ASSET PURCHASE AGREEMENT
WORTHINGTON CUSTOM PLASTICS, INC.
This Agreement is made this 26th day of February, 1999 by and between
Worthington Custom Plastics, Inc., an Ohio corporation ("Seller"), Xxxxxx
Industrial Group, Inc., a Georgia corporation ("Parent") and Xxxxxx Custom
Plastics, Inc., a newly formed Delaware corporation ("Buyer") and wholly-owned
subsidiary of Parent.
W I T N E S S E T H:
WHEREAS, Seller is engaged in the business, among others, of designing,
manufacturing and selling molded plastic and metal parts; and
WHEREAS, Seller desires to sell, and Parent, through Buyer, desires to
purchase, substantially all of the assets of Seller's plastics business located
at Seller's Harrisburg and Concord, North Carolina, St. Xxxxxxxx, South Carolina
and Lebanon, Kentucky facilities (the "Business" as further defined hereafter),
and in connection therewith, Buyer has agreed to assume certain of Seller's
liabilities relating to the Business, all on the terms set forth herein; and
WHEREAS, certain terms used herein have the meanings assigned to them in
Section 12 hereof.
NOW, THEREFORE, in consideration of the foregoing and of the respective
promises, covenants, representations and warranties herein contained, it is
agreed:
SECTION 1. PURCHASE OF ASSETS AND ASSUMPTION OF LIABILITIES.
1.1 PURCHASE OF ASSETS. Subject to the terms and conditions set forth
in this Agreement, on the Closing Date, Seller agrees to sell, transfer, assign,
convey and deliver to Buyer, and Buyer agrees to purchase, acquire and accept
from Seller, all of Seller's right, title and interest in and to all of the
assets, properties and rights of Seller used by Seller solely in the conduct of
the Business, as and to the extent existing on the Closing Date (except for the
Excluded Assets as defined in Section 1.2) collectively, the "Assets", free and
clear of all liens and encumbrances other than Permitted Liens. Without
limitation of the foregoing, the Assets include the following as and to the
extent existing on the Closing Date:
(i) REAL PROPERTY. The Real Property owned or leased by
Seller and listed on Schedule 1.1(i) hereto;
(ii) INVENTORY. All Inventory of the Business;
(iii) ACCOUNTS RECEIVABLE. All accounts receivable of the
Business excluding accounts receivable from Seller or Seller's
Affiliates;
(iv) TANGIBLE PERSONAL PROPERTY. All Tangible Property,
including, but not limited to, the Tangible Property listed on
Schedule 1.1(iv);
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(v) CONTRACTS. All Contracts of the Business to which
Seller is a party and which relate to the conduct of the Business
(the "Contracts of the Business"), including, but not limited to,
those set forth on Schedule 1.1(v) hereto; but excluding those
listed on Schedule 1.2(vi);
(vi) PREPAID EXPENSES. All prepaid expenses of the
Business;
(vii) INTANGIBLE PROPERTY. Subject to Sections 1.2(vi) and
7.10 hereof, all Intangible Property, including, but not limited
to, the Intangible Property listed on Schedule 1.1(vii) ;
(viii) BOOKS AND RECORDS. All general, financial and
personnel records, correspondence and other files and records,
including customer lists and sales records, of the Business;
(ix) GOODWILL. All of the Seller's goodwill in the
Business;
(x) CLAIMS. All claims, causes of action, rights of
recovery and rights of set-off arising out of the conduct of the
Business;
(xi) BALANCE SHEET ASSETS. All other assets of Business set
forth on the Balance Sheet, subject to changes in the ordinary
course of business since the Balance Sheet Date;
(xii) EMPLOYEE PLANS. The assets relating to the Plans
listed on Schedule 1.1(xii).
1.2. EXCLUDED ASSETS. Notwithstanding any provision of this Agreement
to the contrary, Seller shall not sell, transfer, assign or convey to Buyer, and
Buyer shall not purchase, acquire or accept, and there shall be excluded from
the Assets the following (the "Excluded Assets"):
(i) CASH. All cash, marketable securities, commercial
paper, certificates of deposit and other bank deposits, treasury
bills and other cash equivalents;
(ii) BANK ACCOUNTS. All rights with respect to bank
accounts;
(iii) INTERCOMPANY ACCOUNTS. All rights of Seller or the
Business with respect to any obligations of Seller, any Seller
Affiliate or any director or officer of Seller or of any Seller
Affiliate;
(iv) INSURANCE. All insurance policies and all rights of
every nature and description under or arising out of such
policies;
(v) EMPLOYEE BENEFIT PLANS. Except as expressly set forth
on Schedule 1.1(xii), all Plans of Seller and the assets relating
thereto;
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(vi) OTHER MATTERS. All rights of Seller (a) under this
Agreement and the agreements and instruments delivered to Seller
by Buyer pursuant to this Agreement, (b) to Seller's and
Worthington's corporate name, logos, tradenames and trademarks,
and (c) under those Contracts listed in Schedule 1.2(vi); and
(vii) ASSETS NOT USED IN THE BUSINESS. Those assets not used
solely in connection with the Business, including, without
limitation, those listed on Schedule 1.2 (vii).
1.3 ASSUMED LIABILITIES. Subject to the terms and conditions set
forth in this Agreement, Buyer agrees that, on the Closing Date, Buyer shall
assume and thereafter pay, perform and discharge when due all liabilities and
obligations of Seller relating to the Assets or the Business or the operation
thereof (except the Excluded Liabilities as defined in Section 1.4) as and to
the extent existing on the Closing Date, including, without limitation, the
following obligations and liabilities as and to the extent existing on the
Closing Date (the "Assumed Liabilities"):
(i) all liabilities and obligations of Seller relating to
the Assets or the Business to be performed after the Closing Date
arising from the Contracts of the Business;
(ii) all liabilities of Seller reflected or reserved against
in the Closing Balance Sheet, or notes thereto, and those
liabilities of Seller arising in the ordinary course of business
of the Business since the Balance Sheet Date;
(iii) all obligations of Seller for replacement of, or refund
or credit for, damaged, defective or other returned products or
for warranty claims in respect of products sold by the Business;
(iv) all obligations of Seller for rebates, price
adjustments, adjustments to accounts payable, future delivery
obligations, discounts or promotions to the extent accrued or
arising in the ordinary course of business of the Business;
(v) all liabilities and obligations of Seller relating to
the Assets or the Business with respect to accrued and unpaid
Taxes to be assumed by Buyer pursuant to Section 7.4 hereof
(other than income and franchise taxes) existing on the Closing
Date including, without limitation, real estate taxes, sales
taxes, general and special taxes and assessments, ad valorem
taxes, water and sewer charges, federal and state withholding
taxes of employees of the Business;
(vi) all liabilities and obligations of Seller relating to
the Plans set forth on Schedule 1.1(xii);
(vii) subject to Section 10.1, all liabilities of Seller in
connection with each Action or Proceeding set forth on Schedule
1.3(vii) hereto;
(viii) all liabilities and obligations of Seller related to
the IDB as described in Section 1.5; and
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(ix) all other liabilities expressly set forth as being
assumed or payable by Buyer as set forth in Section 7 hereof or
pursuant to the Assignment and Assumption Agreement referred to in
Section 9.5(e).
1.4 LIABILITIES NOT ASSUMED. Anything contained in this Agreement to
the contrary notwithstanding, Buyer shall not assume and there shall be excluded
from the Assumed Liabilities (i) all obligations of Seller or the Business to
any Seller Affiliate or any director or officer of Seller or of any Seller
Affiliate, (ii) those obligations or liabilities listed as Excluded Liabilities
on Schedule 1.4, and (iii) those liabilities expressly set forth as being
payable by Seller pursuant to Section 7 hereof. The liabilities of Seller not
assumed by Buyer as listed in this Section 1.4 are referred to herein as the
"Excluded Liabilities."
1.5 LEBANON IDB. Seller's Lebanon, Kentucky facility was financed
through Industrial Building Revenue Bonds, Series 1994 issued by the City of
Lebanon, Kentucky (the "IDB") which were purchased by a Seller's Affiliate. At
Closing the following will occur with respect to the IDB:
(a) As part of the Assumed Liabilities, Buyer shall assume all of
Seller's liabilities and obligations, for payment and otherwise,
under the IDB; and
(b) As part of the Assets being acquired, Seller's Affiliate shall
transfer the IDB to an entity designated by Buyer.
SECTION 2. PURCHASE PRICE.
2.1 PURCHASE PRICE. The consideration for the Assets (the "Purchase
Price") shall be (i) $25,000,000 (the "Closing Cash Payment"); (ii) non-voting
shares of preferred stock of Parent, without par value (the "Preferred Stock"),
having an aggregate value of $10,000,000 and the terms set forth on Exhibit A
hereto; (iii) voting shares of common stock of Buyer, par value $0.01 per share
(the "Common Stock"), equal to 15% of the equity value of Buyer at the Closing
Date on a fully diluted basis; and (iv) Buyer's assumption of the Assumed
Liabilities. The Closing Cash Payment shall be paid as provided in Section 2.3.
2.2. ADJUSTMENT OF PURCHASE PRICE.
(a) The Purchase Price shall be adjusted as follows:
(i) For purposes hereof, "Operating Capital" shall mean
(A) net accounts receivable plus Inventory, plus investments since
November 30, 1998 in fixed assets, less (B) accounts payable.
"Final Operating Capital" shall mean Operating Capital of the
Business as reflected in the Closing Balance Sheet referred to in
Section 2.2(b); and "Target Operating Capital" shall mean
Operating Capital of the Business as reflected on the November 30,
1998 Balance Sheet.
(ii) If the amount of the Final Operating Capital determined
in accordance with this Section is less than the Target Operating
Capital, the Purchase Price shall be decreased by an amount equal
to the difference between the Final Operating Capital and the
Target Operating Capital.
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(iii) If the amount of the Final Operating Capital is greater
than the Target Operating Capital, the Purchase Price shall be
increased by an amount equal to the difference between the Final
Operating Capital and the Target Operating Capital.
(b) The Final Operating Capital shall be determined as of the close of
business on the day immediately preceding the day of the Closing (the
"Determination Time") on the basis of the balance sheet of the Business
as of the Determination Time (the "Closing Balance Sheet"). The Closing
Balance Sheet (i) shall be prepared by Seller in accordance with
generally accepted accounting principles consistently applied ("GAAP") as
supplemented by the principles set forth in Schedule 2.2 (the "Accounting
Principles"); (ii) shall reflect separately investments since November
30, 1998 in fixed assets; and (iii) shall reflect the transactions
contemplated by Schedule 2.2 hereof.
