EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
Dated as of January 29, 2001
Between
MAGNETEK, INC.
as Seller
and
YASKAWA ELECTRIC AMERICA, INC.
as Purchaser
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Masuda, Funai, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
TABLE OF CONTENTS
1. DEFINITIONS
1.1 DEFINITIONS....................................................................................1
1.2 OTHER DEFINITIONAL PROVISIONS..................................................................6
2. SALE AND PURCHASE OF BUSINESS
2.1 TRANSFER OF ASSETS.............................................................................7
2.2 EXCLUDED ASSETS................................................................................8
2.3 ASSUMED LIABILITIES............................................................................9
2.4 EXCLUDED LIABILITIES..........................................................................10
2.5 PURCHASE PRICE................................................................................11
2.6 CLOSING.......................................................................................11
2.7 ADJUSTMENT OF PURCHASE PRICE..................................................................11
2.8 ALLOCATION OF PURCHASE PRICE..................................................................12
2.9 TRANSACTION TAXES AND FEES....................................................................13
3. REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 ORGANIZATION; GOOD STANDING; AFFILIATES.......................................................13
3.2 AUTHORITY; NO CONFLICT; AGREEMENT VALIDITY, EFFECT............................................13
3.3 FINANCIAL INFORMATION.........................................................................14
3.4 ABSENCE OF CERTAIN LIABILITY..................................................................14
3.5 NO MATERIAL ADVERSE EFFECT....................................................................14
3.6 ORDINARY COURSE...............................................................................14
3.7 ABSENCE OF CHANGES............................................................................14
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3.8 TAX MATTERS...................................................................................15
3.9 EMPLOYEES.....................................................................................15
3.10 LABOR MATTERS.................................................................................16
3.11 EMPLOYEE BENEFITS.............................................................................16
3.12 ASSETS........................................................................................16
3.13 REAL PROPERTY.................................................................................16
3.14 PERSONAL PROPERTY.............................................................................16
3.15 INTANGIBLE PERSONAL PROPERTY..................................................................17
3.16 CONTRACTS.....................................................................................18
3.17 CUSTOMERS, SUPPLIERS..........................................................................20
3.18 PRODUCT SAFETY, LIABILITY.....................................................................20
3.19 ENVIRONMENTAL MATTERS.........................................................................21
3.20 LEGAL REQUIREMENTS, PERMITS...................................................................21
3.21 PROCEEDINGS...................................................................................21
3.22 ACCOUNTS, LOCKBOXES, POWERS OF ATTORNEY.......................................................21
3.23 NO INTERMEDIARY...............................................................................21
3.24 LIMITED REPRESENTATIONS.......................................................................22
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER
4.1 ORGANIZATION; GOOD STANDING; AFFILIATES.......................................................22
4.2 AUTHORITY; NO CONFLICT; AGREEMENT VALIDITY, EFFECT............................................22
4.3 PROCEEDINGS...................................................................................23
4.4 NO INTERMEDIARY...............................................................................23
4.5 ACKNOWLEDGMENT................................................................................23
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5. COVENANTS OF SELLER
5.1 ACCESS........................................................................................23
5.2 CONDUCT OF BUSINESS...........................................................................23
5.3 NON-COMPETITION...............................................................................24
5.4 CONFIDENTIALITY...............................................................................25
5.5 NOTICE OF CERTAIN EVENTS......................................................................25
6. COVENANTS OF PURCHASER
6.1 MAINTENANCE OF BUSINESS RECORDS...............................................................26
6.2 NOTICE OF CERTAIN EVENTS......................................................................26
6.3 CONFIDENTIALITY...............................................................................26
6.4 EXCLUDED ASSETS...............................................................................26
6.5 NON-SOLICITATION..............................................................................26
7. ADDITIONAL COVENANTS
7.1 CLOSING EFFORTS...............................................................................27
7.2 ANTITRUST MATTERS.............................................................................27
7.3 LICENSED MARKS................................................................................27
7.4 ABSENCE OF CERTAIN CONSENTS...................................................................27
7.5 FORWARDING OF PAYMENTS, DELIVERIES............................................................27
7.6 ACCOUNTS RECEIVABLE...........................................................................28
7.7 TERMINATION OF CONFIDENTIALITY AGREEMENT......................................................28
7.8 SUPPLY OF CERTAIN DC DRIVE PRODUCTS...........................................................28
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8. CONDITIONS TO SELLER'S OBLIGATIONS
8.1 HSR ACT, PERMITS..............................................................................28
8.2 NO BREACH.....................................................................................28
8.3 CERTIFICATE...................................................................................29
8.4 RESOLUTIONS...................................................................................29
8.5 UNION MATTERS.................................................................................29
9. CONDITIONS TO PURCHASER'S OBLIGATIONS
9.1 HSR ACT, PERMITS..............................................................................29
9.2 NO BREACH.....................................................................................29
9.3 CERTIFICATE...................................................................................29
9.4 RESOLUTIONS...................................................................................29
9.5 CONSENTS......................................................................................30
9.6 ENVIRONMENTAL, HEALTH, SAFETY.................................................................30
9.7 INSPECTIONS, APPRAISALS.......................................................................30
9.8 INSURANCE.....................................................................................30
9.9 SEARCHES......................................................................................30
9.10 RELEASES OF ENCUMBRANCES......................................................................30
9.11 SURVEYS.......................................................................................30
9.12 ESTOPPELS.....................................................................................30
9.13 NO PROCEEDING.................................................................................30
9.14 NO ADVERSE LEGAL REQUIREMENT..................................................................30
9.15 EMPLOYEE MATTERS..............................................................................30
9.16 EMPLOYEE BENEFIT MATTERS......................................................................31
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9.17 UNION MATTERS.................................................................................31
9.18 PRODUCTIVITY MEASURES.........................................................................31
9.19 FINANCIAL INFORMATION.........................................................................31
10. INDEMNIFICATION
10.1 INDEMNIFICATION BY SELLER.....................................................................31
10.2 INDEMNIFICATION BY PURCHASER..................................................................31
10.3 THIRD-PARTY PROCEEDINGS.......................................................................32
10.4 MINIMUM THRESHOLD, MAXIMUM INDEMNIFICATION....................................................32
10.5 DAMAGES NET OF INSURANCE; DAMAGES LIMITATION; DAMAGES TREATMENT...............................32
10.6 TERMINATION OF CERTAIN INDEMNIFICATION........................................................33
10.7 SURVIVAL OF REPRESENTATIONS...................................................................33
10.8 NO EXHAUSTION OF REMEDIES.....................................................................33
10.9 REMEDY SELECTION..............................................................................34
11. EMPLOYMENT, LABOR AND EMPLOYEE BENEFIT MATTERS
11.1 EMPLOYEES.....................................................................................34
11.2 EMPLOYEE BENEFIT PLANS........................................................................34
11.3 VACATION, HOLIDAY, SICK AND SEVERANCE PAY.....................................................35
11.4 ACCESS TO INFORMATION.........................................................................35
11.5 PAYROLL TAX...................................................................................35
11.6 THIRD-PARTY BENEFICIARIES.....................................................................36
12. TERMINATION PRIOR TO CLOSING
12.1. TERMINATION...................................................................................36
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12.2. EFFECT ON OBLIGATIONS.........................................................................36
13. GENERAL PROVISIONS
13.1 ENTIRE AGREEMENT..............................................................................36
13.2 SUCCESSORS AND ASSIGNS........................................................................36
13.3 COUNTERPARTS..................................................................................37
13.4 HEADINGS......................................................................................37
13.5 WAIVER........................................................................................37
13.6 BULK SALES COMPLIANCE.........................................................................37
13.7 NOTICES.......................................................................................37
13.8. GOVERNING LAW.................................................................................38
13.9. PUBLIC ANNOUNCEMENTS..........................................................................38
13.10. FURTHER ASSURANCES............................................................................38
13.11. SEVERABILITY..................................................................................39
13.12. DISPUTE RESOLUTION............................................................................39
SCHEDULES
Schedule 2.1(1) Real Property
Schedule 2.1(2) Personal Property
Schedule 2.1(5) Contracts
Schedule 2.1(6) Software
Schedule 2.1(9) Intellectual Property
Schedule 2.1(10) Permits
Schedule 2.2 Excluded Assets
Schedule 2.7 Base Balance Sheet
Schedule 2.8 Allocation of Purchase Price
Schedule 3.2 Authority; No Conflict; Agreement Validity, Effect
Schedule 3.7 Absence of Changes
Schedule 3.9 Employees
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Schedule 3.10 Labor Matters
Schedule 3.11 Employee Benefits
Schedule 3.12 Assets
Schedule 3.15 Perfection, Maintenance
Schedule 3.17 Customers, Suppliers
Schedule 3.18 Product Safety, Liability
Schedule 3.19 Environmental Matters
Schedule 3.21 Proceedings
Schedule 3.22 Accounts, Lockboxes, Powers of Attorney
Schedule 5.3 Non-Competition
Schedule 7.3 Licensed Marks
Schedule 9.5 Material Consents
Schedule 11.2 Employee Benefit Plans
EXHIBITS
Exhibit 1 ▇▇▇▇ of Sale and Assignment and Assumption Agreement
Exhibit 2 Intellectual Property Assignment
Exhibit 3 Information Systems Support Agreement
Exhibit 4 Sublease
Exhibit 5 Supply Agreement
Exhibit 6 Transitional Services Agreement
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("AGREEMENT") is made effective as of
January 29, 2001 ("EFFECTIVE DATE"), by MagneTek, Inc., a Delaware corporation
("SELLER"), with its principal place of business located at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, and Yaskawa Electric America, Inc., an Illinois
corporation ("PURCHASER"), with its principal place of business located at ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
WHEREAS, Seller, through its Drives & Industrial Controls Division
("DIVISION"), is in the business of, among other things, manufacturing,
assembling, packaging, marketing, distributing, selling, servicing, repairing
and supporting Yaskawa general purpose AC drives and related products, systems
or solutions, including, but not limited to, the "GPD" product line, and such
business is commonly referred to as the "Drives Products Group" ("BUSINESS");
WHEREAS, Seller desires to sell, and Purchaser desires to purchase,
substantially all of the assets of Seller pertaining to the Business, subject to
the terms and conditions herein;
WHEREAS, Seller desires to transfer, and Purchaser desires to assume,
certain liabilities pertaining to the Business, subject to the terms and
conditions herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. DEFINITIONS.
1.1 DEFINITIONS. For purposes of this Agreement, unless the context
requires otherwise, the following capitalized terms shall be defined as follows:
"ACCOUNTS RECEIVABLE" has the meaning set forth in Section 2.1(4).
"AFFILIATE" means a person or entity that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, the person or entity specified.
"AGREEMENT" means this Agreement, as amended, modified and supplemented
from time to time.
"ANCILLARY AGREEMENTS" means the ▇▇▇▇ of Sale and Assignment and
Assumption Agreement, Intellectual Property Assignments, IS Agreement,
Transitional Services Agreement, Supply Agreement and Sublease.
"ASSETS" has the meaning set forth in Section 2.1.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.3.
"BASE BALANCE SHEET" has the meaning set forth in Section 2.7(1).
"BENEFIT PLAN" means any employee benefit, pension, health or welfare
plan or program.
