1
ASSET PURCHASE AND CONTRIBUTION AGREEMENT
by and between
FIGGIE INTERNATIONAL INC.
and
PRIMUS HOLDINGS, L.P.
Dated as of February 29, 1996
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TABLE OF CONTENTS
Page
1. Purchase and Sale of Assets; Assumption of Certain
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Included Assets. . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . 2
1.3. Instruments of Conveyance and Transfer . . . . . . . . . . . 2
1.4. Assignment of Certain Contracts and Rights . . . . . . . . . 2
1.5. Further Assurances . . . . . . . . . . . . . . . . . . . . . 2
1.6. Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . 3
1.7. Liabilities Not Assumed. . . . . . . . . . . . . . . . . . . 3
2. Closing; Payment of Purchase Price at Closing. . . . . . . . . . . 3
2.1. Closing Date and Time. . . . . . . . . . . . . . . . . . . . 3
2.2. Purchase Price and Payment . . . . . . . . . . . . . . . . . 3
2.3. Assumption of Scheduled Liabilities. . . . . . . . . . . . . 4
2.4. Post-Closing Adjustment. . . . . . . . . . . . . . . . . . . 4
3. Representations and Warranties . . . . . . . . . . . . . . . . . . 5
3.1. Representations and Warranties of the Seller . . . . . . . . 5
3.1.1. Due Organization; Good Standing and Power. . . . . . . . 5
3.1.2. Authorization and Validity of Agreement. . . . . . . . . 6
3.1.3. No Governmental Approvals or Notices Required;
No Conflict with Instruments to which the
Seller is a Party. . . . . . . . . . . . . . . . . . . 6
3.1.4. Financial Information. . . . . . . . . . . . . . . . . . 6
3.1.5. Title to Properties; Absence of Liens and
Encumbrances; Leases . . . . . . . . . . . . . . . . . 7
3.1.6. List of Properties, Contracts, Permits and
Other Data . . . . . . . . . . . . . . . . . . . . . . 7
3.1.7. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 9
3.1.8. Insurance. . . . . . . . . . . . . . . . . . . . . . . . 9
3.1.9. Labor Controversies. . . . . . . . . . . . . . . . . . . 9
3.1.10. Government Licenses, Permits and Related
Approvals. . . . . . . . . . . . . . . . . . . . . . . 9
3.1.11. Conduct of Business in Compliance with
Regulatory and Contractual Requirements. . . . . . . . 9
3.1.12. Employee Benefit Plans. . . . . . . . . . . . . . . . . 9
3.1.13. Absence of Certain Changes of Events. . . . . . . . . . 11
3.1.14. Certain Fees. . . . . . . . . . . . . . . . . . . . . . 11
3.1.15. Hazardous Substances. . . . . . . . . . . . . . . . . . 11
3.1.16. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.1.17. Interests in Competitors. . . . . . . . . . . . . . . . 12
3.1.18. Intellectual Property . . . . . . . . . . . . . . . . . 12
3.2. Representations and Warranties of the Buyer. . . . . . . . . 12
3.2.1. Due Organization; Good Standing and Power. . . . . . . . 12
3.2.2. Authorization and Validity of Agreement. . . . . . . . . 13
3.2.3. No Governmental Approvals or Notices Required;
No Conflict with Instruments to which the
Buyer is a Party . . . . . . . . . . . . . . . . . . . 13
3.2.4. Legal Proceedings. . . . . . . . . . . . . . . . . . . . 14
3.2.5. Certain Fees . . . . . . . . . . . . . . . . . . . . . . 14
3.2.6. No Knowledge . . . . . . . . . . . . . . . . . . . . . . 14
3.3. Survival of Representations, etc . . . . . . . . . . . . . . 14
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4. Transactions Prior to Closing. . . . . . . . . . . . . . . . . . . 15
4.1. Access to Information Concerning Properties and
Records; Confidentiality . . . . . . . . . . . . . . . . . 15
4.2. Conduct of the Business of the Division Pending
the Closing Date . . . . . . . . . . . . . . . . . . . . . 15
4.3. Further Actions. . . . . . . . . . . . . . . . . . . . . . . 16
4.4. Notification . . . . . . . . . . . . . . . . . . . . . . . . 17
4.5. No Inconsistent Action . . . . . . . . . . . . . . . . . . . 17
4.6. Financing Commitments. . . . . . . . . . . . . . . . . . . . 17
5. Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 17
5.1. Conditions Precedent to Obligations of the Buyer . . . . . . 17
5.1.2. Opinions of Counsel. . . . . . . . . . . . . . . . . . . 18
5.1.3. Consents and Approvals.. . . . . . . . . . . . . . . . . 18
5.1.4. Accuracy of Representations and Warranties . . . . . . . 18
5.1.5. Performance of Agreements. . . . . . . . . . . . . . . . 18
5.1.6. Officer's Certificate. . . . . . . . . . . . . . . . . . 18
5.1.7. Actions and Proceedings. . . . . . . . . . . . . . . . . 18
5.1.8. Lease and Lease Assignment . . . . . . . . . . . . . . . 19
5.1.9. Patents. . . . . . . . . . . . . . . . . . . . . . . . . 19
5.1.10. Trademarks. . . . . . . . . . . . . . . . . . . . . . . 19
5.1.11. License Agreement . . . . . . . . . . . . . . . . . . . 19
5.1.12. Compliance Letters. . . . . . . . . . . . . . . . . . . 19
5.2. Conditions Precedent to the Obligations of the
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2.2. Opinion of Counsel.. . . . . . . . . . . . . . . . . . . 20
5.2.3. Consents and Approvals.. . . . . . . . . . . . . . . . . 20
5.2.4. Accuracy of Representations and Warranties . . . . . . . 20
5.2.5. Performance of Agreements. . . . . . . . . . . . . . . . 20
5.2.6. Officer's Certificate. . . . . . . . . . . . . . . . . . 20
5.2.7. Assumption Agreements. . . . . . . . . . . . . . . . . . 20
5.2.8. Actions and Proceedings. . . . . . . . . . . . . . . . . 20
5.2.9. License Agreement. . . . . . . . . . . . . . . . . . . . 21
6. Employee Relations and Benefits. . . . . . . . . . . . . . . . . . 21
7. Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.2. No Liabilities in Event of Termination . . . . . . . . . . . 22
8. Transactions Subsequent to Closing . . . . . . . . . . . . . . . . 22
8.1. Access to Books and Records. . . . . . . . . . . . . . . . . 22
8.2. Settlement of Litigations. . . . . . . . . . . . . . . . . . 23
8.3. Further Agreements . . . . . . . . . . . . . . . . . . . . . 23
8.4. Confidentiality. . . . . . . . . . . . . . . . . . . . . . . 24
9. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.1. Public Announcements . . . . . . . . . . . . . . . . . . . . 24
9.2. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.3. Transfer Taxes and Recording Expenses;
Title Policy and Survey Costs. . . . . . . . . . . . . . . 24
9.4. Indemnification. . . . . . . . . . . . . . . . . . . . . . . 25
9.5. Limitation on Competition. . . . . . . . . . . . . . . . . . 28
9.8. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
9.9. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 30
9.10. Binding Effect; Benefit . . . . . . . . . . . . . . . . . . 30
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9.11. Bulk Sales Law. . . . . . . . . . . . . . . . . . . . . . . 30
9.12. Assignability . . . . . . . . . . . . . . . . . . . . . . . 30
9.13. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . 30
9.14. Section Headings; Table of Contents . . . . . . . . . . . . 30
9.15. Severability. . . . . . . . . . . . . . . . . . . . . . . . 30
9.16. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 31
9.17. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . 31
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LIST OF SCHEDULES AND EXHIBITS TO AGREEMENT
SCHEDULES
Schedule 1.1 - Included Assets
Schedule 1.2 - Excluded Assets
Schedule 1.6 - Assumed Liabilities
Schedule 3.1.3 - Filings, Consents and Approvals
Schedule 3.1.4 - Scheduled Liabilities
Schedule 3.1.5 - Liens, Encumbrances and Restrictions
Schedule 3.1.6(a) - Intellectual Property and Non-
Governmental Licenses
Schedule 3.1.6(b) - Personal Property
Schedule 3.1.6(c) - Contracts and Agreements
Schedule 3.1.6(d) - Licenses and Permits
Schedule 3.1.6(e) - Marketing Promotions
Schedule 3.1.6(f) - Employee Agreements and Plans
Schedule 3.1.6(g) - Breaches and Defaults
Schedule 3.1.7 - Legal Proceedings
Schedule 3.1.9 - Labor Controversies
Schedule 3.1.11 - Compliance with Regulatory and
Contractual Requirements
Schedule 3.1.12(a) - Business Employee Plans
Schedule 3.1.13 - Material Adverse Changes
Schedule 3.1.15 - Compliance with Environmental Laws
Schedule 3.1.16 - Tax Extensions
Schedule 5.1.3 - Seller's Required Consents
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EXHIBITS
EXHIBIT A - Form of Assumption Agreement
EXHIBIT B - Form of Partnership Agreement
EXHIBIT C - Form of Scheduled Liabilities Assumption
Agreement
EXHIBIT D - Form of Opinion of General Counsel of the
Seller
EXHIBIT E - Form of Opinion of LeBoeuf, Lamb, Xxxxxx &
XxxXxx, L.L.P.
EXHIBIT F - Form of Amended and Restated Lease
EXHIBIT G - Form of Assignment and Assumption of Amended
and Restated Lease
EXHIBIT H - Form of Assignment of Patents
EXHIBIT I - Form of Buyer Assignment of Trademarks
EXHIBIT J - Form of Figgie Licensing Corporation
Assignment of Trademarks
EXHIBIT K - Form of License Agreement
EXHIBIT L - Form of Opinion of Xxxxxx & Xxxx, L.L.P.
