1
EXHIBIT 2.1
Portions of this exhibit have been omitted and separately filed with the
Commission pursuant to a request for confidential treatment under Rule 24b-2.
The location of those omissions is denoted by opening and closing brackets as
follows:[ ].
2
ASSET PURCHASE AGREEMENT
BY AND BETWEEN
SL AUBURN, INC.
AND
CHAMPION SPARK PLUG COMPANY
AS OF MAY 1, 1997
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TABLE OF CONTENTS
PAGE
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ARTICLE I - PURCHASE AND SALE OF ASSETS
---------------------------------------
1.1. Purchase and Sale of Assets................................................................................ 1
1.2. Excluded Assets............................................................................................ 3
1.3. Assumed Liabilities........................................................................................ 4
1.4. Excluded Liabilities....................................................................................... 4
ARTICLE II - CONSIDERATION FOR TRANSFER
---------------------------------------
2.1. Consideration.............................................................................................. 6
2.2. Payment of Consideration at Closing........................................................................ 6
2.3. Purchase Price Adjustment.................................................................................. 6
2.4. Closing Statement of Net Assets............................................................................ 7
2.5. Buyer's Review of Preliminary Closing Statement of Net Assets.............................................. 8
2.6. Seller's Response to the Buyer's Letter.................................................................... 8
2.7. Meeting to Resolve Proposed Adjustments.................................................................... 8
2.8. Resolution by Accounting Arbitrator........................................................................ 9
2.9. Notices Relating to the Closing Statement of Net Assets.................................................... 9
2.10. Allocation................................................................................................ 10
ARTICLE III - THE CLOSING AND TRANSFER OF ASSETS
------------------------------------------------
3.1. Closing................................................................................................... 10
3.2. Deliveries by the Buyer................................................................................... 10
3.3. Deliveries by the Seller.................................................................................. 10
3.4. Consents/Nonassignable Contracts.......................................................................... 11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF THE SELLER
---------------------------------------------------------
4.1. Organization and Qualification............................................................................ 12
4.2. Authorization............................................................................................. 12
4.3. No Violation.............................................................................................. 12
4.4. Subsidiaries.............................................................................................. 13
4.5. Consents and Approvals.................................................................................... 13
4.6. Financial Statements...................................................................................... 13
4.7. Absence of Undisclosed Liabilities........................................................................ 13
4.8. Inventory................................................................................................. 14
4.9. Accounts Receivable; Payables............................................................................. 14
4.10. Intellectual Property..................................................................................... 14
4.11. Absence of Certain Changes................................................................................ 15
4.12. Contracts................................................................................................. 16
4.13. Compliance with Applicable Laws; Permits and Licenses..................................................... 17
4.14. Regulatory Reports........................................................................................ 18
4.15. Agreements with Regulatory Agencies....................................................................... 18
4.16. Customers of the Seller................................................................................... 18
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TABLE OF CONTENTS (CONTINUED)
PAGE
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4.17. Representatives........................................................................................... 18
4.18. Litigation................................................................................................ 18
4.19. Brokers' Fees and Commissions............................................................................. 19
4.20. Non-Compete Agreements.................................................................................... 19
4.21. Powers of Attorney; Guaranties............................................................................ 19
4.22. Knowledge of the Seller, Etc.............................................................................. 19
4.23. Copies of Documents....................................................................................... 19
4.24. Title to Purchased Assets................................................................................. 19
4.25. Real Property............................................................................................. 19
4.26. Machinery and Equipment................................................................................... 20
4.27. Sufficiency of Assets..................................................................................... 20
4.28. Product Liability......................................................................................... 20
4.29. Product Warranty.......................................................................................... 20
4.30. Insurance................................................................................................. 20
4.31. Taxes..................................................................................................... 21
4.32. Tax Liens................................................................................................. 21
4.33. No Liabilities for Claims................................................................................. 21
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF THE BUYER
-------------------------------------------------------
5.1. Organization and Qualification............................................................................ 21
5.2. Authorization............................................................................................. 21
5.3. No Violation.............................................................................................. 22
5.4. Consents and Approvals.................................................................................... 22
5.5. Broker's Fees and Commissions............................................................................. 22
5.6. Financing................................................................................................. 22
ARTICLE VI - COVENANTS OF THE SELLER AND THE BUYER
--------------------------------------------------
6.1. Cooperation; Access....................................................................................... 22
6.2. Best Efforts.............................................................................................. 22
6.3. Further Assurances........................................................................................ 22
6.4. Bulk Sales................................................................................................ 23
6.5. Transfer Taxes............................................................................................ 23
6.6. Covenant Not to Compete................................................................................... 23
6.7. Confidentiality........................................................................................... 23
6.8. Collection of Accounts Receivable; Buy Back of Certain Receivables........................................ 23
6.9. Existing Insurance Coverage............................................................................... 24
6.10. [ ] 24
6.11. Access to Auburn Facility..................................................................................25
6.12. [ ] 25
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TABLE OF CONTENTS (CONTINUED)
PAGE
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ARTICLE VII - EMPLOYEE MATTERS
-------------------------------
7.1. Employment................................................................................................ 25
7.2. National Labor Relations Act.............................................................................. 25
7.3. No Right to Employees..................................................................................... 25
ARTICLE VIII - SURVIVAL AND INDEMNIFICATION
-------------------------------------------
8.1. Survival.................................................................................................. 25
8.2. Indemnification of the Buyer.............................................................................. 26
8.3. Indemnification of the Seller............................................................................. 26
8.4. Indemnification Procedure for Third Party Claims Against
Indemnified Parties....................................................................................... 27
8.5. Notice of Claims.......................................................................................... 28
8.6. Limitations on Indemnification............................................................................ 28
8.7. Exclusive Remedy.......................................................................................... 29
8.8. No Other Representations; Limitations on Breach of
Representations and Warranties............................................................................ 29
ARTICLE IX - ARBITRATION
------------------------
9.1. Procedure................................................................................................. 29
9.2. Exclusive Procedure....................................................................................... 30
ARTICLE X - MISCELLANEOUS PROVISIONS
------------------------------------
10.1. Waiver; Modification...................................................................................... 30
10.2. Invalidity................................................................................................ 31
10.3. Parties in Interest....................................................................................... 31
10.4. Expenses.................................................................................................. 31
10.5. Notices................................................................................................... 31
10.6. Governing Law; Forum...................................................................................... 32
10.7. Counterparts.............................................................................................. 32
10.8. Headings.................................................................................................. 32
10.9. Integration............................................................................................... 32
10.10. Assignment................................................................................................ 33
10.11. Publicity................................................................................................. 33
10.12. Certain Definitions....................................................................................... 33
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EXHIBITS
Exhibit A - Certain Definitions
Exhibit B - Peg Statement of Net Assets
Exhibit C - Instrument of Assumption
Exhibit D - [ ]
Exhibit E - Assignment and Xxxx of Sale
Exhibit F - Guarantee of SL Industries
Exhibit G - Persons with Knowledge
Exhibit H - Allocation Schedule
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "AGREEMENT") dated as of May 1, 1997 by
and between SL AUBURN, INC., a New York corporation (the "SELLER") and CHAMPION
SPARK PLUG COMPANY, a Delaware corporation (the "BUYER").
WHEREAS, the Seller is engaged in the business of designing,
engineering, manufacturing, marketing and distributing components utilized in
motors, engines and industrial equipment (the "BUSINESS");
WHEREAS, the Buyer desires to purchase from the Seller and the Seller
desires to sell to the Buyer substantially all of the assets, rights and claims
of the Seller, including without limitation all of the assets, rights and
claims constituting the Business as a going concern, on the terms and
conditions set forth herein; and
WHEREAS, unless otherwise defined in this Agreement, capitalized terms
shall have the meaning ascribed in the attached Exhibit A.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and intending to be legally bound hereby, the parties hereto agree
as follows:
ARTICLE I.
PURCHASE AND SALE OF ASSETS
1.1. PURCHASE AND SALE OF ASSETS. At the Closing (as hereinafter
defined), the Seller shall sell, transfer, assign and deliver to the Buyer, and
the Buyer shall purchase, accept, assume and receive, all of the Seller's
right, title and interest in, to or arising from the Purchased Assets (as
hereinafter defined).
The "PURCHASED ASSETS" are all of the assets, rights and
claims constituting the Business as a going concern and all other assets,
rights and claims of the Seller, including, without limitation, the following:
(a) All accounts receivable;
(b) All inventories (including raw materials, work in
process, samples, supplies, service parts, purchased parts and goods, and
finished goods), whether located at the Seller's facilities, in transit (to the
extent reflected on the Final Closing Statement of Net Assets) to or from the
Seller's facilities, held by the Seller or vendors on consignment, or
otherwise;
(c) All tools, dies, jigs, molds, patterns, machinery and
equipment, whether owned or leased, whether in the possession of the Seller or
vendors or otherwise subject to Section 6.10;
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(d) All office furnishings, display racks, shelves,
decorations, and supplies;
(e) All patents, copyrights, trademarks, trade names, trade
styles, logos and service marks (and all applications and registrations
therefor and licenses thereof) including those set forth on Section 4.10(b) of
the Disclosure Schedule and all technical, processing, manufacturing or
marketing information, including new developments, inventions, know-how,
processes, ideas and trade secrets and documentation thereof (including related
papers, blueprints, drawings, chemical compositions, formulae, diaries,
notebooks, specifications, designs, methods of manufacture and data processing
software) and all claims and rights related thereto (collectively, the
"INTELLECTUAL PROPERTY");
(f) All claims, causes of action and other rights related
to the Purchased Assets;
(g) All documents and records relating to the Purchased
Assets, or the operations or products of the Business (including historical
costing and pricing data, research and development files and studies, market
studies (including studies of competitors), sales histories and quality control
histories), client files, customer lists, vendor lists and records relating to
accounts receivable and accounts payable (Seller may retain copies of any such
documents and records to the extent necessary to allow Seller to prepare tax
returns, represent Seller in tax audits, and prepare financial reports);
(h) All rights under contracts, customer orders, service
agreements, purchase orders, dealer and distributorship agreements, licenses,
instruments and other agreements, including all rights in, to and under the
Material Contracts listed in Section 4.12 of the Disclosure Schedule;
(i) Rights under agreements with employees concerning
confidentiality and the assignment of inventions;
(j) All information systems, programs, hardware, software
and documentation thereof (including all electronic data processing systems,
program specifications, source codes, logs, input data and report layouts and
formats, record file layouts, diagrams, functional specifications and narrative
descriptions, flow charts and other related material), including all
information contained in all databases, which are used or intended to be used
in the conduct of the Business;
(k) Prepaid expenses, deferred charges and cash advanced by
customers of the Business and rights to volume rebates due from suppliers;
(l) All permits, licenses, franchises, product
registrations, filings, authorizations, approvals and indicia of authority (and
pending applications for any thereof) (i) to conduct the operations of the
Business and to own, engineer, manufacture, distribute, install, operate and
service and maintain any product, fixture, facility, equipment, vehicle,
machinery or installation of the Business or (ii) to store, transport, dispose
of, market or sell any goods or any substance used, handled, produced, disposed
of, marketed or sold in the operation of the Business, as issued by any
governmental agency or instrumentality (other than those permits, licenses,
franchises, product registrations, filings, authorizations and approvals
required by the Seller to operate its facility in Auburn, New York which will
not be transferred to the Buyer);
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(m) The books of account (except that the Seller shall be
given access to such books and records as reasonably necessary or desirable for
the conduct by the Seller of the Business and Seller may retain copies of any
such books of account to the extent necessary to allow the Seller to prepare
tax returns, represent the Seller in tax audits and prepare financial reports);
and
(n) All other assets, properties, rights and claims used
solely in the operations of the Business or which arise solely in or from the
conduct thereof;
provided, however, that the Purchased Assets shall not include any of the
assets, rights and claims defined as Excluded Assets in Section 1.2 below.
