--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
among
X. X. XXXXX CORPORATION,
X. X. XXXXX ENTERPRISES LTD.
TOWER AUTOMOTIVE ACQUISITION, INC.,
TOWER AUTOMOTIVE, INC.
and
X. X. TOWER CORPORATION
________________________
Dated as of January 27, 1997
________________________
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
1. Purchase and Sale of Assets; Assumption of Liabilities. . . . . . . . . . 1
1.1. Transfer of Assets . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.3. Instruments of Conveyance and Transfer . . . . . . . . . . . . . . . 5
1.4. Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . 5
1.5. Excluded Liabilities . . . . . . . . . . . . . . . . . . . . . . . . 7
1.6. Nonassignable Contracts and Rights . . . . . . . . . . . . . . . . . 8
2. Closing; Payment of Purchase Price at Closing and Closing Adjustment. . . 9
2.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.2. Purchase Price and Payment . . . . . . . . . . . . . . . . . . . . .10
2.3. Determination of Net Book Value; PostClosing Adjustment. . . . . . .10
2.4. Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . .14
3. Representations and Warranties. . . . . . . . . . . . . . . . . . . . . .14
3.1. Representations and Warranties of the Sellers. . . . . . . . . . . .14
3.2. Representations and Warranties of Buyer and Parents. . . . . . . . .27
3.3. Expiration of Representations and Warranties . . . . . . . . . . . .30
3.4. No Other Representations or Warranties; Memorandum; Projections. . .30
4. Transactions Prior to Closing . . . . . . . . . . . . . . . . . . . . . .31
4.1. Access to Information Concerning Properties and Records;
Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . .31
4.2. Conduct of the Business Pending the Closing Date . . . . . . . . . .31
4.3. Further Actions. . . . . . . . . . . . . . . . . . . . . . . . . . .32
4.4. HSR Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . .33
4.5. Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
4.6. Real Estate Covenants. . . . . . . . . . . . . . . . . . . . . . . .33
4.7. Exclusivity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
4.8. Financing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
4.9. Expiration of Covenants to be Performed Before Closing . . . . . . .35
5. Conditions Precedent. . . . . . . . . . . . . . . . . . . . . . . . . . .35
5.1. Conditions Precedent to Obligations of Buyer . . . . . . . . . . . .35
5.2. Conditions Precedent to the Obligations of the Sellers . . . . . . .36
6. Employee Relations and Benefits . . . . . . . . . . . . . . . . . . . . .37
6.1. Union Represented Employees. . . . . . . . . . . . . . . . . . . . .37
6.2. Hourly Paid NonUnion Represented Employees and Salaried
Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
6.3. Required Notice. . . . . . . . . . . . . . . . . . . . . . . . . . .45
6.4. Vacation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
i
6.5. Payroll Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
7. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
7.1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46
7.2. Post-Termination Obligations . . . . . . . . . . . . . . . . . . . .46
7.3. No Liabilities in Event of Termination . . . . . . . . . . . . . . .47
8. Transactions Subsequent to Closing. . . . . . . . . . . . . . . . . . . .47
8.1. Post-Closing Access to Information and Assistance. . . . . . . . . .47
8.2. Further Agreements . . . . . . . . . . . . . . . . . . . . . . . . .47
8.3. No Competition . . . . . . . . . . . . . . . . . . . . . . . . . . .48
8.4. Assistance and Cooperation Regarding Taxes and Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48
8.5. Corporate Names. . . . . . . . . . . . . . . . . . . . . . . . . . .49
8.6. Company's Insurers or Administrators . . . . . . . . . . . . . . . .50
8.7. Certain Post-Closing Services. . . . . . . . . . . . . . . . . . . .51
8.8. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . .51
8.9. License of Certain Patents . . . . . . . . . . . . . . . . . . . . .51
8.10. Financial Statement Audits. . . . . . . . . . . . . . . . . . .51
8.11. Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . . .52
8.12. TWI License Agreement . . . . . . . . . . . . . . . . . . . . .53
8.13. Certain Litigation. . . . . . . . . . . . . . . . . . . . . . .53
8.14. Certain Contracts . . . . . . . . . . . . . . . . . . . . . . .54
9. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.1. Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
9.2. Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . .55
9.3. Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . .55
9.4. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67
9.5. Resolution of Disputes . . . . . . . . . . . . . . . . . . . . . . .68
9.6. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . .70
9.7. Binding Effect; Benefit. . . . . . . . . . . . . . . . . . . . . . .70
9.8. Bulk Sales Law . . . . . . . . . . . . . . . . . . . . . . . . . . .70
9.9. Assignability. . . . . . . . . . . . . . . . . . . . . . . . . . . .70
9.10. Amendment; Waiver . . . . . . . . . . . . . . . . . . . . . . .70
9.11. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . .71
9.12. Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . .71
9.13. Section Headings; Table of Contents . . . . . . . . . . . . . .71
9.14. Severability. . . . . . . . . . . . . . . . . . . . . . . . . .71
9.15. No Strict Construction. . . . . . . . . . . . . . . . . . . . .71
9.16. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . .71
9.17. Applicable Law. . . . . . . . . . . . . . . . . . . . . . . . .71
ii
SCHEDULES
Schedule 1.1(b) - Owned Real Property
Schedule 1.1(c) - Leased Real Property
Schedule 1.1(d) - Equipment Leases
Schedule 1.1(l) - Corporate Technology Business Unit Property
Schedule 1.2(e) - Excluded Contracts
Schedule 1.2(l) - Excluded Assets
Schedule 2.3(c) - Closing Statement Exceptions
Schedule 3.1(c) - Governmental Approvals or Notice Required; Conflicts
with Instruments
Schedule 3.1(d) - Financial Statements
Schedule 3.1(e) - Owned and Leased Real Property
Schedule 3.1(f) - Liens and Encumbrances
Schedule 3.1(g) - Material Contracts
Schedule 3.1(h) - Defects
Schedule 3.1(i) - Legal Proceedings
Schedule 3.1(j) - Labor Controversies
Schedule 3.1(k) - Trade Rights
Schedule 3.1(l) - Government Licenses, Permits and Related Approvals
Schedule 3.1(m) - Conduct of Business in Compliance with Regulatory
Requirements
Schedule 3.1(n) - Employee Benefit Plans and Arrangements
Schedule 3.1(o) - Environmental Matters
Schedule 3.1(q) - Tax Matters
Schedule 3.1(r) - Absence of Changes or Events
Schedule 3.1(s) - Affiliates
Schedule 3.1(t) - Absence of Undisclosed Liabilities
Schedule 3.1(u) - Product Warranties
Schedule 3.1(v) - Product Liability
Schedule 3.2(c) - Governmental Approvals or Notice Required; Conflicts
with Instruments
Schedule 3.2(h) - Financial Information
Schedule 8.3 - Management and Key Employees
Schedule 8.9 - Patents to be Licensed
Schedule 9.12 - Knowledge of the Sellers
EXHIBITS
Exhibit 1.5(h) - Certain Liabilities
Exhibit 4.2 - Exceptions Concerning Conduct of the Business
Exhibit 8.7 - Transition Services Agreement
Exhibit 8.9 - License Agreement
iii
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of January 27, 1997, among X. X.
XXXXX CORPORATION, a Delaware corporation (the "COMPANY"), X. X. XXXXX
ENTERPRISES LTD., a corporation organized under the laws of Canada
("ENTERPRISES") (the Company and Enterprises are hereinafter collectively
referred to as the "SELLERS"), TOWER AUTOMOTIVE, INC., a Delaware corporation
("TOWER"), and X. X. TOWER CORPORATION, a Michigan corporation ("RJT") (Tower
and RJT are hereinafter collectively referred to as "PARENTS"), and TOWER
AUTOMOTIVE ACQUISITION, INC., a Delaware corporation and wholly-owned subsidiary
of Parents ("BUYER").
W I T N E S S E T H :
WHEREAS, the Sellers desire to sell, transfer and assign to Buyer, and
Buyer desires to purchase and assume from the Sellers, substantially all of the
assets and liabilities associated with the Automotive Products Company division
of the Sellers (the "DIVISION") all upon and subject to the terms and conditions
contained herein.
WHEREAS, the Division is engaged in the business of designing,
engineering, manufacturing and marketing of structural and suspension
components, structural and suspension assemblies and structural and suspension
modules for light vehicles, medium trucks and heavy trucks (the "BUSINESS").
Such term shall include, except as otherwise specifically provided herein, all
operations carried on by or related to products associated by trade name or
otherwise with the Division on the date hereof. Where the context allows, the
term "BUSINESS" shall also mean the Sellers insofar as the operation of the
Business, as above defined, is concerned.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants of the parties hereto, it is hereby agreed as follows:
1. PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1. TRANSFER OF 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 (as defined
in SECTION 2.1) and subject to the provisions of SECTION 1.2, the Sellers shall
sell, convey, assign, transfer and deliver to Buyer, and Buyer shall purchase
and acquire from the Sellers, all of the Sellers' right, title and interest in
the assets, rights, properties, claims, contracts, business and goodwill of the
Sellers at the Closing Date that are utilized primarily in the Business, of
every kind, nature, character and description, tangible and intangible, real,
personal or mixed, wherever located, including without limitation the following
(hereinafter referred to collectively as the "ASSETS"):
(a) Any Trade Rights utilized primarily in the Business. As
used herein, the term "TRADE RIGHTS" shall mean and include: (i) all
trademarks, business identifiers, trade dress, service marks, trade
names and brand names; (ii) all copyrights, chip registrations and
chip registration applications and all other
rights associated therewith and the underlying works of authorship; (iii)
all patents and patent applications, patent disclosures, any reissuances,
reexaminations, divisions, continuations in part or continuations thereof
and any other proprietary rights associated therewith; (iv) all contracts
or agreements granting any right, title, license or privilege under the
intellectual property rights of any third party; (v) all production
records, quality control records, finished product specifications,
ingredient specifications, packaging supply specifications, technical
information, marketing plans, sales records and histories, market research
data, customer lists, vendor lists, catalogs, promotional, advertising and
marketing materials, label and shipping carton dies, mechanical art, films,
photographs, artwork, research, inventions, know-how, processes,
discoveries, improvements, designs, trade secrets, shop and royalty rights,
employee or third party covenants and agreements respecting intellectual
property, confidentiality or non-competition, and all other types of
intellectual property; and (vi) all registrations of any of the foregoing,
all applications and renewals therefor, all goodwill associated with any of
the foregoing, all international rights associated with the foregoing, and
all claims for infringement, misappropriation or breach thereof;
(b) All of the owned real properties of the Sellers associated
primarily with the Business, which are identified on SCHEDULE 1.1(B),
including the buildings and other improvements situated thereon
(collectively, the "OWNED REAL PROPERTY"), and all easements,
privileges, rights-of-way, riparian and other water rights and
appurtenances pertaining to or accruing to the benefit of such
property, in each case subject to the matters discussed in
SECTION 3.1(F);
(c) Rights under all of the leases with respect to real property
leased by the Sellers for use primarily in the Business, which are
identified on SCHEDULE 1.1(C) (the "LEASED REAL PROPERTY" and,
together with the Owned Real Property, the "FACILITIES");
(d) All equipment, furniture, furnishings, fixtures, leasehold
improvements, machinery, vehicles, tools, tooling, molds, dies, spare
parts, supplies and other tangible personal property utilized
primarily in the Business (the "EQUIPMENT"), including without
limitation rights under all leases of tangible personal property
leased by the Sellers pursuant to leases identified on SCHEDULE 1.1(D)
(collectively, the "EQUIPMENT LEASES"), and all warranties and
guarantees, if any, express or implied, existing for the benefit of
the Sellers in connection with the Equipment to the extent
transferable;
(e) The Division's inventory of finished products (the "FINISHED
GOODS"), raw materials and work in process for Division products
(including all such in transit), together with the spare parts,
supplies and promotional and packaging materials that are utilized
primarily in connection with the Business (the "MATERIALS" and,
together with the Finished Goods, the "INVENTORY");
-2-
(f) All management information systems and software related
primarily to the operations of the Facilities, the ownership of the
Assets or the Business except to the extent such systems, software,
data or documentation are licensed from a third party and not
transferable and thus subject to SECTION 1.6.;
(g) Rights under all contracts, arrangements, agreements,
purchase or sale commitments for materials and other services,
advertising and promotional agreements, leases and other agreements
("CONTRACTS") primarily related to the Business, whether or not
entered into in the ordinary course of the Business, including, but
not limited to, any Contracts with suppliers, customers, sales
representatives, distributors, agents, Equipment lessors, licensors,
licensees, consignors and consignees specified therein, including
without limitation those Contracts set forth on SCHEDULE 3.1(G) and
the Equipment Leases, but excluding those Contracts listed on
SCHEDULE 1.2(E) (the Contracts described in this SECTION 1.1(G),
"ASSUMED CONTRACTS");
(h) All licenses, permits or franchises issued by any foreign,
federal, state or municipal authority relating primarily to the
development, use, maintenance or occupation of the Facilities or the
Business ("DIVISION PERMITS") to the extent that such Division Permits
are transferable;
(i) Accounts receivable of the Sellers (whether or not billed)
to the extent attributable to Division products sold and delivered to
a customer or to a bona fide third-party transportation company for
delivery to a customer prior to the Effective Time (as defined in
SECTION 2.1), excluding all intercompany receivables (the
"RECEIVABLES");
(j) All rights to goods and services and all other economic
benefits arising out of prepayments, payments in advance and deposits
by the Sellers to the extent related primarily to the Facilities or
the Business;
(k) The equity securities or other equity interest owned by the
Company in the following (collectively, "DIVISION AFFILIATES"): X. X.
Xxxxx do Brasil Industria E Comercio Ltda., a Brazilian limited
liability company ("BRAZIL SUB"); and Changchun X. X. Xxxxx Golden
Ring Automotive Products Co., Ltd., a corporation formed under the
laws of China ("CHINA JV"). It is expressly understood and agreed (i)
that none of the terms "Division," "Assets" or "Business" as used in
this Agreement includes the business, assets, liabilities or
obligations of the Division Affiliates or of Metalsa, S.A. de C.V., a
corporation organized under the terms of Mexico ("METALSA"); (ii) that
the terms and conditions of this Agreement shall apply to the Division
Affiliates only to the extent that the equity securities of the
Division Affiliates owned by the Company are Assets to be transferred
to Buyer at Closing or as otherwise specifically set forth herein and
(iii)
-3-
except as set forth in SECTION 4.7, that the terms and conditions of this
Agreement shall not apply to Metalsa;
(l) the tangible personal property associated with the Corporate
Technology business unit of the Company and identified on
SCHEDULE 1.1(1);
(m) the following, to the extent related primarily to the
Business: all lists, records and other information pertaining to
accounts, personnel and referral sources, all lists and records
pertaining to suppliers and customers, and all books and records of
every kind, whether evidenced in writing, electronically (including,
without limitation, by computer) or otherwise; and
(n) All claims for collection, indemnity rights, and other
claims and causes of action arising out of occurrences before or after
the Closing, privileges and other intangible rights and assets in each
case relating primarily to the other Assets described in this
SECTION 1.1 or to the Assumed Liabilities (as defined in SECTION 1.5).
1.2. EXCLUDED ASSETS. It is expressly understood and agreed that the
Assets shall not include the following (together, the "EXCLUDED ASSETS"):
(a) Any equity interest in the Sellers;
(b) Any of the Division assets that are consumed, sold or
disposed of in the ordinary course of the Business or otherwise in
accordance with SECTION 4.2 prior to the Closing Date;
(c) Any refunds or credits with respect to any Income Taxes (as
defined in SECTION 1.5(A)) paid or incurred by the Sellers (plus any
related interest received or due from the relevant taxing authority),
any prepaid Income Taxes of the Sellers and any other rights related
to Income Taxes of the Sellers;
(d) Any assets of the Sellers not utilized primarily in the
Business and all rights of the Sellers under this Agreement or related
to the transaction contemplated by this Agreement;
(e) The Sellers' right, title and interest in and to the
Contracts listed on SCHEDULE 1.2(E);
(f) All intercompany receivables of the Sellers;
(g) Cash and cash equivalents or similar type investments (other
than xxxxx cash balances at the Facilities), deposits in transit,
certificates of deposit,
-4-
treasury bills and other marketable securities of the Sellers, whether or
not reflected as assets of the Division;
(h) Any rights in or to the use of the name, xxxx, trade name,
trademark or service xxxx incorporating "X. X. Xxxxx" or "Xxxxx", and
any corporate symbols or logos related thereto, except to the extent
provided in SECTION 8.5;
(i) Any insurance policies (including executive split-dollar
policies), or rights under such policies, held by the Sellers;
(j) Assets (other than the tangible personal property identified
on SCHEDULE 1.1(1)) used primarily in the Corporate Technology
business unit of the Company, whether or not located at the
Facilities, including but not limited to any Trade Rights developed,
or being developed, but not yet employed in the Division or any of the
Sellers' other business units;
(k) Except as expressly provided in SECTION 6, any rights of the
Sellers with respect to (i) any Benefit Plan or Benefit Arrangement
(as such terms are defined in SECTIONS 3.1(N)(I)(A) and 3.1(N)(I)(B),
respectively) that is a defined benefit or defined contribution
retirement plan or (ii) any assets held under the trust agreement or
other funding arrangement related to any Benefit Plan or Benefit
Arrangement that is a defined benefit or defined contribution
retirement plan;
(l) Any assets identified on SCHEDULE 1.2(L);
(m) The equity securities of Metalsa; and
(n) All prepaid items, claims for collection, indemnity rights
and other claims and causes of action arising out of occurrences
before or after the Closing, privileges and other intangible rights
relating primarily to the other Excluded Assets described in this
SECTION 1.2 or to the liabilities described in SECTION 1.5.
1.3. INSTRUMENTS OF CONVEYANCE AND TRANSFER. On the Closing Date, the
Sellers shall (a) deliver or cause to be delivered to Buyer such deeds, bills of
sale, endorsements, consents, assignments, and other good and sufficient
instruments of conveyance and assignment as shall be effective to vest in Buyer
all right, title and interest of the Sellers in and to the Assets and (b)
transfer to Buyer all the books, records, files and other data (or copies
thereof) relating primarily to the Assets and reasonably necessary for the
continued operation of the Business by Buyer.
1.4. ASSUMED LIABILITIES. As used in this Agreement, the term
"LIABILITY" or "LIABILITIES" shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost,
expense, obligation or responsibility, fixed or unfixed,
-5-
known or unknown, asserted or unasserted, liquidated or unliquidated, secured or
unsecured. Subject to the terms and conditions of this Agreement, on the
Closing Date, Buyer and Parents, jointly and severally, shall assume and agree
to pay, perform and discharge when due, subject to the provisions of
SECTION 1.5, all of the Liabilities of the Sellers to the extent relating to the
Division, the Business or the Assets, whether arising before or after the
Closing Date, to the extent the same are unpaid, undelivered or unperformed on
the Closing Date (the "ASSUMED LIABILITIES"), including but not limited to:
(a) all Liabilities relating to the Assumed Contracts;
(b) except as provided in SECTION 1.5(D), all Liabilities
arising in connection with any Environmental Action (as defined below)
where any such Environmental Action or Liability (i) is related in any
way to the Sellers' or any previous owner's or operator's ownership,
operation or occupancy of the Business or the Facilities and Assets
being transferred to Buyer, and (ii) in whole or in part occurred,
existed, arose out of conditions or circumstances that existed, or was
caused on or before the Closing Date, whether or not known to Buyer or
Parents. As used herein, "ENVIRONMENTAL ACTION" means any pollution,
threat to the environment, or exposure to, or manufacture, processing,
distribution, use, treatment, generation, existence, transport,
handling, holding, removal, abatement, remediation, recycling,
reclamation, management, presence, disposal, emission, discharge,
storage, escape, seepage, leakage or release of, or threatened release
of, any Hazardous Substances (as defined below) in any location. As
used herein, "HAZARDOUS SUBSTANCE" means pollutants, contaminants,
chemicals, compounds or industrial, toxic, hazardous or petroleum or
petroleum-based substances or wastes, waste waters or byproducts,
including without limitation asbestos, polychlorinated biphenyls or
urea formaldehyde, and any other substances subject to regulation
under any Environmental Law (as defined in SECTION 3.1(O)). The
Liabilities assumed pursuant to this SECTION 1.4(B) include, without
limitation, Liabilities arising under any applicable federal or state
Environmental Law, including, without limitation, the Federal
Comprehensive Environmental Response, Compensation and Liability Act,
as amended, 42 U.S.C. Section 9601 ET SEQ. ("CERCLA");
(c) all Liabilities to the extent relating to or arising out of
any employment action or practice in connection with persons
previously employed, employed or seeking to be employed in the
Business, including without limitation Liabilities based upon breach
of employment or labor contract, employment discrimination, wrongful
termination, wage and hour or health and safety requirements, workers
compensation, the Consolidated Omnibus Budget Reconciliation Act, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
the Worker Adjustment Retraining Notification Act of 1988, as amended
(the "WARN ACT"), the Occupational Safety and Health Act of 1970, as
amended, or the National Labor Relations Act, constructive
termination, wrongful
-6-
termination, failure to give reasonable notice or pay-in-lieu-of-notice,
severance pay or termination pay (collectively, "LABOR LIABILITIES");
(d) all Liabilities (i) to the extent arising out of the
Business for Taxes (as defined below), including without limitation
the Taxes described as obligations of Buyer pursuant to SECTION 9.2,
but excluding those Taxes described in SECTION 1.5(A), and (ii) for
the expenses described as obligations of Buyer and Parents in
SECTION 9.2. As used herein, "TAXES" shall mean income, profit,
payroll, social security, turnover, withholding, franchise, gross
receipts, sales, use, transfer, registration, recording, value added,
ad valorem, real or personal property, excise, occupation, customs,
import and export or other taxes or governmental fees imposed by the
United States, any foreign country, any state, municipality,
subdivision or agency of the United States or any foreign country or
any other governmental or other authority charged with levying taxes
or fees, and all interest, penalties, deficiencies and assessments due
on account thereof whether disputed or undisputed;
(e) all Liabilities to the extent relating to actions, suits,
proceedings, disputes, claims or investigations arising primarily out
of or related primarily to the Business, the Division or the Assets
(whether or not such Liabilities relate to actions taken prior to the
Closing Date);
(f) all Liabilities to the extent arising on account of Buyer's
conduct of the Business, operation of the Division, use of the Assets
and/or sale of any products manufactured and/or sold by Buyer on or
after the Closing Date;
(g) all Liabilities to the extent arising out of or in any way
relating to or resulting from any product designed, manufactured,
assembled, installed, sold, leased or licensed, or any service
rendered, prior to the Closing Date (including any Liabilities of the
Sellers for claims made for injury to person, damage to property or
other damage, whether made in product liability, tort, breach of
warranty or otherwise, or for returns of Division products sold prior
to the Closing Date); and
(h) all other Liabilities to the extent arising out of or
related to the Business, the Division or the Assets.