EXHIBIT M - Form of Opinion of Weinstein, Boldt, Racine
& Halfhide
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ASSET PURCHASE AND CONTRIBUTION AGREEMENT
This Agreement (the "Agreement"), dated as of
February 29, 1996, is being made and entered into by and between
Figgie International Inc., a Delaware corporation (the "Seller"),
and Primus Holdings, L.P., a Delaware limited partnership (the
"Buyer").
W I T N E S S E T H:
WHEREAS, Interstate Engineering (the "Division") is a
division of the Seller which designs, manufactures and
distributes vacuum cleaners, distributes household steam cleaning
systems, and manufactures heat detectors and certain die cast
aluminum products (such businesses being hereinafter collectively
referred to as the "Business"), and installs residential fire
sprinkler systems (the "Installation Business"); and
WHEREAS, subject only to the limitations and exclusions
contained in this Agreement and on the terms and conditions
hereinafter set forth, the Buyer desires to purchase from the
Seller and the Seller desires to sell or cause to be sold or
contributed to the Buyer the assets of the Business.
NOW, THEREFORE, in consideration of the premises and of
the respective covenants, representations, warranties and
agreements herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. Purchase and Sale of Assets; Assumption of Certain
Liabilities
1.1. Included Assets. On the basis of the
representations, warranties, covenants and agreements and subject
to the satisfaction or waiver of the conditions set forth in this
Agreement, on the Closing Date, subject to Section 1.2, the
Seller shall grant, sell, convey, assign, transfer, deliver and
contribute to the Buyer, or shall cause its affiliates to grant,
sell, convey, assign, transfer, deliver and contribute to the
Buyer, and the Buyer shall purchase and acquire from the Seller
or its affiliates, the assets, rights, leases, fixtures,
accessions, claims and contracts of the Business at the Closing
Date, including all of the following assets, rights, leases,
fixtures, accessions, claims and contracts: (a) those underlying
the Closing Balance Sheet with such changes to such assets as may
occur from January 31, 1996 to the Closing Date in the ordinary
course of the Business; (b) those located at the Division's
facilities in Anaheim, California (the "Plant") on the Closing
Date; and (c) those otherwise substantially related to the
Business on the Closing Date, including, without limitation, the
assets, or categories thereof, set forth on Schedule 1.1 hereto
(all such assets, rights, leases, fixtures, accessions, claims
and contracts being hereinafter collectively referred to as the
"Assets").
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1.2. Excluded Assets. Notwithstanding anything to the
contrary provided in Section 1.1 hereof, none of the assets set
forth on Schedule 1.2 hereto shall be included in the Assets to
be purchased and sold hereunder.
1.3. Instruments of Conveyance and Transfer. On the
Closing Date, the Seller shall (a) deliver or cause to be
delivered to the Buyer such bills of sale, endorsements,
consents, assignments, and other good and sufficient instruments
of conveyance and assignment as shall be reasonably required by
the Buyer and its counsel and as shall be effective to vest in
the Buyer good and marketable title in and to the Assets subject
only to Permitted Encumbrances and (b) transfer to the Buyer
copies of all the contracts, agreements, commitments, books,
records, files and other data relating to the Assets.
1.4. Assignment of Certain Contracts and Rights.
Subject to Section 5.1.3, the Seller shall use its commercially
reasonable efforts prior to and, if necessary, after the Closing
Date to obtain such consents or approvals as may be required for
the assignment or transfer of the contracts, agreements, leases,
commitments and rights to be transferred to the Buyer hereunder;
provided, however, that the Seller shall not be required to
institute any litigation, or to pay or agree to pay any amount,
in order to obtain any such consent or approval. If any consent
or approval is not obtained, the Seller and the Buyer agree to
cooperate in any reasonable arrangements (which may include, in
the case of leased property, a sublease thereof) designed to
provide for the Buyer all of the benefits (and to assure that the
Seller will be effectively relieved from related liabilities)
under such contract, agreement, lease, commitment or right;
provided, however, that any determination to waive the condition
set forth in Section 5.1.3 with respect to any of the consents
and approvals set forth on Schedule 5.1.3 shall be made by the
Buyer. Nothing in this Agreement shall be construed as an
attempt or agreement to assign (a) any contract which is non-
assignable without the consent of the other party or parties
thereto unless such consent shall have been given or (b) any
contract or claim as to which all the remedies for the
enforcement thereof would not pass to the Buyer as an incident of
the assignments provided for by this Agreement.
1.5. Further Assurances. From time to time after the
Closing Date, the Seller will execute and deliver, or cause to be
executed and delivered, such other instruments of conveyance,
assignment, transfer and delivery and will take such other
actions as the Buyer may reasonably request in order to more
effectively transfer, convey, assign, and deliver to the Buyer
any of the Assets, or to enable the Buyer to exercise and enjoy
all rights and benefits of the Seller and its affiliates with
respect to the Assets and the Business.
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1.6. Assumed Liabilities. As additional consideration
for the purchase of the Assets, the Buyer shall execute and
deliver to the Seller an assumption agreement, in the form
attached hereto as Exhibit A (the "Assumption Agreement"),
whereby the Buyer, on and as of the Closing Date, assumes, and
agrees to pay, perform and discharge when due, the liabilities
and obligations of the Seller and its affiliates as of the
Closing Date set forth on Schedule 1.6 relating to the Division
or the Assets. The liabilities and obligations assumed by the
Buyer pursuant to the Assumption Agreement are sometimes
hereinafter referred to as the "Assumed Liabilities." The dollar
amounts for each of the Assumed Liabilities reflected on
Schedule 1.6 are the amounts for such liabilities set forth on
the Closing Balance Sheet.
1.7. Liabilities Not Assumed. Notwithstanding
anything in this Agreement to the contrary, except for the
Assumed Liabilities and the Scheduled Liabilities, the Buyer
shall not assume any, and the Seller shall retain and be
responsible for all, of the liabilities and obligations of the
Seller and its affiliates relating to the Business, including,
without limitation, any liability or obligation payable to the
Seller or any of its affiliates.
2. Closing; Payment of Purchase Price at Closing
2.1. Closing Date and Time. The closing with respect
to the transactions provided for in this Agreement (the
"Closing") shall take place at the offices of Xxxxxx Xxxxxx &
Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, XX 00000-0000, at 10 a.m.
local time, on February 29, 1996, or at such other time and place
as shall be agreed upon by the Seller and the Buyer. The actual
date of the Closing is herein called the "Closing Date."
2.2. Purchase Price and Payment. Subject to Section
2.4, in consideration for the sale and contribution of the
Assets, and subject to the terms and conditions of this
Agreement, the Buyer shall on the Closing Date (a) assume the
Assumed Liabilities as provided in Section 1.6 hereof and
(b) deliver to the Seller at the Closing (i) $19,000,000 less
$265,000 for certain employee related obligations of the Seller
(the "Cash Consideration") by wire transfer of immediately
available funds to such bank account or accounts as may be
designated by the Seller and (ii) $6,000,000 in the form of an
equity partnership interest in the Buyer (the "Partnership
Consideration"), which interest shall be on the terms and
conditions contained in the partnership agreement (the
"Partnership Agreement"), substantially in the form attached as
Exhibit B hereto. The Partnership Consideration shall be issued
to the Seller in exchange for the contribution of those Assets
described on Exhibit D to the Partnership Agreement. The
"Purchase Price" shall mean $25,000,000. Within a reasonable
period of time following Closing, the Buyer shall prepare and
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deliver to the Seller a schedule (the "Allocation Schedule"),
which Schedule shall be subject to the reasonable approval of the
Seller, setting forth the manner in which the Purchase Price will
be allocated among the Assets. The Buyer and the Seller agree to
act in accordance with the Allocation Schedule in all tax
returns, reports and filings.
2.3. Assumption of Scheduled Liabilities. The Seller
hereby agrees to pay to the Buyer at Closing, in exchange for the
Buyer's agreement to assume all liabilities, obligations and
debts of the Division set forth on Schedule 3.1.4 (the "Scheduled
Liabilities") as of the Closing Date, $800,000 (the "Scheduled
Liabilities Amount") by wire transfer of immediately available
funds to such bank account or accounts as may be designated by
the Buyer. In consideration of the payment by the Seller of the
Scheduled Liabilities Amount, the Buyer shall execute and deliver
to the Seller an assumption agreement, in the form attached
hereto as Exhibit C (the "Scheduled Liabilities Assumption
Agreement"), whereby the Buyer agrees to assume and to pay,
perform and discharge the Scheduled Liabilities. The Buyer
agrees that, upon receipt of the Scheduled Liabilities Amount,
the Seller will have satisfied in full all obligations that the
Seller or any of its affiliates has, or may have, with respect to
the Scheduled Liabilities.
2.4. Post-Closing Adjustment. The Purchase Price
shall be subject to adjustment following the Closing as
hereinafter provided. Within fifteen (15) business days after
the Closing Date, the Seller shall prepare and deliver to the
Buyer a proposed balance sheet of the Business as of the close of
business on the Closing Date (the "Final Balance Sheet") along
with a certification of the chief financial officer of the Seller
that such balance sheet was prepared in accordance with the books
and records of the Division and in conformity with the accounting
practices and procedures used to prepare the Closing Balance
Sheet. Subject to Section 8.1, the Buyer agrees that the Seller
shall have access to the books and records relating to the
Business for the purpose of preparing the Final Balance Sheet.
