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ASSET PURCHASE AGREEMENT
among
MAGNETEK, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.*
and
000 XXXX XXXXXX ACQUISITION CORP.
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Dated as of March 13, 1995
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SALE OF CERTAIN ASSETS OF MAGNETEK
NATIONAL ELECTRIC COIL, INC.
LOCATED IN COLUMBUS, OHIO RELATING TO
ROTATING EQUIPMENT REMANUFACTURING AND REPAIR
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TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS.................................................... 1
1.1 Certain Defined Terms................................ 1
1.2 Other Definitional Provisions........................ 7
ARTICLE II CLOSING; PURCHASE PRICE ADJUSTMENT............................. 7
2.1 Sale and Transfer of the Assets...................... 7
2.2 Assets Not Transferred............................... 8
2.3 Assumed and Excluded Liabilities..................... 10
2.4 Closing.............................................. 11
2.5 Purchase Price Adjustment............................ 12
2.6 Tax Allocation....................................... 14
2.7 Sales and Use Tax.................................... 15
ARTICLE III CONDITIONS TO CLOSING..................................... 15
3.1 Buyer's Obligation................................... 15
3.2 Sellers' Obligation.................................. 16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF MAGNETEK..................... 17
4.1 Authority; No Conflicts; Governmental
Consents............................................. 17
4.2 Financial Statements................................. 18
4.3 Taxes................................................ 18
4.4 Assets Other than Real Property Interests............ 18
4.5 Real Property........................................ 19
4.6 [Intentionally Omitted].............................. 19
4.7 Contracts............................................ 19
4.8 Litigation; Decrees.................................. 20
4.9 Employee and Related Matters......................... 21
4.10 Environmental Matters................................ 21
4.11 Employee and Labor Relations......................... 21
4.12 Exclusivity of Representations....................... 22
ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER........................ 22
5.1 Authority; No Conflicts; Governmental
Consents............................................. 22
5.2 Actions and Proceedings, Etc......................... 23
5.3 Availability of Funds................................ 23
5.4 Buyer's Acknowledgment............................... 23
5.5 Exon-Xxxxxx.......................................... 23
5.6 No Knowledge of Sellers' Breach...................... 23
ARTICLE VI COVENANTS OF MAGNETEK.......................................... 24
6.1 Access............................................... 24
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6.2 Ordinary Conduct..................................... 24
6.3 Insurance............................................ 25
6.4 Title Commitment..................................... 25
6.5 Acquisition Proposals................................ 25
6.6 Accounts Receivable.................................. 25
ARTICLE VII COVENANTS OF BUYER........................................ 26
7.1 Confidentiality...................................... 26
7.2 Accounts Receivable.................................. 26
7.3 Waiver of Bulk Sales Law Compliance.................. 26
7.4 Excluded Assets...................................... 27
7.5 Insurance............................................ 27
7.6 Replacement Bonding.................................. 27
ARTICLE VIII MUTUAL COVENANTS.......................................... 28
8.1 Permits and Consents................................. 28
8.2 Cooperation.......................................... 30
8.3 Publicity............................................ 30
8.4 Reasonable Efforts and Further Assurances............ 30
8.5 Records.............................................. 30
8.6 Access to Former Business Records;
Cooperation in Litigation............................ 30
8.7 Use of Trademarks, Trade Names and
Corporate Names...................................... 31
8.8 Required Modifications or Replacements of
Products............................................. 31
8.9 Outstanding Contracts................................ 32
8.10 NASA Bid............................................. 32
ARTICLE IX EMPLOYEE BENEFIT MATTERS....................................... 33
9.1 Employee Retention................................... 33
9.2 Employee Benefit Plans............................... 33
9.3 Employees Covered by Collective Bargaining
Agreements........................................... 34
9.4 Bargaining Plans..................................... 34
9.5 Vacation, Holiday, Sick and Severance Pay............ 34
9.6 Access to Information................................ 34
9.7 Third-Party Beneficiaries............................ 34
ARTICLE X INDEMNIFICATION................................................ 34
10.1 Indemnification by MagneTek.......................... 34
10.2 Indemnification by Buyer............................. 35
10.3 Indemnification for Environmental Matters............ 36
10.4 Losses Net of Insurance, Etc......................... 36
10.5 Termination of Indemnification....................... 37
10.6 Procedures Relating to Indemnification
(Other than for Tax Claims).......................... 38
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10.7 Procedures Relating to Indemnification of
Tax Claims........................................... 39
10.8 Survival of Representations.......................... 40
ARTICLE XI GENERAL PROVISIONS............................................. 40
11.1 Assignment........................................... 40
11.2 No Third-Party Beneficiaries......................... 41
11.3 Termination.......................................... 41
11.4 Expenses............................................. 42
11.5 Attorneys' Fees...................................... 42
11.6 Amendments........................................... 42
11.7 Notices.............................................. 42
11.8 Interpretation; Exhibits and Schedules............... 43
11.9 Counterparts......................................... 44
11.10 Entire Agreement................................... 44
11.11 Fees............................................... 44
11.12 Severability....................................... 44
11.13 Governing Law...................................... 44
iii
EXHIBITS
--------
EXHIBIT A Xxxx of Sale, Assignment and Assumption Agreement..............A-1
EXHIBIT B Opinion of Xxxxxx, Xxxx & Xxxxxxxx.............................B-1
EXHIBIT C Opinion of General Counsel of MagneTek.........................C-1
EXHIBIT D Opinion of Xxxxxxx X. Xxxxxxxx.................................D-1
EXHIBIT E Form of Services and Lease Agreement...........................E-1
EXHIBIT F Form of Deed...................................................F-1
EXHIBIT G Form of Sharing Agreement......................................G-1
EXHIBIT H Form of Trademark License Agreement............................H-1
EXHIBIT I Form of Tradename License Agreement............................I-1
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SCHEDULES
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Schedule 1.1(a) December Balance Sheet
Schedule 1.1(b) Business Employees
Schedule 2.1(d) Description of Data
Schedule 2.2(h) Certain Excluded Assets
Schedule 2.6 Purchase Price Allocation
Schedule 4.1(b) Conflicts (Sellers)
Schedule 4.3 Taxes
Schedule 4.4 Liens
Schedule 4.5 King Avenue Property
Schedule 4.7 Certain Contracts
Schedule 4.8 Litigation
Schedule 4.9 Seller Plans
Schedule 4.11 Labor Matters
Schedule 5.1(b) Conflicts (Buyer)
Schedule 6.2 Exceptions to Ordinary Course
Schedule 7.6 Outstanding Bonds etc.
Schedule 11.11 Sellers' and Buyer's Brokers and Finders
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of March 13, 1995, among
MAGNETEK, INC., a Delaware corporation ("MagneTek"), MAGNETEK NATIONAL ELECTRIC
COIL, INC., a Delaware corporation ("NEC" and together with MagneTek,
"Sellers"), and 000 XXXX XXXXXX ACQUISITION CORP., an Ohio corporation
("Buyer").
NEC, a wholly owned subsidiary of MagneTek, is engaged, through
its King Avenue, Columbus facility, in the business of repairing,
remanufacturing and upgrading generators and motors primarily for the utility
industry (the "Columbus Business"). Sellers desire to sell to Buyer certain
assets (other than excluded assets) relating to the Columbus Business. Buyer
desires to purchase such assets and is willing to assume certain associated
obligations and liabilities.
Accordingly, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be
equally applicable to both the singular and plural forms of the terms
defined):
"Affiliate" has the meaning ascribed to such term in Rule 12b-2
promulgated under the Exchange Act by the SEC, as in effect on the date
hereof.
"Assets" has the meaning set forth in Section 2.1.
"Assigned Contracts" has the meaning set forth in Section 2.1(e).
"Assumed Liabilities" has the meaning set forth in Section 2.3.
"Xxxx of Sale, Assignment and Assumption Agreement" means a Xxxx of
Sale, Assignment and Assumption Agreement in substantially the form attached
hereto as Exhibit A.
"Business Day" means a day other than a Saturday or a Sunday or
other day on which commercial banks in New York are authorized or required by
law to close.
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"Business Employee" means any employee of MagneTek or NEC working
primarily for the Columbus Business on the Closing Date, including any such
employee on vacation, family, illness or disability leave on such date, who
is listed on Schedule 1.1(b).
"Buyer Indemnified Person" has the meaning set forth in Section
10.1.
"Closing Balance Sheet" has the meaning set forth in Section 2.5.
"Closing Date" means the day on which the Closing occurs pursuant
to Section 2.4.
"Code" means the Internal Revenue Code of 1986, as amended from
time to time.
"Collective Bargaining Agreement" means the Agreement between
MagneTek National Electric Coil, Columbus, Ohio, and International Union of
Electrical, Radio & Machine Workers, AFL-CIO-CLC and its Local No. 745, dated
March 4, 1993 and all schedules, appendices and letters of understanding
related thereto.
"Contract" means any contract, agreement, license, lease, sales or
purchase order or other legally binding commitment, whether written or oral,
to which MagneTek or NEC is a party and relating exclusively to the Columbus
Business.
"Contractual Obligation" means, as to any Person, any provision of
any note, bond or security issued by such Person or of any mortgage,
indenture, deed of trust, lease, license, franchise, contract, agreement,
instrument or undertaking to which such Person is a party or by which it or
any of its property or assets is subject.
"December Balance Sheet" means the unaudited balance sheet of the
Columbus Business as of December 31, 1994, attached hereto as Schedule 1.1(a).
"Employee Benefit Arrangements" means each and all pension,
supplemental pension, accidental death and dismemberment, life and health
insurance and benefits (including medical, dental, vision and
hospitalization), disability, holiday, vacation, sick pay, sick leave,
tuition refund, service award and other employee benefit arrangements, plans,
contracts or policies providing employee or executive compensation or
benefits to Business Employees, other than the Employee Benefit Plans.
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"Employee Benefit Plans" means each and all "employee benefit
plans," as defined in Section 3(3) of ERISA, maintained or contributed to by
either Seller or in which either Seller participates or participated and
which, in each case, provides benefits to Business Employees, including (i)
any such plans that are "employee welfare benefit plans" as defined in
Section 3(1) of ERISA and (ii) any such plans that are "employee pension
benefit plans" as defined in Section 3(2) of ERISA.
"Environmental Law" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, and any other applicable statutes,
regulations, rules, ordinances or codes which relate to the protection of the
environment from the effects of Hazardous Substances.
"Equipment" has the meaning set forth in Section 2.1(b).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and the rules and regulations of the SEC
promulgated from time to time thereunder.
"Excluded Assets" has the meaning set forth in Section 2.2.
"Excluded Liabilities" has the meaning set forth in Section 2.3.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Hazardous Substance" means any substance which is defined as a
hazardous waste or hazardous substance under any Environmental Law.
"High Voltage" means voltage greater than or equal to 11,000 KVA.
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"Indemnified Person" means, with respect to any Loss, the Person
seeking indemnification hereunder.
"Indemnifying Person" means, with respect to any Loss, the Person
from whom indemnification is being sought hereunder.
"Intellectual Property" has the meaning set forth in the Sharing
Agreement.
"Inventory" has the meaning set forth in Section 2.1(c).
"King Avenue Property" has the meaning set forth in Section 2.1(a).
"Knowledge of Seller" with reference to any of the representations
and warranties of MagneTek means the actual knowledge of any "officer" of
MagneTek as such term is defined in 17 C.F.R. 240.16a-1(f), to the extent
such officer had, on the date hereof, responsibility for matters that are the
subject of such representation and warranty; PROVIDED, HOWEVER, that unless
such an officer had (a) actual knowledge to the contrary or (b) direct
responsibility at the Columbus Business level for the subject matter thereof,
such knowledge is based solely upon information and materials supplied to
MagneTek by Columbus Business personnel, deemed for this purpose to include
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxxx.