1.2. EXCLUDED ASSETS. The following assets of the Seller are
expressly excluded from the Purchased Assets and shall not be sold, assigned,
transferred or delivered to the Buyer hereunder:
(a) Cash (including (i) checks received by the Seller on or
prior to the Closing which shall be credited against accounts receivable and
(ii) cash in bank accounts), commercial paper, certificates of deposit and
other bank deposits, treasury bills, other cash equivalents and bank accounts;
(b) All accounts receivable or other amounts due from any
Affiliate of the Seller including amounts due from Affiliates for intercompany
cash advances or items included in the "inter-co cash advances" line of the
Seller's balance sheet;
(c) All real property, whether owned or leased, including
all land, buildings, structures, easements, appurtenances and privileges
relating thereto, and all leaseholds for real property, leasehold improvements,
fixtures and other appurtenances and options, including options to purchase and
renew, or other rights thereunder;
(d) Life insurance policies of officers, directors and
employees or other representatives of the Seller, and all other liability,
property, casualty and other insurance policies relating to the Purchased
Assets of the operation of the Business, subject to Section 6.9;
(e) The tradenames and trademarks, whether registered or
unregistered, "SL" and "SL Industries" and the corporate names, logos and
designs associated therewith or incorporating any of the foregoing, and any
other name, logo, design or other xxxx that has such a near resemblance thereto
as may be likely to cause confusion or mistake to the public, or otherwise
deceive the public (collectively, the "EXCLUDED INTELLECTUAL PROPERTY");
(f) The corporate minute books, stock records and tax
returns of the Seller (except that the Buyer shall be given access to such
books and records as reasonably necessary or desirable for the conduct by the
Buyer of the Business);
(g) The personal property listed in Section 1.2(g) of the
Disclosure Schedule;
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(h) All refunds or credits, if any, of Taxes of the Seller
for all periods prior to the Closing;
(i) All rights of the Seller to receive any corporate
overhead and similar services (including but not limited to treasury, cash
management, accounting, tax, legal, data processing and management information
systems services) from SL Industries, Inc. or any Affiliate of SL Industries,
Inc., and all computer programs and computer databases used in providing such
services;
(j) The Seller's rights under this Agreement and any related
agreement executed by or delivered to the Seller, pursuant to or in connection
with this Agreement contemplated hereby and thereby;
(k) Any rights in and with respect to the Employee Benefit
Plans maintained by the Seller or for the benefit of Active or Inactive
Employees;
(l)[
]
(m) Corporate records relating to employment and personnel
records, payroll and banking, in each case for the period prior to the Closing
Date (except that the Buyer shall be given access to such books and records as
reasonably necessary or desirable for the conduct by the Buyer of the
Business);
1.3. ASSUMED LIABILITIES. In connection with the sale, transfer,
conveyance, assignment and delivery of the Purchased Assets pursuant to this
Agreement, on the terms and subject to the conditions set forth in this
Agreement, at the Closing, the Buyer shall assume and agree to pay, perform and
discharge when due only the following liabilities of the Seller relating to or
associated with the Business other than the Excluded Liabilities (the "ASSUMED
LIABILITIES"):
(a) All liabilities of the Seller with respect to accounts
payable relating to the Business (other than the Excluded Accounts Payable
referred to in Section 1.4(a)), but only to the extent of the accruals therefor
set forth on the Final Closing Statement of Net Assets;
(b) All liabilities of the Seller of a type not customarily
included in a balance sheet prepared in accordance with GAAP arising under
contract;
(c) All liabilities of the Seller with respect to accrued
expenses associated with the Business, but only to the extent of the accruals
therefor set forth on the Final Closing Statement of Net Assets;
(d) Any liabilities with respect to any actions, suits,
proceedings, claims or investigations arising after the Closing that arise from
or relate to matters, incidents, sets of facts or circumstances on or prior to
the Closing Date including breach of contract, tort, infringement, or violation
of law; and
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(e) All liabilities for product warranty and product
liability claims (including claims for property damage, personal injury or
death) relating to products the manufacture of which is completed after the
Closing Date.
1.4. EXCLUDED LIABILITIES. The Buyer shall not assume by virtue of
this Agreement or the transactions contemplated hereby, and the Seller shall
retain and continue to be responsible after the Closing for any liabilities of
any nature whatsoever of the Seller not specifically assumed by the Buyer under
Section 1.3 above (the "EXCLUDED LIABILITIES") whether arising or asserted
before, on or after the Closing Date, including without limitation:
(a) All liabilities of the Seller with respect to accounts
payable or other amounts owing to any Affiliate of the Seller including amounts
owed to Affiliates for corporate allocations (the "EXCLUDED ACCOUNTS PAYABLE");
(b) Any and all liabilities for Taxes with respect to the
Seller (including any obligation or liability under any existing agreement of
the Business with respect to Taxes of any person for any period while the
Business was owned by the Seller or any prior owner) and any and all Taxes
relating to the Business while the Business was owned by the Seller or any
prior owner; provided, however, that transfer taxes incurred in connection with
the transactions contemplated hereby shall be paid in the manner set forth in
Section 6.5 hereof;
(c) The Seller's liabilities under this Agreement and any
related agreement executed by the Seller pursuant to or in connection with this
Agreement and the transactions contemplated hereby and thereby;
(d) All liabilities of the Seller with respect to the repair
of, replacement of, or refunds for products sold, or products the manufacture
of which is completed, on or prior to the Closing Date;
(e) All warranty claims relating to products sold, or
products the manufacture of which is completed, on or prior to the Closing
Date;
(f) Any liability of a type which should be accrued on a
balance sheet prepared in accordance with GAAP to the extent such liability is
not accrued on the Final Closing Statement of Net Assets;
(g) Any indebtedness of the Seller for borrowed money (other
than accounts payable reflected on the Final Closing Statement of Net Assets)
including notes payable, revolvers, loans, bonds, accrued interest, fees or
expenses or any other amount with respect to an interest-bearing obligation of
the Seller;
(h) Any liability relating to or arising from the collective
bargaining agreement between the Seller and the United Paperworkers
International Union;
(i) All accruals, liabilities or obligations relating to or
arising from any Inactive Employee or any Active Employee including, without
limitation, any liability or obligation with respect to (i) Employee Benefit
Plans; (ii) severance agreements and employment agreements; (iii) salaries,
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wages, bonuses and commissions, vacation pay, sick pay, personal leave and
severance pay; (iv) payroll taxes including social security or similar tax or
withholding; (v) claims, grievances, complaints, charges or lawsuits including
those arising from injury, death, loss, disability, occupational disease and
claims under worker's compensation laws;
(j) All liabilities for product liability claims (including
claims for property damage, personal injury or death) relating to products sold
by Seller or its predecessors, or products the manufacture of which was
completed, on or before Closing Date;
(k) The Existing Litigation and and the balance of the
litigation settlements due relating to claims brought under the New Jersey
whistle blower statute and the Federal False Claims Act as set forth on Section
4.18 of the Disclosure Schedule;
(l) All liabilities with respect to any actions, suits,
proceedings, claims or investigations arising from claims brought under any
federal or state whistle blower statutes;
(m) Seller's Environmental Liabilities and Costs (as defined
in Exhibit A attached hereto) whether arising before or after the Closing;
(n) All liabilities of the Seller relating to interests in
real property; and
(o) Any liability of the Seller with respect to powers of
attorney, financing agreements, security agreements, guarantees, suretyship
agreements, letters of credit, bid bonds and performance bonds.
ARTICLE II.
CONSIDERATION FOR TRANSFER
2.1. CONSIDERATION. The aggregate consideration for the Purchased
Assets shall be as follows:
(a) $12,029,000 (the "PURCHASE PRICE");
(b) Assumption by the Buyer of the Assumed Liabilities set
forth in Section 1.3 hereof; and
(c) Plus or minus, as the case may be, the "PURCHASE PRICE
ADJUSTMENT" as provided in
Section 2.3.
2.2. PAYMENT OF CONSIDERATION AT CLOSING. At the Closing, the
Buyer shall deliver and the Seller shall accept the following:
(a) $12,029,000 in immediately available funds;
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(b) Instruments of Assumption of the Assumed Liabilities.
2.3. PURCHASE PRICE ADJUSTMENT. Within five business (5) days
following the date on which the Final Closing Statement of Net Assets is
determined, either the Buyer will pay the Seller the Positive Purchase Price
Adjustment or the Seller will pay the Buyer the Negative Purchase Price
Adjustment, in either case, together with interest thereon at the rate of 5.75%
per annum from the Closing Date until the date paid (the "PURCHASE PRICE
ADJUSTMENT"). A "POSITIVE PURCHASE PRICE ADJUSTMENT" means the amount by which
the net assets of the Seller shown on the Final Closing Statement of Net
Assets, is more than $4,593,505, which is the net assets amount shown on the
Peg Statement of Net Assets. A "NEGATIVE PURCHASE PRICE ADJUSTMENT" means the
amount by which the net assets for the Seller shown on the Final Closing
Statement of Net Assets is less than $4,593,505, which is the net assets amount
shown on the Peg Statement of Net Assets. All payments pursuant to this Section
2.3 shall be in immediately available funds by wire transfer pursuant to
instructions provided in writing by the recipient of the funds.
2.4. CLOSING STATEMENT OF NET ASSETS. Within 30 days following the
Closing Date, the Seller shall prepare and deliver to the Buyer a statement of
net assets of the Seller as of the close of business on the Closing Date (the
"PRELIMINARY CLOSING STATEMENT OF NET ASSETS"). The Preliminary Closing
Statement of Net Assets and the final statement of net assets as of Closing as
determined in accordance with Sections 2.4 through 2.8 (the "FINAL CLOSING
STATEMENT OF NET ASSETS") shall be prepared in accordance with the principles,
practices and procedures that are the same as those which resulted in the asset
and liability values reflected in the statement of net assets dated March 9,
1997, which is attached hereto as Exhibit B (the "PEG STATEMENT OF NET ASSETS")
and as to assets or liabilities of a kind or type that were not included in the
Peg Statement of Net Assets, in accordance with the normal principles,
practices and procedures of the Seller regarding similar assets and
liabilities. Notwithstanding the foregoing, the following paragraphs (a)
through (i) shall take precedence over such principles, practices and
procedures in the preparation of the Preliminary and Final Closing Statements
of Net Assets:
(a) If any principles, practices or procedures produce asset
or liability amounts which are not in compliance with GAAP, the Preliminary and
Final Closing Statements of Net Assets shall reflect an adjustment necessary to
produce asset or liability amounts which are in compliance with GAAP, subject
to paragraphs (b) through (i) below which shall take precedence.
(b) The quantities of inventory used to determine the
inventory amount to be included in the Preliminary and Final Closing Statements
of Net Assets will be based on the results of a physical inventory of the
Seller to be taken as of the close of business on the Closing Date in
accordance with the normal procedures of the Seller. The physical inventory
will be taken by the Seller (or its representatives), at the Seller's expense,
and observed by the Buyer (or its representatives). The physical inventory
quantities will be priced utilizing the same standard costs which were used to
determine the inventory amount included in the Peg Statement of Net Assets and,
in the case of items which were not on hand as of March 9, 1997, in accordance
with the normal procedures of the Seller. The amount of the reserves for
obsolete and slow moving inventory totals $313,621 on the Peg Statement of Net
Assets and shall total $350,621 on the Final Closing Statement of Net Assets.
