EXHIBIT 2
PURCHASE AND SALE AGREEMENT
AMONG
XXXXXX POWER TOOLS, INC.
AND
GPX CORP.
AND
XXXXXX INDUSTRIES, INC.
AND
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
MARCH 3, 1998
TABLE OF CONTENTS
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PAGE
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1. Definitions ............................................................ 1
2. Purchase and Sale ...................................................... 9
2.1. Basic Transaction .............................................. 9
2.2. Purchase Price ................................................. 9
2.3. The Closing .................................................... 9
2.4. Deliveries at the Closing ...................................... 9
2.5. Purchase Price Adjustment ...................................... 10
3. Representations and Warranties Concerning the Transaction .............. 15
3.1. Representations and Warranties of the Seller ................... 15
3.2. Representations and Warranties of the Buyer .................... 16
3.3. Representations and Warranties of Xxxxxx ....................... 17
3.4. Representations and Warranties of Global ....................... 17
4. Representations and Warranties Concerning the INTOOL Companies ......... 18
4.1. Organization, Qualification, and Corporate Power ............... 19
4.2. Capitalization ................................................. 19
4.3. Non-Contravention .............................................. 19
4.4. Brokers' Fees .................................................. 20
4.5. Title to Assets ................................................ 20
4.6. INTOOL Subsidiary .............................................. 20
4.7. Financial Statements ........................................... 20
4.8. Events Subsequent to October 31, 1997 .......................... 21
4.9. Undisclosed Liabilities ........................................ 23
4.10. Legal Compliance ............................................... 23
4.11. Real Property .................................................. 23
4.12. Intellectual Property .......................................... 24
4.13. Tangible Assets ................................................ 26
4.14. Inventory ...................................................... 27
4.15. Contracts ...................................................... 27
4.16. Powers of Attorney ............................................. 28
4.17. Insurance ...................................................... 28
4.18. Litigation ..................................................... 29
4.19. Product Warranty ............................................... 29
4.20. Product Liability .............................................. 29
4.21. Employees ...................................................... 29
4.22. Employee Benefits .............................................. 30
4.23. Guaranties ..................................................... 32
4.24. Environment, Health and Safety ................................. 32
4.25. No Sensitive Transactions ...................................... 32
4.26. Bank Accounts .................................................. 33
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TABLE OF CONTENTS (CONTINUED)
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PAGE
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5. Tax Matters ............................................................ 33
5.1. Representations Regarding Tax Matters .......................... 33
5.2. Tax Indemnity .................................................. 34
5.3. Tax Return Filings for Straddle Periods ........................ 35
5.4. Section 338 Elections .......................................... 36
5.5. Tax Return Filings for Pre-Closing Periods ..................... 36
5.6. Wage Reporting ................................................. 37
5.7. Cooperation and Exchange of Information ........................ 37
5.8. No Carrybacks .................................................. 38
5.9. Controlling Language ........................................... 38
6. Pre-Closing Covenants .................................................. 38
6.1. General ........................................................ 38
6.2. Notices and Consents ........................................... 38
6.3. Operation of Business .......................................... 39
6.4. Preservation of Business ....................................... 40
6.5. Full Access .................................................... 40
6.6. Notice of Developments ......................................... 40
6.7. Exclusivity .................................................... 40
6.8. Owned Real Property ............................................ 41
6.9. Other Matters .................................................. 41
7. Post-Closing Covenants ................................................. 41
7.1. General ........................................................ 42
7.2. Litigation Support ............................................. 42
7.3. Transition ..................................................... 42
7.4. Confidentiality ................................................ 43
7.5. Covenant Not to Compete ........................................ 43
7.6. Non-Solicitation ............................................... 43
7.7. Buy Back of Certain Receivables ................................ 44
7.8. Existing Insurance Coverage .................................... 44
7.9. License to Use Global Name ..................................... 45
7.10. Further Assurances; Consents and Approvals ..................... 45
7.11. Checking Accounts .............................................. 46
7.12. Change of Name ................................................. 46
7.13. Employee Benefit Matters and Covenants ......................... 46
7.14. Year-End Bonus ................................................. 50
8. Conditions to Obligation to Close ...................................... 50
8.1. Conditions to Obligation of the Buyer .......................... 50
8.2. Conditions to Obligation of the Seller ......................... 52
8.3. Waiver; Right to Proceed ....................................... 52
9. Remedies for Breaches of This Agreement ................................ 53
9.1. Survival ....................................................... 53
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TABLE OF CONTENTS (CONTINUED)
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PAGE
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9.2. Indemnification Provisions for Benefit of the Buyer ............ 53
9.3. Indemnification Provisions for Benefit of the Seller ........... 56
9.4. Matters Involving Third Parties ................................ 56
9.5. Limitations of Indemnity ....................................... 57
10 Termination ............................................................. 58
10.1. Termination of Agreement ....................................... 58
10.2. Effect of Termination .......................................... 58
11. Miscellaneous ........................................................... 58
11.1. Press Releases and Public Announcements ........................ 58
11.2. No Third-Party Beneficiaries ................................... 59
11.3. Entire Agreement ............................................... 59
11.4. Succession and Assignment ...................................... 59
11.5. Counterparts ................................................... 59
11.6. Headings ....................................................... 59
11.7. Notices ........................................................ 59
11.8. Governing Law .................................................. 60
11.9. Amendments and Waivers ......................................... 60
11.10. Severability ................................................... 60
11.11. Expenses ....................................................... 61
11.12. Construction ................................................... 61
11.13. Incorporation of Exhibits, Certificates and Schedules .......... 61
11.14. Specific Performances .......................................... 61
12. Dispute Resolution ...................................................... 61
12.1. Empowered Officer and Representatives .......................... 61
12.2. Binding Arbitration ............................................ 62
13. Guaranty ................................................................ 63
13.1. Global Guaranty ................................................ 63
13.2. Xxxxxx Guaranty ................................................ 64
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TABLE OF CONTENTS (CONTINUED)
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EXHIBITS
--------
Exhibit A-1 Peg Net Asset Statement
Exhibit A-2 Financial Statements
Exhibit B Intellectual Property Assignment, and Asset Transfer
Agreements
Exhibit 1.1 Certain Insurance Policies
Exhibit 1.36 Global Letter
Exhibit 1.48 Knowledge Definition
Exhibit 2.5.1.2.9 "Cash" Accounts
Exhibit 6.9.2 Description of Nine and One-Half Acres
Exhibit 8.1.7.4 Xxxxxxxx-Xxxxxx Guaranty
Exhibit 8.1.13 Shareholder Consent
SCHEDULES
---------
Schedule 3.1 Exceptions to the Seller's Representations
Schedule 3.4 Exceptions to Global's Representations
Disclosure Schedule
Schedule 5.4 Purchase Price Allocation
CERTIFICATES
------------
Section 8.1.1 Certificate from the Seller
Section 8.2.1 Certificate from the Buyer
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PURCHASE AND SALE AGREEMENT
---------------------------
THIS PURCHASE AND SALE AGREEMENT (the "AGREEMENT") is entered into on March
3, 1998, by and among Xxxxxx Power Tools, Inc., a Delaware corporation (the
"BUYER"), GPX Corp., a Nevada corporation (the "SELLER"), Xxxxxx Industries,
Inc., an Ohio corporation ("XXXXXX"), and Global Industrial Technologies, Inc.,
a Delaware corporation ("GLOBAL"). The Buyer, the Seller, Xxxxxx and Global are
referred to collectively herein as the "PARTIES" and individually as a "PARTY".
The Seller owns all of the issued and outstanding capital stock of INTOOL,
Incorporated, a Delaware corporation (the "TARGET").
THIS AGREEMENT contemplates a transaction in which the Buyer or its
Affiliates will purchase from the Seller or its Affiliates, and the Seller or
its Affiliates will sell to the Buyer or its Affiliates, all of the outstanding
capital stock of the Target and certain assets related to the business of the
Target.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows:
1. CERTAIN DEFINITIONS
-------------------
As used in this Agreement, the following terms shall be defined as set
forth below and such definitions shall be applicable to both the singular and
plural forms of such terms:
1.1. "ACCESS AGREEMENT" means a letter or letters to be executed by the
Seller and Global, the Buyer and Xxxxxx, and the insurance companies
representing substantially all of the coverage of the policies listed in Exhibit
1.1, pursuant to which the carriers will (i) grant to the Buyer and its
Affiliates the unequivocable and irrevocable right to make claims under such
policies with respect to the Business, and (ii) acknowledge and confirm (a) the
assignment of interest under the policies with respect to the Business to the
Buyer and its Affiliates and (b) the Buyer and its Affiliates' beneficial
interest in such policies, including pursuant to (in either (i) or (ii)) any
other agreement, including the Distribution Agreement dated July 17, 1992,
between Dresser Industries, Inc. and INDRESCO, Inc., and the Reorganization
Agreement dated October 20, 1995, between the Target and certain of its
Affiliates.
1.2. "ACCOUNTING ARBITRATOR" has the meaning set forth in (S)2.5.5 below.
1.3. "ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, Environmental Liabilities, obligations,
Taxes, liens, losses, expenses, and fees, including court costs and reasonable
fees and expenses of attorneys, accountants, consultants and experts, and
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reasonable fees and expenses incurred in making claims against insurance
carriers (whether through litigation or otherwise).
1.4. "AFFILIATE" means any Person that directly or indirectly controls,
is controlled by, or is under common control with the Person to whom the
reference is made. Unless otherwise specified, the term "Affiliate" when used
with respect to the Seller, shall not include the Target, the INTOOL Subsidiary
or the INTOOL Divisions (but shall include INTOOL International GmbH, INTOOL
International B.V., INTOOL de Mexico, S.A. de C.V., and Global-GIX Canada Inc.).
Unless otherwise specified, the term "Affiliate" when used with respect to the
Buyer, shall include the Target, the INTOOL Subsidiary and the INTOOL Divisions.
1.5. "ARBITRATOR" has the meaning set forth in (S)12.2.2 below.
1.6. "ASSET TRANSFER AGREEMENTS" means (i) the Asset Transfer Agreement
between Deutsche Xxxxxxx-Denver GmbH & Co. and INTOOL International GmbH
substantially in the form of Exhibit B(2) attached hereto; (ii) the Asset Sale
and Purchase Agreement between Xxxxxx Power Tools B.V. and INTOOL International
B.V. substantially in the form of Exhibit B(3) attached hereto; (iii) the Asset
Transfer Agreement between Bussmann de Mexico, S.A. de C.V. and INTOOL de
Mexico, S.A. de C.V. substantially in the form of Exhibit B(4) attached hereto;
and (iv) the Asset Transfer Agreement between Xxxxxx Industries (Canada) Inc.
and Global-GIX Canada Inc. substantially in the form of Exhibit B(5) attached
hereto.
1.7. "ASSIGNED LEASES" has the meaning set forth in (S)4.11.1 below.
1.8. "BASIS" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or is reasonably likely to
form the basis for any specified consequence.
1.9. "BENEFIT PROGRAMS" means deferred compensation plans, stock option
plans, stock purchase plans, stock award plans, severance pay plans, dependent
care plans, cafeteria plans, employee assistance programs, scholarship programs,
vacation policies or any other employee benefit plan that is not an Employee
Pension Benefit Plan or an Employee Welfare Benefit Plan.
1.10. "BUSINESS" means the business, activity and operations historically
or currently conducted by Global, its Affiliates (including the Target and the
INTOOL Subsidiary) and their respective Predecessors relating to the design,
manufacture, assembly, service, repair, marketing and sale of the Products.
1.11. "BUYER" has the meaning set forth in the preface above.
1.12. "BUYER'S INDEMNIFIED GROUP" has the meaning set forth in (S)9.2.1
below.
1.13. "BUYER'S LETTER" has the meaning set forth in (S)2.5.2 below.
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1.14. "CASH" means cash and cash equivalents (including marketable
securities and short term investments) calculated in accordance with GAAP
applied on a basis consistent with the preparation of the Financial Statements.
1.15. "CLAIM" has the meaning set forth in (S)12.1 below.
1.16. "CLOSING" has the meaning set forth in (S)2.3 below.
1.17. "CLOSING DATE" has the meaning set forth in (S)2.3 below.
1.18. "CODE" means the Internal Revenue Code of 1986, as amended.
1.19. "CONFIDENTIAL INFORMATION" means any information concerning the
businesses and affairs of the INTOOL Companies that is not already generally
available to the public.
1.20. "DISCHARGE" includes the accidental, unknowing, or intentional
spilling, leaking, pumping, pouring, emitting, leaching, escaping, depositing,
adding, placing, emptying, dumping, releasing, burying, injecting, abandoning,
migrating or other release of any Regulated Material into or on the Environment.
1.21. "DISCLOSURE SCHEDULE" has the meaning set forth in (S)4 below.
1.22. "DISPOSE" or "DISPOSAL" includes the disposal, arranging for
disposal, carrying for disposal, or Discharge of any Regulated Material in a
landfill, surface impoundment, waste pile, injection well, facility, salt dome
or bed formation, underground mine or cave, vault, bunker or other location
(whether authorized or unauthorized) for storage (whether temporary or
permanent), disposal or any other purpose, from which a Regulated Material has
entered or may enter the Environment or be Discharged into the Environment.
1.23. "DRESSER LETTER" has the meaning set forth in (S)6.9.4.
1.24. "EMPLOYEE BENEFIT PLAN" means any (a) Employee Pension Benefit Plan,
(b) Employee Welfare Benefit Plan, or (c) other Benefit Programs maintained by
or contributed to by any of the INTOOL Companies or participated in by any
employee of any INTOOL Company.
1.25. "EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in (S)3(2)
of ERISA.
1.26. "EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in (S)3(1)
of ERISA.
1.27. "ENCUMBRANCE" means any claim, demand, right of first refusal,
purchase right, option, warrant, commitment, charge, encumbrance or any other
restriction or obligation of any kind on ownership, transfer, use, licensing,
possession, receipt of income from or any other exercise of any attribute of
ownership, including any Security Interest, except that "Encumbrance" shall not
include any covenants under loan agreements relating to the disposition of
assets, the
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breach of which covenants would not result in a claim, restriction, obligation
or Liability of any kind on the Target Shares or the Transferred Assets.
1.28. "ENVIRONMENT" means the environment, air, land, Water, any surface
of any building, any fixture, equipment, or any combination thereof.
1.29. "ENVIRONMENTAL, HEALTH AND SAFETY LAWS" means any and all Laws of any
Governmental Body, relating to health, safety, pollution control, or protection
of the Environment, including all Laws relating to the manufacture, processing,
distribution, generation, use, ownership, collection, treatment, storage,
transportation, recovery, recycling, removal, handling, Discharge, Disposal,
release or threatened release, of any Regulated Material, or regarding exposure
to, monitoring or assessment of, or remediation (including operation and
maintenance) of, any Regulated Material, or record keeping, notification or
reporting requirements respecting any Regulated Material, or the on-site or off-
site contamination or pollution of the Environment, or air, soil, or Water
quality, or air or Water emissions, or public or employee health and safety or
community right-to-know, including the following U.S. federal laws: the National
Environmental Policy Act, 42 U.S.C. Section 4321 et seq.; the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act and the
Hazardous and Solid Waste Amendments Act of 1984, 42 U.S.C. Section 6901 et
seq.; the Federal Water Pollution Control Act, as amended by the Clean Water Act
of 1977, 33 U.S.C. Section 1251 et seq.; the Public Health Service Act, as
amended by the Safe Drinking Water Act, 42 U.S.C. Section 300f et seq.; the
Clean Air Act, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C.
Section 7401 et seq.; the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. Section 9601 et seq. ("CERCLA"); the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq; the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136 et seq.; the
Occupational Safety and Health Act of 1970, 29 U.S.C. Section 651 et seq.
including the Hazard Communication Standard (29 C.F.R. (S) 1910.1200); the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section
11001 et seq.; and the Hazardous Material Transportation Act, 49 U.S.C. Section
1801 et seq.; in each case as these Laws have been or may be amended or
supplemented and any analogous state or local statutes and the regulations
promulgated pursuant thereto and such other Laws (domestic or foreign) relating
to or addressing similar subject matter of any of the foregoing or amendments to
the foregoing.
1.30. "ENVIRONMENTAL LIABILITY" means (a) any Liability arising under any
Environmental, Health and Safety Law, or (b) any Liability involving any
Regulated Material, damage or harm to the Environment, toxic tort,
investigation, site assessment or characterization, remediation (including
operation and maintenance), treatment, containment, removal, monitoring,
assessing, resource damage, harm to a public resource, enforcement proceedings,
cleanup orders, other remediation or administrative orders, citizen suits,
property damage, economic loss, personal injury or death of any employee or
other individual, occupational or other exposure or actions whether claimed or
instituted by one or more private parties (including the Parties hereto) or
Governmental Bodies, in either case (whether under (a) or (b) above) including
any fees and expenses of attorneys, accountants, consultants, and experts,
whether based upon any
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Environmental, Health and Safety Law which became or becomes effective before,
on or after the Closing Date, and whether arising out of or related to on-site
or off-site matters.
1.31. "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
1.32. "FINAL CLOSING NET ASSET AMOUNT" has the meaning set forth in
(S)2.5.6 below.
1.33. "FINAL CLOSING NET ASSET STATEMENT" means the statement of net assets
determined pursuant to (S)2.5 below.
1.34. "FINANCIAL STATEMENTS" has the meaning set forth in (S)4.7 below.
1.35. "GAAP "means United States generally accepted accounting principles
as in effect on October 31, 1997.
1.36. "GLOBAL LETTER" means the agreement in the form attached hereto as
Exhibit 1.36.
1.37. "GLOBAL XXXX" has the meaning set forth in (S)7.9 below.
1.38. "GOVERNMENTAL BODY" means any country, any national body (including
the European Union), any state, province, municipality, or subdivision of any of
the foregoing, any agency, governmental department, court, entity, commission,
board, ministry, bureau, locality or authority of any of the foregoing, or any
quasi-governmental or private body exercising any regulatory, taxing, importing,
exporting, or other governmental or quasi-governmental function, or any
arbitrator.
1.39. "XXXX-XXXXX-XXXXXX ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
1.40. "HOURLY DEFINED BENEFIT PLANS" has the meaning set forth in (S)7.13.7
below.
1.41. "INDEMNIFIED PARTY" has the meaning set forth in (S)9.4.1 below.
1.42. "INDEMNIFYING PARTY" has the meaning set forth in (S)9.4.1 below.
1.43. "INTELLECTUAL PROPERTY" means (a) all inventions (whether patentable
or unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures, together
with all reissuances, continuations, continuations-in-part, revisions,
extensions, and reexaminations thereof, (b) all trademarks, service marks, trade
dress, logos, trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications, registrations, and renewals in connection therewith, (d) all trade
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secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (e) all computer software (including data and
related documentation), (f) all other proprietary rights, and (g) all copies and
tangible embodiments thereof (in whatever form or medium).
1.44. "INTEREST RATE" shall mean six percent (6%) per annum, calculated on
the basis of a 365 days per year factor applied to the actual days on which
there exists an unpaid amount.
1.45. "INTOOL COMPANIES" means the Target, the INTOOL Subsidiary, the
INTOOL Divisions, and each of INTOOL International GmbH, INTOOL International
B.V., INTOOL de Mexico, S.A. de C.V., Global-GIX Canada Inc. and the Seller as
each relates to the INTOOL Divisions, and their respective Predecessors as each
relates to the Business. Each such company or division is individually referred
to as an "INTOOL Company."
1.46. "INTOOL DIVISIONS" means the divisions of INTOOL International GmbH,
INTOOL International B.V., INTOOL de Mexico, S.A. de C.V., Global-GIX Canada
Inc., and the Seller, that are engaged in or have assets (other than the Target
Shares) directly related to the Business.
1.47. "INTOOL SUBSIDIARY" means Airetool & Xxxx Superior Realty, Inc., an
Ohio corporation.
1.48. "KNOWLEDGE" means actual knowledge of those individuals listed on
Exhibit 1.48.
1.49. "LAWS" means all constitutions; statutes; regulations; by-laws;
codes; ordinances; decrees; rules; judicial, arbitral, administrative,
ministerial, departmental or regulatory judgments, orders, decisions, rulings,
or awards; policies; voluntary restraints; guidelines; directives; agreements
with, requirements of, or instructions by any Governmental Body; general
principles of common or civil law; and equity.
1.50. "LEASED REAL PROPERTY" has the meaning set forth in (S)4.11.1 below.
1.51. "LIABILITY" means any and all liability, obligation, loss,
commitment, damage, or deficiency including interest, penalties, fines,
reasonable fees of attorneys, accountants, consultants, and experts, and
liability for Taxes (in each instance whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued, under accrued or
unaccrued, whether liquidated or unliquidated, and whether due or to become
due).
1.52. "MOST RECENT FINANCIAL STATEMENTS" has the meaning set forth in
(S)4.7 below.
1.53. "NEGATIVE PURCHASE PRICE ADJUSTMENT" has the meaning set forth in
(S)2.5 below.
1.54. "OCTOBER FINANCIAL STATEMENTS" has the meaning set forth in (S)4.7
below.
