EXHIBIT 4.8
STOCK PURCHASE AGREEMENT
DATED NOVEMBER 9, 2000
BETWEEN
ECOLAB INC.
AND
ENODIS CORPORATION
TABLE OF CONTENTS
1 PURCHASE AND SALE OF SHARES AND PURCHASE PRICE ......................... 1
1.1 Purchase and Sale of Shares ....................................... 1
1.2 Purchase Price .................................................... 1
1.3 Purchase Price Adjustment ......................................... 1
1.4 Closing ........................................................... 3
2 REPRESENTATIONS AND WARRANTIES OF SELLER ............................... 4
2.1 Disclosure Schedule ............................................... 4
2.2 Corporate Organization ............................................ 5
2.3 Capital Stock; Options; Warrants .................................. 5
2.4 Authorization ..................................................... 5
2.5 Non-Contravention ................................................. 5
2.6 Consents and Approvals ............................................ 6
2.7 Absence of Certain Changes ........................................ 6
2.8 Real Property ..................................................... 7
2.9 Machinery, Equipment, Vehicles and Personal Property .............. 7
2.10 Inventories ....................................................... 8
2.11 Trade Accounts Receivable, Notes Receivable and Payables .......... 8
2.12 Intellectual Property Rights ...................................... 8
2.13 Litigation ........................................................ 8
2.14 Tax Matters ....................................................... 8
2.15 Contracts and Commitments; No Default ............................. 9
2.16 Orders and Commitments ............................................ 10
2.17 Labor Matters ..................................................... 10
2.18 Permits and Other Operating Rights ................................ 10
2.19 Compliance with Law ............................................... 10
2.20 Environmental Matters ............................................. 10
2.21 Benefit Plans ..................................................... 12
2.22 Limited (Unaudited) Financial Information ......................... 13
2.23 Product Liability Claims .......................................... 13
2.24 Warranties ........................................................ 14
2.25 Brokers ........................................................... 14
2.26 Bank Accounts ..................................................... 14
2.27 Miscellaneous ..................................................... 14
2.28 Requirements ...................................................... 14
3 REPRESENTATIONS AND WARRANTIES OF PURCHASER ............................ 14
3.1 Corporate Organization ............................................ 14
3.2 Authorization ..................................................... 14
3.3 Non-Contravention ................................................. 14
3.4 Consents and Approvals ............................................ 15
3.5 Brokers ........................................................... 15
4 COVENANTS .............................................................. 15
4.1 Confidentiality ................................................... 15
4.2 Public Announcement ............................................... 16
4.3 Employee Matters .................................................. 16
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4.4 Tax Matters ....................................................... 16
4.5 Non-competition ................................................... 17
4.6 Execution of Ancillary Agreements; Further Assurances;
Notification .................................................... 18
4.7 No Intercompany Debt .............................................. 18
4.8 Sufficient Funds .................................................. 18
4.9 Headquarters ...................................................... 18
4.10 Insurance Claims .................................................. 18
5 SURVIVAL AND INDEMNIFICATION ........................................... 19
5.1 Survival of Representations, Warranties and Covenants ............. 19
5.2 Indemnification by Purchaser ...................................... 19
5.3 Indemnification by Seller ......................................... 19
5.4 Claims for Indemnification ........................................ 19
6 MISCELLANEOUS PROVISIONS ............................................... 21
6.1 Expenses .......................................................... 21
6.2 Amendment and Modification ........................................ 21
6.3 Waiver of Compliance; Consents .................................... 21
6.4 No Third Party Beneficiaries ...................................... 21
6.5 Notices ........................................................... 21
6.6 Assignment ........................................................ 22
6.7 Governing Law ..................................................... 22
6.8 Counterparts; Facsimile ........................................... 22
6.9 Headings .......................................................... 22
6.10 Entire Agreement .................................................. 22
6.11 "Mediatable Claims" Definition .................................... 23
6.12 Mediation ......................................................... 23
6.13 Waiver of Jury Trial .............................................. 23
6.14 Definition of "Including" ......................................... 23
6.15 Definition of Knowledge ........................................... 23
6.16 List of Other Defined Terms ....................................... 23
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated November 9, 2000 (the
"Agreement"), is by and between Ecolab Inc., a Delaware corporation ("Seller"),
and Enodis Corporation, formerly known as Welbilt Corporation, a Delaware
corporation ("Purchaser").
RECITALS
▇. ▇▇▇▇▇▇▇ MSC Inc., a Delaware corporation and wholly-owned subsidiary
of Seller (the "Company") is engaged in the business of manufacturing commercial
dishmachines (the "Acquired Business").
B. This Agreement sets forth the terms and conditions upon which Seller
will sell to Purchaser, and Purchaser will purchase from Seller, all of the
issued and outstanding shares of common stock, no par value per share (the
"Shares") of the Company.
In consideration of the representations, warranties, covenants and
agreements contained herein, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
SECTION 1
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1. Purchase and Sale of SHARES AND PURCHASE PRICE.
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1.1. Purchase and Sale of Shares. Subject to the terms and conditions
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of this Agreement, at the closing of the transactions contemplated hereby (the
"Closing"), on the Closing Date (as defined below), Seller shall sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser shall purchase from
Seller, free and clear of any lien, pledge, option, security interest, mortgage
or other restriction or encumbrance ("Encumbrances"), all of the Shares.
1.2. Purchase Price. Subject to the terms and conditions of this
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Agreement and in consideration of the sale, assignment, transfer and delivery of
the Shares, Purchaser will pay, by wire transfer in immediately available funds
to a bank account designated by Seller, to Seller at Closing a total Purchase
Price of Thirty-Five Million Dollars ($35,000,000) (the "Purchase Price"),
subject to the adjustments, if any, subsequent to Closing pursuant to Section
1.3 hereof.
1.3. Purchase Price Adjustment.
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(a) As soon as practicable, but in no event later than seventy-five
(75) days following the Closing Date, Seller shall deliver to the Purchaser an
audited balance sheet (in the format of a Statement of Net Assets Sold,
consistent with the format of the Most Recent Balance Sheet, as defined below)
of the Company (including the notes thereto) as of the close of business on the
Closing Date prepared in accordance with United States Generally Accepted
Accounting Principles ("GAAP") applied consistently with the September 30, 2000
balance sheet of the Company (the "Most Recent Balance Sheet") and in accordance
with Exhibit 1.3(a) hereto. Such balance sheet shall be prepared from the
Company's books and records and be accompanied by a report from Seller's
auditor, PricewaterhouseCoopers, LLP, or such other independent certified public
accounting firm as Purchaser and Seller shall select (the "Auditor"), based upon
their audit of such balance sheet stating that such balance sheet (the "Closing
Balance Sheet") presents fairly, in all material respects, the financial
condition of the Company at the
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Closing Date in conformity with GAAP and this Agreement. The Company took a
physical count of its inventory on or about September 29, 2000, observed by the
Auditor and Purchaser's representatives. The Closing Balance Sheet shall utilize
the results of such inventory, rolled forward (which inventory shall also be
reflected in accordance with Exhibit 1.3(a) hereto) to the Closing Date. Seller
and the Auditor shall have reasonable access to the relevant books and records
of the Company to the extent required to prepare, complete and audit the Closing
Balance Sheet. Seller shall be responsible for the fees and expenses incurred in
connection with the preparation and audit of the Closing Balance Sheet.
(b) After receipt of the Closing Balance Sheet, Purchaser shall have
thirty (30) days to review it. Purchaser and its representatives shall have
reasonable access to the relevant books and records of the Company and the
Auditor's work papers to the extent required to complete its review of the
Closing Balance Sheet; provided that Purchaser and its representatives shall
execute documentation, in the form of Exhibit 1.3(b) hereto, regarding the
Auditor's engagement solely by and report solely to Seller as well as such
access, and Purchaser and its representatives shall comply therewith. Seller
shall make its representatives, and shall use its best efforts to make the
Auditor, available to answer reasonable questions Purchaser may have concerning
its review of the Closing Balance Sheet. Unless Purchaser delivers written
notice of objection to Seller on or prior to the 30th day after receipt of the
Closing Balance Sheet specifying in reasonable detail all disputed items on the
tendered Closing Balance Sheet and the basis therefor, the parties shall be
deemed to have accepted and agreed to the Closing Balance Sheet. If Purchaser so
notifies Seller of an objection to the Closing Balance Sheet, the parties shall
attempt to resolve their differences within thirty (30) days following the date
of such notice (the "Resolution Period") and any resolution by them as to any
disputed amount shall be final, binding, conclusive and nonappealable and shall
preclude Purchaser and Seller from making any claims with respect to such
disputed items under Section 5 hereof.
