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Exhibit 2.0
ASSET PURCHASE AGREEMENT
BETWEEN
XXXXXXX DENVER MACHINERY INC.
BUYER,
CHAMPION PNEUMATIC MACHINERY COMPANY, INC.
SELLER
AND
CRL INDUSTRIES, INC.
DECEMBER 23, 1997
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TABLE OF CONTENTS
1. DEFINITIONS 1
2. SALE AND TRANSFER OF ASSETS 6
2.1 Permits 6
2.2 Contracts 6
2.3 Records 7
2.4 Intellectual Property 7
2.5 Other Assets 8
2.6 Excluded Assets 8
3. PURCHASE PRICE 8
3.1 Calculation of Purchase Price 8
3.2 Payment 9
3.3 Determination of Net Book Value as of the Economic Transfer Date 9
3.4 Allocation of Purchase Price 11
4. ASSUMPTION OF LIABILITIES 11
4.1 Liabilities to be Assumed 11
4.2 Excluded Liabilities Not Assumed 12
4.3 Assumed Liabilities Paid by Seller 13
5. SELLER'S REPRESENTATIONS 13
5.1 Form of Organization of Seller 13
5.2 Authority and Binding Obligation 14
5.3 No Violation 14
5.4 Financial Statements 15
5.5 No Material Change 15
5.6 Inventory 15
5.7 Tax Reports and Payments 16
5.8 Leases 16
5.9 Tangible Personal Property 16
5.10 Real Estate 17
5.11 Intellectual Property 18
5.12 Material Contracts 19
5.13 Employee Matters 21
5.14 Employee Benefits 21
5.15 Litigation 23
5.16 Compliance with Laws 23
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5.17 Permits, Certifications and Licenses 23
5.18 Environmental Laws 23
5.19 Insurance 24
5.20 Accounts Receivable 24
5.21 Books and Records 24
5.22 Transactions with Related Parties 24
5.23 No Undisclosed Liabilities 24
5.24 Product Warranty 24
5.25 Major Customers and Suppliers 24
5.26 Prospective Changes 25
5.27 Material Omissions 25
6. BUYER'S REPRESENTATIONS 25
6.1 Organization of Buyer 25
6.2 Valid and Enforceable Agreement 25
6.3 No Violation 25
7. ACTIONS FOLLOWING EXECUTION 26
7.1 Operations 26
7.2 Maintenance of Assets 26
7.3 Access to Records and Facilities 26
7.4 Further Assurances 27
7.5 Covenant Not-to-Compete 27
7.6 Release from Guarantees 28
7.7 Supplements to Schedules 28
7.8 Governmental Filings 28
7.9 Change of Seller's Name 29
7.10 Survey 29
7.11 Title Insurance 29
8. COVENANTS OF SELLER 29
8.1 Further Documents and Assurances 29
8.2 No Impairment of Transaction 29
8.3 Compliance by Seller 30
8.4 Compliance with Bulk Sales Laws 30
8.5 Princeton Real Estate Remedial Work 30
9. COVENANTS OF BUYER 31
9.1 Further Documents and Assurances 31
9.2 No Impairment of Transaction 31
9.3 Compliance by Buyer 31
10. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER 31
10.1 Representations and Warranties; Covenants 31
10.2 Certified Copy of Resolutions 31
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10.3 Antitrust Injunctions 31
10.4 Certain Approvals 32
10.5 Due Diligence 32
10.6 Adverse Change 32
10.7 Environmental Assessment 32
10.8 Other Matters 32
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER 33
11.1 Representations and Warranties; Covenants 33
11.2 Certified Copy of Resolutions 33
11.3 Antitrust Injunctions 33
11.4 Certain Approvals 33
11.5 Other Matters 33
12. BROKER 33
13. EXPENSES AND TAXES 34
13.1 Seller's Expenses 34
13.2 Buyer's Expenses 34
14. DAMAGES FOR BREACH OF AGREEMENT 34
14.1 Buyer's Claim for Damages 34
14.2 Seller's Claim for Damages 34
14.3 Notice of Claim 35
14.4 Limitation on Claims 35
15. INDEMNIFICATION OF PARTIES 36
15.1 Indemnification by Seller 36
15.2 Indemnification by Buyer 36
16. PROCEDURE FOR CLAIMING INDEMNIFICATION 36
17. SELLER'S CONFIDENTIAL INFORMATION 37
18. EMPLOYEE MATTERS 38
18.1 Employment 38
18.2 Employee Benefit Plans Generally 38
18.3 Pension Plans 39
18.4 Welfare and Fringe Benefits 39
19. TAXES 39
19.1 Cooperation 39
19.2 Books and Records 40
19.3 Confidentiality 40
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20. CLOSING 40
20.1 Documents to be Delivered by Seller 40
20.2 Documents to be Delivered by Buyer 41
21. TERMINATION 42
21.1 Right of Termination Without Breach 42
21.2 Termination for Breach 42
22. ANNOUNCEMENTS 43
23. SURVIVAL OF REPRESENTATIONS 44
24. MISCELLANEOUS 44
24.1 Disclosure Schedule 44
24.2 Further Assurance 44
24.3 Assignment; Parties in Interest 44
24.4 Governing Law 44
24.5 Amendment and Modification 45
24.6 Notice 45
24.7 Entire Agreement 45
24.8 Counterparts 46
24.9 Headings 46
24.10 Waiver 46
24.11 Severability 46
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SCHEDULES
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Schedule 1.32 12/31/96 Net Book Value
Schedule 2.4 Intellectual Property
Schedule 4.2 Seller Liabilities
Schedule 5.1 Qualified Jurisdictions
Schedule 5.4 GAAP Exceptions
Schedule 5.5 Material Changes
Schedule 5.6 Inventory
Schedule 5.8 Leases
Schedule 5.9 Tangible Personal Property
Schedule 5.10 Real Estate
Schedule 5.11 Intellectual Property
Schedule 5.12 Material Contracts
Schedule 5.13.2 Collective Bargaining Agreements
Schedule 5.13.3 Grievances
Schedule 5.14.1 Employee Benefits
Schedule 5.14.5 Acceleration of Benefits
Schedule 5.15 Litigation
Schedule 5.16 Compliance
Schedule 5.18 Environmental Compliance
Schedule 5.19 Insurance
Schedule 5.22 Affiliated Transactions
Schedule 5.25 Ten Largest Customers and Suppliers
Schedule 7.6 Seller Guarantees
Schedule 18.1 Excluded Employees
EXHIBITS
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Exhibit A Assignment, Xxxx of Sale and Assumption Agreement
Exhibit B Continuing Services Agreement
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is entered into this 23rd day of December, 1997, by and
between Xxxxxxx Denver Machinery Inc., a Delaware corporation, which has its
offices at 0000 Xxxxxxx Xxxxxxxxxx, Xxxxxx, Xxxxxxxx 00000, or its assigns
(hereinafter referred to as "Buyer"), Champion Pneumatic Machinery Company,
Inc., a Delaware corporation, which has its offices at Princeton, Illinois
(hereinafter referred to as "Seller") and CRL Industries, Inc., a Delaware
corporation, which has its offices at Bannockburn, Illinois (hereinafter
referred to as "CRLI");
WHEREAS, Buyer, Seller and CRLI have engaged in discussions relating to
the acquisition by Buyer of the operating assets owned and used by Seller in
the Business (as hereinafter defined), as a going concern, as more
particularly described herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and conditions herein contained, the parties agree as follows:
1. DEFINITIONS
The terms below shall have the following meanings under this Agreement
unless the context clearly requires otherwise:
1.1 "AFFILIATE" means, with respect to any entity, any other entity
directly or indirectly controlling, controlled by, or under
common control with such entity.
1.2 "AGREEMENT" means this Asset Purchase Agreement and the Schedules
and Exhibits hereto.
1.3 "APPLICABLE LAW" means all applicable laws, statutes, treaties,
rules, codes, ordinances, regulations, permits, certificates,
orders and licenses of any Governmental Authority,
interpretations of any of the foregoing by a Governmental
Authority having jurisdiction with respect thereto, and
judgments, decrees, injunctions, writs, orders or like action of
any court, arbitrator or other judicial or quasi-judicial
tribunal (including without limitation those pertaining to
labor, health, safety and the environment).
1.4 "ASSETS" means the assets, properties and rights to be sold by
Seller and purchased by Buyer as described in Article 2.
1.5 "ASSUMED LIABILITIES" means those Liabilities of the Seller
described in Section 4.1 hereof.
1.6 "BUSINESS" means the research, development, engineering,
fabrication, marketing, distribution and sale of air
compressors, service parts and similar products, as presently
conducted by Seller.
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1.7 "CASH" means cash and cash equivalents (including marketable
securities and short-term investments) calculated in accordance
with GAAP applied on a basis consistent with the preparation of
the Financial Statements.
1.8 "CLOSING" means the actual transfer and delivery of the
instruments of conveyance for the Assets, and the exchange and
delivery by the parties of such other documents and instruments
contemplated by this Agreement.
1.9 "CLOSING DATE" means seven (7) business days following the
expiration or termination of any applicable pre-merger or
pre-acquisition waiting period imposed by any applicable antitrust
authority or other Governmental Authority, or such other date as
the parties hereto mutually agree, on which date all conditions
to Closing set forth in Articles 10 and 11 hereof shall have
been satisfied or waived.
1.10 "CODE" means the Internal Revenue Code of 1986, as amended.
1.11 "CONFIDENTIAL INFORMATION" shall consist of information
ordinarily known only to Seller's personnel involved in the
Business, such as customer lists, supplier lists, trade
secrets, know-how, pricing records, inventory records and such
other information normally understood to be confidential or
otherwise designated as such in writing by the Seller.
"CONFIDENTIAL INFORMATION" shall not include information which
(i) was known to Buyer prior to its receipt from Seller, (ii)
was publicly divulged by Seller prior to its receipt by Buyer,
(iii) was received in good faith by Buyer from any third party
without breach by any party of any obligations of
confidentiality, or (iv) is part of the public domain. For the
purposes of Section 17.2, "CONFIDENTIAL INFORMATION" shall
include information regarding Buyer's post-closing plans or
strategies disclosed to Seller or CRLI, but shall not include
information which (i) was publicly divulged by Buyer prior to
the Closing, (ii) may in the future be received in good faith
by Seller or CRLI from any third party without breach by any
party of any obligations of confidentiality, or (iii) is part
of the public domain.
1.12 "CONTINUING EMPLOYEES" means individuals actively employed in the
Business as of the Closing Date who accept employment with Buyer.
1.13 "CONTRACTS" means all agreements, contracts, commitments,
unfilled purchase orders for raw materials, components,
subassemblies and supplies, unfilled sales orders, and leases of
real and personal property entered into by Seller, relating to
the Business and all rights thereunder, other than rights of
Seller arising hereunder.
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1.14 "DAMES & XXXXX REPORT" means that certain November 20, 1997 Phase
II Investigation of the Princeton Real Estate prepared by Dames
& Xxxxx for Buyer.
1.15 "ECONOMIC TRANSFER DATE" means 12:01 a.m., Central Standard Time,
on the Closing Date.
1.16 "EMPLOYEE BENEFITS" means any and all pension or welfare benefit
programs, payroll practices, fringe benefits, or other plans,
arrangements, agreements and understandings for employees,
groups of employees or specific individual employees to which
Seller or any affiliate contributes or is a party, by which it
may be bound or under which it may have liability, including
without limitation pension or retirement plans, deferred
compensation plans, bonus or incentive plans, early retirement
programs, severance pay policies, support funds, and medical or
dental insurance, short-term and long-term disability,
educational reimbursement plans, sick leave, vacation policy or
other payroll practices and any other payment or reimbursement
plans. An "EMPLOYEE BENEFIT PLAN" shall have the meaning set
forth in Section 5.14.
1.17 "ENVIRONMENTAL LAWS" means all Applicable Laws (including without
limitation, the Federal Water Pollution Control Act, the Clean
Air Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act, the Solid Waste Disposal Act, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Emergency Planning and Community Right-To-Know
Act, the Safe Drinking Water Act and similar state, regional,
county and local statutes, laws and ordinances, and any
regulation, order, injunction, judgment, declaration, notice or
demand issued thereunder) relating to the environment, including
without limitation, those relating to (i) public health or
safety aspects thereof, (ii) nuisance, trespass, releases,
discharges, emissions, or disposals to the air, water, land or
groundwater, (iii) the withdrawal or use of groundwater, (iv)
the use, handling or disposal of polychlorinated biphenyls
(PCBs), asbestos or urea formaldehyde, (v) the treatment,
storage, disposal or management of Hazardous Material (including
without limitation petroleum, its derivatives, by-products or
other hydrocarbons), (vi) exposure to toxic, hazardous or other
controlled, prohibited or regulated substances and (vii) the
transportation, storage, release, disposal or management of
gaseous or liquid substances.
1.18 "EQUIPMENT" means any and all machinery, equipment, tools, dies
and jigs, computers, computer software (except that constituting
a part of Excluded Assets), automobiles, trucks, trailers,
furniture and all other personal property (other than Inventory
and Records) owned or leased by Seller and used in the Business,
whether or not reflected on the Financial Statements.
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1.19 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
1.20 "ERISA PLAN" shall have the meaning set forth in Section 3(3) of
ERISA with respect to any employee benefit plan sponsored,
maintained or contributed to (or under which there is or may be
an obligation to contribute) by Seller, or any of its Affiliates
that currently covers Seller's employees and is subject to
ERISA.
1.21 "EXCLUDED ASSETS" means those assets of the Seller described in
Section 2.6 hereof.
1.22 "EXCLUDED LIABILITIES" means those Liabilities of the Seller
described in Section 4.2 hereof.
1.23 "FINANCIAL STATEMENTS" means the
(i) unaudited balance sheets for Seller as of December 31,
1994, 1995 and 1996, together with the related statements of
income for the years ended on such dates; and
(ii) unaudited balance sheet for Seller as of November 30, 1997,
together with the related statements of income for the period
ended on such date (collectively, the "INTERIM FINANCIAL
STATEMENTS").
1.24 "GAAP" means generally accepted accounting principles as in
effect in the United States from time to time.
