Exhibit 10.12
EXECUTION COPY
ASSET PURCHASE AGREEMENT
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This Asset Purchase Agreement (the "AGREEMENT") dated December 28, 2006,
by and between Illinois Tool Works Inc., a Delaware corporation, having its
principal office at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("ITW"), ITW
Canada, a limited partnership governed by the law of Ontario, having its head
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("ITW CANADA"), represented
by its general partner ITW Canada Management Company, a corporation governed by
the law of Nova Scotia, (ITW and ITW Canada individually and collectively the
"SELLERS"), and OMG Roofing, Inc., a Delaware corporation having its principal
office at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Buyer") and
OMG, Inc., a Delaware corporation having its principal office located at ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "PARENT").
W I T N E S S E T H:
WHEREAS, ITW is presently engaged in the mechanical roof and fastener
business, including the business of manufacture and sale of fastener assemblies,
namely, washers or plates, through it's Buildex Division, and pursuant to this
Agreement is selling the Buildex mechanical roof & fastener business, which
business involves fasteners when used in combination with washers or plates, or
in combination with roofing battens and tools for installing such fastener
assemblies or roofing battens; but only those fasteners, washers or plates which
are specifically used for attaching single or multi-ply flexible membranes or
insulation sheets to underlayment substrates, such as metal, wood, gypsum-based,
cement or concrete decking, in a flat roof design, in order to provide sealing
and/or insulation, in the territory of North America (the "BUSINESS"). The
Business specifically excludes (i) all other roof fastening applications
manufactured and/or sold by other divisions of ITW, for example, fastener
assemblies, such as pins and washers, and tools for attaching decking, steel,
thin metal, metal cladding, concrete or other materials; (ii) self-drilling
fasteners whether or not used in combination with washers or plates, for
example, TAPCON(R) anchors, whether or not used to install flexible membranes or
insulation sheets by end-users; (iii) insulation fasteners, whether or not used
in combination with washers for plates, for fastening insulation between metal
substrates, for example, insulation TEKS(R) fasteners; (iv) all other building
construction applications and products, for example, attaching insulation to
structures wherein a finish is applied over the insulation (i.e., Exterior
Insulation and Finish Systems or EIFS), or flashing products; (v) any adhesive
or sealant products whether or not used in roofing applications or for attaching
flexible membranes or insulation sheets to underlayment substrates or for
adhering seams therebetween; and (vi) any and all other businesses of the
Sellers whether within or without the territory of North America.
WHEREAS, the Buyer wishes to buy from Sellers, and Sellers wish to sell,
assign and transfer to the Buyer the assets of the Business sold hereunder and
certain liabilities of Sellers as set forth herein;
WHEREAS, Sellers and Buyer desire to make certain representations,
warranties and agreements in connection with the acquisition contemplated herein
(the "ACQUISITION") and also wish to set forth various conditions precedent to
the consummation of the Acquisition;
NOW, THEREFORE, in consideration of the mutual covenants, representations
and warranties made herein, and of the mutual benefits to be derived hereby, the
parties hereto agree as follows:
1. PURCHASE AND SALE
1.1 PURCHASE AND SALE OF ASSETS. Subject to and upon the terms and
conditions set forth in this Agreement, as of the Closing (as defined below),
Sellers will sell, transfer, convey, assign and deliver to Buyer and Buyer will
purchase, acquire and take assignment and delivery of the Purchased Assets of
the Business. The term "PURCHASED ASSETS" shall mean all of the Sellers' right,
title and interest in and to certain assets, properties and rights, real and
personal, tangible and intangible of the Business, except for those Assets not
specifically transferred hereunder and except for Excluded Assets (as defined
below). The Purchased Assets specifically include all rights, title and interest
of the Sellers as of the Closing in and to any of the following which are held
by, used in or otherwise constitute the Business (other than any Excluded
Asset):
1.1.1 Tangible Assets including machinery, equipment, laptop
computers (used by sales employees), vehicles and other transportation
equipment, tools, dies, molds and parts and similar property ("Tangible Assets")
to the extent owned by Sellers and (i) located at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ (the "1500 Facility") including those listed on SCHEDULE 1.1.1(I), (ii)
Tangible Assets located at Amber Engineering or other outside vendors and
specifically associated with the Business- including those Tangible Assets
listed on SCHEDULE 1.1.1(II), and (iii) those Tangible Assets specifically
listed on SCHEDULE 1.1.1(III) which are located at ITW Buildex ▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇( the"1349 facility").
1.1.2 Inventories of raw materials, work-in-process, and finished
products of the Business wherever located, including, but not limited to,
inventories at the 1500 Facility or with ITW Canada and inventories of spare
parts, replacement and component parts for the machinery at the 1500 Facility
(collectively, the "Inventories").
1.1.3 Reserved.
1.1.4 All open Business customer purchase orders, including those
listed on SCHEDULE 1.1.4(I), which list shall be current as of November 28,
2006, and certain other contracts, including all vendor/supplier contracts,
including those listed on SCHEDULE 1.1.4(II), which list shall be current as of
November 28, 2006. All vendor/supplier contracts are included as part of the
Purchased Assets, provided that no such individual contract provides for
purchases in excess of $25,000 in the aggregate. A list of the suppliers/vendors
the Business has done business with in the year 2006 where purchases have
exceeded $4,000 is set forth on SCHEDULE 1.1.4(III). A list of all Manufacturers
Representatives of the Business is set forth on SCHEDULE 1.1.4(IV). A list of
all customers in rebate programs of the Business is set forth on SCHEDULE
1.1.4(V).
1.1.5 Accounts receivable held by the Sellers in the U.S. and Canada
from customers which are exclusive customers of the Business as listed on
SCHEDULE 1.1.5, which list shall be current as of December 19, 2006.
