ASSET PURCHASE AGREEMENT
by and among
AUTOMATIC SYSTEMS, INC.,
COLUMBUS ▇▇▇▇▇▇▇▇ CORPORATION
and
ASI ACQUISITION CORP.
Dated as of May 10, 2002
TABLE OF CONTENTS
PAGE
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ARTICLE 1 DEFINITIONS........................................................1
1.1 DEFINITIONS....................................................1
ARTICLE 2 SALE AND PURCHASE OF ASSETS........................................5
2.1 PURCHASE AND SALE..............................................5
2.2 EXCLUDED ASSETS................................................6
2.3 ASSUMED OBLIGATIONS............................................7
2.4 EXCLUDED LIABILITIES...........................................7
2.5 PURCHASE PRICE AND PAYMENT FOR ASSETS..........................7
ARTICLE 3 CLOSING AND TERMINATION............................................8
3.1 CLOSING........................................................8
3.2 CLOSING DELIVERIES.............................................8
3.3 TERMINATION....................................................9
ARTICLE 4 FINAL BALANCE SHEET...............................................10
4.1 PREPARATION OF FINAL BALANCE SHEET............................10
4.2 CM ADJUSTMENT.................................................10
4.3 FAILURE TO RESOLVE DISPUTES...................................10
4.4 CM ADVANCES...................................................10
4.5 RECEIPTS FROM SPECIAL RECEIVABLES.............................11
4.6 REPAYMENT OF CM...............................................11
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE SELLER......................11
5.1 ORGANIZATION OF THE SELLER AND THE SUBSIDIARY; AUTHORITY......11
5.2 CAPITALIZATION OF THE SELLER; AUTHORITY.......................11
5.3 SUBSIDIARY....................................................11
5.4 ABILITY TO CARRY OUT THE AGREEMENT............................12
5.5 FINANCIAL STATEMENTS..........................................12
5.6 TITLE TO PROPERTIES; ABSENCE OF LIENS.........................13
5.7 LITIGATION....................................................13
5.8 COMPLIANCE WITH LAW...........................................14
5.9 CONTRACTS.....................................................14
5.10 BROKERS AND INTERMEDIARIES....................................15
5.11 TAX MATTERS...................................................15
5.12 EMPLOYEE BENEFITS.............................................16
5.13 INTELLECTUAL PROPERTY.........................................16
5.14 ENVIRONMENTAL MATTERS.........................................17
5.15 ABSENCE OF CERTAIN CHANGES....................................18
5.16 EMPLOYEES, LABOR MATTERS, ETC.................................19
5.17 ACCOUNTS RECEIVABLE...........................................20
5.18 MAJOR CUSTOMERS; BACKLOG......................................20
5.19 AFFILIATE TRANSACTIONS........................................21
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5.20 INVENTORIES...................................................21
5.21 INSURANCE.....................................................21
5.22 BOOKS AND RECORDS.............................................21
5.23 CONDITION AND SUFFICIENCY OF ASSETS...........................21
5.24 GENERAL REPRESENTATION AND WARRANTY...........................22
5.25 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES;
KNOWLEDGE; DISCLOSURE...................................22
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE BUYER.......................23
6.1 ORGANIZATION AND AUTHORITY OF THE BUYER.......................23
6.2 ABILITY TO CARRY OUT THE AGREEMENT............................23
6.3 FINANCIAL ABILITY TO PERFORM..................................23
6.4 BROKERS AND INTERMEDIARIES....................................23
6.5 INFORMATION...................................................24
ARTICLE 7 CERTAIN COVENANTS AND AGREEMENTS OF THE SELLER AND THE BUYER.....24
7.1 ACCESS AND INFORMATION........................................24
7.2 REGULATORY FILINGS............................................24
7.3 CONDUCT OF BUSINESS; INTERCOMPANY ACCOUNTS....................24
7.4 EMPLOYEE MATTERS..............................................25
7.5 TAX MATTERS...................................................27
7.6 NON-SOLICITATION..............................................28
7.7 BOOKS AND RECORDS.............................................28
7.8 ANNOUNCEMENT..................................................29
7.9 EFFORTS.......................................................29
7.10 EXCLUSIVE DEALING.............................................29
7.11 NON-COMPETITION...............................................29
7.12 CONSENTS......................................................30
7.13 STAY PAY AGREEMENTS...........................................30
7.14 ANCILLARY AGREEMENTS..........................................30
7.15 CERTAIN CONSENTS..............................................30
7.16 CHANGE OF NAME................................................30
7.17 CONFIDENTIALITY...............................................31
7.18 CM OBLIGATIONS................................................31
7.19 BUYER OBLIGATIONS.............................................31
7.20 REMITTANCE....................................................31
ARTICLE 8 CONDITIONS PRECEDENT OF THE SELLER................................31
8.1 REPRESENTATIONS AND WARRANTIES................................31
8.2 AGREEMENTS....................................................32
8.3 BUYER CERTIFICATE.............................................32
8.4 NO INJUNCTION.................................................32
8.5 CONSENTS......................................................32
8.6 LENDERS ACTION; RELEASE OF SECURITY INTERESTS.................32
8.7 MISCELLANEOUS CLOSING DELIVERIES..............................32
ARTICLE 9 CONDITIONS PRECEDENT OF THE BUYER.................................32
9.1 REPRESENTATIONS AND WARRANTIES................................33
9.2 AGREEMENTS....................................................33
9.3 THE SELLER'S CERTIFICATE......................................33
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9.4 NO INJUNCTION.................................................33
9.5 CONSENTS......................................................33
9.6 NO MATERIAL ADVERSE CHANGE....................................33
9.7 RELEASE OF SECURITY INTERESTS.................................33
9.8 FINAL BALANCE SHEET...........................................33
9.9 MISCELLANEOUS CLOSING DELIVERIES..............................33
9.10 RELEASE OF NONCOMPETITION AND ASSIGNMENT......................34
9.11 AVAILABLE FINANCING...........................................34
9.12 ENVIRONMENTAL.................................................34
ARTICLE 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.......................34
ARTICLE 11 INDEMNIFICATION..................................................34
11.1 INDEMNIFICATION OF THE BUYER AND ITS AFFILIATES...............34
11.2 INDEMNIFICATION OF THE SELLER AND ANY AFFILIATE
OF THE SELLER.............................................35
11.3 REMEDIES......................................................37
11.4 CERTAIN LIMITATIONS...........................................37
11.5 SURVIVAL......................................................38
ARTICLE 12 MISCELLANEOUS....................................................39
12.1 FURTHER ASSURANCES; COOPERATION...............................39
12.2 EXPENSES......................................................39
12.3 APPLICABLE LAW................................................39
12.4 NOTICES.......................................................39
12.5 ENTIRE AGREEMENT..............................................40
12.6 AMENDMENTS....................................................40
12.7 HEADINGS; REFERENCES..........................................40
12.8 COUNTERPARTS..................................................41
12.9 PARTIES IN INTEREST; ASSIGNMENT...............................41
12.10 SEVERABILITY; ENFORCEMENT.....................................41
12.11 WAIVER........................................................41
12.12 RELATIONSHIP BETWEEN THE PARTIES..............................41
12.13 WAIVER OF CONSEQUENTIAL DAMAGES AND JURY TRIAL................42
12.14 ARBITRATION...................................................42
12.15 WAIVER OF CERTAIN CONFLICTS...................................43
12.16 RISK OF LOSS..................................................43
12.17 CM SUPPLY CONTRACTS...........................................43
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of May 10, 2002 (herein, together
with the Schedules attached hereto, referred to as the "AGREEMENT") by and among
AUTOMATIC SYSTEMS, INC., a Missouri corporation (the "SELLER"), COLUMBUS
▇▇▇▇▇▇▇▇ CORPORATION, a New York corporation ("CM"), and ASI ACQUISITION CORP.,
a Missouri corporation (the "BUYER").
W I T N E S S E T H :
WHEREAS, CM is the record and beneficial owner of all the authorized,
issued and outstanding shares of capital stock of the Seller;
WHEREAS, upon the terms and conditions hereinafter set forth, the
Seller desires to sell and the Buyer desires to purchase substantially all of
the assets of Seller;
NOW, THEREFORE, in reliance upon the representations and warranties
made herein and in consideration of the mutual agreements herein contained, the
Buyer and the Seller hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. For purposes of this Agreement, the following terms
shall have the meanings set forth below; other terms used in this Agreement are
defined in the context in which they occur:
"ACCOUNTING PRINCIPLES" means the accounting principles, policies and
procedures set forth on SCHEDULE 1.1.
"ACCOUNTS RECEIVABLE" means trade receivables, retention receivables
and revenue in excess of ▇▇▇▇▇▇▇▇ and any other accounts receivable of Seller
and the Subsidiary.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly Controlling, Controlled by, or under common Control with,
such other Person.
"AGREEMENT" shall have the meaning set forth in the forepart of this
Agreement.
"ASSETS" shall have the meaning set forth in Section 2.1.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" shall have the meaning set forth
in Section 3.2(a)(ii).
"ASSUMED OBLIGATIONS" shall have the meaning set forth in Section 2.3.
"ASSUMED PORTION" means the amount due to the employees of Seller
under the Stay Pay Agreement for post Closing service with the Buyer, up to
$775,000.
"▇▇▇▇▇ ▇▇▇▇" shall mean ▇▇▇▇▇ ▇▇▇▇ LLP, legal counsel to the Buyer.
"BUYER INDEMNITEE" and "BUYER INDEMNITEES" shall have the respective
meanings set forth in Section 11.1.
"CLOSING" shall have the meaning set forth in Section 3.1.
"CLOSING DATE" shall have the meaning set forth in Section 3.1.
"CM" shall have the meaning set forth in the preamble to this
Agreement.
"CODE" means the Internal Revenue Code of 1986, as amended or, if
appropriate, any predecessor statute.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement dated
August 14, 2001 between ABN AMRO Incorporated, on behalf of CM and ▇▇▇▇▇▇ ▇.
▇▇▇▇ Merchant Banc LLC.
"CONFIDENTIAL INFORMATION MEMORANDUM" shall have the meaning set forth
in Section 5.25.
"CONTRACTS" means written contracts or other binding agreements.
"CONTROL" (including, with correlative meanings, the terms "controlled
by" and "under common control with"), as used with respect to any Person, means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"COSTS" shall have the meaning set forth in Section 11.1.
"DAMAGES" shall have the meaning set forth in Section 11.1.
"DISCLOSED INTELLECTUAL PROPERTY" shall have the meaning set forth in
Section 5.13(a).
"EARNOUT" shall have the meaning set forth in Section 2.5(b).
"EARNOUT AGREEMENT" shall have the meaning set forth in Section
2.5(b).
"ENCUMBRANCES" shall have the meaning set forth in Section 5.6.
"ENVIRONMENTAL LAW" means any federal, state or local statute, law or
regulation, in effect on the date hereof relating to pollution or protection of
the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ESCROW AGENT" shall mean Fleet National Bank.
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"ESCROW AGREEMENT" shall mean the Escrow Agreement in the form
attached hereto as Schedule 3.2(a).
"ESCROW AMOUNT" shall mean $1,750,000.
"EXCLUDED ASSETS" shall have the meaning set forth in Section 2.2.
"EXCLUDED LIABILITIES" shall have the meaning set forth in Section
2.4.
"FINAL TERMINATION DATE" shall have the meaning set forth in Section
3.3(b).
"FINAL BALANCE SHEET" shall have the meaning set forth in Section 4.1.
"HAZARDOUS MATERIALS" means any hazardous materials, hazardous wastes,
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law.
"INTELLECTUAL PROPERTY" means all registered and unregistered
intellectual property rights of and in which Seller and the Subsidiary have any
interest which are used in connection with the conduct of their businesses,
including without limitation, all of the following items along with all income,
royalties, damages, equitable relief and payments due or payable prior to or at
the Closing or thereafter (including, without limitation, damages, equitable
relief and payments for past, present or future infringements or
misappropriations thereof, the right to ▇▇▇ and recover for past infringements
or misappropriations thereof and any and all corresponding rights that, now or
hereafter, may be secured throughout the world): (i) patents, patent
applications, patent disclosures and inventions (whether or not patentable and
whether or not reduced to practice) and any reissue, continuation,
continuation-in-part, division, revision, extension or reexamination thereof;
(ii) trademarks, service marks, industrial designs, trade dress, internet domain
names and web sites, logos, topographies, trade names and corporate names (other
than those owned or used by CM or any of its Affiliates, other than the Seller
or the Subsidiary), together with all goodwill associated therewith; registered
and unregistered copyrights, copyrightable works and mask works; (iii) all
registrations, applications and renewals for any of the foregoing; (iv) trade
secrets and confidential information (including, without limitations, ideas,
formulae, compositions, know-how, manufacturing and production processes and
techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, financial, business and marketing
plans, customer and supplier lists and related information); (v) computer
software and software systems owned or licensed by the Seller or the Subsidiary
(including, without limitation, data, databases and related documentation),
other than the computer software and software systems owned or licensed by CM;
(vi) other proprietary rights; (vii) licenses or other agreements to or from
third parties regarding the foregoing; and (viii) all copies and tangible
embodiments of the foregoing (in whatever form or medium).
"INTERCREDITOR AGREEMENT" shall have the meaning set forth in Section
9.11.
"LIABILITIES" means all of the liabilities and obligations of the
Seller and the Subsidiary determined in accordance with the Accounting
Principles, other than the Excluded Liabilities.
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"LICENSES" means permits, licenses, franchises, orders, approvals,
consents, certificates, registrations and other authorizations or other similar
rights granted by foreign, federal, provincial, state and any local governments,
governmental agencies, judicial authority or regulatory body.
"LOSSES" shall have the meaning set forth in Section 11.1.
"MATERIAL ADVERSE EFFECT" means any effect on the Seller and the
Subsidiary that is materially adverse to the financial condition, assets,
liabilities or operations of the Seller and the Subsidiary in excess of
$200,000, except Material Adverse Effect shall not include any effect resulting
from (i) any occurrence, condition or circumstance affecting the material
handling or conveyor industries generally, (ii) any changes in general economic
conditions, stock or other trading markets or regulatory or political conditions
or (iii) the matters referred to in SCHEDULES 5.23 AND 5.24.
"NET VALUE" means the excess of the value of the Assets over the
Liabilities, as reflected on the Final Balance Sheet.
"NOTE" shall have the meaning set forth in Section 2.5(a)(ii).
