Exhibit 10.15
ASSET PURCHASE AGREEMENT
between
ALABAMA METAL INDUSTRIES CORPORATION
"Purchaser"
CHATWINS GROUP, INC.
"Seller"
DATED SEPTEMBER 30, 1999
TABLE OF CONTENTS
ARTICLE 1 PURCHASE AND SALE OF ASSETS....................................................1
1.1 Purchase and Sale of Assets....................................................1
1.2 Excluded Assets................................................................5
ARTICLE 2 ASSUMPTION OF LIABILITIES......................................................6
2.1 Assumption.....................................................................6
2.2 Excluded Liabilities...........................................................6
ARTICLE 3 CALCULATION AND PAYMENT OF PURCHASE PRICE......................................9
3.1 Calculation of Final Purchase Price............................................9
3.2 Determination of Estimated Purchase Price.....................................10
3.3 Determination of Final Purchase Price.........................................10
3.4 Reconciliation of Estimated and Final Purchase Price..........................11
3.5 Payment of Estimated Purchase Price and Purchase Price Adjustment.............11
3.6 Transfer Expenses.............................................................12
3.7 Allocation of Purchase Price..................................................12
ARTICLE 4 PROCEDURE FOR CLOSING.........................................................12
4.1 Time and Place of Closing.....................................................12
4.2 Transactions at the Closing...................................................13
4.3 Conveyance of Title to Real Property..........................................15
4.4 Survey and Inspection of Property.............................................16
4.5 Certain Consents..............................................................16
4.6 Further Assurances............................................................17
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SELLER......................................17
5.1 Organization and Qualification................................................17
5.2 Authority.....................................................................17
5.3 Subsidiaries; Joint Ventures..................................................18
5.4 Financial Statements..........................................................18
5.5 Inventories...................................................................19
5.6 Accounts Receivable...........................................................19
5.7 Personal Property.............................................................20
5.8 Real Property: Leased Real Property...........................................20
5.9 Contracts.....................................................................23
5.10 Intellectual Property.........................................................25
5.11 Insurance.....................................................................26
5.12 Environmental Matters and OSHA................................................26
5.13 Litigation....................................................................28
5.14 Absence of Changes............................................................29
5.15 Brokers and Finders...........................................................31
5.16 Labor Matters.................................................................31
5.17 Governmental Approval and Consents............................................32
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5.18 Taxes.........................................................................32
5.19 Employee Benefit Plans........................................................33
5.20 Compliance with Laws..........................................................35
5.21 Governmental Approval and Consents............................................36
5.22 Adequacy of Acquired Assets...................................................36
5.23 Compliance with the Immigration Reform and Control Act........................36
5.24 Correctness of Representations................................................36
5.25 Definition of knowledge.......................................................37
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PURCHASER...................................37
6.1 Organization and Qualification................................................37
6.2 Authority.....................................................................37
6.3 Brokers and Finders...........................................................38
6.4 Governmental Approval and Consents............................................38
6.5 Correctness of Representations................................................38
ARTICLE 7 OTHER AGREEMENTS OF THE PARTIES...............................................38
7.1 Consents......................................................................38
7.2 Conditions Precedent..........................................................39
7.3 Environmental Permits.........................................................39
7.4 Discharge of Liens and Encumbrances...........................................40
7.5 Illinois Real Property........................................................40
7.6 Orem City Bonds...............................................................40
7.7 Transferred Benefit Plans.....................................................40
7.8 Pittsburgh Real Property......................................................41
7.9 Oak Brook Real Property.......................................................41
ARTICLE 8 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER..............................42
8.1 Certificate Regarding Schedules and Representations and Warranties............42
8.2 Compliance by Seller..........................................................42
8.3 No Injunction; Etc............................................................42
8.4 Operation in the Ordinary Course..............................................42
8.5 Consents; Authorizations; Approval of Legal Matters...........................42
8.6 Leases........................................................................42
8.7 Incumbency....................................................................43
8.8 Certified Resolutions.........................................................43
8.9 Basic Corporate Documents.....................................................43
8.10 Satisfaction of Title Objections and Release of Certain Liens.................43
8.11 Accuracy of Schedules.........................................................43
8.12 No Adverse Change.............................................................44
8.13 Instruments of Transfer.......................................................44
8.14 Acquisition Documents.........................................................44
8.15 Opinion of Seller's Counsel...................................................44
8.16 Title Commitments; Surveys....................................................44
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8.17 Real and Leased Property Certificates.........................................44
8.18 Proceedings...................................................................44
8.19 Names.........................................................................44
8.20 Condition of Acquired Assets..................................................45
8.21 Financing Arrangements........................................................45
8.22 HSR Act.......................................................................45
ARTICLE 9 CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER.................................45
9.1 Certificate Regarding Representations and Warranties..........................46
9.2 Compliance by Purchaser.......................................................46
9.3 Certified Resolutions.........................................................46
9.4 Basic Corporate Documents.....................................................46
9.5 No Injunction; Etc............................................................46
9.6 Incumbency....................................................................46
9.7 Certificates..................................................................47
9.8 Acquisition Documents.........................................................47
9.9 Opinion of Purchaser's Counsel................................................47
9.10 HSR Act.......................................................................47
9.11 Proceedings...................................................................47
ARTICLE 10 MUTUAL COVENANTS..............................................................47
10.1 Governmental Filings..........................................................47
10.2 Further Mutual Covenants......................................................47
10.3 Prorations....................................................................48
ARTICLE 11 POST CLOSING MATTERS..........................................................49
11.1 Employment of Employees.......................................................49
11.2 Seller's Benefit Plans........................................................50
11.3 Vacation Pay..................................................................50
11.4 Purchaser's Benefit Plans.....................................................51
11.5 Employee Files................................................................51
11.6 Non-Solicitation..............................................................51
11.7 Discharge of Excluded Obligations.............................................51
11.8 Maintenance of Books and Records..............................................51
11.9 Payments Received.............................................................52
11.10 UCC Matters...................................................................52
11.11 Covenant Not to Compete.......................................................52
11.12 Cooperation...................................................................53
ARTICLE 12 CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS.........................................53
12.1 Confidentiality...............................................................53
12.2 Public Announcements..........................................................54
ARTICLE 13 TERMINATION...................................................................54
13.1 Termination...................................................................54
13.2 Effect of Termination.........................................................54
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ARTICLE 14 INDEMNIFICATION...............................................................55
14.1 Agreement of Seller to Indemnify..............................................55
14.2 Agreement of Purchaser to Indemnify Seller....................................55
14.3 Procedures for Indemnification................................................56
14.4 Defense of Third Party Claims.................................................57
14.5 Settlement of Third Party Claims..............................................57
14.6 Duration......................................................................58
14.7 Limitations...................................................................58
ARTICLE 15 GENERAL PROVISIONS............................................................59
15.1 Fees and Expenses.............................................................59
15.2 Notices.......................................................................59
15.3 Assignment; Binding Effect....................................................61
15.4 No Benefit to Others..........................................................61
15.5 Headings, Gender, and Person..................................................61
15.6 Counterparts..................................................................61
15.7 Integration of Agreement......................................................61
15.8 Time of Essence...............................................................62
15.9 Governing Law.................................................................62
15.10 Partial Invalidity............................................................62
15.11 Investigation.................................................................62
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TABLE OF EXHIBITS
Exhibit A License Agreement
Exhibit B Seller Opinion
Exhibit C Assignment and Assumption Agreement
Exhibit D Purchaser Opinion
Exhibit E Illinois Sublease
Exhibit F Oak Brook Sublease
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SCHEDULES
Schedule 1.1.1 Noncurrent Assets
Schedule 1.2.1 Foreign Excluded Assets
Schedule 1.2.2 Additional Excluded Assets
Schedule 5.1.1 Jurisdictions Where Qualified As a Foreign Corporation
Schedule 5.1.2 Locations of the Acquired Assets and Trade Names
Schedule 5.4 Financial Statements
Schedule 5.4.1 Special or Nonrecurring Income
Schedule 5.5 Inventory
Schedule 5.7.1 Vehicles
Schedule 5.7.2 Equipment
Schedule 5.7.3 Furniture and Fixtures
Schedule 5.7.4 Personal Property Liens
Schedule 5.7.5 Leased Personal Property
Schedule 5.8.1 Real Property
Schedule 5.8.2 Leased Real Property
Schedule 5.8.3 Commitments Affecting Real Property
Schedule 5.8.4 Subdivided Real Property
Schedule 5.9.1 Contracts
Schedule 5.9.2 Commitments for Capital Expenditures
Schedule 5.9.3 Customer List
Schedule 5.10 Intellectual Property
Schedule 5.12.1 Environmental Matters
Schedule 5.12.2 Environmental Permits and Licenses
Schedule 5.12.3 Pending Environmental Claims
Schedule 5.12.4 Release of Hazardous Materials
Schedule 5.12.5 Storage Tanks and Audits
Schedule 5.12.6 Environmental Audit Reports
Schedule 5.12.7 Employee Health and Safety Matters
Schedule 5.13 Litigation Matters
Schedule 5.14 Certain Changes
Schedule 5.16 Employees
Schedule 5.17 Permits and Licenses
Schedule 5.18.1 Tax Bills
Schedule 5.18.2 Federal and State Tax Disputes
Schedule 5.19 Benefit Plans
Schedule 5.25 Seller's Knowledge
Schedule 11.1 Employee List
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CROSS REFERENCES TO DEFINED TERMS
TERM SECTION IN WHICH DEFINED
Accounts Receivable Section 1.1(1)
Acquired Asset(s) Section 1.1
Acquisition Documents Section 5.2
Adjustment Date Section 3.4
Air Permits Section 7.3
Agreement Preamble
Assumed Liabilities Section 2.1
Assignment and Assumption Agreement Section 4.2(b)(ii)
Beneficiary Section 10.3(d)
Benefit Plans Section 5.19(a)(ii)
Bond Counsel Section 7.6
Books and Records Section 1.1(g)
Business Recital B
CERCLA Section 2.2(g)
Code Section 4.2(a)(xi)
Closing Section 4.1
Closing Date Section 4.1
Closing Date Balance Sheet Section 3.3(a)
Closing Schedule Section 3.3(a)
Competing Business Section 11.11
Contract(s) Section 1.1(c)
Determination Materials Section 3.3(b)
Division Recital A
Effective Time Section 4.1
Employees Section 5.19(a)
Environmental Permits Section 5.12(a)(v)
Environmental Audit Reports Section 5.12(a)
Equipment Section 1.1(b)
Equipment Charges Section 10.3(b)(iii)
ERISA Section 5.19(a)(i)
Estimated Net Capital Employed Section 3.2
Estimated Purchase Price Section 3.2
Excluded Assets Section 1.2
Excluded Liabilities Section 2.2
Final Purchase Price Section 3.1(a)
Financial Statements Section 5.4
Furniture and Fixtures Section 1.1(i)
GAAP Section 3.1(b)
Goods Contracts Section 5.9(a)(iii)
Hired Employee(s) Section 11.1
Illinois Lease Agreement Section 1.1(a)
Illinois Real Property Section 1.1(a)
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Illinois Sublease Section 7.5
Immigration Laws Section 5.23
Indemnification Claim Section 14.3(a)
Indemnitee Section 14.3
Indemnitor Section 14.3
Information Section 12.1
Intellectual Property Section 1.1(f)
Inventory Section 1.1(d)
Knowledge Section 5.25
Labor Claims Section 5.16
Leased Real Property Section 1.1(a)
Lender(s) Section 8.21
License Agreement Section 1.1
Losses Article 14
Mexican Subsidiary Section 1.1
Negotiation Period Section 14.3(c)
Net Capital Employed Section 3.1(b)
Notice Period Section 14.4(a)
Oak Brook Lease Agreement Section 1.1(a)
Oak Brook Property Section 1.1(a)
Oakbrook Sublease Section 7.9
Objection Section 3.3(b)
Orem City Bonds Section 14.1(e)
Payor Section 10.3(d)
Payee Section 10.3(d)
Permits Section 1.1(h)
Permitted Encumbrances Section 1.1
Person Section 15.5
Personal Property Taxes Section 10.3(b)(v)
Pittsburgh Agreement Section 1.1(a)
Pittsburgh Property Section 1.1(a)
Proration Items Section 10.3(a)
Purchaser Preamble
Purchaser Indemnitees Section 14.1
Purchaser Opinion Section 4.2(b)(vi)
Purchaser's Accountants Section 3.3(a)
Real Property Section 1.1(a)
Real Property Leases Section 5.8(b)
Real Property Taxes Section 10.3(b)(iv)
Recipient Section 10.3(d)
Rental Charges Section 10.3(b)(ii)
Required Consents Section 7.1
Seller Preamble
Seller Indemnitees Section 14.2
Seller Opinion Section 4.2(a)(iv)
Services Contracts Section 5.9(a)(iii)
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Territory Section 11.11
Threshold Amount Section 14.7(a)
Third Party Claim Section 14.4
Title Commitments Section 8.16
Transferred Benefit Plans Section 7.7(a)
Utility Charges Section 10.3(b)(i)
Vehicles Section 1.1(e)
Workpapers Section 3.3(b)
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of this 30th day of September, 1999, between ALABAMA METAL INDUSTRIES
CORPORATION, a Delaware corporation ("Purchaser"), and CHATWINS GROUP, INC., a
Delaware corporation ("Seller").
A. Seller is engaged in the manufacture, sale and distribution of metal
and fiberglass reinforced plastic grating products through its Xxxxx Division
(the "Division").
B. Purchaser desires to purchase substantially all of the business
operations of the Division on and subject to the terms contained in this
Agreement. All of the business and operations of the Division which are located
in the United States are hereinafter referred to as the "Business."
C. Subject only to the limitations and exclusions contained in this
Agreement and on the terms and conditions hereinafter set forth, Seller desires
to sell and Purchaser desires to purchase the Business, and substantially all of
the assets of Seller used therein.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale of Assets. At the Closing (as hereinafter
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defined), on and subject to the terms and conditions of this Agreement, Seller
shall sell, assign, transfer, convey, and deliver to Purchaser, and Purchaser
shall purchase, acquire, and accept from Seller, all of the right, title, and
interest of Seller in and to (i) the Business and all goodwill related
exclusively to the Business, (ii) the name(s) "Xxxxx" and all marks and goodwill
associated therewith, whether or not registered (including the name, marks and
goodwill associated with Shanghai Xxxxx, Xxxxx de Mexico, S.A. de C.V. (the
"Mexican Subsidiary") and CFI Xxxxx which names shall be licensed to Seller
following the Effective Time pursuant to the License Agreement attached hereto
as Exhibit A (the "License Agreement")), and (iii) all of the assets,
properties, and rights of Seller constituting the Business or used by Seller
exclusively therein, of every type and description, tangible and intangible,
wherever located and whether or not reflected on the books of the Seller (except
as may be specifically excluded by this Agreement), free and clear of all liens,
claims, charges, security interests, and encumbrances of any kind or
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nature other than Permitted Encumbrances (as hereinafter defined), including,
without limitation, the following, as the same shall exist at the Closing Date
(as hereinafter defined) and to the extent the same are used exclusively in the
Business:
(a) All real property owned by Seller and used exclusively in
the Business, and all of Seller's right, title, and interest in the buildings,
fixtures, and improvements located thereon, together with all water lines,
rights of way, uses, licenses, easements, hereditaments, tenements, and
appurtenances belonging or appertaining thereto and any and all assignable
warranties of third parties with respect thereto (the "Real Property") and, by
assignment of leases, all of Seller's rights in, to, and under any real estate
leases (including, without limitation, any assignment of a real estate lease or
sublease) to which Seller is a party which are used exclusively in the Business
(other than (i) the certain Lease Agreement (the "Illinois Lease Agreement")
between Seller and Temperature Equipment Corporation relating to real property
located at 000 X. Xxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxxx (the "Illinois Real
Property"), (ii) the Lease Agreement (the "Oak Brook Lease Agreement") between
Seller and American National Bank and Trust Company of Chicago, Trustee under
Trust No. 113883.03 by Riverside Terrace Partnership, an Illinois General
Partnership, its sole beneficiary and Agent for the property relating to real
property located at 0000 Xxxxx Xxxxxxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxxxx 00000
(The "Oak Brook Real Property"), and (iii) the verbal intra company agreement
(the "Pittsburgh Agreement") between Seller and Xxxxx Corporation relating to
real property located at 0000 Xxxxxx Xxxxxx, XxXxxxxxxx, XX 00000 (the
"Pittsburgh Real Property")), together with all of Seller's right, title, and
interest in the buildings, fixtures and improvements, including construction-in-
progress, and appurtenances thereto, located on the real property subject to
such real estate leases, and any and all assignable warranties of third parties
with respect thereto (the "Leased Real Property");
(b) All machinery, equipment, tools, computers, terminals,
computer equipment, office equipment, business machines, telephones and
telephone systems, parts, accessories, and the like, wherever located (including
all such assets located on the Real Property and the Leased Real Property, and
certain of such assets located on the Illinois Real Property, the Oak Brook Real
Property and the Pittsburgh Real Property), but excluding the property and
assets listed on Schedule 1.2.2, and any and all assignable warranties of third
parties with respect thereto, together with all rights of Seller against the
manufacturers or suppliers of such items (the "Equipment");
(c) To the extent permitted by applicable law, all of the
contracts and agreements listed on Schedules 5.7.5, 5.9.1, 5.10 and 5.16
(including, specifically, the collective bargaining agreements relating to the
employees of the Division's Libertyville, Illinois facility and the Liberty,
Missouri facility), those contracts and agreements relating to the Business
which by the terms of Section 5.9(a) are not required to be listed on Schedule
5.9.1, all orders for the goods and services of the Business, whether oral or in
writing, and the benefit of all warranties and guarantees of third parties with
respect to
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any of the foregoing, together with the right to receive income in respect of
such contracts, agreements and purchase orders on and after the Closing Date
(individually, a "Contract" and collectively, the "Contracts");
(d) All raw materials, work-in-progress, finished goods, goods
held for resale, spare parts, waste materials, scrap, consignment inventory,
samples, promotional literature, and supplies wherever located (including all
such assets located on the Real Property and the Leased Real Property, and
certain of such assets located on the Illinois Real Property, the Oak Brook Real
Property and the Pittsburgh Real Property), including inventory in transit to or
from any Seller's facility or on order and not yet delivered (the "Inventory"),
together with all rights of Seller against suppliers of the Inventory including,
without limitation, Seller's rights to receive refunds or rebates in connection
with its purchase of such Inventory;
(e) All motor vehicles, trucks, forklifts, and other rolling
stock and all assignable warranties of third parties related thereto (the
"Vehicles");
(f) All patents, designs, art work, labels, specifications,
designs-in-progress, formulations, know-how, prototypes, inventions, trademarks,
trade names, domain names, websites, trade styles, service marks, and copyrights
(including those set forth on Schedule 5.10 hereto); all registrations and
applications therefor, both registered and unregistered, foreign and domestic;
all trade secrets, technology or processes; all assignable computer software
(including documentation and related object and, if applicable, source codes);
and all confidential or proprietary information that are either (i) owned by or
negotiated in the name of the Division or Seller or (ii) as to which the
Division or Seller has rights as licensee, constituting all of the intellectual
property of the Division or Seller used or contemplated for use exclusively in
the Business (the "Intellectual Property");
(g) All existing data, data bases, books, records (except
those records in Seller's corporate offices or at off-site storage facilities
which are duplicates of the books and records of the Business), correspondence,
business plans and projections, records of sales, customer and vendor lists,
files, papers, and, to the extent permitted under applicable law or regulation,
copies of historical personnel payroll and medical records of each of the Hired
Employees (as defined in Section 11.1 hereof) in the possession of Seller,
including without limitation, employment applications, corrective action
reports, disciplinary reports, notices of transfer, notices of rate changes,
other similar documents, and any summaries of such documents regularly prepared
by Seller; all reported medical claims made for each Hired Employee; and all
manuals and printed instructions of Seller relating to the Acquired Assets (as
hereinafter defined) and to the operation of the Business (the "Books and
Records");
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(h) To the extent permitted under applicable law or
regulation, all licenses, franchises, permits, certificates, consents, and other
governmental, quasi-governmental and/or third party authorizations of Seller
(the "Permits");
(i) All furniture, fixtures, and leasehold improvements
wherever located, and any and all assignable warranties covering such furniture,
fixtures, and leasehold improvements owned by Seller or in which Seller has an
interest ("Furniture and Fixtures");
(j) All cash and cash equivalents and xxxxx cash, if any,
located on the Real Property or the Leased Real Property; all prepaid expenses;
all causes of action (except for those causes of action which are not related to
the Acquired Assets), claims, and demands of Seller, including without
limitation, rights to returned or repossessed goods and rights as an unpaid
vendor; all security deposits and utility deposits (except as related to the
Illinois Lease Agreement); and all other assets used in the Business by Seller
wherever located, tangible or intangible, provided, however, that the Acquired
Assets shall not include, and Purchaser shall not acquire, any right, title, or
interest of Seller in or to the Excluded Assets (as defined in Section 1.2
hereof);
(k) All noncurrent assets identified on Schedule 1.1.1;
(l) All accounts, notes and other receivables of Seller
arising out of the conduct of the Business (the "Accounts Receivable"); and
(m) All of Seller's right, title and interest in the lockboxes
referenced as Lockbox No. 95060 located at Xxxxxx Trust and Savings Bank and all
cash and other property in such lockbox; and
All of the items described in this Section 1.1 to be purchased by
Purchaser and which are not Excluded Assets as defined in Section 1.2 hereof are
hereinafter collectively referred to as the "Acquired Assets." For purposes of
this Agreement, "Permitted Encumbrances" shall mean (i) liens for taxes and
assessments not yet due and payable (other than taxes arising out of the
transactions contemplated by this Agreement); (ii) such minor imperfections of
title not otherwise waived by Purchaser as set forth on Schedule B to the final
title binders delivered at Closing related to the Real Property and such
encumbrances, if any, that, in the aggregate, do not materially and adversely
detract from the value, or materially and adversely interfere with the present
use of any of the Acquired Assets, including the Real Property or Leased Real
Property; (iii) other nonmonetary liens, claims, and nonmonetary encumbrances
relating to the Acquired Assets that (A) secure the Assumed Liabilities (as
hereinafter defined) and (B) have been properly disclosed to Purchaser on an
appropriate Schedule to this Agreement; and (iv) matters shown on the surveys
delivered at Closing.