(c) If at the conclusion of the Resolution Period the parties have not
reached an agreement on the objections, then all amounts remaining in dispute
may, at the election of either party, be submitted to the Chicago office of a
mutually acceptable independent auditor (the "Neutral Auditor"). Each party
agrees to execute, if requested by the Neutral Auditor, a reasonable engagement
letter. All fees and expenses relating to the work, if any, to be performed by
the Neutral Auditor shall be borne equally by Seller and Purchaser. Except as
provided in the preceding sentence, all other costs and expenses incurred by the
parties in connection with resolving any dispute hereunder before the Neutral
Auditor shall be borne by the party incurring such cost and expense. The Neutral
Auditor shall act as an arbitrator to determine, based solely on the
presentations by Seller and Purchaser, and not by independent review, only those
issues still in dispute. The Neutral Auditor's determination shall be made
within thirty (30) days of its engagement (which engagement shall be made no
later than three (3) business days after an election by either party to submit
the objections to the Neutral Auditor) or as soon thereafter as possible, shall
be set forth in a written statement delivered to Seller and Purchaser and shall
be final, binding, conclusive and nonappealable and shall preclude Purchaser and
Seller from making any claims with respect to such disputed items under Section
5 hereof. The term "Final Closing Balance Sheet," as hereinafter used, shall
mean the definitive Closing Balance Sheet agreed to by Seller and Purchaser in
accordance with Section 1.3(b) or the definitive Closing Balance Sheet resulting
from the determination made by the Neutral Auditor in accordance with this
Section 1.3(c) (in addition to those items theretofore agreed to by Seller and
Purchaser).
(d) The Purchase Price for the Shares shall be: (i) increased dollar for
dollar to the extent the shareholders' equity of the Company (defined as total
assets less total liabilities) as reflected on the Final Closing Balance Sheet
is greater than $8,925,000 (the "Target Equity"); and (ii) decreased dollar for
dollar to the extent the shareholders' equity of the Company as reflected on the
Final Closing Balance Sheet is less than the Target Equity amount. The amount of
any decrease to the Purchase Price pursuant
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to this Section 1.3, plus interest on the amount from the Closing Date
calculated at the prime rate of interest in effect on the Closing Date as stated
in the "Money Rates" section of the Wall Street Journal (the "Prime Rate"),
shall be paid by wire transfer in immediately available funds by Seller to the
account specified by Purchaser within five (5) business days after the Final
Closing Balance Sheet is agreed to by Seller and Purchaser or is determined by
the Neutral Auditor. The amount of any increase to the Purchase Price pursuant
to this Section 1.3, plus interest on the amount from the Closing Date
calculated at the Prime Rate, shall be paid by wire transfer in immediately
available funds by Purchaser to the account specified by Seller within five (5)
business days after the Final Closing Balance Sheet is agreed to by Seller and
Purchaser or is determined by the Neutral Auditor.
1.4. Closing.
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(a) The closing shall take place at the offices of Seller on the date
hereof or such other date or place as the parties may agree (the "Closing
Date"), and shall be deemed to be effective as of 11:59 p.m. on the Closing
Date.
(b) At the Closing (or at such earlier time as may be specified in this
Agreement), Seller will deliver to Purchaser the following documents:
(i) Stock certificate(s) with respect to the Shares accompanied by
duly executed stock power(s), endorsed in blank;
(ii) [Intentionally Omitted];
(iii) Certificate of Good Standing of Seller and the Company,
issued by the Secretary of State of the State of Delaware, and of the Company
issued by the Secretary of State of the State of Delaware dated within seven (7)
days of Closing;
(iv) Certified copies of resolutions duly adopted by the Board of
Directors of Seller, and of the sole shareholder of the Company, authorizing the
execution, delivery and performance of this Agreement and all other documents
being entered into by Seller related to, or arising from, this Agreement;
(v) Opinion of the General Counsel of Seller, in the form attached
hereto as Exhibit 1.4(b)(v);
(vi) The Warewashing Equipment Supply Agreement among Purchaser,
Seller and the Company being executed concurrently herewith;
(vii) The Authorized Servicer/Parts Distributor Agreement among GCS
Services, Inc., Ecolab and Purchaser being executed concurrently herewith;
(viii) The Prototyping and Design Agreement for Special Projects
between Seller and the Company being executed concurrently herewith;
(ix) The Stay-Pay Agreement among the Company, Purchaser and ▇▇▇▇▇
▇▇▇▇▇▇ being executed concurrently herewith;
(x) An executed original of the assignment in recordable form
transferring to the Company certain patents;
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(xi) An executed original of a sublease, between Seller and the
Company, relating to certain space in Seller's headquarters in St. ▇▇▇▇,
Minnesota;
(xii) Executed original affidavits customarily utilized by First
American Title Insurance Company;
(xiii) An affidavit complying with (S)1445(b) of the Code,
evidencing that this transaction is exempt from the withholding tax requirement
of (S)1445(a) of the Code, in the form attached hereto as Exhibit 1.4(b)(viii);
(xiv) The minute books and stock transfer books of the Company; and
(xv) Resignations, effective as of the Closing Date, of all
directors and officers of the Company.
The agreements and transaction documents referred to in Section 1.4(b) shall be
referred to collectively as "Ancillary Agreements."
(c) At the Closing (or at such earlier time as may be specified in this
Agreement), Purchaser will deliver to Seller the following:
(i) The Purchase Price in immediately available funds by wire
transfer as directed by Seller;
(ii) [Intentionally Omitted];
(iii) Certified resolutions of the Board of Directors of Purchaser
authorizing the execution, delivery and performance of this Agreement and all
other documents being entered into by the Purchaser related to, or arising from,
this Agreement;
(iv) Certificate of Good Standing of Purchaser, issued by the
Secretary of State of the State of Delaware, dated within seven (7) days of
Closing;
(v) Opinion of counsel for Purchaser, Shack & ▇▇▇▇▇▇, P.C., in the
form attached hereto as Exhibit 1.4(c)(v); and
(vi) All other documents required to be delivered by Purchaser in
connection with the transactions contemplated hereby, including the counterpart
signature pages of the documents referred to in Section 1.4(b) to which
Purchaser or any of its affiliates is a party.
SECTION 2
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2. Representations and Warranties of Seller.
-----------------------------------------
Seller hereby represents and warrants to Purchaser as follows:
2.1. Disclosure Schedule. Seller's Disclosure Schedule being delivered
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to Purchaser in connection with this Agreement lists exceptions to the
representations and warranties (the "Disclosure Schedule").
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2.2. Corporate Organization. The Company is a corporation duly
----------------------
organized, validly existing and in good standing under the laws of the State of
Delaware, has full power and authority to carry on its business as it is now
being conducted and to own, lease and operate its properties and assets, is duly
qualified or licensed to do business as a foreign corporation in good standing
in every other jurisdiction in which the character or location of the properties
and assets owned, leased or operated by it or the conduct of its business
requires such qualification or licensing, except in such jurisdictions in which
the failure to be so qualified or licensed and in good standing would not have a
Material Adverse Effect on the Company. A "Material Adverse Effect" shall mean
an individual or cumulative adverse change in or effect on the business,
operations, properties, working capital, financial condition, assets or
liabilities of the company taken as a whole or which is reasonably expected to
be materially adverse to the company, its business, operations, properties,
working capital, financial condition, assets or liabilities of the company taken
as a whole. The Disclosure Schedule contains a list of all jurisdictions in
which the Company is qualified or licensed to do business. The Company has no
subsidiaries. Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, has full power and
authority to carry on its business as now conducted and to own, lease and
operate its properties and assets.
2.3. Capital Stock; Options; Warrants. The authorized capital stock of
--------------------------------
the Company and the shares of capital stock of the Company issued and
outstanding, of all classes, are as set forth in the Disclosure Schedule. The
Shares represent all of the issued and outstanding common stock of the Company.
Seller owns all the Shares of the Company, free and clear of all Encumbrances
except as set forth in the Disclosure Schedule. All of the Shares are validly
issued, fully paid and nonassessable and are without, and were not issued in
violation of, preemptive rights. Upon the consummation of the transactions
contemplated hereby, Purchaser will acquire good and marketable title to the
Shares, free and clear of all Encumbrances, subject to any Encumbrances created
by Purchaser. There are no issued and outstanding options, warrants, conversion
privileges, securities or contracts by which the Company is bound to issue any
additional shares of its capital stock, equity securities or options or warrants
to purchase shares of its capital stock or any securities convertible into or
exchangeable for such shares, or securities. There are no outstanding or
authorized stock appreciation, phantom stock or similar rights or agreements
with respect to the Company.
2.4. Authorization. Seller has full power and authority to enter into
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this Agreement and the Ancillary Agreements to which it is a party and to carry
out the transactions contemplated herein and therein. The Board of Directors of
Seller and the sole shareholder of the Company have taken all action required by
law and the Seller's and the Company's Certificate of Incorporation and Bylaws
to authorize the execution, delivery and performance of this Agreement and the
Ancillary Agreements to which it is a party and the consummation of the
transactions contemplated herein and therein. This Agreement and any Ancillary
Agreement to which Seller is a party have been duly and validly executed by
Seller and no other corporate action is required. This Agreement and the
Ancillary Agreements to which it is a party are the valid and binding legal
obligation of Seller enforceable against Seller in accordance with their terms,
subject to (a) bankruptcy, reorganization, moratorium, fraudulent conveyance or
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally and (b) general principles of equity (regardless of whether
enforceability is considered in proceeding in equity or at law).