1.25 "GOVERNMENTAL AUTHORITY" means any supranational, national,
federal, state, departmental, county, municipal, regional or
other governmental authority, agency, board, body,
instrumentality or court in whatever country having jurisdiction
in whole or in part over Buyer, Seller or the Business.
1.26 "HAZARDOUS SUBSTANCES" means any substance, material or waste
which is as of the Closing Date, or was before the Closing Date,
regulated by any Governmental Authority, including, but not
limited to, any material or substance which is designated as a
hazardous or polluting substance or subject to regulation as a
hazardous or toxic substance pursuant to any Applicable Law.
1.27 "INTELLECTUAL PROPERTY" means all United States, Canadian and
other patents and registrations and applications therefor;
copyrights and copyright registrations and applications
therefor; trademarks, brand names and trade names and
registrations and applications therefor; know-how; computer
software; trade secrets and confidential business information;
and licenses of any of the foregoing. "RELEVANT INTELLECTUAL
PROPERTY" means all Intellectual Property owned or licensed by
Seller or otherwise used in the Business.
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1.28 "INVENTORY" means all inventories of raw materials, work in
process, finished goods, merchandise, supplies and packaging
materials used in the Business by Seller.
1.29 "LIABILITY" means any liability (whether known or unknown,
asserted or unasserted, absolute or contingent, whether accrued
or unaccrued, liquidated or unliquidated, and whether due or to
become due), except that "Liability" includes Taxes only to the
extent set forth in Section 4.1(iii).
1.30 "MANTECA REAL ESTATE" means Seller's land, building, facility and
fixtures located at Manteca, California.
1.31 "MONTGOMERY REAL ESTATE" means Seller's land, building, facility
and fixtures located at Montgomery, Alabama.
1.32 "NET BOOK VALUE" as of December 31, 1996, means the net book
value of the Assets less the net book value of the Assumed
Liabilities as reflected in the "12/31/96 Net Book Value" set
forth as Schedule 1.32. The "NET BOOK VALUE" as of the Economic
Transfer Date shall be calculated pursuant to Section 3.3
hereof. "NET BOOK VALUE" shall not include the step-up in the
basis of the property, plant and equipment of Seller arising
from the 10/31/92 reorganization of CRLI, currently recorded on
the books and records of CRLI, nor any accumulated depreciation
or other reserves associated therewith. At December 31, 1996,
the step-up recorded on CRLI's books was approximately
$7,800,000.
1.33 "OPERATING PERMITS" means all of the permits, licenses,
approvals, authorities or other franchises granted by any
Governmental Authority or any other third party required or
appropriate for the continued operation of the Business in the
manner heretofore operated or as contemplated to be operated by
Buyer.
1.34 "PERMITTED LIENS" means those liens, claims, encumbrances and
restrictions with respect to any of the Assets set forth on
Schedules 5.9 or 5.10 and which are specifically consented to by
Buyer.
1.35 "PRINCETON REAL ESTATE" means Seller's land, building, facility
and fixtures located at Princeton, Illinois.
1.36 "PURCHASE PRICE" means the amount calculated in accordance with
the provisions of Section 3.1 hereof.
1.37 "PURCHASE PRICE ADJUSTMENT" means the amount of the adjustment to
the Purchase Price, as set forth in Section 3.1 (ii).
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1.38 "REAL ESTATE" means the Princeton Real Estate, Montgomery Real
Estate and the Manteca Real Estate.
1.39 "REMEDIAL WORK" means any investigation, site monitoring,
containment, cleanup, removal, restoration or other remedial
work relating to environmental matters with respect to the
Princeton Real Estate.
1.40 "SELLER'S ACCOUNTANTS" means Deloitte & Touche, who shall review
and "certify" (i.e perform such special procedures and issue an
opinion in the form agreed to by the parties and Deloitte &
Touche prior to execution of this Agreement) the Statement of
Net Book Value as of the Economic Transfer Date for purposes of
Section 3.3 hereof.
1.41 "SETTLEMENT DATE" means a date on or before the fifth business
day following the determination of the final Purchase Price
pursuant to Section 3.2.2.
1.42 "STATEMENT OF NET BOOK VALUE" means the statement of Net Book
Value as of the Economic Transfer Date delivered by Seller to
Buyer within 60 days following the Closing Date pursuant to
Section 3.3.
1.43 "TAX INDEMNITY PERIOD" means, with respect to any Taxes, any
period ending on or before the Economic Transfer Date.
1.44 "TAXES" means all federal (U.S. and Canadian), provincial, state,
local or other foreign taxes, social or economic security
contributions, fees, imposts, levies or other assessments,
including, without limitation, all net income, gross receipts,
sales, use, ad valorem, value added, transfer, recording,
franchise, profits, inventory, capital stock, license,
withholding, payroll, stamp, occupation and property taxes,
customs duties or other similar fees, assessments and charges,
however denominated, together with all interest, penalties,
surcharges, additions to tax or additional amounts imposed by
any Governmental Authority, and any transferee liability in
respect of any of the foregoing taxes.
2. SALE AND TRANSFER OF ASSETS
Seller shall sell, transfer and deliver to Buyer and Buyer shall
purchase from Seller at the Closing all of Seller's right, title and
interest in all of the Assets of Seller as reflected in the Statement
of Net Book Value, including, the Real Estate, Equipment and
Inventory, as well as the assets and property described below and not
separately reflected on the Statement of Net Book Value, which are
owned by Seller on the Closing Date:
2.1 PERMITS. All Operating Permits relating to the Business, to the
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extent transferable by Seller.
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2.2 CONTRACTS. All Contracts, except those not assumed by Buyer
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pursuant to Section 4; provided, however, that if the assignment
of any such Contract requires the consent of the other parties
thereto, this Agreement shall not constitute an agreement to
assign the same, if an attempted assignment will constitute a
breach thereof, but Seller and Buyer shall use their best
efforts to obtain the written consent of the other parties to
such assignment; and failing such consent, Seller will continue
to execute any such Contract upon the direction and for the risk
and benefit of Buyer and Buyer shall indemnify and reimburse
Seller for the cost associated with continued execution of any
such Contract.
2.3 RECORDS. All books, records, documents, files, customer lists,
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advertising and promotional materials, procedural manuals and
other printed or written materials, whether stored electronically
or otherwise, concerning the Business (except for those which may
constitute Excluded Assets).
2.4 INTELLECTUAL PROPERTY. All Relevant Intellectual Property,
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except for that which may constitute Excluded Assets, including,
specifically, the following:
2.4.1 All patents and registrations and applications therefor,
and all reissuances, extensions and continuations
thereof, a listing of which is set forth in Schedule 2.4.
2.4.2 All trademarks, service marks, logos, brand names, trade
names and registrations and applications therefor, a
listing of which is set forth in Schedule 2.4.
2.4.3 All copyrightable works, copyrights and registrations and
applications therefor and all renewals thereof, a listing
of which is set forth in Schedule 2.4.
2.4.4 All mask works and registrations and applications
therefor, and all renewals thereof, a listing of which is
set forth in Schedule 2.4.
2.4.5 Subject to the approval of licensors or licensees, if
required, licenses granted to or by Seller, a listing of
which, except for "shrink wrap" items, is set forth in
Schedule 2.4.
2.4.6 All computer software (including all data, source code and
related documentation belonging to, under the control of,
or in the possession of Seller other than that
constituting part of the Excluded Assets).
2.4.7 Technical documentation reflecting engineering and
production data, design data, plans, specifications,
drawings, technology, know-how, trade secrets,
confidential business information, research and
development, manufacturing processes, customer and
supplier lists, pricing and cost information and
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business and marketing plans and proposals, relating to
the Business or to the maintenance of Assets and all
documentary evidence thereof, including without
limitation the technical information incorporated in such
documentation.
To the extent that Relevant Intellectual Property is entered in
the pertinent patent and trademark registers or offices, Seller
shall, to the full extent permitted by law, deliver to Buyer
all related files in Seller's direct and indirect possession
and all documents, certificates and declarations (hereinafter
referred to as "Assignment Documents") necessary to enable
Buyer to register such Intellectual Property in its name.
2.5 OTHER ASSETS. All other assets of any kind used in the Business
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which are not capitalized and therefore not reflected in the
Financial Statements or in the Statement of Net Book Value and
are not Excluded Assets.
2.6 EXCLUDED ASSETS. The following assets of Seller shall not be
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transferred to Buyer upon Closing and shall remain the separate
property of Seller:
2.6.1 Cash;
2.6.2 any intercompany account receivable due to Seller from
CRLI or any Affiliate;
2.6.3 the FDC software, FAS 1000 software (now known as FAS For
Windows) or any other software which is maintained by a
CRLI-owned license;
2.6.4 any right or interest of Seller in any Employee Benefit
Plan;
2.6.5 all of Seller's stock ownership records, minute books, and
similar corporate records;
2.6.6 all books, records, files or correspondence relating to
Seller's accounting, tax, general ledger or financial
records.
Those Assets, although reflected in Schedule 1.32, that were disposed
of in the ordinary course of business between January 1, 1997 and
Closing are not being sold or transferred hereunder. Unless
otherwise described above as an Excluded Asset, those Assets,
although not reflected in Schedule 1.32, that were acquired by Seller
in the ordinary course of business (and were not thereafter sold in
the ordinary course of business) between January 1, 1997 and Closing
shall be sold and transferred hereunder.
3. PURCHASE PRICE
3.1 CALCULATION OF PURCHASE PRICE. The Purchase Price shall be
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comprised of the following:
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(i) $24,000,000 (the "Cash Portion of Purchase Price");
(ii) plus or minus, as applicable, the difference, if any,
between the Net Book Value as of December 31, 1996
($3,730,451), as shown on Schedule 1.32, and the Net Book
Value as of the Economic Transfer Date, as shown on the
Statement of Net Book Value; and
(iii) the Assumed Liabilities.
No interest shall be paid on any portion of the Purchase Price.
3.2 PAYMENT.
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3.2.1 CASH PAYMENT TO SELLER. The Cash Portion of the Purchase
Price shall be paid to Seller in cash or in immediately
available funds by wire transfer on the Closing Date and
the Assumed Liabilities shall be assumed on the Closing
Date.
3.2.2 CALCULATION OF PURCHASE PRICE ADJUSTMENT. On the
Settlement Date, either (i) Seller shall pay to Buyer the
amount, if any, by which the Net Book Value as of the
Economic Transfer Date, as calculated in accordance with
the provisions of Section 3.3, is less than $3,730,451 or
(ii) Buyer shall pay to Seller the amount, if any, by
which the Net Book Value as of the Economic Transfer Date,
calculated in accordance with the provisions of Section
3.3, exceeds $3,730,451.
Payments under this Section 3.2.2 shall be made by wire
transfer of immediately available funds to an account
designated by the recipient. If there exists any dispute
between the parties over the Purchase Price Adjustment, or
any component thereof, Buyer or Seller, as the case may
be, shall promptly pay the undisputed portion thereof, if
any, and only the balance shall be subject to negotiation
or arbitration, in accordance with Section 3.3.1.
3.3 DETERMINATION OF NET BOOK VALUE AS OF THE ECONOMIC TRANSFER DATE.
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3.3.1 STATEMENT OF NET BOOK VALUE. The Net Book Value as of
December 31, 1996 has been prepared by Seller and is
attached as Schedule 1.32. The Statement of Net Book Value
as of the Economic Transfer Date shall be prepared by
Seller as follows:
(i) Seller shall prepare and deliver to Buyer, within 60 days
following the Closing Date, the Statement of Net Book
Value as of the Economic Transfer Date. There shall be
attached to the Statement of Net Book Value an annex
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setting forth in reasonable detail the computation of the
Purchase Price Adjustment in the form of Schedule 1.32 -
Attachment 2. Seller's Accountants will observe a
physical count of the inventories of Seller as of the
close of business on September 30, 1997 and shall roll
forward the inventory through the Economic Transfer Date
based upon Seller's perpetual inventory records. The
taking of such inventory shall be observed by Buyer and by
Buyer's auditors in Buyer's sole discretion.
(ii) To the extent permitted by GAAP, the assets and liabilities
set forth in the Statement of Net Book Value as of the
Economic Transfer Date shall be determined using the same
accounting methods, policies, principles, practices, and
procedures, with consistent classification, judgments, and
estimation methodology, as used in determining assets and
liabilities included in the Financial Statements.
(iii) Seller shall afford Buyer (including its employees,
auditors, agents, and professional advisors) the
opportunity to review and comment upon drafts of the
Statement of Net Book Value as of the Economic Transfer
Date (and the computation of the Purchase Price Adjustment
annexed thereto) prior to the finalization of the same, and
Seller and Buyer shall attempt in good faith to resolve any
disputes with respect to the Statement of Net Book Value as
of the Economic Transfer Date and the calculations therein
before the final statement is rendered. In connection
therewith, Seller shall arrange for the work papers of
Seller or, if applicable, Seller's Accountants to be made
available to Buyer and Buyer's auditors, and they may make
inquiries of representatives of Seller and Seller's
Accountants to the extent deemed necessary by Buyer.
Following Closing, Buyer shall provide employees of Seller,
as well as representatives of Seller, access to records of
Seller transferred to Buyer to the extent reasonably
necessary to enable Seller and Seller's Accountants to
prepare and review the Statement of Net Book Value as of
the Economic Transfer Date.
(iv) The Statement of Net Book Value as of the Economic Transfer
Date delivered by Seller to Buyer (and the computation of
the Purchase Price Adjustment annexed thereto) shall be
conclusive and binding upon the parties unless Buyer,
within 45 days after the delivery to Buyer of such
Statement, notifies Seller in writing that Buyer disputes
any of the amounts set forth therein, specifying the
nature of the dispute and the basis therefor. The parties
shall in good faith attempt to resolve any dispute, in
which event the Statement of Net Book Value as of the
Economic Transfer Date and the computation of the Purchase
Price Adjustment, as amended to the extent necessary to
reflect the resolution of the dispute, shall be conclusive
and binding upon the parties. If the parties do not reach
agreement resolving the dispute within 30 days after
notice is given by Buyer to Seller, the parties shall
submit the dispute to Price Waterhouse (the "Arbiter") for
resolution.