1.1.6 INTELLECTUAL PROPERTY ASSETS. Certain of Sellers' intellectual
property rights exclusively used in the Business including: (i) patents, patent
rights, patent applications, trademark registrations and common law trademark
rights, (ii) names, (iii) service names, (iv) brand marks, (v) trade names, (vi)
symbols, and (vii) logos, all as set forth on SCHEDULE 1.1.6, (viii) websites,
URLs, and domain names comprised of or confusingly similar to the items listed
in the preceding items (i) through (vii) above, and (ix) customer lists for the
Business (collectively, the "INTELLECTUAL PROPERTY ASSETS"). It is understood
that Sellers shall not transfer any rights, title or interest in or to the
following trademarks, trade names and/or service marks and that the following
are not transferred pursuant to this Agreement: any other intellectual property,
including the names ITW; ILLINOIS TOOL WORKS INC.; ITW BUILDEX; ITW CONSTRUCTION
PRODUCTS; BUILDEX; BX; BUILDING IDEAS THAT WORK; AUTOTEKS; AUTOTRAXX; and any
logos including, the Hardhat Logo, used by ITW, any business unit or subsidiary
of ITW, ITW Construction Products, and/or ITW Canada (collectively, the "BUILDEX
TRADEMARKS"); PROVIDED, HOWEVER, that any inventory currently packaged and
displaying Buildex Trademarks, as of the Closing Date (as defined herein), may
be sold by Buyer until fourteen (14) weeks after the Closing Date. Buyer agrees
not to use the Buildex Trademarks, or any marks similar to the Buildex
Trademarks, to identify or market its goods or services, at any time, and except
for the aforementioned fourteen week period, Buyer shall at no time market or
identify its goods or services as formerly sponsored by, originally invented by,
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or related to Sellers or ITW Buildex. Notwithstanding the provisions of the
preceding sentence, nothing in this Agreement shall prevent the Buyer from
repackaging and selling the Inventories under a different brand name after the
Closing Date;
1.1.7 All rights to causes of action, lawsuits, judgments, claims
and demands of any nature available to or being pursued by the Sellers,
exclusively with respect to the Business or the ownership, use, function or
value of any Purchased Asset, whether arising by way of counterclaim or
otherwise;
1.1.8 To the maximum extent permitted by law, without the consent of
any other party, all guarantees, warranties, indemnities and similar rights
relating exclusively to the Business or to any Purchased Assets.
1.1.9 Computer Intangible Property: The parties understand that
there may be some intangible property, such as certain financial information
contained in laptops Sellers are keeping, to be included in the Purchased
Assets. Information contained therein shall be downloaded and provided to Buyer
after the Closing. Sellers agree to convey this information promptly.
Subject to the terms and conditions of this Agreement, at the Closing, the
Purchased Assets shall be transferred or otherwise conveyed to Buyer free and
clear of all liabilities, obligations, liens, claims and encumbrances.
1.2 EXCLUDED ASSETS. Notwithstanding the foregoing, the Sellers will
retain and not transfer, and Buyer will not purchase or acquire, the following
assets relating to the Business (collectively, the "EXCLUDED Assets"):
1.2.1 The tax and corporate records including Articles of
Incorporation, corporate seal, minute books, stock books and other records
having to do with the corporate organization of Sellers;
1.2.2 Any cash, cash equivalents, and bank accounts;
1.2.3 Accounts receivable of the Sellers that are not exclusive
Customers of the Business.
1.2.4 All tangible and intangible assets including machinery,
equipment, computers, vehicles and other transportation equipment, tools, dies,
molds and parts and similar property not specifically transferred hereunder;
1.2.5 Insurance benefits with respect to any liabilities that are
threatened against, retained by, or otherwise imposed upon Sellers, whether
related to the Business or otherwise;
1.2.6 All proceeds from insurance policies payable to Sellers to the
extent such amounts reimburse Sellers for amounts expended to repair or replace
any Purchased Asset prior to the Closing Date;
1.2.7 All claims, rights, interests and proceeds with respect to
refunds of taxes (including property taxes) for periods ending on or prior to
the Closing Date and all rights to pursue appeals of the same;
1.2.8 All intellectual property, including all patents, patent
applications, trade secrets, technical information, know-how, trademarks, trade
names, copyright, service marks, and domain names not listed on SCHEDULE 1.1.6
or the Buildex Trademarks;
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1.2.9 Any employee benefit or incentive plan, agreement or
arrangement (with the exception of ITW's vacation plan as provided for herein),
including, without limitation, any pension, life insurance, profit sharing,
bonus, incentive, deferred compensation, stock purchase, stock option, group
insurance, cafeteria, severance pay or retirement plan, agreement or
arrangement;
1.2.10 All general ledgers and books of account maintained
by the Sellers with regard to the Business; and
1.2.11 All other properties of Sellers, tangible and
intangible, that are not a part of the Purchased Assets of the Business.
1.3 ASSUMPTION OF LIABILITIES
1.3.1 Subject to the terms and conditions set forth herein, at the
Closing, the Buyer shall assume and agree to pay, honor and discharge when due
the following liabilities related to the Business or the Purchased Assets
existing at or arising on or after the Closing Date (collectively, the "ASSUMED
LIABILITIES"):
1.3.1.1 any and all liabilities, obligations and commitments
relating to the Business or the Purchased Assets that are reflected and to the
extent accrued on the Financial Statements (as defined below), (but excluding
liabilities to ITW) and all such liabilities, obligations and commitments as
such may change in the ordinary course of business between the date of such
Financial Statements and Closing except, in each case, for Excluded Liabilities;
1.3.1.2 any liability, obligation, cost or expense relating to
any claim, litigation or proceeding based on the conduct of the Business, the
products sold or the ownership, possession, use or sale of the Purchased Assets
subsequent to the Closing Date;
1.3.1.3 accrued vacation for Transferees (as defined below)
pursuant to Sellers' vacation policy as set forth in the November Financial
Statements, as such vacation entitlement may change in the ordinary course of
business between the date of the November Financial Statements and Closing; and
1.3.1.4 To the extent assignable, any and all liabilities,
obligations and commitments arising out of the agreements, contracts and
commitments entered into by the Sellers exclusively in connection with the
Business, including open Business purchase orders and other contracts listed on
SCHEDULE 1.1.4 including, without limitation, upon consent of the Lessor, the
Lease for the 1500 Facility.