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1.2 Excluded Assets. Seller shall not sell and Purchaser shall not
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purchase or acquire and the Acquired Assets shall not include:
(a) Any right, title, or interest of Seller in or to any right
to use the name "Chatwins" and any name, expression, trade name, logo, trademark
or service xxxx, whether or not registered, similar to or including such name;
(b) Any assets, properties, or rights of Seller not used
exclusively in the Business;
(c) The assets of any employee benefit plan (other than the
Transferred Benefit Plans) maintained by Seller for the benefit of the employees
of the Division or to which Seller has made any contribution;
(d) The assets and properties used in the Business which have
been disposed of since the date of this Agreement, provided such disposition has
been made in accordance with the terms hereof;
(e) Seller's corporate franchise, stock record books,
corporate record books containing minutes of meetings of directors and
stockholders, tax returns and records, books of account and ledgers, and such
other records having to do with Seller's organization or stock capitalization;
(f) Any rights which accrue or will accrue to Seller under
this Agreement;
(g) Any rights to any of Seller's insurance policies,
premiums, or proceeds from insurance coverages relating to the Business (except
as provided in Section 8.21 hereof );
(h) Any rights to any of Seller's claims for any federal,
state, local, or foreign tax refund;
(i) The assets, properties, and rights used exclusively in the
Chinese and Mexican operations of the Division and specifically listed and
described on Schedule 1.2.1, and all of Seller's interest (however evidenced) in
Shanghai Xxxxx, the Mexican Subsidiary and CFI Xxxxx;
(j) All rights of Seller under or with respect to the Illinois
Lease Agreement, the Oak Brook Lease Agreement and the Pittsburgh Agreement; and
(k) The property and assets listed on Schedule 1.2.2.
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The assets described in this Section 1.2 are hereinafter collectively
referred to as the "Excluded Assets".
ARTICLE 2
ASSUMPTION OF LIABILITIES
2.1 Assumption. Subject to Section 2.2 hereof, as of the Effective
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Time, Purchaser shall assume responsibility for the performance and satisfaction
when due of the following liabilities (collectively, the "Assumed Liabilities"):
(a) The (i) trade accounts payable of the Business (excluding
those accounts that have been paid by Seller pursuant to issued checks that
remain outstanding) (ii) accrued payroll, (iii) accrued taxes, (iii) accrued
pension, and (iv) other accrued expenses incurred in the normal course of
business, in each case as the same exist on the Closing Date, but only in the
amount and to the extent reflected on the Closing Date Balance Sheet (as defined
in Section 3.3(a) hereof); and
(b) All of the executory obligations and liabilities of Seller
to be performed or paid arising from and after the Closing Date, pursuant to (i)
the terms of the Real Property Leases identified in Schedule 5.8.2 (other than
the Illinois Lease Agreement, the Oak Brook Lease Agreement and the Pittsburgh
Agreement), (ii) the Contracts described in Section 1.1(c), and (iii) any other
contract, agreement or purchase order not described in Section 1.1(c) but with
respect to which Purchaser elects to receive the substantial benefit thereof,
but, in each case, excluding any obligations or liabilities arising from or
relating to any breach or violation existing on or arising prior to the Closing
Date of such Real Property Leases or Contracts by Seller or default under such
Real Property Leases or Contracts by Seller.
2.2 Excluded Liabilities. Seller shall retain and pay, perform and
--------------------
satisfy when due the Excluded Liabilities (as hereinafter defined). Purchaser
shall not assume or become liable for any obligations, commitments, or
liabilities of Seller, whether known or unknown, absolute, contingent, or
otherwise, and whether or not related to the Acquired Assets, except for the
Assumed Liabilities (the obligations and liabilities of Seller not assumed by
Purchaser are hereinafter referred to as the "Excluded Liabilities"). Without
limiting the generality of the preceding sentences, the Excluded Liabilities
include all obligations and liabilities of Seller not specifically described in
subsection Sections 2.1(a) and 2.1(b) hereof, including without limitation, the
following:
(a) To the extent not reflected on the Closing Date Balance
Sheet, all pension, retirement, healthcare or other benefits arising out of or
payable on account of service prior to the Effective Time pursuant to any
employee benefit plan maintained by Seller or to which Seller has made any
contribution or to which Seller could be subject to any liability for the
benefit of any of the employees of the Business (including, without
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limitation, liability for post retirement benefits and accrued pension
liabilities), all liability, if any, now existing or hereafter arising for post
retirement medical or health benefits under any Transferred Benefit Plan, and
all liability through the Closing Date for withdrawal from any "multi-employer
plan" based upon or arising out of any event or circumstance occurring prior to
or on the Closing Date or as a result of the consummation of the transactions
provided for herein;
(b) Any losses, costs, expenses, damages, claims, demands and
judgments of every kind and nature (including the defenses thereof and
reasonable attorneys' and other professional fees) related to, arising out of,
or in connection with Seller's failure to comply with the Bulk Transfer Act or
any similar statute as enacted in any jurisdiction, domestic or foreign;
(c) Any liability or obligation arising or accruing under any
Contract, Real Property Lease or Permit prior to the Effective Time, and any
liability or obligation arising from or related to any breach or violation by
Seller of or default by Seller under any provision of any Contract or Real
Property Lease or Permit prior to the Effective Time;
(d) Any liability of Seller with respect to any claim or cause
of action, regardless of when made or asserted, which arises (i) out of or in
connection with the operations of the Business by Seller prior to the Effective
Time and which is not specifically listed or described in Section 2.1 hereof, or
(ii) out of or in connection with any federal, state or local law, rule or
regulation relating to employee health and safety prior to the Effective Date;
(e) Any liabilities or obligations of Seller relating to the
Excluded Assets;
(f) To the extent not reflected on the Closing Date Balance
Sheet, any liability or obligation (including, without limitation, salaries,
bonus, vacation pay, sick pay, holiday pay, severance pay and other like
obligations or payments), arising prior to or as a result of the Closing, to any
present or former employee, agent, or independent contractor of Seller, whether
or not employed or retained by Purchaser after the Closing;
(g) Any liability (whether or not based upon or arising out of
any condition, event or circumstance disclosed in the Environmental Audit
Reports attached hereto as Schedule 5.12.6) arising out of or relating to (i)
any provision of environmental law, rule or regulation relating to environmental
protection as it pertains to, or arising out of, any act or omission of Seller,
its employees, agents or representatives related to or arising out of, the
operation of the Business prior to the Effective Time, or (ii) the ownership,
use, control or operation prior to the Effective Time of any plant, facility,
site, area, or property used by the Business (including, without limitation, any
plant, facility,
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site, area or property currently or previously owned or leased by Seller and
used by the Business) at which a non-lawful release of a Hazardous Material has
occurred (together, (i) and (ii) are individually, and collectively, an
"Environmental Liability"). For purposes of this Agreement, "Hazardous Material"
means any hazardous waste, toxic substance, asbestos, agricultural chemicals,
petroleum or any related material and substances defined as "hazardous
substances" or "toxic substances" in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. (S) 9601 et seq.
("CERCLA"), the Hazardous Materials Transportation Act, 49 U.S.C. (S) 1802, the
Resource Conservation and Recovery Act, 42 U.S.C. (S) 6901 et seq., and any
applicable state law;
(h) Any liability or obligation of Seller arising or incurred
in connection with the negotiation, preparation and execution of this Agreement
and the consummation of the transactions contemplated hereby, including without
limitation, fees and expenses of its brokers, counsel, accountants, and other
experts;
(i) To the extent not reflected on the Closing Date Balance
Sheet, any liability or obligation of Seller for all federal, state or local
income, excise, franchise and capital stock taxes, charges, fees, levies or
other assessments measured on the basis of net income, gross receipts, sales,
use, ad valorem, franchise, profits, license, withholding, payroll, employment,
social security, unemployment, severance, property or other taxes, duties, fees,
assessments or charges of any kind whatsoever, including any interest,
penalties, or additional amounts attributable thereto imposed by any federal,
state, local or foreign governmental authority and payable by Seller or any
member of any affiliated group or any combined or consolidated group on account
of the Business, for all periods through and including the period ending at the
Effective Time, including, without limitation, income arising as a result of the
transactions contemplated herein. For the period that ends at the Effective
Time, the taxable income attributable to such period shall be determined based
on a full closing of the books of the Business in a manner sufficient to support
for tax purposes the allocation to such period of each item of income and
expense accrued on the books in each jurisdiction in which the Business
operates;
(j) The amount of all issued and outstanding checks as of the
Closing Date drawn on the Xxxxxx Trust and Savings Bank Xxxxx Disbursing Account
000-000-0;
(k) Any liability of Seller for any actual or alleged breach
of, or noncompliance with, any federal, state, or local law, rule, regulation,
order or decree applicable to any Contract, Real Property Lease or Permit or
otherwise applicable to the Seller prior to the Effective Time; and
(l) To the extent not reflected on the Closing Date Balance
Sheet, all indebtedness of Seller, whether secured or unsecured, due or to
become due, including without limitation all liabilities under or with respect
to the Orem City Bonds (as
-8-
hereinafter defined) other than any liability thereunder arising as a result of
the breach by Purchaser of its covenant set forth in Section 7.6 hereof;
(m) All liability with respect to any express or implied
warranty made by Seller in connection with any product manufactured (including
work in progress or unshipped product), designed and sold by Seller prior to the
Effective Time or any service performed by Seller prior to the Effective Time;
(n) All liability with respect to claims for personal injury
(including death) or property damage based upon any doctrine of product
liability, with regard to any product that was manufactured (including work in
progress or unshipped product) or sold by Seller prior to the Effective Time;
and
(o) All liability for worker's compensation claims asserted
by, or with respect to, any employee or former employee of Seller with respect
to the Business in respect of any injury or other compensable event or
occupational illness or disease, to the extent occurring prior to the Effective
Time and all costs and expenses (including legal fees, administrative and other
like expenses) incurred in connection with any such claims.
ARTICLE 3
CALCULATION AND PAYMENT OF PURCHASE PRICE
3.1 Calculation of Final Purchase Price.
-----------------------------------
(a) The total consideration to be paid to Seller for the sale,
transfer, and conveyance of the Acquired Assets, and the covenant not to compete
set forth in Section 11.11 hereof shall be an amount equal to the sum of (i) the
Net Capital Employed as of the Effective Time, and (ii) $12,776,000 (which
amount includes $25,000 as an amount agreed upon by the parties to compensate
Seller for lost revenues resulting from the determination of the Net Capital
Employed being conducted on the Closing Date rather than after the Effective
Time) (the "Final Purchase Price"), plus the assumption of the Assumed
Liabilities.
(b) For purposes of determining the Final Purchase Price only,
the term "Net Capital Employed" means (i) the book value of the tangible and
intangible Acquired Assets as of the Effective Time determined in accordance
with generally accepted accounting principles ("GAAP") consistently applied,
less (ii) the amount of the Assumed Liabilities as of the Effective Time to the
extent such Assumed Liabilities would be reflected on or reserved against in a
balance sheet as of the Closing Date prepared in accordance with GAAP
consistently applied. The determination of the application of accounting
principles on a basis consistent with prior periods shall be made by reference
to Seller's prior application of such principles unless such principles or such
prior application thereof was not in accordance with GAAP, in which case GAAP
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determined by Purchaser shall be used without regard to the consistency of the
application thereof with Seller's prior accounting periods.
3.2 Determination of Estimated Purchase Price. Not later than five (5)
-----------------------------------------
business days prior to the Closing Date, Seller shall furnish to Purchaser
Seller's best estimate of the Net Capital Employed as of the Effective Time (the
"Estimated Net Capital Employed"). The purchase price paid at Closing (the
"Estimated Purchase Price") shall be the sum of (i) the Estimated Net Capital
Employed, plus (ii) $12,776,000. For illustrative purposes only, if the
Estimated Net Capital Employed is equal to $19,276,000, then the Estimated
Purchase Price will be $32,052,000.
3.3 Determination of Final Purchase Price.
-------------------------------------
(a) Not later than ninety (90) days following the Closing
Date, Purchaser shall, at its sole cost and expense, furnish to Seller (i) the
audited statement of Net Capital Employed, as of the Effective Time (the
"Closing Date Balance Sheet"), prepared by Purchaser and audited by Deloitte &
Touche LLP ("Purchaser's Accountants"). The Closing Date Balance Sheet will (i)
be prepared in accordance with the books and records of Seller, (ii) be prepared
in accordance with GAAP used to prepare annual financial statements without
regard to accounting practices that normally may be followed at interim dates by
the Business, consistently applied with prior periods. The determination of the
application of accounting principles on a basis consistent with prior periods
shall be made by reference to Seller's prior application of such principles
unless such principles or the prior application thereof was not in accordance
with GAAP, in which case GAAP as determined by Purchaser shall be used without
regard to the consistency of the application thereof with Seller's prior
accounting periods, and (iii) as to the valuation of Inventory shown thereon,
such inventory shall be valued on a first-in-first-out basis based on a physical
count of the inventory of the Business conducted on the Closing Date at which
Seller shall have a right to be present upon Purchaser's reasonable written
notice to Seller. The Closing Date Balance Sheet shall include a schedule,
prepared by Purchaser's Accountants, showing the difference, if any, between the
Estimated Purchase Price and the Final Purchase Price, as determined from the
Closing Date Balance Sheet (the "Closing Schedule").
(b) Seller shall have thirty (30) days from the date of its
receipt of the Closing Date Balance Sheet and the Closing Schedule to review the
Closing Date Balance Sheet and the Closing Schedule, and to agree or disagree as
to the Final Purchase Price reflected thereon. If requested to do so by Seller,
Purchaser will instruct Purchaser's Accountants to make available to Seller and
its representatives all work papers and schedules (including all posted and
passed adjustments) prepared or used by Purchaser or Purchaser's Accountants in
connection with the preparation of the Closing Date Balance Sheet (the
"Workpapers"). If Seller does not agree with the Final Purchase Price reflected
on the Closing Date Balance Sheet or the Closing Schedule, then Seller
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shall, within such thirty (30) day period or fifteen (15) days after receipt of
the Workpapers, whichever is later, deliver a written objection to Purchaser
which shall specify in reasonable detail the basis for the objection, and a
computation of the Final Purchase Price asserted by Seller (collectively, the
"Objection"). Upon Purchaser's receipt of such Objection, Purchaser shall cause
the Closing Date Balance Sheet and the Closing Schedule, the objection and
computations of Seller, and all work papers related thereto (collectively, the
"Determination Materials"), to be submitted to Xxxxxx Xxxxxxxx LLP. Xxxxxx
Xxxxxxxx LLP shall review the Determination Materials and determine which of the
positions asserted, either that asserted by Purchaser in the Closing Date
Balance Sheet and Closing Schedule or that asserted by Seller in the Objection,
is the more correct, and notify Purchaser and Seller of its determination within
thirty (30) days following the receipt of the Determination Materials, which
determination shall be final and conclusive.
(c) The fees and expenses of Purchaser's Accountants shall be
borne by Purchaser, and the fees and expenses of Seller's Accountants shall be
borne by Seller. The fees and expenses of Xxxxxx Xxxxxxxx LLP shall be split
equally between the Purchaser and Seller.
3.4 Reconciliation of Estimated and Final Purchase Price. If the Final
----------------------------------------------------
Purchase Price (as determined in Section 3.3 hereof) is greater than the
Estimated Purchase Price (as determined in Section 3.2 hereof), Purchaser shall
pay the difference between such amounts, together with interest thereon as
provided below, to Seller. If the Final Purchase Price is less than the
Estimated Purchase Price, Seller shall pay the difference between such amounts,
together with interest thereon as provided below, to Purchaser. The payments
required by this subsection shall be made by certified check or by wire transfer
in immediately available funds to an account designated in writing by the
recipient within ten (10) days after the earlier to occur of (i) the date
Purchaser and Seller agree as to the Final Purchase Price or (ii) Xxxxxx
Xxxxxxxx LLP notifies Purchaser and Seller of its determination of the Final
Purchase Price according to the provisions of Section 3.3 hereof (the
"Adjustment Date"). The payment, whether to or from Purchaser, shall bear
interest from the Closing Date until the date of payment at an annual interest
rate equal to the Prime Rate, as published in the "Money Rates" column of The
Wall Street Journal, Eastern Edition, on the Closing Date.
3.5 Payment of Estimated Purchase Price and Final Purchase Price
------------------------------------------------------------
Adjustment. Subject to the fulfillment of the conditions set forth herein:
----------
(a) on the Closing Date, Purchaser shall pay or deliver to
Seller the Estimated Purchase Price by wire transfer in immediately available
funds to an account designated in writing by Seller. A Federal Reserve Reference
Number shall be requested by Purchaser at the time of the transfer for the
purpose of assisting Seller in confirming receipt of the transfer; and
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(b) on the Adjustment Date (as defined in Section 3.4 hereof),
Purchaser shall pay Seller or Seller shall pay Purchaser, as the case may be,
such amount resulting from the adjustments provided for in Section 3.4 hereof to
reach the Final Purchase Price (plus interest as provided in Section 3.4), by
certified check or wire transfer in immediately available funds to an account
designated in writing by Seller or Purchaser, as the case may be.
