EXHIBIT 2.1
Execution Copy
ASSET PURCHASE AGREEMENT
dated as of January 24, 2003
among
TransTechnology Corporation
and
Norco, Inc.
and
Marathon Power Technologies Company
TABLE OF CONTENTS
ARTICLE I - PURCHASE AND SALE OF THE ASSETS AND LIABILITIES.......................................................1
1.1. Transfer of Assets..............................................................................1
1.2. Excluded Assets.................................................................................3
1.3. Assumption of Liabilities.......................................................................3
1.4. Excluded Liabilities............................................................................3
1.5. Consideration...................................................................................5
1.6. Purchase Price Adjustment.......................................................................6
1.7. Purchase Price Allocation.......................................................................7
ARTICLE II - REPRESENTATIONS AND WARRANTIES RELATING TO THE PARENT................................................8
2.1. Due Authorization and Execution.................................................................8
2.2. Ownership of Stock..............................................................................8
2.3. Organization....................................................................................8
2.4. No Conflicts....................................................................................8
2.5. Consents........................................................................................9
2.6. Fees, Commissions and Expenses..................................................................9
ARTICLE III - REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY.............................................10
3.1. Organization of the Company....................................................................10
3.2. Due Authorization and Execution................................................................10
3.3. Capitalization and Corporate Records of the Company............................................10
3.4. Dividends and Distributions....................................................................11
3.5. Financial Statements...........................................................................11
3.6. No Undisclosed Liabilities.....................................................................11
3.7. Absence of Certain Changes.....................................................................12
3.8. Customers and Suppliers........................................................................13
3.9. Taxes..........................................................................................14
3.10. Litigation.....................................................................................16
3.11. Consents, Violations and Authorizations........................................................16
3.12. Agreements, Contracts, Commitments and Leases..................................................17
3.13. Assets.........................................................................................19
3.14. Inventory......................................................................................20
3.15. Accounts Receivable............................................................................20
3.16. Intellectual Property..........................................................................20
3.17. Insurance......................................................................................21
3.18. Compliance with Law............................................................................22
3.19. Employee Benefit Plans.........................................................................22
3.20. Labor Matters..................................................................................23
3.21. Fees, Commissions and Expenses.................................................................23
3.22. Environmental Laws and Regulations.............................................................24
3.23. Real Property..................................................................................26
3.24. Product Warranties.............................................................................26
3.25. Transactions with Affiliates; Intercompany Accounts............................................26
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3.26. Indebtedness...................................................................................27
3.27. No Illegal Payments, etc.......................................................................27
3.28. Books and Records..............................................................................28
3.29. Due Consideration..............................................................................28
3.30. No Material Omission...........................................................................28
3.31. Exclusivity of Representations.................................................................28
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER.........................................................29
4.1. Due Authorization and Execution................................................................29
4.2. Organization of the Buyer......................................................................29
4.3. Consents, Violations and Authorizations........................................................29
4.4. Fees, Commissions and Expenses.................................................................30
ARTICLE V - CONDUCT OF BUSINESS PENDING CLOSING..................................................................30
5.1. Ordinary Course................................................................................30
5.2. No Acquisitions................................................................................30
5.3. No Dispositions................................................................................30
5.4. Employees......................................................................................30
5.5. Mortgages, Liens and Other Encumbrances........................................................31
5.6. Material Agreements............................................................................31
5.7. Capital Expenditures...........................................................................31
5.8. Distributions..................................................................................31
5.9. No Stock Issuances.............................................................................31
5.10. No Charter Amendments..........................................................................31
5.11. Representations and Warranties.................................................................31
5.12. Agreements.....................................................................................32
ARTICLE VI - CONDITIONS TO THE OBLIGATIONS OF THE BUYER..........................................................32
6.1. Representations and Warranties of the Company and the Parent...................................32
6.2. Opinion of Counsel for the Company and the Parent..............................................32
6.3. Absence of Litigation or Investigation.........................................................32
6.4. Requisite Regulatory Approvals.................................................................32
6.5. Consents.......................................................................................33
6.6. Authorization Documents........................................................................33
6.7. Material Adverse Effect........................................................................33
6.8. Audited Financial Statements...................................................................34
6.9. Release from Indebtedness......................................................................34
6.10. Assignment of Contracts........................................................................34
6.11. Lease..........................................................................................34
6.12. Trademarks.....................................................................................34
6.13. Fairness and Solvency Opinions.................................................................35
6.14. Delivery of Documents..........................................................................35
ARTICLE VII - CONDITIONS TO THE OBLIGATIONS OF THE COMPANY.......................................................35
7.1. Representations and Warranties of the Buyer....................................................35
7.2. Opinion of Counsel for the Buyer...............................................................36
7.3. Absence of Litigation or Investigation.........................................................36
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7.4. Requisite Regulatory Approvals.................................................................36
7.5. Authorization Documents........................................................................36
7.6. Delivery of Documents, Payments................................................................36
ARTICLE VIII - SURVIVAL; INDEMNIFICATION.........................................................................36
8.1. Survival of Representations, Warranties and Covenants..........................................36
8.2. General Indemnification........................................................................37
ARTICLE IX - TAX MATTERS.........................................................................................39
9.1. Tax Cooperation................................................................................39
9.2. Transfer Taxes and Incremental State Income Taxes..............................................39
9.3. Tax Effect of Payments.........................................................................40
ARTICLE X - ADDITIONAL COVENANTS OF THE PARTIES..................................................................41
10.1. Access by Buyer and Agents.....................................................................41
10.2. Use of Name....................................................................................41
10.3. Environmental Transfer Statute.................................................................41
10.4. Environmental Remediation......................................................................42
10.5. Notices Prior to Closing.......................................................................43
10.6. Public Announcements...........................................................................43
10.7. HSR Filing.....................................................................................44
10.8. Financial Statements...........................................................................44
10.9. Survival.......................................................................................44
10.10. Employees and Employee Benefit Plans...........................................................44
10.11. Notices Regarding Acquisition Proposals........................................................46
10.12. Information Technology and Telephone Systems...................................................46
ARTICLE XI - POST-CLOSING COVENANTS OF THE PARTIES...............................................................46
11.1. Availability of Records to the Parent..........................................................46
11.2. Non-Compete; Non-Solicitation..................................................................47
11.3. Confidentiality................................................................................48
11.4. Payments to Employees..........................................................................48
11.5. Amounts Received In Respect of Assets..........................................................48
11.6. Survival.......................................................................................49
ARTICLE XII - CLOSING............................................................................................49
12.1. Closing........................................................................................49
12.2. Deliveries by the Company and the Parent at Closing............................................49
12.3. Deliveries by Buyer at Closing.................................................................50
ARTICLE XIII - TERMINATION.......................................................................................51
13.1. Termination....................................................................................51
13.2. Procedure Upon Termination.....................................................................51
ARTICLE XIV - GENERAL PROVISIONS.................................................................................52
14.1. Expenses.......................................................................................52
14.2. Certain Filings and Consents...................................................................52
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14.3. Further Assurances.............................................................................52
14.4. Notices........................................................................................53
14.5. Successors.....................................................................................54
14.6. Permitted Assignments..........................................................................54
14.7. Entire Agreement...............................................................................55
14.8. Amendment and Modification.....................................................................55
14.9. Waiver of Compliance...........................................................................55
14.10. Gender; Number.................................................................................55
14.11. Severability...................................................................................55
14.12. Construction...................................................................................55
14.13. Governing Law..................................................................................56
14.14. Headings; Interpretation.......................................................................56
14.15. Enforcement of Agreement.......................................................................56
14.16. Counterparts...................................................................................56
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LIST OF EXHIBITS
Exhibit A - Escrow Agreement
Exhibit B - Methodology for Calculating Net Working Capital
Exhibit C - Form of opinion of counsel to the Parent and the Company
Exhibit D - Form of opinion of counsel to the Buyer
Exhibit E - Xxxx of Sale and Assumption Agreement
LIST OF SCHEDULES
Schedule 3.5 Financial Statements
Schedule 3.6 No Undisclosed Liabilities
Schedule 3.7 Absence of Certain Changes
Schedule 3.8 Customers and Suppliers
Schedule 3.9 Taxes
Schedule 3.10 Litigation
Schedule 3.11 Consents, Violations and Authorizations
Schedule 3.12 Agreements, Contracts, Commitments and Leases
Schedule 3.13 Assets
Schedule 3.14 Inventory
Schedule 3.15 Accounts Receivable
Schedule 3.16 Intellectual Property
Schedule 3.17 Insurance
Schedule 3.18 Compliance with Law
Schedule 3.19 Employee Benefit Plans
Schedule 3.22 Environmental Laws and Regulations
Schedule 3.23 Real Property
Schedule 3.24 Product Warranties
Schedule 3.25 Transactions with Affiliates, Intercompany Accounts
Schedule 3.26 Indebtedness
Schedule 11.4 Payments to Employees
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INDEX OF DEFINED TERMS
Defined Term Section
------------ -------
1998 Transaction......................................................................... 10.4(a)
Acquisition Proposal..................................................................... 10.11
Action................................................................................... 1.4(b)
affiliate................................................................................ 3.7
Agreement................................................................................ Preamble
Allocation............................................................................... 1.7
Assets................................................................................... 1.1
Assumed Liabilities...................................................................... 1.3
Auditors................................................................................. 1.6(a)
Balance Sheet Date....................................................................... 3.5
Benefit Plans............................................................................ 3.19(a)
Boeing Contract.......................................................................... 3.8(b)
Boeing Letter Agreement.................................................................. 3.8(b)
Xxxx of Sale and Assumption Agreement.................................................... 12.2(a)
Business................................................................................. Preamble
Buyer.................................................................................... Preamble
Buyer Breach............................................................................. 13.1(c)
Buyer's 401(k) Plan...................................................................... 10.10(a)
Closing.................................................................................. 12.1
Closing Date............................................................................. 12.1
Closing Date Balance Sheet............................................................... 1.6(a)
Closing Payment.......................................................................... 1.5(b)
Code..................................................................................... 3.9(j)
Company.................................................................................. Preamble, 3.22(a)(i)
Company Expenses......................................................................... 14.1
Company-to-Parent Contracts.............................................................. 3.25(d)
Contracts................................................................................ 1.1(c)
Corporate Records........................................................................ 3.3
Customer Contracts....................................................................... 5.6
Damages.................................................................................. 8.2(a)
Deposit Amount........................................................................... 1.5(b)
ECAF..................................................................................... 10.3
ELUR..................................................................................... 10.4(a)
Environmental Conditions................................................................. 3.22(a)(iii)
Environmental Indemnification Agreements................................................. 6.10
Environmental Law........................................................................ 3.22(a)(iv)
Environmental Permits.................................................................... 3.22(a)(v)
ERISA.................................................................................... 3.19(a)
ERISA Affiliate.......................................................................... 3.19(d)
Escrow Agent............................................................................. 1.5(c)
Escrow Agreement......................................................................... 1.5(c)
Excluded Contracts....................................................................... 1.1(c)
Excluded Assets.......................................................................... 1.2
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Excluded Liabilities..................................................................... 1.4
Final Effective Date Balance Sheet....................................................... 1.6(d)
Final Effective Net Working Capital Statement............................................ 1.6(d)
Final Payment Date....................................................................... 1.6(d)
Financial Statements..................................................................... 3.5
GAAP..................................................................................... 1.6(a)
Hazardous Wastes......................................................................... 3.22(a)(vi)
HSR Act.................................................................................. 2.4
Income Tax Escrow Amount................................................................. 9.2(b)
Incremental State Income Taxes........................................................... 9.2(b)
Indebtedness............................................................................. 3.26
Indemnified Party........................................................................ 8.2(c)
Indemnifying Party....................................................................... 8.2(c)
Intellectual Property.................................................................... 1.1(b)
Interim Financial Statements............................................................. 3.5
Key Customers............................................................................ 3.8(a)
Key Suppliers............................................................................ 3.8(a)
Liens.................................................................................... 2.4
Litigation Conditions.................................................................... 8.2(d)
Management............................................................................... 3.22(g)
Material Adverse Effect.................................................................. 3.1
Material Contract........................................................................ 3.12
Monthly Financial Statements............................................................. 10.8
Net Working Capital...................................................................... 1.6(a)
Net Working Capital Statement............................................................ 1.6(a)
Neutral Auditor.......................................................................... 1.6(c)
Norco Name............................................................................... 10.2(a)
Ordinary Course of Business.............................................................. 3.7
Owned Real Property...................................................................... 1.2(e)
Parent................................................................................... Preamble
Parent Breach............................................................................ 13.1(b)
Parent Group............................................................................. 3.9(m)(i)
Parent's 401(k) Plan..................................................................... 10.10(a)
Parent-to-Company Contracts.............................................................. 3.25(d)
PBGC..................................................................................... 3.19(d)(i)
Permits.................................................................................. 1.1(i)
Permitted Liens.......................................................................... 2.4
Person................................................................................... 3.1
Prime Rate............................................................................... 1.6(f)
Purchase Price........................................................................... 1.5(a)
Release.................................................................................. 3.22(a)(ii)
Remediation.............................................................................. 3.22(a)(viii)
Representatives.......................................................................... 10.1
Restricted Period........................................................................ 11.2(a)
Xxxx Contract............................................................................ 3.8(b)
Xxxx Letter Agreement.................................................................... 3.8(b)
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Scheduled Closing Date................................................................... 12.1
Senior Lenders........................................................................... 2.5
Site..................................................................................... 3.22(a)(vii)
Specific Performance Sections............................................................ 14.15
Stock.................................................................................... 2.2
Subordinated Lenders..................................................................... 2.5
Tax Return............................................................................... 3.9(m)(iii)
Taxes.................................................................................... 3.9(m)(ii)
Taxing Authority......................................................................... 3.9(m)(iv)
Transaction Documents.................................................................... 2.1
Transfer Act............................................................................. 10.3
Transfer Taxes........................................................................... 9.2(a)
Transferred Employee..................................................................... 10.10(a)
Transition Period........................................................................ 10.10(f)
Year End Financial Statements............................................................ 3.5
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of
January 24, 2003, is entered into among NORCO, Inc., a Connecticut corporation
(the "Company"), TransTechnology Corporation, a Delaware corporation and the
parent corporation of the Company (the "Parent"), and Marathon Power
Technologies Company (the "Buyer").
WHEREAS, the Company is engaged in the business of
manufacturing a broad range of standard and custom-designed mechanical
apparatus, including without limitation, hold-open rods, special connecting
devices, linear motion actuators, power transmission components, mechanical
support systems and locking mechanisms (the "Business"); and
WHEREAS, the Company desires to sell the assets and assign
the liabilities of the Business, and the Buyer desires to purchase such assets
and assume such liabilities, all on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I - PURCHASE AND SALE OF THE ASSETS AND LIABILITIES
1.1. Transfer of Assets.
Upon the terms and subject to the conditions herein set
forth, the Company and the Parent agree to sell, convey, transfer and assign to
the Buyer, and the Buyer agrees to purchase from the Company and the Parent, on
the Closing Date, all of the tangible and intangible assets, properties and
business of the Company and all of the tangible and intangible assets,
properties and business used or held for use in or otherwise material to the
conduct of the Business, whether real, personal or mixed, of every kind and
nature and wherever situated (which assets, properties and business shall
include all assets, goodwill, going concern value, rights, claims, contracts,
causes of action and properties, whether tangible or intangible, matured or
unmatured, known or unknown, contingent or fixed, whether or not any of such
assets have any value for accounting purposes or are carried or reflected on or
specifically referred to in Company's books or financial statements with
respect to the Business) (collectively, the "Assets"), except as provided in
Section 1.2, free and clear of all Liens except the Permitted Liens. The Assets
shall include, without limitation, all of the following:
(a) All assets reflected in the Financial Statements and
not disposed of in the Ordinary Course of Business as permitted by this
Agreement and all assets of the Business acquired after the date hereof;
(b) All patents, trademarks, trade names, service marks,
copyrights, software, trade secrets or know-how used in or necessary for the
conduct of the Company's business, including without limitation, the "Norco"
name (the "Intellectual Property");
(c) All agreements, contracts, licenses, leases, notes,
evidence of indebtedness, letters of credit, instruments and other written or
oral commitments concerning the Business or to which the Business is subject or
entitled (the "Contracts"), but excluding (i) Contracts which provide for any
type of severance payments or benefits or stay bonuses to executives of the
Company, including without limitation, the Executive Severance Agreement, dated
October 15, 1998, between the Company and Xxxxx Xxxxxxxx, (ii) Contracts which
provide for any type of indemnification of any executive or affiliate of the
Company, including without limitation, the Indemnification Agreement, dated
October 15, 1998, between the Company and Xxxxx Xxxxxxxx and (iii) the
Consulting Agreement, dated March 5, 1999, between the Company and Xxxxxx Xxxx
(collectively, the "Excluded Contracts");
(d) All owned and consigned inventory of the Business,
including supplies, raw materials, work in process and finished goods, both on
hand and on order;
(e) All furniture, trade fixtures, machinery, equipment
and other personal property of the Business, including without limitation, all
such items located at the Company's facility located at 000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx;
(f) All deposits, deferred charges, security deposits,
escrowed funds, rights to refunds, prepaid items, credits, and rights of offset
relating to the Business;
(g) All credit balances of or inuring to the Business,
including rebates from suppliers;
(h) All books and records relating to the Business,
including, without limitation, accounting records, customer lists, sales
records, credit data and other information regarding customers, suppliers,
distributors and agents of the Business;
(i) All permits, licenses, franchises, authorizations,
certificates, approvals, registrations and other governmental authorizations
relating to the Business (including, without limitation, Parts Manufacturer
Approvals from the Federal Aviation Administration of the Department of
Transportation) (collectively, the "Permits");
(j) All part drawings and specifications, blueprints,
designs, test data, research and development files, memoranda, promotional
materials, logs, journals and other technical materials used in the Business;
(k) All rights to insurance proceeds relating to the
damage, destruction or impairment of any of the Assets;
(l) All accounts and notes receivable of the Business;
(m) All rights, claims or causes of action against any
Person relating to the Business; and
(n) All automobiles and other vehicles owned or leased
by the Business.
2
1.2. Excluded Assets. The following assets of the Company shall be
excluded from the Assets (the "Excluded Assets"):
(a) All insurance policies covering the Business;
(b) All licenses in favor of the Company, express or
implied, for the use of the TransTechnology name, trademark, and logo and the
phrase "engineered products for global partners";
(c) All assets under any Benefit Plans;
(d) All Excluded Contracts;
(e) The real property and building owned by the Company
and located at 000 Xxxxx Xxxxx Xxxxxxx, Xxxxxxxxxx, Xxxxxxxxxxx (the "Owned
Real Property");
(f) All cash, bank deposits, other cash equivalents and
marketable securities and bank accounts of the Business; and
(g) All intercompany accounts receivable.
