EXHIBIT 10(23)
ASSET PURCHASE AGREEMENT
AMONG
MOLEX INDUSTRIAL VENTURES INC.,
("PURCHASER")
MOLEX INCORPORATED,
("PARENT")
AND
AXSYS TECHNOLOGIES, INC.
("SELLER")
Dated as of February 3, 2000
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of February 3, 2000, by and among
Molex Industrial Ventures Inc., a Delaware corporation ("PURCHASER") and a
wholly-owned subsidiary of Molex Incorporated, a Delaware corporation with
offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("PARENT") and Axsys
Technologies, Inc., a Delaware corporation with offices at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ("SELLER"). Purchaser desires to
purchase and Seller desires to sell all of the operating assets used exclusively
by Seller's Beau Interconnect Division. In consideration of the foregoing and
mutual covenants, agreements and warranties herein contained, it is agreed that
Purchaser shall acquire from Seller all of the Acquired Assets (as defined
herein) and assume all of the Assumed Obligations (as defined herein) as of the
Closing Date (as defined herein) hereof upon the terms and conditions
hereinafter set forth. The parties agree as follows:
CERTAIN DEFINITIONS
Unless otherwise defined herein, terms used herein shall have the
meanings set forth below:
"AFFILIATE" of any person shall mean any corporation, proprietorship,
partnership or business entity which, directly or indirectly, owns or controls,
is under common ownership or control with, or is owned or controlled by, such
person, and any directors, officers, partners or 50% or more owners of such
person.
"AGREEMENT" shall mean this Asset Purchase Agreement, including all
Exhibits and the Disclosure Schedule hereto, as it may be amended from time to
time in accordance with its terms.
"AUTHORITY" means any governmental, regulatory or administrative body,
board, commission, agency, subdivision or authority, any court or judicial
authority, any public, private or industry regulatory authority, whether
foreign, national, Federal, state or local or otherwise, or any Person lawfully
empowered by any of the foregoing to enforce or seek compliance with any
Regulation.
"BULK SALES LAWS" means the Uniform Commercial Code Bulk Transfer
provisions of any jurisdiction relating to bulk sales which are applicable to
the sale of the Acquired Assets by Seller hereunder.
"BUSINESS" means the terminal block, connector and other business and
operations of Seller conducted by the Division at the date of this Agreement
and/or the Closing Date relating to the Acquired Assets and Assumed Obligations.
"CASH" means all cash, certificates of deposit, bank deposits and other
cash equivalents, together with all accrued but unpaid interest thereon.
"CLAIM" means any claim, lawsuit, demand, suit, inquiry made, hearing,
investigation, notice of a violation, litigation, proceeding or arbitration,
whether civil, criminal, administrative or otherwise.
"CLOSING" means the consummation of the transactions contemplated
herein on the Closing Date in accordance with ARTICLE VIII hereof.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"CONTRACT" means any agreement, contract, commitment, or other binding
arrangement or understanding, whether written or oral.
"CREDIT AGREEMENT" means the Credit Agreement, dated as of April 25,
1996 (as amended, modified or supplemented), among Seller, various of its
subsidiaries, the Banks party to the Credit Agreement and Paribas, as Agent.
"DISCLOSURE SCHEDULE" means the disclosure schedule of Seller attached
hereto.
"DIVISION" means the Seller with respect to its Beau Interconnect
Division.
"EMPLOYEES" has the meaning specified in SECTION 6.1 hereof.
"EMPLOYEE BENEFIT PLAN" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan (as defined in
Section 3(37) and 40001(a)(3) of ERISA), or (d)
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Employee Welfare Benefit Plan, in each case, which provides benefits to
Employees.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(2).
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in ERISA
Section 3(1).
"ENVIRONMENTAL CLAIM" shall mean any Claim by any Person or any
Authority alleging potential Liability or obligations (including potential
Liability or obligations for or requirement to incur investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or resulting
from (i) the presence, or release into the environment, of any Materials of
Environmental Concern at any location, whether or not owned or operated by
Seller, or (ii) circumstances forming the basis of any violation, or alleged
violation, or Liability under any Environmental, Health and Safety Requirement.
"ENVIRONMENTAL, HEALTH, AND SAFETY REQUIREMENTS" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and pollution or
protection of the environment (including ambient air, surface water, ground
water, land surface or subsurface strata), including without limitation all
those relating to the presence, use, production, generation, handling,
transportation, treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup of any
Materials of Environmental Concern as such requirements are enacted and in
effect on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" means each entity which is treated as a single
employer with Seller for purposes of Code Section 414.
"EXISTING INDEBTEDNESS" means all funded indebtedness of the Division
(including both the current and long-term portions of any long-term
indebtedness), including the IRB Indebtedness and all obligations under
capitalized leases.
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"FACILITY" means the buildings, structures, fixtures and improvements
comprising the headquarters and manufacturing facility of the Division situated
on the property leased by Seller under the Lease.
"FINANCIAL STATEMENTS" means the unaudited financial statements of the
Division, consisting of the balance sheet, together with related statements of
income and retained earnings and changes in cash flows, and the notes and
supplementary information thereto, certified by the chief financial officer of
Seller, as of and for each of the three years ended December 31, 1998 (the
"ANNUAL FINANCIAL STATEMENTS"), and as of for the nine-month period ended
September 30, 1999, consisting of the balance sheet at such date (the "SEPTEMBER
30 BALANCE SHEET") and, with respect to the nine-month period ended September
30, 1999, only the related statements of income for such period then ended,
copies of which are attached to the Disclosure Schedule.
"GAAP" shall mean the U.S. generally accepted accounting principles at
the time in effect, consistently applied by Seller.
"IRB INDEBTEDNESS" shall mean The Industrial Development Authority of
the State of New Hampshire Floating/Fixed Rate Industrial Facility Revenue Bonds
(V Land Corporation - 1985 Laconia Series) payable from payments made under the
Loan Agreement.
"KNOWLEDGE" of any Person (or any form of such term, such as "knows",
"known", etc.) as used in this Agreement with respect to a party's awareness of
the presence or absence of a fact, event or condition shall mean (i) the actual
knowledge of such Person after due inquiry, and in the case of Seller, the
actual knowledge after due inquiry of each officer or director of Seller, ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇ plus (ii) the knowledge that should be obtained by a
party conducting itself reasonably and with sound discretion in the management
of its own affairs.
"LEASE" means the Lease Agreement, dated September 15, 1987 by and
between the City of Laconia and Laconia Airport Authority, as lessors (the
"LESSORS") and Seller as Lessee.
"LEASED PROPERTY" shall mean the property leased to Seller pursuant to
the terms of the Lease.
"LIABILITY" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent,
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whether accrued or unaccrued, whether liquidated or unliquidated, and whether
due or to become due), including any liability or obligation for or with respect
to Taxes.
"LIEN" means any security interest, lien, charge, mortgage, deed,
assignment, pledge, hypothecation, encumbrance, easement, restriction or
interest of another Person or any kind or nature.
"LOAN AGREEMENT" means the Loan Agreement among The Industrial
Development Authority of the State of New Hampshire and Seller, dated as of May
1, 1985, as amended.
"LOSSES" shall mean all Liabilities, losses, costs, damages, penalties
or expenses (including, without limitation, reasonable attorneys' fees and
expenses, costs of investigation and litigation, court costs and amounts paid in
settlement (to the extent paid in accordance with the provisions of ARTICLE X
hereof)).
"MATERIAL ADVERSE CHANGE" means any developments or changes which would
have a Material Adverse Effect.
"MATERIAL ADVERSE EFFECT" with respect to any Person means any material
adverse effect on the business, results of operations or financial condition of
such Person, except any such effect resulting from or arising in connection with
(A) changes in economic, financial market, regulatory or political conditions
generally or in particular markets in which the Division operates the Business
or (B) any matters disclosed in the Disclosure Schedule. When used in relation
to the Division or the Business (each of which shall be deemed to include the
Acquired Assets, the Assumed Obligations, and the Real Property,) Material
Adverse Effect shall have a correlative meaning to the meaning stated in the
preceding sentence.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean any pollutants,
contaminants, toxic or hazardous or extremely hazardous substances, materials,
wastes, constituents, compounds, chemicals (including, without limitation,
petroleum or any by-products or fractions thereof, any form of natural gas,
lead, asbestos and asbestos-containing materials (ACM), polychlorinated
biphenyls (PCB) and PCB-containing equipment, radon and other radioactive
elements, ionizing radiation, electromagnetic field radiation and other
non-ionizing radiation, pesticides, defoliants, explosives, flammables,
corrosives and urea formaldehyde foam insulation)
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that are regulated by, or may now form the basis of Liability under, any
Environmental, Health and Safety Requirement.
"MODIFIED SEPTEMBER 30 BALANCE SHEET" has the meaning specified in
SECTION 2.2(A) hereof.
"ORDER" means any decree, order, writ, injunction, rule, judgment,
consent of or by a federal, state or foreign Authority.
"PERMITS" means any franchises, orders, registrations, certificates,
licenses, permits, variances, interim permits, permit applications, approvals or
other authorizations under any Regulation applicable to the Business or the Real
Property.
"PERSON" means any corporation, partnership, joint venture, limited
liability company, organization, entity, Authority or natural person.
"REAL PROPERTY" shall mean, collectively, the Leased Property and the
Facility.
"REGULATION" means any law, statute, regulation, ruling, rule, Order or
Permit, of, administered or enforced by or on behalf of any Authority, and the
certificate of incorporation and by-laws of Seller.
"SUBSIDIARY" means any entity with respect to which another specified
entity has the power to vote or direct the voting of sufficient securities or
interests to elect a majority of the board of directors or comparable governing
body.
"TAXES" means all taxes, charges, fees, duties, levies or other
assessments, including, without limitation, income, gross receipts, net
proceeds, ad valorem, turnover, real and personal property (tangible and
intangible), sales, use, franchise, excise, value added, license, payroll,
unemployment, environmental, customs duties, capital stock, disability, stamp,
leasing, lease, user, transfer, fuel, excess profits, occupational and interest
equalization, windfall profits, severance and employees' income withholding and
Social Security taxes imposed by the United States or any foreign country or by
any state, municipality, subdivision or instrumentality of the United States or
of any foreign country or by any other tax Authority, including all applicable
penalties and interest, and such term shall include any interest, penalties or
additions to tax attributable to such Taxes.
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"TAX RETURN" means any report, return or other information required to
be supplied to a taxing authority in connection with Taxes.
ARTICLE I
PURCHASE AND SALE; ASSUMPTION
OF CERTAIN LIABILITIES
1.1. ACQUIRED ASSETS. At the Closing, subject to the terms and
conditions set forth in this Agreement, Seller agrees to sell, convey, transfer,
assign and deliver to Purchaser, and Purchaser agrees to purchase, acquire and
take assignment and delivery of, all of the assets owned by Seller (wherever
located) constituting the Business, and all of Seller's right, title and
interest therein and thereto, except for those assets specifically excluded in
SECTION 1.3 (all of the assets sold, assigned, transferred and delivered to
Purchaser hereunder are referred to collectively herein as the "ACQUIRED
ASSETS"). The Acquired Assets shall include all of Seller's right, title and
interest in and to the following assets to the extent used exclusively in
connection with the business and operations of the Business:
(a) Any and all of the machinery, equipment, installations,
furniture, patterns, dies, tools, spare parts, purchased parts, packaging goods,
consigned goods, supplies, office equipment, computer hardware or software owned
or leased by Seller and used by Seller in the operation of the Business,
maintenance equipment and supplies, materials, items of building improvements,
and all other tangible personal property of every kind and description (the
"EQUIPMENT");
(b) All of the inventories, including all raw materials, work
in process and finished goods inventories, wherever located (the "INVENTORIES");
(c) All of the lift trucks, tractors, trailers, boom trucks,
automobiles and other vehicles (the "VEHICLES");
(d) All production records, product files, technical
information, designs, drawings, laboratory notebooks, confidential information,
price lists, marketing plans and strategies, sales records, product development
techniques or plans, customer lists and files (including customer credit and
collection information), details of client or consultant contracts, operational
methods, historical and financial records and files, and other proprietary
information, together with the following papers and
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records in Seller's care, custody or control or otherwise available to it; all
blueprints, building specifications and "as built" plans, all personnel and
labor relations records, all employee benefits and compensation plans and
records, all environmental control, monitoring and test records, all plant cost
records, all maintenance and production records and all plans and designs of
buildings, structures, fixtures and equipment (the "INFORMATION AND RECORDS");
(e) All United States and foreign patents, patent applications
(including the rights to any and all continuations, divisionals, reissues,
reexamination certificates and other derivative applications), patent licenses,
service names, service marks, trade names, trademarks, trade name and trademark
registrations (and applications therefor), copyrights and copyright
registrations (and applications therefor), trade secrets, inventions, processes,
designs, know-how and formulae, including all rights in respect of the name and
▇▇▇▇ "▇▇▇▇" and all derivatives thereof, and all goodwill associated with the
foregoing, rights under the foregoing, remedies against infringement of the
foregoing (including past infringement), and rights to protection of interests
in the foregoing under the laws of all jurisdictions (the "Intellectual
Property");
(f) Any assets (other than the Excluded Assets) reflected on
the September 30 Balance Sheet to the extent not disposed of in the ordinary
course of business (the "OTHER ASSETS");
(g) All goodwill;
(h) All accounts and Permits belonging to Seller relating
exclusively to the Acquired Assets or the Real Property or exclusively to the
operation by Seller of the Business;
(i) All real estate and real property interests, and all
fixtures and other improvements thereto, including the Facility;
(j) Any and all accounts receivable, trade receivables, notes
receivable and other receivables (the "ACCOUNTS RECEIVABLE");
(k) Except as provided in SECTION 1.3, all Claims, deposits,
prepayments, refunds, causes of action, choses in action, rights of recovery,
rights of set-off and rights of recoupment (excluding any such item relating to
the payment of Taxes); and
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(l) Permanent books of account of the Division (except that
Seller shall have the right to inspect and copy the same as may be reasonably
necessary after the Closing).
1.2. ASSIGNMENT OF CONTRACTS, LEASES AND OTHER ASSETS. As additional
consideration for the Acquired Assets, subject to the terms and conditions set
forth in this Agreement, Seller will assign and transfer to Purchaser, effective
as of the Closing Date, all of Seller's right, title and interest in and to, and
Purchaser will take assignment of, the following rights and interests that are
used exclusively in connection with or relate to the business and operation of
the Business (and all of the following shall be deemed included in the term
"ACQUIRED ASSETS" as used herein):
(a) All of the leases of real property (the "REAL PROPERTY
LEASES");
(b) All of the leases of equipment, machinery, installations,
vehicles and other personal property, except capitalized leases (it being
understood that the equipment and other personal property subject to such leases
are Acquired Assets for purposes of this Agreement) (the "EQUIPMENT AND OTHER
PERSONAL PROPERTY LEASES");
(c) All of the purchase orders, contracts and agreements for
the purchase of goods, materials and services, including all rights arising
under warranties and all rights to rebates, sales incentives and other payments
under oral or written agreements with suppliers and others (the "SELLER PURCHASE
ORDERS");
(d) All of the purchase orders, Contracts and agreements for
the sale of goods and services (the "CUSTOMER PURCHASE ORDERS");
(e) All of the other Contracts, policies (to the extent
relating solely to the Division or Business), indentures, instruments,
guaranties, other similar arrangements and rights thereunder relating to the
Business (the "OTHER CONTRACTS"); and
(f) All Permits.
1.3. EXCLUDED ASSETS. The following assets of Seller, as well as any
other assets of Seller not identified or described as being sold or assigned to
Purchaser in this Agreement, shall be retained by Seller and are not being sold
or assigned to Purchaser hereunder (all of the following are referred to
collectively as the "EXCLUDED ASSETS"):
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(a) Cash;
(b) The corporate charter, qualifications to conduct business
as a foreign corporation, arrangements with registered agents relating to
foreign qualifications, taxpayer and other identification numbers, corporate
minute book, seal stock register and other corporate and organizational
documents and records of Seller relating to the organization, maintenance and
existence of Seller as a corporation;
(c) Income tax records (except that Purchaser shall have the
right to inspect and copy the same as may be reasonably necessary in connection
with its own tax liability or tax liabilities arising from the transactions
contemplated hereby);
(d) Permits to the extent the same are not assignable;
(e) Rights of Seller under this Agreement (or under any other
agreement between the Seller, on the one hand, and the Purchaser or Parent, on
the other hand); and
(f) Any items relating to the payment of Taxes for periods
prior to the Closing, including refunds of Taxes paid by Seller prior to the
Closing.