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Promptly, but no later than 30 days after its acceptance
of its appointment as Arbiter, the Arbiter shall make a
determination, based solely on presentations by Buyer and
Seller, and not by independent review, and shall render a
report as to its determination and the resulting
computation of the Statement of Net Book Value and the
Purchase Price Adjustment, if any, which shall be
conclusive and binding upon the parties. In resolving any
disputed item, the Arbiter (x) shall be bound by the
provisions of Section 3.3.1 (ii) and (y) may not assign a
value to any item greater than the greatest value for such
item claimed by either party or less than the smallest
value for such item claimed by either party. The fees,
costs, and expenses of the Arbiter (A) shall be borne by
Buyer in the proportion that the aggregate dollar amount
of such disputed items so submitted that are
unsuccessfully disputed by Buyer (as finally determined by
the Arbiter) bears to the aggregate dollar amount of such
items so submitted and (B) shall be borne by Seller in the
proportion that the aggregate dollar amount of such
disputed items so submitted that are successfully disputed
by Buyer (as finally determined by the Arbiter) bears to
the aggregate dollar amount of such items so submitted.
Buyer and Seller each shall make available to the other
(upon the request of the other) their respective work
papers generated in connection with the preparation or
review of the Statement of Net Book Value.
3.4 ALLOCATION OF PURCHASE PRICE. On or before the 60th day after
----------------------------
the Closing Date, Seller shall send to Buyer a draft of Internal
Revenue Service Form 8594 containing Seller's proposed
allocation, under Section 1060 of the Code, of the Purchase
Price among the Assets. Within forty-five (45) days after
receipt of such Form 8594, Buyer will notify Seller whether it
agrees or disagrees with such proposed allocation and, if Buyer
disagrees, the parties agree to make a good faith attempt to
reach agreement as to the allocation to be reported on such Form
as filed by Buyer and Seller. Seller and Buyer shall cooperate
with each other in filing any returns or reports required to be
filed by each of them under Applicable Law with respect to such
allocation, and each party shall be given an opportunity to
review and comment upon the other parties' return or report
prior to its filing with the appropriate Governmental Authority.
4. ASSUMPTION OF LIABILITIES
4.1 LIABILITIES TO BE ASSUMED. At Closing, Buyer shall assume, and
-------------------------
agree to satisfy and perform, to the extent not satisfied or
performed prior to the Economic Transfer Date, without any
charge or cost to Seller, the following liabilities only (the
"Assumed Liabilities"):
(i) except for those items described in Section 4.2, those
Liabilities of Seller incurred in the ordinary course of
the Business, including, but not limited to
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the Liabilities reflected as separate line items on the
Statement of Net Book Value as of the Economic Transfer
Date;
(ii) all Liabilities relating to the Business which arise after
the Economic Transfer Date in the ordinary course of the
Business including open purchase orders on the Closing
Date, product liability claims occurring (i.e., the date of
damage or injury) after the Closing Date, warranty
liability claims and environmental claims (other than any
Liability resulting from, arising out of, relating to, in
the nature of, or caused by (x) any breach of contract,
tort, infringement, violation of law, or environmental
matter initially asserted prior to the Closing Date, or (y)
which involves the storage, handling, disposal or treatment
of Hazardous Substances by Seller in or on or affecting any
site other than the Real Estate, or (z) any Princeton Real
Estate Remedial Work for which Seller is responsible as set
forth in Section 8.5);
(iii) any Taxes (except income taxes and other taxes measured by
or based upon income) for which the period for timely
payment has not passed as of the Economic Transfer Date,
but only to the extent such Taxes are reflected as
Liabilities on the Statement of Net Book Value as of the
Economic Transfer Date;
(iv) all obligations of the Seller under the Contracts; and
(v) employment obligations set forth in Section 18.1.
If the assumption of any Liabilities assumed by Buyer under this
Section 4.1 require the consent of any third party, Seller and
Buyer shall use their best efforts to obtain the written consent
of such third parties to the assumption; failing such consent,
Buyer will indemnify Seller against any claim arising out of such
assumed Liabilities. For purposes of Sections 4.1(i) and 4.1(ii)
above the "Liabilities of Seller incurred in the ordinary course
of the Business" shall mean only those Liabilities of Seller
which the event or action giving rise to the Liability is an
event or occurrence that is not either outside of the scope of
the historical operation of the Business or outside of the scope
of the Business as determined by a reasonable person skilled in
the business and familiar with its operation.
4.2 EXCLUDED LIABILITIES NOT ASSUMED. Buyer shall not assume or be
--------------------------------
liable for any Liability of the Seller except for those Assumed
Liabilities expressly assumed under Section 4.1. Without
limiting the scope of the immediately preceding sentence, the
Buyer shall not specifically assume and shall have no liability
for any of the following Liabilities ("Excluded Liabilities"):
(i) any Liability of the Seller resulting from, arising out
of, relating to, in the nature of, or caused by (x) any
breach of contract, tort, infringement, violation of law,
or environmental matter initially asserted prior to the
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Closing Date, or (y) which involves the storage,
handling, disposal or treatment of Hazardous Substances
by Seller, in or on or affecting any site other than the
Real Estate, or (z) any Princeton Real Estate Remedial
Work for which Seller is responsible as set forth in
Section 8.5;
(ii) any Liability of the Seller for Taxes incurred, accrued or
otherwise arising during the Tax Indemnity Period, except
to the extent of any Taxes (except income taxes and other
taxes measured by or based upon income) reflected as
Liabilities on the Statement of Net Book Value as of the
Economic Transfer Date;
(iii) any obligation of the Seller to indemnify any person by
reason of the fact that such person was a director,
officer, employee, or agent of the Seller or was serving at
the request of the Seller as a partner, member, trustee,
director, officer, employee, or agent of another entity
(whether such indemnification is for judgments, damages,
penalties, fines, costs, amounts paid in settlement,
losses, expenses (including attorneys' fees), or otherwise,
and whether such indemnification is pursuant to any
statute, charter document, by-law, agreement, or otherwise;
(iv) any Liability of Seller with respect to the lease of real
property;
(v) any Liability of the Seller for costs and expenses
(including legal and accounting costs and expenses and
fees and commissions payable to investment bankers and
other advisors) incurred in connection with this Agreement
and the transactions contemplated hereby;
(vi) any indebtedness of the Seller to CRLI or an Affiliate of
Seller;
(vii) any Liability or obligation of the Seller under this
Agreement or under any ancillary agreement between the
Seller on the one hand and the Buyer on the other hand
entered into on or after the date of this Agreement; or
(viii) all other Liabilities and obligations of Seller set forth
in Schedule 4.2.
To the extent Buyer becomes liable to any third party to pay or
perform any such Excluded Liability, Seller agrees to indemnify
Buyer with respect thereto pursuant to the provisions of Section
15 hereof.
4.3 ASSUMED LIABILITIES PAID BY SELLER. In the event Seller pays or
----------------------------------
otherwise discharges any Assumed Liabilities after the Closing
Date, Buyer shall reimburse Seller for the amount thereof.
Seller shall notify Buyer prior to payment and give Buyer an
opportunity to discharge such liability prior to payment. Seller
agrees to discharge, in accordance with its terms, the deferred
compensation Liabilities of Seller to Xxxxxxx X. Xxxxxxx and
Xxxxxxx X.
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Xxxxxxxxxx set forth in items 5.12(i) C. and D. respectively of
Schedule 5.12 in the aggregate amount of approximately $101,000 (the
"Deferred Compensation Liabilities").
5. SELLER'S REPRESENTATIONS
Seller represents as follows, and acknowledges that, (i)
notwithstanding any investigation Buyer may undertake, Buyer is
relying on the following representations and (ii) except as otherwise
specifically provided herein, the same shall be true on the date
hereof and as of the Closing Date and shall survive the Closing of
this transaction in accordance with Section 23 of this Agreement:
5.1 FORM OF ORGANIZATION OF SELLER.
------------------------------
5.1.1 Seller is a corporation organized, validly existing and in
good standing under the laws of the State of Delaware and
has full corporate power and authority to carry on its
business operations as now being conducted and to own the
properties and assets it now owns. To the extent Seller
does business outside its jurisdiction of incorporation,
it is qualified or licensed to do business in such
jurisdictions, each of which jurisdiction is listed on
Schedule 5.1 attached hereto.
5.1.2 The copies of the Articles of Incorporation and the By-Laws
of Seller, including any amendments thereto, which have
been delivered to Buyer, are true, correct and complete
copies thereof as presently in effect.
5.2 AUTHORITY AND BINDING OBLIGATION.
--------------------------------
5.2.1 Seller has full corporate power, legal right and authority
to enter into, execute and deliver this Agreement and any
ancillary instruments and to carry out the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by Seller and is, and when
executed and delivered, each ancillary instrument or
agreement contemplated hereby will be, the legal, valid
and binding obligation of Seller, enforceable in
accordance with its respective terms, except as such may
be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, and by
general equitable principles. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized
by Seller by all necessary corporate action.
5.2.2 CRLI has full corporate power, legal right and authority
to enter into, execute and deliver this Agreement and any
ancillary instruments and to carry out the transactions
contemplated hereby. This Agreement has been duly and
validly executed and delivered by CRLI and is, and when
executed
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and delivered, each ancillary instrument or agreement
contemplated hereby will be, the legal, valid and binding
obligation of CRLI, enforceable in accordance with its
respective terms, except as such may be limited by
bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally, and by general
equitable principles. The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized
by the Board of Directors of CRLI.
5.3 NO VIOLATION. Neither the execution and the delivery of this
------------
Agreement, nor the consummation of the transactions contemplated
hereby, nor the performance of Seller's or CRLI's obligations
hereunder will (i) subject to expiration or termination of the
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976 (the "Xxxx-Xxxxx-Xxxxxx Act"), violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
Governmental Authority, (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which Seller
or CRLI is a party or by which either of them is bound or to
which any of their assets is subject or (iii) conflict with the
Articles of Incorporation or By-Laws of Seller or CRLI. Other
than approvals or authorizations required under the
Xxxx-Xxxxx-Xxxxxx Act and any filings and approval requirements
under any "Bulk Sales" laws, Seller, CRLI or any affiliate is
not required to give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any Governmental
Authority to consummate the transactions contemplated by this
Agreement.
5.4 FINANCIAL STATEMENTS. Buyer has received true, complete and
--------------------
accurate copies of the Financial Statements and the Net Book
Value as of December 31, 1996. The Financial Statements and the
Net Book Value as of December 31, 1996 have been prepared in
accordance with the books and records of the Seller which were
used in the preparation of CRLI's audited consolidated financial
statements for the corresponding periods and, except as noted on
Schedule 5.4, the Financial Statements were prepared in
accordance with GAAP, consistently applied throughout the
periods indicated, and present fairly the financial condition
and results of operations of Seller as at the dates indicated
and for the periods indicated in the Financial Statements and
the Net Book Value as of December 31, 1996.
5.5 NO MATERIAL CHANGE. Except as set forth in Schedule 5.5 attached
------------------
hereto or as contemplated in Article 7 hereof, since December 31,
1996 there has not been:
5.5.1 any material adverse change in the business, financial
condition, operations or results of operations of Seller or
the Business;
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5.5.2 any damage, destruction or loss, whether covered by
insurance or not, materially and adversely affecting the
properties of Seller or the Business;
5.5.3 any declaration, setting aside or payment of any dividend
to any shareholder (whether in cash, stock or property) in
respect of the capital of Seller;
5.5.4 any increase in the compensation or granting of bonuses
payable or to become payable by Seller to any shareholders,
directors, officers or employees of Seller, except
increases or grants occurring in the ordinary course of
business and in accordance with past practice;
5.5.5 any sale or transfer by Seller of any tangible or
intangible asset, any mortgage or pledge or creation of any
security interest, lien or encumbrance of or in any such
asset, any lease (capital or operating) of real property or
equipment, or any cancellation of any debt or claim, all
except in the ordinary course of business;
5.5.6 any other transaction not in the ordinary course of
business; or
5.5.7 any change in accounting methods or principles.
5.6 INVENTORY. Since December 31, 1996, Seller has maintained its
---------
inventories of raw materials, work in process, finished goods,
merchandise, supplies and packaging materials in a normal and
customary manner consistent with prior practice and its
inventory policy as set forth on Schedule 5.6. Schedule 5.6
sets forth a listing of each location at which Inventory of
Seller is, or is customarily, maintained. No Inventory has been
consigned, i.e., delivered but not sold or sold with an
unlimited right of return, to any customer, except as set forth
on Schedule 5.6.
5.7 TAX REPORTS AND PAYMENTS. (a) Seller has accurately prepared and
------------------------
timely filed (or will accurately prepare and timely file) with
each applicable Governmental Authority all reports and returns
of every kind for Taxes required to be filed by it with respect
to the Business, and has duly paid all such Taxes due to or
claimed to be due by each such Governmental Authority, (b) Buyer
has received true, complete and correct copies of all income and
other returns of Seller made to all Governmental Authorities
with respect to income taxes for the periods ended December 31,
1992 through 1996 and for any interim period after December 31,
1996 ending on or before the Closing Date, (c) no Governmental
Authority is now asserting or, to the knowledge of Seller,
threatening to assert against Seller any deficiency or claim for
additional Taxes, (d) no state, provincial, local or foreign
Governmental Authority in a jurisdiction in which Seller has not
filed a return has claimed, or is investigating whether, Seller
is liable for Taxes in such taxing jurisdiction, (e) there are
no agreements for the extension or waiver of the time for
assessment of any Taxes relating to the Assets or the Business
for any period ending on or prior to the Closing Date and Seller
has not been requested to enter into any
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such agreement or waiver, (f) all Taxes relating to the Assets
and the Business that Seller is required by law to withhold or
collect (including without limitation sales and use taxes, and
employment and income taxes relating to payments to employees or
others) have been duly withheld or collected, and have been
timely paid over to the proper authorities to the extent due and
payable, (g) Seller is not now, nor has ever been, a party to
any Tax allocation, sharing, indemnification, or similar
agreement that could result in any liability to Buyer as a
result of the acquisition of the Assets or Business, (h) Seller
has paid all workers' compensation and unemployment compensation
premiums due to date, and (i) Seller has properly completed and
filed all sales tax exemption certificates for sales where tax
was not charged.