"▇▇▇▇ OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT" means the ▇▇▇▇
of Sale and Assignment and Assumption Agreement between Seller and Purchaser
substantially in the form of Exhibit 1.
"BUSINESS" has the meaning set forth in the recitals.
"BUSINESS RECORDS" has the meaning set forth in Section 2.1(12).
"CERTIFICATION" has the meaning set forth in Section 2.1(12).
"CLOSING" means the consummation of the transactions contemplated by
this Agreement.
"CLOSING BALANCE SHEET" has the meaning set forth in Section 2.7(2).
"CLOSING DATE" means 12:01 a.m. (Central time) of the date on which the
Closing occurs.
"CODE" means the federal Internal Revenue Code of 1986, as amended.
"COLLECTIVE BARGAINING AGREEMENT" means the Labor Agreement between
Seller and Local 846, International Union of Electronic, Electrical, Salaried,
Machine and Furniture Workers, AFL-CIO, dated October 9, 1998, as amended.
"CONSENT" means any consent, approval, authorization, certificate, or
waiver of any third party required or necessary to (i) assign or transfer any
Contract, Permit or other Asset or (ii) consummate the transactions contemplated
by this Agreement.
"CONTRACTS" has the meaning set forth in Section 2.1(5).
"COPYRIGHT" means any copyright and any registration, application,
renewal or filing in connection therewith.
"CORPORATE RECORDS" means (i) the articles of incorporation and
by-laws; (ii) all amendments thereto, minutes of the proceedings of the Board of
Directors and shareholders; and (iii) all other documents relating to the
organization and corporate maintenance of a corporation.
"DAMAGES" means any damages, injuries, losses, payments, expenses,
fees, costs, fines or penalties, including, but not limited to, reasonable
investigation expenses and attorneys' fees.
"DIVISION" has the meaning set forth in the preamble.
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"DOLLAR(S)", "$" and "U.S. $" mean lawful currency of the United States
of America which is legal tender for the payment of public and private debts in
the United States of America.
"EFFECTIVE DATE" has the meaning set forth in the preamble.
"EMPLOYEE" means any person employed by Seller primarily in connection
with the Business including, without limitation, any person on leave.
"ENCUMBRANCE" means any encumbrance, lien, charge, pledge,
hypothecation, mortgage, deed of trust or security interest.
"EXCLUDED ASSETS" has the meaning set forth in Section 2.2.
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.4.
"GAAP" means U.S. generally accepted accounting principles applied on a
consistent basis.
"GOVERNMENTAL AUTHORITY" means any international, foreign, federal,
state, regional, local or other governmental or regulatory authority, body or
official.
"HSR ACT" means the federal ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
"HAZARDOUS MATERIAL" means any (i) pollutant, contaminant or waste or
(ii) material, substance, liquid, gas, chemical or product which is toxic or
hazardous or classified or regulated as "toxic" or "hazardous" by any Legal
Requirement, including, but not limited to, asbestos, lead, petroleum (including
crude oil and any fraction thereof) polychlorinated biphenyls and radon.
"INDEMNIFIED PARTY" means a party entitled to indemnification from
another party pursuant to Section 10 and any of such first party's Affiliates,
officers, directors, employees or agents.
"INDEMNIFYING PARTY" means a party required to provide indemnification
pursuant to Section 10.
"INTELLECTUAL PROPERTY" has the meaning set forth in Section 2.1(9).
"INTELLECTUAL PROPERTY ASSIGNMENT" means the Intellectual Property
Assignment from Seller in favor of Purchaser substantially in the form of
Exhibit 2.
"INVENTORY" has the meaning set forth in Section 2.1(3).
"IRS" means the U.S. Internal Revenue Service.
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"IS AGREEMENT" means the Information Systems Support Agreement between
Purchaser and Seller substantially in the form of Exhibit 3.
"KNOWLEDGE" means the actual knowledge of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇.
"LEGAL REQUIREMENT" means any treaty, convention, statute, law,
regulation, ordinance, Permit, injunction, order, judgment, consent decree or
legal requirement of a Governmental Authority, as amended from time to time.
"▇▇▇▇" means any trademark, trade name, logo, service ▇▇▇▇ or trade
dress and any registration, application, renewal or filing in connection
therewith, including, but not limited to, the "GPD" name and numbering system.
"MATERIAL ADVERSE EFFECT" means any condition, circumstance, change or
effect that is materially adverse to the assets, properties, operations,
financial condition or performance of the Business or to the transactions
contemplated by this Agreement, taken as a whole.
"MINIMUM THRESHOLD" has the meaning set forth in Section 10.4(1).
"PATENT" means any letter patent and patent application (including any
re-issue, continuation, division, continuation-in-part, renewal, reexamination
or extension) and any counterpart or equivalent.
"PERMIT" means any permit, license, approval, authorization,
registration, certificate, exemption, consent, right or privilege of a
Governmental Authority.
"PERMITTED ENCUMBRANCE" means any Encumbrance which (i) is listed on
Schedule 3.12, (ii) arose or was incurred in the ordinary course of the Business
consistent with past practice or (iii) does not materially impair the value or
use of any material Asset.
"PERSON" means any natural person, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity.
"PERSONAL PROPERTY" has the meaning set forth in Section 2.1(2).
"PRE-CLOSING TAX" means any Tax with respect to the income or
operations of the Business incurred in (i) any taxable period ending before the
Closing Date or (ii) in the portion ending immediately before the Closing Date
of any taxable period that includes, but ends after, the Closing Date, except
for any Tax that is reflected on the Closing Balance Sheet or is the
responsibility of Purchaser pursuant to Section 2.9. For purposes of determining
Pre-Closing Taxes for any taxable period "straddling" the Closing Date, Taxes
shall be allocated on a closing-of-the-books, specific-identification basis to
the extent reasonably possible and, otherwise, Pre-Closing Taxes shall include
the product obtained by multiplying the Taxes for any such entire
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period by a fraction, the numerator of which is the number of days in the
taxable period through the day before Closing Date and the denominator of which
is the number of days in the entire taxable period.
"PROCEEDING" means any proceeding, charge, claim, complaint, action,
arbitration, lawsuit or litigation, or any investigation or audit by a
Governmental Authority.
"PRODUCT" means any product or service currently sold or offered by the
Business, including, but not limited to, drives and AC inverters and related
systems or solutions and the "GPD" product line.
"PURCHASE PRICE" has the meaning set forth in Section 2.5.
"PURCHASER" has the meaning set forth in the preamble.
"REAL PROPERTY" has the meaning set forth in Section 2.1(1).
"RELEASE" means any release, spill, leak, escape, discharge, emission,
leaching, migration, seepage, movement, dumping, burying or disposal.
"SELLER" has the meaning set forth in the preamble.
"SOFTWARE" has the meaning set forth in Section 2.1(6).
"SUBLEASE" means the Sublease between Purchaser and Seller
substantially in the form of Exhibit 4.
"SUPPLY AGREEMENT" means the Supply Agreement between Purchaser and
Seller substantially in the form of Exhibit 5.
"TANGIBLE NET WORTH" means the current and fixed assets of the Business
(excluding goodwill) less trade accounts payable and other liabilities of the
Business being assumed by Purchaser.
"TAX" means any tax, including, but not limited to, any pertaining to
income, profits, premiums, estimated, excise, sales, use, gross receipts,
franchise, transfer, withholding, employment, unemployment compensation,
payroll-related and property taxes, import duties and other governmental
charges, whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions or tax or interest and penalties
with respect thereto, and including expenses associated with contesting any
proposed adjustment relating to the foregoing and including any liability for
the payment of any amounts described above as a result of being a "Transferee"
as defined in Section 6901 of the Code.
"TAX RETURN" means any return, statement, report, filing or other
document pertaining to a Tax and which is required to be filed with a
Governmental Authority.
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"TECHNOLOGY" means any technology, knowledge, know-how, expertise,
method, invention, discovery, research or technical information.
"TRADE SECRET" means any trade secret or confidential or proprietary
information, including, but not limited to, a confidential Technology, customer
list, formulation, pattern, compilation, device, method, technique or process.
"TRANSACTION AGREEMENTS" means this Agreement and the Ancillary
Agreements (including any schedule, exhibit or attachment thereto).
"TRANSFERRED EMPLOYEE" means any Employee who is employed by Purchaser
in connection with the Business after the Closing.
"TRANSITIONAL SERVICES AGREEMENT" means the Transitional Services
Agreement between Purchaser and Seller substantially in the form of Exhibit 6.
"WEBSITE" has the meaning set forth in Section 2.1(8).
1.2 OTHER DEFINITIONAL PROVISIONS. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement. The words "Section," "Schedule" and "Exhibit" refer to this Agreement
unless otherwise specified. The word "party" refers to a party to this Agreement
unless the context requires otherwise. The meanings given to terms defined
herein shall be applicable equally to both the singular and plural forms of such
terms.
2. SALE AND PURCHASE OF BUSINESS.
2.1 TRANSFER OF ASSETS. Subject to the terms and conditions of this
Agreement, at the Closing and upon payment of the Purchase Price this Agreement
shall become effective and Seller shall sell, assign, transfer, convey and
deliver to Purchaser, and Purchaser shall purchase, acquire and accept all
right, title and interest of Seller in all assets, properties, rights and
businesses owned, held or used primarily in connection with the Business as of
the Closing Date ("ASSETS"), including, but not limited to:
(1) REAL PROPERTY. All interests in real property, including,
but not limited to, the buildings, structures, improvements and
fixtures listed at Schedule 2.1(1) ("REAL PROPERTY");
(2) PERSONAL PROPERTY. All machinery, equipment, fixed assets,
fixtures, goods, hardware, tools, dies, patterns, molds, computers,
communication or information systems, parts, appliances, furniture,
furnishings, artwork, vehicles and other tangible personal property,
including, but not limited to, those listed at Schedule 2.1(2)
("PERSONAL PROPERTY");
(3) INVENTORY. All raw materials, work-in-process, finished
goods, supplies and other inventories ("INVENTORY");
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(4) ACCOUNTS RECEIVABLE. All accounts, notes, debts and other
receivables ("ACCOUNTS RECEIVABLE");
(5) CONTRACTS. All contracts, agreements, obligations, leases,
licenses, guaranties, warranties, sales and purchase orders or other
legally binding commitments to which Seller is a party, to the extent
transferable, including, but not limited to, those listed at Schedule
2.1(5) ("CONTRACTS");
(6) SOFTWARE. All computer, communication, equipment,
information system and other software, programs and files, including,
but not limited to, those listed at Schedule 2.1(6), and all
documentation in connection therewith ("SOFTWARE");
(7) DATABASES. All databases, reports, lists, files,
compilations, collections and spreadsheets, including, but not limited
to, those pertaining to customers, prospects, suppliers, competitors,
products, goods, services, sales, purchases, transactions, operations
and production ("DATABASES");
(8) WEBSITES. All rights pertaining to ▇▇▇.▇▇▇▇▇▇.▇▇▇
("WEBSITE");
(9) INTELLECTUAL PROPERTY. All Patents, Marks, Copyrights,
Trade Secrets and Technology, including, but not limited to, those
listed at Schedule 2.1(9), and all rights and goodwill in connection
therewith ("INTELLECTUAL PROPERTY");
(10) PERMITS. All Permits, to the extent transferable,
including, but not limited to, any transferable Permits listed at
Schedule 2.1(10) ("TRANSFERRED PERMITS");
(11) CERTIFICATIONS. All certificates, approvals,
registrations, rights and privileges from any industry, testing,
standard setting, compliance, validation association, organization or
other Person, including Underwriters Laboratories and similar entities
("CERTIFICATIONS");
(12) BUSINESS RECORDS. All books, records, documents,
documentation, papers, files, correspondence, communications, journals,
logs, ledgers, manuals, directories, catalogs, reference works,
literature, graphics, blueprints, drawings, illustrations and similar
materials, regardless of format or medium ("BUSINESS RECORDS"); and
(13) MISCELLANEOUS. All telephone numbers, lock boxes, prepaid
items and deposits to the extent reflected on the Closing Balance Sheet
and claims against other Persons (except those relating to Excluded
Assets or Excluded Liabilities).