"Lien" means any mortgage, pledge, hypothecation, assignment,
encumbrance, lien (statutory or other) or other security agreement of any
kind or nature whatsoever (including, without limitation, any conditional
sale or other title retention agreement or any financing lease having
substantially the same economic effect as any of the foregoing).
"Loss" means any loss, liability, claim, damage or expense
(including reasonable attorneys' fees and disbursements and the costs of
investigation). Loss recoverable hereunder is subject to the limitations set
forth in Section 10.4.
"Material Adverse Effect" means a material adverse effect on (a)
the business, operations, property or condition (financial or other) of the
Columbus Business, taken as a whole, or (b) the ability of Sellers to
consummate the Transactions.
"Permits" has the meaning set forth in Section 2.1(f).
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"Permitted Liens" has the meaning set forth in Section 4.4.
"Person" means an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"Purchase Price" has the meaning set forth in Section 2.4.
"Quit Claim Deed" means the Quit Claim Deed to be granted by NEC to
Buyer in substantially the form attached hereto as Exhibit F.
"Reciprocal Easement Agreement" means the Reciprocal Easement
Agreement dated as of October 31, 1994 by and between NEC and Rail Products
International, Inc., an Ohio corporation ("RPI"), as amended to date.
"Records" has the meaning set forth in Section 2.1(g).
"Required Modification" means, with respect to any product, a
modification, improvement or enhancement which is (a) required by any
Requirement of Law or (b) otherwise necessary or advisable in MagneTek's sole
discretion to permit MagneTek to meet any duty or obligation owing by NEC to
remedy defects or hazards in such products or to provide any warning with
respect to any such defects or hazards. Required Modifications may include,
but shall not be limited to, modifications, improvements or enhancements
necessary to meet industry standards, or to implement design improvements, or
modifications of or supplements to the product's design, quality, components,
safety features, labeling, warnings or instructions. Required Modification
shall in no event mean or include any modification, improvement or
enhancement required by any written warranty covering the relevant product.
"Requirement of Law" means, as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.
"RPI Agreement" has the meaning set forth in Section 2.2(i).
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"RPI Assets" has the meaning set forth in Section 2.2(i).
"SEC" means the Securities and Exchange Commission.
"Seller Plans" means each and all Employee Benefit Plans and
Employee Benefit Arrangements sponsored or maintained by NEC or MagneTek
under which any Columbus Business Employee participates or is entitled to
receive benefits.
"Services and Lease Agreement" means the agreement to be entered
into by NEC and Buyer in respect of certain engineering services to be
rendered by Buyer personnel and the use by Seller of certain real estate and
equipment at King Avenue, in substantially the form attached hereto as
Exhibit E.
"Sharing Agreement" means the agreement to be entered into by Buyer
and NEC pertaining to the license of certain intellectual property in
substantially the form of Exhibit G hereto.
"Tax" or "Taxes" means, with respect to any Person, any federal,
state, local or foreign net income, gross income, gross receipts, sales, use,
ad valorem, value-added, capital, unitary, intangible, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp,
transfer, occupation, premium, property or windfall profit tax, custom, duty
or other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest or penalty, addition to tax or
additional amount imposed by any jurisdiction or other taxing authority, on
such Person.
"Tax Returns" has the meaning set forth in Section 4.3.
"Title Commitment" has the meaning set forth in Section 6.4.
"Trademark License Agreement" means the non-exclusive license
agreement pertaining to the "Neccobond" trademark and to various "NECCO"
tradenames to be entered into by Buyer and MagneTek in substantially the form
of Exhibit H hereto.
"Tradename License Agreement" means the non-exclusive license
agreement pertaining to the name "National Electric Coil" to be entered into
by Buyer and NEC in substantially the form of Exhibit I hereto.
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"Transaction Documents" means (i) this Agreement, (ii) the Xxxx of
Sale, Assignment and Assumption Agreement, (iii) the Services and Lease
Agreement, (iv) the Quit Claim Deed, (v) the Sharing Agreement, (vi) the
Trademark License Agreement and (vii) the Tradename License Agreement.
"Transactions" means the transactions contemplated by the
Transaction Documents.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) Terms defined in this Agreement in Sections other
than Section 1.1 shall have the meanings as so defined when used in this
Agreement.
(b) As used herein, accounting terms not defined or to
the extent not defined shall have the respective meanings given to them under
GAAP.
(c) Unless express reference is made to Business Days,
references to days shall be to calendar days.
ARTICLE II
CLOSING; PURCHASE PRICE ADJUSTMENT
2.1 SALE AND TRANSFER OF THE ASSETS. Subject to the terms and
conditions of this Agreement, on the Closing Date, NEC and, to the extent
applicable, MagneTek, will sell, convey, transfer, assign and deliver to
Buyer all of their respective right, title and interest in and to the
following assets (except the Excluded Assets), as the same shall exist on the
Closing Date (the "Assets"):
(a) the real property (including all buildings,
improvements and structures located on such portion and all rights,
privileges, easements and appurtenances thereto) located at 000 Xxxx Xxxxxx,
Xxxxxxxx, Xxxx 00000 described on Schedule 4.5 hereto (the "King Avenue
Property");
(b) all tangible personal property, including, without
limitation, the fixtures, furnishings, furniture, office supplies, vehicles,
rolling stock, tools, tooling and forms, machinery, equipment and computer
equipment (including software) located upon or affixed to the King Avenue
Property (collectively, including the fixtures, the "Equipment");
(c) all inventory, including, without limitation, raw
materials, work-in-process, finished goods, packaging materials, spare parts
and supplies of the Columbus Business (the "Inventory");
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(d) the Intellectual Property described on Schedule
2.1(d);
(e) all Contracts (including, but not limited to, all
Contracts listed on Schedule 4.7 and all Contracts entered into by the
Columbus Business through the Closing Date), except for any Contract that
requires the consent to assignment of a party thereto which consent has not
been obtained prior to the Closing Date pursuant to Section 8.1 (the
"Assigned Contracts");
(f) all transferable business licenses and permits used
exclusively in or relating exclusively to the Columbus Business or the Assets
(the "Permits");
(g) all books and records, employment records and files
(other than Intellectual Property, historical accounting, financial and Tax
records) related to or used by Sellers exclusively in connection with the
Assets and the operation of the Columbus Business and located at the King
Avenue Property (the "Records");
(h) all insurance proceeds paid or payable by any
insurance provider, other than Sellers or any Affiliate of Sellers, for any
Asset that is destroyed or damaged after the date hereof and prior to the
Closing;
(i) all accounts receivable and notes receivable of
Sellers on the Closing Date arising exclusively out of the activities of the
Columbus Business;
(j) the stock of MagneTek Power, Inc.; and
(k) all goodwill appurtenant to the foregoing Assets.
2.2 ASSETS NOT TRANSFERRED. Notwithstanding anything herein to
the contrary, the following assets are not included in the Assets and shall
be retained by Sellers (the "Excluded Assets"):
(a) all cash and cash equivalent items (except as
described in Section 2.1(h) and except for deposits and prepaid expenses
reflected on the Closing Balance Sheet and relating to Assumed Liabilities)
of Sellers, including, without limitation, checking accounts, bank accounts,
lock box files, certificates of deposit, time deposits, securities and the
proceeds of accounts receivable, including uncashed checks in payment thereof
received by Sellers on or prior to the Closing Date, in each case whether or
not relating to the Columbus Business;
8
(b) all rights, properties and assets which have been
used or held for use in connection with the Columbus Business and which shall
have been transferred (including transfers by way of sale) or otherwise
disposed of prior to the Closing; PROVIDED, such transfers and disposals
shall have been in the ordinary course of the business of the Columbus
Business as conducted at the date hereof;
(c) rights to or claims for refunds or rebates of Taxes
and other governmental charges for periods ending on or prior to the Closing
Date and the benefit of net operating loss carryforwards, carrybacks or other
credits of Sellers, whether or not attributable to the Columbus Business;
(d) claims or rights against third parties, except those
arising with respect to events or breaches occurring after the Closing Date
under the Assigned Contracts; PROVIDED, HOWEVER, that any rights of
indemnification, contribution or reimbursement that may exist under the
Assigned Contracts in respect of Excluded Assets or Excluded Liabilities
hereunder shall be Excluded Assets;
(e) all insurance policies and rights thereunder,
including, but not limited to, rights to any cancellation value as of the
Closing Date;
(f) proprietary or confidential business or technical
information, records and policies that relate to any other division of either
Seller, to Sellers generally or to the division of which the Columbus
Business forms a part generally, or any of either Sellers' Affiliates,
including, without limitation, organization manuals and strategic plans, but
subject to the Sharing Agreement;
(g) subject to the limited rights granted in Section 8.7
and pursuant to the Sharing Agreement, the Trademark License Agreement and
Tradename License Agreement, all "MagneTek" and "NEC" marks, the NECCOBOND
trademark, and all trademarks or service marks, trade names, slogans or other
like property relating to or including the names "MagneTek," "National
Electric Coil" or "NEC," "NECCO", the xxxx MagneTek or NEC, or any derivative
thereof, and the MagneTek or NEC logo or any derivative thereof, and the name
"Energy Engineered," the "Power M" design, and any derivative thereof, and
Sellers' proprietary computer programs or other software, including, but not
limited to, Sellers' proprietary databases, accounting and reporting formats,
systems and procedures;
(h) the Intellectual Property described in Schedule
2.2(h) or covered by the Sharing Agreement;
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(i) those assets (the "RPI Assets") sold pursuant to that
certain Asset Purchase Agreement dated as of October 31, 1994 by and among
Sellers and Rail Products International, Inc., an Ohio corporation (the "RPI
Agreement") and any assets that may not be sold hereunder under the terms of
the RPI Agreement;
(j) all other assets of Sellers not expressly included in
the Assets to be sold hereunder, including, but not limited to, assets used
by Sellers or their Affiliates in other businesses of Sellers or at other
locations of the same division, and assets used primarily in connection with
Sellers' corporate functions (including but not limited to the corporate
charter, taxpayer and other identification numbers, seals, minute books and
stock transfer books), whether or not used for the benefit of the Columbus
Business; and
(k) the IBM mainframe computer and associated software.
2.3 ASSUMED AND EXCLUDED LIABILITIES. On the Closing Date, Buyer
shall execute and deliver to Sellers the Xxxx of Sale, Assignment and
Assumption Agreement pursuant to which Buyer shall assume and agree to pay,
perform and discharge when due, all the liabilities and obligations of
Sellers arising out of the business of the Columbus Business, of any kind or
nature, whether absolute, contingent, accrued or otherwise, and whether
arising before or after the Closing, including, without limitation, all
liabilities (i) for tax items assumed by Buyer under Section 2.7, (ii) under
the Assigned Contracts, (iii) in respect of the threatened litigation
referred to on Schedule 4.8 and (iv) all liabilities and obligations of Buyer
set forth in Article IX hereof (collectively, the "Assumed Liabilities");
PROVIDED, HOWEVER, that the Assumed Liabilities shall in no event include the
following liabilities (the "Excluded Liabilities"):
(a) any liability, responsibility or obligation with
respect to any Seller Plan, except (i) as provided in Article IX, (ii) under
the Collective Bargaining Agreement (to the extent provided in Article IX)
and (iii) pursuant to any Assigned Contract;
(b) any liability for (i) warranty claims made after the
Closing for service, repair, replacement and similar work required under
Sellers' written warranties with respect to products sold or services
provided prior to the Closing, the expenses of which, at shop level cost
(direct materials, direct labor and factory overhead), in the aggregate
exceed the warranty reserve on the Closing Balance Sheet, (ii) workers'
compensation claims with respect to injuries
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prior to the Closing, (iii) claims under health insurance plans of Sellers
for covered Business Employees with respect to services rendered prior to the
Closing (but not in respect of any sick leave or disability benefits
pertaining to any period after the Closing Date regardless of when the
relevant illness or condition arose) or (iv) any product liability claims for
injuries, property damage or other Losses, arising with respect to products
sold or services provided prior to the Closing, but only if written notice of
such claims described in clause (i), (ii), (iii) or (iv) shall have been
delivered by Buyer to MagneTek within the two-year period following the
Closing Date;
(c) any liability for Taxes for any period ending on or
prior to the Closing Date, excluding the tax items covered by Section 2.7;
(d) any liability under any litigation pertaining to the
Columbus Business as to which a complaint has been filed in state or federal
court, or an administrative charge or complaint has been filed with a
governmental agency, in each case prior to the Closing Date including,
without limitation, in respect of the EEOC complaint described on Schedule
4.8; and
(e) any liability under any contract as to which (i)
consent to assignment is required but has not been obtained and (ii) the
benefits have not been made available to Buyer as contemplated by Section 8.1
hereof.