1.4. ASSUMED OBLIGATIONS. Except as set forth in SECTION 1.5, Purchaser
shall, on the Closing Date, assume, and agree to pay, perform, fulfill and
discharge, all of the debts, liabilities, responsibilities and obligations of
the Business (whether known or unknown, whether asserted or unasserted, whether
absolute or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including, without limitation:
(a) All liabilities and obligations of the Business under the
agreements, contracts, leases, licenses, permits, and other arrangements
referred to in the definition of Acquired Assets;
(b) All liabilities and obligations of the Business under
outstanding product and service warranty obligations as of the Closing Date;
(c) Employment and other related obligations to the Employees
to the extent provided for in ARTICLE VI hereof; and
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(d) All liabilities and obligations of or relating to the
Business with respect to environmental matters, including without limitation
those arising under Environmental, Health, and Safety Requirements.
All of the liabilities and obligations of Seller and the Business
assumed pursuant to this SECTION 1.4 or elsewhere in this Agreement are
collectively referred to herein as the "ASSUMED OBLIGATIONS."
1.5. NO OTHER LIABILITIES ASSUMED. Anything in this Agreement to the
contrary notwithstanding, but subject to ARTICLE VI hereof (to the extent
applicable), neither Purchaser nor any of its affiliates shall assume, and shall
not be deemed to have assumed, any debt, claim, obligation or other liability of
Seller or any of its affiliates whatsoever other than as specifically set forth
in SECTION 1.4 including, but not limited to:
(a) any Liability of Seller for unpaid Taxes (deferred or
currently payable) or for income, transfer, sales, use or any other Taxes of
Seller arising as a result of the consummation of the transactions contemplated
hereby, or for any Liability of the Seller to any Authority on account of
amounts required to be withheld or collected from salaries or wages of Persons
in its employ under any income tax, social security, medicare or similar law
applicable to such Persons ("employment taxes") (other than (i) employment and
sales taxes which have been collected by Seller after the date of the September
30 Balance Sheet and prior to the Closing Date in accordance with applicable law
and are not then due and payable and (ii) unpaid real estate Taxes through the
Closing Date which are not then due and payable, in each case to the extent
reflected on the Closing Balance Sheet and which, in each case, shall be deemed
to be Assumed Obligations for purposes of this Agreement and shall be assumed
and paid by the Purchaser).
(b) Brokers or finders' fees, or other liability of Seller for
costs and expenses (including accounting and legal fees and expenses and all
fees and expenses payable to ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇) incurred in
connection with this Agreement or the consummation of the transactions
contemplated hereby;
(c) Liabilities or obligations of Seller under this Agreement
(or under any other agreement between Seller on the one hand and the Purchaser
on the other hand entered into on or after the date of this Agreement);
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(d) Liabilities or obligations in respect of Seller's
indebtedness for borrowed money (including principal, interest, prepayment or
other penalty or premium incurred with respect to the IRB Indebtedness and
capitalized lease obligations);
(e) any obligation of Seller to indemnify any Person by reason
of the fact that such Person was a director, officer, employee, or agent of
Seller or was serving at the request of any such entity as a partner, trustee,
director, officer, employee, or agent of another entity (whether such
indemnification is for judgments, damages, penalties, fines, costs, amounts paid
in settlement, losses, expenses or otherwise and whether such indemnification is
pursuant to any statute, charter document, bylaw, agreement or otherwise);
(f) any Liability or obligation of Seller under the Employee
Benefit Plans (other than any Liability or obligation expressly assumed by
Purchaser under ARTICLE VI hereof, but only to the extent reflected on the
Closing Balance Sheet, which shall be deemed Assumed Obligations for purposes of
this Agreement);
(g) any Liability or obligation of Seller to the officers,
directors, stockholders or Affiliates of Seller;
(h) any Liability or obligation (including any termination
Liability) of Seller with respect to any lease, contract, commitment,
understanding, or agreement not listed in SECTION 3.12 of the Disclosure
Schedule to the extent required to be disclosed by the terms of SECTION 3.12
hereof;
(i) any Liability or obligation relating to assets of Seller
other than the Acquired Assets;
(j) any Liability or obligation of Seller imposed by the
Worker Adjustment Retraining and Notification Act in connection with the notice
or failure to provide notice of a plant closing, mass layoff or termination of
employees prior to the Closing;
(k) any Liability of the Division, the Business or any of the
Acquired Assets in respect of intercompany indebtedness or intercompany accounts
payable; and
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(l) any Liability of the Division, the Business or any of the
Acquired Assets in respect of the employment discrimination matters disclosed in
SECTION 3.15 of the Disclosure Schedule.
The assumption by Purchaser of the Assumed Obligations shall not in any
way expand the rights or remedies of any third party against Purchaser or Seller
as compared to the rights and remedies which such third party would have had
against any such party had Purchaser not assumed such liabilities. Without
limiting the generality of the foregoing, the assumption by Purchaser of the
Assumed Obligations shall not create any third party beneficiary rights in favor
of any third party. Seller shall pay and discharge when due all of its
Obligations that Purchaser has not specifically agreed to assume pursuant to
SECTION 1.4 hereof.
The liabilities and obligations of Seller and the Business specified
above in this SECTION 1.5 are referred to herein as the "EXCLUDED LIABILITIES."
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1. PAYMENT OF PURCHASE PRICE. At the Closing, Purchaser agrees to pay
to Seller $31,800,000.00 for the Acquired Assets and to assume the Assumed
Obligations. Such amount shall be payable by wire transfer of immediately
available funds to an account designated by Seller. Such $31,800,000.00, as
adjusted by the Purchase Price Adjustment pursuant to SECTION 2.2 hereof, is
referred to herein as the "Purchase Price."
2.2. CLOSING BALANCE SHEET; PURCHASE PRICE ADJUSTMENT. (a) As promptly
as practicable but in any event within 60 days following the Closing Date,
Seller shall prepare, or cause to be prepared, and deliver to Purchaser an
unaudited pro forma balance sheet of the Division as of the close of business on
the day immediately preceding the Closing Date (the "CLOSING BALANCE SHEET").
There shall be attached to the Closing Balance Sheet an annex setting forth in
reasonable detail Seller's computation of the Purchase Price Adjustment (as
defined in SECTION 2.2(D)). For purposes of calculating the Purchase Price
Adjustment, Purchaser and Seller have prepared the modified September 30 Balance
Sheet attached hereto (the "Modified September 30 Balance Sheet") included in
Section 2.2(a) of the Disclosure Schedule.
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(b) The Closing Balance Sheet shall be prepared in accordance
with GAAP, as modified by the principles utilized to prepare the Modified
September 30 Balance Sheet, determined as of the close of business on the day
immediately preceding the Closing Date and applied on a consistent basis (it
being acknowledged, for the purposes of clarity, that reserves shall be created,
modified or reversed only in accordance with Seller's past policies and
practices); except that (i) no Excluded Asset (including, without limitation,
Cash) shall be included on the Closing Balance Sheet; (ii) no Excluded Liability
or reserve therefor (including, without limitation, all Existing Indebtedness
not assumed by Purchaser) shall be included on the Closing Balance Sheet; (iii)
no deferred income tax asset or income tax liability shall be included on the
Closing Balance Sheet; (iv) no income tax asset or income tax liability shall be
included on the Closing Balance Sheet; (v) no allocation of corporate expenses
shall be included on the Closing Balance Sheet; (vi) no property, plant or
equipment shall be revalued; (vii) goodwill shall not be revalued; (viii) the
allowance for doubtful accounts receivable on the Closing Balance Sheet shall be
the greater of $64,405 or 2.3% of the gross accounts receivable outstanding;
(ix) the reserve for customer product returns on the Closing Balance Sheet shall
be the greater of $43,083 or 1.5% of gross accounts receivable outstanding and
(x) no Liability or reserve therefor with respect to employee compensation or
benefit matters (including under any Employee Benefit Plan) shall be accrued or
reflected on the Closing Balance Sheet except for accruals in the ordinary
course of business consistent with past practices. The Closing Balance Sheet
shall include appropriate accruals through the Closing Date for all Assumed
Obligations.
(c) The Closing Balance Sheet delivered by Seller to Purchaser
and the computation of the Purchase Price Adjustment annexed thereto shall be
conclusive and binding upon the parties unless Purchaser, within 30 days after
the delivery to Purchaser of the Closing Balance Sheet, notifies Seller in
writing that Purchaser disputes any of the amounts set forth therein, specifying
the nature of the dispute and the basis therefor. The parties shall in good
faith attempt to resolve any dispute, in which event the Closing Balance Sheet
and the computation of the Purchase Price Adjustment, as amended to the extent
necessary to reflect the resolution of the dispute, shall be conclusive and
binding upon the parties. If the parties do not reach agreement resolving all of
the matters in dispute within 30 days after notice is given by Seller to
Purchaser pursuant to the second preceding sentence, the parties shall submit
the remaining matters in dispute to the department specializing in dispute
resolution of the New York office
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of KPMG LLP for resolution; provided, that if KPMG LLP has had a material
relationship with any of Purchaser, Parent or Seller or any of their respective
affiliates within the two years preceding the appointment or KPMG LLP refuses to
accept such appointment, the parties shall submit the remaining matters in
dispute to such other nationally recognized independent accounting firm that is
mutually agreeable to the parties, which firm shall not have had a material
relationship with any of Purchaser, Parent or Seller or their respective
affiliates within the two years preceding the appointment (such accounting firm,
the "ARBITER"), for resolution. If the parties cannot agree on the selection of
such an independent accounting firm to act as Arbiter, the parties shall request
the American Arbitration Association to appoint such a firm, and such
appointment shall be conclusive and binding upon the parties. Promptly, but no
later than 30 days after its acceptance of its appointment as Arbiter, the
Arbiter shall determine, based solely on presentations by Purchaser and Seller,
and not by independent review, only those issues in dispute and shall render a
written report as to the dispute and the resulting computation of the Closing
Balance Sheet and the Purchase Price Adjustment, if any, which shall be
conclusive and binding upon the parties. In resolving any disputed item, the
Arbiter (x) shall make its determination in accordance with the provisions of
this SECTION 2.2 and the other provisions of this Agreement to the extent
expressly relating to this SECTION 2.2 and the matters in dispute (provided
that, whether or not Purchaser has an indemnification right hereunder with
respect to any matter shall not be taken into account for purposes of the
preparation of the Closing Balance Sheet or any dispute in connection
therewith), (y) shall be bound by the provisions of paragraph (b) of this
SECTION 2.2, and (z) may not assign a value to any item greater than the
greatest value for such item claimed by either party or less than the smallest
value for such item claimed by either party. The fees, costs and expenses of the
Arbiter (i) shall be borne by Purchaser in the proportion that the aggregate
dollar amount of such disputed items so submitted that are unsuccessfully
disputed by Purchaser (as finally determined by the Arbiter) bears to the
aggregate dollar amount of such items so submitted and (ii) shall be borne by
Seller in the proportion that the aggregate dollar amount of such disputed items
so submitted that are successfully disputed by Purchaser (as finally determined
by the Arbiter) bears to the aggregate dollar amount of such items so submitted.
Parent and Purchaser, on the one hand, and Seller, on the other hand, each shall
make available to the other (upon the request of the other) their respective
work papers generated in connection with the preparation or review of the
Closing Balance Sheet.
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(d) As used herein, (i) the term "FINAL CLOSING BALANCE SHEET"
shall mean the Closing Balance Sheet which has become conclusive and binding
upon the parties pursuant to paragraph (c) of this SECTION 2.2, (ii) the term
"CLOSING BOOK VALUE" shall mean the amount obtained by subtracting the Assumed
Obligations, as set forth in the Final Closing Balance Sheet, from the Acquired
Assets, as set forth in the Final Closing Balance Sheet (which shall be the
amount corresponding to the "Division Equity" on the Modified September 30
Balance Sheet), and (iii) the term "TARGET BOOK VALUE" shall mean $8,007,877.00,
being the "Division Equity" as set forth in Modified September 30 Balance Sheet.
The difference between the Target Book Value and the Closing Book Value shall be
the "PURCHASE PRICE ADJUSTMENT." If the Target Book Value exceeds the Closing
Book Value, Seller shall pay to Purchaser an amount equal to the Purchase Price
Adjustment in accordance with the provisions of paragraph (e) of this SECTION
2.2. If the Closing Book Value exceeds the Target Book Value, Purchaser shall
pay to Seller an amount equal to the Purchase Price Adjustment in accordance
with the provisions of paragraph (e) of this SECTION 2.2.
(e) The amount of any Purchase Price Adjustment shall bear
interest at an annual rate equal to the reference rate from time to time of The
Chase Manhattan Bank N.A. from and including the Closing Date to, but not
including, the date of payment. Any amount payable as Purchase Price Adjustment
(plus interest determined pursuant to the immediately preceding sentence) shall
be paid by wire transfer of immediately available funds to an account designated
in writing by Seller or Purchaser, as applicable. Such payment shall be made on
the third business day following (i) the last day on which Purchaser may,
pursuant to the first sentence of paragraph (c) of this SECTION 2.2, notify
Seller that it disputes any of the amounts set forth in the Closing Balance
Sheet, if Purchaser shall not notify Seller of any dispute, or such earlier date
as Purchaser shall advise Seller of the absence of any dispute, or (ii) the date
mutual agreement is reached as to the amount of the Purchase Price Adjustment,
if any, in the event of a dispute that is settled by the parties without resort
to the Arbiter, or (iii) the receipt of the report of the Arbiter in the event
of a dispute which is settled by the Arbiter, as applicable.
(f) Seller shall provide Purchaser and its accountants
reasonable access to the books and records of the Division and to any other
information, including work papers of its accountants, to the extent reasonably
necessary for the Purchaser to review the Closing Balance Sheet. Purchaser shall
provide Seller and its accountants with reasonable
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access to the books, records, facilities and personnel of the Business and to
any other information, including work papers of its accountants, to the extent
reasonably necessary for Seller in connection with the preparation of the
Closing Balance Sheet and in connection with any objections to the Closing
Balance Sheet raised by Purchaser.
(g) Each of the parties hereto shall have the right to offset
amounts then owing or subject to an outstanding Claim in respect of the other
party's indemnification obligations pursuant to ARTICLE X hereof (subject in any
event to the application of any deductible or cap with respect to such
indemnification) against any amount due in respect of the Purchase Price
Adjustment. Any setoff made in respect of an outstanding Claim, however, shall
be subject to reversal in accordance with the final resolution of the relevant
outstanding Claim, and, promptly after such final resolution, the Seller shall
pay to the Purchaser, or the Purchaser shall pay to the Seller, as applicable,
an amount such that, after any effect thereto, the total payments made in
respect of the Purchase Price Adjustment properly reflect such final resolution
and the accrued interest on the amount of the setoff computed from Closing Date
at the rate provided in SECTION 2.2(E).
2.3. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated in the manner described in SECTION 2.3 of the Disclosure Schedule, it
being understood that, on or prior to the 15th business day after the Closing
Balance Sheet is finally determined, the Parent and the Purchaser shall
establish the values applicable to the Acquired Assets in a reasonably
supportable manner consistent with Section 2.3 of the Disclosure Schedule and
provide written notice to the Seller of the values so established. Any
adjustment to the Purchase Price pursuant to SECTION 2.2 hereof or otherwise
shall be allocated in a manner consistent with SECTION 2.3 of the Disclosure
Schedule and as required by the relevant tax laws. Seller, Parent and Purchaser
further agree to file all income tax returns or reports, including, without
limitation, IRS Form 8594, for their respective taxable years in which the
Closing occurs and to reflect the allocation of Purchase Price described in this
SECTION 2.3 on any such return or report and, unless required by the relevant
tax laws, agree not to take any position inconsistent therewith before any
governmental agency charged with the collection of any Taxes or in any judicial
proceeding.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to each of Purchaser and Parent as of
the date hereof and as of the Closing Date as set forth below. The information
disclosed in any section of the Disclosure Schedule attached hereto shall be
deemed to relate solely to the section of this ARTICLE III to which such section
of the Disclosure Schedule relates and shall not be deemed made for other
sections of this ARTICLE III to which such disclosure may apply unless (1) it is
readily apparent that such information is clearly applicable to another section
of this Article III or (2) such disclosure is cross-referenced in the
Schedule(s) relating to such other section(s), and, in each such case, only to
the extent that the applicable information or risk is described.