1.3. Assumption of Liabilities. Subject to the terms and
conditions of this Agreement, and in each case, subject to Section 1.4 hereof,
at the Closing, the Buyer shall assume the following specific liabilities and
obligations of the Company relating to the Business (the "Assumed
Liabilities"):
(a) All obligations and liabilities arising after the
Closing Date under any of the Contracts assigned to the Buyer or for which the
Buyer is receiving the economic benefits of as provided in Section 14.3(b);
(b) All liabilities reflected on the balance sheet
contained in the Interim Financial Statements and all liabilities relating to
the Business which are incurred by the Company in the Ordinary Course of
Business after December 29, 2002 through the Closing Date, but in each case,
only in the dollar amount and to the extent such liabilities exist on the
Closing Date; and
(c) All of the liabilities and obligations which relate
to the Assets or the Business to the extent attributable to operation of the
Business by the Buyer following the Closing Date.
1.4. Excluded Liabilities. Notwithstanding Section 1.3 hereof, at
the Closing, the Buyer shall not be assuming the following liabilities and
obligations of the Company relating to the Business:
(a) All intercompany accounts payables;
(b) All liabilities in respect of any action, claim,
suit, litigation, proceeding, labor dispute, arbitral action, governmental
audit, inquiry, criminal prosecution, investigation or
3
unfair labor practice charge or complaint ("Action") that: (i) were served on
the Company on or before the Closing Date; or (ii) arise out of the conduct of
the Business on or prior to the Closing Date regardless of when served except
to the extent that such Actions referred to in this clause (ii) relate to
Assumed Liabilities;
(c) All liabilities for and relating to Indebtedness;
(d) All liabilities under any Benefit Plans;
(e) All liabilities with respect to former employees of
the Business;
(f) All liabilities and obligations of the Company or
the Parent or any affiliate of either thereof for Taxes, including without
limitation, (i) any of such Taxes arising as a result of the Company's
operation of the Business or ownership of the Assets on or before the Closing,
(ii) any liability for Taxes pursuant to a tax sharing agreement or tax
indemnity or by virtue of the Company or the Parent being a transferee or a
successor, (iii) any Tax liability resulting from the Company or the Parent
being liable for the Taxes of any consolidated, combined or unitary or similar
group pursuant to Treasury Regulations Section 1-1502-6 or any analogous state
or local tax provision and (iv) except as provided in Section 9.2(a), any
Transfer Taxes;
(g) All liabilities and obligations of the Parent or any
affiliate of the Parent of any nature, whether absolute, accrued, contingent,
determined, determinable or otherwise, including without limitation, any
indemnification liability or obligation of the Parent or an affiliate of the
Parent, for which the Company is or may become liable, and all withdrawal
liabilities relating to multiemployer pension plans of the Parent;
(h) All liabilities and obligations of the Company to
third parties in respect of tort claims involving the Business (whether
personal injury, bodily harm or property damage) that arise from products of
the Business sold on or before the Closing Date;
(i) All liabilities and obligations of the Parent or the
Company for any medical reimbursements to the employees of the Company relating
to medical expenditures incurred by the employees of the Company on or prior to
the Closing Date;
(j) All liabilities and obligations of the Company or
the Parent arising out of or relating to any Environmental Condition or any
noncompliance with any Environmental Law;
(k) All liabilities and obligations of the Company or
the Parent under any of the Excluded Contracts;
(l) All liabilities and obligations of the Company and
the Parent under this Agreement;
(m) All liabilities and obligations of the Company and
the Parent arising out of the Company's use of the trademarks FN (and design),
FLENNUT and FLENNOR on or prior to the Closing Date; and
(n) All liabilities and obligations relating to the
Excluded Assets.
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In addition to the foregoing liabilities and obligations, at
the Closing, the Buyer shall not be assuming any other liability or obligation
of the Company relating to the Business except as specifically set forth under
Section 1.3 hereof (collectively, the "Excluded Liabilities"). The Excluded
Liabilities shall be and remain the sole and exclusive responsibility of the
Company, and the Company shall be solely liable and responsible for, and shall
perform and discharge in full, all of the Excluded Liabilities.
1.5. Consideration.
(a) Purchase Price. Upon the terms and subject to the
conditions set forth herein, the aggregate price to be paid by the Buyer for
the purchase of the Assets (the "Purchase Price") shall be (i) Fifty-One
Million Dollars ($51,000,000), plus the excess in the Net Working Capital at
Closing over $7,117,000 or minus the shortfall in the Net Working Capital at
Closing from $6,883,000, plus up to One Million Dollars ($1,000,000) for
Transfer Taxes and Incremental State Income Taxes as set forth in Section 9.2,
payable in cash and (ii) the assumption by the Buyer of the Assumed
Liabilities.
(b) Payments at Closing. Upon the terms and subject to
the conditions set forth herein, in consideration for the transfer of the
Assets pursuant to Section 1.1 hereof, on the Closing Date, the Buyer shall pay
Fifty-One Million Dollars ($51,000,000) minus Two Million and Five hundred
Thousand Dollars ($2,500,000) (the "Deposit Amount") together with the interest
accrued thereon (such difference, the "Closing Payment"), in cash by wire
transfer of immediately available funds to the Company to such account as the
Company shall designate in a written notice to the Buyer at least two business
days prior to the Closing Date.
(c) Deposit Amount. Upon execution of this Agreement,
the Buyer shall deliver to X.X. Xxxxxx Trust Company, N.A. (the "Escrow Agent")
pursuant to the terms of an escrow agreement among the Buyer, the Company and
the Escrow Agent, substantially in the form attached hereto as Exhibit A (the
"Escrow Agreement"), the Deposit Amount in immediately available funds to be
held by the Escrow Agent in an interest bearing account reasonably acceptable
to the Buyer to serve as a down payment on the Purchase Price, and to be
released in accordance with the following procedures:
(i) on the Closing Date, the Company and the
Buyer shall jointly instruct the Escrow Agent to deliver the
Deposit Amount, together with the interest accrued thereon,
by wire transfer of immediately available funds, to an
account designated by the Company in the Escrow Agreement
(and such amount shall be applied towards the payment of the
Purchase Price);
(ii) upon termination of this Agreement by the
Company pursuant to Section 13.1(c) as a result of the
Buyer's failure to consummate the transactions contemplated
hereunder after the fulfillment or satisfaction of all of the
conditions set forth in Article VI, and provided that neither
the Parent nor the Company has been in breach of this
Agreement, the Company and the Buyer shall jointly instruct
the Escrow Agent to deliver the Deposit Amount, together with
the interest accrued thereon, by wire transfer of immediately
available funds, to an account designated by the Company in
the Escrow Agreement, to be retained by
5
the Company (and the payment of the Deposit Amount to the
Company shall be the Company's and the Parent's sole and
exclusive remedy for Damages resulting from any breach by the
Buyer of this Agreement or from termination of this Agreement
for any other reason); and
(iii) upon termination of this Agreement for any
other reason, the Buyer shall instruct the Escrow Agent to
deliver the Deposit Amount, together with the interest
accrued thereon, by wire transfer of immediately available
funds, to an account designated by the Buyer in the Escrow
Agreement, to be retained by the Buyer.
1.6. Purchase Price Adjustment. The adjustment to the Purchase
Price, if any, shall be determined as follows:
(a) Closing Accounting Audit. Following the Closing, the
Buyer shall cause KPMG LLP (the "Auditors") to prepare an audited balance sheet
of the Assets and the Assumed Liabilities, dated as of the Closing Date (the
"Closing Date Balance Sheet"), and a statement setting forth the Net Working
Capital (as defined) as calculated based on the Closing Date Balance Sheet (the
"Net Working Capital Statement"). The Closing Date Balance Sheet and the Net
Working Capital Statement shall be prepared in accordance with generally
accepted accounting principles in the United States of America, as in effect
from time to time ("GAAP"), and shall present fairly the Assets and the Assumed
Liabilities as of the Closing Date. The Buyer shall cause the Closing Date
Balance Sheet and the Net Working Capital Statement to be delivered to the
Company as soon as reasonably practicable, but in any event, no later than the
date which is ninety (90) days after the Closing Date. The Buyer, the Company
and the Parent agree that they will, and agree to cause their respective
independent accountants to, cooperate and assist in the preparation of the
Closing Date Balance Sheet, the Net Working Capital Statement and in the
conduct of the audits and reviews referred to in this Section 1.6, including
without limitation, the making available to the extent necessary of books,
records, files, documents, work papers and personnel. For purposes of this
Agreement, "Net Working Capital" shall mean the total current assets included
in the Assets less the total current liabilities included in the Assumed
Liabilities calculated pursuant to the methodology set forth on Exhibit B.
(b) Review by the Company . If the Company wishes to
dispute any matter arising out of the Closing Date Balance Sheet or the Net
Working Capital Statement, the Company shall, within thirty (30) days after
receipt of the Closing Date Balance Sheet, give written notice to the Buyer of
its calculation of the Net Working Capital together with a detailed written
explanation of those items in the Closing Date Balance Sheet or the Net Working
Capital Statement which the Company disputes. Within a further period of thirty
(30) days from the end of the 30-day review period, the parties will attempt to
resolve in good faith any disputed items.
(c) Arbitration. If the Buyer and the Company fail to
resolve all items in dispute within the thirty (30) day period, the parties
agree that the independent certified public accounting firm of
PricewaterhouseCoopers (the "Neutral Auditor") shall be employed to resolve any
items which remain in dispute after the end of such thirty (30) day period (all
such other items relating to the Closing Date Balance Sheet and the Net Working
Capital Statement shall be deemed to be final and binding on the parties). The
parties shall direct the Neutral Auditor to
6
resolve the remaining items in dispute as soon as reasonably practicable, but
in no event later than 30 days, and the decision of the Neutral Auditor shall
be final and binding upon the parties hereto. Such decision will be subject to
specific performance pursuant to Section 14.15, and judgment may also be
entered thereon as an arbitration award pursuant to 9 U.S.C. ss. 9 in any court
of competent jurisdiction (subject to the provisions of Section 14.13).
(d) Adjustment Amount. The Closing Date Balance Sheet
and the Net Working Capital Statement, (i) if the Company does not give written
notice of any dispute within thirty (30) days after receipt thereof; (ii) as
modified by the parties upon any mutual resolution of any dispute; or (iii) as
finally determined by the Neutral Auditor, as applicable, are hereinafter
referred to as the "Final Effective Date Balance Sheet" and the "Final
Effective Net Working Capital Statement". The date which is ten (10) days after
(i) the expiration of the thirty (30) day period in which the Company may give
written notice of a dispute if no such notice is given, (ii) the parties
mutually resolve any dispute, or (iii) the date on which the Neutral Auditor
issues its final decision regarding any dispute is hereinafter referred to as
the "Final Payment Date."
(e) Payment. To the extent that the amount set forth on
the Final Effective Net Working Capital Statement is less than $6,883,000, the
Company and the Parent shall pay to the Buyer, as an adjustment to the Purchase
Price, that shortfall, in the manner and with interest as provided in Section
1.6(f), on the Final Payment Date. To the extent that the amount set forth on
the Final Effective Net Working Capital Statement exceeds $7,117,000, the Buyer
shall pay to the Company, as an adjustment to the Purchase Price, the amount of
that excess, in the manner and with interest as provided in Section 1.6(f), on
the Final Payment Date.
(f) Interest. Any payment pursuant to Section 1.6(e)
shall be made on the Final Payment Date by delivery by the Buyer or the
Company, as the case may be, of such payment in immediately available funds to
an account designated in writing by the other party. The amount of any payment
to be made pursuant to Section 1.3(e) shall bear interest from and including
the Closing Date to but excluding the date of payment at a rate per annum equal
to the Prime Rate as published in the Wall Street Journal, Eastern Edition, in
effect on the Closing Date (the "Prime Rate"). Such interest shall be payable
at the same time as the payment to which it relates and shall be calculated
daily on the basis of a year of 365 days and the actual number of days elapsed.
(g) Neutral Auditors' Fees. If the Neutral Auditors
determine that the Net Working Capital calculated by the Buyer was correct,
then the Company shall pay the fees and expenses of the Neutral Auditors. If
the Neutral Auditors determine that the Net Working Capital calculated by the
Company was correct, then the Buyer shall pay the fees and expenses of the
Neutral Auditors. If the Neutral Auditors determine a different Net Working
Capital, the fees and expenses of the Neutral Auditors shall be borne by the
Company and the Buyer in the proportion in which the amount in dispute was
allocated.
1.7. Purchase Price Allocation.
Within six (6) months after the Closing Date, the Buyer shall
deliver to the Company a final form of allocation of the Purchase Price (and
all other items properly included in "consideration," as described in Treasury
Regulation section 1.1060-1(c)(1)), in a manner
7
consistent with Section 1060 of the Code and the rules and regulations
thereunder (the "Allocation"), which Allocation shall be binding upon the
Company and the Parent. The Allocation shall be adjusted as necessary to
reflect any adjustments to the Purchase Price after the Closing Date. The Buyer
and the Company agree to use such allocation in filing all required forms under
Section 1060 of the Code (or any comparable forms under state or foreign law),
and all other Tax Returns, and the Buyer and the Company further agree that
they shall not take any position inconsistent with such allocation upon any
examination of any such Tax Return, in any refund claim or in any tax
litigation. Not later than 30 days prior to the filing of their respective
Forms 8594 relating to this transaction, each party shall deliver to the other
party a copy of its Form 8594.
ARTICLE II - REPRESENTATIONS AND WARRANTIES RELATING TO THE PARENT
The Parent represents and warrants to and agrees with the
Buyer that as of the date hereof and as of the Closing Date:
2.1. Due Authorization and Execution.
The Parent has the necessary power and authority to enter
into this Agreement and each other agreement, document or instrument
contemplated hereby (collectively, the "Transaction Documents"), to consummate
the transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. This Agreement has been, and the other Transaction
Documents will be, duly and validly executed and delivered by the Parent and,
assuming due execution and delivery by the other parties hereto and thereto
(other than the Company), constitute valid and binding obligations of the
Parent enforceable against the Parent in accordance with their terms. The
execution and delivery by the Parent of this Agreement and the other
Transaction Documents, the consummation of the transactions contemplated hereby
and thereby, and the performance of the Parent's obligations hereunder and
thereunder, have been duly and validly authorized by all necessary corporate
and shareholder action.
2.2. Ownership of Stock.
The Parent is the sole lawful record and beneficial owner of
all of the outstanding shares of capital stock of the Company (such outstanding
shares of capital stock being herein collectively referred to as the "Stock").
2.3. Organization.
The Parent is a corporation, duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority to conduct its business as it is presently being conducted and to
own and lease its properties and assets.
2.4. No Conflicts.
Neither the execution, delivery and performance of this
Agreement or the other Transaction Documents by the Parent nor the consummation
of the transactions contemplated
8
hereby or thereby will result (immediately or upon the giving of notice or the
passage of time or both) in (a) any violation of or default under, or give rise
to a right of modification, termination, cancellation or acceleration of any
obligation or to a loss of a benefit under, any mortgage, indenture, lease,
instrument, franchise, license or other agreement or permit to which the
Parent, the Company or the Assets are parties to, beneficiaries of, or bound
by, or, assuming compliance with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder (the "HSR
Act"), any violation of any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Parent, the Company or the Assets, (b) a
violation of or a conflict with any provision of the Corporate Records of the
Parent, or (c) an imposition of any Lien (other than Permitted Liens) on the
Company or on any of the Assets. For purposes of this Agreement, "Liens" shall
mean liens, encumbrances, security agreements, security interests, equities,
options, charges, restrictions, claims, restrictions on transfer or voting,
mortgage, deed of trust, pledge, charge, conditional sale or other title
retention agreement, lease, preemptive right, right of first refusal, license
or other encumbrance of any kind. For purposes of this Agreement, "Permitted
Liens" shall mean (i) mechanics', materialmen's and similar liens arising in
the Ordinary Course of Business with respect to any amounts not yet due and
payable or which are being contested in good faith through appropriate
proceedings if a reserve or other appropriate provision, if any, as shall be
required by GAAP, consistently applied, shall have been made therefor, (ii)
Liens for taxes not yet due and payable, (iii) Liens securing rental payments
under capital lease agreements, and (iv) Liens on real property that do not
materially interfere with the present or intended uses of such real property or
materially detract from the value of the real property to which such Liens
relate.
2.5. Consents.
Each of the Parent and the Company has received (and
furnished to the Buyer evidence thereof reasonably satisfactory to the Buyer)
the consent of each of (i) The CIT/Business Credit Group, Inc. and Ableco
Finance LLC (collectively, the "Senior Lenders") and (ii) X. X. Xxxxxxx
Mezzanine Fund, L.P., Albion Alliance Mezzanine Fund I, L.P., Albion Alliance
Mezzanine Fund II, L.P., The Equitable Life Assurance Society of the United
States, Fleet Corporate Finance, Inc. and Citizens Capital, Inc. (collectively,
the "Subordinated Lenders"), which consent is in the form attached hereto as
Appendix A, in connection with the transactions contemplated hereby (and such
consents have not expired or been withdrawn as of the date hereof and shall not
have expired or been withdrawn as of the Closing Date).
2.6. Fees, Commissions and Expenses.
Quarterdeck Investment Partners, LLC has been paid or will be
paid at Closing by the Parent all commissions and fees owing it in connection
with this Agreement and the transactions contemplated hereby, and there are no
brokerage commissions, finders' fees or similar compensation otherwise payable
by the Company or the Parent in connection with the transactions contemplated
by this Agreement.
9
ARTICLE III - REPRESENTATIONS AND WARRANTIES RELATING TO THE COMPANY
Each of the Parent and the Company represents and warrants to
and agrees with the Buyer (and in Section 8.2 hereof the Parent shall indemnify
the Buyer in respect thereof to the extent set forth therein) that as of the
date hereof and as of the Closing Date:
3.1. Organization of the Company.
The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Connecticut. The
Company has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted. The Company
is duly qualified or licensed to do business as a foreign corporation in good
standing in all jurisdictions in which the ownership of its property or the
conduct of its business requires such qualification, except for such
jurisdictions wherein the failure to be so qualified would not have a Material
Adverse Effect. The Company has no subsidiaries and does not own any stock,
joint venture or other equity or ownership interest in any Person. For purposes
of this Agreement, "Person" shall mean any individual, corporation (including
any non-profit corporation), general or limited partnership, limited liability
partnership, limited liability company, joint venture, estate, trust,
association, labor union or other entity or governmental body. For purposes of
this Agreement, "Material Adverse Effect" shall mean any change, effect or
circumstance that, individually or when taken together with all other such
changes, effects or circumstances that have occurred prior to the date of
determination of the occurrence of a Material Adverse Effect, has or is
reasonably likely to have, any material adverse effect (i) on the assets,
liabilities, operations, business, prospects, results of operations or
condition (financial or otherwise) of the Company or (ii) on the ability of the
Parent or the Company to consummate the transactions contemplated hereby.