5.8 LEASES. Seller has furnished or made available to Buyer copies
------
of all material leases and subleases of personal or real
property used in the Business, all of which are listed on
Schedule 5.8. All material leases are in full force and effect
and there has been no breach of any such lease by any Seller or,
to Seller's knowledge, any other party thereto.
5.9 TANGIBLE PERSONAL PROPERTY. Except as set forth on Schedule 5.9,
--------------------------
Seller has good and marketable title to all of its owned
personal property used in the Business, free and clear of all
liens, claims, encumbrances and restrictions, except Permitted
Liens. To the extent not covered by adequate reserves therefor,
all Equipment (including without limitation office equipment and
the like) reflected in the Financial Statements is in good
operating condition and repair for the purposes for which they
are presently employed by Seller. To the best of Seller's
knowledge there is no condition of the Equipment which would
require any material expenditure for repair or replacement for
use consistent with prior practice. Except as set forth on
Schedule 5.9 attached hereto, all such property has been
maintained in accordance with maintenance procedures consistent
with prior practice of Seller. Schedule 5.9 also discloses the
existence of any liens, claims, charges, encumbrances and
restrictions imposed upon or relating to all such property or to
which such property is subject. Permitted Liens shall include
only such liens, claims, charges, encumbrances and restrictions
shown on the Statement of Net Asset Value (and only to the
extent shown thereon) and such other encumbrances consented to
by Buyer in writing prior to Closing.
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5.10 REAL ESTATE.
-----------
5.10.1 Schedule 5.10 sets forth accurate legal descriptions of
the Real Estate, of which Seller is the legal and
equitable owner of good and marketable title in fee simple
absolute, including the buildings, structures fixtures and
improvements situated thereon and appurtenances thereto,
in each case free and clear of all tenancies and other
possessory interests, security interests, conditional sale
or other title retention agreements, liens, encumbrances,
mortgages, pledges, assessments, easements, rights of way,
covenants, restrictions, reservations, options, rights of
first refusal, defects in title, encroachments and other
burdens, except for Permitted Liens. Seller is in
possession of the entire parcels of the Real Estate.
Permitted Liens shall include only (i) such interests,
agreements, liens, encumbrances, mortgages, pledges,
assessments, easements, rights of way, covenants
restrictions, reservations, options, rights of first
refusal, defects, encroachments and other burdens as
consented to by Buyer in writing prior to Closing and (ii)
any lien, claim, charge, encumbrance or restriction
removed prior to the Closing Date.
5.10.2 All contracts, agreements, options and undertakings
affecting the Real Estate are set forth on Schedule 5.10
and are legally valid and binding and in full force and
effect and there are no defaults, offsets, counterclaims
or defenses thereunder and Seller has received no notice
that any such defaults, offsets, counterclaims or defenses
exist thereunder. Seller has delivered or made available
to Buyer correct and complete copies of all such
contracts, agreements, options and undertakings.
5.10.3 No portion of the Real Estate has been condemned,
requisitioned or otherwise taken by any Governmental
Authority, and no notice of any such condemnation,
requisition or taking has been received, and, to Seller's
knowledge, no such condemnation, requisition or taking is
threatened or contemplated. Seller has no knowledge of
any public improvements which may result in special
assessments against or otherwise affecting the Real
Estate.
5.10.4 The Real Estate is in good operating condition and repair
for the purposes for which it is presently employed by
Seller (reasonable wear and tear excepted).
5.10.5 The Real Estate is in material compliance with all
applicable zoning, building, health, fire, water, use or
similar Applicable Laws. The zoning of the Real Estate
permits the existing improvements and the continuation
following consummation of the transactions contemplated
hereby of the Business as presently conducted thereon.
Seller has all certificates of occupancy and
authorizations required to utilize the Real Estate.
Seller
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has all easements and rights necessary to conduct
the Business, including all easements for all utilities,
services, roadway and other means of ingress and egress.
To the knowledge of Seller, no fact or condition exists
which would result in termination or impairment of, or
permit any third party to terminate or impair, access to
the Real Estate or the discontinuance of, or permit any
third party to discontinue, sewer, water, electric, gas,
telephone, waste disposal or other utilities services.
5.10.6 Seller has delivered or made available to Buyer accurate,
correct and complete copies of all title insurance
policies, title reports, surveys and asset appraisals, if
any, pertaining to the Real Estate.
5.11 INTELLECTUAL PROPERTY.
---------------------
5.11.1 All Relevant Intellectual Property used in the Business
and capable of being listed is listed or incorporated by
reference on Schedule 5.11 attached hereto and, except as
noted on Schedule 5.11, is, or will be as of Closing,
owned by Seller.
5.11.2 The Relevant Intellectual Property is free of any liens
or encumbrances. To the knowledge of Seller, no one is
infringing upon any rights of Seller with respect to any
Relevant Intellectual Property.
5.11.3 Seller does not require any Intellectual Property that it
does not already have, in order to conduct the Business
as currently conducted.
5.11.4 The Intellectual Property conveyed hereunder along with
the services provided under the Continuing Services
Agreement to be delivered at Closing pursuant to Section
20 shall be adequate for Buyer to conduct the Business as
presently conducted by Seller.
5.11.5 To the knowledge of Seller, no actions for annulment or
cancellation are pending or threatened with respect to the
Intellectual Property listed on Schedule 5.11 and no
actions for recovery have been made or threatened.
5.11.6 To the knowledge of Seller, Seller is not infringing on
Intellectual Property rights of third parties, nor has
Seller been accused of doing so by a third party. To the
knowledge of Seller there exists no circumstance which
might entitle a licensor of any Intellectual Property
listed on Schedule 5.11 to terminate or prohibit the
assignment of such license other than the imposition of
additional fees to maintain or transfer such licenses.
5.11.7 No shareholder, director, officer, or, to the Seller's
knowledge, employee of Seller owns, directly or indirectly,
in whole or in part, any Intellectual
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Property rights which Seller uses, has used or the use of
which is necessary for the conduct of the Business as
presently conducted, except as listed or described in
Schedule 5.11.
5.11.8 Except as set forth in Schedule 5.11 or otherwise
disclosed pursuant to this Agreement, there are no
agreements relating to or affecting Relevant Intellectual
Property or the use or ownership of any Relevant
Intellectual Property by Seller, including, but not
limited to, confidentiality and non-disclosure agreements,
assignments or agreements to assign, development
agreements, settlement agreements, and the like.
5.11.9 Except as set forth in Schedule 5.11, Seller is not
subject to any right to compensation belonging to former
and current employees for inventions used in the Business
and that compensation paid with respect to any such rights
which may exist have been accurately reflected in the
Financial Statements.
5.11.10 All charges, fees and taxes relating to the Relevant
Intellectual Property have been duly and timely paid.
5.12 MATERIAL CONTRACTS.
------------------
5.12.1 Schedule 5.12 attached hereto sets forth a list of all of
the following Contracts or arrangements by which Seller is
bound:
(i) any Contract relating to the employment of any
person by Seller, or any bonus, deferred
compensation, pension, profit sharing, stock
option, employee stock purchase, retirement or
other similar employee benefit plan;
(ii) any loan or advance to, or investment in any
other person or any Contract relating to the
making of any such loan, advance or investment;
(iii) any guarantee or other contingent liability
with respect of any indebtedness or obligation
of any other person;
(iv) any management, service, consulting or any
other similar arrangement, or any
noncompetition agreement;
(v) other than purchase contracts or open purchase
orders relating to trade payables, any
agreement which by its terms involves the
future payment by or to Seller of an amount
equivalent to $25,000 or more, as of the
Economic Transfer Date;
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(vi) any Contract limiting the freedom of Seller to
engage in any line of business or to compete
with any other person;
(vii) any Contract for the purchase of raw materials
or supplies for, or the furnishing of services
to, the Business,
(A) for which, to the knowledge of Seller,
comparable goods or services are not
readily available in the ordinary course
of business, at prices at or similar to
those which Seller has agreed to pay
under such Contract, or
(B) the quantities of which are in excess of
the normal operating requirements of the
Business;
(viii) any distributor, sales representative or
agency agreements to which Seller is a party,
regardless of amounts involved;
(ix) any Contract not entered into in the ordinary
course of business which is not cancelable
without penalty within 30 days;
(x) any power of attorney granted by or to Seller;
or
(xi) any lease, conditional sales or other agreement
pursuant to which Seller leases, has purchased
or sold or holds possession of, but not title
to, any real or personal property, whether as
lessor, lessee, purchaser, seller, bailee,
pledgee or the like.
5.12.2 Except as set forth therein, each Contract listed on
Schedule 5.12 is in full force and effect and there exists
no default nor, to the knowledge of Seller, no event,
occurrence, condition or act (other than the Closing of
the purchase of the Assets) exists or will exist at
Closing which, with the giving of notice or the lapse of
time, would become a default thereunder. Other than as
noted above, and except as set forth in Schedule 5.12,
Seller is not in material violation of any of the terms or
conditions of any Contract listed therein, and, to the
knowledge of Seller, all of the covenants to be performed
by any other party thereto have been fully performed.
Other than in the ordinary course of business, Seller has
not incurred and will incur no cost, expense, liability or
obligation under any Contract which is not expressly
contemplated in writing in such Contract.
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5.13 EMPLOYEE MATTERS.
----------------
5.13.1 Seller has delivered to Buyer, on or prior to the date
hereof, a list of each person who was an employee of the
Seller who earned more than $75,000 annually as of
December 31, 1996, including each such person's (i)
name, (ii) total period of employment, (iii) current
position or job classification, and (iv) employer. As
soon as practicable after the date hereof, Seller shall
provide Buyer with a separate, confidential list of wage
or salary and bonus information for each Employee.
5.13.2 Except as set forth in Schedule 5.13.2, there are no
collective bargaining or other labor union agreements
applicable to any employees of Seller. No material work
stoppage or material labor dispute against the Seller or
the Business is pending or threatened, and, to Seller's
knowledge, there is no organizational activity currently
underway with respect to the Business.
5.13.3 Except as set forth in Schedule 5.13.3, to its knowledge
Seller is not engaged in, and Seller has not received
any written notice of any grievance under any collective
bargaining agreement or any claim relating to, any
unfair labor practice, human rights violation,
employment discrimination practice or the like related
to the Business and no such complaints are pending
before the National Labor Relations Board or any other
Governmental Authority.
5.14 EMPLOYEE BENEFITS.
-----------------
5.14.1 Schedule 5.14.1 lists each Employee Benefit which or
to which Seller sponsors, maintains or to which
Seller contributes or is obligated to contribute or
under which Seller or, any sponsor may have any
liability and under which any employee or former
employee of the Seller (or their respective
beneficiaries or dependents) is eligible to
participate or accrue a benefit (each, an "Employee
Benefit Plan"). Except as set forth in Schedule
5.14.1, (i) each Employee Benefit Plan complies in
all material respects, and has been operated and
administered in all material respects, in accordance
with all applicable requirements of all applicable
laws and regulations of any Governmental Authority,
including ERISA and the Code, (ii) no "reportable
event", "prohibited transaction" (as such terms are
defined in ERISA and the Code, as applicable) or full
or partial termination has occurred (other than any
full or partial termination caused by the
transactions contemplated by this Agreement), whether
under Title IV of ERISA or otherwise, with respect to
any Employee Benefit Plan and (iii) Seller is not
obligated to pay any additional amounts to, or
pursuant to, and has not guaranteed the obligations
of any Employee Benefit Plan or related trust. Each
ERISA Plan and related funding
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arrangement intended to so qualify under Sections
401(a) and 501(a), respectively, of the Code has
received a ruling or determination letter concluding
that such ERISA Plan so qualifies, and, to Seller's
knowledge, no event has occurred, amendment been
adopted or action been taken or not taken that would
cause such ERISA Plan to lose its tax-qualified
status.
5.14.2 Seller has delivered or made available to Buyer, on
or prior to the date hereof, copies of each Employee
Benefit Plan and any amendments thereto and any
related trust agreement, funding agreement and
insurance contract relating thereto and, if
applicable (i) the most recent actuarial valuation
reports for the past three years, (ii) the last three
years' filed Form 5500 or 5500-C (and Form 5500-R if
last filed) and all schedules thereto, (iii) the
summary plan description currently in effect for each
Employee Benefit Plan and all material modifications
thereto, (iv) the last three years' summary annual
report issued to participants with respect to each
Employee Benefit Plan, (v) the last three years'
financial statements for each Employee Benefit Plan
and its related trust, if any, (vi) the most recent
determination letter issued with respect to each
Employee Benefit Plan, and (vii) the most recent
premium filings with the Pension Benefit Guaranty
Corporation covering or related to an Employee
Benefit Plan.
5.14.3 All contributions required under applicable law or an
Employee Benefit Plan to be made on or prior to the
date hereof by Seller to an Employee Benefit Plan
have been made within the time prescribed by such law
or Employee Benefit Plan. There does not exist any
accumulated funding deficiency within the meaning of
either Section 412 of the Code or Section 302 of
ERISA as to any ERISA Plan, nor would there exist any
such deficiency but for the application of the
minimum funding standards imposed by the Code with
respect to any such ERISA Plan. The fair market
value of the assets of each ERISA Plan that is a
funded defined benefit pension plan equals or exceeds
the actuarial present value of all accrued benefits
under such ERISA Plan, including early retirement
subsidies, plant closing benefits and all other
amounts considered to be benefit liabilities upon a
standard termination of a defined benefit plan
subject to Title IV of ERISA with the said actuarial
present value being determined by application of the
actuarial methods and assumptions applied by such
ERISA Plan's enrolled actuary at the most recent
annual valuation of such ERISA Plan, plus all
administrative expenses, fiduciaries' fees and
similar charges payable by such ERISA Plan, plus all
Taxes, if any, payable from plan assets.
5.14.4 (i) No ERISA Plan is a "multiple employer" plan within
the meaning of Section 4063 or 4064 of ERISA, and
(ii) no ERISA Plan is a
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"multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA.
5.14.5 Except as set forth in Schedule 5.14.5, the
consummation of the transactions contemplated by this
Agreement will not result in any increase in the
amount of compensation or benefits or accelerate the
vesting or timing of payment of any benefits payable
by the Buyer to or in respect of any employee or
former employee of the Seller or any beneficiary or
dependent thereof.