2.4 CLOSING. The closing (the "Closing") of the purchase and sale
of the Assets shall be held at offices to be specified by Buyer in Columbus,
Ohio, at 10:00 a.m. on March 13, 1995, or if the conditions to Closing set
forth in Article III shall not have been satisfied or waived by such date,
subject to Section 11.3, as soon as practicable after such conditions shall
have been satisfied or waived. The date on which the Closing shall occur is
hereinafter referred to as the "Closing Date." At the Closing, Buyer shall
deliver to Sellers by wire transfer (to a bank account designated at least
two business days prior to the Closing Date in writing by Sellers)
immediately available funds in an amount equal to the sum of $4,862,900 (the
"Purchase Price"), plus or minus an estimate, if the parties mutually agree
prior to the Closing Date with respect thereto, of any adjustment to the
Purchase Price under Section 2.5 (the Purchase Price plus or minus such
estimate of any adjustment under Section 2.5 being hereinafter called the
"Closing Date Amount"), and such other documents as are required by this
Agreement.
At the Closing, Sellers shall deliver or cause to be delivered to
Buyer (a) the Xxxx of Sale, Assignment and
11
Assumption Agreement, (b) the Quit Claim Deed, (c) the Services and Lease
Agreement, (d) the Sharing Agreement, (e) the Trademark License Agreement,
(f) the Tradename License Agreement, (g) the documents and agreements
referred to in Section 3.1 hereof and (h) such other instruments of transfer
and documents as Buyer may reasonably request; and Buyer shall deliver to
Sellers (i) the documents and agreements referred to in the preceding clauses
(a) through (f), (ii) the documents and agreements referred to in Section 3.2
hereof and (iii) such other instruments of assumption and documents as
Sellers may reasonably request. In addition, Sellers shall deliver to Buyer
at the Closing affidavits in form and substance satisfactory to Buyer, duly
executed and acknowledged, certifying that neither Seller is a foreign person
within the meaning of Section 1445(f)(3) of the Code, and any corresponding
affidavit required for state tax purposes.
2.5 PURCHASE PRICE ADJUSTMENT.
(a) Within 60 days after the Closing Date, Buyer shall
prepare and deliver to MagneTek a balance sheet of the Columbus Business as
of the close of business on the Closing Date comprising the Assets and the
outstanding Assumed Liabilities (the "Closing Balance Sheet"). For purposes
of preparing the Closing Balance Sheet, MagneTek shall make its accounting
personnel available to Buyer (without charge) and such employees shall, for
the purpose of assisting Buyer in preparing the Closing Balance Sheet, be
instructed by MagneTek to act at Buyer's direction.
During the 30 days immediately following MagneTek's receipt of the
Closing Balance Sheet, MagneTek shall be entitled to review the Closing
Balance Sheet and Buyer's working papers relating to the Closing Balance
Sheet, and Buyer shall provide MagneTek access at all reasonable times to its
personnel, properties, books and records to the extent relevant. The Closing
Balance Sheet shall become final and binding upon the parties on the 30th day
following delivery thereof unless MagneTek gives written notice to Buyer of
its disagreement with the Closing Balance Sheet (a "Notice of Disagreement")
prior to such date. Any Notice of Disagreement shall specify in reasonable
detail the nature of any disagreement so asserted. If a timely Notice of
Disagreement is received by Buyer with respect to the Closing Balance Sheet,
then the Closing Balance Sheet (as revised in accordance with clause (x) or
(y) below), shall become final and binding upon the parties on the earlier of
(x) the date the parties hereto resolve in writing any differences they have
with respect to any matter specified in a Notice of Disagreement or (y) the
date any matters properly in dispute are finally resolved in writing by the
Accounting Firm (as
12
defined below). During the 30 days immediately following the delivery of any
Notice of Disagreement, MagneTek and Buyer shall seek in good faith to
resolve in writing any differences which they may have with respect to any
matter specified in such Notice of Disagreement. During such period, Buyer
and MagneTek shall each have access to the other party's working papers
prepared in connection with the other party's preparation of the Closing
Balance Sheet or a Notice of Disagreement. At the end of such 30-day period,
MagneTek and Buyer shall submit to an independent accounting firm (the
"Accounting Firm") for review and resolution any and all matters which remain
in dispute and which were properly included in any Notice of Disagreement,
and the Accounting Firm shall reach a final, binding resolution of all
matters which remain in dispute. The Closing Balance Sheet, with such
adjustments necessary to reflect the Accounting Firm's resolution of the
matters in dispute, shall become final and binding on Buyer and MagneTek on
the date the Accounting Firm delivers its final resolution to the parties.
The Accounting Firm shall be Xxxxxx Xxxxxxxx, or if such firm is unable or
unwilling to act, such other nationally recognized independent public
accounting firm with offices in Columbus, Ohio, as shall be agreed upon by
the parties hereto in writing. The cost of any arbitration (including the
fees and expenses of the Accounting Firm) pursuant to this Section 2.5 shall
be borne 50% by Buyer and 50% by MagneTek.
(b) The Closing Balance Sheet shall be prepared in
accordance with GAAP, applied in a manner consistent with that followed in
the preparation of the December Balance Sheet, subject to the following:
(i) the Closing Balance Sheet
shall not reflect any provision for Taxes
(whether as an asset or a liability);
(ii) intercompany advances shall
be eliminated;
(iii) inventory shall be valued on
a first-in first-out basis; and
(iv) all Excluded Assets (and all
related depreciation and reserves) shall be
eliminated and all Excluded Liabilities (and
related reserves) shall be eliminated.
(c) The Purchase Price shall be adjusted (after giving
effect to the estimation, if any, reflected in the Closing Date Amount) such
that the Purchase Price is (i) increased, to the extent that the aggregate net
book value of the Columbus Business increases from the amount reflected
13
on the December Balance Sheet, and (ii) decreased, to the extent that such
aggregate net book value decreases. The Purchase Price shall be adjusted
upward or downward, dollar for dollar, in respect of any such negative or
positive adjustment; PROVIDED, HOWEVER, that no adjustment to the Purchase
Price pursuant to this Section 2.5 shall be made unless such adjustment would
exceed $100,000, and if the adjustment would exceed $100,000, then the full
amount of the adjustment shall be made; PROVIDED, FURTHER, HOWEVER, that the
estimated adjustment paid on the Closing Date, if any, shall be taken into
account in determining whether such threshold is met. Any required
adjustment to the Purchase Price pursuant to this Section 2.5 shall be
referred to as the "Purchase Price Adjustment."
(d) Buyer agrees, with respect to Purchase Price
Adjustments, that following the Closing, Buyer will not take any actions with
respect to the accounting books, records, policies and procedures of the
Columbus Business on which the Closing Balance Sheet is to be based that are
not consistent with GAAP applied in the manner consistent with the past
practices of the Columbus Business.
(f) Within 30 days after the receipt by MagneTek of the
Closing Balance Sheet in accordance with Section 2.5(a) hereof, Buyer shall
remit to Sellers or Sellers shall remit to Buyer, as the case may be, in
immediately available funds, any undisputed amounts constituting Purchase
Price Adjustments. With respect to any items that are the subject of a
Notice of Disagreement, payment shall be made in immediately available funds
within three Business Days after the resolution thereof pursuant to Section
2.5(a). Each payment pursuant to this Section 2.5 shall be made with
interest on the amount of the payment at an annual rate equal to the
reference rate quoted by the San Xxxxxxxxx xxxxxx of Bank of America on the
Closing Date for the period from the Closing Date to the date of payment,
computed on the basis of a 360-day year and actual days elapsed.
2.6 TAX ALLOCATION. Buyer and Sellers shall allocate the Purchase
Price plus the Assumed Liabilities (to the extent identifiable or reasonably
estimable as of the date hereof) to broad categories constituting components
of the Assets in accordance with Schedule 2.6 (as the same may be updated as
of the Closing to reflect changes in the Assets or Assumed Liabilities
occurring after the date thereof and prior to the Closing Date). Buyer and
Sellers shall report the purchase and sale of the Assets in accordance with
the agreed upon allocation among such broad categories for all Tax purposes
(including the filing of the forms prescribed under Section 1060 of the Code
and the Treasury Regulations
14
promulgated thereunder), but such allocation shall not constrain reporting
for other purposes.
2.7 SALES AND USE TAX. Buyer and Sellers shall cooperate in
preparing, executing and filing use and sales Tax Returns relating to, and
Buyer and MagneTek shall share equally and pay when due, any and all sales,
real estate, transfer or use Tax due with regard to the purchase and sale of
the Assets. Such Tax Returns shall be prepared in a manner that is consistent
with the allocation of the Purchase Price and Assumed Liabilities
contemplated by Section 2.6. Buyer shall also furnish Sellers with a form of
resale certificate that complies with the requirements of Ohio and other
applicable state taxation laws.
ARTICLE III
CONDITIONS TO CLOSING
3.1 BUYER'S OBLIGATION. The obligations of Buyer to purchase and
pay for the Assets are subject to the satisfaction (or waiver by Buyer) as of
the Closing of the following conditions:
(a) The representations and warranties of MagneTek made
in this Agreement shall be true and correct in all material respects as of
the date hereof and, except as specifically contemplated by this Agreement,
on and as of the Closing, as though made on and as of the Closing Date, and
Sellers shall have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be performed or
complied with by Sellers by the time of the Closing; and Sellers shall have
delivered to Buyer certificates dated the Closing Date and signed by an
authorized officer of the respective Sellers confirming the foregoing.
(b) Buyer shall have received an opinion dated the
Closing Date of Xxxxxx, Xxxx & Xxxxxxxx, counsel to Sellers, as to the
matters set forth in Exhibit B, and an opinion dated the Closing Date of
Xxxxxx X. Miley, Esq., General Counsel of MagneTek, as to the matters set
forth in Exhibit C, which opinions shall be reasonably satisfactory in form
to Buyer.
(c) No injunction or order shall have been granted by any
Governmental Authority that would restrain or prohibit any of the
Transactions or that would impose damages as a result thereof, and no action
or proceeding shall be pending before any Governmental Authority in which any
Person seeks such a remedy (if in the opinion of counsel to Buyer
15
there exists a reasonable risk of a materially adverse result in such pending
action or proceeding).
3.2 SELLERS' OBLIGATION. The obligations of Sellers to sell and
deliver the Assets to Buyer are subject to the satisfaction (or waiver by
Sellers) as of the Closing of the following conditions:
(a) The representations and warranties of Buyer made in
this Agreement shall be true and correct in all material respects as of the
date hereof and on and as of the Closing, as though made on and as of the
Closing Date, and Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Buyer by the time of the Closing; and Buyer
shall have delivered to Sellers a certificate dated the Closing Date and
signed by an authorized officer of Buyer confirming the foregoing.
(b) Sellers shall have received an opinion dated the
Closing Date of Xxxxxxx X. Xxxxxxxx, Esq., counsel to Buyer, as to the
matters set forth in Exhibit D, which opinion shall be reasonably
satisfactory in form to Sellers.
