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STOCK PURCHASE AGREEMENT
by and between
FALCON BUILDING PRODUCTS, INC.
and
PENTAIR, INC.
Dated as of August 12, 1999
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TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 Purchase and Sale of the Shares..................................... 1
Section 1.2 Purchase Price...................................................... 1
Section 1.3 Closing Payment..................................................... 1
Section 1.4 Post Closing Purchase Price Adjustment.............................. 2
Section 1.5 Closing............................................................. 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Organization........................................................ 4
Section 2.2 Capitalization...................................................... 4
Section 2.3 Authority Relative to this Agreement................................ 5
Section 2.4 Consents and Approvals; No Violations............................... 5
Section 2.5 Financial Statements................................................ 6
Section 2.6 Absence of Certain Changes; No Undisclosed Liabilities.............. 6
Section 2.7 No Default.......................................................... 7
Section 2.8 Litigation.......................................................... 7
Section 2.9 Certain Agreements.................................................. 7
Section 2.10 Taxes............................................................... 7
Section 2.11 Environmental Matters............................................... 8
Section 2.12 Employee Benefit Matters............................................ 9
Section 2.13 Brokers............................................................. 10
Section 2.14 Labor Relations..................................................... 10
Section 2.15 Intellectual Property............................................... 10
Section 2.16 Real Property....................................................... 11
Section 2.17 Compliance with Laws; Licenses and Permits.......................... 11
Section 2.18 Product Warranty and Product Liability.............................. 12
Section 2.19 Employment Compensation............................................. 12
Section 2.20 Certain Relationships............................................... 12
Section 2.21 Year 2000........................................................... 13
Section 2.22 Insurance........................................................... 13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization........................................................ 13
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Section 3.2 Authority Relative to this Agreement................................ 14
Section 3.3 Consents and Approvals; No Violations............................... 14
Section 3.4 Brokers............................................................. 14
Section 3.5 Funds Available..................................................... 15
Section 3.6 Absence of Proceedings.............................................. 15
Section 3.7 Investment Intent................................................... 15
Section 3.8 Status as Accredited Investor....................................... 15
Section 3.9 No Outside Reliance................................................. 15
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of the Company.................................. 15
Section 4.2 Access to Information............................................... 17
Section 4.3 Government Approvals................................................ 18
Section 4.4 Third Party Consents................................................ 18
Section 4.5 Public Announcements................................................ 18
Section 4.6 Directors' and Officers' Indemnification............................ 18
Section 4.7 Employee Contracts.................................................. 19
Section 4.8 Resignation of Directors............................................ 19
Section 4.9 Notification of Certain Matters..................................... 19
Section 4.10 Settlement of Intercompany Accounts................................. 19
Section 4.11 Receivables Securitization Program.................................. 19
Section 4.12 Straddle Period Tax Provisions...................................... 20
Section 4.13 Pension and Savings Plans........................................... 21
Section 4.14 Insurance........................................................... 23
Section 4.15 Certain Agreements.................................................. 23
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to Purchaser's Obligations............................... 23
Section 5.2 Conditions to Seller's Obligations.................................. 24
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 Termination......................................................... 25
Section 6.2 Effect of Termination............................................... 25
Section 6.3 Amendment........................................................... 26
Section 6.4 Extension; Waiver................................................... 26
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Non-Survival of Representations and Warranties; Agreements.......... 26
Section 7.2 Entire Agreement; Assignment........................................ 26
Section 7.3 Notices............................................................. 26
Section 7.4 Governing Law....................................................... 27
Section 7.5 Descriptive Headings................................................ 28
Section 7.6 Counterparts........................................................ 28
Section 7.7 Fees and Expenses................................................... 28
Section 7.8 Miscellaneous....................................................... 28
Section 7.9 Specific Performance................................................ 28
SCHEDULES
Schedule 1.4 Net Operating Assets at March 31, 1999
Schedule 2.1 States of Qualification
Schedule 2.2(a) Company Capitalization
Schedule 2.2(b) Subsidiary Capitalization
Schedule 2.4 No Violations
Schedule 2.5 Financial Statements
Schedule 2.6 Certain Changes; Disclosed Liabilities
Schedule 2.7 No Default
Schedule 2.8 Litigation
Schedule 2.9 Certain Agreements
Schedule 2.10 Taxes
Schedule 2.11 Environmental Matters
Schedule 2.12(a) Employee Benefit Matters: Benefits Plans
Schedule 2.12(b) Employee Benefit Matters: Certain Plans
Schedule 2.14 Labor Relations
Schedule 2.15 Intellectual Property
Schedule 2.16(a) Real Property: List of Real Properties
Schedule 2.16(b) Real Property: Consents and Defaults
Schedule 2.16(c) Real Property: Title
Schedule 2.17 Compliance with Laws; Licenses and Permits
Schedule 2.18 Product Warranty and Product Liability
Schedule 2.19 Employment Compensation
Schedule 2.20 Certain Relationships
Schedule 2.21 Year 2000
Schedule 2.22 Insurance
Schedule 4.1 Conduct of the Business of the Company
Schedule 4.7 Employee Contracts
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Schedule 4.13(b) Actuarial Assumptions
Schedule 5.1(e) Terminated Agreements
Schedule 5.1(f) Consents
Schedule 7.8(c) Knowledge
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of August 12, 1999 (the
"AGREEMENT"), is by and between Falcon Building Products, Inc., a Delaware
corporation ("SELLER"), and Pentair, Inc., a Minnesota corporation
("PURCHASER").
WHEREAS, Seller is the owner of 100% of the issued and outstanding
capital stock (the "SHARES") of Falcon Manufacturing, Inc., a Delaware
corporation (the "COMPANY");
WHEREAS, the Company is the owner of 100% of the issued and
outstanding capital stock of DeVilbiss Air Power Company, a Delaware
corporation (the "SUBSIDIARY"); and
WHEREAS, Seller desires to sell to Purchaser the Shares, and
Purchaser desires to purchase for the amount provided herein, and on the
terms and subject to the conditions set forth in this Agreement, the Shares.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms
and conditions hereof, on the Closing Date, Seller shall sell, assign,
transfer and deliver to Purchaser, free and clear of all liens, the Shares,
and Purchaser shall purchase the Shares from Seller, at the price and in the
manner set forth in this Article I.
Section 1.2 PURCHASE PRICE. The aggregate purchase price for the
Shares is Four Hundred Sixty Million Dollars ($460,000,000) (the "BASE
PURCHASE PRICE"), subject to adjustment as provided in Section 1.4 hereof.
Section 1.3 CLOSING PAYMENT. At the Closing, Purchaser shall
deliver to Seller payment, by wire transfer to a bank account designated in
writing by Seller at least two business days prior to the Closing Date, of
immediately available funds in an amount equal to the Base Purchase Price
plus or minus the Estimated Adjustment Amount (as defined herein). The
"Estimated Adjustment Amount" means the amount by which the Base Purchase
Price would be adjusted pursuant to Section 1.4 hereof based upon an
estimated Closing Date balance sheet of the Company and the Subsidiary
prepared in good faith by Seller in a manner consistent with the accounting
methods and practices followed in the preparation of the March Balance Sheet
(as defined in Section 2.5), which balance sheet will be delivered to
Purchaser not less than five (5) business days prior to the Closing Date. The
Base Purchase Price plus or minus the Estimated Adjustment Amount is referred
to herein as the "CLOSING DATE AMOUNT".
Section 1.4 POST CLOSING PURCHASE PRICE ADJUSTMENT.
(a) As soon as practicable after the Closing Date, but in any
event not later than the 60th day after the Closing Date, Seller shall
prepare and deliver to Purchaser a consolidated balance sheet of the
Company and the Subsidiary as of the Closing Date in the form set forth
in Schedule 1.4, prepared in a manner consistent with the accounting
methods and practices followed in the preparation of the March Balance
Sheet (the "CLOSING BALANCE SHEET"), and a certificate of Seller that
the Closing Balance Sheet has been prepared in such manner. Purchaser
shall assist Seller in the preparation of the Closing Balance Sheet and
shall provide Seller and its independent auditors access at all
reasonable times to the personnel, properties, books and records of the
Company and the Subsidiary for such purpose. Purchaser's independent
auditors may participate in the preparation of the Closing Balance
Sheet; PROVIDED, HOWEVER, that Purchaser acknowledges that Seller shall
have the primary responsibility and authority for preparing the Closing
Balance Sheet.