2.2 EXCLUDED ASSETS. Anything to the contrary notwithstanding, the
following assets, properties, rights and businesses shall be retained by Seller
and shall not be transferred to Purchaser:
(1) any Contract, to the extent not transferable;
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(2) any Permit, to the extent not transferable;
(3) the facility in or near Pittsburgh;
(4) any Benefit Plan, retention, "stay and pay" or similar
agreement or contract of Seller with any Employee or other Person,
including, but not limited to, those agreements dated as of June 1,
2000 with five certain Employees;
(5) all cash and cash equivalent items (except for deposits
and prepaid expenses reflected on the Closing Balance Sheet) of Seller,
including, without limitation, checking accounts, certificates of
deposit, time deposits, securities and the proceeds of accounts
receivable, including uncashed checks in payment thereof received by
Seller on or prior to the Closing Date, in each case whether or not
relating to the Business;
(6) all rights, properties, and assets which have been used or
held for use in connection with the Business and which shall have been
transferred (including transfers by way of sale) or otherwise disposed
of prior to the Closing, PROVIDED THAT such transfers and disposals
shall have been in the ordinary course of the Business consistent with
past practice;
(7) Seller's corporate charter, qualifications to conduct
business, arrangements with registered agents relating to
qualifications to conduct business, taxpayer and other identification
numbers, seals, minute books, stock transfer books, blank stock
certificates, and other documents relating solely to the organization,
maintenance and existence of Seller;
(8) rights to or claims for refunds or rebates of Taxes and
other governmental charges for periods ending on or prior to the
Closing Date and the benefit of net operating loss carryforwards,
carrybacks or other credits of Seller, whether or not attributable to
the Business;
(9) claims or rights against other Persons in connection with
Excluded Assets or Excluded Liabilities;
(10) all insurance policies and rights thereunder, including,
but not limited to, rights to any cancellation value as of the Closing
Date;
(11) all Trade Secrets, Patents, Marks, Technology, Websites,
Databases or Business Records of Seller, its divisions or its
Affiliates to the extent not owned, used or held by Seller primarily in
connection with the Business;
(12) all "MagneTek" Marks or any derivative thereof;
(13) any asset or right that is provided by Seller to
Purchaser pursuant to the IS Agreement or Transitional Services
Agreement;
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(14) all Business Records relating to Proceedings not included
in the Assumed Liabilities or prepared or received by Seller in
preparation for the sale of the Business; and
(15) any asset, property, right or business listed on Schedule
2.2.
2.3 ASSUMED LIABILITIES. Subject to the terms and conditions of this
Agreement, Purchaser after the Closing Date shall assume the following ("ASSUMED
LIABILITIES"):
(1) liabilities arising from the conduct of the Business by
Purchaser after the Closing Date;
(2) liabilities set forth on the Closing Balance Sheet;
(3) liabilities arising after the Closing Date pursuant to the
Contracts assumed by Purchaser provided that Purchaser is also assuming
the 2001 license fee under the Xycom license agreement;
(4) liabilities for warranty claims asserted with respect to
Products sold on or before the Closing Date;
(5) liabilities for product liability Damages arising from
events occurring after the Closing Date with respect to Products sold
on or before the Closing Date;
(6) liabilities assumed by Purchaser pursuant to Section 11;
(7) liabilities not addressed in subsections (1) through (6)
above for injuries or events occurring after the Closing Date arising
from the conduct of the Business by Seller in the ordinary course on or
before the Closing Date; and
(8) other liabilities not addressed in subsections (1) through
(7) above arising from the conduct of the Business by Seller in the
ordinary course on or before the Closing Date that: (i) are not
Excluded Liabilities; (ii) that are not required to be included on the
Closing Balance Sheet; and (iii) do not, in the aggregate, exceed
$1,000,000.
2.4 EXCLUDED LIABILITIES. All liabilities, obligations and commitments
in connection with the Business other than the Assumed Liabilities ("EXCLUDED
LIABILITIES") shall be retained by Seller and shall not be assumed by Purchaser.
Without limiting the foregoing, Purchaser shall not assume or otherwise be
responsible for, without limitation, the following Excluded Liabilities: any
liability, obligation or commitment to the extent:
(1) arising in connection with any Excluded Asset;
(2) arising in connection with an asset, property or business
of Seller other than the Assets, such as, without limitation, the
Division or Seller facilities in or near Pittsburgh, Pennsylvania;
16
(3) relating to workers' compensation claims for injuries
occurring on or before the Closing Date;
(4) arising pursuant to any Benefit Plan of Seller;
(5) for any Pre-Closing Tax;
(6) arising, through the third anniversary of the Closing
Date, from any existence, generation, storage, treatment, disposal,
Release or threatened Release of a Hazardous Material in connection
with the Business or at or around the Real Property on or before the
Closing Date; and
(7) in connection with the Proceedings set forth at Schedule
3.21.
2.5 PURCHASE PRICE. The purchase price for the Assets is U.S.
$27,588,000 ("PURCHASE PRICE"), subject to adjustment pursuant to Section 2.7.
2.6 CLOSING. The Closing shall occur at the offices of Masuda, Funai,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇ on the later of January 29, 2001 or the 10th business day after
satisfaction of all closing conditions set forth in Sections 9 and 10, or at
such other time and/or place agreed upon by the parties. At the Closing:
(1) Purchaser shall pay to Seller the Purchase Price in
immediately available funds by wire transfer to an account of Seller
with a U.S. bank designated by Seller;
(2) Seller and Purchaser shall execute, enter and deliver to
each other the Ancillary Agreements to which they are a party;
(3) Seller shall transfer and deliver to Purchaser possession
and control of the Assets; and
(4) Seller and Purchaser shall execute, enter and deliver to
each other such transfer instruments, certificates, receipts,
agreements or other documents as may be reasonably necessary or
appropriate to consummate the transactions contemplated by this
Agreement.
2.7 ADJUSTMENT OF PURCHASE PRICE.
(1) The Purchase Price shall be adjusted by the difference
between the Tangible Net Worth of the Business as shown on the Balance
Sheet Analysis: Drives Portion as of August 27, 2000, as restated, a
copy of which is set forth at Schedule 2.7 ("BASE BALANCE SHEET"), and
the Tangible Net Worth of the Business as of the Closing Date.
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(2) As soon as possible, but in no event later than 30 days
after the Closing Date, Purchaser shall prepare and deliver to Seller a
balance sheet setting forth the assets, liabilities and Tangible Net
Worth of the Business as of the Closing Date ("CLOSING BALANCE SHEET"),
which Closing Balance Sheet shall be prepared in accordance with GAAP
(except as set forth in Section 3.3) as historically applied by Seller
and in a manner consistent with that used in the preparation of the
Base Balance Sheet. Purchaser and its authorized representatives and
agents shall be given full access by Seller to all necessary and
relevant information necessary to prepare the Closing Balance Sheet.
(3) During the 45 days after Seller's receipt of the Closing
Balance Sheet, Seller shall be entitled to review and confirm the
Closing Balance Sheet. During this review process, Seller and its
authorized representatives and agents shall be given full access by
Purchaser to all necessary and relevant information, including, but not
limited to all Business Records, Employees and accountants of Purchaser
necessary to confirm the information in the Closing Balance Sheet. If
Seller does not object, in writing, to the Closing Balance Sheet within
such 45 days, then the Closing Balance Sheet shall become final and
binding upon the parties and the parties shall make the payment
required by Section 2.7(6). If Seller objects to the Closing Balance
Sheet within such 45 days, then the Closing Date Balance Sheet shall
not become final and binding upon the parties until a resolution of the
dispute specified in the notice is reached in accordance with Section
2.7(4) or Section 2.7(5).
(4) Purchaser and Seller shall negotiate in good faith and use
their best efforts to resolve any objection within the 30 days
following the written notice. If Purchaser and Seller are unable to
resolve the dispute with respect to the Closing Balance Sheet, then the
parties shall submit the dispute to an independent auditor agreed upon
by the parties no later than the 31st day, along with all information
necessary to support their respective positions. The parties shall
supply any information which the independent auditor may reasonably
request, from time to time. Purchaser and Seller shall each pay 50
percent of the fees and costs of the independent auditor for such
determination.
(5) The independent auditor shall have a maximum of 60 days to
review all information provided by the parties and issue a written
determination of its findings regarding the dispute with respect to the
Closing Balance Sheet. All decisions made by the independent auditor
shall become final, binding and non-appealable upon the parties and
enforceable pursuant to Section 13.12. Purchaser and Seller each
covenant not to contest such decisions.
(6) Within 10 days after the Closing Balance Sheet becomes
final and binding upon the parties, the adjustment to the Purchase
Price shall be paid in immediately available U.S. funds by wire
transfer. Such adjustment shall be paid by Purchaser to Seller if, and
to the extent that, the Tangible Net Worth on the Closing Balance Sheet
exceeds the Tangible Net Worth on the Base Balance Sheet. Such
adjustment shall be paid by Seller to Purchaser if, and to the extent
that, the Tangible Net Worth on the Base Balance Sheet exceeds the
Tangible Net Worth on the Closing Balance Sheet. Interest will accrue
on such adjustment from the Closing Date at a rate of 7.5 percent per
annum.
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2.8 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
as set forth at Schedule 2.8, subject to the adjustment provisions set forth in
Section 2.7. Each party shall prepare any applicable Tax Return in a manner
consistent with Schedule 2.8, except to the extent such party reasonably
believes that to do so would result in a violation of an applicable Legal
Requirement.
2.9 TRANSACTION TAXES AND FEES. Each party shall be responsible for its
own taxes and fees in connection with the transactions contemplated by this
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Purchaser as of the Effective Date as
follows:
3.1 ORGANIZATION; GOOD STANDING; AFFILIATES.
(1) Seller is a corporation duly organized, validly existing
and in good standing pursuant to the laws of Delaware. Seller has all
corporate power and authority required to conduct its business as it is
now being conducted and to own or use the properties and assets that it
purports to own or use.
(2) Seller is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
nature of its activities, properties or assets with respect to the
Business requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a Material
Adverse Effect.
3.2 AUTHORITY; NO CONFLICT; AGREEMENT VALIDITY, EFFECT.
(1) Seller has all corporate power and authority, and has
taken all corporate action, required to execute and deliver the
Transaction Agreements to which it is or will be a party, to consummate
the transactions contemplated thereby and to perform its obligations
thereunder.
