for Taxes assumed by
Buyer under Section 2.7, (ii) under the Assigned Contracts, (iii) relating to
the claims described on Schedules 4.8 and 4.11 (such matters referred to in this
clause (iii) being hereinafter collectively referred to as the "Assumed
Litigation") and (iv) all liabilities and obligations of Buyer set forth in
Article IX hereof (collectively, the "Assumed Liabilities"); PROVIDED, HOWEVER,
that the Assumed Liabilities shall in no event include the following liabilities
(the "Excluded Liabilities"):
(a) any liability, responsibility or obligation with respect to
any Seller Plan, except (i) as provided in Article IX, and (ii) pursuant to any
Assigned Contract;
(b) any liability for (i) warranty claims made after the Closing
for service, repair, replacement and similar work required under Sellers'
written warranties with respect to products sold or services provided prior to
the Closing, the expenses of which, at shop level cost (direct materials, direct
labor and factory overhead), in the aggregate exceed the warranty reserve on the
Closing Balance Sheet, (ii) workers' compensation claims with respect to
injuries prior to the Closing, (iii) claims under health insurance plans of
Sellers for covered Railroad SBU Employees with respect to services rendered
prior to the Closing (but not in respect of any sick leave or disability
benefits pertaining to any period after the Closing Date regardless of when the
relevant illness or condition arose) or (iv) any product liability claims for
injuries, property damage or other Losses, arising with respect to products sold
or services provided prior to the Closing, but only if written notice of such
claims described in clause (i), (ii), (iii) or (iv) shall have been delivered to
Sellers within the two-year period following the Closing Date;
11
(c) any liability for Taxes for any period ending on or prior to
the Closing Date, excluding the Taxes covered by Section 2.7; and
(d) any liability under the Retained Lease.
2.4 CLOSING. The closing (the "Closing") of the purchase and sale of
the Assets shall be held at offices to be specified by Buyer in Columbus, Ohio,
at 10:00 a.m. on October 31, 1994, or if the conditions to Closing set forth in
Article III shall not have been satisfied or waived by such date, subject to
Section 11.3, as soon as practicable after such conditions shall have been
satisfied or waived. The date on which the Closing shall occur is hereinafter
referred to as the "Closing Date." At the Closing, Buyer shall deliver to
Sellers by wire transfer (to a bank account designated at least two business
days prior to the Closing Date in writing by Sellers) immediately available
funds in an amount equal to the sum of $11,800,000 (Eleven Million Eight Hundred
Thousand dollars, hereinafter, the "Purchase Price"), plus or minus an estimate,
if the parties mutually agree prior to the Closing Date with respect thereto, of
any adjustment to the Purchase Price under Section 2.5 (the Purchase Price plus
or minus such estimate of any adjustment under Section 2.5 being hereinafter
called the "Closing Date Amount"), and such other documents as are required by
this Agreement.
At the Closing, Sellers shall deliver or cause to be delivered to Buyer
(a) the Xxxx of Sale, Assignment and Assumption Agreement, (b) the Ground Lease
and Reciprocal Easement Agreement, (c) the Supply Agreement, (d) the Services
Agreement, (e) the documents and agreements referred to in Section 3.1 hereof
and (f) such other instruments of transfer and documents as Buyer may reasonably
request, and Buyer shall deliver to Sellers (i) the documents and agreements
referred to in the preceding clauses (a) through (d) and in Section 3.2 hereof
and (ii) such other instruments of assumption and documents as Sellers may
reasonably request. In addition, Sellers shall deliver to Buyer at the Closing
affidavits in form and substance satisfactory to Buyer, duly executed and
acknowledged, certifying that neither Seller is a foreign person within the
meaning of Section 1445(f)(3) of the Code, and any corresponding affidavit
required for state tax purposes.
2.5 PURCHASE PRICE ADJUSTMENT; ASSIGNMENT OF ACCOUNTS RECEIVABLE.
(a) Within 60 days after the Closing Date, MagneTek shall
prepare and deliver to Buyer a balance sheet of the Railroad SBU as of the close
of business on the Closing Date comprising the Assets and the outstanding
Assumed
12
Liabilities (the "Closing Balance Sheet"). For purposes of preparing the
Closing Balance Sheet, Buyer shall make Railroad SBU Employees available to
MagneTek (without charge) and such employees shall, for the purpose of assisting
MagneTek in preparing the Closing Balance Sheet, be instructed by Buyer to act
at MagneTek's direction.
During the 30 days immediately following Buyer's receipt of the Closing
Balance Sheet, Buyer shall be entitled to review the Closing Balance Sheet and
MagneTek's working papers relating to the Closing Balance Sheet, and MagneTek
shall provide Buyer access at all reasonable times to its personnel, properties,
books and records to the extent relevant and not comprising Assets. The Closing
Balance Sheet shall become final and binding upon the parties on the thirtieth
day following delivery thereof unless Buyer gives written notice to MagneTek of
its disagreement with the Closing Balance Sheet (a "Notice of Disagreement")
prior to such date. Any Notice of Disagreement shall specify in reasonable
detail the nature of any disagreement so asserted. If a timely Notice of
Disagreement is received by MagneTek with respect to the Closing Balance Sheet,
then the Closing Balance Sheet (as revised in accordance with clause (x) or (y)
below), shall become final and binding upon the parties on the earlier of
(x) the date the parties hereto resolve in writing any differences they have
with respect to any matter specified in a Notice of Disagreement or (y) the date
any matters properly in dispute are finally resolved in writing by the
Accounting Firm (as defined below). During the 30 days immediately following
the delivery of any Notice of Disagreement, MagneTek and Buyer shall seek in
good faith to resolve in writing any differences which they may have with
respect to any matter specified in such Notice of Disagreement. During such
period, Buyer and MagneTek shall each have access to the other party's working
papers prepared in connection with the other party's preparation of a Notice of
Disagreement. At the end of such 30-day period, MagneTek and Buyer shall submit
to an independent accounting firm (the "Accounting Firm") for review and
resolution any and all matters which remain in dispute and which were properly
included in any Notice of Disagreement, and the Accounting Firm shall reach a
final, binding resolution of all matters which remain in dispute. The Closing
Balance Sheet, with such adjustments necessary to reflect the Accounting Firm's
resolution of the matters in dispute, shall become final and binding on Buyer
and MagneTek on the date the Accounting Firm delivers its final resolution to
the parties. The Accounting Firm shall be Xxxxxx Xxxxxxxx, or if such firm is
unable or unwilling to act, such other nationally recognized independent public
accounting firm with offices in Columbus, Ohio, as shall be agreed upon by the
parties hereto in writing. The cost of any arbitration (including the fees and
expenses of
13
the Accounting Firm) pursuant to this Section 2.5 shall be borne 50% by Buyer
and 50% by MagneTek.
(b) The Closing Balance Sheet shall be prepared in accordance
with GAAP, applied in a manner consistent with that followed in the preparation
of the December Balance Sheet, subject to the following:
(i) the Closing Balance Sheet shall not reflect any
provision for Taxes (whether as an asset or a liability);
(ii) intercompany advances shall be eliminated; and
(iii) all Excluded Assets, including, without limitation,
the accounts receivable included therein (and all related depreciation
and reserves) shall be eliminated and all Excluded Liabilities (and
related reserves) shall be eliminated.
(c) The Purchase Price shall be adjusted (after giving effect to
the estimation, if any, reflected in the Closing Date Amount) such that the
Purchase Price is (i) increased, to the extent that (A) current Assets of the
Railroad SBU increase (B) current Assumed Liabilities of the Railroad SBU
decrease or (C) the aggregate net book value of plant and equipment increases,
in each case from the amount reflected on the December Balance Sheet, and
(ii) decreased, to the extent that (x) current assets of the Railroad SBU
decrease, (y) current Assumed Liabilities increase or (z) the aggregate net book
value of plant and equipment decreases, in each case from the amount reflected
on the December Balance Sheet. The adjustments referred to in the foregoing
clauses (i) and (ii) shall be cumulative as to each category. In addition, the
Purchase Price shall be adjusted in accordance with Section 2.5(d) hereof in
respect of the assignment of certain accounts receivable to Buyer, if
applicable. The Purchase Price shall be adjusted upward or downward, dollar for
dollar, in respect of any such negative or positive adjustment; PROVIDED,
HOWEVER, that no adjustment to the Purchase Price pursuant to this Section 2.5
shall be made unless such adjustment would exceed $100,000, and if the
adjustment would exceed $100,000, then the full amount of the adjustment shall
be made; PROVIDED, HOWEVER, that the estimated adjustment paid on the Closing
Date shall be taken into account in determining whether such threshold is met.
Any required adjustment to the Purchase Price pursuant to this Section 2.5 shall
be referred to as the "Purchase Price Adjustment."
14
(d) The Purchase Price shall be further adjusted to reflect an
increase equal to (i) the face amount of all accounts receivable not sold to
Buyer and which were therefore eliminated from the Closing Balance Sheet which
accounts receivable have not been collected by Sellers on or prior to the 60th
day after the Closing Date less (ii) the amount of the reserve for uncollectible
accounts receivable that would have been reflected on such Closing Balance Sheet
had the related accounts receivable been so sold. Prior to such 60th day after
the Closing Date, Sellers shall use commercially reasonable efforts to collect
payment for such accounts receivable, and Buyer shall provide all commercially
reasonable assistance in respect thereto but no party shall be obligated to
institute litigation or incur any extraordinary expense in connection therewith.
(e) Buyer agrees, with respect to Purchase Price Adjustments,
that following the Closing, Buyer will not take any actions with respect to the
accounting books, records, policies and procedures of the Railroad SBU on which
the Closing Balance Sheet is to be based that are not consistent with GAAP
applied in the manner consistent with the past practices of the Railroad SBU.
(f) Within thirty days after the receipt by Buyer of the Closing
Balance Sheet in accordance with Section 2.5(a) hereof, Buyer shall remit to
Sellers or Sellers shall remit to Buyer, as the case may be, in immediately
available funds, any undisputed amounts constituting Purchase Price Adjustments.