(b) During the 30-day period following Purchaser's receipt of
the Closing Balance Sheet, Purchaser and its independent auditors shall
be permitted to review the working papers relating to the Closing
Balance Sheet. The Closing Balance Sheet shall become final and binding
upon the parties on the 30th day following delivery thereof, unless
Purchaser gives written notice of its disagreement with the Closing
Balance Sheet (a "NOTICE OF DISAGREEMENT") to Seller prior to such
date. Any Notice of Disagreement shall (i) specify in reasonable detail
the nature of any disagreement so asserted, (ii) only include
disagreements based on mathematical errors or based on Net Operating
Assets not being calculated in accordance with this Section 1.4 and
(iii) be accompanied by a certificate of Purchaser that it has complied
with the covenants set forth in Section 1.4(e). If a Notice of
Disagreement is received by Seller in a timely manner, then the Closing
Balance Sheet (as revised in accordance with this sentence) shall
become final and binding upon Seller and Purchaser on the earlier of
(A) the date Seller and Purchaser resolve in writing any differences
they have with respect to the matters specified in the Notice of
Disagreement or (B) the date any disputed matters are finally resolved
in writing by the Accounting Firm (as defined herein). During the
30-day period following the delivery of a Notice of Disagreement,
Seller and Purchaser shall seek in good faith to resolve any
differences that they may have with respect to the matters specified in
the Notice of Disagreement. During such period, Seller and its auditors
shall have access to the working papers of Purchaser and its auditors
prepared in connection with their certification of the Notice of
Disagreement. At the end of such 30-day period, Seller and Purchaser
shall submit to a nationally recognized independent public accounting
firm (the "ACCOUNTING FIRM") for review and resolution any and all
matters that remain in dispute and were properly included in the Notice
of Disagreement. The Accounting Firm shall be Xxxxxx Xxxxxxxx or, if
such firm is unable or unwilling to act, such other nationally
recognized independent public accounting firm as shall be agreed upon
by the parties hereto in writing. The scope of the disputes to be
resolved by the Accounting Firm shall be limited to whether the
calculation of Net Operating Assets was done in accordance with this
Section 1.4, and whether there were mathematical errors in such
calculation.
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The Accounting Firm is not to make any other determination. Seller
and Purchaser agree to use reasonable efforts to cause the
Accounting Firm to render a decision resolving the matters submitted
to the Accounting Firm within 30 days following submission or, if
earlier, as soon as reasonably practicable after submission.
Judgment may be entered upon the determination of the Accounting
Firm in any court having jurisdiction over the party against which
such determination is to be enforced. The cost of the fees and
expenses of the Accounting Firm pursuant to this Section 1.4 shall
be borne by Purchaser and Seller in inverse proportion as they may
prevail on matters resolved by the Accounting Firm, which
proportionate allocations shall also be determined by the Accounting
Firm at the time the determination of the Accounting Firm is
rendered on the merits of the matters submitted. Each of Seller and
Purchaser shall be responsible for the fees and disbursements of
their respective independent auditors incurred as a result of this
Section 1.4(b).
(c) The Base Purchase Price shall be increased by the amount
by which Net Operating Assets (as finally determined in accordance with
this Section 1.4) exceeds $132,353,000 or the Base Purchase Price shall
be decreased by the amount by which Net Operating Assets (as finally
determined in accordance with this Section 1.4) is less than
$132,353,000, as the case may be. The Base Purchase Price as so
increased or decreased shall hereinafter be referred to as the
"ADJUSTED PURCHASE PRICE". If the Closing Date Amount is less than the
Adjusted Purchase Price, Purchaser shall, and if the Closing Date
Amount is more than the Adjusted Purchase Price, Seller shall, within
five business days after the Closing Balance Sheet becomes final and
binding on the parties, make payment by wire transfer in immediately
available funds of the amount of such difference, together with
interest thereon at a rate of six percent (6%), calculated on the basis
of the actual number of days elapsed divided by 365, from the Closing
Date to the date of payment. Either party may, in its discretion, make
a payment to the other pursuant to this Section 1.4 prior to final
determination of the Closing Balance Sheet for purpose of reducing the
interest it may be obligated to pay pursuant to such provision.
(d) The term "NET OPERATING ASSETS" means the amount by which
the sum of (i) Trade Receivables Net, (ii) Inventories Net, (iii) Other
Current Assets and (iv) Property, Plant & Equipment (before Accumulated
Depreciation) exceeds the sum of (A) Trade Payables, (B) Other Accounts
Payable, (C) Accrued Income Taxes-State, and (D) Other Accrued Expenses
as set forth on the Closing Balance Sheet.
(e) During the period of time from and after the Closing Date
through the resolution of any adjustment to the Purchase Price
contemplated by this Section 1.4, Purchaser shall afford to Seller and
any accountants, counsel or financial advisers retained by Seller in
connection with any adjustment to the Purchase Price contemplated by
this Section 1.4 reasonable access upon advance notice and during
normal business hours to all the properties, books, contracts,
personnel and records of the Company and the Subsidiary relevant to the
adjustment contemplated by this Section 1.4.
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Section 1.5 CLOSING. Upon the terms and subject to the conditions
contained herein, the closing of the transactions contemplated hereby (the
"CLOSING") shall take place at the offices of Xxxxxx, Xxxx & Xxxxxxxx LLP,
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or any other mutually
agreed upon location, at 9:00 a.m. New York City time on the date (the
"CLOSING DATE") which is three (3) business days after the conditions set
forth in Article V hereof have been satisfied or waived, or any other
mutually agreed upon time. At the Closing, the parties will deliver to each
other such certificates and other documents as are reasonably agreed upon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 2.1 ORGANIZATION.
(a) Seller is a corporation validly existing and in good
standing under the laws of its jurisdiction of incorporation and has
all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as now conducted.
(b) Each of the Company and the Subsidiary is a corporation
validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
business as now conducted, and is duly qualified or licensed or in good
standing to do business in each jurisdiction in which the property
owned, leased or operated by it or the nature of the business conducted
by it makes such qualification or licensing necessary, except where the
failure to have such power or authority or to be qualified or licensed
and in good standing would not constitute a Material Adverse Effect (as
defined herein). The states in which each of the Company and the
Subsidiary is, as of the date hereof, qualified to do business are
listed on Schedule 2.1. Except for the Company's ownership of 100% of
the capital stock of the Subsidiary, neither the Company nor the
Subsidiary owns or controls, directly or indirectly, any other equity
interest in any corporation, partnership, joint venture, limited
liability company, trust, firm or other entity. The Company has
heretofore made available to Purchaser accurate and complete copies of
the certificate of incorporation and by-laws, as in effect on the date
hereof, of the Company and the Subsidiary.
Section 2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of
1,100 shares of common stock, par value $1.00 per share, of which 1,000
shares are issued and outstanding. All of the issued and outstanding
Shares have been validly issued, fully paid and are nonassessable and
were not issued in violation of any preemptive rights or rights of any
person to acquire such Shares. Except as disclosed on Schedule 2.2(a),
all such Shares are owned by Seller free and clear of all liens,
charges, security interests, claims or
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encumbrances, and there are no subscriptions, options, warrants,
calls or other agreements or commitments to which Seller or the
Company is a party relating to the issuance, sale, purchase,
redemption, conversion, exchange, transfer or voting of any shares
of capital stock of the Company, and there are no outstanding
stockholder agreements, voting trusts, proxies or other agreements
or understandings with respect to or concerning the purchase, sale
or voting of any of the equity securities of the Company.
(b) The authorized capital stock of the Subsidiary consists of
3,000 shares of common stock, par value $0.10 per share, of which 100
shares are issued and outstanding. All such shares have been validly
issued, fully paid and are non-assessable and were not issued in
violation of any preemptive rights or rights of any person to acquire
such securities. Except as disclosed on Schedule 2.2(b), all such
shares are owned by the Company free and clear of all liens, charges,
security interests, claims or encumbrances, and there are no
subscriptions, options, warrants, calls or other agreements or
commitments to which Seller, the Company or the Subsidiary is a party
relating to the issuance, sale, purchase, redemption, conversion,
exchange, transfer or voting of any shares of capital stock of the
Subsidiary, and there are no outstanding stockholder agreements, voting
trusts, proxies or other agreements or understandings with respect to
or concerning the purchase, sale or voting of any of the equity
securities of the Subsidiary.
Section 2.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the other documents and instruments to be
executed and delivered by Seller pursuant hereto and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Seller. No other corporate approvals are required on the part of
Seller, the Company or the Subsidiary or their respective stockholders to
authorize the execution and delivery of this Agreement or the other documents
and instruments to be executed and delivered by Seller to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and, assuming the due authorization, execution
and delivery hereof by Purchaser, constitutes a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (b) is subject to general principles of equity.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for applicable requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), no filing with, and no permit, authorization, consent or
approval of, any governmental body or authority is necessary for the
consummation by Seller of the transactions contemplated by this
Agreement.
(b) Except as disclosed on Schedule 2.4, the execution and
delivery of this Agreement by Seller and the consummation by Seller of
the transactions contemplated
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hereby and compliance by Seller with any of the provisions hereof
will not (i) violate any provision of the certificate of
incorporation or by-laws of Seller, the Company or the Subsidiary,
(ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default or give rise
to any right of termination, cancellation, material modification or
acceleration under, or result in the creation of any lien or
encumbrance on any asset of the Company or the Subsidiary under, any
note, bond, mortgage, indenture, license, contract, lease, agreement
or other instrument or obligation to which Seller, the Company or
the Subsidiary is a party or by which any of them or any of their
properties or assets may be bound, except for such violations,
breaches, defaults, rights, liens and encumbrances that would not,
individually or in the aggregate, constitute a Material Adverse
Effect or (iii) assuming compliance with the HSR Act, violate any
order, writ, injunction, decree, statute, treaty, rule or regulation
applicable to Seller, the Company, the Subsidiary or any of their
properties or assets.