3.1. DUE INCORPORATION, ETC. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Seller is duly
qualified to transact business as a foreign corporation and in good standing in
the State of New Hampshire and each other state in which the nature of the
Business requires such qualification, a list of which is set forth in SECTION
3.1 of the Disclosure Schedule.
3.2. CORPORATE AUTHORITY; ENFORCEABILITY; CONFLICTS. (a) The execution,
delivery and performance by Seller of this Agreement and all agreements,
certificates and other instruments executed and delivered pursuant hereto by
Seller ("SELLER'S ANCILLARY DOCUMENTS"), and the consummation by Seller of the
transactions contemplated hereby and thereby, have been duly authorized by all
necessary corporate action on the part of Seller. Each of this Agreement and
each of Seller's Ancillary Documents has been, or will have been, duly and
validly executed and delivered by Seller, and constitutes or will constitute,
the legal, valid and binding obligation of Seller, enforceable in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws from time to
time in effect which affect creditors' rights generally, and by legal and
equitable limitations on the availability of specific remedies.
(b) Except as specified in SECTION 3.2 of the Disclosure
Schedule or as would not reasonably be expected to have a Material
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Adverse Effect on the Business or on the ability of Seller to consummate the
transactions contemplated hereby, the execution, delivery and performance of
this Agreement and all of Seller's Ancillary Documents by Seller will not:
(i) violate any Order applicable to the interest of
Seller in any of the Acquired Assets, the Assumed Obligations
or the Division;
(ii) violate any Regulation binding on Seller, any of
the Acquired Assets, the Assumed Obligations or the Division;
(iii) violate or conflict with, or result in a breach
of, or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a
default) under, or give rise to any event creating rights of
acceleration, termination, modification or cancellation under
any material Contract to which the Division is a party, or by
which the Division or any of the Acquired Assets or the
Assumed Obligations are bound; or
(iv) result in the creation of any Lien upon the
Acquired Assets; or
(v) violate, conflict with or result in any breach of
any provision of the certificate of incorporation or bylaws
(or comparable organizational documents) of Seller;
(c) SECTION 3.2 of the Disclosure Schedule sets forth each
consent, approval, permit, act, amendment, novation or waiver of any third party
(each a "CONSENT") necessary to prevent the occurrence of a violation, conflict,
breach, default, with or without due notice or lapse of time or both, or event
creating rights of acceleration, termination, modification or cancellation by
reason of the execution, delivery and performance of this Agreement and Seller's
Ancillary Documents by Seller, except for Consents which, if not obtained, would
not, individually or in the aggregate, result in a Material Adverse Effect on
the Division, or materially adversely affect the consummation of the
transactions contemplated hereby or the conduct of the Business after the
Closing. Seller agrees to use commercially
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reasonable efforts to obtain such Consents as provided in SECTION 5.1 hereof,
provided that Seller shall obtain the consents specified in paragraphs (a) - (c)
of SECTION 3.2 of the Disclosure Schedule satisfactory in form and substance to
the Purchaser.
3.3. PERMITS; COMPLIANCE WITH LAW; CONSENTS. The Division holds all of
the Permits described in SECTION 3.3 of the Disclosure Schedule, and no other
Permits are currently necessary for the lawful operation of the Division or the
use of the Real Property, except for those the absence of which would not
reasonably be expected to have a Material Adverse Effect on the Division. Seller
is not in violation of any Regulation to which the Division, Acquired Assets or
Assumed Obligations are subject, except for such violations as would not
reasonably be expected to have a Material Adverse Effect on the Division. Except
as set forth in the Disclosure Schedule and for the applicable requirements of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), no notice to, filing with, authorization of, exemption by, or Consent of
any Authority is required for Seller to consummate the transactions contemplated
hereby or by the Seller's Ancillary Documents.
3.4. FINANCIAL STATEMENTS AND CONDITION. Seller has delivered to
Purchaser copies of the Financial Statements, true and correct copies of which
are attached to the Disclosure Schedule. The Financial Statements, including the
notes thereto, (i) were prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, (ii) present fairly the financial
position, results of operations and changes in cash flows of the Division as of
such dates and for the periods then ended (subject, in the case of unaudited
interim Financial Statements, to normal year-end audit adjustments consistent
with prior periods), (iii) have been derived from the books and records of
account of Seller, and (iv) can be reconciled with the financial statements and
the financial records maintained and the accounting methods applied by Seller
for federal income tax purposes.
3.5. CERTAIN CHANGES. Since December 31, 1998, Seller has conducted its
business only in the ordinary and usual course and, except as set forth in
SECTION 3.5 of the Disclosure Schedule, there has been no Material Adverse
Change in the assets, properties, business, operations, prospects, customer,
supplier or employee relations, net income or condition (financial or otherwise)
of the Division taken as a whole or in the ability of Seller to perform this
Agreement, the Ancillary Documents and the transactions contemplated hereby and
thereby, and there is no event,
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condition, circumstance or prospective development which, to the Seller's
knowledge, threatens to cause such a Material Adverse Change. Without limiting
the generality of the foregoing, except as specified in SECTION 3.5 of the
Disclosure Schedule, since December 31, 1998, there has not been (i) any
Material Adverse Change with respect to the Division, (ii) any material loss or
damage (whether or not covered by insurance) to any of the Acquired Assets,
which materially affects or impairs the ability of Seller to conduct the
business of the Division, or any other event or condition of any character which
has materially and adversely affected the business or operation of the Division,
(iii) any contract or other transaction entered into by Seller relating to, or
otherwise affecting in any way, the Division or the operation thereof, other
than in the ordinary course of business, (iv) any sale or transfer of the
Acquired Assets, except items of the Inventories which have been sold in the
ordinary course of business, or any cancellation of any debts or claims of
Seller, except in the ordinary course of business consistent with past
practices, (v) any material changes in the terms of any instruments, accounts,
notes, Contracts, or other instruments that are Assumed Obligations, except in
the ordinary course of business (vi) any changes in the accounting or tax
systems, policies or practices of Seller, (vii) any material waiver by Seller of
any rights which have any value, except in the ordinary course of business
consistent with past practices or (viii) any transactions out of the ordinary
course of business with any of Seller's affiliates, (ix) any Liability or
obligation (whether directly or by way of guarantee or otherwise) incurred by
the Division other than in the ordinary course of business consistent with past
practices, or any obligation to repay prematurely any borrowed money, (x) any
material change in the credit policies or practices of the Division, (xi) any
increases in the rate or terms of compensation (including termination and
severance pay) payable or to become payable by the Division to directors,
officers or employees, or increases in the rate or terms of any bonus,
insurance, pension or other employee benefit plan, program or arrangement made
to, for or with any such directors, officers or employees, except increases
occurring in the ordinary course of business consistent with past practice or as
required by applicable law, or any new or amended employment, severance or
termination agreement with any such Person, (xii) any change to any of its
business policies, including advertising, licensing, investment, marketing,
pricing, purchasing, production, personnel, sales, returns, budget and product
acquisition policies, in each case, other than in the ordinary course of
business and where such change, singly or together with other such changes, has
not had a Material Adverse Effect on the Division, (xiii) any receipt of any
advances or prepayments on or prior to the Closing Date with
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respect to products to be delivered or services to be performed by Purchaser
after the Closing Date, (xiv) engaged in any other transaction other than in the
ordinary course of business, or (xv) agreed, in writing or orally, to do any of
the foregoing.
3.6. TITLE TO ACQUIRED ASSETS. Except for leased assets, Seller has
full, unconditional, good and marketable title to the personal property and real
property included in the Acquired Assets, free and clear of any Lien, except as
referred to SECTION 3.7 hereof and as disclosed in SECTION 3.6 of the Disclosure
Schedule and except for minor Liens, defects or other restrictions (other than
security interests) which do not, individually or in the aggregate, materially
detract from the value or materially interfere with the present use of such
property or the Leased Property (each such minor Lien, defect or other
restriction, a "PERMITTED LIEN"). All financing statements or similar
instruments filed by any party with respect to the Acquired Assets are specified
in SECTION 3.6 of the Disclosure Schedule. Except for such financing statements,
there are not any Liens, defects in title or other restrictions to which the
real or personal property included in the Acquired Assets is subject except for
Permitted Liens. At and as of the Closing, Seller will convey the Acquired
Assets to Purchaser by ▇▇▇▇▇, ▇▇▇▇ of sale, certificates of title and
instruments of assignment and transfer effective to vest in Purchaser, and
Purchaser will have, good title to all of the Acquired Assets, free and clear of
all Liens, except for Permitted Liens.
3.7. REAL PROPERTY LEASES. SECTION 3.7 of the Disclosure Schedule lists
all leases pursuant to which Seller holds any real property used in connection
with the Division. Other than the Facility, Seller does not own any real
property which is used in the operation of the Business, and no other real
property is included within the Acquired Assets. The Leased Property is leased
by Seller pursuant to the Lease, a true and correct copy of which is attached to
the Disclosure Schedule. The Lease provides that all improvements constructed on
the Leased Property, including the Facility and all fixtures, equipment,
personal property and appurtenances thereto, shall be the property of Seller and
shall be removed by Seller at the termination of the Lease unless otherwise
agreed by the Lessors. The Lease is in full force and effect and is valid,
binding and enforceable with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws from time to time in effect which affect creditors' rights
generally, and by legal and equitable limitations on the availability of
specific remedies. Except to the extent of any required Consent to the
assignment of the Lease to Purchaser, there exists no default by Seller or event
or condition which,
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with notice or lapse of time or both, would constitute a default by Seller under
the Lease. There exists no default by Lessors or, to Seller's knowledge, any
event or condition which, with notice or lapse of time or both, would constitute
a default by Lessors under the Lease. The Lease has not been amended or
modified, whether orally or in writing. Seller has not assigned the Lease or any
of its right, title or interest thereunder.
3.8. EQUIPMENT. Seller has previously provided to Purchaser its most
recent regularly generated list of all of the Equipment. The Equipment and Other
Personal Property Leases listed in SECTION 3.8 of the Disclosure Schedule
includes all leases by the Division of any item of personal property used in
connection with the business and operation of the Division. The majority of the
items of machinery, equipment and other tangible assets included among the
Acquired Assets has been in use for more than ten years and, giving due
consideration to the age of such items, is in good operating condition,
reasonable wear and tear excepted, and has been maintained and repaired on a
regular basis so as to preserve its utility and value. The equipment included in
the Acquired Assets (whether owned or leased by Seller) is adequate and
sufficient to conduct the Business as presently conducted. Except as set forth
in SECTION 3.6 of the Disclosure Schedule, Seller is not aware of (i) any
Acquired Assets which require substantial repair or replacement, (ii) any
manufacturer, supplier or servicer of any Acquired Assets which has terminated
its operations and for which there is no readily available comparable
replacement; or (iii) any other facts or circumstances which would adversely
affect Purchaser's ability to obtain repair or replacement products, parts or
services with respect to any Acquired Assets after the Closing. Seller has
delivered to Purchaser true, correct and complete copies of all Equipment and
Other Personal Property Leases.
3.9. INTELLECTUAL PROPERTY. SECTION 3.9 of the Disclosure Schedule is
an accurate and complete list of all of the United States and foreign patents,
patent applications, patent licenses, service names, service marks, trade names,
trademarks, trade name and trademark registrations (and applications therefor),
copyrights and copyright registrations (and applications therefor) used in
connection with or relating to the business and operation of the Business. All
of the Intellectual Property is owned by Seller free and clear of all
encumbrances or has been duly licensed for use by Seller except as set forth in
SECTION 3.9 of the Disclosure Schedule. Except as set forth in SECTION 3.9 of
the Disclosure Schedule, none of the Intellectual Property has been or is the
subject of any pending adverse Claim, or, to the Seller's knowledge, any
threatened Claim of infringement
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nor, to the Seller's knowledge, is there any basis for such a Claim. Except as
described in SECTION 3.9 of the Disclosure Schedule, the Division has not
received any notice contesting its right to use any Intellectual Property now
used by it in connection with the Business or the operation thereof. Except as
set forth in SECTION 3.9 of the Disclosure Schedule, Seller has not granted any
license in respect of any Intellectual Property. The Intellectual Property
rights constitute all of the proprietary rights that are used in or necessary
for the conduct of the Business as currently being conducted, and Seller is not
subject to any judgment, order, writ, injunction or decree of any Authority, or
has entered into or is a party to any contract which restricts or impairs the
use of any such Intellectual Property. Notwithstanding any limitations or
qualifications of, or exceptions to (whether in the Disclosure Schedule attached
hereto or otherwise) any other representation and warranty contained in this
Article III, (i) there are no Liabilities or obligations of Seller or its
affiliates of any kind whatsoever (whether accrued or not and whether absolute
or contingent, known or unknown or due or to become due) with respect to Claims
relating to the validity of, or the Division's ownership of or right to use, the
Intellectual Property or alleged infringement by the Division of the
intellectual property of any other Person; (ii) there is no valid basis for the
assertion of any such Liabilities or obligations, whether or not accrued and
whether or not absolute or contingent, known or unknown or due or to become due;
and (iii) there is no existing condition, situation or set of circumstances
which will result in such a Liability or obligation, except in the case of items
(i), (ii) and (iii) of this sentence, for such Liabilities or obligations which
would not have, individually or in the aggregate, a Material Adverse Effect on
the Business. Except as described in SECTION 3.9 of the Disclosure Schedule,
Seller does not pay to or receive any royalty from any Person under any of the
Intellectual Property. Assuming the execution and delivery and, where
applicable, recording of assignments in proper form, all rights of the Division
in and to the Intellectual Property will be unaffected by the transactions
contemplated by this Agreement. The Intellectual Property rights are valid and
enforceable and no relevant application, patent or registration relating thereto
has (except as indicated in SECTION 3.9 of the Disclosure Schedule) lapsed,
expired, or been abandoned or cancelled or is the subject of cancellation or
other adversarial proceeding and (except as indicated in SECTION 3.9 of the
Disclosure Schedule) all pending applications are in good standing, subject to
in each case, to such exceptions would not have, individually or in the
aggregate, a Material Adverse Effect on the Business. Seller has complied with
its contractual obligations
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relating to the protection of the Intellectual Property used pursuant to
licenses.
3.10. CUSTOMER AND SUPPLIER LISTS. (a) SECTION 3.10 of the Disclosure
Schedule contains a true and complete list of all customers and accounts of
Seller in respect of the Division which produced gross sales in excess of
$50,000 during the year ended December 31, 1998 or the nine months ended
September 30, 1999 and (b) all suppliers of the Division which furnished 1% or
more of all products or supplies furnished to the Division during the year ended
December 31, 1998 or the nine months ended September 30, 1999.
(b) During the twelve months preceding the date hereof and the
twelve months prior to the Closing Date (as applicable), Seller has not done
anything to materially adversely affect the Division's relationship with any
such customers or suppliers, and no such customer or supplier has terminated or
changed significantly its relationship with the Division. No customer or
supplier of the Division has threatened to terminate or change significantly its
relationship with the Division on or after the Closing Date, nor, to the
Seller's knowledge, will the transactions contemplated by this Agreement
adversely affect the relationship of the Division with any of its customers or
suppliers. Seller has not granted or received from any customer, supplier or any
other Person (collectively, "OTHER PARTIES") more favorable terms or conditions
with respect to the operation of the Business based on the payment of any funds
or transfer of any asset of Seller or any Related Party, directly or indirectly,
to Other Parties or employees, agents or Affiliates of Other Parties or based on
the relationship of Other Parties or employees, agents or Affiliates of Other
Parties to Seller or any Related Party. Set forth on SECTION 3.10 of the
Disclosure Schedule is a description of any credit or other sales terms provided
by Seller or Other Parties in connection with sales of products or services by
the Division. Seller has not granted any credit or other sales terms to
customers or others inconsistent with its prior practices or general industry
practice.
