EXHIBIT 2.3
EXECUTION
CAPITALIZATION AGREEMENT
Among
GT LIGHTING, LLC
and
XXXXXX INDUSTRIES INC.
TUPELO HOLDINGS INC.
XXXXXX INDUSTRIES HOLDINGS INC.
GARDCO MFG, INC.
CAPRI LIGHTING, INC.
XXXXXX IMPORTS, INC.
TI INDUSTRIES CORPORATION
Dated April 28, 1998
CAPITALIZATION AGREEMENT
CAPITALIZATION AGREEMENT, dated April 28, 1998, by and among GT Lighting,
LLC, a Delaware limited liability company (the "Company"), Xxxxxx Industries
Inc., a Delaware corporation ("Xxxxxx") and the Transferring Affiliates (Xxxxxx
and the Transferring Affiliates, collectively, "Transferor").
W I T N E S S E T H:
WHEREAS, Transferor is in the business of manufacturing, selling, marketing
and distributing consumer, commercial, industrial and outdoor lighting products
through an unincorporated division (collectively the "Division") of Transferor;
WHEREAS, the Transferring Affiliates are wholly owned, either directly or
indirectly, by Xxxxxx;
WHEREAS, Transferor and The Genlyte Group Incorporated ("Genlyte") have
caused the Company to be formed under the laws of the State of Delaware;
WHEREAS, Transferor desires to capitalize the Company with substantially
all of the assets, properties and capital stock comprising, held or used in
connection with the Business in a transaction qualifying under Section 721(a) of
the Code, in exchange for an ownership interest in the Company and the direct or
indirect assumption by the Company of the Assumed Liabilities and upon the terms
and subject to the conditions hereinafter set forth;
WHEREAS, Xxxxxx'x rights and duties as a member of the Company shall be as
set forth in that certain Limited Liability Company Agreement dated April 28,
1998 by and between Xxxxxx and Genlyte (the "LLC Agreement");
WHEREAS, the Company will consummate certain transactions and enter into
certain agreements as set forth in the Master Transaction Agreement dated April
28, 1998 by and between Xxxxxx and Genlyte (the "Master Transaction Agreement")
and the parties' obligations hereunder will be subject to satisfaction or waiver
of the conditions in the Master Transaction Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein, and of the mutual benefits to be derived hereby, the
parties hereto agree as follows:
ARTICLE I
CAPITALIZATION
1.1 Assets. Subject to and upon the terms and conditions set forth in this
Agreement, at the Closing, Transferor will contribute, transfer, convey, assign
and deliver to the Company, and the Company will acquire from Transferor, all
right, title and interest of Transferor in and to the properties, assets and
rights of every nature, kind and description, tangible and intangible (including
goodwill), whether real, personal or mixed, whether accrued, contingent or
otherwise and whether now existing or hereinafter acquired (other than the
Excluded Assets) primarily relating to or used or held for use in connection
with the Business as the same may exist on the Closing Date (collectively, the
"Assets"), including all those items in the following categories that conform to
the definition of the term "Assets":
(a) all machinery, equipment, telephone systems and equipment,
furniture, furnishings, automobiles, trucks, vehicles, tools, dies, molds and
parts and similar property (including any of the foregoing purchased subject to
any conditional sales or title retention agreement in favor of any other Person)
together with all Systems and all Components;
(b) all inventories of raw materials, work in process, finished
products, goods, spare parts, replacement and component parts, and office and
other supplies (collectively, the "Inventories") held at any Facility and
Inventories previously purchased and in transit to any Transferor at the
Facilities;
(c) all rights in and to products sold or leased (including products
hereafter returned or repossessed and Transferor's unpaid rights of rescission,
replevin, reclamation and rights to stoppage in transit);
(d) all rights (including any and all Intellectual Property rights)
in and to the products sold or leased and in and to any products or other
Intellectual Property rights under research or development prior to or on the
Closing Date;
(e) all of the rights of Transferor under all contracts,
arrangements, licenses, leases and other agreements, including any right to
receive payment for products sold or services rendered, and to receive goods and
services, pursuant to such agreements and to assert claims and take other
rightful actions in respect of breaches, defaults and other violations of such
contracts, arrangements, licenses, leases and other agreements and otherwise;
(f) all credits, prepaid expenses, deferred charges, advance
payments, security deposits and prepaid items;
(g) all notes and accounts receivable held by Transferor and all
notes, bonds and other evidences of indebtedness of and rights to receive
payments from any Person held by Transferor, except as set forth in Section 4.3;
(h) all Intellectual Property and all rights thereunder or in respect
thereof used or held for use in connection with the Business, including rights
to xxx for and remedies against past, present and future infringements thereof,
and rights of priority and protection of interests therein under the laws of any
jurisdiction worldwide and all tangible embodiments thereof (the "Intellectual
Property Assets");
(i) all books, records, manuals and other materials (in any form or
medium), including all records and materials maintained at the headquarters or
other offices of Transferor, advertising matter, catalogues, price lists,
correspondence, mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, personnel records, manufacturing and quality
control records and procedures, blueprints, research and development files,
records, data and laboratory books, Intellectual Property disclosures, media
materials and plates, accounting records, sales order files and litigation
files, (collectively, the "Books and Records");
(j) to the extent their transfer is permitted by law, all
Governmental Approvals, including all applications therefor;
(k) all Real Property and all licenses, permits, approvals and
qualifications relating to any Real Property issued to Transferor by any
Governmental Authority;
(l) all rights to causes of action, lawsuits, judgments, claims and
demands of any nature available to or being pursued by Transferor with respect
to the Business or the ownership, use, function or value of any Asset, whether
arising by way of counterclaim or otherwise;
(m) all guarantees, warranties, indemnities and similar rights in
favor of Transferor with respect to any Asset;
(n) to the extent not described elsewhere in this Section 1.1, all
Net Working Capital;
(o) Xxxxxx Lighting web site domain name together with related
rights; and
(p) all stock, partnership, membership or other interests in any
Person engaged in the Business listed on Schedule 1.1(p);
provided that, at Transferor's option, Transferor may convey Inventories to a
limited liability company that is a wholly-owned subsidiary of the Company.
At the Closing, the Assets shall be transferred to the Company free and
clear of all liabilities, obligations, liens and encumbrances excepting only
Assumed Liabilities, liens listed on Schedule 3.1.11 and Permitted Liens.
1.2. Excluded Assets. Transferor will retain and not transfer, and the
Company will not acquire any assets of Transferor other than the Assets,
including (i) the assets listed on Schedule 1.2, (ii) the Headquarters, (iii)
all Tax refunds, (iv) the names and marks "Xxxxxx" and "Xxxxxx Industries
Inc.", and (v) computers and software located at the Headquarters (collectively,
the "Excluded Assets").
1.3. Shared Assets. All of Transferor's properties, assets and rights of
every nature, kind and description, tangible and intangible (including
goodwill), whether real, personal or mixed, whether accrued, contingent or
otherwise and whether now existing or hereinafter acquired (other than the
Excluded Assets) that do not primarily relate to or are not primarily used or
held for use in connection with the Business as the same may exist on the
Closing Date, but relate to or are used in or held for use in connection with
the Business to some lesser degree shall be retained by Transferor and provided
to the Company pursuant to the Services Agreement or a license agreement in a
form mutually acceptable to Transferor and the Company.
ARTICLE II
THE CLOSING
2.1. Place and Date. The consummation of the transactions contemplated
hereby shall take place on the "closing date" described in the Master
Transaction Agreement (the "Closing Date").
2.2. Consideration. (a) Membership Interests. On the terms and subject
to the conditions set forth in this Agreement, the Master Transaction Agreement
and the LLC Agreement and, together with the Note or cash referenced in Section
2.2(b) below, as the sole consideration for Transferor's contribution of the
Assets to the Company pursuant hereto, on the Closing Date, the Company agrees
to issue to Xxxxxx and/or wholly-owned subsidiaries of Xxxxxx an aggregate
interest in the Company representing a 32% ownership interest (the "Membership
Interests") and to assume the Assumed Liabilities as provided in Section 2.3.
(b) Note. On the Closing Date, the Company agrees to pay Xxxxxx
an amount equal to 32/68ths of Genlyte's total long-term indebtedness for
borrowed money on the Closing Date plus 100% of the cash consideration paid by
Xxxxxx for the Horizon/Lite Acquisition, either in cash or pursuant to a
promissory note payable to Xxxxxx, on payment terms corresponding to the terms
contained in the Company's primary credit facility referenced in Sections 6.8
and 7.8 of the Master Transaction Agreement (the "Note"), provided that the Note
shall be prepayable at any time without penalty or premium.
2.3. Assumption of Liabilities. (a) Subject to Sections 2.4 and 8.2 and
the other terms and conditions set forth herein, at the Closing, the Company
will assume and agree to pay, honor and discharge when due all of those
liabilities primarily relating to the Assets or arising out of the Business and
existing at or arising on or after the Closing Date (collectively, the "Assumed
Liabilities"), except for (i) long-term indebtedness of Xxxxxx or the Business
for borrowed money, (ii) Taxes of Transferor for periods prior to the Closing
Date, whether or not relating to or arising out of the Business, (iii)
intercompany accounts payable that do not represent trade accounts payable, (iv)
liabilities in respect of Employees, employment agreements or Plans except to
the extent specifically assumed by the Company pursuant to Article VI, (v)
liabilities in respect to Transferred Employees except to the extent
specifically assumed by the Company pursuant to Article VI, and (vi) any
liability, obligation or commitment of Transferor set forth on Schedule 2.3.
(b) At the Closing, the Company shall assume the Assumed Liabilities
by executing and delivering to Transferor an assumption agreement in a form
reasonably satisfactory to Transferor (the "Assumption Agreement").
2.4 Excluded Liabilities. Notwithstanding the provisions of Section 2.3
or any other provision hereof or any schedule or exhibit hereto and regardless
of any disclosure to the Company, the Company shall not assume any liabilities,
obligations or commitments of Transferor, whether or not relating to or arising
out of the operation of the Business or the ownership of the Assets prior to the
Closing, other than the Assumed Liabilities (the "Excluded Liabilities").
2.5 Consent of Third Parties. Notwithstanding anything to the contrary in
this Agreement, this Agreement shall not constitute an agreement to assign or
transfer any Governmental Approval, instrument, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom if an assignment or transfer or an attempt to make such an
assignment or transfer without the consent of a third party would constitute a
breach or violation thereof or affect adversely the rights of the Company or
Transferor thereunder; and any transfer or assignment to the Company by
Transferor of any interest under any such instrument, contract, lease, permit or
other agreement or arrangement that requires the consent of a third party shall
be made subject to such consent or approval being obtained. In the event any
such consent or approval is not obtained on or prior to the Closing Date,
Transferor shall continue to use its reasonable commercial efforts to obtain any
such approval or consent after the Closing Date until such time as such consent
or approval has been obtained, and Transferor will cooperate with the Company in
any lawful and economically feasible arrangement to provide that the Company
shall receive the interest of Transferor in the benefits under any such
instrument, contract, lease or permit or other agreement or arrangement,
including performance by Transferor as agent, if economically feasible, provided
that the Company shall be solely responsible for and undertake to pay or satisfy
the corresponding liabilities for the enjoyment of such benefit to the extent
the Company would have been responsible therefor hereunder if such consent or
approval had been obtained and shall be solely responsible for any breach of
warranty with respect to products of the Business manufactured after the Closing
Date. Transferor shall pay and discharge, and shall indemnify and hold the
Company harmless from and against, any and all out-of-pocket costs of seeking to
obtain or obtaining any such consent or approval whether before or after the
Closing Date. Nothing in this Section 2.5 shall be deemed a waiver by the
Company of its right to have received on or before the Closing an effective
assignment of all of the Assets nor shall this Section 2.5 be deemed to
constitute an agreement to exclude from the Assets any assets described under
Section 1.1.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1. Representations and Warranties of Transferor. Transferor represents
and warrants to and agrees with the Company as follows:
3.1.1. Authorization, etc. Transferor has the corporate power and
authority to execute and deliver this Agreement and each of the Collateral
Agreements to which it will be a party, to perform fully its obligations
thereunder, and to consummate the transactions contemplated hereby and thereby.
Subject to Section 4.1.10, the execution and delivery by Transferor of this
Agreement, and the consummation of the transactions contemplated hereby, have
been, and on the Closing Date the execution and delivery by Transferor of each
of the Collateral Agreements to which it will be a party and the consummation of
the transactions contemplated thereby will have been, duly authorized by all
requisite corporate action of Transferor (including the approval of Transferor's
shareholders to the extent required by law). Transferor has duly executed and
delivered this Agreement and on the Closing Date will have duly executed and
delivered each of the Collateral Agreements to which it is a party. This
Agreement is, and on the Closing Date each of the Collateral Agreements to which
Transferor is a party will be, legal, valid and binding obligations of
Transferor, enforceable against it in accordance with their respective terms.
3.1.2. Corporate Status. (a) Transferor is a corporation duly organized,
validly existing and in good standing under the respective laws of the
jurisdiction of its incorporation, as set forth in Schedule 3.1.2(a), with full
corporate power and authority to carry on its business (including the Business)
and to own or lease and to operate its properties as and in the places where
such business is conducted and such properties are owned, leased or operated.
(b) Transferor is duly qualified or licensed to do business and is in
good standing in each of the respective jurisdictions specified in Schedule
3.1.2(b), which are the only jurisdictions in which the operation of the
Business or the character of the properties owned, leased or operated by it in
connection with the Business makes such qualification or licensing necessary.
(c) Transferor has delivered to the Company complete and correct
copies of its certificate of incorporation and by-laws or other organizational
documents, as amended and in effect on the date hereof. Transferor is not in
violation of any of the provisions of its certificate of incorporation or by-
laws or other organizational documents.
(d) Xxxxxx has no Subsidiaries engaged in the Business except as set
forth on Schedule 3.1.2(d). Except as set forth on Schedule 3.1.2(d), Xxxxxx
has no interest, direct or indirect, and has no commitment to purchase any
interest, direct or indirect, in any other corporation or in any partnership,
joint venture or other business enterprise or entity. Except as set forth on
Schedule 3.1.2(d), the Business has not been conducted through any other direct
or indirect Subsidiary or affiliate of Xxxxxx.
3.1.3. No Conflicts, etc. The execution, delivery and performance by
Transferor of this Agreement and each of the Collateral Agreements to which it
is a party, and the consummation of the transactions contemplated hereby and
thereby, do not and will not conflict with or result in a violation of or a
default under (with or without the giving of notice or the lapse of time or
both) (i) any Applicable Law applicable to Transferor or any Affiliate thereof
or any of the properties or assets of Transferor (including the Assets), (ii)
the certificate of incorporation or by-laws or other organizational documents of
Transferor or (iii) except as set forth in Schedule 3.1.3, any Contract to
which Transferor or any Affiliate thereof is a party or by which Transferor or
any of its properties or assets, including the Assets, may be bound or
affected. Except as specified in Schedule 3.1.3, no Governmental Approval or
other Consent is required to be obtained or made by Transferor in connection
with the execution and delivery of this Agreement and the Collateral
Agreements or the consummation of the transactions contemplated thereby. The
consummation of the transaction that is the subject of this Agreement and the
Collateral Agreements and the issuance of the Membership Interests to all
members will not trigger any rights under the Xxxxxx Industries Inc. and The
Fifth Third Bank Rights Agreement dated as of January 5, 1998 between Xxxxxx
and The Fifth Third Bank or any applicable shareholder protection or state
takeover statute.
3.1.4. Financial Statements. Transferor has delivered to the Company (a)
unaudited consolidated financial statements of the Business as at and for the
year ended December 31, 1997 (the "Balance Sheet Date"), (b) unaudited
consolidated financial statements of the Business as at and for the period ended
March 31, 1998, and (c) unaudited consolidated financial statements of the
Business as at and for the monthly periods ended March 31, 1998 , including in
each of clauses (a), (b) and (c) a balance sheet, a statement of income and a
statement of cash flows (collectively, the "Financial Statements"). The
Financial Statements are complete and correct in all material respects and have
been prepared in accordance with GAAP applied throughout the periods indicated
and consistently applied with those portions of Transferor's financial
statements regarding the Business, except that the Financial Statements do not
contain notes and may be subject to normal audit adjustments. The balance
sheets included in the Financial Statements do not include any material assets
(other than Excluded Assets) or liabilities (other than Excluded Liabilities)
not intended to constitute a part of the Business or the Assets or omit any
material assets or liabilities of the Business, and present fairly the financial
condition of the Business as at their respective dates. The statements of
income and retained earnings and statements of cash flows included in the
Financial Statements do not reflect the operations of any entity or business not
intended to constitute a part of the transactions, reflect all costs that
historically have been incurred by the Business (other than the Excluded
Liabilities) and present fairly the results of operations and cash flows of the
Business for the periods indicated.
3.1.5. Absence of Undisclosed Liabilities. Transferor has no liabilities
or obligations of any nature, whether known or unknown, absolute, accrued,
contingent or otherwise and whether due or to become due, arising out of or
relating to the Business, except (a) as set forth in Schedule 3.1.5, (b) as and
to the extent disclosed or reserved against in the Balance Sheet (excluding the
notes thereto) and (c) for liabilities and obligations that (i) were incurred
after the date of the Balance Sheet in the ordinary course of business
consistent with prior practice and (ii) have not had or resulted in, and will
not have or result in, a Material Adverse Effect. None of the Division's
employees is, or will by the passage of time hereinafter become, entitled to
receive any material vacation time, vacation pay or severance pay attributable
to services rendered prior to such date except as disclosed on the Balance Sheet
(excluding the notes thereto) or as set forth on Schedule 3.1.5.