(c) No injunction or order shall have been granted by any
Governmental Authority that would restrain or prohibit the Transactions or
that would impose damages as a result thereof, and no action or proceeding
shall be pending before any Governmental Authority in which any Person seeks
such a remedy (if in the opinion of counsel to Sellers there exists a
reasonable risk of a materially adverse result in such pending action or
proceeding).
(d) MagneTek shall have received from Buyer insurance
certificates reflecting compliance with the provisions of Section 7.5.
(e) MagneTek shall have received Releases from Xxxxxx X.
Xxxxxxx and Xxxxxx X. Xxxxxxx in substantially the form attached to their
respective Retention Agreements dated as of March 1, 1994.
16
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF MAGNETEK
MagneTek hereby represents and warrants to Buyer as follows:
4.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
Seller has all requisite corporate power and authority to enter into the
Transaction Documents and to consummate the Transactions. All corporate acts
and other proceedings required to be taken by each Seller to authorize the
execution, delivery and performance of the Transaction Documents and the
consummation of the Transactions have been duly and properly taken. This
Agreement has been duly executed and delivered by each Seller and constitutes
a valid and binding obligation of each Seller, enforceable against each
Seller in accordance with its terms, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally or by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) The execution and delivery of this Agreement does not
and of the other Transaction Documents will not, and the consummation of the
Transactions and compliance with the terms of the Transaction Documents will
not, conflict with, or result in any violation of or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or to loss of a
benefit under, or result in the creation of any Lien upon any of the
properties or assets of Sellers under, any provision of (i) the Certificate
of Incorporation or By-Laws of either Seller, (ii) subject to the matters
disclosed in Schedule 4.1(b), any Contractual Obligation of MagneTek or, to
the Knowledge of Seller, NEC, or (iii) any judgment, order or decree or,
subject to the matters described in clauses (A)-(E) below, any Requirement of
Law applicable to either Seller or its property or assets, other than, in the
case of clauses (ii) and (iii) above, any such conflicts, violations,
defaults, rights or Liens that, individually or in the aggregate, would not
have a Material Adverse Effect. No consent, approval, license, permit, order
or authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with respect
to either Seller in connection with the execution and delivery of the
Transaction Documents or the
17
consummation of the Transactions, other than (A) compliance with and filings
under Section 13(a) or 15(d), as the case may be, of the Exchange Act, (B)
compliance with and filings and notifications under applicable Environmental
Laws, (C) any necessary approvals in connection with the novation of
Contracts with governmental agencies, (D) those that may be required solely
by reason of Buyer's participation in the Transactions and (E) those that, if
not made or obtained, individually or in the aggregate, would not have a
Material Adverse Effect.
4.2 FINANCIAL STATEMENTS. To the Knowledge of Seller, the
December Balance Sheet was prepared in accordance with GAAP consistently
applied, and fairly presents the financial condition of the Columbus Business
as of December 31, 1994 except: (a) as set forth therein; (b) for the absence
of footnotes; (c) for normal recurring adjustments; and (d) to the extent it
was prepared on a PRO FORMA basis, with allocations of certain assets and
liabilities based upon good faith estimates of management.
4.3 TAXES.
(a) Except as disclosed on Schedule 4.3, (i) each Seller,
and any affiliated group within the meaning of Section 1504 of the Code of
which either Seller is or has been a member (the "Affiliated Group," but only
for the taxable period during which either Seller has been a member thereof)
have filed or caused to be filed in a timely manner (within any applicable
extension periods) with the appropriate Governmental Authority all Tax
returns, reports and forms (collectively, "Tax Returns") required to be filed
by the Code or by applicable laws, (ii) all Taxes shown on such Tax Returns
have been timely paid in full by the due date thereof, (iii) no Tax Liens
have been filed by any Tax authority against any property or assets of the
Columbus Business, and (iv) to the Knowledge of Seller, no claims are being
asserted in writing with respect to any Taxes relating to the Columbus
Business.
(b) Except as set forth in Schedule 4.3, (i) no property
of the Columbus Business is "tax exempt use property" within the meaning of
Section 168(h) of the Code, and (ii) the Assigned Contracts do not include
any lease made pursuant to former Section 168(f)(8) of the Code.
(c) Neither Seller is a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
4.4 ASSETS OTHER THAN REAL PROPERTY INTERESTS. NEC has good and
valid title to all assets reflected on the December Balance Sheet or
thereafter acquired, except those
18
sold or otherwise disposed of since the date of such December Balance Sheet
in the ordinary course of business consistent with past practice, in each
case free and clear of all Liens except (a) such as are disclosed on Schedule
4.4 and (b) mechanics', carriers', workmen's, repairmen's or other like Liens
arising or incurred in the ordinary course of business, Liens arising under
original purchase price conditional sales contracts and equipment leases with
third parties entered into in the ordinary course of business, Liens for
Taxes and other governmental charges which are not yet due and payable or
which may thereafter be paid without penalty, and other imperfections of
title, restrictions or encumbrances, if any, which Liens, imperfections of
title, restrictions or other encumbrances do not, individually or in the
aggregate, materially impair the continued use and operation of the specific
assets to which they relate (the Liens described in the preceding clause (b)
are hereinafter referred to collectively as "Permitted Liens").
This Section 4.4 does not relate to real property or interests in
real property, such items being the subject of Section 4.5.
4.5 REAL PROPERTY. Schedule 4.5 sets forth a description of the
King Avenue Property. NEC has good, marketable and insurable fee title to
the King Avenue Property, free and clear of all Liens, easements, covenants,
rights-of-way and other similar restrictions of any nature whatsoever, except
(i) Permitted Liens, (ii) the Services and Lease Agreement, (iii) the
Reciprocal Easement Agreement, (iv) easements, covenants, rights-of-way and
other similar restrictions of record and (v) (A) zoning, building and other
similar restrictions, (B) Liens that have been placed by any developer,
landlord or other third party on property over which NEC has easement rights
and (C) unrecorded easements, covenants, rights-of-way or other similar
restrictions, none of which items set forth in clauses (A), (B) and (C)
above, individually or in the aggregate, materially impair the continued use
and operation of the property to which they relate.
4.6 [INTENTIONALLY OMITTED].
4.7 CONTRACTS. Schedule 4.7 sets forth a list of each of the
following types of Contracts:
(a) any employment or severance agreement that has an
aggregate future liability in excess of $100,000 and is not terminable by
notice of not more than 60 days for a cost of less than $50,000 (including
any contracts or agreements with Business Employees that relate to the
Transactions, other
19
than any such contracts or agreements for which MagneTek is solely liable and
which are not assigned to Buyer);
(b) any employee collective bargaining agreement or other
contract with any labor union covering Business Employees;
(c) to the Knowledge of Seller, any Contract other than
in the ordinary course of business pursuant to which the aggregate of
payments to become due from or to either Seller is equal to or exceeds
$200,000, and which is not terminable by no more than 60 days' notice for a
cost of less than $100,000; and
(d) any lease (other than the Services and Lease
Agreement) or similar agreement under which NEC is a lessor or sublessor of,
or makes available for use by any third party (including another division of
either Seller), any King Avenue Property or premises otherwise occupied by
the Columbus Business.
Except as disclosed on Schedule 4.7, each Contract listed on
Schedule 4.7 is valid, binding and in full force and effect and is
enforceable by NEC or MagneTek, as the case may be, in accordance with its
terms. Except as disclosed in Schedule 4.7, to the Knowledge of Seller, NEC
or MagneTek, as the case may be, has performed all material obligations
required to be performed by it to date under the Contracts and is not (with
or without the lapse of time or the giving of notice, or both) in breach or
default in any material respect thereunder and, to the Knowledge of Seller,
no other party to any of the Contracts is (with or without the lapse of time
or the giving of notice, or both) in breach or default in any material
respect thereunder.
4.8 LITIGATION; DECREES. To the Knowledge of Seller, Schedule 4.8
sets forth a list, as of the date of this Agreement, of all pending and
threatened lawsuits or claims with respect to which NEC or MagneTek, as the
case may be, has contacted in writing the defendant or been contacted in
writing by the claimant or by counsel for the claimant by or against NEC or
MagneTek, as the case may be, relating, to the Knowledge of Seller, to the
Columbus Business which (a) involves a claim by or against either Seller of
more than $50,000, (b) seeks any injunctive relief or (c) relates to the
Transactions. To the Knowledge of Seller, except as disclosed on Schedule
4.8, neither NEC nor MagneTek, as the case may be, is in default under any
judgment, order or decree of any Governmental Authority applicable to the
Columbus Business, except where the default would not have a Material Adverse
Effect.
20
4.9 EMPLOYEE AND RELATED MATTERS. Schedule 4.9 sets forth each
material Employee Benefit Plan. Sellers have made available to Buyer true,
complete and correct copies or summaries of each Plan so listed.
4.10 ENVIRONMENTAL MATTERS. To the Knowledge of Seller, as to the
Columbus Business and the King Avenue Property:
(a) NEC is not in material violation of any applicable
Environmental Law and is not under investigation or review by any
Governmental Authority with respect to compliance therewith, or with respect
to the generation, use, treatment, storage or disposal, or the spillage or
other release of any Hazardous Substance;
(b) There is no Hazardous Substance that is likely to
pose any material risk to safety, health or the environment, and there has
heretofore been no spillage, discharge, release or disposal of any such
Hazardous Substance by NEC on or under the King Avenue Property in an amount
and of a nature which could reasonably be expected to result in material
liability to the Columbus Business; and
(c) No pending citations, fines, penalties or claims have
been asserted against NEC under any Environmental Law which could reasonably
be expected to have a Material Adverse Effect and which have not been
reflected in the December Balance Sheet.
4.11 EMPLOYEE AND LABOR RELATIONS. Except as set forth on
Schedule 4.11:
(a) there is no labor strike, dispute, or work stoppage
or lockout pending, or, to the Knowledge of Seller, threatened, involving the
Columbus Business;
(b) there is no unfair labor practice charge or complaint
against NEC pending, or, to the Knowledge of Seller, threatened, before the
National Labor Relations Board involving the Columbus Business;
(c) there is no pending, or, to the Knowledge of Seller,
threatened, grievance involving an employee of the Columbus Business that, if
adversely decided, would have a Material Adverse Effect; and
(d) no charges with respect to or relating to NEC are
pending before the Equal Employment Opportunity Commission or any other
Governmental Authority responsible for the prevention of unlawful employment
practices as to which there is a reasonable likelihood of adverse
determination
21
involving the Columbus Business, other than those which, if so determined,
would not have a Material Adverse Effect.
4.12 EXCLUSIVITY OF REPRESENTATIONS. EXCEPT AS EXPRESSLY PROVIDED
HEREIN, SELLERS MAKE NO REPRESENTATION OR WARRANTY CONCERNING THE ASSETS OR
THE COLUMBUS BUSINESS, INCLUDING AS TO THE QUALITY, CONDITION,
MERCHANTABILITY, SALABILITY, OBSOLESCENCE, WORKING ORDER OR FITNESS FOR A
PARTICULAR PURPOSE THEREOF. EXCEPT AS EXPRESSLY PROVIDED HEREIN, THE ASSETS
ARE SOLD TO BUYER "AS IS."
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
5.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio. Buyer has
all requisite corporate power and authority to enter into this Agreement and
to consummate the Transactions. All corporate acts and other proceedings
required to be taken by Buyer to authorize the execution, delivery and
performance of this Agreement and the consummation of the Transactions have
been duly and properly taken. This Agreement has been duly executed and
delivered by Buyer and constitutes a valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally or by general principles (regardless of whether such enforceability
is considered in a proceeding in equity or law).