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1.55. "ORDINARY COURSE OF BUSINESS" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
1.56. "OTHER AGREEMENTS" has the meaning set forth in (S)8.1.7 below.
1.57. "OWNED REAL PROPERTY" has the meaning set forth in (S)4.11.1 below.
1.58. "PARTY" has the meaning set forth in the preface above.
1.59. "PBGC" means Pension Benefit Guaranty Corporation.
1.60. "PEG NET ASSET STATEMENT" means the statement dated October 31, 1997,
attached hereto as Exhibit A-1.
1.61. "PERMIT" means any license, permit, approval, consent, authorization,
requirement, order, license application, and license amendment application of or
to a Governmental Body and all governmental or third party product registrations
or approvals.
1.62. "PERSON" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, a limited
liability company, an unincorporated organization, an other entity, or a
Governmental Body.
1.63. "POSITIVE PURCHASE PRICE ADJUSTMENT" has the meaning set forth in
(S)2.5 below.
1.64. "POST-CLOSING STRADDLE PERIOD" has the meaning set forth in (S)5.2.2
below.
1.65. "PRE-CLOSING STRADDLE PERIOD" has the meaning set forth in (S)5.2.2
below.
1.66. "PREDECESSOR" means a Person which has previously held an interest to
which the referenced Person has succeeded, including a Person which conveyed,
transferred or assigned all or substantially all of its assets to the referenced
Person or a Person which was merged or amalgamated into or consolidated with the
referenced Person. For example, Dresser Industries, Inc. is a Predecessor of
the Target.
1.67. "PRELIMINARY CLOSING NET ASSET STATEMENT" has the meaning set forth
in (S)2.5.1 below.
1.68. "PRODUCTS" means pneumatic and electrical tools, including assembly
tools, fabrication tools, pneumatic and hydraulic pressure drilling equipment,
pneumatic tube cleaners and expanders, automatic fastening systems, fixturized
and specialty engineering tools, and complementary products, parts, software and
components.
1.69. "PURCHASE PRICE ADJUSTMENT" has the meaning set forth in (S)2.5
below.
1.70 "PURCHASE PRICE" has the meaning set forth in (S)2.2 below.
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1.71. "REGULATED MATERIAL" means any (a) material, substance, waste
(including any solid, liquid, semisolid or gas or gaseous mixture), product, by-
product, chemical, pesticide, fungicide, rodenticide, pollutant, contaminant,
hazardous material, hazardous substance, hazardous waste, solid waste, or
nonhazardous waste as the foregoing terms are considered or defined as harmful,
unwholesome or toxic under, regulated by or form the basis of Liability under
any applicable Law (including Environmental, Health and Safety Laws); (b)
petroleum (including crude oil or any fraction thereof); (c) asbestos and
asbestos containing material; (d) radioactive substance; and (e) any
polychlorinated biphenyl (PCB) and its thermal decomposition products, including
dioxins and dibenzofurans.
1.72. "REPORTABLE EVENT" has the meaning set forth in ERISA Sec. 4043.
1.73. "RULES" has the meaning set forth in (S)12.2.1 below.
1.74. "SECTION 338 ELECTIONS" has the meaning set forth in (S)5.4 below.
1.75. "SECURITIES ACT" means the Securities Act of 1933, as amended.
1.76. "SECURITY INTEREST" means any mortgage, pledge, lien, charge, or
other security interest.
1.77. "SELLER" has the meaning set forth in the preface above.
1.78. "SELLER'S INDEMNIFIED GROUP" has the meaning set forth in (S)9.3
below.
1.79. "SELLER'S LETTER" has the meaning set forth in the (S)2.5.3 below.
1.80. "STRADDLE PERIOD" has the meaning set forth in (S)5.2.2 below.
1.81. "TARGET" has the meaning set forth in the preface above.
1.82. "TARGET SHARE" means any share of the capital stock of the Target,
and all rights and ancillary rights attributed to such share of capital.
1.83. "TAXES" means all federal, state, provincial, local, municipal, and
foreign income, gross receipts, profits, license, payroll, employment, stamp,
premium, windfall profits, franchise, unincorporated business, withholding,
capital, general corporate, customs duties, environmental (including taxes under
Code Section 59A), disability, registration, alternative, add-on, minimum,
estimated, sales, goods and services, use, occupation, property, severance,
production, excise, recording, ad valorem, gains, transfer, value-added,
unemployment compensation, social security premium, privilege and any and all
other taxes, including any interest, penalty, or addition thereto, whether
disputed or not.
1.84. "TAX PROCEEDING" has the meaning set forth in (S)5.7.2 below.
-8-
1.85. "TAX RETURN" means any return, declaration, report, claim for refund,
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.86. "THIRD PARTY CLAIM" has the meaning set forth in (S)9.4.1 below.
1.87. "TRANSFERRED ASSETS" has the meaning set forth in (S)2.1 below.
1.88. "VHL CLAIMS" and "VHL INJURIES" mean any hearing loss or vibration-
related claims/injuries, respectively (including vibration white finger, carpal
tunnel syndrome and repetitive stress/trauma).
1.89. "WATER" means surface water, ground, other, or any of them.
2. PURCHASE AND SALE.
------------------
2.1. BASIC TRANSACTION. On and subject to the terms and conditions of this
-----------------
Agreement, (i) the Buyer agrees to purchase from the Seller, and the Seller
agrees to sell to the Buyer, all of the Target Shares, and (ii) the Buyer agrees
to purchase from the Seller certain Intellectual Property owned by the Seller
and used in the Business, and the Seller agrees to sell certain Intellectual
Property owned by the Seller and used in the Business, and the Seller shall also
cause its respective Affiliates to sell to the Buyer or one or more of its
designees certain assets pursuant to the Other Agreements (such Intellectual
Property and other assets being collectively referred to as the "TRANSFERRED
ASSETS").
2.2. PURCHASE PRICE. The Buyer agrees to pay to the Seller $217,500,000
--------------
(the "PURCHASE PRICE") for all the Target Shares and the Transferred Assets in
accordance with and subject to the following provisions of this (S)2, as
adjusted for the addition or substraction of the Purchase Price Adjustment.
2.3. THE CLOSING. The closing of the transactions contemplated by this
-----------
Agreement (the "CLOSING") shall take place at the offices of Xxxxxx in Houston,
Texas, commencing at 9:00 a.m. local time on the fifth business day following
the earlier of (i) expiration of the waiting period for completion of the
transactions contemplated by this Agreement imposed by the Xxxx-Xxxxx-Xxxxxx
Act, (ii) termination of such waiting period prior to its expiration, or (iii)
such other date as the Parties may mutually determine (provided that in each
case the condition specified in (S)8.1.3(D) is also satisfied) (the "CLOSING
DATE"). The Parties agree that the Closing of the sale of that portion of the
Transferred Assets belonging to INTOOL International GmbH may occur on a date
later than the Closing of the other transactions contemplated by the Agreement,
as more particularly described in (S)6.2.2.
2.4. DELIVERIES AT THE CLOSING. At the Closing, (i) the Seller will
-------------------------
deliver to the Buyer the various certificates, instruments, and documents
referred to in (S)8.1 below, (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in (S)8.2 below,
(iii) the Seller will deliver to the Buyer stock certificates representing all
of the Target Shares,
-9-
endorsed in blank or accompanied by duly executed assignment documents, (iv) the
Seller will deliver to the Buyer stock certificates representing all of the
Target's shares of the INTOOL Subsidiary, which certificates shall be in the
name of the Target, and (v) the Buyer will pay to the Seller the Purchase Price
by wire transfer of federal or other immediately available funds to an account
designated in writing by the Seller no later than 3 business days prior to
Closing.
2.5. PURCHASE PRICE ADJUSTMENT. The Purchase Price Adjustment means the
-------------------------
amount by which the Final Closing Net Asset Amount, determined pursuant to
(S)2.5.6 is more (a "POSITIVE PURCHASE PRICE ADJUSTMENT") or less (a "NEGATIVE
PURCHASE PRICE ADJUSTMENT") than $66,195,000.
2.5.1 CLOSING NET ASSET STATEMENT. The Seller shall prepare and
---------------------------
deliver to the Buyer within 60 days following the Closing Date, a net asset
statement reflecting the combined net assets of the INTOOL Companies (including
the Transferred Assets) as of the close of business in each relevant
jurisdiction on the Closing Date (the "PRELIMINARY CLOSING NET ASSET
STATEMENT"). The Preliminary and Final Closing Net Asset Statements shall be
prepared in accordance with the provisions of this (S)2.5.1. In the event of a
conflict or inconsistency between Sections 2.5.1.1 and 2.5.1.2, (S)2.5.1.2 shall
take precedence over (S)2.5.1.1.
2.5.1.1. The Preliminary and Final Closing Net Asset
Statements shall, except as provided in (S)2.5.1.2. be prepared in accordance
with principles, practices and procedures that are the same as those which were
applied by the Target in preparing the Peg Net Asset Statement, and as to assets
or Liabilities of a kind or type that were not included in the Peg Net Asset
Statement, in accordance with the normal principles, practices and procedures of
the Target regarding similar assets or Liabilities and consistent with GAAP.
2.5.1.2. Notwithstanding anything to the contrary in
(S)2.5.1.1, the following specific accounting rules shall control the
preparation of the Preliminary and Final Closing Net Asset Statements:
2.5.1.2.1. The asset and Liability amounts included in the
Preliminary and Final Closing Net Asset Statements will be the same as those
included in the Peg Net Asset Statement except as necessary to reflect those
changes in the asset and Liability values that result from new transactions or
new events occurring during the period after but not including October 31, 1997,
through and including the Closing Date, subject to (S)2.5.1.2.2 through
(S)2.5.1.2.18 below, which shall take precedence .
2.5.1.2.2. The Peg Net Asset Statement does not include and the
Preliminary and Final Closing Net Asset Statements will not include any
Liabilities or assets for deferred income taxes.
2.5.1.2.3 The quantities of inventory used to determine the
inventory amount to be included in the Preliminary and Final Closing Net Asset
Statements will be based on the results of a physical inventory to be taken
immediately after the Closing Date. The physical inventory will be taken by the
Buyer (or its representative), at the Buyer's expense,
-10-
and observed by the Seller (or its representative). The physical inventory
quantities will be priced utilizing the same standard costs which were used in
preparing the Peg Net Asset Statement (which for inventory purposes, shall be
the November 1, 1997, standard), and, in case of items that were not on hand as
of October 31, 1997, in accordance with the normal procedures of the Seller. The
inventory valuation reserve shall be $8,156,779 (which represents all inventory
valuation reserves as of October 31, 1997) on both the Peg Net Asset Statement
and the Preliminary and Final Closing Net Asset Statements.
2.5.1.2.4 The Peg Net Asset Statement does not include and the
Preliminary and Final Closing Net Asset Statements will not include, (i) any
amount payable to the Seller or any Affiliate of the Seller (including the
Target, the INTOOL Subsidiary and the INTOOL Divisions) from any of the INTOOL
Companies, or (ii) any amount receivable from the Seller or any Affiliate of the
Seller (including the Target, the INTOOL Subsidiaries and the INTOOL Divisions)
and payable to any of the INTOOL Companies, including, in both (i) and (ii),
inter and intra-company payables or receivables.
2.5.1.2.5 The Preliminary and Final Closing Net Asset
Statements will reflect the results of a fixed asset physical existence test of
assets with a net book value greater than $10,000 to be conducted immediately
following Closing. The net book value of fixed assets greater than $10,000 which
cannot be physically located shall not be excluded from the Preliminary and
Final Closing Net Asset Statements unless the aggregate of all such fixed assets
which cannot be physically located exceeds $100,000, in which case the net book
value in excess of such $100,000 will be excluded from the Preliminary and Final
Closing Net Asset Statements. Such fixed asset physical existence test shall be
observed by both the Buyer and the Seller or their respective representatives.
2.5.1.2.6 The Peg Net Asset Statement does not include and the
Preliminary and Final Closing Net Asset Statements will not include any
Liabilities or assets with respect to legal, accounting or investment banking
fees related to this or any other contemplated transaction to sell the Business
incurred prior to the Closing.
2.5.1.2.7 Except as otherwise provided in Sections 2.5.1.2.12,
2.5.1.2.14, and 2.5.1.2.16, the Liabilities in the Preliminary and Final Closing
Net Asset Statements will not be decreased for any change from the Liabilities
included in the Peg Net Asset Statement except to the extent of amounts paid in
cash by the Seller or its Affiliates (including the Target and the INTOOL
Subsidiary) to third parties between October 31, 1997, and the Closing Date.
2.5.1.2.8 The Peg Net Asset Statement does not include and the
Preliminary and Final Closing Net Asset Statements will not include a reserve
for accounts receivable that are doubtful or uncollectible.
2.5.1.2.9 The Peg Net Asset Statement does not include and the
Preliminary and Final Closing Net Asset Statements will include Cash for the
accounts listed in Exhibit 2.5.1.2.9.
-11-
2.5.1.2.10 The Peg Net Asset Statement does not include and
the Preliminary and Final Closing Net Asset Statements will not include any
amounts for "Retained Assets" and "Retained Liabilities" as those terms are
defined in the Asset Transfer Agreements.
2.5.1.2.11 The Peg Net Asset Statement does not include and
the Preliminary and Final Closing Net Asset Statements will not include any
asset or Liability amounts with respect to the Hourly Defined Benefit Plans.
2.5.1.2.12 The accrual for Liabilities related to the
INTOOL Companies' retiree Employee Welfare Benefit Plan in the Preliminary and
Final Closing Net Asset Statements shall be equal to $7,771,500 less the amount
retained by the Seller pursuant to (S)7.13.10 calculated using the same
assumptions utilized in calculating the $7,771,500.
2.5.1.2.13 The Peg Net Asset Statement includes and the
Preliminary and Final Closing Net Asset Statements will not include an accrual
for bonus amounts.
2.5.1.2.14 The Peg Net Asset Statement includes and the
Preliminary and Final Closing Net Asset Statement will not include (exclusive of
any overaccrual as of October 31, 1997) any asset or Liability amounts related
to the Global Industrial Technologies, Inc. Incentive Deferred Compensation
Plan.
2.5.1.2.15 The Peg Net Asset Statement does not include and
the Preliminary and Final Closing Net Asset Statements will include an accrual
for Liabilities related to the employee pension plan offered to the employees of
INTOOL de Mexico S.A. de C.V., using the same procedures and assumptions as used
by Busete Matematico Acturial S.C. in its actuarial valuation prepared January
1, 1996, a copy of which has been delivered to the Buyer.
2.5.1.2.16 The Peg Net Asset Statement includes and the
Preliminary and Final Closing Net Asset Statements will not include (exclusive
of any overaccrual as of October 31, 1997) any asset or Liability amounts
related to the Global Industrial Technologies, Inc. Retirement Income Plan as
such plan relates to the Target employees formerly part of The Rotor Tool
Company.
2.5.1.2.17 The Peg Net Asset Statement does not and the
Preliminary and Final Closing Net Asset Statements will not include any asset or
Liability amounts related to the real property described in Exhibit 6.9.2.
2.5.1.2.18 The Preliminary and Final Net Asset Statements
will include an accrual for Liabilities related to the statutory profit
participation plan with respect to the employees of INTOOL de Mexico, S.A. de
C.V.
2.5.2 BUYER'S REVIEW. The Buyer will have 60 days following
--------------
receipt of the Preliminary Closing Net Asset Statement from the Seller to review
such Preliminary Closing Net Asset Statement and to determine if, in the Buyer's
judgment, it has been prepared in accordance
-12-
with (S)2.5. If in the Buyer's judgment adjustments are necessary for the
Preliminary Closing Net Asset Statement to be so prepared, the Buyer, within the
60-day period, shall notify the Seller in writing of its proposed adjustments,
including the amount, nature and basis for the adjustments ("BUYER'S LETTER").
If the Buyer does not submit Buyer's Letter within such 60-day period, the
Preliminary Closing Net Asset Statement will become the Final Closing Net Asset
Statement.
2.5.3. SELLER'S REVIEW. The Seller will then have 30 days following
---------------
receipt of Buyer's Letter to review any adjustments proposed therein. Within the
30-day period, the Seller shall notify the Buyer in writing of the Seller's
position with respect to each of the Buyer's proposed adjustments ("SELLER'S
LETTER"). If the Seller does not submit Seller's Letter within such 30-day
period, the Preliminary Closing Net Asset Statement as adjusted by the
adjustments proposed in Buyer's Letter will become the Final Closing Net Asset
Statement.
2.5.4. CONFERENCE. Within 30 days after the Buyer receives Seller's
----------
Letter, the Buyer and the Seller shall confer and endeavor to mutually resolve
the adjustments, if any, which are in dispute.
2.5.5. ARBITRATOR. If the Buyer and the Seller cannot mutually
----------
resolve any disputes involving the Buyer's proposed adjustments within the 30
days following the Buyer's receipt of Seller's Letter, the Buyer and the Seller
shall thereafter jointly engage the Dallas office of the accounting firm of
Coopers & Xxxxxxx (the "ACCOUNTING ARBITRATOR"), to act as the arbitrator,
subject to that firm's confirmation that it is independent of all Parties. If
such accounting firm is unable to confirm its independence, the Buyer and the
Seller shall jointly engage an alternate mutually acceptable accounting firm
that can confirm that it is independent of the Buyer and the Seller. If either
the Buyer or the Seller unreasonably delays or refuses to engage the Accounting
Arbitrator, the other may unilaterally engage the Accounting Arbitrator. The
Accounting Arbitrator shall be furnished with a copy of the Agreement, the Peg
Net Asset Statement, the Preliminary Closing Net Asset Statement, Buyer's
Letter, Seller's Letter and any other relevant correspondence between the Buyer
and the Seller or records deemed appropriate by the Buyer and the Seller. The
Accounting Arbitrator must, within 30 days from the date such documents are
furnished, complete its review and render a written report setting forth its
conclusion with respect to each of the Buyer's adjustments which were unresolved
between the Buyer and the Seller. The Accounting Arbitrator shall be granted
access to the books and records of the INTOOL Companies as well as the working
papers or other documents which the Buyer, the Seller or their respective
accountants may have which relate to the Peg Net Asset Statement or the
Preliminary Closing Net Asset Statement and any other documents or information
which the Accounting Arbitrator may deem appropriate. The Accounting
Arbitrator's review shall be limited to the purpose of determining whether, in
respect of each disputed adjustment, the Buyer's proposed adjustment or the
amount reflected on the Preliminary Net Asset Statement is more nearly in
accordance with the terms of this Agreement. The Buyer and the Seller shall have
the right to submit written materials to the Accounting Arbitrator all in
accordance with procedures to be set forth in the engagement letter between the
Buyer and the Seller and the Accounting Arbitrator. The decision by the
Accounting Arbitrator shall be in writing and delivered to both the Buyer and
the Seller. The Parties agree that the Accounting Arbitrator is the sole person
to make all interpretations necessary (including interpretations or
constructions of the Agreement)
-13-
to support its determinations. The Accounting Arbitrator's decision shall be
conclusive and binding upon the Parties and may be entered and enforced in any
court of competent jurisdiction. The Parties agree to submit to the jurisdiction
of any such court for the enforcement of such award or decision. The Buyer on
one hand and the Seller on the other hand shall each pay 50% of the fees and
expenses of the Accounting Arbitrator.
2.5.6. FINAL CLOSING DATE NET ASSET AMOUNT. The Preliminary Closing
-----------------------------------
Net Asset Statement will be modified by any adjustments proposed by the Buyer to
which the Seller did not object in Seller's Letter, any other adjustments agreed
by the Buyer and the Seller pursuant to (S)2.5.4 and by the determination of the
Accounting Arbitrator pursuant to (S)2.5.5, and will become the Final Closing
Net Asset Statement. The amount of the net assets as reflected on the Final
Closing Net Asset Statement is the "FINAL CLOSING NET ASSET AMOUNT."
2.5.7. PAYMENT If there is a Positive Purchase Price Adjustment, the
-------
Buyer shall pay to the Seller the Purchase Price Adjustment, together with
interest thereon at the Interest Rate from the Closing Date until such payment,
which shall be within five business days of the determination of the Final
Closing Net Asset Statement. If there is a Negative Purchase Price Adjustment,
the Seller shall pay to the Buyer the Purchase Price Adjustment, together with
interest thereon at the Interest Rate from the Closing Date until such payment,
which shall be within five business days of the determination of the Final
Closing Net Asset Statement.
2.5.8. ACCOUNT OBLIGATIONS.
-------------------
2.5.8.1. Simultaneously with the Closing, the Seller shall,
and shall cause its Affiliates to, cancel or otherwise eliminate all then
outstanding obligations of the INTOOL Companies to either the Seller or any of
its Affiliates, and the Seller shall, and shall cause its Affiliates to, cancel
or otherwise eliminate all then outstanding obligations of the Seller or any of
its Affiliates to the INTOOL Companies, and in all cases neither the Seller and
any of its Affiliates nor the INTOOL Companies and any Affiliate of the Buyer
that purchases the Transferred Assets shall have any further Liability with
respect to any such obligation, except that nothing in this (S)2.5.8.1 shall
affect any and all of the covenants, agreements, obligations and other
provisions contemplated under this Agreement or the Other Agreements applicable
to the Seller, the Buyer or the INTOOL Companies, including pursuant to
(S)7.8.1, (S)7.8.2 or (S)9.2.4.2.