3.1.6. Taxes. (a) Transferor has (or by the Closing will have) duly and
timely filed all Tax Returns with respect to Taxes required to be filed on or
before the Closing Date ("Returns"). Except for Taxes set forth on Schedule
3.1.6(a), which are being contested in good faith and by appropriate
proceedings, and with respect to which Transferor has Adequate Reserves, the
following Taxes have (or by the Closing Date will have) been duly and timely
paid: (i) all Taxes shown to be due on the Returns, (ii) all deficiencies and
assessments of Taxes of which notice has (or by the Closing Date will have) been
received by Transferor that are or may become payable by the Company or
chargeable as a lien upon the Business or the Assets, and (iii) all other Taxes
due and payable on or before the Closing Date for which neither filing of
Returns nor notice of deficiency or assessment is required, if Transferor is or
reasonably should be (or by the Closing Date will be or reasonably should be)
aware that such Taxes are or may become payable by the Company or chargeable as
a lien upon the Business or the Assets. All Taxes required to be withheld by or
on behalf of Transferor in connection with amounts paid or owing to any
employee, independent contractor, or creditor ("Withholding Taxes") have been
withheld, and such withheld taxes have either been duly and timely paid to the
proper Governmental Authorities or set aside in accounts for such purposes.
(b) Except as set forth on Schedule 3.1.6(b), no agreement or other
document extending, or having the effect of extending, the period of assessment
or collection of any Taxes or Withholding Taxes, and no power of attorney with
respect to any such Taxes, has been filed with the IRS or any other Governmental
Authority.
(c) Except for items set forth on Schedule 3.1.6(c), with respect to
which Transferor has Adequate Reserves, (i) there are no Taxes or Withholding
Taxes asserted in writing by any Governmental Authority to be due from
Transferor and (ii) no issue has been raised in writing by any Governmental
Authority in the course of any audit with respect to Taxes or Withholding
Taxes. Except as set forth on Schedule 3.1.6(c), no Taxes and no Withholding
Taxes are currently under audit by any Governmental Authority. Except for
items set forth on Schedule 3.1.6(c), with respect to which Transferor has
Adequate Reserves, neither the IRS nor any other Governmental Authority is
now asserting or, to the Knowledge of Transferor, threatening to assert
against Transferor any deficiency or claim for additional Taxes or any
adjustment or Taxes that would, if paid by the Company, have a Material
Adverse Effect, and there is no reasonable basis for any such assertion of
which Transferor is or reasonably should be aware.
(d) Except as set forth on Schedule 3.1.6(d), there is no litigation
or administrative appeal pending or, to the Knowledge of Transferor, threatened
against or relating to Transferor in connection with Taxes.
3.1.7. Absence of Changes. Except for items set forth in Schedule 3.1.7,
with respect to which Transferor has Adequate Reserves, since the Balance Sheet
Date, Transferor has conducted the Business only in the ordinary course
consistent with prior practice and has not, on behalf of, in connection with or
relating to the Business or the Assets:
(a) suffered any Material Adverse Effect;
(b) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could have a Material Adverse Effect;
(c) discharged or satisfied any Lien other than those then required
to be discharged or satisfied, or paid any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, other than
current liabilities shown on the Balance Sheet and current liabilities incurred
since the date thereof in the ordinary course of business consistent with prior
practice;
(d) mortgaged, pledged or subjected to Lien, any property, business
or assets, tangible or intangible, held in connection with the Business other
than purchase money security interests incurred in the ordinary course of
business;
(e) sold, transferred, leased to others or otherwise disposed of any
of the Assets, except in the ordinary course of business, or canceled or
compromised any debt or claim, or waived or released any right of substantial
value;
(f) received any notice of termination of any contract, lease or
other agreement or suffered any damage, destruction or loss (whether or not
covered by insurance) which, in any case or in the aggregate, has had a Material
Adverse Effect;
(g) transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any Intellectual Property,
or modified any existing rights with respect thereto;
(h) other than in the ordinary course of business, made any change in
the rate of compensation, commission, bonus or other direct or indirect
remuneration payable, or paid or agreed or orally promised to pay, conditionally
or otherwise, any bonus, dividend, incentive, retention or other compensation,
retirement, welfare, fringe or severance benefit or vacation pay, to or in
respect of any shareholder, director, officer, employee, salesman, distributor
or agent of Transferor relating to the Business;
(i) encountered any labor union organizing activity, had any actual
or threatened employee strikes, work stoppages, slowdowns or lockouts, or had
any material change in its relations with its employees, agents, customers or
suppliers;
(j) failed to replenish the Division's inventories and supplies in a
normal and customary manner consistent with its prior practice and prudent
business practices prevailing in the industry, or made any purchase commitment
in excess of the normal, ordinary and usual requirements of the Business or at
any price in excess of the then current market price or upon terms and
conditions more onerous than those usual and customary in the industry, or made
any change in its selling, pricing, advertising or personnel practices
inconsistent with its prior practice and prudent business practices prevailing
in the industry;
(k) made any capital expenditures or capital additions or
improvements in excess of $250,000;
(l) instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body relating to the Business or the
Assets other than in the ordinary course of business consistent with past
practices but not in any case involving amounts in excess of $250,000;
(m) entered into any transaction, contract or commitment other than
in the ordinary course of business or paid or agreed to pay any legal,
accounting, brokerage, finder's fee, Taxes or other expenses in connection with,
or incurred any severance pay obligations by reason of, this Agreement or the
transactions contemplated hereby; or
(n) except with respect to performing its obligations under this
Agreement, taken any action or omitted to take any action that would result in
the occurrence of any of the foregoing.
3.1.8. Litigation. Except for items set forth on Schedule 3.1.8, with
respect to which Transferor has Adequate Reserves, there is no action, claim,
demand, suit, proceeding, arbitration, grievance, citation, summons, subpoena,
inquiry or investigation of any nature, civil, criminal, regulatory or
otherwise, in law or in equity, pending or threatened against or relating to
Transferor in connection with the Assets or the Business or against or relating
to the transactions contemplated by this Agreement, and Transferor knows of no
basis for any of the foregoing. Except for items set forth in such Schedule
3.1.8, with respect to which Transferor has Adequate Reserves, since December
31, 1997, no material citations, fines or penalties have been asserted against
Transferor with respect to the Division under any Environmental Law or any
foreign, federal, state or local law relating to occupational health or safety.
3.1.9. Compliance with Laws; Governmental Approvals and Consents;
Governmental Contracts. (a) Except for items disclosed in Schedule 3.1.9(a),
with respect to which Transferor has Adequate Reserves, since the Balance Sheet
Date, Transferor has complied in all material respects with all Applicable Laws
applicable to the Business or the Assets, and Transferor has not received any
notice alleging any such conflict, violation, breach or default.
(b) Except for items set forth in Schedule 3.1.9(b), with respect to
which Transferor has Adequate Reserves, all Governmental Approvals and Consents
necessary for or otherwise material to the conduct of the Business have been
duly obtained and are in full force and effect, and Transferor is in material
compliance with each of such Governmental Approvals and Consents held by it with
respect to the Assets and the Business.
(c) To the Knowledge of Transferor, there are no proposed laws,
rules, regulations, ordinances, orders, judgments, decrees, governmental
takings, condemnations or other proceedings which would be applicable to the
business, operations or properties of the Division and which might adversely
affect the properties, assets, liabilities, operations or prospects of the
Division, either before or after the Closing Date.
3.1.10. Operation of the Business. Except as set forth in Schedule
3.1.10, (a) Transferor has conducted the Business only through the Division and
not through any other divisions or any direct or indirect Subsidiary or
Affiliate of Transferor and (b) no part of the Business is operated by
Transferor through any entity other than Transferor.
3.1.11. Assets. Except for items disclosed in Schedule 3.1.11, with
respect to which Transferor has Adequate Reserves, Transferor has good title to
all the Assets free and clear of any and all Liens other than Permitted Liens.
The Assets, together with the services and arrangements described in Section
5.2.2, comprise all assets and services required for the continued conduct of
the Business by the Company as now being conducted. The Assets, taken as a
whole, constitute all the properties and assets primarily relating to or used or
held for use in connection with the Business during the past twelve months
(except Inventory sold, cash disposed of, accounts receivable collected, prepaid
expenses realized, Contracts fully performed, properties or assets sold in the
ordinary course of business, employees not hired by the Company, and the
Excluded Assets). Except for Excluded Assets and subject to Section 2.5, there
are no assets or properties used in the operation of the Business and owned by
any Person other than Transferor that will not be leased or licensed to the
Company under valid, current leases or license arrangements. Except as
disclosed on Schedule 3.1.11, the Assets are in all material respects adequate
for the purposes for which such Assets are currently used or are held for use,
and are in reasonably good repair and operating condition (subject to normal
wear and tear) and, to the Knowledge of Transferor, there are no facts or
conditions affecting the Assets which could interfere in any material respect
with the use, occupancy or operation thereof as currently used, occupied or
operated, or their adequacy for such use.
3.1.12. Contracts. (a) Schedule 3.1.12(a) contains a complete and
correct list of all agreements, contracts, commitments and other instruments and
arrangements (whether written or oral) of the types described below (x) by which
any of the Assets are bound or affected or (y) to which Transferor is a party or
by which it is bound in connection with the Business or the Assets (the
"Contracts"):
(i) other than the Leases and Other Leases, each lease and other
contract concerning or relating to the Real Property with respect to which
the amount that could reasonably be expected to be paid or received
thereunder exceeds $100,000 per year;
(ii) employment, consulting, agency, collective bargaining or
other similar contracts, agreements, and other instruments and arrangements
that cannot be terminated in accordance with their terms within six months
of the date hereof relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives, distributors,
dealers, agents, independent contractors or consultants;
(iii) loan agreements, indentures, letters of credit,
mortgages, security agreements, pledge agreements, deeds of trust, bonds,
notes, guarantees, and other agreements and instruments relating to the
borrowing of money or obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting the use of, any
Intellectual Property;
(v) brokerage or finders' agreements;
(vi) joint venture, partnership and similar contracts involving a
sharing of profits or expenses (including joint research and development
and joint marketing contracts);
(vii) asset purchase agreements and other acquisition or
divestiture agreements, including any agreements relating to the sale,
lease or disposal of any Assets (other than sales of inventory or other
properties or assets in the ordinary course of business) or involving
continuing indemnity or other obligations, entered into since January 1,
1992;
(viii) other than purchase orders or contracts for capital
projects already approved by Transferor's Board of Directors, contracts
with respect to which the aggregate amount that could reasonably be
expected to be paid or received thereunder in the future exceeds $250,000
per annum;
(ix) contracts, agreements or arrangements with respect to the
representation of the Business in foreign countries, other than Canada and
Mexico;
(x) master lease agreements providing for the leasing of both
(A) personal property primarily used in, or held for use primarily in
connection with, the Business and (B) other personal property, pursuant to
which, in either case, the amount that could reasonably be expected to be
paid or received thereunder exceeds $100,000 per year or $1,500,000 in the
aggregate;
(xi) contracts, agreements or commitments with any employee,
director, officer, stockholder or Affiliate of Transferor; and
(xii) any other contracts, agreements or commitments that are
material to the Business pursuant to which the amount that could reasonably
be expected to be paid or received thereunder exceeds $100,000 per year or
$1,500,000 in the aggregate.
(b) Transferor has delivered to the Company complete and correct
copies of all written Contracts, together with all amendments thereto, and
accurate descriptions of all material terms of all oral Contracts, set forth or
required to be set forth in Schedule 3.1.12(a).
(c) All Contracts are in full force and effect and enforceable
against each party thereto. There does not exist under any Contract any event
of default or event or condition that, after notice or lapse of time or both,
would constitute a violation, breach or event of default thereunder on the part
of Transferor or, to the Knowledge of Transferor, any other party thereto except
for items set forth in Schedule 3.1.12(c), with respect to which Transferor has
Adequate Reserves, and except for such events or conditions that, individually
and in the aggregate, (i) has not had or resulted in, and will not have or
result in, a Material Adverse Effect and (ii) has not and will not materially
impair the ability of Transferor to perform its obligations under this Agreement
and under the Collateral Agreements. Except as set forth in Schedule 3.1.12(c),
no consent of any third party is required under any Contract as a result of or
in connection with, and the enforceability of any Contract will not be affected
in any manner by, the execution, delivery and performance of this Agreement or
any of the Collateral Agreements or the consummation of the transactions
contemplated hereby or thereby.
(d) Transferor has outstanding no power of attorney relating to the
Business.
3.1.13. Territorial Restrictions. Except as set forth on Schedule 3.1.13,
Transferor is not restricted by any written agreement or understanding with any
other Person from carrying on the Business anywhere in the world. Except as set
forth on Schedule 3.1.13, the Company, solely as a result of its purchase of the
Business from Transferor pursuant hereto and the assumption of the Assumed
Liabilities, will not thereby become restricted in carrying on any business
anywhere in the world.
3.1.14. Product Warranties. Except for items set forth in Schedule
3.1.14, with respect to which Transferor has Adequate Reserves, and for
warranties under Applicable Law, there are no pending or threatened claims with
respect to any warranty, express or implied, written or oral, with respect to
the products or services of the Business in excess of $100,000 per claim, and
Transferor has no liability with respect to any such warranty, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due.
3.1.15. Absence of Certain Business Practices. To the Knowledge of
Transferor, none of Transferor, any officer, employee or agent of Transferor, or
any other Person acting on their behalf, has, directly or indirectly, within the
past five years given or agreed to give any gift or similar benefit to any
customer, supplier, governmental employee or other person who was or may be in a
position to help or hinder the Business (or assist Transferor in connection with
any actual or proposed transaction relating to the Business) (i) which subjected
or might have subjected Transferor to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which if not given in
the past, might have had a Material Adverse Effect, (iii) which if not continued
in the future, might have a Material Adverse Effect or subject Transferor to
suit or penalty in any private or governmental litigation or proceeding, (iv)
for any of the purposes described in Section 162(c) of the Code or (v) for the
purpose of establishing or maintaining any concealed fund or concealed bank
account.
3.1.16. Intellectual Property. (a) Title. Schedule 3.1.16(a) contains a
complete and correct list of all Intellectual Property that is owned by
Transferor and primarily related to, used in, held for use in connection with,
or necessary for the conduct of, or otherwise material to the Business (the
"Owned Intellectual Property"). Except as set forth on Schedule 3.1.16(a),
Transferor owns or has the right to use pursuant to license, sublicense,
agreement or permission all Intellectual Property Assets, free from any Liens
(other than Permitted Liens) and free from any requirement of any past, present
or future royalty payments, license fees, charges or other payments, in any case
in excess of $100,000, or conditions or restrictions whatsoever. The
Intellectual Property Assets comprise all of the Intellectual Property necessary
for the Company to conduct and operate the Business as now being conducted by
Transferor.
(b) Transfer. Immediately after the Closing, the Company will own
all of the Owned Intellectual Property and will have a right to use all other
Intellectual Property Assets, free from any Liens (other than Permitted Liens)
and on the same terms and conditions as in effect prior to the Closing.
(c) No Infringement. The conduct of the Business does not infringe
or otherwise conflict with any rights of any Person in respect of any
Intellectual Property. To the Knowledge of Transferor, none of the Intellectual
Property Assets is being infringed or otherwise used or available for use, by
any other Person.
(d) No Intellectual Property Litigation. Except for items set forth
on Schedule 3.1.16(d), with respect to which Transferor has Adequate Reserves,
no claim or demand of any Person has been made nor is there any proceeding that
is pending, or to the Knowledge of Transferor, threatened, nor is there a
reasonable basis therefor, that (i) challenges the rights of Transferor in
respect of any Intellectual Property Assets, (ii) asserts that Transferor is
infringing or otherwise in conflict with, or is, except for items set forth in
Schedule 3.1.16(d), with respect to which Transferor has Adequate Reserves,
required to pay any royalty, license fee, charge or other amount, in any case in
excess of $100,000, with regard to, any Intellectual Property, or (iii) claims
that any default exists under any agreement or arrangement concerning any
Intellectual Property Assets. None of the Intellectual Property Assets is
subject to any outstanding order, ruling, decree, judgment or stipulation by or
with any court, arbitrator, or administrative agency, or has been the subject of
any litigation within the last five years, whether or not resolved in favor of
Transferor.
(e) Use of Name and Xxxx. Except as set forth in Schedule 3.1.16(e),
there are, and immediately after the Closing will be, no contractual restriction
or limitations pursuant to any orders, decisions, injunctions, judgments, awards
or decrees of any Governmental Authority on the Company's right to use the name
and marks set forth on Schedule 3.1.16(e) in the conduct of the Business as
presently carried on by Transferor.
3.1.17. Insurance. Schedule 3.1.17 contains a complete description of all
insurance policies maintained by Transferor for the benefit of or in connection
with the Assets or the Business. Transferor has made available to the Company
complete and correct copies of all such policies together with all riders and
amendments thereto. Such policies are in full force and effect, and all
premiums due thereon have been paid. Transferor has complied in all material
respects with the terms and provisions of such policies. The insurance coverage
provided by such policies is adequate and customary for the Business. Schedule
3.1.17 sets out all claims, other than worker's compensation claims, made by
Transferor under any policy of insurance during the past two years with respect
to the Business.