5.14.6 The costs of all Employee Benefits which are paid
currently by Seller are reflected as expenses in the
Financial Statements; and the cost of such Employee
Benefits which are, in whole or in part, not paid
currently are adequately reserved for in the
Financial Statements.
5.14.7 No Employee Benefit provides benefits, including
without limitation death or medical benefits (whether
or not insured), with respect to current or former
employees beyond their retirement or other
termination of service (other than (i) coverage
mandated by applicable law, (ii) death benefits or
retirement benefits under any ERISA Plan, (iii)
deferred compensation accrued on the Financial
Statements, or (iv) benefits, the full cost of which
is borne by the current or former employee (or his or
her beneficiary)). If an employee benefit is
designed to satisfy the requirements of Section 125,
Section 401, Section 401(k), Section 409, Section
501(c)(9), Section 4975(e)(7), and/or Section 4980B
of the Code, the Employee Benefit satisfies such
section. No "leased employee," as that term is
defined in Section 414(n) of the Code, performs
services for Seller.
5.15 LITIGATION. Except as set forth on Schedule 5.15 attached
----------
hereto, there are no legal actions, suits, arbitrations or other
legal, administrative or other governmental proceedings or
investigations pending or, to the knowledge of Seller, threatened
against Seller arising out of the Business. Seller is not
subject to any judgment, order or decree entered in a lawsuit or
proceeding which might have a material adverse effect on the
Business or render it unable in any material respect to acquire
any property or conduct business in any jurisdiction.
5.16 COMPLIANCE WITH LAWS. Except as set forth on Schedule 5.16
--------------------
attached hereto, and except for Environmental Laws addressed in
Section 5.18, Seller is in compliance in all material respects
with all Applicable Laws.
5.17 PERMITS, CERTIFICATIONS AND LICENSES. Each Operating Permit
------------------------------------
required to be obtained for the operation of the Business is in
full force and effect. To the knowledge of Seller, there is no
threatened or pending action which would result in
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any revocation of any Operating Permit which would materially and
adversely affect the operation of the Business as presently
conducted.
5.18 ENVIRONMENTAL LAWS. Except as disclosed in the Dames & Xxxxx
------------------
Report or as otherwise set forth on Schedule 5.18 attached
hereto, to the Seller's knowledge, Seller has been for the past
five (5) years, and is, in material compliance with all
Environmental Laws. Seller is not aware of any pending or
threatened environmental investigation or proceeding with
respect to the operation of the Business. Except as set forth
on Schedule 5.18, there is and, within the last 5 years, to the
Seller's knowledge, there has been no current or past usage or
practice of the Business with respect to any Hazardous
Substances which may reasonably support a claim or cause of
action against Seller under Applicable Law.
5.19 INSURANCE. Schedule 5.19 attached hereto contains an accurate
---------
and complete list of insurance policies which Seller maintains
with respect to the Business or its properties or employees.
Since December 31, 1996, there has not been any material adverse
change in Seller's relationships with its insurers or in its
premiums payable pursuant to such policies.
5.20 ACCOUNTS RECEIVABLE. To the best of Seller's knowledge none of
-------------------
the accounts receivable, unbilled invoices or debts due to Seller
(other than those owing by any Affiliate) is subject to any
counterclaim or offset, except to the extent of any recorded
general allowance or reserve.
5.21 BOOKS AND RECORDS. The minute books, or similar books of
-----------------
proceedings, of Seller, as previously made available to Buyer,
contain full and complete minutes of all annual, special and
other meetings (or written consents in lieu thereof) of Seller
and have been kept in accordance with Applicable Law; the
signatures on such minutes and written consents are the true
signatures of the persons purporting to have signed them. The
business records of Seller are true and complete, reflect all
transactions of the Seller undertaken in the course of carrying
on the Business.
5.22 TRANSACTIONS WITH RELATED PARTIES. Except as set forth on
---------------------------------
Schedule 5.22 attached hereto, Seller is not a party to any
transaction or proposed transaction, including, without
limitation, the leasing of property, the purchase or sale of raw
materials or finished goods, or the furnishing of services, with
any Affiliate.
5.23 NO UNDISCLOSED LIABILITIES. Seller is not subject to any known
--------------------------
Liability or obligation, including without limitation any
Contract, except (i) as disclosed in the Schedules hereto or
reflected in the Financial Statements (if the nature and amount
thereof is required to be disclosed in such Schedules or
Financial Statements) and (ii) for liabilities or obligations
arising or incurred in the ordinary course of operation of the
Business since December 31, 1996 and then only as consistent
with the past practices of Seller.
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5.24 PRODUCT WARRANTY. To the Seller's knowledge, all products sold
----------------
by Seller have in all material respects been manufactured in
conformity with all applicable laws, contractual commitments and
all express or implied warranties. Warranty claims have been,
and will be through the Closing Date, handled in a normal and
customary manner consistent with the prior practice of the
Business.
5.25 MAJOR CUSTOMERS AND SUPPLIERS.
-----------------------------
5.25.1 Schedule 5.25 attached hereto contains a list of the ten
(10) largest customers of Seller, showing the total
amount of net sales to each such customer for the fiscal
year 1996.
5.25.2 Schedule 5.25 contains a list of the ten (10) largest
suppliers to Seller, showing the total amount of purchases
from each such supplier for the fiscal year 1996.
5.26 PROSPECTIVE CHANGES. To the Seller's knowledge, there are no
-------------------
impending changes in the Business or in the relationships of
Seller with its customers or suppliers, or in any governmental
actions or relations affecting the Business, which if one or
more should occur, could have a material adverse effect on the
financial condition or results of operation of the Business.
5.27 MATERIAL OMISSIONS. To the Seller's knowledge, no
------------------
representation or warranty by Seller in this Agreement nor any
statement, document, certificate or schedule furnished or to be
furnished by Seller to Buyer pursuant to this Agreement or in
connection with the transactions contemplated herein contains or
will contain any untrue statement of material fact or omits or
will omit a material fact necessary to make the statements
contained therein not misleading in light of the circumstances.
6. BUYER'S REPRESENTATIONS
Buyer represents and warrants to Seller as follows and acknowledges
that the same shall be true as of the date hereof and of the Closing
Date and shall survive the Closing of this transaction in accordance
with Section 23 of this Agreement:
6.1 ORGANIZATION OF BUYER. Buyer is a corporation organized, validly
---------------------
existing and in good standing under the laws of the State of
Delaware.
6.2 VALID AND ENFORCEABLE AGREEMENT. Buyer has full corporate power,
-------------------------------
legal right and authority to enter into, execute and deliver
this Agreement and any ancillary instruments and to carry out
the transactions contemplated hereby. The execution, delivery
and performance of this Agreement and consummation of the
transactions contemplated hereby have been duly authorized by
Buyer by all necessary corporate action. This Agreement has
been duly executed and delivered by Buyer and is, and
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when executed and delivered, each ancillary instrument contemplated
hereby will be, the legal, valid and binding obligation of Buyer
enforceable in accordance with its respective terms, except as
such may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally, and by
general equitable principles.
6.3 NO VIOLATION. Neither the execution and the delivery of this
------------
Agreement, nor the consummation of the transactions contemplated
hereby, will (i) subject to expiration or termination of the
waiting period under the Xxxx-Xxxxx-Xxxxxx Act, violate any
constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Buyer is
subject, or (ii) conflict with the Certificate of Incorporation
or By-Laws of Buyer. Other than any notice that may be required
under the Xxxx-Xxxxx-Xxxxxx Act, Buyer is not required to give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any Governmental Authority to consummate
the transactions contemplated by this Agreement.
7. ACTIONS FOLLOWING EXECUTION
The parties hereto agree that from the date hereof to the Closing Date
or, if no Closing shall take place, to the date of termination of this
Agreement:
7.1 OPERATIONS. Without the written consent of Buyer, Seller:
----------
(i) shall only conduct the Business in the ordinary course and
in accordance with its operational and capital plans as
exist on the date hereof;
(ii) shall not enter into any transaction or perform any act or
refuse or fail to do so, which action or inaction would
constitute a breach of the representations, warranties or
covenants contained herein, or would be inconsistent with
prior practice of the Business;
(iii) shall only pay creditors of the Business consistent with
prior practice and the normal course of dealing with such
creditors; and
(iv) shall use commercially reasonable efforts to preserve the
business organization of Seller intact and to keep
available to Buyer the services of its present employees.
The Buyer and its designated representatives will promptly
respond to all notifications by Seller hereunder and shall not
unreasonably withhold consent under this Section 7.1, so long as
such actions do not adversely affect the conduct of the Business
as presently carried on by Seller, or its profitability,
operations, financing or value.
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7.2 MAINTENANCE OF ASSETS. Seller shall maintain the Assets in
---------------------
accordance with prior practice. Seller shall not remove, retire
or sell any of its material Assets, without the consent of Buyer,
outside the ordinary course of business or inconsistent with
prior practice of the Business.
7.3 ACCESS TO RECORDS AND FACILITIES. Seller will make available to
--------------------------------
Buyer and its designated representatives, all of the books and
records relating to its Business and Seller and its employees
shall cooperate fully with Buyer in its examination and
inspection of the same. Buyer and its designated
representatives shall be given full access during regular
business hours to the Seller's facilities.
7.4 FURTHER ASSURANCES. At any time after the Closing Date, Seller
------------------
and Buyer shall and shall cause their respective Affiliates
promptly to, execute, acknowledge and deliver any other documents
or instruments reasonably requested by Seller or Buyer, as the
case may be, to satisfy their respective obligations hereunder or
to obtain the benefits contemplated hereby.
7.5 COVENANT NOT-TO-COMPETE.
-----------------------
7.5.1 Seller and CRLI acknowledge and agree that the value to
Buyer of the transactions contemplated by this agreement
would be substantially diminished if Seller or any of its
Affiliates were to enter into certain business activities,
and Seller and CRLI have agreed to the covenant in this
Section 7.5 as an inducement to Buyer to enter into this
Agreement. Seller and CRLI specifically acknowledge and
agree that the covenants in this Section 7.5 are
commercially reasonable and reasonably necessary to
protect the interests Buyer intends to acquire hereunder.
If any court of competent jurisdiction shall in any
proceedings refuse to enforce such covenant, in whole or
in part, because the time limit or geographical extent
applicable thereto is deemed unreasonable in the
jurisdiction, it is expressly understood and agreed that
such covenant shall not be void. Instead, for the purpose
of such proceedings, such temporal or geographic
limitations shall be deemed to be reduced to the extent
necessary to permit the enforcement of such covenant in
the particular jurisdiction.
7.5.2 For a period of five years following the Closing Date,
Seller, CRLI and each Affiliate (for so long as they
remain an Affiliate) shall not engage directly or
indirectly in the business of manufacturing or selling air
compressors in North America; provided, however, that
Seller and any Affiliate may:
(a) maintain and continue their operations in accordance
with current and past practice, except as relates to
the Business;
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(b) acquire securities and other interests in any entity
as investments of any Employee Benefit Plan of
Seller or any Affiliate;
(c) acquire up to 5% of the outstanding securities and
other interests in any entity;
(d) acquire any securities and other interests in any
entity if the revenues of such entity that are
attributable to businesses that compete directly with
the current business of the Seller does not exceed
10% of such entity's total annual revenues; or
(e) perform any act or conduct any business contemplated
by this Agreement.
7.5.3 The parties agree that money damages would be an inadequate
remedy for a violation of the covenant set forth in this
Section 7.5. Accordingly, Buyer shall be entitled, in
addition to any other rights and remedies that it may have,
to injunction relief to enjoin any such breach.
7.6 RELEASE FROM GUARANTEES. Buyer and Seller shall use their
-----------------------
reasonable efforts to secure, effective as of the Closing Date,
full releases for Seller and any Affiliate under letters of
credit, bank guarantees, surety bonds, foreign exchange contracts
and other obligations listed in Schedule 7.6. After the Closing
Date, Buyer shall indemnify, defend and hold Seller and its
Affiliates harmless from and against all damage attributable to
any of the obligations listed in Schedule 7.6 which remain
outstanding following such date. Each party shall pay its own
costs in connection with seeking and obtaining such releases, but
if any additional or different payments or terms are imposed by
any obligees in connection therewith, the costs or the
performance thereof shall be borne by Seller, unless otherwise
agreed by Buyer.
7.7 SUPPLEMENTS TO SCHEDULES. Each party hereto shall notify the
------------------------
other of any development(s) which might or shall constitute a
material breach of any of the warranties and representations in
Article 5. In the event of such a notice, Seller shall have 10
days to cure the breach in question. Seller and Buyer agree
that, in the event Seller is unable or elects not to cure such
breach within such 10-day period, they will negotiate in good
faith to determine an adjustment to the Purchase Price
appropriate to reflect the breach in question. If Seller and
Buyer are unable to agree upon such an adjustment to the
Purchase Price within 5 days of the end of the aforesaid 10-day
period, Buyer shall have the right to terminate this Agreement.
If Buyer does not exercise such right to terminate within 2
business days of the end of the aforesaid 5-day period, Buyer
shall not have exercised its right to terminate this Agreement,
the written notice shall be deemed to have amended this
Agreement and the relevant schedules attached thereto, to have
qualified the representations and warranties contained in
Article 5 above, or to have cured any misrepresentation or
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breach of warranty that otherwise might have existed hereunder
by reason of such development, and the party making the warranty
or representation shall continue to use its reasonable efforts
to obtain fulfillment of all conditions to Closing set forth in
Section 10 and 11 hereof, including the cure of the actual or
potential breach to which reference is made in the notice.
7.8 GOVERNMENTAL FILINGS. Promptly after the date hereof, Buyer and
--------------------
Seller's ultimate parent entity shall file with the Federal
Trade Commission and the United States Department of Justice the
notification required to be filed with respect to the
transactions contemplated by this Agreement. Such parties shall
file promptly any additional information reasonably requested
and shall use their respective reasonable best efforts to secure
such approvals.
7.9 CHANGE OF SELLER'S NAME. Promptly following Closing, Seller
-----------------------
shall change its name so that the name "Champion Pneumatic"
shall be available for use by Buyer or any Affiliate in the
conduct of the Business.
