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ASSET AND STOCK PURCHASE AGREEMENT
among
MAGNETEK, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.
and
NATIONAL ELECTRIC COIL COMPANY, L.P.
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Dated as of September 14, 1995
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SALE OF CERTAIN ASSETS OF
MAGNETEK NATIONAL ELECTRIC COIL, INC. LOCATED IN
BROWNSVILLE, TEXAS, RELATING TO ROTATING EQUIPMENT
REMANUFACTURING AND REPAIR AND OF COIL COMPANY DE MEXICO,
S.A. DE C.V.
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TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS............................................... 1
1.1 Certain Defined Terms..................................... 1
1.2 Other Definitional Provisions............................. 8
ARTICLE II CLOSING; PURCHASE PRICE ADJUSTMENT........................ 8
2.1 Sale and Transfer of the Assets........................... 8
2.2 Assets Not Transferred.................................... 10
2.3 Assumed and Excluded Liabilities.......................... 11
2.4 Closing................................................... 13
2.5 Purchase Price Adjustment................................. 13
2.6 Tax Allocation............................................ 17
2.7 Sales and Use Tax......................................... 17
ARTICLE III CONDITIONS TO CLOSING................................ 17
3.1 Buyer's Obligation........................................ 17
3.2 Sellers' Obligation....................................... 18
3.3 Condition Subsequent...................................... 19
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MAGNETEK................ 20
4.1 Authority; No Conflicts; Governmental Consents............ 20
4.2 Financial Statements...................................... 21
4.3 Taxes..................................................... 21
4.4 Title to Assets........................................... 22
4.5 Contracts................................................. 22
4.6 Litigation; Decrees....................................... 23
4.7 Employee and Related Matters.............................. 23
4.8 Environmental Matters..................................... 24
4.9 Employee and Labor Relations.............................. 24
4.10 Exclusivity of Representations............................ 25
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER................... 25
5.1 Authority; No Conflicts; Governmental Consents............ 25
5.2 Actions and Proceedings, etc.............................. 26
5.3 Availability of Funds..................................... 26
5.4 Buyer's Acknowledgment.................................... 26
5.5 Exon-Xxxxxx............................................... 27
5.6 No Knowledge of Sellers' Breach........................... 27
ARTICLE VI COVENANTS OF MAGNETEK..................................... 27
6.1 Accounts Receivable....................................... 27
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6.2 Offsite Assets............................................ 28
6.3 Glasmex Consolidation..................................... 28
ARTICLE VII COVENANTS OF BUYER................................... 29
7.1 Confidentiality........................................... 29
7.2 Accounts Receivable....................................... 29
7.3 Waiver of Bulk Sales Law Compliance....................... 30
7.4 Excluded Assets........................................... 30
7.5 Insurance................................................. 30
7.6 Replacement Bonding....................................... 30
ARTICLE VIII MUTUAL COVENANTS..................................... 30
8.1 Permits and Consents...................................... 30
8.2 Cooperation............................................... 32
8.3 Publicity................................................. 32
8.4 Reasonable Efforts and Further Assurances................. 32
8.5 Records; Cooperation in Litigation........................ 33
8.6 Access to Former Business Records;
Cooperation in Litigation................................. 33
8.7 Use of Trademarks and Trade Names......................... 33
8.8 Required Modifications or Replacements of Products........ 34
8.9 Warranty Work; ALCAN Inventory............................ 34
8.10 Tax Returns and Taxes for Coil Company.................... 35
ARTICLE IX EMPLOYEE BENEFIT MATTERS.................................. 35
9.1 Employee Retention........................................ 35
9.2 Employee Benefit Plans.................................... 36
9.3 Vacation, Holiday, Sick and Severance Pay................. 36
9.4 Access to Information..................................... 36
9.5 Third-Party Beneficiaries................................. 37
ARTICLE X INDEMNIFICATION........................................... 37
10.1 Indemnification by MagneTek............................... 37
10.2 Indemnification by Buyer.................................. 38
10.3 Indemnification for Environmental Matters................. 38
10.4 Losses Net of Insurance, etc.............................. 39
10.5 Termination of Indemnification............................ 40
10.6 Procedures Relating to Indemnification (Other than
for Tax Claims)........................................... 41
10.7 Procedures Relating to Indemnification of Tax Claims ..... 42
10.8 Survival of Representations............................... 43
ARTICLE XI GENERAL PROVISIONS........................................ 43
11.1 Assignment................................................ 43
11.2 No Third-Party Beneficiaries.............................. 44
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11.3 Termination............................................... 44
11.4 Expenses.................................................. 45
11.5 Attorneys' Fees........................................... 45
11.6 Amendments................................................ 45
11.7 Notices................................................... 45
11.8 Interpretation; Exhibits and Schedules.................... 46
11.9 Counterparts.............................................. 47
11.10 Entire Agreement.......................................... 47
11.11 Fees...................................................... 47
11.12 Severability.............................................. 47
11.13 Governing Law............................................. 47
EXHIBITS
Exhibit A Xxxx of Sale, Assignment and Assumption Agreement
Exhibit B Brownsville Sublease
Exhibit C License Agreement
Exhibit D Mexico Sublease
Exhibit E Services Agreement
Exhibit F Sharing Agreement Amendment
Exhibit G Legal Opinion--Sellers' Counsel
Exhibit H Legal Opinion--MagneTek
Exhibit I Legal Opinion--Buyer's Counsel
SCHEDULES
Schedule 1.1(a) Alcan Agreement
Schedule 1.1(b) Business Employees
Schedule 1.1(c) June Balance Sheets
Schedule 1.1(d) Mexico Facility
Schedule 2.1(a) Brownsville Facility
Schedule 2.1(d) Intellectual Property
Schedule 2.5 Special Reserve Matters
Schedule 2.6 Purchase Price Allocation
Schedule 4.1(b) Conflicts
Schedule 4.1(c) Mexican Consents
Schedule 4.3 Certain Tax Matters
Schedule 4.4 Specified Liens
Schedule 4.5 Certain Contracts
Schedule 4.6 Pending or Threatened Claims
Schedule 4.7 Employee Benefit Plans
Schedule 4.9 Employment and Labor Matters
Schedule 5.1(b) Conflicts with Buyer Obligations
Schedule 5.4 Certain Mexico Corporate Deficiencies
Schedule 7.6 Contractors and Performance Bonds
Schedule 11.11 Brokers or Finders
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ASSET AND STOCK PURCHASE AGREEMENT
ASSET AND STOCK PURCHASE AGREEMENT dated as of September 14,
1995, among MAGNETEK, INC., a Delaware corporation ("MagneTek"), MAGNETEK
NATIONAL ELECTRIC COIL, INC., a Delaware corporation ("NEC" and together with
MagneTek, "Sellers"), and NATIONAL ELECTRIC COIL COMPANY, L.P., an Ohio limited
partnership ("Buyer").
NEC, a wholly owned subsidiary of MagneTek, is engaged through
its Brownsville, Texas operation in repairing, remanufacturing and upgrading
motors and generators (turbines and hydroelectric) primarily for the utility
industry (the "Brownsville Business"). Sellers desire to sell to Buyer certain
assets (other than excluded assets) relating to the Brownsville Business, as
well as the stock of a Mexican subsidiary of MagneTek. Buyer desires to
purchase such assets and stock and is willing to assume certain associated
obligations and liabilities.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act by the SEC, as in effect on the date
hereof.
"Alcan" means Alcan Smelters & Chemicals Limited.
"Alcan Agreement" means the agreement entered into on or about June
24, 1991 between MagneTek National Electric Coil and Alcan relating to a
repair performed by the Brownsville Business at the Kemano, British Columbia
power station of Alcan and the correspondence relating thereto dated June 28,
1991, attached hereto as Schedule 1.1(a).
"Assets" has the meaning set forth in Section 2.1.
"Assigned Contracts" has the meaning set forth in Section 2.1(e).
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"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Xxxx of Sale, Assignment and Assumption Agreement" means a
Xxxx of Sale, Assignment and Assumption Agreement in substantially the form
attached hereto as Exhibit A.
"Brownsville Sublease" means the Sublease between NEC and Buyer
in respect of the Brownsville Facility in substantially the form attached hereto
as Exhibit B.
"Brownsville Facility" means all of the leased facilities
described on Schedule 2.1(a), comprising the leased facilities owned by
Xx. Xxxxxxxx X. Xxxx and currently occupied by MagneTek and/or its sublessees in
Brownsville, Texas, except (i) the leasehold occupied by the Xxxxx Xxxxx Company
pursuant to a sublease, (ii) the leasehold occupied by NEC's PEI division and
(iii) the leasehold occupied by MagneTek's Jefferson Transformer division.
"Business Day" means a day other than a Saturday or a Sunday or
other day on which commercial banks in New York are authorized or required by
law to close.
"Business Employees" means any employee of NEC employed by the
Brownsville Business, and all employees of Coil Company (including those
transferred from Glasmex or who ultimately remain employees of Glasmex pursuant
to Sections 3.3 and 6.3 hereof) on the Closing Date including any such employee
on vacation, family, illness or disability leave on such date. Schedule 1.1(b)
sets forth a list of Business Employees as of the date set forth thereon.
"Buyer Indemnified Person" has the meaning set forth in Section
10.1.
"Closing Balance Sheet" has the meaning set forth in Section 2.5.
"Closing Date" means the day on which the Closing occurs
pursuant to Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Coil Company" means Coil Company de Mexico, S.A. de C.V., a
company organized under the laws of Mexico.
"Contract" means any contract, agreement, license, lease, sales or
purchase order or other legally binding commitment, whether written or oral,
to which MagneTek or NEC
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is a party and relating exclusively to the Brownsville Business.
"Contractual Obligation" means, as to any Person, any provision of
any note, bond or security issued by such Person or of any mortgage,
indenture, deed of trust, lease, license, franchise, contract, agreement,
instrument or undertaking to which such Person is a party or by which it or
any of its property or assets is subject.
"Employee Benefit Arrangements" means each and all pension,
supplemental pension, accidental death and dismemberment, life and health
insurance and benefits (including medical, dental, vision and
hospitalization), disability, holiday, vacation, sick pay, sick leave,
tuition refund, service award and other employee benefit arrangements, plans,
contracts or policies providing employee or executive compensation or
benefits to Business Employees, other than the Employee Benefit Plans.
"Employee Benefit Plans" means each and all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained or contributed to by
either Seller or in which either Seller participates or participated and
which, in each case, provides benefits to Business Employees of the
Brownsville Business, including (i) any such plans that are "employee welfare
benefit plans" as defined in Section 3(1) of ERISA and (ii) any such plans
that are "employee pension benefit plans" as defined in Section 3(2) of ERISA.
"Environmental Law" means (a) with respect to the Brownsville
Business and the Brownsville Facility, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, and any other applicable
statutes, regulations, rules, ordinances or governmental codes which relate
to the protection of the environment from the effects of Hazardous
Substances; and (b) with respect to the Mexico Business and the Mexico
Facility, statutes, regulations, rules, ordinances or governmental codes of
the Republic of Mexico which relate to the protection of the environment from
the effects of Hazardous Substances and which are of nationwide
applicability, as in effect on the date of this Agreement.
"Equipment" has the meaning set forth in Section 2.1(b).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC
promulgated from time to time thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.3.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Glasmex" means Glasmex S.A. de C.V., a company organized under the
laws of Mexico.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Substance" means any substance which is defined as a
hazardous waste or hazardous substance under any applicable statutes or
regulations currently in effect in the United States or Mexico adopted for
the protection of the environment.
"Indemnified Person" means, with respect to any Loss, the Person
seeking indemnification hereunder.
"Indemnifying Person" means, with respect to any Loss, the Person
from whom indemnification is being sought hereunder.
"Intellectual Property" has the meaning set forth in the Sharing
Agreement.
"Inventory" has the meaning set forth in Section 2.1(c).
"June Balance Sheets" means the unaudited balance sheets (i) of the
Brownsville Business and Coil Company (consolidated) as of June 18, 1995 and
(ii) of Glasmex as of July 3, 1995, in each case as attached hereto as
Schedule 1.1(c). As the context requires, "June Balance Sheet" refers to the
applicable balance sheet of any one of the foregoing attached.
"Knowledge of Seller" with reference to any of the representations
and warranties of MagneTek means the actual
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knowledge of any "officer" of MagneTek as such term is defined in 17 C.F.R.
