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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "AGREEMENT") is entered into on the
10th day of July, 1998 by and between Xxxx Xxxxxxx (the "BUYER"), and NORTEK,
INC., a Delaware corporation (the "SELLER").
The Seller owns all of the issued and outstanding shares of capital stock
(the "SHARES") of UNIVERSAL-XXXXXX CORPORATION (the "COMPANY").
This Agreement contemplates a transaction in which the Buyer will purchase
the Shares from the Seller for cash.
1. PURCHASE AND SALE OF SHARES.
1.1 BASIC TRANSACTION. On and subject to the terms and conditions of
this Agreement, the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, all of the Shares for the consideration specified
below in this Section 1.
1.2 PURCHASE PRICE.
(a) As the purchase price for the Shares (the "PURCHASE
PRICE"), the Buyer agrees to pay to the Seller at the Closing, by wire transfer
of immediately available federal funds to a bank account designated by Seller,
the sum of $33,653,000.
1.3 THE CLOSING. The closing of the transactions contemplated by
this Agreement (the "CLOSING") shall take place at the offices of Xxxxx &
XxXxxxxx, Xxx Xxxxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, commencing at 9:00 a.m. local
time on July 10, 1998, or such other date and/or time as the Buyer and the
Seller may mutually agree (the "CLOSING DATE").
1.4 DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
deliver to the Buyer the various certificates, instruments and documents
referred to in Section 6 below, (ii) the Buyer will deliver to the Seller the
various certificates, instruments and documents referred to in Section 7 below,
(iii) the Seller will deliver to the Buyer a stock certificate representing all
of the Shares, endorsed in blank or accompanied by duly executed assignment
documents, and (iv) the Buyer will deliver to the Seller the consideration
specified in Section 1.2 above.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
and warrants to the Buyer that the statements contained in this Section 2 are
true, correct and complete as of the date of this Agreement and will be true,
correct and complete as of the Closing Date (as though made on such date and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 2).
2.1 AUTHORIZATION. The Seller has full power and authority to
execute and deliver this Agreement and all other agreements, documents, and
instruments contemplated
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hereby and to perform its obligations hereunder and thereunder. The Seller has
obtained all necessary approvals from its Board of Directors required for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. No such approval by Seller's stockholders is
required. This Agreement has been duly executed and delivered by the Seller and
constitutes the valid and legally binding obligation of the Seller, enforceable
in accordance with its terms. Except for the filing of notices under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act (the "H-S-R ACT"), the Seller need
not give any notice to, make any filing with, or obtain any authorization,
consent or approval of any government or government agency in order to
consummate the transactions contemplated by this Agreement.
2.2 NONCONTRAVENTION. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, judgment, order, decree, stipulation,
injunction, charge or other restriction of any government, governmental agency,
or court to which the Seller is subject, (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, or require any
notice under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement, mortgage, instrument of indebtedness or other
arrangement to which the Seller is a party or by which it is bound or to which
any of its assets is subject, or (iii) contravene, conflict with or result in a
violation of the Certificate of Incorporation or Bylaws of Seller.
2.3 BROKER'S FEES. The Seller has no liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which the Buyer or the Company
could become liable or obligated.
2.4 OWNERSHIP OF SHARES. The Seller holds of record and owns
beneficially all of the Shares, free and clear of any restrictions on transfer,
claims, taxes, pledges, encumbrances, security interests, rights of first
refusal, liens or other demands or liabilities. The Seller is not a party to any
option, warrant, right, contract, right of conversion, call, put or other
agreement or commitment providing for the disposition or acquisition of any
capital stock of the Company (other than this Agreement). The Seller is not a
party to any voting trust, proxy, or other agreement or understanding with
respect to voting of any capital stock of the Company. As a result of Seller's
delivery of the stock certificate or certificates representing the Shares
endorsed in blank or accompanied by duly executed assignment documents to Buyer
at the Closing and Buyer's payment to the Seller at Closing, at Closing, Buyer
will be acquiring ownership of the Shares, free and clear of any restrictions,
claims, taxes, pledges, encumbrances, security interests, rights of first
refusal, liens or other demands or liabilities.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLER CONCERNING THE COMPANY.
The Seller represents and warrants to the Buyer that the statements contained in
this Section 3 are true, correct and complete as of the date of this Agreement
and will be true, correct and complete as of the Closing Date (as though made on
such date and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3), except as set forth in the disclosure
schedule accompanying this Agreement (the "DISCLOSURE SCHEDULE"), and except for
changes in the business and properties of the Company expressly permitted or
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required by the terms hereof. The Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 3. With respect to any representation and warranty herein which is
made "to the best of Seller's knowledge" or "to Seller's knowledge", Seller
shall be deemed to have knowledge of any matter or fact if any of Xxxxxxx X.
Xxxxxx, Xxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx,
Xxxxxx X. Regal, Xxx X. Xxxxxxxxxxxx, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx
X. Xxxxx, Xxx Xxxxxx, Xxxxxxx Xxxxx, Xxxx Xxxxxxx, Xxxxxx Xxxxxxx, Xxxxxx
Xxxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxxxx or Xxxxxxx Xxxxxx has actual personal
knowledge of such matter or fact; PROVIDED, HOWEVER, that (A) with respect to
the representation and warranty contained in Section 3.11 hereof, only as it
relates to the Company's facilities in New Castle, Pennsylvania, Seller shall be
deemed to have knowledge of any matter or fact only if any of Xxxxxxx X. Xxxxxx,
Xxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X.
Regal, Xxx X. Xxxxxxxxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Tips or Xxxx Xxxxxxx
has actual personal knowledge of such matter or fact, and (B) with respect to
the representation and warranty contained in the last sentence of Section 3.19
hereof, Seller shall be deemed to have knowledge of any matter or fact only if
any of Xxxxxxx X. Xxxxxx, Xxxxx X. Xxxx, Xxxxx X. Xxxxxxx, Xxxxx X. Xxxxxxxx and
Xxxxxxx X. Xxxxxx has actual personal knowledge of such matter or fact.
3.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. The Company is
a corporation duly organized, validly existing and in good standing under the
laws of Delaware. The Company is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction in which the nature of its
business or the ownership or leasing of its properties requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the business, operations, assets or financial condition of the
Company (a "MATERIAL ADVERSE EFFECT"). Each such jurisdiction is listed in
Section 3.1 of the Disclosure Schedule. The Company has all requisite power and
authority to carry on its business as now conducted and to own or lease and to
operate its properties as such properties are now owned, leased or operated.
Section 3.1 of the Disclosure Schedule lists the directors and officers of the
Company. The Seller has delivered to the Buyer true, correct and complete copies
of the charter and by-laws of the Company (each as amended to date).
3.2 CAPITALIZATION. The entire authorized, issued and outstanding
shares of capital stock of the Company is as described in Section 3.2 of the
Disclosure Schedule. All of the issued and outstanding shares have been duly
authorized and are validly issued, fully paid and nonassessable. All of the
issued and outstanding shares are held of record and beneficially by the Seller.
There are no outstanding or authorized options, warrants, rights, contracts,
calls, puts, rights to subscribe, conversion rights, or other agreements or
commitments to which the Company is a party or which are binding upon the
Company providing for the issuance, disposition or acquisition of any of its
capital stock. There are no outstanding or authorized equity appreciation,
phantom equity, or similar rights with respect to the Company. There are no
voting trusts, proxies or any other agreements or understandings with respect to
the voting of the capital stock of the Company.
3.3 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(a) contravene
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or conflict with the Company's charter or by-laws, each as amended to date; (b)
except where there would be no material adverse effect resulting therefrom:
constitute a violation of, or be in conflict with, or constitute or create a
default under, give any person the right to accelerate, modify, terminate,
cancel or exercise any remedy under, or result in the creation or imposition of
any lien, security interest or other encumbrance upon any property of the
Company pursuant to, any agreement or commitment to which it is a party or by
which it or any of its properties is bound or to which it or any of such
properties is subject; (c) contravene, conflict with or result in any violation
of any statute (other than antitrust laws) or any judgment, decree, order,
regulation or rule of any court or governmental authority or; (d) contravene,
conflict with or result in a violation of any of the terms or requirements of,
or give any governmental body the right to revoke, withdraw, suspend, cancel,
terminate, or modify, any Governmental Authorization that is held by the Company
or that otherwise relates to the business of, or any of the assets owned or used
by, the Company.
For purposes of this Agreement, "GOVERNMENTAL AUTHORIZATION" means any
approval, consent, license, permit, waiver, or other authorization issued,
granted, given, or otherwise made available by or under the authority of any
governmental body or pursuant to any Legal Requirement; and "LEGAL REQUIREMENT"
means any federal, state, local, municipal, foreign, international,
multinational, or other administrative order, constitution, law, ordinance,
principle of common law, regulation, statute, or treaty.
Neither the Seller nor the Company is or will be required to give any
notice to or obtain any consent from any person in connection with the execution
and delivery of this Agreement or the consummation or performance of the
transactions contemplated by this Agreement except where the failure to give
such notice or obtain such consent would not have a material adverse effect.
3.4 GOVERNMENTAL CONSENT. Except for compliance with the H-S-R Act,
no consent, approval or authorization of, or registration, qualification or
filing with, any governmental agency or authority is required for the execution
and delivery of this Agreement or for the consummation of the transactions
contemplated hereby.