2.5.8.2. After Closing, none of the Target, the INTOOL
Subsidiary, or the Affiliates of the Buyer that purchases the Transferred Assets
will reimburse or pay the Seller or any Affiliate of the Seller for any
transaction between the Target, the INTOOL Subsidiary or any Affiliate of the
Buyer that purchases any of the Transferred Assets, on the one side, and the
Seller or one of its Affiliates on the other side, provided, however, that if,
at the express written consent of the Buyer, the Seller or one of its Affiliates
incurs a Liability after the Closing resulting in a cash expenditure after the
Closing for the benefit of the Target, the INTOOL Subsidiary, or an Affiliate of
the Buyer that purchases any of the Transferred Assets, the Buyer shall
reimburse or pay to the Seller such cash expenditures, except that nothing in
this (S)2.5.8.2 shall affect any and all of the covenants, agreements,
obligations and other provisions
-14-
contemplated under this Agreement or the Other Agreements applicable to the
Seller, the Buyer or the INTOOL Companies, including pursuant to (S)7.8.2.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
----------------------------------------------------------
3.1. REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller represents
--------------------------------------------
and warrants that the statements contained in this (S)3.1 are correct and
complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this (S)3.1) except as
set forth in Schedule 3.1 attached hereto.
3.1.1. ORGANIZATION OF THE SELLER. The Seller is duly organized,
--------------------------
validly existing, and in good standing under the Laws of the jurisdiction of its
incorporation.
3.1.2. AUTHORIZATION OF TRANSACTION. The Seller has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the Other Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the respective Boards of Directors of the Seller and its
Affiliates that operate the INTOOL Divisions, and no other corporate proceedings
on the part of the Seller or its Affiliates (including the Target, the INTOOL
Subsidiary and the Affiliates of the Seller that operate the INTOOL Divisions)
is necessary to authorize this Agreement and the Other Agreements and to
consummate the transactions so contemplated. This Agreement constitutes the
valid and legally binding obligation of the Seller, enforceable in accordance
with its terms and conditions (subject to applicable bankruptcy, insolvency, and
similar Laws affecting creditors' rights generally and subject as to
enforceability to general principles of equity (regardless whether enforcement
is sought in a proceeding in equity or at law)). Except as set forth in (S)6.2,
neither the Seller nor any of its Affiliates (including the Affiliates of the
Seller that operate the INTOOL Divisions) need give any notice to, make any
filing with, or obtain any material Permit of any Governmental Body in order to
consummate the transactions contemplated by this Agreement.
3.1.3. NON-CONTRAVENTION. Neither the execution and the delivery of
-----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any Law or other restriction of any Governmental Body to which
the Seller is subject or any provision of its charter or bylaws or (B) 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 or consent under any material agreement,
contract, lease, Permit, instrument, 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.
3.1.4. BROKERS' FEES. The Seller has no Liability 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 its Affiliates could
become liable or obligated.
-15-
3.1.5. TARGET SHARES. The Seller holds of record and owns
-------------
beneficially all of the Target Shares, free and clear of any Encumbrance (other
than any restrictions under the Securities Act and state securities laws),
Taxes, Security Interests, contracts and equities. No other Person holds of
record or owns beneficially any Target Shares. The Seller is not a party to any
option, warrant, purchase right, or other contract or commitment that could
require the Seller to issue, sell, transfer, or otherwise dispose of any capital
stock of the Target (other than this Agreement) or security convertible into
capital stock of the Target. The Seller is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the voting of any
capital stock of the Target. Other than to the Buyer, the Seller has not
assigned, transferred, gifted, pledged, or otherwise disposed of any of the
Target Shares.
3.2. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer represents and
-------------------------------------------
warrants that the statements contained in this (S)3.2 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this (S)3.2).
3.2.1. ORGANIZATION OF THE BUYER. The Buyer is a corporation duly
-------------------------
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.
3.2.2. AUTHORIZATION OF TRANSACTION. The Buyer has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the Other Agreements and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the respective Boards of Directors of the Buyer and its Affiliates
that will acquire the Transferred Assets, and no other corporate proceedings on
the part of the Buyer or such Affiliates are necessary to authorize this
Agreement and the Other Agreements and to consummate the transactions so
contemplated. This Agreement constitutes the valid and legally binding
obligation of the Buyer, enforceable in accordance with its terms and conditions
(subject to applicable bankruptcy, insolvency, and similar Laws affecting
creditors' rights generally and subject as to enforceability to general
principles of equity (regardless whether enforcement is sought in a proceeding
in equity or at law)). Except as set forth in (S)6.2 and except for the
requirements imposed by the Investment Canada Act, the Buyer need not give any
notice to, make any filing with, or obtain any material Permit of any
Governmental Body in order to consummate the transactions contemplated by this
Agreement.
3.2.3. NON-CONTRAVENTION. Neither the execution and the delivery of
-----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any Law or other restriction of any Governmental Body, or court
to which the Buyer is subject or any provision of its charter or bylaws or (B)
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 or consent under any material agreement,
contract, lease, Permit, instrument, or other arrangement to which the Buyer is
a party or by which it is bound or to which any of its assets is subject.
-16-
3.2.4. BROKERS' FEES. The Buyer has no Liability to pay any fees or
-------------
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller or its Affiliates could
become liable or obligated.
3.2.5. INVESTMENT. The Buyer is not acquiring the Target Shares with
----------
a view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
3.3. REPRESENTATIONS AND WARRANTIES OF XXXXXX. Xxxxxx represents and
----------------------------------------
warrants that the statements contained in this (S)3.3 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this (S)3.3).
3.3.1. ORGANIZATION OF XXXXXX. Xxxxxx is a corporation duly
----------------------
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.
3.3.2. AUTHORIZATION OF TRANSACTION. Xxxxxx has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Xxxxxx
and no other proceedings on the part of Xxxxxx are necessary to authorize this
Agreement and to consummate the transactions as contemplated. This Agreement
constitutes the valid and legally binding obligation of Xxxxxx, enforceable in
accordance with its terms and conditions (subject to applicable bankruptcy,
insolvency, and similar Laws affecting creditors' rights generally and subject
as to enforceability to general principles of equity (regardless whether
enforcement is sought in a proceeding in equity or at law)). Except as set
forth in (S)6.2 and except for the requirements imposed by the Investment Canada
Act, Xxxxxx need not give any notice to, make any filing with, or obtain any
material Permit of any Governmental Body in order to consummate the transactions
contemplated by this Agreement.
3.3.3. NON-CONTRAVENTION. Neither the execution and the delivery of
-----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any Law or other restriction of any Governmental Body to which
Xxxxxx is subject or any provision of its charter or bylaws or (B) 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 or consent under any material agreement,
contract, lease, Permit, instrument, or other arrangement to which Xxxxxx is a
party or by which it is bound or to which any of its assets is subject.
3.3.4. BROKERS' FEES. Xxxxxx has no Liability to pay any fees or
-------------
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which the Seller or its Affiliates could
become liable or obligated.
3.4. REPRESENTATIONS AND WARRANTIES OF GLOBAL. Global represents and
----------------------------------------
warrants that the statements contained in this (S)3.4 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the
-17-
Closing Date were substituted for the date of this Agreement throughout this
(S)3.4), except as set forth in Schedule 3.4 attached hereto.
3.4.1. ORGANIZATION OF GLOBAL. Global is a corporation duly
----------------------
organized, validly existing, and in good standing under the Laws of the
jurisdiction of its incorporation.
3.4.2. AUTHORIZATION OF TRANSACTION. Global has full power and
----------------------------
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of Global
and no other proceedings on the part of Global are necessary to authorize this
Agreement and to consummate the transactions as contemplated. This Agreement
constitutes the valid and legally binding obligation of Global, enforceable in
accordance with its terms and conditions (subject to applicable bankruptcy,
insolvency, and similar Laws affecting creditors' rights generally and subject
as to enforceability to general principles of equity (regardless whether
enforcement is sought in a proceeding in equity or at law)). Except as set
forth in (S)6.2, Global need not give any notice to, make any filing with, or
obtain any material Permit of any Governmental Body in order to consummate the
transactions contemplated by this Agreement.
3.4.3. NON-CONTRAVENTION. Neither the execution and the delivery of
-----------------
this Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any Law or other restriction of any Governmental Body to which
Global is subject or any provision of its charter or bylaws or (B) 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 or consent under any material agreement,
contract, lease, Permit, instrument, or other arrangement to which Global is a
party or by which it is bound or to which any of its assets is subject.
3.4.4. BROKERS' FEES. Global has no Liability 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 its Affiliates could
become liable or obligated.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE INTOOL COMPANIES. The Seller
---------------------------------------------------------------
represents and warrants that the statements contained in this (S)4 are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this (S)4), except as set
forth in the disclosure schedule delivered by the Seller to the Buyer on the
date hereof (the "DISCLOSURE SCHEDULE"). However, nothing in the Disclosure
Schedule shall be deemed adequate to disclose an exception to a representation
or warranty made herein, unless the Disclosure Schedule identifies the exception
with reasonable particularity and describes the relevant facts in reasonable
detail. Without limiting the generality of the foregoing, the mere listing (or
inclusion of a copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein (unless
-18-
the representation or warranty has to do with the existence of the document or
other item itself). The Disclosure Schedule will be arranged in paragraphs
corresponding to the numbered paragraphs contained in this (S)4. Disclosure made
in a specific section shall not be deemed to have been disclosed with respect to
any other section unless an explicit cross-reference appears.
4.1. ORGANIZATION, QUALIFICATION, AND CORPORATE POWER. Each of the Target,
------------------------------------------------
the INTOOL Subsidiary and the Affiliates of the Seller that operate the INTOOL
Divisions is a corporation duly organized, validly existing, and in good
standing under the Laws of the jurisdiction of its incorporation. Each of the
Target, the INTOOL Subsidiary and the Affiliates of Seller that operate the
INTOOL Divisions is duly authorized to conduct business and is in good standing
under the Laws of each jurisdiction where such qualification is required, except
where the failure to do so would not have a material adverse effect on the
Business. The states in which the Target is licensed or qualified to do
business are listed in (S)4.1 of the Disclosure Schedule. Each of the INTOOL
Companies has full corporate power and authority and all material Permits
necessary to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it. Section 4.1 of the Disclosure Schedule
lists the directors and officers of each of the Target and the INTOOL
Subsidiary. The Seller has made available to the Buyer correct and complete
copies of the charter and bylaws of each of the Target and the INTOOL Subsidiary
(as amended to date). The minute books (containing the records of meetings of
the stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of each of
the Target and the INTOOL Subsidiary are correct and complete and each have been
provided to the Buyer. Neither Target nor the INTOOL Subsidiary is in default
under or in violation of any provision of its charter or bylaws.
4.2. CAPITALIZATION. The entire authorized capital stock of the Target
--------------
consists of 10,000 shares of common stock, with no par value, of which 200
shares of common stock are issued and outstanding. All of the issued and
outstanding Target Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the Seller. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Target to issue, sell, or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to the Target. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of the capital stock of the Target.
At Closing, the Seller shall transfer to the Buyer good title to all of the
Target Shares, free and clear of all Encumbrances.
4.3. NON-CONTRAVENTION. Neither the execution and the delivery of this
-----------------
Agreement or the Other Agreements, nor the consummation of the transactions
contemplated hereby or thereby, will (i) violate any Law or other restriction of
any Governmental Body to which any of the INTOOL Companies is subject or any
provision of the charter or bylaws of any of the Target, the INTOOL Subsidiary
and the Affiliates of the Seller that operate the INTOOL Divisions, or (ii)
except as set forth in (S)4.3 of the Disclosure Schedule, 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 or consent under any material agreement, contract, lease,
Permit, instrument, or other arrangement to which any of the INTOOL Companies
-19-
is a party or by which it is bound or to which any of its assets is subject (or
result in the imposition of any Security Interest upon any of its assets).
Except as set forth in (S)6.2 and except for the authorization required by the
Industrial Site Evaluation Center of the New Jersey Department of Environmental
Protection, to the Seller's Knowledge, none of the INTOOL Companies needs to
give any notice to, make any filing with, or obtain any Permit of any
Governmental Body in order for the Parties to consummate the transactions
contemplated by this Agreement.
4.4. BROKERS' FEES. None of the INTOOL Companies has any Liability 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 its
Affiliates could become liable or obligated.
4.5. TITLE TO ASSETS. Except as set in (S)4.5 of the Disclosure Schedule
---------------
and except as set forth in the fourth sentence of (S)4.11.1, the INTOOL
Companies have good and marketable title to, or a valid leasehold interest in,
the properties and assets used by them, located on their premises, or shown on
the October Financial Statements or acquired after the date thereof, free and
clear of all Encumbrances, except for properties and assets disposed of in the
Ordinary Course of Business since October 31, 1997. The Affiliates of the
Seller that operate the INTOOL Divisions have good and marketable title to the
Transferred Assets in each case free and clear of all Encumbrances.
4.6. INTOOL SUBSIDIARY. The entire authorized capital stock of the INTOOL
-----------------
Subsidiary consists of 1,100 shares of common stock, with $100.00 par value, of
which 1,100 shares of common stock are issued and outstanding. All of the
issued and outstanding shares of capital stock of the INTOOL Subsidiary have
been duly authorized and are validly issued, fully paid, and nonassessable, and
are held of record by the Persons set forth in (S)4.6 of the Disclosure
Schedule. The Target holds of record and owns beneficially 550 outstanding
shares of the INTOOL Subsidiary, free and clear of all Encumbrances. The Target
has representation, voting and otherwise, on the Board of Directors of the
INTOOL Subsidiary equal to that of the sole other shareholder of the INTOOL
Subsidiary. There are no outstanding or authorized options, warrants, purchase
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Target to sell, transfer, or otherwise dispose of any
capital stock of the INTOOL Subsidiary or that could require the INTOOL
Subsidiary to issue, sell, or otherwise cause to become outstanding any of its
own capital stock. There are no outstanding stock appreciation, phantom stock,
profit participation, or similar rights with respect to the INTOOL Subsidiary.
There are no voting trusts, proxies, or other agreements or understandings with
respect to the voting of any capital stock of the INTOOL Subsidiary. The Target
has no subsidiaries other than the INTOOL Subsidiary and it does not own,
directly or indirectly, any capital stock or other equity participation
(including partnership or membership interest) in any Person other than the
INTOOL Subsidiary.
4.7. FINANCIAL STATEMENTS. Attached hereto as Exhibit A-2 are the
--------------------
following financial statements (collectively the "FINANCIAL STATEMENTS") of the
Business: (i) unaudited consolidated and consolidating balance sheets and
statements of income as of and for the fiscal year ended October 31, 1997 (the
"OCTOBER FINANCIAL STATEMENTS"), and (ii) unaudited consolidated and
-20-
consolidating balance sheets and statements of income as of and for the three
months ended January 31, 1998 ("MOST RECENT FINANCIAL STATEMENTS"). The
Financial Statements have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Business as of such dates and the results of
operations of the Business for such periods, are correct and complete in all
material respects, and are consistent with the books and records of the
Business.
4.8. EVENTS SUBSEQUENT TO OCTOBER 31, 1997. Since October 31, 1997, there
-------------------------------------
has not been any change in the business, financial condition, operations or
results of operations of the Target, the INTOOL Subsidiary or the INTOOL
Divisions. Without limiting the generality of the foregoing, except as set
forth on (S)4.8 of the Disclosure Schedule, since October 31, 1997:
4.8.1. one of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has sold, leased, transferred, or assigned any of its assets, tangible
or intangible, other than for a fair consideration in the Ordinary Course of
Business;
4.8.2. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has entered into any agreement, contract, lease, or license (or group
of related agreements, which for the purposes of this Agreement, shall mean any
master agreement under which there are subsequent schedules, or blanket
agreements under which there are subsequent releases) either involving more than
$100,000 or outside the Ordinary Course of Business;
4.8.3. no party (including the Target, the INTOOL Subsidiary and the
INTOOL Divisions) has accelerated, terminated, modified, or canceled any
agreement, contract, lease, or license (or group of related agreements)
involving more than $100,000 to which any of the Target, the INTOOL Subsidiary
or the INTOOL Divisions is a party or by which any of them is bound;
4.8.4. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has imposed or permitted to exist any Security Interest outside the
Ordinary Course of Business upon any of its assets, tangible or intangible;
4.8.5. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has made any capital expenditure (or series of related capital
expenditures) either involving more than $250,000 or outside the Ordinary Course
of Business;
4.8.6. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has made any capital investment in, any loan to, or any acquisition of
the securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions);
4.8.7. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has issued any note, bond, or other debt security or created,
incurred, assumed, or guaranteed any indebtedness for borrowed money or
capitalized lease obligation;
-21-
4.8.8. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has delayed or postponed the payment of accounts payable or other
Liabilities for any period exceeding that of the Ordinary Course of Business;
4.8.9. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has canceled, compromised, waived, or released any right or claim (or
series of related rights and claims) against third parties outside the Ordinary
Course of Business;
4.8.10. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has granted any license or sublicense of any rights under or with
respect to any Intellectual Property;
4.8.11. there has been no change made or authorized in the charter or
bylaws of any of the Target, the INTOOL Subsidiary and the Affiliates of the
Seller that operate the INTOOL Divisions;
4.8.12. neither the Target nor the INTOOL Subsidiary has issued, sold,
or otherwise disposed of any of its capital stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its capital stock;
4.8.13. neither the Target nor the INTOOL Subsidiary has declared, set
aside, or paid any dividend or made any distribution with respect to its capital
stock (whether in cash or in kind) or redeemed, purchased, or otherwise acquired
any of its capital stock;
4.8.14. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has experienced any damage, destruction, or loss (whether or not
covered by insurance) to its property, which singly exceeds $50,000;
4.8.15. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has made any loan to, or entered into any other transaction with, any
of its directors, officers, and employees outside the Ordinary Course of
Business;
4.8.16. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;
4.8.17. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has granted any increase in the base or other compensation of any of
its directors, officers, and employees outside the Ordinary Course of Business;
4.8.18. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has adopted, amended, modified, or terminated any bonus, profit-
sharing, incentive, severance, or other plan, contract, or commitment for the
benefit of any of its directors, officers, and employees (or taken any such
action with respect to any other Employee Benefit Plan) outside the Ordinary
Course of Business;
-22-
4.8.19. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has made any other change in employment terms for any of its
directors, officers, and employees outside the Ordinary Course of Business;
4.8.20. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has made or pledged to make any charitable or other capital
contribution outside the Ordinary Course of Business; and
4.8.21. none of the Target, the INTOOL Subsidiary or the INTOOL
Divisions has committed to any of the foregoing.
4.9. UNDISCLOSED LIABILITIES. To the Seller's Knowledge, the INTOOL
-----------------------
Companies have disclosed all Liabilities in the October Financial Statements
(including any footnotes thereto) and the Most Recent Financial Statements
(including any footnotes thereto) which are required to be reflected in
accordance with GAAP (and, except as stated in such statements, there is no
Basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand against any of the INTOOL
Companies giving rise to any such Liability), except for Liabilities which have
arisen after January 31, 1998, in the Ordinary Course of Business.
4.10. LEGAL COMPLIANCE. Except as set forth in (S)4.10 of the Disclosure
----------------
Schedule, each of the INTOOL Companies has complied in all material respects
with all applicable Laws and Environmental, Health and Safety Laws and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply.
4.11. REAL PROPERTY.
-------------
4.11.1. The INTOOL Companies own or lease all real property necessary
for the conduct of the Business as presently conducted and as presently proposed
to be conducted. Section 4.11 of the Disclosure Schedule lists all real
property used in the Business that any of the INTOOL Companies owns
(collectively, the "OWNED REAL PROPERTY") or leases (the "LEASED REAL PROPERTY")
and indicates the owner or lessor thereof. None of the Target, the INTOOL
Subsidiary or the INTOOL Divisions owns or leases any real property not used in
the Business. With respect to the Owned Real Property, the Target or the INTOOL
Subsidiary has good and marketable title to the parcel of real property, free
and clear of any Encumbrances, except for those of record and Encumbrances that
do not impair the current use, occupancy, value, or the marketability of title
of such property. To the Knowledge of the Seller, there are no pending or
threatened condemnation, eminent domain or similar proceedings relating to any
such property. The Seller has made available to the Buyer a legal description
for each such parcel and correct and complete copies of the leases listed in
(S)4.11 of the Disclosure Schedule and a written summary setting forth the terms
and conditions (to the Seller's Knowledge) of each oral lease (including the
lease pursuant to which the INTOOL Subsidiary leases real property to The Xxxx
Superior Co.). With respect to each lease listed in (S)4.11 of the Disclosure
Schedule (the "ASSIGNED LEASES"), the lease or sublease is legal, valid,
binding, enforceable, and in full force and effect.