With respect to any items that are the subject of a Notice of Disagreement,
payment shall be made in immediately available funds within three business days
after the resolution thereof pursuant to Section 2.5(a). Each payment pursuant
to this Section 2.5 shall be made with interest on the amount of the payment at
an annual rate equal to the reference rate quoted by the San Xxxxxxxxx xxxxxx of
Bank of America on the Closing Date for the period from the Closing Date to the
date of payment, computed on the basis of a 360-day year and actual days
elapsed.
2.6 TAX ALLOCATION. Buyer and Sellers shall allocate the Purchase
Price plus the Assumed Liabilities (to the extent identifiable or reasonably
estimable as of the date hereof) to broad categories constituting components of
the Assets in accordance with Schedule 2.6 (as the same may be updated as of the
Closing to reflect changes in the Assets or Assumed Liabilities occurring after
the date thereof and prior to the Closing Date). Buyer and Sellers shall report
the purchase and sale of the Assets in accordance with the agreed upon
allocation among such broad categories for all Tax purposes (including the
filing of the forms prescribed under Section 1060 of the Code and the Treasury
Regulations
15
promulgated thereunder), but such allocation shall not constrain reporting for
other purposes.
2.7 SALES AND USE TAX. Buyer and Sellers shall cooperate in
preparing, executing and filing use and sales Tax returns relating to, and Buyer
and MagneTek shall share equally and pay when due, any and all sales, real
estate, transfer or use Tax due with regard to, the purchase and sale of the
Assets. Such Tax Returns shall be prepared in a manner that is consistent with
the allocation of the Purchase Price and Assumed Liabilities contemplated by
Section 2.6. Buyer shall also furnish Sellers with a form of resale certificate
that complies with the requirements of Ohio and other applicable state taxation
laws.
ARTICLE III
CONDITIONS TO CLOSING
3.1 BUYER'S OBLIGATION. The obligations of Buyer to purchase and pay
for the Assets are subject to the satisfaction (or waiver by Buyer) as of the
Closing of the following conditions:
(a) The representations and warranties of MagneTek made in this
Agreement shall be true and correct in all material respects as of the date
hereof and, except as specifically contemplated by this Agreement, on and as of
the Closing, as though made on and as of the Closing Date, and Sellers shall
have performed or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or complied with by Sellers
by the time of the Closing; and Sellers shall have delivered to Buyer
certificates dated the Closing Date and signed by an authorized officer of the
respective Sellers confirming the foregoing.
(b) Buyer shall have received an opinion dated the Closing Date
of Xxxxxx, Xxxx & Xxxxxxxx, counsel to Sellers, as to the matters set forth in
Exhibit B, and an opinion dated the Closing Date of Xxxxxx X. Miley, Esq.,
General Counsel of MagneTek, as to the matters set forth in Exhibit C, which
opinions shall be reasonably satisfactory in form to Buyer.
(c) MagneTek shall have entered into the Services Agreement.
(d) No injunction or order shall have been granted by any court
or administrative agency or instrumentality of competent jurisdiction that would
restrain or prohibit any of the Transactions or that would impose
16
damages as a result thereof, and no action or proceeding shall be pending before
any court or administrative agency or instrumentality of competent jurisdiction
in which any Person seeks such a remedy (if in the opinion of counsel to Buyer
there exists a reasonable risk of a materially adverse result in such pending
action or proceeding).
3.2 SELLERS' OBLIGATION. The obligations of Sellers to sell and
deliver the Assets to Buyer are subject to the satisfaction (or waiver by
Sellers) as of the Closing of the following conditions:
(a) The representations and warranties of Buyer made in this
Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing, as though made on and as of the Closing
Date, and Buyer shall have performed or complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by Buyer by the time of the Closing; and Buyer shall have
delivered to Sellers a certificate dated the Closing Date and signed by an
authorized officer of Buyer confirming the foregoing.
(b) Sellers shall have received an opinion dated the Closing
Date of Xxxxxxx X. Xxxxxxxx, Esq., counsel to Buyer, as to the matters set forth
in Exhibit D, which opinion shall be reasonably satisfactory in form to Sellers.
(c) MagneTek shall have received, from Messrs. Xxxxxx X. Xxxxxx,
Xxxxxx X. Xxxxxxx and Xxxxxx X Xxxxx III, certificates relating to certain
environmental matters in the form attached hereto as Exhibit I (the "Key
Employee Certificates").
(d) No injunction or order shall have been granted by any court
or administrative agency or instrumentality of competent jurisdiction that would
restrain or prohibit the Transactions or that would impose damages as a result
thereof, and no action or proceeding shall be pending before any court or
administrative agency or instrumentality of competent jurisdiction in which any
Person seeks such a remedy (if in the opinion of counsel to Sellers there exists
a reasonable risk of a materially adverse result in such pending action or
proceeding).
(e) MagneTek shall have received from Buyer insurance
certificates reflecting compliance with the provisions of Section 7.5.
17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MAGNETEK
MagneTek hereby represents and warrants to Buyer as follows:
4.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Seller has all requisite corporate power and authority to enter into the
Transaction Documents and to consummate the Transactions. All corporate acts
and other proceedings required to be taken by each Seller to authorize the
execution, delivery and performance of the Transaction Documents and the
consummation of the Transactions have been duly and properly taken. This
Agreement has been duly executed and delivered by each Seller and constitutes a
valid and binding obligation of each Seller, enforceable against each Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) The execution and delivery of this Agreement does not and of
the other Transaction Documents will not, and the consummation of the
Transactions and compliance with the terms of the Transaction Documents will not
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Sellers under, any provision of (i) the Certificate of Incorporation or By-Laws
of either Seller, (ii) subject to the matters disclosed in Schedule 4.1(b), any
Contractual Obligation of either Seller or (iii) any judgment, order or decree
or, subject to the matters described in clauses (A)-(D) below, any Requirement
of Law applicable to either Seller or its property or assets, other than, in the
case of clauses (ii) and (iii) above, any such conflicts, violations, defaults,
rights or Liens that, individually or in the aggregate, would not have a
Material Adverse Effect. No consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any Governmental
Authority is required to be obtained or made by or with respect to either Seller
in connection with the execution and delivery of the Transaction Documents or
the consummation of the Transactions, other than (A) compliance with and filings
18
under Section 13(a) or 15(d), as the case may be, of the Exchange Act,
(B) compliance with and filings and notifications under applicable Environmental
Laws, (C) those that may be required solely by reason of Buyer's participation
in the Transactions and (D) those that, if not made or obtained, individually or
in the aggregate, would not have a Material Adverse Effect.
4.2 FINANCIAL STATEMENTS. To the knowledge of Seller, the December
Balance Sheet was prepared in accordance with GAAP consistently applied, and
fairly presents the financial condition of the Railroad SBU as of December 31,
1993 except: (a) as set forth therein; (b) for the absence of footnotes;
(c) for normal recurring adjustments; and (d) to the extent it was prepared on a
PRO FORMA basis, with allocations of certain assets and liabilities based upon
good faith estimates of management.
4.3 TAXES.
(a) Except as disclosed on Schedule 4.3, each Seller, and any
affiliated group within the meaning of Section 1504 of the Code, of which either
Seller is or has been a member (the "Affiliated Group," but only for the taxable
period during which either Seller has been a member thereof), have filed or
caused to be filed in a timely manner (within any applicable extension periods)
with the appropriate Governmental Authority (i) all Tax returns, reports and
forms (collectively, "Tax Returns") required to be filed by the Code or by
applicable laws, (ii) all Taxes shown on such Tax Returns have been timely paid
in full by the due date thereof, (iii) no Tax Liens have been filed by any Tax
authority against any property or assets of the Railroad SBU, and (iv) to the
Knowledge of Seller, no claims are being asserted in writing with respect to any
Taxes relating to the Railroad SBU.
(b) Except as set forth in Schedule 4.3, (i) no property of the
Railroad SBU is "tax exempt use property" within the meaning of Section 168(h)
of the Code, and (ii) the Assigned Contracts do not include any lease made
pursuant to former Section 168(f)(8) of the Code.
(c) Neither Seller is a "foreign person" within the meaning of
Section 1445(f)(3) of the Code.
4.4 ASSETS OTHER THAN REAL PROPERTY INTERESTS. NEC has good and
valid title to all assets reflected on the December Balance Sheet or thereafter
acquired, except those sold or otherwise disposed of since the date of such
December Balance Sheet in the ordinary course of business consistent with past
practice, in each case free and clear of all Liens
19
except (a) such as are disclosed on Schedule 4.4 and (b) mechanics', carriers',
workmen's, repairmen's or other like Liens arising or incurred in the ordinary
course of business, Liens arising under original purchase price conditional
sales contracts and equipment leases with third parties entered into in the
ordinary course of business, Liens for Taxes and other governmental charges
which are not yet due and payable or which may thereafter be paid without
penalty, and other imperfections of title, restrictions or encumbrances, if any,
which Liens, imperfections of title, restrictions or other encumbrances do not,
individually or in the aggregate, materially impair the continued use and
operation of the specific assets to which they relate (the Liens described in
the preceding clause (b) are hereinafter referred to collectively as "Permitted
Liens").
This Section 4.4 does not relate to real property or interests in real
property, such items being the subject of Section 4.5.
4.5 REAL PROPERTY. Schedule 4.5 sets forth a complete list of all
Owned Properties (an Owned Property being sometimes referred to herein
individually as a "Railroad SBU Property" and collectively as "Railroad SBU
Properties"). NEC has good, marketable and insurable fee title to all Owned
Property, free and clear of all Liens, easements, covenants, rights-of-way and
other similar restrictions of any nature whatsoever, except (i) Permitted Liens,
(ii) easements, covenants, rights-of-way and other similar restrictions of
record, (iii) (A) zoning, building and other similar restrictions, (B) Liens
that have been placed by any developer, landlord or other third party on
property over which NEC has easement rights and (C) unrecorded easements,
covenants, rights-of-way or other similar restrictions, none of which items set
forth in clauses (A), (B) and (C) above, individually or in the aggregate,
materially impair the continued use and operation of the property to which they
relate and (iv) subject to the provisions of Section 6.4 hereof.