3.1.18. Real Property. (a) Owned Real Property. Schedule 3.1.18(a)
contains a complete and correct list of all Owned Real Property setting forth
the address and owner of each parcel of Owned Real Property and describing all
improvements thereon including the properties reflected as being so owned on the
Financial Statements. Transferor has, or on the Closing Date will have, good,
valid and marketable fee simple title to the Owned Real Property indicated on
Schedule 3.1.18(a) as being owned by it, free and clear of all Liens other than
Permitted Liens. There are no outstanding options or rights of first refusal to
purchase the Owned Real Property, or any portion thereof or interest therein.
(b) Leases. Schedule 3.1.18(b) contains a complete and correct list
of (i) all Leases setting forth the address, landlord and tenant for each Lease
and (ii) all Other Leases, setting forth the address, landlord and tenant for
each Other Lease, in either case, with respect to which the amount that could
reasonably be expected to be paid or received thereunder exceeds $100,000 per
year. Transferor has made available to the Company correct and complete copies
of the Leases and the Other Leases. Each Lease and Other Lease is legal, valid,
binding, enforceable, and in full force and effect, except as may be limited by
bankruptcy, insolvency, reorganization and similar Applicable Laws affecting
creditors generally and by the availability of equitable remedies. Neither
Transferor nor any other party is in default, violation or breach in any respect
under any Lease or Other Lease, and no event has occurred and is continuing that
constitutes or, with notice or the passage of time or both, would constitute a
default, violation or breach in any respect under any Lease or Other Lease,
which default, violation or breach has had or could reasonably be expected to
have a Material Adverse Effect on the Business or the Company or cause any Lease
or Other Lease to be terminated. Each Lease grants the tenant under the Lease
the exclusive right to use and occupy the demised premises thereunder.
Transferor has good and valid title to the leasehold estate under each Lease
free and clear of all Liens other than Permitted Liens. Transferor enjoys
peaceful and undisturbed possession under its respective Leases for the Leased
Real Property.
(c) Fee and Leasehold Interests, etc. The Real Property constitutes
all the fee and leasehold interests in real property held for use in connection
with, necessary for the conduct of, or otherwise material to, the Business.
(d) No Proceedings. There are no eminent domain or other similar
proceedings pending or, to the Knowledge of Transferor, threatened affecting
any portion of the Real Property. There is no writ, injunction, decree, order
or judgment outstanding, nor any action, claim, suit or proceeding, pending or,
to the Knowledge of Transferor, threatened, relating to the ownership, lease,
use, occupancy or operation by any Person of any Real Property.
(e) Current Use. Transferor has received no written notice that the
use and operation of the Real Property in the conduct of the Business violates
in any material respect any instrument of record or agreement affecting the Real
Property. Transferor has received no written notice that there is any violation
of any covenant, condition, restriction, easement or order of any Governmental
Authority having jurisdiction over such property or of any other Person entitled
to enforce the same affecting the Real Property or the use or occupancy
thereof. No damage or destruction has occurred with respect to any of the
Real Property since December 31, 1997 that would, individually or in the
aggregate, have a Material Adverse Effect.
(f) Compliance with Real Property Laws. Transferor has received no
written notice that the Real Property is not in full compliance with all
applicable building, zoning, subdivision and other land use and similar
Applicable Laws affecting the Real Property (collectively, the "Real Property
Laws"). To the Knowledge of Transferor, there is no pending or anticipated
change in any Real Property Law that will have or result in a Material Adverse
Effect upon the ownership, alteration, use, occupancy or operation of the Real
Property or any portion thereof. No current use by Transferor of the Real
Property is dependent on a nonconforming use or other Governmental Approval the
absence of which would materially limit the use of such properties or Assets
held for use in connection with, necessary for the conduct of, or otherwise
material to, the Business.
(g) Subdivision. To Transferor's Knowledge, no approvals are
necessary to subdivide the Owned Real Property from any Real Property included
in the Excluded Assets.
3.1.19. Environmental Matters. (a) Permits. Except for items set forth
on Schedule 3.1.19(b), with respect to which Transferor has Adequate Reserves,
Transferor currently holds, and at all times has held, all such Environmental
Permits necessary to the operation of the Business or the ownership, occupancy
or use of the Real Property or the Assets, and all such Environmental Permits
shall be validly transferred to the Company on the Closing Date. All such
Environmental Permits are in full force and effect. To Transferor's Knowledge,
Transferor has not been notified by any relevant Governmental Authority that any
Environmental Permit will be modified, suspended, canceled or revoked, or cannot
be renewed in the ordinary course of business.
(b) No Violations. Except for items set forth on Schedule 3.1.19(b),
with respect to which Transferor has Adequate Reserves, each of Transferor and
its Affiliates have complied and is in compliance in all material respects with
all Environmental Permits and all applicable Environmental Laws pertaining to
the Real Property (and the ownership, occupancy, use or transferability
thereof), the Business or the Assets. Except for items set forth on Schedule
3.1.19(b), with respect to which Transferor has Adequate Reserves, no Person has
alleged any violation by Transferor and its Affiliates of any Environmental
Permits or any applicable Environmental Law relating to the conduct of the
Business or the use, ownership or transferability of the Real Property or the
Assets.
(c) No Actions. Except for items set forth in Schedule 3.1.19(c),
with respect to which Transferor has Adequate Reserves, none of Transferor or
any of its Affiliates has caused or taken any action that has resulted or may
result in, or has been or is subject to, any liability or obligation relating to
(i) the environmental conditions on, under, about or emanating from any Real
Property, the Assets or other properties or assets owned, operated, leased or
used by Transferor held for use in connection with, necessary for the conduct
of, or otherwise material to, the Business, or (ii) the past or present use,
management, handling, transport, treatment, generation, storage, disposal or
Release of any Hazardous Substances, except for any such liabilities and
obligations that, individually and in the aggregate, are not material to the
Business and have not had or resulted in, and will not have or result in, a
Material Adverse Effect.
(d) Other. Except for items set forth in Schedule 3.1.19(d), with
respect to which Transferor has Adequate Reserves:
(i) None of current or past operations, or any by-product
thereof, and none of the currently or formerly owned property or assets of
Transferor used in the Business, including the Assets and the Real
Property, is related to or subject to any investigation or evaluation by
any Governmental Authority, as to whether any Remedial Action is needed to
respond to a Release or threatened Release of any Hazardous Substances.
(ii) Transferor is not subject to any outstanding order,
judgment, injunction, decree or writ from, or contractual or other
obligation to or with, any Governmental Authority or other Person in
respect of which the Company may be required to incur any Environmental
Liabilities and Costs arising from the Release or threatened Release of a
Hazardous Substances.
(iii) None of the Real Property is, and none of Transferor or
any of its Affiliates has transported or arranged for transportation
(directly or indirectly) of any Hazardous Substances relating to the Assets
or the Real Property to any location that is, listed or proposed for
listing under CERCLA, or on any similar state list, or the subject of
federal, state or local enforcement actions or investigations or Remedial
Action.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Assets pursuant to or to comply with
any Environmental Law, nor has Transferor or any of its Affiliates received
any notice of any such requirement, except for such work, repair,
construction or capital expenditure as is not material to the Business and
is in the ordinary course of business.
(e) Full Disclosure. Transferor has disclosed and made available to
the Company all information, including all studies, analyses and test results,
in the possession, custody or control of Transferor and its Affiliates relating
to (i) the environmental conditions on, under, about or emanating from the Real
Property, and (ii) Hazardous Substances used, managed, handled, transported,
treated, generated, stored, disposed of or Released by Transferor or any other
Person at any time on any Real Property, or otherwise in connection with the
operation of the Business or the ownership, operation, occupancy or use of the
Real Property, the Assets or other assets, equipment or facilities used in or
held for use in connection with the Business.
3.1.20. Employees, Labor Matters, etc. Except as set forth in Schedule
3.1.20, Transferor is not a party to or bound by any collective bargaining
agreement and there are no labor unions or other organizations representing,
purporting to represent or, to Transferor's Knowledge, attempting to represent
any employees employed in the operation of the Business. Since December 31,
1997, there has not occurred or, to Transferor's Knowledge, been threatened any
material strike, slowdown, picketing, work stoppage, concerted refusal to work
overtime or other similar labor activity with respect to any employees employed
in the operation of the Business. Except for items set forth on Schedule
3.1.20, with respect to which Transferor has Adequate Reserves, there are no
labor disputes currently subject to any grievance procedure, arbitration or
litigation and there is no representation petition pending or, to the Knowledge
of Transferor, threatened with respect to any employees employed in the
operation of the Business. Transferor has complied with all provisions of
Applicable Law pertaining to the employment of employees, including all such
Laws relating to labor relations, equal employment, fair employment practices,
entitlements, prohibited discrimination or other similar employment practices or
acts, except for any failure so to comply that, individually or together with
all such other failures has not had or resulted in, and will not have or result
in, a Material Adverse Effect. Except for items set forth on Schedule 3.1.20,
with respect to which Transferor has Adequate Reserves, Transferor is not party
to any agreement with any employee employed in the Business that contains change
of control and/or severance provisions that would become operative by virtue of
the consummation of the transaction that is the subject of this Agreement.
3.1.21. Employee Benefit Plans and Related Matters. (a) Employee Benefit
Plans. Schedule 3.1.21(a) sets forth a true and complete list of each "employee
benefit plan," as such term is defined in section 3(3) of the ERISA, whether or
not subject to ERISA, and each bonus, incentive or deferred compensation,
severance, termination or other separation benefits, retention, change of
control, stock option, stock appreciation, stock purchase, phantom stock or
other equity-based, fringe benefits or payroll practices, performance or other
employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee employed or formerly employed in the operation of the Business or the
beneficiaries or dependents of any such employee or former employee (such
employees, former employees, beneficiaries and dependents collectively, the
"Employees") or under which any Employee is or may become eligible to
participate or derive a benefit and that is or has been maintained, contributed
to, or required to contribute to, or established, by Transferor or any of its
Affiliates or any other trade or business, whether or not incorporated, which,
together with Transferor is or would have been at any date of determination
occurring within the preceding six years treated as a single employer under
Section 414 of the Code or within the meaning of section 4001 of ERISA (such
other trades and business collectively, the "Related Persons"), or to which
Transferor or any Related Person contributes or is or has been obligated or
required to contribute or with respect to which Transferor or the Business may
have any liability or obligation (collectively, the "Plans"). With respect to
each such Plan (other than a "multiemployer plan" within the meaning of Section
4001(a)(3) of ERISA (a "Multiemployer Plan")), Transferor has provided the
Company and Genlyte complete and correct copies, if applicable, of: the document
embodying or establishing each written Plan (including all amendments thereto);
a description of each unwritten Plan; all trust agreements, insurance contracts
or other funding arrangements; the two most recent actuarial and trust reports;
the two most recent Forms 5500 and all schedules thereto; the most recent IRS
determination letter; the current summary plan description; the two most recent
summary annual reports, all summaries of material modifications; all material
communications received from or sent to the IRS, including a request for a
compliance certificate under the IRS Voluntary Compliance Program (or similar
program), or an application under the IRS Closing Agreement Programs with
respect to any of the Plans, the Pension Benefit Guaranty Corporation or the
Department of Labor (including a written description of any oral communication);
an actuarial study of any post-employment life or medical benefits provided
under any such Plan; and all amendments and modifications to any such document.
With respect to each Multiemployer Plan, Transferor has provided the Company and
Genlyte a complete and correct copy of statements or other communications
regarding withdrawal or other multiemployer plan liabilities, and the most
recent available estimate from the Multiemployer Plan of the withdrawal
liability of the Transferor or Related Persons if the Transferor or Related
Persons were to have a complete withdrawal. Except as specifically set forth in
Schedule 3.1.21(a), Transferor has not communicated to any Employee any
intention or commitment to modify any Plan or to establish or implement any
other employee or retiree benefit or compensation arrangement.
(b) Qualification. Each of the Plans (other than a Multiemployer
Plan) that is intended to meet the requirements of Section 401(a) and, where
applicable, Section 401(k) of the Code, now meets, and since its inception has
met, the requirements for qualification under Section 401(a), and, where
applicable, Section 401(k) of the Code and its related trust is now, and since
its inception has been, exempt from taxation under Section 501(a) of the Code
and nothing has occurred that would adversely affect the qualified status of any
such Plan. Each such Plan and the trust forming a part thereof, has received a
favorable determination letter from the IRS pursuant to Revenue Procedure 93-39
and its progeny as to its qualification under the Code, and to the effect that
each such trust is exempt from taxation under section 501(a) of the Code, and,
to the Knowledge of the Transferor, nothing has occurred since the date of such
determination letter that could adversely affect such qualification or tax-
exempt status.
(c) Compliance; Liability.
(i) With respect to each Plan (other than a Multiemployer Plan)
that is subject to section 412 of the Code or section 302 or Title IV of
ERISA, (A) no "accumulated funding deficiency" (within the meaning of
Section 302 of ERISA and Section 412 of the Code) has been or could be
expected to be incurred, whether or not waived, and no excise or other
taxes have been or could be expected to be incurred or are due and owing
with respect to the Plan because of any failure to comply with the minimum
funding standards of ERISA and the Code, (B) no proceeding has been or is
expected to be initiated to terminate such Plan, and (C) no security under
Section 401(a)(29) of the Code has been or could be expected to be
required.
(ii) No liability has been or is expected to be incurred by
Transferor, any Related Person or the Business (either directly or
indirectly, including as a result of an indemnification obligation) under
or pursuant to ERISA or otherwise or the penalty, excise tax or joint and
several liability provisions of the Code relating to employee benefit plans
that could, following the Closing, become or remain a liability of the
Business or become a liability of the Company or of any employee benefit
plan established or contributed to by the Company and, to the Knowledge of
each of Transferor, no event, transaction or condition has occurred or
exists that could result in any such liability to the Business or,
following the Closing, the Company.
(iii) Each of the Plans has been operated and administered in
all respects in compliance with all Applicable Laws and the provisions of
each Plan, except for any failure so to comply that, individually or
together with all other such failures, has not and will not result in a
material liability or obligation on the part of the Business, or, following
the Closing, the Company, and has not had or resulted in, and will not have
or result in, a Material Adverse Effect. There are no material pending or,
to the Knowledge of Transferor, threatened claims, lawsuits, arbitrations
or other action by or on behalf of any of the Plans, by any Employee or
otherwise involving any such Plan or the assets of any Plan (other than
routine claims for benefits).
No Plan is or is expected to be under audit or investigation by the IRS, DOL, or
any other Governmental Authority and no such completed audit, if any, has
resulted in the imposition of any tax or penalty. No "reportable event" within
the meaning of Section 4043(b) of ERISA has occurred with respect to any Plan.
Notwithstanding the foregoing, the representations set forth in this subsection
(c) with respect to any Multiemployer Plan shall be made to Transferor's
Knowledge.
(iv) No Plan is a "multiple employer plan" within the meaning of
section 4063 or 4064 of ERISA, and there has never been any "multiple
employer plan" covering any Employees. With respect to each Plan which is
a Multiemployer Plan:
(a) with respect to events prior to the Closing, none of the
Transferor, any Related Person, or their predecessors has incurred or
has any reason to believe it has incurred or will incur any withdrawal
liability; no event has occurred which with the giving of notice would
result in any liability under Section 4201 of ERISA as a result of a
complete withdrawal (within the meaning of Section 4203 of ERISA) or a
partial withdrawal (within the meaning of Section 4205 of ERISA); none
of the Transferor, any Related Person, or their predecessors has
received any notice of any claim or demand for complete or partial
withdrawal liability;
(b) none of the Transferor, any Related Person, or their
predecessors has received any notice or has any reason to believe that
such Multiemployer Plan is in "reorganization" (within the meaning of
Section 4241 of ERISA), that increased contributions may be required
to avoid a reduction in plan benefits or the imposition of an excise
tax, or that the Multiemployer Plan is or may become "insolvent"
(within the meaning of Section 4241 of ERISA);
(c) no Multiemployer Plan is a party to any pending merger or
asset or liability transfer under Part 2 of Subtitle E of Title IV of
ERISA; and
(d) the PBGC has not instituted proceedings against the
Multiemployer Plan.
(v) All contributions required to have been made by Transferor
and each Related Person to any Plan under the terms of any such Plan or
pursuant to any applicable collective bargaining agreement or Applicable
Law have been made within the time period prescribed by any such Plan,
agreement or Applicable Law.
(vi) No Employee is or may become entitled to post-employment
benefits of any kind by reason of employment in the Business, including
death or survivor benefits, medical or health benefits (whether or not
insured), other than (a) coverage provided pursuant to the terms of any
Plan specifically identified as providing such coverage in Schedule
3.1.21(c)(vi) or mandated by section 4980B of the Code, (b) retirement
benefits payable under any Plan qualified under section 401(a) of the Code
or (c) deferred compensation accrued as a liability on the Balance Sheet or
incurred after December 31, 1997 in the ordinary course of business
consistent with the prior practice of Transferor, pursuant to the terms of
a Plan. The consummation of the transactions contemplated by this
Agreement or the Collateral Agreements will not (either alone or upon the
occurrence of any additional subsequent events) result in an increase in
the amount of compensation or benefits (whether of severance pay or
otherwise) or the acceleration of the vesting or timing of payment of any
compensation or benefits payable to or in respect of any Employee. No
amounts payable under any Plan will fail to be deductible for federal
income tax purposes by virtue of Sections 280G or 162(m) of the Code.