-23-
4.11.1.1. There are no existing defaults under any Assigned
Leases and none of the INTOOL Companies has received any notice from any lessor
under any of the Assigned Leases that any of the INTOOL Companies is currently
in material default under any of the Assigned Leases. There are no facts,
circumstances, conditions, or events which, but for notice or lapse of time, or
both, would constitute or result in a material default; nor has any of the
INTOOL Companies any reason to believe that there is likely to be a default with
respect to any of its respective obligations or Liabilities under any of the
Assigned Leases.
4.11.1.2. To the Knowledge of the Seller, the buildings
(including the roof) and building mechanical systems such as electrical,
mechanical, heating and air conditioning systems for each of the Owned Real
Property and Leased Real Property sites are in good operating condition and
repair, normal wear and tear excepted, and there are no defects in the
structural components comprising such buildings and building mechanical systems
located thereon or therein.
4.11.1.3. None of the IN TOOL Companies has entered into or
undertaken any material written or oral commitments, arrangements, agreements or
obligations of any kind affecting the Owned Real Property or the Leased Real
Property that are not reflected in the documents delivered to the Buyer.
4.11.1.4. No Person has any lawful right of possession to or
any option, right of first refusal to lease or purchase all or any portion of
any Owned Real Property except for: (i) the Buyer's right of possession of the
property at Closing; and (ii) the holders of any Encumbrances of record.
4.11.1.5. There is no commitment to or agreement with any
Governmental Body affecting any portion of any of the Owned Real Property or
Leased Real Property except for Encumbrances of record.
4.12. INTELLECTUAL PROPERTY.
---------------------
4.12.1. The INTOOL Companies own or have the exclusive right to use
pursuant to license, sublicense, agreement, or permission all Intellectual
Property necessary for the conduct of the Business as presently conducted. Each
of the INTOOL Companies has good and marketable title to the Intellectual
Property owned by it, free and clear of all Encumbrances. Each item of
Intellectual Property owned or used by any of the INTOOL Companies immediately
prior to the Closing will be owned or available for use by the Target or one of
the Affiliates of the Buyer that purchases the Transferred Assets, on identical
terms and conditions immediately subsequent to the Closing hereunder. Each of
the INTOOL Companies has taken all usual and customary action to maintain and
protect each item of Intellectual Property that it owns or uses.
4.12.2. To the Knowledge of the Seller (which for the purpose of all
of (S)4.12, shall include the Knowledge of Xxxxx Xxxxxx and Xxxxx Xxxxxxxxx),
except as set forth in (S)4.12.2 of the Disclosure Schedule, none of the INTOOL
Companies has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of third
-24-
parties which conflict has not been resolved without restriction or continuing
Liability on the part of the INTOOL Companies. Within the last three years,
except as set forth in (S)4.12.2 of the Disclosure Schedule, none of the
individuals listed in Exhibit 1.48, Xxxxx Xxxxxx or Xxxxx Xxxxxxxxx, has ever
received any charge, complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation (including any claim
that any of the INTOOL Companies must license or refrain from using any
Intellectual Property rights of any third party). To the Knowledge of the Seller
and except as set forth in (S)4.12.2 of the Disclosure Schedule, no third party
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of any of the Target or the
INTOOL Divisions.
4.12.3. Section 4.12.3 of the Disclosure Schedule identifies each
patent or registration that has been issued to any of the INTOOL Companies with
respect to any of its Intellectual Property, identifies each pending patent
application or application for registration which any of the INTOOL Companies
has made with respect to any of its Intellectual Property, and identifies each
license, agreement, or other permission which any of the INTOOL Companies has
granted to any third party with respect to any of its Intellectual Property
(together with any exceptions). The Seller has made available to the Buyer
correct and complete copies of all such patents, registrations, and applications
(as amended to date) and has made available to the Buyer correct and complete
copies of all other written documentation evidencing ownership and prosecution
(if applicable) of each such item. Section 4.12.3 of the Disclosure Schedule
also identifies each registered trademark, trade name, and service xxxx, and, to
the Seller's Knowledge, each unregistered trademark, trade name and service
xxxx, used in connection with the Business. With respect to each item of
Intellectual Property required to be identified in (S)4.12.3 of the Disclosure
Schedule, except as stated therein:
4.12.3.1. the relevant INTOOL Company possesses all right,
title, and interest in and to the item, free and clear of any Encumbrance;
4.12.3.2. the item is not subject to any outstanding
injunction, judgment, order, decree, ruling, or charge;
4.12.3.3. no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of the Seller, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
4.12.3.4. none of the INTOOL Companies has any current
agreement (or agreement with continuing Liability) to indemnify any Person for
or against any interference, infringement, misappropriation, or other conflict
with respect to the item, which indemnification has been expressly agreed.
4.12.4. Except for off-the-shelf software costing less than $2,000,
(S)4.12.4 of the Disclosure Schedule identifies each item of Intellectual
Property that any third party owns and that any of the INTOOL Companies uses
pursuant to license, sublicense, agreement, or permission. The Seller has made
available to the Buyer correct and complete copies of all such licenses,
sublicenses, agreements, and permissions (as amended to date). With respect to
each item of
-25-
Intellectual Property required to be identified in (S)4.12.4 of the Disclosure
Schedule, except as stated therein:
4.12.4.1. the license, sublicense, agreement, or permission
covering the item is legal, valid, binding, enforceable, and in full force and
effect;
4.12.4.2. the license, sublicense, agreement, or permission
will not cease to be legal, valid, binding, enforceable, and in full force and
effect on identical terms as a result of the Closing;
4.12.4.3. no party to the license, sublicense, agreement, or
permission is in breach or default, and to the Seller's Knowledge, no event has
occurred which with notice or lapse of time would constitute a breach or default
or permit termination, modification, or acceleration thereunder;
4.12.4.4. no party to the license, sublicense, agreement, or
permission has repudiated any provision thereof;
4.12.4.5. with respect to each sublicense, the
representations and warranties set forth in subsections (1) through (4) above
are true and correct with respect to the underlying license;
4.12.4.6. no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand is pending or, to the
Knowledge of the Seller, is threatened which challenges the legality, validity,
or enforceability of the underlying item of Intellectual Property; and
4.12.4.7. none of the INTOOL Companies has granted any
sublicense or similar right with respect to the license, sublicense, agreement,
or permission.
4.12.5. Except as set forth in (S)4.12.5 of the Disclosure Schedule,
to the Knowledge of the Seller, none of the Target, the INTOOL Subsidiary or the
INTOOL Divisions will interfere with, infringe upon, misappropriate, or
otherwise come into conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its business as presently
conducted.
4.13. TANGIBLE ASSETS. The INTOOL Companies own or lease all buildings,
---------------
machinery, equipment, and other tangible assets necessary for the conduct of the
Business as presently conducted. Each of the INTOOL Companies has good and
marketable title to such assets owned by it, free and clear of all Encumbrances
(except for Encumbrances of mechanics or materialmen imposed by Law arising or
incurred in the Ordinary Course of Business for sums not yet delinquent). Each
such tangible asset has been maintained in accordance with normal industry
practice. No building, piece of machinery or equipment, or other tangible asset
owned or used by any of the INTOOL Companies immediately prior to the Closing
will cease to be owned or available for use by the Target, the INTOOL
Subsidiary, or one of the Affiliates of the Buyer that
-26-
purchases the Transferred Assets, on identical terms and conditions immediately
subsequent to the Closing hereunder.
4.14. INVENTORY. The inventory of each of the Target and the INTOOL
---------
Divisions reflected in the October Financial Statements does not include any
items which are obsolete or not useable or salable in the Ordinary Course of
Business, except those items the values of which have been written down to net
realizable value or with respect to which adequate reserves have been provided
for in the October Financial Statements.
4.15. CONTRACTS. Section 4.15 of the Disclosure Schedule lists the
---------
following contracts and other agreements to which any of the INTOOL Companies is
a party:
4.15.1. any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease payments in
excess of $50,000 per annum;
4.15.2. any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the performance
of which will extend over a period of more than one year, result in a loss to
any of the Target, the INTOOL Subsidiary or the INTOOL Divisions in excess of
$10,000 or is not in the Ordinary Course of Business, or involve consideration
in excess of $250,000;
4.15.3. any agreement concerning a partnership or joint venture;
4.15.4. any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, in excess of $200,000 or under which
it has imposed a Security Interest on any of its assets, tangible or intangible;
4.15.5. any agreement concerning confidentiality entered into outside
the Ordinary Course of Business, or non-competition;
4.16.6. any agreement with any of the Seller and its Affiliates
(including the Target, the INTOOL Subsidiary and the INTOOL Divisions) that will
not be canceled at Closing;
4.15.7. any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers, and employees;
4.15.8. any agreement for the employment of any individual on a full-
time, part-time, consulting, or other basis providing annual compensation in
excess of $50,000 or providing severance benefits;
4.15.9. any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees outside the Ordinary Course of
Business;
-27-
4.15.10. any agreement outside the Ordinary Course of Business related
to any bank account or credit facility, letter of credit, payment or performance
bond, or other surety relationship;
4.15.11. any agreement under which the consequences of a default
(including the failure to obtain consent to assignment or a change in control)
or termination could have an adverse effect on the business, financial
condition, operations or results of operations of the Target, the INTOOL
Subsidiary or the INTOOL Divisions;
4.15.12. any foreign exchange contract; or
4.15.13. any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $200,000 or is not in
the Ordinary Course of Business.
The Seller has made available to the Buyer a correct and complete copy of
each written agreement listed in (S)4.15 of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions (to the
Seller's Knowledge) of each oral agreement referred to in (S)4.15 of the
Disclosure Schedule. With respect to each such agreement, to the Seller's
Knowledge: (A) the agreement is legal, valid, binding, enforceable, and in full
force and effect; (B) the agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) no party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any provision
of the agreement. Section 4.15 of the Disclosure Schedule also lists all
services provided by the Seller or its Affiliates to the INTOOL Companies.
4.16. POWERS OF ATTORNEY. Except as set forth in (S)4.16 of the Disclosure
------------------
Schedule, there are no outstanding powers of attorney outside the Ordinary
Course of Business executed by or on behalf of any of the Target, the INTOOL
Subsidiary or the INTOOL Divisions.
4.17. INSURANCE. The Seller has delivered to the Buyer summaries of each
---------
insurance policy (including all policies providing property, casualty,
liability, and workers' compensation coverage and bond and surety arrangements)
to which any of the INTOOL Companies is currently a party, a named insured, or
otherwise has beneficial interest. The Seller has made available to the Buyer
summaries of insurance policies to which, to the Seller's Knowledge (which for
the purposes of this (S)4.17, shall include Xxxx Xxxxxx) any of the Target, the
INTOOL Subsidiary or the INTOOL Divisions is a beneficiary by virtue of Dresser
Industries, Inc. being a party, a named insured, or a holder of a beneficial
interest. With respect to each such insurance policy, to the Seller's Knowledge:
(A) the policy is legal, valid, binding, enforceable, and in full force and
effect (subject to applicable bankruptcy, insolvency and similar Laws affecting
creditors' rights generally and subject as to enforceability to general
principles of equity); (B) except as set forth in (S)4.17 of the Disclosure
Schedule, the policy will continue to be legal, valid, binding, enforceable, and
in full force and effect on identical terms following the consummation of the
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transactions contemplated hereby unless canceled pursuant to (S)7.8.1 hereof
(subject to applicable bankruptcy, insolvency and similar Laws affecting
creditors' rights generally and subject as to enforceability to general
principles of equity); (C) no "named insured" to the policy is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. Each of the INTOOL Companies has been covered during the
past five years by insurance in scope and amount customary and reasonable for
the businesses in which it has engaged during the aforementioned period. Section
4.17 of the Disclosure Schedule describes any self-insurance arrangements in
effect since July 17, 1992, affecting liability or workers' compensation
policies or programs related to any of the INTOOL Companies.
4.18. LITIGATION. Section 4.18 of the Disclosure Schedule sets forth each
----------
instance in which any of the INTOOL Companies (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or has
been informed in writing or, to the Seller's Knowledge, is threatened to be made
a party to any action, suit, proceeding, hearing, or investigation of, in, or
before any Governmental Body. Except for the items described in (S)9.2.4.2, to
the Seller's Knowledge, there is no Basis for any action, suit, proceeding,
hearing, or investigation which could result in a material adverse change in the
business, financial condition, operations or results of operation of the Target,
the INTOOL Subsidiary or the INTOOL Divisions.
4.19. PRODUCT WARRANTY. To the Seller's Knowledge, there are no defects
----------------
in the products or parts sold by the INTOOL Companies which could result in the
failure of any such products or parts to satisfy the warranty applicable to
their sale. No product manufactured, sold, leased, or delivered by any of the
INTOOL Companies is subject to any guaranty, warranty, or other indemnity beyond
the standard terms and conditions of sale or lease applicable to such sale or
lease. Section 4.19 of the Disclosure Schedule includes copies of the standard
terms and conditions of sale or lease for each of the Target and the INTOOL
Divisions (containing applicable guaranty, warranty, and indemnity provisions).
4.20. PRODUCT LIABILITY. Except as set forth in Schedules 4.18 and 4.20,
-----------------
to the knowledge of Xxxxxx X. Xxxxx, neither the Target nor any INTOOL Division
has any Liability or Environmental Liability for personal injuries (including
death) resulting from the use of products manufactured or sold by the Target and
the INTOOL Divisions which, due to defects in materials and workmanship, failed
to function in conformity with applicable contractual commitments, including
express warranties (and there is no Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim or demand
against any of the INTOOL Companies giving rise to any such Liability or
Environmental Liability). For purposes of this Section 4.20, the definition of
"Liability" in Section 1.51 shall be deemed to omit the words "whether known or
unknown" from the parenthetical therein.
4.21. EMPLOYEES. To the Knowledge of the Seller, no executive, key
---------
employee, or group of employees has given written notice to terminate employment
with any of the INTOOL
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Companies, within 60 days after the Closing Date. Except as set forth in (S)4.21
of the Disclosure Schedule, none of the INTOOL Companies is a party to or bound
by any collective bargaining agreement, nor in the last three years has any of
them experienced any strikes, material grievances, claims of unfair labor
practices, or other collective bargaining disputes. Within the last three years,
none of the INTOOL Companies has committed any unfair labor practice in
violation of Law nor is any INTOOL Company currently under any order or judgment
of a Governmental Body to remedy an unfair labor practice. The Seller has no
Knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to employees of the Target or the
INTOOL Divisions.
4.22. EMPLOYEE BENEFITS.
-----------------
4.22.1. Section 4.22 of the Disclosure Schedule lists each Employee
Benefit Plan.
4.22.1.1. Each Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all material
respects with the applicable requirements of ERISA, the Code, and other
applicable Laws.
4.22.1.2. All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's, and Summary Plan
Descriptions) have been filed or distributed with respect to each Employee
Benefit Plan. To the extent applicable, the requirements of Part 6 of Subtitle B
of Title I of ERISA and (S)4980B of the Code have been met with respect to each
Employee Benefit Plan which is an Employee Welfare Benefit Plan.
4.22.1.3. All premiums or other payments for all periods
ending on or before the Closing Date have been paid or accrued with respect to
each Employee Benefit Plan that is an Employee Welfare Benefit Plan.
4.22.1.4. The terms of all Employee Benefit Plans that are
Employee Pension Benefit Plans intended to qualify under (S)401(a) of the Code
(i) have been determined by the Internal Revenue Service to qualify under
(S)401(a) of the Code, or (ii) have not had the applicable remedial amendment
periods under (S)401(b) of the Code expire prior to the Closing Date. The Seller
has no Knowledge of any event or circumstance that could reasonably be expected
to cause the Internal Revenue Service to disqualify any Employee Pension Benefit
Plan.
4.22.1.5. No Employee Benefit Plan which is an Employee
Pension Benefit Plan had an accumulated funding deficiency as defined in (S)302
of ERISA and (S)412 of the Code, whether or not waived, as of the last day of
the most recent fiscal year of the Employee Pension Benefit Plan ending on or
prior to the Closing Date.
4.22.1.6. The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary plan descriptions, the most
recent determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
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such Employee Benefit Plan for which the Buyer (or its Affiliates that purchase
assets of the INTOOL Divisions) has Liability.
4.22.1.7. To the Seller's Knowledge, the Global Industrial
Technologies, Inc. Deferred Saving Plan offered by the Target to its hourly
employees in Houston, Texas, and Cleveland, Ohio, is voluntarily offered by the
Target, is not part of a negotiated collective bargaining agreement and may be
withdrawn at any time by the Target.
4.22.2. With respect to each Employee Benefit Plan that any of the
INTOOL Companies and the controlled group of corporations (determined in
accordance with (S)414 of the Code) which includes the INTOOL Companies
maintains or ever has maintained or to which any of them contributes, ever has
contributed, or ever has been required to contribute and with respect to the
period of time for which any applicable statute of limitation is still in effect
on the Closing Date:
4.22.2.1. The PBGC has not instituted proceedings to
terminate any Employee Pension Benefit Plan that is maintained or contributed to
by any INTOOL Company or any entity that is treated as a single employer with
any INTOOL Company under (S)414 of the Code and no condition exists that
presents a material risk that such proceedings will be instituted. During the
period for which any applicable statute of limitations is still in effect on the
Closing Date, no "reportable event" within the meaning of (S)4043(c) of ERISA
with respect to which the 30-day notice requirement has not been waived by the
PBGC has occurred with respect to any Employee Benefit Plan that is an Employee
Pension Benefit Plan.
4.22.2.2. To the Knowledge of the Seller, no Person has
engaged in a transaction that could reasonably be expected to result in the
imposition upon any of the INTOOL Companies (or upon any Person with respect to
which any of the INTOOL Companies is, or may be required to, indemnify) of a
civil penalty under (S)409 or (S)502(i) of ERISA or a tax under (S)4975 of the
Code with respect to any Employee Benefit Plan. No action, suit, proceeding,
hearing, or investigation with respect to the administration or the investment
of the assets of any such Employee Benefit Plan (other than routine claims for
benefits) is pending or, to the Knowledge of the Seller, threatened. The Seller
has no Knowledge of any Basis for any such action, suit, proceeding, hearing, or
investigation.
4.22.2.3. None of the INTOOL Companies has incurred, and
the Seller has no reason to expect that any of the INTOOL Companies will incur,
any Liability to the PBGC (other than PBGC premium payments) or otherwise under
Title IV of ERISA with respect to any such Employee Benefit Plan which is an
Employee Pension Benefit Plan.
4.22.3. None of the INTOOL Companies or any Person that is treated
as a single employer together with any INTOOL Company under (S)414 of the Code
has, during the six year period ending on the Closing Date, ever maintained, had
an obligation to contribute to, contributed to, or incurred any Liability with
respect to a plan that is both a multiemployer plan (as defined in (S)3(37) of
ERISA) and a pension benefit plan (as defined in (S)3(2) of ERISA) or a plan
described in (S)4063(a) of ERISA.
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4.22.4. Section 4.22.4 of the Disclosure Schedule is a true,
correct and complete list of the name, date of birth, date of employment
commencement and salary or wage rate of each employee of the INTOOL Divisions.
4.23. GUARANTIES. Except as set forth in (S)4.23 of the Disclosure
----------
Schedule, none of the INTOOL Companies is a guarantor or otherwise is liable for
any Liability or obligation (including indebtedness) of any other Person outside
the Ordinary Course of Business.
4.24. ENVIRONMENT, HEALTH AND SAFETY.
------------------------------
4.24.1. Each of the INTOOL Companies is in compliance with all
applicable Environmental, Health and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence, to the
Seller's Knowledge, except as set forth in (S)4.24.1 of the Disclosure Schedule,
since July 17, 1992, each of the INTOOL Companies has obtained and been in
compliance with all of the terms and conditions of all Permits which are
required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all applicable Environmental, Health and
Safety Laws.
4.24.2. None of the INTOOL Companies has any Environmental
Liability, and none of the INTOOL Companies has handled, Discharged or Disposed
of any Regulated Material, arranged for the Discharge or Disposal of any
Regulated Material, exposed any employee or other individual to any Regulated
Material or condition, or owned, leased, operated or used any on-site or off-
site property or facility in any manner that could, to the Seller's Knowledge,
except as set forth in (S)4.24.2 of the Disclosure Schedule, form the Basis for
any present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand or notice against any of the INTOOL Companies giving
rise to any Environmental Liability.
4.24.3. Except as set forth in (S)4.24.3 of the Disclosure Schedule,
there is no material Environmental Liability for any real property owned,
leased, operated or used by the Target, the INTOOL Subsidiary or the INTOOL
Divisions at any time or for any condition of such real property, or any
operating fact, action or event at such real property.
4.25. NO SENSITIVE TRANSACTIONS. To the Seller's Knowledge, none of the
-------------------------
INTOOL Companies or any of their respective officers, employees, agents, or
other Persons acting on behalf of any INTOOL Company has directly or indirectly
used funds or other assets for (a) contributions, gifts, entertainments, or
other expenses relating to political activity other than as specifically
permitted by applicable written Law; (b) payments to or for the benefit of any
officials or employees of any Governmental Body, either foreign or domestic,
other than payments required by applicable written Law; or (c) establishment or
maintenance of a secret or unrecorded fund or account. To the Seller's
Knowledge, there have been no false, fictitious or materially misleading entries
made in the books or records of the INTOOL Companies.