Section 240.16a-1(f), to the extent such officer had, on the date hereof,
responsibility for matters that are the subject of such representation and
warranty; PROVIDED, HOWEVER, that unless such an officer had (a) actual
knowledge to the contrary or (b) direct responsibility at the Brownsville
Business level for the subject matter thereof, such knowledge is based solely
upon information and materials supplied to MagneTek by Business Employees
deemed for this purpose to be comprised of Messrs. Xxxxxxxxx Xxxxxx and
Xxxxxxx Xxxxxx.
"Landlord Consent" means the instrument or instruments required to
be executed by the lessor of the Brownsville Facility and the Mexico Facility
in connection with the consummation of the transactions contemplated by this
Agreement.
"License Agreement" means the non-exclusive license agreement
between Buyer as licensor and NEC as licensee, pertaining to the use of the
trademark "NECCOBOND" and "NEC," "NECCOBOND" and certain other tradenames, in
substantially the form of Exhibit C hereto.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement or any financing lease having
substantially the same economic effect as any of the foregoing).
"Loss" means any loss, liability, claim, damage or expense
(including reasonable attorneys' fees and disbursements and the costs of
investigation). Loss recoverable hereunder is subject to the limitations set
forth in Section 10.4.
"Material Adverse Effect" means a material adverse effect on (a)
the business, operations, property or condition (financial or other) of the
Brownsville Business and the Mexico Business, taken as a whole, or (b) the
ability of Sellers to consummate the transactions contemplated by this
Agreement.
"Mexican Environmental Law" means solely the Environmental Law
described in clause (b) of the definition of Environmental Law.
"Mexico Business" means, collectively, the businesses currently
conducted by Coil Company and Glasmex.
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"Mexico Facility" means the all of the leased facilities currently
occupied by Glasmex or Coil Company in the State of Tamaulipas, Mexico, as
described on Schedule 1.1(d).
"Mexico Sublease" means the Sublease between Glasmex as sublessor
and Coil Company as sublessee substantially in the form of Exhibit D attached
hereto.
"Permits" has the meaning set forth in Section 2.1(f).
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Purchase Price" has the meaning set forth in Section 2.4.
"Records" has the meaning set forth in Section 2.1(g).
"Required Modification" means, with respect to any product, a
modification, improvement or enhancement which is (a) required by any
Requirement of Law or (b) otherwise necessary or advisable in MagneTek's sole
discretion to permit MagneTek to meet any duty or obligation owing by NEC to
remedy defects or hazards in such products or to provide any warning with
respect to any such defects or hazards. Required Modifications may include,
but shall not be limited to, modifications, improvements or enhancements
necessary to meet industry standards, or to implement design improvements, or
modifications of or supplements to the product's design, quality, components,
safety features, labeling, warnings or instructions. Required Modification
shall in no event mean or include any modification, improvement or
enhancement required by any written warranty covering the relevant product.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"RPI" means Rail Products International, Inc.
"SEC" means the Securities and Exchange Commission.
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"Seller Indemnified Person" has the meaning set forth in Section
10.2.
"Seller Plans" means each and all Employee Benefit Plans and
Employee Benefit Arrangements sponsored or maintained by NEC, MagneTek, Coil
Company or (prior to the Closing Date) Glasmex under which any Business
Employee of the Brownsville Business participates or is entitled to receive
benefits.
"Services Agreement" shall mean the Services Agreement between
MagneTek (in respect of its Jefferson Transformer division), NEC (in respect
of its PEI division) and Buyer in substantially the form attached hereto as
Exhibit E.
"Sharing Agreement" means the Sharing Agreement dated as of March
13, 1995, by and between NEC and 000 Xxxx Xxxxxx Acquisition Corp. pertaining
to the license of certain intellectual property, as amended by the Sharing
Agreement Amendment.
"Sharing Agreement Amendment" means the amendment to the Sharing
Agreement, which amendment shall be entered into among National Electric
Coil-Columbus, Inc., NEC and Buyer in substantially the form attached hereto
as Exhibit F.
"Special Reserve" has the meaning set forth in Section 2.5.
"Tax" or "Taxes" means, with respect to any Person, any federal,
state, local or foreign net income, gross income, gross receipts, sales, use,
ad valorem, value-added, capital, unitary, intangible, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
transfer, occupation, premium, property or windfall profit tax, custom,
tariff, duty or other tax, governmental fee or other like assessment or
charge of any kind whatsoever, together with any interest or penalty,
addition to tax or additional amount imposed by any jurisdiction or other
taxing authority, on such Person.
"Tax Returns" has the meaning set forth in Section 4.3.
"Transaction Documents" means (i) this Agreement, (ii) the Xxxx of
Sale, Assignment and Assumption Agreement; (iii) the Sharing Agreement
Amendment; (iv) the Services Agreement; (v) the License Agreement; (vi) the
Brownsville Sublease; (vii) the Mexico Sublease; and (viii) the Landlord
Consent.
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"Transactions" means the transactions contemplated by the
Transaction Documents.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Terms defined in this Agreement in Sections other
than Section 1.1 shall have the meanings as so defined when used in this
Agreement.
(b) As used herein, accounting terms not defined or to
the extent not defined, shall have the respective meanings given to them
under GAAP.
(c) Unless express reference is made to Business Days,
references to days shall be to calendar days.
ARTICLE II
CLOSING; PURCHASE PRICE ADJUSTMENT
2.1 SALE AND TRANSFER OF THE ASSETS AND STOCK. Subject to the
terms and conditions of this Agreement, on the Closing Date NEC and, to the
extent applicable, MagneTek, will sell, convey, transfer, assign and deliver
to Buyer all of their respective right, title and interest in and to the
following assets (except the Excluded Assets), as the same shall exist on the
Closing Date (the "Assets"):
(a) to the extent provided for in the Brownsville
Sublease and Mexico Sublease, respectively, Sellers' interest in the
Brownsville Facility and Mexico Facility, respectively;
(b) all tangible personal property, including, without
limitation, the fixtures, furnishings, furniture, office supplies, vehicles,
rolling stock, tools, tooling and forms, machinery, equipment, computer
equipment (including software), located upon or affixed to the Brownsville
Facility (collectively, including the fixtures, the "Equipment");
(c) all inventory, including without limitation, raw
materials, work-in-process, finished goods, packaging materials, spare parts
and supplies of the Brownsville Business included on its June Balance Sheet
(and the ALCAN inventory described in Section 8.9 that is not so included) or
acquired by the Brownsville Business thereafter, including the Glasmex/Hesgon
inventory heretofore stored in the facility of the PEI Division of NEC
located adjacent to the Brownsville Facility and included on the Closing
Balance Sheet (the "Inventory");
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(d) the Intellectual Property described on Schedule
2.1(d);
(e) all Contracts (including but not limited to all
Contracts listed on Schedule 4.5 and all Contracts entered into by the
Brownsville Business through the Closing Date), except for any Contract
(other than a Contract that has been fully performed but under which warranty
obligations remain outstanding) that requires the consent to assignment of a
party thereto which consent has not been obtained prior to the Closing Date
pursuant to Section 8.1, until such consent has been obtained (the "Assigned
Contracts");
(f) all transferable business licenses and permits used
exclusively in or relating exclusively to the Brownsville Business (the
"Permits");
(g) all books and records, employment records and files
(other than Intellectual Property that is not described on Schedule 2.1(d),
historical accounting, financial and Tax records) related to or used by
Sellers exclusively in connection with the Assets and the operation of the
Brownsville Business and located at the Brownsville Facility (the "Records");
(h) all insurance proceeds paid or payable by any
insurance provider, other than Sellers or any Affiliate of Sellers, for any
Asset that is destroyed or damaged after the date hereof and prior to the
Closing;
(i) all accounts receivable and notes receivable of
Sellers on the Closing Date arising exclusively out of the activities of the
Brownsville Business;
(j) the 246 shares of stock of Coil Company owned by
Sellers and all minute books, incorporation documents, stock transfer books
and corporate seals relating to Coil Company in Sellers' possession;
(k) the names "National Electric Coil," "NEC" and
"Neccobond," subject to NEC's rights under the License Agreement, and the
name "Hesgon";
(l) the trademark "HESGON" and the United States
federal registration thereof No. 1,020,160 and, subject to NEC's rights under
the License Agreement, the trademark "NECCOBOND" and the United States
federal registration thereof No. 1,571,303; and
(m) all goodwill appurtenant to the foregoing Assets.
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2.2 ASSETS NOT TRANSFERRED. Notwithstanding anything herein to
the contrary, the following assets are not included in the Assets and shall
be retained by Sellers (the "Excluded Assets"):
(a) all cash and cash equivalent items (except as
described in Section 2.1(h) and except for deposits and prepaid expenses
reflected on the Closing Balance Sheet and relating to Assumed Liabilities)
of Sellers, including, without limitation, checking accounts, bank accounts,
lock box numbers, certificates of deposit, time deposits, securities (other
than the stock of Coil Company) and the proceeds of accounts receivable,
including uncashed checks in payment thereof received by Sellers on or prior
to the Closing Date, in each case whether or not relating to the Brownsville
Business;
(b) all rights, properties, and assets which have been
used or held for use in connection with the Brownsville Business and which
shall have been transferred (including transfers by way of sale) or otherwise
disposed of prior to the Closing, provided such transfers and disposals shall
have been in the ordinary course of business;
(c) rights to or claims for refunds or rebates of Taxes
and other governmental charges for periods ending on or prior to the Closing
Date and the benefit of net operating loss carryforwards, carrybacks or other
credits of Sellers, whether or not attributable to the Brownsville Business,
including, without limitation, any right to or claim for refund or rebate of
Coil Company or Glasmex in respect of Taxes payable in connection with the
consummation of the Transactions;
(d) claims or rights against third parties, except
those arising with respect to events or breaches occurring after the Closing
Date under the Assigned Contracts; PROVIDED, HOWEVER, that any rights of
indemnification, contribution or reimbursement that may exist under the
Assigned Contracts in respect of Excluded Assets or Excluded Liabilities
hereunder shall be Excluded Assets;
(e) except as set forth in Section 2.1(h), all
insurance policies and rights thereunder, including but not limited to,
rights to any cancellation value as of the Closing Date;
(f) proprietary or confidential business or technical
information, records and policies that relate to any other division of either
Seller, to Sellers generally or to the division of which the Brownsville
Business and the Mexico Business forms a part generally, or any of either
Sellers'
10
Affiliates, including, without limitation, organization manuals and strategic
plans, but subject to the provisions of the Sharing Agreement;
(g) subject to the limited rights granted in Section
8.7 and pursuant to the Sharing Agreement all "MagneTek" marks, and all
trademarks or service marks, trade names, slogans or other like property
relating to or including the name "MagneTek," the xxxx "MagneTek," or any
derivative thereof, and the "MagneTek" logo or any derivative thereof, the
name "Energy Engineered," the "Power M" design or any derivative thereof and
Sellers' proprietary computer programs or other software, including but not
limited to Sellers' proprietary data bases, accounting and reporting formats,
systems and procedures but excluding any software developed for and used
historically by the division of NEC comprised of the Brownsville Business and
the Columbus business;
(h) those assets sold pursuant to that certain Asset
Purchase Agreement dated as of October 31, 1994 by and among Sellers and RPI
and under that certain Asset Purchase Agreement dated as of March 13, 1995
among Sellers and 000 Xxxx Xxxxxx Acquisition Corp.;
(i) all rights to receive payments from Alcan at the
end of the 10-year period referred to in "Option 2" of the Alcan Agreement in
respect of the "coil inventory" referred to in such Agreement;
(j) all other assets of Sellers not expressly included
in the Assets to be sold hereunder, including but not limited to assets used
by Sellers or their Affiliates in other businesses of Sellers or at other
locations of the same division, racks and other equipment of the PEI or
Jefferson Divisions of MagneTek whether located in such divisions' facilities
adjacent to the Brownsville Facility or elsewhere, and assets used primarily
in connection with Sellers' corporate functions (including but not limited to
the corporate charter, taxpayer and other identification numbers, seals,
minute books and stock transfer book), whether or not used for the benefit of
the Brownsville Business; and
(k) any asset or right that is covered by the Sharing
Agreement.
