EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
by and among
XXXXXXX LIMITED PARTNERSHIP,
APW LTD.
and
APW MAYVILLE, INC.
JANUARY 23, 2001
TABLE OF CONTENTS
ARTICLE I
TRANSACTION............................................................................. 2
ARTICLE II
CLOSING AND CLOSING DATE................................................................ 2
ARTICLE III
SALE OF ASSETS.......................................................................... 2
3.1 Assets....................................................................... 2
3.2 Excluded Assets.............................................................. 5
ARTICLE IV
ASSUMPTION OF LIABILITIES............................................................... 5
4.1 Assumed Liabilities.......................................................... 5
4.2 Excluded Liabilities......................................................... 7
4.3 Assignment of Defenses....................................................... 8
ARTICLE V
PAYMENT OF PURCHASE PRICE............................................................... 8
5.1 Purchase Price............................................................... 8
5.2 Closing Balance Sheet Adjustment of Purchase Price........................... 9
5.3 Allocation of Purchase Price................................................. 15
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER................................................ 15
6.1 Organization; Authority; Qualification....................................... 15
6.2 Authorization; Valid and Binding Obligation.................................. 16
6.3 No Violation; Consents and Approvals......................................... 16
6.4 Financial Statements......................................................... 17
6.5 Absence of Certain Changes................................................... 17
6.6 Tax Matters.................................................................. 18
6.7 Litigation................................................................... 18
6.8 Owned Real Property.......................................................... 19
6.9 Leased Real Property......................................................... 20
6.10 Owned and Leased Tangible Personal Property.................................. 21
6.11 Sufficiency of Assets........................................................ 21
6.12 Certain Contracts............................................................ 22
6.13 Warranties; Product Claims................................................... 23
6.14 Compliance with Laws......................................................... 23
6.15 Licenses and Permits......................................................... 24
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6.16 Environmental Matters...................................................... 24
6.17 Intellectual Property...................................................... 25
6.18 Benefit Plans.............................................................. 27
6.19 Brokers or Finders......................................................... 34
6.20 Books and Records.......................................................... 34
6.21 Labor Matters.............................................................. 34
6.22 Insurance.................................................................. 35
6.23 Transactions with Affiliates............................................... 35
6.24 Investment Intent.......................................................... 36
6.25 No Power of Attorney....................................................... 37
6.26 Warranties True and Correct. ............................................. 37
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYERS.............................................. 38
7.1 Organization; Authority; Qualification..................................... 38
7.2 Authorization; Valid and Binding Obligation................................ 38
7.3 Capital Structure.......................................................... 39
7.4 SEC Documents and Other Reports............................................ 40
7.5 No Violation, Consents and Approvals....................................... 41
7.6 Litigation................................................................. 42
7.7 Funds...................................................................... 42
7.8 Tax Matters................................................................ 42
7.9 Compliance with Laws....................................................... 42
7.10 Intellectual Property...................................................... 43
7.11 No Undisclosed Employee Benefit Plan
Liabilities or Severance Arrangements...................................... 44
7.12 Absence of Certain Changes................................................. 44
7.13 Environmental Matters...................................................... 45
7.14 Brokers or Finders......................................................... 45
7.15 Warranties True and Correct................................................ 45
ARTICLE VIII
COVENANTS OF SELLER................................................................... 46
8.1 Affirmative Covenants...................................................... 46
8.2 Negative Covenants......................................................... 47
8.3 Alternative Proposals. .................................................... 49
8.4 Noncompetition............................................................. 49
8.5 Minimum Net Worth.......................................................... 50
8.6 Key Employees.............................................................. 50
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ARTICLE IX
COVENANTS OF BUYERS............................................................................ 51
9.1 U.S. Revenue Procedure 96-60........................................................ 51
9.2 Transfer of Common Stock............................................................ 51
ARTICLE X
MUTUAL COVENANTS............................................................................... 51
10.1 Access to Information............................................................... 51
10.2 Access to Books After the Closing................................................... 52
10.3 Bulk Sales.......................................................................... 53
10.4 Employment.......................................................................... 53
10.5 Government Filings.................................................................. 59
10.6 Public Announcements................................................................ 60
10.7 Further Assurances.................................................................. 60
10.8 Consents. ......................................................................... 60
10.9 Nonsolicitation. ................................................................. 61
10.10 Unemployment Compensation Accounts.................................................. 62
10.11 Mayville Site. .................................................................... 62
10.12 Title Insurance and ALTA Surveys.................................................... 63
ARTICLE XI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYERS.............................................. 64
11.1 Accuracy of Representations and Warranties;
Performance of Covenants............................................................ 64
11.2 No Material Adverse Change.......................................................... 65
11.3 No Injunction....................................................................... 65
11.4 HSR Act............................................................................. 65
11.5 Closing Deliveries.................................................................. 65
11.6 Consents............................................................................ 66
ARTICLE XII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER.............................................. 67
12.1 Accuracy of Representations and Warranties;
Performance of Covenants............................................................ 67
12.2 No Material Adverse Change.......................................................... 67
12.3 No Injunction....................................................................... 67
12.4 HSR Act............................................................................. 67
12.5 Closing Deliveries.................................................................. 68
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ARTICLE XIII
EXPENSES AND TAXES........................................................................ 69
13.1 Expenses....................................................................... 69
13.2 Taxes.......................................................................... 69
ARTICLE XIV
TERMINATION............................................................................... 70
14.1 Termination.................................................................... 70
14.2 Effect of Termination.......................................................... 70
ARTICLE XV
INDEMNIFICATION AND SURVIVAL OF
REPRESENTATIONS AND WARRANTIES............................................................ 71
15.1 Indemnification by Seller...................................................... 71
15.2 Indemnification by Buyers...................................................... 71
15.3 Limitation of Indemnification Liability of Seller.............................. 72
15.4 Limitation of Indemnification Liability of Buyers.............................. 72
15.5 Survival....................................................................... 72
15.6 Indemnification Procedures..................................................... 73
ARTICLE XVI
MISCELLANEOUS............................................................................. 75
16.1 Governing Law.................................................................. 75
16.2 Counterparts; Use of Facsimiles................................................ 75
16.3 Entire Agreement............................................................... 75
16.4 No Presumption Against Draftsman............................................... 75
16.5 Notices........................................................................ 76
16.6 Successors and Assigns......................................................... 77
16.7 Severability................................................................... 77
16.8 Buyer Guarantee................................................................ 77
16.9 Certain Definitions............................................................ 78
Schedules
Schedule 3.1(a) Owned Real Property
Schedule 3.1(b) Real Property Leases
Schedule 3.1(o) Tangible Assets
Schedule 5.2(a) Adjustment Calculation
Schedule 5.3 Allocation of Purchase Price
Schedule 6.3 Consents and Approvals
Schedule 6.4 Financial Statements
Schedule 6.5 Absence of Certain Changes
Schedule 6.6(a) Tax Matters
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Schedule 6.6(d) Audits and Examinations
Schedule 6.7 Litigation
Schedule 6.8 Real Property Encumbrances
Schedule 6.9(b) Leased Property Encumbrances
Schedule 6.9(c) Leased Property Third Party Approvals
Schedule 6.10 Tangible Personal Property Encumbrances
Schedule 6.11 Sufficiency of Assets
Schedule 6.12(a) Material Contracts
Schedule 6.12(b) Restrictive Contracts
Schedule 6.13 Warranty and Product Claims
Schedule 6.14 Compliance with Laws
Schedule 6.15 Licenses and Permits
Schedule 6.16(a) Compliance with Environmental Laws
Schedule 6.16(b) Environmental Claims
Schedule 6.16(c) Environmental Matters
Schedule 6.16(d) Storage Tanks
Schedule 6.16(e) Environmental Reports
Schedule 6.16(f) Continued Operation
Schedule 6.17(a) Intellectual Property
Schedule 6.17(b) Third Party Intellectual Property Grants
Schedule 6.17(d)(i) Software
Schedule 6.17(d)(ii) Third Party Software
Schedule 6.18(a) Company Group
Schedule 6.18(b) Company Plans
Schedule 6.18(c) Company Qualified Plans
Schedule 6.18(e) Termination of Company Qualified Plans
Schedule 6.18(h)(i) Multiemployer Plan
Schedule 6.18(h)(ii) Contributions to Multiemployer Plan
Schedule 6.18(k) Retiree Benefits
Schedule 6.21 Labor Matters
Schedule 6.22(a) Insurance
Schedule 6.22(b) Insurance Claims
Schedule 6.23 Transactions with Affiliates
Schedule 6.25 Powers of Attorney
Schedule 7.5 Consents and Approvals
Schedule 7.6 Litigation
Schedule 7.8(a) Tax Matters
Schedule 7.8(b) Audits and Examinations
Schedule 7.9 Compliance with Laws
Schedule 7.10(a) Intellectual Property
Schedule 7.10(b) Intellectual Property Litigation
Schedule 7.12 Absence of Certain Changes
Schedule 7.13(a) Compliance with Environmental Laws
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Schedule 7.13(b) Environmental Claims
Schedule 7.13(c) Environmental Matters
Schedule 8.2 Negative Covenants
Schedule 10.4 Eligible Employees
Schedule 11.6 Consents
Exhibits
Exhibit A Form of Registration Rights Agreement
Exhibit 11.5(d) Topics for the Opinion of Counsel to Seller
Exhibit 11.5(e)(i) Form of Indenture, Xxxx of Sale and Assignment
Exhibit 11.5(e)(ii)(A) Form of Assignment of Texas Lease
Exhibit 11.5(e)(ii)(B) Form of Assignment of New Jersey Lease
Exhibit 11.5(e)(ii)(C) Form of Assignment of Virginia Lease
Exhibit 11.5(e)(iii)(A) Form of Special Warranty Deed for Arizona Property
Exhibit 11.5(e)(iii)(B) Form of Special Warranty Deed for North Carolina
Property
Exhibit 11.5(e)(iii)(C) Form of Special Warranty Deed for Wisconsin Property
Exhibit 11.5(g) Form of Transitional Services Agreement
Exhibit 12.5(d) Topics for the Opinion of Counsel to Buyers
Exhibit 12.5(f) Form of Instrument of Assumption
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 23, 2001 (this
"Agreement"), by and among Xxxxxxx Limited Partnership, a Delaware limited
partnership ("Seller"), APW Ltd., a Bermuda company ("Buyer"), and APW Mayville,
Inc., a Wisconsin corporation ("Buyer Sub" and together with Buyer, "Buyers").
Seller owns the Mayville Metal Products Division, which is a
manufacturer and supplier of custom metal electronic enclosures and related
products for the telecommunications and semiconductor equipment industries and
other industries (such division as more fully described and reflected in the
Financial Statements (as defined in Section 6.4) being hereinafter referred to
as the "Division");
Seller desires to sell to Buyers, and Buyers desire to purchase from
Seller, the Assets (as defined in Section 3.1) of the Division, and Buyers
desire to assume from Seller and Seller desires to assign to Buyers, the Assumed
Liabilities (as defined in Section 4.1) of the Division on the terms and
conditions set forth in this Agreement; and
Simultaneously with the consummation of said sale and purchase, Seller
and Buyer shall enter into a Registration Rights Agreement substantially in the
form of Exhibit A hereto (the "Registration Rights Agreement").
NOW, THEREFORE, in order to consummate said sale and purchase and in
consideration of the representations, warranties, covenants and agreements set
forth herein, the parties hereto agree as follows:
ARTICLE I
TRANSACTION
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Subject to the terms and conditions of this Agreement, (a) Seller shall
sell, assign, transfer, convey and deliver to Buyers, and Buyers shall purchase
and accept from Seller, the Assets and (b) Seller shall assign to Buyers, and
Buyers shall assume from Seller, the Assumed Liabilities (the transactions
referred to in clauses (a) and (b) and the other transactions contemplated by
this Agreement are sometimes referred to herein collectively as the
"Transaction").
ARTICLE II
CLOSING AND CLOSING DATE
------------------------
The closing (the "Closing") of the Transaction shall take place at the
offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, at 10:00 a.m. on the second business day following the
satisfaction or waiver of the conditions set forth in Articles XI and XII, or on
such other date and at such other place as the parties may agree in writing. The
date of the Closing is referred to as the "Closing Date."
ARTICLE III
SALE OF ASSETS
--------------
3.1 Assets. Seller shall, at the Closing and pursuant to the Transfer
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Documents (as defined in Section 11.5(e)), sell, assign, transfer, convey and
deliver to Buyer Sub all of Seller's entire right, title and interest in all of
the assets, properties, rights, claims and privileges of every nature and
description of the Division, whether or not reflected in the Financial
Statements, as they exist as of the Closing, including, without limitation, all
of Seller's entire right, title and interest in the following (collectively, the
"Assets"):
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(a) the land described on Schedule 3.1(a) hereto and the buildings,
structures, fixtures and improvements thereon and all appurtenances thereto
(collectively, the "Owned Real Property");
(b) the leases listed on Schedule 3.1(b) hereto (collectively, the
"Real Property Leases");
(c) all "Accounts receivable," "Inventories," "Other current assets"
and "Property, plant and equipment" of the Division reflected on the Closing
Balance Sheet (as defined in Section 5.2(c));
(d) all registered or unregistered trademarks, trade names, service
marks and logos and all patents, inventions, ideas, algorithms, software,
copyrights, schematics, technologies, drawings, specifications, know-how, trade
secrets and any other proprietary rights that are used in the conduct of the
business of the Division as currently conducted, and all licenses to,
registrations of, or applications to register any of the foregoing (collectively
referred to as "Division Intellectual Property");
(e) all leases of personal property of the Division;
(f) the Material Contracts (as defined in Section 6.12(a)), and all
other agreements of the Division and all claims, causes of action, refunds,
rights of recovery, rights of setoff and rights of recoupment of any kind
against, relating to or pursuant to any of such Material Contracts or other
agreements;
(g) all books and records of the Division, including the customer and
supplier lists, and all proprietary and non-proprietary information of the
Division;
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(h) except as otherwise provided in Section 3.2(b), all credits,
prepaid expenses, deferred charges, advance payments, security deposits, prepaid
items and duties of the Division;
(i) to the extent their transfer is permitted by law, all
authorizations of Governmental Agencies (as defined in Section 16.9) of the
Division;
(j) all goodwill and similar intangible property of the Division;
(k) all warranties, representations, and guarantees made by suppliers,
manufacturers and contractors of the Division to the extent transferable to
Buyer Sub;
(l) all telephone, fax, pager and mobile phone numbers of the Division
and all email addresses, internet connections and uniform resource locators, or
"URLs," and websites owned, licensed or leased by the Division, to the extent
assignable;
(m) all insurance, warranty and condemnation proceeds of the Division;
(n) all claims of the Division necessary to assure Buyer Sub full
title, ownership and possession of the Assets after the Closing;
(o) all tangible assets of the Division, including, without
limitation, those set forth on Schedule 3.1(o);
(p) all intangible assets of the Division; and
(q) any other assets of Seller used primarily in connection with the
day-to-day operation, as opposed to the supervision, of the Division;
provided, however, that the Assets shall not include, and the
Excluded Assets (as defined in Section 3.2) shall include, Seller's right, title
and interest in any of the items referred to
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in Sections 3.1(h), (k), (m), (n) or (q) if and to the extent that such right,
title or interest relates to any of the Excluded Assets or any of the Excluded
Liabilities (as defined in Section 4.2).
3.2 Excluded Assets. Notwithstanding Section 3.1, there shall be excluded
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from the Assets all of Seller's right, title and interest in the following
assets (collectively, the "Excluded Assets"):
(a) the cash of the Division;
(b) the "Prepaid insurance" of the Division reflected on the Closing
Balance Sheet; and
(c) commercially available software programs licensed by Seller from
third parties on a "shrinkwrap basis" and used by the Division that are not
transferable to Buyer Sub.