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(c) The Peg Statement of Net Assets does not, and the
Preliminary and Final Closing Statement of Net Assets will not, include any
cash, drafts payable, income taxes and deferred taxes.
(d) The Preliminary and Final Closing Statement of Net
Assets will reflect the real property, building and improvements relating to
Seller's facility in Auburn, New York, that are Excluded Assets under Section
1.2(c) at the same amount as reflected on the Peg Statement of Net Assets.
(e) Except as provided in paragraphs (c) and (d) above, the
Peg Statement of Net Assets does, but the Preliminary and Final Closing
Statement of Net Assets will not, include any Excluded Assets and Excluded
Liabilities.
(f) The Peg Statement of Net Assets includes a reserve for
uncollectible accounts receivable of $16,404 and the Preliminary and Final
Closing Statements of Net Assets will not include any reserve for uncollectible
accounts receivable.
(g) A upward Purchase Price Adjustment shall be made for a
decrease in the amount of any payables, reserves or accruals only to the extent
the decrease results from actual cash expenditures on or prior to the Closing
Date.
(h) The Final Closing Statement of Net Assets will exclude
the book value of any fixed assets that cannot be located as of Closing based
on a fixed asset physical existence test to be conducted by Seller and observed
by Buyer.
(i) Prepaid expenses and other assets and deferred charges
shall only be included on the Preliminary and Final Closing Statements of Net
Assets if they were included on the Peg Statement of Net Assets and only to the
extent of the dollar amount reflected on the Peg Statement of Net Assets. The
prepaid expenses and other assets and deferred charges shall be amortized
between March 9, 1997 and the Closing Date consistent with prior practice of
the Seller.
2.5. BUYER'S REVIEW OF PRELIMINARY CLOSING STATEMENT OF NET
ASSETS. The Buyer shall have 30 days following receipt of the Preliminary
Closing Statement of Net Assets to review such statement. If the Buyer
determines that it has not been prepared in accordance with the provisions of
Section 2.4, then within the 30-day period allowed for the Buyer's review, the
Buyer shall send a letter to the Seller ("BUYER'S LETTER") setting forth in
reasonable detail the adjustments that the Buyer determines are appropriate.
During such 30-day period, the Seller shall grant the Buyer and its
representatives reasonable access during normal business hours to the books and
records of the Seller including any working papers or other documents prepared
by the Seller or its auditors with respect to the Preliminary Closing Statement
of Net Assets. If the Buyer does not prepare and furnish the Buyer's Letter to
the Seller within the 30 days allowed, then the Preliminary Closing Statement of
Net Assets as prepared by the Seller will become the Final Closing Statement of
Net Assets.
2.6. SELLER'S RESPONSE TO THE BUYER'S LETTER. The Seller will have
20 days following receipt of the Buyer's Letter, if any, to review such letter
and prepare a written response ("SELLER'S LETTER") setting forth the Seller's
position with respect to each adjustment proposed by the Buyer in the
15
Buyer's Letter. If the Seller does not prepare and furnish the Seller's Letter
to the Buyer within the 20 days allowed, then all of the adjustments set forth
in the Buyer's Letter shall be deemed to have been accepted by the Seller, and
the Final Closing Statement of Net Assets shall be prepared by adjusting the
Preliminary Closing Statement of Net Assets for all of the adjustments set
forth in the Buyer's Letter.
2.7. MEETING TO RESOLVE PROPOSED ADJUSTMENTS. As soon as
practicable, but not later than 10 days following the receipt by the Buyer of
the Seller's Letter, if any, the parties shall meet and endeavor to mutually
resolve any of the Buyer's adjustments not agreed to in the Seller's Letter. If
the parties reach agreement on these adjustments, if any, then the Final Closing
Statement of Net Assets shall be prepared by adjusting the Preliminary Closing
Statement of Net Assets for the adjustments agreed to in the Seller's Letter and
those mutually resolved by the parties.
2.8. RESOLUTION BY ACCOUNTING ARBITRATOR. If the parties do not
meet within the 10 day period set forth in Section 2.7, or they fail to agree to
meet at some later date, or they meet but are unable to resolve to their mutual
satisfaction all of the adjustments set forth in the Buyer's Letter, then the
parties, jointly, or if one party is unwilling then the other singly, shall
engage Coopers and Xxxxxxx (the "ACCOUNTING ARBITRATOR") to finally resolve any
of the Buyer's adjustments which remain unresolved subject to that firm's
confirmation that it is independent of both parties. The parties shall furnish
the Accounting Arbitrator with a copy of the Agreement, the Peg Statement of Net
Assets, the Preliminary Closing Statement of Net Assets, the Buyer's Letter, the
Seller's Letter and any other relevant correspondence between the parties. The
Accounting Arbitrator shall, within 30 days from the date such documents are
furnished, complete its review and render a written report setting forth its
conclusion with respect to each of the Buyer's adjustments which were unresolved
between the parties. The Accounting Arbitrator shall be granted access to the
books and records of the Seller as well as the working papers or other documents
which either party or its accountants may have that relate to the Preliminary
Closing Statement of Net Assets and any other documents or information which the
Accounting Arbitrator may deem appropriate. The Accounting Arbitrator's review
shall be limited to the purpose of determining whether, in respect of each
disputed adjustment, the Buyer's proposed adjustment or the Seller's position
with respect to the Buyer's proposed adjustment is more nearly in accordance
with the terms of this Agreement. The parties shall have the right to submit
written materials to the Accounting Arbitrator all in accordance with procedures
to be set forth in the engagement letter between the parties and the Accounting
Arbitrator. In arriving at its determination the Accounting Arbitrator must
select for each adjustment either the Buyer's proposed adjustment or the
Seller's position with respect to the Buyer's proposed adjustment. The decision
by the Accounting Arbitrator shall be in writing and delivered to both the Buyer
and the Seller. The Accounting Arbitrator's decision shall be final, conclusive
and binding upon the parties and may be entered and enforced in any court of
competent jurisdiction. The parties agree to submit to the jurisdiction of any
such court for the enforcement of such award or decision. Each party shall pay
50% of the fees and expenses of the Accounting Arbitrator. If the Accounting
Arbitrator is engaged, the Final Closing Statement of Net Assets will be
prepared by adjusting the Preliminary Closing Statement of Net Assets for those
of the Buyer's adjustments accepted by the Seller's Letter, those mutually
agreed to by the parties and those determined by the Accounting Arbitrator. The
procedures specified in this Section 2.8 shall be the sole and exclusive
procedures for resolution of disputes concerning the adjustments to be made to
the Preliminary Closing Statement of Net Assets in order to determine the Final
Closing Statement of Net Assets.
16
2.9. NOTICES RELATING TO THE CLOSING STATEMENT OF NET ASSETS.
Notwithstanding Section 10.5, all notices and other communications under
Sections 2.5, 2.6, 2.7 and 2.8 shall be delivered to the individuals listed
below and shall be sufficiently given for all purposes hereunder if in writing
and delivered personally, sent by documented overnight delivery services, or
certified mail return receipt requested:
If to the Buyer: Xxxxxx Industries, Inc.
000 Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxxx,
Vice President and Controller
If to the Seller: SL Industries, Inc.
000 Xxxxxxxxxx Xxxx
Xxxxx 000X
Xx. Xxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx,
Vice President and Controller
All such notices shall be deemed given upon date of delivery to the
recipient.
2.10. ALLOCATION. The Seller and the Buyer shall allocate the
purchase price (including, for purposes of this Section, any other consideration
paid by the Buyer and any assumed liabilities), among the Purchased Assets in
accordance with Exhibit H (the "ALLOCATION SCHEDULE"). The Seller and the Buyer
each agrees to file IRS Form 8594, and all federal, state, local and foreign tax
returns, in accordance with the Allocation Schedule.
ARTICLE III.
THE CLOSING AND TRANSFER OF ASSETS
3.1. CLOSING. The transfer of assets contemplated by this
Agreement (the "CLOSING") shall occur at the offices of Xxxxxxxx & Xxxxxxxx,
Four Stamford Plaza, Stamford, Connecticut, at 10:00 a.m., Eastern Standard
Time, on April 29, 1997, or such other place or date as the parties shall
mutually agree (the "CLOSING DATE"). The effective time of the Closing shall be
deemed to occur as of the close of business on the Closing Date (the "EFFECTIVE
TIME").
3.2. DELIVERIES BY THE BUYER. At the Closing, the Buyer shall
deliver the following:
(a) The payment required by Section 2.1(a);
(b) An instrument of assumption in substantially the form of
Exhibit C;
17
(c) A certified copy of resolutions of the Board of
Directors of the Buyer providing authority for the execution, delivery and
performance of this Agreement and the transactions contemplated hereby;
(d) Buyer's wire transfer instructions for remitting
accounts receivable that are collected by the Seller after Closing pursuant to
Section 6.8(c);
(e) [
]
(f) Such other instruments or documents as may be necessary
or appropriate to carry out the transactions contemplated hereby.
3.3. DELIVERIES BY THE SELLER. At the Closing, the Seller shall
deliver the following:
(a) [
]
(b) [
]
(c) Trademark and patent assignments contemplated by this
Agreement, in a form appropriate for filing with the United States Patent and
Trademark Office;
(d) Assignments (with lessor's consents thereto) of
leasehold interests in any leased personal property included in the Purchased
Assets;
(e) Assignments of the Material Contracts;
(f) A certified copy of resolutions of the board of
directors of the Seller and the sole shareholder of the Seller providing
authority for the execution, delivery and performance of this Agreement and the
transactions contemplated hereby;
(g) All consents, approvals and novations required for the
Seller to consummate the sale of the Business and the Purchased Assets or to
enable the Buyer to continue to conduct the Business after the Closing in
substantially the same manner in which it is presently conducted by the Seller;
(h) The notification required by the state taxing authority
in New York regarding the transactions contemplated hereby;
(i) A guarantee in the form of Exhibit F executed by SL
Industries, Inc.;
18
(j) [
]
(k) Such other instruments or documents as may be necessary
or appropriate to carry out the transactions contemplated hereby.
3.4. CONSENTS/NONASSIGNABLE CONTRACTS.
(a) To the extent that the assignment by the Seller of any
sales order, purchase order, lease, permits, licenses, or other contract or
agreement included in the Purchased Assets is not permitted without (i) the
consent of the other party thereto, (ii) the approval of the Buyer as a source
of the products or services called for by such contract or agreement or (iii)
the approval of the Buyer as a lessee, this Agreement shall be deemed not to
constitute an assignment or an attempted assignment of the same, if such
assignment or attempted assignment would constitute a breach thereof. However,
unless otherwise agreed by the parties hereto as to any particular contract or
order (or class thereof), the Seller shall use and will continue after Closing
to use its best efforts to obtain any and all such consents, approvals and
novations.
