EXHIBIT 2.2
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STOCK PURCHASE AGREEMENT
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BY AND AMONG
DAYTON PARTS, LLC
DAYTON PARTS, INC.
AND
JPE, INC.
FEBRUARY 7, 2003
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TABLE OF CONTENTS
PAGE
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ARTICLE I CERTAIN DEFINITIONS....................................................................... 1
ARTICLE II PURCHASE AND SALE OF SHARES............................................................... 5
2.1 PURCHASE AND SALE OF SHARES............................................................... 5
ARTICLE III PURCHASE PRICE............................................................................ 6
3.1 PURCHASE PRICE............................................................................ 6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.................................................. 6
4.1 ORGANIZATION AND GOOD STANDING............................................................ 6
4.2 POWER AND AUTHORIZATION................................................................... 6
4.3 NO CONFLICTS.............................................................................. 6
4.4 OWNERSHIP................................................................................. 7
4.5 BROKERS................................................................................... 7
ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLER.............................. 7
5.1 ORGANIZATION AND QUALIFICATION............................................................ 7
5.2 NO CONFLICTS.............................................................................. 8
5.3 CAPITAL STRUCTURE; SUBSIDIARIES; STOCK RECORDS............................................ 8
5.4 COMPLIANCE WITH LAWS...................................................................... 9
5.5 LITIGATION................................................................................ 10
5.6 FINANCIAL STATEMENTS...................................................................... 10
5.7 BROKERS................................................................................... 10
5.8 REAL PROPERTY............................................................................. 11
5.9 PERSONAL PROPERTY......................................................................... 12
5.10 LIST OF CONTRACTS......................................................................... 12
5.11 CONTRACTS................................................................................. 13
5.12 INSURANCE................................................................................. 13
5.13 TRADEMARKS AND INTELLECTUAL PROPERTY...................................................... 13
5.14 TAX MATTERS............................................................................... 14
5.15 EMPLOYEE BENEFITS......................................................................... 14
5.16 LABOR MATTERS............................................................................. 14
5.17 AFFILIATED AGREEMENTS..................................................................... 15
5.18 ENVIRONMENTAL MATTERS..................................................................... 15
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TABLE OF CONTENTS
(CONTINUED)
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5.19 ABSENCE OF CERTAIN CHANGES AND EVENTS..................................................... 16
5.20 PRODUCT DESIGN; WARRANTIES................................................................ 16
5.21 ACCOUNTS RECEIVABLE AND INVENTORY......................................................... 16
5.22 SELLER'S KNOWLEDGE........................................................................ 17
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER................................................... 17
6.1 ORGANIZATION AND QUALIFICATION............................................................ 17
6.2 POWER AND AUTHORIZATION................................................................... 17
6.3 NO CONFLICTS.............................................................................. 17
6.4 FINANCIAL CONDITION....................................................................... 18
6.5 INVESTIGATION AND EVALUATION.............................................................. 18
6.6 BROKERS................................................................................... 18
ARTICLE VII PRE-CLOSING COVENANTS..................................................................... 19
7.1 SELLER'S COVENANTS........................................................................ 19
7.2 PUBLICITY................................................................................. 20
7.3 COOPERATION AND BEST EFFORTS; UPDATED SCHEDULES........................................... 20
7.4 EMPLOYMENT ARRANGEMENTS................................................................... 21
ARTICLE VIII POST-CLOSING COVENANTS.................................................................... 21
8.1 BOOKS AND RECORDS......................................................................... 21
8.2 COMPLIANCE WITH FACILITY CLOSING LAWS..................................................... 21
8.3 SPECIAL TAX PROVISIONS.................................................................... 21
8.4 RESTRICTIVE COVENANT...................................................................... 23
ARTICLE IX CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE............................................... 23
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE BY SELLER......................... 23
9.2 CLOSING DELIVERIES........................................................................ 23
9.3 ABSENCE OF LITIGATION..................................................................... 24
9.4 CONSENTS.................................................................................. 24
9.5 SATISFACTION OF OUTSTANDING INDEBTEDNESS.................................................. 24
9.6 MATERIAL ADVERSE CHANGES.................................................................. 24
9.7 RESIGNATION OF DIRECTORS AND OFFICERS..................................................... 24
9.8 EFFECTUATION OF THE ASSET PURCHASE AGREEMENT.............................................. 24
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TABLE OF CONTENTS
(CONTINUED)
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ARTICLE X CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE.............................................. 24
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE BY BUYER.......................... 24
10.2 CLOSING DELIVERIES........................................................................ 25
10.3 ABSENCE OF LITIGATION..................................................................... 25
10.4 CONSENTS.................................................................................. 25
10.5 EFFECTUATION OF THE ASSET PURCHASE AGREEMENT.............................................. 25
ARTICLE XI THE CLOSING............................................................................... 25
11.1 THE CLOSING............................................................................... 25
11.2 DELIVERIES AT THE CLOSING................................................................. 25
ARTICLE XII TERMINATION............................................................................... 27
12.1 TERMINATION............................................................................... 27
12.2 RIGHTS NOT IMPAIRED....................................................................... 28
12.3 PROCEDURE FOR TERMINATION................................................................. 28
ARTICLE XIII INDEMNITY................................................................................. 28
13.1 INDEMNIFICATION OF BUYER.................................................................. 28
13.2 GENERAL INDEMNIFICATION OBLIGATION OF BUYER............................................... 30
13.3 SURVIVAL; TIME LIMITATIONS................................................................ 30
13.4 INDEMNITY LIMITATIONS..................................................................... 31
13.5 METHOD OF ASSERTING CLAIMS, ETC........................................................... 32
13.6 PAYMENT................................................................................... 33
13.7 OTHER REMEDIES............................................................................ 33
ARTICLE XIV MISCELLANEOUS............................................................................. 33
14.1 JURISDICTION/VENUE........................................................................ 33
14.2 COUNTERPARTS.............................................................................. 34
14.3 ASSIGNMENT................................................................................ 34
14.4 FEES AND EXPENSES......................................................................... 34
14.5 NOTICES................................................................................... 34
14.6 GOVERNING LAW............................................................................. 35
14.7 FURTHER ACTIONS AND ASSURANCES............................................................ 35
14.8 EFFECT OF HEADINGS........................................................................ 35
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TABLE OF CONTENTS
(CONTINUED)
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14.9 SEVERABILITY.............................................................................. 35
14.10 REPRESENTATIONS........................................................................... 36
14.11 ENTIRE AGREEMENT; MODIFICATION; WAIVER.................................................... 36
14.12 DISCLAIMER OF WARRANTIES.................................................................. 36
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made and entered into
this 7th day of February, 2003 by and among DAYTON PARTS, LLC, a Delaware
limited liability company ("Buyer"), DAYTON PARTS, INC., a Michigan corporation
(the "Company") and JPE, INC., a Michigan corporation (the "Seller").
WHEREAS, Seller owns one hundred percent (100%) of the issued and
outstanding shares of capital stock of the Company;
WHEREAS, BRAKE, AXLE & TANDEM COMPANY CANADA, INC., a corporation
organized under the laws of Alberta, Canada ("BATCO") is a wholly owned
subsidiary of the Company; and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, one hundred percent (100%) of the issued and outstanding shares of
capital stock of the Company, including the Company's ownership of one hundred
percent (100%) of the issued and outstanding shares of capital stock of BATCO.
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants, agreements, representations and warranties herein contained,
and for other valuable consideration the receipt and sufficiency of which are
hereby acknowledged, Buyer and Seller do hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms have the following
meaning unless the context requires otherwise:
"ASSET PURCHASE AGREEMENT" that certain Asset Purchase Agreement
entered into by and among Buyer, the Company and the Seller.
"AUTHORIZATION" means any consent, license, permit, franchise, grant or
authorization of any Governmental Authority.
"BATCO" means Brake, Axle & Tandem Company Canada, Inc., a corporation
organized under the laws of Alberta, Canada and a wholly owned subsidiary of the
Company.
"BATCO BUSINESS" means the after market truck and trailer replacement
parts business conducted by BATCO.
"BUYER DISCLOSURE STATEMENT" means the disclosure statement delivered
to Seller by Buyer in connection with the transactions contemplated by this
Agreement.
"BUYER TRANSACTION DOCUMENTS" mean the agreements, instruments and
documents required to be delivered by Buyer in connection with the transactions
contemplated by this Agreement.
"CLOSING" means the consummation of the transactions described in
Article II of this Agreement in accordance with Article XI of this Agreement.
"CLOSING DATE" means the date defined in Section 11.1 of this
Agreement.
"COMPANY TRANSACTION DOCUMENTS" means the agreements, instruments and
documents required to be delivered by the Company in connection with the
transactions contemplated by this Agreement.
"CONTRACT" means any contract, agreement, license, lease, understanding
or arrangement or other legally binding contractual right or obligation (whether
written or oral).
"DISCLOSURE STATEMENT" means the disclosure statement delivered to
Buyer by the Company and Seller in connection with this Agreement.
"DOLLARS" OR "$" means the dollars currency of the United States of
America.
"EFFECTIVE TIME" shall have the meaning ascribed to such term in
Section 11.1 hereof.
"ENCUMBRANCE" means any restriction, mortgage, deed of trust, pledge,
lien, option, right of first refusal, security interest or other similar charge,
claim or encumbrance, including any restriction on use, transfer, voting,
receipt of income or other attribute of ownership.
"ENVIRONMENTAL HEALTH AND SAFETY LAWS" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976 and the Occupational Safety and Health Act
of 1970, each as amended, together with all other Laws (including laws of Canada
and the Province of Alberta) concerning pollution or protection of the
environment, public health and safety or employee health and safety, including
Laws relating to emissions, discharges, releases or threatened releases of
pollutants, contaminants or Hazardous Substances into ambient air, surface
water, ground water or lands, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or chemical, industrial, Hazardous
Substances or wastes.
"ERISA AFFILIATE" means any entity under common control with the
Seller, within the meaning of Sections 414(b), 414(c), 414(m) or 414(o) of the
Code (as herein defined) or Section 4001(b) of ERISA (as herein defined)."
"ESCROW AMOUNT" as defined in the Asset Purchase Agreement.
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"EXCLUDED ASSETS" means those certain assets of the Company defined as
"Excluded Assets" in subparagraphs (a), (c), (d), (g), (h) and (i) of Section
2.2 of the Asset Purchase Agreement.
"EXCLUDED LIABILITIES" means those certain liabilities and obligations
of the Company defined as "Excluded Liabilities" in Section 3.3 of the Asset
Purchase Agreement.
"FACILITY" means the land and improvements used by BATCO in the
operation of the BATCO Business located at 00000 000xx Xxxxxx, Xxxxxxxx,
Xxxxxxx, Xxxxxx.
"GOVERNMENTAL AUTHORITY" means any federal, state, provincial, local or
other governmental authority of Canada or of the United States of America or any
political subdivision of any of the foregoing, and any governmental, judicial,
public or statutory instrumentality, tribunal, agency, authority, body or entity
having legal jurisdiction over any matter or Person in question.