(c) Seller shall use its best efforts to deliver to Buyer the Closing
Balance Sheet within sixty (60) days after the Closing; (i) setting forth
the amount of Final Operating Capital reflected in the Closing Balance
Sheet, and (ii) setting forth the amount of any required adjustment to
the Purchase Price pursuant to this Section 2.2. Seller and Buyer shall
reasonably agree upon the method for obtaining an accurate report of
closing inventory (i.e. physical inventory, cycle count or other). The
parties shall reasonably agree when any counts shall be conducted and
each party and their representatives shall be permitted to observe the
conduct of any counts. In connection with any physical inventory/cycle
count and the preparation of the Closing Balance Sheet, the Buyer shall
cause the employees of the Business to provide to Seller without charge,
full access to the books, records, facilities and employees of the
Business and the Buyer shall cause the Businesses employees to cooperate
fully with Seller in the conduct of the physical inventory/cycle count
and the preparation of the Closing Balance Sheet. The Buyer and its
representatives shall be entitled to consult with personnel of Seller
during the course of the preparation of the Closing Balance Sheet and to
review the work papers prepared in connection therewith.
(d) The Buyer shall have 30 days after its receipt of the Closing
Balance Sheet (hereafter the "Dispute Period") during which it shall have
the opportunity to examine the Closing Balance Sheet and to determine if
it proposes any adjustments to amounts set forth therein. If adjustments
are proposed, the Buyer shall provide a written notice to Seller (a
"Dispute Notice") within the Dispute Period setting forth the proposed
adjustments. Within 15 days after receipt of the Dispute Notice, Buyer
and Seller shall meet and attempt to resolve such proposed adjustments
and upon reaching agreement shall set forth such agreement in writing and
prepare a final Closing Balance Sheet. In the event that Seller and
Buyer are unable to resolve any such Dispute within the 15 day period (or
such longer period as the parties may mutually agree) then the public
accounting firm of Deloitte & Touche, LLP (Columbus office) shall be
employed as arbitrator hereunder to settle the Dispute as soon as
practicable. The arbitrator shall have access to all documents and
facilities necessary to perform its functions as arbitrator. The
arbitrator's determination with respect to any Dispute shall be the
exclusive method for the resolution of that dispute, shall be final and
binding upon the parties hereto and may be enforced by any court of
competent jurisdiction. The arbitrator may at his discretion
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establish binding rules of procedure for the conduct of the
arbitration. Seller and Buyer shall each pay one-half of the fees and
expenses of the arbitrators for such purposes.
2.3. PAYMENT OF PURCHASE PRICE.
(a) At the Closing, Buyer shall pay to Seller (i) an amount equal to
the Closing Cash Payment by wire transfer of immediately available funds
to an account designated by Seller, and (ii) certificates issued in the
name of Seller representing the Preferred Stock and Common Stock
contemplated by Section 2.1.
(b) Within three (3) business days after the determination of Final
Operating Capital is finalized, then (i) in the event the Final Operating
Capital is less than the Target Operating Capital, Seller shall pay to
Buyer the amount, if any, by which the Target Operating Capital exceeds
the Final Operating Capital, or (ii) in the event the Final Operating
Capital exceeds the Target Operating Capital, Buyer shall pay to Seller
the amount, if any, by which the Final Operating Capital is greater than
the Target Operating Capital. Any such payment pursuant to this Section
(b) shall be made by wire transfer of immediately available funds and
shall be accompanied by payment of an amount determined by computing
simple interest on the amount of that payment at the rate of interest
announced publicly by Bank One in Columbus from time to time as its
"reference rate" (on the basis of a 365-day year) from the Closing Date
to the date of payment.
2.4 ALLOCATION. The Purchase Price shall be allocated among the
Assets on a schedule to be attached hereto as Schedule 2.4 and agreed to by the
parties hereto on or prior to the Closing Date. Such purchase price allocation
shall be made consistent with Section 1060 of the Code. Each of the parties
hereto shall not, and shall not permit any of its Affiliates to, take a position
(except as required pursuant to any Order) on any Tax Return, before any
governmental agency charged with the collection of any Tax, or in any judicial
proceeding, that is in any way inconsistent with the allocation determined in
accordance with this Section 2.4.
SECTION 3. CLOSING; TERMINATION; FILINGS.
3.1. CLOSING. Subject to fulfillment or waiver of the conditions
precedent set forth in Sections 8 and 9 hereof, the Closing shall take place on
the Closing Date at the offices of Vorys, Xxxxx, Xxxxxxx and Xxxxx, L.L.P. in
Columbus, Ohio at 10:00 a.m., local time, or at such other time and place on the
Closing Date upon which Seller and the Buyer may mutually agree.
3.2. CLOSING DATE. The Closing Date (the "Closing Date") shall either
be the later of (i) March 31, 1999 or, if applicable, the date which is five (5)
business days after all waiting periods, including any extensions thereof,
applicable to the transactions contemplated hereby under the HSR Act have
expired or terminated, or (ii) such other date upon which Seller and the Buyer
may mutually agree. Seller and Buyer shall use their best efforts to effect
Closing on or before March 31, 1999.
3.3. TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual written consent of Buyer, Parent and Seller;
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(b) by Buyer or Parent if there has been a material misrepresentation
or breach on the part of Seller, or by Seller if there has been a
material misrepresentation or breach on the part of Buyer or Parent, of
the representations, warranties or covenants set forth in this Agreement,
or if events have occurred which have made it impossible to satisfy a
condition precedent to the terminating Party's obligations to consummate
the transactions contemplated hereby, unless the willful breach of this
Agreement by such terminating Party has caused the condition to be
unsatisfied;
(c) by any of Buyer, Parent, or Seller if the Closing has not occurred
on or prior to April 15, 1999; provided that none of Buyer, Parent or
Seller will be entitled to terminate this Agreement pursuant to this
Section 3.3(c) if a willful breach of this Agreement by such party has
prevented the consummation of the transactions contemplated hereby at or
prior to such time; or
(d) by the Buyer pursuant to the terms of Section 3.6.
In the event of termination of this Agreement by Buyer, Parent or
Seller as provided above, this Agreement will forthwith become void and
there will be no liability on the part of any party hereto to any other
party hereto or its stockholders or directors or officers in respect
thereof, except for the obligations of the parties hereto in Sections
7.7, 11.9 and 11.10 and except that nothing herein will relieve any party
from liability for any breach of this Agreement prior to such
termination.
3.4. FILINGS; COOPERATION.
(a) Prior to the Closing the parties shall proceed with diligence and
in good faith to make such filings and take such other actions as may be
necessary to satisfy the HSR Act, if applicable. Buyer shall be
responsible for the HSR Act filing fee; provided that Seller shall
reimburse Buyer for one-half of such filing fee.
(b) On and after the Closing Date, the Buyer and Seller shall, on
request, cooperate with one another by furnishing any additional
information, executing and delivering any additional documents and/or
instruments, and doing any and all such other things as may be reasonably
required by the parties or their counsel to consummate or otherwise
implement the transactions contemplated by this Agreement.
(c) Unless otherwise consented to in writing by the other party,
neither Seller nor Buyer shall cause or permit the destruction or other
disposing of the documentation (including work papers) used in the
development of the Closing Balance Sheet within five (5) years from the
date of Closing and shall grant reasonable access to or cause reasonable
access to be granted to the other party to such documentation during
normal business hours and shall permit such party to make copies thereof
at such party's expense. The above provision does not apply to any
documentation of which both parties have copies.
3.5. NON-ASSIGNABLE CONTRACTS. To the extent that assignment hereunder
by Seller to Buyer of any Contract is not permitted or is not permitted without
the consent of any third party, this Agreement shall not be deemed to constitute
an undertaking to assign the same if such
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consent is not given or if such an undertaking otherwise would constitute a
breach of or cause a loss of benefits thereunder. Buyer and Seller will use
commercially reasonable efforts to obtain any and all such third party
consents.
3.6 DISCLOSURE LETTER. Seller has delivered to Buyer a disclosure
letter dated the date hereof (the "Disclosure Letter"), which contains the
schedules to this Agreement. Seller shall provide supplements to the Disclosure
Letter and schedules to reflect any new information discovered by Seller or
Buyer prior to Closing; provided, however, that if a supplement to the
Disclosure Letter or schedules, unless expressly consented to by Buyer, shall
disclose any fact or event which would have a Material Adverse Effect, Buyer
shall have the right to terminate this Agreement. No supplement to the
Disclosure Letter or schedules shall modify, affect or diminish Buyer's right to
terminate this Agreement pursuant to the terms of Section 3.3 above.
SECTION 4. REPRESENTATIONS, WARRANTIES AND DISCLAIMERS OF SELLER.
Seller represents and warrants to Buyer and Parent as follows:
4.1. ORGANIZATION, POWER. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Ohio, and
is qualified to do business in all jurisdictions in which the failure to do so
would have a Material Adverse Effect. Seller has all requisite corporate power
to conduct the Business and to enter into this Agreement and to carry out its
obligations hereunder.
4.2 AUTHORITY. The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action required on the part of Seller. The Agreement
has been duly executed and delivered by Seller, and constitutes the valid and
legally binding obligation of Seller and is enforceable against Seller in
accordance with its terms.
4.3 NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will:
(i) violate or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any of the terms, conditions or provisions of
the Articles of Incorporation or Code of Regulations of Seller, or any note,
bond, mortgage, indenture, deed of trust, material license agreement, loan
agreement or other material agreement, instrument or obligation to which Seller
is a party, or by which it or any of the Assets may be bound or affected; or
(ii) violate any judgment, order, writ, injunction or decree, or any law, rule
or regulation applicable to Seller or the Assets, to the extent any of the
foregoing would have a Material Adverse Effect. Except as set forth on Schedule
4.3, Seller is not required to give notice or obtain any consent from any person
in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
4.4. FINANCIAL STATEMENTS.
(a) DELIVERY OF FINANCIAL STATEMENTS. Seller has heretofore delivered
to the Buyer a Balance Sheet of the Business as of November 30, 1998 (the
"Balance Sheet Date") and a statement of earnings for the six months then
ended (collectively, the "Financial
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Statements"). The Balance Sheet of the Business as of November 30,
1998 is attached hereto as Schedule 4.4(a) and is sometimes referred
to herein as the "Balance Sheet".
(b) COMPLIANCE WITH GAAP. The Financial Statements have been prepared
from the Seller's books and records and fairly present the financial
position and results of operations of the Business, as of the dates and
for the periods then ended, in conformity with GAAP consistently applied
as supplemented by the principles set forth in Schedule 2.2, except for
the absence of information that would ordinarily be contained in notes to
audited financial statements, and except for normal year end adjustments
as to the November 30, 1998 financial statements.