ARTICLE IV
ASSUMPTION OF LIABILITIES
-------------------------
4.1 Assumed Liabilities. Buyer Sub shall, at the Closing and pursuant
-------------------
to the Instrument of Assumption (as defined in Section 12.5(f)), assume, and
shall discharge and satisfy when due, all of the following liabilities and
obligations of the Division (collectively, the "Assumed Liabilities"):
(a) the "Accounts payable," "Accrued expenses" and "Amounts due
Parent" of the Division to the extent shown on the Closing Balance Sheet;
(b) all liabilities and obligations for accrued and unpaid vacation
and wages of the Eligible Employees (as defined in Section 10.4(a)) to the
extent shown on the Closing Balance Sheet;
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(c) all liabilities and obligations of the nature for which there are
reserves or accruals reflected in the Closing Balance Sheet to the extent of the
aggregate of such reserves and without regard to whether any such liability or
obligation relates to any particular reserve;
(d) all liabilities and obligations arising, or the performance of
which arises, after the Closing under the Real Property Leases;
(e) all liabilities and obligations arising, or the performance of
which arises, after the Closing under the leases of personal property of the
Division;
(f) all liabilities and obligations arising, or the performance of
which arises, after the Closing under the Material Contracts or other agreements
of the Division (other than the Real Property Leases or leases of personal
property referred to in Sections 4.1(d) and (e));
(g) all liabilities and obligations becoming due and payable or
arising, or the performance of which arises, after the Closing under the Alliant
Energy Wisconsin Power & Light Company Shared Savings Contract for Mayville
Metal Products, Inc. Paint Shop Retrofit and the liabilities and obligations
with respect thereto to the extent reflected on the Closing Balance Sheet;
(h) all liabilities and obligations associated with the collective
bargaining agreements (the "CBAs") existing as of the Closing between Seller and
Local Lodge No. 2052 of the IAM (the "Union");
(i) the liabilities and obligations set forth in Sections 10.4(d) and
(e), to the extent set forth therein and the responsibility for the contribution
to the CLP Profit Sharing and Savings Plan with respect to the Transferred
Employees (as defined in Section 10.4(a)) for the calendar year 2000;
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(j) except as set forth in Sections 4.2(e) and 10.11, all liabilities
and obligations arising out of or related to the Assets or the operation of the
business of the Division at any time which arise out of or relate to (i) the
presence, Release (as defined in Section 16.9) or threatened Release of any
Hazardous Material (as defined in Section 16.9) at any location or (ii)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law (as defined in Section 16.9);
(k) the liabilities and obligations under the Division's Health
Maintenance Organization ("HMO") agreements covering certain employees subject
to the CBAs as set forth in Section 10.4(f) and under the Division's Employee
Assistance Program; and
(l) the liabilities and obligations for payment of benefits and
administration of the portion of the Beneflex Component Plan of the CLP Health
and Welfare Plan which is to be spun-off pursuant to Section 10.4(i) and the
liability to make payments to Eligible Employees who are on short term
disability leave of absence as of the Closing Date, in accordance with Section
10.4(j).
4.2 Excluded Liabilities. Except for the Assumed Liabilities, Buyers
--------------------
are not assuming, or in any way becoming liable or responsible for, any
liabilities or obligations of Seller or the Division (whether reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured) including, without
limitation, (a) liabilities or obligations under the agreements referred to in
Sections 4.1(d), (e), (f), (g), (h), (i) or (k) which arose, or the performance
of which arose, prior to the Closing, (b) liabilities or obligations under (i)
that certain industrial revenue bond in the aggregate principal amount of
$5,100,000 issued by The Industrial Development Authority of the
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City of Casa Grande, Arizona or (ii) that certain industrial revenue bond in the
aggregate principal amount of $9,000,000 issued by the Granville County, North
Carolina Industrial Facilities and Pollution Control Financing Authority, (c)
liabilities or obligations under the Long Term Incentive Plan or Seller's
Pension Plan (as defined in Section 16.9), (d) except as set forth in Section
13.2, liabilities or obligations for any Taxes (as defined in Section 16.9)
arising in connection with the consummation of the Transaction and (e) any
liability or obligation of Seller with respect to the Aquatech Site near Greer,
South Carolina and the Four County Landfill in Delong, Indiana which arise out
of or relate to the Release or threatened Release of Hazardous Materials
generated prior to the Closing Date in connection with the assets of Seller or
the operation of the businesses of Seller (all such liabilities or obligations
not expressly assumed by Buyers pursuant to this Agreement are hereinafter
referred to collectively as the "Excluded Liabilities").
4.3 Assignment of Defenses. In the event of any claim against Buyers
----------------------
with respect to any of the Assumed Liabilities, Buyers will have, and Seller
hereby assigns to Buyer Sub, any defense, counterclaim, or right of setoff of
Seller with respect to any claim which is or could be asserted against Seller.
ARTICLE V
PAYMENT OF PURCHASE PRICE
-------------------------
5.1 Purchase Price. The aggregate purchase price (the "Purchase Price")
--------------
shall consist of: (a) the Assumed Liabilities; (b) a number of shares of common
stock, par value $.01 per share, of Buyer ("Common Stock") equal to the greater
of (i) 1,509,434 or (ii) $50,000,000 divided by the average of the closing
prices per share of the Common Stock on the New York
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Stock Exchange, Inc., as reported in the Wall Street Journal's New York Stock
Exchange Composite Transactions, on the five (5) trading days immediately
preceding the Closing Date (such greater number of shares of Common Stock being
hereinafter referred to as the "Share Consideration"); and (c) $225,000,000 in
cash (the "Cash Consideration"), and shall be subject to adjustment pursuant to
Section 5.2. At the Closing, (x) Buyer Sub shall pay the Cash Consideration by
wire transfer in federal or other immediately available funds to an account or
accounts designated by Seller and assume the Assumed Liabilities pursuant to the
Instrument of Assumption, and (y) Buyer shall issue and deliver to Seller a
certificate representing the Share Consideration with the legend set forth in
Section 6.24(d).
5.2 Closing Balance Sheet Adjustment of Purchase Price.
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(a) The Purchase Price shall be increased or decreased (the "Purchase
Price Adjustment"), dollar for dollar, to the extent (i) the amount by which (A)
the sum of "Accounts receivable, net," "Inventories" and "Other current assets,"
as reflected on the Unaudited Closing Balance Sheet (as defined in Section
5.2(b)) or the Closing Balance Sheet as the case may be, exceeds (B) the sum of
"Accounts payable," "Accrued expenses," "Amounts due Parent," and the "Alliant
Savings Contract - current," as reflected on the Unaudited Closing Balance Sheet
or the Closing Balance Sheet, as the case may be, is greater than or less than
(ii) $10,107,000 (which amount has been calculated as set forth on Schedule
5.2(a) hereto), respectively.
(b) As promptly as practical, and in any event not more than
seven (7) days after the Closing Date, Seller shall prepare and deliver to
Buyers (i) a balance sheet of the Division as of the Closing Date (the
"Unaudited Closing Balance Sheet") and (ii) a calculation of the amount of the
Purchase Price Adjustment derived from the Unaudited Closing Balance Sheet
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(the "Initial Calculation"). The Unaudited Closing Balance Sheet (i) shall
fairly present in all material respects the financial position of the Division
as of the Closing Date, (ii) shall be prepared from and be consistent with the
books and records of the Division and (iii) shall be prepared on a basis
consistent with the audited balance sheet of the Division included in the
Financial Statements (except (A) that the Excluded Assets shall not be included,
(B) that there shall be no reserves therein for Excluded Assets or Excluded
Liabilities and (C) that the environmental reserve therein shall be the same as
the environmental reserve in the balance sheet of the Division as of October 31,
2000). Upon the later of (i) the third (3rd) business day following Buyers'
receipt of the Unaudited Closing Balance Sheet and the Initial Calculation or
(ii) March 5, 2001:
(A) if the Purchase Price Adjustment derived from the
Unaudited Closing Balance Sheet is an increase in the Purchase Price,
Buyer Sub shall pay Seller fifty percent (50%) of the Purchase Price
Adjustment derived from the Unaudited Closing Balance Sheet; or
(B) if the Purchase Price Adjustment derived from the
Unaudited Closing Balance Sheet is a decrease in the Purchase Price,
Seller shall pay Buyer Sub fifty percent (50%) of the Purchase Price
Adjustment derived from the Unaudited Closing Balance Sheet.
The payment required to be made pursuant to this Section 5.2(b) shall be made in
cash by wire transfer in federal or other immediately available funds to an
account or accounts designated by the party entitled thereto.
(c) As promptly as practical, and in any event not more than
forty-five (45) days after the Closing Date, Seller shall prepare and deliver to
Buyers (i) a balance sheet of the Division as of the Closing Date (the "Closing
Balance Sheet") and a report thereon of Seller's
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independent accountants, PricewaterhouseCoopers LLC ("Seller's PwC"), and (ii) a
calculation of the amount of the Purchase Price Adjustment derived from the
Closing Balance Sheet (the "Calculation"). The Closing Balance Sheet (i) shall
fairly present in all material respects the financial position of the Division
as of the Closing Date, (ii) shall be prepared from and be consistent with the
books and records of the Division and (iii) shall be prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a basis consistent
with the audited balance sheet of the Division included in the Financial
Statements (except (A) as set forth in the notes thereto or in the report of the
independent accountants included therein, (B) that the Excluded Assets shall not
be included, (C) that there shall be no reserves therein for Excluded Assets or
Excluded Liabilities and (D) that the environmental reserve therein shall be the
same as the environmental reserve in the balance sheet of the Division as of
October 31, 2000). In connection with the audit of the Closing Balance Sheet,
Seller shall cooperate, and cause its agents and representatives, including
Seller's PwC, to cooperate with Buyers and their agents and representatives,
including Buyers' accounting firm, PricewaterhouseCoopers LLC ("Buyer's PwC"),
and shall provide such agents and representatives access to such books, records
and information as may be requested from time to time. Seller shall cause
Seller's PwC to meet with Buyer's PwC (i) prior to the commencement of the audit
to discuss the scope of the procedures to be performed, (ii) throughout the
audit process, as requested by Buyer's PwC, to allow Buyer's PwC the ability to
participate in the performance of the audit procedures and discuss the
preliminary findings of the audit and (iii) prior to the issuance of the Closing
Balance Sheet to discuss the final findings of the audit. The audit of the
Closing Balance Sheet shall
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include a physical inventory count which will occur within seven (7) calendar
days preceding the Closing.
(d) The Closing Balance Sheet and the Calculation shall be conclusive
and binding on the parties unless Buyers deliver to Seller a notice specifying
in reasonable detail the respects in which they object to the Closing Balance
Sheet (the "Objection Notice") within fifteen (15) days following Buyers'
receipt of the Closing Balance Sheet and the Calculation. If Buyers deliver an
Objection Notice, Buyers, Seller and their respective accountants shall
negotiate among themselves for a period of fifteen (15) days thereafter in an
attempt to resolve the objections stated therein. If no resolution is reached
within such fifteen (15) day period, Buyers and Seller shall submit such
objections to Seller's PWC and Buyer's PWC and they shall jointly report their
decision on the objections in the Objection Notice to Seller and Buyers within
thirty (30) days of such submission. The joint decision of Seller's PWC and
Buyer's PWC shall be conclusive and binding on the parties, and the Closing
Balance Sheet and the Calculation will be adjusted, if necessary, accordingly.
(e) Upon the later of (i) the first business day following the
fifteenth (15th) day following Buyers' receipt of the Closing Balance Sheet and
the Calculation, without any objection by Buyers, or (ii) the fifth (5th)
business day following resolution of the objections in the Objection Notice or
receipt of the joint decision of Seller's PWC and Buyer's PWC:
(A) if the Purchase Price Adjustment derived from the Closing Balance
Sheet (as adjusted to reflect resolution of any objections, if any) is an
increase in the Purchase Price and the Purchase Price Adjustment derived
from the Unaudited Closing Balance Sheet was an increase in the Purchase
Price, either (xx) where the former exceeds or is equal to
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the latter, Buyer Sub shall pay Seller an amount equal to the amount by
which the Purchase Price Adjustment derived from the Closing Balance Sheet
exceeds the amount paid by Buyer Sub pursuant to Section 5.2(b) or (yy)
where the latter exceeds the former, either (xxx) where the Purchase Price
Adjustment derived from the Closing Balance Sheet exceeds the amount paid
by Buyer Sub pursuant to Section 5.2(b), Buyer Sub shall pay Seller an
amount equal to the amount by which the Purchase Price Adjustment derived
from the Closing Balance Sheet exceeds the amount paid by Buyer Sub
pursuant to Section 5.2(b) or (yyy) where the amount paid by Buyer Sub
pursuant to Section 5.2(b) exceeds the Purchase Price Adjustment derived
from the Closing Balance Sheet, Seller shall pay Buyer Sub an amount equal
to the amount by which the amount paid by Buyer Sub pursuant to Section
5.2(b) exceeds the Purchase Price Adjustment derived from the Closing
Balance Sheet;
(B) if the Purchase Price Adjustment derived from the Closing Balance
Sheet (as adjusted to reflect resolution of any objections, if any) is an
increase in the Purchase Price and the Purchase Price Adjustment derived
from the Unaudited Closing Balance Sheet was an decrease in the Purchase
Price, Buyer Sub shall pay Seller an amount equal to the sum of the
Purchase Price Adjustment derived from the Closing Balance Sheet and the
amount paid by Seller pursuant to Section 5.2(b);
(C) if the Purchase Price Adjustment derived from the Closing Balance
Sheet (as adjusted to reflect resolution of any objections, if any) is a
decrease in the Purchase Price and the Purchase Price Adjustment derived
from the Unaudited Closing Balance Sheet was a decrease in the Purchase
Price, either (xx) where the former exceeds or is equal to
13
the latter, Seller shall pay Buyer Sub an amount equal to the difference
between the Purchase Price Adjustment derived from the Closing Balance
Sheet and the amount paid by Seller pursuant to Section 5.2(b) or (yy)
where the latter exceeds the former, either (xxx) where the Purchase Price
Adjustment derived from the Closing Balance Sheet exceeds the amount paid
by Seller pursuant to Section 5.2(b), Seller shall pay Buyer Sub an amount
equal to the amount by which the Purchase Price Adjustment derived from the
Closing Balance Sheet exceeds the amount paid by Seller pursuant to Section
5.2(b) or (yyy) where the amount paid by Seller pursuant to Section 5.2(b)
exceeds the Purchase Price Adjustment derived from the Closing Balance
Sheet, Buyer Sub shall pay Seller an amount equal to the amount by which
the amount paid by Seller pursuant to Section 5.2(b) exceeds the Purchase
Price Adjustment derived from the Closing Balance Sheet; or
(D) if the Purchase Price Adjustment derived from the Closing Balance
Sheet (as adjusted to reflect resolution of any objections, if any) is a
decrease in the Purchase Price and the Purchase Price Adjustment derived
from the Unaudited Closing Balance Sheet was an increase in the Purchase
Price, Seller shall pay Buyer Sub an amount equal to the sum of the
Purchase Price Adjustment derived from the Closing Balance Sheet and the
amount paid by Buyer Sub pursuant to Section 5.2(b).
The payment required to be made pursuant to this Section 5.2(e) shall be made in
cash by wire transfer in federal or other immediately available funds to an
account or accounts designated by the party entitled thereto.
14
5.3 Allocation of Purchase Price. Seller and Buyers shall negotiate in good
----------------------------
faith an allocation of the Purchase Price as set forth on Schedule 5.3 hereto
(the "Original Allocation"). In the event of a Purchase Price Adjustment
pursuant to Section 5.2, the Original Allocation shall be adjusted in a manner
consistent with the original allocation principles. Seller and Buyers shall
file, or cause to be filed, all Tax Returns (as defined in Section 16.9) and
other information relating to Taxes with any Taxing Authority (as defined in
Section 16.9) consistent with such allocation. Seller and Buyers shall cooperate
with each other in meeting the requirements of Section 1060 of the Internal
Revenue Code of 1986, as amended (the "Code"), and shall each file Form 8594 in
accordance with applicable rules and regulations.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyers that the following statements are
true and correct as of the date of this Agreement and will be true and correct
as of the Closing Date:
6.1 Organization; Authority; Qualification. Seller is a limited partnership
--------------------------------------
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Seller has full partnership power and authority to own, lease
and use its properties, including the Assets, and to carry on its business,
including the business of the Division, as presently conducted, and to execute
and deliver this Agreement and to consummate the Transaction. Seller is duly
licensed or qualified to do business as a foreign partnership in good standing
in every jurisdiction in which the conduct of the business of the Division
requires such qualification, except where the failure to be so licensed or
qualified would not have a Division Adverse Effect (as defined in Section 16.9).
15
6.2 Authorization; Valid and Binding Obligation. This Agreement has
-------------------------------------------
been duly authorized, executed and delivered by Seller and constitutes a valid
and legally binding obligation of Seller enforceable against Seller in
accordance with its terms, except that (a) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting creditors' rights generally and (b) the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to the discretion of the court before which any proceeding therefor may
be brought.