"PENDING FIELD ORDER" shall mean, consistent with the Seller's past
practice, field orders in process but for which final written approval has not
as yet been obtained.
"PERSON" means an individual, corporation, partnership, trust or
unincorporated organization or a government or any agency or political
subdivision thereof.
"▇▇▇▇▇▇▇▇ ▇▇▇▇▇" shall mean Phillips, Lytle, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇
LLP, legal counsel to CM and the Seller.
"PRE-CLOSING PERIOD" shall mean any period which ends on or before the
Closing Date.
"PROPERTY" shall have the meaning set forth in Section 5.14.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.5(a).
"REAL PROPERTY" shall have the meaning set forth in Section 5.6.
"REFERENCE SHAREHOLDER'S EQUITY" shall mean $43,752,678.
"RESTRICTED BUSINESS" shall have the meaning set forth in Section
7.11.
"RETURNS" means all returns, reports, estimates, information returns
and statements of any nature with respect to Taxes.
"SELLER BENEFIT PLANS" shall have the meaning set forth in Section
5.12.
"SELLER INDEMNITEE" and "SELLER INDEMNITEES" shall have the respective
meanings set forth in Section 11.2.
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"SPA" shall have the meaning set forth in Section 9.10.
"SPECIAL RECEIVABLES" shall mean the Accounts Receivable listed on
SCHEDULE 1.1(A) which shall have the net value reflected in such Schedule.
"STAY PAY AGREEMENT" shall have the meaning set forth in Section 7.13.
"SUBSIDIARY" means Automatic Systems Conveyors, Limited, a Canadian
corporation.
"SURVEY" shall have the meaning set forth in Section 3.2(a)(i).
"TAX" or "TAXES" means any federal, state, local or foreign income,
gross receipts, value added, profits, franchise, transfer, sales, use, payroll,
occupation, property (real or personal), excise and similar taxes (including
interest, penalties or additions to such taxes).
"TRANSITIONAL SERVICES AGREEMENT" shall have the meaning set forth in
Section 3.2(a)(vi).
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 PURCHASE AND SALE. On the terms and subject to the conditions
contained in this Agreement, except as hereafter provided, at the Closing, Buyer
shall purchase from the Seller, and the Seller shall sell, convey, assign and
transfer to Buyer, and Buyer shall purchase from Seller free and clear of all
Encumbrances (except for Assumed Obligations), all rights, titles and interests
of every kind and nature in and to all of the assets and properties owned,
licensed or leased by the Seller (including indirect and other forms of
beneficial ownership) as of the Closing Date, which are used in, useful for or
otherwise associated with the business conducted by the Seller, whether
tangible, intangible, personal or real and wherever located and by whomever
possessed, including without limitation, all of the following assets, but in all
cases excluding all Excluded Assets (the "Assets"):
(a) Seller's right, title and interest in and to the Real Property
described in SCHEDULE 5.6 (including, without limitation, fixtures, fittings and
improvements thereon, easements, servitudes, rights of way and the appurtenances
thereto, including appurtenant rights in and to public streets, whether or not
vacated);
(b) all tangible personal property consisting of the equipment,
machinery, office equipment, furniture, fixtures, leasehold improvements,
vehicles and supplies;
(c) all inventory, production supplies, spare parts, raw materials,
work in progress and finished goods;
(d) all cash, cash equivalents and Accounts Receivable;
(e) all prepaid expenses and prepaid deposits;
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(f) all interest in and to, and rights under, all of the Contracts of
the Seller or the Subsidiary (subject to the provisions of Section 7.15) and all
of Seller's and CM's interest in and to, and rights under, all noncompetition
agreements entered into in connection with the consummation of the transaction
under the SPA (which have not expired) not released pursuant to Section 9.10,
except to the extent they relate to LICO Steel, Inc.;
(g) all of Seller's interest in and to the Intellectual Property,
including all of Seller's rights to use the name "Automatic Systems Inc.";
(h) operational records of Seller relating to the businesses of the
Seller and the Subsidiary, including office and sales records, blueprints,
marketing strategies, business plans, studies and inventory lists and records
(but expressly excluding Seller's employee records, capital stock records,
corporate minute books, bank account records and tax returns);
(i) all claims, deposits, prepayments, warranties, guarantees,
refunds, causes of action, rights of recovery, rights of set-off and rights of
compensation of every kind and nature, including, all claims and all proceeds
from all claims under any insurance policies of the Seller or its Affiliates
insuring the Assets which arise from events occurring after March 31, 2002 and
before the Closing Date, to the extent provided in Section 12.16, other than (x)
prepaid Taxes (other than real or personal property Taxes) and (y) those
relating solely to Excluded Assets or Excluded Liabilities;
(j) any transferable interest in all Licenses and all data and records
pertaining thereto;
(k) except as provided in Section 12.16, all warranty and condemnation
proceeds received after March 31, 2002, with respect to damage, non-conformance
of or loss to the Assets,
(l) all rights to receive mail or other communications addressed to
Seller and relating to its business or the Assets, including, without
limitations, the Accounts Receivable, but not including any mail or
communication relating to Excluded Assets, Excluded Liabilities or Taxes, other
than real or personal property Taxes; and
(m) all other assets of Seller, not described above and not Excluded
Assets, which are either (1) reflected on the Final Balance Sheet and not
disposed of by Seller in the ordinary course of business between March 31, 2002
and the Closing Date; or (2) acquired by Seller in the ordinary course of
business after March 31, 2002 and before the Closing Date and not disposed of
before the Closing Date.
2.2 EXCLUDED ASSETS. Notwithstanding anything else contained in this
Agreement, the "Assets" shall not include, and Buyer shall not acquire
hereunder: (i) any of the capital stock of Seller, (ii) any Seller Benefit
Plans, or any interest therein or right thereunder and any Contracts and
accounts relating thereto, (iii) any rights of Seller under this Agreement or
any other agreement or instrument arising in connection herewith; (iv) Seller's
corporate, financial and Tax records, (v) subject to the provisions of Section
12.16, insurance claims or proceeds of or due Seller not otherwise included in
the Assets, (vi) Seller's insurance policies, (vii) any prepayments or deposits
for Taxes, other than real or personal property Taxes, or any deferred income
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Tax assets, (viii) any proprietary information pertaining solely to the Excluded
Assets, (ix) any obligations and amounts due from Affiliates of the Seller,
other than the Subsidiary, (x) any computer, software, data or information
processing systems and related equipment owned or licensed by an Affiliate of
Seller, (xi) the shares of capital stock of LICO Steel, Inc.; (xii) goodwill;
and (xiii) the assets listed on SCHEDULE 2.2 (collectively, the "Excluded
Assets").
2.3 ASSUMED OBLIGATIONS. Commencing from and after the Closing Date,
Buyer shall assume and agree to pay, perform and discharge, when due (subject to
the right to contest the same in good faith) the following liabilities and
obligations of Seller and the Subsidiary whether absolute, contingent or fixed
including: (i) the obligations and liabilities of Seller that are reflected on
the Final Balance Sheet or incurred by the Seller or the Subsidiary after March
31, 2002 consistent with the provisions of Sections 5.15 and 7.3, (ii) duties,
liabilities, and obligations under all Contracts of the Seller or the
Subsidiary, (iii) payables for goods, supplies or services ordered by Seller or
the Subsidiary prior to the Closing in the ordinary course of business, (iv)
duties, liabilities and obligations under the collective bargaining agreements
of the Seller or the Subsidiary, (v) performance of the backlog orders and
orders obtained after Closing from bids binding on the Seller or the Subsidiary,
(vi) accrued vacation for employees of the Seller and the Subsidiary, (vii)
▇▇▇▇▇▇▇▇ in excess of revenues with respect to the Contracts of the Seller or
the Subsidiary, and (viii) warranty and other contractual obligations of the
Seller and the Subsidiary with respect to goods and services provided by the
Seller or the Subsidiary, (ix) obligations for subcontractor payables associated
with the Special Receivables, (x) the Assumed Portion and (xi) the obligations
listed on SCHEDULE 2.3 (the "Assumed Obligations"). The Buyer does not assume or
agree to pay, perform or discharge liabilities, or obligations for any Taxes of
Seller or any of Seller's Affiliates other than real or personal property Taxes,
and non-income Taxes incurred after March 31, 2002.
2.4 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
contained in this Agreement and regardless of whether such liability or
obligation is disclosed in this Agreement or any instrument, agreement or
document executed and delivered under this Agreement or on any schedule hereto
or thereto, Buyer will not assume or be directly or indirectly liable for any
liabilities or obligations of Seller or its Affiliates not described in Section
2.3, any obligation or liability whatsoever related to Excluded Assets which is
not an Assumed Obligation, the liabilities described in SCHEDULE 2.4, to the
extent provided in such Schedule, and all obligations for self-retained or
self-insured amounts and deductibles under insurance policies owned by CM or its
Affiliates covering the Seller (the "Excluded Liabilities").
2.5 PURCHASE PRICE AND PAYMENT FOR ASSETS.
(a) PURCHASE PRICE. The purchase price for the Assets shall be
$32,993,000 less the amount of the Special Receivables as set forth in SCHEDULE
1.1(A). ("Purchase Price"). The Purchase Price shall be paid at Closing as
follows:
(i) $1,750,000 cash to the Escrow Agent pursuant to the Escrow
Agreement at Closing;
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(ii) a Subordinated Promissory Note in the original principal
amount of twenty-five percent (25%) of the Purchase Price in the form attached
hereto as SCHEDULE 2.5(A)(II) (the "Note"); and
(iii) the balance of the Purchase Price in cash to Seller or its
designee at Closing.
(b) EARNOUT. Buyer shall also pay to Seller or its assignee, an Earnout of up to
$10,000,000 ("Earnout") pursuant to an Earnout Agreement in the same form as the
Earnout Agreement attached hereto as SCHEDULE 2.5 ("Earnout Agreement").
(c) SPECIAL RECEIVABLES. The Buyer shall pay to Seller or its assignee, when
collected by the Buyer, seventy-five percent (75%) of the amounts collected with
respect to the Special Receivables (net of all costs of collection and
subcontractor claims) until Seller or its assignee has received $849,000 and
then Seller or its assignee, shall be paid twenty-five percent (25%) of all
additional amounts collected (net of all costs of collection and subcontractor
claims) with respect to the Special Receivables.
(d) PAYMENT OF PURCHASE PRICE. At the Closing the cash portion of the
Purchase Price shall be paid by the Buyer to the Seller or its designee by wire
transfer as provided in Section 3.2(b).
ARTICLE 3
CLOSING AND TERMINATION
3.1 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the transactions provided for herein (the "CLOSING") will take place
at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP at One Kansas City Place, 1200 Main, Suite
3500, Kansas City, Missouri at 10:00 a.m. (local time) on May 10, 2002, or at
such other time and place as the Buyer and the Seller shall agree in writing
(the date of the Closing being the "CLOSING DATE").
3.2 CLOSING DELIVERIES.
(a) At the Closing, the Seller shall convey all of the Assets to the Buyer and
will deliver or cause to be delivered to the Buyer the following:
(i) deeds, bills of sale, assignments and other instruments of
transfer and conveyance, including an affidavit executed by an individual with
knowledge, affirming no change in the ALTA/ACSM Land Title Survey by ▇▇▇▇▇▇▇ and
Associates Land Surveyors, dated November 12, 1996 of the Real Property
("Survey"), each in a form agreed to by Buyer and Seller and duly executed by
Seller;
(ii) subject to the provisions of Section 7.15, an assignment and
assumption agreement in the same form as attached hereto as SCHEDULE 3.2(A)(II)
("Assignment and Assumption Agreement) duly executed by the Seller;
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(iii) each of the certificates and other documents contemplated
by Article 9 hereof;
(iv) the Earnout Agreement duly executed by CM;
(v) an opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, executed and dated as of the
Closing Date, addressed to the Buyer and its lender, in the same form attached
hereto as SCHEDULE 3.2(A)(V);
(vi) the Transitional Services Agreement duly executed CM set out
in SCHEDULE 3.2(A)(VI) ("Transitional Services Agreement"); and
(vii) the Escrow Agreement duly executed by CM and the Seller in
the form of Escrow Agreement set out in SCHEDULE 3.2(A)(VII) attached hereto
("Escrow Agreement").
(b) At the Closing, the Buyer will deliver to the Seller the following:
(i) the cash portion of the Purchase Price by wire transfer in
immediately available funds, to a bank account in the United States designated
by the Seller;
(ii) the Escrow Amount by wire transfer in immediately available
funds to a bank account designated by the Escrow Agent;
(iii) the Assignment and Assumption Agreement duly executed by
the Buyer;
(iv) the Note duly executed by the Buyer;
(v) each of the certificates and other documents contemplated by
Article 8 hereof;
(vi) the Earnout Agreement duly executed by the Buyer;
(vii) the Transitional Services Agreement duly executed by the
Buyer;
(viii) an opinion of counsel of ▇▇▇▇▇ ▇▇▇▇, executed and dated as
of the Closing Date, in the same form attached hereto as SCHEDULE 3.2(B)(VIII);
(ix) the Assignment and Assumption Agreement duly executed by the
Buyer; and
(x) the Escrow Agreement duly executed by the Buyer.
3.3 TERMINATION. This Agreement may be terminated at any time prior to
Closing:
(a) by the mutual written consent of the Buyer and the Seller; or
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(b) by either the Buyer or the Seller, if the transactions
contemplated hereby are not consummated on or before May 10, 2002, (the "FINAL
TERMINATION DATE"); or
(c) by the Buyer, if the Seller shall breach in any material respect
any of its representations, warranties or obligations hereunder and such breach
shall not have been cured or waived on or before the Final Termination Date, but
only if such breach, singly or together with all other such breaches,
constitutes a failure of the condition contained in Section 9.1 or Section 9.2
as of the date of such termination; or
(d) by the Seller, if the Buyer shall breach in any material respect
any of its representations, warranties or obligations hereunder and such breach
shall not have been cured on or before the Final Termination Date, but only if
such breach, singly or together with all other such breaches, constitutes a
failure of the condition contained in Section 8.1 or Section 8.2 as of the date
of such termination; or
(e) by either the Buyer or the Seller if the parties are unable to
resolve their disputes with respect to the Final Balance Sheet as provided in
Section 4.3.