Section 2.5 FINANCIAL STATEMENTS. Attached as Schedule 2.5 are
true and correct copies of the Company's unaudited consolidated balance sheet
and statement of income for the year ended December 31, 1998, and the
Company's unaudited consolidated balance sheets and statements of income for
the three months ended March 31, 1999 (the "MARCH BALANCE SHEET") and the six
months ended June 30, 1999 (collectively, the "FINANCIAL Statements"). Except
as disclosed on Schedule 2.5, the Financial Statements have been prepared in
accordance with generally accepted accounting principles, subject to the
Company Accounting Policies (as described in Schedule 2.5), applied on a
consistent basis, have been prepared in accordance with the books and records
of the Company and the Subsidiary and fairly present in all material respects
the consolidated financial position of the Company and the Subsidiary as at
the dates thereof and the consolidated results of the Company and the
Subsidiary's operations for the periods then ended except, in the case of
interim financial statements, for normal year-end adjustments.
Section 2.6 ABSENCE OF CERTAIN CHANGES; NO UNDISCLOSED LIABILITIES.
Except as set forth in Schedule 2.6 or as contemplated by this Agreement,
since December 31, 1998, the Company and the Subsidiary have conducted their
businesses in the ordinary course consistent with past practices and have not
(a) suffered any change, condition, event or occurrence which, individually
or in the aggregate, is reasonably likely to constitute a Material Adverse
Effect, (b) entered into or modified any material transaction, other than
according to the ordinary and usual course of such businesses or (c) made any
material change in the Company's accounting principles. Except (x) for
liabilities or obligations incurred in the ordinary course of business, (y)
for liabilities or obligations incurred in connection with the transactions
contemplated by this Agreement and (z) as set forth on Schedule 2.6, since
December 31, 1998, the Company and the Subsidiary have not incurred any
liabilities or obligations (whether absolute, accrued, contingent or
otherwise) and, to the knowledge of Seller, there is no basis for any such
liability or obligation, that would be required to be reflected or reserved
against in a consolidated balance sheet of the Company prepared in accordance
with generally accepted accounting principles. None of the liabilities
described in clauses (x), (y) or (z) of the preceding sentence has or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
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Section 2.7 NO DEFAULT. Except as disclosed on Schedule 2.7,
neither the Company nor the Subsidiary is in default or violation (and no
event has occurred which with notice or the lapse of time or both would
constitute a default or violation) of any term, condition or provision of (a)
its certificate of incorporation or its by-laws, (b) any note, bond,
mortgage, indenture, license, agreement or other instrument or obligation to
which the Company or the Subsidiary is now a party or by which it or any of
its properties or assets may be bound except in the case of (b) for any
defaults or violations which, individually or in the aggregate, have not had
and are not reasonably likely to have a Material Adverse Effect.
Section 2.8 LITIGATION. Except as disclosed on Schedule 2.8 there
is no action, suit, arbitration, claim, proceeding or governmental
investigation pending nor, to the knowledge of Seller, has Seller, the
Company or the Subsidiary received any written notice or threat of any
action, suit, arbitration, claim, proceeding or governmental investigation
involving the Company or the Subsidiary before any court or other
governmental or regulatory body which is reasonably likely to result in a
liability of the Company or the Subsidiary in excess of $500,000 or have a
material adverse effect on the ability of Seller to consummate the
transactions contemplated by this Agreement.
Section 2.9 CERTAIN AGREEMENTS. Except as disclosed on Schedule
2.9, and excluding contracts, agreements or commitments for the sale or
purchase of products by the Subsidiary in the ordinary course of its business
as of the date hereof, neither the Company nor the Subsidiary is a party to
or bound by any contract, agreement or commitment (a) with respect to which
the aggregate of payments to become due from or to the Company or the
Subsidiary are in excess of $1,000,000 or for which the cost to terminate
such contract, agreement or commitment is in excess of $1,000,000 or (b)
which is otherwise material to the Company and the Subsidiary taken as a
whole. Except as disclosed on Schedule 2.9, neither the Company nor the
Subsidiary is a party to or bound by any contract, agreement or commitment
regarding the employment, services, consulting, termination or severance from
employment of any director, officer or employee of the Company or the
Subsidiary that provides for payments in excess of $100,000 in any year.
Section 2.10 TAXES. For the purposes of this Agreement, the term
"taxes" shall mean all taxes (including without limitation, leasing,
franchise, excise, income, gross receipts, sales, use, occupational, tangible
and intangible personal property, real property and stamp taxes and taxes
imposed under the Internal Revenue Code of 1986, as amended (the "CODE"),
payments in lieu of taxes, levies, imposts, duties, assessments, fees
(including, without limitation, license, documentation, recording and
registration fees), charges and withholdings of any nature whatsoever,
together with any penalties, fines, additions to tax, assessments or interest
thereon, whether disputed or undisputed, howsoever due and owing to any
federal, state, county, local or foreign government or to any governmental
agency, subdivision or taxing authority of any of the foregoing by the
Company or the Subsidiary or (for any taxable year with respect to which tax
liability could be imposed on the Company or the Subsidiary pursuant to
Treasury Regulation Section 1.1502-6) each consolidated, combined or
affiliated group of which the Company or the Subsidiary is or has been a
member. Except as disclosed on Schedule 2.10, the Company, the Subsidiary and
each consolidated, combined or affiliated group of which the Company or the
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Subsidiary is or has been a member for any taxable year for which tax
liability could be imposed on the Company or the Subsidiary (a) have filed
all federal, state, foreign and local tax returns in respect of income or
similar taxes required to be filed for tax years ended prior to the date of
this Agreement and in respect of which such filings have become due, except
for those tax returns for which requests for extensions have been filed, and
all such returns are complete and correct in all material respects, (b) have
paid or accrued all taxes shown to be due and payable on such returns, and
(c) have "open" years for federal income tax returns only as disclosed on
Schedule 2.10. Except as disclosed on Schedule 2.10, (i) there are no audits
or other examinations of the federal and state income tax returns of the
Company or the Subsidiary pending or underway by the IRS or the appropriate
state taxing authorities, and (ii) neither the Company nor the Subsidiary has
received from the IRS or from the taxing authorities of any state, county,
local or other jurisdiction any notice of underpayment of income taxes or
other deficiency which has not been paid or accrued, nor has any objection
been received with respect to any return or report filed by the Company or
the Subsidiary. Except as disclosed on Schedule 2.10, neither the Company nor
the Subsidiary is a party to any agreement providing for the allocation or
sharing of taxes. The provision made for taxes on the March Balance Sheet was
sufficient for the payment of all taxes owed as of the date thereof. Since
the date of the March Balance Sheet, neither the Company nor the Subsidiary
has incurred any taxes other than taxes incurred in the ordinary course of
business consistent in type and amount with past practices.
Section 2.11 ENVIRONMENTAL MATTERS. Except as disclosed on
Schedule 2.11, to the knowledge of Seller, the properties, assets and
operations of the Company and the Subsidiary are in compliance with
applicable federal, state and local laws, rules, regulations, orders,
decrees, judgments, permits, licenses, common law and other requirements
relating to the protection of human health or the environment including those
relating to the generation, handling, disposal, transportation, release,
threatened release or remediation of Hazardous Materials (as defined herein),
other than any such failures to be in compliance which are not, in the
aggregate, reasonably likely to constitute a Material Adverse Effect. With
respect to such properties, assets and operations, except as disclosed on
Schedule 2.11, (a) there are no conditions, circumstances, omissions, actions
or plans of the Company or the Subsidiary that are reasonably expected to
interfere with, prevent compliance with, impose liability under, or which
give rise to any claim under, any applicable Environmental Law, (b) neither
the Company nor the Subsidiary has received written notice from any court or
governmental or regulatory body that the Company or the Subsidiary is in
violation or allegedly in violation of, does not comply or allegedly does not
comply with, is responsible or potentially responsible for the investigation
or cleanup of Hazardous Materials under, or that there is a basis for
liability or alleged liability under, any applicable Environmental Law, (c)
there is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice of violation, investigation, proceeding, order, decree,
directive, notice or demand letter pending or outstanding relating to
Environmental Laws and relating to the Company or the Subsidiary or any uses,
activities or operations at or in connection with the Real Property
threatened against the Company or the Subsidiary or the Real Property
relating to any Environmental Laws and (d) neither the Company nor the
Subsidiary has received written notice of a claim pursuant to any agreement
that requires it to pay, reimburse, guaranty, pledge, defend, indemnify or
hold harmless any person for or against liabilities or costs arising in
connection with Hazardous Materials or under Environmental Laws. "Hazardous
Material"
8
means any substance: (i) the presence of which requires investigation or
remediation under any Environmental Law or (ii) which is defined, regulated
or designated as a "hazardous waste," "hazardous substance," pollutant, or
contaminant under any Environmental Law including, without limitation,
asbestos, polychlorinated biphenyls, petroleum, crude oil or natural gas, or
fractions thereof.