(c) ABSENCE OF CERTAIN LIABILITIES. Except to the extent reflected or
reserved for in the Balance Sheet there are no liabilities or obligations
of the Business that would normally be shown on a balance sheet prepared
in accordance with GAAP except (i) liabilities or obligations incurred in
the ordinary course of business since the date of the Balance Sheet,
(ii) liabilities and obligations disclosed on Schedule 4.4(c); and (iii)
liabilities and obligations not required to be so disclosed because of
their failure to meet the materiality thresholds set forth therein.
(d) BOOKS AND RECORDS. The books of account and other records of the
Seller maintained in connection with the operation of the Business have
been made available to Buyer, accurately record transactions relating to
the Business in all material respects, and have been maintained in
accordance with sound business practices.
4.5. TITLE TO PROPERTIES, ABSENCE OF LIENS AND ENCUMBRANCES.
(a) REAL PROPERTY. Schedule 1.1(i) sets forth all real property,
owned or leased, by the Seller that is used solely in the Business.
(b) TANGIBLE PROPERTY. Schedule 1.1(iv) sets forth a correct and
complete list, as of the date of this Agreement, of each material item of
Tangible Property owned by the Seller and used solely in connection with
the Business.
(c) LIENS. The Seller has good and marketable title to or a valid
leasehold interest in the Assets of the Business, free and clear of all
liens, mortgages, security interests, claims, charges and encumbrances,
or other defects in title (collectively "Liens") except for (i) Liens set
forth on Schedule 4.5(c) or the title insurance commitment for the Real
Property, (ii) Liens for current Taxes not yet due or delinquent or being
contested in good faith by appropriate proceedings (iii) statutory Liens
arising in the ordinary course of business; and (iv) such Liens, if any,
as are not, individually or in the aggregate, substantial in character,
amount or extent, and do not, individually or in the aggregate,
materially detract from the value or interfere with the present use of
any property or asset subject thereto or affected thereby or the
operations of the Business as presently conducted (collectively items (i)
through (iv) being referred to as "Permitted Liens").
(d) INTANGIBLE PROPERTY. Schedule 1.1(vii) sets forth a list, as of
the date of this Agreement, of all material Intangible Property (to the
extent reducible to written form) owned or used by the Seller in
connection with the conduct of the Business. Except as
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set forth on Schedule 1.1(vii) neither the Business nor any of the
Intangible Property listed on Schedule 1.1(vii) infringes upon the
rights of any other Person. The Seller owns or possesses licenses or
other rights to use all Intangible Property necessary to conduct the
Business as presently operated, and is not currently being challenged
with respect thereto in any way. There is no claim or action by any
person pending, or to Seller's knowledge, threatened with respect to
the use of the foregoing properties or rights.
4.6. MATERIAL CONTRACTS. Schedule 4.6 sets forth a correct and complete
list, as of the date of this Agreement, of each of the following Contracts to
which the Seller is a party and relate to the conduct of the Business
(collectively, the "Material Contracts"):
(a) Contracts for the future acquisition or sale of any assets or the
furnishing of any services involving $50,000 individually (or $100,000 in
the aggregate, in the case of any related series of Contracts), other
than acquisitions or sales of Inventory in the ordinary course of
business;
(b) Contracts other than as listed or excluded under clause (a)
calling for future aggregate payments to or from Seller in any one year
of more than $50,000 in any one case (or $100,000 in the aggregate, in
the case of any related series of Contracts);
(c) Contracts relating to joint ventures or partnerships;
(d) Contracts containing covenants of the Seller prohibiting or
materially limiting the right to compete in any line of business or
prohibiting or restricting its ability to conduct business with any
Person or in any geographical area;
(e) Contracts relating to the acquisition by the Business of any
operating business or the capital stock of any other Person for a
purchase price of more than $50,000 individually (or $100,000 in the
aggregate, in the case of any related series of Contracts);
(f) Contracts requiring the payment by or to the Business of a
royalty, override or similar commission or fee of more than $50,000 in
any one year;
(g) Employment agreements and commitments, severance agreements and
other Contracts with current or former officers, directors or employees
of the Business;
(h) Collective bargaining agreements with any labor union representing
any employees of the Business;
(i) Mortgages, indentures, notes, bonds, letters of credit and other
agreements relating to the borrowing of money which will not be paid,
forgiven or otherwise terminated prior to Closing;
(j) Contracts relating to the creation of Liens or the guarantee of
the payment of liabilities or performance of obligations of any other
Person by the Business; and
(k) Licensing agreements or other contracts with respect to patents,
trademarks, copyrights, trade secrets, or other intellectual property,
including agreements with current
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or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Seller's patents,
trademarks, copyrights, trade secrets or other intellectual property.
True, correct and complete copies of all of the Material Contracts have
either been delivered by Seller to Buyer or made available by Seller to Buyer
for its review. Except as set forth on Schedule 4.6, (a) all of the Material
Contracts are valid and in full force and are enforceable against Seller in
accordance with their respective terms; (b) the Seller is not in default under
any such Material Contract; and (c) no other party to any such Material Contract
has given notice to the Seller that it intends to terminate or materially alter
the provisions of such Material Contract. Except as reflected in the Material
Contract or on Schedule 4.3, no approval or consent of any Person is needed for
the Material Contract to continue to be in full force and effect.
4.7. LICENSES; PERMITS. The Business has all material governmental
licenses, permits, authorizations and approvals necessary to the operation of
the Business.
4.8. EMPLOYEE BENEFIT PLANS.
(a) The Schedule 4.8(a) lists all Plans that cover employees of the
Business. Seller has furnished or made available to Buyer, to the extent
requested by Buyer, copies of the Plans (and, if applicable, related
trust agreements) and all amendments thereto together with, where
applicable , (i) the most recent annual report prepared in connection
with any Plan to be assumed by Buyer (Form 5500 including, if applicable,
Schedule B thereto), and (ii) each Plan's summary plan description and
any summaries of material modifications thereto. Seller does not
contribute to or have any liability or obligation under or with respect
to any Plan which is a "multiemployer plan" as defined for purposes of
and subject to Subtitle E of Title IV of ERISA with respect to any
employees or former employees of the Business.
(b) Neither Seller, nor any entity aggregated with Seller under
Section 414(b) or (c) of the Code or Section 4001 of ERISA, has incurred,
with respect to the Business, (i) any liability under Title IV of ERISA
arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of
ERISA or (ii) any liability under Section 412 of the Code, that in either
case would become a liability of Buyer after the Closing Date.
(c) Each Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so
qualified and no event has occurred since the date of such determination
that would have a Material Adverse Effect on such qualification.
(d) Schedule 4.8(d) sets forth a calculation of the liability of
Seller for post-retirement benefits with respect to employees of the
Business other than pensions, made in accordance with Financial
Accounting Statement 106 of the Financial Accounting Standards Board,
regardless of whether Seller is required by this Statement to disclose
such information.
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(e) Seller is in substantial compliance with all of its obligations
under the Plans.
(f) Seller is in substantial compliance with (i) its filing
requirements under ERISA and the Code as to each Plan, and (ii) all
notice and disclosure to participants requirements under either ERISA or
the Code.
4.9. RELATED PARTY TRANSACTIONS. Except for the intercompany
transactions between Seller and Seller's Affiliates, no officer or director of
the Seller:
(a) has any material direct or indirect interest in (i) any entity
which does any material business with the Business; or (ii) any material
property, asset or right which is used by the Business; or
(b) has any material contractual relationship with the Business other
than such relationship as attaches to being such officer or director.
4.10. LITIGATION. Except as disclosed on Schedule 1.3(vii) there are no
material Actions or Proceedings pending or threatened against the Business or
the Assets, at law or in equity, or before or by any Governmental or Regulatory
Body. There exists no set of facts or circumstances that are not otherwise
addressed by any other representation, warranty or covenant in this Agreement
and that, if discovered as of the Closing Date, would form the basis, as of the
Closing Date, of any such material Action or Proceeding. The Business is not
subject to any Order directed specifically at the Business.
4.11 COMPLIANCE WITH LAW. Except as set forth on Schedule 4.11, Seller
is in substantial compliance with the Laws and Orders to which the Business or
the Assets or the Assumed Liabilities are subject.
4.12 CONDUCT OF BUSINESS. Except as contemplated by this Agreement or
as set forth on Schedule 4.12, since the Balance Sheet Date, the Seller has
conducted the Business only in the ordinary course and there has been no:
(a) Material Adverse Effect;
(b) sale, assignment, transfer, mortgage, pledge or lease of any
material assets of the Business, except for sales transactions or leases
in the ordinary course of business;
(c) incurrence of any material obligation or liability (absolute,
contingent or otherwise) except for liabilities and obligations not being
assumed by Buyer and except for liabilities and obligations incurred in
the ordinary course of business consistent with prior practice or as a
result of normal intercompany transactions;
(d) material damage, destruction or loss (whether or not covered by
insurance) adversely affecting the Business; or
(e) any actual or threatened employee strikes, work stoppages, slow
downs, or walk outs.
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4.13. TAX RETURNS. The Seller has filed (or will file when due) all Tax
Returns for the Business, for all years and periods, and portions thereof for
which the due date (with extension) falls on or before the Closing Date. All
Taxes shown by those returns to be payable and all assessments of the Seller
have been paid or will be paid when due. The federal income tax returns of the
Seller through the taxable year ended May 31, 1995 have been examined by the
Internal Revenue Service and any deficiencies or assessments including interest
and penalties thereon, claimed or made as a result of those examinations
(insofar as they affect the Business) have been paid or provided for or will be
paid by Seller pursuant to Section 7.4. Except as set forth on Schedule 4.13,
there are no claims or investigations by any taxing authority pending, or to the
best of Seller 's knowledge, threatened against the Seller for any past due
Taxes, which could become a liability of Buyer.
4.14. ENVIRONMENTAL VIOLATIONS. Except as set forth on Schedule 4.14,
(i) within the last five years, no Order has been issued, no Environmental Claim
has been filed, no penalty has been assessed and no investigation or review is
pending or, to Seller's knowledge, threatened by any Governmental or Regulatory
Body with respect to any alleged failure by the Business to have any license
required under applicable Environmental Laws in connection with the conduct of
the Business and (ii) the Business is not in material violation of, and has not
received any claim or notice that it is currently in violation of, any
Environmental Law in connection with the conduct of the Business.
4.15. LABOR MATTERS. Seller is not a party to or bound by any
collective bargaining agreement or relationship with any labor organization with
respect to employees of the Business. There have been no labor strikes, work
stoppages, or slowdowns or other material labor disputes with respect to the
Business within the past five years.
4.16 INSURANCE. Schedule 4.16 lists the insurance coverage which is
maintained by or for the Business. All insurance policies maintained by or for
the Business are in full force and effect, all premiums due thereon have been
paid, and the Business has complied with the provisions of such policies. No
notices of any pending or threatened terminations with respect to any of such
insurance policies have been received. The Business has not failed to give any
notice or present any material claim under any insurance policy in due and
timely fashion.