ARTICLE 4
FINAL BALANCE SHEET
4.1 PREPARATION OF FINAL BALANCE SHEET. The Seller shall prepare in good
faith and deliver to Buyer the consolidated final balance sheet showing Assets,
Liabilities (minus Seller's investment in LICO Steel, Inc. and the assets and
liabilities of LICO Steel, Inc.) and Net Value at such date which has been
prepared in accordance with the Accounting Principles and this Agreement (the
"Final Balance Sheet"). Seller shall allow Buyer and Buyer's representatives to
observe Seller's activities in connection with the preparation of the Final
Balance Sheet and shall provide all work papers to Buyer and Buyer's
representatives for the purpose of reviewing the Final Balance Sheet. Buyer and
Buyer's representatives may review the Final Balance Sheet and the books of
account of the Seller and the Subsidiary and may make inquiry of the
representatives of Seller and its representatives. The Buyer and the Seller
shall negotiate to attempt to resolve any disputes concerning the Final Balance
Sheet prior to the Closing Date.
4.2 CM ADJUSTMENT. If the Buyer and Seller resolve all disputes
concerning the Final Balance Sheet: (i) if the Reference Shareholder's Equity
exceeds the Net Value, CM shall contribute to the Seller prior to the Closing an
amount of cash equal to such excess and such cash contribution shall be included
in the Assets, as agreed by the Buyer and CM; or (ii) if the Net Value exceeds
the Reference Shareholder's Equity, the Buyer shall make an additional cash
payment at Closing equal to such excess.
4.3 FAILURE TO RESOLVE DISPUTES. If the Buyer and the Seller are unable
to resolve their disputes with respect to the Final Balance Sheet, either party
shall have the right to terminate this Agreement pursuant to Section 3.3(e).
4.4 CM ADVANCES. If CM makes cash advances to the Seller which are not
reflected on the Final Balance Sheet, such cash advances shall first be credited
against any contributions CM may be required to make pursuant to Section 4.2(i)
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and any such advances in excess of such required contributions not previously
repaid to CM, shall be refunded in cash to CM by the Buyer at the Closing.
4.5 RECEIPTS FROM SPECIAL RECEIVABLES. If any payments or other amounts
are received by the Seller after March 31, 2002 with respect to the Special
Receivables, notwithstanding any other provision of this Agreement, such
payments or other amounts shall be promptly paid after Closing as provided in
Section 2.5(c).
4.6 REPAYMENT OF CM. The Buyer shall promptly reimburse CM in cash for the
amount of any Assumed Obligations which CM or, after the Closing, the Seller, is
obligated to pay and, in fact, did pay to third parties.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer that:
5.1 ORGANIZATION OF THE SELLER AND THE SUBSIDIARY; AUTHORITY. The Seller
is a corporation validly existing and in good standing under the laws of the
State of Missouri, with the corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The Subsidiary is a
corporation validly existing and in good standing under the laws of Ontario and
has all the requisite corporate power and authority to carry on its business as
now being conducted and to own and use the properties owned and used by it. The
Seller and the Subsidiary are each qualified to do business in each jurisdiction
in which the nature of its business requires it to be so qualified, except to
the extent the failure to so qualify has not had, and would not reasonably be
expected to have, a Material Adverse Effect. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action on the part of the Seller.
Assuming the due authorization, execution and delivery hereof by the Buyer, this
Agreement has been duly executed and delivered by the Seller and constitutes the
valid, binding and enforceable obligation of the Seller, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization or
similar laws affecting creditors' rights generally or by general equitable
principles.
5.2 CAPITALIZATION OF THE SELLER; AUTHORITY. All of the issued and
outstanding shares of capital stock of the Seller are duly authorized, validly
issued, fully paid and non-assessable and owned of record by CM. There are no
outstanding options, warrants or other rights of any kind to acquire any
additional shares of capital stock of the Seller or securities convertible into
or exchangeable for, or which otherwise confer on the holder thereof any right
to acquire, any such additional shares, nor is the Seller committed to issue any
such option, warrant, right or security. Except as set forth in SCHEDULE 5.2
Seller has full legal right, power and authority to sell, transfer and assign
the Assets to the Buyer in the manner contemplated by this Agreement.
5.3 SUBSIDIARY. SCHEDULE 5.3 sets forth the Seller's equity interest in
the Subsidiary. Except as set forth on SCHEDULE 5.3, all outstanding capital
stock of the Subsidiary owned by the Seller is owned free and clear of any and
all liens, claims, pledges, voting agreement, security interests or options. All
shares of capital stock of the Subsidiary have been validly issued and are fully
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paid and non-assessable. There are no outstanding options, warrants or other
rights of any kind to acquire any additional shares of capital stock of the
Subsidiary or securities convertible into or exchangeable for any additional
shares of capital stock of the Subsidiary, nor is the Subsidiary committed to
issue any such option, warrant, right or security. There are no outstanding
options, warrants or other rights of any kind to acquire any additional equity
interests of the Subsidiary, nor is the Subsidiary committed to issue any such
option, warrant or right. Seller does not have, directly or indirectly, any
equity interest in any other corporation, joint venture, partnership, limited
liability company or other entity, other than its ownership of capital stock of
LICO Steel, Inc. and other than any equity interest evidenced by marketable
securities.
5.4 ABILITY TO CARRY OUT THE AGREEMENT. Except as disclosed on SCHEDULE
5.4, neither the Seller nor the Subsidiary is subject to or bound by any
provision of
(i) any law, statute, rule, regulation or judicial or
administrative decision,
(ii) any articles or certificate of incorporation or by-laws, or
(iii) any judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator,
that would prevent or be violated by or under which there would be a default as
a result of this Agreement and the transactions contemplated hereby, other than
violations, defaults or failures which, singly and in the aggregate, have not
had and are not reasonably likely to have a Material Adverse Effect or a
material adverse effect on the ability of the Seller to perform its obligations
under this Agreement.
5.5 FINANCIAL STATEMENTS.
(a) Attached hereto as SCHEDULE 5.5(A) are copies of (i) the unaudited
consolidated balance sheet for the Seller and the Subsidiary as of October 28,
2001, adjusted to exclude (x) the Excluded Assets and (y) the Excluded
Liabilities, (ii) the unaudited consolidated statement of operations for the
Seller and the Subsidiary for the seven fiscal months ended October 28, 2001,
(iii) the unaudited consolidated statement of cash flows for the Seller and the
Subsidiary for the seven fiscal months ended October 28, 2001, and (iv) the
unaudited consolidated balance sheets for the Seller and all of its
subsidiaries, other than LICO Steel, Inc. as of March 31, 1999, March 31, 2000
and March 31, 2001 and the unaudited consolidated statements of operations and
cash flow for each of the years then ended, prepared based on the audited
financial statements of CM of which the Seller and such subsidiaries were a
part. Each of such statements in subsection (iv) above, except as set forth on
SCHEDULE 5.5(A), has been prepared in conformity with United States generally
accepted accounting principles, in effect on the date of each such statement,
consistently applied, and fairly present the consolidated financial position of
the Seller at the respective dates thereof and the consolidated results of
operations of the Seller and its cash flows for the periods then ended.
(b) Except for liabilities or obligations reflected or reserved against in the
Final Balance Sheet or as provided in SCHEDULE 5.5(B), neither the Seller nor
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the Subsidiary has any liabilities, whether absolute, accrued, contingent or
otherwise, that would be required by the Accounting Principles to be reflected
on a consolidated balance sheet of the Seller, that will not be reflected or
reserved against in the Final Balance Sheet, except for (x) liabilities incurred
by the Seller or the Subsidiary after March 31, 2002 consistent with the
provisions of Sections 5.15 and 7.3 and (y) Excluded Liabilities.
5.6 TITLE TO PROPERTIES; ABSENCE OF LIENS.
(a) SCHEDULE 5.6 lists all real properties either owned or leased by the Seller
or the Subsidiary. Each of the Seller and the Subsidiary: (i) has good and
marketable title to all of its owned real properties, subject to the
Encumbrances shown on SCHEDULE 5.6 ("Real Property"); (ii) possesses a valid
leasehold interest in its leased real properties; (iii) confirms and affirms
that as to the property described in the Survey, there are no additional
improvements, encroachments or matters which would be revealed by a current
accurate survey, except as disclosed by the above survey, and (iv) has title to,
or leasehold or license interests in, all of its personal properties and assets
used solely in the businesses of the Seller or the Subsidiary or reflected on
the Final Balance Sheet, free and clear of any mortgages, assessments, pledges,
conditional sales agreements, liens and security interests ("ENCUMBRANCES"),
except that the term "Encumbrances" shall not include (a) encumbrances or
exceptions set forth on SCHEDULE 5.6, (b) encumbrances of record or otherwise
that do not and will not materially interfere with the present use by the Seller
or the Subsidiary of the property subject thereto or affected thereby or which
otherwise have not in the aggregate had a Material Adverse Effect, (c)
encumbrances for taxes, assessments or governmental charges, or landlords',
mechanics', workmen's, materialmen's or similar liens, in each case that are not
delinquent or which are being contested in good faith and (with reasonable
reserves provided therefore), and (d) encumbrances that are reflected in the
title reports or surveys, if any, delivered or otherwise made available to the
Buyer in connection with the transactions contemplated hereby. No property or
assets of the Seller of the Subsidiary has been disposed of or acquired since
March 31, 2002 other than in the ordinary course of business consistent with
past practice.
(b) The Seller has delivered or made available to Buyer copies of the deeds and
other instruments (as recorded) by which the Seller or the Subsidiary acquired
all Real Property and copies of all title insurance policies, opinions,
abstracts, and surveys in the possession of CM, the Seller or the Subsidiary and
relating to such property. To Seller's knowledge, all buildings, plants, and
structures included in the Assets lie wholly within the boundaries of the real
property included in the Assets and do not encroach upon the property of, or
otherwise conflict with the property rights of, any other Person. To Seller's
knowledge, all real property owned or leased by Seller or the Subsidiary
complies with all zoning laws, regulations and orders and are not subject to any
rights of way, building use restrictions, exceptions, variances, reservations,
any existing or proposed plan to modify or realign any street or highway or
other limitations of any material nature.
5.7 LITIGATION. Except as disclosed on SCHEDULE 5.7, there is no action,
suit or proceeding pending or, to the knowledge of the Seller, threatened
against the Seller or the Subsidiary at law, in equity or otherwise, in, before,
or by any court or governmental agency or authority.
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5.8 COMPLIANCE WITH LAW. Except as disclosed on SCHEDULE 5.8, the business
of the Seller and the Subsidiary is being conducted in compliance with all laws,
ordinances and regulations of any governmental entity applicable to the Seller
and the Subsidiary, except for violations, if any, which singly and in the
aggregate have not had, and are not reasonably likely to have, a Material
Adverse Effect. All Licenses required by the Seller and the Subsidiary in
connection with the conduct of its business have been obtained and are in full
force and effect and are being complied with, except for such which singly and
in the aggregate have not had, and are not reasonably likely to have, a Material
Adverse Effect.
5.9 CONTRACTS. SCHEDULE 5.9(A) includes each Contract outstanding as of
April 28, 2002, to which the Seller or the Subsidiary is a party which,
(i) involves future payment or receipt of in excess of $100,000
or future performance or receipt of services or delivery or receipt of goods and
materials, in each case with an aggregate value in excess of $100,000, including
but not limited to sale and purchase agreements, distributorship agreements and
loan agreements, notes and other financing documents;
(ii) is a guarantee in respect of indebtedness of any Person
(other than the Seller or the Subsidiary) or is a mortgage, security agreement
or other collateral arrangement securing indebtedness of any Person (other than
the Seller or the Subsidiary) and creating Encumbrances on properties and assets
of the Seller or the Subsidiary;
(iii) is a lease providing for monthly rental payments in excess
of $50,000 in the aggregate over the life of the Contract (exclusive of charges
for taxes, insurance, utilities, maintenance and repair) or $25,000 in any
month;
(iv) is a written employment or consulting Contract (excluding
contract engineers) or is a contract (written or oral) entered with any employee
to induce the employee to remain in the employment of the Seller or the
Subsidiary (the "Stay Bonus Agreement");
(v) is a material software or other technology license agreement
(other than standard so-called "shrink wrap" license);
(vi) that by its terms materially limits the Seller's or the
Subsidiary's freedom to compete in any line of business;
(vii) is a contract or agreement to sell, lease or otherwise
dispose of any asset valued at more than $5,000 other than in the ordinary
course of business consistent with past practice; or
(viii) is any other agreement or contract, commitment or series
of related agreements, contracts or commitments which, in any case, involve
payments or receipts of more than $100,000 over the life of such agreement or
contract; or
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(ix) is otherwise material to the Seller or the Subsidiary or its
business or operations.
(b) There is no default by the Seller or the Subsidiary or, to the
knowledge of the Seller, by any third party, under any Contract required to be
described in SCHEDULE 5.9(A), except for defaults which have not had, and are
not reasonably likely to have, a Material Adverse Effect or except as described
on SCHEDULE 5.9(B).
(c) Virtually all of the Contracts of the Seller or the Subsidiary may
not be assigned without the consent of the other party thereto and SCHEDULE
5.9(C) designates those consents to assignment which are required to be obtained
by the Buyer as a condition to Closing.
5.10 BROKERS AND INTERMEDIARIES. Except for ABN AMRO Incorporated, neither
the Seller, nor the Subsidiary has made arrangements with or employed any
broker, finder, investment banker advisor or intermediary in connection with the
transactions contemplated by this Agreement which would be entitled to a
broker's, finder's or similar fee or commission in connection therewith or upon
the consummation thereof. The Seller shall be responsible for making any
payments to which ABN AMRO Incorporated shall be entitled.
5.11 TAX MATTERS. Except as disclosed on SCHEDULE 5.11:
(a) The Seller and the Subsidiary have filed or caused to be filed (on
a timely basis since March 31, 1998) all Tax Returns that are or were required
to be filed by or with respect to any of them, either separately or as a member
of a group of corporations, pursuant to applicable law, rule, regulation or
order ("Legal Requirement"). SCHEDULE 5.11 contains a complete and accurate list
of all such Tax Returns filed since March 31, 1998 that related to periods
beginning after such date. Seller and the Subsidiary have paid, or made
provision for the payment of, all Taxes that have or may have become due
pursuant to those Tax Returns or otherwise for all Pre-Closing Periods, or
pursuant to any assessment received by Seller or the Subsidiary.
(b) There is no action, suit, proceeding, investigation, audit or
claim now pending regarding any Taxes of Seller or the Subsidiary for any
Pre-Closing Period and there are no agreements for the extension of the time for
assessment of any Taxes of Seller or the Subsidiary for any Pre-Closing Period.