3.5 FINANCIAL STATEMENTS. Attached hereto as Section 3.5 of the
Disclosure Schedule are (1) the Company's internal unaudited income statement
for the year ended December 31, 1997 and (2) the Company's internal unaudited
balance sheet and income statement as of and for the interim period ended May
30, 1998 (together with all footnotes thereto, the "FINANCIAL STATEMENTS"). Such
Financial Statements fairly present the financial condition and the results of
operations of the Company as of the respective dates thereof and for the
respective periods then ended and, except as disclosed in any footnotes to the
Financial Statements, have been prepared in accordance with generally accepted
accounting principles applied on a basis consistent throughout the periods
covered thereby; PROVIDED, HOWEVER, that (i) any interim Financial Statements
are subject to normal year-end adjustments (the effect of which will not,
individually or in the aggregate, be materially adverse), (ii) the Financial
Statements may not reflect certain immaterial adjustments which might be
required as a result of an audit of the Financial Statements, and (iii) the
Financial Statements may not have all required footnotes.
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The most recent balance sheet of the Company included in the Financial
Statements is herein referred to as the "BALANCE SHEET." The date of the Balance
Sheet is herein referred to as the "BALANCE SHEET DATE." Seller represents and
warrants to Buyer that the net amount of all cash transfers between (i) the
Seller and its affiliates (other than the Company) and (ii) the Company, from
May 30, 1998 through the Closing Date, is a net $903,000 cash transfer to the
Company.
3.6 ABSENCE OF CERTAIN CHANGES. Since the Balance Sheet Date, except
for any changes due to actions taken by Buyer or its employees, agents or
representatives, there has been no adverse change in the financial condition,
business, operations, properties or assets of the Company which has had, or is
reasonably likely to have, a material adverse effect.
3.7 TITLE TO PROPERTIES. The Company is the lawful owner or lessee
of, and (in the case of owned assets) has good title to, all of the assets which
it purports to own or lease or located in facilities owned or operated by the
Company or (in the case of owned assets) reflected as owned in the books and
records of the Company, including all assets reflected in the Balance Sheet
(except for personal property sold since the Balance Sheet Date in the ordinary
course of business) and all assets purchased or acquired by the Company since
the Balance Sheet Date, free and clear of any liens, security interests or other
encumbrances, other than (i) liens for current taxes not yet payable, (ii)
zoning and building statutes, ordinances, resolutions or regulations which, as
to any material property, do not in the aggregate materially adversely affect
the Company's ability to conduct its business as now being conducted, and (iii)
other encumbrances which do not adversely affect the Company's ability to
conduct its business as now being conducted (collectively, "PERMITTED
ENCUMBRANCES").
3.8 TANGIBLE ASSETS. The Company owns or leases all tangible assets
necessary for the conduct of its business as now conducted.
3.9 REAL PROPERTY.
(a) Section 3.9(a) of the Disclosure Schedule lists all the
real properties owned by the Company (the "OWNED REAL PROPERTY"), and the
Company has delivered to Buyer, to the extent available, all copies of deeds and
other instruments (as recorded) by which the Company acquired the Owned Real
Property. Furthermore, with respect to each such Owned Real Property, Seller
represents and warrants that:
(1) the Company has good and marketable title to all Owned
Real Property and holds such real property free and clear of any
lien, encumbrance, easement, covenant, or other restriction,
except for (i) matters of record which do not impair the
Company's ability to use the Owned Real Property affected
thereby for the purposes for which such property is currently
being used and (ii) liens in respect of current taxes and
installments of special assessments not yet delinquent;
(2) there are no pending (or to the best of Seller's or the
Company's knowledge, threatened) special assessments,
condemnation proceedings,
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lawsuits, or administrative actions relating to any parcel of
Owned Real Property;
(3) there are no leases, subleases, licenses, concessions, or
other agreements, written or oral, granting to any party or
parties the right to use or occupy any portion of any parcel of
Owned Real Property;
(4) there are not outstanding options or rights of first
refusal to purchase any parcel of Owned Real Property, or any
portion thereof or interest therein;
(5) there are no parties (other than Seller) in possession of
any parcel of Owned Real Property, other than tenants under any
leases disclosed in the Disclosure Schedule, who are in
possession of space to which they are entitled (the parties
acknowledging that this representation shall apply
notwithstanding any exception to the contrary contained in any
title commitment disclosed on Section 3.9 of the Disclosure
Schedule);
(6) all facilities located on any parcel of Owned Real
Property are supplied with utilities and other services
necessary for the operation of such facilities, including gas,
electricity, water, telephone, sanitary sewer, and storm sewer;
(7) all real estate taxes, penalties and interest due and
payable on or before the Closing Date with respect to the Owned
Real Property have been paid in full;
(8) to the best of Seller's knowledge, the legal description
for the parcel(s) contained in the deed(s) thereof describe such
parcel(s) fully and adequately, the buildings and improvements
are located within the boundary lines of the described parcel(s)
of land, are not in violation of applicable setback
requirements, zoning laws, and ordinances (and none of the
properties or buildings or improvements thereon are subject to
"permitted non-conforming use" or "permitted non-conforming
structure" classifications), and do not encroach on any easement
which may burden the land, and the land does not serve any
adjoining property for any purpose inconsistent with the use of
the land, and the property is not located within any flood plain
or subject to any similar type restriction for which any permits
or licenses necessary to the use thereof have not been obtained;
and
(9) to the best of Seller's knowledge, each parcel of Owned
Real Property abuts on and has direct vehicular access to a
public road, or has access to a public road via a permanent,
irrevocable, appurtenant easement
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benefiting such parcel of real property, and access to the
property is provided by paved public right-of-way with adequate
curb cuts available.
(b) Section 3.9(b) of the Disclosure Schedule lists all the
real properties leased and subleased to and from the Company (the "LEASED REAL
PROPERTY"), and, to the extent available, the Company has delivered to Buyer
true, correct, and complete copies of all leases (including all modifications
thereof and all amendments and supplements thereto) relating to the Leased Real
Property. Furthermore, with respect to each such Leased Real Property, Seller
represents and warrants that:
(1) the Company has not assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered any interest in any
leasehold or subleasehold; and
(2) all facilities leased or subleased thereunder are supplied
with utilities and other services necessary for the operation of
said facilities.
3.10 INVENTORY. The values at which the inventories are shown on the
balance sheets included in the Financial Statements have been determined in
accordance with generally accepted accounting principles, consistently applied.
3.11 ENVIRONMENTAL PROTECTION.
(a) To Seller's knowledge, the Company is in material
compliance with all applicable Environmental Laws (as defined below). To
Seller's knowledge, the Company has not received any written communication from
any person or governmental authority that alleges that the Company is not in
such compliance with applicable Environmental Laws. To Seller's knowledge, the
Company has obtained or has applied for all permits required under Environmental
Laws (collectively, the "ENVIRONMENTAL PERMITS") necessary for the construction
of its facilities or the conduct of its operations. To Seller's knowledge, all
such Environmental Permits are in good standing or, where applicable, a renewal
application has been timely filed and is pending agency approval. To Seller's
knowledge, the Company is in material compliance with all terms and conditions
of the Environmental Permits. There is no Environmental Claim (as defined below)
pending or, to the knowledge of Seller, threatened against (i) the Company; (ii)
to the knowledge of the Seller, against any person or entity whose liability for
any Environmental Claim the Company has or may have retained or assumed either
contractually or by operation of law, or (iii) to Seller's knowledge, against
any real property which the Company owns, leases or manages, or has owned,
leased or managed, in whole or in part. To the knowledge of the Seller, there
have been no Releases (as defined below) of any Hazardous Material (as defined
below) that would be reasonably likely to form the basis of any Environmental
Claim against the Company.
(b) "ENVIRONMENTAL CLAIM" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, investigations, proceedings or notices of noncompliance or
violation by any person or entity
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(including any governmental authority) alleging potential liability (including,
without limitation, potential responsibility for or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on or resulting from (i) the presence,
Release or threatened Release into the environment of any Hazardous Materials at
any location, whether or not owned, operated, leased or managed by the Company;
or (ii) circumstances forming the basis of any violation or alleged violation of
any Environmental Law; or (iii) any and all claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from the presence or Release of any Hazardous
Materials.
(c) "ENVIRONMENTAL LAWS" means all federal, state or local
laws, rules and regulations in effect on the date hereof relating to pollution,
the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata), occupational health or safety,
or protection of human health as it relates to the environment including,
without limitation, laws and regulations relating to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
(d) "HAZARDOUS MATERIALS" means (i) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contain dielectric fluid containing polychlorinated biphenyls; (ii) any
chemicals, materials or substances which are now defined as or included in the
definition of "hazardous substances", "hazardous wastes," "hazardous materials,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic substances,"
"toxic pollutants," or words of similar import under any Environmental Law and
(iii) any other chemical, material, substance or waste, exposure to which is now
prohibited, limited or regulated under any Environmental Law in a jurisdiction
in which the Company operates.
(e) "RELEASE" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the atmosphere, soil, surface water, groundwater or property.
(f) The Seller and the Buyer agree that, notwithstanding
anything to the contrary elsewhere herein contained, the only representations
and warranties herein as to any legal obligation or liability of the Company
under any Environmental Law or relating to Hazardous Materials are those
contained in this Section 3.11. Without limiting the generality of the
foregoing, the Buyer specifically acknowledges that the representations and
warranties contained in Sections 3.14 and 3.17 do not relate to the matters
covered by this Section 3.11.
3.12 INSURANCE. Except as set forth in Section 3.12 of the Disclosure
Schedule, fire, liability, workers' compensation and other forms of insurance
applicable to the Company are currently provided by policies maintained by the
Seller, coverage under which shall, except with respect to pre-Closing
occurrences, terminate, with respect to the Company, on the Closing Date.
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Seller has provided Buyer's insurance broker with a loss history for the five
years prior to this Agreement with regard to the following insurance policies
applicable to the Company: workers' compensation, general liability insurance
and automobile liability insurance.
Except as set forth on Section 3.12 of the Disclosure Schedule, the current
policies applicable to the Company or a director of the Company shall be valid,
outstanding, and enforceable with respect to the Company until the Closing.
The Seller or the Company has paid all premiums due, and have otherwise
performed all of their respective obligations, under each policy which provides
coverage to the Company or director thereof.