2.3 ASSUMED AND EXCLUDED LIABILITIES. On the Closing Date, Buyer
shall execute and deliver to Sellers the Xxxx of Sale, Assignment and
Assumption Agreement pursuant to which Buyer shall assume and agree to pay,
perform and discharge when due, all the liabilities and obligations of
Sellers arising out of the business of the Brownsville Business, of any kind
or nature, whether absolute, contingent,
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accrued or otherwise, and whether arising before or after the Closing
including, without limitation, all liabilities (i) for tax items assumed by
Buyer under Section 2.7, (ii) in respect of any threatened litigation
referred to on Schedule 4.6, (iii) under the Assigned Contracts, (iv) all
liabilities and obligations of Buyer set forth in Article IX hereof and (v)
all liabilities in respect of roof repairs required by the landlord at the
Brownsville Facility, but not to exceed the lesser of $48,000 or one-half of
the final cost of such repairs to the Main Building of the Brownsville
Facility (collectively, the "Assumed Liabilities"), it being acknowledged
that the contracts of Coil Company and Glasmex need not be expressly assumed
because the contracts of Glasmex are being assumed by Coil Company and the
stock of Coil Company is being acquired (and/or, the stock of Glasmex is
subsequently acquired pursuant to Section 3.3); PROVIDED, HOWEVER, that the
Assumed Liabilities shall in no event include the following liabilities (the
"Excluded Liabilities"):
(a) any liability, responsibility or obligation with
respect to any Seller Plan, except (i) as provided in Article IX and (ii)
pursuant to any Assigned Contracts;
(b) any liability for (i) warranty claims (other than
warranty claims under the Alcan Agreement or those covered by the Special
Reserve, none of which shall reduce the reserve on the Closing Balance Sheet
or otherwise give rise to any liability of either Seller) made after the
Closing for service, repair, replacement and similar work required under
Sellers' written warranties with respect to products sold or services
provided prior to the Closing, the expenses of which, at shop level cost
(direct materials, direct labor and factory overhead) in the aggregate exceed
the warranty reserve on the Closing Balance Sheet, (ii) workers' compensation
claims with respect to injuries prior to the Closing, (iii) claims under
health insurance plans of Sellers for covered Business Employees with respect
to services rendered prior to the Closing (but not in respect of any sick
leave or disability benefits pertaining to any period after the Closing Date
regardless of when the relevant illness or condition arose) or (iv) any
product liability claims for injuries, property damage or other Losses,
arising with respect to products sold or services provided prior to the
Closing, but only if written notice of such claims described in clause (ii),
(iii) or (iv) shall have been delivered to MagneTek within the two-year
period following the Closing Date;
(c) any liability for Taxes for any period ending on or
prior to the Closing Date, excluding the tax items covered by Section 2.7; and
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(d) any liability in connection with any litigation
pertaining to the Brownsville Business as to which a complaint has been filed
prior to the Closing Date.
2.4 CLOSING. The closing (the "Closing") of the purchase and sale
of the Assets shall be held at offices to be specified by Buyer in Columbus,
Ohio, at 10:00 a.m. on September 14, 1995, or if the conditions to Closing
set forth in Article III shall not have been satisfied or waived by such
date, subject to Section 11.3, as soon as practicable after such conditions
shall have been satisfied or waived. The date on which the Closing shall
occur is hereinafter referred to as the "Closing Date." At the Closing,
Buyer shall deliver to Sellers by wire transfer (to a bank account designated
at least two Business Days prior to the Closing Date in writing by Sellers)
immediately available funds in an amount equal to $3,205,000 (hereinafter,
the "Purchase Price"), plus or minus an estimate, if the parties mutually
agree prior to the Closing Date with respect thereto, of any adjustment to
the Purchase Price under Section 2.5 (the Purchase Price plus or minus such
estimate of any adjustment under Section 2.5 being hereinafter called the
"Closing Date Amount"), and such other documents as are required by this
Agreement.
At the Closing, Sellers shall deliver or cause to be delivered to
Buyer (a) the Xxxx of Sale, Assignment and Assumption Agreement, (b) the
License Agreement, (c) the Sharing Agreement Amendment, (d) the Services
Agreement, (e) the Brownsville Sublease, (f) the Mexico Sublease, (g) the
Landlord Consent, (h) the documents and agreements referred to in Section 3.1
hereof and (i) such other instruments of transfer and documents as Buyer may
reasonably request, and Buyer shall deliver to Sellers (i) the documents and
agreements referred to in the preceding clauses (a) through (g) and in
Section 3.2 hereof, (ii) the Landlord Consent if required by the landlord to
be executed and delivered by Buyer as well as Seller, and (iii) such other
instruments of assumption and documents as Sellers may reasonably request.
In addition, Sellers shall deliver to Buyer at the Closing affidavits in form
and substance satisfactory to Buyer, duly executed and acknowledged,
certifying that neither Seller is a foreign person within the meaning of
Section 1445(f)(3) of the Code, and any corresponding affidavit required for
state tax purposes.
2.5 PURCHASE PRICE ADJUSTMENT.
(a) Within 60 days after the Closing Date, Buyer shall
prepare and deliver to MagneTek a balance sheet of the Brownsville Business
and Coil Company as described in Section 2.5(b) below (the "Closing Balance
Sheet") and schedules (the "Cash Schedules") detailing (i) (A) as to the
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Brownsville Business and Coil Company, cash generated during the period from
and including June 18, 1995 and (B) as to Glasmax, from and including July 3,
1995, in each case through and including the Closing Date, including all
uncashed checks received by the Brownsville Business, Coil Company and
Glasmax during the respective covered periods ("Generated Cash") and (ii) (A)
as to the Brownsville Business and Coil Company, and (B) as to Glasmex, in
each case during the respective covered periods, all cash used during the
applicable period, including all uncashed checks issued by the relevant
Person during the applicable period, but excluding any intercompany payments
or allocations other than in direct payment of goods or services ("Expended
Cash"). For purposes of preparing the Closing Balance Sheet, Sellers shall
make their accounting personnel available to Buyer (without charge) and such
employees shall, for the purpose of assisting Buyer in preparing the Closing
Balance Sheet and Cash Schedule, be instructed by Sellers to act at Buyer's
direction.
During the 30 days immediately following MagneTek's receipt of the
Closing Balance Sheet and Cash Schedule, MagneTek shall be entitled to review
the Closing Balance Sheet and Cash Schedule and Buyer's working papers
relating to the Closing Balance Sheet and Cash Schedule, and Buyer shall
provide MagneTek access at all reasonable times to its personnel, properties,
books and records to the extent relevant. The Closing Balance Sheet and Cash
Schedule shall become final and binding upon the parties on the thirtieth day
following delivery thereof unless MagneTek gives written notice to Buyer of
its disagreement with the Closing Balance Sheet or Cash Schedule (a "Notice
of Disagreement") prior to such date. Any Notice of Disagreement shall
specify in reasonable detail the nature of any disagreement so asserted. If
a timely Notice of Disagreement is received by Buyer with respect to the
Closing Balance Sheet or Cash Schedule, then the Closing Balance Sheet or
Cash Schedule (as revised in accordance with clause (x) or (y) below), shall
become final and binding upon the parties on the earlier of (x) the date the
parties hereto resolve in writing any differences they have with respect to
any matter specified in a Notice of Disagreement or (y) the date any matters
properly in dispute are finally resolved in writing by the Accounting Firm
(as defined below). During the 30 days immediately following the delivery of
any Notice of Disagreement, MagneTek and Buyer shall seek in good faith to
resolve in writing any differences which they may have with respect to any
matter specified in such Notice of Disagreement. During such period, Buyer
and MagneTek shall each have access to the other party's working papers
prepared in connection with the other party's preparation of a Notice of
Disagreement. At the end of such 30-day period, MagneTek and Buyer shall
submit to an independent accounting firm (the "Accounting Firm") for review
14
and resolution any and all matters which remain in dispute and which were
properly included in any Notice of Disagreement, and the Accounting Firm
shall reach a final, binding resolution of all matters which remain in
dispute. The Closing Balance Sheet and Cash Schedule, with such adjustments
necessary to reflect the Accounting Firm's resolution of the matters in
dispute, shall become final and binding on Buyer and MagneTek on the date the
Accounting Firm delivers its final resolution to the parties. The Accounting
Firm shall be such nationally recognized independent public accounting firm
with offices in Nashville, Tennessee, and Columbus, Ohio, as shall be agreed
upon by the parties hereto in writing. The cost of any arbitration
(including the fees and expenses of the Accounting Firm) pursuant to this
Section 2.5 shall be borne 50% by Buyer and 50% by MagneTek.
(b) The Closing Balance Sheet shall be prepared in
accordance with GAAP, applied in a manner consistent with that followed in
the preparation of the June Balance Sheets, and shall be identical to the
June Balance Sheets except insofar as any one or more of the following
adjustments is not reflected upon the June Balance Sheets:
(i) the Closing Balance Sheet shall
not reflect any provision for Taxes (whether as
an asset or a liability);
(ii) intercompany advances shall be
eliminated;
(iii) inventory shall be valued on a
first-in, first-out basis;
(iv) all Excluded Assets (and all
related depreciation and reserves) shall be
eliminated and all Excluded Liabilities (and
related reserves) shall be eliminated;
(v) the Closing Balance Sheet shall
reflect a special reserve (the "Special
Reserve") in an aggregate amount of $274,000,
reflecting Sellers' sole and complete liability
and obligation to Buyer in respect of all of
the following:
(A) Severance payments that are
or may become due to any employees of Coil
Company or Glasmex;
(B) Certain Glasmex inventory
described in Schedule 2.5; and
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(C) The additional matters
described in Schedule 2.5.
The Special Reserve shall apply to reduce the
Purchase Price, but in the event the actual
liabilities associated with such Reserve exceed
the amount thereof, Buyer shall have no claim
against Sellers and conversely, if the actual
amount of the Special Reserve exceeds the
associated liabilities, Buyer shall not be
required to pay any additional purchase price
to Sellers;
(vi) The inventory associated with
the warranty obligation under the Alcan
Agreement (currently having a book value of
approximately U.S. $380,000) shall be excluded
from the Closing Balance Sheet; provided,
however, that such inventory comprises part of
the Assets, and subject to Section 8.9 hereof;
and
(vii) All copper inventory that is
"tolled" at Southwire Company and Westinghouse
Wire Corporation shall be included on the
Closing Balance Sheet;
(c) The Purchase Price shall be adjusted (after giving
effect to the estimation, if any, reflected in the Closing Date Amount) such
that the Purchase Price is (i) increased, to the extent that the Cash Schedules
in the aggregate show a net excess of Expended Cash over Generated Cash, and
(ii) decreased, to the extent that the Cash Schedules in the aggregate show a
net excess of Generated Cash over Expended Cash. The Purchase Price shall be
adjusted upward or downward, dollar for dollar, in respect of any such negative
or positive adjustment; PROVIDED, HOWEVER, that the estimated adjustment paid on
the Closing Date shall be taken into account in determining whether such
threshold is met. Any required adjustment to the Purchase Price pursuant to
this Section 2.5 shall be referred to as the "Purchase Price Adjustment."
(d) Buyer agrees, with respect to Purchase Price
Adjustments, that following the Closing, Buyer will not take any actions with
respect to the accounting books, records, policies and procedures of the
Brownsville Business on which the Closing Balance Sheet is to be based that are
not consistent with GAAP applied in the manner consistent with the past
practices of the Brownsville Business.
(e) Within thirty days after the receipt by MagneTek of
the Closing Balance Sheet and Cash Schedules in
16
accordance with Section 2.5(a) hereof, Buyer shall remit to Sellers or
Sellers shall remit to Buyer, as the case may be, in immediately available
funds, any undisputed amounts constituting Purchase Price Adjustments. With
respect to any items that are the subject of a Notice of Disagreement,
payment shall be made in immediately available funds within three business
days after the resolution thereof pursuant to Section 2.5(a). Each payment
pursuant to this Section 2.5 shall be made with interest on the amount of the
payment at an annual rate equal to the reference rate quoted by the San
Xxxxxxxxx xxxxxx of Bank of America on the Closing Date for the period from
the Closing Date to the date of payment, computed on the basis of a 360-day
year and actual days elapsed.
2.6 TAX ALLOCATION. Buyer and Sellers shall allocate the Purchase
Price and any Purchase Price Adjustments plus the Assumed Liabilities (to the
extent identifiable or reasonably estimable as of the date hereof) to broad
categories constituting components of the Assets in accordance with Schedule
2.6. Buyer and Sellers shall report the purchase and sale of the Assets in
accordance with the agreed upon allocation among such broad categories for
all Tax purposes (including the filing of the forms prescribed under Section
1060 of the Code and the Treasury Regulations promulgated thereunder), but
such allocation shall not constrain reporting for other purposes.