The Buyer shall review the Final Balance Sheet and, in
the event that the Buyer disagrees with the Seller's treatment of
any item or items on such balance sheet, shall provide to the
Seller, within fifteen (15) business days after receipt of such
balance sheet (the "Review Period"), a written notice (the
"Objection Notice") setting forth the disputed item or items and
in reasonable detail the nature of and reasons for the Buyer's
objections with respect to the treatment of such item or items;
it being understood that any item or items on the Final Balance
Sheet not addressed in the Objection Notice shall be deemed
accepted by the Buyer. The Final Balance Sheet shall be deemed
accepted by the Buyer unless the Buyer delivers the Objection
Notice within the Review Period. In the event that the Buyer and
the Seller are unable to agree on the manner in which any item or
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items should be treated in preparation of the Final Balance
Sheet, such item or items shall be promptly referred by the Buyer
and the Seller to Coopers & Xxxxxxx L.L.P. ("C&L") for resolution
within fifteen (15) business days. The manner in which C&L shall
in writing determine that such item or items should be treated in
the preparation of the Final Balance Sheet shall be binding and
conclusive on the parties and shall be so reflected in the Final
Balance Sheet. The Buyer and the Seller shall share equally the
costs of retaining C&L.
If the amount of Net Assets of the Division set forth
on the Final Balance Sheet (the "Final Net Assets Amount")
exceeds $3,495,000 (i.e., the amount of Net Assets of the
Division set forth on the Closing Balance Sheet) (the "Closing
Net Assets Amount") by more than ten percent, then the Buyer
shall pay to the Seller an amount equal to (a) the excess of
(i) the Final Net Assets Amount over (ii) the Closing Net Assets
Amount plus (b) interest on such excess from the Closing Date to
but excluding the date of payment at an interest rate equal to
eight percent (8%). If the Closing Net Assets Amount exceeds the
Final Net Assets Amount by more than ten percent, then the Seller
shall pay to the Buyer an amount equal to (x) the excess of
(i) the Closing Net Assets Amount over (ii) the Final Net Assets
Amount plus (y) interest on such excess from the Closing Date to
but excluding the date of payment at an interest rate equal to
eight percent (8%). Any payment required to be made pursuant to
this Section 2.4 shall be made no later than five (5) business
days after determination of the amount due, by wire transfer of
immediately available funds to such account or accounts as
designated by the party receiving the payment.
3. Representations and Warranties
3.1. Representations and Warranties of the Seller.
The Seller hereby represents and warrants to the Buyer as
follows:
3.1.1. Due Organization; Good Standing and Power. The
Seller and each of its affiliates that owns any of the Assets is
a corporation validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the
requisite power and authority to own, lease and operate the
Assets to be sold hereunder and to conduct the business of the
Division as now conducted by it. The Seller has all requisite
power and authority to enter into this Agreement and any other
agreement contemplated hereby and to perform its obligations
hereunder and thereunder, and each affiliate of the Seller that
owns any of the Assets has all requisite power and authority to
convey good and marketable title to the Buyer with respect to the
Assets owned by it. The Seller and each of its affiliates that
owns any of the Assets is duly authorized, qualified or licensed
to do business as a foreign corporation, and is in good standing,
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in each of the jurisdictions in which the conduct of the Business
by it requires such authorization, qualification or licensing.
3.1.2. Authorization and Validity of Agreement. The
execution, delivery and performance by the Seller of this
Agreement and any other agreements contemplated hereby and the
consummation by it of the transactions contemplated hereby and
thereby have been duly authorized. The execution, delivery and
performance by any affiliate of the Seller of any agreement
contemplated hereby and the consummation by such affiliate of the
transactions contemplated by such agreement have been duly
authorized. No other corporate or stockholder action is
necessary for the authorization, execution, delivery and
performance by the Seller or any of its affiliates of this
Agreement and any other agreements contemplated hereby and the
consummation by the Seller and its affiliates of the transactions
contemplated hereby or thereby. This Agreement has been duly
executed and delivered by the Seller and constitutes a valid and
legally binding obligation of the Seller, enforceable against the
Seller in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing.
3.1.3. No Governmental Approvals or Notices Required;
No Conflict with Instruments to which the Seller is a Party.
Except as described in Schedule 3.1.3 hereto, the execution,
delivery and performance of this Agreement and any other
agreements contemplated hereby by the Seller or any of its
affiliates and the consummation by the Seller and any of its
affiliates of the transactions contemplated hereby and thereby
(a) will not violate (with or without the giving of notice or the
lapse of time or both), or require any consent, approval, filing
or notice under, any provision of any material law, rule or
regulation, court order, judgment or decree applicable to the
Seller or any such affiliate, and (b) will not conflict with, or
result in the breach or termination of any provision of, or
constitute a default under, or result in the acceleration of the
performance of the obligations of the Seller or any such
affiliate under, or result in the creation of a lien, charge or
encumbrance upon a portion of the properties, assets or business
of the Division pursuant to, the charter or by-laws of the Seller
or any such affiliate, or any material indenture, mortgage, deed
of trust, lease, licensing agreement, contract, instrument or
other agreement to which the Seller or any such affiliate is a
party or by which the Seller or any such affiliate or any of the
Assets held by the Seller or any such affiliate is bound.
3.1.4. Financial Information. The Seller has
delivered to the Buyer true and complete copies of (a) the
Division's unaudited balance sheets at December 31, 1995, 1994
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and 1993 and the related unaudited statements of income for the
fiscal years then ended (the "Financial Statements") and (b) the
Division's unaudited balance sheet at January 31, 1996 (the
"Closing Balance Sheet") and related unaudited statements of
income for the period then ended (together with the Closing
Balance Sheet, the "Interim Financial Statements"). The
Financial Statements and the Interim Financial Statements have
been prepared in accordance with accounting principles
consistently applied throughout the periods and, except to the
extent that such financial statements do not include those
obligations and liabilities set forth on Schedule 3.1.4, fairly
and accurately present the financial position, assets and
liabilities of the Division at the dates indicated and the
results of operations for the periods indicated. Except as set
forth on Schedule 3.1.4, the Division has no liabilities,
obligations or debts required to be reflected in the Financial
Statements and the Interim Financial Statements.
3.1.5. Title to Properties; Absence of Liens and
Encumbrances; Leases. As of the Closing Date, the Seller or its
affiliates will have good and marketable title to all personal
property, leasehold interests, fixtures and accessions relating
to the Business included as Assets, tangible and intangible, free
and clear of all claims, liens, security interests, charges,
leases, encumbrances, licenses or sublicenses and other
restrictions of any kind and nature, other than (a) as
specifically set forth in Schedule 3.1.5, (b) liens for current
taxes not yet due and payable, (c) statutory liens of
warehousemen, mechanics and materialmen and other like inchoate
statutory liens which arose in the ordinary course of business,
(d) purchase money liens arising out of the purchase of products
or services in the ordinary course of business and consistent
with past practices, which purchase money liens, if any, are
included in Assumed Liabilities, and (e) liens securing Assumed
Liabilities (the exceptions described in the foregoing clauses
(a), (b), (c), (d), and (e) being referred to as "Permitted
Encumbrances").
3.1.6. List of Properties, Contracts, Permits and
Other Data. The following Schedules set forth certain
information with respect to the Assets and the Seller on the date
hereof:
(a) Schedule 3.1.6(a) hereto contains a complete
and correct list of (i) all material trademarks, trademark
registrations and trademark applications, trade names,
copyrights, copyright registrations and copyright
applications and patents owned or used by the Seller or its
affiliates in the manufacture and sale of the Division's
products and (ii) all non-governmental licenses or
sublicenses utilized in the manufacture and sale of the
Division's products granted by or to the Seller or its
affiliates;
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(b) Schedule 3.1.6(b) hereto contains a complete
and correct list of all material personal property utilized
in the manufacture and sale of the Division's products owned
of record or beneficially by the Seller or its affiliates
and all leases of real or personal property utilized in the
manufacture and sale of the Division's products under which
the Seller or an affiliate of the Seller is a lessee;
(c) Schedule 3.1.6(c) hereto contains a complete
and correct list of all material contracts, maintenance and
service agreements, purchase commitments for materials and
services, advertising and promotional agreements, leases
under which the Seller or an affiliate of the Seller is a
lessor and other agreements pertaining to the manufacture
and sale of the Division's products to which the Seller or
an affiliate of the Seller is a party, the benefits of which
are enjoyed in the manufacture and sale of the Division's
products or to which any of the Assets is subject;
(d) Schedule 3.1.6(d) hereto contains a complete
and correct list of all material licenses and permits issued
by governmental authorities relating to the use, maintenance
or occupation of the Plant or the manufacture and sale of
the Division's products (other than sales and use tax
permits);
(e) Schedule 3.1.6(e) hereto contains a complete
and correct list of all material marketing related
obligations, contracts and commitments related to the sale
of the Division's products; and
(f) Schedule 3.1.6(f) hereto contains a complete
and correct list of all collective bargaining agreements,
employment and consulting agreements, executive compensation
plans, bonus plans, deferred compensation agreements,
severance pay arrangements, employee profit-sharing plans,
group life insurance, hospitalization insurance or other
plans or arrangements providing for benefits for Active
Employees. "Active Employees" shall mean any of the
employees of the Business (the "Employees") actively
employed by the Seller in the Business on the Closing Date
and who are United States ("U.S.") salaried or non-union
hourly employees.
True and complete copies of all documents relating to the
Business (including all amendments thereto) referred to in
Schedules 3.1.6(a), 3.1.6(b), 3.1.6(c), 3.1.6(d), 3.1.6(e) and
3.1.6(f) either have been delivered to the Buyer or made
available to the Buyer. Except as specified in Schedule 3.1.6(g)
hereto, all rights, licenses, leases, registrations,
applications, contracts, commitments and other arrangements
relating to the Business referred to in such Schedules are in
full force and effect and are valid and enforceable in accordance
15
with their respective terms. Except as specified in
Schedule 3.1.6(g) hereto, the Seller and its affiliates are not
in breach or default in the performance of any obligation
thereunder and, to the best of the Seller's knowledge, no event
has occurred or has failed to occur whereby any of the other
parties thereto are in breach or default thereof, have been or
will be released therefrom or will be entitled to refuse to
perform thereunder.