3.13 MATERIAL CONTRACTS. Except as set forth in Section 3.13 of the
Disclosure Schedule, the Company neither has nor is bound by:
(a) any agreement, contract or commitment relating to the
employment of any person (including any written contract or commitment to any
labor union), or any written bonus, deferred compensation, pension, severance,
profit sharing, stock option, employee stock purchase, retirement or other
employee benefit plan,
(b) any agreement, indenture or other instrument under or
pursuant to which the Company has borrowed money or guaranteed indebtedness for
borrowed money of $25,000 or more,
(c) any agreement, contract or commitment relating to capital
expenditures of $25,000 or more,
(d) any agreement, contract or commitment relating to the
making of any loan, advance or investment in any other entity,
(e) any guarantee or other contingent liability in respect of
any indebtedness or obligation of any other person or entity (other than the
endorsement of negotiable instruments for collection in ordinary course of
business) of $25,000 or more,
(f) any management service, consulting or any other similar
type contract involving an obligation of $25,000 or more or not unilaterally
cancelable by the Company without liability within 90 days,
(g) any contract for the purchase by the Company of products
or services (other than purchase orders relating to the supply of products or
services to the Company in the ordinary course of business) involving an
obligation of $25,000 or more or not unilaterally cancelable by the Company
without liability within 90 days,
(h) any license agreement involving an obligation of $25,000
or more or not unilaterally cancelable by the Company without liability within
90 days,
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(i) any agreement, contract or commitment limiting the freedom
of the Company to engage in any line of business or to compete with any other
person or entity,
(j) any agreement, contract or commitment relating to the
lease of personal property (including capitalized leases) involving an
obligation of $25,000 or more and not unilaterally cancelable by the Company
without liability within 90 days,
(k) any service or maintenance agreements or any similar type
contract involving an obligation of $25,000 or more and not unilaterally
cancelable by the Company without liability within 90 days,
(l) any sales representative, manufacturer's representative or
distribution agreements or any similar type contract involving an obligation of
$25,000 or more and not unilaterally cancelable by the Company without liability
within 90 days,
(m) any contract for the future sale of any of the Company's
products or services (other than unfulfilled orders for the Company's products
received in the ordinary course of business),
(n) any partnership or joint venture agreement or other
agreement involving a sharing of profits, losses, costs or liabilities by the
Company;
(o) any lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other contract affecting the
ownership of, leasing of, title to, use of, or any leasehold or other interest
in, any real property;
(p) any licensing agreement or other contract with respect to
patents, trademarks, copyrights, or other intellectual property, including
agreements with current or former employees, consultants, or contractors
regarding the appropriation or the non-disclosure of any of the Intellectual
Property Assets;
(q) any power of attorney that is currently effective and
outstanding;
(r) any warranty, guaranty, and or other similar undertaking
with respect to contractual performance extended by the Company other than in
the ordinary course of business;
(s) any agreement, contract or commitment not entered into in
the ordinary course of business which involves amounts of $25,000 or more and is
not unilaterally cancelable by the Company without liability within 90 days.
(t) any amendment, supplement, and modification in respect of
any of the foregoing.
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Except as set forth in Section 3.13 of the Disclosure Schedule, Seller (or
any affiliate of Seller other than the Company) has not and may not acquire any
rights under, and Seller (or any affiliate of Seller other than the Company) has
not and may not become subject to any obligation or liability under, any
contract that relates to the business of, or any of the assets owned or used by,
the Company.
Each contract or agreement described in Section 3.13 of the Disclosure Schedule
is in full force and effect. The Company has not violated any of the terms or
conditions of any contract or agreement set forth in Section 3.13 of the
Disclosure Schedule in any material respect, and, to the Seller's knowledge, all
covenants to be performed by any other party thereto have been fully performed
in all material respects. The Company has not given to or received from any
other person or entity any written notice regarding any uncured violation or
breach of, or uncured default under, any such contract. To the best of Seller's
knowledge, Seller has delivered to Buyer or its representatives copies of all
written contracts described in Section 3.13 of the Disclosure Schedule.
3.14 PERMITS. The Company has and maintains, and complies in all
material respects with the terms and requirements of, all such licenses, permits
and other authorizations from all such governmental authorities as are necessary
or desirable for the conduct of its business, except where the failure to have
any such license, permit or other authorization would not have a material
adverse effect. Each such license, permit or other authorization is valid and in
full force and effect. The Company has not received any written notice from any
governmental body or any other person or entity regarding (i) any uncured
violation of or uncured failure to comply with any term or requirement of any
such license, permit or other authorization or (ii) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to any such license, permit or other
authorization.
3.15 INTELLECTUAL PROPERTIES. Section 3.15 of the Disclosure Schedule
sets forth a complete and accurate list of (a) all patents, trademarks, trade
names and copyrights registered in the name of the Company or used or proposed
to be used by the Company, all applications therefor, and all licenses and other
agreements relating thereto, and (b) all written agreements relating to
technology, know-how and processes by which the Company is licensed or
authorized to use by others or by which the Company has licensed or authorized
for use by others. The Company owns or has the sole and exclusive right to use
all patents, trademarks, trade names and copyrights, in the jurisdictions in
which they are shown as being registered, used or necessary for the ordinary
course of business as presently conducted. The consummation of the transactions
contemplated hereby will not alter or impair any such right or written
agreement. No claims have been asserted in writing, and no claims are pending,
by any person regarding the use of any such patents, trademarks, trade names,
copyrights, technology, know-how or processes, or challenging or questioning the
validity or effectiveness of any license or agreement. The use by the Company of
such patents, trademarks, trade names, copyrights, technology, know-how or
processes used by the Company in the ordinary course of business does not, to
the knowledge of the Seller, infringe on the rights of any person. To the
knowledge of the Seller, no activity of any
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third party infringes upon the rights of the Company with respect to any such
patents, trademarks, trade names, copyrights, technology, know-how or processes.
3.16 LITIGATION. Section 3.16 of the Disclosure Schedule sets forth
each instance in which the Company (i) is subject to any unsatisfied judgment,
order, decree, stipulation, injunction, or charge or (ii) is a party or, to the
knowledge of the Seller, is threatened in writing to be made a party to, any
action, suit, proceeding, hearing, or investigation of, or in any court or
quasi-judicial or administrative agency of, any federal, state, local, or
foreign jurisdiction or before any arbitrator, EXCEPT for (A) any matter
described in clause (i) or (ii) (other than lawsuits actually pending against
the Company) which has not had or would not have a material adverse effect, (B)
any government investigation of which Seller has no knowledge, and (C) any
workers' compensation claims in respect of which Seller has agreed to indemnify
Buyer pursuant to clause (d) of Section 10.2 hereof.
3.17 LEGAL COMPLIANCE. The Company has complied, in all material
respects, with all Legal Requirements and no unresolved charge, complaint,
action, suit, proceeding, hearing, claim, demand, or notice has been filed or
commenced against the Company alleging any failure to comply with any such Legal
Requirement. The Company has not received any written notice from any
governmental body or any other person or entity regarding (A) any uncured
violation of, or uncured failure to comply with, any Legal Requirement or (B)
any unfulfilled obligation on the part of the Company to undertake, or to bear
all or any portion of the cost of, any remedial actions under Environmental
Laws. The Company has filed in a timely manner all material reports, documents,
and other materials it was required to file (and the information contained
therein was correct and complete in all material respects) under all applicable
material Legal Requirements. The Company has possession of all material records
and documents it was required to retain under all applicable Legal Requirements.
3.18 EMPLOYEE BENEFIT PLANS. Section 3.18 of the Disclosure Schedule
contains a true and complete list of each written employee pension benefit plan
("COMPANY PENSION PLAN") or employee welfare benefit plan ("COMPANY WELFARE
PLAN"), as each term is defined in the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), Section 125 plan, severance plan or severance
agreement, fringe benefit program or employee incentive program maintained by
the Company or to which the Company contributes (collectively, the "COMPANY
BENEFIT PLANS"). The Seller has heretofore delivered to the Buyer a true,
correct and complete copy of each such plan or a summary description thereof
and, where applicable, a copy of the most recent annual report and actuarial
report, a copy of the most recent report prepared in accordance with Statement
of Financial Accounting Standards No. 87, a copy of the most recent report
prepared in accordance with Statement of Financial Accounting Standards Board
No. 106 and a copy of the funding arrangement for each plan. All material
contributions and other payments required to be made by the Company to any
Company Pension Plan (or to any person pursuant to the terms thereof) have been
made or the amount of such payment or contribution obligation has been reflected
in the Financial Statements. Each of the Company Benefit Plans intended to be
"qualified" within the meaning of Section 401(a) of the Internal Revenue Code of
1986, as amended (the "CODE") has been determined by the Internal Revenue
Service ("IRS") to be so qualified, and, to the knowledge of the Seller, no
circumstances exist that are reasonably
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expected to result in the revocation of any such determination. The Company is
in compliance in all material respects with, and each of the Company Benefit
Plans is and has been operated in all material respects in compliance with,
ERISA, the Code or other applicable law, including, without limitation,
compliance with all requirements for the filing of returns or reports with the
IRS and the Department of Labor. Each Company Benefit Plan intended to provide
for the deferral of income, the reduction of salary or other compensation, or to
afford other income tax benefits, complies in all material respects with the
requirements of the applicable provisions of the Code or other laws, rules and
regulations required to provide such income tax benefits. No prohibited
transactions (as defined in Section 406 or 407 of ERISA or Section 4975 of the
Code) have occurred for which a statutory exemption is not available with
respect to any Company Benefit Plan, and which could give rise to liability on
the part of the Company, any Company Benefit Plan, or any fiduciary, party in
interest or disqualified person with respect thereto that would be material to
the Company or would be material to the Company if it were Company's liability.