(2) Except as set forth on Schedule 3.2, neither Seller's
execution, delivery or performance of the Transaction Agreements nor
the consummation of any transaction contemplated hereunder will (with
or without the giving of notice and/or the lapse of time), subject to
applicable requirements of the HSR Act: (i) materially violate any
material Corporate Record of Seller or Legal Requirement applicable to
Seller; (ii) result in a material breach, default, acceleration or
termination pursuant to any material Contract or material Encumbrance
with respect to the Business; or (iii) require the material consent,
authorization or approval of any other Person or Governmental
Authority.
(3) This Agreement has been duly and validly executed and
delivered by Seller. This Agreement constitutes, and each Ancillary
Agreement to which Seller is a
19
party shall constitute, upon Seller's execution and delivery thereof, a
legal, valid and binding obligation of Seller, enforceable in
accordance with its terms, except to the extent limited by (i)
bankruptcy, insolvency, reorganization, moratorium or similar laws
relating to creditors' rights generally or (ii) general principles of
equity (whether in a proceeding in equity or at law).
3.3 FINANCIAL INFORMATION. The Base Balance Sheet presents fairly in
all material respects the assets and liabilities of the Business in accordance
with GAAP, except that: (1) Excluded Assets and Excluded Liabilities are
excluded; (2) intercompany advances and receivables (other than resulting from
the sale of Products) are excluded; (3) accruals for retiree health and welfare
benefits, if any, are excluded; and certain accrued Taxes, such as federal and
state income Taxes, are excluded.
3.4 ABSENCE OF CERTAIN LIABILITY. To the Knowledge of Seller, there is
no material liability or obligation of any nature (whether known or unknown,
accrued or contingent, due or to become due or otherwise) with respect to the
Business except as: (1) reflected or reserved in the Base Balance Sheet, (2) set
forth in the Schedules or (3) incurred since the date of the Base Balance Sheet,
in the ordinary course of business consistent with past practices.
3.5 NO MATERIAL ADVERSE EFFECT. Since the date of the Base Balance
Sheet, there has been no occurrence of any facts or circumstances, individually
or in the aggregate, which has had a Material Adverse Effect or could reasonably
be expected to have a Material Adverse Effect.
3.6 ORDINARY COURSE. Since the date of the Base Balance Sheet, Seller
has conducted the Business in all material respects in the ordinary course
consistent with past practices.
3.7 ABSENCE OF CHANGES. Except as disclosed on Schedule 3.7, since the
date of the Base Balance Sheet, with respect to the Business, there has not been
any:
(1) material change to any material accounting,
administrative, financial, management, employment, labor, operational,
sales or other policy, practice or procedure;
(2) purchase, sale, transfer, assignment, disposition or
encumbrance of any asset for an amount in excess of $25,000;
(3) damage, destruction or loss (regardless of any insurance)
involving an amount in excess of $25,000;
(4) capital improvement, project or expenditure for an amount
in excess of $25,000;
(5) obligation, debt, guarantee for an amount in excess of
$25,000;
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(6) payment, discharge, satisfaction, release, termination,
compromise or settlement of any claim, right, indebtedness, guarantee,
liability or obligation for an amount in excess of $25,000; or
(7) agreement, commitment or understanding with respect to the
foregoing.
3.8 TAX MATTERS.
(1) Seller has timely filed any required Tax Return, paid any
required Tax, deficiency or penalty and made any required withholding
in connection with the Assets or with respect to the income or
operations of the Business to the extent Purchaser could be subject to
a material liability for any such failure to file, pay or withhold. Any
such Tax Return was true, complete and correct when filed.
(2) No Governmental Authority has proposed, assessed or
asserted any material Tax deficiency against Seller for any period for
which Tax Returns have been filed, and no lien for material Taxes
exist, in connection with the Assets or with respect to the income or
operations of the Business and for which Purchaser could be liable by
reason of acquiring the Assets pursuant to this Agreement. To the
Knowledge of the Seller there is no basis for any such deficiency.
3.9 EMPLOYEES.
(1) Schedule 3.9(1) lists each Employee as follows: name,
employee number, position or title, start date, base salary or wage
rate.
(2) To the Knowledge of Seller, no key Employee, has advised
Seller of an intent or plan to terminate his or her employment in
connection with the Business within the next three months, including,
but not limited to, because of the transactions contemplated by this
Agreement. To the Knowledge of Seller, no key Employee is subject to
any non-competition, non-disclosure or other agreement that has been,
or which may be reasonably expected to be, breached in the course of
such Employee's employment with respect to the Business.
(3) Schedule 3.9(3) lists each independent contractor used in
connection with the Business in the last year as follows: name,
address, responsibilities, engagement dates and compensation.
(4) Schedule 3.9(4) lists any material outstanding loan,
advance or other payment obligation to Seller of any current or former
employee of the Business, other than for reimbursement of travel or
entertainment expenses incurred in the ordinary course of the Business.
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3.10 LABOR MATTERS.
(1) Schedule 3.10 lists any collective bargaining, union or
other labor organization applicable to the Business or Employees.
(2) There is no pending or, to the Knowledge of Seller,
threatened labor strike, lockout or work stoppage with respect to the
Business or transactions contemplated by this Agreement.
3.11 EMPLOYEE BENEFITS. Schedule 3.11 lists any material Benefit Plan
in connection with the Business.
3.12 ASSETS.
(1) TITLE, RIGHT. Seller has good and marketable title to, or
other right to use or possess, the Assets, free and clear of any
Encumbrance other than a Permitted Encumbrance. To the Knowledge of
Seller, Schedule 3.12(1) lists any Encumbrance with respect to the
Assets.
(2) SUFFICIENCY, LOCATION. Except (i) for the Excluded Assets,
(ii) for the assets and services provided by Seller pursuant to the IS
Agreement or Transitional Services Agreement or (iii) as set forth on
Schedule 3.12(2), the Assets are substantially all of the assets,
properties and rights used by Seller to conduct the Business in the
ordinary course consistent with past practices. Except as set forth on
Schedule 3.12(2), the assets and services provided by Seller pursuant
to the IS Agreement and Transitional Services Agreement will enable
Purchaser to conduct the Business on a basis consistent with past
practices. All material, tangible Assets are located at the Real
Property.
(3) CONDITION. In the aggregate and in all material respects,
the Assets are adequate and suitable for their ordinary intended
purposes and uses and are in good maintenance, repair and operating
condition (ordinary wear and tear excepted).
3.13 REAL PROPERTY. Schedule 2.1(1) lists each Real Property owned,
leased or operated in connection with the Business and the following: address,
approximate square footage, nature of property interest, on-site activities and
any lease or sublease.
3.14 PERSONAL PROPERTY. Schedule 2.1(2) lists as of December 31, 2000
all Personal Property owned primarily in connection with the Business, which is
material or has a book value in excess of $1,000.
3.15 INTANGIBLE PERSONAL PROPERTY.
(1) CERTAIN PROPERTY. Schedule 2.1(9) lists all Patents,
registered Marks pending applications for Marks, material Marks and
Copyrights and Schedule 2.1(6) lists all material Software owned,
licensed or used by Seller in connection with the Business. The Website
is the only the Internet website, domain name or uniform resource
locator owned, licensed or used by Seller in connection with the
Business.
22
(2) EXCLUSIVITY; VALIDITY; NO CHALLENGE.
(i) Seller is the owner of record in the U.S. Patent
and Trademark Office and all other international trademark
offices or other related agencies, free and clear of any and
all Encumbrances, other than Permitted Encumbrances, of all
Intellectual Property listed on Schedule 2.1(9).
(ii) Seller has taken all actions necessary in the
U.S. Patent and Trademark Office and all other international
trademark offices or other related agencies to maintain its
ownership and other rights including without limitation,
maintenance of any and all of the Intellectual Property listed
on Schedule 2.1(9) in full force and effect.
(iii) Except as disclosed on Schedule 2.1(9) and
except for licenses of software or firmware used in the
Business that are generally available "off the shelf" through
commercial software vendors, Seller owns, or has the right to
use and the right to transfer to the Purchaser without payment
to any other party, the Intellectual Property.
(iv) Except as disclosed on Schedule 2.1(5) or
Schedule 2.1(9), no third party has been licensed or permitted
to use any of the Intellectual Property.
(v) Except as set forth on Schedule 2.1(9), no claims
are pending or, to the Knowledge of Seller, threatened against
Seller by any person with respect to the ownership, validity,
enforceability, or use of any Intellectual Property or
challenging or questioning the validity or effectiveness of
any such Intellectual Property.
(3) NO INFRINGEMENT OR MISAPPROPRIATION. To the Knowledge of
Seller, neither Seller nor any of its Employees or agents, past or
present, have infringed or misappropriated, or are infringing, the
intellectual property of any other Person in connection with the
Business. Seller is not aware of any infringement or misappropriation
of any Intellectual Property by any other Person in connection with the
Business. Seller has used reasonable diligence in policing any known
third-party use of any Intellectual Property.
(4) TRADE SECRETS. Seller has taken any action reasonably
necessary to maintain or protect the secrecy, confidentiality and value
of any Trade Secret, except where failures to do so would not,
individually or in the aggregate, have a Material Adverse Effect.
Seller is not aware of any disclosure of a Trade Secret to any Person
other than pursuant to an appropriate confidentiality arrangement for
the benefit of the Business, except for disclosures which would not,
individually or in the aggregate, have a Material Adverse Effect.
(5) EMPLOYEES, CONTRACTORS. Except as set forth on Schedule
3.15(5), any employee or contractor (whether current or former) of
Seller in connection with the
23
Business has executed a reasonably appropriate confidentiality and
assignment of inventions agreement for the benefit of Seller and the
Business.
(6) PERFECTION, MAINTENANCE. With respect to any Patent or
▇▇▇▇ set forth on Schedule 2.1(9), Schedule 3.15(6) lists the renewals
or other routine and ordinary government filings that are required by
current U.S. patent and trademark laws and regulations to be taken
within 180 days of the Effective Date in order to maintain such
applications, registrations or issued patents in force, except where
the failure to make such renewals or filings would not, individually or
in the aggregate, have a Material Adverse Effect.
3.16 CONTRACTS. Each Contract is in full force and effect and is a
valid, legal and binding obligation, enforceable in accordance with its terms,
except to the extent limited by (i) bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to creditors' rights generally or (ii)
general principles of equity (whether in a proceeding in equity or at law).