2.5. Non-Contravention. Except as set forth in the Disclosure Schedule,
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neither the execution, delivery and performance of this Agreement or any
Ancillary Agreement nor the consummation of the transactions contemplated herein
or therein will: (a) violate or be in conflict with any provision of the
Certificate of Incorporation or Bylaws of Seller or the Company; or (b) be in
conflict with, or constitute a default under, or cause or permit the
acceleration of the maturity of, or give rise to
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any right of termination, cancellation, imposition of fees or penalties under
(i) any debt, note, bond, lease, mortgage, indenture, contract or other
agreement to which Seller is a party or by which its properties or assets is
bound or result in the creation or imposition of any Encumbrance upon any
property or assets of Seller under any debt, note, bond, lease, mortgage,
indenture, contract or other agreement to which Seller is a party or by which
Seller or any of its assets or properties is bound, or (ii) any debt, note,
bond, lease, mortgage, indenture, contract or other agreement to which the
Company is a party or by which its properties or assets is bound or result in
the creation or imposition of any Encumbrance upon any property or assets of the
Company under any debt, note, bond, lease, mortgage, indenture, contract or
other agreement to which the Company is a party or by which the Company or any
of its assets or properties is bound; or (c) violate any statute, law, judgment,
writ, injunction, decree, order, regulation, ordinance or other similar
authoritative matter (sometimes hereinafter separately referred to as a "Law"
and sometimes collectively as "Laws") of any federal, state or local
governmental, administrative, regulatory or judicial court, department,
commission, agency, board, bureau, instrumentality or other authority
(hereinafter sometimes separately referred to as an "Authority" and sometimes
collectively as "Authorities").
2.6. Consents and Approvals. Except (a) for filings pursuant to the
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▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and (b) as set forth in the Disclosure Schedule, with respect to the Company, no
consent, permit, approval, order or authorization of or from, or registration,
notification, declaration or filing with (hereinafter sometimes separately
referred to as a "Consent" and sometimes collectively as "Consents"), any
individual or entity, including any Authority, is required in connection with
the execution, delivery or performance of this Agreement or any Ancillary
Agreement to which Seller is a party by Seller or the consummation by Seller of
the transactions contemplated herein or therein.
2.7. Absence of Certain Changes. Except as set forth in the Disclosure
--------------------------
Schedule, since September 30, 2000, the Company has operated only in the
ordinary course of business and consistent with past practice. Without limiting
the generality of the foregoing, since September 30, 2000 the Company has not:
(a) suffered any Material Adverse Effect;
(b) incurred any material damage, destruction or similar casualty loss
to any of its tangible assets, whether or not covered by insurance, having an
adverse effect on the business, assets or properties of the Company;
(c) effected any change in the accounting practices, procedures or
methods of the Company;
(d) amended the Certificate of Incorporation or Bylaws of the Company;
(e) entered into any transaction other than in the ordinary course of
business and consistent with past practice;
(f) permitted or allowed any of its property or assets (real, personal
or mixed, tangible or intangible) to be subjected to any Encumbrance, except for
liens for current taxes not yet due and as set forth in the Disclosure Schedule;
(g) written down the value of any inventory (including write-downs by
reason of shrinkage or ▇▇▇▇-down) or written off as uncollectible any notes or
accounts receivable, except (i) for immaterial
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write-downs and write-offs in the ordinary course of business and consistent
with past practice, and (ii) as may be contemplated by Exhibit 1.3(a);
(h) canceled any material debts or waived any claims or rights of
substantial value;
(i) sold, transferred, or otherwise disposed of any of its properties
or assets (real, personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past practice;
(j) disposed of or permitted to lapse any rights to the use of any
patent, trademark, trade name or copyright, or disposed of or disclosed (except
as necessary in the conduct of its business) to any person or entity other than
representatives of Purchaser any trade secrets, process or know-how not
theretofore a matter of public knowledge;
(k) granted any general increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension, profit
sharing or other plan or commitment) or any increase in the compensation payable
or to become payable to any officers or employee, except for standard raises in
customary amounts and at customary times consistent with past practice;
(l) made any capital expenditure or commitment for additions to
property, plant, equipment or intangible capital assets in excess of $50,000;
(m) paid, loaned or advanced any amount to, or sold, transferred or
leased any properties or assets (real, personal or mixed, tangible or
intangible) to, or entered into any agreement or arrangement with, any of its
officers, directors or shareholders or any affiliate or associate of any of its
officers, directors or shareholders; or
(n) agreed to take any action described in this Section 2.7.
2.8. Real Property. Set forth in the Disclosure Schedule is an
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identification of all real property owned or leased by the Company during the
past four years. The Company owns such real property or leasehold interest
therein, free of any Encumbrance except as set forth on the Disclosure Schedule.
All real properties owned or leased by the Company are, to Seller's Knowledge,
free from any structural defects, in good operating condition and repair normal
wear and tear excepted. Each such parcel of real property and its present use
conform in all material respects to all occupational, safety or health, zoning,
planning, subdivision, platting and similar Laws. All public utilities necessary
for the use and operation of any facilities on the aforesaid real properties as
the Acquired Business is presently conducted are currently available for use or
access at such properties and there is no legal or physical impairment to free
ingress or egress from any such facilities or real properties.
2.9. Machinery, Equipment, Vehicles and Personal Property. Except as
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set forth in the Disclosure Schedule, the Company has good title to, or a
leasehold interest in and to, all its machinery, equipment, vehicles and other
tangible personal property reflected on the Final Closing Balance Sheet, free of
any Encumbrances. Except as set forth in the Disclosure Schedule, such
machinery, equipment, vehicles and other personal property are, to Seller's
Knowledge, in good operating condition and repair, ordinary wear and tear
excepted. All such machinery, equipment, vehicles and other tangible personal
property is transferred hereby on an "as is" basis, with no other
representations or warranties of any kind, except as set forth in this Section
2.9, express, implied, statutory or otherwise, including any warranty of fitness
for a particular purpose. Except as set forth in the Disclosure Schedule, all
such machinery, equipment, vehicles and other tangible personal property owned
or leased by the Company is located in
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Barbourville, Kentucky or the space utilized by the Company at Seller's St.
▇▇▇▇, Minnesota corporate headquarters. Subject to the foregoing and any acts of
Purchaser, the Company's fixed tangible assets will be sufficient as of the
Closing Date to permit the Company to continue manufacturing as it did prior to
the Closing Date.
2.10. Inventories. Except as set forth in the Disclosure Schedule, the
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inventories of the Company consist of finished goods, work in process, raw and
packaging materials and spare and replacement parts which (a) do not, to
Seller's Knowledge, infringe any third party patent, trademark or service ▇▇▇▇
rights, and (b) are usable or saleable in the ordinary course of business.
2.11. Trade Accounts Receivable, Notes Receivable and Payables. Except
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as set forth in the Disclosure Schedule:
(a) (i) The Company has good title to its trade accounts receivable and
notes receivable reflected on the Most Recent Balance Sheet and will have good
title to those which will be reflected on the Closing Balance Sheet; (ii) none
of such trade accounts receivable and notes receivable is subject to any
Encumbrance; (iii) all of the trade accounts receivable and notes receivable
owing to the Company constitute valid and enforceable claims arising from bona
fide transactions in the ordinary course of business, and there are no
Encumbrances, to Seller's Knowledge, including any claims, refusals to pay or
other rights of set-off, against any thereof; and (iv) no account or note debtor
is delinquent in payment by more than one hundred twenty (120) days;
(b) All accounts payable and notes payable by the Company arose in bona
fide transactions in the ordinary course of business and no such account payable
or note payable is delinquent by more than one hundred twenty (120) days in its
payment.
2.12. Intellectual Property Rights.
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(a) The Company owns or has rights to use the intellectual property
rights, including the copyrights, patent rights, technology and trademarks
(collectively, "Intellectual Property Rights") described on the Disclosure
Schedule. Except as set forth in the Disclosure Schedule, the use of the
Intellectual Property Rights does not, to Seller's Knowledge, infringe the
intellectual property rights of any person or entity. Except as set forth in the
Disclosure Schedule, the Company does not own or use any Intellectual Property
Rights pursuant to any written or oral, formal or informal license agreement nor
has the Company granted any person or entity any rights, pursuant to written or
oral, formal or informal license agreements or otherwise, to use the
Intellectual Property Rights.