Buyer is not assuming, nor shall be deemed to have assumed, any other
Liabilities of the Sellers of any kind or nature whatsoever, except as expressly
provided in this Agreement or any instrument delivered pursuant to
SECTION 5.2(D).
1.5. EXCLUDED LIABILITIES. It is expressly understood and agreed that
Assumed Liabilities shall not include the following:
-7-
(a) Liabilities of the Sellers for any Taxes based on, or
measured by, income ("INCOME TAXES"), including, without limitation,
any Income Taxes arising from the operation of the Business on or
prior to the Closing Date or from the consummation of the transactions
contemplated hereby;
(b) All intercompany Liabilities and Liabilities arising under
or related to any indebtedness for borrowed money, except for
Liabilities under the industrial revenue bond financing relating to
the Milan, Tennessee Facility;
(c) Liabilities covered by the insurance policies of the Sellers
in effect on or prior to the Closing Date (the "INSURANCE POLICIES"),
but only to the extent either of the Sellers receives proceeds
thereunder; provided that any such Liability will become an Assumed
Liability to the extent any such proceeds are subsequently required to
be remitted back to the insurance carrier;
(d) Liabilities of the Sellers whether or not set forth on
SCHEDULE 3.1(O) and whether or not known to Buyer, Parents or the
Sellers (i) arising from the offsite transportation, treatment,
storage, disposal, or arrangement for disposal of Hazardous Substances
generated or used on or prior to the Closing Date by Sellers or any of
their predecessors or (ii) arising in connection with any
Environmental Action arising from or relating to any property or
facility other than the Facilities (Liabilities of the type described
in CLAUSES (I) and (II) of this SECTION 1.5(D) are collectively
referred to as "OFFSITE LIABILITIES"); provided, however, that any
Liability that involves the migration of a Hazardous Substance from
any of the Facilities shall not be deemed to be an Offsite Liability;
(e) Liabilities resulting from any special incentive or other
bonus agreements or arrangements between the Sellers and any of their
employees relating primarily to the consummation of the transactions
contemplated by this Agreement;
(f) Except as otherwise provided herein, all Liabilities that do
not arise primarily out of or relate primarily to the Business or the
Assets;
(g) (i) Except as expressly provided in SECTION 6, any Liability
of the Sellers for benefits accrued through the Closing Date under any
Benefit Plan or Benefit Arrangement that is a defined benefit or
defined contribution retirement plan and (ii) Liabilities for eligible
claims incurred prior to the Effective Time for health, dental,
prescription drug, life and accidental death and dismemberment
benefits as provided in SECTION 6.1(E) and SECTION 6.2(E);
(h) Liabilities arising out of the matters described on EXHIBIT
1.5(H); and
(i) Liabilities arising under the Contracts listed on
SCHEDULE 1.2(E).
-8-
1.6. NONASSIGNABLE CONTRACTS AND RIGHTS. Notwithstanding anything to
the contrary in this Agreement, no Contracts, properties, rights or other assets
of the Sellers shall be deemed sold, transferred or assigned to Buyer pursuant
to this Agreement if the attempted sale, transfer or assignment thereof to Buyer
without the consent or approval of another party or governmental entity would be
ineffective or would constitute a breach of Contract or a violation of any law
or regulation or would in any other way materially and adversely affect the
rights of the Sellers (or Buyer as transferee or assignee) and such consent or
approval is not obtained on or prior to the Closing Date. In such case, to the
extent possible, (i) the beneficial interest in or to such Contracts,
properties, rights or other assets (collectively, the "BENEFICIAL RIGHTS") shall
in any event pass as of the Closing Date to Buyer under this Agreement; and (ii)
pending such consent or approval, Buyer shall assume or discharge the
Liabilities of the Sellers under such Beneficial Rights (to the extent such
obligations are Assumed Liabilities) as agent for the Sellers, and the Sellers
shall act as Buyer's agent in the receipt of any benefits, rights or interest
received from the Beneficial Rights. Buyer and the Sellers shall use their
reasonable best efforts (and bear their respective costs of such efforts)
without payment of any material penalty, fee or any other amounts to any third
parties, subject to SECTION 9.2, to obtain and secure any and all consents and
approvals that may be necessary to effect the legal and valid sale, transfer or
assignment of the Contracts, properties, rights or other assets underlying the
Beneficial Rights, including without limitation their formal assignment or
novation, if advisable. Buyer and the Sellers will make or complete such
transfers as soon as reasonably possible and cooperate with each other in any
other reasonable arrangement designed to provide for Buyer the Beneficial Rights
including enforcement at the cost and for the account of Buyer of any and all
rights of the Sellers, or either one of them, against the other party thereto
arising out of the breach or cancellation thereof by such other party or
otherwise, and to provide for the discharge by Buyer and Parents, jointly and
severally, of any Liability under such Contracts, properties, rights or other
assets, to the extent such Liability constitutes an Assumed Liability. With
respect to any Contracts, properties, rights or other assets referred to above
that are not assigned to Buyer because of the failure to obtain a required
consent ("NONTRANSFERRED ASSETS"), Buyer and Parents, jointly and severally,
shall indemnify, defend and hold harmless the Sellers from and against any
Liability that the Sellers may have in connection with such Nontransferred
Assets as a result of the transactions contemplated by this Agreement, except to
the extent of the Sellers' gross negligence or willful malfeasance.
2. CLOSING; PAYMENT OF PURCHASE PRICE AT CLOSING AND CLOSING ADJUSTMENT
2.1. CLOSING DATE. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
SECTION 7.1, and provided that the conditions to the Closing set forth in
SECTION 5.1 and SECTION 5.2 are satisfied or waived, the closing with respect to
the transactions provided for in this Agreement (the "CLOSING") shall take place
at the offices of Xxxxx & Xxxxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxxxx, at 10:00 a.m., Milwaukee time, on the earliest of (a) April 20, 1997;
(b) the fifth business day after the latest of (i) the satisfaction or waiver of
the conditions to the Closing set forth in SECTION 5.1(C) and SECTION 5.2(C),
(ii) the date the Company, in its sole discretion, delivers a notice to Buyer to
commence the time period described in this CLAUSE (b)(II) (the "CLOSING NOTICE")
and (iii) February 21, 1997; or (c) at such other time, date and place as shall
be agreed upon by the Sellers
-9-
and Buyer. Notwithstanding the foregoing, if the Closing does not take place in
accordance with the preceding sentence because any condition to the obligations
of the Sellers, on the one hand, or Buyer, on the other hand, under this
Agreement is not met on that date, then either party may postpone the Closing
from time to time to any designated subsequent business day not more than five
(5) business days after the original or postponed date on which the Closing was
to occur by delivering notice of such postponement on the date the Closing was
to occur. The actual time and date of the Closing are herein called the
"CLOSING DATE". All acts and transactions occurring under this Agreement at
the Closing shall be effective as of 11:59 p.m., Milwaukee time, on the Closing
Date (the "EFFECTIVE TIME").
2.2. PURCHASE PRICE AND PAYMENT. In consideration for the Assets, and
subject to the terms and conditions of this Agreement, Buyer shall on the
Closing Date (a) assume the Assumed Liabilities as provided in SECTION 1.4 and
(b) transfer cash to the Company in the amount of $625,000,000, subject to the
following adjustments:
(i) INCREASE. An increase equal to the amount, if any, by which
the Net Book Value (as defined in SECTION 2.3(A)) as reflected on the
Estimated Closing Statement (as defined in SECTION 2.3(B)) is greater
than $411,500,000; and
(ii) DECREASE. A reduction equal to the amount, if any, by which
the Net Book Value as reflected on the Estimated Closing Statement is
less than $411,500,000
(the amounts paid by Buyer pursuant to SECTIONS 2.2(A) AND (B) are hereinafter
collectively referred to as the "INITIAL PURCHASE PRICE"). The amount of the
Initial Purchase Price payable pursuant to SECTION 2.2(B) shall be paid on the
Closing Date by wire transfer of immediately available funds to an account the
Company has designated, at least two (2) business days prior to the Closing
Date, in writing to Buyer. The value tendered by Buyer pursuant to this
SECTION 2.2, as adjusted pursuant to the provisions of Section 2.3, shall be
hereinafter referred to as the "PURCHASE PRICE."
2.3. DETERMINATION OF NET BOOK VALUE; POST-CLOSING ADJUSTMENT.
(a) NET BOOK VALUE. The term "NET BOOK VALUE" shall mean the
total book value, as of the Effective Time, of the Assets less the
total book value of the Assumed Liabilities, in each case as reflected
on the Estimated Closing Statement, the Closing Statement or the
Adjusted Closing Statement, as the case may be; provided, that (i) Net
Book Value shall not include the value of any Asset where neither the
Asset nor its Beneficial Rights is actually transferred to Buyer
(including without limitation any Receivable that has been assigned or
purported to be assigned to Norwest Bank Minnesota, National
Association), (ii) in the event the equity interests in any Division
Affiliate are not actually transferred, Net Book Value shall not
include the value of any assets held by such Division Affiliate and
(iii) Net Book Value shall not reflect any Liability that is not an
Assumed Liability or any reserve therefor.
-10-
(b) ESTIMATED CLOSING STATEMENT. For purposes of determining an
estimate of the Net Book Value to be reflected on the Closing
Statement and the Purchase Price payable by Buyer at the Closing, not
less than five (5) business days prior to the Closing Date, the
Company shall, in consultation with Buyer, prepare and deliver to
Buyer a balance sheet which shall represent the Company's reasonable
estimate of the Closing Statement; such balance sheet to be in
accordance with GAAP, and to the extent in accordance with GAAP, using
accounting principles and policies, consistent with the balance sheet
of the Division as of December 31, 1996, attached hereto as part of
SCHEDULE 3.1(D) (the "PRELIMINARY STATEMENT"), except that such
balance sheet shall reflect only the Assets and the Assumed
Liabilities. In the event Buyer shall object to any of the
information set forth on such balance sheet or accompanying schedules
as presented by the Company, the parties shall negotiate in good faith
and attempt to agree on appropriate adjustments such that such balance
sheet and accompanying schedules reflect a reasonable estimate of the
Closing Statement and of the Net Book Value to be reflected on the
Closing Statement, but in the absence of such agreement, the most
recent month-end balance sheet of the Division shall control (the
estimated balance sheet as agreed to by the parties pursuant to this
subsection, or in the absence of such agreement, the most recent
month-end balance sheet of the Division, is herein referred to as the
"ESTIMATED CLOSING STATEMENT"). In connection with the determination
of the Estimated Closing Statement, the Company shall provide to Buyer
such information and detail and access to such books, records and work
papers as Buyer shall reasonably request.
(c) CLOSING STATEMENT. Within fifteen (15) days following the
Closing, the Company shall prepare, or cause to be prepared, and
deliver to Buyer an unaudited statement (the "CLOSING STATEMENT")
which shall set forth the Net Book Value as of the Effective Time and,
except as set forth on SCHEDULE 2.3(c), shall be prepared (i) in
accordance with generally accepted accounting principles in the United
States ("GAAP"), as in effect on the date of such preparation, (ii) in
a manner involving application of GAAP and otherwise consistent with
the preparation of the Preliminary Statement as to accounting methods,
policies, practices and procedures, with consistent classifications,
judgments and estimation methodologies to the extent such methods,
policies, practices and procedures are in accordance with GAAP, and
(iii) based only on the information relating to the content of the
Closing Statement that is known to Buyer or the Company on the date 30
days after the Closing Date. The parties agree that the adjustment
contemplated by this SECTION 2.3(c) is solely intended to show changes
in the Assets and the Assumed Liabilities reflected in the Preliminary
Statement to the Effective Time and that any such change can only be
measured if the Closing Statement is prepared using the same
principles, methods, policies, practices and procedures (subject to
the immediately preceding sentence) as were used in connection with
the preparation of the Preliminary Statement provided that such
principles, methods, policies, practices and procedures are in
accordance with
-11-
GAAP. In preparing the Closing Statement, the respective amounts included
therein for reserves (in the form of an accrued Liability or an offset to
an Asset or similar item) relating to any of the Assets or the Assumed
Liabilities, the amount of which was determined for the Preliminary
Statement by subjective estimates, shall be equal to the respective amounts
(including the absence of a reserve or zero) included in respect of such
items on the Preliminary Statement except to reflect (A) changes in
circumstances or events (including changes to reserves to reflect costs
incurred or payments made by or on behalf of the Sellers) occurring between
the date of the Preliminary Statement and the Closing Date to the knowledge
of Buyer and the Sellers on the date 30 days after the Closing Date or (B)
changes occurring between the date of the Preliminary Statement and the
date 30 days after the Closing Date in information known to Buyer and the
Sellers on the Closing Date concerning circumstances or events occurring
prior to the date of the Preliminary Statement (in which event the first
sentence of this SECTION 2.3(C) shall govern the determination of any
changes in the reserve).
(d) DISPUTES REGARDING CLOSING STATEMENT. Buyer shall, within
thirty (30) days after the delivery by the Company of the Closing
Statement, complete its review of the Net Book Value derived from the
Closing Statement. If Buyer determines that the Closing Statement has
not been prepared in accordance with SECTION 2.3(C), then Buyer shall
inform the Company on or before the last day of such 30-day period by
delivering a notice to the Company ("BUYER'S OBJECTION") (i) setting
forth a specific description of the basis of Buyer's Objection and the
adjustments to Net Book Value that Buyer believes should be made and
(ii) only including objections based on mathematical errors or based
on the Closing Statement not being prepared in accordance with
SECTION 2.3(C). The Company shall then have thirty (30) days to
review and respond to Buyer's Objection. The Sellers and Buyer shall
seek in good faith to resolve in writing any differences which they
may have with respect to any matter specified in Buyer's Objection and
the Sellers shall have full access to the working papers of Buyer
prepared in connection with Buyer's preparation of Buyer's Objection.
If the Company and Buyer are unable to resolve all of their
disagreements with respect to the determination of the foregoing items
within twenty (20) days following the completion of the Company's
review of Buyer's Objection, then the Company and Buyer shall refer
their remaining differences to Price Waterhouse, LLP or another
internationally recognized firm of independent public accountants as
to which the Company and Buyer mutually agree (the "CPA FIRM"), who
shall, acting as experts and not as arbitrators, determine on the
basis of the standards set forth in SECTION 2.3(C), and only with
respect to the remaining accounting-related differences so submitted
by Buyer to the Company (and not by independent review), whether and
to what extent, if any, Net Book Value as derived from the Closing
Statement requires adjustment. In connection with the engagement of
the CPA Firm, each of the parties shall execute reasonable engagement
letters with the CPA Firm. The Company and Buyer shall direct the CPA
Firm to use its
-12-
reasonable best efforts to render its determination within forty-five (45)
days. The CPA Firm's determination shall be conclusive and binding upon
Buyer and the Sellers. The fees and disbursements of the CPA Firm shall be
shared equally by Buyer and the Company. Buyer and the Sellers shall make
readily available to the CPA Firm all relevant books and records and any
work papers (including those of the parties' respective accountants)
relating to the Preliminary Statement and the Closing Statement and all
other items reasonably requested by the CPA Firm. The "ADJUSTED CLOSING
STATEMENT" shall be (i) the Closing Statement in the event that (x) no
Buyer's Objection is delivered to the Company during the 30-day period
specified above, or (y) the Company and Buyer so agree, (ii) the Closing
Statement, adjusted in accordance with Buyer's Objection in the event that
the Company does not respond to Buyer's Objection within the 30-day period
following receipt by the Company of Buyer's Objection, or (iii) the Closing
Statement, as adjusted by either (x) the agreement of the Company and Buyer
or (y) the CPA Firm.
(e) COOPERATION. Buyer and the Company agree that, following
the Closing, neither will take any actions with respect to the
accounting books, records, policies and procedures of the Division
that would obstruct or prevent the preparation of the Closing
Statement. Buyer shall cooperate with the Company in the preparation
of the Closing Statement including, but not limited to, (i) providing
the Company and the Company's representatives with full access during
normal business hours to the books, records (including work papers,
schedules, memoranda and other documents), facilities and employees of
the Business, (ii) causing employees of the Business to provide the
Company as promptly as practicable following the Closing Date (but in
no event later than ten (10) days after the Closing Date) with normal
year-end closing financial information for the Division for the period
ending as of the close of business on the day immediately prior to the
Closing Date, and (iii) cooperating fully with the Company and the
Company's representatives, including the provision on a timely basis
of all other information necessary or useful in connection with the
preparation of the Closing Statement. Buyer and its accountants shall
have full access to all information used by the Company in preparing
the Closing Statement, including the work papers of its accountants.
(f) ADJUSTMENT PAYMENT TO BUYER. In the event the Net Book
Value as derived from the Adjusted Closing Statement is less than the
Net Book Value as reflected on the Estimated Closing Statement, the
Company shall make an adjustment payment to Buyer in an amount equal
to the difference between (i) the Net Book Value as reflected on the
Estimated Closing Statement and (ii) the Net Book Value as derived
from the Adjusted Closing Statement. Any payment required by the
first sentence of this SECTION 2.3(F) shall be made by the Company to
Buyer, together with interest thereon at an annual rate of eight and
one-half percent (8.5%) (the "APPLICABLE RATE") calculated on the
basis of the number of
-13-
days elapsed from and including the Closing Date to and excluding the date
of payment, in immediately available funds within five (5) business days
after the determination of the Adjusted Closing Statement.
(g) ADJUSTMENT PAYMENT TO THE COMPANY. In the event the Net
Book Value as derived from the Adjusted Closing Statement is greater
than the Net Book Value as reflected on the Estimated Closing
Statement, Buyer shall make an adjustment payment to the Company in an
amount equal to the difference between (i) the Net Book Value as
reflected on the Estimated Closing Statement and (ii) the Net Book
Value as derived from the Adjusted Closing Statement. Any payment
required by the first sentence of this SECTION 2.3(G) shall be made by
Buyer to the Company, together with interest thereon at the Applicable
Rate calculated on the basis or the number of days elapsed from and
including the Closing Date to and excluding the date of payment, in
immediately available funds within five (5) business days after the
determination of the Adjusted Closing Statement.
2.4. ALLOCATION OF PURCHASE PRICE. The aggregate Purchase Price shall
be allocated among the Assets for tax purposes on the basis of the relative fair
market values of such properties as of the Closing Date. The amount of the
aggregate Purchase Price allocated to the equity interests of the Company in
China JV shall be $25,000,000. All other values, and the value of the aggregate
Purchase Price, shall be reasonably determined by Buyer and delivered to the
Company within one hundred eighty (180) days following Closing Date and shall be
subject to the Company's consent, which consent shall not be unreasonably
withheld. The Company and Buyer will follow and use such allocation in all tax
returns, filings or other related reports made by them to any governmental
agencies. To the extent that disclosures of this allocation are required to be
made by the parties to the Internal Revenue Service ("IRS") under the provisions
of Section 1060 of the Internal Revenue Code of 1986, as amended (the "CODE"),
or any regulations thereunder, Buyer and the Company will disclose such reports
to the other prior to filing with the IRS.
3. REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. To allocate risk
between the Sellers, on the one hand, and Buyer, on the other hand, for purposes
of and subject to SECTION 9.3, the Sellers, jointly and severally, represent and
warrant to Buyer as follows:
(a) DUE ORGANIZATION AND POWER. The Sellers are each duly
organized, validly existing and in good standing under the laws of the
jurisdiction of their respective incorporation and have the requisite
power and authority to own, lease and operate their properties to be
sold hereunder and to conduct the Business as now conducted by them.
The Sellers have all requisite power and authority to enter into and
deliver this Agreement and any other agreement contemplated hereby and
to perform their obligations hereunder and thereunder, including the
power and authority to convey good title to Buyer with respect to the
Assets owned
-14-
by the Sellers. The Sellers are duly authorized, qualified or licensed to
do business as foreign corporations in each of the jurisdictions in which
their right, title or interest in or to any of the Assets, or the conduct
of the Business, requires such authorization, qualification or licensing.
Each of the Division Affiliates is validly existing under the laws of the
jurisdiction of their respective incorporation.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution,
delivery and performance by each of the Sellers of this Agreement and
any other agreements contemplated hereby and the consummation by each
of them of the transactions contemplated hereby and thereby have been
duly authorized by the respective boards of directors of the Sellers.
No other corporate or stockholder action is necessary for the
authorization, execution, delivery and performance by the Sellers of
this Agreement and any other agreements contemplated hereby and the
consummation by the Sellers of the transactions contemplated hereby or
thereby. This Agreement and the other agreements contemplated hereby
have been, or will be at or prior to Closing, duly executed and
delivered by each of the Sellers, and each constitutes, or will when
so executed and delivered constitute, a valid and legally binding
obligation of each of the Sellers, enforceable against each of them in
accordance with its respective terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors rights generally
or by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
(c) NO GOVERNMENTAL APPROVALS OR NOTICES REQUIRED; NO CONFLICT
WITH INSTRUMENTS TO WHICH THE SELLERS ARE A PARTY. Except as
described in SCHEDULE 3.1(C) and except for the requirement that the
applicable waiting periods expire pursuant to the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), the
execution, delivery and performance of this Agreement and any other
agreements contemplated hereby by the Sellers, or either one of them,
and the consummation by each of them of the transactions contemplated
hereby and thereby (i) will not violate (with or without the giving of
notice or the lapse of time or both), or require any authorization,
consent, approval, filing or notice under, any provision of any law,
rule or regulation, court order, judgment or decree applicable to the
Sellers or Brazil Sub, or any one of them, or applicable to any of the
Assets and (ii) 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 Sellers or Brazil Sub, or any one of them, under, or result in the
creation of the right to accelerate, terminate, modify or cancel, or
result in the creation of a lien, charge or encumbrance upon a portion
of the Assets pursuant to, or require any notice under, the charter or
by-laws of the Sellers or Brazil Sub, or any one of them, or the
express terms of any Contract required to be disclosed on SCHEDULE
3.1(g) to which the Sellers or Brazil Sub, or any one of them, is a
party or by which the
-15-
Sellers or Brazil Sub, or any one of them, or any of the Assets is bound or
affected. The parties hereto agree that no event, occurrence or
circumstance that would constitute a breach of a representation or warranty
contained in SECTION 3.2(c) will be a basis for a breach of a
representation or warranty contained in this SECTION 3.1(c).
