EXECUTION COPY
EXHIBIT 2.2
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VVP AMERICA, INC.,
VVP AMERICA ACQUISITION, L.L.C.,
SUNSOURCE INC.,
SUNSOURCE INVESTMENT COMPANY, INC.,
▇▇▇▇▇▇▇ GLASS, INC.
AND
SUNSUB A INC.
ASSET PURCHASE AGREEMENT
Dated as of April 12, 2000
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TABLE OF CONTENTS
Item Page
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RECITAL .......................................................................1
ARTICLE 1 DEFINITIONS .......................................................2
1.1 Definitions...............................................................2
Acquisitive Parties Opinion...............................................2
Affiliate.................................................................3
Assets....................................................................3
Assumed Liabilities.......................................................3
Balance Sheets............................................................3
Bills of Sale.............................................................3
Bonus Accords.............................................................3
Branch Accounts Agreement.................................................3
Business Day..............................................................3
Closing...................................................................4
Closing Date..............................................................4
Closing Date Balance Sheet................................................4
COBRA.....................................................................4
Code......................................................................4
Draft Closing Date Balance Sheet..........................................4
Environmental Claims......................................................4
Environmental Laws........................................................4
ERISA.....................................................................5
Estimated Closing Date Balance Sheet......................................5
Excluded Assets...........................................................5
Financial Statements......................................................5
GAAP......................................................................5
General Real Property Lease Assignment....................................5
▇▇▇▇▇▇▇...................................................................5
Hazardous Materials.......................................................5
HSR Act...................................................................6
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Income Taxes..............................................................6
Initial and Estimated Payment.............................................6
Instrument of Assumption..................................................6
Insurance Policies........................................................6
Intellectual Property Assignments.........................................6
IRS.......................................................................6
Issuer....................................................................7
Knowledge.................................................................7
Landlords' Waivers........................................................7
Law.......................................................................7
Letter of Credit..........................................................7
Liens or a Lien...........................................................7
Lockbox Letter............................................................8
Losses....................................................................8
LOF.......................................................................8
LOF Note..................................................................8
Mesa Sublease.............................................................8
MPM.......................................................................8
Multiemployer Plan........................................................8
National Data Letter......................................................8
Official Body.............................................................8
Permitted Liens...........................................................9
Person....................................................................9
Plan......................................................................9
Policy 21.................................................................9
Property Leases...........................................................9
Proprietary Rights........................................................9
Purchase Price............................................................9
Raytown Lease............................................................10
Real Estate Deliverables.................................................10
Related Person...........................................................10
Retained Liabilities.....................................................10
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Retained Leased Real Property............................................10
Retained Owned Real Property.............................................10
Roanoke Sublease.........................................................10
Schedule.................................................................10
Sellers Opinion..........................................................11
SM Agreements............................................................11
Standards................................................................11
Subleases................................................................11
Subsidiary...............................................................11
SunSource Revolver.......................................................11
TSA......................................................................12
Taxes....................................................................12
Tax Return...............................................................12
Territory................................................................12
Time.....................................................................13
Tucson Sublease..........................................................13
ARTICLE 2 SALE AND PURCHASE OF ASSETS ......................................13
2.1 Sale and Purchase of Assets..............................................13
2.2 The Purchase Price.......................................................19
2.3 Determination of Closing Date Balance Sheet..............................19
2.4 Closing..................................................................27
2.5 Closing Deliveries by Sellers............................................27
2.6 Closing Deliveries by the Acquisitive Parties............................34
2.7 Timeliness of Payments...................................................37
2.8 Assets Not Purchased by the Buyer........................................37
2.9 Liabilities Assumed by the Buyer.........................................40
2.10 Liabilities Not Assumed by the Acquisitive Parties.......................41
ARTICLE 3 JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF THE SELLERS ..48
3.1 Organization and Qualification of the Company and the Absence
of Subsidiaries........................................................48
3.2 Equity Interests.........................................................49
3.3 Authority................................................................50
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3.4 No Governmental Consents.................................................51
3.5 Properties, etc..........................................................51
3.6 Patents, Licenses and Related Matters....................................53
3.7 Financial Statements.....................................................55
3.8 Absence of Undisclosed Liabilities.......................................55
3.9 Absence of Certain Changes or Events.....................................56
3.10 Contracts................................................................57
3.11 Litigation...............................................................59
3.12 Compliance with Law......................................................60
3.13 Labor Matters............................................................61
3.14 Insurance................................................................62
3.15 Employee Benefit Matters.................................................63
3.16 Customers and Suppliers..................................................68
3.17 Machinery and Equipment..................................................69
3.18 Accounts Receivable......................................................69
3.19 Inventories..............................................................69
3.20 Employees................................................................70
3.21 Accounts Payable.........................................................71
3.22 Taxes....................................................................71
3.23 Customer Lists...........................................................72
3.24 Environmental and Occupational Safety and Health.........................72
3.25 Transactions with Affiliates.............................................75
3.26 Bank Accounts, etc.......................................................76
3.27 Backlog..................................................................76
3.28 Decrees..................................................................76
3.29 Company Products.........................................................77
3.30 Books and Records........................................................78
3.31 Defined Benefit Plan.....................................................78
3.32 Lifetime Benefits........................................................78
3.33 Excise Tax Liability.....................................................79
3.34 Brokers..................................................................79
3.35 Affiliate Transactions...................................................79
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3.36 No Sensitive Transactions................................................80
3.37 Representations Complete.................................................80
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE ACQUISITIVE PARTIES ........80
4.1 Organization.............................................................81
4.2 Authority................................................................81
4.3 Brokers..................................................................82
4.4 Litigation Affecting the Acquisitive Parties.............................83
4.5 No Consents..............................................................83
4.6 Adequate Capital.........................................................83
ARTICLE 5 COVENANTS ........................................................83
5.1 Employee Benefit Matters.................................................84
5.3 Substitution of Collateral...............................................90
5.4 Records..................................................................91
5.5 Confidentiality..........................................................92
5.6 Non-Competition..........................................................94
5.7 WARN Act.................................................................97
5.8 Profitability of Uncompleted Contracts, Agreements or Other
Commitments of the Company.............................................98
5.9 Provisions for Warranty Claims..........................................100
5.10 FICA Adjustment.........................................................103
5.11 Cobra and Accrued Benefits..............................................103
ARTICLE 6 INDEMNIFICATION .................................................105
6.1 Survival of Representations, Warranties and Covenants...................105
6.2 Indemnification.........................................................106
6.2.1. By the Sellers..................................................106
6.2.2. By the Acquisitive Parties......................................114
6.2.3. Indemnification Procedures......................................115
6.2.4. The Procedure for Presentation to Assure of Letter of Credit....117
6.3 Receivables Indemnification.............................................119
6.4 Claw Back Right.........................................................124
6.5 Subrogation Rights......................................................124
6.6 Effect of Investigation or Knowledge....................................125
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ARTICLE 7 GENERAL PROVISIONS ..............................................125
7.1 Modification; Waiver....................................................125
7.2 Transfer of Acquired Assets and of Funds................................125
7.3 Entire Agreement........................................................127
7.4 Allocation of Purchase Price............................................128
7.5 Environmental Reports...................................................128
7.6 Preparation of Documents................................................128
7.7 Expenses................................................................129
7.8 Interpretation..........................................................129
7.9 Headings................................................................129
7.10 Time is of the Essence..................................................129
7.10 Notices.................................................................129
7.12 Severability............................................................131
7.13 Binding Effect; Assignment..............................................131
7.14 No Third Party Beneficiaries............................................131
7.15 Change of Name..........................................................131
7.16 Counterparts............................................................131
7.17 Governing Law; Dispute Resolution.......................................132
7.18 Arbitral Award..........................................................134
7.19 Sole Remedy.............................................................134
Exhibit 1 - the "Landlords' Waiver"
Exhibit 2 - the "▇▇▇▇ of Sale"
Exhibit 3 - the "▇▇▇▇ of Sale"
Exhibit 4 - the "▇▇▇▇ of Sale"
Exhibit 5 - the "▇▇▇▇ of Sale"
Exhibit 6 - the "▇▇▇▇ of Sale"
Exhibit 7 - the "Intellectual Property Assignments"
Exhibit 8 - the "Letter of Credit"
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Exhibit 9 - the "General Real Property Assignment"
Exhibit 10 - the "Raytown Lease"
Exhibit 11 - the "Tucson Sublease"
Exhibit 12 - the "Mesa Sublease"
Exhibit 13 - the "Roanoke Sublease "
Exhibit 14 - the "Certificate of Fulfillment"
Exhibit 15 - the "Sellers Opinion"
Exhibit 16 - the "Certificate of Government Consents"
Exhibit 17 - the "Certificate "
Exhibit 18 - the "Transition Services Agreement"
Exhibit 19 - the "Assignment"
Exhibit 20 - the "Lockbox Letter"
Exhibit 21 - the "National Data Letter"
Exhibit 22 - Intentionally Omitted
Exhibit 23 - the "Branch Accounts Agreement"
Exhibit 24 - the "Bonus Accords"
Exhibit 25 - the "Payoff Letter "
Exhibit 26 - the "Instrument of Assumption"
Exhibit 27 - the "Certificate"
Exhibit 28 - the "Acquisitive Parties' Opinion"
Exhibit 29 - the "Certificate"
Exhibit 30 - the "Certificate"
Exhibit 31 - the "Letter of Credit"
Exhibit 32 - the "Property Lease"
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Asset Purchase Agreement
Agreement, dated as of April 12, 2000, by and between VVP
America, Inc., a corporation organized and existing pursuant to the laws of the
State of Delaware (the "Parent"), VVP America Acquisition, L.L.C., a limited
liability company organized and existing pursuant to the laws of the State of
Delaware (the "Buyer") (the Parent and the Buyer are hereinafter collectively
referred to as the "Acquisitive Parties" or, singularly, as an "Acquisitive
Party"), SunSource Inc., a corporation organized and existing pursuant to the
laws of the State of Delaware ("SunSource"), SunSource Investment Company, Inc.,
a corporation organized and existing pursuant to the laws of the State of
Delaware ("SIC"), ▇▇▇▇▇▇▇ Glass, Inc., a corporation organized and existing
pursuant to the laws of the State of Delaware (the "Company"), and SunSub A
Inc., a corporation organized and existing pursuant to the laws of the State of
Delaware (the "Owner") (the Owner, SIC, the Company and SunSource are
hereinafter collectively referred to as the "Sellers" or, singularly, as a
"Seller") (the "Agreement").
W I T N E S S E T H :
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WHEREAS, SIC, a wholly owned subsidiary of SunSource, owns all
of the issued and outstanding shares of capital stock of the Owner;
WHEREAS, the Owner owns all of the issued and outstanding
capital stock of the Company;
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WHEREAS, the Company desires to sell, and the Buyer desires to
purchase, the business and certain of the related assets of ▇▇▇▇▇▇▇, each upon
the terms and conditions hereinafter set forth; and
WHEREAS, in the absence of the execution and delivery hereof
by SunSource and the joint and several liability of the Sellers, the Acquisitive
Parties would not execute and deliver the Agreement.
NOW, THEREFORE, in consideration of the premises and mutual
covenants and agreements herein set forth, the parties hereto, intending to be
bound by the terms and provisions hereof, agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. The terms defined in this Article 1, whenever
used herein, shall have the following meanings for purposes of this Agreement:
"Acquisitive Parties Opinion" shall have the meaning ascribed
to such phrase in Section 2.6(d) hereto.
"Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with,
such Person where "control" is defined as having ownership, directly or
indirectly, of 20%, or more, of the voting stock or other equity interest of
such Person.
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"Assets" shall have the meaning ascribed to such word in
Section 2.1 hereof.
"Assumed Liabilities" shall have the meaning ascribed to such
phrase in Section 2.9 hereof.
"Balance Sheets" shall have the meaning ascribed to such
phrase in Section 2.3(a) hereof.
"Bills of Sale" shall have the meaning ascribed in such phrase
in Section 2.5(b) hereof.
"Bonus Accords" shall have the meaning ascribed to such phrase
in Section 2.5(w) hereof.
"Branch Accounts Agreement" shall have the meaning ascribed to
such phrase in Section 2.5(v) hereof.
"Business Day" means any day that is not a Saturday, Sunday or
other day on which banking institutions in Philadelphia, Pennsylvania, are
authorized or required by law, or executive order, to close.
"Closing" means the consummation of the purchase of the Assets
as contemplated by Section 2.1 hereof.
"Closing Date" means the date the Closing takes place.
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"Closing Date Balance Sheet" has the meaning ascribed to such
phrase in Section 2.3(a) hereof.
"COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor thereto.
"Draft Closing Date Balance Sheet" has the meaning ascribed to
such phrase in Section 2.3(c) hereof.
"Environmental Claims" has the meaning ascribed to such phrase
in Section 3.24(i) hereof.
"Environmental Laws" has the meaning ascribed to such phrase
in Section 3.24(ii) hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, or any successor thereto.
"Estimated Closing Date Balance Sheet" has the meaning
ascribed to such phrase in Section 2.3(a) hereof.
"Excluded Assets" shall have the meaning ascribed to such
phrase in Section 2.8 hereof.
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"Financial Statements" shall have the meaning ascribed to such
phrase in Section 3.7 hereof.
"GAAP" means generally accepted U.S. accounting principles,
consistently applied.
"General Real Property Lease Assignment" shall have the
meaning ascribed to such phrase in Section 2.5(f) hereof.
"▇▇▇▇▇▇▇" shall mean the Company.
"Hazardous Materials" has the meaning ascribed to such phrase
in Section 3.24(iii) hereof.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Income Taxes" means all federal, state, local and foreign
taxes (excluding franchise taxes) on, or based on, net income (including
interest and penalties relating thereto) attributable to the operations of the
Company.
"Initial and Estimated Payment" shall have the meaning
ascribed to such phrase in Section 2.2 hereof.
"Instrument of Assumption" has the meaning ascribed to such
phrase in Section 2.6(b) hereof.
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"Insurance Policies" has the meaning ascribed to such phrase
in Section 3.14 hereof.
"Intellectual Property Assignments" shall have the meaning
ascribed to such phrase in Section 2.5(c) hereof.
"IRS" means the United States Internal Revenue Service.
"Issuer" means PNC Bank, National Association.
"Knowledge", as to ▇▇▇▇▇▇▇, means awareness, after a
reasonable investigation, of any of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇; and "Knowledge", as to any Seller
other than ▇▇▇▇▇▇▇, means the awareness of any of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ (but only as to matters preceding April 28, 1999, at which time ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ retired) or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
"Landlords' Waivers" shall have the meaning ascribed to such
phrase in Section 2.5(a) hereof.
"Law" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"Letter of Credit" shall have the meaning ascribed to such
phrase in Section 2.5(e) hereof.
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"Liens" or a "Lien" shall mean any mortgage, deed of trust,
pledge, lien, security interest, charge or other encumbrance or security
arrangement of any nature whatsoever including any conditional sale or title
retention arrangement, and any assignment, deposit arrangement or lease intended
as, or having the effect of, security.
"Lockbox Letter" shall have the meaning ascribed to such
phrase in Section 2.5(s) hereof.
"Losses" shall mean any and all liability, loss, cost, damage
or expense.
"LOF" shall have the meaning ascribed to such word in Section
2.3(a) hereof.
"LOF Note" shall have the meaning ascribed to such phrase in
Section 2.3(a)(I) hereof.
"Mesa Sublease" shall have the meaning ascribed to such phrase
in Section 2.5(i) hereof.
"MPM" shall have the meaning ascribed to said word as set
forth in Section 5.8 hereof.
"Multiemployer Plan" shall have the meaning ascribed to such
phrase in Section 3.15(a) hereof.
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"National Data Letter" shall have the meaning ascribed to such
phrase in Section 2.5(t) hereof.
"Official Body" shall mean any government or political
subdivision or agency, authority, bureau, central bank, commission, department
or instrumentality of either, or any court, tribunal, grand jury or arbitrator,
in each case whether foreign or domestic.
"Permitted Liens" shall have the meaning ascribed to such
phrase in Section 3.5 hereof.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust or unincorporated organization.
"Plan" shall have the meaning ascribed to such term in Section
3.15(a) hereof.
"Policy 21" shall have the meaning ascribed to such phrase in
Section 2.3(a) hereof.
"Property Leases" shall have the meaning ascribed to such
phrase in Section 2.8(a) hereof.
"Proprietary Rights" shall have the meaning ascribed to such
phrase in Section 2.1 hereof.
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"Purchase Price" shall be the sum of Thirty Three Million
($33,000,000) Dollars plus, or minus, the difference between Nineteen Million
Six Hundred and Twelve Thousand ($19,612,000) Dollars and the tangible net worth
of the Company as set forth on the Closing Date Balance Sheet.
"Raytown Lease" shall have the meaning ascribed to such phrase
in Section 2.5(g) hereof.
"Real Estate Deliverables" shall have the meaning ascribed to
such phrase in Section 2.5(d) hereof.
"Related Person" means any corporation, trade, business or
entity under common control with the Company, within the meaning of Sections
414(b), (c) or (m) of the Code or Section 4001(b) of ERISA.
"Retained Liabilities" shall have the meaning ascribed to such
phrase in Section 2.10 hereof.
"Retained Leased Real Property" shall have the meaning
ascribed to such phrase in Section 2.8(a) hereof.
"Retained Owned Real Property" shall have the meaning ascribed
to such phrase in Section 2.8(a) hereof.
"Roanoke Sublease" shall have the meaning ascribed to such
phrase in Section 2.5(j) hereof.
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"Schedule" means any of the disclosure schedules of the
Sellers containing information relating to the Company or the Sellers pursuant
to Section 3 hereof and the other provisions hereof that have been provided to
the Acquisitive Parties on the date hereof.
"Sellers Opinion" shall have the meaning ascribed to such
phrase in Section 2.5(l) hereof.
"SM Agreements" shall have the meaning ascribed to such phrase
in Section 2.10(a) hereof.
"Standards" shall have the meaning assigned to such phrase in
Section 2.3(a) hereof.
"Subleases" shall have the meaning ascribed to such word in
Section 2.8(a) hereof.
"Subsidiary" means each corporation of which the Company owns,
directly or indirectly, on the Closing Date, capital stock representing more
than 50% of the outstanding voting stock and each partnership, joint venture or
other Person in which the Company owns, or has the right to acquire, directly or
indirectly, a majority equity interest.
"SunSource Revolver" means certain credit facilities under the
revolving credit, term loan, guaranty, and security agreement, dated December
15, 1999, among SunSource and certain of its Affiliates, PNC Bank, National
Association, as agent, and the other parties thereto, as amended, from time to
time.
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"TSA" shall have the meaning ascribed to such word in Section
2.5(o) hereof.
"Taxes" shall mean any and all taxes, including income taxes,
charges, fees, levies or other assessments, including income, gross receipts,
excise, real or personal property, sales, withholding, social security,
occupation, use, service, service use, value added, license, net worth, payroll,
franchise, transfer and recording taxes, fees and charges, imposed by the IRS or
any taxing authority (whether domestic or foreign), including any state, local
or foreign government or any subdivision or taxing agency thereof (including a
United States possession), whether computed on a separate, consolidated,
unitary, combined or any other basis; and such term shall include any interest,
penalties or additional amounts attributable to, or imposed upon, or with
respect to, any such taxes, charges, fees, levies or other assessments.
"Tax Return" shall mean any report, return, document,
declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction (foreign or domestic) with respect to Taxes.
"Territory" means all ▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇ and the District of Columbia, Canada and Mexico.
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"Time" shall have the meaning ascribed to such word in Section
2.3(a) hereof.
"Tucson Sublease" shall have the meaning ascribed to such
phrase in Section 2.5(h) hereof.
ARTICLE 2
SALE AND PURCHASE OF ASSETS
2.1 Sale and Purchase of Assets Error! Bookmark not defined.
The Company hereby sells, transfers, assigns, conveys and delivers to the Buyer,
and the Buyer hereby purchases, acquires and accepts from the Company, all of
the properties and assets of the Company and any predecessor or Subsidiary of
the Company, excluding only the Excluded Assets, including those assets which
are used by the Company but which are owned by a predecessor, or Affiliate or a
Subsidiary of the Company and are located at a facility owned or leased by the
Company or a predecessor as set forth on Schedule 2.1A hereto (all of such
assets and properties to be hereinafter collectively referred to as the
"Assets") upon the terms, and subject to the conditions, hereinafter set forth.
