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EXHIBIT 2
STOCK PURCHASE AND SALE AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇▇▇ Y&N HOLDINGS, INC.
(the "Seller")
AND
NTK SUB, INC.
(the "Buyer")
March 9, 1998
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TABLE OF CONTENTS
Page
ARTICLE I -- PURCHASE AND SALE OF THE COMPANY SHARES...........................1
1.1 Purchase and Sale............................................1
1.2 Purchase Price...............................................1
1.3 The Closing..................................................2
1.4 Post-Closing Adjustments.....................................2
ARTICLE II -- REPRESENTATIONS AND WARRANTIES OF THE SELLER.....................5
2.1 Organization, Qualification and Corporate Power..............5
2.2 Capitalization and Ownership.................................6
2.3 Authority....................................................7
2.4 Noncontravention.............................................7
2.5 Subsidiaries.................................................8
2.6 Financial Statements.........................................8
2.7 Absence of Certain Changes...................................8
2.8 Undisclosed Liabilities......................................9
2.9 Tax Matters..................................................9
2.10 Tangible Personal Property..................................10
2.11 Leased and Owned Real Property..............................10
2.12 Intellectual Property.......................................10
2.13 Contracts...................................................11
2.14 Litigation..................................................12
2.15 Labor Matters...............................................12
2.16 Employee Benefits...........................................12
2.17 Environmental Matters.......................................15
2.18 Legal Compliance............................................17
2.19 Permits.....................................................17
2.20 Insurance...................................................17
2.21 Brokers' Fees...............................................17
2.22 Product Warranty............................................17
2.23 Product Compliance..........................................18
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE BUYER....................18
3.1 Organization................................................18
3.2 Authorization of Transaction................................18
3.3 Noncontravention............................................19
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3.4 Broker's Fees...............................................19
3.5 Litigation..................................................19
3.6 Investment Intent...........................................19
3.7 Solvency....................................................20
3.8 No Knowledge of Misrepresentation or Omission...............20
ARTICLE IV -- PRE-CLOSING COVENANTS...........................................20
4.1 Efforts.....................................................20
4.2 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.......................................20
4.3 Replacement of Guarantees and Letters of Comfort............21
4.4 Pre-Closing Transactions....................................21
4.5 Operation of Business.......................................21
4.6 Access......................................................21
4.7 Notification................................................22
4.8 Exclusivity.................................................23
ARTICLE V -- CONDITIONS PRECEDENT TO CLOSING..................................23
5.1 Conditions to Obligations of the Buyer......................23
5.2 Conditions to Obligations of the Seller.....................24
ARTICLE VI -- INDEMNIFICATION.................................................25
6.1 Indemnification by the Seller...............................25
6.2 Indemnification by the Buyer................................27
6.3 Claims for Indemnification..................................28
6.4 Survival....................................................33
6.5 Limitations.................................................33
6.6 Treatment of Indemnification Payments.......................35
ARTICLE VII -- TERMINATION....................................................35
7.1 Termination of Agreement....................................35
7.2 Effect of Termination.......................................36
ARTICLE VIII -- ENVIRONMENTAL MATTERS.........................................39
8.1 Environmental Indemnification for Included Properties.......39
8.2 Environmental Indemnification for Excluded Properties.......41
8.3 Exclusive Remedy............................................42
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8.4 Buyer's Indemnification.....................................42
ARTICLE IX -- TAX MATTERS.....................................................43
9.1 Preparation and Filing of Tax Returns.......................43
9.2 Tax Indemnification by the Seller...........................44
9.3 Tax Indemnification by the Buyer............................44
9.4 Allocation of Certain Taxes.................................45
9.5 Refunds and Carrybacks......................................46
9.6 Cooperation on Tax Matters; Tax Audits......................47
9.7 Termination of Tax-Sharing Agreements.......................48
ARTICLE X -- FURTHER AGREEMENTS...............................................48
10.1 Access to Information; Record Retention; Cooperation........48
10.2 Director and Officer Indemnification........................50
10.3 Covenant Not to Compete; Non-Solicitation...................50
10.4 Disclosure Generally........................................51
10.5 Certain Insurance Matters...................................52
10.6 Certain Employee Benefits Matters...........................53
10.7 Post-Closing Covenant Regarding Excluded Properties.........55
10.8 Foreign Exchange Contracts..................................55
10.9 Resignations................................................56
10.10 Release of Accrued Dividend Obligations.....................56
10.11 Further Assurances..........................................56
ARTICLE XI -- GUARANTEES......................................................56
11.1 ▇▇▇▇▇▇▇▇' Guarantee.........................................56
11.2 Buyer's Parent Guarantee....................................57
ARTICLE XII -- MISCELLANEOUS..................................................58
12.1 Press Releases and Announcements............................58
12.2 No Third Party Beneficiaries................................59
12.3 Action to be Taken by Affiliates............................59
12.4 Entire Agreement............................................59
12.5 Succession and Assignment...................................59
12.6 Counterparts................................................59
12.7 Headings....................................................59
12.8 Notices.....................................................59
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12.9 Governing Law...............................................61
12.10 Amendments and Waivers......................................61
12.11 Severability................................................61
12.12 Expenses....................................................61
12.13 Specific Performance........................................61
12.14 Submission to Jurisdiction..................................62
12.15 Construction................................................62
12.16 Incorporation of Exhibit, Schedule and Attachments..........62
12.17 Facsimile Signature.........................................62
Exhibit A - Opinion of Counsel to the Seller
Exhibit B - Opinion of Counsel to the Buyer
Disclosure Schedule
Attachment 1.4(a) - Principles for Determination of Closing Balance Sheet
Attachment 4.4 - Pre-Closing Transactions
Attachment 4.6 - Buyer Personnel
Attachment 6.1(i) - Certain Benefits Matters
Attachment 7.2 - Irrevocable Letter of Credit
Attachment 10.4(e) - Certain Items Reflected in the Purchase Price
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TABLE OF DEFINED TERMS
Defined Term Section
------------ -------
1997 Financial Statements 2.6
1997 Balance Sheet 2.6
Adjusted Purchase Price 1.4(b)
Affiliates 2.7(a)
Agreed Amount 6.3(b)
Agreement Preliminary Statement
Buyer Preliminary Statement
Buyer's 401(k) Plan 10.7(a)
Buyer's Canadian Plan 10.7(d)
Buyer's Parent Introduction
CERCLA 2.17(e)
Claim Notice 6.3(b)
Claimed Amount 6.3(b)
Claims 10.6
Closing 1.1
Closing Balance Sheet 1.4(a)(i)
Closing Balance Sheet Date 1.4(a)(i)
Closing Date 1.3(a)
Closing Net Asset Value 1.4(a)(i)
Code 2.16(a)
Company Introduction
Company Intellectual Property 2.12(a)
Company Material Adverse Effect 2.1(b)
Company Plans 2.16(a)
Company Shares Introduction
Competitive Business 10.3
Competitive Products 10.3
Confidentiality Agreement 4.5
Damages 6.1
Disclosure Schedule Article II
Employee Benefit Plan 2.16(a)
Environmental Authority 8.1(a)
Environmental Law 2.17(e)
Environmental Matters 2.17(g)
ERISA 2.16(a)
ERISA Affiliate 2.16(a)
Excluded Properties 2.17(d)
Existing 401(k) Plan 10.7(a)
FTC 4.2
FTC Clearance Date 4.2
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Final Closing Balance Sheet 1.4(a)(ii)
Final Closing Net Asset Value 1.4(a)(ii)
Governmental Entity 2.4
Harrodsburg Facility 2.17(d)
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act 1.3(a)
Highland Park Facility 2.17(d)
Included Properties 2.17(d)
Indebtedness for Borrowed Money Attachment 4.4
Indemnified Party 6.3(a)
Indemnifying Party 6.3(a)
Information 10.1
Market Out Event 7.2(c)
Material Noncompliance 8.1(d)
Materials of Environmental Concern 2.17(f)
Model 663 Recall Costs 6.3(h)
Monroe Facility 2.17(d)
Monroe Indemnification Agreement 8.2(a)
NAV Dispute Notice 1.4(a)(ii)
Neutral Accountants 1.4(a)(iii)
Noncompetition Party 10.3
Noncompetition Period 10.3
Non-Consenting Party 9.6(b)
Ordinary Course of Business 2.2(a)
Parties Preliminary Statement
Permits 2.20
Pre-Closing Transactions 4.4
Pro Forma Balance Sheet 1.4(a)(i)
Purchase Price 1.2
RCRA 2.17(f)
Response Costs 8.1(e)
Saltire 6.3(d)(ii)
Scheduled Arrangements 4.3
Second Request 4.2
Securities Act 2.2(a)
Security Interest 2.2(a)
Seller Preliminary Statement
Seller Retained Benefits Liabilities 5.1(i)
Seller's Insurers 10.6
Subsidiary Introduction
Supplemental Agreements 10.6(f)
Tax Returns 2.9
Taxes 2.9
Transporter Liability 8.1(f)
U.S. GAAP 2.6
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▇▇▇▇▇▇▇▇ 4.5
▇▇▇▇▇▇▇▇ Canadian Defined Benefit Plan 10.7(d)
▇▇▇▇▇▇▇▇ Canadian Defined Contribution Plan 10.7(d)
▇▇▇▇▇▇▇▇ Canadian Employees 6.1(e)
▇▇▇▇▇▇▇▇ Intercompany Indebtedness Attachment 4.4
WNA 6.1(c)
WUSH Introduction
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STOCK PURCHASE AND SALE AGREEMENT
This STOCK PURCHASE AND SALE AGREEMENT (the "Agreement") is entered
into as of March 9, 1998 by and between ▇▇▇▇▇▇▇▇ Y&N Holdings, Inc., a Delaware
corporation (the "Seller"), and NTK Sub, Inc., a Delaware corporation (the
"Buyer"). The Seller and the Buyer are referred to collectively herein as the
"Parties."
INTRODUCTION
1. NuTone Inc., a Delaware corporation (the "Company"), and its wholly
owned subsidiary, NuTone Canada Inc., a corporation organized under the laws of
the Province of Ontario, Canada (the "Subsidiary"), are engaged in the business
of manufacturing and supplying built-in electrical and other appliances
primarily for use in residential construction and remodeling in the United
States and Canada.
2. The Seller, a wholly owned subsidiary of ▇▇▇▇▇▇▇▇ U.S. Holdings
Inc., a Delaware corporation ("WUSH"), owns all of the outstanding shares of the
capital stock of the Company (the "Company Shares").
3. The Buyer is a wholly-owned subsidiary of Nortek, Inc., a Delaware
corporation ("Buyer's Parent").
4. The Seller desires to sell to the Buyer, and the Buyer desires to
purchase from the Seller, all of the Company Shares for the consideration set
forth below, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF THE COMPANY SHARES
1.1 Purchase and Sale. Upon and subject to the terms and conditions of
this Agreement, at the closing of the purchase and sale of the Company Shares
contemplated by this Agreement (the "Closing"), the Seller shall sell, transfer,
convey, assign and deliver to the Buyer, and the Buyer shall purchase, acquire
and accept from the Seller, all of the Company Shares.
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1.2 Purchase Price. Subject to Section 1.4, the purchase price to be
paid by the Buyer for all of the Company Shares shall be $242,500,000 (the
"Purchase Price") and shall be paid to the Seller at the Closing.
1.3 The Closing.
(a) Time and Location. The Closing shall take place at the
offices of ▇▇▇▇ and ▇▇▇▇ LLP in Boston, Massachusetts, commencing at 10:00 a.m.,
local time, on the first business day after the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than the delivery of the officers' certificates and
opinions referred to in Sections 5.1 and 5.2) (the "Closing Date"); provided
that in no event shall the Closing Date occur before the later of (i) May 1,
1998 or (ii) the date which is 45 days after the FTC Clearance Date (as defined
in Section 4.2).
(b) Actions at the Closing.
At the Closing:
(i) the Seller shall deliver (or cause to be
delivered) to the Buyer the various certificates, instruments and documents
referred to in Section 5.1;
(ii) the Buyer shall deliver (or cause to be
delivered) to the Seller the various certificates, instruments and documents
referred to in Section 5.2;
(iii) the Seller shall deliver to the Buyer one or
more certificates evidencing all of the Company Shares, duly endorsed in blank
or with stock powers duly executed by the Seller;
(iv) the Seller shall (or shall cause the Company to)
deliver to the Buyer the minute books, stock books, ledgers and registers,
corporate seals and other similar corporate records of the Company and the
Subsidiary; and
(v) the Buyer shall deliver to the Seller the
Purchase Price by wire transfer of immediately available funds into an account
or accounts designated by the Seller.
1.4 Post-Closing Adjustments.
(a) Net Asset Value Adjustment. The Purchase Price shall be
subject to adjustment after the Closing Date as follows:
(i) Within 45 days after the Closing Date, the Seller
shall prepare and deliver to the Buyer a consolidated balance sheet of the
Company and the Subsidiary (the "Closing Balance Sheet") as of the end of the
Company's last fiscal month ending on or prior
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to the Closing Date (the "Closing Balance Sheet Date"). The Seller has made
available to the Buyer a list of the Company's fiscal month end dates for 1998.
The Closing Balance Sheet shall be prepared on the basis of the accounting
methods, treatments, principles and procedures set forth on Attachment 1.4(a)
(being the same principles used in preparing the Pro Forma Balance Sheet (as
defined below) except as otherwise indicated on the first page of Attachment
1.4(a)), or to the extent not specifically addressed on Attachment 1.4(a), on a
basis consistent with the accounting methods, treatments, principles and
procedures used in the preparation of the pro forma consolidated balance sheet
of the Company and the Subsidiary as of December 31, 1996 included in Exhibit
G-II of Appendix G of the Descriptive Memorandum dated October 1997 previously
furnished to the Buyer (using the FIFO inventory basis indicated in the notes to
such consolidated balance sheet) (the "Pro Forma Balance Sheet").
Notwithstanding any provision of this Agreement to the contrary, any (x)
dividends paid or other distributions or payments (including without limitation
debt repayments, foreign sales corporation commissions and management charges)
made by the Company to the Seller or the Seller's Affiliates after the Closing
Balance Sheet Date and on or prior to Closing or (y) capital contributions or
other cash infusions into the Company made by the Seller or the Seller's
Affiliates after the Closing Balance Sheet Date and on or prior to Closing (and
the application of the proceeds from such capital contributions or other cash
infusions) shall be reflected on the Closing Balance Sheet. The consolidated net
assets of the Company and the Subsidiary as reflected on the Closing Balance
Sheet (i.e., the excess of consolidated total assets over consolidated total
liabilities, in each case as determined on the basis set forth in this Section
1.4(a)(i)) is referred to herein as the "Closing Net Asset Value."
(ii) If the Buyer in good faith disputes the Closing Net Asset
Value as shown on the Closing Balance Sheet prepared by the Seller, the Buyer
shall deliver to the Seller within 30 days after receiving the Closing Balance
Sheet a statement (the "NAV Dispute Notice") setting forth what the Buyer
believes is the correct Closing Net Asset Value and describing the basis for the
determination of such different Closing Net Asset Value. The Parties shall use
reasonable efforts to resolve such differences regarding the determination of
the Closing Net Asset Value for a period of 30 days after the Buyer has given
the NAV Dispute Notice. If the Parties resolve such differences, the Closing Net
Asset Value agreed to by the Parties shall be deemed to be the "Final Closing
Net Asset Value" and the Closing Balance Sheet agreed to by the Parties shall be
deemed to be the "Final Closing Balance Sheet."
(iii) If the Parties do not reach a final resolution within 30
days after the Buyer has given the NAV Dispute Notice, unless the Parties
mutually agree to continue their efforts to resolve such differences, KPMG Peat
Marwick, LLP (or if such firm is unable or unwilling to do so, another
independent firm of nationally recognized public accountants that does not
provide material services to the Seller, the Buyer or any of their respective
Affiliates) (the "Neutral Accountants") shall resolve such differences in the
manner provided below. The Parties shall each be entitled to make a presentation
to the Neutral Accountants, pursuant to procedures to be agreed to among the
Seller, the Buyer and the Neutral Accountants, advocating the merits of the
Closing Net Asset Value espoused by such Party;
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and the Neutral Accountants shall be required to resolve the differences between
the Parties and determine the Closing Net Asset Value within ten business days
thereafter. The Closing Net Asset Value determined by the Neutral Accountants
shall be deemed to be the Final Closing Net Asset Value and the Closing Balance
Sheet, as adjusted to reflect such determination, shall be deemed to be the
Final Closing Balance Sheet. Such determination by the Neutral Accountants shall
be conclusive and binding upon the Parties, absent fraud or manifest error.
Nothing herein shall be construed to authorize or permit the Neutral Accountants
(x) to determine any questions or matters whatsoever under or in connection with
this Agreement except for the resolution of differences between the Parties
regarding the determination of the Closing Net Asset Value, (y) to resolve any
such differences by making an adjustment to the Closing Balance Sheet that is
outside of the range defined by amounts as finally proposed by the Parties or
(z) to prepare the Closing Balance Sheet on any basis other than that described
in the second sentence of Section 1.4(a)(i).
(iv) The Seller, on the one hand, and the Buyer, on the other
hand, shall share equally the fees and expenses of the Neutral Accountants;
provided that if the Neutral Accountants determine that one Party has adopted a
position or positions with respect to the Closing Balance Sheet that is
frivolous or clearly without merit, the Neutral Accountants may, in their
discretion, assign a greater portion of any such fees and expenses to such
Party.
(v) Failure of the Buyer to deliver a NAV Dispute Notice
within 30 days after receiving the Closing Balance Sheet shall constitute
acceptance of the Closing Net Asset Value set forth on the Closing Balance
Sheet, whereupon such Closing Net Asset Value shall be deemed to be the Final
Closing Net Asset Value and the Closing Balance Sheet shall be deemed to be the
Final Closing Balance Sheet.
(vi) If the Final Closing Net Asset Value is within the range
of $65,100,000 (inclusive) to $67,100,000 (inclusive), then neither Party shall
be required to make any payment to the other Party pursuant to this Section 1.4.