(vii) No Employee has accrued any additional benefits under
the Floor Plan since July 1, 1995 (including earning any additional service
towards a subsidized "early" retirement benefit).
(viii) Transferor does not maintain any Plan that is funded by
a trust described in Section 501(c)(9) of the Code or subject to the
provisions of Section 505 of the Code. Transferor has complied with the
requirements of Section 4980B of the Code regarding the continuation of
health care coverage under any Plan and the provisions of the Health
Insurance Portability and Accountability Act of 1996 ("HIPAA").
(ix) No event, condition, or circumstance exists that could
result in a material increase of the benefits provided under any Plan or
the expense of maintaining any Plan from the level of benefits or expense
incurred for the most recent fiscal year ended before the Closing. Except
as set forth on Schedule 3.1.21(c)(ix), no event, condition, or
circumstance exists that would prevent the amendment or termination of any
Plan.
3.1.22. Confidentiality. Except as set forth on Schedule 3.1.22,
Transferor has taken all steps reasonably necessary to preserve the confidential
nature of all material confidential information (including any proprietary
information) with respect to the Business, including the manufacturing or
marketing of any of the Division products or services.
3.1.23. No Guarantees. None of the obligations or liabilities of the
Business or of Transferor incurred in connection with the operation of the
Business is guaranteed by or subject to a similar contingent obligation of any
other Person other than Transferor. Other than guarantees by Xxxxxx of the
obligations of its Affiliates, Transferor has not guaranteed or become subject
to a similar contingent obligation in respect of the obligations or liabilities
of any other Person related to the Business. There are no outstanding letters
of credit, surety bonds or similar instruments of Transferor or any of its
Affiliates in connection with the Business or the Assets.
3.1.24. Records. The minute books of Transferor insofar as they relate to
or affect the Business and the Assets are substantially complete and correct in
all material respects. The books of account of Transferor, insofar as they
relate to or affect the Business and the Assets, are sufficient to prepare the
Financial Statements in accordance with GAAP.
3.1.25. Brokers, Finders, etc. All negotiations relating to this
Agreement, the Collateral Agreements, and the transactions contemplated thereby,
have been carried on without the participation of any Person acting on behalf of
Transferor or its Affiliates in such manner as to give rise to any valid claim
against the Company or any of its subsidiaries for any brokerage or finder's
commission, fee or similar compensation, or for any bonus payable to any
officer, director, employee, agent or sales representative of or consultant to
Transferor or its Affiliates upon consummation of the transactions contemplated
hereby or thereby.
3.1.26. Disclosure. No representation or warranty by Transferor contained
in this Agreement nor any statement or certificate furnished or to be furnished
by or on behalf of Transferor to the Company or its representatives in
connection herewith or pursuant hereto or set forth in any reports filed with
the Securities and Exchange Commission pursuant to the Securities Exchange Act
of 1934 contains or will contain any untrue statement of a material fact, or
omits or will omit to state any material fact required to make the statements
contained herein or therein not misleading. There is no fact (other than
matters of a general economic or political nature which do not affect the
Business uniquely) known to Transferor that has not been disclosed by Transferor
to the Company that might reasonably be expected to have or result in a Material
Adverse Effect.
3.1.27. Receivables. All of Transferor's receivables (including accounts
receivable, loans receivable and advances) which have arisen in connection with
the Business and which are reflected in the Financial Statements, and all such
receivables which will have arisen since the Balance Sheet Date, shall have
arisen only from bona fide transactions in the ordinary course of business.
Unless paid prior to the Closing Date, such receivables are or will be as of the
Closing Date current and collectible net of the respective reserves shown on the
Balance Sheet or on the accounting records of Transferor as of the Closing Date
(which reserves are adequate and calculated consistent with past practices and,
in the case of the reserve as of the Closing Date, will not represent a greater
percentage of such receivables as of the Closing Date than the reserve reflected
in the Balance Sheet represented of such receivables reflected therein and will
not represent a material adverse change in the composition of such receivables
in terms of aging).
3.1.28. Relationships With Related Entities. No Related Entity of
Transferor has, or since December 31, 1997 has had, any interest in property
(whether real, personal or mixed and whether tangible or intangible), used in or
pertaining to the Business. Neither Transferor nor any Related Entity of
Transferor is or since December 31, 1997 has owned (of record or as a beneficial
owner) an equity interest in or in any of the financial or profit interest in, a
Person that has (i) had business dealings or a material financial interest in
any transaction with Transferor relating to the Business, or (ii) engaged in
competition with Transferor with respect to any line of products or services of
Transferor relating to the Business in any market presently served by
Transferor. Neither Transferor nor any Related Entity of Transferor is a party
to any Contract with, or has any claim or right against, Transferor.
3.1.29. Year 2000 Compliance. (a) Transferor represents and warrants
that, (i) it is in the process of conducting a comprehensive review of its
Systems to identify those Systems that may be unable to process data accurately
beyond the year 1999; and (ii) a plan has been implemented whereby identified
Systems will either be replaced or modified over the next eighteen months and
that the execution of this plan will not cause significant disruptions in the
Business's operations or have a Material Adverse Effect.
3.1.30. Information Supplied for Joint Proxy Statement. None of the
information supplied or to be supplied by Transferor for inclusion or
incorporation by reference in the Joint Proxy Statement to be filed with the
Securities and Exchange Commission by Transferor and Genlyte in connection with
the stockholder meetings of Transferor and Genlyte to be held in connection with
the Master Transaction Agreement and the transactions contemplated hereby will,
at the date mailed to stockholders, or at the time of such meetings, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. The
Joint Proxy Statement will, as of its mailing date, comply as to form in all
material respects with Applicable Law, including the Securities Exchange Act of
1934, as amended and the rules and regulations promulgated thereunder, except
that no representation is made by Transferor with respect to information
supplied by Genlyte or the stockholders of Genlyte for inclusion therein.
3.1.31 Opinion of Financial Advisor. The financial advisor of
Transferor, Xxxxxxx Xxxxx Barney, has rendered an opinion to the Board of
Directors of Transferor to the effect that, as of the date thereof, the
Membership Interest to be received by Transferor pursuant to this Agreement is
fair from a financial point of view to Transferor; it being understood and
acknowledged by the Company that such opinion has been rendered for the benefit
of the Board of Directors of Transferor and is not intended to, and may not, be
relied upon by the Company or its Affiliates.
ARTICLE IV
COVENANTS
4.1. Covenants of Transferor.
4.1.1. Further Actions. (a) Subject to the terms and conditions of the
Master Transaction Agreement, Transferor agrees to use all reasonable good faith
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated hereby by the Closing Date,
including obtaining the approval of Transferor's stockholders.
(b) Transferor will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by it pursuant to Applicable Law in connection
with this Agreement, the Collateral Agreements, the sale and transfer of the
Assets pursuant to this Agreement and the consummation of the other transactions
contemplated thereby, including filings pursuant to the HSR Act and the WARN
Act, to the extent required by Applicable Law.
(c) Transferor, as promptly as practicable, will use all reasonable
efforts to obtain, or cause to be obtained, all Consents (including all
Governmental Approvals and any Consents required under any Contract) necessary
to be obtained by any of them in order to consummate the contribution and
transfer of the Assets to the Company pursuant to this Agreement and the
consummation of the other transactions contemplated thereby.
4.1.2. Further Assurances. Following the Closing, Transferor shall, and
shall cause each of their Affiliates to, from time to time, execute and deliver
such additional instruments, documents, conveyances or assurances and take such
other actions as shall be necessary, or otherwise reasonably requested by the
Company, to confirm and assure the rights and obligations provided for in this
Agreement, and in the Collateral Agreements and render effective the
consummation of the transactions contemplated hereby and thereby.
4.1.3. Certificates of Tax Authorities. On or before the Closing Date, to
the extent such taxing authorities grant certificates, Transferor shall provide
to the Company copies of certificates from all taxing authorities in which
Transferor files (or should file) Tax Returns stating that no Taxes are due to
any such state or other taxing authority for which the Company could have
liability to withhold or pay Taxes with respect to the transfer of the Assets or
the Business
4.1.4. Use of Business Name. After the Closing, Transferor will not,
directly or indirectly, use or do business, or allow any Affiliate to use or do
business, or assist any third party in using or doing business, under the names
and marks listed on Schedule 4.1.4.
4.1.5. Environmental Compliance. Transferor shall comply in all material
respects with the requirements of all applicable Environmental Laws necessary to
effect the lawful transfer of the Real Property or the Business prior to the
Closing Date.
4.1.6. Assumed Liabilities. Transferor agrees that the Company shall be
permitted to direct the defense and settlement of any litigation that is an
Assumed Liability and shall have sole discretion as to the manner of doing so,
provided that the Company takes all steps reasonably necessary to conduct a
competent and diligent defense or settlement thereof, and provided further that
such litigation does not seek injunctive or other equitable relief involving
Transferor or an adverse result in connection therewith could not reasonably be
expected to have a Material Adverse Effect on Transferor other than with respect
to this Agreement. In addition, to the extent that any litigation is reasonably
expected to exceed the Reserve attributable thereto, the Company shall consult
with Transferor regarding the settlement, disposition and strategy with respect
to such litigation and the Company shall not settle or dispose of such
litigation without Transferor's consent, which consent shall not be unreasonably
withheld.
4.1.7. Audited Financial Statements. Transferor shall make all books and
records available, cooperate with the Company, and pay all of the expenses, and
Transferor shall and shall cause Transferor's Accountants to make available all
work papers, in connection with the preparation of audited financial statements
of the Business as at and for the year ended December 31, 1997, together with an
unqualified report thereon by Transferor's Accountants, including a balance
sheet, statements of income and retained earnings and a statement of cash flows
(the "Audited Financial Statement). At the time that the Audited Financial
Statements are delivered to the Company, Transferor shall by such delivery be
deemed to have made the same representations and warranties to the Company with
respect to such Audited Financial Statements as the representations and
warranties have been made to the Unaudited Financial Statements as set forth in
Section 3.1.4.
4.1.8. Insurance. Transferor agrees that the Company shall have the
right to make claims against any product liability insurance or other insurance
maintained prior to Closing by Transferor for the Business, provided that the
cost of adding the Company as an additional named insured as well as any
deductible or self-insured retentions related to any claim asserted under these
insurance policies with respect to the Business shall be borne by the Company.
4.1.9. Adjusted Tax Basis. On or before the Closing Date, Transferor
shall prepare and deliver to the Company a schedule that accurately and
completely sets forth Transferor's adjusted tax basis in each of the Assets
having a value in excess of $10,000, which shall become the Company's tax basis
in the Assets by operation of Code Section 723, subject to adjustment in
accordance with the provisions of Code Sections 734(b) and 754, as set forth in
the LLC Agreement.
4.1.10. Due Authorization. Within 15 days of the date hereof, Xxxxxx
shall cause each Transferring Affiliate to have duly authorized the execution
and delivery of this Agreement and the Collateral Agreements and the
consummation of the transactions contemplated hereby and thereby by all
requisite corporate action, and shall deliver to the Company evidence of such
authorization satisfactory to the Company in all respects.
4.2. Covenants of the Company.
4.2.1. Further Assurances. Following the Closing, the Company shall, and
shall cause its members to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by Transferor,
to confirm and assure the rights and obligations provided for in this Agreement
and in the Collateral Agreements and render effective the consummation of the
transactions contemplated thereby.
4.2.2. Use of Business Names by the Company. To the extent the name
"Xxxxxx Industries, Inc." is used by the Division or the Business on stationery,
signage, invoices, receipts, forms, packaging, advertising and promotional
materials, products, training and service literature and materials, computer
programs or like materials ("Marked Materials") or appear on Inventory at the
Closing, the Company may use such Marked Materials or sell such Inventory after
the Closing for a period of 12 months without altering or modifying such Marked
Materials or Inventory, or removing such trademarks, service marks, brand names,
or trade, corporate or business names, but the Company shall not thereafter use
such trademarks, service marks, brand names or trade, corporate or business
names in any other manner without the prior written consent of Transferor.
Within 13 months after the Closing Date, the Company shall provide evidence
reasonably satisfactory to Transferor that all Marked Materials have been used
or destroyed. The Company shall defend, indemnify and hold Transferor harmless
from any Loss from the use of the Marked Materials, including any product
liability or other claims arising from products manufactured or sold by the
Company using such Marked Materials unless due to the fault of Transferor.
4.2.3. Liability for Transfer Taxes. The Company shall be responsible for
the timely payment of, and shall indemnify and hold harmless Transferor against,
all sales (including bulk sales), use, value added, documentary, stamp, gross
receipts, registration, transfer, conveyance, excise, recording, license and
other similar Taxes and fees ("Transfer Taxes"), arising out of or in connection
with or attributable to the transactions effected pursuant to this Agreement.
The Company shall prepare and timely file all Tax Returns required to filed in
respect of Transfer Taxes (including all notices required to be given with
respect to bulk sales taxes), provided that Transferor shall be permitted to
prepare any such Tax Returns that are the primary responsibility of Transferor
under applicable law. Transferor's preparation of any such Tax Returns shall be
subject to the Company's approval, which approval shall not be withheld
unreasonably.
4.2.4. Records and Documents. For seven years following the Closing Date,
the Company shall grant Transferor and its representatives, at Transferor's
request, during normal business hours on two day's prior notice, access to and
the right to make copies of Books and Records, possession of which is held by
the Company, as may be necessary or useful in connection with Transferor's
preparation of its accounting records, tax returns, financial statements,
compliance with Applicable Laws related to Employee Benefits, filings with the
Securities and Exchange Commission or other related matters. If during such
period, the Company elects to dispose of such Books and Records, the Company
shall first give Transferor sixty (60) days' written notice during which period
Transferor shall have the right to take such Books and Records.
4.2.5. Removal of Transferor as Guarantor. The Company shall use its best
efforts to, within thirty days of the Closing Date, cause Transferor and its
Affiliates to be removed as guarantors with respect to any obligation or
liability related to the Business or any Asset. During the period prior to
removing Transferor and its Affiliates as guarantors, the Company shall
indemnify Transferor and its Affiliates from any and all Losses related to such
guaranties.
4.2.6. LIFO Method. The Company shall adopt the federal income tax
accounting methodology directed by Transferor for the inventories received by
the Company from Transferor. In the case of inventories to be accounted for on
the last-in-first-out ("LIFO") method, the Company shall take all reasonable
measures to ensure the continued use of the LIFO method and avoid the
liquidation of LIFO reserves. Transferor shall, (i) at its cost, be responsible
for the conduct of any income tax or financial reporting examination of such
LIFO methodology and any related issues and (ii) control the settlement or
litigation and bear any and all costs and expense of the litigation or
settlement of any proposed adjustments to the taxable income of the Company with
respect to such LIFO inventory, including adjustments which are the result of
settlement or litigation.
4.3. Adjustment. (a) Prior to the Closing, the Company will prepare and
deliver to Transferor a balance sheet and income statement of Genlyte and the
Business as of the last day of the most recent fiscal month for which month-end
statements are available (the "Determination Date"), all at the Company's
expense, (the "Determination Date Financial Statements"). The Company will also
prepare and deliver to Transferor a calculation setting forth the Target Net
Working Capital (as defined below) as of the Determination Date (the
"Determination Date Target Net Working Capital") and the Net Working Capital as
of the Determination Date (the "Determination Date Net Working Capital"). After
the Closing, the Company will prepare a balance sheet and income statement (the
"Closing Financial Statements") of Genlyte and the Business as of the Closing
Date, all at the Company's expense. The Company shall deliver the Closing
Financial Statements to Transferor within 60 days after the Closing Date,
together with a statement (the "Adjustment Statement") premised upon such
Closing Financial Statements setting forth the Target Net Working Capital (as
defined below) of the Business as of the Closing Date (the "Closing Date Target
Net Working Capital") and the Net Working Capital as of the Closing Date (the
"Closing Date Net Working Capital").
(b) (i) On the Closing Date, Transferor shall pay to the Company, in
cash, the amount, if any, by which Net Working Capital of the Business is less
than the Determination Date Target Net Working Capital (a "Cash Payment"), and
the Company shall pay to Transferor, at Transferor's option, either (A) pursuant
to a promissory note, bearing interest at a rate equal to the rate paid by the
Company on its short term borrowings, which note may be repaid by the Company at
any time, but shall in any event be paid in full within one year from the date
of issuance (the "NWC Note"), or (B) Transferor shall retain an undivided
percentage interest in the accounts receivable of the Business, equal to, in the
case of either clause (A) or (B), the amount, if any, by which Net Working
Capital of the Business exceeds the Determination Date Target Net Working
Capital (a "Note/Receivable Payment"). In the event Transferor retains such
accounts receivable, the Company shall have the exclusive right to collect such
accounts receivable and the Company shall remit the proceeds thereof to
Transferor within five days after the last day of the month within which such
receivables are collected until such time as the proceeds received by Transferor
equals the amount owed to Transferor under this Section 4.3(b)(i).
(ii) Following the delivery of the Adjustment Statement, the
Company shall pay to Transferor, or Transferor shall pay to the Company, as the
case may be, the amount necessary so that the Closing Date Net Working Capital
of the Business equals the Closing Date Target Net Working Capital, taking into
account any Cash Payment or Note/Receivable Payment made pursuant to Section
4.3(b)(i). Any payments made pursuant to this Section 4.3(b)(ii) required by
Transferor shall be made in cash, within ten Business Days after the delivery of
the Adjustment Statement. Any payments required to be made by the Company
pursuant to this Section 4.3(b)(ii) shall be made, at Transferor's option (x)
pursuant to the terms of a promissory note on the same terms as the NWC Note, or
(y) the Company shall transfer to Transferor that undivided percentage interest
in receivables of the Business equal to the amount owed pursuant to this Section
4.3(b)(ii).