(d) FINANCIAL STATEMENTS. SCHEDULE 3.1(D) contains certain
historical balance sheets of the Division as of December 31, 1996,
1995 and 1994 and statements of operations for the Division for the
fiscal years ended December 31, 1996, 1995 and 1994 (collectively, the
"FINANCIAL STATEMENTS"). The Financial Statements were prepared in
accordance with GAAP, as in effect on the date of such Financial
Statements and applied on a consistent basis during the periods
involved (except as may be indicated in the notes or comments to such
Financial Statements), and such Financial Statements and notes or
comments fairly present, in all material respects, the financial
position and results of operations of the Division as of their
respective dates and for the respective periods covered thereby.
(e) OWNED AND LEASED REAL PROPERTY
(i) SCHEDULE 1.1(B) contains a complete and correct list of
the real property owned by either Seller that is used primarily
by the Division;
(ii) SCHEDULE 1.1(C) contains a complete and correct list of
the real property leased or subleased by either Seller that is
used primarily by the Division;
(iii) except as set forth on SCHEDULE 3.1(e), there is
no other real property used by the Division or Brazil Sub other
than as set forth on SCHEDULE 1.1(b) and SCHEDULE 1.1(c), and to
the knowledge of the Sellers, there is no other real property
used by China JV except as set forth on SCHEDULE 3.1(e);
(iv) the current use of the Facilities does not violate any
covenant, condition, restriction or instrument of record
affecting such Owned Real Property or, to the knowledge of the
Sellers, Leased Real Property;
(v) except as set forth on SCHEDULE 3.1(e) and except for
Permitted Encumbrances (as defined in SECTION 3.1(f)), there are
no leases, subleases, licenses, concessions, or other agreements,
written or oral, granting to any party or parties the right of
use or occupancy of any portion of the Owned Real Properties or
Leased Real Properties and there are no parties (other than
Sellers) in possession of the Owned Real Properties or Leased
Real Properties; and
-16-
(vi) with respect to each lease relating to Leased Real
Property listed on SCHEDULE 1.1(c), the Sellers have not
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the lease.
(f) TITLE TO PROPERTIES AND ABSENCE OF LIENS AND ENCUMBRANCES.
(i) Except as set forth on SCHEDULE 3.1(f), the Sellers own all
of the Assets (real, personal and mixed, tangible and intangible),
free and clear of all claims, covenants, conditions, restrictions,
liens, security interests, charges, mortgages, pledges, easements,
leases, options, rights of first refusal or offer, encumbrances,
licenses or sublicenses, conditional sales or other title retention
agreements (an "ENCUMBRANCE") other than Permitted Encumbrances (as
defined below). Upon payment for the Assets as contemplated herein,
the Sellers will convey to Buyer all of the Sellers' right, title and
interest in and to the Assets free and clear of all exceptions to
title or Encumbrances, except in each case (A) as specifically set
forth in SCHEDULE 3.1(f), (B) liens for current taxes and assessments
not yet due and payable or being contested in good faith by
appropriate proceedings and for which appropriate GAAP reserves have
been made, (C) as reflected in the public records relating to real
property included in the Assets (other than judgement or other liens
securing financial obligations of the Sellers except those described
in CLAUSE (B) or (D)) which do not materially impair the current use
of the property subject thereto and (D) for contractors, materialmen
and mechanics statutory liens incurred in the ordinary course of
business for which amounts are not delinquent and in the aggregate do
not materially impair the Business (such exceptions, collectively, the
"PERMITTED ENCUMBRANCES").
(ii) The Assets, together with the rights received under the
Transition Services Agreement referred to in SECTION 8.7 comprise all
of the assets and rights of the Sellers, tangible and intangible
(including Trade Rights), that the Sellers use in the conduct of the
Business as presently conducted, except for the assets described on
SCHEDULE 3.1(f).
(iii) The Company obtained a building permit for and
initiated construction of the Facility of the Business located in
Botetourt County, Virginia (the "ROANOKE FACILITY") prior to
August 1, 1996. Taking into account the Company's investments
prior to the date of this Agreement and investments the Division
will make pursuant to Contracts disclosed on SCHEDULE 3.1(G) or
not required to be disclosed on SCHEDULE 3.1(G), the Division
will have constructed the Roanoke Facility with a total
investment in excess of $24,000,000. In December 1996, the
Company employed 56 employees at the Roanoke Facility.
-17-
(g) MATERIAL CONTRACTS. SCHEDULE 3.1(g) sets forth a list as of
the date of this Agreement of each of the following types of written
Contracts to which either or both of the Sellers (or, in the case of
CLAUSE (XI), Brazil Sub) are a party that relate primarily to the
Business or to which the Assets are bound:
(i) any employment Contract with any officer or director of
the Sellers that has future liability in excess of $200,000 per
annum and is not terminable by notice of not more than sixty (60)
calendar days;
(ii) any collective bargaining agreement applicable to
employees of the Business (the "COLLECTIVE BARGAINING
AGREEMENT(S)");
(iii) any covenant not to compete that restricts the
Sellers;
(iv) any Contract to lease real or personal property which
has future liability in excess of $150,000 per annum and is not
terminable by notice of not more than sixty (60) calendar days;
(v) any Contract for loaning any money or directly or
indirectly guaranteeing Liabilities of others (other than
endorsements for the purpose of collection, loans made to
employees for relocation, travel or other employment-related
purposes, or purchases of equipment or materials made under
conditional sales contracts, in each case in the ordinary course
of the Business), in each case having an outstanding principal
amount in excess of $250,000;
(vi) any Contract under which any other person has directly
or indirectly guaranteed Liabilities of either or both of the
Sellers (other than endorsements for the purpose of collection in
the ordinary course of the Business), in each case having an
outstanding principal amount or aggregate future liability in
excess of $250,000;
(vii) any Contract under which the Sellers or either one
of them licenses to or from any third party any Trade Rights
which requires payments per annum of more than $250,000;
(viii) any agreement or indenture relating to the
borrowing of money or the mortgaging, pledging or otherwise
placing a lien on any of the Assets;
(ix) product distribution or sales representative Contracts;
(x) any other Contract, in each case of a type not
described in any of CLAUSES (I) through (IX) above (without
reference to disclosure
-18-
thresholds set forth therein), to which either or both of the Sellers
are a party or by or to which any of their assets are bound or subject
which has future liability in excess of $1,000,000 per annum and is
not terminable by the Sellers by notice of not more than sixty (60)
calendar days (other than purchase orders of either of the Sellers for
the purchase of Materials or other Inventory in the ordinary course of
the Business consistent with past practice);
(xi) any material Contract to which Brazil Sub is a party;
or
(xii) any Contract that is terminable by the Sellers
only by notice of more than sixty (60) calendar days and that
expressly provides for the payment of a penalty or premium in
excess of $250,000 upon such termination (other than purchase
orders of either of the Sellers for the purchase of Materials or
other Inventory in the ordinary course of the Business consistent
with past practice).
The Sellers have delivered to, or made available for inspection
by, Buyer a copy of each Contract listed on SCHEDULE 3.1(G) as amended
to date. Except as disclosed on SCHEDULE 3.1(G) or the other
Schedules hereto, each Contract described on SCHEDULE 3.1(G)
(collectively, the "MATERIAL CONTRACTS") is valid, binding and in full
force and effect and is enforceable by the Company, Enterprises or
Brazil Sub, as the case may be, in accordance with its terms, and the
Sellers have no knowledge of any cancellation, breach or anticipated
breach of any Material Contract. Except as disclosed in
SCHEDULE 3.1(G) or the other Schedules hereto, the Company,
Enterprises or Brazil Sub, as the case may be, has performed all
obligations required to be performed by it to date under the Material
Contracts and is not (with or without the lapse of time or the giving
of notice, or both) in breach or default in any manner.
(h) DEFECTS. Except as described on SCHEDULE 3.1(H), to the
knowledge of the Sellers, the Facilities and Equipment currently in
use in connection with the Business, taken as a whole, are in normal
operating condition and repair, subject to normal wear and tear.
Except with respect to the representations and warranties contained in
this Agreement, Buyer is acquiring the Assets AS IS, WHERE IS. THE
SELLERS MAKE NO OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE DESIGN, CONDITION, CAPACITY, VALUE, UTILITY,
PERFORMANCE OR QUALITY OF THE ASSETS (INCLUDING INVENTORY) AND THE
SELLERS MAKE NO IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE WITH RESPECT THERETO.
(i) LEGAL PROCEEDINGS. Except as described in SCHEDULE 3.1(I),
as of the date of this Agreement, there is no pending, or to the
knowledge of the Sellers,
-19-
threatened (in a reasonably serious manner or in writing), litigation,
proceeding, action, suit or investigation relating to the Division to which
the Sellers, or either one of them, is a party relating primarily to the
Assets or the Business or the transactions contemplated by this Agreement.
(j) LABOR CONTROVERSIES. Except as set forth on
SCHEDULE 3.1(j), as of the date of this Agreement, there are no
pending or, to the knowledge of Sellers, threatened (in a reasonably
serious manner or in writing) grievances, labor arbitrations or other
labor disputes relating to Division Employees (as defined in
SECTION 3.1(n)(i)(1)). Except as set forth on SCHEDULE 3.1(j), as of
the date of this Agreement, the Sellers have not suffered any strike,
picketing or work stoppage by any group of Division Employees
affecting the Business during the three (3) years preceding the date
of this Agreement. Except as set forth on SCHEDULE 3.1(j), there are
no union organizing campaigns, or other questions concerning
representation, relating to Division Employees, and there are no
unfair labor practice charges pending or, to the knowledge of Sellers,
threatened (in a reasonably serious manner or in writing) which could
result in the imposition of new bargaining relationships with any
employee representative. To the Sellers' knowledge, no key executive
Division Employee who is a member of the Division's leadership team
(other than those identified on SCHEDULE 3.1(j)) and no group of
employees acting as a group has plans to terminate his, her or its
employment with the Division.
(k) TRADE RIGHTS. SCHEDULE 3.1(k) lists all patented,
registered and applied for, and material unregistered, Trade Rights of
the Business of the type described in CLAUSES (i), (ii) and (iii) of
SECTION 1.1(a) (including any registrations thereof or applications
therefor) and indicates whether such Trade Rights are owned or
licensed by the Sellers. To the knowledge of the Sellers, the Sellers
have not interfered with, infringed upon, misappropriated, or violated
any Trade Rights of any third party in the operation of the Business.
Except as set forth on SCHEDULE 3.1(k), the Sellers, or either one of
them, in connection with the Business, have not received within the
past three years any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation or
violation, or asserting the invalidity, unenforceability or misuse of
any of the Sellers' Trade Rights, and no such charge, complaint,
claim, demand or notice is currently outstanding or is threatened (in
a reasonably serious manner or in writing), nor to the knowledge of
the Sellers has any third party interfered with, infringed upon,
misappropriated, or violated any material Trade Rights of the Sellers
with respect to the Business.
(l) GOVERNMENT LICENSES, PERMITS AND RELATED APPROVALS.
SCHEDULE 3.1(L) sets forth a complete list of all of the Sellers'
material licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities relating
primarily to the Business. Except as described
-20-
on SCHEDULE 3.1(l), each of the Sellers has all licenses, permits,
consents, approvals, authorizations, qualifications and orders of
governmental authorities required for the conduct of the Business as
presently conducted by it.
(m) CONDUCT OF BUSINESS IN COMPLIANCE WITH REGULATORY
REQUIREMENTS. Except as described on SCHEDULE 3.1(m), the Sellers
have conducted the Business and operated the Facilities so as to
comply with all applicable laws, ordinances and regulations,
including, without limitation, all applicable laws, ordinances and
regulations pertaining to human health or safety.
(n) EMPLOYEE BENEFIT PLANS AND ARRANGEMENTS.
(i) SCHEDULE 3.1(n) hereto identifies:
(A) Each "EMPLOYEE BENEFIT PLAN", as such term is
defined in Section 3(3) of ERISA, that is covered by ERISA
and that is maintained or otherwise contributed to by the
Sellers for the benefit of the current or former employees
of either of the Sellers in the Business (such employees,
who include without limitation those persons listed on
SCHEDULE 3.1(n), "DIVISION EMPLOYEES"). The Sellers have
delivered or made available to Buyer copies or descriptions
of such plans (each, a "BENEFIT PLAN" and, collectively, the
"BENEFIT PLANS"), together with the most recent
determination letter issued by the Internal Revenue Service
(where applicable).
(B) Each plan or arrangement not subject to ERISA
maintained or otherwise contributed to by the Sellers for
the benefit of Division Employees and providing for deferred
compensation (including foreign deferred compensation
arrangements), bonuses, severance, stock options, employee
insurance coverage or any similar compensation or welfare
benefit arrangement (a "BENEFIT ARRANGEMENT" and
collectively, the "BENEFIT ARRANGEMENTS"), copies or
descriptions of which have been delivered or made available
to Buyer or shall be furnished upon request.
(ii) Subject to the exceptions set forth on SCHEDULE 3.1(n),
each Benefit Plan and Benefit Arrangement has been maintained and
administered at all times in compliance with its terms and all
applicable laws, rules and regulations, including but not limited
to ERISA and the Code, applicable to such Benefit Plan or Benefit
Arrangement.
(iii) No "reportable event" (as such term is used in
Section 4043 of ERISA), "prohibited transaction" (as such term is
used in Section 406 of ERISA or Section 4975 of the Code) or
"accumulated funding
-21-
deficiency" (as such term is used in Section 412 of ERISA or
Section 4971 of the Code) has heretofore occurred with respect to any
Benefit Plan.
(iv) The Sellers are not a participating or contributing
employer in any multiemployer benefit plan (as defined in Section
3(37) of ERISA) with respect to the Division Employees nor have
the Sellers incurred any withdrawal liability with respect to any
multiemployer plan.
(v) Each Benefit Plan that is intended to be qualified
under Section 401(a) of the Code is so qualified and has received
from the Internal Revenue Service ("IRS") a favorable
determination letter within the last two years. The Sellers have
not incurred, and have no reason to expect that they will incur,
any Liability to the Pension Benefit Guaranty Corporation
("PBGC") (other than PBGC premium payments) or otherwise under
Title IV of ERISA (including any withdrawal Liability) or under
the Code with respect to any employee pension benefit plan that
the Sellers or any member of their Controlled Group (within the
meaning of Code Section 414(b) and (c)) maintains or ever has
maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute.
(o) ENVIRONMENTAL MATTERS. Except as set forth on
SCHEDULE 3.1(o):
(i) Each of the Division, the Assets and the Facilities
have complied (except instances of past noncompliance that have
been fully corrected, where all fines and penalties have been
paid and where all related government and third party actions
have been resolved) and comply with all applicable federal, state
or local statutes, regulations, ordinances, codes or decrees
regarding protection of the environment (including, without
limitation, those protecting the quality of the ambient air,
soil, surface water or groundwater or otherwise regulating
Environmental Actions) in effect as of or, to the extent
applicable, at any time prior to the Closing Date (collectively,
the "ENVIRONMENTAL LAWS") and all permits, licenses,
registrations and other authorizations required under applicable
Environmental Laws to own or operate the Facilities and the
Assets as they are currently operated;
(ii) No Hazardous Substances have been produced, sold, used,
stored, transported, handled, released, discharged or disposed of
at or from the Facilities by any person in a manner that violated
any applicable Environmental Law (except instances of past
violations that have been fully corrected, where all fines and
penalties have been paid and where all related government and
third party actions have been resolved), or has given or would
give rise to Liabilities pursuant to any Environmental Law or
common law;
-22-
(iii) The Sellers have not received written notice from
any person, entity or governmental authority that the Facilities
are in violation or allegedly in violation of, do not comply or
allegedly do not comply with any applicable Environmental Law, or
are subject to liability or alleged liability under any
applicable Environmental Law or common law (except for notices
where the subject matter of such notices has been fully
corrected, where all fines, penalties, damages and remedial costs
have been paid and where all related government and third party
actions have been resolved); and
(iv) The off-site waste disposal sites identified on
SCHEDULE 3.1(o) constitute all of the off-site waste disposal
sites relating primarily to the Business that have been
identified to the Sellers as off-site waste disposal sites
requiring remediation under one or more Environmental Laws.
(p) CERTAIN FEES. Neither the Sellers, the Division Affiliates
nor any of their respective officers, directors or employees, 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, except for those brokers whose fees
will be paid by the Sellers.
(q) TAX MATTERS.
(i) Each Seller has timely filed (taking into account any
extensions granted) all Tax Returns (as defined in CLAUSE (IV) of
this SECTION 3.1(q)) required to be filed by it with respect to
Taxes arising out of the Business, each such Tax Return has been
prepared in compliance with all applicable laws and regulations,
and such Tax Returns are true and accurate in all respects. All
Taxes arising out of the Business that are due and payable by the
Sellers have been paid.
(ii) Except as set forth in SCHEDULE 3.1(q) attached hereto:
(A) no deficiency or proposed adjustment which has not
be settled or otherwise resolved for any amount of Tax arising
out of the Business has been proposed, asserted or assessed by
any taxing authority against either Seller and there is no
action, suit, taxing authority proceeding or audit now in
progress, pending, or to the Sellers' knowledge, threatened
against or with respect to the Sellers;
(B) each Seller has withheld and paid all Taxes
arising out of the Business required to have been withheld and
paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third
party;
-23-
(C) no claim has ever been made by a taxing authority
in a jurisdiction where the Sellers do not file Tax Returns that
the Sellers are or may be subject to Taxes assessed by such
jurisdiction; and
(D) there are no liens for Taxes (other than for
current Taxes not yet due and payable) upon the Assets.
(iii) each Seller shall furnish to Buyer prior to the
Closing a certification pursuant to Treasury Regulation Section
1.1445-2(b)(2) that such Seller is not a foreign person.
(iv) As used herein, the term "TAX RETURNS" means returns,
declarations, reports, claims for refund, information returns or
other documents (including any related or supporting schedules,
statements or information) filed or required to be filed in
connection with the determination, assessment or collection of
Taxes of any party or the administration of any laws, regulations
or administrative requirements relating to any Taxes.
(r) ABSENCE OF CHANGES OR EVENTS. Except as set forth on
SCHEDULE 3.1(r) or the other Schedules hereto, and except as to
matters relating to Metalsa, since December 31, 1996, neither of the
Sellers has
(i) suffered a change having a Material Adverse Effect (as
defined below) other than (A) changes resulting from developments
or occurrences relating to or affecting United States or foreign
economies in general or the industry of the Division in general
and not specifically relating to the Division ("GENERAL CHANGES")
and (B) changes that are the result of actions taken by Buyer
prior to the Closing Date or as contemplated herein that have an
effect on the Division ("TRANSACTION CHANGES"), which shall
include without limitation any disruptions to the Business as a
result of the execution of this Agreement, the announcement by
Buyer of its intention to purchase the Division or the
announcement by the Company of its intention to sell the
Division, and the consummation of the transactions contemplated
hereby, and Buyer agrees that any General Changes or Transaction
Changes do not and shall not constitute a breach of this
SECTION 3.1(r). As used in this Agreement, the phrase "MATERIAL
ADVERSE EFFECT" shall mean a material adverse effect on the
results of operations or financial condition of the Division and
the Division Affiliates taken as a whole;
(ii) sold, leased, assigned or transferred any material
portion of its tangible assets or Trade Rights used in the
Business, except in the ordinary course of business;
-24-
(iii) entered into, amended or terminated any Contract
or any other transaction in connection with the Business
involving in excess of $1,000,000, other than in the ordinary
course of business and on a basis consistent with past practice;
or
(iv) in connection with the Business, made or granted any
bonus or any wage, salary or compensation increase in excess of
$50,000 per year to any employee, sales representative or
consultant or made or granted any increase in benefits under any
Benefit Plan or Benefit Arrangement, or amended or terminated any
existing Benefit Plan or Benefit Arrangement or adopted any new
Benefit Plan or Benefit Arrangement, in each case other than on a
basis consistent with past practice.
AFFILIATES.
(i) The Division Affiliates and Metalsa constitute the only
business organizations operating within the Division in which the
Sellers own any equity interest.
(ii) The authorized and outstanding equity interests in
Brazil Sub consist of 25,000 quotas, all of which are owned by
the Company and a subsidiary of the Company. Except as set forth
on SCHEDULE 3.1(s), Brazil Sub has no outstanding stock or
securities convertible or exchangeable for any of its equity
interests, and Brazil Sub does not have outstanding any rights or
options to subscribe for or to purchase its equity interests or
any securities convertible into or exchangeable for its equity
interests. Except as set forth on SCHEDULE 3.1(s), Brazil Sub is
not subject to any obligation (contingent or otherwise) to
repurchase or otherwise acquire or retire any of its equity
interests or any warrants, options or other rights to acquire its
equity interests. All of the outstanding shares of Brazil Sub's
capital stock are validly issued, fully paid and nonassessable.
After giving effect to the transactions contemplated herein,
Buyer will own 100% of the issued and outstanding equity
interests of Brazil Sub.
(iii) SCHEDULE 3.1(s) identifies any agreement to which
the Sellers are a party, of which the Sellers have knowledge or
which the Sellers' appointees to the board of directors of China
JV have voted to approve relating to (A) the authorized and
outstanding equity interests in China JV; (B) any outstanding
equity interests of China JV or securities convertible or
exchangeable for any of its equity interests; (C) any rights or
options to subscribe for or to purchase its equity interests or
any securities convertible into or exchangeable for its equity
interests; (D) any obligation (contingent or otherwise) to which
China JV is subject to repurchase or otherwise acquire or retire
any of its equity interests or any warrants, options or other
-25-
rights to acquire its equity interests; or (E) the assessability of
the Sellers' equity interests in China JV. To the knowledge of the
Sellers, subject to the rights of the other equity interest holders of
China JV as set forth in, and compliance with the other terms and
restrictions of, the agreements relating to China JV identified on
SCHEDULE 3.1(s), after giving effect to the transactions contemplated
herein, Buyer will own 60% of the issued and outstanding equity
interests of China JV.
(iv) Except as set forth on SCHEDULE 3.1(s), there are no
contractual stockholders preemptive rights or rights of refusal
with respect to the sale of Brazil Sub's equity interest
hereunder or, to the knowledge of the Sellers, to the sale of
China JV's equity interest hereunder and there are no agreements
among the Sellers and the Division Affiliates' other equity
interests holders with respect to the voting or transfer of the
Division Affiliates' equity interests or with respect to any
other aspect of the Division Affiliates' corporate affairs.
(t) ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in
SCHEDULE 3.1(t), the Sellers have no Liabilities (including without
limitation Labor Liabilities) arising out of transactions entered into
at or prior to the Closing, or any action or inaction at or prior to
the Closing, or any state of facts existing at or prior to the
Closing, except (i) Liabilities under Contracts disclosed on
SCHEDULE 3.1(g), under Contracts that are not required to be disclosed
on SCHEDULE 3.1(g) (but not Liabilities for breaches thereof) or under
Contracts entered into after the date of this Agreement in accordance
with the terms and conditions of this Agreement, (ii) Liabilities
reflected on the December 31, 1996 balance sheet of the Division or on
the Adjusted Closing Statement, and (iii) Liabilities disclosed in
this Agreement or as set forth in any other Schedule to this
Agreement.