6.3 No Violation; Consents and Approvals.
------------------------------------
(a) Neither the execution and delivery of this Agreement by Seller nor
the consummation of the Transaction by Seller will (i) conflict with or result
in a breach of the Limited Partnership Agreement or Certificate of Limited
Partnership of Seller, (ii) violate or conflict with any law, judgment, order,
decree, injunction, ruling, rule or regulation of any Governmental Agency
applicable to the Division or any of the Assets, (iii) violate, conflict with or
result in a breach of or default (or any event which, with the lapse of time or
the giving of notice or both, would constitute an event of default) under any
agreement, lease, loan, note or other obligation of the Division which would
have a Division Adverse Effect, (iv) violate, conflict with or result in a
breach of or default (or any event which, with the lapse of time or the giving
of notice or both, would constitute an event of default) under any agreement,
lease, loan, note or other obligation of Seller which would materially adversely
effect Seller's ability to perform its obligations hereunder or consummate the
Transaction or (v) result in the creation of any liens, restrictions, security
interests or other encumbrances on any of the Assets.
16
(b) Except as set forth on Schedule 6.3 hereto and except for the
filing with the Antitrust Division of the U.S. Department of Justice and the
Federal Trade Commission pursuant to the Xxxx-Xxxxx-Xxxxxx Act of 1976, as
amended (the "HSR Act"), there are no authorizations, consents, approvals or
notices required to be obtained by Seller from any Governmental Agency, or
waiting periods required to expire, in connection with the execution and
delivery of this Agreement or the consummation of the Transaction.
6.4 Financial Statements. Schedule 6.4 hereto contains (a) the unaudited
--------------------
balance sheet of the Division as of December 31, 2000, and the related unaudited
statement of income and Parent investment and cash flows for the year then
ended, and (b) the audited balance sheet of the Division as of December 31,
1999, and the related audited statement of income and Parent investment and cash
flows for the year then ended, and the notes thereto (such unaudited and audited
financial statements being hereinafter referred to as the "Financial
Statements"). Except as set forth on Schedule 6.4 hereto, the Financial
Statements (i) fairly present in all material respects the financial position,
results of operations and cash flows of the Division for the respective periods
stated therein, (ii) have been prepared from and are consistent in all material
respects with the books and records of the Division, and (iii) have been
prepared in accordance with GAAP consistently applied throughout the relevant
periods (except, (A) as set forth in the notes thereto or in the report of the
independent accountants included therein or (B) in the case of the unaudited
Financial Statements, for normal year-end adjustments).
6.5 Absence of Certain Changes. Except as set forth on Schedule 6.5
--------------------------
hereto, since December 31, 1999 and through the date hereof, Seller has operated
the Division in the ordinary course consistent with past practice and there has
not been an adverse change (or event or
17
condition that could result in an adverse change) in the assets, liabilities or
financial condition of the Division taken as a whole in an amount of $1,500,000
or more.
6.6 Tax Matters.
-----------
(a) Except as set forth on Schedule 6.6(a) hereto, Seller has duly
filed all income and other material Tax Returns required to be filed by Seller
(taking into account any extensions) and has duly paid all Taxes due or claimed
to be due from Seller by any Taxing Authority in respect of Seller's properties,
income, franchises, licenses, sales, wages, compensation or payrolls relating
to the Assets or the business of the Division.
(b) There are no liens for Taxes upon any of the Assets except for
liens arising as a matter of law for current Taxes not yet due.
(c) No written notice has been given by any Governmental Agency in a
jurisdiction where Seller has not filed a Tax Return in connection with the
business of the Division that Seller is or may be subject to taxation by that
jurisdiction.
(d) Except as set forth on Schedule 6.6(d) hereto, there is no audit,
examination, deficiency or refund litigation pending and no Taxing Authority
has given written notice of the commencement of any audit, examination or
deficiency litigation with respect to any Taxes.
(e) Seller is, and has been for all periods of its existence, a
partnership for federal income tax purposes.
6.7 Litigation. Except as set forth on Schedule 6.7 hereto, (a) there
----------
are no actions, suits, proceedings, charges, arbitrations, grievances or
governmental investigations or audits pending or, to the best of Seller's
knowledge, threatened (i) against or involving the Division or the Assets which
would have a Division Adverse Effect or (ii) against Seller challenging the
18
validity or propriety of, or otherwise relating to or involving, this Agreement
or the consummation of the Transaction and (b) Seller is not subject to any
judgment, order or decree entered in any litigation or proceeding or otherwise
with any Governmental Agency or third party applicable to the Division or the
Assets.
6.8 Owned Real Property. The Owned Real Property is the only real
-------------------
property owned by Seller that is used by the Division. Except as set forth on
Schedule 6.8 hereto (the "Real Property Encumbrances"), Seller has good and
marketable title to all of the Owned Real Property and owns the Owned Real
Property free and clear of any lien, mortgage, security interest or other
encumbrance. To the best of Seller's knowledge, (a) the purposes for which the
Owned Real Property is currently used conforms in all material respects with all
covenants or restrictions of record and all applicable laws, ordinances, rules
and regulations of Governmental Agencies (including, without limitation, all
applicable building codes and zoning requirements), (b) the structures, plants,
improvements, systems and fixtures located on the Owned Real Property comply in
all material respects with all applicable laws, ordinances, rules and
regulations of Governmental Agencies and are in good operating condition and
repair in all material respects in light of their respective ages, ordinary wear
and tear excepted, (c) the Owned Real Property is not located in a flood plain,
(d) no special agreements exist with any governmental body or agency with
respect to real estate taxes or assessed valuations payable in connection with
the Owned Real Property and (e) there are no outstanding construction or
mechanic's liens or rights to claim a construction or mechanic's lien in favor
of any contractor, materialman or laborer or any other person in connection with
the Owned Real Property other than ones that are reflected on the Closing
Balance Sheet. Seller has not received any written notice of any violation of
any
19
occupancy permit held by Seller in connection with the Owned Real Property.
There are no pending or threatened condemnation proceedings relating to the
Owned Real Property.
6.9 Leased Real Property. The real estate leased by Seller pursuant to
--------------------
the Real Property Leases (the "Leased Real Property") is the only real estate
leased by Seller that is used by the Division. To the best of Seller's
knowledge, (a) each of the Real Property Leases, true and complete copies of
which have been made available to Buyers, are valid and binding and in full
force and effect as of the date of this Agreement, (b) except as set forth on
Schedule 6.9(b) hereto, Seller is not in material default under any of the Real
Property Leases, (c) except as set forth on Schedule 6.9(c) hereto, no Real
Property Lease requires the consent of any third party to its assignment in
connection with consummation of the Transaction, (d) the Leased Real Property
and the systems and fixtures located in the Leased Real Property for which
Seller, as tenant, is responsible to maintain and repair are in good operating
condition and repair in all material respects in light of their respective ages,
ordinary wear and tear excepted (e) there are no outstanding construction or
mechanic's liens or rights to claim a construction or mechanic's lien in favor
of any contractor, materialman or laborer or any other person in connection with
the Leased Real Property for which Seller, as tenant, is responsible other than
ones that are reflected on the Closing Balance Sheet and (f) the roof of the
Leased Real Property located at 000 Xxxxxxxxxxxxx Xxxxx, Xxxxx Xxxxx Xxxxxxxx,
XX, is in good condition and will not need replacement during the original term
of said lease. Seller has not received any written notice that the structures,
improvements, systems and fixtures located on or in the Leased Real Property do
not comply in any material respect with any applicable laws, ordinances, rules
and regulations of any Governmental Agencies. Seller has not received any
written notice of any pending or threatened
20
condemnation proceedings relating to the Leased Real Property. Seller has not
received any written notice of any violation of any occupancy permit held by
Seller, as tenant, in connection with the Leased Real Property.
6.10 Owned and Leased Tangible Personal Property. Except as set forth
-------------------------------------------
on Schedule 6.10 hereto, Seller has, and will have on the Closing Date, good and
marketable title to, or a valid leasehold interest in, all of the machinery,
equipment, vehicles, furniture, fixtures and other tangible personal property
owned or leased by Seller and used by the Division (collectively, "Tangible
Personal Property"), free and clear of any lien, restriction, security interest
or other encumbrance. Each lease of Tangible Personal Property is enforceable
against Seller and, to the best of Seller's knowledge, against the other party
thereto, in each case, in accordance with its terms. The maintenance and
operation of the Tangible Personal Property complies in all material respects
with all applicable laws, ordinances, rules and regulations of Governmental
Agencies. The Tangible Personal Property is in good operating condition and
repair in all material respects in light of its ages, ordinary wear and tear
excepted.
6.11 Sufficiency of Assets. Except as set forth on Schedule 6.11 hereto,
---------------------
the Assets constitute all of the assets used in, or necessary for, the operation
and conduct of the business of the Division as presently conducted. The sale of
the Assets by Seller to Buyer Sub at Closing in accordance with this Agreement
effectively will convey to Buyer Sub the entire business of, and all of the
tangible and intangible property used in, or necessary for, the operation and
conduct of the business of the Division as presently conducted, other than the
Excluded Assets.
21
6.12 Certain Contracts.
-----------------
(a) Except as set forth on Schedule 6.12(a) hereto, Seller is not a
party to any: (i) agreement, contract or commitment for the future purchase by
the Division of, or payment by the Division for, supplies or products involving
in any one case $250,000 or more; (ii) agreement, contract or commitment for
the Division to sell or supply products or to perform services involving in any
one case $500,000 or more; (iii) any other agreement of the Division under which
the consequences of a default by the Division or the termination thereof would
have a Division Adverse Effect; or (iv) any other agreement or group of related
agreements, the performance of which involves consideration in excess of
$250,000. Except as set forth on Schedule 6.12(a) hereto, (i) each of the
agreements, contracts and commitments listed on Schedule 6.12(a) hereto (the
"Material Contracts"), true and complete copies of which have been made
available to Buyers, is enforceable against Seller and, to the best of Seller's
knowledge, against the other party thereto, in each case, in accordance with its
terms, (ii) Seller is not in material default under any of the Material
Contracts, (iii) no supplier of Seller that is a party to a Material Contract
has given Seller written notice of its intention to terminate or materially
decrease its supply of products or services to the Division other than in the
ordinary course of business, (iv) no customer of Seller that is a party to a
Material Contract has given Seller written notice of its intention to terminate
or materially decrease its purchase of products or services from the Division
other than in the ordinary course of business, (v) no Material Contract requires
the consent of any party thereto to its assignment in connection with the
consummation of the Transaction, (vi) no other agreement of the Division under
which the consequences of failing to obtain the consent of any party thereto to
its assignment required in connection with the
22
consummation of the Transaction would materially adversely effect Buyers'
ability to operate the business of the Division as presently conducted and (vii)
no purchase commitment for materials, supplies, component parts or other items
of inventory for the Division is in excess of the ordinary, normal, usual and
current requirements of the Division or at a price in excess of the reasonable
market price.
(b) Except as set forth on Schedule 6.12(b) hereto, Seller is not a
party to any (i) agreement, contract or commitment limiting or restraining the
Division or any successor thereto from engaging or competing in any manner or in
any business, (ii) distribution, dealer, representative or sales agency
agreement, contract or commitment relating to the Division, (iii) any agreement
for the employment of any individual, (iv) any joint venture or partnership
agreement with respect to the Division or (v) any confidentiality agreement with
respect to the Division unrelated to the supply or acquisition of products or
the performance or acquisition of services.
6.13 Warranties; Product Claims. Schedule 6.13 hereto sets forth the
--------------------------
material warranty claim experience of the Division for the three-year period
covered thereby. Except as set forth on Schedule 6.13 hereto, no material return
or warranty claims are pending or, to best of Seller's knowledge, threatened
with respect to products sold or services performed by the Division for which
the Division may have continuing liability or obligations as of the date hereof.
6.14 Compliance with Laws. Except as set forth on Schedule 6.14 hereto,
--------------------
since January 1, 1999, (a) Seller has complied, in all material respects, with
all laws, judgments, orders, decrees, rulings, rules and regulations of
Governmental Agencies applicable to the
23
Division and (b) Seller has not received any written claim or notice that it is
not in compliance with any such laws, judgments, orders, decrees, rulings, rules
or regulations.
6.15 Licenses and Permits. Schedule 6.15 hereto sets forth all material
--------------------
licenses, permits and other authorizations from Governmental Agencies applicable
to or necessary for the operation of the Division (the "Permits"). Seller has
not received any written notice of revocation or suspension of any Permit.
6.16 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 6.16(a) hereto, with respect
to the Assets and their operation (including, but not limited to, the Owned Real
Property and the real estate leased by Seller pursuant to the Real Property
Leases), Seller is in compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by Seller of all
Permits required for the Assets and their operation under applicable
Environmental Laws, and compliance with the terms and conditions thereof),
except where failure to be in compliance would not have a Division Adverse
Effect, and there are no proceedings to materially modify or revoke any such
Permits.
(b) Except as set forth on Schedule 6.16(b) hereto, with respect
to the Assets, there is no Environmental Claim (as defined in Section 16.9)
pending or, to the best of Seller's knowledge, threatened against Seller which
would have a Division Adverse Effect.
(c) Except as set forth on Schedule 6.16(c) hereto, with respect
to the Assets and their operation, there are no present or past actions,
activities, omissions, circumstances, conditions, events or incidents,
including, without limitation, the Release, threatened Release or
24
presence of any Hazardous Material which could form the basis of any
Environmental Claim against Seller which would have a Division Adverse Effect.
(d) Except as set forth on Schedule 6.16(d) hereto, there are no
underground storage tanks, whether in use or closed, under any Owned Real
Property or real estate leased by Seller pursuant to the Real Property Leases.
(e) Except as set forth on Schedule 6.16(e) hereto, Seller has
provided or made available to Buyers true and complete copies of all material
reports, studies, surveys, data, governmental communications and similar
documents in Seller's possession regarding the Assets' compliance with
Environmental Laws any Environmental Releases and any Environmental Claims.
(f) Except as set forth on Schedule 6.16(f) hereto, to the best
knowledge of Seller, no reason exists why the Assets would not be capable of
continued operation immediately following the Closing Date as currently
operated, in material compliance with applicable Environmental Laws.
6.17 Intellectual Property.
---------------------
(a) Except as set forth on Schedule 6.17(a) hereto, (i) Seller
is the owner of the entire right, title and interest in and to the Division
Intellectual Property, free and clear of any claims, liens or other rights of
third parties, other than express and implied nonexclusive licenses granted to
customers in the ordinary course of business, and has the right to sell, convey,
transfer, assign and deliver the Division Intellectual Property to Buyer Sub as
contemplated herein, (ii) the operations of the Division, as conducted within
the last three (3) years, do not infringe, misuse or misappropriate any third
party intellectual property rights, except for such infringement, misuse
25
or misappropriation as would not have a Division Adverse Effect, and Seller has
no knowledge of any claim, and has not within the last three (3) years received
any notice of any claim of, infringement, misuse or misappropriation of any
third party intellectual property rights by the Division, (iii) Seller has no
knowledge of any unauthorized infringement, misuse or misappropriation of the
Division Intellectual Property rights by any third party, including any employee
or former officer, director or employee of Seller, (iv) the Division
Intellectual Property rights are all of the intellectual property rights
required for the conduct of business of the Division, as presently conducted,
(v) all software included in the Division Intellectual Property which is listed
in Schedule 6.17(d)(i) as owned software is original with the Division and has
been either created by employees of Seller on a work-for-hire basis or by
consultants or contractors who have created such software themselves and have
assigned or are under an obligation to assign all rights they may have in such
software to Seller, (vi) all copies of third-party software in use by the
Division or resident on computers owned or controlled by the Division
("Third-Party Software") are duly licensed to Seller under license agreements
permitting the use thereof as currently used in the conduct of the business of
the Division, except where failure to possess such licensed rights would not
have a Division Adverse Effect, (vii) no license or maintenance fees are payable
by Seller with respect to any Third Party Software, except as specifically
reflected as liabilities of the Division to be assumed by Buyers hereunder, and
(viii) Seller has taken precautions consistent with applicable industry practice
to maintain the confidentiality of its information which derives economic value,
actual or potential, from not being generally known to any other Person (as
defined in Section 16.9) who can obtain economic value from its disclosure or
use, except where the failure to take such precautions would not have a Division
Adverse Effect.
26
(b) Except as set forth on Schedule 6.17(b) hereto and except for
express or implied nonexclusive licenses granted to customers in the ordinary
course of business, Seller has not granted any licenses, sublicenses or
permissions or other rights to use any of the Division Intellectual Property to
any third party. Seller is not, nor will it be as a result of the execution and
delivery of this Agreement or the consummation of the Transaction, in breach of
any license, sublicense or other agreement of Seller relating to the Division
Intellectual Property, except for such breaches as would not have a Division
Adverse Effect, and Seller has not received any notice or claim of any breach of
any such license, sublicense or other similar agreement of Seller relating to
the Division Intellectual Property.