3.1.7. Legal Proceedings. Except as described in
Schedule 3.1.7 hereto, there is no litigation, proceeding or
governmental investigation relating to the Division to which the
Seller or any of its affiliates is a party pending or in effect
or, to the best of the Seller's knowledge, threatened against it
or any of its affiliates relating to the Assets or the Business
or the transactions contemplated by this Agreement.
3.1.8. Insurance. The insurable properties relating
to the Business and the conduct of the business of the Division
by the Seller are, and will be until the Closing Date, in the
reasonable judgment of the Seller, adequately insured by
financially sound and reputable insurers, except to the extent
the Seller self-insures on the date hereof, against all risks
usually insured against by persons owning or operating similar
properties or businesses.
3.1.9. Labor Controversies. Except as described on
Schedule 3.1.9 hereto, there are no labor controversies pending,
or, to the best of the Seller's knowledge, threatened against the
Seller or involving the Division.
3.1.10. Government Licenses, Permits and Related
Approvals. The Seller or its affiliates has all material
licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities required
for the conduct of the Business as presently conducted by the
Seller, all of which are binding and in full force and effect.
3.1.11. Conduct of Business in Compliance with
Regulatory and Contractual Requirements. Except as described on
Schedule 3.1.11 hereto, the Seller has conducted the Business so
as to comply in all material respects with all applicable laws,
ordinances, regulations, rights of concession, licenses, know-how
or other proprietary rights of others.
3.1.12. Employee Benefit Plans. (a) The term
"Employee Plan" means any "employee benefit plan" (as defined in
the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), any plan or policy providing for "fringe benefits"
(including but not limited to vacation, paid holidays, personal
leave, employee discount, educational benefit or similar
programs), and any other bonus, incentive, compensation, profit-
sharing, stock, severance, retirement, health, life, disability,
16
group insurance, employment, fringe benefit, or any other similar
plan, agreement, policy or understanding (whether written or
oral, qualified or nonqualified), and any trust, escrow, or other
agreement related thereto. The term "Business Employee Plan"
means an Employee Plan which (i) is maintained or contributed to
by the Business or the Seller for the benefit of the Business, or
(ii) provides benefits, or describes policies or procedures
applicable, to any officer, employee, former officer or former
employee of the Business, or the dependents thereof, regardless
of whether funded. Set forth in Schedule 3.1.12(a) is each
Business Employee Plan. Seller has made available to Buyer, with
respect to any Business Employee Plan, true, accurate and
complete copies of the documents, records or other materials
related thereto reasonably requested by Buyer.
(b) With respect to each Employee Plan maintained or
contributed to, currently or in the past, by Seller or any ERISA
Affiliate, or with respect to which Seller or any ERISA Affiliate
has any liability (the "Seller Controlled Group Plans"), none of
the Seller Controlled Group Plans is a "multiple employer plan"
or "multiemployer plan" (as either such term is defined in
ERISA), nor has Seller or any ERISA Affiliate ever contributed or
been required to contribute to any such plan. "ERISA Affiliate"
means Seller and each corporation, partnership, or other trade or
business, whether or not incorporated, which is or has been
treated as a single employer or controlled group member with
Seller pursuant to Section 414 of the Code or Section 4001 of
ERISA.
(c) Each Business Employee Plan has been operated in
compliance with ERISA, applicable tax qualification requirements
and all other applicable laws, and could be terminated as of the
Closing Date with no liability to Buyer, Seller or any ERISA
Affiliate.
(d) Notwithstanding any provision in this Agreement to
the contrary, Buyer has not agreed to, and shall not, assume,
adopt or succeed to, or have any liability or responsibility with
respect to, any Business Employee Plan or any Seller Controlled
Group Plan or any obligations under any such plans, and Seller
shall indemnify Buyer to the extent Buyer incurs any liability
with respect to any such plans.
(e) The consummation of the transactions contemplated
by this Agreement will not accelerate the time of payment or
vesting, or increase the amount of compensation due to any Active
Employee. No written or oral representations have been made to
any Active Employee promising or guaranteeing any employer
payment or funding for the continuation of medical, dental, life,
or disability coverage for any time period beyond the end of the
current plan year (except to the extent of coverage required by
Section 4980B of the Code).
17
3.1.13. Absence of Certain Changes of Events. Except
as set forth on Schedule 3.1.13, since January 31, 1996, there
has not been (a) any material adverse change in the Business, the
Assets or in the financial condition or results of operations of
the Business; (b) any material damage, destruction or loss
relating to the Business or the Assets, whether or not insured;
(c) any liability created or incurred which Buyer will assume
under this Agreement or the Assumption Agreement other than
liabilities created or incurred in the ordinary course of
business and in amounts not unusual in respect of the Business as
customarily conducted; (d) other than in the ordinary course of
business, any general increase in, or commitment or plan adopted
to increase, the wages, salaries, compensation, pension or other
benefits or payments to the Active Employees; (e) any dividends,
reimbursements or other payments of any nature by the Division,
whether in cash or in property, to or for the benefit of the
Seller or any of its affiliates other than those made by the
Division in the ordinary course of the Business; (f) any salaried
Active Employee hired by the Division; or (g) any rights of
material value waived with respect to the Assets or the Business.
3.1.14. Certain Fees. Except for any fees and
expenses payable to Xxxxx Xxxxxx Inc. which will be paid by the
Seller, neither the Seller nor any of its affiliates nor any of
their respective officers, directors or employees, on behalf of
the Seller or such affiliates, has employed any broker or finder
or incurred any other liability for any brokerage fees,
commissions or finders' fees in connection with the transactions
contemplated hereby.
3.1.15. Hazardous Substances. Except as set forth on
Schedule 3.1.15 hereto, to the best of the Seller's knowledge,
the Seller and its affiliates have complied with respect to the
Assets and the Plant in all respects with all Environmental Laws
(as hereinafter defined) in connection with the generation,
handling, manufacturing, processing, treatment, storage, use,
transfer, release or disposal of hazardous substances, hazardous
wastes, hazardous waste constituents and reaction by-products,
hazardous materials, pesticides, oil and other petroleum
products, and toxic substances, including asbestos and
polychlorinated biphenyls, as those terms are defined pursuant to
Environmental Laws (collectively "Hazardous Substances"). To the
best of the Seller's knowledge, the Assets do not contain any
Hazardous Substances in violation of any Environmental Laws. For
purposes of this Section 3.1.15, "Environmental Laws" shall be
all federal, state and local laws, rules, regulations,
ordinances, programs, permits, guidance, orders and consent
decrees relating to environmental matters in effect as of the
date hereof, including without limitation the Resource
Conservation and Recovery Act (42 U.S.C. 6901 et seq.), as
amended, the Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. 9601 et seq.), as amended, the
18
Federal Clean Water Act (33 U.S.C. 1251 et seq.), as amended, the
Clean Air Act (42 U.S.C. 7401 et seq.), as amended and state and
federal environmental cleanup programs.
3.1.16. Taxes. The Seller has filed all federal,
state, local and foreign tax returns and reports relating to the
Business which are required to be filed by the Seller which
returns and reports were complete and correct and accurately
reflected the matters required to be stated therein and the
amounts of taxes due or obtained extensions therefor, which
extensions are set forth on Schedule 3.1.16. The Seller has
paid, or will timely pay, all federal, state, local and foreign
taxes accrued or due and payable with respect to the Business
relating to the period prior to the Closing Date, including taxes
required to be paid prior to the Closing Date, except for any
taxes which Seller is, in good faith, contesting and for which
adequate reserves have been established on its books. Any and
all of such contested taxes which shall ultimately be deemed to
be due and payable shall be the responsibility of the Seller.
There are no pending federal tax examinations or audits relating
to the Division. There are no tax sharing or other agreements
with respect to taxes relating to the Division.
3.1.17. Interests in Competitors. Neither the Seller
nor any of its affiliates owns, directly or indirectly, any
interest in any person or entity that is a competitor, customer,
or supplier of the Division, that otherwise has business dealings
with the Division or that is engaged in the same business as the
Division.
3.1.18. Intellectual Property. The intellectual
property (the "Intellectual Property") listed in
Schedule 3.1.6(a) constitutes all of the material Intellectual
Property owned by, licensed to, claimed by or otherwise utilized
by Seller or its affiliates in connection with the operation of
the Division or constituting any part of the Assets. Except as
set forth on Schedule 3.1.6.(a), all registrations or
applications with respect thereto are held in Seller's name, and
Seller owns or has the right to use the Intellectual Property
with respect to the products and services and in the geographic
areas where the Intellectual Property is currently being used.
There are no claims or demands of, or infringements alleged by,
any person or entity relating to the ownership or use of any of
the Intellectual Property.
3.2. Representations and Warranties of the Buyer. The
Buyer hereby represents and warrants to the Seller as follows:
3.2.1. Due Organization; Good Standing and Power. The
Buyer is a limited partnership validly existing and in good
standing under the laws of its jurisdiction of organization.
Primus Holdings Corp. ("Primus") is the Buyer's only general
partner and is a corporation validly existing and in good
19
standing under the laws of its jurisdiction of incorporation.
The Buyer and Primus, in its capacity as general partner of the
Buyer, have all requisite partnership or corporate, as the case
may be, power and authority to enter into this Agreement, the
Partnership Agreement and any other agreement contemplated hereby
or thereby and to perform their respective obligations hereunder
and thereunder. Each of the Buyer and Primus is duly authorized,
qualified or licensed to do business, and is in good standing, in
each of the jurisdictions (including California) in which its
right, title or interest in or to any asset, or the conduct of
its business, requires such authorization, qualification or
licensing.