(u) PRODUCT WARRANTIES. Except as set forth on SCHEDULE 3.1(u),
no product processed, manufactured, sold or delivered by the Sellers
is subject to any guaranty, warranty or indemnity beyond the
applicable standard terms of sale or lease, other than statutory
warranties.
(v) PRODUCT LIABILITY; RECALLS. Except as set forth in
SCHEDULE 3.1(v), there is no Liability relating to or resulting from
any product installed, sold, leased or licensed, or any service
rendered, prior to the Closing Date (including any Liabilities of the
Sellers for claims made for injury to person, damage to property or
other damage, whether made in product liability, tort, breach of
warranty or otherwise, or for returns of Division products sold prior
to the Closing Date). Since January 1, 1994, there have been no
product recalls or requests therefor by any governmental entities or
customers.
-26-
(w) INVENTORY. The inventories of the Sellers reflected on the
Recent Balance Sheet and to be reflected on the Adjusted Closing
Statement are reflected at the lower of cost or market in accordance
with GAAP and will be realizable in the ordinary course of business.
(x) NOTES AND ACCOUNTS RECEIVABLE. The Receivables reflected on
the Preliminary Statement were (except to the extent Receivables
reflected on the Preliminary Statement were subject to the Receivables
Purchase Facility to the Company from Norwest Bank Minnesota, National
Association), and Receivables reflected on the Adjusted Closing
Statement will be, valid receivables subject to no setoffs or
counterclaims.
(y) CLOSING DATE. All of the representations and warranties
contained in this SECTION 3.1 will be true and correct on the Closing
Date except for representations and warranties that speak as of a
specific date or time and except to the extent that the Sellers have
advised Buyer otherwise in writing prior to the Closing.
3.2. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENTS. Buyer and
Parents, jointly and severally, represent and warrant to the Sellers as follows:
(a) DUE ORGANIZATION AND POWER. Buyer and Parents are
corporations duly organized and validly existing under the laws of
their respective jurisdictions of incorporation. Buyer and Parents
each have each all requisite power and authority to enter into this
Agreement and any other agreement contemplated hereby and to perform
their respective obligations hereunder and thereunder. Buyer and
Parents are each duly authorized, qualified or licensed to do business
as a foreign corporation, and are each validly existing, in each of
the jurisdictions in which their respective rights, titles or
interests in or to any asset, or the conduct of their respective
businesses, require such authorization, qualification or licensing.
Tower owns all of the issued and outstanding capital stock of RJT and
has no other subsidiaries (other than Tower Automotive Export, Inc.),
and RJT owns all of the issued and outstanding capital stock of Buyer.
(b) AUTHORIZATION AND VALIDITY OF AGREEMENT. The execution,
delivery and performance by Buyer and Parents of this Agreement and
any other agreements contemplated hereby and the consummation by Buyer
and Parents of the transactions contemplated hereby and thereby have
been duly authorized by their respective boards of directors. No
other corporate or stockholder action is necessary for the
authorization, execution, delivery and performance by Buyer and
Parents of this Agreement and any other agreement contemplated hereby
and the consummation by Buyer and Parents of the transactions
contemplated hereby or thereby. This Agreement and the other
agreements contemplated hereby have been, or will be at or prior to
Closing, duly executed and delivered by each of
-27-
Buyer and Parents, and each constitutes, or will when so executed and
delivered constitute, a valid and legally binding obligation of each of
Buyer and Parents, enforceable against each of them in accordance with its
respective terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to
or affecting creditors' rights generally or by general equitable principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(c) NO GOVERNMENTAL APPROVALS OR NOTICES REQUIRED; NO CONFLICT
WITH INSTRUMENTS TO WHICH BUYER OR PARENTS ARE A PARTY. Except as
described in SCHEDULE 3.2(C) and except for the requirement that the
applicable waiting periods expire pursuant to the HSR Act, the
execution, delivery and performance of this Agreement and any other
agreements contemplated hereby by Buyer and Parents and the
consummation by each of them of the transactions contemplated hereby
and thereby (including without limitation consummation of the
Financing (as defined in SECTION 3.2(E)) (i) 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
law, rule or regulation, court order, judgment or decree applicable to
Buyer or Parents, or any one of them, and (ii) 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 Buyer or Parents, or any one of
them, under, the charter or by-laws of either Buyer or Parents, or any
one of them, or any indenture, mortgage, deed of trust, lease,
licensing agreement, contract, instrument or other agreement to which
Buyer or Parents, or any one of them, is a party or by which Buyer or
Parents, or any one of them, or any of their assets or properties is
bound.
(d) CERTAIN FEES. Neither Buyer or Parents, nor any of their
officers, directors or employees, 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,
except for those brokers whose fees will be paid by Buyer or Parents.
(e) FINANCIAL CAPACITY. Buyer has commitments from financial
institutions pursuant to the Bank of America commitment letter dated
January 24, 1997 delivered to the Company, to enable it to consummate
the transactions contemplated by this Agreement (the "FINANCING").
(f) FACILITIES CLOSINGS AND MASS LAYOFFS. Buyer does not
currently plan or contemplate any plant closings, reductions in force
or terminations of employees that, in the aggregate, would constitute
a plant closing, mass layoff of Division Employees or similar event
under the Warn Act or any similar foreign, federal, state or local
statute or ordinance during any period as to which either of the
-28-
Sellers may have a notice obligation and/or potential Liability in
connection therewith under applicable law.
(g) ACQUISITION OF EQUITY SECURITIES OF DIVISION AFFILIATES FOR
INVESTMENT. The equity securities of the Division Affiliates to be
purchased by Buyer pursuant to this Agreement are being acquired for
investment only and not with a view to any public distribution
thereof, and Buyer will not offer to sell or otherwise dispose of the
equity securities so acquired by it in violation of any of the
registration requirements of the Securities Act of 1933, as amended,
or any comparable state law. Buyer acknowledges that it has received
all information it has requested from the Company regarding its
decision as to whether to purchase the equity securities of each of
the Division Affiliates.
(h) FINANCIAL INFORMATION.
(i) 1996 FINANCIALS. Set forth on SCHEDULE 3.2(H) are the
consolidated balance sheets of Buyer and Parents as of December
31, 1996 and the consolidated statements of income and expense
for Buyer and Parents for the year then ended (collectively, the
"1996 FINANCIALS"). The 1996 Financials have been prepared in
accordance with GAAP applied on a consistent basis (except as
otherwise noted therein) and fairly present in all material
respects the financial position of Buyer and Parents as of such
date and the results of their operations for the year then ended
subject to potential audit adjustments that will not be material.
(ii) MATERIAL ADVERSE CHANGE. Since December 31, 1996,
there has been no material adverse change in the financial
position or results of Buyer or Parents from that reflected in
the 1996 Financials.
(iii) SOLVENCY OF BUYER AND PARENTS. Upon consummation
of the transactions provided for in this Agreement, each of Buyer
and Parents will be solvent and will have adequate working
capital to pay, discharge or perform all of their Liabilities,
including without limitation the Assumed Liabilities, as such
become due and payable.
(iv) CAPITALIZATION OF BUYER AND PARENTS. SCHEDULE 3.2(H)
sets forth the current consolidated capitalization of Buyer and
Parents and the anticipated consolidated capitalization of Buyer
and Parents immediately following the Closing.
(v) PROJECTIONS. Set forth on SCHEDULE 3.2(H) are Buyer's
and Parents' reasonable good faith projections of the
consolidated balance sheets of Buyer and Parents as of December
31, 1997 and 1998 and the consolidated statements of income and
expense for Buyer and Parents for
-29
the years then ending, in each case assuming consummation of the
transactions contemplated hereby. The Sellers acknowledge that there
are uncertainties inherent in Buyer's and Parents' attempting to make
such projections and that the actual results may differ from the
projected results in a material manner.
(i) CLOSING DATE. All of the representation and warranties contained
in this Section 3.2 will be true and correct on the Closing Date except for
representations and warranties that speak as of a specific date or time and
except to the extent that Buyer has advised the Sellers otherwise in
writing prior to the Closing.
3.3. EXPIRATION OF REPRESENTATIONS AND WARRANTIES. None of the
respective representations and warranties of the Sellers, Buyer and Parents
contained herein or in any certificate or other document delivered prior to or
on the Closing Date shall survive the Closing, except that (a) the
representations and warranties as to the matters set forth in SECTION 3.1 that
the Sellers make on the date hereof and at the Closing, by delivering the
certificate described in SECTION 5.1(a) (the "SURVIVING REPRESENTATIONS"), shall
survive the Closing for a period lasting until (i) with respect to claims made
under matters set forth in SECTIONS 3.1(b) (Authorization) and 3.1(q) (Taxes)
(or under SECTION 3.1(y) in respect of such matters), the expiration of the
applicable statute of limitations, (ii) with respect to claims made under
matters set forth in SECTIONS 3.1 (f)(i) (Title to Properties) (or under SECTION
3.1(y) in respect of such matters), the second anniversary of the Closing, (iii)
with respect to claims made under matters set forth in SECTION 3.1(O)
(Environmental) (or under SECTION 3.1(y) in respect of such matters), the third
anniversary of the Closing, (iv) with respect to claims in respect of the
Sellers' compliance with their respective obligations and covenants to be
performed or complied with prior to the Closing under SECTION 4.2, the six month
anniversary of the Closing, and (v) with respect to claims arising under matters
otherwise set forth in SECTION 3.1 (or under SECTION 3.1(y) in respect of such
matters), the fifteen month anniversary of the Closing and (b) the
representations and warranties as to the matters set forth in SECTION 3.2 that
Buyer and Parents make on the date hereof and at the Closing, by delivering the
certificate described in SECTION 5.2(a), shall survive the Closing until the
fifteen month anniversary of the Closing.
3.4. NO OTHER REPRESENTATIONS OR WARRANTIES; MEMORANDUM; PROJECTIONS.
Except for the representations and warranties contained in SECTION 3.1, Buyer
and Parents acknowledge that neither the Sellers nor any other person or entity,
acting on behalf of the Sellers, makes or has made any other express or implied
representation or warranty to Buyer or Parents as to the accuracy or
completeness of any information regarding the Business or any other matter.
Buyer and Parents further agree that neither the Sellers nor any other person or
entity will have or be subject to any liability to Buyer or Parents, or any one
of them, or any other person resulting from the distribution to Buyer or
Parents, or Buyer's or Parents' use, of any such information, including the
Memorandum prepared by Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated in
October 1996 and any information, document or material made available to Buyer
or Parents, or any one of them, in certain "data rooms," management
presentations or any other
-30-
form in expectation of the transactions contemplated by this Agreement except to
the extent any such information is incorporated into this Agreement or the
Schedules hereto.
Without limitation, in connection with Buyer's or Parents'
investigation of the Business, the Division or the Assets, Buyer and Parents
have received from or on behalf of the Sellers certain projections, including,
without limitation, projected statements of operating revenues and income from
operations of the Business for the fiscal year ending on December 31, 1996 and
for subsequent fiscal years and certain business plan information for such
fiscal year and succeeding fiscal years. Buyer and Parents acknowledge that
there are uncertainties inherent in attempting to make such estimates,
projections and other forecasts and plans, that Buyer and Parents are familiar
with such uncertainties, that Buyer or Parents are taking full responsibility
for making their own evaluation of the adequacy and accuracy of all estimates,
projections and other forecasts and plans so furnished to it (including the
reasonableness of the assumptions underlying such estimates, projections and
forecasts), and that Buyer and Parents shall have no claim against the Sellers
or any other person acting on behalf of the Sellers with respect thereto.
Accordingly, the Sellers make no representation or warranty with respect to such
estimates, projections and other forecasts and plans (including the
reasonableness of the assumptions underlying such estimates, projections and
forecasts).
4. TRANSACTIONS PRIOR TO CLOSING
4.1. ACCESS TO INFORMATION CONCERNING PROPERTIES AND RECORDS;
CONFIDENTIALITY. Except (a) for information which, if provided, would adversely
affect the ability of the Sellers or any of their affiliates to assert attorney-
client or attorney work product privilege or other similar privilege and (b) as
prohibited by applicable law, the Sellers agree that, during the period
commencing on the date hereof and ending on the Closing Date, (i) they will give
or cause to be given to Buyer and its representatives (including its Financing
sources and their representatives) such access, during normal business hours, to
the Facilities, properties, books and records of the Sellers relating to the
Assets or the Business as Buyer may from time to time reasonably request, (ii)
they will furnish or cause to be furnished to Buyer such financial and operating
data and other information with respect to the Business and the properties of
the Division, including access to the work papers of the Company's independent
auditors (with the consent of such auditors, which the Company shall use its
reasonable best efforts to obtain), as Buyer may from time to time reasonably
request, and (iii) Buyer and its representatives shall be entitled, upon
reasonable advance notice to and with the consent of the Company (which shall
not be unreasonably withheld), to such access to the representatives, customers,
suppliers, union officials, officers and employees of the Sellers involved in
the Business as Buyer may reasonably request. In connection with the foregoing,
Buyer may complete "Phase I" environmental assessments of the Facilities of
customary scope and conduct such other environmental assessments and
investigations as to which Buyer and the Company agree in writing. Buyer and
Parents will continue to comply with the terms of that certain access agreement
entered into between Tower and the Company dated January 10, 1997 (the "ACCESS
AGREEMENT").
-31-
4.2. CONDUCT OF THE BUSINESS PENDING THE CLOSING DATE. The Sellers
agree that, except as required or contemplated by this Agreement and except for
any actions taken by the Sellers of the type set forth in EXHIBIT 4.2, or
otherwise consented to by Buyer, during the period commencing on the date hereof
and ending on the Closing Date, they 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 commercially reasonable efforts,
consistent with past practice, to preserve the Division's present
business organization intact, keep available the services of the
Division Employees and preserve its present relationships with persons
having business dealings with the Division;
(b) not dispose of any of the fixed Assets that are material to
the Business, except in the ordinary course of the Business consistent
with past practices;
(c) not (i) permit or allow any of the Assets to become subject
to any Encumbrances except Permitted Encumbrances, (ii) grant any
increase in the compensation of Division Employees (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 the Business and consistent with past practice or as a result of
contractual arrangements or sales compensation plans existing on the
date hereof or (iii) enter into any Contracts giving rise to specific
obligations with respect to the Division in excess of $1,000,000,
except Contracts to purchase Materials or other Inventory and other
trade obligations in the ordinary course of the Business and Contracts
entered into in connection with quotes or proposals that either of the
Sellers has delivered to customers prior to the date of this
Agreement;
(d) do the following in respect of the Division, in each case in
a manner consistent with past practice: keep in full force and effect
all Trade Rights; maintain the Assets in normal repair, order and
condition consistent with current needs; replace in accordance with
past practices inoperable, worn out or obsolete assets; in the event
of a casualty, loss or damage to any material Assets prior to the
Closing Date, either repair or replace such damaged property or use
the proceeds of any insurance (other than business interruption
coverage, which shall be subject to SECTION 8.6) in such other manner
as mutually agreed upon by Buyer and the Sellers; and comply with all
material legal requirements and contractual obligations applicable to
the operation of the Business; and
(e) not, and shall cause their affiliates not to, take any
material action that would require disclosure under SECTION 3.1(R) of
this Agreement if such action had occurred immediately prior to the
signing of this Agreement.
-32-
4.3. FURTHER ACTIONS. Subject to the terms and conditions hereof, the
Sellers and Buyer shall use their reasonable best efforts to take, or cause to
be taken, all action and to do, or cause to be done, and to cooperate fully with
each other with respect to, all things necessary, proper or advisable to
consummate and make effective the transactions contemplated by this Agreement,
including using all reasonable best efforts: (i) to obtain prior to the Closing
Date all licenses, permits, consents, approvals, authorizations, qualifications,
orders, non-disturbance agreements in reasonable form, landlord estoppel letters
in reasonable form and releases of liens set forth on item 2.d. of SCHEDULE
3.1(F) of governmental authorities and parties to Contracts with the Sellers
that are necessary for the consummation of the transactions contemplated hereby,
(ii) to effect all necessary registrations and filings (including but not
limited to the filings contemplated by SECTION 4.4); PROVIDED, HOWEVER, that
such assistance shall not include any requirement of the Sellers to expend
money, commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party, except as provided in SECTION 9.2, (iii) to
complete the actions contemplated by SECTION 8.11(A), SECTION 8.11(D) and
SECTION 8.14 to the extent practicable prior to the Closing and (iv) to cause
the conditions to Buyer's and the Sellers' obligations to close to be satisfied.
Without limiting the generality of the foregoing or the provisions of this
SECTION 4.3, for purposes of this SECTION 4.3, the "REASONABLE BEST EFFORTS" of
the Sellers shall include without limitation an obligation of the Sellers to
cause the Sellers' appointees to the board of directors of China JV to approve
the transfer of the Sellers' equity interest in China JV to Buyer in accordance
with this Agreement.
4.4. HSR ACT COMPLIANCE. Buyer and the Company shall each file or
cause to be filed with the Federal Trade Commission and the United States
Department of Justice any notifications required to be filed under the HSR Act
with respect to the transactions contemplated hereby and Buyer and the Company
shall bear the costs and expenses of their respective filings; PROVIDED THAT
Buyer shall pay the filing fee in connection therewith. Buyer and the Company
shall use their respective reasonable best efforts to make such filings promptly
(and in any event within five (5) business days) following the date hereof, to
respond to any requests for additional information made by either of such
agencies, to cause the waiting periods under the HSR Act to terminate or expire
at the earliest possible date and to resist in good faith, at each of their
respective cost and expense (including the institution or defense of legal
proceedings), any assertion that the transactions contemplated hereby constitute
a violation of the antitrust laws, all to the end of expediting consummation of
the transactions contemplated hereby. Each of Buyer and the Company shall
consult with the other prior to any meetings, by telephone or in person, with
the staff of the Federal Trade Commission or the United States Department of
Justice, and each of Buyer and the Company shall have the right to have a
representative present at any such meeting.
4.5. NOTIFICATION. The Sellers shall promptly (after the Sellers have
notice thereof) notify Buyer and Buyer and Parents shall promptly (after they
have notice thereof) notify the Sellers and keep such other party advised as to
(i) any litigation or administrative proceeding pending and known to such party
or, to its actual knowledge, threatened against such party that challenges the
transactions contemplated hereby; (ii) any material damage or destruction of any
of the Assets; (iii) any material adverse change in the results of operations or
financial condition
-33-
of the Division or Buyer, as the case may be; (iv) as to the notification
obligation of the Sellers, any circumstance as a result of which any of their
representations and warranties contained in SECTION 3.1 are not true and correct
in all material respects to the knowledge of such parties or any material breach
of any of their respective covenants hereunder; or (v) as to the notification
obligation of Buyer and Parents, any circumstance as a result of which any of
their representations and warranties contained in SECTION 3.2 are not true and
correct in all material respects to the knowledge of such parties or any
material breach of any of their respective covenants hereunder.
4.6. REAL ESTATE COVENANTS.
(a) TITLE INSURANCE. Buyer shall obtain, and the Sellers shall
provide reasonable assistance necessary for Buyer to obtain, in
preparation for Closing, a commitment for an ALTA Owners or Leasehold
Title Insurance, Form B-1970 and endorsements, for each of the Owned
Real Properties and Leased Real Property (the "TITLE COMMITMENTS")
insuring Buyer's interest in such parcel as of Closing, subject only
to Permitted Encumbrances, and final title policies issued in
accordance with the Title Commitments.
(b) SURVEYS. Buyer shall obtain, and the Sellers shall provide
reasonable assistance necessary for Buyer to obtain, in preparation
for the Closing, current 1992 ALTA/ACSM Land Title Surveys (including
Table A items, except Item 5 thereof regarding contours and
elevations) (the "SURVEYS") of each of the Owned Real Properties and
Leased Real Properties.
(c) BOWLING GREEN. Prior to the Closing, the Company shall
obtain good and marketable title to the real property, fixtures and
improvements located at 000 Xxxxxxxxxx Xxxxx, Xxxxxxx Xxxxx, Xxxxxxxx
00000, free and clear of all Encumbrances other than Permitted
Encumbrances.
4.7. EXCLUSIVITY. Until this Agreement has been terminated in
accordance with its terms, but not beyond the Effective Time, the Sellers will
not, and will cause their respective officers, directors and agents to not,
discuss a possible sale or other disposition of (a) all or any part of the
Assets other than inventory, immaterial assets in the ordinary course of
business and the Company's equity interest in China JV (only to the extent
necessary to comply with the right of first refusal requirement (or similar
requirement) set forth in the relevant joint venture agreement) or (b) the
Company's equity interest in Metalsa other than in connection with the possible
sale or other disposition of such interest to other investors in Metalsa, in
each case whether indirectly or directly, or by merger, sale of stock,
reorganization, recapitalization or otherwise, with any party other than Buyer
(an "ACQUISITION PROPOSAL") or provide any information to any other party
regarding the Division (other than information which is traditionally provided
in the regular course of its business operations to third parties where the
Sellers and their officers, directors and agents have no reason to believe that
such information may be utilized to evaluate a possible acquisition of the
Division and other than information relating to Metalsa). The Sellers and their
officers and directors (i) do not have any agreement,
-34-
arrangement or understanding with respect to any Acquisition Proposal and (ii)
will cease and cause to be terminated any and all discussions with third parties
regarding any Acquisition Proposal.
FINANCING.
(a) Buyer and Parents will use their reasonable best efforts to
consummate the Financing. If any portion of the Financing becomes
unavailable, regardless of fault, then Buyer and Parents will use
their reasonable best efforts to obtain from other sources the
financing necessary for the consummation of the transactions
contemplated hereby. Consistent with the foregoing, neither Buyer nor
Parents will take any action or omit to take any action that may
impair their ability, or the lenders' willingness, to consummate the
Financing. Buyer will keep the Company reasonably informed as to the
status of the Financing and will notify the Company promptly of any
material developments with respect to the Financing.
(b) As a condition and inducement to the Seller's willingness to
enter into and perform this Agreement and to give Buyer and Parents
the rights associated with the condition to the Closing set forth in
SECTION 5.1(d), in the event that the Trigger Event (as hereinafter
defined) has occurred, then Buyer and Parents shall pay to the Company
a fee of $15,000,000. Such fee shall be payable in immediately
available funds within two days following the occurrence of the
Trigger Event. As used herein, the "TRIGGER EVENT" shall mean that
(i) Buyer has relied on the failure of the condition to the Closing
set forth in SECTION 5.1(d) to be satisfied or waived as a basis for
not consummating the Closing and (ii) this Agreement has been
terminated pursuant to SECTION 7.1 for any reason other than a willful
and material breach of this Agreement by the Sellers.