2.7 SALES AND USE TAX. Buyer and Sellers shall cooperate in
preparing, executing and filing use and sales Tax Returns relating to, and
Buyer and MagneTek shall share equally and pay when due, any and all sales,
real estate or stock transfer or use Tax due with regard to, the purchase and
sale of the Assets, except that Buyer and Coil Company shall not be
responsible for any such Taxes incurred by Glasmex or Coil Company in
connection with the transfer of assets from Glasmex to Coil Company. Such
Tax Returns shall be prepared in a manner that is consistent with the
allocation of the Purchase Price and Assumed Liabilities contemplated by
Section 2.6. Buyer shall also furnish Sellers with a form of resale
certificate that complies with the requirements of Texas and other applicable
state taxation laws and, if reasonably required by Sellers, a form of resale
certificate that complies with the requirements of any applicable laws of
Mexico.
ARTICLE III
CONDITIONS TO CLOSING
3.1 BUYER'S OBLIGATION. The obligations of Buyer to purchase and
pay for the Assets are subject to the
17
satisfaction (or waiver by Buyer) as of the Closing of the following
conditions:
(a) The representations and warranties of MagneTek made
in this Agreement shall be true and correct in all material respects as of the
date hereof and, except as specifically contemplated by this Agreement, on and
as of the Closing, as though made on and as of the Closing Date, and Sellers
shall have performed or complied in all material respects with all obligations
and covenants required by this Agreement to be performed or complied with by
Sellers by the time of the Closing; and Sellers shall have delivered to Buyer
certificates dated the Closing Date and signed by an authorized officer of the
respective Sellers confirming the foregoing.
(b) Buyer shall have received an opinion dated the
Closing Date of Xxxxxx, Xxxx & Xxxxxxxx, counsel to Sellers, as to the matters
set forth in Exhibit G, and an opinion dated the Closing Date of Xxxxxx X.
Miley, Esq., General Counsel of MagneTek, as to the matters set forth in
Exhibit H, which opinions shall be reasonably satisfactory in form to Buyer.
(c) The appropriate Seller or Glasmex, in the case of the
Mexico Sublease, shall have entered into the Xxxx of Sale, Assignment and
Assumption Agreement, the Sharing Agreement Amendment, the License Agreement,
the Brownsville Sublease, the Mexico Sublease and the Services Agreement.
(d) Sellers shall have executed and delivered to Buyer an
instrument of assignment of the 246 shares of stock of Coil Company owned by
Sellers.
(e) Buyer shall have received the Landlord Consent.
(f) No injunction or order shall have been granted by any
court or administrative agency or instrumentality of competent jurisdiction that
would restrain or prohibit any of the Transactions or that would impose damages
as a result thereof, and no action or proceeding shall be pending before any
court or administrative agency or instrumentality of competent jurisdiction in
which any Person seeks such a remedy (if in the opinion of counsel to Buyer
there exists a reasonable risk of a materially adverse result in such pending
action or proceeding).
3.2 SELLERS' OBLIGATION. The obligations of Sellers to sell and
deliver the Assets to Buyer are subject to the satisfaction (or waiver by
Sellers) as of the Closing of the following conditions:
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(a) The representations and warranties of Buyer made in
this Agreement shall be true and correct in all material respects as of the date
hereof and on and as of the Closing, as though made on and as of the Closing
Date, and Buyer shall have performed or complied in all material respects with
all obligations and covenants required by this Agreement to be performed or
complied with by Buyer by the time of the Closing; and Buyer shall have
delivered to Sellers a certificate dated the Closing Date and signed by an
authorized officer of Buyer confirming the foregoing.
(b) Sellers shall have received an opinion dated the
Closing Date of Xxxxxxx X. Xxxxxxxx, Esq., counsel to Buyer, as to the matters
set forth in Exhibit I, which opinion shall be reasonably satisfactory in form
to Sellers.
(c) Buyer shall have entered into the Xxxx of Sale,
Assignment and Assumption Agreement, the Sharing Agreement Amendment, the
License Agreement, the Brownsville Sublease, and the Services Agreement.
(d) Coil Company shall have entered into the Mexico
Sublease.
(e) No injunction or order shall have been granted by any
court or administrative agency or instrumentality of competent jurisdiction that
would restrain or prohibit any of the Transactions or that would impose damages
as a result thereof, and no action or proceeding shall be pending before any
court or administrative agency or instrumentality of competent jurisdiction in
which any Person seeks such a remedy (if in the opinion of counsel to Sellers
there exists a reasonable risk of a materially adverse result in such pending
action or proceeding).
(f) MagneTek shall have received from Buyer insurance
certificates and documentation reflecting compliance with the provisions of
Sections 7.5 and 7.6.
3.3 CONDITION SUBSEQUENT. Sellers and Buyer agree that in the
event the Glasmex union does not grant its consent to the reorganization
contemplated by Section 6.3 in a form reasonably satisfactory to Buyer within
180 days after the Closing Date, Sellers and Buyer will jointly rescind and
reverse such transaction to the extent necessary to reinstate the former
Glasmex employees as Glasmex employees and, without further consideration,
Sellers will transfer all of the stock of Glasmex to Buyer and/or its
designees and deliver all instruments in its possession described in Section
2.1(j) hereof. Buyer acknowledges that such stock is encumbered by that
certain letter agreement with Xx. Xxxx dated May 23, 1988.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MAGNETEK
MagneTek hereby represents and warrants to Buyer as follows:
4.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Seller has all requisite corporate power and authority to enter into the
Transaction Documents and to consummate the Transactions. All corporate acts
and other proceedings required to be taken by each Seller to authorize the
execution, delivery and performance of the Transaction Documents and the
consummation of the Transactions have been duly and properly taken. This
Agreement has been duly executed and delivered by each Seller and constitutes a
valid and binding obligation of each Seller, enforceable against each Seller in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) The execution and delivery of this Agreement does not
and of the other Transaction Documents will not, and the consummation of the
Transactions and compliance with the terms of the Transaction Documents will not
conflict with, or result in any violation of or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a benefit under, or
result in the creation of any Lien upon any of the properties or assets of
Sellers under, any provision of (i) the Certificate of Incorporation or By-Laws
of either Seller, (ii) subject to the matters disclosed in Schedule 4.1(b), any
Contractual Obligation of MagneTek or, to the Knowledge of Seller, NEC or
(iii) any judgment, order or decree or, subject to the matters described in
clauses (A)-(D) below, any United States Requirement of Law applicable to either
Seller or its property or assets, other than, in the case of clauses (ii) and
(iii) above, any such conflicts, violations, defaults, rights or Liens that,
individually or in the aggregate, would not have a Material Adverse Effect. No
consent, approval, license, permit, order or authorization of, or registration,
declaration or filing with, any United States Governmental Authority is required
to be obtained or made by or with respect to either Seller in connection with
the execution and
20
delivery of the Transaction Documents or the consummation of the
Transactions, other than (A) compliance with and filings under Section 13(a)
or 15(d), as the case may be, of the Exchange Act, (B) compliance with and
filings and notifications under applicable Environmental Laws, (C) any
necessary approval of any Governmental Authority in connection with the
assignment or novation of any Contracts, (D) those that may be required
solely by reason of Buyer's participation in the Transactions and (E) those
that, if not made or obtained, individually or in the aggregate, would not
have a Material Adverse Effect.
(c) To the Knowledge of Seller, the sale of the stock of
Coil Company and the transactions contemplated by Section 6.3 hereof do not
require any consent, approval, license, permit, order, or authorization of, or
registration, declaration or filing with, any Mexican Governmental Authority or
any party to a Contractual Obligation of either Glasmex or Coil Company, other
than the consents and filings described in Schedule 4.1(c) hereof, none of which
has been obtained as of the Closing.
4.2 FINANCIAL STATEMENTS. To the Knowledge of Seller, the June
Balance Sheets were prepared in accordance with GAAP consistently applied,
and fairly presents the combined financial condition of the Brownsville
Business, Coil Company and Glasmex as of the respective dates thereof except:
(a) as set forth therein; (b) for the absence of footnotes; (c) for normal
recurring adjustments; and (d) to the extent it was prepared on a PRO FORMA
basis, with allocations of certain assets and liabilities based upon good
faith estimates of management.
4.3 TAXES.
(a) Except as disclosed on Schedule 4.3, each Seller, and
any affiliated group within the meaning of Section 1504 of the Code, of which
either Seller is or has been a member (the "Affiliated Group," but only for the
taxable period during which either Seller has been a member thereof), have filed
or caused to be filed in a timely manner (within any applicable extension
periods) with the appropriate Governmental Authority (i) all Tax returns,
reports and forms (collectively, "Tax Returns") required to be filed by the Code
or by applicable laws, (ii) all Taxes shown on such Tax Returns have been timely
paid in full by the due date thereof, (iii) no Tax Liens have been filed by any
Tax authority against any property or assets of the Brownsville Business, and
(iv) to the Knowledge of Sellers, no claims are being asserted in writing with
respect to any Taxes relating to the Brownsville Business.
21
(b) Except as set forth in Schedule 4.3, (i) no property
of the Brownsville Business is "tax exempt use property" within the meaning of
Section 168(h) of the Code, and (ii) the Assigned Contracts do not include any
lease made pursuant to former Section 168(f)(8) of the Code.
(c) Neither Seller is a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
(d) No representation or warranty as to Taxes is made in
respect of Coil Company or Glasmex.
4.4 TITLE TO ASSETS. Either NEC or Coil Company has good and
marketable title to all assets reflected on the June Balance Sheet of the
Brownsville Business, except those sold or otherwise disposed of since the date
of such June Balance Sheet in the ordinary course of business consistent with
past practice, in each case free and clear of all Liens except (a) such as are
disclosed on Schedule 4.4 and (b) mechanics', carriers', workmen's, repairmen's
or other like Liens arising or incurred in the ordinary course of business,
Liens arising under original purchase price conditional sales contracts and
equipment leases with third parties entered into in the ordinary course of
business, Liens for Taxes and other governmental charges which are not yet due
and payable or which may thereafter be paid without penalty, and other
imperfections of title, restrictions or encumbrances, if any, which Liens,
imperfections of title, restrictions or other encumbrances do not, individually
or in the aggregate, materially impair the continued use and operation of the
specific assets to which they relate. Either MagneTek or NEC has good and
marketable title to 246 shares of the stock of Coil Company. The names of the
last known owners of the additional outstanding shares of the stock of Coil
Company are listed on Schedule 4.4.
4.5 CONTRACTS. Schedule 4.5 sets forth a list of each of the
following types of Contracts:
(a) any employment or severance agreement that has an
aggregate future liability in excess of $100,000 and is not terminable by notice
of not more than 60 days for a cost of less than $50,000 (excluding any
contracts or agreements with Business Employees that relate to the Transactions
but are not being assumed by Buyer);
(b) any employee collective bargaining agreement or other
contract with any labor union covering Business Employees;
(c) to the Knowledge of Sellers, any Contract other than
in the ordinary course of business pursuant to
22
which the aggregate of payments to become due from or to either Seller is equal
to or exceeds $200,000, and which is not terminable by no more than 60 days'
notice for a cost of less than $100,000; and
(d) any lease or similar agreement under which NEC is a
lessor or sublessor of, or makes available for use by any third party (including
another division of either Seller), any Business Property or premises otherwise
occupied by the Brownsville Business.
Schedule 4.5 sets forth all such contracts (as such term is defined in the
definition of Contract) to which either Coil Company or Glasmex is a party.
Except as disclosed on Schedule 4.5, to the Knowledge of
Sellers, each Contract (or contract) listed on Schedule 4.5 is valid, binding
and in full force and effect and is enforceable by NEC, MagneTek, Coil Company
or Glasmex, as the case may be, in accordance with its terms. Except as
disclosed in Schedule 4.5, to the Knowledge of Sellers, MagneTek, NEC, Coil
Company or Glasmex, as the case may be, has performed all material obligations
required to be performed by it to date under the Contracts and is not (with or
without the lapse of time of the giving of notice, or both) in breach or default
in any material respect thereunder and, to the Knowledge of Sellers, no other
party to any of the Contracts (or contracts) is (with or without the lapse of
time or the giving of notice, or both) in breach or default in any material
respect thereunder.
4.6 LITIGATION; DECREES. To the Knowledge of Sellers, Schedule
4.6 sets forth a list, as of the date of this Agreement, of all pending and
threatened lawsuits or claims with respect to which either Seller has
contacted in writing the defendant or been contacted in writing by the
claimant or by counsel for the claimant by or against either Seller relating
to the Brownsville Business, Coil Company or Glasmex which (a) involves a
claim by or against either Seller of more than $50,000, (b) seeks any
injunctive relief or (c) relates to the Transactions. To the Knowledge of
Sellers, except as disclosed on Schedule 4.6, neither Seller is in default
under any judgment, order or decree of any Governmental Authority applicable
to the Brownsville Business, Coil Company or Glasmex except where the default
would not have a Material Adverse Effect.