With respect to the Company Benefit Plans, individually and in the aggregate, no
event has occurred, and, to the knowledge of the Seller, there does not now
exist any condition or set of circumstances, that could subject the Company to
any material liability arising under the Code, ERISA or any other applicable law
(including, without limitation, any liability to any such plan or the Pension
Benefit Guaranty Corporation), or under any indemnity agreement to which the
Company is a party, excluding liability for benefit claims and funding
obligations payable in the ordinary course. The Company is not subject to any
material liability with respect to any terminated plan which would be considered
a Company Benefit Plan if it were still in existence, or with respect to any
withdrawal from any Multi-Employer Plan, within the meaning of ERISA Section
3(37). Except for (i) the right for an employee who retires between the ages of
62 and 65 to continue in the medical plan applicable to active employees until
his 65th birthday, (ii) the right to Hospital In-Patient Benefits under the
Basic Medical Insurance Plan of the Company ("12.00 per day plan") and (iii)
Retiree Life Insurance, and except as provided in the plans disclosed in Section
3.18 of the Disclosure Schedule, the Company does not provide for any benefits
with respect to current or former employees for periods extending beyond their
retirement or other termination of service, other than continuation coverage
required to be provided under Section 4980B of the Code or Part 6 of the Title I
of ERISA. Following the Closing, no employee will be entitled to any
compensation or other benefit or payment from the Company pursuant to Seller's
change in control severance benefit plan for key employees or any compensation,
benefit or payment from the Company that is otherwise contingent upon the change
of control of the Company.
3.19 LABOR RELATIONS. The Company is in material compliance with all
federal, state and local laws respecting employment and employment practices,
terms and conditions of employment, wages and hours and nondiscrimination in
employment. There is no charge pending or, to the knowledge of the Seller,
threatened in writing against the Company alleging unlawful discrimination in
employment practices before any court or agency. None of the employees of any
Company is covered by any collective bargaining agreement, and no collective
bargaining agreement is currently being negotiated by the Company. The Company
has not experienced any work stoppage or other material labor difficulty during
the last five years. There has not been, and, to the knowledge of the Seller,
there will not be, any material adverse change in relations with employees of
the Company as a result of any announcement of the transactions
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contemplated by this Agreement. To the knowledge of the Seller, no key employee
or group of employees has any plans to terminate employment with the Company.
3.20 TAXES. The Company and all members for income tax purposes of
any affiliated group of corporations of which the Company is or has been a
member (the "TAXPAYER") has filed or caused to be filed, within the times and
within the manner prescribed by law, all Federal, state, local and foreign
reports, declarations, statements and returns of any kind ("TAX RETURNS") which
are required to be filed by them with respect to Taxes (hereafter defined). Such
Tax Returns reflect accurately all liability for Taxes for the periods covered
thereby. The Taxpayers have paid in full all Taxes required to be paid by such
Taxpayers before payment became delinquent. All Taxes payable by, or due from,
the Company have been fully paid or adequately disclosed and fully provided for
in the books and financial statements of the Company. All Taxes which the
Company has been required to collect or withhold have been duly collected or
withheld and, to the extent required when due, have been or will be duly paid to
the proper taxing authority. All deficiencies asserted by the IRS or any other
taxing authority relating to the Company have been paid or finally settled. The
Company is not a party to any tax-sharing agreement or similar arrangement which
will not be terminated as of the Closing Date and any liability or obligation of
the Company under any such agreements will terminate as of the Closing Date and
be of no further force or effect for any tax period after the Closing. For
purposes of this Agreement, "TAXES" means any and all federal, state, county,
local, foreign and other taxes, including, without limitation, income, profits,
excise, sales, use, occupancy, gross receipts, franchise, ad valorem, transfer,
withholding, employment and payroll related, personal or other tax, levy,
impost, fee, imposition, assessment or similar charge or levy, whether
attributable to statutory or nonstatutory rules and whether or not measured in
whole in part by net income, together with (i) any related addition to tax,
interest or penalty thereon, and (ii) expenses (including reasonable costs of
investigation and reasonable attorney's fees) associated with contesting any
proposed or actual adjustment related to any of the foregoing.
Except as set forth in Section 3.20 of the Disclosure Schedule, (i) the
Company has not consented to extend the time in which any Tax may be assessed or
collected by any tax authority; (ii) there are no ongoing or pending audits,
reviews, examinations, lawsuits or any other proceedings with any tax authority
with respect to the Company; (iii) there is no closing agreement, compromise or
settlement with any tax authority that is binding on the Company for any tax
period ending after the Closing Date; and (iv) there are no requests for rulings
or determinations relating to the Company pending with any tax authority.
3.21 INVESTMENTS. The Company does not own, or have any agreement or
commitment to acquire, any capital stock or other equity or ownership or
proprietary interest in any corporation, partnership, association, trust, joint
venture or other entity.
3.22 ACCOUNTS RECEIVABLE. All accounts receivable recorded in the
records and books of account of the Company as being due to them as of the
Closing Date: (i) have arisen from bona fide sales transactions in the ordinary
course of business consistent with past practice, (ii) to Seller's knowledge,
represent bona fide indebtedness incurred by the applicable account debtor, and
(iii) to Seller's knowledge, are collectible in the ordinary course of business
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consistent with past practice and not subject to any defense or offset (other
than as contemplated by the reserves therefor set forth or reflected in the
Financial Statements). This Section 3.22 shall not be construed as a guaranty of
the collectability of any of the Company's accounts receivable.
3.23 AIR RIGHTS. To the knowledge of Seller, the Company is the owner
of certain available emission reduction credits for VOCs issued by the San
Xxxxxxx Valley Unified Air Pollution Control District (the "District") as shown
on the Report of the District dated July 6, 1998, transmitted to Seller by a
facsimile of the District dated July 6, 1998, copies of which have both been
furnished to Buyer.
3.24 BOOKS AND RECORDS. The books and records of the Company contain
true, correct and complete entries of all material business transactions and
have been maintained in accordance with good business practices.
3.25 PRODUCT WARRANTY. Section 3.25 of the Disclosure Schedule
contains the forms of express product warranties currently used by the Company.
To Seller's knowledge, the Company has not offered any materially different
forms of express product warranties. To Seller's knowledge, no events have
occurred or facts exist which could result in a material increase in the product
warranty expense of the Company.
3.26 INTERESTS IN CLIENTS, SUPPLIERS, ETC. No stockholder, officer,
or director of the Company possesses, directly or indirectly, any financial
interest in, or is a stockholder, director, officer or employee of, any
corporation, firm, association or business organization which is a client,
supplier, customer, lessor, lessee, or competitor or potential competitor of the
Company. There is no patent, trademark, technology, know-how, process, or
proprietary or confidential knowledge that any stockholder, officer or director
of the Company owns or is licensed or otherwise has the right to use which is
used or useful in the Company's business. Ownership of securities of a public
company not in excess of 1% of any class of such securities shall not be deemed
to be a financial interest for purposes of this Section 3.26.
3.27 AGREEMENTS WITH EMPLOYEES. The Company has not entered into any
written employment, severance or similar arrangement with any present or former
officer, director or employee that will result in any obligation (absolute or
contingent) of the Company to make any payment to any present or former officer,
director or employee following termination of employment or as a result of the
transactions contemplated by this Agreement.
3.28 NO CHANGES PRIOR TO CLOSING DATE. During the period from the
Balance Sheet Date to and including the Closing Date, except as expressly
contemplated hereby, the Company has not:
(a) incurred any indebtedness for borrowed money, assumed,
guaranteed, endorsed or otherwise become responsible for obligations of any
other individual, partnership, firm or corporation, or make any loans or
advances to any individual, partnership, firm or corporation, except in the
ordinary course of business and consistent with past practice;
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(b) issued any shares of its capital stock or any other
securities or any securities convertible into shares of its capital stock or any
other securities;
(c) taken any action outside the ordinary course of business,
or taken any action for the primary purpose or effect of generating cash other
than in the ordinary course of business;
(d) made any change to its charter or by-laws;
(e) sold, transferred or otherwise disposed of any of its
properties or assets or canceled, released or assigned any indebtedness owed to
it or any claims held by it (except in the ordinary course of business and
consistent with past practice) or mortgaged, pledged or otherwise encumbered any
of its properties or assets;
(f) made any investment of a capital nature either by purchase
of stock or securities, contributions to capital, property transfer or
otherwise, or by the purchase of any property or assets of any other individual,
partnership, firm or corporation, except in the ordinary course of business and
consistent with past practice;
(g) entered into or terminated any material contract or
agreement, or made any material change in any of its material contracts;
(h) made or granted to any of its employees, director or
officers any bonus, wage or salary increase, stock option or any other form of
added compensation or gift the timing or amount of which is not in the ordinary
course of business and consistent with past practices, or entered into any
employment, severance or similar agreement with any officer, director or
employee.
(i) adopted, or increased the payments to or benefits under,
any profit sharing, bonus, deferred compensation, savings, insurance, pension,
retirement, or other employee benefit plan for or with any employees of the
Company;
(j) incurred any damage to or destruction or loss of any asset
or property of the Company, whether or not covered by insurance, materially and
adversely affecting the properties, assets, business, financial condition, or
prospects of the Company;
(k) permitted any material change in the accounting methods
used by the Company; or
(l) entered into any agreement, whether oral or written, to do
any of the foregoing.
3.29 NO UNDISCLOSED LIABILITIES. (a) To the best of Seller's
knowledge, except as set forth in Section 3.29 of the Disclosure Schedule, the
Company has no liabilities or obligations of
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any nature (whether absolute, accrued or contingent) except for (i) liabilities
or obligations reflected or reserved against in the Balance Sheet or the notes
thereto, (ii) current liabilities incurred in the ordinary course of business
since the date thereof and (iii) commercial liabilities and obligations under
the Company's contracts, not in default, disclosed in the Disclosure Schedule
(or which would be disclosed except for any applicable dollar threshold).