3.2.2. Authorization and Validity of Agreement. The
execution, delivery and performance by the Buyer and Primus, in
its capacity as general partner of the Buyer, of this Agreement,
the Partnership Agreement and any other agreements contemplated
hereby or thereby and the consummation by the Buyer and Primus,
in its capacity as general partner of the Buyer, of the
transactions contemplated hereby and thereby have been duly
authorized and approved by all necessary action of the Buyer and
Primus. No other partnership, corporate or stockholder action,
as the case may be, is necessary for the authorization,
execution, delivery and performance by the Buyer and Primus, in
its capacity as general partner of the Buyer, of this Agreement,
the Partnership Agreement and any other agreement contemplated
hereby or thereby and the consummation by the Buyer and Primus,
in its capacity as general partner of the Buyer, of the
transactions contemplated hereby or thereby. This Agreement and
the Partnership Agreement have been duly executed and delivered
by the Buyer and Primus, in its capacity as general partner of
the Buyer, and constitute valid and legally binding obligations
of the Buyer and Primus, in its capacity as general partner of
the Buyer, enforceable against the Buyer and Primus, in its
capacity as general partner of the Buyer, in accordance with
their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing.
3.2.3. No Governmental Approvals or Notices Required;
No Conflict with Instruments to which the Buyer is a Party. The
execution, delivery and performance of this Agreement, the
Partnership Agreement and any other agreements contemplated
hereby or thereby by the Buyer and Primus, in its capacity as
general partner of the Buyer, and the consummation by them of the
transactions contemplated hereby and thereby (a) will not violate
(with or without the giving of notice or the lapse of time or
both), or require any consent, approval, filing or notice under
any provision of any material law, rule or regulation, court
order, judgment or decree applicable to the Buyer or Primus, and
20
(b) will not conflict with, or result in the breach or
termination of any provision of, or constitute a default under,
or result in the acceleration of the performance of the
obligations of the Buyer or Primus, as the case may be, under,
any organizational documents of the Buyer (including the
Partnership Agreement), the charter or by-laws of Primus or any
material indenture, mortgage, deed of trust, lease, licensing
agreement, contract, instrument or other agreement to which the
Buyer or Primus is a party or by which the Buyer or Primus or any
of their assets or properties is bound.
3.2.4. Legal Proceedings. There is no litigation,
proceeding, or governmental investigation to which the Buyer,
Primus or any of their affiliates is a party pending or in effect
or, to the best of the Buyer's or Primus's knowledge, threatened
against the Buyer, Primus or any of their affiliates relating to
the transactions contemplated by this Agreement.
3.2.5. Certain Fees. Except for any fees and expenses
payable to Xxxxxx Xxxxx & Associates which will be paid by the
Buyer, neither the Buyer nor Primus nor any of their respective
officers, directors or employees, on behalf of the Buyer or
Primus, has employed any broker or finder or incurred any other
liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated hereby.
3.2.6. No Knowledge. As of the Closing Date, the
Buyer has no knowledge of any fact not disclosed herein or on the
Schedules hereto which, without disclosure, would result in the
Seller being in breach of any of its representations, warranties
or covenants contained herein.
3.3. Survival of Representations, etc. The
representations and warranties contained in this Agreement shall
survive the Closing and shall remain in full force and effect
until June 31, 1997, regardless of any investigation made by or
on behalf of any party, but subject to all limitations and other
provisions contained in this Agreement; provided, however, that
the representations and warranties contained in Section 3.1.6 of
this Agreement shall survive until February 28, 1998, the
representations and warranties contained in Sections 3.1.3,
3.1.10, 3.1.11, 3.1.12 and 3.2.3 of this Agreement shall survive
until February 28, 1999, the representations and warranties
contained in Section 3.1.5 of this Agreement shall survive until
February 28, 2001, and the representations and warranties
contained in Sections 3.1.1, 3.1.2, 3.1.7, 3.1.15, 3.1.16, 3.2.1,
3.2.2 and 3.2.4 of this Agreement shall survive until the
expiration of the applicable statutes of limitation.
21
4. Transactions Prior to Closing
4.1. Access to Information Concerning Properties and
Records; Confidentiality. The Seller agrees that, during the
period commencing on the date hereof and ending on the Closing
Date (the "Interim Period"), (a) it will give or cause to be
given to the Buyer and its representatives such access, during
normal business hours, to the Plant, properties, books and
records of the Seller relating to the Assets or the Business as
the Buyer shall from time to time reasonably request and (b) it
will furnish or cause to be furnished to the Buyer such financial
and operating data and other information with respect to the
Business and properties of the Division as the Buyer shall from
time to time reasonably request. The Buyer agrees that it treat
all information so obtained from the Seller as "Confidential
Information" under the Confidentiality Agreement, dated
August 18, 1995, by and between Xxxxxx Xxxx Capital Corporation
("EUCC"), and the Seller and will continue to honor any
obligations the Buyer has thereunder as an affiliate of EUCC;
provided, however, that the Buyer and the Seller hereby agree
that the Confidentiality Agreement and any obligations of the
Buyer pursuant thereto shall terminate on the Closing Date.
4.2. Conduct of the Business of the Division Pending
the Closing Date. The Seller agrees that, except as required or
contemplated by this Agreement or otherwise consented to or
approved in writing by the Buyer, during the Interim Period, it
will:
(a) operate the Business only in the usual, regular
and ordinary manner, on a basis consistent with past practice
and, to the extent consistent with such operation, use its
commercially reasonable efforts to preserve the Division's
present business organization intact, keep available the services
of the present employees engaged in the manufacture of the
Division's products and preserve its present relationships with
persons having business dealings with the Division;
(b) make, with respect to the Business, capital
expenditures on a basis consistent with past practice; provided,
however, that during the Interim Period the Seller shall not be
obligated to make with respect to the Business any capital
expenditure in excess of $10,000, but if the Seller elects to
make such expenditure, the Seller may only do so with the prior
written consent of the Buyer;
(c) maintain its books, accounts and records relating
to the Business in the usual, regular and ordinary manner, on a
basis consistent with past practice, comply in all material
respects with all laws and contractual obligations applicable to
the Division or to the conduct of the Business and perform all of
its material obligations relating to the Business;
22
(d) maintain all of the licenses and permits listed on
Schedule 3.1.6(d) hereof in full force and effect;
(e) not, other than in the ordinary course of
business, (i) dispose of any of the Assets, (ii) modify or change
in any material respect or enter into any material contract
relating to the Business, (iii) incur any liabilities related to
the Assets or the Business, (iv) modify or change any collection
practice of the Division in any material respect or (v) permit
any of its affiliates to do, or agree, whether in writing or
otherwise, to do, any of the foregoing;
(f) maintain all insurance agreements relating to the
Business on substantially the same terms and conditions as are in
effect on the date hereof;
(g) pay its accounts payable relating to the Business
in the usual, regular and ordinary manner on a basis consistent
with past practice; and
(h) not (i) permit or allow any of the Assets to
become subject to any liens except liens described on
Schedule 3.1.5 hereto or Permitted Encumbrances, (ii) waive any
claims or rights relating to the Business, except in the ordinary
course of business and consistent with past practice and except
for waivers of intercompany obligations or claims or rights which
will not be assigned to the Buyer hereunder, (iii) grant any
increase in the compensation of any hourly Active Employee
(including any such increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment), except for
reasonable increases in the ordinary course of business and
consistent with past practice or as a result of contractual
arrangements existing or the subject of existing negotiations on
the date hereof, and reasonable payments in normal sales
compensation plans, including bonuses, (iv) without the prior
written consent of the Buyer, hire any additional salaried
employee or grant any increase in the compensation of any
salaried Active Employee, or (v) permit any of its affiliates to
do, or agree, whether in writing or otherwise, to do, any of the
foregoing.
4.3. Further Actions. Subject to the terms and
conditions hereof, the Seller and the Buyer agree to use their
commercially reasonable efforts to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using all
commercially reasonable efforts (without payment of money or
commencement of litigation): (a) to obtain prior to the Closing
Date all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and parties
to contracts with the Seller or its affiliates as are necessary
for the consummation of the transactions contemplated hereby;
23
(b) to effect all necessary registrations and filings; and (c) to
furnish to each other such information and assistance as
reasonably may be requested in connection with the foregoing.
Where the consent of any third party is required under the terms
of any of the leases or contracts to be assumed by the Buyer
hereunder, the Seller or the affiliate which is a party to such
lease or contract will take all reasonable and necessary steps to
obtain such consent on terms and conditions not materially less
favorable than as in effect on the date hereof; provided,
however, that with respect to any consent listed on
Schedule 5.2.2 the Seller or such affiliate shall not in
connection with obtaining such consent agree to any amendment to
the underlying contract or lease without the prior written
consent of the Buyer. The Seller or such affiliate and the Buyer
shall cooperate fully with each other to the extent reasonably
required to obtain such consents.
4.4. Notification. The Seller shall notify the Buyer
and keep it advised as to (a) any litigation or administrative
proceeding pending and known to the Seller or, to the best of the
Seller's knowledge, threatened against the Seller which
challenges the transactions contemplated hereby; (b) any material
damage or destruction of any of the Assets; and (c) any material
adverse change in the results of operations or business of the
Division.
4.5. No Inconsistent Action. Subject to Sections 7.1
and 7.2, the Seller and the Buyer shall not take any action
inconsistent with their obligations under this Agreement or which
could materially hinder or delay the consummation of the
transactions contemplated by this Agreement.
4.6. Financing Commitments. The Buyer will use its
commercially reasonable efforts to expeditiously obtain debt or
equity financing to allow the Buyer to consummate the
transactions contemplated by this Agreement by February 29, 1996.
5. Conditions Precedent
5.1. Conditions Precedent to Obligations of the Buyer.
The obligations of the Buyer under this Agreement are subject to
the satisfaction (or waiver by the Buyer) at or prior to the
Closing Date of each of the following conditions:
5.1.1. No Injunction, etc. No preliminary or
permanent injunction or other order issued by any federal or
state court of competent jurisdiction in the United States or by
any United States federal or state governmental or regulatory
body nor any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state
governmental authority which restrains, enjoins or otherwise
prohibits the transactions contemplated hereby shall be in
effect.
