EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
XXXXXX GROUP INC.,
a Delaware corporation, et al (the "Buyer")
AND
XXXXXX INDUSTRIES, INC.,
a Delaware corporation (the "Seller")
AND
PARAGON CORPORATE
HOLDINGS, INC.,
a Delaware corporation (the "Parent")
Dated as of Xxxxx 00, 0000
XXXXX PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered
into as of the 27th day of April, 2000 (the "Effective Date"), by
and among XXXXXX GROUP INC., a Delaware corporation ("BGI"), on
behalf of itself, Xxxxxx Group Canada Inc., a Canadian
corporation ("Xxxxxx Canada"), and Xxxxxx Distribution Europe
Limited, a United Kingdom corporation ("Xxxxxx Europe") (BGI,
Xxxxxx Canada and Xxxxxx Europe are collectively referred to
herein as the "Buyer"), XXXXXX INDUSTRIES, INC., a Delaware
corporation (the "Seller"), and PARAGON CORPORATE HOLDINGS, INC.,
a Delaware corporation (the "Parent"). The Buyer, the Seller and
the Parent are sometimes referred to herein individually as a
"Party" and collectively as the "Parties".
RECITALS:
WHEREAS, the Seller and its wholly-owned subsidiaries,
Xxxxxx Industries (UK) Limited, a U.K. limited company (the "U.K.
Sub"), and Xxxxxx Industries of Canada Limited, a Canadian
limited company (the "Canadian Sub") (collectively the U.K. Sub
and the Canadian Sub are referred to herein as the "Xxxxxx
Subsidiaries" and, together with the Seller, are referred to
herein as the "Xxxxxx Parties"), are engaged in the logistical
management business, distributing automotive security products,
fasteners, and MRO industrial supplies (the "Business").
WHEREAS, to induce the Buyer to enter into this Agreement,
the Parent, being the sole stockholder of the Seller, wishes to
join in this Agreement and to indemnify the Buyer in accordance
with the provisions of Article 9 hereof.
WHEREAS, the Buyer wishes to purchase and acquire from the
Seller, and the Seller wishes to sell and transfer to the Buyer,
certain assets relating to the Business, upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein
contained, the Parties agree as follows.
ARTICLE 1
DEFINITIONS
1.1 "Acquired Assets" means all right, title and interest in and
to substantially all of the assets of the Seller, tangible or
intangible, relating primarily to the Business. The Acquired
Assets are listed on Section 1.1 of the Disclosure Schedule
attached hereto and, except as set forth on Section 1.31 of the
Disclosure Schedule, shall include all of the Seller's (a) real
property, leaseholds and subleaseholds therein, improvements,
fixtures and fittings thereon, and easements, rights-of-way and
other appurtenances thereto (such as appurtenant rights in and to
public streets), (b) tangible personal property (e.g., telephone,
office and other equipment, inventory, parts, work-in-process,
office and other supplies, furniture, computers and motor
vehicles), (c) Intellectual Property, goodwill associated
therewith, licenses and sublicenses granted and obtained with
respect thereto and rights thereunder, remedies against
infringements thereof, and rights to protection of interests
therein under the laws of all jurisdictions, (d) leases,
subleases and rights thereunder for personal property, (e)
agreements (including all Area
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Manager, Sales Executive, Employee, District Marketing Manager
and District Sales Manager, and Participation and Non-Competition
Agreements and all other agreements entered into by any of the
Xxxxxx Parties with any of their respective employees or agents
which contain covenants not to compete or similar competitive
restrictions), contracts, indentures, mortgages, instruments,
security interests, guaranties (other than the Seller's guaranty
of the Parent's Series A and Series B 9 5/8% Senior Notes and
other Obligations (as such term is defined in that certain
Indenture dated April 1, 1998 among the Parent, the subsidiary
guarantors identified therein and Norwest Bank Minnesota,
National Association, as trustee)), other similar arrangements
and rights thereunder (including billed and unbilled accounts
receivable, as well as other rights to receive money that are
reflected on the Closing Balance Sheet), (f) all of the issued
and outstanding capital stock of the Canadian Sub, to be
purchased by Xxxxxx Canada, and all of the issued and outstanding
capital shares of the U.K. Sub, to be purchased by Xxxxxx Europe,
(g) to the extent reflected on the Closing Balance Sheet and to
the extent that such liabilities are assumed by Buyer, any
claims, deposits, prepayments received by any Xxxxxx Party prior
to the Closing for services to be rendered by the Buyer, the U.K.
Sub or the Canadian Sub after the Closing, refunds, causes of
action, rights of recovery, rights of set off and rights of
recoupment (including any such item relating to the payment of
Taxes), (h) Governmental Authorizations, (i) originals or copies,
as appropriate, of books (including minute books and stock
ledgers of the Xxxxxx Subsidiaries), records (other than those
set forth at Section 1.31 of the Disclosure Schedule), files,
ledgers, invoices, purchase orders, sales and service
acknowledgements, documents, correspondence, business plans,
projections and forecasts, other plans, drawings and
specifications, creative materials, advertising and promotional
materials, studies, reports, manuals, training materials and
other printed or written materials, (j) to the extent provided in
Section 6.7, assets held in certain trusts and other vehicles
associated with certain Employee Benefit Plans assumed by the
Buyer and certain assets of the Seller associated with such
Employee Benefit Plans, (k) internet addresses, (l) all goodwill
of the Business, and (m) all other property and rights of every
kind and nature owned or held by the Parent or any of the Xxxxxx
Parties that relate primarily to the operation, maintenance,
promotion or advertising of the Business.
1.2 "Affiliate" means with respect to any Person, any other
Person controlling, controlled by or under common control with
such Person. For purposes of this definition, "control"
(including, with correlative meaning, the term "controlled by"),
as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities or by contract or
otherwise.
1.3 "Assumed Contracts" shall mean those contracts and
agreements listed in Section 2.2(a) of the Disclosure Schedule
attached hereto, in each case as in effect at the Closing.
1.4 "Assumed Liabilities" means only those liabilities (other
than Excluded Liabilities): (a) expressly assumed under the
Operative Documents, (b) set forth on the December 31 Balance
Sheet (except for intercompany obligation(s) of any of the Xxxxxx
Parties to the Parent, which obligation(s) shall not be Assumed
Liabilities); (c) arising in the Ordinary Course of Business out
of the conduct of the Business during the period from January 1,
2000 through the Closing Date, (d) resulting from the termination
of any employee of a Xxxxxx Party at or after the Closing Date,
(e) arising under any employee benefit plan of a Xxxxxx Party,
(f) set
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forth on the attached Section 2.2(b) of the Disclosure Schedule,
(g) set forth in Section 6.7 (relating to Employee Benefit
Plans), (h) related to the U.K. Sub and the Canadian Sub
(provided, however, nothing in this clause (h) shall modify or
diminish Buyer's right to indemnification for any breach of a
representation, warranty or covenant relating thereto), (i)
relating to real property taxes and personal property taxes for
all periods before and after the Closing Date, (j) relating to
workmen's compensation claims arising before and after the
Closing Date, and (k) relating to casualty insurance (or claims
thereunder) with respect to Bath Iron Works.
1.5 "Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act or
transaction that forms or could form the basis for any specified
consequence.
1.6 "Business" has the meaning set forth in the Recitals above.
1.7 "Buyer" has the meaning set forth in the preface above.
1.8 "Canadian Sub" has the meaning set forth in the Recitals
above.
1.9 "Cash" means cash (including all disbursements in the form
of a check that were issued prior to the applicable balance sheet
date but that were not deducted by the bank from the bank balance
prior to such balance sheet date), cash equivalents, marketable
securities and short-term investments.
1.10 "Closing" has the meaning set forth in Section 2.4 below.
1.11 "Closing Date" has the meaning set forth in Section 2.4
below.
1.12 "Closing Balance Sheet" has the meaning set forth at Section
2.3(a)(iii).
1.13 "Closing Payment" has the meaning set forth at Section 2.3.
1.14 "Code" means the Internal Revenue Code of 1986, as amended,
or any successor law, and regulations issued by the IRS pursuant
to the Code or any successor law or, with respect to the Xxxxxx
Subsidiaries, the comparable statutes, laws and regulations of
the U.K. and Canadian Tax Authorities, respectively.
1.15 "Consent" means any approval, consent, ratification, waiver
or other authorization (including any Governmental
Authorization).
1.16 "Xxxxxx Parties" has the meaning set forth in the Recitals
above.
1.17 "Xxxxxx Subsidiaries" has the meaning set forth in the
Recitals above.
1.18 "December 31 Balance Sheet" has the meaning set forth in
Section 3.4 below.
1.19 "Disclosure Schedule" has the meaning set forth in Section
2.2(a) below.
1.20 "Draft Closing Balance Sheet" has the meaning set forth at
Section 2.3(a)(ii).
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1.21 "DOR" has the meaning set forth in Section 2.5(k) below.
1.22 "Effective Date" has the meaning set forth in the preface
above.
1.23 "Employee Benefit Plan" means: (a) with respect to the
Seller, (i) any "employee benefit plan" as defined in Section
3(3) of ERISA (including any "multiemployer plan" as defined in
Section 3(37) of ERISA), and (ii) all other contracts, programs
or arrangements to provide benefits, including: supplemental
retirement, deferred compensation, excess benefit, profit
sharing, bonus, incentive, stock purchase, stock ownership, stock
option, stock appreciation right, employment, severance, salary
continuation, termination, change of control, vacation,
educational assistance, scholarships, moving expenses, holiday
and any other fringe benefit plan, contract, program or
arrangement, whether written or unwritten, qualified or
nonqualified, funded or unfunded, and including any that have
been frozen or terminated) maintained, contributed to or required
to be contributed to, by any of the Xxxxxx Parties or any of
their ERISA Affiliates for the benefit of any employee, former
employee, director, officer or independent contractor of any of
the Xxxxxx Parties or under which any of the Xxxxxx Parties or
their ERISA Affiliates has any liability with respect to any
employee, former employee, director, officer or independent
contractor of any of the Xxxxxx Parties; and (b) with respect to
the U.K. Sub and/or the Canadian Sub, any private scheme,
arrangement or agreement for the provision of any pension,
retirement, death, incapacity, sickness, disability, accident or
other like benefits (including the payment of medical expenses)
for any Xxxxxx Parties employee or for the widow, child or
dependent of any Xxxxxx Parties employee which the U.K. Sub
and/or the Canadian Sub is either a party to, participates in,
contributes to or which relates to the employees of the U.K. Sub,
the Canadian Sub or the Seller.
1.24 "Employee Pension Benefit Plan" has the meaning set forth in
ERISA Section 3(2).
1.25 "Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Section 3(1).
1.26 "Encumbrance" means any lien, pledge, mortgage, security
interest, claim, charge or other encumbrance, right or claim of
any kind whatsoever, other than liens for Taxes not yet due and
payable.
1.27 "Environment" means soil, land surface or subsurface strata,
surface waters (including navigable waters, ocean waters,
streams, ponds, drainage basins, and wetlands), groundwaters,
drinking water supply, stream sediments, ambient air (including
indoor air), plant and animal life, and any other environmental
medium or natural resource.
1.28 "Environmental, Health and Safety Laws" means any Legal
Requirement that refers or relates to the Environment, public
health and safety, or employee health and safety that was in
effect on or prior to the Closing Date.
1.29 "ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, any successor statute thereto
and all final or temporary regulations promulgated thereunder and
generally applicable published rulings entitled to precedential
effect.
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1.30 "ERISA Affiliate" means (a) any corporation included with
the Seller in a controlled group of corporations within the
meaning of Section 414(b) of the Code, (b) any trade or business
(whether or not incorporated) which is under common control with
the Seller within the meaning of Section 414(c) of the Code, (c)
any member of an affiliated service group of which the Seller is
a member within the meaning of Section 414(m) of the Code, or (d)
any other Person treated as an affiliate of the Seller under
Section 414(o) of the Code.
1.31 "Excluded Assets" means the assets of the Xxxxxx Parties set
forth on the attached Section 1.31 of the Disclosure Schedule,
including funded debt, Cash, and any deposits, refunds or rights
to receive money that are not reflected on the Closing Balance
Sheet; provided, that Excluded Assets shall not include advance
payments received by a Xxxxxx Party prior to the Closing for
services to be rendered by the Buyer, the U.K. Sub or the
Canadian Sub after the Closing; notwithstanding anything else
provided herein, Seller shall be entitled to retain all Cash held
by the U.K Subsidiary or the Canadian Subsidiary and it shall not
constitute a violation of the covenants set forth in Article V
hereto to transfer cash to Buyer from either such subsidiary (i)
in satisfaction of any intercompany account payable of either
such subsidiary, (ii) as a distribution, or (iii) otherwise.
1.32 "Excluded Liabilities" means (i) all liabilities of the
Seller which are not Assumed Liabilities, and (ii) all
liabilities of the Xxxxxx Parties for periods ending at or prior
to the Closing Date (and any partial periods then ended) relating
to (a) Taxes and (b) escheat or unclaimed funds.
1.33 "Facilities" means any real property, whether held through
leaseholds or owned, currently occupied by any of the Xxxxxx
Parties and any buildings, plants, or structures thereon.
1.34 "Fiduciary" has the meaning set forth in ERISA Section
3(21).
1.35 "Final Purchase Price" has the meaning set forth at Section
2.3 below.
1.36 "Financial Statements" has the meaning set forth in Section
3.4 below.
1.37 "GAAP" means United States generally accepted accounting
principles as in effect from time to time; provided, with respect
to those items specified in Section 3.4 of the Disclosure
Schedule, for any and all purposes under this Agreement
(including preparation of the Closing Balance Sheet and the
determination of the accuracy of any representation or warranty
and the right to any indemnity), the parties have agreed that the
treatment of such items on the December 31 Balance Sheet is
consistent with GAAP and that the parties shall not dispute
whether an item has been properly accounted for in accordance
with GAAP.
1.38 "Governmental Authorization" means any approval, consent,
license, permit, franchise, order, registration, qualification,
accreditation, waiver, variance, or other authorization issued,
granted, given, or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Legal
Requirement.
1.39 "Governmental Body" means any
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(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, provincial, local, municipal, foreign, or
other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official,
or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police,
regulatory, or taxing authority or power of any nature.
1.40 "Hazardous Materials" means any waste or other substance
that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, radioactive, or toxic or a
pollutant or a contaminant under or pursuant to any
Environmental, Health and Safety Law, including any admixture or
solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and
asbestos or asbestos-containing materials.
1.41 "HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, or any successor law, and regulations
and rules issued pursuant to that Act or any successor law.
1.42 "Intellectual Property" means (a) all inventions (whether
patented or not patented, patentable or unpatentable and whether
or not reduced to practice), all improvements thereto, and all
patents, patent applications and patent disclosures, together
with all reissuances, continuations, continuations-in-part,
revisions, extensions and reexaminations thereof, (b) all
trademarks, service marks, trade dress, logos, trade names and
corporate names including the Trade Names, together with all
translations, adaptations, derivations and combinations thereof
and including all goodwill associated therewith, and all
applications, registrations and renewals in connection therewith,
(c) all copyrightable works, all copyrights, and all
applications, registrations and renewals in connection therewith,
(d) all mask works and all applications, registrations and
renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and
production processes and techniques, technical data, designs,
drawings, specifications, customer and supplier lists, pricing
and cost information, and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all
copies and tangible embodiments thereof (in whatever form or
medium).
1.43 "Inventories" means all stock and inventories of finished
goods, raw materials, works in process, parts and supplies of the
Xxxxxx Parties.
1.44 "IRS" means the United States Internal Revenue Service or
any successor agency, and, to the extent relevant, the United
States Department of the Treasury.
1.45 "ITA" means the Income Tax Act (Canada), as amended.
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1.46 "Knowledge" means actual knowledge of Xxxxx Xxxxxxx, Xxxxxx
Xxxx, Xxx Xxxxx, Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxxx Xxxxxx,
Xxxx Xxxx and Xxx Xxxxxxx, as appropriate, of a particular fact
or other matter following good faith investigation thereof.
1.47 "Legal Requirement" means any federal, state, provincial,
local, municipal, foreign, international, multinational, or other
administrative order, constitution, law, ordinance, principle of
common law, rule, regulation, code, license, permit, statute or
treaty, including, without limitation, those applicable to any of
the Xxxxxx Parties, the Acquired Assets, the Business or any of
the Facilities.
1.48 "Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
Taxes.
1.49 "Multiemployer Plan" has the meaning set forth in ERISA
Section 3(37) and Code Section 414(f).
1.50 "Multiple Employer Plan" has the meaning set forth in ERISA
Section 210.
1.51 "Net Worth" means the amount determined by subtracting (i)
the amount of total liabilities of the Seller as reported on the
Seller's applicable balance sheet from (ii) the amount of total
assets of the Seller reported on the Seller's applicable balance
sheet, in each case exclusive of the Seller's goodwill, cash and
funded debt.
1.52 "Net Worth Adjustment Schedule" has the meaning set forth at
Section 2.3(a)(ii) below.
1.53 "Operative Documents" means this Agreement, its Exhibits and
Schedules, and all other instruments, certificates and agreements
required hereby and thereby.
1.54 "Order" means any award, decision, injunction, judgment,
order, decree, ruling, charge, subpoena, or verdict entered,
issued, made, or rendered by any court, administrative agency, or
other Governmental Body or by any arbitrator.
1.55 "Ordinary Course of Business" -- As used in this Agreement,
an action taken by a Person will be deemed to have been taken in
the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such
Person, is not of unusual size or duration and is taken in the
ordinary course of the normal day-to-day operations of such
Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons
exercising similar authority) and is not required to be
specifically authorized by the stockholders of such Person; and
(c) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons
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exercising similar authority), in the ordinary course of the
normal day-to-day operations of other Persons that are in the
same line of business as such Person.
Notwithstanding the foregoing, in no event shall
the "Ordinary Course of Business" include any action that would
cause any of the Xxxxxx Parties or the Parent to violate or
breach any contract, agreement, representation, or warranty made
by it under this Agreement.
1.56 "Parent" has the meaning set forth in the preface above.
1.57 "Party" has the meaning set forth in the preface above.
1.58 "PBGC" means the Pension Benefit Guaranty Corporation.
1.59 "Person" means an individual, a partnership, a corporation,
an association, a joint stock company, a limited liability
company or partnership, a trust, a joint venture, an
unincorporated organization or a Governmental Body (or any
department, agency, or political subdivision thereof).