3.11 ABSENCE OF UNDISCLOSED LIABILITIES. Notwithstanding any
limitations or qualifications of, or exceptions to, (whether in the Disclosure
Schedule or otherwise) any other representation and warranty contained in this
ARTICLE III, there are no Liabilities, commitments or obligations of the
Division of any kind whatsoever, and, to Seller's knowledge, there is no valid
basis for the assertion of any such Liabilities, commitments or obligations,
and, to Seller's knowledge, there is no existing condition, situation or set of
circumstances which is reasonably likely to result in such
- 25 -
a Liability, commitment or obligation, other than (a) liabilities and
obligations to the extent and in the amounts set forth on the September 30
Balance Sheet (none of which results from, arises out of, relates to, is in the
nature of or was caused by any breach of contract, breach of warranty, tort,
infringement or violation of law), (b) additional accruals of liabilities and
obligations incurred, in each case, in the ordinary course of business
consistent with past practices subsequent to the date of the September 30
Balance Sheet and prior to the date hereof or the Closing Date (as applicable),
provided that none of such additional accruals results from, arises out of,
relates to, is in the nature of, or was caused by any breach of contract, breach
of warranty, tort, infringement or violation of law or relates to indebtedness
for borrowed money or inter-company debt or debt owed to Affiliates, (c)
obligations in respect of the performance of Contracts, Permits or other items
containing continuing obligations specified in the Disclosure Schedule (or not
required, pursuant to the provisions of this Agreement, to be so specified),
none of which results from, arises out of, relates to, is in the nature of, or
was caused by any breach of contract, breach of warranty, tort, infringement or
violation of law or relates to indebtedness for borrowed money or inter-company
debt or debt owed to Affiliates and (d) the Excluded Liabilities.
3.12. CONTRACTS. SECTION 3.12 of the Disclosure Schedule contains a
list of all Contracts (other than purchase or sales orders made in the ordinary
course of business consistent with the past practices of the Division) as
provided below relating to the Division, the Acquired Assets and the Assumed
Obligations the performance of which will involve consideration in excess of
$25,000. Seller has delivered to Purchaser true and correct copies of each
listed document and a written description of each oral Contract so listed.
SECTION 3.12 of the Disclosure Schedule includes all the Contracts the
performance of which will involve consideration in excess of $25,000 and
includes the following types to which the Division is a party or by which it is
bound relating to the Business or the operation thereof, or to which any of the
Acquired Assets or Assumed Obligations is subject: (a) any pension, retirement,
deferred compensation, profit sharing, incentive compensation, bonus, stock
purchase, stock option, welfare, hospitalization or insurance plan or
arrangement or any vacation pay or severance pay or any other employee benefit
arrangement for its officers, employees, consultants or agents whether pursuant
to a Contract or pursuant to custom or informal understanding; (b) all Contracts
of any kind with any executive, director, or stockholder of Seller, relating to
present or future compensation or other benefits available to such person or
otherwise; (c) any contract,
- 26 -
purchase order or other arrangement of any kind with any person or entity
affiliated with or controlled by (or with power to control) any officer,
director, employee or stockholder; (d) any Contract with a broker, sales agency,
advertising agency or other person engaged in sales, distributing or promotional
activities; (e) a summary schedule of all Customer Purchase Orders and Seller
Purchase Orders; (f) any commitment or arrangement pursuant to which Seller has
made or will make loans or advances, or has or will have incurred debts or
become a guarantor or surety or pledged its credit on or otherwise become
responsible with respect to any undertaking of another (except for the
negotiation or collection of negotiable instruments in transactions in the
ordinary course of business); (g) any indentures, credit agreements, loan
agreements, notes, mortgages, security agreements, leases of real property or
material leases of personal property and agreements for financing; (h) any
Contract involving a partnership, joint venture or other cooperative
undertaking, or involving any restrictions of the geographical area of
operations or scope or type of business of the Seller; (i) all Contracts with
sales representatives, distributors and dealers; (j) any power of attorney or
agency agreement or arrangement with any party pursuant to which such party is
granted the authority to act for or on behalf of the Division; (k) any property,
casualty and other forms of insurance; (l) Contracts under which the
requirements for performance extend beyond 60 days from the date of this
Agreement; (m) all bank accounts of any type of Seller; and (n) all other
contracts not made in the ordinary course of business which are to be performed
at or after the date of this Agreement.
3.13. EMPLOYEE BENEFIT PLANS. SECTION 3.13 of the Disclosure Schedule
lists each Employee Benefit Plan that the Division maintains or to which the
Division contributes.
(a) To the knowledge of Seller, each such Employee Benefit
Plan (and each related trust, insurance contract, or fund) complies in form and
in operation in all respects with the applicable requirements of ERISA and the
Code, except where the failure to comply would not reasonably be expected to
have a Material Adverse Effect on the Division.
(b) All contributions (including all employer contributions
and employee salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension Benefit Plan.
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(c) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan has received a determination letter from the Internal
Revenue Service to the effect that it meets the requirements of Code Section
401(a).
(d) Seller has delivered to Purchaser correct and complete
copies of the plan documents and summary plan descriptions relating to each such
Employee Benefit Plan.
(e) Except as set forth in Schedule 3.13, the Seller
(including any affiliate) is not as of the date hereof sponsoring, maintaining,
contributing to, incurring any obligation to contribute to or has any liability
with respect to, (i) an employee benefit plan as defined in Section 3(3) of the
ERISA or Section 414(f) of the Code that is subject to Title IV of ERISA,
Section 302 of ERISA or Section 412 of the Code or (ii) any multi-employer plan
(as defined in Sections 3(37) and 4001(a)(3) of ERISA). The Seller has not
maintained or contributed to any plan described in this SECTION 3.13(E) in the
past 6 years.
(f) With respect to any plans set forth in Schedule 3.13, each
such plan is in compliance with the requirements provided by ERISA, the Code,
and any other laws or regulations applicable to such plans. Each such plan and
its related trust intended to qualify under Sections 401(a) and 501(a) of the
Code is so qualified and nothing has occurred and no condition exists that could
cause the loss of such qualification. With respect to each such plan (i) no
prohibited transaction as defined in Section 406 of ERISA or Section 4975 of the
Code has occurred and (ii) no prohibited transaction will occur by virtue of the
consummation of the transactions contemplated by this Agreement.
3.14. CERTAIN ENVIRONMENTAL MATTERS. (a) Except as set forth in SECTION
3.14 of the Disclosure Schedule or as would not reasonably be expected to have a
Material Adverse Effect on the Division: (i) the Division is in compliance with
Environmental, Health, and Safety Requirements, which compliance includes the
possession by the Division and the Business of all permits and other
governmental authorizations required under applicable Environmental, Health and
Safety Requirements, and compliance with the terms and conditions thereof, and
(ii) Seller has not received any communication that alleges that the Division or
the Business is not or was not in compliance with any Environmental, Health and
Safety Requirement, and
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(b) SECTION 3.14 of the Disclosure Schedule sets forth all
environmental audits possessed by or reasonably available to Seller with respect
to the Leased Property and each parcel of real property which Seller previously
owned, used, leased or subleased in relation to the Division. Seller has made
available to Purchaser accurate and complete copies of such environmental
audits.
(c) Except as set forth on SECTION 3.14 of the Disclosure
Schedule, Seller has not received any communication, whether from any Authority,
Person, citizens group or otherwise, that alleges that the Division or the
Business is not or was not in compliance with any Environmental, Health and
Safety Requirement, and Seller does not have knowledge of any circumstances that
may prevent or interfere with such compliance in the future. Except as set forth
on SECTION 3.14 of the Disclosure Schedule, there is no Environmental Claim
pending or, to the Seller's knowledge, threatened against Seller in respect of
the Division.
(d) Except as set forth in SECTION 3.14 of the Disclosure
Schedule, to the Seller's knowledge, without in any way limiting the generality
of the foregoing, (i) Seller has not disposed or arranged for the disposal of
Materials of Environmental Concern at any site listed on the National Priorities
List, the Comprehensive Environmental Response, Compensation and Liability
Information System List, or any comparable state list of properties to be
investigated or remediated, (ii) there are no underground storage tanks
presently located on property owned or leased by Seller, and (iii) there is no
asbestos contained in or forming part of any building, building component,
equipment, structure or office space owned or leased by Seller, which asbestos
requires removal or replacement to comply with Environmental, Health and Safety
Requirements.
(e) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release, emission,
discharge, presence or disposal of any Materials of Environmental Concern, or to
the knowledge of Seller, exposures of employees or other Persons to Materials of
Environmental Concern that could form the basis of any Environmental Claim
against Seller or against any Person whose Liability for any Environmental Claim
Seller has or may have retained or assumed either contractually or by operation
of law.
(f) This SECTION 3.14 contains the sole and exclusive
representations and warranties of Seller with respect to any environmental,
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health, or safety matters, including without limitation any arising under any
Environmental, Health, and Safety Requirements.
3.15. LITIGATION. Except as disclosed in SECTION 3.15 of the Disclosure
Schedule, which contains a list and summary description of all pending and
threatened Claims known to the Seller, there are no Claims pending or, to the
Seller's knowledge, threatened, against or affecting the Division, the Business,
the Acquired Assets or the Assumed Obligations or the Leased Property, or any
officers, directors, employees of the Division or of Seller in respect of the
Division in their capacity as such, or any of the properties or businesses
thereof, or relating to the transactions contemplated by this Agreement, nor, to
the Seller's knowledge, is there any basis for any such Claim. None of Seller or
any of its businesses, assets or properties is subject to any order, writ,
judgment, award, injunction or decree of any Authority or arbitrator in respect
of the Division. No present or former employees of the Division or Business have
made or are, to the Seller's knowledge, entitled to assert any Claim against
Seller by virtue of any patent or latent employment-related health defect. There
are no pending, or to the Seller's knowledge, threatened condemnation
proceedings against any portion of the Real Property.
3.16. TAXES. (a) All Taxes with respect to the Division have been
properly determined in accordance with applicable rules and regulations and have
been paid in full on time. The Division has duly and timely filed all material
Tax Returns of every nature required to be filed by it, in every jurisdiction in
which the same may have been so required, and has paid all Taxes disclosed on
such returns. Except as set forth in SECTION 3.16 of the Disclosure Schedule,
Seller's income Tax Returns have never been audited and Seller does not have
outstanding waivers of the statute of limitations for any Taxes for any taxable
year. All deposits required by law to be made by Seller with respect to the
Division's employees' withholding taxes have been made. There are no Tax liens
on any assets of the Division, except liens for Taxes not yet due. Seller is not
a foreign person within the meaning of Section 1445(f)(3) of the Code for
purposes of withholding tax on disposition of United States real property
interests.
(b) Except as set forth on SECTION 3.16 of the Disclosure
Schedule, no claims for Taxes have been asserted against the Seller with respect
to the Division. Except as set forth in SECTION 3.16 of the Disclosure Schedule,
none of the Acquired Assets is "tax exempt use property" within the meaning of
Section 168(b) of the Code, and the Real Property Leases
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and Equipment and Other Personal Property Leases do not include any lease made
pursuant to former Section 168(f)(8) of the Code.
3.17. BROKERS. Seller has not employed any broker, finder or financial
advisor except for ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation (the
"FINANCIAL ADVISOR") or incurred any liability for any investment banking,
brokerage, finder's or other fees or commissions in connection with the
transactions contemplated by this Agreement, except for the fees and expenses of
the Financial Advisor for investment banking services, which fees and expenses
will be paid by Seller.
3.18. ASSETS SUFFICIENT FOR CONDUCT OF BUSINESS. Except for blanket
insurance policies of Seller covering the Division and the general corporate
authority of Seller to conduct its business, the Acquired Assets (including,
with respect to assets leased or licensed by Seller as described in the
Disclosure Schedule, only Seller's leasehold or licensed interest therein)
constitute all of the assets, properties, rights and interests used by the
Division in the conduct of the Business and are sufficient for the conduct of
the Business as presently conducted and none of the Excluded Assets (other than
Cash and any non-assignable Permits) or Excluded Liabilities are necessary for
such conduct of the Business.
3.19. LABOR DISPUTES; COMPLIANCE. (a) No work stoppage or other labor
dispute in respect of the Division has occurred in the last five years or is
pending, or to Seller's knowledge, threatened. To Seller's knowledge, no facts
or circumstances exist which would provide the basis for any work stoppage or
other labor dispute.
(b) Except as set forth on SECTION 3.19 of the Disclosure
Schedule, no present or former employee or independent contractor performing
services for the Division has a Claim pending or, to the Seller's knowledge, has
threatened to make a Claim against Seller (under any Regulation of any Authority
or otherwise) in respect of such service, including any Claim for (i) overtime
pay, other than overtime pay for the current payroll period, (ii) wages,
salaries or profit sharing (excluding wages, salaries or profit sharing for the
current payroll period), (iii) vacations, time off or pay in lieu of vacation or
time off, other than vacation or time off (or pay in lieu thereof) earned in
respect of Seller's current fiscal year, (iv) any violation of any Regulation or
contract relating to minimum wages or maximum hours of work, (v) discrimination
against employees on any basis, (vi) unlawful or wrongful employment or
termination practices, (vii) unlawful retirement, termination or labor
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relations practices or breach of contract, (viii) unlawful retirement,
termination or labor relations practices or breach of contract or (ix) any
violation of occupational safety or health standards. Except as disclosed on
SECTION 3.19 of the Disclosure Schedule, there are no administrative charges,
arbitration or mediation proceedings or court complaints pending or threatened
against Seller in relation to the Division before the U.S. Equal Employment
Opportunity Commission or any state or federal court or agency or any other
entity concerning alleged employment discrimination, contract violation or any
other matters relating to the employment of labor. There is no unfair labor
practice charge or complaint pending or, to Seller's knowledge, threatened
against Seller in relation to the Division before the National Relations Board
or any similar state or local body.
(c) Except as set forth in SECTION 3.19 of the Disclosure
Schedule, the Division is and has been in compliance with all applicable
Regulations relating to the employment of labor, including employment and
employment practices, terms and conditions of employment, wages and hours, equal
opportunity, occupational health and safety, severance, termination or
discharge, collective bargaining and the payment of employee welfare and
retirement and other taxes, the Worker Adjustment Retraining and Notification
Act and the Immigration Reform and Control Act of 1986, each as amended, and is
not engaged in any unfair labor practice, except for such non-compliance as
would not reasonably be expected to have a Material Adverse Effect on the
Division. Except as set forth in SECTION 3.19 of the Disclosure Schedule,
Seller, within the six month period preceding the Closing, has not laid off,
terminated (other than for cause, retirement or voluntary departure) or reduced
the hours (other than for voluntary reduction) of any Employee.
(d) The Seller in relation to the Division is not a signatory
or party to, or otherwise bound by, a collective bargaining agreement (or any
other agreement with any labor organization) which covers employees of the
Division, and, to the Seller's knowledge, there is no activity or proceeding of
any labor organization (or representative thereof) to organize any unorganized
employees of the Division. To the Seller's knowledge, no executive, key employee
or group of employees of the Division has any plan to terminate employment with
Seller.
(e) Except as set forth on SECTION 3.19 of the Disclosure
Schedule, Seller is not a party to or bound by any Contract for the employment
of any director or employee of the Division or for the performance by any
independent contractor (including consultants and the
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like) of services for the Division. Seller has furnished to Purchaser true and
correct copies of all the documents listed on SECTION 3.19 of the Disclosure
Schedule.
3.20. BACKLOG. SECTION 3.20 of the Disclosure Schedule sets forth a
true, complete and correct list of all customer orders of the Division which
constitute backlog and the dollar amount represented by each such order ("SELLER
BACKLOG") as of the date no earlier than five days prior to the date of this
Agreement.
3.21. PRODUCT AND SERVICE WARRANTIES. (a) Except as described in
SECTION 3.21 of the Disclosure Schedule, the Division has not given or made any
warranties to third parties with respect to any products supplied or services
performed by it which may still be in effect at any time after the date hereof,
except for warranties imposed by law or which are no longer in effect. Attached
to SECTION 3.21 of the Disclosure Schedule and incorporated therein by reference
is an accurate, correct and complete copy of each form of any such warranty (or
material deviation from such form). Except as disclosed on SECTION 3.21 of the
Disclosure Schedule or as required by applicable law, there are no other
warranties, oral or written or express or implied, which remain in effect on the
Closing Date for sales by the Division or Business prior to the Closing Date.