24
5.1.2. Opinions of Counsel. The Buyer shall have
received a favorable opinion of each of (i) the General Counsel
of the Seller, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit D, and (ii) LeBoeuf, Lamb, Xxxxxx
& XxxXxx, L.L.P., special counsel to the Seller, dated as of the
Closing Date, in substantially the form attached hereto as
Exhibit E. In giving its opinion, each such counsel shall be
entitled to rely in good faith upon certificates of officers of
the Seller and third parties with respect to factual matters and
upon opinions of other counsel reasonably satisfactory in form
and substance to the Buyer, and its counsel, provided that copies
of any such opinions of other counsel are furnished with the
opinion of counsel required by this Section 5.1.2 which relies on
such opinions.
5.1.3. Consents and Approvals. The authorizations,
consents, approvals, filings and registrations listed on
Schedule 5.1.3 hereof required to be obtained or made by the
Seller prior to the consummation of the transactions contemplated
hereby shall have been obtained or made and shall be in full
force and effect as of the Closing Date.
5.1.4. Accuracy of Representations and Warranties.
All representations and warranties of the Seller contained herein
shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the
Closing Date, except as contemplated or permitted by this
Agreement and except to the extent that any such representation
or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of
such date.
5.1.5. Performance of Agreements. The Seller shall
have performed, or shall have caused its respective affiliates to
perform, all obligations and agreements, and shall have complied
with, or shall have caused its respective affiliates to comply
with, all covenants and conditions, contained in this Agreement
to be performed or complied with by them prior to or at the
Closing Date.
5.1.6. Officer's Certificate. The Buyer shall have
received a certificate, dated the Closing Date, of a Vice
President of the Seller to the effect that the conditions
specified in paragraphs 5.1.4 and 5.1.5 above have been
fulfilled.
5.1.7. Actions and Proceedings. All corporate
actions, proceedings, instruments and documents of the Seller and
its affiliates required to carry out the transactions
contemplated by this Agreement or incidental thereto and all
other related legal matters shall be reasonably satisfactory to
counsel for the Buyer, and such counsel shall have been furnished
25
with such certified copies of such corporate actions and
proceedings and such other instruments and documents as it shall
have reasonably requested, including assignments and bills of
sale with respect to the Assets.
5.1.8. Lease and Lease Assignment. The Seller will
have entered into an Amended and Restated Lease (the "Lease")
with CAFIG Inc., an affiliate of the Seller ("CAFIG"), in
substantially the form attached hereto as Exhibit F, with respect
to the Division's facilities located in Anaheim, California, and
the Buyer will have entered into a related Assignment and
Assumption of Amended and Restated Lease (the "Lease Assignment")
with CAFIG and the Seller, in substantially the form attached
hereto as Exhibit G.
5.1.9. Patents. The Buyer will have received from the
Seller a duly executed Assignment of Patents, substantially in
the form attached hereto as Exhibit H.
5.1.10. Trademarks. The Buyer will have received from
the Seller a duly executed Assignment of Trademarks,
substantially in the form attached hereto as Exhibit I. The
Buyer will have received from Figgie Licensing Corporation, an
affiliate of the Seller ("FLC"), a duly executed Assignment of
Trademarks, substantially in the form attached hereto as
Exhibit J.
5.1.11. License Agreement. The Buyer and FLC will
have entered into a license agreement (the "License Agreement"),
in substantially the form attached hereto as Exhibit K.
5.1.12. Compliance Letters. The Seller shall have
received an executed letter from each of Vantronics, Triad Safety
Systems, Inc., and Masterguard Corporation concerning its
compliance with the order, dated April 11, 1986, issued by the
Federal Trade Commission to the Seller relating to the sale by
the Division of certain heat detectors.
5.2. Conditions Precedent to the Obligations of the
Seller. The obligations of the Seller under this Agreement are
subject to the satisfaction (or waiver by the Seller) at or prior
to the Closing Date of each of the following conditions:
5.2.1. No Injunction, etc. No preliminary or
permanent injunction or other order issued by any federal or
state court of competent jurisdiction in the United States or by
any United States federal or state governmental or regulatory
body nor any statute, rule, regulation or executive order
promulgated or enacted by any United States federal or state
governmental authority which restrains, enjoins or otherwise
prohibits the transactions contemplated hereby shall be in
effect.
26
5.2.2. Opinion of Counsel. The Seller shall have
received a favorable opinion of each of (i) Xxxxxx & Xxxx,
L.L.P., counsel to the Buyer, dated as of the Closing Date, in
substantially the form attached hereto as Exhibit L, and
(ii) Weinstein, Boldt, Racine & Halfhide, California counsel to
the Buyer, dated as of the Closing Date, in substantially the
form attached hereto as Exhibit M. In giving its opinion, each
such counsel shall be entitled to rely in good faith upon
certificates of officers of the Buyer and third parties with
respect to factual matters and upon opinions of other counsel
reasonably satisfactory in form and substance to the Seller, and
its counsel, provided that copies of any such opinions of other
counsel are furnished with the opinion of counsel required by
this Section 5.2.2 which relies on such opinions.
5.2.3. Consents and Approvals. The authorizations,
consents, approvals, filings and registrations listed on
Schedule 5.2.3 hereof required to be obtained or made by the
Buyer prior to the consummation of the transactions contemplated
hereby shall have been obtained or made and shall be in full
force and effect as of the Closing Date.
5.2.4. Accuracy of Representations and Warranties.
All representations and warranties of the Buyer contained herein
shall be true and correct in all material respects on and as of
the Closing Date, with the same force and effect as though such
representations and warranties had been made on and as of the
Closing Date, except as contemplated or permitted by this
Agreement and except to the extent that any such representation
or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of
such date.
5.2.5. Performance of Agreements. The Buyer shall
have performed all obligations and agreements, and complied with
all covenants and conditions, contained in this Agreement to be
performed or complied with by it prior to or at the Closing Date.
5.2.6. Officer's Certificate. The Seller shall have
received a certificate, dated the Closing Date, of the President
or a Vice President of the Buyer to the effect that the
conditions specified in paragraphs 5.2.4 and 5.2.5 above have
been fulfilled.
5.2.7. Assumption Agreements. The Buyer shall have
executed and delivered to the Seller the Assumption Agreement and
the Scheduled Liabilities Assumption Agreement.
5.2.8. Actions and Proceedings. All corporate
actions, proceedings, instruments and documents of the Buyer
required to carry out the transactions contemplated by this
Agreement or incidental thereto and all other related legal
matters shall be reasonably satisfactory to counsel for the
27
Seller, and such counsel shall have been furnished with such
certified copies of such corporate actions and proceedings and
such other instruments and documents as it shall have reasonably
requested.
5.2.9. License Agreement. The Buyer and FLC will have
entered into the License Agreement.
6. Employee Relations and Benefits. (a) As of the Closing
Date, no event has occurred and no condition exists that would
subject Seller to any tax under Section 4980B of the Code.
Seller shall indemnify Buyer for any failure by Seller to (i)
provide required notice under Section 4980B of the Code or COBRA
to any Active Employee who is not hired by Buyer, or (ii)
provide, under Section 4980B of the Code or COBRA, coverage under
a health plan adopted by Seller to any Active Employee who is not
hired by Buyer. "COBRA" means the Consolidate Omnibus
Reconciliation Act of 1985, as amended.
(b) The Buyer agrees to provide medical coverage to
Active Employees hired by the Buyer which is substantially
similar to the coverage Seller maintained on the day before the
Closing Date. Buyer may satisfy this requirement by adopting the
medical plan of Seller currently offered to such Active Employees
(the "Medical Plan"), if authorized by the Medical Plan provider
or insurer; however, in no event shall Buyer's adoption of
Seller's Medical Plan exceed 90 days following the Closing Date.
Buyer shall pay to Seller all premiums, costs, and expenses of
the Medical Plan for such coverage. Buyer shall provide
continuation coverage required by Section 4980B of the Code with
respect to all the Buyer's employees including Active Employees
hired by the Buyer. After the expiration of said 90 day period,
Buyer agrees to provide Active Employees with medical coverage
which is substantially similar to the coverage provided to them
on the day prior to the Closing Date. The Buyer agrees to take
no action which would adversely effect the Medical Plan or Seller
or its tax status.
(c) Except as set forth on Schedule 1.6, Buyer shall
not be liable for, and Seller shall indemnify and hold Buyer
harmless from, any severance payments, wages, benefits, taxes,
unpaid sick and holiday pay, monies or damages asserted against
Buyer by any Active Employees who do not accept employment with
Buyer.
7. Termination
7.1. General. This Agreement may be terminated and
the transactions contemplated herein may be abandoned (a) by
mutual consent of the Buyer and the Seller or (b) by any party by
notice to the other party in the event that the Closing Date
shall not have occurred on or before February 29, 1996; provided,
however, that the right to terminate this Agreement under clause
28
(b) above shall not be available to any party whose failure to
fulfill or perform any obligation under this Agreement has been
the cause of, or resulted in, the failure of the Closing to occur
on or before such date.
7.2. No Liabilities in Event of Termination. In the
event of any termination of the Agreement as provided in
Section 7.1 above, this Agreement shall forthwith become wholly
void and of no further force and effect and there shall be no
liability on the part of the Buyer, the Seller or their
respective officers or directors, except that the obligations of
the Buyer under Section 4.1 of this Agreement shall remain in
full force and effect, and except that termination shall not
preclude any party from suing the other party for breach of this
Agreement.