(c) For purposes of this Section 4.3, the term "Target Net Working
Capital" shall mean:
A+B
2
where "A" is equal to the Genlyte Adjusted Net Working Capital multiplied by
32/68. "Genlyte Adjusted Net Working Capital" is equal to the sum of (i)
Genlyte's Net Working Capital, plus (ii) excess reserves classified by Genlyte
as current liabilities; and
"B" is the product of (i) Xxxxxx'x Business reported year-to-date net sales, and
(ii) Genlyte's Net Working Capital divided by Genlyte's reported year-to-date
net sales.
(d) For purposes of this Section 4.3, the term "Net Working Capital" shall
mean current assets less current liabilities (in each case excluding Excluded
Assets and Excluded Liabilities), all as determined in accordance with GAAP,
consistently applied.
(e) Transferor's and the Company's rights to indemnification hereunder
(and any limitations on such rights) shall not be deemed to limit, supercede or
otherwise affect the Company's or Transferor's rights to a full adjustment
pursuant to this Section 4.3.
ARTICLE V
CONDITIONS PRECEDENT
5.1. Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
5.1.1. Master Transaction Agreement. All of the conditions of Xxxxxx and
Genlyte set forth in the Master Transaction Agreement shall have been satisfied,
the LLC Agreement shall be effective and the Genlyte Capitalization Agreement
shall close simultaneously herewith.
5.2. Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated hereby shall be subject to
the fulfillment (or waiver by the Company) on or prior to the Closing Date of
the following additional conditions, which Transferor agrees to use reasonable
good faith efforts to cause to be fulfilled:
5.2.1. Representations, Performance. The representations and warranties
of Transferor contained in this Agreements and in the Collateral Agreements
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) at and as of the date hereof, and (ii) shall be repeated and
shall be true and correct in all respects (in the case of any representation or
warranty containing any materiality qualification) or in all material respects
(in the case of any representation or warranty without any materiality
qualification) on and as of the Closing Date with the same effect as though made
on and as of the Closing Date. Transferor shall have duly performed and
complied in all material respects with all agreements and conditions required by
this Agreement and each of the Collateral Agreements to be performed or complied
with by it prior to or on the Closing Date. Transferor shall have delivered to
the Company a certificate, dated the Closing Date and signed by its duly
authorized officers, to the foregoing effect.
5.2.2. Collateral Agreements. Transferor or one of its Affiliates, as the
case may be, shall have entered into each of the following agreements with the
Company:
(a) a transitional services agreement, in form and substance mutually
agreed upon by the parties (the "Services Agreement");
(b) a license agreement, in form and substance mutually agreed upon
by the parties, pursuant to which Transferor shall provide to the Company a
royalty-free, fully paid-up, perpetual license of the names and marks "Xxxxxx"
and "Xxxxxx Lighting";
(c) the LLC Agreement; and
(d) the Master Transaction Agreement.
5.2.3. Opinion of Counsel. The Company shall have received an opinion,
addressed to it and dated the Closing Date, from XxXxxxxxx, Will & Xxxxx,
counsel to Transferor, in substance and form reasonably satisfactory to the
Company.
5.2.4. Transfer Documents. Transferor shall have delivered to the Company
at the Closing all documents, certificates and agreements necessary to transfer
to the Company good and marketable title to the Assets, free and clear of any
and all Liens thereon, other than Permitted Liens, including:
(a) a xxxx of sale, assignment and general conveyance, in form and
substance reasonably satisfactory to the Company, dated the Closing Date, with
respect to the Assets, (other than any Asset to be transferred pursuant to any
of the instruments referred to in any other clause of this Section 5.2.4);
(b) assignments of all Contracts, Intellectual Property and any other
agreements and instruments constituting Assets, dated the Closing Date,
assigning to the Company all of Transferor's right, title and interest therein
and thereto, with any required Consent endorsed thereon;
(c) a general warranty deed, dated as of the Closing Date, with
respect to each parcel of Owned Real Property in form and substance mutually
agreed upon by the parties, together with any necessary transfer declarations,
or other filings;
(d) an assignment of lease, dated as of the Closing Date, with
respect to each Lease and each Other Lease, in form and substance mutually
agreed upon by the parties, together with any necessary transfer declarations or
other filings;
(e) certificates of title to all motor vehicles included in the
Assets to be transferred to the Company hereunder, duly endorsed for transfer to
the Company as of the Closing Date; and
(f) stock certificates representing the Assets described in Section
1.1(p) together with stock powers executed by Transferor in blank.
5.2.5. Consents and Estoppels. The Company shall have received consents
from the lessor of each Lease listed on Schedule 3.1.18(b) to the assignment of
such Lease to the Company. The Company shall also have received estoppel
certificates addressed to the Company from the lessor of each Lease, dated
within 30 days of the Closing Date, identifying the Lease documents and any
amendments thereto, stating that the Lease is in full force and effect and, to
the best knowledge of the lessor, that the tenant is not in default under the
Lease and no event has occurred that, with notice or lapse of time or both,
would constitute a default by the tenant under the Lease and containing any
other information reasonably requested by the Company.
5.2.6. FIRPTA Certificate. The Company shall have received a certificate
of Transferor, dated the Closing Date and sworn to under penalty of perjury,
setting forth the name, address and federal tax identification number of
Transferor and stating that Transferor is not a "foreign person" within the
meaning of Section 1445 of the Code, such certificate to be in the form set
forth in the Treasury Regulations thereunder.
5.2.7. Environmental Compliance. Transferor shall have complied in all
material respects with the requirements of all applicable Environmental Laws
necessary to effect the lawful transfer of the Real Property or the Business.
5.2.8. Financial Statements. The Company shall have received the Audited
Financial Statements and they shall not be materially different from the
Financial Statements or reflect a Material Adverse Effect as compared to the
Financial Statements.
5.2.9. Adjusted Tax Basis. Transferor shall have delivered to the Company
the schedule referred to in Section 4.1.9 in form and substance reasonably
satisfactory to the Company.
5.3. Conditions to Obligations of Transferor. The obligation of
Transferor to consummate the transactions contemplated hereby shall be subject
to the fulfillment (or waiver by Transferor), on or prior to the Closing Date,
of the following additional conditions, which the Company agrees to use
reasonable good faith efforts to cause to be fulfilled.
5.3.1. Representations, Performance, etc. The Company shall have duly
performed and complied in all material respects with all agreements and
conditions required by this Agreement and the Collateral Agreements to be
performed or complied with by it prior to or on the Closing Date. The Company
shall have delivered to Transferor a certificate, dated the Closing Date and
signed by its duly authorized officer, to the foregoing effect.
5.3.2. Assumption Agreement. Transferor shall have received from the
Company the Assumption Agreement.
5.3.3. Collateral Agreements. The Company shall have entered into each of
the Collateral Agreements to which it is a party.
5.3.4. Environmental Compliance. Transferor shall have complied in all
material respects with the requirements of all applicable Environmental Laws
necessary to effect the lawful transfer of the Real Property or the Business.
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
6.1 Employment of Transferor's Employees.
(a) Transferor will, and will cause each of its Affiliates to, use
all commercial efforts to cause the employees employed by Transferor in the
Business to make available their employment services to the Company. For a
period of two years from the Closing Date, Transferor will not, and will not
permit any of its Affiliates to, solicit, offer to employ, hire or retain the
services of or otherwise interfere with the relationship of the Company with any
person employed by or otherwise engaged to perform services for the Company in
connection with the operation of the Business.
(b) Effective as of the Closing Date, the Company shall offer
employment to all employees who are actively employed by Transferor principally
in the operation of the Business ("Business Employees"). Those Business
Employees who accept such offers of employment effective as of the Closing Date
shall be referred to herein as the "Transferred Employees". The Company shall
provide any Transferred Employee who is terminated by the Company within 180
days after the Closing Date with severance pay equal to the severance pay that
such Transferred Employee would have received under the severance plans of
Transferor listed on Schedule 3.1.21(a) if such person's employment with
Transferor were terminated as of the Closing Date. Except as provided under the
immediately preceding sentence, Transferor shall remain responsible, and the
Company shall not assume any liability, for payment of any and all severance,
termination pay, retention, change in control or other similar compensation or
benefits which are or may become payable in connection with the consummation of
the transactions contemplated by this Agreement or the Collateral Agreements.
(c) As of, and subject to, the Closing, the Company shall assume all
Benefit Liabilities of Transferor to the extent such Benefit Liabilities relate
to a Plan (as defined in Section 3.1.21) and any other non-material Benefit
Liability with respect to the Transferred Employees, except to the extent
expressly provided in this Article VI . From and after the Closing Date,
Transferor shall remain solely responsible for any and all Benefit Liabilities
which are not assumed by the Company pursuant to this Article VI.
6.2. Salaried Pension Plan.
As of the date hereof, Transferor maintains the Xxxxxx Industries Pension
Floor Plan (the "Floor Plan") under which eligible Business Employees have
frozen accrued benefits. Notwithstanding anything herein to the contrary, the
Company will not assume the Floor Plan, or any rights, duties, obligations or
liabilities thereunder, nor shall it become a successor employer or be
responsible in any way for Transferor's participation in or obligations or
responsibilities with respect to the Floor Plan. Transferor shall take such
actions as are necessary to fully vest as of the Closing Date the accrued
benefits of each Business Employee under the Floor Plan.
6.3. Salaried Profit Sharing Plan.
(a) As of the date hereof, Transferor maintains the Xxxxxx Industries
Profit Sharing Plan (the "Transferor Profit Sharing Plan") in which eligible
Business Employees participate. Effective as of the Closing Date, Transferor
and the Company shall take all action necessary for the Company to adopt the
Transferor Profit Sharing Plan as a contributing employer for those Transferred
Employees who, immediately prior to the Closing Date, participated (or were
eligible to participate) in the Transferor Profit Sharing Plan (the "Covered
Profit Sharing Participants"). Such actions shall include Transferor's
amendment of the Transferor Profit Sharing Plan and related documents to the
extent necessary to effectuate the intent of this Section, including any changes
necessary so that Transferred Employees will not be entitled to a distribution
under the Transferor Profit Sharing Plan as the result of the transactions
contemplated by this Agreement and the Collateral Agreements. Unless the
Company unilaterally terminates its participation in the Transferor Profit
Sharing Plan at an earlier date, as provided under Section 6.3(c) below, the
Company shall remain a participating employer in the Transferor Profit Sharing
Plan until December 31, 1999.
(b) During the period that the Company is a contributing employer
under the Transferor Profit Sharing Plan, the Company consents to all of the
provisions of the Transferor Profit Sharing Plan, as the same shall be amended
from time to time, and agrees to be bound thereby; provided, however, that the
Company shall have discretion to set the contribution levels applicable to
Covered Profit Sharing Participants for periods on and after January 1, 1999.
During the period it is a contributing employer under the Transferor Profit
Sharing Plan, the Company shall pay (i) to the Transferor Profit Sharing Plan
its contributions at such times required of other contributing employers, and
(ii) to Transferor an administrative fee as set forth in the Services Agreement
(as defined in Section 5.2.2(a)). The contribution to the Transferor Profit
Sharing Plan for each Covered Profit Sharing Participant for the plan year in
which the Closing Date occurs shall be made by Transferor and the Company on a
proportionate basis based on the number of days in such plan year that the
Covered Profit Sharing Participant were employed by each such company.
(c) The Company, upon at least 30 days advance written notice to
Transferor, may unilaterally terminate its participation in the Transferor
Profit Sharing Plan on a prospective basis; provided that the Company shall
remain obligated to pay to the Transferor Profit Sharing Plan all contribution
amounts owed to such Plan with respect to the period prior to the effective date
of such termination.
(d) (i) As soon as practicable after December 31, 1999, or such
earlier date after the Company's participation in the Transferor Profit Sharing
Plan terminates, that is mutually agreed to by Transferor and the Company,
Transferor shall cause the trustee of the Transferor Profit Sharing Plan to
transfer to the funding agent of a defined contribution plan maintained or
established by the Company (the "Company Profit Sharing Plan ) and containing
provisions necessary to satisfy section 411(d)(6) of the Code by a transferee
plan, for the benefit of Covered Profit Sharing Participants, an amount, in cash
or securities traded on a nationally recognized securities exchange (other than
securities of Transferor or any of its Affiliates), bonds of companies traded on
a nationally recognized securities exchange or such other assets mutually agreed
to by Transferor and the Company, equal to the total account balances (whether
or not vested) held under the Transferor Profit Sharing Plan for the Covered
Profit Sharing Participants (the "Transferred Profit Sharing Plan Assets").
Transferor also shall include in the Transferred Profit Sharing Plan Assets (i)
actual investment earnings or losses through the date of transfer, and (ii)
amounts required under the Transferor Profit Sharing Plan or applicable law to
be contributed to such plan by Transferor with respect to such Covered Profit
Sharing Participants on account of any period prior to the Closing Date (whether
or not currently due). The Company hereby represents and warrants that nothing
shall occur prior to, and on, the actual date of transfer of the Transferred
Profit Sharing Plan Assets which would adversely affect the qualified status of
the Company Profit Sharing Plan and Transferor hereby represents and warrants
that nothing shall occur prior to, and on, the actual date of transfer of the
Transferred Profit Sharing Plan Assets which would adversely affect the
qualified status of the Transferor Profit Sharing Plan. Transferor and the
Company agree that the Transferred Profit Sharing Plan Assets shall not in any
event be less than the amount required under Section 414(1) of the Code and the
regulations thereunder.
(ii) Pending the transfer of the Transferred Profit Sharing Plan
Assets, the accounts of the Covered Profit Sharing Participants shall remain in
the trust fund for the Transferor Profit Sharing Plan and Transferor shall cause
the trustee of the Transferor Profit Sharing Plan to pay any current benefits or
make any distributions to Covered Profit Sharing Participants as they become
due.
(iii) Transferor and the Company agree to provide each other
with such records and information as they may reasonably request relating to
their respective obligations under this section or the administration of the
Transferor Profit Sharing Plan or the Company Profit Sharing Plan, and agree, if
required by law, and in accordance with any time periods required by applicable
law, to notify the Internal Revenue Service of the contemplated transfer.
(e) Except as specifically provided in this Section 6.3, the Company
will not assume the Transferor Profit Sharing Plan, or any rights, duties,
obligations or liabilities thereunder (other than to provide benefits under the
Company Profit Sharing Plan relating to Transferred Profit Sharing Plan Assets),
nor shall it become a successor employer or be responsible in any way for
Transferor's participation in or obligations or responsibilities with respect to
the Transferor Profit Sharing Plan.
6.4. Salaried Savings Plan.
(a) As of the date hereof, Transferor maintains the Xxxxxx Industries
Inc. Retirement Savings and Investment Plan (the "Transferor Savings Plan") in
which eligible Business Employees participate. Effective as of the Closing
Date, Transferor and the Company shall take all action necessary for the Company
to adopt the Transferor Savings plan as a contributing employer for those
Transferred Employees who, immediately prior to the Closing Date, participated
(or were eligible to participate) in the Transferor Savings Plan (the "Covered
Savings Participants"). Such actions shall include Transferor's amendment of the
Transferor Savings Plan and related documents to the extent necessary to
effectuate the intent of this Section, including any changes necessary so that
Transferred Employees will not be entitled to a distribution under the
Transferor Savings Plan as the result of the transactions contemplated by this
Agreement and the Collateral Agreements. Unless the Company unilaterally
terminates its participation in the Transferor Savings Plan at an earlier date,
as provided under Section 6.4(c) below, the Company shall remain a participating
employer in the Transferor Savings Plan until December 31,1999.
(b) During the period that the Company is a contributing employer
under the Transferor Savings Plan, the Company consents to all of the provisions
of the Transferor Savings Plan, as the same shall be amended from time to time,
and agrees to be bound thereby; provided, however, that the Company shall have
discretion to set the matching contribution levels applicable to Covered Savings
Participants for periods on and after January 1, 1999. During the period it is
a contributing employer under the Transferor Savings Plan, the Company shall pay
(i) to the Transferor Savings Plan its contributions at such times required of
other contributing employers, and (ii) to the Transferor an administrative fee
as set forth in the Services Agreement (as defined in Section 5.2.2(a)). The
employer matching contributions to the Transferor Savings Plan for each Covered
Savings Participant for the plan year in which the Closing Date occurs shall be
made by Transferor and the Company based on the salary deferral contributions
made by the Covered Savings Participant during the period they were employed by
each such company.
(c) The Company, upon at least 30 days advance written notice to
Transferor, may unilaterally terminate its participation in the Transferor
Savings Plan on a prospective basis; provided that the Company shall remain
obligated to pay to the Transferor Savings Plan all contribution amounts owned
to such Plan with respect to the period prior to the effective date of such
termination.