1.3.2 The Buyer hereby assumes the Assumed Liabilities, effective
upon and subject to the Closing. The Buyer shall also execute and deliver to
Sellers an assumption agreement in a form reasonably satisfactory to Sellers
(the "ASSUMPTION AGREEMENT"), if requested in writing by the Sellers at or after
the Closing.
1.3.3 As of the Closing Date, Buyer shall assume any and all
liabilities, obligations and commitments arising from and after the Closing
relating to maintenance, renewal, prosecution, issuance, opposition, attorney,
assignment, recording, and/or other fees relating to the Intellectual Property
Assets transferred hereunder, and any and all royalty payments and/or
obligations due pursuant to the License Agreements attached in SCHEDULE 3.10.
1.4 EXCLUDED LIABILITIES. Except for the Assumed Liabilities, Sellers
shall retain and be fully liable and responsible for and, therefore, Buyer shall
not assume, agree or be obligated to pay, perform or discharge at any time, any
Taxes (as defined below), claims, liabilities, suits, actions, obligations or
commitments, whether known or unknown, contingent or otherwise relating to or
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arising out of the operation of the Business or the ownership of the Purchased
Assets prior to the Closing and any Taxes (as defined below) in connection with
this transaction (including but not limited to, sales and use taxes and real
property transfer taxes if any), including, but not limited to (collectively,
the "EXCLUDED LIABILITIES"):
1.4.1 any liability or obligation of Sellers to the extent arising
out of (i) any suit, action, proceeding, arbitration, mediation, inquiry or
pending or threatened investigation concerning any event occurring prior to the
Closing or (ii) any actual or alleged breach of applicable law prior to the
Closing;
1.4.2 any liability or obligation of Sellers for any federal, state,
local or other taxes, including, without limitation, corporate income taxes,
property taxes, sales taxes and any other taxes of any kind or description
attributable to periods (or portions thereof) prior to the Closing, whether or
not relating to the Business and, with respect to periods subsequent to the
Closing, other than with respect to the operation of the Business or the
ownership or use of the Purchased Assets;
1.4.3 any liability or obligation attributable to any Employment
Plan of Sellers with the exception of vacation entitlement earned by Transferees
pursuant to the Sellers' vacation policy as of the Closing Date. For the
purposes of this Agreement, Employment Plan shall mean (i) all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), (ii) each loan to a non-officer employee, loans
to officers and directors and any stock option, stock purchase, phantom stock,
stock appreciation right, supplemental retirement, severance, sabbatical,
medical, dental, vision care, disability, employee relocation, cafeteria benefit
(Code Section 125) or dependent care (Code Section 129), life insurance or
accident insurance plans, programs, agreements or arrangements, (iii) all bonus,
pension, profit sharing, savings, deferred compensation or incentive plans,
programs, agreements or arrangements, (iv) other fringe or employee benefit
plans, programs, agreements or arrangements of the Company and its subsidiaries
and (v) any current or former employment, change of control, retention or
executive compensation or severance agreements, written or otherwise, as to
which unsatisfied obligations of the Company or any of its subsidiaries remain
for the benefit of, or relating to, any present or former employee, consultant
or director of the Company or any of its subsidiaries (collectively, the
"Employment Plan"); and
1.4.4 any and all fees, costs or expenses of any person, firm,
corporation or other entity acting on behalf of, or representing Sellers as a
broker, finder, investment banker, financial advisor, accountant, attorney or
other representative, in connection with this Agreement and the transactions
contemplated hereby.
1.5 NON-ASSIGNMENT OF CERTAIN ASSUMED CONTRACTS. Except as otherwise
specified in SCHEDULE 1.1.4, to the extent that the assignment hereunder of any
of the Assumed Contracts (as hereinafter defined) shall require the consent of
any other party (or in the event that any of the same shall be nonassignable),
neither this Agreement nor any action taken pursuant to its provisions shall
constitute an assignment or an agreement to assign if such assignment or
attempted assignment would constitute a breach thereof or result in the loss or
diminution thereof; PROVIDED, HOWEVER, that upon Buyer's written request,
Sellers shall use commercially reasonable efforts to assist Buyer in obtaining
consents or approvals from third parties as may be necessary to complete any
transfer of any such Assumed Contract; PROVIDED, FURTHER, that if such consent
is not obtained, Sellers shall cooperate with Buyer in any reasonable
arrangement designed to provide for Buyer the full benefits of any such Assumed
Contract including, without limitation, enforcement, for the account and benefit
of Buyer, of any and all rights of Sellers against any other person with respect
to any such Assumed Contract.
2. PURCHASE PRICE
2.1 PURCHASE PRICE. On the terms and subject to the adjustment provisions
set forth in this Agreement, Buyer agrees to pay or cause to be paid to Sellers
an aggregate of TWENTY-FOUR Million Dollars (US$24,000,000) (the "PURCHASE
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PRICE") and to assume the Assumed Liabilities as provided in Section 1.3. The
Purchase Price shall be payable at the Closing by the wire transfer of
immediately available funds subject to certain adjustments as set forth on
SCHEDULE 2.1 and to the adjustment as set forth in Section 2.3 below. The
Purchase Price shall be disbursed at Closing in accordance with SCHEDULE 2.1.