(b) Except as set forth on SECTION 3.21 of the Disclosure Schedule,
there is no action, suit, inquiry, proceeding or investigation by or before any
Authority pending or, to the Seller's knowledge, threatened against or involving
the Division or Business relating to any product alleged to have been processed,
manufactured, serviced or sold by the Division and alleged to have been
defective, or improperly processed, manufactured or serviced, nor is there any
valid basis for any such action, proceeding or investigation. Neither Seller nor
Purchaser will be subject to any Claim, expense, Liability or obligation arising
from injury to Person or property as a result of ownership, possession or use of
any product manufactured, processed, serviced, distributed or shipped or sold by
the Division prior to the Closing Date, and, to the Seller's knowledge, there is
no fact relating to any product that may impose upon Seller or Purchaser a duty
to recall such product or a duty to warn customers or others of a defect in any
such product. There is no liability for any latent or overt design,
manufacturing or other defect in any product produced by the Division, except to
the extent reserves therefor have been provided in the September 30 Balance
Sheet or have accrued thereafter in accordance with past practices or provisions
of SECTION 2.2(B).
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3.22. CERTAIN BUSINESS RELATIONSHIPS WITH THE DIVISION. Except as
disclosed in SECTION 3.22 of the Disclosure Schedule, none of Seller or its
affiliates has been involved in any business arrangement or relationship with
the Division within the past 12 months, and none of Seller or its affiliates
owns any asset, tangible or intangible, which is used in the business of the
Division. Except as set forth on SECTION 3.22 of the Disclosure Schedule, (a)
since January 1, 1996, there have not been nor are there now any transactions
between the Division and (i) any director, officer or Affiliate of Seller, or
(ii) any relative or spouse (or relative of such spouse) of any such director,
officer or Affiliate (such Persons in (i) and (ii) being referred to herein as a
"RELATED PARTY" or collectively as the "RELATED Parties"), (b) since January 1,
1998, no Related Party has been a director or officer of, or has had any direct
or indirect interest in, any firm, corporation, association or business
enterprise which during such period has been a supplier, customer, sales agent,
licensor, licensee, lessor or lessee of the Division, or has competed with or
been engaged in any business of the kind being conducted by the Division, (c) no
Related Party has an interest in or owns, directly or indirectly, in whole or in
part, any tangible or intangible property of the Division, or that the Division
uses in the conduct of the Business, (d) no Related Party has any cause of
action or other claim whatsoever against or owes any money or other amounts to,
nor (except for wages and other amounts owing in the ordinary course of
business) is any Related Party owed any money or other amounts by, the Division,
and (e) (except in relation to employment arrangements) no Related Party is a
party to any contract, lease, agreement, arrangement or commitment used in the
operations of the Division. All indebtedness of the Division to any Related
Party, and all indebtedness of any Related Party to the Division, is set forth
on the September 30 Balance Sheet, and since the date of the September 30
Balance Sheet, except in relation to employment arrangements, the Division has
not directly or indirectly (i) created, incurred or assumed any indebtedness for
borrowed money or otherwise created any Liability to any Related Party, or (ii)
made any loans, payments or transfers of Division assets to any Related Party.
3.23. DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES. Except as
expressly set forth in this ARTICLE III, Seller makes no representation or
warranty, express or implied, at law or in equity, in respect of any of the
Division's assets (including, without limitation, the Acquired Assets),
liabilities or operations, including, without limitation, with respect to
merchantability or fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed. Purchaser
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hereby acknowledges and agrees that, except to the extent specifically set forth
in this ARTICLE III, the Purchaser is purchasing the Acquired Assets on an
"as-is, where-is" basis. Without limiting the generality of the foregoing,
Seller makes no representation or warranty regarding any assets other than the
Acquired Assets or any liabilities other than the Assumed Obligations, and none
shall be implied at law or in equity.
3.24. NON-COMPETE AGREEMENTS. Except as set forth in SECTION 3.24 of
the Disclosure Schedule, no oral or written Contract, license or permit
restricts the ability of Seller to own, possess or use the assets of the
Division or conduct the Division's business or operations in any geographic area
or restricts in any way the full participation of Seller in the operation of the
Division.
3.25. INVENTORY. The inventories of the Division reflected on the
September 30 Balance Sheet, or acquired by Seller after the date thereof and
prior to the Closing Date (i) are of a quality useable or saleable in the
ordinary course of business, and are of a quantity sufficient (but not, in the
reasonable judgment of Seller, excessive) to enable the Division to carry on the
Business as currently conducted, (ii) are carried at amounts which reflect
valuations at the lower of cost, determined on a first-in first-out basis or
market, (iii) have been determined in accordance with GAAP, and (iv) do not
include any obsolete or defective materials or any items that were, or should
have been, at any prior time written-off or written-down by Seller and were not
so written down or off. Except for conditional stock rotation in the ordinary
course of business in a manner consistent with past practices of the Division,
the Division has, and Purchaser will have, no Liability for any refunds,
allowances or returns in respect of products sold or services provided prior to
the Closing Date or in respect of products included in the inventories of Seller
on the Closing Date and distributed, shipped or sold by or for the account of
the Purchaser after the Closing Date, except to the extent of the reserves
therefor reflected on the September 30 Balance Sheet in accordance with GAAP or
accrued thereafter in accordance with past practices the provisions of SECTION
2.2(B). All inventories disposed of subsequent to December 31, 1998 have been
disposed of only in the ordinary course of business and at prices and under
terms that are normal and consistent with past practices.
3.26. ACCOUNTS RECEIVABLE. Except as set forth in SECTION 3.26 of the
Disclosure Schedule, to the Seller's knowledge, all outstanding accounts, notes
and loans receivable reflected on the September 30 Balance Sheet or accrued by
Seller after the date thereof and prior to the Closing Date are valid claims
against account debtors for goods or services
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delivered or rendered, and subject to no defenses, offsets or counterclaims,
collectible in full within 120 days of delivery, except to the extent reserved
against on the September 30 Balance Sheet in accordance with GAAP or accrued
thereafter in accordance with past practices or the provisions of SECTION
2.2(B). Except as set forth on SECTION 3.26 of the Disclosure Schedule,
Purchaser will have no obligation pursuant to any Regulation of any Authority
(whether in bankruptcy or insolvency proceedings or otherwise) to repay, return,
refund or forfeit any receivables collected by Seller prior to the Closing Date
or any receivables reflected on the September 30 Balance Sheet which Purchaser
collects after the Closing Date. Except as set forth in SECTION 3.26 of the
Disclosure Schedule, all receivables arose in the ordinary course of business,
none of the obligors of such receivables has refused or given notice that it
refuses to pay the full amount thereof and none of the obligors of such
receivables is an Affiliate of Seller. Except as set forth in SECTION 3.26 of
the Disclosure Schedule, no receivables are subject to prior assignment, claim,
lien or security interest. Except as reflected in the September 30 Balance Sheet
or as set forth in SECTION 3.26 of the Disclosure Schedule, the Division has not
incurred any Liabilities to customers for discounts, returns, promotional
allowances or otherwise. Except as set forth in SECTION 3.26 of the Disclosure
Schedule, the Division has no Liability for any refunds, allowances or returns
in respect of products manufactured, processed, distributed, shipped or sold by
or for the account of Seller on or prior to the Closing Date, except to the
extent of the reserves therefor reflected on the September 30 Balance Sheet in
accordance with GAAP or accrued thereafter in accordance with past practices or
the provisions of SECTION 2.2(B) and except for conditional stock rotation in
the ordinary course of business.
3.27. YEAR 2000 COMPLIANCE. All computer, network or other data
processing hardware, software, systems and technology, and all computer
controlled facility components (defined as software driven technology and
embedded microchip technology, including programmable thermostats, HVAC
controllers, auxiliary elevator controllers, utility monitoring and control
systems, fire detection and suppression systems, alarms, security systems, and
any other facilities control systems utilizing microcomputer, minicomputer, or
programmable logic controllers) (collectively the "COMPUTER SYSTEMS") owned or
used by the Division are Year 2000 Compliant. The Division has not suffered, and
Seller reasonably expects that the Division will not at any time hereafter
suffer any interruption of, or interference with, its business operations or
activities by reason of the failure of any Computer Systems owned or used by the
Division or, to the Seller's knowledge, any of its suppliers or customers to be
Year 2000
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Compliant. For such purposes, "Year 2000 Compliant" means, with respect to any
Computer Systems owned or used by any Person, that such Computer Systems (a)
will correctly store, represent, and process (including sort) all dates
(including single and multi-century formulas and leap year calculations), such
that errors will not occur when the date being used is in the Year 2000, or in a
year preceding or following the Year 2000; and (b) will operate and will not
cause or result in an abnormal termination or ending.
3.28. DISCLOSURE. All documents referred to in this Agreement,
including in the Schedules or Exhibits, and the corporate minute books of Seller
to the extent relevant to the transactions contemplated by the Agreement have
been delivered or made available to Purchaser to the extent requested by
Purchaser. Such corporate minute books contain all of the minutes of meetings of
stockholders, board of directors, and any committees of the board of directors
that have been held preceding the date hereof relating to the Division and all
of the written consents to action executed in lieu thereof. None of the
representations, warranties or statements of Seller contained in this Agreement,
in the Schedules or Exhibits hereto, or in any other agreement, instrument or
document executed or delivered by or on behalf of such Person in connection with
the transactions contemplated by this Agreement contains any untrue statement of
a material fact or omits to state any material fact required to be stated
therein or necessary to make the representations, warranties or statements made
therein in light of the circumstances under which they were made, not false or
misleading. Seller acknowledges that the statements contained in this Section
shall not be deemed to limit or qualify any of the other representations or
warranties contained in this Agreement, in the Schedules or Exhibits hereto or
in any agreement delivered in connection herewith.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PURCHASER AND PARENT
Purchaser and Parent each jointly and severally represents and warrants
to Seller as follows on the date hereof and as of the Closing Date:
4.1. DUE INCORPORATION, ETC. Each of Purchaser and Parent is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware with all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business as now being
conducted.
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4.2. CORPORATE AUTHORITY; ENFORCEABILITY; CONFLICTS. (a) The execution,
delivery and performance by each of Purchaser and Parent of this Agreement and
all agreements, certificates and other instruments executed and delivered
pursuant hereto by Purchaser and Parent ("PURCHASER'S ANCILLARY DOCUMENTS"), and
the consummation by Purchaser of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action on the part
of each of Purchaser and Parent. Each of this Agreement and each of Purchaser's
Ancillary Documents has been, or will have been, duly and validly executed and
delivered by Purchaser and/or Parent, as the case may be, and constitutes or
will constitute, the legal, valid and binding obligation of each of Purchaser
and Parent, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization or similar laws from time to time in effect which affect
creditors' rights generally, and by legal and equitable limitations on the
availability of specific remedies.
(b) Except as would not reasonably be expected to have a
material adverse effect on the ability of Purchaser or Parent to consummate the
transactions contemplated hereby, the execution, delivery and performance of
this Agreement and all of Purchaser's Ancillary Documents by each of Purchaser
and Parent will not:
(i) violate any Order applicable to Purchaser and/or
Parent, as the case may be;
(ii) violate any Regulation binding on Purchaser
and/or Parent, as the case may be; or
(iii) violate or conflict with, or result in a breach
of, or constitute a default (or an event which, with or
without notice or lapse of time or both, would constitute a
default) under, or give rise to any event creating rights of
acceleration, termination, modification or cancellation under
the Certificate of Incorporation or By-laws of Purchaser or
Parent, respectively, or under any material Contract to which
Purchaser and/or Parent, as the case may be, is a party, or by
which Purchaser and/or Parent, as the case may be, is bound.
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4.3. PERMITS; COMPLIANCE WITH LAW; CONSENTS. Except as set forth in the
Disclosure Schedule and except for the applicable requirements of the HSR Act,
no notice to, filing with, authorization of, exemption by, or Consent of any
Authority is required for Purchaser and Parent to consummate the transactions
contemplated hereby.
4.4. FINANCING. Parent will cause Purchaser to have funds available at
the Closing sufficient to consummate the transactions contemplated hereby.
4.5. BROKERS. Purchaser has not paid or become obligated to pay any fee
or commission to any broker, finder, investment banker or other intermediary in
connection with the transactions contemplated by this Agreement.
4.6. INTERIM OPERATIONS OF PURCHASER. Purchaser was formed for the sole
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
ARTICLE V
CERTAIN COVENANTS OF THE PARTIES
5.1. CONSENTS AND APPROVALS; NOVATION. (a) Each of Purchaser and
Parent, on the one hand, and Seller, on the other hand, shall give notice to,
and shall use its commercially reasonable efforts to obtain the Consents to the
performance of this Agreement and the transactions contemplated hereby required
to satisfy the conditions specified in SECTIONS 7.1(e) and (G) hereof. To the
extent that one or more of the Permits are not transferable or replacements
therefor are not obtainable on or before the Closing, but such Permits are
transferable or replacements therefor are obtainable after the Closing, Seller
shall continue to use its commercially reasonable efforts in cooperation with
Purchaser and Parent after the Closing as may be required to obtain all such
Consents to transfer, or obtain replacements for, such Permits after Closing and
shall do all things necessary to give Purchaser the benefits which would be
obtained under such Permits.
(b) On and after the Closing Date, Purchaser shall use its
commercially reasonable efforts to enter into novation agreements to remove
Seller from all primary obligations and liabilities in respect of the
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Acquired Assets, including the Contracts specified in SECTION 1.2. Seller will
prepare and mail at the Closing such notices to the other party under each of
the Contracts specified in SECTION 1.2 as are necessary or desirable or may be
reasonably requested by Purchaser, advising such other party that such Contract
has been assigned and directing such other party to send Purchaser all future
notices and correspondence relating to such Contract.
(c) Within ten business days after the date hereof, Seller, on
the one hand, and Purchaser and Parent, on the other hand, will make such
filings as may be required by the HSR Act with respect to the consummation of
the transactions contemplated by this Agreement. Thereafter, Seller, on the one
hand and Purchaser and Parent, on the other hand, will file or cause to be filed
as promptly as practicable with the United States Federal Trade Commission and
the United States Department of Justice any supplemental information which may
be required pursuant to the HSR Act. Without limiting the generality or effect
of the foregoing, Seller, on the one hand, and Purchaser and Parent, on the
other hand, will (i) use commercially reasonable efforts to comply as
expeditiously as possible with all lawful requests of Authorities for additional
information and documents pursuant to the HSR Act; (ii) not (A) extend any
waiting period under the HSR Act or (B) enter into any agreement with any
Authority not to consummate the transactions contemplated by this Agreement,
except with the prior consent of each other; and (iii) cooperate with each other
and use commercially reasonable efforts to cause the lifting or removable of any
temporary restraining order, preliminary injunction or other judicial or
administrative order which may be entered into in connection with the
transactions contemplated by this Agreement, including, without limitation, the
execution, delivery and performance by the appropriate entity of such
divestiture agreements or other actions, as the case may be, as may be necessary
to secure the expiration or termination of the applicable waiting periods under
the HSR Act or the removal, dissolution, stay or dismissal of any temporary
restraining order, preliminary injunction or other judicial or administrative
order which prevents the consummation of the transactions contemplated hereby.
(d) To the extent that the assignment by Seller of any
property, right or asset to be assigned to Purchaser pursuant to this Agreement
shall require the Consent of any other party, and such Consent shall not have
been obtained on or prior to the Closing Date, this Agreement shall not
constitute a contract to assign the same if an attempted assignment would
constitute a breach thereof or would in any way adversely affect the rights of
Seller (or Purchaser as assignee) thereunder. If any such Consent
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is required but not obtained on or prior to the Closing Date, the parties hereto
covenant and agree that in such case, the beneficial interest in or to such
property, right or asset shall in any event pass as of the Closing Date to
Purchaser hereunder; Purchaser shall assume or discharge the obligations of
Seller thereunder on a subcontract or purchase order basis or other arrangement;
and the parties hereto shall use all commercially reasonable efforts without the
payment of any penalty or fee to obtain and secure any and all Consents that may
be necessary to effect the valid sale, transfer or assignment of the same to
Purchaser without change in any of the material terms or conditions thereof,
including, without limitation, the formal assignment or novation of any of the
same, if so required.
5.2. GENERAL. From the date hereof until the Closing Date or
termination of this Agreement, each of the parties shall use commercially
reasonable efforts to take all action and to do all things necessary, proper and
advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in ARTICLE VII below). Without limiting the
generality of the foregoing, Parent shall, or shall cause Purchaser to, perform
all of Purchaser's obligations under this Agreement.