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4.26. BANK ACCOUNTS. Section 4.26 of the Disclosure Schedule contains a
-------------
true and correct list of all bank accounts and lock boxes used by, held by or in
the name of the Target, the INTOOL Subsidiary or any INTOOL Division.
5. TAX MATTERS.
-----------
5.1 REPRESENTATIONS REGARDING TAX MATTERS. The Seller represents and
-------------------------------------
warrants that the statements contained in this (S)5.1 are correct and complete
as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this (S)5.1), except as
set forth in (S)5.1 of the Disclosure Schedule.
5.1.1. All material Tax Returns required to be filed on or prior
to the Closing Date by or on behalf of the INTOOL Companies have been filed in
accordance with all applicable Laws, and all Taxes owed by the INTOOL Companies
which are due and payable on or before the Closing Date (whether or not shown to
be due on such Tax Returns) have been or will be paid prior to the Closing Date.
Such Tax Returns are true, correct and complete in all material respects. There
are no pending claims by any Governmental Body in a jurisdiction where Tax
Returns are not filed by or on behalf of the INTOOL Companies that Tax Returns
should have been so filed.
5.1.2. No deficiency or adjustment in respect of any Taxes
claimed by any Governmental Body against the INTOOL Companies remains unpaid and
no claim or assessment for any such deficiency or adjustment is pending except
for Taxes being contested in good faith as set forth in (S)5.1.2 of the
Disclosure Schedule.
5.1.3. There are no Encumbrances on any of the assets of the
INTOOL Companies that arose in connection with any failure (or alleged failure)
to pay any Taxes other than for Taxes which are not yet delinquent.
5.1.4. Effective as of the Closing Date, all tax-sharing
agreements or similar arrangements involving Taxes among the INTOOL Companies,
on the one hand, and the Seller and its Affiliates (including the Target, the
INTOOL Subsidiary and the INTOOL Divisions), on the other hand, will be
terminated.
5.1.5. Except as set forth in (S)5.1.5 of the Disclosure
Schedule, the INTOOL Companies have established adequate accruals and reserves
on the Financial Statements and the Peg Net Asset Statement for Taxes of the
INTOOL Companies relating to periods (or portions thereof) covered thereby, and
have or will establish adequate accruals and reserves for Taxes relating to
subsequent periods through the Closing, and such accruals and reserves for
deferred foreign Taxes are in accordance with generally accepted accounting
principles in the respective country of incorporation.
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5.1.6. Except as set forth in (S)5.1.6 of the Disclosure Schedule,
none of the INTOOL Companies is currently under examination by the Internal
Revenue Service or any Governmental Body with respect to Taxes. None of the
INTOOL Companies is currently under audit by any Governmental Body, nor has any
INTOOL Company received notice of a proposed audit from any Governmental Body.
No waivers of statute of limitations governing any Taxes have been given to or
requested by any Governmental Body with respect to any of the INTOOL Companies.
5.1.7. There is no current dispute or claim concerning any Liability
relating to Taxes of any of the INTOOL Companies which was claimed or raised by
any Governmental Body in writing.
5.1.8. Section 5.1.8 of the Disclosure Schedule lists all federal,
state, local and foreign income, franchise, and sales Tax Returns filed with
respect to the Target, the INTOOL Subsidiary and the INTOOL Divisions for
taxable periods ended on or after December 31, 1994. The Seller has made
available to the Buyer correct and complete copies of all federal and state
income and franchise Tax Returns for taxable periods ended on or after December
31, 1994 (with respect to consolidated, combined or unitary or similar Tax
Returns, the Seller has made available only the portion of such Tax Returns
related to the INTOOL Divisions).
5.2 TAX INDEMNITY.
-------------
5.2.1. The Seller agrees to defend, indemnify and hold each member
of Buyer's Indemnified Group harmless from and against the entirety of any
Adverse Consequences that any of Buyer's Indemnified Group may suffer resulting
from, arising out of or relating to: (i) any Taxes relating to the INTOOL
Companies for any taxable period ending on or before the Closing Date, but only
to the extent such Taxes exceed the reserve or accrual for Taxes included in the
Final Closing Net Asset Statement (provided that in the event that the Adverse
Consequences suffered by Buyer's Indemnified Group with respect to such taxable
periods ending on or before the Closing Date exceed the total amount reserved or
accrued for Taxes in the Final Closing Net Asset Statement, then Buyer's
Indemnified Group may exercise all rights and remedies available to it under
this (S)5.2, even if the particular Tax for which Buyer's Indemnified Group
seeks indemnification is not in excess of the amount reserved or accrued for
such particular Tax on the Final Closing Net Asset Statement, and provided
further that the Seller shall have no Liability for any Taxes of the INTOOL
Companies that arise as a result of any actions taken, or caused to be taken, by
the Buyer after the Closing but on the Closing Date (subject to (ii) immediately
following this subparagraph (i))), and (ii) any income, franchise or similar
taxes arising as a result of any election under Section 338(h)(10) of the
Internal Revenue Code of 1986, as amended, or any comparable or resulting
election under state law filed by both the Buyer and the Seller. The Seller
shall be entitled to all refunds of Taxes relating to the INTOOL Companies for
all periods ending on or before the Closing Date.
5.2.2. Any Liability for or refund of Taxes for a taxable period
beginning before the Closing Date and ending after the Closing Date (a "STRADDLE
PERIOD") with respect to the INTOOL Companies shall be apportioned between the
Seller and the Buyer based on the actual
-34-
operations of the INTOOL Companies during that portion of such period ending on
the Closing Date (the "PRE-CLOSING STRADDLE PERIOD") and the portion of such
period beginning on the date following the Closing Date (the "POST-CLOSING
STRADDLE PERIOD"). For purposes of Sections 5.2.1, 5.2.2. 5.2.3, 5.2.4, and 5.5,
each of such periods shall be deemed to be a separate taxable period. Real
estate taxes and personal property taxes shall be prorated on a per diem basis.
5.2.3. The Seller agrees to defend, indemnify and hold harmless each
member of Buyer's Indemnified Group from and against the entirety of any Adverse
Consequences that any of Buyer's Indemnified Group may suffer resulting from,
arising out of, relating to, in the nature of, or caused by any Liability of any
of the Target, the INTOOL Subsidiary, and the Buyer's Affiliates with regard to
the INTOOL Divisions for the unpaid Taxes of any Person (other than Buyer and
its Affiliates) under Treas. Reg. (S)1.1502-6 (or any similar provision of Law),
as a transferee or successor, by contract, or otherwise, for any taxable period
ending on or before the Closing Date, or for any transferee liability imposed
upon the Buyer or its Affiliates under Treas. Reg. 1.1502-6 for unpaid Taxes of
the Seller or its Affiliates, for periods after the Closing Date.
5.2.4. The Buyer shall be liable for, and shall indemnify, defend
and hold harmless Seller's Indemnified Group from and against (i) any Taxes
relating to the Target, the INTOOL Subsidiary and the INTOOL Divisions for any
Taxable period beginning after the Closing Date and (ii) any Taxes relating to
the INTOOL Companies for any Taxable period ending on or before the Closing Date
but only to the extent such Taxes are included in a reserve or accrual for Taxes
included in the Final Closing Net Asset Statement. The Buyer shall be entitled
to all refunds of Taxes relating to the INTOOL Companies for all periods ending
after the Closing Date.
5.2.5. Each of the Tax indemnifications contained herein shall
survive the Closing and shall remain in full force and effect until the
applicable statute of limitations has expired with respect to each of the Taxes.
5.3 TAX RETURN FILINGS FOR STRADDLE PERIODS.
---------------------------------------
5.3.1. Anything herein to the contrary notwithstanding, the Buyer
shall prepare (in a manner consistent with prior practice unless the Buyer and
the Seller conclude that there is no reasonable basis for any such position or
that a change is necessary to comply with a change in the Law enacted since the
prior filing date) and file all Straddle Period Tax Returns and shall pay all
Taxes due with respect to the Target; provided, however, that the Seller shall
pay the Buyer the amount of Taxes calculated as due for the Pre-Closing Straddle
Period to the extent that they exceed the reserve or accrual for Taxes which is
included in the Final Closing Net Asset Statement.
5.3.2. At least thirty days prior to the due date for the payment of
Taxes for a Straddle Period, the Buyer shall present the Seller with a schedule
detailing its computation of Taxes of the Target for the applicable Straddle
Period together with a copy of the relevant Tax Return and any supporting
documentation reasonably requested by the Seller. The Seller shall
-35-
have twenty days to review and approve such computation and to object to any of
the Buyer's computations. In the event that the Seller does not dispute the
Buyer's calculations, at least ten days before the applicable Tax Return is due,
the Seller shall pay the Buyer the amount of the Straddle Period Tax as computed
by the Buyer except that the Seller shall have no Liability to pay such Pre-
Closing Straddle Period Tax to the extent that a Liability in respect of such
Taxes is included in the Final Closing Net Asset Statement. In making the
computation, the Seller shall receive full credit for any estimated tax payments
or other prepayments or credits against Taxes made by the Seller or its
Affiliates (including the Target, the INTOOL Subsidiary and the INTOOL
Divisions) on or before the Closing Date. If the Seller disputes the Buyer's
computation of the Straddle Period Tax, the Buyer shall pay the disputed amount
of Taxes, in the first instance. Whether any such disputed amount was in fact
due from the Seller shall be resolved by the Accounting Arbitrator in accordance
with the procedures set out in (S)2.5.5 which shall be deemed modified as
necessary to accommodate the resolution of the dispute between the Buyer and the
Seller. If upon such resolution it is determined that any of such disputed
amount was payable to the Buyer, then the Seller shall pay to the Buyer such
amount, plus interest at the Interest Rate.
5.3.3. Anything herein to the contrary notwithstanding, the Buyer
shall provide the Seller with a copy of the INTOOL Subsidiary's Tax Return
prepared and filed by the sole third party shareholder of the INTOOL Subsidiary.
The Buyer shall pay the sole third party shareholder one-half of the Taxes due
with respect to the INTOOL Subsidiary; provided, however, that the Seller shall
pay the Buyer the amount of Taxes calculated as due for the Pre-Closing Straddle
Period to the extent that they exceed the reserve or accrual for such Taxes
which is included in the Final Closing Net Asset Statement.
5.4 SECTION 338 ELECTIONS. If requested by the Buyer, the Buyer and the
---------------------
Seller shall join in an election to have the provisions of (S)338(h)(10) of the
Internal Revenue Code and similar provisions of state law ("SECTION 338
ELECTIONS") apply to the acquisition of the Target and, where permitted by law,
the INTOOL Subsidiary. The Buyer shall be responsible for and control the
preparation and filing of such elections, provided that the Seller shall be
entitled to review and approve such election. The allocation of the Purchase
Price among the assets of the Target, the INTOOL Subsidiary, the INTOOL
Divisions, and the Intellectual Property of the Business held by the Seller or
its Affiliates, shall be as set forth on Schedule 5.4 hereto. Any changes in
the Purchase Price resulting from the Purchase Price Adjustment shall be
allocated among the assets of the Target, the INTOOL Subsidiary and the INTOOL
Divisions on a prorated basis, unless readily allocable to a particular asset or
as otherwise required by Law. Subject to the Seller's right to review and
approve, the Seller shall execute and deliver to the Buyer such documents or
forms (including Section 338 Forms, as defined below) as the Buyer shall
reasonably request or as are required by applicable Law for an effective Section
338 Election. In the event that the Seller does not approve the Buyer's Section
338 Forms, the Buyer and the Seller shall use their best efforts to reach
agreement on changes to such Forms. If such an agreement cannot be reached, the
Buyer and the Seller shall nevertheless execute and submit the Section 338
Forms, provided that the Forms shall be silent on the allocation of the Purchase
Price or other items on which agreement cannot be reached. "Section 338 Forms"
shall mean all returns, documents, statements, and other forms that are required
to be submitted to any federal, state, county or other local taxing authority in
connection with a Section 338 Election, including, without limitation, any
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"statement of Section 338 Election" and IRS Form 8023 (together with any
schedules or attachments thereto) that are required pursuant to Treasury
Regulations.
5.5 TAX RETURN FILINGS FOR PRE-CLOSING PERIODS. The Seller shall prepare
------------------------------------------
and submit to the Buyer, together with a check in payment of all Taxes shown as
due thereon (reduced to the extent a reserve or accrual in respect of such Taxes
was included on the Final Closing Net Asset Statement) for its review and
approval not later than 30 days prior to the due date for the filing thereof,
all income Tax Returns for the Target and the INTOOL Subsidiary that are
required to be filed by the Target or the INTOOL Company on a separate basis
after the Closing Date for any taxable period ending on or before the Closing
Date. Such Tax Returns shall be on a basis consistent with the last previous
Tax Returns filed or prepared in respect of the Target and the INTOOL
Subsidiary, unless the Seller and the Buyer conclude that there is no reasonable
basis for such position or that such change is necessary to comply with a change
in the Law enacted since the prior filing date. After reviewing such Tax
Returns, the Buyer shall promptly file each such Tax Return and pay all Taxes
shown as due thereon, and the Buyer shall send the Seller copies of
documentation showing such filing and payment. To the extent that the Target or
the INTOOL Subsidiary is required to file a Tax Return for a Pre-Closing
Straddle Period which is part of a consolidated, combined, unitary or similar
Tax Return which includes the Seller or any Affiliates of the Seller, the Seller
shall prepare and submit to the Buyer not later than 30 days prior to the due
date for the filing thereof, a calculation of the Tax Liability of the Target
and the INTOOL Subsidiary which are included therein. After reviewing such
computation, the Buyer shall pay to the Seller the amount of the Taxes reflected
in such computation, but such payment shall not exceed the amount reflected as a
reserve for such Taxes which was included in the Final Closing Net Asset
Statement.
5.6 WAGE REPORTING. Pursuant to the alternative procedure prescribed by
--------------
Section 5 of Revenue Procedure 96-60, at the Buyer's option: (i) the Buyer will
assume the Seller's entire obligation to prepare, file and furnish Forms W-2 for
the year ended December 31, 1998, with respect to such employees, (ii) the
Seller and its Affiliates shall be relieved of any obligation to provide Forms
W-2 to such persons for such year, and (iii) the Seller and the Buyer will work
in good faith to adopt similar procedures under applicable state or local Laws.
The Parties shall cooperate with each other in preparing filings and forms
relating to these procedures, and the Seller shall provide the Buyer with any
information in the Seller's possession which the Buyer needs to satisfy its
obligations under this Section.
5.7 COOPERATION AND EXCHANGE OF INFORMATION.
---------------------------------------
5.7.1. The Seller and the Buyer shall each (i) provide the other
Party with such information and assistance as may be reasonably requested by the
other party in connection with the preparation and filing of any Tax Returns
(including the Buyer's completion of the Seller's federal, state and foreign tax
information packages prepared in a manner consistent with the packages
customarily prepared for periods ending prior to the Closing), any audit or
examination by any taxing authority, any judicial or administrative proceeding,
or any other reasonable business purpose relating to Liability for Taxes with
respect to the INTOOL Companies; (ii) retain for the applicable statute of
limitations period (including any extensions) such material records or
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information as may be relevant to such Tax Returns, audits, examinations or
proceedings; (iii) provide the other Party with reasonable access to, and allow
the other Party to make copies of such records or information, and prior to
disposing of any such records or information allow the other Party the right to
obtain the originals of such records or information; and (iv) provide the other
Party with a copy of any final determination of any audit, examination or
proceeding that affects the amount required to be shown on any Tax Return of the
other Party for any period.
5.7.2 In the case of any audit, examination or other proceeding
with respect to Taxes ("TAX PROCEEDING") for which the Seller is or may be
liable pursuant to this Agreement, the Buyer shall promptly notify the Seller,
and the Seller, at the Seller's expense, shall have the exclusive right to
control the conduct and resolution of such Tax Proceeding; provided, however,
the Seller shall consult with the Buyer with respect to the resolution of any
issue relating to or which reasonably could be expected to adversely affect a
Post-Closing Straddle Period or other Tax period beginning after Closing and the
Seller shall not settle or cause to be settled any issue, or file any amended
return relating to such issues, without the prior written consent of the Buyer
which consent shall not be unreasonably withheld. Except as set forth in the
preceding sentence, the Buyer shall have the right, at its expense, to control
the conduct and resolution of any Tax Proceedings relating to any Taxes for any
taxable period ending after the Closing Date with respect to the INTOOL
Companies; provided, however, the Buyer shall consult with the Seller with
respect to the resolution of any issue relating to or which could affect a
Straddle Period and the Buyer shall not settle or cause to be settled any such
issue, or file any amended return relating to any such issue, without the prior
written consent of the Seller, which consent shall not be unreasonably withheld.
5.8 NO CARRYBACKS. To the extent permitted by Law, the Buyer shall cause
-------------
the INTOOL Divisions to elect not to carry back any net operating losses or
other Tax attributes to Tax periods ending before the Closing Date.
5.9 CONTROLLING LANGUAGE. In the event of a conflict between (S)5 and any
--------------------
other provision of this Agreement, the appropriate provision of (S)5 shall
control.
6. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to the
---------------------
period between the execution of this Agreement and the Closing.
6.1 GENERAL. Each of the Parties will use its reasonable best efforts to
-------
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
(S)8 below).
6.2 NOTICES AND CONSENTS. The Seller will cause each of the INTOOL
--------------------
Companies to give any notices to third parties, and will cause each of the
INTOOL Companies to use its best efforts to obtain any third-party consents
referred to in (S)4.3 above (including the consent of (i) lessors of Leased Real
Property, (ii) vendors or licensors of computer hardware or software,
respectively, and (iii) General Motors and Black & Xxxxxx). Each of the Parties
will (and the
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Seller will cause each of the INTOOL Companies to) give any notices to, make any
filings with, and use its best efforts to obtain any authorizations, consents,
and approvals of Governmental Bodies in connection with the matters referred to
in (S)3.1.2, (S)3.2.2, (S)3.3.2, (S)3.4.2 and (S)4.3 above. The Seller shall
also use best efforts to (i) notify the Texas Natural Resources Conservation
Commission of (a) the change in ownership of the real property described in
Exhibit 6.9.2, and (b) the Seller's retention of Liability with respect to that
real property and (ii) modify the existing Voluntary Cleanup Program application
to list the Seller (or its Affiliate) as sole applicant, and modify the existing
Voluntary Cleanup Agreement to substitute the Seller (or its Affiliate) for the
Target as the party contracting with the Texas Natural Resources Conservation
Commission, and provide the Buyer with copies of the modified application and
modified agreement.
6.2.1. HSR. Xxxxxx and Global have filed their respective Xxxx-
---
Xxxxx- Xxxxxx Premerger Notification and Report Forms with the Department of
Justice and the Federal Trade Commission on February 3, 1998. The Seller and the
Buyer shall each promptly make all further filings or submissions as are
required under the Xxxx-Xxxxx-Xxxxxx Act in order that the Seller and Buyer may
consummate the transactions contemplated by this Agreement. The Seller and the
Buyer shall each furnish to the other such necessary information and reasonable
assistance as the other may request in connection with its preparation of any
filing or submission which is necessary under the Xxxx-Xxxxx-Xxxxxx Act. The
Seller and the Buyer shall each keep the other appraised of the status of any
communications with an any inquiries or requests for additional information made
by any Governmental Body and shall comply promptly with any such informational
inquiry or request. The Parties shall, upon the request of either the Federal
Trade Commission or the Department of Justice, or any other Governmental Body,
supply such agency with any additional requested information as expeditiously as
is possible, and shall use their good faith reasonable best efforts to cause the
satisfaction or termination of the applicable waiting period under the Xxxx-
Xxxxx-Xxxxxx Act or any extension thereof.
6.2.2. BUNDESKARTELLANT. Xxxxxx has filed a notification to the
----------------
Bundeskartellant (Cartel Office of Germany). Each of the Seller and the Buyer
shall (and shall cause its Affiliates to) promptly make all further submissions
and related information as are required by the Bundeskartellant in order that
the Seller and Buyer may consummate the transactions contemplated by this
Agreement and use their good faith reasonable best efforts to cause the
satisfaction or termination of the applicable waiting period. The Seller and
the Buyer shall each furnish to the other such necessary information and
reasonable assistance as the other may request in connection with such
submissions and related information. The Parties agree that if the Closing is
scheduled to proceed, but for the satisfaction of the condition in this Section
6.2.2 with respect to the Bundeskartellant, the Closing shall proceed; provided,
however, that the transactions contemplated under the Asset Transfer Agreement
with respect to INTOOL International GmbH shall not be consummated until such
condition is satisfied. If such condition is not satisfied prior to May 31,
1998, the Preliminary and Final Closing Net Asset Statements shall be adjusted
to remove the associated assets and Liabilities for INTOOL International GmbH.