4.9. EXPIRATION OF COVENANTS TO BE PERFORMED BEFORE CLOSING. None of
the obligations to perform the respective covenants of the Sellers and Buyer
contained in this SECTION 4 shall survive the Closing, claims with respect to
breaches of such covenants must be made prior to the six month anniversary of
the Closing and claims with respect to breaches of the covenants of the Sellers
in SECTION 4.2 may be made solely on the basis of the representations and
warranties of the Sellers as to compliance with such covenants that the Sellers
make by delivering the certificate contemplated by SECTION 5.1(a).
5. CONDITIONS PRECEDENT.
5.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. The obligations of
Buyer under this Agreement are subject to the satisfaction (or waiver by Buyer)
at or prior to the Closing Date of each of the following conditions:
-35-
(a) NO MATERIAL ADVERSE CHANGE. The representations and
warranties of the Sellers made in SECTION 3.1 shall be true and
correct in all material respects on and as of the Closing Date in
respect of the period between the date hereof and the Closing Date, as
though made on and as of the Closing Date, except (i) to the extent of
General Changes, Transaction Changes or changes or developments
contemplated by the terms of this Agreement, including those arising
in the ordinary course of the Business to the extent the Business is
conducted in accordance with SECTION 4.2, (ii) for exceptions thereto
that, in the aggregate, would not have a Material Adverse Effect,
(iii) for exceptions thereto that have been cured (including without
limitation through the granting of a post-Closing indemnity for any
Losses (as defined in SECTION 9.3(a)(i)) related thereto) and (iv) for
representations and warranties that speak as of a specific date or
time, and the Sellers shall have performed and complied in all
material respects with the obligations and covenants required by this
Agreement to be performed or complied with by the Sellers by the time
of the Closing; and the Company shall have delivered to Buyer a
certificate dated the Closing Date and signed by an officer of the
Company in the officer's capacity as such confirming the foregoing to
the best of such officer's knowledge.
(b) NO INJUNCTION, ETC. No preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or
governmental authority or other legal restraint or prohibition that
restrains, enjoins or otherwise prohibits the transactions
contemplated hereby shall be in effect.
(c) HSR WAITING PERIOD. All applicable waiting periods under
the HSR Act shall have expired.
(d) RECEIPT OF PROCEEDS. Buyer shall have received proceeds of
the Financing pursuant to the Bank of America commitment letter
previously delivered to the Sellers dated January 24, 1997 or from
other sources.
5.2. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers under this Agreement are subject to the satisfaction
(or waiver by the Sellers) at or prior to the Closing Date of each of the
following conditions:
(a) ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer and Parents made in this
Agreement shall be true and correct in all material respects as of the
date hereof and on and as of the Closing Date, as though made on and
as of the Closing Date, except to the extent of changes or
developments contemplated by the terms of the Agreement, except for
representations and warranties that speak as of a specific date or
time (which need only be true and correct as of such date or time),
and Buyer and Parents shall have performed or complied in all material
respects with the obligations and covenants required by this Agreement
to be performed or complied with by Buyer and/or
-36-
Parents by the time of the Closing; and Buyer and Parents shall have
delivered to the Company a certificate dated the Closing Date and signed by
an officer of Buyer and Parents confirming the foregoing to the best of
such officer's knowledge.
(b) NO INJUNCTION, ETC. No preliminary or permanent injunction
or other order issued by any court of competent jurisdiction or
governmental authority or other legal restraint or prohibition that
restrains, enjoins or otherwise prohibits the transactions
contemplated hereby shall be in effect.
(c) HSR WAITING PERIOD. All applicable waiting periods under
the HSR Act shall have expired.
(d) ASSUMPTION OF LIABILITIES. Buyer and Parents shall have
executed and delivered to the Sellers such document or documents as
reasonably requested by the Company or the Company's counsel to
evidence assumption by Buyer and Parents of the Assumed Liabilities.
6. EMPLOYEE RELATIONS AND BENEFITS.
6.1. UNION REPRESENTED EMPLOYEES.
(a) ASSUMPTION OF COLLECTIVE BARGAINING AGREEMENTS. At the
Closing, the Sellers shall assign to Buyer and, except as otherwise
provided herein, Buyer shall offer to assume the Collective Bargaining
Agreements set forth on SCHEDULE 3.1(g)(ii) that cover Division
Employees who are or were represented by a collective bargaining agent
(the "UNION REPRESENTED EMPLOYEES"). Buyer shall inform each union
representing Division Employees that it is willing to assume their
respective Collective Bargaining Agreement.
(b) EMPLOYMENT OF UNION REPRESENTED EMPLOYEES. All of the Union
Represented Employees who are in active employment status on the day
immediately prior to the Closing Date ("ACTIVE UNION REPRESENTED
EMPLOYEES") shall cease their employment status with the Sellers at
the Effective Time and simultaneously therewith shall be offered
employment by Buyer under the terms and conditions of the respective
Collective Bargaining Agreements and under terms that recognize prior
employment with the Sellers (or their predecessors) for purposes of
all Benefit Plans, Benefit Arrangements or other seniority based
programs or benefits. For purposes of this SECTION 6.1, the term
"ACTIVE EMPLOYMENT STATUS" includes any individual not actively at
work due to illness, short-term disability or sick leave, authorized
leave of absence, layoff for lack of work or service in the Armed
Forces of the United States, but does not include any individual not
actively at work due to retirement, resignation, permanent dismissal
or long-term disability. In addition, any Union Represented Employee
who is not an Active Union Represented Employee in accordance with the
foregoing
-37-
provisions of this SECTION 6.1(b) ("NON-ACTIVE UNION REPRESENTED EMPLOYEES") but
who has a right to return to employment with Buyer under the Collective
Bargaining Agreement applicable to such employee or pursuant to any applicable
law shall be extended an employment offer by Buyer at the time each such
employee is eligible to return to work, if at all, under the Collective
Bargaining Agreement applicable to such employee or pursuant to any applicable
law, and if employed, shall become an Active Union Represented Employee at that
time.
(c) DEFINED BENEFIT PENSION PLANS.
(i) The Sellers shall retain all of the assets of the X.X.
Xxxxx Retirement Plan ("RETIREMENT PLAN") and the liabilities for
(A) all benefits payable under the Retirement Plan with respect
to Non-Active Union Represented Employees who retired or
otherwise terminated employment on or prior to the Closing Date,
(B) the "basic retirement benefit" accrued by Active Union
Represented Employees through the Closing Date, and (C) to the
extent provided under SECTION 6.1(c)(iii), (iv) and (v), the
subsidized value of early retirement benefits, early retirement
supplements, retiree benefit increases and pension enhancements
related to Medicare eligibility for Active Union Represented
Employees. For purposes of this SECTION 6.1, the term "basic
retirement benefit" means the monthly normal retirement age
benefit accrued under the Retirement Plan on the Closing Date
based upon the employee's credited service under the Retirement
Plan through the Closing Date, exclusive of the subsidized value
of any early retirement benefit, early retirement supplements,
pension enhancements related to Medicare eligibility, retiree
benefit increases, or any other benefit, supplement or subsidy
under the Retirement Plan that the employee would have earned in
addition thereto had he continued employment with the Sellers.
(ii) As of the Effective Time, Buyer shall establish for
Active Union Represented Employees a pension plan or plans
intended to qualify under Section 401(a) of the Code and that are
identical to the Retirement Plan as in effect for Union
Represented Employees ("BUYER PENSION PLAN"). For purposes of
eligibility, vesting and benefit accrual, Buyer Pension Plan
shall credit each Active Union Represented Employee with service
for periods prior to the Effective Time equal to the service
credited to such employee under the Retirement Plan; provided,
however, that Buyer Pension Plan may offset benefits provided
under the Retirement Plan in order to avoid duplication of
benefits on account of periods of service recognized under both
the Retirement Plan and Buyer Pension Plan. To the extent not
provided by the Retirement Plan in accordance with SECTION
6.1(c)(iii), (iv) and (v), Buyer Pension Plan shall be
responsible for the subsidized value of early retirement
benefits, early retirement supplements, pension enhancements
related to Medicare eligibility and retiree benefit increases
provided to Active Union Represented Employees. Further, Buyer
Pension Plan shall be solely responsible for providing disability
benefits for Active Union Represented Employees who become
disabled on or after the Closing Date other than for any
participant who is in the disability waiting period as of the
Effective Time, for whom the Retirement Plan shall be solely
responsible.
(iii) As of the Effective Time, the Sellers shall amend
the Retirement Plan in the following respects:
(A) An Active Union Represented Employee shall be
entitled to commence his benefit under the Retirement Plan only
if the employee, in addition to satisfying the otherwise
applicable requirements for commencement of his benefit, has
retired or terminated from employment with Buyer;
(B) For purposes of determining the employee's
eligibility for early retirement benefits, early retirement
supplements, retiree benefit increases and pension enhancements
related to Medicare eligibility, but not for purposes of
determining an employee's credited service under the Retirement
Plan or for any other purpose, the Retirement Plan shall
recognize an Active Union Represented Employee's employment with
the Buyer as if such employment were rendered to the Sellers.
(C) In the case of an Active Union Represented
Employee who is a participant in the Retirement Plan, who retires
on or after the Closing Date with an entitlement to a normal or
early retirement benefit under the terms of Buyer Pension Plan,
and who either is eligible for a normal or early retirement
benefit from the Retirement Plan or would have been eligible for
a normal or early retirement benefit under the Retirement Plan
had his employment with Buyer instead been rendered to the
Sellers, then:
(I) The employee shall be eligible for retiree
benefit increases in accordance with the terms of the
Retirement Plan as in effect on the Closing Date based on
the employee's credited service through the Closing Date.
Buyer Pension Plan shall be responsible for all remaining
retiree benefit increases.
(II) The employee shall be eligible for a pension
enhancement related to Medicare eligibility in accordance
with the terms of the Retirement Plan as in effect on the
Closing Date that
-39-
is prorated between the Retirement Plan and Buyer Pension Plan in
accordance with SECTION 6.1(c)(iv).
(III) If the employee elects early retirement
benefits, the Retirement Plan shall be responsible for the
subsidized value of early retirement benefits payable from
the Retirement Plan, and Buyer Pension Plan shall be
responsible for the subsidized value of early retirement
benefits payable from Buyer Pension Plan, and the early
retirement supplement (if any) shall be prorated between the
Retirement Plan and Buyer Pension Plan in accordance with
SECTION 6.1(c)(v).
(iv) The pension enhancement related to Medicare eligibility
to be provided under the Retirement Plan shall be equal to the
lesser of (A) the pension enhancement calculated under the terms
of the Retirement Plan as in effect on the day prior to the
Closing Date multiplied by a fraction, the numerator of which is
the employee's years of credited service under the Retirement
Plan through the Closing Date, and the denominator of which is
the sum of the numerator and the employee's service with Buyer
from the Closing Date through the employee's retirement or
termination of employment from Buyer, or (B) the pension
enhancement calculated under the terms of Buyer's Pension Plan as
in effect on the employee's retirement or termination of
employment from Buyer (prior to reduction for the portion of the
enhancement to be paid from the Retirement Plan) multiplied by a
fraction, the numerator of which is the employee's years of
credited service under the Retirement Plan through the Closing
Date, and the denominator of which is the sum of the numerator
and the employee's service with Buyer from the Closing Date
through the employee's retirement or termination of employment
from Buyer. Buyer Pension Plan shall be responsible for any
remaining pension enhancement related to Medicare eligibility.
(v) The early retirement supplement to be provided under
the Retirement Plan shall be equal to the lesser of (A) the early
retirement supplement calculated under the terms of the
Retirement Plan as in effect on the day prior to the Closing Date
multiplied by a fraction, the numerator of which is the
employee's years of credited service under the Retirement Plan
through the Closing Date, and the denominator of which is the sum
of the numerator and the employee's service with Buyer from the
Closing Date through the employee's retirement or termination of
employment from Buyer, or (B) the early retirement supplement
calculated under the terms of Buyer's Pension Plan as in effect
on the employee's retirement or termination of employment from
Buyer (prior to reduction for the portion of the supplement to be
paid from the Retirement Plan) multiplied by a
-40-
fraction, the numerator of which is the employee's years of credited
service under the Retirement Plan through the Closing Date, and the
denominator of which is the sum of the numerator and the employee's
service with Buyer from the Closing Date through the employee's
retirement or termination of employment from Buyer. Buyer Pension
Plan shall be responsible for any remaining early retirement
supplement. Notwithstanding the foregoing, an early retirement
supplement shall not be paid from the Retirement Plan, and Buyer's
Pension Plan shall be solely responsible for any early retirement
supplement payable with respect to an Active Union Represented
Employee retiring on or after the Closing Date if such employee's
involuntary retirement or termination of employment is the result of
any event which requires notice to be given to such employee pursuant
to WARN, including any reduction in force, mass layoff or plant
closing; provided, that this exclusion shall not apply to any employee
whose retirement or termination of employment occurs in the ordinary
course of business, is connected with the transfer of the heavy truck
business to the Roanoke facility, or where the employee has been
offered a comparable position within the organization and has declined
the offer.
(vi) Buyer and the Sellers agree that the provisions of this
Section 6.1(c) are intended to be consistent with applicable law,
including, without limitation, the requirements of Section 414(l)
of the Code. Accordingly, nothing in this Section 6.1(c) is
intended to result in a transfer from the Retirement Plan to
Buyer Pension Plan within the meaning of Section 414(l) of the
Code.
(d) DEFINED CONTRIBUTION RETIREMENT PLANS. At Closing, Buyer
shall assume sponsorship of the X. X. Xxxxx Employee 401(k) Savings
Plan, X. X. Xxxxx Employee Savings Plan and X. X. Xxxxx Savings
Investment Plan. In addition, Buyer shall establish or designate a
defined contribution retirement plan that is substantially comparable
to the portion of the X. X. Xxxxx Corporation Savings and Security
Plan covering Union Represented Employees ("BUYER SAVINGS PLAN"). On
or before the last day of the remedial amendment period described in
Section 401(b) of the Code and the regulations thereunder, Buyer shall
file with the Internal Revenue Service an appropriate application for
a determination letter holding that Buyer Savings Plan satisfies the
applicable requirements for qualification and exemption under Sections
401(a) and 501(a) of the Code, and shall, no later than the last day
of such remedial amendment period, take such corrective action as may
be necessary in order to secure such determination letter. Upon
evidence satisfactory to the Sellers relative to the establishment of
Buyer Savings Plan and the filing of a determination letter
application, the Sellers shall cause the trustee of the X. X. Xxxxx
Corporation Savings and Security Plan to transfer the account balances
of Active Union Represented Employees to Buyer Savings Plan.
-41-
(e) WELFARE BENEFIT PLANS AND ARRANGEMENTS. The Sellers (or the
Sellers' third party administrator or insurer) shall process and pay
all eligible claims for health, dental, prescription drug, life, and
accidental death and dismemberment benefits on behalf of Union
Represented Employees that are incurred prior to the Effective Time
(including, without limitation, benefits for claims incurred prior to
the Effective Time but for which the claim is received on or after the
Effective Time). Buyer (or Buyer's third party administrator or
insurer) shall process and pay all eligible claims for benefits on
behalf of Union Represented Employees (including Union Represented
Employees who retired or terminated employment prior to the Effective
Time) that are incurred at or after the Effective Time. The Sellers
shall use their reasonable best efforts (i) to assign or otherwise
transfer to Buyer any group policy or Contract governing welfare
benefits (including, but not limited to, those relating to health,
dental, prescription drug, life, accidental death and dismemberment,
and sickness and accident) for Union Represented Employees that is
maintained on a stand-alone basis, and (ii) in the case of a group
policy or Contract governing welfare benefits (including, but not
limited to, those relating to health, dental, prescription drug, life,
accidental death and dismemberment, and sickness and accident) for
Union Represented Employees but maintained under a Contract or policy
covering both Union Represented and Employees and other employees of
the Sellers, to assign or otherwise transfer to Buyer the portion of
the policy or Contract covering Union Represented Employees.
6.2. HOURLY PAID NON-UNION REPRESENTED EMPLOYEES AND SALARIED EMPLOYEES.
(a) EMPLOYMENT. All of the hourly paid Division Employees not
represented by a collective bargaining agent and all of the Division
Employees who are paid on a salaried or commission basis
(collectively, "NON-REPRESENTED EMPLOYEES") who are in active
employment status on the day immediately prior to the Closing Date
("ACTIVE NON-REPRESENTED EMPLOYEES") shall cease their employment
status with the Sellers at the Effective Time and simultaneously
therewith shall be offered employment by Buyer under terms that,
except as provided in SECTION 6.2(c), recognize prior employment with
the Sellers (or their predecessors) for purposes of all Benefit Plans,
Benefit Arrangements or other seniority based programs or benefits.
For purposes of this SECTION 6.2, the term "ACTIVE EMPLOYMENT STATUS"
includes any individual not actively at work due to illness, short-
term disability or sick leave, authorized leave of absence, layoff for
lack of work, or service in the Armed Forces of the United States but
does not include any individual not actively at work due to
retirement, resignation, permanent dismissal or long-term disability.
In addition, any Non-Represented Employee who is not an Active Non-
Represented Employee in accordance with the foregoing provisions of
this SECTION 6.2 ("NON-REPRESENTED NON-ACTIVE EMPLOYEES") but who has
a right to return to employment under the applicable policies of the
Sellers or pursuant to any applicable law shall be extended an
-42-
employment offer by Buyer at the time each such employee is eligible to
return to work or additional employment in the applicable job
classification is deemed warranted by Buyer. If such Non-Represented Non-
Active Employee is employed by Buyer pursuant to the preceding sentence,
then such employee shall become an Active Non-Represented Employee as of
the date the person returns to employment.
(b) WAGE RATES. Buyer shall make each Active Non-Represented
Employee an offer an employment at the same current base rate of pay
or salary, as applicable, that was in effect for such employee
immediately prior to the Closing Date, provided that Buyer may adjust
any individual Non-Represented Employee's wage rate at any time after
employment is accepted.
(c) DEFINED BENEFIT PENSION PLANS. The Sellers shall retain all
of the assets of the Retirement Plan and the X. X. Xxxxx Enterprises
Ltd. Stratford Plant Industrial Pension Plan ("CANADIAN PLAN") and the
liabilities for benefits accrued through the Closing Date under such
plans. Effective as of the Effective Time, Buyer shall establish for
Active Non-Represented Employees a defined benefit pension plan or
plans that is or are substantially comparable to the Retirement Plan
as in effect for Non-Represented Employees. Buyer's plan shall
recognize employment with the Sellers for purposes of eligibility and
vesting under Buyer's plan, but need not recognize employment with the
Sellers for purposes of benefit accrual. Effective as of the
Effective Time, Seller shall amend the Retirement Plan and the
Canadian Plan to provide (1) an Active Non-Represented Employee shall
be entitled to commence his benefit under the Retirement Plan or
Canadian Plan only if the employee, in addition to satisfying the
otherwise applicable requirements for commencement of his benefit, has
retired or terminated from employment with Buyer, and (2) an Active
Non-Represented Employee's service with Buyer shall be considered for
purposes of determining the employee's eligibility for early
retirement benefits under each plan (but not for purposes of accruing
additional benefits thereunder).
(d) DEFINED CONTRIBUTION RETIREMENT PLANS. (i) Effective as of
the Effective Time, Buyer shall establish for Active Non-Represented
Employees (or otherwise include Active Non-Represented Employees in) a
defined contribution plan or plans that either continue a level of
benefits provided by the Sellers or that provide benefits comparable
to those provided by Buyer to its non-represented employees ("BUYER
DEFINED CONTRIBUTION PLAN"); provided that in the case of an Active
Non-Represented Employee who either participated in or was eligible to
participate in the X.X. Xxxxx Profit Sharing Retirement Plan, the
minimum level of employer matching contributions under Buyer Defined
Contribution Plan for the period beginning on January 1, 1997 and
ending on December 31, 1997 shall be 35 cents for each dollar of pre-
tax contributions (including pre-tax contributions made between
January 1, 1997 and the Effective Time under the X.X. Xxxxx Profit
-43-
Sharing Retirement Plan) up to six percent of the employee's compensation
for the year (including compensation paid between January 1, 1997 and the
Effective Time by Sellers). Buyer's plan shall recognize employment with
the Sellers for purposes of eligibility and vesting under Buyer's plan.
(ii) On or before the last day of the remedial amendment period
described in Section 401(a) of the Code and the regulations
thereunder, Buyer shall file with the Internal Revenue Service an
appropriate application for a determination letter holding that Buyer
Defined Contribution Plan satisfies the applicable requirements for
qualification and exemption under Section 401(a) and 501(a) of the
Code, and shall, no later than the last day of such remedial amendment
period, take such corrective action as may be necessary in order to
secure such determination letter. Upon evidence satisfactory to the
Sellers relative to the establishment of Buyer Defined Contribution
Plan and the filing of a determination letter application, the Sellers
shall cause the trustee of the applicable X.X. Xxxxx defined
contribution plan to transfer the account balances of Active Non-
Represented Employees to Buyer's Defined Contribution Plan; provided,
that participant loans shall be transferred in-kind.
(e) WELFARE BENEFIT PLANS AND ARRANGEMENTS. The Sellers (or the
Sellers' third party administrator or insurer) shall process and pay
all eligible claims for health, dental, prescription drug, life, and
accidental death and dismemberment benefits on behalf of Non-
Represented Employees that are incurred prior to the Effective Time
(including, without limitation, benefits for claims incurred prior to
the Effective Time but for which the claim is received on or after the
Effective Time). Buyer (or Buyer's third party administrator or
insurer) shall process and pay all eligible claims for benefits on
behalf of Non-Represented Employees (including Non-Represented
Employees who retired or terminated employment prior to the Effective
Time) that are incurred on or after the Effective Time. The Sellers
shall use their reasonable best efforts (i) to assign or otherwise
transfer to Buyer any group policy or Contract governing welfare
benefits (including, but not limited to, those relating to health,
dental, prescription drug, life, accidental death and dismemberment,
and sickness and accident) for Non-Represented Employees that is
maintained on a stand-alone basis, and (ii) in the case of a group
policy or Contract governing welfare benefits (including, but not
limited to, those relating to health, dental, prescription drug, life,
accidental death and dismemberment, and sickness and accident) for
Non-Represented Employees but maintained under a Contract or policy
covering both Non-Represented and Employees and other employees of the
Sellers, to assign or otherwise transfer to Buyer the portion of the
policy or Contract covering Non-Represented Employees.