4.7 EMPLOYEE AND RELATED MATTERS. Schedule 4.7 sets forth each
material Employee Benefit Plan. Sellers have made available to Buyer true,
complete and correct copies or summaries of each Plan so listed.
23
4.8 ENVIRONMENTAL MATTERS. To the Knowledge of Sellers, except
for the matters disclosed or referred to in the Phase I Environmental Report
of the Brownsville Facility, as to the Brownsville Business:
(a) Sellers are not in material violation of any
applicable Environmental Law and are not under investigation or review by any
Governmental Authority with respect to compliance therewith, or with respect to
the generation, use, treatment, storage or disposal, or the spillage or other
release of any Hazardous Substance;
(b) There has heretofore been no spillage, discharge,
release or disposal of any such Hazardous Substance by NEC on or under the
Brownsville Facility in an amount and of a nature which could reasonably be
expected to result in material liability to the Brownsville Business; and
(c) No pending citations, fines, penalties or claims have
been asserted against NEC under any Environmental Law which could reasonably be
expected to have a Material Adverse Effect and which have not been reflected in
the June Balance Sheet.
No representation or warranty as to environmental matters
is made in respect of Coil Company or Glasmex.
4.9 EMPLOYEE AND LABOR RELATIONS. Except as set forth on
Schedule 4.9:
(a) there is no labor strike, dispute, or work stoppage
or lockout pending or, to the knowledge of Sellers, threatened, involving the
Brownsville Business or the Mexico Business;
(b) there is no unfair labor practice charge or complaint
against NEC pending, or threatened, before the National Labor Relations Board
involving the Brownsville Business;
(c) there is no pending or, to the knowledge of Sellers,
threatened grievance involving a Business Employee that, if adversely decided,
would have a Material Adverse Effect;
(d) no charges with respect to or relating to NEC are
pending before the Equal Employment Opportunity Commission or any other
Governmental Authority responsible for the prevention of unlawful employment
practices as to which there is a reasonable likelihood of adverse determination
24
involving the Brownsville Business, other than those which, if so determined,
would not have a Material Adverse Effect; and
(e) to the Knowledge of Sellers, no charges with respect
to or relating to Coil Company or Glasmex are pending before any Mexican
Governmental Authority responsible for the prevention of unlawful employment
practices as to which there is a reasonable likelihood of adverse determination
involving the Mexico Business, other than those which, if so determined, would
not have a Material Adverse Effect.
4.10 EXCLUSIVITY OF REPRESENTATIONS. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, SELLERS MAKE NO REPRESENTATION OR WARRANTY CONCERNING THE ASSETS
(INCLUDING THE STOCK OF COIL COMPANY AND THE ASSETS OF GLASMEX) OR THE
BROWNSVILLE BUSINESS, INCLUDING AS TO THE QUALITY, CONDITION, MERCHANTABILITY,
SALABILITY, OBSOLESCENCE, WORKING ORDER OR FITNESS FOR A PARTICULAR PURPOSE
THEREOF. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE ASSETS OF THE BROWNSVILLE
BUSINESS ARE SOLD TO BUYER "AS IS AND WHERE IS," THE STOCK OF COIL COMPANY IS
SOLD TO BUYER "AS IS" AND, IF THE STOCK OF GLASMEX IS TRANSFERRED PURSUANT TO
SECTION 3.3, IT IS SOLD TO BUYER "AS IS."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
5.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Buyer is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Ohio.
Buyer has all requisite partnership power and authority to enter into this
Agreement and to consummate the Transactions. All acts and other proceedings
required to be taken by Buyer and its general partner to authorize the
execution, delivery and performance of this Agreement and the consummation of
the Transactions have been duly and properly taken. This Agreement has been
duly executed and delivered by Buyer and constitutes a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally or by general principles (regardless of whether such
enforceability is considered in a proceeding in equity or law).
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(b) Except as disclosed on Schedule 5.1(b), the execution
and delivery of this Agreement does not and of the other Transaction Documents
will not, and the consummation of the Transactions and compliance with the terms
of the Transaction Documents will not, conflict with, or result in any violation
of or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or to loss of a material benefit under, or result in the creation of any Lien
upon any of the properties or assets of the Buyer under, any provision of
(i) the agreement of limited partnership of Buyer or the articles of
incorporation or bylaws of its general partner, (ii) any Contractual Obligation
of Buyer or (iii) any judgment, order or decree or, subject to the matters
described in clauses (A)-(C) below, any Requirement of Law applicable to Buyer
or its property or assets. No material consent, approval, license, permit order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with respect to
Buyer or its Affiliates in connection with the execution and delivery of the
Transaction Documents or the consummation by Buyer of the Transactions, other
than (A) compliance with and filings under Section 13(a) and 15(d), as the case
may be, of the Exchange Act, (B) compliance with and filings and notifications
under applicable Environmental Laws, (C) any necessary approval of any
Governmental Authority in connection with the novation of any Contracts and
(D) those that may be required solely by reason of Sellers' (as opposed to any
other third party's) participation in the Transactions.
5.2 ACTIONS AND PROCEEDINGS, ETC. There are no (a) outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer or (b) actions, suits, claims or
legal, administrative or arbitration proceedings or investigations pending or,
to the knowledge of Buyer, threatened against Buyer.
5.3 AVAILABILITY OF FUNDS. Buyer has all funds, or binding
commitments as to the availability to Buyer of all funds, required to
consummate the Transactions.
5.4 BUYER'S ACKNOWLEDGMENT. Buyer acknowledges and agrees that,
(a) other than the representations and warranties of MagneTek specifically
contained in this Agreement, there are no representations or warranties of
either Seller either expressed or implied with respect to either Seller, the
Brownsville Business, Coil Company, Glasmex or the Transactions, (b) that
Sellers have disclosed to Buyer the matters set forth on Schedule 5.4 with
respect to Coil Company and Glasmex and none of such matters or any consequences
26
thereof shall be deemed a breach of any representation or warranty of either
Seller hereunder (PROVIDED, HOWEVER, that the Sellers' indemnification
obligation under clause (e) of Section 10.1 is not limited by the foregoing
acknowledgment), and (c) Buyer shall have a right to indemnification solely as
provided in Article X hereof and shall have no claim or right to indemnification
with respect to any information, documents or materials furnished by either
Seller or any of its officers, directors, employees, agents or advisors, or
otherwise available to Buyer.
5.5 EXON-XXXXXX. Buyer is not a "foreign person" for purposes of the
Exon-Xxxxxx Amendment to the Defense Production Act of 1950.
5.6 NO KNOWLEDGE OF SELLERS' BREACH. Neither Buyer nor, to the best
knowledge of Buyer, any of its Affiliates, has knowledge of any breach of any
representation or warranty by MagneTek or of any other condition or circumstance
that would excuse Buyer from its timely performance of its obligations
hereunder. If Buyer obtains actual knowledge of any information relevant to the
representations and warranties of MagneTek under this Agreement prior to the
Closing Date (whether through Sellers or otherwise), then for the purposes of
MagneTek's liability under such representations and warranties the effect shall
be as if the representations and warranties were so modified in this Agreement,
and no claim for indemnification may be made under Article X hereof to the
extent such claim would not arise under such modified representation or
warranty.
ARTICLE VI
COVENANTS OF MAGNETEK AND NEC
MagneTek and NEC severally, and not jointly, covenant and agree
as follows:
6.1 ACCOUNTS RECEIVABLE. If, after the Closing Date, either Seller
receives any payment from any Person who at the time of such payment has
outstanding accounts payable to either Seller, on the one hand (for the purposes
of this Section, "Seller Accounts Receivable"), and to Buyer, on the other hand
(for the purposes of this Section, "Buyer Accounts Receivable"), and the payment
(a) does not indicate whether it is in respect of Seller Accounts Receivable or
Buyer Accounts Receivable or (b) indicates that it is in payment of both Seller
Accounts Receivable and Buyer Accounts Receivable without specifying the portion
to be allocated to each, then Sellers and Buyer shall consult with one another
to determine the proper allocation of such payment; and, if they are unable to
reach agreement on the proper allocation, such payment
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shall be applied so as to retire undisputed Seller Accounts Receivable and
undisputed Buyer Accounts Receivable in chronological order based upon the
period of time such accounts receivable have existed on the books of Sellers
or the Buyer, as applicable.
6.2 OFFSITE ASSETS. To the extent any Assets sold pursuant hereto
remain at NEC facilities that are not being transferred to Buyer, NEC agrees to
exercise reasonable care in respect thereof, and in no event less than it
exercises with respect to its own assets. In the event Buyer wishes to remove
such Assets, NEC shall cooperate in all reasonable respects, but Buyer shall
bear all expenses associated therewith.
6.3 GLASMEX CONSOLIDATION.
(a) On or prior to the Closing Date and without cost to
Buyer except as provided below:
(i) Sellers and Buyer shall cause Glasmex to
transfer, assign and convey to Coil Company all of its assets, other than its
interest as the beneficial owner of the Mexico Facility, by instrument or
instruments reasonably satisfactory to Sellers and Buyer;
(ii) Sellers and Buyer shall cause Glasmex to assign
to Coil Company all contracts (as such term is defined in the definition of
Contract) to which Glasmex is a party and shall cause Coil Company to assume the
obligations under such contracts of Glasmex, by instrument or instruments
reasonably satisfactory to Sellers and Buyer;
(iii) Sellers and Buyer shall cause Glasmex to
terminate the employment of its employees and shall cause Coil Company
concurrently to employ such persons on substantially the same terms and
conditions to the extent reasonably possible;
(iv) Sellers and Buyer shall cause Coil Company to
assume the liabilities of Glasmex accrued on its balance sheet and certain
liabilities pertaining to its employees including, without limitation, the
accrued severance pay obligations associated with such employees, by instrument
or instruments reasonably satisfactory to Buyer and Sellers; and
(v) Glasmex and Coil Company shall enter into the
Mexico Sublease.
(b) Buyer acknowledges that Sellers have not obtained the
consents or made the filings in respect of the foregoing transactions and that
certain consents and filings
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are likely required, as set forth to the Knowledge of Sellers in Schedule
4.1(c). Buyer acknowledges that the Transactions and the above transactions
are being consummated without such consents and filings in part to
accommodate Buyer's desired closing schedule and accordingly, agrees to use
reasonable efforts to obtain such consents and to complete such filings
promptly after the Closing Date. To the extent Buyer incurs out-of-pocket
expenses in connection with such actions, Buyer shall be reimbursed for up to
$5,000 of such expenses provided that documentation thereof is submitted no
later than the date the Closing Balance Sheet is required to be delivered
pursuant to Section 2.5.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees as follows:
7.1 CONFIDENTIALITY. Buyer acknowledges that the information
being provided to it by Sellers is subject to the terms of a confidentiality
agreement contained in the Management Agreement dated as of July 6, 1995 (the
"Confidentiality Agreement"), the terms of which are incorporated herein by
reference. Buyer hereby assumes all of the obligations of such
representative under the Confidentiality Agreement. Effective upon, and only
upon, the Closing, the Confidentiality Agreement will terminate; PROVIDED,
HOWEVER, that Buyer acknowledges that the Confidentiality Agreement will
terminate only with respect to information relating solely to the Brownsville
Business, Coil Company and Glasmex; and PROVIDED, FURTHER, HOWEVER, that
Buyer acknowledges that any and all other information provided to it by
Sellers or Sellers' representatives concerning Sellers shall remain subject
to the terms and conditions of the Confidentiality Agreement after the date
of the Closing.
7.2 ACCOUNTS RECEIVABLE. If, after the Closing Date, Buyer
receives any payment from any Person who at the time of such payment has
outstanding accounts payable to Sellers, on the one hand (for the purposes of
this Section, "Seller Accounts Receivable"), and to Buyer, on the other hand
(for the purposes of this Section, "Buyer Accounts Receivable"), and the
payment (a) does not indicate whether it is in respect of Seller Accounts
Receivable or Buyers Accounts Receivable or (b) indicates that it is in
payment of both Seller Accounts Receivable and Buyer Accounts Receivable
without specifying the portion to be allocated to each, then Sellers and
Buyer shall consult with one another to determine the proper allocation of
such payment; and, if they are unable to reach agreement on the proper
allocation, such payment shall be applied so as to retire undisputed Seller
Accounts
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Receivable and undisputed Buyer Accounts Receivable in chronological order
based upon the period of time such accounts receivable have existed on the
books of the Sellers or Buyer, as applicable.