Section 2.12 EMPLOYEE BENEFIT MATTERS.
(a) All employee benefit plans covering current or former
employees of the Company and the Subsidiary or with respect to which
the Company or the Subsidiary has liability (excluding any benefit
plans referred to in the Agreement, dated October 1, 1994, among the
Company, the Pension Benefit Guaranty Corporation (the "PBGC") and the
other signatories thereto) are listed on Schedule 2.12(a), except such
benefit plans which are not material (the "BENEFIT PLANS"). True and
complete copies of the Benefit Plans and material related documents
have been made available to Purchaser. Except as provided in Schedule
2.12(a), to the extent applicable, the Benefit Plans comply in all
material respects with the requirements of applicable law including,
without limitation, the Employment Retirement Income Security Act of
1974, as amended ("ERISA"), and the Code, and any Benefit Plan intended
to be qualified under Section 401(a) of the Code has received a
favorable determination from the Internal Revenue Service (the "IRS")
or such Benefit Plan has been submitted to the IRS for determination of
its qualified status. There has been no application for waiver or
waiver of the minimum funding standards imposed by Section 412 of the
Code and no "accumulated funding deficiency" within the meaning of
Section 412(a) of the Code exists with respect to any Benefit Plan.
Except as provided in Schedule 2.12(a), neither the Company nor the
Subsidiary has incurred any material liability or penalty (i) under
Section 4975 of the Code or Section 406 of ERISA with respect to any
Benefit Plan, or (ii) to the PBGC (except for PBGC premiums). Except as
provided in Schedule 2.12(a), each Benefit Plan has been maintained and
administered in all material respects in compliance with its terms and
with applicable law including, without limitation, ERISA and the Code
to the extent applicable thereto. To the knowledge of Seller and the
Company, there are no pending, nor has Seller, the Company or the
Subsidiary received notice of any threatened, material claims (other
than routine claims for benefits) against or otherwise involving any of
the Benefit Plans. All material contributions required to be made as of
the date of this Agreement to the Benefit Plans to which the Company or
the Subsidiary is required to contribute have been made or provided
for.
(b) Except as provided in Schedule 2.12(b), no Benefit Plan
provides for post-employment health, life insurance, or other welfare
benefit coverage, other than as may be required under "COBRA" pursuant
to Part VI of Title I of ERISA. Except as set forth on Schedule 2.12,
each Benefit Plan can be amended or terminated at any time without
approval from any person (other than the board of directors of the plan
sponsor or the plan administrator), without advance notice (other than
the notice required by Section 204(h) of ERISA for defined benefit
pension plans), and without liability other than for benefits accrued
prior to such amendment or termination. Except as disclosed in
9
Schedule 2.12(b), with respect to each Benefit Plan and any other
similar arrangement or plan either currently or previously
terminated, maintained, or contributed to by any entity which either
is currently or was previously under common control with the Company
as determined under Code Section 414 or ERISA Section 4001(a)(14),
no event has occurred and no condition exists that after the Closing
Date could subject Purchaser, directly or indirectly, to any
liability under Section 412, 413, 4971, 4975, or 4980B of the Code
or Section 302, 502, 515, 601, 606, or Title IV of ERISA. Except as
set forth on Schedule 2.12(b), no agreement, commitment, or
obligation exists to increase any benefits under any Benefit Plan or
to adopt any new Benefit Plan. No Benefit Plan has any unfunded
accrued benefits that are not fully reflected in the Financial
Statements to the extent required by generally accepted accounting
principles. No Benefit Plan is a multiemployer plan (as defined in
ERISA Sections 3(37) or 4001(a)(3). Neither the Company nor the
Subsidiary contributes to or maintains any multiple-employer plan
within the meaning of Section 413 of the Code.
(c) Seller has provided Purchaser with a list of each
Transferred Employee who participates in the SERP (as defined in
Section 4.13(i)) and the current level of benefits provided to such
SERP participants.
Section 2.13 BROKERS. No broker, finder or investment banker
(other than Xxxxxxx Xxxxx Xxxxxx Inc.) is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by and on behalf of Seller,
the Company or the Subsidiary.
Section 2.14 LABOR RELATIONS. Except as set forth in Schedule
2.14, as of the date hereof (a) there are no collective bargaining agreements
to which either the Company or the Subsidiary is a party or by which it is
bound and (b) to the knowledge of Seller, there are no pending or threatened
activities regarding the establishment, modification or extension of any such
collective bargaining agreement.
Section 2.15 INTELLECTUAL PROPERTY. Set forth on Schedule 2.15 is
a complete list of, as of the date thereon, all patents and trademarks owned
or licensed by the Company or the Subsidiary. Except as set forth in Schedule
2.15, the Company or the Subsidiary owns or possesses adequate rights to use
all patents, trademarks, trade names, inventions, processes, designs,
formulas, know-how and other intellectual property rights used by it in the
conduct its business as presently conducted. Except as set forth in Schedule
2.15, to the knowledge of the Company, neither the Company nor the Subsidiary
has received any written notice or claim since December 31, 1998 asserting
that the Company or the Subsidiary has infringed or is infringing the
intellectual property rights of any third party.
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Section 2.16 REAL PROPERTY.
(a) Set forth on Schedule 2.16(a) is a complete list of all
real property (i) owned by the Company or the Subsidiary (the "OWNED
PROPERTY"), or in which the Company or the Subsidiary has legal,
beneficial or equitable title together with the principal uses for
which each such Owned Property is used and (ii) with respect to which
the Company or the Subsidiary is lessee, sublessee, licensee or other
occupant or user (the "LEASED PROPERTY" and, collectively with the
Owned Property, the "REAL PROPERTY"), together with the principal uses
for which each Leased Property is used.
(b) Seller has not received written notice of and has no
knowledge of any claim of adverse possession or prescriptive rights
involving any of the Real Property which has had or is reasonably
likely to have a Material Adverse Effect. All of the Real Property is
currently being ingressed and egressed by the Company or the Subsidiary
to and from the public street systems for all usual street and road
purposes. The Company has no knowledge of any order or decree requiring
repair, alteration, or correction of any existing condition affecting
any Real Property owned by the Company. Neither the Company nor the
Subsidiary has received written notice of any material breach or event
of default on its part under the lease for any Leased Property which is
material to its business and has no knowledge of any material breach or
default on the part of any other party to such lease. All material
leases for Leased Property are in full force and effect and are valid
and enforceable against the parties thereto in accordance with their
terms. No material rental or other payments are delinquent under any
such leases. Except as set forth on Schedule 2.16(b), the transactions
contemplated hereby do not require the consent of any party to, and
will not constitute an event of default under or permit any party to
terminate or change the existing terms of, any material lease.
(c) Except as disclosed on Schedule 2.16(c), the Company or
the Subsidiary, as applicable, has good and marketable title in fee
simple to the Owned Property, good leasehold title to the Leased
Property, and good title to all assets, businesses, plants, buildings,
fixtures and improvements located on the Owned Property, in each case
free and clear of any mortgages, deeds of trust, liens, security
interests, judgments, options, encroachments, easements, rights-of-way
and other imperfections of title. Except as disclosed on Schedule
2.16(c), neither the Company's nor the Subsidiary's assets, business or
properties are subject to any restrictions with respect to the
transferability thereof, and the Company's and the Subsidiary's title
thereto will not be affected in any material way by the transactions
contemplated hereby.
Section 2.17 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. Except as
set forth on Schedule 2.17, each of the Company and the Subsidiary is in
compliance in all material respects with, and has for the past two years
complied in all material respects with, all applicable laws, regulations and
orders. Except as set forth on Schedule 2.17, neither the Company nor the
Subsidiary has received written notice from any governmental or regulatory
body of any violation or alleged violation of, or is subject to material
liability for past or continuing violation of, any applicable laws,
regulations and orders. The Company and the Subsidiary have all
11
material licenses, permits, approvals, authorizations and consents of all
governmental or regulatory bodies and all certification organizations
required, and all exemptions from requirements to obtain or apply for any of
the foregoing, for the conduct of the business and the operation of the
Company's and the Subsidiary's facilities. Except as set forth in Schedule
2.17, the Company and the Subsidiary are and have been in compliance, in all
material respects, with all such permits, licenses, approvals, authorizations
and consents.
Section 2.18 PRODUCT WARRANTY AND PRODUCT LIABILITY. Schedule 2.18
contains a true, correct and complete copy of the standard warranty or
warranties of the Subsidiary for sales of Products and, except as expressly
identified therein, there are no warranties, deviations from standard
warranties, commitments or obligations with respect to the return, repair or
replacement of Products. Schedule 2.18 sets forth the provision for warranty
expense reflected on the Subsidiary's financial statements for the years
ending December 31, 1997 and December 31, 1998 and for the six months ending
June 30, 1999. Schedule 2.18 also contains a description of all pending
product warranty and product liability claims. There are no defects in
design, construction or manufacture of Products that would adversely affect
performance or create an unusual risk of injury to persons or property.