(f) SEVERANCE BENEFITS. Effective as of the Effective Time,
Buyer shall establish and maintain for a period of at least twelve
(12) months a severance pay plan that recognizes prior employment with
the Sellers (or their predecessors) and
-44-
that provides severance benefits under the same conditions and at least as
generous in amount as those provided under the X. X. Xxxxx Xxxxxxxxx Pay
Plan identified on SCHEDULE 3.1(N). In addition, Buyer agrees to indemnify
the Sellers for all severance benefits payable by the Sellers under the
X. X. Xxxxx Xxxxxxxxx Pay Plan and costs incurred in connection with such
benefits (including, without limitation, attorneys' fees incurred in
defending against a claim for severance benefits) to the extent that any
such claim for severance benefits is based, in whole or in part, on Buyer's
failure or refusal to offer employment to Division Employees in accordance
with the terms of this SECTION 6 or the termination of any Division
Employee within twelve (12) months after the Closing.
(g) BONUS PAYMENTS. Buyer shall continue Seller's bonus plans
that are in effect as of the Effective Time for the duration of the
1997 calendar year and shall pay bonuses in accordance therewith.
Buyer and Seller shall cooperate in the determination of the bonuses
that are payable thereunder for 1997. Seller shall promptly reimburse
Buyer for the portion of the 1997 bonuses paid by Buyer which is
attributable to the pre-closing period, such proportion shall be
determined by dividing the number of calendar days preceding the
Effective Time by 365.
(h) SECTION 125 PLAN. Buyer shall assume, and Seller shall
transfer, the portion of the X.X. Xxxxx Flexible Benefits Plan which
is attributable to the 1997 plan year participation of Business
employees.
(i) EXECUTIVE RETIREMENT BENEFITS. Seller shall remain liable
for obligations accrued under the X.X. Xxxxx Corporation Executive
Life Insurance Plan and the X.X. Xxxxx Supplemental Benefit Plan with
respect to any employee of the Business and Buyer shall not assume any
liability or obligation with respect thereto.
(j) WORKERS' COMPENSATION OBLIGATIONS. Seller shall remain
liable for all workers' compensation obligations which relate to
injuries incurred prior to the Effective Time; provided that in the
case of an injury for which the date of incurrence cannot be
ascertained (including, without limitation, occupational disease or
repetitive motion claims), Seller shall be liable only for claims
filed prior to the Effective Time and Buyer shall be liable for all
claims filed on or after the Effective Time.
6.3. REQUIRED NOTICE. Buyer will provide any plant closing notices as
required under federal, provincial, state or local law (including without
limitation, the Warn Act) as a result of the transactions contemplated in this
Agreement, and Buyer and Parents shall indemnify, defend and hold the Sellers
harmless from and against any and all liability incurred by the Sellers, or
either one of them, as a result of Buyer's failure to provide such notice on a
timely and effective basis.
-45-
6.4. VACATION. With respect to any accrued but unused vacation time
to which any Active Non-Represented Employee is entitled pursuant to the
vacation policy applicable to such employee immediately prior to the Closing
Date (the "VACATION POLICY"), Buyer shall allow such employee to use such
accrued vacation; provided, however, that if Buyer deems it necessary to
disallow such employee from taking such accrued vacation, then Buyer shall be
liable for and pay in cash to each such employee an amount equal to such
vacation time in accordance with terms of the Vacation Policy.
6.5. PAYROLL TAX. The Company and Buyer agree that, with respect to
Division Employees who are employed by Buyer following to Closing pursuant to
this ARTICLE 6 ("CONTINUING EMPLOYEES"), they respectively meet the definitions
of "predecessor" and "successor" as defined in Revenue Procedure 96-60. For
purposes of reporting employee remuneration to the IRS on Forms W-2 and W-3 for
the calendar year within which the Closing Date occurs, the Company and Buyer
will utilize the "Standard Procedure" described in Section 4 of Revenue
Procedure 96-60. The Company and Buyer agree that, for purposes of reporting
employee remuneration for Federal Insurance Contributions Act ("FICA") purposes
for the calendar year within which the Closing Date occurs, the Company meets
the definition of "predecessor" and Buyer meets the definition of "successor" as
defined in IRS Regulation Section 31.3121(a)(1)-1(b). The Company will supply
to Buyer, with respect to all Continuing Employees, all cumulative payroll
information as of the Closing Date that Buyer shall require in order to employ
IRS Regulation Section 31.3121(a)(1)-1(b).
7. TERMINATION.
7.1. GENERAL. This Agreement may be terminated and the transactions
contemplated herein may be abandoned,
(a) by mutual consent of Buyer and the Company;
(b) by the Company if any of the conditions set forth in
SECTION 5.2 shall have become incapable of fulfillment and shall not
have been waived by the Company;
(c) by Buyer if any of the conditions set forth in SECTION 5.1
shall have become incapable of fulfillment and shall not have been
waived by Buyer; or
(d) by either party if the Closing has not occurred on or prior
to June 30, 1997;
PROVIDED, that if a party seeking termination pursuant to CLAUSE (b), (c) or (d)
is in breach in any material respect of any of its representations and
warranties, covenants or agreements contained in this Agreement, that party may
not terminate the Agreement on the basis of such breach.
-46-
7.2. POST-TERMINATION OBLIGATIONS. In the event of termination by the
Company or Buyer pursuant to SECTION 7.1, written notice thereof shall forthwith
be given to the other party and the transactions contemplated by this Agreement
shall be terminated, without further action by any party, and:
(a) Buyer and Parents shall return all documents and copies and
other materials received from or on behalf of the Sellers relating to
the transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the Sellers;
(b) all information received or accumulated by Buyer and Parents
shall be treated as "Proprietary Information" in accordance with the
Letter Agreement (as defined in SECTION 9.6 and as modified or
supplemented by this Agreement and the Access Agreement) which shall
remain in full force and effect, as modified or supplemented by this
Agreement and the Access Agreement, notwithstanding the termination of
this Agreement; and
(c) to the extent required thereunder, Buyer and Parents shall
pay all fees to the Company required under SECTION 4.8(b).
7.3. NO LIABILITIES IN EVENT OF TERMINATION. In the event of any
termination of this Agreement as provided in SECTION 7.1, this Agreement shall
forthwith become wholly void and of no further force and effect and there shall
be no liability on the part of Buyer or the Sellers, except that the respective
obligations of Buyer, Parents and/or the Sellers, as the case may be, under
SECTIONS 4.1, 4.8(b), 9.1, 9.2 and SECTION 7.2 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 or impair the right of
any party to compel specific performance by another party of its obligations
under SECTIONS 4.1, 4.8(b), 9.1, 9.2 and SECTION 7.2 of this Agreement.
8. TRANSACTIONS SUBSEQUENT TO CLOSING.
8.1. POST-CLOSING ACCESS TO INFORMATION AND ASSISTANCE.
(a) For a period of seven (7) years after the Closing Date, each
party hereto shall provide, and shall cause its appropriate personnel
to provide, when reasonably requested to do so by another party,
access to all tax, financial and accounting records and any other
records transferred to Buyer or retained by the Sellers, as
applicable, in accordance with this Agreement (other than in
connection with a dispute between the parties relating to the
transactions contemplated by this Agreement) and the right to make
copies or extracts therefrom at its expense. Neither party shall, nor
shall it permit its affiliates to, intentionally dispose of, alter or
destroy any such books, records and other data without giving thirty
(30) days' prior written notice to the other party and permitting the
other parties hereto,
-47-
at their expense, to examine, duplicate or repossess such records, files,
documents and correspondence.
(b) Each party agrees to cooperate with the other party in the
preparation for and prosecution of the defense of any claim, action or
cause of action arising out of or relating to any Liability relating
to the Business which arose prior to the Closing and which, in the
case of Buyer and Parents, has been assumed by Buyer and Parents, or,
in the case of the Sellers, has been retained by the Sellers,
including, without limitation, by making available evidence within the
cooperating party's control and persons needed as witnesses employed
by the cooperating party, as reasonably needed for such defense.
Except as provided in SECTION 9.3, the requesting party shall
reimburse the cooperating party for its actual out-of-pocket costs
relating to its cooperation under this SECTION 8.1(B) and for a pro
rata portion of the salary (including fringe benefits, with such pro
rata portion determined based upon the time spent in connection with
such cooperation) and for travel and subsistence expenses directly
relating to the cooperation of any of the cooperating party's
employees who assist the requesting party.
8.2. FURTHER AGREEMENTS. The Sellers authorize and empower Buyer on
and after the Closing Date to receive and open all mail received by Buyer
relating to the Business or the Assets and to deal with the contents of such
communications in any proper manner. The Sellers shall promptly deliver to
Buyer any mail or other communication received by them after the Closing Date
pertaining to the Business or the Assets and any cash, checks or other
instruments of payment to which Buyer is entitled. Buyer shall promptly deliver
to the Sellers any mail or other communication received by it after the Closing
Date pertaining to the assets and liabilities described in SECTIONS 1.2 AND 1.5,
and any cash, checks or other instruments of payment in respect thereof.
8.3. NO COMPETITION.
(a) During the period commencing on the Closing Date and ending
on the fifth anniversary of the Closing Date, the Sellers will not,
and will cause any person that is a subsidiary of either or both of
them not to, directly or indirectly, conduct or engage in the design,
engineering, manufacturing and marketing of structural and suspension
components, structural and suspension assemblies and structural and
suspension modules for light vehicles, medium trucks and heavy trucks
(the "RESTRICTED BUSINESS"). Notwithstanding the foregoing, neither
the Sellers nor any of their existing or future subsidiaries shall be
in violation of this SECTION 8.3 if either or both of them continue to
operate the assets excluded from sale hereunder pursuant to
SECTION 1.2 in substantially the same manner as their current
operations.
(b) For a period of one year from the Closing Date, the Sellers
will not, without the prior written consent of Buyer, directly or
indirectly contact or solicit
-48-
for the purpose of offering employment to or hiring (whether as an
employee, consultant, agent, independent contractor or otherwise) any
management or other key employee employed by the Sellers in the Business at
any time during the 180 days prior to the Closing Date other than those
identified on SCHEDULE 8.3, but the foregoing shall not prohibit
solicitations to the public in general.
8.4. ASSISTANCE AND COOPERATION REGARDING TAXES AND FINANCIAL
STATEMENTS. After the Closing Date, Buyer shall cooperate and shall cause its
appropriate personnel to cooperate in providing the Sellers with such
information and assistance with respect to financial and tax matters as the
Sellers shall reasonably request to enable (i) the Sellers to prepare their
returns and pay Taxes, including all Taxes related to the Sellers' operation of
the Division prior to the Closing Date for which Buyer is not otherwise
responsible pursuant to this Agreement and (ii) the Company to prepare its
consolidated financial statements. The Company shall reimburse Buyer for its
actual out-of-pocket costs relating to its cooperation under this SECTION 8.4
and for a pro rata portion of the salary (including fringe benefits, with such
pro rata portion determined based upon the time spent in connection with such
cooperation) and for travel and subsistence expenses directly relating to the
cooperation of any of Buyer's employees who assist the Sellers under this
SECTION 8.4.
8.5. CORPORATE NAMES.
(a) USE OF NAMES. Effective from and after the Closing and up
to the date six (6) months from the Closing Date, the Company hereby
grants Buyer the nonexclusive, royalty-free right to use (without
right of sublicense) the name "X. X. Xxxxx" or any derivation thereof
and any corporate symbols or logos related thereto, but only in
connection with the conduct and operation of the Business relating to:
(i) INVENTORIES. The use of existing Inventories which
bear the name "X. X. Xxxxx" or derivations thereof; and
(ii) SUPPLIES. The use of existing stationery, packaging,
shipping, invoices, purchase orders and marketing materials
("SUPPLIES") which bear the name "X. X. Xxxxx" or derivations
thereof; PROVIDED, HOWEVER, that Buyer shall overprint,
overstamp, apply on an appropriate label or otherwise obliterate
such names and logos on such items or otherwise indicate that
Buyer, and not the Sellers, is the party contracting or otherwise
performing in connection with such Supplies;
PROVIDED, HOWEVER, that neither Buyer, China JV (following the
Closing) nor Brazil Sub (following the Closing) shall represent or
hold itself out as representing the Sellers or any one of them and
PROVIDED FURTHER, HOWEVER, that Buyer and Parents shall indemnify and
hold harmless the Sellers from any loss, damage, cost or expense
(including reasonable attorneys' fees) incurred by the Sellers as a
result
-49-
of Buyer's, China JV's (following the Closing) or Brazil Sub's (following
the Closing) use of such names or symbols or logos. The rights provided
for in SECTION 8.5(a)(i) are subject to the Company's right to require the
Buyer to take such reasonable action as the Company deems necessary to
maintain appropriate quality control of the Inventories.
(b) CHANGE OF NAME. Buyer acknowledges that, except for the
limited right granted by this Section, it has no right or interest in
the name "X. X. Xxxxx" or "Xxxxx". Prior to the date sixty (60) days
from the Closing Date, Buyer shall take all such action as is
necessary to cause China JV and Brazil Sub to take any and all such
action and to make all filings as necessary to change their corporate
names to names that do not contain "X. X. Xxxxx" or "Xxxxx" or any
substantially or confusingly similar name or reference and, except as
provided in SECTION 8.5(a), to thereafter cease from using any name,
trade name, trademark or service xxxx or any related logos
incorporating "X. X. Xxxxx" or "Xxxxx" in any manner whatsoever.
8.6. COMPANY'S INSURERS OR ADMINISTRATORS.
(a) Buyer acknowledges that the Company or an affiliate thereof
may be making payments after the Closing to the Company's insurers or
claims processors or administrators ("COMPANY'S INSURERS") in respect
of (i) the self-insured retention portion of any workers compensation,
product liability, general liability and automobile liability claims
relating to the Company or any of its affiliates made or to be made in
the future in respect of periods prior to the Closing, and (ii)
medical and other claims and related administrative costs relating to
the Company or any of its affiliates made or to be made in the future
in respect of periods prior to the Closing, in each case including
associated claims handling charges, for which the Company or any of
its affiliates is responsible with respect to Company's Insurers and
for which Buyer and Parents have assumed the Liability pursuant to
SECTION 1.4 (collectively, "CLAIMS"). Without in any way limiting the
generality of SECTION 1.4, Buyer and Parents will pay each Claim or
reimburse the Company therefor within five (5) days after the Company
advises Buyer of the amount thereof and provides Buyer with an invoice
from Company's Insurers or other documentation reasonably satisfactory
to Buyer to the Claim (the "ADVICE DATE"). If Buyer or Parents fail
to pay any Claim or reimburse the Company therefor within five (5)
days of the Advice Date, then Buyer and Parents shall pay to the
Company interest on the amount thereof at an annual rate equal to the
Applicable Rate from and including the Advice Date to but not
including the date of payment.
(b) The Sellers shall take all legally proper and appropriate
actions (i) to maintain the effectiveness and enforceability of each
Insurance Policy with respect to insurance coverage for events
occurring, or facts existing, on or prior
-50-
to the Closing Date, including without limitation satisfying all conditions
precedent and all other obligations under such Insurance Policies in each
case that are within the control of the Sellers, and (ii) following the
Closing at the written request of Buyer, to obtain the proceeds of such
insurance coverage under each Insurance Policy, provided that Buyer has
delivered its request on a timely basis and delivered to the Sellers all
information reasonably requested by the Sellers; provided, however, that
this SECTION 8.6(B) shall not obligate the Sellers to commence litigation
unless (A) Buyer requests the Sellers to do so and agrees to bear the
Sellers' reasonable expenses incurred in pursuing such litigation and (B)
the Sellers conclude, in the exercise of their reasonable business
judgement based on advice of counsel, that litigation is a viable remedy.
If the Sellers receive notice of a matter as to which it is reasonably
apparent that Buyer would be reasonably likely to request the Sellers to
obtain proceeds under an Insurance Policy with respect to the matter under
this SECTION 8.6(B) assuming Buyer was aware of such matter, then Buyer
will be deemed to have submitted a request to the Sellers pursuant to
CLAUSE (II) above.
(c) With respect to Insurance Policies covering business
interruptions, if an event is occurring, or is reasonably likely to
occur, prior to the Effective Time that would entitle the Sellers to
any insurance proceeds under such Insurance Policies, the Sellers
shall (i) take all legally proper and appropriate actions to maintain
the effectiveness and enforceability of such Insurance Policies until
such event, or the likelihood of such event, has ceased and (ii) at
the Closing in respect of any proceeds received prior to the Closing
and immediately as to proceeds received thereafter, deliver to Buyer
all proceeds of such coverage that relate to any period of time
following the Closing Date. The Sellers have complied, or will comply
within the requisite period, with the "Reporting Requirements" of the
applicable "Business Interruption Endorsement."
8.7. CERTAIN POST-CLOSING SERVICES. At the Closing, Buyer and the
Sellers shall enter into an agreement in the form of EXHIBIT 8.7 (the
"TRANSITION SERVICES AGREEMENT") pursuant to which the Sellers shall perform
certain services for Buyer and Buyer shall perform certain services for the
Sellers on the terms and conditions set forth in the Transition Services
Agreement and such other terms and conditions to which the Sellers and Buyer
agree, subject to the following: (a) Buyer shall be obligated to provide
services relating to the defense of the matters described in items 2 and 3 of
EXHIBIT 1.5(h) until their resolution; (b) the Sellers' obligation to provide
services shall expire no later than December 31, 1997; (c) the Sellers shall be
obligated to provide services only in respect of all or a portion of the matters
identified in item 2.c. of SCHEDULE 3.1(f); and (d) the charge for providing
services shall reflect the provider's actual out-of-pocket costs relating to the
provision of such services and a pro rata portion of the salary (including
fringe benefits, with such pro rata portion determined based upon the time spent
in connection with providing services) and travel and subsistence expenses
directly relating to the provision of services by any of the provider's
employees who assist in providing services. Subject
-51-
to the foregoing, prior to the Closing, the Sellers and Buyer shall negotiate in
good faith with respect to the remaining terms of the Transition Services
Agreement.
8.8. FURTHER ASSURANCES. From time to time after the Closing Date,
the Sellers, on the one hand, and Buyer, on the other hand, 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 other may reasonably request in order to more effectively consummate the
transactions contemplated hereby, such as to transfer, convey, assign, and
deliver to Buyer any of the Assets, or enable Buyer and Parents to discharge the
Assumed Liabilities, or enable Buyer to exercise and enjoy all rights, benefits
and obligations of the Sellers with respect thereto.
8.9. LICENSE OF CERTAIN PATENTS. On the Closing Date, Buyer and the
Sellers shall enter into a License Agreement in the form attached hereto as
EXHIBIT 8.9 .
8.10. FINANCIAL STATEMENT AUDITS. If Buyer or Parents, or any one
of them, desires to have completed audited or interim financial statements for
the Business for any period commencing on or after January 1, 1994, then, at
Buyer's election, the Sellers shall request the Company's external auditors to
complete such statements at Buyer's expense and use reasonable best efforts to
cause such auditors to do so or allow Buyer's external auditors to complete such
statements at Buyer's expense.
8.11. LEASES.
(a) The Sellers, Parents and Buyers shall have a continuing
obligation to use all reasonable best efforts to take, or cause to be taken, all
action and to do, or cause to be done, and to cooperate fully with the other
party with respect to, all things necessary, proper or advisable (i) to cause
the lessors under the Equipment Leases to bifurcate such leases into leases
relating to equipment, machinery, vehicles or other tangible personal property
utilized primarily in the Business ("BUSINESS LEASES") and leases relating to
equipment, machinery, vehicles or other tangible personal property not relating
primarily to the Business ("OTHER LEASES"), (ii) to cause the Sellers to be
released from all Liabilities under the Business Leases, any Equipment Leases
where the lessor does not agree to such bifurcation and real estate leases with
respect to Leased Real Property identified on SCHEDULE 1.1(c) and (iii) to cause
Buyer to have no Liability under the Other Leases.
(b) Buyer or Parents shall not agree to any modifications or
amendments to any of the Equipment Leases or any of the real estate leases
identified on SCHEDULE 3.1(g) as to which the Sellers remain a party that
increase the Sellers' Liabilities or potential Liabilities thereunder,
including, without limitation, renewing any Equipment Lease as to any leased
asset, extending the term of an Equipment Lease in whole or as to any leased
asset, adding assets to any Equipment Lease, extending the term of any real
estate lease or exercising any option thereunder, without the prior written
consent of the Sellers. Notwithstanding the foregoing, and subject to the
continuing obligation of Buyer and Parents under SECTION 8.11(a)(ii), Buyer
shall be entitled
-52-
to exercise the two consecutive five-year renewal options set forth in Section 3
of the lease dated February, 1989 and amended June 6, 1989, by and between FCBII
Limited Partnership, Lessor, and the Company.
(c) So long as Buyer has any Liability under Equipment Leases in
respect of any equipment, machinery, vehicles or other tangible personal
property not relating primarily to the Business ("RETAINED EQUIPMENT"), the
Sellers shall comply with all terms of the obligations under the Equipment
Leases with respect to the Retained Equipment (including without limitation the
obligation to make all payments pursuant to the Equipment Leases), and shall use
commercially reasonable best efforts to prevent and/or cure any defaults that
may arise under the Equipment Leases as a result of the Sellers' or their
affiliates' actions or inactions. The Sellers shall indemnify and hold harmless
Buyer and Parents with respect to any Liabilities arising in connection with the
Equipment Leases as to Retained Equipment or in connection with the Other
Leases. Buyer and Parents shall indemnify and hold harmless the Sellers with
respect to any Liabilities arising in connection with the Equipment Leases as to
equipment, machinery, vehicles or other tangible personal property utilized
primarily in the Business, in connection with the Business Leases or in
connection with real estate leases with respect to Leased Real Property
identified on SCHEDULE 1.1(c). Notwithstanding the foregoing, nothing set forth
herein shall prohibit Buyer from terminating any Equipment Leases after the
Closing Date provided that Buyer shall give the Sellers ninety days advance
written notice of its intent to do so.