1.60 "Preliminary Purchase Price" has the meaning set forth in
Section 2.3 below.
1.61 "Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
1.62 "Prohibited Transaction" has the meaning set forth in ERISA
Section 406 and Code Section 4975.
1.63 "Relevant Employees" means any past or present employee of
the U.K. Sub.
1.64 "Reportable Event" has the meaning set forth in ERISA
Section 4043.
1.65 "Schemes" means the retirement benefits schemes known as The
Xxxxxx Executive Pension Plan and The Xxxxxx Industries (U.K.)
Limited Pension Plan each established by trust deeds dated July
1, 1988 (or the trustees from time to time of those schemes as
the context requires).
1.66 "Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the
common stock or has the power to vote or direct the voting of
sufficient securities to elect a majority of the directors.
1.67 "Seller" has the meaning set forth in the preface above.
1.68 "Tax" means all forms of taxation, duty, levy, impost or
charge imposed by a Tax Authority, including federal, state,
provincial, local or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital, capital stock,
corporate, franchise, profits, withholding, social security (or
similar), unemployment, disability,
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sales, use, transfer, registration, alternative or add-on
minimum, estimated or other tax of any kind whatsoever, including
any interest, penalty or addition thereto, whether disputed or
not, and any liability for the payment of any amount of the type
described herein as a result of being a "transferee" (within the
meaning of Section 6901 of the Code, Section 160 of the ITA or
any other applicable law) of another entity or a member of an
affiliated or combined group and, with respect to the U.K. Sub
and the Canadian Sub, wage, employer health, workers
compensation, compensation, retirement contribution, turnover,
utility, or value added tax; provided, however, "Tax" shall not
include any real property or personal property taxes.
1.69 "Taxes Xxx 0000" means the Income and Corporation Taxes Xxx
0000.
1.70 "Tax Authority" means any Governmental Body, domestic or
foreign, having jurisdiction over the assessment, determination,
collection, or other imposition of any Tax.
1.71 "Tax Reassessment Period" in respect of any Taxes means the
period ending on the first date on which no assessment,
reassessment, notice of deficiency or other document assessing
liability for such Taxes may be issued pursuant to the relevant
laws that impose such Taxes.
1.72 "Tax Return" means any return, declaration, report, claim
for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any
amendment thereof.
1.73 "Threatened" -- A claim, Proceeding, dispute, action, or
other matter will be deemed to have been "Threatened" if any
demand or statement has been made in writing or any notice has
been given in writing, or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to
conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
1.74 "Trade Names" has the meaning set forth in Section 3.10(c)
below.
1.75 "Y2K-Compliant" shall mean that the Xxxxxx Parties' software
systems are able to provide specific dates and calculate spans of
dates, and to record, store, process and provide true and
accurate dates and calculations for dates and spans of dates
within the closed interval January 1, 1942 through December 31,
1999 (the "Interval Dates") prior to, including and following
January 1, 2000, including by: (i) prior and up to December 31,
1999 correctly processing day and date calculations within the
Interval Dates; (ii) on and after January 1, 2000 correctly
processing day and date calculations within the Interval Dates;
(iii) recognizing September 9, 1999 and January 1, 2001 as valid
dates; (iv) recognizing the year 2000 as a leap year having 366
days, and correctly processing February 29, 2000 as a valid leap
year date; and (v) incorporating interface programs sufficient to
translate accurately to four-digit format (without any burden of
interpretation) any two-digit year representations included in
software, components or systems, including but not limited to
external databases, data warehouses, software systems and user
interfaces, not owned or operated in connection with the
Business, which electronically or manually send data to or
receive data from software, components or systems used in the
Business.
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ARTICLE 2
BASIC TRANSACTION
2.1 Purchase and Sale of Assets. On and subject to the terms
and conditions of this Agreement, at the Closing the Buyer agrees
to purchase and acquire from the Seller and the Seller agrees to
sell, transfer, convey and deliver to the Buyer, the Acquired
Assets, free and clear of any Encumbrance other than the Assumed
Liabilities, for the consideration specified in Section 2.3
below.
2.2 Assumption of Contracts and Liabilities.
(a) Assumed Contracts. At Closing, the Assumed
Contracts, as set forth in Section 2.2(a) of the disclosure schedule
accompanying this Agreement and initialed by the Buyer and the
Seller (the "Disclosure Schedule"), will be assigned by the
Seller to the Buyer (and/or the Buyer's designee, at the Buyer's
discretion); as a result of such assignment, the Buyer and/or its
designee shall only assume and be responsible for obligations
that do not arise out of (i) any breach or default by any of the
Xxxxxx Parties or their Affiliates, or (ii) facts that, with
notice or a lapse of time or both, would constitute a default on
the part of any of the Xxxxxx Parties or their Affiliates in the
performance of any of the Assumed Contracts. To the extent that
any of the Assumed Contracts are not assignable without the
consent of a third party, this Agreement shall not, in and of
itself, constitute an assignment or an attempted assignment of
such Assumed Contract if such assignment or attempted assignment
would constitute a breach thereof. The Seller shall obtain prior
to the Closing Date all required consents to assignment from such
third parties in accordance with Section 7.1(c) of this
Agreement.
(b) Assumed Liabilities. Except for (i) its obligations
under the Assumed Contracts from and after the Closing and (ii) the
Assumed Liabilities, the Buyer will not assume or have any
responsibility with respect to any obligation or Liability of any
kind, whether known or unknown, contingent or absolute and
whether now existing or arising hereafter, of the Seller or with
respect to the Acquired Assets, the Facilities or the Business.
2.3 Payment of Purchase Price. In full consideration for the
performance of this Agreement by the Seller and the transfer and
delivery to the Buyer of the Acquired Assets, the Buyer agrees,
subject to the terms, conditions and limitations set forth in
this Agreement, (i) to pay to the Seller at the Closing the
aggregate consideration of SIXTY TWO MILLION ONE HUNDRED THOUSAND
DOLLARS, ($62,100,000) (the "Preliminary Cash Payment"), and (ii)
to assume the Assumed Liabilities (such assumption, together with
the Preliminary Cash Payment, constituting the "Preliminary
Purchase Price"), subject to the adjustments expressly set forth
in this Agreement (as so adjusted, the "Final Purchase Price").
The Preliminary Cash Payment shall be made at the Closing by wire
transfer of immediately available funds to one or more accounts
to be designated by the Seller not less than two (2) business
days prior to the Closing (the "Closing Payment").
(a) Post-Closing Adjustment of the Preliminary Purchase
Price. The Preliminary Purchase Price shall be subject to upward or
downward adjustment on a dollar-for-dollar basis after the
Closing Date as follows:
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(i) On May 1, 2000, Buyer shall take such cycle
counts of the Xxxxxx Parties' inventory that it believes are reasonably
necessary to assure itself of the accuracy of Seller's perpetual
inventory system. If Buyer is not satisfied with the results of
such cycle count, the Buyer will take a physical count of the
Inventories as soon as reasonably possible prior to the Closing,
which count the Seller and its representatives may observe. Such
count shall apply methods consistent with the Seller's past
practice, as reflected in the Financial Statements.
(ii) Within sixty (60) days following the Closing,
the Buyer shall prepare and deliver to the Seller an unaudited balance
sheet of the Business (including the Xxxxxx Subsidiaries) as at
April 29, 2000 (the "Draft Closing Balance Sheet"). The Buyer
shall prepare the Draft Closing Balance Sheet in accordance with
GAAP and the same accounting principles, assumptions and bases
utilized in the preparation of the December 31 Balance Sheet
previously delivered to the Buyer by the Seller, and
incorporating the results of the physical inventory, if any, with
respect to variances from the perpetual inventory pursuant to
Section 2.3(a)(i) above. The Seller shall cooperate fully with
the Buyer in the preparation of the Draft Closing Balance Sheet,
including, the furnishing of all information regarding the
accounting principles, assumptions and bases used in preparing
the December 31 Balance Sheet. The Buyer shall also prepare a
Post-Closing Adjustment Schedule of the Preliminary Purchase
Price in the same form as Exhibit A attached hereto (the "Net
Worth Adjustment Schedule") reflecting adjustments to the Closing
Balance Sheet to take into account assets and or liabilities of
the Business not transferred to or assumed by Buyer on the
Closing Date.
(iii) The Seller shall deliver to the Buyer
within twenty-one (21) days following its receipt of the Draft Closing
Balance Sheet and the Net Worth Adjustment Schedule, a detailed statement
describing its objections (based upon the comparison of the
December 31 Balance Sheet and the Draft Closing Balance Sheet,
and setting forth in reasonable detail each amount objected to,
including any good faith objection to the physical count of the
Inventories, the amount proposed as an adjustment thereto and the
basis for such objection), if any, thereto. Failure by the
Seller to so object to the Draft Closing Balance Sheet and the
Net Worth Adjustment Schedule shall constitute acceptance
thereof, whereupon the Draft Closing Balance Sheet shall be
deemed to be the "Closing Balance Sheet." The Buyer and the
Seller shall use their reasonable and good faith efforts to
resolve any such objections, but if they do not reach a final
resolution within thirty (30) days following the Seller's
delivery of its statement of objections, the Buyer and the Seller
shall settle the disagreement by retaining a nationally-
recognized accounting firm other than the Buyer's or the Seller's
auditors to resolve any remaining objections. The determination
of such accounting firm will be set forth in writing and shall be
issued within forty-five (45) days of the date such accounting
firm is retained. The Draft Closing Balance Sheet then shall be
adjusted in accordance with such accounting firm's decision. The
Draft Closing Balance Sheet, as so adjusted, shall be the Closing
Balance Sheet. Any decision by such accounting firm shall be
final and binding upon the Parties, absent fraud or manifest
error, and judgment may be entered thereon, upon the application
of either Party, by any court having competent jurisdiction. The
Buyer and the Seller each shall bear the cost of preparing and
presenting its case, and the fees and expenses of such accounting
firm will be shared equally by the Buyer and the Seller.
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(iv) During the period of any dispute referred to
above, (A) the Buyer shall provide the Seller, the Seller's accountants,
and the nationally recognized accounting firm retained pursuant to
subsection (iii), above, full access during the Buyer's normal
business hours to the books, records, facilities and employees of
the Buyer, the Buyer's accountants and all work papers in
connection with the Draft Closing Balance Sheet and the Net Worth
Adjustment Schedule; provided, however, that any such access
shall be allowed only in such manner as not to interfere
unreasonably with the operation of the Buyer's business, and (B)
the Seller shall, and shall cause the Seller's independent
accountants to, provide the Buyer, the Buyer's accountants and
the nationally recognized accounting firm retained pursuant to
subsection (iii), above, full access to the work papers in
connection with the December 31 Balance Sheet, the Seller's
objections to the Draft Closing Balance Sheet, and the Net Worth
Adjustment Schedule.
(v) If the Net Worth of the Seller as shown
on the Closing Balance Sheet is greater or less than Nineteen Million
Seventy Nine Thousand Dollars ($19,079,000), the Preliminary Purchase
Price shall be subject to adjustment on a dollar-for-dollar
basis. Within five (5) business days after the date on which the
Closing Balance Sheet is finally determined pursuant to this
Section 2.3(a), the Buyer (in the event the Net Worth is greater)
or the Seller (in the event the Net Worth is less) shall pay to
an account specified by the other Party, by wire transfer of
immediately available funds, the difference between the Net Worth
reflected on the Closing Balance Sheet and Nineteen Million
Seventy Nine Thousand Dollars ($19,079,000).
(b) [Intentionally Left Blank]
2.4 The Closing. Subject to the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with
respect to actions the respective Parties will take at the
Closing), the closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of
Squire, Xxxxxxx and Xxxxxxx, L.L.P., 0000 Xxx Xxxxx, 000 Xxxxxx
Xxxxxx, Xxxxxxxxx, XX, 00000, or such other place as mutually
agreed to by the Parties, commencing at 10:00 a.m. local time on
the later of: (a) May 11, 2000 or (b) such other date and time as
the Parties may mutually determine (the "Closing Date").
2.5 Closing Deliveries by the Seller. At the Closing, the
Seller shall execute and deliver or cause to be delivered to the
Buyer:
(a) The right to immediate possession of the Acquired Assets.
(b) A Xxxx of Sale in the form attached as Exhibit B,
and such other instruments of transfer and conveyance as may reasonably be
requested by the Buyer, in each case executed by a duly authorized officer
of the Seller.
(c) Certificates representing all of the issued and outstanding
capital stock of the Xxxxxx Subsidiaries, together with duly endorsed stock
transfer powers therefor.
(d) Those consents specified in Section 2.5(d) to the
Disclosure Schedule;
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(e) The Assignment and Assumption Agreements, in the forms
attached as Exhibit C-1 (Contracts) and C-2 (Leases), executed by
a duly authorized officer of the Seller with respect to the
Assumed Contracts.
(f) Copies of the discharges or pay-off letters, as
applicable, of all Encumbrances, UCC financing statements or other loan
documents listed on Section 2.5(f) to the Disclosure Schedule.
(g) An Estoppel and Consent Certificate for each lease or
sublease listed in Section 3.9(a) of the Disclosure Schedule executed by
the landlord in any such lease or sublease, in form reasonably satisfactory
to the Buyer.
(h) An opinion of counsel to the Seller, addressed to the
Buyer and dated as of the Closing Date, as to the due organization,
valid existence and capitalization of the Xxxxxx Subsidiaries,
their due qualification/licensure to conduct business, the
Seller's ownership of and due authorization to sell and transfer
to the Buyer all of the equity securities of the Xxxxxx
Subsidiaries, the due approval by the Canadian Sub of the
transfer of all of the issued and outstanding capital stock of
the Canadian Sub from the Seller to the Buyer, the sufficiency of
the foreign Governmental Authorizations obtained to effect such
transfer and sale and to permit the Buyer to continue to conduct
the Business post-Closing where and in the manner conducted by
the Xxxxxx Subsidiaries immediately prior to the Closing, the
validity, binding nature and enforceability of the Operative
Documents with respect to such transfer and sale, and the matters
specified in Section 3.3 with respect to the Xxxxxx Subsidiaries.
In rendering such opinion, such counsel may rely upon
certificates of public officers, as to matters governed by the
laws of jurisdictions other than Ohio, New York or the federal
laws of the United States of America, upon opinions of counsel
reasonably satisfactory to the Buyer, and, as to matters of fact,
upon certificates of officers of the Seller, copies of which
opinions and certificates shall be contemporaneously delivered to
the Buyer.
(i) Certificates issued as of a recent date (i) by
the Secretary of State of the State of Delaware certifying as to the legal
existence and active status of the Seller and of the Parent, and
(ii) by the U.K. Registrar of Companies certifying as to the
legal existence and good standing of the U.K. Sub.
(j) A Certificate of Compliance issued as of a recent
date by Industry Canada, Corporation Directorate certifying as to the
incorporation and continued existence and good standing of the
Canadian Sub.
(k) A letter issued by the Division of Revenue of the
State of Delaware ("DOR"), dated within ten (10) days of the Closing Date,
indicating that the Seller is current with respect to the payment
of Delaware state income Taxes.
(l) A completed application, including Form T2062, to
obtain a clearance certificate pursuant to Section 116 of the ITA in
respect of the disposition of the shares of the Canadian Sub by
the Seller. If the Seller has not previously applied for such a
clearance certificate, the Seller undertakes to forthwith submit
the application to the Canada Customs and Revenue Agency upon
completion of the Closing and to use best efforts to obtain the
clearance
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certificate within 30 days after the end of the month in which
the Buyer acquires the shares of the Canadian Sub. The Seller
agrees to provide a copy of the clearance certificate to the
Buyer upon receipt of same from the Canada Customs and Revenue
Agency.
(m) Certificates of the Secretaries of the Seller and the
Parent, in form reasonably satisfactory to the Buyer, dated the
Closing Date and certifying, respectively, as to (i) the
incumbency and genuine signature of each of the Seller's and the
Parent's officers who executed the Operative Documents, (ii) the
written consents of the Seller's and the Parent's stockholders
and directors, respectively authorizing (a) the Seller to
undertake the transactions contemplated hereunder, (b) the Parent
to enter into the Agreement and to indemnify the Buyer in
accordance with the provisions of Article 9 hereunder, (c) their
signatories to execute and deliver the Agreement and all other
documents and instruments required to effect such transactions,
such resolutions and consents having been duly adopted and being
in full force and effect on the Closing Date, and (iii) the
written consent of the Canadian Sub approving the transfer of all
of the issued and outstanding capital stock of the Canadian Sub
from the Seller to the Buyer, such consent having been duly
adopted and being in full force and effect on the Closing Date.
(n) Officer's Certificates of the Seller and the Parent,
each dated the Closing Date and certifying that (i) the Seller's and
the Parent's representations and warranties contained in Article
3 are true and correct on and as of the Closing Date with the
same force and effect as though made on such date, and that (ii)
with respect to each Benefit Plan that is a "group health plan"
within the meaning of Section 607 of ERISA and that is subject to
Section 4980B of the Code, the Seller and each ERISA Affiliate of
the Seller have complied in all respects with the continuation
coverage requirements of the Code and ERISA.
(o) A duly executed Certificate of Amendment to the
Seller's Certificate of Incorporation, in form ready for filing, to effect
a change of the Seller's name in accordance with the provisions
of Section 6.9 below.
(p) Resolutions of the Xxxxxx Parties effectuating the
transfer of sponsorship of those Employee Benefit Plans specified in
Section 6.10, certified respectively by the applicable
Secretaries of the Xxxxxx Parties, such resolutions having been
duly adopted and being in full force and effect on the Closing
Date.
(q) An Assignment of Patents and an Assignment of
Trademarks, each in a form reasonably acceptable to Buyer.
(r) Such other agreements, instruments and documents
as the Buyer reasonably deems necessary to effect the transactions
contemplated hereby.
(s) Section 6.11of the Disclosure Schedule.
2.6 Closing Deliveries by the Buyer. At the Closing, the Buyer
will execute and deliver, or cause to be delivered to the Seller:
(a) The Preliminary Purchase Price pursuant to Section 2.3(a)
hereof.
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(b) The Assignment and Assumption Agreement executed by
a duly authorized officer of the Buyer.
(c) A Certificate issued as of a recent date by the
Secretary of State of the State of Delaware certifying as to the legal
existence and good standing of the Buyer.