"HAZARDOUS ACTIVITY" means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment or use (including any
withdrawal or other use of groundwater) of a Hazardous Substance, pollutant, or
contaminant in, on, under, about or from any of the Facility or any part thereof
into the environment.
"HAZARDOUS SUBSTANCE" means (i) any substance designated or listed as a
"hazardous substance" under Section 101(14) of the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980 or the regulations adopted
pursuant thereto; (ii) any substance designated or listed as a "hazardous
substance" under Sections 307 or 311 of the Clean Water Act or the regulations
adopted pursuant thereto; (iii) any substance defined, designated or listed as a
"hazardous waste" under Section 1004(5) of the Resource Conservation and
Recovery Act or the regulations adopted pursuant thereto; (iv) petroleum or
petroleum products; (v) any substance defined as a "hazardous substance" by 35
P.S. Section 6020.103 (Hazardous Sites Clean Up Act); or (vi) any substance
defined as a "regulated substance" by 35 P.S. Section 6026.103 (Land Recycling
and Environmental Remediation Standards Act).
"LAW" means any ordinance, regulation, decree, order, statute,
regulation, permit, license or certificate, or any judgment, order or award, of
any court or other Governmental Authority.
"LEGAL OBLIGATION" means any requirement or duty created by statute or
common law.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the BATCO
Business or on BATCO's operations or financial condition.
"MATERIAL CONTRACT" means any Contract to which BATCO is a party and
which:
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(i) involves performance of services or delivery of goods
or materials by BATCO of an amount or value in excess
of $75,000 annually;
(ii) involves performance of services or delivery of goods
or materials to BATCO of an amount or value in excess
of $75,000 annually;
(iii) was not entered into in the ordinary course of
business and that involves expenditures or receipts
of BATCO in excess of $50,000;
(iv) affects the ownership of, leasing of, title to, use
of or any leasehold or other interest in any real or
personal property (except personal property leases
and installment and conditional sales agreements
having a value per item or aggregate payments of less
than $50,000;
(v) is with any labor union or other employee
representative of a group of employees relating to
wages, hours and other conditions of employment of
employees of BATCO;
(vi) involves a sharing of profits, losses, costs or
liabilities by BATCO with any other Person;
(vii) contains covenants that in any way purport to
restrict BATCO's business activity or limit the
freedom of BATCO to engage in any line of business or
to compete with any Person;
(viii) contains or provides for an express undertaking by
BATCO to be responsible for consequential damages;
(ix) provides for capital expenditures by BATCO in excess
of $75,000;
(x) is a written warranty, guaranty and/or other similar
undertaking with respect to contractual performance
extended by BATCO other than in the ordinary course
of business;
(xi) was entered into with: (1) an officer or director of
either the Seller, the Company or BATCO; or (2)
Seller; or (3) the Company; and
(xii) each amendment, supplement and modification (whether
oral or written) in respect of any of the foregoing.
"PERSON" means an individual, corporation, partnership (limited or
general), association, limited liability company, joint stock company, trust,
estate, unincorporated organization or court or other Governmental Authority or
any agency or subdivision thereof, or any other legally recognizable entity.
"PURCHASED ASSETS" as defined in the Asset Purchase Agreement.
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"SELLER TRANSACTION DOCUMENTS" means the agreements, instruments and
documents required to be delivered by Seller in connection with the transactions
contemplated by this Agreement.
"STANDARD PRODUCTS WARRANTY CLAIMS" any liabilities and obligations of
BATCO to BATCO's customers arising out of a customer claim of a breach of
BATCO's written warranty agreements in the forms disclosed in Section 5.20 of
the Disclosure Statement given by BATCO to its customers and of any implied
warranties, each in the ordinary course of business for products of BATCO
shipped by BATCO prior to the Effective Time, up to an aggregate amount of such
liabilities and obligations (measured by the cost of repairs and replacements
and the amount of credit provided to customers for returned, defective or
damaged products and calculated using the same pre-closing methods and practices
as BATCO) not to exceed, together with the amount of Assumed Products Warranty
Claims (as such term is defined in the Asset Purchase Agreement), $138,000.
"TAXES" means any federal, state, provincial, county, local or foreign
taxes, charges, fees, levies, or other assessments, including all net income,
gross income, sales and use, ad valorem, transfer, gains, profits, excise,
franchise, real and personal property, gross receipts, capital stock,
production, business and occupation, disability, employment, payroll, license,
estimated, stamp, custom duties, severance or withholding taxes or charges
imposed by any Governmental Authority, and includes any interest and penalties
(civil or criminal) on or additions to any such taxes.
"TAX RETURN" means a report, return or other information required to be
supplied to a Governmental Authority with respect to Taxes paid or payable by
BATCO.
"TRANSACTION DOCUMENT(S)" means one or more Buyer Transaction Document,
Company Transaction Document or Seller Transaction Document, as applicable.
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 PURCHASE AND SALE OF SHARES. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date, Seller shall sell,
transfer and deliver to Buyer, and Buyer shall purchase from Seller, free and
clear of any and all Encumbrances (except for restrictions imposed generally by
applicable securities Laws), 4000 shares of the capital stock of the Company, in
the aggregate constituting one hundred percent (100%) of the issued and
outstanding shares of capital stock of the Company (the "Company Shares"),
together with all rights attaching or accruing thereto and all dividends and
distributions declared, made or paid from and after the Closing Date thereon or
in respect thereof.
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ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE. The aggregate purchase price paid to Seller by
Buyer for the purchase of the Company Shares shall be $300,000 (the "Purchase
Price"). The Purchase Price shall be paid in cash to Seller by Buyer on the
Closing Date by wire transfer of immediately available funds to an account
designated by Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as of the date of this
Agreement and as of the Closing Date as follows:
4.1 ORGANIZATION AND GOOD STANDING. Seller is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Michigan and has all requisite corporate power and authority to own, operate and
lease its assets and properties and to carry on its business as presently
conducted.
4.2 POWER AND AUTHORIZATION. Seller has full corporate right,
power and authority necessary to enter into and perform its obligations under
this Agreement and under the Seller Transaction Documents to which it is a
party. This Agreement has been and, at the Closing, each Seller Transaction
Document to be executed by Seller will have been, duly and validly executed and
delivered by Seller. This Agreement constitutes, and each Seller Transaction
Document will constitute when executed and delivered by Seller, Seller's legal,
valid and binding obligation, enforceable against it in accordance with its
terms.
4.3 NO CONFLICTS.
(a) Except as set forth in Section 4.3(a) of the
Disclosure Statement, the execution, delivery and performance by Seller of this
Agreement and the Seller Transaction Documents to which it is a party do not and
will not:
(i) violate or conflict with the articles of
incorporation or bylaws of Seller, or any
Law binding upon Seller;
(ii) violate or conflict with, result in a breach
of or constitute a default under any
material Contract of Seller, or give to
others any rights in or with respect to the
Company Shares; or
(iii) result in, require or permit the creation or
imposition of any Encumbrance upon or with
respect to the Company Shares or any assets
of the Company.
(b) Section 4.3(b) of the Disclosure Statement sets forth
each consent or approval of, or registration, notification, filing and/or
declaration with, any Governmental
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Authority, creditor, lessor or other Person required to be given or made by
Seller in connection with the execution, delivery and performance by Seller of
this Agreement and the Seller Transaction Documents to which Seller is a party
(the "Seller Consents"). Except as set forth in Section 4.3(b) of the Disclosure
Statement, all Seller Consents have been obtained or made or Seller will use
reasonable efforts to have same obtained or made prior to the Closing.
(c) There are no actions, proceedings or investigations
pending or, to the knowledge of Seller, threatened that question any of the
transactions contemplated by, or the validity of, this Agreement or the Seller
Transaction Documents or which, if adversely determined, restrict Seller from
entering into or performing its obligations under this Agreement or the Seller
Transaction Documents to which Seller is a party.
(d) Seller has not received any request from any
Governmental Authority for information with respect to the transactions
contemplated hereby.
4.4 OWNERSHIP. Except as set forth in Section 4.4 of the
Disclosure Statement, Seller owns the Company Shares, beneficially and of
record, and has good and valid title to such Shares. On the Closing Date,
subject to obtaining the Seller Consents, Seller shall deliver or cause to be
delivered to Buyer full right, title and interest in and to the Company Shares,
free and clear of any and all Encumbrances (except for restrictions imposed
generally by applicable securities Laws). Neither Seller nor the Company is a
party to any option, warrant, right, Contract, call, put or other agreement or
commitment providing for the disposition or acquisition of any of the capital
stock of the Company, including, without limitation, the Company Shares. Except
as set forth in Section 4.4 of the Disclosure Statement, there are no Contracts,
including, without limitation, option or shareholder agreements, affecting the
right of Seller to convey the Company Shares. Except as set forth in Section 4.4
of the Disclosure Statement, Seller has the absolute right, authority, power and
capacity to sell, assign and transfer the Company Shares to Buyer free and clear
of any and all Encumbrances (except for restrictions imposed generally by
applicable securities Laws).
4.5 BROKERS. No Person acting on behalf of Seller, the Company or
BATCO or under the authority of any of the foregoing is or will be entitled to
any brokers' or finders' fee or any other commission or similar fee, directly or
indirectly, from any of such parties in connection with any of the transactions
contemplated by this Agreement, other than W.Y. Xxxxxxxx & Company, whose fees
and expenses shall be paid by Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SELLER
Seller and the Company hereby jointly and severally represent and
warrant to Buyer as of the date of this Agreement and as of the Closing Date as
follows:
5.1 ORGANIZATION AND QUALIFICATION. The Company is duly organized,
validly existing and in good standing under the Laws of the State of Michigan.
BATCO is duly
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organized, validly existing and in good standing under the laws of the Province
of Alberta, Canada. Each of the Company and BATCO has all requisite corporate
power and authority to own, operate and lease its assets and properties and to
carry on its business as presently conducted. Each of the Company and BATCO is
duly qualified to do business as a foreign corporation in each jurisdiction set
forth beside its name in Section 5.1 of the Disclosure Statement and there is no
jurisdiction in which BATCO is obligated by applicable law to qualify to do
business in which it is not so qualified and where the failure to be so
qualified has had a Material Adverse Effect.
5.2 NO CONFLICTS.
(a) Except as set forth in Section 5.2(a) of the
Disclosure Statement, the execution, delivery and performance of this Agreement
do not and will not:
(i) violate or conflict with the articles of
incorporation or bylaws of the Company or
BATCO, or any Law binding upon the Company
or BATCO;
(ii) violate or conflict with, result in a breach
of or constitute a default or otherwise
cause any loss of benefit under any Material
Contract, or give to others any rights
(including rights of termination,
foreclosure, cancellation or acceleration)
in or with respect to the Company or BATCO
or any material assets or properties of the
Company or BATCO; or
(iii) result in, require or permit the creation or
imposition of any Encumbrance upon or with
respect to the Company Shares, the Company,
BATCO or any material assets or properties
of the Company or BATCO.