2.2 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the acquired assets in accordance with Section 1060 of the Internal
Revenue Code and Treasury Regulations promulgated thereunder. In connection with
the determination of the foregoing allocation schedule, the parties shall
cooperate with each other and provide such information as any of them shall
reasonably request. The parties will each report the federal, state and local
and other tax consequences of the purchase and sale contemplated hereby
(including the filing of Internal Revenue Service Form 8594) in a manner
consistent with such allocation.
2.3 PURCHASE PRICE ADJUSTMENT.
2.3.1 The Purchase Price assumes a net asset value at Closing of at
least FOUR MILLION SEVEN HUNDRED AND SIX THOUSAND AND TWO HUNDRED AND FORTY
DOLLARS ($4,706,240.00) ("Target Net Asset Value") based on the net asset value
of the Business as of December 31, 2005 as set forth on SCHEDULE 2.3.1. For
purposes of this Agreement, the term "Net Asset Value" shall have the meaning
set for on SCHEDULE 2.3.1.
2.3.2 Sellers shall conduct a physical inventory at or before
Closing, in accordance with generally accepted accounting principles
consistently applied and consistent with past practices ("CLOSING Inventory").
Buyer shall have the right to observe the Closing Inventory.
2.3.3 At Closing, Sellers shall provide Buyer an estimated Net Asset
Value schedule dated as of November 30, 2006 ("ESTIMATED CLOSING DATE NET ASSET
VALUE SCHEDULE") prepared in accordance with generally accepted accounting
principles and in a manner consistent with SCHEDULE 2.3.1.
2.3.4 If the TARGET NET ASSET VALUE is greater than the Net Asset
Value on the Estimated Closing Date Net Asset Value Schedule, the Purchase Price
shall be decreased by the amount of the difference. If the TARGET NET ASSET
VALUE is less than the Net Asset Value on the ESTIMATED CLOSING DATE NET ASSET
VALUE SCHEDULE the Purchase Price shall be increased by the amount of the
difference.
2.3.5 Within 30 business days after Closing, Sellers shall provide
to Buyer a net asset value schedule dated as of the Closing Date ("CLOSING DATE
NET ASSET VALUE SCHEDULE") prepared in accordance with generally accepted
accounting principles and in a manner consistent with SCHEDULE 2.3.1. Buyer
shall be allowed immediate access to all work papers and accounting documents
relevant to the preparation of SCHEDULE 2.3.1, the ESTIMATED CLOSING DATE NET
ASSET VALUE SCHEDULE and the CLOSING DATE NET ASSET VALUE SCHEDULE.
2.3.6 The Purchase Price adjustment shall be determined as follows:
2.3.6.1 If the Net Asset Value on the CLOSING DATE NET ASSET
VALUE SCHEDULE is less than the Net Asset Value on the ESTIMATED CLOSING DATE
NET ASSET VALUE SCHEDULE, the Purchase Price shall be decreased by the amount of
the difference; if the Net Asset Value on the CLOSING DATE NET ASSET VALUE
SCHEDULE is greater than the Net Asset Value on the ESTIMATED CLOSING DATE NET
ASSET VALUE SCHEDULE, the Purchase Price shall be increased by the amount of the
difference.
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2.3.6.2 Upon preparation and agreement of the CLOSING DATE NET
ASSET VALUE SCHEDULE, final payment of the Purchase Price Adjustment based on
the CLOSING DATE NET ASSET VALUE SCHEDULE shall be made within 30 days after
agreement on the Purchase Price Adjustment.
2.3.7 If the parties cannot agree on the CLOSING DATE NET ASSET
VALUE SCHEDULE and the corresponding final Purchase Price Adjustment by the end
of the 30th business day after Buyer's receipt of the CLOSING DATE NET ASSET
VALUE SCHEDULE, then the matter shall be referred to Ernst & Young, first, and
if it declines the engagement or there is an actual or perceived conflict of
interest, then to KPMG, and if both shall decline the engagement then to another
nationally recognized independent certified public accounting firm (other than
Deloitte and Touche and Buyer's independent auditor) selected jointly by Buyer
and Sellers ("INDEPENDENT PUBLIC ACCOUNTANTS") whose decision shall be final.
The Independent Public Accountants shall be guided in reaching their decision by
this Agreement, and then to the extent not inconsistent by generally accepted
accounting principles as applied by Sellers in preparation of SCHEDULE 2.3.1 and
applicable provisions of this Agreement. The decision of the Independent Public
Accountants shall be made within thirty (30) days after their retention, and
payment of the Purchase Price Adjustment shall be made within ten (10) days
thereafter. The fees of the Independent Public Accountants shall be paid by the
parties and allocated among them based on their estimate of the Purchase Price
Adjustment and how close it was to the amount ultimately determined by the
Independent Public Accountants, with such allocation to be determined by the
Independent Public Accountants.
3. SELLERS' REPRESENTATIONS AND WARRANTIES. Sellers jointly and severally
represent and warrant to the Buyer as follows:
3.1 CORPORATE STATUS. ITW is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. ITW
Canada is a corporation duly organized, validly existing and in good standing
under the laws of Ontario, Canada. Sellers have the corporate power to carry on
its business as it is now being conducted. Sellers are duly qualified or
licensed to do business and are in good standing as a foreign corporation in
each jurisdiction in which the ownership or leasing of any Purchased Asset or
the transaction of business by the Business requires them to be so qualified or
licensed, except where the failure to be so qualified or licensed would not in
the aggregate reasonably be expected to have a material adverse effect on the
operations of the Business (as now conducted), or the assets, properties,
rights, prospects or condition (financial or otherwise) of Sellers, or a
combination thereof.