7.10 SURVEY. Seller will procure current surveys of the Real Estate
------
certified to Buyer, prepared by licensed surveyors and
conforming to current ALTA Minimum Detail Requirements for Land
Title Surveys, disclosing the location of all improvements,
easements, party walls, sidewalks, roadways, utility lines, and
other matters shown customarily on such surveys, and showing
access affirmatively to public streets and roads (the
"Surveys"). The Surveys shall not disclose any survey defect or
encroachment from or onto the real property which has not been
cured or insured over prior to the Closing.
7.11 TITLE INSURANCE. Seller will obtain ALTA Owners Policies of
---------------
Title Insurance Form B-1987 (or equivalent policy reasonably
acceptable to the Buyer if a Form B-1987 Policy is not available
in Illinois) issued by a title insurer reasonably satisfactory
to the Buyer, in such amount as Buyer may reasonably determine
to be the fair market value of such Real Estate (including all
improvements located thereon), insuring title to such Real
Estate in the Buyer, subject only to exception consented to by
Buyer in writing prior to Closing.
Such title policy shall (A) insure title to the Real Estate and
all recorded easements benefitting such real property, (B)
contain an "extended coverage endorsement" insuring over the
general exceptions contained customarily in such policies, (C)
contain an ALTA Zoning Endorsement 3.1 (or equivalent), and (D)
contain an endorsement insuring that the real property described
in the title policy is the same real estate as shown on the
Survey.
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8. COVENANTS OF SELLER
In connection with the transactions contemplated in this Agreement,
Seller agrees to perform the following actions or to enter into the
following agreements:
8.1 FURTHER DOCUMENTS AND ASSURANCES. At any time and from time to
--------------------------------
time after the Closing Date, Seller shall, upon request of Buyer,
execute, acknowledge and deliver all such further and other
assurances and documents, and will take such action consistent
with the terms of this Agreement, as may be reasonably requested
to fulfill the conditions set forth in Article 10 and to carry
out the transactions contemplated herein and to permit Buyer to
enjoy its rights and benefits hereunder.
8.2 NO IMPAIRMENT OF TRANSACTION. Seller shall take no action which
----------------------------
would impair or prevent the consummation of the transactions
contemplated by this Agreement, except as permitted by this
Agreement.
8.3 COMPLIANCE BY SELLER. Seller and CRLI shall take all actions
--------------------
necessary or appropriate to cause Seller to perform all acts
imposed upon Seller hereunder and to refrain from violating any
provision hereof.
8.4 COMPLIANCE WITH BULK SALES LAWS. Except for Assumed Liabilities,
-------------------------------
Seller will indemnify and hold Buyer harmless with respect to any
liability resulting from the failure to comply with any and all
applicable bulk sales laws.
8.5 PRINCETON REAL ESTATE REMEDIAL WORK. With respect to the matters
-----------------------------------
disclosed in the Dames & Xxxxx Report and the report dated
December 19, 1997 of XXXXX International, and such other
conditions existing prior to the Closing Date (including any
further migration of such conditions) as may be identified
pursuant to the investigation and remedial activities referred
to in this paragraph, in connection with the presence, suspected
presence, release or suspected release of a Hazardous Substance
in, on, under or about the Princeton Real Estate (or any portion
thereof)("Pre-closing Environmental Conditions"), Seller shall
take all reasonable remedial actions, including starting a
voluntary remediation program, so as to obtain a "No Further
Remediation" letter for industrial/commercial use from the
Illinois Environmental Protection Agency ("IEPA") under
Illinois' Site Remediation Program ("Princeton Real Estate
Remedial Work"). Provided that Buyer gives Seller appropriate
access to the Princeton Real Estate and otherwise reasonably
cooperates with Seller (at Seller's cost), Seller shall within
sixty (60) days after Closing, or as soon thereafter as weather
permits (or such shorter period as may be required under any
Applicable Law or agreement), commence or cause to be commenced,
perform and thereafter diligently pursue to completion, all such
Princeton Real Estate Remedial Work. Seller shall keep Buyer
fully informed with respect to activities associated with the
Princeton Real Estate Remedial Work, and in that regard shall
furnish to Buyer copies of all significant correspondence to and
from the IEPA, together with drafts of the remediation work plan
to be submitted to
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the IEPA and any significant modifications thereto and the final
work plan to be followed relating to the Princeton Real Estate
Remedial Work. Seller shall provide reasonable advance notice
to Buyer of any remedial work, including the Princeton Real
Estate Remedial Work, to be performed under this Agreement. In
designing and implementing any remedial work, Seller shall take
all reasonably available measures to avoid or minimize any
adverse impact on operation of the Business or value of any Real
Estate. All costs and expenses associated with such Princeton
Real Estate Remedial Work shall be paid by Seller including,
without limitation, the charges of such contractors and/or the
consulting engineer, all administrative costs of the IEPA, and
the reasonable consultant or attorneys' fees and costs incurred
by Buyer in connection with review of such Princeton Real Estate
Remedial Work. Without limiting Seller's other indemnity
obligations under this Agreement, Seller shall remain
responsible, and protect, hold harmless and indemnify Buyer with
respect to all claims or liabilities under Environmental Laws
respecting Pre-closing Environmental Conditions, until Seller
has obtained a "No Further Remediation" letter from IEPA as
referenced above, or in the absence of Seller obtaining such
letter, in perpetuity. Once such "No Further Remediation"
letter is received, all of Seller's obligations under this
paragraph shall be discharged and Buyer agrees to fully comply
with any site safety program or similar restrictions consistent
with industrial/commercial use contained in such letter.
9. COVENANTS OF BUYER
In connection with the transactions contemplated in this Agreement,
Buyer agrees to perform the following actions or to enter into the
following agreements:
9.1 FURTHER DOCUMENTS AND ASSURANCES. At any time and from time to
--------------------------------
time after the Closing Date, Buyer shall, upon request of Seller,
execute, acknowledge and deliver all such further and other
assurances and documents, and will take such action consistent
with the terms of this Agreement, as may be reasonably requested
to fulfill the conditions set forth in Article 11 and to carry
out the transactions contemplated herein and to permit Seller to
enjoy their rights and benefits hereunder.
9.2 NO IMPAIRMENT OF TRANSACTION. Buyer shall take no action which
----------------------------
would impair or prevent the consummation of the transactions
contemplated by this Agreement, except as permitted by this
Agreement.
9.3 COMPLIANCE BY BUYER. Buyer shall take all actions necessary or
-------------------
appropriate to cause Buyer to perform all acts imposed upon Buyer
hereunder and to refrain from violating any provision hereof.
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10. CONDITIONS PRECEDENT TO OBLIGATION OF BUYER
The obligations of Buyer hereunder are subject to fulfillment prior to
or at Closing of each of the following conditions:
10.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
-----------------------------------------
representations and warranties made by Seller in this Agreement
or in any instrument, schedule, certificate or writing delivered
by Seller pursuant to this Agreement, shall be true and correct
when made and shall be true and correct at and as of the Closing
Date as though such representations and warranties were made or
given on and as of the Closing Date. Seller and CRLI shall have
performed and complied with all covenants and agreements
required by this Agreement to be performed by either of them
prior to or at the Closing.
10.2 CERTIFIED COPY OF RESOLUTIONS. Seller shall have delivered to
-----------------------------
Buyer a certified copy of resolutions adopted by Seller and its
shareholder authorizing the execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby.
10.3 ANTITRUST INJUNCTIONS. The applicable waiting periods (including
---------------------
any extensions) under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or been terminated. No injunctions or other similar
relief shall have been issued restricting or prohibiting the
transactions contemplated by this Agreement.
10.4 CERTAIN APPROVALS. All governmental and other consents and
-----------------
approvals, if any, necessary to permit the consummation of the
transactions contemplated under this Agreement shall have been
received. Seller shall use its best efforts to obtain such
consents and approvals prior to the Closing.
10.5 DUE DILIGENCE. The results of Buyer's due diligence
-------------
investigation shall be satisfactory to Buyer in its sole and
absolute discretion.
10.6 ADVERSE CHANGE. There shall have been no material adverse change
--------------
in the business, assets, operations, financial condition or
prospects of Seller from December 31, 1996 to the Closing Date
and no event shall have occurred which, with the passage of time,
the giving of notice or otherwise, could reasonably be expected
to result in any such adverse change.
10.7 ENVIRONMENTAL ASSESSMENT. The results of any inspections, soil
------------------------
test borings, soil tests, drainage tests, surveys, topographical
analyses, engineering studies or other investigations performed
or obtained by Buyer shall not have disclosed evidence of
Hazardous Materials in or on any of the Real Estate other than
incidental amounts used or managed in the ordinary course of
business in compliance with applicable Environmental Laws or
other than disclosed in the Dames & Xxxxx Report or Schedule
5.18. Buyer shall not have discovered any evidence that there
are existing
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material violations of any Environmental Law or that any
requisite environmental license or permit or any occupancy, use
or building permits or other approvals from any Governmental
Authority are currently required for the continued operation of
the Real Estate or the Business which have not been obtained or
are not in effect. In order to enable Buyer to conduct a due
diligence investigation, Seller shall provide Buyer (including
its employees and agents, and its professional advisors) with
the right to conduct inspections, soil test borings, soil tests,
drainage tests, surveys, topographical analyses, engineering
studies, and investigations, together with access to all
environmental files, licenses, permits, permit applications,
consultant reports, notices from local, state, and federal
governmental entities, environmental audit and inspection
reports, insurance files, and other information, necessary for
Buyer to assess the environmental status of the Real Estate.
Buyer shall provide Seller with a copy of all reports prepared
in the course of such investigations.
10.8 OTHER MATTERS. All corporate and other proceedings and actions
-------------
taken in connection with the transactions contemplated hereby
and all certificates, opinions, agreements, instruments and
documents, including warranty deeds, assignments and bills of
sale mentioned herein or incident to any such transactions shall
have been delivered and shall be reasonably satisfactory in form
and substance to Buyer and its counsel.
11. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller is subject to fulfillment prior to or at
Closing of each of the following conditions:
11.1 REPRESENTATIONS AND WARRANTIES; COVENANTS. Each of the
-----------------------------------------
representations and warranties made by Buyer in this Agreement or
in any instrument, schedule, certificate or writing delivered by
Buyer pursuant to this Agreement, shall be true and correct when
made and shall be true and correct at and as of the Closing Date
as though such representations and warranties were made or given
on and as of the Closing Date. Buyer shall have performed and
complied in all material respects with all covenants and
agreements required by this Agreement to be performed by it prior
to or at the Closing.
11.2 CERTIFIED COPY OF RESOLUTIONS. Buyer shall have delivered to
-----------------------------
Seller a certified copy of resolutions adopted by the Board of
Directors of Buyer authorizing the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby.
11.3 ANTITRUST INJUNCTIONS. The applicable waiting periods (including
---------------------
any extensions) under the Xxxx-Xxxxx-Xxxxxx Act shall have
expired or been terminated. No injunctions shall have been
issued restricting or prohibiting the transactions contemplated
by this Agreement.
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11.4 CERTAIN APPROVALS. All governmental and other consents and
-----------------
approvals, if any, necessary to permit the consummation of the
transactions contemplated under this Agreement shall have been
received. Buyer shall use its best efforts to obtain such
consents and approvals prior to the Closing.
11.5 OTHER MATTERS. All corporate and other proceedings and actions
-------------
taken in connection with the transactions contemplated hereby and
all certificates, opinions, agreements, instruments and
documents, including warranty deeds, assignments and bills of
sale mentioned herein or incident to any such transactions shall
have been delivered and shall be reasonably satisfactory in form
and substance to Seller and its counsel.
12. BROKER
Seller represents and warrants to Buyer that it has dealt with no
broker in connection with the sale of the Business. Seller will
defend, indemnify and hold Buyer harmless from and against any claim
for commissions and all liabilities, costs and expenses in connection
therewith, by reason of the assertion of any agreement, understanding
or other arrangement with Seller with respect to the transactions
contemplated herein.
Buyer represents and warrants to Seller that it has dealt with no
broker in connection with the purchase of the Business. Buyer will
defend, indemnify and hold Seller harmless from and against any claim
for commission, and all liabilities, costs and expenses in connection
therewith, by reason of the assertion of any agreement, understanding
or other arrangement with Buyer with respect to the transactions
contemplated herein.
13. EXPENSES AND TAXES
13.1 SELLER'S EXPENSES. Seller shall pay all expenses incurred by,
-----------------
and all Taxes (including sales and use taxes) imposed upon it
relating to the transactions contemplated by this Agreement,
including without limitation, the fees and expenses of their
respective legal, accounting and financial advisors.
13.2 BUYER'S EXPENSES. Buyer shall pay all expenses incurred by, and
----------------
all Taxes imposed upon it relating to the transactions
contemplated by this Agreement, including without limitation,
the fees and expenses of its legal, accounting and financial
advisors.
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14. DAMAGES FOR BREACH OF AGREEMENT
14.1 BUYER'S CLAIM FOR DAMAGES. Notwithstanding (i) the right of the
-------------------------
Buyer to refuse to close the purchase of the Assets in the event
of any misrepresentation or breach of a representation, warranty
or covenant as provided in Section 10.1 of this Agreement, (ii)
that such misrepresentation was made either knowingly,
recklessly, negligently or innocently and (iii) that Buyer could
have known of such misrepresentation or breach of a
representation, warranty or covenant as a result of Buyer's
investigation of Seller in connection with the transactions
contemplated herein, in the event of any misrepresentation or
any breach of any representation, warranty or covenant contained
in this Agreement, Buyer shall be entitled to recover from
Seller any and all liabilities, losses, damages, claims, costs
and expenses, including all reasonable legal fees, incurred by
Buyer, by reason of, arising out of or relating in any way to
such misrepresentation or breach. Provided, however, if Buyer
had knowledge of the misrepresentation or breach of
representation, warranty or covenant prior to the Closing Date,
Buyer shall not be entitled to recover from Seller any and all
liabilities, losses, damages, claims, costs and expenses,
including all reasonable legal fees, incurred by Buyer, by
reason of, arising out of or relating in any way to such
misrepresentation or breach.