Except as set forth on Schedule 2.18, since June 17, 1997 none of the
Products has been the subject of any replacement, field fix, retrofit,
modification or recall campaign and, to the Subsidiary's knowledge, no facts
or conditions exist which could reasonably be expected to result in such a
recall campaign. All Products have been designed, manufactured and labeled so
as to meet and comply in all material respects with all governmental
standards and specifications and all applicable laws currently in effect, and
have received all governmental approvals necessary to allow their sale and
use. "PRODUCTS" means any and all products currently or at any time
previously designed, manufactured, distributed or sold by the Subsidiary or
any predecessor under any brand name or xxxx under which products are or have
been manufactured, distributed or sold by the Subsidiary.
Section 2.19 EMPLOYMENT COMPENSATION. Schedule 2.19 contains a
true and correct list of all employees to whom the Company or the Subsidiary
is paying compensation, including bonuses and incentives, at an annual rate
in excess of $100,000 for services rendered or otherwise.
Section 2.20 CERTAIN RELATIONSHIPS. Schedule 2.20 describes each
lease, contract, agreement or other commitment between the Company or the
Subsidiary, on the one hand, and any Affiliate or officer or director of the
Company or the Subsidiary, on the other hand, obligating the Company or the
Subsidiary to make payments to such Affiliate or officer or director other
than agreements related to the employment of any such officer or director. No
Affiliate or officer or director of the Subsidiary has any direct or indirect
interest in (a) any entity that does business with the Company or the
Subsidiary in connection with the operation of, or is competitive with, the
business of the Company and the Subsidiary or (b) any property, asset or
right that is used by the Company or the Subsidiary in the conduct of its
business. "AFFILIATE" means the Company or the Subsidiary and any entity of
which the Company or the Subsidiary owns, directly or indirectly, a 10% or
greater equity interest.
12
Section 2.21 YEAR 2000. Except as identified on Schedule 2.21, to
the Company's and the Subsidiary's knowledge, none of the Products and none
of the personal property, equipment or assets owned or leased by the Company
or the Subsidiary, including but not limited to computer software, databases,
hardware, controls and peripherals, has characteristics or qualities that may
cause it to fail to operate and produce data on and after January 1, 2000
(including taking into effect that such year is a leap year), or use data
based on time periods on or after January 1, 2000 (including taking into
effect that such year is a leap year), or use data based on time periods on
or after January 1, 2000 (including taking into effect that such year is a
leap year) accurately and without delay, interruption or error solely as a
result of the fact that the time at which and the date on which such software
is operating is on or after 12:00 a.m. on January 1, 2000 (including taking
into effect that such year is a leap year) (a "YEAR 2000 DEFECT")). Except as
identified on Schedule 2.21, to the Company's and the Subsidiary's knowledge,
none of the property or assets owned or leased by the Company or the
Subsidiary will fail to perform in any material respect or require any
material repair, rewrite, conversion or other adaptation because of a Year
2000 Defect. To the Company's and the Subsidiary's knowledge, no software
licensed by the Company or the Subsidiary contains a Year 2000 Defect. The
Company and the Subsidiary have no obligations under warranty or service or
other agreements to rectify a Year 2000 Defect of any person or to indemnify
any person in the event the Company or the Subsidiary experience a Year 2000
Defect.
Section 2.22 INSURANCE. Schedule 2.22 sets forth a complete list
and description of all policies (including the carrier, a description of
coverage and the years for which such policies are applicable) of workers'
compensation, general and product liability, automotive liability and
umbrella or excess liability insurance for which the Company or the
Subsidiary are named insureds (collectively, the "INSURANCE POLICIES").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 3.1 ORGANIZATION. Purchaser is a corporation validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified or licensed or in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary, except where the failure to have such power or
authority or to be qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect. Purchaser
has heretofore made available to Seller accurate and complete copies of its
certificate or articles of incorporation and by-laws, or equivalent
organizational documents, and such documents have not been amended to date.
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Section 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has
full corporate power and authority to execute and deliver this Agreement and
to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action, and no other corporate proceedings on the part of Purchaser
are necessary to authorize this Agreement or to consummate the transactions
so contemplated. This Agreement has been duly and validly executed and
delivered by Purchaser and, assuming the due authorization, execution and
delivery hereof by Seller, constitutes a valid and binding agreement of
Purchaser, enforceable against it in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors'
rights generally and (b) is subject to general principles of equity.
Section 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for applicable requirements of the HSR Act, no
filing with, and no permit, authorization, consent or approval of any
governmental body or authority is necessary for the consummation by
Purchaser of the transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement by Purchaser
and the consummation by Purchaser of the transactions contemplated
hereby and compliance by Purchaser with any of the provisions hereof
will not (i) violate any provision of the certificate or articles of
incorporation or by-laws, or equivalent organizational documents, of
Purchaser, (ii) result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default or give rise
to any right of termination, cancellation, material modification or
acceleration under, any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation to which Purchaser is a party or by which
Purchaser or any of its properties or assets may be bound, except for
such violations, conflicts and breaches that would not, individually or
in the aggregate, constitute a Material Adverse Effect or (iii)
assuming compliance with the HSR Act, violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Purchaser
or any of its properties or assets.
Section 3.4 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser.
Section 3.5 FUNDS AVAILABLE. Purchaser will have available to it
as of the Closing immediately available funds necessary to consummate the
transactions contemplated hereby. To the extent such funds are to be provided
by third parties, Purchaser has provided the Company with complete and
correct copies of all documents relating to the provision of such funds.
Section 3.6 ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding or investigation pending, or to the knowledge of Purchaser,
threatened, against Purchaser which
14
might adversely affect or restrict Purchaser's ability to consummate the
transactions contemplated by this Agreement.
Section 3.7 INVESTMENT INTENT. Purchaser is purchasing the Shares
hereunder solely for its own account and with no intention of distributing or
reselling the Shares or any part thereof, or interest therein, in any
transaction that would be in violation of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or any other securities laws of the United
States of America or any state thereof.
Section 3.8 STATUS AS ACCREDITED INVESTOR. Purchaser is an
"ACCREDITED INVESTOR" (as that term is defined in Rule 501 of Regulation D
under the Securities Act). Purchaser has such knowledge and experience in
business and financial matters so that Purchaser is capable of evaluating the
merits and risks of an investment in the Shares. Purchaser understands the
full nature and risk of an investment in the Shares. Purchaser further
acknowledges that it has had access to the books and records of the Company
and the Subsidiary, is generally familiar with the business being conducted
by the Company and the Subsidiary and has had an opportunity to ask questions
concerning the Company and the Subsidiary and the Shares; PROVIDED, HOWEVER,
that nothing herein shall affect the representations and warranties of Seller
hereunder.
Section 3.9 NO OUTSIDE RELIANCE. Purchaser has not relied and is
not relying upon any statement or representation not made in this Agreement
or a Schedule hereto or any document required to be provided by Seller
pursuant to this Agreement.