3.2. Due Authorization and Execution.
The Company has the necessary corporate power and authority
to enter into this Agreement and all other Transaction Documents to which it is
a party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. All required corporate action
on the part of the Board of Directors and the shareholders of the Company has
been taken to authorize and approve the execution and delivery of this
Agreement and the other Transaction Documents, the consummation of the
transactions contemplated hereby and thereby, and the performance of the
Company's obligations hereunder and thereunder. This Agreement has been, and
the other Transaction Documents will be, duly and validly executed and
delivered by the Company and, assuming due execution and delivery by the other
parties hereto and thereto (other than the Parent), constitute valid and
binding obligations of the Company enforceable against it in accordance with
their terms.
3.3. Capitalization and Corporate Records of the Company.
The authorized capitalization of the Company consists of
50,000 shares of Common Stock, par value $1.00 per share, and 50,000 shares of
Preferred Stock, par value $25.00 per share. All of the Stock have been duly
authorized and validly issued and are fully
10
paid and nonassessable and were not issued in violation of the preemptive
rights of any shareholder. The Company has delivered or made available to the
Buyer true and complete copies of the Certificate of Incorporation and By-Laws
of the Company, as currently in effect, all stock issuance and transfer records
of the Company, and all written records reflecting proceedings of the Board of
Directors and shareholders of the Company, including actions taken by written
consent (such Certificate of Incorporation, By-Laws, stock records and written
records of corporate proceedings are herein referred to as the "Corporate
Records").
3.4. Dividends and Distributions.
Since April 1, 2002, there has not been, and prior to the
Closing, there will not be (a) any declaration, setting aside or payment of a
dividend or other distribution in respect of any of the Stock, or (b) any
direct or indirect redemption, purchase or other acquisition of any of the
capital stock or other securities of the Company or any action constituting a
constructive dividend or distribution to the shareholders of the Company.
3.5. Financial Statements.
Schedule 3.5 contains the following financial statements:
unaudited balance sheets and statements of income as of and for the fiscal
years ended March 31, 2000, March 31, 2001 and March 31, 2002 (the "Balance
Sheet Date") for the Company (collectively the "Year End Financial Statements")
and as of and for the nine-month period ended December 29, 2002 (the "Interim
Financial Statements" and, together with the Year End Financial Statements and
the Monthly Financial Statements, the "Financial Statements"). Except as set
forth on Schedule 3.5, the Financial Statements: (i) are correct and complete,
(ii) have been prepared in accordance with GAAP, consistently applied,
throughout the periods covered thereby, (iii) present fairly in accordance with
GAAP, consistently applied, the assets and liabilities and financial position
of the Company as of such dates and the results of operations of the Company
for such periods, (iv) except with respect to the intercompany accounts,
reflect accurately all assets, liabilities and results of operations of the
Company as if the Company were independent and not affiliated with any other
corporation, business or entity, and (v) are based upon information contained
in the books and records of the Company. The books of account of the Company
have been maintained in accordance with applicable laws, rules and regulations,
are complete and correct in all material respects, fairly reflect in reasonable
detail as of the dates shown thereon all items of income and expense, and all
assets, liabilities and accruals of the Company in accordance with GAAP,
consistently applied, and provided a fair and accurate basis for the
preparation of the Financial Statements.
3.6. No Undisclosed Liabilities.
Except as set forth in Schedule 3.6, there are no liabilities
or obligations of the Company of any nature, whether absolute, accrued,
contingent, determined, determinable or otherwise, and there is no existing
condition, situation, or set of circumstances that could reasonably be expected
to result in such a liability or obligation, other than (i) liabilities and
obligations set forth on the face of the balance sheet included in the Interim
Financial Statements and (ii) liabilities and obligations incurred in the
Ordinary Course of Business since December
11
29, 2002 which could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
3.7. Absence of Certain Changes.
Except as set forth in Schedule 3.7, since the Balance Sheet
Date, the business of the Company has been conducted only in the Ordinary
Course of Business and there has not been any event, occurrence, change,
development, condition or state of circumstances which has had or could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. Without limiting the generality of the foregoing, except as set
forth in Schedule 3.7, since the Balance Sheet Date, there has not occurred:
(i) any damage, destruction or loss, whether or not adequately covered by
insurance, involving any Asset in excess of $50,000; (ii) any adoption or
modification of any Benefit Plan made to, for or with any employees of the
Company; (iii) any change in compensation payable (including, without
limitation, commission, bonus or other direct or other remuneration) or to
become payable by the Company to its employees, directors, officers or agents
or change in benefits under any Benefit Plan, in each case other than changes
made in the Ordinary Course of Business; (iv) any sale or other disposition of
any Assets of the Company, other than sales or dispositions made in the
Ordinary Course of Business; (v) any creation or other incurrence of a Lien of
any kind upon any Assets of the Company except Permitted Liens; (vi) any change
in the method of allocation of expenses, liabilities or income between the
Company and any other subsidiaries, divisions or business units of the Company
or the Parent or any other change in the method of accounting or accounting
practices of the Company; (vii) any amendment, termination, waiver,
cancellation or release of any rights or claims of material value, including
rights or claims under any Material Contract, or any waiver or release of any
right or claim relating to the Company's business against any affiliate (as
defined in Rule 405 under the Securities Act, "affiliate") of any of the Parent
or the Company; (viii) any discharge or payment of any material obligation or
liability of the Company other than in the Ordinary Course of Business; (ix)
any incurrence of Indebtedness by the Company; (x) any capital expenditures or
commitments by the Company for any addition to property, plant or equipment
exceeding $20,000 individually or $100,000 in the aggregate; (xi) any material
cancellation or waiver of any debts to or any claims of the Company except in
the Ordinary Course of Business; (xii) any declaration, setting aside or
payment of any dividend or other distribution with respect to the Stock, or any
repurchase, redemption or other acquisition by the Company of any outstanding
shares of capital stock or other securities of the Company, or other payments
to any of the Company's stockholders in their capacity as such; (xiii) any
amendment of any material term of any outstanding security of the Company or
any recapitalization or reclassification of the capital stock of the Company;
(xiv) (A) any employment agreement with or for the benefit of any of the
Company's directors, officers, employees or agents; (B) any payment of any
pension, retirement allowance or other employee benefit not required to be paid
by any existing Benefit Plan; or (C) any commitment made by the Company to any
of the Company's directors, officers, employees or agents with respect to any
additional pension, profit sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation, group insurance, severance
pay, retirement or other Benefit Plan; (xv) any amendment or termination (other
than by completion thereof) of any Material Contract; (xvi) any change or
modification in any material respect to the Company's credit, collection or
payment policies, procedures or practices, including acceleration of
collections or receivables (whether or not past due), acceleration of payment
of payables or other liabilities or failure to
12
pay or delay in payment of payables or other liabilities; (xvii) any license or
sublicense of any rights under or with respect to any of the Company's
Intellectual Property; (xviii) any amendment to any Corporate Records of the
Company; (xix) any material Tax election (or revocation of a Tax election),
except in a manner consistent with past practice, any change in any method of
accounting for Tax purposes, or any settlement or compromise of any material
Tax liability with any Taxing Authority or agreement to an extension of a
statute of limitations; (xx) any acquisition or agreement to acquire by merging
or consolidating with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation, partnership, joint
venture, association or other business organization or division, operating unit
or product line thereof; or (xxi) any agreement to take any action described in
this Section 3.7. Ordinary Course of Business as used in this Agreement shall
mean the ordinary course of business consistent with past practice, including,
where applicable, with respect to quantity and frequency.
3.8. Customers and Suppliers.
(a) Schedule 3.8 sets forth a true and correct list of
(a) the names and addresses of the 20 largest customers of the Company in terms
of sales during each of the two fiscal years ended March 31, 2001 and 2002 and
for the nine-month period ended December 29, 2002 (the "Key Customers"),
setting forth the total sales to and total bookings for each such customer
during each such period and (b) the names and addresses of the 10 largest
suppliers of the Company in terms of purchases during the fiscal years ended
March 31, 2001 and 2002 and for the nine-month period ended December 29, 2002
(the "Key Suppliers"), setting forth for each such supplier the total purchases
from each such supplier during each such period. Except as set forth in
Schedule 3.8, since April 1, 2001, there has not been any material modification
to the terms of any contract with the Key Customers or Key Suppliers, including
material price decreases in the Company's outputs or material price increases
in the Company's inputs, and none of such contracts has been terminated. Except
as set forth in Schedule 3.8, there are no ongoing discussions with any of the
Key Customers or Key Suppliers in connection with any modification to the terms
of any contract with the Key Customers or Key Suppliers, including price
decreases in the Company's outputs or price increases in the Company's inputs,
or in connection with any termination of such contracts. To the knowledge of
the Parent and the Company, none of the Key Customers or Key Suppliers has any
intention to materially modify the terms of any current contract with the
Company or terminate any such contract or materially adversely change its
business or relationship with the Company. The consummation of the transactions
contemplated by this Agreement, with or without the giving of notice or the
lapse of time or both, will not result in the loss of any Key Customer or Key
Supplier or adversely affect the Company's relationship with any Key Customer
or Key Supplier; and, to the knowledge of the Parent and the Company, there is
no other event, condition or circumstance that has adversely affected or could
reasonably be expected to adversely affect the Company's relationship with any
Key Customer or Key Supplier. The Company has provided and delivered to the
Buyer true and correct copies of (i) all Material Contracts with Key Customers
and Key Suppliers and (ii) all documents, materials, correspondence,
communications, summaries and notes in any way relating to any proposed
material modification, termination, extension or renewal of any Material
Contracts with Key Customers or Key Suppliers. Schedule 3.8 sets forth, with
respect to each Material Contract with Key Customers or Key Suppliers, (w) the
name of the Key Customer or Key Supplier, (x) the expiration date of such
Material Contract, (y)
13
the status of such Material Contract (whether the contract is being modified,
terminated, extended or renewed) and (z) whether consent is required to assign
such Material Contract to the Buyer at Closing.
(b) By letter agreement dated December 9, 2002 between
The Boeing Company and the Company (the "Boeing Letter Agreement"), the term of
the Special Business Provisions and the General Terms Agreement (No.
WIC-31455-GTA-0599-3481), dated December 11, 1999, between the Company and The
Boeing Company (the "Boeing Contract") has been extended through December 31,
2003. By letter agreement dated December 19, 2002 between Xxxxxxxx
Aerostructures Group and the Company (the "Xxxx Letter Agreement"), the term of
the Purchase Agreement (No. 1NE001), dated January 23, 1995, between the
Company and Xxxx, Inc. (now operating as Xxxxxxxx Aerostructures Group) (the
"Xxxx Contract") has been extended through December 31, 2004. Each of the
Boeing Contract, as amended by the Boeing Letter Agreement, and the Xxxx
Contract, as amended by the Xxxx Letter Agreement, is legal, valid, binding and
enforceable against the Company (and, to the knowledge of the Company and the
Parent, the other party or parties thereto) in accordance with its terms.
3.9. Taxes.
(a) The Company and each Parent Group has timely filed
all Tax Returns that are required to be filed with respect to the activities of
the Company or the Parent Group, which Tax Returns are correct and complete in
all material respects.
(b) The Company and each Parent Group has paid or caused
to be paid within the time and in the manner prescribed by law all Taxes due
and payable by it. Neither the Company nor any Parent Group is subject to any
tax imposed on net income in any jurisdiction or by any Taxing Authority other
than with respect to Taxes shown on those Tax Returns described in subparagraph
(g) of this Section 3.9.
(c) Except as set out on Schedule 3.9, no Tax assessment
or deficiency which has not been paid has been made or proposed against the
Company or a Parent Group, nor are any of the Tax Returns of the Company or a
Parent Group now being or, to the best knowledge of the Parent and the Company,
threatened to be examined or audited, and no consent waiving or extending any
applicable statutes of limitations for the Tax Returns of the Company or a
Parent Group, or any Taxes required to be paid thereunder, has been filed.
(d) The Company has collected all sales, use and value
added Taxes required to be collected, and has remitted, or will remit on a
timely basis, such amounts to the appropriate governmental authorities and has
furnished properly completed exemption certificates for all exempt
transactions.
(e) The Company has properly withheld income and social
security or other similar Taxes and paid payroll Taxes with respect to all
persons who should properly be characterized as employees for federal, state or
local Tax purposes.
(f) None of the assets of the Company is subject to any
liens in respect of Taxes (other than for current Taxes not yet due and
payable).
14
(g) The Company has made available to the Buyer complete
and correct copies of all federal, state and local income or franchise Tax
Returns filed with respect to the Company for the three (3) most recent taxable
years for which such Tax Returns have been filed immediately preceding the date
of this Agreement, together with all related work papers, memoranda, opinions,
rulings or correspondence with Taxing Authorities prepared within the past
three years.
(h) No claim has been made by a Taxing Authority in a
jurisdiction where the Company or a Parent Group does not file Tax Returns that
the Company or a Parent Group is or may be subject to taxation by that
jurisdiction.
(i) The accruals for Taxes of the Company set forth on
the March 31, 2002 balance sheet and the December 29, 2002 balance sheet
included in the Financial Statements are adequate to cover all liabilities for
Taxes of the Company as of the date of such balance sheets, and nothing has
occurred subsequent to such dates to make any of such accruals inadequate,
provided that no representation is made with respect to the accruals for income
Taxes of the Company. All Taxes of the Company for periods after March 31, 2002
have been paid or reflected on the books of the Company.
(j) The Company has never (i) filed any consent
agreement under Section 341(f) of the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder (collectively,
the "Code"); (ii) been a member of an affiliated group of corporations (as
defined in Section 1504(a) of the Code) other than the group in which each of
the Parent and the Company is a member, or filed or been required to file or
been included in a combined, consolidated, or unitary federal, state, local or
foreign income tax return other than with the Parent; (iii) been the subject of
a Tax ruling that has continuing effect; (iv) been the subject of a closing
agreement with any Taxing Authority that has continuing effect; or (v) granted
a power of attorney with respect to any Tax matters that has continuing effect.
(k) The Company is not a party to any agreement,
contract, arrangement or plan that could result, individually or in the
aggregate, in the payment of any "excess parachute payments" within the meaning
of Section 280G of the Code.
(l) The Company does not have any liability for Taxes of
any other person (i) as a transferee or successor, or (ii) by contract.
(m) For purposes of this Agreement, the terms set out
below shall have the following meanings:
(i) "Parent Group" shall mean (A) in the case
of federal income Taxes, a consolidated group of corporations
of which the Company is a member and (B) in the case of other
Taxes, the applicable group of corporations including the
Company for which the Company may be held liable for the
Taxes of any other member of the group.
(ii) "Taxes" means any income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use,
ad valorem, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation,
15
premium, real property, personal property, or windfall profit
tax, custom duty or other tax, governmental fee or other like
assessment or charge of any kind whatsoever, addition to tax
or additional amount imposed by any Taxing Authority
responsible for the imposition of any such tax, together with
any interest and any penalty thereon.
(iii) "Tax Return" means any return, report,
information return, or amendments thereto, (including any
related or supporting information) filed or required to be
filed with any Taxing Authority in connection with the
determination of any Tax or the administration of any laws,
regulations or administrative requirements relating to any
Tax.
(iv) "Taxing Authority" means, with respect to
federal income taxes, the Internal Revenue Service, and, with
respect to any other Taxes, the applicable governmental body
with the authority to audit and collect such Taxes.
3.10. Litigation.
Except as set forth in Schedule 3.10, there is no action,
suit, proceeding or investigation pending or, to the Company's or the Parent's
knowledge, threatened against or involving the Company, its business or the
Assets, or against or involving the Parent that relate to or impact the
Company, its business or the Assets, at law or in equity, before any federal,
state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality; nor does the Company or the Parent know of any
reasonably likely basis for any such action, suit, proceeding or investigation,
the result of which could reasonably be expected to have a Material Adverse
Effect; nor is there any judgment, decree, injunction, rule or order of any
public body or governmental authority outstanding against the Company, its
business or the Assets, or against the Parent that relate to or impact the
Company, its business or the Assets. None of the actions, suits, proceedings,
investigations, judgments, decrees, injunctions, rules or order listed on
Schedule 3.10 has had or could reasonably be expected to have a Material
Adverse Effect.
3.11. Consents, Violations and Authorizations.
(a) Except as set forth in Schedule 3.11(a), the Company
is not a party to or bound by any mortgage, indenture, Lien, deed of trust,
lease, agreement, permit, concession, franchise, license, instrument, order,
judgment or decree, which would require the consent of another Person to the
execution, delivery and performance of this Agreement or the other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby.
(b) Neither the execution, delivery and performance of
this Agreement or the other Transaction Documents by the Company, nor the
consummation of the transactions contemplated hereby or thereby will:
(i) violate any provision of the Certificate of
Incorporation or Bylaws of the Company;
16
(ii) conflict with, or result (immediately or
upon the giving of notice or the passage of time or both) in
any violation of or default under, or give rise to a right of
modification, termination, cancellation or acceleration of
any obligation, loss of a benefit under, any mortgage,
indenture, lease, instrument, permit, franchise, license or
other agreement which the Company or the Assets are parties
to, beneficiaries of, or bound by, or, assuming compliance
with the HSR Act, violate any judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the
Company or the Assets, other than such conflicts, violations
or defaults or modifications, terminations, cancellations or
accelerations which, individually or in the aggregate, would
not have a Material Adverse Effect; or
(iii) result in an imposition of any Lien (other
than Permitted Liens).
(c) Other than in connection with or in compliance with
the provisions of the HSR Act, no notice to, declaration, filing or
registration with, or authorization, consent or approval of, or permit from,
any domestic or foreign governmental or regulatory body or authority, is
required to be made or obtained by the Parent or the Company in connection with
the execution, delivery and performance of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby and thereby.