(d) A Certificate of the Secretary of the Buyer, in form
reasonably satisfactory to the Seller, dated the Closing Date and
certifying as to (i) the incumbency and genuine signature of each
of the officers of the Buyer who executed the Operative
Documents, and (ii) the resolutions of the Buyer's Board of
Directors, authorizing the Buyer to undertake the transactions
contemplated hereunder and authorizing the Buyer's signatories to
execute and deliver this Agreement and all other documents and
instruments required to effect such transactions, such
resolutions having been duly adopted and being in full force and
effect on the Closing Date.
(e) A Certificate of the President of the Buyer
dated the Closing Date and certifying that the representations and
warranties of the Buyer contained in Article 4 are true and
correct on and as of the Closing Date with the same force and
effect as though made on such date.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE PARENT
As a material inducement to the Buyer to enter into the
Operative Documents and to consummate the transactions
contemplated hereunder and thereunder, each of the Seller and the
Parent represents and warrants to the Buyer that the statements
contained in this Article 3 (and in the applicable Sections of
the Disclosure Schedule) are true and correct as of the date of
this Agreement and will be true and correct at and as of the
Closing.
3.1 Organization and Capitalization of the Xxxxxx Parties.
(a) Section 3.1 of the Disclosure Schedule contains a
complete and accurate list for each of the Xxxxxx Parties of its name, its
jurisdiction of incorporation, and its capitalization (including
the identity of each stockholder and the number of shares held by
each). Each of the Xxxxxx Parties and the Parent is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation.
Each of the Xxxxxx Parties is duly qualified or licensed to do
business as a foreign corporation and is in good standing under
the laws of each state or other jurisdiction in which either the
ownership or use of the properties owned or used by it, or the
nature of the activities conducted by it, require such
qualification, except where failure to be so qualified or
licensed would not have a material adverse effect on the Acquired
Assets, the Business or any of the Xxxxxx Parties. Each of the
Xxxxxx Parties has all requisite power and authority to own,
lease and operate the properties and assets that it purports to
own or use, to carry on its business as now conducted (including
the performance of all its obligations under the Assigned
Contracts) and to consummate the transactions contemplated by the
Operative Documents.
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(b) The Parent is the record and beneficial owner of
all of the Seller's issued and outstanding capital stock. A listing of the
authorized equity securities of each Xxxxxx Subsidiary is set
forth on Section 3.1 of the Disclosure Schedule. The Seller is,
and on the Closing Date will be, the record and beneficial owner
and holder of all of the equity securities of the Xxxxxx
Subsidiaries, free and clear of all Encumbrances. The shares of
the Xxxxxx Subsidiaries being sold pursuant to this Agreement
consist of the whole of the issued and allotted share capital,
respectively, of the Xxxxxx Subsidiaries. No legend or other
reference to any purported Encumbrance appears upon any
certificate representing equity securities of any of the Xxxxxx
Parties. None of the outstanding equity securities or other
securities of the Xxxxxx Parties was issued in violation of any
Legal Requirement (including the Securities Act of 1933, as
amended) or any preemptive right of any Person. All of the
outstanding equity securities of the Xxxxxx Subsidiaries have
been duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth on Section 3.1 of the
Disclosure Schedule, there are no outstanding securities,
options, warrants, rights, agreements, calls, subscription
commitments, demands or understandings of any character
whatsoever, fixed or contingent, that directly or indirectly (a)
call for or require the issuance, sale, transfer or other
disposition of any equity interests or securities of any of the
Xxxxxx Parties, (b) obligate the Seller, its stockholder or
either of the Xxxxxx Subsidiaries to grant, offer or enter into
any such agreement, or (c) relate to the voting or control of any
equity interests of any of the Xxxxxx Parties. There are no
securities convertible into or exchangeable for the stock of any
of the Xxxxxx Parties and no Person has any right to require the
Seller, its stockholder or either of the Xxxxxx Subsidiaries to
register any securities of any of the Xxxxxx Parties under the
Securities Act of 1933 or otherwise. Except as set forth in
Section 3.1 of the Disclosure Schedule, none of the Xxxxxx
Parties owns, either directly or indirectly, any interest or
investment (whether debt or equity) in any corporation,
partnership, joint venture, business trust or other entity.
3.2 Authorization of Transaction.
(a) The Seller has all requisite power and authority
(including full corporate power and authority) to execute and deliver the
Operative Documents and to undertake its obligations thereunder
and to consummate the transactions contemplated thereby,
including, without limitation, the sale and transfer to the Buyer
of all of the issued and outstanding capital stock of the Xxxxxx
Subsidiaries. Without limiting the generality of the foregoing,
the Board of Directors of the Seller and the stockholders of the
Seller have duly authorized the execution, delivery and
performance of this Agreement by the Seller. Each of the
Operative Documents to which the Seller is a party constitutes a
valid and binding agreement of the Seller, enforceable against
the Seller in accordance with its terms subject to applicable
bankruptcy, insolvency and other laws affecting creditors' rights
generally, public policy and equitable principles generally. The
Operative Documents are sufficient to transfer to and to vest in
the Buyer good and marketable title to the Acquired Assets, free
and clear of all liabilities, obligations, Encumbrances and
contingencies of any kind, except as set forth on Section 3.2 of
the Disclosure Schedule.
(b) The Parent has all requisite power and authority
(including full corporate power and authority) to execute and deliver the
Operative Documents, to undertake its obligations thereunder and
to consummate the transactions contemplated thereby. Without
limiting the generality of the foregoing, the Board of Directors
of the Parent has duly authorized
-16-
the execution, delivery and performance of this Agreement by the
Parent. Each of the Operative Documents to which the Parent is a
party constitutes a valid and binding agreement of the Parent,
enforceable against the Parent in accordance with its terms
subject to applicable bankruptcy, insolvency and other laws
affecting creditors' rights generally, public policy and
equitable principles generally.
3.3 Noncontravention. The execution and delivery of the
Operative Documents by the Seller and the Parent, and the
consummation of the transactions contemplated thereby (including
the assignments and assumptions referred to in Article 2 above),
(a) will not violate any provision of the Certificate of
Incorporation, Articles of Incorporation or other similar charter
document, or the Bylaws, of the Seller, the Xxxxxx Subsidiaries
or the Parent, (b) will not violate any statute, rule,
regulation, order or decree of any Governmental Body by which the
Seller, the Xxxxxx Subsidiaries, their respective properties or
assets, or the Parent is bound or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify
any Governmental Authorization that is held by any of the Xxxxxx
Parties or that otherwise relates to the Acquired Assets or the
Business, and (c) will not result in a violation or breach of, or
constitute a default under, any license, franchise, permit,
indenture, agreement or other instrument to which the Seller,
either of the Xxxxxx Subsidiaries or the Parent is a party, or by
which the Seller, either of the Xxxxxx Subsidiaries, or any of
their properties or assets is bound, excluding from the foregoing
clauses (b) and (c) violations, breaches or defaults which,
either individually or in the aggregate, (i) would not prevent
the Seller, the Xxxxxx Subsidiaries or the Parent from performing
their respective obligations under the Operative Documents or the
consummation of the transactions contemplated thereby, and (ii)
would not have a material adverse effect on the Buyer's post-
Closing ownership, operation and maintenance of the Acquired
Assets and conduct of the Business as conducted by the Xxxxxx
Parties immediately prior to the Closing. Except as set forth in
Section 3.3 of the Disclosure Schedule, none of the Seller, the
Xxxxxx Subsidiaries or the Parent is required to give any notice
to, make any filing with, or obtain any Consent from any Person
in connection with the execution and delivery of this Agreement
or any of the other Operative Documents, or the consummation or
performance of the transactions contemplated hereby and thereby.
Except as set forth in Section 3.3 of the Disclosure Schedule and
except for filings required under the HSR Act, none of the
Seller, the Xxxxxx Subsidiaries or the Parent is, and none of
them will be solely on account of the Closing hereunder, required
to make any filing or registration with, or obtain any Consent
from, any Person in connection with the execution, delivery and
complete performance of the transactions contemplated by the
Operative Documents (including the assignments and assumptions
referred to in Article 2 above), or in order for the transactions
contemplated by the Operative Documents to be effective or to
preserve any material right or benefit of the Xxxxxx Parties or
the Business.
3.4 Financial Statements. The Seller has delivered to the
Buyer: (a) audited consolidated balance sheets of the Seller and
its subsidiaries as at December 31, 1998 and as at December 31,
1997, in each case, including the notes thereto and the related
consolidated statements of income, changes in stockholders'
equity and cash flow for the fiscal periods then ended, certified
by Ernst & Young LLP, independent certified public accountants
(Ernst & Young LLP audited the balance sheet as of December
31,1997 and the related consolidated statements of operations and
cash flows for the one-month period then ended. Ernst & Young
LLP also audited the statements of operations and cash flows for
Xxxxxx Industries, Inc. for the eleven-month period ended
December 5, 1997), and (b) the audited consolidated balance sheet
of
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the Seller and its subsidiaries as at December 31, 1999 (the
"December 31 Balance Sheet") and the related consolidated
statements of income, changes in stockholders' equity and cash
flow for the fiscal year then ended, including in each case the
notes thereto, (the financial statements described in clauses (a)
and (b) above, including the notes thereto, the "Financial
Statements"). Except as set forth in Section 3.4 of the
Disclosure Schedule, all the Financial Statements fairly present
the financial condition and the results of operations, changes in
stockholders' equity and cash flow of the Seller and its
subsidiaries as at the respective dates of, and for the periods
referred to in, the Financial Statements, all in accordance with
GAAP. Except as set forth in Section 3.4 of the Disclosure
Schedule, the Financial Statements reflect the consistent
application of such accounting principles throughout the periods
involved, are correct and complete in all material respects, and
are consistent with the books and records of the Seller and its
subsidiaries. Except as set forth in Section 3.4 of the
Disclosure Schedule, the Seller has maintained adequate reserves
for all liabilities set forth in the Financial Statements. The
books and records of the Seller and its subsidiaries are, and
during the periods covered by the Financial Statements were, in
all material respects, true, correct and complete and fairly and
accurately reflect or reflected the income, expenses, assets and
liabilities of the Xxxxxx Parties, including the nature thereof
and the transactions giving rise thereto, and provide a fair and
accurate basis for the presentation of the Financial Statements.
3.5 Conduct of the Business Subsequent to December 31, 1999.
Except as disclosed at Section 3.5 of the Disclosure Schedule and
except as contemplated hereby, since December 31, 1999, the
Business has been carried on only in the Ordinary Course of
Business, and there has not been any material adverse change in
the condition (financial or otherwise), assets, liabilities,
obligations, operations, or results of operations of the Xxxxxx
Parties or the Business. Without limiting the generality of the
foregoing, since that date, except as disclosed at Section 3.5 of
the Disclosure Schedule:
(a) None of the Xxxxxx Parties has sold, leased,
transferred, assigned or otherwise disposed of any of their assets,
tangible or intangible, other than inventory for a fair consideration or
other assets in the Ordinary Course of Business.
(b) None of the Xxxxxx Parties has entered into any
agreement, contract, lease or license (or series of related agreements,
contracts, leases and licenses) either involving more than
$25,000 or outside the Ordinary Course of Business.
(c) None of the Xxxxxx Parties has accelerated, terminated,
modified or cancelled any agreement, contract, lease or license
(or series of related agreements, contracts, leases and licenses)
involving more than $25,000 to which it is a party or by which it
is bound.
(d) None of the Xxxxxx Parties has suffered the imposition
of any Encumbrance upon any of its assets.
(e) None of the Xxxxxx Parties has made any capital
expenditure (or series of related capital expenditures) either involving
more than $25,000 in the aggregate or outside the Ordinary Course of
Business.
-18-
(f) None of the Xxxxxx Parties has made any capital
investment in, any loan to, or any acquisition of the securities or assets
of any other Person (or series of related capital investments,
loans and acquisitions).
(g) None of the Xxxxxx Parties has issued any note,
bond or other debt security or created, incurred, assumed or guaranteed
any indebtedness for borrowed money or for a capitalized lease
obligation either involving more than $25,000 singly or $40,000
in the aggregate or for any obligation of the Parent or any of
its Affiliates.
(h) None of the Xxxxxx Parties has delayed or postponed
the payment of accounts payable or other Liabilities outside the
Ordinary Course of Business.
(i) None of the Xxxxxx Parties has granted any extension
of credit in the sale of products, collection of receivables or
otherwise, other than in the Ordinary Course of Business.
(j) None of the Xxxxxx Parties has cancelled, compromised,
waived or released any right or claim (or series of related rights and
claims) involving more than $25,000.
(k) None of the Xxxxxx Parties has granted any license or
sublicense of any rights under or with respect to any Intellectual Property.
(l) None of the Xxxxxx Parties has authorized any change in its
Certificate of Incorporation, Articles of Incorporation or other similar
charter document.
(m) None of the Xxxxxx Parties has experienced any damage,
destruction or loss (whether or not covered by insurance) to its property,
reasonable wear and tear excepted.
(n) None of the Xxxxxx Parties has made any loan to, or
entered into any other transaction with, any of its directors or officers
or any relative by blood or marriage thereof, or any of the
Xxxxxx Parties' Affiliates or any employee of the Xxxxxx Parties.
(o) None of the Xxxxxx Parties has entered into any employment
or compensation agreements other than in the Ordinary Course of Business,
collective bargaining agreements or any consulting agreements or any other
similar arrangements, written or oral, or modified the terms of any existing
such contract or agreement.
(p) None of the Xxxxxx Parties has granted any increase in the
base compensation of, or made any other change in employment terms for, any
of its directors, officers and employees, except as required pursuant to
written employment agreements or in the Ordinary Course of Business.
(q) None of the Xxxxxx Parties has adopted, amended, modified
or terminated any bonus, profit-sharing, incentive, severance or other plan,
contract or commitment for the benefit of any of its directors, officers and
employees, or taken any such action with respect to any other Employee
Benefit Plan.
-19-
(r) None of the Xxxxxx Parties has experienced any labor
problems which, individually or in the aggregate, materially adversely
affected or are reasonably expected to materially adversely affect the
condition (financial or otherwise), assets, earnings, operations, business
or prospects of the Xxxxxx Parties or the Business.
(s) None of the Xxxxxx Parties has made or pledged to make any
charitable or other capital contribution.
(t) None of the Xxxxxx Parties has engaged in any methods of
billing and collection, purchase, sale, lease, management, equipment
servicing or repair, accounting or operation that vary from its usual and
customary past practice.
(u) None of the Xxxxxx Parties has suffered any other material
occurrence, event, incident, action, failure to act or transaction outside
the Ordinary Course of Business or which has a material adverse effect or
is reasonably expected to have a material adverse effect on the Business,
the Acquired Assets or any of the Xxxxxx Parties.
(v) None of the Xxxxxx Parties has agreed to any of the
foregoing.
3.6 Undisclosed Liabilities.
(a) None of the Xxxxxx Parties has any Liability required by
GAAP to be reflected on the December 31 Balance Sheet or the Closing Balance
Sheet and, to the Knowledge of the Seller, there is no Basis for (nor
should the Seller have had Knowledge of) any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or
demand against the Xxxxxx Parties or any of them giving rise to any Liability,
except for: (i) Liabilities set forth on the Financial Statements;
(ii) Liabilities which have arisen after December 31, 1999 in the Ordinary
Course of Business, none of which results from, arises out of, relates to,
is in the nature of or was caused by any breach of contract, breach of
warranty, tort, infringement or violation of law; and (iii) Liabilities
expressly set forth at Section 3.6(a) of the Disclosure Schedule hereto.
(b) Without in any way limiting the representation and warranty
set forth in Section 3.6(a) above, none of the Xxxxxx Parties has any
unfunded Liabilities required by GAAP to be reflected on the
Closing Balance Sheet of Seller in connection with any workers'
compensation, employers' liability, group health plan, retirement
plan, pension plan or other employee benefit except as described
in Section 3.6(b) of the Disclosure Schedule.
3.7 Legal Compliance.
(a) Except as set forth in Section 3.7(a) of the Disclosure
Schedule, the Xxxxxx Parties have complied in all material respects with each
Legal Requirement that is or was applicable to it or to the conduct or
operation of the Business or the ownership or use of any of the Acquired
Assets;
(b) To the Knowledge of the Seller, no event has occurred
or circumstance exists that (with or without notice or lapse of time
or both) (i) may constitute or result in a violation by any of
the Xxxxxx Parties of, or a failure on the part of any of the
Xxxxxx
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Parties to comply with, any Legal Requirement, or (ii) may give
rise to any obligation on the part of any of the Xxxxxx Parties
to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature, and no Proceeding, charge,
complaint, claim, demand or notice has been filed or commenced
against any of the Xxxxxx Parties alleging any failure so to
comply;
(c) The Governmental Authorizations listed in Section 3.7(c) of
the Disclosure Schedule collectively constitute all of the material
Governmental Authorizations necessary to permit the Xxxxxx Parties to
lawfully conduct and operate the Business in the manner in which they
currently conduct and operate the Business and to permit the Xxxxxx
Parties to own and use their respective assets in the manner in which
they currently own and use such assets. All documentation and record
keeping which the Xxxxxx Parties or any of them are required to perform
under applicable Legal Requirements has been fully performed in all
material respects in a timely manner, and at and after the Closing,
the Seller shall put the Buyer in possession of or, as applicable with
respect to the corporate and tax records of the Seller, give access to
such documentation and record keeping.
(d) None of the Xxxxxx Parties, and none of their officers,
employees or independent contractors, is suspended or debarred
from doing business with the U.S. Government or is the subject of
a finding of nonresponsibility or ineligibility for U.S.
Government contracting.