If the Final Closing Net Asset Value is less than $65,100,000 then the Seller
shall pay to the Buyer an amount equal to the difference between $65,100,000 and
the Final Closing Net Asset Value. If the Final Closing Net Asset Value is more
than $67,100,000 then the Buyer shall pay to the Seller an amount equal to the
difference between the Final Closing Net Asset Value and $67,100,000. Any
payment shall be made by wire transfer or other delivery of immediately
available funds, within five business days after the date on which the Final
Closing Net Asset Value is determined pursuant to this Section 1.4(a) to an
account or accounts designated by the receiving Party within two business days
after such determination date.
(b) Adjusted Purchase Price. For purposes of this Agreement, "Adjusted
Purchase Price" means the Purchase Price plus, if applicable, the amount of the
payment required to be made by the Buyer to the Seller pursuant to the third
sentence of
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Section 1.4(a)(vi) or minus, if applicable, the amount of the payment required
to be made by the Seller to the Buyer pursuant to the second sentence of Section
1.4(a)(vi).
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in the disclosure schedule attached hereto (the
"Disclosure Schedule"), the Seller represents and warrants to the Buyer as of
the date hereof as follows:
2.1 Organization, Qualification and Corporate Power.
(a) The Seller. The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to carry on the business in
which it is now engaged and to own and use the properties now owned and used by
it.
(b) The Company. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
The Company is duly qualified to conduct business under the laws of each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification necessary, except
for any such failures to be qualified that would not reasonably be expected to
have a Company Material Adverse Effect (as defined below). The Company has all
requisite corporate power and authority to carry on the business in which it is
now engaged and to own and use the properties now owned and used by it. For
purposes of this Agreement, "Company Material Adverse Effect" means any change,
effect or circumstance that (a) is materially adverse to the assets, business,
financial condition or results of operations of the Company and the Subsidiary,
taken as a whole (other than changes that are the result of economic factors
affecting the economy as a whole or changes that are the result of factors
generally affecting the specific markets in which the Company and the Subsidiary
compete) or (b) materially impairs the ability of the Seller to consummate the
purchase and sale of the Company Shares contemplated by this Agreement;
provided, however, that a "Company Material Adverse Effect" shall not include
any adverse change, effect or circumstance primarily arising out of or resulting
primarily from actions contemplated by the Parties in connection with this
Agreement, or that is primarily attributable to the transactions contemplated by
this Agreement.
(c) The Subsidiary. The Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the Province
of Ontario, Canada. The Subsidiary has all requisite corporate power and
capacity to carry on its business in which it is now engaged and to own and use
the properties now owned and used by it.
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2.2 Capitalization and Ownership.
(a) The Company. The authorized capital stock of the Company
consists of (i) 3,000 shares of common stock, par value $0.01 per share, of
which 1,030 shares are issued and outstanding, (ii) 1,000 shares of 8% Series A
Cumulative Preferred Stock, par value $0.01 per share, all of which shares are
issued and outstanding, and (iii) 1,000 shares of 10% Series B Cumulative
Preferred Non-Voting Stock, par value $0.01 per share, all of which shares are
issued and outstanding. All of the issued and outstanding Company Shares are
duly authorized, validly issued, fully paid, and nonassessable. There are no
outstanding or authorized options, warrants, rights, agreements or commitments
to which the Company is a party or which are binding upon the Company providing
for the issuance, disposition or acquisition of any of its capital stock. There
are no outstanding or authorized stock appreciation, phantom stock or similar
rights with respect to the Company. There are no agreements, voting trusts,
proxies or understandings with respect to the voting, or registration under the
Securities Act of 1933, as amended (the "Securities Act") of any Company Shares.
All of the issued and outstanding Company Shares are owned of record and
beneficially by the Seller and, immediately prior to the Closing, the Seller
will have good title to the Company Shares, free and clear of any Security
Interest, contractual restriction or covenant, option or other adverse claim
(whether arising by contract or by operation of law), other than applicable
federal and state securities law restrictions. For purposes of this Agreement,
"Security Interest" means any mortgage, pledge, security interest, encumbrance,
charge, or other lien (whether arising by contract or by operation of law),
other than (i) mechanic's, materialmen's, and similar liens, (ii) liens arising
under worker's compensation, unemployment insurance, social security,
retirement, and similar legislation, and (iii) liens on goods in transit
incurred pursuant to documentary letters of credit, in each case arising in the
ordinary course of business consistent with past custom and practice of the
Company and the Subsidiary, taken as a whole ("Ordinary Course of Business").
(b) The Subsidiary. The authorized capital stock of the
Subsidiary consists of (i) unlimited common shares, without par value, of which
2,001 shares are issued and outstanding and (ii) unlimited Class A Special
shares, without par value, of which 4,800,000 shares are issued and outstanding.
All of the issued and outstanding capital stock of the Subsidiary is validly
issued, fully paid and nonassessable. There are no outstanding or authorized
options, warrants, rights, agreements or commitments to which the Subsidiary is
a party or which are binding upon the Subsidiary providing for the issuance,
disposition or acquisition of any of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock or similar rights with respect
to the Subsidiary. There are no agreements, voting trusts, proxies or
understandings with respect to the voting, or registration under the Securities
Act, of any shares of capital stock of the Subsidiary. All of the issued and
outstanding shares of capital stock of the Subsidiary are owned of record and
beneficially by the Company, free and clear of any Security Interest,
contractual restriction or covenant, option or other adverse claim (whether
arising by contract or by operation of law), other than applicable Canadian
securities law restrictions or the Competition Act (Canada).
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2.3 Authority. The Seller has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by the
Seller and the consummation by the Seller of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate action
on the part of the Seller. This Agreement has been duly and validly executed and
delivered by the Seller and, assuming this Agreement constitutes the valid and
binding agreement of the Buyer, constitutes a valid and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms.
2.4 Noncontravention. Subject to compliance with the applicable
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"), neither the execution and delivery of
this Agreement by the Seller, nor the consummation by the Seller of the
transactions contemplated hereby, will (a) conflict with or violate any
provision of the charter or bylaws of the Seller, the Company or the Subsidiary,
(b) require on the part of the Seller, the Company or the Subsidiary any filing
with, or any permit, authorization, consent or approval of, any court,
arbitrational tribunal, administrative agency or commission or other
governmental or regulatory authority or agency (a "Governmental Entity"), except
for any filing, permit, authorization, consent or approval which if not obtained
or made would not reasonably be expected to have a Company Material Adverse
Effect, (c) conflict with, result in a breach of, constitute (with or without
due notice or lapse of time or both) a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice, consent or waiver under, any contract, lease, sublease,
license, sublicense, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which the Company or the Subsidiary is a party or by which the
Company or the Subsidiary is bound or to which any of their assets is subject,
(d) result in the imposition of any Security Interest upon the Company Shares or
any assets of the Company or the Subsidiary, (e) violate any order, writ,
injunction, decree, applicable to the Seller, the Company, the Subsidiary or any
of their respective properties or assets or (f) violate any statute, rule or
regulation applicable to the Seller, the Company, the Subsidiary or any of their
respective properties or assets (other than a statute, rule or regulation
relating to antitrust laws other than the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act), except for any
violation that would not reasonably be expected to have a Company Material
Adverse Effect.
2.5 Subsidiaries. Except for the Subsidiary, the Company does not
control, directly or indirectly, or have any direct or indirect equity
participation in, any corporation, limited liability company, partnership, trust
or other business association.
2.6 Financial Statements. The Seller has provided to the Buyer copies
of the audited consolidated balance sheet and consolidated statements of income
and cash flows for the Company and the Subsidiary as of and for the year ended
December 31, 1997 (collectively, the "1997 Financial Statements" and such
balance sheet, the "1997 Balance Sheet"). Except as
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disclosed in the notes thereto, the 1997 Financial Statements have been prepared
in accordance with United States generally accepted accounting principles ("U.S.
GAAP") and fairly present, in all material respects, the consolidated financial
condition and consolidated results of operations and cash flows of the Company
and the Subsidiary as of and for the year ended December 31, 1997.
2.7 Absence of Certain Changes. Except as contemplated by this
Agreement (including without limitation those matters contemplated by Sections
4.4 and 4.5 of this Agreement), since December 31, 1997, there have not been any
changes in the financial condition or results of operations of the Company and
the Subsidiary, taken as a whole, except for any changes that would not
reasonably be expected to have a Company Material Adverse Effect. Except as
contemplated by this Agreement (including without limitation those matters
contemplated by Sections 4.4 and 4.5 of this Agreement), since December 31,
1997, neither the Company nor the Subsidiary has taken any of the following
actions or permitted any of the following events to occur:
(a) borrowed any amount, except for borrowings from the Seller
or its affiliates, as defined in Rule 12b-2 under the Securities Exchange Act of
1934 ("Affiliates"), or, in the case of the Subsidiary, borrowings in the
Ordinary Course of Business under the Subsidiary's credit facility with Canadian
Imperial Bank of Commerce which is described in the Disclosure Schedule;
(b) subjected to any Security Interest any material portion of
its assets, except liens for current Taxes (as defined in Section 2.9) not yet
due and payable and liens for current Taxes that are being contested in good
faith;
(c) sold, assigned or transferred any portion of its tangible
assets in a single transaction or series of related transactions in an amount in
excess of $250,000, except in the Ordinary Course of Business;
(d) suffered any extraordinary losses material to the Company
and the Subsidiary, taken as a whole, or waived any rights of material value to
the Company and the Subsidiary, taken as a whole.
(e) issued, sold or transferred any of its capital stock or
other equity securities, securities convertible into its capital stock or other
equity securities or warrants, options or other rights to acquire its capital
stock or other equity securities;
(f) declared or paid any dividends or made any distributions
on the Company's capital stock or other equity securities or redeemed or
purchased any shares of the Company's capital stock or other equity securities,
except for dividends, distributions and redemptions paid solely in cash; or
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17
(g) except in the Ordinary Course of Business, made any
capital expenditures or commitments therefor in an amount in excess of
$1,000,000 in the aggregate.
2.8 Undisclosed Liabilities. Neither the Company nor the Subsidiary has
any liability of a nature required by U.S. GAAP to be set forth on a balance
sheet which is material to the Company and the Subsidiary, taken as a whole,
except for (a) liabilities shown on the 1997 Balance Sheet, (b) liabilities
which have arisen since December 31, 1997 in the Ordinary Course of Business and
(c) contractual liabilities incurred in the Ordinary Course of Business.
2.9 Tax Matters. Each of the Company and the Subsidiary has filed all
material Tax Returns (as defined below) that it was required to file and all
such Tax Returns were correct and complete, except for any error or omission
that would not reasonably be expected to have a Company Material Adverse Effect.
Each of the Company and the Subsidiary has paid all Taxes (as defined below)
that are shown to be due on any such Tax Returns. All Taxes that the Company or
Subsidiary is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Entity, except for any such Taxes with respect to which the failure
to withhold, collect or pay would not reasonably be expected to have a Company
Material Adverse Effect. To the Seller's knowledge, there are no audits of any
Company Tax Returns pending that would reasonably be expected to have a Company
Material Adverse Effect. For purposes of this Agreement, "Taxes" means all
taxes, including without limitation income, gross receipts, ad valorem,
value-added, excise, real property, personal property, sales, use, transfer,
withholding, employment and franchise taxes imposed by the United States of
America or any state, local or foreign government, or any agency thereof, or
other political subdivision of the United States or any such government, and any
interest, penalties, assessments or additions to tax resulting from,
attributable to or incurred in connection with any Tax or any contest or dispute
thereof. For purposes of this Agreement, "Tax Returns" means all reports,
returns, declarations, statements, forms or other information required to be
supplied to a taxing authority in connection with Taxes.
2.10 Tangible Personal Property. The Company or the Subsidiary has good
title to all of the tangible personal property reflected on the 1997 Balance
Sheet (other than property sold, consumed or otherwise disposed of in the
Ordinary Course of Business since the date of the 1997 Balance Sheet), free and
clear of all Security Interests, except for (i) Security Interests listed on the
Disclosure Schedule, (ii) liens for taxes not yet due and payable or due but not
delinquent or being contested in good faith by appropriate proceedings and (iii)
Security Interests not included in clauses (i) or (ii) above and relating to
capitalized lease financing or indebtedness for borrowed money in an aggregate
amount of less than $100,000.
2.11 Leased and Owned Real Property. The Disclosure Schedule lists all
real property that the Company or the Subsidiary owns or leases which is
material to the Company and the Subsidiary, taken as a whole. The Company has
made available to the
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18
Buyer a commitment from Lawyers Title Insurance Corporation for purchase by the
Buyer, at the Buyer's sole election and cost, of a title insurance policy with
respect to the real property owned by the Company at Madison and Red Bank Roads,
Cincinnati, Ohio, a copy of which commitment is included in the Disclosure
Schedule. The Seller has made available to the Buyer correct and complete copies
of the leases and subleases (as amended to date) listed in the Disclosure
Schedule. All such real property leases are in full force and effect and there
exists no default of the Company or the Subsidiary or, to the Seller's
knowledge, any other party thereto, under any such real property leases that
would reasonably be expected to have a Company Material Adverse Effect.
2.12 Intellectual Property.
(a) The Disclosure Schedule lists all patents, trademarks,
registered copyrights, trade names and service marks (and any applications
therefor) (collectively, the "Company Intellectual Property") that are currently
used in the business or operations of the Company or the Subsidiary and that are
material to the business or operations of the Company or the Subsidiary, taken
as a whole. To the Seller's knowledge, each of the Company and the Subsidiary
owns, or is licensed or otherwise possesses valid rights to use the Company
Intellectual Property, except where any failure to own, license or otherwise
possess valid rights to use such Company Intellectual Property would not
reasonably be expected to have a Company Material Adverse Effect.
(b) Neither the Company nor the Subsidiary has been named in
any suit, action or proceeding which involves a claim of infringement of any
patents, trademarks, trade names, service marks or copyrights of any third
party. To the Seller's knowledge, the manufacturing, marketing, licensing or
sale of the products of the Company and the Subsidiary as presently conducted do
not infringe any valid patents, trademarks, trade names, service marks or
copyrights of any third party, except for any such infringement that would not
reasonably be expected to have a Company Material Adverse Effect.
2.13 Contracts.
(a) Neither the Company nor the Subsidiary is a party to any:
(1) written or, to the Seller's knowledge, oral
arrangement (or group of related arrangements) for the lease of personal
property from or to third parties providing for lease payments in excess of
$250,000;
(2) written or, to the Seller's knowledge, oral
arrangement (or group of related arrangements) for the purchase or sale of
products or services, other than purchase orders relating to the supply of goods
and services to the Company or the Subsidiary in the Ordinary Course of
Business, under which the undelivered balance of such products and services is
in excess of $1,000,000;
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19
(3) written or, to the Seller's knowledge, oral
arrangement establishing a partnership or joint venture;
(4) written or, to the Seller's knowledge, oral
arrangement (or group of related arrangements) under which it has created,
incurred, assumed, or guaranteed (or may create, incur, assume, or guarantee)
indebtedness (including capitalized lease obligations) involving more than
$250,000 or under which it has imposed (or may impose) a Security Interest on
any assets, except for any Security Interests (i) listed on the Disclosure
Schedule or (ii) not included in clause (i) above and relating to capitalized
lease financing or indebtedness for borrowed money in an aggregate amount of
less than $100,000;
(5) written or, to the Seller's knowledge, oral
arrangement that prohibits the Company or the Subsidiary from freely engaging in
business anywhere in the world;
(6) written or, to the Seller's knowledge, oral
arrangement involving (i) any executive officer or director of the Company or
the Subsidiary or (ii) the Seller or its Affiliates (other than the Company and
the Subsidiary);
(7) written or, to the Seller's knowledge, oral
arrangement under which the consequences of a default or termination would
reasonably be expected to have a Company Material Adverse Effect; and
(8) other written or, to the Seller's knowledge, oral
arrangement (or group of related arrangements) involving more than $2,500,000.
(b) The Seller has made available to the Buyer a correct and
complete copy of each written agreement (as amended to date) listed in the
Disclosure Schedule. All such agreements are in full force and effect and there
exists no defaults of the Company or the Subsidiary or, to the Seller's
knowledge, any other party thereto, except for any such failures to be in full
force and effect or defaults that would not reasonably be expected to have a
Company Material Adverse Effect.
2.14 Litigation. There is no (a) unsatisfied judgment, order, decree,
stipulation or injunction or (b) claim, complaint, action, suit, proceeding,
hearing or investigation of or in any Governmental Entity or before any
arbitrator to which the Company or the Subsidiary is a party or, to the Seller's
knowledge, which has been overtly threatened against the Company or the
Subsidiary, other than any of the foregoing that would not reasonably be
expected to have a Company Material Adverse Effect.
2.15 Labor Matters. Neither the Company nor the Subsidiary is a party
to or bound by any collective bargaining agreement, nor has either of them
experienced, since January 1, 1995, any (i) strikes or (ii) any grievances,
claims of unfair labor practices or other collective
-11-
20
bargaining disputes, except for any grievances, claims of unfair labor practices
or other collective bargaining disputes that would not reasonably be expected to
have a Company Material Adverse Effect. The Seller has no knowledge of any
organizational effort being made or threatened since January 1, 1995 by or on
behalf of any labor union with respect to employees of the Company or the
Subsidiary.
2.16 Employee Benefits.
(a) The Disclosure Schedule contains a complete and accurate
list of all Employee Benefit Plans (as defined below) maintained, or contributed
to, by the Company, the Subsidiary, or any ERISA Affiliate (as defined below)
for the benefit of present or former employees of the Company or the Subsidiary
that are material to the Company and the Subsidiary, taken as a whole (the
"Company Plans"). For purposes of this Agreement, "Employee Benefit Plan" means
any "employee pension benefit plan" (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) other than a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA, any "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA), and any other
written or oral plan, agreement or arrangement involving direct or indirect
compensation, including without limitation insurance coverage, severance
benefits, disability benefits, deferred compensation, bonuses, stock options,
stock purchase, phantom stock, stock appreciation or other forms of incentive
compensation or post-retirement compensation. For purposes of this Agreement,
"ERISA Affiliate" means any entity which is a member of (i) a controlled group
of corporations (as defined in Section 414(b) of the Code), (ii) a group of
trades or businesses under common control (as defined in Section 414(c) of the
Code), or (iii) an affiliated service group (as defined under Section 414(m) of
the Internal Revenue Code of 1986, as amended (the "Code") or the regulations
under Section 414(o) of the Code), any of which includes the Company or the
Subsidiary. Complete and accurate copies of all Company Plans and all related
trust agreements, insurance contracts and summary plan descriptions, have been
made available to the Buyer. Each Company Plan has been administered in
accordance with its terms and each of the Company and the Subsidiary has met its
obligations with respect to such Company Plan, except for any failure to so
administer or so meet its obligations that would not reasonably be expected to
have a Company Material Adverse Effect. The Company and the Company Plans are in
compliance with the currently applicable provisions of ERISA and the Code and
the regulations thereunder and other laws applicable to such plans, except for
any failure to so comply that would not reasonably be expected to have a Company
Material Adverse Effect.