(b) Section 5.2(b) of the Disclosure Statement sets forth
each consent or approval of, or registration, notification, filing and/or
declaration with, any Governmental Authority, creditor, lessor or other Person
required to be given or made by the Company or BATCO in connection with the
execution, delivery and performance by Seller of this Agreement and the Seller
Transaction Documents (the "Company and BATCO Consents"). Except as set forth in
Section 5.2(b) of the Disclosure Statement, all Company and BATCO Consents have
been obtained or made or Company and BATCO, as applicable, will use reasonable
efforts to have same obtained or made prior to the Closing.
(c) Neither the Company nor BATCO has received any
request from any Governmental Authority for information with respect to the
transactions contemplated hereby.
5.3 CAPITAL STRUCTURE; SUBSIDIARIES; STOCK RECORDS.
(a) The authorized, issued and outstanding capital stock
and other securities of the Company and BATCO are set forth in Section 5.3 of
the Disclosure Statement. The
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Company Shares to be sold pursuant to Section 2.1 of this Agreement constitute
all of the outstanding shares of capital stock of the Company and have been duly
authorized, are validly issued and outstanding, fully paid and nonassessable,
and have been issued in compliance with the articles of incorporation of the
Company and all applicable securities Laws. The shares of capital stock of BATCO
listed beside its name in Section 5.3(a) of the Disclosure Statement constitute
all of the outstanding shares of capital stock of BATCO and have been duly
authorized, are validly issued and outstanding, fully paid and nonassessable,
and have been issued in compliance with the articles of incorporation of BATCO
and all applicable securities Laws (the "BATCO Shares"). Other than BATCO, the
Company has no subsidiaries.
(b) No Person has any preemptive or other similar rights
with respect to any capital stock or other securities of the Company or BATCO
and there are no options, warrants, rights, Contracts, conversion rights, rights
to subscribe for, or commitments or rights of any kind (contingent or otherwise)
relating to the issuance, conversion, registration, voting, sale or transfer of
any capital stock or other securities of the Company (including, without
limitation, the Company Shares) or BATCO or obligating the Company, BATCO or any
other Person to purchase or redeem any capital stock option, warrant, right,
equity interest or other securities of the Company or BATCO.
(c) Except as set forth in Section 5.3 of the Disclosure
Statement, the Company owns the BATCO Shares, beneficially and of record, and
has good and valid title to the BATCO Shares, free and clear of any and all
Encumbrances (except for restrictions imposed generally by applicable securities
Laws). Except as set forth in Section 5.3 of the Disclosure Statement, neither
Seller nor the Company is a party to any option, warrant, right, Contract, call,
put or other agreement or commitment providing for the disposition or
acquisition of any of the capital stock of BATCO, including, without limitation,
the BATCO Shares. Except as set forth in Section 5.3 of the Disclosure
Statement, there are no Contracts, including, without limitation, option or
shareholder agreements, affecting the right of the Company to continue its
ownership of the BATCO Shares.
(d) The stock records of the Company fairly and
accurately reflect the record ownership of all of its outstanding shares of
capital stock and the stock records of BATCO fairly and accurately reflect the
record ownership of all its outstanding shares of capital stock.
5.4 COMPLIANCE WITH LAWS. Other than with respect to Environmental
Health and Safety Laws, as to which Seller and the Company represent and warrant
to Buyer solely as set forth in Section 5.18, BATCO is in compliance in all
material respects with all Laws applicable to the conduct of the BATCO Business.
Other than with respect to Environmental Health and Safety Laws, as to
which the Seller represents and warrants to Buyer solely as set forth in Section
5.18: (i) BATCO owns, holds, possesses or lawfully uses in the operation of its
business all Authorizations that are necessary for it to conduct such business,
(ii) set forth in Section 5.4 of the Disclosure Statement is a list of all
material Authorizations of BATCO, and (iii) BATCO is not in default in any
material respect, nor has BATCO received any written notice of any claim of
default, under any Authorization.
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5.5 LITIGATION. Except as set forth in Section 5.5 of the
Disclosure Statement, there are no claims, actions, suits, proceedings
(arbitration or otherwise) or investigations involving BATCO pending either in
court or before any other Governmental Authority, or before an arbitrator of any
kind. To the knowledge of the Seller, no such claim, action, suit, proceeding or
investigation is presently threatened, which if adversely determined could
reasonably be expected to have a Material Adverse Effect. There are no
unsatisfied judgments, penalties or awards against or affecting BATCO or its
assets or properties.
5.6 FINANCIAL STATEMENTS.
(a) Section 5.6 of the Disclosure Statement includes: (i) the
consolidated balance sheet of the Company and BATCO as at December 31, 2001
(the "Balance Sheet") and the related consolidated statement of income for the
fiscal year then ended (collectively, the "Historic Financial Statements"); and
(ii) the consolidated balance sheet of the Company and BATCO as at December 31,
2002 (the "Interim Balance Sheet"), and the related consolidated statement of
income for the twelve (12) months then ended (collectively, the "Interim
Statements"). The Historic Financial Statements and the Interim Statements
fairly present, in all material respects, the financial condition and results
of operations of the Company and BATCO on a consolidated basis as of the
respective dates thereof and for the periods therein referred to, all in
accordance with United States generally accepted accounting principles
("GAAP"), consistently applied, except for the omission of footnotes and
subject in the case of Interim Statements to year-end adjustments.
(b) The Balance Sheet and the Interim Balance Sheet fairly
reflect, as of the respective dates thereof, all material liabilities of the
Company and BATCO of the type required to be reflected or disclosed in a
balance sheet (or the notes thereto) prepared in accordance with GAAP. Neither
the Company nor BATCO has any material liabilities or obligations of a nature
required to be reflected in a balance sheet prepared in accordance with GAAP
that are not reflected on the Interim Balance Sheet, except for current
liabilities (within the meaning of GAAP) which have been incurred since the
date thereof in the ordinary course of business consistent with past practice.
(c) Except as described in the Disclosure Statement, BATCO has no
liabilities nor obligations with respect to the BATCO Business, either direct
or indirect, matured or unmatured or absolute, contingent or otherwise, except:
(i) those liabilities or obligations set forth on the
Interim Balance Sheet and not heretofore paid or
discharged; or
(ii) those liabilities or obligations incurred,
consistently with past business practice, in or as a
result of the normal and ordinary course of business.
5.7 BROKERS. No Person acting on behalf of the Seller or any of
its affiliates or under the authority of any of the foregoing is or will be
entitled to any broker's or finder's fee or any other commission or similar fee,
directly or indirectly, from any of such parties in connection
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with any of the transactions contemplated by this Agreement, other than W.Y.
Xxxxxxxx & Company, whose fees and expenses shall be paid by the Seller.
5.8 REAL PROPERTY.
(a) "Premises" Defined. All real property (including,
without limitation, all fee simple and leasehold interests in and rights to the
Facilities and any other real property) and improvements located thereon which
are owned or leased by BATCO and used in connection with the BATCO Business are
listed in Section 5.8 of the Disclosure Statement (the "Premises").
(b) Real Property. With respect to the Premises:
(i) Seller has delivered to Buyer a true and
complete copy of the deed pursuant to which
BATCO acquired fee simple ownership and/or
every lease and sublease pursuant to which
BATCO is a tenant or subtenant of any of the
Premises (a "Lease"), and each Lease
referenced in Section 5.8 of the Disclosure
Statement is described by listing the name
of the landlord or sublandlord, a
description of the leased premises, the
commencement and expiration dates of the
current term, the security deposited by
BATCO with the landlord or sublandlord, if
any, the monthly rental (including base and
all additional rents), and whether a change
of control of BATCO from Seller to Buyer
requires the consent of the landlord or
sublandlord in order to avoid a breach of
such Lease; and
(ii) each Lease is in full force and effect and
has not been assigned by BATCO, modified,
supplemented or amended except as listed on
the Disclosure Statement, and neither BATCO
nor, to the Seller's knowledge, the landlord
or sublandlord under any Lease is in
material default under any of the Leases,
and, to the knowledge of Seller and the
Company, no circumstances or state of facts
presently exists which, with the giving of
notice or passage of time, or both, would
entitle the landlord or sublandlord under
any Lease to terminate any Lease;
(c) Zoning. The Premises are, to the Seller's knowledge,
in all material respects, in compliance with all material applicable zoning and
other land use requirements, except where the failure to so comply has not had a
Material Adverse Effect.
(d) Utility Services. To Seller's knowledge, the water,
electric, gas and sewer utility services and the septic tank and storm drainage
facilities currently available to the Premises are (i) adequate for the present
use of the Premises by BATCO in conducting the BATCO Business, and (ii) are not
being improperly appropriated by BATCO, and to Seller's knowledge, there is no
current condition which will result in the termination of the present access
from the Premises to such utility services and other facilities.
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(e) Access. To Seller's knowledge, BATCO has obtained all
material Authorizations and rights-of-way, including proof-of-dedication, which
are reasonably necessary to lawfully permit the present manner of vehicular and
pedestrian ingress and egress to and from the Premises.
(f) Assessments or Hazards. To Seller's knowledge, BATCO
has not received any written notices from any governmental body, that the
assessed value of the Premises has been determined to be materially greater than
that upon which county, township or school tax was paid for the 2001 tax year
applicable to each such tax.
(g) Eminent Domain. To Seller's knowledge, BATCO has not
received any written notices that any governmental body having the power of
eminent domain over the Premises has commenced or intends to exercise the power
of eminent domain or a similar power with respect to all or any part of the
Premises.
(h) No Violations. Except as set forth in the Disclosure
Statement, to Seller's knowledge, BATCO has not received any written notices
that the Premises and the present uses thereof fail to comply in all material
respects with all applicable building, fire & safety, and electrical codes to
which buildings of similar age and similar use as the Facilities are subject in
Edmonton, Alberta, Canada.
(i) Improvements. Except as set forth in Section 5.8 of
the Disclosure Statement, to Seller's knowledge, the improvements located on the
Premises are structurally sound, and all mechanical and other systems located
therein when last used were in operating condition, subject to normal wear and
tear typical of buildings of similar age and prior use as the Facility, except
that not being in such condition would only be a breach of this representation
if it would have a Material Adverse Effect.
5.9 PERSONAL PROPERTY. BATCO has good title to all of the personal
property which it purports to own (whether real, personal, or mixed and whether
tangible or intangible), located on the Premises and/or used in the BATCO
Business, including all of the properties and assets reflected in the Balance
Sheet and the Interim Balance Sheet except for assets and personal property sold
or disposed of since the date of the Balance Sheet and the Interim Balance
Sheet, as the case may be, in the ordinary course of business or as otherwise
permitted under Section 7.1(f)(i) hereof.
5.10 LIST OF CONTRACTS. Section 5.10 of the Disclosure Statement
sets forth the following:
(i) each Contract of BATCO for the purchase or sale of
real property;
(ii) each Material Contract of BATCO;
(iii) any guarantee by BATCO of the obligations of its
customers, suppliers, officers, directors, employees,
affiliates or others;
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(iv) any agreement which provides for the incurrence by
BATCO of indebtedness for borrowed money; and
(v) any mortgage or other form of secured indebtedness of
BATCO.