(b) Except as set forth in Section 3.29 of the Disclosure
Schedule, there are no amounts owed by the Seller or its affiliates (other than
the Company) to the Company, except for amounts reflected in the Balance Sheet
or the notes thereto.
3.30 INTENTIONALLY LEFT BLANK.
3.31 DISCLOSURE. To the best of Seller's knowledge, no representation
or warranty or other statement of Seller in this Agreement contains any untrue
statement of a material fact or omits to state a material fact necessary to make
such representations, warranties and other statements herein, in light of the
circumstances in which they were made, not misleading.
3.32 COMPLIANCE WITH CERTAIN U.S. LAWS.
(a) The Company and its officers, managers, employees, agents
and representatives, have not, to obtain or retain business, directly or
indirectly, offered, paid or promised to pay, or authorized the payment of any
money or other thing of value (including any fee, gift, sample, travel expense,
or entertainment), or any commission payment, to:
(i) any person who is an official, officer, agent,
employee or representative of any government or instrumentality thereof, or of
any existing or prospective customer (whether government-owned or
non-government-owned);
(ii) any political party or official thereof;
(iii) any candidate for political or political party
office; or
(iv) any other individual or entity while knowing or
having reason to believe that all or any portion of such money or thing of value
would be offered, given, or promised, directly or indirectly, to any such
official, officer, agent, employee, representative, political party, political
party official, candidate, individual or entity affiliated with such government,
instrumentality thereof, customer, political party or official, or political
office.
(b) The Company has at all times been in compliance with the
export control laws of the United States. To Seller's knowledge, no product sold
or service provided by the Company in the previous five (5) year period has
been, directly or indirectly, sold to or performed on behalf of, Cuba, Iraq,
Iran, Libya, or North Korea.
(c) During the previous five (5) year period, no product has
been sold by the Company to customers in Bahrain, Jordan, Kuwait, Lebanon, Oman,
Qatar, Saudi Arabia, Sudan,
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Syria, United Arab Emirates, or Yemen. The Company has not violated the
anti-boycott provisions contained in 50 U.S.C. ss.2401 et seq.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
warrants to the Seller that the statements contained in this Section 4 are true,
correct and complete as of the date of this Agreement and will be true, correct
and complete as of the Closing Date (as though made on such date and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4).
4.1 ORGANIZATION AND STANDING OF CR/PL. CR/PL, L.L.C. ("CR/PL") is a
limited liability company duly organized, validly existing and in good standing
under the laws of Delaware.
4.2 BINDING EFFECT. This Agreement has been duly executed and
delivered by the Buyer and constitutes the legal, valid and binding obligation
of the Buyer, enforceable against the Buyer in accordance with its terms.
4.3 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement by the Buyer nor the consummation by the Buyer of the transactions
contemplated hereby will constitute a violation of, or be in conflict with,
constitute or create a default under, or result in the creation or imposition of
any lien, security interest or other encumbrance upon any property of the Buyer
pursuant to (a) any agreement or commitment to which the Buyer is a party or by
which the Buyer or any of its properties is bound or to which the Buyer or any
of its properties is subject; or (b) except for antitrust laws, any statute or
any judgment, decree, order, regulation or rule of any court or governmental
authority.
4.4 INVESTMENT. The Buyer is not acquiring the Shares with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act of 1933, as amended.
4.5 SPECIAL ACKNOWLEDGMENT. Buyer acknowledges that Seller operates
a centralized cash management system and that substantially all of the Company's
cash has been (through the Closing Date) distributed to Seller.
5. INTENTIONALLY LEFT BLANK.
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. The obligation of the
Buyer to consummate the Closing shall be subject to the satisfaction at or prior
to the Closing of each of the following conditions (to the extent noncompliance
is not waived in writing by the Buyer):
6.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by the Seller in this Agreement shall be
true and correct in all material respects at and as of the Closing.
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6.2 COMPLIANCE WITH AGREEMENT. The Seller shall have performed and
complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it on or prior to the Closing
Date. Each certificate or document required to be delivered by Seller pursuant
to Section 1.4 must be delivered.
6.3 INTENTIONALLY LEFT BLANK
6.4 INTENTIONALLY LEFT BLANK
6.5 NO LITIGATION. No action, suit or proceeding shall be pending or
threatened before any court or administrative body in which it will be or is
sought to restrain or prohibit or obtain damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby.
6.6 INTENTIONALLY LEFT BLANK.
6.7 INTENTIONALLY LEFT BLANK.
6.8 GOVERNMENTAL APPROVALS. The Buyer and the Company shall have
received all licenses, permits and other governmental approvals deemed necessary
in the opinion of the Buyer's counsel to consummate the transactions
contemplated hereby. All applicable waiting periods under the H-S-R Act shall
have expired or otherwise been terminated.
6.9 RESIGNATIONS OF BOARD MEMBERS AND OFFICERS. The Buyer shall have
received the resignations, effective as of the Closing Date, of each director
and officer of the Company requested by Buyer.
6.10 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Buyer in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
respects to the Buyer and the Buyer's counsel, and the Buyer shall have received
the originals or certified or other copies of all such records and documents as
the Buyer may reasonably request. The Buyer shall have received good standing
certificates with respect to the Company from such governmental authorities as
reasonably requested by Buyer.
6.11 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. There must
not have been made or threatened by any person or entity any claim asserting
that such person or entity (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity, or ownership interest in, the Company, or (b) is entitled
to all or any portion of the Purchase Price payable for the Shares.
7. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. The obligation of the
Seller to consummate the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by the Seller):
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7.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties made by the Buyer in this Agreement shall be true
and correct in all material respects at and as of the Closing.
7.2 COMPLIANCE WITH AGREEMENT. The Buyer shall have performed and
complied in all material respects with all of its obligations under this
Agreement that are to be performed or complied with by it on or prior to the
Closing.
7.3 NO LITIGATION. No action, suit or proceeding shall be pending or
threatened before any court or administrative body in which it will be or is
sought to restrain or prohibit or obtain damages or other relief in connection
with this Agreement or the consummation of the transactions contemplated hereby.
7.4 INTENTIONALLY LEFT BLANK.
7.5 INTENTIONALLY LEFT BLANK.
7.6 H-S-R ACT. All applicable waiting periods under the H-S-R Act
shall have expired or otherwise been terminated.
7.7 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to the Seller in connection with the
transactions contemplated by this Agreement shall be satisfactory in all
respects to the Seller and the Seller's counsel, and the Seller shall have
received the originals or certified or other copies of all such records and
documents as the Seller may reasonably request.
8. OTHER COVENANTS AND AGREEMENTS.
8.1 CONFIDENTIAL INFORMATION. The Seller agrees to hold and maintain
as confidential from the date hereof forever, all proprietary information of any
nature relating to the Company or Buyer, their respective businesses, products,
operations, financial condition, prospects, customers, or employees unless (i)
such information becomes publicly available through no fault of Seller, (ii) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
transactions contemplated hereby, (iii) the furnishing or use of such
information is required by or necessary or appropriate in connection with legal
proceedings, (iv) the furnishing or use of such information is required by law
or stock exchange rule or necessary or appropriate in connection with any
financing transaction of Seller, or (v) the furnishing or use of such
information is required by, or necessary or appropriate in connection with, the
performance by Seller of its indemnity obligations hereunder.
8.2 EXPENSES. The Buyer and the Seller will each bear their own
costs and expenses (including legal and brokers fees and expenses) incurred in
connection with this
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Agreement and the transactions contemplated hereby. Seller will cause the
Company not to incur any out-of-pocket expenses in connection with this
Agreement.
8.3 H-S-R ACT. The Buyer and the Seller shall file all initial forms
and related material required to be filed under the H-S-R Act, will use their
best efforts to obtain a waiver from the applicable waiting period, and will
make any further filings pursuant thereto that may be necessary, proper or
advisable.
8.4 COVENANT NOT TO COMPETE. (a) For a period of five (5) years from
the Closing Date, the Seller will not: (1) engage directly or indirectly in the
manufacture of vitreous china bathroom fixtures, gelcoat and acrylic bathtubs,
shower stalls and whirlpools, brass and die cast faucets and shower doors (a
"Competing Business"); (2) induce any present officers or employees of the
Company to leave the employ of the Company; (3) for the purpose of engaging in a
Competing Business, call upon or attempt to do business with any customer or
supplier of the Company; or (4) induce, attempt to induce, request, advise or in
any manner attempt to influence any present, future, or potential customer,
supplier, licensee, licensor, franchisee or other business relations of the
Buyer or the Company, to cease doing business with the Buyer or the Company, to
deal with any competitor of the Buyer or the Company, or in any way interfere
with the relationship between the Buyer or the Company and its customers,
suppliers, licensees, licensors, franchisees or other business relations.
Notwithstanding the foregoing, (A) ownership of less than 10% of the outstanding
stock of any publicly-traded corporation shall not be a violation of this
covenant and (B) nothing herein shall prevent Seller from acquiring a Competing
Business in connection with an acquisition where such Competing Business
accounts for less than 25% of the total revenues of the target of the
acquisition or where such Competing Business is divested within twelve (12)
months of the consummation of such acquisition.
If a court of competent jurisdiction determines that the
noncompetition or nonsolicitation covenants contained in this Section are
unreasonable, arbitrary, against public policy or otherwise invalid or
unenforceable, then the duration and geographic area of restriction will be
reduced to the maximum duration and area of restriction that such court would
deem legal, valid, and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable covenant, and this Section will be
enforceable as so modified.
(b) Seller shall not use or permit any of its affiliates to
use the Company's corporate or trade name or any name confusingly similar
thereto in any manner anywhere in the world.