7.3 WAIVER OF BULK SALES LAW COMPLIANCE. Buyer hereby waives
compliance by Sellers with the requirements, if any, of Article 6 of the
Uniform Commercial Code as in force in any state in which Assets are located
and all other similar Requirements of Law applicable to bulk sales and
transfers, to the extent applicable to the Transactions. MagneTek shall
indemnify Buyer in connection with the foregoing matters pursuant to Section
10.1(c) hereof.
7.4 EXCLUDED ASSETS. If, after the Closing Date, Excluded Assets
shall remain on the premises utilized or controlled by Buyer, then Buyer
shall, at MagneTek's expense, deliver such Excluded Assets to Sellers upon
the request of Sellers, and so long as such assets remain in Buyer's control,
shall exercise reasonable care with respect thereto, and in no event less
care than with respect to its own properties.
7.5 INSURANCE. Buyer shall secure insurance with respect to the
Brownsville Business from the Closing Date covering general liability and
products liability in amounts customary for the industry in which such
businesses operate.
7.6 REPLACEMENT BONDING. Within 30 days of the Closing Date, Buyer
shall secure replacements for certain performance bonds set forth on
Schedule 7.6, or shall have made alternative arrangements with the beneficiaries
thereof, to MagneTek's satisfaction. The foregoing shall not limit Buyer's
responsibility in respect of the matters as to which such instruments pertain,
which responsibility shall be governed by this Agreement in respect of the
applicable Assumed Liabilities. In addition, Buyer shall promptly reimburse
Sellers for the incremental expense of maintaining the foregoing instruments
from the Closing Date through the date they are so replaced.
ARTICLE VIII
MUTUAL COVENANTS
Each of Sellers and Buyer covenants and agrees as follows:
8.1 PERMITS AND CONSENTS.
(a) Except as expressly provided in Section 6.3 hereof,
as promptly as practicable after the date hereof, Buyer and Sellers shall make
all filings with
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Governmental Authorities, and use all reasonable efforts to
obtain all permits, approvals, authorizations and consents of all third parties,
required to consummate the Transactions. Buyer and Sellers shall furnish
promptly to each other all information that is not otherwise available to the
other party and that such party may reasonably request in connection with any
such filing. Sellers and Buyer shall use reasonable efforts to obtain such
consents to the assignment of the Assigned Contracts as may be required. Buyer
acknowledges that consents to the Transactions may be required from parties to
the Assigned Contracts and that Sellers will not assign to Buyer at the Closing
any Contract that by its terms requires, prior to such assignment, the consent
of any other contracting party thereto unless such consent has been obtained
prior to the Closing Date.
(b) Buyer agrees that Sellers shall not have any
liability whatsoever to Buyer arising out of or relating to the failure to
obtain any consents to the assignment of Contracts that may be required in
connection with the Transactions or because of the default, acceleration or
termination of any Contract as a result thereof. Buyer further agrees that no
representation or warranty of MagneTek or covenant of MagneTek or of NEC
contained herein shall be breached or deemed breached, and no condition shall be
deemed not satisfied, as a result of (i) the failure to obtain any such consent
or as a result of any such acceleration or termination or (ii) any lawsuit,
action, claim, proceeding or investigation commenced or threatened by or on
behalf of any Person arising out of or relating to the failure to obtain any
such consent or any such acceleration or termination. Sellers shall cooperate
with Buyer in any reasonable manner in connection with Buyer obtaining any such
consents; PROVIDED, HOWEVER, that such cooperation shall not include any
requirement that Sellers commence any litigation or offer or grant any
accommodation (financial or otherwise) to any third party. The Purchase Price
shall not be subject to adjustment by reason of any such consents that are not
obtained.
(c) With respect to each such Contract not assigned on
the Closing Date, after the Closing Date Sellers shall, to the extent necessary,
continue to deal with the other contracting party(ies) to such Contract as the
prime contracting party, and Buyer and Sellers shall continue to use reasonable
efforts to obtain the consent of all required parties to the assignment of such
Assigned Contract. Such Contract shall be deemed assigned by Sellers to Buyer
after receipt of such consent after the Closing Date. Any contract as to which
consent is obtained after the Closing Date shall thereupon comprise an Assigned
Contract. Notwithstanding the absence of any such consent, Buyer shall be
entitled to the benefits of such Contract accruing after the Closing Date to
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the extent that Sellers may provide Buyer with such benefits without violating
the terms of such Contract; and to the extent such benefits are so provided,
Buyer agrees to perform at its sole expense all of the obligations of Sellers
to be performed under such Contract after the Closing Date, such obligations to
comprise Assumed Liabilities hereunder.
(d) Without limiting the generality of the foregoing, the
parties acknowledge that Buyer will seek novations in respect of the government
contracts of Sellers included in the Transactions, and Sellers undertake to
provide customary and reasonable assistance to Buyer in respect of the
preparation of novation requests.
8.2 COOPERATION. Buyer and Sellers shall cooperate with each
other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other after the Closing to ensure the
orderly transition of the Brownsville Business and Mexico Business to Buyer
and to minimize any disruption to the respective businesses of Sellers or the
Brownsville Business or Mexico Business that might result from the
Transactions. Sellers, at their own expense, shall cooperate with Buyer with
respect to the cure of any deficiencies concerning Coil Company disclosed on
Schedule 5.4 if reasonably requested by Buyer, but any out-of-pocket costs of
the cure of such deficiencies shall be at Buyer's expense. Neither party
shall be required by this Section 8.2 to take any action that would
unreasonably interfere with the conduct of its business.
8.3 PUBLICITY. Sellers and Buyer agree that, from the date hereof
through the Closing Date, no public release or announcement concerning the
Transactions shall be issued by any party without the prior consent of the
other parties (which consent shall not be unreasonably withheld or delayed),
except as such release or announcement may be required by any Requirement of
Law, in which case the party required to make the release or announcement
shall allow the other parties reasonable time to comment on such release or
announcement in advance of such issuance.
8.4 REASONABLE EFFORTS AND FURTHER ASSURANCES. Subject to the
terms and conditions of this Agreement (including the limitations set forth
in Section 8.1), each party will use all reasonable efforts to cause the
Closing to occur. Sellers and Buyer shall, at any time and from time to time
after the Closing, upon the reasonable request of another party, execute,
acknowledge, deliver and file all such further acts, transfers, conveyances,
assignments and assurances as may reasonably be required to effect the
Transactions.
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8.5 RECORDS; COOPERATION IN LITIGATION. After the Closing, upon
reasonable written notice and at Buyer's sole expense, Sellers agree to
furnish or cause to be furnished to Buyer and its representatives (including
its auditors), access at reasonable times and during normal business hours to
such information relating to the Assets in Sellers' possession as is
reasonably necessary for financial reporting and accounting matters, the
preparation and filing of any Tax Returns, reports or forms or the defense of
any Tax Claim or assessment; PROVIDED, HOWEVER, that such access does not
unreasonably disrupt the normal operations of Sellers.
8.6 ACCESS TO FORMER BUSINESS RECORDS; COOPERATION IN LITIGATION.
For a period of seven years following the Closing, Buyer will retain all
Records. During such period, Buyer will afford authorized representatives of
Sellers (including their auditors) access to such Records at reasonable times
and during normal business hours at its principal business office, or at such
other location or locations at which such Records may be stored or maintained
from time to time, and will permit such representatives to make abstracts
from, or copies of, any of such Records, or to obtain temporary possession of
any thereof as may be reasonably required by Sellers at Sellers' sole cost
and expense. During such period, Buyer will, at Sellers' expense (limited,
however, to Buyer's reasonable out-of-pocket expenditures without regard to
any employee cost or other overhead expenses), cooperate with Sellers in
furnishing information, evidence, testimony, and other reasonable assistance
in connection with any action, proceeding, Tax audit, or investigation to
which Sellers or any of their Affiliates is subject relating to the
Brownsville Business, Coil Company or Glasmex prior to the Closing. The term
"Record" as used in this Section 8.6 shall include any data processing files
or other computerized data.
8.7 USE OF TRADEMARKS AND TRADE NAMES. Notwithstanding anything
to the contrary in this Agreement, Buyer and Coil Company, as applicable, may
continue to use the name "MagneTek" and related trademarks, corporate names,
and trade names incorporating "MagneTek" and the stylized "MagneTek" logos
(i) in displays, signage and postings for the period after the Closing Date
necessary to permit the reasonably prompt removal of such names, and only to
the extent such displays, signage or postings exist on the Closing Date; (ii)
for a period of two years, to state the Brownsville Business' former
affiliation with MagneTek (e.g., formerly a division of "MagneTek, Inc.") and
(iii) to the extent any such trade names, trademarks, service marks or logos
appear on stationery, packaging materials, supplies or inventory on hand as
of the Closing Date or on order at the time of the Closing, until such is
exhausted.
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8.8 REQUIRED MODIFICATIONS OR REPLACEMENTS OF PRODUCTS. The
following provisions of this Section 8.8 shall govern the responsibilities of
Buyer and MagneTek regarding Required Modifications:
(a) Buyer shall advise MagneTek promptly after becoming
aware of any Required Modifications to the products shipped or services provided
by the Brownsville Business prior to the Closing Date to the extent Buyer
intends to assert any claim under Article X hereof in respect of such products.
(b) Whether or not Buyer gives the foregoing notice,
Buyer shall make any Required Modifications to products shipped or services
provided by the Brownsville Business prior to the Closing Date which are
necessary or advisable, in the reasonable discretion of MagneTek. If the cost
to MagneTek under Section 8.8(c) of implementing any such Required Modification
exceeds the cost to MagneTek of replacing such products, Buyer shall replace
such products at MagneTek's expense pursuant to Section 8.8(c). The obligation
of Buyer hereunder shall include, but not be limited to, such actions as
MagneTek may reasonably request for (i) the notification of customer and other
third parties in possession of the applicable products, (ii) the shipping of
such products, if necessary, to and from Buyer's facilities for modification,
improvement, enhancement or replacement, (iii) the production of replacement
products, parts or supplies necessary for the implementation of the product
modification, enhancement, improvement or replacement, (iv) the installation,
modification or replacement of the product by personnel of Buyer, either at the
customer's location or at Buyer's facilities, as appropriate, and
(v) recordkeeping and reports with respect to such product modifications,
enhancements, improvements or replacements to the extent required by law or
reasonably requested by MagneTek.
(c) MagneTek shall reimburse Buyer for direct materials,
direct labor and factory overhead incurred by Buyer in installing or
implementing any Required Modification under Section 8.8(b) or in producing any
replacement products, parts or supplies under Section 8.8(b), together with all
reasonable out-of-pocket shipping, postage and printing costs incurred by Buyer
in connection therewith.
8.9 WARRANTY WORK; ALCAN INVENTORY. As set forth in Section
2.3(b), Buyer shall perform all required warranty work (including labor and
materials) pertaining to products sold or services provided by the
Brownsville Business prior to the Closing Date, including, without
limitation, all warranty work in respect of the Alcan Agreement. Such
warranty obligations shall not reduce the reserve referred to in
34
Section 2.3(b). In addition, Buyer shall acquire, as part of the Assets, the
"coil inventory" pertaining to the Alcan Agreement warranty obligation, which
currently has a book value of approximately U.S. $380,000, notwithstanding
that such coil inventory has been eliminated from the Closing Balance Sheet.
To the extent such coil inventory is disposed of by Buyer and is required to
be replaced pursuant to "Option 2" of the Alcan Agreement, then Buyer, at no
cost to Sellers, will be responsible for the replacement of such coil
inventory. At the expiration of the 10-year period referred to in "Option 2"
of the Alcan Agreement, any funds that are received by Buyer from Alcan in
respect of the "coil inventory" will be remitted promptly to MagneTek, it
being acknowledged that Sellers have not assigned to Buyer the right to
receive payment from Alcan at the expiration of such 10-year period.