2.13. Litigation. Except as set forth in the Disclosure Schedule, there
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is no legal, administrative, mediation, arbitration or other proceeding, suit or
action or, to Seller's Knowledge, demand letter, investigation or audit of any
kind, judgment, decree, decision, injunction, writ or order pending, or to
Seller's Knowledge threatened, by or against the Company, its assets, properties
or businesses, whether at law or in equity, before or by any person or entity or
Authority of any kind, or against Seller or the Company, which questions or
challenges the validity of this Agreement or any action taken or to be taken by
the parties hereto pursuant to this Agreement or in connection with the
transactions contemplated herein. The Company is not in default in respect of
any judgment, order, writ, injunction or decree of any Authority applicable to
it or any of its assets and the Disclosure Schedule sets forth all such
judgments, orders, writs, injunctions and decrees, if any. Set forth in the
Disclosure Schedule are a list of all material claims asserted against the
Company during the past five years for bodily injury or property damage, whether
or not covered by insurance.
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2.14. Tax Matters. The Company has duly filed all tax reports and
-----------
returns required to be filed by it with respect to all income, franchise,
property, sales, use, and employment-related taxes (collectively, "Taxes") of
the United States and the state and other jurisdictions and subdivisions thereof
in which the Company conducts business or maintains property subjecting it to
taxation (collectively, the "Tax Returns") and, except as set forth in the
Disclosure Schedule, the Company has duly paid, or made adequate provision for
the due and timely payment of, all Taxes, including deposits required with
respect to employee withholdings, interest, penalties, assessments and
deficiencies, due or claimed to be due from it prior to Closing. The Company has
withheld from its employees proper amounts in compliance with all withholding
provisions. There is no omission, deficiency, error, misstatement or
misrepresentation in any Tax Return filed by the Company for any period prior to
Closing. Except as set forth in the Disclosure Schedule, all deficiencies and
assessments resulting from examination of the Tax Returns of the Company have
been paid. Except as set forth in the Disclosure Schedule, there are no
outstanding tax sharing, tax separation or other agreements, waivers or powers
of attorney, whether filed with any governmental Authority or otherwise,
regarding taxes, including to the extent the statutory period of limitation
applicable to any Tax Return for any period. Except as set forth in the
Disclosure Schedule, the Company has not been subject to federal, state or local
tax audits, examinations, inquiries or proceedings, and no such tax audits,
examinations, inquiries or proceedings are pending or, to Seller's Knowledge,
threatened.
2.15. Contracts and Commitments; No Default.
-------------------------------------
(a) Except as set forth in the Disclosure Schedule, the Company:
(i) does not have any written or oral contract, lease (real or
personal property), commitment, agreement, or arrangement with any
person which requires payments individually in excess of $25,000
annually or in excess of $50,000 over its term (including periods
covered by any option to extend or renew by either party);
(ii) does not pay any person (other than employees) or entity cash
remuneration at the annual rate of more than $50,000 for services
rendered;
(iii) is not restricted by agreement from carrying on its
businesses or any part thereof anywhere in the world or from competing
in any line of business with any person or entity or in the use of any
of its assets;
(iv) is not subject to any obligation or requirement to provide
funds to or make any investment (in the form of a loan, capital
contribution or otherwise) in any person or entity;
(v) is not a party to any purchase or sale contract or agreement
(including "take or pay" or exclusive supply agreements) that calls for
aggregate purchases or sales in excess over the course of such contract
or agreement of $50,000 or which continues for a period of more than
twelve (12) months (including periods covered by any option to renew or
extend by either party) which is not terminable on thirty (30) days' or
less notice without cost or other liability at or any time after the
Closing; or
(vi) is not a party to any capitalized lease.
(b) True and complete copies (or summaries, in the case of oral items)
of all items disclosed pursuant hereto (the "Contracts") have been provided to
Purchaser for review. Except as set forth in the Disclosure Schedule, all such
items are valid and enforceable by and against the Company in accordance
9
with their respective terms. Seller is not in breach, violation or default,
however defined, in the performance of any of its obligations thereunder.
2.16. Orders and Commitments. Set forth in the Disclosure Schedule is a
----------------------
list of all accepted and unfulfilled orders for the sale of products. Except as
set forth in the Disclosure Schedule, all such orders for the sale of products
and the performance of services entered into by the Company and all outstanding
contracts or commitments for the purchase of supplies, materials and services
were made in bona fide transactions in the ordinary course of business.
2.17. Labor Matters. Except as set forth in the Disclosure Schedule:
-------------
(a) the Company is and has been in compliance in all material respects with all
Laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, and has not and is not engaged in any unfair
labor practice; (b) there is no unfair labor practice complaint against the
Company pending or, to Seller's Knowledge, threatened before the National Labor
Relations Board or any other comparable Authority; (c) there is no labor strike,
dispute, slowdown or stoppage actually pending or, to Seller's Knowledge,
threatened against the Company; (d) no grievance or arbitration proceeding
arising under the Company's collective bargaining agreement is pending and, to
Seller's Knowledge, no claims have been threatened; and (e) Seller is not
delinquent in payments to any persons for any wages, salaries, commissions,
bonuses or other direct or indirect compensation for any services performed by
them or amounts required to be reimbursed to such persons.
2.18. Permits and Other Operating Rights. Except as set forth in the
----------------------------------
Disclosure Schedule, the Company possesses all Consents from all Authorities
necessary to permit the Company to operate the Acquired Business and its plant
in Barbourville, Kentucky in the manner in which it presently is conducted.
2.19. Compliance with Law. Except as set forth in the Disclosure
-------------------
Schedule, the Company is in compliance in all material respects with all Laws
applicable to it. There are no outstanding and unsatisfied deficiency reports,
plans of correction, notices of noncompliance or work orders relating to any
such Authorities, and no such discussions with any such Authorities are pending.
Except as set forth in the Disclosure Schedule, the Company has not received
notification that it is currently in violation of any building, zoning, health
ordinance or regulation with respect to the operation of the Acquired Business
in the manner in which it presently is conducted or with respect to the
operation of the Company's plant in Barbourville, Kentucky as currently
operated.
2.20. Environmental Matters. Except as set forth in the Disclosure
---------------------
Schedule:
(a) The Company has obtained all permits, licenses and other Consents
which are required under the Environmental Laws (as defined below) for the
ownership, use and operation of each location currently owned, operated or
leased by the Company (the "Property"), all such permits, licenses and Consents
are in effect, no appeal nor any other action is pending to revoke any such
permit, license or Consent, and the Company is in compliance with all terms and
conditions of all such permits, licenses and Consents.
(b) The Company is in compliance with all Environmental Laws, including
all applicable restrictions, conditions, standards, limitations, prohibitions,
requirements, obligations, schedules and timetables contained in the
Environmental Laws or contained in any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder.
10
(c) The Company has heretofore delivered to Purchaser true and complete
copies of all environmental reports furnished to the Company in the last five
(5) years relating to the Company, or to any Property or facility currently
owned, operated or leased by the Company. Except as set forth in such reports,
to Seller's Knowledge, there are no Hazardous Substances, Oils, Pollutants or
Contaminants on or under the Company's property.
(d) There is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation, proceeding, notice or demand
letter existing or pending or, to Seller's Knowledge, threatened, against the
Company or any Property under the Environmental Laws.
(e) The Company has not released, placed, stored, buried or dumped any
Hazardous Substances, Oils, Pollutants or Contaminants or any other wastes
produced by, or resulting from, any business, commercial or industrial
activities, operations or processes, on, beneath or adjacent to any Property
except for inventories of such substances to be used, and wastes generated
therefrom, in the ordinary course of business of the Company (which inventories
and wastes, if any, were and are stored or disposed of in accordance with
applicable laws and regulations and in a manner such that there has been no
Release of any such substances into the environment).
(f) The Company has not transported to any other site or property any
Hazardous Substances, Oils, Pollutants or Contaminants or other wastes produced
by, or resulting from, any business, commercial or industrial activities,
operations or processes of the Company in any manner other than in accordance
with applicable laws and regulations.
(g) No Release or Cleanup has occurred at any Property which could
result in the assertion or creation of an Encumbrance on the Property by any
governmental Authority with respect thereto, nor has any such assertion of an
Encumbrance been made by any governmental Authority with respect thereto.
(h) The Company has received no notice or order from any governmental
agency or private or public Person advising it that, with respect to any
Property, it is responsible for or potentially responsible for Cleanup or paying
for the cost of Cleanup of any Hazardous Substances, Oils, Pollutants or
Contaminants or any other waste or substance and the Company has not entered
into any agreements concerning such Cleanup.
(i) The Company has not entered into any agreement that will require it
to pay to, reimburse, guarantee, pledge, defend, indemnify or hold harmless any
Person for or against any environmental liabilities or costs.