(b) There are no termination proceedings or other claims
(except claims for benefits payable in the normal operation of the Employee
Benefit Plans and proceedings with respect to qualified domestic relations
orders), audits, suits or proceedings against or involving any Company Plan or
asserting any rights or claims to benefits under any Company Plan, or, to the
Seller's knowledge, investigations by any Governmental Entity involving any
Company Plan, except for any such termination proceedings or other claims,
suits,
-12-
21
proceedings or investigations that would not reasonably be expected to have a
Company Material Adverse Effect.
(c) The Company Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such Company Plans are qualified and the
plans and the trusts related thereto are exempt from federal income taxes under
Sections 401(a) and 501(a), respectively, of the Code. No event has occurred
that would reasonably be expected to give rise to disqualification or loss of
tax-exempt status of any such Company Plan or related trust under Sections
401(a) and 501(a) of the Code, except for any event that could be corrected
without resulting in a Company Material Adverse Effect.
(d) No Employee Benefit Plan contributed to, or maintained by,
the Company, the Subsidiary or any ERISA Affiliate which is subject to Title IV
of ERISA has been terminated or has accrued benefits, calculated based on the
assumptions set forth in the Disclosure Schedule, which exceed the assets of
such plan. No "accumulated funding deficiency" (as defined in Section 412 of the
Code) has occurred with respect to any Employee Benefit Plan contributed to, or
maintained by, the Company, the Subsidiary or any ERISA Affiliate which is
subject to Section 412 of the Code or Title IV of ERISA.
(e) None of the Company, the Subsidiary or any ERISA Affiliate
is obligated to contribute to any multi-employer plans.
(f) There are no unfunded obligations under any Company Plan
providing benefits after termination of employment to any employee of the
Company or the Subsidiary (or to any beneficiary of any such employee),
including but not limited to retiree health coverage and deferred compensation,
but excluding continuation of health coverage required to be continued under
Section 4980B of the Code and insurance conversion privileges under state law.
(g) No act or omission has occurred and no condition exists
with respect to any Employee Benefit Plan maintained by the Company, any of its
Affiliates or any ERISA Affiliate that would subject the Company, the Subsidiary
or any ERISA Affiliate to any fine, penalty, tax or liability of any kind
imposed under ERISA or the Code, except for any fine, penalty, tax or liability
that would not reasonably be expected to have a Company Material Adverse Effect.
(h) The amount determined by the following formula:
0.6 multiplied by (A-B+C)
where A = the accumulated benefit obligation as at December 31, 1997
under the NuTone Inc. Hourly Pension Plan and the NuTone Inc.
Retirement Plan
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22
(collectively, the "Pension Plans") determined based on the
actuarial methods and procedures described in Statement of
Financial Accounting Standards Number 87 and assumptions set
forth in Attachment 6.1(i) and taking into account
compensation earned and service performed through December 31,
1997
B= the fair market value of the assets of the Pension
Plans as of the close of business on December 31,
1997, as determined by the Trustee of the master
trust holding the assets of the Pension Plans plus
the cash amount of any contributions made to the
Pension Plans from January 1, 1998 through January
15, 1998, and
C= the accumulated post-retirement benefit obligation
as at December 31, 1997 for the former employees and
current employees listed in Attachment 6.1(i)
calculated in accordance with the premium rates
listed in Attachment 6.1(i) and actuarial methods and
procedures described in Statement of Financial
Accounting Standards Number 106 and assumptions set
forth in Attachment 6.1(i) by reference to the plan
benefits summaries set forth in Attachment 6.1(i)
does not exceed $25 million.
2.17 Environmental Matters.
(a) To the Seller's knowledge, except as discussed or
identified in the consultant reports listed in the Disclosure Schedule:
(i) the Company's and the Subsidiary's operations at
each of the Included Properties (as defined in Section 2.17(d) below) are in
compliance with all applicable Environmental Laws (as defined in Section 2.17(e)
below), except for any failures to so comply with Environmental Laws that would
not reasonably be expected to have a Company Material Adverse Effect;
(ii) there is no pending civil or criminal
litigation, written notice of violation or formal administrative proceeding by
any Governmental Entity relating to any Environmental Law involving any of the
Included Properties;
(iii) there is no pending investigation, inquiry or
information request by any Governmental Entity relating to any Environmental Law
involving any of the Included Properties, except for any such investigation,
inquiry or information request that would not reasonably be expected to have a
Company Material Adverse Effect; and
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23
(iv) the Company has all permits, licenses and
approvals required under Environmental Laws to currently operate the Included
Properties, except for any permits, licenses or approvals the absence of which
would not reasonably be expected to have a Company Material Adverse Effect.
(b) The Disclosure Schedule lists all permits, licenses, and
approvals required, to the Seller's knowledge, under Environmental Laws
applicable to the Included Properties and the Company's and the Subsidiary's
operations at the Included Properties, except for any permits, licenses or
approvals the absence of which would not reasonably be expected to have a
Company Material Adverse Effect.
(c) To the Seller's knowledge, except as discussed or
identified in the consultant reports listed in the Disclosure Schedule, with
respect to the Included Properties:
(i) there has been no release of Materials of
Environmental Concern (as defined in Section 2.17(f)) to the environment that
would reasonably be expected to have a Company Material Adverse Effect; and
(ii) there is no existing governmental order or claim
requiring the investigation or remediation of a release of Materials of
Environmental Concern.
(d) For purposes of this Agreement, "Included Properties"
means the properties located at (i) Madison and ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇; (ii) ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇; (iii) ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and (iv) ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇. For purposes of this Agreement, "Excluded Properties" means the
properties located at (i) U.S. Route 127, Harrodsburg, Kentucky (the
"Harrodsburg Facility"); (ii) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇ (the "Monroe
Facility"); (iii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ (the
"Highland Park Facility") and (iv) any other property that the Company or the
Subsidiary owned or operated at any time prior to the Closing (other than the
Included Properties).
(e) For purposes of this Agreement, "Environmental Law" means
any federal, state or local law, statute, rule or regulation of the United
States or Canada or any political subdivisions thereof relating to the
environment or occupational health and safety, including without limitation any
statute, regulation or order pertaining to (i) treatment, storage, disposal,
generation and transportation of industrial, toxic or hazardous substances or
solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater
and soil contamination; (iv) the release or threatened release into the
environment of industrial, toxic or hazardous substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) underground and
other storage tanks or vessels; (vi) health and safety of employees; and (vii)
manufacture, processing, use, distribution, treatment, storage, disposal,
transportation or handling of pollutants, contaminants, chemicals or industrial,
toxic or hazardous substances or
-15-
24
oil or petroleum products or solid or hazardous waste. As used above, the terms
"release" and "environment" shall have the meaning set forth in the federal
Comprehensive Environmental Compensation, Liability and Response Act of 1980
("CERCLA").
(f) For purposes of this Agreement, "Materials of
Environmental Concern" mean any chemicals, pollutants or contaminants, hazardous
substances (as such term is defined under CERCLA), solid wastes and hazardous
wastes (as such terms are defined under the federal Resources Conservation and
Recovery Act ("RCRA")), toxic materials, oil or petroleum and petroleum
products.
(g) The Seller and the Buyer agree that the only
representations and warranties of the Seller herein as to any Environmental
Matters (as defined below) are those contained in this Section 2.17. Without
limiting the generality of the foregoing, the Buyer specifically acknowledges
that the representations and warranties contained in Section 2.18 and Section
2.19 do not relate to Environmental Matters. For purposes of this Agreement,
"Environmental Matters" means any legal obligation or liability arising under
Environmental Laws or relating to Materials of Environmental Concern.
2.18 Legal Compliance. To the Seller's knowledge, each of the Company
and the Subsidiary is in compliance with all applicable laws (including rules
and regulations thereunder) currently in effect of any federal, state, local or
foreign government, or any Governmental Entity, except where the failure to
comply therewith would not reasonably be expected to have a Company Material
Adverse Effect.
2.19 Permits. To the Seller's knowledge, (a) neither the Company nor
the Subsidiary is in violation of or default under any permit, license,
franchise or authorization from any Governmental Authority used in its business
or operations as presently conducted and material to the business or operations
of the Company and the Subsidiary, taken as a whole (collectively, the
"Permits") and (b) no Permit will be revoked, terminated prior to its normal
expiration date or not renewed solely as a result of the consummation of the
transactions contemplated by this Agreement, except, in either case, for any
violation, default, revocation, termination or renewal that would not reasonably
be expected to have a Company Material Adverse Effect.
2.20 Insurance. The Disclosure Schedule lists each insurance policy
maintained by the Company or the Subsidiary which is material to the Company and
the Subsidiary, taken as a whole. All of such insurance policies are in full
force and effect and, to the Seller's knowledge, neither the Company nor the
Subsidiary is in default with respect to its obligations under any of such
insurance policies. None of the transactions contemplated by this Agreement
shall eliminate or alter the coverage provided by such policies for occurrences
prior to Closing and the Company shall continue to be entitled to the benefit
and recovery under such policies for pre-Closing occurrences (subject to the
deductibles, limits and other terms and conditions of such policies).
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25
2.21 Brokers' Fees. None of the Seller, the Company or the Subsidiary
has any liability or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by this Agreement,
other than to ▇.▇. ▇▇▇▇▇▇ Securities, Inc., whose fees and expenses shall be
paid by the Seller.
2.22 Product Warranty. The Disclosure Schedule contains the standard
product warranties used in commerce by the Company and the Subsidiary since
January 1, 1992. To the Seller's knowledge, since January 1, 1992, no product
manufactured, sold, leased, licensed or delivered by the Company or the
Subsidiary has been subject to any product warranty beyond the applicable
standard product warranties which are set forth in the Disclosure Schedule. The
Disclosure Schedule sets forth the aggregate expenses incurred by the Company
and the Subsidiary in fulfilling their product warranty obligations during each
year since 1992. The Seller has no reason to believe that warranty expense as a
percentage of sales will increase materially in the future.
2.23 Product Compliance. To the Seller's knowledge, (a) no product
manufactured, sold, leased, licensed or delivered by the Company or the
Subsidiary is subject to a recall required by any Governmental Entity and (b)
neither the Company nor the Subsidiary has any plans to initiate a voluntary
product recall. To the Seller's knowledge, each type of product manufactured,
sold, leased, licensed or delivered by the Company or the Subsidiary conforms
with all applicable laws (including rules and regulations thereunder) currently
in effect of any federal, state, local government of the United States or Canada
or any political subdivisions thereof, or any Governmental Entity, and with the
applicable requirements of Underwriters Laboratories and the Canadian Standards
Association, except where the failure to comply therewith would not reasonably
be expected to have a Company Material Adverse Effect. The Company has complied
with all applicable rules, regulations and reporting requirements currently in
effect of the United States Consumer Products Safety Commission, except where
the failure to comply therewith would not reasonably be expected to have a
Company Material Adverse Effect.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
3.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
3.2 Authorization of Transaction. The Buyer has all requisite corporate
power and authority to execute and deliver this Agreement and to perform its
obligations hereunder.
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26
The execution and delivery of this Agreement by the Buyer and the performance of
this Agreement and the consummation of the transactions contemplated hereby by
the Buyer has been duly and validly authorized by all necessary corporate action
on the part of the Buyer. This Agreement has been duly and validly executed and
delivered by the Buyer and, assuming this Agreement constitutes the valid and
binding obligation of the Seller, constitutes a valid and binding obligation of
the Buyer, enforceable against the Buyer in accordance with its terms.
3.3 Noncontravention. Except for applicable requirements of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and the notice required to be filed by the Buyer under the
Investment Canada Act not more than 30 days after the Closing, neither the
execution and delivery of this Agreement by the Buyer, nor the consummation by
the Buyer of the transactions contemplated hereby, will (a) conflict or violate
any provision of the charter or by-laws of the Buyer, (b) require on the part of
the Buyer any filing with, or permit, authorization, consent or approval of, any
Governmental Entity, other than any filing, permit, authorization, consent or
approval which if not obtained or made would not reasonably be expected to have
a material adverse effect on the assets, business, financial condition or
results of operations of the Buyer or on the ability of the Parties to
consummate the transactions contemplated by this Agreement, (c) conflict with,
result in breach of, constitute (with or without due notice or lapse of time or
both) a default under, result in the acceleration of, create in any party any
right to accelerate, terminate, modify or cancel, or require any notice, consent
or waiver under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, Security Interest or other arrangement to which the Buyer is a
party or by which the Buyer is bound or to which any of its assets are subject,
other than any conflict, breach, default, acceleration, right to accelerate,
termination, modification, cancellation, notice, consent or waiver which would
not reasonably be expected to have a material adverse effect on the assets,
business, financial condition or results of operations of the Buyer or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement, or (d) violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Buyer or any of its properties or assets (other
than a statute, rule or regulation relating to antitrust laws other than the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act), other than any violation which would not reasonably be
expected to have a material adverse effect on the assets, business, financial
condition or results of operations of the Buyer or on the ability of the Parties
to consummate the transactions contemplated by this Agreement.
3.4 Broker's Fees. The Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement, other than to ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Securities, Inc., whose fees and expenses shall be paid by the Buyer.
3.5 Litigation. There are no actions, suits, claims or legal,
administrative or arbitratorial proceedings pending against, or, to the Buyer's
knowledge, threatened against,
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27
the Buyer which would adversely affect the Buyer's performance under this
Agreement or the consummation of the transactions contemplated by this
Agreement.
3.6 Investment Intent. The Buyer is acquiring the Company Shares for
investment for its own account and not with a view to the distribution of any
part thereof. The Buyer acknowledges that the Company Shares have not been
registered under U.S. federal or any applicable state securities laws or the
laws of any other jurisdiction and cannot be resold without registration under
such laws or an exemption therefrom. The Buyer further acknowledges that (i) it
has knowledge and experience in financial and business matters, that it is
capable of evaluating the merits and risks of an investment in the Company
Shares, and that it can bear the economic risk of an investment in the Company
Shares and (ii) it has had the opportunity to conduct an independent due
diligence review of the Company and the Subsidiary.
3.7 Solvency. Immediately after giving effect to the transactions
contemplated by this Agreement, the Buyer, the Company and the Subsidiary shall
be able to pay their debts as they become due and shall own property having a
fair saleable value greater than the amounts required to pay their respective
debts (including a reasonable estimate of the amount of all contingent
liabilities). Immediately after giving effect to the transactions contemplated
by this Agreement, the Buyer, the Company and the Subsidiary shall have adequate
capital to carry on their respective businesses. No transfer of property is
being made and no obligation is being incurred in connection with the
transactions contemplated by this Agreement with the intent to hinder, delay or
defraud either present or future creditors of the Buyer or, to the Buyer's
knowledge, the Company or the Subsidiary.
3.8 No Knowledge of Misrepresentation or Omission. The Buyer has no
knowledge that any of the representations and warranties of the Seller in this
Agreement are not true and correct, and the Buyer has no knowledge of any errors
in, or omissions from, the Disclosure Schedule.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Efforts. Each of the Parties shall use commercially reasonable
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement.
4.2 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act. Each of the Parties shall use commercially
reasonable efforts to respond to the Second Request dated January 16, 1998 (the
"Second Request") issued by the Federal Trade Commission (the "FTC") and to
obtain clearance under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act for the transactions
contemplated by this Agreement. For purposes of this
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Agreement, the term "FTC Clearance Date" shall mean the date that the
post-Second-Request compliance waiting period applicable to the consummation of
the transactions contemplated by this Agreement under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act
has expired without the FTC seeking to restrain or enjoin consummation of the
transactions contemplated by this Agreement or been terminated by the FTC with
the indication that the FTC will not seek to restrain or enjoin consummation of
the transactions contemplated by this Agreement.
4.3 Replacement of Guarantees and Letters of Comfort. The Buyer shall
(i) arrange, prior to the Closing, for replacement arrangements (which shall
include a full and complete release of the Seller and its Affiliates (other than
the Company and the Subsidiary)), including, to the extent required, guarantees
and letters of comfort, reasonably satisfactory to the Seller with respect to
each of the arrangements listed in Item 3 of paragraph (c) of Section 2.4 of the
Disclosure Schedule (except for the standby letters of credit relating to the
Harrodsburg Facility and the Monroe Indemnification Agreement) (the "Scheduled
Arrangements") and (ii) use commercially reasonable efforts to arrange, prior to
the Closing, for such replacement arrangements with respect to all other letters
of credit and other borrowings of the Company or the Subsidiary which are
subject to any guarantee, letter of comfort or similar assurance provided by the
Seller or any of its Affiliates (other than the Company or the Subsidiary) as of
the Closing Date (except for the standby letters of credit relating to the
Harrodsburg Facility and the Monroe Indemnification Agreement).
4.4 Pre-Closing Transactions. The Seller shall use commercially
reasonable efforts to effect the transactions listed on Attachment 4.4 (the
"Pre-Closing Transactions") as Items 1 and 2 prior to the Closing. The Seller
shall effect the Pre-Closing Transaction listed on Attachment 4.4 as Item 3
prior to the Closing.
4.5 Operation of Business. Except as contemplated by this Agreement,
including without limitation Section 10.6, during the period from the date of
this Agreement until the Closing Date, the Seller shall cause the Company and
the Subsidiary to use best efforts to conduct their operations in the Ordinary
Course of Business; provided, however, that the Seller, the Company and the
Subsidiary shall be permitted to (i) effect the Pre-Closing Transactions, (ii)
accept capital contributions and loans from the Seller and (iii) use any and all
cash, cash equivalents and other short-term liquid investments of the Company or
the Subsidiary to make dividends, distributions or other payments to the Seller
or any Affiliate of the Seller.