(c) There exists no proposed tax assessment against the Seller or the
Subsidiary and all Taxes that the Seller or the Subsidiary is or was required by
Legal Requirements to withhold or collect have been duly withheld or collected
and, to the extent required, have been paid to the proper governmental body or
other Person.
(d) All Tax Returns filed by (or that include on a consolidated basis)
the Subsidiary are true, correct, and complete. True copies of the most recent
of such Tax Returns (or the portion of such Tax Returns which include the
Subsidiary) have been provided to Buyer. There is no tax sharing, allocation,
indemnification or similar arrangement that will require any payment by the
Subsidiary after the date of this Agreement that relate to a period prior to the
Closing Date.
15
(e) The Subsidiary has not applied for, been granted or agreed to any
accounting method change for which it will be required after the Closing to take
into account any adjustment under Code section 481 or any similar Code provision
or the corresponding tax law of any nation, state or locality.
(f) No election under Code section 341(f) has been made or shall be
made prior to the Closing Date to treat the Subsidiary as a "consenting
corporation" as defined in Code section 341.
5.12 EMPLOYEE BENEFITS.
(a) SCHEDULE 5.12 sets forth all employee benefit plans (as defined in
Section 3(3) of ERISA) and any bonus, deferred compensation, incentive
compensation, severance or termination pay, change in control, compensation and
death benefit plans maintained or contributed to by the Seller or any Affiliate
of the Seller and applicable to employees of the Seller or the Subsidiary (the
"Seller Benefit Plans") and all fringe benefit plans or programs maintained by
the Seller or the Subsidiary.
(b) Except as indicated in SCHEDULE 5.12(B):
(i) no Seller Benefit Plans maintained by the Seller is subject
to Title IV of ERISA;
(ii) each of the Seller Benefit Plans that is intended to be a
qualified plan, the account balances of which may be rolled over into a
comparable plan maintained by Buyer, has received a favorable determination
letter from the Internal Revenue Service and to Seller's knowledge nothing has
occurred and no condition exists that could cause the loss of such
qualification;
(iii) none of the employees of Seller or the Subsidiary are
participants in a "multiemployer plan" as defined in Section 4001(a) of ERISA;
(iv) the Seller would incur no withdrawal liability under Section
4201(a) of ERISA determined without regard to the adjustments in Subsections
4201(b)(1)(A), (B) and (C) if the Seller were to have had a complete withdrawal
with respect to any multiemployer plan at Closing; and
(v) no Seller Benefit Plan provides medical coverage to persons
who are no longer employed by Seller except as required under ERISA Section 601.
5.13 INTELLECTUAL PROPERTY.
(a) Set forth on SCHEDULE 5.13 hereto is a list of all patents,
trademarks, trade names, service marks and copyrights that are owned or used by
the Seller or the Subsidiary and are necessary for the operation of the Seller's
business as presently conducted ("Disclosed Intellectual Property") and except
as disclosed on SCHEDULE 5.13, (i) to the knowledge of the Seller, the Seller
owns or possesses, or owns or possesses licenses or other valid rights to use
the same; and (ii) to the knowledge of the Seller, the conduct of the business
16
of the Seller and the Subsidiary as now being conducted does not infringe or
conflict with, nor has it been alleged to infringe or conflict with, any
patents, trademarks, trade names or copyrights or other intellectual property
rights of others.
(b) To the knowledge of the Seller, there is no claim or liability for
trademark, trade name, patent or copyright infringement as to any products
manufactured or sold in the businesses of the Seller and the Subsidiary.
(c) To the knowledge of the Seller, except as set forth on SCHEDULE
5.13, on the date hereof (i) there are no pending re-examination, opposition,
interference, cancellation or other administrative proceedings with respect to
any of the Disclosed Intellectual Property, and (ii) no order, holding, decision
or judgment has been rendered by any court of law or authority, and no
agreement, consent or pending litigation in a court of law exists to which the
Seller or the Subsidiary is a party, which would prevent the Seller, or the
Subsidiary from using or enjoying any of the Disclosed Intellectual Property.
5.14 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 5.14, each of
the representations and warranties set forth in subsections (a) through (e) of
this Section 5.14 is true and correct with respect to each parcel of real
property owned, leased or otherwise used by the Seller or the Subsidiary
(individually, a "PROPERTY" and collectively, the "PROPERTIES") except to the
extent that the facts and circumstances giving rise to any such failure to be so
true and correct, if not disclosed on SCHEDULE 5.14, would not reasonably be
expected to have a Material Adverse Effect:
(a) The Properties do not contain or emit, by activities or operations
of the Seller or the Subsidiary, in, on, under or from, including, without
limitation, the soil and groundwater thereunder, any Hazardous Materials;
(b) The Properties owned or leased by the Seller or the Subsidiary and
all operations and facilities at such Properties are in compliance with all
Environmental Laws and all governmental approvals, permits and Licenses required
for the Properties and all operations and facilities of the Properties under
Environmental Laws have been obtained and are in full force and effect and are
being complied;
(c) Since March 31, 1998, neither the Seller nor the Subsidiary nor
any of their respective Affiliates has received any written governmental
complaint, notice of violation, alleged violation, or investigation or notice of
potential liability or of potential responsibility regarding environmental
protection matters or permit compliance with regard to the Properties;
(d) Hazardous Materials have not been generated, stored, transported,
treated or disposed of by the Seller or the Subsidiary on the Properties or
transferred by the Seller or the Subsidiary from the Properties to any other
location except in compliance with all Environmental Laws in effect at the time
of such activities; and
(e) There are no governmental, administrative actions or judicial
proceedings pending or, to the knowledge of Seller, threatened under any
Environmental Laws to which the Seller or the Subsidiary is named or to be named
as a party with respect to the Properties or any Hazardous Materials transferred
from the Properties, nor are there any consent decrees or other decrees, consent
17
orders, administrative orders or other orders, under any Environmental Law with
respect to any of the Properties;
Anything in this Agreement to the contrary notwithstanding, this Section
5.14 shall be the exclusive representation and warranty relating to
environmental matters.
5.15 ABSENCE OF CERTAIN CHANGES. Except as set forth in SCHEDULE 5.15 or
any other Schedule hereto or as contemplated by this Agreement, between February
24, 2002 and the Closing Date, neither the Seller nor the Subsidiary have:
(i) purchased, sold, leased, transferred or assigned or agreed to
purchase, sell, lease, transfer or assign, any of its assets, tangible or
intangible involving more than $15,000 except, in the ordinary course of
business consistent with past practice;
(ii) entered into any contract, lease, sublease, license or
sublicense (or series of related contracts, leases, subleases, licenses and
sublicenses) except in the ordinary course of business consistent with past
practices;
(iii) accelerated, terminated, modified, or canceled any
contract, lease, sublease, license or sublicense (or series of related
contracts, leases, subleases, licenses and sublicenses) to which the Seller or
the Subsidiary is a party or by which it is bound, except in the ordinary course
of business consistent with past practice;
(iv) imposed any Encumbrances (except for Encumbrances set forth
on SCHEDULE 5.6 or otherwise permitted by Sections 5.6(a) through (d)
(inclusive)) upon any of its assets, except in the ordinary course of business
consistent with past practice;
(v) made any capital expenditure (or series of related capital
expenditures) involving more than $100,000;
(vi) made any capital investment in, any loan to, or any
acquisition of the securities or assets of any other Person (or series of
related capital investments, loans, and acquisitions), except in the ordinary
course of business consistent with past practice;
(vii) created, incurred, assumed, or guaranteed any indebtedness
for borrowed money (including capitalized lease obligations), except in the
ordinary course of business consistent with past practice;
(viii) canceled, compromised, waived, or released any right or
claim (or series of related rights and claims), except in the ordinary course of
business consistent with past practice;
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(ix) granted any license or sublicense of any rights under or
with respect to any material Intellectual Property outside of the ordinary
course of business consistent with past practice;
(x) made or authorized any change in the articles of
incorporation or bylaws of the Seller;
(xi) issued, sold, or otherwise disposed of any of its capital
stock, or granted any options, warrants, or other rights to purchase or obtain
(including upon conversion or exercise) any of its capital stock;
(xii) declared, set aside, or paid any non-cash dividend or
distribution with respect to its capital stock or redeemed, purchased, or
otherwise acquired any of its capital stock;
(xiii) experienced any damage, destruction, or loss to its
property that has, or to Seller's knowledge is reasonably likely to have, a
Material Adverse Effect;
(xiv) made any loan to, or entered into any other transaction
with, any of its directors, officers, and employees outside the ordinary course
of business giving rise to any claim or right on its part against the person or
on the part of the person against it;
(xv) entered into any employment contract or collective
bargaining agreement, written or oral, or modified the terms of any existing
such contract or agreement outside the ordinary course of business consistent
with past practice;
(xvi) granted any increase in the base compensation of any of its
directors, officers, and employees outside the ordinary course of business
consistent with past practice;
(xvii) adopted any (A) bonus, (B) profit-sharing, (C) incentive
compensation, (D) pension, (E) retirement, (F) medical, hospitalization, life,
or other insurance or (G) severance plan;
(xviii) made any other material change in employment terms for
any of its directors, officers, and employees outside the ordinary course of
business consistent with past practice; and
(xix) committed to do any of the foregoing.
5.16 EMPLOYEES, LABOR MATTERS, ETC. SCHEDULE 5.16 sets forth the name of
each employee of the Seller as of the date hereof. Except as set forth on
SCHEDULE 5.16, the Seller is not a party to or bound by any collective
bargaining or other labor agreement, and there are no labor unions or other
organizations representing or, to the knowledge of the Seller, purporting to
represent or attempting to represent any employees employed by the Seller.
Except as set forth on SCHEDULE 5.16, since April 1, 1998, there has not
occurred or, to the knowledge of the Seller, been threatened any material
19
strike, slowdown, picketing, work stoppage, concerted refusal to work overtime
or other similar labor activity with respect to any employees of the Seller.
Except as set forth on SCHEDULE 5.16, there are no material labor disputes
currently subject to any grievance procedure, arbitration or litigation and
there is no representation petition pending or, to the knowledge of the Seller,
threatened with respect to any employee of the Seller. The Seller has complied
with all applicable laws pertaining to the employment or termination of
employment of its employees, including, without limitation, all such applicable
laws relating to labor relations, equal employment opportunities, fair
employment practices, prohibited discrimination or distinction and other similar
employment activities, except for any failure so to comply that, individually
and in the aggregate, could not reasonably be expected to have a Material
Adverse Effect.
5.17 ACCOUNTS RECEIVABLE. Except to the extent reserved against in the
Final Balance Sheet, the Accounts Receivable reflected in the Final Balance
Sheet will be free and clear of any Encumbrances and will have arisen only from
bona fide transactions in the ordinary course of business, and to the knowledge
of the Seller, except as described on SCHEDULE 5.17, no material Accounts
Receivable in excess of the reserves for bad debt, returns and allowances of the
Seller (excluding any Excluded Assets) should have been written off as
uncollectible based on the past practices of the Seller. The reserve against bad
debts in the Final Balance Sheet will be established based upon the Accounting
Principles.
5.18 MAJOR CUSTOMERS; BACKLOG.(a) SCHEDULE 5.18(A) sets forth, for the
twelve month period ended March 31, 2002, (a) the names of the five (5) largest
customers of the Seller (based on the aggregate value of services or products
invoiced by the Seller to such customers during such period) and (b) the amount
for which each such customer was invoiced during such period. Except as
disclosed on SCHEDULE 5.18(A), the Seller has not received from any customer of
the Seller any written notice or, to the knowledge of the Seller, any other
notice (other than in connection with business negotiations in the ordinary
course and the subject of which is not reasonably expected to individually or in
the aggregate, have a Material Adverse Effect), that such customer (i) has
ceased, or will cease, to use the services or products of the Seller, (ii) has
materially reduced, or will materially reduce, the use of services or products
of the Seller or (iii) has sought, or is seeking, to materially reduce the price
it will pay for services or products of the Seller which, in the case of clause
(i), (ii) or (iii), either individually or in the aggregate would reasonably be
expected to have a Material Adverse Effect.
(b) Except as set forth on SCHEDULE 5.18(B), the Seller has not
received during the twelve month period ended on March 31, 2002 any written
notice or, to the knowledge of the Seller, any other notice (other than in
connection with business negotiations in the ordinary course and the subject of
which shall not individually or in the aggregate have a Material Adverse
Effect), that any Person with whom the Seller does business will not continue to
do business with the Seller after the Closing Date on terms and conditions
substantially the same as those prevailing during the past twelve (12) months if
such failure to continue would have a Material Adverse Effect.
(c) SCHEDULE 5.18(C) is a list of binding Contracts of the Seller and
the Subsidiary as of March 31, 2002 which have not been completed as of March
31, 2002.
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5.19 AFFILIATE TRANSACTIONS. SCHEDULE 5.19 contains a list of all
contracts, agreements, transactions or commitments between the Seller or any
affiliate of the Seller, any officer, employee or director of the Seller or the
Subsidiary, any family member of any of the foregoing or any other Affiliate of
any of the foregoing, on the one hand, and the Seller, on the other hand, other
than (i) compensation paid as part of the employment relationship for services
rendered (including directors' fees) or (ii) contributions by the Seller or
payments of benefits under any Seller Benefit Plans that are currently in effect
and that will not bind the Buyer after the Closing.
5.20 INVENTORIES. The inventories of the Seller and the Subsidiary, whether
reflected on the Final Balance Sheet or subsequently acquired, will be generally
of a quality and quantity usable or salable in the ordinary course of business,
subject to reserves reflected on the Final Balance Sheet. The inventories of the
Seller and the Subsidiary will be reflected on the Final Balance Sheet and in
their respective books and records in accordance with Accounting Principles.
Except as set forth in SCHEDULE 5.20, since March 31, 2002, there have not been
any write-downs of the value of, or establishment of any reserves against, any
inventory, except for write-downs and reserves in the ordinary course of
business and consistent with past practice and which will be reflected in the
Final Balance Sheet.
5.21 INSURANCE. Included in SCHEDULE 5.21 hereto is a list of all policies
of property, fire, liability, life and other forms of insurance, and indemnity
bonds, carried by or covering the Seller or the Subsidiary identifying the
nature of risks covered and the amount of coverage in each case and specifies
any year or years since March 31, 1998 when any such insurance was not in
effect. The amount of coverage for each such policy has been equal to or greater
than the amount required by Contracts. All such policies are in full force. The
Seller or the Subsidiary have given due and timely notice of any claim and of
any occurrence known to them which they believe may give rise to a material
claim which may be covered by any such insurance and have otherwise complied
with the provisions of such policies.