(b) If any consent, approval or novation is requested but
not obtained and the parties reasonably determine that such consent, approval
or novation will not be obtained despite further efforts to do so, the Seller
shall cooperate with the Buyer in any reasonable arrangement designed to
provide the Buyer with all of the benefits under such contract, agreement,
lease, sales order or purchase order as if such consent, approval or novation
had been obtained, including subleases from the Seller and, undertakings by the
Buyer of the work necessary to complete contracts and to ship products called
for thereunder as the agent of the Seller with the understanding that the
Seller shall then invoice the purchaser for products shipped and promptly remit
the amount of the receivable to the Buyer. In any such arrangement, the Buyer
shall bear all costs and expenses with respect thereto arising or occurring
after the Closing Date; shall be solely entitled to the benefits; and shall be
solely responsible for any breach of warranty with respect to products of the
Business the manufacture of which is completed after the Closing Date.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer, as of the date hereof
and as of the Closing Date, as follows:
4.1. ORGANIZATION AND QUALIFICATION.
(a) The Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York, with all
requisite corporate power and authority and legal right to own, lease and
operate its assets and to carry on the Business.
19
(b) The Seller has delivered to the Buyer complete and
correct copies of the Seller's Certificate of Incorporation and By-Laws.
4.2. AUTHORIZATION. The Seller has full corporate power,
authority and legal right to execute and deliver, and to perform its obligations
under this Agreement. The execution and delivery of this Agreement by the Seller
and the performance by the Seller of its obligations hereunder have been duly
authorized by all requisite corporate action, including, without limitation, by
its Board of Directors and its stockholders. No other action on the part of the
Seller is necessary to authorize the execution and delivery of this Agreement or
the performance of its obligations hereunder. This Agreement has been, and the
documents delivered at the Closing by the Seller are duly and validly executed
and delivered by the Seller and constitute the legal, valid and binding
obligation of the Seller, enforceable against the Seller in accordance with
their terms, except to the extent that such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights and remedies
generally.
4.3. NO VIOLATION. Neither the execution and delivery of this
Agreement by the Seller, nor the performance by the Seller of its obligations
hereunder, will:
(a) Violate or result in any breach of any provision of the
Certificate of Incorporation or By-Laws of the Seller;
(b) To the best of the Seller's knowledge, violate, conflict
with or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under, or permit the termination
of, or require the consent of any other party to, or result in the acceleration
of, or entitle any party to accelerate any obligation, or result in the loss of
any benefit, or give rise to the creation of any options, pledges, security
interests, liens, mortgages, claims, debts, charges, or other encumbrances or
restrictions of any kind whatsoever (each, an "ENCUMBRANCE") upon any of the
Purchased Assets, under any of the terms, conditions or provisions of any
contract, agreement or arrangement, whether written or oral, to which the
Seller is a party or by which the Seller or any of its assets is bound; nor
(c) Violate any order, writ, judgment, injunction, decree,
statute, law, rule, regulation or ordinance of any court or governmental,
quasi-governmental or regulatory department or authority ("GOVERNMENTAL
AUTHORITY") applicable to the Seller or its properties or assets.
4.4. SUBSIDIARIES. The Seller does not own stock or have any
equity investment or other interest in, does not have the right to acquire any
such interest in, and does not control, directly or indirectly, any corporation,
association, partnership, joint venture or other entity and has not had such an
ownership or control relationship with any such entity.
4.5. CONSENTS AND APPROVALS. To the best of the Seller's
knowledge, other than the consents and approvals of or filings or registrations
with any Governmental Authority listed on Section 4.5 of the Disclosure
Schedule, no filing or registration with, no notice to and no permit,
authorization, consent or approval of any Governmental Authority, including,
without limitation, the Regulatory Agencies (as defined in Section 4.15 hereof),
is necessary for the execution and delivery of this
20
Agreement, the consummation of the purchase and sale of the Business and the
Purchased Assets or to enable the Buyer to continue to conduct the Business
after the Closing in a manner which is consistent with that in which it is
presently conducted.
4.6. FINANCIAL STATEMENTS. The Seller has delivered to the Buyer
copies of the Seller's unaudited, internally-prepared balance sheet and
statements of income and cash flow as of and for the fiscal years ended July
31, 1996, July 31, 1995 and July 31, 1994 (the "YEAR-END FINANCIAL STATEMENTS")
and the Seller's unaudited, internally-prepared interim balance sheet and
statements of income and cash flow for the seven months ended March 9, 1997
(the "INTERIM FINANCIAL STATEMENTS", together with the Year-end Financial
Statements, the "FINANCIAL STATEMENTS"). Such Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP"),
consistently followed throughout the periods indicated, except as set forth in
Schedule 4.6. Such Financial Statements fairly present the financial condition
of the Seller as of the dates thereof and the results of operations and cash
flow of the Seller for the periods indicated. The Year-End Financial Statements
and the Peg Statement of Net Assets reflect normal year-end adjustments. The
Buyer agrees that it shall not make any claim for indemnification based on a
breach of the Seller's warranty under this Sections 4.6 and 4.8 to the extent
such claim is based on an allegation that the inventory reserve for excess,
obsolete and slow moving inventory or the reserve for uncollectible accounts
receivable is inadequate.
4.7. ABSENCE OF UNDISCLOSED LIABILITIES. The Seller has no
liabilities (whether accrued, absolute, continent or otherwise, and whether then
due or to become due), and no loss contingencies, except for (i) Assumed
Liabilities to the extent accrued or reserved against on the Final Closing
Statement of Net Assets; (ii) Assumed Liabilities of a type not customarily
included in a balance sheet prepared in accordance with GAAP arising under
contracts; and (iii) Excluded Liabilities.
4.8. INVENTORY.
(a) All inventories reflected on the Final Closing Statement
of Net Assets will be, (a) properly valued at the lower of cost or market value
on a first-in, first-out basis in accordance with GAAP; (b) meet the current
standards and specifications of the Business subject only to the reserves
established in the Final Closing Statement of Net Assets for slow-moving,
obsolete, damage or defective inventory; and (c) at adequate levels. All
inventories disposed of subsequent to July 31, 1996, have been disposed of only
in the ordinary course of business and at prices and under terms that are
normal and consistent with past practice.
(b) The Seller does not have any open orders with respect to
which it has been prepaid, in whole or in part, or has received deposits or
other advances except to the extent any such deposits or other advances are
reflected as a liability on the Final Closing Statement of Net Assets.
4.9. ACCOUNTS RECEIVABLE; PAYABLES.
(a) Except as set forth in Section 4.9 of the Disclosure
Schedule, all outstanding accounts receivable included in the Purchased Assets
are due and valid claims against account debtors for goods or services
delivered or rendered, are subject to no defenses, offsets or counterclaims.
The
21
accruals or reserves reflected in the January 31, 1997 Balance Sheet reflect
the Seller's historical bad debt experience. Except as set forth in Section 4.9
of the Disclosure Schedule, all accounts receivable arose in the ordinary
course of business. No accounts receivable are subject to prior assignment or
other Encumbrance.
(b) All obligations of the Seller for money owed, whether in
respect of the payment for goods and services, pursuant to financing
arrangements or otherwise that are customarily included in a balance sheet
prepared in accordance with GAAP and which are included in the Assumed
Liabilities have been fully reflected in the Final Closing Statement of Net
Assets.
4.10. INTELLECTUAL PROPERTY.
(a) The Seller owns or has the right to use each item of
Intellectual Property used in the Business as presently conducted. Except for
the Excluded Intellectual Property, after Closing the Buyer will own or have
the right to use each such item of Intellectual Property on terms and
conditions substantially identical to those existing prior to Closing without
additional restrictions as to its use occurring because of Closing.
(b) Set forth in Section 4.10(b) of the Disclosure Schedule
is a list of all patents, copyrights, service marks, trademarks, trade names
and registrations and applications therefor which are owned by the Seller (or
its Affiliates) and which are used in the Business. Except for the Excluded
Intellectual Property, the ownership of all such patents, copyrights, service
marks, trademarks, trade names and registrations and applications therefor will
be transferred to the Buyer at Closing. There are no licenses, sublicenses or
other agreements relating to the use by third parties of any such patents,
copyrights, service marks, trademarks, trade names and registrations and
applications therefor except as set forth in Section 4.10(b) of the Disclosure
Schedule (in each case identifying the item licensed, the licensee, the date of
the license agreement or other agreement and whether the licensee's consent is
required to transfer the interest of the Seller or its Affiliate thereunder to
the Buyer).
(c) Set forth in Section 4.10(c) of the Disclosure Schedule
is a list of all patents, copyrights, service marks, trademarks, trade names
and registrations and applications therefor which are not owned by the Seller
(or its Affiliates) but are licensed for use in the Business (in each case
identifying the owner or licensor, the date of the license or other agreement,
and whether the owner or licensor's consent is required to assign or transfer
the interest of the Seller or its Affiliate thereunder to the Buyer). The
interest of the Seller (or its Affiliate) under all such licenses or other
agreements will be transferred or assigned to the Buyer at Closing. There is no
default under such licenses or other agreements.
(d) The Seller or its Affiliates have not received any
written notice of a claim that the Intellectual Property is invalid or
unenforceable or that the Seller's manufacture or sale of any product or the
Seller's use of any process in connection with the Business infringes upon the
rights of any third party nor are any such claims the subject of any action,
suit or proceeding involving the Seller or its Affiliates.
(e) The Seller has no knowledge of any infringement by any
third party of the Intellectual Property, nor has the Seller or any Affiliate
instituted any action, suit, proceeding in which an
22
act constituting an infringement of any of the Intellectual Property was
alleged to have been committed by a third party.
4.11. ABSENCE OF CERTAIN CHANGES. Except as disclosed in Section
4.11of the Disclosure Schedule, since July 31, 1996, the Seller has conducted
the Business only in the ordinary and usual course, and, without limiting the
generality of the foregoing, since such date there has not been:
(a) Any event, change or condition of any character in or on
the business, properties, assets, financial condition, results of operations of
the Seller which, individually or in the aggregate, have had or could
reasonably be expected to have a Substantial Adverse Effect;
(b) Any purchase, redemption or other acquisition by the
Seller of any shares of capital stock or other equity securities or other
ownership interests of any other entity;
(c) Any sale, lease, license, Encumbrance or other transfer
or disposition of any material assets or properties of the Seller (either
singly or in the aggregate) other than sales in the ordinary course of
business;
(d) Any forgiveness or cancellation of any debts or claims,
or, except in the ordinary course, any discharge or satisfaction of any lien,
charge or other Encumbrance or payment of any liability or obligation, of the
Seller;
(e) Any material change in the credit practices of the
Seller or any creation or assumption of indebtedness for money borrowed, or any
making of loans, advances or capital contributions;
(f) (i) Any increase in the rate or terms of compensation
(including termination and severance pay) payable or to become payable by the
Seller to its directors, officers, employees or agents (other than increases
which are not material and which were made in the ordinary course of business
consistent with past practice), or any increase in the rate or terms of any
bonus, insurance, pension or other Employee Benefit Plan, or any program or
arrangement made to, for or with any such directors, officers, employees or
agents, or (ii) any entry by the Seller into any employment, profit sharing,
compensation, severance or termination agreement with any such person or any
modification by the Seller of any existing such agreement, or (iii) any other
material change in employment terms for any such person;
(g) Any entry into any Material Contract (as hereinafter
defined) by the Seller or any entry by the Seller into any contract, lease,
license or agreement outside the ordinary course of business;
(h) Any material change in the sales practices of its sales
force, including without limitation, attempts by the sales force to cause
customers to accelerate purchases;
(i) Any material damage, destruction or loss to the
Purchased Assets, whether or not covered by insurance, which may have a
Material Adverse Effect;
23
(j) Any change by the Seller in its financial or tax
accounting principles or methods;
(k) Any failure by the Seller to take all reasonable efforts
to preserve its goodwill with suppliers, customers and others with which the
Seller has business relationships;
(l) Any failure to timely pay accounts payable and other
liabilities of the Business which may have a Material Adverse Effect;
(m) Any entry by the Seller into any agreement to sell
substantially all its assets except for this Agreement; or
(n) Any commitment to do any of the foregoing.