8. Transactions Subsequent to Closing
8.1. Access to Books and Records. (a) For a period
of ten (10) years following the Closing Date, the Buyer shall
afford, and will cause its affiliates to afford, to the Seller
and any affiliates of the Seller, its counsel and its
accountants, during normal business hours or as otherwise agreed
by the Buyer and the Seller, reasonable access to the books,
records and other data of the Division with respect to the period
prior to the Closing Date to the extent that such access may be
reasonably required by the Seller or any affiliate of the Seller
to facilitate (i) the preparation by the Seller or such affiliate
of such tax returns as it may be required to file with respect to
the operations of the Division or in connection with any audit,
amended return, claim for refund or any proceeding with respect
thereto, (ii) the investigation, litigation and final disposition
of any claims which may have been or may be made against the
Seller or such affiliate in connection with the Division,
(iii) the payment of any amount pursuant to Section 9.4 or in
connection with any liabilities or obligations which have not
been assumed by the Buyer under this Agreement, (iv) the
preparation of the Final Balance Sheet, and (v) the closing of
the books and accounts of the Division with respect to periods
prior to the Closing Date. The Buyer will not, and will cause
its affiliates to not, dispose of, alter or destroy any such
books, records and other data without giving thirty (30) days'
prior notice to the Seller to permit it, at its expense, to
examine, duplicate or repossess such records, files, documents
and correspondence. The Buyer will provide or make available to
the Seller access to, and assistance from, any employees of the
Buyer whose assistance is reasonably required in connection with
the purposes described in the first sentence of subsection (a) of
this Section 8.1.
(b) For a period of ten (10) years following the
Closing Date, the Seller shall afford, and will cause its
affiliates to afford, to the Buyer, its counsel and its
29
accountants, during normal business hours or as otherwise agreed
by the Buyer and the Seller, reasonable access to the books,
records and other data of the Seller and its affiliates with
respect to the period prior to the Closing Date to the extent
that such access may be reasonably required by the Buyer or any
affiliate of the Buyer to facilitate (i) the preparation by the
Buyer or such affiliate of such tax returns as it may be required
to file with respect to the operations of the Division or in
connection with any audit, amended return, claim for refund or
any proceeding with respect thereto, (ii) the investigation,
litigation and final disposition of any claims which may have
been or may be made against the Buyer or such affiliate in
connection with the Division and (iii) the payment of any amount
pursuant to Section 9.4 or in connection with any liabilities or
obligations which have not been assumed by the Buyer under this
Agreement. The Seller will not, and will cause its affiliates to
not, dispose of, alter or destroy any such books, records and
other data without giving thirty (30) days' prior notice to the
Buyer to permit it, at its expense, to examine, duplicate or
repossess such records, files, documents and correspondence. The
Seller will provide or make available to the Buyer access to, and
assistance from, any employee of the Seller whose assistance is
required in connection with the purposes described in the first
sentence of subsection (b) of this Section 8.1.
8.2. Settlement of Litigations. The Seller hereby
agrees that it will not, without the prior written consent of the
Buyer (which consent shall not be unreasonably withheld), enter
into any compromise or settlement with respect to those legal
proceedings identified in Item 2 and Item 3 of Schedule 3.1.7
(each, a "Retained Litigation") which would adversely affect the
business of the Division as conducted in Canada on the Closing
Date. If at any time subsequent to the Closing Date, the Seller
decides to no longer pursue either Retained Litigation, the
Seller shall notify the Buyer of such decision and shall, upon
the written request of the Buyer, assign to the Buyer the
Seller's cause of action with respect to such Retained
Litigation. If the Seller assigns to the Buyer its cause of
action relating to either Retained Litigation, the parties hereto
agree that the aggregate amount (less the amount of any
reasonable costs and expenses incurred by the Buyer in connection
with such Retained Litigation) received by the Buyer in
connection with the final determination of such Retained
Litigation (whether as a result of settlement, compromise or an
award of the court of competent jurisdiction) shall be shared
equally by the Buyer and the Seller.
8.3. Further Agreements. The Seller authorizes and
empowers the Buyer on and after the Closing Date to receive and
open all mail received by the Buyer relating to the Business or
the Assets and to deal with the contents of such communications
in any proper manner. The Seller shall promptly deliver to the
Buyer any mail or other communication received by it after the
30
Closing Date pertaining to the Business or the Assets and any
cash, checks or other instruments of payment to which the Buyer
is entitled. The Buyer shall promptly deliver to the Seller any
mail or other communication received by it after the Closing Date
pertaining to the assets described in Section 1.2 hereof, and any
cash, checks or other instruments of payment in respect of such
assets.
8.4. Confidentiality. After the Closing, the Seller
will hold and keep confidential and will not disclose or use, and
will cause its affiliates to hold and keep confidential and not
disclose or use, (a) any information provided to the Seller or
any of its affiliates or any of their representatives by or on
behalf of the Buyer or any of its affiliates in connection with
the transactions contemplated hereby and (b) any information
regarding the Assets or the Business; provided, however, that
this Section 8.4 shall not apply to (i) information which is
publicly available at the time of disclosure (through no act of
the Seller or any of its affiliates), (ii) information which is
disclosed to the Seller or any of its affiliates by a third party
which did not disclose it in violation of a duty of
confidentiality, (iii) use of information to perform the Seller's
obligations hereunder or (iv) disclosures which are required to
be made by the Seller or any of its affiliates under legal
process by subpoena or other court order or other applicable laws
or regulations, or which are requested by the Buyer or any of its
affiliates.
9. Miscellaneous
9.1. Public Announcements. Prior to the Closing Date,
no news release or other public announcement pertaining in any
way to the transactions contemplated by this Agreement will be
made by either party without the prior consent of the other
party, unless in the opinion of counsel to such party such
release or announcement is required by law.
9.2. Expenses. Subject to Section 9.3, whether or not
the transactions contemplated by this Agreement are completed,
each of the parties hereto shall pay the fees and expenses
incurred by it in connection with the negotiation, preparation,
execution and performance of this Agreement, including, without
limitation, attorneys' fees and accountants' fees.
9.3. Transfer Taxes and Recording Expenses; Title
Policy and Survey Costs. (a) The Buyer and the Seller shall
share equally in the payment of all sales, motor vehicle or
similar transfer taxes and recording expenses, if any, required
to be paid in connection with the transfer of the Assets
(including any interest charge or penalty with respect thereto).
(b) The Buyer and the Seller shall share equally in
the payment of all costs and expenses incurred in connection with
31
the preparation by XxXxxx & Xxxxxxx of the ALTA Survey related to
the Plant (the "Survey").
(c) The Buyer and the Seller shall share equally in
the payment of the cost of obtaining with respect to the Plant a
leasehold owner's policy (excluding the cost of any lender's
policy related thereto) to be issued to the Seller and the Buyer,
as their interests appear, with a maximum policy limit of
$2,500,000 (the "Title Policy").
9.4. Indemnification. (a) Subject to subsection (d)
of this Section 9.4 and to Section 2.3, the Seller agrees to
indemnify and hold the Buyer harmless against and in respect of
(i) all obligations and liabilities of the Seller (including the
obligation to pay any fee to Xxxxx Xxxxxx Inc. in connection with
the transactions contemplated by this Agreement) and its
affiliates, whether accrued, absolute, fixed, contingent or
otherwise, not expressly assumed by the Buyer pursuant to the
Assumption Agreement; (ii) any loss, liability or damage incurred
or sustained by the Buyer as a result of any breach by the Seller
of any of its representations and warranties contained herein;
(iii) any loss, liability or damage incurred or sustained by the
Buyer as a result of any breach by the Seller of any of its
covenants and agreements contained herein; (iv) liabilities for
sales, use and income taxes arising at any time out of sales made
by the Seller prior to the Closing Date (including the Seller's
portion of any transfer taxes and recording expenses described in
Section 9.3(a) of this Agreement); (v) liabilities for the
Seller's portion of any costs and expenses related to the
preparation of the Survey or obtaining the Title Policy as
described in Sections 9.3(b) and (c) of this Agreement; (vi) any
violation of any Environmental Law applicable to the Division or
the Business on or prior to the Closing Date; and (vii) all
reasonable costs and expenses (including reasonable attorneys'
fees) incurred by the Buyer in connection with any action, suit,
proceeding, demand, assessment or judgment incident to any of the
matters indemnified against in this Section 9.4(a). The Buyer
will not be entitled to recovery for any matter indemnified
against in Section 9.4(a)(ii) unless and until the aggregate
amount of claims which may be asserted pursuant to such
Section 9.4(a)(ii) for indemnified losses exceeds $500,000, and
then only for that portion of such aggregate amount which exceeds
$250,000.
(b) Notwithstanding any other provision of this
Agreement, the Seller shall not have any obligation to indemnify
the Buyer under this Section 9.4(a) for any loss, liability or
damage (including, without limitation, any loss, liability or
damage for loss of profits) with respect to (A) Item (a) of
Schedule 3.1.7 or (B) Item 1 of Schedule 3.1.13, except for (1)
with respect to Item 7(a) of Schedule 3.1.7, any loss, liability
or damage (excluding any loss, liability or damage for loss of
32
profits) in respect of any violation of any law which relates to
the period prior to the Closing Date or (2) with respect to
Item 1 of Schedule 3.1.13, any loss, liability or damage which
exceeds $120,000 (excluding any loss, liability or damage for
loss of profits) associated with a retrofit or recall required by
a Japanese governmental authority relating to vacuum cleaners
sold by the Seller prior to the Closing Date or in respect of any
violation of any law which relates to the period prior to the
Closing Date.