ARTICLE IV
COVENANTS
Section 4.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Closing, Seller will cause the Company to, and the Company
will cause the Subsidiary to, conduct its operations according to its
ordinary and usual course of business and consistent with past practices, and
Seller will cause the Company to, and the Company will cause the Subsidiary
to, use its commercially reasonable best efforts, consistent with prudent
business judgment, to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain
satisfactory relationships with licensors, suppliers, contractors,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, and except as otherwise
contemplated in Schedule 4.1 or elsewhere in this Agreement, prior to the
Closing, Seller will cause the Company not to, and the Company will cause the
Subsidiary not to, without the prior written consent of Purchaser (not to be
unreasonably withheld):
(a) amend its certificate of incorporation or by-laws;
(b) issue, sell, encumber or deliver or agree or commit to
issue, sell, encumber or deliver any shares of capital stock, or issue
any securities convertible into, exchangeable for or representing a
right to purchase or receive, or enter into any contract or arrangement
with respect to the issuance of, shares of capital stock;
15
(c) split, combine or reclassify any shares of its capital
stock; declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in
respect of its capital stock; or redeem or otherwise acquire any of its
securities or any securities of the Subsidiary;
(d) incur or guarantee any additional indebtedness for borrowed
money other than (i) through intercompany borrowings from Seller in
the ordinary course of business or (ii) borrowings under Seller's
existing revolving credit facility and accounts receivable facility in
the ordinary course;
(e) enter into, amend any existing, or adopt any new bonus,
pension, change of control, deferred compensation, health, plant
closing, profit sharing, severance or other employee benefit agreements
that increase the total compensation of any officer, director or
employee of the Company or the Subsidiary, increase the compensation or
fringe benefits of any director, officer or employee of the Company or
the Subsidiary, or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing, except for any of the foregoing
with respect to employees of the Company or the Subsidiary which are
(i) implemented in the ordinary course of business consistent with past
practice and will not result in a material increase in benefits or
compensation expense to the Company or the Subsidiary or (ii) to be
paid by Seller in cancellation of any outstanding options to purchase
Seller's capital stock;
(f) except for capital expenditures contemplated by clause (g)
below and except in connection with the manufacture and sale of
products in the ordinary course of business consistent with past
practice, acquire (whether by merger, consolidation or otherwise), sell
(whether by merger, consolidation or otherwise), lease, encumber,
transfer or dispose of in excess of $500,000 of assets;
(g) make or commit to make any capital expenditures other than
(i) consistent with the amended capital spending plan for the
Subsidiary in 1999 attached as Schedule 4.1(g) and (ii) additional
capital expenditures not exceeding $250,000 individually and not
exceeding $2.0 million in the aggregate;
(h) make any material tax elections (except in the ordinary
course of business consistent with past practice) or settle or
compromise any material federal, state or local income tax liability in
excess of any amounts that may have been reserved therefor, or waive or
extend the statute of limitations in respect of any such taxes;
(i) (i) materially modify, amend or terminate any material
contract or agreement to which it is a party or waive, release or
assign any material rights or claims thereunder or (ii) settle any
material suit or claim of liability against the Company;
(j) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the
accounting principles, methods or practices used by it;
16
(k) adopt a plan of complete or partial liquidation,
dissolution, consolidation, restructuring, recapitalization,
reorganization or merger;
(l) enter into an agreement or make a commitment (other than
agreements or commitments under existing purchase arrangements) for the
purchase or supply of products or components of products, which
involves consideration or other expenditure, or to which the aggregate
of payments to become due from or to the Company or the Subsidiary are,
in excess of $1.0 million;
(m) directly or indirectly (through a representative or
otherwise) solicit or furnish any information to any prospective buyer,
commence, or conduct presently ongoing, negotiations with any other
party or enter into any agreement with any other party concerning the
sale of the Company, the Subsidiary, the Company's or the Subsidiary's
assets or business or any part thereof, or any equity securities of the
Company or the Subsidiary (an "ACQUISITION PROPOSAL"), and Seller shall
immediately advise Purchaser of the receipt of any Acquisition
Proposal; or
(n) enter into an agreement binding the Company or the
Subsidiary to do any of the foregoing.
Section 4.2 ACCESS TO INFORMATION. From the date of this Agreement
to the Closing, upon reasonable notice and to the extent permitted by
applicable law, Seller will cause the Company to cause, and the Company will
cause the Subsidiary to cause, their respective officers, directors,
employees and auditors and agents to (a) give Purchaser and its accountants,
counsel and other authorized representatives, reasonable access during normal
business hours to the plants, offices, warehouses and other facilities, to
Company and Subsidiary management, and to the books and records of the
Company and the Subsidiary, (b) permit Purchaser and its authorized
representatives to make such reasonable inspections as they may require and
(c) furnish to Purchaser and its authorized representatives such financial
and operating data and other information with respect to the business and
properties of the Company and the Subsidiary as Purchaser may from time to
time reasonably request. Without limiting the foregoing, Seller will cause
the Company to, and the Company will cause the Subsidiary to, provide
Purchaser with interim monthly financial statements of the Company and the
Subsidiary as and when they are available.
Section 4.3 GOVERNMENT APPROVALS. Each of the parties hereto
agrees to use its commercially reasonable best efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement, including without limitation
compliance with the HSR Act.
Section 4.4 THIRD PARTY CONSENTS. The Company and the Subsidiary
will use commercially reasonable efforts prior to the Closing to obtain all
consents, approvals and agreements of, and to give all notices and make all
filings with, any third parties necessary to authorize, approve or permit the
consummation of the transactions contemplated by this Agreement.
17
Section 4.5 PUBLIC ANNOUNCEMENTS. Prior to the Closing, neither
party to this Agreement shall issue or seek the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, except
as agreed by the parties or where such release or announcement is required by
law or by the rules of the New York Stock Exchange; provided that, prior to
making any permitted announcement, such party will seek advice of counsel as
to the need for such announcement and will utilize its commercially
reasonable best efforts to give the other party notice thereof and to consult
with the other party regarding the timing and terms thereof.
Section 4.6 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) Purchaser acknowledges and agrees that all rights to
indemnification now existing in favor of the directors, officers,
employees and agents of the Company and the Subsidiary (the
"INDEMNIFIED PARTIES") as provided in their respective certificates of
incorporation or by-laws or by contract or otherwise as in effect on
the date hereof with respect to matters occurring prior to the Closing
shall survive the Closing and shall continue in full force and effect
for a period of not less than six years from the Closing.
(b) Notwithstanding anything herein to the contrary, if any
claim, action, suit, proceeding or investigation (whether arising
before, at or after the Closing) is made or threatened against any
Indemnified Party, on or prior to the sixth anniversary of the Closing,
the provisions of this Section 4.6 shall continue in effect until the
final disposition of such claim, action, suit, proceeding or
investigation.
(c) This covenant is intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties and their
respective heirs and legal representatives. The Indemnification
provided for herein shall not be deemed exclusive of any other rights
to which an Indemnified Party is entitled, whether pursuant to law,
contract or otherwise. The Company or Subsidiary shall pay all
expenses, including attorneys' fees, that may be incurred by any
Indemnified Party in enforcing his or her indemnification rights.
Section 4.7 EMPLOYEE CONTRACTS. Purchaser agrees to honor, and
from and after the Closing shall cause the Company and the Subsidiary to
honor, in accordance with their respective terms as in effect on the date
hereof, all of the employment, termination, severance, indemnity and bonus
agreements and arrangements to which the Company or the Subsidiary is a party
and which are set forth on Schedule 4.7. In the event that the Company, the
Subsidiary or Purchaser or any of their respective successors or assigns (a)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger
or (b) transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, to the extent necessary to
effectuate the purpose of this Section 4.7, proper provision shall be made so
that the successors and assigns of the Company, the Subsidiary or Purchaser
shall succeed to the obligations set forth in this Section 4.7 and none of
the actions described in clauses (a) or (b) shall be taken until such
provision is made.
18
Section 4.8 RESIGNATION OF DIRECTORS. Prior to the Closing, Seller
will cause the Company to deliver to Purchaser evidence satisfactory to
Purchaser of the resignation of all directors of the Company and the
Subsidiary, effective upon the Closing.
Section 4.9 NOTIFICATION OF CERTAIN MATTERS. Seller shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to Seller,
of (a) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or
warranty of either party contained in this Agreement to be untrue or
inaccurate and (b) any failure of Seller or Purchaser to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by either party hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.9 shall not limit or otherwise affect the remedies
available hereunder to the party giving or receiving such notice.
Section 4.10 SETTLEMENT OF INTERCOMPANY ACCOUNTS. At or prior to
the Closing, Seller shall cause to be settled or canceled all intercompany
advances and loans between the Company and the Subsidiary, on the one hand,
and Seller, on the other hand.
Section 4.11 RECEIVABLES SECURITIZATION PROGRAM. At or prior to
the Closing, the Subsidiary shall acquire from Seller's receivables
securitization program, or Seller shall otherwise permit Purchaser to
acquire, all of the receivables in such program that originated from sales of
product by the Subsidiary.
Section 4.12 STRADDLE PERIOD TAX PROVISIONS.
(a) Purchaser shall timely prepare and file with the appropriate
authorities all tax returns required to be filed by the Company or the
Subsidiary for any taxable period that includes (but does not end on)
the Closing Date, and for any taxable period of the Company or the
Subsidiary that ends on or before the Closing Date with respect to
which the due date (including extensions) for the timely filing of a
return has not passed, and will pay all taxes due with respect to such
returns, reports and forms (other than returns or reports in respect
of (i) United States federal income taxes, or (ii) income or similar
taxes of any state in which the Company is included in a combined
report or consolidated return with Seller for such period, which
returns or reports shall be filed by Seller). Purchaser and Seller
agree to cause the Company and the Subsidiary to file all tax returns
for the period including the Closing Date on the basis that (x) the
Closing occurred as of 5:00 p.m. on the Closing Date, and (y) the
relevant taxable period ended as of the close of business on the
Closing Date, unless the relevant taxing authority will not accept a
return, report or form filed on that basis. In the case of any taxable
period including, but not ending on, the Closing Date, the income of
the Company and the Subsidiary will be apportioned to the period up to
and including the Closing Date and the period after the Closing Date by
closing the books of the Company and the Subsidiary as of the end of
the Closing Date.