4.17. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by Seller, without the
intervention of any other person or firm in such manner as not to give rise to
any valid claim against the Buyer for a brokerage commission, finder's fee or
other like payment to any person or entity, except that Seller has retained
Xxxxxxx Xxxxx Xxxxxx whose fees and expenses as its investment advisor in
connection herewith shall be paid by Seller.
4.18. KNOWLEDGE. To be a breach of a representation or warranty which
is made to the knowledge of Seller, the knowledge required shall be the
knowledge of officers or plant managers of the Seller involved with the
Business, and knowledge of other employees of the Seller involved with the
Business shall not be imputed to Seller. The term "knowledge" means either
actual knowledge or awareness of a fact or other matter that a prudent
individual could reasonably be expected to discover upon due inquiry.
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4.19. ACCOUNTS RECEIVABLE. All accounts receivable of the Business that
are reflected on the Closing Balance Sheet (collectively, the "Accounts
Receivable") will represent valid obligations arising from sales actually made,
services actually performed or other transactions in the ordinary course of the
Business. The reserves reflected in the Closing Balance Sheet in respect of
Accounts Receivable have been calculated consistent with past practice.
4.20. INVENTORY. The reserves reflected in the Closing Balance Sheet in
respect of Inventory of the Business have been calculated consistent with past
practice.
4.21. PRODUCT WARRANTIES. There are no claims against or liability of
Seller relating to the Business outside the range normally experienced by the
Business on account of product warranties or with respect to the manufacture,
sale, distribution, or rental of defective products and to Seller's knowledge
there is no basis for any such claim outside the range normally experienced by
the Business on account of defective products heretofore manufactured, sold,
distributed, or rented, except as otherwise set forth on Schedule 4.21.
4.22. CUSTOMERS AND SUPPLIERS.
(a) Schedule 4.22(a) sets forth a true, accurate and complete list:
(i) of the ten (10) largest customers of the Business in
terms of revenue earned during the most recently completed fiscal year and
the portion of the current fiscal year prior to the date of this Agreement
(collectively, the "Major Customers"), showing the total revenue earned in
each such period from each such customer; and
(ii) of the ten (10) largest suppliers of the Business in
terms of purchases during the most recently completed fiscal year and the
portion of the current fiscal year prior to the date of this Agreement
(collectively, the "Major Suppliers"), showing the total purchases in each
such period from each such supplier;
(b) Since July 1, 1998, except as set forth on Schedule 4.22(b), there
has not been any material adverse change in the business relationship, and there
has been no material dispute, between Seller and any Major Customer or any Major
Supplier, and to Seller's knowledge, no Major Customer or Major Supplier intends
to reduce its purchases from, or sales to, Seller, other than as a result of
such Major Customer's or Major Supplier's normal business cycles.
4.23. PRODUCT LIABILITY CLAIMS. Schedule 4.23 sets forth the product
liability claims against the Business currently pending or which have been
resolved within the past two (2) full fiscal years and the portion of current
fiscal year prior to the date hereof.
4.24. DISCLOSURE. No representation of warranty of Seller in this
Agreement and no statement in the Disclosure Letter furnished pursuant hereto
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
SECTION 5. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer and Parent, jointly and severally, represent and warrant to Seller
as follows:
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5.1. ORGANIZATION, POWER. Buyer and Parent are corporations duly
organized, validly existing and in good standing under the laws of their
respective state of incorporation and are qualified to do business as foreign
corporations in all jurisdictions in which the failure to do so would have a
Material Adverse Effect on the results of operations or financial condition of
Buyer or Parent, as applicable. Buyer and Parent have all requisite corporate
power to enter into this Agreement and to carry out their respective obligations
hereunder.
5.2. AUTHORITY. The execution and delivery of the Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action required on the part of the Buyer and Parent.
The Agreement has been duly executed and delivered by Buyer and Parent, and
constitutes the valid and legally binding obligation of Buyer and Parent and is
enforceable against the Buyer and Parent in accordance with its terms.
5.3. NO CONFLICTS. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will:
(i) violate or conflict with, or result in a breach of any provisions of, or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, any of the terms, conditions or provisions of
the Certificate of Incorporation or By-laws of the Buyer and the parent, or any
note, bond, mortgage, indenture, deed of trust, material license agreement, loan
agreement or other material agreement, instrument or obligation to which Buyer
or Parent or both are a party, or by which Buyer or Parent or any of their
respective properties or assets may be bound or affected; or (ii) violate any
material judgment, order, writ, injunction or decree, or any law, rule or
regulation applicable to Buyer or Parent or both or any of their respective
properties or assets, to the extent any of the foregoing would have a Material
Adverse Effect on the results of operations or financial condition of Buyer or
Parent, or both. Except as set forth on Schedule 5.3, neither Buyer nor Parent
is required to give notice or obtain any consent from any person in connection
with the execution and delivery of the Agreement or the consummation of the
transactions contemplated hereby.
5.4. CAPITALIZATION. At the Closing, Buyer's authorized capital stock
shall consist of 3,000 shares of Common Stock, of which 1,000 shares are issued
and outstanding. At the Closing, Parent's authorized capital stock shall
consist of 20,000,000 shares of Class A common stock, par value $0.01 per share,
of which 3,866,944 shares are issued and outstanding, 200,000 shares of Class B
common stock, par value $0.01 per share, of which 200,000 shares are issued and
outstanding, and 2,000,000 shares of Preferred Stock, without par value, none of
which are issued and outstanding. At the Closing, no other securities of Buyer
or Parent will be authorized, issued or outstanding and there will be no
outstanding subscriptions, options, warrants, convertible securities,
commitments or demands of any character, preemptive or otherwise, other than
this Agreement, relating to any of Buyer's or Parent's capital stock or other
securities of Buyer or Parent, other than stock options granted under Parent's
1997 Stock Option Plan and approximately $105,000,000 of bonds to provide
acquisition financing and debt refinancing. Upon consummation of the
transactions contemplated hereby, Seller shall own approximately 15% of the
total equity capital of Buyer on a fully diluted basis.
5.5. TITLE TO STOCK. As of the date hereof Parent owns, and as of the
Closing Date Parent will own, beneficially and of record, and has or will have
good and marketable title to, all of the outstanding common stock of Buyer.
Upon issuance, the shares of Common Stock and
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Preferred Stock to be issued to Seller hereunder, shall be validly issued,
fully paid and nonassessable and free and clear of all liens, charges,
claims, pledges, restrictions and encumbrances of any kind or nature
whatsoever.
5.6. BROKERS. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on by the Buyer without the
intervention of any other person or firm in such manner as not to give rise to
any valid claim against Seller or Seller's Affiliates for a brokerage
commission, finder's fee or other like payment to any person or entity.
5.7. AVAILABLE FUNDS. Attached hereto as Annex A are financing letters
received by Buyer from Three Cities Research, Inc. and Xxxxxx Bank with respect
to the funds necessary to consummate the transactions contemplated hereunder.
Buyer shall use its best efforts to obtain the financing necessary to consummate
the transactions contemplated hereby on commercially reasonable terms and
conditions
5.8 DISCLOSURE. No representation of warranty of Buyer or Parent in
this Agreement and no statement in the Disclosure Letter furnished pursuant
hereto omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
SECTION 6. OBLIGATIONS PRIOR TO CLOSING.
6.1. CONDUCT OF BUSINESS. Prior to the Closing, Seller shall, except
as otherwise provided herein:
(a) conduct the Business and its affairs only in the ordinary course
and consistent with prior practice,
(b) maintain the assets and properties of the Business and insurance
thereon, in accordance with present practices in all material respects, and
(c) comply in all material respects with all Laws and Orders
applicable to the Business.
6.2. ACCESS TO INFORMATION AND DOCUMENTS. Upon reasonable notice and
during regular business hours, Seller will give or cause to be given to the
Buyer and the Buyer's attorneys, accountants and other representatives
reasonable access to the personnel of the Business and the properties,
documents, contracts, books and records of the Business with respect to the
assets, properties, liabilities or operations of the Business and will furnish
the Buyer with copies of those documents and with that information with respect
to the affairs of the Business as the Buyer may from time to time reasonably
request.
6.3. TITLE INSURANCE, SURVEYS. Seller shall cooperate with the Buyer in
obtaining such title commitments or opinions and such surveys, with respect to
the Real Property, which Buyer may reasonably desire. Seller and Buyer shall
each be responsible for one-half of all expenses incurred in connection with
title searches, reports, commitments insurance and surveys, if necessary.
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6.4. DISCOVERY BY BUYER. Buyer shall provide prompt, written notice to
Seller in the event it obtains actual knowledge at any time prior to Closing of
any breach of any of the representations and warranties made in Section 4 or
elsewhere in this Agreement, or of an event or circumstance it believes would
give Buyer the right to terminate this Agreement or to make a claim against
Seller after Closing.
6.5. THIRD PARTY CONSENTS. Seller and Buyer agree to use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including, without limitation, the obtaining of all necessary
waivers, consents and approvals and the continuance in full force and effect of
the permits, contracts and other agreements set forth on the schedules to this
Agreement and the fulfillment of each condition to the other party's obligations
set forth in Sections 8 and 9.
6.6. REGULATORY AND OTHER APPROVALS. Seller and Buyer will (i) take
all commercially reasonable steps necessary or desirable, and proceed diligently
and in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all filings
with and to give all notices to Governmental or Regulatory Bodies required of
such parties or their Affiliates to consummate the transactions contemplated
hereby, (ii) provide such other information and communications to such
Governmental or Regulatory Bodies as such parties or such Governmental or
Regulatory Bodies may reasonably request in connection therewith and
(iii) cooperate with each other as promptly as practicable in connection with
the foregoing. In addition to and not in limitation of the foregoing, Seller
and Buyer will (A) take promptly all actions necessary to make the filings
required of each of them or their Affiliates under the HSR Act, (B) comply at
the earliest practicable date with any request for additional information
received by each of them or their Affiliates from the Federal Trade Commission
or the Antitrust Division for the Department of Justice pursuant to the HSR Act
and (C) cooperate with each other in connection with any filing under the HSR
Act and in connection with resolving any investigation or other inquiry
concerning the transactions contemplated by this Agreement commenced by either
the Federal Trade Commission, the Antitrust Division of the Department of
Justice or state attorneys general.
SECTION 7. ADDITIONAL AGREEMENTS AND ACKNOWLEDGMENTS.
7.1. INSURANCE AND PRODUCT CLAIMS.
(a) Worthington and Seller shall terminate the participation of the
Business and its employees in Worthington's self-insurance program and
coverage under insurance policies procured by Worthington effective as of
the Closing Date. The Buyer shall be responsible for obtaining and
providing insurance coverage with respect to the Business and its
employees from and after the Closing Date.