6.3 OPERATION OF BUSINESS. The Seller will not cause or permit any of the
---------------------
Target or the INTOOL Divisions, and shall not cause the INTOOL Subsidiary, to
engage in any practice, take any action, or enter into any transaction outside
the Ordinary Course of Business. Without
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limiting the generality of the foregoing, the Seller will not cause or permit
(i) any of the Target or the INTOOL Subsidiary to declare, set aside, or pay any
dividend or make any distribution with respect to its capital stock or redeem,
purchase, or otherwise acquire any of its capital stock, except as expressly
permitted herein, (ii) any of the Target or the INTOOL Divisions to engage in
any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business the primary purpose or effect of which will be to
generate or preserve Cash, or (iii) any of the Target or the INTOOL Divisions,
or cause the INTOOL Subsidiary, to otherwise engage in any practice, take any
action, or enter into any transaction of the sort described in (S)4.8 above.
6.4 PRESERVATION OF BUSINESS. The Seller will cause each of the Target and
------------------------
the INTOOL Divisions, and shall use its best efforts to cause the INTOOL
Subsidiary, to take such actions as may be required in the Ordinary Course of
Business, to keep its business and properties substantially intact, including
its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
6.5 FULL ACCESS. The Seller will permit, and the Seller will cause the
-----------
Target and the INTOOL Divisions, and shall use its best efforts to cause the
INTOOL Subsidiary, to permit, representatives of the Buyer to have full access
at all reasonable times, and in a manner so as not to interfere with the normal
business operations of the Target, the INTOOL Subsidiary or the INTOOL
Divisions, to all premises, properties, personnel, books, records (including Tax
and Employee Benefit Plan records), contracts, and documents of or pertaining to
each of the INTOOL Companies, subject to the terms of any confidentiality
agreement between any third party and the Target, the INTOOL Subsidiary or the
INTOOL Divisions, respectively.
6.6 NOTICE OF DEVELOPMENTS. The Seller will give prompt written notice to
----------------------
the Buyer of any development causing a breach of any of the representations and
warranties in (S)4 or (S)5 above. Each Party will give prompt written notice to
the others of any development causing a breach of any of its own representations
and warranties in (S)3 above. Subject to (S)10.1.2, any such disclosure made
prior to Closing shall be deemed to supplement and/or amend the Disclosure
Schedule if, had the subject matter of the disclosure been existing on the date
of this Agreement, such disclosure would have been required to be set forth or
described in the Disclosure Schedule.
6.7 EXCLUSIVITY. Global shall not and shall direct management of its
-----------
Affiliates (including the Target, the INTOOL Subsidiary and the INTOOL
Divisions) not to, directly or indirectly, solicit, invite or encourage any
other proposal or agreement for the sale of the Business, or substantially all
of the Business (whether through direct purchase, merger or consolidation or
other business combination), or offer the Business or substantially all of the
Business or assets of the Business for sale, except for the sale of assets in
the Ordinary Course of Business; provided, however, that Global may (i) upon the
request of a third party (who makes an unsolicited, bona fide proposal regarding
an alternative transaction involving such third party, the INTOOL Companies and
Global and who executes a confidentiality agreement with Global and the Target
in customary form), furnish information or data (including without limitation
confidential information or data) relating to the INTOOL Companies, (ii)
participate in negotiations or have substantive discussions with such third
party, and (iii) consummate such alternative transaction with such third party
to the extent that the Board of Directors of Global determines in good faith,
after
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consultation with and upon advice of counsel, that the action in each of (i),
(ii) or (iii), as applicable, is required in order for the Board of Directors to
act in a manner that is consistent with its fiduciary obligations under
applicable law. The Seller shall promptly advise the Buyer of any such request
or proposal that Global or any of its Affiliates (including the Target, the
INTOOL Subsidiary and the INTOOL Divisions) may receive, including the terms
thereof, and give the Buyer the opportunity to counter such request or proposal
and amend this Agreement. The Seller agrees not to disclose the terms of this
Agreement to any third party.
6.8 OWNED REAL PROPERTY.
-------------------
6.8.1. With respect to the Owned Real Property, the Buyer may
procure, at its own expense, such policies of title insurance and surveys as it
deems necessary, provided that the Seller shall, at its sole expense, cure all
Encumbrances (except permitted encumbrances) evidenced by the title commitments
issued in connection with such title policies. The phrase "permitted
encumbrances" means: (i) imperfections of title or Encumbrances which
individually or in the aggregate do not materially detract from the value of the
property subject thereto, or materially impair the use of such property as
presently used in the Business, and (ii) zoning and similar restrictions
provided the existing buildings and other improvements located on the Owned Real
Property and the use thereof in their existing manner in the Business do not
violate any of the same.
6.8.2. At Closing, the Seller or its applicable Affiliate shall
execute and deliver to the Buyer or its Affiliates an assignment of lease for
the real property leases related to the INTOOL Divisions, if requested by the
Buyer.
6.9 OTHER MATTERS.
-------------
6.9.1. The Seller shall cause the Target to (i) remove all roofing
material debris from the Leased Real Property in Cleveland, Ohio, and (ii)
remove certain drums containing waste material designated by the Buyer, from the
Owned Real Property located in Houston, Texas.
6.9.2. The Seller shall cause the Target to convey the approximately
nine and one-half acres described on Exhibit 6.9.2 attached hereto, to the
Seller or an Affiliate of the Seller by quit claim deed, and the Seller shall
record such deed. In the event the survey being procured by the Buyer and
describing such acreage is not available on or prior to the date of this
Agreement, the Buyer shall provide the Seller with the description of such
acreage, as soon as reasonably practical after the date of this Agreement, and
in no such event one day prior to the Closing Date.
6.9.3. The Seller shall, or shall cause its Affiliates to, cause any
banks holding bank accounts not being transferred to the Buyer or its Affiliates
pursuant to this Agreement or the Other Agreements to detach from such accounts
any lock boxes used exclusively by the Target, the INTOOL Subsidiary or the
INTOOL Divisions.
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6.9.4. The Seller and the Buyer shall use best efforts to agree upon
the form of a letter to be forwarded to and executed by Dresser Industries, Inc.
(the "DRESSER LETTER"), pursuant to which Dresser Industries, Inc. consents to
or acknowledges (without objection to) the assignment of certain rights and
assets to Xxxxxx and its Affiliates, pursuant to this Agreement, which rights
and assets were originally assigned to Global and its Affiliates in the
Distribution Agreement dated as of July 17, 1992, between Dresser Industries,
Inc. and Xxxxxxxx-Xxxxxx Refractories Company.
7. POST-CLOSING COVENANTS. The Parties agree as follows with respect to the
----------------------
period following the Closing.
7.1 GENERAL. The Seller acknowledges and agrees that from and after the
-------
Closing, the Buyer will be entitled to possession of all documents, books,
records (including Tax and Employee Benefit Plan records), agreements, and
financial data of any sort relating to the INTOOL Companies. The Buyer will
permit, and the Buyer will cause the Target and each Affiliate of the Buyer that
purchases assets of the INTOOL Divisions to permit, representatives of the
Seller to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Target and such Affiliates,
to all premises, properties, personnel, books, records (including Tax records),
contracts, and documents of or pertaining to each of the Target and the INTOOL
Divisions, to the extent the Seller has retained the Liability related to the
matter to which the Seller desires access.
7.2 LITIGATION SUPPORT. In the event and for so long as any Party is
------------------
actively pursuing insurance coverage (although not necessarily through
litigation) or is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, transaction, or product
manufactured or sold on or prior to the Closing Date involving any of the INTOOL
Companies, each of the other Parties will cooperate with it and its counsel in
the pursuit, contest or defense, make available their personnel (including Xxx
Xxxxx and Xxxxx Xxxxxx), and provide such testimony and access to their books
and records as shall be necessary in connection with the pursuit, contest or
defense, all at the sole cost and expense of the pursuing, contesting or
defending Party (unless the pursuing, contesting or defending Party is entitled
to indemnification therefor under (S)9 below).
7.3 TRANSITION. Neither the Seller nor any of its Affiliates will take
----------
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of any of the
Target, the INTOOL Subsidiary or the INTOOL Divisions from maintaining the same
business relationships with such persons after the Closing as it maintained with
them prior to the Closing. The Seller will refer all customer inquiries relating
to the businesses of the Target, the INTOOL Subsidiary or the INTOOL Divisions
to the Buyer from and after the Closing.
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7.4 CONFIDENTIALITY. The Seller and its Affiliates will treat and hold as
---------------
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession. The term "Confidential Information" does not include
information which (i) is or becomes generally available to the public other than
as a result of a disclosure by the Sellers, its Affiliates, or their respective
representatives or (ii) becomes available to the Seller or its Affiliates on a
non-confidential basis from a source other than the Buyer or its Affiliates,
provided that such source is not bound by a confidentiality agreement from
transmitting the information to third parties. In the event that the Seller or
any of its Affiliates is requested or required (by oral question or request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, the Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this (S)7.4. If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller or any of its
Affiliates is, on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt, then the Seller
or such Affiliate may disclose the Confidential Information to the tribunal;
provided, however, that the Seller shall use its best efforts to obtain an order
or other assurance that confidential treatment will be accorded to such portion
of the Confidential Information required to be disclosed as the Buyer shall
designate.
7.5 COVENANT NOT TO COMPETE. For a period of five years from and after
-----------------------
the Closing Date, the Seller will not (and the Seller will cause its Affiliates
not to) engage directly or indirectly in any business that any of the Target,
the INTOOL Subsidiary or the INTOOL Divisions conducts as of the Closing Date
(or conducted within three years prior thereto) in any geographic area in which
any of the Target, the INTOOL Subsidiary or the INTOOL Divisions conducts that
business within three years of the Closing Date; provided, however, that (i)
ownership of less than 1% of the outstanding stock of any publicly traded
corporation shall not be deemed to engage solely by reason thereof in any of its
businesses and (ii) in the event that the condition described in (S)6.2.2 is not
satisfied, then the Seller, through INTOOL International GmbH, shall have the
right to sell the assets of INTOOL International GmbH related to the Business to
a third party or parties, for a period of one year after the Closing. If the
final judgment of a court of competent jurisdiction declares that any term or
provision of this (S)7.5 is invalid or unenforceable, the Parties agree that the
court making the determination of invalidity or unenforceability shall have the
power to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified.
7.6 NON-SOLICITATION. For two years immediately after the Closing, the
----------------
Seller shall not (and the Seller shall cause its Affiliates not to) directly or
indirectly solicit for employment the employees of the Target and the INTOOL
Divisions as of the Closing Date, without the prior written consent of the
Buyer, provided however, that nothing herein shall limit the right of the
-43-
Seller to hire employees of the Target or the INTOOL Divisions who independently
seek or inquire about employment. Notwithstanding the preceding, in the event
that a sufficient number of employees, or a key employee or key employees,
independently seek or inquire about employment with the Seller or its Affiliates
and are subsequently hired by the Seller or its Affiliates, and such hiring, in
the Buyer's reasonable opinion, materially impacts the Buyer or its Affiliates,
then the Buyer shall notify the Seller of this impact and the Seller shall, for
the remainder of the two year term, cease to hire any additional employees of
the Target or the INTOOL Divisions as of the Closing Date.
7.7 BUY BACK OF CERTAIN RECEIVABLES. After the Closing, the Buyer
-------------------------------
agrees to use its normal and customary collection procedures (excluding
institution of litigation or the release of any debtor) as in effect on the
Closing Date, to collect the accounts receivable of the Target, the INTOOL
Subsidiary and the INTOOL Divisions existing on the Closing Date and reflected
on the Final Closing Net Asset Statement. The Buyer may, no later than 210 days
after the Closing Date, assign to the Seller any of the accounts receivable
balances of the Target, the INTOOL Subsidiary or the INTOOL Divisions included
in the Final Closing Net Asset Statement which, on the 180th day following
Closing Date, have not been collected in cash in the full amount. In such
event, (i) the Seller shall pay the Buyer, in cash, within 15 days of the notice
of such assignment, the account receivable balance less the amount collected in
cash on such account, and, (ii) subject to any confidentiality agreement to
which the Buyer or its Affiliates is a party, the Buyer shall deliver to the
Seller any information reasonably requested by the Seller to enable the Seller
to collect such accounts receivable. A list of accounts receivable shall be
prepared by the Seller as of the Closing Date and shall be delivered to the
Buyer with the Preliminary Closing Net Asset Statement.
7.8 EXISTING INSURANCE COVERAGE.
---------------------------
7.8.1. As of the Closing Date, the Seller or its Affiliates may
cancel insurance coverage applicable to the Target, the INTOOL Subsidiary and
the INTOOL Divisions for occurrences (with respect to any "occurrence" policies)
after the Closing Date (other than insurance policies solely in the name of the
Target, the INTOOL Subsidiary or any INTOOL Division); provided, however, that
any and all remaining liability insurance coverage and policies in which any of
the INTOOL Companies is a party, named insured, or otherwise has a beneficial
interest (with respect to any "occurrence" or "claims made" policies) shall be
available to the Buyer and its Affiliates, and all rights and interests in all
such policies are hereby transferred to the Buyer and its Affiliates with
respect to occurrences relating to the Business on or prior to the Closing Date,
to the extent that the Buyer or its Affiliates have retained, assumed, paid or
agreed to indemnify Global, the Seller, or Xxxxxxxx-Xxxxxx Refractories Company
with respect to the related Liability. The Seller shall take all necessary
actions in accordance with (S)7.10 to effect this transfer to the Buyer.
Furthermore, until the rights in such policies are transferred to the Buyer and
its Affiliates and acknowledged by the carriers of such policies, the Seller
agrees that the Buyer is fully subrogated to all of the Seller or its
Affiliates' rights and interests in such liability insurance policies, to the
extent that the Buyer or its Affiliates have retained, assumed or paid the
Liability. If after the Closing, the Seller or one of its Affiliates receives
cash proceeds from an insurer that are attributable to such insurance coverage
with respect to any occurrences on or prior
-44-
to the Closing Date, then such cash proceeds shall be paid to the Buyer to the
extent that the Buyer or its Affiliates have retained, assumed or paid the
Liability. If an insurance carrier fails to accept a claim submitted on behalf
of the Buyer or any of its Affiliates with respect to any occurrence on or prior
to the Closing Date for which the Buyer or its Affiliates have retained, assumed
or paid the Liability, then the Buyer may direct the Seller to commence
litigation in the name of the Seller or one of its Affiliates against the
insurance company, such litigation to be under the Buyer's direction and control
and at the Buyer's sole cost and expense, provided that the Seller shall bear
the sole cost and expense to the extent it has agreed to indemnify Buyer's
Indemnified Group pursuant to (S)9.
7.8.2. The Seller shall, and shall cause its Affiliates to, in good
faith and at its sole expense, use commercially reasonable best efforts to
procure (i) the Access Agreement from each of the carriers listed in Exhibit
1.1, which shall be in a form reasonably acceptable to the Seller and the Buyer,
and (ii) the Dresser Letter. Furthermore, the Seller shall, and shall cause its
Affiliates to, at all times, in good faith and at its sole expense, use
commercially reasonable best efforts to pursue coverage from the insurance
carriers listed in Exhibit 1.1 (including the instigation of litigation against
such carriers or Dresser Industries, Inc.), in the event the Buyer or its
Affiliates are denied the economic benefit of such policies (as a party, a named
insured, or as a holder of a beneficial interest), provided, however, that
commencing on the date following the fifth anniversary of Closing, such pursuit
shall be at the sole expense of the Buyer (except for any matters pending on
such anniversary date which shall remain at the sole expense of the Seller).
7.9 LICENSE TO USE GLOBAL NAME. Global hereby authorizes the Buyer and its
--------------------------
Affiliates to use the Global Industrial Technologies trade name (the "GLOBAL
XXXX"): (i) on the tools and dies (if any) of the Target and INTOOL Divisions
which at Closing bear the Global Xxxx for a period of up to 9 months from
Closing; (ii) on the purchase orders and letterhead of the Target and the INTOOL
Divisions which at Closing have the Global Xxxx for a period of up to 21 days
from Closing, and (iii) invoices, brochures, catalogues and other advertising
material of the Target and the INTOOL Divisions which at Closing bear the Global
Xxxx for a period of up to 120 days from Closing; provided, however, that the
Buyer shall, or shall cause its Affiliates to, use its reasonable best efforts
to discontinue the use of the Global Xxxx on the items enumerated in (i)-(iii)
immediately preceding prior to the applicable deadline established for
discontinuing such use. Except as permitted by this (S)7.9, neither the Buyer
nor its Affiliates shall make any use of the Global Xxxx as a trade name or
trademark after Closing.
7.10 FURTHER ASSURANCES; CONSENTS AND APPROVALS.
------------------------------------------
7.10.1. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement (including carrying out
those covenants described in (S)6 that are not accomplished prior to Closing),
each of the Parties will take such further action (including the giving of
notices, the obtaining of consents, the curing of title defects, and the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the Party
originally responsible for the matter related to such action (unless such Party
is entitled to indemnification therefor under (S)9 below).
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Without limiting the generality of the foregoing, at the Buyer's request, the
Seller shall, without additional consideration, cause its Affiliates (and shall
use its best efforts to cause the relevant Predecessor of the Target, the INTOOL
Subsidiary or the INTOOL Divisions) to transfer to the Buyer or its Affiliates
the record title to all assets used in the Business, the record title of which
are held by an Affiliate of the Seller that is not a party to one of the Other
Agreements, or a Predecessor of the Target, the INTOOL Subsidiary or the INTOOL
Divisions. The Seller shall pay all costs associated with such transfer.
7.10.2. This Agreement and the transactions contemplated hereby
shall not constitute an assignment, transfer or lease of any interest in any
agreement if an assignment, transfer or lease, or an attempt to make such an
assignment, transfer or lease (a) without the consent of or notice to a third
party would constitute a breach or violation thereunder, or (b) is restricted or
prohibited by Law, including any Environmental Law. Any transfer, assignment or
lease to the Buyer or its Affiliates of any interest in any agreement that
requires filing with, notice to or the consent of a third party shall be made
subject to such filing or notice being given or such consent or approval being
obtained. In the event such consent or approval is not obtained on or prior to
the Closing, the Seller shall continue to use best efforts to obtain any such
approval or consent until the earliest of (i) such time as such consent or
approval has been obtained or (ii) the date the Seller reasonably determines
that the third party will not provide its consent or approval. In the event the
Seller reasonably determines that the third party will not provide its consent
or approval, the Seller will cooperate with the Buyer and its Affiliates in any
lawful and feasible arrangement to provide that the Buyer and its Affiliates
shall receive the benefits under any such agreement, including performance by
the Seller (or its Affiliates) as agent.
7.11. CHECKING ACCOUNTS. The Seller agrees to pay and be solely
-----------------
responsible for any check dated on or prior to the Closing Date presented on any
checking account of the Seller or its Affiliates, except those accounts listed
on Exhibit 2.5.1.2.9. The Seller agrees not to (and shall cause its Affiliates
not to) write any additional checks after the Closing on any accounts of the
Target, the INTOOL Subsidiary or the INTOOL Divisions. Except to the extent
otherwise agreed, the Seller agrees to remit to the Buyer within 15 days any
funds that it or any of its Affiliates receives after the Closing relating to
the Target, the INTOOL Subsidiary or the INTOOL Divisions in any lock box or
collection accounts maintained by the Seller or its Affiliates.
7.12. CHANGE OF NAME. As soon as administratively possible after the
--------------
Closing Date but in any event no later than 30 days after Closing, the Seller
shall cause each of its Affiliates that uses "INTOOL" in its corporate name to
delete such word from its corporate name. Neither the Seller nor any of its
Affiliates shall have any rights to, or make any use of, the name "INTOOL" as a
trademark or trade name after the Closing.
7.13. EMPLOYEE BENEFIT MATTERS AND COVENANTS.
--------------------------------------
7.13.1 Salaried exempt and non-exempt employees of the Target and
the INTOOL Divisions shall be eligible to participate in the Salaried Employees'
Retirement Plan of Xxxxxx
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Industries, Inc. and the Xxxxxx Industries, Inc. Retirement Savings and Stock
Ownership Plan effective as soon as administratively possible after the Closing
Date. Previous employment with the INTOOL Companies shall be credited in
accordance with the provisions of each plan for purposes of determining vesting
and eligibility for benefits provided under each plan, but shall not be credited
for purposes of determining the amount of the benefit.
7.13.2. The Seller shall, or shall cause its Affiliates to, take all
necessary steps to fully vest the accrued benefits of the employees of the
Target who participate in the Global Industrial Technologies, Inc. Retirement
Income Plan as of the Closing Date.
7.13.3. The assets and related Liabilities for all benefits accrued
in the Global Industrial Technologies, Inc. Retirement Income Plan by employees
and former employees, and their beneficiaries, of the INTOOL Companies as of the
Closing Date shall be retained by such plan. Members of the Global Industrial
Technologies, Inc. Retirement Income Plan who were or are employees of the
INTOOL Companies and are now considered to be on Total Disability as defined in
the Global Industrial Technologies, Inc. Retirement Income Plan shall be
credited with Continuing Service, Vesting Service, and Credited Service, each as
defined in such plan, up to the Closing Date, under the terms of the Global
Industrial Technologies, Inc. Retirement Income Plan.
7.13.4. The Seller shall, or shall cause its Affiliates to, take all
necessary actions such that the Target shall cease to be an employer effective
immediately prior to Closing under the Global Industrial Technologies, Inc.