(c) Other than in the ordinary course of business, Seller has not
entered into any agreement to indemnify any third party against any charge of
infringement of the intellectual property rights of any third party.
(d) Schedule 6.17(d)(i) hereto sets forth a list of all software owned
by Seller and included in the Division Intellectual Property. Schedule
6.17(d)(ii) hereto sets forth a list of all material Third Party Software and
maintenance or support agreements relating to Third Party Software, other than
Third Party Software licensed on a "shrinkwrap" basis and acquired at a license
cost of less than $500 per copy.
6.18 Benefit Plans.
-------------
(a) Controlled Group or Affiliated Service Group. Except as set forth
--------------------------------------------
on Schedule 6.18(a) hereto, no other corporation, trade, business, or other
entity, other than Seller or any of its subsidiaries, would, together with
Seller or any of its subsidiaries, constitute a single employer within the
meaning of Section 414 of the Code. Seller and its subsidiaries and any
27
other entities which constitute a single employer within the meaning of Section
414 of the Code are hereinafter collectively referred to as the "Company Group."
(b) List of Employee Benefit Plans. Schedule 6.18(b) hereto sets
------------------------------
forth a true and complete list of all of the following types of agreements or
plans which are presently in effect and which cover employees of the Division
("Employees") (other than multiemployer plans within the meaning of Sections
3(37) and 4001(a)(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA") or, with respect to any pension benefit plan within the
meaning of Section 3(2) of ERISA, which are subject to Title IV of ERISA that
are sponsored by any member of the Company Group (such plans, hereinafter, the
"Company Plans")), and indicating, with respect to each, the plans which the
Division maintains or contributes to on behalf of the Employees:
(i) Any employee benefit plan as defined in Section 3(3) of
ERISA and any trust or other funding agency created thereunder, or under which
any member of the Company Group, has any outstanding, present, or future
obligation or liability, or under which any Employee or former 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, incentive, bonus, vacation,
severance, disability, hospitalization, medical, life insurance or other
employee benefit plan, program, policy or arrangement, whether written or
unwritten, formal or informal, which any member of the Company Group maintains
or to which any member of the Company Group has any outstanding, present or
future obligations
28
to contribute to, contingent or otherwise, or to which any member of the Company
Group has any liability.
Seller has delivered to Buyers true and complete copies of all written plan
documents and contracts evidencing the Company Plans, as they may have been
amended to the date hereof, together with the following: (1) all documents,
including any insurance contracts and trust agreements, setting forth the terms
of the Company Plan, or if there are no such documents evidencing the Company
Plan, a full description of the Company Plan, (2) the ERISA summary plan
description, if any, and any other summary of plan provisions provided to
participants or beneficiaries for each such Company Plan, (3) all documents,
including without limitation, Forms 5500, relating to any Company Plans required
to have been filed prior to the date hereof with governmental authorities for
each of the three most recently completed plan years with respect to each
Company Plan, (4) each favorable determination letter, opinion or ruling from
the Internal Revenue Service ("IRS") for each Company Plan, the assets of which
are held in trust, to the effect that such trust is exempt from federal income
tax, including any outstanding request for a determination letter, (5) each
opinion or ruling from the Department of Labor or the Pension Benefit Guaranty
Corporation ("PBGC") with respect to such Company Plans and (6) financial
statements and actuarial reports, if any, for each Company Plan for the three
most recently completed plan years.
(c) Qualified Employee Benefit Plans.
--------------------------------
(i) Except as to those plans identified on Schedule 6.18(c)
hereto as tax-qualified Company Plans (the "Company Qualified Plans"), no member
of the Company Group maintains a Company Plan which meets or was intended to
meet the requirements of Section
29
401(a) of the Code. The IRS has issued favorable determination letters to the
effect that each Company Qualified Plan qualifies under Section 401(a) of the
Code and that any related trust is exempt from taxation under Section 501(a) of
the Code, and such determination letters remain in effect and have not been
revoked. The Company Qualified Plans currently comply in form with the
requirements under Section 401(a) of the Code, other than changes required by
statutes, regulations and rulings for which amendments are not yet required.
(ii) Except as set forth on Schedule 6.18(c) hereto, no issue
concerning the qualification of the Company Qualified Plans is pending before or
is threatened by the IRS. The Company Qualified Plans have been administered
according to their terms (except for those terms which are inconsistent with the
changes required by statutes, regulations, and rulings for which changes are not
yet required to be made, in which case the Company Qualified Plans have been
administered in accordance with the provisions of those statutes, regulations
and rulings) and in accordance with the requirements of Section 401(a) of the
Code. No member of the Company Group or, to the best of Seller's knowledge, any
fiduciary of any Company Qualified Plan has done anything that would adversely
affect the qualified status of the Company Qualified Plans or the related
trusts.
(iii) Any Company Qualified Plan which is required to satisfy
Sections 401(k)(3) and 401(m)(2) of the Code has been tested for compliance
with, and has satisfied the requirements of Sections 401(k)(3) and 401(m)(2) of
the Code for each plan year ending prior to the Closing Date.
(d) Compliance with All Statutes, Orders and Rules. Each
----------------------------------------------
member of the Company Group is in material compliance with the requirements
prescribed by any and all
30
statutes, orders, governmental rules and regulations applicable to the Company
Plans and all reports and disclosures relating to the Company Plans required to
be filed with or furnished to any governmental entity, participants or
beneficiaries prior to the Closing Date have been or will be filed or furnished
in a timely manner and in accordance with applicable law.
(e) Termination or Partial Termination of Plan. Except as set forth
------------------------------------------
on Schedule 6.18(e) hereto, no termination or partial termination of any Company
Qualified Plan has occurred which could result in any liability for Buyers nor
has a notice of intent to terminate any Company Qualified Plan been issued by a
member of the Company Group.
(f) Defined Benefit Plans and Money Purchase Plans. With respect to
----------------------------------------------
any Company Qualified Plan or any member of the Company Group, no termination
liability to the PBGC has been or is expected to be incurred or would be
incurred if any Company Qualified Plan were terminated on the Closing Date and
the current present value of all projected benefit liabilities under each of the
Company Qualified Plans subject to Title IV of ERISA do not, as of the date
hereof, exceed the then current value of the assets of such Company Qualified
Plan. No Company Qualified Plan has suffered any accumulated funding deficiency
within the meaning of Section 302 of ERISA and Section 412 of the Code. No
member of the Company Group has any outstanding liability under Section 4971 of
the Code. As of the date hereof, all required premium payments for Company
Qualified Plans have been made, when due, to the PBGC. No event or condition
exists with respect to any Company Qualified Plan which could be deemed a
"reportable event" as defined in Section 4043 of ERISA, with respect to which
the 30-day notice requirement has not been waived and which could result in a
liability to Buyers, and no condition exists which would subject Buyers to a
fine under Section 4071 of ERISA. There is no lien upon
31
any property of any member of the Company Group outstanding pursuant to Section
412(n) of the Code in favor of any Company Plan. No assets of any member of the
Company Group have been provided as security to any Company Plan pursuant to
Section 401(a)(29) of the Code.
(g) Funding. Each member of the Company Group has made full and timely
-------
payment of, or has accrued pending full and timely payment, all amounts which
are required under the terms of each of the Company Qualified Plans and in
accordance with applicable laws to be paid as a contribution to each Company
Plan and no excise taxes are assessable as a result of any nondeductible or
other contributions made or not made to a Company Qualified Plan. The assets of
all Company Qualified Plans which are required under applicable laws to be held
in trust are in fact held in trust. The liabilities of each Company Qualified
Plan are properly and accurately reported on the financial statements and
records of the Company. The assets of each Company Qualified Plan are reported
at their fair market value on the books and records of each plan in accordance
with GAAP.
(h) Multiemployer Plans.
-------------------
(i) Except as set forth on Schedule 6.18(h)(i) hereto, no member
of the Company Group maintains, or has at any time established or maintained, or
has at any time been obligated to make, or made, contributions to or under any
multiemployer plan (as defined in Section 3(37) and Section 4001(a)(3) of ERISA
(a "Multiemployer Plan")) on behalf of the Employees.
(ii) Schedule 6.18(h)(ii) hereto sets forth all Company Group
contributions made to each Multiemployer Plan on behalf of Employees for the
twelve (12) months ending on the last day of Seller's most recent fiscal year.
32
(iii) No member of the Company Group has any outstanding
liability to a Multiemployer Plan, whether or not contested, resulting from a
complete or partial withdrawal from any Multiemployer Plan.
(iv) No withdrawal liability to any Multiemployer Plan covering
Employees has been or is expected to be incurred or would be incurred which
would result in any liability to Buyers if any member of the Company Group were
to withdraw from such Multiemployer Plan on the Closing Date.
(v) No member of the Company Group is liable or has been
advised that it is liable for any funding taxes under Sections 413(b)(6) or 4971
of the Code which would result in any liability to Buyers on account of an
accumulated funding deficiency of any Multiemployer Plan to which any member of
the Company Group has contributed or is required to contribute.
(i) COBRA/HIPAA. Each member of the Company Group 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
Sections 601 through 608 of ERISA with respect to the Company Plans. Each member
of the Company Group has also complied in all material respects with the
portability, access, and renewability provisions of Section K, Chapter 100 of
the Code and Section 701 et. seq. of ERISA with respect to the Company Plans.
(j) Pending Claims or Suits. Other than routine claims for benefits,
-----------------------
there are no actions, audits, investigations, suits or claims pending, or
threatened against any Company Plan by or on behalf of any Employee or former
Employee of the Division or any beneficiary
33
thereof, any trust or other funding agency created thereunder, or against any
fiduciary of any Company Plan or against the assets of any Company Plan.
(k) Retiree Benefits. Except as set forth on Schedule 6.18(k) hereto,
no member of the Company Group has any obligation to any retired or former
Employee or any current Employee upon retirement or termination of employment
under any Company Plan. Except as set forth on Schedule 6.18(k) hereto, no
member of the Company Group maintains, or has at any time established or
maintained, or has at any time been obligated to make, or made, contributions to
or under any plan which provides post-retirement medical or health benefits with
respect to Employees.
6.19 Brokers or Finders. Except for Xxxxxx Xxxxxxxx & Co., whose fee will
------------------
be paid by Seller, no agent, broker, investment banker, financial advisor or
other firm or Person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee in connection with the Transaction based on
any arrangement made by Seller.
6.20 Books and Records. The books of account and other records of the
-----------------
Division, all of which have been made available to Buyers, are complete and
correct and have been maintained in accordance with sound business practices
and GAAP, including the maintenance of an adequate system of internal controls.
There are no minute books or stock record books for the Division or Seller.
6.21 Labor Matters. Except as set forth on Schedule 6.21 hereto: (a)
-------------
the Division has not in the last five (5) years, suffered any strike, slowdown,
picketing or work stoppage by any union or other group of Employees, (b) the
Division is not a party to and has no obligations under any agreement,
collective bargaining or otherwise, with any party regarding the rates of
34
pay or working conditions of any of the Employees, nor is the Division obligated
under any agreement to recognize or bargain with any labor organization or
union, (c) to the best of Seller's knowledge, there is no union organization
activity among any of the Employees and (d) neither the Division, nor any of its
officers or directors or Employees, have been charged or, to the best of
Seller's knowledge, threatened with a charge of any unfair labor practice.
6.22 Insurance. Schedule 6.22(a) hereto sets forth a complete and
---------
correct list and a brief description of all insurance policies (the "Policies")
currently in effect which are owned or held by Seller, insuring the Division or
the Assets. All Policies are in full force and effect and all premiums due and
payable in respect thereof have been paid. Seller has complied with the
provisions of the Policies, and the Policies are sufficient for compliance with
all requirements of agreements to which Seller is a party. Since the respective
dates of the Policies, no notice of cancellation or non-renewal with respect to
any policy has been received by Seller. Schedule 6.22(b) sets forth a list of
all material pending claims with respect to the Policies.
6.23 Transactions with Affiliates. Except as set forth on Schedule 6.23
----------------------------
hereto, the Division has not purchased, acquired or leased any property or
services from, or sold, transferred or leased any property or services to, or
loaned or advanced any money to, or borrowed any money from or entered into or
been subject to any management, consulting or similar agreement with, any
officer, partner, director or shareholder or affiliate of Seller or any of their
respective affiliates. No officer, partner, director or shareholder or affiliate
of Seller (other than the Division) owns any of the Assets.
35
6.24 Investment Intent.
-----------------
(a) Seller is an accredited investor and has sufficient knowledge and
experience in financial and business matters to enable it to evaluate the
merits and risks of the transactions contemplated by this Agreement or has
relied for advice on a qualified purchase representative as defined in Rule 501
under the Securities Act of 1933, as amended (the "Securities Act").
(b) Seller has been given access to information requested by Seller
regarding Buyer, including the opportunity to ask questions of and receive
answers from the officers of Buyer concerning the present and proposed
activities of Buyer and to obtain the information which Seller deems necessary
or advisable in order to evaluate the merits and risks of the transactions
contemplated by this Agreement, and Seller has made its own independent investi-
gation of Buyer and the merits and risks of the transactions contemplated by
this Agreement.
(c) Seller is acquiring the Common Stock comprising the Share
Consideration for its own account, for investment purposes, and not with a view
to resale or for distribution of all or any portion of the Common Stock
comprising the Share Consideration.
(d) Seller understands that the Common Stock comprising the Share
Consideration has not been, and will not be, registered under the Securities
Act or under any state securities laws as of the Closing and is being offered
and sold in reliance upon federal and state exemptions for transactions not
involving any public offering, and that the certificates representing the
Common Stock comprising the Share Consideration will bear a legend in
substantially the following form, as well as any other legend that may be
required by applicable law:
36
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE (THE
"STATE LAWS"), BUT HAVE BEEN ISSUED IN RELIANCE UPON
EXEMPTIONS THEREFROM. NO TRANSFER OF THESE SECURITIES OR ANY
INTEREST THEREIN MAY BE MADE EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND THE
APPROPRIATE STATE LAWS, UNLESS THE ISSUER HAS RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT SUCH TRANSFER
DOES NOT REQUIRE SUCH REGISTRATION.
(e) Seller has been provided with the information specified in Rule
502(b)(2)(ii)(B) and (C) under the Securities Act and has had the opportunity to
obtain additional information as desired in order to evaluate the merits and
risks inherent in holding the Common Stock comprising the Share Consideration.
(f) Seller has not been offered the Common Stock comprising the Share
Consideration by any form of general advertising or general solicitation.
(g) Seller is able to bear the economic risk and lack of liquidity
inherent in holding the Common Stock comprising the Share Consideration.
6.25 No Power of Attorney. Except as set forth on Schedule 6.25 hereto,
--------------------
Seller has not granted any power of attorney to any Person with respect to the
Division which is currently in force.
6.26 Warranties True and Correct. To the knowledge of Seller, no
---------------------------
representation or warranty by Seller in this Agreement or in any Schedule and
Exhibit hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact
37
required to be stated herein or therein to make the statements herein or
therein, in light of the circumstances under which they were made, not
misleading.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYERS
----------------------------------------
Buyers represent and warrant to Seller that the following statements
are true and correct as of the date of this Agreement, and will be true and
correct as of the Closing Date:
7.1 Organization; Authority; Qualification. Buyer is a company duly
--------------------------------------
organized, validly existing and in good standing under the laws of Bermuda.
Buyer Sub is a corporation duly organized and validly existing under the laws of
the State of Wisconsin. Each of Buyer and Buyer Sub has the corporate power and
authority to carry on its business as presently conducted and to execute and
deliver this Agreement and consummate the Transaction.
7.2 Authorization; Valid and Binding Obligation. This Agreement has been
-------------------------------------------
duly executed and delivered by Buyers and constitutes a legal, valid and binding
obligation of Buyers, enforceable against Buyers in accordance with its terms,
except that (a) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
affecting creditors' rights generally and (b) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to the
discretion of the court before which any proceeding therefor may be brought. The
issuance by Buyer of the Common Stock comprising the Share Consideration has
been duly authorized, and upon delivery to Seller of a certificate therefor, the
shares of Common Stock comprising the Share Consideration shall be validly
issued, fully paid and non-assessable and free of preemptive rights and any
liens or encumbrances of any kind whatsoever.