5.11 CONTRACTS. Except as set forth in Section 5.11 of the
Disclosure Statement, each Material Contract to which BATCO is a party is in
full force and effect and is valid, binding and enforceable against BATCO in
accordance with its terms. Except as described in Section 5.11 of the Disclosure
Statement, BATCO has performed in all material respects all obligations required
to be performed by it under each such Material Contract and, to the knowledge of
Seller, all other parties (other than BATCO) to a Material Contract have
performed in all material respects all obligations required to be performed by
them under each such Material Contract.
5.12 INSURANCE.
(a) The description of the policies and binders of
insurance of BATCO contained in Section 5.12 of the Disclosure Statement
identifies: (i) the respective issuers and expiration dates thereof; (ii)
deductible amounts and amounts of coverage available and outstanding thereunder;
(iii) whether such policies and binders are "claims made" or "occurrences"
policies, (iv) all self-insurance programs or arrangements and (v) any
retrospective premium adjustments of which the Seller has knowledge.
(b) To Seller's knowledge, Section 5.12(b) of the
Disclosure Statement sets forth, by year, for the current policy year and each
of the two preceding policy years:
(i) a summary of the loss experience under each
policy of insurance;
(ii) a statement describing each claim under a
policy of insurance for an amount in excess
of $75,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by
insurer, type of insurance and
period of coverage; and
(C) the amount and a brief description
of the claim; and
(iii) a statement describing the loss experience
for all claims that were self-insured,
including the number and aggregate cost of
such claims.
(c) Except as set forth in Section 5.12(c) of the
Disclosure Statement, to Seller's knowledge, all policies of insurance to which
BATCO is a party or that provide coverage to BATCO are valid, outstanding and
enforceable.
5.13 TRADEMARKS AND INTELLECTUAL PROPERTY. Section 5.13 of the
Disclosure
- 13 -
Statement sets forth all material patents, tradenames, trademarks, service
marks, brandmarks, brandnames, copyrights or registrations, or other material
intellectual property or licenses thereof or applications therefor or interests
therein, which BATCO presently is using (other than commercially available
software). BATCO owns or has a valid license to use all of the technology,
manufacturing processes and formulations that are material to its business as
presently conducted. To Seller's knowledge, BATCO is not violating or
infringing, and there is no pending or threatened claim of violation or
infringement by BATCO of any industrial property rights, including without
limitation any patents, copyrights, trademarks, tradenames and trade secrets,
owned by any third person.
5.14 TAX MATTERS. All Tax Returns that are due and required to be
filed by, or with respect to, BATCO have been filed. BATCO has, in all material
respects, paid all Taxes required to be paid in respect of the periods covered
by such Tax Returns. BATCO is not delinquent in any material respect in the
payment of any Tax, assessment or governmental charge. There are no Tax liens
upon the assets of BATCO except liens for Taxes not yet due or being contested
in good faith through appropriate proceedings. No deficiency for any Taxes has
been proposed, asserted or assessed against BATCO that has not been resolved or
paid in full. No audits or other administrative proceedings or court proceedings
are currently pending with regard to any material Tax or Tax Returns of BATCO.
BATCO is not a party to any tax-sharing, allocation or indemnification agreement
with any party.
The Company acquired BATCO on April 16, 1997 and BATCO has been owned
by the Company as a 100% owned foreign subsidiary since that time. The
accumulated earnings and profits (calculated for IRC Section 1248 purposes) of
BATCO as of December 31, 2001 (summarized by year) are reflected in Section 5.14
of the Disclosure Statement. Section 5.14 of the Disclosure Statement also sets
forth: (a) the Seller's estimate as of January 27, 2003 of BATCO's earnings and
profits for the year ended December 31, 2002; and (b) a list of Canadian income
taxes paid by BATCO (by year) for the periods that the Company owned BATCO. The
Company's tax basis in the BATCO Shares as of December 31, 2001 and the
Company's estimate of its tax basis in the BATCO Shares as of December 31, 2002
are set forth in Section 5.14 of the Disclosure Statement.
5.15 EMPLOYEE BENEFITS.
(a) BATCO does not provide any employee benefits to its
employees
(b) Section 5.15 of the Disclosure Statement lists the name,
title, currently annualized salary or hourly wage rate for each employee of
BATCO and the amount of severance compensation, if any, to which each such
employee would be entitled if his employment were terminated by BATCO as of the
date hereof.
5.16 LABOR MATTERS. None of the employees of BATCO are, or during
the last three years have been, represented by any union or other bargaining
representative, and no application or petition for certification of a collective
bargaining agent at or with respect to BATCO is pending. To the knowledge of the
Seller, during the last three years, no union has attempted to organize any
group of employees of BATCO and no such group has sought to organize into a
- 14 -
union or similar organization for the purpose of collective bargaining. There
are no pending grievances, arbitration proceedings, unfair labor practice
charges or other similar controversies between BATCO and any of their respective
employees.
5.17 AFFILIATED AGREEMENTS. Except as described in Section 5.17 of
the Disclosure Statement, there are no agreements, arrangements or
understandings between BATCO on the one hand and Seller, the Company and any
officers or directors of Seller or the Company on the other hand that will not
be terminated at or prior to the Closing.
5.18 ENVIRONMENTAL MATTERS. Except as set forth in Section 5.18 of
the Disclosure Statement:
(a) BATCO has not received any written notice of
violation or other notification from any Governmental Authority, employee or any
third party alleging that BATCO is in violation of any Environmental, Health and
Safety Laws;
(b) BATCO is not the subject of any administrative or
judicial proceedings or investigations pursuant to any Environmental, Health and
Safety Laws;
(c) To the knowledge of the Seller, the Premises do not
contain any Hazardous Substance that, under any Environmental, Health and Safety
Laws currently in effect: (x) imposes or could reasonably be expected to impose
on any Person liability for removal, remediation, or other cleanup, damages to a
third party, or damage to natural resources; or (y) could reasonably be expected
to result in the imposition of an Encumbrance on the Premises or any of the
assets of BATCO;
(d) BATCO has not received any written request for
information from any Governmental Authority or other Person related to any site
which is, or may be, subject to actions for removal, response, remediation or
cleanup of any Hazardous Substances, including, without limitation, any
information request pursuant to the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, or similar laws of any state or province
where BATCO operates; and
(e) BATCO has not received any order, demand, or other
claim: (x) for removal, response, remediation or cleanup of any regulated
substances; (y) for damage to natural resources; or (z) for personal injury or
property damage related to the release or discharge of Hazardous Substances.
(f) To the knowledge of Seller, there are no Hazardous
Substances located at the Facilities, including any Hazardous Substances
contained in barrels, aboveground or underground storage tanks, landfills, land
deposits, dumps, equipment (whether movable or fixed) or other containers,
either temporary or permanent, and deposited or located in land, water, sumps,
or any other part of the Facilities or incorporated into any structure therein
or thereon that would result in a material liability pursuant to Environmental,
Health and Safety Laws. To the knowledge of Seller, no Person conducted, or is
aware of, any Hazardous Activity conducted with respect to any Facility or any
other property or assets (whether real, personal or
- 15 -
mixed) in which Seller has or had an interest except in compliance in all
material respects with all applicable Environmental, Health and Safety Laws.
5.19 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth in
Section 5.19 of the Disclosure Statement, since the date of the Interim Balance
Sheet, BATCO has conducted its business in the usual and ordinary course
consistent with past practice and there has not been any:
(a) declaration or payment of any dividend or other
distribution or payment in respect of the capital stock of BATCO, other than any
such paid entirely in cash, or any repurchase or redemption of any capital stock
of BATCO, other than for consideration consisting entirely of cash;
(b) material increase in any compensation payable to any
shareholder, director, officer or employee of BATCO;
(c) adoption of or change in any Employee Benefit Plan,
except as required by Law; change in the accounting methods, principles or
practices followed by BATCO; or agreement, whether or not in writing, to do any
of the foregoing.
5.20 PRODUCT DESIGN; WARRANTIES. Section 5.20 of the Disclosure
Statement includes a copy of the current standard warranty of BATCO and BATCO's
current warranty policy with respect to products created, manufactured, sold,
distributed or licensed by BATCO, other than any such implied by law. To the
knowledge of the Seller, there are no material design, manufacturing or other
defects, latent or otherwise, with respect to any such products. Except as
described in Section 5.20 of the Disclosure Statement, no products have been
sold or distributed by BATCO under an understanding or agreement by BATCO that
such products are returnable except pursuant to such warranties.
5.21 ACCOUNTS RECEIVABLE AND INVENTORY. All accounts receivable of
BATCO represent obligations from sales made or services rendered in the ordinary
course of business. Such receivables, net of reserves for doubtful accounts
reflected on the Interim Balance Sheet, are not, except as set forth in Section
5.21 of the Disclosure Statement, subject to any valid dispute, counterclaims,
encumbrances or setoff known to the Seller, or any other reduction or discount
that has been agreed to by BATCO.
The inventory of BATCO consists of items usable or salable in the
ordinary course of business. BATCO has sufficient amounts of inventory for the
conduct of its business in the ordinary course.
- 16 -
5.22 SELLER'S KNOWLEDGE. For purposes of this Agreement, "to the
knowledge of the Seller" or words of similar import shall be conclusively deemed
to be only that knowledge actually possessed by the Xxxx Xxxxxxx, Xxxxx Xxxxxx,
Xxxx Xxxxxxxx, Xxxxx Xxxxxx, Xxx Xxxxxxxx, Xxxxx Xxxxx, Xxxxxx Xxxxxxx, Xxxxx
Xxxxxx, Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxxx, and Xxxxx Xxxxxx. The Seller shall not
be deemed to have actual or constructive knowledge of any fact, circumstance or
occurrence known to any Person other than as set forth in the preceding
sentence.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as of the date of this
Agreement and as of the Closing Date as follows:
6.1 ORGANIZATION AND QUALIFICATION. Buyer is duly organized,
validly existing and in good standing under the Laws under which it has been
formed and has all requisite entity power and authority to own, operate and
lease its assets and properties and to carry on its business as presently
conducted.
6.2 POWER AND AUTHORIZATION. Buyer has full entity right, power
and authority necessary to enter into and perform its obligations under this
Agreement and under the Buyer Transaction Documents. This Agreement has been
and, at the Closing, each Buyer Transaction Document will have been, duly and
validly executed and delivered by Buyer. This Agreement constitutes, and each
Buyer Transaction Document will constitute when executed and delivered by Buyer,
Buyer's legal, valid and binding obligation, enforceable against it in
accordance with its terms.
6.3 NO CONFLICTS.
(a) Except as set forth in Section 6.3(a) of the Buyer
Disclosure Statement, the execution, delivery and performance of this Agreement
and the Buyer Transaction Documents do not and will not:
(i) violate or conflict with the certificate or
articles of organization of Buyer or other
organization documents of Buyer, or any Law
binding upon Buyer; or
(ii) violate or conflict with, result in a breach
of, or constitute a default or otherwise
cause any loss of benefit under any material
Contract to which Buyer is a party.
(b) Section 6.3(b) of the Buyer Disclosure Statement sets
forth each consent or approval of, or registration, notification, filing and/or
declaration with, any court or other Governmental Authority, creditor, lessor or
other Person required to be given or made by Buyer in connection with the
execution, delivery and performance of this Agreement and the Buyer
- 17 -
Transaction Documents (the "Buyer Consents"). Except as set forth in Section
6.3(b) of the Buyer Disclosure Statement, all Buyer Consents have been obtained
or made or Buyer will use reasonable efforts to have same obtained or made prior
to Closing.