(c) Seller recognizes, acknowledges and agrees that if Seller
breaches any of the covenants, duties or obligations set forth in Section 8.4(a)
or 8.4(b), Buyer would encounter extreme difficulty in attempting to prove the
actual amount of damages suffered by Buyer as a result of such breach, and that
Buyer would not be reasonably or adequately compensated in damages in any action
at law. In addition to any other remedy Buyer may have at law, in equity, by
statute or otherwise, if Seller breaches any of its covenants, duties or
obligations set forth in Sections 8.4(a) or 8.4(b), Buyer will be entitled to
seek and receive injunctive and other equitable relief from any governmental
body of competent jurisdiction to
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enforce any of the rights of Buyer under Sections 8.4(a) or 8.4(b) or otherwise
to prevent violation of any terms or provisions set forth in Sections 8.4(a) or
8.4(b) without the necessity of proving the amount of any actual damage to Buyer
resulting therefrom; provided, however, that nothing contained in this Section
8.4 will be deemed or construed in any manner whatsoever as a waiver by Buyer of
any of the rights that it may have against Seller at law, equity, by statute or
otherwise arising out of, in connection with or resulting from the breach by
Seller of any of its covenants, agreements, duties or obligations under this
Agreement.
8.5 INTERCOMPANY ACCOUNTS. All amounts owed by the Seller or its
affiliates (other than the Company) to the Company and all amounts owed by the
Company to Seller or its affiliates shall be canceled and forgiven as of the
Closing Date.
8.6 FURTHER ASSURANCES. The Seller and the Buyer shall execute and
deliver to the appropriate other party such other instruments as may be
reasonably required in connection with the performance this Agreement and each
shall take all such further actions as may be reasonably required to carry out
the transactions contemplated by this Agreement.
8.7 SATISFACTION OF CONDITIONS PRECEDENT. The Seller and the Buyer
will each use their best efforts to cause the satisfaction of the conditions
precedent contained in this Agreement; PROVIDED, HOWEVER, that nothing contained
in this Section 8.7 shall obligate any party hereto to waive any right or
condition under this Agreement.
8.8 PUBLIC STATEMENTS OR RELEASES. The Buyer and the Seller agree
that, without the other party's prior approval (which shall not be unreasonably
withheld), neither they, nor any of their affiliates will make, issue or release
any public or industry announcement, statement or acknowledgment of the
existence of the transactions provided for herein, other than as may be legally
required or advisable.
8.9 TRANSFER OF VINELAND ASSETS. On or prior to the Closing Date the
Company shall assign and transfer to the Seller all of the funds in the VINELAND
insurance coverage action settlement fund, all rights under the related
settlement agreements with the settling insurers, and all rights against the
nonsettling insurer, Commercial Union Insurance Company (including all rights
under the judgment rendered against Commercial Union in the insurance coverage
action), and Seller assumes any and all liabilities and obligations of the
Company relating to the matters referred to in this Section 8.9. All actions
against Commercial Union shall continue to be pursued under the Company's name.
8.10 CLAIMS UNDER SELLER INSURANCE POLICIES. The Company has been
covered for certain periods under insurance policies maintained by the Seller
and covering the Seller and certain of its subsidiaries. Coverage under these
policies will cease to apply to the Company for occurrences after the Closing
Date. The Seller will permit the Company to continue to be covered by the
Seller's insurance policies for pre-Closing occurrences related to the Company
on the condition that, subject to the obligations of Seller under Section 10.2
hereof, the Buyer or the Company reimburse the Seller for all charges to Seller
incurred after the Closing Date in connection with claims under such policies
made by the Company after the Closing Date
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(including, without limitation, all retained or deductible amounts, self-insured
retentions, legal fees, premium tax payments and claim administration fees but
not including premiums). Accordingly, the Buyer or the Company shall, promptly
after receipt of notice and supporting documentation (and in any event within 30
days), reimburse Seller for all such amounts charged to the Seller after the
Closing Date. Notwithstanding the foregoing, neither Buyer nor the Company will
have any such reimbursement obligation in respect of claims under such policies
which arise out of pre-closing occurrences known to Seller prior to the Closing.
8.11. BONUSES. Seller will pay directly, or reimburse the Company
for, the bonuses payable to employees of the Company specifically identified in
Items 2 and 3 of Section 3.27 of the Disclosure Schedule.
8.12 LITIGATION COOPERATION. (a) Notwithstanding anything to the
contrary elsewhere herein contained, at Seller's sole expense, Seller shall
exclusively undertake and control the defense and settlement of the claims and
litigation in respect of which Seller indemnifies Buyer pursuant to clauses (d),
(g) and (j) of Section 10.2 hereof provided that (i) Seller will not consent to
the entry of any judgment, or enter into any settlement, without Buyer's written
consent (which shall not be unreasonably withheld or delayed) unless (A) there
is no finding or admission of any violation by the Company of Legal Requirements
or any violation by the Company of the rights of any person or entity and no
effect on any other claims that may be made against the Company and (B) the sole
relief provided is monetary damages that are paid in full by Seller or insurers
and (ii) Buyer will have no liability with respect to any compromise or
settlement of such claims and litigation effected without its written consent
(which shall not be unreasonably withheld or delayed).
(b) In connection with Seller's defense of any and all claims
and litigation in respect of which Seller indemnifies Buyer pursuant hereto
(including but not limited to the claims and litigation which are the subject of
clauses (d), (g) and (j) of Section 10.2 hereof), Buyer shall, and shall cause
the Company to: (i) render such assistance and cooperation to Seller as Seller
shall reasonably request, including, but not limited to, giving Seller
reasonable access to relevant portions of the Company's books and records (only
where relevant to the claim or litigation) and making Company personnel
available to give depositions or testimony and (ii) as Seller may direct, (aa)
make a claim under any of the Company's insurance policies now or previously in
effect providing coverage in respect of any claim or litigation in respect of
which Seller indemnifies Buyer hereunder and (bb) commence and diligently
prosecute litigation to enforce any such reasonable, good faith claim under any
of such of the Company's insurance policies, provided that, in the case of both
(aa) and (bb), Seller reimburses the Company for any and all charges incurred by
the Company in connection with making, litigating or enforcing a claim under
such policies (including, without limitation, all retained or deductible
amounts, legal fees, premium tax payments and claim administration fees but not
including premiums). Seller shall fulfill its indemnification obligations
hereunder promptly, without offset or delay in respect of any insurance proceeds
anticipated to be received by the Company, provided that insofar as the Company
receives any insurance proceeds as a result of any claim made (whether or not at
Seller's direction) under any of the Company's insurance policies in respect of
any particular claim or litigation in respect of which Seller indemnifies Buyer
hereunder, Buyer shall cause the
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Company to remit such proceeds to Seller to the extent of any damages or
expenses incurred by Seller in the defense of such claim or litigation, net of
any damages or expenses incurred by the Company in respect thereof for which
Seller has not previously indemnified the Company.
(c) In respect of any claims and litigation against the
Company in respect of which Seller does not indemnify Buyer pursuant to Section
10.2 hereof, Seller shall render such assistance and cooperation to Buyer and
the Company as Buyer shall reasonably request, but Seller shall have no
obligation to continue to permit the Company to be covered by Seller's insurance
policies except to the extent provided in Section 8.10 hereof.
(d) Each party will promptly reimburse the other party for all
reasonable out-of-pocket expenses incurred by the other party and its employees
and representatives in furnishing the cooperation and assistance contemplated by
this Section 8.12 hereof (including, but not limited to, expenses for travel,
meals and lodging) upon substantiation thereof.
8.13 RETAINED PLANS. As of the date of Closing, Seller agrees to
assume plan sponsorship of, and the obligations of the employer with respect to,
the three defined benefit Plans maintained by the Company, specifically the
Milwaukee Faucets Retirement Income Plan, the Xxxxxxxx Products Retirement
Income Plan, and the Universal-Xxxxxx Corporation Retirement Plan A, hereinafter
the "Retained Plans", and hereby assumes all assets and liabilities relating to,
arising out of or under the Retained Plans. Buyer shall have no right, title or
interest in or to any assets of the Retained Plans. Nor shall the Buyer assume
any liabilities in connection with or arising out of the Retained Plans. Buyer
acknowledges that Seller's assumption of plan sponsorship of the Retained Plans,
and the assets and liabilities thereunder, may require the consent of certain
unions; and Buyer agrees that, following the Closing, it will, and will cause
the Company to, assist and cooperate with Seller to obtain such consent, if
required.
8.14 RETENTION OF RECORDS AND ACCESS THERETO. Until the fifth (5th)
anniversary of the Closing Date or such later time as may be required by law:
(a) Buyer shall cause the Company to retain all financial and other records
which relate to the business, operations and affairs of the Company and which
relate to any matter in respect of which Seller has agreed to indemnify Buyer
hereunder, including, but not limited to, hazardous waste manifests relating to
the off-site transportation or off-site disposal of Hazardous Materials, and (b)
Buyer shall cause the Company to give Seller and its representatives reasonable
access to such records as necessary or appropriate for Seller to perform its
indemnity obligations hereunder.
9. TAX MATTERS.
9.1 FEDERAL, STATE AND LOCAL INCOME TAXES. The applicable income,
deductions and credits with respect to the Company for the period beginning on
January 1, 1998 and ending on the day before the Closing Date (the "SHORT
PERIOD") will be included in the consolidated federal income Tax Return of the
affiliated group having the Seller as its common parent and will be included in
the applicable combined or unitary state or local income Tax Return of the
Seller or, where permitted under state or local law, will be included in
separate
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state or local income Tax Returns to be filed for such period on behalf of the
Company by the Seller. The Seller shall pay the income Taxes of the Company as
shown on any such separate state or local return. In any case where applicable
state or local law does not permit the Company to treat the Short Period as a
taxable year, then the Seller shall pay to the Buyer a portion of the state or
local income Tax paid by the Company for the taxable year which includes the
Short Period equal to the Tax that would have been due if the Short Period were
treated as a taxable year. The Seller shall be solely responsible for and shall
indemnify and hold harmless the Buyer with respect to all federal, state or
local income Taxes, and any interest, penalty or additional amounts, with
respect to any taxable periods of the Company ending before the Closing Date.