The Assets so sold, assigned and transferred shall constitute all of the
properties and assets of the Company or of any Affiliate of the Company or
predecessor of the Company as are used in or in connection with the business of
the Company, excluding the Excluded Assets and any administrative personnel and
other assets related to services provided by a Seller, other than the Company,
to the Company and located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, of whatever kind, nature and description, tangible and intangible, real
or personal, wherever situated, in which the Company has any right or interest,
including:
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(a) all cash, other than as noted in Section 2.8(m),
checks, marketable securities, notes, bank accounts, other than as noted in
Section 2.8(l) hereof, (including all deposit accounts, lockboxes, lockbox
accounts and any and all funds present therein on the date hereof and in the
future) trade and other accounts receivable (other than those delineated in
Section 2.8(d) hereof), royalties, deferred charges, advance payments, prepaid
items (other than prepaid insurance assets and prepaid taxes [which are
discussed elsewhere in the Agreement]), claims for refunds (other than those
with respect to insurance policies of the Company or taxes), rights of offset
and credits;
(b) all property, plant and equipment including all fee
simple interests in all land other than the Retained Owned Real Property (as
hereinafter defined), which shall be subject to a lease in the form attached as
Exhibit 10, leaseholds (excluding the leases with respect to the facilities of
the Company in Mesa, Arizona, Tucson, Arizona and Roanoke, Virginia [the
"Retained Leases"]), easements, rights of way, licenses, railroad and other use
agreements, rights to vacated land and other interests in land, computer and
telephone equipment, machinery, equipment, tools, motor vehicles,
transportation, packing and delivery equipment and supplies, furniture and
fixtures;
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(c) all contract rights and other intangible and tangible
assets including:
(i) all leases, other than the Retained Leases,
and leasehold estates and interests therein
(including leases with respect to computer
hardware or software used by the Company),
permits, licenses, forbearances and consents;
(ii) all contractual and other rights and licenses
under purchase orders, supply agreements,
sales orders, agreements pursuant to which the
Company, or any other Seller with respect to
the business of the Company, is to indemnified
(except the Agreement), joint venture
agreements of the Company, or any other Seller
with respect to the business of the Company,
restrictive covenant agreements running in
favor of the Company, or any other Seller with
respect to the business of the Company, to the
extent that the same are so assignable (to the
extent that any of the same are not
assignable, and all of the same are set forth,
whether assignable or not, on Schedule 2.1B
hereto, the Sellers agree to, at the sole
cost, expense and liability of Buyer, to seek
to enforce the same as, and to the extent
that, the Buyer may, from time to time,
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direct), agreements of employment,
representative agreements, non-competition
agreements to the extent that the same are so
assignable (to the extent that any of the same
are not assignable, and all of the same are
set forth, whether assignable or not, on
Schedule 2.1C hereto, the Sellers agree to, at
the sole cost, expense and liability of Buyer,
to seek to enforce the same as, and to the
extent that, the Buyer may, from time to time,
direct), dealer agreements, export agent
agreements, consulting agreements,
confidentiality agreements to the extent that
the same are so assignable (to the extent that
any of the same are not assignable the Company
agrees to, at the sole cost, and expense and
liability of the Buyer, to seek to enforce the
same as, and to the extent that, the Buyer
may, from time to time, direct), development
agreements, assignment agreements and all
other contracts, including any contracts
described in Section 3.10 and any Immaterial
Contracts;
(iii) all proprietary rights existing in all
countries, including all patents, patent
applications, and patent disclosures, all
trademarks, service marks, trade names, trade
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dress, logos, designs, corporate names and all
translations, adaptations, derivations and
combinations thereof, and all registrations
and applications to register any of the
foregoing and all of the goodwill of the
products, services or businesses with which
any of the foregoing or the Company is, or has
been, associated or in any way connected, all
copyrightable subject matters, copyrights,
copyright registrations and applications to
register copyrights, all mask works, mask work
registrations and applications to register
mask works, all trade secrets, shop rights,
know-how, confidential information, all
licenses to, or from, third parties with
respect to any of the foregoing, all copies
and tangible embodiments to the foregoing (in
whatever form or medium) owned by the Company,
together with all rights to ▇▇▇ and to recover
for past infringement or misappropriation of
any of the foregoing;
(iv) all discoveries, improvements, processes,
formula (secret or otherwise), databases and
computer software in both source code and
object code form, if any), and documentation
-16-
related thereto, owned by the Company, data,
engineering, technical and shop drawings, art
work, specifications and ideas (including
those in the possession of third parties and
which are the property of the Company),
whether protectable or not, licenses and other
similar agreements, and all drawings, records,
books or other indicia, however evidenced, of
the foregoing (and all copies and intangible
embodiments thereof owned by the Company, in
whatever form or medium);
(v) all supplies on hand and in transit,
inventories of finished goods, raw material
and work-in-process;
(vi) all memberships, agencies and permits, of
whatever kind or nature;
(vii) all books of account, customer records,
customer lists, mailing lists, files, papers
and records relating to the Assets and the
business and affairs of the Company including
those with respect to the Assets and the
Assumed Liabilities in the possession of the
Company on the Business Day preceding the date
hereof;
(viii) all goodwill in the business of the Company;
and
-17-
(ix) all franchise and all right, title and
interest in and to the use of the names
"▇▇▇▇▇▇▇", "▇▇▇▇▇▇▇ Glass", "One Stop Glass
Shop" and any other and additional trademark,
service ▇▇▇▇, trade name, name or designation
similar or dissimilar to any of the foregoing
used in connection with the business of the
Company or as set forth in the Intellectual
Property Assignments (the rights in Sections
2.1(c)(iii), (iv), (viii) and (ix) are
hereinafter collectively referred to herein as
the "Proprietary Rights").
2.2 The Purchase Price. Simultaneous with the execution and
delivery hereof the Owner agrees to cause the Company to sell, and the Buyer
shall purchase and accept, the Assets, for a cash purchase price equal to Thirty
Three Million ($33,000,000.00) Dollars plus, or minus, on a dollar for dollar
basis, the difference between the tangible net worth of the Company, as
determined in accordance with the terms hereof, and as set forth on the
Estimated Closing Date Balance Sheet (as hereinbelow defined), and Nineteen
Million Six Hundred and Twelve Thousand ($19,612,000) Dollars (the "Initial and
Estimated Payment"), said Initial and Estimated Payment to be subject to later
adjustment in accordance with the terms hereof.
-18-
2.3 Determination of Closing Date Balance Sheet.
(a) Not later than April 6, 2000, the Sellers shall have
delivered to the Acquisitive Parties the estimated closing date balance sheet,
as of the close of business on the Closing Date (the "Time"), of the Company,
which is acceptable to the Acquisitive Parties (the "Estimated Closing Date
Balance Sheet"). The Estimated Closing Date Balance Sheet, the Draft Closing
Date Sheet (as defined below) and the closing date balance sheet, as of the Time
(the "Closing Date Balance Sheet") (the Estimated Closing Date Balance Sheet,
the Draft Closing Date Balance Sheet and the Closing Date Balance Sheet are
hereinafter collectively referred to as the "Balance Sheets"), shall each be
prepared in accordance with the "Standards", which shall consist of the
following principles, (A) GAAP applied on a consistent basis except where
otherwise addressed herein, (B) each of the Balance Sheets will reflect the
results of the February 25, 2000 and the March 31, 2000, physical inventories of
the Assets rolled forward, in accordance with GAAP to reflect the gains and
losses on the February and March physical inventories on the Balance Sheets; (C)
the Balance Sheets shall each reflect accrued vacation and sick pay expenses as
of the Closing Date, (D) each of the Balance Sheets shall contain such
additional provisions if any, as may be required by "Policy 21", of the Company
as attached herewith as Schedule 2.3A , (E) the value of the tangible Assets of
the Company on the Balance Sheets, including the value of the inventory and the
property, plant and equipment of the Company will reflect the adjustments, if
any, indicated by the result of the February 25, 2000, and March 31, 2000,
physical inventory of the Assets, rolled forward, in accordance with GAAP, to
-19-
the appropriate date on the relevant balance sheet in order to assure an
appropriate evaluation of the physical inventory in accordance therewith, said
process to be performed by the Company in accordance with prior practices of the
Company subject only to GAAP, (F) all accounts payable on the Balance Sheets are
to be supported by appropriate documentation, (G) each of such Balance Sheets
shall contain a reserve equal to Two Hundred and Five Thousand ($205,000.00)
Dollars representative of those bonus payments to be made by the Buyer, within
ten (10) days after the date hereof, as set forth on Schedule 2.3B hereto (the
"GBK"), (H) each of such Balance Sheets shall reflect the deletion therefrom of
(i) the book value of the real property assets of the facility of the Company in
Raytown, Missouri and the projected net book value accorded to the leasehold
interests of the Company with respect to its facilities in Tucson, Arizona, as
of April 12, 2001, Mesa, Arizona, as of February 28, 2002, and Roanoke,
Virginia, as of February 25, 2002, and (ii) any value with respect to any
intangible assets of the Company, as defined by GAAP, including good will and
intellectual property rights and any value accorded to any litigation presently
being prosecuted or pursued by the Company, other than any litigation with
respect to the collection of accounts receivable being acquired by the Buyer
pursuant to the terms hereof, (I) there shall be recorded on each of such
Balance Sheets an entry reflective of the indebtedness of the "▇▇▇▇▇▇▇ Glass
Industries a division of SDI Operating Partners, L.P." to ▇▇▇▇▇▇-▇▇▇▇▇-Ford
Company ("LOF") pursuant to the note, dated April 20, 1988, from said debtor to
LOF (the "LOF Note") thereunder on the Closing Date in the amount of Nine
-▇▇-
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇ Thousand ($974,000) Dollars, (J) there shall be established
a reserve, on each of the Balance Sheets, in the amount of Two Hundred and Three
Thousand ($203,000) Dollars for each of (i) any severance liabilities, costs and
expenses of the Company to be paid in a manner consistent with the existing
severance plan of the Company as set forth on Schedule 3.15(a) hereof and (ii)
the "stay plan" of the Company, as set forth on Schedule 3.15(a) hereto, with
respect to employees of the Company so employed by the Company on the date
hereof (such reserve not to be applied or applicable with respect to any
obligation of any party to any individual executing an SMA [complete liability
with respect to each SMA, and with respect to each person executing an SMA, to
be a "Retained Liability" for any and all purposes hereof]) said reserve to be
the sole liability of the Sellers with respect to the severance liabilities to
be paid in accordance with the severance plan set forth in Schedule 3.15(a) and
the "stay plan" of the Company as set forth on Schedule 3.15(a) hereto, and in
the event that less than One Hundred and Three Thousand [$103,000.00] Dollars is
expended pursuant to the "severance plan" of the Company as set forth on
Schedule 3.15(a) hereto with respect to employees of the Company so employed by
the Company on the date hereof, the remaining sum, if any, shall be paid to the
Company, as soon after the date hereof as the same may be responsibly
calculated, (K) on each of the Balance Sheets there shall be recorded an entry
reflective of the value of only those accounts receivable of the Company bearing
an invoice date on, or after, the 1st day of January, 2000, and those accounts
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receivable of the Company bearing an earlier invoice date and noted on Schedule
2.3C hereto, (L) each of the Balance Sheets shall reflect accrued group medical
insurance, dental insurance, life insurance and accidental death and
dismemberment reserves, consisting of reserves for services performed prior to,
but unpaid by the Company as of, the Closing Date for the Company's employees
under the medical, dental, life, and accidental death and disability plans
(collectively considered the "medical plans"); and (M) any current or deferred
assets or liabilities relating to prepaid insurance assets and Taxes shall be
removed from each of the Balance Sheets.
(b) The Buyer shall, in accordance with the Agreement,
pay, or cause to be paid, to the Owner and by wire transfer to that account
delineated in Schedule 2.3(b) hereto, and in immediately available U.S. funds,
against delivery to the Acquisitive Parties of all documents required to be
delivered by the Sellers, the Initial and Estimated Payment.
(c) As soon as is practicable after the Closing Date, but
in any event within a period of ninety (90) days thereafter, the Sellers shall
prepare and deliver to the Acquisitive Parties a Draft Closing Date Balance
Sheet of the Company (the "Draft Closing Date Balance Sheet") as of the Time
prepared in accordance with the Standards and said Draft Closing Date Balance
Sheet shall be accompanied by a detailed quantitative analysis of any
differences between the Estimated Closing Date Balance Sheet and the Draft
Closing Date Balance Sheet. The Acquisitive Parties shall, within a period of
-22-
thirty (30) days after receipt by the Acquisitive Parties of such Draft Closing
Date Balance Sheet, advise the Sellers, in writing, as to any manner in which
the Acquisitive Parties believe that the Draft Closing Date Balance Sheet has
not been prepared in accordance with the Standards. In the event that such
written statement of the Acquisitive Parties is not received by the Sellers
within said thirty (30) day period, the Draft Closing Date Balance sheet shall
be deemed, for any and all purposes, to be the Closing Date Balance Sheet. In
the event the written statement of disagreement from the Acquisitive Parties is
timely received, the Sellers shall be afforded a period of thirty (30) days,
after receipt by the Sellers of the same, to advise the Acquisitive Parties, in
writing, as to disagreements of the Sellers, if any, therewith. In the event
that the Acquisitive Parties do not receive, within such thirty (30) day period,
the written statement of disagreement from the Sellers, the written statement of
disagreement from the Acquisitive Parties shall be deemed, for any and all
purposes, to be accepted by the Sellers, with the effect that all such changes
proposed in the statement of disagreement of the Acquisitive Parties shall be
accepted and automatically incorporated into the Closing Date Balance Sheet. In
the event that the Acquisitive Parties do receive the written statement of
disagreement of the Sellers on or prior to the expiration of the thirty (30) day
period afforded to the Sellers the parties shall seek, for a period of thirty
(30) days thereafter, to "amicably resolve" their disagreements with respect to
the "Draft Closing Date Balance Sheet", in accordance with the Standards and the
Agreement. If the parties do so resolve all of their differences the parties
shall thereupon timely jointly prepare the "Closing Date Balance Sheet",
evidencing the agreement of the parties.
-23-
In the event that the parties are not able to so resolve their
differences, payment shall be made, as appropriate, to effect any agreements
between the parties and any matters remaining in controversy shall be referred
for final resolution, in accordance with the Standards and the Agreement, to the
Cincinnati, Ohio, office of one (1) of the five (5) largest United States
independent certified public accounting firms which has no business relationship
with any of the Acquisitive Parties or the Sellers. If the parties hereto fail
to agree on such accounting firm within ten (10) Business Days, any of the
parties hereto may request the American Arbitration Association to appoint such
an accounting expert (or another accounting firm if all five (5) accounting
firms decline to accept or are disqualified from accepting, the engagement), and
such appointment shall be conclusive and binding upon the parties hereto. The
fees, costs and expenses of said firm shall be borne equally by the Acquisitive
Parties and the Sellers and the "Closing Date Balance Sheet", as determined by
such accounting firm, shall be, for any and all purposes, deemed to be the
"Closing Date Balance Sheet."
(d) The Sellers shall permit the accountants and other
representatives of the Acquisitive Parties to, at any time and from time to
time, observe, and participate in, the preparation of the Draft Closing Date
Balance Sheet, and each of the Sellers and the Acquisitive Parties shall make
-24-
available to the other parties, and their accountants and other representatives,
such documents, instruments, work papers and supporting documentation as they
may wish to review and make available to such parties such employees of, and
records of, the Sellers or the Acquisitive Parties, as the case may be, as they
may desire to interview and review in connection with their review of the
Balance Sheets and in connection with any dispute arising from the same.
(e) The Acquisitive Parties and the Sellers, as the case
may be, shall make payment, free and clear of any offsets, deductions or
counterclaims, within five (5) Business Days of receipt of the Closing Date
Balance Sheet, howsoever derived, in order to, on a dollar-for-dollar basis,
reflect all differences between the Purchase Price and the Initial and Estimated
Payment.
(f) Other than with respect to the liabilities and
reserves established on the Balance Sheets with respect to accounts receivable,
inventory and warranty matters, in the event that any reserves established on
the Closing Date Balance Sheet are not fully utilized, or do not then remain
payable, as calculated on December 31, 2000 in a manner consistent with the
Company's prior practices, the Buyer shall remit such unused amount to the
Company subject to the dispute resolution procedure in Section 2.3(c); provided,
however, that, the parties shall seek to effect full disposition of any
remaining reserves with respect to warranty not later than five (5) years from
-25-
the date hereof. Similarly, in the event that any reserves or accruals
specifically established on the Balance Sheets are less than the liability of
the Company with respect to the category covered by such reserves, as of the
period prior to the Closing, and such liability is paid by the Buyer, the
Sellers shall, within ten (10) days of being advised by the Buyer of the amount
of said insufficiency, pay to the Buyer the difference between such reserves or
accruals and the amount so paid by the Buyer subject to the dispute resolution
procedure in Section 2.3(c).
2.4 Closing. The Closing shall take place at the offices of
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇-▇▇▇▇, at 9:00 A.M., local time, on the date hereof. For GAAP and tax
purposes, the Closing shall be effective as of the close of business on the
Closing Date.
2.5 Closing Deliveries by Sellers. At the Closing, the
Sellers shall deliver, or cause to be delivered, the following to the
Acquisitive Parties:
(a) The landlords' consents to assignment and waivers in
the form attached herewith as Exhibit 1, executed by each lessor of real
property leased to, or otherwise occupied by, the Company as set forth on
Schedule 2.5(b) hereto and received, on or before the date hereof, by any Seller
(hereinafter collectively referred to as the "Landlords' Waivers").
(b) A ▇▇▇▇ of sale in the form attached hereto as Exhibit
2, with respect to those accounts receivable of the Company bearing an invoice
-26-
date on, or after, the 1st day of January, 2000, a ▇▇▇▇ of sale, in the form
attached herewith as Exhibit 3, with respect to those accounts receivable of the
Company noted on Schedule 2.3C, a ▇▇▇▇ of sale, in the form attached herewith as
Exhibit 4, with respect to all leased non-real estate property and assets of the
Seller, a general ▇▇▇▇ of sale with respect to the Assets, in the form attached
hereto as Exhibit 5, and a separate ▇▇▇▇ of sale, in the form attached herewith
as Exhibit 6, from each owner as to such vehicles in each state of registration
thereof with respect to all vehicles, including cars, trucks, tractors and
trailers owned by either the Company, or any affiliate or predecessor thereof
and used (if owned by the Company or a predecessor thereof) in whole or in part,
in the business of the Company (hereinafter collectively referred to as the
"Bills of Sale"), together with original ownership cards and documents and other
evidence of ownership of each of the vehicles being transferred by the Sellers
or their predecessors pursuant to the terms hereof.
(c) Assignments transferring to the Buyer all of the
Proprietary Rights (the "Intellectual Property Assignments"), in the forms
attached hereto as Exhibit 7, or in such other form, or forms, as may be
appropriate or necessary, in the opinion of the Acquisitive Parties, for
recordation in any and all jurisdictions.
(d) With respect to all real property owned by the
Company, or any predecessor thereto, to be acquired by the Buyer pursuant to the
terms hereof, as set forth on Schedule 2.5 hereto, the Sellers shall deliver (i)
-27-
a special warranty deed in form and substance reasonably satisfactory to the
Acquisitive Parties, fully executed and acknowledged by the Company, or the
record owner thereof, conveying the subject property to the Buyer, subject only
to the Permitted Encumbrances, (ii) a certificate from the Sellers in a form
reasonably acceptable to the Acquisitive Parties and a title insurance company
to be designated by the Acquisitive Parties ("Title Company") stating that each
of the Sellers is a United States taxpayer and is not a foreign estate or trust
or any other foreign entity or person in accordance with applicable law and the
regulations of the IRS, (iii) such forms and certificates prescribed by each
municipality where each property is located transferring all municipal water,
wastewater and other utilities capacity and reservations applicable to the
subject property with all capital recovery, and other charges paid, (iv) a
Seller's affidavit and such other documents, receipts, certificates, instruments
or agreements as are reasonably required by the Title Company and/or customary
for the closing of a real estate transaction in the jurisdiction in which such
property is located, and (v) a wire transfer made payable to the order of the
Title Company, representative of the sum of the following adjustments (as shown
on the fully executed HUD-1 Settlement Sheet prepared by the Title Company),
each to be effective as of the date hereof:
(i) The total of all real estate taxes, general or
special, and all other public charges or
assessments against the subject properties
(collectively, the "Real Estate Charges") that
-28-
are payable on an annual basis pro-rated on a
per diem basis to and as of the date hereof
(such pro-rations shall be based upon the
respective fiscal years of taxing bodies
levying such taxes);
(ii) Fifty percent (50%) of all recordation stamps
or taxes and all transfer taxes imposed upon
the conveyance of the subject property and/or
the recordation of the deeds; and
(iii) Fifty percent (50%) of all fees for to the
recordation of the deeds (all of the foregoing
are hereinafter collectively referred to an
the "Real Estate Deliverables").
(e) The Irrevocable Letter of Credit in favor of the
Buyer in the amount of Two Million ($2,000,000.00) Dollars issued by the Issuer
for a term of two (2) years from the date hereof and then to be reduced to an
amount equal to the amount of any then outstanding claims by the Buyer against
any Seller pursuant to the Agreement in the form of Exhibit 8 hereto (the
"Letter of Credit");
(f) The General Real Property Lease Assignment executed
by the Sellers in the form attached hereto as Exhibit 9 (the "General Real
Property Lease Assignment");
-29-
(g) A lease agreement executed by the Company, in the
form attached hereto as Exhibit 10, with respect to the facility of the Company
at ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Raytown Lease");
(h) A sublease agreement, in the form attached hereto as
Exhibit 11, by and between the Company and the Buyer with respect to the
facility leased by the Company located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ (the "Tucson Sublease");
(i) A sublease agreement, in the form attached hereto as
Exhibit 12, by and between the Company and the Buyer with respect to the
facility leased by the Company located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Mesa Sublease");
(j) A sublease agreement, in the form attached hereto as
Exhibit 13, by and between the Company and the Buyer with respect to the
facility leased by the Company located at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Roanoke Sublease");
(k) A separate certificate, dated the Closing Date and in
the form attached hereto as Exhibit 14, signed by the President or a Vice
President of each of the Sellers, to the effect that (A) all representations and
warranties of the Sellers are true and correct in all material respects and (B)
that the Sellers have performed and complied in all material respects with all
agreements, contracts and conditions required by this Agreement to be performed
-30-
and complied with by them prior to or on the date hereof, subject to such
exceptions to subpart (B) as are set forth on a schedule appended to such
certificate with respect to the failure, or possible failure, of the Sellers to
have obtained certain consents to the transfer to the Buyer of all the right,
title and interest of the Sellers to certain contracts, agreements and
understandings of the Sellers;
(l) The written opinion of ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP,
counsel to the Sellers, dated the Closing Date, in the form attached herewith as
Exhibit 15 (the "Sellers' Opinion");
(m) A certificate in the form attached hereto as Exhibit
16 of the Sellers that the Sellers have received all necessary governmental
consents or approvals to permit the Sellers to consummate the transactions
contemplated by this Agreement;
(n) A certificate, in the form attached hereto as Exhibit
17, of the Sellers that all applicable waiting periods under the HSR Act have
expired or been terminated and no court order has been entered that enjoins,
restrains or prohibits consummation of the transactions contemplated by this
Agreement or questions the validity of this Agreement, and that there is no
pending or threatened litigation, proceeding or investigation that restrains,
prohibits or prevents or, in the reasonable opinion of the Sellers, presents a
significant risk of restraining, prohibiting or preventing, or changing the
terms of the transactions contemplated by this Agreement or which otherwise
-31-
would materially and adversely affect the condition, financial or otherwise, of
the Company;
(o) The transition services agreement executed by the
Company in the form of Exhibit 18 hereto (the "TSA");
(p) The assignment, in the form attached hereto as
Exhibit 19, to the Buyer of all right, title and interest of SunSource with
respect to each of the confidentiality and non-competition provisions of
employment agreements, dated December 9, 1999, between SunSource and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇;
(q) Evidence that the Buyer has been designated as an
"additional insured" on those insurance policies of the Company set forth on
Schedule 2.5(a) which shall include the personal injury and property/casualty
insurance policies of the Company or of the Sellers with respect to the Company;
(r) Evidence that the Company has taken actions to
satisfy all conditions as set forth in Section 5.1(b) of the Agreement, to the
obligations of the Buyer to assume any liability with respect to the Plans;
-32-
(s) Letter from the Company to each of Commerce Bank,
N.A. and UMB Bank N.A. (the "Lockbox Banks") in the form attached herewith as
Exhibit 20 (the "Lockbox Letter");
(t) Letter by the Company to NDC/eCommerce in the form
attached herewith as Exhibit 21 (the "National Data Letter");
(u) [Intentionally Omitted];
(v) Letter agreement, dated as of the date hereof, by and
between the Company, the Buyer, VVP Funding Corporation, Redwood Receivables
Corporation and General Electric Capital Corporation in the form attached
herewith as Exhibit 23 (the "Branch Accounts Agreement");
(w) Letter Agreements, dated as of the Closing, and in
the form attached hereto as Exhibit 24, between each of the individual
signatories to the SMA Agreements and SunSource (the "Bonus Accords"); and
(x) The letter, dated as of the date hereof, from the
Issuer to the Company in the form attached hereto as Exhibit 25 (the "Payoff
Letter").