(j) For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "Cleanup" means all actions required to: (A) cleanup, remove,
treat or remediate Hazardous Substances, Oils, Pollutants or
Contaminants in the indoor or outdoor environment; (B) prevent the
Release of Hazardous Substances, Oils, Pollutants or Contaminants so
that they do not migrate, endanger or threaten to endanger public
health or welfare or the indoor or outdoor environment; (C) perform
pre-remedial studies and investigations and post-remedial monitoring
and care; or (D) respond to any government requests for information or
documents in any way relating to cleanup, removal, treatment or
remediation or potential cleanup, removal, treatment or remediation of
Hazardous Substances, Oils, Pollutants or Contaminants in the indoor or
outdoor environment.
11
(ii) "Environmental Laws" means all federal, state and local laws,
regulations, rules and ordinances applicable to Seller relating to
pollution or protection of the environment, including laws relating to
Releases or threatened Releases of Hazardous Substances, Oils,
Pollutants or Contaminants into the indoor or outdoor environment
(including ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, transport
or handling of Hazardous Substances, Oils, Pollutants or Contaminants,
and all laws and regulations with regard to record-keeping,
notification, disclosure and reporting requirements respecting
Hazardous Substances, Oils, Pollutants or Contaminants, and all laws
relating to endangered or threatened species of fish, wildlife and
plants.
(iii) "Hazardous Substances, Oils, Pollutants or Contaminants"
means all substances defined as such in the National Oil and Hazardous
Substances Pollution Contingency Plan, 40 C.F.R. Section 300.5, or
defined as such by, or regulated as such under, any Environmental Law
applicable to the Company or the Property.
(iv) "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or, as
applicable, any other entity.
(v) "Release" means any release, spill, emission, discharge,
leaking, pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment (including
ambient air, surface water, groundwater, and surface or subsurface
strata) or into or out of any property, including the movement of
Hazardous Substances, Oils, Pollutants or Contaminants through or in
the air, soil, surface water, groundwater or property.
2.21. Benefit Plans. Except as set forth in the Disclosure Schedule:
-------------
(a) Neither the Company nor any other "person" within the meaning of
Section 7701(a)(1) of the Code, that together with the Company is considered a
single employer pursuant to Sections 414(b), (c), (m) or (o) of the Code or
Sections 3(5) or 4001(b)(1) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") (an "Affiliated Organization") sponsors, maintains,
contributes to, is required to contribute to or has or could have any liability
of any nature, whether known or unknown, fixed or contingent, with respect to,
any "employee pension benefit plan" ("Pension Plan") as such term is defined in
Section 3(2) of ERISA, including any such plan that is excluded from coverage by
Section 4(b)(5) of ERISA or is a "Multiemployer Plan" within the meaning of
Section 3(37) or 4001(a)(3) of ERISA. Each such Pension Plan has been operated
in all material respects in compliance with the applicable provisions of ERISA
and the Code.
(b) Neither the Company nor any Affiliated Organization has any
liability of any nature, whether known or unknown or fixed or contingent, to any
Pension Plan, the Pension Benefit Guaranty Corporation ("PBGC") or any other
person, arising directly or indirectly under Title IV of ERISA.
(c) The Company does not sponsor, maintain, contribute to, nor have any
obligation to contribute to any "employee welfare benefit plan" ("Welfare Plan")
as such term is defined in Section 3(1) of ERISA, whether insured or otherwise.
Each Welfare Plan has been operated in all material respects in compliance with
the applicable provisions of ERISA and the Code. The Company does not have and
has not established or contributed to, is not required to contribute to, any
"voluntary employees beneficiary association" within the meaning of Section
501(c)(9) of the Code, "welfare benefit fund" within the meaning of Section 419
of the Code, "qualified asset account" within the meaning of Section
12
419A of the Code or "multiple employer welfare arrangement" within the meaning
of Section 3(40) of ERISA.
(d) The Company is not a party to, and does not maintain or contribute
to, any bonus, incentive, commission, stock or other current or deferred
compensation, separation, retention, severance or similar agreement,
arrangement, plan or policy, or any individual employment, consulting or
personal service agreement ("Compensation Plans"). Each Compensation Plan has
been operated in all material respects in compliance with ERISA and the Code.
(e) There are no facts or circumstances which could subject the Company
to any (i) excise tax or other liability under Chapters 43, 46 or 47 of Subtitle
D of the Code, (ii) penalty tax or other liability under Chapter 68 of Subtitle
F of the Code or (iii) civil liability or penalty arising under Section 502 of
ERISA.
(f) Full payment has been made of all amounts which the Company is
required, under applicable Law, the terms of any Pension Plan, Welfare Plan or
Compensation Plan, or any agreement relating to any Pension Plan or Welfare Plan
or Compensation Plan, to have paid as a contribution, premium or other
remittance thereto or benefit thereunder. No Pension Plan is subject to part 3
of Subtitle B of Title I of ERISA or Section 412 of the Code.
(g) There are no pending audits, investigations, claims, suites,
grievances or other proceedings involving any Pension Plan, Welfare Plan, or
Compensation Plan, or any rights or benefits thereunder, other than the ordinary
and usual claims for benefits by participants, dependents or beneficiaries.
(h) The transactions contemplated herein do not result in the
acceleration of accrual, vesting, funding or payment or any contribution or
benefit under any Pension Plan, Welfare Plan or Compensation Plan.
(i) Section 2.21 of the Disclosure Schedule lists and Seller has
delivered to Purchaser true and complete current copies of (i) the form of
summary plan description currently in effect with respect to each Pension Plan,
Welfare Plan or Compensation Plan, (ii) the most recent determination letter
with respect to each Pension Plan intended to qualify under Section 401(a) of
the Code and (iii) complete and accurate employment records showing, for each
Transferred Employee, the following: name, address, social security number, date
of hire and rate of pay.
2.22. Limited (Unaudited) Financial Information. The Most Recent
-----------------------------------------
Balance Sheet has been prepared from the books and records of the Company. The
Disclosure Schedule sets forth the Company's sales, cost of goods sold, freight
and gross profits figures in each of the years ended December 31, 1998 and 1999
and the nine-months ended September 30, 2000. Such sales, cost of goods sold,
freight and gross profits figures have been prepared from the books and records
of the Company on a consistent basis. Such sales constitute bona fide sales of
products substantially in accordance with the Company's then effective price
lists. The cost of sales figures represent costs incurred by the Company
substantially in connection with the manufacture and distribution of products.
2.23. Product Liability Claims. Except as set forth in the Disclosure
------------------------
Schedule, during the four-year period preceding the date hereof, the Company has
not received, and Seller has not received, with respect to any product
manufactured by the Company, a claim for or based upon breach of product
warranty (other than warranty service and repair claims in the ordinary course
of business not material in amount or significance), strict liability in tort,
negligent manufacture or design of product, personal
13
injury or property damage, or any other allegation of liability, including or
resulting, or to Seller's Knowledge threatened to result, in product recalls,
arising from the design, manufacture or sale of the Company's products.
2.24. Warranties. The terms of all product and service warranties and
----------
product return policies of the Company are specifically set forth on the
Disclosure Schedule.
2.25. Brokers. Neither Seller nor the Company has employed any broker,
-------
finder, or financial advisor or incurred any liability for any brokerage fee or
commission, finder's fee or financial advisory fee, in connection with the
transactions contemplated hereby.
2.26. Bank Accounts. The Disclosure Schedule sets forth the names and
-------------
locations of all banks at which the Company has accounts, the names and numbers
of such accounts, and the names of all persons authorized to draw thereon (the
"Bank Accounts").
2.27. Miscellaneous. The Company has not guaranteed any liabilities of
-------------
Seller. The Company has, since its inception, been engaged in the Acquired
Business and activities ancillary thereto, and has not been engaged to any
substantial extent in any other line of business.
2.28. Requirements. To Seller's Knowledge, the Company has met and
------------
maintained all of the requirements, including the addition of employees, that it
has been required to meet and/or maintain, as of the date hereof, under the
Company's governmental or tax incentive agreements (the "Incentive Agreements")
in order to be entitled to the substantial benefits provided under such
agreements.
SECTION 3
---------
3. Representations and Warranties of Purchaser.
--------------------------------------------
Purchaser represents and warrants to Seller as follows:
3.1. Corporate Organization. Purchaser is a corporation duly organized,
----------------------
validly existing and in good standing under the law of the State of Delaware,
has full power and authority to carry on its business as now conducted and to
own, lease and operate its properties and assets.
3.2. Authorization. Purchaser has full power and authority to enter
-------------
into this Agreement and the Ancillary Agreements to which it is a party and to
carry out the transactions contemplated herein and therein. The Board of
Directors of Purchaser has taken all action required by Law, its Certificate of
Incorporation and Bylaws or otherwise to authorize the execution, delivery and
performance of this Agreement and the Ancillary Agreements to which it is a
party and the consummation of the transactions contemplated herein and therein.