4.6 Access. The Seller shall cause the Company and the Subsidiary to
permit the representatives of the Buyer listed on Attachment 4.6 of this
Agreement to have reasonable access (at reasonable times, on reasonable prior
written notice and in a manner so as not to interfere with the normal business
operations of the Company and the Subsidiary) to the premises, properties,
financial and accounting records, contracts, other records and documents, and
personnel, of or pertaining to the Company and the Subsidiary for reasonable
business purposes (it being acknowledged by the Buyer that the Buyer has
completed its due
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diligence investigation and that the purpose of this provision is not to permit
further due diligence). In addition, the Seller shall cooperate with the Buyer
to respond to reasonable and customary due diligence requests made by any
underwriter or placement agent engaged by the Buyer in connection with a
financing transaction to be completed prior to the Closing. The Seller further
agrees to provide to the Buyer copies of (i) the monthly internal financial
statements customarily prepared with respect to the Company and the Subsidiary
promptly after such financial statements have been finalized in accordance with
the customary procedures of the Seller's Affiliates and (ii) if required prior
to Closing under applicable U.S. securities laws, an unaudited consolidated
balance sheet and consolidated statement of income and cash flows, prepared in
accordance with U.S. GAAP, for the three month period ending March 31, 1998. The
Buyer acknowledges that it remains bound by the Confidentiality Agreement, dated
November 24, 1997, previously entered into between the Buyer and ▇▇▇▇▇▇▇▇ plc,
an English public limited company ("▇▇▇▇▇▇▇▇") (the "Confidentiality
Agreement"). Prior to the Closing, the Buyer and its representatives shall
contact and communicate with the employees, customers and suppliers of the
Company in connection with the transactions contemplated by this Agreement only
with the prior written consent of the Seller, which consent will not be
unreasonably withheld.
4.7 Notification.
(a) By the Seller. The Seller shall deliver to the Buyer
written notice of any event or development that would (i) render any statement,
representation or warranty of the Seller in this Agreement (including the
Disclosure Schedule) inaccurate or incomplete in any material respect or (ii)
constitute or result in a breach by the Seller of, or a failure by the Seller to
comply with, any agreement or covenant in this Agreement applicable to it. Any
disclosure made by the Seller pursuant to clause (i) of the prior sentence shall
be deemed to amend and supplement the Disclosure Schedule for all purposes of
this Agreement (except for the Buyer's right to terminate this Agreement
pursuant to clause (b) of Section 7.1).
(b) By the Buyer. The Buyer shall deliver to the Seller
written notice of any event or development that would (i) render any statement,
representation or warranty of the Buyer in this Agreement inaccurate or
incomplete in any material respect, or (ii) constitute or result in a breach by
the Buyer or a failure by the Buyer to comply with, any agreement or covenant in
this Agreement applicable to it. In addition, the Buyer shall promptly notify
the Seller if the Buyer becomes aware that any representation or warranty of the
Seller in this Agreement is not true and correct or if the Buyer has knowledge
of any errors in, or omissions from, the Disclosure Schedule. Any disclosure
which is the subject of the notice referred to in the preceding sentence shall
be deemed to amend and supplement the Disclosure Schedule for all purposes of
this Agreement (except for the Buyer's right to terminate this Agreement
pursuant to clause (b) of Section 7.1).
4.8 Exclusivity. During the period from the date of this Agreement
until the Closing or the earlier termination of this Agreement, the Seller shall
not and shall use its best
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efforts to cause its Affiliates and each of its officers, directors, employees,
representatives and agents not to, directly or indirectly, encourage, solicit,
initiate, engage or participate in discussions or negotiations with any person
or entity (other than the Buyer) concerning any merger or consolidation
involving the Company or the Subsidiary, any sale of material assets by the
Company or the Subsidiary not in the Ordinary Course of Business, sale of the
capital stock of the Company or the Subsidiary or other business combination
involving the Company or the Subsidiary.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions to Obligations of the Buyer. The obligation of the Buyer
to consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by the Buyer) of the following conditions:
(a) the Company and the Subsidiary shall have obtained all of
the waivers, permits, consents, approvals or other authorizations, and effected
all of the registrations, filings and notices required to consummate the
transactions contemplated by this Agreement (including, without limitation, any
indicated on the Disclosure Schedule), except for any which if not obtained or
effected would not reasonably be expected to have a Company Material Adverse
Effect;
(b) the representations and warranties of the Seller set forth
in Article II shall be true and correct at and as of the Closing Date as if made
as of the Closing Date, except for (i) changes contemplated or permitted by this
Agreement, (ii) those representations and warranties that address matters only
as of a particular date (which shall be true and correct as of such date,
subject to clause (iii)), and (iii) where the failure of the representations and
warranties to be true and correct would not reasonably be expected to have a
Company Material Adverse Effect (it being agreed that this clause (iii) shall be
inapplicable to any representations and warranties which already contain a
Company Material Adverse Effect qualification).
(c) the Seller shall have performed or complied with in all
material respects its agreements and covenants required to be performed or
complied with by it under this Agreement as of or prior to the Closing;
(d) the Seller shall have delivered to the Buyer a certificate
to the effect that each of the conditions specified in clauses (a) through (c)
of this Section 5.1 is satisfied in all respects;
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(e) no action, suit or proceeding shall be pending by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would reasonably be expected to (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(f) all applicable waiting periods (and any extensions
thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated;
(g) the Buyer shall have received from ▇▇▇▇ and ▇▇▇▇ LLP,
counsel to the Company, an opinion with respect to the matters set forth in
Exhibit A attached hereto, addressed to the Buyer and dated as of the Closing
Date; and
(h) the Company shall have consummated the Pre-Closing
Transaction listed on Attachment 4.4 as Item 3.
5.2 Conditions to Obligations of the Seller. The obligation of the
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction (or waiver by the Seller) of the following conditions:
(a) the Company and the Subsidiary shall have obtained all of
the waivers, permits, consents, approvals or other authorizations and effected
all of the requisitions, filings and notices which are required to consummate
the transactions contemplated by this Agreement (including, without limitation,
any indicated on the Disclosure Schedule), except for any which if not obtained
or effected would not reasonably be expected to have a Company Material Adverse
Effect;
(b) the representations and warranties of the Buyer set forth
in Article III shall be true and correct at and as of the Closing Date as if
made as of the Closing Date, except for (i) changes contemplated or permitted by
this Agreement, (ii) those representations and warranties that address matters
only as of a particular date (which shall be true and correct as of such date,
subject to clause (iii)) and (iii) where the failure of the representations and
warranties to be true and correct would not reasonably be expected to have a
material adverse effect on the assets, business, financial condition or results
of operations of the Buyer or on the ability of the Parties to consummate the
transactions contemplated by this Agreement (it being agreed that this clause
(iii) shall be inapplicable to any representations and warranties which already
contain a materiality qualification).
(c) the Buyer shall have performed or complied with in all
material respects its agreements and covenants required to be performed or
complied with by it under this Agreement as of or prior to the Closing;
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(d) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified in clauses (b) and (c) of
this Section 5.2 is satisfied in all respects;
(e) no action, suit or proceeding shall be pending by or
before any Governmental Entity wherein an unfavorable judgment, order, decree,
stipulation or injunction would reasonably be expected to (i) prevent
consummation of any of the transactions contemplated by this Agreement or (ii)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, and no such judgment, order, decree, stipulation or
injunction shall be in effect;
(f) all applicable waiting periods (and any extensions
thereof) under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or otherwise been
terminated;
(g) the Seller shall have received from Ropes & ▇▇▇▇, special
counsel to the Buyer, an opinion with respect to the matters set forth in
Exhibit B attached hereto, addressed to the Seller and dated as of the Closing
Date;
(h) the Seller and each of its Affiliates (other than the
Company or the Subsidiary) which is a guarantor of, or has provided any letter
of comfort or other similar assurance with respect to, the Scheduled
Arrangements shall have received a full and complete release of all liabilities
thereunder in form and substance reasonably satisfactory to the Seller; and
(i) the Company shall have consummated the Pre-Closing
Transaction listed on Attachment 4.4 as Item 3.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Seller. Subject to the terms and conditions
of this Article VI, the Seller shall indemnify the Buyer in respect of, and hold
the Buyer harmless against, any and all debts, obligations and other
liabilities, monetary damages, fines, fees, penalties, interest obligations,
deficiencies, losses, costs and expenses (including without limitation
reasonable attorneys' fee and expenses) (collectively, "Damages") incurred or
suffered by the Buyer or any Affiliate thereof:
(a) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of the Seller contained in this
Agreement or the certificate of the Seller delivered at the Closing pursuant to
Section 5.1(d) or (ii) failure to perform any covenant or agreement of the
Seller contained in this Agreement; or
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(b) resulting from any failure of the Seller to have good
title to the issued and outstanding Company Shares, free and clear of any
Security Interest, contractual restriction or covenant, option or other adverse
claims (whether arising by contract or by operation of law), other than
applicable federal and state securities law restrictions or the Competition Act
(Canada); or
(c) relating to the Pension Plan for Bargaining Unit Employees
of the NuTone Inc. ▇▇▇▇ ▇▇▇▇ Harrodsburg, Kentucky Plant to be retained by WNA
Inc., a Delaware corporation ("WNA"), or another Affiliate of the Seller
pursuant to Section 10.6(c); or
(d) relating to any withdrawal prior to the Closing from any
multiemployer plan to which the Company or an Affiliate of the Company was
obligated at any time prior to the Closing to contribute; or
(e) relating to retirement benefits accrued prior to the
Closing under any defined benefit plan which was maintained for the benefit of
Canadian employees of the Subsidiary (the "Canadian Employees"); or
(f) resulting from any personal injury or property damage
caused by (i) any products sold by the Company or the Subsidiary prior to the
Closing which is the subject of a claim made by a third party relating to injury
or damage occurring prior to the Closing or (ii) any of the Company's model
663LN, 663LNMP, 663LNB, 669L, 669LB, VF305C or VF307C Ceiling Exhaust Fan and
Light Units sold by the Company prior to the date that the recall of such
products commenced in 1997 and which contained the fault specified in such
recall and were not repaired in response to such recall; or
(g) relating to the ▇▇▇▇▇▇▇ Special Benefit Agreement, dated
January 18, 1988, and the related Executive Death Benefit Agreements; provided,
however, that the Seller's obligation to make any payments pursuant to this
Section 6.1(g) shall be subject to the conditions specified in Section 6.3(d);
or
(h) (i) constituting the first $500,000 (including amounts
incurred prior to the Closing) of Model 663 Recall Costs (as defined below);
provided, however, that (x) the Seller shall not be required to pay any amount
to the Buyer pursuant to this clause (i) until the earlier of when (A) a final
judgment or settlement is reached in connection with any proceeding referred to
in Section 6.3(c)(ii) or (B) it is no longer commercially reasonable to pursue
any proceeding referred to in Section 6.3(c)(ii) and (y) the maximum amount that
the Seller is required to pay to the Buyer pursuant to this clause (i) shall be
subject to reduction in accordance with the proviso in the last sentence of
Section 6.3(c)(ii); and
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(ii) constituting 50% of the second $500,000 of Model
663 Recall Costs, it being agreed that the remaining 50% shall be borne by the
Buyer; and
(iii) constituting all Model 663 Recall Costs over
and above the total of $1,000,000 of such Model 663 Recall Costs referred to in
clauses (i) and (ii) of this Section 6.1(h).
For purposes of this Agreement, "Model 663 Recall Costs" means the
costs and expenses incurred by the Company or the Subsidiary relating to the
recall commenced in 1997 of the Company's models 663LN, 663LNMP, 663LNB, 669L,
669LB, VF305C and VF307C Ceiling Exhaust Fan and Light unit products, including
without limitation goods recovery, replacement inventory, mailing and other
public information and announcements and third-party rectification and
installation costs; provided, however, that in no event shall Model 663 Recall
Costs be deemed to include amounts other than out-of-pocket payments actually
made to third parties and, in particular, shall not include any costs and
expenses relating to personnel of the Company, the Subsidiary, the Seller, the
Buyer or any of their respective Affiliates or overhead costs and expenses of
the Company, the Subsidiary, the Seller, the Buyer or any of their respective
Affiliates; or
(i) constituting Seller Retained Benefits Liabilities (as
determined in amount in accordance with Section 6.3(e)). For purposes of this
Agreement, "Seller Retained Benefits Liabilities" means any post-retirement
medical or life insurance benefits of the Company or the Subsidiary as in effect
on or prior to the Closing Date to the extent, but only to the extent, (1) the
recipient entitled to receive such benefits (or the person through whom the
recipient is entitled to receive such benefits) is not identified in Attachment
6.1(i) or (2) the level of benefits a recipient is entitled to receive
(determined on an actuarial basis based on the assumptions set forth in
Attachment 6.1(i)) exceeds the level of benefits (also determined on an
actuarial basis based on the assumptions set forth in Attachment 6.1(i)) assumed
for such recipient on Attachment 6.1(i); or
(j) relating to the Employment Termination Agreement between
the Company and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, dated November 26, 1997; or
(k) relating to any claims by ▇▇▇▇▇ Systems, S.A. against the
Company with respect to the matters described in the correspondence referenced
in Section 2.14 of the Disclosure Schedule.
6.2 Indemnification by the Buyer. Subject to the terms and conditions
of this Article VI, the Buyer shall indemnify the Seller in respect of, and hold
the Seller harmless against, any and all Damages incurred or suffered by the
Seller or any Affiliate thereof:
(a) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of the Buyer contained in this Agreement
or the certificate of the Buyer
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delivered at the Closing pursuant to Section 5.2(d) of this Agreement or (ii)
failure to perform any covenant or agreement of the Buyer contained in this
Agreement; or
(b) resulting from the conduct of the business or operations
of the Company or the Subsidiary following the Closing, except with respect to
any matter for which the Buyer is entitled to indemnification pursuant to
Section 6.1; or
(c) relating to (i) the Buyer's 401(k) Plan following the
completion of the transfer of assets and liabilities from the Existing 401(k)
Plan pursuant to Section 10.6(a) or (ii) the Buyer's Canadian Plan following the
completion of the transfer of assets and liabilities from the ▇▇▇▇▇▇▇▇ Canadian
Defined Contribution Plan pursuant to Section 10.6(d); or
(d) relating to the NuTone Inc. Hourly Pension Plan or the
NuTone Inc. Retirement Plan, each of which is to be retained by the Company
pursuant to Section 10.6(b); or
(e) relating to any post-retirement medical or life insurance
benefits of the Company or the Subsidiary other than Seller Retained Benefits
Liabilities; or
(f) relating to any obligations of the Seller or its
Affiliates (other than the Company or the Subsidiary) under any letters of
credit and other borrowings of the Company or the Subsidiary which are subject
to any guarantee, letter of comfort or similar assurance provided by the Seller
or any of its Affiliates (other than the Company or the Subsidiary) as of the
Closing Date (including without limitation the Scheduled Arrangements but
excluding the standby letters of credit relating to the Harrodsburg Facility and
the Monroe Indemnification Agreement).
6.3 Claims for Indemnification.
(a) Third-Party Claims. A person entitled to indemnification
under this Article VI (an "Indemnified Party") shall give prompt written
notification to the person from whom indemnification is sought (the
"Indemnifying Party") of the commencement of any action, suit or proceeding
relating to a third-party claim for which indemnification may be sought or, if
earlier, upon the assertion of any such claim by a third party. Within 30 days
after delivery of such notification, the Indemnifying Party may, upon written
notice thereof to the Indemnified Party, assume control of the defense of such
action, suit, proceeding or claim with counsel reasonably satisfactory to the
Indemnified Party. If the Indemnifying Party does not assume control of such
defense, the Indemnified Party shall control such defense. The Party not
controlling such defense may participate therein at its own expense; provided
that if the Indemnifying Party assumes control of such defense and the
Indemnified Party reasonably concludes, based on advice from counsel, that the
Indemnifying Party and the Indemnified Party have conflicting interests with
respect to such action, suit, proceeding or claim, the reasonable fees and
expenses of counsel to the Indemnified Party shall be
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considered "Damages" for purposes of this Agreement. The Party controlling such
defense shall keep the other Party advised of the status of such action, suit,
proceeding or claim and the defense thereof and shall consider recommendations
made by the other Party with respect thereto. The Indemnified Party shall not
agree to any settlement of such action, suit, proceeding or claim without the
prior written consent of the Indemnifying Party. The Indemnifying Party shall
not agree to any settlement of such action, suit, proceeding or claim that does
not include a complete release of the Indemnified Party from all liability with
respect thereto or that imposes any liability or obligation on the Indemnified
Party without the prior written consent of the Indemnified Party, which shall
not be unreasonably withheld or delayed.
(b) Procedure for Other Claims. An Indemnified Party wishing
to assert a claim for indemnification under this Article VI which is not subject
to Section 6.3(a) shall deliver to the Indemnifying Party a written notice (a
"Claim Notice") which contains (i) a description and the amount (the "Claimed
Amount") of any Damages incurred by the Indemnified Party, (ii) a statement that
the Indemnified Party is entitled to indemnification under this Article VI and a
reasonable explanation of the basis therefor, and (iii) a demand for payment in
the amount of such Damages. Within 30 days after delivery of a Claim Notice, the
Indemnifying Party shall deliver to the Indemnified Party a written response in
which the Indemnifying Party shall: (i) agree that the Indemnified Party is
entitled to receive all of the Claimed Amount (in which case such response shall
be accompanied by a payment by the Indemnifying Party to the Indemnified Party
of the Claimed Amount, by check or by wire transfer), (ii) agree that the
Indemnified Party is entitled to receive part, but not all, of the Claimed
Amount (the "Agreed Amount") (in which case such response shall be accompanied
by a payment by the Indemnifying Party to the Indemnified Party of the Agreed
Amount, by check or by wire transfer) or (iii) contest that the Indemnified
Party is entitled to receive any of the Claimed Amount. If the Indemnifying
Party in such response contests the payment of all or part of the Claimed
Amount, the Indemnifying Party and the Indemnified Party shall use good faith
efforts to resolve such dispute.
(c) Model 663 Fan Claims.