5.3. OPERATION OF BUSINESS. Except as expressly required under any
other provision of this Agreement (including SECTION 5.6), Seller shall not, and
shall cause the Division not to, engage in any practice, take any action, or
enter into any transaction which is not in the ordinary course of business of
the Division and is not consistent with past practice. Without limiting the
generality of the foregoing, Seller shall not, and shall cause the Division not
to, engage in any practice, take any action, or enter into any transaction of
the sort which, if it occurred, would result in a breach of any of the Seller's
representations and warranties contained in ARTICLE III. Except as expressly
contemplated or permitted by this Agreement or as set forth in Schedule 5.3 of
the Disclosure Schedule, the Division will not, without the prior written
consent of Purchaser: (a) incur any Liability or obligation other than in the
ordinary and usual course of business and consistent with past practice, issue
any debt securities, make, create, incur, assume or suffer to exist any Lien on
its assets, or assume, guarantee, endorse or otherwise as an accommodation
become responsible for the Liabilities of any other Person; (b) acquire (by
merger, consolidation, acquisition of stock or assets or otherwise) any
corporation, partnership or other business organization or division or
significant assets thereof or acquire, directly or indirectly, any equity
interest in any Person or incur any capital expenditures other than the capital
expenditures set forth on SCHEDULE 5.3; (c) make any change in
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financial or tax accounting methods, principles or practices or make or cause to
be made any elections on Tax returns of Seller, except as consistent with past
practices; (d) fail to maintain inventories at current levels, except for sales
in the ordinary course of business, and maintain the property and assets of the
business in good repair, order and condition; (e) fail to maintain and keep in
full force and effect all insurance on assets and property or for the benefit of
employees of the Division, all liability and other casualty insurance and all
bonds on personnel, presently carried, fail to present all claims under such
insurance policies in a proper and timely manner or breach any obligation under
such insurance policies; (f) fail to use commercially reasonable efforts to (i)
preserve intact the organization and reputation of the Division, (ii) keep all
Permits in full force and effect, (iii) keep available the services of the
present executives, employees and agents of the Division and (iv) preserve the
goodwill of suppliers, distributors, customers and others having business
relationships with the Division; (g) fail to maintain its books, accounts and
records in the usual, regular and ordinary manner on a basis consistent with
prior years; (h) directly or indirectly engage in any transaction with any
officer, director, or other insider or Affiliate which is not at arm's length;
(i) adopt or amend any Employee Benefit Plan, other than changes in employee
welfare or benefit arrangements with respect to officers and employees of the
Division made in the ordinary course consistent with past practice or required
by applicable law; (j) grant, or become obligated to grant, any increase in the
compensation of officers or employees of the Division, including any such
increase pursuant to any Employee Benefit Plan (except for increases in
compensation in the ordinary course of business consistent with past practice or
required pursuant to the terms of any Contract); (k) enter into any employment
or similar agreement or arrangement with any director or employee of the
Division or any independent contractor to provide services to the Division; and
(l) agree, in writing or otherwise, to do any of the foregoing.
5.4. PRESERVATION OF BUSINESS. The Seller shall use its commercially
reasonable efforts to keep the Business and the Acquired Assets substantially
intact, including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers, customers, and
employees.
5.5. ACCESS. From the date hereof until the Closing Date or termination
of this Agreement, Seller shall permit representatives of Purchaser or Parent to
have full access at all reasonable times, upon
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reasonable notice, and in a manner so as not to interfere with the normal
business operations of the Division, to all premises, properties, personnel,
books, records (including Tax and accounting records), contracts, and documents
of or pertaining to the Division or the Business. All such information shall be
subject to the terms and conditions of the letter agreement, dated as of
September 24, 1999, between Purchaser and Seller (the "CONFIDENTIALITY
AGREEMENT"). Seller shall fully cooperate with regard to all such inspections
(in order to conduct, among other things, interviews of individuals, visual
inspections, Phase I environmental assessments of the Facility) as Purchaser and
Parent shall reasonably require and shall cause its officers to furnish
Purchaser and Parent such financial and operating data and other information
with respect to the Business and properties of the Division as Purchaser and
Parent may from time to time reasonably request. The representations and
warranties of Seller contained herein or in any certificate or other documents
delivered to Purchaser or Parent shall not be deemed waived or otherwise
affected by any such investigation made by Purchaser or Parent or any of their
representatives.
5.6. PREPAYMENT; RELEASES. On or prior to the Closing, Seller shall
prepay the Existing Indebtedness and all obligations in respect of the Equipment
and other Personal Property Leases. Seller shall also obtain a full release of
each of the Liens (other than Permitted Liens) granted in the Acquired Assets,
including those to secure obligations in respect of (i) the IRB Indebtedness,
(ii) the Equipment and other Personal Property Leases and (iii) the Credit
Agreement, and deliver copies thereof to Purchaser.
5.7. NOTICE OF DEVELOPMENTS. Seller shall give prompt written notice to
Purchaser and Parent of any development which, to its knowledge, causes a breach
of any of their representations and warranties, covenants and agreements
hereunder. Purchaser and Parent shall give prompt written notice to Seller of
any development which, to their knowledge, causes a breach of any of their
representations and warranties, covenants and agreements hereunder. Such
disclosures shall be subject to the confidentiality provisions of SECTION 5.8
hereof.
5.8. PUBLIC ANNOUNCEMENTS; CONFIDENTIALITY. Except as may be required
by Regulation, neither Seller, on the one hand, nor Purchaser and Parent, on the
other hand, nor any of their affiliates shall issue any press release or make
any public announcement with respect to this Agreement and the transactions
contemplated hereby without the consent of Purchaser, Parent or Seller, as
applicable, which consent shall not be unreasonably withheld. Purchaser and
Parent agree to maintain the confidentiality of any
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and all confidential information furnished to Purchaser and Parent by Seller and
any of its advisors, agents or employees in connection with the transactions
contemplated hereby as provided in the Confidentiality Agreement.
5.9. COMPLIANCE WITH BULK SALES LAWS. Purchaser and Parent hereby waive
compliance by Seller with Bulk Sales Laws with respect to the transactions
contemplated hereby.
5.10. NON-COMPETITION AGREEMENT. Seller shall not, for a period
commencing on the Closing Date and terminating on the date which is three years
thereafter (i) engage in any business that competes in any market with the
Business; or (ii) induce or attempt to persuade any Person to engage in any
business competing with the Business; or (iii) solicit for employment any
employee, advisor or consultant of the Business. Seller shall not do or say
anything which is harmful to the reputation of the Business or which may lead
any person to cease to do business with the Business on substantially equivalent
terms to those previously offered or not to engage in business with the
Business.
5.11. SERVICING OF WARRANTY CLAIMS. From and after the Closing Date,
Purchaser shall, and Parent shall cause Purchaser to, process and satisfy
warranty claims presented to Purchaser by customers of the Division in respect
of products manufactured or sold prior to the Closing Date in accordance with
the prior practice of the Division.
5.12. NO SOLICITATION. Seller shall not, and shall cause its
Affiliates, officers, partners, directors, employees, representatives and
agents, not to, directly or indirectly, encourage, solicit, initiate, engage or
participate in discussions or negotiations with, or provide any information to,
any Person other than Parent, Purchaser or their Affiliates (a "THIRD PARTY") in
connection with any exchange offer, merger, consolidation, sale of substantial
or material assets, sale of securities, acquisition of beneficial ownership of
or the right to vote securities, liquidation, dissolution or similar
transactions involving the Division or the Business (such proposals,
announcements or transactions being referred to herein as "ACQUISITION
PROPOSALS"). Seller shall promptly inform each of Purchaser and Parent of any
inquiry (including the terms thereof and the identity of the Third Party making
such inquiry) which it may receive in respect of an Acquisition Proposal and
furnish to Purchaser and Parent a copy of any such written inquiry.
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5.13. COLLECTION OF ACCOUNTS. If, after the Closing Date, Seller shall
receive any payment on any receivables acquired by Purchaser hereunder or any
rebate or other amounts under agreements with suppliers or others ("REBATES"),
it shall forward such payment to Purchaser within five business days after
receipt thereof, together with any endorsement required so as to permit
Purchaser to collect such receivables or Rebates. Purchaser or its designees
shall have full power and authority to collect all receivables and Rebates
acquired by Purchaser hereunder and to endorse, in the name of Seller, any
checks or other instruments of payment received on account of payment of such
receivables or Rebates.
5.14. AFTER-ACQUIRED ASSETS. Seller shall assign, transfer and deliver
to Purchaser all assets, properties, rights and interests of whatever kind and
nature, real and personal, tangible and intangible, included within the
definition of Acquired Assets relating to the Business and received, held or
acquired by Seller from and after the Closing Date.
5.15. INTELLECTUAL PROPERTY RIGHTS. From and after the Closing Date,
Sellers and its Affiliates shall cease using the Intellectual Property rights.
5.16. SPECIFIC PERFORMANCE. Each of the parties hereto hereby
acknowledges and agrees that the other parties would be damaged irreparably in
the event that any of the material provisions of this Agreement are not
substantially performed in accordance with their specific terms or are otherwise
breached. Accordingly, each of the parties hereto hereby agrees that the other
parties shall be entitled to an injunction or injunctions to prevent breaches of
the material provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
state court of New York, Illinois or federal court located in New York or
Illinois in addition to any other remedy to which they may be entitled pursuant
hereto.
5.17 CERTAIN AGREEMENTS. Purchaser and Parent shall use commercially
reasonable efforts to enter into the agreements specified in SECTION 7.1(L) AND
7.1(M). Seller shall, as requested by Purchaser and Parent, assist Purchaser and
Parent in their respective efforts to enter into such agreements.
5.18. PERFORMANCE BY PURCHASER. Parent shall perform, or shall cause
Purchaser to perform, all of Purchaser's obligations under the Agreement.
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ARTICLE VI
EMPLOYEES AND BENEFIT PLANS
6.1. EMPLOYEES. SECTION 6.1 of the Disclosure Schedule is a true,
correct and complete list of all of Seller's employees who work at or are
employed in connection with the Division (collectively , the "Employees")
(including, without limitation, manufacturing plant, technical and sales
personnel), wherever located, indicating the current rate of pay of each such
employee as of the date hereof (including discretionary benefits and bonuses
paid during such period), the location of such employee, the date such employee
was hired and any severance pay, lump sum or other payment, compensation or
other remuneration that such Person is or would be eligible to receive, or has
received, upon termination of employment or service or as a result of any of the
transactions contemplated by this Agreement. Such Employees shall remain on the
Division's payroll records until the Closing Date (except for those Employees
terminated by Seller), and shall be paid by Seller all amounts of wages, bonuses
and other remuneration (including, without limitation, discretionary benefits
and bonuses) payable to such Employees with respect to any period ending on or
prior to the Closing Date, together with any worker's compensation claims or
amounts payable to such Employees in connection with events occurring prior to
the Closing Date (except to the extent that such amounts in respect of interim
periods prior to the Closing shall have been accrued in determining the amount
of the Purchase Price Adjustment, which amounts shall be assumed and paid by
Purchaser following the Closing and shall be deemed to be Assumed Obligations
for purposes of this Agreement). Subject to SECTION 6.3, Purchaser agrees to
offer employment with Purchaser as of the Closing Date to all Employees as of
the Closing Date on terms, conditions and benefits substantially similar in the
aggregate to those pursuant to which such Employees were employed by the
Division immediately prior to the Closing Date and to cause such terms,
conditions and benefits as apply to the Employees generally to remain not
materially less favorable in the aggregate than the terms on which such
Employees were employed by the Division immediately prior to the Closing Date
until at least the first anniversary of the Closing Date. The foregoing shall
not, however, prohibit Purchaser from terminating the employment of any such
Employee following the Closing Date for any reason.
6.2. EMPLOYEE BENEFIT PLANS. Seller presently maintains a plan intended
to satisfy the requirements of Section 401(k) of the Code (the "401(K) PLAN").
It is Seller's current intention to fully vest the 401(k) Plan
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accounts of Employees whose employment is terminated from Seller as of the
Closing Date and to provide that such Employees will be entitled to a
distribution from the 401(k) Plan under similar provisions as apply generally to
participants in the 401(k) Plan whose employment is terminated, with
distribution options to include a direct rollover to Purchaser's tax-qualified
defined contribution plan, if any. Seller represents that such distributions
will conform with the applicable requirements of Section 401(k)(10) of the Code
and that it will continue to maintain the 401(k) Plan after the Closing. Parent
currently maintains a tax-qualified defined contribution plan which accepts
qualified rollover contributions (the "Parent's 401(k) Plan"). Purchaser may, at
its discretion, and currently intends to establish a 401(k) plan specifically
for Employees (the "Purchaser's 401(k) Plan") and which, if established, will
benefit Employees and accept qualified rollover contributions to the extent
permitted by law. As soon as administratively feasible and in no case more than
90 days after the Closing Date, Employees will be permitted to participate
either in Purchaser's 401(k) Plan, or at Purchaser's discretion, in Parent's
401(k) Plan. Purchaser, Parent and Seller shall cooperate in communicating to
the Employees with respect to 401(k) Plan benefits available to the Employees
following the Closing.
6.3. PARTICIPATION IN PURCHASER'S EMPLOYEE BENEFIT PLANS. As of the
Closing Date with respect to welfare benefits, including but not limited to,
medical and dental benefits, and as soon as administratively feasible and in no
case more than 90 days after the Closing Date with respect to any other employee
benefits, Purchaser shall permit all Employees to participate in employee
benefit and welfare benefit plans substantially similar in the aggregate to
those benefit plans offered to Employees immediately prior to the Closing Date
and on terms and conditions not materially less favorable in the aggregate than
the terms and conditions applicable immediately prior to the Closing Date.
Employees shall receive prior service credit for eligibility and vesting
purposes and, with respect to Purchaser's vacation policy and policy on
severance payments, Employees will receive prior service credit for purposes of
vacation accruals and severance payments.
6.4. WELFARE BENEFITS. (a) Prior to the Closing Date, Seller has
provided benefits (other than pension benefits) to its employees and their
eligible dependents (where applicable) under certain welfare benefit plans
listed in SECTION 6.4 of the Disclosure Schedule (which plans are hereinafter
referred to as "SELLER'S WELFARE PLANS"). All benefits and coverages provided
under Seller's Welfare Plans to Employees and their eligible dependents shall
terminate as of the Closing Date except for those claims
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and expenses incurred prior to the Closing Date that are eligible for payment
under the terms of Seller's Welfare Plans, which claims and expenses shall
remain the responsibility of Seller and except for Seller's obligations, if any,
with respect to continuation coverage under Part 6 of Title I of ERISA and
Section 4980B of the Code.
(b) To the extent that any Purchaser welfare benefit plan in
which Employees participate provides medical, dental or vision benefits,
Purchaser shall cause all pre-existing condition exclusions and actively at work
requirements of such plan to be waived for such Employee and his or her covered
dependents, and Purchaser shall cause any eligible expenses incurred by such
Employee in the plan year on or before the Closing Date to be taken into account
under such plan for purposes of satisfying all deductible, coinsurance and
maximum out-of-pocket requirements applicable to such Employee and his or her
covered dependents for the applicable plan year.
(c) Purchaser shall assume Seller's obligation to pay accrued
but unused vacation and personal day pay as of the Closing Date for all
Employees who are continuing Employees to the extent reflected on the Closing
Balance Sheet, which obligations shall be Assumed Obligations for purposes of
this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS
OF PURCHASER AND SELLER
7.1. CONDITIONS TO OBLIGATIONS OF PURCHASER. All obligations of
Purchaser at the Closing hereunder are subject to the fulfillment prior to and
at the Closing Date of each of the following conditions, which may be waived, in
writing, in whole or in part by Purchaser:
(a) Any waiting period under the HSR Act applicable to the
purchase of the Acquired Assets shall have terminated or expired.
(b) The representations and warranties of Seller herein shall
be true in all respects at and as of the Closing Date as if made on the Closing
Date, except that any representations or warranties made as of a specified date
shall be true in all respects as of such date, and except that for each
representation and warranty that does not contain any qualification
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with respect to materiality, such representation shall be true and correct in
all material respects as if made on the Closing Date.