(c) There are no actions, proceedings or investigations
pending or, to the knowledge of Buyer, threatened that question any of the
transactions contemplated by, or the validity of, this Agreement or the Buyer
Transaction Documents or which, if adversely determined, would have an adverse
effect upon the ability of Buyer to enter into or perform its obligations under
this Agreement or the Buyer Transaction Documents.
(d) Buyer has not received any request from any
Governmental Authority for information with respect to the transactions
contemplated hereby.
6.4 FINANCIAL CONDITION. Buyer has equity funding which will
comprise a portion of the payment to Seller of the Purchase Price. Affiliates of
Buyer are experienced in obtaining debt financing on commercially reasonable
terms for transactions similar to the transactions contemplated by this
Agreement and Buyer has obtained a commitment letter for debt financing for the
transactions contemplated by this Agreement. Buyer shall use its best efforts in
good faith to close the debt financing necessary to enable it to consummate the
transactions contemplated by this Agreement.
6.5 INVESTIGATION AND EVALUATION. Buyer acknowledges that: (a)
Buyer is experienced in the operation of the type of businesses conducted by
BATCO; (b) Buyer and its directors, officers, employees, attorneys, accountants
and advisors have been given the opportunity to (i) examine to the full extent
deemed necessary and desirable by Buyer all books, records and other information
with respect to the Company and BATCO and (ii) visit with the Company and BATCO
and meet with its respective officers and other representatives to discuss the
business and the assets, liabilities, financial condition, cash flow and
operations of the Company and BATCO; (c) Buyer has taken full responsibility for
determining the scope of its investigations of the Company and BATCO and for the
manner in which such investigations have been conducted, and has made its own
independent examination, investigation, analysis and evaluation of the Company
and BATCO, including Buyer's own estimate of the value of the Company Shares;
and (d) Buyer is fully capable of evaluating the adequacy and accuracy of the
information and material obtained by Buyer in the course of such investigations.
6.6 BROKERS. No Person acting on behalf of Buyer or any of its
affiliates or under the authority of any of the foregoing is or will be entitled
to any brokers' or finders' fee or any other commission or similar fee, directly
or indirectly, from any of such parties in connection with any of the
transactions contemplated by this Agreement.
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ARTICLE VII
PRE-CLOSING COVENANTS
7.1 SELLER'S COVENANTS. Seller covenants as follows:
(a) Buyer's Access to Premises and Information. Buyer and
its representatives shall, prior to Closing, have reasonable access during
normal business hours to the properties and business and the books and records
of BATCO. The Seller shall furnish, or cause to be furnished, Buyer with such
financial and operating data and other information as to the business and
properties of BATCO as Buyer shall from time to time reasonably request and as
reasonably available to the Seller, the Company and BATCO. Buyer acknowledges
that certain of the information which may be made available to it is proprietary
and includes confidential information. Buyer agrees that all information
provided or made available to it or any of its representatives will be subject
to the Confidentiality Agreement dated October 11, 2002 between Buyer and W.Y.
Xxxxxxxx & Company (the "Confidentiality Agreement") which agreement shall
remain in full force and effect until the Closing.
(b) Conduct of Business in Normal Course. Until the
Closing, except as contemplated by the Asset Purchase Agreement, Seller and the
Company shall cause BATCO to carry on its business and activities only in the
ordinary course.
(c) Maintenance of Facilities and Assets. Until the
Closing, except as contemplated by the Asset Purchase Agreement, Seller and the
Company shall cause BATCO to maintain its facilities and assets in substantially
the same state of repair, order and condition as they were in as the date
hereof, reasonable wear and tear excepted.
(d) Preservation of the Business. Until the Closing,
except as contemplated by the Asset Purchase Agreement, the Seller and the
Company shall each use its reasonable efforts to cause BATCO to preserve its
business, business relationships and goodwill.
(e) Maintenance of Insurance. Until the Closing, the
Seller and the Company shall cause BATCO to maintain insurance relating to its
business in the amounts and with the coverages described in Section 5.12 of the
Disclosure Statement hereunder, subject to variations in amounts required by the
ordinary operations of such businesses, and Seller and the Company shall cause
BATCO to pay all premiums thereon when due.
(f) Further Covenants. Except as expressly provided
herein and except as contemplated by the Asset Purchase Agreement, between the
date hereof and the Closing, except as may otherwise be consented to by Buyer,
the Seller shall cause BATCO to:
(i) not subject any of its assets or properties
to any Encumbrance, other than Encumbrances
disclosed in the Disclosure Statement, and
not dispose of any material assets other
than inventory sold or used, accounts
receivable collected upon and supplies used,
in each case in the ordinary course of
business consistent with past
- 19 -
practice, and other than assets not used or
useful in the conduct of its business;
(ii) maintain its books and records on a basis
consistent with prior practice and the
provisions herein;
(iii) not:
(A) make any change in its capital
stock, grant any stock option or
other right to purchase shares of
its capital stock, issue or make
any commitment to issue any of its
securities, including, without
limitation, any securities
convertible into capital stock;
grant any registration rights; or
purchase, redeem, retire or make
any other acquisition of any shares
of any capital stock; or
(B) amend its articles of incorporation
or bylaws in a manner that could
have a Material Adverse Effect.
(iv) comply in all material respects with all
Laws and perform its contractual obligations
without default in any material respect,
other than matters contested in good faith
or the noncompliance with which,
individually or in the aggregate, do not and
will not have a Material Adverse Effect; and
(v) cooperate with Buyer in obtaining all
necessary consents and approvals required in
connection with the transactions
contemplated hereby; and
(vi) pay or discharge, in a timely manner
consistent with its past practice, BATCO's
liabilities reflected in the Interim Balance
Sheet and Periodic Pre-Closing Balance
Sheets.
7.2 PUBLICITY. Neither Buyer nor Seller shall, except to the
extent required by Law or the rules of any securities exchange on which a
party's or its affiliates' securities are traded, make any public announcement
(whether written or oral) or notice to the press relating to any transaction
contemplated by this Agreement without the prior approval of the other party
hereto, which approval shall not be unreasonably withheld. In the case of any
public announcement or other disclosure required by Law or the rules of any
securities exchange on which a party's or its affiliates' securities are traded,
each party shall, insofar as is practicable, consult with the other party prior
to any such disclosure, but the other party's approval shall not be required.
7.3 COOPERATION AND BEST EFFORTS; UPDATED SCHEDULES. Each party
hereto agrees to cooperate with the others in the performance of all obligations
under this Agreement and to use its reasonable best efforts to fulfill its
obligations under this Agreement, and to satisfy or cause to be satisfied, at or
before the Closing, the conditions to its performance under this Agreement that
are under its control. In the event that any of the representations and
warranties
- 20 -
in Article IV and V of Seller and the Company shall become inaccurate prior to
the Closing in any material respect, Seller shall promptly provide to Buyer
corrective supplemental information in writing in the form of one or more
"bring-down letters". The furnishing of such corrective supplemental information
shall not impair Buyer's rights under Articles IX and XII hereunder.
7.4 EMPLOYMENT ARRANGEMENTS.
(a) Effective as of the Closing Date, Buyer shall cause
BATCO to retain as employees, on at will employment basis, all of the employees
of BATCO. A list of all employees of BATCO and their titles as of the date
hereof is set forth on Section 7.4(a) of the Disclosure Statement. The Seller
shall provide Buyer with an updated Section 7.4(a) of the Disclosure Statement
at the Closing which shall reflect all changes in such employees that occur
between the date hereof and the Closing, none of which such changes shall be
effected other than in the ordinary course of business. Any offer of continued
employment post-Closing by BATCO to such employees shall, subject to Section
8.2, not be construed to limit the ability of Buyer to terminate any such
employee at any time for any reason. Except as otherwise expressly contemplated
by this Section 7.4, all such continued employment of BATCO employees pursuant
to this Section 7.4(a) shall be on an at will basis on terms and conditions
(including severance) which, taken in the aggregate, are substantially
comparable to the terms and conditions of employment currently in effect for
such employees. Each such employee who remains employed, as of the Closing Date,
shall hereinafter be referred to as a "Transferred Employee."
(b) This Section 7.4 shall not create any right of any
person to remain an employee of BATCO, and no employee of BATCO shall have any
right to rely on this Section 7.4 for any purpose whatsoever.
ARTICLE VIII
POST-CLOSING COVENANTS
8.1 BOOKS AND RECORDS. Buyer will use its best efforts to preserve
all books and records of the Company and of BATCO received from Seller, or held
by the Company or BATCO immediately after the Closing, and to provide Seller or
its agents reasonable access to such books and records for a period of six years
following the Closing Date, or until such later date as preservation of and
access to those books and records is no longer required by any governmental or
similar body.
8.2 COMPLIANCE WITH FACILITY CLOSING LAWS. Following the Closing
Date, Buyer shall comply with any applicable law requiring prior notification to
Transferred Employees of BATCO or to any Governmental Authority incident to the
closing of a business or portion thereof or termination of employment of
Transferred Employees.
8.3 SPECIAL TAX PROVISIONS.
(a) Seller will timely prepare and file all federal
(United States and Canadian),
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state, province, and local income Tax Returns of the Company and BATCO for any
period prior to the Closing Date and pay all federal (United States and
Canadian), state, province, and local income taxes due thereunder in accordance
with applicable law. Seller shall provide copies thereof to Buyer. Buyer shall
cause the Company and BATCO to timely prepare and file all Tax Returns of the
Company and BATCO which are due after the Closing Date and which include any
period from and after the Closing Date and pay all Taxes due thereunder in
accordance with applicable law. All such Tax Returns shall be prepared and all
elections with respect to such Tax Returns shall be made, to the extent
permitted by Law, in a manner consistent with the Company's or BATCO's, as
applicable, prior normal practice. The Company shall not and shall cause BATCO
not to (and Buyer shall cause each of them not to), without Seller's consent,
file any amendment to the Tax Return of the Company and BATCO for any period
ending on or before Closing.
(b) Seller shall be entitled to any credits or refunds of
Taxes of the Company or BATCO for any period or periods ending on or before the
Closing Date, excluding any amounts reflected in the determination of the
Certified Net Working Capital (as defined in the Asset Purchase Agreement), and
shall pay any deficiency of Taxes of the Company or BATCO for such period or
periods. Any credits or refunds to which Seller is entitled hereunder but which
at any time subsequent to the Closing Date are received by or credited to the
Company or BATCO, shall be promptly paid to Seller following receipt of such
refund or the utilization by the Company or BATCO of such credit (and Buyer
shall cause each of Company and BATCO to make such payment). In the event that a
Tax increase resulting from an audit by a Governmental Authority of a Tax Return
of the Company or BATCO for a period ending on or before the Closing Date shall
have the effect of creating an offsetting Tax benefit for the Company or BATCO
in a period ending after the Closing Date, Buyer shall cause Company and BATCO,
as applicable, to remit to Seller, within ten (10) days of the Company's or
BATCO's, as applicable, receipt of such Tax benefit, an amount equal to the
lesser of (1) the amount of such Tax benefit or (2) the amount of any such Tax
increase borne by Seller.