3.12. Agreements, Contracts, Commitments and Leases.
Except as set forth in Schedule 3.12, the Company is not a
party to any written or, to the best of its knowledge, oral:
(a) agreement, contract or commitment with any present
or former employee or consultant or for the employment of any person, including
any consultant;
(b) agreement, contract or commitment for the purchase
of, or payment for, materials, commodities, goods, supplies, products or
services, or other real, personal or mixed property, involving annual payments
of $50,000 or more;
(c) agreement, contract or commitment to sell or supply
materials, commodities, goods, supplies, products or services, or other real,
personal or mixed property, involving annual payments of $50,000 or more;
(d) agreement, contract or commitment not otherwise
required to be listed in Schedule 3.12 and continuing over a period of more
than six months from the date hereof or exceeding $50,000 in value;
(e) distribution, dealer or sales agency agreement,
contract or commitment;
(f) lease under which the Company is either lessor or
lessee of real or personal property;
(g) note, debenture, bond, equipment trust agreement,
letter of credit agreement, security agreement, loan agreement or other
contract or commitment for the
17
borrowing or lending of money or agreement or arrangement for a line of credit
or guarantee, pledge or undertaking of the indebtedness of any other Person;
(h) agreement, contract or commitment for any capital
expenditure or leasehold improvement in excess of $20,000 individually or
$100,000 in the aggregate;
(i) (A) agreement, contract or commitment with any third
party limiting or restraining the Company or any successor thereto from
engaging or competing in any manner or in any line of business or in any
geographic area; or (B) agreement, contract or commitment with any third party
limiting or restraining any of the Company's directors, officers or employees
within the scope of their responsibilities on behalf of the Company, from
engaging or competing in any manner or in any line of business or in any
geographic area;
(j) license or similar agreement with respect to any
tangible or intangible property, including without limitation Intellectual
Property licensed by or to the Company;
(k) material agreement, contract or commitment not made
in the Ordinary Course of Business;
(l) agreement, contract or commitment concerning any
partnership, joint venture, joint development or other cooperation arrangement;
(m) confidentiality and non-disclosure agreement,
contract or commitment (other than standard non-disclosure forms signed by
employees generally, copies of which have been provided to the Buyer);
(n) agreement, contract or commitment under which the
Company has advanced or loaned funds to any Person, including any of the
employees of the Company (other than contracts solely relating to expenses
advanced to employees in the Ordinary Course of Business);
(o) agreement, contract or commitment which relate to
inventions by employees of the Company (other than standard nondisclosure forms
signed by employees generally, copies of which have been provided to the
Buyer);
(p) agreement, contract or commitment relating to Tax or
with any governmental entity;
(q) agreement, contract or commitment between or among
the Company, on the one hand, and the Parent or any affiliate of the Company or
the Parent or any director, officer or employee of the Company or the Parent,
on the other hand; and
(r) agreement, contract or commitment for the purchase
or sale of any business, corporation, partnership, joint venture, association
or other business organization or any division, material Assets, operating unit
or product line thereof.
Schedule 3.12 also sets forth (i) all written or oral
agreements, contracts or commitments pursuant to which the Parent or an
affiliate of the Parent provides materials,
18
commodities, goods, supplies, products or services to the Company and (ii) all
written or oral agreements, contracts or commitments to which the Parent or an
affiliate of the Parent is a party that relate to or impact the Company, its
business or the Assets. The Company has made available to the Buyer true and
complete copies of all written agreements, contracts or commitments identified
in Schedules 3.9, 3.12, 3.16 and 3.25, together with a complete description of
any oral agreement, contract or commitment identified in Schedules 3.9, 3.12,
3.16 and 3.25 (each a "Material Contract").
Except as otherwise noted in Schedule 3.12, each Material
Contract is legal, valid, binding and enforceable against the Company (and, to
the knowledge of the Company and the Parent, the other party or parties
thereto) in accordance with its terms; the Company is, and to the Company's and
the Parent's knowledge, all other parties thereto are, in compliance with the
provisions thereof in all material respects; the Company is not, and to the
Company's and the Parent's knowledge, no other party thereto is, in default in
the performance, observance or fulfillment of any material obligation, covenant
or condition contained therein; and no event has occurred which with or without
the giving of notice or lapse of time, or both, would constitute a default
thereunder. The consummation of the transactions contemplated hereby, with or
without the giving of notice or the lapse of time or both, will not give rise
to a right of modification, termination, or amendment, or a loss of a benefit
under, any Material Contract. No party to any Material Contract has, within the
twenty-four months preceding the date hereof, given the Company or the Parent
written notice repudiating any provision thereof or indicating an intention to
exercise any right of cancellation, termination or non-renewal thereof.
Schedule 3.12 specifically identifies as such all Material Contracts pursuant
to which the Company has granted exclusive rights with respect to the
distribution, sale or other use of any products, services, the Company's
Intellectual Property or other Assets.
3.13. Assets.
All buildings, structures, equipment and other material items
of tangible property and assets included in the Assets of the Company,
including fixtures, are in good operating condition and repair, subject to
normal wear and maintenance, are useable in the Ordinary Course of Business and
conform in all material respects to all applicable laws, ordinances, codes,
rules, and regulations relating to their use and operation other than as set
forth in Schedule 3.13. Except as set forth on Schedule 3.13, the Company has
good and marketable title to, or a valid leasehold interest in, all of the
Assets of the Company, free and clear of all Liens other than Permitted Liens
and Liens in favor of the Senior Lenders and the Subordinated Lenders, which
Liens shall be released on or prior to the Closing. No Person other than the
Company owns the Assets situated on the premises of the Company or necessary to
the operation of its business, except for items leased pursuant to leases
disclosed in Schedule 3.13 and for items of immaterial value. All leases
relating to the Assets of the Company are in good standing and are valid,
binding and enforceable in accordance with their respective terms and there
does not exist under any such lease any default or any event which with notice
or lapse of time or both would constitute a default. The Assets constitute all
of the assets used in or necessary to conduct the Company's business in
accordance with past practices and as presently conducted.
19
3.14. Inventory.
Except as set forth on Schedule 3.14, all inventory of the
Company, including without limitation raw materials, work in process and
finished goods reflected in the Financial Statements or acquired since the
Balance Sheet Date, was acquired and has been maintained in the Ordinary Course
of Business; is of good and merchantable quality; is not subject to any
write-down or write-off not consistent with past practice; is of a quality and
quantity readily useable or saleable in the Ordinary Course of Business within
a reasonable period of time; and are in quantities sufficient for the Ordinary
Course of Business of the Company. Except as set forth on Schedule 3.14, all
such inventories are owned by the Company free and clear of any and all Liens.
3.15. Accounts Receivable.
Except as set forth on Schedule 3.15, all of the accounts
receivable of the Company, including those reflected in the Financial
Statements, and all accounts receivable of the Company which have arisen since
the Balance Sheet Date (except such accounts receivable as have been collected
since the Balance Sheet Date), reflect valid obligations due to the Company for
the payment of goods or services provided by the Company and arose out of
arm's-length transactions; there are no rights of set-off or claims against
such accounts receivable possessed by the account debtors of the Company; and
such accounts receivable are reasonably anticipated to be paid in the normal
course less any recorded allowance for collection losses. The allowance for
collection losses reflected in the Financial Statements has been determined
using GAAP, consistently applied.
3.16. Intellectual Property.
(a) Schedule 3.16 (a) contains a complete and accurate
list of all foreign and domestic patents and patent applications, trademarks,
service marks, trade names, material copyrights and foreign and domestic
registrations and applications for registration of copyrights, trademarks,
service marks, trade names, trade dress and domain names used or held for use
by the Company in the conduct of its business.
(b) Schedule 3.16 (b) contains a complete and accurate
list of all material licenses, sublicenses, consents and other agreements
(whether written or otherwise) (i) pertaining to any patents and patent
applications, trademarks, service marks, trade names, trade dress, copyrights,
trade secrets, inventions and technology (whether or not patentable), know-how
or other confidential and proprietary information, domain names, computer
software (other than "shrink wrap" and similar standard end-user licenses for
widely available, commercial software), or other Intellectual Property rights
used by the Company in the conduct of its business, and (ii) by which the
Company licenses or otherwise authorizes a third party to use any of the
Company's Intellectual Property. The consummation of the transactions
contemplated under this Agreement, with or without the giving of notice or the
lapse of time or both, do not and will not trigger any provision under any
license agreement to permit the termination of such agreement by the licensor,
permit the renegotiation of any terms, including without limitation the amount
of any commission, royalty or other fee(s) payable under such agreement,
restrict, in any material
20
way, the Buyer's use of such Intellectual Property in the business subsequent
to the Closing Date or trigger any rights in the Company's Intellectual
Property.
(c) Except as set forth in Schedule 3.16(c), the
business operations of the Company as currently conducted do not infringe,
dilute, misappropriate, or otherwise violate the intellectual property rights
of any third party in any material respect, or, to the knowledge of the Parent
and the Company, constitute unfair competition or trade practices under the
laws of any jurisdiction. Except as set forth in Schedule 3.16(c), neither the
Parent nor the Company has received any notice asserting, and neither the
Parent nor the Company has knowledge of any claim being asserted by any third
party, that the operations of the Company infringe, misappropriate or otherwise
violate the intellectual property rights of such third party. Except as set
forth in Schedule 3.16(c), the Company has not asserted claims that a third
party has infringed any Intellectual Property owned by the Company.
(d) Except as set forth in Schedule 3.16(d), all of the
patents, trademark and service xxxx registrations, copyright registrations, and
domain name registrations indicated in Schedule 3.16(a) are in full force, are
held of record in the name of the Company free and clear of all Liens, are not
the subject of any cancellation or reexamination proceeding or any other
proceeding challenging their extent or validity.
(e) Both the Parent and the Company have taken all
appropriate steps that are required or necessary to protect the Company's
rights in all material trade secrets, know-how or other confidential or
proprietary information of the Company or provided by any Person to the
Company, including without limitation, limiting the disclosure and use of such
information pursuant to appropriate confidentiality agreement and taking
reasonable steps to ensure that such information is not improperly disclosed by
past or present employees or consultants.
(f) Except as set forth in 3.16(f), (i) the Company owns
or possesses the right to use, including without limitation the right to modify
and create derivative works of, the design, content, and all Intellectual
Property rights associated with and contained in the Company's web site
(xxxx://xxx.xxxxxxxx.xxx) and (ii) the Company owns all right, title and
interest in the design and content of the web site free and clear of all
claims, including without limitation claims or rights of joint owners and
employees, agents, consultants or other parties involved in the development,
creation, maintenance or enhancement of the web site.
3.17. Insurance.
The Parent maintains in effect insurance covering the
Company, the Assets, and any liabilities relating thereto in the amounts and
coverages set out in Schedule 3.17. Such insurance provides, and during its
term has provided, coverage to the extent and in the manner as may be or may
have been required by law and by any and all Material Contracts. The Company is
not in material default under any of such policies or binders, and since July
28, 1998, the Company has not failed to give any notice or to present any
material claim under any such policy or binder in a due and timely fashion.
Since July 28, 1998, no insurer has refused, denied or disputed coverage of any
material claim made thereunder. Except as set forth on Schedule 3.17, no
insurer has advised the Parent or the Company in writing that it intends to
reduce coverage or
21
increase any premium in any material respect or fail to renew any existing
policy or binder. All such policies and binders are in full force and effect.
3.18. Compliance with Law.
The Company (i) is, except as set forth in Schedule 3.22, in
compliance in all material respects with all applicable domestic or foreign
laws, ordinances, regulations and orders, including without limitation any
applicable building, zoning, health, sanitation, safety, labor relations or
similar laws, ordinances, regulations or orders, (ii) has not received any
complaint or notice of violation from any governmental authority in the past
three (3) years which has not been addressed by the Company and, to the
Company's and the Parent's knowledge, none is threatened alleging that the
Company has violated any such law, ordinance, regulation or order, and (iii)
has not received any notice from any governmental authority of any pending
proceeding to take all or any part of the Company's real properties (whether
leased or owned) by condemnation or right of eminent domain and, to the
Company's and the Parent's knowledge, no such proceeding is threatened. The
Company owns and possesses all licenses, permits and other authorizations
required by law, each of which is currently valid and in full force and effect
and necessary to carry on the business of the Company as it is presently
conducted. Such licenses, permits and other authorizations are listed on
Schedule 3.18. Except as disclosed on Schedule 3.18, to the knowledge of the
Parent and the Company, as of the date of this Agreement, no competitor of the
Company has obtained a Parts Manufacturer Approval (PMA) from the Federal
Aviation Administration of the Department of Transportation for any product
that competes with any product currently offered by the Company with annual
sales volume in excess of $5,000.
3.19. Employee Benefit Plans.
(a) Schedule 3.19(a) sets forth a true and complete list
of all employee benefit plans, as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974 ("ERISA"), and all other fringe benefit
plans (of whatever type) maintained or contributed to by the Company, or with
respect to which the Company has any liability (collectively, "Benefit Plans")
for the benefit of any of its employees, directors, and consultants.
(b) Each Benefit Plan complies in all material respects
currently, and has complied in all material respects in the past, with all
applicable law.
(c) The Company does not maintain any plan that provides
(or will provide) medical or death benefits to one or more former employees
(including retirees), other than benefits that are required to be provided
pursuant to Section 4980B of the Code or state law continuation coverage or
conversion rights and benefits disclosed in Schedule 3.12.
(d) The Company does not maintain and neither
contributes nor is required to contribute to any Benefit Plan that is subject
to Title IV of ERISA or Section 412 of the Code, or that is a "Multiemployer
Plan" (as defined in Section 4001(a)(3) of ERISA). In addition, neither the
Parent nor any other employer (an "ERISA Affiliate") that is, or at any
relevant time was, together with the Company, treated as a "single employer"
under section 414(b), 414(c) or 414(m) of the Code has:
22
(i) incurred any material liability to the
Pension Benefit Guaranty Corporation ("PBGC") or otherwise
with respect to any employee pension benefit plan (as defined
by Section 3(3) of ERISA), subject to Title IV of ERISA,
other than for the payment of premiums, all of which have
been paid when due, including, without limitation, any
liability under Section 4062, 4063 or 4064 of ERISA; or
(ii) been required to contribute to or incurred
any withdrawal liability, within the meaning of Section 4201
of ERISA to any multiemployer plan, as defined by Section
3(37) of ERISA, including any potential withdrawal liability
arising from a transaction described in Section 4204 of
ERISA,
that could reasonably be expected to be or become a liability
of the Buyer or to subject any Asset to any Lien.
(e) There are no (i) investigations, proceedings or
lawsuits, either currently in progress or threatened, relating to any Benefit
Plan, by any administrative agency, whether local, state or federal or (ii)
pending or threatened lawsuits or other claims (other than routine claims for
benefits under the plan and qualified domestic relations orders) against or
involving (A) any Benefit Plan or (B) any fiduciary of such plan (within the
meaning of Section 3(21)(A) of ERISA) brought on behalf of any participant,
beneficiary, or fiduciary thereunder, nor is there any reasonable basis for any
such claim, other than those that could not reasonably be expected to be or
become a liability of the Buyer or to subject any Asset to any Lien.
3.20. Labor Matters.
The Company is not a party to any collective bargaining
agreement or other labor contract. The Company does not know of any activity or
proceedings of any labor union to organize any employees of the Company, or of
any strikes, slowdowns, work stoppages, lockouts or threats thereof, by or with
respect to any of such employees. There is no unfair labor practice charge or
complaint pending or, to the knowledge of the Parent and the Company,
threatened that relates to the Company. Since July 28, 1998, there have been no
labor troubles involving employees of the Company nor are there any current
union representation questions involving such employees. The Company is in
compliance in all material respects with all requirements of applicable
domestic and foreign laws and regulations governing employee relations,
including without limitation, anti-discrimination laws, wage and hour laws,
labor relations laws and occupational safety and health laws, and no suits,
charges or administrative proceedings relating to any such law or regulation
are pending or, to the Company's and the Parent's knowledge, have been
threatened.
3.21. Fees, Commissions and Expenses.
The Company is not liable for or obligated to pay any
brokerage commissions, finders' fees or similar compensation in connection with
the transactions contemplated by this Agreement.
23
3.22. Environmental Laws and Regulations.
(a) Definitions. The following terms, when used in this
Section 3.22, shall have the following meanings:
(i) "Company" for purposes of this Section 3.22
includes (A) all persons directly or indirectly controlled by the Company, (B)
all partnerships, joint ventures and other entities or organizations in which
the Company was at any time or is a partner, joint venturer, member or
participant, and (C) all predecessor or former corporations, partnerships,
joint ventures, organizations, businesses or other entities, whether in
existence as of the date hereof or at any time prior to the date hereof, the
assets or obligations of which have been acquired or assumed by the Company or
to which the Company has succeeded;
(ii) "Release" means any release, threatened
release, discharge, dumping, injection, deposit, spill, leak, presence in an
uncontained state, migration, leeching, or emission into the environment or the
workplace of any Hazardous Waste, and otherwise as defined in any Environmental
Law;
(iii) "Environmental Conditions" mean the Release
of any Hazardous Waste (whether or not such Release constitutes or at the time
thereof constituted a violation of any Environmental Law) as a result of which
the Company has or may become liable to any Authority or Person or by reason of
which the business or any of the assets of the Company may suffer or be
subjected to any lien or liability;
(iv) "Environmental Law" means any foreign,
federal, state, district, local or municipal, law, statute, regulation,
ordinance, order, judgment, decree, common law theory or reported decision of
any state or federal court, in any case relating to pollution, remediation or
protection of the environment, or health and safety matters, including without
limitation any such laws or other matters relating to (i) releases or
threatened releases of materials constituting Hazardous Wastes into the
environment (including, without limitation, ambient air, surface water, land
surface or subsurface strata) or into any building or structure; (ii) the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Wastes; or (iii) employee protection from
exposure to Hazardous Wastes.
(v) "Environmental Permits" means all licenses,
permits, certificates, approvals and other governmental authorizations,
agreements with local wastewater treatment facilities, or other enforceable
commitments under Environmental Laws or otherwise relating to Hazardous Wastes.
(vi) "Hazardous Wastes" means PCBs, petroleum,
petroleum-based products and any materials defined as hazardous substances,
hazardous materials, hazardous wastes, toxic substances, or solid wastes under
any Environmental Law, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, the
Resource Conservation and Recovery Act, as amended, and the Hazardous Materials
Transportation Act.
(vii) "Site" means any real property now or
previously owned, leased or operated by the Company or any predecessor thereof.
24
(viii) "Remediation" means any and all
investigative, mitigation, containment, removal, monitoring, and cleanup
activity consistent with and/or required by the provisions of Section 22a-
133k-1, et seq., of the Regulations of Connecticut State Agencies, as they may
be amended from time to time through the date hereof or other Environmental
Laws.
(b) Compliance. Except as specifically disclosed in
Schedule 3.22(b), the Company and each Site is and has been in compliance with
all, and the Company has no liability under any, Environmental Laws.