2.6 Closing Deliveries by the Acquisitive Parties. At the
Closing, the Acquisitive Parties shall deliver, or cause to be delivered, the
following to the Sellers:
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(a) Cash in the amount of the Initial and Estimated
Payment, by wire transfer of immediately available U.S. funds to the account
identified on Schedule 2.6(a) hereto; and
(b) An instrument of assumption with respect to the
Assumed Liabilities in the form attached hereto as Exhibit 26 (the "Instrument
of Assumption");
(c) A separate certificate, dated the Closing Date and in
the form attached hereto as Exhibit 27, signed by the President or a Vice
President of each of the Acquisitive Parties to the effect that (A) all
representations and warranties of the Acquisitive Parties are true and correct
in all material respects (B) and that the Acquisitive Parties have performed and
complied in all material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by them prior to or
on the date hereof;
(d) The written opinion of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP,
counsel to the Acquisitive Parties, dated the Closing Date, in the form attached
hereto as Exhibit 28 (the "Acquisitive Parties' Opinion");
(e) A certificate in the form attached hereto as Exhibit
29 of the Acquisitive Parties that the Acquisitive Parties have received all
necessary government consents or approvals to permit them to consummate the
transactions contemplated by this Agreement;
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(f) A certificate in the form attached hereto as Exhibit
30 of the Acquisitive Parties that all applicable waiting periods under the HSR
Act have expired or been terminated and no court order shall have been entered
that enjoins, restrains or prohibits consummation of the transactions
contemplated by this Agreement or questions the validity of this Agreement, and
that there is no pending or threatened litigation, proceeding or investigation
that restrains, prohibits or prevents or, in the reasonable opinion of the
Acquisitive Parties, presents a significant risk of restraining, prohibiting or
preventing, or changing the terms of the transactions contemplated by this
Agreement or which otherwise would materially and adversely effect the
condition, financial or otherwise, of the Buyer;
(g) The Intellectual Property Assignments;
(h) The General Real Property Lease Assignment;
(i) The Raytown Lease;
(j) The Tucson Sublease;
(k) The Mesa Sublease;
(l) The Roanoke Sublease;
(m) The TSA;
(n) The AA Agreements;
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(o) The Branch Accounts Agreement;
(p) Evidence that Buyer has taken actions to assume those
Employee Benefit Plans which Buyer agreed to assume in Section 5.1(a) herein,
however said assumption is conditioned upon the satisfaction of certain
conditions precedent by the Sellers as noted in Section 5.1(b) hereof (the
Closing to be dispositive evidence of the satisfaction of this condition
precedent); and
(q) The Bonus Accords.
2.7 Timeliness of Payments. In the event that any sums due
and owing pursuant to this Agreement are not paid on, or before, the date that
such sums become due and payable or, if disputed, the date such sums are
adjudicated to be, or mutually agreed, in writing, to have become, due and
payable (the "Due Date"), such unpaid sums shall bear interest, from the due
date, until so received by the recipient party, at that interest rate equal to
the lesser of (A) the highest rate permitted by applicable law or (B) the
product of (i) 1.50 and (ii) that interest rate then paid or to be paid by the
party who has failed to make the payment when due with respect to "short term
unsecured" indebtedness for borrowed funds pursuant to such company's then
existing credit facility, if any, or if no such facility then exists, that
interest rate then paid by such party with respect to indebtedness for borrowed
funds due within one (1) year of the first borrowing thereof, as the same may
change from time to time.
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2.8 Assets Not Purchased by the Buyer. The parties hereto
agree that, notwithstanding anything to the contrary contained herein, or
elsewhere, the Buyer is not purchasing, directly or indirectly, any right, title
or interest in, and to, the following assets (said assets are hereinafter
collectively referred to as the "Excluded Assets");
(a) The real property and real estate leases of the
Company or a predecessor thereof as are set forth on Schedule 2.8A hereto
(hereinafter collectively referred to as the "Retained Owned Real Property"),
each of which shall either be the subject of a lease agreement by and between
the Company, or a predecessor thereof, and the Buyer in the form attached hereto
as Exhibit 31 hereto (the "Property Lease") or (Y), as to the balance of the
properties set forth on Schedule 2.8A (hereinafter collectively referred to as
the "Retained Leased Real Property"), each of which shall be the subject of a
sublease agreement by and between the Company, or an Affiliate thereof, and the
Buyer in the form attached hereto as Exhibit 32, 33 or 34 (the "Subleases");
(b) Any right, title or interest of the Company in, or
to, the employment contract, dated February 9, 1999, between the Company and
▇▇▇▇▇ ▇▇▇▇▇ (the "▇▇▇▇▇ Contract");
(c) Any and all litigation set forth on Schedule 3.11A
hereto including those claims of the Company with respect to the claim asserted
by PCL Construction Services, Inc., as general contractor, with respect to the
"▇▇▇▇▇▇ Dam Project" and with respect to "In Re: Flat Glass Antitrust
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Litigation" presently pending in the United States District Court for the
Western District of Pennsylvania, Master Docket Misc. 97-550, MDL 1200;
(d) Those accounts receivable of the Company as are set
forth on Schedule 2.8(d) hereto;
(e) Any of the issued and outstanding capital stock of
any Affiliate of the Company;
(f) Any right, title or interest of the Company in, or
to, the Agreement;
(g) Insurance policies of the Company and all rights
thereunder to receive refunds, retrospective premium payments and prepaid
insurance refunds;
(h) All right, title and interest of the Company in and
to any and all escrow accounts established with respect to the acquisition by
the Company of the issued and outstanding capital stock of ▇▇▇▇▇▇▇▇▇ and Premier
(as hereinafter defined);
(i) Any and all Tax refunds relating to periods prior to
the Closing and prepaid taxes;
(j) All corporate seals, charter documents, minute books,
stock books, tax returns (the Buyer being permitted to obtain and retain a full
and complete copy thereof) and other records relating to the organization of the
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Company; provided, however, the financial, operational, market and sales,
accounting, accounts receivable, accounts payable and other like records are to
be conveyed to the Buyer simultaneously herewith;
(k) Refunds relating to prepaid business licenses and
prepaid insurance policies;
(l) The account of the Company to which the Initial and
Estimated Payment is to be transmitted and any cash in such account; and
(m) Any remaining cash in account No. ▇▇▇-▇▇▇-▇ at ▇▇▇▇
▇▇▇▇▇▇ Bank & Trust Company that was created pursuant to that certain escrow
agreement, dated August 7, 1991, between ▇▇▇▇▇▇▇ Glass Industries, Hillcrest
Health Center and ▇▇▇▇ ▇▇▇▇▇▇ Bank and Trust Co. (in the approximate amount of
Fifteen Thousand ($15,000.00) Dollars).
2.9 Liabilities Assumed by the Buyer. The Buyer agrees to
assume, discharge in accordance with their terms, and indemnify, defend and hold
harmless the Sellers, and each of their respective officers, subsidiaries,
affiliates, directors, employees, representatives and agents, from and against
any and all Losses based upon those liabilities of the Company reflected, and
only to the extent so reflected, on the Closing Date Balance Sheet and those
obligations and liabilities of the Company arising, from and after the date
hereof, as a consequence of (a) the contracts and agreements of the Company
specifically listed on a schedule, or schedules, to this Agreement, (b) other
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contracts of the Company as to which the Buyer will receive the economic benefit
after the date hereof that were not required to be listed on such schedules by
the terms of this Agreement, (c) those benefit plans set forth on Schedule
3.15(a) hereto and designated on such Schedule as an "Assumed Plan", subject to
the satisfaction of all related conditions precedent thereto and delivery to the
Buyer of the documents referred to in Section 2.5(r) hereof and (d) any and all
Taxes arising solely and exclusively from the operation of the business by the
Buyer or the ownership of the Assets, in each case from and after the date
hereof (hereinafter collectively referred to as the "Assumed Liabilities".
2.10 Liabilities Not Assumed by the Acquisitive Parties.
Notwithstanding anything to the contrary contained in the Agreement, or
otherwise, except as to the Assumed Liabilities, the Acquisitive Parties are not
assuming, or agreeing to be responsible for, any or all Losses arising, whether
known or unknown, contingent or otherwise, out of any action or omission prior
to the date hereof, or after the date hereof as may be provided herein, by, or
on behalf of, the Company, or any of its predecessors, Affiliates or
Subsidiaries, or any of their respective officers, directors, agents and
employees, including any and all Losses arising, whether currently asserted or
asserted at any time hereafter, as a direct or indirect consequence of (all
liabilities and obligations as are hereinafter set forth and described in
Sections (i) through (xxii) hereof are hereinafter referred to as the "Retained
Liabilities") (i) any claims or assessments, known or unknown, by any federal,
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state or local authorities for any Taxes or interest, fines or penalties thereon
with respect to the Company, and any predecessor thereto, or any Affiliate or
Subsidiary of any of the foregoing parties to the extent such claims relate to
periods prior to the Closing Date, (ii) any Loss, of whatever kind or nature,
contingent or otherwise, including those based upon contract, statute or tort,
with respect to products, work-in-process, or goods or services of the Company,
and any predecessor thereto or any Affiliate or Subsidiary of any of the
foregoing parties, manufactured and sold prior to the date hereof including any
Loss based upon injuries to persons, property or business by reason of the
defectiveness, improper design or manufacture or malfunction, or otherwise, of
any products sold or services provided by the Company, or any predecessor
thereof, or any Affiliate or Subsidiary of the foregoing, (iii) any tort, crime,
breach of contract or violation of any law or regulation by the Company, any
predecessor of the Company, or any Affiliate or Subsidiary of any of the
foregoing parties, or any of their respective employees, agents or
representatives that occurred prior to the date hereof, (iv) any obligations or
liabilities of the Sellers to the Acquisitive Parties pursuant to the Agreement,
(v) any actual or alleged liability or obligation pursuant to "employee benefit"
plans, arrangements, agreements or practices, actual or alleged employment
contracts, distributor, agency or sales representative agreement or
understanding or pension, retirement, disability, medical, dental or other
health, life insurance or death benefit, profit sharing, deferred compensation,
vacation, sick, holiday or other paid leave, severance plan (except pursuant to
-41-
the GBK) and fringe benefit plans or arrangements maintained or contributed to
by the Company, any predecessor thereof, or any Affiliate or Subsidiary of any
of the foregoing, other than with respect to the Savings Plan (as hereinafter
defined) or the Profit Sharing Plan (as hereinafter defined) hereto subject to
the full and complete fulfillment of the conditions precedent to the assumption
thereof by the Buyer, as are set forth in Section 5.1(b) hereto, with respect to
past or present employees of any such entities or their dependents or other
affiliated parties including any "employee benefit plans", "welfare plans", and
"pension plans" as defined in ERISA provided, however, that such liabilities or
obligations described in this subsection arose prior to the Closing Date and are
not specifically otherwise addressed pursuant to the terms of this Agreement,
(vi) any liability or obligation of the Company as of the Closing Date to any
actual or prospective lenders (including principal and interest obligations to
financial institutions or others), investors (including common stock and
preferred stock investors, including employees, officers, directors and
consultants who have acquired stock, stock options or warrants under any
employee benefit plans), option holders or warrant holders, (vii) any accounts
payable and accrued operating expenses incurred prior to the Closing in excess
of the reserves expressly established with respect thereto on the Closing Date
Balance Sheet, (viii) any Excluded Assets, (ix) any liability of the Company, or
any predecessor thereof, or any Affiliate or Subsidiary of any of the foregoing,
arising out of any action or omission prior to the date hereof by, or on behalf
of, any of such parties, or their respective officers, directors, agents or
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employees incurred under, or imposed by, any federal, state or local law,
ordinance, rule or regulation or other legal requirement or common law including
those pertaining to workmens' compensation or the Environmental Laws or with
respect to past or past or present employees or alleged employees, (x) the
violation, prior to the date hereof, of the terms of any agreements, contracts
or understandings to which the Company, or any past or present Subsidiary,
Affiliate or predecessor thereof, was a party or by the terms of which it may be
bound, (xi) any claims by actual, or alleged, insurance or surety companies
against any Seller based upon actions or omissions, or payments or remittances
that occurred, prior to the date hereof, including retrospective premium
adjustments, deductibles or payments for costs and expenses; provided that the
Buyer shall promptly pay over to the Company any refund, adjustment or other
payment made by insurance or surety company that the Buyer receives after the
date hereof and that relate to the period prior thereto, (xii) any and all
claims or obligations of any Seller pursuant to any of the employment
agreements, each instrument being dated December 9, 1999, between SunSource and
each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇ (hereinafter collectively referred to as the "SM Agreements") including any
claim asserted by, or on behalf of, any individual who is a party to any SM
Agreement against the Company, or any Acquisitive Party (whether based on any
changes in employment terms, conditions or status occurring at any time prior to
the date hereof or within one (1) year from the date hereof, the only
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obligations of the Buyer to any of said parties to be to pay salaries and
provide "welfare plan" benefits as are made available to like situated
employees, but not severance liabilities or liabilities incurred as a result of
complying with COBRA, or any similar payment, after the date hereof), (xiii) any
claim for severance, or other compensation, or payment, based upon a change in
employment status, location, position, authority, compensation or any other
basis asserted, with respect to actions both before and after the date hereof,
against any Acquisitive Party by any of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ on or before, or with respect to any period
prior to the first anniversary of the date hereof including any claim based, in
whole or in part, upon the amendment or cessation of the employment relationship
between any of the foregoing named individuals and any Acquisitive Party prior
to the first anniversary of the date hereof and any claim asserted against any
Acquisitive Party by any person who was an employee of any Seller prior to the
date hereof and is not offered employment by any of the Acquisitive Parties
following the Closing Date; (xiv) any claim by any shareholder, former
shareholder, or warrant holder of any of ▇▇▇▇▇▇▇▇▇ Glass, Inc. ("▇▇▇▇▇▇▇▇▇") or
Premier Glass Services, Inc. ("Premier") or any predecessor, including any claim
for additional funds based, in whole or in part, upon the purchase of the issued
and outstanding capital stock of ▇▇▇▇▇▇▇▇▇ or Premier due and owing, for any
reason to such former shareholders, (xv) the closure or abandonment of any
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facility of the Company, or any of its predecessors, prior to the date hereof,
including any lease termination, expiration or amendment or fees, costs and
expenses relating to such closure or abandonment; (xvi) any Loss with respect to
any actions, or omissions, by or on behalf of the Company, or any predecessor,
or Premier with respect to those facilities of Premier previously located in
Jacksonville, North Carolina, Fayetteville, North Carolina and Walterboro, South
Carolina, (xvii) the failure of the Company, or any predecessor thereto, to have
obtained any required consents or approvals with respect to the assignment or
transfer to the Buyer of any Assets, contracts, leases, licenses, agreements or
understandings entered into by the Company or any Affiliate or predecessor to
the Company, provided that such Loss arises out of such failure to obtain such
consent or approval and not out of the Acquisitive Parties' failure to comply
with the material provisions (provisions with respect to the requirement to
obtain any consent or approval as to this transaction only with respect to the
assignment, or attempted assignment, or de facto assignment, of any of the same
shall not be considered, for any purposes hereof, to be included within the
purview of "material provisions" for purposes hereof) of such contracts, leases,
licenses, agreements or understandings after the date hereof; (xviii) any
failure of any assets of the Company reflected on the Closing Date Balance Sheet
to be owned, of record, by the Company, (xix) any Loss with respect to the
litigation described in Schedule 3.11A hereof, including ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ v.
S.D.I. Operating Partners L.P., ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Glass, the "▇▇▇▇▇▇ Dam
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Visitors Project", In Re: Flat Glass Antitrust Litigation in the United States
District Court for the Western District of Pennsylvania, Master Docket Misc. No.
97-550, MDL 1200, the facilities of the Company formerly located in Omaha,
Nebraska, and Salina, Kansas, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ vs ▇▇▇▇▇▇▇ Glass, Inc., ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. vs. Escambio County School District and ▇▇▇▇▇▇▇ Glass, Inc.,
Ophelia's L.L.C. and Construction Technologies, Inc. ▇. ▇▇▇▇▇▇▇ Glass
Industries, Inc., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Glass, Inc., ▇▇▇▇▇▇ Electric Company v.
▇▇▇▇▇▇▇ ▇▇▇▇▇, et al., ▇▇▇▇▇▇ Electric J.P.&T., Inc. et al. and ▇. ▇▇▇▇▇▇▇▇▇ vs.
▇▇▇▇▇▇▇ Glass, Inc. and any manner, cause of, action, claim or other liability
arising, directly or indirectly, therefrom, (xx) any of the independent
contractor agreement, dated February 9, 1999, among ▇▇▇▇▇▇▇▇▇ Management Group,
Inc. and the parties thereto, the agreement, effective January 1, 2000 to
December 31, 2002, by and between "▇▇▇▇▇▇▇ Glass Denver" and the Glaziers,
Architectural Metal and Glass Workers Local Union No. 930, Service Agreement,
dated June 21, 1999, by and between Aramark Uniform Services, Inc. and the
Company, Service and Supply Agreement, dated April 29, 1999, by and between G&K
Services, Inc. and the Company, Service Agreement, dated April 18, 1997, by and
between Aramark Services, Inc. and the Company, any insurance policy by and
between SunSource and Legion Insurance Company, letter agreement, dated January
25, 1999, between the Company and Graftec of Rockford, Inc., the tax consulting
agreement, dated March 16, 1998, by and between the Company and KMR Consulting,
Ltd., the ▇▇▇▇▇ Contract (with respect to said contract the Sellers agree to not
amend or terminate, or attempt to amend or terminate, the same for thirty (30)
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days after the date hereof and the Buyer agrees to comply, on behalf of the
Sellers, with sections 4(b) and 4(c) thereof as long as ▇▇. ▇▇▇▇▇ is an employee
of the Buyer), the employment contract, dated February 2, 1999, between the
Company and ▇▇▇▇▇▇ ▇▇▇▇▇, and the employment contract, dated April 30, 1998, by
and between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and the severance plan, dated as
of May 1, 1996, amended January 1, 1997, of the Company, (xxi) the failure of
any Plan or any Multiemployer Plan to be fully funded in accordance with the
terms of said plan and applicable Law as of the date hereof and (xxii) any third
party claim against the Company or any Subsidiary or Affiliate, or any
predecessor of any of the foregoing, resulting from the operation of the
businesses of the Company and the Affiliates or Subsidiaries, or any predecessor
of any of the foregoing, on or before the date hereof.
ARTICLE 3
JOINT AND SEVERAL REPRESENTATIONS AND
WARRANTIES OF THE SELLERS
The Sellers jointly and severally represent and warrant to the
Acquisitive Parties as follows:
3.1 Organization and Qualification of the Company and the
Absence of Subsidiaries. The Company has no Subsidiaries and is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, with all requisite power and authority to own, lease and
operate its properties and carry on its business as presently conducted. The
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Company is in good standing as a foreign corporation and licensed or qualified
to transact business in each jurisdiction in which the nature of the properties
owned, leased or operated by it, or the business transacted by it, requires it
to be so licensed or qualified. Set forth on Schedule 3.1A hereto is a list of
each jurisdiction in which the Company is qualified to do business as a foreign
corporation. The copy of the certificate of incorporation and bylaws of the
Company appended herewith as Schedule 3.1B is complete and correct and there are
no dissolution, liquidation or bankruptcy proceedings pending, contemplated by
or threatened, in writing, or threatened, to the Knowledge of the Company,
orally against the Company or any of the other Sellers or any Affiliate of any
of the foregoing entities.
3.2 Equity InterestsError! Bookmark not defined..
(a) Schedule 3.2 sets forth and identifies all Persons in
which the Company holds any equity interest, and all of the issued and
outstanding capital stock of the Company is owned of record by the Owner, free
and clear of any Liens.
(b) There are not outstanding any subscriptions, options,
calls, warrants or other rights or agreements to acquire from the Company or the
Owner or any other party any shares of capital stock or other securities of the
Company.
(c) The Company has no Subsidiaries.
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3.3 Authority.
(a) The Sellers are each a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
with all requisite power and authority to enter into and perform this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the performance by the Sellers of their
respective obligations hereunder have been duly authorized by all necessary
corporate action on behalf of the Sellers. This Agreement has been duly executed
and delivered by the Sellers and constitutes the legal, valid and binding
obligation of the Sellers, enforceable against each of them in accordance with
its terms.
(b) Except as set forth in Schedule 3.3(b), neither the
execution and delivery of this Agreement by the Sellers, nor the consummation of
the transactions contemplated hereby will: (i) require any filing with,
notification to, or permit, authorization, consent or approval of, any Person,
other than an Official Body, (ii) violate, conflict with, result in a breach of
or constitute a default under, (A) the certificate of incorporation or by-laws
(or other similar charter or governing documents) of any of the Sellers or (B)
any judgment, order, injunction, decree or award of any court, arbitrator,
administrative agency or governmental body to which any Seller is a party, or by
which any of them (or any of their respective properties or assets), is subject
or bound, (iii) result in the creation of, or give any party the right to
create, any Lien upon any of the properties or assets of the Company, (iv)
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violate, conflict with or result in the breach, modification or termination of,
or give any other party the right to terminate or modify the provisions or terms
of any contract, agreement, lease, mortgage, bond, indenture, commitment,
license, franchise, permit, authorization, concession or other instrument or
obligation to which the Company or any other Seller is a party or by which it
(or any of its properties or assets) are subject or bound or (v) violate or
conflict with any statute, rule, regulation, ordinance or code applicable to any
Seller.