(d) Notwithstanding SECTION 8.11(a), Buyer and the Sellers shall
have a continuing obligation to use all reasonable best efforts to take, or
cause to be taken, all action and to do, or cause to be done, and to cooperate
fully with the other party with respect to, all things necessary, proper or
advisable (A) to obtain an amendment of the lease, dated January 26, 1990, by
and between Xxxxxxxx County Progress Corporation and the Company, and the
related Consent and Agreement dated January 23, 1990, by the Company in favor of
Prudential Insurance Company of America (together, the "CORYDON LEASE"), on
terms reasonably acceptable to Buyer and to the Sellers that shall have the
effect, without limitation, of releasing the Sellers from all obligations under
the Corydon Lease upon an assignment thereof to Buyer and deleting and/or
modifying the covenants in Article XI thereof in a manner reasonably acceptable
to Buyer and to the Sellers; (B) in the event either party shall reasonably deem
the alternative described in CLAUSE (A) unattainable, to pursue alternatives
reasonably acceptable to the Sellers and to Buyer (it being understood that,
depending upon the circumstances, the purchase of the property by Buyer and/or
prepayment of the related loan might be reasonable alternatives) that give Buyer
beneficial use of the property; and (C) in the event the Sellers and Buyer shall
fail to agree on, and consummate the actions required under, an alternative
under CLAUSE (A) or CLAUSE (B) prior to Closing, to obtain the lessor's consent
to the form of a sublease agreement for the property, complying with the terms
of Article XXIII of the Corydon Lease, requiring Buyer to comply with terms,
covenants and conditions substantially the same as those in the Corydon Lease
(including a covenant substantially the same as Section 11.3.5 thereof but
excluding the other covenants in Article XI thereof) and providing that the
Sellers shall not be liable to Buyer for any default under the Corydon Lease and
otherwise in a form reasonably acceptable to Buyer and to the Sellers, which
Buyer, Parents and the Company shall enter into at the Closing or as soon
thereafter as such
-53-
consent is received; provided, however, that if the parties are not able to
obtain such consent, then (1) the beneficial interest in or to the Corydon Lease
(the "CORYDON BENEFICIAL RIGHTS") shall in any event pass as of the Closing Date
to Buyer under this Agreement and (ii) pending such consent, Buyer shall assume
or discharge the Liabilities of the Sellers under the Corydon Beneficial Rights
(to the extent such obligations are Assumed Liabilities) as agent for the
Sellers, and the Sellers shall act as Buyer's agent in the receipt of any
benefits, rights or interests received from the Corydon Beneficial Rights,
pursuant to SECTION 1.6.
8.12. TWI LICENSE AGREEMENT. Upon the written request of Buyer,
the Sellers shall use commercially reasonable best efforts to cause The Welding
Institute ("TWI"), pursuant to Section 2.4 of the License Agreement between the
Company and TWI dated February 20, 1996 (the "TWI AGREEMENT"), to grant Buyer a
license. Buyer and the Sellers shall share all fees, costs and payments
associated with obtaining such a license between Buyer and TWI in accordance
with SECTION 9.2. In the event that TWI gives written notice, that it has made
a good faith determination that such a license between Buyer and TWI would, in
the opinion of TWI, damage its legitimate business interests, the Sellers'
obligation under this SECTION 8.12 shall be considered terminated. In the event
the TWI Agreement is terminated or expires, the Sellers' obligation under this
SECTION 8.12 shall be considered terminated.
8.13. CERTAIN LITIGATION. The Company shall defend the litigation
described in item 2 of EXHIBIT 1.5(h) (the "VEHMA LITIGATION") in good faith.
Buyer shall nonetheless have the right to participate in the defense thereof and
to employ counsel, at its own expense, separate from the counsel employed by the
Company, it being understood, however, that the Company shall control the
defense of such litigation. Further, Parents and Buyer shall cooperate with the
Company in the defense of such litigation in accordance with SECTION 8.1(b).
Notwithstanding the Company's control of the defense of such litigation, (a) the
Company shall consult with Buyer regarding the defense of and the strategy with
respect to such litigation, (b) Buyer shall be free to actively monitor such
litigation, to review the files of the Company's counsel with respect thereto
(to the extent doing so will not nullify any available privileges) and to
provide input to the Company and the Company's counsel in connection therewith
and (c) the Company shall not consent to the entry of any judgment with respect
to such litigation or settle such litigation on terms that would impose any
nonmonetary relief on Buyer without the prior written consent of Buyer, which
consent shall not be unreasonably withheld or delayed.
8.14. CERTAIN CONTRACTS.
(a) Upon the written request of Buyer, the Sellers and Buyer
shall use their commercially reasonable best efforts to cause Fourth Shift
Corporation ("FOURTH SHIFT") to enter into agreements to amend the Volume
Purchase Agreement and Software License Agreement dated January 18, 1996,
between the Company and Fourth Shift (the "FOURTH SHIFT AGREEMENTS"), and to
enter into a new agreement with Buyer for the purposes of obtaining for Buyer
the rights under the Fourth Shift Agreements associated with China JV's site of
operations and preserving for the Company its other rights under the Fourth
Shift Agreements. The Sellers and Buyer shall
-54-
share any fees, costs and payments associated with entering into such agreements
in accordance with SECTION 9.2.
(b) Upon the written request of Buyer, the Sellers and Buyer
shall use their commercially reasonable best efforts to establish or enter into
an arrangement to enable Buyer to be eligible to obtain the benefits of the
Joint Venture Agreement dated September, 1995, among the Company, Caterpillar,
Inc., U.S. Steel and the Lincoln Electric Company, for Fabrication of Advanced
Structures Using Intelligent and Synergistic Materials Processing, but the
Sellers shall not be obligated to forgo any benefits to which the Company is
entitled in connection with such joint venture. The Sellers and Buyer shall
share any fees, costs and payments associated with obtaining such benefits in
accordance with SECTION 9.2.
(c) As to the Contracts described in paragraphs h, i, j, k, n,
p, q, r and s of Item 2 of SCHEDULE 3.1(f), upon the written request of Buyer,
the Sellers shall introduce Buyer to the other parties to such Contracts and
provide reasonable assistance to Buyer in negotiating its own arrangements with
such parties, but the Seller shall not be obligated to agree to any amendments
to Contracts between the Sellers and such other parties.
9. MISCELLANEOUS.
9.1. PUBLICITY. The Sellers, Buyer and Parents agree that, from the
date hereof through the Closing Date, no public release or announcement
concerning the transactions contemplated hereby shall be issued or made by any
party without the prior consent of the other party (which consent shall not be
unreasonably withheld), except (i) as such release or announcement may, in the
judgment of the releasing party, be required by law or the rules or regulations
of any United States securities exchange, in which case the party required to
make the release or announcement shall allow the other party reasonable time to
comment on such release or announcement in advance of such issuance, and (ii)
that the Sellers may make such announcements to their employees.
Notwithstanding the foregoing, Buyer and the Company shall cooperate to prepare
a joint press release to be issued at the time of the signing of this Agreement
and on the Closing Date. The Sellers, Buyer and Parents agree to keep the terms
of this Agreement confidential, except to the extent required by applicable law
or for financial reporting purposes and except that the parties may disclose
such terms to their respective accountants and other representatives as
necessary in connection with the ordinary conduct of their respective businesses
(so long as such persons agree to keep the terms of this Agreement
confidential).
9.2. FEES AND EXPENSES. Except as otherwise stated in this Agreement
or as set forth below, all expenses incurred by the parties hereto shall be
borne solely and entirely by the party that has incurred such expenses:
TITLE INSURANCE PREMIUMS. All premiums for the issuance of title
insurance policies on the Sellers' owned or leased real property conveyed
pursuant to this Agreement and the cost of any surveys performed on such
property shall be borne and paid for exclusively by Buyer.
-55-
(b) TRANSFER TAXES AND RECORDING EXPENSES. Buyer and Parents,
jointly and severally, on the one hand, and the Sellers, jointly and
severally, on the other hand, shall each pay 50% of all sales, transfer,
motor vehicle, registration or similar Taxes and recording expenses, and
any consent fees, royalties or similar payments, if any, required to be
paid in connection with the transfer of the Assets (including any interest
charge, penalty or addition to tax with respect thereto) without regard to
whether such Taxes or expenses are imposed on Buyer or the Sellers, or any
one of them, except that (i) Buyer shall pay 100% of the HSR Act filing fee
and (ii) neither party shall be liable for consent fees, royalties or
similar payments incurred without the party's consent, which consent shall
not be unreasonably withheld or delayed.
9.3. INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY.
(i) Subject to the terms and conditions of this
SECTION 9.3, the Company shall indemnify, defend and hold
harmless Buyer and Parents, and their directors, officers,
employees and controlling persons, from and against all Losses
(as defined below) asserted against, resulting to, imposed upon
or incurred by any such person, directly or indirectly, by reason
of or resulting from (A) any Liabilities described in
SECTION 1.5, (B) any breach of the Surviving Representations, (C)
subject to SECTION 4.9, any breach of any covenant or agreement
made by the Sellers contained in this Agreement, (D) the matters
described on EXHIBIT 9.3, (E) the matters set forth on
SCHEDULE 3.1(O), or (F) any business interruption Losses of Buyer
attributable to any period after the Closing arising out of any
casualty, loss or damage to any material Assets prior to the
Closing Date, but the Company's obligation under this CLAUSE (F)
shall be limited to the amount of the proceeds the Sellers
receive in respect of any such period under Insurance Policies
covering business interruptions. As used in this Agreement, the
term "LOSS" or "LOSSES" shall include (1) all Liabilities; (2)
all losses, damages (BUT EXCLUDING consequential damages, lost
profits or punitive damages other than those awarded to a third
party), judgments, awards, penalties and settlements; (3) all
demands, claims, suits, actions, causes of action, proceedings
and assessments, whether or not ultimately determined to be
valid; and (4) all costs and expenses (including, without
limitation, interest (including prejudgment interest in any
litigated or arbitrated matter), court costs and fees and
expenses of attorneys and expert witnesses) of investigating,
defending or asserting any of the foregoing. Notwithstanding
such exclusion from "Losses" of consequential damages and lost
profits, "Losses" will include the amount by which Buyer's
profits decrease due to a permanent loss of revenues by Buyer
(without limitation, a decrease in certain revenues in one time
period that is offset by the recovery of those certain revenues
in one or more other time periods shall
-56-
not constitute a permanent loss of revenue) and/or an increase in
Buyer's expenses, in either case as a result of an interruption in
Buyer's ability to conduct any manufacturing or production operation
for any period of time at any Facility where the cause of the
interruption is due to a matter as to which Buyer is entitled to
indemnification hereunder provided that Buyer has taken reasonable
actions to mitigate such effects to the extent required by law. That
Losses of Buyer for which Buyer is entitled to indemnification under
SECTION 9.3(a)(i)(b) also constitute Assumed Liabilities shall not
preclude Buyer's right to indemnification under SECTION 9.3(a)(i)(b).
(ii) The Company's obligations under SECTION 9.3(a)(i) shall
be subject to the following general limitations and other terms:
(A) Buyer shall have no right to indemnification under
SECTION 9.3(a)(i)(b) or SECTION 9.3(a)(i)(e) with respect to any
Loss or alleged Loss if Buyer requested a reduction in the Net
Book Value reflected on the Adjusted Closing Statement on account
of any matter forming the basis for such Loss or alleged Loss,
unless there was no amount reflected on the Adjusted Closing
Balance (excluding footnotes thereto) on account of the matter
due to the fact that reflecting an amount on the Adjusted Closing
Statement with respect to such matter would not have been in
accordance with GAAP, or if Buyer would have been precluded from
requesting such a reduction in the Net Book Value due to the
provisions of SECTION 2.3(C) even if the Company and/or Buyer had
knowledge of the matter forming the basis for such Loss or
alleged Loss on the Closing Date;
(B) if a reserve (in the form of an accrued Liability
or an offset to an Asset or similar item) was reflected on the
Adjusted Closing Statement relating to any matter for which Buyer
would otherwise be entitled to indemnification under
SECTION 9.3(a)(i), then the calculation of Buyer's Losses in
respect of such matter shall be reduced by the sum of the full
amount of the reserve as reflected in the calculation of Net Book
Value on the Adjusted Closing Statement LESS any previous
reductions pursuant to this CLAUSE (B);
(C) in determining the existence of a breach of the
Sellers' representations and warranties as to the matters set
forth in SECTION 3.1(o) for purposes of this SECTION 9.3, no
effect will be given to items set forth on SCHEDULE 3.1(o) or any
other Schedule hereto as exceptions to such representations and
warranties;
(D) the Company's obligations pursuant to
SECTION 9.3(a)(i)(b) shall terminate as to each Surviving
Representation when such Surviving Representation
-57-
terminates pursuant to SECTION 3.3 and the Company's obligations
pursuant to SECTION 9.3(a)(i)(e) shall terminate on the third
anniversary of the Closing; PROVIDED, HOWEVER, that such obligations
shall not terminate with respect to any item as to which Buyer shall
have, prior to the expiration of the applicable period, previously
made a claim by delivering an Indemnification Notice (as defined in
SECTION 9.3(c)); and
(E) without expanding liability the Company would
otherwise have pursuant to this SECTION 9.3(a), the Company shall
not have any liability under SECTION 9.3(a)(i)(b) or SECTION
9.3(a)(i)(e) in respect of Losses to the extent arising out of
Buyer's operation of the Business after the date 45 days after
the Closing.
(iii) The Company's obligations under SECTION
9.3(a)(i)(b) and SECTION 9.3(a)(i)(e) in respect of Losses for
which the Company may be liable in accordance with, and
notwithstanding the limitations set forth in, SECTION 9.3(a)(ii)
shall be subject to the following additional limitations:
(A) the Company shall not have any liability for any
Losses resulting from a claim with respect to any particular
breach to the extent such Losses are less than $250,000, provided
that (1) if the Losses related to such claim equal or exceed
$250,000, then the Company (subject to the other provisions of
this SECTION 9.3(a)(iii)) shall be liable for Losses related
thereto only to the extent such Losses exceed $250,000 and (2) in
each case, any claim or series of claims arising out of or
relating to the same, substantially similar or substantially
related facts, circumstances, occurrences, transactions or
conditions shall constitute one claim with respect to any
particular breach;
(B) the Company shall not have any liability in
respect of Buyer Environmental Losses for which the Company may
be liable notwithstanding the limitation set forth in CLAUSE (A)
above unless such Buyer Environmental Losses are incurred in
accordance with SECTION 9.3(f), and in such case the Company
shall have liability only if the aggregate of all such Buyer
Environmental Losses for which the Company would, but for this
CLAUSE (B), be required to indemnify Buyer (excluding without
limitation Losses for which the Company has no liability as a
result of CLAUSE (A) above) exceeds on a cumulative basis an
amount equal to $5,000,000, at which point the Company, subject
to CLAUSE (E) of this SUBSECTION (a)(iii), shall indemnify Buyer
for 70% of such Losses, but only to the extent such Losses exceed
$5,000,000;
-58-
(C) the Company shall not have any liability in
respect of Customer Losses for which the Company may be liable
notwithstanding the limitation set forth in CLAUSE (A) above
unless such Customer Losses are incurred in accordance with
SECTION 9.3(g);
(D) the Company shall not have any liability in
respect of Customer Losses for which the Company may be liable
notwithstanding the limitations set forth in CLAUSES (A) and (C)
above or Other Buyer Losses (other than Losses resulting from the
breach of the representation and warranty set forth in SECTION
3.1(b) for which the Company may be liable notwithstanding the
limitation set forth in CLAUSE (A) above unless the aggregate of
all such Customer Losses and such Other Buyer Losses for which
the Company would, but for this CLAUSE (D) be required to
indemnify Buyer (excluding without limitation Losses for which
the Company has no liability as a result of CLAUSE (A) above)
exceeds on a cumulative basis an amount equal to $5,000,000, at
which point the Company, subject to CLAUSE (E) of this SUBSECTION
(a)(iii), shall indemnify Buyer for the full amount of such
Losses but only to the extent such Losses exceed $5,000,000;
(E) the Company shall not have any liability under
SECTION 9.3(a)(i)(b) or 9.3(a)(i)(e) to the extent the aggregate
amount of Losses (other than Losses resulting from the breach of
the representation and warranty set forth in SECTION 3.1(b)) for
which the Company would otherwise be liable exceeds $75,000,000.
As used in this Agreement, "BUYER ENVIRONMENTAL LOSSES" shall mean
Losses of Buyer under SECTION 9.3(a)(i)(b) arising from any breach of
the Surviving Representations set forth in SECTION 3.1(o), whether or
not such Losses also arise from any breach of any other Surviving
Representation, and Losses of Buyer arising under
SECTION 9.3(a)(i)(e); "CUSTOMER LOSSES" shall mean Losses of Buyer
under SECTION 9.3(a)(i)(b) arising from any breach of any of the
Surviving Representations in connection with Liabilities or potential
Liabilities to customers of the Business or the allocation between the
Business and any customer of responsibility for Losses or potential
Losses; and "OTHER BUYER LOSSES" shall mean all Losses of Buyer under
SECTION 9.3(a)(i)(b) other than Buyer Environmental Losses and
Customer Losses.
(b) BY BUYER AND PARENTS. Subject to the terms and conditions of
this SECTION 9.3, Buyer and Parents, jointly and severally, shall
indemnify, defend and hold harmless the Sellers, and their respective
directors, officers, employees and controlling persons, from and against
all Losses asserted against, resulting to, imposed upon or incurred by any
such person, directly or indirectly, by reason of or resulting from (i) the
breach of any covenant of Buyer or Parents, or any one of them, contained
in this Agreement (including without limitation the other indemnification
obligations of Buyer and
-59-
Parents provided for in this Agreement); (ii) the breach of the
representations or warranties of Buyer and/or Parents described in
SECTION 3.3(b); (iii) failure of Buyer or Parents, or any one of them, to
pay, perform and discharge, when due, any of the Assumed Liabilities; or
(iv) subject to any indemnity obligation the Sellers may have in respect of
the period described in SECTION 9.3(a)(ii)(e), the operation of the
Business by Buyer following the Closing. Notwithstanding the foregoing,
(A) the obligations to indemnify and hold the Company harmless pursuant to
SECTION 9.3(b)(ii) shall terminate when the representations and warranties
of Buyer and Parents terminate pursuant to SECTION 3.3; PROVIDED, HOWEVER,
that such obligations to indemnify and hold harmless shall not terminate
with respect to any item as to which the Company shall have, prior to the
expiration of the applicable period, previously made a claim by delivering
an Indemnification Notice and (B) the amount of Losses for which Buyer and
Parents would otherwise be liable in respect of any breach of this
Agreement prior to the Closing shall be reduced (but not below zero) by the
amount of any payment actually made to the Sellers pursuant to SECTION
4.8(b).
(c) PROCEDURES RELATING TO INDEMNIFICATION AMONG BUYER, PARENTS AND
THE SELLERS. Following the discovery of any facts or conditions which
could reasonably be expected to give rise to a Loss or Losses for which
indemnification under this SECTION 9 can be obtained, the party seeking
indemnification under this SECTION 9 (the "INDEMNIFIED PARTY") shall,
within a reasonable period of time thereafter, provide written notice to
the party from whom indemnification is sought (the "INDEMNIFYING PARTY"),
setting forth the specific facts and circumstances, in reasonable detail,
relating to such Loss or Losses and the amount of Loss or Losses (or a non-
binding, reasonable estimate thereof if the actual amount is not known or
not capable of reasonable calculation) ("INDEMNIFICATION NOTICE");
PROVIDED, HOWEVER, that failure to give such Indemnification Notice on a
timely basis shall not affect the indemnification provided hereunder except
to the extent the Indemnifying Party shall have been actually prejudiced as
a result of such failure.
(d) PROCEDURES RELATING TO INDEMNIFICATION FOR THIRD PARTY CLAIMS.
From and after the Closing, subject to SECTION 9.3(f) with respect to Buyer
Environmental Losses and subject to SECTION 9.3(g) with respect to Customer
Losses, and subject to SECTION 8.13 with respect to the Vehma Litigation,
(i) In order for an Indemnified Party to be entitled to any
indemnification provided for under this Agreement arising out of
or involving a claim or demand made by any other person, firm,
governmental authority or corporation (a "THIRD PARTY CLAIM"),
the Indemnified Party must provide an Indemnification Notice to
the Indemnifying Party relating to the Third Party Claim as
promptly as reasonably possible after receipt by such Indemnified
Party of notice of the Third Party Claim. Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, within
five (5) business days after the Indemnified Party's receipt
thereof, copies of all notices and documents (including court
papers) received by the Indemnified
-60-
Party relating to the Third Party Claim; provided, however, that
failure to provide an Indemnification Notice, or deliver copies of all
notices and documents, on a timely basis shall not affect the
indemnification provided hereunder except to the extent the
Indemnifying Party shall have been actually prejudiced as a result of
such failure.
(ii) If a Third Party Claim is made against the Indemnified
Party, the Indemnifying Party shall be entitled to participate in
the defense thereof and, if the Indemnifying Party so chooses and
acknowledges its obligation in writing to indemnify the
Indemnified Party therefor, to assume the defense thereof with
counsel selected by the Indemnifying Party and reasonably
satisfactory to Indemnified Party (except that the Indemnifying
Party may not so elect without the Indemnified Party's consent
unless (A) the suit, action, claim, liability or obligation does
not seek to impose any liability or obligation upon the
Indemnified Party other than for money damages and (B) such suit,
action, claim, liability or obligation does not relate to the
Indemnified Party's relationship with its customers).
Notwithstanding any acknowledgment made pursuant to the
immediately preceding sentence, the Company shall continue to be
entitled to assert any limitation on its indemnification
responsibility contained in SECTION 9.3(a)(ii) or (iii). Should
the Indemnifying Party so elect to assume the defense of a Third
Party Claim, the Indemnifying Party shall not be liable to the
Indemnified Party for legal expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof. If the
Indemnifying Party assumes such defense, then the Indemnified
Party shall have the right to participate in the defense thereof
and to employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being understood,
however, that the Indemnifying Party shall control such defense.
The Indemnifying Party shall be liable for the fees and expenses
of counsel employed by the Indemnified Party for any period
during which the Indemnifying Party has not assumed the defense
thereof. If the Indemnifying Party chooses to defend any Third
Party Claim, all the parties hereto shall cooperate in the
defense or prosecution of such Third Party Claim. Such
cooperation shall include the retention and (upon the
Indemnifying Party's request) the provision to the Indemnifying
Party of records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a
mutually convenient basis to provide additional information and
explanation of any material provided hereunder. If the
Indemnifying Party, within a reasonable time after receipt of an
Indemnification Notice relating to a Third Party Claim, chooses
not to assume defense of a Third Party Claim or fails to defend
such Third Party Claim actively and in good faith, the
Indemnified Party will (upon further notice) have the right to
undertake the defense, compromise or settlement of such Third
Party Claim or consent
-61-
to the entry of judgment with respect to such Third Party Claim, on
behalf of, and for the account and risk of, the Indemnifying Party,
and the Indemnifying Party shall have no right to challenge the
Indemnifying Party's defense, compromise, settlement or consent to
judgment.