(i) Notwithstanding the provisions of Sections 6.3(a)
or 6.3(b), until such time as the total amount of Model 663 Recall Costs exceeds
$1,000,000 (at which time the procedures in Sections 6.3(a) and 6.3(b) shall be
applicable), the Buyer shall (or shall cause the Company to) assume control,
with counsel reasonably satisfactory to the Seller, of the defense of any
action, suit, proceeding or claim (including without limitation any proceeding
before the U.S. Consumer Products Safety Commission) in connection with or
relating to the product recall of the Model 663 fan-light and shall generally be
responsible for the conduct of the product recall. The Seller may, at its own
expense, participate in the defense of any such action, suit, proceeding or
claim. The Buyer shall keep the Seller advised of the status of any such action,
suit, proceeding or claim and the defense thereof as well as the status of any
other matters relating to the product recall and shall consider in good faith
recommendations made
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by the Seller with respect thereto. Without limiting the foregoing, the Buyer
shall cause the Company to provide the Seller with copies of all correspondence
relating to the recall and shall respond in a timely manner to all other
reasonable requests for information by the Seller. The Buyer shall not agree to
any settlement of any such action, suit, proceeding or claim that does not
include a complete release of the Seller from all liability with respect thereto
or that imposes any liability or obligation on the Seller without the prior
written consent of the Seller, which shall not be unreasonably withheld or
delayed.
(ii) The Buyer shall cause the Company to vigorously
pursue all legal rights and remedies that the Company or the Subsidiary may have
against the supplier of the socket included in the Model 663 fan-light or any
other third party and shall keep the Seller informed of the status of such
efforts. Without limiting the foregoing, the Buyer shall cause the Company to
provide the Seller with copies of all correspondence relating to such efforts
and shall respond in a timely manner to all other reasonable requests for
information by the Seller. The Seller may, at its own expense, participate in
the prosecution of any such claim. The Buyer shall not agree to any settlement
with such supplier or other third party without the prior written consent of the
Seller, which shall not be unreasonably withheld or delayed. With respect to any
amounts recovered from such supplier or other third party (net of reasonable
costs and expenses (including reasonable fees and expenses of counsel)) incurred
by the Buyer in connection with obtaining such recovery), the amount actually
recovered shall be treated as follows:
Amount Recovered Treatment of Amounts Within Indicated
Range
$0 to $500,000 Amount is retained by the Company and
reduces, on a dollar for dollar basis, the
Seller's $500,000 maximum indemnification
obligation pursuant to clause (i) of Section
6.1(h).
$500,001 to $1,000,000 One-half of any amount between $500,001 and
$1,000,000 shall be retained by the Company
and one-half of such amount shall be paid to
the Seller at the same time the Company (or
any of its Affiliates) receives payment.
$1,000,001 and up All amounts over $1,000,000 shall be paid to
the Seller at the same time the Company (or
any of its Affiliates) receives payment.
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(d) ▇▇▇▇▇▇▇ Special Benefit Agreement Claims. Notwithstanding the
provisions of Section 6.3(a) or 6.3(b), as a condition to the Buyer's right to
make an indemnification claim against the Seller pursuant to Section 6.1(g), the
Buyer shall take the following steps:
(i) At any time that the Company is required to make a payment to
a former executive of the Company pursuant to the ▇▇▇▇▇▇▇ Special Benefit
Agreement, dated January 18, 1988, and the related Executive Death Benefit
Agreements, the Buyer shall provide written notice of such event and the amount
of such payment to the Seller.
(ii) The Buyer shall cause the Company to deliver to the Seller a
proposed form of notice to First City Diversified Inc. (now known as Saltire
Industrial Inc., together with its successors-in-interest, if any, "Saltire"),
identifying such payment and requesting reimbursement from Saltire in accordance
with Saltire's indemnification obligations set forth in a letter dated May 2,
1997 from Saltire to an Affiliate of the Seller. Within five business days of
the Seller's receipt of the proposed notice, the Seller may provide to the Buyer
revisions to the proposed notice. The Buyer shall make all revisions reasonably
requested by the Seller and shall then promptly deliver such notice to Saltire,
with a copy to the Seller.
(iii) If Saltire responds to the notice sent to it pursuant to (ii)
above by indicating that it will not make all or a portion of the requested
payment to the Company or fails to respond to the notice within 90 days after
notice is given, then the Buyer shall be entitled to request indemnification
from the Seller pursuant to Section 6.1(g) and the Seller shall pay to the
Buyer, within five business days of receiving notice from the Buyer of its
obligation hereunder to make a payment, the amount specified in the initial
notice given by the Buyer to the Seller pursuant to (i) above (less any amount
Saltire agreed to pay).
(iv) Upon (and as a further condition to) payment by the Seller to
the Buyer of the amount specified in (iii) above, the Seller shall have the
right to control the prosecution of all legal rights and remedies that the
Company or the Subsidiary may have against Saltire, including without limitation
the right to bring suit in the name of the Company and the Subsidiary. Without
limiting the foregoing, the Buyer shall cause the Company and the Subsidiary to
each constitute and appoint the Seller as their true and lawful attorney in
their respective name and on their behalf to claim, demand, collect and receive
any amounts owed by Saltire to the Company or the Subsidiary and to prosecute
the same at law, to settle or compromise the same, and, upon discharge thereof,
to complete, execute and deliver any and all necessary instruments of
satisfaction and release. The Seller shall keep the Buyer advised of the status
of any such action, suit or proceeding and shall consider in good faith
recommendations made by the Buyer with respect thereto. Without limiting the
foregoing, the Seller shall provide the Buyer with copies of all correspondence
relating to such action, suit or proceeding and shall respond in a timely manner
to all other reasonable
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requests for information by the Buyer. The Buyer shall cause the Company and the
Subsidiary to pay to the Seller any amount recovered from Saltire pursuant to
this clause (iv).
(e) Seller Retained Benefits Liabilities Claims. If the Buyer is
entitled to indemnification pursuant to Section 6.1(i) with respect to any
Seller Retained Benefits Liabilities, the amount of such indemnification
obligation shall be calculated in good faith by the Parties on a present value
basis using the actuarial assumptions contained in Attachment 6.1(i) and the
amount so determined shall be settled by a one-time, lump sum payment from the
Seller to the Buyer. In addition, to the extent the Seller does not assume
control of the defense of any claim with respect to any actual or alleged Seller
Retained Benefits Liabilities in accordance with Section 6.3(a), the Buyer shall
be entitled to be indemnified for costs incurred in processing, defending and
resolving such claim (including without limitation the reasonable fees and
expenses of counsel).
(f) Interpretation of Certain Materiality Qualifiers. The Parties
agree that, solely for purposes of determining the extent, if any, to which the
Buyer is entitled to indemnification under Section 6.1(a)(i) for Damages
incurred or suffered as a result of a misrepresentation or breach of warranty of
the Seller, references in the following Sections of Article II to materiality
(including without limitation references to Company Material Adverse Effect),
shall be interpreted to mean the dollar amount set forth below for such Section:
-----------------------------------------------------------------------------------------------
SECTION AMOUNT
------- ------
2.4, 2.11, 2.12, 2.13, 2.15, $1,000,000
2.16, 2.19
-----------------------------------------------------------------------------------------------
2.8, 2.20 $0
-----------------------------------------------------------------------------------------------
2.14 $0 (with respect to actual litigation
commenced on or before March 9,
1998)
$1,000,000 (with respect to all other
matters)
-----------------------------------------------------------------------------------------------
6.4 Survival.
(a) The representations and warranties of the Seller and the Buyer
set forth in this Agreement shall survive the Closing and the consummation of
the transactions contemplated hereby and continue until the first anniversary of
the Closing Date at which
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time they shall expire. Notwithstanding the foregoing, (i) the representations
and warranties contained in Section 2.2(a) shall survive the Closing and the
consummation of the transactions contemplated thereby without limitation and
(ii) the representations and warranties contained in Sections 2.9 and 2.17 shall
expire upon the occurrence of the Closing.
(b) Any valid claim that is properly asserted in writing pursuant
to Section 6.3 prior to the expiration as provided in Section 6.4(a) of the
representation or warranty that is the basis for such claim shall survive until
such claim is finally resolved and satisfied.
6.5 Limitations.
(a) Except with respect to claims (i) based on actual fraud or
(ii) made pursuant to Section 6.2(b), Article VIII or Article IX, the rights of
the Indemnified Parties under this Article VI shall be the sole and exclusive
remedies of the Indemnified Parties and their respective Affiliates with respect
to claims resulting from or relating to any misrepresentation, breach of
warranty or failure to perform any covenant or agreement contained in this
Agreement. The rights of the Parties under Article VIII shall be the sole and
exclusive remedy of the Parties with respect to any Environmental Matters. The
rights of the Parties under Article IX shall be the sole and exclusive remedy of
the Parties with respect to the subject matter of Article IX. Without limiting
the generality of the foregoing three sentences, in no event shall the Buyer,
its successors or permitted assigns be entitled to claim or seek rescission of
the transactions consummated under this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, each of the following four limitations shall apply:
(i) the aggregate liability of the Seller for the sum of all
Damages under clause (a)(i) of Section 6.1 and Section 8.1 shall not exceed an
amount equal to 20% of the Adjusted Purchase Price;
(ii) the aggregate liability of the Seller for the sum of all
Damages under this Article VI shall not exceed an amount equal to the Adjusted
Purchase Price;
(iii) no individual claim or series of related claims for
indemnification under Section 6.1(a)(i) or 6.2(a)(i) or under Section 8.1 shall
be valid and assertable unless it is (or they are) for an amount in excess of
$10,000; and
(iv) the Seller shall be liable under clause (a)(i) of
Section 6.1 for only that portion of the aggregate Damages under clause (a)(i)
of Section 6.1 which exceeds $3,000,000 (it being understood that the Seller
shall not be liable, in any event, for the first $3,000,000 of said Damages).
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(c) In no event shall any Indemnifying Party be responsible and
liable for any Damages or other amounts under this Article VI or under Article
VIII that are consequential, in the nature of lost profits, diminution in value,
damage to reputation or the like.
(d) The Seller shall not have any right of contribution against
the Company with respect to any breach by the Seller of any of its
representations, warranties, covenants or agreements. Effective as of the
Closing, except as set forth in Section 10.8, and except for any claims that
arise under Article VI, the Buyer shall cause the Company and the Subsidiary to
waive, and forever release and discharge, any claim the Company or the
Subsidiary may have against the Seller or its Affiliates.
(e) The amount of any Damages for which indemnification is
provided under this Article VI or under Article VIII shall be reduced by (i) any
related recoveries actually realized or received by the Indemnified Party under
insurance policies, (ii) any other related payments actually realized or
received by the Indemnified Party from third parties and (iii) any tax benefits
actually realized or received by the Indemnified Party or any of its Affiliates,
in each case, on account of the matter resulting in such Damages or the payment
of such Damages. In each of the foregoing cases, the amount "actually realized
or received" shall be determined net of reasonable costs and expenses incurred
by the Indemnified Party in connection with realizing or receiving such amount.
The Buyer shall (and shall cause the Company and the Subsidiary to) use
commercially reasonable efforts to pursue all legal rights and remedies that the
Company or the Subsidiary may have in order to minimize the Damages for which
indemnification is provided to the Buyer by the Seller under Articles VI or
VIII.
(f) The Buyer agrees that to the extent any representation or
warranty of the Seller made in this Agreement is, to the knowledge of the Buyer
on or prior to the Closing Date, untrue or incorrect, the Buyer shall have no
rights under this Article VI by reason of such untruth or inaccuracy (except for
any right to terminate this Agreement which may be available pursuant to Section
7.1(b)).
(g) Notwithstanding anything to the contrary contained in this
Agreement, the Buyer shall not be entitled to make any claim for indemnification
with respect to any matter to the extent the Purchase Price has been adjusted to
reflect such matter pursuant to Section 1.4 and the amount of any Damages for
which indemnification is provided under this Article VI or under Article VIII
shall be calculated net of any accruals, reserves or provisions reflected in the
Final Closing Balance Sheet.
6.6 Treatment of Indemnification Payments. All indemnification payments
made under this Agreement shall be treated by both Parties as an adjustment to
the Adjusted Purchase Price.
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ARTICLE VII
TERMINATION
7.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Closing as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) the Buyer may terminate this Agreement by giving written
notice to the Seller in the event the Seller is in material breach, and the
Seller may terminate this Agreement by giving written notice to the Buyer in the
event the Buyer is in material breach, of any representation, warranty, covenant
or agreement contained in this Agreement, and such breach is not remedied within
15 days of delivery of written notice thereof;
(c) the Buyer may terminate this Agreement by giving written
notice to the Seller (which notice shall be immediately effective if given by
telecopy or personally delivered) if the Closing shall not have occurred by July
17, 1998 by reason of the failure of any condition precedent under Section 5.1
hereof (unless the failure results primarily from a breach by the Buyer of any
representation, warranty, covenant or agreement contained in this Agreement);
(d) the Seller may terminate this Agreement by giving written
notice to the Buyer (which notice shall be immediately effective if given by
telecopy or personally delivered) if the Closing shall not have occurred by July
17, 1998 by reason of the failure of any condition precedent under Section 5.2
hereof (unless the failure results primarily from a breach by the Seller of any
representation, warranty, covenant or agreement contained in this Agreement);
(e) the Seller may terminate this Agreement by giving written
notice to the Buyer (which notice shall be immediately effective if given by
telecopy or personally delivered) at any time after 11:59 p.m. on June 19, 1998,
unless as of 11:59 p.m. on June 19, 1998 the waiting period applicable to the
consummation of the transactions contemplated by this Agreement under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act has expired or been terminated; or
(f) the Seller may terminate this Agreement by giving written
notice to the Buyer (which notice shall be immediately effective if given by
telecopy or personally delivered) at any time on or after the earlier of (x)
July 10, 1998 or (y) the later of (i) May 1, 1998 or (ii) the date which is 45
days after the FTC Clearance Date, if the Closing shall not have occurred by the
earlier of such dates.
7.2 Effect of Termination.
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(a) If either Party terminates this Agreement pursuant to Sections
7.1(a), 7.1(b), 7.1(c) or 7.1(d), all obligations of the Parties hereunder shall
terminate without any liability of either Party to the other Party; provided,
however, that termination pursuant to Section 7.1(b) by reason of a breach prior
to the time of such termination of any covenant or agreement contained in this
Agreement (but not by reason of a breach of any representation and warranty)
shall not relieve the defaulting or breaching Party (whether or not it is the
terminating Party) from any liability to the other Party.
(b) If,
(i) the Seller terminates this Agreement pursuant to Section
7.1(e),
(ii) on or before May 15, 1998, the Seller delivered to the
FTC a certification of substantial compliance with the
Second Request,
(iii) as of 11:59 p.m. on May 29, 1998, the Seller was in
substantial compliance with the Second Request, and
(iv) at the time of such termination the Seller is not in
material breach of any representation, warranty,
covenant or agreement contained in this Agreement as to
which the Buyer has given the Seller notice of breach
prior to the time at which Seller gives Buyer notice of
termination pursuant to Section 7.1(e),
then the Buyer shall immediately pay $3,000,000 in cash to the
Seller and all other obligations of the Parties hereunder shall terminate
without any liability of either Party to the other Party. If the Seller
terminates this Agreement pursuant to Section 7.1(e), but either or both of the
conditions in clauses (ii) or (iii) of the prior sentence have not been
satisfied, then all obligations of the Parties hereunder shall terminate without
any liability of either Party to the other Party. Notwithstanding anything to
the contrary contained in this Agreement or in any other agreement or
understanding between the Parties, the sole and exclusive remedy for any and all
liabilities, demands, claims, actions, judgments or causes of action (either at
law or in equity), assessments, losses, fines, penalties, costs, damages and
expenses sustained, incurred or alleged to be sustained or incurred by the
Seller, the Company or the Subsidiary resulting from, arising under or relating
to a termination of this Agreement by the Seller pursuant to Section 7.1(e) of
the Agreement shall be limited to an aggregate amount of $3,000,000.
(c) If,
(i) the Seller terminates this Agreement pursuant to Section
7.1(f),
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(ii) at the time of such termination the Seller is not in
material breach of any representation, warranty,
covenant or agreement contained in this Agreement as to
which the Buyer has given the Seller notice of breach
prior to the time at which the Seller gives the Buyer
notice of termination pursuant to Section 7.1(f),
(iii) during the period beginning on the FTC Clearance Date
and ending on the earlier of (x) July 10, 1998 or (y) 45
days after the FTC Clearance Date a Market Out Event (as
defined below) has not occurred, and
(iv) the FTC Clearance Date shall have occurred,
then the Buyer shall immediately pay $5,000,000 in cash to the
Seller and all other obligations of the Parties hereunder shall terminate
without any liability of either Party to the other Party. If the Seller
terminates this Agreement pursuant to Section 7.1(f), but either or both of the
conditions in clauses (ii) or (iii) of the prior sentence have not been
satisfied, then all obligations of the Parties hereunder shall terminate without
any liability of either Party to the other Party. Notwithstanding anything to
the contrary contained in this Agreement or in any other agreement or
understanding between the Parties, the sole and exclusive remedy for any and all
liabilities, demands, claims, actions, judgments or causes of action (either at
law or in equity), assessments, losses, fines, penalties, costs, damages and
expenses sustained, incurred or alleged to be sustained or incurred by the
Seller, the Company or the Subsidiary resulting from, arising under or relating
to a termination of this Agreement by the Seller pursuant to Section 7.1(f) of
the Agreement or the transactions contemplated hereby shall be limited to an
aggregate amount of $5,000,000.
For purposes of this Agreement, the term "Market Out Event"
shall mean the occurrence of one of the following three events: (1) a suspension
or material limitation of trading in securities generally on the New York Stock
Exchange, (2) a general moratorium on commercial banking activities in the City
of New York declared by either federal or New York State authorities, or (3) any
material outbreak or material escalation of hostilities involving the United
States or other national or international calamity or crisis of similar
magnitude and severity; after which occurrence the Buyer delivers to the Seller
a certificate of (A) the Buyer's Chief Executive Officer or Chief Financial
Officer and (B) an authorized representative of the Buyer's investment bank,
certifying that as a result of such occurrence the Buyer is unable to obtain the
financing necessary to consummate the transactions contemplated by this
Agreement.
(d) The Buyer has delivered to the Seller an irrevocable letter of
credit, in the form attached hereto as Attachment 7.2(d), to secure the Buyer's
obligations under Sections 7.2(b) and 7.2(c).
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(e) Notwithstanding any other provision contained in this
Agreement to the contrary, the Confidentiality Agreement and Section 10.1(f)
shall survive the termination of this Agreement for any reason.