3.8 Tax Matters.
(a) Each of the Xxxxxx Parties and the Parent has
filed, caused to be filed or will file on a timely basis all Tax Returns
that are, were or will be required to be filed by or with respect
to any of them, either separately or as a member of a group of
corporations, as of the Closing Date, pursuant to applicable Legal
Requirements, to the extent such Tax Returns relate to the Business,
except where failure to file such Tax Returns would not
have a material adverse effect on the financial condition of the
Xxxxxx Parties. The Xxxxxx Parties have paid, or made provision
for the payment of, all Taxes that are applicable to them that
have or may have become due pursuant to those Tax Returns or
otherwise, or pursuant to any assessment received by the Parent
or any of the Xxxxxx Parties, except such Taxes, if any, as are
listed on Section 3.8(a) of the Disclosure Schedule and are being
contested in good faith and as to which adequate reserves
(determined in accordance with GAAP) have been provided in the
December 31 Balance Sheet and except where failure to pay such
Taxes would not have a material adverse effect on the financial
condition of the Xxxxxx Parties. The unpaid Taxes of the Xxxxxx
Parties: (i) did not, as of December 31, 1999, exceed the
reserve for Tax Liability set forth on the face of the December
31 Balance Sheet; and (ii) do not exceed that reserve as adjusted
for the passage of time through the Closing Date in accordance
with the past custom and practice of the Parent and the Xxxxxx
Parties in filing their Tax Returns, except where such unpaid
Taxes would not have a material adverse effect on the financial
conditions of the Xxxxxx Parties. All Taxes due and payable by
the Xxxxxx Parties (whether or not shown on any Tax Return) with
respect to all periods (or partial periods) through the Closing
Date have been paid or will be paid by the Seller or the Parent,
except where failure to pay such Taxes would not have a material
adverse effect on the financial condition of the Xxxxxx Parties.
Except as set forth at Section 3.8(a) of the Disclosure Schedule,
none of the Xxxxxx Parties or the Parent is currently the
beneficiary of any extension of time within which to file any Tax
Return related to the Business. None of the
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Parent or the Xxxxxx Parties has waived any statute of
limitations in respect of Taxes or agreed to any extension of
time with respect to a Tax assessment or deficiency related to
the Business.
(b) Section 3.8(b) of the Disclosure Schedule lists all Tax
Returns filed with respect to the Xxxxxx Parties and the Business
for taxable periods that have not been barred by any federal or
applicable state, provincial, local or foreign statute of
limitations, indicates those Tax Returns that have been audited,
and indicates those Tax Returns that currently are the subject of
audit. Each such Tax Return filed with respect to the Xxxxxx
Parties and the Business was true, correct and complete in all
material respects, together with all examination reports and
statements of deficiencies assessed against or agreed to by the
Parent with respect to the Business or any of the Xxxxxx Parties.
All deficiencies proposed as a result of such audits have been
paid, reserved against, settled or, as described in Section
3.8(a) of the Disclosure Schedule, are being contested in good
faith by appropriate proceedings with adequate reserves provided
therefor. The Seller has delivered or made available to the
Buyer copies of the Tax Returns indicated on the attached Section
3.8(b) of the Disclosure Statement.
(c) The Xxxxxx Parties have withheld and/or remitted to
the applicable Tax Authority all Taxes required to be so withheld or
remitted in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder, non-
resident person or other third party, except where failure to pay
such Taxes would not have a material adverse effect on the
financial condition of the Xxxxxx Parties.
(d) There are no Tax liens on any assets of the Xxxxxx
Parties, including but not limited to the Acquired Assets, and no basis
exists for the imposition of any such liens. Except as set forth
in Section 3.8(d) of the Disclosure Schedule, no adjustment of or
deficiency for any Tax or claim for additional Taxes has been
proposed, Threatened, asserted or assessed against the Seller,
the Xxxxxx Parties or any member of any affiliated or combined
group of which the Seller or the Xxxxxx Parties is or was a
member for which the Seller or any of the Xxxxxx Parties could be
liable. Except as set forth in Section 3.8(d) of the Disclosure
Schedule, there are no audit examinations being conducted or
Threatened, and there is no deficiency or refund litigation or
controversy in progress or Threatened, with respect to any Taxes
of the Parent (with respect to the Xxxxxx Parties, the Acquired
Assets and the Business) or the Xxxxxx Parties or with respect to
any Tax Returns previously filed by or on behalf of the Parent
(to the extent related to the Business) or the Xxxxxx Parties.
(e) No claim has been made by a Tax Authority in a
jurisdiction where the Xxxxxx Parties do not file Tax Returns that any
of the Parent (with respect to the Xxxxxx Parties, the Acquired Assets
and the Business) or the Xxxxxx Parties is or may be subject to
Taxes by that jurisdiction. Section 3.8(e) of the Disclosure
Schedule lists all of the jurisdictions in which the Xxxxxx
Parties have been authorized to do business, owned or leased
property, had employees or customers, employed capital, or
solicited or made sales.
(f) The Seller is a qualified subchapter S subsidiary.
Except as set forth in Section 3.8(a) of the Disclosure Schedule, none
of the Xxxxxx Parties is a "U.S. real property holding corporation"
as defined in Section 897(c)(2) of the Code. Neither the Seller nor
the Parent is a foreign person within the meaning of, and no Tax is
required to be withheld as a result of the transfer contemplated by
this Agreement pursuant to, Section 1445 of the Code.
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Except as set forth in Section 3.8(f) of the Disclosure
Schedule, there is no Tax allocation or Tax sharing agreement
that will require any payment by the Buyer or by the Xxxxxx
Parties after the date of this Agreement. None of the Xxxxxx
Parties has entered into any advance pricing agreements with any
Tax Authority.
(g) None of the Assumed Liabilities, if any, is an
obligation to make a payment that will not be deductible under Code Section
280G.
(h) The U.K. Sub is and always has been resident in the United
Kingdom for tax purposes.
(i) The U.K. Sub has duly and punctually paid all Tax that it
has become liable to pay and is under no liability to pay any
penalty or interest in connection with any claim for Tax and has
not paid any Tax which it was and is not properly due to pay.
(j) No distribution within the meaning of Sections 209,
210 and 212, Taxes Act 1988 has been made by the U.K. Sub except
dividends shown in its audited accounts nor is the U.K. Sub bound
to make any such distribution. No securities (within the meaning
of Section 254(1), Xxxxx Xxx 0000,) issued by the U.K. Sub and
remaining in issue at the date hereof were issued in such
circumstances that the interest payable thereon fails to be
treated as a distribution under Section 209(2)(e)(iii), Taxes Xxx
0000. The U.K. Sub has not made or received any distribution
which is an exempt distribution within Xxxxxxx 000, Xxxxx Xxx
0000. The U.K. Sub has not received any capital distribution to
which the provisions of Xxxxxxx 000, Xxxxx Xxx 0000 or
Xxxxxxx 000, XXXX 0000 could apply. The U.K. Sub has not issued
any share capital, nor granted options or rights to any person
which entitles that person to require the issue of any share
capital to which the provision of Xxxxxxx 000, Xxxxx Xxx 0000
could apply.
(k) There has not within the three years preceding the date
hereof been a major change in the nature or conduct of the trade
of the U.K. Sub within the meaning of Xxxxxxx 000, Xxxxx Xxx 0000
nor has any transaction occurred to which Xxxxxxx 000X, Xxxxx Xxx
0000 could apply.
(l) The U.K. Sub is not a dual resident investing company
within the meaning of Xxxxxxx 000, Xxxxx Xxx 0000.
(m) The U.K. Sub has never been a close company within
the meaning of Xxxxxxx 000, Xxxxx Xxx 0000. No distribution within
Xxxxxxx 000, Xxxxx Xxx 0000 has been made by the U.K. Sub and no
such distribution will be made before Completion. The U.K. Sub
has not made (and will not be deemed to have made) any loan or
advance to a participator or an associate of a participator so as
to become liable to make any payment under Xxxxxxx 000, Xxxxx Xxx
0000. The U.K. Sub has supplied to the inspector such
information and particulars as are necessary to make full and
accurate disclosure of all facts and considerations material to
be known by him to enable him to make intimations pursuant to
Schedule 00, xxxxxxxxx 00, Xxxxx Xxx 0000 that he does not intend
to make apportionment in respect of the U.K. Sub for any
accounting period ending on or before the Accounts Date and the
U.K. Sub has received such intimations. No apportionment
pursuant to Xxxxxxx 000, Xxxxx Xxx 0000 and Schedule 19 has ever
been made or could be made against the U.K. Sub. The U.K. Sub
has at all times been a
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"trading company" or a "member of a trading group" as defined in
Schedule 00, xxxxxxxxx 0, Xxxxx Xxx 0000. The U.K. Sub has not
expended or applied any sums liable to be regarded as income
available for distribution pursuant to Schedule 00, xxxxxxxxx 0,
Xxxxx Xxx 0000 (first business loans) and is not bound
(contingently or otherwise) to expend or apply any such sum.
(n) If each of the capital assets of the U.K. Sub were
disposed of for a consideration equal to the book value of that asset or
adopted for the purpose of the audited accounts, no liability to
corporation tax on chargeable gains or balancing charge under the
Capital Allowances Act 1990 would arise (and for this purpose
there shall be disregarded any relief and allowances available to
the U.K. Sub other than amounts falling to be deducted from the
consideration receivable under Section 38, TCGA 1992). No
election under Section 35, TCGA 1992 is in effect in relation to
the U.K. Sub and, on or prior to the Closing Date, full
particulars are given in the Disclosure Letter of the first
relevant disposal for the purposes of that section. On or prior
to the Closing Date, the Disclosure Letter contains full
particulars of all assets held by the U.K. Sub or disposed of by
the U.K. Sub on or after 6 April 1988 in respect of which relief
is or would be available under Schedule 4, TCGA 1992 upon
disposal.
(o) The U.K. Sub has not disposed of or acquired any
asset to or from any Person connected with it within the meaning of
Xxxxxxx 000, Xxxxx Xxx 0000 or in circumstances such that the
provisions of Section 17, TCGA 1992 could apply to such disposal
or acquisition.
(p) The U.K. Sub has properly operated the Pay As You Earn
system deducting tax as required by law from all payments to or
treated as made to employees and ex-employees of the U.K. Sub and
punctually accounting to the Inland Revenue for all tax so
deducted.
(q) The U.K. Sub has not issued any shares or conferred any
interest in shares in the circumstances described in the
Section 138(1), Taxes Act 1988 and has complied with
Section 139(5), Taxes Xxx 0000. The U.K. Sub has not issued any
shares or conferred any interest in shares in the circumstances
described in Section 77(1) and has complied with Section 85,
Finance Xxx 0000. The U.K. Sub has not made any payment to which
Xxxxxxx 000, Xxxxx Xxx 0000 applies. The U.K. Sub does not
operate any share scheme approved under the provisions of
Schedule 9, Taxes Act 1988 nor a profit related pay scheme to
which the provisions of Chapter III of Part V, Taxes Act 1988
apply.
(r) The U.K. Sub has paid all national insurance and
graduated pension contributions for which it is liable and has kept proper
books and records relating to the same.
(s) The U.K. Sub has duly paid or has procured to be paid all
stamp duty on documents to which it is a party or in which it is interested
and which are liable to stamp duty.
(t) All supplies made by the U.K. Sub are taxable supplies
and the U.K. Sub is not and will not be denied credit for any input
tax by reason of the operation of Section 26, Value Added Tax Xxx
0000 and regulations made thereunder. All input tax for
-24-
which the U.K. Sub has claimed credit has been paid by the U.K.
Sub in respect of supplies made to it relating to goods or
services used or to be used for the purpose of its business. No
supplies have been made to the U.K. Sub to which the provisions
of Section 8, Value Added Tax Xxx 0000 might apply. The U.K. Sub
has not committed any offence contrary to Section 60 or 72, Value
Added Tax Xxx 0000, nor has it received any penalty liability
notice pursuant to Section 64(3), Value Added Tax Xxx 0000,
surcharge liability notice pursuant to Section 59, or written
warranty issued pursuant to Section 76(2) of that Act. On or
prior to the Closing Date, the Disclosure Letter contains details
and copies of all elections, together with the relevant
notification, made by the U.K. Sub pursuant to paragraph 2,
Schedule 10, Value Added Tax Xxx 0000.
3.9 Properties; Acquired Assets.
(a) Section 3.9(a) of the Disclosure Schedule contains a
complete and accurate list of (i) all real property and interests
therein owned by any of the Xxxxxx Parties (the "Owned Real
Property"), and (ii) each item of real property leased, used or
occupied by any of the Xxxxxx Parties or in which any of the
Xxxxxx Parties has an interest (other than real property owned by
any of the Xxxxxx Parties) (the "Leased Property"; and together
with the Owned Real Property, the "Real Property"). The Seller
has good and marketable, indefeasible, fee simple title to the
Owned Real Property, and valid leasehold interests in the Leased
Property. Except as set forth in Section 3.9(a) of the
Disclosure Schedule, and except for properties and assets
disposed of in the Ordinary Course of Business since the date of
the December 31 Balance Sheet, the Owned Real Property is free
and clear of all Encumbrances or restrictions on transfer except:
(i) as reflected in the December 31 Balance Sheet or the Closing
Balance Sheet, (ii) liens for Taxes not yet due and payable or
being contested in good faith (and for which adequate accruals
have been reserved on the December 31 Balance Sheet or the
Closing Balance Sheet), and (iii) such imperfections of title and
Encumbrances with respect to other properties as are not material
in character, amount or extent, and which do not detract from the
value, or interfere with the present use, of the property subject
thereto or affected thereby.
(b) Except as set forth in Section 3.9(b) of the Disclosure
Schedule, there are no developments affecting any of the Real
Property pending or, to the Knowledge of the Seller, Threatened,
which might materially interfere with any present use, or, with
respect to the Owned Property, materially detract from the value
or marketability of, any such property or assets.
(c) The Seller has delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section 3.9(a) of
the Disclosure Schedule (as amended to date). Except as set
forth in Section 3.9(c) of the Disclosure Schedule, all leases of
the Leased Property are in good standing and are valid, binding
and enforceable in accordance with their respective terms and, to
the Seller's Knowledge, there does not exist under any such lease
any default or any event which with notice or lapse of time or
both would constitute a default. There are no disputes, oral
agreements or forbearance programs in effect as to any such lease
or sublease. Except as set forth in Section 3.9(c) of the
Disclosure Schedule, each such lease or sublease will continue to
be legal, valid, binding, enforceable and in full force and
effect on identical terms following the consummation of the
transactions contemplated by the Operative Documents (including
the assignments and assumptions referred to in Section 2 above),
subject
-25-
to applicable bankruptcy, insolvency and other laws affecting
creditors' rights generally, public policy and equitable
principles generally. To the Seller's Knowledge, no
condemnation, environmental, zoning, land-use or other regulatory
proceedings or rule making procedures have been instituted or
planned to be instituted, with respect to the current Leased
Property, which would result in the Xxxxxx Parties or the Buyer
being required to vacate such premises or materially alter or
limit such use, nor has the Seller received notice of any
proceedings to impose any new Taxes or operating restrictions
upon any of such properties or the Seller's conduct of the
Business therein.
(d) The Facilities are in adequate condition to operate the
Business as heretofore conducted and are, to the Seller's
Knowledge, structurally sound.
(e) To the Seller's Knowledge, the Facilities have access
to (i) public roads or valid easements over private streets or private
property for such ingress to and egress from all such Facilities,
and (ii) water supply, storm and sanitary sewer facilities,
telephone, gas and electrical connections, fire protection,
drainage and other public utilities, in each case as is necessary
for the conduct of the Business as heretofore conducted. To the
Seller's Knowledge, none of the Facilities encroaches upon real
property of another Person, and no structure of any other Person
substantially encroaches upon any of the Real Property.
(f) To the Seller's Knowledge, all Facilities have
received all Governmental Approvals required in connection with the
operation thereof and have been operated and maintained in accordance with
applicable laws, rules and regulations in all material respects.
To the Seller's Knowledge, the Real Property and its continued
use, occupancy and operation as is currently used, occupied and
operated, does not constitute a nonconforming use under any
applicable building, zoning, subdivision or other land use or
similar Legal Requirement.
(g) Except as set forth in Section 3.9(g) of the Disclosure
Schedule, the Acquired Assets constitute substantially all of the
properties and assets used in connection with the operation of
the Business in the manner in which and to the extent to which
the Business is currently being conducted. The Acquired Assets
do not omit any asset required to operate the Business as
operated by Seller immediately preceding the Effective Date or
the Closing. Except as set forth in Section 3.9(g) of the
Disclosure Schedule, none of the tangible personal property
included in the Acquired Assets is subject to any personal
property or equipment leases. To the Seller's Knowledge, each
such tangible asset is in good operating condition and repair
(subject to normal wear and tear) and is suitable for the
purposes for which it presently is used. As of the Closing Date,
and except as set forth in Section 3.9(a) of the Disclosure
Schedule, good and valid title to, and valid leasehold interests
in, the Acquired Assets shall vest in the Buyer, free and clear
of all Encumbrances or restrictions on transfer, except: (i) as
reflected in the December 31 Balance Sheet or the Closing Balance
Sheet, (ii) liens for Taxes not yet due and payable or being
contested in good faith (and for which adequate accruals have
been reserved on the December 31 Balance Sheet or the Closing
Balance Sheet), and (iii) such imperfections of title and
Encumbrances with respect to other properties as are not material
in character, amount or extent, and which do not detract from the
value, or interfere with the present use, of the property subject
thereto or affected thereby.
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(h) All of the Inventories are owned by the Xxxxxx
Parties free and clear of all Encumbrances and are properly valued in
accordance with GAAP consistently applied by the Xxxxxx Parties.
All of the Inventories reflected in the Financial Statements or
produced or acquired thereafter have been produced or acquired in
the Ordinary Course of Business. Except to the extent of
reserves set forth in the Financial Statements for slow-moving
and/or obsolete inventory, all Inventories (a) are in good
condition, (b) are saleable or usable in the Ordinary Course of
Business, and (c) are in quantities sufficient for the normal
operation of the Business in accordance with past practice.
Except as set forth in Section 3.9(h) of the Disclosure Schedule,
none of the Inventories are held on consignment by the Seller or
any other Person or are subject to any repurchase or return
agreement in favor of any Person and all of the Inventories are
located at the Facilities of the Xxxxxx Parties or are in transit
in the Ordinary Course of Business. Since December 31, 1999, the
Inventories have not materially increased or decreased other than
in the Ordinary Course of Business.
3.10 Intellectual Property.
(a) The Xxxxxx Parties own or have the right to use
pursuant to license, sublicense, agreement or permission all Intellectual
Property necessary for or used in the operation of the Business
as presently conducted. Each item of Intellectual Property owned
or used by the Xxxxxx Parties immediately prior to the Closing
hereunder will be owned or available for use by the Buyer on
substantially identical terms and conditions immediately
subsequent to the Closing hereunder. The Seller has taken all
necessary action to maintain and protect each item of
Intellectual Property that the Xxxxxx Parties or any of them own
or use in connection with the Business.