38
7.3 Capital Structure.
-----------------
(a) The authorized stock of Buyer consists of 250,000,000 shares of
Common Stock and 50,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock"), of which 1,000,000 shares have been designated Series
Preferred Stock ("Series A Junior Participating Preferred Stock"). At the close
of business on January 15, 2001, (i) 39,217,199 shares of Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights and no shares of Series A Junior
Participating Preferred Stock were issued and outstanding, (ii) no shares of
Common Stock were held in the treasury of Buyer or by the subsidiaries of Buyer
and (iii) 5,000,000 shares of Common Stock were reserved for future issuance
pursuant to stock option or stock purchase plans. Except as disclosed in the
Buyer SEC Documents (as defined in Section 7.4), there are no outstanding
contractual obligations of Buyer or any of its subsidiaries (w) restricting the
transfer of, (x) affecting the voting rights of, (y) requiring the registration
for sale of or (z) granting any preemptive or antidilutive rights with respect
to, any shares of Common Stock or Preferred Stock.
(b) The authorized stock of Buyer Sub consists of 9,000 shares of
common stock, par value $.01 per share ("Buyer Sub Common Stock"). At the close
of business on January 22, 2001, (i) 100 shares of Buyer Sub Common Stock were
issued and outstanding, all of which were validly issued, fully paid and
nonassessable and free of preemptive rights, (ii) no shares of Buyer Sub Common
Stock were held in the treasury of Buyer Sub or by the subsidiaries of Buyer
Sub and (iii) no shares of Buyer Sub Common Stock were reserved for future
issuance pursuant to stock option or stock purchase plans. There are no
outstanding contractual obliga-
39
tions of Buyer Sub or any of its subsidiaries (w) restricting the transfer of,
(x) affecting the voting rights of, (y) requiring the registration for sale of
or (z) granting any preemptive or antidilutive rights with respect to, any
shares of Common Stock or Preferred Stock.
7.4 SEC Documents and Other Reports. Buyer has filed all required
-------------------------------
documents with the Securities and Exchange Commission (the "SEC") since July 31,
2000 (the "Buyer SEC Documents"). As of their respective dates, the Buyer SEC
Documents complied in all material respects with the requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended, as the case
may be, and, at the respective times they were filed, none of the Buyer SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Buyer is eligible to use Form S-3 for the registration of its
securities under the Securities Act. The consolidated financial statements
(including, in each case, any notes thereto) of Buyer included in the Buyer SEC
Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with
respect thereto, were prepared in accordance with GAAP (except, in the case of
the unaudited statements, as permitted by Form 10-Q or the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly present in accordance with GAAP the
consolidated financial position of Buyer and its consolidated subsidiaries as at
the respective dates thereof and the consolidated results of their operations
and their consolidated cash flows for the periods then ended (subject, in the
case of unaudited statements, to any other adjustments described therein and
normal year-end audit adjustments).
40
7.5 No Violation, Consents and Approvals.
------------------------------------
(a) Neither the execution and delivery of this Agreement by Buyer and
Buyer Sub nor the consummation of the Transaction by Buyer and Buyer Sub will
(i) conflict with or result in a breach of (A) in the case of Buyer, the
Memorandum of Continuance or Bye-laws of Buyer as currently in effect, or (B) in
the case of Buyer Sub, the Articles of Incorporation or Bylaws of Buyer Sub as
currently in effect, (ii) violate or conflict with any law, judgement, order,
decree, injunction, ruling, rule or regulation of any Governmental Agency
applicable to Buyers, (iii) violate, conflict with or result in a breach of or
default (or any event which, with the lapse of time or the giving of notice or
both, would constitute an event of default) under any agreement, lease, loan,
note or other obligation of Buyers which would have a Buyer Adverse Effect (as
defined in Section 16.9) or (iv) violate, conflict with or result in a breach of
or default (or any event which, with the lapse of time or the giving of notice
or both, would constitute an event of default) under any agreement, lease, loan,
note or other obligation of Buyers which would materially adversely effect
Buyers' ability to perform its obligations hereunder or consummate the
Transaction.
(b) Except as set forth on Schedule 7.5 hereto and except for the
filing with the Antitrust Division of the U.S. Department of Justice and the
Federal Trade Commission pursuant to the HSR Act, there are no authorizations,
consents, approvals or notices required to be obtained by Buyers from any
Governmental Agency or waiting periods required to expire, in connection with
the execution and delivery of this Agreement or the consummation of the
Transaction.
41
7.6 Litigation. Except as set forth on Schedule 7.6 hereto, there are no
----------
actions, suits, proceedings or governmental investigations pending or, to the
best of Buyers' knowledge, threatened (a) against or involving Buyers which
would have a Buyer Adverse Effect or (b) against Buyers challenging the validity
or propriety of, or otherwise relating to or involving, this Agreement or the
consummation of the Transaction.
7.7 Funds. Buyer has sufficient available sources of funds to satisfy all
-----
obligations of Buyers hereunder, including, without limitation, payment of the
Purchase Price and will make such funds available to Buyer Sub.
7.8 Tax Matters.
-----------
(a) Except as set forth on Schedule 7.8(a) hereto, to the best of each
of Buyer's and Buyer Sub's knowledge, Buyer and Buyer Sub each have duly filed
all income and other material Tax Returns required to be filed by Buyer and
Buyer Sub, respectively (taking into account any extensions), and each have duly
paid all Taxes due or claimed to be due from Buyer and Buyer Sub, respectively,
by any Taxing Authority in respect of Buyer's and Buyer Sub's properties,
income, franchises, licenses, sales, wages, compensation or payrolls,
respectively.
(b) Except as set forth on Schedule 7.8(b) hereto, there is no audit,
examination, deficiency or refund litigation pending and no Taxing Authority has
given written notice of the commencement of any audit, examination or deficiency
litigation with respect to any Taxes of Buyer or Buyer Sub.
7.9 Compliance with Laws. Except as set forth on Schedule 7.9 hereto,
--------------------
since July 31, 2000, (a) Buyer has complied, in all material respects, with any
such laws, judgments, orders, decrees, rulings, rules and regulations of
Governmental Agencies applicable to Buyer and (b)
42
Buyer has not received any written claim or notice that it is not in material
compliance with any such laws, judgments, orders, decrees, rulings, rules and
regulations. Since January 22, 2001, (a) Buyer Sub has complied, in all material
respects, with all laws, judgments, orders, decrees, rulings, rules and
regulations of Governmental Agencies applicable to Buyer Sub and (b) Buyer Sub
has not received any written claim or notice that it is not in compliance with
any such laws, judgments, orders, decrees, rulings, rules and regulations.
7.10 Intellectual Property.
---------------------
(a) Except as set forth on Schedule 7.10(a) hereto, Buyer and
Buyer Sub and their respective subsidiaries have such ownership of, or such
rights by license or other agreement to use, all patents and patent
applications, trademarks and service marks, trademark and service xxxx
registrations and applications, trade names, logos, copyrights, copyright
registrations and applications, trade secrets, know-how, propriety processes and
formulae and computer software programs as are necessary to permit Buyer and
Buyer Sub and their respective subsidiaries to conduct their respective
businesses as currently conducted (collectively, the "Buyers Intellectual
Property"), except where the failure to have such ownership, license or right to
use would not, individually or in the aggregate, have a Buyer Adverse Effect.
(b) To the best of each of Buyer's and Buyer Sub's knowledge,
the conduct of the business of Buyer and Buyer Sub and their respective
subsidiaries as currently conducted does not infringe upon any intellectual
property or other proprietary right of any third party, and there is no present
or threatened infringement of the Buyers Intellectual Property by any third
party, except, in either case, for such infringement as would not, individually
or in the aggregate, have a Buyer Adverse Effect. Except as set forth on
Schedule 7.10(b) hereto, there are not
43
pending or, to the best of each of Buyer's and Buyer Sub's knowledge, threatened
proceedings or litigation or other adverse claims by any person against the use
by Buyer or Buyer Sub or their respective subsidiaries of any Buyers
Intellectual Property that is owned by or licensed to Buyer or Buyer Sub or
their respective subsidiaries.
7.11 No Undisclosed Employee Benefit Plan Liabilities or Severance
-------------------------------------------------------------
Arrangements. All "employee benefit plans," as defined in Section 3(3) of ERISA,
------------
maintained or contributed to by Buyers or their respective subsidiaries have
been maintained in accordance with their terms and all applicable laws,
including, without limitation, ERISA and the Code, and Buyers and their
respective subsidiaries do not have any liabilities or obligations with respect
to any such employee benefit plans, whether or not accrued, contingent or
otherwise, except (a) as described in any of the Buyer SEC Documents or
previously disclosed in writing to Seller and (b) for instances of noncompliance
or liabilities or obligations that would not, individually or in the aggregate,
have a Buyer Adverse Effect. No employee of Buyers will be entitled to any
additional benefits or any acceleration of the time of payment or vesting of any
benefits under any employee incentive or benefit plan, program or arrangement as
a result of the transactions contemplated by this Agreement, either alone or in
combination with another event.
7.12 Absence of Certain Changes. Except as set forth on Schedule 7.12
--------------------------
hereto and as disclosed in the Buyer SEC Documents, since July 31, 2000 and
through the date hereof, Buyer and its subsidiaries has operated its business in
the ordinary course consistent with past practice and there has not been an
adverse change (or event or condition that could result in an adverse change) in
the assets, liabilities or financial condition of Buyer and its subsidiaries
taken as a whole in an amount of $1,500,000 or more.
44
7.13 Environmental Matters.
---------------------
(a) Except as set forth on Schedule 7.13(a) hereto, Buyers are
in compliance with all applicable Environmental Laws (which compliance includes,
but is not limited to, the possession by Buyers of all Permits required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof), except where failure to be in compliance would not have a Buyer
Adverse Effect, and there are no proceedings to materially modify or revoke any
such Permits.
(b) Except as set forth on Schedule 7.13(b) hereto, there is
no Environmental Claim pending or, to the best of each of Buyer's and Buyer
Sub's knowledge, threatened against Buyers which would have a Buyer Adverse
Effect.
(c) Except as set forth on Schedule 7.13(c) hereto, there are
no present or past actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the Release, threatened Release or
presence of any Hazardous Material which could form the basis of any
Environmental Claim against Buyers which would have a Buyer Adverse Effect.
7.14 Brokers or Finders. No agent, broker, investment banker,
------------------
financial advisor or other firm or Person is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with the
Transaction based on any arrangement made by Buyers.
7.15 Warranties True and Correct. To the knowledge of Buyers, no
---------------------------
representation or warranty by Buyers in this Agreement or in any Schedule or
Exhibit hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact required to be stated herein or
therein to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading.
45
ARTICLE VIII
COVENANTS OF SELLER
-------------------
8.1 Affirmative Covenants. From and after the date of this Agreement
---------------------
and through the earlier of the Closing or the termination of this Agreement
pursuant to Article XIV, Seller shall, unless Buyers otherwise consent in
writing:
(a) use its commercially reasonable best efforts to satisfy the
conditions precedent to the obligations of Buyers specified in Article XI;
(b) conduct the business of the Division in the ordinary course
consistent with past business practices;
(c) use its commercially reasonable best efforts to keep
available the services of the present Employees;
(d) use its commercially reasonable best efforts to maintain the
Division's present business relationships with customers and suppliers;
(e) comply in all material respects with all laws, judgments,
orders, decrees, rulings, rules and regulations applicable to the Division or
the Assets;
(f) cause the Division to maintain its books, records and
accounts in its customary and usual manner;
(g) maintain in full force and effect all policies of insurance
in effect on the date of this Agreement relating to the business of the
Division;
(h) maintain all of the Assets in the existing condition,
reasonable wear and tear excepted;
46
(i) prepare and timely and properly file all income and other
material federal, state, local, foreign and other Tax Returns required to be
filed with respect to Seller and the business of the Division for Tax
liabilities arising prior to the Closing; and
(j) use its commercially reasonable best efforts to obtain and
deliver to Buyers, prior to closing, an estoppel certificate from the landlord
of each Real Property Lease in form reasonably acceptable to Seller and Buyers.
8.2 Negative Covenants. Except as set forth on Schedule 8.2 hereto,
------------------
from and after the date of this Agreement and through the earlier of the Closing
or the termination of this Agreement pursuant to Article XIV, Seller shall not,
without the prior written consent of Buyers:
(a) enter into any contract or commitment in connection with
the business of the Division extending beyond the Closing Date, except in the
ordinary course of business consistent with past practice;
(b) terminate, modify or amend any Permit or any of the Real
Property Leases or Material Contracts;
(c) (i) adopt, enter into, amend, alter or terminate (partially
or completely) any Company Plan, (ii) enter into any employment, consulting,
severance or compensation agreement with any Eligible Employee, (iii) hire more
than twenty (20) new Employees or (iv) adjust in any way, either directly or
indirectly, grant or agree to grant any increase in the wages, salary, bonus or
other compensation, remuneration or benefits of any Employee, consultant or
agent of the Division except for increases in wages, salary, bonus or other
compensation under normal salary review procedures, without acceleration
(provided that those individuals named in Section 8.6 shall not receive
increases pursuant to this Section 8.2(c)(iv) and no individual shall receive
47
an increase of more than five percent (5%) in wages, salary, bonus or other
compensation), pursuant to new collective bargaining agreements or as required
under applicable law or the terms of existing agreements or arrangements or as
contemplated by this Agreement;
(d) incur any indebtedness, liabilities or obligations of any
nature in connection with the business of the Division, except current
liabilities in the ordinary course of business consistent with past practice;
(e) sell or transfer any of the Assets other than in the
ordinary course of business consistent with past practice;
(f) subject to any lien, charge or encumbrance (other than
mortgages) any of the Assets; cancel any debts or waive any claims or rights of
substantial value of the Division, other than in the ordinary course of business
consistent with past practice and, if applicable, accounted for in accordance
with GAAP as reflected on the Closing Balance Sheet;
(g) mortgage any of the Assets;
(h) permit to lapse or dispose of any rights to the use of the
Division Intellectual Property, or dispose of or disclose to any Person any
trade secret, formula, process or knowhow not heretofore a matter of public
knowledge;
(i) extend credit in the sale of products of the Division,
collection of receivables or otherwise, other than in the ordinary course of
business consistent with past practice;
(j) make any change in any method of accounting practice,
procedure, or policy with respect to the Division, other than changes required
by GAAP; or
(k) enter into any commitment to do any of the foregoing.
48
8.3 Alternative Proposals. From and after the date of this Agreement
---------------------
and through the earlier of the Closing Date or the termination of this Agreement
pursuant to Article XIV, Seller will not, and will direct its partners,
officers, directors, advisors and representatives not to, directly or
indirectly, (a) encourage or solicit any inquiries or proposals by, or furnish
any information to, any Person concerning any sale, lease, exchange, mortgage,
pledge, transfer or disposition of all or substantially all of the Assets in a
single transaction or series of related transactions (collectively, an
"Alternative Transaction"), (b) engage in any discussions or negotiations
concerning any Alternative Transaction or (c) enter into any agreement or under-
standing concerning any Alternative Transaction. If after the date hereof Seller
receives an inquiry from any Person concerning an Alternative Transaction,
Seller will inform such Person of Seller's obligations under this Section 8.3.
If after the Transaction is publicly announced Seller receives any proposal for
an Alternative Transaction, Seller will inform Buyer of the terms thereof. Upon
the execution of this Agreement, (a) to the extent that any information
regarding the Division has been furnished prior to the date hereof to any third
party in connection with an Alternative Transaction proposed by such third
party, Seller shall, as promptly as practicable, request that such third party
return to Seller or destroy such information and (b) Seller shall cancel any
meetings with any such third party for the purpose of such third party
conducting a due diligence investigation of the Division.
8.4 Noncompetition. For a period of five (5) years from the Closing
--------------
Date, Seller and any affiliate or partner of Seller shall not, directly or
indirectly, (a) acquire, own, assist, manage or participate, within any
geographic area in which the Division conducted its business on or prior to the
Closing Date, in any business, trade or other enterprise involved in the
manufacture,
49
assembly, distribution or sale of any electronic enclosure products which are
the same or substantially the same as the products manufactured, assembled or
distributed or sold by Seller on or prior to the Closing Date or (b) solicit or
induce any customer or supplier of the Division as of the Closing Date to limit,
curtail, reduce, cancel or terminate its business with the Division. Seller
further agrees that the terms and conditions of this Section 8.4 are reasonable
and necessary for the protection of the legitimate interests of Buyers and to
prevent loss or damage to Buyers as a result of action taken by Seller or its
affiliates and partners. Notwithstanding the foregoing provisions of this
Section 8.4, Seller and its affiliates or partners (a) may own any amount of
securities in APW Ltd., (b) may own or acquire securities of any other entity
the securities of which are publicly traded if the value of the securities of
such other entity so owned or held is less than five percent (5%) of the total
value of all the then outstanding securities of such entity in the aggregate and
(c) may own and acquire passive investments in any private equity fund.