(b) Notwithstanding the provisions of Section 10 and except for those
liabilities assumed by Buyer pursuant to Section 1.3, Seller shall retain
liability for and defend, indemnify and hold harmless the Business and
the Buyer, and their respective successors and assigns, against and in
respect of, any and all damages, claims, losses, liabilities and expenses
(collectively, "Losses") resulting from loss of life, bodily injury or
property
17
damage due to events which occur before the Closing Date and as
to which claims alleging such liability are filed prior to the Closing
Date. The obligation of Seller to retain the liability and
indemnification provided for in this Section 7.1(b) is conditioned upon
the Buyer's performance of the following covenants:
(i) the Buyer shall cause the Business and its personnel to
cooperate fully with Seller in the defense of any such claims and
provide Seller with access to the facilities, books, records and
personnel of the Business; and
(ii) so long as Seller is defending any such claim in good
faith, the Buyer shall not, and shall not cause or permit the
Business to, settle or compromise any such claim, without the
written consent of Seller.
(c) Buyer shall insure against all liability claims resulting from a
loss of life, bodily injury or property damage that are made against the
Business after Closing with respect to events that occurred prior to
Closing. Seller agrees to reimburse Buyer for each such claim in amount
equal to the lesser of (i) the deductible amount under the Buyer's
insurance, and (ii) $100,000.
(d) Buyer shall assume liability for and defend and hold harmless the
Seller and Worthington, and their respective successors and assigns,
against and in respect of any and all Losses resulting from loss of
life, bodily injury or property damage arising from or relating to the
Business due to events which occur after the Closing Date.
(e) Buyer shall assume liability for and defend and hold harmless the
Seller and Worthington and their respective successors and assigns,
against and in respect of any and all Losses arising out of the
replacement of, or refund or credit for, damaged, defective or other
returned products or for warranty claims in respect of products sold by
the Business.
7.2. EMPLOYEE MATTERS.
(a) Except for those individuals listed on Schedule 7.2 hereof, whose
employment with the Business shall terminate as of the Closing Date, the
Buyer shall offer to employ all employees of the Business effective
immediately after the Closing. The terms of such employment shall be
competitive with industry standards, and the Buyer shall implement the
employee benefit plans and fringe benefit plans providing benefits set
forth on Schedule 7.2.
(b) Buyer will not, and will not permit the Business to, take any
action which would cause Seller to have any liability under the Workers
Adjustment and Retraining Notification act of 1988, or any similar or
successor federal, state or local law, regulation or ordinance.
7.3. BENEFIT COVERAGE.
(a) The participation of the Business (and its employees and former
employees) in the Worthington employee benefit plans shall cease as of
the Closing Date. The costs of all
18
obligations with respect to employees or former employees of the
Business under any benefit plan applicable to them shall be assumed by
Buyer after the Closing Date except to the extent provided below. The
above provision notwithstanding, the following benefits for the
employees and/or former employees of the Business shall be made
available by Seller.
(i) Subject to subsection (ii) below, Seller shall pay or
otherwise discharge (or shall cause the insurance company to pay
or otherwise discharge) claims for benefits relating to health
care services rendered prior to the Closing Date to current and
former employees of the Business as and to the extent required by
the terms of the health care plans not being assumed by Buyer that
apply to such employees of the Business on the Closing Date
("Worthington Health Plans") regardless of when such claims are
filed. Seller may apply normal plan cut-off dates.
(ii) Buyer shall reimburse Seller or Worthington for all
amounts paid pursuant to Section 7.3(a)(i) under claims filed
after the Closing Date with respect to employees of the business,
except for amounts covered by true insurance (i.e. amounts for
which Seller or Worthington is not ultimately liable).
(b) Seller agrees that it shall be responsible for making available to
former employees of the Business who are covered by the Worthington
Health Plans and who leave the employ of the Business prior to the
Closing Date (and such former employee's eligible dependents) the
election to continue coverage under the Worthington Health Plans to the
extent required by federal or state law, at the former employee's or
dependent's expense.
(c) Seller agrees that it shall make available to former employees of
the Business who were covered by the Worthington Health Care Plan and who
have retired under the Worthington Deferred Profit Sharing Plan prior to
the Closing Date, the option to purchase health benefits under the
Worthington Health Plans to the extent that such benefits are made
available to Worthington retirees in general under such plan.
(d) Nothing in this Section 7.3 or elsewhere in this Agreement shall
expand the benefits or coverage which would have been available to any
employee or former employee of the Business under the Worthington Health
Care Plans or other plans had the transaction contemplated by this
Agreement not occurred.
(e) Following the Closing Date, the Buyer shall be responsible for and
shall provide health care and disability benefits to persons who, on the
Closing Date, are employees (including inactive employees on disability
or layoff who are eligible for such insurance) of the Business and their
dependents consistent with industry practice. Subject to Section 10.1,
the Buyer shall assume liability for, and shall make payments in respect
of, disability and health care benefits for all employees and former
employees of the Business receiving such disability and health care
benefits under any plan in existence on the Closing Date, provided
however, that after a total of 42 months of disability as defined in the
plan, it is understood that such employees who are disabled at the
Closing
19
Date will be covered by disability insurance currently provided by
Worthington through an outside insurance carrier.
(f) Following the Closing Date, and subject to Section 10.1, the Buyer
shall be responsible for and shall assume all of Seller's obligations to
provide health care benefits to certain former employees of the
Harrisburg, North Carolina facility as more particularly described on
Schedule 7.3(f).
7.4. TAX MATTERS.
(a) INCOME TAXES. Seller shall include the results of operations of
the Business through the Closing in Worthington's consolidated
U.S. federal income tax returns and shall make all state and local income
tax filings and payments for the Business for the tax period ending on
the Closing Date. All liabilities, including interest or penalties,
under U.S. federal and state income tax laws attributable to the
operations of the Business through the Closing Date shall be borne by
Seller, and any refunds or credits or rights to refunds or credits with
respect thereto (including interest and penalties) shall be the property
of Seller.
(b) ALLOCATION OF NON-INCOME TAX LIABILITY. All tax liabilities
attributable to the Business or its assets, operations, purchases, sales,
income, payroll, capital stock or surplus incurred prior to the Closing
Date (other than federal, state and local income tax liabilities) shall
be borne by the Buyer to the extent that such liabilities are, in the
aggregate, reserved for on the Closing Balance Sheet. The reserve on the
Closing Balance Sheet shall not include a reserve for those U.S. federal
income tax liabilities or any state or local income tax liabilities which
are required to be paid by Seller pursuant to this Agreement. Tax
liabilities incurred by the Business prior to the Closing Date in excess
of the reserve therefor on the Closing Balance Sheet shall be borne by
Seller, provided that the liability is not increased due to actions by
the Buyer after Closing. In the event that the reserve on the Closing
Balance Sheet exceeds those tax liabilities which the Business or the
Buyer actually pays, the Buyer shall promptly refund to Seller the amount
of any such excess.
(c) POST CLOSING TAXES. All Taxes attributable to the Business or its
properties, assets, operations, purchases, sales, income, payroll,
capital stock or surplus incurred subsequent to Closing shall be the
responsibility of the Buyer.
(d) REIMBURSEMENTS. If either party pays any Taxes to be borne by the
other party under this Section 7.4, the other party shall promptly
reimburse such party for the Taxes paid. If, in preparing Tax filings or
payments after Closing, it appears to the Buyer or the Business that the
Seller will be asked to pay additional Taxes, the Buyer shall so notify
Seller, and provide Seller a reasonable opportunity to review any related
returns prior to filing them and paying the Tax. If either party receives
any refunds or credits which are the property of the other party under
this Section 7.4, such party shall promptly pay the amount of such
refunds or credits to the other party. As soon as practicable after the
Closing, Seller shall furnish to the Buyer copies of the Business's
portion of the final income tax information included in Seller's combined
federal income tax return and in
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any consolidated or combined state income tax return required to be filed
by Worthington or Seller after the Closing relating solely to the
operations of the Business through the Closing Date.
(e) TRANSFER TAXES. Seller shall file all necessary documentation and
returns with respect to sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar Taxes and fees (such
Taxes and fees, including any interest or penalties thereon, are herein
sometimes called "Transfer Taxes"). Buyer and Seller shall each be
responsible for one-half (1/2) of all transfer taxes arising out of or
in connection with the transactions effected pursuant to this Agreement.
(f) COOPERATION. Buyer shall and shall require the Business to make
available to Worthington, Seller and their representatives all records
and materials reasonably required by them to pursue or contest any Tax
matters and shall provide reasonable cooperation to Worthington and
Seller in such case, including having personnel of the Business provide
reasonable assistance to Worthington and Seller, consistent with the
manner in which such matters would have been dealt with prior to Closing.
Worthington and Seller shall make available to Buyer and its
representatives those records and materials reasonably required by them
to prepare, pursue or contest any Tax matters arising after Closing which
have factual reference to the pre-Closing periods.
7.5 DEFERRED PROFIT SHARING AND CASH PROFIT SHARING PLANS.
(a) Buyer shall assume the liability for and shall make any payments
which may be due to employees of the Business in connection with the Cash
Profit Sharing Plan applicable to employees of the Business and any
payments of executive bonuses which may be owing to employees of the
Business; provided that Seller shall pay to Buyer an amount equal to the
portion of the payment allocable to Seller in excess of applicable
reserves reflected in the Closing Balance Sheet (based upon the
assumption that the determination period ended as of the Closing Date).
(b) The participation of the employees of the Business in Worthington's
Deferred Profit Sharing Plan shall cease as of the Closing Date. Seller
shall pay over to the Deferred Profit Sharing Plan the amount of any
required contribution to such Plan which is allocable to Seller in excess
of applicable reserves reflected in the Closing Balance Sheet (based upon
the assumption that the determination period ended as of the Closing
Date). All benefits under such Plan shall be calculated and paid in
accordance with the provisions of the Worthington Deferred Profit Sharing
Plan.
7.6. BOOKS AND RECORDS; TAX CLOSING PACKAGE. Unless otherwise
consented to in writing by Seller, the Buyer shall not destroy or otherwise
dispose of any of the existing books and records of the Business within four
(4) years from the date of Closing, and the Buyer shall grant and cause the
Business to grant Seller and its affiliates and their representatives
reasonable access thereto during normal business hours. Thereafter, the
Buyer shall not destroy or otherwise dispose of such books and records
without first offering to surrender to Seller such books and records or any
portion thereof. The Buyer shall cause the personnel of the Business to
prepare the final audit package, monthly financial package and tax package
for the Business.
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7.7. EXPENSES.