(b) None of the Xxxxxx Parties has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any
Intellectual Property rights of third parties, and none of the
directors and officers (and employees with responsibility for
Intellectual Property matters) of the Xxxxxx Parties, to the
Knowledge of the Seller, has ever received any charge, complaint,
claim, demand or notice alleging any such interference,
infringement, misappropriation or violation (including any claim
that the Xxxxxx Parties must license or refrain from using any
Intellectual Property rights of any third party). To the
Knowledge of Seller, no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict
with any Intellectual Property rights of the Xxxxxx Parties.
(c) The Seller does not own any patents or patent
registrations, issued or pending. The Seller does not hold any rights
under patent licenses or patent agreements. The Seller has not granted
any license, agreement, right or other permission to any third
party with respect to its Intellectual Property, except as set
forth in Section 3.10(c) of the Disclosure Schedule. Section
3.10(c) of the Disclosure Schedule also identifies each trade
name, and registered and unregistered trademark presently used by
the Seller in connection with the operation of the Seller's
Business (collectively, the "Trade Names"). With respect to each
item of Intellectual Property required to be identified in
Section 3.10(c) of the Disclosure Schedule:
(i) the Seller possesses all right, title and interest
in and to the item, free and clear of any Encumbrance, license or other
restriction;
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(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge;
(iii) no Proceeding, complaint, claim or demand is
pending or Threatened which challenges the legality, validity,
enforceability, use or ownership of the item; and
(iv) The Seller has not agreed to indemnify any Person
for or against any interference, infringement, misappropriation or other
conflict with respect to the item.
(b) There exists no Intellectual Property that any third party
owns and that the Seller uses pursuant to license, sublicense,
agreement or permission.
(c) The Seller will not interfere with, infringe upon,
misappropriate or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the
continued operation of the Business as presently conducted.
3.11 Material Contracts. Section 3.11 of the Disclosure Schedule
sets forth a list of each contract to which any of the Xxxxxx
Parties is a party which is material to the Business or which
results or could reasonably be expected to result in an annual
payment to or by the Parent (in respect of the Business) or by
the Xxxxxx Parties of at least $100,000. The Seller has
delivered to the Buyer true, complete and correct copies of each
written Assumed Contract and a description of each oral Assumed
Contract. With respect to each such Assumed Contract and except
as disclosed in Section 3.11 of the Disclosure Schedule: (a) the
Assumed Contract is legal, valid, binding, enforceable and in
full force and effect, subject to applicable bankruptcy,
insolvency and other laws affecting creditors' rights generally,
public policy and equitable principles generally; (b) the Assumed
Contract will continue to be legal, valid, binding, enforceable
and in full force and effect on identical terms following the
consummation of the transactions contemplated by the Operative
Documents (including the assignments and assumptions referred to
in Article 2 above), subject to applicable bankruptcy, insolvency
and other laws affecting creditors' rights generally, public
policy and equitable principles generally; (c) to the Seller's
Knowledge, no party is in material breach or default, and no
event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination,
modification or acceleration, under the Assumed Contract; and (d)
to the Seller's Knowledge, no party has repudiated any provision
of the Assumed Contract. The Seller has complied with all of the
material provisions of each such Assumed Contract. Except as set
forth on Section 3.11 of the Disclosure Schedule, all such
Assumed Contracts can be freely assigned to the Buyer without
penalty or liquidated damages and the assignment of each such
Assumed Contract shall be valid and binding on the Seller and the
third party thereto. The writings evidencing all such Assumed
Contracts constitute the substantive agreement between the
parties as to the subject matter thereof, including, but not
limited to, terms of price and quantity.
3.12 Notes and Accounts Receivable. All accounts receivable of
the Business are reflected properly on the Xxxxxx Parties' books
and records, are valid receivables subject to no setoffs or
counterclaims, are properly reflected on the accounts receivable
aging schedules previously provided to the Buyer, are collectible
in accordance with their terms at their recorded
-28-
amounts, subject only to the reserve for bad debts set forth on
the face of the December 31 Balance Sheet, as adjusted for the
passage of time through the Closing Date in accordance with the
past custom and practice of the Xxxxxx Parties.
3.13 Insurance. Section 3.13 of the Disclosure Schedule contains
a complete and correct list of all insurance policies maintained
by the Xxxxxx Parties or the Parent in respect of the Business
since January 1, 1992 and as of the date hereof and describes any
self-insurance arrangements applicable to the Business and sets
forth the following information with respect to each insurance
policy (including policies providing property, casualty,
liability and workers' compensation coverage and bond and surety
arrangements) to which the Parent or any of the Xxxxxx Parties
has been a party, a named insured or otherwise the beneficiary of
coverage at any time since the Xxxxxx Parties' respective
incorporation:
(a) the name, address and telephone number of the agent;
(b) the name of the insurer, the name of the policyholder and
the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage
was on a claims made, occurrence or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate)
of coverage;
(e) a description of any retroactive premium adjustments or
other loss-sharing arrangements; and
(f) a loss run, as of a date that is within 30 days of the
Closing Date, with respect to each such insurance policy.
With respect to each such insurance policy: (i) the policy
is legal, valid, binding, enforceable (subject to applicable
bankruptcy, insolvency and other laws affecting creditors' rights
generally, public policy and equitable principles generally) and
in full force and effect; (ii) neither the Seller nor, to the
Knowledge of the Seller, any other party to the policy is in
breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such a
breach or default, or permit termination, modification or
acceleration, under the policy; and (iii) to the Knowledge of
Seller, no party to the policy has repudiated any provision
thereof. The Seller has made available to the Buyer complete and
correct copies of all such policies together with all riders and
amendments thereto.
3.14 Litigation. Section 3.14 of the Disclosure Schedule sets
forth each instance in which any of the Xxxxxx Parties: (a) is
subject to any outstanding injunction, judgment, order, decree,
ruling or charge; or (b) is a party or, to the Knowledge of the
Seller, is Threatened to be made a party to any Proceeding of,
in, or before any court or quasi-judicial or administrative
agency of any federal, state, provincial, local or foreign
jurisdiction or before any arbitrator. None of the Proceedings
set forth in Section 3.14 of the Disclosure Schedule, if decided
adversely to the Parent, the Xxxxxx Parties or the Business,
could result in any material adverse
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effect. The Seller has no Basis to believe that any such
Proceeding may be brought or threatened against the Parent, the
Xxxxxx Parties or the Business.
3.15 Employees.
(a) To the Knowledge of the Seller, no executive, key
employee or group of employees has any plans to terminate employment with
any of the Xxxxxx Parties, and neither the Seller nor the Parent
has knowledge of any reason why any of the Xxxxxx Parties'
employees would not agree to continue his or her employment
following the Closing, provided, that he or she is offered
employment by the Buyer on terms no less favorable to such
employee than those terms currently applicable to him or her.
Except as set forth on Section 3.15(a) of the Disclosure
Schedule, none of the Parent or the Xxxxxx Parties is a party to
or bound by, nor are any of their employees otherwise subject to,
any collective bargaining agreement, nor has the Parent or any of
the Xxxxxx Parties experienced any strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes
since January 1, 1992. To the Knowledge of the Seller or Parent,
none of the Parent or the Xxxxxx Parties has committed any unfair
labor practice with respect to employees of the Xxxxxx Parties.
Neither the Seller nor the Parent has Knowledge of any
organizational effort presently being made or threatened or at
any time during the past three years made or threatened by or on
behalf of any labor union or any representatives thereof with
respect to employees of the Xxxxxx Parties.
(b) Attached at Section 3.15(b) of the Disclosure Schedule
is a list of all of the Seller's employees as of April 14, 2000. The
Seller has previously delivered to the Buyer a written summary of
the material terms of each such employee's employment. Except as
set forth on Section 3.15(b) to the Disclosure Schedule, the
Xxxxxx Parties have paid all salaries, wages, bonuses,
commissions, vacation pay, overtime and benefits, including
termination and severance benefits, to which their respective
employees are currently entitled, which they have earned and
which are due and payable. From and after the Closing Date,
Buyer shall be exclusively liable for the payment to persons who
were employees of any of the Xxxxxx Parties on the Closing Date
due on termination of employment, including severance benefits
and all benefits under claims incurred but not paid as of and
through the Closing Date. Except as set forth on Section 3.15(b)
to the Disclosure Schedule, to the Knowledge of the Seller, no
employee or former employee of any of the Xxxxxx Parties is in
breach of any employment, confidentiality or non-competition
agreement with any of the Xxxxxx Parties or with any other
Person, and no employee or former employee has misappropriated
any Intellectual Property of any Person.
(c) To the Knowledge of the Seller, no employee or former
employee of any of the Xxxxxx Parties, while employed by any of
the Xxxxxx Parties, has procured or arranged for the procurement
for any Person of any products and/or services that were not then
available to customers through the Business in exchange for a fee
or other form of compensation from such Person to such employee.
(d) Section 3.15(d) of the Disclosure Schedule lists
employees who had been employed by a Xxxxxx Party for more than one year
and whose employment with any of the Xxxxxx Parties has been
terminated for any reason during the six month period immediately
prior to the Closing. For each such employee who was in the
sales function and who was among the top 20 salespersons in
annual sales volume, Section 3.15(d) of the Disclosure Schedule
also
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lists his or her sales volume for each of the two (2) years
immediately preceding the termination of his or her employment.
3.16 Employee Benefits.
(a) Set forth on Section 3.16(a) of the Disclosure Schedule
is a complete list of each Employee Benefit Plan that the Seller
maintains or to which the Seller contributes. Except as set
forth on Section 3.16(a) of the Disclosure Schedule:
(i) each Employee Benefit Plan (and each related trust,
insurance contract or fund) has at all times through the date
hereof complied in all material respects in form and in operation
in all respects with the applicable requirements of ERISA, the
Code and other applicable laws;
(ii) all required reports and descriptions due on or
before the Closing Date (including Form 5500 Annual Reports, Summary Annual
Reports, PBGC-1s and Summary Plan Descriptions) will have been
filed or distributed appropriately with respect to each such
Employee Benefit Plan on or before the Closing Date. With
respect to Employee Benefit Plans maintained by Seller, the
requirements of Part 6 of Subtitle B of Title I of ERISA and of
Code Section 4980B have been met in all material respects with
respect to each such Employee Benefit Plan which is an Employee
Welfare Benefit Plan;
(iii) with respect to Employee Benefit Plans maintained
by Seller, all contributions (including all employer contributions
and employee salary reduction contributions) which are due have
been paid to each such Employee Benefit Plan which is an Employee
Pension Benefit Plan, and there is no "accumulated funding
deficiency" (as defined in Section 412 of the Code and Section
302 of ERISA) with respect to any Employee Pension Benefit Plan.
All premiums or other payments due on or before the Closing Date
for all periods ending on or before the Closing Date have been
paid with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan;
(iv) with respect to Employee Benefit Plans
maintained by Seller, except as disclosed in Section 3.16(d) of the
Disclosure Schedule, no Employee Benefit Plan provides benefits, including
death or medical benefits, beyond termination of service or
retirement other than (a) coverage mandated by law or (b) death
or retirement benefits under an Employee Benefit Plan qualified
under Section 401(a) of the Code. Except as disclosed in Section
3.16(d) of the Disclosure Schedule, none of the Xxxxxx Parties or
their ERISA Affiliates has made a written or oral representation
to any current or former employee promising or guaranteeing any
employer-paid continuation of medical, dental, life or disability
coverage for any period of time beyond retirement or termination
of employment;
(v) with respect to Employee Benefit Plans maintained
by Seller, each Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than a plan described in Section 401(a)(1) of ERISA)
meets the requirements of a "qualified plan" under Code
Section 401(a) and each such Employee Benefit Plan and each
Employee Benefit Plan which is a voluntary employee beneficiary
association has received a favorable
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determination letter from the Internal Revenue Service, or such
letter is pending or such Employee Benefit Plan is an adopted
standardized prototype plan that has received such a letter;
(vi) with respect to Employee Benefit Plans maintained
by Seller, each such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been funded
in compliance with the requirements of ERISA and Code Section
412; and
(vii) the Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received from
the Internal Revenue Service, the most recent Form 5500 Annual
Report and the most recent actuarial report of an Employee
Pension Benefit Plan and all related trust agreements, insurance
contracts and other funding agreements which implement each such
Employee Benefit Plan.
(b) Except as disclosed in Section 3.16(b) of the Disclosure
Schedule, with respect to each Employee Benefit Plan maintained
or contributed to by Seller or its ERISA Affiliates (while such
entities were ERISA Affiliates of Seller):
(i) no such Employee Benefit Plan which is an
Employee Pension Benefit Plan (other than any Multiemployer Plan) has been
completely or partially terminated or been the subject of a
Reportable Event as to which notices would be required to be
filed with the PBGC. No Proceeding by the PBGC to terminate any
such Employee Pension Benefit Plan (other than any Multiemployer
Plan) has been instituted or threatened;
(ii) there have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has any Liability
for breach of fiduciary duty or any other failure to act or
comply in connection with the administration or investment of the
assets of any such Employee Benefit Plan. No Proceeding with
respect to the administration or the investment of the assets of
any such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the knowledge of the directors and
officers of the Seller, threatened. None of the directors and
officers of the Seller has any knowledge of any Basis for any
such Proceeding; and
(iii) the Seller has not incurred, and none of the
directors and officers of the Seller has any reason to expect that the
Seller will incur, any Liability to the PBGC (other than PBGC
premium payments which are not yet due) or otherwise under Title
IV of ERISA (including any withdrawal Liability) or under the
Code with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
(c) With respect to Employee Benefit Plans maintained by or
contributed to by Seller and its ERISA Affiliates, Seller and its
ERISA Affiliates (while such entities were ERISA Affiliates of
Seller) do not contribute to, have never contributed to, or have
never been required to contribute to any Multiemployer Plan or
has no Liability (including withdrawal Liability) under any
Multiemployer Plan.
(d) With respect to Employee Benefit Plans maintained
by Seller, except as disclosed in Section 3.16(d) of the Disclosure
Schedule, the Seller does not maintain,
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has never maintained or contributed to, and has never been
required to contribute to, any Employee Welfare Benefit Plan
providing medical, health or life insurance or other welfare-type
benefits for current or future retired or terminated employees,
their spouses or their dependents (other than in accordance with
Code Section 4980B).
(e) Except as disclosed in Section 3.16(e) of the
Disclosure Schedule, the Seller's and the Parent's execution of this
Agreement and performance of the transactions contemplated by the
Operative Documents do not and will not constitute an event under
any Employee Benefit Plan that will result in any payment
(whether as severance pay or otherwise), acceleration, vesting or
increase in benefits with respect to any employee. With respect
to Employee Benefit Plans maintained by Seller, no Employee
Benefit Plan provides for "parachute payments" within the meaning
of Section 280G of the Code.
(f) UK Sub Pensions.
(i) Save for the Schemes, the UK Sub is
neither a party to nor participates in nor contributes to any
private scheme, arrangement or agreement (whether legally
enforceable or not) for the provision of any pension, retirement,
death, incapacity, sickness, disability, accident or other like
benefits (including the payment of medical expenses) for any
Relevant Employee or for the widow, child or dependant of any
Relevant Employee.
(ii) To the Knowledge of Seller, the UK Sub
(a) has not given any undertaking or assurance (whether legally
enforceable or not) to any Relevant Employee or to any widow,
child or dependant of any Relevant Employee as to the
introduction, improvement or increase of any benefit of a kind
described in Section 3.16(f)(i) above; or (b) is not paying nor
has in the last three years paid any benefit of a kind described
in (i) above to any Relevant Employee or the widow, child or
dependant of any Relevant Employee.
(iii) All material details relating to
the Schemes that have been requested by Buyer have been made
available to Buyer
(iv) Contributions to the Schemes are not
paid in arrears and all contributions and other amounts which
have fallen due for payment have been paid and no fees, charges
or expenses referable to the Schemes for which the UK Sub is or
may become liable (whether wholly or in part) have been incurred
but not paid and the UK Sub has reimbursed any person who has
paid any such fees, costs and expenses if and to the extent that
the UK Sub is or may become liable so to do.
(v) The UK Sub has been admitted to
participation in the Schemes; to the Knowledge of Seller, has
observed and performed those provisions of the Schemes which
apply to it; and may terminate its liability to contribute to the
Schemes without notice, without the consent of any person and
without further payment.
(vi) Except as otherwise provided in this
clause (vi), the Schemes provide only money purchase benefits
(within the meaning of the Pension Scheme Act of 1993. All
benefits (which are not money purchase benefits as aforesaid)
payable in the event of death while in employment to which the
Schemes relate are insured fully under a policy with an insurance
company of good repute and, to the Knowledge of Seller, there are
no grounds on
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which that company might avoid liability under that policy. The
Schemes are exempt approved schemes (within the meaning of the
Income and Corporation Taxes Xxx 0000, Section 592), to the
Knowledge of Seller, comply with and have at all times been
administered in accordance with all applicable laws, regulations
and requirements (including those of the Inland Revenue and of
trust law).
(vii) The trustees of the Schemes are not
engaged in any litigation or arbitration proceedings and, to the
Knowledge of Seller, no litigation or arbitration proceedings are
pending or Threatened by or against the trustees of the Schemes
and there are no facts likely to give rise to any litigation or
arbitration.
(viii) The UK Sub is the only employer for
the time being participating in the Schemes. No employer which
has previously participated in the Schemes has any claim under
the Schemes and, in respect of any such employer, the Schemes has
been partially wound up in accordance with its provisions.
(ix) In relation to the Schemes or the assets
or previous assets thereof, neither the UK Sub nor the trustees
or administrator of the Schemes has given an indemnity or
guarantee to any person (other than in the case of the UK Sub any
general indemnity in favor of the trustees or administrator under
the documents governing the Schemes).
3.17 Environment, Health and Safety. Except as set forth on
Section 3.17 to the Disclosure Schedule and except for matters
that would not have a material adverse effect on the Business:
(a) The Xxxxxx Parties' officers and directors and the
Xxxxxx Parties have complied at all times through the date hereof in all
material respects with all Environmental, Health and Safety Laws,
and no Proceeding, complaint, claim, demand or notice has been
filed or commenced against any of them alleging any failure so to
comply. In addition, no notice, request for information, or
other inquiry has been received by any of them with respect to
any environmental or health and safety matters, and there has
been no Threatened Proceeding with respect to any of them under
any Environmental, Health and Safety Laws. Without limiting the
generality of the preceding sentence, the Xxxxxx Parties have
obtained and been in material compliance with all of the terms
and conditions of all Government Authorizations which are
required under, and have complied in all material respects with
all other Legal Requirements which are contained in, all
Environmental, Health and Safety Laws.