(c) Buyer shall immediately notify Seller in writing upon
receipt by Buyer, the Company or BATCO notice of any tax audits, any pending or
threatened assessments with respect to Taxes or any requests by a taxing
authority to extend the applicable statute of limitations relating to periods
and Taxes of the Company or BATCO for which Seller has any liability under this
Agreement. Seller shall have the right, at its cost, to determine whether to
grant or deny any such extensions, to control the Company's or BATCO's interests
in any audit or other examination by any taxing authority and to contest,
resolve and defend against any assessment for Taxes, notice of deficiency or
other adjustment of Taxes of or relating to the Company or BATCO, as applicable,
for taxable periods ending on or prior to the Closing Date and to employ counsel
of its choice, at its cost.
(d) Buyer and Seller shall each provide the other with
such assistance as reasonably may be requested by either of them in connection
with the preparation of any Tax Return, any audit or other examination by any
taxing authority or any judicial or administrative proceedings related to
liability for Taxes (including refunds), and will each provide the other with
any records or information relevant to such return, audit or examination,
proceedings or determination as are in their possession or subject to their
control. Such assistance shall include
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making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder and shall include
providing copies of any relevant Tax Returns. Each party shall retain for a
reasonable period of time (but not less than six (6) years after Closing or
until expiration of all applicable statutes of limitation, whichever is later)
and provide the other party with any records or information or any other
assistance (including, without limitation, making employees available to such
other party) which may be relevant to such Tax Return, audit, proceeding or
determination. The party requesting assistance hereunder shall reimburse the
other for reasonable expenses incurred in providing such assistance.
(e) Buyer shall, if so requested by Seller, cause each of
the Company and BATCO to apply forthwith upon the request being made, at the
expense of Seller, for any available amnesty or other legal provision permitting
it to close preceding years for any Tax-related purpose.
8.4 RESTRICTIVE COVENANT.
(a) For a period of five years following the Closing,
neither the Seller nor any subsidiary of the Seller shall engage in, or have any
significant financial interest in, any business engaged in the same or
substantially similar activities to the BATCO Business as conducted by BATCO as
of the Closing Date within the United States or Canada.
(b) For a period of four years following the Closing
under this Agreement, neither the Seller nor any subsidiary of the Seller shall
interfere with the relationship of the post-Closing BATCO with the Transferred
Employees, including but not limited to, causing or helping another business to
hire, or solicit to hire, any Transferred Employee, provided that this provision
shall not be violated by general solicitation for hire of employees.
ARTICLE IX
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligation of Buyer to purchase the Company Shares from Seller
under this Agreement is subject to the satisfaction, at or before the Closing,
of all the conditions set forth in this Article IX. Buyer may waive any or all
of these conditions in whole or in part, but only in writing.
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE BY
SELLER. The representations and warranties of the Company and Seller contained
in this Agreement shall be true and correct in all material respects, except for
changes expressly permitted or contemplated by this Agreement, on and as of the
time of Closing with the same effect as though such representations and
warranties had been made at and as of such time (except to the extent that they
expressly relate to an earlier date). The Company and Seller shall have
performed and complied with all material covenants, agreements and conditions
required by this Agreement to be performed or complied with by it prior to or at
the Closing.
9.2 CLOSING DELIVERIES. Buyer shall have received the deliveries
set forth in Sections
- 23 -
11.2(a).
9.3 ABSENCE OF LITIGATION. No action or proceeding before any
court or other Governmental Authority shall have been instituted or threatened
by any Person (other than Buyer or any affiliate thereof) to restrain or
prohibit the transactions contemplated by this Agreement and shall not have been
dismissed or resolved.
9.4 CONSENTS. All material consents, approvals, permits, orders
and actions set forth in Section 4.3 or Section 5.2 of the Seller Disclosure
Statement and Section 6.3(b) of the Buyer Disclosure Statement shall have been
obtained and shall be in full force and effect.
9.5 SATISFACTION OF OUTSTANDING INDEBTEDNESS. At or before the
Closing, Seller shall have caused BATCO and the Company to repay or be released
from all outstanding indebtedness for borrowed money and inter-company
indebtedness for which each of BATCO and the Company is liable.
9.6 MATERIAL ADVERSE CHANGES. There shall not have been any
material adverse changes in the operations or financial condition of the BATCO
Business since December 31, 2002. Except for the consummation of the
transactions contemplated in the Asset Purchase Agreement and the use by the
Company of the Excluded Assets to discharge Excluded Liabilities or to make
distributions to the Seller or otherwise assign the Excluded Assets to Seller or
its affiliates, no material adverse changes in the financial condition of the
Company will have occurred after the closing of the sale of the Purchased Assets
in accordance with the terms of the Asset Purchase Agreement.
9.7 RESIGNATION OF DIRECTORS AND OFFICERS. The directors and
officers of the Company and BATCO in office immediately prior to the Closing
Date shall have resigned from their respective positions with the Company and
BATCO.
9.8 EFFECTUATION OF THE ASSET PURCHASE AGREEMENT. The sale and
purchase of the Purchased Assets and the other transactions contemplated by the
Asset Purchase Agreement shall have been consummated in accordance with the
terms of the Asset Purchase Agreement.
ARTICLE X
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligation of Seller to sell and transfer the Company Shares to
Buyer under this Agreement is subject to the satisfaction, at or before the
Closing, of all conditions set forth in this Article X. Seller may waive any or
all of these conditions in whole or in part, but only in writing.
10.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES; PERFORMANCE BY
BUYER. The representations and warranties of Buyer contained in this Agreement
shall be true and correct in all material respects, except for changes permitted
or contemplated by this Agreement, on and as of the time of Closing with the
same effect as though such representations and warranties had
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been made at and as of such time (except to the extent that they expressly
relate to an earlier date). Buyer shall have performed and complied with all
material covenants, agreements and conditions required by this Agreement to be
performed or complied with by it prior to or at the Closing.
10.2 CLOSING DELIVERIES. Seller shall have received the deliveries
set forth in Section 11.2(c).
10.3 ABSENCE OF LITIGATION. No action or proceeding before any
court or other Governmental Authority shall have been instituted or threatened
by any Person (other than Seller or any of their affiliates) to restrain or
prohibit the transactions contemplated by this Agreement and shall not have been
dismissed or resolved.
10.4 CONSENTS. All consents, approvals, permits, orders and actions
set forth in Sections 4.3(b) and 5.2(b) of the Disclosure Statement shall have
been obtained and shall be in full force and effect.
10.5 EFFECTUATION OF THE ASSET PURCHASE AGREEMENT The sale and
purchase of the Purchased Assets and other transactions contemplated by the
Asset Purchase Agreement shall have been consummated in accordance with the
terms of the Asset Purchase Agreement and the Company shall have applied the
Excluded Assets to the discharge of Excluded Liabilities or to the making of
distributions to the Seller or shall have otherwise assigned the Excluded Assets
to Seller or its affiliates.
ARTICLE XI
THE CLOSING
11.1 THE CLOSING. The "Closing Date" refers to the date upon which
the parties consummate the purchase and sale of the Company Shares as
contemplated herein, and shall occur on a date on the later of: (a) a business
day on or before February 28, 2003 mutually agreed upon by the Seller and the
Buyer or (b) on a business day following the closing date of the sale of the
Purchased Assets under the Asset Purchase Agreement designated by Seller no
later than the second business day following such closing date under the Asset
Purchase Agreement. The consummation of the purchase and sale of the Company
Shares (the "Closing") shall take place at the offices of Drinker Xxxxxx & Xxxxx
LLP, One Xxxxx Square, 00xx & Xxxxxx Xxxxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000,
commencing at 10:00 a.m., local time, on the Closing Date, and shall be
effective as of 12:01 a.m. eastern standard time on the Closing Date (the
"Effective Time"). Subject to Article XII, failure to consummate the Closing
shall not result in the termination of this Agreement or relieve any Person of
any obligation hereunder.
11.2 DELIVERIES AT THE CLOSING. At the Closing, in addition to the
other actions contemplated elsewhere herein:
(a) Seller shall deliver, or shall cause to be delivered,
to Buyer the following:
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(i) stock certificates representing all of the
Company Shares, duly endorsed for transfer
or with stock powers affixed thereto
executed in blank in proper form for
transfer and stock certificates representing
all of the BATCO Shares;
(ii) a certificate, dated the Closing Date and
signed by it, to the effect set forth in
Section 9.1.
(iii) a copy of the Seller's articles of
incorporation and bylaws, and all amendments
thereof to date, certified as of a recent
date by the Secretary of the State of
Michigan and by the Secretary or an
Assistant Secretary of the Seller, and
accompanied by a Certificate of Good
Standing as of a recent date for the Seller,
certified by the Secretary of the State of
Michigan; and
(iv) copies of the resolutions of the board of
directors of the Seller authorizing the
execution, delivery and performance of this
Agreement and the Seller Transaction
Documents, certified as of the Closing by
the Secretary or an Assistant Secretary of
the Seller.
(b) Seller shall cause the Company to deliver to Buyer
the following:
(i) a certificate, dated the Closing Date and
signed by the President or any Vice
President of the Company, to the effect set
forth in Section 9.1;
(ii) a copy of the Company's articles of
incorporation and bylaws, and all amendments
thereof to date, certified as of a recent
date by the Secretary of the State of
Michigan and by the Secretary or an
Assistant Secretary of the Company, and
accompanied by a Certificate of Good
Standing as of a recent date for the
Company, certified by the Secretary of the
State of Michigan;
(iii) a copy of BATCO's articles of incorporation
and bylaws, and all amendments thereof to
date, certified as of a recent date by the
Secretary or an Assistant Secretary of the
Company, and accompanied by a Certificate of
Status as of a recent date for the Company,
certified by the Register of Corporations of
the Province of Alberta; and
(iv) copies of the resolutions of the board of
directors of the Company authorizing the
execution, delivery and performance of this
Agreement and the Company Transaction
Documents, certified as of the Closing by
the Secretary or an Assistant Secretary of
the Company.
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(c) Buyer shall deliver, or shall cause to be delivered,
to Seller the following:
(i) immediately available funds in the amount of
the Purchase Price by wire transfer to an
account specified by Seller;
(ii) a certificate, dated the Closing Date signed
by the President or any Vice President of
Buyer, to the effect set forth in Section
10.1;
(iii) a copy of Buyer's articles or certificate of
organization (or other organization
documents) and all amendments thereof to
date, certified as of a recent date by the
Secretary of State of Delaware and by the
Secretary or an Assistant Secretary of
Buyer, and accompanied by a certificate of
good standing as of a recent date for Buyer,
certified by the Secretary of State of
Delaware; and
(iv) a copy of the resolutions of the board of
directors of Buyer authorizing the
execution, delivery and performance by Buyer
of this Agreement and the Buyer Transaction
Documents, certified as of the Closing by
the Secretary or an Assistant Secretary of
Buyer.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated prior to the
Closing Date:
(a) by mutual consent of Buyer and Seller; or
(b) by Buyer or Seller if the transactions contemplated
hereby are not consummated on or before February 28, 2003 or within five days
following the closing of the sale of the Purchased Assets under the Asset
Purchase Agreement, whichever is later; provided, however, that the right to
terminate this Agreement 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 Buyer or Seller if the Asset Purchase Agreement
has been terminated; or
(d) by Buyer, if any representation or warranty of the
Company or Seller made in or pursuant to this Agreement is untrue or incorrect
in any material respect or the Company or Seller materially breaches the
covenants or other terms of this Agreement; or
(e) by Seller if any representation or warranty of Buyer
made in or pursuant to this Agreement is untrue or incorrect in any material
respect or Buyer materially breaches the covenants or other terms of this
Agreement.