14.2 SELLER'S CLAIM FOR DAMAGES. Notwithstanding (i) the right of the
--------------------------
Seller to refuse to close the purchase of the Assets in the event
of any misrepresentation or breach of a representation, warranty
or covenant as provided in Section 11.1 of this Agreement, (ii)
that such misrepresentation was made either knowingly,
recklessly, negligently or innocently and (iii) that Seller could
have known of such misrepresentation or breach of covenant, in
the event of any misrepresentation or any breach of any
representation, warranty or covenant contained in this Agreement,
Seller shall be entitled to recover from Buyer any and all
liabilities, losses, damages, claims, costs and expenses,
including all reasonable legal fees, incurred by Buyer, by reason
of, arising out of or relating in any way to such
misrepresentation or breach. Provided, however, if Seller had
knowledge of the misrepresentation or breach of representation,
warranty or covenant prior to the Closing Date, Seller shall not
be entitled to recover from Buyer any and all liabilities,
losses, damages, claims, costs and expenses, including all
reasonable legal fees, incurred by Seller, by reason of, arising
out of or relating in any way to such misrepresentation or
breach.
14.3 NOTICE OF CLAIM. Promptly upon discovery of any
---------------
misrepresentation contained in any portion of this Agreement,
Buyer or Seller shall give to the other party written notice of
such claim, along with the proposed calculation of damages and a
full statement of the reasons therefor. Within 30 days following
dispatch of such claim, the breaching party shall either pay the
amount of the claim to the other or advise the other of the
breaching party's intent to dispute such claim, along with a full
statement of the reasons therefor. Buyer and the Seller shall
thereupon negotiate regarding such disputed claim in an attempt
to reach a good faith settlement thereof.
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14.4 LIMITATION ON CLAIMS.
--------------------
14.4.1 DEDUCTIBLE. Seller shall be liable to Buyer for all
----------
damages that are indemnifiable pursuant to Section 14.1,
and Buyer shall be liable to Seller for damages that are
indemnifiable pursuant to Section 14.2, only if the
aggregate amount of damages to Buyer or Seller,
respectively, exceeds $250,000; provided, however, that
once such amount is reached, all amounts payable as
compensation for damages hereunder shall be payable.
14.4.2 LIMIT OF LIABILITY. The total aggregate liability of
------------------
Seller to Buyer for damages that are indemnifiable
pursuant to Section 14.1, shall not exceed $2,400,000.
The total aggregate liability of Buyer to Seller for
damages that are indemnifiable pursuant to Section 14.2,
shall not exceed $2,400,000.
14.4.3 DEDUCTIBLE AND LIMIT EXCLUSIONS. Notwithstanding anything
-------------------------------
in Subsections 14.4.1 and 14.4.2 to the contrary, the
$250,000 deductible and the $2,400,000 limit shall not be
applicable to (a) Seller's failure to pay any Purchase
Price Adjustment or Seller's breach of Sections 5.18,
7.5, 8.4 or 15.1, or (b) Buyer's failure to pay any
Purchase Price Adjustment or Buyer's breach of Sections
7.6, 15.2. or 18.1.
14.4.4 CONSEQUENTIAL DAMAGES; MITIGATION. Neither Seller nor
---------------------------------
Buyer shall have any obligation to indemnify the other
for any damages arising out of any interruption of
business, loss of profits, loss of use of facilities,
claims of customers, loss of goodwill or other indirect
damages, or for damages that are (a) recovered or
recoverable from any third party (including any insurer),
or (b) offset by tax savings realized on account of such
damages by the non-breaching party or any of its
Affiliates.
14.4.5 EXCLUSIVE REMEDY. This Section 14 sets forth the
----------------
exclusive remedy for monetary damages owing from Seller
and/or CRLI to Buyer and from Buyer to Seller and/or CRLI
that arise from the matters described in Sections 14.1 and
14.2.
14.4.6 EFFECT OF MATERIALITY QUALIFICATIONS. For purposes of
------------------------------------
determining whether Buyer or Seller are entitled to
indemnification under Section 14.1 or 14.2, and whether
limitations on claims or on recovery set forth above apply
to any demand for indemnification, qualifications as to
materiality in individual representations and warranties
shall be disregarded.
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15. INDEMNIFICATION OF PARTIES
15.1 INDEMNIFICATION BY SELLER. Without limiting any other
-------------------------
substantive remedy Buyer may expressly have hereunder, including
without limitation those provided in Article 14 hereof, Seller
hereby agrees to indemnify, defend and hold Buyer harmless from
and against and in respect of any and all liabilities, losses,
damages, claims, costs and expenses, including reasonable
attorneys' fees, arising from the assertion by any third party
against Buyer of (i) any Excluded Liabilities or any claim or
demand for payment therefor, or (ii) any claim under Treas. Reg.
1.1502 by the Internal Revenue Service (whenever made) against
any member of the consolidated group of which Seller is a member
prior to the Closing Date with respect to any federal income tax
liability of Seller or any such member for any period ending on
or prior to the Closing Date.
15.2 INDEMNIFICATION BY BUYER. Without limiting any other substantive
------------------------
remedy Seller may expressly have hereunder, including without
limitation those provided in Article 14 hereof, Buyer hereby
agrees to indemnify, defend and hold Seller harmless from and
against and in respect of any and all liabilities, losses,
damages, claims, costs and expenses, including reasonable
attorneys' fees, arising from the assertion by any third party
against Seller of any Assumed Liabilities.
16. PROCEDURE FOR CLAIMING INDEMNIFICATION
16.1 The party seeking indemnification under Article 15 hereof (the
"Indemnitee") shall give the party from whom indemnification is
sought (the "Indemnitor") notice of any claim or the
commencement of action or proceeding promptly after the
Indemnitee receives notice thereof; provided, however, that the
failure of the Indemnitee to give notice shall not relieve the
Indemnitor of its obligations hereunder, except to the extent
the Indemnitor is actually prejudiced or harmed by such failure
to give notice. The Indemnitor shall be permitted to assume the
defense of any such claim or litigation resulting from such
claim, with counsel reasonably satisfactory to the Indemnitee.
The Indemnitor shall provide Indemnitee written notice of such
assumption of defense within thirty (30) days of receipt by the
Indemnitor of notice of the proceeding.
16.2 If the Indemnitor assumes the defense of any such claim or
litigation resulting therefrom, the Indemnitor shall take all
steps necessary in the defense or settlement of such claim or
litigation resulting therefrom and hold the Indemnitee harmless
from and against any and all losses, damages and liabilities
caused by or arising out of any settlement approved by the
Indemnitor or any judgment in connection with such claim or
litigation resulting therefrom. The Indemnitee may participate,
at its expense, in the defense of any such claim or litigation,
provided that the Indemnitor shall direct and control the defense
of such claim or litigation. Except with the written consent of
the Indemnitee, the Indemnitor shall not, in the defense of such
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claim or any litigation resulting therefrom, consent to entry of
any judgment or enter into any settlement which does not include
as an unconditional term thereof, the giving by the claimant or
the plaintiff to the Indemnitee of a release from all liability
with respect to the claim or litigation.
16.3 If the Indemnitor shall not assume the defense of any such claim
or litigation resulting therefrom, the Indemnitee may defend
against such claim or litigation in such manner as it may deem
appropriate and, unless the Indemnitor shall deposit with the
Indemnitee a sum equivalent to the total amount demanded in such
claim or litigation, or shall deliver to Indemnitee a surety
bond in form and substance reasonably satisfactory to
Indemnitee, Indemnitee may settle such claim or litigation on
such terms as it may reasonably deem appropriate, and the
Indemnitor, if it does not dispute liability, shall promptly
reimburse Indemnitee for the amount of all expenses, legal or
otherwise, reasonably incurred by the Indemnitee in connection
with the defense against or settlement of such claim or
litigation. If no settlement of such claim or litigation is
made, the Indemnitor, if it does not dispute liability, shall
promptly reimburse the Indemnitee for the amount of any final
judgment rendered with respect to such claim or in such
litigation and for all reasonable expenses, legal or otherwise,
incurred by the Indemnitee in the defense against such claim or
litigation, but only to the extent that such amounts are
actually paid.
17. SELLER'S CONFIDENTIAL INFORMATION
17.1 Buyer acknowledges that pursuant to its right to inspect Seller's
records and facilities, Buyer may become privy to Confidential
Information. In the event the transactions contemplated by this
Agreement are not completed, all Confidential Information
disclosed to Buyer shall remain confidential, shall not be used
for the benefit of Buyer or any affiliate thereof or disclosed to
outside sources and all recorded evidence thereof shall be
delivered to Seller or destroyed together with a certificate of
an officer of Buyer to the effect that no copies thereof remain
in possession of Buyer, Buyer's agents, affiliates, counsel or
auditors.
17.2 Seller and CRLI acknowledge that they are privy to Confidential
Information relating to the Business. From and after the
Closing, all Confidential Information known to or in the
possession of either Seller or CRLI shall remain confidential
thereafter, shall not be used for the benefit of Seller or any
affiliate thereof or disclosed to outside sources of any kind or
for any reason, without the prior consent of Buyer except that
Seller may use any Confidential Information relating to
operation of the Business prior to the Closing Date to satisfy
any tax or governmental reporting obligations imposed upon
Seller without obtaining the prior consent of Buyer.
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18. EMPLOYEE MATTERS
18.1 EMPLOYMENT. Except as otherwise provided herein, Buyer shall
----------
offer employment to each active employee of Seller at
compensation rates and benefits comparable to existing rates,
with such employment to commence as of the Closing Date or such
later date as shall be agreed by Buyer and any such employee,
except for any employees listed on Schedule 18.1, each of whom
Seller and Buyer mutually agree shall be retained or terminated
by Seller or any Affiliate. Any liability to any employee of
Seller for severance pay and other separation benefits under
Seller's or Buyer's plans that arise out of transactions that
occur on or after the Closing Date, including any liability or
obligation that arises as a result of the termination of
employment by Buyer of any of Seller's former employees, except
for any employee listed on Schedule 18.1, on or after the
Closing Date shall be an Assumed Liability. Buyer shall not be
liable for severance pay or other separation benefits that may
become due under any of Seller's plans as the result of the
refusal of any former employee of Seller to accept Buyer's offer
of employment.
18.2 EMPLOYEE BENEFIT PLANS GENERALLY.
--------------------------------
18.2.1 EMPLOYEE BENEFIT PLANS. Effective as of the Closing Date,
----------------------
and soon as practicable, Buyer shall establish and
qualify or register with applicable regulatory
authorities Employee Benefit Plans for the Continuing
Employees of Seller which are in accordance with local
law and which in the aggregate provide benefits at least
comparable to those benefits currently provided to such
Continuing Employees. Except as provided hereinafter in
this Section 18 with respect to specific types of
benefits, Buyer shall, or shall cause one or more of its
Affiliates to, take into account the Continuing
Employees' period of service with Seller or its
Affiliates prior to the Closing, for eligibility purposes
under any Employee Benefits sponsored by Buyer or its
Affiliates after the Closing in which any of such
Continuing Employees are eligible to participate. In
addition, for purposes of vacation policy only, Buyer
shall recognize prior service with Seller or its
Affiliates for calculation of such Continuing Employees'
vacation benefits.
18.2.2 TERMINATION OF COVERAGE UNDER SELLER EMPLOYEE BENEFIT
-----------------------------------------------------
PLANS. Effective as of the Closing Date, each Continuing
-----
Employee who is an active participant in any Employee
Benefit Plans of Seller or any Affiliate (including but
not limited to all life insurance, health insurance,
welfare and health benefit plans, pension, profit sharing
and savings and stock ownership plans, workers
compensation insurance and payments into State
Unemployment Compensation Funds) shall cease to be an
active participant.
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18.3 PENSION PLANS. Except as provided in Section 4.1(i), all assets
-------------
and liabilities under the Seller's pension plan attributable to
service prior to the Closing Date for each Continuing Employee
who is a participant in Seller's pension plan immediately prior
to the Closing Date shall be Excluded Assets and Excluded
Liabilities. Subject to the approval of the appropriate pension
plan administration committee of Seller which approval shall
have been received on or before the Closing Date, Seller shall
cause its pension plan to vest fully each Continuing Employee
who is a participant in such plan immediately prior to the
Closing Date in his or her accrued benefits under the plan.
Buyer shall grant to each Continuing Employee credit for his or
her period of employment with Seller and its Affiliates (and
their predecessors) prior to the Closing Date, for the purpose
of eligibility and vesting under any pension benefit plan by
which such Continuing Employees become covered, but not for the
purpose of benefit accrual or entitlement to or eligibility for
early retirement benefits or subsidies thereunder.
18.4 WELFARE AND FRINGE BENEFITS. Buyer shall, or shall cause one or
---------------------------
more of its Affiliates to, (a) grant to each Continuing Employee
credit under any Employee Benefit covering such employee after
the Closing for any deductible and co-payments paid by such
employee under any corresponding Employee Benefit during the
plan year which includes the Closing Date, and (b) amend any
employee welfare plan covering Continuing Employees from and
after the Closing so that such plan does not exclude from
coverage any pre-existing conditions of any of such employees or
their dependents, which preexisting conditions were covered
under any Employee Benefit immediately prior to the Closing;
provided, however, nothing herein shall require Buyer's
Employees Benefit Plans to cover any particular disease or other
event or prevent Buyer's Employee Benefit Plans from applying
any limits or other conditions which affect coverage or the
amount of benefits as provided thereunder.
18.5 Nothing contained in this Section 18 shall prohibit Buyer or any
Affiliate from amending, modifying, substituting or terminating
any employee benefit in its sole judgment following the Closing
Date.
19. TAXES
19.1 COOPERATION. Buyer and Seller and their respective Affiliates
-----------
shall cooperate in the preparation of all Tax returns relating
in whole or in part to taxable periods ending on or before or
including the Closing Date that are required to be filed after
such date. Such cooperation shall include, but not be limited
to, furnishing prior years' returns or return preparation
packages illustrating previous reporting practices or containing
historical information relevant to the preparation of such
returns, and furnishing such other information within such
party's possession requested by the party filing such returns as
is relevant to their preparation. In the case of any state,
local or foreign joint, consolidated, combined, unitary or group
relief system
41
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returns, such cooperation shall also relate to any other taxable
periods in which one party could reasonably require the
assistance of the other party in obtaining any necessary
information.