3.4 No Governmental Consents. Except for the filing
requirements under the HSR Act, and except as set forth on Schedule 3.4, no
filing with, notification to, or permit, authorization, consent or approval of,
any Official Body is necessary for the consummation by the Sellers of the
transactions contemplated by this Agreement.
3.5 Properties, etc. Except as otherwise set forth in
Schedule 3.5A, the Company has (a) good, indefeasible and insurable fee simple
title (insurable by a reputable title company at its standard rates) to those
properties listed on Schedule 3.5B, or valid leasehold or license interests in,
all of the real property leased to the Company as listed on Schedule 3.5C and
(b) good title to, or valid leasehold or license interests in, all of the
tangible personal property and assets, that are reflected on the Balance Sheets,
other than assets or properties sold, retained, closed or otherwise disposed of
in compliance with the Agreement. With respect to the assets that the Company
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owns other than real property, except as otherwise set forth in Schedule 3.5D,
the Company owns each of such assets free and clear of any Liens other than (i)
Liens for taxes not yet due and payable or which are being contested in good
faith by appropriate proceedings as set forth on Schedule 3.5E hereto, (ii) such
other easements, covenants, declarations, restrictions and encumbrances (not
including monetary liens) that may be set forth in any properly recorded
document relating to the real property owned by the Company that do not
adversely impact upon the value, marketability, use or utility of such real
property, (iii) statutory liens for amounts not yet due and payable, (iv) the
right of customers of the Company with respect to inventory or work-in-progress
under orders or contracts entered into by the Company, as set forth on Schedule
3.5F hereto, (v) deposits or pledges that are statutory obligations to secure
workmen's compensation, unemployment insurance, old age benefit or other social
security obligations and (vi) liens of carriers, workers, warehousemen,
mechanics and materialmen incurred in the ordinary course of business for
amounts not yet due and payable (the Liens expressly described in the foregoing
clauses being referred to as the "Permitted Liens"). Except as set forth in
Schedule 3.5G, all leases, conditional sale contracts, franchises or licenses
pursuant to which the Company is currently holding, or using, any Assets are
valid and effective, and the Company has performed all of its payment and other
material obligations to be performed prior to the date hereof under all such
leases, conditional sales contracts, franchises, licenses or easements, and the
Company has not received any notice of default or termination thereunder and has
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no Knowledge of any facts or other circumstances which, with notice or lapse of
time, or both, would constitute a payment or other material default thereunder.
Attached hereto as Schedule 3.5H is a list of all vehicles currently owned by
the Company, or by any of its predecessors or Affiliates, which are used in the
business of the Company, and attached herewith, as Schedule 3.5I, is a list of
all vehicles currently leased to the Company, or to any of its predecessors or
Affiliates, which are used in the business of the Company, a list of all such
lease agreements is attached herewith as Schedule 3.5J hereto.
3.6 Patents, Licenses and Related Matters.
(a) Except as set forth in Schedule 3.6(a)(i), the
Company is the sole owner of, or has a valid and effective license or otherwise
has the right to use, all patents and applications therefor, inventions (whether
patentable or not), trade secrets, expertise, know-how, trademarks and trade
names and registrations and applications therefor, copyrights, and copyright
registrations and applications therefor and other intangible property of any
kind that is, or has been, in the five (5) year period immediately preceding the
date hereof, used in the operation of the business of the Company (hereinafter
collectively referred to as the "Intellectual Property"). The Company owns or
uses no copyrights, or patents or patent applications, and all Intellectual
Property owned or licensed by or to the Company is set forth in Schedule
3.6(a)(ii), and all royalties, fees and other payments due and payable and other
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contractual obligations and covenants to be performed by the Company to keep
such Intellectual Property in effect have been made or performed.
(b) Except as described in Schedule 3.6(b), the Company
has not been charged with or received any claim or charge (oral or written), nor
is there any basis, to the Knowledge of the Company, for any such claim or
charge, with respect to the actual or alleged infringement (whether in the past
or as an ongoing matter) of any unexpired patent, trademark, trademark
registration, trade name, copyright, copyright registration, trade secret or
other proprietary right of any other party.
(c) There are no licenses pursuant to which the Company
is a licensor of Intellectual Property, and all licenses under which the Company
is a licensee or sublicensee of Intellectual Property are valid and enforceable,
and the Company has made all payments and performed all of its other obligations
and covenants in connection therewith, and the representations and warranties of
the Company to the licensors and sublicensors thereof were true and correct when
made.
3.7 Financial Statements. Attached herewith, as Schedule
3.7A, is the balance sheet and related statement of loss and cash flow of the
Company as of, or for the period ending, as the case may be, December 31, 1999
(the "Financial Statements"). The Financial Statements, present fairly, in all
materials respects, the financial position of the Company, and the results of
operation thereof, as at the date thereof, or for the period then ending subject
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to the absence of complete footnotes, none of such footnotes, had they been
prepared, would have discussed, referred or described any contingent liabilities
of the Company, except as referred to or described herein, have been prepared in
accordance with GAAP, consistently applied, and are in accordance with the books
and records of the Company.
3.8 Absence of Undisclosed Liabilities. Except to the extent
reflected on, or reserved against, or otherwise disclosed in the Financial
Statements or as set forth on Schedule 3.8A hereto, as of the date hereof, the
Company does not have, any liabilities or obligations of any nature, whether
absolute, accrued, contingent or otherwise, which would be of a nature required
by GAAP to be disclosed on the Financial Statements which are not disclosed
thereon in compliance with GAAP and the Company has no liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
which would be of a nature required by GAAP to be disclosed on the Closing Date
Balance Sheet, which are not disclosed on the Estimated Closing Date Balance
Sheet in accordance with GAAP.
3.9 Absence of Certain Changes or Events. Except as set forth
on Schedule 3.9A, since December 31, 1999, (a) there has not been: (i) any
adverse change in the financial condition or results of operations of the
Company or (ii) any damage or destruction out of the ordinary course of business
or casualty loss, whether or not covered by insurance, and (b), except as set
forth in Schedule 3.9B, the Company has not (i) issued, or agreed to issue, or
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deliver, or agreed to deliver, any bonds (except bid or performance bonds
entered into in the ordinary course of business, as set forth on Schedule 3.9C)
or notes whether or not secured, or to be secured, by a Lien, (ii) borrowed, or
agreed to borrow, any funds or incurred or become subject to any obligation or
liability (absolute, accrued, contingent or otherwise) that has or may result in
the attachment of a Lien (other than Permitted Liens) on all, or any, of the
assets of the Company other than pursuant to the SunSource Revolver, none of
such liens with respect to indebtedness for borrowed funds pertain or attach or
relate to any Assets, (iii) sold or transferred, or agreed to sell or transfer,
any assets, properties or rights other than in the ordinary course of business,
(iv) waived any contractual rights except in the ordinary course of business and
in no event in excess of Five Thousand ($5,000.00) Dollars, singularly, or in
excess of Thirty Thousand ($30,000.00) Dollars, in the aggregate, (v) made, or
permitted, any amendment to or termination of any contract except in the
ordinary course of business consistent with prior practice, (vi) made any
accrual or arrangement for the payment of bonuses or special compensation of any
kind to any present or former officers or employees, (vii) increased the rate of
compensation payable, or to become payable, by the Company to its officers,
employees or agents, except for salary or hourly increases made consistent with
prior practice and pursuant to their respective present salary review and
administration programs or union contracts, (viii) except as may be required by
Law or as may be consistent with their respective customary practices or union
contracts, increased the benefits under any of the respective plans relating to
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compensation, profit-sharing, bonus, deferred compensation, severance pay,
insurance, pension, vacation, retirement or other similar plans applicable to
its respective officers, employees or agents, (ix) made any unusual and
significant change in any method of operations or in accounting methods,
principles or practices or (x) agreed, in any way, to do any of the foregoing.
3.10 Contracts. Schedule 3.10A lists or describes all
contracts, agreements, leases, commitments, licenses, franchises, permits,
authorizations, concessions or other instruments or obligations to which the
Company is a party, or by which it is bound, as of March 15, 2000, the Company
having conducted its affairs, from and after that date, in compliance with the
ordinary course of business of the Company, and which (a) are mortgages,
indentures, bonds, loan or credit agreements, security agreements and other
agreements and instruments relating to the borrowing of money or extension of
credit, or providing for the guaranty of the obligations of any party (other
than performance or bid bonds entered into in the ordinary course of business);
(b) are distributorship or other agreements providing for the marketing and/or
sale of products or services; (c) are employment contracts or arrangements,
consulting or commission sales contracts or arrangements; (d) involve
arrangements with customers or suppliers for the sharing of fees, the rebating
of charges or other similar arrangements; (e) contain covenants expressly, or
impliedly, limiting, in any way, the freedom of the Company to compete in any
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line of business with any Person in any geographic area or certain
non-competition agreements running in favor of the Company; (f) are executory
contracts or options relating to the acquisition, or sale, by the Company of any
capital stock, other equity securities, indebtedness or assets of any operating
business or contracts or options for the purchase of any asset, tangible or
intangible, other than in the ordinary course of business; or (g) as of March
15, 2000, obligate, or may obligate, the Company to, the Company having
conducted its affairs, from and after said date, in a manner consistent with the
ordinary course of business of the Company and in compliance with the terms
hereof, pay more than Five Thousand ($5,000.00) Dollars or entitle or may
entitle the Company to receive more than Five Thousand ($5,000.00) Dollars
provided that contracts or other arrangements which are cancellable on not more
than thirty (30) days notice without cause or penalty or contracts or other
arrangements under which the executory obligation of the Company was less than
Five Thousand ($5,000.00) Dollars (the "Immaterial Contracts") shall not be
required to be listed in each of (a) - (g) (all such contracts or other
arrangements described in the foregoing clauses (a) - (g), excepting the
Immaterial Contracts, are hereinafter referred to as "Material Contracts").
Except as set forth on Schedule 3.10B, the Company is not a licensor of any
assets or property and has performed all of its payment and performance
obligations to be performed prior to the date hereof under all Material
Contracts, and neither the Company nor, to the Knowledge of the Company or the
other Sellers, any other party to any such contract is in breach thereof or
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default thereunder and there does not exist any event, to the Knowledge of the
Company or any of the other Sellers, which, with the giving of notice, or the
lapse of time, or both, would constitute such a breach or default, except for
such breaches, defaults and events as to which requisite written waivers or
consents have been obtained by the Company, or a different Seller, prior to the
date hereof.
3.11 Litigation. Except as set forth in Schedule 3.11A, there
is no claim, action, suit, administrative action, arbitration, proceeding or
investigation pending, threatened, in writing, or, to the Knowledge of the
Company or the other Sellers threatened, orally, against, or involving, the
Company or any of its properties or assets before any court or governmental or
regulatory authority or body or before any arbitral forum. There is no
litigation pending or threatened, in writing, or, to the Knowledge of the
Company, or the other Sellers, threatened, orally, against, or with respect to,
the Company which could give rise to any right of indemnification from the
Company for the benefit of any past or present director, officer or employee of
the Company, or his, or her, heirs, executors or administrators. Except as
listed in Schedule 3.11B, the Company is not subject to any judgment, order,
writ, injunction, decree or award.
3.12 Compliance with Law.
(a) The Company has all governmental licenses,
franchises, permits and authorizations that are legally required to enable it to
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carry on its businesses as presently conducted (such licenses, franchises,
permits and authorizations are listed on Schedule 3.12(a)(i) and are hereinafter
referred to as the "Permits"). Each of the Permits is in full force and effect.
Except as described in Schedule 3.12(a)(ii), no proceeding is pending, or
threatened in writing or, to the Knowledge of the Company or any other Seller,
threatened, orally, in which any party seeks the revocation or limitation of any
Permit, and, to the Knowledge of the Company or the other Seller, there is no
basis or grounds for any such revocation or limitation and no circumstances
exist that would prevent all, or any, of the Permits from being transferred, or
reissued, without modification or amendment.
(b) Except as set forth in Schedule 3.12(b), the Company
has conducted, and is now conducting, its businesses and operations in
compliance with all applicable Law, judgments and court or administrative
orders.
3.13 Labor Matters. Except as set forth in Schedule 3.13
attached hereto, (i) the Company is not a party to, or bound by, any collective
bargaining agreement or any affirmative action plan established pursuant to any
local, state or federal law or order of any governmental body or court; (ii) the
Company has discharged all liabilities with respect to severance or termination
pay to former employees; (iii) there is no unfair labor practice charge or
complaint against the Company pending or threatened, in writing or, to the
Knowledge of the Company or any other Seller, threatened, orally, before the
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National Labor Relations Labor Board or other Official Body; (iv) there is no
complaint or proceeding pending or threatened, in writing, or to the Knowledge
of the Company or any other Seller, threatened, orally, before the Equal
Employment Opportunity Commission or other Official Body based on any actual, or
alleged, discrimination or other failure of the Company, or any employee
thereof, to comply with the laws and regulations with respect to equal
employment opportunity; (v) there are no grievance or arbitration proceedings
arising out of collective bargaining agreements to which the Company is party;
(vi) there is no current labor strike or stoppage actually pending against, or
affecting, the Company, and the Company has not experienced any labor strikes or
stoppages since January 1, 1995; (vii) there is no written collective bargaining
agreement or individual agreement relating to employees of the Company being
negotiated and no collective bargaining agreements to which the Company is a
party, or by the terms of which it is, or may be, bound; (viii) there are no
written individual agreements, or other written or oral representations, which
have been made to any employees of the Company to commit any Acquisitive Party
or the Company to retain them as employees for any period of time subsequent to
the date hereof, or that are, in any way, inconsistent with their status with
the Company as "employees-at-will" who may be terminated at any time without
cause or notice, except as otherwise provided by Law; (ix) the Company is not
subject to any settlement or consent decree that is currently effective and that
relates to any present or former employee, employer representative or any
Official Body related to claims of unfair labor practices, employment
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discrimination or other claims in respect to employment practices and policies,
and no Official Body has issued a judgment, order, decree or finding with
respect to the labor and employment practices of the Company; and (x) the
Company has not been issued any deficiency letters by any Official Body or
entered into any settlement agreements, conciliation agreements or letters of
commitment with any Official Body which have any present effect (or could
reasonably be expected to have any future effect) on the employment practices or
policies of the Company.
3.14 Insurance. Schedule 3.14A lists all insurance policies
currently in effect (such list noting, as to each and every one of such
Insurance Policies [as hereinafter defined]), the name of the insurance company,
the policy number, the policy term, assets covered, risks insured against,
deductibles and retrospective premium adjustments) covering the Company or any
of its properties or operations, without regard to whether the Company or any
other Seller is a party thereto (hereinafter singularly referred to as an
"Insurance Policy" or collectively referred to as the "Insurance Policies"). No
notice of termination of any Insurance Policy has been received by the Company,
any of the other Sellers or any Affiliate of any of the foregoing entities. The
Company has timely notified, or otherwise timely filed claims with, the relevant
insurers issuing Insurance Policies, or predecessor insurance policies, with
respect to each claim, other than those claims set forth on Schedule 3.14B
hereto with respect to which, in each instance, the Company believed that there
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were good and valid business reasons (which would not include the possible
impact thereof on the "net" cost to the Company of procuring, or maintaining,
such insurance in the future) for not asserting a claim against the said insurer
with respect thereto, arising during the five (5) year period immediately
preceding the date hereof, which the Company reasonably believed would be
covered by one (1), or more, of such Insurance Policies.
3.15 Employee Benefit Matters.
(a) Schedule 3.15(a) is a true and complete list of all
pension, retirement, disability, medical, dental, accident or other health, life
insurance or death benefit, profit sharing, deferred compensation, vacation,
sick, holiday or other paid leave, severance plan and fringe benefit plans or
arrangements maintained by, or contributed to, by the Company with respect to
past or present employees of either the Company or any ERISA Affiliate (as
hereinafter defined) or their dependants or other affiliated parties including
any "employee benefit plans" (as defined in Section 3(3) of ERISA), welfare
plans and pension plans, as defined in Sections 3(1) and 3(2) respectively, of
ERISA, collective bargaining agreements and employment contracts which are
maintained by the Company or any ERISA Affiliate in respect of, or which
otherwise cover, any other current or former employees of the Company or any
eligible beneficiaries of said current or former employees. Each and every such
plan set forth on Schedule 3.15(a) which is sponsored or maintained by the
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Company is hereinafter referred to as a "Plan" and, collectively, as the "Plans"
and each of the same as are set forth on Schedule 3.15(a) to which the Company
is obligated to contribute pursuant to the terms of a collective bargaining
agreement and to which more than one (1) employer is required to contribute
within the meaning of Section 3(37) of ERISA is hereinafter referred to as a
"Multiemployer Plan." For purposes hereof an "ERISA Affiliate" means each trade
or business (whether or not incorporated) which, together with the Company,
would be treated as a single employer under Sections 4001(b)(1) or 4001(a)(14)
of ERISA or Sections 414(b), (c), (m), (n) or (o) of the Code. The Company is
not now making, nor has it within the past five (5) years made, any ex gratia
payment to any individual related, in whole or in part, to the Company. With
respect to each Plan and Multiemployer Plan, the Sellers have made available to
the Acquisitive Parties a true, correct and complete copy of the written Plan
document, or descriptions of any Plan which is not in writing; the related trust
agreement, if any; the most recent available actuarial report, if any; the most
recent available Form 5500 filed with the IRS and any and all schedules thereto,
if any; the most recent determination letter issued by the IRS, if any; the
summary plan description, if any; and all written amendments and modifications
to any such document.
(b) Each Plan other than a Mutiemployer Plan intended to
be qualified under Section 401(a) of the Code (a "Qualified Plan"), and the
trust (if any) forming a part thereof, satisfies the requirements of such
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Section and has received a favorable determination letter from the IRS, or the
"remedial amendment period" as defined in Code ss.401(b) has not expired with
respect to such Plan, as to its qualification under the Code and to the effect
that each such trust is exempt from taxation under Section 501(a) of the Code.
To the Sellers Knowledge, each Multiemployer Plan intended to be a Qualified
Plan and trust, if any, forming a part thereof, satisfies the requirements of
Code ss.401(a) and has received a favorable determination letter from the IRS as
to its qualification under the Code and to the effect that each such trust is
exempt from taxation under ss.501(a) of the Code. Each Plan has been operated
and administered in substantial compliance with its governing documents and
applicable law including Section 4980B(f) of the Code.
(c) Except as disclosed on Schedule 3.15(c), (i) none of
the Company or any Related Person has incurred any liability pursuant to Title
IV of ERISA (including any withdrawal liability or liability to the Pension
Benefit Guaranty Corporation incurred prior to the Time) which remains
outstanding other than liability for premiums to the Pension Benefit Guaranty
Corporation which are not yet past due; (ii) none of the Company, any of the
Plans, and any trust created thereunder nor, to the Knowledge of the Company or
the other Sellers, any other fiduciary with respect to any Plan has committed
any act or omission or engaged in any transaction with respect to any Plan which
could be expected to result in the imposition on the Company of a civil penalty
pursuant to Section 502(i) of ERISA, a tax pursuant to Section 4975 of the Code
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or liability pursuant to Section 409 or 502(l) of ERISA; (iii) no Plan is funded
by a trust which is intended to be exempt from federal income taxation pursuant
to Section 501(c)(9) of the Code; (iv) there are no pending or threatened
written claims, actions, suits, litigations or administrative proceedings by, on
behalf of, or against, any of the Plans (or, to the Knowledge of the Company or
any other Seller, is there any threatened oral claim against any of the Plans)
or their assets (other than routine claims for benefits) which would have an
adverse effect on the business of the Company; (v) to the Knowledge of the
Company or the other Sellers, no complete or partial withdrawal under Subtitle E
of Title IV of ERISA has occurred within the preceding five (5) years with
respect to any Multiemployer Plan; (vi) none of the Sellers has, within the
preceding five (5) years, incurred any contingent liability under Section 4204
of ERISA; (vii) to the Knowledge of the Company or any other Seller, no
Multiemployer Plan is in "reorganization" or "insolvent" and none of the Sellers
has received any notice from the administrator of any such plan that any such
plan is expected to be in reorganization, insolvent or terminated (within the
meaning ascribed to such terms under Title IV of ERISA); (viii) no Plan is
subject to the minimum funding standards of Sections 412 and 302 of the Code and
ERISA, respectively; (ix) no Plan has incurred any "accumulated funding
deficiency" (whether or not waived) within the meaning of Section 412 of the
Code or Section 302 of ERISA, no event or condition exists which presents a risk
of termination of a Plan, no reportable event within the meaning of Section 4043
of ERISA (for which the disclosure requirements of Regulation Section 4043.1 et
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seq. promulgated by the Pension Benefit Guaranty Corporation have not been
waived) has occurred with respect to a Plan, no notice of intent to terminate a
Plan has been given under Section 4041 of ERISA, no proceeding has been
instituted under Section 4042 of ERISA to terminate a Plan and there has been no
termination or partial termination of a Plan within the meaning of Section
411(d)(3) of the Code; (x) all contributions required to have been made by the
Company and each Related Person to any employee benefit plan pursuant to Section
412 of the Code or Section 302 of ERISA have been timely made; (xi) all
contributions required to have been made by the Company under the provisions of
the Plans or the Multiemployer Plans or pursuant to ERISA or the Code have been
timely made and all such contributions to the Qualified Plans are deductible
pursuant to Section 404 of the Code and will not give rise to any excise tax
pursuant to Section 4979 of the Code; (xii) there are no matters pending (other
than routine qualification determination filings) with respect to any of the
Plans before the IRS, the Department of Labor or the Pension Benefit Guaranty
Corporation and, (xiii) to the Knowledge of the Company or any other Seller, no
event has occurred which will result in the imposition on the Company of an
excise tax pursuant to Section 4977 of the Code.
(d) Schedule 3.15(d) sets forth, by number and
classification, the number of employees employed by the Company as of December
31, 1999 and, with respect to each classification set forth on such Schedule,
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sets forth the approximate number of employees in each such classification
subject to collective bargaining agreements.