(b) None of the Xxxxxx Parties has handled or disposed
of any Hazardous Material, arranged for the disposal of any Hazardous
Material, exposed any employee or other individual to any
substance or condition or owned or operated any property or
facility in any manner that could reasonably be expected to form
the Basis for any present or future Proceeding against the Seller
giving rise to any Liability for any cost of investigation,
remediation or other response actions, for damage to any property
or natural resources, for any illness of or personal injury to
any employee or other individual, or for any reason under any
Environmental, Health and Safety Law or under common law.
Without limiting the generality of the foregoing, no release,
emission or discharge of any Hazardous Material into the
environment has occurred or is currently occurring in connection
with the Business, or has occurred at, on, into, under, or having
originated at any Facility or property of the Xxxxxx Parties,
except for
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minimal amounts in compliance with Environmental, Health and
Safety Laws incident to the ordinary operation of the Business.
3.18 No Bribes, Illegal Payments. To the Knowledge of the
Seller, no officer, partner, employee or agent of the any of the
Xxxxxx Parties has directly or indirectly given or agreed to give
any illegal gift, contribution, payment or similar benefit to any
supplier, customer, governmental employee or other Person who
was, is or may be in a position to help or hinder the Xxxxxx
Parties, the Business or: (a) which could subject any of the
Xxxxxx Parties or the Buyer to any damage or penalty in any
Proceeding; or (b) the non-continuation of which in the future
could result in a material adverse effect on the business,
operations, assets, prospects or condition, financial or
otherwise, of the Business or the Buyer. To the Knowledge of the
Seller, no officer, partner, employee or agent of any of the
Xxxxxx Parties has: (i) established or maintained any unrecorded
fund or asset for any purpose; or (ii) made any false entries on
any books or records furnished in connection herewith to the
Buyer.
3.19 Compliance with Fictitious Name Statutes. The Seller has
complied with all requirements of fictitious name statutes in all
jurisdictions in which it conducts business, except where the
failure to so comply would not have a material adverse effect.
All of the fictitious name filings of the Seller are listed in
Section 3.19 of the Disclosure Schedule attached hereto.
3.20 Trade Payables. At the Closing, the Seller shall provide
the Buyer with a true and complete listing of all of the known
outstanding trade payables and accrued expenses of the Xxxxxx
Parties relating to the Business and incurred in the Ordinary
Course of Business (the "Pre-Closing Payables"), identifying the
amount of Pre-Closing Payables as of a date not more than ten
(10) days prior to the Closing Date.
3.21 Brokers' Fees. Except for fees payable to Brown, Gibbons,
Lang & Company, which fees shall be the responsibility of the
Seller, the Seller has no Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to the
transactions contemplated by the Operative Documents, and there
are no such fees or commissions incurred by or on behalf of the
Seller for which the Buyer could become liable or obligated.
3.22 Year 2000 Compliance. To the Knowledge of the Seller, all
material items, products, software, components and systems used
in the operation of the Business, which incorporate the
processing of dates or date-related data (including, but not
limited to, representing, calculating, comparing and sequencing),
including, but not limited to, computer systems, infrastructure
items, software applications, hardware and related equipment and
utilities are currently Y2K-Compliant.
3.23 Transactions with Affiliates; Conflicts of Interest. Except
as set forth in Section 3.23 of the Disclosure Schedule, to the
Knowledge of Seller, no (a) director, officer, employee or
stockholder of any of the Xxxxxx Parties or the Parent or their
respective Affiliates, nor (b) to the Seller's and the Parent's
Knowledge, any corporation, partnership, trust or other entity in
which any such person, or any member of the family of any such
person, is an officer, director, trustee, partner or holder of
more than five percent (5%) of the outstanding capital stock, is
a party to any transaction with any of the Xxxxxx Parties,
including any contract agreement or other arrangement providing
for the employment of, furnishing of services by, rental of real
or personal property
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from or otherwise requiring payments to, any such person or
firm. To the Seller's and the Parent's Knowledge, none of such
persons has any direct or indirect ownership interest in any firm
or corporation which competes with the Xxxxxx Parties, except
that employees, officers, directors and stockholders of the
Seller, and their families, may own stock in a publicly traded
company that competes with the Xxxxxx Parties, provided such
stock ownership does not exceed five percent (5%) of the issued
and outstanding capital stock of such competing company. For
purposes of this Agreement, a company shall be considered to be
"competing" if it engages in any business that is similar to the
Business as of the date of this Agreement.
3.24 Promotional Programs. A complete description of the Xxxxxx
Parties' promotional programs including a summary of the
constituent components and eligible participants is set forth on
Section 3.24 of the Disclosure Schedule.
3.25 Investment Canada Act. The Canadian Sub does not provide
"transportation services" or "financial services" and is not a
"cultural business" within the meaning of the Investment Canada
Act.
3.26 Competition Act (Canada). The Xxxxxx Parties do not have
assets in Canada that exceed in the aggregate, Cdn.$35 million in
aggregate value and do not have gross revenues from sales in,
from, or into Canada, that exceed, in the aggregate, Cdn.$35
million in value, determined for purposes of and in the manner
prescribed by the Competition Act (Canada).
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE BUYER
As a material inducement to the Seller and the Parent to
enter into this Agreement and to consummate the transactions
contemplated hereunder and thereunder, the Buyer represents and
warrants to the Seller and the Parent that each of the statements
contained in this Article 4 (and in the applicable Sections of
the Disclosure Schedule) is true and correct as of the date of
this Agreement and will be true and correct at and as of the
Closing.
4.1 Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws
of the State of Delaware and has full power and authority to
carry on its business as it is now being conducted.
4.2 Authorization of Transaction. The execution, delivery and
performance of the Operative Documents by the Buyer and the
performance by the Buyer of the transactions contemplated thereby
shall have been duly authorized and approved by all necessary
corporate proceedings of the Buyer as of the Closing Date. This
Agreement has been duly executed and delivered by the Buyer and
constitutes a valid and binding agreement of the Buyer,
enforceable against the Buyer in accordance with its terms
subject to applicable bankruptcy, insolvency and other laws
affecting creditors' rights generally, public policy and
equitable principles generally. The Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver the Operative Documents and to perform its
obligations thereunder.
4.3 Noncontravention. The execution and delivery of the
Operative Documents by the Buyer, and the consummation of the
transactions contemplated thereby (including the
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assignments and assumptions referred to in Article 2 above), (a)
will not violate any provision of the Certificate of
Incorporation or Bylaws of the Buyer, (b) will not violate any
statute, rule, regulation, order or decree of any Governmental
Body by which the Buyer or any of its properties or assets is
bound, and (c) will not result in a violation or breach of, or
constitute a default under, any license, franchise, permit,
indenture, agreement or other instrument to which the Buyer is a
party, or by which the Buyer or any of its properties or assets
is bound, excluding from the foregoing clauses (b) and (c)
violations, breaches or defaults which, either individually or in
the aggregate, would not prevent the Buyer from performing its
obligations under the Operative Documents or consummation of the
transactions contemplated thereby. Except as set forth in
Section 4.3 of the Disclosure Schedule, the Buyer does not need
to give any notice to, make any filing with, or obtain any
Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of
the transactions contemplated hereby and by the Operative
Documents. Except for filings required under the HSR Act, the
Buyer is not and will not be required to make any filing or
registration with, or obtain any Consent from, any Person in
connection with the execution and delivery of this Agreement and
the consummation or performance of the transactions contemplated
hereby and by the Operative Documents.
4.4 Proceedings. There is no Proceeding pending or, to the
Knowledge of the Buyer, Threatened against the Buyer, that would
have a material adverse effect on the Buyer's ability to perform
its obligations under the Operative Documents.
4.5 Brokers or Finders. No agent, broker or Person acting on
behalf of the Buyer is, or will be, entitled to any commission or
broker's or finder's fee from any of the Parties or their
Affiliates in connection with any of the transactions
contemplated by the Operative Documents.
ARTICLE 5
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period
between the execution of this Agreement and the Closing (except
with respect to the final clause of Section 5.2, which shall
survive the Closing):
5.1 General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary, proper
or advisable in order to consummate and make effective the
transactions contemplated by the Operative Documents (including
satisfaction, but not waiver, of the Closing conditions set forth
in Article 7 below).
5.2 Notices and Consents; Governmental Authorizations. The
Seller will give any notices to third parties, and will use its
best efforts to obtain any Consents and non-disturbance
agreements that the Buyer reasonably may request in connection
with the matters referred to in Section 3.3 above and/or to
effect transfers of the Assumed Contracts or the leases or
subleases referred to in Section 3.9(a) of the Disclosure
Schedule. Subject to the Buyer's right to require that all
Consents be delivered as a condition to Closing, if a Consent is
not obtained with respect to any such contract or agreement, the
Seller will use, and will cause the Xxxxxx Subsidiaries to use,
their commercially reasonable efforts to continue to maintain in
effect such contract or
-37-
agreement and will otherwise assist the Buyer with respect to
the transfer of any claims or rights thereunder. Each of the
Parties will give any required notices, make any filings with,
and use its reasonable best efforts to obtain any Governmental
Authorizations in connection with the matters referred to in
Sections 3.3, 3.11 and 4.3 above; provided, that at any time and
from time to time after the Closing, to the extent that any
contract or agreement may not effectively be assigned to the
Buyer, the Seller hereby covenants and agrees to perform and
enforce such contract or agreement or portion thereof for the
benefit of the Buyer, at the Buyer's request and sole expense.
5.3 Operation of Business. The Seller will not, and it will not
allow the Xxxxxx Subsidiaries to, engage in any practice, take
any action, or enter into any transaction outside the Ordinary
Course of Business without obtaining the prior written consent of
the Buyer. Without limiting the generality of the foregoing, the
Seller will not: (a) declare, set aside or pay any dividend or
make any distribution with respect to its capital stock or
redeem, purchase or otherwise acquire any of its capital stock;
or (b) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in Section 3.5
above; notwithstanding anything else provided herein, Seller
shall be entitled to retain all Cash held by the U.K Subsidiary
or the Canadian Subsidiary and it shall not constitute a
violation of the covenants set forth in Article V hereto to
transfer cash to Buyer from either such subsidiary (i) in
satisfaction of any intercompany account payable of either such
subsidiary, (ii) as a distribution, or (iii) otherwise.
5.4 Preservation of Business. The Seller will use its best
efforts to keep the Business and properties substantially intact,
including the Xxxxxx Parties' present operations, physical
facilities, goodwill, working conditions and relationships with
lessors, licensors, suppliers, customers and employees.
5.5 Full Access. Until termination of this Agreement or Closing
pursuant to the terms hereof, the Seller will permit
representatives of the Buyer to have reasonable access during
normal business hours and upon reasonable notice, and in a manner
so as not to interfere with the normal business operations of the
Seller, to all premises, properties, personnel, books, records
(including Tax records), contracts and documents of or pertaining
to the Business or the Xxxxxx Parties.
5.6 Notice of Developments. Each Party will give prompt written
notice to the other Party of any material adverse development
causing a breach of any of its own representations and warranties
in Article 3 and Article 4, as the case may be. No disclosure by
any Party pursuant to this Section 5.6, however, shall be deemed
to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation, breach of warranty or breach of
covenant.
5.7 Exclusivity. Until termination of this Agreement or Closing
pursuant to the terms hereof, the Seller will not: (a) solicit,
initiate or encourage the submission of any proposal or offer
from any Person relating to the acquisition of any capital stock
or other voting securities, or any substantial portion of the
assets, of any of the Business or the Xxxxxx Parties (including
any acquisition structured as a merger, consolidation or share
exchange); or (b) participate in any discussions or negotiations
regarding, furnish any information with respect to, assist or
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participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek to do any of the foregoing.
5.8 Resignations. Seller will obtain resignations effective as
of the Closing of the officers and directors of the Xxxxxx
Parties specified by Buyer.
ARTICLE 6
COVENANTS WHICH SURVIVE THE CLOSING
6.1 Confidentiality Covenant. Except as set forth below,
neither the Seller, the Xxxxxx Subsidiaries or the Parent, on the
one hand, nor the Buyer, on the other hand, nor any of their
respective Affiliates, shall at any time from and after the
execution of this Agreement, directly or indirectly, without the
prior written consent of the other Party, disclose or use, in any
way harmful to the business, operations, assets, prospects or
condition of the Business, the other Party or any of its
Affiliates, or otherwise contrary to the interests of such other
Party or its Affiliates, any information involving or relating to
the other Party or any of its Affiliates or any business, venture
or other activity of such other Party, past, present or future,
actual or prospective; provided, however, that such information
shall not include any information known generally to the public
(other than as a result of disclosure in violation hereof by a
Party or any of its Affiliates), or disclosed to such Party on a
nonconfidential basis from a third party, provided, that such
third party is not bound by a confidentiality agreement with or
other obligation of confidentiality or secrecy with respect to
such information under an agreement or applicable law, and
further provided, that the Parties and their Affiliates may
disclose such confidential information to their respective
advisors who shall be bound by the provisions of this Section
6.1. Notwithstanding the foregoing, the provisions of this
Section 6.1 shall not prohibit any disclosure required by law in
connection with any judicial or administrative proceeding or
inquiry. This Section 6.1 shall survive the Closing or
termination of this Agreement for any reason whatsoever;
provided, however, that this Section 6.1 shall not prevent the
Buyer and its Affiliates from using confidential information
relating to the Acquired Assets, the Business and/or the Xxxxxx
Parties from and after the Closing in connection with the
operation of the Business and the Acquired Assets.
6.2 Non-Competition and Non-Solicitation Covenants. The Seller,
for itself and the Xxxxxx Subsidiaries, hereby acknowledges that
the success of the business of the Buyer (including, without
limitation, after giving effect at the Closing to the sale and
transfer to the Buyer of the Acquired Assets) depends, among
other things, upon the absence of competition from the Xxxxxx
Parties, the Parent and their respective Affiliates, and the
continued preservation of the confidentiality of certain
information acquired from the Xxxxxx Parties, the Parent and
their respective Affiliates pursuant to Section 6.1. Each of the
Seller and the Parent hereby further acknowledges that an absence
of such competition and the preservation of the confidentiality
of such information is an essential premise of the bargain by and
among the Parties, and that the Buyer would be unwilling to enter
into the Operative Documents in the absence of this Section 6.2.
Accordingly, commencing on the Closing Date and continuing for a
period of two (2) years, the Parties agree to the following:
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(a) Except as set forth on Section 6.2(a)(i) of the
Disclosure Schedule, none of the Seller, the Parent or their stockholders
shall, directly or indirectly, own, manage, operate, control or
participate in any manner in the ownership, management, operation
or control of, or be connected as an officer, employee, partner,
director, consultant, agent or otherwise with, or have any
financial interest in, or aid or assist anyone else in any
business that is a direct competitor of the Business (taking into
consideration products, markets and distribution methods and
channels to customers), as conducted by Seller prior to the
Closing.
(b) Except with the Buyer's prior written consent, none
of the Seller, the Parent or their stockholders or corporate Affiliates
shall, directly or indirectly, recruit, employ as a result of any
such recruitment, or otherwise seek to induce by any means any
person who was employed by any of the Xxxxxx Parties within six
months preceding the Closing Date to terminate his or her
employment, to violate any agreement with or duty to the Buyer or
any Affiliate of the Buyer, or to hire any such employee.
(c) None of the Xxxxxx Parties, the Parent or their
Affiliates shall, directly or indirectly, solicit or encourage any Person
who is a client of the Business to terminate its relationship
with the Business.
(d) Enforcement. The Parties acknowledge and agree that,
because legal remedies may be inadequate in the event of a breach
of, or other failure to perform, any of the covenants and
obligations set forth in this Section 6.2, the non-breaching
Party may, in addition to obtaining any damages available to it,
enforce this Section 6.2 by injunction and other equitable
remedies. The Seller and the Parent also acknowledge and agree
that no breach by a Party of, or other failure by such Party to
perform, any of its covenants and obligations under any of the
Operative Documents or otherwise shall relieve the other Party of
any of its obligations under this Section 6.2.
(e) Severability; Etc. The Parties agree that the
provisions set forth in this Section 6.2, including without limitation
as to duration and geographic scope, are reasonable to protect the
legitimate interests of the Buyer and the goodwill associated
with the Business prior to the Closing. The provisions of this
Section 6.2 are severable, and in the event that any provision
hereof should, for any reason, be held invalid or unenforceable
in any respect, it shall not invalidate, render unenforceable or
otherwise affect any other provision hereof, and such invalid or
unenforceable provision shall be construed by limiting it so as
to be valid and enforceable to the maximum extent compatible
with, and possible under, applicable law.
6.3 Prorations and Adjustments.
(a) Real Estate Taxes. Real estate taxes and
assessments shall be the responsibility of Buyer and shall not be
prorated as of the Closing Date.
(c) The Seller's Accrual of Certain Employee Benefit
Obligations on or Before the Closing Date. On the Closing Balance Sheet,
Seller shall fully accrue for all vested and accrued employee
vacation, holiday pay, sick leave and like expense for the
Seller's employees through the Closing Date.
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(c) Survival at Closing. The provisions of this
Section 6.3 shall survive the Closing for twelve (12) months.
6.4 Further Assurances. Each of the Parties hereto, upon the
request from time to time of the other Party hereto and without
further consideration, will do each and every act and thing as
may be necessary or reasonably requested to consummate the
transactions contemplated hereby (including, without limitation,
the orderly transfer to the Buyer of the Acquired Assets and
assumption by the Buyer of the Assumed Liabilities), including
without limitation: (i) executing, acknowledging and delivering
assurances, assignments and other documents and instruments,
furnishing information and copies of documents, books and records
(including without limitation tax records); (ii) filing reports,
returns, applications, filings and other documents and
instruments with governmental authorities; (iii) taking such
steps as shall be necessary to enter the Buyer upon the books of
the Canadian Sub as the holder of all of the issued and
outstanding capital stock of the Canadian Sub and to issue stock
certificates to the Buyer representing such shares; and (iv)
cooperating with each other party hereto in exercising any right
or pursuing any claim, whether by litigation or otherwise, other
than rights and claims running against the party from whom or
which such cooperation is requested. This Section 6.4 shall
survive the Closing for an unlimited period of time.