Neither Seller nor, to the Knowledge of Seller, any other Person is in material
breach or default with respect to any Contract. Schedule 2.1(5) lists all of the
material Contracts. Schedule 2.1(5) lists Contracts by category and denotes any
Contract which contains a provision requiring an assignment or change in control
provision, as follows:
(1) AFFILIATE. Any agreement with an Affiliate of Seller;
(2) CORPORATE TRANSACTIONS. Any merger, acquisition,
divestiture, stock purchase or similar agreement;
(3) OPTIONS. Any option, right of first refusal, right of
first offer or similar agreement;
(4) EXTRAORDINARY. Any agreement outside the ordinary course
of business;
(5) PARTNERS. Any joint venture, joint development,
partnership, strategic alliance or similar agreement;
(6) NON-COMPETITION. Any non-competition or similar agreement;
(7) LABOR. Any collective bargaining or other agreement with a
labor union or similar employee representative;
(8) EMPLOYMENT. Any employment agreement;
(9) CONSULTING. Any management, consulting, outsourcing or
similar agreement;
(10) DISTRIBUTION/SALES. Any distributorship, dealership,
sales representation, franchise, original equipment manufacturer,
reseller or similar agreement;
24
(11) EXCLUSIVITY. Any exclusive, requirements, sole source or
similar agreement;
(12) FINANCIAL. Any note or loan, debt, credit, security,
financing, bond trust or similar agreement;
(13) GUARANTY/INDEMNIFICATION. Any guaranty, surety,
indemnification or similar agreement;
(14) INTELLECTUAL PROPERTY. Any software, intellectual
property, technology, license, source code escrow or similar agreement;
(15) INFORMATION SYSTEMS. Any computer, network, information
system or information technology, Internet, website or similar
agreement;
(16) CONFIDENTIALITY. Any confidentiality, nondisclosure or
similar agreement;
(17) RETURNS. Any agreement with respect to the return of any
Product;
(18) SETTLEMENT. Any settlement agreement which may require
performance or forbearance after the Closing;
(19) LEASES. Any lease agreement;
(20) CAPITAL EXPENDITURES. Any agreement for a capital
improvement or expenditure;
(21) CUSTOMERS. Any agreement with a customer;
(22) SUPPLIERS. Any agreement with a supplier or service
provider;
(23) AGENCY. Any agency or similar agreement;
(24) PENDING MATTERS. Any draft agreement in negotiation; and
(25) MISCELLANEOUS MATTERS. Any other material Contract.
3.17 CUSTOMERS, SUPPLIERS.
(1) Relations between Seller and each material customer or
supplier described on Schedule 3.17(1) are good in all material
respects. Since June 30, 2000, no material customer or supplier has in
writing or, to the Knowledge of Seller, otherwise notified Seller of
any plan or intent to terminate or restrict dealings in connection with
the Business.
(2) Schedule 3.17(2) lists any standard form or terms and
conditions of distribution, distributorship, sales representation or
sales agreement or contract in effect
25
in connection with the Business and no such agreement or contract is
materially less favorable to Seller than the standard forms or terms
and conditions listed at Schedule 3.17(2).
3.18 PRODUCT SAFETY, LIABILITY.
(1) Except to the extent caused by products or services
supplied by Purchaser to Seller, each Product is and has been free of
any design defect or failure to warn and complies in all material
respects with any applicable (i) Legal Requirement or (ii)
Certification. Schedule 3.18(1) lists, to the Knowledge of Seller, any
injury, damage, loss or failure arising in connection with a Product
within the last five years.
(2) No recall or post-sale notice or warning is pending or, to
the Knowledge of Seller, threatened in connection with any Product or
the Business and, to the Knowledge of Seller, no basis exists for such
a recall, notice or warning. Seller has received no notice in writing
since January 1, 2000 that any material Certification with respect to
any Product or the Business may be modified, terminated, suspended or
withdrawn.
(3) Schedule 3.18(3) lists any standard or form of terms and
conditions regarding warranty, remedy, liability limitation or
indemnification matters used in connection with any Product. No Product
is subject to any terms or conditions which are materially less
favorable to Seller than those listed at Schedule 3.18(3).
3.19 ENVIRONMENTAL MATTERS.
(1) HAZARDOUS MATERIALS. Schedule 3.19(1) lists any Hazardous
Material used, stored or generated at the Real Property in the last
three years.
(2) ABSENCE OF CERTAIN CONDITIONS. The Real Property does not
contain and has not contained any aboveground or underground storage
tank, asbestos, dump, hazardous waste management facility, impoundment,
lagoon, landfill, lead, pipeline, radon, septic system or wetland.
There are no conditions or circumstances with respect to the Real
Property which pose a risk to the environment.
(3) NO HAZARDOUS MATERIAL RELEASE. There is and has been no
Release, threatened Release or disposal of a Hazardous Material at the
Real Property. The Real Property is not, and has not been, adversely
affected by any Release, threatened Release or disposal of a Hazardous
Material originating or emanating from any other property.
(4) SERVICE PROVIDERS. Schedule 3.19(4) lists any pollution
control, waste management or transportation, landfill or other service
provider used by Seller in connection with the Business in the last
year. Seller is not aware of any basis for liability
26
to Seller, or Purchaser after the Closing, pursuant to applicable Legal
Requirements or otherwise in connection with such service providers.
3.20 LEGAL REQUIREMENTS, PERMITS.
(1) NO VIOLATION. The Business complies in all material
respects with any applicable Legal Requirement.
(2) PERMITS. Seller has obtained any material Permit required
by an applicable Legal Requirement in connection with the Business and
each such Permit is valid and in full force and effect. Schedule
2.1(10) lists each such Permit.
(3) ABSENCE OF CERTAIN REQUIREMENTS. Except as set forth on
Schedule 2.1(5)(18), the Business is not subject to any settlement
agreement, order, judgment, injunction, decree or the equivalent
currently in effect.
3.21 PROCEEDINGS. Except as listed on Schedule 3.21, there is no
Proceeding pending or, to the Knowledge of Seller, threatened in connection with
the Business.
3.22 ACCOUNTS, LOCKBOXES, POWERS OF ATTORNEY. Schedule 3.22 lists with
respect to the Business any bank account, lockbox arrangement or power of
attorney that is in effect.
3.23 NO INTERMEDIARY. Seller has not employed any investment banker,
business consultant, broker or finder or incurred any liability for any
investment banking, business consultant, brokerage, finder fee or commission in
connection with this Agreement or the transactions contemplated herein.
3.24 LIMITED REPRESENTATIONS. Except to the extent expressly provided
otherwise in the Transaction Agreements, (i) Seller makes no representation or
warranty concerning the Business, Division or Assets, including as to the
quality, condition, merchantability, salability, obsolescence, working or
fitness for a particular purpose thereof and (ii) the Assets are sold to
Purchaser "as is and where is."
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to Seller as of the Effective Date as
follows:
4.1 ORGANIZATION; GOOD STANDING; AFFILIATES.
(1) Purchaser is a corporation duly organized, validly
existing and in good standing pursuant to the laws of Illinois. Seller
has all corporate or organizational power and authority required to
conduct its business as it is now being conducted and to own or use the
properties and assets that it purports to own or use.
27
(2) Purchaser is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the
nature of its activities, properties or assets requires such
qualification, except to the extent any failure to do so could not be
reasonably expected, individually or in the aggregate, to have a
Material Adverse Effect.
4.2 AUTHORITY; NO CONFLICT; AGREEMENT VALIDITY, EFFECT.
(1) Purchaser has all corporate or organizational power and
authority, and has taken any corporate or organizational action,
required to execute and deliver the Transaction Agreements to which it
is or will be a party, to consummate the transactions contemplated
thereby and to perform its obligations thereunder.
(2) Except as set forth on Schedule 3.2, neither Purchaser's
execution, delivery or performance of the Transaction Agreements nor
the consummation of any transaction contemplated hereby will (with or
without the giving of notice and/or the lapse of time), subject to
applicable requirements of the HSR Act: (i) violate any Corporate
Record or Legal Requirement applicable to Purchaser; (ii) result in a
breach, default, acceleration or termination pursuant to any contract
or encumbrance; or (iii) require the consent, authorization or approval
of any other Person or Governmental Authority, except to the extent any
such event could not be reasonably expected to, individually or
together with other circumstances, have a Material Adverse Effect.
(3) This Agreement has been duly and validly executed and
delivered by Purchaser. This Agreement constitutes, and each Ancillary
Agreement to which Purchaser is a party shall constitute, upon
Purchaser's execution and delivery thereof, a legal, valid and binding
obligation of Purchaser, enforceable in accordance with its terms,
except to the extent limited by (i) bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to creditors'
rights generally or (ii) general principles of equity (whether in a
proceeding in equity or at law).
4.3 PROCEEDINGS. There is no Proceeding pending or, to the Knowledge of
Purchaser, threatened against Purchaser, which would reasonably be expected to
have a material adverse effect as to the transactions contemplated by this
Agreement.
4.4 NO INTERMEDIARY. Purchaser has not employed any investment banker,
business consultant, broker or finder or incurred any liability for any
investment banking, business consultant, brokerage, finder fee or commission in
connection with this Agreement or the transactions contemplated herein.
4.5 ACKNOWLEDGMENT. Purchaser acknowledges that, except to the extent
expressly provided otherwise in the Transaction Agreements, (i) Seller makes no
representation or warranty concerning the Business, Division or Assets,
including as to the quality, condition, merchantability, salability,
obsolescence, working or fitness for a particular purpose and (ii) the Assets
are sold to Purchaser "as is and where is."
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5. COVENANTS OF SELLER.
5.1 ACCESS. Seller will allow and arrange for Purchaser and the
officers, employees, attorneys, accountants, consultants and other authorized
representatives ("REPRESENTATIVES") of Purchaser to have full and complete
access at reasonable times and without material disruption to the Assets and
Representatives of Seller in connection with the Business and transactions
contemplated by this Agreement.
5.2 CONDUCT OF BUSINESS. Until the Closing, Seller with respect to the
Business shall:
(1) use commercially reasonable efforts to prevent any
Material Adverse Effect;
(2) conduct the Business in ordinary course consistent with
past practices;
(3) use commercially reasonable efforts to maintain and
preserve good relations with Employees, customers, suppliers and other
parties and to encourage all such parties to continue their relations
in connection with the Business after the Closing;
(4) maintain the Assets in good condition, maintenance and
repair;
(5) maintain the current or equivalent insurance policies;
(6) not make or cause any material change to any accounting,
administrative, financial, management, operational, sales or other
policy, practice or procedure;
(7) not make or cause any material purchase, sale, transfer,
assignment, disposition or Encumbrance of any Asset; and
(8) use commercially reasonable efforts to prevent any
material damage, destruction or loss.
5.3 NON-COMPETITION.
(1) As a material inducement for the Purchaser to consummate
the transactions contemplated by this Agreement, Seller and its
subsidiaries shall not, until after the third anniversary of the
Closing Date, conduct or engage in, as a stockholder, consultant,
promoter, control person or otherwise, the business of marketing,
distributing or selling, with or without modifications designed to the
specifications of the customer, products that are substantially similar
to the Products set forth on Schedule 5.3 hereto, for the types of
applications currently served by the Business. In addition, until the
second anniversary of the Closing Date, Seller will not solicit nor
induce any employee of Purchaser in connection with the Business to
terminate his or her employment with Purchaser, PROVIDED THAT, this
non-solicitation provision shall not apply with respect to resolution
of union employee arrangements reasonably necessary in connection with
the
29
Collective Bargaining Agreement and transactions contemplated by the
Transaction Agreements.
(2) The above non-competition obligations shall apply to the
following territories: Canada, Mexico and the United States of America.
(3) The above non-competition obligations shall not apply to
or preclude: (i) the continuation in the ordinary course of any
[retained,] current business of the Division, other than the Business,
with respect to current types of applications; or (ii) the ownership of
up to 3 percent of the outstanding shares of any corporation listed
with a national securities exchange.
(4) If any Governmental Authority rules that any provision of
the above non-competition obligations is excessively broad in scope or
duration, then any such provision shall be deemed, without further
action, to be modified or limited to the extent necessary to be valid
and enforceable for the purposes of such Governmental Authority.