4.12. CONTRACTS.
(a) Section 4.12(a) of the Disclosure Schedule sets forth a
list of all of the material contracts, agreements and arrangements, whether
written or oral, formal or informal, to which the Seller is a party or by which
the Seller or its properties or assets is bound (sometimes hereinafter
collectively referred to as the "MATERIAL CONTRACTS") which contracts include,
without limitation, any and all contracts, agreements and arrangements that
individually or as a group are material to the conduct of the Business. The
Material Contracts also include, without limitation, contracts, agreements and
arrangements to purchase capital equipment, non-competition agreements,
confidentiality agreements, any agreement which involves a certain (rather than
contingent) obligation of the Seller of more than $20,000 in any twelve month
period, profit sharing, employment, and severance agreements, collective
bargaining agreements, consulting, distribution, agency and sales
representative agreements. The Material Contracts were negotiated at arms'
length and in good faith on the part of the Seller. The Seller has delivered
true, complete and correct copies of all Material Contracts to the Buyer.
(b) The Seller is not in default with respect to any
obligation to be performed under any Material Contract which is a Purchased
Asset which default could have a Material Adverse Effect.
(c) The Seller has no knowledge of any default by any third
party under any Material Contract which is a Purchased Asset, nor is the Seller
aware of any fact, condition or event, including, without limitation, the
execution, delivery and performance of this Agreement, that could cause any
third party to terminate any Material Contract which is a Purchased Asset.
There exists no event, occurrence, condition or act which, with the giving of
notice or the lapse of time, would become a default by the Seller or any third
party under any Material Contract which is a Purchased Asset the result of
which could have a Material Adverse Effect.
(d) Except as set forth in Section 4.12(d) of the Disclosure
Schedule, no consent by, notice to or approval from any third party is required
under any of the Material Contracts which is a Purchased Asset as a result of
or in connection with the execution, delivery or performance of this Agreement
and the consummation of the transactions contemplated herein and such Material
Contracts shall continue in full force and effect following the consummation of
the transactions contemplated herein.
24
4.13. COMPLIANCE WITH APPLICABLE LAWS; PERMITS AND LICENSES.
(a) Except as set forth in Section 4.13(a) of the Disclosure
Schedule, the Seller holds, and at all relevant times has held, all material
licenses, franchises, permits, consents and authorizations necessary for the
lawful conduct of the Business, and the Business is not being and has not,
during the relevant statute of limitations period, been conducted in violation
of any provision of any federal, state, local or foreign statute, law,
ordinance, rule, regulation, judgment, decree, order, concession, grant,
franchise, permit, consent or license or other governmental authorization or
approval applicable to the Seller.
(b) Except as set forth in Section 4.13(b) of the Disclosure
Schedule, the Seller has not received any notification of any failure by the
Seller to comply with any such federal, state, local or foreign statute, law,
ordinance, rule, regulation, judgment, decree, order, concession, grant,
franchise, permit, consent or license or other governmental authorization or
approval applicable to the Business.
(c) Section 4.13(c) of the Disclosure Schedule sets forth
all of the licenses, franchises, permits, consents and authorizations material
to and necessary for the lawful conduct of the Business.
4.14. REGULATORY REPORTS. The Seller has filed all material
reports, registrations and statements, together with any amendments required to
be made with respect thereto, that it was required to file in respect of the
Business in the last seven (7) year period with any federal, state, local or
foreign governmental, quasi-governmental or regulatory department, authority or
agency, including, without limitation, the Federal Aviation Administration
(hereinafter sometimes collectively referred to as the "REGULATORY AGENCIES"),
and has paid all fees or assessments due and payable in connection therewith.
Except as set forth in Section 4.14 of the Disclosure Schedule and except for
normal periodic examinations conducted by the applicable Regulatory Agency in
the regular course of the Business, no Regulatory Agency has initiated any
proceeding or investigation into the business or operations of the Business in
the last five (5) year period, nor has the Seller initiated any such proceeding.
There is no unresolved violation, criticism or exception by any Regulatory
Agency with respect to any report or statement relating to an examination of the
Business.
4.15. AGREEMENTS WITH REGULATORY AGENCIES. Except as set forth in
Section 4.15 of the Disclosure Schedule, the Seller is not subject to any
cease-and-desist or other order issued by, or a party to any written agreement
or memorandum of understanding with, any Regulatory Agency that materially
restricts or may adversely impact the conduct of the Business.
4.16. CUSTOMERS OF THE SELLER. Section 4.16 of the Disclosure
Schedule contains an accurate and complete list of the ten (10) largest
customers of the Seller during the last twelve months (the "KEY CUSTOMERS"),
based on the net revenues derived from such customers during such period. The
parties acknowledge that certain Key Customers are competitors of the Buyer and
there may be adverse effects on the Buyer's continuing relationship with these
customers due to the consummation of this transaction. To the best of the
Seller's knowledge, except as set forth in Section 4.17 of the Disclosure
Schedule, the Seller's relationship with the Key Customers and its other
customers and accounts is good and the Seller
25
does not know of any fact, condition or event (including, without limitation,
the consummation of the transactions contemplated herein) which would have a
Material Adverse Effect on the relationship of the Seller with its customers
generally or with any Key Customer identified in Section 4.17 of the Disclosure
Schedule.
4.17. REPRESENTATIVES. Section 4.17 of the Disclosure Schedule sets
forth an accurate, correct and complete list of (a) all representatives or
sales agents authorized to sell products or promote services of the Business
(the "REPRESENTATIVES"), (b) Representatives whose relationship with the Seller
has been terminated within one year prior to the date hereof, (c) all persons
who have become Representatives within one year prior to the date hereof, and
(d) all agreements, arrangements and understandings between the Seller and a
Representative (the "REPRESENTATIVE AGREEMENTS"). No current or past
Representatives were purchasers of "franchises" or "business opportunities" or
any other classification under applicable state or federal law which regulates
the disclosure of information regarding the relationship with the Seller.
4.18. LITIGATION. Except as set forth in Section 4.18 of the
Disclosure Schedule, (i) there is no action, suit, inquiry, judicial or
administrative proceeding, arbitration or investigation pending or, to the best
of the Seller's knowledge, threatened against the Seller, or any of its
properties, assets or rights, before any court, arbitrator or administrative or
governmental body, (ii) there is no judgment, decree, injunction, rule or order
of any court, governmental department, commission, agency, instrumentality or
arbitrator outstanding against, and unsatisfied by, the Seller, and (iii) the
Seller has not received written notice of any claims against the Seller
relating to or alleging any breach of contract, breach of warranty, tort,
infringement, product liability or violation of law (any of the foregoing being
herein referred to as "EXISTING LITIGATION").
4.19. BROKERS' FEES AND COMMISSIONS. Neither the Seller nor any of
its directors, officers, employees or agents has employed any investment
banker, broker, finder or intermediary, and no fee or other commission is owed
to any third party, in connection with the transactions contemplated herein.
4.20. NON-COMPETE AGREEMENTS. Except as set forth in Section 4.20
of the Disclosure Schedule, no agreement, understanding or arrangement, whether
oral or written, express or implied, restricts the ability of the Seller to
own, possess or use its respective assets or properties or conduct business or
operations in any geographic area or region, or to compete against any
individual or entity.
4.21. POWERS OF ATTORNEY; GUARANTIES. Except as set forth in
Section 4.21 of the Disclosure Schedule, the Seller has no power of attorney,
revocable or irrevocable, which remains outstanding as of the date hereof or
will be outstanding as of the Closing Date, which was given by the Seller to
any person, firm, organization, or other entity for any person whatsoever, nor
does there exist any obligation or liability on the part of the Seller, either
actual, accrued, accruing or contingent, as guarantor, surety, co-signer,
endorser, co-maker or indemnitor in respect of the obligation of any person,
firm, organization or other entity. Section 4.21 of the Disclosure Schedule
contains an accurate and complete list of the powers of attorney, revocable or
irrevocable, which have been granted to the Seller and which remain effective
as of the date hereof or which will be granted or be effective as of the
Closing Date.
26
4.22. KNOWLEDGE OF THE SELLER, ETC. To the extent that the Seller
represents and warrants itself to have had knowledge or belief as to any event,
fact, condition or other matter set forth in this Agreement, "knowledge" or
"belief" (or similar words) shall mean the knowledge or belief, after due
inquiry, of those persons set forth on Exhibit G.
4.23. COPIES OF DOCUMENTS. The Seller has caused to be made
available for inspection and copying by the Buyer and its advisers true,
complete and correct copies of all documents referred to in any Section of the
Disclosure Schedule.
4.24. TITLE TO PURCHASED ASSETS. The Seller has good title to, or a
valid leasehold interest or license in or right to use, the Purchased Assets
free and clear of all Encumbrances. At Closing, the Seller will, or will cause
its Affiliates to, transfer good title to, or a valid leasehold interest or
license in or right to use, the Purchased Assets to the Buyer free and clear of
all Encumbrances.
4.25. REAL PROPERTY. Section 4.25 of the Disclosure Schedule lists
all real property that is owned by the Seller. There are no pending or
threatened condemnation, eminent domain or similar proceedings relating to any
such property. No third party has any lawful right of possession to or any
option, or right of first refusal to lease or purchase all or any portion of
such owned real property. The Seller does not lease any real property.
4.26. MACHINERY AND EQUIPMENT. To the best of the Seller's
knowledge, the machinery and equipment, tools, dies, jigs, molds, patterns,
that are included in the Purchased Assets and which have been used to produce
products during the past year are free from defects, are in satisfactory
operating condition and repair (normal wear and tear excepted), have been
maintained in accordance with normal industry practice and are suitable for the
purposes for which they are presently used.
4.27. SUFFICIENCY OF ASSETS. Except for the Excluded Assets, the
Purchased Assets constitute all the assets, properties, Intellectual Property,
contract rights and licenses that are necessary to operate the Business in
substantially the same manner as the Business is presently conducted.
4.28. PRODUCT LIABILITY. The Seller has no liability (and, to the
best of the Seller's knowledge, there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Seller giving rise to any liability) arising out of any
injury to individuals or property as a result of the ownership, possession, or
use of any product sold, leased, delivered, or the manufacture of which was
completed by the Seller, on or prior to the Closing Date.
4.29. PRODUCT WARRANTY. Each product sold, leased, delivered, or
the manufacture of which was completed, by the Seller on or prior to the
Closing Date conforms with all applicable contractual commitments and all
express and implied warranties, and the Seller has no liability (and, to the
best of the Seller's knowledge, there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Seller giving rise to any liability) for replacement or
repair thereof or other damages in connection therewith.
4.30. INSURANCE. Section 4.30 of the Disclosure Schedule sets forth
an accurate and complete list of (i) all current insurance policies which are
owned by the Seller or its Affiliates and which
27
provide coverage applicable to the Business and (ii) all insurance policies
providing general or product liability coverage during the prior four years, in
each case setting forth the following information:
(a) The name of the insurer and the name of the
policyholder;
(b) The policy number and period of coverage;
(c) 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; and
(d) A description of any retroactive premium adjustments or
other loss-sharing arrangements.