5.22 BOOKS AND RECORDS. The books of account, financial records and other
records of the Seller and the Subsidiary, all of which have been made available
to Buyer, represent actual bonafide transactions and to their knowledge have
been maintained in accordance with sound business practices, including
maintenance of an adequate system of internal controls. Except as disclosed in
Schedule 5.22, the stock books of the Subsidiary made available to Buyer are
correct and complete. At the Closing, those books will be given to Buyer.
5.23 CONDITION AND SUFFICIENCY OF ASSETS. To the knowledge of the Seller
and the Subsidiary, except as provided in SCHEDULE 5.23, the buildings, plants
and structures of the Seller and the Subsidiary are structurally sound and the
buildings, plants, structures, equipment and tangible personalty included in the
Assets (excluding inventory) that are being used in their business are in good
condition and repair, and are adequate for the uses to which they are being put
and none of such buildings, plants, structures, equipment or tangible personalty
has any latent defects or is in need of maintenance or repairs except for
ordinary, routine maintenance and repairs. The buildings, plants, structures,
equipment and tangible personalty included in the Assets are sufficient for the
continued conduct of the business of Seller and the Subsidiary by Buyer after
the Closing in substantially the same manner as conducted prior to the Closing.
21
5.24 GENERAL REPRESENTATION AND WARRANTY. Neither this Agreement nor any
Schedule furnished by or on behalf of the Seller in connection with this
Agreement to the knowledge of the Seller, except as provided in SCHEDULE 5.24,
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained herein or therein not
misleading. There is no fact known to CM, Seller or the Subsidiary that has not
been disclosed in the Agreement or the Schedules and not known to the Buyer that
has specific application to the Seller or the Subsidiary (other than general
political, economic or industry conditions) which, as far as the Seller can
reasonably foresee, materially threatens, the assets, business, prospects,
financial condition, or results of operations of the Seller and the Subsidiary
(on a consolidated basis) not set forth in this Agreement. The Seller makes no
representation or warranty regarding any projections, estimates, budgets or
forward-looking information heretofore delivered to or made available to Buyer
or any other Person.
5.25 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES; KNOWLEDGE;
DISCLOSURE.
(a) The Seller does not make, or has not made, any representations or
warranties relating to the Seller, the Subsidiary, or the businesses of the
Seller or the Subsidiary or otherwise in connection with the transactions
contemplated hereby other than those expressly set forth herein which are made
by the Seller. Without limiting the generality of the foregoing, the Seller has
not made, or shall not be deemed to have made, any representations or warranties
in the Confidential Information Memorandum dated September 2001, relating to the
businesses of the Seller and the Subsidiary supplied to the Buyer prior to the
date hereof (the "Confidential Information Memorandum") or in any presentation
of the businesses of the Seller and the Subsidiary in connection with the
transactions contemplated hereby, and no statement contained in the Confidential
Information Memorandum or made in any such presentation shall be deemed a
representation or warranty hereunder or otherwise. It is understood that any
cost estimates, projections or other predictions, any data, any financial
information or any memoranda or offering materials or presentations, including
but not limited to the Confidential Information Memorandum, are not and shall
not be deemed to be or to include representations or warranties of the Seller.
No Person has been authorized by the Seller or the Subsidiary to make any
representation or warranty relating to the Seller or the Subsidiary, the
businesses of the Seller or the Subsidiary or otherwise in connection with the
transactions contemplated hereby.
(b) Whenever a representation or warranty made by the Seller herein
refers to the knowledge of the Seller, such knowledge shall be deemed to consist
only of the actual knowledge on the date hereof and on the Closing Date, as
applicable, of those Persons listed on SCHEDULE 5.25.
(c) Notwithstanding anything to the contrary contained in this
Agreement or in any of the Schedules, any information disclosed in one Schedule
shall be deemed to be disclosed in all Schedules if the applicability or
relevance of a disclosure on a Schedule to another Schedule is explicitly
apparent on the face of such disclosure. Certain information set forth in the
Schedules is included solely for informational purposes and may not be required
to be disclosed pursuant to this Agreement. The disclosure of any information
shall not be deemed to constitute an acknowledgment that such information is
required to be disclosed in connection with the representations and warranties
made by the Seller in this Agreement or that it is material, nor shall such
information be deemed to establish a standard of materiality.
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ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller that:
6.1 ORGANIZATION AND AUTHORITY OF THE BUYER. The Buyer is a corporation
duly incorporated, validly existing and in good standing under the laws of
Missouri, with the corporate power and authority to enter into this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all requisite corporate action on the part of the Buyer. This
Agreement has been duly executed and delivered by the Buyer and constitutes the
valid, binding and enforceable obligation of the Buyer, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and to general equitable
principles.
6.2 ABILITY TO CARRY OUT THE AGREEMENT. The Buyer is not subject to or
bound by any provision of
(i) any law, statute, rule, regulation or judicial or
administrative decision,
(ii) any articles or certificate of incorporation or by-laws,
(iii) any mortgage, deed of trust, lease, note, shareholders'
agreement, partnership agreement, bond, indenture, other material instrument or
agreement, license, permit, trust, custodianship, other restriction, or
(iv) any judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator,
that would prevent or be violated by or under which there would be a default as
a result of, nor is the consent of any Person under any material agreement which
has not been obtained, required for, the execution, delivery and performance by
the Buyer of this Agreement and the transactions contemplated hereby.
6.3 FINANCIAL ABILITY TO PERFORM. The Buyer has obtained commitments (the
"Commitments") for funds to purchase and to pay the Purchase Price on the terms
and conditions contemplated by this Agreement and has heretofore furnished the
Seller with sufficient evidence of its ability to purchase the Assets and pay
the Purchase Price. The Buyer and Seller acknowledge that the Buyer's
performance of its obligations under this Agreement is contingent upon the
funding of the Commitments.
6.4 BROKERS AND INTERMEDIARIES. The Buyer has not employed any broker,
finder, advisor or intermediary in connection with the transactions contemplated
by this Agreement which would be entitled to a broker's, finder's, or similar
fee or commission in connection therewith or upon the consummation thereof.
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6.5 INFORMATION. The Seller and its representatives have answered to the
Buyer's satisfaction all inquiries that the Buyer or its representatives have
made concerning the businesses of the Seller and the Subsidiary or otherwise
relating to the transactions contemplated hereby
ARTICLE 7
CERTAIN COVENANTS AND AGREEMENTS
OF THE SELLER AND THE BUYER
7.1 ACCESS AND INFORMATION. The Seller shall permit the Buyer and its
representatives after the date of this Agreement to have reasonable access to
Seller's and the Subsidiary's customers (provided however that the Buyer must
provide the Seller with the opportunity to be present during any discussions or
other communication with such customers prior to the Closing) and reasonable
access during normal business hours, upon reasonable advance notice, to the
books and records of the Seller and the Subsidiary for the purpose of verifying
the representations and warranties of the Seller and the Subsidiary hereunder,
PROVIDED that such access shall be conducted by the Buyer and its
representatives in such a manner as not to interfere unreasonably with the
business or operations of the Seller or the Subsidiary. All information provided
to the Buyer pursuant hereto shall be subject to the terms of the
Confidentiality Agreement. The Buyer shall notify the Seller promptly upon its
discovery prior to the Closing of any information which constitutes or would
indicate a material breach by the Seller or the Subsidiary of any
representation, warranty or agreement of the Seller hereunder.
7.2 REGULATORY FILINGS. Each of the parties hereto will furnish to the
other party hereto such necessary information and reasonable assistance as such
other party may reasonably request in connection with the preparation of
necessary filings or submissions to any governmental agency. The Buyer and the
Seller each agree to use commercially reasonable efforts to effect compliance
with the conditions specified in Sections 8.5 and 9.5 hereof.
7.3 CONDUCT OF BUSINESS; INTERCOMPANY ACCOUNTS.
(a) Between March 31, 2002 and the Closing, and except as provided on
SCHEDULE 7.3 or otherwise contemplated by this Agreement or consented to or
approved by the Buyer, the Seller shall:
(i) cause the business conducted by it and the Subsidiary to be
operated in all material respects in the ordinary and usual course;
(ii) not, and shall not cause the Subsidiary to issue or sell any
shares of its capital stock, or issue or sell any options, warrants or other
rights of any kind to acquire any such shares or securities convertible into or
exchangeable for, or which otherwise confer on the holder thereof any right to
acquire, any such shares, or enter into any agreement obligating it to do any of
the foregoing;
(iii) not, and shall not cause the Subsidiary to declare, set
aside or pay any dividend or other distribution in respect of their respective
capital stock or make any direct or indirect redemption, purchase or other
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acquisition of any shares of their respective capital stock or make any payment
to CM or any Affiliate on account of the ownership of their capital stock or,
mortgage, pledge or subject to any material Encumbrance any of their respective
properties or assets that are included in the Assets outside of the ordinary
course of business;
(iv) not, and shall not cause the Subsidiary to, except in the
ordinary course of business and consistent with past practice, forgive or cancel
any debt or claim, waive any right, or incur or pay any liability or obligation;
(v) not, and shall not cause the Subsidiary to, adopt or amend
any profit-sharing plan, agreement, arrangement or practice for the benefit of
any director, officer or employee;
(vi) not, and shall not cause the Subsidiary to, enter into any
collective bargaining agreement;
(vii) not, and shall not cause the Subsidiary to, merge or
consolidate or enter into a binding share exchange or any other business
combination or acquire any stock, equity interest or business of any other
Person;
(viii) not, and shall cause the Subsidiary not to, declare any
bonus or increase in the salary or compensation of any employee, officer or
director except in the ordinary course of business consistent with past
practice;
(ix) not and shall cause the Subsidiary not to change the
accounting methods or practices; and
(x) not knowingly take any action or knowingly omit to take any
action or knowingly allow any of its Affiliates to take any action or omit to
take any action, which would cause the representations set forth in Article 5 to
become untrue.
(b) As provided in Section 4.4, nothing in this Agreement shall be
construed to prohibit CM from advancing funds to the Seller or the Subsidiary or
the Seller to the Subsidiary. The Seller and the Buyer agree that all
intercompany accounts between the Subsidiary and the Seller or any Affiliate of
the Seller (other than the Seller and the Subsidiary) shall be settled or
discharged at or prior to the Closing.
7.4 EMPLOYEE MATTERS.
(a) The Buyer acknowledges that Seller's employees who terminate
employment with Seller in connection with the Closing (including those on
disability leave) will not accrue any additional benefits with respect to events
occurring after the Closing Date under any Seller Benefit Plans effective as of
the Closing. Buyer agrees to offer employment to all employees of Seller who are
terminated on the Closing Date and to make available to Seller's employees who
become employed by Buyer or any of its Affiliates within thirty (30) days of the
Closing a health benefits plan reasonably comparable to the plan available to
said employees from the Seller prior to the Closing. Notwithstanding the
25
previous sentence, the Buyer shall have no obligation to offer employment to any
employee of the Seller that is a party to any Stay Pay Agreement if such
employee does not agree in writing, in form and substance satisfactory to the
Seller and the Buyer, prior to the Closing Date, to amend his or her Stay Pay
Agreement to delete the requirement that such employee receive for six (6)
months after Closing benefits at levels not less than in effect for such
employee on June 30, 2001. Buyer agrees that any employee of the Seller that is
a party to a Stay Pay Agreement and who provides an amendment as contemplated in
the preceding sentence shall be paid a salary by Buyer at the level required by
the Stay Pay Agreement and the benefits Buyer provides to such employee as of
the Closing for a period of at least six (6) months after the Closing.
(b) Buyer and Seller agree that Section 4204 of ERISA shall be
applicable to the extent that the sale of the Assets would otherwise result in a
complete withdrawal or a partial withdrawal by Seller or any Affiliate from any
"Fund" (as defined in the next sentence). As used in this Section 7.4(b), the
term "Fund" shall mean any "multiemployer plan" (as defined in Section 4001 of
ERISA) that is listed in SCHEDULE 7.4(B). Accordingly, the Buyer and Seller
agree as follows:
(i) Buyer acknowledges that, following the Closing Date, it will
have an obligation to contribute to each Fund for substantially the same number
of contribution base units for which the Seller had an obligation to contribute
to the Fund within the meaning of ERISA Section 4204(a)(1)(A);
(ii) Buyer shall provide each of the Funds with a bond or escrow
in accordance with ERISA Section 4204(a)(1)(B) before the first day of the "plan
year" of the Fund (as defined in the governing instrument of the Fund) beginning
after the Closing Date and continuing for five (5) plan years, unless a
"variance" (within the meaning of ERISA Section 4204(c)) from such obligation is
obtained with respect to the Fund;
(iii) if Buyer withdraws in a complete withdrawal or a partial
withdrawal from a Fund during the five (5) plan years of the Fund following the
Closing Date, Seller shall have secondary liability with respect to any
withdrawal liability it would have had to the Fund (but for the application of
ERISA Section 4204) if the withdrawal liability of Buyer is not paid, as
provided under ERISA Section 4204(a)(1)(C) and shall obtain any bond required by
ERISA Section 4204(a)(3) if applicable; and
(iv) Buyer and Seller shall take such steps as may be reasonable
under the circumstances to obtain a variance from the bond or escrow requirement
in ERISA Section 4204(a)(1)(B). In particular, such parties shall inform each
Fund in writing that ERISA Section 4204 shall apply to the sale of the Assets,
by executing and submitting to each Fund, as soon as may be practicable after
the Closing Date, a notice in the form described in Pension Benefit Guaranty
Corporation regulations promulgated under ERISA Section 4204.
26
(c) The undertakings of Buyer in this Section 7.4(b)(ii) and (iii)
shall survive the Closing for a period of five (5) full plan years beyond the
Closing as to each multiemployer plan affected by Section 7.4(b).
(d) The Seller shall provide reasonable access to the Buyer to the
employee records of those former employees of the Seller who are hired by the
Buyer.
(e) The Seller acknowledges that the Seller has the responsibility to
provide continuation coverage under ERISA Section 601 with respect to qualifying
events that occur on or before the Closing Date.
(f) The Seller shall spin off into a separate tax qualified plan to be
adopted by the Buyer as of Closing, the account balances of participants in CM's
401(k) plan who are employed by the Buyer in connection with the Closing.
7.5 TAX MATTERS.
(a) The Seller shall indemnify the Buyer, in accordance with and
subject to Article 11, for any funds required to be expended by the Buyer or the
Subsidiary to pay any Taxes of the Seller and Taxes of the Subsidiary relating
to any Pre-Closing Period in excess of accruals for any Taxes on the books of
the Subsidiary.