This Agreement and the Ancillary Agreements to which it is a party have been
duly and validly executed by the Purchaser and are the valid and binding legal
obligations of Purchaser, enforceable against it in accordance with their terms,
subject to (a) bankruptcy, reorganization, moratorium, fraudulent conveyance or
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally and (b) general principles of equity (regardless of whether
enforceability is considered in proceeding in equity or at law).
3.3. Non-Contravention. Neither the execution, delivery and performance
-----------------
of this Agreement or any Ancillary Agreement to which Purchaser is a party nor
the consummation of the transactions contemplated herein or therein will: (a)
violate any provision of the Certificates of Incorporation or
14
Bylaws of Purchaser; (b) violate any Law; or (c) be in conflict with, or
constitute a default under, or cause or permit the acceleration of the maturity
of, or give rise to any right of termination, cancellation, imposition of fees
or penalties under, any debt, note, bond, lease, mortgage, indenture, contract
or other agreement to which the Purchaser is a party or by which it or any of
its properties or assets is bound or result in the creation or imposition of any
Encumbrance upon any property or assets of the Purchaser under any debt, note,
bond, lease, mortgage, indenture, contract or other agreement to which the
Purchaser is a party or by which the Purchaser or any of its assets or
properties is bound.
3.4. Consents and Approvals. Except for filings pursuant to the HSR
----------------------
Act, no Consent is required from, with or by any person or entity, including any
Authority, in connection with the execution, delivery and performance by
Purchaser of this Agreement or any Ancillary Agreement to which it is a party or
the consummation by Purchaser of the transactions contemplated herein or
therein.
3.5. Brokers. Neither Purchaser nor any affiliate thereof has employed
-------
any broker, finder or financial advisor, or incurred any liability for any
brokerage fee or commission, finder's fee or financial advisory fee, in
connection with the transactions contemplated hereby.
SECTION 4
---------
4. Covenants.
---------
4.1. Confidentiality.
---------------
(a) Prior to the Closing, the confidentiality agreement dated May 8,
2000 between the parties shall remain in effect.
(b) For a period of five (5) years from and after the Closing Date,
except as otherwise permitted hereby or consented to by Purchaser, (i) Seller
will not use or disclose any Confidential Information (as defined below) except
as required by Law or the terms of a subpoena or similar order; and (ii) if
Seller receives a request to disclose all or any part of the Confidential
Information in connection with a legal proceeding, Seller will (A) notify
Purchaser of such request, (B) consult with Purchaser on such request, and (C)
if disclosure of such information is required, and at Purchaser's cost and
expense, exercise commercially reasonable efforts to obtain reliable assurance
that confidential treatment will be accorded such portion of the information
which is disclosed.
(c) "Confidential Information" means any and all confidential and
------------------------
proprietary information relating to the trade secrets, technology or services of
the Company, including any and all formulae, processes, customer lists, purchase
and sales records, marketing plans, financial information, and other
confidential and proprietary information relating to the Company's business,
other than such information as may at any time (i) be or become lawfully
available to the general public through no fault of the disclosing party, or
(ii) be or become available to Seller on a non-confidential basis from another
source, not subject to a confidentiality agreement.
(d) The covenants and undertakings contained in this Section 4.1 relate
to matters which may be of a special, unique and extraordinary character and a
violation of any of the terms of this Section 4.1 may cause irreparable injury
to Purchaser, the amount of which may be impossible to estimate or determine and
for which adequate compensation may not be available. Therefore, Purchaser shall
be entitled to an injunction from a court of competent jurisdiction restraining
any violation of any such terms by Seller.
15
4.2. Public Announcement. Neither Seller nor Purchaser nor their
-------------------
affiliates shall make any public announcement with respect to the transactions
contemplated herein without the prior written consent of the other party;
provided, however, that the parties shall jointly agree on the wording of their
respective initial press releases following Closing regarding the transaction;
provided, further, that any of the parties hereto may at any time make any
announcements which are required by applicable Law or the rules of the New York
Stock Exchange or NASDAQ so long as the party so required to make an
announcement promptly upon learning of such requirement notifies the other
parties of such requirement and discusses with the other parties in good faith
the wording of any such announcement.
4.3. Employee Matters.
----------------
(a) General. Set forth in the Disclosure Schedule is a list of the
-------
name, title or job description and salary or hourly rate of all non-union
employees employed by the Company (and those employees of Ecolab that are part
of the Acquired Business) on the date hereof. Purchaser shall, subject to
Section 4.3(d) below, cause the Company to continue the employment following
Closing of each such employee as of the Closing Date (i) at substantially the
same rate of compensation and upon the same terms, conditions and benefits as
other similarly situated employees of the Company, and (ii) to cause the Company
to meet the job creation and retention requirements of all Incentive Agreements
for the full term thereof.
(b) Benefit Plans and Employment Policies. Such employees shall receive
-------------------------------------
past service credit for years of service with the Company (and/or Ecolab) as of
the Closing for purposes of eligibility and vesting (but not for purposes of
benefit accrual) in benefit plans available to the Company's employees.
(c) Union. Purchaser agrees, from and after the Closing, to cause the
-----
Company to bargain in good faith with, and otherwise comply with all applicable
requirements of Law with respect to, the Company's union.
(d) No Third Party Beneficiaries. Nothing set forth in this Section 4.3
----------------------------
shall give any employee any rights or claims against Purchaser or Seller or is
intended to modify or change the "at will" nature of each employee's employment
by the Company (although the foregoing is not intended to abrogate any employee
rights arising through the Company's union).
4.4. Tax Matters.
-----------
(a) Tax Periods Ending On or Before the Closing Date. Seller shall
------------------------------------------------
prepare or cause to be prepared and deliver or cause to be delivered to the
Company all Tax Returns and Requests for Additional Time to File Tax Returns for
the Company for all periods ending on or prior to the Closing Date which are
filed after the Closing. Purchaser shall file or cause to be filed such Tax
Returns and Requests. Purchaser and Seller acknowledge and agree that, for
federal income tax purposes, a Taxable Period will end on the Closing Date.
Purchaser and Seller will jointly determine whether, for Tennessee and Kentucky
state income tax purposes, a Taxable Period will end on the Closing Date. Seller
shall pay or promptly reimburse the Company for any and all Taxes with respect
to Taxable Periods ending on or prior to the Closing Date. Seller shall provide
Purchaser with a copy of all Tax Returns for the Company and Requests for
Additional Time to File Tax Returns for the Company reasonably prior to their
due date or extended due date and the parties will work together in good faith
to resolve any disagreements on the tendered documents. In addition, Seller
shall provide Purchaser with a copy of all information that Purchaser reasonably
requests contained in its federal consolidated income tax return specifically
relating to the Company and required by Purchaser, not later than September 15,
2001.
16
(b) Tax Periods Beginning Before and Ending After the Closing Date.
--------------------------------------------------------------
Seller shall prepare or cause to be prepared and deliver or cause to be
delivered any Tax Returns of the Company for tax periods which begin before the
Closing Date and end after the Closing Date. Purchaser shall file or cause to be
filed such Tax Returns. Seller shall promptly pay to Purchaser an amount equal
to the portion of such taxes which relates to the portion of such Taxable period
ending on the Closing Date to the extent such taxes are not reflected in the
reserve for Tax on the Final Closing Balance Sheet. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall be deemed to be the amount of such tax
for the entire taxable period multiplied by a fraction the numerator of which is
the number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire Taxable period. The
amount of the tax shall be calculated based upon the Company being a stand alone
entity and not part of a consolidated group. Any credits relating to a Taxable
period that begins before and ends after the Closing Date shall be taken into
account as though the relevant Taxable period ended on the Closing Date.
(c) Audits. In connection with any inquiry, audit or other examination
------
by any taxing authority or judicial or administrative proceedings relating to
liability for Taxes, or any Tax Return for the taxable periods ending on or
before the Closing Date, or taxable periods beginning before and ending after
the Closing Date, Seller shall assume control of, and Purchaser shall fully
cooperate with Seller as Seller may reasonably request in a prompt and timely
fashion and manner in connection with, any such inquiry, audit or other
examination and Seller's response thereto. The Taxes shall be allocated pursuant
to Section 4.4(a) and (b). Seller shall provide Purchaser with information
regarding any final determination of any such inquiry, audit or examination that
affects any amount required to be shown on any Tax Return of the Company for
periods referred to in this Section including any federal income tax return
information contained therein.
(d) Assistance. Purchaser shall (i) provide Seller with such assistance
----------
as may reasonably be requested by Seller in connection with the preparation of
any Tax Return or any inquiry, audit or other examination, including signing and
filing the Tax Returns, and (ii) retain and provide Seller with any records or
other information which may be relevant to such Tax Return or inquiry, audit or
examination.
(e) Records Retention. Both Purchaser and Seller shall retain, until
-----------------
the applicable statutes of limitations (including any extensions) have expired,
copies of all Tax Returns, supporting work schedules and other records or
information which would be relevant to such returns or any inquiry, audit or
examination for all tax periods or portions thereof ending before or beginning
before and ending after the Closing Date, and shall not destroy or otherwise
dispose of any such records without first providing the other party with a
reasonable opportunity to review and copy the same.