With respect to the Seller's current policy which provides worker's
compensation coverage, the Disclosure Schedule sets forth a description of how
retrospective premiums are determined including the amount of the minimum
premium.
4.31. TAXES. Except as set forth on Section 4.31 of the Disclosure
Schedule, no pending claim for any past due Taxes has been proposed in writing
or assessed against the Seller with respect to the Business. For tax periods
beginning on or after January 1, 1992 or, to the extent that an audit is
ongoing, any earlier period, Section 4.31 of the Disclosure Schedule identifies
the Returns of the Seller with respect to the Business which have been audited
and, where applicable, accepted by the relevant taxing authorities for the
fiscal years indicated in such Disclosure Schedule, and, except as indicated
therein, for all taxable periods there is no ongoing audit, litigation, or
similar proceeding concerning any Returns of the Seller with respect to the
Business nor does there exist any waiver or agreement for the extension of time
for the assessment of any Taxes by the Seller with respect to the Business.
4.32. TAX LIENS. The Seller represents and warrants that, to the
best of the Seller's knowledge, there are no Encumbrances on any of the
Purchased Assets that arose in connection with any failure (or alleged failure)
to pay any Tax, and there are no material pending claims for past due Taxes
which might result in any such Encumbrance.
4.33. NO LIABILITIES FOR CLAIMS. Except as expressly set forth in
the Disclosure Schedules attached to this Agreement, the Seller has no
liability with respect to any action, suit, proceeding, claim or investigation
(whether arising before or after the Closing Date) that arises from or relates
to matters, incidents, sets of facts or circumstances on or prior to the
Closing Date including breach of contract, tort, infringement or violation of
law.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
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The Buyer represents and warrants to the Seller, as of the date hereof
and as of the Closing Date, as follows:
5.1. ORGANIZATION AND QUALIFICATION. The Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, with all requisite power and authority to own, lease and
operate its properties and assets and to carry on its business as it is now
being conducted. The Buyer has delivered to the Seller complete and correct
copies of the Buyer's Certificate of Incorporation and By-Laws.
5.2. AUTHORIZATIONS. The Buyer has full corporate power and
authority to execute and deliver, and to perform its obligations under this
Agreement. The execution and delivery of this Agreement by the Buyer and the
performance by the Buyer of its obligations hereunder have been duly authorized
by all requisite corporate action, including, without limitation, by the
Buyer's Board of Directors. No other action on the part of the Buyer is
necessary to authorize the execution and delivery of this Agreement or the
performance of its obligations hereunder. This Agreement has been, and the
documents to be delivered at the Closing by the Buyer are duly and validly
executed and delivered by the Buyer and constitute the legal, valid and binding
obligation of the Buyer, enforceable against the Buyer in accordance with their
terms, except to the extent that such enforcement may be subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and remedies generally.
5.3. NO VIOLATION. Neither the execution and delivery of this
Agreement by the Buyer, nor the performance by the Buyer of its obligations
hereunder, will:
(a) Violate or result in any material breach of any
provision of the Certificate of Incorporation or By-Laws of the Buyer; or
(b) Violate any order, writ, judgment, injunction, decree,
statute, rule or regulation of any court or Governmental Authority applicable
to the Buyer or its properties or assets which, in any case, could reasonably
be expected to have a Material Adverse Effect on the business, revenues,
financial condition, results of operations, properties, assets or prospects of
the Buyer.
5.4. CONSENTS AND APPROVALS. To the best of the Buyer's knowledge,
other than the consents and approvals of or filings or registrations with the
Governmental Authorities listed on Section 5.4 of the Disclosure Schedule, no
filing or registration with, no notice to and no permit, authorization, consent
or approval of any Governmental Authority is necessary for the execution and
delivery by the Buyer of this Agreement or the consummation by the Buyer of the
purchase and sale of the Business and the Purchased Assets.
5.5. BROKER'S FEES AND COMMISSIONS. Neither the Buyer nor any
of its shareholders, directors, officers, employees or agents has employed any
investment banker, broker, finder or intermediary, and no such fee or other
commission is owed to any third party, in connection with the transactions
contemplated herein.
29
5.6. FINANCING. The Buyer has sufficient cash and/or available
credit facilities to pay the Purchase Price and to make all other necessary
payments, including payments of Taxes, fees and expenses, in connection with
the transactions contemplated by this Agreement.
ARTICLE VI.
COVENANTS OF THE SELLER AND THE BUYER
The Seller and the Buyer hereby agree to keep, perform and fully
discharge the following covenants and agreements:
6.1. COOPERATION; ACCESS. From the date hereof through the Closing
Date, the Seller shall cooperate fully in assisting the Buyer in the planning
and implementation of a transitional plan for the transfer of the Business.
Without limiting the foregoing, the Seller shall afford to representatives of
the Buyer reasonable access to offices, plants, properties, books and records
of the Business as the Buyer may from time to time request.
6.2. BEST EFFORTS. The Seller and the Buyer shall each use all
commercially reasonable efforts to consummate the transactions contemplated by
this Agreement.
6.3. FURTHER ASSURANCES. Following the Closing, the parties
hereto shall take all action reasonably requested by the other party to
confirm, facilitate or perfect the transfer of the Purchased Assets.
6.4. BULK SALES. The Buyer and the Seller hereby waive compliance
with the provisions of the bulk sales law of any state, including without
limitation, the Uniform Commercial Code - Bulk Transfer provisions and the
Seller shall indemnify the Buyer for any Losses arising from Seller's failure
to comply with any bulk sales law.
6.5. TRANSFER TAXES. All sales, transfer, deed, duties, stamp,
notary public, recording and registration fees, and other similar taxes, duties
and transfer fees applicable to the transactions contemplated by this Agreement
shall be shared equally by and between the Buyer and the Seller.
6.6. COVENANT NOT TO COMPETE. For a period of five years from and
after the Closing Date, the Seller will not, and will cause its Affiliates not
to, engage directly or indirectly in the business that the Seller conducts as
of the Closing Date in any geographic area in which the Seller conducts such
business as of the Closing Date; provided, however, that ownership of less than
5% of the outstanding stock of any publicly traded corporation shall not be
deemed to engage solely by reason thereof in any of its businesses. If the
final judgment of an arbitrator or a court of competent jurisdiction declares
that any term or provision of this Section 6.6 is invalid or unenforceable, the
parties agree that the court or arbitrator making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this provision shall be enforceable as so modified.
30
6.7. CONFIDENTIALITY. The Seller will, and the Seller will cause
its Affiliates to, treat and hold as such all of the "Confidential Information"
(as defined in Exhibit A), which is in the possession of the Seller or its
Affiliates, using the same reasonable precautions as the Seller or its
Affiliates take to safeguard their own proprietary and confidential
information. In the event that the Seller or any of its Affiliates is requested
or required (by oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, the Seller will
notify the Buyer promptly of the request or requirement so that the Buyer may
seek an appropriate protective order or waive compliance with the provisions of
this Section 6.7. If, in the absence of a protective order or the receipt of a
waiver hereunder, the Seller or any of its Affiliates is, on the advice of
counsel, compelled to disclose any Confidential Information to any tribunal or
else stand liable for contempt, the Seller or the applicable Affiliate may
disclose the Confidential Information to the tribunal; provided, however, that
the Seller shall use all commercially reasonable efforts to obtain, at the
request of the Buyer and at the Buyer's expense, an order or other assurance
that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Buyer may designate.
6.8. COLLECTION OF ACCOUNTS RECEIVABLE; BUY BACK OF CERTAIN
RECEIVABLES.
(a) At its option, the Buyer may require the Seller to
purchase any account receivables included in the Purchased Assets which are
still outstanding as of 120 days after the Closing Date. The account
receivables which meet the foregoing criteria are called the "REASSIGNED
RECEIVABLES"; provided, however, the Reassigned Receivables shall not include
any accounts receivable due from a customer which the Buyer has terminated or
cut-off. Between 120 and 140 days after the Closing Date, the Buyer shall
provide the Seller with a list of any Reassigned Receivables including the name
and address of the customer and the amount of the Reassigned Receivables which
remain due and payable from the customer as of 120 days after the Closing Date
together with copies of the related unpaid invoices. Within 15 days after the
Seller receives the Buyer's notification regarding the Reassigned Receivables,
the Seller shall pay the Buyer in cash the amount of the Reassigned
Receivables. Upon receipt of such payment from the Seller, the Buyer shall
assign the Reassigned Receivables to the Seller.
(b) The Buyer shall use commercially reasonable efforts to
collect the trade accounts receivable during the 120 days immediately following
the Closing Date. Any payments received from a customer in payment of accounts
receivable will be applied in the order of such customer's oldest accounts
owing, unless the customer specifically in writing applies payment to a
particular invoice in which case such payment shall be so applied.
(c) The Seller shall remit to the Buyer any monies the
Seller receives from a customer in respect of the accounts receivable included
in the Purchased Assets or accounts receivable arising after the Closing Date
from sales of products. Such remittance shall be made within 7 days after the
Seller receives such payment from the customer and shall be wire transferred to
the Buyer based on wire transfer instructions provided by the Buyer to the
Seller. Similarly, if the Seller pays the Buyer for the Reassigned Receivables
and the Buyer receives monies from a customer for such Reassigned
31
Receivables, the Buyer shall remit such monies to the Seller within 15 days
after Buyer receives such payment from the customer.
6.9. EXISTING INSURANCE COVERAGE. Insurance coverage applicable to
the Business shall be available to the Buyer with respect to insured
occurrences or claims made relating to the Business on or prior to the Closing
Date, if and only to the extent that the Buyer has assumed or paid the loss or
liability attributed to such occurrences. If, after the Closing, the Seller
actually receives from an insurer cash proceeds (excluding any return of
premium or reimbursed attorneys or investigation or other fees) attributable to
such insurance coverage with respect to any insured occurrences or any series
of occurrences on or prior to the Closing Date or any claims that were asserted
on or prior to the Closing Date, then such cash proceeds shall be paid to the
Buyer net of any deductible, co-payment, retro fees, self-insured premiums,
defense costs or other charges paid or payable to the insurance carrier or
obligations to reimburse the insurance carrier for which the Seller is liable,
to the extent that the Buyer has assumed or paid the loss or liability
attributed to such occurrences. The Buyer shall reimburse the Seller for any
administrative costs, retro fees, premiums, self-insured or deductible loss
costs or other expenses that the Seller is charged after the Closing by such
insurance carrier relating to claims paid to the Buyer subsequent to Closing
under insurance coverage and applicable to the Business prior to Closing.
6.10. [
]
6.11. ACCESS TO AUBURN FACILITY. [
] the Seller will provide the Buyer with full and complete
access to the facilities at the Auburn plant for the purpose of allowing Buyer
to crate, move and ship equipment and other property acquired hereunder. During
the period that the Buyer needs access to such facilities, the Buyer shall be
responsible for utilities, insurance, property taxes and any other expenses
incurred by the Seller that are necessary to provide the Buyer with access to
the facilities and to move, crate and ship equipment and other property
acquired by the Buyer hereunder.
6.12. [
]
ARTICLE VII.
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EMPLOYEE MATTERS
7.1. EMPLOYMENT. The Seller acknowledges that the Buyer is not
employing or offering to employ any employees of the Seller as a result of the
transactions contemplated by this Agreement. Following the Closing, the Seller
shall continue to be responsible for all liabilities, obligations and claims
relating to its Active and Inactive Employees whether arising before or after
the Closing.