(a) Except as otherwise provided in this Agreement, Seller shall pay
all of its costs and expenses (including attorneys' and accountants'
fees, legal costs and expenses) incurred in connection with this
Agreement and the consummation of the transactions contemplated herein.
(b) The Buyer shall pay all of its costs and expenses (including
attorneys' and accountant's fees, legal costs and expenses) incurred in
connection with this Agreement and the consummation of the transactions
contemplated herein, including, but not limited to, the costs of
preparing an audit of the Business.
7.8. WORKERS' COMPENSATION. The workers' compensation liabilities
for employees of the Business are covered through insurance policies obtained
by Worthington. Worthington shall continue to pay (or shall cause its
insurance company to pay) up to and through the Closing Date for workers'
compensation injuries which occurred prior to Closing. After such time
coverage and payments under the Worthington policies shall terminate.
Effective as of Closing Date, and subject to Section 10.1, Buyer shall obtain
appropriate workers' compensation coverage for the employees of the Business
and shall assume continuing responsibility for workers' compensation injuries
that occurred prior to Closing and were previously covered by Worthington.
7.9 PREPARATION OF PAYROLL FORMS. Buyer shall prepare and file, and
Seller shall take all action reasonably required pursuant to Internal Revenue
Service Rev. Proc. 96-60 1996-2 C.B. 399 so that Buyer may file, Forms W-2
for the employees of the Business for the 1998 calendar year.
7.10. PACKAGING AND OTHER MATERIALS - NAME CHANGE. The Buyer shall
not hold the Business out as an affiliated company or subsidiary of
Worthington following the Closing Date. Neither the Buyer nor the Business
shall have the right to use any packaging or other materials which contain
the names Worthington Industries, Worthington Custom Plastics or any
derivation or modification thereof, or any trademark, logo or design of
Worthington Industries or Worthington Custom Plastics (the "Restricted Names
or Marks"). The Buyer shall not cause or permit the Business to use, after
the Closing Date, any advertising or other materials which contain any
Restricted Names or Marks without first obliterating such Restricted Names or
Marks thereon by overprinting, stamping out or otherwise removing the
Restricted Names or Marks from those materials. Furthermore, the Buyer shall
not order, buy, produce or otherwise procure any packaging, advertising or
other materials containing any of the Restricted Names or Marks.
7.11 CREDIT UNION. The employees of the Business have been eligible
to participate in the Worthington Industries Credit Union. To the extent
permitted by law, the Buyer agrees to cause the Business to continue payroll
deduction for any employees currently paying off existing loans from such
credit union through payroll deductions, and to pay over the amount withheld
to the credit union. Payroll deductions for employees of the Business will
not be available for new loans from the Worthington Industries Credit Union
following the Closing.
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7.12. RELEASE FROM GUARANTEES. To the extent that Seller,
Worthington or any Seller Affiliate are liable in connection with any
obligations of the Business, either directly as guarantor, surety or
otherwise, Buyer shall use its best efforts in conjunction with Seller
(including agreeing to replace Seller, Worthington or the Seller Affiliate as
guarantor, surety, etc. and providing bonds or letters of credit in lieu
thereof), in order to have Seller, Worthington or any Seller Affiliate
removed from such liabilities either directly or as guarantor, surety, etc.
In the event that Seller, Worthington or any Seller Affiliate cannot be so
removed from such obligations, Buyer shall indemnify such company with
respect thereto as set forth in Section 10.2.
7.13. PREPARATION OF FINANCIAL STATEMENTS. Seller shall cooperate
with Buyer in the preparation of: (a) audited balance sheets of the Business
as at the end of each of the last full three (3) fiscal years of the
Business, and the related statements of income, changes in stockholders'
equity, and cash flow for each such fiscal year, together with the report
thereon of Ernst & Young, independent certified public accountants, (b) a
balance sheet of the Business as at the Closing Date, and the related
statements of income, changes in stockholders' equity, and cash flow for the
partial year then ended, including each case the notes thereto.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER.
The obligations of the Buyer under this Agreement to enter into and
complete the Closing shall, at the option of the Buyer, be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent (any or all of which may be waived by Buyer).
8.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. All warranties and
representations made by Seller in this Agreement (considered collectively),
and each of such representations and warranties (considered individually)
shall be true and correct in all material respects on and as of the Closing
Date with the same effect as if such warranties and representations had been
made on and as of the Closing Date except those expressly stated to be made
as of a specified date, and any supplement to the Disclosure Letter added
after the date of this Agreement shall not disclose any fact or event which
would have a Material Adverse Effect.
8.2 COMPLIANCE WITH COVENANTS. Seller shall have performed or
complied with all covenants, agreements and conditions contained in this
Agreement on its part required to be performed or complied with at or prior
to the Closing.
8.3. NO INJUNCTION, ORDER. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or otherwise interferes with
the Agreement or any of the conditions to the consummation of the transactions
contemplated by this Agreement or would be likely to have any Material Adverse
Effect on the Business or the Assets.
8.4. CONSENTS, WAIVERS, LICENSES, FILINGS, ETC. All consents,
approvals, authorizations, licenses, registrations, declarations or filings
listed on any Schedule to this Agreement shall have been obtained or made, as
the case may be, except where the failure to obtain or make any of the
foregoing (or in lieu thereof waivers) would not reasonably be
23
expected, individually or in the aggregate with other such failures, to have
a Material Adverse Effect.
8.5. NO MATERIAL ADVERSE EFFECT. During the period from the date
hereof to the Closing Date, there has been no Material Adverse Effect.
8.6. ABSENCE OF LITIGATION. No action, suit, investigation or
proceeding shall have been commenced or threatened by a governmental agency
or third party against Buyer, the Seller, the Subsidiary, or any of the
affiliates, officers or directors of any of them, with respect to the
transactions contemplated hereby, challenging the rights of the parties
hereto to consummate such transactions or which reasonably could be expected
to have a Material Adverse Effect.
8.7. CLOSING DELIVERIES. Seller shall deliver, or cause to be
delivered, to the Buyer at or prior to the Closing the following documents:
(a) The opinion letter of Xxxx X. Xxxxxxxx, counsel for the Seller,
dated the Closing Date substantially in the form of Exhibit B.
(b) A certified copy of resolutions adopted by the Board of Directors
of Seller authorizing the execution and delivery of this Agreement and
the transactions contemplated hereby.
(c) Executed copies of (i) an Assignment and Assumption Agreement in
substantially the form of Exhibit C; and (ii) a Xxxx of Sale, in
substantially the form of Exhibit D.
(d) Executed and acknowledged limited or special warranty deeds
necessary to transfer the Real Property listed in Schedule 1.1(i).
(e) Executed copies of appropriate assignment and assumption documents
with respect to the leased Real Property in a form reasonably
satisfactory to both Buyer and Seller.
(f) An officer's certificate, dated the Closing Date, signed by the
President or Vice President of Seller, stating that (i) all
representations and warranties made by Seller under this Agreement are
true and correct in all material respects at and as of the Closing Date,
and (ii) all of the agreements, covenants and obligations to be performed
on the part of the Seller under this Agreement as of the Closing Date
have been timely and duly performed in all material respects.
(g) Executed copies of (i) a Transition Services Agreement in
substantially the form attached herto as Exhibit E and (ii) a
Shareholder's Agreement in substantially the form attached hereto as
Exhibit F.
(h) All documents, certificates, instruments necessary to transfer the
IDB to an entity designated by Buyer.
(i) Such other documents, assignments and other good and sufficient
instruments of conveyance and transfer, in form reasonably satisfactory
to each of the parties hereto, as
24
shall be reasonably requested by Buyer to consummate the transactions
contemplated hereby.
8.8. HSR ACT. The applicable waiting period under the HSR Act in
respect of the transactions contemplated hereby shall have expired or been
terminated.
8.9 CERTAIN GE BUSINESS. Seller and Buyer shall have reached a
mutually acceptable agreement with respect to (i) two GE appliance parts
contracts currently being fulfilled at the Lebanon, Kentucky facility,
(ii) certain GE production at Seller's Mason, Ohio facility that is to be
transferred to the Lebanon, Kentucky facility, and (iii) certain equipment
used in connection with GE production that is currently located at the
St. Xxxxxxxx, South Carolina facility and is to be transferred to the
Lebanon, Kentucky facility.
8.10. XXXXXX CONSENT. Buyer shall have received the consent to the
consummation of the transactions contemplated by this Agreement from its
senior lender, Xxxxxx Trust and Savings Bank, Chicago, Illinois.
8.11. SATISFACTORY FINANCING. Buyer shall have either obtained the
proceeds from a private placement of high yield bonds, or obtained a commitment
for financing the transactions contemplated by this Agreement and the operation
of the Business from a reputable lender or lenders.
8.12. CINPRES INTELLECTUAL PROPERTY. Seller and Buyer shall have
reached a mutually acceptable agreement with respect to certain Cinpres
technology and equipment used at Seller's Lebanon, Kentucky facility. This
technology and equipment is currently the subject of a License Agreement and
a Lease Agreement between Seller and Cinpres Limited, each of which also
cover Cinpres technology and equipment located at certain of Seller's other
facilities that are not part of the Business.
SECTION 9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.
The obligations of Seller under this Agreement to enter into and
complete the Closing shall, at the option of Seller, be subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions precedent (any or all of which may be waived by Seller).
9.1. ACCURACY OF REPRESENTATIONS AND WARRANTIES. All warranties and
representations made by the Buyer in this Agreement shall be true and correct
in all material respects on and as of the Closing Date with the same effect
as if such warranties and representations had been made on and as of the
Closing Date except those expressly stated to be made as of a specific date;
9.2 COMPLIANCE WITH COVENANTS. Buyer shall have performed or
complied with all covenants, agreements and conditions contained in this
Agreement on its part required to be performed or complied with at or prior
to the Closing.
9.3. NO INJUNCTION, ORDER. At the Closing, there shall not be any
Order outstanding against any party hereto or Law promulgated that restrains,
prohibits, invalidates or otherwise prevents consummation of the transactions
contemplated by, or seeks damages as a result of or
25
otherwise interferes with the Agreement or any of the conditions to the
consummation of the transactions contemplated by this Agreement or would be
likely to have any Material Adverse Effect on the Business or the Assets.
9.4. CONSENTS, WAIVERS, LICENSES, FILINGS, ETC. All consents,
approvals, authorizations, licenses, registrations, declarations or filings
listed on any Schedule to this Agreement shall have been obtained or made, as
the case may be, except where the failure to obtain or make any of the
foregoing (or in lieu thereof waivers) would not reasonably be expected,
individually or in the aggregate with other such failures, to materially
adversely affect Buyer or to have a Material Adverse Effect.