(b) Except as disclosed on Schedule 5.1(b), the execution
and delivery of this Agreement does not and of the other Transaction
Documents will not, and the consummation of the Transactions and compliance
with the terms of the Transaction Documents will not, conflict with, or
result in any violation of or default (with or without notice or lapse of
time, or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or
result in the creation of any Lien upon any of the properties or assets of
the Buyer under, any provision of (i) the Certificate of Incorporation or
By-Laws of Buyer, (ii) any Contractual Obligation of Buyer or (iii) any
judgment, order or decree or, subject to the matters described in clauses
(A)-(D) below, any Requirement of Law applicable to Buyer or its property or
assets. No
22
material consent, approval, license, permit order or authorization of, or
registration, declaration or filing with, any Governmental Authority is
required to be obtained or made by or with respect to Buyer or its Affiliates
in connection with the execution and delivery of the Transaction Documents or
the consummation by Buyer of the Transactions, other than (A) compliance with
and filings under Section 13(a) and 15(d), as the case may be, of the
Exchange Act, (B) compliance with and filings and notifications under
applicable Environmental Laws, (C) any necessary approvals in connection with
the novation of Contracts with governmental agencies and (D) those that may
be required solely by reason of Sellers' (as opposed to any other third
party's) participation in the Transactions.
5.2 ACTIONS AND PROCEEDINGS, ETC. There are no (a) outstanding
judgments, orders, writs, injunctions or decrees of any court, governmental
agency or arbitration tribunal against Buyer or (b) actions, suits, claims or
legal, administrative or arbitration proceedings or investigations pending
or, to the knowledge of Buyer, threatened against Buyer.
5.3 AVAILABILITY OF FUNDS. Buyer has all funds, or binding
commitments as to the availability to Buyer of all funds, required to
consummate the Transactions.
5.4 BUYER'S ACKNOWLEDGMENT. Buyer acknowledges and agrees that,
(a) other than the representations and warranties of MagneTek specifically
contained in this Agreement, there are no representations or warranties of
either Seller either expressed or implied with respect to either Seller, the
Columbus Business or the Transactions and (b) it shall have a right to
indemnification solely as provided in Article X hereof and shall have no
claim or right to indemnification with respect to any information, documents
or materials furnished by either Seller or any of its officers, directors,
employees, agents or advisors, or otherwise available to Buyer.
5.5 EXON-XXXXXX. Buyer is not a "foreign person" for purposes of
the Exon-Xxxxxx Amendment to the Defense Production Act of 1950.
5.6 NO KNOWLEDGE OF SELLER'S BREACH. Neither Buyer nor, to the
best knowledge of Buyer, any of its Affiliates, has knowledge of any breach
of any representation or warranty by MagneTek or of any other condition or
circumstance that would excuse Buyer from its timely performance of its
obligations hereunder. If any information relevant to the representations
and warranties of MagneTek under this Agreement shall come to Buyer's
attention before the Closing Date (whether through Sellers or otherwise),
then for the
23
purposes of MagneTek's liability under such representations and warranties
the effect shall be as if the representations and warranties were so modified
in this Agreement, and no claim for indemnification may be made under Article
X hereof to the extent such claim would not arise under such modified
representation or warranty.
ARTICLE VI
COVENANTS OF MAGNETEK AND NEC
MagneTek and NEC severally, and not jointly, covenant and agree as
follows:
6.1 ACCESS. Subject to the provisions of Section 7.1 hereof,
prior to the Closing, NEC will give Buyer and its representatives, employees,
counsel and accountants, together with representatives of Persons providing
financing to Buyer for the Transactions, reasonable access, during normal
business hours and upon reasonable notice, to the personnel, properties,
books and records of the Columbus Business for purposes of investigating its
assets, operations, prospects, obligations and liabilities; PROVIDED,
HOWEVER, that such access does not unreasonably disrupt the normal operations
of the Columbus Business. Additionally, subject to the provisions of Section
7.1 hereof and to prior notification, and the consent (which will not be
unreasonably withheld or delayed) of NEC, Buyer and such representatives may
contact the principal customers and suppliers of the Columbus Business for
purposes of the foregoing investigation.
6.2 ORDINARY CONDUCT. Except as contemplated by this Agreement or
as set forth in Schedule 6.2, from the date hereof to the Closing, NEC will
cause the business of the Columbus Business to be conducted in the ordinary
course in substantially the same manner as presently conducted and will make
all reasonable efforts consistent with past practices to preserve
relationships with customers, suppliers and others with whom the Columbus
Business deals. Except as contemplated by this Agreement, NEC will not do
any of the following with respect to the Columbus Business without the prior
written consent of Buyer, which consent will not be unreasonably withheld or
delayed:
(a) adopt or amend in any material respect any Seller
Plan or collective bargaining agreement, except as required by law or insofar
as a collective bargaining agreement is then subject to negotiation in
advance of its expiration in the ordinary course;
(b) sell, lease or otherwise dispose of, or agree to
sell, lease or otherwise dispose of, any material
24
portion of its assets (other than Excluded Assets), except in the ordinary
course of business consistent with past practice;
(c) enter into any lease of real property, except any
renewals of existing leases; or
(d) agree, whether in writing or otherwise, to do any of
the foregoing.
6.3 INSURANCE. MagneTek shall keep, or cause to be kept, all
insurance policies presently maintained relating to the Columbus Business and
its properties, or replacements therefor, in full force and effect through
the close of business on the Closing Date. Buyer will not have any rights
under any such insurance policies from and after the Closing Date.
6.4 TITLE COMMITMENT. Buyer has obtained a standard form
commitment for an owner's policy of title insurance (the "Title Commitment")
issued by First American Title Insurance Corporation in the amount of
$2,100,000. Buyer shall reimburse NEC for one-half of the expense of the
Title Commitment.
6.5 ACQUISITION PROPOSALS. Neither Seller nor any Person
authorized by Sellers shall solicit, initiate or encourage any acquisition
proposal or engage in any discussion with respect thereto or provide
information to any other person concerning a possible sale of the Assets or
the business of the Columbus Business, unless MagneTek has made a reasonable
determination that Buyer will not consummate the Transactions and has given
notice to Buyer of such determination.
6.6 ACCOUNTS RECEIVABLE. Sellers agree promptly to forward to
Buyer any and all proceeds from accounts receivable of the Columbus Business
that are included in the Assets. If, after the Closing Date, either Seller
receives any payment from any Person who at the time of such payment has
outstanding accounts payable to either Seller, on the one hand (for the
purposes of this Section, "Seller Accounts Receivable"), and to Buyer, on the
other hand (for the purposes of this Section, "Buyer Accounts Receivable"),
and the payment (a) does not indicate whether it is in respect of Seller
Accounts Receivable or Buyer Accounts Receivable or (b) indicates that it is
in payment of both Seller Accounts Receivable and Buyer Accounts Receivable
without specifying the portion to be allocated to each, then Sellers and
Buyer shall consult with one another to determine the proper allocation of
such payment; and, if they are unable to reach agreement on the proper
allocation, such payment shall be applied so as to retire undisputed Seller
Accounts Receivable
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and undisputed Buyer Accounts Receivable in chronological order based upon
the period of time such accounts receivable have existed on the books of
Sellers or the Buyer, as applicable.
ARTICLE VII
COVENANTS OF BUYER
Buyer covenants and agrees as follows:
7.1 CONFIDENTIALITY. Buyer acknowledges that the information
being provided to it by Sellers is subject to the terms of a confidentiality
agreement for the benefit of Sellers dated as of December 13, 1994 (the
"Confidentiality Agreement") [please provide copy], the terms of which are
incorporated herein by reference. Effective upon, and only upon, the
Closing, the Confidentiality Agreement will terminate; PROVIDED, HOWEVER,
that Buyer acknowledges that the Confidentiality Agreement will terminate
only with respect to information relating solely to the Columbus Business;
and PROVIDED, FURTHER, HOWEVER, that Buyer acknowledges that any and all
other information provided to it by Sellers or Sellers' representatives
concerning Sellers shall remain subject to the terms and conditions of the
Confidentiality Agreement after the date of the Closing.
7.2 ACCOUNTS RECEIVABLE. Buyer agrees to promptly forward or
cause to be forwarded to MagneTek any and all proceeds from accounts
receivable of either Seller comprising Excluded Assets that are received by
Buyer or the Columbus Business after the Closing Date. If, after the Closing
Date, Buyer receives any payment from any Person who at the time of such
payment has outstanding Seller Accounts Receivable, and the payment (a) does
not indicate whether it is in respect of Seller Accounts Receivable or Buyer
Accounts Receivable or (b) indicates that it is in payment of both Seller
Accounts Receivable and Buyer Accounts Receivable without specifying the
portion to be allocated to each, then Sellers and Buyer shall consult with
one another to determine the proper allocation of such payment; and, if they
are unable to reach agreement on the proper allocation, such payment shall be
applied so as to retire undisputed Seller Accounts Receivable and undisputed
Buyer Accounts Receivable in chronological order based upon the period of
time such accounts receivable have existed on the books of the Sellers or
Buyer, as applicable.
7.3 WAIVER OF BULK SALES LAW COMPLIANCE. Buyer hereby waives
compliance by NEC and MagneTek with the requirements, if any, of Article 6 of
the Uniform Commercial Code as in force in any state in which Assets are
located and
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all other similar Requirements of Law applicable to bulk sales and transfers,
to the extent applicable to the Transactions. MagneTek shall indemnify Buyer
in connection with the foregoing matters pursuant to Section 10.1(c) hereof.
7.4 EXCLUDED ASSETS. If, after the Closing Date, Excluded Assets,
including but not limited to those referred to in Section 2.2(h) or set forth
on Schedule 2.2(h), shall remain on the premises utilized or controlled by
Buyer, then Buyer shall deliver such Excluded Assets to Sellers, at the
expense of Sellers, where and when requested by Sellers, and so long as such
assets remain in Buyer's control, shall exercise reasonable care with respect
thereto, and in no event less care than with respect to its own properties.
Without limiting the generality of the foregoing, Buyer shall provide access
to representatives of Sellers for the purposes of (i) removing the
Intellectual Property comprising Excluded Assets from the computer system of
Buyer and obtaining all hard copy, source code or object codes and any
related instruction manuals pertaining thereto and (ii) removing Intellectual
Property documentation comprising Excluded Assets from the main vault and
other storage areas at the King Avenue Property, provided Buyer receives
reasonable notice and such access occurs at reasonable times. Buyer and
Sellers agree that the removal of Intellectual Property Excluded Assets will
be supervised by Xxxxxxx Xxxxxx on behalf of Sellers and that each of Buyer
and NEC will appoint an engineer to review the relevant materials and divide
them into the appropriate categories as between (x) Assets, (y) Excluded
Assets and (z) Intellectual Property subject to the Sharing Agreement, as
provided and defined herein and therein. In the event such engineers
disagree as to the allocation of any Intellectual Property, the matter shall
be referred for resolution to Xxxx Xxxxx and Xxxxxxxxx Xxxxxx. If Xx. Xxxxx
and Xx. Xxxxxx are unable to reach agreement, either party may seek judicial
resolution of the issue and, pending such resolution, the disputed item of
Intellectual Property shall be considered to form a part of the Sharing
Agreement but all copies thereof shall remain under NEC's control. In
addition, the parties agree that the IBM mainframe computer may remain at the
King Avenue Property at least until December 31, 1995.
7.5 INSURANCE. Buyer shall secure insurance with respect to the
Columbus Business from the Closing Date covering general liability and
products liability in amounts customary for the industry in which the
Columbus Business operates.