3.6 Transfer Expenses. Seller and Purchaser shall each pay one-half
-----------------
(1/2) of any sales and use, transfer, documentary, or other taxes levied on the
transfer of the Acquired Assets. All Inventory shall be claimed as exempt from
sales or use tax by Purchaser and Purchaser shall furnish Seller at Closing with
appropriate sales tax exemption certificates as reasonably requested by Seller
for the Inventory. Seller and Purchaser shall timely report and remit any such
taxes to the appropriate revenue authorities. In the event any tax is paid in
full by either Purchaser or Seller, the other party shall promptly reimburse the
paying party, on demand, for the other party's portion of such payment.
3.7 Allocation of Purchase Price. The consideration paid for the
----------------------------
covenant not to compete set forth in Section 11.11 hereof, the assumption of the
Assumed Liabilities that are taken into account in determining the amount
realized for tax purposes, and for the Acquired Assets (which shall equal the
Final Purchase Price) shall be allocated among the Acquired Assets in accordance
with the provisions contained in Treasury Regulation Section 1.1060-1T(d). The
parties agree to be bound by such allocation and to report the transaction
contemplated herein for federal income tax purposes in accordance with such
allocation; provided, however, that if adjustments are made to the Estimated
Purchase Price in calculating the Final Purchase Price, then corresponding
adjustments shall be made to the allocation. In furtherance of the foregoing,
the parties hereto agree to execute and deliver Internal Revenue Service Form
8594 reflecting such allocation.
ARTICLE 4
PROCEDURE FOR CLOSING
4.1 Time and Place of Closing. The closing for the purchase and sale
-------------------------
contemplated by this Agreement (the "Closing") shall be held at the offices of
Xxxxxx & Bird, One Atlantic Center, 0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx
00000, on September 30, 1999, commencing at 9:00 A.M., Eastern Daylight Time, or
at such other time and place as the parties hereto may agree in writing (the
date on which the Closing actually occurs is hereinafter referred to as the
"Closing Date"). Subject to the consummation of the Closing on the Closing Date,
the sale, assignment, transfer, and conveyance to Purchaser of the Acquired
Assets and the assumption of the Assumed
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Liabilities will be effective as of 12:01 AM Eastern Daylight Time on the day
following the Closing Date (the "Effective Time").
4.2 Transactions at the Closing. At the Closing, each of the following
---------------------------
items shall be delivered:
(a) Seller shall deliver or make available to Purchaser the
following:
(i) such bills of sale, motor vehicle titles, special
or warranty deeds, quitclaim deeds, assignments, consents, endorsements, and
other good and sufficient instruments and documents of conveyance and transfer,
in form reasonably satisfactory to Purchaser and its counsel, as shall be
necessary and effective to transfer and assign to, vest in, and purchase all of
Seller's right, title, and interests in and to the Acquired Assets, including
without limitation, good, marketable and insurable title in and to all of the
Acquired Assets owned by Seller free and clear of all liens (subject only to
Permitted Encumbrances), and valid leasehold interests in and to all of the
Acquired Assets leased by Seller as lessee, and all of Seller's rights under all
Contracts;
(ii) a certificate of Seller with respect to the
matters described in Sections 8.1, 8.2, 8.5, 8.6, 8.13, and 8.21 hereof;
(iii) a certificate of the Secretary or Assistant
Secretary of Seller with respect to the matters described in Sections 8.8, 8.9
and 8.10 hereof;
(iv) the opinion of Xxxxxxxx Xxxxxxxxx, counsel to
Seller, in substantially the form of Exhibit B hereto (the "Seller Opinion");
(v) copies of the consents and waivers described in
Section 8.5 hereof;
(vi) satisfactory evidence of the approvals described
in Section 8.5 hereof;
(vii) certificates of existence or certificates of
good standing of Seller, as of a date within a reasonable period of time prior
to the Closing Date, from the State of Delaware and each jurisdiction listed in
Schedule 5.1.1 hereto;
(viii) the Agreements of Estoppel, Consent and Waiver
and the Landlords' Consent to Lease Assignment described in Section 8.18 hereof;
(ix) affidavit(s) of title stating that (a) there are
no parties in possession of any of the Real Property or Leased Real Property
other than Seller (or otherwise specifically setting forth any such other
parties' rights and the source and extent
-13-
of such parties' rights), and (b) Seller has not caused any work to be performed
on any of the Real Property or Leased Real Property within one hundred (100)
days of the date of such affidavit(s), or if Seller has caused any such work to
be performed within one hundred (100) days of such date(s) that all such work
has been completed and fully paid for, and such other affidavits and
documentation as Purchaser's title insurance company may reasonably request;
(x) a duly executed certificate stating that Seller
is exempt from withholding under all applicable laws;
(xi) a duly executed certificate stating that Seller
is not a "foreign person" for United States income tax purposes, in accordance
with Section 1445 and Section 897 of the Internal Revenue Code of 1986, as
amended (the "Code");
(xii) such other evidence of the performance of all
covenants and the satisfaction of all conditions required of Seller by this
Agreement at or prior to the Closing Date as Purchaser or its counsel may
reasonably require.
The documents and certificates to be delivered hereunder by or on
behalf of Seller on the Closing Date shall be in form and substance reasonably
satisfactory to Purchaser and its counsel.
(b) Purchaser shall deliver to Seller the following:
(i) a wire transfer in the amount equal to the
Estimated Purchase Price in immediately available funds to an account designated
by Seller;
(ii) an instrument or instruments of assumption of the
Assumed Liabilities in substantially the form of Exhibit C attached hereto (the
"Assignment and Assumption Agreement"), duly executed by Purchaser, and
reasonably satisfactory in form and substance to Seller and its counsel;
(iii) a certificate of Purchaser with respect to the
matters described in Sections 9.1 and 9.2;
(iv) a certificate of the Secretary or Assistant
Secretary of Purchaser with respect to the matters described in Sections 9.3,
9.4 and 9.6 hereof;
(v) the opinion of Xxxxxx & Bird LLP, counsel to
Purchaser, in substantially the form of Exhibit D hereto (the "Purchaser
Opinion");
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(vi) certificates of existence or certificates of good
standing of Purchaser, as of a date within a reasonable period of time prior to
the Closing Date, from the States of Delaware and Alabama;
(vii) such other evidence of the performance of all
covenants and satisfaction of all of the conditions required of Purchaser by
this Agreement, at or before the Closing Date, as Seller or its counsel may
reasonably require.
(viii) a letter identifying those exceptions to title
set forth on Schedule B to the final title binders to be delivered at Closing
which Purchaser has agreed to waive.
The documents and certificates to be delivered hereunder by or on
behalf of the Purchaser on the Closing Date shall be in form and substance
reasonably satisfactory to the Seller and its counsel.
4.3 Conveyance of Title to Real Property.
------------------------------------
(a) Seller shall convey title to the Real Property to
Purchaser by special or general warranty deed in a form customarily used in the
locality in which the Real Property is located, subject, however, to Permitted
Encumbrances. Each such deed shall be executed in accordance with the
requirements of the laws of the state in which such Real Property is located and
shall be in such form as will permit the deed to be recorded. Seller shall
transfer and assign to Purchaser its rights under the Real Property Leases (and
its rights in and to all deposits thereunder, if any (other than with respect to
the Illinois Lease Agreement, the Oak Brook Lease Agreement and the Pittsburgh
Agreement), and all buildings, other structures, and improvements permitted to
be retained or removed by the lessee thereunder) by transfer and assignment in
form reasonably acceptable to Purchaser and its counsel. Regardless of whether
Purchaser objects to the same as provided hereinbelow, the Real Property and the
Leased Real Property shall not be subject to (i) any mortgage, deed of trust,
security deed, security agreement, judgment, lien or claim of lien, or any other
title exception or defect created, caused, suffered or incurred by Seller that
is monetary in nature, Seller hereby agreeing to pay and satisfy of record any
such monetary title defects or encumbrances prior to or at Closing at Seller's
expense, or (ii) any leases, rental agreements or other rights of occupancy of
any kind (other than the Real Property Leases), whether oral or written, except
as disclosed to and accepted by Purchaser as provided elsewhere herein.
(b) Purchaser has examined the title to and has obtained a
current survey of each parcel of Real Property and Leased Real Property and has
heretofore notified Seller in writing of any objections to, defects in or
encumbrances upon Seller's title to or interest in such Real Property or Leased
Real Property, other than Permitted Encumbrances. Seller covenants and agrees
that it will, at Seller's own cost and
-15-
expenses, satisfy those material title defects and encumbrances of which
Purchaser has notified Seller in writing as of the Closing Date.
4.4 Survey and Inspection of Property.
---------------------------------
(a) Seller has granted to Purchaser and Purchaser's agents,
employees and independent contractors the right and privilege to enter upon the
Real Property and the Leased Real Property prior to the date hereof to inspect
the Real Property and the Leased Real Property and to conduct soil borings and
other environmental, geological, engineering, percolation, hydrologic,
feasibility, or landscaping tests or studies, all at Purchaser's sole cost and
expense, provided such testing does not unreasonably interfere with the
operation of the Business at that location. Purchaser agrees to defend and
indemnify Seller from and against any liability or obligation arising out of
such entry or testing by Purchaser or Purchaser's agents under this subsection.
Prior to the Closing Date, Purchaser shall provide copies of all drafts and
finished reports of the Phase I environmental assessment reports prepared by
GaiaTech Inc. in connection with the transactions contemplated herein to Seller,
as soon as practicable. Prior to the Closing Date, the reporting of any
detection of a violation or possible violations to appropriate governmental
authorities shall be controlled by Seller.
(b) Each parcel of Real Property shall be described in the
deed conveying such parcel and other closing documents either by (i) the metes
and bounds description set forth for such parcel (if any) on Exhibit A attached
to and incorporated into Schedule 5.8.1 hereto, or (ii) the metes and bounds
description of such parcel set forth in the deed vesting title to such parcel in
Seller, as said metes and bounds descriptions in item (i) or (ii) may be
modified by mutual agreement of the parties acting in good faith with respect
thereto, provided, however, in the event Purchaser or Seller causes a new survey
of a parcel of Real Property to be made by a land surveyor registered or
licensed in the state in which such Real Property is located, and the resulting
plat of survey accurately depicts the boundaries of such Real Property and those
characteristics of such Real Property that would be revealed by a careful
inspection of such Real Property and is otherwise reasonably acceptable to
Seller, then reference shall be made to such new plat in the description of such
Real Property and the legal description of such Real Property in the closing
documents shall be prepared therefrom.
4.5 Certain Consents. To the extent that Seller's rights under any
----------------
agreement, Contract, commitment, lease, Permit, Real Property Lease or other
Acquired Asset to be assigned to Purchaser hereunder may not be assigned without
the consent of another person which has not been obtained prior to the Closing
Date, and which is important to the ownership, use or disposition by Purchaser
of an Acquired Asset, this Agreement shall not constitute an agreement to assign
the same if an attempted assignment would constitute a breach thereof or be
unlawful, and Seller, at its expense, shall use its commercially reasonable best
efforts to obtain any such required consent(s) as promptly
-16-
as possible. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Purchaser's rights under the
Acquired Asset in question, so that Purchaser would not in effect acquire the
benefit of all such rights, Seller, to the maximum extent permitted by law, and
the specific Acquired Asset and at Seller's expense, shall act after the Closing
as Purchaser's agent in order to obtain for the Purchaser the benefits
thereunder, and Seller shall cooperate, to the maximum extent permitted by law
and the specific Acquired Assets with Purchaser in any other reasonable
arrangement designed to provide such benefits to Purchaser, including any
sublease or subcontract or similar arrangement.
4.6 Further Assurances. Each of the parties will, from time to
------------------
time after the Closing Date at the other party's request and without further
compensation, execute, acknowledge, and deliver to the other party such
additional instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents, certifications, and
further assurances as the other party may reasonably require in order to vest
more effectively in Purchaser, or to put Purchaser more fully in possession of,
any of the Acquired Assets, or to better enable Purchaser to complete, perform,
or discharge any of the Assumed Liabilities. Each of the parties hereto will
cooperate with the other and execute and deliver to the other parties hereto
such other instruments and documents and take such other actions as may be
reasonably requested from time to time by any other party hereto as necessary to
carry out, evidence, and confirm the intended purposes of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that:
5.1 Organization and Qualification. Seller is a corporation duly
------------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware. Seller is duly qualified and is in good standing as a foreign
corporation in each of the jurisdictions set forth on Schedule 5.1.1, which
constitute all of the jurisdictions where Seller owns or leases property that is
used in the Business or where Seller conducts the Business. Schedule 5.1.2
hereto contains the address (including city, county, state, or other
jurisdiction and zip code) of each location where any of the Acquired Assets are
located and each trade name under which Seller operates at each such address and
any additional business and trade names under which the Business has been
operated at each such address in the five (5) years preceding the date of this
Agreement.
5.2 Authority. Seller has full power and authority to enter into
---------
this Agreement and the agreements to which it is a party contemplated hereby, or
executed in connection herewith (collectively, this Agreement and the other
documents or agreements to be executed in connection herewith shall be referred
to hereinafter as the "Acquisition
-17-
Documents"), and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by Seller of each of the Acquisition
Documents to which Seller is a party has been duly and validly authorized and
approved by all necessary action on the part of Seller. Each of the Acquisition
Documents to which Seller is a party is the legal, valid, and binding obligation
of Seller enforceable against Seller in accordance with its terms, except as
enforceability may be limited by applicable equitable principles (whether
applied in a proceeding at law or in equity) or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting creditors' rights
generally, to the exercise of judicial discretion in accordance with general
equitable principles, and to equitable defenses that may be applied to the
remedy of specific performance. Neither the execution and delivery by Seller of
any of the Acquisition Documents to which Seller is a party nor, subject to
obtaining the consents and approvals described in Schedules 5.7.5, 5.8.2, and
5.9.1, and the transfer of the Permits described in Schedule 5.17, the
consummation by Seller of the transactions contemplated hereby and thereby will
(i) violate Seller's Certificate of Incorporation or Bylaws, (ii) violate any
provisions of law or any order of any court or any governmental entity to which
Seller is subject, or by which the Acquired Assets may be bound, (iii) conflict
with, result in a breach of, or constitute a default under any indenture,
mortgage, lease, agreement, or other instrument to which Seller is a party or by
which it or any of the Acquired Assets may be bound, or (iv) result in the
creation of any lien, charge, or encumbrance upon any of the Acquired Assets, or
result in the acceleration of the maturity of any payment date of any of the
Assumed Liabilities, or increase or adversely affect the obligations of Seller
under any of the Assumed Liabilities.
5.3 Subsidiaries; Joint Ventures. No shares of any corporation or
----------------------------
any ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity
are included in the Acquired Assets.
5.4 Financial Statements. Attached as Schedule 5.4 are true,
--------------------
correct, and complete copies of the unaudited balance sheets and related
statements of income and cash flows of the Business as, at and for the fiscal
years ended December 31, 1997, December 31, 1998 and for the periods then ended,
and the unaudited financial statements of the Business prepared by Seller at and
for the three (3) month periods ended March 31, 1999 and June 30, 1999
(collectively, the "Financial Statements"). The Financial Statements have been
prepared from the books and records of Seller, and present fairly in accordance
with GAAP, consistently applied, the financial position and results of operation
of the Business as at the dates and for the periods indicated (other than as
disclosed in the footnotes thereto), such Financial Statements having been
included in the preparation of Seller's consolidated financial statements. The
Business has no liabilities or obligations (secured or unsecured, whether
accrued, absolute, direct, indirect, contingent or otherwise, and whether due or
to become due) which are not fully and adequately accrued or reserved against in
the Financial Statements in accordance
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with GAAP consistently applied. Seller has not received any advice or
notification from its independent certified public accountants that Seller has
used any improper accounting practice that would have the effect of not
reflecting or incorrectly reflecting in the Financial Statements or the books
and records, any properties, assets, liabilities, revenues, or expenses. Except
as set forth on Schedule 5.4.1, the Financial Statements do not contain any
items of special or nonrecurring income, or other income not earned in the
ordinary course of business, individually in excess of $10,000 and in the
aggregate in excess of $60,000. The books, records, and accounts of Seller
maintained with respect to the Business accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of Seller
with respect to the Business. Seller has not engaged in any transaction with
respect to the Business, maintained any bank account for the Business, or used
any of the funds of Seller in the conduct of the Business, except for
transactions, bank accounts, and funds which have been and are reflected in the
normally maintained books and records of the Business.
5.5 Inventories. All Inventory, whether reflected on the Financial
-----------
Statements or subsequently acquired, (a) is now and at the Closing Date will be
on those locations described on Schedule 5.5 or located on the Real Property
described on Schedule 5.8.1 or on the Leased Real Property described on Schedule
5.8.2 consistent with past practices, (b) has been or will be acquired by Seller
only in bona fide transactions entered into in the ordinary course of business,
(c) is of good and merchantable quality except to the extent adequately reserved
for in the Financial Statements, (d) is not now and at the Closing Date will not
be subject to any write-down or write-off in excess of the reserves established,
and (e) is valued at the lesser of cost or net realizable market value, with
appropriate adjustments for stale and slow moving Inventory in accordance with
GAAP. Except as described in Schedule 5.5, Seller has now and on the Closing
Date will have valid legal title to its Inventory free and clear of any
consignments, liens, claims, charges, and encumbrances, other than encumbrances
which shall be removed prior to Closing. Seller is not under any liability or
obligation with respect to the return of inventory in the possession of
wholesalers, retailers, or other customers which shall not be reserved against
in the Closing Date Balance Sheet.
5.6 Accounts Receivable. All Accounts Receivable shown on the
-------------------
Financial Statements represent, and the Accounts Receivable of Seller
outstanding on the Closing Date will represent, sales actually made or services
actually performed in the ordinary course of business in bona fide transactions
completed in accordance with the terms and provisions contained in any documents
relating thereto and are fully collectible to the extent not reserved for in the
Closing Date Balance Sheet. The reserves for uncollectible Accounts Receivable
reflected on the Financial Statements were established in accordance with GAAP
and are adequate in light of all the facts then known to Seller and Seller's
historical methods and practices in establishing such reserves. The Accounts
Receivable outstanding on the Closing Date are subject to no defenses,
counterclaims, or
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rights of setoff other than those arising in the ordinary course of business and
for which adequate reserves have been established.
5.7 Personal Property.
-----------------
(a) Schedule 5.7.1 contains a true and correct list and a
description (including serial number) of all Vehicles indicating, with respect
to each, those which are owned by Seller and those which are leased by Seller.
Schedule 5.7.2 contains a true and correct list of all Equipment (excluding
items of Equipment having a value of less than $1,000 individually, or $10,000
in the aggregate) indicating, with respect to each, those which are owned by
Seller and those which are leased by Seller. Schedule 5.7.3 contains a true and
correct list of all Furniture and Fixtures and all other items of personal
property (excluding items of Furniture and Fixtures and other personal property
having a value of less than $1,000 individually, or $10,000 in the aggregate)
indicating, with respect to each, those which are owned by Seller and those
which are leased by Seller. Seller has good and marketable title to all of its
Furniture and Fixtures, Equipment, Vehicles, and other items of personal
property included among the Acquired Assets (whether or not disclosed in
Schedules 5.7.1, 5.7.2, or 5.7.3), free and clear of all liens, claims, charges,
security interests, and other encumbrances of any kind and of any nature, except
as disclosed on Schedule 5.7.4.