ARTICLE VIII
ENVIRONMENTAL MATTERS
8.1 Environmental Indemnification for Included Properties.
(a) Subject to the terms and conditions of this Article VIII, with
respect to any valid claim properly asserted in writing by the Buyer prior to
the third anniversary of the Closing Date, the Seller shall indemnify the Buyer
and its Affiliates in respect of, and hold the Buyer and its Affiliates harmless
against:
(i) any and all Damages incurred or suffered by the Buyer or
any Affiliate thereof as a result of any Material Noncompliance (as defined in
Section 8.1(d)) prior to the Closing Date by the Company or the Subsidiary with
any applicable Environmental Laws in connection with the operations of the
Company or the Subsidiary at an Included Property; provided such Damages
directly result from (1) the Company's or the Subsidiary's compliance with an
order issued by an administrative agency or other governmental or regulatory
authority with jurisdiction or authority to enforce Environmental Laws (an
"Environmental Authority") or by a court in a proceeding commenced by an
Environmental Authority which establishes a mandatory obligation to rectify such
Material Noncompliance, (2) a mandatory obligation of the Company or the
Subsidiary to pay a fine or penalty which is imposed by an Environmental
Authority or a court in a proceeding commenced by an Environmental Authority as
a result of such Material Noncompliance or (3) an obligation of the Company to
rectify a material violation of Environmental Laws which is identified as
existing prior to the Closing as part of the Company's participation in OSHA's
Cooperative Compliance Program; provided that the Buyer and its Affiliates shall
only be entitled to indemnification to the extent the Damages incurred are
necessary to rectify such material violation; and
(ii) any Response Costs (as defined in Section 8.1(e))
arising from any release of Materials of Environmental Concern to the
environment which occurred prior to the Closing Date at an Included Property;
provided, such Response Costs directly result from an order issued by an
Environmental Authority or a court in a proceeding commenced by an Environmental
Authority which establishes a mandatory obligation on the part of the Company or
the Subsidiary to investigate and/or remediate said release of Materials of
Environmental Concern; and
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(iii) any and all Damages incurred or suffered by the Buyer or
any Affiliate thereof relating to or resulting from any Transporter Liability
(as defined in Section 8.1(f));
provided further, however, that, in the case of both clauses (i) and (ii), the
Seller's obligations under this Section 8.1 shall be conditioned upon the
applicable Included Property having been continuously operated for industrial
purposes (including related office, warehouse, sale and service activities)
during such three year indemnification period and thereafter during the pendency
of any claim asserted prior to the third anniversary of the Closing Date.
(b) The Seller and the Buyer agree that any voluntary action,
program or expense incurred under or related to Environmental Laws, whether or
not required for compliance with Environmental Laws, including without
limitation action pursuant to the Ohio Voluntary Cleanup Program, Ohio Rev. Code
Section 3746.01 et seq., and the Ohio Voluntary Audit Law, Ohio Rev. Code
Section 3745.70 et seq., shall not be deemed a mandatory obligation for purposes
of this Section 8.1. In addition, neither the Buyer nor any of its Affiliates
shall be entitled to indemnification under this Article VIII if a mandatory
obligation arises as a result of voluntary disclosure by the Buyer or any of its
Affiliates to a third party (other than an Affiliate of the Buyer) of
information or data. Except as otherwise provided in clause (3) of Section
8.1(a)(i), the Seller and the Buyer agree that the Seller shall have no
liability, and neither the Buyer nor its Affiliates shall be entitled to
indemnification, with respect to any Damages resulting from the Company's
participation in OSHA's Cooperative Compliance Program.
(c) The Buyer shall give prompt written notification to the Seller
of the commencement of any action, suit or proceeding for which indemnification
under this Section 8.1 may be sought or, if earlier, upon the assertion of any
claim or commencement of any inquiry by an Environmental Authority for which
indemnification under this Section 8.1 may be sought, whereupon the Seller shall
assume exclusive control of the defense and settlement of such action, suit,
proceeding, claim or inquiry. Without limiting the generality of the foregoing,
if a mandatory obligation of the kind specified in Section 8.1(a) exists: (i)
the Seller shall determine, control and undertake the actions to be taken in
order to comply with or satisfy such mandatory obligation and (ii) the Buyer
shall be provided reasonable notice and opportunity to comment upon the Seller's
plans for addressing such mandatory obligation.
(d) For purposes of this Agreement, "Material Noncompliance" means
all costs and expenses which, in the aggregate, exceed $250,000 (it being
understood that the Seller shall not be liable, in any event, for the first
$250,000 of said costs and expenses).
(e) For purposes of this Agreement, "Response Costs" means all
"response costs" within the meaning of CERCLA which, in the aggregate, exceed
$250,000 (it being understood that the Seller shall not be liable, in any event,
for the first $250,000 of said
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response costs). The term "Damages" includes all Response Costs (as defined in
the prior sentence, including the limitation set forth therein).
(f) For purposes of this Agreement, "Transporter Liability" means
all costs and expenses relating to or resulting from any transportation,
treatment, storage or disposal, or the arrangement therefor, by the Company, the
Subsidiary or any of their respective Affiliates, agents, contractors or
representatives, prior to the Closing of any Materials of Environmental Concern
to or at any off-site property, location or facility not owned or operated by
the Company or the Subsidiary which, in the aggregate, exceed $125,000 (it being
understood that the Seller shall not be liable, in any event, for the first
$125,000 of said costs and expenses).
8.2 Environmental Indemnification for Excluded Properties.
(a) Subject to the terms and conditions of this Article VIII, the
Seller shall indemnify the Buyer in respect of, and hold the Buyer harmless
against:
(i) any and all Damages (including without limitation any
amounts paid by the Company as a result of the three standby letters of credit
referred to in the Purchase and Sale Agreement referred to in the Disclosure
Schedule relating to the Harrodsburg Facility or the Monroe Facility being drawn
upon) incurred or suffered by the Buyer or any Affiliate thereof as a result of
any release of Materials of Environmental Concern to the environment at any time
which occurred or originated at any Excluded Property; and
(ii) any and all Damages incurred or suffered by the Buyer or
any Affiliate thereof pursuant to the environmental provisions contained in
Section 12.0 of the Purchase and Sale Agreement dated November 1, 1996, as
amended, between NuTone Inc. and E ▇▇▇▇ Corp. for the sale of the ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ property (the "Monroe Indemnification
Agreement"); and
(iii) any and all Damages incurred or suffered by the Buyer or
any Affiliate thereof relating to or resulting from any transportation,
treatment, storage or disposal, or the arrangement therefor, by the Company, the
Subsidiary or any of their respective Affiliates, agents, contractors or
representatives, of any Materials of Environmental Concern originating at or on
any Excluded Property.
(b) The Buyer shall give prompt written notification to the Seller
upon becoming aware of any facts or circumstances pursuant to which
indemnification under this Section 8.2 may be sought, whereupon the Seller shall
assume exclusive control of the defense and settlement of all matters for which
indemnification may be sought pursuant to this Section 8.2. Without limiting the
generality of the foregoing, the Buyer agrees that the Seller or its Affiliates
shall exercise and control, on an exclusive basis, all of the rights of the
Company under the Monroe Indemnification Agreement.
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8.3 Exclusive Remedy.
(a) This Article VIII shall be the sole and exclusive remedy of
the Buyer and its Affiliates against the Seller or any of its Affiliates for any
and all Damages under Environmental Laws or any common law providing for any
remedy or right of recovery with respect to Environmental Matters arising in the
past, present or future and related directly or indirectly to the business or
operations of the Company or the Subsidiary. The Buyer hereby waives (and shall
cause its Affiliates and the respective successors and permitted assigns of the
Buyer and its Affiliates to waive) any right to seek contribution or other
recovery from the Seller or its Affiliates or any present or former officer,
director or employee, agent, or contractor of the Company, the Subsidiary, the
Seller or any Affiliates of the Seller that any of them may now or in the future
have under any Environmental Laws and any common law providing for any remedy or
right of recovery with respect to Environmental Matters, with respect to events
related directly or indirectly to the business or operations of the Company or
the Subsidiary prior to the Closing. The Buyer hereby releases (and shall cause
its Affiliates and the respective successors and assigns of the Buyer and its
Affiliates to release) the Seller and its Affiliates and all present or former
officers, directors and employees, agents, or contractors of the Company, the
Subsidiary, the Seller or any Affiliates of the Seller from any and all such
claims, demands and causes of action that any of them may now or in the future
have under any Environmental Laws and any common law providing for any remedy or
right of recovery with respect to Environmental Matters, with respect to events
related directly or indirectly to the business or operations of the Company or
the Subsidiary prior to the Closing.
(b) The provisions of Sections 6.5 and 6.6 are applicable to this
Article VIII.
8.4 Buyer's Indemnification.
(a) Subject to the terms and conditions of this Article VIII, the
Buyer shall indemnify the Seller and its Affiliates in respect of, and hold the
Seller and its Affiliates harmless against, any and all Damages with respect to
Environmental Matters related directly or indirectly to the business or
operations of the Company or the Subsidiary as to which the Seller is not
obligated to indemnify the Buyer pursuant to Section 8.1.
(b) The procedures set forth in Section 6.3 shall apply with
respect to any claim for indemnification made by the Seller pursuant to this
Section 8.4.
ARTICLE IX
TAX MATTERS
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9.1 Preparation and Filing of Tax Returns.
(a) The Seller shall prepare and timely file or shall cause to be
prepared and timely filed the following Tax Returns with respect to the Company
and the Subsidiary or in respect of their businesses, assets or operations:
(i) All Tax Returns for any Taxes imposed upon, or measured
by, income (and, in the case of the Subsidiary, by income and capital) for any
taxable period ending on or before the Closing Date; and
(ii) All other Tax Returns required to be filed (taking into
account extensions) prior to the Closing Date.
(b) The Seller shall permit the Buyer to review and comment upon
all Tax Returns prepared pursuant to Section 9.1(a) to the extent such Tax
Returns relate to the Company or the Subsidiary (i.e., in the case of
consolidated returns access will be provided to information about the Company
and the Subsidiary but not to the overall consolidated return). With respect to
any Tax Returns prepared pursuant to Section 9.1(a), the Seller shall not take
any position inconsistent with prior Tax Returns that would materially adversely
affect the Company after the Closing Date without obtaining the prior written
consent of the Buyer, which consent shall not be unreasonably withheld or
delayed.
(c) The Buyer shall prepare and timely file or shall cause to be
prepared and timely filed all other Tax Returns with respect to the Company and
the Subsidiary or in respect of their businesses, assets or operations.
(d) Any Tax Return to be prepared and filed by the Buyer for
taxable periods beginning before the Closing Date and ending after the Closing
Date shall be prepared on a basis consistent with the last previous Tax Return,
and the Buyer shall consult with the Seller concerning each such Tax Return and
report all items with respect to the portion of the period ending on the Closing
Date in accordance with the instructions of the Seller. The Buyer shall cause
the Company to provide the Seller with a copy of each proposed Tax Return (and
such additional information regarding such Tax Return as may reasonably be
requested by the Seller) at least 45 days prior to the filing of such Tax
Return, except that in the case of a Tax Return relating to a monthly taxable
period, the copy shall be provided to the Seller at least 10 days prior to the
filing of such Tax Return.
9.2 Tax Indemnification by the Seller.
(a) Except as set forth in Sections 9.3(a)(ii) and 9.3(a)(iii)
hereof, the Seller shall indemnify the Buyer and its Affiliates in respect of,
and hold the Buyer and its Affiliates harmless, on an after-Tax basis, against
the following Taxes with respect to the Company and the Subsidiary to the extent
such Taxes exceed the accruals, reserves or assets for Taxes set
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forth on the Final Closing Balance Sheet and the amount of any estimated Tax
payments and any payments of Canadian Tax installments made on or before the
Closing Date:
(i) Any and all Taxes due and payable by the Company or the
Subsidiary for any taxable period ending (or deemed pursuant to Section 9.4(b)
or Section 9.4(c) to end) on or before the Closing Balance Sheet Date, including
any Taxes in respect of the Pre-Closing Transactions listed on Attachment 4.4 as
Items 1 and 2;
(ii) Any liability of the Company or the Subsidiary for Taxes
for periods ending on or before the Closing Balance Sheet Date under Treasury
Regulation Section 1.1502-6 or under any comparable or similar provision under
state, local or foreign laws or regulations; and
(iii) Any sales, use, transfer, stamp, conveyance, value
added, recording, registration, documentary, filing or other similar Taxes and
fees, including such Taxes or fees in respect of the Pre-Closing Transactions,
whether levied on the Buyer, the Seller, the Company, the Subsidiary or any of
their respective Affiliates, resulting from the purchase of the stock of the
Company or otherwise on account of this Agreement or the transactions
contemplated hereby.
(b) Amounts payable pursuant to this Section 9.2 shall be computed
after taking into account all Tax consequences to the Buyer (or its Affiliates)
of (i) the receipt of (or the right to receive) the indemnification payment and
(ii) the incurrence of the liability that gave rise to the right to receive the
indemnification payment. Thus, it is the intention of the Parties that the Buyer
be held harmless with respect to the liability that gave rise to the right to
the indemnification payment on an after-Tax basis. The Parties agree that to the
maximum extent allowable under applicable Tax laws, amounts payable to the Buyer
or its Affiliates pursuant to this Section 9.2 shall be treated (and reported on
all applicable Tax Returns) as adjustments to the Adjusted Purchase Price.
9.3 Tax Indemnification by the Buyer.
(a) The Buyer shall indemnify the Seller and its Affiliates in
respect of, and hold the Seller and its Affiliates harmless, on an after-Tax
basis, against, the following Taxes with respect to the Company and the
Subsidiary:
(i) Any and all Taxes for any taxable period beginning (or
deemed pursuant to Section 9.4(b) or Section 9.4(c) to begin) on or after the
Closing Balance Sheet Date; and
(ii) Any and all Taxes specified in paragraphs (i) and (ii)
of Section 9.2(a), but only to the extent of the accruals, reserves or assets
for Taxes set forth on the Final
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Closing Balance Sheet and the amount of any estimated Tax payments and any
payments of Canadian Tax installments made on or before the Closing Date.
(b) Amounts payable pursuant to this Section 9.3 shall be computed
after taking into account all Tax consequences to the Seller (or its Affiliates)
of (i) the receipt of (or the right to receive) the indemnification payment and
(ii) the incurrence of the liability that gave rise to the right to receive the
indemnification payment. Thus, it is the intention of the Parties that the
Seller be held harmless with respect to the liability that gave rise to the
right to the indemnification payment on an after-Tax basis. The Parties agree
that to the maximum extent allowable under applicable Tax laws, amounts payable
to the Seller or its Affiliates pursuant to this Section 9.3 shall be treated
(and reported on all applicable Tax Returns) as adjustments to the Adjusted
Purchase Price.
9.4 Allocation of Certain Taxes.
(a) The Buyer and the Seller agree that if the Company or the
Subsidiary is permitted but not required under applicable foreign, state or
local Tax laws to treat the Closing Date as the last day of a taxable period,
the Buyer and the Seller shall treat such day as the last day of a taxable
period. The Buyer and the Seller agree that they will treat the Company as if it
ceased to be part of the affiliated group of corporations of which the Seller is
a member within the meaning of Section 1504 of the Code, and any comparable or
similar provision of state, local or foreign laws or regulations, as of the
close of business on the Closing Date.
(b) Except as provided in Section 9.4(c), any Taxes for a taxable
period ending after the Closing Balance Sheet Date with respect to the Company
and/or the Subsidiary shall be paid by the Buyer, the Company and/or the
Subsidiary, and the Taxes for such period shall be apportioned for purposes of
Section 9.2 and Section 9.3 between the Seller and the Buyer based on the actual
operations of the Company and/or the Subsidiary, as the case may be, during the
portion of such period ending on the Closing Balance Sheet Date, if any, and the
portion of such period beginning on the day following the Closing Balance Sheet
Date, and for purposes of the provisions of Sections 9.2, 9.3 and 9.5, each
portion of such period shall be deemed to be a taxable period (whether or not it
is in fact a taxable period).
(c) Any Taxes for a taxable period ending on the Closing Date with
respect to the Company and/or the Subsidiary shall be paid by the Seller, and
the Taxes for such period shall be apportioned for purposes of Section 9.2 and
Section 9.3 between the Seller and the Buyer based on the actual operations of
the Company and/or the Subsidiary, as the case may be, during the portion of
such period ending on the Closing Balance Sheet Date and the portion of such
period beginning on the day following the Closing Balance Sheet Date, and for
purposes of the provisions of Sections 9.2, 9.3 and 9.5, each portion of such
period shall be considered to be a taxable period (whether or not it is in fact
a taxable period).
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(d) The Party not responsible under Section 9.1 for filing the Tax
Return for any period for which Taxes are apportioned under subsections (b) or
(c), shall make any payment for which it is liable under Section 9.2 or Section
9.3 to the Party responsible for filing such Tax Return under Section 9.1 not
later than five business days prior to the due date for the payment of such
Taxes (including estimated Taxes).
9.5 Refunds and Carrybacks.
(a) The Seller or its Affiliates shall be entitled to an amount
equal to any refunds (including any interest paid thereon) or credits of Taxes
attributable to taxable periods ending (or deemed pursuant to Section 9.4(b) to
end) on or before the Closing Balance Sheet Date to the extent such refunds
(including any interest paid thereon) or credits were not reflected on the Final
Closing Balance Sheet. The Buyer shall promptly notify the Seller in writing of
any tax refund(s) received by or payable to the Company or the Subsidiary after
the Closing in respect of periods before or including the Closing Date.
(b) The Buyer, the Company, the Subsidiary and/or their
Affiliates, as the case may be, shall be entitled to any refunds (including any
interest paid thereon) or credits of Taxes attributable to (i) taxable periods
beginning (or deemed pursuant to Section 9.4(b) to begin) after the Closing
Balance Sheet Date and (ii) taxable periods ending (or deemed pursuant to
Section 9.4(b) to end) on or before the Closing Balance Sheet Date to the extent
such refunds (including any interest paid thereon) or credits were reflected on
the Final Closing Balance Sheet.
(c) The Buyer shall, or shall cause the Company and the Subsidiary
promptly to, forward to or reimburse the Seller for any refunds (including any
interest paid thereon) or credits due the Seller (pursuant to the terms of this
Agreement) after receipt thereof, and the Seller shall promptly forward to the
Buyer or reimburse the Buyer for any refunds (including any interest paid
thereon) or credits due the Buyer after receipt thereof.