(c) Seller shall have performed and complied in all material
respects with all covenants, agreements and conditions required by this
Agreement to be performed by it on or prior to the Closing Date.
(d) Seller shall have delivered to Purchaser a certificate
signed by an officer of Seller to the effect that each of the conditions
specified above in SECTION 7.1(B) and SECTION 7.1(C) is satisfied.
(e) Seller shall have obtained and delivered to Purchaser an
estoppel certificate from the Lessors in form and substance satisfactory to
Purchaser, dated the Closing Date and duly executed by the Lessors, evidencing,
among other things, the Consent of the Lessors to the assignment of the Lease.
(f) No Authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Order or Regulation which is in
effect and which would prohibit the transactions contemplated by this Agreement.
(g) All (i) action required by law or otherwise to be taken by
the Board of Directors of Seller to authorize the execution, delivery and
performance of this Agreement and the Ancillary Documents to which such Person
is a party and the transactions contemplated hereby and thereby shall have been
duly and validly taken, and (ii) licenses, Permits, Consents, waivers, approvals
and similar authorizations necessary for the consummation of the transactions
contemplated hereby and for the lawful conduct of the Business by Purchaser
following the Closing Date shall have been obtained, except where the failure to
obtain the same would not have a Material Adverse Effect on the Division or the
Business following the Closing and shall also not have a material adverse effect
on the Acquired Assets or the Assumed Obligations following the Closing;
PROVIDED that, in any event, those Consents and Permits enumerated in SECTION
7.1(G) of the Disclosure Schedule shall have been obtained.
(h) Seller shall have executed and delivered to Purchaser and
Parent assignments and bills of sale in form and substance satisfactory to
Purchaser.
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(i) Seller shall have delivered to Purchaser and Parent an
opinion of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, legal counsel to the
Seller, dated the Closing Date, in substantially the form attached hereto.
(j) Purchaser and Parent shall have received such certificates
of Seller's officers and such other documents or agreements, in each case in
form and substance satisfactory to counsel to Parent and Purchaser, as may
reasonably be requested by Parent and Purchaser.
(k) Seller shall have repaid all Existing Indebtedness and
secured the release of all Liens other than Permitted Liens encumbering the
Acquired Assets, including those listed in SECTION 3.6 of the Disclosure
Schedule and shall have delivered such releases to Purchaser at Closing,
including, but not limited to, releases or terminations under the Uniform
Commercial Code and any other similar applicable Regulation of any financing or
similar statements filed against any such assets in all applicable jurisdictions
or Seller shall otherwise satisfy Purchaser that such Liens are no longer
effective.
(l) Purchaser and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
and ▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have entered into employment agreements in the
applicable forms attached hereto.
(m) Seller and each of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have entered into an agreement in form and substance
acceptable to Purchaser acknowledging the termination of all rights under
employee and severance agreements entered into prior to the Closing Date,
including Employment Agreements dated September 24, 1999, Severance Protection
Agreements dated February 11, 1999, letter agreements re: Benefits Payable in
Connection with Termination following a Sale of the Company dated March 23,
1999, and letter agreements re: Benefits Payable in Connection with Termination
following a Sale of Beau dated July 19, 1999; provided, however, that with
regard to the agreements dated March 23, 1999 and July 19, 1999 it shall be
sufficient that such persons acknowledge that neither Purchaser nor Parent shall
have any liability thereunder.
(n) There shall have been obtained a leasehold title insurance
policy in an amount equal to the allocated Purchase Price for the Real Property
insuring the Purchaser as holder of the tenant's interest under the Lease and
fee owner of the Facility, subject only to such title exceptions as are
reasonably acceptable in form and substance to Purchaser and
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containing such title endorsements as Purchaser may reasonably request. All
costs of procuring such insurance policy shall be the responsibility of the
Purchaser.
(o) Purchaser shall have obtained a survey of the Property,
which survey shall be sufficient to delete the survey exception from the
leasehold title insurance policy referred to in SECTION 7.1(N). The survey shall
be prepared and certified no earlier than the date 30 days prior to the Closing
Date by a New Hampshire licensed and registered professional engineer or land
surveyor. All costs of procuring such survey results shall be borne by the
Purchaser.
7.2. CONDITIONS TO OBLIGATIONS OF SELLER. All obligations of Seller at
the Closing hereunder are subject to the fulfillment prior to and at the Closing
Date of each of the following conditions, which may be waived, in writing, in
whole or in part by Seller:
(a) Any waiting period under the HSR Act applicable to the
purchase of the Acquired Assets shall have terminated or expired.
(b) The representations and warranties of each of Purchaser
and Parent herein shall be true in all respects at and as of the Closing Date as
if made on the Closing Date, except that any representation or warranty made as
of a specified date shall be true in all respects as of such date, and except
that for each representation and warranty that does not contain any
qualification with respect to materiality, such representation shall be true and
correct in all material respects as if made on the Closing Date.
(c) Each of Purchaser and Parent shall have performed and
complied in all material respects with all covenants, agreements and conditions
required by this Agreement to be performed by it on or prior to the Closing
Date.
(d) Each of Purchaser and Parent shall have delivered to
Seller a certificate signed by an officer of Purchaser and Parent, respectively,
to the effect that each of the conditions specified above in SECTION 7.2(B) and
SECTION 7.2(C) is satisfied.
(e) No Authority of competent jurisdiction shall have enacted,
issued, promulgated, enforced or entered any Order or Regulation which is in
effect and which would prohibit the transactions contemplated by this Agreement.
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(f) All action required by law or otherwise to be taken by
each of Purchaser and Parent to authorize the execution, delivery and
performance of this Agreement and the Ancillary Documents to which such Person
is a party and the transactions contemplated hereby and thereby shall have been
duly and validly taken.
(g) Purchaser shall have delivered to Seller an opinion of
Purchaser's General Counsel, dated the Closing Date, in the form attached
hereto.
(h) Seller shall have received such certificates of
Purchaser's and Parent's officers and such other documents or agreements, in
each case in form and substance satisfactory to counsel to Seller, as may
reasonably be requested by Seller.
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ARTICLE VIII
CLOSING AND CLOSING DELIVERIES
8.1. CLOSING. The Closing shall take place on or before June 30, 2000,
or as soon as practicable after the satisfaction or waiver of the conditions set
forth in ARTICLE VII, whichever is earlier. The Closing shall be held at the
offices of Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ at ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M., or such other place and time as shall be
mutually agreed upon by Purchaser and Seller.
8.2. DELIVERIES BY SELLER. Prior to or at the Closing, Seller shall
deliver the following to Purchaser: (a) duly executed bills of sale, assignments
and other transfer documents consistent with the terms of this Agreement which
shall be sufficient to vest good and marketable title to the Acquired Assets in
the name of Purchaser, free and clear of any Liens, except Permitted Liens, and
with the Assignment of the Lease being in recordable form; (b) original Consents
in writing reasonably satisfactory to Purchaser from (A) each party specified in
SECTION 7.1(G) of the Disclosure Schedule, for the transfer and assignment of
any Assumed Obligations to Purchaser, and (B) any Authority whose consent and
approval is required for the consummation of the transactions contemplated
hereby; (c) duly executed Uniform Commercial Code termination statements with
respect to the financing statements specified in SECTION 3.6 of the Disclosure
Schedule; (d) the certificate specified in SECTION 7.1(D); (e) a certificate,
dated as of the Closing Date, executed on behalf of Seller by its Secretary, (i)
certifying that the resolutions, as attached to such certificate, were duly
adopted by the Board of Directors of Seller authorizing and approving the
execution of this Agreement and the consummation of the transactions
contemplated hereby and that such resolutions remain in full force and effect
and (ii) providing, as an attachment thereto, a certificate of good standing
certified of Seller by the Secretary of State of the State of Delaware as of a
date not more than 5 days prior to the Closing Date; (f) an affidavit to delete
the mechanics lien and parties in possession general exceptions to the title
insurance policy referred to in SECTION 7.1(N); and (g) any other documents
customarily required in order to issue such a title insurance policy.
8.3. DELIVERIES BY PURCHASER. Prior to or at the Closing, Purchaser
shall deliver the following to Seller: (a) the Purchase Price as provided in
SECTION 2.1; (b) duly executed instruments of assumption consistent with the
terms of this Agreement pursuant to which Purchaser shall assume and
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undertake to perform Seller's obligations in respect of the Assumed Obligations;
(c) the certificate specified in SECTION 7.2(D); and (d) certificates, dated as
of the Closing Date, executed on behalf of Purchaser and Parent by their
respective Secretaries, (i) certifying that the resolutions, as attached to such
certificate, were duly adopted by the Board of Directors of each of Purchaser
and Parent authorizing and approving the execution of this Agreement and the
consummation of the transactions contemplated hereby and that such resolutions
remain in full force and effect; and (ii) providing, as attachments thereto,
certificates of good standing of Purchaser and Parent certified by the Secretary
of State of the State of Delaware as of a date not more than 5 days prior to the
Closing Date.
ARTICLE IX
TERMINATION
9.1. TERMINATION OF AGREEMENT. This Agreement and, subject to the
provisions of this ARTICLE IX, the obligations hereunder may be terminated and
the transactions contemplated hereby abandoned as provided below:
(a) Purchaser and Parent, on the one hand, and Seller, on the
other hand, may terminate this Agreement by mutual written agreement at any time
prior to the Closing.
(b) Purchaser and Parent may terminate this Agreement by
giving written notice to Seller at any time prior to the Closing (A) in the
event Seller has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, Purchaser and Parent have notified
Seller of such breach, and the breach has continued without cure for a period of
20 days after the notice of breach or (B) if the Closing shall not have occurred
on or before June 30, 2000, by reason of the failure of any condition precedent
under SECTION 7.1 hereof.
(c) Seller may terminate this Agreement by giving written
notice to Purchaser and Parent at any time prior to the Closing (A) in the event
Purchaser has breached any representation, warranty, or covenant contained in
this Agreement in any material respect, Seller has notified Purchaser of the
breach, and the breach has continued without cure for a period of 20 days after
the notice of breach or (B) if the Closing shall not
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have occurred on or before June 30, 2000, by reason of the failure of any
condition precedent under SECTION 7.2 hereof.
9.2. EFFECT OF TERMINATION. If any party terminates this Agreement
pursuant to SECTION 9.1 above, all rights and obligations of the parties
hereunder shall terminate without any Liability of any party to any other party
(except for any Liability of any party then in breach); PROVIDED, HOWEVER, that
the parties shall continue to be bound by the confidentiality provisions of
SECTION 5.8 hereof and the Confidentiality Agreement.
ARTICLE X
SURVIVAL AND REMEDIES; INDEMNIFICATION
10.1. SURVIVAL. All of the terms and conditions of this Agreement,
together with the warranties, representations, agreements and covenants
contained herein or in any instrument or document delivered or to be delivered
pursuant to this Agreement, shall survive the execution of this Agreement and
the Closing; provided, however, that (a) the agreements and covenants (other
than the indemnification provisions set forth in this ARTICLE X, which will
survive as provided below) set forth in this Agreement shall survive and
continue until all obligations set forth therein shall have been performed and
satisfied; and (b) all representations and warranties, and the agreements of
Seller and the Stockholders and Purchaser to indemnify each other set forth in
this ARTICLE X, shall survive and continue for, and all indemnification claims
with respect thereto shall be made prior to the end of fifteen months from the
Closing Date, except for (i) the representations and warranties set forth in
SECTIONS 3.13 (Employee Benefit Plans) and 3.16 (Taxes), and the indemnities and
agreements related to said Sections, which shall survive until, and all claims
with respect thereto shall be made prior to, 90 days after the expiration of the
applicable statute of limitations, (ii) representations, warranties and
indemnities set forth in SECTION 3.9 and SECTION 3.14 and the indemnities and
agreements related to said Sections, which shall survive until, and all claims
with respect thereto shall be made on or prior to, five years following the
Closing Date, (iii) representations, and related indemnities for which an
indemnification claim shall be pending as of the end of the applicable period
referred to above, in which event such indemnities shall survive with respect to
such indemnification claim until the final disposition thereof, and (iv)
representations, warranties and indemnities relating to title and/or ownership
of the Acquired Assets, which will survive indefinitely. In the event of a
breach of any of such representations, warranties,
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covenants and agreements, the party to whom such representation, warranty,
covenant or agreement has been made shall have all rights and remedies for such
breach available to it under the provisions of this Agreement, regardless of any
disclosure to, or investigation made by or on behalf of such party on or before
the Closing Date. The rights and remedies of any party based upon, arising out
of or otherwise in respect of any inaccuracy in or breach of any representation,
warranty, covenant or agreement contained in this Agreement shall in no way be
limited by the fact that the act, omission, occurrence or other state of facts
upon which any claim of any such inaccuracy or breach is based may also be the
subject matter of any other representation, warranty, covenant or agreement
contained in this Agreement as to which there is no inaccuracy or breach (it
being understood that solely for purposes of this ARTICLE X, any such
representation or warranty shall be interpreted without giving effect to the
words "Material Adverse Effect," "knowledge" (except to the extent such term
refers to threatened future actions by third parties), "materially" or
"material," or variations of such terms or qualifications or limitations or
exceptions based on such terms).
10.2. INDEMNIFICATION BY SELLER. From and after the Closing, Seller
agrees to indemnify Purchaser and each of its Affiliates, and their respective
officers, directors, employees, stockholders, representatives and agents,
against, and agrees to hold it and them harmless from, any and all Losses
(excluding any and all Losses to the extent attributable to post closing acts or
omissions of the party seeking the benefits of indemnification if such acts or
omissions were outside the ordinary course of business and were inconsistent
with industry practices and the manner in which the Business was conducted prior
to Closing) incurred or suffered by Purchaser or any of them (or any combination
thereof) related to, resulting from or arising out of any of the following: (a)
any breach of or any inaccuracy in any representation or warranty made by Seller
pursuant to this Agreement or any Seller's Ancillary Document (it being
understood that solely for purposes of this ARTICLE X, any such representation
or warranty shall be interpreted without giving effect to the words "Material
Adverse Effect," "knowledge" (except to the extent such term refers to
threatened future actions by third parties), "materially" or "material," or
qualifications or limitations or exceptions based on such terms); or variations
of such terms; (b) any breach of or failure by Seller to perform any covenant or
obligation of Seller set out in this Agreement or any Seller's Ancillary
Document; (c) any of the Excluded Assets; (d) any Excluded Liabilities; (e) any
and all claims made in good faith based upon facts alleged that, if true, would
have
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constituted any such inaccuracy, breach or failure; (f) the operation and
conduct of any business or activity of Seller other than the Business; (g) the
failure to obtain any Consent, license, permit, waiver, approval or other
similar authorization specified in SECTION 7.1(G) of the Disclosure Schedule;
and (h) the Bulk Sales Laws of any jurisdiction in connection with the
transactions contemplated by this Agreement (other than Claims by creditors with
respect to the Assumed Obligations).
10.3. INDEMNIFICATION BY PURCHASER. From and after the Closing,
Purchaser and Parent, jointly and severally, agree from and after the Closing to
indemnify Seller and each of its Affiliates, and their respective officers,
directors, employees, stockholders, representatives and agents against, and
agree to hold it and them harmless from, any and all Losses (excluding any and
all Losses to the extent attributable to post closing acts or omissions of the
party seeking the benefits of indemnification if such acts or omissions were
outside the ordinary course of business and were inconsistent with industry
practices and the manner in which the Business was conducted prior to Closing)
incurred or suffered by Seller or any of them related to, resulting from or
arising out of (a) any breach of or any inaccuracy in any representation or
warranty made by Purchaser or Parent pursuant to this Agreement or any Purchaser
Ancillary Document (it being understood that solely for purposes of this ARTICLE
X, any such representation or warranty shall be interpreted without giving
effect to the words "Material Adverse Effect," "knowledge" (except to the extent
such term refers to threatened future actions by third parties), "materially" or
"material," or qualifications or limitations or exceptions based on such terms);
and (b) any breach of or failure by Purchaser or Parent to perform any covenant
or obligation of Purchaser or Parent set out in this Agreement, including the
failure to pay, perform or discharge when due all Assumed Obligations.
10.4. CERTAIN LIMITATIONS. (a) Indemnification claims shall be reduced,
by and to the extent, (i) that an indemnitee shall realize any tax benefit as a
result of such Losses has received proceeds under insurance policies, risk
sharing pools, or similar arrangements (other than self-insurance) specifically
as a result of, and in compensation for, the subject matter of an
indemnification claim by such indemnitee, or (ii) the amount subject to
indemnification is reserved against or reflected as a liability on the Closing
Balance Sheet.