8.5 Minimum Net Worth. Until the date fifteen (15) months after the
-----------------
Closing Date, Seller shall maintain a net worth of not less than $50,000,000 and
thereafter and until the expiration of the survival periods for the
representations and warranties in Sections 6.1, 6.2, 6.6, 6.11 and 6.16 pursuant
to Section 15.5, Seller shall maintain a minimum net worth of not less than
$15,000,000.
8.6 Key Employees. Seller acknowledges that Buyer has informed
-------------
Seller that it intends to ask each of Xxxxx Xxxxxx, Xx., Xxxxxxx Xxxx, Xxxxxx X.
XxXxxxxxx, Xxxxxx X. Xxx, Xxxxx X. Xxxxxxxx, Xxxxx X. Xxxxx and Xxxx X. Xxxx to
enter into its standard form noncompete
50
and confidentiality agreements and Seller shall instruct its senior executives
not to discourage these individuals from entering into such agreements.
ARTICLE IX
COVENANTS OF BUYERS
-------------------
9.1 U.S. Revenue Procedure 96-60. Under U.S. Revenue Procedure
----------------------------
96-60, Buyers will act as a successor employer for Seller for wage reporting
purposes for the calendar year 2001 as long as the Closing Date is prior to
December 31, 2001.
9.2 Transfer of Common Stock. If at any time after the Closing,
------------------------
Seller requests Buyer's transfer agent to transfer all or any portion of the
shares of Common Stock comprising the Share Consideration, and in connection
therewith, provides Buyer and Buyer's transfer agent with an opinion of counsel
reasonably satisfactory to Buyer to the effect that registration under the
Securities Act is not required in connection with such transfer, Buyer shall
cause its transfer agent to effect such transfer promptly.
ARTICLE X
MUTUAL COVENANTS
----------------
10.1 Access to Information. From the date of this Agreement and
---------------------
through the earlier of the Closing or the termination of this Agreement as
provided in Article XIV, Buyers and their officers, directors, agents, lenders,
employees and representatives shall have the right at any time during normal
business hours (in a manner that does not unreasonably interfere with the
business operation of Seller), with reasonable advance notice, to visit and
inspect the Division's offices, plants and properties and to examine its books,
agreements, accounts and records and to request and receive from Seller
information concerning the Assets and the Division.
51
10.2 Access to Books After the Closing. Buyers shall maintain intact
---------------------------------
for a period of at least six (6) years after the Closing all books, records and
other data of or relating to the Assets or the Division with respect to the
period prior to the Closing and none of these books, records and other data may
thereafter be destroyed without the prior written consent of Seller, which
consent shall not be unreasonably withheld or delayed. Seller shall be provided
reasonable access to these books, records and other data during normal business
hours, upon request. Following the Closing, Seller and Buyers shall cooperate
with each other, and will cause their officers and employees to so cooperate, in
the furnishing of information, testimony and other assistance in connection with
any action, judicial or administrative proceeding, claim or dispute to which any
party is or becomes a party relating to the Assets, Division, Assumed
Liabilities or Excluded Liabilities, or in connection with the preparation of
financial statements or Tax Returns or the preparation for any audit or other
examination of Seller by any Taxing Authority or other Governmental Agency
relating to the Assets, Division, Assumed Liabilities or Excluded Liabilities.
Seller and Buyers shall cooperate with each other and make available or cause to
be made available to each other in a timely fashion such Tax data, prior Tax
Returns and filings and other information as may be reasonably required for the
preparation by Seller and Buyers of any Tax Returns, elections, consents or
certificates required to be prepared and filed by Seller and Buyers. Seller and
Buyers shall cooperate with each other in the conduct of any audit or other
proceeding related to Taxes involving the business of the Division.
Buyers shall reimburse Seller, or Seller shall reimburse Buyers,
as the case may be, for reasonable out-of-pocket expenses in providing such
cooperation as described in this Section 10.2.
52
10.3 Bulk Sales. Seller and Buyers hereby waive the provisions of
----------
any applicable Bulk Sales Laws.
10.4 Employment.
----------
(a) Prior to the Closing Date, Buyer Sub shall offer employment
(such employment to become effective as of the Closing) to those employees of
Seller and its affiliates who are listed on Schedule 10.4 hereto (all such
employees hereinafter referred to as "Eligible Employees"). For the avoidance of
doubt, the parties hereto agree that Schedule 10.4 shall include employees who
are on workers' compensation or short term disability leave of absence. All such
offers of employment shall be made in accordance with all applicable laws and
regulations and shall offer terms of employment (including, without limitation,
salary levels, bonus opportunities, commissions, pension and welfare benefits,
severance benefits, vacation and fringe benefits) which are comparable in the
aggregate to those which are provided to similarly situated United States
employees of Buyer and Buyer's United States affiliates. Each Eligible Employee
who accepts such an offer shall become an employee of Buyer Sub as of the
Closing (each such person referred to hereinafter as a "Transferred Employee").
Effective as of the Closing, each Eligible Employee shall cease to be employed
by Seller and, except as required by law, participation by each such Eligible
Employee in Seller's Benefit Plans (as defined in Section 16.9) shall cease.
From and after the Closing Date, Buyer Sub shall pay, discharge and be
responsible for all salary, wages, benefits and any other claims arising out of
or relating to the employment of the Transferred Employees by Buyer Sub from and
after the Closing, and shall indemnify and hold Seller harmless against any
expenses, costs, claims or other liabilities associated with such employment.
53
(b) With respect to each plan of Buyer or any affiliate of Buyer
maintained following the Closing Date in which any Transferred Employee
participates (each a "Buyer's Plan") that is a severance or termination pay plan
or an "employee benefit plan," as defined in Section 3(3) of ERISA, for purposes
of determining eligibility to participate, vesting and entitlement to benefits
(including severance benefits and vacation entitlement, but not accruals under
any defined benefit pension plan), service with Seller or its affiliates (or
predecessor employers to the extent Seller provided past service credit) shall
be treated as service with Buyer or such affiliate, as the case may be;
provided, however, that such service shall not be recognized to the extent that
such recognition would result in a duplication of benefits. Such service also
shall apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any preexisting condition
limitations. With respect to each Transferred Employee, each Buyer's Plan shall
waive any pre-existing condition limitations, waiting period requirements or
evidence of insurability requirements. Transferred Employees shall be given
credit for amounts paid under a corresponding benefit plan during the same
period for purposes of applying deductibles, co-payments and out-of-pocket
maximums as though such amounts had been paid in accordance with the terms and
conditions of the Buyer's Plan. Nothing contained in this Section 10.4 shall be
construed as requiring Buyer or any affiliate of Buyer to continue the
employment of any Transferred Employee following the Closing Date.
(c) If an Eligible Employee's response to an offer of employment
made by Buyer Sub in compliance with Section 10.4(a) qualifies such Eligible
Employee for termination pay or severance pay under any termination or severance
plan of Seller, then Seller shall be responsible for such payments. Buyer Sub
shall be responsible for, and shall indemnify and hold
54
Seller harmless with respect to, all severance benefits or termination pay that
becomes payable in connection with any failure by Buyer Sub to comply with
Section 10.4(a) or as a result of termination of any Transferred Employee's
employment with Buyer Sub following the Closing. Nothing in this Agreement shall
be construed as an acknowledgment or admission of liability to pay termination
or severance pay pursuant to any plan or program of Seller or Buyer.
(d) Effective as of the Closing Date, all Eligible Employees
shall cease participation in the CLP Profit Sharing and Savings Plan and the CLP
Hourly Union Saving Plan (collectively, "Seller's Savings Plans"). As soon as
practicable following the Closing, Buyer or an affiliate thereof shall
designate, or establish, a savings plan or savings plans, qualified under
Sections 401(a) and 401(k) of the Code, and a trust or trusts thereunder that
are exempt from tax under Section 501(a) of the Code (such plan or plans,
"Buyer's 401(k) Plan"), and shall allow all Transferred Employees previously
eligible to participate in Seller's Savings Plans to participate in Buyer's
401(k) Plan on the same terms and conditions as apply to other similarly
situated employees of Buyers or such affiliate (if applicable), with service
credit as described in Section 10.4(b). Buyer agrees that for a period of one
year following the Closing Date the core contribution to Buyer's 401(k) Plan
shall be increased based upon 2001 performance to reflect the overall employer
contribution with respect to the CLP Profit Sharing and Savings Plan and the
benefit accrual under the Seller's Pension Plan. As soon as practicable after
the designation or establishment of Buyer's 401(k) Plan, and upon (i) the
provision by Buyer of evidence reasonably satisfactory to Seller, which may be
in the form of an opinion of Buyer's counsel, that Buyer's 401(k) Plan is
qualified under Section 401(a) of the Code and exempt from tax under Section
501(a) of the Code; (ii) the provision by Seller of evidence reasonably
satisfactory to Buyer,
55
which may be in the form of an opinion of Seller's counsel that Seller's Savings
Plans are qualified under Section 401(c) of the Code and exempt from tax under
Section 501(a) of the Code; and (iii) satisfaction of any other applicable legal
requirements to such transfer, Seller shall cause Seller's Savings Plans to
transfer to the trust or trusts established under Buyer's 401(k) Plan, in cash
or in other property reasonably acceptable to Buyer's 401(k) Plan's trustee, the
full account balances of all Transferred Employees who have elected to
participate in Buyer's 401(k) Plan, determined as of the date of transfer and
without regard to any applicable vesting schedule under Seller's Savings Plans.
As soon as practicable following the Closing, Seller shall make a contribution
to Seller's Savings Plans for the period commencing January 1, 2000 and ending
December 31, 2000 with respect to the Transferred Employees (the "Profit Sharing
Contribution"). As soon as practicable following the profit sharing contribution
to the CLP Profit Sharing and Savings Plan in respect of calendar year 2000, if
any, Seller shall cause the CLP Profit Sharing and Savings Plan to make a second
transfer to the trust established under Buyer's 401(k) Plan, in cash or other
property reasonably acceptable to Buyer's 401(k) Plan's trustee, of the full
account balances of all Eligible Transferred Employees (as defined in Section
16.9) then participating in Buyer's 401(k) Plan, determined as of the date of
transfer. Seller and Buyer shall enter into an agreement reasonably satisfactory
to Seller and Buyer and reflecting the terms of such transfer. The transfer of
account balances and liabilities pursuant to this Section 10.4(d) is intended to
comply with Section 414(l) of the Code and any other applicable legal
requirements for such a transfer. From and after such transfer, Buyer shall
indemnify and hold harmless Seller's Savings Plans and Seller, as well as their
respective affiliates, directors, officers, employees, agents and fiduciaries,
as applicable, from and against all losses, liabilities
56
and expenses, including reasonable expenses and fees of counsel, attributable to
any action or inaction of Buyer with respect to the account balances and
liabilities transferred to Buyer's 401(k) Plan, except to the extent that such
losses are due to acts or omissions of Seller accruing prior to such transfer.
As to such matters, Seller shall indemnify and hold harmless Buyer's 401(k) Plan
and Buyer, as well as their respective affiliates, directors, officers,
employees, agents and fiduciaries, as applicable, from and against all losses,
liabilities and expenses, including reasonable expenses and fees of counsel,
attributable to any such acts or omissions of Seller. Buyer shall be responsible
for the profit sharing accrual with respect to the CLP Profit Sharing and
Savings Plan for the period commencing on January 1, 2000 and ending on December
31, 2000 and shall reimburse Seller with respect to the Profit Sharing
Contribution within thirty (30) days of Closing (but not later than March 1,
2001).
(e) As of the Closing, Buyer shall assume and agree to perform
the Incentive Plan with respect to those Transferred Employees who are
participants in such plan as of the Closing with respect to calendar year 2000.
Without limiting the generality of the foregoing, Seller agrees to pay to the
participating Transferred Employees any earned and unpaid amounts under such
plan in accordance with Seller's past practice. Seller further agrees that it
will not amend the Transition Incentive Plan (as defined in Section 16.9) with
respect to any Transferred Employee following the date hereof without the prior
written consent of Buyer.
(f) The applicable health plan of Seller shall retain
responsibility for all eligible services or payments provided to Eligible
Employees (or any of their dependents) under any such plan prior to the Closing
Date. Seller shall retain Seller's Pension Plan and all liabilities and
obligations thereunder, including, without limitation, obligations for benefits
57
payable under Seller's Pension Plan for Eligible Employees and former Employees
and obligations to make contributions to such plan. Seller shall cause each
Eligible Employee to become fully vested in his or her benefit under Seller's
Pension Plan as of the Closing. Buyers shall assume and agree to perform, as of
the Closing, the Division's Employee Assistance Program and the HMO agreements
covering certain employees subject to the CBAs and the Division's Employee
Assistance Program. Seller shall make all payments in respect of such HMO
agreements which become due prior to the Closing Date.
(g) The obligation for compliance with the federal Worker
Adjustment, Retraining and Notification Act (the "WARN Act") and for compliance
with the Wisconsin Plant Closing Law shall pass from Seller to Buyer at the
Closing relative to all Eligible Employees. Effective as of the Closing, the
insurance policies currently maintained by Seller, including in respect of
workers compensation and general liability coverage, will terminate insofar as
it relates to the business of the Division. Buyer will assume (and will
indemnify Seller for) liabilities relating to workers compensation and general
liability insurance claims arising out of the business of the Division that are
based on events occurring on or after the Closing Date. Buyer shall offer to
assume the CBAs. Said offer shall be made in writing by Buyer to the Union prior
to the Closing Date. In the event that the Union refuses to be bound by such
assumption, then Buyer shall offer to recognize and bargain with the Union as
representative of the unit of employees described in the agreement, and shall
not alter or amend any hours, wages or other terms and conditions of employment
applicable to employees in said agreement until such bargaining has produced
agreement or lawful impasse, all as defined by applicable labor laws.
58
(h) Buyer shall have the right to be informed with respect to
any negotiation by Seller with respect to any collective bargaining agreement
occurring prior to Closing.
(i) Immediately prior to, and subject to, the Closing, Seller
shall cause a "spin-off" of the liabilities of Beneflex Component Plan of the
CLP Health and Welfare Plan (which contains dependent care and medical health
reimbursement component parts) with respect to the Transferred Employees (the
"Transferred Flex Plan"). At the Closing, Seller shall cause the Transferred
Flex Plan, including the benefit liabilities of the Transferred Employees, to be
transferred to Buyer. The parties hereto agree that in no event shall Seller's
liabilities with respect to the Transferred Flex Plan exceed the amount deferred
by Transferred Employees during 2001 and prior to the Closing. Prior to the
Closing, Seller shall draft the appropriate documents in a form and substance
reasonably satisfactory Buyer, and use its commercially reasonable best efforts
to take all actions necessary, to the extent possible, to effectuate the intent
of this Section 10.4(i).
(j) As of the Closing Date, Buyer shall assume the obligation
to make payments to each Eligible Employee who is then on short term disability
leave and shall continue to make such payments in accordance with the applicable
short term disability plan of Seller in accordance with the provisions of such
plan as in effect on the date hereof.
10.5 Government Filings. Seller and Buyers shall use their respective
------------------
reasonable efforts to make or cause to be made in a timely manner all filings
with, and to obtain or cause to be obtained in a timely manner all Permits,
consents or approvals of any Governmental Agency required to be made or obtained
in connection with the Transaction.
59
10.6 Public Announcements. Prior to the Closing, Seller and Buyers
--------------------
shall consult with each other and will mutually agree upon any press release or
public announcement pertaining to the Transaction and shall not issue any such
press release or make any such public announcement prior to such consultation
and agreement, except as may be required by applicable law or by obligations
pursuant to any listing agreement with any national securities exchange or
national automated quotation system, in which case the party proposing to issue
such press release or make such public announcement shall use reasonable efforts
to consult in good faith with the other party before issuing any such press
release or making any such public announcement.
10.7 Further Assurances. Each party shall (a) upon request of any
------------------
other party, at any time and from time to time execute, acknowledge, deliver and
perform all such further acts, deeds, assignments, transfers, conveyances,
powers of attorney and instruments of further assurances as may reasonably be
necessary or appropriate to carry out the provisions and intent of this
Agreement and (b) from and after the date of this Agreement and to and including
the Closing Date, unless all other parties otherwise consent in writing, use its
commercially reasonable best efforts to satisfy, (i) in the case of Buyers, the
conditions precedent to the obligations of Seller in Article XII, and, (ii) in
the case of Seller, the conditions precedent to the obligations of Buyers in
Article XI.