(b) Schedule 5.7.5 contains a list of all leases for Vehicles,
Equipment, Furniture and Fixtures, or other items of personal property included
among the Acquired Assets (except miscellaneous leases having an aggregate
value, if capitalized, of less than $10,000) leased by Seller and included in
the Acquired Assets. True and correct copies of each lease listed on Schedule
5.7.5 and any amendments, extensions, and renewals thereof are attached thereto.
Each of the leases described on Schedule 5.7.5 is in full force and effect and
there are no existing defaults or events of default, real or claimed, or events
which with notice or lapse of time or both would constitute defaults, the
consequences of which, severally or in the aggregate, would have an adverse
effect on the Business. No rights of Seller under such leases have been assigned
or otherwise transferred as security for any obligation of Seller. Except as
described on Schedule 5.7.5 and 5.9.2(a), all such leases are fully assignable
without the consent of any third party.
5.8 Real Property: Leased Real Property.
-----------------------------------
(a) Schedule 5.8.1 contains a true and correct list of each
parcel of Real Property. Except as reflected in the original or amended title
insurance binders delivered to Purchaser or otherwise in Schedule 5.8.1, Seller
has good and marketable fee simple title to the Real Property, free and clear of
all mortgages, liens, charges, encumbrances, and purchase options and other
rights to or against such property, other than Permitted Encumbrances. The
conveyance of the Real Property to Purchaser shall
-20-
not cause a breach, default, or event of default under any of the mortgages
except for those mortgages identified on Schedule 5.8.1 as requiring consents.
(b) Schedule 5.8.2 contains a true and correct list of
each parcel of Leased Real Property. Attached to Schedule 5.8.2 is a true and
correct copy of each Lease pursuant to which Seller leases the Leased Real
Property and any amendments, extensions, and renewals thereof (the "Real
Property Leases"). Seller hereby represents that it is the lessee under each of
the Real Property Leases. Each Real Property Lease is in full force and effect
and there is no existing default or event of default, real or claimed, or event
which with notice or lapse of time or both would constitute a default thereunder
by Seller or, to the knowledge of Seller, any other party to such Real Property
Leases. Except for Permitted Encumbrances, or as described in Schedule 5.8.2,
Seller's interest in each of the Real Property Leases is free and clear of any
mortgages and liens, and is not subject to any deeds of trust, assignments,
subleases, or rights of any third parties known to or created or permitted by
Seller other than the lessor thereof or any mortgagees of such lessors. The
assignment of any of the Leased Real Property to Purchaser shall not cause a
breach, default, or event of default under any lease or, to Seller's knowledge
without independent inquiry, mortgage relating to such parcel except for those
leases or mortgages identified on Schedule 5.8.2 as requiring consents. Seller
shall use its commercially reasonable best efforts to obtain the necessary
consents or estoppels pursuant to Sections 7.5 and 8.18 hereof; provided
however, the failure to obtain any such consent after Seller has used its
commercially reasonable best efforts to do so shall not constitute a breach of
this Agreement but obtaining such consent shall remain a condition precedent to
Purchaser's obligations hereunder as and to the extent provided in Section 8.5
below.
(c) To Seller's Knowledge, all improvements on the Real
Property and the Leased Real Property conform to all applicable state and local
laws, use restrictions, building ordinances, building and fire codes the
noncompliance of which would have a material adverse effect on Seller's current
ownership or use of such property by Seller, and the property is zoned for the
various purposes for which the Real Property and the Leased Real Property and
improvements thereon are presently being used.
(d) Seller has received no written notice of any pending or
threatened condemnations, planned public improvements, annexation, special
assessments, zoning or subdivision changes, or other adverse claims affecting
the Real Property or the Leased Real Property.
(e) There is no private restrictive covenant or governmental
use restriction (including zoning) known to Seller, on all or any portion of the
Real Property or the Leased Real Property which prohibits the current use of the
Real Property and the Leased Real Property.
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(f) To Seller's Knowledge, all licenses, permits and approvals
required for the occupancy and operation of the Real Property and the Leased
Real Property (with appurtenant parking uses) as presently being used have been
obtained and are in full force and effect. Seller has received no written
notices of violations in connection with such items, except as disclosed in the
Environmental Audit Reports attached to Schedule 5.12.6 hereto.
(g) Seller does not have in its possession any studies or
reports which indicate any defects in the design or construction of any of the
improvements on the Real Property or the Leased Real Property.
(h) Seller has not failed to pay any taxes, assessments, or
other charges adversely affecting the present use of the Real Property or Leased
Real Property which are due and payable.
(i) There is no pending litigation or dispute, and Seller has
received no notice of any disputes, concerning the location of the lines and
corners of the Real Property, and Seller has not been served with any legal
action concerning the location of the lines and corners of the Real Property.
(j) No person or entity, other than Purchaser, has any right,
agreement, commitment, option, right of first refusal or any other agreement,
whether oral or written, with respect to the purchase, assignment or transfer of
all or any portion of the Real Property.
(k) The Real Property is not subject to or affected by any
special assessment for public improvements or otherwise, whether or not there is
presently a lien upon the Real Property. Except as described on Schedule 5.8.3,
Seller has made no commitment to any governmental authority, utility company,
school board, church or other religious body, homeowner or homeowner's
association or any other organization, group or individual relating to the Real
Property which would impose an obligation upon Seller or its successors or
assigns to make any contributions or dedications of money or land, or to
construct, install or maintain any improvements of a public or private nature as
part of the Real Property or upon separate lands. No governmental authority has
imposed any requirement that Seller pay, directly or indirectly, any special
fees or contributions or incur any expenses or obligations in connection with
the development of the Real Property or any portion thereof, other than any
regular and nondiscriminatory local real estate or school taxes assessed against
the Real Property. The parcels comprising the Real Property are separately
assessed for real property tax assessment purposes and are not combined with any
other real property for tax assessment purposes. Seller has received no notice
of any contemplated or actual reassessment of the Real Property or any portion
thereof for general real estate tax purposes. As of the date hereof, all due and
payable taxes, assessments, water charges and sewer charges affecting the Real
Property
-22-
and, to Seller's knowledge, the Leased Real Property, or any portion thereof
have been paid.
(l) To Seller's Knowledge, Seller has complied with all
applicable laws, ordinances, regulations, statutes, rules and restrictions
pertaining to and affecting the Real Property which relate to such subdivision,
except as disclosed in the Environmental Audit Reports attached to Schedule
5.12.6.
(m) There is no default or breach by Seller nor, to the best
of Seller's knowledge, any other party thereto, under any covenants, conditions,
restrictions or easements which may affect the Real Property or the Leased Real
Property or any portion or portions thereof which are to be performed or
complied with by the owner of the Real Property or the Leased Real Property, and
no condition or circumstance exists which, with the giving of notice or the
passage of time, or both, would constitute a default or breach by Seller nor, to
the best of Seller's knowledge, any other party thereto, under any such
covenants, conditions, restrictions, rights-of-way or easements.
5.9 Contracts.
---------
(a) Schedule 5.9.1 contains a true and correct list of all
Contracts not otherwise listed on Schedules 5.7.5, 5.8.2, 5.10 or 5.16, together
with a true and correct copy (and, if oral, a description) of each such Contract
(other than Real Property Leases, personal property leases, and purchase
orders), that: (i) has a duration of twelve (12) months or more, (ii) requires
or could require any party thereto to pay $20,000 or more, or (iii) is between
Seller and any officer, stockholder, director, employee, or affiliate and all
modifications, amendments, renewals, or extensions thereof. Each of the
Contracts was entered into prior to the Closing Date in the ordinary course of
business on terms substantially consistent with Seller's practice prior thereto.
Except as listed on Schedules 5.7.5, 5.8.2, 5.9.1, 5.10 or 5.16, Seller is not a
party to any written or legally binding oral:
(i) agreement, contract, or commitment with any
present or former employee or consultant or for the employment of any person,
including any consultant, who is engaged in the conduct of the Business;
(ii) agreement, contract, or commitment for the
future purchase of, or payment for, supplies or products, or for the performance
of services by a third party which supplies, products or services are used in
the conduct of the Business involving in any one case $20,000 or more;
(iii) agreement, contract or commitment to sell or
supply products ("Goods Contracts") or to perform maintenance, services or
similar duties
-23-
("Services Contracts") in connection with the Business involving in any one case
$20,000 or more;
(iv) distribution, dealer, representative, or
sales agency agreement, contract, or commitment relating to the Business;
(v) lease under which Seller is lessor relating
to the Acquired Assets or any property at which the Acquired Assets are located;
(vi) note, debenture, bond, equipment trust
agreement, letter of credit agreement, loan agreement, or other contract or
commitment for the borrowing or lending of money relating to the Business or
agreement or arrangement for a line of credit or guarantee, pledge, or
undertaking of the indebtedness of any other person relating to the Business;
(vii) agreement, contract, or commitment for any
charitable or political contribution relating to the Business;
(viii) agreement, contract, or commitment limiting
or restraining the Business or any successor thereto from engaging or competing
in any manner or in any business, nor, to Seller's knowledge, is any employee of
Seller engaged in the conduct of the Business subject to any such agreement,
contract, or commitment;
(ix) material agreement, contract, or commitment
relating to the Business not made in the ordinary course of business; or
(x) agreement, contract or transaction with the
Seller or any affiliate thereof.
(b) Schedule 5.9.2 contains a true and correct list of all
commitments for capital expenditures that have been approved or made prior to
the date of this Agreement in excess of $10,000 by Seller and that remain
outstanding as of the date hereof.
(c) Each of the Contracts is in full force and effect and
there exists no breach or violation of or default under any of such Contracts by
Seller or, to the knowledge of Seller, any other party to such Contracts or any
event which, with notice or the lapse of time, or both, will create a breach or
violation thereof or default thereunder by Seller or, to the knowledge of
Seller, any other party to such Contracts. Schedule 5.9.2(a) hereto sets forth,
as of the Closing Date, the assignment status for the Contracts set forth on
Schedules 5.7.5, 5.8.2, 5.9.1, 5.10 and 5.16 (including, the Contracts that are
(i) freely assignable, (ii) assignable with third party consent, (iii) silent as
to assignment, and (iv) not assignable.
-24-
(d) Except as indicated on Schedule 5.14, there exists no
actual or, to the best knowledge of Seller, any threatened termination,
cancellation, or limitation of, or any amendment, modification, or change to any
Contract, which would have [a material] adverse effect on the business or
condition, financial or otherwise, of the Business, including without
limitation, (i) the business relationship of Seller with any customer,
distributor, or related group of customers or distributors whose purchases
individually or in the aggregate are material to the operations and financial
condition of the Business, (ii) the requirements of any customer or related
group of customers of Seller whose purchases individually or in the aggregate
are material to the operations and financial condition of the Business, or (iii)
the business relationship of Seller with any material supplier to the Business.
(e) Seller has not granted any power of attorney affecting or
with respect to the Business or the Acquired Assets that remains outstanding
(other than powers of attorney entered into in the ordinary course of business
with freight forwarders for shipping product).
(f) Schedule 5.9.3 contains a true and correct list of
customers which collectively accounted for forty-two and thirteen one-hundredths
percent (42.13%) of Seller's revenues during the fiscal year ended December 31,
1998, and for the period commencing January 1, 1999 through the last day of the
month preceding the date hereof, together with the dollar amount of sales made
to each customer for each such period. To the knowledge of Seller, no person or
entity listed on Schedule 5.9.3 has indicated or threatened that it intends to
materially decrease the amount of business that it does with Seller related to
the Business. Schedule 5.9.3 also describes all discount, rebate, consignment,
make and hold and similar arrangements offered by Seller to customers of the
Business.
5.10 Intellectual Property. Schedule 5.10 contains a true and
---------------------
correct list of all patents, domain names, websites, registered copyrights, and
commercially significant trademarks, trade names, service marks included in the
Intellectual Property, containing a brief description of each item of
Intellectual Property and the nature of Seller's interest therein. The Acquired
Assets include and, upon the purchase of those assets, Purchaser will own or
have the uncontested right to use all, patents, designs, art work, designs-in-
progress, formulations, know-how, inventions, trademarks, trade names, trade
styles, service marks, copyrights, manufacturing processes, logos, and
confidential or proprietary information necessary for the conduct of the
Business as presently conducted. No claim is pending or, to the best of Seller's
knowledge threatened, and Seller has received no notice that the conduct of the
Business (including without limitation, Seller's use of any Intellectual
Property) infringes upon or conflicts with any rights claimed therein by any
third party, nor is Seller aware of any unasserted claim the assertion of which
is probable. No use by Seller of any Intellectual Property licensed to it
violates the
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terms of any agreement pursuant to which it is licensed. No claim is pending, or
to the best of Seller's knowledge threatened, which alleges that any
Intellectual Property owned or licensed by Seller or which Seller otherwise has
the right to use is invalid or unenforceable by Seller, nor is Seller aware of
any such claim that is unasserted, but the assertion of which is probable.
Except as set forth on Schedule 5.10, Seller does not manufacture products which
are the subject of patents, patent applications, copyrights, copyright
applications, trademarks, trademark applications, trade styles, service marks,
or trade secrets owned by or licensed from third parties. Except as shown on
Schedule 5.10, no royalties or fees are payable by Seller to anyone for use of
any Intellectual Property. True, correct, and complete copies of all agreements
pursuant to which Seller has any license or right to use any Intellectual
Property are attached to Schedule 5.10. All such agreements are in full force
and effect and, there are no existing defaults or events of default, real or
claimed, or events which with or without notice or lapse of time or both would
constitute defaults under such agreements that would give the non-defaulting
party a right to terminate such agreement or a right to receive any payment
pursuant to such agreement. Seller has not received any notice that the
manufacture, use, or sale by Seller of its products, or any component or part
thereof, nor any manufacturing operation or machinery employed by Seller,
violates or infringes upon any claims of any United States or foreign patent or
patent application owned or held by any third party, nor is Seller aware of any
unasserted claim the assertion of which is probable. All Seller's Intellectual
Property and registrations, applications, and agreements related thereto are
fully assignable to Purchaser without the consent of any third party, except as
shown on Schedule 5.10.
5.11 Insurance. The Acquired Assets and the Business are insured
---------
under various policies of general liability and other forms of insurance, which
policies are in amounts adequate in the reasonable judgment of Seller. Seller
has not been refused any insurance with respect to the Business, by any
insurance carrier to which it has applied for insurance or with which it has
carried insurance during the past five (5) years. There are no outstanding
requirements or recommendations by any current insurer or underwriter with
respect to the Business or the Acquired Assets which require or recommend
changes in the conduct of the Business, or require any repairs or other work to
be done with respect to any of the Acquired Assets or operations of the
Business.
5.12 Environmental Matters and OSHA.
------------------------------
(a) Except as set forth in Schedule 5.12.1 and disclosed in
the environmental audit reports attached hereto as Schedule 5.12.6
("Environmental Audit Reports") hereto, Seller, with respect to the Business,
(i) is in compliance with all laws, rules, and
regulations relating to environmental protection. Seller has not (A) been
notified that it is potentially liable under or (B) received any requests for
information or other correspondence
-26-
concerning any site or facility under, nor has Seller any reason to believe that
it is considered potentially liable under the CERCLA, or any similar law;
(ii) has accurately prepared and timely filed with the
appropriate jurisdictions all reports and filings required pursuant to any
federal, state, or local law, regulation, statute, or order applicable to or
affecting the Business of the Seller or the Acquired Assets;
(iii) has not entered into or received any consent
decree, compliance order, or administrative order relating to environmental
protection;
(iv) has not entered into or received nor is Seller
in default under any judgment, order, writ, injunction or decree of any federal,
state, or municipal court or other governmental authority relating to
environmental protection;
(v) has obtained all permits, licenses, approvals,
consents, orders, and authorizations relating to environmental protection
("Environmental Permits") which are required under federal, state, or local
laws, rules, and regulations in connection with the Business or the ownership,
use, or lease of the Acquired Assets, and which, if not so obtained, would cause
a material adverse effect on the ownership, operation or disposal of the
Business or the Acquired Assets, taken as a whole, and Schedule 5.12.2 contains
a complete list and description of each such Environmental Permit. Except as
described in Schedule 5.12.2, Seller is in compliance with each such
Environmental Permit and no Environmental Permit restricts Seller from operating
any Equipment covered by such Environmental Permit as currently being conducted;
and
(vi) has not been, and currently is not, a
"generator" of "hazardous waste" (as those terms are defined by the Resource
Conservation and Recovery Act of 1976 and the regulations promulgated
thereunder), for the purposes of obtaining an EPA identification number under 40
C.F.R. (S)262.12(a) or complying with the manifest system under Subpart 8 of 40
C.F.R. Part 262.
(b) With respect to the Business,
(i) except as set forth on Schedule 5.12.3 or as
described in the Environmental Audit Reports, there are no actions, suits,
claims, arbitration proceedings, or complaints pending or, to the best of
Seller's knowledge, threatened by any governmental authority, municipality,
community, citizen, or other entity, against Seller relating to environmental
protection, compliance with environmental laws, or the condition of the Real
Property or the Leased Real Property;
(ii) except as set forth on Schedule 5.12.4 or as
described in the Environmental Audit Reports, there has been no disposal,
release, burial, or
-27-
placement of hazardous or toxic substances, pollutants, contaminants, petroleum,
gas products, or asbestos-containing materials (as any of such terms may be
defined under federal, state, or local law) or other Hazardous Materials by
Seller or, to the best of Seller's knowledge, by any other party on, in, at, or
about any of the Real Property or Leased Real Property or any facilities used
for or in connection with the Business that could subject Purchaser to damages,
costs, penalties or expenses, or recovery or remediation requirements under any
current federal, state or local law, rule or regulation;
(iii) all above-ground and underground storage tanks
located on the Real Property and the Leased Real Property have been identified
in Schedule 5.12.5, together with a description of the materials stored therein
and a statement as to whether such tanks are currently used by Seller;
(iv) no lien has arisen on any of the Acquired Assets
under or as a result of any federal, state, or local law, rule, or regulation
relating to environmental protection;
(v) except as identified in Schedule 5.12.6, no audit
or other investigation has been conducted as to environmental matters at any of
Seller's properties by any private party during or, to the best of Seller's
knowledge, prior to the period during which Seller owned, leased or operated
such properties.
(c) Except as set forth in Schedule 5.12.7, Seller is in
material compliance with all applicable laws relating to employee health and
safety; and Seller has not received any written notice that the Acquired Assets
violate any applicable legal requirements or otherwise can be made the basis of
any claim, citations, proceeding, or investigation, based on or related to
violations of employee health and safety requirements.
5.13 Litigation. Except as listed and briefly described on Schedule
----------
5.13, there are no claims, charges, arbitrations, grievances, actions, suits,
proceedings, or investigations pending or to Seller's knowledge threatened
against, or adversely affecting the Business or any of the Acquired Assets, at
law or in equity or admiralty, or before or by any federal, state, municipal, or
other governmental department, commission, board, bureau, agency, or
instrumentality, domestic or foreign, nor is Seller aware of any unasserted
claim, charge, arbitration, grievance, action, suit, proceeding or
investigation, the assertion of which is probable. Seller is not in default
under or in violation of any order, writ, injunction, or decree of any federal,
state, municipal court, or other governmental department, commission, board,
bureau, agency, or instrumentality, domestic or foreign, affecting the Business
or the Acquired Assets.