5.4 CONFIDENTIALITY. Seller shall not disclose to any Person or use for
any purpose any Trade Secret as to the Business; PROVIDED THAT Seller may make
any such disclosure to the extent required by an applicable Legal Requirement
after first providing Purchaser reasonable advance notice of the need for such a
disclosure or to comply with any Transaction Agreement. Seller shall not be
deemed to have violated this provision to the extent any Trade Secret is or
becomes known to a third party or to the public generally, unless it becomes so
known due to the breach hereof by Seller.
5.5 NOTICE OF CERTAIN EVENTS. Seller promptly shall notify Purchaser in
connection with the Business or this Agreement of any material new information
or any:
(1) change, individually or in the aggregate, which has had a
Material Adverse Effect or could reasonably be expected to have a
Material Adverse Effect;
(2) material change outside of the ordinary course consistent
with past practices;
(3) material change to any accounting, administrative,
financial, management, employment, labor, operational, sales or other
policy, practice or procedure;
(4) material purchase, sale, transfer, assignment, disposition
or encumbrance of any asset;
(5) material damage, destruction or loss (regardless of any
insurance);
(6) material capital improvement, project or expenditure;
(7) material liability (contingent or otherwise), obligation,
debt, guarantee;
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(8) material payment, discharge, satisfaction, release,
termination, compromise or settlement of any claim, right,
indebtedness, guarantee, liability or obligation;
(9) termination of any Employee;
(10) Proceeding;
(11) agreement, commitment or understanding with respect to
the foregoing;
(12) notice or communication from a Governmental Authority in
connection with the transactions contemplated by this Agreement; or
(13) any breach of the Contracts, applicable Legal
Requirements or Seller's representations, warranties, statements or
obligations pursuant to this Agreement.
6. COVENANTS OF PURCHASER.
6.1 MAINTENANCE OF BUSINESS RECORDS. After the Closing, Purchaser shall
maintain material Business Records until the seventh anniversary of the Closing
Date. Purchaser acknowledges that certain Business Records may pertain to
matters of Seller other than with respect to the Business and that Seller may
provide to Purchaser only copies of the portions thereof pertaining to the
Business.
6.2 NOTICE OF CERTAIN EVENTS. Purchaser promptly shall notify Seller in
connection with this Agreement of any:
(1) Proceeding;
(2) notice or communication from a Governmental Authority in
connection with the transactions contemplated by this Agreement; or
(3) any breach of Purchaser's representations, warranties,
statements or obligations pursuant to this Agreement.
6.3 CONFIDENTIALITY. Purchaser shall not disclose to any Person or use
for any purpose any Trade Secret of Seller concerning any business of Seller
other than the Business obtained in connection with the transactions
contemplated by this Agreement; PROVIDED THAT Purchaser may make any such
disclosure to the extent required by an applicable Legal Requirement after first
providing Seller reasonable advance notice of the need for such a disclosure or
to comply with any Transaction Agreement. Purchaser shall not be deemed to have
violated this provision to the extent any Trade Secret is or becomes known to a
third party or to the public generally, unless it becomes so known due to the
breach hereof by Purchaser.
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6.4 EXCLUDED ASSETS. Purchaser shall exercise reasonable maintenance
care with respect to, and shall reasonably cooperate at the expense of Seller to
deliver to Seller, any Excluded Asset which remains at the Real Property after
the Closing.
6.5 NON-SOLICITATION. Until the second anniversary of the Closing Date,
Purchaser will not solicit nor induce any employee of Seller in connection with
the Division to terminate his or her employment with Seller, PROVIDED THAT, this
provision shall not apply with respect to resolution of union employee
arrangements reasonably necessary in connection with the Collective Bargaining
Agreement and transactions contemplated by the Transaction Agreements.
7. ADDITIONAL COVENANTS.
7.1 CLOSING EFFORTS. Each party shall use reasonable efforts to
cooperate with the other, cause as appropriate the existence, occurrence,
satisfaction and continuation of the conditions precedent set forth in Sections
9 and 10, including, but not limited to, the delivery to the other of any
deliverable specified in Sections 9 and 10, and effectuate the Closing.
7.2 ANTITRUST MATTERS. Seller and Purchaser shall use their reasonable
efforts to resolve objections or inquiries, if any, of the Antitrust Division of
the U.S. Department of Justice or the U.S. Federal Trade Commission or other
antitrust Governmental Authorities may assert with respect to the transactions
contemplated by this Agreement. In the event a Proceeding is instituted by any
Person asserting that the transactions contemplated by this Agreement violate
antitrust Legal Requirements, Seller and Purchaser shall use their reasonable
efforts to resolve such Proceeding promptly, PROVIDED THAT, neither Seller nor
Purchaser shall be required by this Agreement to divest any assets, properties
or businesses or exclude any Assets from the transactions contemplated by this
Agreement.
7.3 LICENSED MARKS.
(1) Seller hereby grants Purchaser a royalty-free,
non-exclusive license to use the Marks set forth on Schedule 7.3(1) in
connection with the ownership and operation of the Business in the
ordinary course (i) for six (6) months from the Closing Date for
Purchaser to complete an orderly termination of the affirmative use of
such Marks and (ii) for one year from the Closing Date to exhaust
inventories of Products and other goods bearing such Marks.
(2) Purchaser hereby grants Seller a royalty-free,
non-exclusive license to use the Marks set forth on Schedule 7.3(2) in
connection with the ownership and operation of the Division in the
ordinary course (i) for six (6) months from the Closing Date for Seller
to complete an orderly termination of the affirmative use of such Marks
and (ii) for one year from the Closing Date to exhaust inventories of
Products and other goods bearing such Marks.
7.4 ABSENCE OF CERTAIN CONSENTS. To the extent any Consent to the
transfer or assignment of any Contract or other Asset from Seller to Purchaser
cannot reasonably be
32
obtained or any Contract or other Asset is not transferable, then Seller shall
retain such Contract or other Asset and the parties shall cooperate to provide
in a permissible manner and to the extent reasonably feasible the practical
benefits to Purchaser of such Contract or other Asset.
7.5 FORWARDING OF PAYMENTS, DELIVERIES. From the Closing, each party
shall transmit and deliver to the other within one week of receipt any payment,
correspondence or asset intended for the other which it receives after the
Closing. From the Closing, each party promptly will notify and consult with the
other as to the allocation of any payment it receives which (i) does not
indicate whether the payment is made in connection with the Business or one of
Seller's remaining businesses or (ii) indicates that the payment is made in
connection with the Business and one of Seller's remaining businesses. If the
parties cannot agree upon an allocation for such a payment, then it shall be
applied in chronological order as to the accounts receivable of both parties,
from earliest to latest.
7.6 ACCOUNTS RECEIVABLE. An adjustment shall be made within 10 days
after the six-month anniversary of the Closing Date as provided in this Section
7.6. If Purchaser, despite good faith efforts consistent with its past
collection practices, has not as of the sixth-month anniversary collected an
amount equal to the net Accounts Receivable set forth on the Closing Balance
Sheet (that is, gross amount of Accounts Receivable less the reserve for
uncollectibility), then Seller shall repurchase an amount of Accounts Receivable
at face value from Seller equal to such shortfall, with a maximum repurchase
obligation of $337,500. Seller shall designate the specific Accounts Receivable
to be repurchased. If Purchaser, as of the sixth-month anniversary, has
collected more of the Accounts Receivable than the net Accounts Receivable set
forth on the Closing Balance Sheet, then Purchaser shall pay Seller an amount
equal to the excess, with a maximum payment obligation of $337,500.
7.7 TERMINATION OF CONFIDENTIALITY AGREEMENT. The Confidentiality
Agreement between the parties, dated April 1, 2000, shall remain in effect in
accordance with its terms.
7.8 SUPPLY OF CERTAIN DC DRIVES PRODUCTS. Seller shall supply and sell
to Purchaser any DC drives or other product of Seller, to the extent that (i)
Seller manufactures, distributes or sells such product and (ii) Purchaser is
obligated by a Contract to supply such product to another person. The price to
Purchaser for such products shall be as described in Schedule 7.8 for the
markets described therein and, with respect to other matters, each party shall
provide the other terms and conditions in connection with such products no less
favorable than those it provides to similarly situated persons.
8. CONDITIONS TO SELLER'S OBLIGATIONS.
Seller's obligations with respect to the Closing pursuant to Section
2.6 are contingent upon the existence, occurrence, satisfaction and continuation
of the conditions precedent set forth below.
8.1 HSR ACT, PERMITS. The issuance of any Permit or the completion of
any action by any Governmental Authority which is required by the HSR Act or
other applicable Legal
33
Requirement for the consummation of the transactions contemplated by this
Agreement without any Material Adverse Effect on the Business.
8.2 NO BREACH. Every representation, warranty and statement by
Purchaser in this Agreement shall have been true and correct in all material
respects when made and shall be true and correct in all material respects as if
originally made on and as of the Closing Date. Purchaser shall have performed in
all material respects all of its obligations pursuant to this Agreement through
the Closing Date.
8.3 CERTIFICATE. Seller shall have received from Purchaser an
incumbency and specimen signature certificate with respect to the officers of
Purchaser who execute the Transaction Agreements.
8.4 RESOLUTIONS. Seller shall have received from Purchaser certified
copies of resolutions of Purchaser's board of directors authorizing the
execution, delivery, consummation and performance of the Transaction Agreements.
8.5 UNION MATTERS. Seller shall have received to Seller's reasonable
satisfaction assurances with respect to union relations and the Collective
Bargaining Agreement to be in effect after the Closing.
9. CONDITIONS TO PURCHASER'S OBLIGATIONS
Purchaser's obligations with respect to the Closing pursuant to Section
2.6 are contingent upon the existence, occurrence, satisfaction and continuation
of the conditions precedent set forth below.
9.1 HSR ACT, PERMITS. The issuance of any Permit or the completion of
any action by any Governmental Authority which is required by the HSR Act or
other applicable Legal Requirement for the consummation of the transactions
contemplated by this Agreement without any materially adverse restriction or
requirement.
9.2 NO BREACH. Every representation, warranty and statement by Seller
in this Agreement shall have been true and correct in all material respects when
made and shall be true and correct in all material respects as if originally
made on and as of the Closing Date. Seller shall have performed in all material
respects all of its obligations pursuant to this Agreement through the Closing
Date.
9.3 CERTIFICATE. Purchaser shall have received from Seller an
incumbency and specimen signature certificate with respect to the officers of
Seller who execute the Transaction Agreements.
9.4 RESOLUTIONS. Purchaser shall have received from Seller certified
copies of resolutions of Seller's board of directors authorizing the execution,
delivery, consummation and performance of the Transaction Agreements.
34
9.5 CONSENTS. Purchaser shall have received from Seller all material
Consents listed on Schedule 9.5.
9.6 ENVIRONMENTAL, HEALTH, SAFETY. Purchaser shall have received to
Purchaser's reasonable satisfaction environmental, health and safety
assessments, reports or other information with respect to the Business and Real
Property.
9.7 INSPECTIONS, APPRAISALS. Purchaser shall have received to
Purchaser's reasonable satisfaction inspection reports, appraisals or other
information with respect to the Assets.
9.8 INSURANCE. Purchaser shall have received to Purchaser's reasonable
satisfaction title and other insurance policies and endorsements with respect to
the Real Property, other Assets and Business.