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12.2 RIGHTS NOT IMPAIRED. In the event of any failure to consummate
the transactions contemplated by this Agreement for other than a permitted
termination of this Agreement in accordance with the provisions of Section
12.1(a) or (b) or (c) hereof, no provision of this Agreement shall impair, limit
or otherwise affect the right of any party hereto to xxx and collect damages
from any Person for breach of contract, including, without limitation, for
breach of any representations, warranties or covenants contained herein. If
termination results from the exercise of a party's right of termination under
Section12.1(a) or (b) or (c) hereof, this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned without further action or
remedy by any party.
12.3 PROCEDURE FOR TERMINATION. A party terminating this Agreement
pursuant to Section 12.1 shall give written notice thereof to each other party
hereto.
ARTICLE XIII
INDEMNITY
13.1 INDEMNIFICATION OF BUYER.
From and after the Closing, Seller will indemnify and hold harmless
Buyer, and its successors, owners, officers, directors, and affiliates
(including, after the Effective Time, BATCO and the Company), (collectively, the
"Buyer Indemnified Persons"), and will reimburse the Buyer Indemnified Persons
for any loss, liability, claim, damage, expense (including costs of
investigation and defense and reasonable attorneys' fees and expenses)
(collectively, "Damages"), arising from or in connection with:
(a) any breach of any representation or warranty made by
Seller in (i) this Agreement, (ii) any transfer instrument, or (iii) any
certificate, document, writing or instrument required to be delivered by Seller
or the Company to Buyer as a condition to Closing under this Agreement;
(b) any breach of any covenant or obligation of Seller in
this Agreement or in any other certificate, document, writing or instrument
required to be delivered by Seller or the Company to Buyer as a condition to
Closing under this Agreement;
(c) except for Standard Products Warranty Claims, any
product liability or similar claim by a third party against a Buyer Indemnified
Person for injury to person or property, regardless of when made or asserted,
which arises out of or is based upon any express or implied representation,
warranty, agreement or guarantee made by BATCO, or alleged to have been made by
BATCO, or which is imposed or asserted to be imposed by operation of law on a
Buyer Indemnified Person, in connection with any product sold and shipped by, or
leased and shipped by, or on behalf of BATCO on or prior to the Effective Time,
including without limitation any claim seeking recovery for consequential
damage, lost revenue or income;
(d) any expense or cost incurred by a Buyer Indemnified
Person to satisfy a material Legal Obligation related to the presence prior to
the Effective Time of any Hazardous
- 28 -
Substance at the Facility, or the occurrence prior to the Effective Time of any
Hazardous Activity at the Facility, or the violation prior to the Effective
Time by BATCO or any possessor of the Facility prior to the Effective Time of
any Environmental, Health and Safety Laws, or the disposal or treatment of
Hazardous Substances by BATCO prior to the Effective Time, provided that such
Buyer Indemnified Person has received written notice of such a material Legal
Obligation from a Governmental Authority which could enforce the Legal
Obligation or a third party which would have standing to xxx a Buyer
Indemnified Person concerning the Legal Obligation; or
(e) liabilities and obligations of BATCO to BATCO's
customers arising out of a customer claim of a breach of BATCO's written
warranty agreements in the forms disclosed in Section 5.20 of the Disclosure
Statement given by BATCO to its customers and of any implied warranties, each in
the ordinary course of business for products of BATCO shipped prior to the
Effective Time to the extent the amount of such liabilities and obligations are
in excess of the Standard Products Warranty Claims ("Excess Products Warranty
Claims - BATCO");
(f) any liability or obligations arising out of
proceedings against, or investigations involving or affecting, BATCO commenced
by a third party pending either in court or before any other Governmental
Authority, or before an arbitrator of any kind, as of the Effective Time;
(g) other than as provided in Section 13.1(c) hereof, any
liability or obligations arising from any proceedings against, or investigations
involving or affecting, BATCO, the Company or Buyer either in court or before
any other Governmental Authority, or before an arbitrator of any kind, not
instituted based on actions of Buyer or its affiliates, commenced by a third
party after the Effective Time but relating to the operation or conduct of the
BATCO Business prior to the Effective Time;
(h) any federal (United States or Canadian), state,
province, or local income tax payable by BATCO or the Company with respect to
the business, assets, properties or operations of BATCO or the Company for any
period prior to the Effective Time;
(i) any indebtedness incurred by BATCO or the Company
prior to the Effective Time for borrowed monies or evidenced by a promissory
note issued by BATCO or the Company and any inter-company indebtedness of BATCO
or of the Company;
(j) any liability or obligation of BATCO or the Company
for fees and expenses of counsel, accountants and other experts arising or
incurred prior to the Effective Time in connection with the negotiation,
preparation and execution of this Agreement and the transactions contemplated
hereby;
(k) any liabilities and obligations that arise under
ERISA (as defined in this Agreement) as a result of BATCO being prior to the
Effective Time an ERISA Affiliate of certain other Persons;
(l) any liabilities and obligations to employees of BATCO
under Contracts
- 29 -
that provide for payments to such employees upon a change of control of BATCO.
13.2 GENERAL INDEMNIFICATION OBLIGATION OF BUYER. From and after
the Closing, Buyer will indemnify and hold harmless Seller, and its successors,
owners, officers, directors, and affiliates, (collectively, the "Seller
Indemnified Persons"), and will reimburse the Seller Indemnified Persons for
Damages arising from or in connection with:
(a) any breach of any representation or warranty made by
Buyer in (i) this Agreement, (ii) any transfer instrument, or (iii) any
certificate, document, writing or instrument required to be delivered by Buyer
to Seller as a condition to Closing under this Agreement;
(b) any breach of any covenant or obligation of Buyer in
this Agreement or in any other certificate, document, writing or instrument
delivered by Buyer to Seller pursuant to this Agreement; or
(c) any liability or obligation of the Company or BATCO
occurring or arising during the period after the Effective Time; or
(d) any expense or cost incurred by Seller to satisfy a
material Legal Obligation related to the presence after the Effective Time of
any Hazardous Substance brought on to the Facility by Buyer or an agent or
affiliate of Buyer (including, after the Effective Time, BATCO) or created at
the Facility by Buyer or an agent or affiliate of Buyer; or the occurrence after
the Effective Time of any Hazardous Activity at the Facility caused by or
permitted to occur by Buyer or an agent or affiliate of Buyer while the Facility
is owned or operated by Buyer or an agent or affiliate of Buyer; or the
violation after the Effective Time by the Buyer or an affiliate or agent of
Buyer of any Environmental, Health and Safety Laws or the disposal or treatment
of Hazardous Substances by the Buyer or an agent or affiliate of Buyer after the
Effective Time, provided that such Seller Indemnified Person has received
written notice of such a material Legal Obligation from a Governmental Authority
which could enforce the Legal Obligation or a third party which would have
standing to xxx a Seller Indemnified Person concerning the Legal Obligation; and
(e) any product liability or similar claim by a third
party against a Seller Indemnified Person for injury to person or property,
regardless of when made or asserted, which arises out of or is based upon any
express or implied representation, warranty, agreement or guarantee made by
Buyer or BATCO, or alleged to have been made by Buyer or BATCO, or which is
imposed or asserted to be imposed by operation of law on a Seller Indemnified
Person, in connection with any product sold and shipped by, or leased and
shipped by, or on behalf of Buyer or BATCO on or after the Effective Time,
including without limitation any claim seeking recovery for consequential
damage, lost revenue or income.
13.3 SURVIVAL; TIME LIMITATIONS.
(a) All representations and warranties in this Agreement
and in any certificate or document delivered pursuant to this Agreement will
survive the Closing through the first year anniversary of the Closing Date,
except that the representations and warranties of Seller
- 30 -
contained in Sections 4.4 and 5.3 of this Agreement and the representations and
warranties of Buyer contained in Section 6.1 of this Agreement shall survive
until the earlier of (i) the expiration of applicable statute of limitations or
(ii) December 31, 2005. Provided, however, that, if prior to the expiration of
the survival period with respect to any claim for indemnity arising from an
inaccurate or breached representation or warranty, the indemnifying parties
shall have been notified of such claim and such claim shall not have been
finally resolved before the expiration of such survival period, any
representation, warranty, covenant or agreement that is the basis for such claim
shall continue to survive as to such claim and shall remain a basis for
indemnity as to such claim until such claim is finally resolved.
(b) Seller will have no liability for indemnification
under Section 13.1(b) through (l) hereof unless Buyer notifies the Seller of a
claim specifying the factual basis of that claim in reasonable detail to the
extent such detail is then known by Buyer on or before December 31, 2005.
(c) Buyer will have no liability for indemnification
under Section 13.2(b) through (e) hereof unless the Seller notifies Buyer of a
claim specifying the factual basis of that claim in reasonable detail to the
extent such detail is then known by Seller on or before December 31, 2005.
13.4 INDEMNITY LIMITATIONS.
(a) Neither Seller nor Buyer will have liability under
this Article XIII until the total of all such liability arising under (1) this
Article XIII and (2) under Article XIII of the Asset Purchase Agreement exceeds
Three Hundred Thousand Dollars ($300,000), provided, however, that if the total
of such liability exceeds $300,000, the obligated party or parties shall be
liable for the total amount of all such liability, and further provided that
this limitation shall not apply to: (1) any liability imposed on an indemnifying
party arising from such indemnifying party's fraud or intentional and knowing
breach of a representation, warranty or covenant herein with the intent to
deceive the party to which the representation or warranty was made; or (2) the
Seller's obligations under the following subparagraphs of Section 13.1 hereof:
(e)[Excess Products Warranty Claims - BATCO], (f) [pending proceedings], (h)
[income taxes], (i) [borrowed monies/inter-company debt], and (j) [certain
expenses related to negotiation and preparation of this Agreement]. If an
indemnity claim arises under Section 13.1(a)(i) from a breach of a
representation or warranty of Seller (or the Company) set forth in Articles IV
or V or under Section 13.2(a)(i) from a breach of a representation or warranty
of Buyer set forth in Article VI, the effect of the words "material" and
"materially" and all "material adverse effect", "in all material respects", "in
any material respects", and "material adverse change" clauses included in
Articles IV, V and VI shall be disregarded for purposes of determining the
applicability of the limitation of this Section 13.4.