10.8 Consents. Nothing in this Agreement shall be deemed to constitute
--------
or require an assignment or an attempt to assign any of the Assets if the
attempted assignment without the consent of a third party would adversely affect
in any way the rights of either Seller or Buyers. If any such consent shall not
have been obtained at or prior to the Closing, or the attempted transfer or
assignment of any of the Assets would have an adverse effect on Buyers or
Seller, Seller will
60
cooperate with Buyers in any reasonable arrangement designed to provide for
Buyers the rights and benefits of such Assets, including, enforcing for the
benefit of Buyers any or all rights of Seller under any agreements against any
other party arising out of the breach or cancellation by such other party, while
permitting Buyers the possession and use of such Assets for Buyers' account as
if such Assets had been so transferred, assigned and delivered, or otherwise.
Pending the obtaining of such consents, approvals or novations, Buyers will
continue performance of any remaining unfulfilled obligations of Seller under
any of the agreements in the same manner as though the same were subcontracted
to Buyers on the same terms and conditions as contained in the agreements. To
the extent that Buyers are provided the benefits of any agreement referred to
herein (whether from Seller or otherwise), Buyers shall perform at the
reasonable direction of Seller and for the benefit of any third Person the
obligations of Seller thereunder or in connection therewith, and Buyers agree to
pay, perform and discharge and indemnify Seller against and hold Seller harmless
from, all obligations and liabilities of Seller relating to such performance or
failure to perform, after the Closing Date, in accordance with Article XV.
10.9 Nonsolicitation. For a period of two (2) years from and after the
---------------
Closing Date, (a) Seller will not, directly or indirectly, for itself or for any
other Person (other than Buyers or any of their affiliates), (i) employ, attempt
to employ or enter into any contractual employment arrangement with any person
who is a current employee of the Division or (ii) interfere with the business
relations between Buyers or any of their affiliates and any Person who is a
current consultant or independent contractor of the Division, and (b) Buyers
will not, directly or indirectly, for themselves or for any other Person (other
than Seller or any of its affiliates),
61
employ, attempt to employ or enter into any contractual employment arrangement
with any person who is a current employee of Seller or any affiliate of Seller.
10.10 Unemployment Compensation Accounts. Seller shall cause, if
----------------------------------
permitted by law, its unemployment compensation accounts with any state to be
transferred to Buyer Sub if requested by Buyer.
10.11 Mayville Site. Buyers shall be responsible for completing the
-------------
investigation and remediation of contamination arising from the Release of
Hazardous Materials prior to the Closing Date at the Owned Real Property in
Mayville, Wisconsin and any migration of such contamination to any other
properties at any time (collectively, the "Mayville Contamination") until a
closure letter is obtained from the Wisconsin Department of Natural Resources
("WDNR"). After Buyers have completed the site investigation in accordance with
applicable rules, Buyers will prepare a remedial action plan and submit it to
Seller for review and comment before Buyers submit the plan to WDNR. Seller may
participate in any meetings with the WDNR at its own expense. Buyers will keep
Seller informed of response activities undertaken at the Mayville Site. Buyers
shall be responsible for complying with any conditions of the WDNR closure
letter. Buyers shall notify Seller when Buyers have expended $1,000,000 for
Response Costs (as defined in Section 16.9) to address the Mayville
Contamination (the "Mayville Response Costs"). Seller shall, upon receipt of
such notice, promptly reimburse Buyers for fifty percent (50%) of all Mayville
Response Costs in excess of $1,000,000 incurred by Buyers.
If after the Closing Date, Buyers or Seller receive notice of any third
party claims arising from or relating to the Mayville Contamination, they shall
promptly notify the other party as provided in Section 15.6(a). Buyers and
Seller shall cooperate with each other in responding to
62
such claims, however, each shall have the right to join the other in the action.
Buyers and Seller shall each be responsible for its own defense and attorneys
fees, unless the parties subsequently agree to a joint defense arrangement and
defense cost sharing. The costs arising from any settlement or judgment
resolving such third party claims ("Mayville Third Party Environmental Costs")
shall be paid fifty percent (50%) by Seller; provided, however, that if Buyers
have not expended $1,000,000 for Mayville Response Costs at the time that any
Mayville Third Party Environmental Costs are incurred, Buyers shall be
responsible for one hundred percent (100%) of the Mayville Third Party
Environmental Costs until Buyers' total combined payments of Mayville Response
Costs and Mayville Third Party Environmental Costs exceed $1,000,000.
10.12 Title Insurance and ALTA Surveys. Seller, on the one hand, and
--------------------------------
Buyers, on the other hand, shall cooperate with each other to obtain, shall
obtain and deliver to Buyers and shall each bear one-half of the costs of
obtaining, (a) at least ten (10) days prior to Closing a commitment (the "Title
Commitment") for an owner's policy of title insurance (including the 3.1 Zoning
Endorsement, Access Endorsement, Gap Coverage, CLTA Form 100.6 Covenants,
Conditions and Restrictions, Violations for the Owned Real Property located in
Arizona and in North Carolina and Contiguity Endorsement, as appropriate, for
the operations being conducted on each of the Owned Real Property, to the extent
available) for each Owned Real Property issued by a national and responsible
title insurance company licensed to issue title insurance in the state in which
each Owned Real Property is located, reasonably acceptable to Buyers (the "Title
Company") in the amount of the fair market value of each Owned Real Property
covering title to the Owned Real Property, showing title in Seller subject only
to such exceptions set forth on Schedule 6.8 hereto and committing to insure the
interest of Buyer Sub, as owner of each Owned
63
Real Property, with extended coverage, other than (i) the general mechanic's
lien exception, (ii) the general taxes or special assessments exceptions (but
only if and to the extent that Buyers are responsible for the payment of said
taxes and assessments under this Agreement) and (iii) the general survey
exceptions which shall be removed from the title policies to be issued to Buyers
at Closing and shall be replaced with specific survey exceptions, if any, to the
extent permitted under this Agreement, at Closing and (b) at least two (2) days
prior to Closing, a current plat of survey (the "Survey") for each Owned Real
Property prepared by a surveyor registered in the state in which the Owned Real
Property is located, in conformity with the land survey standards for such state
in which the Owned Real Property is located and ALTA/ACSM Class A Survey
Standards and acceptable to the Title Company to provide the coverage set forth
in this Agreement. Each Survey shall be certified to Buyers and shall show no
encumbrances or defects, other than the Real Property Encumbrances.
ARTICLE XI
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYERS
-------------------------------------------------
The obligations of Buyers under this Agreement shall be subject to the
satisfaction, at or prior to the Closing, of the following conditions, any or
all of which may be waived in writing by Buyers:
11.1 Accuracy of Representations and Warranties; Performance of
----------------------------------------------------------
Covenants. Except where expressly limited to a specific date, each of the
---------
representations and warranties of Seller in this Agreement shall be true and
correct, in all material respects, on and as of the Closing Date with the same
effect as though made on and as of such date and Seller shall have performed and
64
complied with, in all material respects, the covenants and agreements of Seller
in this Agreement required to be performed or complied with on or prior to the
Closing Date.
11.2 No Material Adverse Change. Since the date of this Agreement,
--------------------------
there shall have not occurred a material adverse change (or event or condition
that could result in a material adverse change) in the assets, liabilities or
financial condition of the Division taken as a whole.
11.3 No Injunction. No temporary restraining order, preliminary or
-------------
permanent injunction or other order preventing the consummation of the
Transaction shall have been issued by any court of competent jurisdiction and
remain in effect.
11.4 HSR Act. The parties shall have filed with the Federal Trade
-------
Commission and the Antitrust Division of the U.S. Department of Justice
notification and report forms with respect to the Transaction pursuant to the
HSR Act and the rules promulgated thereunder, and the waiting period required to
expire under the HSR Act and the rules promulgated thereunder, including any
extension of the waiting period, shall have expired or early termination thereof
shall have been granted.
11.5 Closing Deliveries.
------------------
Seller shall have delivered to Buyers:
(a) an officer's certificate, dated as of the Closing Date,
certifying that, except where expressly limited to a specific date, each of the
representations and warranties of Seller in this Agreement is true and correct,
in all material respects, on and as of the Closing Date and Seller has performed
and complied with, in all material respects, the covenants and agreements of
Seller in this Agreement required to be performed and complied with on or prior
to the Closing Date;
65
(b) a good standing certificate of Seller, of recent date, from
the Secretary of State of Delaware;
(c) copies of all partnership actions duly taken by the general
partner of Seller, authorizing the execution, delivery and performance of this
Agreement and the other agreements, instruments and documents contemplated and
to be delivered under this Agreement, which actions shall be in full force and
effect at the time of delivery on the Closing Date;
(d) an opinion of counsel to Seller covering the topics set
forth on Exhibit 11.5(d) hereto in form and substance reasonably satisfactory to
Buyers;
(e) (i) an Indenture, Xxxx of Sale and Assignment substantially
in the form of Exhibit 11.5(e)(i) hereto, (ii) Assignments of the Real Property
Leases, substantially in the forms of Exhibits 11.5(e)(ii)(A), (B) and (C)
hereto and (iii) Special Warranty Deeds for the Owned Real Property,
substantially in the forms of Exhibits 11.5(e)(iii)(A), (B) and (C) hereto, duly
executed by Seller and acknowledged as required by applicable law (collectively,
the "Transfer Documents");
(f) the Registration Rights Agreement, duly executed by Seller;
and
(g) the Transitional Services Agreement substantially in the
form of Exhibit 11.5(g) hereto (the "Transitional Services Agreement"), duly
executed by Seller.
11.6 Consents. The consents set forth on Schedule 11.6 hereto shall
--------
have been obtained.
66
ARTICLE XII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLER
-------------------------------------------------
The obligations of Seller under this Agreement shall be subject to the
satisfaction, at or prior to the Closing, of the following conditions, any and
all of which may be waived in writing by Seller:
12.1 Accuracy of Representations and Warranties; Performance of
----------------------------------------------------------
Covenants. Except where expressly limited to a specific date, each of the
---------
representations and warranties of Buyers contained in this Agreement shall be
true and correct, in all material respects, on and as of the Closing Date with
the same effect as though made on and as of such date and Buyers shall have
performed and complied with, in all material respects, the covenants and
agreements of Buyers in this Agreement required to be performed or complied with
on or prior to the Closing Date.
12.2 No Material Adverse Change. Since the date of this Agreement,
--------------------------
there shall not have occurred a material adverse change (or event or condition
that could result in a material adverse change) in the assets, liabilities or
financial condition of Buyer and its subsidiaries taken as a whole.
12.3 No Injunction. No temporary restraining order, preliminary or
-------------
permanent injunction or other order preventing the consummation of the
Transaction shall have been issued by any court of competent jurisdiction and
remain in effect.
12.4 HSR Act. The parties shall have filed with the Federal Trade
-------
Commission and the Antitrust Division of the U.S. Department of Justice
notification and report forms with respect to the Transaction pursuant to the
HSR Act and the rules promulgated thereunder, and the waiting period required to
expire under the HSR Act and the rules promulgated thereunder, including any
67
extension of the waiting period, shall have expired or early termination thereof
shall have been granted.
12.5 Closing Deliveries.
------------------
Buyers shall have delivered to Seller:
(a) an officer's certificate of each of Buyer and Buyer Sub, dated as
of the Closing Date, certifying that, except where expressly limited to a
specific date, each of the representations and warranties of Buyers in this
Agreement is true and correct, in all material respects, on and as of the
Closing Date and each of Buyer and Buyer Sub has performed and complied with, in
all material respects, the covenants and agreements of Buyers in this Agreement
required to be performed or complied with on or prior to the Closing Date;
(b) a good standing certificate of Buyer from the Registrar of
Companies of Bermuda;
(c) copies of the resolutions duly adopted by the Board of Directors
of each of Buyer and Buyer Sub authorizing the execution, delivery and
performance of this Agreement and the other agreements, instruments and
documents contemplated by this Agreement, which shall be in full force and
effect at the time of delivery on the Closing Date;
(d) an opinion of counsel to Buyers covering the topics set forth on
Exhibit 12.5(d) hereto in form and substance reasonably satisfactory to Seller;
(e) the Cash Consideration;
(f) (i) the Transfer Documents and (ii) an Instrument of Assumption
substantially in the form of Exhibit 12.5(f) hereto (the "Instrument of
Assumption"), duly executed by Buyer Sub;
68
(g) a certificate representing the Share Consideration;
(h) the Registration Rights Agreement, duly executed by Buyer; and
(i) the Transitional Services Agreement, duly executed by Buyers.
ARTICLE XIII
EXPENSES AND TAXES
------------------
13.1 Expenses. Except as otherwise provided in this Agreement, Seller shall
--------
pay all fees and expenses incurred by Seller in connection with the Transaction,
including the fees and expenses of Seller's counsel and accountants, and Buyers
shall pay all expenses incurred by Buyers in connection with the Transaction,
including the fees and expenses of Buyers' counsel and accountants. The filing
fee in connection with the filing of premerger notification and report forms
under the HSR Act shall be paid by Buyers.
13.2 Taxes. Buyers and Seller shall each pay fifty percent (50%) of all
-----
applicable Transfer Taxes (as defined in Section 16.9), and Buyers shall furnish
to Seller all appropriate exemption certificates. Real property taxes, personal
property taxes, sewer and water rents or charges shall be apportioned between
Seller, on the one hand, and Buyers, on the other hand, as of the Closing Date,
based on the number of days of such taxable period included in the period ending
with and including the Closing Date (with respect to any such taxable period,
the "Pre-Closing Tax Period"), and the number of days of such taxable period
beginning after the Closing Date (with respect to any such taxable period, the
"Post-Closing Tax Period"). Seller shall be liable for the proportionate amount
of such taxes, rents or charges that is attributable to the Pre-Closing Tax
Period to the extent not reflected on the Closing Balance Sheet, and Buyers
shall be liable for the proportionate amount of such taxes, rents or charges
that is attributable to (a) the
69
Pre-Closing Tax Period to the extent reflected on the Closing Balance Sheet
and (b) the Post-Closing Tax Period.
ARTICLE XIV
TERMINATION
-----------
14.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(a) by written consent of each of the parties; or
(b) by either Buyers or Seller by notice to the other if the Closing
has not occurred by April 2, 2001, provided that, if on April 2, 2001 the only
conditions to Closing that remain unsatisfied are the conditions in Sections
11.4 and 12.4, neither Buyers nor Seller may exercise this right of termination
earlier than May 2, 2001.
14.2 Effect of Termination. If this Agreement is terminated pursuant
---------------------
to Section 14.1, this Agreement shall become void and have no effect and no
party hereto or any of any such party's affiliates, partners, directors,
officers, employees, agents, consultants, representatives, advisors or
shareholders shall have any liability or further obligation to any Person in
respect hereof, except (a) in respect of the parties' respective obligations
under Section 13.1 and this Section 14.2 and the Confidentiality Agreement (as
defined in Section 16.9), which shall survive any termination of this Agreement
pursuant to Section 14.1 and (b) if this Agreement is terminated pursuant to
Section 14.1 (b) and if (i) Buyers have complied with and performed, in all
material respects, all covenants and agreements required by this Agreement to
have been performed or complied with by Buyers prior to the Closing, Buyers may
seek appropriate remedies for any and all damages, costs and expenses incurred
by Buyers by reason of any breach
70
of this Agreement by Seller prior to such termination or (ii) Seller has
complied with and performed, in all material respects, all covenants and
agreements required by this Agreement to have been performed or complied with by
Seller prior to the Closing, Seller may seek appropriate remedies for any and
all damages, costs and expenses incurred by Seller by reason of any breach of
any provision of this Agreement by Buyers prior to such termination.
ARTICLE XV
INDEMNIFICATION AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES
--------------------------------------------------------------
15.1 Indemnification by Seller. Seller shall indemnify Buyers and their
-------------------------
affiliates, directors, officers, stockholders, employees, agents and
representatives, against any and all claims, losses, liabilities, damages,
expenses (including reasonable attorneys' fees and expenses) which may be
asserted against, incurred or required to be paid by Buyers or their affiliates,
directors, officers, stockholders, employees, agents, representatives,
successors and assigns by reason or on account of: (a) any breach of any
representation or warranty made by Seller in this Agreement; (b) any failure by
Seller to observe or perform its covenants and agreements in this Agreement or
in any agreement entered into pursuant to this Agreement; or (c) the Excluded
Liabilities.