7.6 REPLACEMENT BONDING. Set forth on Schedule 7.6 is a list
reflecting, to the Knowledge of Seller, all currently outstanding letters of
credit, performance bonds, bank guaranties and other surety arrangements of
Sellers
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pertaining to the Columbus Business. As to those items indicated on such
Schedule with an asterisk, prior to the 60th day after the Closing Date,
Buyer shall have effectuated, to MagneTek's reasonable satisfaction, either
the replacement or the cancellation in full thereof, in each case in a manner
extinguishing all liability of either Seller thereunder, or shall have
arranged, at Buyer's sole expense and risk, a letter of credit to be issued
in Sellers' favor and to its reasonable satisfaction covering all of the
liability under such items. Notwithstanding the foregoing, as to the
performance bonds outstanding to NASA and Puerto Rico Electric Power
Authority ("PREPA"), Buyer shall use all reasonable efforts, within 120 days
after the Closing Date, to effectuate the novation of the related agreement,
the replacement of the performance bond with Buyer's bond and the
cancellation of Sellers' bonds. In the event such cancellation is not
effected prior to such 120th day in respect of either or both bonds, Buyer
shall obtain a letter of credit in favor of the relevant Seller in an amount
equal to 20% of the bond amount of such unreplaced bond, such letter or
letters of credit to be renewed until the relevant performance bond is
cancelled. In addition, for all periods following the Closing Date that
either the PREPA or NASA bond is outstanding, whether or not such a letter of
credit is required, Buyer shall reimburse Sellers in full for the expense of
maintaining such bonds.
ARTICLE VIII
MUTUAL COVENANTS
Each of Sellers and Buyer covenants and agrees as follows:
8.1 PERMITS AND CONSENTS.
(a) As promptly as practicable after the date hereof,
Buyer and Sellers shall make all filings with Governmental Authorities, and
use all reasonable efforts to obtain all permits, approvals, authorizations
and consents of all third parties, required to consummate the Transactions.
Buyer and Sellers shall furnish promptly to each other all information that
is not otherwise available to the other party and that such party may
reasonably request in connection with any such filing. Sellers and Buyer
shall use reasonable efforts to obtain such consents to the assignment of the
Assigned Contracts as may be required. Buyer acknowledges that consents to
the Transactions may be required from parties to the Assigned Contracts and
that Sellers will not assign to Buyer at the Closing any Assigned Contract
that by its terms requires, prior to such assignment, the consent of any
other contracting party thereto unless such consent has been obtained prior
to the Closing Date.
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(b) Buyer agrees that Sellers shall not have any
liability whatsoever to Buyer arising out of or relating to the failure to
obtain any consents to the assignment of Contracts that may be required in
connection with the Transactions or because of the default, acceleration or
termination of any Assigned Contract as a result thereof. Buyer further
agrees that no representation or warranty of MagneTek or covenant of MagneTek
or of NEC contained herein shall be breached or deemed breached, and no
condition shall be deemed not satisfied, as a result of (i) the failure to
obtain any such consent or as a result of any such acceleration or
termination or (ii) any lawsuit, action, claim, proceeding or investigation
commenced or threatened by or on behalf of any Person arising out of or
relating to the failure to obtain any such consent or any such acceleration
or termination. Sellers shall cooperate with Buyer in any reasonable manner
in connection with Buyer obtaining any such consents; PROVIDED, HOWEVER, that
such cooperation shall not include any requirement that either Seller
commence any litigation or offer or grant any accommodation (financial or
otherwise) to any third party. The Purchase Price shall not be subject to
adjustment because any such consents are not obtained.
(c) With respect to each such Assigned Contract not
assigned on the Closing Date, after the Closing Date Sellers shall continue
to deal with the other contracting party(ies) to such Assigned Contract as
the prime contracting party, and Buyer and Sellers shall continue to use
reasonable efforts to obtain the consent of all required parties to the
assignment of such Assigned Contract. Such Assigned Contract shall be
promptly assigned by Sellers to Buyer after receipt of such consent after the
Closing Date. Any Contract as to which consent is obtained after the Closing
Date shall thereupon comprise an Assigned Contract. Notwithstanding the
absence of any such consent, Buyer shall be entitled to the benefits of such
Assigned Contract accruing after the Closing Date to the extent that Sellers
may provide Buyer with such benefits without violating the terms of such
contract; and to the extent such benefits are so provided, Buyer agrees to
perform at its sole expense all of the obligations of Sellers to be performed
under such Assigned Contract after the Closing Date, such obligations to
comprise Assumed Liabilities hereunder.
(d) Without limiting the generality of the foregoing, the
parties acknowledge that Buyer will seek novations in respect of the
government contracts of Sellers included in the Transactions, and Sellers
undertake to provide customary and reasonable assistance to Buyer in respect
of the preparation of novation requests.
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8.2 COOPERATION. Buyer and Sellers shall cooperate with each
other and shall cause their officers, employees, agents, auditors and
representatives to cooperate with each other after the Closing to ensure the
orderly transition of the Columbus Business to Buyer and to minimize any
disruption to the respective businesses of Sellers or the Columbus Business
that might result from the Transactions. Neither party shall be required by
this Section 8.2 to take any action that would unreasonably interfere with
the conduct of its business.
8.3 PUBLICITY. Sellers and Buyer agree that, from the date hereof
through the Closing Date, no public release or announcement concerning the
Transactions shall be issued by any party without the prior consent of the
other parties (which consent shall not be unreasonably withheld or delayed),
except as such release or announcement may be required by any Requirement of
Law, in which case the party required to make the release or announcement
shall allow the other parties reasonable time to comment on such release or
announcement in advance of such issuance.
8.4 REASONABLE EFFORTS AND FURTHER ASSURANCES. Subject to the
terms and conditions of this Agreement (including the limitations set forth
in Section 8.1), each party will use all reasonable efforts to cause the
Closing to occur. Sellers and Buyer shall, at any time and from time to time
after the Closing, upon the reasonable request of another party, execute,
acknowledge, deliver and file all such further acts, transfers, conveyances,
assignments and assurances as may reasonably be required to effect the
Transactions.
8.5 RECORDS. After the Closing, upon reasonable written notice
and at Buyer's sole expense, Sellers agree to furnish or cause to be
furnished to Buyer and its representatives (including its auditors), access
at reasonable times and during normal business hours to such information
relating to the Columbus Business in Sellers' possession as is reasonably
necessary for financial reporting and accounting matters, the preparation and
filing of any Tax Returns, reports or forms or the defense of any Tax Claim
or assessment; PROVIDED, HOWEVER, that such access does not unreasonably
disrupt the normal operations of Sellers.
8.6 ACCESS TO FORMER BUSINESS RECORDS. For a period of seven
years following the Closing, Buyer will retain all Records. During such
period, Buyer will afford authorized representatives of Sellers (including
their auditors) access to such Records at reasonable times and during normal
business hours at the principal business office of the Columbus Business, or
at such other location or locations at which such Records may be stored or
maintained from time to time, and
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will permit such representatives to make abstracts from, or copies of, any of
such Records, or to obtain temporary possession of any thereof as may be
reasonably required by Sellers at Sellers' sole cost and expense. During such
period, Buyer will, at Sellers' expense (limited, however, to Buyer's
reasonable out-of-pocket expenditures without regard to any employee cost or
other overhead expenses), cooperate with Sellers in furnishing information,
evidence, testimony, and other reasonable assistance in connection with any
action, proceeding, Tax audit, or investigation to which Sellers or any of
their Affiliates is subject relating to the business of the Columbus Business
prior to the Closing. The term "Record" as used in this Section 8.6 shall
include any data processing files or other computerized data.
8.7 USE OF TRADEMARKS, TRADE NAMES AND CORPORATE NAMES.
Notwithstanding anything to the contrary in this Agreement, Buyer may
continue to use the name "MagneTek" and related trademarks, corporate names,
and trade names incorporating "MagneTek," and the stylized "MagneTek" logo
(i) in displays, signage and postings for the period after the Closing Date
necessary to permit the reasonably prompt removal of such names, and only to
the extent such displays, signage or postings exist on the Closing Date; (ii)
for a period of two years, to state the Columbus Business' former affiliation
with MagneTek (E.G., formerly a division of "MagneTek, Inc.") and (iii) to
the extent any such trade names, trademarks, service marks or logos appear on
stationery, packaging materials, supplies or inventory on hand as of the
Closing Date or on order at the time of the Closing, until such is exhausted.
Within ten Business Days of the Closing Date, Buyer shall cause the name of
MagneTek Power, Inc. to be changed to a name that does not include "MagneTek."
8.8 REQUIRED MODIFICATIONS OR REPLACEMENTS OF PRODUCTS. The
following provisions of this Section 8.8 shall govern the responsibilities of
Buyer and MagneTek regarding Required Modifications:
(a) Buyer shall advise MagneTek promptly after becoming aware
of any Required Modifications to the products shipped or services provided by
the Columbus Business prior to the Closing Date to the extent Buyer intends to
assert any claim under Article X hereof in respect of such product.
(b) Whether or not Buyer gives the foregoing notice, Buyer
shall make any Required Modifications requested by MagneTek to products shipped
or services provided by the Columbus Business prior to the Closing Date. If the
cost to MagneTek under Section 8.8(c) of implementing any such Required
Modification exceeds the cost to MagneTek of replacing such products, Buyer
shall replace such products at
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MagneTek's expense pursuant to Section 8.8(c). The obligation of Buyer
hereunder shall include, but not be limited to, such actions as MagneTek may
reasonably request for (i) the notification of customer and other third
parties in possession of the applicable products, (ii) the shipping of such
products, if necessary, to and from Buyer's facilities for modification,
improvement, enhancement or replacement, (iii) the production of replacement
products, parts or supplies necessary for the implementation of the product
modification, enhancement, improvement or replacement, (iv) the installation,
modification or replacement of the product by personnel of Buyer, either at
the customer's location or at Buyer's facilities, as appropriate, and (v)
recordkeeping and reports with respect to such product modifications,
enhancements, improvements or replacements to the extent required by law or
reasonably requested by MagneTek.
(c) MagneTek shall reimburse Buyer for direct materials,
direct labor and factory overhead incurred by Buyer in installing or
implementing any Required Modification under Section 8.8(b) or in producing any
replacement products, parts or supplies under Section 8.8(b), together with all
reasonable out-of-pocket shipping, postage and printing costs incurred by Buyer
in connection therewith.
8.9 OUTSTANDING CONTRACTS. Buyer and NEC acknowledge that NEC has
certain existing agreements and commitments (the principal of which are to
the Army Corps of Engineers, the City of Seattle and Duke Power) as to which
the Columbus Business has responsibilities, but which are not Assigned
Contracts. In respect of such agreements and commitments, to the extent
purchase orders have already been issued to the Columbus Business, Buyer and
NEC shall honor the terms thereof notwithstanding the consummation of the
Transactions.
8.10 NASA BID. NEC is currently bidding on Bid No.
RFTP-2-35995(JMS) Requisition/Purchase REQ No.-EE0228 (the "NASA Bid"). The
NASA Bid is not an Assigned Contract, but Buyer and NEC are each free to
pursue such bid separately following the Closing Date. Each party shall be
entitled to retain a full set of copies of NEC's file in connection with the
NASA Bid. It is the expectation of the parties that NEC and Buyer will work
together to pursue the NASA Bid, but neither party shall have any obligation
to work with the other in connection therewith.
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ARTICLE IX
EMPLOYEE BENEFIT MATTERS
9.1 EMPLOYEE RETENTION. Buyer shall offer employment to commence
as of the Closing Date to all Business Employees, at the same salaries and
wages and on substantially the same terms and conditions as those in effect
immediately prior to the Closing Date. Buyer has no present intention
(subject to its discretion as to employee performance) to terminate the
employment of any Business Employee within the 60 days following the Closing
Date, and Buyer assumes all obligations and liabilities, if any, under the
Worker Adjustment and Retraining Notification Act (the "WARN Act") and any
analogous Ohio legislation relating to or arising out of the Transactions.
Buyer also agrees to comply with the terms of the WARN Act and any analogous
Ohio legislation following the Closing Date. Sellers shall continue to be
responsible for any employees of the Columbus Business not included in the
definition of Business Employee.