4.6 INTELLECTUAL PROPERTY. To the Knowledge of Seller, Schedule 4.6
sets forth a list of all Intellectual Property (excluding any such Intellectual
Property that is included in Excluded Assets). With respect to registered
trademarks, if any, Schedule 4.6 contains a list of all jurisdictions in which
such trademarks are registered or applied for and all registration and
application numbers. Except as disclosed on Schedule 4.6, to the Knowledge of
Seller, NEC owns or has the right to use, without payment to any other party,
the Intellectual Property listed on such Schedule 4.6. Except as set forth on
Schedule 4.8, no claims are pending or, to the Knowledge of Seller, threatened
against
20
NEC by any person with respect to the ownership, validity, enforceability or use
of any Intellectual Property listed on Schedule 4.6 or otherwise challenging or
questioning the validity or effectiveness of any such Intellectual Property.
4.7 CONTRACTS. Schedule 4.7 sets forth a list of each of the
following types of Contracts:
(a) any employment or severance agreement that has an aggregate
future liability in excess of $100,000 and is not terminable by notice of not
more than 60 days for a cost of less than $50,000 (including any contracts or
agreements with certain Railroad SBU Employees that relate to the Transactions;
(b) any employee collective bargaining agreement or other
contract with any labor union covering Railroad SBU Employees;
(c) to the Knowledge of Seller, any Contract other than in the
ordinary course of business pursuant to which the aggregate of payments to
become due from or to either Seller is equal to or exceeds $200,000, and which
is not terminable by no more than 60 days' notice for a cost of less than
$100,000;
(d) any lease or similar agreement under which NEC is a lessor
or sublessor of, or makes available for use by any third party (including
another division of either Seller), any Railroad SBU Property or premises
otherwise occupied by the Railroad SBU.
Except as disclosed on Schedule 4.7, each Contract listed on
Schedule 4.7 is valid, binding and in full force and effect and is enforceable
by NEC in accordance with its terms. Except as disclosed in Schedule 4.7, to
the Knowledge of Seller, NEC has performed all material obligations required to
be performed by it to date under the Contracts and is not (with or without the
lapse of time of the giving of notice, or both) in breach or default in any
material respect thereunder and, to the Knowledge of Seller, no other party to
any of the Contracts is (with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect thereunder.
4.8 LITIGATION; DECREES. To the Knowledge of Seller, Schedule 4.8
sets forth a list, as of the date of this Agreement, of all pending and
threatened lawsuits or claims with respect to which NEC has contacted in writing
the defendant or been contacted in writing by the claimant or by counsel for the
claimant by or against NEC relating to the Railroad SBU which (a) involves a
claim by or against either
21
Seller of more than $50,000, (b) seeks any injunctive relief or (c) relates to
the Transactions. To the Knowledge of Seller, except as disclosed on
Schedule 4.8, NEC is not in default under any judgment, order or decree of any
Governmental Authority applicable to the Railroad SBU; except where the default
would not have a Material Adverse Effect.
4.9 EMPLOYEE AND RELATED MATTERS. Schedule 4.9 sets forth each
material Employee Benefit Plan. Sellers have made available to Buyer true,
complete and correct copies of (i) each Employee Benefit Plan (or, in the case
of any unwritten Employee Benefit Plans, descriptions thereof) and (ii) the most
recent summary plan description for each material Employee Benefit Plan for
which such a summary plan description is required. Except as disclosed on
Schedule 4.9, no Railroad SBU Employee is entitled to any benefit under any
Seller Plan by reason of the Transactions.
4.10 ENVIRONMENTAL MATTERS. Except as has been alleged by the Dublin
Road Partnership in connection with the Dublin Road Dispute, to the Knowledge of
Seller, as to the Railroad SBU and the Railroad SBU Property:
(a) NEC is not in material violation of any applicable
Environmental Law and is not under investigation or review by any Governmental
Authority with respect to compliance therewith, or with respect to the
generation, use, treatment, storage or disposal, or the spillage or other
release of any Hazardous Substance;
(b) There is no Hazardous Substance that is likely to pose any
material risk to safety, health or the environment, and there has heretofore
been no spillage, discharge, release or disposal of any such Hazardous Substance
by NEC on or under the Railroad SBU Property in an amount and of a nature which
could reasonably be expected to result in material liability to the Railroad
SBU; and
(c) No pending citations, fines, penalties or claims have been
asserted against NEC under any Environmental Law which could reasonably be
expected to have a Material Adverse Effect and which have not been reflected in
the December Balance Sheet.
4.11 EMPLOYEE AND LABOR RELATIONS. Except as set forth on
Schedule 4.11:
(a) there is no labor strike, dispute, or work stoppage or
lockout pending, or, to the Knowledge of Seller, threatened, involving the
Railroad SBU;
22
(b) there is no unfair labor practice charge or complaint
against NEC pending, or, to the Knowledge of Seller, threatened, before the
National Labor Relations Board involving the Railroad SBU;
(c) there is no pending, or, to the Knowledge of Seller,
threatened, grievance involving an employee of the Railroad SBU that, if
adversely decided, would have a Material Adverse Effect; and
(d) no charges with respect to or relating to NEC are pending
before the Equal Employment Opportunity commission or any other Governmental
Authority responsible for the prevention of unlawful employment practices as to
which there is a reasonable likelihood of adverse determination involving the
Railroad SBU, other than those which, if so determined would not have a Material
Adverse Effect.
4.12 ASSETS OF THE RAILROAD SBU. Except for (i) any Assets that may
not be transferred to Buyer pursuant to Section 2.2 or Section 8.1 and (ii) as
limited by the provisions of Section 6.4, the Assets and the rights conferred by
the Transaction Documents comprise all the properties and assets used by Sellers
exclusively in the operation of the business of the Railroad SBU as conducted on
the date hereof. EXCEPT AS EXPRESSLY PROVIDED HEREIN, SELLERS MAKE NO
REPRESENTATION OR WARRANTY CONCERNING THE ASSETS OR THE RAILROAD SBU, INCLUDING
AS TO THE QUALITY, CONDITION, MERCHANTABILITY, SALABILITY, OBSOLESCENCE, WORKING
ORDER OR FITNESS FOR A PARTICULAR PURPOSE THEREOF. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, THE ASSETS ARE SOLD TO BUYER "AS IS AND WHERE IS."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
5.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Ohio. Buyer has all requisite
corporate power and authority to enter into this Agreement and to consummate the
Transactions. All corporate acts and other proceedings required to be taken by
Buyer to authorize the execution, delivery and performance of this Agreement and
the consummation of the Transactions have been duly and properly taken. This
Agreement has been duly executed and delivered by Buyer and constitutes a valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms except as enforceability may be limited by bankruptcy, insolvency,
23
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or by general principles (regardless of whether such
enforceability is considered in a proceeding in equity or law).
(b) Except as disclosed on Schedule 5.1(b), the execution and
delivery of this Agreement does not and of the other Transaction Documents will
not, and the consummation of the Transactions and compliance with the terms of
the Transaction Documents will not, conflict with, or result in any violation of
or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of the Buyer under, any provision of
(i) the Certificate of Incorporation or By-Laws of Buyer, (ii) any Contractual
Obligation of Buyer or (iii) any judgment, order or decree or, subject to the
matters described in clauses (A)-(C) below, any Requirement of Law applicable to
Buyer or its property or assets. No material consent, approval, license, permit
order or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with respect to
Buyer or its Affiliates in connection with the execution and delivery of the
Transaction Documents or the consummation by Buyer of the Transactions, other
than (A) compliance with and filings under Section 13(a) and 15(d), as the case
may be, of the Exchange Act, (B) compliance with and filings and notifications
under applicable Environmental Laws and (C) those that may be required solely by
reason of Sellers' (as opposed to any other third party's) participation in the
Transactions.
5.2 ACTIONS AND PROCEEDINGS, ETC. There are no (a) outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer or (b) actions, suits, claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the knowledge of Buyer, threatened against Buyer.
5.3 AVAILABILITY OF FUNDS. Buyer has all funds, or binding
commitments as to the availability to Buyer of all funds, required to consummate
the Transactions.
5.4 BUYER'S ACKNOWLEDGMENT. Buyer acknowledges and agrees that,
(a) other than the representations and warranties of MagneTek specifically
contained in this Agreement, there are no representations or warranties of
either Seller either expressed or implied with respect to either Seller, the
Railroad SBU or the Transactions, (b) it shall have a right to indemnification
solely as provided in Article X hereof and
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shall have no claim or right to indemnification with respect to any information,
documents or materials furnished by either Seller or any of its officers,
directors, employees, agents or advisors, or otherwise available to Buyer and
(c) NEC has no obligations with respect to these Transactions other than as set
forth in Section 11.13 hereof.
5.5 EXON-XXXXXX. Buyer is not a "foreign person" for purposes of the
Exon-Xxxxxx Amendment to the Defense Production Act of 1950.
5.6 NO KNOWLEDGE OF SELLER'S BREACH. Neither Buyer nor, to the best
knowledge of Buyer, any of its Affiliates, has knowledge of any breach of any
representation or warranty by MagneTek or of any other condition or circumstance
that would excuse Buyer from its timely performance of its obligations
hereunder. If any information relevant to the representations and warranties of
MagneTek under this Agreement shall come to Buyer's attention before the Closing
Date (whether through Sellers or otherwise), then for the purposes of MagneTek's
liability under such representations and warranties the effect shall be as if
the representations and warranties were so modified in this Agreement, and no
claim for indemnification may be made under Article X hereof to the extent such
claim would not arise under such modified representation or warranty.