9.9 SEARCHES. Purchaser shall have received to Purchaser's reasonable
satisfaction Encumbrance, Proceeding and Intellectual Property search reports or
other information dated no earlier than 10 days before the Closing Date with
respect to the Seller, Business and Assets.
9.10 RELEASES OF ENCUMBRANCES. Purchaser shall have received from
Seller to Purchaser's reasonable satisfaction releases of all Encumbrances and
documentation thereof with respect to the Assets other than Permitted
Encumbrances.
9.11 SURVEYS. Purchaser shall have received to Purchaser's reasonable
satisfaction surveys of Real Property for which title insurance is being
obtained.
9.12 ESTOPPELS. Purchaser shall have received from Seller to
Purchaser's reasonable satisfaction estoppel letters duly executed by the
landlords and mortgagees of the leased Real Property dated no earlier than 10
days before the Closing Date.
9.13 NO PROCEEDING. No Proceeding shall have been commenced or
threatened in connection with the transactions contemplated by this Agreement.
9.14 NO ADVERSE LEGAL REQUIREMENT. No Legal Requirement shall exist
which would prevent the transactions contemplated by this Agreement.
9.15 EMPLOYEE MATTERS. Purchaser shall have received to Purchaser's
reasonable satisfaction assurances with respect to any Employees who may be
employed in connection with the Business after the Closing. Purchaser shall have
received to its reasonable satisfaction assurances with respect to the
employment terms and conditions that will be applicable to the Business after
the Closing.
9.16 EMPLOYEE BENEFIT MATTERS. Purchaser shall have received to
Purchaser's reasonable satisfaction assurances with respect to Benefit Plans
that will be applicable to the Business after the Closing.
35
9.17 UNION MATTERS. Purchaser shall have received to Purchaser's
reasonable satisfaction assurances with respect to union relations and the
Collective Bargaining Agreement to be in effect after the Closing.
9.18 PRODUCTIVITY MEASURES. Purchaser shall have received to
Purchaser's reasonable satisfaction assurances with respect to the productivity
measures to be implemented by Seller with respect to the Business before the
Closing Date, including, but not limited to, the Rancho ▇▇▇▇▇▇▇▇▇, California
facility and workforce.
9.19 FINANCIAL INFORMATION. Purchaser shall have received to
Purchaser's reasonable satisfaction assurances with respect to financial
information pertaining to the Business.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION BY SELLER. Subject to the terms and conditions of
Section 10, Seller shall indemnify, defend and hold harmless Purchaser and its
Affiliates, officers, directors, employees or agents from any Damages or
Proceedings to the extent arising from:
(1) any breach of any representation or warranty of Seller in
or pursuant to this Agreement, the Ancillary Agreements or a
certificate of Seller delivered in connection with the Closing;
(2) any breach of any covenant or obligation of Seller in or
pursuant to this Agreement or the Ancillary Agreements;
(3) any Excluded Liabilities; and
(4) except for (i) Assumed Liabilities and (ii), after the
third anniversary of the Closing Date, the Excluded Liabilities set
forth at Section 2.4(6), any occurrence, event or condition existing in
connection with the Business or Assets on or before the Closing Date.
10.2 INDEMNIFICATION BY PURCHASER. Subject to the terms and conditions
of Section 10, Purchaser shall indemnify, defend and hold harmless Seller and
its Affiliates, officers, directors, employees or agents from any Damages or
Proceedings to the extent arising from:
(1) any breach of any representation or warranty of Purchaser
in or pursuant to this Agreement, the Ancillary Agreements or a
certificate of Purchaser delivered in connection with the Closing;
(2) any breach of any covenant or obligation of Purchaser in
or pursuant to this Agreement or the Ancillary Agreements;
(3) any Assumed Liabilities; and
36
(4) the conduct of the Business by Purchaser after the Closing
Date.
10.3 THIRD-PARTY PROCEEDINGS. In the event of a Proceeding against an
Indemnified Party by a third party, the Indemnifying Party shall have the right,
at its option and expense, to be represented by counsel of its choice, and to
defend, negotiate, settle or otherwise manage any Proceeding and/or Damages
subject to Section 10, PROVIDED THAT, the Indemnified Party may participate in
any such Proceeding with counsel of its choice and at its expense. The parties
shall cooperate fully in connection with the defense, negotiation, settlement or
management of any such Proceeding. To the extent the Indemnifying Party elects
not to defend such Proceeding, the Indemnified Party may retain counsel and
control the defense of the Proceeding at the expense of the Indemnifying Party.
Neither party shall settle any such Proceeding without the consent of the other,
which consent shall not be unreasonably withheld. After final resolution of any
such Proceeding (including, but not limited to, disposition by a Governmental
Authority or alternative dispute resolution authority or settlement) and
expiration of the time for any appeal, the Indemnified Party shall deliver to
the Indemnifying Party a written request for any amounts due from the
Indemnified Party with respect to such Proceeding. The Indemnifying Party shall
pay all sums due with respect to such Proceeding by wire transfer or certified
or bank cashier's check within 30 days after receipt of such notice.
10.4 MINIMUM THRESHOLD; MAXIMUM INDEMNIFICATION.
(1) Section 10 shall not be applicable with respect to
Damages arising from a breach of any representation, warranty or
statement in or pursuant to this Agreement unless and until the
aggregate amount of all such Damages incurred by the Indemnified Party
equals or exceeds $150,000 ("MINIMUM THRESHOLD"), at which time the
Indemnifying Party shall be responsible for all such Damages in excess
of the Minimum Threshold, PROVIDED THAT the Minimum Threshold shall not
be applicable with respect to a breach of Section 3.12(1).
(2) An Indemnifying Party's aggregate liability pursuant to
this Agreement shall not exceed 25 percent of the Purchase Price, as
adjusted pursuant to Section 2.7.
10.5 DAMAGES NET OF INSURANCE; DAMAGES LIMITATION; DAMAGES TREATMENT.
(1) The amount of any Damages for which indemnification is
provided under Section 10 shall be net of all amounts recovered by the
Indemnified Person under insurance policies with respect to such
Damages and shall be net of any reserve in respect thereof reflected on
the Closing Balance Sheet.
(2) If the Indemnifying Person makes any payment under Section
10 in respect of any Damages, the Indemnifying Person shall be
subrogated, to the extent of such payment and except to the extent that
such subrogation is not permitted by the terms of any insurance policy,
to the rights of the Indemnified Person against any insurer or third
party with respect to such Damages.
37
(3) Anything to the contrary in this Agreement
notwithstanding, no Indemnifying Person shall, in any event, be liable
to any Indemnified Person for any consequential damages, including, but
not limited to, loss of revenue or income, cost of capital or loss of
business reputation or opportunity relating to the breach or alleged
breach of this Agreement. To the extent such damages become due to a
third party in a Proceeding in which a party is an Indemnified Person
hereunder, such damages shall not be excluded from the Damages that may
be due pursuant to Section 10. Each party agrees that it will not seek
punitive damages from any Indemnifying Person in connection with any
Damages arising in connection with the transactions contemplated by
this Agreement.
(4) Any indemnification payment for Taxes required under
Section 10 shall for purposes of federal, state and local income Taxes
be treated as a purchase price adjustment, to the extent consistent
with applicable Legal Requirements.
10.6 TERMINATION OF CERTAIN INDEMNIFICATION. The obligations to
indemnify and hold harmless a party hereto pursuant to Section 10.1(1) and
Section 10.2(1) shall terminate when the applicable representation or warranty
terminates pursuant to Section 10.7, PROVIDED THAT such obligations to indemnify
and hold harmless shall not terminate with respect to any claim an Indemnified
Person delivers in writing to an Indemnifying Person before the expiration of
all relevant survival periods.
10.7 SURVIVAL OF REPRESENTATIONS. All representations and warranties in
this Agreement shall survive the Closing for purposes of Section 10 and
terminate at 6:00 p.m. (Pacific time) on the eighteen-month anniversary of the
Closing Date, except as to Section 3.12(1), which shall survive for the
applicable statutes of limitation.
10.8 NO EXHAUSTION OF REMEDIES. An Indemnified Party shall not be
required to pursue or exhaust its remedies against any other Person before
enforcing its rights pursuant to Section 10 against an Indemnifying Party.
10.9 REMEDY SELECTION. Section 10 shall provide the exclusive remedy
with respect to any Damages or claims of a party arising in connection with the
transactions contemplated by this Agreement, except (i) as provided otherwise by
any Ancillary Agreement or (ii) with respect to matters involving or requiring
injunctive or equitable relief. Except as provided in the preceding sentence,
each party hereby waives with respect to the other, and covenants not to ▇▇▇ the
other pursuant to, any claim pursuant to an applicable Legal Requirement in
connection with the transactions contemplated by this Agreement, including, but
not limited to, the federal Comprehensive Environmental Response, Compensation
and Liability Act or any state counterpart.
38
11. EMPLOYMENT, LABOR AND EMPLOYEE BENEFIT MATTERS.
11.1 EMPLOYEES.
(1) Purchaser shall offer employment to commence effective
immediately after the Closing Date to all Employees at substantially
the same salaries and wages (including division-level, but not
Seller-wide, bonus and incentive programs), reasonably equivalent
benefits in the aggregate, and on substantially the same terms and
conditions as those in effect immediately prior to the Closing Date.
With respect to Transferred Employees who may later be terminated,
Purchaser shall be solely responsible for all obligations and
liabilities, if any, pursuant to any applicable Legal Requirement
pertaining to a mass layoff or other termination of employment.
(2) Purchaser hereby acknowledges that it is a successor
employer with respect to those Transferred Employees who are members of
a collective bargaining unit and Purchaser shall comply with all
requirements under the National Labor Relations Act as a successor
employer, which may include recognition of any collective bargaining
representative recognized by Seller as of the Closing Date for
bargaining units of Transferred Employees and/or good faith
negotiations with the collective bargaining representative with respect
to a new collective bargaining agreement.
11.2 EMPLOYEE BENEFIT PLANS.
(1) Effective as of the Closing Date, Transferred Employees
shall cease accruing any benefits under any Benefit Plan of Seller, and
Seller shall take, or cause to be taken, all such action, if any, as
may be necessary to effect such cessation of participation. Effective
as of the Closing Date, Purchaser shall establish Benefit Plans for
Transferred Employees which in the aggregate are reasonably equivalent
to the Benefit Plans of Seller. Purchaser shall grant all Transferred
Employees credit for service with Seller and its Affiliates, and their
respective predecessors through the Closing Date, as set forth on
Schedule 3.9 and to substantially the same extent as Seller. With
respect to Purchaser's Benefit Plans that provide medical or dental
benefits, such plans shall waive any exclusions or limitations with
respect to pre-existing conditions to the extent required by applicable
Legal Requirements. Purchaser shall also cause its health plan(s) to be
responsible for health benefit claims by Transferred Employees and
their covered dependents for services covered by such plans and
rendered after the Closing Date, except those claims for Transferred
Employees who are not actively at work as of the Closing Date.
Purchaser shall cause its health plan(s) to be responsible for health
benefit claims by Transferred Employees who are not actively at work as
of the Closing Date, and their covered dependents, for services covered
by such plans and rendered effective upon their return to work.