9.2 EMPLOYEE BENEFIT PLANS. Effective as of the Closing Date, as
applicable, (a) Business Employees shall cease accruing any benefits under
any Seller Plan, and MagneTek shall take, or cause to be taken, all such
action, if any, as may be necessary to effect such cessation of participation
and (b) with respect to Business Employees who are not members of a
collective bargaining unit, Buyer shall establish employee benefit plans
providing benefits which in the aggregate are substantially the same as the
benefits provided to such Business Employees under Seller Plans (the "Buyer's
Benefit Plans"). With respect to the Buyer's Benefit Plans, Buyer shall
grant all Business Employees from and after the Closing Date credit for all
service with Sellers and their Affiliates and their respective predecessors
prior to the Closing Date for all purposes (other than the accrual of
benefits under a defined benefit pension plan, however, this proviso shall
not preclude Buyer from granting such credit) for which such service was
recognized by Sellers and their Affiliates. With respect to Buyer's Benefit
Plans (and any plan established or adopted pursuant to Section 9.4) that
provide medical or dental benefits after the Closing Date, such plans shall
waive any exclusion or limitation with respect to pre-existing conditions and
actively-at-work exclusions and shall provide that any expenses incurred on
or before the Closing Date by a Business Employee or his covered dependents
shall be taken into account under such health plans for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions. Buyer shall also cause its health plan(s) to be responsible for
all health benefit claims by Business Employees and their covered dependents
for services rendered after the Closing Date.
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9.3 EMPLOYEES COVERED BY COLLECTIVE BARGAINING AGREEMENTS. On,
and effective as of, the Closing Date, as applicable, Buyer shall expressly
recognize any collective bargaining representative recognized by Sellers as
of the Closing Date for any units that include Business Employees and shall
either: (i) assume any collective bargaining agreements existing on the
Closing Date with respect to Business employees ("Bargaining Employees"), or
(ii) negotiate with any such collective bargaining representative(s) a new
collective bargaining agreement(s) covering such Bargaining Employees;
PROVIDED, HOWEVER, in either case, Buyer shall assume and discharge all of
Sellers' obligations (except for obligations to make salary and similar
payments due for periods prior to the Closing Date) with respect to the
Bargaining Employees under any such bargaining agreements (including the
Collective Bargaining Agreement) on or after the Closing Date.
9.4 BARGAINING PLANS. Effective as of the Closing Date Buyer
shall establish for the benefit of the Bargaining Employees such employee
benefit plans as are required by the collective bargaining agreement that
includes the Business Employees ("Buyer's Bargaining Plans").
9.5 VACATION, HOLIDAY, SICK AND SEVERANCE PAY. As of the Closing
Date and the Termination Date, as applicable, Buyer shall assume all of
Sellers' obligations for vacation (including accrued vacation), holiday, sick
(including accrued sick) and severance (if any) pay to all Business Employees.
9.6 ACCESS TO INFORMATION. Sellers shall make reasonably
available to Buyer such actuarial, financial, personnel and related
information as may be reasonably requested by Buyer with respect to any
Seller Plan as it relates to a Business Employee, including, but not limited
to, compensation and employment histories.
9.7 THIRD-PARTY BENEFICIARIES. No provision of this Article IX
shall create any third-party beneficiary rights in any employee or former
employee of the Columbus Business (including any beneficiary or dependent
thereof), including, without limitation, any right to continued employment or
employment in any particular position with Buyer for any specified period of
time after the Closing Date.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY MAGNETEK. Subject to the terms and
conditions of this Article X, MagneTek shall indemnify Buyer and each of its
officers, directors, employees and agents (each, a "Buyer Indemnified
Person") against, and
34
hold them harmless from, any Loss suffered or incurred by any such Buyer
Indemnified Person (other than any Loss relating to environmental matters,
for which indemnification provisions are set forth in Section 10.3) to the
extent arising from (a) if the Closing occurs, any breach of any
representation or warranty of MagneTek contained in this Agreement or in any
certificate, instrument or other document delivered pursuant hereto or in
connection herewith which by its terms survives the Closing, (b) any breach
of any covenant of MagneTek contained in this Agreement requiring performance
after the Closing Date or (c) if the Closing occurs, the existence of, or the
failure of Sellers to pay, perform and discharge when due, any of the
Excluded Liabilities (including, without limitation, any Losses as a result
of the failure of NEC to comply with any bulk sales laws referred to in
Section 7.3); PROVIDED, HOWEVER, that MagneTek shall not have any liability
under this Section 10.1 unless the aggregate of all Losses relating thereto
for which MagneTek would, but for this proviso, be liable exceeds, on a
cumulative basis with Losses for which Buyer is indemnified under Section
10.3, an amount equal to $50,000 (and then only to the extent of any such
excess); and PROVIDED FURTHER, HOWEVER, that MagneTek's aggregate liability
under this Section 10.1 and Section 10.3 shall in no event exceed $3,000,000.
Notwithstanding the foregoing, MagneTek shall have no obligation to
indemnify Buyer with respect to any Loss, including, but not limited to, any
breach of the representations set forth in Section 4.5, which are within the
scope of the Title Commitment, and Buyer agrees that its sole recourse with
respect to such matters shall be against the issuer of the Title Commitment.
10.2 INDEMNIFICATION BY BUYER. Subject to the terms and
conditions of this Article X, Buyer shall indemnify Sellers and each of their
respective officers, directors, employees and agents (each, a "Seller
Indemnified Person") against, and hold them harmless from, any Loss suffered
or incurred by any such Seller Indemnified Person (other than any relating to
environmental matters, for which indemnification provisions are set forth in
Section 10.3) to the extent arising from (a) if the Closing occurs, any
breach of any representation or warranty of Buyer contained in this Agreement
or in any certificate, instrument or other document delivered pursuant hereto
or in connection herewith which by its terms survives the Closing, (b) any
breach of any covenant of Buyer contained in this Agreement requiring
performance after the Closing Date, (c) if the Closing occurs, the existence
of, or the failure of Buyer to pay, perform and discharge when due, any of
the Assumed Liabilities and (d) if the Closing occurs, the ongoing operations
of Buyer and the Assets after the Closing Date; PROVIDED, HOWEVER, that Buyer
shall not have any liability under this Section 10.2 unless the aggregate of
all Losses relating thereto for which Buyer
35
would, but for this proviso, be liable exceeds on a cumulative basis with
Losses for which Seller is indemnified under Section 10.3, an amount equal to
$50,000 (and then only to the extent of such excess); and PROVIDED FURTHER,
HOWEVER, that Buyer's aggregate liability under clauses (a) and (b) of this
Section 10.2 shall in no event exceed $3,000,000.
10.3 INDEMNIFICATION FOR ENVIRONMENTAL MATTERS. Subject to the
terms and conditions of this Article X, MagneTek shall indemnify and hold
Buyer Indemnified Persons harmless from and against all Losses resulting from
claims or demands by any Governmental Authority or any third party which is
unrelated to Buyer or its Affiliates arising under any Environmental Law, to
the extent such Losses (a) are attributable to the use and/or occupancy of
any premises owned or used by Sellers prior to the Closing Date (a "Seller
Facility") or to Hazardous Substances transported offsite from a Seller
Facility for treatment, storage or disposal prior to the Closing and (b)
exceed, on a cumulative basis with Losses for which Buyer is indemnified
under Section 10.1, an amount equal to $50,000; but only to the extent of
such excess and PROVIDED, FURTHER, that MagneTek's aggregate liability under
this Section 10.3 and Section 10.1 shall in no event exceed $3,000,000.
MagneTek's indemnification liability hereunder shall in no event be construed
to extend to or include any remediation or other liability arising as a
result of the presence or removal of asbestos in or upon any of the
improvements located on the King Avenue Property at any time. MagneTek's
obligation to indemnify Buyer under this Section 10.3 shall expire on the
second anniversary of the Closing Date, and Buyer hereby expressly releases
MagneTek from and after such second anniversary from any liability in respect
of the matters covered by such indemnification, whether arising by statute or
common law, or otherwise. Notwithstanding the foregoing, MagneTek shall have
no obligation to indemnify any Buyer Indemnified Person with respect to
conditions that existed prior to the utilization of the King Avenue Property
that commenced in 1933. Buyer shall indemnify and hold each Seller
Indemnified Person harmless from and against all Losses resulting from claims
or demands by any Governmental Authority or third party arising under any
Environmental Law to the extent such Losses are attributable to Buyer's use
and/or occupancy of any Seller Facility.
10.4 LOSSES NET OF INSURANCE, ETC.
(a) The amount of any Loss for which indemnification is
provided under this Article X shall be net of any amounts recovered or
recoverable by the Indemnified Person under insurance policies with respect
to such Loss and of any reserve in respect thereof reflected on the Closing
Balance Sheet.
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(b) If the Indemnifying Person makes any payment under
this Article X in respect of any Loss, the Indemnifying Person shall be
subrogated, to the extent of such payment, to the rights of the Indemnified
Person against any insurer or third party with respect to such Losses. The
Indemnified Person shall execute any required documents or instruments, serve
as a named plaintiff, or take any other similar steps necessary to effectuate
such subrogation.
(c) Notwithstanding anything to the contrary elsewhere in
this Agreement, no Indemnifying Person shall, in any event, be liable to the
other party for any consequential damages, including, but not limited to,
loss of revenue or income, business interruption, cost of capital, or loss of
business reputation or opportunity relating to the breach or alleged breach
of this Agreement. Each party agrees that it will not seek punitive damages
as to any matter under, relating to or arising out of the Transactions. The
foregoing shall not be interpreted, however, to limit indemnification for
Losses incurred as a result of the assertion by a claimant (other than the
parties hereto and their successors and assigns), in a Third-Party Claim (as
defined below) of claims for damages of the foregoing type.
(d) The parties hereto agree that the indemnification
provisions of this Article X are intended to provide the exclusive remedy as
to all Losses any Indemnified Person may incur arising from or relating to
the Transactions, and each party hereby waives, to the extent they may do so,
any other rights or remedies that may arise under any applicable statute,
rule or regulation. Moreover, notwithstanding anything to the contrary in
this Agreement, Buyer waives no rights it may have or come to have or to
pursue against any unrelated predecessors in interest of MagneTek or NEC.
10.5 TERMINATION OF INDEMNIFICATION. The obligations to indemnify
and hold harmless a party hereto, (A) pursuant to Sections 10.1(a) and
10.2(a), shall terminate when the applicable representation or warranty
terminates pursuant to Section 10.8, (B) pursuant to Section 10.3, shall
terminate as and to the extent set forth therein and (C) pursuant to Sections
10.1(b) and 10.2(b), shall terminate on the second anniversary of the Closing
Date; PROVIDED, HOWEVER, that as to clauses (A), (B) and (C) above, such
obligations to indemnify and hold harmless shall not terminate with respect
to any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering a
notice (stating in reasonable detail the basis (whether or not the amount of
Losses related to such claim is then known or estimable) of such claim) to
the Indemnifying Person.
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10.6 PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN FOR TAX
CLAIMS). In order for an Indemnified Person to be entitled to any
indemnification provided for under this Agreement (other than for Tax Claims)
in respect of, arising out of or involving a claim or demand made by any
Person against the Indemnified Person (a "Third-Party Claim"), such
Indemnified Person must notify the Indemnifying Person in writing, and in
reasonable detail, of the Third-Party Claim within 10 Business Days after
receipt by such Indemnified Person of written notice of the Third-Party
Claim; PROVIDED, HOWEVER, that failure to give such notification shall not
affect the indemnification provided hereunder except to the extent the
Indemnifying Person shall have been actually prejudiced as a result of such
failure (except that the Indemnifying Person shall not be liable for any
Losses incurred during the period in which the Indemnified Person failed to
give such notice). Thereafter, the Indemnified Person shall deliver to the
Indemnifying Person, within five Business Days after the Indemnified Person's
receipt thereof, copies of all notices and documents (including court papers)
received by the Indemnified Person relating to the Third-Party Claim.