3.16 Customers and Suppliers. Schedule 3.16A lists the ten
(10) largest, by revenue of products or services sold to, or purchased from, the
Company, customers and suppliers of the Company during the one (1) year period
ended December 31, 1999. Other than as set forth on Schedule 3.16B, there is no
dispute, of any kind, excepting ordinary course payment disputes, between either
the Company or any of such customers and suppliers and none of such suppliers or
customers has advised any of the Sellers, in any way, that it intends to reduce,
or eliminate, in any manner, its purchases from, or its sales to, the Company.
3.17 Machinery and Equipment. All machinery and equipment and
other personal property owned or leased by, or to, the Company is suitable for
the purpose for which it is used and in working condition, reasonable wear and
tear and depreciation excepted. The only machinery or equipment or personal
property owned by, or leased to, the Company which is not now being used in the
business or operations of the Company is set forth on Schedule 3.17.
3.18 Accounts Receivable. Schedule 3.18 is a list of the
accounts receivable of the Company as of the last day of the calendar month
immediately preceding the date hereof. All such accounts receivable (i) have
arisen in the normal course of business of the Company, (ii) represent bona fide
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indebtedness incurred by applicable account debtors in the stated amounts
reflected on the books and records of the Company and (iii) none of the accounts
receivable of the Company acquired on the date hereof by the Buyer are subject
to prior assignment, deduction, setoff or any Lien. Each of the outstanding
accounts receivable of the Company is payable in United Stated Dollars.
3.19 Inventories. The inventory (whether characterized as raw
material, work-in-process or finished goods) of the Company, taken in the
aggregate, is of a quality and quantity usable or saleable in the ordinary
course of the business of the Company as heretofore conducted, net of any
"Policy 21" reserves established by the Company, without additional discount and
the valuation accorded to all inventory reflected on the books and records of
the Company has been determined, in all respects, in accordance with GAAP and
past practices.
3.20 Employees. Schedule 3.20A is a list of all employment,
compensation (including any "golden parachute", severance or similar
agreements), confidentiality, non-competition, assignment, invention and
consulting agreements or arrangements that are currently in effect by and
between the Company and any person who is now, or has been in the past, employed
or engaged by the Company, whether written or oral, and a list of each employee
of the Company whose aggregate annual compensation, for the year ending December
31, 1999, was, or for the year ended December 31, 2000, is expected to be,
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Thirty Five Thousand ($35,000) Dollars, or more. Schedule 3.20B contains a list
of all bonuses paid to all employees of the Company for the calendar year ended
December 31, 1999, the amount of bonuses budgeted for, or committed to be paid
for the fiscal year ending December 31, 2000, or thereafter and the aggregate
amount of accrued vacation and sick leave for which employees of the Company
will be eligible as of the date hereof. The Company is not in default with
respect to any of its obligations to its employees including pursuant to the
instruments or arrangements noted on Schedule 3.20A hereto. The Company has no
outstanding commitment or agreement to effect any general wage or salary
increase or bonus or increase in fringe benefits for any of its employees other
than expressly pursuant to those collective bargaining agreements set forth on
Schedule 3.13 hereto, or the employment agreements set forth on Schedule 3.10A
hereto. The Company has made no agreements or arrangement with, or promises to,
any director, officer, employee or shareholder of the Company regarding future
compensation or payments or fringe benefits of any kind, except as specifically
noted on Schedule 3.20C hereto.
3.21 Accounts Payable. Schedule 3.21 sets forth a true and
correct "aged" list of all accounts payable of the Company as of December 31,
1999.
3.22 Taxes. Other than as set forth on Schedule 3.22, (i) the
Company has filed all required United States federal, state and local tax
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returns of the Company required to have been completed and filed for all taxable
years and periods up to and including the date hereof; (ii) all payments showing
thereon to be due have been timely paid; (iii) the federal, state and local tax
returns filed by the Company accurately reflect the income, credits, deductions
and losses of the Company; (iv) either the Company or SunSource has paid, or
fully reserved for payment on its books and records, all required withholding,
unemployment, sales, excise and ad valorem taxes owed for, or attributable to,
all periods prior to the date hereof and has established a reserve on its books
and records for all Taxes for all periods prior to the Closing Date; (v) there
is no (nor has there been a request for) agreement, waiver or consent providing
for an extension of time with regard to the assessment of any tax, levy or
impost with respect to the Company and no power of attorney granted by the
Company with respect to any tax matters; (vi) there is no investigation, audit,
claim, demand, deficiency, or additional assessment pending or threatened in
writing or, to the Knowledge of the Company or any other Seller, threatened,
orally, against, or with respect to, any tax, duty, levy, or impost nor is there
any factual or legal basis therefore; (vii) no agreement or consent under
Section 341(f) of the Code has been filed and (viii) the Company is not a party
to, nor is it bound by, nor does it have any obligation under, any tax sharing,
tax indemnity or similar agreement.
3.23 Customer Lists. The Company has the right to use, free
and clear of any claims or rights of others, all of the customer mailing lists
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owned or used by the Company and such customer mailing lists are included, in
all respects, among the Assets.
3.24 Environmental and Occupational Safety and Health. Other
than as set forth on Schedule 3.24A, as of the date hereof (a) no releases of
Hazardous Materials (as hereinafter defined) in quantities that would require
remediation under any applicable Environmental Law (as hereinafter defined) have
occurred at or from any property owned or leased by or to the Company on the
date hereof, (b) there are no past, currently pending or threatened
Environmental Claims (as hereinafter defined) against the Company, (c) there are
no underground storage tanks at or under any property owned by or leased to the
Company on the date hereof, (d) there are no facts, circumstances, or conditions
that could reasonably be expected to restrict, under any Environmental Law (as
hereinafter defined) the ownership, occupancy, use or transferability of any
property owned by or leased to the Company as of the date hereof, (e) the
Company is in compliance with all Environmental Laws applicable to the Company's
current operations and/or facilities owned or operated by the Company on the
date hereof, (f) the Company has not entered into or been subject to any consent
decrees, compliance orders or administrative orders with respect to any of the
facilities owned or operated by the Company on the date hereof or the operations
thereof and (g) the Company has not received notice under the provisions of any
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Environmental Law or other Law in connection with any facility owned or operated
by the Company on the date hereof or the operations thereon. As used in this
Agreement:
(i) "Environmental Claims" means any and all
administrative or judicial actions, suits,
orders, claims, investigations, information
requests, liens, notices, violations or
proceedings related to any applicable
Environmental Law brought, issued, or asserted
or threatened, in writing, by: (A) an Official
Body for compliance, damages, penalties,
removal, response, remedial or other actions
pursuant to any applicable Environmental Law
or (B) a third party seeking contribution to
or reimbursement of removal, response,
remedial or other costs or damages for
personal injury or property damage resulting
from (i) the violation or alleged violation by
the Company of any Environmental Law or (ii)
the release of or exposure to a Hazardous
Material at, to or from any facility. For
purposes of the definition of "Environmental
Claim" only, the term "facility" includes any
facility currently owned and/or operated by
the Company, and any facility to or at which
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any Hazardous Materials from the Company have
been transported, stored, treated or disposed;
(ii) "Environmental Laws" means all applicable
federal, state and local laws, statutes,
ordinances, codes, rules and regulations and
common law causes of action related to the
protection of the environment or the handling,
use, generation, treatment, storage,
transportation or disposal of Hazardous
Materials.
(iii) "Hazardous Materials" means any hazardous or
toxic substance, material or waste which
previously was regulated as or is currently
regulated by state or local governmental
authority or the United States of America,
including any material or substance that is:
(A) defined as a hazardous substance under
applicable state law, (B) petroleum, (C)
asbestos, (D) polychlorinated bi-phenyls, (E)
designated as a hazardous substance pursuant
to Section 311 of the Federal Water Pollution
Control Act, as amended as of the Closing
Date, 33 U.S.C. 1251 et. seq. (33 U.S.C.
1321), (F) defined as a hazardous waste
pursuant to Section 1004 of the Resource
Conservation Recovery Act, as amended as of
the Closing Date, 42 U.S.C. 6901 et seq. (42
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U.S.C. 6903), (G) defined as a hazardous
substance pursuant to Section 101 of the
Comprehensive Environmental Response,
Compensation and Liability Act, as amended as
of the Closing Date, 42 U.S.C. 9601 et seq.
(42 U.S.C. 9601), (H) defined as a regulated
substance pursuant to Section 9001 of the
Resource Conservation and Recovery Act, as
amended as of the Closing Date, 42 U.S.C. 6901
et seq. (42 U.S.C. 6991) or (I) otherwise
regulated under the Toxic Substances Control
Act, 15 U.S.C. 2601 et seq., the Clean Air
Act, as amended as of the Closing Date, 42
U.S.C. 7401 et seq., the Hazardous Materials
Transportation Act, as amended as of the
Closing Date, 49 U.S.C. 1801, et seq., or the
Federal Insecticide, Fungicide and Rodentcide
Act, as amended as of the Closing Date, 7
U.S.C. 136 et seq.
3.25 Transactions with Affiliates. Other than as set forth on
Schedule 3.25 hereto, no director, officer, shareholder, or executive level
employee of the Company or any party to an SMA has, or has had within the past
six (6) months, directly or indirectly, any interest in any entity which (i)
sold or sells, or attempted to sell, services or products to the Company or (ii)
purchased, or attempted to purchase, from the Company any goods or services,
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except for an interest of less than 1% in an entity publicly traded on a
national securities or over-the-counter exchange.
3.26 Bank Accounts, etc. Attached herewith, as Schedule 3.26A,
is a complete and correct description of all banking, safe deposit box and
lockbox arrangements currently maintained by, or on behalf of, the Company, and
the names of all persons authorized to draw thereon or make withdrawals
therefrom. Except as set forth on Schedule 3.26B, the Company has not granted
any power of attorney or similar rights to any person or entity.
3.27 Backlog. Schedule 3.27 sets forth, as at December 31,
1999, the "backlog" of the Company. For any and all purposes of this Section
3.27 "backlog" shall be products scheduled to be shipped within one (1) year of
the date hereof pursuant to those contracts, agreements and understandings of
the Company which have been classified as a "contract" in accordance with the
prior practice of the Company.
3.28 Decrees. Other than as set forth on Schedule 3.28, there
are no judgments, orders, writs, notices, decrees, or injunctions of any court,
governmental commission, department, board, agency or instrumentality, domestic
or foreign, presently in effect to which the Company, or any predecessor, is a
party or that were specifically directed at the Company, or any predecessor, or
any of their officers or employees.
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3.29 Company Products. Except as set forth on Schedule 3.29A,
there are no statements, citations or decisions issued by any governmental or
regulatory or other bodies within the past five (5) years that any products
manufactured, marketed or distributed by, or on behalf of, the Company (a
"Company Product") is, in whole or in part, defective or fails to meet any
standard promulgated by any such governmental authority or regulatory or other
body or Underwriters' Laboratories, Inc., nor has any such governmental or
regulatory or other body threatened, in writing, or to the Knowledge of the
Company or any other Seller, orally, to issue any such statement, citation or
decision. Except as set forth on Schedule 3.29B, there have been no actual or
implied recalls within the last five (5) years by any such governmental or
regulatory body or by the Company or any of the other Sellers with respect to
any Company Product. Except as set forth on Schedule 3.29C, there is no (i) fact
relating to any Company Product that would impose upon the Company a duty to
recall any Company Product or a duty to warn customers of a defect in any
Company Product or (ii) latent or overt design, manufacturing or other defect
with respect to any Company Product that has occurred and has not been
corrected.
3.30 Books and Records. The books and records of the Company
are, in all material respects, true, correct and complete as of the date hereof
and fully, completely and accurately reflect, in all material respects, the
business, operations and affairs of the Company including the accurate and
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timely reflection thereon of any and all transactions by, and between, all, or
any, of the Company, SunSource, the Owner, SIC and any Affiliate of any of the
foregoing.
3.31 Defined Benefit Plan. The Company does not maintain a
defined benefit pension plan (within the meaning of Section 3(35) of ERISA) or,
other than as set forth on Schedule 3.15(a) hereto, Multiemployer Plan (within
the meaning of Section 4001(a)(3) of ERISA).
3.32 Lifetime Benefits. The Company has never agreed or
promised, directly or indirectly, to any actual, or purported, employee that it
would provide, in whole or in part, lifetime medical benefits to retirees or
former employees. The Company does not maintain or contribute to any Plan which
provides, or purports to provide, lifetime medical benefits to retirees or
former employees. To the Knowledge of the Company or the other Sellers, the
Company does not contribute to any Multiemployer Plan which provides or purports
to provide lifetime medical benefits to retirees or former employees.
3.33 Excise Tax Liability. Neither the Company nor any of its
ERISA Affiliates have any excise tax liability under Code Sections 4971, 4972,
4976, 4979 or 4980B, and to the Knowledge of the Company there are not any
circumstance which would give rise to such excise tax liability.
3.34 Brokers. Other than as set forth on Schedule 3.34, all
negotiations relating to this Agreement and the transactions contemplated hereby
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have been carried out without the intervention of any person acting on behalf of
the Sellers or the Company in such manner as to give rise to any valid claim
against the Buyer, the Company or any subsidiary for any brokerage or finder's
commission, fee or similar compensation, except for PaineWebber Incorporated,
whose fees, cost and expenses shall be timely paid solely and exclusively by the
Sellers.
3.35 Affiliate Transactions. Except as set forth on Schedule
3.35A, no obligation or liability of any Seller (excepting the Company) or an
Affiliate of any Seller (excepting the Company) is guaranteed by, or subject to,
a similar contingent obligation of, the Company nor is any obligation or
liability of the Company guaranteed by, or subject to, a similar contingent
obligation of, any other Seller or any Affiliate of any of the foregoing. Except
as set forth in Schedule 3.35B, there are no contracts or binding obligations
between the Owner, or any Affiliate thereof, and the Company.
3.36 No Sensitive Transactions. Neither the Company, nor any
of its officers, employees or agents, have, directly or indirectly, used funds
or other assets of the Company for (i) contributions, gifts, entertainment or
other expenses relating to political activity other than as specifically
permitted by applicable law; (ii) payments to, or for the benefit of, any
officials or employees of any government or any agency or instrumentality of any
government, either foreign or domestic, other than payments required or allowed
by law; (iii) any other purpose described in Section 162(c) of the Code; or (iv)
the establishment or maintenance of a secret or unrecorded fund or account.
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3.37 Representations Complete. No representation or warranty
by the Sellers contained herein, nor any statement made in any Schedule or
certificate furnished by, or on behalf of, the Sellers pursuant to this
Agreement, when read in its entirety, contains, or will contain, any untrue
statement of a material fact or omits to state any material fact necessary in
order to make the statements contained herein, or therein, in light of the
circumstances under which made, not false or misleading in any material respect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE ACQUISITIVE PARTIES
The Acquisitive Parties jointly and severally represent and
warrant to the Sellers as follows:
4.1 Organization. The Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware. The Buyer is a limited liability company duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
4.2 Authority.
(a) The Acquisitive Parties have all requisite power and
authority to enter into and perform this Agreement and to consummate the
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transactions contemplated hereby. The execution and delivery of this Agreement
and the performance by the Acquisitive Parties of their respective obligations
hereunder have been duly authorized by all necessary corporate action on behalf
of the Acquisitive Parties, and no such action is required on behalf of any
shareholder thereof. This Agreement has been duly executed and delivered by the
Acquisitive Parties and constitutes the legal, valid and binding obligation of
the Acquisitive Parties enforceable against the Acquisitive Parties in
accordance with its terms.
(b) Neither the execution and delivery of this Agreement
by the Acquisitive Parties nor the consummation of the transactions contemplated
hereby will: (i) violate, conflict with, result in a breach of or constitute a
default under, (A) the certificate of incorporation or by-laws (or other similar
charter or governing documents) of any Acquisitive Party or (B) any judgment,
order, injunction, decree or award of any court, arbitrator, administrative
agency or governmental body to which any of the Acquisitive Parties is a party
or by which it (or any of its properties or assets) is subject or bound which
could adversely affect the ability of the Buyer to consummate the transactions
contemplated hereby; (ii) result in, other than as set forth on Schedule 4.2
hereto, the creation of, or give any party the right to create, any Lien, other
than a Permitted Lien, upon any of the properties or assets of any Acquisitive
Party, (iii) violate, conflict with or result in the breach, modification or
termination of, or give any other party the right to terminate or modify the
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provisions or terms of any contract, agreement, lease, mortgage, bond,
indenture, commitment, license, franchise, permit, authorization, concession or
other instrument or obligation to which any Acquisitive Party is a party or by
which it (or any of its material properties or assets) are subject or bound
which violation, conflict, breach, modification or termination could adversely
affect the ability of any Acquisitive Party to consummate the transactions
contemplated hereby or (iv) violate or conflict with any statute, rule,
regulation, ordinance or code applicable to any Acquisitive Party.
4.3 Brokers. All negotiations relating to this Agreement and
the transactions contemplated hereby have been carried out without the
intervention of any person acting on behalf of the Acquisitive Parties in such
manner as to give rise to any valid claim against the Acquisitive Parties for
any brokerage or finder's commission, fee or similar compensation.
4.4 Litigation Affecting the Acquisitive Parties. There is no
claim, action, suit, administrative action, arbitration, proceeding or
investigation pending or threatened, in writing, or, to any Acquisitive Party's
Knowledge, threatened orally, against or involving any Acquisitive Party or any
of their properties or assets before any court or governmental or regulatory
authority or body or before any arbitral forum which (a) questions the validity
of this Agreement or any action taken or to be taken by Acquisitive Parties in
connection herewith or (b) could otherwise materially and adversely affect the
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ability of the Acquisitive Parties to perform their obligations under this
Agreement.
4.5 No Consents. Except for the filing requirements under the
HSR Act, no filing with, notification to, or permit, authorization, consent or
approval of, any public body or authority and no consent of any third party is
necessary for the consummation by the Acquisitive Parties of the transactions
contemplated by this Agreement.
4.6 Adequate Capital. The Acquisitive Parties have adequate
financial resources and access to the same as will be necessary to consummate
the purchase of the Assets.
ARTICLE 5
COVENANTS
5.1 Employee Benefit Matters.
(a) With the exception of any plans set forth on Schedule
3.15(a) hereto, and designated on such Schedule as an assumed plan and, subject
to the satisfaction, of all related conditions precedent thereto and the
delivery to the Buyer of the documents referred to in Section 2.5(r), or as
specifically provided for herein, the Acquisitive Parties shall not assume any
liabilities, assets or the sponsorship of any of the plans as set forth on
Schedule 3.15(a) and not designated on such Schedule as an assumed plan.
Notwithstanding anything contained herein to the contrary, to the extent
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required by the TSA, the Company shall continue to cover "Transferred Employees"
in the employee benefit plans until such time as provided in the TSA. To the
extent that the TSA applies to any plan maintained by the Company, the Company
shall not cause such plan to be amended, modified or terminated effective during
the period that the TSA applies to such plan. For this purpose, "Transferred
Employee" means any individual who is an employee of the Company as of the
Closing Date and who is employed by the Buyer on the day next following the
Closing Date.
(b) Subject to the satisfaction of conditions precedent
set forth herein, effective as of the Time, Buyer shall assume sponsorship of
the ▇▇▇▇▇▇▇ Glass Retirement Savings Plan (the "Savings Plan") and the ▇▇▇▇▇▇▇
Glass Profit Sharing Plan and Trust (the "Profit Sharing Plan") (collectively
referred to as the "Plans"). The participation of "Affiliated Participants" (as
defined below), in the Savings Plan and the Profit Sharing Plan shall cease
effective at the Time. Buyer shall assume sponsorship of the Savings Plan and
the Profit Sharing Plan provided that not later than 30 days following the
Closing Date (a) the Company has caused or will cause to be contributed to the
Savings Plan any employee elective deferrals due to the Savings Plan within the
time prescribed by applicable law; (b) on or before the Closing Date, the
Company has made any Company contributions due under the Profit Sharing Plan
and/or the Savings Plan; and (c) the Company has amended the Savings Plan and
the Profit Sharing Plan to cease the participation of Affiliated Participants as
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of the Closing Date. With respect to the Savings Plan and the Profit Sharing
Plan to the extent that the preceding conditions are met effective as of the
Closing Date, the Buyer shall assume sponsorship of the Savings Plan and the
Profit Sharing Plan effective as of the Time and the Company and its Affiliates
shall cease to be the sponsor of such Plans. As soon as reasonably practicable,
but not later than ninety (90) days following the Closing Date, the Company
shall, or shall cause one (1) or more of their Affiliates to, establish one (1)
or more defined contribution retirement plans or to designate one (1), or more,
of its existing defined contribution retirement plans to become the transferee
of funds from the Savings Plan and the Profit Sharing Plan as described in this
section (collectively, the "Company Plan"). The Buyer and the Company shall
cooperate in causing the trustee of the trust forming part of the Savings Plan
and the Profit Sharing Plan to transfer the amounts described below to the
trust, or trusts, forming part of the Company Plan, as designated by the Company
(collectively, the "Company Trust"), in cash or, upon the mutual consent of the
Buyer and the Company, in kind, and in accordance with applicable law, as soon
as reasonably practicable, but not later than ninety (90) days, following
notification to the Company of the identity of the Company Trust. The Company
shall cause the Seller Plan to contain such provisions as are necessary (i) for
qualification under Section 401(a) of the Code and (ii) to ensure that the
transfer provided for herein complies with the applicable requirements of
Section 411(d)(6) of the Code. The amounts to be transferred shall consist of an
amount which is equal to the fair market value of the aggregate account balances
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of the participants and beneficiaries of the Savings Plan and the Profit Sharing
Plan who are current or former employees of SunSource at its headquarters group
(the "Affiliated Participants"). Such value is to be determined as of the
transfer date, on the valuation date, as defined in the Savings Plan and Profit
Sharing Plan, immediately preceding and in an amount equal to the account
balances attributable to such Affiliated Participants. From and after the
completion of the transfer to the Company's Trust described herein, the Company
shall assume and become solely responsible for, and shall indemnify, defend and
hold harmless the Savings Plan and the Profit Sharing Plan from and against, any
and all liabilities or obligations in respect of the benefits accrued under the
Savings Plan and/or the Profit Sharing Plan by the Affiliated Participants. From
and after the completion of the transfer to the Company's Trust described
herein, the Buyer shall assume and become solely responsible for and shall
hereinafter, defend and hold harmless the Seller from and against any and all
liabilities and obligations with respect to the Non-Affiliated Participants. The
Buyer and the Company shall use their best efforts to cause the prompt filing of
all Forms 5310 required to be filed with the IRS prior to the transfer of any
amount hereunder.