ARTICLE VI
COVENANTS OF MAGNETEK AND NEC
MagneTek and NEC severally, and not jointly, covenant and agree as
follows:
6.1 ACCESS. Subject to the provisions of Section 7.1 hereof, prior
to the Closing, NEC will give Buyer and its representatives, employees, counsel
and accountants, together with representatives of Persons providing financing to
Buyer for the Transactions, reasonable access, during normal business hours and
upon reasonable notice, to the personnel, properties, books and records of the
Railroad SBU for purposes of investigating its assets, operations, prospects,
obligations and liabilities; PROVIDED, HOWEVER, that such access does not
unreasonably disrupt the normal operations of the Railroad SBU. Additionally,
subject to the provisions of Section 7.1 hereof and to prior notification, and
the consent (which will not be unreasonably withheld or delayed) of Buyer, Buyer
and such representatives may contact the principal customers and suppliers of
the Railroad SBU for purposes of the foregoing investigation.
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6.2 ORDINARY CONDUCT. Except as contemplated by this Agreement or as
set forth in Schedule 6.2, from the date hereof to the Closing, NEC will cause
the business of the Railroad SBU to be conducted in the ordinary course in
substantially the same manner as presently conducted and will make all
reasonable efforts consistent with past practices to preserve relationships with
customers, suppliers and others with whom the Railroad SBU deals. Except as
contemplated by this Agreement, NEC will not do any of the following with
respect to the Railroad SBU without the prior written consent of Buyer, which
consent will not be unreasonably withheld or delayed:
(a) adopt or amend in any material respect any NEC Plan or
collective bargaining agreement, except as required by law or insofar as a
collective bargaining agreement is then subject to negotiation in advance of its
expiration in the ordinary course;
(b) sell, lease or otherwise dispose of, or agree to sell, lease
or otherwise dispose of, any material portion of its assets (other than Excluded
Assets), except in the ordinary course of business consistent with past
practice;
(c) enter into any lease of real property, except any renewals
of existing leases; or
(d) agree, whether in writing or otherwise, to do any of the
foregoing.
6.3 INSURANCE. MagneTek shall keep, or cause to be kept, all
insurance policies presently maintained relating to the Railroad SBU and its
properties, or replacements therefor, in full force and effect through the close
of business on the Closing Date. Buyer will not have any rights under any such
insurance policies from and after the Closing Date.
6.4 SUBDIVISION OF KING AVENUE FACILITY. Buyer acknowledges that the
Owned Property at the King Avenue Facility has not heretofore been subdivided
and that such subdivision may not prove feasible after Closing. Accordingly,
NEC and Buyer agree as follows:
(a) On the Closing Date, Buyer and NEC shall enter into the
Ground Lease and Reciprocal Easement Agreement.
(b) Following the Closing Date, MagneTek shall use commercially
reasonable efforts to effect the subdivision of the Owned Property from the
remaining King Avenue property of NEC in the manner reflected upon the survey
obtained by MagneTek in September 1994. NEC and Buyer shall be bound by the
Reciprocal Easement Agreement. MagneTek shall pursue all
26
zoning variances and other local approvals required to effect such subdivision
and shall seek appropriate appellate review if any such approval is denied.
Notwithstanding the foregoing, (i) MagneTek shall not be required to effect such
subdivision if the terms imposed by any local authority would be significantly
more burdensome as to NEC from those provided for in the Ground Lease and
(ii) in no event will MagneTek be required to incur fees and expenses, including
the fees and expenses incurred prior to the date hereof (but excluding the title
insurance premium referred to in paragraph (c) below) in excess of an aggregate
of $25,000; PROVIDED, HOWEVER, that if such amount is exceeded, Buyer may
continue to pursue the subdivision at its own expense, subject to MagneTek's and
NEC's rights set forth in clause (i) of this paragraph (b). Such $25,000 shall
include an amount, not to exceed $2,500, to be expended in connection with the
separation of underground drainage.
(c) Whether or not the subdivision is achieved, MagneTek shall
also pay one-half of Buyer's expense in obtaining a title insurance policy in
respect of the Ground Lease and, if the subdivision is effected, in respect of
the portion of the King Avenue Facility acquired pursuant to the subdivision
(such title policy or policies being hereinafter referred to as the "Title
Commitment"). If the subdivision is effected, NEC shall deliver a quit-claim
deed to Buyer.
(d) Whether or not the subdivision is achieved, within 180 days
of the Closing Buyer shall, at Buyer's sole expense, (i) cause all utilities
provided to Buyer at the King Avenue Facility to be separately metered and until
the same is accomplished, the provisions of the Ground Lease in respect of
utilities set forth in Section 17.1 thereof shall continue to apply,
notwithstanding any prior termination of the Ground Lease and (ii) Buyer shall
arrange for the Owned Property and the remainder of the King Avenue Property of
NEC to be separately assessed in respect of property taxes.
6.5 ACQUISITION PROPOSALS. Neither Seller nor any Person authorized
by Sellers shall solicit, initiate or encourage any acquisition proposal or
engage in any discussion with respect thereto or provide information to any
other person, concerning a possible sale of the Assets or the business of the
Railroad SBU, unless MagneTek has made a reasonable determination that Buyer
will not consummate the transaction provided for hereunder and has given notice
to Buyer of such determination.
6.6 ACCOUNTS RECEIVABLE. Sellers agree promptly to forward to Buyer
any and all proceeds from accounts receivable of the Railroad SBU that are
received by either Seller to the
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extent they pertain to products sold or services provided after the Closing
Date. If, after the Closing Date, either Seller receives any payment from any
Person who at the time of such payment has outstanding accounts payable to
either Seller, on the one hand (for the purposes of this Section, "Seller
Accounts Receivable"), and to Buyer, on the other hand (for the purposes of this
Section, "Buyer Accounts Receivable"), and the payment (a) does not indicate
whether it is in respect of Seller Accounts Receivable or Buyer Accounts
Receivable or (b) indicates that it is in payment of both Seller Accounts
Receivable and Buyer Accounts Receivable without specifying the portion to be
allocated to each, then Sellers and Buyer shall consult with one another to
determine the proper allocation of such payment; and, if they are unable to
reach agreement on the proper allocation, such payment shall be applied so as to
retire undisputed Seller Accounts Receivable and undisputed Buyer Accounts
Receivable in chronological order based upon the period of time such accounts
receivable have existed on the books of Sellers or the Buyer, as applicable.
6.7 NON-COMPETITION.
(a) Subject to the terms, conditions and exceptions of this
Section 6.7, MagneTek hereby agrees that neither MagneTek nor any Affiliate then
controlled by MagneTek (a "MagneTek Affiliate"), for a period of three years
from and after the Closing Date, will engage, directly or indirectly, whether as
principal, consultant, investor or otherwise, in the design, development,
fabrication, test or delivery of any of the products (which products are not
sold by any other Division or Affiliate of MagneTek) currently sold by the
Railroad SBU in the railroad market. Notwithstanding anything to the contrary
in this Section 6.7, the acquisition by MagneTek of (i) any Person, less than
10% of the gross revenues of which are derived from a business involving the
production of any of the products (which products are not sold by any other
Division or Affiliate of MagneTek) currently sold by the Railroad SBU in the
railroad market (a "Competitive Business") or (ii) no more than 5% of any class
of securities of a Person, if such securities are traded in any public market
(within or outside of the United States) or 15% of any class of privately held
securities of a Person, in either case if such Person derives 10% or more of its
gross revenues from a Competitive Business, shall not constitute a breach of
this Section 6.7.
(b) The prohibition in Section 6.7(a) shall apply to all
counties in the State of California and all similar political subdivisions or
regions in all states of the United States and all geographical areas worldwide.
MagneTek agrees that, in connection with the purchase by Buyer of the
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Assets (including the goodwill) of the Railroad SBU, the time and geographic
restrictions set forth above are reasonable. MagneTek agrees that the remedy at
law for any breach by MagneTek of this Section 6.7 will be inadequate and that
Buyer shall be entitled to injunctive relief. The parties intend that the
unenforceability or invalidity of any term or provision of this Section 6.7
shall not render any other term or provision contained herein unenforceable or
invalid. If the activities described in Section 6.7(a) or the period of time or
the geographical area covered by this Section 6.7 should be deemed too
extensive, then the parties intend that this Section 6.7 be construed to cover
the maximum scope of business activities, period of time and geographical area
(not exceeding those specifically set forth herein) as may be permissible under
applicable law.
6.8 OFFSITE ASSETS.
(a) To the extent the Assets set forth on Schedule 2.1(i) hereto
remain at NEC facilities that are not being transferred to Buyer, NEC agrees to
exercise reasonable care in respect thereof, and in no event less than it
exercises with respect to its own assets. In the event Buyer wishes to remove
such Assets, NEC shall cooperate in all reasonable respects, but Buyer shall
bear all expenses associated therewith in excess of an aggregate (cumulated with
any expenditures by MagneTek pursuant to Section 7.4 hereof) of $200,000, to be
paid by MagneTek; (b) the Assets set forth on Schedule 2.1(i) shall be removed
in accordance with the following schedule: (i) the Assets identified on
Schedule 2.1(i) as the King Avenue Assets shall be removed by RPI within
120 days of the Closing Date; (ii) the Assets identified on Schedule 2.1(i) as
the St. Xxxx Assets shall be removed by RPI within 60 days of termination of the
Subcontract Agreement; (iii) the Assets identified on Schedule 2.1(i) as the
Brownsville Assets shall be removed by RPI within 60 days of termination of the
Supply Agreement; (iv) the Assets identified on Schedule 2.1(i) as the Dublin
Road Assets shall be removed by RPI within 60 days of termination of the Service
Agreement.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees as follows:
7.1 CONFIDENTIALITY. Buyer acknowledges that the information being
provided to it by Sellers is subject to the terms of a confidentiality agreement
between a representative of Buyer and Sellers dated as of January 24, 1994 (the
"Confidentiality Agreement"), the terms of which are
29
incorporated herein by reference. Buyer hereby assumes all of the obligations
of such representative under the Confidentiality Agreement. Effective upon, and
only upon, the Closing, the Confidentiality Agreement will terminate; PROVIDED,
HOWEVER, that Buyer acknowledges that the Confidentiality Agreement will
terminate only with respect to information relating solely to the Railroad SBU;
and PROVIDED, FURTHER, HOWEVER, that Buyer acknowledges that any and all other
information provided to it by Sellers or Sellers' representatives concerning
Sellers shall remain subject to the terms and conditions of the Confidentiality
Agreement after the date of the Closing.