8.10 TAX RETURNS AND TAXES FOR COIL COMPANY. Seller shall prepare
or cause to be prepared all Tax returns and reports of Coil Company (and/or,
if it acquires the Glasmex stock pursuant to Section 3.3 hereof, of Glasmex)
the due date for which (taking into account any extensions of time for
filing) is on or before the Closing Date, and shall pay or cause to be paid
all Taxes required to be shown on such returns or reports as due. Buyer
shall prepare or cause to be prepared all returns and reports of Coil Company
the due date for which (taking into account extensions of time for filing) is
after the Closing Date, and except as otherwise provided in this Section
8.10, shall pay or cause to be paid all Taxes required to be shown on such
returns or reports as due. If any such returns or reports prepared by Seller
cover a period that includes the Closing Date (an "Overlap Period"), Seller
will pay to Buyer an amount equal to the Tax liability of Coil Company (or
Glasmex, if applicable) that would have resulted had the Overlap Period ended
on the Closing Date, computed in a manner consistent with prior periods. Any
amount so payable by Seller shall be paid to Buyer within fifteen (15)
business days following receipt of written notice from Buyer of the amount
due, together with the computations thereof and supporting workpapers,
provided Seller approves of the amount (such approval not to be unreasonably
withheld).
ARTICLE IX
EMPLOYEE BENEFIT MATTERS
9.1 EMPLOYEE RETENTION. Buyer shall offer employment to commence
as of the Closing Date to all Business Employees of the Brownsville Business,
at the same salaries and wages and on substantially the same terms and
conditions as those in effect immediately prior to the Closing Date.
35
Buyer has no present intention (subject to its discretion as to employee
performance) to terminate the employment of any Business Employee within the
sixty (60) days following the Closing Date, and Buyer assumes all obligations
and liabilities, if any, under the Worker Adjustment and Retraining
Notification Act (the "WARN Act") and any analogous state legislation
relating to or arising out of the Transactions. Buyer automatically assumes
all comparable liabilities under Mexican law by acquiring the stock of Coil
Company and, if applicable pursuant to Section 3.3, of Glasmex.
9.2 EMPLOYEE BENEFIT PLANS. Effective as of the Closing Date,
Business Employees shall cease accruing any benefits under any Seller Plan,
and MagneTek shall take, or cause to be taken, all such action, if any, as
may be necessary to effect such cessation of participation. Effective as of
the Closing Date, Buyer shall establish health plans for the Business
Employees of the Brownsville Business that are similar to those now offered
to salaried Business Employees of the Brownsville Business, and such plans
shall waive any exclusion or limitation with respect to pre-existing
conditions and actively-at-work exclusions and shall provide that any
expenses incurred on or before the Closing Date by a Business Employee of the
Brownsville Business or his covered dependents shall be taken into account
under such health plans for purposes of satisfying applicable deductible,
coinsurance and maximum out-of-pocket provisions. By virtue of acquiring the
stock of Coil Company and, if applicable pursuant to Section 3.3 of Glasmex,
Buyer automatically assumes all liabilities of the Employee Benefit
Arrangements as to Business Employees of the Mexico Business.
9.3 VACATION, HOLIDAY, SICK AND SEVERANCE PAY. As of the Closing
Date, Buyer shall assume all of Sellers' obligations for vacation (including
accrued vacation), holiday, sick (including accrued sick) and severance (if
any) pay to all Business Employees. By virtue of acquiring the stock of Coil
Company, Buyer automatically assumes all of such liabilities as to the
Business Employees of Coil Company, including Business Employees of Coil
Company who formerly were employees of Glasmex. Buyer acknowledges that such
liabilities as to such employees of Glasmex were not and will not be
discharged in connection with their transfer of employment to Coil Company.
9.4 ACCESS TO INFORMATION. Sellers shall make reasonably
available to Buyer such actuarial, financial, personnel and related
information as may be reasonably requested by Buyer with respect to any
Seller Plan as it relates to a Business Employee, including, but not limited
to, compensation and employment histories.
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9.5 THIRD-PARTY BENEFICIARIES. No provision of this Article IX
shall create any third-party beneficiary rights in any employee or former
Business Employee (including any beneficiary or dependent thereof),
including, without limitation, any right to continued employment or
employment in any particular position with Buyer for any specified period of
time after the Closing Date.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY MAGNETEK. Subject to the terms and
conditions of this Article X, MagneTek shall indemnify Buyer and each of its
officers, directors, employees and agents (each, a "Buyer Indemnified
Person") against, and hold them harmless from, any Loss suffered or incurred
by any such Buyer Indemnified Person (other than any Loss relating to
environmental matters, for which indemnification provisions are set forth in
Section 10.3) to the extent arising from (a) if the Closing occurs, any
breach of any representation or warranty of MagneTek contained in this
Agreement which survives the Closing or in any certificate, instrument or
other document delivered pursuant hereto or in connection herewith which by
its terms survives the Closing, (b) any breach of any covenant of MagneTek
contained in this Agreement requiring performance after the Closing Date, (c)
if the Closing occurs, the existence of, or the failure of Sellers to pay,
perform and discharge when due, any of the Excluded Liabilities (including,
without limitation, any Losses as a result of the failure to comply with any
bulk sales laws referred to in Section 7.3), (d) if the Closing occurs, any
litigation pertaining to the Mexico Business as to which a complaint has been
filed and notice thereof duly provided to Glasmex or Coil Company prior to
the Closing Date, or (e) if the Closing occurs, any claims or demands made by
any Governmental Authority or any third party which is unrelated to Buyer or
its Affiliates arising from deficiencies relating to Coil Company or Glasmex
set forth on Schedule 5.4 (PROVIDED that Buyer shall have afforded Sellers
the opportunity to mitigate any such Loss by cooperating with Buyer in the
cure of such deficiencies pursuant to Section 8.2); PROVIDED, HOWEVER, that
MagneTek shall not have any liability under this Section 10.1 unless the
aggregate of all Losses relating thereto for which MagneTek would, but for
this proviso, be liable exceeds on a cumulative basis with Losses for which
Buyer is indemnified under Section 10.3, an amount equal to $50,000 (and then
only to the extent of any such excess); and PROVIDED FURTHER, HOWEVER, that
MagneTek's aggregate liability under this Section 10.1 and Section 10.3 shall
in no event exceed $2,000,000.
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10.2 INDEMNIFICATION BY BUYER. Subject to the terms and
conditions of this Article X, Buyer shall indemnify Sellers and each of their
respective officers, directors, employees and agents (each, a "Seller
Indemnified Person") against, and hold them harmless from, any Loss suffered
or incurred by any such Seller Indemnified Person (other than any Loss
relating to environmental matters, for which indemnification provisions are
set forth in Section 10.3) to the extent arising from (a) if the Closing
occurs, any breach of any representation or warranty of Buyer contained in
this Agreement which survives the Closing or in any certificate, instrument
or other document delivered pursuant hereto or in connection herewith which
by its terms survives the Closing, (b) any breach of any covenant of Buyer
contained in this Agreement requiring performance after the Closing Date, (c)
if the Closing occurs, the existence of, or the failure of Buyer to pay,
perform and discharge when due, any of the Assumed Liabilities (including,
for purposes of this Article X, the liabilities of Glasmex assumed by Coil
Company pursuant to Section 6.3), (d) if the Closing occurs, the failure of
Buyer or Coil Company (or Glasmex, if acquired by Buyer) to pay, perform or
discharge when due any liability under Mexican law referred to in the last
sentence of Section 9.1 and (e) if the Closing occurs, the ongoing operations
of Buyer, Coil Company (and Glasmex, if acquired by Buyer) and the Assets
after the Closing Date; PROVIDED, HOWEVER, that Buyer shall not have any
liability under this Section 10.2 unless the aggregate of all Losses relating
thereto for which Buyer would, but for this proviso, be liable exceeds on a
cumulative basis with Losses for which Sellers are indemnified under Section
10.3, an amount equal to $50,000 (and then only to the extent of such
excess); and PROVIDED FURTHER, HOWEVER, that Buyer's aggregate liability
under clauses (a) and (b) of this Section 10.2 shall in no event exceed
$2,000,000.
10.3 INDEMNIFICATION FOR ENVIRONMENTAL MATTERS. Subject to the
terms and conditions of this Article X, MagneTek shall indemnify and hold
Buyer Indemnified Persons harmless from and against all Losses resulting from
claims or demands by any Governmental Authority or any third party which is
unrelated to Buyer or its Affiliates arising under any Environmental Law to
the extent such Losses (a) either (i) are attributable to the use and/or
occupancy of the Brownsville Facility or to Hazardous Substances transported
offsite from the Brownsville Facility for treatment, storage or disposal
prior to the Closing or (ii) are attributable to the use and/or occupancy of
the Mexico Facility or to Hazardous Substances transported offsite from the
Mexico Facility for treatment, storage or disposal prior to the Closing and
such Losses and claims or demands are made by a third party as aforesaid and
arise under Mexican Environmental Law; and (b) exceed, on a cumulative basis
with Losses for which Buyer
38
is indemnified under Section 10.1, an amount equal to $50,000; but only to
the extent of such excess and PROVIDED, FURTHER, that MagneTek's aggregate
liability under this Section 10.3 and Section 10.1 shall in no event exceed
$2,000,000. MagneTek's indemnification liability hereunder shall in no event
be construed to extend to or include any remediation or other liability
arising as a result of the presence or removal of asbestos in or upon any of
the improvements located on the Brownsville or Mexico Facilities or any other
facility of either Seller at any time. MagneTek's obligation to indemnify
Buyer under this Section 10.3 shall expire on the second anniversary of the
Closing Date, and Buyer hereby expressly releases each Seller from and after
such second anniversary from any liability in respect of the matters covered
by such indemnification, whether arising by statute or common law, or
otherwise. MagneTek shall have no obligation to indemnify any Buyer
Indemnified Person with respect to any condition or circumstance relating to
the Brownsville Facility or the Brownsville Business prior to the utilization
of the Brownsville Facility that commenced in 1983, or with respect to any
condition or circumstance relating to the Mexico Facility or the Mexico
Business prior to Seller's acquisition of Glasmex. In addition, Magnetek
shall have no obligation to indemnify Buyer in respect of the matter referred
to in item 6 of Schedule 2.5 hereto, and such matter shall not contribute to
the $50,000 deductible hereunder. Buyer shall indemnify and hold each Seller
Indemnified Person harmless from and against all Losses resulting from claims
or demands by any Governmental Authority or third-party arising under any
Environmental Law to the extent such Losses are attributable to the use
and/or occupancy by Buyer or any Affiliate of Buyer of the Brownsville or
Mexico Facility.
10.4 LOSSES NET OF INSURANCE, ETC.
(a) The amount of any Loss for which indemnification is
provided under this Article X shall be net of any amounts recovered or
recoverable by the Indemnified Person under insurance policies with respect
to such Loss and of any reserve in respect thereof reflected on the Closing
Balance Sheet.
(b) If the Indemnifying Person makes any payment under
this Article X in respect of any Loss, the Indemnifying Person shall be
subrogated, to the extent of such payment, to the rights of the Indemnified
Person against any insurer or third party with respect to such Losses. The
Indemnified Person shall execute any required documents or instruments, serve
as a named plaintiff, or take any other similar steps necessary to effectuate
such subrogation.
39
(c) Notwithstanding anything to the contrary elsewhere
in this Agreement, no Indemnifying Person shall, in any event, be liable to
the other party for any consequential damages, including, but not limited to,
loss of revenue or income, business interruption, cost of capital, or loss of
business reputation or opportunity relating to the breach or alleged breach
of this Agreement. Each party agrees that it will not seek punitive damages
as to any matter under, relating to or arising out of the Transactions. The
foregoing shall not be interpreted, however, to limit indemnification for
Losses incurred as a result of the assertion by a claimant (other than the
parties hereto and their successors and assigns), in a Third-Party Claim (as
defined below) of claims for damages of the foregoing type.
(d) The parties hereto agree that the indemnification
provisions of this Article X are intended to provide the exclusive remedy as
to all Losses any Indemnified Person may incur arising from or relating to
the Transactions, and each party hereby waives, to the extent they may do so,
any other rights or remedies that may arise under any applicable statute,
rule or regulation. Moreover, notwithstanding anything to the contrary in
this Agreement, Buyer waives no rights it may have or come to have or to
pursue against any unrelated predecessors in interest of MagneTek or NEC.
(e) No Buyer Indemnified Person shall have any right,
nor shall Magnetek have any liability under this Article X in respect of, any
claim for indemnification under Section 10.1 or 10.3 to the extent such claim
arises from any action or omission that occurred on or after July 6, 1995 and
was under the control of Buyer or its Affiliates or agents pursuant to the
Management Agreement referred to in Section 7.1 hereof.
(f) To the extent any Indemnified Person incurs a Loss
for which a right to indemnification may be asserted under this Article X and
such Loss is incurred in Mexican currency, for purposes of calculating the
amount of such Loss under this Agreement, the New York selling exchange rate
published in THE WALL STREET JOURNAL on the date the Loss was incurred shall
govern.