(d) The Buyer and the Company agree that, with respect to any Tax,
the Company and the Subsidiary shall not carry back any item of loss, deduction
or credit which arises in any taxable period ending after the Closing Date to
any taxable period ending on or before the Closing Date.
9.6 Cooperation on Tax Matters; Tax Audits.
(a) The Buyer and the Seller and their respective Affiliates shall
cooperate in the preparation of all Tax Returns for any Tax periods for which
one Party could reasonably require the assistance of the other Party in
obtaining any necessary information. Such cooperation shall include, but not be
limited to, furnishing prior years' Tax Returns or return preparation packages
to the extent related to the Company or the Subsidiary illustrating previous
reporting practices or containing historical information relevant to the
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preparation of such Tax Returns, and furnishing such other information within
such Party's possession requested by the Party filing such Tax Returns as is
relevant to their preparation. Such cooperation and information also shall
include without limitation provision of powers of attorney for the purpose of
signing Tax Returns and defending audits and promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any applicable governmental authority responsible for the imposition of Taxes
(the "Taxing Authority") which relate to the Company or the Subsidiary, and
providing copies of all relevant Tax Returns to the extent related to the
Company or the Subsidiary, together with accompanying schedules and related
workpapers, documents relating to rulings or other determinations by any Taxing
Authority and records concerning the ownership and tax basis of property, which
the requested Party may possess. The Buyer and the Seller and their respective
Affiliates shall make their respective employees and facilities available on a
mutually convenient basis to explain any documents or information provided
hereunder.
(b) The Seller shall have the right, at its own expense, to
control any audit or examination by any Taxing Authority ("Tax Audit"), initiate
any claim for refund, contest, resolve and defend against any assessment, notice
of deficiency, or other adjustment or proposed adjustment relating to any and
all Taxes for any taxable period ending on or before the Closing Date with
respect to the Company and the Subsidiary, provided that the Seller shall not
settle or compromise any audit in a manner that is inconsistent with any
position taken on prior Tax Returns and that would materially adversely affect
the Company after the Closing Date without obtaining the prior written consent
of the Buyer, which consent shall not be unreasonably withheld or delayed. The
Buyer shall have the right, at its own expense, to control any other Tax Audit,
initiate any other claim for refund, and contest, resolve and defend against any
other assessment, notice of deficiency, or other adjustment or proposed
adjustment relating to Taxes with respect to the Company and the Subsidiary;
provided that, with respect to (i) any state, local or foreign Taxes for any
taxable period beginning before the Closing Date and ending after the Closing
Date and (ii) any item the adjustment of which may cause the Seller to become
obligated to make any payment pursuant to Section 9.2(a) hereof, the Buyer shall
consult with the Seller with respect to the resolution of any issue that would
affect the Seller, and not settle any such issue, or file any amended Tax Return
relating to such issue, without the consent of the Seller, which consent shall
not be unreasonably withheld. Where consent to a settlement is withheld by the
Seller pursuant to this Section, the Seller may continue or initiate any further
proceedings at its own expense, provided that any liability of the Buyer, after
giving effect to this Agreement, shall not exceed the liability that would have
resulted had the Seller not withheld its consent.
9.7 Termination of Tax-Sharing Agreements. All Tax sharing agreements or
similar arrangements with respect to or involving the Company and the Subsidiary
shall be terminated prior to the Closing Date and, after the Closing Date, the
Company and the Subsidiary shall not be bound thereby or have any liability
thereunder for amounts due in respect of periods ending on or before the Closing
Date.
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ARTICLE X
FURTHER AGREEMENTS
10.1 Access to Information; Record Retention; Cooperation.
(a) Access to Information. Following the Closing, each Party shall
afford to the other Party and to the other Party's Affiliates, authorized
accountants, counsel and other designated representatives reasonable access
(including using reasonable efforts to give access to third parties possessing
information and providing reasonable access to its own employees who are in
possession of relevant information) and duplicating rights during normal
business hours to all records, books, contracts, instruments, documents,
correspondence, computer data and other data and information (collectively,
"Information") within the possession or control of such Party or its Affiliates,
relating to the Company or the Subsidiary or their respective businesses or
operations prior to the Closing, insofar as such access is reasonably required
by the other Party. Information may be requested under this Section 10.1(a) for
without limitation, financial reporting and accounting matters, including for
purposes of preparing financial statements and the Closing Balance Sheet,
resolving any differences between the Parties with respect to the Closing
Balance Sheet, the preparation and filing of any Tax Returns, the prosecution of
any claims for refund, the defense of any Tax claims or assessment, the
preparation of securities law or exchange filings, prosecution, defense or
settlement of litigation and any insurance claims, performance of this Agreement
and the transactions contemplated hereby and all other proper business purposes.
(b) Access to Personnel. Following the Closing, each Party shall
use reasonable efforts to make available to the other Party, upon written
request, such Party's and its Affiliates' officers, directors, employees and
agents to the extent that such persons may reasonably be required in connection
with any legal, administrative or other proceedings in which the requesting
Party may from time to time be involved relating to the Company or the
Subsidiary or their respective businesses or operations prior to the Closing or
for any other matter referred to in Section 10.1(a).
(c) Reimbursement. A Party providing Information or personnel to
the other Party under Section 10.1(a) or (b) shall be entitled to receive from
the recipient, upon the presentation of invoices therefor, payments for such
amounts, relating to supplies, disbursements and other out-of-pocket expenses,
as may be reasonably incurred in providing such Information; provided, however,
that no such reimbursements shall be required for the salary or cost of fringe
benefits or similar expenses pertaining to employees or directors of the
providing Party or its Affiliates.
(d) Retention of Records. Except as otherwise required by law or
agreed to in writing by the Parties, each Party shall (and shall cause its
Affiliates to) preserve all
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Information in its possession pertaining to the Company and the Subsidiary and
their respective businesses and operations prior to the Closing until December
31, 2005. Notwithstanding the foregoing, in lieu of retaining any specific
Information, either Party may offer in writing to the other Party to deliver
such Information to the other Party and, if such offer is not accepted within 90
days, the offered Information may be disposed of at any time.
(e) Preparation of Closing Balance Sheet and ▇▇▇▇▇▇▇▇ Financial
Statements. Following the Closing, the Buyer shall cause the Company and the
Subsidiary to prepare and provide to the Seller and its Affiliates all
information relating to the Company and the Subsidiary reasonably required for
the Seller and its Affiliates to prepare (i) the Closing Balance Sheet and (ii)
the consolidated accounts of ▇▇▇▇▇▇▇▇ for the fiscal periods ending June 30,
1998 and December 31, 1998. Without limiting the generality of the foregoing,
the Buyer shall cause the Company and the Subsidiary to prepare, in accordance
with past practice prior to the Closing, full "statutory packs" for the Company
and the Subsidiary using ▇▇▇▇▇▇▇▇' normal accounting policies, principles,
bases, methods and procedures and the Buyer shall cause the Company and the
Subsidiary to use their best efforts to act in full compliance with the
reasonable timetable and instructions of ▇▇▇▇▇▇▇▇. Any information provided
pursuant to this Section in any format requested by ▇▇▇▇▇▇▇▇ shall be without
prejudice to any rights that the Buyer may have to dispute the Closing Balance
Sheet in accordance with the provisions of Section 1.4. During the period of
preparation of the Closing Balance Sheet and the audited accounts of ▇▇▇▇▇▇▇▇,
the Buyer shall use its best efforts to ensure that the Seller and its
Affiliates (and their auditors) will be provided with full unrestricted access
to the Company and the Subsidiary during normal business hours, their financial
management and their books, accounts and records and will be able to review the
work being carried out in accordance with this Section.
(f) Confidentiality. Each of the Buyer and the Seller shall hold,
and shall use reasonable efforts to cause its Affiliates, consultants and
advisors to hold, in strict confidence all Information concerning the other
furnished to it by the other Party or the other Party's representatives at any
time prior to Closing or pursuant to this Section 10.1 (except to the extent
that such Information (i) is or becomes generally available to the public other
than as a result of a disclosure by the receiving Party in violation of the
terms of this Section 10.1, (ii) was within the possession of the receiving
Party prior to it being furnished to the receiving Party by or on behalf of the
other Party pursuant hereto, provided that the source of such information was
not known by the receiving Party at the time of receipt to be bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the other Party or any other party with respect
to such information, (iii) is or becomes available to the receiving Party from a
source other than the other Party, provided that such source is not, to the
knowledge of the receiving Party at the time of receipt, bound by a
confidentiality agreement with or other contractual, legal or fiduciary
obligation of confidentiality to the other Party or any other party with respect
to such information, or (iv) was or is independently developed by the receiving
Party without utilizing any Information or violating any of the receiving
Party's obligations under this
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Agreement), and each Party shall not release or disclose such Information to any
other person, except its auditors, attorneys, financial advisors, bankers and
other consultants and advisors, unless compelled to disclose such Information by
judicial or administrative process or, as advised by its counsel, by other
requirements of law.
10.2 Director and Officer Indemnification. The Buyer shall not take any
action to alter or impair any exculpatory or indemnification provisions, now
existing in the (i) Certificate of Incorporation or By-laws of the Company or
(ii) the Articles of Amalgamation or By-laws of the Subsidiary, for the benefit
of any individual who served as a director or officer of the Company or the
Subsidiary at any time prior to the Closing Date, except for any changes that
may be required to conform with changes in applicable law and any changes that
do not affect the application of such provisions to acts or omissions of such
individuals prior to the Closing Date.
10.3 Covenant Not to Compete; Non-Solicitation. During the period
commencing on the Closing Date and continuing until the third anniversary of the
Closing Date (the "Noncompetition Period"), the Seller shall not (and shall
cause each Noncompetition Party (as defined below) not to), directly or
indirectly, (a) own, manage, operate or control any business in the United
States, Canada, North America or the rest of the world that develops,
manufacturers and sells any Competitive Products (as defined below) in
competition with the business activities conducted by the Company and the
Subsidiary on the date hereof (a "Competitive Business") or (b) solicit (other
than by general advertising) any of the officers, management or key employees of
the Company as of the Closing Date to terminate his or her employment with the
Company or the Subsidiary; provided, however, that the foregoing covenant shall
not prohibit, or be interpreted as prohibiting, any Noncompetition Party from
(i) continuing in any line of business conducted by any Noncompetition Party
(other than the Company and the Subsidiary) on the date hereof, regardless of
whether any such business is a Competitive Business; (ii) manufacturing or
selling raw materials or components used in or sold to a Competitive Business;
(iii) entering into any relationship with a person or entity not owned, managed,
operated or controlled by any Noncompetition Party for purposes primarily
unrelated to a Competitive Business; (iv) making equity investments in publicly
owned companies which conduct a Competitive Business, provided such investments
do not confer control of any such company upon any Noncompetition Party; or (v)
acquiring any person or entity which conducts a Competitive Business if either
(x) in the calendar year prior to such acquisition, the revenues of such person
or entity from its Competitive Business do not constitute more than 25% of the
total revenues of such person or entity or (y) the applicable Noncompetition
Party promptly commences and thereafter pursues for a period of 12 months after
such acquisition the transfer of that portion of the business of such person or
entity as constitutes a Competitive Business upon terms and conditions and at a
price determined by the applicable Noncompetition Party in its sole discretion,
failing which the applicable Noncompetition Party shall for a period of three
months following such 12 month period negotiate with the Buyer in good faith for
the sale of such Competitive Business to the Buyer on terms and conditions and
at a price mutually agreeable to the applicable
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Noncompetition Party and the Buyer. For purposes of this Agreement, "Competitive
Products" means the following items sold primarily for use in residential
housing construction or remodeling: exhaust fans and heaters, range hoods, attic
and whole house ventilation fans, paddle fans, air purification devices, bath
cabinets and fixtures, door chimes, intercoms, central vacuums and audio
speakers. For purposes of the Agreement, "Noncompetition Party" means each of
▇▇▇▇▇▇▇▇ and any direct or indirect majority-owned subsidiaries of ▇▇▇▇▇▇▇▇,
including without limitation the Seller.
10.4 Disclosure Generally.
(a) Any information furnished in the Disclosure Schedule (or any
update thereto) shall be deemed to modify all of the Seller's representations
and warranties. The inclusion of any information in the Disclosure Schedule (or
any update thereto) shall not be deemed to be an admission or acknowledgment, in
and of itself, that such information is required by the terms hereof to be
disclosed or is material to the Company or the Subsidiary or outside the
Ordinary Course of Business.
(b) Neither the Seller nor any of its Affiliates has made or shall
be deemed to have made or make any representation and warranty to the Buyer
other than as set forth in Article II of this Agreement. Without limiting the
generality of the foregoing, the Buyer acknowledges that neither the Seller nor
any of its Affiliates has made or shall be deemed to have made or make any
representation as to projections or budgets of the Company or the Subsidiary,
including without limitation as to future revenues, expenses or income.
(c) For purposes of this Agreement, the terms "to the Seller's
knowledge," "known by the Seller" or other words of similar meaning shall mean
the actual knowledge of ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. Edge, ▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇, L. ▇▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇ ▇. ▇▇▇▇▇ and shall not refer to the knowledge of
any other person or entity.
(d) For purposes of this Agreement, the terms "to the Buyer's
knowledge," "known by the Buyer" or other words of similar meaning shall mean
the actual knowledge of ▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
and ▇▇▇ ▇▇▇▇▇ and shall not refer to the knowledge of any other person or
entity.
(e) The Buyer acknowledges and agrees that (x) to the extent that
any of the items set forth in Attachment 10.4(e) hereto involves an accounting
method, treatment, principle or procedure, the item as treated or reflected by
the Company or the Seller (and not as challenged or questioned by the Buyer) is
consistent with Attachment 1.4(a), (y) with respect to the items indicated by an
asterisk on Attachment 10.4(e), the 1997 Financial Statements shall not be
considered as not being prepared in accordance with U.S. GAAP to the extent
(limited to the indicated amounts) that such items are not reflected in such
financial
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statements and (z) no loss of a customer by the Company or the Subsidiary to the
Buyer or an Affiliate of the Buyer shall entail or be deemed to entail a Company
Material Adverse Effect or a breach of a warranty or misrepresentation by the
Seller.
10.5 Certain Insurance Matters.
(a) The Buyer shall (or shall cause the Company or the Subsidiary
to) reimburse the Seller and its Affiliates with respect to any and all Damages
incurred or suffered by the Seller or any Affiliate thereof resulting from or
relating to:
(i) any workers compensation claims arising from the
business or operations of the Company or the Subsidiary prior to the Closing;
provided that, solely with respect to such claims that arose outside of the
State of Ohio, the Buyer's reimbursement obligation under this clause (i) shall
be limited to occurrences during the period from January 1, 1994 through and
including the Closing Date and to an amount of $500,000 per occurrence; or
(ii) any claims relating to personal injury or property
damage caused by the ownership or operation of an automobile or other motor
vehicle in connection with the business or operations of the Company or the
Subsidiary prior to the Closing, provided, however, that the Buyer's
reimbursement obligation under this clause (ii) shall be limited to an amount of
$250,000 per occurrence;
provided, further, however, that the insurer shall control and
manage the defense of any matter relating to clause (i) or (ii) above, subject
to the reasonable direction of the Company.
(b) The Seller shall invoice the Company on a monthly basis for
all amounts due to the Seller and its Affiliates pursuant to Section 10.5(a).
Such invoice shall include a level of detail consistent with that which the
Company received prior to the Closing. The Buyer shall (or shall cause the
Company or the Subsidiary to) pay in full the amounts shown on each such invoice
within 15 business days of receipt. Overdue amounts will bear interest at 10%
per annum, compounded monthly. Other than with respect to amounts referred to in
Section 10.5(c), the Buyer shall not have any right of set off with respect to
amounts to be paid pursuant to Section 10.5 and may not withhold payment during
the pendency of any dispute.
(c) The Buyer shall be entitled to the benefit and receipt of any
claims and/or recoveries under any insurance policies maintained by any of the
Seller, the Company or the Subsidiary with respect to matters referred to in
Sections 10.5(a)(i) and 10.5(a)(ii). The Seller shall maintain, and shall not
take any steps to prospectively or retrospectively cancel, buy-out or remove the
Company or the Subsidiary as additional insureds from any and all insurance
policies providing coverage for all periods prior to Closing with respect to any
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events, occurrences or matters occurring prior to the Closing, including without
limitation the matters referred to in Section 10.5(a)(i) and 10.5(a)(ii)
(subject in each case to the deductibles, limits and other terms and conditions
of such policies).
10.6 Certain Employee Benefits Matters.
(a) 401(k) Plan Transfer. As soon as practicable after the Closing
Date, the Seller shall cause the transfer of (i) the account balances of the
employees of the Company who participate under the ▇▇▇▇▇▇▇▇ Holdings, Inc.
Retirement Savings 401(k) Plan as of the Closing Date (the "Existing 401(k)
Plan") and (ii) assets having a value equal to said account balances to a
profit-sharing plan maintained by the Company or the Buyer which is qualified
under Section 401(a) of the Code and which includes a cash or deferred
arrangement which qualifies under Section 401(k) of the Code (the "Buyer's
401(k) Plan"). The Buyer shall, prior to the Closing, notify the Seller in
writing of the identity of the Buyer's 401(k) Plan and shall cause the Buyer's
401(k) Plan to accept the transfers referred to in the prior sentence. The
assets transferred shall consist of cash or other assets acceptable to the Buyer
and the promissory notes evidencing loans from the Seller's 401(k) Plan to
employees of the Company.
(b) Defined Benefit Plans. On or prior to the Closing Date, the
Seller shall (i) cause the NuTone Inc. Hourly Pension Plan and the NuTone Inc.
Retirement Plan to be amended to provide that the Company is the sole sponsor of
said plans effective as of the Closing Date, (ii) establish separate trusts for
each of said plans and (iii) cause assets to be transferred from the master
trust holding the assets of said plans to said separate trusts equal in value to
the value of the interest of each of said plans in the master trust determined
as of the date of the transfer. The assets transferred shall, to the greatest
extent possible, consist of a pro rata share of the assets of the master trust
currently managed by Nations Gartmore Investment Management provided such assets
are consistent with the investment guidelines in place as of January 31, 1998, a
copy of which has previously been furnished by the Seller to the Buyer.