6.5 Disclosure of Breach or Futility. If, prior to Closing, any
Party acquires knowledge of: (a) a material misrepresentation or
material breach by any other Party; or (b) an event, occurrence
or circumstance making satisfaction of a condition in Section 7.1
or 7.2 hereof unlikely, the Party acquiring such knowledge shall
give prompt written notice thereof to each other Party in
sufficient detail to permit a reasonable analysis thereof. Any
due diligence undertaken by the Buyer hereunder shall not
diminish the Buyer's right to rely upon the representations,
warranties and agreements of the Seller and the Parent in this
Agreement.
6.6 Transition Services. During the sixty (60) day period
following the Closing, the Seller and the Parent shall work with
the Buyer to develop mutually agreeable arrangements with respect
to transition services for the benefit of the Buyer, such
transition services, if any, to be made available to the Buyer
throughout the twelve (12) month period immediately following the
Closing.
6.7 Offers of Employment; Employee Plan Matters.
(a) The Buyer shall offer employment, commencing
on the Closing Date, to all employees of the Xxxxxx Parties, such
employment offers to include no less base compensation and other
compensation and benefits in the aggregate not less favorable
than the compensation and benefits provided by the Xxxxxx Parties
immediately prior to the Closing. In addition, Buyer shall offer
employment to A. Xxxxx Xxxxxxx and Xxxxxx X. Xxxx under
employment agreements that are no less favorable in the aggregate
than their employment agreements respectively dated July 2, 1998
and July 20, 1998. With respect to each employee who accepts
employment with Buyer as of the Closing, Buyer shall adopt a
severance pay plan or arrangement that is identical to the
severance pay plan or arrangement which was provided by the
Xxxxxx Parties to such employee on the Closing Date. Such
severance pay plan or arrangements shall include, without
limitation, the Xxxxxx Industries, Inc. Severance Pay Plan for
Certain Executive Employees, the Xxxxxx Industries, Inc.
Severance Benefit Plan for Certain
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Executive Employees, the Xxxxxx Industries, Inc. Severance Pay
Benefit Plan for Landerhaven Headquarters Employees (exempt and
non-exempt), and the severance pay provisions of paragraph 4 of
the employment agreements with A. Xxxxx Xxxxxxx (dated July 2,
1998) and Xxxxxx X. Xxxx (dated July 20, 1998). After the
Closing Date, Buyer may amend or terminate any of the
aforementioned compensation arrangements, plans and benefits in
accordance with their respective terms and applicable law. Buyer
shall assume, and Seller shall have no liability for, any
termination liability under the Worker Adjustment and Retraining
Notification ACT of 1988 ("WARN") in connection with the
transactions contemplated hereunder, any severance pay or any
other liability with respect to the employees of the Xxxxxx
Parties. The Xxxxxx Parties shall not attempt to retain any of
the employees to whom the Buyer has offered employment or in any
way interfere with the Buyer's attempts to employ such
individuals. Buyer agrees that the health plan coverage to be
afforded to those employees of the Seller who accept employment
with the Buyer shall be coverage that, pursuant to Section
602(2)(D)(i) of ERISA, terminates any continuation coverage
rights such employees might otherwise have under the COBRA health
continuation of coverage provisions (hereinafter referred to as
the "COBRA Provisions") contained in Section 4980(f) of the Code
and in Section 601 through 608 of ERISA as a result of the
termination of their employment with the Seller.
(b) Buyer shall assume Seller's existing
obligation to provide deferred compensation payments pursuant to
the terms of the Deferred Compensation Agreements with Certain
Former Executives and the Supplemental Executive Retirement Plan,
each as disclosed in Section 3.16 of the Disclosure Schedule.
Buyer shall assume Seller's existing obligation to provide
retiree medical and retiree life insurance benefits pursuant to
the terms of the Postretirement Benefit Plan for Certain Former
UAW Manufacturing and Executive Employees.
(c) Buyer shall assume sponsorship of, and all of
the Seller's existing obligations to provide deferred
compensation payment pursuant to, the Area Manager Deferred
Compensation Plan (the "Area Manager Plan"). At the Closing (to
the extent cash had been funded in the applicable bank account),
Seller shall transfer to Buyer in cash an amount equal to the
amount funded in any applicable bank accounts relating to
deferred compensation payments under the Area Manager Plan,
determined as of the Closing Date. After the Closing Date, with
respect to the Area Manager Plan, Buyer shall be solely
responsible for (i) satisfying all obligations with respect to
such plan, (ii) maintaining such plan, including, without
limitation, amending such plan to the extent required to comply
with applicable law, and (iii) all reporting and disclosure
requirements with due dates after the Closing Date. After the
Closing Date, Buyer may amend or terminate the Area Manager Plan
in accordance with its terms and applicable law.
(d) Buyer shall become the sponsoring employer of the
Xxxxxx Industries, Inc. UAW Retirement Income Plan (the "UAW Plan").
Accordingly, the UAW Plan shall be amended to substitute Buyer as
the sponsoring employer of the plan and, to the extent
applicable, any trust or other funding arrangement for such plan
shall be likewise amended, effective as of the Closing Date.
After the Closing Date, with respect to the UAW Plan, the Buyer
shall be solely responsible for (i) making all required
contributions to, and otherwise providing funding for, all
benefits accrued under the plan, (ii) the maintenance of such
plan, including, without limitation, amendment of such plan to
comply with the requirements of
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Section 401(a) of the Code, (iii) and all reporting and
disclosure requirements with due dates after the Closing Date,
and (iv) any liability due with respect to any termination of
such plan. After the Closing Date, Buyer may amend or terminate
the UAW Plan in accordance with its terms and applicable law.
(e) Buyer shall become the sponsoring employer of
the Xxxxxx Industries, Inc. 401(k) Retirement Savings Plan (the
"401(k) Plan"). Accordingly, the 401(k) Plan shall be amended to
substitute Buyer as the sponsoring employer of the plan and, to
the extent applicable, any trust or other funding arrangement for
such plan shall be likewise amended, effective as of the Closing
Date. Seller shall accrue on the Closing Balance Sheet, all
amounts attributable to salary deferrals of its employees made
under the 401(k) Plan prior to the Closing Date, and any employer
matching contributions required to be contributed to the plan as
a result of such salary deferrals. After the Closing Date, with
respect to the 401(k) Plan, Buyer shall be solely responsible for
(i) making all required contributions to, and otherwise providing
funding for, all benefits accrued under the plan, (ii)
maintenance of the plan, including, without limitation, amendment
of such plan to comply with the requirements of Section 401(a) of
the Code, and (iii) all reporting and disclosure requirements
with due dates after the Closing Date. After the Closing Date,
Buyer may amend or terminate the 401(k) Plan in accordance with
its terms and applicable law.
(f) Buyer shall become the sponsoring employer of
the following welfare benefit plans and/or programs of Xxxxxx
Industries, Inc.:
a. The Group Insurance Plan, including:
(i) The Xxxxxx Foundation Health Plan
of Ohio,
(ii) The Xxxxxx Foundation Health Plan
of Hawaii
(iii)The Xxxxxx Foundation Health Plan
of Atlanta
(iv) The self-insured group health plan
of Xxxxxx Industries, Inc.
maintained with The TPA, Inc. as
third party administrator and
aggregate and specific stop-loss
insurance coverage through Xxxx
Xxxxx Life Insurance Company.
b. The Dental Insurance Plan maintained
with Union Fidelity Insurance Co.
c. The Life Insurance Plans maintained with
(i) Life Insurance Company of North
America,
(ii) CNA Life Insurance Co., and
(iii)UNUM Life Insurance Co. of America.
d. The Long-Term Disability Plan maintained
with UNUM Life Insurance Company of
America, the Contributory Long Term
Disability Plan maintained with Xxxx
Xxxxxx Insurance Company, and the Short
Term Disability Plan.
e. The Group Travel Accident Insurance
Program.
f. The Personal Accident Insurance Plan.
g. The Educational Assistance Plan.
h. The Section 125 Plan.
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Each of the foregoing plans is referred to herein
as the "Assumed Welfare Plans". Each of the Assumed Welfare
Plans shall be amended to substitute Buyer as the sponsoring
employer of the plan and, to the extent applicable, a likewise
amendment shall be made to any insurance contract, trust, third
party administrator contract, or other funding arrangement for
such plans, effective as of the Closing Date. Seller shall pay
all premiums due under insurance contracts maintained with
respect to the Assumed Welfare Plans, for premium due dates prior
to the Closing Date. All employee contributions for coverage
under an Assumed Welfare Plan which are deducted from employee
paychecks prior to the Closing Date, shall, in accordance with
the applicable plan, be applied toward the purchase of insurance
prior to the Closing Date or held under the self-insured health
care plan and/or Section 125 Plan, and transferred to Buyer as
part of Buyer's assumption of such plans. After the Closing
Date, with respect to the Assumed Welfare Plans, Buyer shall be
solely responsible for (i) making all required premium payments
to, and for otherwise providing funding for, all benefits due
under such plans, (ii) the maintenance of such plans, including,
without limitation, amendment of such plans to comply with the
requirements of applicable law, (iii) all reporting and
disclosure requirements with due dates after the Closing Date,
and (iv) any obligations of such plans relating to Part 6 of
Subtitle B of Title I of ERISA (including obligations arising
prior to the Closing Date). After the Closing Date, Buyer may
amend or terminate the Assumed Welfare Plans in accordance with
their terms and applicable law.
6.8 Post-Closing Retention of Records. For a period of not less
than four (4) years after the Closing Date, the Buyer shall
preserve and retain all corporate, accounting, legal, auditing
and other books and records pertaining to the Acquired Assets;
provided, however, such four (4) year period shall be extended in
the event that any Proceeding has been commenced or is pending or
Threatened at the expiration of such four (4) year period and
such extension shall continue until any such Proceeding has been
settled or resolved with finality or is no longer pending or
Threatened. Notwithstanding the foregoing, the Buyer may discard
or destroy any of such books and records prior to the end of such
four (4) year period or period of extension if the Buyer has
given the Seller at least sixty (60) days prior written notice of
the Buyer's intent to discard or destroy such books and records
and has given the Seller the opportunity to take possession of
any or all of such books and records within said sixty (60) day
period. The Buyer shall afford the Seller and its
representatives reasonable access during normal business hours
to, and the right to make copies of, all such books and records,
for any legitimate purpose (including, without limitation, in
connection with the preparation, documentation and/or handling of
any financial statements, tax returns, tax audits, reports to
governmental or regulatory agencies, litigation, disputes, claims
or controversies).
6.9 Use of Trade Names. Except as set forth on Section 6.9 of
the Disclosure Schedule, the Seller agrees that, from and after
the Closing, it will not use the corporate identities and Trade
Names or any variation or variations thereof on any item
disseminated to the public. From and after the Closing, the
Buyer and its Affiliates shall have the exclusive right to use
the Trade Names in connection with the Business. Effective as
soon as practicable following the Closing, the Parent, in its
capacity as the sole shareholder of the Seller, shall cause the
Seller to take all necessary action to change the corporate,
assumed and trade names of the Seller in its state of
incorporation and in all states in which it is authorized to
transact business on the Closing Date to a name that does not
contain any words similar or reasonably likely to be confused
with any words in the "Xxxxxx Industries, Inc." name or any use
by the Buyer thereof
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and shall thereupon cease all use of such name. This Section 6.9
shall survive the Closing for an unlimited period of time.
6.10 Transfer of Sponsorship of Certain Employee Benefits Plans.
Prior to the Closing, the Xxxxxx Parties shall have adopted
resolutions in form and substance reasonably satisfactory to the
Buyer to effect the transfer to the Buyer of the sponsorship of
those Employee Benefits Plans set forth on Section 6.10 of the
Disclosure Schedule.
6.11 Enforcement of Confidentiality Agreements. Section 6.11 of
the Disclosure Schedule, which shall be delivered at Closing,
sets forth each confidentiality agreement or portion thereof
running in favor of the Seller in respect of the Business and/or
the Acquired Assets (unless such agreement may not be disclosed
pursuant to its term). The Seller shall assign to the Buyer each
confidentiality agreement or portion thereof running in favor of
the Seller in respect of the Business and/or the Acquired Assets;
PROVIDED, that at any time and from time to time after the
Closing, to the extent that any such confidentiality agreement
may not effectively be assigned to the Buyer, the Seller hereby
covenants and agrees to enforce such non-assignable
confidentiality agreement or portion thereof for the benefit of
the Buyer, at the Buyer's request and sole expense.
6.12 Canadian Sub Clearance Certificate. In the event that the
Buyer is obligated to remit tax on behalf of the Seller pursuant
to Section 116(5) of the ITA, (i) the Buyer undertakes to remit
the amount payable under Section 116(5) of the ITA to the
Receiver General of Canada, on, but not before, the 30th day of
the month following in the month in which the Buyer acquires the
shares of the Canadian Sub and to obtain a receipt for such
payment. If the Buyer fails to remit as and when required by
Section 116(5) of the ITA, any liability arising as a result of
such failure to comply, is and remains the sole responsibility of
the Buyer and (ii) the Seller agrees to forthwith reimburse to
the Buyer any amounts paid by the Buyer on account of the
Seller's tax pursuant to Section 116(5) of the ITA and this
Section 2.5(l)(i), upon receiving the payment receipt from the
Buyer.
6.13 Post Closing Tax Payments. If, during the five years
following the Closing Date, any portion of the management fee
payments made in any taxable year that began before the Closing
by the U.K. Sub are disallowed for United Kingdom corporation tax
purposes or are treated as dividends for United Kingdom income
tax purposes, or any portion of the management fee payments made
in any taxable year that began before the Closing by the Canadian
Sub are disallowed for Canadian income tax purposes or are
treated as dividends for Canadian income tax purposes, the U.K.
Sub (or any successor thereto) or the Canadian Sub (or any
successor thereto) is required to pay Tax on such disallowed
amounts, and Parent or its stockholder may amend any of their
United States federal income tax returns to take a credit for any
foreign taxes paid or to treat under Revenue Procedure 99-32,
1999-34 I.R.B. 296, the disallowed portion of such management fee
payments as a loan or advance, then Parent will promptly remit to
BGI the actual tax benefit that would be available to Parent or
its stockholder from such amendment. Parent agrees that it will
cooperate reasonably with Buyer, at Buyer's expense, in seeking
relief under the competent authority provisions of the income tax
convention between the United States and the United Kingdom or
the income tax convention between the United States and Canada.
Parent shall not be required to pay any amount to the U.K. Sub
(or any successor thereto) or the Canadian Sub (or any successor
thereto) pursuant to Revenue Procedure 99-32,
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unless Buyer pays an equal amount to Parent (as additional
consideration for the stock of the U.K. Sub or the Canadian Sub).
If Parent or its stockholder files any amendments to its Tax
Returns and any tax credit claimed is disallowed, BGI will remit
to Seller the amount relating to the tax credit previously paid
to BGI.
ARTICLE 7
CONDITIONS TO OBLIGATION TO CLOSE
7.1 Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(a) The representations and warranties set forth in Article 3
above shall be true and correct in all material respects at and
as of the Closing Date as if made on the Closing Date.
(b) The Seller shall have performed and complied with all of
its respective covenants hereunder in all material respects to be
performed on or prior to the Closing.
(c) The Seller shall have procured all third party consents
specified in Section 5.2 above.
(d) The Parties shall have procured with finality all
Governmental Authorizations necessary or appropriate (i) for the
continued operation of the Business by the Buyer, on the same
basis as the Xxxxxx Parties are currently operating the same,
without the imposition of materially adverse conditions on the
Business or the Acquired Assets; and (ii) for the consummation of
the transactions contemplated by the Operative Documents. All
notification filings required to be made under the HSR Act shall
have been made, all applicable waiting periods thereunder shall
have expired or been terminated without any request from any
appropriate Governmental Body for additional information or, if
additional information has been requested, all applicable
extended waiting periods shall have expired; provided, however,
that the Buyer may not rely on the condition set forth in this
Section 7.1(d) if the failure to obtain the requisite approvals
or clearances under the HSR Act is a result of the Buyer's
failure to take all necessary action in accordance with Section
6.4 above.
(e) No material adverse change in the operation of the
Business shall have occurred after the Effective Date and no fact shall
have arisen which has or reasonably could be expected to have a
material adverse effect on the Acquired Assets or on the
Business. Without limiting the generality of the foregoing, for
purposes of this Section 7.1(e), the termination by any employee,
customer or vendor (other than those vendors identified on
Section 7.1(e) of the Disclosure Schedule) of his, her or its
relationship with any of the Xxxxxx Parties shall not be deemed
to constitute a material adverse change in the operation of the
Business.
(f) No Proceeding shall be pending or Threatened wherein an
unfavorable injunction, judgment, order, decree, ruling or charge
would: (i) prevent
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consummation of any of the transactions contemplated by this
Agreement; (ii) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation; or (iii)
affect adversely the right of the Buyer to own the Acquired
Assets and to operate the Business (and no such injunction,
judgment, order, decree, ruling or charge shall be in effect).
(g) The Seller shall have paid and discharged in full all
indebtedness and removed all liens in any way affecting the
Acquired Assets, except for such liens as are expressly assumed
by the Buyer as more particularly set forth on Section 2.2(b) of
the Disclosure Schedule hereto.
(h) The Seller shall have delivered to the Buyer a
certificate signed by an authorized officer of the Seller dated the Closing
Date to the effect that each of the conditions specified in Subsections
7.1(a)-(h) have been satisfied in all respects.
(i) The Buyer shall have received from counsel to the
Seller the opinion required pursuant to Section 2.5(h) above.
The Buyer may waive any condition specified
in this Section 7.1 if it executes a writing so stating at or
prior to the Closing.
7.2 Conditions to Obligation of the Seller. The obligation of
the Seller to consummate the transactions to be performed by it
in connection with the Closing is subject to satisfaction of the
following conditions:
(a) The representations and warranties set forth in Article 4
above shall be true and correct in all material respects at and as of the
Closing Date as if made on the Closing Date.
(b) The Buyer shall have performed and complied with all of its
covenants hereunder in all material respects required to be performed on or
prior to the Closing.
(c) No Proceeding shall be pending or Threatened wherein an
unfavorable injunction, judgment, order, decree, ruling or charge
would: (i) prevent consummation of any of the transactions contemplated
by this Agreement; or (ii) cause any of the transactions contemplated
by this Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling or charge shall be in effect).
(d) The Buyer shall have delivered to the Seller a certificate
signed by an authorized officer of the Buyer to the effect that each of
the conditions specified in subsections 7.2(a)-(c) has been satisfied in
all respects.