3.2 CORPORATE POWER AND AUTHORITY. Sellers have the full power, authority
and legal right to execute, deliver and perform this Agreement, the ▇▇▇▇ of
Sale, the Intellectual Property Assignment (as such term is defined herein), and
all other agreements, documents and instruments required to be executed by
Sellers pursuant hereto (collectively, the "Seller Agreements"). All necessary
corporate action has been taken by Sellers with respect to the execution,
delivery and performance by Sellers of this Agreement and the Seller Agreements
and the consummation of the transactions contemplated hereby and thereby, and no
further corporate authorization will be necessary to authorize the execution and
delivery by Sellers and the performance of its obligations under this Agreement
or the Seller Agreements. The Seller Agreements constitute, and when executed
and delivered will constitute, legal, valid and binding agreements of Sellers
enforceable against Sellers in accordance with their terms, except as may be
limited by bankruptcy, insolvency and other similar laws affecting creditors'
rights generally and by general equity principles.
3.3 NO CONFLICTS. The execution, delivery and performance by Sellers of
this Agreement, and the consummation of the transactions contemplated hereby, do
not and will not conflict with or result in a violation of or a default under
(with or without the giving of notice or the lapse of time or both) (i) any law
applicable to Sellers or any of the properties or assets of Sellers (including
the Purchased Assets), (ii) the certificate of incorporation or by-laws or other
organizational documents of Sellers, (iii) any contract, agreement or other
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instrument to which Buyer will be bound after the Closing Date, except for
violations or defaults which would not, individually or in the aggregate, have a
material adverse effect on the business, properties, related to or arising from
contracts not assumed hereunder, or which (iv) violate any order, writ,
injunction, decree, judgment, ruling, law, rule or regulation of any federal,
state, county, municipal or foreign court or governmental authority applicable
to the Sellers or relating to the Business or Purchased Assets. No governmental
approval or other consent is required to be obtained or made by Sellers in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby.
3.4 FINANCIAL STATEMENTS. Sellers have delivered to Buyer unaudited
financial statements of the Business as of and for the periods ended December
31, 2004 and December 31, 2005 (the "FINANCIAL STATEMENTS") and unaudited
financial statements for the eleven-month period ended November 30, 2006 (the
"NOVEMBER FINANCIAL STATEMENTS"). With the exception of December 31, 2004, which
only includes a statement of income, the Financial Statements include a balance
sheet and statements of income and a cash flow statement. The Financial
Statements have been prepared in all material respects in accordance with
generally accepted accounting principles ("GAAP") consistently applied, except
that the Financial Statements omit footnotes that would ordinarily be contained
in accordance with GAAP. To the extent that footnotes to the Financial
Statements have not been delivered to Buyer, such footnotes do not contain
information that may reasonably have a material adverse effect on the Business.
The balance sheet included in the Financial Statements does not include any
assets or liabilities (other than the Excluded Assets) that do not constitute
part of the Business or the Purchased Assets after giving effect to the
transactions contemplated hereby, and presents fairly the financial condition of
the Business as of the date of such balance sheet. The statement of income
included in the Financial Statements does not include any footnote references or
reflect the operations of any entity or business that do not constitute a part
of the Business after giving effect to all such transactions and presents fairly
the results of operations of the Business for the period indicated.
3.5 TAXES. Sellers have (or by the Closing will have) duly and timely
filed all federal, state, county, local and foreign income, excise, property,
sales and other tax returns relating to the Business required to be filed on or
before the Closing Date. In addition, Sellers have paid (or by the Closing will
accrued for or have paid) all taxes relating to the Business including, but not
limited to income, unitary, sales, use, ad valorem, franchise, withholding,
payroll, excise, property, custom, duty or other tax, governmental fee or other
like assessment or charge of any kind whatsoever (collectively, "TAXES"),
together with any interest or penalty, which have become due or payable on or
prior to the Closing. With respect to the period prior to the Closing, all Taxes
required to be withheld by or on behalf of the Sellers in connection with
amounts paid and social security contributions due or owing with respect to any
employee, independent contractor, creditor or other party with respect to the
Business have been (or by the Closing will have been) withheld, and such
withheld Taxes either have been or will be duly and timely paid to the proper
governmental authorities or set aside in accounts for such purpose.
3.6 LITIGATION. Except as disclosed on SCHEDULE 3.6, there is no
litigation, arbitration, investigation or other proceeding of or before any
court, arbitrator or governmental or regulatory official, body or authority
pending or to Sellers' knowledge threatened against Sellers which relates to any
of the Purchased Assets, the Business or the transactions contemplated by this
Agreement, nor to the best of knowledge of Sellers is there any basis for such
litigation, arbitration, investigation or other proceeding. Sellers are not a
party to any judgment, order, writ, injunction, decree or award of any court,
arbitrator or governmental or regulatory official, body or authority which
affects the Purchased Assets or the Business or the transactions contemplated by
this Agreement. The Sellers have not received or suffered any claim(s) in the
past five (5) years which individually exceed Twenty Five Thousand Dollars
($25,000.00) or One Hundred Thousand Dollars ($100,000) in the aggregate
relating to the Purchased Assets or the Business involving (i) personal injuries
or property damage which were caused or alleged to have been caused by the
products of the Business; or (ii) product defects or warranty non-conformities;
8
or (iii) any other claim for contribution or indemnification against the Sellers
with respect to the operations of the Business.