(d) (i) Unless otherwise agreed to by the Company, as soon as
practicable after the Company's participation in the Transferor Savings Plan
terminates, Transferor shall cause the trustee of the Transferor Savings Plan to
transfer to the funding agent of a defined contribution plan maintained or
established by the Company (the "Company Savings Plan") and containing
provisions necessary to satisfy sections 401(k) and 411(d)(6) of the Code by a
transferee plan, for the benefit of Covered Savings Participants, an amount , in
cash or common stock of Transferor, or such other assets mutually agreed to by
Transferor and the Company, in kind, equal to the total account balances
(whether or not vested) held under the Transferor Savings Plan for the Covered
Savings Participants (the "Transferred Savings Plan Assets"). Transferor also
shall include in the Transferred Savings Plan assets (i) actual investment
earnings or losses through the date of transfer and (ii) amounts required under
respect to such Covered Savings Participants on account of any period prior to
the Closing Date (whether or not currently due). In addition, Transferor shall
take all action necessary prior to the date assets are transferred to the
Company Savings Plan so that all accounts of Covered Savings Participants under
the Transferor Savings Plan are participant directed under ERISA Section
404(c). The Company hereby represents and warrants that nothing shall occur
prior to, and on, the actual date of transfer of the Transferred Savings Plan
Assets which would adversely affect the qualified status of the Company
Savings Plan and Transferor hereby represents and warrants that nothing shall
occur prior to, and on, the actual date of transfer of the Transferred
Savings Plan Assets which would adversely affect the qualified status of the
Transferor Savings Plan. Transferor and the Company agree that the
Transferred Savings Plan Assets shall not in any event be less than the
amount required under Section 414(1) of the Code and the regulations thereunder.
(ii) Pending the transfer of the Transferred Savings Plan Assets,
the accounts of the Covered Participants shall remain in the trust fund for the
Transferor Savings Plan and Transferor shall cause the trustee of the Transferor
Savings Plan to pay any current benefits or make any distributions to Covered
Participants as they become due.
(iii) Transferor and the Company agree to provide each other
with such records and information as they may reasonably request relating to
their respective obligations under this section or the administration of the
Transferor Savings Plan or the Company Savings Plan, and agree, if required by
law, and in accordance with any time periods required by applicable law, to
notify the Internal Revenue Service of the contemplated transfer.
(e) Except as specifically provided in this Section 6.4, the Company
will not assume the Transferor Savings Plan, or any rights, duties, obligations
or liabilities thereunder (other than to provide benefits under the Company
Savings Plan relating to Transferred Savings Plan Assets), nor shall it become a
successor employer or be responsible in any way for Transferor's participation
in or obligations or responsibilities with respect to the Transferor Savings
Plan.
6.5. Consolidated Thrift Savings Plan for Hourly Employees.
(a) As of the date hereof, Transferor maintains the Xxxxxx
Industries, Inc. Consolidated Thrift Savings Plan for Hourly Employees (the
"Transferor Consolidated Savings Plan") in which eligible Business Employees
participate. Immediately prior to the Closing, Transferor shall establish a
separate, substantially identical plan and trust to the Transferor Consolidated
Savings Plan and related trust (the "New Consolidated Savings Plan") and "spin
off" to the New Consolidated Savings Plan the assets and liabilities of the
Transferor Consolidated Savings Plan representing the account balances of
Business Employees. As of, and subject to, the Closing, the Company shall adopt
and assume the New Consolidated Savings Plan with respect to all persons
entitled to benefits under the provisions of the New Consolidated Savings Plan.
Transferor shall contribute to the Transferor Consolidated Savings Plan all
amounts required under the Transferor Consolidated Savings Plan or applicable
law to be contributed to such plan with respect to such Business Employees on
account of periods prior to the Closing Date (whether or not currently due).
Prior to and after the Closing, Transferor and the Company shall cooperate in
preparing any appropriate documents and use their reasonable best efforts to
take all other actions necessary to effectuate the intent of this Section.
(b) As soon as administratively practicable after the Closing
Date, Transferor will supply the Company with (i) all records concerning
participation, vesting, accrual of benefits, payment of benefits, and election
forms of benefits under the New Consolidated Savings Plan, and (ii) any other
information reasonably requested by the Company as necessary or appropriate for
the administration of the New Consolidated Savings Plan. Transferor will make
all required filings or reports with or to the IRS, or any other governmental
agency, and the participants and their beneficiaries with respect to the New
Consolidated Savings Plan (the "Required Filings") on a timely basis for all
plan years ending before or on the Closing Date or as may be required in
connection with the transfer of the New Consolidated Savings Plan. The Company
will make all Required Filings on a timely basis for the plan years ending after
the Closing Date, and Transferor will supply the Company with all information
and data in Transferor's control reasonably requested by the Company as
necessary or appropriate for the completion of the Required Filings or for
seeking any determination from the IRS with respect to New Consolidated Savings
Plan.
(c) The Company will not assume the Transferor Consolidated Savings
Plan, or any rights, duties, obligations or liabilities thereunder (other than
to provide benefits under the New Consolidated Savings Plan), nor shall it
become a successor employer or be responsible in any way for Transferor's
participation in or obligations or responsibilities with respect to the
Transferor Consolidated Savings Plan.
6.6. Assumed Hourly Plans.
(a) As of the date hereof, Transferor maintains the Xxxxxx
Industries Inc. Thrift Savings Plan for Hourly Employees at Emco Lighting,
Milan, Illinois, the Xxxxxx Industries Inc., at Hopkinsville, Kentucky, and the
I.B.E.W. Local Union No. 1090, AFL-CIO, Pension Plan, the Xxxxxx Industries
Holdings Inc. at Sparta, Tennessee and the I.B.E.W. Local Union No. 2143, AFL-
CIO, Pension Plan, and the Xxxxxx Industries Holdings Inc. Retirement Plan for
Employees Represented by Local 1028 and Local 1969, I.B.E.W., AFL-CIO
(collectively, the "Hourly Plans"), and (ii) Transferor is the contributing
employer under the Gardco-I.B.E.W. Retirement Plan and the Gardco-I.B.E.W.
401(k) Plan (collectively, the "Gardco Hourly Plans", and, together with the
Hourly Plans, the "Assumed Hourly Plans"), in which eligible Business Employees
participate. As of, and subject to, the Closing, the Company shall adopt and
assume the Assumed Hourly Plans, with respect to all persons entitled to
benefits under the provisions of such Assumed Hourly Plans. Prior to and after
the Closing, Transferor and the Company shall cooperate in preparing any
appropriate documents and use their reasonable best efforts to take all other
actions necessary to effectuate the intent of this Section.
(b) As soon as administratively practicable after the Closing Date,
Transferor will supply the Company with (i) all records concerning
participation, vesting, accrual of benefits, payment of benefits, and election
forms of benefits under each Assumed Hourly Plan, and (ii) any other information
reasonably requested by the Company as necessary or appropriate for the
administration of each Assumed Hourly Plan. Transferor will make all required
filings or reports with or to the IRS, or any other governmental agency, and the
participants and their beneficiaries with respect to each Assumed Hourly Plan
(the "Required Filings") on a timely basis for all plan years ending before the
Closing Date or as may be required in connection with the transfer of the
Assumed Hourly Plans. The Company will make all Required Filings on a timely
basis for all plan years ending after the Closing Date, and Transferor will
supply the Company with all information and data in Transferor's control
reasonably requested by the Company as necessary or appropriate for the
completion of the Required Filings or for seeking any determination from the IRS
with respect to the Assumed Hourly Plans.
6.7. Continuation of Welfare Benefits.
(a) Transferor agrees to continue to provide, for the one hundred and
eighty (180) day period beginning on the Closing Date, any Transferred Employees
or, at the Company's option, any other persons hired by the Company or
transferred to one of the facilities contributed by Transferor pursuant hereto
within the one hundred and eighty (180) day period beginning on the Closing Date
(collectively referred to as "Post Closing Employees") with such benefits under
"welfare plans" (as defined in Section 3(1) of ERISA) other than severance
plans, as are, immediately prior to the Closing Date, being provided to such
Transferred Employees, whether provided through insurance programs or on a self-
funded basis, (collectively, the "Welfare Benefits"). Transferor agrees to take
all steps necessary (including amending the applicable plans and related
documents) to allow Transferred Employees to continue to participate in such
plans for said one hundred and eighty (180) day period and the Company agrees to
reimburse Transferor for the actual cost of providing such Welfare Benefits
within thirty (30) days after presentation of written monthly statements thereof
to the Company to the extent not disputed. With respect to Welfare Benefits
provided through insurance programs, for purposes of the preceding sentence,
Transferor's actual cost for providing such Welfare Benefits shall mean the sum
of employer and employee premium contributions which are made on behalf of Post-
Closing Employees to the plans providing such Welfare Benefits, which shall not
exceed the rate of such contributions made on behalf of comparable employees of
Transferor. Transferor shall furnish the Company with such reasonable
information as the Company shall request in order for the Company to verify
Transferor's cost thereof. If the Company so requests, Transferor agrees to use
its best efforts to procure the consent of any insurance carrier or other
Person, and to take such other actions as may be necessary, in order to
effectuate the assignment to the Company of any insurance policies or other
contracts issued to Transferor exclusively in connection with the Welfare
Benefits or the Transferred Employees under other Plans. If any "qualifying
event," as defined in Section 603 of ERISA, occurs during the period in which
health coverage is provided pursuant to the provisions hereof, Transferor agrees
to offer the affected Post Closing Employees and their dependents the
opportunity to continue health coverage with the full cost thereof to be paid by
the persons continuing such coverage, to the extent and for the time required by
ERISA or the Code and any applicable state laws (on the same basis, to the same
extent and for payment of the same amounts as employees and dependents of
Transferor are provided the opportunity to continue such coverage), and to
provide the Post-Closing Employees and their dependents with any notifications
required thereunder. Transferor shall continue to process and pay, or cause to
be processed and paid, in accordance with the terms of its plans providing
Welfare Benefits, all claims submitted by the Post-Closing Employees under such
benefit plans for expenses and claims incurred prior to the date to which such
Welfare Benefits coverage is extended pursuant to the provisions hereof.
(b) From and after the Closing Date, Transferor shall remain solely
responsible for any and all Benefit Liabilities relating to or arising in
connection with the requirements of Section 4980B of the Code (including the
obligation to provide "COBRA" continuation coverage under 4980(B) of the Code)
to provide continuation of health care coverage and the requirements of HIPAA
and under any Benefit Plan in respect of (A) Business Employees, other than the
Transferred Employees and their covered dependents, and (B) to the extent
related to a qualifying event occurring on or before the Closing Date,
Transferred Employees and their covered dependents. Transferor agrees, and
agrees to cause its Affiliates to, issue or cause to be issued all certificates,
notices and such other documents required by HIPAA to each Transferred Employee
and their covered dependents.
(c) Except as specifically provided in this Section 6.7 and in
Sections 6.1(b) and 6.8, the Company will not assume any Plan providing Welfare
Benefits, or any rights, duties, obligations or liabilities thereunder, nor
shall it become a successor employer or be responsible in any way for
Transferor's participation in or obligations or responsibilities with respect to
any such Plan.
6.8. Post-Retirement Health Benefits.
As of the date hereof, Transferor maintains one or more Plans that are
"employee welfare benefit plan" (within the meaning of section 3(1) of ERISA)
and that provide post-retirement health benefits to Business Employees and
former employees of the Business ("Transferor Retiree Welfare Benefits").
Effective as of, and subject to the Closing, the Company shall assume the
obligation to provide such Transferor Retiree Welfare Benefits, provided that
Transferor agrees to reimburse the Company after the Closing Date for the actual
cost incurred by the Company to provide the Transferor Retiree Welfare Benefits
under the terms of the applicable Plan in effect as of the date hereof, to the
extent such cost incurred by the Company exceeds (i) $500,000 with respect to
any full calendar year beginning after the Closing Date, or (ii) with respect to
the calendar year in which the Closing Date occurs, an amount equal to $500,000,
multiplied by a fraction, the numerator of which is the number of days in such
calendar year after the Closing Date and the denominator of which is 365. Such
reimbursement shall be made within 30 days after presentation of written monthly
statements thereof to Transferor to the extent not disputed.
6.9. Multiemployer Plans.
With respect to each Multiemployer Plan set forth on Schedule 3.1.21(a),
the Company shall reimburse Transferor for any withdrawal liability incurred by
Transferor under such Multiemployer Plan as the result of the transactions
contemplated under this Agreement and the Collateral Agreements.
Notwithstanding the foregoing, the Company may elect prior to the Closing Date
that Section 4204 of ERISA shall apply to the transactions contemplated under
this Agreement and the Collateral Agreements with respect to any such
Multiemployer Plan, in which case Transferor and the Company shall take all
actions necessary to comply with Section 4204 of ERISA with respect to each such
Multiemployer Plan. Such compliance shall include the execution of any
necessary documentation and the posting of a bond or escrow (or letter of credit
if acceptable to the Multiemployer Plan) within the time required by Section
4204(a)(1)(B) of ERISA for each of the Multiemployer Plans for which a bond or
escrow (or letter of credit) is required, in an amount, for the period of time,
and in a form that complies with Section 4204(a)(1)(B) of ERISA - or, within
such time period obtaining a variance from such bonding or escrow requirement
from each of the applicable Multiemployer Plan or Multiemployer Plans or from
the Pension Benefit Guaranty Corporation (the "PBGC") - so that a transfer of
contribution obligations to the Company under the Multiemployer Plans with
respect to Business Employees does not result in a complete or partial
withdrawal of Transferor from the applicable Multiemployer Plans under Sections
4203 or 4205 of ERISA, respectively. In order to assist the Company in making
any election contemplated by this Section 6.9, Transferor shall use its
reasonable best efforts to provide to the Company as soon as possible after the
date hereof a written estimate from each Multiemployer Plan of the withdrawal
liability of the Transferor or Related Persons if the Transferor or Related
Persons were to have a complete withdrawal as of the Closing.
6.10. Supplemental Profit Sharing Plan.
(a) As of the date hereof, Transferor maintains the Xxxxxx Industries
Supplemental Profit Sharing Plan (the "Supplemental Plan") in which eligible
Business Employees participate, and with respect to which Transferor has
established and maintained a grantor trust (the "Rabbi Trust") to fund benefits
to be provided under the Supplemental Plan. Effective as of, and subject to,
the Closing Date, Transferor and the Company shall take all action necessary for
the Company to adopt the Supplemental Plan as a contributing employer for those
Transferred Employees who, immediately prior to the Closing Date, participated
(or were eligible to participate) in the Supplemental Plan (the "Supplemental
PSP Participants"). The Company shall remain a contributing employer under the
Supplemental Plan until December 31, 1998 or such longer period agreed to by the
parties. During the period it is a contributing employer under the Supplemental
Plan, the Company shall pay to the Rabbi Trust its contributions at such times
required of other contributing employers, and (ii) to Transferor an
administrative fee as set forth in the Services Agreement (as defined in Section
5.2.2(a)).
(b) At approximately the same time as Transferred Profit Sharing Plan
Assets are transferred to the Company Profit Sharing Plan under Section 6.3(d),
Transferor shall use its commercially reasonable efforts to transfer assets of
the Rabbi Trust to a successor trust to be established by the Company which
represents the entire benefit accrued by Supplemental PSP Participants as of
such date under the Supplemental Plan. To the extent that Transferor is able to
transfer such amounts to the successor trust to be established by the Company,
the Company shall assume the obligation of Transferor to provide the benefits
accrued by Supplemental PSP Participants under the Supplemental Plan.
Transferor agrees to provide Company with such records and information as it may
reasonably request relating to its obligations to provide the benefits
contemplated under this Section.
(c) Except for the Company's assumption of Transferor's obligation to
provide benefits accrued by Supplemental PSP Participants under the Supplemental
Plan to the extent that assets are transferred to a successor trust to be
established by the Company, as described above, the Company will not assume the
Supplemental Plan, or any rights, duties, obligations or liabilities thereunder,
nor shall it become a successor employer or be responsible in any way for
Transferor's participation in or obligations or responsibilities with respect to
the Supplemental Plan.
6.11. Employment Taxes.
(a) Transferor and the Company will, to the extent permitted by
Applicable Law, (i) treat the Company as a "successor employer" and Transferor
as a "predecessor employer" within the meaning of sections 3121(a)(1) and
3306(b)(1) of the Code, with respect to Transferred Employees who are employed
by the Company for purposes of Taxes imposed under the United States Federal
Unemployment Tax Act ("FUTA") or the United States Federal Insurance
Contributions Act ("FICA") and (ii) and cooperate with each other to avoid, to
the extent possible, the filing of more than one IRS Form W-2 with respect to
each such Transferred Employee for the calendar year within which the Closing
Date occurs.
(b) At the request of the Company with respect to any particular
applicable Tax law relating to employment, unemployment insurance, social
security, disability, workers' compensation, payroll, healthcare or other
similar Tax other than taxes imposed under FICA and FUTA, Transferor and the
Company will, to the extent permitted by Applicable Law, (i) treat the Company
as a successor employer and Transferor as a predecessor employer, within the
meaning of the relevant provisions of such Tax law, with respect to Transferred
Employees who are employed by the Company and (ii) cooperate with each other to
avoid, to the extent possible, the filing of more than one individual
information reporting form pursuant to each such Tax law with respect to each
such Transferred Employee for the calendar year within which the Closing Date
occurs.
6.12. Other Plans. The Company shall not assume or have any Benefit
Liabilities with respect to the Xxxxxx Industries Executive Retirement Plan, the
Xxxxxx Industries Inc. 1995 Incentive Stock Plan and the Xxxxxx Industries Stock
Award Program.