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5.14 Absence of Changes. Except as set forth on Schedule 5.14 or on
------------------
the monthly financial statements referenced in Section 5.4, since March 31,
1999, there has not been any transaction or occurrence in which Seller, with
respect to the Business, has:
(a) suffered any material adverse change in the business,
operations, condition (financial or otherwise), liabilities, assets, or earnings
of the Business nor, to Seller's knowledge, has there been any event which has
had or may reasonably be expected to have a material adverse effect on any of
the foregoing;
(b) incurred any obligations or liabilities of any nature
other than items incurred in the regular and ordinary course of business,
consistent with past practice, or increased (or experienced any change in the
assumptions underlying or the methods of calculating) any bad debt, contingency,
or other reserve, other than in the ordinary course of business consistent with
past practice;
(c) paid, discharged, or satisfied any claim, lien,
encumbrance, obligation, or liability (whether absolute, accrued, contingent,
and whether due or to become due), other than the payment, discharge, or
satisfaction in the ordinary course of business consistent with past practice of
claims, liens, encumbrances, obligations, or liabilities of the type reflected
or reserved against in the Financial Statements or which were incurred since
March 31, 1999 in the ordinary course of business consistent with past practice;
(d) permitted, allowed, or suffered any of its properties or
assets (real, personal or mixed, tangible, or intangible) to be subjected to any
mortgage, pledge, lien, encumbrance, restriction, or charge of any kind, other
than Permitted Encumbrances;
(e) written down or written up the value of any Inventory
(including write-downs by reason of shrinkage or markdowns), determined as
collectible any Accounts Receivable or any portion thereof which were previously
considered uncollectible, or written off as uncollectible any Accounts
Receivable or any portion thereof, except for write-downs, write-ups, and write-
offs in the ordinary course of business consistent with past practice, none of
which is material in amount;
(f) canceled any debts or waived any claims or rights in
excess of $5,000.00 individually or $10,000.00 in the aggregate;
(g) disposed of or permitted to lapse any right to the use of
any patent, trademark, assumed name, service xxxx, trade name, copyright,
license, or application therefor or disposed of or to the best of Seller's
knowledge disclosed to any person not authorized to have such information any
trade secret, proprietary information, formula, process, or know-how not
previously a matter of public knowledge or existing in the public domain;
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(h) except for the capital expenditure commitments described
on Schedule 5.9.2, made any significant capital expenditure or commitment for
additions to property, plant, equipment, intangible, or capital assets or for
any other purpose, other than for emergency repairs or replacement;
(i) incurred any long term indebtedness;
(j) paid, loaned, distributed, or advanced any amounts to,
sold, transferred, or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, purchased, leased, licensed, or otherwise acquired
any properties or assets from, or entered into any other agreement or
arrangement with (i) any stockholder, officer, employee, or director of Seller,
(ii) any corporation or partnership in which any affiliate is an officer,
director, or holder directly or indirectly of five percent (5%) or more of the
outstanding equity or debt securities, or (iii) any person controlling,
controlled by, or under common control with any such partner, stockholder,
officer, director, or affiliate except for compensation not exceeding the rate
of compensation set forth on Schedule 5.16 or permitted by Section 5.14(m) and
for routine travel advances to officers and employees;
(k) entered into any collective bargaining or labor agreement
(oral and legally binding or written), or experienced any organized slowdown,
work interruption, strike, or work stoppage;
(l) sold, transferred, or otherwise disposed of any of the
Acquired Assets except in the ordinary course of business consistent with past
practice;
(m) granted or incurred any obligation for any increase in
the compensation of any officer or employee of Seller (including, without
limitation, any increase pursuant to any bonus, pension, profit-sharing,
retirement, or other plan or commitment) except for raises to employees in the
ordinary course of business consistent with past practice;
(n) made any material change in any method of accounting or
accounting principle, practice, or policy;
(o) suffered any casualty loss or damage in excess of $25,000
in the aggregate (whether or not insured against);
(p) made or agreed to make any charitable contributions or
incurred or agreed to incur any non-business expenses in excess of $5,000 in the
aggregate;
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(q) taken any other action neither in the ordinary course of
business and consistent with past practice nor provided for in this Agreement;
or
(r) agreed, so as to legally bind Seller whether in writing or
otherwise, to take any of the actions set forth in this Section 5.14 and not
otherwise permitted by this Agreement.
5.15 Brokers and Finders. Neither Seller nor any affiliate of
-------------------
Seller has incurred any obligation or liability to any party for any brokerage
fees, agent's commissions, or finder's fees in connection with the transactions
contemplated by the Acquisition Documents.
5.16 Labor Matters. Schedule 5.16 contains a true and correct and
-------------
complete list of all present employees and sales representatives employed or
engaged by Seller in the Business, their total remuneration for the year ended
December 31, 1998, their current remuneration, and a description of all
perquisites and fringe benefits they receive or are eligible to receive. Except
as described on Schedule 5.16, Seller, within the last three (3) years, has not
experienced any organized slowdown, work interruption, strike, or work stoppage
by employees of Seller engaged in the Business. Except as set forth on Schedule
5.16, Seller is not a party to nor does Seller have any obligation pursuant to
any oral and legally binding or written agreement, collective bargaining or
otherwise, with any party regarding the rates of pay or working conditions of
any of the employees of Seller engaged in the Business, nor is Seller obligated
under any agreement to recognize or bargain with any labor organization or union
on behalf of such employees. Neither Seller, with respect to the Business, nor
any of its officers, directors, or employees has been charged or, to Seller's
knowledge, threatened with the charge of any unfair labor practice, with respect
to the Business within the last two (2) years. Seller, with respect to the
Business, is in material compliance with all applicable federal, state, local
and foreign laws and regulations concerning the employer-employee relationship
and with all agreements relating to the employment of Seller's employees,
including applicable wage and hour laws, fair employment laws, safety laws,
worker compensation statutes, unemployment laws, and social security laws.
Except as described on Schedule 5.16, with respect to the Business, there are no
pending or, to Seller's knowledge, threatened claims, investigations, charges,
citations, hearings, consent decrees, or litigation concerning: wages,
compensation, bonuses, commissions, awards, or payroll deductions; equal
employment or human rights violations regarding race, color, religion, sex,
national origin, age, handicap, veteran's status, marital status, disability, or
any other recognized class, status, or attribute under any federal, state, local
or foreign equal employment law prohibiting discrimination; representation
petitions or unfair labor practices; grievances or arbitrations pursuant to
current or expired collective bargaining agreements; occupational safety and
health; workers' compensation; wrongful termination, negligent hiring, invasion
of privacy or defamation; immigration or any other claim based on the employment
relationship or termination of the employment relationship (collectively,
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"Labor Claims"). With respect to the Business, Seller is not liable for any
unpaid wages, bonuses, or commissions (other than those not yet due) or any tax,
penalty, assessment, or forfeiture for failure to comply with any of the
foregoing. Except as described on Schedule 5.16, there is no outstanding
agreement or arrangement with respect to severance payments with respect to any
Employee.
5.17 Governmental Approval and Consents. Except as described on
----------------------------------
Schedule 5.17 and as set forth in the Environmental Audit Reports, Seller, with
respect to the Business, has obtained all governmental approvals,
authorizations, permits, licenses, and orders required for the lawful operation
of the Business as presently conducted the absence of which would materially and
adversely affect the operation of the Business. Schedule 5.17 contains a true
and correct copy of each such approval, authorization, permit, license, and
order.
5.18 Taxes.
-----
(a) Seller has timely filed, and as of the Closing Date will
have timely filed, all federal and foreign income tax returns, and, with respect
to the Business, all state, county, and local income, franchise, property,
sales, use, unemployment, and other tax returns in each jurisdiction where such
returns are required to be filed on or prior to the Closing Date, taking into
account any extensions of the filing deadlines which have been validly granted
to Seller, and such returns are and will be true and correct in all material
respects. Seller, with respect to the Business, has paid, or by the Closing Date
will have paid, all federal, state, county, and local income, franchise,
property, sales, use, and all other taxes and assessments (including penalties
and interest in respect thereof, if any) that have become or are due with
respect to any period ended on or prior to the Closing Date whether shown as due
on such returns or not, or Seller is contesting in good faith such taxes and
assessments, in which event Seller has disclosed the details of such contests on
Schedule 5.18.1.
(b) Schedule 5.18.1 provides a brief description of any
pending federal and state tax disputes in which Seller, with respect to the
Business, is alleged to be liable or in which Seller is claiming a refund,
including the nature and amount of the controversy, the respective positions of
the parties as to any amounts claimed to be due thereunder, and the current
status thereof.
(c) All taxes required to be withheld prior to the Closing
Date from employees of Seller engaged in the Business for income taxes and
social security taxes have been properly withheld and, if required prior to the
Closing Date, have been deposited with the appropriate governmental agency.
(d) No claim or investigation is pending, or to the best of
Seller's knowledge, threatened, by any state, local, or other jurisdiction
alleging that Seller has a
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duty to file tax returns and pay taxes or is otherwise subject to the taxing
authority of any jurisdiction not included in Schedule 5.18.1 with respect to
any taxes covered by Section 10.3, nor has Seller received any notice or
questionnaire from any such jurisdiction which suggests or asserts that Seller,
with respect to the Business, may have a duty to file such returns and pay such
taxes, or otherwise is subject to the taxing authority of such jurisdiction.
5.19 Employee Benefit Plans.
----------------------
(a) Schedule 5.19 contains a true and complete list of all the
following agreements or plans which are presently in effect (and with respect to
multi-employer plans, those plans which have previously been in effect) and
which cover employees of Seller engaged in the Business ("Employees"),
including, without limitation, incentive, bonus, vacation and severance
programs:
(i) Any employee benefit plan as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974 ("ERISA") or under
which Seller, with respect to Employees, has any outstanding, present, or future
obligation or liability, or under which any Employee has any present or future
right to benefits which are covered by ERISA; or
(ii) Any other pension, profit sharing, retirement,
deferred compensation, stock purchase, stock option, stock appreciation, phantom
stock or other equity-based, incentive, bonus, performance vacation,
termination, retention, change of control, severance, "golden parachute,"
disability, hospitalization, medical, life insurance, or other employee benefit
plan, program, policy, or arrangement, which Seller, with respect to the
Business, maintains or to which Seller, with respect to the Business, has any
outstanding, present, or future obligations to contribute or make payments
under, whether voluntary, contingent, or otherwise.
The plans, programs, policies, or arrangements described in subparagraph (i) or
(ii) are hereinafter collectively referred to as the "Benefit Plans."
(b) The Benefit Plans have been or will be made available to
the Purchaser for review, including, but not limited to, correct and complete
copies of (i) all trust agreements or other funding arrangements for such
Benefit Plans and all amendments thereto, (ii) with respect to any such Benefit
Plans or amendments, all determination letters, rulings, opinion letters,
information letters, advisory opinions issued by the Internal Revenue Service or
the Department of Labor, and voluntary filings or other corrective actions
described in Revenue Procedure 98-22.
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(c) Seller and each of the Benefit Plans are in compliance
with the applicable provisions of ERISA, those provisions of the Code applicable
to the Benefit Plans and all other laws, restrictions, rulings, etc. applicable
to such Benefit Plans.
(d) All contributions to, and payments from, the Benefit Plans
which may have been required to be made in accordance with the Benefit Plans
and, when applicable, Section 302 of ERISA or Section 412 of the Code, have been
timely made.
(e) There are (i) no pending investigations by any
governmental authority involving the Benefit Plans, (ii) no termination
proceedings involving the Benefit Plans, (iii) no threatened or pending claims
(except for claims for benefits payable in the normal operation of the Benefit
Plans), suits or proceedings against any Benefit Plan or asserting any rights or
claims to benefits under any Benefit Plan which could give rise to any material
liability, and (iv) no facts which could give rise to any material liability in
the event of such investigation, claim, suit or proceeding.
(f) Neither the Benefit Plans, Seller, any Employee nor any
trusts created thereunder or any trustee, administrator or other fiduciary
thereof, has engaged in a "prohibited transaction" (as such term is defined in
Section 4975 of the Code or Section 406 of ERISA) which could subject Seller to
the tax or penalty on prohibited transactions imposed by such Section 4975 or
the sanctions imposed under Title I of ERISA.
(g) Neither Seller nor any entity aggregated with the Company
at any time under Code Section 414 (an "ERISA Affiliate") has at anytime
sponsored, contributed to or been obligated under Title I or Title IV of ERISA
to contribute to a "defined benefit plan" (as defined in ERISA Section 3(35)).
(h) Except as described on Schedule 5.19, neither Seller nor
any ERISA Affiliate has had an "obligation to contribute" (as defined in ERISA
Section 4212) to a "multiemployer plan" (as defined in ERISA Sections 4001(a)(3)
and 3(37)(A)) or has incurred a "complete or partial withdrawal" (as defined in
ERISA Sections 4203 and 4205).
(i) Seller has not incurred nor is it reasonably likely to
incur any liability with respect to any plan or arrangement that would be
included within the definition of "Benefit Plan" hereunder but for the fact that
such plan or arrangement was discontinued or terminated before the date of this
Agreement.
(j) Seller has not incurred any liability to provide, and no
Transferred Benefit Plan includes an obligation to provide, death or medical
benefits with respect to any current or former employee of Seller with respect
to the Business beyond retirement or other termination of employment other than
as required by Section 4890B of the Code.
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(k) All annual returns and reports, audited or unaudited
financial statements, actuarial reports, summary annual reports and summary plan
descriptions issued with respect to the Benefit Plans are correct and complete,
have been timely filed with the IRS and timely delivered to participants and
there has been no material changes in the information set forth therein. No
material oral or written representation or communication with respect to any
aspect of the Benefit Plans has been made to employees of Seller that is not in
accordance with the written terms of such plans.
(l) Except as set forth on Schedule 5.19, neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated by this Agreement will (i) entitle any current or
former employee or director of Seller to severance pay, unemployment
compensation or any payment contingent upon a change in control or ownership of
Seller, (ii) increase or enhance any benefits payable under any Benefit Plan or
(iii) accelerate the time of payment or vesting, or increase the amount, of any
compensation due to any such employee or former employee or director.
(m) Seller has complied in all material respects with the
continuation coverage requirements of Section 1001 of the Consolidated Omnibus
Budget Reconciliation Act of 1985, as amended, and ERISA Sections 601 through
608. Seller shall be responsible for complying with the requirements of Code
Section 4980 B and Part 6 of Title 1 of ERISA for its employees (including the
Hired Employees, as hereinafter defined) and their "qualified beneficiaries"
whose "qualifying event" (as such terms are defined in Code Section 4980 B)
occurs on or prior to the Closing Date.
5.20 Compliance with Laws. Except as set forth on the Environmental
--------------------
Audit Reports, Seller, with respect to the Business, is not engaging in any
activity or omitting to take any action with respect to the Business or the
Acquired Assets that is or creates a material violation of any law, statute,
ordinance, or regulation applicable to the Business, or to the Acquired Assets.
Neither the Business nor any of the Acquired Assets are subject to any judgment,
order, writ, injunction, or decree issued by any court or any governmental or
administrative body or agency which has a material effect on either of them.
Seller possesses all permits and licenses material to the operation of the
Business as presently conducted and is in compliance with all applicable laws,
regulations, and orders issued by any court or governmental or administrative
body or agency where a failure so to comply would have a material adverse effect
on either the Business or the Acquired Assets. Seller, with respect to the
Business, has not at any time during the last five (5) years (i) made any
unlawful contribution to any political candidate, or failed to disclose fully
any contribution in violation of law, or (ii) made any payment to any federal,
state or local governmental, regulatory or administrative officer or official,
or other person charged with similar public or quasi-public duties, other than
payments required or permitted by the laws of the United States or any
jurisdiction thereof.
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5.21 Governmental Approval and Consents. Except for the filing of
----------------------------------
the appropriate documents pertaining to the Xxxx-Xxxxx-Xxxxxx Anti-trust
Improvements Act of 1976, as amended (the "HSR Act") with the United States
Federal Trade Commission and the United States Department of Justice, and the
expiration of the applicable waiting period or the receipt of an order of
termination of the waiting period therefrom, no consent, approval, or
authorization of or declaration, filing, or registration with any governmental
or regulatory authority is required in connection with the execution, delivery,
and performance of this Agreement by Seller or the consummation by Seller of the
transactions contemplated hereby.
5.22 Adequacy of Acquired Assets. The Acquired Assets include all
---------------------------
rights, properties, interests in properties, and assets necessary to permit
Purchaser to carry on the Business as presently conducted by Seller. To Seller's
knowledge, with no duty of independent inquiry, the Equipment, Furniture and
Fixtures and the improvements on the Real Property are individually and in the
aggregate in good condition and state of repair, reasonable wear and tear and
normal depreciation excepted. To Seller's knowledge, with no duty of independent
inquiry, Seller has no reason to anticipate, nor has it received any written
notice from its representatives, that capital expenditures of greater than an
aggregate of $50,000 will be required within twelve (12) months after the
Closing Date to repair or replace any of such assets, other than non-capital
expenditures for routine, preventive or remedial maintenance in the ordinary
course of business and capital expenditures consistent in amount with past
annually budgeted capital expenditures.
5.23 Compliance with the Immigration Reform and Control Act. To the
------------------------------------------------------
best of Seller's knowledge, Seller is in full compliance with and has not
violated the terms and provisions of the Immigration Reform and Control Act of
1986, and all related regulations promulgated thereunder (the "Immigration
Laws"). With respect to each employee (as defined in Section 274a.1(f) of Title
8, Code of Federal Regulations) of the Seller for whom compliance with the
Immigration Laws by an employer (as defined in Section 274a.1(g) of Title 8,
Code of Federal Regulations) is required, the Seller, upon request of Purchaser,
will make available to Purchaser prior to the Closing Date, such employee's Form
I-9 (Employment Eligibility Verification Form) and all other records, documents
or other papers which are retained with the Form I-9 by the employer pursuant to
the Immigration Laws. The Seller has never been the subject of any inspection or
investigation relating to its compliance with or violation of the Immigration
Laws, nor has it been warned, fined or otherwise penalized by reason of any
failure to comply with the Immigration Laws, nor is any such proceeding pending
or, to the best of Seller's knowledge, threatened.
5.24 Correctness of Representations. No representation or warranty
------------------------------
of Seller in this Agreement or in any Exhibit, certificate, or Schedule attached
hereto or furnished pursuant hereto, contains, or on the Closing Date will
contain, any untrue statement of material fact or omits, or on the Closing Date
will omit, to state any fact necessary in
-36-
order to make the statements contained therein not misleading in any material
respect, and all such statements, representations, warranties, Exhibits,
certificates, and Schedules shall be true and complete in all material respects
on and as of the Closing Date as though made on that date. True copies of all
mortgages, indentures, notes, leases, agreements, plans (except Company Benefit
Plans), Contracts, and other instruments listed on the Schedules delivered or
furnished to Purchaser pursuant to this Agreement have been delivered to
Purchaser.
5.25 Definition of "knowledge". The phrases "to the knowledge of
-------------------------
Seller", "Seller has not received notice", "to Seller's knowledge", "Seller has
not been notified" and any other similar phrases as used in this Article 5 refer
to the knowledge of the executive officers and general managers for each
facility of Seller and the Division and, as to specific areas which are the
subject of the representations and warranties, the knowledge of those employees
of Seller and the Division having management responsibilities related to such
specific areas. The list of such executive officers, general managers and
employees is set forth on Schedule 5.25.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
6.1 Organization and Qualification. Purchaser is a corporation
------------------------------
duly organized, validly existing, and in good standing under the laws of the
State of Delaware and has all corporate power and authority to conduct its
business, to own, lease, or operate its properties in the places where such
business is conducted and such properties are owned, leased, or operated.