7.2. NATIONAL LABOR RELATIONS ACT. Nothing in this Agreement or
any related agreement shall limit the Seller from fulfilling its obligations,
if any, regarding notice or effects bargaining under the National Labor
Relations Act.
7.3. NO RIGHT TO EMPLOYEES. Nothing in this Agreement or its
attached Exhibits and Schedules, expressed or implied, shall confer upon any
Active Employee, Inactive Employee, legal representative thereof, or any
collective bargaining agent any rights or remedies, including, without
limitation, any right to employment, or continued employment for any specified
period or the benefits, terms and conditions thereof, of any nature or kind
whatsoever under or by reasons of this Agreement.
ARTICLE VIII.
SURVIVAL AND INDEMNIFICATION
8.1. SURVIVAL. All representations, warranties, covenants and
agreements contained in this Agreement, and in any certificate, schedule,
document or other writing delivered pursuant hereto or in connection with the
transactions contemplated herein shall be in all cases deemed to have been
relied upon by the parties hereto, and shall survive the Closing; provided that
the representations and warranties shall be fully effective and enforceable
only for a period of two (2) years after the Closing Date, and shall thereafter
be of no further force or effect. Additionally, the parties agree that the
indemnification obligations set forth in this Article VIII with respect to a
misrepresentation or breach of a representation or warranty shall survive with
respect to any claims made by the indemnified party in writing within the
applicable survival period until finally resolved or judicially determined,
including any appeal thereof.
8.2. INDEMNIFICATION OF THE BUYER. From and after the Closing,
the Seller agrees to indemnify, defend and save the Buyer and its directors,
officers, employees, owners, agents and Affiliates and their successors and
assigns or heirs and personal representatives, as the case may be (each a
"BUYER INDEMNIFIED Party"), forever harmless from and against, and to promptly
pay to a Buyer Indemnified Party or reimburse a Buyer Indemnified Party for any
and all losses, damages, expenses (including, without limitation, court costs,
amounts paid in settlement, judgments, reasonable attorneys' fees or other
expenses for investigating and defending), suits, actions, claims,
deficiencies, liabilities or obligations (collectively, the "LOSSES") sustained
or incurred by such Buyer Indemnified Party relating to, caused by or resulting
from:
(a) Any misrepresentation or breach of warranty made by the
Seller contained herein or in any certificate, schedule, document or other
writing delivered by the Seller pursuant hereto;
33
(b) Any failure to fulfill or satisfy any covenant or
agreement made by the Seller herein or in any certificate, schedule, document
or other writing delivered by the Seller pursuant hereto; and
(c) The Excluded Liabilities.
With respect to the indemnification for the Seller's
Environmental Liabilities and Costs, the parties hereto agree that there shall
be a presumption that any Environmental Liabilities and Costs whenever arising
(including after Closing) based on, arising out of or otherwise in respect of
the Purchased Assets, the Business, or property owned, operated, used or leased
at some time by the Seller or its predecessors are the Seller's Environmental
Liabilities and Costs.
8.3. INDEMNIFICATION OF THE SELLER. From and after the Closing,
the Buyer agrees to indemnify, defend and save the Seller and its respective
legal representatives, heirs, successors, assigns, agents and Affiliates (each
a "SELLER INDEMNIFIED PARTY"), forever harmless from and against, and to
promptly pay to a Seller Indemnified Party or reimburse a Seller Indemnified
Party for, any and all Losses sustained or incurred by such Seller Indemnified
Party relating to, caused by or resulting from:
(a) Any misrepresentation or breach of warranty, or failure
to fulfill or satisfy any covenant or agreement made by the Buyer contained
herein or in any certificate, schedule, document or other writing delivered by
the Buyer pursuant hereto;
(b) Any failure to fulfill or satisfy any covenant or
agreement made by the Buyer in any certificate, schedule, document or other
writing delivered by the Buyer pursuant hereto; and
(c) The Assumed Liabilities.
8.4. INDEMNIFICATION PROCEDURE FOR THIRD PARTY CLAIMS AGAINST
INDEMNIFIED PARTIES.
(a) In the event that subsequent to the Closing any Buyer
Indemnified Party or Seller Indemnified Party (each, an "INDEMNIFIED PARTY")
receives notice of the assertion of any claim or of the commencement of any
action, suit or proceeding by any entity which is not a party to this Agreement
(including, without limitation, any governmental, quasi-governmental or
regulatory agencies) (a "THIRD PARTY CLAIM") against such Indemnified Party,
with respect to which the Buyer or the Seller (the "INDEMNIFYING PARTY"), as
the case may be, are required to provide indemnification under this Agreement,
the Indemnified Party shall promptly give written notice, together with a
statement of any available information regarding such claim (collectively, the
"THIRD PARTY INDEMNIFICATION NOTICE"), to the Indemnifying Party within thirty
(30) days after learning of such claim (or within such shorter time as may be
necessary to give the Indemnifying Party a reasonable opportunity to respond to
such claim), provided, however, that no delay on the part of the Indemnified
Party in notifying the Indemnifying Party shall relieve the Indemnifying Party
from any liability or obligation hereunder unless (and then solely to the
extent) the Indemnifying Party can demonstrate that the defense of the Third
Party Claim is prejudiced by such delay or failure to notify. The Indemnifying
Party shall have the right, upon delivering written notice to the Indemnified
Party (the "DEFENSE NOTICE") within thirty (30) days after receipt from an
Indemnified Party of a Third Party Indemnification Notice, to conduct, at the
34
Indemnifying Party's sole cost and expense, the defense against such Third
Party Claim in the Indemnifying Party's own name, or, if necessary, in the name
of the Indemnified Party.
(b) If the Indemnifying Party gives the Indemnified Party
the Defense Notice and thereby elects to conduct the defense of the Third Party
Claim:
(i) the Indemnifying Party shall reimburse the
Indemnified Party for any costs it has incurred and will defend the Indemnified
Party against the matter with counsel of the Indemnifying Party's choice;
(ii) the Indemnified Party may retain separate
co-counsel at its sole cost and expense;
(iii) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
matter without the written consent of the Indemnifying Party not to be
unreasonably withheld or delayed; and
(iv) the Indemnifying Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
matter, which does not include a provision whereby the plaintiff or claimant in
the matter releases the Indemnified Party from all liability with respect
thereto, without the written consent of the Indemnified Party not to be
unreasonably withheld or delayed.
(c) If the Indemnifying Party does not give the
Indemnified Party the Defense Notice and thereby elects not to conduct the
defense of the Third Party Claim, the Indemnified Party may defend against, or
enter into any settlement with respect to, the matter in any manner the
Indemnified Party reasonably deems appropriate without waiving any right to
indemnity therefor by the Indemnifying Party.
(d) The parties shall cooperate in defending any Third
Party Claim. The defending party shall have reasonable access to the books,
records and personnel which are pertinent to the defense and which are in the
possession or control of the other party.
8.5. NOTICE OF CLAIMS. In the case of a claim for indemnification
under Section 8.2 or Section 8.3 hereof, upon determination by a Buyer
Indemnified Party or a Seller Indemnified Party, as the case may be, that it
has a claim for indemnification, the Indemnified Party shall deliver notice of
such claim to the Indemnifying Party, setting forth in reasonable detail the
basis of such claim for indemnification (each, an "INDEMNIFICATION NOTICE").
Upon the Indemnification Notice having been given to the Indemnifying Party,
the Indemnifying Party shall have thirty (30) days in which to notify the
Indemnified Party in writing (the "DISPUTE NOTICE") that the amount of the
claim for indemnification is in dispute, setting forth in reasonable detail the
basis of such dispute. In the event that a Dispute Notice is not given to the
Indemnified Party within the required thirty (30) day period, the Indemnifying
Party shall be obligated to pay to the Indemnified Party the amount set forth
in the Indemnification Notice within sixty (60) days after the date that the
Indemnification Notice had been given to the Indemnifying Party.
35
In the event that a Dispute Notice is timely given to an
Indemnified Party, the Dispute Notice shall initiate the dispute resolution
mechanism set forth in Section 9.1.
8.6. LIMITATIONS ON INDEMNIFICATION.
(a) The Seller shall not be liable and the Buyer agrees not
to enforce any claim for indemnification with respect to a misrepresentation or
breach of a representation or warranty under this Agreement until the aggregate
amount of all such claims exceeds $50,000 (the "THRESHOLD AMOUNT"), and then
the Buyer shall be entitled to recover only the amount of such claims in excess
of the Threshold Amount. The Buyer shall provide the Seller with written notice
of all claims included in the Threshold Amount. The maximum liability of the
Seller for indemnification for misrepresentation or breach of representations
and warranties under Article IV shall be the Purchase Price.
(b) The parties shall use reasonable efforts to collect the
proceeds of any insurance which would have the effect of reducing Losses, in
which case such insurance proceeds (net of the costs incurred in obtaining such
proceeds) shall reduce such Losses, and, if indemnification payments shall have
been received by the Indemnified Party prior to the collection of such
proceeds, the Indemnified Party shall remit to the Indemnifying Party the
amount of such proceeds (net of the cost of collection thereof) to the extent
of indemnification payments received in respect of such Losses. To the extent
any Loss of an Indemnified Party is reduced by receipt of payment (i) under
insurance policies which are not subject to retroactive adjustment or other
reimbursement to the insurer in respect of such payment, or (ii) from third
parties not affiliated with the Indemnified Party, such payments (net of the
expenses of the recovery thereof) shall be credited against such Loss.
8.7. EXCLUSIVE REMEDY. From and after the Closing, the
indemnification provisions of this Article VIII shall be the sole and exclusive
remedy for any breach of this Agreement and all related agreements, and no
other remedy shall be had in contract, tort or otherwise by the Seller and the
Buyer and their respective officers, directors, employees, agents, Affiliates,
attorneys, consultants, successors and assigns, all such remedies being hereby
expressly waived. In addition to the foregoing, the maximum amount of the
Seller's indemnification obligations for misrepresentations or breaches of
representations and warranties hereunder is subject to the limitation set forth
in Section 8.6(a), and the Buyer shall not be entitled to a rescission of this
Agreement or any related agreement or to any further indemnification rights or
claims of any nature whatsoever for misrepresentations or breaches of
representations and warranties, all of which the Buyer hereby waives.
8.8. NO OTHER REPRESENTATIONS; LIMITATIONS ON BREACH OF
REPRESENTATIONS AND WARRANTIES. Notwithstanding anything to the contrary
contained in this Agreement, the Buyer acknowledges and agrees that the Seller
is making no representations or warranties whatsoever, express or implied, with
respect to the Purchased Assets or the Business, the transactions contemplated
hereby or under any related agreement or any matter related thereto, except for
the representations and warranties contained in this Agreement or any related
Agreement. Without limitation as to the foregoing, the Buyer acknowledges and
agrees that the Seller has not made any representations or warranties to the
Buyer with respect to any projections or forecasts relating to the Business or
the Purchased Assets, or representations and warranties as to any other
information provided to the Buyer in connection with the transactions
contemplated hereby or under any related agreement.
36
ARTICLE IX.
ARBITRATION
9.1. PROCEDURE. If, after the Closing Date, the parties should
have any dispute arising out of or relating to this Agreement or the parties'
respective rights and duties hereunder (in each case a "DISPUTE"), then the
parties will resolve such Dispute in the following manner:
(a) Either party may at any time deliver to the other a
written notice identifying a Dispute (the "DISPUTE NOTICE"). The Dispute Notice
shall initiate the dispute resolution mechanism contemplated by this Section
9.1. Within fifteen (15) days after delivery of the Dispute Notice, the
receiving party shall submit to the other a written response. The Dispute
Notice and the response thereto shall state with particularity the facts and
conditions giving rise to the Dispute and shall include (i) a statement of each
party's position and a summary of arguments supporting that position and (ii)
the name and title of the persons who will represent that party in the
negotiations contemplated by Section 9.1(b) below.