(b) Neither Seller nor Buyer will have total liability
under this Article XIII and under Article XIII of the Asset Purchase Agreement
in an aggregate amount in excess of Eleven Million Dollars ($11,000,000),
provided, however, that this limitation shall not apply to any liability imposed
on an indemnifying party arising from such indemnifying party's fraud or
intentional and knowing breach of a representation or warranty herein made by
such
- 31 -
indemnifying party herein with the intent to deceive the party to which the
representation or warranty was made.
(c) No party hereto shall be deemed to have breached any
representation, warranty, or covenant if (i) such party shall have notified the
other party hereto in writing, on or prior to the Closing Date, of the breach
of, or inaccuracy in, or of any facts or circumstances constituting or resulting
in the breach of, or inaccuracy in, such representation, warranty or covenant
and (ii) such other party has permitted the Closing to occur, in which case such
other party shall be deemed to have waived such breach or inaccuracy. In no
event shall the Seller be liable under this Section 13.1 for Damages if Buyer
had actual knowledge on or prior to the Closing Date of the misrepresentation,
breach of warranty or nonperformance or breach of covenant giving rise to such
Damages.
(d) Under no circumstances shall Damages include any
losses, claims, liabilities, damages, obligations, costs or expenses to the
extent they affect or relate to any business other than the continuation of the
BATCO Business from and after the Closing.
(e) Notwithstanding any other provision hereof, the
Seller shall have no liability in respect of any claim for indemnification
under this Section 13.1:
(i) if and to the extent that such claim arises
or is increased as a result of any change in
legislation enacted after the Effective Time
that takes effect retrospectively; or
(ii) if and to the extent that such claim occurs
or is increased as a result of any increase
in the rate of taxation in force at the date
hereof;
(f) Under no circumstances shall any party hereto be
liable for any special, consequential, indirect or punitive damages for any
misrepresentation or breach of any provision of, or any other matter arising
pursuant to, this Agreement or any Transaction Document.
13.5 METHOD OF ASSERTING CLAIMS, ETC.
(a) In case any claim is made, or any suit or action is
commenced by a third party against Buyer in respect of which indemnification
under Section 13.1 may be sought by it hereunder, or the Seller in respect of
which indemnification under Section 13.2 may be sought by it hereunder, the
indemnified party (the "Indemnitee") shall promptly give the indemnifying party
(the "Indemnifying Party") notice thereof and the Indemnifying Party shall be
entitled to control the defense thereof. The Indemnitee may (but need not)
retain its own counsel, but the fees and expenses of such counsel shall be at
the expense of the Indemnitee. The Indemnifying Party may at any time notify the
Indemnitee of its intention to settle or compromise any claim, suit or action
against the Indemnitee, and the Indemnifying Party may settle or compromise any
such claim, suit or action unless the Indemnitee notifies the Indemnifying Party
in writing (within ten (10) business days after the Indemnifying Party has given
written notice of its intention to settle or compromise) that the Indemnitee
intends to conduct or to continue to conduct the defense of such claim, suit or
action. Unless the Indemnitee gives the notice referred
- 32 -
to in the foregoing sentence with respect to settlements or compromises, any
such settlement or compromise of, or (notwithstanding any notice from the
Indemnitee referred to in the foregoing sentence) any final judgment or decree
entered on or in respect of any claim, suit or action shall be binding upon, the
Indemnitee as fully as if the Indemnitee had assumed and controlled the defense
thereof and a final judgment or decree had been entered in such suit or action,
or with regard to such claim, by a court of competent jurisdiction for the
amount of such settlement, compromise, judgement or decree. If the Indemnitee
conducts or continues the conduct of the defense of any claim, suit or action as
aforesaid, it shall do so at its own cost and expense, holding the Indemnifying
Party harmless from all costs, fees, expenses, debts, liabilities and charges in
connection with such defense.
(b) If an Indemnitee is entitled to be indemnified
hereunder other than in respect of a claim made or action commenced against
Buyer or the Seller as referred to in Section 13.5(a), the Indemnifying Party
shall be given written notice thereof promptly by the Indemnitee, which notice
shall specify the amount and nature of the amounts to be indemnified and include
the request of the Indemnitee for indemnification of such amount. The
Indemnifying Party shall within twenty (20) days pay to the Indemnitee the
amount so specified, or deliver to the Indemnitee written notice setting forth
in reasonable detail that Indemnifying Party is not obligated to pay such
amount, in which event the parties shall use good faith efforts to resolve any
disputed matters.
13.6 PAYMENT. Upon the determination of liability under this
Article XIII, the appropriate party shall pay to the other, as the case may be,
within ten days after such determination, the amount of any claim for
indemnification made hereunder. Any liability of the Seller under Article XIII
shall first be paid from the Escrow Amount. Upon the payment in full of any
claim, the entity making payment shall be subrogated to the rights of the
indemnified party against any Person with respect to the subject matter of such
claim.
13.7 OTHER REMEDIES. Except for fraud, including an intentional
misrepresentation made with intent to deceive, the rights and remedies of the
Buyer for money damages under this Article XIII are exclusive and in lieu of any
and all rights and remedies that the Buyer may have under this Agreement or
under applicable law for any Damages. Except for the express provisions of
Sections 13.4(a) and 13.4(b) hereof, the provisions of this Agreement shall not
limit or modify the indemnification rights or obligations created under the
Asset Purchase Agreement of the parties hereto or of any other beneficiary of
such indemnification rights specified in the Asset Purchase Agreement.
ARTICLE XIV
MISCELLANEOUS
14.1 JURISDICTION/VENUE. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
shall be brought in the United States District Court, Middle District of
Pennsylvania, Harrisburg Division, if such Court has or can acquire
jurisdiction. If such United States District Court does not have or cannot
acquire jurisdiction, such action or proceeding may be brought against any of
the parties in the Court of Common Pleas for Harrisburg, Pennsylvania. Each of
the parties consents to the jurisdiction of such courts (and of the
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appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
Prior to initiating a judicial proceeding against another party to this
Agreement, a party shall first seek in good faith to negotiate for 30 days a
resolution of the dispute with such other party, unless the initiating party in
good faith determines that such a delay will materially impair or adversely
affect such party's rights or remedies available under this Agreement or
applicable law. The non-prevailing party of any judicial proceeding shall bear
all of the expenses of the prevailing party for any such proceeding initiated to
seek enforcement of any provision of, or any rights or remedies arising under,
this Agreement, including the reasonable attorneys fees of the prevailing party.
The parties shall seek the designated court's determination as to which party is
the non-prevailing party.
14.2 COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Photostatic or
facsimile reproductions of this Agreement may be made and relied upon to the
same extent as originals.
14.3 ASSIGNMENT. This Agreement shall be binding on, and shall
inure to the benefit of, the parties to it and their respective heirs, legal
representatives, successors, and assigns, but this Agreement shall not be
assignable by a party without the prior written consent of the other party,
except that Buyer may assign this Agreement to an affiliate of Buyer, but in
such event the original signatory hereto as well as the affiliate assignee shall
be jointly and severally liable for the obligations of Buyer hereunder.
14.4 FEES AND EXPENSES. The Seller shall pay all the expenses, fees
and costs (including without limitation legal and accounting expenses) incurred
or to be incurred by Seller and the Company in negotiating and preparing this
Agreement and in closing and carrying out the transactions contemplated by this
Agreement. The Buyer shall pay all the expenses, fees and costs (including
without limitation legal and accounting expenses) incurred or to be incurred by
it in negotiating and preparing this Agreement and in closing and carrying out
the transactions contemplated by this Agreement.
14.5 NOTICES. All notices, waivers and other communications under
this Agreement must be in writing and will be deemed to have been duly given (i)
when delivered by hand (with written confirmation of receipt), (ii) when sent by
facsimile (with written confirmation of successful transmission) or, (iii) two
business days following deposit thereof (with all postage and other fees paid)
with a nationally recognized overnight delivery service, in each case to the
appropriate addresses and facsimile numbers, as applicable, set forth below (or
to such other addresses and facsimile numbers as a party may designate by notice
to the other parties):
Buyer: Dayton Parts, LLC
00 Xxxxxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxxxx X. Xxxx, President
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With a Copy to: Xxxxxx & Xxxxxxxx, PLLC
Xxxxx 0000, XxxXxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Facsmilie: 000-000-0000
Attn: X. Xxxxx Green
Company: Dayton Parts, Inc.
0000 Xxxxxxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxxx, XX 00000-0000
Facsimile: 000-000-0000
Attn: Xxxx Xxxxxxx, President
Seller: JPE, Inc.
0000 Xxxxx Xxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000-0000
Facsimile: 000-000-0000
Attn: Xxxxx Xxxxxx, President & COO
With a Copy to: Drinker Xxxxxx & Xxxxx LLP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
Facsimile: 000-000-0000
Attn: Xxxx X. Xxxxx
14.6 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the internal Laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of Laws thereof.
14.7 FURTHER ACTIONS AND ASSURANCES. Each of the parties hereto
shall use such party's reasonable best effort to take such action as may be
necessary or reasonably requested by the other parties hereto to carry out and
consummate the transactions contemplated by this Agreement. From time to time,
at Buyer's request, whether at or after the Closing and without further
consideration, Seller shall execute and deliver such further instruments of
assignment, conveyance and transfer and take such other actions as Buyer may
reasonably request to convey and transfer more effectively to Buyer the Company
Shares. Buyer shall, after the Closing, from time to time, promptly execute,
acknowledge and deliver any other assurances or documents reasonably requested
by Seller.
14.8 EFFECT OF HEADINGS. The subject headings of the articles and
sections of this Agreement are included for purposes of convenience only, and
shall not affect the construction or interpretation of any of its provisions.
14.9 SEVERABILITY. The invalidity or unenforceability of any
particular provision, or part of any provision, of this Agreement shall not
affect the other provisions or parts hereof, and
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this Agreement shall be construed in all respects as if such invalid or
unenforceable provisions or parts were omitted.
14.10 REPRESENTATIONS. No representation or warranty in this
Agreement shall be deemed violated if the information required to be disclosed
by a party in any such representation or warranty is disclosed by such party in
or in response to any other representation or warranty of such party in this
Agreement.
14.11 ENTIRE AGREEMENT; MODIFICATION; WAIVER. This Agreement,
together with the other agreements referred to herein, including the Asset
Purchase Agreement, constitute the entire agreement between the parties
pertaining to the subject matter contained in it and supersedes all prior
agreements, representations, and undertakings of the parties hereto. No
supplement, modification, or amendment of this Agreement shall be binding unless
executed in writing by all the parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision, whether or not similar, nor shall any waiver constitute a continuing
waiver. No waiver shall be binding unless executed in writing by any party
making the waiver.
14.12 DISCLAIMER OF WARRANTIES. Except for representations and
warranties expressly set forth in this Agreement, in the Asset Purchase
Agreement or in any transfer instrument or certificate delivered as a condition
to Closing hereunder, no party has made any representations or warranties on
which any other party may rely.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
on the day and year first above written.
JPE, INC.
By: _____________________________________
Name:
Title:
DAYTON PARTS, INC.
By: _____________________________________
Name:
Title:
DAYTON PARTS, LLC
By: _____________________________________
Name:
Title:
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