7.2 ACCOUNTS RECEIVABLE. Buyer agrees to promptly forward or cause
to be forwarded to MagneTek any and all proceeds from accounts receivable of
either Seller (including those comprising Excluded Assets) that are received by
Buyer or the Railroad SBU after the Closing Date. If, after the Closing Date,
Buyer receives any payment from any Person who at the time of such payment has
outstanding accounts payable to Sellers, on the one hand (for the purposes of
this Section, "Seller Accounts Receivable"), and to Buyer, on the other hand
(for the purposes of this Section, "Buyer Accounts Receivable"), and the payment
(a) does not indicate whether it is in respect of Seller Accounts Receivable or
Buyers Accounts Receivable or (b) indicates that it is in payment of both Seller
Accounts Receivable and Buyer Accounts Receivable without specifying the portion
to be allocated to each, then Sellers and Buyer shall consult with one another
to determine the proper allocation of such payment; and, if they are unable to
reach agreement on the proper allocation, such payment shall be applied so as to
retire undisputed Seller Accounts Receivable and undisputed Buyer Accounts
Receivable in chronological order based upon the period of time such accounts
receivable have existed on the books of the Sellers or Buyer, as applicable.
7.3 WAIVER OF BULK SALES LAW COMPLIANCE. Buyer hereby waives
compliance by NEC with the requirements, if any, of Article 6 of the Uniform
Commercial Code as in force in any state in which Assets are located and all
other similar Requirements of Law applicable to bulk sales and transfers, to the
extent applicable to the Transactions. MagneTek shall indemnify Buyer in
connection with the foregoing matters pursuant to Section 10.1(c) hereof.
7.4 EXCLUDED ASSETS. If, after the Closing Date, Excluded Assets
shall remain on the premises utilized or controlled by Buyer, then (subject to
the following sentence) Buyer shall take reasonable steps, at its own expense,
(provided that MagneTek shall pay up to $200,000 cumulatively with expenditures
under Section 6.8 hereof) to deliver such
30
Excluded Assets to Sellers, and so long as such assets remain in Buyer's
control, shall exercise reasonable care with respect thereto, and in no event
less care than with respect to its own properties.
7.5 INSURANCE. Buyer shall secure insurance with respect to the
Railroad SBU from the Closing Date covering general liability and products
liability in amounts customary for the industry in which the Railroad SBU
operates.
(28) Includes list of omitted Schedules and Exhibits, which will be
provided by the Registrant upon request.
ARTICLE VIII
MUTUAL COVENANTS
Each of Sellers and Buyer covenants and agrees as follows:
31
8.1 PERMITS AND CONSENTS.
(a) As promptly as practicable after the date hereof, Buyer and
Sellers shall make all filings with governmental bodies and other regulatory
authorities, and use all reasonable efforts to obtain all permits, approvals,
authorizations and consents of all third parties, required to consummate the
Transactions. Buyer and Sellers shall furnish promptly to each other all
information that is not otherwise available to the other party and that such
party may reasonably request in connection with any such filing. Sellers and
Buyer shall use reasonable efforts to obtain such consents to the assignment of
the Assigned Contracts as may be required. Buyer acknowledges that consents to
the Transactions may be required from parties to the Assigned Contracts and that
Sellers will not assign to buyer at the Closing any Assigned Contract that by
its terms requires, prior to such assignment, the consent of any other
contracting party thereto unless such consent has been obtained prior to the
Closing Date.
(b) Buyer agrees that Sellers shall not have any liability
whatsoever to buyer arising out of or relating to the failure to obtain any
consents to the assignment of Contracts that may be required in connection with
the transactions or because of the default, acceleration or termination of any
Assigned Contract as a result thereof. Buyer further agrees that no
representation or warranty of MagneTek or covenant of MagneTek or of NEC
contained herein shall be breached or deemed breached, and no condition shall be
deemed not satisfied, as a result of (i) the failure to obtain any such consent
or as a result of any such acceleration or termination or (ii) any lawsuit,
action, claim, proceeding or investigation commenced or threatened by or on
behalf of any person arising out of or relating to the failure to obtain any
such consent or any such acceleration or termination. Sellers shall cooperate
with Buyer in any reasonable manner in connection with Buyer obtaining any such
consents; PROVIDED, HOWEVER, that such cooperation shall not include any
requirement that Sellers commence any litigation or offer or grant any
accommodation (financial or otherwise) to any third party. The Purchase Price
shall not be subject to adjustment by reason of any such consents that are not
obtained.
(c) With respect to each such Assigned Contract not assigned on
the Closing Date, after the Closing Date sellers shall continue to deal with the
other contracting party(ies) to such Assigned Contract as the prime contracting
party, and Buyer and Sellers shall continue to use reasonable efforts to obtain
the consent of all required parties to the assignment of such Assigned Contract.
Such Assigned Contract
32
shall be promptly assigned by Sellers to Buyer after receipt of such consent
after the Closing Date. Notwithstanding the absence of any such consent, Buyer
shall be entitled to the benefits of such Assigned Contract accruing after the
Closing Date to the extent that Sellers may provide Buyer with such benefits
without violating the terms of such contract; and to the extent such benefits
are so provided, Buyer agrees to perform at its sole expense all of the
obligations of Sellers to be performed under such Assigned Contract after the
Closing Date.
8.2 COOPERATION. Buyer and Sellers shall cooperate with each other
and shall cause their officers, employees, agents, auditors and representatives
to cooperate with each other after the Closing to ensure the orderly transition
of the Railroad SBU to Buyer and to minimize any disruption to the respective
businesses of Sellers or the Railroad SBU that might result from the
Transactions. Neither party shall be required by this Section 8.2 to take any
action that would unreasonably interfere with the conduct of its business.
8.3 PUBLICITY. Sellers and Buyer agree that, from the date hereof
through the Closing Date, no public release or announcement concerning the
Transactions shall be issued by any party without the prior consent of the other
parties (which consent shall not be unreasonably withheld or delayed), except as
such release or announcement may be required by any Requirement of Law, in which
case the party required to make the release or announcement shall allow the
other parties reasonable time to comment on such release or announcement in
advance of such issuance.
8.4 REASONABLE EFFORTS AND FURTHER ASSURANCES. Subject to the terms
and conditions of this Agreement (including the limitations set forth in
Section 8.1), each party will use all reasonable efforts to cause the Closing to
occur. Sellers and Buyer shall, at any time and from time to time after the
Closing, upon the reasonable request of another party, execute, acknowledge,
deliver and file all such further acts, transfers, conveyances, assignments and
assurances as may reasonably be required to effect the transactions.
8.5 RECORDS. On the Closing Date, Sellers shall deliver or cause to
be delivered to Buyer all records (including copies of any material records that
would constitute Records under the definition thereof set forth in
Section 2.1(g) if such material records were located at the King Avenue or
Dublin Road facility) included in the assets, which are in the possession of
MagneTek or NEC to the extent not then in the possession of the Railroad SBU,
except any Records relating to Excluded Liabilities (including, without
limitation, to any Tax liability of Sellers or to any
33
litigation or claim not assumed by Buyer hereunder). After the Closing, upon
reasonable written notice and at Buyer's sole expense, Sellers agree to furnish
or cause to be furnished to Buyer and its representatives (including its
auditors), access at reasonable times and during normal business hours to such
information relating to the Railroad SBU in Sellers' possession as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any Tax Returns, reports or forms or the defense of any Tax Claim or
assessment; PROVIDED, HOWEVER, that such access does not unreasonably disrupt
the normal operations of Sellers, Buyer or the Railroad SBU.
8.6 ACCESS TO FORMER BUSINESS RECORDS; COOPERATION IN LITIGATION.
(a) For a period of seven years following the Closing, Buyer
will retain all records. During such period, Buyer will afford authorized
representatives of Sellers (including their auditors) access to such records at
reasonable times and during normal business hours at the principal business
office of the Railroad SBU, or at such other location or locations at which such
Records may be stored or maintained from time to time, and will permit such
representatives to make abstracts from, or copies of, any of such records, or to
obtain temporary possession of any thereof as may be reasonably required by
Sellers at Sellers' sole cost and expense. During such period, Buyer will, at
Sellers' expense (limited, however, to Buyer's reasonable out-of-pocket
expenditures without regard to any employee cost or other overhead expenses),
cooperate with Sellers in furnishing information, evidence, testimony, and other
reasonable assistance in connection with any action, proceeding, Tax audit, or
investigation to which Sellers or any of their Affiliates is subject relating to
the business of the Railroad SBU prior to the Closing. The term "Record" as
used in this Section 8.6 shall include any data processing files or other
computerized data.
(b) Buyer acknowledges the existence of the Dublin Road Dispute.
Buyer further acknowledges, without limiting the generality of the foregoing
provisions of this Section 8.6, that its obligations of cooperation with Sellers
may include extensive devotion of time (including travel, at the reasonable
expense of MagneTek) of employees of Buyer and may otherwise involve
investigation and remediation activities that are disruptive to the business of
the Railroad SBU. Buyer expressly covenants to make such personnel as may be
reasonably requested by Sellers available in the event of such pre-trial
proceedings and/or litigation.
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8.7 USE OF TRADEMARKS AND TRADE NAMES. Notwithstanding anything to
the contrary in this Agreement, Buyer may continue to use the name "MagneTek"
and related trademarks, corporate names, and trade names incorporating "MagneTek
and NEC," and the stylized "MagneTek and NEC" logos (i) in displays, signage and
postings for the period after the closing date necessary to permit the
reasonably prompt removal of such names, and only to the extent such displays,
signage or postings exist on the Closing Date; (ii) for a period of two years,
to state the Railroad SBU's former affiliation with NEC (e.g., formerly a
division of "MagneTek National Electric Coil, Inc.") and (iii) to the extent any
such trade names, trademarks, service marks or logos appear on stationery,
packaging materials, supplies or inventory on hand as of the Closing Date or on
order at the time of the Closing, until such is exhausted.