(e) EXCLUSIVE REMEDY. Except for rights expressly provided in
SECTIONS 5.1, 5.2 and 7.1, the indemnification provisions of this
SECTION 9.3 constitute the sole and exclusive remedy with respect to any
and all claims relating to the subject matter of this Agreement (or any
related agreements, except to the extent otherwise expressly set forth
therein) and no other remedy shall be had in contract, tort or otherwise by
Buyer, Parents or the Sellers and their respective officers, directors,
employees, agents, affiliates, attorneys, consultants, successors and
assigns, all such remedies being hereby expressly waived to the fullest
extent permitted under applicable law. Without limitation, the procedures
set forth in this SECTION 9.3 constitute the sole and exclusive remedy of
Buyer and the Sellers arising out of any breach or claimed breach of the
representations and warranties set forth in SECTION 3.1 (other than SECTION
3.1(y)) made as of the date of this Agreement relating to events occurring
on or prior to the date hereof that becomes known to the Buyer on or prior
to the Closing Date. In furtherance of the foregoing, the Sellers, on the
one hand, and Buyer and Parents, on the other hand, hereby waive to the
fullest extent permitted under applicable law, any and all rights, claims
and causes of action they may have against the Buyer and the Parents, on
the one hand, the Sellers, or either one of them, on the other hand,
relating to the subject matter of this Agreement arising under or based
upon any federal, state, provincial, local or foreign statute, law,
ordinance, rule or regulation or otherwise, including, without limitation,
such rights, claims and causes of action Buyer may have against the Sellers
under CERCLA. In addition to the foregoing, the amount of indemnification
obligations of the Sellers, Buyers and Parents set forth in this
SECTION 9.3 shall be the maximum amount of indemnification obligations set
forth hereunder and the Sellers, Buyer and Parents shall not be entitled to
a rescission of this Agreement (or any related agreements) or any further
indemnification rights or claims of any nature whatsoever, all of which the
Sellers, Buyer and Parents hereby waive.
(f) ENVIRONMENTAL PROCEDURES. In addition to SECTION 9.3(d), to the
extent such section is applicable, this SECTION 9.3(f) shall apply to Buyer
Environmental Losses:
(i) The Company shall only be required to indemnify Buyer
for any Buyer Environmental Losses (A) that arise from or relate
to any investigation, removal, remedial, cleanup, corrective or
compliance action ("REMEDIAL ACTION") that (1) is required
pursuant to Environmental Laws in effect at the time of such
Remedial Action, or by any governmental authority having
jurisdiction over such laws whereby such authority purports to be
acting pursuant to such laws, unless the requirement reasonably
appears to be outside the authority of the governmental authority
(a "REQUIRED REMEDIAL ACTION"), or (2) is a Prudent Remedial
Action (as defined in SUBSECTION (vii)); (B) that exceed any net
recovery by Buyer or
-62-
its affiliates from any third parties, which recovery Buyer shall
assess in good faith and, if reasonably determined to be viable by
Buyer based on advice of counsel, pursue; and (C) if Buyer complies in
all material respects with its obligations under the remainder of this
SECTION 9.3(f). Notwithstanding the foregoing, if any Remedial Action
is performed (other than by the Company) that is not a Permitted
Remedial Action (as defined below), then the Company shall have no
indemnity obligation in respect of Buyer Environmental Losses that are
discovered or incurred as a consequence of such Remedial Action
unless, and then only to the extent that, there is an independent
basis for the Company's indemnity obligation under this SECTION
9.3(f). Notwithstanding anything in this SECTION 9.3(f) to the
contrary, the failure of either party to comply with the obligations
of this SECTION 9.3(f) shall not affect the indemnification or rights
provided hereunder except to the extent that the other party shall
have been actually prejudiced as a result of such failure. A
"PERMITTED REMEDIAL ACTION" shall mean a Required Remedial Action or a
Prudent Remedial Action.
(ii) During the period that (A) Buyer Environmental Losses
that would otherwise be subject to indemnification under this
SECTION 9.3 have not exceeded the sum described in CLAUSE (B) of
SECTION 9.3(a)(iii) or (B) the Company has no obligation with
respect to Buyer Environmental Losses due to the limitation set
forth in CLAUSE (E) of SECTION 9.3(a)(iii), Buyer shall have the
right to control and direct any Remedial Action. During the
period described in CLAUSE (A) above, Buyer shall keep the
Company reasonably apprised of material developments relating to
any Remedial Action, including providing the Company with copies
of material reports, agency notices, correspondence to or from
governmental agencies and other material documents related to
such Remedial Action as well as, upon the reasonable request of
the Company, provide the Company an opportunity to discuss with
Buyer any investigation proposed to be performed by Buyer prior
to the start of such investigation. During the period that Buyer
Environmental Losses subject to indemnification under this
SECTION 9.3 have not exceeded the sum described in CLAUSE (B) of
SECTION 9.3(a)(iii) but exceed eighty percent (80%) of that
amount, Buyer shall in addition to providing the Company the
information described in the preceding sentence: (1) give the
Company reasonable advance notice of, and a reasonable
opportunity to participate in, material decisions with respect
any Remedial Actions controlled or directed by the Buyer and (2)
notify the Company regarding any material meetings with agency
representatives and allow the Company to attend such meetings at
the Company's expense. During the period that Buyer
Environmental Losses that would otherwise be subject to
indemnification under this SECTION 9.3 exceed the sum described
in CLAUSE (B) of SECTION 9.3(a)(iii), but do not exceed the
limitation set forth in CLAUSE (E) of SECTION 9.3(a)(iii), the
Company shall
-63-
have the right to control and direct any Permitted Remedial Action
subject to indemnification under this SECTION 9.3, subject to the
following procedure: (W) prior to controlling and directing such
matter, the Company shall provide Buyer with written acknowledgment of
its intention to indemnify Buyer with respect to such Permitted
Remedial Action in accordance with this Agreement; (X) at any time
during the Permitted Remedial Action, the Company may, subject to its
obligation to do so as soon as practicable and with reasonable
justification, inform Buyer in writing that the Company has determined
it does not have an obligation to indemnify Buyer with respect to the
Permitted Remedial Action or any portion thereof; (Y) in such event,
Buyer may by notice to the Company assume the right to control and
direct such Permitted Remedial Action (or portion thereof), and in any
event the Company may cease controlling and directing such Permitted
Remedial Action (or portion thereof) by notice to Buyer; and (Z) if
the Company does not have an obligation to indemnify Buyer with
respect to such Permitted Remedial Action (or portion thereof), then
Buyer shall reimburse the Company for reasonable expenses the Company
has incurred in connection therewith; provided, however, that the
Company shall be responsible for Losses of Buyer to the extent Buyer
is prejudiced by the failure of the Company to inform Buyer as soon as
practicable that the Company has determined it does not have an
obligation to indemnify Buyer. During the period the Company is
controlling and directing any Permitted Remedial Action, the Company
shall: (1) give Buyer reasonable advance notice of, and a reasonable
opportunity to participate in, material decisions with respect
thereto, (2) obtain Buyer's consent prior to undertaking any material
action with respect to such Permitted Remedial Action, PROVIDED THAT
such consent shall not be unreasonably withheld or delayed, (3)
provide Buyer with copies of reports, agency notices, correspondence
to or from governmental agencies and other material documents related
to such Permitted Remedial Action, and (4) notify Buyer regarding any
material meetings with agency representatives and allow Buyer to
attend such meetings at Buyer's expense. During the period that Buyer
Environmental Losses exceed the limitation set forth in SECTION
9.3(a)(iii)(e), and upon the reasonable request of the Company, and at
the Company's sole cost and expense, Buyer shall provide non-
privileged information to the Company concerning any Remedial Action
conducted by Buyer and shall provide the Company with the opportunity
to discuss any such Remedial Action with Buyer. To "CONTROL AND
DIRECT," as used in this SECTION 9.3(f), shall include, without
limitation, the right (1) to hire and discharge consultants,
contractors, and experts, (2) obtain any tests, reports, and surveys
necessary to define and delineate the extent of any contamination or
noncompliance, (3) contact governmental authorities, make any reports
to such authorities, submit any remediation or compliance plans to
such authorities, negotiate with such
-64-
authorities, and otherwise deal with such authorities, (4) prepare the
work plan for any remediation or correction of noncompliance, and (5)
conduct or direct any such remediation or correction of noncompliance.
(iii) To better delineate the respective obligations of
the Company, on the one hand, and Buyer and Parents, on the other
hand, with respect to environmental matters, Buyer and Parents
shall use commercially reasonable best efforts to cause the
Business to be operated after the Closing Date in material
compliance with Environmental Laws so as not to knowingly
compound or aggravate any Environmental Action for which the
Company may be responsible under this Agreement. Buyer and
Parents shall not take action intended to initiate or encourage a
claim by a third party, including any governmental agency,
concerning an Environmental Action for which the Company is
obligated to indemnify Buyer under SECTION 9.3.
(iv) Buyer and Parents and the Company shall treat
information concerning any Environmental Action that may be
subject to indemnification under this SECTION 9.3 as confidential
information. Notwithstanding the foregoing, Buyer or the Company
may disclose such information (A) in confidence to any person
with whom it proposes to enter into contract for any commercial
purpose, including financing entities; (B) as required by law,
including Environmental Laws; (C) in order to attain compliance
with Environmental Laws; (D) as requested by a court; (E) as
requested by a governmental agency or other governmental
authority whereby such authority purports to be acting pursuant
to Law, unless the requirement reasonably appears to be outside
the authority of the governmental agency or governmental
authority; or (F) that is otherwise publicly available. If
either Parents or Buyer, on the one hand, or the Company, on the
other hand, intends to disclose information concerning an
Environmental Action that may be subject to indemnification under
this SECTION 9.3, then Buyer or the Company shall notify the
other party prior to such proposed disclosure pursuant to SECTION
9.4.
(v) The party not controlling and directing a Remedial
Action shall cooperate in good faith with the party controlling
and directing the Remedial Action, and vice versa. Such
cooperation shall include (A) cooperation in connection with
efforts to seek reimbursement under applicable governmental
underground storage tank or other reimbursement programs; (B)
cooperation in connection with any efforts to seek reimbursement
under applicable insurance policies relating to the Remedial
Action; and (C) providing, upon reasonable advance notice,
reasonable access to the property involved and to all non-
privileged documents, personnel and other sources of information
that relate to the Remedial
-65-
Action or are otherwise necessary to effectuate the Remedial Action.
While it is controlling and directing any Permitted Remedial Action,
the Company shall not unreasonably interfere with Buyer's use of any
property involved or the conduct of Buyer's business.
(vi) With respect to any Remedial Action conducted at any
time prior to such time as Buyer Environmental Losses exceed the
limitation set forth in CLAUSE (E) of SECTION 9.3(a)(iii), (A)
the parties shall perform such Remedial Action in accordance with
Environmental Laws in effect as of the time of such Remedial
Action to allow the continued use of the property for uses
substantially the same as those for which the Company used the
property; (B) no Remedial Action shall be undertaken until after
notice is provided to and approval received from such
governmental authority with jurisdiction over the Environmental
Action, if such notice and approval process is required; and (C)
such Remedial Action shall be performed in a cost-effective and
reasonable manner.
(vii) A "PRUDENT REMEDIAL ACTION" pursuant to SECTION
9.3(f)(i)(a)(2) shall be a Remedial Action (A) that is undertaken
in response to Material Facts (as defined below), (B) where Buyer
has, prior to commencing the Remedial Action, either requested
and obtained the Company's consent subject to SECTION
9.3(f)(viii) or received a determination under SECTION 9.5 that
the Company's consent has been unreasonably withheld or delayed,
such determination to be made subject to the provisions of
SECTION 9.3(f)(viii), and (C) where the scope of the Remedial
Action undertaken is reasonable in relation to the perceived
risk. "MATERIAL FACTS" shall mean material facts that represent
reliable objective evidence indicating that a Hazardous Substance
is present in a manner that would reasonably be expected to
present a significant risk to human health or the environment.
Buyer acknowledges that the facts specifically disclosed in this
Agreement or in the Schedules hereto (including documents
incorporated by reference therein) or otherwise known to Parents
or Buyer based on the information it has received from Environ
Corporation as of the date of this Agreement (it being understood
that prior to the date of this Agreement, Parents and Buyer have
requested, and Environ Corporation has provided to Parents and
Buyer, an oral report containing all material information it has
learned up to the date of this Agreement), do not currently
represent reliable objective evidence indicating that a Hazardous
Substance is present in a manner that would reasonably be
expected to present a significant risk to human health or the
environment, but the Company acknowledges that there may be
changes in circumstances relating to such facts, or changes in
information known to Buyer with respect to such facts, that
together with such facts could represent reliable objective
evidence indicating that a Hazardous Substance
-66-
is present in a manner that would reasonably be expected to present a
significant risk to human health or the environment.
(viii) At the time that Buyer requests the consent of
the Company pursuant to SECTION 9.3(f)(vii)(b), Buyer shall
disclose to the Company all material information relating to the
proposed Remedial Action and the basis for conducting the
Remedial Action. The Company's consent shall not be unreasonably
withheld or delayed; however, (1) the reasonableness of the
Company's decision will be determined based solely upon the
information disclosed to or known by the Company at the time such
consent is requested; (2) evidence that a Hazardous Substance may
be present shall not result in any presumption that the Hazardous
Substance would reasonably be expected to present a significant
risk to human health or the environment; and (3) the parties
recognize that a determination not to further investigate
evidence indicating that a Hazardous Substance is present may,
under some circumstances, be a reasonable determination.
(g) CUSTOMER PROCEDURES. Following the Closing, Buyer shall notify
the Company of the receipt by Buyer or Parents of any Third Party Claim
involving Customer Losses that may be reasonably expected to exceed the
limitations set forth in SECTION 9.3(a)(iii)(d). Buyer and the Company
shall negotiate in good faith as to the reasonable administration,
satisfaction and discharge of any such Customer Losses in a commercially
reasonable manner, and Buyer shall administer, satisfy and discharge such
Customer Losses only in a manner approved in all material respects by the
Company in advance, which approval shall not be unreasonably withheld or
delayed. Buyer shall as soon as practicable notify the Company as to
material developments with respect to such Third Party Claims.
9.4. NOTICES. Except as otherwise set forth in this Agreement, 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, if telecopied or mailed, first class mail,
postage prepaid, return receipt requested, as follows:
(a) if to the Sellers:
X. X. Xxxxx Corporation
00000 Xxxx Xxxx Xxxxx
X. X. Xxx 00000
Milwaukee, Wisconsin 53223-0972
Attention: Xxxx X. Xxxxxxxxx
Telecopy: (000) 000-0000
-67-
with copies to:
X. X. Xxxxx Corporation
00000 Xxxx Xxxx Xxxxx
X. X. Xxx 00000
Milwaukee, Wisconsin 53223-0972
Attention: W. Xxxxx Xxxxxxx
Telecopy: (000) 000-0000
and
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Quick
Telecopy: (000) 000-0000
(b) if to Buyer:
Tower Automotive, Inc.
0000 00xx Xxxxxx, X.X.
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
with a copy to:
Hidden Creek Industries
0000 XXX Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Telecopy: (000) 000-0000
and
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
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
delivery or telecopy or on the third business day after the mailing thereof.
-68-
9.5. RESOLUTION OF DISPUTES.
(a) NEGOTIATION. In the event of any dispute or disagreement between
the Sellers and Buyer or Parents as to the interpretation of any provision
of, or the performance of obligations under, this Agreement (except for
such disputes or disagreements regarding the Closing Statement which shall
be resolved exclusively pursuant to SECTION 2.4(d)), the matter, upon
written request of either party, shall be referred to representatives of
the parties for decision, each party being represented by a senior
executive officer who has no direct operational responsibility for the
matters contemplated by this Agreement (the "REPRESENTATIVES"). The
Representatives shall promptly meet in a good faith effort to resolve the
dispute. If the Representatives do not agree upon a decision within thirty
(30) calendar days after reference of the matter to them, Buyer and the
Sellers shall be free to exercise the remedies available to them under this
SECTION 9.5.
(b) ARBITRATION. Any dispute, controversy or claim arising out of or
relating to this Agreement or the negotiation hereof or entry hereunto or
any Contract entered into pursuant hereto or the performance by the parties
of its or their terms shall be settled by binding arbitration administered
by the Center for Public Resources in accordance with its then prevailing
Rules for Non-Administered Arbitration of Business Disputes (except as
otherwise provided herein). The arbitration shall be held in Milwaukee,
Wisconsin. This SECTION 9.5 shall be construed and enforced in accordance
with the Federal Arbitration Act, notwithstanding any other choice of law
provision in this Agreement. Notwithstanding the foregoing, Buyer may, in
its discretion, apply to a court of competent jurisdiction for equitable
relief from any violation or threatened violation of the covenants of the
Sellers, or any one of them, under SECTION 8.3. Such an application shall
not be deemed a waiver of the right to compel arbitration pursuant to this
SECTION 9.5.
(c) ARBITRATORS. If the matter in controversy (exclusive of attorney
fees and expenses) shall appear, as at the time of the demand for
arbitration, to exceed $2,000,000, then the panel to be appointed shall
consist of three (3) neutral arbitrators; otherwise, one neutral
arbitrator.
(d) PROCEDURES; NO APPEAL. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within one hundred twenty (120)
days after the selection of the arbitrator(s). The arbitrator(s) shall
give the parties written notice of the decision, with the reasons therefor
set out, and shall have thirty (30) days thereafter to reconsider and
modify such decision if any party so requests within ten (10) days after
the decision. Thereafter, the decision of the arbitrator(s) shall be
final, binding, and nonappealable with respect to all persons, including
(without limitation) persons who have failed or refused to participate in
the arbitration process.
-69-
(e) AUTHORITY. The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or
preliminary relief, and to allocate responsibility for the costs of the
arbitration and to award recovery of attorneys fees and expenses in such
manner as is determined to be appropriate by the arbitrator(s).
Notwithstanding the foregoing, the arbitrator(s) shall not be empowered to
award any past consequential damages, loss profits (except as provided in
the penultimate sentence of SECTION 9.3(a)(i)) or punitive damages in
connection with any dispute between Buyer and Parents, on the one hand, and
the Sellers, on the other hand, or either one of them, arising out of or
relating in any way to this Agreement or the transactions arising
hereunder, and each party hereby irrevocably waives any right to recover
such damages.
(f) ENTRY OF JUDGMENT. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject
matter jurisdiction. The Sellers, Buyer and Parents hereby submit to the
in personam jurisdiction of the federal and state courts in Wisconsin, for
the purpose of confirming any such award and entering judgment thereon.
(g) CONFIDENTIALITY. All proceedings under this SECTION 9.5, and all
evidence given or discovered pursuant hereto, shall be maintained in
confidence by all parties and by the arbitrator or arbitrators.
(h) CONTINUED PERFORMANCE. The fact that the dispute resolution
procedures specified in this SECTION 9.5 shall have been or may be invoked
shall not excuse any party from performing its obligations under this
Agreement, and during the pendency of any such procedure all parties shall
continue to perform their respective obligations in good faith.
(i) TOLLING. All applicable statutes of limitation shall be tolled
while the procedures specified in this SECTION 9.5 are pending. The
parties will take such action, if any, required to effectuate such tolling.
9.6. ENTIRE AGREEMENT. This Agreement (including the Exhibits and
schedules hereto), the Access Agreement and the letter agreement entered into
between Tower and the Company dated October 18, 1996 constitute the entire
agreement between the parties hereto and supersede all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.
9.7. 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.
-70-
9.8. BULK SALES LAW. Buyer and the Sellers each agree to waive
compliance by the other with the provisions of the bulk sales law of any
jurisdiction, and the Sellers agree to indemnify Buyer for any Losses arising
from such non-compliance other than in respect of Losses constituting Assumed
Liabilities.
9.9. ASSIGNABILITY. This Agreement shall not be assignable by the
Sellers without the prior written consent of Buyer or by Buyer or Parents
without the prior written consent of the Sellers, provided that (a) Buyer may
assign its rights and delegate its duties hereunder for collateral security
purposes to its lenders providing the Financing and (b) Buyer may assign its
rights and delegate its duties hereunder to an affiliate or affiliates, so long
as Parents, Buyer and such affiliate agree to be jointly and severally liable
for all obligations hereunder, but any such assignments shall be subject to all
of the terms and conditions applicable to such rights and obligations under this
Agreement.
9.10. 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.
9.11. SCHEDULES. Any fact or item disclosed on any Schedule to
this Agreement shall be deemed disclosed on all other Schedules to this
Agreement to which such fact or item may reasonably apply so long as such
disclosure is in sufficient detail to enable a party hereto to identify the
facts or items to which it applies. Any fact or item disclosed on any Schedule
hereto shall not by reason only of such inclusion be deemed to be material and
shall not be employed as a point of reference in determining any standard of
materiality under this Agreement. Prior to the Closing, the Sellers shall have
the right to supplement, modify or update the Schedules hereto to reflect
changes in the ordinary course of the Business prior to the Closing; PROVIDED,
HOWEVER, that any such supplements, modifications or updates shall be subject to
Buyer's rights under SECTION 5.1(A).
9.12. KNOWLEDGE. The term "KNOWLEDGE" when used in the phrases
"to the knowledge of the Sellers" or "Sellers have no knowledge" or words of
similar import shall mean, and shall be limited to, the actual knowledge of the
individuals listed with respect to the Sellers on SCHEDULE 9.12 and shall only
include their actual knowledge obtained in their respective capacities with the
Sellers, without any duty to investigate; provided, however, that the knowledge
of the Sellers as of a particular time after the Closing for purposes of SECTION
9.3(f)(vii) shall not be deemed to include the knowledge of any individual who
is not employed by the Sellers or any of their affiliates as of such time.
-71-
9.13. 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.
9.14. SEVERABILITY. If any provision of this Agreement shall be
declared by any court of competent jurisdiction to be illegal, void or
unenforceable, then all other provisions of this Agreement shall not be affected
and shall remain in full force and effect.
9.15. NO STRICT CONSTRUCTION. Notwithstanding the fact that this
Agreement has been drafted or prepared by one of the parties, each of the
parties confirms that both it and its counsel have reviewed, negotiated and
adopted this Agreement as the joint agreement and understanding of the parties,
and the language used in this Agreement shall be deemed to be the language
chosen by the parties hereto to express their mutual intent, and no rule of
strict construction shall be applied against any person.
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 Delaware without regard
to conflicts of laws principles thereof.
-72-
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written.
X. X. XXXXX CORPORATION
(the "Company")
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Title:
X. X. XXXXX ENTERPRISES LTD.
("Enterprises")
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Title:
TOWER AUTOMOTIVE ACQUISITION, INC.
("Buyer")
By: /s/ Xxxxx X. Xxxx
-------------------------------
Title:
TOWER AUTOMOTIVE, INC.
("Tower")
By: /s/ Xxxxx X. Xxxx
-------------------------------
Title:
X. X. TOWER CORPORATION
("RJT")
By: /s/ Xxxxx X. Xxxx
-------------------------------
Title:
-73-
SCHEDULES TO ASSET PURCHASE AGREEMENT
-74-