(c) Releases and Environmental Conditions. Except as
specifically disclosed in Schedule 3.22(c), no Release has occurred at any
Site, and there are no present or past Environmental Conditions in any way
relating to the Company, any Site, or the business of the Company.
(d) Environmental Reports. The Company has provided the
Buyer with copies of all environmental studies, reports and audits, including
asbestos surveys, in its possession relating to any Environmental Condition of
the Company and the compliance with Environmental Laws.
(e) Cost Estimates. Schedule 3.22(e) sets forth, to the
extent prepared by or on behalf of the Company, cost estimates and a time
schedule for completion of all Remediation necessary to address the soil and
groundwater contamination identified in the reports referred to in subsection
(d) above and to obtain a covenant not to xxx under the Connecticut General
Statutes.
(f) Potentially Responsible Party. Except as
specifically disclosed in Schedule 3.22(f), the Company has not been identified
as a potentially responsible party with respect to any federal, state, or local
environmental clean-up site or with respect to investigations or corrective
actions under any Environmental Law.
(g) Notice of Violation. Except as specifically
disclosed in Schedule 3.22(g), the Company has not received notice of any
alleged, actual or threatened, inquiry, investigation or administrative or
judicial proceeding regarding (x) any use, handling, storage, treatment,
generation, manufacture ("Management"), or Release by the Company or at any
Site or other location for which the Company could be liable, or (y) any
violation of or non-compliance by the Company with the provisions of any
Environmental Law or Environmental Permit. Except as so disclosed, the Company
has not received any notice of any other claim, demand or action by any
governmental, regulatory or administrative body, agency or authority or any
person alleging any actual or threatened injury or damage to any person,
property, or the environment arising from or relating to any Release by the
Company of any Hazardous Waste or violation by the Company of any Environmental
Law.
(h) There are no consent decrees, consent orders,
judgments, judicial or administrative orders, or liens, by any governmental
authority, or use or, except as specifically disclosed in Schedule 3.22(h),
deed restrictions affecting any Site relating to Environmental Conditions, any
of which regulate, obligate or bind the Company, nor is the Company aware of
any facts that would lead to such.
25
3.23. Real Property.
Schedule 3.23 lists all Owned Real Property. The Company is
in actual, exclusive possession of all of its real property and has good,
marketable and indefeasible fee simple title to its real property set forth on
Schedule 3.23, free and clear of all Liens, tenancies, easements and
encroachments (from or onto property) except for (a) Liens disclosed on
Schedule 3.23 and (b) Permitted Liens. The Company has delivered to the Buyer
complete and correct copies of all existing title insurance policies held by
the Company, and all surveys possessed by the Company with respect to the real
property listed on Schedule 3.23 (and, to the knowledge of the Company and the
Parent, such surveys are accurate in all material respects).
3.24. Product Warranties.
There are no product warranties applicable to products sold
by the Company except the express warranties which are set forth in written
agreements between the Company and its customers and such warranties as are
imposed by applicable law. Except as set forth in Schedule 3.24, no events have
occurred since the Balance Sheet Date or facts exist which would result in a
material increase in product warranty expenses or claims. Each of the products
produced or sold by the Company is, and at all times up to and including the
sale thereof, has been, (i) in compliance in all material respects with all
applicable federal, state, local and foreign laws and regulations, (ii)
manufactured in conformance with the agreed specifications and drawings
applicable to such product and (iii) fit for the ordinary purposes for which it
is intended to be used. Each of such products bears such warnings and, when
delivered, instructions, as are required by applicable laws, rules and
regulations and as is consistent with current industry practice.
3.25. Transactions with Affiliates; Intercompany Accounts.
(a) Except as set forth in Schedule 3.25(a), neither the
Parent nor any affiliate of the Company or the Parent or any director, officer
or employee of the Company or the Parent is involved in any arrangement or
transaction with the Company (whether written or oral) (none of which shall
survive the Closing, except as set forth in Schedule 3.25(a)), or owns any
property or right, tangible or intangible, which is used by the Company or is
necessary for the conduct by the Company of its business.
(b) Except as set forth in Schedule 3.25(b), as of
December 29, 2002, there were no intercompany receivables or payables between
the Parent or any affiliate of the Parent, on the one hand, and the Company, on
the other hand.
(c) Schedule 3.25(c) sets forth (i) the assets,
liabilities, income and expenses of the Parent (and the amounts thereof)
allocated to the Company and (ii) the assets, liabilities, income and expenses
of the Company (and the amounts thereof) allocated to the Parent.
(d) Schedule 3.25(d) sets forth (i) all written or oral
agreements, contracts or commitments pursuant to which the Parent or an
affiliate of the Parent provides materials, commodities, goods, supplies,
products or services to the Company (and the amounts related thereto) (the
"Parent-to-Company Contracts") and (ii) all written or oral agreements,
contracts or commitments pursuant to which the Company provides materials,
commodities, goods, supplies,
26
products or services to the Parent or an affiliate of the Parent (and the
amounts related thereto) (the "Company-to-Parent Contracts"). Other than
pursuant to the Parent-to-Company Contracts and the Company-to-Parent Contracts
set forth in Schedule 3.25(d), neither the Parent nor an affiliate of the Parent
provides to the Company, and the Company does not provide to the Parent or an
affiliate of the Parent, any materials, commodities, goods, supplies, products
or services.
3.26. Indebtedness.
Except as set forth in the balance sheet contained in the
Interim Financial Statements, the Company has no long-term liabilities or
Indebtedness for borrowed money or for the deferred purchase price of property
or services (other than trade payables and other accrued current liabilities
incurred in the Ordinary Course of Business), or capital lease obligations,
conditional sale or other title retention agreements. Except as set forth on
Section 3.26, the Company is not a guarantor or otherwise liable for any
liability or obligation of any other Person.
"Indebtedness" shall mean, with respect to any Person, (a)
all indebtedness of such Person, whether or not contingent, for borrowed money,
(b) all obligations of such Person for the deferred purchase price of property
or services, (c) all obligations of such Person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, (e) all obligations of such Person
as lessee under leases that have been or should be, in accordance with GAAP,
recorded as capital leases, (f) all obligations, contingent or otherwise, of
such Person under acceptance, letter of credit or similar facilities, (g) all
obligations of such Person to purchase, redeem, retire or otherwise acquire for
value any capital stock of such Person or any warrants, rights or options to
acquire such capital stock, valued, in the case of redeemable preferred stock,
at the greater of its voluntary or involuntary liquidation preference plus
accrued and unpaid accrued and unpaid dividends, (h) all Indebtedness of others
referred to in clauses (a) through (f) above guaranteed directly or indirectly
in any manner by such Person, or in effect guaranteed directly or indirectly by
such Person, and (i) all Indebtedness referred to in clauses (a) through (f)
above secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Encumbrance on property
(including, without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for the
payment of such Indebtedness.
3.27. No Illegal Payments, etc.
Neither the Parent nor the Company, nor any of their
respective Representatives, has (a) directly or indirectly given or agreed to
give any gift, contribution, payment or similar benefit to any distributor,
supplier, customer, governmental official or employee or other Person who was,
is or may be in a position to help or hinder the Company which is prohibited by
applicable law, or (b) established or maintained any unrecorded fund or asset
or made any false entries on any books or records.
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3.28. Books and Records.
The records of the Company accurately reflect the record and
registered ownership of all of the Stock. The other books and records of the
Company, including financial records, minute books, books of account and
Corporate Records, are complete and accurate in all material respects and have
been maintained in accordance with sound business practice and, in all material
respects, laws and other requirements.
3.29. Due Consideration.
The sale of the Assets pursuant to this Agreement is not
being made with the actual intent to hinder, delay or defraud any Person to
which the Parent or the Company is indebted or any Person to which the Parent
or the Company may become indebted. Each of the Parent and the Company has
valid business reasons for selling the Assets. The Parent and the Company,
after an auction process for the Company during which offering memoranda and
due diligence materials were provided to potential buyers and bids were
received, and such bids were compared and evaluated, have concluded that the
Purchase Price constitutes reasonably equivalent value for the Assets. The
Parent and the Company have delivered to the Buyer those resolutions of the
Boards of Directors of the Parent and the Company that conclude that the
Purchase Price constitutes reasonably equivalent value for the Assets. Neither
the Parent nor the Company is engaged in business or a transaction, or is about
to engage in business or a transaction, for which any property remaining with
the Parent or the Company, as the case may be, is or will be unreasonably small
capital, and neither the Parent nor the Company intends to incur, and has not
incurred, debts beyond its ability to pay as they mature or as the Parent or
the Company, as the case may be, expects to otherwise come due and payable. The
Boards of Directors of the Parent and the Company have not authorized, and do
not intend to authorize, any bankruptcy, reorganization, debt arrangement or
other proceeding under any bankruptcy or insolvency law, nor have the Boards of
Directors authorized the officers of the Parent or the Company to take any
action with respect to any bankruptcy, reorganization, debt arrangement or
other proceeding under any bankruptcy or insolvency law.
3.30. No Material Omission.
Neither this Agreement nor the schedules hereto, nor any
other Transaction Document, contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statement contained
therein or herein not misleading.
3.31. Exclusivity of Representations.
The representations and warranties made by either or both the
Parent and the Company in this Agreement or any other Transaction Document are
in lieu of (and are exclusive of) any other representations and warranties by
the Parent and/or the Company, or any officer, employee or agent of the Parent
or the Company, express or implied. The Parent and the Company each hereby
disclaim any such other representations or warranties (express or implied),
notwithstanding any delivery or disclosure of any documents or other
information (other than the Transaction Documents) to the Buyer, its officers,
directors, employees, agents or representatives or any other person.
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ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to and agrees with the
Company and the Parent that as of the date hereof and as of the Closing Date:
4.1. Due Authorization and Execution.
The Buyer has the necessary corporate power and authority to
enter into this Agreement and the other Transaction Documents, to consummate
the transactions contemplated hereby and thereby and to perform its obligations
hereunder and thereunder. The Board of Directors of the Buyer has duly
authorized and approved the execution and delivery of this Agreement and the
other Transaction Documents, the consummation of the transactions contemplated
hereby and thereby and the performance of the Buyer's obligations hereunder and
thereunder. No other corporate proceedings on the part of the Buyer are
necessary to authorize this Agreement and the consummation of such
transactions. This Agreement has been, and the other Transaction Documents will
be, duly and validly executed and delivered by the Buyer and, assuming due
execution and delivery by the parties hereto and thereto, constitute valid and
binding obligations of the Buyer enforceable against it in accordance with
their terms.
4.2. Organization of the Buyer.
The Buyer is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware and has
full power and authority to conduct its business as it is presently being
conducted and to own and lease its properties and assets.
4.3. Consents, Violations and Authorizations.
(a) Neither the execution, delivery and performance of
this Agreement or the other Transaction Documents by the Buyer, nor the
consummation of the transactions contemplated hereby or thereby will:
(i) violate any provision of the Certificate of
Incorporation or Bylaws of the Buyer; or
(ii) assuming compliance with the HSR Act,
violate any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Buyer or its assets,
other than such violations which, individually or in the
aggregate, would not have a material adverse effect on the
Buyer.
(b) Other than in connection with or in compliance with
the provisions of the HSR Act, no authorization, consent or approval of, or
filing with, any public body or governmental authority is necessary for the
consummation by the Buyer of the transactions contemplated by this Agreement
and the other Transaction Documents.
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4.4. Fees, Commissions and Expenses.
The Buyer has paid or shall duly pay any brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement which it has contracted to pay.
ARTICLE V - CONDUCT OF BUSINESS PENDING CLOSING
From the date of this Agreement until the Closing, each of
the Parent and the Company covenants that, except as otherwise consented to in
writing by the Buyer (which consent shall not be unreasonably withheld with
respect to Section 5.7 and Section 5.12 to the extent it relates to an action
contemplated by Section 5.7), it shall either satisfy or cause to be satisfied
the following:
5.1. Ordinary Course.
The Company shall, and the Parent shall cause the Company to,
carry on its business in the ordinary course in substantially the same manner
as heretofore conducted and shall use its best efforts to (i) preserve intact
the business organization of the Company, (ii) retain the services of the
present officers, employees and agents of the Company, (iii) maintain good
business relationships with third parties having business dealings with the
Company including, without limitation, the Key Customers and Key Suppliers,
(iv) maintain in effect insurance covering the Company, the Assets, and any
liabilities relating thereto in the amounts and coverages set out in Schedule
3.17 and (v) maintain all existing permits.
5.2. No Acquisitions.
The Company shall not, and the Parent shall cause the Company
not to, acquire or agree to acquire a material portion of the assets, capital
stock or ownership interest of any business or any corporation, partnership,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets which are material in the aggregate to
its business.
5.3. No Dispositions.
The Company shall not, and the Parent shall cause the Company
not to, sell, lease or otherwise dispose of any of the Assets except in the
Ordinary Course of Business.
5.4. Employees.
The Company shall not, and the Parent shall cause the Company
not to, grant any material increase in the compensation payable to any of its
Representatives or any material benefit increase in any Benefit Plan, except
for increases made in the Ordinary Course of Business and increases arising
from Material Contracts.
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5.5. Mortgages, Liens and Other Encumbrances.
The Company shall not, and the Parent shall cause the Company
not to, create, assume or incur any Lien of any kind other than immaterial
Liens incurred in the Ordinary Course of Business and Permitted Liens.
5.6. Material Agreements.
The Company shall not, and the Parent shall cause the Company
not to, (i) enter into, amend, modify, supplement or terminate any written or
oral agreement, contract or commitment to provide materials, commodities,
goods, supplies, products or services (collectively, the "Customer Contracts"),
involving annual payments of $100,000 or more, or (ii) enter into, amend,
modify, supplement or terminate any Customer Contracts involving annual
payments of less than $100,000 that is outside the Ordinary Course of Business,
or (iii) enter into, amend, modify, supplement or terminate any agreement,
contract or commitment, other than the Customer Contracts, except in the
Ordinary Course of Business.
5.7. Capital Expenditures.
The Company shall not, and the Parent shall cause the Company
not to, make or commit to any capital expenditures or commitments exceeding
$20,000 individually or $100,000 in the aggregate.
5.8. Distributions.
The Company shall not, and the Parent shall cause the Company
not to, declare or pay any dividend or other distribution to its shareholders.
5.9. No Stock Issuances.
The Company shall not, and the Parent shall cause the Company
not to, issue, or agree to issue, any shares of its capital stock or other
securities or any rights, options, warrants, subscription rights, conversion
rights or other agreements or commitments for the purchase or acquisition of
any shares of its capital stock or other securities.
5.10. No Charter Amendments.
The Company shall not, and the Parent shall cause the Company
not to, amend its Certificate of Incorporation or By-Laws.
5.11. Representations and Warranties.
The Company and the Parent shall not, and the Parent shall
cause the Company not to, without the prior written consent of the Buyer, to
take or omit to take any action which if taken or omitted prior to the date
hereof would constitute a breach of any representations or warranties of the
Company or the Parent set forth in this Agreement, or which would result in any
of the occurrences or events set forth in Section 3.7 hereof.
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5.12. Agreements.
The Company shall not, and the Parent shall cause the Company
not to, commit or agree, whether in writing or otherwise, to take any action
prohibited by this Article V.
ARTICLE VI - CONDITIONS TO THE OBLIGATIONS OF THE BUYER
The obligations of the Buyer hereunder are subject to
fulfillment or satisfaction at or prior to the Closing of each of the following
conditions (any one or more of which may be waived by the Buyer but only in
writing):
6.1. Representations and Warranties of the Company and the Parent.
All representations and warranties of the Company and the
Parent contained in this Agreement and the other Transaction Documents (i) that
are qualified by materiality or Material Adverse Effect shall be true and
correct as of the date of this Agreement and as of the Closing with the same
effect as though such representations and warranties were made at and as of the
Closing and (ii) that are not so qualified by materiality or Material Adverse
Effect shall be true and correct as of the date of this Agreement and true and
correct in all material respects as of the Closing with the same effect as
though such representations and warranties were made at and as of the Closing,
except insofar as such representations and warranties are specifically made as
of an earlier stated date or period of time (which only need be true and
correct as of such date or time); the Company and the Parent shall have
performed and satisfied in all material respects all covenants, conditions and
agreements required or contemplated by this Agreement to be performed by either
of them prior to or at the Closing Date; and at the Closing, there shall be
delivered to the Buyer a certificate(s) signed by authorized officers of the
Parent and the Company, to such effect.
6.2. Opinion of Counsel for the Company and the Parent.
The Buyer shall have received from counsel for the Company
and the Parent, an opinion in form and substance satisfactory to the Buyer
dated as of the Closing covering the matters set forth in Exhibit C.
6.3. Absence of Litigation or Investigation.
No preliminary or permanent injunction, order, statute, rule,
regulation, executive order, stay, decree or judgment of any court or
governmental agency or instrumentality shall have been issued, entered,
enacted, promulgated or enforced and remain in effect which restrains,
prohibits or prevents the consummation of the transactions contemplated by this
Agreement.
6.4. Requisite Regulatory Approvals.
All permits, authorizations, consents, approvals and waivers
as may be required by any regulatory authority having jurisdiction over the
parties or the subject matter hereof or actions herein proposed to be taken,
including the approval of the Federal Trade Commission or
32
Department of Justice with regard to HSR Act filings, shall have been obtained.
The applicable waiting period, including any extension thereof, under the HSR
Act shall have expired.
6.5. Consents.
(a) The Company shall have received (and furnished to
the Buyer evidence thereof reasonably satisfactory to the Buyer) (i) any and
all necessary or required approvals and consents from all third parties
(including, without limitation, under Material Contracts) necessary or required
to complete the transactions contemplated hereby on terms reasonably
satisfactory to the Buyer, and (ii) any and all consents under those Material
Contracts, the absence of which consent, with or without the giving of notice
or the lapse of time or both, would give rise to a right of modification,
termination or amendment or a loss of a benefit under such Material Contract
(and, in each case, such approvals and consents shall not have expired or been
withdrawn as of the Closing Date).
(b) Without in any way limiting Section 6.5(a) hereof,
the Company shall have received (and furnished to the Buyer evidence thereof
reasonably satisfactory to the Buyer) any and all consents under each of the
following agreements:
(i) The License Agreement, dated February 9,
1990, between the Company and CVN Systems, Inc., as amended;
(ii) The Actuator Product Supply Agreement,
dated February 9, 1990, between the Company and CVN Systems,
Inc., as amended;
(iii) The Proprietary Norco Drive Mechanism
Supply Agreement, dated February 9, 1990, between the Company
and CVN Systems, Inc., as amended; and
(iv) The Drive Mechanism Standby License
Agreement, dated February 9, 1990, between the Company and
CVN Systems, Inc., as amended.