8.8 REQUIRED MODIFICATIONS OR REPLACEMENTS OF PRODUCTS. The
following provisions of this Section 8.8 shall govern the responsibilities of
Buyer and MagneTek regarding Required Modifications:
(a) Buyer shall advise MagneTek promptly after becoming aware of
any Required Modifications to the products shipped by the Railroad SBU prior to
the Closing Date to the extent MagneTek would be required to indemnify Buyer for
any claims in respect of such products.
(b) Whether or not Buyer gives the foregoing notice, Buyer shall
make any Required Modifications to products shipped by the Railroad SBU prior to
the Closing Date which are necessary or advisable, in the reasonable discretion
of MagneTek. If the cost to MagneTek under Section 8.8(c) of implementing any
such Required Modification exceeds the cost to MagneTek of replacing such
products, Buyer shall replace such products. The obligation of Buyer hereunder
shall include, but not be limited to, such actions as MagneTek may reasonably
request for (i) the notification of customer and other third parties in
possession of the applicable products, (ii) the shipping of such products, if
necessary, to and from Buyer's facilities for modification, improvement,
enhancement or replacement, (iii) the production of replacement products, parts
or supplies necessary for the implementation of the product modification,
enhancement, improvement or replacement, (iv) the installation, modification or
replacement of the product by personnel of Buyer, either at the customer's
location or at Buyer's facilities, as appropriate, and (v) recordkeeping and
reports with respect to such product modifications, enhancements, improvements
or replacements to the extent required by law or reasonably requested by
MagneTek.
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(c) MagneTek shall reimburse Buyer for direct materials, direct
labor and factory overhead incurred by Buyer in installing or implementing any
Required Modification under Section 8.8(b) or in producing any replacement
products, parts or supplies under section 8.8(b), together with all reasonable
out-of-pocket shipping, postage and printing costs incurred by Buyer in
connection therewith.
ARTICLE IX
EMPLOYEE BENEFIT MATTERS
9.1 EMPLOYEE RETENTION. Buyer shall offer employment to commence as
of the Closing Date to all Railroad SBU Employees other than those set forth on
Schedule I to the Services Agreement, at the same salaries and wages and on
substantially the same terms and conditions as those in effect immediately prior
to the Closing Date. Effective upon termination of the Services Agreement (the
"Termination Date"), Buyer shall similarly offer employment to commence on such
date to all Railroad SBU Employees set forth on Schedule I to the Services
Agreement, at the same salaries and wages and on substantially the same terms
and conditions as those in effect immediately prior to the Termination Date.
Buyer has no present intention (subject to its discretion as to employee
performance) to terminate the employment of any Railroad SBU Employee within the
sixty (60) days following the later of the Closing Date and the Termination
Date, and Buyer assumes all obligations and liabilities, if any, under the
Worker Adjustment and Retraining Notification Act (the "WARN Act") and any
analogous Ohio legislation relating to or arising out of the Transactions.
Buyer also agrees to comply with the terms of the WARN Act and any analogous
Ohio legislation following the Closing Date.
9.2 EMPLOYEE BENEFIT PLANS. Effective as of the Closing Date or the
Termination Date, as applicable, (a) Railroad SBU Employees shall cease accruing
any benefits under any Seller Plan, and MagneTek shall take, or cause to be
taken, all such action, if any, as may be necessary to effect such cessation of
participation and (b) with respect to Railroad SBU Employees who are not members
of a collective bargaining unit, Buyer shall establish employee benefit plans
providing benefits which in the aggregate are substantially the same as the
benefits provided to such Railroad SBU Employees under Seller Plans (the
"Buyer's Benefit Plans"). With respect to the Buyer's Benefit Plans, Buyer
shall grant all Railroad SBU Employees from and after the Closing Date (or the
Termination Date, as applicable) credit for all service with Sellers and their
Affiliates and their respective predecessors prior to the Closing Date for all
purposes (other than the accrual of benefits under a defined benefit pension
36
plan, however, this proviso shall not preclude Buyer from granting such credit)
for which such service was recognized by Sellers and their Affiliates. With
respect to Buyer's Benefit Plans (and any plan established or adopted pursuant
to Section 9.4) that provide medical or dental benefits after the Closing Date
(or the Termination Date, as applicable), such plans shall waive any exclusion
or limitation with respect to pre-existing conditions and actively-at-work
exclusions and shall provide that any expenses incurred on or before the Closing
Date by a Railroad SBU Employee or his covered dependents shall be taken into
account under such health plans for purposes of satisfying applicable
deductible, coinsurance and maximum out-of-pocket provisions. Buyer shall also
cause its health plan(s) to be responsible for all health benefit claims by
Railroad SBU Employees and their covered dependents for services rendered after
the Closing Date or the Termination Date, as applicable.
9.3 EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS. On, and
effective as of, the Closing Date or the Termination Date, as applicable, Buyer
shall expressly recognize any collective bargaining representative recognized by
Sellers as of the Closing Date (or the Termination Date, as applicable) for any
units that include Railroad SBU Employees and shall either: (i) assume any
collective bargaining agreements existing on the Closing Date with respect to
Railroad SBU employees ("Bargaining Employees"), or (ii) negotiate with any such
collective bargaining representative(s) a new collective bargaining agreement(s)
covering such Bargaining Employees; PROVIDED, HOWEVER, in either case, Buyer
shall assume and discharge all of Sellers' obligations (except for obligations
to make salary and similar payments due prior to the Closing Date (or the
Termination Date, as applicable)) with respect to the Bargaining Employees under
any such bargaining agreements (including the Collective Bargaining Agreement),
on or after the Closing Date or the Termination Date, as applicable.
9.4 BARGAINING PLANS. Effective as of the Closing Date and the
Termination Date, as applicable, Buyer shall establish for the benefit of the
Bargaining Employees such employee benefit plans as are required by the
collective bargaining agreement that includes the Railroad SBU ("Buyer's
Bargaining Plans").
9.5 VACATION, HOLIDAY AND SEVERANCE PAY. As of the Closing Date and
the Termination Date, as applicable, Buyer shall assume all of Sellers'
obligations for vacation (including accrued vacation), holiday and severance (if
any) pay to all Railroad SBU Employees.
37
9.6 ACCESS TO INFORMATION. Sellers shall make reasonably available
to Buyer such actuarial, financial, personnel and related information as may be
reasonably requested by Buyer with respect to any Seller Plan as it relates to a
Railroad SBU Employee, including, but not limited to, compensation and
employment histories.
9.7 THIRD-PARTY BENEFICIARIES. No provision of this Article IX shall
create any third-party beneficiary rights in any employee or former employee of
the Railroad SBU (including any beneficiary or dependent thereof), including,
without limitation, any right to continued employment or employment in any
particular position with Buyer for any specified period of time after the
Closing Date or Termination Date.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY MagneTek. Subject to the terms and conditions
of this Article X, MagneTek shall indemnify Buyer and each of its officers,
directors, employees and agents (each, a "Buyer Indemnified Person") against,
and hold them harmless from, any Loss suffered or incurred by any such Buyer
Indemnified Person (other than any Loss relating to environmental matters, for
which indemnification provisions are set forth in Section 10.3) to the extent
arising from (a) if the Closing occurs, any breach of any representation or
warranty of MagneTek contained in this Agreement which survives the Closing or
in any certificate, instrument or other document delivered pursuant hereto,
(b) any breach of any covenant of MagneTek contained in this Agreement or the
Services Agreement requiring performance after the Closing Date or (c) if the
Closing occurs, the existence of, or the failure of Sellers to pay, perform and
discharge when due, any of the Excluded Liabilities (including, without
limitation, any Losses as a result of the failure of NEC to comply with any bulk
sales laws referred to in Section 7.3); PROVIDED, HOWEVER, that MagneTek shall
not have any liability under this Section 10.1 unless the aggregate of all
Losses relating thereto for which MagneTek would, but for this proviso, be
liable exceeds on a cumulative basis with Losses for which Buyer is indemnified
under Section 10.3, an amount equal to $50,000 (and then only to the extent of
any such excess); and PROVIDED FURTHER, HOWEVER, that MagneTek's aggregate
liability under this Section 10.1 and Section 10.3 shall in no event exceed
$6,000,000. Notwithstanding the foregoing, MagneTek shall have no obligation to
indemnify Buyer with respect to any Loss, including but not limited to, any
breach of the representations set forth in Section 4.5, which are within the
scope of the Title Commitment, and Buyer agrees that its sole
38
recourse with respect to such matters shall be against the issuer of the Title
Commitment. Moreover, for avoidance of doubt, the parties agree that the
indemnification provided for in this Section 10.1 in respect of a breach of the
Services Agreement includes an indemnification (subject to all of the terms and
conditions of this Article X) for any Loss incurred as a result of any legal
claim, action, proceeding or demand that may be made or asserted against Buyer
by the Dublin Road Partnership, its successors or assigns, or a mortgagee
thereof in connection with the Services Agreement or which may frustrate the
performance by either party thereof, whether or not such claim, action,
proceeding or demand can be attributed to any direct or indirect breach by
MagneTek of such Services Agreement.