6.2 Authority. Purchaser has full power and authority to enter
---------
into this Agreement and each of the other Acquisition Documents to which it is a
party and consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Purchaser of this Agreement and each of
the other Acquisition Documents to which Purchaser is a party have been duly and
validly authorized and approved by all necessary action on the part of
Purchaser. This Agreement and each of the other Acquisition Documents to which
Purchaser is a party are the legal, valid, and binding obligations of Purchaser
enforceable against Purchaser in accordance with their terms, except as
enforceability may be limited by applicable equitable principles or by
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally, and by the exercise of judicial discretion in
accordance with equitable principles. Neither the execution and delivery by
Purchaser of this Agreement or any of the other Acquisition Documents to which
Purchaser is a party nor the consummation by Purchaser of the transactions
contemplated hereby or thereby will (i) violate Purchaser's Articles of
Incorporation or Bylaws, (ii) violate any provisions of law or any order of any
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court or any governmental unit to which Purchaser is subject, or by which its
assets are bound, or (iii) conflict with, result in a breach of, or constitute a
default under any indenture, mortgage, lease, agreement, or other instrument to
which Purchaser is a party or by which its assets or properties are bound.
6.3 Brokers and Finders. Neither Purchaser nor any affiliate of
-------------------
Purchaser has incurred any obligation or liability to any party for any
brokerage fees, agent's commissions, or finder's fees in connection with the
transactions contemplated by the Acquisition Documents.
6.4 Governmental Approval and Consents. Except for the filing of
----------------------------------
the appropriate documents pertaining to the HSR Act with the United States
Federal Trade Commission and the United States Department of Justice, and the
expiration of the applicable waiting period or the receipt of an order of
termination of the waiting period therefrom, no consent, approval, or
authorization of or declaration, filing, or registration with any governmental
or regulatory authority is required in connection with the execution, delivery,
and performance by Purchaser of this Agreement or the consummation of the
transactions contemplated hereby.
6.5 Correctness of Representations. No representation or warranty
------------------------------
of Purchaser in this Agreement or in any Exhibit, certificate, or Schedule
attached hereto or furnished pursuant hereto contains, or on the Closing Date
will contain, any untrue statement of material fact or omits or, on the Closing
Date, will omit, to state any fact necessary in order to make the statements
contained therein not misleading in any material respect, and all such
statements, representations, Exhibits, and certificates shall be true and
complete on and as of the Closing Date as though made on that date.
ARTICLE 7
OTHER AGREEMENTS OF THE PARTIES
7.1 Consents. Prior to the date hereof, Purchaser has advised
--------
Seller in writing of all consents and estoppels which, in the reasonable
judgment of Purchaser, are necessary or appropriate for the transfer or
assignment of each of the material Acquired Assets and the Business to Purchaser
and the consummation of the transactions contemplated hereby (each a "Required
Consent" and together the "Required Consents"). All Required Consents so
obtained shall be in writing and in form and substance reasonably satisfactory
to Purchaser, and executed counterparts thereof will be delivered to Purchaser
promptly after receipt thereof but in no event later than the Closing. In any
case where a necessary Required Consent has not been obtained at or prior to the
Closing, Seller shall assist Purchaser, at Purchaser's request, after Closing in
every reasonable effort to obtain such Required Consent. Seller shall also
assist Purchaser, at Purchaser's request, after Closing in every reasonable
effort to obtain any consents and estoppels
-38-
relating to the transfer or assignment of any Acquired Asset or the consummation
of the transactions provided for herein that is not a Required Consent.
7.2 Conditions Precedent. Seller shall use its best efforts to
--------------------
satisfy the conditions enumerated in Article 8 hereof.
7.3 Environmental Permits.
---------------------
(a) Seller has filed a Notice of Intent with applicable
governmental authorities for the issuance of storm water permits with respect to
each of Seller's facilities at which the Business is conducted and at which such
permits are required by applicable law. Seller and Purchaser shall cooperate at
all times following the date of this Agreement (i) to diligently prosecute in
the name of Seller each such Notice of Intent, (ii) to seek the issuance at the
earliest practical time of the storm water permits to which each Notice of
Intent relates, and (iii) upon issuance of each such permit, promptly file and
diligently prosecute an application for the transfer of such permit to
Purchaser. Seller covenants and agrees that it will not do, or cause, permit or
allow others under its control to do, any act that would prevent or delay, or
that might reasonably be expected to prevent or delay, the issuance and
subsequent transfer to Purchaser of any such permit. Seller shall pay and shall
indemnify and hold harmless Purchaser against (i) all fees and charges of
governmental agencies in connection with the issuance of the storm water
permits, (ii) all reasonable fees and charges of personnel, counsel and advisors
of both Purchaser and Seller incurred in connection with the application for and
the issuance and transfer of such storm water permits, and (iii) any penalties
or like charges levied or assessed against Seller or Purchaser based upon or
arising out of the failure to have a storm water permit as required at a
facility based upon operations conducted at that facility as of the Closing Date
at any time prior to the date of issuance thereof.
(b) As soon as practical following the Closing Date, Purchaser
shall file with applicable governmental authorities and shall diligently
prosecute applications for air emission permits or approvals ("Air Permits")
with respect to each facility at which the Business is conducted and with
respect to which Purchaser is advised by its environmental consultants and legal
counsel that such Air Permit is reasonably likely to be required by applicable
law based upon operations conducted at that facility as of the Closing Date.
Seller shall cooperate with Purchaser in any way reasonably requested by
Purchaser, but at Seller's own cost and expense, in filing and prosecuting such
applications for Air Permits and in seeking the issuance thereof to Purchaser.
Prior to filing with applicable governmental authorities, Purchaser shall
provide Seller a copy of any such Air Permit applications for Seller's review
and comment which shall be completed so as to not unreasonably delay the filing
of any such applications. Seller shall pay, and indemnify and hold harmless
Purchaser against, (i) all fees and charges of governmental agencies in
connection with the issuance of the Air Permits, (ii) all reasonable fees and
charges of personnel, counsel, and advisors of both Purchaser and
-39-
Seller incurred in connection with the application for and the issuance of such
Air Permits, and (iii) any penalties or like charges levied or assessed against
Purchaser or Seller based upon or arising out of the failure to have an Air
Permit as required at a facility based on operations conducted at that facility
as of the Closing Date at any time prior to the issuance of the date thereof.
7.4 Discharge of Liens and Encumbrances. All liens, claims,
-----------------------------------
charges, security interests, pledges, assignments, or encumbrances relating to
the Acquired Assets that are not Permitted Encumbrances shall be satisfied,
terminated, and discharged by Seller on or prior to the Closing and evidence
reasonably satisfactory to Purchaser and its counsel of such satisfaction,
termination, and discharge shall be delivered to Purchaser at or prior to the
Closing.
7.5 Illinois Real Property. At the Closing, Seller and Purchaser
----------------------
shall enter into the Sublease Agreement attached as Exhibit E hereto with
respect to the Illinois Real Property (the "Illinois Sublease"). Seller shall
use its commercially reasonable best efforts to procure the consent of the
Landlord under the Illinois Lease Agreement to the Illinois Sublease; provided
however, the failure to obtain such consent after Seller has used its
commercially reasonable best efforts to do so shall not constitute a breach of
this Agreement but obtaining such consent shall remain a condition precedent to
Purchaser's obligations hereunder as and to the extent provided in Section 8.5
below. Seller shall use its best efforts to procure the termination of the
Illinois Lease Agreement as soon as possible following the termination or
expiration of the term of the Illinois Sublease. If Seller is required to make
any payment with respect to the termination of the Illinois Lease Agreement,
Purchaser shall, in addition to rental and other charges payable by Purchaser,
as lessee, under the Illinois Sublease, pay and reimburse Seller in the amount
of the lesser of (a) one-half of the aggregate amount so paid or (b) $500,000.
7.6 Orem City Bonds. Purchaser agrees to use the Division's Orem,
---------------
Utah facilities, financed with the Orem City Bonds, for the business of
designing, manufacturing, producing, and marketing metal bar gratings,
fiberglass reinforced plastic gratings and related products, respectively, or
Purchaser will obtain the opinion of Bond Counsel to the effect that any other
proposed use will not affect adversely the validity or tax exempt status of the
Orem City Bonds. For purposes of this covenant, "Bond Counsel" shall mean an
attorney or firm whose legal and tax opinion on municipal bond issues is
nationally recognized and who shall be acceptable to the trustee for the Orem
City Bonds and who will not be an employee of Orem City, the Seller or the
Purchaser.
7.7 Transferred Benefit Plans.
-------------------------
(a) Seller shall within ninety (90) days of the Closing, take
such action as is reasonably necessary to transfer sponsorship, together with
all assets and liabilities, including but not limited to insurance contracts, of
the following Benefit Plans to which
-40-
Seller contributes pursuant to the collective bargaining agreements for the
Division's Liberty, Missouri and Libertyville, Illinois facilities: (i) the
Arrowhead Grating & Metalworks, Inc. Union Retirement Plan (a 401(k) plan), and
(ii) the Libertyville Multi-employer Pension Plan (the "Transferred Benefit
Plans"). For avoidance of doubt, the Transferred Benefit Plans do not include
the Arrowhead Grating & Metalworks, Inc. Union Pension Plan, which is a frozen
money purchase pension plan.
On or before the effective date of such transfer, Seller will provide
to Purchaser all records, data, and information maintained by Seller or its
affiliates relating to the foregoing Transferred Benefit Plans. Thereafter,
Seller will make its personnel available to Purchaser, under reasonable
conditions, to answer questions regarding the administration or operation of the
Transferred Benefit Plans.
(b) Prior to the Closing, Seller shall contribute to the
Transferred Benefit Plans an amount equal to the employer contribution accrued
under such Transferred Benefit Plans through the Closing, assuming such
contribution accrued ratably over the Transferred Benefit Plan year and without
regard to requirements relating to minimum hours or employment on the last date
of such Transferred Benefit Plan year.
7.8 Pittsburgh Real Property. Purchaser shall have the right for a
------------------------
period of sixty (60) days following the Closing, without payment of rent or any
other fee or charge, to enter upon, and to have its agents, employees and
representatives enter upon the premises of Seller's Pittsburgh, Pennsylvania
facility for the purpose of removing in a commercially reasonable manner, any of
the Acquired Assets that are located on such premises. Thereafter, Purchaser may
extend such license for thirty (30) day periods of time for $6,000 per thirty
(30) day period. Purchaser agrees to indemnify and hold harmless the Seller for
any damage to such premises caused by the acts of Purchaser, or its agents,
employees or representatives, in removing the Acquired Assets from the premises.
7.9 Oak Brook Real Property. At the Closing, Seller and Purchaser
-----------------------
shall enter into the Sublease Agreement attached as Exhibit F hereto with
respect to the Oak Brook Real Property (the "Oak Brook Sublease"). Seller shall
use its commercially reasonable best efforts to procure the consent of the
Landlord under the Oak Brook Lease Agreement to the Oak Brook Sublease; provided
however, the failure to obtain such consent after Seller has used its
commercially reasonable best efforts to do so shall not constitute a breach of
this Agreement but obtaining such consent shall remain a condition precedent to
Purchaser's obligations hereunder as and to the extent provided in Section 8.5
below. The Oak Brook Sublease shall be for a term not to exceed one hundred and
eighty (180) days, but may be terminated prior to the expiration of such period
on ten (10) days notice from Purchaser to Seller.
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ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligation of Purchaser to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or before the Closing
Date, of each of the following conditions all or any of which may be waived in
writing, in whole or in part, by Purchaser:
8.1 Certificate Regarding Schedules and Representations and
-------------------------------------------------------
Warranties. All information required to be furnished or delivered by Seller
----------
pursuant to this Agreement shall have been furnished or delivered as of the
Closing Date, as required hereunder; the representations and warranties made by
Seller in Article 5 shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date
(except that such representations and warranties may be untrue or incorrect as a
result of actions or transactions expressly permitted by this Agreement or
actions or transactions of Seller made with the prior written consent of
Purchaser); and Purchaser shall have received a certificate dated as of the
Closing Date executed by an authorized officer of Seller to such effect.
8.2 Compliance by Seller. Seller shall have duly performed in all
--------------------
material respects all of the covenants, agreements, and conditions contained in
this Agreement to be performed by Seller on or prior to the Closing Date, and
Purchaser shall have received a certificate, dated as of the Closing Date,
executed by an authorized officer of Seller, to such effect.
8.3 No Injunction; Etc. No action, proceeding, investigation,
------------------
regulation, or legislation shall be pending or threatened which seeks to enjoin,
restrain, or prohibit Purchaser, or to obtain substantial damages from
Purchaser, in respect of the consummation of the transactions contemplated
hereby, or which seeks to enjoin the operation of all or a material portion of
the Business or the Acquired Assets, which, in the reasonable judgment of
Purchaser, would make it inadvisable to consummate the transactions contemplated
by this Agreement.
8.4 Operation in the Ordinary Course. Since March 31, 1999, Seller
--------------------------------
shall have operated the Business of Seller in the ordinary course (except as
otherwise permitted by this Agreement or as agreed to by Purchaser as evidenced
by Purchaser's prior written consent).
8.5 Consents; Authorizations; Approval of Legal Matters. Purchaser
---------------------------------------------------
shall have received a true and correct copy of each Required Consent.
8.6 Leases. Seller shall have obtained the written consent of each
------
lessor of the Leased Real Property to the assignment of the Real Property Leases
to Purchaser and
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Seller shall have delivered copies of such consents to Purchaser. Seller shall
have obtained the consent of each lessor to, and approval of, the Illinois
Sublease and the Oakbrook Sublease, respectively.
8.7 Incumbency. Purchaser shall have received a certificate of
----------
incumbency of Seller executed by an executive officer and Secretary or Assistant
Secretary of Seller listing the officers of Seller authorized to execute the
agreement and the instruments of transfer on behalf of Seller, certifying the
authority of each such officer to execute the agreements, documents, and
instruments on behalf of Seller in connection with the consummation of the
transactions contemplated herein.
8.8 Certified Resolutions. Purchaser shall have received a
---------------------
certificate of the Secretary or Assistant Secretary of Seller containing a true
and correct copy of the resolutions duly adopted by the board of directors of
Seller, approving and authorizing each Acquisition Document and the transactions
contemplated hereby and thereby. The Secretary or Assistant Secretary of Seller
shall also certify that such resolutions have not been rescinded, revoked,
modified, or otherwise affected and remain in full force and effect.
8.9 Basic Corporate Documents. Seller shall have delivered to
-------------------------
Purchaser on the Closing Date copies of certificates from the Secretaries of
State in each jurisdiction listed on Schedule 5.1.1, indicating that, as of a
date within a reasonable period of time prior to the Closing Date, Seller was in
good standing and had paid all taxes required to have been paid as of such date
(except those taxes being disputed in good faith as described in Schedule
5.18.1).
8.10 Satisfaction of Title Objections and Release of Certain Liens.
-------------------------------------------------------------
Seller shall have satisfied Purchaser's title objections to the extent required
under Section 4.3 and, in addition, Purchaser at its discretion shall have
received Uniform Commercial Code searches (which searches shall be made or
caused to be made by and at the expense of Purchaser) of filings made pursuant
to Article 9 thereof in all jurisdictions where any of the Acquired Assets are
located, in form, scope, and substance reasonably satisfactory to Purchaser and
its counsel, which searches shall reflect the release or termination of liens,
claims, security interests, or encumbrances against any of the Acquired Assets
disclosed thereby that are not Permitted Encumbrances, and to the extent any
such release or termination is not reflected of record, Purchaser shall have
received evidence satisfactory to it, that all such liens and encumbrances
against the Acquired Assets other than Permitted Encumbrances have been released
or terminated prior to or at the Closing.
8.11 Accuracy of Schedules. Examination by Purchaser shall not have
---------------------
disclosed any material inaccuracy in the representations and warranties of
Seller, set forth in this Agreement or in the Schedules delivered to Purchaser
pursuant hereto.
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8.12 No Adverse Change. There shall not have been any material
-----------------
adverse change in the Acquired Assets or the Business since March 31, 1999,
except as reflected in the monthly financial statements included in the
Financial Statements, and Purchaser shall have received a certificate dated as
of the Closing Date, executed by an authorized officer of Seller to such effect.
8.13 Instruments of Transfer. Seller shall have delivered to
-----------------------
Purchaser such warranty deeds, quitclaim deeds, bills of sale, motor vehicle
titles, endorsements, assignments, licenses, and other good and sufficient
instruments of conveyance and transfer and any other instruments reasonably
deemed appropriate by counsel to Purchaser all in form and substance reasonably
satisfactory to counsel to Purchaser to vest in Purchaser all of Seller's
rights, title, and interest with respect to the Acquired Assets, free and clear
of all liens, charges, encumbrances, pledges, or claims of any nature, except
for Permitted Encumbrances, and Purchaser's assumption of Seller's obligations
thereunder, including, but not limited to, the Assumption Agreement.
8.14 Acquisition Documents. Purchaser shall have received the
---------------------
Acquisition Documents, the Sublease Agreement and the License Agreement to which
Seller is a party, executed by Seller.
8.15 Opinion of Seller's Counsel. Purchaser shall have received the
---------------------------
Seller Opinion.
8.16 Title Commitments; Surveys. Purchaser, provided that Purchaser
--------------------------
has used its best efforts to acquire the following at Purchaser's sole cost and
expense, shall have received title commitments from Commonwealth Land Title
Insurance Company for the issuance to Purchaser at the Closing of an owner's
policy of title insurance on ALTA Form A, and surveys, for the Real Property
(the "Title Commitments"), which shall be reasonably satisfactory to Purchaser.
8.17 Real and Leased Property Certificates. Purchaser shall have
-------------------------------------
received prior to Closing, in form and substance reasonably satisfactory to
Purchaser, the Agreements of Estoppel, Consent and Waiver and Landlords' Consent
to Lease Assignments for the Leased Real Property.
8.18 Proceedings. The form and substance of all opinions,
-----------
certificates, assignments, orders, and other documents and instruments,
hereunder shall be satisfactory in all reasonable respects to Purchaser and its
counsel.
8.19 Names. Seller shall have ceased to use in any manner
-----
whatsoever the trade names included among the Acquired Assets and described on
Schedules 5.1.2 and 5.10, except in connection with tax returns, filings with
other governmental authorities, and similar purposes and except as permitted
pursuant to the License Agreement.
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8.20 Condition of Acquired Assets. On the Closing Date, all of
----------------------------
the Acquired Assets shall be in substantially the same condition as at the
close of business on March 31, 1999, except for ordinary use and wear thereof
and changes occurring in the ordinary course of business or expressly
permitted by this Agreement, and Purchaser shall have received a certificate
dated as of the Closing Date, executed by an authorized officer of Seller to
such effect; provided, however, if on or prior to the Closing Date any of the
Acquired Assets shall have suffered loss or damage on account of fire, flood,
accident, act of war, civil commotion, or any other cause or event beyond the
reasonable power and control of Seller (whether or not similar to the
foregoing) to an extent which, in the reasonable opinion of Purchaser,
materially affects the value of the Acquired Assets, taken as a whole,
Purchaser shall have the right either (a) to terminate this Agreement and all
of Purchaser's obligations hereunder without incurring any liability to Seller
as a result of such termination or (b) to consummate the transactions provided
for herein and be paid the full amount of all insurance proceeds, if any, paid
or payable to Seller, in respect of such loss plus an amount equal to any
deductible or co-insurance reserve applicable to such loss. If under the
circumstances described in the foregoing sentence, Purchaser shall elect to
consummate the transactions provided for herein, Seller shall, on demand, pay
to Purchaser the full amount of any insurance proceeds received by Seller in
respect of any such loss, together with any deductible or co-insurance reserve
applicable to such loss.