(c) (i) With the exception of the Southern California
Multiemployer Plans (as described in Section 3.15(c)(ii) herein), the applicable
Acquisitive Parties shall, upon Closing, become a participating employer in
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those Multiemployer Plans noted on Schedule 3.15(a) and designated as an assumed
plan, with respect to those employees employed by Buyer on the day following
Closing, and who, under the terms of a Collective Bargaining Agreement are
required to participate in such Multiemployer Plans.
(ii) The Acquisitive Parties shall not assume the
Southern California, Arizona, Colorado and Southern Nevada Glaziers,
Architectural Metal and Glass Workers Agreement and Declaration of Pension Trust
and the Southern California, Arizona, Colorado and Southern Nevada Glaziers,
Architectural Metal and Glass Workers Agreement, Declaration of Health & Welfare
Trust (collectively referred to as the "Southern California Multiemployer
Plans"). The Sellers shall be solely responsible for and retain any and all
liabilities including withdrawal liability as such may be assessed by the
Southern California Multiemployer Plans (as set forth on Schedule 3.15(a)) as a
result of this transaction or otherwise that have accrued as of the Closing Date
under each Southern California Multiemployer Plan as set forth on Schedule
3.15(a). The Seller hereby acknowledges that it shall retain all such Southern
California Multiemployer Plan liabilities accrued as of the Closing Date whether
or not assessment of such liabilities has been actually presented to the Seller
by the Southern California Multiemployer Plan as of the Closing Date.
Acquisitive Party shall not assume any liabilities that have accrued as of the
Closing Date under any Southern California Multiemployer Plan, including
withdrawal liability, as such may be assessed by the Southern California
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Multiemployer Plans, and accrued on or before the Closing Date. If after the
Closing Date, any Acquisitive Party participates in or has any obligation to
participate in a Southern California Multiemployer Plan, such Acquisitive Party
shall assume such liabilities that may have accrued after the Closing Date under
any Southern California Multiemployer Plan with respect to such Acquisitive
Party, including withdrawal liability, as such may be assessed by the Southern
California Multiemployer Plans which accrued after the Closing Date.
(d) (i) The Company shall be solely responsible for and
retain all liabilities that have accrued as of the Closing Date under all
welfare benefit plans, post-retirement welfare plans covering employees or
former employees of the Company as set forth on Schedule 3.15(a), except to the
extent liability with respect to such Plan is reflected as a liability on the
Closing Date Balance Sheet and is agreed to in the TSA, and the Company hereby
acknowledges that it shall retain all such liabilities (including those
liabilities which accrued prior to the Closing Date with respect to any retiree
medical plan which provides coverage to current or former employees of the
Company).
(ii) The Company shall be responsible for payment of
the premiums for Company's employee welfare benefits and group insurance
contracts, relating to periods prior to the Time, and for any liability for all
claims, expenses and treatments, including administrative expenses related
thereto, which are in fact covered and payable under the terms of the Company's
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employee welfare benefit plans and group insurance contracts and incurred prior
to the Time.
(iii) The Company shall provide any benefits to which
spouses, former spouses or other qualifying beneficiaries of any Transferred
Employee may be entitled as of the Closing Date, by reason of qualifying events
occurring on or prior to the Closing Date by virtue of any provision of any
employee welfare benefit plan or group insurance contract or any laws, statutes
or regulations requiring any continuation of benefit coverage upon the happening
of certain events, such as the termination of employment or change in
beneficiary or dependent status, including such requirements under COBRA from
and after the Closing Date through the remaining period of required coverage.
5.2 Further Assurances. From time to time after the date
hereof, the Sellers shall, at their own expense, execute and deliver, or cause
to be executed and delivered, such documents to each Acquisitive Party as said
party may reasonably request in order more effectively to vest in the Buyer good
title to the Assets and to carry out the terms of this Agreement, and from time
to time after the date hereof, the Acquisitive Parties will, at their own
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expense, execute and deliver, or cause to be executed and delivered, such
documents to the Sellers as the Sellers may reasonably request in order more
effectively to consummate the sale of the Assets and to carry out the terms of
this Agreement and the covenants of the Acquisitive Parties contained herein. In
addition, from time to time and from the date hereof, the Acquisitive Parties
shall cooperate and assist the Sellers, during normal business hours, and upon
suitable advance written notice, in prosecuting or defending against any claim
or litigation matters for which the Sellers retain either the benefits or the
liabilities, including with respect to the Retained Liabilities, with respect to
Taxes and/or insurance policies or like contracts of the Company, by making
available, at the expense of the Sellers, the employees or agents of the Buyer
as witnesses in such claims and litigation and any working papers, documents or
other materials necessary to prosecute or defend against such claims or matters.
5.3 Substitution of Collateral. Prior to, but effective as
of, the Closing, Buyer shall seek to arrange for a substitution of collateral,
enter into a general indemnity agreement with an insurance or bonding company,
or otherwise provide credit support with respect to all outstanding performance
and payment bonds of the Company as set forth on Schedule 3.9C hereto in form
and substance reasonably satisfactory to the Company. In the event that the
arrangement of such substitution of collateral, general indemnity agreement or
credit support cannot be effectuated on, or before, the Closing the Buyer agrees
to indemnify, defend and hold harmless the Company from and against any Losses
arising out of actions and omissions by the Buyer after the Closing with respect
to the outstanding performance and payment bonds of the Company as are set forth
on Schedule 3.9C hereto.
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5.4 Records. With respect to the books and records of the
Company relating to matters prior to the date hereof: (A) for a period of ten
(10) years after the date hereof (or longer to the extent reasonably requested
by the Sellers because of open tax audit issues), the Acquisitive Parties shall
not cause or permit their destruction or disposal without first offering to
surrender them to the Sellers; and (B) where there is a legitimate purpose
including an audit of any Seller by the IRS or any other taxing authority, the
Acquisitive Parties shall allow the said Seller and its representatives
reasonable access to such books, records and personnel during regular business
hours and shall permit the copying thereof as appropriate to such purpose. In
addition, and notwithstanding anything to the contrary contained herein, each of
the parties hereto shall provide each other with such cooperation and
information as they may reasonably request of the other in filing any return
determining the liability for Taxes or a right to a refund of Taxes or
conducting an audit or other proceeding in respect of Taxes. Such cooperation
shall include making employees available on a mutually convenient basis to
provide explanation of any documents or information provided hereunder or
otherwise as required in the conduct of any audit or other proceeding. Each of
the parties hereto will retain all tax returns, schedules and work papers and
all other material records and documents relating to matters of the Company
relating to Taxes for the tax period beginning on the Closing Date and for all
prior tax periods until the expiration of the statute of limitations of the tax
periods to which such returns and other documents relate (including any
extensions thereof), and, at the expiration of such period, each party shall
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have the right to dispose of any such returns or other documents or records
after providing thirty (30) days prior written notice to the other party. Any
information, documents or records obtained under this Section 5.4 shall be kept
confidential, except as may be otherwise necessary in connection with the filing
of returns or claims for refund or conducting an audit or other proceeding as
may be required by applicable law or in connection with the enforcement of the
provisions of the Agreement.
5.5 Confidentiality. From and after the date hereof, the
Sellers will hold in confidence, and will cause each of the Affiliates to hold
in confidence, all knowledge or information of a confidential nature which is
related to the business and affairs of the Company (including customer lists and
intellectual property rights) and not disclose, publish or use all, or any, of
the same provided, however, that the foregoing restriction shall not apply to
any portion of the foregoing which (i) becomes generally available to the
public, in any manner or form, through no action or omission of any Seller, (ii)
is independently developed by Sellers who previously had not had access to all,
or any, of the foregoing, (iii) is released for disclosure with the Buyer's
express prior written consent, (iv) is required to be disclosed by a
governmental entity or otherwise required by law or in order to establish rights
under the Agreement or any of the other agreements referred to herein or (v) is
necessary to be disclosed in order to comply with applicable law; provided that,
in the event of any such disclosure, the Sellers shall furnish to the
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Acquisitive Parties as much advance written notice with respect thereto as is
possible in order that the Sellers and the Acquisitive Parties may seek a
protective order with respect to such disclosure or take such other and further
action as may, in the opinion of the Sellers and the Acquisitive Parties, be
considered by the Sellers and the Acquisitive Parties to be desirable in order
to preclude or limit the disclosure thereof. In addition, the Acquisition
Parties shall take the same precautions and use the same standard of care to
protect and maintain the confidentiality of the information contained in the
Mechanics and in Subsection 6.2.1(c) as they would use to protect and maintain
the confidentiality of such Acquisitive Parties' trade own secrets and similar
sensitive and confidential information, and which shall not be less than a
"reasonableness" standard, and shall not disclose, publish or use all, or any,
of the information contained in such sections, except (i) in connection with the
enforcement of the terms of this Agreement, (ii) to any party purchasing or
seeking to explore the purchase of all, or substantially all, of the Assets or
the issued and outstanding capital stock of the Buyer or any Acquisitive Party,
and (iii) in the event of a Triggering Event (as hereinafter defined), the
Acquisitive Party shall be entitled to disclose to the potential buyer the
nature of the relationship between the Sellers and the Acquisitive Parties but
not the specifics of such relationship (which are set forth in the Mechanics and
6.2.1(c)).
5.6 Non-Competition. From and after the date hereof, and
recognizing that this is an agreement with respect to the sale of a "trade or
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business" and that the Acquisitive Parties have advised the Sellers that, absent
the full breadth of this Section 5.6, that the Acquisitive Parties are not
willing to execute this Agreement, and for the next succeeding five (5) years
(the "Restricted Period") neither the Company, nor any other Seller, nor any
Subsidiary or Affiliate of any thereof, shall, directly or indirectly, or in
whole or in part, (i) within the Territory engage in any business, involving, in
whole or in part, the provision of automotive and flat glass to business and
individual consumers including contract glazing, flat glass fabrication and
distribution, automobile glass distribution, retail installation of flat glass
and automobile glass, glass tabletop manufacturing, tempering, insulation and
glass manufacturing, custom laminating and/or mirror manufacturing or any other
activity which is, in whole or in part, competitive with the business of the
Company as conducted at any time during the one (1) year period immediately
preceding the date hereof (the "Current Businesses") (excluding the business of
the distribution of "hard goods" designed for maintenance and repair
applications, which "hard goods" shall not include, for any and all purposes
hereof, the Current Businesses) or (ii) obtain any equity or ownership or
possessory interest in any Person engaged in such activity in any capacity
including as a partner, shareholder, principal, agent, representative, supplier,
trustee, employee or consultant. In addition, for the three (3) year period
following the date hereof, no Seller, nor any Subsidiary or Affiliate thereof,
shall, directly or indirectly, solicit any employee of the Acquisitive Parties
or encourage, in any way, any such employee to leave such employment while such
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employee is employed by either Acquisitive Party, except by means of
advertisements in the media or by means of general solicitation not directed
specifically at the employees of either Acquisitive Party. The parties hereto
acknowledge that any breach or threatened breach of any of the covenants
contained in this Section 5.6 would cause irreparable harm to the Acquisitive
Parties and that money damages would not, alone, provide an adequate remedy to
the Acquisitive Parties. The Acquisitive Parties shall have all the rights and
remedies available under law, or in equity, to a party enforcing any such
covenants, each of such rights and remedies to be independent of the other and
severally enforceable, including the right to have such covenants enforced by
any court of competent jurisdiction, including through temporary injunctive
relief, temporary restraining order and/or permanent injunctive relief, all
without requirement for the posting or provision of any bond or other security,
which requirements are hereby expressly waived by the Sellers, and the right to
require any violating party to pay to the Acquisitive Parties any and all legal
fees, costs or expenses incurred by said Acquisitive Party in connection with
the enforcement of this Section 5.6 and account for, and pay over to the
Acquisitive Parties, the product of (A) two (2) and (B) all benefits derived or
received by such violating party, or any of its Subsidiaries or Affiliates, as a
result of any breach of such covenant. No violating party, or any Subsidiary or
Affiliate thereof, shall raise as a defense to the granting of any such relief
that the person requesting any such relief has an adequate remedy at law. Each
of the parties hereto acknowledges and agrees that the covenants set forth in
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this Section 5.6 are reasonable in duration and scope and in all other respects.
If any court determines that any of such covenants, or any part thereof, are
invalid or unenforceable, the remaining covenants shall not be affected and they
shall be given full effect, without regard to the invalid portions. If any court
determines that all, or any part of, the covenants herein are unenforceable,
because of the duration or scope of such provision, such court is requested to
reduce the duration or scope of such provision, as the case may be, so that, in
its reduced form, such provision shall then be enforceable. The parties hereto
intend to and do hereby confer jurisdiction to enforce the covenants contained
herein upon the courts of any jurisdiction within the United States or within
any jurisdiction within the Territory. If the courts of any one (1), or more, of
such jurisdictions hold such covenants unenforceable by reason of the breadth of
their scope, or otherwise, it is the intention of the parties that such
determination not preclude, or in any way effect, the right of the Acquisitive
Parties to the relief provided above in the courts of any other jurisdiction as
to breaches of such covenant in such other respective jurisdictions, such
covenants as they relate to each jurisdiction being, for this purpose, severable
and independent covenants. Notwithstanding the foregoing, nothing contained
herein shall prevent any party from owning less than 1% of the issued and
outstanding capital stock of any corporation whose shares are listed for trading
on The New York Stock Exchange, the American Stock Exchange, the NASDAQ National
Market or any similar national securities exchange.
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5.7 WARN Act. The Buyer shall comply with the Worker
Adjustment and Retraining Notification Act, if applicable. It is agreed and
understood that all employees of ▇▇▇▇▇▇▇ will remain employed by Sellers through
the date of the closing, April 12, 2000. For any affected employees of Sellers
who, on or after April 12, 2000, suffer an "employment loss" as that term is
defined in 29 U.S.C. ss. 2101(a)(1)(B)(2) and (3), Buyers will assume
responsibility to give any advance notice of the "employment loss" as may be
required by the Worker Adjustment Retraining and Notification Act ("WARN"), 29
U.S.C. ss. 2101 et seq.
5.8 Profitability of Uncompleted Contracts, Agreements or
Other Commitments of the Company. The Sellers do hereby covenant that those
contracts, agreements and understandings of the Company which have been
classified as a "contract" in accordance with the prior practice of the Company
which are not completed on, or before, the date hereof, and which are to be
completed, in whole or in part, by the Buyer after the date hereof (the
"Customer Contracts") shall, taking all such Customer Contracts in the
aggregate, result in a gross profit margin to the Buyer, calculated in a manner
consistent with the past practices of the Company, of not less than Twenty Three
(23%) per centum (the "MPM"). The Buyer hereby agrees to operate no less
efficiently or prudently after the date hereof than the Company did before the
date hereof.
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At the end of each six (6) month period, from and after the
date hereof, the Buyer shall deliver to the Sellers a report indicating the
gross profit margin of all Customer Contracts, taken in the aggregate, to the
Buyer and shall provide to the Sellers reasonable information with respect
thereto, consistent with the information retained and developed by the Company
prior to the date hereof for such Customer Contracts, which were completed
during the said immediately preceding six (6) month period. In the event that
the aggregate gross profit margin on such Customer Contracts was less than the
MPM, the Sellers shall, within twenty (20) Business Days of the receipt of said
report, reimburse the Buyer, on a dollar for dollar basis, for such shortfall
and, alternatively, in the event that the gross profit margin was in excess of
the MPM, then the Buyer shall reimburse, within twenty (20) Business Days of the
receipt of said report, the Company for such surplusage, in either case on a
dollar for dollar basis and such payment to be made in immediately available
U.S. funds.
Such reports shall continue to be rendered, and payments
effected, at the end of each six (6) month anniversary of the date hereof, with
respect to the immediately preceding six (6) month period, until such time as
the parties hereto agree, unanimously and in writing, that no such further
reports shall be issued or payments made with respect to this Section or until
all Customer Contracts as of the Closing Date have been fully completed.
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In the event that, within twenty (20) Business Days after
receipt of any such report, the Sellers wish to review the books, documents and
records of the Buyer with respect to the accuracy and/or completeness of the
said report they shall be permitted reasonable access thereto, during normal
business hours and upon reasonable notice, in order to review the same and they
shall advise, in writing, the Buyer within twenty (20) Business Days of their
review if they do not agree with the conclusions reached in the initial report
by the Buyer and the specific reasons therefore. If no such statement of
disagreement is received within the period noted, the report of the Buyer shall
be deemed conclusive and accepted. If such report is rendered by the Sellers,
the parties shall have twenty (20) days to amicably resolve their differences
and, if the same are not resolved, the parties shall, thereupon, submit their
differences for resolution in accordance with the dispute resolution process set
forth in Section 2.3(c) hereof. Payment shall be made, in accordance with the
terms hereof, to the extent of the parties are in agreement.
5.9 Provisions for Warranty Claims. All claims for
indemnification with respect to warranty obligations of the Sellers under
section 2.10(ii) (the "Product Warranty Claims") shall be subject to the
following provisions:
(a) If, following the date hereto, a direct or indirect
purchaser of any good or service of the Company asserts to the Company or the
Buyer a warranty claim or makes a request to the Company or to the Buyer for any
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"warranty" or "warranty related" work based upon an action or omission by the
Company with respect to any product sold or service provided by, or on behalf
of, the Company or any Affiliate or Subsidiary thereof, or any predecessor of
all, or any, of the foregoing, on or before the Closing Date, the Buyer will, in
a manner consistent, in all material respects, with the prior practice of the
Company, as known to the Buyer, undertake such warranty work as is required, in
the reasonable opinion of the Buyer, by the terms and provisions of the
agreement relating to the sale of such goods or services. Notwithstanding
anything to the contrary contained in the Agreement, the Sellers shall, after
first exhausting all reserves specifically established for "Product Warranty
Claims" on the Closing Date Balance Sheet, indemnify, defend and hold harmless
the Buyer, any and all payments to be made by the Sellers to the Buyer pursuant
to subsection (a) hereof to be made in immediately available U.S. Funds not
later than twenty (20) days after receipt by the Sellers of the invoice of the
Buyer relating thereto (it being the intention of the parties that payments to
be made pursuant to subsection (b) hereto shall be made as described in the last
sentence of that subsection), from and against any and all Losses (excluding any
profit or direct or indirect consequential or incidental damage) incurred by the
Buyer in connection with such Product Warranty Claims.
(b) In the event that costs incurred by the Buyer with
respect to Product Warranty Claims exceed, in any twelve (12) month period from
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and after the date hereof, the sum of Ninety Two Thousand Seven Hundred and
Fifty Four ($92,754) Dollars (the "Ceiling"), the Sellers agree to pay to the
Buyer, in addition to any Losses reimbursed to the Buyer pursuant to subsection
(a) above with respect thereto, such additional sum, or sums, as are set forth
in the next sentence hereof. With respect to "auto replacement glass", such sum
shall be eighty-nine (89) per centum of the costs incurred by the Buyer; with
respect to "retail flat glass", such sum shall be eighty and five tenths (80.5)
per centum of the costs incurred by the Buyer; and with respect to "contract",
each of these categorizations to be made in a manner consistent with the prior
practices of the Company, the "incremental" sum shall be thirty-two and two
tenths (32.2) per centum of the costs actually incurred. Once the Ceiling is
exceeded, in any twelve (12) month period from and after the date hereof, the
additional sums payable to the Buyer by the Sellers hereunder shall be paid, in
immediately available U.S. funds, not later than twenty (20) days after an
invoice with respect to the same is received by the Sellers. Should any invoice
of the Buyer with respect to this Section not be timely paid by the Company the
Buyer shall have the right to, at its option, and at any time during the period
in which such invoice remains unpaid, cease all performance of any and all work
hereunder unless a particular payment is being reasonably disputed, in writing
and the facts and circumstances of the dispute have been so communicated to the
Buyer.
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(c) At any time, and from time to time, after full and
complete reimbursement by the Sellers to the Buyer of any "non-disputed" sums to
be paid by the Sellers pursuant to the terms hereof, the Sellers shall have the
right, upon reasonable notice, which shall not unreasonably interfere with the
business and operations of the Buyer, to review the books, records and documents
of the Company and the Buyer, and to interview the employees of the Buyer and
shall have the reasonable cooperation of the Buyer in all such respects. All
reasonable expenses related to such review by Sellers shall be borne by the
Sellers and reimbursed to the Buyer within twenty (20) days of demand therefor.
Any dispute by the parties arising out of such audit and review by the Sellers
shall be resolved in accordance with the second paragraph of Section 2.3(c)
hereof. If it is ultimately determined that any of the parties hereto have paid
in excess of their respective obligations to the other, then the party who has
received such overpayment shall remit such "overpayment", to the party who has
so "overpaid", within five (5) Business Days of such determination, plus
interest thereon for all periods during which such "surplusage" was held by that
party, until received by the appropriate recipient party, at that interest rate
equal to that interest rate set forth in Section 2.7 hereof.
5.10 FICA Adjustment. One (1) year from and after the date
hereof the Sellers agree to pay to the Buyer an amount reflective of the sum of
(a) the "Medicare" component of the obligation of the Buyer with respect to
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those bonus payments made by the Buyer pursuant to Section 2.3(a)(G) hereof and
(b) the difference between the "FICA" payment obligation of the Buyer in
connection with the payment of the salaries of those individuals who are
recipients of such payments, as employees of the Company and the Buyer, and the
"FICA" payment obligation of the Company and the Buyer when said bonus payments
are aggregated with the salary payments made to those individuals.
5.11 Cobra and Accrued Benefits. With respect to Plans which
Buyer (i) assumes, as listed on Schedule 3.15(a) hereto as assumed plans and
(ii) may adopt after the Time which qualify as "group health plans" under
Section 4980B of the Code and Section 607(1) of ERISA and related regulations
(relating to the benefit continuation rights imposed by "COBRA"), Buyers will be
responsible for any liability to Transferred Employees arising after April 12,
2000, and will indemnify Sellers and hold Sellers harmless for any claims which
may be asserted against Sellers, or any damages which may be awarded against
Sellers (including any liability to the Transferred Employees, as well as any
reasonable costs and attorneys' fees incurred in the defense of any such
claims), as a result of Buyer's failure to give the required notice and provide
continuation or effect. The Buyer will give the required COBRA notice and
provide COBRA continuous coverage as required by law to those employees who are
parties to the SM Agreements referred to in Section 2.10 hereof, and who incur a
COBRA qualifying event after the Closing Date. The Sellers will indemnify Buyer
and hold Buyer harmless for any claims which may be asserted against Buyer, or
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any damages which may be awarded against Buyer (including any liability to the
affected employees, as well as any costs and attorneys' fees incurred in the
defense of any such claims), except for those claims relating to Buyer's failure
to give the required notice, or to comply with the requirements of COBRA,
including timely notice to Seller regarding COBRA qualifying events as a result
of any claim for COBRA benefits made by any individual who is a party to an SM
Agreement referred to in Section 2.10 hereof and for whom Seller retained COBRA
liability pursuant to Section 2.10.