The Buyer shall be responsible for, and shall indemnify and hold harmless the
Seller with respect to, all such Taxes for periods commencing on or after the
Closing Date. The Seller shall be entitled to all refunds of federal, state or
local income Taxes accruing to the Company with respect to any taxable periods
ending before the Closing Date.
9.2 CERTAIN CONTEST RIGHTS. The Buyer will promptly inform the
Seller as to the commencement of any audit or proceeding with respect to the
federal, state or local income Tax liability of the Company for periods ending
on or prior to the Closing Date. Similarly, the Seller will promptly inform the
Buyer of any such proceedings which would have an effect on the income Tax
liability of the Company for periods commencing on or after the Closing Date.
The parties will reasonably cooperate with each other with respect to such
proceedings, taking into account, among other things, the relevant provisions of
this Section 9.
9.3 OTHER TAXES. Except as provided in Section 9.1 above, and except
for any breach of Seller's representation and warranty on Taxes contained in
Section 3.20 for which Buyer is entitled to indemnity hereunder, the Buyer shall
be solely responsible for, and shall indemnify and hold harmless the Seller with
respect to, all Taxes imposed by any taxing authority with respect to the
Company.
9.4 TERMINATION OF PRIOR TAX SHARING AGREEMENTS. Effective as of the
Closing Date, all tax sharing agreements, whether or not written, to which the
Seller and the Company is a party shall be terminated and the provisions of this
Section 9 shall thereafter govern the obligations of the Seller and the Company
with respect to tax matters. The foregoing provision and the other provisions of
this Section 9.4 are not intended to reverse any prior tax payments made by the
Company to the Seller.
9.5 COOPERATION. The Company shall deliver to the Seller, in a
timely manner, such information and data as the Seller shall reasonably request,
including such information required by Seller's customary tax and accounting
questionnaires, in order to enable the Seller to fulfill its obligations under
this Section 9.
9.6 Buyer agrees to ensure that the Company will not carryback any
tax losses incurred for periods subsequent to the Closing Date to any returns
for tax periods prior to the Closing Date.
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10. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION.
10.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the parties hereto contained in this Agreement shall survive
the Closing, unless the damaged party knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing. For purposes of
the immediately preceding sentence, with reference to Buyer, the term "damaged
party" shall mean any of Xxxxxxx Xxxxxx, Xxx Xxxxxxx, Xxxx Xxxxxx, Xxxx Xxxxxx,
Xxx Xxxx, Xxxx Xxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxx Xxxxx, Xxxxx Xxxxxxxxxx,
Xxx Xxxxxx, Xxxx Xxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx and Xxxxx
Xxxxxxxx. All of the representations and warranties of the Seller contained in
Sections 2 and 3 (other than Sections 2.4, 3.2 and 3.20) and of the Buyer
contained in Section 4 shall expire and be of no further force or effect with
respect to any claim for breach thereof not asserted within two (2) years of the
Closing Date. Sections 2.4 and 3.2 shall remain in full force and effect
forever. Section 3.20 shall expire and be of no further force or effect with
respect to any claim for breach thereof not asserted within 60 days after the
expiration of all statutes of limitations with respect to the assessment of any
tax liability described therein.
10.2 INDEMNIFICATION BY THE SELLER. Subject to the limitations set
forth in Section 10.4, the Seller hereby indemnifies and holds harmless the
Buyer and the Company, and their respective representatives, owners, controlling
persons and affiliates, against all claims, damages, losses, liabilities, costs
and expenses (including, without limitation, settlement costs and any reasonable
legal, accounting or other expenses for investigating or defending any actions
or threatened actions) incurred by them in connection with each and all of the
following:
(a) any breach by the Seller of any representation or warranty
in this Agreement;
(b) any breach of any covenant, agreement or obligation of the
Seller contained in this Agreement;
(c) the Vineland Environmental and Insurance Coverage
Litigation;
(d) workers' compensation claims already asserted against the
Company or workers' compensation claims related to workers' compensation
injuries suffered by employees of the Company occurring prior to the Closing
Date;
(e) severance payments (not including those referred to in
Section 10.2(f) hereof) made to employees of the Company terminated within 90
days of the Closing Date in accordance with the terms of the Company's existing
severance policy or collective bargaining agreement, as in effect on the Closing
Date, and payments which may become due to current or former employees of the
Company under the Federal Worker Adjustment and Retraining Notification Act,
provided that Seller's maximum liability under this clause (e) shall be limited
to $500,000;
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(f) one-half of all severance payments paid to Xxxx Xxxxxx,
and all severance payments paid to Xxxxxxx X. Xxxxx, Xxxxxx Xxxxx and Xxx X.
Xxxxxxxxxxxx, in connection with the termination of their employment by the
Company, PROVIDED such person's employment is terminated within 90 days of the
Closing Date or, in the case of Xx. Xxxxxx only, he is notified within 90 days
of the Closing Date that his employment will be terminated;
(g) (1) the off-site transportation or off-site disposal,
occurring at any time prior to the Closing Date, of any Hazardous Materials
generated by the operations of the Company (exclusive of any release, spill,
emission, leaking, injection, deposit, discharge, dispersal, leaching or
migration of Hazardous Materials into the soil, surface water, groundwater or
atmosphere occurring or originating at any real property owned or operated, or
formerly owned or operated, by the Company); (2) any Environmental Claims
relating to any site or facility previously owned or leased by the Company
(other than the Owned Real Property, the Leased Real Property and the facilities
located thereon); and (3) clean-up, remediation or capital expenditures
reasonably necessary to achieve compliance with any new or modified permit
conditions and to conduct operations as conducted on or prior to the Closing
Date in the event the Hondo, Texas wastewater discharge permit pending for
renewal is denied or modified, provided that Buyer must notify Seller prior to
commencing any such clean-up or remediation or making any such capital
expenditure, and provided, further, that Seller's liability under this clause
(g)(3) shall not exceed 50% of the damages, losses, liabilities, costs and
expenses incurred in connection with the matters addressed by this clause
(g)(3);
(h) the bonuses referred to in Section 8.11 hereof;
(i) the Retained Plans; and
(j) the claims and litigation matters referred to in Section
3.16 of the Disclosure Schedule, Section 3.17 of the Disclosure Schedule and
Section 3.19 of the Disclosure Schedule which are marked with an asterisk (*).
To the extent the Company makes any severance or bonus payments after the
Closing in respect of which Seller is obligated to indemnify Buyer and Company
pursuant to clause (e), clause (f) or clause (h) of Section 10.2 hereof, Seller
will reimburse the Company therefor within seven (7) days of Seller's receipt of
supporting documentation.
10.3 INDEMNIFICATION BY THE BUYER. The Buyer hereby indemnifies and
holds harmless the Seller, and its representatives, owners, controlling persons
and affiliates, against all claims, damages, losses, liabilities, costs and
expenses (including, without limitation, settlement costs and any reasonable
legal, accounting or other expenses for investigating or defending any actions
or threatened actions) incurred by them in connection with each and all of the
following:
(a) any breach by the Buyer of any representation or warranty
in this Agreement;
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(b) any breach of any covenant, agreement or obligation of the
Buyer contained in this Agreement;
(c) subject to Seller's limited indemnity obligation under
clause (e) of Section 10.2 hereof, any failure to comply with the notice and
other requirements of the Worker Adjustment and Retraining Notification Act in
connection with any plant closing or mass layoff which involves employees of the
Company and which occurs at or after the Closing;
(d) any post-Closing operation by employees of the Company of
automobiles leased by Seller as of the Closing Date and previously made
available to Company employees; and
(e) any dealings, discussions, negotiations or bargaining
between Buyer and its representatives, on the one hand, and the unions
representing the Company's employees, on the other hand, occurring during the
last 60 days, and any claims asserted by any of (i) the Company's union
employees, (ii) the unions representing the Company's employees or (iii) the
National Labor Relations Board in connection or relating to the negotiation or
consummation of the transactions contemplated hereby.
10.4 LIMITATIONS.
(a) Except for breaches of Sections 8.1 and 8.4, the sole and
exclusive remedy of Buyer and Seller against each other arising hereunder or in
connection with the transactions contemplated hereby shall be to assert a claim
for indemnification under this Section 10, it being the intention and agreement
of the parties that all other claims and remedies shall be, and they hereby are,
waived to the maximum extent permitted by law.
(b) The Seller shall not be liable for breaches of its
representations and warranties contained in this Agreement until Buyer has
suffered aggregate losses in excess of $250,000, after which point, the Seller
shall only be obligated to indemnify the Buyer against further losses in excess
of such amount. Notwithstanding the foregoing, nothing in the previous sentence
shall limit the indemnity obligations of the Seller under clauses (c) through
(j) of Section 10.2 or under Section 9.1. The Buyer shall not be liable for
breaches of its representations and warranties contained in this Agreement until
Seller has suffered aggregate losses in excess of $250,000, after which point,
the Buyer shall only be obligated to indemnify the Seller against further losses
in excess of such amount. Notwithstanding the foregoing, nothing in the previous
sentence shall limit the indemnity obligations of Buyer under clauses (c)
through (e) of Section 10.3.
(c) The aggregate liability of the Seller hereunder shall not
exceed $5,000,000, provided that nothing in this sentence shall limit the
indemnity obligation of Seller under clauses (c) through (j) of Section 10.2
hereof or under Section 9.1 hereof and the amount of any indemnification paid by
Seller pursuant to clauses (c) through (j) of Section 10.2 hereof or under
Section 9.1 hereof shall not be counted for purposes of such $5,000,000 limit.