10.2 INDEMNIFICATION BY BUYER. Subject to the terms and conditions of
this Article X, Buyer shall indemnify Sellers and each of their respective
officers, directors, employees and agents (each, a "Seller Indemnified Person")
against, and hold them harmless from, any Loss suffered or incurred by any such
Seller Indemnified Person (other than any relating to environmental matters, for
which indemnification provisions are set forth in Section 10.3) to the extent
arising from (a) if the Closing occurs, any breach of any representation or
warranty of Buyer contained in this Agreement which survives the Closing or in
any certificate, instrument or other document delivered pursuant hereto or in
connection herewith, (b) any breach of any covenant of Buyer contained in this
Agreement or the Services Agreement requiring performance after the Closing
Date, (c) if the Closing occurs, the existence of, or the failure of Buyer to
pay, perform and discharge when due, any of the Assumed Liabilities and (d) if
the Closing occurs, the ongoing operations of Buyer and the Assets after the
Closing Date; PROVIDED, HOWEVER, that Buyer shall not have any liability under
this Section 10.2 unless the aggregate of all Losses relating thereto for which
Buyer would, but for this proviso, be liable exceeds on a cumulative basis with
Losses for which Seller is indemnified under Section 10.3, an amount equal to
$50,000 (and then only to the extent of such excess); and PROVIDED FURTHER,
HOWEVER, that Buyer's aggregate liability under clauses (a) and (b) of this
Section 10.2 shall in no event exceed $6,000,000.
10.3 INDEMNIFICATION FOR ENVIRONMENTAL MATTERS.
(a) Subject to the terms and conditions of this Article X and
except as set forth below in Section 10.3(b), MagneTek shall indemnify and hold
Buyer Indemnified Persons harmless from and against all Losses resulting from
claims or demands by any Governmental Authority or any third party which is
unrelated to Buyer or its
39
Affiliates arising under any Environmental Law to the extent such Losses (a) are
attributable to the use and/or occupancy of any premises owned or used by
Sellers prior to the Closing Date (a "Seller Facility") or to Hazardous
Substances transported offsite from a Seller Facility for treatment, storage or
disposal prior to the Closing and (b) exceed, on a cumulative basis with Losses
for which Buyer is indemnified under Section 10.1, an amount equal to $50,000;
but only to the extent of such excess and PROVIDED, FURTHER, that MagneTek's
aggregate liability under this Section 10.3(a), Section 10.3(b) and Section 10.1
shall in no event exceed $6,000,000. MagneTek's indemnification liability
hereunder shall in no event be construed to extend to or include any remediation
or other liability arising as a result of the presence or removal of asbestos in
or upon any of the improvements located on the Railroad SBU Property at any
time. MagneTek's obligation to indemnify Buyer under this Section 10.3(a) shall
expire on the second anniversary of the Closing Date, and Buyer hereby expressly
releases MagneTek from and after such second anniversary from any liability in
respect of the matters covered by such indemnification, whether arising by
statute or common law, or otherwise. Notwithstanding the foregoing and except
as set forth below in Section 10.3(b), MagneTek shall have no obligation to
indemnify any Buyer Indemnified Person with respect to conditions that existed
prior to the utilization of the King Avenue Facility that commenced in 1933.
Buyer shall indemnify and hold each Seller Indemnified Person harmless from and
against all Losses resulting from claims or demands by any Governmental
Authority or third-party arising under any Environmental Law to the extent such
Losses are attributable to Buyer's use and/or occupancy of any Seller Facility.
Moreover, notwithstanding Section 10.3(b) or any other provision hereof, no
Buyer Indemnified Person shall be indemnified or held harmless by MagneTek, and
Buyer shall indemnify and hold harmless each Seller Indemnified Person, to the
extent any representation or warranty in any Key Employee Certificate shall
prove untrue in any material respect.
(b) Notwithstanding the foregoing, solely in respect of the
Dublin Road Facility, MagneTek shall indemnify and hold each Buyer Indemnified
Person harmless from and against all Losses resulting from claims or demands by
any Governmental Authority or any third-party which is unrelated to Buyer or its
Affiliates arising under any Environmental Law including, without limitation,
any Losses resulting from the Dublin Road Dispute, to the extent such Losses
exceed, independent of matters for which Buyer is indemnified under Section 10.1
or Section 10.3(a), an amount equal to $25,000, but only to the extent of such
excess and PROVIDED, FURTHER, that MagneTek's aggregate liability under this
Section 10.3(b), Section 10.3(a) and Section 10.1 shall in no
40
event exceed $6,000,000. The indemnification in this Section 10.3(b) shall
extend to and include events which occurred prior to NEC's occupation of the
Dublin Road Facility. MagneTek's obligation to indemnify Buyer Indemnified
Persons under this Section 10.3(b) shall expire on the fifteenth anniversary of
the Closing Date, and Buyer hereby expressly releases MagneTek from and after
such fifteenth anniversary from any liability in respect of the matters covered
by such indemnification, whether arising by statute or common law, or otherwise.
10.4 LOSSES NET OF INSURANCE, ETC.
(a) The amount of any Loss for which indemnification is provided
under this Article X shall be net of any amounts recovered or recoverable by the
Indemnified Person under insurance policies with respect to such Loss and of any
reserve in respect thereof reflected on the Closing Balance Sheet.
(b) If the Indemnifying Person makes any payment under this
Article X in respect of any Loss, the Indemnifying Person shall be subrogated,
to the extent of such payment, to the rights of the Indemnified Person against
any insurer or third party with respect to such Losses. The Indemnified Person
shall execute any required documents or instruments, serve as a named plaintiff,
or take any other similar steps necessary to effectuate such subrogation.
(c) Notwithstanding anything to the contrary elsewhere in this
Agreement, no Indemnifying Person shall, in any event, be liable to the other
party for any consequential damages, including, but not limited to, loss of
revenue or income, business interruption, cost of capital, or loss of business
reputation or opportunity relating to the breach or alleged breach of this
Agreement. Each party agrees that it will not seek punitive damages as to any
matter under, relating to or arising out of the Transactions. The foregoing
shall not be interpreted, however, to limit indemnification for Losses incurred
as a result of the assertion by a claimant (other than the parties hereto and
their successors and assigns), in a Third-Party Claim (as defined below) of
claims for damages of the foregoing type.
(d) The parties hereto agree that the indemnification provisions
of this Article X are intended to provide the exclusive remedy as to all Losses
any Indemnified Person may incur arising from or relating to the Transactions,
and each party hereby waives, to the extent they may do so, any other rights or
remedies that may arise under any applicable statute, rule or regulation.
Moreover, notwithstanding anything to the contrary in this Agreement,
41
Buyer waives no rights it may have or come to have or to pursue against any
predecessors of MagneTek or NEC.
10.5 TERMINATION OF INDEMNIFICATION. The obligations to indemnify and
hold harmless a party hereto, (A) pursuant to Sections 10.1(a) and 10.2(a),
shall terminate when the applicable representation or warranty terminates
pursuant to Section 10.8, (B) pursuant to Section 10.3, shall terminate as and
to the extent set forth therein and (C) pursuant to Sections 10.1(b) and
10.2(b), shall terminate on the second anniversary of the Closing Date (except
as to Section 6.7, which shall survive for the period set forth therein and
Section 8.6(b) which shall survive until the fifteenth anniversary of the
Closing Date; PROVIDED, HOWEVER, that as to clauses (A), (B) and (C) above, such
obligations to indemnify and hold harmless shall not terminate with respect to
any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis (whether or not the amount of
Losses related to such claim is then known or estimable) of such claim) to the
Indemnifying Person.
10.6 PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN FOR TAX
CLAIMS). In order for an Indemnified Person to be entitled to any
indemnification provided for under this Agreement (other than for Tax Claims) in
respect of, arising out of or involving a claim or demand made by any Person
against the Indemnified Person (a "Third-Party Claim"), such Indemnified Person
must notify the Indemnifying Person in writing, and in reasonable detail, of the
Third-Party Claim within 10 Business Days after receipt by such Indemnified
Person of written notice of the Third-Party Claim; PROVIDED, HOWEVER, that
failure to give such notification shall not affect the indemnification provided
hereunder except to the extent the Indemnifying Person shall have been actually
prejudiced as a result of such failure (except that the Indemnifying Person
shall not be liable for any Losses incurred during the period in which the
Indemnified Person failed to give such notice). Thereafter, the Indemnified
Person shall deliver to the Indemnifying Person, within five Business Days after
the Indemnified Person's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Person relating to the
Third-Party Claim. It is hereby acknowledged that MagneTek has received notice
of the Dublin Road Dispute.
If a Third-Party Claim is made against an Indemnified Person, the
Indemnifying Person will be entitled to participate in the defense thereof and,
if it so chooses, to assume the defense thereof with counsel selected by the
Indemnifying Person and reasonably satisfactory to the
42
Indemnified Person. Should the Indemnifying Person so elect to assume the
defense of a Third-Party Claim, the Indemnifying Person will not be liable to
the Indemnified Person for legal fees and expenses subsequently incurred by the
Indemnified Person in connection with the defense thereof. If the Indemnifying
Person assumes such defense, the Indemnified Person shall have the right to
participate in the defense thereof and to employ counsel, at its own expense,
separate from the counsel employed by the Indemnifying Person, it being
understood that the Indemnifying Person shall control such defense. The
Indemnifying Person shall be liable for the fees and expenses of counsel
employed by the Indemnified Person for any period during which the Indemnifying
Person has not assumed the defense thereof (other than during any period in
which the Indemnified Person shall have failed to give notice of the Third Party
Claim as provided above). If the Indemnifying Person chooses to defend or
prosecute any Third-Party Claim, all the parties hereto shall cooperate in the
defense or prosecution thereof. Such cooperation shall include the retention
and (upon the Indemnifying Person's request) the provision to the Indemnifying
Person of records and information which are reasonably relevant to such Third-
Party Claim, and making employees available on a mutually convenient basis in
the manner specified in Section 8.6 hereof to provide additional information and
explanation of any material provided hereunder. Notwithstanding the foregoing,
in the event a Third-Party Claim is made against either Seller as to which
MagneTek is entitled to seek indemnification under this Article X and MagneTek
concludes, in its reasonable judgment, that Buyer lacks the financial and
personnel resources to vigorously defend MagneTek from such Third-Party Claim,
MagneTek may elect to retain the defense of such Third-Party Claim and shall be
entitled to be reimbursed by Buyer for its Losses incurred in such defense, such
expenditures to be reimbursed promptly after submission of invoices therefor.