ARTICLE 6
INDEMNIFICATION
6.1 Survival of Representations, Warranties and
Covenants Error! Bookmark not defined.. Except with respect to the
representations and warranties set forth in Sections 3.22 and 3.33, which shall
survive until the expiration of the applicable statute of limitations, the
representations and warranties set forth in Sections 3.3(a) and 3.5, which shall
never expire or terminate, and the representations and warranties contained in
Section 3.24, which shall survive until the 5th annual anniversary of the date
hereof, the remaining representations and warranties contained in Sections 3 and
4 of this Agreement shall survive until, and expire and be of no further force
or effect, on the second annual anniversary of the date hereof. No action for
indemnification may be brought under this Section 6 or may be brought with
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respect to a breach of representations and warranties after the stated
expiration date unless, prior to such date, the party seeking indemnification
has been notified of such claim pursuant to Section 6.2.3. Any and all covenants
made by, or on behalf of, any of the parties hereto shall survive without
limitation and shall never terminate or expire. Further, a claim may be asserted
by all, or any, of the Acquisitive Parties pursuant to Sections 6.2.1(a)(ii),
(iii), (iv), (v) and (vi) at any time from and after the date hereof as none of
the same shall ever expire or terminate.
6.2 Indemnification.
6.2.1. By the Sellers.
(a) Except for disputes under Section 2.3 (which shall
be subject only to the remedies set forth in Section 2.3), from and after the
Closing, the Sellers jointly and severally agree to indemnify, defend and hold
harmless each of the Acquisitive Parties and each of their respective officers,
directors, employees, agents and Affiliates from and against any Loss (including
reasonable attorneys' fees and other costs and expenses) (collectively, the
"Damages") incurred or sustained by any Acquisitive Party, or any Subsidiary or
Affiliate thereof, as a direct or indirect result of (i) the inaccuracy of any
representation or warranty on the part of the Sellers under this Agreement, (ii)
the breach of any covenant contained in this Agreement on the part of any
Seller, (iii) the Retained Liabilities, (iv) the noncompliance of any Seller
with the "bulk sales" laws as are applicable to the Sellers with respect thereto
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except to the extent that such Loss with respect to non-compliance with the
"bulk sales" laws arises out of the failure of the Acquisitive Parties to comply
with their obligations with respect to the Assumed Liabilities (the parties
hereto acknowledge that the Sellers do not intend to comply with the provisions
of the applicable "bulk sales" laws), and (v) any fines or penalties imposed
upon the Buyer as a consequence of the failure of the Buyer to obtain any
permits and/or licenses as are required by Law prior to the date hereof (the
Buyer agrees hereby to use its best reasonable efforts to obtain each of the
same as promptly after the date hereof as is reasonable).
(b) Notwithstanding anything to the contrary contained
herein in this Agreement, the parties hereto do hereby affirm that any and all
instances of non-compliance with Law by any Seller prior to the date hereof are,
and shall forever remain, a Retained Liability, and, in consideration thereof,
the Buyer does hereby agree to assert no claim against any Seller with respect
to any such actual or alleged instance of noncompliance with Law by the Company,
or by any predecessor, prior to the date hereof, unless and until an action,
claim, suit or proceeding with respect thereto is received by, asserted against
or filed against either the Buyer or any Affiliate of the Buyer or any officer,
director, employee, agent or representative thereof, in each case whether former
or present, with respect to such instance of non-compliance by, or behalf of,
any Official Body or Person. The Buyer shall, in all instances, be authorized to
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comply with any notification or like requirement imposed by Law in all respects,
including the furnishing, at any time, of any notifications or other writings as
are required by Law to any Official Body or other Person. The Buyer agrees to
consult reasonably with the Sellers prior to furnishing any such notification in
an effort to reasonably resolve the instances of non-compliance with Law or
eliminate the need to notify any Official Body or Person or take other mutually
agreeable action; provided, however, in the event that such notification must,
in the reasonable opinion of the Buyer, be furnished within a period of three
(3) days, or less, no such consultation shall be required and in the event, and
in any instance, the parties disagree with respect to the requirement or content
of such notification the reasonable and informed opinion of the Buyer shall be
determinative. The Sellers do hereby irrevocably agree to not assert as a
defense, or permit to be asserted as a defense, to any claim by any Acquisitive
Party, or any Affiliate, pursuant to the Agreement that such action, suit, claim
or proceeding was initiated or instigated or is a result of, in whole or in
part, any notification sent pursuant to, and in accordance with, this Section.
The foregoing provisions of Section 6.2.1(b) are hereinafter referred to
collectively as the "Mechanics." Upon receipt of any order, notice or other
written communication from any Official Body (collectively, the "Order")
requiring investigation, remediation, monitoring or similar activities
(collectively, "Remedial Actions") at any of the properties transferred to
Acquisitive Parties under this Agreement or at any of the Retained Owned Real
Property or Retained Leased Real Property (hereinafter, collectively the
"Properties"), Sellers shall perform all necessary Remedial Actions in
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accordance with the laws, rules, orders and regulations applicable thereto.
Acquisitive Parties shall provide Sellers, its employees, agents,
representatives or other persons authorized in writing by the Sellers with
reasonable access to the Properties to perform the Remedial Actions with respect
to Owned Real Property and will use reasonable efforts with respect to Retained
Leased Real Property (which shall not include the obligation to pay any money,
commence a legal action or furnish any consideration), provided that such work
does not unreasonably interfere with Acquisitive Parties' operations, except to
the extent as required by any Environmental Laws or Official Body. Acquisitive
Parties shall also provide Sellers, its employees, agents, representatives or
other persons authorized in writing by the Sellers with reasonable access to the
Properties in the event that Sellers elect to perform Remedial Actions at any of
the Properties in the absence of an Order, provided that such work is performed
in accordance with applicable laws, rules, orders and regulations and does not
unreasonably interfere with Acquisitive Parties' operations, except to the
extent as required by any Environmental Law or Official Body. To the extent that
Sellers' further investigation determines that the release, condition or other
event requiring a Remedial Action is the result of or attributable to the
actions of Acquisitive Parties or any officer, director, employee, agent or
representative hereof, and/or Acquisitive Parties' operations at, on or around
the Properties, Sellers shall provide notification to Acquisitive Parties and
shall be entitled to recover all costs and expenses, including reasonable
attorneys' and consultant's fees and expenses, incurred in connection with its
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Remedial Actions which are necessary to address such release, condition or other
event; provided, however, that Sellers shall not be entitled to recover that
portion of the costs and expenses incurred which are attributable to any
Retained Liability.
(c) In the event that, at any time from and after the
date hereof, any Acquisitive Party receives a bona fide offer from any Person to
acquire any real property of any Acquisitive Party, or any affiliate or
predecessor, acquired by any Acquisitive Party pursuant to the terms hereof
which said Acquisitive Party is desirous of accepting or causing the Buyer to
accept, the Acquisitive Party shall forthwith furnish a copy of such bona fide
offer to the Sellers, subject to any confidentiality obligations which may be
imposed upon the Acquisitive Party. In the event that such prospective purchaser
(a) requests remediation, in whole or in part, of such property in order to
"bring the same" into compliance with then applicable Environmental Laws or (b)
requests any indemnification or protection from any Loss, in any way, or
howsoever phrased, from the Acquisitive Party with respect to the failure of
such real property to then be in compliance with then applicable Environmental
Laws (each of [a] and [b] are hereinafter referred to as a "Triggering
Request"), the Sellers shall assert no claim against the Buyer or any
Acquisitive Party or defense of any claim by any of the Acquisitive Parties
based upon the results of such review and/or the possibility that the results
thereof may require the Buyer to furnish notification to any Official Body and,
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within thirty (30) days of receipt by the Seller of such Triggering Request, the
Seller shall either (i) agree, with such prospective purchaser and the
Acquisitive Party, in form and substance satisfactory to each of the same, to
promptly arrange for, and promptly prosecute to completion, any and all
remediation or like action required by the purchaser or prospective purchaser of
that property in order to cause the same to be in compliance with then
applicable Environmental Laws, (ii) furnish such protection from any Loss
directly from the Sellers to the bona fide purchaser in order that such
purchaser will consummate the transaction which is the subject of the bona fide
offer or (iii) failing to fully and completely comply with either (i) or (ii)
within such thirty (30) day period, the Sellers shall, within five (5) Business
Days after the expiration of the noted thirty (30) day period, purchase, acquire
and pay for said real property, without warranty as to compliance with the
Environmental Laws prior to the date hereof, by paying to the Acquisitive Party
that purchase price referred to in the bona fide offer. The Acquisitive Party
shall have no obligation, direct or indirect, to effect any testing, remediation
or any indemnification, whatsoever, to the Sellers with respect to compliance of
the subject property with the Environmental Laws as of the date of transfer or
otherwise. Should the Sellers fail to comply herewith, the Acquisitive Parties
shall have all the rights and remedies available under then applicable
Environmental Laws, and the Sellers agree to pay, on demand, to the Acquisitive
Party all reasonable legal fees, costs and expenses incurred by the Acquisitive
Party in connection with the enforcement of this provision and interest on such
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purchase price as was noted in the bona fide offer from and after the expiration
of the fifth (5th) day after expiration of thirtieth (30th) day after receipt of
such offer by the Sellers until such sum is paid to the Acquisitive Party at
that interest rate set forth in Section 2.7 hereof. Any provision of this
Section 6.2.1(c) to the contrary notwithstanding, in the event that condition(s)
or circumstance(s) on said real property does not constitute a Retained
Liability, Seller shall be entitled to recover from the Acquisitive Parties all
Losses arising therefrom.
(d) There shall not be any duplicative payments,
purchase price adjustments or indemnities by the Sellers (provided, however,
that in no event shall the Sellers receive any benefit or reduction in their
liabilities or obligations hereunder based upon insurance funds or proceeds
which may, at any time, be recovered by, or on behalf of, any Acquisitive Party
pursuant to the policies of the Acquisitive Parties or any tax benefits garnered
by any Acquisitive Party as a result of any payments made by, or on behalf of,
any Seller pursuant to the terms of the Agreement), and any reserves
specifically established on the Closing Date Balance Sheet with respect to any
matter as to which the Acquisitive Parties would otherwise be entitled to
indemnification hereunder shall first be utilized, and a claim, or claims,
asserted based thereon against the Sellers shall be payable or indemnifiable
only to the extent that the Damages exceed the then remaining amount of such
reserve or reserves. The Acquisitive Parties shall not be entitled to make a
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claim for indemnification under this Section 6.1.2 based upon any item which was
the subject of the net worth adjustment in connection with the establishment of
the Closing Date Balance Sheet. Notwithstanding the foregoing, the Buyer shall
not be permitted to seek recovery against the Sellers for amounts already
received from the insurance policies of the Sellers, pursuant to those policies
set forth on Schedule 2.5(q).
(e) The Acquisitive Parties shall have the right to
assert a claim, or claims, for indemnification under this Section 6.2.1 pursuant
to such provision or provisions, of the Agreement as the Acquisitive Parties
may, from time to time, determine when one (1), or more, such provisions of the
Agreement are applicable to the facts and circumstances of such a claim.
(f) The Acquisitive Parties shall be entitled to
indemnification under clause (i) of Section 6.2.1(a) only to the extent that the
aggregate amount of Damages exceeds the net of (A) One Hundred and Fifty
Thousand ($150,000) Dollars minus (B) the product of (i) .50 and (ii) the amount
that is the difference between (x) One Million Three Hundred and Forty Five
Thousand ($1,345,000) Dollars and (y) all amounts paid or accrued (if the event
giving rise to the payment obligation has occurred and a written claim has been
received by a Seller prior to the expiration of the one (1) year period after
the Closing) by SunSource pursuant to the SM Agreements within such one (1) year
period up to a maximum amount of One Hundred and Fifty Thousand ($150,000)
Dollars (the amount that is equal to (A) minus (B) is hereinafter referred to as
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the "Basket"). Further, the Acquisitive Parties agree, with respect to a claim
for indemnity under Section 6.2.1(a)(i) only, to assert no claim with respect to
a breach or a group of related breaches based upon a specific fact or
controversy or series of related facts or controversies if the Damages ascribed
thereto are less than Five Thousand ($5,000) Dollars, and no claim, or claims,
are to be configured so as to avoid the limitations of this sentence, provided,
however, when the amount of Damages the assertion of which would otherwise be
precluded by this sentence exceeds Twenty-Five Thousand ($25,000) Dollars, then
the Acquisitive Parties shall be entitled to assert and to recover claims
thereafter without regard to the exclusionary impact of this sentence in order
that claims of less than Five Thousand ($5,000) Dollars may then be thereafter
recoverable. The Basket and the other provisions of this Section are not
applicable other than with reference to claims asserted pursuant to Section
6.2.1(a)(i).
6.2.2. By the Acquisitive Parties.
(a) Except for disputes under Section 2.3 (which shall
be subject only to the remedies set forth in Section 2.3), from and after the
Closing, the Acquisitive Parties agree to indemnify the Sellers and hold each of
them harmless from and against any Damages incurred or sustained by the Sellers
as a result of (i) the inaccuracy of any representation or warranty on the part
of the Acquisitive Parties under this Agreement, (ii) the breach of any covenant
contained in this Agreement on the part of the Acquisitive Parties, provided
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that there shall not be any duplicative payments or indemnities by the
Acquisitive Parties and (iii) the failure of the Acquisitive Parties to comply
with their obligations with respect to the Assumed Liabilities.
(b) The Sellers shall be entitled to indemnification
under clause (i) of Section 6.2.2.(a) only to the extent that the aggregate
amount of such Damages exceeds the sum of One Hundred and Fifty Thousand
($150,000) Dollars. The immediately preceding sentence is not applicable other
than with reference to claims asserted only pursuant to Section 6.2.2.(a)(i).
6.2.3. Indemnification Procedures. The following procedures
shall apply to all claims for indemnification under this Article 6. A party
entitled to indemnification hereunder shall herein be referred to as an
"Indemnitee". A party obligated to indemnify an Indemnitee hereunder shall
herein be referred to as an "Indemnitor".
(a) Promptly after receipt by an Indemnitee of notice
of any claim or the commencement of any action, or upon discovery of any facts
which an Indemnitee reasonably believes may give rise to a claim for
indemnification from an Indemnitor hereunder, such Indemnitee shall, if a claim
in respect thereof is to be made against an Indemnitor under this Article 6,
notify such Indemnitor in writing (the "Notice of Claim") of such claim, action
or facts in reasonable detail of the claim or the commencement of such action,
provided that the failure of the Indemnitee to give a Notice of Claim as
provided herein shall not relieve the Indemnitor of its obligations under this
Article 8 except to the extent the Indemnitor is actually materially prejudiced
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by such failure to give a Notice of Claim. The Indemnitee shall furnish to the
Indemnitor in reasonable detail all such information as it may have with respect
to such claim.
(b) If the claim or demand set forth in the Notice of
Claim is a claim or demand asserted by a third party (a "Third Party Claim"),
the Indemnitor shall have fifteen (15) days after the date the Notice of Claim
is actually received by the Indemnitor to notify the Indemnitee, in writing, of
its election to defend such Third Party Claim on behalf of the Indemnitee,
provided that such election by the Indemnitor shall be without prejudice to the
Indemnitee's right to participate in the defense of such Third Party Claim at
the Indemnitee's expense through counsel of its own choosing. Neither party
hereto may settle or compromise any Third Party Claim without the written
consent of the other party hereto, which consent shall not be unreasonably
withheld, delayed or conditioned. If the Indemnitor (A) does not elect to defend
a Third Party Claim and (B) shall have offered in writing to deliver to the
Indemnitee the full amount set forth in the Third Party Claim (the "Offered
Amount"), the Indemnitee shall have the right, in addition to any other right or
remedy it may have hereunder, to refuse such delivery and, at the expense of the
Indemnitee, to defend against such Third Party Claim, provided that if the
Indemnitee defends such Third Party Claim, then, whether or not such Indemnitee
is found to have any liability with respect thereto, the Indemnitor shall
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indemnify the Indemnitee for all Damages with respect thereto, including
expenses incurred in such defense, but only up to a maximum amount equal to the
Offered Amount. Further, the Indemnitee shall indemnify the Indemnitor to the
extent of the excess of all Damages with respect to this matter over the Offered
Amount in this situation.
(c) If the Indemnitor elects to defend a Third Party
Claim pursuant to paragraph (b) of this Section 6.2.3, the Indemnitee will
cooperate with the Indemnitor in such defense and will make reasonably available
to the Indemnitor (at the Indemnitor's reasonable expense) all records and other
materials and personnel which are reasonably required in the defense thereof.
6.2.4 The Procedure for Presentation to Assure of Letter of
Credit. The parties hereto do agree to follow the following process in
connection with any presentation by the Acquisitive Parties to the Issuer of the
Letter of Credit:
(a) As a condition precedent to a demand upon the
issuer pursuant to the Letter of Credit, the Acquisitive Parties shall deliver
to each of the Sellers, with a copy to the Issuer, a written notice (the
"Purchaser Notice"), which shall be signed on behalf of the Acquisitive Parties
and set forth (i) a demand for payment to the Acquisitive Parties of a specified
dollar amount of damages incurred by the Acquisitive Parties, (ii) the Section,
or Sections, of this Agreement alleged to have been breached, (iii) a reasonably
detailed itemization of the damage, loss, cost or expense incurred by the
Acquisitive Parties and (iv) a description of the liability or obligation to the
Acquisitive Parties pursuant to any provision of the Agreement.
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(b) If the Acquisitive Parties deliver to each of the
Sellers a Purchaser Notice and the Sellers do not deliver to the Acquisitive
Parties a Response Notice (as defined below), within thirty (30) days of the
receipt of the Purchaser Notice by the Sellers, then the Acquisitive Parties
shall be authorized to, at any time thereafter, deliver to the Issuer a written
statement from the Acquisitive Parties specifying, under penalty of perjury,
that a Purchaser Notice has been tendered and that no Response Notice has been
received by the Acquisitive Parties within thirty (30) days of the receipt of
the Purchaser Notice by the Sellers, and the procedures set forth in the Letter
of Credit relating to the payment of the funds reserved thereunder (the "Letter
of Credit Funds") shall govern at such time.
(c) If the Sellers believe that the Purchaser
Distribution Event specified in the Purchaser Notice has not occurred, or
disagree with the demanded specified dollar amount, then the Sellers shall,
within thirty (30) days of the receipt by the Sellers of the notification,
deliver to the Acquisitive Parties a written notice (a "Response Notice") which
shall be signed by the Sellers. The Response Notice shall set forth, and a copy
of the same shall be forwarded to the Issuer, the specific basis for such belief
that the Purchaser Notice is incorrect. If the Sellers deliver a Response
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Notice, the Acquisitive Parties shall not be entitled to the Letter of Credit
Funds except as the same may be released pursuant to Paragraphs (II) or (III) of
the Letter of Credit.
(d) Following the expiration of the two (2) year term
of the Letter of Credit, to the extent that at such time there is an outstanding
unsatisfied claim in an amount set forth in the Purchaser Notice (the
"Liquidated Claim Amount"), the amount then available under the Letter of Credit
shall be reduced by the difference between $2,000,000 and such Liquidated Claim
Amount.
(e) If, at any time after the term of the Letter of
Credit has been extended or renewed beyond 24 months, the Issuer withdraws the
Letter of Credit, then SunSource shall use its best efforts to provide
immediately to the Buyer in an amount equal to the Liquidated Claim Amount, at
the Sellers' election, either (i) obtain a bond issued by a reputable United
States financial institution or bond issuer, (ii) obtain a letter of credit
issued by a United States bank of national reputation or (iii) establish an
escrow fund at a United States financial institution of national reputation
consisting of cash or marketable securities, each of which shall be subject to
the consent of the Buyer, which shall not be unreasonably withheld, delayed or
conditioned.
6.3 Receivables Indemnification.
(a) The Company has delivered to the Buyer a complete
list of all accounts receivable reflected on the Estimated Closing Date Balance
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Sheet ("Receivables") that are uncollected ninety (90) days or more after the
invoice date (the "Payment Date") on which payment is due and owing pursuant to
the invoices relating to such Receivables (the "AR List"), together with all
documentation relating to the collection of such unpaid Receivables (including
all documentation relating to any compromise or waiver of any amount thereof)
("Unpaid Receivables Documentation"). On the Business Day prior to the Closing
Date, the Buyer delivered to the Company a complete list of the Receivables
listed on the AR List with respect to which the Buyer elects to cause to be
included among the Excluded Assets, which election shall be binding upon all
parties. The reserves for accounts receivable set forth on the Estimated Closing
Date Balance Sheet and carried over to the Closing Date Balance Sheet shall be
adjusted, on a dollar for dollar basis, but not less than zero, on or before the
Closing Date, in order to reflect the amount of the accounts receivable of the
Company to be included among the Excluded Assets and not purchased by the Buyer.
(b) Within fifteen (15) days after the end of each
calendar month after the Closing in which Receivables reflected on the Closing
Date Balance Sheet, or if not yet in existence, the Draft Closing Date Balance
Sheet which are uncollected ninety (90) days or more after the Payment Dates
relating thereto (the "Remaining Unpaid Receivables") are outstanding, the Buyer
shall deliver to the Sellers a complete list of the Remaining Unpaid Receivables
with respect to which it intends to assign all causes of action to the Sellers
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pursuant to the terms of this Section 6.3(b), together with all Unpaid
Receivables Documentation received by the Buyer from the Company, together with
a form of ▇▇▇▇ of sale, the only representation or warranty of the Buyer
contained therein shall be that the Buyer owns such unpaid receivable, free and
clear of any liens, claims, charges or encumbrances (the "ARBS"), with respect
to such unpaid receivables. Not later than fifteen (15) days after delivery of
each such monthly list, the Buyer shall assign, convey and transfer to the
Sellers, without recourse, any and all legal and equitable causes of action of
the Buyer relating to the Remaining Unpaid Receivables listed on such list which
are outstanding on such date, and shall reduce the "bad debt" reserve
established on the Closing Date Balance Sheet on a dollar-for-dollar basis but
not less than zero. To the extent that the value of the remaining unpaid
receivables ("RUP") exceeds the remaining "bad debt" reserve established on the
Closing Date Balance Sheet, the Sellers shall pay to the Buyer, not later than
five (5) Business Days after such assignment by the Company is received by the
Owner, an amount, in cash equal to such Remaining Unpaid Receivables, and the
Buyer shall deliver any Unpaid Receivables Documentation together with the ARBS,
the form which is referred to above, relating to such unpaid receivables.