(b) The Buyer shall promptly notify the Seller in writing upon receipt
by the Buyer or any Affiliate of the Buyer of notice of (i) any pending or
threatened Tax audits or assessments of the Subsidiary, so long as any
Pre-Closing Period remains open, and (ii) any pending or threatened Tax audits
or assessments of the Buyer or any Affiliate of the Buyer which may affect the
Tax liabilities of the Subsidiary, in each case only for Pre-Closing Periods.
The Seller shall promptly notify the Buyer in writing upon receipt by the Seller
or any Affiliate of the Seller of notice of any pending or threatened Tax audits
or assessments relating to the income, properties or operations of the
Subsidiary.
(c) The Seller shall have the right to represent the interests of the
Subsidiary in any Tax audit or administrative or court proceeding relating to
Returns for Pre-Closing Periods with respect to which the Seller may be liable
for Taxes pursuant to this Agreement (including any such proceedings relating to
the Subsidiary); PROVIDED, HOWEVER, that the Buyer shall have the right to
participate in any such audit or proceeding to the extent that any such audit or
proceeding may affect the Tax liability of the Buyer, any of its Affiliates, or
the Subsidiary for any period ending after the Closing Date and to employ
counsel of its choice at its own expense for purposes of such participation.
(d) After the Closing Date, the Buyer and the Seller shall provide
each other, and the Buyer shall cause the Subsidiary to provide the Seller, with
such cooperation and information relating to the business of the Seller sold to
the Buyer and the Subsidiary as either party reasonably may request in filing
any Return (or amended Return) or refund claim, determining any Tax liability or
a right to a refund, conducting or defending any audit or other proceeding in
respect of Taxes or effectuating the terms of this Agreement. The parties shall
retain, and the Buyer shall cause the Subsidiary to retain, all Returns,
schedules, work papers and other material documents relating thereto, until the
expiration of any relevant statute of limitations (and, to the extent notified
27
by any party, any extensions thereof) and, unless such Returns and other
documents are offered and delivered to the Seller or the Buyer, as applicable,
until the final determination of any Tax in respect of such years. Any
information obtained under this Section 7.5(d) shall be kept confidential,
except as may be otherwise necessary in connection with filing any Return (or
amended Return) or refund claim, determining any Tax liability or a right to a
refund, conducting or defending any audit or other proceeding in respect of
Taxes or otherwise effectuating the terms of this Agreement. Notwithstanding the
foregoing, neither the Seller nor the Buyer, nor any of their respective
Affiliates, shall be required unreasonably to prepare any document, or determine
any information not then in its possession, in response to a request under this
Section 7.5(d).
(e) The Seller shall be liable for, and shall pay when due, any
transfer, gains, documentary, sales, use, registration, stamp, value added or
other similar Taxes (but not income taxes of the Buyer and its Affiliates)
payable by reason of the transactions specified by this Agreement or
attributable to the sale, transfer or delivery of the Assets hereunder, and the
Seller shall, at its own expense, file all necessary Tax Returns and other
documentation with respect to all such Taxes.
(f) Any agreement for the allocation or apportionment of Taxes
involving the Subsidiary and any other entity shall be terminated as to the
Subsidiary as of the Closing and shall be of no further effect as to the
Subsidiary thereafter.
(g) The parties hereto agree that the Purchase Price and the Assumed
Obligations will be allocated to the Assets for Tax purposes in the manner set
forth on SCHEDULE 7.5(G) . Seller and its Affiliates and Buyer will file all Tax
returns (including amended returns and claims for refund) and information
reports in a manner consistent with such values and allocations.
7.6 NON-SOLICITATION. If this Agreement is terminated, the Buyer will
not, for a period of the three (3) years thereafter, directly or indirectly,
except by means of a general public solicitation, solicit, encourage, entice or
induce any Person who is an employee of CM, the Seller or the Subsidiary at the
date hereof or at any time hereafter that precedes such termination, to
terminate his or her employment with CM, the Seller or the Subsidiary, nor, in
the case of any key employee, may the Buyer employ any such key employee during
the first two (2) years of such three-year period. The Buyer agrees that money
damages will not be an adequate remedy and that CM, the Seller and the
Subsidiary shall be entitled to equitable relief, including but not limited to
injunction, in the event of any breach by the Buyer of this Section 7.6, in
addition to any other remedies available to CM, the Seller or the Subsidiary at
law.
7.7 BOOKS AND RECORDS. The Buyer will, until the sixth anniversary of the
Closing Date, retain all books, records and other documents pertaining to the
businesses of the Seller and the Subsidiary in existence on the Closing Date and
to make such books, records and other documents available for inspection and
copying by the Seller or any Affiliate of the Seller at the expense of the
Seller during the normal business hours of the Buyer or the Subsidiary, as
applicable, upon request and upon reasonable notice. Without limiting the
generality of the foregoing, the Buyer will make available to the Seller, the
Affiliates of the Seller and their respective representatives all information
deemed reasonably necessary or desirable by the Seller or such Affiliates of the
28
Seller in preparing their respective financial statements and conducting any
audits in connection therewith or in connection with any claims (including
claims between the parties) or environmental or tax matters.
7.8 ANNOUNCEMENT. Neither the Seller nor the Buyer will issue any press
release or otherwise make any public statement with respect to this Agreement
and the transactions contemplated hereby without the prior consent of the other
(which consent shall not be unreasonably withheld), except as may be required by
applicable law or stock exchange regulation. Furthermore, neither the Seller nor
the Buyer will publicly disclose the purchase price, except as may be required
by applicable law, regulation or legal process. Notwithstanding anything in this
Section 7.8 to the contrary, the Buyer and the Seller will consult with each
other before issuing, and provide each other the opportunity to review and
comment upon, any such press release or other public statements with respect to
this Agreement and the transactions contemplated hereby whether or not required
by law.
7.9 EFFORTS. Each of the parties hereto shall use commercially reasonable
efforts to fulfill or obtain the fulfillment of the conditions of the Closing,
including, without limitation, the execution and delivery of all agreements
contemplated hereunder to be so executed and delivered.
7.10 EXCLUSIVE DEALING. During the period from the date of this Agreement
to the earlier of the Closing Date, or termination of this Agreement neither the
Seller nor any of its Affiliates shall take any action to, directly or
indirectly, encourage, initiate or engage in discussions or negotiations with,
or provide any information to, any Person, other than the Buyer, concerning any
purchase of the Assets or any merger, sale of substantially all of the assets or
similar transaction involving the Seller (outside the ordinary course).
7.11 NON-COMPETITION. CM and the Seller each agrees that for a period of
three (3) years from the Closing Date (the "RESTRICTED PERIOD"), neither CM, the
Seller nor any of its Affiliates will (a) sell any overhead and inverted
conveyor systems and electrified monorail systems of the type currently sold by
the Seller to the customers listed in SCHEDULE 7.11 hereof ("Restricted
Business") or (b) directly or indirectly, except by means of a general public
solicitation, solicit, encourage, entice or induce any Person who is an employee
of the Seller or the Subsidiary at the date hereof or at the date of the
Closing, to terminate his or her employment with Buyer or the Subsidiary. CM and
the Seller agree that they will maintain and they will cause to be maintained by
all of their Affiliates the confidentiality of, and will not use in competition
with the business of the Buyer all confidential information and all trade
secrets held by or known to the Seller or any of its Affiliates which after the
Closing are the property of the Buyer, subject to the same qualifications as are
contained in the Confidentiality Agreement. Notwithstanding the foregoing, the
prohibitions set forth in this Section 7.11 shall be deemed not to prevent CM or
its Affiliates from (i) engaging in any business heretofore engaged in by any of
them (other than businesses engaged in solely by the Seller), (ii) acquiring any
company or companies or the stock or assets thereof, which companies engage in
the Restricted Business, but only if the aggregate most recent annual revenues
of such Restricted Business does not exceed one-third of the aggregate most
recent annual revenues of such acquired company, (iii) supplying goods and
services to, engaging in joint sales with, assisting in the development of
improved products for, providing component parts to (or, in each case, any
similar activity), any competitor of the Buyer, provided that CM or such
29
Affiliate does not enter into any joint venture with any such competitor in
which the aggregate equity interest of CM and its Affiliates exceeds fifty
percent (50%) or in which the day to day control of such joint venture is with
CM or such Affiliate. The Seller agrees that money damages will not be an
adequate remedy and that Buyer shall be entitled to equitable relief, including
but not limited to injunction, in the event of any breach of this Section 7.11,
in addition to any other remedies available to Buyer at law.
7.12 CONSENTS. The Seller and the Buyer shall cooperate and use reasonable
commercial efforts to obtain any necessary consent of any Person to the
assignment to Buyer of Seller's or the Subsidiary's rights and obligations under
any Contract. Neither the Seller nor the Buyer shall be required to make any
payment to any Person in connection with the effort to obtain any such consent.
Seller shall be obligated to make any payment in connection with obtaining such
consent if the payment is required by the express terms of a Contract between
the Seller or the Subsidiary and such Person.
7.13 STAY PAY AGREEMENTS. The Seller shall be responsible for and pay the
amounts due to its employees at Closing pursuant to the Stay Pay Agreements
entered into with the employees listed in SCHEDULE 7.13 ("Stay Pay Agreements")
and for severance benefits for employees of the Seller terminated prior to the
Closing Date. In addition to the salaries and benefits as provided in the last
sentence of Section 7.4(a), the Buyer shall pay the Assumed Portion when due
after the Closing Date.
7.14 ANCILLARY AGREEMENTS. The Buyer and Seller shall execute and deliver
at Closing the Transitional Services Agreement and the Earnout Agreement.
7.15 CERTAIN CONSENTS. Nothing in this Agreement shall be construed as an
attempt to assign any Contract which is by its terms or by law not assignable
without the consent of the other party or parties thereto unless such consent
shall have been given. However, in order to provide the Buyer with the benefits
of and relieve the Seller of its obligations under every Contract, the Buyer and
the Seller shall use all commercially reasonable efforts (but without any
payment of money or other consideration) to obtain the consent of the other
party or parties to any such Contract. If any such consent is not obtained and
an attempted assignment thereof would be ineffective, the Seller will cooperate
with the Buyer in any reasonable arrangement proposed by the Buyer under which
the Buyer may obtain the benefits and assume the obligations under such Contract
including sublicensing, subcontracting or subleasing arrangements or under which
the Seller would enforce for the benefit of the Buyer, at the Buyer's expense,
all rights of the Seller thereunder and the Buyer would assume or otherwise
discharge all the Seller's obligations to perform under such Contract. In
attempting to obtain any consent to any assignment under any Contract, the
parties shall use all commercially reasonable efforts to cause the consent to
assignment to operate as a novation or substitution of the Buyer in place of the
Seller pursuant to which the Seller shall be released from all obligations under
any of the Contracts which are assumed by the Buyer.
7.16 CHANGE OF NAME. The Seller will change its name from Automatic
Systems, Inc. to a dissimilar name as soon as practicable after the Closing and
will not use such name in the conduct of its business.
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7.17 CONFIDENTIALITY. Following the Closing, the Buyer may have in its
possession or acquire as a result of the Transitional Services Agreement,
confidential information regarding CM and its Affiliates (other than the Seller
and the Subsidiary) that does not relate to the Assets, Contracts and Assumed
Obligations. The Buyer shall not use and shall maintain the confidentiality of
such information.
7.18 CM OBLIGATIONS. CM shall agree to pay and discharge or reimburse the
Seller for all obligations and liabilities related to any (a) severance
obligations that are owed to any employees of the Seller or the Subsidiary
terminated prior to the Closing Date and not hired by the Buyer, (b) obligations
under the Stay Pay Agreements (other than the salary and benefits provided in
the last sentence of Section 7.4(a) and the Assumed Portion), (c) workers
compensation claims of any former employees of the Seller or the Subsidiary
employed by the Buyer arising from any events occurring prior to the Closing
Date and (d) all Tax obligations of the Seller, other than real and personal
property Taxes and other non-income Taxes of the Seller or the Subsidiary
incurred after March 31, 2002. CM shall also continue to maintain general
liability insurance which insures against obligations and liabilities arising
from the ownership, operation and design of products manufactured or installed
in the conduct of the Seller's or the Subsidiary's business prior to the Closing
Date (upon such terms and in such amounts which are applicable to CM and all of
its Affiliates), shall keep such coverage in effect for six (6) years after the
Closing Date and shall provide a certificate evidencing such insurance annually
during such six (6) year period.
7.19 BUYER OBLIGATIONS. Buyer shall maintain general liability insurance on
such terms and such amounts as it deems appropriate which is applicable to Buyer
and its Affiliates which insures against obligations and liabilities arising
from the ownership, operation and design of products manufactured and installed
in the conduct of Buyer's or its Affiliate's business after the closing, shall
keep such coverage in effect for six (6) years after the Closing Date and shall
provide a certificate evidencing such insurance annually during such six (6)
year period.
7.20 REMITTANCE. After Closing, any amounts received by Seller or its
Affiliates for any Accounts Receivable shall be remitted to Buyer within 48
hours of receipt.
ARTICLE 8
CONDITIONS PRECEDENT OF THE SELLER
The obligation of the Seller to consummate the transactions described in
Article 2 hereof is subject to the fulfillment of each of the following
conditions prior to or at the Closing:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties of
the Buyer made hereunder shall be true in all material respects at and as of the
Closing Date, with the same force and effect as though made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement and
except to the extent that any representation and warranty is made as of a
specified date, in which case such representation and warranty shall be true in
all material respects as of such date.
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8.2 AGREEMENTS. The Buyer shall have performed and complied in all
material respects with all its undertakings and agreements required by this
Agreement to be performed or complied with by the Buyer prior to or at the
Closing.
8.3 BUYER CERTIFICATE. The Seller shall have been furnished with a
certificate of an authorized officer of the Buyer, dated the Closing Date,
certifying to the effect that the conditions contained in Sections 8.1 and 8.2
have been fulfilled.
8.4 NO INJUNCTION. No injunction, restraining order or decree of any
nature of any court or governmental or regulatory authority shall exist against
the Buyer, the Seller, the Subsidiary or any of their respective Affiliates, or
any of the principals, officers or directors of any of them, that restrains,
prevents or materially changes the transactions contemplated hereby.