3.7 COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS. Except for environmental
matters which are the subject of SECTION 3.15 hereof, Sellers have complied in
all material respects with all existing laws, rules, regulations, ordinances,
orders, judgments and decrees now applicable to the Business, its operations as
presently conducted, or the Purchased Assets except where the failure to so
comply would not have a material adverse effect on the Business or the Purchased
Assets individually or in the aggregate. Except as set forth in SCHEDULE 3.7, to
the best of Sellers' knowledge, neither the ownership nor the use of the
Purchased Assets in the Business, nor the conduct of the Business, conflicts
with the rights of any other person, firm or corporation or violates, with or
without the giving of notice or the passage of time, or both, or will violate,
conflict with or result in a default, right to accelerate or loss of rights
under, any terms or provisions of its certificate of incorporation or by-laws as
presently in effect, or any lien, encumbrance, mortgage, deed of trust, or
license to which Sellers are a party or by which Sellers or the Purchased Assets
may be bound or affected, except for conflicts, violations and defaults
disclosed on SCHEDULE 3.7, which would not in each case or in the aggregate have
a material adverse effect on the Business.
3.8 TITLE TO PROPERTIES. Except for Permitted Liens (as defined below),
Sellers have good, valid and marketable title to all of the Purchased Assets
free and clear of all liens, pledges, security interests, charges, claims,
restrictions and other encumbrances and defects of title of any nature
whatsoever. Sellers have the unrestricted right to sell the Purchased Assets as
herein provided. For purposes of this Agreement , the term "PERMITTED LIENS"
means: (a) liens for taxes that are not yet due or delinquent; (b) easements,
covenants, restrictions and/or rights of way which do not, individually or in
the aggregate, materially interfere with the right or ability to use or operate
real property in the manner in which such real property is currently used; (c)
statutory liens created in the ordinary course of business that are not yet
delinquent or which are being contested in good faith and which are not,
individually or in the aggregate, material to the Sellers or the Business; (d)
imperfections in title or encumbrances, if any, which are not substantial in
amount, do not materially detract from the value of the property subject thereto
and do not materially restrict or impair the use of such property in the
Business; (e) zoning, building or similar restrictions relating to or affecting
the real property used by the Sellers in the conduct of the Business; and (f)
the Assumed Liabilities. Except in the ordinary course of Business, since
December 31, 2005, Sellers have not sold, transferred or otherwise disposed of
any of the assets located at the 1500 Facility or at Amber Engineering. There
are sufficient Tangible Assets transferred hereunder at the 1500 Facility to
carry on the Business at that facility in its normal course as it is being
conducted as of the Closing Date.
3.9 CONTRACTS.
3.9.1 SCHEDULE 1.1.4 lists certain of the contracts being
transferred from Sellers to Buyer as of the Closing Date as provided therein
(the "Assumed Contracts").
3.9.2 Except for (a) changes caused by partial or complete
performance prior to Closing, and (b) general principles of equity, including
without limitation, concepts of materiality, reasonableness, good faith and fair
dealing and other similar doctrines affecting the enforceability of agreements
generally and applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws of general application affecting creditor's rights, all
Assumed Contracts are valid, binding, and in full force and effect, according to
their terms.
3.9.3 There exists no default by the Sellers or by another party
thereto of which Sellers are aware, nor has any event occurred which with the
passage of time or giving of notice would constitute a default by Sellers under
9
the contracts, agreements, commitments and undertakings, including all
amendments and supplements thereto and modifications thereof, listed in SCHEDULE
1.1.4.
3.9.4 Sellers are not aware of any dispute, complaint or other
material disagreement with any of the suppliers, vendors, manufacturers,
representatives or customers listed on SCHEDULES 1.1.4(I), 1.1.4(II) 1.1.4(III),
1.1.4(IV), OR 1.1.4(V), nor have Sellers been notified by any such party of
their intent to discontinue business with Sellers or materially modify the terms
upon which such party does business with the Sellers as it relates to the
Business.
3.10 INTELLECTUAL PROPERTY (i) SCHEDULE 1.1.6 hereto contains an accurate
list of the patents, patent applications, trademark registrations and common law
trademark rights transferred hereunder, which have been recorded in Sellers'
name (except for common law trademarks) and to the knowledge of the Sellers, all
registered, issued patents and registered and common law trademarks excluding
POLYMER ▇▇▇▇▇▇ STRIP and US ▇▇▇. 6,722,095 (see SCHEDULE 1.1.6) are valid and
enforceable, and together with the intellectual property license granted in
Section 12, contains all Intellectual Property Assets used by Sellers in their
conduct of the Business except as specifically set forth in SCHEDULE 1.1.6.
(ii) The execution, delivery and performance of the Sellers Agreements and
the consummation of the transactions contemplated hereby will not constitute a
breach of any instrument or agreement governing any rights under the
Intellectual Property Assets, will not cause the forfeiture or termination or
give rise to a right of forfeiture or termination of any Intellectual Property
Assets or impair the right of the Business to use, sell or license any
Intellectual Property Asset or any portion thereof.
(iii) Neither the manufacture, marketing, license, sale or intended use
of any tangible products currently sold by Sellers as of the Closing Date
violates any license or agreement between Sellers and any third party relating
to such product or infringes any intellectual property right of any other party,
and there is no pending claim or litigation contesting the validity and Sellers'
ownership or right to use, sell, license or dispose of any Intellectual Property
Asset, nor have Sellers received any notice asserting that any Intellectual
Property Asset or the proposed use, sale, license or disposition thereof
conflicts or will conflict with the rights of any other party, and Sellers have
neither licensed the use of the Intellectual Property Assets to any third party
nor permitted the use by any third party of the same in a manner which would
infringe the trademark rights of Sellers; provided, however, that sales of
roofing plates, including without limitation, stress plates and EYE HOOK(R) Seam
Plates are sold subject to royalty bearing License Agreements between Seller and
Engineered Construction Components (America) Inc. as identified on SCHEDULE
3.10, which are assignable and shall be assigned to Buyer hereunder upon Buyer's
acquisition of the Business.