8.21 Financing Arrangements. Purchaser shall have consummated
-----------------------
borrowings from one or more lenders (the "Lender(s)") under terms satisfactory
to Purchaser, which borrowings, when taken in the aggregate with other funds
available to Purchaser, are received from the Lender sufficient to pay the
Final Purchase Price and all expenses and fees of Purchaser arising out of the
negotiation, documentation, and consummation of the transactions contemplated
hereby and provide adequate working capital for the operation of the Business
following the Closing.
8.22 HSR Act. The consent or approval of, or the expiration of
-------
the applicable waiting period imposed by, any governmental authority under the
HSR Act, shall have been obtained or shall have expired, and documentation
relating thereto shall be presented by Purchaser.
ARTICLE 9
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions contemplated
by this Agreement shall be subject to the satisfaction, on or before the
Closing Date hereunder, of each of the following conditions, all or any of
which may be waived, in whole or in part, by Seller.
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9.1 Certificate Regarding Representations and Warranties. All
----------------------------------------------------
information required to be furnished or delivered by Purchaser pursuant to
this Agreement shall have been furnished or delivered as of the Closing Date
as required hereunder; the representations and warranties made by Purchaser in
Article 6 hereof shall be true and correct in all material respects on and as
of the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date;
and Seller shall have received a certificate dated the Closing Date, executed
by an authorized officer of Purchaser to such effect.
9.2 Compliance by Purchaser. Purchaser shall have duly performed
-----------------------
in all material respects all of the covenants, agreements, and conditions
contained in this Agreement to be performed by Purchaser on or before the
Closing Date, and Seller shall have received a certificate dated the Closing
Date, executed by an authorized officer of Purchaser, to such effect.
9.3 Certified Resolutions. Seller shall have received from
---------------------
Purchaser a certificate executed by the Secretary of Purchaser containing a
true and correct copy of resolutions duly adopted by Purchaser's Board of
Directors approving and authorizing this Agreement and each of the other
Acquisition Documents to which Purchaser is a party and each of the
transactions contemplated thereby. The Secretary or Assistant Secretary of
Purchaser shall also certify that such resolutions have not been rescinded,
revoked, modified, or otherwise affected and remain in full force and effect.
9.4 Basic Corporate Documents. Purchaser shall have delivered to
-------------------------
Seller on the Closing Date copies of certificates from the Secretaries of
State in Delaware and Alabama, indicating that, as of a date within a
reasonable period of time prior to the Closing Date, Purchaser was in good
standing, and had paid all taxes required to have been paid as of such date.
9.5 No Injunction; Etc. No action, proceeding, investigation,
------------------
regulation, or legislation shall be pending or overtly threatened which seeks
to enjoin, restrain, or prohibit Seller, or to obtain substantial damages from
Seller, in respect of the consummation of the transactions contemplated
hereby, which, in the reasonable judgment of Seller, would make it inadvisable
to consummate such transactions.
9.6 Incumbency. Seller shall have received a certificate of
----------
incumbency of Purchaser executed by the Chairman or President and attested by
the Secretary or Assistant Secretary of Purchaser listing the officers of
Purchaser authorized to execute this Agreement and the other Acquisition
Documents to which Purchaser is a party and the instruments of assumption on
behalf of Purchaser and certifying the authority of each such officer to
execute the agreements, documents, and instruments on behalf of Purchaser in
connection with the consummation of the transactions contemplated herein.
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9.7 Certificates. Seller shall have received from Purchaser all
------------
such certificates, dated as of the Closing Date, as Seller shall reasonably
request to evidence the fulfillment by Purchaser, or such other satisfaction
as the Closing Date, of the terms and conditions of this Agreement.
9.8 Acquisition Documents. Seller shall have received the
---------------------
Acquisition Documents, the Sublease Agreement and the License Agreement to
which Purchaser is a party, executed by Purchaser.
9.9 Opinion of Purchaser's Counsel. Seller shall have received
------------------------------
the Purchaser Opinion.
9.10 HSR Act. The consent or approval of, or the expiration of
-------
the applicable waiting period imposed by, any governmental authority under the
HSR Act, shall have been obtained or shall have expired, and documentation
relating thereto shall be presented by Seller.
9.11 Proceedings. The form and substance of all opinions,
-----------
certificates, assignments, orders and other documents and instruments
hereunder shall be satisfactory in all reasonable respects to Seller and its
counsel.
ARTICLE 10
MUTUAL COVENANTS
10.1 Governmental Filings. Purchaser and Seller, to the extent
--------------------
legally required, shall promptly prepare, file, and diligently prosecute at
the earliest practicable time after the date hereof all applications and
filings required by federal or state law in order to effect the transactions
contemplated by this Agreement.
10.2 Further Mutual Covenants. Purchaser and Seller shall each
------------------------
take all actions contemplated by this Agreement, and, subject to Purchaser's
and Seller's right to terminate this Agreement pursuant to Article 13 hereof,
do all things reasonably necessary to effect the consummation of the
transactions contemplated by this Agreement. Except as otherwise provided in
this Agreement, Purchaser and Seller shall each refrain from knowingly taking
or failing to take any action which would render any of the representations or
warranties contained in Articles 5 or 6 of this Agreement in any material
respect inaccurate as of the Closing Date. Each party shall promptly notify
the other party of any action, suit, or proceeding that shall be instituted or
threatened against such party to restrain, prohibit, or otherwise challenge
the legality of any transaction contemplated by this Agreement
-47-
10.3 Prorations.
----------
(a) To the extent not included in the Assumed
Liabilities and not reflected or reserved for on the Closing Date Balance
Sheet, Utility Charges, Rental Charges, Equipment Charges, Real Property
Taxes, Personal Property Taxes, and Service Contracts including, without
limitation, accruals or prepayments thereof (all as individually defined below
and collectively called the "Proration Items"), shall be prorated directly
between the Seller and the Purchaser as provided in this Section 10.3.
(b) For purposes of this Section 10.3, the capitalized
terms set forth below shall have the following meanings:
(i) "Utility Charges" shall mean water, sewer,
electricity, gas and other utility charges, if any, applicable to the Leased
Real Property;
(ii) "Rental Charges" shall mean common area
maintenance charges, merchant association dues, insurance reimbursement and
rental charges payable or receivable and other payments or receipts (other
than Real Property Taxes) applicable to the Leased Real Property;
(iii) "Equipment Charges" shall mean rental charges
payable or receivable and other payments or receipts applicable to the
Equipment;
(iv) "Real Property Taxes" shall mean ad valorem
taxes imposed upon the Real Property and any portion of the Leased Real
Property, general assessments imposed with respect to the Leased Real Property
and special assessments upon the Leased Real Property, whether payable in full
or by installments prior to the Closing Date; and
(v) "Personal Property Taxes" shall mean ad
valorem taxes imposed upon the Assets other than the Real Property or the
Leased Real Property.
(c) As soon as practicable after the Closing Date, all
Utility Charges, Rental Charges, Equipment Charges, Real Property Taxes,
Personal Property Taxes, and Service Contracts (including amounts owed
pursuant to transferable state licenses applicable to the Acquired Assets and
transferred to Purchaser hereunder) which are not included in the Assumed
Liabilities shall be apportioned to the Closing Date, and representatives of
the Seller and Purchaser will examine all relevant books and records as of the
Closing Date in order to make the determination of the apportionments, which
determinations shall be calculated based upon the number of days in the
relevant billing period (e.g. month, fiscal year, calendar year, quarterly
period, semi-annual period, etc.) that elapse to and including the Closing
Date and the number of days after the Closing Date remaining in such period
and with regard to Real Property Taxes such prorations
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shall be in accordance with the past practices of the relevant taxing
authority. Payments in respect thereof shall be made to the appropriate party
by check within thirty (30) days after such determination, except that
payments for Real Property Taxes and Personal Property Taxes shall initially
be determined based on the previous year's taxes and shall later be adjusted
to reflect the current year's taxes when the tax bills are finally rendered.
The parties shall fully cooperate to avoid, to the extent legally possible,
the payment of duplicate Personal Property Taxes, and each party shall
furnish, at the request of the other, proof of payment of any Personal
Property Taxes or other documentation which is a prerequisite to avoiding
payment of a duplicate tax.
(d) In the event that either party (the "Payor") pays a
Proration Item (other than if and to the extent included in the Assumed
Liabilities) for which the other party (the "Payee") is obligated in whole or
in part under this Section 10.3, the Payor shall present to the Payee evidence
of payment and a statement setting forth the Payee's proportionate share of
such Proration item, and the Payee shall promptly pay such share to the Payor.
In the event either party (the "Recipient") receives payments of a Proration
Item to which the other party (the "Beneficiary") is entitled in whole or in
part under this Agreement, the Recipient shall promptly pay such share to the
Beneficiary.
(e) In the event there exists as of the Closing Date
any pending appeals of ad valorem tax assessments with regard to any Acquired
Assets, the continued prosecution and/or settlement of such appeals shall be
subject to the direction and control of Purchaser with respect to assessments
for the year within which the Closing occurs.
ARTICLE 11
POST CLOSING MATTERS
11.1 Employment of Employees. On the Closing Date, Purchaser
------------------------
shall offer employment to: (i) all of the salaried and non-salaried
manufacturing and production employees at the Division's manufacturing
facilities, and (ii) substantially all of the salaried and non-salaried
administrative and clerical employees of the Business (except, in both cases,
for employees who are (a) on Seller's salary continuation program for
employees of the Business, (b) employees who are otherwise on any leave or
part-time status, other than vacation leave, maternity leave or any leaves
taken in connection with the Family and Medical Leave Act of 1993 at the
Closing Date, and (c) those employees listed on Schedule 11.1 hereto) at
substantially equivalent rates of pay and working conditions, respectively,
offered by Seller to such Employees on the date of this Agreement. All
employees of the Business accepting Purchaser's offer of employment are
hereinafter referred to as the "Hired Employees." To the extent not reflected
on the Closing Date Balance Sheet or otherwise defined as an Assumed
Liability, Seller shall be responsible for the payment of all earned but
unpaid salaries, bonus, vacation pay, sick pay, holiday pay, severance pay and
other like obligations and payments to the employees of the Business for all
periods ending on or prior to the Effective Time. To
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the extent not reflected on the Closing Date Balance Sheet or otherwise
defined as an Assumed Liability, Seller shall be responsible for the payment
of any amounts due to its employees (including the Hired Employees) pursuant
to the Benefit Plans as a result of the employment of its employees, and, in
determining bonuses and other similar payments due to Hired Employees for any
period ended on or prior to the Effective Time, Seller shall, if payment
thereof will occur after the Effective Time, waive any requirement that such
employees be employees of Seller on the date such bonuses or other similar
payments are paid. To the extent not reflected on the Closing Date Balance
Sheet or otherwise defined as an Assumed Liability, Seller shall be
responsible for all medical claims (including all incurred but unreported or
unpaid) arising out of treatment provided on or prior to, or hospitalization
or confinement for medical reasons in any health care or treatment facility
that commenced on or prior to and continues through and after, the Effective
Time and for all costs associated with such medical claims. Purchaser shall
become responsible for all salaries and compensation payable to Hired
Employees for employment services first provided on or after the Effective
Time; provided, however, that Purchaser shall not be responsible for (a)
liabilities arising under the Benefit Plans (other than the Transferred
Benefit Plans), or (b) liabilities associated with any leaves taken prior to
the Closing Date in connection with the Family and Medical Leave Act of 1993
unless such liability arises from Purchaser's failure to comply with the
Family and Medical Leave Act of 1993. Effective on the Closing Date, Seller
shall, and hereby does, release all Hired Employees from any employment and/or
confidentiality agreement previously entered into between Seller and such
Hired Employees relating to the Business to the extent (but only to the
extent) necessary for Purchaser to operate the Business in the same manner as
operated by Seller prior to the Closing Date. Seller does not release any
Hired Employee from any confidentiality agreement executed by such Hired
Employee in favor of third parties relating to receipt of confidential
information in connection with potential business acquisitions.
11.2 Seller's Benefit Plans. Purchaser shall assume no
-----------------------
responsibility with regard to any Benefit Plans of Seller other than with
respect to the Transferred Benefit Plans and other than the payment of the
accrued pension amount as and to the extent reflected on the Closing Balance
Sheet. To the extent necessary, Seller may continue to communicate with the
Hired Employees regarding their rights and entitlement to any benefits under
the Benefit Plans, subject to Purchaser's prior approval, which shall not be
unreasonably withheld, and the parties shall cooperate with each other in the
administration of all applicable employee benefit plans and programs.
11.3 Vacation Pay. Purchaser agrees to give each Hired Employee
-------------
credit for prior years of service with Seller for purposes of calculating
vacation pay that may be received pursuant to the vacation pay policy of
Purchaser as may be in effect from time to time after the Closing, and will
waive any eligibility requirements of such policy with respect to Hired
Employees.
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11.4 Purchaser's Benefit Plans. If Purchaser establishes
--------------------------
employee benefit plans, then each Hired Employee shall receive credit for
prior years of service with Seller for all purposes of such plans (except for
purposes of benefits accrued under a defined benefit plan) and shall be
entitled to participate in any such Purchaser's employee benefit plans without
the application of any applicable waiting periods. Purchaser shall also permit
the Hired Employees and their eligible dependents to participate in its
applicable group medical plans. Purchaser shall recognize all medical expenses
incurred by Hired Employees and eligible dependents during the calendar year
of the Closing and prior to the Closing Date for purposes of satisfying the
existing calendar year deductibles and such calendar year's co-payment
limitations, if any.
11.5 Employee Files. To the extent permitted by law, on the
--------------
Closing Date, or as soon as practicable thereafter, Seller shall deliver or
make available to a designee of Purchaser a copy of all historical personnel
records of each of the Hired Employees, including, but not limited to,
employment agreements, confidentiality and noncompete agreements, employment
applications, corrective action reports, disciplinary reports, notices of
transfer, notices of rate changes, other similar documents.
11.6 Non-Solicitation. Seller shall terminate effective as of
----------------
the Closing Date all employment agreements it has with any of the Hired
Employees. Until the expiration of eighteen (18) months after the month in
which the Closing Date occurs, Seller shall not directly or indirectly solicit
or offer employment to any Hired Employee who is then an employee of
Purchaser, or who has terminated such employment without the consent of
Purchaser within one hundred eighty (180) days of such solicitation or offer,
and Purchaser shall not directly or indirectly solicit or offer employment to
any person who, after the Closing Date is then an employee of Seller or who
has terminated such employment without the consent of Seller within one
hundred eighty (180) days of such solicitation or offer.
11.7 Discharge of Excluded Obligations. From and after the
---------------------------------
Closing Date, Seller shall pay and discharge, in accordance with past practice
but not less than on a timely basis subject to all defenses and set-offs
lawfully available to Seller, all Excluded Liabilities.
11.8 Maintenance of Books and Records. Each of Seller and
--------------------------------
Purchaser shall preserve until the seventh anniversary of the Closing Date all
Books and Records possessed or to be possessed by such party relating to any
of the assets, liabilities or business of the Business prior to the Closing
Date. Seller shall give Purchaser written notice of any Books and Records
discovered by Seller that were not transferred to Purchaser because such Books
and Records were not located on the Real Property or the Leased Property.
After the Closing Date, where there is a legitimate purpose, such party shall
provide the other parties and their representatives with access, upon prior
reasonable written request specifying the need therefor, during regular
business hours, to (i) the
-51-
officers and employees of such party and (ii) the Books and Records of such
party, but, in each case, only to the extent relating to the assets,
liabilities or business of the Business prior to the Closing Date, and the
other parties and their representatives shall have the right to make copies of
such Books and Records; provided, however, that the foregoing right of access
shall not be exercisable in such a manner as to interfere unreasonably with
the normal operations and business of such party; and further, provided, that,
as to such information as constitutes trade secrets or confidential business
information of such party, the requesting party, its affiliates, officers,
directors and representatives will use due care to not disclose such
information except (i) as required by law, (ii) with the prior written consent
of such party, which consent shall not be unreasonably withheld, or (iii)
where such information becomes available to the public generally, or becomes
generally known to competitors of such party, through sources other than the
requesting party, its affiliates or its officers, directors or
representatives. Such records may nevertheless be destroyed by a party if such
party sends to the other party written notice of its intent to destroy such
records, specifying with particularity the contents of the records to be
destroyed. Such records may then be destroyed only after written consent to
such destruction is delivered.
11.9 Payments Received. Seller and Purchaser each agree that
------------------
after the Closing they will hold and will promptly transfer and deliver to the
other, from time to time as and when received by them, any cash, checks with
appropriate endorsements (using their best efforts not to convert such checks
into cash), or other property that they may receive on or after the Closing
which properly belongs to the other party, including without limitation, any
insurance proceeds, and will account to the other for all such receipts. From
and after the Closing, Purchaser shall have the right and authority to endorse
without recourse the name of Seller on any check or any other evidences of
indebtedness received by Purchaser on account of the Business and the Acquired
Assets transferred to Purchaser hereunder.
11.10 UCC Matters. From and after the Closing Date, Seller will
-----------
promptly refer all inquiries with respect to ownership of the Acquired Assets
or the Business to Purchaser. In addition, Seller will execute such documents
and financing statements as Purchaser may reasonably request from time to time
to evidence transfer of the Acquired Assets to Purchaser, including any
necessary assignments of financing statements.
11.11 Covenant Not to Compete. Seller agrees that for a period
------------------------
of five (5) years commencing on the Closing Date, it will not, within the
Territory (as hereinafter defined), either directly or indirectly, own,
manage, operate, join, control or participate in the ownership, management,
operation or control of, any business, whether in corporate, proprietorship or
partnership form or otherwise where such business is engaged in the design,
manufacture, production, sale of metal and fiberglass reinforced plastic
grating (a "Competing Business"); provided however that this covenant does not
apply to and is not intended to restrict the sales and activities of Shanghai
Xxxxx, Xxxxx de Mexico, S.A. de C.V. and the Mexican Subsidiary outside of the
Territory. As used herein, the term
-00-
"Xxxxxxxxx" xxxxx xxx xxxxxxxxxxx Xxxxxx Xxxxxx. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of
the foregoing will be inadequate and that the Purchaser, in addition to any
other relief available to it, shall be entitled to temporary and permanent
injunctive relief without the necessity of proving actual damage. In the event
that the provisions of this Section 11.11 should ever be deemed to exceed the
limitation provided by applicable law, then the parties hereto agree that such
provisions shall be reformed to set forth the maximum limitations permitted.
11.12 Cooperation. Seller and Purchaser shall cooperate with each
-----------
other in all reasonable respects in connection with the defense of any claim
included within any Assumed Liability or Excluded Liability, as the case may
be, including making available records relating to such claim and furnishing,
without expense, management employees of the party as may be reasonably
necessary for the preparation of the defense of any such claim or for
testimony as a witness in any proceeding relating to such claim; provided,
however, that the foregoing right to cooperation shall not be exercisable by
one party in such a manner as to interfere unreasonably with the normal
operations and business of the other party.