9.5. CLOSING DELIVERIES. The Buyer shall deliver or cause to be
delivered to Seller at the Closing the following:
(a) A wire transfer of the Closing Cash Payment;
(b) Certificates representing the shares of Common Stock and the
shares of Preferred Stock to be issued to Seller as contemplated by
Section 2.1;
(c) An opinion of Husch & Eppenberger, L.L.C., counsel to the Buyer
and Parent, dated the Closing Date, substantially in the form of
Exhibit G.
(d) Certified copies of resolutions adopted by the Board of Directors
of Buyer authorizing the execution and delivery of the Agreement and the
transactions contemplated thereby.
(e) Executed copies of (i) an Assignment and Assumption Agreement in
substantially the form of Exhibit C; and (ii) a Xxxx of Sale, in
substantially the form of Exhibit D.
(f) Executed copies of appropriate assignment and assumption documents
with respect to the leased Real Property in a form reasonably
satisfactory to both Buyer and Seller.
(g) Executed copies of (i) a Transition Services Agreement in
substantially the form attached herto as Exhibit E and (ii) a
Shareholder's Agreement in substantially the form attached hereto as
Exhibit F.
(h) An officer's certificate, dated the Closing Date, signed by the
President or Vice President of Buyer, stating that (i) all
representations and warranties made by Buyer under this Agreement are
true and correct in all material respects at and as of the Closing Date,
and (ii) all of the agreements, covenants and obligations to be performed
on the part of the Buyer under this Agreement as of the Closing Date have
been timely and duly performed in all material respects.
(i) All documents, certificates, instruments necessary to assume all
of Seller's liabilities and obliations, for payment and otherwise, under
the IDB.
26
(j) Such other documents, assignments and other good and sufficient
instruments of conveyance and transfer, in form reasonably satisfactory
to each of the parties hereto, as shall be reasonably requested by Seller
to consummate the transactions contemplated hereby.
9.6. HSR ACT. The applicable waiting period under the HSR Act in
respect of the transactions contemplated hereby shall have expired or been
terminated.
9.7. CERTAIN GE BUSINESS. Seller and Buyer shall have reached a
mutually acceptable agreement with respect to (i) two GE appliance parts
contracts currently being fulfilled at the Lebanon, Kentucky facility,
(ii) certain GE production at Seller's Mason, Ohio facility that is to be
transferred to the Lebanon, Kentucky facility, and (iii) certain equipment
used in connection with GE production that is currently located at the
St. Xxxxxxxx, South Carolina facility and is to be transferred to the
Lebanon, Kentucky facility.
9.8. CINPRES INTELLECTUAL PROPERTY. Seller and Buyer shall have
reached a mutually acceptable agreement with respect to certain Cinpres
technology and equipment used at Seller's Lebanon, Kentucky facility. This
technology and equipment is currently the subject of a License Agreement and
a Lease Agreement between Seller and Cinpres Limited, each of which also
cover Cinpres technology and equipment located at certain of Seller's other
facilities that are not part of the Business.
SECTION 10. INDEMNIFICATION.
10.1. INDEMNIFICATION BY SELLER.
(a) Except as hereinafter set forth, Seller shall indemnify and hold
harmless the Buyer, Buyer's Affiliates and their respective successors
and assigns, against, and in respect of, any and all Losses, including,
without limitation, reasonable legal, accounting and other expenses,
which may arise out of any of the following (collectively the "Indemnity
Claims"):
(i) any breach or violation of any agreement in this
Agreement on the part of Seller;
(ii) any breach of any of the representations, warranties or
covenants made in this Agreement by Seller;
(iii) the Excluded Liabilities;
(iv) the Actions and Proceedings set forth on
Schedule 1.3(vii);
(v) all payments of workers' compensation liability, and
out-of-pocket expenses directly related thereto, made by Buyer
pursuant to Buyer's obligation under Section 7.8 to assume
continuing responsibility for workers' compensation injuries of
employees of the Business that occurred prior to the Closing;
27
(vi) all payments made by Buyer and not covered by insurance
with respect to Buyer's obligation under Section 7.3(e) to assume
responsibility for all disability benefits and health care
benefits during the period of disability for all employees or
former employees of the Business receiving disability benefits on
the Closing Date; and
(vii) all health care premiums paid by Buyer pursuant to
Buyer's obligation under Section 7.3(f) to assume responsibility
for certain health care benefits to certain former employees of
the Harrisburg, North Carolina facility;
PROVIDED HOWEVER, THAT, EXCEPT for Indemnity Claims (A) arising with
respect to breaches by Seller of representations, warranties or
covenants contained in Sections 7.1, 7.4 and 4.5 hereof (to which the
Basket does not apply), or (B) that concern the Actions and
Proceedings set forth in Schedule 1.3(vii) or any Action or Proceeding
hereinafter instituted that constitutes a breach of Seller's warranty
in Section 4.10 (to which the Litigation Basket applies), the Buyer
shall be entitled to indemnification hereunder only when, and only to
the extent of amounts by which the aggregate of all such Indemnity
Claims (excluding those excepted from this limitation) exceed $500,000
(the "Basket"); and provided further that Buyer shall be entitled for
indemnification hereunder only when and to the extent of the amounts
by which Losses attributable to the Actions and Proceedings set forth
on Schedule 1.3(vii), or for any Action or Proceeding hereinafter
instituted that constitutes a breach of Seller's warranty in
Section 4.10, exceed $125,000 in the aggregate or $50,000 individually
(the "Litigation Basket").
(b) Except for (I) Indemnity Claims and other obligations which Seller
has specifically assumed in Section 7 hereof, and (II) Indemnity Claims
relating to items (iv)-(vii) of Section 10.1, all of which shall survive
until the termination of all liabilities arising from the subject matter
thereof pursuant to applicable statutes of limitation, the warranties,
representations and covenants of Seller contained in this Agreement, or
any certificate, document, instrument or agreement delivered pursuant to
this Agreement, shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transactions called
for by this Agreement but shall expire on April 30, 2000; provided that
if there shall then be pending any Indemnity Claim previously asserted by
the Buyer, such Indemnity Claim shall continue to be subject to
indemnification in accordance herewith.
(c) Buyer acknowledges and agrees that (i) other than the
representations and warranties of Seller specifically contained in this
Agreement or in any other instrument or document executed pursuant
hereto, there are no representations or warranties of Seller either
expressed or implied with respect to the transactions contemplated
hereby, with respect to Seller, the Business or the Assets, (ii) Buyer
shall have no claim or right to indemnification pursuant to this Section
10.1 with respect to any information documents or materials furnished by
Seller or any of its officers, directors, employees, agents or advisors
to Buyer in expectation of the transactions contemplated hereby other
than this Agreement, the Disclosure Letter and Schedules hereto and any
supplements thereto and any instruments and documents executed pursuant
hereto and (iii) if the Closing occurs, Buyer's sole and exclusive remedy
with respect to any and all Losses relating to this
28
Agreement or any instrument or document delivered by Seller pursuant
hereto, the transactions contemplated hereby, Seller, the Business and
the Assets shall be pursuant to the indemnification provisions set
forth in this Section 10.1. In furtherance of the foregoing, Buyer
hereby waives, from and after the Closing, any and all rights, claim
and causes of action Buyer may have against Seller and its Affiliates
arising under or based upon any federal, state, local or foreign
statute, law, ordinance, rule or regulation or otherwise (except
pursuant to the indemnification provisions set forth in this Section
10.1).
10.2. INDEMNIFICATION BY THE BUYER. The Buyer shall indemnify and hold
harmless Seller and Seller's Affiliates and their successors and assigns,
against and in respect of, any and all Losses which may arise out of (i) any
breach or violation of any agreement in this Agreement on the part of the Buyer;
(ii) any breach of any of the representations, warranties or covenants made in
this Agreement by the Buyer; (iii) obligations under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C.A. Section 2101 with respect to employees
of the Business; or (iv) any obligations or occurrences relating to the Business
or Assets of the Business for which Seller or a Seller Affiliate is primarily,
secondarily or jointly and severally liable, whether as guarantor, surety or
otherwise (except for those obligations or occurrences specifically retained by
Seller or a Seller Affiliate hereunder and those obligations or occurrences for
which Buyer has a right of indemnification against Seller under the provisions
of this Agreement).
10.3. NOTICE OF CLAIM. Upon obtaining knowledge thereof, the Buyer or
Seller (the "Indemnitee") shall promptly notify the party against whom indemnity
is being sought, either Seller or the Buyer, as the case may be, (the
"Indemnitor") in writing of any damage, claim, loss, liability or expense which
the Indemnitee has determined has given or could give rise to a claim under
Sections 10.1 or 10.2 hereof (such written notice being hereinafter referred to
as a "Notice of Claim"). A Notice of Claim shall specify, in reasonable detail,
the nature and estimated amount of any such claim giving rise to a right of
indemnification.
10.4. DEFENSE OF THIRD PARTY CLAIMS. With respect to any action or any
claim or demand set forth in the Notice of Claim relating to a third party
claim, the Indemnitor may defend, in good faith with reasonable diligence and at
its expense, any such claim or demand, and the Indemnitee, at its expense, shall
have the right to participate in the defense of any such third party claim. So
long as the Indemnitor is defending in good faith any such third party claim,
the Indemnitee shall not settle or compromise such third party claim. The above
provisions notwithstanding, if the third party claim seeks a remedy other than
payment of monetary damages and such other remedy, if awarded to claimant, could
have a material adverse effect upon the Indemnitee, then the parties shall meet
and reasonably agree upon an appropriate manner in which to defend and manage
the claim, so as to protect the interests of both Indemnitor and Indemnitee.
The Indemnitee shall make available to the Indemnitor or its representatives all
records and other materials reasonably required by them for its use in
contesting any third party claim and shall cooperate fully with the Indemnitor
in the defense of all such claims. If the Indemnitor does not so elect to
defend any such third party claim, the Indemnitee shall have no obligation to do
so.
10.5. DISPUTED INDEMNIFICATION. In the event of a dispute concerning
whether a party has an obligation to indemnify and the matter proceeds to
litigation, the parties agree that the
29
trier of fact may require the non-prevailing party to pay all or part of the
prevailing party's costs of the litigation (including attorney's fees) if the
trier of fact believes that the equities require such an award based upon the
non-prevailing party's lack of good faith in asserting or defending such
claim.
10.6. LIMITATION OF CLAIMS. The aggregate amount of all claims subject
to indemnification hereunder by Seller as Indemnitor shall not exceed the
aggregate Purchase Price.
10.7. CALCULATION OF LOSSES. For purposes of this Section 10, in
computing such aggregate amounts of Losses, the amount of each Loss shall be
deemed to be an amount (i) net of any insurance proceeds and any indemnity,
contribution or other similar payment payable by any third party with respect
thereto, and (ii) net of any reserves provided for the situation in question
which are included in Assets.