4.5. Non-competition.
---------------
(a) Except as provided below, for a period of five (5) years beginning on the
Closing Date, Seller (i) shall not, directly or through any "controlled
subsidiary," engage, anywhere in the world, in the manufacture of commercial
dishmachines (a "Competing Business"), and (ii) shall not make an investment, in
any entity whose primary business is the manufacture of commercial dishmachines,
which would result in Seller holding a ten percent (10%) or more equity interest
in that entity. For purposes of clarity, Purchaser acknowledges that the
foregoing shall in no way limit the "Ecotemp" or Puritan businesses of Seller as
currently conducted and described in the Disclosure Schedule. A "controlled
subsidiary" means a subsidiary of Seller that Seller possesses, directly or
indirectly, the power to direct
17
(or cause the direction of) the management or policies of, whether through the
ownership of a majority of voting securities, by contract or otherwise.
(b) The provisions of this Section 4.5 shall not be deemed to prohibit
Seller or any affiliate of Seller from acquiring not more than five percent (5%)
of any class of securities of any company with a class of securities registered
under the Securities Exchange Act of 1934, as amended, or otherwise publicly
traded. Further, the provisions of this Section 4.5 shall not be deemed to
prohibit Seller or any affiliate of Seller from acquiring a Competing Business
if (i) the Competing Business has less than ten percent (10%) of the entity's
consolidated sales; provided, however, this clause (i) shall not be violated if
the sales of the Competing Business are less than $5 million; (ii) Seller ceases
to engage in the Competing Business within one hundred eighty (180) days after
the consummation of such transaction; and (iii) Seller shall have first offered
Purchaser, upon customary commercial terms, the exclusive opportunity, for a
thirty (30) day period, to purchase such Competing Business (and the foregoing
180-day period shall be extended for 180 days from the date on which Purchaser
declines such opportunity or the parties cease negotiations).
(c) If, at the time of enforcement of this Section 4.5, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area. Seller acknowledges and
agrees that Purchaser may be damaged irreparably in the event any of the
provisions of this Section 4.5 are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, Seller agrees that
Purchaser shall be entitled to an injunction to prevent breaches of the
provisions of this Section 4.5 and to enforce specifically the terms and
provisions of this Section 4.5 at law or in equity.
4.6. Execution of Ancillary Agreements; Further Assurances;
------------------------------------------------------
Notification.
-------------
(a) Each party hereto shall, at the Closing, and subject to the
satisfaction or express waiver in writing of the respective conditions to such
respective parties' obligations hereunder, execute and deliver to the other
parties hereto, or shall cause their respective affiliates to execute and
deliver to the other parties hereto, the respective documents referred to in
Section 1.4 hereof.
(b) Each party hereto shall, at and for a period of five (5) years
after the Closing Date, execute and deliver such further instruments and take
such other actions as the other party or parties, as the case may be, may
reasonably require in order to carry out the intent of this Agreement.
4.7. No Intercompany Debt. The Company and Seller shall, in connection
--------------------
with the Closing, satisfy all outstanding indebtedness between Seller and its
affiliates (excluding the Company), on the one hand, and the Company, on the
other, including any ordinary accounts receivable for dishmachines sold by the
Company to Seller, such that the Final Closing Balance Sheet shall not reflect
any such indebtedness.
4.8. Sufficient Funds. Seller shall have sufficient funds in the Bank
----------------
Accounts to cover all outstanding checks issued by the Company prior to Closing.
4.9. Headquarters. Purchaser agrees, for a period of three (3) years
------------
from the Closing Date, to maintain dishmachine business headquarters and
manufacturing at Barbourville, Kentucky and (ii) to adhere to and abide by the
job creation and other commitments made in connection with the Incentive
Agreements; provided, however, that Seller acknowledges that the foregoing does
not obligate Purchaser to complete any Seller-planned or other plant expansion.
18
4.10. Insurance Claims. Auto liability, general liability, property
----------------
liability, product liability and workers compensation claims with dates of loss
prior to Closing shall continue to be covered by Seller's insurance policies.
Purchaser shall cause the Company to reimburse Seller for any deductible or self
insured retention amounts paid by Seller in respect thereof after the Closing.
SECTION 5
---------
5. Survival and Indemnification.
-----------------------------
5.1. Survival of Representations, Warranties and Covenants. All
-----------------------------------------------------
representations and warranties of the parties contained in this Agreement shall
survive the Closing for a period of eighteen (18) months from the Closing Date,
provided that the representations and warranties contained in Section 2.14
hereof shall survive for a period of four (4) years from the Closing Date and
the representations and warranties contained in Section 2.3 hereof shall survive
for the applicable statute of limitations. The respective expiration dates for
the survival of the representations and warranties shall be referred to herein
as the relevant "Expiration Date."
5.2. Indemnification by Purchaser. Purchaser agrees to indemnify and
----------------------------
hold Seller and its subsidiaries, affiliates, officers, directors, employees and
agents harmless from and against any and all loss, liability, damage and actions
and against all claims in respect thereof (including amounts paid in settlement
and reasonable costs of investigation and/or defense of such claims, actions,
suits or proceedings, including attorneys fees and expenses herein referred to
collectively as "Losses" or individually as "Loss") to which Seller or any other
indemnified person may become subject or which it or they may suffer or incur,
directly or indirectly, as a result of (a) any untrue representation of, or
breach of warranty by, Purchaser in this Agreement, notice of which is given to
Purchaser on or prior to the relevant Expiration Date; (b) any breach of or any
nonfulfillment of any covenant, agreement or undertaking of Purchaser in this
Agreement; (c) the ownership of the Company or the conduct and operation of the
Acquired Business after the Closing Date, subject to the terms and conditions of
this Agreement and the Ancillary Agreements; and (d) any and all reasonable
costs and expenses, including reasonable legal fees and expenses, in connection
with enforcing the indemnification rights pursuant to this Section 5.2.
5.3. Indemnification by Seller. Seller agrees to indemnify and hold
-------------------------
Purchaser and its subsidiaries, affiliates, officers, directors, employees and
agents harmless from and against all Loss or Losses to which Purchaser or any
other indemnified person may become subject or which it may suffer or incur,
directly or indirectly, as a result of (a) any untrue representation of, or
breach of warranty by, Seller in this Agreement (determined in all cases as if
the term "materially" or "material" were not included therein), notice of which
is given to Seller on or prior to the relevant Expiration Date; (b) the breach
of or nonfulfillment of any covenant, agreement or undertaking of Seller in this
Agreement; (c) any third party infringement claims or similar claims relating to
the Reserved Intellectual Property as that term is defined in the Supply
Agreement; (d) any Tax of the Company attributable to periods ending on or prior
to the Closing Date including any liability relating to any Tax Return signed
pursuant to Section 4.4(d) hereof; and (e) any and all costs and expenses
including reasonable legal fees and expenses, incurred in connection with
enforcing the indemnification rights pursuant to this Section 5.3.
5.4. Claims for Indemnification.
--------------------------
(a) General. The parties intend that all indemnification claims be made
-------
as promptly as practicable by the party seeking indemnification (the
"Indemnified Party"). Whenever any claim shall
19
arise for indemnification hereunder, the Indemnified Party shall promptly notify
the party from whom indemnification is sought (the "Indemnifying Party") of the
claim, and the facts constituting the basis for such claim. The failure to so
notify the Indemnifying Party shall not relieve the Indemnifying Party of any
liability that it may have to the Indemnified Party except to the extent the
Indemnifying Party demonstrates that it is prejudiced thereby.
(b) Claims by Third Parties. With respect to claims by third parties,
-----------------------
the Indemnifying Party shall be entitled to assume control of the defense of
such claim at the expense of the Indemnifying Party with counsel reasonably
satisfactory to the Indemnified Party; provided, however, that:
(i) the Indemnified Party shall be entitled to participate in the
defense of such claim and to employ counsel at its own expense to
assist in the handling of such claim;
(ii) no Indemnifying Party shall, without the consent of the
Indemnified Party (which consent shall not be unreasonably withheld),
consent to the entry of any judgment or enter into any settlement (A)
that does not include as an unconditional term thereof the giving by
each claimant or plaintiff to each Indemnified Party of a release from
all liability in respect to such claim or (B) if, pursuant to or as a
result of such consent or settlement, injunctive or other equitable
relief would be imposed against the Indemnified Party or such judgment
or settlement could materially interfere with the business, operations
or assets of the Indemnified Party; and
(iii) if the Indemnifying Party does not assume control of the
defense of such claim in accordance with the foregoing provisions
within ten (10) business days (or such shorter period as legal process
may require) after receipt of notice of the claim, the Indemnified
Party shall have the right to defend, contest and/or settle such claim
in such manner as it deems reasonably appropriate at the cost and
expense of the Indemnifying Party, the amount of the actual costs and
expenses shall not be challenged by the Indemnifying Party and the
Indemnifying Party will pay and reimburse the Indemnified Party
therefor in full in accordance with this Section 5; provided that the
Indemnified Party shall coordinate with the Indemnifying Party and each
Party shall use its commercially reasonable efforts to determine
together whether the entry of any judgment or any settlement of such
claim shall include as an unconditional term thereof the giving by each
claimant or plaintiff to each Indemnifying Party of a release from all
liability in respect of such claim if, pursuant to or as a result of
such judgment or settlement, injunctive or other equitable relief would
be imposed against the Indemnifying Party or such judgment or
settlement could materially interfere with the business, operations or
assets of the Indemnifying Party.