(2) Purchaser shall cause its "401(k)" plan to accept direct
rollovers of cash and participant loans from Seller's 401(k) plans for
those Transferred Employees who elect such direct rollovers, provided
that such Seller's Plans are qualified plans and that Seller so
represents.
39
(3) Seller shall spinoff to Purchaser, and Purchaser shall
become the sponsor of, that portion of Seller's cafeteria plans that
are applicable to Transferred Employees, as provided in the transfer of
sponsorship agreements attached at Schedule 11.2.
11.3 VACATION, HOLIDAY, SICK AND SEVERANCE PAY. As of the Closing Date,
Seller shall retain all of Seller's obligations for vacation (including accrued
vacation), holiday, sick (including accrued sick) and severance pay (if any)
payable to all Transferred Employees, who are not covered by the Collective
Bargaining Agreement, including those under any "stay and pay agreement."
Transferred Employees shall become eligible for Purchaser's vacation, holiday,
sick pay and severance pay benefits after the Closing Date. Vacation pay for
Transferred Employees subject to the Collective Bargaining Agreement shall be
accrued on the Closing Balance Sheet as of the Closing Date in accordance with
GAAP.
11.4 ACCESS TO INFORMATION. Seller shall make reasonably available to
Purchaser such actuarial, financial, personnel and related information as may be
reasonably requested by Purchaser with respect to any Seller Benefit Plan or
Transferred Employee, including, but not limited to, compensation and employment
histories. Seller shall provide to Purchaser health and workers' compensation
insurance claim history relating to Transferred Employees within 30 days after
the Closing Date.
11.5 PAYROLL TAX. Seller and Purchaser agree that, with respect to
Transferred Employees who accept employment with Purchaser upon the Closing,
they will take the position that they respectively meet the definitions of
"predecessor" and "successor" as defined in Revenue Procedure 96-60 and IRS
Regulation Section 31.3121(a)(1)-1(b). Absent a mutual agreement to the
contrary, Seller and Purchaser will use the "Standard Procedure" described in
Section 4 of Revenue Procedure 96-60. Seller shall supply to Purchaser, with
respect to all Transferred Employees, all cumulative payroll information as of
the Closing Date that Purchaser shall reasonably request in order to comply with
IRS Regulation Section 31.3121(a)(1)-1(b).
11.6 THIRD-PARTY BENEFICIARIES. No provision of this Article 11 shall
create any third-party beneficiary rights in any former Employee (including any
beneficiary or dependent thereof), including, without limitation, any right to
continued employment or employment in any particular position with Purchaser for
any specified period of time after the Closing Date.
12. TERMINATION PRIOR TO CLOSING.
12.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(1) by the mutual written consent of Purchaser and Seller;
(2) by either Seller or Purchaser in writing (provided that
the terminating party is not otherwise in default or in breach of this
Agreement) if the Closing shall not have occurred on or before February
28, 2001;
40
(3) by either party in writing if the other is in material
default or breach of this Agreement and fails to cure such default or
breach within 30 days of receiving written notice of such default or
breach; or
(4) by either Seller or Purchaser in writing, if there shall
be in effect a non-appealable order of a Governmental Authority
enjoining or prohibiting the consummation of the transactions
contemplated by this Agreement.
12.2 EFFECT ON OBLIGATIONS. Termination of this Agreement pursuant to
this Section 12 shall terminate all obligations of the parties hereunder, except
for the obligations pursuant to Sections 2.9, 10.1(1), 10.1(2), 10.2(1),
10.2(2), 10.3, 10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 12, 13.1, 13.2, 13.3, 13.4,
13.5, 13.7, 13.8, 13.9, 13.11 and 13.12; PROVIDED THAT, such termination shall
not relieve any party in default or breach of this Agreement from any liability
to the other for such default or breach.
13. GENERAL PROVISIONS.
13.1 ENTIRE AGREEMENT. The Transaction Agreements (including the
Schedules and Exhibits) constitute the sole understanding of the parties with
respect to the matters provided for therein and supersede any previous
agreements and understandings between the parties with respect to the subject
matter thereof. This Agreement shall be amended, modified or supplemented only
by a writing signed by all parties.
13.2 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the parties
hereto. This Agreement shall not be assigned by any party without the prior
written consent of the other, except by Purchaser, in whole, to any of its
Affiliates having a comparable net worth to Purchaser, and by Seller in
connection with a sale of all, or substantially all, of its businesses. No
assignment of this Agreement hereunder shall relieve the assigning party of any
obligation hereunder. Any assignee shall be deemed to have made the
representations, warranties, covenants and agreements hereunder of the assigning
party.
13.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all of which
together shall constitute one and the same instrument.
13.4 HEADINGS. The headings of Sections are for convenience only and
shall not affect interpretation of this Agreement.
13.5 WAIVER. Any term or condition of this Agreement may be waived in
writing at any time by a party benefited thereby. No such waiver of a provision
of this Agreement shall constitute a waiver of any similar or other provision of
this Agreement.
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13.6 BULK SALES COMPLIANCE. The parties waive the requirements of any
applicable bulk sales Legal Requirement. Seller shall indemnify and hold
harmless Purchaser from any Damages or Proceedings arising from a bulk sales
Legal Requirement.
13.7 NOTICES. Any notice, request, instruction or other document to be
given hereunder by any party hereto to any other party shall be in writing and
delivered personally, sent by registered or certified mail, postage prepaid, by
confirmed facsimile, or by commercial courier. If to Seller, to:
MagneTek, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser to:
Yaskawa Electric America, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Junji (▇▇▇) Tsuda
EXECUTIVE VICE PRESIDENT
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Masuda, Funai, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally, by confirmed facsimile or by commercial
courier in the manner provided herein shall be deemed to have been duly given to
the party to whom it is directed upon actual receipt by such party (or its agent
for notices hereunder). Any notice which is addressed and mailed in the manner
herein provided shall be conclusively presumed to have been duly given to
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the party to which it is addressed at the close of business, local time of the
recipient, on the fifth day after the day it is so placed in the mail.
13.8 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware without regard to
principles of conflict of laws.
13.9 PUBLIC ANNOUNCEMENTS. Except to the extent required by an
applicable Legal Requirement, neither Seller nor Purchaser shall, without the
prior written consent of the other, disclose publicly or to any third party
(other than to each other's Representatives pursuant to appropriate
confidentiality arrangements) the existence of the negotiations relating to this
Agreement or any of term or condition hereof; PROVIDED THAT, Purchaser shall
have the right to meet with customers and suppliers in connection with the
Business upon reasonable advance notice to Seller.
13.10 FURTHER ASSURANCES. Each party shall, at the request and
reasonable expense of the other, execute and deliver any further instrument or
document, provide any information or technical assistance and take any further
action reasonably necessary or appropriate to consummate, effectuate, implement
or perform the transactions contemplated by this Agreement.
13.11 SEVERABILITY. If a provision of this Agreement is held by a
Governmental Authority to be illegal, invalid, void or unenforceable, then such
provision shall have no force and effect and such event shall not affect or
impair the legality, validity or enforceability of any other provision of this
Agreement.
13.12 DISPUTE RESOLUTION.
(1) BINDING ARBITRATION. Except as provided pursuant to
Section 13.12(2), any dispute, controversy or claim arising out of or
in connection with this Agreement or the performance or breach of
obligations hereunder shall be settled or otherwise resolved by binding
arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. Any such arbitration
shall be conducted exclusively in Chicago, Illinois, if initiated by
Seller, or Los Angeles, California, if initiated by Purchaser. Each
party covenants not to bring or prosecute any dispute, controversy or
claim in connection with this Agreement except as provided pursuant to
Section 13.12.
(2) CERTAIN EXCEPTIONS TO ARBITRATION. Section 13.12(1)
notwithstanding, a party may elect before the commencement of
arbitration: (i) to resolve any dispute with respect to Purchase Price
adjustment pursuant to Section 2.7, non-competition pursuant to Section
5.3 and confidentiality pursuant to Section 5 through the federal or
state courts located in Chicago, Illinois, if initiated by Seller, and
Los Angeles, California, if initiated by Purchaser; or (ii) to resolve
any dispute between the parties which is related directly to a
third-party Proceeding in the course of such third-party Proceeding, in
the event all necessary third parties do not consent to participate in
arbitration of such matters in the manner provided in Section 13.12(1).
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(3) ARBITRATION PANEL. For any arbitration, the number of
arbitrators on the arbitration panel shall be as follows: one neutral
arbitrator if the matter of dispute at the time of the arbitration
demand shall reasonably be expected to involve an amount less than
$500,000; and three neutral arbitrators if otherwise.
(4) PROCEDURES; NON-APPEALABILITY. The arbitration panel shall
allow such discovery as it determines appropriate under the
circumstances and shall resolve the dispute as expeditiously as
practicable, and if reasonably practicable, within 120 days after the
selection of the panel is completed. The arbitration panel shall
deliver to the parties a written notice of decision with a written
explanation and, if a party requests within 10 days thereafter, shall
have 30 days after such request to reconsider and modify in writing
such decision. Thereafter, the decision of the arbitration panel shall
be final, binding and non-appealable in all respects, including,
without limitation, with respect to any person who has failed or
refused to participate in the arbitration.
(5) CERTAIN RELIEF. The arbitration panel shall have authority
to award relief pursuant to legal or equitable principles, including
interim or preliminary relief, and to allocate responsibility for the
costs of the arbitration and to award recovery of attorneys' fees and
expenses in such manner as it deems appropriate.
(6) ENFORCEMENT; IRREPARABLE INJURY; EQUITABLE RELIEF.
Judgment upon a decision or award by the arbitration panel, or by an
independent auditor pursuant to Section 2.7, may be entered in any
court having personal and subject matter jurisdiction. Seller and
Purchaser hereby submit to the federal and state courts located in
Chicago, Illinois and Los Angeles, California for the purpose of
confirming any such decision or award and entering judgment thereon and
enforcement or resolution of disputes with respect to Sections 2.7,
5.3, 5.4 and/or 6.3. Seller acknowledges that its non-competition
obligations pursuant to Section 5.3 and confidentiality obligations
pursuant to Section 5.4 are material inducements to Purchaser to enter
into the transactions contemplated by this Agreement and that any
violation or breach of such obligations will result in irreparable
injury to Purchaser for which a remedy at law would be inadequate and
for which Purchaser shall be entitled to injunctive or equitable
relief. Purchaser acknowledges that its confidentiality obligations
pursuant to Section 6.3 are material inducements to Seller to enter
into the transactions contemplated by this Agreement and that any
violation or breach of such obligations will result in irreparable
injury to Seller for which a remedy at law would be inadequate and for
which Seller shall be entitled to injunctive or equitable relief.
(7) CONFIDENTIALITY. All arbitration proceedings pursuant to
Section 13.12, and all evidence given or discovered pursuant hereto,
shall be maintained in confidence by all parties, except as required by
applicable Legal Requirements.
(8) CONTINUING OBLIGATIONS. The commencement and proceeding of
any arbitration in connection with this Agreement shall not excuse any
party from its obligations in connection with this Agreement and the
parties shall continue to perform their respective obligations in good
faith.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their authorized representatives and delivered as of the
Effective Date.
MAGNETEK, INC.
By:
---------------------------------
Name:
Title:
YASKAWA ELECTRIC AMERICA, INC.
By:
---------------------------------
Name:
Title:
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