If a Third-Party Claim is made against an Indemnified Person, the
Indemnifying Person will be entitled to participate in the defense thereof
and, if it so chooses, to assume the defense thereof with counsel selected by
the Indemnifying Person and reasonably satisfactory to the Indemnified
Person. Should the Indemnifying Person so elect to assume the defense of a
Third-Party Claim, the Indemnifying Person will not be liable to the
Indemnified Person for legal fees and expenses subsequently incurred by the
Indemnified Person in connection with the defense thereof. If the
Indemnifying Person assumes such defense, the Indemnified Person shall have
the right to participate in the defense thereof and to employ counsel, at its
own expense, separate from the counsel employed by the Indemnifying Person,
it being understood that the Indemnifying Person shall control such defense.
The Indemnifying Person shall be liable for the fees and expenses of counsel
employed by the Indemnified Person for any period during which the
Indemnifying Person has not assumed the defense thereof (other than during
any period in which the Indemnified Person shall have failed to give notice
of the Third-Party Claim as provided above). If the Indemnifying Person
chooses to defend or prosecute any Third-Party Claim, all the parties hereto
shall cooperate in the defense or prosecution thereof. Such cooperation shall
include the retention and (upon the Indemnifying Person's request) the
provision to the Indemnifying Person of records and information which are
reasonably relevant to such Third-Party Claim, and making employees available
on a mutually convenient basis in the manner specified in
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Section 8.6 hereof to provide additional information and explanation of any
material provided hereunder. Notwithstanding the foregoing, in the event a
Third-Party Claim is made against either Seller as to which MagneTek is
entitled to seek indemnification under this Article X and MagneTek concludes,
in its reasonable judgment, that Buyer lacks the financial and personnel
resources to vigorously defend MagneTek from such Third-Party Claim, MagneTek
may elect to retain the defense of such Third-Party Claim and shall be
entitled to be reimbursed by Buyer for its Losses incurred in such defense,
such expenditures to be reimbursed promptly after submission of invoices
therefor. Whether or not the Indemnifying Person shall have assumed the
defense of a Third-Party Claim, the Indemnified Person shall not admit any
liability with respect to, or settle, compromise or discharge, such
Third-Party Claim without the Indemnifying Person's prior written consent
(which consent shall not be unreasonably withheld or delayed). All Tax
Claims (as defined in Section 10.7) shall be governed by Section 10.7.
10.7 PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS.
(a) If a claim shall be made by any Tax authority, which,
if successful, might result in an indemnity payment to any Person hereunder
(a "Tax Indemnitee"), the Tax Indemnitee shall promptly notify the party
against whom indemnification is sought (the "Tax Indemnitor") in writing of
such claim (a "Tax Claim"). If notice of a Tax Claim is not given to the Tax
Indemnitor within a sufficient period of time to allow the Tax Indemnitor to
effectively contest such Tax Claim, or in reasonable detail to apprise the
Tax Indemnitor of the nature of the Tax Claim, in each case taking into
account the facts and circumstances with respect to such Tax Claim, the Tax
Indemnitor shall not be liable to the Tax Indemnitee to the extent that the
Tax Indemnitor's ability to effectively contest such Tax Claim is actually
prejudiced as a result thereof.
(b) With respect to any Tax Claim, the Tax Indemnitor
shall control all proceedings taken in connection with such Tax Claim
(including, without limitation, selection of counsel) and, without limiting
the foregoing, may in its sole discretion pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with any taxing
authority with respect thereto and may, in its sole discretion, either pay
the Tax claimed and xxx for a refund where applicable law permits such refund
suits or contest the Tax Claim in any permissible manner; PROVIDED, HOWEVER,
that the Tax Indemnitor shall not settle or compromise a Tax Claim without
giving 30-days' prior notice to the Tax Indemnitee, and without the Tax
Indemnitee's consent, which shall not be
39
unreasonably withheld or delayed, if such settlement or compromise would have
a material adverse effect on the Tax liabilities of the Tax Indemnitee, its
Affiliates or any member of its affiliated group. The Tax Indemnitee, and
each of its Affiliates, shall cooperate with the Tax Indemnitor in contesting
any Tax Claim, which cooperation shall include, without limitation, the
retention and (upon the Tax Indemnitor's request) the provision to Tax
Indemnitor of records and information which are reasonably relevant to such
Tax Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided
hereunder or to testify at proceedings relating to such Tax Claim.
10.8 SURVIVAL OF REPRESENTATIONS. The representations and
warranties in this Agreement (and in any other document delivered in
connection herewith which expressly survive the Closing) shall survive the
Closing solely for purposes of Sections 10.1 and 10.2 and shall terminate at
the close of business on the second anniversary of the Closing Date.
Notwithstanding the foregoing, (a) representations and warranties relating to
environmental matters in Section 4.10 shall not survive the Closing and (b)
Buyer's acknowledgment pursuant to Section 5.4 shall not expire. Nothing in
this Section 10.8 shall limit the duration of Section 10.3.
ARTICLE XI
GENERAL PROVISIONS
11.1 ASSIGNMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties' successors-in-interest and assigns.
This Agreement and the rights and obligations hereunder shall not be
assignable or transferable by Buyer other than by operation of law, including
by way of stock sale or merger, except to a buyer of substantially all the
assets of Buyer, without the prior written consent of MagneTek; PROVIDED,
HOWEVER, that (a) Buyer may assign its right to purchase the Assets hereunder
to an Affiliate of Buyer that can accurately make all of Buyer's
representations and warranties as of the Closing without the prior written
consent of MagneTek, but in no event shall any such assignment limit or
affect Buyer's obligations hereunder and (b) Buyer may assign its rights
(including its indemnification rights) hereunder or grant a security interest
in this Agreement, or both, to or for the benefit of any Person holding a
financial obligation of Buyer issued in connection with the financing of the
Transactions or in connection with any renewal, extension, modification,
amendment, refinancing, refunding or replacement of any such financial
obligation.
40
11.2 NO THIRD-PARTY BENEFICIARIES. Except as provided in Section
11.1 as to permitted assignees and in Article X as to Indemnified Persons,
this Agreement is for the sole benefit of the parties hereto and their
permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the parties hereto and such
assigns, any legal or equitable rights hereunder.
11.3 TERMINATION.
(a) Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated (except as set forth in
Section 11.3(c)) and the Transactions abandoned at any time prior to the
Closing Date:
(i) by mutual written consent of
Sellers and Buyer;
(ii) by Sellers if any of the
conditions set forth in Section 3.2 shall
have become incapable of fulfillment, and
shall not have been waived by Sellers;
(iii) by Buyer if any of the
conditions set forth in Section 3.1 shall
have become incapable of fulfillment, and
shall not have been waived by Buyer; or
(iv) by Sellers or Buyer, if the
Closing does not occur on or prior to
April 30, 1995;
PROVIDED, HOWEVER, that the party seeking termination pursuant to clause (ii),
(iii) or (iv) is not materially in breach (after having been given written
notice and a five-Business Day cure period, if such breach is susceptible of
cure) of any of its representations, warranties, covenants or agreements
contained in this Agreement.
(b) In the event termination by Sellers or Buyer pursuant
to this Section 11.3 shall become effective, written notice thereof shall
forthwith be given to the other party and the Transactions shall be
terminated, without further action by either party. If the Transactions are
terminated as provided herein:
(i) Buyer shall return all
documents and copies and other material
received from Sellers relating to the
Transactions, whether so obtained before or
after the execution hereof, to Sellers;
41
(ii) all confidential information
received by Buyer with respect to the
Columbus Business and Sellers shall be
treated in accordance with the
Confidentiality Agreement which shall remain
in full force and effect notwithstanding the
termination of this Agreement.
(c) If this Agreement is terminated and the Transactions
are abandoned as described in this Section 11.3, this Agreement shall become
void and of no further force and effect, except for the provisions of (i)
Section 7.1 relating to the obligation of Buyer to keep confidential certain
information and data obtained by it, (ii) Section 11.4 relating to certain
expenses, (iii) Section 8.3 relating to publicity, (iv) Section 11.5 relating
to attorneys' fees and expenses, (v) Section 11.11 relating to finder's fees
and broker's fees and (vi) this Section 11.3. Nothing in this Section 11.3
shall be deemed to release Sellers or Buyer from any liability for any breach
by such party of the terms and provisions of this Agreement or to impair the
right of Sellers or Buyer to compel specific performance by the other party
of its obligations under this Agreement.
11.4 EXPENSES. Whether or not the Transactions are consummated,
and except as otherwise provided in this Agreement, all fees, costs and
expenses incurred in connection with the Transaction Documents and the
Transactions shall be paid by the party incurring such fees, costs or
expenses.
11.5 ATTORNEYS' FEES. Should any litigation be commenced
concerning this Agreement or the rights and duties of any party with respect
to it, the party prevailing shall be entitled, in addition to such other
relief as may be granted, to a reasonable sum for such party's attorneys'
fees and expenses determined by the court in such litigation or in a separate
action brought for that purpose.
11.6 AMENDMENTS. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by all parties hereto.
11.7 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent prepaid telex, cable or telecopy, or sent, postage prepaid, by
registered, certified or express mail, or reputable overnight courier service
and shall be deemed given when so delivered by hand, telexed, cabled or
telecopied, or if mailed, three days after mailing (one business day in the
case of express mail or overnight courier service), as follows:
42
(i) if to Buyer, to:
Xx. Xxxx Xxxxx
President
000 Xxxx Xxxxxx Acquisition Corp.*
000 Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxxxx, Esq.
00 Xxxx Xxxxxx
Xxxxxx Xxxxxx, XX 00000
(ii) if to MagneTek, to:
MagneTek, Inc.
00 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Miley, Esq.
General Counsel
with a copy to:
Xxxxxx, Xxxx & Xxxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx Xxxxxx, Esq.
(iii) if to NEC, to:
MagneTek National Electric Coil, Inc.
c/o 00 Xxxxxxx Xxxxxxxxx
X.X. Xxx 000000
Xxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxxx X. Miley, Esq.
Secretary
11.8 INTERPRETATION; EXHIBITS AND SCHEDULES. The headings
contained in this Agreement, in any Exhibit or Schedule hereto and in the
table of contents to this Agreement, are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Any matter disclosed in one Schedule hereto shall
-----------------
* After the Closing Date, Buyer's name is expected to be changed to National
Electric Coil-Columbus, Inc.
43
be deemed incorporated by reference into each other Schedule hereto and
disclosed in each such Schedule. All Exhibits and Schedules annexed hereto
or referred to herein are hereby incorporated in and made a part of this
Agreement as if set forth in full herein. Any capitalized terms used in any
Schedule or Exhibit, but not otherwise defined therein, shall have the
meaning as defined in this Agreement. All of the Transaction Documents shall
be interpreted in such a manner as to harmonize and give effect to the
provisions thereof.
11.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more such counterparts have been
signed by each of the parties and delivered to the other party.
11.10 ENTIRE AGREEMENT. This Agreement and the Confidentiality
Agreement contain the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersede all prior oral
and written agreements and understandings relating to such subject matter.
11.11 FEES. Each party hereto hereby represents and warrants that
(a) the only brokers or finders that have acted for such party in connection
with this Agreement or the transactions contemplated hereby or that may be
entitled to any brokerage fee, finder's fee or commission in respect thereof
are set forth in Schedule 11.11 and (b) each party agrees that it will pay
all fees or commissions which may be payable to such firm(s) retained by it
or to which it may be obligated.
11.12 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision hereof.
11.13 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed entirely within such State,
without regard to the conflicts of law principles of such State.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first written above.
MAGNETEK, INC.
By:
-------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President and
Treasurer
000 XXXX XXXXXX ACQUISITION CORP.
By:
------------------------
Name: Xxxx Xxxxx
Title:President
MAGNETEK NATIONAL ELECTRIC COIL, INC.
By:
------------------------
Name: Xxxx X. Xxxxxxx, Xx.
Title: Vice President and
Chief Financial Officer
45