ARTICLE VII
TERMINATION
7.1 Termination. This Agreement shall be terminated at such time as the
Master Transaction Agreement is terminated. In the event of the termination of
this Agreement, this Agreement shall become void and have no effect, without any
liability to any Person in respect hereof or of the transactions contemplated
hereby on the part of any party hereto, or any of its directors, members,
managers, officers, employees, agents, consultants, representatives, advisers,
stockholders or Affiliates, except (i) as specified in Section 8.4, (ii) subject
to Article VIII of the Master Transaction Agreement, for any liability resulting
from such party's breach of this Agreement and (iii) for the payment of any fee
pursuant to Article VIII of the Master Transaction Agreement.
ARTICLE VIII
DEFINITIONS, MISCELLANEOUS
8.1 Definition of Certain Terms. The terms defined in this Section 8.1,
whenever used in this Agreement (including in the Schedules), shall have the
respective meanings indicated below for all purposes of this Agreement. All
references herein to a Section, Article or Schedule are to a Section, Article or
Schedule of or to this Agreement, unless otherwise indicated.
Adequate Reserves: with respect to any asset or liability, an amount
of specific or general Reserves that equals or exceeds the amount of any
Loss associated with such asset or liability now or hereafter recognized.
Adjustment Statement: as defined in Section 4.3(a).
Affiliate: when used with reference to a specified Person, any Person
that directly or indirectly through one or more intermediaries controls or
is controlled by or is under common control with the specified Person.
Agreement: this Capitalization Agreement, including the Schedules
hereto.
Applicable Law: all applicable provisions of all (i) constitutions,
treaties, statutes, laws (including the common law), rules, regulations,
ordinances, codes or orders of any Governmental Authority, (ii)
Governmental Approvals and (iii) orders, decisions, injunctions, judgments,
awards and decrees of or agreements with any Governmental Authority.
Assets: as defined in Section 1.1.
Assumed Liabilities: as defined in Section 2.3.
Assumed Hourly Plans: as defined in Section 6.6(a).
Assumption Agreement: as defined in Section 2.3(b).
Audited Financial Statements: as defined in Section 4.1.7.
Balance Sheet: the balance sheet contained in the Financial
Statements referenced in clause (a) of Section 3.1.4.
Balance Sheet Date: as defined in Section 3.1.4.
Benefit Liabilities: liabilities, obligations, commitments, damages,
costs, taxes and expenses, including reasonable fees and disbursements of
attorneys and other advisors, including any such expenses incurred in
connection with the enforcement of any applicable provision of this
Agreement payable to any Employee or other Person as a result of, with
respect to or under any Plan or similar employee benefit plan, agreement,
policy or practice.
Books and Records: as defined in Section 1.1(i).
Business: the business of Transferor relating to the manufacture,
sale, marketing and distribution of consumer, commercial, industrial and
outdoor lighting.
Business Day: shall mean any day on which commercial banks in the
City of New York, New York are open for business.
Business Employees: as defined in Section 6.1(b).
Cash Payment: as defined in Section 4.3(b)(i).
CERCLA: the Comprehensive Environmental Response, Compensation and
Liability Act, as amended, 42 U.S.C. section9601 et seq.
Closing Date: as defined in Section 2.1.
Closing Date Net Working Capital: as defined in Section 4.3(a).
Closing Date Target Net Working Capital: as defined in Section
4.3(a).
Closing Financial Statement: as defined in Section 4.3(a).
Code: the Internal Revenue Code of 1986, as amended, or any successor
statute to such Code.
Collateral Agreements: the agreements and other documents and
instruments described in Section 5.2.2 and 5.2.4.
Company: as defined in the first paragraph of this Agreement.
Company Indemnitees: as defined in Section 8.2(a).
Company's Accountants: the accountants of the Company as determined
by the Company's management board.
Company Profit Sharing Plan: as defined in Section 6.3(d)(i).
Company Savings Plan: as defined in Section 6.4(d)(i).
Component: means any Hardware, Software, Databases and/or Embedded
Control of any System used in the Business.
Consent: any consent, approval, authorization, waiver, permit, grant,
franchise, concession, agreement, license, exemption or order of
registration, certificate, declaration or filing with, or report or notice
to, any Person, including but not limited to any Governmental Authority.
Contract: as defined in Section 3.1.12(a).
Covered Profit Sharing Participants: as defined in Section 6.3(a).
Covered Savings Participants: as defined in Section 6.4(a).
Database: shall mean all data and other information recorded, stored,
transmitted and retrieved in electronic form by a System or any Component,
whether located on any Component(s) of a System or archived in storage
media of a type employed or used in conjunction with any Component or
System used in the Business.
Determination Date: as defined in Section 4.3(a).
Determination Date Financial Statements: as defined in Section
4.3(a).
Determination Date Net Working Capital: as defined in Section 4.3(a).
Determination Date Target Net Working Capital: as defined in Section
4.3(a).
Division: as defined in the first WHEREAS clause of this Agreement.
$ or dollars: lawful money of the United States.
Embedded Control: shall mean any microprocessor, microcontroller, PLC,
smart instrumentation or other sensor, driver, monitor, robotic or other
device containing a semiconductor, memory circuit, BIOS, PROM or other
microchip used in the Business.
Employees: as defined in Section 3.1.21(a).
Environmental Laws: all Applicable Laws relating to the protection of
the environment, to human health and safety, or to any emission, discharge,
generation, processing, storage, handling, holding, abatement, existence,
Release, threatened Release or transportation or disposal of any Hazardous
Substances, including (i) CERCLA, the Resource Conservation and Recovery
Act, and the Occupational Safety and Health Act, (ii) all other
requirements pertaining to reporting, licensing, permitting, investigation
or remediation of emissions, discharges, releases or threatened releases of
Hazardous Substances into the air, surface water, groundwater or land, or
relating to the manufacture, processing, distribution, use, sale,
treatment, receipt, storage, disposal, transport or handling of Hazardous
Substances, and (iii) all other requirements pertaining to the protection
of the health and safety of employees or the public.
Environmental Liabilities and Costs: all Losses, whether direct or
indirect, known or unknown, current or potential, past, present or future,
imposed by, under or pursuant to Environmental Laws, including all Losses
related to Remedial Actions, and all fees disbursements and expenses of
counsel, experts, personnel and consultants based on, arising out of or
otherwise in respect of: (i) the ownership, operation, use or occupancy of
the Business, the Assets, the Real Property or Other Leases or any other
real properties, assets, equipment or facilities, by any Transferor, or any
of their predecessors or Affiliates; (ii) the environmental conditions
existing on the Closing Date on, under, above, about or emanating from any
Real Property, the Assets or property subject to Other Leases or any other
real properties, assets, equipment or facilities currently or previously
owned, leased, operated, occupied or used by the any Transferor, or any of
their predecessors or Affiliates; and (iii) expenditures necessary to cause
any Real Property or any aspect of the Business or the Assets to be in
compliance with any and all requirements of Environmental Laws as of the
Closing Date, including all Environmental Permits issued or required under
or pursuant to such Environmental Laws, and reasonably necessary to make
full economic use of any Real Property or the Assets.
Environmental Permits: any federal, state and local permit, license,
registration, consent, order, administrative consent order, certificate,
approval or other authorization with respect to the any Transferor
necessary for the conduct of the Business as currently conducted or
previously conducted under any Environmental Law.
ERISA: the Employee Retirement Income Security Act of 1974, as
amended.
Excluded Assets: as defined in Section 1.2.
Excluded Liabilities: as defined in Section 2.4.
Financial Statements: each of the financial statements required to be
provided by Section 3.1.4.
Floor Plan: as defined in Section 6.2.
GAAP: generally accepted accounting principles as in effect in the
United States.
Gardco Hourly Plans: as defined in Section 6.6(a).
Genlyte: as defined in the WHEREAS clauses of this Agreement.
Genlyte Adjusted Net Working Capital: as defined in Section 4.3(c).
Governmental Approval: any Consent of, with or to any Governmental
Authority.
Governmental Authority: any nation of government, any state or other
political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, including any government authority, agency,
department, board, commission or instrumentality of the United States, any
State of the United States or any political subdivision, thereof, and any
tribunal or arbitrator(s) of competent jurisdiction, and any self-
regulatory organization.
Hardware: shall mean all mainframes, midrange computers, personal
computers, notebooks, servers, switches, printers, modems, drives,
peripherals and any component of any of the foregoing used by the Business.
Hazardous Substances: any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or related
materials (ii) requires investigation, removal or remediation under any
Environmental Law, or is defined, listed or identified as a "hazardous
waste" or "hazardous substance" thereunder, or (iii) is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic, or
otherwise hazardous and is regulated by any Governmental Authority or
Environmental Law.
Headquarters: the building located at 0000 Xxxxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxx 00000.
HIPAA: as defined in Section 3.1.21(c)(viii).
Horizon/Lite Acquisition: the contemplated acquisition by one of
Transferor's subsidiaries of certain assets of Horizon/Lite.
Hourly Plans: as defined in Section 6.6(a).
HSR Act: the Xxxx-Xxxxx-Xxxxxx Anti-trust Improvements Act of 1976,
as amended.
Indemnified Party: as defined in Section 8.2(d).
Indemnifying Party: as defined in Section 8.2(d).
Intellectual Property: any and all United States and foreign: (a)
patents (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting
filing, reissues, divisions, continuations, continuations-in-part and
extensions), patent disclosures awaiting filing determination, inventions
and improvements thereto; (b) trademarks, service marks, trade names, trade
dress, logos, business and product names, slogans, and registrations and
applications for registration thereof but excluding the names "Xxxxxx" and
"Xxxxxx Industries Inc."; (c) copyrights (including software) and
registrations thereof; (d) inventions, processes, designs, formulae, trade
secrets, know-how, industrial models, confidential and technical
information, manufacturing, engineering and technical drawings, product
specifications and confidential business information; (e) mask work and
other semiconductor chip rights and registrations thereof; (f) Software;
(g) intellectual property rights similar to any of the foregoing; (h)
copies and tangible embodiments thereof (in whatever form or medium,
including electronic media) used in the Business.
Intellectual Property Assets: as defined in Section 1.1(h).
Inventories: as defined in Section 1.1(b).
IRS: the Internal Revenue Service.
Joint Proxy Statement: the Joint Proxy Statement of Xxxxxx and
Genlyte to be filed with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, pursuant to which each of
Xxxxxx and Genlyte will seek stockholder approval of the transactions
contemplated by the Master Transaction Agreement.
Knowledge: the actual knowledge after due inquiry of (i) any
"officer" of the Transferor, as such term is defined in Rule 16a-1(f) of
the General Rules and Regulations under the Securities Exchange Act of
1934, or (ii) any individual employed by Transferor as a manager of any
portion of the Business.
LLC Agreement: as defined in the WHEREAS clauses of this Agreement.
Leased Real Property: means all interests leased pursuant to the
Leases.
Leases: means the real property leases, subleases, licenses and
occupancy agreements relating the Business pursuant to which Transferor is
the lessee, sublessee, licensee or occupant.
Lien: any mortgage, pledge, hypothecation, right of others, claim,
security interest, encumbrance, lease, sublease, license, occupancy
agreement, adverse claim or interest, easement, covenant, encroachment,
burden, title defect, title retention agreement, voting, trust agreement,
interest, equity, option, lien, right of first refusal, charge or other
restrictions or limitations of any nature whatsoever, including such as may
arise under any Contracts.
Losses: as defined in Section 8.2(a).
Marked Materials: as defined in Section 4.2.2.
Master Transaction Agreement: as defined in the WHEREAS clauses of
this Agreement.
Material Adverse Effect: any event, occurrence, fact, condition,
change or effect that is adverse to the business, operations, prospects,
results of operations, condition (financial or otherwise), properties
(including intangible properties), assets (including intangible assets) or
liabilities of the Business in an amount equal to $5,000,000 or greater.
Membership Interests: as defined in Section 2.2.
Multiemployer Plan: as defined in Section 3.1.21(a).
Net Working Capital: as defined in Section 4.3(d).
New Consolidated Savings Plan: as defined in Section 6.5.
Note: as defined in Section 2.2(b).
Note/Receivable Payment: as defined in Section 4.3(b)(i).
NWC Note: as defined in Section 4.3(b).
Other Leases: the leases, subleases, licenses and occupancy
agreements pursuant to which Transferor is a lessor sublessor or licensor
of any part of the Real Property.
Owned Intellectual Property: as defined in Section 3.1.16(a).
Owned Real Property: the real property owned by the Transferor or any
Affiliate utilized by the Business, together with all other structures,
facilities, improvements, fixtures, systems, equipment and items of
property presently or hereafter located thereon attached or appurtenant
thereto or owned by Transferor or any Affiliate and utilized by the
Business and located on Leased Real Property and all easements, licenses,
rights and appurtenances relating to the foregoing other than owned real
property included in Excluded Assets.
Permitted Liens: (i) Liens reserved against in the Balance Sheet to
the extent so reserved, (ii) Liens for Taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on Transferor's books
in accordance with GAAP, (iii) liens arising in the ordinary course of
business from a purchase money security interest or related to indebtedness
for borrowed money under Transferor's credit facilities, or (iv) Liens
that, individually and in the aggregate, do not and would not materially
detract from the value of any of the property or assets of the Business or
materially interfere with the use thereof as currently used.
Person: any individual, partnership, limited liability company,
corporation, cooperative, trust, estate or other entity.
Plan: as defined in Section 3.1.21(a).
Rabbi Trust: as defined in Section 6.10.
Real Property: all of the real property, together with all buildings,
structures, fixtures and improvements, listed on Schedules 3.1.18(a) and
3.1.18(b).
Real Property Laws: as defined in Section 3.1.18(f).
Related Entity: with respect to any Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common
control with such specified Person;
(b) any Person that holds a material interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a material
interest;
(e) any Person with respect to which such specified Person serves
as a general partner or a trustee(or in a similar capacity); and
(f) any Related Entity of any individual described in clause (b)
or (c).
Related Persons: as defined in Section 3.1.21(a).
Release: any releasing, disposing, discharging, injecting, spilling,
leaking, leaching, pumping, dumping, emitting, escaping, emptying, seeping,
dispersal, migration, transporting, placing and the like, including, the
moving of any materials through, into or upon, any land, soil, surface
water, ground water or air, or otherwise entering into the environment.
Remedial Action: all actions required to (i) clean up, remove, treat
or in any other way remediate any Hazardous Substances; (ii) prevent the
release of Hazardous Substances so that they do not migrate or endanger or
threaten to endanger public health or welfare or the environment; or (iii)
perform studies, investigations and care related to any such Hazardous
Substances.
Reserves: the reserves shown on the Balance Sheet or in the
accounting records of Transferor for the Business as of the Closing Date.
Software: shall mean all software owned, developed, licensed or used
by Transferor or any of its Affiliates in the Business, including (i) all
modifications, enhancements, fixes, updates, upgrades, bypasses and work-
arounds, (ii) the source code and object code for any of the foregoing and
(iii) all operating systems, bridgeware, firmware, middleware or utilities
used by the Business.
Subsidiaries: each corporation or other Person in which a Person owns
or controls, directly or indirectly, capital stock or other equity
interests representing at least 50% of the outstanding voting stock or
other equity interests.
Supplemental Plan: as defined in Section 6.10.
Supplemental PSP Participants: as defined in Section 6.10.
System: shall mean any combination of any Software, Hardware, Database
or Embedded Control used by the Business.
Target Net Working Capital: as defined in Section 4.3(c).
Tax: any federal, state, provincial, local, foreign or other income,
alternative, minimum, accumulated earnings, personal holding company,
franchise, capital stock, net worth, capital, profits, windfall profits,
gross receipts, value added, sales, use, goods and services, excise,
customs duties, transfer, conveyance, mortgage registration, stamp,
documentary, recording, premium, severance, environmental (including taxes
under Section 59A of the Code), real property, personal property, ad
valorem, intangibles, rent, occupancy, license, occupational, employment,
unemployment insurance, social security, disability, workers' compensation,
payroll, health care, withholding, estimated or other similar tax, duty or
other governmental charge or assessment or deficiencies thereof (including
all interest and penalties thereon and additions thereto whether disputed
or not).
Tax Return: any return, report, declaration, form, claim for refund
or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
Xxxxxx: as defined in the first paragraph of this Agreement.
Transaction Expenses: as defined in Section 8.4.
Transferred Employees: as defined in Section 6.1(b).
Transferred Profit Sharing Plan Assets: as defined in Section
6.3(d)(i).
Transferred Savings Plan Assets: as defined in Section 6.4(d)(i).
Transferring Affiliates: Tupelo Holdings Inc., Xxxxxx Industries
Holdings Inc., Gardco Mfg, Inc., Capri Lighting, Inc., Xxxxxx Imports, Inc.
and TI Industries Corporation.
Transfer Taxes: as defined in Section 4.2.3.
Transferor: as defined in the first paragraph of this Agreement.
Transferor Consolidated Savings Plan: as defined in Section 6.5.
Transferor Profit Sharing Plan: as defined in Section 6.3(a).
Transferor Retiree Welfare Benefits: as defined in Section 6.8.
Transferor Savings Plan: as defined in Section 6.4(a).
Transferor's Accountants: Ernst & Young LLP.
Treasury Regulations: the regulations prescribed pursuant to the
Code.
Welfare Benefits: as defined in Section 6.7(a).