(b) Purchaser will not be entitled to indemnification pursuant
to SECTION 10.2 and Seller will not be entitled to indemnification
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pursuant to SECTION 10.3 with respect to any breach or misrepresentation of any
representation or warranty until such time as its respective aggregate right to
such indemnification exceeds $300,000 after which, Purchaser or Seller will be
entitled to such indemnification in excess of such $300,000 threshold.
(c) Solely with respect to Losses arising out of any breach of
or any inaccuracy in any representation or warranty set forth in this Agreement
(except for any breach of or inaccuracy of representations and warranties
relating to title and/or ownership of the Acquired Assets, including SECTION 3.6
hereof), and notwithstanding anything in this ARTICLE X to the contrary, (i) (A)
subject to SECTION 10.4(C)(I)(B), the aggregate amount of Losses payable by
Seller under SECTION 10.2 shall not under any circumstances exceed $4,000,000
(it being understood that the first $1,500,000 of Losses payable by Seller under
SECTION 10.2 with respect to any breach or inaccuracy in the representations and
warranties in SECTION 3.9 shall not be counted against the foregoing $4,000,000
limitation), and (B) the aggregate amount of Losses payable by Seller under
SECTION 10.2 with respect to any breach or inaccuracy in the representations and
warranties in SECTION 3.9 shall not under any circumstances exceed an amount
equal to $5,500,000 less the aggregate Losses, if any, for which Seller has
indemnified the Indemnified Parties in respect of breaches or inaccuracies in
representations or warranties which are subject solely to the $4,000,000
limitation in SECTION 10.4(C)(I)(A) and (ii) the aggregate amount of Losses
payable by Purchaser under SECTION 10.3 shall not under any circumstances exceed
$4,000,000. Purchaser and Parent, on the one hand, and Seller, on the other
hand, acknowledge and agree that (a) the foregoing limitation on the amount of
Losses payable provided for in this SECTION 10.4(C) applies only to Losses
arising out of any breach of or any inaccuracy in any representation or warranty
set forth in this Agreement and (b) the foregoing limitation on the amount of
Losses payable provided for in this SECTION 10.4(C) shall not limit Losses
payable as a result of, relating to, or arising out of (i) a party's breach of
or failure to perform any covenant or obligation set out in this Agreement, (ii)
any of the Excluded Assets, (iii) any Excluded Liabilities, or (iv) any breach
of or inaccuracy of any representations and warranties relating to title and/or
ownership of the Acquired Assets, including SECTION 3.6 hereof; (v) the
operation of any business or activity of Seller other than the Business; (vi)
the failure to obtain any Consent, license, permit, waiver, approval or other
similar authorization specified in SECTION 7.1(G) of the Disclosure Schedule;
and (vi) the Bulk Sales Laws of any jurisdiction in connection with the
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transactions contemplated by this Agreement (other than Claims by creditors with
respect to the Assumed Obligations).
(d) If, after any indemnification payment has been made in
respect of any Loss, the party receiving the indemnification payment shall
receive any recovery, whether through insurance or otherwise, of the Loss for
which an indemnification payment has been made, the indemnified party shall
promptly, but in no event later than 30 days after such recovery is made,
reimburse the indemnifying party that portion of the indemnification payment
made that relates to the recovered Loss (it being agreed, for this purpose, that
any Loss so recovered shall be applied first to the deductible amount under
SECTION 10.4(B), if and to the extent that such deductible amount was used in
calculating the indemnification payment made by the indemnifying party). To the
extent that an indemnification payment shall be made by Seller in respect of any
accounts receivable from an account debtor which is not collected by Purchaser,
then, for purposes of determining whether such account receivable has been
collected and the indemnification payment recovered, any payments made to the
Purchaser in respect of accounts receivable by such account debtor shall be
applied against the accounts receivable from such account debtor in
chronological order of their age (I.E., first, to the oldest accounts
receivable), unless the account debtor specifically designates otherwise.
(e) Seller, on the one hand, and Purchaser and Parent, on the
other hand, acknowledge and agree that the foregoing indemnification provisions
in this ARTICLE X shall be the exclusive remedy of Seller, on the one hand, and
Purchaser and Parent, on the other hand, with respect to the Division and the
transactions contemplated by this Agreement.
10.5. THIRD-PARTY CLAIMS. Except as otherwise provided in this
Agreement, the following procedures shall be applicable with respect to
indemnification pursuant to this ARTICLE X relating to or arising out of Claims,
actions or omissions by Authorities, or other third parties. Promptly after
receipt by the party seeking indemnification hereunder (hereinafter the
"INDEMNITEE") of notice of the commencement of any (a) tax audit or proceeding
for the assessment of any Tax or any other proceeding likely to result in the
imposition of a liability or obligation for Taxes or (b) any action or the
assertion of any Claim, liability or obligation by an Authority or a third party
(whether by legal process or otherwise), against which Claim, liability or
obligation a party under SECTIONS 10.2 and/or 10.3 (hereinafter the
"INDEMNITOR") is, or may be, required under this Agreement to indemnify such
indemnitee, the indemnitee will, if a claim thereon is to
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be, or may be, made against the indemnitor pursuant to this ARTICLE VIII, notify
the indemnitor in writing of the commencement or assertion thereof and give the
indemnitor a copy of such claim, process and all legal pleadings and other
written evidence thereof. The indemnitor shall have, in all instances, the right
to participate in the defense of such action with counsel of reputable standing.
The indemnitor shall have the right to assume the defense of such action unless
such action (a) may result in Orders, injunctions or other equitable remedies in
respect of the indemnitee or its business; or (b) may result in liabilities
which, taken with other then existing claims under this ARTICLE X, would not be
fully indemnified hereunder. The indemnitor shall have 10 days, after receipt of
notice of such claim, process, legal proceeding and other written notice, to
assume defense thereof. If the indemnitor does assume such defense, it will,
within such 10 days, so notify the indemnitee. If the indemnitor does not assume
such defense and so notify the indemnitee, or if the indemnitor is barred from
assuming such defense pursuant to this SECTION 10.5, then the indemnitee shall
assume such defense, subject to the participation of the indemnitor, as provided
in this SECTION 10.5, and the indemnitee's fees and expenses (including fees and
expenses of counsel) in connection with such defense will be borne by the
indemnitor. In any case, the indemnitor and indemnitee shall cooperate and
assist each other in such defense, and shall make available to the other all
records, documents and information (written or otherwise) relevant to such
defense. If the indemnitee shall be required by judgment or a settlement
agreement to pay any amount in respect of any obligation or liability against
which the indemnitor has agreed to indemnify the indemnitee under this
Agreement, the indemnitor shall promptly reimburse the indemnitee in an amount
equal to the amount of such payment plus all reasonable expenses (including
legal fees and expenses) incurred by such indemnitee in connection with such
obligation or liability, subject to this ARTICLE X. Prior to paying any claim
against which an indemnitor is, or may be, obligated under this Agreement to
indemnify an indemnitee, the indemnitee must first supply the indemnitor with a
copy of a final court judgment or decree, or evidence of assessment of Taxes or
a similar final action by a Taxing Authority, holding the indemnitee liable on
such Claim or failing such judgment or decree, must first receive the written
approval of the terms and conditions of such settlement from the indemnitor,
which approval shall not be unreasonably withheld. An indemnitor or indemnitee
shall have the authority to settle or compromise any Claim for which it has
assumed or conducted the defense pursuant to this SECTION 10.5; provided that an
indemnitor shall not settle or compromise any such Claim if such settlement or
compromise would result
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in an Order, injunction or other equitable remedy materially adversely affecting
the indemnitee or its business, or would result in liabilities which, taken
together with other existing claims under this ARTICLE X, would not be fully
indemnified hereunder; in each case, without the prior written consent of the
indemnitee, which consent will not be unreasonably withheld. An indemnitee shall
have the right to employ its own counsel in any case, but the fees and expenses
of such counsel shall be at the expense of the indemnitee.
10.6. DETERMINATION OF INDEMNIFICATION AMOUNT. In the event that any
indemnitee believes that it is entitled to claim indemnification from an
indemnitor under this ARTICLE X, the indemnitee shall notify the indemnitor of
such claim, the amount or estimated amount thereof and the basis for such claim
(which will be described in reasonable detail). The indemnitor, on the one hand,
and the Person which is not the indemnitor, on the other hand, will proceed, in
good faith, and using reasonable efforts, to agree on the amount of such
indemnification claim. If they are unable to agree on the amount of such
indemnification claim within 30 days after such notice, (a) if such
indemnification claim arises out of a claim by an Authority or third party of
the type referred to in SECTION 10.5, then the amount of such indemnification
claim will be determined pursuant to a final judgment or settlement or
compromise pursuant to SECTION 10.5, or (b) if such indemnification claim does
not arise out of such a third party claim, then the indemnification claim will
be submitted to arbitration conducted pursuant to the rules and procedures of
the American Arbitration Association. The determination of the amount of any
indemnification claim pursuant to this SECTION 10.6 will be final, binding and
conclusive, and the indemnitor, upon final determination of the amount of the
indemnification claim will pay the indemnitee within 10 days of such final
determination, the full amount, in cash, of such indemnification claim, as
finally determined, and the indemnitee will be entitled to apply to any court or
Authority of competent jurisdiction to enforce such payment (the fees and
expenses of such enforcement, if necessary, to be borne by the indemnitor). In
addition, if the indemnitor does not pay in full the indemnification claim,
within 10 days, as aforesaid, the amount of the indemnification claim, as
finally determined, will be increased by 2% for each 4-week period that it is
not paid in full.
10.7. FAILURE TO GIVE TIMELY NOTICE. A failure by an indemnitee to give
timely, complete or accurate notice as provided in this Article X will not
affect the rights or obligations of any party hereunder except and only to
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the extent that, as a result of such failure, any party entitled to receive such
was damages as a result of such failure to give timely notice.
10.8. TREATMENT OF INDEMNIFICATION PAYMENTS. Amounts paid to an
indemnitee as indemnification hereunder shall be treated as adjustments to the
consideration for the Business paid pursuant to this Agreement. If any Tax
authority successfully asserts that an indemnification payment is not an
adjustment to such consideration, the indemnitor shall indemnify the indemnitee
for any Tax imposed upon the Indemnitee in connection with its receipt of such
indemnification payment, including any Tax imposed on any payment pursuant to
this SECTION 10.8.
10.9. RIGHTS OF SET-OFF. If Seller becomes liable to any indemnitee for
any indemnity pursuant to this Article X, in addition to its other rights,
Purchaser shall have the right to offset any such liability against any and all
amounts otherwise due or to become due to Seller under this Agreement and any
agreement delivered pursuant hereto; provided that Purchaser complies with the
procedures set forth in this Article X.
ARTICLE XI
MISCELLANEOUS
11.1. EXPENSES. Each party hereto shall bear its own expenses with
respect to this transaction. Seller agrees to pay and be responsible for all
sales, use, stamp, transfer, service, recording, real estate and like taxes or
fees, if any, imposed by any Authority, required to be paid by any party in
connection with the transfer and assignment of the Business.
11.2. AMENDMENT. This Agreement may be amended, modified or
supplemented but only in writing signed by Purchaser and Parent, on the one
hand, and Seller, on the other hand.
11.3. NOTICES. Any notice, request, instruction or other document to be
given hereunder by a party hereto shall be in writing and shall be deemed to
have been given, (i) when received if given in person, (ii) on the date of
transmission if sent by telex, telecopy or other wire transmission (provided
that a copy of such transmission is simultaneously posted in the manner provided
in clause (iii) below) or (iii) three days after being deposited in the U.S.
mail, certified or registered mail, postage prepaid:
(A) If to Purchaser, addressed as follows:
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Molex Industrial Ventures Inc.
c/o
Molex Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Vice President of New
Ventures and Acquisitions
▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary and General
Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
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with a copy to:
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
8000 Sears Tower
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(B) if to Parent, addressed as follows:
Molex Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇, Vice President of New
Ventures and Acquisitions
▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary and General
Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
8000 Sears Tower
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(C) If to Seller, addressed as follows:
Axsys Technologies, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
- 64 -
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other individual or address as a party hereto may designate for
itself by notice given as herein provided.
11.4. AMOUNTS IN UNITED STATES DOLLARS. For purposes of this Agreement,
all figures set out herein which are preceded by the "$" symbol shall be deemed
amounts in United States Dollars.
11.5. COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.6. GOVERNING LAW. The validity, performance and enforcement of this
Agreement and all Ancillary Documents, unless expressly provided to the
contrary, shall be governed by the laws of the State of New York, without giving
effect to any choice of law principle which would require the application of the
laws of any other jurisdiction.
11.7. ASSIGNMENT. This Agreement may not be assigned by any party
hereto without the written consent of each other party hereto, except that prior
to the Closing Date Purchaser may assign its rights and obligations hereunder to
Parent without the consent of any other Person. Purchaser may grant a security
interest in respect of its rights hereunder to its lenders, which may exercise
their rights in respect of that security interest.
11.8. NO THIRD PARTY BENEFICIARIES. This Agreement is solely for the
benefit of the parties hereto and their respective affiliates and no provision
of this Agreement (other than the provisions of ARTICLE VI and ARTICLE X) shall
be deemed to confer upon third parties any remedy, claim, liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.
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11.9. TAX MATTERS.
(a) Purchaser and Seller shall treat and report the
transaction contemplated by this Agreement in all respects consistently for
purposes of any federal, state or local tax, including, without limitation, the
calculation of gain, loss and basis with reference to the Purchase Price
allocation made pursuant to SECTION 2.3 hereof. The parties hereto shall not
take any actions or positions inconsistent with the obligations set forth herein
unless required by relevant tax law.
(b) Purchaser shall make available to Seller, and Seller shall
make available to Purchaser, (i) such records as any such party may require for
the preparation of any Tax Returns required to be filed by Seller or Purchaser
and (ii) such records as Seller or Purchaser may require for the defense of any
audit, examination, administrative appeal, or litigation of any Tax Return in
which Seller was included.
(c) Purchaser shall cooperate with Seller in filing any tax
returns that have been historically filed by the Division on behalf of the
Seller, including, without limitation, returns relating to withholding taxes or
other amounts collected from salaries and wages of Employees which are required
to be remitted to any Authority.
11.10. OTHER INSTRUMENTS. Upon the reasonable request of the other
party hereto, Purchaser and Seller will on and after the Closing Date execute
and deliver to the other party such other documents, releases, assignments and
other instruments as may be required to effectuate completely the transfer and
assignment to Purchaser of, and to vest fully in Purchaser title to, each of the
Acquired Assets and Assumed Obligations.
11.11. ARBITRATION. Seller, on the one hand, and Purchaser and Parent,
on the other hand, agree that any dispute between or among the parties to this
Agreement relating to or in respect of this Agreement, its negotiation,
execution, performance, subject matter, or any course of conduct or dealing or
actions under or in respect of this Agreement, shall be submitted to, and
resolved exclusively pursuant to arbitration in accordance with the commercial
arbitration rules of the American Arbitration Association. Such arbitration
shall take place in New York, New York, and shall be subject to the substantive
law of the State of New York. Decisions pursuant to such arbitration shall be
final, conclusive and binding on the parties. Upon the conclusion of
arbitration, any of Seller, Purchaser or
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Parent may apply to any court having jurisdiction over such matter to enforce
the decision pursuant to such arbitration.
11.12. ENTIRE UNDERSTANDING. This Agreement and the Confidentiality
Agreement set forth the entire agreement and understanding of the parties hereto
in respect to the transactions contemplated hereby and supersede all prior
agreements, arrangements and understandings relating to the subject matter
hereof and is not intended to confer upon any other person any rights or
remedies hereunder. There have been no representations or statements, oral or
written, that have been relied on by any party hereto, except those expressly
set forth in this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered on the date first above written.
MOLEX INDUSTRIAL VENTURES INC.
By: /s/ J. ▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
Name: J. ▇▇▇▇▇▇ ▇▇▇▇
Title: President and Chief Operating
Officer
MOLEX INCORPORATED
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇
Title: Vice President New Ventures
and Acquisitions
AXSYS TECHNOLOGIES, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chairman
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