6.6. Authorization Documents.
The Buyer shall have received certificates from each of the
Company and the Parent, dated the Closing Date, duly executed by authorized
officers of the Company and the Parent, certifying as to: (i) the attached copy
of the resolutions of the Board of Directors of the Company and the Parent,
authorizing and approving the execution, delivery and performance of, and the
consummation of the transactions contemplated by, this Agreement and the other
Transaction Documents, and stating that the resolutions thereby certified have
not been amended, modified, revoked or rescinded; and (ii) the incumbency,
authority and specimen signature of each officer of the Company and the Parent,
executing this Agreement and the other Transaction Documents.
6.7. Material Adverse Effect.
33
There shall not have occurred after the date hereof any
Material Adverse Effect, and at the Closing, there shall be delivered to the
Buyer a certificate(s) signed by authorized officers of the Parent and the
Company, to such effect.
6.8. Audited Financial Statements.
The Parent and the Company shall have delivered to the Buyer
audited consolidated balance sheet and statements of income and cash flows as
of and for the fiscal year ended March 31, 2002 for the Company that reflect
assets, liabilities, income, losses and expenses that are each consistent with
those set forth on the unaudited financial statements for the fiscal year ended
March 31, 2002, except for any inconsistencies that do not, in the aggregate,
have a Material Adverse Effect.
6.9. Release from Indebtedness.
All Indebtedness of the Company outstanding on the Closing
Date (together with all interest accrued thereon through the Closing Date and
any prepayment premiums, penalties or fees) shall have been repaid or the
Assets shall have been released from all such Indebtedness prior to or at
Closing. Prior to or at Closing, the creditors under any Indebtedness of the
Company or the Parent shall have terminated and released all Liens of any kind
on the Assets of the Company securing such Indebtedness. The Buyer shall have
received copies of such payoff letters and other evidences of termination and
release as are reasonably satisfactory to the Buyer.
6.10. Assignment of Contracts.
The Parent shall have validly assigned to the Buyer all
agreements, contracts or commitments to which the Parent is a party that relate
to the Business or the Assets, including without limitation, all
confidentiality agreements to which the Parent is a party that relate to the
Company, its business or the Assets, but excluding (i) the Stock Purchase
Agreement, dated as of July 25, 1998, among Norco, Inc., each of the
shareholders of Norco, Inc. and TransTechnology Corporation and (ii) the
Environmental Agreement, dated as of July 28, 1998, among each of the
shareholders of Norco, Inc., and TransTechnology Corporation (collectively, the
"Environmental Indemnification Agreements").
6.11. Lease.
The Buyer and the Company shall have entered into a lease
agreement with respect to the real property owned by the Company located at 139
Ethan Xxxxx Highway, Ridgefield, Connecticut, in form and substance reasonably
satisfactory to the Buyer and the Company. Such lease agreement shall be for a
twelve (12) month term at a rate of $180,000 per annum and the Buyer shall have
an option to buy such real property at the end of such term for $1,800,000. In
the event the Buyer fails to exercise such option, the Buyer shall have six (6)
months in which to vacate such real property and pay $90,000 in rent for such
six month period.
6.12. Trademarks.
(a) The Company shall have delivered to the Buyer a
written confirmation reasonably satisfactory to the Buyer from Flennor, Inc.
and Xxxxxxx Xxxxxxxx stating that the
34
Buyer has a royalty-free, worldwide license from Flennor, Inc. and Xxxxxxx
Xxxxxxxx to permit the Buyer to use the FLENNOR trademark in the Business as
currently conducted or as proposed to be conducted.
(b) The Company shall have executed and filed or cause
to be executed and filed in the United States Patent and Trademark Office and
shall have delivered to the Buyer all appropriate documentation as may be
necessary to effectuate and record the assignment of the trademarks FN (and
design) (Reg. No. 1,358,860) and FLENNUT (Reg. No. 2,004,333) from Flennor,
Inc. to Norco, Inc.
6.13. Fairness and Solvency Opinions.
The Parent and the Company shall have delivered to the Buyer
a fairness and solvency opinion, in form and substance reasonably satisfactory
to the Buyer, of Xxxxxxxx Xxxxx Xxxxxx & Xxxxx Advisors, Inc. with respect to
the financial terms of the transactions contemplated hereunder and the solvency
of the Parent and the Company. All costs and expenses of obtaining such
fairness opinion shall be borne by the Parent and the Company. The reasonable
costs and expenses of obtaining such solvency opinion shall be borne by the
Buyer.
6.14. Delivery of Documents.
The documents described in Section 12.2 of this Agreement
shall have been delivered.
ARTICLE VII - CONDITIONS TO THE OBLIGATIONS OF THE COMPANY
The obligations of the Company hereunder are subject to the
fulfillment or satisfaction at or prior to the Closing of each of the following
conditions (any one or more of which may be waived by the Company, but only in
writing):
7.1. Representations and Warranties of the Buyer.
All representations and warranties of the Buyer contained in
this Agreement and the other Transaction Documents (i) that are qualified by
materiality shall be true and correct as of the date of this Agreement and as
of the Closing with the same effect as though such representations and
warranties were made at and as of the Closing and (ii) that are not so
qualified by materiality shall be true and correct as of the date of this
Agreement and true and correct in all material respects as of the Closing with
the same effect as though such representations and warranties were made at and
as of the Closing, except insofar as such representations and warranties are
specifically made as of an earlier stated date or period of time (which only
need be true and correct as of such date or time); the Buyer shall have
performed and satisfied in all material respects all covenants, conditions and
agreements required or contemplated by this Agreement to be performed by it
prior to or at the Closing Date; and at the Closing, there shall be delivered
to the Company a certificate signed by an authorized officer of the Buyer to
such effect.
35
7.2. Opinion of Counsel for the Buyer.
The Company shall have received from counsel for the Buyer an
opinion in form and substance satisfactory to the Company dated as of the
Closing covering the matters set forth in Exhibit D.
7.3. Absence of Litigation or Investigation.
No preliminary or permanent injunction, order, statute, rule,
regulation, executive order, stay, decree or judgment of any court or
governmental agency or instrumentality shall have been issued, entered,
enacted, promulgated or enforced and remain in effect which restrains,
prohibits or prevents the consummation of the transactions contemplated by this
Agreement.
7.4. Requisite Regulatory Approvals.
All permits, authorizations, consents, approvals and waivers
as may be required by any regulatory authority having jurisdiction over the
parties or the subject matter hereof or actions herein proposed to be taken,
including the approval of the Federal Trade Commission or Department of Justice
with regard to HSR Act filings, shall have been obtained. The applicable
waiting period, including any extension thereof, under the HSR Act shall have
expired.
7.5. Authorization Documents.
The Company shall have received a certificate from the Buyer,
dated the Closing Date, duly executed by an authorized officer of the Buyer,
certifying as to: (i) the attached copy of the resolutions of the Board of
Directors of the Buyer, authorizing and approving the execution, delivery and
performance of, and the consummation of the transactions contemplated by, this
Agreement and the other Transaction Documents, and stating that the resolutions
thereby certified have not been amended, modified, revoked or rescinded; and
(ii) the incumbency, authority and specimen signature of each officer of the
Buyer, executing this Agreement and the other Transaction Documents.
7.6. Delivery of Documents, Payments.
The documents and payments described in Section 12.2 of this
Agreement shall have been delivered.
ARTICLE VIII - SURVIVAL; INDEMNIFICATION
8.1. Survival of Representations, Warranties and Covenants.
The representations and warranties contained in Articles II,
III and IV of this Agreement shall survive the Closing hereunder and shall
continue in effect notwithstanding any knowledge of, or any investigation by or
on behalf of, the Buyer, the Company or the Parent, as the case may be, until
eighteen (18) months following the Closing Date, except that (a) the
representations and warranties set forth in Section 3.22 (Environmental Laws
and Regulations) shall survive until five (5) years following the Closing Date,
(b) the representations and
36
warranties set forth in Sections 3.9 (Taxes), 3.18 (Compliance with Law) and
3.19 (Employee Benefit Plans) shall survive until the date which is sixty (60)
days after the expiration of the relevant statute of limitations, and (c) the
representations and warranties set forth in Sections 2.1 (Due Authorization and
Execution), 3.1 (Organization of the Company), 3.2 (Due Authorization and
Execution), 3.3 (Capitalization and Corporate Records of the Company), 3.13
(Assets), 4.1 (Due Authorization and Execution) and 4.2 (Organization of the
Buyer) shall survive the Closing in perpetuity; provided, however, that the
termination of the survival period of any representations and warranties
provided herein shall not affect the rights of a party in respect of any claim
made by such party in a writing received by the party making such
representation or warranty prior to the expiration of the applicable survival
period provided herein. All covenants and agreements contained in this
Agreement shall survive the Closing and shall remain in effect until they are
performed or until they lapse in accordance with their respective terms.
8.2. General Indemnification.
(a) By Parent and the Company. Following the Closing,
the Parent and the Company, jointly and severally, shall indemnify, save and
hold harmless the Buyer and each of its affiliates and Representatives against
and from any and all costs, losses, Taxes, liabilities, damages, lawsuits,
claims, and expenses (including reasonable attorneys' fees) (collectively,
"Damages"), incurred in connection with, arising out of, resulting from or
incident to: (i) any inaccuracy in, or breach of, any representation or
warranty made by the Company or the Parent in this Agreement or any other
Transaction Document; (ii) any breach of any covenant made by the Company or
the Parent in this Agreement or any other Transaction Document; or (iii) any
Excluded Liabilities.
The term "Damages" is not limited to matters asserted by
third parties against an indemnified person, but includes Damages incurred or
sustained by the indemnified person in the absence of third party claims.
Payments by an indemnified person of amounts for which it is indemnified
hereunder shall not be a condition precedent to recovery.
(b) By Buyer. Following the Closing, the Buyer shall
indemnify, save and hold harmless the Parent and each of its affiliates and
Representatives against and from any and all Damages incurred in connection
with, arising out of, resulting from or incident to: (i) any breach of, any
representation or warranty made by the Buyer in this Agreement or any other
Transaction Document; (ii) any breach of any covenant made by the Buyer in this
Agreement or any other Transaction Document; or (iii) any Assumed Liabilities.
(c) Procedure for Claims between Parties. If a claim for
Damages is to be made by a party entitled to indemnification hereunder, the
party claiming such indemnification (the "Indemnified Party") shall give
written notice to the indemnifying party (the "Indemnifying Party"). Such
written notice shall be given as soon as practicable after the Party becomes
aware of any fact, condition or event which may give rise to Damages for which
indemnification may be sought under this Section 8.2. Any failure to submit
any such notice of claim to the Indemnifying Party shall not relieve the
Indemnifying Party of any liability hereunder, except to the extent the
Indemnifying Party is actually prejudiced by such failure. The parties shall
use their best efforts to resolve the matter internally on an expeditious basis
and in any event within 60 calendar days after the notice is received by the
Indemnifying Party.
37
(d) Defense of Third Party Claims. If any lawsuit or
enforcement action is filed against an Indemnified Party, written notice
thereof shall be given to the Indemnifying Party as promptly as practicable
(and in any event within 10 days after the service of the citation or summons).
The failure of an Indemnified Party to give timely notice hereunder shall not
affect rights to indemnification hereunder, except to the extent that the
Indemnifying Party is materially prejudiced by such failure. After such notice,
if (i) the Indemnifying Party shall expressly agree in writing to the
Indemnified Party that the Indemnifying Party is obligated under the terms of
its indemnity hereunder to satisfy or discharge such lawsuit or action, (ii)
the lawsuit or action involves (and continues to involve) solely monetary
damages and the Indemnifying Party's assumption of the defense or settlement of
such lawsuit or action will not have a material adverse effect on the
Indemnified Party's business, and (iii) the Indemnifying Party 's aggregate
financial condition remains substantially similar to its condition on the date
immediately preceding the Closing Date (the foregoing collectively, the
"Litigation Conditions"), then the Indemnifying Party shall be entitled, if it
so elects at its own cost, risk and expense, (x) to take control of the defense
and investigation of such lawsuit or action, (y) to employ and engage attorneys
of its own choice to handle and defend the same unless the named parties to
such action or proceeding include both an Indemnifying Party and an Indemnified
Party and the Indemnified Party reasonably concluded that there may be one or
more legal defenses available to such Indemnified Party that are different from
or additional to those available to the Indemnifying Party such as to render
joint representation inappropriate under the applicable standards of
professional responsibility, in which event the Indemnified Party shall be
entitled, at the Indemnifying Party's cost, risk and expense, to separate
counsel of its own choosing, and (z) to compromise or settle such lawsuit or
action, which compromise or settlement shall be made only with the written
consent of the Indemnified Party, such consent not to be unreasonably withheld.
The Indemnifying Party shall forfeit the right to control the defense,
investigation or settlement of any such lawsuit or action if, at any time after
assuming the defense, investigation or settlement thereof, the Indemnifying
Party no longer satisfies the Litigation Conditions. The Indemnified Party, at
the Indemnifying Party's expense, shall cooperate in all reasonable respects
with the Indemnifying Party and its attorneys in the investigation, trial and
defense of such lawsuit or action and any appeal arising therefrom; provided,
however, that the Indemnified Party may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The parties shall cooperate with each other in any
notifications to insurers. If the Indemnifying Party fails to assume the
defense of such lawsuit or action within 10 calendar days after receipt of the
notice of such lawsuit or action by the Indemnifying Party, elects not to
defend such lawsuit or action, or fails to satisfy the Litigation Conditions,
the Indemnified Party against which such lawsuit or action has been asserted
will (upon delivering notice to such effect to the Indemnifying Party) have the
right to undertake, at the Indemnifying Party's cost, risk and expense, the
defense, compromise or settlement of such lawsuit or action on behalf of and
for the account and risk of the Indemnifying Party; provided, however, that
such lawsuit or action shall not be compromised or settled without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld. If the Indemnified Party assumes the defense of the lawsuit or
action, the Indemnified Party will keep the Indemnifying Party reasonably
informed of the progress of any such defense, compromise or settlement. The
Indemnifying Party shall be liable for any settlement of any lawsuit or action
effected pursuant to and in accordance with this Section 8.2 and for any final
judgment (subject to any right of appeal), and the Indemnifying
38
Party agrees to indemnify and hold harmless an Indemnified Party from and
against any Damages by reason of such settlement or judgment.
(e) No right to indemnification under this Article VIII
shall be limited by reason of any investigation or audit conducted before or
after the Closing of any party hereto or the knowledge of such party of any
breach of any representation, warranty, agreement or covenant by the other
party at any time, or the decision by such party to complete the Closing.
ARTICLE IX - TAX MATTERS
9.1. Tax Cooperation.
The Buyer, the Company and the Parent and their respective
officers shall reasonably cooperate with each other in connection with the
preparation of all Tax Returns with respect to the Company and with any tax
investigation, audit or other proceeding related to the Company. The Buyer, the
Company and the Parent shall preserve all information, returns, books, records
and documents relating to any liabilities for Taxes with respect to a taxable
period until the later of the expiration of all applicable statutes of
limitation and extensions thereof, or the conclusion of all litigation with
respect to Taxes for such period.
9.2. Transfer Taxes and Incremental State Income Taxes.
(a) The Buyer and the Parent shall make a good faith
attempt to estimate the amount of sales, use, transfer and other similar Taxes
that will be incurred in connection with the purchase and sale of the Assets
hereunder (the "Transfer Taxes") prior to the Closing, and the Buyer, the
Parent and the Company shall take all reasonable steps to minimize the amount
of such Transfer Taxes, including claiming any and all exemptions from such
Transfer Taxes that are reasonably available under applicable law. Except in
such cases where the Company is solely responsible for the preparation and
filing of such tax returns under applicable law, Buyer shall be responsible for
the preparation and filing of all tax returns required to be filed with respect
to such Transfer Taxes. Buyer shall pay on a timely basis, all Transfer Taxes
incurred in connection with the transaction, provided that (i) in no event
shall the Buyer be responsible for the amount of any such Transfer Taxes
resulting from the Parent or the Company's failure to claim an applicable
exemption for such Transfer Taxes and (ii) in no event shall the Buyer be
responsible for the amount of such Transfer Taxes (less the amount of any
Incremental State Income Taxes for which the Buyer has reimbursed the Company
pursuant to Section 9.2(b) below) in excess of $1 million, and the Company and
the Parent shall be solely responsible for such excess.
(b) The Company shall provide the Buyer prior to the
Closing with a good faith estimate of the excess, if any, of (A) the state and
local income taxes incurred by the Company as a result of the sale of the
Assets contemplated hereby over (B) the state and local income or franchise
taxes that would have been incurred by the Parent if the transaction were
structured as a sale of stock of the Company (the "Incremental State Income
Taxes"). The parties hereby acknowledge that if a transaction for the sale of
stock of the Company had occurred, then the transaction would have been taxed
in the State of New Jersey. Simultaneously with the Closing, the Buyer shall
deposit with the Escrow Agent pursuant to the terms of an
39
escrow agreement in form and substance reasonably satisfactory to the Buyer and
the Company a sum equal to the lesser of (i) the estimated Incremental State
Income Taxes and (ii) One Million Dollars ($1,000,000) less the amount of the
Transfer Taxes that are the responsibility of the Buyer pursuant to Section
9.2(a) (such deposited amount, the "Income Tax Escrow Amount"). Such deposit
into escrow shall not be construed to mean that the Buyer agrees with the
Company's estimate of the Incremental State Income Taxes. At Closing, the
Company shall provide the Buyer with calculations setting forth in reasonable
detail the amount of the Incremental State Income Taxes and shall provide the
Buyer with all supporting documentation for such calculation. Within fifteen
(15) days following receipt of such calculations, the Buyer shall notify the
Company of any disagreement with such calculations. If the Buyer and the
Company are unable to resolve any dispute with respect to such calculations
within five (5) days thereafter, such dispute shall be submitted to the Neutral
Auditor for final resolution. The parties shall direct the Neutral Auditor to
resolve all remaining disputes within twenty-one (21) days, and the decision of
the Neutral Auditor shall be final and binding upon the parties hereto. The
Company shall give the Buyer at least five (5) business days prior written
notice of the date upon which it is required to remit payment of the
Incremental State Income Taxes. Provided that all disputes with respect to the
calculation of the Incremental State Income Taxes have been finally resolved as
set forth in this Section 9.2(b), after the receipt of such notice of
remittance from the Company, the Buyer and the Company shall jointly instruct
the Escrow Agent in writing to deliver from the escrow fund (x) to the
appropriate taxing authority not less than two (2) business days prior to the
date noticed by the Company for the remittance, the lesser of (A) the amount of
the final Incremental State Income Taxes and (B) the Income Tax Escrow Amount,
and (y) to the Buyer, the remainder of the escrow fund, if any. If thereafter
the Company or the Parent files a tax return with a lower amount of Incremental
State Income Taxes or the Company or the Parent receives a refund of any
previously paid Incremental State Income Taxes, then the Company and the Parent
shall promptly pay to the Buyer the difference in the amount of the Incremental
State Income Taxes paid and the amount of the Incremental State Income Taxes
set forth in such tax return and, without duplication, the amount of any such
refund. The Income Tax Escrow Amount shall be used only to pay state and local
income or franchise taxes that have been incurred by the Company by virtue of
the transaction being structured as a sale of the Assets. Notwithstanding the
foregoing, in no event shall the sum of the Incremental State Income Taxes that
are the responsibility of the Buyer pursuant to this Section 9.2(b) and the
amount of the Transfer Taxes that are the responsibility of the Buyer pursuant
to Section 9.2(a) exceed $1 million, and the Company and the Parent shall be
solely responsible for all such Taxes in excess of $1 million.