(c) Until the date on which all causes of action with
respect to any Closing Date Unpaid Receivable or Remaining Unpaid Receivable
(all such unpaid accounts receivable being collectively referred to herein as
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"Unpaid Receivables") have been assigned to the Sellers pursuant to this Section
6.3, the Buyer will use its customary collection efforts to collect all amounts
owed on such Unpaid Receivables, and shall not compromise or waive any claim, in
whole or in part, for any Unpaid Receivable, without the prior consent of the
Sellers, such consent not to be unreasonably withheld, delayed or conditioned.
The Buyer shall not use any collection efforts or take or refrain from taking
any action with respect to any Unpaid Receivable which would give rise to a
defense against collection in full of such Unpaid Receivable, without the prior
consent of the Sellers, such consent not to be unreasonably withheld, delayed or
conditioned. Unless a customer specifically indicates that such customer is
paying a specific invoice, all amounts collected on accounts receivable from a
customer shall be applied first to reduce the amount of the longest outstanding
Unpaid Receivable associated with such customer and shall not be applied against
accounts receivable arising after the Closing Date until all such customer's
Unpaid Receivables with Payment Dates prior to the Closing Date have been paid
in full.
(d) The Buyer shall cooperate with the Sellers in the
Seller's efforts to collect all Unpaid Receivables, including providing the
Sellers with reasonable access to the books, records, personnel, attorneys or
other agents of the Buyer involved in the efforts to collect such Unpaid
Receivables. From and after the date of receipt by the Buyer of payment from the
Seller for a particular Remaining Unpaid Receivable the Sellers may take such
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actions as they may deem desirable in order to collect the same including,
communications with such account debtors and taking any and all legal or
equitable actions as the Sellers shall, at their sole cost, expense and
liability, believe desirable, but in no event shall any Seller or any employee
or agent thereof recommend, directly or indirectly, or permit any party who has
undertaken efforts to collect the same, whether for the account of the Seller or
any other party, to, in any way, suggest that an account debtor not pay any
indebtedness to the Buyer in accordance with the collection efforts of such
Seller or any other party with respect thereto.
(e) On or prior to November 30, 2000, the Buyer shall
deliver to the Sellers and Deloitte & Touche a list of all Unpaid Receivables
with respect to which the Buyer has assigned to the Sellers all causes of action
relating thereto and all Remaining Unpaid Receivables with respect to which such
causes of action have not yet been assigned, together with a report on the
compliance by the Buyer and the Company with the terms of this Section 6.3.
Prior to December 31, 2000, Deloitte & Touche shall deliver to the Sellers and
the Buyer a report confirming, in the reasonable opinion of Deloitte & Touche,
the accuracy of such list and the compliance by the Buyer and the Company with
the terms of this Section 6.3. In the event that Deloitte & Touche concludes
that any Receivables on such list were not Unpaid Receivables, the Buyer shall
cause all amounts paid by the Sellers on account of such Unpaid Receivables to
be reimbursed to the Sellers within five (5) Business Days of receipt of
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Deloitte & Touche's report, provided that the amount of any such reimbursement
shall be reduced by all amounts recovered by the Sellers with respect to such
Unpaid Receivables. The parties agree that the report of Deloitte & Touche
rendered pursuant to this Section 6.3(e) shall be final and binding (subject to
Section 6.3[f]) on the parties hereto with respect to the subject matter covered
hereby.
(f) At any time, and from time to time, the Sellers shall
have the right to review all information and reports rendered pursuant to this
Section in order to assure themselves of the accuracy and completeness thereof.
The Buyer shall cooperate, upon reasonable notice, with the Sellers with respect
thereto, make available to the Sellers the books, records, information and
personnel of the Buyers in connection therewith and in the event of any dispute
or disagreement among the parties hereto the same shall be promptly resolved in
accordance with the dispute resolutions procedure set forth in Section 2.3(c)
hereof.
6.4 Claw Back Right. If at any time on, or after, the date
hereof, the Buyer receives any payment with respect to any assets of the Company
not conveyed to the Buyer pursuant to the terms hereof, including any accounts
receivable not purchased by the Buyer, any accounts receivable later purchased
by and assigned to the Company from the Buyer payments with respect to
insurance, Tax refunds and insurance proceeds the same shall be, within ten (10)
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Business Days of receipt thereof and identification thereto as subject hereto,
remitted to the Company.
6.5 Subrogation Rights. If any party hereto has any rights
against a third party with respect to any Damages which result in the making of
an indemnification payment under this Agreement, then the party paying such
indemnification shall, to the extent of such payment and as may be permitted
under then applicable contracts, agreements or understandings, be subrogated to
the rights of the Person receiving indemnification.
6.6 Effect of Investigation or Knowledge. Any claim by an
Indemnitee to indemnification shall not be adversely effected by any
investigation by, or the opportunity to investigate afforded to said party, but
each party hereto shall be deemed to be relying on the representations and
warranties of the other party set forth herein regardless of any investigation
or audit conducted before, or after, the Closing Date or the decision of any
such party to consummate the transaction which is the subject hereto and
complete the Closing.
ARTICLE 7
GENERAL PROVISIONS
7.1 Modification; Waiver. This Agreement may be amended,
modified or supplemented only by a written instrument executed by each of the
parties hereto. Any of the terms and conditions of this Agreement may be waived
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in writing at any time on or prior to the Closing Date by the party entitled to
the benefits thereof.
7.2 Transfer of Acquired Assets and of Funds. To the extent
that any of the Assets are non-assignable or non-transferable to the Buyer, or
non-assignable or non-transferable without the consent of a third party, or
shall be subject to any option in any third party by virtue of a request for
permission to assign or transfer by reason of or pursuant to this Agreement or
the transactions contemplated hereby, this Agreement shall not constitute an
assignment or a contract to assign or transfer the same (unless such consent is
obtained or option waived) if an assignment or an attempted assignment or
transfer would, immediately, or with the passage of time or the giving of
notice, or both, constitute a breach thereof. If the Sellers shall have failed
to have procured a required consent to any assignment or a transfer or waiver of
such option with respect to any of such Assets prior to the date hereof the
Sellers shall thereafter promptly use commercially reasonably efforts (which
shall not include the obligation to pay money or commence a legal action) to
make the full use and benefit of such Assets available to the Buyer to the same
extent as if such impediment to the assignment or transfer did not exist. In the
event that the use and benefit of any such Assets are not made available to the
Buyer substantially to the same extent as the same was available to the Company,
the Sellers shall, subject to the Buyer having timely fulfilled its material
obligations pursuant to such Asset (provisions with respect to the requirement
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to obtain any consent or approval with respect to this transaction only shall
not be construed, for any purposes hereby, to constitute "material obligations")
from and after the date hereof, indemnify, defend and hold harmless the Buyer,
and each of its officers, directors, employees and agents, from and against any
and all loss, cost, damage or expense arising from the failure of the Buyer to
have available to it the full use and benefit of such Assets.
If the Company or any of its Affiliates receives, on or after
this date, any payments on any of the accounts receivable purchased by the Buyer
from the Sellers, the Sellers and their Affiliates shall hold such payments in
trust for the benefit of the Buyer and shall forward the same to the Buyer (only
endorsed to the extent necessary to facilitate collection thereof) within five
(5) Business Days after the Company or such Affiliate's receipt thereof, and the
Company and its Affiliates shall not commingle such payments with their own
property or deposit the same to any bank account.
7.3 Entire Agreement. This Agreement, including the Schedules
and Exhibits hereto, together with each of the other documents, agreements and
instruments referred to herein (are hereinafter collectively referred to as the
"Related Agreements") contain all of the terms, conditions and representations
and warranties agreed upon by the parties relating to the subject matter of this
Agreement and, except as expressly set forth herein, and except for the
provisions of the Related Agreements, there are no restrictions, promises,
representations, warranties, covenants or undertakings, other than those
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expressly set forth herein and in the Schedules and Exhibits hereto. This
Agreement and the Related Agreements supersede all other prior and
contemporaneous agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, with respect to the subject
matter hereof and thereof.
7.4 Allocation of Purchase Price. The parties agree that they
will not file a return or statement, including IRS Form 8594, or otherwise take
a position, with the Service, or any other tax authority, that is inconsistent
with the allocation based on the books of account as set out in the Closing Date
Balance Sheet.
7.5 Environmental Reports. If and to the extent requested by
the Sellers, the Acquisitive Parties shall, without warranty as to accuracy or
completeness, deliver to the Sellers a copy of all Phase I and Phase II
environmental site assessments prepared by EnSafe, Inc. for the Buyer in
connection with this transaction excluding those relating to the Retained Owned
Real Property which shall be forwarded within thirty (30) days following the
Sellers' request at any time within the next two (2) years. The Acquisitive
Parties shall bear all costs related to the duplication and delivery thereof.
7.6 Preparation of Documents. This Agreement is the joint
work product of the parties hereto and in the event of any ambiguity herein no
inference shall be drawn against a party by reason of document preparation.
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7.7 Expenses. Whether or not the transactions contemplated
herein shall be consummated, each party shall pay all fees and expenses incurred
by it in connection with this Agreement and the consummation of the transactions
contemplated hereby.
7.8 Interpretation. Unless the context of this Agreement
clearly otherwise requires, (a) references to the plural will include the
singular, the singular the plural, the part to the whole, (b) references to any
gender will include all genders, (c) "include" and "including" have the
inclusive meaning frequently identified with the phrases "without limitation" or
"but not limited to" and (d) references to "hereunder", "herein" or "hereof"
relate to this Agreement.
7.9 Headings. The headings contained in this Agreement are
intended solely for convenience and shall not affect the rights of the parties
to this Agreement.
7.10 Time is of the Essence. Time is of the essence as to any
and all actions to be taken pursuant to the Agreement.
7.11 Notices. All notices, requests, demands and other
communications made in connection with this Agreement shall be in writing and
shall be deemed to have been duly given on the date of delivery, if delivered
personally to the persons identified below or by telecopier or by DHL or other
internationally recognized overnight courier, or five (5) days after the mailing
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if mailed by certified or registered mail, postage prepaid, return receipt
requested, addressed as follows (or at such other address for a party as shall
be specified by like notice, provided that notice of a change of address shall
be effective only upon receipt thereof):
If to the Sellers:
SunSource Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
with a copy to
▇▇▇▇▇▇ ▇▇▇▇▇ & Bockius, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esquire
If to the Acquisition Parties
VVP America, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to
▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Such addresses may be changed, from time to time, by means of a notice given in
the manner provided in this Section.
7.12 Severability. If any provision of this Agreement is held
to be unenforceable for any reason, it shall be adjusted rather than voided, if
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possible, in order to achieve the intent of the parties to this Agreement to the
extent possible. In any event, all other provisions of this Agreement shall be
deemed valid and enforceable to the full extent possible.
7.13 Binding Effect; Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
7.14 No Third Party Beneficiaries. Nothing in this Agreement
shall confer any rights upon any person or entity which is not a party or a
successor or assignee of a party to this Agreement.
7.15 Change of Name. Effective as of the date hereof the
Sellers shall cause the Company to change its name to a name not confusingly
similar, in any respect, to "▇▇▇▇▇▇▇ Glass, Inc.", and such name shall not
contain, in any way, the words "▇▇▇▇▇▇▇" or "Glass" or any word derived
therefrom.
7.16 Counterparts. This Agreement may be signed in any number
of counterparts with the same effect as if the signatures to each counterpart
were upon a single instrument, and all such counterparts together shall be
deemed an original of this Agreement.
7.17 Governing Law; Dispute Resolution.
(a) Except as provided in paragraph (b) below, this
Agreement shall be governed by, and construed in accordance with, the laws of
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the State of Delaware (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law).
(b) Except as provided in Section 2.3(c) and with respect
to provisions relating to competition and confidentiality, any controversy or
claim arising out of or relating to this Agreement or any breach thereof shall
be settled by arbitration. The arbitration shall be held in Cincinnati, Ohio
and, except to the extent inconsistent with this Agreement, shall be conducted
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association in effect at the time of the arbitration. The arbitration shall be
conducted in the English language. The arbitration proceedings, all documents
and all testimony, written or oral produced in connection therewith, and the
arbitration award shall be confidential.
(c) The arbitration panel shall consist of three (3)
arbitrators. The party initiating arbitration (the "Claimant") shall appoint its
arbitrator in its demand (the "Demand"). The other party (the "Respondent")
shall appoint its arbitrator within thirty (30) days of receipt of the Demand
(whether the Demand is received from the Claimant or from the American
Arbitration Association) and shall notify the Claimant of such appointment in
writing. If the Respondent fails to appoint an arbitrator within such thirty
(30) day period, the arbitrator named in the Demand shall decide the controversy
or claim as a sole arbitrator; provided that the respondent shall be entitled to
five (5) days notice an opportunity to cure such failure. Otherwise, the two (2)
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arbitrators appointed by the parties shall appoint a third arbitrator within
forty-five (45) days after the Respondent has notified Claimant of the
appointment of the Respondent's arbitrator. When the arbitrators appointed by
the Claimant and Respondent have appointed a third arbitrator and the third
arbitrator has accepted the appointment, the two (2) arbitrators shall promptly
notify the parties of the appointment of the third arbitrator. If the two (2)
arbitrators appointed by the parties fail or are unable so to appoint a third
arbitrator or so to notify the parties, either party may request the then
President of the American Arbitration Association to appoint the third
arbitrator. The President of the American Arbitration Association shall appoint
the third arbitrator within thirty (30) days after such request and shall notify
the parties of the appointment. The third arbitrator shall act as Chairman of
the panel. If any arbitrator shall for any reason cease to be an arbitrator, his
replacement shall be chosen in the same manner as which such departing
arbitrator was chosen.
(d) In addition to the authority conferred on the
arbitrators by the Commercial Arbitration Rules of the American Arbitration
Association and by law, the arbitrators shall have the authority to order such
discovery and production of documents, including the deposition of party
witnesses, and to make such orders for interim relief, including injunctive
relief, as they may deem just and equitable. Notwithstanding the foregoing, the
arbitrators shall be only empowered to interpret and apply the terms of this
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Agreement, and shall not be empowered to revise or amend any provision in this
Agreement, nor to make a decision based on any such revision or amendment.
7.18 Arbitral Award. The arbitral award may grant any
relief deemed by the arbitrators to be just and equitable, including, without
limitation, specific performance. The arbitral award shall state the reasons for
the award and relief granted, shall be final and binding on the parties to the
arbitration, and may include an award of costs, including reasonable attorneys'
fees and disbursements. Any award rendered may be confirmed, judgment upon any
award rendered may be entered, and such award of the judgment thereon may be
enforced in any court of any state or country having the jurisdiction over the
parties and/or their assets.
7.19 Sole Remedy. The indemnification rights pursuant to
Article 6 hereof shall constitute the sole and exclusive remedies for recovery
of money damages with respect to the matters described therein. Notwithstanding
the terms of this Section 7.19 to the contrary, this provision shall not limit,
in any way, any other legal or equitable remedy that may be available to the
Buyer with respect to this Agreement other than as the same may be dispositively
addressed in such Article 6
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
VVP America, Inc.
By:____________________________________
Title:_________________________________
VVP America Acquisition, L.L.C.
By:____________________________________
Title:_________________________________
SunSource Inc.
By:____________________________________
Title:_________________________________
SunSub A Inc.
By:____________________________________
Title:_________________________________
SunSource Investment Company Inc.
By:____________________________________
Title:_________________________________
▇▇▇▇▇▇▇ Glass, Inc.
By:____________________________________
Title:_________________________________
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1.1 DEFINITIONS...............................................................2
ACQUISITIVE PARTIES OPINION
AFFILIATE
ASSETS
ASSUMED LIABILITIES
BALANCE SHEETS
BILLS OF SALE
BONUS ACCORDS
BRANCH ACCOUNTS AGREEMENT
BUSINESS DAY
CLOSING
CLOSING DATE
CLOSING DATE BALANCE SHEET
COBRA
CODE
DRAFT CLOSING DATE BALANCE SHEET
ENVIRONMENTAL CLAIMS
ENVIRONMENTAL LAWS
ERISA
ESTIMATED CLOSING DATE BALANCE SHEET
EXCLUDED ASSETS
FINANCIAL STATEMENTS
GAAP
GENERAL REAL PROPERTY LEASE ASSIGNMENT
▇▇▇▇▇▇▇
HAZARDOUS MATERIALS
HSR ACT
INCOME TAXES
INITIAL AND ESTIMATED PAYMENT
INSTRUMENT OF ASSUMPTION
INSURANCE POLICIES"
INTELLECTUAL PROPERTY ASSIGNMENTS
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IRS
ISSUER
KNOWLEDGE
LANDLORDS' WAIVERS
LAW
LETTER OF CREDIT
LIENS" OR A "LIEN
LOCKBOX LETTER
LOSSES
LOF
LOF NOTE
MESA SUBLEASE
MPM
MULTIEMPLOYER PLAN
NATIONAL DATA LETTER
OFFICIAL BODY
PERMITTED LIENS
PERSON
PLAN
POLICY 21
PROPERTY LEASES
PROPRIETARY RIGHTS
PURCHASE PRICE
RAYTOWN LEASE
REAL ESTATE DELIVERABLES
RELATED PERSON
RETAINED LIABILITIES
RETAINED LEASED REAL PROPERTY
RETAINED OWNED REAL PROPERTY"
ROANOKE SUBLEASE
SCHEDULE
SELLERS OPINION
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SM AGREEMENTS
STANDARDS
SUBLEASES
SUBSIDIARY
SUNSOURCE REVOLVER
TSA
TAXES
TAX RETURN
TERRITORY
TIME
TUCSON SUBLEASE
2.1 Sale and Purchase of Assets..............................................12
2.2 The Purchase Price.......................................................18
2.3 Determination of Closing Date Balance Sheet..............................18
2.4 Closing..................................................................26
2.5 Closing Deliveries by Sellers............................................26
2.6 Closing Deliveries by the Acquisitive Parties............................33
2.7 Timeliness of Payments...................................................36
2.8 Assets Not Purchased by the Buyer........................................37
2.9 Liabilities Assumed by the Buyer.........................................39
2.10 Liabilities Not Assumed by the Acquisitive Parties.......................40
3.1 Organization and Qualification of the Company and the Absence of
Subsidiaries.............................................................47
3.2 Equity Interests.........................................................48
3.3 Authority................................................................49
3.4 No Governmental Consents.................................................50
3.5 Properties, etc..........................................................50
3.6 Patents, Licenses and Related Matters....................................52
3.7 Financial Statements.....................................................53
3.8 Absence of Undisclosed Liabilities.......................................54
3.9 Absence of Certain Changes or Events.....................................54
3.10 Contracts................................................................56
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3.11 Litigation...............................................................58
3.12 Compliance with Law......................................................58
3.13 Labor Matters............................................................59
3.14 Insurance................................................................61
3.15 Employee Benefit Matters.................................................62
3.16 Customers and Suppliers..................................................67
3.17 Machinery and Equipment..................................................67
3.18 Accounts Receivable......................................................67
3.19 Inventories..............................................................68
3.20 Employees................................................................68
3.21 Accounts Payable.........................................................69
3.22 Taxes....................................................................69
3.23 Customer Lists...........................................................70
3.24 Environmental and Occupational Safety and Health.........................71
3.25 Transactions with Affiliates.............................................74
3.26 Bank Accounts, etc.......................................................75
3.27 Backlog..................................................................75
3.28 Decrees..................................................................75
3.29 Company Products.........................................................76
3.30 Books and Records........................................................76
3.31 Defined Benefit Plan.....................................................77
3.32 Lifetime Benefits........................................................77
3.33 Excise Tax Liability.....................................................77
3.34 Brokers..................................................................77
3.35 Affiliate Transactions...................................................78
3.36 No Sensitive Transactions................................................78
3.37 Representations Complete.................................................79
4.1 Organization.............................................................79
4.2 Authority................................................................79
4.3 Brokers..................................................................81
4.4 Litigation Affecting the Acquisitive Parties.............................81
4.5 No Consents..............................................................82
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4.6 Adequate Capital.........................................................82
5.1 Employee Benefit Matters.................................................82
5.2 Further Assurances.......................................................88
5.3 Substitution of Collateral...............................................89
5.4 Records..................................................................90
5.5 Confidentiality..........................................................91
5.6 Non-Competition..........................................................92
5.7 WARN Act.................................................................95
5.8 Profitability of Uncompleted Contracts, Agreements or Other
Commitments of the Company...............................................96
5.9 Provisions for Warranty Claims...........................................98
5.10 FICA Adjustment.........................................................101
5.11 Cobra and Accrued Benefits..............................................102
6.1 Survival of Representations, Warranties and Covenants...................103
6.2 Indemnification.........................................................104
6.3 Receivables Indemnification.............................................117
6.4 Claw Back Right.........................................................122
6.5 Subrogation Rights......................................................122
6.6 Effect of Investigation or Knowledge....................................122
7.1 Modification; Waiver....................................................123
7.2 Transfer of Acquired Assets and of Funds................................123
7.3 Entire Agreement........................................................125
7.4 Allocation of Purchase Price............................................125
7.5 Environmental Reports...................................................125
7.6 Preparation of Documents................................................126
7.7 Expenses................................................................126
7.8 Interpretation..........................................................126
7.9 Headings................................................................126
7.10 Time is of the Essence..................................................127
7.11 Notices.................................................................127
7.12 Severability............................................................128
7.13 Binding Effect; Assignment..............................................128
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7.14 No Third Party Beneficiaries............................................128
7.15 Change of Name..........................................................128
7.16 Counterparts............................................................129
7.17 Governing Law; Dispute Resolution.......................................129
7.19 Sole Remedy.............................................................131