19.2 BOOKS AND RECORDS.
-----------------
19.2.1 ACCESS. For a period of ten years after the Closing, each
------
of CRLI and Buyer shall provide the other with reasonable
access during normal business hours to its books and
records (or those of its Affiliates) to the extent they
relate to the condition or operation of the Business prior
to or following, respectively, the Closing and are
requested to prepare tax returns, to respond to third
party claims or for any other legitimate purpose specified
in writing. Each of Seller and Buyer shall have the
right, at its own expense, to make copies of any such
books and records.
19.2.2 DESTRUCTION. Neither Seller, CRLI nor Buyer shall destroy
-----------
any books or records of the Business to the extent that
they relate to the condition or operation prior to the
Closing Date without first offering to turn over
possession to the other by written notice at least 90
calendar days prior to the proposed date of destruction.
19.3 CONFIDENTIALITY. Each of Seller, CRLI and Buyer may take such
---------------
action as it deems reasonably appropriate to separate or redact
information unrelated to the Business from documents and other
materials requested and made available pursuant to this Section
and to condition access to materials that it deems confidential
to the execution and delivery of any agreement by the other party
not to disclose or misuse such information.
20. CLOSING
The closing of this transaction (the "Closing") shall take place on the
Closing Date, or on such other date as the parties hereto shall agree
upon, in either case at such time and place as the parties hereto shall
agree upon. All documents of transfer shall be deemed to have been
delivered simultaneously by the parties upon receipt by Seller of
payment by Buyer in cash or by wire transfer of that portion of the
Purchase Price due on the Closing Date.
20.1 DOCUMENTS TO BE DELIVERED BY SELLER. At the Closing, Seller
-----------------------------------
shall deliver to Buyer the following documents, in each case duly
executed or otherwise in proper form:
20.1.1 COMPLIANCE CERTIFICATE. A certificate signed by a duly
----------------------
authorized officer of Seller and CRLI that each of the
representations and warranties made by Seller in this
Agreement is true and correct in all material respects on
and as of the Closing Date with the same effect as though
such representations and warranties had been made or given
on and as of
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the Closing Date (except for any changes permitted by the
terms of this Agreement or consented to in writing by Buyer),
and that Seller has performed and complied with all of
Seller's obligations under this Agreement which are to be
performed or complied with on or prior to the Closing Date.
20.1.2 CERTIFIED RESOLUTIONS. Certified copies of the
---------------------
resolutions of the Board of Directors of both the Seller
and CRLI and the shareholder of Seller, authorizing and
approving this Agreement and the consummation of the
transactions contemplated by this Agreement.
20.1.3 INCUMBENCY CERTIFICATE. Incumbency certificates relating
----------------------
to each person executing (as a corporate officer or
otherwise on behalf of another person) any document
executed and delivered to Buyer pursuant to the terms
hereof.
20.1.4 OTHER DOCUMENTS. All other documents, instruments or
---------------
writings required to be delivered to Buyer at or prior to
the Closing pursuant to this Agreement and such other
certificates of authority and documents as Buyer may
reasonably request. Seller shall also deliver to Buyer a
certificate whereby Seller shall confirm that after the
Closing and the perfection of the purchase of the Assets
by Buyer, all of the provisions of this Agreement,
including, but not limited to, the warranties,
representations and indemnity obligations of Seller shall
continue in full force and effect as provided by this
Agreement.
20.1.5 CRLI GUARANTY. A Guaranty by CRLI of all obligations of
-------------
Seller hereunder.
20.1.6 XXXX OF SALE. The Assignment, Xxxx of Sale and Assumption
------------
Agreement in the form of Exhibit A attached hereto
executed by Seller and Buyer.
20.1.7 CONTINUING SERVICES AGREEMENT. The Continuing Services
-----------------------------
Agreement pursuant to which Seller shall provide Buyer
services regarding the software described in Section
2.6.3, on the terms and conditions set forth in Exhibit B
attached hereto.
20.2 DOCUMENTS TO BE DELIVERED BY BUYER. At the Closing, Buyer shall
----------------------------------
deliver to Seller and CRLI the following documents, in each case
duly executed or otherwise in proper form:
20.2.1 COMPLIANCE CERTIFICATE. A certificate signed by the Chief
----------------------
Executive Officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and
correct on and as of the Closing Date with the same
effect as though such representations and warranties had
been
43
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made or given on and as of the Closing Date (except for any
changes permitted by the terms of this Agreement to in
writing by Seller), and that Buyer has performed and complied
with all of Buyer's obligations under this Agreement which
are to be performed or complied with on or prior to the
Closing Date.
20.2.2 CERTIFIED RESOLUTIONS. A certified copy of the
---------------------
resolutions of the Boards of Directors of Buyer and any
Affiliate to which this Agreement may be assigned
authorizing and approving this Agreement and the
consummation of the transactions contemplated by this
Agreement.
20.2.3 INCUMBENCY CERTIFICATE. Incumbency certificates relating
----------------------
to each person executing any document executed and
delivered to Seller by Buyer pursuant to the terms hereof.
20.2.4 XXXX OF SALE. The Assignment, Xxxx of Sale and Assumption
------------
Agreement in the form of Exhibit A attached hereto
executed by Seller and Buyer.
20.2.5 CONTINUING SERVICES AGREEMENT. The Continuing Services
-----------------------------
Agreement pursuant to which Seller shall provide Buyer
services regarding the software described in Section
2.6.3, on the terms and conditions set forth in Exhibit B
attached hereto.
20.2.6 OTHER DOCUMENTS. All other documents, instruments or
---------------
writings required to be delivered to Seller at or prior to
the Closing pursuant to this Agreement and such other
certificates of authority and documents as Seller may
reasonably request. Buyer shall also deliver to Seller a
certificate whereby Buyer shall confirm that after the
Closing and the perfection of the purchase of the Assets
by Buyer, all of the provisions of this Agreement,
including, but not limited to, the warranties,
representations and indemnity obligations of Buyer shall
continue in full force and effect as provided by this
Agreement.
21. TERMINATION
21.1 RIGHT OF TERMINATION WITHOUT BREACH. This Agreement may be
-----------------------------------
terminated without further liability of any party at any time
prior to the Closing:
21.1.1 by mutual written agreement of Buyer and Seller; or
21.1.2 by either Buyer or Seller if the Closing shall not have
occurred on or before June 30, 1998, provided the
terminating party has not, through breach of a
representation, warranty or covenant, prevented the
Closing from occurring on or before such date.
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21.2 TERMINATION FOR BREACH.
----------------------
21.2.1 TERMINATION BY BUYER. If, after written notice and
--------------------
failure to cure within five (5) business days (i) there
has been a material violation or breach by Seller or CRLI
of any of the agreements, representations or warranties
contained in this Agreement which has not been waived in
writing by Buyer, or (ii) there has been a failure of
satisfaction of a condition to the obligations of Buyer as
the result of a breach by Seller or CRLI which has not
been waived, or (iii) Seller or CRLI shall have attempted
to terminate this Agreement under this Section 21 or
otherwise without grounds to do so, then Buyer may, by
written notice to Seller at any time prior to the Closing
that such violation, breach, failure or wrongful
termination attempt is continuing, terminate this
Agreement with the effect set forth in Section 21.2.3
hereof.
21.2.2 TERMINATION BY SELLER. If, after written notice and
---------------------
failure to cure within five (5) business days (i) there
has been a material violation or breach by Buyer of any of
the agreements, representations or warranties contained in
this Agreement which has not been waived in writing by
Seller, or (ii) there has been a failure of satisfaction
of a condition to the obligations of Seller as the result
of a breach by Buyer which has not been waived, or (iii)
Buyer shall have attempted to terminate this Agreement
under this Section 21 or otherwise without grounds to do
so, then Seller may, by written notice to Buyer at any
time prior to the Closing that such violation, breach,
failure or wrongful termination attempt is continuing,
terminate this Agreement with the effect set forth in
Section 21.2.3 hereof.
21.2.3 EFFECT OF TERMINATION. In the event of termination under
---------------------
Section 21.2, the terminating party shall have the right
to receive, as damages for such breach and not as a
penalty, reimbursement of all expenses incurred by it in
connection with the transactions contemplated in this
Agreement. Neither party shall be liable for, and no
party may recover, consequential or punitive damages as a
result of the termination of this Agreement.
21.3 Subject to the foregoing, the parties' obligations under Sections
12, 13, 17 and 21 of this Agreement shall survive termination.
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22. ANNOUNCEMENTS
Buyer and Seller shall cooperate in the preparation of any
announcements regarding the transactions contemplated by this
Agreement. Except as required by Applicable Law (in which case such
announcing party shall prior thereto advise the other party), no party
shall issue any announcement regarding the transactions contemplated
hereby without the prior consent of the other, which consents shall
not be unreasonably withheld.
23. SURVIVAL OF REPRESENTATIONS
Notwithstanding any statutory limitations to the contrary, all
representations herein shall survive the Closing hereof for a period
of two (2) years, except for the representations (i) set forth in
Section 5.7 hereof, which shall survive the Closing for a period equal
to the applicable statutes of limitation, and (ii) set forth in
Section 5.18 hereof, which shall survive the Closing for a period of
three (3) years.
24. MISCELLANEOUS
24.1 DISCLOSURE SCHEDULE. The Schedules have been compiled in a bound
-------------------
volume (the "Disclosure Schedule"), executed by Seller and dated
and delivered to Buyer on the date of this Agreement.
Disclosure in one Schedule hereto shall constitute disclosure
for all purposes under this Agreement and in response to any
other Schedule hereto. Disclosure of a document or information
in a Schedule hereto is not intended as a representation or
warranty of the material nature of such document or information
nor does it establish any standard of materiality upon which to
judge the inclusion or omission of other similar documents or
information in that Schedule or other Schedules.
24.2 FURTHER ASSURANCE. From time to time, at Buyer's request and
-----------------
without further consideration, Seller shall execute and deliver
to Buyer such documents and take such other action as Buyer may
reasonably request in order to consummate more effectively the
transactions contemplated hereby.
24.3 ASSIGNMENT; PARTIES IN INTEREST.
-------------------------------
24.3.1 ASSIGNMENT. Except as expressly provided herein, the
----------
rights and obligations of a party hereunder may not be
assigned, transferred or encumbered without the prior
written consent of the other parties. Notwithstanding
the foregoing, Buyer may, without consent of any other
party, cause one or more affiliates of Buyer to carry
out all or part of the transactions contemplated hereby.
Buyer shall, however, continue to be liable for the
performance of its covenants hereunder and shall
guarantee the performance of its assignee.
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24.3.2 PARTIES IN INTEREST. This Agreement shall be binding
-------------------
upon, inure to the benefit of, and be enforceable by the
respective successors and permitted assigns of the
parties hereto. Nothing contained herein shall be deemed
to confer upon any other person any right or remedy under
or by reason of this Agreement.
24.4 GOVERNING LAW. This Agreement may not be modified or terminated
-------------
orally, and shall be construed and interpreted according to the
internal laws of the State of Delaware, excluding any choice of
law rules that may direct the application of the laws of another
jurisdiction.
24.5 AMENDMENT AND MODIFICATION. Buyer, CRLI and Seller may amend,
--------------------------
modify and supplement this Agreement in such manner as may be
agreed upon in writing between the parties hereto.
24.6 NOTICE. Any notice or communication required or permitted to be
------
given hereunder, including a change in address for any
subsequent notice, shall be in writing and shall be deemed
given, if personally delivered or given by fax, upon receipt, or
if mailed, when deposited in the United States mail, postage
prepaid, registered or certified mail, return receipt requested
addressed as follows:
If to Seller: Champion Pneumatic Machinery Company, Inc.
c/o CRL Industries, Inc.
0000 Xxxxxxxx Xxxx
Xxxxx X-000
Xxxxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxx, Esq.
Fax: (000)000-0000
with a copy to: Xxxxxx & Coff
00 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx
Fax: (000)000-0000
If to Buyer: Xxxxxxx Denver Machinery Inc.
0000 Xxxxxxx Xxxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. Xxxxxxxx
Fax: (000)000-0000
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with a copy to: Squire, Xxxxxxx & Xxxxxxx L.L.P.
0000 Xxx Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxx
Fax: (000)000-0000
24.7 ENTIRE AGREEMENT. This Agreement, together with the related
----------------
Schedules and Exhibits, embodies the entire agreement between
the parties hereto with respect to the transactions contemplated
herein, and supersedes all prior agreements, understandings and
discussions of the parties other than that certain
Confidentiality Agreement between the parties, and there are no
agreements, representations or warranties between the parties in
connection with the subject matter of this Agreement other than
those set forth or provided for herein.
24.8 COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
24.9 HEADINGS. The headings in this Agreement are inserted for
--------
convenience and shall not constitute a part hereof.
24.10 WAIVER. No failure of any party to this Agreement to pursue any
------
remedy resulting from a breach of this Agreement shall be
construed as a waiver of that breach or as a waiver of any
subsequent or other breach. No waiver shall be enforced against
a party unless such waiver is in writing and signed by the party
against whom enforcement of such is sought.
24.11 SEVERABILITY. Should any provision of this Agreement be or
------------
become invalid in whole or in part or be incapable of
performance for whatever reason, then the validity of the
remaining provisions of this Agreement shall not be affected
thereby. In such event, the parties hereby undertake to
substitute for any such invalid provision or for any provision
incapable of performance, a provision which corresponds to the
spirit and purpose of such invalid or unperformable provision as
far as permitted under applicable law, so as to provide to the
parties to the fullest extent possible the economic purpose and
effect of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered as of the date first above written.
SELLER: BUYER:
CHAMPION PNEUMATIC MACHINERY XXXXXXX DENVER MACHINERY INC.
COMPANY INC.
By:---------------------------------- By:----------------------------------
Its:--------------------------------- Its:----------------------------------
CRLI:
CRL INDUSTRIES, INC.
By:----------------------------------
Its:----------------------------------
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EXHIBIT A
---------
Assignment, Xxxx of Sale and Assumption Agreement
-------------------------------------------------
[To be agreed upon by the parties prior to Closing]
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EXHIBIT B
---------
Continuing Services Agreement
-----------------------------
[To be agreed upon by the parties prior to Closing]
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