9.3. Tax Effect of Payments.
The Parent, the Company and the Buyer agree that any
indemnification payments made pursuant to Article VIII shall be treated for tax
purposes as an adjustment to the Purchase Price unless otherwise required by
applicable law.
40
ARTICLE X - ADDITIONAL COVENANTS OF THE PARTIES
10.1. Access by Buyer and Agents.
The Parent and the Company agree that the Buyer and its
designated Representatives, shall have reasonable access to the books of
account, financial and corporate records, contracts, leases, tax returns,
properties and other assets of the Company and to make copies of such corporate
records, reports and other documents as they may request at any reasonable time
during regular business hours prior to the Closing, and the Company agrees to
use its best efforts to cooperate with such persons in conducting such
examination. The Company will cause the Company's officers, employees and
accountants, as the case may be, to furnish such additional financial and
operating data and other information as the Buyer may from time to time
reasonably request. For purposes of this Agreement, "Representatives" shall
mean any officer, director, employee, investment banker, lender, attorney,
accountant, consultant, environmental auditor, surveyor or other agent or
advisor.
10.2. Use of Name.
(a) From and after the Closing, the Buyer shall own all
of the corporate names, trade names and trademarks included in the Intellectual
Property, including without limitation, "Norco" and all other variations
thereof which include the "Norco" name, together with all related designs
(collectively, the "Norco Name"). The Company shall, and the Parent shall cause
the Company to, promptly following the Closing Date, change its name to delete
any reference to the Norco Name and any other corporate name, trade name or
trademark included in the Intellectual Property (and file with the appropriate
governmental authorities any certificates or instruments required to effect
such name change).
(b) Effective from the Closing until the date which is
six (6) months from the Closing Date, the Parent hereby grants to the Buyer a
worldwide, royalty-free license to use: (i) all of the Parent's corporate
names, trade names and trademarks that include the term "TransTechnology" and
all other variations thereof, together with all related logos and designs, and
(ii) the phrase "engineered products for global partners" on and in all
products, stationery, catalogues, brochures, boxes, packing materials, signage,
and other items existing as of the Closing on which the term "TransTechnology"
and any variations thereof or the phrase "engineered products for global
partners" appears.
10.3. Environmental Transfer Statute.
The Parent shall comply, at the Parent's sole cost and
expense, with all obligations, requirements and responsibilities under the
Connecticut Transfer of Establishments Act ("Transfer Act") resulting from the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereunder (including, without limitation, the filing
of any Property Transfer Forms and the Environmental Condition Assessment Form
("ECAF") (each as defined in the Transfer Act), the payment of any filing fees,
and the performance of any Remediation, whether due before or after the Closing
Date). The Parent shall retain a consultant reasonably acceptable to the Buyer
(and Buyer hereby states that the continued retention of Xxxxx and Xxxxxxx,
Inc. is and would be acceptable) and complete all
41
appropriate forms, including the ECAF and Property Transfer Form, naming Parent
as the certifying party, and provide such forms to the Buyer at least five (5)
days prior to the Closing for the Buyer's review and comment. If Remediation or
other actions are required pursuant to the Transfer Act, whether before or
after the Closing Date, the Parent shall carry out all such obligations,
requirements or responsibilities, in form and substance reasonably satisfactory
to the Buyer but the Parent shall not have responsibility for any Environmental
Condition that is caused, created or exacerbated (to the extent, and only to
the extent, of such exacerbation) after the Closing by Buyer or third parties
unrelated to the Parent.
10.4. Environmental Remediation.
(a) The Parent shall complete the activities required
under the Transfer Act as a result of the Stock Purchase Agreement, dated as of
July 25, 1998, among the Company, each of the shareholders of the Company and
the Parent, and the Environmental Agreement, dated as of July 28, 1998, among
each of the shareholders of the Company and the Parent (collectively referred
to as the "1998 Transaction"), and the activities required under the Transfer
Act as a result of the transactions contemplated by this Agreement. The Parent
shall indemnify, defend and save and hold harmless the Buyer and its affiliates
and Representatives with respect to, and shall conduct, at the Parent's sole
cost and expense, all Remediation of the soil and groundwater conditions
required pursuant to the Transfer Act. Such remediation shall be in a manner
which does not require use restriction, such as an Environmental Land Use
Restriction ("ELUR"), unless such ELUR does not limit or impair the Buyer's
operation of Business after the Closing or materially increase the cost of the
Business' operations.
(b) With respect to any pre-Closing violation of
Environmental Laws which constitutes a breach of the representation in Section
3.22 or which is disclosed in Schedule 3.22, the Parent shall correct such
violation before the Closing or, if such cannot be corrected before the
Closing, shall indemnify, defend and save and hold harmless the Buyer and its
affiliates and Representatives with respect thereto, and shall reimburse the
Buyer and its affiliates and Representatives for all costs and expenses to
correct such violation, and the Parent shall pay any and all fines, penalties
or assessments associated therewith. It is understood that this indemnification
does not extend to or create any rights or causes of action in or for the
benefit of any other Person not a party to this Agreement.
(c) The Parent shall indemnify, defend and save and hold
harmless the Buyer and its affiliates and Representatives with respect to
Damages, including the cost for Remediation or other costs and expenses
incurred in connection therewith, arising out of, resulting from or incident to
the off-site transportation, storage, treatment, recycling or disposal of
Hazardous Wastes generated before the Closing by or on behalf of the Company or
any of its predecessors in interest (including liability for so-called
"Superfund Sites" under the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, or under similar state or federal
Environmental Laws). It is understood that this indemnification does not extend
to or create any rights or causes of action in or for the benefit of any other
Person not a party to this Agreement.
42
(d) Buyer shall provide, or cause any successor, tenant
or other occupant to provide, access to the Site and to cooperate in all
reasonable respects with any and all of Parent's efforts required or allowed
under sections 10.3 and 10.4 of this Agreement.
10.5. Notices Prior to Closing.
(a) Prior to the Closing, the Parent and the Company
shall give prompt notice to the Buyer of:
(i) any breach or default by the Parent or the
Company of any of the Parent's or the Company's
representations, warranties, covenants or agreements
hereunder or any other Transaction Document;
(ii) any notice or other communication from any
third party alleging that the consent of such third party is
or may be required in connection with the transactions
contemplated by this Agreement or any other Transaction
Document;
(iii) any notice or other communication from any
governmental or regulatory authority or court in connection
with the transactions contemplated by this Agreement or any
other Transaction Document;
(iv) any Material Adverse Effect; and
(v) any claim, action, or proceeding against
the Parent or the Company which could reasonably be expected
to have a Material Adverse Effect.
(b) Prior to the Closing, the Buyer shall give prompt
notice to the Company of:
(i) any breach or default by the Buyer of any
of the Buyer's representations, warranties, covenants or
agreements hereunder or under any other Transaction Document;
(ii) any notice or other communication from any
third party alleging that the consent of such third party is
or may be required in connection with the transactions
contemplated by this Agreement or any other Transaction
Document; and
(iii) any notice or other communication from any
governmental or regulatory authority or court in connection
with the transactions contemplated by this Agreement or any
other Transaction Document.
10.6. Public Announcements.
Neither the Company or the Parent, on the one hand, nor the
Buyer, on the other hand, will issue any press release or public statement with
respect to the transactions contemplated by this Agreement and the other
Transaction Documents without the Parent's or the Buyer's, as the case may be,
prior written consent (such consent not to be unreasonably
43
withheld), except as may be required by applicable law, stock exchange rules or
court process. In addition to the foregoing, the parties will consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any such press release or other public statements with respect to
such transactions. The parties agree that the initial press release or releases
to be issued with respect to the transactions contemplated by this Agreement
and the other Transaction Documents shall be mutually agreed upon prior to the
issuance thereof.
10.7. HSR Filing.
As soon as practicable after the execution and delivery of
this Agreement, the Buyer and the Company shall make all filings required under
the HSR Act, and the Buyer, the Parent and the Company shall promptly respond
to any Department of Justice or Federal Trade Commission requests for further
information. The filing fees to be paid pursuant to the HSR Act in connection
with the transactions contemplated by this Agreement shall be borne by the
Buyer.
10.8. Financial Statements.
By no later than the 15th day of each calendar month or if
such day is not a business day, the next succeeding business day, beginning on
February 15, 2003, the Company shall, and the Parent shall cause the Company
to, deliver to the Buyer the divisional financial analysis of the Company
prepared in the Ordinary Course of Business (the "Monthly Financial
Statements").
10.9. Survival.
The provisions of Sections 10.2, 10.3 and 10.4 shall survive
the Closing.
10.10. Employees and Employee Benefit Plans.
(a) 401(k) Plan Rollover. The Buyer will, and will cause
the Buyer's 401(k) plan (the "Buyer's 401(k) Plan") to accept the rollover, by
direct or indirect rollover, as selected by each employee of the Company who is
employed by the Buyer following Closing (each a "Transferred Employee"), of
that portion of each Transferred Employees' accounts in the Parent's 401(k)
plan (the "Parent's 401(k) Plan") that constitutes an "eligible rollover
distribution" as that term is defined by section 402(c)(4) of the Code,
provided that at the time a Transferred Employee elects such a rollover that
Transferred Employee is employed by the Buyer. Any such rollover will be
effected in cash and, as applicable, any notes evidencing loans from the
Parent's 401(k) Plan to the Transferred Employee electing such rollover. The
Buyer and the Parent will, and will cause the trustees of their respective
401(k) plans to, cooperate with each other with respect to the rollover of the
eligible rollover distribution portions of the Transferred Employees' account
balances in the Parent's 401(k) Plan to the Buyer's 401(k) Plan.
(b) Welfare Benefit Plans. The Buyer shall include the
Transferred Employees in welfare benefit plans maintained or adopted by the
Buyer. With respect to any flexible spending or similar cafeteria plan account
maintained by the Parent or any ERISA Affiliate for the benefit of any
Transferred Employee, as soon as practicable after Closing, the Parent shall
reimburse the Buyer for the aggregate contributions to such accounts withheld
by the Parent from Transferred Employees prior to the Closing Date to the
extent that the Parent did not
44
exhaust such contributions by providing benefits to such Transferred Employees
or their beneficiaries, prior to the Closing Date.
(c) Service Credit. Transferred Employees shall be given
credit by the Buyer for purposes of any employee benefit plans maintained by
the Buyer in which such Transferred Employees become eligible to participate,
for all service with the Company and its ERISA Affiliates, to the same extent
that such service would have been credited under any analogous plan maintained
by the Company or its ERISA Affiliates for the purposes of eligibility, vesting
and benefit calculation.
(d) Multiemployer Plan Withdrawal Liabilities. The
Parent and its ERISA Affiliates will pay any and all multiemployer pension plan
withdrawal liability properly assessed against them, at a rate no less rapid
than that established by the multiemployer pension plan Board of Trustees or
other applicable governing body and will, in accordance with Article VIII
hereof, indemnify and hold harmless the Buyer and the Company from any Damages
arising from the participation in, or withdrawal from, any multiemployer
pension plan by the Parent or any ERISA Affiliate of the Parent.
(e) Benefit Plan Liabilities. The Parent and its ERISA
Affiliates will retain all liabilities and responsibilities with respect to any
employee benefit plans maintained by them for all benefits accrued under such
plans and any and all claims with respect to such plans, including, without
limitation, the obligation to provide continuation coverage under section 4980B
of the Code with respect to any employee or qualified beneficiary who has
incurred a qualifying event under any group medical plan maintained by the
Parent or any ERISA Affiliate on or before the last day of the Transition
Period described in Section 10.10(f) below. Without limiting the generality of
the foregoing, the Parent and its ERISA Affiliates will retain liability for
all life insurance, accidental death and dismemberment or medical claims
incurred prior to the Closing Date by the Company's employees or their
dependents or beneficiaries, including the Transferred Employees, without
regard to whether such claims are submitted before or after the Closing Date.
For these purposes, a claim will be deemed incurred:
(i) on the date of the occurrence of death or
dismemberment in the case of claims under life insurance and
accidental death and dismemberment plans;
(ii) on the date on which the accident or
illness giving rise to the claim occurs, or, if such date
cannot be determined, on the date on which the service or
treatment is provided (notwithstanding the foregoing, in the
case of an ongoing course of treatment, the claim shall be
deemed incurred on the date that medical treatment giving
rise to the claim is first rendered), in the case of claims
under medical, hospital, dental and similar plans; or
(iii) on the date following a Transferred
Employee's last day worked on which a physician legally
licensed to practice medicine certifies to total disability
under the applicable disability plan.
45
(f) Transitional Medical Insurance. From the Closing
Date through the end of the next succeeding calendar month (the "Transition
Period"), the Parent will continue to cover the Transferred Employees, their
dependents and beneficiaries under the group medical plan or plans in which
such Transferred Employees, their dependents and beneficiaries are
participating on the Closing Date. In return, the Buyer will reimburse the
Parent, within ten (10) business days after receipt of a proper invoice from
the Parent, for 102% of the premiums paid, or in the case of a self-insured
plan, charged for COBRA continuation coverage, by the Parent to provide such
group medical coverage. Provided that the Buyer timely pays the premium amount
described in the immediately preceding sentence, the Buyer will have no further
liability with respect to any claim or expense incurred by, or with respect to,
any Transferred Employee during the Transition Period.
10.11. Notices Regarding Acquisition Proposals.
From the date of this Agreement until the Closing, the Parent
and the Company shall give prompt notice to the Buyer of (A) any inquiries or
submission of any proposals regarding any merger, business combination,
reorganization, recapitalization, liquidation, sale of all or substantially all
assets, or other similar transactions involving the Company or any proposal or
offer to acquire, directly or indirectly, any equity interest in or any voting
securities of the Company (any of the foregoing inquiries or proposals being
referred to herein as an "Acquisition Proposal"), (B) any indication that a
Person is intending to make an Acquisition Proposal, (C) any modification of or
amendment to any Acquisition Proposal or (D) any request for nonpublic
information relating to the Company or for access to the properties, books or
records of the Company (or of the Parent relating to the Company) by any Person
that is intending to make, or has made, an Acquisition Proposal or (E) the
entering into of discussions with respect to any Acquisition Proposal.
10.12. Information Technology and Telephone Systems.
The Company and the Parent covenant that immediately after
the consummation of the transactions contemplated hereby, the Buyer will have
operational and adequate information technology and telephone systems,
including without limitation, systems relating to wide area network, internet
and remote access capabilities, such that the Buyer will be able to conduct the
Business after the Closing in accordance with past practices and as presently
conducted. If necessary, the Company, the Parent and the Buyer will enter into
a transitional services agreement, in form and substance reasonably
satisfactory to the Company, the Parent and the Buyer, which would provide the
Buyer with such operational and adequate information technology and telephone
systems.
ARTICLE XI - POST-CLOSING COVENANTS OF THE PARTIES
11.1. Availability of Records to the Parent.
For a period of five years after the Closing, the Buyer, on
the one hand, and the Parent and the Company, on the other hand, agree that
each will make available to the other party, during normal business hours, such
documents, books, records or information relating to the Company prior to the
Closing as the Parent or the Buyer, as the case may be, may reasonably
46
require after the Closing in connection with any tax determination, defense of
any claim relating to the conduct of the business of the Company prior to the
Closing or governmental investigation of the Company or any of its Affiliates.
The Buyer, on the one hand, and the Parent and the Company, on the other hand,
each agrees not to destroy any files or records which are subject to this
Section 11.1 without giving reasonable notice to the other party, and within 15
business days of receipt of such notice, the Buyer, on the one hand, or the
Parent and the Company, on the other hand, as the case may be, may cause to be
delivered to the other party the records intended to be destroyed, at such
other party's expense.
11.2. Non-Compete; Non-Solicitation.
(a) For a period of three (3) years from and after the
Closing Date (the "Restricted Period"), none of the Parent, the Company or any
of their affiliates will engage, directly or indirectly, in any area of the
world, in the management, ownership, operation or control of any business,
venture or activity which competes with the Business as presently conducted or
proposed to be conducted on the Closing Date or with products presently offered
for sale or in development by the Business; provided, however, ownership of
less than one percent (1%) of the outstanding stock of any publicly traded
corporation shall not be deemed to constitute engaging in any such business;
provided, further, that nothing contained in this Section 11.2(a) shall
prohibit a third party that competes with the Company from acquiring the Parent
or any of the Parent's assets and continuing thereafter to so compete, provided
that such third party does not use any of the Parent's assets or employees so
acquired in such competitive activity. For purposes of this Section 11.2(a)
only, the defined term "Business" shall, as to linear motion actuators, include
only linear motion actuators for medical diagnostic equipment and linear motion
actuators used to secure an Israeli tank gun barrel for Urdan Industries and
any other linear actuators that the Company has delivered on an existing
program or is under contract to deliver on a new program or has a customer
proposal outstanding as of the date of this Agreement.
(b) During the Restricted Period, each of the Parent and
the Company shall not, and shall cause its affiliates not to, without the prior
written consent of the Buyer, directly or indirectly, (i) induce or attempt to
induce any employee of the Buyer to leave the employ of the Buyer, or in any
way interfere with the relationship between the Buyer and any employee thereof,
(ii) hire any person within one (1) year of the last day such person was an
employee of the Buyer except in the event that such employment is the result of
a general advertisement for employment or as a result of the services of an
employment agency in connection with a nondirected solicitation, or (iii)
induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Buyer to cease doing business with
the Buyer or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Buyer (including,
without limitation, making defamatory statements or communications about the
Buyer).