Withholding Taxes: as defined in Section 3.1.6(a)
8.2 Indemnification. (a) By Transferor. Transferor covenants and agrees
to defend, indemnify and hold harmless the Company, its officers, directors,
employees, agents, advisers, representatives and Affiliates (collectively, the
"Company Indemnitees") from and against, and pay or reimburse the Company
Indemnitees for, any and all claims, liabilities, obligations, losses, fines,
costs, royalties, proceedings, deficiencies or damages (whether absolute,
accrued, conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the same or
in asserting any of their respective rights hereunder (collectively, "Losses"),
resulting from or arising out of:
(i) any inaccuracy of any representation or warranty made by
Transferor herein or under any Collateral Agreement or in connection
herewith or therewith;
(ii) any failure of Transferor to perform any covenant or
agreement hereunder or under any Collateral Agreement or fulfill any
other obligation in respect hereof or of any Collateral Agreement;
(iii) any Excluded Liabilities or Excluded Assets;
(iv) any and all Taxes of Transferor and all Affiliates thereof,
whether or not relating to or arising out of the Business; and
(v) any and all Benefit Liabilities not assumed by the Company.
Except for inaccuracies in the representations and warranties
contained in Sections 3.1.1, 3.1.2, 3.1.3, 3.1.6 and 3.1.11 and breaches of
covenants contained herein or in any Collateral Agreement, Transferor shall not
be required to indemnify the Company Indemnitees with respect to any claim for
indemnification pursuant to this Section 8.2(a) unless and until the aggregate
amount of all Losses arising under this Section 8.2(a) exceeds $1,000,000 and
then only for the amount of such excess. Notwithstanding the immediately
preceding sentence, Transferor shall not be required to indemnify the Company
Indemnitees with respect to any claim for indemnification arising from
inaccuracies in the representations and warranties contained in Section 3.1.19
unless and until the aggregate amount of all such Losses exceeds $500,000 and
then only for the amount of such excess.
(b) By the Company. The Company covenants and agrees to defend,
indemnify and hold harmless Transferor and its officers, directors, employees,
agents, advisers, representatives and Affiliates (collectively, the "Transferor
Indemnitees") from and against any and all Losses resulting from or arising out
of:
(i) any inaccuracy in any representation or warranty by the
Company made or contained in any Collateral Agreement or in connection
therewith; or
(ii) any failure of the Company to perform any covenant or
agreement made or contained in this Agreement or any Collateral
Agreement or fulfill any other obligation in respect thereof;
(iii) the Assumed Liabilities except to the extent that they
constitute Losses for which Transferor is required to indemnify the
Company Indemnitees under Section 8.2(a);
(iv) the use by the Company of any Transferor tradenames or
trademarks after the Closing Date as contemplated by Section 4.2.2;
and
(v) the operation of the Business by the Company or the
Company's ownership, operation or use of the Assets following the
Closing Date, except to the extent such Losses result from or arise
out of the Excluded Liabilities, Excluded Assets or constitute Losses
for which Transferor is required to indemnify the Company Indemnitees
under Section 8.2(a).
(c) Adjustment to Indemnification Payments. Any payment made by
Transferor pursuant to Section 8.2(a) in respect of any Losses shall be net of
any Reserve maintained by Transferor for such Loss or category of Losses. Any
payment made by Transferor to the Company Indemnitees, on the one hand, or by
the Company to the Transferor Indemnitees, on the other hand, pursuant to this
Section 8.2 in respect of any Losses (i) shall be net of any insurance proceeds
realized by and paid to the Indemnified Party in respect of such Losses and (ii)
shall be (A) reduced by an amount equal to any Tax benefits attributable to such
Losses and (B) increased by an amount equal to any Taxes attributable to the
receipt of such payment, but only to the extent that such Tax benefits are
actually realized, or such Taxes are actually paid, as the case may be, by the
Indemnified Party or by a consolidated, combined or unitary group of which the
Indemnified Party is a member. The Indemnified Party shall use its reasonable
efforts to make insurance claims relating to any Losses for which it is seeking
indemnification pursuant to this Section 8.2; provided that the Indemnified
Party shall not be obligated to make such an insurance claim if the Indemnified
Party in its reasonable judgment believes (based on written advice from
insurance brokers or providers) the cost of pursuing such an insurance claim
together with any corresponding increase in insurance premiums or other
chargebacks to the Indemnified Party, as the case may be, would exceed the value
of the claim for which the Indemnified Party is seeking indemnification. Any
amount paid by Transferor pursuant to Section 8.2(a) shall be characterized, for
tax purposes, as a contribution to the Company's capital and amounts paid by the
Company pursuant to Section 8.2(b) shall be characterized as a return of
capital. "Indemnified Party" means a party entitled to indemnification pursuant
to this Agreement.
(d) Indemnification Procedures. In the case of any claim asserted by
a third party against an Indemnified Party, notice shall be given by the
Indemnified Party to the party required to provide indemnification (the
"Indemnifying Party") promptly after such Indemnified Party has actual knowledge
of any claim as to which indemnity may be sought, and the Indemnified Party
shall permit the Indemnifying Party (at the expense of such Indemnifying Party)
to assume the defense of any claim or any litigation resulting therefrom,
provided that (i) the counsel for the Indemnifying Party who shall conduct the
defense of such claim or litigation shall be reasonably satisfactory to the
Indemnified Party, (ii) the Indemnified Party may participate in such defense at
such Indemnified Party's expenses, and (iii) the omission by any Indemnified
Party to give notice as provided herein shall not relieve the Indemnifying Party
of its indemnification obligation under this Agreement except to the extent that
such omission results in a failure of actual notice to the Indemnifying Party
and such Indemnifying Party is materially damaged as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that provides for
injunctive or other nonmonetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax liability or the ability of the Company to conduct its business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation subject to this
Section 8.2 and the records of each shall be available to the other with respect
to such defense.
(e) Time Limitation. All claims for indemnification under clause (i)
of the first sentence of Section 8.2(a) or clause (i) of the first sentence of
Section 8.2(b) must be asserted prior to the termination of the respective
survival periods set forth in Section 8.3. Notwithstanding the foregoing, any
claim for indemnification that is asserted by written notice within the
applicable survival period shall survive until resolved and discharged by the
parties or pursuant to a final non-appealable judicial determination.
(f) Payment by Transferor. Notwithstanding any provision of this
Section 8.2 to the contrary, any payment required to be made by Transferor to
the Company pursuant to this Section 8.2 shall be deemed a liability of Xxxxxx
owing to the Company and shall be deducted from the next distribution made to
Xxxxxx pursuant to Section 6.2(b) of the LLC Agreement (other than Tax
Distributions, as such term is defined in the LLC Agreement), provided that in
the event that the Loss payable by Transferor exceeds the amount of such
distribution, Transferor shall deliver to the Company a note in the amount of
such excess, which shall bear interest at the rate of the Company's primary
credit facility referenced in Sections 6.8 and 7.8 of the Master Transaction
Agreement, and shall be payable out of future distributions (other than Tax
Distributions) pursuant to the LLC Agreement. The mechanism provided in this
Section 8.2(f) shall be the sole and exclusive source of payment for any
obligation of Transferor pursuant to this Section 8.2.
(g) Application of Reserve. With respect to indemnification claims
for breach of representations or warranties to which a Reserve is applicable,
Transferor shall bear the burden of proving the amount of the Reserve.
(h) Exclusive Remedy. Except for the provisions of Section 7.1 and
subject to Article VIII of the Master Transaction Agreement, the
indemnifications contained in Section 8.2 shall be Transferor's and the
Company's sole and exclusive remedies with respect to money damages, against
each other, with respect to matters arising under this Agreement, of any kind or
nature, or relating to the Division, the Business, the Assets, the Assumed
Liabilities, the Excluded Assets or the Excluded Liabilities. Transferor and
the Company hereby waive and release any other rights, remedies, causes of
action or claims that they have or that may arise against the other with respect
to matters arising under this Agreement, of any kind or nature, or relating to
the Division, the Business, the Assets, the Assumed Liabilities, the Excluded
Assets or the Excluded Liabilities. The foregoing restrictions of this Section
8.2(h) shall not apply to any matter involving actual fraud or criminal
misconduct.
8.3. Survival of Representations and Warranties, etc. The representations
and warranties contained in this Agreement shall survive the execution and
delivery of this Agreement, any examination by or on behalf of the parties
hereto and the completion of the transactions contemplated herein, but only to
the extent specified below:
(a) except as set forth in clauses (b) and (c) below, the
representations and warranties contained in Section 3.1 shall survive
to the date that is 60 days after the delivery of the audited
financial statements of the Company for the fiscal year 1999;
(b) the representations and warranties contained in Section 3.1.19
shall survive for a period of three years following the Closing Date;
(c) the representations and warranties contained in Sections 3.1.1,
3.1.2, 3.1.3 and 3.1.11 shall survive without limitation; and
(d) the representations and warranties of Transferor contained in
Section 3.1.6 shall survive as to any Tax covered by such
representations and warranties for so long as any statute of
limitations for such Tax remains open, in whole or in part, including
by reason of waiver of such statute of limitations.
8.4. Expenses. Except as provided in Section 4.2.3 and in Section 8.2 of
the Master Transaction Agreement, Transferor, on the one hand, and the Company,
on the other hand, shall bear their respective expenses, costs and fees
(including attorneys', auditors' and financing commitment fees) in connection
with the transactions contemplated hereby, including the preparation, execution
and delivery of this Agreement and compliance herewith (the "Transaction
Expenses"), whether or not the transactions contemplated hereby shall be
consummated.
8.5. Partial Invalidity. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
8.6 Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be, personally delivered or sent by
facsimile transmission with confirming copy sent by overnight courier (such as
Express Mail, Federal Express, etc.) and a delivery receipt obtained and
addressed to the intended recipient as follows:
(a) If to Xxxxxx:
Xxxxxx Industries Inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
P.O. Box 35120
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President and CEO
Telecopy No.: 000-000-0000
With a copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy No.: 000-000-0000
(b) If to the Company:
GT Lighting, LLC
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
P.O. Box 35120
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx, President & CEO
Telecopy No. 000-000-0000
Any party may change its address for receiving notice by written notice given to
the others named above. Notices shall be deemed given as of the date of
receipt.
8.7. Miscellaneous.
8.7.1. Other Rules of Construction. References in this Agreement to
sections, schedules and exhibits are to sections of, and schedules and exhibits
to, this Agreement unless otherwise indicated. Words in the singular include
the plural and in the plural include the singular. The word "or" is not
exclusive. The word "including" shall mean including, without limitation. The
section and other headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement
8.7.2. Entire Transaction. This agreement and the agreements and documents
referred to herein contain the entire agreement and understanding among the
parties with respect to the transactions contemplated hereby and supersede all
other agreements, understandings and undertakings among the parties on the
subject matter hereof. All exhibits and schedules hereto are hereby
incorporated by reference and made a part of this Agreement
8.7.3. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.7.4. Governing Law, etc. This Agreement shall be governed in all
respects, including as to validity, interpretation and effect, by the internal
laws of the State of Delaware without giving effect to the conflict of laws
rules thereof. The Company and Transferor hereby irrevocably submit to the
jurisdiction of the courts of the State of Delaware and the Federal courts of
the United States of America located in the State of Delaware solely in respect
of the interpretation and enforcement of the provisions of this Agreement and of
the documents referred to in this Agreement, and hereby waive, and agree not to
assert, as a defense in any action, suit or proceeding for the interpretation or
enforcement hereof or of any such document, that such party is not subject
thereto or that such action, suit or proceeding may not be brought or is not
maintainable in said courts or that the venue thereof may not be appropriate or
that this Agreement or any of such document may not be enforced in or by said
courts, and the parties hereto irrevocably agree that all claims with respect to
such action or proceeding shall be heard and determined in such a Delaware State
or Federal court. The Company and Transferor hereby consent to and grant any
such court jurisdiction over the person of such parties and over the subject
matter of any such dispute and agree that mailing of process or other papers in
connection with any such action or proceeding in the manner provided in Section
8.6, or in such other manner as may be permitted by law, shall be valid and
sufficient service thereof.
8.7.5. Successors and Assigns This Agreement shall bind and inure to the
benefit of the parties named herein and their respective successors and
permitted assigns. This Agreement shall not be assigned by either party hereto
without the express prior written consent of the other party and any attempted
assignment, without such consents, shall be null and void, provided that the
Company may assign this Agreement to any Subsidiary of the Company, provided
further that the Company shall in all events remain liable hereunder. Except as
otherwise provided in the Master Transaction Agreement, this Agreement does not
create any rights, claims or benefits inuring to any person that is not a party
hereto nor create or establish any third-party beneficiary hereto.
8.7.6. Amendment; Waivers.
(a) No amendment, waiver or consent with respect to any provision of
this Agreement shall in any event be effective, unless the same shall be in
writing and signed by the parties hereto, and then such amendment, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
(b) The failure of any party at any time or times to require
performance of any provisions hereof shall in no manner affect that party's
right at a later time to enforce the same. No waiver by any party of the breach
of any term or covenant contained in this Agreement in any one or more instances
shall be deemed to be, or construed as, a further or continuing waiver of any
such breach, or a waiver of the breach of any other term or covenant contained
in this Agreement.
8.7.7. Remedies. The rights and remedies of any party based upon, arising
out of or otherwise in respect of any inaccuracy or breach of any
representation, warranty, covenant or agreement or failure to fulfill any
condition shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement as to which there is no inaccuracy or breach.
The representations and warranties of Transferor shall not be affected or deemed
waived by reason of any investigation made by or on behalf of the Company
(including but not limited to by any of its advisors, consultants or
representatives) or by reason of the fact that the Company or any of such
advisors, consultants or representatives knew or should have known that any such
representation or warranty is or might be inaccurate.
8.7.8. Authorship. The parties hereto agree that the terms and language
of this Agreement were the result of negotiations between the parties and, as a
result, there shall be no presumption that any ambiguities in this Agreement
shall be resolved against either party. Any controversy over the construction
of this Agreement shall be decided without regard to events of authorship or
negotiation.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first above written.
GT LIGHTING, LLC
By: ______________________________
Xxxxx X. Xxxxxx
President
XXXXXX INDUSTRIES INC.
TUPELO HOLDINGS INC.
XXXXXX INDUSTRIES HOLDINGS INC.
GARDCO MFG, INC.
CAPRI LIGHTING, INC.
XXXXXX IMPORTS, INC.
TI INDUSTRIES CORPORATION
By: ______________________________
Xxxxxxx X. Xxxxx
President
LIST OF SCHEDULES
TO THE
CAPITALIZATION AGREEMENT
BETWEEN
GT LIGHTING, LLC
AND
XXXXXX INDUSTRIES INC.
TUPELO HOLDINGS INC.
XXXXXX INDUSTRIES HOLDINGS INC.
GARDCO MFG, INC.
CAPRI LIGHTING, INC.
XXXXXX IMPORTS, INC.
TI INDUSTRIES CORPORATION
DATED APRIL 28, 1998
Schedule 1.1(p): Stock, Partnership, Membership or Other Interests in
any Person Engaged in the Business
Schedule 1.2: Excluded Assets
Schedule 2.3: Excluded Liabilities
Schedule 3.1.2(a): State of Incorporation
Schedule 3.1.2(b): States in Which Qualified to do Business
Schedule 3.1.2(d): Subsidiaries
Schedule 3.1.3: Required Consents
Schedule 3.1.5: Undisclosed Liabilities
Schedule 3.1.6(a): Contested Taxes
Schedule 3.1.6(b): Agreements or Powers of Attorney Extending Period of
Assessment or Collection of Taxes
Schedule 3.1.6(c): Taxes Due or Audit Issues
Schedule 3.1.6(d): Tax-Related Litigation or Administrative Appeal
Schedule 3.1.7: Changes in Conduct of Business out of the Ordinary
Course Since the Audited Balance Sheet Date
Schedule 3.1.8: Litigation Pending or Threatened
Schedule 3.1.9(a): Noncompliance with Applicable Law
Schedule 3.1.9(b): Governmental Approvals and Consents Required
Schedule 3.1.10: Conduct of the Business Outside of the Division
Schedule 3.1.11: Assets to Which Xxxxxx Industries Inc. Does Not Have
Good Title; Assets Not in Reasonably Good Repair and
Operating Condition
Schedule 3.1.12(a): List of Contracts
Schedule 3.1.12(c): Defaults under Contracts; Consents Required
Schedule 3.1.12(d): Power of Attorney Relating to the Business
Schedule 3.1.13: Territorial Restrictions: Non-Competition Agreements
Schedule 3.1.14: Pending or Threatened Claims Regarding Warranties in
Excess of $100,000
Schedule 3.1.16(a): Owned Intellectual Property
Schedule 3.1.16(d): Intellectual Property Litigation
Schedule 3.1.16(e): List of Names and Marks; Contractual Restrictions
Schedule 3.1.17: Insurance Policies; Claims Made within Last Two Years
Schedule 3.1.18(a): Owned Real Property
Schedule 3.1.18(b): Leases in amount in excess of $100,000
Schedule 3.1.19(b): Noncompliance with Environmental Permits and Laws
Schedule 3.1.19(c): Actions Resulting in Liability or Obligation
Schedule 3.1.19(d): Other Environmental Concerns
Schedule 3.1.20: Employees, Labor Matters, etc.
Schedule 3.1.21(a): Employee Benefit Plans, etc.
Schedule 3.1.21(c)(vi): Post-Employment Benefits
Schedule 3.1.21(c)(ix): Severance Pay Policies
Schedule 3.1.22: Breaches of Confidentiality
Schedule 4.1.4: Names and Marks Under which Business Will be Conducted
After Closing
Schedule 8.1(b): Transferring Affiliates