The Seller may waive any condition specified
in this Section 7.2 if it executes a writing so stating at or
prior to the Closing.
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ARTICLE 8
TERMINATION
8.1 Termination of Agreement. The Parties may terminate this
Agreement as expressly provided below:
(a) The Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing.
(b) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing: (i) in the
event the Seller has breached any representation, warranty or
covenant contained in this Agreement in any material respect; or
(ii) if the Closing shall not have occurred on or before the
Closing Date, by reason of the failure of any condition precedent
under Section 7.1 hereof (unless the failure results primarily
from the Buyer itself breaching any representation, warranty or
covenant contained in this Agreement), and in the case of either
(i) or (ii), the Buyer has given written notice to the Seller of
such breach or failure and the Seller shall not have cured such
breach or failure within fifteen (15) days.
(c) The Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing: (i) in the
event the Buyer has breached any representation, warranty or
covenant contained in this Agreement in any material respect; or
(ii) if the Closing shall not have occurred on or before the
Closing Date, by reason of the failure of any condition precedent
under Section 7.2 hereof including, without limitation, payment
of the Purchase Price (unless the failure results primarily from
the Seller breaching any representation, warranty or covenant
contained in this Agreement) and in the case of either (i) or
(ii), the Seller has given written notice to the Buyer of such
breach or failure and, except with respect to payment of the
Purchase Price, the Buyer shall not have cured such breach or
failure within fifteen (15) days.
8.2 Effect of Termination. Each Party's right of termination
under Section 8.1 is in addition to any other rights it may have
under this Agreement or otherwise, and the exercise of a right of
termination will not constitute an election of remedies. If this
Agreement is terminated pursuant to Section 8.1, all further
obligations of the Parties under this Agreement will terminate
except that the obligations in Section 6.1 (Confidentiality),
Section 10.1 (Press Releases) and Section 10.11 (Expenses) will
survive; provided, however, that if this Agreement is terminated
by a Party because one or more conditions to the terminating
Party's obligations under this Agreement is not satisfied as a
result of the other Party's failure to comply with its
obligations under this Agreement, the terminating Party's right
to pursue all legal remedies will survive such termination
unimpaired.
ARTICLE 9
INDEMNIFICATION
9.1 Survival of Representations. Unless specifically otherwise
provided, the Parties agree that all representations, warranties
and covenants made in the Operative Documents shall
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survive for a period of twelve (12) months after the Closing
Date and shall not be extinguished by the Closing or any
investigation made by or on behalf of any party hereto.
Notwithstanding the foregoing, the representations and warranties
set forth in Sections 3.1, 3.2, 3.3, 3.7(b), 3.7(c), 3.7(d),
3.9(a), 3.9(c), 3.9(g), 3.10(a), 3.21, 4.1, 4.2, 4.3, 4.5, and
9.2(b) shall survive indefinitely. Also notwithstanding the
foregoing, any representation, warranty or covenant for which a
timely action, proceeding or claim is made pursuant to the
provisions of this Article IX shall survive beyond such twelve
(12) month period until any such action, proceeding or claim is
finally determined and paid in full.
9.2 Indemnification of the Buyer.
(a) General Indemnification. The Seller and the Parent agree,
jointly and severally, to indemnify and hold harmless the Buyer
and its Affiliates and their respective directors, officers and
employees (the "Buyer Indemnitees") from and against (A) any and
all payments, damages, claims, demands, losses, expenses, costs,
obligations and liabilities, including reasonable attorneys'
fees, but excluding lost profits and consequential damages
(collectively, "Damages"), which may be asserted against or
sustained or incurred by the Buyer Indemnitees in connection
with, arising out of or related to (i) any inaccuracy in,
misrepresentation, breach or alleged breach of any of the
representations, warranties, agreements, commitments,
obligations, covenants or conditions made by the Seller or the
Parent hereunder; (ii) the Excluded Liabilities; (iii) the
failure of the transfer and assignment of the Acquired Assets
from the Seller to the Buyer to cause the Buyer to acquire such
title to the Acquired Assets as is represented and warranted by
the Seller in this Agreement and the Disclosure Schedule, unless
such failure is caused by the action of the Buyer; and (iv) any
breach of any obligation arising under the Assumed Contracts on
or prior to the Closing Date; and (B) any and all costs and
expenses (including, but not limited to, reasonable legal
expenses) incurred by the Buyer Indemnitees in connection with
the enforcement of their respective rights hereunder. To the
full extent permitted by law, the Seller and the Parent covenant
on behalf of themselves and their Affiliates not to xxx any of
the Buyer Indemnitees regarding any matters referenced in this
Section 9.2. Notwithstanding the foregoing, the Seller and its
Affiliates shall have the right to enforce the performance of the
Buyer's covenants and obligations set forth in this Agreement or
the other agreements contemplated hereby, to the extent that the
Seller or its Affiliate is a party thereto or otherwise entitled
to the benefits thereunder.
(b) Environmental Indemnification. Notwithstanding anything
to the contrary in this Agreement, the Seller and the Parent agree,
jointly and severally, to indemnify and hold harmless the Buyer
Indemnitees, without duplication, from and against all Damages
(including, without limitation, all reasonable costs and expenses
of investigation by engineers, environmental consultants and
similar technical personnel), whether accrued, contingent,
absolute, determined, determinable or otherwise, incurred or
suffered by the Buyer Indemnitees or any of them arising out of
or in connection with any fact, condition or circumstance listed
in Section 9.2(b) of the Disclosure Schedule that constitutes a
Liability under any Environmental, Health and Safety Laws as of
the Closing Date.
9.3 Indemnification of the Seller. The Buyer agrees to
indemnify and hold harmless the Xxxxxx Parties and their
Affiliates and their respective directors, officers and employees
(the "Seller Indemnitees") from and against (A) any and all
Damages which may be asserted against
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or sustained or incurred by the Seller Indemnitees in connection
with, arising out of or related to: (i) the Assumed Liabilities;
(ii) any inaccuracy in, misrepresentation, breach or alleged
breach of any of the representations, warranties, agreements,
commitments, obligations, covenants or conditions made by the
Buyer hereunder; or (iii) the operation of the Business following
the Closing, except with respect to any Excluded Liabilities, and
(B) any and all costs and expenses (including, but not limited
to, reasonable legal expenses) incurred by the Seller Indemnitees
in connection with the enforcement of their respective rights
hereunder. To the full extent permitted by law, the Buyer
covenants on behalf of itself and its Affiliates not to xxx any
of the Seller Indemnitees regarding any matters referenced in
this Section 9.3. Notwithstanding the foregoing, the Buyer and
its Affiliates shall have the right to enforce the performance of
the Parent's and Seller's covenants and obligations set forth in
this Agreement or the other agreements contemplated hereby, to
the extent that the Buyer or its Affiliate is a party thereto or
otherwise entitled to the benefits thereunder.
9.4 Procedure for Indemnification. Any party making a claim for
indemnification hereunder (the "Indemnitee") shall promptly
notify the indemnifying party (the "Indemnifying Party") of the
claim in writing, describing the claim, the amount thereof, and
the basis therefor. The Indemnifying Party shall respond to each
such claim within thirty (30) days of receipt of such notice. No
action shall be taken pursuant to the provisions of this
Agreement or otherwise by the Indemnitee until the later of (a)
the expiration of the thirty (30) day response period (unless
reasonably necessary to protect the rights of the Indemnitee), or
(b) thirty (30) days following the receipt of a response within
such thirty (30) day period by the Indemnitee requesting an
opportunity to cure the matter giving rise to indemnification
(and, in such event, the amount of such claim for indemnification
shall be reduced to the extent so cured within such thirty (30)
day cure period). If such demand is based on a claim by a third
party, the Indemnifying Party shall have the right to assume the
entire control of the defense, compromise or settlement thereof,
including at its own expense, employment of counsel reasonably
satisfactory to the Indemnitee, and, in connection therewith, the
Indemnitee shall cooperate fully to make available to the
Indemnifying Party all pertinent information under its control.
The Indemnifying Party shall not concede, settle or compromise
any such third-party claim without the consent of the Indemnitee,
which consent shall not be unreasonably withheld or delayed. No
claim for indemnification resulting from the breach or falsity of
any of the representations or warranties set forth herein or in
any certificate or other instrument delivered pursuant hereto
shall be made after a date on which such representation, warranty
or agreement shall have expired under the provisions of Section
9.1 hereof.
9.5 Limitations on Indemnity Obligations. Except as set forth
in the last sentence of this Section, the Indemnifying Party
shall have no obligation to pay any claim for indemnification
hereunder unless and until the aggregate amount of all such
claims exceeds Five Hundred Thousand Dollars ($500,000) (the
"Threshold Indemnity Amount"). In the event the aggregate amount
of all claims for which an Indemnified Party seeks
indemnification hereunder exceeds the Threshold Indemnity Amount,
the Indemnifying Party or Parties shall be liable for the entire
indemnity amount with respect to such aggregated claims,
including the Threshold Indemnity Amount, up to a maximum amount
of Twelve Million Five Hundred Thousand Dollars ($12,500,000)
and, with respect to each if the UK Sub and Canadian Sub,
respectively, up to a maximum amount of twenty percent (20%) of
the Final Purchase Price allocated to the share of each such
subsidiary. Notwithstanding the foregoing, the limitations set
forth in this
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Section 9.5 shall not apply to any claims for indemnification
made pursuant to this Article 9 (a) by any of the Buyer
Indemnitees with respect to the payment by the Seller of any post-
Closing adjustment to the Final Purchase Price pursuant to
Section 2.3 hereof, or (b) by any of the Seller Indemnitees with
respect to the Assumed Liabilities or the payment by the Buyer of
any post-Closing adjustment to the Final Purchase Price pursuant
to Section 2.3 hereof.
9.6 Treatment of Indemnification Payments. Any payment by an
Indemnifying Party under this Article IX will be an adjustment to
the Final Purchase Price unless a determination (as defined in
Section 1313 of the Code) with respect to the Indemnitee causes
any such payment not to constitute an adjustment to the Final
Purchase Price for United States Federal income tax purposes.
ARTICLE 10
MISCELLANEOUS
10.1 Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating
to the subject matter of this Agreement without the prior written
approval of the other Party; provided, however, that any Party
may make any public disclosure it believes in good faith is
required by applicable law (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party
prior to making the disclosure).
10.2 No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
Without limiting the foregoing, this Agreement shall not confer
any rights or remedies upon any present or former employee,
consultant or agent of any of the Xxxxxx Parties or the Buyer.
10.3 Entire Agreement. This Agreement together with all other
Operative Documents constitutes the entire agreement between the
Parties and supersedes any prior understandings, agreements or
representations by or between the Parties, written or oral, to
the extent they relate in any way to the subject matter hereof.
10.4 Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and
their respective successors and permitted assigns. No Party may
assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the
other Party; provided, however, that the Buyer may: (a) assign
any or all of its rights and interests hereunder to one or more
of its Affiliates; and (b) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of
which cases the Buyer nonetheless shall remain responsible for
the performance of all of its obligations hereunder).
10.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all
of which together will constitute one and the same instrument.
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10.6 Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
10.7 Notices. All notices, requests, demands, claims and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set
forth below:
If to the Seller:
Xxxx X. Xxxxxxxx, Chairman
Paragon Corporate Holdings, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx, XX 00000-0000
Telecopier: 000-000-0000
If to the Buyer:
Xxxxxx Group Inc.
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Attention: Vice President, Business Development
Telecopier: 000-000-0000
with a copy to:
Xxxxxx Group Inc.
000 Xxxx Xxxxxx
X.X. Xxx 000
Xxxxxxx, XX 00000-0000
Attention: Senior Vice President, General Counsel
And Secretary
Telecopier: 000-000-0000
Any Party may send any notice, request, demand, claim or
other communication hereunder to the intended recipient at the
address set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
U.S. mail or electronic mail), but no such notice, request,
demand, claim or other communication shall be deemed to have been
duly given unless and until it actually is received by the
intended recipient. Any Party may change the address to which
notices, requests, demands, claims and other communications
hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
10.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of
New York without giving effect to any choice or conflict of law
provision or rule that would cause the application of the laws of
any jurisdiction other than the State of New York.
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10.9 Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing
and signed by the Parties. No waiver by any Party of any
default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend
to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights
arising by virtue of any prior or subsequent such occurrence.
10.10 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
10.11 Expenses. Each of the Buyer and the Seller will bear
its own costs and expenses (including legal fees and expenses)
incurred in connection with this Agreement and the transactions
contemplated hereby, except that the Buyer shall also pay the
filing fee for the Parent's notification filing(s) under the HSR
Act with respect to the transactions contemplated by the
Operative Documents.
10.12 Construction. Any reference to any federal, state,
local or foreign statute or law shall be deemed also to refer to
all rules and regulations promulgated thereunder, unless the
context requires otherwise. The word "including" shall mean
including without limitation. Nothing in the Disclosure Schedule
shall be deemed adequate to disclose an exception to a
representation or warranty made herein unless the Disclosure
Schedule identifies the exception with reasonable particularity
and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or
warranty made herein (unless the representation or warranty has
to do with the existence of the document or other item itself).
The Parties intend that each representation, warranty and
covenant contained herein shall have independent significance.
If any Party has breached any representation, warranty or
covenant contained herein in any respect, the fact that there
exists another representation, warranty or covenant relating to
the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract
from or mitigate the fact that the Party is in breach of the
first representation, warranty or covenant.
10.13 Joint Effort. The provisions of this Agreement have
been examined, negotiated and revised by counsel for each party,
and no implication shall be drawn against any Party by virtue of
the drafting of this Agreement.
10.14 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
10.15 Specific Performance. Each of the Parties acknowledges
and agrees that the other Party would be damaged irreparably in
the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the Parties agrees that,
unless otherwise expressly set forth herein, the other Party
shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof
in any action
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instituted in any court of the United States or any state
thereof having jurisdiction over the Parties and the matter
(subject to the provisions set forth in Section 10.16 below), in
addition to any other remedy to which it may be entitled, at law
or in equity.
signatures appear on next page
-54-
IN WITNESS WHEREOF, the Parties have caused this Agreement
to be executed by their respective duly authorized officers as of
the date first written above.
THE BUYER: THE SELLER:
XXXXXX GROUP INC. XXXXXX INDUSTRIES, INC.
By:/s/Xxxxxx X. Xxxxxxxx By:/s/Xxxx X. Xxxxxxxx
--------------------- -------------------
Title: Vice President, Title: Chairman
Business Development -------------------
---------------------
THE PARENT:
----------
PARAGON CORPORATE HOLDINGS,
INC.
By:/s/Xxxx X. Xxxxxxxx
--------------------
Title: Chairman
--------------------
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LIST OF OMITTED SCHEDULES AND EXHIBITS
--------------------------------------
The Registrant has omitted from this filing the Schedules
and Exhibits listed below. The Registrant will furnish
supplementally to the Commission, upon request, a copy of any
omitted Schedule or Exhibit.
Disclosure Schedule by Section
------------------------------
1.1 Acquired Assets
1.31 Excluded Assets
2.2(a) Assumed Contracts
2.2(b) Assumed Liabilities
2.5(d) Consents to assignment
2.5(f) Encumbrances, UCC financing statements, other loan
documents
3.1 Name, jurisdiction and capitalization of each Xxxxxx
Party
3.2 Exceptions to the Seller's and Parent's authority to
transfer Acquired Assets
3.3 Notices, filings, third-party Consents in connection
with the transaction
3.4 Exceptions to the Seller's and Parent's representations
and warranties related to the Financial Statements
3.5 Exceptions to the Seller's conduct of the business in
the ordinary course
3.6(a) Undisclosed liabilities
3.6(b) Unfunded liabilities of the Seller's and Parent's
employee benefit plans
3.7(a) Exceptions to representations and warranties about the
Xxxxxx Parties' compliance with Legal Requirements
3.7(c) Governmental Authorizations
3.8(a) Exceptions to the Seller's and Parent's representations
and warranties regarding Taxes
3.8(b) Tax Returns
3.8(d) Exceptions to Seller's and Parent's representations and
warranties regarding Tax adjustments, deficiencies,
audit examinations, etc.
3.8(e) Jurisdictions where the Xxxxxx Parties are authorized
to do business, etc.
3.8(f) Tax allocation and sharing agreements of Seller and
Parent
3.9(a) Properties
3.9(b) Exceptions to the Seller's and Parent's representations
and warranties regarding Real Property
3.9(c) Exceptions to the Seller's and Parent's representations
and warranties regarding Leased Property
3.9(g) Exceptions to the Seller's and Parent's representations
and warranties regarding the Acquired Assets
3.9(h) Exceptions to the Seller's and Parent's representations
and warranties regarding the Inventories
1
3.10(c) Intellectual Property of the Xxxxxx Parties
3.11 Material Contracts of the Xxxxxx Parties
3.13 Insurance policies
3.14 Litigation involving a Xxxxxx Party
3.15(a) Exceptions to the Seller's and Parent's representation
and warranties regarding relationships with employees
of the Xxxxxx Parties
3.15(b) Seller's employees
3.15(d) Certain terminated employees
3.16(a) Seller's Employee Benefit Plans
3.16(b) Exceptions to the Seller's and Parent's representations
and warranties regarding Employee Pension Benefit Plans
3.16(d) Exceptions to Seller's and parent's representations and
warranties regarding Employee Welfare Benefit Plans
3.17 Exceptions to the Seller's and Parent's representations
and warranties regarding the environment, health and
safety
3.19 Seller's fictitious name filings
3.23 Transactions between the Xxxxxx Parties and affiliates
6.9 Exceptions to the Seller's covenant not to use
corporate identities and Trade Names from and after
Closing
6.10 Employee Benefit Plans, transfer of sponsorship to the
Buyer
6.11 Third-party confidentiality agreements in the Seller's
favor
7.1(e) Material vendors
9.2(b) Liabilities under Environmental, Health and Safety
Laws, indemnified by the Seller and Parent
Exhibits
--------
A Net Worth Adjustment Schedule
B Xxxx of Sale
C-1 Assignment and Assumption Agreement (Contracts)
C-2 Assignment and Assumption Agreement (Leases)
Letter Agreement, dated May 10, 2000, by and among Xxxxxx Group
Inc., and Xxxxxx Industries, Inc. and Paragon Corporate
Holdings, Inc., regarding cash reconciliation and transfer
to the Seller as of the Closing.
2