The aggregate liability of Buyer hereunder shall not exceed $5,000,000, provided
that nothing in this
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sentence shall limit the indemnity obligation of Buyer under clauses (c) through
(e) of Section 10.3 hereof and the amount of any indemnification paid by Buyer
pursuant to clauses (c) through (e) of Section 10.3 hereof shall not be counted
for purposes of such $5,000,000 limit.
(d) With respect to any indemnification claims against Seller
described below, no such claim may be made against Seller, and Seller shall have
no liability in respect of such claim, unless written notice of such claim is
given to Seller on or before: (i) in the case of a claim for breach of the
representation and warranty contained in Section 3.20 hereof, sixty (60) days
after the date of expiration of all applicable statutes of limitation with
respect to the assessment of any tax liability of the Company, and (ii) in the
case of a claim for breach of any of the other representations and warranties
made by Seller in Sections 2.1 through 2.3, inclusive, or Sections 3.1 and 3.3
through 3.32, inclusive, the second anniversary of the Closing Date.
(e) The amount of losses or damages for which indemnification
is paid or payable shall be reduced by any recoveries which the indemnified
party receives under insurance policies and by any tax benefits which the
indemnified party actually receives. Absent bad faith or manifest error, the
amount of "tax benefits" as calculated by Buyer's regularly retained tax
advisers or preparers shall be conclusive and binding on Seller, provided such
calculations, and supporting documentation, are furnished to Seller.
(f) Notwithstanding anything to the contrary elsewhere herein
contained, Seller and Buyer acknowledge and agree that: (A) Seller makes no
representations or warranties with respect to the Special Matters (as
hereinafter defined) or any costs or liabilities associated therewith, (B) Buyer
is acquiring the Shares subject to the Special Matters, (C) Seller has afforded
to Buyer and its representatives the opportunity to conduct, and Buyer and its
representatives have conducted and are relying solely upon, their own due
diligence review and investigation of the Special Matters (including, without
limitation, access to and review of the Company's facilities, properties, books
and records and its key suppliers and customers), and (D) no claim may be made
by Buyer against Seller, and Seller shall have no liability in respect of, the
Special Matters. As used herein, the term "SPECIAL MATTERS" shall mean: (1)
changes, due to normal operations, in the condition (financial or otherwise),
properties, assets, liabilities, business, operations or affairs of the Company
occurring after May 30, 1998; (2) the Company's relationships with customers and
suppliers; (3) the matters referred to on the Schedule of "Universal-Xxxxxx
Closing Adjustments/Items" as identified in and attached to a side agreement of
even date herewith between Seller and Buyer referring thereto; (4) the
environmental matters referred to on Tables 2-8 as identified in and attached to
a side agreement of even date herewith between Seller and Buyer referring
thereto; (5) retiree medical and life benefits provided by the Company as
referred to in Section 3.18 hereof and the Disclosure Schedule; and (6) the
Company's union relations and any dealings or discussions between Buyer and its
representatives, on the one hand, and the unions representing the Company's
employees, on the other hand, occurring during the last 60 days.
10.5 CLAIMS FOR INDEMNIFICATION. Whenever any claim shall arise for
indemnification hereunder, the indemnified party shall promptly notify the
indemnifying party of the claim and, when known, the facts constituting the
basis for such claim, PROVIDED HOWEVER,
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that no delay on the part of the indemnified party shall release the
indemnifying party of any liability or obligation hereunder unless (and then
solely to the extent) the indemnifying party thereby is damaged. In the event of
any such claim for indemnification hereunder resulting from or in connection
with any claim or legal proceedings by a third-party, the notice to the
indemnifying party shall specify, if known, the amount or an estimate of the
amount of the liability arising therefrom. The indemnified party shall not
settle or compromise any claim by a third party for which it is entitled to
indemnification hereunder without the prior written consent of the indemnifying
party, which shall not be unreasonably withheld, unless suit shall have been
instituted against it and the indemnifying party shall not have taken control of
such suit after notification thereof.
10.6 DEFENSE OF INDEMNIFYING PARTY. In connection with any claim to
indemnity hereunder resulting from or arising out of any claim or legal
proceeding by a person who is not a party to this Agreement, the indemnifying
party, at its sole cost and expense may, upon written notice to the indemnified
party, assume the defense and control of any such claim or legal proceeding with
counsel reasonably satisfactory to the indemnified party if the indemnifying
party acknowledges to the indemnified party in writing its obligations to
indemnify the indemnified party with respect to all elements of such claim. In
any such claim or proceeding, (i) the indemnifying party will not consent to the
entry of any judgment with respect to the matter, or enter into any settlement,
without the indemnified party's written consent (which shall not be unreasonably
withheld or delayed) unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any person or
entity and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (ii) the indemnified party will have
no liability with respect to any compromise or settlement of such claims
effected without its written consent (which shall not be unreasonably withheld
or delayed). The indemnified party shall be entitled to participate in (but not
control) the defense of any such action, with its counsel and at its own
expense. If the indemnifying party does not assume the defense of any such claim
or litigation resulting therefrom within 30 days after the indemnified party
gives notice to the indemnifying party of such claim or litigation, (a) the
indemnified party may defend against such claim or litigation, in such manner it
may deem appropriate, including, but not limited to, settling such claim or
litigation, after giving notice of the same to the indemnifying party, on such
terms as the indemnified party may deem appropriate, and (b) the indemnifying
party shall be entitled to participate in (but not control) the defense of such
action, with its counsel and at its own expense and (c) insofar as the
indemnifying party has an indemnification obligation hereunder, the indemnifying
party will be bound by any determination made with respect to such claim or in
such proceeding or any compromise or settlement effected by the indemnified
party.
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11. GENERAL.
11.1 NOTICES. All notices, demands and other communications hereunder
shall be in writing and shall be made by hand delivery, telecopier, or overnight
air courier guaranteeing next day delivery addressed as follows:
(a) if to the Buyer to:
Crane Plumbing
0000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx
with a copy sent contemporaneously to:
Xxxxx & XxXxxxxx
One Prudential Plaza
000 X. Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx, Esq.
(b) if to the Seller, to:
Nortek, Inc.
00 Xxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: President
Fax: (000) 000-0000
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with a copy sent contemporaneously to the Seller marked
"Attention: General Counsel"; or
(c) to such other address as the party receiving such notice
shall have properly designated to the other party hereto in writing.
Each such notice shall be deemed given at the time delivered by hand, if
personally delivered; when receipt acknowledged, if telecopied; and the next
business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
11.2 ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties, supersedes all prior agreements and understandings
relating to the subject matter hereof (including without limitation the letter
agreement between the parties dated February 27, 1998 which shall be terminated
and have no further force or effect as of the date hereof) and shall not be
amended except by a written instrument hereafter signed by the parties hereto.
11.3 INTERPRETATION. This Agreement has been prepared, and
negotiations in connection herewith have been carried on, by the joint efforts
of the parties hereto and their respective counsel. This Agreement is to be
construed fairly and simply and not strictly for or against any of the parties
hereto.
11.4 GOVERNING LAW. The validity and construction of this Agreement
shall be governed by the internal substantive laws of the State of Delaware.
11.5 TABLE OF CONTENTS; SECTIONS AND SECTION HEADINGS. The table of
contents hereto, and the headings of sections and subsections are for reference
only and shall not limit or control the meaning thereof.
11.6 ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the heirs and successors of each of the parties. Neither this
Agreement nor the obligations of any party hereunder shall be assignable or
transferable by such party without the prior written consent of the other party
hereto; PROVIDED, HOWEVER, that nothing contained in this Section 11.6 shall
prevent the Buyer, without the consent of the Seller, from transferring or
assigning this Agreement or its rights or obligations hereunder to another
entity controlling, under the control of, or under common control with the Buyer
including but not limited to CR/PL. No such transfer or assignment shall relieve
the Buyer of its obligations hereunder, provided if Seller, Buyer and CR/PL
shall enter into an Assignment and Assumption Agreement in the form of EXHIBIT A
attached hereto, Buyer shall be relieved of its obligations hereunder as therein
provided.
11.7 NO IMPLIED RIGHTS OR REMEDIES. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person, firm or corporation, other than
the Seller and the Buyer, any rights or remedies under or by reason of this
Agreement.
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11.8 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.9 AMENDMENTS. This Agreement may not be changed orally, but only
by an agreement in writing signed by the Seller and the Buyer.
11.10 WAIVER OF COMPLIANCE. Any failure of the Seller, on the one
hand, or the Buyer, on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be expressly waived in writing by the Seller
(in respect of failures by the Buyer) or the Buyer (in respect of failures by
the Seller).
11.11 DELIVERY BY FACSIMILE. Delivery of an executed counterpart of a
signature page to this Agreement by telecopier or facsimile transmission shall
be effective as delivery of a manually executed counterpart of this Agreement.
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as of the
date and year first above written.
SELLER:
NORTEK, INC.
By: _________________________
Title: ______________________
BUYER:
/s/ Xxxx X. Xxxxxxx
-----------------------------
Xxxx Xxxxxxx
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed and delivered as of the
date and year first above written.
SELLER:
NORTEK, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Title: Vice President and General Counsel
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BUYER:
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Xxxx Xxxxxxx
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36
DISCLOSURE SCHEDULE TO
THE STOCK PURCHASE AGREEMENT DATED JULY 10, 1998
BY AND BETWEEN XXXX XXXXXXX AND NORTEK, INC.
Pursuant to Section 601(b)(2) of Regulation S-K, the disclosure schedule to
the Stock Purchase Agreement dated July 10, 1998 by and between Xxxx Xxxxxxx and
Nortek, Inc. has been omitted and the registrant agrees to furnish
supplementally a copy of such disclosure schedule to the Commission upon
request.