Whether or not the Indemnifying Person shall have assumed the defense of a
Third-Party Claim, the Indemnified Person shall not admit any liability with
respect to, or settle, compromise or discharge, such Third-Party Claim without
the Indemnifying Person's prior written consent (which consent shall not be
unreasonably withheld or delayed). It is acknowledged that the Dublin Road
Dispute is an Assumed Liability as to which Buyer is indemnified pursuant to
Section 10.3(b) and that MagneTek has assumed the defense thereof and has full
control of such defense. All Tax Claims (as defined in Section 10.7) shall be
governed by Section 10.7.
10.7 PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS.
(a) If a claim shall be made by any Tax authority, which, if
successful, might result in an indemnity
43
payment to any Person hereunder (a "Tax Indemnitee"), the Tax Indemnitee shall
promptly notify the party against whom indemnification is sought (the "Tax
Indemnitor") in writing of such claim (a "Tax Claim"). If notice of a Tax Claim
is not given to the Tax Indemnitor within a sufficient period of time to allow
the Tax Indemnitor to effectively contest such Tax Claim, or in reasonable
detail to apprise the Tax Indemnitor of the nature of the Tax Claim, in each
case taking into account the facts and circumstances with respect to such Tax
Claim, the Tax Indemnitor shall not be liable to the Tax Indemnitee to the
extent that the Tax Indemnitor's ability to effectively contest such Tax Claim
is actually prejudiced as a result thereof.
(b) With respect to any Tax Claim, the Tax Indemnitor shall
control all proceedings taken in connection with such Tax Claim (including,
without limitation, selection of counsel) and, without limiting the foregoing,
may in its sole discretion pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with any taxing authority with respect
thereto and may, in its sole discretion, either pay the Tax claimed and xxx for
a refund where applicable law permits such refund suits or contest the Tax Claim
in any permissible manner, provided, however, that the Tax Indemnitor shall not
settle or compromise a Tax Claim without giving 30 days' prior notice to the Tax
Indemnitee, and without the Tax Indemnitee's consent, which shall not be
unreasonably withheld or delayed, if such settlement or compromise would have a
material adverse effect on the Tax liabilities of the Tax Indemnitee, its
Affiliates or any member of its affiliated group. The Tax Indemnitee, and each
of its Affiliates, shall cooperate with the Tax Indemnitor in contesting any Tax
Claim, which cooperation shall include, without limitation, the retention and
(upon the Tax Indemnitor's request) the provision to Tax Indemnitor of records
and information which are reasonably relevant to such Tax Claim, and making
employees available on a mutually convenient basis to provide additional
information or explanation of any material provided hereunder or to testify at
proceedings relating to such Tax Claim.
10.8 SURVIVAL OF REPRESENTATIONS. The representations and warranties
in this Agreement and in any other document delivered in connection herewith
shall survive the Closing solely for purposes of Sections 10.1 and 10.2 and
shall terminate at the close of business on the second anniversary of the
Closing Date. Notwithstanding the foregoing, (a) representations and warranties
relating to environmental matters in Section 4.10 shall not survive the Closing
and (b) Buyer's acknowledgment pursuant to Section 5.4 shall not expire.
Nothing in this Section 10.8 shall limit the duration of Section 10.3(a) or (b).
44
ARTICLE XI
GENERAL PROVISIONS
11.1 ASSIGNMENT. This Agreement and the rights and obligations
hereunder shall not be assignable or transferable by Buyer other than by
operation of law, including by way of stock sale or merger, except to a Buyer of
substantially all the assets of Buyer, without the prior written consent of
Seller; PROVIDED, HOWEVER, that (a) Buyer may assign its right to purchase the
Assets hereunder to an Affiliate of Buyer that can accurately make all of
Buyer's representations and warranties as of the Closing without the prior
written consent of Seller, but in no event shall any such assignment limit or
affect Buyer's obligations hereunder and (b) Buyer may assign its rights
(including its indemnification rights) hereunder or grant a security interest in
this Agreement, or both, to or for the benefit of any Person holding a financial
obligation of Buyer issued in connection with the financing of the Transactions
or in connection with any renewal, extension, modification, amendment,
refinancing, refunding or replacement of any such financial obligation.
11.2 NO THIRD-PARTY BENEFICIARIES. Except as provided in Section 11.1
as to permitted assignees and in Article X as to Indemnified Persons, this
Agreement is for the sole benefit of the parties hereto and their permitted
assigns and nothing herein expressed or implied shall give or be construed to
give to any Person, other than the parties hereto and such assigns, any legal or
equitable rights hereunder.
11.3 TERMINATION.
(a) Anything contained herein to the contrary notwithstanding,
this Agreement may be terminated (except as set forth in Section 11.3(c)) and
the Transactions abandoned at any time prior to the Closing Date:
(i) by mutual written consent of Sellers and Buyer;
(ii) by Sellers if any of the conditions set forth in
Section 3.1 shall have become incapable of fulfillment, and shall
not have been waived by Sellers;
(iii) by Buyer if any of the conditions set forth in
Section 3.1 shall have become incapable of fulfillment, and shall
not have been waived by Buyer; or
45
(iv) by Sellers or Buyer, if the Closing does not
occur on or prior to November 4, 1994; PROVIDED, HOWEVER, that the
party seeking termination pursuant to clause (ii), (iii) or (iv)
is not materially in breach (after having been given written
notice and a five-Business Day cure period, if such breach is
susceptible of cure) of any of its representations, warranties,
covenants or agreements contained in this Agreement.
(b) In the event of termination by Sellers or Buyer pursuant to
this Section 11.3, written notice thereof shall forthwith be given to the other
party and the Transactions shall be terminated, without further action by either
party. If the Transactions are terminated as provided herein:
(i) Buyer shall return all documents and copies and
other material received from Sellers relating to the Transactions,
whether so obtained before or after the execution hereof, to
Sellers;
(ii) all confidential information received by Buyer
with respect to the Railroad SBU and Sellers shall be treated in
accordance with the Confidentiality Agreement which shall remain
in full force and effect notwithstanding the termination of this
Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 11.3, this
Agreement shall become void and of no further force and effect, except for the
provisions of (i) Section 7.1 relating to the obligation of Buyer to keep
confidential certain information and data obtained by it, (ii) Section 11.4
relating to certain expenses, (iii) Section 8.3 relating to publicity,
(iv) Section 11.5 relating to attorney fees and expenses, (v) Section 11.11
relating to finder's fees and broker's fees and (vi) this Section 11.3. Nothing
in this Section 11.3 shall be deemed to release Sellers or Buyer from any
liability for any breach by such party of the terms and provisions of this
Agreement or to impair the right of Sellers or Buyer to compel specific
performance by the other party of its obligations under this Agreement.
11.4 EXPENSES. Whether or not the Transactions are consummated, and
except as otherwise provided in this Agreement, all fees, costs and expenses
incurred in connection
46
with the Transaction Documents and the Transactions shall be paid by the party
incurring such fees, costs or expenses.
11.5 ATTORNEYS' FEES. Should any litigation be commenced concerning
this Agreement or the rights and duties of any party with respect to it, the
party prevailing shall be entitled, in addition to such other relief as may be
granted, to a reasonable sum for such party's attorney fees and expenses
determined by the court in such litigation or in a separate action brought for
that purpose.
11.6 AMENDMENTS. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by both parties hereto.
11.7 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the case
of express mail or overnight courier service), as follows:
(i) if to Buyer, to:
Xx. Xxxxxx X. Xxxxxx
Rail Products International
000 Xxxx Xxxxxx
Xxxxxxxx, XX 00000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
00 Xxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
(ii) if to MagneTek prior to
November 7, 1994, to:
MagneTek, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Miley, Esq.
General Counsel
47
and after November 7, 1994, to:
MagneTek, Inc.
00 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Miley, Esq.
General Counsel
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
(iii) if to NEC, to:
MagneTek National Electric Coil, Inc.
c/o 00 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Miley, Esq.
Secretary
11.8 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings contained
in this Agreement, in any Exhibit or Schedule hereto and in the table of
contents to this Agreement, are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Any matter
disclosed in one Schedule hereto shall be deemed incorporated by reference into
each other Schedule hereto and disclosed in each such Schedule. All Exhibits
and Schedules annexed hereto or referred to herein are hereby incorporated in
and made a part of this Agreement as if set forth in full herein. Any
capitalized terms used in any Schedule or Exhibit, but not otherwise defined
therein, shall have the meaning as defined in this Agreement. All of the
Transaction Documents shall be interpreted in such a manner as to harmonize and
give effect to the provisions thereof. Without limiting the generality of the
foregoing, no provision of this Agreement in respect of the Dublin Road Facility
shall be interpreted to conflict with or contradict any provision in the
Services Agreement.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
48
11.10 ENTIRE AGREEMENT. This Agreement and the Confidentiality
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior oral
and written agreements and understandings relating to such subject matter.
11.11 FEES. Each party hereto hereby represents and warrants that
(a) the only brokers or finders that have acted for such party in connection
with this Agreement or the transactions contemplated hereby or that may be
entitled to any brokerage fee, finder's fee or commission in respect thereof are
set forth in Schedule 11.11 and (b) each party agrees that it will pay all fees
or commissions which may be payable to such firm(s) retained by it or to which
it may be obligated.
11.12 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision hereof.
11.13 NEC COVENANTS. Buyer acknowledges that MagneTek is currently
negotiating for the sale of NEC. Buyer acknowledges that MagneTek is
accordingly the sole indemnitor in respect of representations and warranties
pertaining to the Railroad SBU hereunder, and that NEC's future liability
hereunder is limited to its obligations under Sections 2.1, 2.4, 2.5, 6.1, 6.4,
6.8, 8.1, 8.2, 8.4, 8.5 and 8.7. Any claim for indemnification by Buyer in
respect thereof shall be governed by the provisions of Article X pertaining to
indemnification of Buyer in respect of breaches of covenants.
11.14 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
MAGNETEK, INC.
By:
------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President and Treasurer
RAIL PRODUCTS INTERNATIONAL, INC.
By:
------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
As to matters enumerated in Section 11.13
MAGNETEK NATIONAL ELECTRIC COIL, INC.
By:
------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President & CFO
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