(b) Seller, the Company, the Subsidiary and Purchaser shall
reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives reasonably to
cooperate, in preparing and filing all returns, reports
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and forms relating to taxes (including amended returns and claims for
refund), including maintaining and making available to each other all
records necessary in connection with taxes and in resolving all
disputes and audits with respect to all taxable periods relating to
taxes. Purchaser and Seller recognize that Seller and its affiliates
will need access, from time to time, after the Closing Date, to
certain accounting and tax records and information held by the Company
and the Subsidiary to the extent such records and information pertain
to events occurring prior to the Closing Date; therefore, Purchaser
agrees, and agrees to cause the Company and the Subsidiary, to (i) use
their best efforts to properly retain and maintain such records until
such time as Seller agrees that such retention and maintenance is no
longer necessary, and (ii) allow Seller and its agents and
representatives (and agents or representatives of any of its
affiliates), at time and dates mutually acceptable to the parties, to
inspect, review and make copies of such records as Seller may deem
necessary or appropriate from time to time, such activities to be
conducted during normal business hours and at Seller's expense.
(c) All transfer, documentary, sales, use, registration and
other such taxes incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by Purchaser, and Seller
and Purchaser shall cooperate in timely making all filings, returns,
reports and forms as may be required to comply with the provisions of
such tax laws.
(d) Seller hereby indemnifies and holds harmless Purchaser from
and against all taxes, liabilities, costs and expenses incurred by
Purchaser, the Company or the Subsidiary resulting from or arising out
of any liability of the Company or the Subsidiary for taxes of any
person other than the Company or the Subsidiary under Treasury
Regulation Section 1.1502-6 (or any similar provision of any state,
local or foreign regulation).
Section 4.13 PENSION AND SAVINGS PLANS.
(a) Each employee of the Subsidiary who is a current participant
in the Falcon Building Products, Inc. Employee Savings Plan (the
"SAVINGS PLAN") (i) shall have his or her accrued benefit under the
Savings Plan become 100% vested and nonforfeitable as of the Closing
Date and (ii) shall be entitled to receive an allocation of any and
all employer contributions made to the Savings Plan for the plan year
which includes the Closing Date, including the contributions required
to be made pursuant to paragraph (f) of this Section 4.13. Each
employee of the Subsidiary who is a current participant in the Falcon
Building Products, Inc. Cash Balance Pension Plan (the "CASH BALANCE
PLAN") shall have his or her accrued benefit under the Cash Balance
Plan become 100% vested and nonforfeitable.
(b) Seller shall transfer, or cause the trustee of the Cash
Balance Plan to transfer, to the trustee of a qualified defined benefit
pension plan maintained by Purchaser or any entity required by Section
414 of the Code to be treated as a single employer with Purchaser (an
"ERISA AFFILIATE") (either currently existing or hereinafter
established by
20
Purchaser or such ERISA Affiliate) (the "TRANSFEREE PENSION PLAN")
such amounts (in cash or in marketable securities at market values
determined by the plan trustee) under the Cash Balance Plan as are
required by Section 414(1) of the Code for each employee of the
Subsidiary on the Closing Date (the "TRANSFERRED EMPLOYEES"). The
transferred amount shall be calculated as of the Closing Date by
Seller's actuaries, and agreed to by Purchaser's actuaries (such
agreement not to be unreasonably withheld), using service and
compensation for service to the Closing Date, and on the basis of the
actuarial assumptions set forth in Schedule 4.13(b), together with
interest thereon at the rate of six percent (6%), calculated on the
basis of the actual number of days elapsed divided by 365, from the
Closing Date to the date of transfer, and considering (i) as plan
assets actual and receivable contributions through the Closing Date and
(ii) as plan liabilities benefits accrued through the Closing Date.
Unless otherwise agreed to in writing by Purchaser and Seller, the
transfer date shall occur within 60 days after Purchaser obtains and
presents to Seller evidence satisfactory to Seller that the Transferee
Pension Plan is qualified under the applicable provisions of the Code.
Such evidence of qualification shall be supplied by Purchaser within 90
days of the Closing Date.
(c) Seller shall transfer, or cause the trustee of the Savings
Plan to transfer, to the trustee of a qualified defined contribution
pension plan maintained by Purchaser (either currently existing or
hereinafter established by Purchaser or an ERISA Affiliate of
Purchaser) (the "TRANSFEREE SAVINGS PLAN"), in cash or in marketable
securities at market values determined by the plan trustee, the entire
value of each Transferred Employee's accounts under the Savings Plan as
determined under the provisions of the Savings Plan. Unless otherwise
agreed by Seller and Purchaser, the transfer shall occur within 60 days
after Purchaser presents to Seller evidence satisfactory to Seller that
the Transferee Savings Plan is qualified under the applicable
provisions of the Code. Such evidence of qualification shall be
provided by Purchaser within 90 days of the Closing Date.
(d) After the transfers described above, none of Seller, the
Cash Balance Plan or the Savings Plan, or any fiduciary of such plans,
shall have any liability or obligation to pay or otherwise provide to
the Transferred Employees any benefits accrued or provided for under
the Cash Balance Plan or the Savings Plan, and Purchaser, the
Transferee Pension Plan and the Transferee Savings Plan shall assume
full liability for such benefits, and shall indemnify and hold harmless
Seller, the Cash Balance Plan, the Savings Plan and the fiduciaries of
such plans from and against the same.
(e) The Transferee Pension Plan and Transferee Savings Plan (i)
shall provide respectively, for the payment of all benefits accrued
under the Cash Balance Plan and the Savings Plan (within the meaning of
Section 411 and other sections of the Code) prior to the Closing Date
by the Transferred Employees; and (ii) shall recognize, respectively,
the service, prior to the Closing Date, of the Transferred Employees
who participated in the Cash Balance Plan and the Savings Plan
immediately prior to the Closing Date for eligibility, vesting and
benefit accrual purposes under the Transferee Pension Plan and
Transferee Savings Plan to the same extent that such service is
recognized for such
21
purposes under the Cash Balance Plan and the Savings Plan prior to the
Closing Date (subject to the 100% vesting set forth in Section 4.13(a)
above).
(f) At Closing, Seller shall cause the Company or the Subsidiary
to pay over to the Savings Plan all employer and employee
contributions of the Company and the Subsidiary to the Savings Plan not
made as of the Closing Date for all calendar months ending on or prior
to the Closing Date and for the portion of the calendar month in which
the Closing Date occurs. For purposes of this paragraph, the employee
contributions shall be those amounts withheld or required to be
withheld from employees' compensation for the period prior to and
including the Closing Date, and employer contributions shall be the
employer contributions that would be required to be made with respect
to such employee contributions.
(g) At Closing, Seller shall cause the Company or the Subsidiary
to pay over to the Cash Balance Plan the sum of (i) all contributions
of the Company and the Subsidiary to the Cash Balance Plan for the
plan years of the plan ending prior to the Closing Date remaining
uncontributed, and (ii) a pro rata portion of the Company's and/or
Subsidiary's annual contribution for the portion of the plan year in
which the Closing Date occurs, such pro-rata portion to be based
solely on service and compensation for services through the Closing
Date. In each case, the annual contribution shall be the amount
necessary to meet the minimum funding standards of ERISA Section 302
and Section 412 of the Code, determined in accordance with the most
recent actuarial valuation for the Plan.
(h) The Company and the Subsidiary shall continue to make
contributions to the Savings Plan and the Cash Balance Plan in
accordance with their respective historical business practices through
the Closing Date.
(i) As of the Closing Date, Purchaser shall assume and shall
continue, with respect to and for the benefit of all Transferred
Employees, the Falcon Building Products, Inc. Supplemental Retirement
Plan ("SERP") in accordance with Section 9.5 thereof. Purchaser shall
furthermore assume all liability under the SERP relating to the
Transferred Employees, and shall indemnify and hold Seller and the SERP
harmless from and against any and all liability relating thereto.
Section 4.14 INSURANCE. Prior to the Closing, Seller shall cause
the counter parties to the indemnity agreements and claims handling
agreements related to the Insurance Policies (including self-insured,
deductible, retrospective and guaranteed cost insurance plans) to enter into
agreements, on customary terms and conditions (including but not limited to
posting customary letters of credit or other security or collateral), with
the Company and/or the Subsidiary (or Purchaser) which shall either novate or
amend such indemnity agreements and claims handling agreements thereby
transferring to the Company and/or the Subsidiary (or Purchaser) the assumed
worker's compensation, general and automobile plan liabilities that relate to
or arise out of the Company and the Subsidiary's operations. Following the
Closing, (a) Seller shall continue to provide the Company and the Subsidiary
full access to coverage under
22
the Insurance Policies, and (b) Seller shall not take any action (other than
submission of claims) in with respect to the Insurance Policies that would
have an adverse effect on the Company's or the Subsidiary's ability to avail
themselves of the coverage under the Insurance Policies.