(b) Within thirty (30) days after delivery of the Dispute
Notice, the designated representatives of both parties shall attempt in good
faith to resolve the Dispute and shall meet at a mutually acceptable time and
place, and there often as they reasonably deem necessary, to attempt to resolve
the Dispute. In attempting to resolve the dispute the parties may consult with
a neutral third party mediator if both parties agree in writing. All
negotiations pursuant to this Section 9.1(b) shall be confidential and shall be
treated as compromise and settlement negotiations for purposes of applicable
rules of evidence.
(c) If the representatives of the parties are unable to
resolve the Dispute through negotiations within ninety (90) days after delivery
of the Dispute Notice, then the Dispute shall be resolved by final and binding
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"), as the same may be modified by the terms of
this Agreement. Within ten (10) days of the expiration of the ninety (90) day
period referenced in the preceding sentence, the demanding party may initiate
arbitration by making a written demand for arbitration on the other party and
simultaneously filing copies of the demand, together with the required fees,
with the office of the AAA in New York, New York. Within ten (10) business days
after receipt of such demand by the other party, each party shall designate one
arbitrator and the two arbitrators named by the parties will, within ten (10)
business days thereafter, select a third arbitrator (the three arbitrators
being collectively referred to herein as the "ARBITRATION PANEL"). The
Arbitration Panel shall cause a hearing to be held within sixty (60) calendar
days after the date the third arbitrator is selected and shall render an award
within ninety (90) calendar days from the commencement date of the hearing
based on the unanimous or majority decision of the arbitrators.
(d) The place of arbitration shall be New York, New York.
The parties expressly covenant and agree to be bound by the decision of the
Arbitration Panel and accept any such decision as the final determination of
the matter in dispute. Any decision, award and/or judgment rendered by the
Arbitration Panel may be entered in any court having competent jurisdiction.
(In no event shall any
37
demand for arbitration be made after the date that institution of legal or
equitable proceedings based upon the claim, dispute or other matter would be
barred by this Agreement.) The expenses and fees of the Arbitration Panel shall
be borne as set forth in the award of the Arbitration Panel. Each party shall
bear its own legal fees and expenses.
(e) The Arbitration Panel is not empowered to award any
damages in excess of compensatory damages and each party hereby irrevocably
waives any right to recover such damages with respect to any Dispute resolved
by arbitration under this Section 9.
(f) This Section 9 shall not apply to any disputes between
the parties involving the determination of the Final Closing Statement of Net
Assets which are to be resolved by the Accounting Arbitrator pursuant to
Section 2.8.
9.2. EXCLUSIVE PROCEDURE. The procedures specified in this Section
9 shall be the sole and exclusive procedures for the resolution of a Dispute
(other than disputes submitted to the Accounting Arbitrator under Section 2.8);
provided, however, that a party, without prejudice to the above procedures, may
seek a preliminary injunction or other provisional judicial relief, if in its
sole judgment such action is necessary to avoid irreparable damage or to
preserve the status quo.
ARTICLE X.
MISCELLANEOUS PROVISIONS
10.1. WAIVER; MODIFICATION. No provision of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing and signed by a duly authorized representative of each of
the parties hereto. No waiver by either party hereto at any time of any breach
by the other party hereto of, or compliance with, any condition or provision of
this Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
10.2. INVALIDITY. If any provision of this Agreement shall be
determined by any court of competent jurisdiction to be unenforceable or
invalid to any extent, the remainder of this Agreement shall not be affected
thereby, and this Agreement shall be construed to the fullest extent possible
to as to give effect to the intentions of the provision found unenforceable or
invalid.
10.3. PARTIES IN INTEREST. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, expressed or implied, is intended to confer upon any other person
any rights or remedies of any nature whatsoever under or by reason of this
Agreement.
10.4. EXPENSES. Except as otherwise specifically provided for
herein, each party hereto shall bear all expenses incurred by it in connection
with this Agreement including, without limitation, the charges of its counsel,
accountants and other experts.
38
10.5. NOTICES. All notices and other communications provided for
hereunder shall be in writing and shall be delivered to each party hereto by
hand or sent by reputable overnight couriers, with respect verified, or
facsimile, with receipt verified, or registered or certified mail, return
receipt requested, addressed as follows:
(a) If to the Buyer:
c/o Cooper Industries, Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx Industries, Inc.
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Executive Vice President
(Automotive)-Xxxxxx Industries
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(b) If to the Seller:
c/o SL Industries, Inc.
000 Xxxxxxxxxx Xxxx, Xxxxx X-000
Xx. Xxxxxx, Xxx Xxxxxx 00000
Attention: Xx. Xxxx Xxxxxx, President and CEO
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to:
Xxxxx X. Xxxxxxxxxx, Esq.
Xxxxxxxx & Xxxxxxxx
Four Stamford Plaza
P. O. Xxx 000
Xxxxxxxx, Xxxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
39
or at such other address as either party may specify by notice to the other
party given as aforesaid. Such notices shall be deemed to be effective when the
same shall be deposited, postage prepaid, in the mail and/or when the same
shall have been delivered by hand or overnight courier, and/or upon facsimile
transmission, as the case may be.
10.6. GOVERNING LAW; FORUM. The validity, interpretation,
construction and performance of this Agreement shall be governed by the laws of
the State of New York without regard to its conflicts of law principles.
Subject to Section 9 including Section 9.2, the parties hereto do hereby
consent and submit to the venue and jurisdiction of the State or Federal Courts
sitting in New York as the sole and exclusive forum for such matters of
dispute, and further agree that, in the event of any action or suit as to any
matters of dispute between the parties, service of any process may be made upon
the other party by mailing a copy of the summons and/or complaint to the other
party at the address set forth herein and a party's refusal to accept any such
notice shall be equivalent to service.
10.7. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
10.8. HEADINGS. All headings contained in this Agreement are for
reference purposes only and shall not in any way effect the meaning or
interpretation of any provision or provisions of this Agreement.
10.9. INTEGRATION. This Agreement, and the documents to be
delivered in connection therewith, and the exhibits and schedules thereto, set
forth the entire agreement of the parties hereto in respect of the subject
matter contained herein and supersedes all prior and contemporaneous
agreements, promises, covenants, arrangements, understandings, arrangements,
communications, representations or warranties, whether oral or written, by any
officer, employee or representative of any party hereto; and any prior
agreement of the parties hereto in respect of the subject matter contained
herein is hereby terminated and cancelled. No agreements or representations,
whether written, oral, express or implied, with respect to the subject matter
hereof have been made by either party that are not set forth expressly in this
Agreement and the other documents to be delivered in connection herewith and
therewith.
10.10. ASSIGNMENT. Neither party may assign its rights hereunder
without the prior written consent of the other party; provided, however, that
the Buyer may assign its rights to any Affiliate of the Buyer, or any successor
of the Buyer in connection with the sale of all or substantially all of the
assets of the Buyer, or the merger or consolidation of the Buyer with another
party, provided such Affiliate or successor agrees in writing to be bound to
all of the terms and liabilities of this Agreement to the same extent that the
Buyer is bound. Any assignment in contravention of this section shall be null
and void.
10.11. PUBLICITY. No party shall issue any press release or public
announcement of any kind concerning the transactions contemplated by this
Agreement without the prior written consent of the other party hereto, except
as may be required by law or by the rules of any stock exchange, and if so
required the parties shall to the extent that it is reasonably practicable
consult with each other prior to
40
such publicity. The parties agree to issue an announcement following the
Closing its form and content satisfactory to each of the parties hereto.
10.12. CERTAIN DEFINITIONS. Unless otherwise defined herein,
capitalized terms shall have the meaning ascribed in the attached Exhibit A.
* * * * * * * * * *
41
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SL AUBURN, INC.
By:_/s/_Owen Xxxxxx
---------------------
Name:_ Xxxx Xxxxxx
----------------------
Title:___Chairman
-----------------------
CHAMPION SPARK PLUG COMPANY
By:_/s/ Xxxxxxx X. Xxxxxx
---------------
Name:_William X. Xxxxxx
-----------------
Title:__Director, Business Development
--
42
LIST OF OMITTED SCHEDULES TO ASSET PURCHASE AGREEMENT
-----------------------------------------------------
The Registrant agrees to submit any schedules upon request by the Commission.
Exhibit A - Certain Definitions
Exhibit B - Peg Statement of Net Assets
Exhibit C - Instrument of Assumption
Exhibit D - [ ]
Exhibit E -Assignment and Xxxx of Sale
Exhibit F - Guarantee of SL Industries
Exhibit G -Persons with Knowledge
Exhibit H -Allocation Schedule
Section 1.2(g) - Excluded Personal Property
Section 4.5 - Seller's List of Required Government Notices, Consents, Filings,
Permits etc.
Section 4.6 - List of Exceptions to Generally Accepted Accounting Procedures
Section 4.9 - List of Exceptions to (a) All Outstanding Accounts and Notes
Receivable Which Are Due and Valid Claims Against Account Debtors and (b) All
Accounts Receivable Which Arose in the Ordinary Course of Business
Section 4.10(b) - List of Patents, Copyrights, Servicemarks, Trademarks, Trade
Names and registrations and applications thereof which are owned by Seller and
Used in the Business
Section 4.10(c) - List of Patents, Copyrights, Servicemarks, Trademarks, Trade
Names and registrations and applications thereof which are not owned by the Seller
(or its Affiliates) but are licensed for Use in the Business
Section 4.11 - List of Exceptions to the Business Being Conducted in the Ordinary
and Usual Course
Section 4.12(a) - Material Contracts
43
Section 4.12(d) - List of Third Party Consents Required Under the Material
Contracts
Section 4.13(a) - List of Missing Material Licenses, Franchises, Permits, Consents
and Authorizations Necessary for the Lawful Conduct of Business
Section 4.13(b) - Notifications of Failure to Comply with Material Laws Applicable
to the Business
Section 4.13(c) - List of All Material Licenses, Franchises, Permits, Consents,
and Authorizations Material to and Necessary for the Lawful Conduct of the Business
Section 4.14 - List of Investigations or Proceedings into the Business Initiated by
any Regulatory Agency Within the Last Five (5) Years
Section 4.15 - Agreements With Regulatory Agencies
Section 4.16(a) - List of Seller's Ten Largest Customers
Section 4.16(b) - List of Conditions or Events Which Would Have a Material
Adverse Effect on the Seller's Relationship with its Ten Largest Customers
Section 4.17 - List of All (a) Representatives, (b) Representatives Terminated
Within One Year, (c) Representatives Employed Within One Year, and (d)
Representative Agreements.
Section 4.18 - Existing or Threatened Litigation or Disputes
Section 4.20 - Restrictions on Seller's Ability to own, Possess or
Use its Assets or Properties or Conduct Business or Operations, or
Compete Against any Individual or Entity
Section 4.21 - Powers of Attorney
Section 4.25 - Real Property Owned by Seller
Section 4.30 - Insurance Policies Owned by Seller
Section 4.31 - Tax Assessments Against Seller
Section 5.4 - Buyer's List of Required Government Notices,
Consents, Filings, Permits etc.