ARTICLE 12
CONFIDENTIALITY; PUBLIC ANNOUNCEMENTS
12.1 Confidentiality. Consummation of the transactions
---------------
contemplated by this Agreement has involved, and will continue to involve, the
written or verbal disclosure and communication to Purchaser of information or
documentation owned by Seller, which information may include, but is not
necessarily limited to, financial data, business plans, personnel information,
drawings, samples, devices, trade secrets, technical information, computer
systems and software, results of research and other data in either oral or
written form (collectively and individually referred to as the "Information").
Purchaser agrees that the following terms and conditions will apply:
(a) The Information is disclosed to Purchaser solely
for Purchaser's use in completing corporate investigation procedures
incidental to this Agreement, and Purchaser agrees not to use the Information
prior to the Closing Date for any other purpose, not to disclose or
communicate the Information to any third party, except to those employees,
agents, attorneys, accountants, lenders, or consultants who shall have a need
to know the Information for the purpose described above and for whom the
Purchaser shall be responsible.
(b) Except to the extent contemplated by this
Agreement, the Information and all rights to the Information which have been
or will be provided by Seller to Purchaser shall remain the exclusive world-
wide property of Seller prior to the Closing Date and shall be held in trust
by Purchaser for the benefit of Seller. Neither party will, directly or
indirectly, deal with, use, exploit, or disclose such Information to
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any person or entity for any purpose prior to the Closing Date, except as
described herein or unless and until expressly authorized in writing to do so
by the other. If the transactions contemplated hereby are not consummated,
each party will return or destroy as much of such written Information as the
party furnishing such Information shall reasonably request.
(c) The restrictions of this Section 12.1 shall
terminate on the Closing Date, and thereafter, the Information may be used by
Purchaser free of any restriction imposed by this Agreement.
12.2 Public Announcements. Seller and Purchaser will consult
--------------------
with each other before issuing any press releases or otherwise making any
public statements or filings with governmental entities with respect to this
Agreement or the transactions contemplated hereby and shall not issue any
press releases or make any public statements or filings with governmental
entities prior to such consultation and shall modify any portion thereof if
the other party reasonably objects thereto, unless the same may be required by
applicable law.
ARTICLE 13
TERMINATION
13.1 Termination. This Agreement may be terminated:
-----------
(a) by the mutual consent of Purchaser and Seller;
(b) by Purchaser: (i) if any condition in Article 8
becomes impossible of performance or has not been satisfied in full or
previously waived by Purchaser in writing at or prior to the Closing Date,
(ii) as provided in Sections 4.3(b), 4.6, or 8.21 hereof;
(c) by Seller if any condition in Article 9 becomes
impossible of performance or has not been satisfied in full or previously
waived by Seller in writing at or prior to the Closing Date; or
(d) by either party (other than a party that is in
material breach of its obligations under this Agreement) if the Closing shall
not have occurred on or before September 30, 1999.
13.2 Effect of Termination. If this Agreement is terminated by
a party due to or based upon the breach or default by the other party of any
provision of this Agreement, such termination shall not affect any right or
remedy of the terminating party arising out of such breach or default, and
such party shall be entitled to pursue its rights or remedies
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against the other party to the extent such rights or remedies may be available
at law or in equity.
ARTICLE 14
INDEMNIFICATION
For the purposes of this Article 14, "Losses" shall mean any and all
demands, claims, actions or causes of action, assessments, losses, damages,
liabilities, costs, removal and remediation requirements and expenses,
including without limitation, interest, penalties, and reasonable attorneys'
and other professional fees and expenses.
14.1 Agreement of Seller to Indemnify. Subject to the terms
-----------------------------------
and conditions of this Article 14, Seller agrees to indemnify, defend, and
hold harmless Purchaser and its officers, directors, and employees
(collectively, the "Purchaser Indemnitees") from, against, for, and in respect
of any and all Losses relating to, imposed upon, or incurred by the Purchaser
Indemnitees by reason of, resulting from, based upon, or arising out of:
(a) the breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement or any other
Acquisition Document or in any certificate, Schedule, or Exhibit furnished by
Seller in connection herewith or therewith;
(b) the breach of any covenant or agreement of Seller
contained in or made pursuant to this Agreement or any other Acquisition
Document;
(c) any Excluded Liability;
(d) the failure to deliver good, valid and marketable
title to any of the Acquired Assets, subject only to the Permitted
Encumbrances;
(e) any duties, obligations, liabilities or other
Losses in connection with those certain industrial development revenue bonds
issued by Orem City, Utah in 1981 in the principal amount of $680,000 for the
benefit of Xxxxx Corporation (the "Orem City Bonds") and any and all loan
agreements, promissory notes or other documents, agreements or instruments
executed in connection therewith (other than any duties, obligations,
liabilities or other Losses with respect to the Orem City Bonds arising as a
result of the breach by Purchaser of its covenant set forth in Section 7.6
hereof); and
(f) as provided in Section 7.3.
14.2 Agreement of Purchaser to Indemnify Seller. Subject to the
------------------------------------------
terms and conditions of this Article 14, Purchaser agrees to indemnify,
defend, and hold harmless Seller and its officers, directors, and employees
(collectively, the "Seller Indemnitees")
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from, against, for, and in respect of any and all Losses relating to, imposed
upon, or incurred by the Seller Indemnities arising out of:
(a) the breach of any representation or warranty of
Purchaser contained in or made pursuant to this Agreement or any other
Acquisition Document or in any certificate, Schedule, or Exhibit furnished by
Purchaser in connection herewith or therewith;
(b) the breach of any covenant or agreement of
Purchaser contained in or made pursuant to this Agreement or any other
Acquisition Document; and
(c) any Assumed Liability.
14.3 Procedures for Indemnification. As used herein, the term
------------------------------
"Indemnitor" means the party against whom indemnification hereunder is sought,
and the term "Indemnitee" means the party seeking indemnification hereunder.
(a) A claim for indemnification hereunder
("Indemnification Claim") shall be made by the Indemnitee by delivery of a
written declaration to the Indemnitor requesting indemnification and
specifying the basis on which indemnification is sought and the amount of
asserted Losses and, in the case of a Third Party Claim (as hereinafter
defined), containing (by attachment or otherwise) such other information as
the Indemnitee shall have concerning such Third Party Claim.
(b) If the Indemnification Claim involves a Third Party
Claim, the procedures set forth in Section 14.4 hereof shall be observed by
the Indemnitee and the Indemnitor.
(c) If the Indemnification Claim involves a matter
other than a Third Party Claim, the Indemnitor shall have twenty (20) business
days to object to such Indemnification Claim by delivery of a written notice
of such objection to the Indemnitee specifying in reasonable detail the basis
for such objection. Failure to timely so object shall constitute a final and
binding acceptance of the Indemnification Claim by the Indemnitor and the
Indemnification Claim shall be paid in accordance with Section 14.3(d) hereof.
If an objection is timely interposed by the Indemnitor, then the Indemnitee
and the Indemnitor shall negotiate in good faith for a period of forty-five
(45) business days from the date (such period is hereinafter referred to as
the "Negotiation Period") the Indemnitee receives such objection prior to
commencing any formal legal action, suit or proceeding with respect to such
Indemnification Claim.
(d) Upon determination of the amount of an
Indemnification Claim that is binding on both the Indemnitor and the
Indemnitee, the Indemnitor shall pay the
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amount of such Indemnification Claim by check within ten (10) days of the date
such amount is determined.
14.4 Defense of Third Party Claims. Should any claim be made, or
-----------------------------
suit or proceeding (including, without limitation, a binding arbitration or an
audit by any taxing authority) be instituted against the Indemnitee which, if
prosecuted successfully, would be a matter for which the Indemnitee is
entitled to indemnification under this Agreement (a "Third Party Claim"), the
obligations and liabilities of the parties hereunder with respect to such
Third Party Claim shall be subject to the following terms and conditions:
(a) The Indemnitor shall have thirty (30) days (or such
lesser time as may be necessary to comply with statutory response requirements
for litigation claims) from receipt of the Indemnification Claim (the "Notice
Period") to notify the Indemnitee, (i) whether or not the Indemnitor disputes
its liability to the Indemnitee with respect to such claim, and (ii)
notwithstanding any such dispute, whether or not the Indemnitor desires, at
its sole cost and expense, to defend the Indemnity against such claim.
(i) In the event that the Indemnitor notifies the
Indemnitee within the Notice Period that it desires to defend the Indemnitee
against such claim then, except as hereinafter provided, the Indemnitor shall
have the right to defend the Indemnitee by appropriate proceedings, which
proceedings shall be promptly settled or prosecuted by the Indemnitor to a
final conclusion. If the Indemnitee desires to participate in, but not
control, any such defense or settlement, it may do so at its sole cost and
expense.
(ii) Except where the Indemnitor (A) timely elects
to defend the Indemnitee against such claim or demand (in which case Section
14.4(a)(i) shall govern), or (B) Indemnitor disputes its liability in a timely
manner under this Section 14.4, the Indemnitor shall be conclusively liable
for the amount of any such claim or defense which is unsuccessful.
(b) The Indemnitee and the Indemnitor shall cooperate
with each other in all reasonable respects in connection with the defense of
any Third Party Claim, including making available records relating to such
claim and furnishing, without expense to the Indemnitor, management employees
of the Indemnitee as may be reasonably necessary for the preparation of the
defense of any such claim or for testimony as witness in any proceeding
relating to such claim.
14.5 Settlement of Third Party Claims. No settlement of a Third
--------------------------------
Party Claim involving the asserted liability of the Indemnitee under this
Article 14 shall be made without the prior written consent by or on behalf of
the Indemnitee, which consent shall not be unreasonably withheld or delayed.
Consent shall be presumed in the case of settlements of $20,000 or less where
the Indemnitee has not responded within twenty (20)
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business days of written notice of a proposed settlement. In the event of any
dispute regarding the reasonableness of a proposed settlement, the party that
will bear the larger financial loss resulting from such settlement shall make
the final determination in respect thereto, which determination shall be final
and binding on all involved parties.
14.6 Duration. The indemnification rights of the parties hereto
--------
for Losses resulting from a breach of representations and warranties contained
in this Agreement or any other Acquisition Document (other than for tax,
employee benefit, and environmental matters) is subject to the condition that
the Indemnitor shall have received written notice of the Losses for which
indemnity is sought within eighteen (18) months after the Closing Date. The
indemnification rights of the parties hereto for Losses resulting from a
breach of representations and warranties for or that are related to
environmental matters is subject to the condition that the Indemnitor shall
have received written notice of the Losses for which indemnity is sought
within seven (7) years of the Closing Date. The indemnification rights of the
parties hereto for Losses resulting from a breach of representations and
warranties for or that are related to tax or employee benefit matters is
subject to the condition that the Indemnitor shall have received written
notice of the Losses for which indemnity is sought prior to the later of the
date on which a claim which would result in such Loss is barred by all
applicable statues of limitation. The indemnification rights of the parties
hereto for Losses resulting from a breach of any representation and warranty
with respect to title to any of the Acquired Assets, or resulting from a
breach of any covenant or agreement contained herein, or with respect to the
breach of any agreement or undertaking with respect to payment of the Excluded
Liabilities or Assumed Liabilities is subject to the condition that the
Indemnitor shall have received written notification of the Losses for which
indemnity is sought prior to the seventh anniversary of the Closing Date.
14.7 Limitations.
-----------
(a) The Indemnitor shall be obligated to indemnify the
Indemnitee under Section 14.1(a) or Section 14.2(a) only when the aggregate of
all Losses suffered or incurred by the Indemnitee as to which a right of
indemnification is provided under Section 14.1(a) or Section 14.2(a) exceeds
Two Hundred and Fifty Thousand Dollars ($250,000) (the "Threshold Amount").
After the aggregate of all Losses suffered or incurred by the Indemnitee as to
which a right of indemnification is provided under either of such sections
exceeds the Threshold Amount, the Indemnitor shall be obligated to indemnify
such Indemnitee for all such Losses without reduction by the Threshold Amount.
Notwithstanding the above, the Threshold Amount limitation shall not apply to
the indemnification rights of the parties hereto for Losses resulting from
those liabilities described in Sections 14.1(b), 14.1(c), 14.1(d), 14.1(e),
14.1(f), 14.2(b) or 14.2(c).
(b) The Indemnitor shall be obligated to indemnify the
Indemnitee for all Losses under Sections 7.3, 14.1(a) (as it relates to the
breach of any representation or
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warranty set forth in Section 5.12), 14.1 (c) (as it relates to Environmental
Liabilities) and 14.1(f) only when the aggregate amount of all Losses suffered
or incurred by the Indemnitee as to which a right of indemnification is
provided under Section, 7.3, 14.1(a) (as it relates to the breach of any
representation or warranty set forth in Section 5.12), 14.1(c) (as it relates
to Environmental Liabilities) or 14.1(f) exceeds Fifty Thousand Dollars
($50,000) (the "Environmental Loss Deductible") and then only to the extent
the aggregate amount of such Losses exceeds the Environmental Loss Deductible;
provided, however the Indemnitor shall not be obligated to indemnify the
Indemnitee under Sections 7.3, 14.1(a) (as it relates to the breach of any
representation or warranty set forth in Section 5.12), 14.1(c) (as it relates
to Environmental Liabilities) or 14.1(f) for fees, charges, penalties and
other costs described in the last sentence of each of Sections 7.3(a) and
7.3(b) and any Losses arising therefrom or based thereon with respect to storm
water permits or Air Permits for Seller's Libertyville, Illinois facility in
an aggregate amount in excess of Two Hundred Thousand Dollars ($200,000).
(c) The Indemnitor shall not be liable for damages in
excess of the actual damages suffered by the Indemnitee as a result of the
act, circumstance, or condition for which indemnification is sought net of any
insurance proceeds received by the Indemnitee or any tax benefits realized by
the Indemnitee as a result of the Losses for which indemnification is claimed.
In no event shall Seller be liable as an Indemnitor hereunder in an aggregate
amount greater than the Final Purchase Price.
ARTICLE 15
GENERAL PROVISIONS
15.1 Fees and Expenses. Except as specifically provided in this
-----------------
Agreement, Seller and Purchaser each shall pay their respective fees and
expenses in connection with the transactions contemplated by this Agreement.
Purchaser shall pay for any and all owner's title insurance policies, surveys
and fees related to the title insurance company's participation in the Closing
in connection with the Acquired Assets. Notwithstanding anything to the
contrary set forth herein, Seller shall not pay any Excluded Liabilities or
any fees or expenses incurred by Seller in connection with the transactions
contemplated by this Agreement by using the Acquired Assets or any portion
thereof, and if prior to the Effective Time a portion of the Acquired Assets
is used to pay any Excluded Liabilities, or any of such fees and expenses,
Seller shall reimburse Purchaser by the amount of Acquired Assets so used.
15.2 Notices. All notices, requests, demands, and other
-------
communications hereunder shall be in writing (which shall include
communications by telex and telecopy) and shall be delivered (a) in person or
by courier or overnight service, (b) mailed by first class registered or
certified mail, postage prepaid, return receipt requested, or (c) by facsimile
transmission, as follows:
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(a) If to Seller:
Chatwins Group, Inc.
000 Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Mr. Xxxxxxx Xxxxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxxx Ingersoll
One Oxford Center
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx Xxxxxx, Esq.
Telephone: 000-000-0000
Facsimile: 000-000-0000
(b) If to Purchaser:
Alabama Metal Industries Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx & Bird
One Atlantic Center
0000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
or to such other address as the parties hereto may designate in writing to the
other in accordance with this Section 15.2. Any party may change the address
to which notices are to be sent by giving written notice of such change of
address to the other parties in the manner above provided for giving notice.
If delivered personally or by courier, the date on which the notice, request,
instruction or document is delivered shall be the date on which such delivery
is made and if delivered by facsimile transmission or mail as
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aforesaid, the date on which such notice, request, instruction or document is
received shall be the date of delivery.
15.3 Assignment; Binding Effect. Except as provided in this
--------------------------
Section 15.3, prior to the Closing, this Agreement shall not be assignable by
any of the parties hereto without the written consent of the other; provided,
however, that (a) at the Closing Purchaser may assign all of its rights herein
to any lender or lenders providing financing to Purchaser subject to all of
the provisions hereof and subject to all rights, remedies and defenses that
Seller could assert against Purchaser, and (b) after the Closing, Purchaser
may assign its interest in this Agreement to any person or entity (subject to
all rights, remedies and defenses that Seller could assert against Purchaser)
without the written consent of Seller, which consent shall not be unreasonably
withheld or delayed; provided, however, in no event shall Seller's obligations
hereunder be increased by such assignment. From and after any such assignment,
the word "Purchaser" shall mean such assignee.
15.4 No Benefit to Others. The representations, warranties,
--------------------
covenants, and agreements contained in this Agreement are for the sole benefit
of the parties hereto and, in the case of Article 14 hereof, the Purchaser
Indemnitees and the Seller Indemnitees and their heirs, executors,
administrators, legal representatives, successors and assigns, and they shall
not be construed as conferring any rights on any other persons.
15.5 Headings, Gender, and "Person". All section headings
------------------------------
contained in this Agreement are for convenience of reference only, do not form
a part of this Agreement and shall not affect in any way the meaning or
interpretation of this Agreement. Words used herein, regardless of the number
and gender specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine,
or neuter, as the context requires. Any reference to a "person" herein shall
include an individual, firm, corporation, partnership, trust, governmental
authority or body, association, unincorporated organization or any other
entity.
15.6 Counterparts. This Agreement may be executed in two (2) or
------------
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one counterpart has been signed by
each party and delivered to the other party hereto.
15.7 Integration of Agreement. This Agreement supersedes all
------------------------
prior agreements, oral and written, between the parties hereto with respect to
the subject matter hereof. Neither this Agreement, nor any provision hereof,
may be changed, waived, discharged, supplemented, or terminated orally, but
only by an agreement in writing signed by the party against which the
enforcement of such change, waiver, discharge, or termination is sought.
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15.8 Time of Essence. Time is of the essence in this Agreement.
---------------
15.9 Governing Law. This Agreement shall be construed under the
-------------
laws of the State of Delaware without regard to conflict of laws.
15.10 Partial Invalidity. Whenever possible, each provision hereof
------------------
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
other provisions of this Agreement, and this Agreement shall be construed as
if such invalid, illegal, or unenforceable provision or provisions had never
been contained herein unless the deletion of such provision or provisions
would result in such a material change as to cause completion of the
transactions contemplated hereby to be unreasonable.
15.11 Investigation. Purchaser acknowledges that its officers,
-------------
directors, employees and authorized representatives and agents have been given
an opportunity to examine the agreements, instruments, documents and other
information, including the Acquired Assets, relating to the Business that they
have requested to examine. Any inspection, preparation, or compilation of
information or Schedules, or audit of the inventories, properties, financial
condition, or other matters relating to the Business conducted by or on behalf
of Purchaser pursuant to this Agreement shall in no way limit, affect, or
impair the ability of Purchaser to rely upon the representations, warranties,
covenants, and agreements of Seller set forth herein. The covenants and
representations and warranties of Seller and Purchaser shall survive the
Closing and the execution and delivery of all instruments of conveyance for
the periods set forth in Section 14.6.
(SIGNATURES APPEAR ON THE FOLLOWING PAGE)
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IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed on its behalf by its duly authorized officer, all as of the day and
year first above written.
PURCHASER:
ALABAMA METAL INDUSTRIES CORPORATION
By: /s/ Xxxxxxx X. Xxxxx
_________________________________
Name: Xxxxxxx X. Xxxxx
_______________________________
Title: President & CEO
______________________________
SELLER:
CHATWINS GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
_________________________________
Name: Xxxxxxx X. Xxxxxxx
_______________________________
Title: Senior Vice President
______________________________
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