Section 4.15 CERTAIN AGREEMENTS. From and after the Closing,
Seller shall not take any actions with respect to the agreements listed in
Items 15, 26, 27, 28 or 29 of Schedule 2.9 that adversely effects the
Subsidiary without the prior written consent of Purchaser.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligation
of Purchaser to purchase the Shares and effect the Closing shall be subject
to the satisfaction or waiver at or prior to the Closing of the following:
(a) no statute, rule, regulation, order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any court
or governmental authority which makes illegal the purchase and sale of
the Shares or otherwise prohibits the consummation of the transactions
contemplated hereby;
(b) any waiting period applicable to the purchase and sale of
the Shares under the HSR Act shall have terminated or expired;
(c) there shall have been no material breach by Seller in the
performance of any of its covenants, agreements or obligations herein;
none of the representations and warranties of Seller contained or
referred to in Article II shall fail to be true and correct as of the
date hereof and on the Closing Date as though made on such date, except
for (i) representations and warranties that speak as of a specific date
other than the Closing Date (which need only be true and correct as of
such date), (ii) representations and warranties which are not qualified
by Material Adverse Effect or otherwise by material adversity (which
need be true and correct except for such inaccuracies as in the
aggregate (together with the inaccuracies referred to in the following
clause (iii)) would not have a Material Adverse Effect), (iii)
representations and warranties which are qualified by Material Adverse
Effect or otherwise by material adversity shall also be true and
correct without regard to such qualification except for such
inaccuracies as in the aggregate (together with the inaccuracies
referred to in the preceding clause (ii)) would not have a Material
Adverse Effect and (iv) changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in
writing by Purchaser; and there shall have been delivered to Purchaser
a certificate to such effect, dated the Closing Date and signed by the
President or other senior executive officer of Seller;
(d) Seller shall have performed in all material respects all
agreements herein required to be performed by it on or prior to the
Closing; and
23
(e) all consents under or pursuant to the agreements listed on
Schedule 5.1(e) shall have been obtained.
Section 5.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of
Seller to sell the Shares and effect the Closing shall be subject to the
satisfaction or waiver at or prior to the Closing of the following:
(a) no statute, rule, regulation, order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any court
or governmental authority which makes illegal the purchase and sale of
the Shares or otherwise prohibits the consummation of the transactions
contemplated hereby;
(b) any waiting period applicable to the purchase and sale of
the Shares under the HSR Act shall have terminated or expired;
(c) there shall have been no material breach by Purchaser in
the performance of any of its covenants, agreements or obligations
herein; none of the representations and warranties of Purchaser
contained or referred to in Article III shall fail to be true and
correct as of the date hereof and on the Closing Date as though made on
such date, except for (i) representations and warranties that speak as
of a specific date other than the Closing Date (which need only be true
and correct as of such date), (ii) representations and warranties which
are not qualified by Material Adverse Effect or otherwise by material
adversity (which need be true and correct except for such inaccuracies
as in the aggregate (together with the inaccuracies referred to in the
following clause (iii)) would not have a Material Adverse Effect),
(iii) representations and warranties which are qualified by Material
Adverse Effect or otherwise by material adversity shall also be true
and correct without regard to such qualification except for such
inaccuracies as in the aggregate (together with the inaccuracies
referred to in the preceding clause (ii)) would not have a Material
Adverse Effect and (iv) changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to in
writing by Seller; and there shall have been delivered to Seller a
certificate to such effect, dated the Closing Date and signed by the
President or other senior executive officer of Purchaser;
(d) Purchaser shall have performed in all material respects
all agreements herein required to be performed by it on or prior to the
Closing; and
(e) all consents under or pursuant to the agreements listed on
Schedule 5.1(f) shall have been obtained.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
24
(a) by mutual written consent of Purchaser and Seller;
(b) by Purchaser or Seller if the Closing shall not have
occurred on or before September 30, 1999; provided, however, that the
right to terminate the Agreement under this Section 6.1(b) shall not be
available to any party whose failure to fulfill any obligation under
this Agreement has been the cause of, or resulted in, the failure of
the Closing to occur on or before such date; or
(c) by Purchaser or Seller if any court of competent
jurisdiction in the United States or other governmental body shall have
issued an order, decree or ruling or taken any other action
restraining, enjoining or otherwise prohibiting the purchase and sale
of the Shares and such order, decree, ruling or other action shall have
become final and nonappealable.
Section 6.2 EFFECT OF TERMINATION. Nothing contained in Section
6.1 shall relieve any party from liability for any breach of this Agreement.
In the event of the termination of this Agreement, the confidentiality
agreement previously entered into between Seller and Purchaser (the
"CONFIDENTIALITY AGREEMENT") shall survive and be in full force and effect.
Section 6.3 AMENDMENT. This Agreement may be amended by action
taken by Seller and Purchaser at any time. No such amendment shall be
effective unless it is in writing signed on behalf of each of the parties.
Section 6.4 EXTENSION; WAIVER. At any time prior to the Closing,
either party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in
the representations and warranties of the other party contained herein or in
any document, certificate or writing delivered by the other parties pursuant
hereto or (c) waive compliance by the other party with any of the agreements
or conditions contained herein. Any agreement on the part of any party to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
AGREEMENTS. The representations and warranties made herein shall terminate
upon the Closing; PROVIDED, HOWEVER, that the representations and warranties
provided in Section 2.2 shall survive until the sixth anniversary of the
Closing Date; PROVIDED, FURTHER, however, that in the case of the
representations and warranties provided in Section 2.10, to the extent the
breach thereof results in the Company or the Subsidiary being liable for
taxes of any person other than the Company or the Subsidiary pursuant to
Treasury Regulation Section 1.1502-6, such representations and warranties
shall survive until 60 days following the expiration of the applicable
statute of limitations. All covenants and agreements set forth in this
Agreement shall survive in accordance with their terms.
25
Section 7.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a)
together with the Confidentiality Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof, (b) may not be
assigned by a party, by operation of law or otherwise, without the prior
written consent of the other party and (c) shall be binding upon the parties
hereto and their respective successors and permitted assigns.
Section 7.3 NOTICES. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be deemed to
have been duly given (a) upon receipt if given by delivery by hand, (b) upon
transmission if given by facsimile (receipt confirmed), (c) one business day
after being sent by prepaid overnight carrier with guaranteed delivery (with
record of receipt) or (d) five business days after being deposited in the
mail by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties as follows:
if to Purchaser:
Pentair, Inc.
Waters Edge Plaza
0000 Xxxxxx Xxxx X0 Xxxx
Xxxxx Xxxx, Xxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
with a copy to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxx, III, Esq.
if to Seller:
Falcon Building Products, Inc.
000 X. Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxx X. Xxxxx, Esq.
with a copy to:
26
Xxxxxx, Xxxx & Xxxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
Attention: E. Xxxxxxx Xxxxxxx, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
Section 7.5 DESCRIPTIVE HEADINGS. The table of contents and
descriptive headings herein are inserted for convenience of reference only
and are not intended to be part of or to affect the meaning or interpretation
of this Agreement.
Section 7.6 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall he deemed to be an original, but all
of which shall constitute one and the same agreement.
Section 7.7 FEES AND EXPENSES. Each party hereto shall bear its
own expenses in connection with this Agreement and the transactions
contemplated hereby.
Section 7.8 MISCELLANEOUS.
(a) "MATERIAL ADVERSE EFFECT" means, with respect to the Company
and the Subsidiary, any material adverse effect on the financial
condition, business or results of operations of the Company and the
Subsidiary, taken as a whole, excluding in all cases any such effect
resulting from one or more of the following: (i) any events or
conditions generally affecting the industry in which the Company and
the Subsidiary operate or from changes in general business or economic
conditions; (ii) the announcement of the transactions contemplated by
this Agreement or Purchaser's plans with respect to the business
conducted by the Subsidiary; (iii) compliance by Seller, the Company or
the Subsidiary with the terms of this Agreement; and (iv) the death or
disability of any executive officer of the Company or the Subsidiary.
27
(b) "MATERIAL ADVERSE EFFECT" means, with respect to Purchaser,
any effect that is materially adverse to the ability of Purchaser to
consummate the purchase of the Shares.
(c) In each provision of this Agreement in which a
representation or warranty is qualified to the "KNOWLEDGE" of a party
or by reference to whether a party has received notice of any matter,
unless otherwise stated in such provision, such phrase means that such
party does not have actual knowledge of any state of facts which is
different from the facts described in the representation or warranty or
actual knowledge of receipt of the notice described in the
representation and warranty. With respect to Seller, the Company and
the Subsidiary, such knowledge shall refer solely to the "knowledge" of
any of the individuals identified on Schedule 7.8(c).
Section 7.9 SPECIFIC PERFORMANCE. The parties acknowledge and
agree that any breach of the terms of this Agreement would give rise to
irreparable harm for which money damages would not be an adequate remedy and
accordingly the parties agree that, in addition to any other remedies, each
shall be entitled to enforce the terms of this Agreement by a decree of
specific performance without the necessity of proving the inadequacy of money
damages as a remedy.
28
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be duly executed as of the day and year first above written.
FALCON BUILDING PRODUCTS, INC.
By: /s/ XXX X. XXXXX
-------------------------------
Name: Xxx X. Xxxxx
Title: Executive Vice President
PENTAIR, INC.
By: /s/ XXXXX X. XXXXXXXXX
-------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Senior Vice President
and General Counsel