(c) If a judgment of a court of competent jurisdiction
declares that any term or provision of this Section 11.2 is invalid or
unenforceable, the parties hereto agree that the court making the determination
of invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provisions, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and
47
enforceable and that comes closest to expressing the intention of the invalid
or unenforceable term or provision, and this Agreement shall be enforceable as
so modified.
11.3. Confidentiality.
(a) At all times after the date hereof, each of the
Parent and the Buyer shall, and shall cause each of its affiliates and
Representatives to, keep secret and retain in confidence, and not use for its
benefit or the benefit of others, all confidential information and not disclose
such confidential information to anyone other than the Buyer and Parent,
respectively, except with the express written consent of the Buyer or Parent,
as applicable, and except for confidential information which becomes publicly
known through no wrongful act of the Buyer or Parent, as applicable, as a
result of being (i) readily ascertainable from public or published information,
or trade sources, (ii) received from a third party not under an obligation to
the Parent, Buyer or the Company to keep such information confidential or (iii)
required by any law or order. Notwithstanding anything contained herein to the
contrary, confidential information with respect to the Company may be disclosed
by the Buyer in its sole discretion after the Closing.
(b) In the event that a Person subject to the preceding
paragraph, or any of its affiliates or Representatives, are required by law or
order to disclose any such information, such Person will promptly notify the
affected party in writing so that the affected party may seek a protective
order and/or other motion to prevent or limit the production or disclosure of
such information. If such motion has been denied, then the Person required to
disclose such information may disclose only such portion of such information
which, based on advice of the disclosing Person's outside legal counsel, is
required by law or order to be disclosed (provided that the Person required to
disclose such information will use all reasonable efforts to preserve the
confidentiality of the remainder of such information). The disclosing Person
will not, and will not permit any of its affiliates or Representatives to,
oppose any motion for confidentiality brought by the affected party. The
parties hereto will continue to be bound by their obligations pursuant to this
Section 11.3 for any information that is not required to be disclosed, or that
has been afforded protective treatment, pursuant to such motion.
11.4. Payments to Employees.
(a) After the Closing, the Buyer agrees to pay to the
Transferred Employees in the Ordinary Course of Business all accrued bonuses
reflected on the Financial Statements and set forth in Schedule 11.4(a). All
accrued bonuses for employees of the Parent shall be paid directly by the
Parent and the Parent shall indemnify the Buyer for all Damages arising or
resulting from any non-payment of such accrued bonuses.
(b) After the Closing, the Buyer agrees promptly to
adopt a severance plan for the Transferred Employees that is substantially
similar to the Company's severance plan for employees attached hereto as
Schedule 11.4(b) and shall keep such severance plan in effect for at least
eighteen (18) months after the Closing Date.
11.5. Amounts Received In Respect of Assets.
Amounts received by the Company or the Parent on or after the
Closing Date in respect of any Assets (including without limitation, accounts
receivable of the Business) shall be
48
held in trust by the Company or the Parent for the benefit of the Buyer and
shall be paid over to the Buyer promptly upon receipt by the Company or the
Parent. Any such amounts received by the Company or the Parent by wire transfer
shall be paid over to the Buyer promptly by wire transfer of immediately
available funds to an account of the Buyer designated by the Buyer in a written
notice to the Company or the Parent. The Company and the Parent shall promptly
send the Buyer copies of all remittance advices and checks related to payments
received by the Company or the Parent with respect to such items. The Buyer
shall notify the Business' customers of the change in address of the owner of
the Assets as may be required in order for such customers to properly remit any
payments required under any applicable Asset and the Company and the Parent
shall cooperate with the Buyer as is reasonably necessary to so notify such
customers.
11.6. Survival.
The provisions of this Article XI shall survive the Closing.
ARTICLE XII - CLOSING
12.1. Closing.
Unless this Agreement shall have been terminated and the
purchase of the Assets herein contemplated shall have been abandoned pursuant
to the provisions of Article XIII hereof, the closing (the "Closing") will be
held at the offices of Dechert, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx, xx
February 14, 2003 or such other date or place as the parties may agree to in
writing (the "Scheduled Closing Date"); provided, however, that if any of the
conditions provided for in Articles VI and VII shall not have been satisfied or
waived by the Scheduled Closing Date, then the Closing shall occur within three
business days after such conditions have been satisfied or waived or such other
date or place as the parties may agree to in writing. The date on which the
Closing shall occur is sometimes referred to herein as the "Closing Date."
12.2. Deliveries by the Company and the Parent at Closing.
(a) At the Closing, the Company and the Parent will
deliver or cause to be delivered to the Buyer:
(i) a xxxx of sale, assignment and assumption
agreement for the Assets and the Assumed Liabilities, duly
executed by the Company, substantially in the form of Exhibit
E (the "Xxxx of Sale and Assumption Agreement");
(ii) assignments of all Intellectual Property,
each duly executed and, where necessary or desirable, in
recordable form, in form and substance reasonably
satisfactory to the Buyer;
(iii) all such other instruments of assignment,
transfer or conveyance as shall, in the reasonable opinion of
the Buyer and its counsel, be necessary to vest in the Buyer
good, valid and marketable title to the Assets and to put the
Buyer in actual possession or control of the Assets;
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(iv) title certificates to any motor vehicles
included in the Assets, duly executed by the Company
(together with any other transfer forms necessary to transfer
title to such vehicles);
(v) a receipt for the Purchase Price duly
executed by the Company;
(vi) certificates of each of the Company's and
the Parent's organization, valid existence and good standing
as a domestic corporation in the state of its incorporation
as of a date no more than five (5) days prior to the Closing
Date;
(vii) the Transaction Documents to which the
Parent or the Company is a party, duly executed by the Parent
or the Company, as appropriate;
(viii) affidavits of each of the Parent and the
Company, prepared pursuant to Section 1445 of the Code and
the regulations thereunder, stating, under penalties of
perjury, the Parent's and the Company's taxpayer
identification numbers and that neither the Parent nor the
Company is a foreign person pursuant to Section 1445(b)(2) of
the Code;
(ix) the certificates and other documents
required to be delivered by the Company or the Parent
pursuant to Article VI; and
(x) such other previously undelivered documents
required to be delivered by the Company or the Parent to the
Buyer at or prior to the Closing in connection with the
transactions contemplated by this Agreement.
(b) At the Closing, the Company shall deliver to the
Escrow Agent the Escrow Agreement.
12.3. Deliveries by Buyer at Closing.
(a) At the Closing, the Buyer will deliver or cause to
be delivered to the Company:
(i) the Closing Payment;
(ii) the Deposit Amount;
(iii) the Xxxx of Sale and Assumption Agreement,
duly executed by the Buyer;
(iv) a certificate of the Buyer's organization,
valid existence and good standing as a domestic corporation
in the state of its incorporation as of a date no more than
five (5) days prior to the Closing Date;
(v) the Transaction Documents to which the
Buyer is a party, duly executed by the Buyer;
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(vi) the certificates and other documents
required to be delivered by the Buyer pursuant to Article
VII; and
(vii) such other previously undelivered documents
required to be delivered by the Buyer to the Company at or
prior to the Closing in connection with the transactions
contemplated by this Agreement.
(b) At the Closing, the Buyer shall deliver to the
Escrow Agent the Escrow Agreement.
ARTICLE XIII - TERMINATION
13.1. Termination.
This Agreement may be terminated and the transactions
contemplated herein may be abandoned on or before the Closing Date:
(a) by the mutual consent of the Company and the Buyer;
(b) by the Buyer, by written notice to the Company, at
any time (i) if the representations and warranties of the Parent or the Company
in this Agreement were incorrect in any material respect when made or at any
time thereafter, or (ii) the Parent or the Company is in breach in any material
respect of any of its covenants or agreements in this Agreement (a "Parent
Breach"), and, in either of such cases, such Parent Breach continues uncured
for thirty (30) days after written notice thereof by the Buyer;
(c) by the Company, by written notice to the Buyer, at
any time (i) if the representations and warranties of the Buyer in this
Agreement were incorrect in any material respect when made or at any time
thereafter, or (ii) the Buyer is in breach in any material respect of any of
its covenants or agreements in this Agreement (a "Buyer Breach"), and, in
either of such cases, such Buyer Breach continues uncured for thirty (30) days
after written notice thereof by the Parent; or
(d) by the Company or the Buyer by giving written notice
to the other party if the Closing shall not have occurred on or before February
21, 2003.
13.2. Procedure Upon Termination.
In the event of termination of this Agreement pursuant to
Section 13.1, all obligations of the parties hereto under this Agreement shall
terminate and there shall be no liability or obligation on the part of the
Company, the Parent or the Buyer to any other party hereto, except that (i) the
obligations of the parties under Section 1.5(c) [Deposit Amount], Section 10.6
[Public Announcements], Section 10.7 [HSR Filing], Section 14.1 [Expenses] and
Section 14.13 [Governing Law] of this Agreement shall remain in full force and
effect and (ii) subject to Section 1.5(c)(ii), such termination shall not
relieve any party of any liability for any breach of this Agreement.
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ARTICLE XIV - GENERAL PROVISIONS
14.1. Expenses.
The parties agree that the Parent shall bear and pay for any
and all Company Expenses. For purposes of this Agreement, "Company Expenses"
shall mean any and all fees and out-of-pocket costs and expenses (including,
without limitation, any bonuses, stay bonuses, and other payments to director,
officers or employees, and any fees and expenses of counsel to the Company or
the Parent or any other advisors, experts or representatives retained by any of
them) incurred by the Company prior to the Closing Date in connection with the
negotiation, preparation and performance of this Agreement and the transactions
contemplated hereby (whether payable prior to, at or after the Closing Date).
Except as otherwise provided in this Agreement, all expenses incurred pursuant
to this Agreement and the transactions contemplated hereby shall be paid by the
party incurring the expense.
14.2. Certain Filings and Consents.
The Company, the Parent and the Buyer will use their
respective best efforts to comply with all legal requirements which may be
imposed on them with respect to the transactions contemplated by this
Agreement. The Company, the Parent and the Buyer will use their respective best
efforts to obtain (and to cooperate with any other party in obtaining) any
consent, authorization, order or approval of, or exemption by, any regulatory
authority, or third party, required to be obtained in connection with the
transactions contemplated by this Agreement.
14.3. Further Assurances.
(a) Each party hereto agrees to use such party's best
efforts to cause the conditions to such party's obligations herein set forth to
be satisfied at or prior to the Closing insofar as such matters are within its
control. Each of the parties agrees to execute and deliver any and all further
agreements, documents or instruments necessary to effectuate this Agreement and
the transactions referred to herein or contemplated hereby or reasonably
requested by the other party to perfect or evidence its rights hereunder. All
parties will use their best efforts to complete all transactions contemplated
by this Agreement as promptly as practicable.
(b) Notwithstanding anything to the contrary contained
herein, this Agreement shall not constitute an assignment, an attempted
assignment or an agreement to assign, or a novation of, any Contract or Permit
if an assignment, attempted assignment or agreement to assign, or novation of,
the same without the consent of any other party or parties thereto or, in the
case of any Permit, the governmental authority that issued or granted such
Permit, would constitute a breach thereof or not be permitted by law, or in any
material way impair the rights of the Company or the Buyer thereunder. If any
such consent or novation is not obtained on or prior to the Closing and the
Buyer elects to waive the conditions to closing with respect to such consents
or novations as set forth in Sections 6.4 and 6.5 hereof, each of the Company
and the Parent shall use its best efforts to obtain all such consents and
novations after the Closing (and, if and when such consents and novations are
obtained, the transfer of the applicable Contract or Permit shall be effected
in accordance with the terms of this Agreement).
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In addition, if any such consent or novation is not obtained or if an attempted
assignment or agreement to assign would be ineffective or would impair the
Company's or the Buyer's rights under any such Contract or Permit so that the
Buyer would not receive all material rights needed to conduct the Business,
then each of the Company and the Parent shall (x) use its best efforts to
provide or cause to be provided to the Buyer, to the extent permitted by law,
the full benefits of any such Contract or Permit, (y) pay promptly or cause to
be paid promptly to the Buyer when received all monies and other properties
received by the Company and the Parent with respect to any thereof, provided
that the Buyer performs all the obligations relating thereto, and (z) enforce,
at the request of the Buyer and at the sole expense and for the account of the
Buyer, to the extent permitted by law, any and all rights of the Company
arising from such Contract or Permit against the other party or parties thereto
or the issuer or grantor thereof (including the right to elect to terminate
such Contract or Permit in accordance with the terms thereof upon the written
advice of the Buyer). Furthermore, each of the Company and the Parent shall
take such other actions as may reasonably be requested by the Buyer in order to
place the Buyer, insofar as reasonably possible, in the same position as if
such Contract or Permit had been transferred as contemplated hereby and so that
all the benefits relating thereto, including possession, use, risk of loss,
potential for gain and dominion, control and command, shall inure to the Buyer.
Nothing in this Section 14.3(b) shall in any way (i) diminish the Company's and
the Parent's obligations hereunder to obtain all consents, approvals and
novations and to take all such other actions prior to or at Closing as are
necessary to enable the Company to convey or assign good and marketable title
free and clear of all Liens (other than Permitted Liens) to all the Assets to
the Buyer or (ii) affect the conditions to Closing for the Buyer set forth in
Sections 6.4 and 6.5 hereof. For the avoidance of doubt, the parties agree that
it shall not be a condition to Closing that the Company deliver to the Buyer
any novation of contracts with governmental agencies.
14.4. Notices.
Any notices required hereunder shall be in writing and shall
be deemed sufficiently given by one party to another only if in writing and if
and when delivered or tendered by personal delivery; when transmitted, if
transmitted by fax, electronic or digital transmission method; two days after
it is sent, if sent for next day delivery to a domestic address by recognized
overnight delivery service; or as of three business days after deposit in the
United States mail in a sealed envelope, registered or certified, with postage
prepaid, addressed as follows:
If to the Company or the Parent:
TransTechnology Corporation
000 Xxxxxxx Xxxxxx
Xxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx, Esq.
Facsimile: 908.686.6537
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If to the Buyer: Marathon Power Technologies Company
0000 Xxxxxxxx Xxxxx
Xxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxxxx
President
Facsimile: 254.776.6558
TransDigm, Inc.
Destination Building
26380 Xxxxxxx Xxxxxx Parkway
Xxxxxxxx Xxxxxxx, XX 00000
Attn: W. Xxxxxxxx Xxxxxx
President and Chief Executive Officer
Facsimile: 216.289.4937
With a copy to: Dechert LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxx
Facsimile: 212.698.3599
or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with
this Section 14.4. A notice not given as provided above shall, if it is in
writing, be deemed given if and when actually received by the party to whom it
is given.
14.5. Successors.
This Agreement shall be binding upon and shall inure to the
benefit of each of the parties hereto and their successors and assigns. Except
as expressly provided herein, this Agreement shall not inure to the benefit of
any persons or entities not a party hereto.
14.6. Permitted Assignments.
The Buyer may assign its rights hereunder to a wholly-owned
subsidiary of the Buyer, with recourse, and additionally the Buyer (or such
subsidiary, if applicable) may pledge, assign and grant to the Buyer's
institutional lenders, for the benefit of such lenders, a continuing security
interest and lien on all of the Buyer's or such subsidiary's right, title and
interest in and to this Agreement and any and all related agreements, as
security for the payment and performance of all obligations of the Buyer or
such subsidiary to such lenders by reason of borrowings or the guarantee of
borrowings, or otherwise; provided, however, that the Buyer shall not be
released or discharged from any of its obligations as "Buyer" under this
Agreement and any transactions contemplated by this Agreement.
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14.7. Entire Agreement.
This Agreement, together with the exhibits and schedules
hereto (which are all incorporated herein by this reference) and the other
Transaction Documents, constitute the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements and
understandings of the parties in connection herewith; provided, however, that
the provisions of that certain non-disclosure agreement dated August 6, 2002
given by the Buyer (regarding the confidentiality of information supplied by
the Company to the Buyer) shall remain in full force and effect except to the
extent inconsistent herewith.
14.8. Amendment and Modification.
Subject to applicable law, this Agreement may be amended,
modified and supplemented by written agreement of the parties hereto, at any
time prior to the Closing Date with respect to any of the terms contained
herein.
14.9. Waiver of Compliance.
The failure by any party hereto to comply with any
obligation, covenant, agreement or condition contained herein may be expressly
waived in writing by the party or parties hereto adversely affected by such
failure, but such waiver or failure to insist upon strict compliance shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure.
14.10. Gender; Number.
Except where the context otherwise requires, words used in
the masculine gender include the feminine and neuter; the singular number
includes the plural, and the plural the singular.
14.11. Severability.
Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. If any provision is held to be invalid or
unenforceable, such provision shall be construed by the appropriate judicial
body by limiting or reducing it to the minimum extent necessary to make it
legally enforceable.
14.12. Construction.
The parties have participated jointly in the negotiation and
drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
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14.13. Governing Law.
This Agreement shall be construed and enforced in accordance
with, and governed by, the laws of the State of Connecticut.
14.14. Headings; Interpretation.
(a) The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
(b) When reference is made in this Agreement to an
Article or Section or Schedule, such reference shall be to an Article, Section
or Schedule of this Agreement unless otherwise indicated. Whenever the words
"included", "includes" or "including" (or any other tense or variation of the
word "include") are used in this Agreement, they shall be deemed to be followed
by the words "without limitation". As used in this Agreement, the auxiliary
verbs "will" and "shall" are mandatory, and the auxiliary verb "may" is
permissive (and, by extension, is prohibitive when used negatively, as a denial
of permission). All accounting terms used but not otherwise defined in this
Agreement shall have the meanings determined by GAAP. The words "hereof",
"herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Any agreement, instrument or statute defined or
referred to herein or in any document or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes.
14.15. Enforcement of Agreement.
The parties hereby acknowledge and agree that money damages
would not be adequate compensation for the damages that a party would suffer by
reason of a breach of the following enumerated sections of this Agreement
(Sections 10.2, 10.3, 10.4, 11.2 and 11.3) (the "Specific Performance
Sections") or a failure of any other party to perform any of its obligations
under the Specific Performance Sections. Therefore, each party hereto agrees
that in addition to and without limiting any other remedy or right it may have,
the non-breaching party will have the right to an injunction, temporary
restraining order or other equitable relief in any court of competent
jurisdiction enjoining any such breach and enforcing specifically the terms and
provisions of the Specific Performance Sections.
14.16. Counterparts.
This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original but all of which shall constitute one
and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first written above.
NORCO, INC.
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Secretary
TRANSTECHNOLOGY CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President, Secretary
and General Counsel
MARATHON POWER TECHNOLOGIES COMPANY
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Treasurer and Assistant Secretary
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