(iv) Sellers have not received any notice and are not otherwise aware that
any current or prior members, officers, employees or consultants of Sellers
claim an ownership interest in any of the Intellectual Property Assets as a
result of having been involved in the development of such property while
employed by or consulting to the Business or otherwise.
3.11 GUARANTIES. None of the obligations or liabilities of Sellers arising
in connection with the Business is guaranteed by, or subject to a similar
contingent liability of any other person, firm or corporation.
3.12 RECEIVABLES. All accounts receivable and notes receivable of the
Sellers that are included in the Purchased Assets pursuant to Section 1.1
(collectively, the "ACCOUNTS RECEIVABLE") represent or will represent valid
obligations arising from sales actually made or services actually performed in
the ordinary course of business. All of such Accounts Receivable arose out of
bona fide, arms-length transactions for the sale of goods or performance of
services and shall be good and collectable except to the extent reflected in the
10
reserves on the Company's balance sheet. To the knowledge of the Sellers, there
is no contest, claim or right of set-off, other than returns in the ordinary
course of business, under any material contract with any obligor of an Accounts
Receivable relating to the amount or validity of such Accounts Receivable as of
the date of the Financial Statements.
3.13 INVENTORY. All items of Sellers' inventory and related supplies
(including raw materials, work-in-process and finished goods) that are included
in Purchased Assets pursuant to SECTION 1.1 are in the ordinary course of
business as first quality goods at normal ▇▇▇▇-ups; except as reserved for on
the Financial Statements, are not obsolete, slow-moving or below standard
quality and are valued at standard cost in accordance with the applicable
generally accepted accounting principles as consistently applied by Sellers.
3.14 REAL PROPERTY. Sellers lease the 1500 Facility (the "Leased
Premises") pursuant to that certain Standard Industrial Lease Agreement (the
"Lease"), dated October 29, 2002 between ITW, as tenant, and AMB-SGP
CIF-Illinois, L.P., a Delaware limited partnership ("Landlord"), as landlord, a
true, correct and complete copy of the Lease being attached hereto as SCHEDULE
3.14. The Lease is in full force and effect and has not been modified or amended
in any respect. The Lease constitutes the full agreement of ITW and Landlord
with respect to the Leased Premises. There are no subleases or tenancies or
licenses of any portion of the Leased Premises. The only occupant of the Leased
Premises is ITW. ITW has legal and valid occupation of and permits and other
required licenses or governmental approvals for the 1500 Facility (copies of
which have been delivered to the Buyer). Except as described in SCHEDULE 3.14,
to the best of Sellers' knowledge, ITW is a tenant in good standing under the
Lease, free of any default or breach whatsoever and quietly enjoys the premises
provided for therein and has no knowledge of any event which, with or without
the giving of notice and passage of time, will constitute a default by ITW under
the Lease. Except as described in SCHEDULE 3.14, to the best of Sellers'
knowledge the Landlord is not in default under the Lease and Sellers have no
knowledge of any event which, with or without the giving of notice and passage
of time, will constitute a material default by the Landlord under the Lease.
Rental and other payments due under the Lease have been duly made, each act
required to be performed which, if not performed, would constitute a material
breach under the Lease has been duly performed and no act forbidden to be
performed has been performed under the Lease which, if presented, would
constitute a material breach thereof. ITW is the current tenant under the Lease
and has the full right and authority to assign the Lease to Buyer (subject to
consent from landlord), and no other person has any interest in or claim to
ITW's interest in the Lease. The Leased Premises are free and clear of
judgments, claims, executions, liens, taxes and assessments due by or against
ITW and ITW has paid all costs for work done or caused to be done by ITW in the
Leased Premises which could result in any lien, judgment, encumbrance or
execution to be filed or attached on the tenant's interest in the Lease, on the
Lease Premises, on the Landlord's interest in the Leased Premises or on the land
on which the Leased Premises is situated.
3.15 ENVIRONMENTAL MATTERS Except as disclosed on SCHEDULE 3.15, with
respect to the 1500 Facility and the Business to the extent conducted at the
1500 Facility:
3.15.1 Sellers have not, and to Sellers' knowledge, no other
person (including without limitation, any prior owner, lessee or occupant of
the 1500 Facility), deposited or caused to be deposited under or into the
ambient air, surface water, groundwater, land surface, or subsurface strata,
any solvents, pollutants, chemicals, flammables, contaminants, gasoline,
petroleum products, crude oil, explosives, radioactive materials, hazardous
materials or industrial or other hazardous or toxic materials, substances, or
wastes, or polychlorinated biphenyls or related or similar materials,
asbestos or any material containing asbestos, any underground storage tanks,
any air, soil or water contamination or any other hazardous substance or
material (collectively, the "HAZARDOUS SUBSTANCES") in material violation of
any applicable federal, state or local governmental law, rule, regulation or
ordinance including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss.