(c) Harrodsburg Defined Benefit Plan. The Seller shall cause WNA
or another Affiliate of the Seller to remain as the sponsor of the Pension Plan
for Bargaining Unit Employees of the NuTone Inc. ▇▇▇▇ ▇▇▇▇ Harrodsburg, Kentucky
Plant.
(d) Canadian Plans. The Seller shall retain (or cause to be
retained by an Affiliate of the Seller) all responsibility for retirement
benefits accrued prior to January 1, 1998 under any defined benefit plan which
was maintained for the benefit of the Canadian Employees (each, a "▇▇▇▇▇▇▇▇
Canadian Defined Benefit Plan"). Effective January 1, 1998, Affiliates of the
Seller established a defined contribution plan (the "▇▇▇▇▇▇▇▇ Canadian Defined
Contribution Plan") for the benefit of employees of certain Affiliates of the
Seller, including the Canadian Employees, and the Canadian Employees ceased to
accrue benefits under any ▇▇▇▇▇▇▇▇ Canadian Defined Benefit Plan. The Canadian
Employees shall cease to
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accrue benefits under the ▇▇▇▇▇▇▇▇ Canadian Defined Contribution Plan on the
Closing Date. As of the Closing Date, the Buyer shall cause the Subsidiary to
establish and maintain a "pension plan" (within the meaning of the Pension
Benefits Act (Ontario)) for the Canadian Employees as a successor to the
▇▇▇▇▇▇▇▇ Canadian Defined Contribution Plan (the "Buyer's Canadian Plan"). The
Buyer agrees to cause the Buyer's Canadian Plan to accept the transfer from the
▇▇▇▇▇▇▇▇ Canadian Defined Contribution Plan of the account balances of the
Canadian Employees. The Buyer and the Seller agree to take all the steps
necessary to consummate such transfer, including obtaining all necessary
regulatory approvals, as soon as possible after the Closing Date.
(e) Continued Benefits. For a period of one year beginning upon
the Closing Date, the Buyer shall cause the Company and the Subsidiary to
provide to all individuals who are employees of the Company or the Subsidiary on
the Closing Date and who are not members of a bargaining unit subject to a
collective bargaining agreement with the Company, benefits substantially
equivalent in the aggregate to the benefits provided to such employees
immediately prior to the Closing; provided, however, that the Buyer reserves the
right in its sole discretion, to terminate the Company's defined benefit pension
plans.
(f) Executive Team Modified Incentive Scheme. Prior to the
Closing, the Seller shall cause the Company to assume all of the payment
obligations of the Seller or its Affiliates set forth in the agreements dated
October 1997 (as modified in December 1997) with certain of the Company's
executive officers referred to in the Disclosure Schedule (the "Supplemental
Agreements"). The Seller shall reimburse the Company for the cost of (i) the
loyalty payments referred to in the Supplemental Agreements, (ii) the enhanced
performance based bonus payments referred to in the Supplemental Agreements (but
only to the extent such enhanced bonus payments exceed the amount that would
have otherwise been payable under the Company's original bonus plan), and (iii)
the enhanced severance payments referred to in the Supplemental Agreements (but
only to the extent such enhanced severance payments exceed the amount that would
have otherwise been payable if the Supplemental Agreements had never come into
existence), in each case net of any related tax benefit to the Company in
respect of periods after the Closing Balance Sheet Date.
10.7 Post-Closing Covenant Regarding Excluded Properties. If the
Pre-Closing Transactions listed on Attachment 4.4 as Items 1 and 2 have not, for
any reason, been consummated prior to the Closing, the Parties shall cooperate
and use their respective best efforts in order to consummate, in the manner
specified by the Seller and at the Seller's sole cost and expense, such
transactions as promptly as possible after the Closing. Furthermore, until the
Pre-Closing Transactions listed on Attachment 4.4 as Item 1 are consummated,
Seller shall have sole responsibility and authority for fulfillment of any and
all obligations arising from or related to, directly or indirectly, Hazardous
Waste Post-Closure Permit No. KYD ▇▇▇-▇▇▇-▇▇▇, the correlated EPA corrective
action portion of the permit, EPA ID No. KYD ▇▇▇-▇▇▇-▇▇▇, the Agreed Order among
the Kentucky Natural Resources and Environmental Protection Cabinet, the City of
Harrodsburg, Textron, Inc., ▇▇▇▇▇▇▇, Inc., and NuTone Inc.,
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Hallmack Division, dated July 25, 1995, File Nos. DWM 13376-09 and DWM
16282-114, and any environmental liability associated with the Harrodsburg
Facility. To the extent required by law, or for the convenience of the Seller,
Buyer shall provide written notice of the Seller's delegation of authority for
all matters related to the above-referenced permit and Agreed Order at the
request of Seller.
10.8 Foreign Exchange Contracts. The Buyer shall cause the Subsidiary to
fulfill its obligations under the foreign exchange contracts between the
Subsidiary, on the one hand, and the Seller or any of its Affiliates (other than
the Company or the Subsidiary) on the other hand that are either (i) listed on
the Disclosure Schedule or (ii) entered into in the Ordinary Course of Business
after the date as of which information is provided in the Disclosure Schedule
and prior to the Closing.
10.9 Resignations. Effective upon the Closing, the Seller shall cause all
of its own employees, directors and attorneys and all of its Affiliates' (other
than the Company and the Subsidiary) employees, directors and attorneys to
resign from the board of directors of the Company and the Subsidiary and from
all positions as officers of the Company and the Subsidiary.
10.10 Release of Accrued Dividend Obligations. The Seller hereby releases
(and shall cause its Affiliates (other than the Company and the Subsidiary) to
release) the Company of any and all claims which the Seller or such Affiliates
may have on account of any accrued but unpaid dividends existing as of the
Closing with respect to the Company's 8% Series A Cumulative Preferred Stock or
10% Series B Cumulative Preferred Non-Voting Stock.
10.11 Further Assurances. At any time and from time to time after the
Closing, as and when requested by either Party hereto and at such Party's
expense, the other Party shall promptly execute and deliver, or cause to be
executed and delivered, all such documents and instruments and shall take, or
cause to be taken, all such further or other actions as such other party may
reasonably deem necessary or desirable to evidence and effectuate the
transactions contemplated by this Agreement.
ARTICLE XI
GUARANTEES
11.1 ▇▇▇▇▇▇▇▇' Guarantee. ▇▇▇▇▇▇▇▇ hereby unconditionally guarantees the
due and punctual payment and performance of all of the Seller's obligations set
forth in this Agreement. This guaranty is an irrevocable guaranty of payment
(and not just of collection) and shall continue in effect notwithstanding any
extension or modification of the terms of this Agreement, any assumption of any
such guaranteed obligation by any other party or any other act or event that
might otherwise operate as a legal or equitable discharge of ▇▇▇▇▇▇▇▇
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under this Section 11.1. This guarantee is in no way conditioned upon any
requirement that the Buyer first attempt to collect or enforce any guaranteed
obligation from or against the Seller. So long as any obligation of the Seller
to the Buyer under this Agreement remains unpaid or undischarged, ▇▇▇▇▇▇▇▇
hereby waives (but only with respect to the Buyer and its Affiliates and not as
to any other parties) all rights to subrogation arising out of any payment by
▇▇▇▇▇▇▇▇ under this Section 11.1.
The obligations of ▇▇▇▇▇▇▇▇ hereunder shall be absolute and unconditional
irrespective of the validity, legality or enforceability of this Agreement or
any other document related hereto, and shall not be affected by or contingent
upon (i) the liquidation or dissolution of, or the merger or consolidation of
the Seller with or into any corporation, or any sale or transfer by the Seller
or all or any part of its property or assets, (ii) the bankruptcy, receivership,
insolvency, reorganization or similar proceedings involving or affecting the
Seller, (iii) any modification, alteration, amendment or addition of or to this
Agreement, or (iv) any disability or any other defense of the Seller or any
other person and any other circumstance whatsoever (with or without notice to or
knowledge of ▇▇▇▇▇▇▇▇) which may or might in any manner or to any extent vary
the risks of ▇▇▇▇▇▇▇▇ or might otherwise constitute a legal or equitable
discharge of a surety or a guarantor or otherwise.
▇▇▇▇▇▇▇▇ hereby waives all special suretyship defenses and protest, notice
of protest, demand for performance, diligence, notice of any other action at any
time taken or omitted by the Buyer and, generally, all demands and notices of
every kind in connection with this Section 11.1 and the Seller's obligations
hereby guaranteed, and which ▇▇▇▇▇▇▇▇ may otherwise assert against the Buyer.
This Section 11.1 shall continue to be effective or shall be reinstated,
as the case may be, if at any time payment or performance of any of the
obligations of the Seller under this Agreement is rescinded or must otherwise be
restored or returned by the Buyer upon the insolvency, bankruptcy or
reorganization of the Seller or otherwise.
▇▇▇▇▇▇▇▇ acknowledges that each of the waivers set forth above is made
with full knowledge of its significance and consequences and under the
circumstances the waivers are reasonable and not contrary to public policy. If
any of said waivers is determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the extent permitted by law.
11.2 Buyer's Parent Guarantee. Buyer's Parent hereby unconditionally
guarantees the due and punctual payment and performance of all of the Buyer's
obligations set forth in this Agreement. This guaranty is an irrevocable
guaranty of payment (and not just of collection) and shall continue in effect
notwithstanding any extension or modification of the terms of this Agreement,
any assumption of any such guaranteed obligation by any other party or any other
act or event that might otherwise operate as a legal or equitable discharge of
Buyer's Parent under this Section 11.2. This guarantee is in no way conditioned
upon any
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requirement that the Seller first attempt to collect or enforce any guaranteed
obligation from or against the Buyer. So long as any obligation of the Buyer to
the Seller under this Agreement remains unpaid or undischarged, Buyer's Parent
hereby waives (but only with respect to the Seller and its Affiliates and not as
to any other parties) all rights to subrogation arising out of any payment by
Buyer's Parent under this Section 11.2.
The obligations of Buyer's Parent hereunder shall be absolute and
unconditional irrespective of the validity, legality or enforceability of this
Agreement or any other document related hereto, and shall not be affected by or
contingent upon (i) the liquidation or dissolution of, or the merger or
consolidation of the Buyer with or into any corporation, or any sale or transfer
by the Buyer or all or any part of its property or assets, (ii) the bankruptcy,
receivership, insolvency, reorganization or similar proceedings involving or
affecting the Buyer, (iii) any modification, alteration, amendment or addition
of or to this Agreement, or (iv) any disability or any other defense of the
Buyer or any other person and any other circumstance whatsoever (with or without
notice to or knowledge of Buyer's Parent) which may or might in any manner or to
any extent vary the risks of Buyer's Parent or might otherwise constitute a
legal or equitable discharge of a surety or a guarantor or otherwise.
Buyer's Parent hereby waives all special suretyship defenses and protest,
notice of protest, demand for performance, diligence, notice of any other action
at any time taken or omitted by the Seller and, generally, all demands and
notices of every kind in connection with this Section 11.2 and the Buyer's
obligations hereby guaranteed, and which Buyer's Parent may otherwise assert
against the Seller.
This Section 11.2 shall continue to be effective or shall be reinstated,
as the case may be, if at any time payment or performance of any of the
obligations of the Buyer under this Agreement is rescinded or must otherwise be
restored or returned by the Seller upon the insolvency, bankruptcy or
reorganization of the Buyer or otherwise.
Buyer's Parent acknowledges that each of the waivers set forth above is
made with full knowledge of its significance and consequences and under the
circumstances the waivers are reasonable and not contrary to public policy. If
any of said waivers is determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the extent permitted by law.
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ARTICLE XII
MISCELLANEOUS
12.1 Press Releases and Announcements. Neither Party shall issue (and
each party shall cause its Affiliates not to issue) any press release or public
disclosure relating to the subject matter of this Agreement without the prior
written approval of the other Party; provided, however, that either Party may
make any public disclosure it believes in good faith is required by law,
regulation or exchange rule (in which case the disclosing Party shall advise the
other Party and the other Party shall have the right to review such press
release or announcement prior to its publication).
12.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns and, to the extent specified herein, their
respective Affiliates; provided, however, that the provisions of Article VI,
Article VIII and Section 10.2 are intended for the benefit of the entities and
individuals specified therein and their respective legal representatives,
successors and assigns.
12.3 Action to be Taken by Affiliates. Each of the Parties shall cause
its Affiliates to comply with any of the obligations specified in this Agreement
to be performed by such Affiliates. Prior to the Closing, the Company and the
Subsidiary will be deemed to be Affiliates of the Seller and not of the Buyer.
Following the Closing, the Company and the Subsidiary will be deemed to be
Affiliates of the Buyer and not of the Seller.
12.4 Entire Agreement. This Agreement (including the documents referred
to herein) and the Confidentiality Agreement constitute the entire agreement
between the Buyer and its Affiliates, on the one hand, and the Seller and its
Affiliates, on the other. This Agreement supersedes any prior understandings,
agreements, or representations by or between the Buyer and its Affiliates, on
the one hand, and the Seller and its Affiliates, on the other, whether written
or oral, with respect to the subject matter hereof (other than the
Confidentiality Agreement).
12.5 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Neither Party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
12.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
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12.7 Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
12.8 Notices. All notices, requests, demands, claims, and other
communications hereunder shall be in writing. Except as otherwise provided in
Sections 7.1(c), 7.1(d), 7.1(e) and 7.1(f), any notice, request, demand, claim,
or other communication hereunder shall be deemed duly delivered one business day
after it is sent by (i) a reputable courier service guaranteeing delivery within
one business day or (ii) telecopy, provided electronic confirmation of
successful transmission is received by the sending Party and a confirmation copy
is sent on the same day as the telecopy transmission by certified mail, return
receipt requested, in each case to the intended recipient as set forth below:
If to the Seller
or ▇▇▇▇▇▇▇▇: ▇▇▇▇▇▇▇▇ Y&N Holdings, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: 617-526-5000
If to the Buyer
or the Buyer's Parent: NTK Sub, Inc.
c/o Nortek, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Copy to: Ropes & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
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Either Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the Party for whom
it is intended. Either Party may change the address to which notices, requests,
demands, claims, and other communications hereunder are to be delivered by
giving the other Party notice in the manner herein set forth.
12.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the Commonwealth of Massachusetts without
giving effect to any choice or conflict of law provision or rule (whether of the
Commonwealth of Massachusetts or any other jurisdiction) that would cause the
application of laws of any jurisdiction other than those of the Commonwealth of
Massachusetts.
12.10 Amendments and Waivers. The Parties may mutually amend or waive any
provision of this Agreement at any time. No amendment or waiver of any provision
of this Agreement shall be valid unless the same shall be in writing and signed
by both Parties. No amendment or waiver of Section 11.1 shall be valid unless
the same is also signed by ▇▇▇▇▇▇▇▇. No amendment or waiver of Section 11.2
shall be valid unless the same is also signed by Buyer's Parent. No waiver by
either Party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any
prior or subsequent such occurrence.
12.11 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed.
12.12 Expenses. Except as otherwise specifically provided to the contrary
in this Agreement, each of the Parties shall bear its own costs and expenses
(including legal fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
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12.13 Specific Performance. Each of the Parties acknowledges and agrees
that the other Party would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Party shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter.
12.14 Submission to Jurisdiction. Each of the Parties, ▇▇▇▇▇▇▇▇ and the
Buyer's Parent (a) submits to the jurisdiction of any state or federal court
sitting in the Commonwealth of Massachusetts in any action or proceeding arising
out of or relating to this Agreement, (b) agrees that all claims in respect of
the action or proceeding may be heard and determined in any such court, and (c)
agrees not to bring any action or proceeding arising out of or relating to this
Agreement in any other court. Each of the Parties, ▇▇▇▇▇▇▇▇ and the Buyer's
Parent waives any defense of inconvenient forum to the maintenance of any action
or proceeding so brought and any defense of improper venue. Each of the Parties,
▇▇▇▇▇▇▇▇ and the Buyer's Parent may make service on the other Party, ▇▇▇▇▇▇▇▇
and the Buyer's Parent by sending or delivering a copy of the process to the
entity to be served at the address and in the manner provided for the giving of
notices in Section 12.8. Nothing in this Section 12.14, however, shall affect
the right of either Party, ▇▇▇▇▇▇▇▇ or the Buyer's Parent to serve legal process
in any other manner permitted by law.
12.15 Construction. The language used in this Agreement shall be deemed to
be the language chosen by the Parties hereto to express their mutual intent, and
no rule of strict construction shall be applied against either Party. Any
reference to any federal, state, local, or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise.
12.16 Incorporation of Exhibits, Schedules and Attachments. The Exhibits,
Schedules and Attachments identified in this Agreement are incorporated herein
by reference and made a part hereof.
12.17 Facsimile Signature. This Agreement may be executed by facsimile
signature.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of
the date first above written.
▇▇▇▇▇▇▇▇ Y&N HOLDINGS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Associate Director of
Corporate Finance
-----------------------------
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NTK SUB, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
The undersigned has executed this Agreement solely for the purpose of
becoming bound by Sections 11.1 and Article XII.
▇▇▇▇▇▇▇▇ PLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------
Title: Associate Director of
Corporate Finance
-----------------------------
The undersigned has executed this Agreement solely for the purpose of
becoming bound by Sections 11.2 and Article XII.
NORTEK, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
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EXHIBITS, SCHEDULE AND ATTACHMENTS TO STOCK PURCHASE AND
SALE AGREEMENT
DATED MARCH 9, 1998
BETWEEN
▇▇▇▇▇▇▇▇ Y&N HOLDINGS, INC. AND NTK SUB, INC.
OMITTED ARE AS FOLLOWS:
EXHIBITS:
Exhibit A -- Opinion of Counsel to the Seller
Exhibit B -- Opinion of Counsel to the Buyer
SCHEDULE
Disclosure Schedule
ATTACHMENTS
Attachment 1.4(a) -- Principles for Determination of Closing Balance Sheet
Attachment 4.4 -- Pre-Closing Transactions
Attachment 4.6 -- Buyer Personnel
Attachment 6.1(i) -- Certain Benefits Matters
Attachment 7.2 -- Irrevocable Letter of Credit
Attachment 10.4(e) Certain Items Reflected in the Purchase Price
Pursuant to Section 601(b)(2) of the Regulation S-K, the exhibits,
schedule and attachments listed above have been omitted and registrant agrees to
furnish supplementally a copy of any such exhibit, schedule or attachment to the
Commission on request.
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