Deferred Savings Plan. Each employee shall be entitled to receive a
distribution of the value of his accrued benefit as of the Closing Date. During
the period requested by the Buyer pursuant to (S)7.13.9, the Seller shall, or
shall cause its Affiliates to, withhold loan repayments from the compensation of
employees of the Target who have outstanding loan balances under the Global
Industrial Technologies, Inc. Deferred Savings Plan.
7.13.5. Beginning no later than 90 days after Closing, all non-union
employees of the Target and the INTOOL Divisions (who are employed by the Target
or one of the INTOOL Divisions as of the Closing Date) shall have the option to
rollover part or all of the pre-tax portion of their account balances (including
any outstanding loan balances, but excluding any Global stock) from the Global
Industrial Technologies, Inc. Deferred Savings Plan to the Xxxxxx Industries,
Inc. Retirement Savings and Stock Ownership Plan. All such rollovers shall be
made in cash and shall be made in accordance with the applicable terms and
conditions of the Xxxxxx Industries, Inc. Retirement Savings and Stock Ownership
Plan.
7.13.6. The Seller and its Affiliates shall retain all Liabilities
attributable to employees and former employees, and their beneficiaries, of the
INTOOL Companies in the ERISA Excess Benefit Plan for Salaried Employees of
Global Industrial Technologies, Inc. and Its Participating Subsidiaries Who Are
Not Represented by a Union, the ERISA Compensation Limit Benefit Plan for
Executives of Global Industrial Technologies, Inc. and the Supplemental
Executive Retirement Plan for Top Executives of Global Industrial Technologies,
Inc. as of the Closing Date. As of the Closing Date, and at Xxxxxx'x
discretion, employees of the Target and
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the INTOOL Divisions will be eligible to participate in non-qualified plans of
Xxxxxx that Xxxxxx has established for its highly-compensated employees.
7.13.7. The Seller shall, or shall cause its Affiliates, to arrange
for the total plan assets of the Rotor Tool Company Hourly Pension Plan, the
Dresser Industries, Inc. Pension Plan for Hourly Employees of Industrial Tool
Division, Springfield, Ohio and the Dresser Industries, Inc. Retirement Plan for
Lodge #969, I.A.M., Industrial Tool Division, Houston, Texas (collectively, the
"HOURLY DEFINED BENEFIT PLANS") to be transferred in cash to an account
designated by the Buyer, within 30 days of such designation. Until such time as
the assets are transferred, the Seller shall be responsible for ensuring that
all benefits are paid from the trust on a timely basis.
7.13.8. The Seller shall, or shall cause its Affiliates to, pay to
the Buyer the amount determined as of the last day of the month immediately
preceding the month in which Closing occurs, representing the aggregate excess
of the accumulated benefit obligation over the market value of assets in the
Hourly Defined Benefit Plans. The accumulated benefit obligation shall be
determined using the same assumptions used in the August 1, 1997, actuarial
valuations of each plan, including a discount rate of 7.50%. As soon as
practicable following Closing but no later than 90 days after Closing, the
Seller shall deliver to the Buyer for its review a copy of a report or reports
setting forth the accumulated benefit obligation of each plan determined as set
forth herein and the market value of assets of each plan and the underlying
information necessary to complete the calculation and prepare the report. The
Buyer shall have 60 days to notify the Seller in writing of any objection to the
report or reports. If the Buyer does not timely notify the Seller of any
objections, the calculations shall be final and binding on all Parties. If the
Buyer timely notifies the Seller of any objections which the Seller and the
Buyer cannot resolve within thirty days of the date the Buyer notifies the
Seller of such objections, the Seller and the Buyer shall appoint an actuarial
firm satisfactory to both Parties (the cost of which shall be shared equally by
the Seller and the Buyer) to resolve such objections, which resolution shall be
final and binding on both Parties. Notwithstanding the preceding, in the event
that the market value of assets in the Hourly Defined Benefit Plans exceeds the
accumulated benefit obligations as determined in accordance with the above
procedures, the Buyer shall pay such excess to the Seller. In either case,
payment shall be made within 15 days of such determination, to the account
designated by the payee, and shall bear interest at the rate of 7.5% per annum
from the last day of the month immediately preceding Closing until such payment.
7.13.9. As the agent of the respective INTOOL Companies designated by
the Buyer, the Seller shall, and shall cause its Affiliates to, pay the payroll
of such INTOOL Companies implementing to the extent feasible such changes as
requested by the Buyer (including the cessation of flexible spending account and
401(k) plan deductions) for the period requested by the Buyer, which shall not
exceed 90 days following the Closing. The Seller shall, and shall cause its
Affiliates to, cooperate with the Buyer as it (or its Affiliates) implements an
appropriate payroll system, including by furnishing to the Buyer applicable
information and records. The Seller shall deliver to the Buyer no later than 30
days after Closing a list of the employees of the Target as of the Closing Date,
together with the date of birth, social security number, title, date of
employment commencement and salary or wage rate of each such employees. The
Buyer shall
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reimburse the Seller or Global, as applicable, for all such Liabilities incurred
after Closing as a result of making such payments no later than 5 days following
the Seller's notification to the Buyer of the payment of such Liability.
7.13.10. The Seller and its Affiliates shall retain all Liability for
the retiree welfare benefits currently being provided and to be provided in the
future to those current and former employees, and the beneficiaries and
dependents thereof, who have met the age and service requirements for such
benefits as of the Closing Date except for Liabilities related to those current
and former employees who participate in or are receiving pension benefits from
the Hourly Defined Benefit Plans, which Liabilities shall be assumed by the
Buyer or its Affiliates. Xxxxxx shall assume the Liability for retiree welfare
benefits to be provided to all employees, and their beneficiaries and
dependents, of Target or the INTOOL Divisions who have not met the age and
service requirements for such benefits as of the Closing Date.
7.13.11. The Seller shall, or shall cause its Affiliates to, continue
to provide welfare benefits and any benefits which are required in accordance
with the Consolidated Omnibus Budget Reconciliation Act of 1987, and regulations
thereunder, to current and former employees and their beneficiaries and
dependents of the INTOOL Companies through the Employee Welfare Benefit Plans
currently in place which are self-insured for the period requested by Buyer,
which shall not exceed 90 days following the Closing. The Buyer shall reimburse
the Seller (or its Affiliates) for all such Liabilities incurred after Closing
(which shall mean the occurrence after Closing of the event which gives rise to
a right to such a benefit) by the Seller (or its Affiliates) as a result of the
extension of such coverage.
7.13.12. The Seller and its Affiliates shall retain all assets and
Liabilities related to the Global Industrial Technologies, Inc. Incentive
Deferred Compensation Plan.
7.13.13. The Buyer and the Seller shall, and shall each cause its
Affiliates to, take all steps necessary to accomplish the provisions of
(S)7.13.1 through 7.13.12, and cooperate fully with each other and to provide
all necessary data and assistance in order to accomplish the employee benefit
transition provisions set forth herein.
7.13.14. The Buyer's obligation to reimburse the Seller (or its
Affiliates) under this (S)7.13 shall not include any internal costs of the
Seller (or its Affiliates). The Buyer or its Affiliates shall be entitled to
the tax deduction with respect to any benefits paid or made available to
employees of the INTOOL Companies after the Closing Date by the Seller (or its
Affiliates) for which the Buyer reimburses the Seller (or its Affiliates) under
this (S)7.13.
7.13.15. Nothing in this Agreement (whether expressed or implied)
shall either (i) confer upon any employee any rights or remedies of any nature
or kind whatsoever, including any right to employment for any period or under
any particular terms and conditions or any third-party beneficiary rights
hereunder or (ii) require the continued employment of any employee or the
maintenance of any Employee Benefit Plan for any period from and after the
Closing Date. Moreover, nothing in this Agreement shall restrict the Buyer or
its Affiliates from amending or terminating any Employee Benefit Plan.
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7.14. YEAR-END BONUS. The Seller shall, or shall cause its Affiliates to,
--------------
pay to each employee employed by the Target, the INTOOL Subsidiary or any of the
INTOOL Divisions as of the Closing Date, which employee has customarily received
a bonus or received a bonus in 1997, a bonus for the time period of November 1,
1997, through the end of the month immediately preceding the Closing. The
Seller shall pay such bonus no later than 15 days after the Closing Date, such
bonus shall be an amount customary although pro rata for the applicable period,
and in no event shall the aggregate amount paid by the Seller (or its
Affiliates) to all such employees exceed the amount customarily accrued for all
such bonuses as of the Closing Date.
8. CONDITIONS TO OBLIGATION TO CLOSE.
---------------------------------
8.1. CONDITIONS TO OBLIGATION OF THE BUYER. The obligation of the Buyer
-------------------------------------
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction at or prior to Closing of the following
conditions:
8.1.1. the representations and warranties set forth in (S)3.1,
(S)3.4, (S)4 and (S)5.1 above shall be true and correct in all respects at and
as of the Closing Date, except where the failure of such representations and
warranties to be true and correct would not, in the aggregate, result in a
material adverse effect on the Business as conducted by the Target and the
INTOOL Divisions, taken as a whole;
8.1.2. the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
8.1.3. no action, suit, or proceeding shall be pending or
threatened before any Governmental Body wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own the Target
Shares and to control the INTOOL Divisions, or (D) affect adversely the right of
any of the Target, the INTOOL Subsidiary or the INTOOL Divisions to own its
assets and to operate its businesses in any material respect (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect), and
neither the Federal Trade Commission nor the Department of Justice shall have
notified any Party that such agency proposes to approve the consummation of the
transactions contemplated by this Agreement only with the imposition of
conditions that will materially impair the ability of the Buyer to own and
operate the Business after Closing as it is presently constituted and operated
or otherwise materially impair the ability of the Buyer or its Affiliates to own
and operate its own business after Closing in the way that they are presently
constituted and operated;
8.1.4. the Seller shall have delivered a current stock transfer
ledger in conformity with (S)4.2 and (S)4.6, together with the minute books and
corporate seals of the Target and all applicable canceled certificates shall
have been placed in the appropriate minute book;
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8.1.5. the Seller shall have delivered to the Buyer a certificate
(one of which shall be a certificate executed by Global) to the effect that each
of the conditions specified above in (S)8.1.2 and (S)8.1.3 are satisfied in all
respects;
8.1.6. all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise terminated;
8.1.7. the Seller shall or shall cause its Affiliates to execute and
deliver the following agreements (collectively, the "OTHER AGREEMENTS"):
8.1.7.1. Intellectual Property Assignment between Xxxxxx
Technologies Company and the Seller substantially in the form of Exhibit B(1)
attached hereto;
8.1.7.2. The Asset Transfer Agreements;
8.1.7.3. An assignment by Indressco International, Ltd. and
GIX Foreign Sales Corp. to Xxxxxx Industries Foreign Sales Company of all assets
(including agreements) held by such Persons related to the Business.
8.1.7.4. A letter executed by Xxxxxxxx-Xxxxxx Refractories
Company guaranteeing the obligations of the Seller set forth in (S)9.2.4.2, in
the form attached hereto as Exhibit 8.1.7.4, which guaranty shall be in addition
to (and not in lieu of) the guaranty set forth in (S)13.1.
8.1.8 the Buyer shall have received the resignations, effective as
of the Closing, of each director of the Target and the INTOOL Subsidiary, and
each officer of the Target and the INTOOL Subsidiary that is not an employee of
the Target;
8.1.9 the Buyer shall have received from the Seller or its
Affiliates letters to the applicable banks relating to the changing of
authorized signatories on bank accounts;
8.1.10 the Buyer shall have received the executed Global Letter;
8.1.11. the Seller shall have delivered to the Buyer a copy of the
quit claim deed referenced in (S)6.9.2;
8.1.12. [THIS SECTION INTENTIONALLY LEFT BLANK];
8.1.13. the Seller shall have delivered to the Buyer the consent of
and ratification by the sole third party shareholder of the INTOOL Subsidiary to
the election by the Target (simultaneously with Closing and as an Affiliate of
the Buyer), of its directors to the INTOOL Subsidiary, which consent and
ratification is in the form attached hereto as Exhibit 8.1.13; and
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8.1.14. all certificates, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably satisfactory in
form and substance to the Buyer.
8.2. CONDITIONS TO OBLIGATION OF THE SELLER. The obligation of the Seller
--------------------------------------
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction at or prior to Closing of the following
conditions:
8.2.1. the representations and warranties set forth in (S)3.2 and
(S)3.3 above shall be true and correct in all material respects at and as of the
Closing Date;
8.2.2. the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
8.2.3. no action, suit, or proceeding shall be pending or threatened
before any Governmental Body wherein an unfavorable injunction, judgment, order,
decree, ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall be in effect);
8.2.4. the Buyer shall have delivered to the Seller a certificate
(one of which shall be a certificate executed by Xxxxxx) to the effect that each
of the conditions specified above in (S)8.2.2 and (S)8.2.3 is satisfied in all
respects;
8.2.5. all applicable waiting periods (and any extensions thereof)
under the Xxxx-Xxxxx-Xxxxxx Act shall have expired or otherwise terminated;
8.2.6. the Buyer shall or shall cause its Affiliates to execute and
deliver the Other Agreements to which any of them is a party; and
8.2.7. all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
8.3. WAIVER; RIGHT TO PROCEED. If any of the conditions specified in
------------------------
(S)8.1 hereof have not been satisfied, the Buyer, in addition to any other
rights that may be available to it, may waive its rights to have such conditions
satisfied at Closing and may proceed with the transactions contemplated hereby,
and if any of the conditions specified in (S)8.2 hereof have not been satisfied
at Closing, the Seller, in addition to any other rights that may be available to
it, may waive its rights to have such conditions satisfied and may proceed with
the transactions contemplated hereby; provided, however, that any such waiver by
the Buyer or the Seller, as the case may be, shall in no way diminish or
eliminate any other rights that may be available to the waiving party related to
or as a result of the waived condition or conditions not having been satisfied
at Closing and all such rights are expressly reserved.
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9. REMEDIES FOR BREACHES OF THIS AGREEMENT.
---------------------------------------
9.1 SURVIVAL. All of the representations and warranties of the Parties
--------
contained in this Agreement shall survive the Closing hereunder and continue in
full force and effect thereafter for eighteen months after the Closing, except
for the representations and warranties in (S)4.2 which will survive without
limitation. Furthermore, all of the representations and warranties of the
Parties contained in this Agreement shall survive the Closing as provided in the
preceding sentence even if the damaged Party knew or had reason to know of any
breach of representation or warranty at the time of Closing; provided, however,
if at the time of the execution hereof, Xxxxx X. Xxxxx, Xx., Senior Vice
President of Xxxxxx, had actual knowledge of a breach of a representation or
warranty of the Seller or Global, then the Buyer shall have no right to
indemnification under (S)9.2.1 with respect to the specific known matter that
causes the breach of the representation or warranty. All covenants of the
Parties contained in this Agreement, other than (S)9.2 and (S)9.3, shall survive
the Closing and continue thereafter until the expiration of the applicable
statute of limitations, other than any covenant which by its express term
terminates sooner. All covenants of the Parties contained in (S)9.2 and (S)9.3
shall survive without limitation except as set forth therein.
9.2. INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE BUYER.
---------------------------------------------------
9.2.1. If either of the Seller or Global breaches (or if any third
party alleges facts that, if true, would mean the Seller or Global has breached)
any of its representations, warranties, or covenants contained herein and the
Buyer makes a written claim for indemnification against the Seller or Global
within the applicable survival period, then the Seller agrees to defend,
indemnify and hold each of the Buyer, its Affiliates and their directors,
officers and employees ("BUYER'S INDEMNIFIED GROUP") harmless from and against
the entirety of any Adverse Consequences that any of the Buyer's Indemnified
Group may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences that any of the Buyer's Indemnified Group
may suffer after the end of any applicable survival period) resulting from,
arising out of, relating to, in the nature of, or caused by the breach (or the
alleged breach); provided, however, that the Seller shall have no obligation to
defend, indemnify and hold harmless any of Buyer's Indemnified Group from and
against any Adverse Consequences resulting from, arising out of, relating to, in
the nature of, or caused by the breach (or alleged breach) of any representation
or warranty of the Seller contained in (S)4 or (S)5 above until Buyer's
Indemnified Group has suffered Adverse Consequences by reason of all such
breaches (or alleged breaches) in excess of a $1,750,000 aggregate threshold (at
which point the Seller will be obligated to indemnify Buyer's Indemnified Group
from and against all such Adverse Consequences for each dollar in excess of the
$1,750,000 aggregate threshold); provided further, that the Seller shall have no
obligation to defend, indemnify and hold harmless any of Buyer's Indemnified
Group from and against any Adverse Consequences resulting from the breach of any
representation or warranty of the Seller contained in (S)3, (S)4 or (S)5 above
to the extent such Adverse Consequences are consequential damages except that
this limitation shall in no way apply to (a) any out-of-pocket costs incurred by
Buyer's Indemnified Group and (b) the representations and warranties made in
Sections 3.1.1, 3.1.2, 3.1.3(A), 3.1.4, 3.1.5, 3.4.1, 3.4.2, 3.4.3(A), 3.4.4,
4.2, 4.4 and 4.6.
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9.2.2. The Seller agrees to defend, indemnify and hold harmless each
member of Buyer's Indemnified Group as provided in (S)5.2.
9.2.3. The Seller agrees to defend, indemnify and hold harmless each
member of the Buyer's Indemnified Group from and against the entirety of any
Adverse Consequences resulting from, arising out of, relating to, in the nature
of, or caused by or attributable to the "Retained Liabilities" or the "Retained
Assets" as these terms are defined in the Asset Transfer Agreements, whether
arising before, on or after Closing.
9.2.4. Notwithstanding any disclosure made to the Buyer, but except
to the extent of a specific reserve reflected on the Final Closing Net Asset
Statement, the Seller agrees to defend, indemnify and hold each member of the
Buyer's Indemnified Group harmless from and against the entirety of any Adverse
Consequences that any of the Buyer's Indemnified Group may suffer resulting
from, arising out of, or relating to:
9.2.4.1. Litigation or arbitration pending or claims made
against the INTOOL Companies or the Business on or before the Closing Date,
including (i) the litigation, arbitration and claims set forth on (S)4.18 of the
Disclosure Schedule, and (ii) all claims (resulting from, arising out of, or
related to an alleged VHL Injury) or claimants (who allege VHL Injuries of the
type alleged by other claimants in such pending matter) that are added to,
joined or consolidated after the Closing Date with any case pending in
Mississippi, Connecticut or Texas on the Closing Date in which a claim for such
alleged VHL Injury is made (excluding any such consolidated claim that involves
an employee from a work site and employer different from those the subject of
the pending cases or involves claimant's counsel different from that involved in
the pending cases, which consolidated claim shall be governed by the terms of
(S)9.2.4.2), and (iii) all claims (resulting from, arising out of, or related to
an alleged VHL Injury) or claimants (who allege VHL Injuries of the type alleged
by other claimants in such pending matter) that are added to any case pending in
West Virginia on the Closing Date in which a claim for such alleged VHL Injury
is made.
9.2.4.2. Except for the claims described in (S)9.2.4.1 (other
than the claims excluded from (S)9.2.4.1 by virtue of the parenthetical in such
section), all VHL Claims made against the Business or Buyer's Indemnified Group
on or before the fifth anniversary of Closing related to the use of products
sold by the INTOOL Companies prior to Closing, provided, however, that the
Seller's obligation under this (S)9.2.4.2 shall be limited to one-half of the
numerical result of (a) the entirety of any Adverse Consequences suffered by
Buyer's Indemnified Group less (b) any related insurance proceeds received by
Buyer's Indemnified Group.
9.2.4.2.1. If the insurance proceeds described in
(S)9.2.4.2 are initially delivered to the Seller or one of its Affiliates, the
Seller is hereby obligated to promptly pay all of such amount to the Buyer,
provided, however, that after the fifth anniversary of Closing, the Seller shall
be obligated to continue promptly paying all such amounts to the Buyer and,
except for VHL Claims pending as of such anniversary date (which shall continue
to be governed by the terms of this (S)9.2.4.2 (unless governed by (S)9.2.4.1)),
the Seller shall have no further liability after such date pursuant to this
(S)9.2.4.2.
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9.2.4.2.2 To the extent that the Seller indemnifies Buyer's
Indemnified Group pursuant to this (S)9.2.4.2, and the Buyer ultimately recovers
any such amount from a third party (except from an insurance carrier (unless
such insurance carrier is listed in Exhibit 1.1 and the proceeds are not
otherwise included in the calculation stated previously in (S)9.2.4.2) or by
virtue of a Tax deduction), then the Buyer shall promptly pay one-half of such
recovery to the Seller.