8.5 CONSENTS. All material consents, approvals and authorizations of
governmental and regulatory authorities, and all material filings with and
notifications of governmental authorities and regulatory agencies or other
entities which regulate the businesses of CM, the Seller, the Subsidiary or the
Buyer, necessary on the part of CM, the Seller, the Subsidiary, the Buyer, or
their respective Affiliates, to the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby, shall have been
obtained or effected.
8.6 LENDERS ACTION; RELEASE OF SECURITY INTERESTS. On or prior to the
Closing Date, CM shall have received the consents of its lenders to this
Agreement and the transactions contemplated hereby and the Encumbrances set
forth on SCHEDULE 5.6 shall be terminated and released as to any and all of the
Assets and the assets and property of the Subsidiary subject thereto.
8.7 MISCELLANEOUS CLOSING DELIVERIES. The Seller shall have received each
of the following:
(a) all payments, documents, instruments and other closing deliveries
specified in Section 3.2(b) and Article 7; and
(b) such evidence as the Seller may reasonably request in order to
establish (i) the corporate power and authority of the Buyer to consummate the
transactions contemplated by this Agreement and (ii) compliance with the
conditions of Closing set forth herein.
ARTICLE 9
CONDITIONS PRECEDENT OF THE BUYER
The obligation of the Buyer to consummate the transactions described in
Article 2 hereof is subject to the fulfillment of each of the following
conditions prior to or at the Closing:
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9.1 REPRESENTATIONS AND WARRANTIES. All of the Seller's representations
and warranties in this Agreement shall be accurate in all material respects at
and as of the Closing Date, as if made on and as of the Closing Date (without
giving effect to any supplemental disclosures made after the date of this
Agreement), and all of the Seller's representations and warranties in this
Agreement that contain an express materiality or Material Adverse Effect
qualification shall be accurate in all respects as of the Closing Date as if
made on and as of the Closing Date, without giving effect to any supplemental
disclosures made after the date of this Agreement, except for changes permitted
or contemplated by this Agreement and except to the extent that any
representation and warranty is made as of a specified date, in which case such
representation and warranty shall be true as of such date.
9.2 AGREEMENTS. The Seller and CM shall have performed and complied with
all of its respective undertakings and agreements required by this Agreement to
be performed or complied with by the Seller and CM prior to or at the Closing.
9.3 THE SELLER'S CERTIFICATE. The Buyer shall have been furnished with a
certificate of an authorized officer of the Seller, dated the Closing Date,
certifying to the effect that the conditions contained in Sections 9.1 and 9.2
have been fulfilled.
9.4 NO INJUNCTION. No injunction, restraining order or decree of any court
or governmental or regulatory authority shall exist against the Buyer, CM, the
Seller, the Subsidiary or any of their respective Affiliates, or any of the
principals, officers or directors of any of them, that restrains, prevents or
materially changes the transactions contemplated hereby.
9.5 CONSENTS. All material consents, approvals and authorizations of
governmental and regulatory authorities, and all filings with and notifications
of governmental authorities and regulatory agencies or other entities which
regulate the businesses of CM, the Seller, the Subsidiary, the Buyer or their
respective Affiliates, necessary on the part of CM, the Seller, the Subsidiary
or the Buyer, or their respective Affiliates, to the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
shall have been obtained or effected. The consents to assignment referred to in
SCHEDULE 5.9(C) shall have been obtained.
9.6 NO MATERIAL ADVERSE CHANGE. Since March 31, 2002, except as set forth
on SCHEDULE 9.6, without giving effect to any supplemental disclosure made after
the date hereof, there shall have been no Material Adverse Effect.
9.7 RELEASE OF SECURITY INTERESTS. On or prior to the Closing Date, the
Encumbrances set forth on SCHEDULE 5.6 shall be terminated and released as to
the Assets and the assets and properties of the Subsidiary.
9.8 FINAL BALANCE SHEET. The parties hereto have resolved all disputes
regarding the Final Balance Sheet in accordance with Section 4.1(a).
9.9 MISCELLANEOUS CLOSING DELIVERIES. The Buyer shall have received each
of the following:
33
(a) all documents, instruments and other closing deliveries specified
in Sections 3.2(a) and Article 7; and
(b) such evidence as the Buyer may reasonably request in order to
establish (i) the corporate power and authority of the Seller to consummate the
transactions contemplated by this Agreement and (ii) compliance with the
conditions of Closing set forth herein.
9.10 RELEASE OF NONCOMPETITION AND ASSIGNMENT. The Seller shall have
released ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and the ▇▇▇▇▇ Family LLC from all noncompetition
agreements contained in the Stock Purchase Agreement, dated as of March 11, 1998
by and between LICO, Inc. and CM ("SPA") except to the extent they relate to
LICO Steel, Inc. and CM shall have assigned to the Buyer all of its rights under
noncompetition agreements of former shareholders of LICO, Inc. entered into in
connection with the consummation of the SPA, except to the extent they relate to
LICO Steel, Inc.
9.11 AVAILABLE FINANCING. Funding shall be made available to Buyer on the
Closing Date to facilitate Closing. Seller shall have executed and delivered an
intercreditor agreement with Buyer and Buyer's lenders in form and substance
reasonably satisfactory to Buyer's lender (the "Intercreditor Agreement").
9.12 ENVIRONMENTAL. The Buyer shall have received Phase I environmental
surveys for each of the premises on which Seller or the Subsidiary operates its
business and shall be satisfied with the matters contained in such reports.
Buyer shall promptly seek such surveys and shall promptly provide copies of such
surveys to the Seller.
ARTICLE 10
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
10 SURVIVAL. The respective representations and warranties of the Seller
and of the Buyer hereunder shall survive the Closing for a period of fifteen
(15) months; PROVIDED, HOWEVER, the representations and warranties in Sections
5.2, 5.11, 5.12 and 5.14 shall survive the Closing for a period equal to the
applicable statute of limitations.
ARTICLE 11
INDEMNIFICATION
11.1 INDEMNIFICATION OF THE BUYER AND ITS AFFILIATES. The Seller agrees to
defend, indemnify and hold harmless the Buyer, any Affiliates of the Buyer and
the officers, directors, employees, agents, advisors, and representatives of
such Person, and their respective successors and assigns (individually, a "BUYER
INDEMNITEE", and collectively, the "BUYER INDEMNITEES"), against and in respect
of:
(a) any and all losses, damages, deficiencies or liabilities
("LOSSES") caused by, resulting or arising from or otherwise relating to any
failure by the Seller to perform or otherwise fulfill or comply with, if the
Closing shall occur, (A) any failure of any representation or warranty of the
Seller contained herein to be true when made and as at the Closing Date, it
being understood that to the extent that any such representations and warranties
34
were made as of a specified date the same shall apply only to the failure of
such representations and warranties to be true as of such specified date, (B)
the failure of the Seller or its Affiliates to comply with any undertaking or
other agreement or obligation hereunder to be performed, fulfilled or otherwise
complied with by the Seller after the Closing; and
(b) any and all liabilities and obligations (other than the Assumed
Obligations) arising from the Excluded Assets or the Excluded Liabilities; and
(c) any and all actions, suits, proceedings, claims, liabilities,
demands, assessments, judgments, costs and expenses (all together "COSTS"; Costs
and Losses together shall hereinafter be referred to as "DAMAGES"), including
reasonable attorneys' fees (whether or not incurred by the Buyer Indemnitees in
connection with any action, suit, proceeding or claim against the Seller
hereunder), incident to any of the foregoing or such indemnification; PROVIDED,
HOWEVER, that if any action, suit, proceeding, claim, liability, demand or
assessment shall be asserted against any Buyer Indemnitee in respect of which
such Buyer Indemnitee proposes to demand indemnification, such Buyer Indemnitee
shall notify the Seller thereof within a reasonable period of time (and in no
event more than fifteen (15) days) after assertion thereof. Subject to rights of
or duties to any insurer or other third Person having liability therefor, the
Seller shall have the right within thirty (30) days after receipt of such notice
to assume the control of the defense, compromise or settlement of any such
action, suit, proceeding, claim, liability, demand or assessment, including, at
its own expense, employment of counsel and at any time thereafter to exercise on
behalf of the Buyer Indemnitee any rights which may mitigate any of the
foregoing; PROVIDED, HOWEVER, that if the Seller shall have exercised its right
to assume such control, the Buyer Indemnitee (i) may, in its sole discretion,
employ counsel to represent it (in addition to counsel employed by the Seller,
and in the latter case, at Buyer Indemnitee's sole expense) in any such matter,
and in such event counsel selected by the Seller shall be required to cooperate
with such counsel of Buyer Indemnitee in such defense, compromise or settlement
for the purpose of informing and sharing information with such Buyer Indemnitee
and (ii) will, at its own expense (subject to reimbursement by the Seller of
reasonable out-of-pocket expenses), make available to the Seller those employees
of the Buyer or any Affiliate of the Buyer (including but not limited to the
Subsidiary) whose assistance, testimony or presence is reasonably necessary to
assist the Seller in evaluating and in defending any such action, suit,
proceeding, claim, liability, demand or assessment; and PROVIDED, HOWEVER, that
any such access shall be conducted in such a manner as not to interfere
unreasonably with the operations of the businesses of the Buyer and its
Affiliates (including but not limited to the Subsidiary).
Notwithstanding any other provision contained in this Agreement, nothing in this
Section 11.1 shall obligate Seller to indemnify any Buyer Indemnitee for any
Damages to the extent such Damages are caused by the wrongful acts or negligence
of the Buyer or any of its subsidiaries after the Closing Date.
11.2 INDEMNIFICATION OF THE SELLER AND ANY AFFILIATE OF THE SELLER. The
Buyer agrees to defend, indemnify and hold harmless the Seller, any Affiliate of
the Seller and the officers, directors, employees, agents, advisors and
representatives of each such Person, and their respective successors and assigns
(individually, a "SELLER INDEMNITEE", and collectively, the "SELLER
INDEMNITEES"), against and in respect of:
35
(a) any and all Losses caused by, resulting or arising from or
otherwise relating to any failure by the Buyer to perform or otherwise fulfill
or comply with, if the Closing shall occur, any failure of any representation or
warranty of the Buyer contained herein to be true when made and as at the
Closing Date, it being understood that to the extent that any such
representations and warranties were made as of a specified date the same shall
apply only to the failure of such representations and warranties to be true as
of such specified date or the failure of the Buyer to comply with any
undertaking or other agreement or obligation hereunder to be performed,
fulfilled or otherwise complied with by the Buyer after the Closing;
(b) any and all liabilities and obligations, whether or not known, of
the Seller and any Affiliate of the Seller assumed by the Buyer or any Affiliate
of the Buyer pursuant to Sections 2.3 and 7.4 or otherwise relating to the
businesses of the Seller or the Subsidiary (other than with respect to the
Seller's obligations under Section 11.1(a) hereof); and
(c) any and all Costs, including reasonable attorneys' fees (whether
or not incurred by the Seller Indemnitees in connection with any action, suit,
proceeding or claim against the Buyer hereunder), incident to any of the
foregoing or such indemnification; PROVIDED HOWEVER, that if any action, suit,
proceeding, claim, liability, demand or assessment shall be asserted against any
Seller Indemnitee in respect of which such Seller Indemnitee proposes to demand
indemnification, such Seller Indemnitee shall notify the Buyer thereof within a
reasonable period of time (and in no event more than fifteen (15) days) after
assertion thereof. Subject to rights of or duties to any insurer or other third
Person having liability therefor, the Buyer shall have the right within thirty
(30) days after receipt of such notice to assume the control of the defense,
compromise or settlement of any such action, suit, proceeding, claim, liability,
demand or assessment, including, at its own expense, employment of counsel and
at any time thereafter to exercise on behalf of Seller Indemnitee any rights
which may mitigate any of the foregoing; PROVIDED, HOWEVER, that if the Buyer
shall have exercised its right to assume such control, Seller Indemnitee (i)
may, in its sole discretion, employ counsel to represent it (in addition to
counsel employed by the Buyer, and in the latter case, at Seller Indemnitees'
sole expense) in any such matter, and in such event counsel selected by the
Buyer shall be required to cooperate with such counsel of Seller Indemnitee in
such defense, compromise or settlement for the purpose of informing and sharing
information with such Seller Indemnitee and (ii) will, at its own expense
(subject to reimbursement by the Buyer of reasonable out-of-pocket expenses),
make available to the Buyer those employees of the Seller or any Affiliate of
the Seller whose assistance, testimony or presence is necessary to assist the
Buyer in evaluating and in defending any such action, suit, proceeding, claim,
liability, demand or assessment; and PROVIDED, HOWEVER, that any such access
shall be conducted in such a manner as not to interfere unreasonably with the
operations of the businesses of the Seller or any Affiliate of the Seller.
Notwithstanding any other provision contained in this Agreement, nothing in this
Section 11.2 shall obligate Buyer to indemnify any Seller Indemnitee for any
Damages to the extent such Damages are caused by the wrongful acts or negligence
of Seller or any of its subsidiaries prior to the Closing Date; provided,
however, that nothing in this Section 11.2 shall limit in any respect Buyer's
obligations under Sections 2.3 and 7.4 or to indemnify all Seller Indemnitees
with respect to such obligations in accordance with Section 11.2.
36
11.3 REMEDIES. Except as otherwise specifically provided in this Article 11
and Sections 7.6 and 7.11, the sole and exclusive remedy of both the Buyer
Indemnitees and the Seller Indemnitees hereunder or otherwise in connection with
the transactions contemplated hereby shall be restricted to the indemnification
rights set forth in this Article 11. Without limiting the foregoing, the Buyer
shall have no other rights or remedies, and shall not assert, and shall cause
the Subsidiary not to assert, any claim against the Seller, or against any
present or former director, officer, employee, agent or shareholder of the
Seller or the Subsidiary, for or with respect to any matter, whether arising
from their capacities as shareholders, directors, officers, employees or agents
of the Seller or the Subsidiary, or for or with respect to any of the
representations, warranties, covenants, agreements or certifications contained
in or relating to this Agreement.
11.4 CERTAIN LIMITATIONS. The liability of the Seller or the Buyer, as
applicable, for claims under this Agreement shall be limited by the following:
(a) If the Closing shall not have occurred, recovery of the Buyer
pursuant to Section 11.1 shall in no event include any punitive, exemplary,
special, indirect, incidental or consequential damages whatsoever.
(b) Fifteen (15) months after the Closing Date, or the applicable
statute of limitations with respect to the representation and warranties in
Section 5.2, 5.11, 5.12 and 5.14 and the third anniversary of the Closing Date
with respect to a violation of Section 7.11 the Seller shall have no further
liability or obligations under this Article 11 or this Agreement or otherwise,
except for Damages with respect to which the Buyer Indemnitee has given the
Seller adequate written notice prior to such date.