(c) Subject to Subsection (e) of this Section 9.4, the
Buyer agrees to indemnify and hold the Seller and its affiliates
harmless against and in respect of (i) all obligations and
liabilities of the Seller and its affiliates expressly assumed by
the Buyer pursuant to the Assumption Agreement or pursuant to
Section 2.3; (ii) any loss, liability or damage incurred or
sustained by the Seller or its affiliates as a result of any
breach by the Buyer of any of its representations and warranties
contained herein; (iii) any loss, liability or damage incurred or
sustained by the Seller or any of its affiliates as a result of
any breach by the Buyer of any of its covenants and agreements
contained herein; (iv) any liabilities or obligations accruing
after the Closing that relate to the operation of the Business
after the Closing Date; (v) liabilities for the Buyer's portion
of transfer taxes and recording expenses as described in
Section 9.3(a) of this Agreement; (vi) liabilities for the
Buyer's portion of any costs and expenses related to the
preparation of the Survey or obtaining the Title Policy as
described in Sections 9.3(b) and (c) of this Agreement; (vii) any
fee payable to Xxxxxx Xxxxx & Associates in connection with the
transactions contemplated by this Agreement; (viii) any amount
payable to the Seller pursuant to Section 8.2; and (ix) all
reasonable costs and expenses (including reasonable attorneys'
fees) incurred by the Seller or its affiliates in connection with
any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this
Section 9.4(b).
(d) Promptly after receipt by an indemnified party
under this Section 9.4 of notice of any claim or the commencement
of any action, the indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under this
Section 9.4, notify the indemnifying party in writing of the
claim or the commencement of that action, provided that the
failure to notify the indemnifying party shall not relieve it
from any liability which it may have to the indemnified party
otherwise than under this Section 9.4. If any such claim shall
be brought against an indemnified party, and it shall notify the
indemnifying party thereof (including, without limitation, any
claim against the Buyer relating to Item 7(a) of Schedule 3.1.7
and Item 1 of Schedule 3.1.13), the indemnifying party shall be
entitled to participate therein, and to assume the defense
thereof with counsel satisfactory to the indemnified party, and
33
to settle and compromise any such claim or action; provided,
however, that if the indemnified party has elected to be
represented by separate counsel pursuant to the proviso in the
following sentence, such settlement or compromise shall be
effected only with the consent of the indemnified party, which
consent shall not be unreasonably withheld. After notice from
the indemnifying party to the indemnified party of its election
to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this
Section 9.4 for any legal or other expenses subsequently incurred
by the indemnified party in connection with the defense thereof
other than reasonable costs of investigation; provided, however,
that the indemnified party shall have the right to employ counsel
to represent it if, in the indemnified party's reasonable
judgment, it is advisable for the indemnified party to be
represented by separate counsel, and in that event the fees and
expenses of such separate counsel shall be paid by the
indemnified party. The Buyer and the Seller each agree to render
to each other such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any such claim
or proceeding.
(e) Notwithstanding any other provision of this
Agreement, the indemnification obligations of each of the Seller
under Section 9.4(a) and the Buyer under Section 9.4(b) shall not
exceed an amount equal to the Cash Consideration less the
Scheduled Liabilities Amount.
(f) The indemnities provided in this Agreement shall
survive the Closing. The indemnity provided in this Section 9.4
shall be the sole and exclusive remedy of the indemnified party
against the indemnifying party at law or equity for any matter
covered by paragraphs (a) and (b) above.
(g) The Buyer shall take such actions as may be
requested by the Seller to mitigate the damages relating to such
matter for which the Seller is liable pursuant to Section 9.4(a)
to the extent such actions are reasonably acceptable to the Buyer
and are not detrimental to the Business (which determination
shall be made by the Buyer); provided, however, that the
aggregate costs and expenses of any such actions shall be borne
solely by the Seller; provided, further, however, that in the
event the Buyer does not take an action requested by the Seller
with respect to a matter for which the Seller is liable pursuant
to Section 9.4(a), the Seller shall not be liable to the Buyer
for any punitive damages assessed by a court of competent
jurisdiction relating to the period after the date of the
Seller's request for such action if the failure by the Buyer to
take such action resulted in such punitive damages.
Notwithstanding the provisions of this subsection (f) of Section
9.4, the Seller does not waive any rights or remedies it may have
under statute or common law in connection with mitigation of
damages.
34
9.5. Limitation on Competition. For a period of four
(4) years after the Closing, neither the Seller nor any affiliate
of the Seller will on its own behalf or on behalf of any other
person or entity:
(a) engage in the design, manufacture or distribution
of vacuum cleaners, steam cleaning systems, heat detectors
or die cast aluminum products (collectively, the "Restricted
Businesses") in the United States of America, Canada, Europe
or Asia (the "Territory");
(b) own or have a proprietary interest of any nature
in, any person or entity engaged in any of the Restricted
Businesses, provided that the foregoing shall not apply to
any investment by the Seller or any affiliate of the Seller
in any class of securities of any corporation engaged in any
of the Restricted Businesses if such investment constitutes
less than 5% of the outstanding securities in such class;
(c) influence or attempt to influence any customer or
potential customer of the Buyer to purchase goods or
services related to the Restricted Businesses from any
person or entity other than the Buyer; or
(d) employ or attempt to employ or solicit for any
employment competitive with the Buyer, any of the Buyer's
employees who were employees of Seller prior to the Closing,
or influence or seek to influence any employee to leave the
Buyer's employment.
9.6. Installation of Telephone System. Within 180
days after the Closing Date, the Buyer shall have purchased and
installed at the Division a stand alone telephone system (the
"Phone System"). The Seller agrees to reimburse the Buyer for
any costs and expenses the Buyer actually incurs in connection
with the purchase and installation of the Phone System, provided,
that in no event shall the Seller be liable for any costs and
expenses related to such purchase and installation which, in the
aggregate, exceed $22,916. Prior to the date on which the
installation of the Phone System is completed, the Seller agrees
to allow the Buyer and the Division to continue to use the
telephone system currently utilized by the Division in connection
with the Business, and the Buyer agrees to reimburse the Seller
and any of its affiliates for any costs and expenses related to
the Buyer's or the Division's use of such telephone system during
such period.
9.7. Law/Xxxxxxxx, Inc. Reference is made to the
letter agreement, dated February 6, 1996, by and between
Law/Xxxxxxxx, Inc. ("Law/Xxxxxxxx") and Figgie Properties, Inc.,
an affiliate of the Seller, with respect to the proposed removal
of certain contaminated soils located at the die cast
manufacturing building located at the Plant. The Seller hereby
35
agrees to pay all costs and expenses related to the removal of
such contaminated soils by Law/Xxxxxxxx. To facilitate the
removal of such contaminated soils, the Buyer agrees to afford to
Law/Xxxxxxxx and the Seller reasonable access to the Plant during
normal business hours.
9.8. Notices. All notices, requests, demands and
other communications which are required or may be given under
this Agreement shall be in writing and shall be deemed to have
been duly given if delivered personally, delivered by an
overnight courier service such as Federal Express or mailed,
first class mail, postage prepaid, return receipt requested, as
follows:
(a) If to the Seller:
Figgie International Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
with a copy to:
LeBoeuf, Lamb, Xxxxxx & XxxXxx, L.L.P.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxx, Esq.
(b) If to the Buyer:
Primus Holdings, L.P.
0000 Xxxxxx Xxxxx Xxxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxx
with a copy to:
Xxxxxx & Xxxx, L.L.P.
0000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. XxXxxxxxx, Esq.
or to such other address as either party shall have specified by
notice in writing to the other party. All such notices,
requests, demands and communications shall be deemed to have been
received on the date of personal or courier delivery or on the
third business day after the mailing thereof. In the event
36
actual delivery is prevented because the addressee has moved and
not provided the other party hereto with a new address or because
the addressee refuses delivery, delivery shall be deemed made on
the date of attempted delivery (provided the sending party
retains evidence of such attempted delivery).
9.9. Entire Agreement. This Agreement (including the
Exhibits and Schedules hereto) constitutes the entire agreement
between the parties hereto and supersedes all prior agreements
and understandings, oral and written, between the parties hereto
with respect to the subject matter hereof.
9.10. Binding Effect; Benefit. This Agreement shall
inure to the benefit of and be binding upon the parties hereto
and their respective successors and assigns. Nothing in this
Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective
successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
9.11. Bulk Sales Law. Each of the Buyer and the
Seller agrees to waive compliance by the other with the provision
of the bulk sales law of California.
9.12. Assignability. This Agreement shall not be
assignable by the Seller without the prior written consent of the
Buyer or by the Buyer without the prior written consent of the
Seller.
9.13. Amendment; Waiver. This Agreement may be
amended, supplemented or otherwise modified only by a written
instrument executed by the parties hereto. No waiver by either
party of any of the provisions hereof shall be effective unless
explicitly set forth in writing and executed by the party so
waiving. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including without limitation,
any investigation by or on behalf of any party, shall be deemed
to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants, or
agreements contained herein, and in any documents delivered or to
be delivered pursuant to this Agreement and in connection with
the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
9.14. Section Headings; Table of Contents. The
section headings contained in this Agreement and the Table of
Contents to this Agreement are for reference purposes only and
shall not affect the meaning or interpretation of this Agreement.
9.15. Severability. If any provision of this
Agreement shall be declared by any court of competent
jurisdiction to be illegal, void or unenforceable, all other
37
provisions of this Agreement shall not be affected and shall
remain in full force and effect.
9.16. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original and all of which together shall be deemed to be one
and the same instrument.
9.17. Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the
State of California without regard to conflicts of laws
principles thereof.
38
IN WITNESS WHEREOF, the parties hereto have executed
and delivered this Agreement as of the date first above written.
FIGGIE INTERNATIONAL INC.
By: \s\ Xxxxxx X. Xxxxxxxxxx
Name: Xxxxxx X. Xxxxxxxxxx
Title: Senior Vice President and
Chief Financial Officer
PRIMUS HOLDINGS, CORP., in its capacity
as the general partner of Primus
Holdings, L.P.
By: \s\ Xxxxxx X. Xxxx
Name: Xxxxxx X. Xxxx
Title: President