10.5 TERMINATION OF INDEMNIFICATION. The obligations to indemnify
and hold harmless a party hereto, (A) pursuant to Sections 10.1(a) and
10.2(a), shall terminate when the applicable representation or warranty
terminates pursuant to Section 10.8, (B) pursuant to Section 10.3, shall
terminate as and to the extent set forth therein and (C) pursuant to Sections
10.1(b) and 10.2(b), shall terminate on the second anniversary of the Closing
Date (except as to
40
Sections 7.6, 8.6, 8.7 and 8.9 which shall survive indefinitely or for any
applicable periods set forth therein); PROVIDED, HOWEVER, that as to clauses
(A), (B) and (C) above, such obligations to indemnify and hold harmless shall
not terminate with respect to any item as to which the person to be
indemnified shall have, before the expiration of the applicable period,
previously made a claim by delivering a notice (stating in reasonable detail
the basis (whether or not the amount of Losses related to such claim is then
known or estimable) of such claim) to the Indemnifying Person.
10.6 PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN FOR TAX
CLAIMS). In order for an Indemnified Person to be entitled to any
indemnification provided for under this Agreement (other than for Tax Claims)
in respect of, arising out of or involving a claim or demand made by any
Person against the Indemnified Person (a "Third-Party Claim"), such
Indemnified Person must notify the Indemnifying Person in writing, and in
reasonable detail, of the Third-Party Claim within 10 Business Days after
receipt by such Indemnified Person of written notice of the Third-Party
Claim; PROVIDED, HOWEVER, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Person shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Person shall not be liable for any
Losses incurred during the period in which the Indemnified Person failed to
give such notice). Thereafter, the Indemnified Person shall deliver to the
Indemnifying Person, within five Business Days after the Indemnified Person's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Person relating to the Third-Party Claim.
If a Third-Party Claim is made against an Indemnified Person, the
Indemnifying Person will be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with counsel selected by
the Indemnifying Person and reasonably satisfactory to the Indemnified
Person. Should the Indemnifying Person so elect to assume the defense of a
Third-Party Claim, the Indemnifying Person will not be liable to the
Indemnified Person for legal fees and expenses subsequently incurred by the
Indemnified Person in connection with the defense thereof. If the
Indemnifying Person assumes such defense, the Indemnified Person shall have
the right to participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the Indemnifying Person,
it being understood that the Indemnifying Person shall control such defense.
The Indemnifying Person shall be liable for the fees and expenses of counsel
employed by the Indemnified Person for any period during which the
Indemnifying Person has not
41
assumed the defense thereof (other than during any period in which the
Indemnified Person shall have failed to give notice of the Third Party Claim
as provided above). If the Indemnifying Person chooses to defend or prosecute
any Third-Party Claim, all the parties hereto shall cooperate in the defense
or prosecution thereof. Such cooperation shall include the retention and
(upon the Indemnifying Person's request) the provision to the Indemnifying
Person of records and information which are reasonably relevant to such
Third-Party Claim, and making employees available on a mutually convenient
basis in the manner specified in Section 8.6 hereof to provide additional
information and explanation of any material provided hereunder.
Notwithstanding the foregoing, in the event a Third-Party Claim is made
against either Seller as to which MagneTek is entitled to seek
indemnification under this Article X and MagneTek concludes, in its
reasonable judgment, that Buyer lacks the financial and personnel resources
to vigorously defend MagneTek from such Third-Party Claim, MagneTek may elect
to retain the defense of such Third-Party Claim and shall be entitled to be
reimbursed by Buyer for its Losses incurred in such defense, such
expenditures to be reimbursed promptly after submission of invoices therefor.
Whether or not the Indemnifying Person shall have assumed the defense of a
Third-Party Claim, the Indemnified Person shall not admit any liability with
respect to, or settle, compromise or discharge, such Third-Party Claim
without the Indemnifying Person's prior written consent (which consent shall
not be unreasonably withheld or delayed). All Tax Claims (as defined in
Section 10.7) shall be governed by Section 10.7.
10.7 PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS.
(a) If a claim shall be made by any Tax authority,
which, if successful, might result in an indemnity payment to any Person
hereunder (a "Tax Indemnitee"), the Tax Indemnitee shall promptly notify the
party against whom indemnification is sought (the "Tax Indemnitor") in
writing of such claim (a "Tax Claim"). If notice of a Tax Claim is not given
to the Tax Indemnitor within a sufficient period of time to allow the Tax
Indemnitor to effectively contest such Tax Claim, or in reasonable detail to
apprise the Tax Indemnitor of the nature of the Tax Claim, in each case
taking into account the facts and circumstances with respect to such Tax
Claim, the Tax Indemnitor shall not be liable to the Tax Indemnitee to the
extent that the Tax Indemnitor's ability to effectively contest such Tax
Claim is actually prejudiced as a result thereof.
(b) With respect to any Tax Claim, the Tax Indemnitor
shall control all proceedings taken in connection with such Tax Claim
(including, without limitation, selection
42
of counsel) and, without limiting the foregoing, may in its sole discretion
pursue or forego any and all administrative appeals, proceedings, hearings
and conferences with any taxing authority with respect thereto and may, in
its sole discretion, either pay the Tax claimed and xxx for a refund where
applicable law permits such refund suits or contest the Tax Claim in any
permissible manner, provided, however, that the Tax Indemnitor shall not
settle or compromise a Tax Claim without giving 30 days' prior notice to the
Tax Indemnitee, and without the Tax Indemnitee's consent, which shall not be
unreasonably withheld or delayed, if such settlement or compromise would have
a material adverse effect on the Tax liabilities of the Tax Indemnitee, its
Affiliates or any member of its affiliated group. The Tax Indemnitee, and
each of its Affiliates, shall cooperate with the Tax Indemnitor in contesting
any Tax Claim, which cooperation shall include, without limitation, the
retention and (upon the Tax Indemnitor's request) the provision to Tax
Indemnitor of records and information which are reasonably relevant to such
Tax Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
10.8 SURVIVAL OF REPRESENTATIONS. The representations and
warranties in this Agreement shall survive the Closing solely for purposes of
Sections 10.1 and 10.2 and shall terminate at the close of business on the
second anniversary of the Closing Date. Notwithstanding the foregoing, (a)
the representations and warranties relating to environmental matters in
Section 4.8 shall not survive the Closing and (b) Buyer's acknowledgment
pursuant to Section 5.4 shall not expire. Nothing in this Section 10.8 shall
limit the duration of Section 10.3.
ARTICLE XI
GENERAL PROVISIONS
11.1 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties' successor-in-interest and assigns. This
Agreement and the rights and obligations hereunder shall not be assignable or
transferable by Buyer other than by operation of law, including by way of
stock sale or merger, except to a buyer of substantially all the assets of
Buyer, without the prior written consent of MagneTek; PROVIDED, HOWEVER, that
(a) Buyer may assign its right to purchase the Assets hereunder to an
Affiliate of Buyer that can accurately make all of Buyer's representations
and warranties as of the Closing without the prior written consent of
MagneTek, but in no event shall any
43
such assignment limit or affect Buyer's obligations hereunder and (b) Buyer
may assign its rights (including its indemnification rights) hereunder or
grant a security interest in this Agreement, or both, to or for the benefit
of any Person holding a financial obligation of Buyer issued in connection
with the financing of the Transactions or in connection with any renewal,
extension, modification, amendment, refinancing, refunding or replacement of
any such financial obligation.
11.2 NO THIRD-PARTY BENEFICIARIES. Except as provided in Section
11.1 as to permitted assignees and in Article X as to Indemnified Persons,
this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the parties hereto and such
assigns, any legal or equitable rights hereunder.
11.3 TERMINATION.
(a) Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated (except as set forth in
Section 11.3(c)) and the Transactions abandoned at any time prior to the Closing
Date:
(i) by mutual written consent
of Sellers and Buyer;
(ii) by Sellers if any of the conditions set forth
in Section 3.2 shall have become incapable of fulfillment,
and shall not have been waived by Sellers;
(iii) by Buyer if any of the conditions set forth in
Section 3.1 shall have become incapable of fulfillment,
and shall not have been waived by Buyer; or
(iv) by Sellers or Buyer, if the Closing does
not occur on or prior to September 30, 1995; PROVIDED,
HOWEVER, that the party seeking termination pursuant
to clause (ii), (iii) or (iv) is not materially in breach
(after having been given written notice and a five-Business
Day cure period, if such breach is susceptible of cure) of
any of its representations, warranties, covenants or
agreements contained in this Agreement.
(b) In the event of termination by Sellers or Buyer
pursuant to this Section 11.3, written notice thereof shall forthwith be given
to the other party and the
44
Transactions shall be terminated, without further action by either party. If
the Transactions are terminated as provided herein:
(i) Buyer shall return all documents and
copies and other material received from Sellers relating to
the Transactions, whether so obtained before or after
the execution hereof, to Sellers;
(ii) all confidential information received
by Buyer with respect to the Brownsville Business, Coil
Company and Glasmex and Sellers shall be treated in
accordance with the Confidentiality Agreement which
shall remain in full force and effect notwithstanding
the termination of this Agreement.
(c) If this Agreement is terminated and the transactions
contemplated hereby are abandoned as described in this Section 11.3, this
Agreement shall become void and of no further force and effect, except for the
provisions of (i) Section 7.1 relating to the obligation of Buyer to keep
confidential certain information and data obtained by it, (ii) Section 11.4
relating to certain expenses, (iii) Section 8.3 relating to publicity,
(iv) Section 11.11 relating to finder's fees and broker's fees and (v) this
Section 11.3. Nothing in this Section 11.3 shall be deemed to release Sellers
or Buyer from any liability for any breach by such party of the terms and
provisions of this Agreement or to impair the right of Sellers or Buyer to
compel specific performance by the other party of its obligations under this
Agreement.
11.4 EXPENSES. Whether or not the Transactions are consummated,
and except as otherwise provided in this Agreement, all fees, costs and
expenses incurred in connection with the Transaction Documents and the
Transactions shall be paid by the party incurring such fees, costs or
expenses.
11.5 ATTORNEYS' FEES. Should any litigation be commenced
concerning this Agreement or the rights and duties of any party with respect
to it, the party prevailing shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum for such party's attorneys'
fees and expenses determined by the court in such litigation or in a separate
action brought for that purpose.
11.6 AMENDMENTS. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by both parties hereto.
45
11.7 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the
case of express mail or overnight courier service), as follows:
(i) if to Buyer, to:
National Electric Coil Company, L.P.
c/o National Electric Coil-Columbus
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
00 Xxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
(ii) if to MagneTek, to:
MagneTek, Inc.
00 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Miley, Esq.
General Counsel
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
(iii) if to NEC, to:
MagneTek National Electric Coil, Inc.
c/o 00 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Miley, Esq.
Secretary
11.8 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings
contained in this Agreement, in any Exhibit or Schedule hereto and in the
table of contents to this
46
Agreement, are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Any matter disclosed in one
Schedule hereto shall be deemed incorporated by reference into each other
Schedule hereto and disclosed in each such Schedule. All Exhibits and
Schedules annexed hereto or referred to herein are hereby incorporated in and
made a part of this Agreement as if set forth in full herein. Any
capitalized terms used in any Schedule or Exhibit, but not otherwise defined
therein, shall have the meaning as defined in this Agreement. All of the
Transaction Documents shall be interpreted in such a manner as to harmonize
and give effect to the provisions thereof.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been
signed by each of the parties and delivered to the other party.
11.10 ENTIRE AGREEMENT. This Agreement, the Sharing Agreement and
the Confidentiality Agreement contain the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersede all prior oral and written agreements and understandings relating
to such subject matter. 11.11FEES. Each party hereto hereby represents and
warrants that (a) the only brokers or finders that have acted for such party
in connection with this Agreement or the transactions contemplated hereby or
that may be entitled to any brokerage fee, finder's fee or commission in
respect thereof are set forth in Schedule 11.11 and (b) each party agrees
that it will pay all fees or commissions which may be payable to such firm(s)
retained by it or to which it may be obligated.
11.12 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision hereof.
11.13 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
47
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
MAGNETEK, INC.
By:
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President
MAGNETEK NATIONAL ELECTRIC COIL, INC.
By:
-----------------------------------
Name: Xxxxx X. Xxxxxxx
Title: President
NATIONAL ELECTRIC COIL COMPANY, L.P.
By: Advanced Coil Technology,
Inc., its general partner
By:
-----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
48