(c) The amount of Damages otherwise recoverable under this Article 11
shall be reduced to the extent to which any Federal, state, local or foreign tax
liabilities of the Seller Indemnitee or Buyer Indemnitee, as applicable, or any
of their respective Affiliates (including in the case of the Buyer, and the
Subsidiary once the Closing has occurred) is decreased by reason of any Damage
in respect of which such Seller Indemnitee or Buyer Indemnitee, as applicable,
shall be entitled to indemnity under this Agreement.
(d) No Damages shall be recoverable by a Seller Indemnitee or Buyer
Indemnitee with respect to any matter which is covered by insurance, to the
extent proceeds of such insurance or other third party indemnitor are paid net
of any costs incurred in connection with the collection thereof (including, but
not limited to present, retrospective, or future premiums, self-insured
retention amounts, deductibles, legal and administrative costs and costs of
investigations) the Seller Indemnitee or Buyer Indemnitee, as the case may be,
hereby agreeing to exhaust all reasonable remedies against all applicable
insurers or indemnitors prior to recovering any amounts hereunder, it being
understood and agreed that such reasonable remedies shall not include the
commencement of litigation PROVIDED that to the extent litigation is not so
commenced the indemnifying party shall be subrogated to all rights of the Seller
Indemnitee or Buyer Indemnitee, as the case may be, against such insurers or
indemnitors.
37
(e) Any payment required under this Section 11 paid to any Buyer
Indemnitee or any Seller Indemnitee, as the case may be, shall be treated by the
Buyer and the Seller as a further adjustment of the Purchase Price for the
Assets.
(f) (i) No Damages shall be recoverable by a Buyer Indemnitee
pursuant to the provisions of this Article 11, and no claim therefor shall be
asserted by a Buyer Indemnitee for any purpose whatsoever hereunder, unless the
amount of the Buyer Indemnitees' Damages equals at least $300,000 in the
aggregate and then only to the extent such Damages exceed $300,000 in the
aggregate.
(ii) The aggregate amount of Damages recoverable pursuant to the
provisions of this Article 11 by all Buyer Indemnitees shall be limited to
$5,000,000.
(iii) Damages recoverable by a Buyer Indemnitee shall be
recoverable solely against the balance remaining in the Escrow and amounts owed
pursuant to the Note as follows: 50% of any Damages to be recoverable by a Buyer
Indemnitee shall be paid from the Escrow and 50% by set-off against the amounts
owed pursuant to the Note except to the extent the Escrow is exhausted in which
case such Damages shall be paid by set-off against the amounts owed pursuant to
the Note.
(iv) In no event shall Damages recoverable by Buyer Indemnitees
in the aggregate pursuant to this Article 11 exceed, or be recoverable from any
source other than the balance remaining in the Escrow or amounts unpaid under
the Note.
(g) No Damages shall be recoverable by any Buyer Indemnitee pursuant
to the provisions of this Article 11, and no claim therefor shall be asserted
for any purpose whatsoever hereunder, which arise out of facts, circumstances or
conditions which are disclosed in this Agreement or any Schedule hereto or of
which any Buyer Indemnitee had knowledge on or before the Closing Date. The
knowledge of any current employee of the Seller shall not be imputed to any
other Buyer Indemnitee.
(h) Notwithstanding anything to the contrary contained in this
Agreement, the Buyer Indemnitees shall not be entitled to indemnification under
Section 11.1 for any Damages to the extent that the Buyer receives at or after
the Closing an adjustment to the Purchase Price with respect to the matters
giving rise to such Damages by reason of Article 4 hereof.
(i) Except to the extent Seller is liable to Buyer for a breach of the
representations contained in Section 5.14, Buyer releases Seller and its
Affiliates from any claims, including contribution claims arising under any
Environmental Law as well as any common law regarding the protection of health,
safety and the environment.
11.5 SURVIVAL. Notwithstanding anything herein to the contrary, this
Article 11 shall survive termination of this Agreement without limitation.
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ARTICLE 12
MISCELLANEOUS
12.1 FURTHER ASSURANCES; COOPERATION. From time to time after the Closing,
the Seller will execute and deliver, or cause to be executed and delivered, such
documents to the Buyer as the Buyer shall reasonably request in order to
consummate more effectively the transactions contemplated by this Agreement, and
from time to time after the Closing, the Buyer will execute and deliver, or
cause to be executed and delivered, such documents to the Seller as the Seller
shall reasonably request in order to consummate more effectively the transaction
contemplated by this Agreement. Each of the parties hereby shall use its
reasonable efforts to take or cause to be taken all actions, to cooperate with
the other party hereto, with respect to all actions, and to do or cause to be
done, all things necessary, proper or advisable to consummate and to make
effective the transactions contemplated by this Agreement, including reasonable
assistance to the Seller with respect to the Excluded Liabilities.
12.2 EXPENSES. Each of the parties hereto shall pay the fees and expenses
of its respective counsel, accountants and other experts and shall pay all other
expenses incurred by it in connection with the negotiation, preparation and
execution of this Agreement and the consummation of the transactions
contemplated hereby.
12.3 APPLICABLE LAW. The rights and duties of the Buyer and the Seller
under this Agreement shall, pursuant to the New York General Obligations Law
Section 5-1401, be governed by the law of the State of New York.
12.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given or made as follows: (a) if
sent by registered or certified mail in the United States return receipt
requested, upon receipt; (b) if sent by reputable overnight air courier (such as
DHL or Federal Express), two business days after being so sent; (c) if sent by
telecopy transmission, with a copy mailed on the same day in the manner provided
in clause (a) or (b) above, when transmitted and receipt is confirmed by
telephone; or (d) if otherwise actually personally delivered, when delivered and
shall be delivered as follows:
If to the Seller, to:
Columbus ▇▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Secretary
39
with a copy to:
Phillips, Lytle, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
If to Buyer, to:
ASI Acquisition Corp.
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇ Merchant Banc, LLC
Twelve Wyandotte Plaza
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
One Kansas City Place, Suite 3500
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Such names and addresses may be changed by such notice.
12.5 ENTIRE AGREEMENT. This Agreement (including the Schedules attached
hereto, all of which are a part hereof) and the Confidentiality Agreement
contains the entire understanding of the parties hereto with respect to the
subject matter contained herein, supersedes and cancels all prior agreements,
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting such subject matter, including but not limited to
the Confidential Information Memorandum. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions under this Agreement other than those set forth
herein or made hereunder.
12.6 AMENDMENTS. This Agreement may be amended only by a written instrument
executed by the parties or their respective successors or assigns.
12.7 HEADINGS; REFERENCES. The article, section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. All references
herein to "ARTICLES," "Sections," "SCHEDULES" or "EXHIBITS" shall be deemed to
40
be references to Articles or Sections hereof or Schedules or Exhibits hereto
unless otherwise indicated.
12.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original.
12.9 PARTIES IN INTEREST; ASSIGNMENT. This Agreement shall inure to the
benefit of and be binding upon the Seller and Buyer and their respective
successors. Except as provided in or contemplated by Article 11 (which shall
confer upon the Persons referred to therein for whose benefit it is intended the
right to enforce such Article, as applicable), nothing in this Agreement,
express or implied, is intended to confer upon any Person not a party to this
Agreement any rights or remedies under or by reason of this Agreement. No party
to this Agreement may assign or delegate all or any portion of its rights,
obligations or liabilities under this Agreement without the prior written
consent of the other party to this Agreement; provided, however, that the Seller
and the Buyer may (i) assign its rights under this Agreement to an Affiliate and
(ii) assign or grant a security interest in the rights under this Agreement to
its lender(s) as security for such party's obligations to such lender(s) (and
such lender(s) may exercise its rights and remedies with respect to such
security interest or assignment) in each case without any other party's prior
consent. Notwithstanding the assignment of this Agreement pursuant to the
provisions stated hereinabove, it is understood and agreed that the assignor
shall remain responsible for its obligations under this Agreement.
12.10 SEVERABILITY; ENFORCEMENT. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or unenforceability
of any of the terms or provisions of this Agreement in any other jurisdiction.
If any provision of this Agreement is so broad as to be unenforceable, the
provisions shall be interpreted to be only so broad as is enforceable.
12.11 WAIVER. Any of the conditions to Closing set forth in this
Agreement may be waived in writing at any time prior to or at the Closing
hereunder by the party entitled to the benefit thereof. The failure of any party
hereto to enforce at any time any of the provisions of this Agreement shall in
no way be construed to be a waiver of any such provision, nor in any way to
affect the validity of this Agreement or any part hereof or the right of such
party thereafter to enforce each and every such provision. No waiver of any
breach of or non-compliance with this Agreement shall be held to be a waiver of
any other or subsequent breach or non-compliance.
12.12 RELATIONSHIP BETWEEN THE PARTIES. The parties agree that this is an
arm's length transaction in which the parties' rights, undertakings and
obligations are limited to those which are set forth in this Agreement.
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12.13 WAIVER OF CONSEQUENTIAL DAMAGES AND JURY TRIAL. THE PARTIES TO THIS
AGREEMENT EXPRESSLY WAIVE AND FOREGO ANY RIGHT TO RECOVER CONSEQUENTIAL DAMAGES
IN ANY ARBITRATION, LAWSUIT, LITIGATION OR PROCEEDING ARISING OUT OF OR
RESULTING FROM ANY CONTROVERSY OR CLAIM ARISING OUT OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF THE
FOREGOING WAIVERS, (ii) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF
SUCH WAIVERS, (iii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND (iv) IT HAS BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 12.13.
12.14 ARBITRATION. Any dispute between the parties hereto or claim by a
party against another party arising out of or in connection with or in relation
to this Agreement or any agreements to be executed in connection herewith or the
Closing or in relation to any alleged breach hereof or thereof which cannot be
finally settled by the parties themselves within 30 days from the first written
notice of such dispute (the "Self Resolution Period"), shall be finally
determined by arbitration in accordance with the rules then in force of the
American Arbitration Association. The arbitration proceedings shall take place
in Chicago, Illinois or such other location as the parties in dispute hereafter
may agree upon; and such proceedings and shall be governed by the laws of the
State of New York as such laws are applied to agreements between residents of
such State entered into and to be performed entirely within such State. There
shall be one arbitrator, as shall be agreed upon by the parties in the dispute,
who shall be an individual skilled in the legal and business aspects of the
subject matter of this Agreement and of the dispute. In the absence of such
agreement, each party in dispute shall select one arbitrator and the arbitrators
so selected shall select a third arbitrator. In the event the arbitrators cannot
agree upon the selection of a third arbitrator, such third arbitrator shall be
appointed by the American Arbitration Association at the request of any of the
parties in dispute. The arbitrators shall be individuals skilled in the legal
and business aspects of the subject matter of this Agreement and of the dispute.
If there are three arbitrators, the decision of a majority of the arbitrators
shall govern. The decision rendered by the arbitrator or arbitrators shall be
accompanied by a written opinion in support thereof. Such decision shall be
final and binding upon the parties in dispute without right of appeal. Judgment
upon any such decision may be entered into in any court having jurisdiction
thereof, or application may be made to such court for a judicial acceptance of
42
the decision and an order of enforcement. The arbitrator(s) will be authorized
to impose either temporary or permanent injunctions (either before or after a
full hearing). Costs of the arbitration shall be assessed by the arbitrator or
arbitrators against any or all of the parties in dispute, and shall be paid
promptly by the party or parties so assessed.
12.15 WAIVER OF CERTAIN CONFLICTS. The Buyer understands and agrees that
the Seller will be entitled to retain the services of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as its
attorneys even in the event of any dispute of the Buyer with the Seller
concerning this Agreement or any of the related documents or any of the
transactions contemplated hereby and thereby or whether involving the Subsidiary
or its Affiliates notwithstanding any result of ▇▇▇▇▇▇▇▇ Lytle's prior
representation of the Seller or the Subsidiary. Notwithstanding the sale of the
Assets to the Buyer, the Buyer and the Seller and the Subsidiary agree that
neither the Subsidiary nor the Buyer shall have the right to assert the
attorney/client privilege as to pre-closing and post-closing communications
between the Seller (for the Subsidiary, only with respect to pre-closing
communications), on one hand, and its counsel, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, on the other
hand, to the extent that the privileged communications relate to this Agreement
or any of the related documents or to the transactions contemplated hereby and
thereby. The parties agree that only the Seller shall be entitled to assert such
attorney/client privilege in connection with such communications following the
Closing of this Agreement.
The files generated and maintained by ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ as a result of the law
firm's representation of the Seller in connection with this Agreement or the
agreement pursuant to which the Seller was acquired by CM or any of the related
documents or any of the transactions contemplated hereby or thereby or any
efforts to sell their interests in the Seller or the Subsidiary to the Buyer or
any person is and will remain the exclusive property of the Seller.
12.16 RISK OF LOSS. The Seller hereby assumes all risk of loss, damage and
destruction to all or any part of the tangible Assets that occurs prior to the
Closing from any cause whatsoever, whether or not they are insured therefore,
including, without limitation, fire, flood, accident, acts of God, earthquake,
insurrection, riot or other causes commonly referred to as force majeur. In such
event the Seller, at its option, shall repair or replace the same or assign to
the Buyer, Seller's right to insurance proceeds with respect thereto. In the
event such insurance proceeds are inadequate to cover such loss, damage or
destruction, the Seller shall pay the shortfall in cash.
12.17 CM SUPPLY CONTRACTS. The Seller participates in or benefits under
certain service arrangements of CM for services and supplies and policies
referred to in Schedule 12.17 and item 17 of SCHEDULE 5.9(A) which are provided
by third party vendors to CM and various of its Affiliates whether or not Seller
is a named party to contracts relating to such arrangements. The parties
understand that at Closing, the Buyer shall not have any right to participate in
or benefit under any such arrangement. However, the Buyer shall assume and be
responsible for any outstanding commitments made for the benefit of the Seller
prior to the Closing and shall pay to CM the allocable charges therefore within
five days after request by CM. CM will encourage the vendors under such
arrangements to service the Buyer at the same level of support they provided to
the Seller.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
AUTOMATIC SYSTEMS, INC.
By:/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Vice President
COLUMBUS ▇▇▇▇▇▇▇▇ CORPORATION
By:/S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Title: Chief Financial Officer
ASI ACQUISITION CORP.
By:/S/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
1125136.21(Word)
JALhr
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