(c) Limitation on Indemnification. In the event of any claim for
-----------------------------
indemnity under Section 5.3(a) hereof, Purchaser shall not be entitled to
indemnification therefor unless Purchaser has sustained Losses in excess of Five
Hundred Thousand Dollars ($500,000) in the aggregate, in which event the
Indemnified Party shall be entitled to indemnification for the amount of Loss
suffered or incurred in excess of such Five Hundred Thousand Dollars ($500,000)
of Losses (the "Basket") up to a maximum of Seven Million Five Hundred Thousand
Dollars ($7,500,000) (the "Cap"). Notwithstanding anything herein to the
contrary, the Basket and the Cap shall not apply with respect to (i) any
fraudulent breach of any representation or warranty or any claim with respect to
fraudulent inducement to enter into this Agreement or (ii) any breach of any
representation or warranty contained in Sections 2.3, 2.4 or 2.14 hereof.
(d) Remedies Exclusive. Except as set forth in Sections 4.1, 4.5 and
------------------
6.12 hereof, the remedies provided herein are exclusive and preclude an
Indemnified Party from asserting any other rights
20
or seeking any other rights or remedies at law or in equity against the
Indemnifying Party or their respective successors or assigns.
SECTION 6
---------
6. Miscellaneous Provisions.
-------------------------
6.1. Expenses. Each of the parties hereto shall bear its own costs,
--------
fees and expenses in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby.
6.2. Amendment and Modification. Subject to applicable Law, this
--------------------------
Agreement may be amended or modified by the parties hereto at any time after the
Closing with respect to any of the terms contained herein; provided, however,
that all such amendments and modifications must be in writing duly executed by
all of the parties hereto.
6.3. Waiver of Compliance; Consents. Any failure of a party to comply
------------------------------
with any obligation, covenant, agreement or condition herein may be expressly
waived in writing by the party entitled hereby to such compliance, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial exercise
of a right or remedy shall preclude any other or further exercise thereof or of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a party, such consent shall be given in writing
in the same manner as for waivers of compliance.
6.4. No Third Party Beneficiaries. Except as expressly set forth
----------------------------
herein, nothing in this Agreement shall entitle any person or entity (other than
a party hereto and his, her or its respective successors and assigns permitted
hereby) to any claim, cause of action, remedy or right of any kind.
6.5. Notices. All notices, requests, demands and other communications
-------
required or permitted hereunder shall be made in writing and shall be deemed to
have been duly given and effective: (a) on the date of delivery, if delivered
personally; (b) on the earlier of the fourth (4th) day after mailing or the date
of the return receipt acknowledgment, if mailed, postage prepaid, by certified
or registered mail, return receipt requested; (c) on the date of transmission,
if sent by facsimile (provided such facsimile is received during normal business
hours); or (d) on the date of delivery if sent by a recognized overnight
courier:
If to Purchaser: To: Enodis Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, CEO/President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Shack & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
21
If to Seller: To: Ecolab Inc.
Ecolab Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Sr. V.P. - Industrial Group
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Ecolab Inc.
Ecolab Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other person or address as shall be furnished to the other parties
hereto in writing in accordance with this subsection.
6.6. Assignment. This Agreement and all of the provisions hereof shall
----------
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and permitted assigns,
but neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned (whether voluntarily, involuntarily, by operation of
law, or otherwise) by any of the parties hereto without the prior written
consent of the other parties; provided that the foregoing prohibition on
assignment shall not apply in the event of (i) any change of control of a party
or (ii) any internal corporate reorganization, if that party agrees to remain
bound hereby.
6.7. Governing Law. This Agreement and the legal relations among the
-------------
parties hereto shall be governed by and construed in accordance with the
internal substantive laws of the State of Delaware (without regard to the laws
of conflict that might otherwise apply) as to all matters, including matters of
validity, construction, effect, performance and remedies. Subject to Section
6.12 hereof, venue shall lie exclusively in a court of competent jurisdiction
within Delaware and Seller and Purchaser hereby consent to the personal
jurisdiction of such courts and shall subject themselves to such personal
jurisdiction.
6.8. Counterparts; Facsimile. This Agreement may be executed
-----------------------
simultaneously in one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Delivery of an executed counterpart of a signature page to this
Agreement by facsimile transmission shall be effective as delivery of a manually
executed counterpart.
6.9. Headings. The table of contents and the headings of the sections
--------
and subsections of this Agreement are inserted for convenience of the parties
only and shall not constitute a part hereof.
6.10. Entire Agreement. The Disclosure Schedule and the Exhibits and
----------------
other writings referred to in this Agreement or in the Disclosure Schedule or
any such Exhibit or other writing are part of this Agreement, together they
embody the entire agreement and understanding of the parties hereto in respect
of the transactions contemplated by this Agreement and together they are
referred to as "this Agreement" or "the Agreement." There are no restrictions,
promises, warranties, agreements, covenants or undertakings, other than those
expressly set forth or referred to in this Agreement. This Agreement supersedes
all prior agreements and understandings between the parties with respect to the
transaction or
22
transactions contemplated by this Agreement (including the Terms Sheet dated
July 10, 2000, as amended to extend the exclusive dealing provision thereof,
between Purchaser and Seller). Provisions of this Agreement shall be interpreted
to be valid and enforceable under applicable Law to the extent that such
interpretation does not materially alter this Agreement; provided, however, that
if any such provision shall become invalid or unenforceable under applicable Law
such provision shall be stricken to the extent necessary and the remainder of
such provisions and the remainder of this Agreement shall continue in full force
and effect.
6.11. "Mediatable Claims" Definition. "Mediatable Claims" as used in
-----------------------------
this Agreement, shall mean and refer to claims, disputes, controversies,
demands, causes of action (whether arising under state or federal statutes,
equity or the common law), damages, claims or demands for equitable relief,
other matters in question between or among Seller and Purchaser under this
Agreement or arising out of the negotiation, execution, delivery (including the
fraudulent inducement thereof) or performance of this Agreement, but
specifically excludes any matters of injunctive relief under Sections 4.1 or 4.5
hereof.
6.12. Mediation. Mediatable Claims shall be submitted to mediation
---------
(assuming other good faith attempts to resolve the dispute have failed) prior to
commencing any lawsuit. The mediation shall take place in Chicago, Illinois,
unless another location is agreed by the parties. If the parties are unable to
agree upon a mediator, each party shall select a mediator, which mediators in
turn shall select the mediator of the dispute. Each party's representation at
the mediation shall include a business representative having full settlement
authority. The parties shall use best efforts to schedule the mediation within
thirty (30) days of the delivery of a request for mediation. Any mediation shall
be non-binding and anything presented in any mediation shall constitute
settlement discussions. The parties acknowledge that they agree to mediate
disputes in hopes of amicably resolving the matter before incurring significant
attorneys' fees which may act as a barrier to settlement of the dispute at a
later time. Accordingly, the parties shall mediate in good faith and use
reasonable efforts to reach a resolution of the matter.
6.13. Waiver of Jury Trial. The parties waive any right to a jury trial
--------------------
of any controversy or claim arising out of or relating to this Agreement, or the
making, performance or interpretation thereof, including fraudulent inducement
thereof.
6.14. Definition of "Including". Any references to or uses of the term
-------------------------
"Including" in this Agreement shall mean "including without limitation" or
"including, but not limited to," and no references to or uses of such latter
phrases in this Agreement shall mean or be read to imply any different meaning
for "including."
6.15. Definition of Knowledge. For purposes of this Agreement,
-----------------------
"Knowledge" or "to Seller's Knowledge" (or similar reference) means knowledge
actually possessed by ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ and such knowledge which
reasonably should have come to the attention of such persons in the course of
preparation of this Agreement and the related Disclosure Schedule or in the
course of discharging such individual's duties as an officer or director of the
Company.
6.16. List of Other Defined Terms. Reference is made to Exhibit 6.16
---------------------------
for a listing and location of terms defined in this Agreement.
23
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SELLER
ECOLAB INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Title: Corporate Development V.P.
------------------------------------
PURCHASER
ENODIS CORPORATION, a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Title: CEO/President
------------------------------------
24