15.2 Indemnification by Buyers. Buyers shall indemnify Seller and its
-------------------------
affiliates, partners, directors, officers, employees, agents, representatives,
successors and assigns against any and all claims, losses, liabilities, damages,
expenses (including reasonable attorneys' fees and expenses) which may be
asserted against, incurred or required to be paid by Seller or its affiliates,
partners, directors, officers, employees, agents, representatives, successors
and assigns by reason or on account of: (a) any breach of any representation or
warranty made by Buyers in this Agreement; (b) any failure by Buyers to observe
or perform their covenants and agreements in this
71
Agreement or in any agreement entered into pursuant to this Agreement; or (c)
the Assumed Liabilities.
15.3 Limitation of Indemnification Liability of Seller. Seller shall not
-------------------------------------------------
have any liability with respect to the payment of any indemnification amounts
finally determined to be owing under Section 15.1(a) until such time as the
aggregate amount of all such indemnification amounts exceed $2,000,000 and then
only to the extent the aggregate amount of such amounts exceed $2,000,000. The
aggregate liability of Seller under Section 15.1(a) shall in no event exceed
$36,250,000. Seller shall have no liability for indemnification under Section
15.1 unless Seller has been notified of the claim, in the manner provided under
Sections 15.6 and 16.5, within the survival period specified in Section 15.5.
15.4 Limitation of Indemnification Liability of Buyers. Buyers shall not
-------------------------------------------------
have any liability with respect to the payment of any indemnification amounts
finally determined to be owing under Section 15.2(a) until such time as the
aggregate amount of all such indemnification amounts exceed $2,000,000 and then
only to the extent the aggregate of such amounts exceed $2,000,000. The
aggregate liability of Buyers under Section 15.2(a) shall in no event exceed
$36,250,000. Buyers shall have no liability for indemnification under Section
15.2 unless Buyers have been notified of the claim, in the manner provided under
Sections 15.6 and 16.5, within the survival period specified in Section 15.5.
15.5 Survival. Notwithstanding any investigation by, or information
--------
supplied to, Seller or Buyers, the representations and warranties of Seller and
Buyers in this Agreement shall survive the Closing until the date fifteen (15)
months after the Closing Date and shall terminate and be of no further force or
effect as of such date except that (a) the representations and warranties in
Sections 6.1, 6.2, 6.11, 7.1 and 7.2 shall survive the Closing until the date
thirty-six (36) months after the Closing and shall terminate and be of no
further force or effect as of such date and (b) the representations and
warranties in Sections 6.6, 6.16, 7.8 and 7.13 shall the survive Closing until
sixty (60) days after the expiration of the applicable statute of limitations
with respect to the subject matter thereof and shall terminate and be of no
further force or effect as of such date. The covenants and agreements of Seller
and Buyers in this Agreement shall survive the Closing and shall be fully
effective and enforceable for the periods therein indicated or where not
indicated, forever.
15.6 Indemnification Procedures.
--------------------------
(a) Any party making a claim for indemnification under this Article
XV (the "Indemnitee") shall notify the indemnifying party (the "Indemnitor") of
the claim in writing promptly after discovering the claim or receiving written
notice of a claim against the Indemnitee (if by a third party), describing the
claim and the amount (if known and quantifiable), and the basis thereof;
provided, however, that no delay on the part of the Indemnitee in notifying the
Indemnitor of such claim shall relieve the Indemnitor from any liability or
obligation under this Article XV and then solely to the extent that the
Indemnitor is damaged thereby.
(b) If any action or proceeding is brought against the Indemnitee,
with respect to which the Indemnitor may have an obligation to indemnify under
this Article XV, the action or proceeding shall be defended (including all
proceedings on appeal or for review which counsel for the Indemnitee shall deem
appropriate) by the Indemnitor with counsel of its choice reasonably
satisfactory to the Indemnitee. If the Indemnitor, within a reasonable time
after notice of claim, fails to assume the defense thereof, the Indemnitee shall
have the right to undertake the defense,
73
compromise or settlement of such claim for the account of the Indemnitor,
subject to the right of the Indemnitor to assume the defense of such claim with
counsel of its choice reasonably satisfactory to the Indemnitee at any time
prior to the compromise, settlement or final determination thereof. The
Indemnitee shall have the right to employ its own counsel in any such case, but
the fees and expenses of such counsel shall be at the Indemnitee's own expense
unless the employment of such counsel and the payment of such fees and expenses
both shall have been specifically authorized by the Indemnitor in connection
with the defense of such action or proceeding. In case of such specific
authorization by Indemnitor, only that portion of such fees and expenses
reasonably related to matters covered by the indemnity agreements contained in
this Agreement shall be borne by the Indemnitor.
The Indemnitee shall be kept fully informed of such action or proceeding at
all stages whether or not it is so represented. The Indemnitee shall make
available to the Indemnitor and its attorneys and accountants all books and
records of the Indemnitee relating to such proceedings or litigation and the
parties agree to render to each other such assistance as they may reasonably
require of each other in order to ensure the proper and adequate defense of any
such action or proceeding.
(c) The Indemnitee will not consent to the entry of any judgment or
enter into any settlement with respect to the matter without the written consent
of the Indemnitor (not to be withheld unreasonably), and the Indemnitor will not
consent to the entry of any judgment with respect to the matter, or any
settlement which does not include a provision pursuant to which plaintiff or
claimant in the matter releases the Indemnitee from all liability with respect
thereto, without the written consent of the Indemnitee.
74
ARTICLE XVI
MISCELLANEOUS
-------------
16.1 Governing Law. This Agreement shall be governed by the laws of the
-------------
State of Delaware without regard to any applicable conflicts of laws.
16.2 Counterparts; Use of Facsimiles. This Agreement may be executed in
-------------------------------
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute a single agreement. The reproduction of
signatures by means of a telecopying device shall be treated as though such
reproductions are executed originals and each party shall provide the other
party with a copy of this Agreement bearing original signatures within five (5)
days following transmittal by facsimile.
16.3 Entire Agreement. This Agreement, and all Schedules and Exhibits
----------------
attached hereto, and the letter dated as of the date hereof from Xxxxxxx X.
Xxxxxxx to Buyer with respect to Section 8.5 contain the entire agreement of the
parties and supersedes all prior written or oral understandings between the
parties with respect to the subject of this Agreement; provided, however, that
the Confidentiality Agreement shall not be superceded and shall remain in full
force and effect. No modification, release or waiver of any provision will be
valid unless by a written amendment to this Agreement signed by both parties.
16.4 No Presumption Against Draftsman. There shall be no presumption
--------------------------------
against any party on the ground that such party or its counsel was responsible
for preparing this Agreement or any part hereof.
75
16.5 Notices. Any notice, request, demand or other communication given by
-------
any party under this Agreement shall be in writing, may be given by a party or
its legal counsel, and shall be deemed to be duly given (a) when personally
delivered or (b) when delivered by facsimile transmission if a copy thereof is
also delivered in person or by overnight courier. Notices of address change
shall be effective only upon receipt notwithstanding the provisions of the
foregoing sentence.
Notice to Seller shall be sufficient if given to:
Xxxxxxx Limited Partnership
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Vice President, Legal and Environmental
Facsimile: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Notice to Buyers shall be sufficient if given to:
APW Ltd.
X00 X00000
Xxxxxxxxx Xxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
76
with a copy to:
Xxxxxxx & Xxxxx LLP
000 X. Xxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx III, Esq.
Facsimile: (000) 000-0000
16.6 Successors and Assigns. This Agreement, or any rights or obligations
----------------------
under this Agreement, shall not be assigned by either party (voluntarily by
acquisition of assets or stock or merger, or otherwise or by operation of law)
without the prior written consent of the other party, except that Buyers may
assign any of their rights (but not any of their obligations to Seller) under
this Agreement to one or more of Buyer's direct or indirect subsidiary
corporations or companies. Subject to the foregoing, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and permitted assigns.
16.7 Severability. The provisions of this Agreement shall, to the extent
------------
possible, be interpreted in such a manner as to comply with applicable law. If,
notwithstanding such interpretation, any of the provisions of this Agreement are
held to be invalid or unenforceable by a final determination of a court of
competent jurisdiction, such invalidity or unenforceability shall not affect in
any way the validity or enforceability of any other provision of this Agreement,
except those of which the invalidated or unenforceable provisions comprise a
material part of and are otherwise clearly inseparable.
16.8 Buyer Guarantee. Buyer unconditionally undertakes and guarantees the
---------------
performance of all obligations of Buyer Sub under this Agreement (and of all
obligations of any direct or indirect subsidiary corporation or company to which
any rights are assigned pursuant to Section
77
16.6), and in connection with the consummation of the Transaction, including,
without limitation, the payment of the Purchase Price.
16.9 Certain Definitions. As used in this Agreement, the following terms
-------------------
have the meanings given:
Buyer Adverse Effect: an adverse change (or event or condition that
--------------------
could result in an adverse change) in the assets, liabilities or financial
condition of Buyer and its subsidiaries taken as a whole in an amount of
$200,000 or more.
Cleanup: all actions required to: (a) cleanup, remove, treat or
-------
remediate Hazardous Materials in the indoor or outdoor environment; (b)
prevent the Release of Hazardous Materials so that they do not migrate,
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment; (c) perform pre-remedial studies and investigations
and post-remedial monitoring and care; or (d) respond to any government
requests for information or documents in any way relating to cleanup,
removal, treatment or remediation or potential cleanup, removal, treatment
or remediation of Hazardous Materials in the indoor or outdoor environment.
Confidentiality Agreement: the Confidentiality Agreement, dated as of
-------------------------
December 12, 2000, by and between Seller and Buyer.
Division Adverse Effect: an adverse change (or event or condition
-----------------------
that could result in an adverse change) in the assets, liabilities or
financial condition of the Division taken as a whole in an amount of
$200,000 or more.
78
Eligible Transferred Employees: Transferred Employees who (a) become
------------------------------
participants in Buyer's 401(k) Plan and (b) were formerly participants in
the CLP Profit Sharing and Savings Plan.
Environmental Claim: any claim, action, cause of action, notice of
-------------------
deficiency, notice of violation, order, judicial or administrative action,
investigation or written notice or request for information by any Person
alleging potential liability (including, without limitation, potential
liability for investigatory costs, Cleanup costs, Response Costs,
governmental oversight or response costs, natural resources damages,
property damages, personal injuries, or penalties) arising out of, based on
or resulting from (a) the presence, Release or threatened Release of any
Hazardous Materials at any location, or (b) circumstances forming the basis
of any violation, or alleged violation, of any Environmental Law.
Environmental Law or Laws: all federal, state, local, common and
-------------------------
foreign laws and regulations, codes, orders, rulings, decrees and plans
relating to pollution or protection of human health, employee safety or the
environment, including without limitation laws and regulations relating to
emissions, discharges, releases or threatened releases of Hazardous
Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Materials and all laws and regulations with regard to record
keeping, notification, disclosure and reporting requirements respecting
Hazardous Materials (including, without limitation, the Solid Waste
Disposal Act, 42 U.S.C. (S) 6901 et seq.; the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. (S) 9601 et
seq., as amended by the Superfund Amendments and Reauthorization Act of
1986; the Hazardous Materials
79
Transportation Act, 49 U.S.C. (S) 1801 et seq.; the Federal Water Pollution
Control Act, 33 U.S.C. (S) 1251 et seq.; the Clean Air Act, 42 U.S.C. (S)
7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.;
the Safe Drinking Water Act, 42 U.S.C. (S) 300f et seq.).
Governmental Agency or Agencies: all agencies, authorities, bodies,
-------------------------------
boards, commissions, courts, instrumentalities, legislatures and offices of
any nature whatsoever of any federal, state, county, district, municipal,
city, foreign or other government or quasi-government unit or political
subdivision.
Hazardous Materials: (a) any petroleum or petroleum products,
-------------------
petroleum derived substances or wastes, flammable explosives, radioactive
materials, asbestos in any form that could become friable, urea
formaldehyde foam insulation, polychlorinated biphenyls (PCBs); and (b) any
substances listed on Appendix I of Chapter 391-3-19 of the Georgia Rules
for Hazardous Response, and any other substances, chemicals or other
materials that are defined as, included in the definition of, or otherwise
regulated as "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes,"
"toxic substances" or "toxic pollutants" under any Environmental Law.
Incentive Plan: the Xxxxxxx Limited Partnership Executive Incentive
--------------
Plan.
Person: any individual, company, body corporate, association,
------
partnership, joint venture, trust or trustee or governmental body.
Release: any release, spill, emission, discharge, leaking, escaping,
-------
pumping, injection, filtration, deposit, disposal, dispersal, uncontrolled
loss, leaching or migration
80
into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater, wetlands and surface or subsurface
strata) or into or out of any property, including the movement of Hazardous
Materials through, on, under or in the air, soil, surface water,
groundwater or property.
Response Costs:
--------------
(a) Subject to subparagraph (b) of this definition, all costs
incurred in connection with any action that is required by a governmental
entity under an applicable Environmental Law that is in effect as of the
Closing Date or is required by an applicable Environmental Law that is in
effect as of the Closing Date to respond to a Release or threatened Release
of Hazardous Materials (including any such actions to assess, monitor and
evaluate the Release or threatened Release, actions to remove and dispose
of removed material, all other investigation, remedial and Cleanup actions,
measures to limit access, measures to obtain access to offsite properties,
measures to obtain deed restrictions on offsite properties, post-remedial
monitoring, long-term operation of remedial systems, provision of
alternative water supplies, relocation of supply xxxxx, treatment of
groundwater, and all closure and conditional-closure actions imposed by any
governmental authority).
(b) Response Costs shall not include any of the following costs: (i)
any increase in costs necessary to respond to the Release or threatened
Release of Hazardous Materials due to a negligent or wrongful act or
omission after the Closing Date by any person other than Seller or its
affiliates or any of their respective employees or representatives; (ii)
any costs associated with the construction or reconstruction of buildings
or other similar
81
structures on any property unless such construction or reconstruction is
part of the most cost-effective method for performing the Cleanup
consistent with the continued operation of the business at Mayville,
Wisconsin; and (iii) any costs that are incurred due to any change related
to the Mayville Site resulting or arising from a change in use of the
facilities from manufacturing to any other use.
Seller's Benefit Plans: each employee benefit or compensation plan,
----------------------
program policy or arrangement, including, without limitation, the Company
Plans, maintained, sponsored or contributed to by Seller or any affiliate
thereof, in which Employees participate.
Seller's Pension Plan: the CLP Pension Plan.
---------------------
Tax or Taxes: all taxes, assessments, charges, duties, fees, levies,
------------
imposts, duties and other governmental charges, including, but not limited
to, all federal, state, local, foreign and other income, alternative
minimum, add-on, gross income, gross receipts, sales, use, transfer,
capital gains, ad valorem, value-added, franchise, license, capital stock,
capital structure, profits, withholding, payroll, employment, unemployment,
excise, severance, stamp, occupation, premium, recording, real property,
personal property, windfall profits, custom, service, service use, lease,
gift, social security, disability, transactions, intangibles, registration,
title, federal highway use, environmental (including, but not limited to,
taxes under Section 59A of the Code) and other governmental charges of any
kind whatsoever (whether payable directly or by withholding and whether or
not requiring the filing of a return) and all estimated taxes, deficiency
assessments, additions
82
to tax, additional amounts imposed by any Governmental Agency (domestic or
foreign), penalties, fines and interest.
Taxing Authority: the IRS and any other Governmental Agency
----------------
responsible for the administration of any Tax.
Tax Return: any return, declaration, report, claim for refund,
----------
information return, statement or other similar document relating to Taxes,
including any amendments thereto and related or supporting information,
filed or required to be filed with respect to Taxes.
Transfer Taxes: any sales, use, stamp, documentary, filing,
--------------
recording, transfer, real estate transfer, stock transfer, gross receipts,
registration or other similar fees or taxes or governmental charges
(together with any interest or penalty, addition to tax or additional
amount imposed) as levied by any Taxing Authority in connection with the
Transaction.
[Remainder of page intentionally left blank.]
83
Transition Incentive Plan: the Xxxxxxx Limited Partnership
-------------------------
Transition Incentive Plan.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
in multiple originals by their duly authorized officers as of the date first
written above.
XXXXXXX LIMITED PARTNERSHIP
By: Its General Partner
XXXXXXX INDUSTRIES, INC.
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
APW LTD.
By: /s/ Xxxxxxx X. Sim
-----------------------
Name: Xxxxxxx X. Sim
Title: President
[corporate seal]
APW MAYVILLE, INC.
By: /s/ Xxxxxxx X. Sim
-----------------------
Name: Xxxxxxx X. Sim
Title: President