SECTION 11. MISCELLANEOUS
11.1. ENTIRE AGREEMENT. This Agreement (including the Disclosure Letter
and supplements thereto, the Schedules and Exhibits) contain the entire
agreement between the parties with respect to the transactions contemplated
hereby, and supersedes all negotiations, representations, warranties,
commitments, offers, contracts, and writings prior to the date hereof. No
waiver and no modification or amendment of any provision of this Agreement shall
be effective unless specifically made in writing and duly signed by the party to
be bound thereby.
11.2. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together, shall constitute one and the same instrument.
11.3. SEVERABILITY. If any provision hereof shall be held invalid or
unenforceable by any court of competent jurisdiction or as a result of future
legislative action, such holding or action shall be strictly construed and shall
not affect the validity or effect of any other provision hereof.
11.4. ASSIGNABILITY. This Agreement shall be binding upon and inure to
the benefit of the successors and assigns of the parties hereto; provided, that
neither this Agreement nor any right hereunder shall be assignable by Seller or
the Buyer without the prior written consent of the other party, and any other
purported assignment shall be null and void.
11.5. CAPTIONS. The captions of the various Sections of this Agreement
have been inserted only for convenience of reference and shall not be deemed to
modify, explain, enlarge or restrict any of the provisions of this Agreement.
11.6. WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof.
30
11.7. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Ohio without regard to principles of
conflicts of law. Any judicial proceeding brought against any of the parties to
this Agreement on any dispute arising out of this Agreement or any matter
related hereto shall be brought in the courts of the State of Ohio, and, by
execution and delivery of this Agreement, each of the parties hereto accepts the
non-exclusive jurisdiction of the aforesaid courts, and irrevocably agrees to be
bound by any judgment rendered thereby in connection with this Agreement.
11.8. NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and delivered in person or sent by FAX
or sent by certified mail, postage prepaid, and properly addressed as follows:
TO SELLER:
Worthington Custom Plastics, Inc.
c/o Worthington Industries, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
FAX: (000) 000-0000
Attn: Date X. Xxxxxxxx, General Counsel
TO BUYER:
Xxxxxx Industrial Group, Inc.
0000 Xxxx Xxxxxxxxx
X.X. Xxx 000
Xxxxxx, XX 00000-0000
Attn: Xxxxx X. Xxxxxxxxx, Vice President
Any party may from time to time change its address for the purpose of
notices to that party by a similar notice specifying a new address, but no such
change shall be deemed to have been given until it is actually received by the
party sought to be charged with its contents.
All notices and other communications required or permitted under this
Agreement which are addressed as provided in this Section 11.8 if delivered
personally or by FAX, shall be effective upon delivery; and, if delivered by
mail, shall be effective three days following deposit in the United States mail,
postage prepaid.
11.9 PUBLIC ANNOUNCEMENTS. Neither the Buyer, Seller nor affiliates or
representatives of either of them shall make any public announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior written consent of the other party hereto, unless such party is advised by
counsel that such disclosure is required by law.
11.10. CONFIDENTIALITY. Upon execution of this Agreement, through and
beyond the Closing, Seller shall, and shall cause its Affiliates to, continue
to maintain the confidentiality of all information, documents and materials
relating to the Business, including all such materials which remain in the
possession of Seller, except to the extent disclosure of any such information
is required by law or authorized by Buyer or reasonably occurs in connection
with consummation of the transactions contemplated by, or disputes over the
terms of, this Agreement, and Buyer shall maintain the confidentiality of
all information, documents and materials relating to Seller
31
(other than that relating to the Business) which Buyer has obtained in
connection with this Agreement or with the transactions contemplated herein,
except to the extend disclosure of any such information is required by law or
authorized by Seller or reasonably occurs in connection with consummation of
the transactions contemplated by, or disputes over the terms of this
Agreement. In the event that any party reasonably believes after
consultation with counsel that it is required by law to disclose any
confidential information described in this Section 11.10, the disclosing
party will (a) provide the other party with prompt notice before such
disclosure in order that any party may attempt to obtain a protective order
or other assurance that confidential treatment will be accorded such
confidential information and (b) cooperate with the other party in attempting
to obtain such order or assurance. The provisions of this Section 11.10
shall not apply to any information, documents or materials which are, as
shown by appropriate written evidence, in the public domain or, as shown by
appropriate written evidence, shall come into the public domain or, as shown
by appropriate written evidence, shall come into the public domain other than
by reason of breach by the applicable party bound hereunder or its
Affiliates. If this Agreement is terminated, the Buyer shall return to
Seller any and al such documents, reports and other written materials
(including financial statements) concerning the Business and shall destroy
all notes or other documents prepared by Buyer containing such confidential
information.
11.11 FURTHER ASSURANCES. At any time and from time to time, each party
hereto, without further consideration shall cooperate, take such further actions
and execute and deliver such further instruments and documents as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
SECTION 12. DEFINED TERMS
12.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:
"ACTION OR PROCEEDING" means any claim, action, suit, proceeding or
arbitration by any Person, or any investigation or audit by any Governmental or
Regulatory Body.
"AFFILIATE" means with respect to any Person, any other Person
controlling, controlled by or under common control with such first Person.
"BUSINESS" shall mean the business of designing, manufacturing, assembly
and selling molded plastic parts as currently engaged in by Worthington Custom
Plastics, Inc. from its Lebanon, Kentucky, St. Xxxxxxxx, South Carolina and the
PMI operations in Concord and Harrisburg, North Carolina. The term "Business"
specifically excludes the plastics operations in Worthington Custom Plastics,
Inc.'s Novi, Michigan sales office , and its Xxxxx, Salem and Upper Sandusky,
Ohio facilities. The term "Business" also specifically excludes the Seller's
land, building and other assets in Cumming, Georgia.
"BUSINESS DAY" means any day on which commercial banks are not authorized
or required by law to close in Columbus, Ohio.
"CODE" means the Internal Revenue Code of 1986, as amended.
32
"CONTRACTS" means all executory contracts, agreements, understandings,
indentures, notes, bonds, loans, instruments, leases (for real and personal
property), mortgages, franchises, licenses or commitments.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any written
notice or claim by any other Person alleging or asserting such Person's
liability for investigatory costs, clean-up costs, Governmental or Regulatory
Body response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence or release into the environment, of any Hazardous Material or (b)
circumstances forming the basis of any violation of any Environmental Law.
"ENVIRONMENTAL LAW" means any Law or Order relating to the regulation or
protection of the environment or to emissions, discharges, releases or
threatened releases of pollutants, contaminants or toxic or hazardous wastes
into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"GOVERNMENTAL OR REGULATORY BODY" means any court, tribunal, arbitrator
or any government or political subdivision thereof, whether federal, state,
county, local or foreign, or any agency, authority, official or instrumentality
of any such government or political subdivision.
"HAZARDOUS MATERIAL" means any chemicals or other materials or substances
which are defined as or included in the definition of "hazardous substances,"
"hazardous wastes," "hazardous materials," "extremely hazardous wastes,"
"restricted hazardous wastes," "toxic substances," "toxic pollutants" or words
of similar import under any Environmental Law.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Anti-trust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INTANGIBLE PROPERTY" means all patents and applications therefor,
copyrights and applications therefor (including rights to renew), trademarks and
applications therefor, tradenames and applications therefor and servicemarks and
applications therefor, owned by Seller or Worthington and used solely in
connection with the Business.
"INVENTORY" means all raw materials, work-in-process, finished goods,
office and other supplies, parts, packaging materials and other accessories and
supplies related thereto.
"LAW" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States of America, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Body.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the results
of the operations or financial condition of the Business, but excluding any such
effect resulting from the loss of the AYP business.
"ORDER" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Body, in each case whether preliminary or final.
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"PERSON" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental or Regulatory Body or other entity.
"PLAN" means an "employee benefit plan" for purposes of Section 3(3) of
ERISA, and each other employee benefit plan, contract and other arrangement,
whether or not subject to ERISA, maintained, administered, or contributed to by
Seller, and which covers any employees of the Business or under which the
Business has liability.
"REAL PROPERTY" means the real property used solely in connection with
the Business, together with all easements, licenses, interests and all of the
rights arising out of the ownership thereof, together with the buildings,
fixtures and other improvements and appurtenances, if any, belonging or in any
way appertaining thereto.
"SELLER AFFILIATE" means an Affiliate of Seller.
"TANGIBLE PROPERTY" means all furniture, fixtures, equipment (including
motor vehicles), machinery, tools, dyes, castings, fixed assets, computers,
printers, servers, spare parts and other items of tangible personal property of
every kind and description (other than Inventory) used solely in connection with
the Business and owned or leased by Seller.
"TAX" and "TAXES" means all taxes or other assessments imposed by any
federal, state, local, or foreign taxing authority, including income, excise,
property, sales, use, ad valorem, and franchise taxes other than Transfer Taxes.
"TAX RETURN" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any federal, state, local or foreign governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.
"WORTHINGTON" means Worthington Industries, Inc., a Delaware corporation,
which is the ultimate parent entity of the Seller.
12.2 TERMS DEFINED ELSEWHERE. The following terms are defined in the
Sections listed opposite their name:
DEFINED TERM SECTION
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Accounting Principles 2.2(b)
Accounts Receivable 4.19
Assets 1.1
Assumed Liabilities 1.3
Balance Sheet 4.4(a)
Balance Sheet Date 4.4(a)
Closing Balance Sheet 2.2(b)
Closing Cash Payment 2.1
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Closing Date 3.2
Common Stock 2.1
Contracts of the Business 1.1(v)
Determination Time 2.2(b)
Disabling Condition 7.3(a)
Disclosure Letter 3.6
Dispute Notice 2.2(d)
Dispute Period 2.2(d)
Excluded Assets 1.2
Excluded Liabilities 1.4
Final Operating Working Capital 2.2(a)(i)
Financial Statements 4.4(a)
GAAP 2.2(b)
IDB 1.5
Indemnitee 10.3
Indemnitor 10.3
Indemnity Claims 10.1(a)
Liens 4.5(c)
Losses 7.1(b)
Major Customers 4.23(a)(i)
Major Suppliers 4.23(a)(ii)
Material Contracts 4.6
Notice of Claim 10.3
Operating Capital 2.2(a)(i)
Permitted Liens 4.5(c)
Preferred Stock 2.1
Purchase Price 2.1
Restricted Names or Marks 7.10
Target Operating Capital 2.2(a)(i)
Transfer Taxes 7.4(e)
Worthington Health Plans 7.3(a)(i)
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IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the date first above written.
WORTHINGTON CUSTOM PLASTICS, INC. XXXXXX INDUSTRIAL GROUP, INC.
By: By:
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Its: Its:
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XXXXXX CUSTOM PLASTICS, INC.
By:
-----------------------------
Its:
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