9.2.4.3. Any off-site Environmental Liability resulting from, arising
out of or relating to (x) the failure of the INTOOL Companies, or any
Predecessor of any interest in real estate owned, leased, operated or used by
the INTOOL Companies, to comply with Environmental, Health and Safety Laws, or
(y) facts, action, events or conditions that occurred or existed in whole or in
part before, on or after the Closing. For purposes of this (S)9.2.4.3, "off-
site" shall mean any location other than the Owned Real Properties and the
Leased Real Properties. The indemnification provided under this (S)9.2.4.3 as it
relates to the off-site property described in the quit claim deed referenced in
(S)6.9.2: (i) is only with respect to such matters which are required under
Environmental Law and shall not include replacement of buildings, equipment or
fixtures, and (ii) does not include the Buyer's internal costs, costs arising
out of the Buyer's negligence or willful misconduct, diminution in value to the
Target or its property or other damages to the extent resulting from affirmative
acts or omissions by the Buyer (such as voluntary sampling or investigation)
which promote regulatory or enforcement action by any Government Body or
otherwise create, accelerate or increase any Environmental Liability (provided
that this limitation described in (ii) does not apply to Adverse Consequences
suffered by Buyer's Indemnified Group arising as a result of migration);
9.2.4.4. Any Environmental Liability resulting from, arising out of or
relating to facts, actions, events or conditions to the extent that they
occurred or existed on or before the Closing Date at the real property located
at 000 Xxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxx, and are attributed to or caused by The
Xxxx Superior Co.;
9.2.4.5. Obtaining any third party consents necessary for the
consummation of the transactions hereunder (including any fees imposed by such
third parties in consideration for granting such consent), and the failure of
the Seller to obtain any such consent;
9.2.4.6. The agreements between the Target (including as successor in
interest to Rotor Tool, Inc.) and Xxxxx and Company (including as successor in
interest to DMARC Electronic Controls) entered into on or before the Closing
Date);
9.2.4.7. Any severance and/or incentive arrangement between Global or
its Affiliates and any employee of the Target or the INTOOL Divisions, including
the arrangements disclosed in (S)4.15.7 of the Disclosure Schedule and the bonus
payment to Xx. X.X. Xxxxxxx;
9.2.4.8. The Seller's pursuit of insurance coverage as provided in
(S)7.8.2, subject to the proviso therein;
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9.2.4.9. Any breach by the Seller of a covenant of any
agreement referenced herein.
9.2.5. The ability of the Buyer to seek indemnity pursuant to
(S)9.2.1 shall not preclude the Buyer from asserting a claim pursuant to
(S)9.2.2, (S)9.2.3, and (S)9.2.4.
9.3. INDEMNIFICATION PROVISIONS FOR BENEFIT OF THE SELLER. If either of
----------------------------------------------------
the Buyer or Xxxxxx breaches (or if any third party alleges facts that, if true,
would mean the Buyer or Xxxxxx has breached) any of its representations,
warranties, and covenants contained herein, and the Seller makes a written claim
for indemnification against the Buyer within the survival period, then the Buyer
agrees to defend, indemnify and hold harmless each of the Seller, its Affiliates
and their directors, officers and employees ("SELLER'S INDEMNIFIED GROUP") from
and against the entirety of any Adverse Consequences that any of the Seller's
Indemnified Group may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences that any of the Seller's
Indemnified Group may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach (or the alleged breach). Except as provided in (S)9.2.4.1 and
(S)9.2.4.2, the Buyer agrees to defend, indemnify and hold each member of the
Seller's Indemnified Group harmless from and against the entirety of any Adverse
Consequences that any of Seller's Indemnified Group may suffer resulting from,
arising out of, or relating to all VHL Claims made after the Closing, provided,
however, that in no event shall "Adverse Consequences" as used in this sentence
be deemed to include amounts paid by the Seller to Buyer's Indemnified Group as
provided in (S)9.2.4.1 or (S)9.2.4.2.
9.4. MATTERS INVOLVING THIRD PARTIES.
-------------------------------
9.4.1. Except as provided in (S)9.4.5 and except for the litigation
and arbitration proceedings and claims governed by (S)9.2.4.1 for each of which
the Seller waives the requirement of notice and hereby assumes the defense
hereof, if any third party shall notify any Party (the "INDEMNIFIED PARTY") with
respect to any matter (a "THIRD PARTY CLAIM") which may give rise to a claim for
indemnification against any other Party (the "INDEMNIFYING PARTY") under this
(S)9, then the Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, however, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall relieve the
Indemnifying Party from any obligation hereunder unless (and then solely to the
extent) the Indemnifying Party is prejudiced by such delay.
9.4.2. Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (A) the Indemnifying
Party notifies the Indemnified Party in writing within 15 days after the
Indemnified Party has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by the Third
Party Claim, (B) the Indemnifying Party provides the Indemnified Party upon
request with evidence reasonably acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend against the Third
Party Claim
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and fulfill its indemnification obligations hereunder, and (C) the Indemnifying
Party conducts the defense of the Third Party Claim actively and diligently.
9.4.3. So long as the Indemnifying Party is conducting the defense of
the Third Party Claim in accordance with (S)9.4.2 above, (A) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the Third Party Claim, (B) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld or delayed unreasonably), and (C) the
Indemnifying Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (unless such settlement, judgment or other
equitable relief is not, in the good faith judgment of the Indemnifying Party,
likely to establish a precedential custom or practice adverse to the continuing
business interest of the Indemnified Party), such consent not to be withheld or
delayed unreasonably.
9.4.4. However, in the event any of the conditions in (S)9.4.2 above
is or becomes unsatisfied (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim, subject to the consent of the Indemnifying Party (not
to be withheld or delayed unreasonably), (B) the Indemnifying Party will
reimburse the Indemnified Party promptly and periodically for the reasonable
costs of defending against the Third Party Claim (including reasonable fees and
expenses of attorneys, accountants, consultants and experts), and (C) the
Indemnifying Party will remain responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest extent provided in
this (S)9.
9.4.5. Notwithstanding the preceding, the Buyer will have the right
to defend all claims which might give rise to a claim for indemnification
against the Seller under (S)9.2.4.2., provided that the Seller may retain
separate co-counsel at its sole cost and expense and participate in the defense
of such Third Party Claim. The Buyer will not consent to the entry of any
judgment or enter into any settlement with respect to any such Third Party Claim
without the prior written consent of the Seller (not to be withheld or delayed
unreasonably) nor will the Seller consent to the entry of any judgment or enter
into any settlement with respect to such Third Party Claim without the prior
written consent of the Buyer (not to be withheld or delayed unreasonably). Every
six months the Buyer shall invoice the Seller, and the Seller will pay to the
Buyer promptly, one half of the costs of defending against such Third Party
Claim (including fees and expenses of attorneys, accountants, consultants and
experts), provided that the Seller will remain responsible for any Adverse
Consequences the Buyer may suffer resulting from, arising out of, relating to,
in the nature of, or caused by such Third Party Claim to the fullest extent
provided in this (S)9.
9.5. LIMITATIONS OF INDEMNITY. In case any event shall occur which would
------------------------
otherwise entitle any Party to assert a claim for indemnification as provided
above, such Party will not be entitled to assert a claim to the extent any
proceeds are received by such Party from any insurance policies with respect
thereto.
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10. TERMINATION.
-----------
10.1. TERMINATION OF AGREEMENT. Certain of the Parties may terminate this
------------------------
Agreement as provided below:
10.1.1. the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
10.1.2. the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event either of
the Seller or Global has breached any covenant contained in this Agreement in
any material respect, or has breached any representation or warranty which
breach results in a material adverse effect on the Business as conducted by the
Target and the INTOOL Divisions taken as a whole, and the Buyer has notified the
Seller of the breach, and the breach has continued without cure for a period of
15 days after the notice of breach, (B) if the Closing shall not have occurred
on or before April 30, 1998 (or May 31, 1998, in the event the Parties receive a
request for additional information pursuant to the Xxxx-Xxxxx-Xxxxxx Act), by
reason of the failure of any condition precedent under (S)8.1 hereof (unless the
failure results primarily from the Buyer's or Xxxxxx'x breaching any
representation, warranty, or covenant contained in this Agreement) or (C) in the
event that any disclosure made by the Seller as required under (S)6.6 could
result in a Liability in excess of $50,000, and the Seller fails to discharge,
assume or remedy such event giving rise to the Liability; and
10.1.3. the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event either the
Buyer or Xxxxxx has breached any representation, warranty, or covenant contained
in this Agreement in any material respect, the Seller has notified the Buyer of
the breach, and the breach has continued without cure for a period of 15 days
after the notice of breach or (B) if the Closing shall not have occurred on or
before April 30, 1998 (or May 31, 1998, in the event the Parties receive a
request for additional information pursuant to the Xxxx-Xxxxx-Xxxxxx Act), by
reason of the failure of any condition precedent under (S)8.2 hereof (unless the
failure results primarily from the Seller's or Global's breaching any
representation, warranty, or covenant contained in this Agreement).
10.2. EFFECT OF TERMINATION. If any Party terminates this Agreement
---------------------
pursuant to (S)10.1 above, all rights and obligations of the Parties hereunder
shall terminate without any Liability of any Party to any other Party (except
for any Liability of any Party then in breach).
11. MISCELLANEOUS.
-------------
11.1. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
---------------------------------------
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the other Party (not to be
unreasonably withheld); provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case
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the disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
11.2. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not confer any
----------------------------
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
11.3. ENTIRE AGREEMENT. This Agreement (including the agreements referred
----------------
to herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
11.4. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
-------------------------
inure to the benefit of the Parties and their respective successors and
permitted assigns. Neither the Seller nor Global may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the Buyer and Xxxxxx (not to be unreasonably withheld
or delayed) and neither the Buyer nor Xxxxxx may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the Seller and Global; provided, however, that the Buyer may (i)
assign any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
Any assignment requiring consent made without consent shall be void.
11.5. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. The Parties agree that
delivery of an executed facsimile page shall be treated as the execution and
delivery of an original. Any Party using such a facsimile shall send the
original by overnight courier for next day delivery to the proper recipient(s).
11.6. HEADINGS. The section headings contained in this Agreement are
--------
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.7. NOTICES. All notices, requests, demands, claims, and other
-------
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed given (i) when delivered by
hand, (ii) when transmitted by facsimile transmission confirmation of receipt
(including a message generated by the sender equipment), or two business days
after it is sent by overnight delivery by Airborne Express, Federal Express,
other express delivery service, to the addressee at the following address or fax
number (or to such other addressee or fax number as a Party may specify from
time to time by notice hereunder):
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IF TO THE SELLER: GPX Corp.
c/o Global Industrial Technologies, Inc.
0000 Xxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Senior Vice President, General Counsel
& Secretary
Facsimile: (000) 000-0000
IF TO THE BUYER: Xxxxxx Industries, Inc.
Chase Tower
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Senior Vice President, General Counsel
& Secretary
Facsimile: (000) 000-0000
WITH A COPY TO: Xxxxxx Power Tools, Inc.
000 Xxxxxxxxxx Xxxxx
Xxxxxxxxx, X.X. 00000-0000
Attention: President
Facsimile: (000) 000-0000
11.8. GOVERNING LAW. This Agreement shall be governed by and construed
-------------
in accordance with the domestic Laws of the State of Texas without giving effect
to any choice or conflict of law provision or rule that would cause the
application of the Laws of any other jurisdiction, except that the Federal
Arbitration Act, 9 U.S.C. Sections 1-16 shall govern all questions relating to
the arbitrability of any claim or dispute in connection with this Agreement,
including without limitation, such claims or disputes relating to the purchase
price adjustment pursuant to (S)2 hereof, and to the enforcement of the
arbitration provisions contained in (S)2 and (S)12 hereof.
11.9. AMENDMENTS AND WAIVERS. No amendment of any provision of this
----------------------
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Seller. The requirement for modifications or amendments to be made
in writing applies also to any modification or amendment of the requirement for
a written agreement in the preceding sentence. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.10. SEVERABILITY. Any term or provision of this Agreement that is
------------
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
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11.11. EXPENSES. Each of the Parties and the INTOOL Companies will bear
--------
its own costs and expenses (including all fees and expenses of its attorneys,
consultants, investment brokers, accountants, advisors or other agents or
representatives) incurred in connection with this Agreement and the transactions
contemplated hereby. The Seller agrees that none of the INTOOL Companies has
borne or will bear any of the Seller's or Global's costs and expenses in
connection with this Agreement or any of the transactions contemplated hereby.
The Seller agrees that any fees or expenses related to the INTOOL Companies
incurred prior to the Closing (regardless of when any such fee or expense is
invoiced) in any way related to the transactions contemplated hereunder shall be
paid by the Seller.
11.12. CONSTRUCTION. The Parties have participated jointly in the
------------
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local,
or foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
11.13. INCORPORATION OF EXHIBITS, CERTIFICATES, AND SCHEDULES. The
------------------------------------------------------
Exhibits, Certificates and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
11.14. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and agrees
--------------------
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter, in addition to any other remedy to which they may be
entitled, at law or in equity.
12. DISPUTE RESOLUTION.
------------------
12.1. EMPOWERED OFFICER AND REPRESENTATIVES. Any claim or dispute,
-------------------------------------
between the Parties arising out of or in connection with this Agreement or the
agreements referenced herein or any alleged breach hereof or thereof (except
those to which the arbitration provisions in (S)2.7.5 or (S)5.3 apply and any
claim or dispute regarding a covenant not to compete including the
enforceability thereof), including any issue as to whether this (S)12 applies
(but not the issue
-61-
whether this (S)12 applies to a claim or dispute regarding any covenant not to
compete) (a "CLAIM"), shall be submitted for resolution to an officer of the
Buyer and the Seller (each such representative being fully empowered to settle
the claim or dispute), who shall meet within 15 days of such submission to seek
in good faith an amicable settlement.
12.2. BINDING ARBITRATION.
-------------------
12.2.1. GOVERNING PRINCIPLES. Any Claim not settled by the
--------------------
Parties within 60 days after written notice of the Claim is first submitted by
either Party to the other shall be finally settled by arbitration under the
Commercial Arbitration Rules (the "RULES") and the Guidelines for Expediting
Larger, Complex Commercial Arbitrations of the American Arbitration Association,
and judgment upon the award rendered by the Arbitrator may be entered in any
court having jurisdiction over it.
12.2.2. SELECTION AND QUALIFICATION OF THE ARBITRATOR. If the
---------------------------------------------
amount in dispute is $1,000,000 or less, there shall be one arbitrator, and if
the amount is dispute is greater than $1,000,000, there shall be three
arbitrators. If there is one arbitrator, the Parties shall endeavor to agree on
the selection of an arbitrator, but if no agreement has been reached within 30
days of claimant's demand, the arbitrator shall be selected by the American
Arbitration Association. If there is to be three arbitrators, each Party shall
select one and those two arbitrators shall select the third. The term
"ARBITRATOR" is used herein to refer to either one or three arbitrators, as
applicable. The arbitration shall be held in Austin, Texas. Promptly after
expiration of respondent's time to answer the claimant's demand, and before the
beginning of arbitrator selection, an administrative conference shall be held.
The Arbitrator shall conduct himself as a neutral, shall be on the National
Panel of Commercial Arbitrators established and maintained by the Arbitrator,
and be subject to disqualification pursuant to Section 19 of the Rules. The
Arbitrator shall be compensated at his normal hourly or per diem rates for all
time spent in connection with the arbitration proceeding, and pending final
award, appropriate compensation and expenses shall be advanced equally by the
Parties.
12.2.3. PRELIMINARY HEARING. Within 15 days after the
-------------------
Arbitrator has been appointed, a preliminary hearing among the Arbitrator and
counsel for the Parties shall be held for the purpose of developing a written
plan for the management of the arbitration, that shall promote the efficient,
expeditious and cost-effective conduct of the proceeding.
12.2.4. INTERIM RELIEF FROM A COURT. Either Party may request a
---------------------------
court to provide interim or provisional relief (including pursuant to (S)11.4),
and such request shall not be deemed incompatible with the agreement to
arbitrate or as a waiver of that agreement.
12.2.5. POWERS OF THE ARBITRATOR AND ARBITRATION PROCEDURES.
---------------------------------------------------
The Arbitrator shall permit and facilitate such discovery as he determines is
appropriate, including prehearing depositions, particularly of witnesses who
will not appear, and orders to protect the confidentiality of proprietary
information, trade secrets, and other sensitive information disclosed in
discovery. Papers, documents and written communications shall be delivered by
the Parties directly to each other, the Arbitrator, and the AAA tribunal
administrator. The Arbitrator shall actively manage
-62-
the proceeding to make it fair, expeditious, economical and less burdensome and
adversarial than litigation. The Arbitrator may limit the issues, limit the time
for each Party to present its case, exclude testimony and other evidence that
the Arbitrator deems irrelevant, cumulative or inadmissible, and order that the
direct testimony of witnesses be furnished by written sworn statement. All
documents that a Party proposes to offer in evidence, except for those objected
to by an opposing Party, shall be self-authenticated. There shall be a
stenographic transcript of the proceedings, the cost of which shall be borne
equally by the Parties, pending the final award. Any Claim submitted to
arbitration shall be resolved in accordance with Title 9 of the U.S. Code (U.S.
Arbitration Act), which shall govern the interpretation, enforcement and
proceedings pursuant to this arbitration provision.
12.2.6. RENDERING OF AWARD. The award rendered by the
------------------
Arbitrator shall be itemized, may include exemplary damages (for any knowing or
willful breach of this Agreement) and may include all or a part of a Party's
reasonable fees and expenses of attorneys, accountants, consultants and experts,
and shall state the reasoning on which it rests. Before rendering the final
award, the Arbitrator shall submit to the Parties an unsigned draft of the
proposed award, and each Party may deliver, within 15 days after receipt of such
draft, a written statement of alleged errors of fact, computation, law or
otherwise. The Arbitrator may disregard any Party's statement to the extent that
it is in substance an application for reargument. Within 20 days after receipt
of such Party statements, the Arbitrator shall render the final award.
13. GUARANTY.
--------
13.1. GLOBAL GUARANTY. In consideration of the Buyer's entering into
---------------
this Agreement, under which Global will receive benefits as the shareholder of
the Seller, Global hereby irrevocably and unconditionally guarantees to the
Buyer full, prompt and complete performance and payment by the Seller of its
obligations and Liabilities contained in this Agreement, including its
obligation to cause its Affiliates to take or refrain from taking certain acts
and their indemnification obligations (including the obligations of the Seller's
Affiliates under the Other Agreements). Global covenants and agrees that (i)
waiver by the Seller or its Affiliates of any of the terms, provisions,
obligations and agreements of this Agreement and the Other Agreements, (ii) any
modification or changes to this Agreement and the Other Agreements, or (iii) the
granting of extensions of time, may be done without notice to Global and without
in any way affecting, changing or releasing Global from its obligations
hereunder. Global hereby waives (a) all notices with respect to the obligations
of this (S)13.1, including demand, notice and notice of intent to accelerate,
(b) any right to require the Buyer to first proceed against the Seller before
proceeding against Global, the obligations of Global hereunder being primary and
independent of the obligations of its Affiliates under this Agreement or the
Other Agreements, (c) any defense based on any bankruptcy, insolvency,
reorganization, liquidation or dissolution of the Seller or a change in
ownership or control of the Seller, (d) the provisions of Law pertaining to
sureties or guarantors to the extent waivable under Law, that may be contrary to
the provisions of this (S)13.1, and (e) any requirement that the Buyer or its
Affiliates notify Global of any facts the Buyer may learn regarding a change in
the financial status of the Seller.
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13.2. XXXXXX GUARANTY. In consideration of the Seller's entering into
---------------
this Agreement, under which Xxxxxx will receive benefits as the shareholder of
the Buyer, Xxxxxx hereby irrevocably and unconditionally guarantees to the
Seller full, prompt and complete performance and payment by the Buyer of its
obligations and Liabilities contained in this Agreement, including its
obligation to cause its Affiliates to take or refrain from taking certain acts
and its indemnification obligations (including the obligations of the Seller's
Affiliates under the Other Agreements). Xxxxxx covenants and agrees that (i)
waiver by the Buyer or its Affiliates of any of the terms, provisions,
obligations and agreements of this Agreement and the Other Agreements, (ii) any
modification or changes to this Agreement and the Other Agreements, or (iii) the
granting of extensions of time, may be done without notice to Xxxxxx and without
in any way affecting, changing or releasing Xxxxxx from its obligations
hereunder. Xxxxxx hereby waives (a) all notices with respect to the obligations
of this (S)13.2, including demand, notice and notice of intent to accelerate,
(b) any right to require the Seller to first proceed against the Buyer before
proceeding against Xxxxxx, the obligations of Xxxxxx hereunder being primary and
independent of the obligations of its Affiliates under this Agreement or the
Other Agreements, (c) any defense based on any bankruptcy, insolvency,
reorganization, liquidation or dissolution of the Buyer or a change in ownership
or control of the Buyer; (d) the provisions of Law pertaining to sureties or
guarantors to the extent waivable under Law, that may be contrary to the
provisions of this (S)13.2, and (e) any requirement that the Seller or its
Affiliates notify Xxxxxx of any facts the Seller may learn regarding a change in
the financial status of the Buyer.
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The Parties hereto have executed this Agreement on the date first
above written.
XXXXXX POWER TOOLS, INC.
By: /s/ Xxxxx X. Xxxxx, Xx.
-----------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Authorized Signatory
GPX CORP.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
XXXXXX INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxxx, Xx.
-----------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Sr. Vice President
GLOBAL INDUSTRIAL TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Sr. Vice President