9601, et. seq.), the Hazardous Materials Transportation Act, as amended (49
11
U.S.C. ss. 1801, et. seq.), the Resource Conservation and Recovery Act, as
amended (42 U.S.C. ss. 6901 et. seq.), the Federal Water Pollution Control
Act, as amended (33 U.S.C. ss. 1251 et. seq.), the Clean Air Act, as amended
(42 U.S.C. ss. 7401 et. seq.) the Toxic Substances Control Act, as amended (15
U.S.C. ss. 2601 et. seq.), the Clean Water Act, as amended (33 U.S.C. ss. 1251
et. seq.) (collectively all such laws, rules, ordinances, or regulations,
including, without limitation, all federal, state and local laws, statutes,
codes, rules, regulations, common law or other legal requirements relating to
the environment, natural resources, and public or employee health and safety
called herein, "ENVIRONMENTAL LAWS");
3.15.2 Sellers have not, and to Sellers' knowledge, no other person
(including without limitation, any prior owner, lessee or occupant of the 1500
Facility), used, generated, manufactured, refined, transported, treated, stored,
handled, disposed, transferred, produced, processed or in any manner dealt with
Hazardous Substances in, on, over, under or about the 1500 Facility except in
compliance, in all material respects, with applicable Environmental Laws;
3.15.3 Sellers have obtained, and to Sellers' knowledge, each prior
owner, lessee or occupant of the 1500 Facility obtained, all registrations,
permits, licenses, and other material authorizations which are required under
applicable federal, state and local laws and regulations relating to pollution
or protection of the environment including, but not limited to, all
Environmental Laws and including all laws relating to emissions, discharges,
releases, or threatened releases of Hazardous Substances (including, without
limitation, into the ambient air, surface water, groundwater, land surface, or
subsurface strata) or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances;
3.15.4 Sellers are in compliance in all material respects, with all
terms and conditions of such required registrations, permits, licenses and
authorizations; and Sellers are also in compliance, in all material respects,
with all other limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in the applicable
Environmental Laws or contained in any applicable regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder;
3.15.5 There is no civil, criminal, or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter pending, or, to the knowledge of Sellers, threatened against
the Sellers with respect to the Business relating in any way to (i) Sellers'
use, operation or occupancy of the 1500 Facility and the Environmental Laws or
any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter issued, entered, promulgated, or approved thereunder, or (ii)
Sellers' use, operation or occupancy of the 1500 Facility and the release into
the environment of any Hazardous Substances; and
3.15.6 Sellers have no knowledge of any underground storage tanks or
above ground storage tanks ever located on, in or under the 1500 Facility.
3.16 BROKERS. Except for the fees owed to Lincoln International for
which the Sellers will be responsible for payment, Sellers have not directly or
indirectly dealt with anyone acting on their behalf in the capacity of a finder
or broker (or investment advisor), and have not incurred and shall not incur any
obligation for any finder's, broker's or investment banking fee, related to the
transaction contemplated herein.
3.17 LICENSES AND PERMITS. The Sellers hold and are in compliance with all
licenses, permits, concessions, grants, franchises, approvals and authorizations
used in the Business.
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3.18 EMPLOYEE BENEFITS. SCHEDULE 3.18 hereto contains a complete list of
all of the employees and employee contracts of the Business as of the date
hereof that are being transferred hereunder, including the rate of pay and
current annual compensation for each such employee, and bonuses, if any, paid to
each employee listed. None of the employees listed in SCHEDULE 3.18 hereto is a
member of any labor union which has a contract or agreement with the Sellers.
3.19 ABSENCE OF CERTAIN CHANGES AND EVENTS. Except as set forth on
SCHEDULE 3.19, since July 31, 2006, Sellers have conducted the Business in the
ordinary course consistent with their prior practices and there has not been,
with respect to the Business, the Purchased Assets and/or the Assumed
Liabilities, as the case may be:
3.19.1 Any material adverse change in the results of operations of
the Business (as now conducted), or the assets, properties, rights or condition
(financial or otherwise) of Business, or combination thereof (a "Seller Material
Adverse Effect");
3.19.2 Any material change made by Sellers in the methods of doing
business or in the accounting principles or practices or the method of
application of such principles or practices;
3.19.3 Any mortgage, pledge, lien, security interest, hypothecation,
charge or other encumbrance imposed or agreed to be imposed on or with respect
to the 1500 Facility which will not be discharged prior to the Closing, except
for Permitted Liens;
3.19.4 Any damage, destruction or similar loss with respect to the
Business or the Purchased Assets, whether or not covered by insurance, in excess
of $100,000 individually, or $250,000 in the aggregate;
3.19.5 Any strike, picketing, work slowdown or labor
disturbance with respect to the Business; or
3.19.6 Any increase in amounts payable by Sellers to or for the
benefit of or committed to be paid by Sellers to or for the benefit of any agent
or employee of Sellers, in any capacity, whether in the form of salary, bonus or
otherwise, or in any benefits granted under any bonus, stock option, profit
sharing, pension, retirement, deferred compensation, insurance, or other direct
or indirect benefit plan with respect to any such person, except for changes in
compensation in the ordinary course of business and not to exceed 10% per annum
in any instance.
3.20 CUSTOMERS. To the knowledge of Sellers, none of the customers of the
Business has informed Sellers of their intent to terminate their contracts or
arrangements related to the Business as a result of the transaction contemplated
by this Agreement.
3.21 DISCLOSURE. To the knowledge of Sellers, no representation or
warranty of Sellers contained in this Agreement contains any untrue statement of
a material fact, or omits a material fact required to make the statements
herein, in light of the circumstances under which they were made and when taken
as a whole, not misleading. To the best of Sellers' knowledge, there is no fact
which adversely affects in any material respects, or in the future may adversely
affect in any material respects, operations, affairs, condition or prospects of
the Business or the Purchased Assets which has been set forth in this Agreement
or in the documents, instruments, certificates or Schedules furnished pursuant
hereto.
4. BUYER'S REPRESENTATIONS AND WARRANTIES. Buyer represents and warrants to
Sellers as follows:
13
4.1 CORPORATE STATUS. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York.
4.2 CORPORATE POWER AND AUTHORITY. Buyer has the full power, authority and
legal right to execute, deliver and perform this Agreement and all other
agreements, documents and instruments required to be executed by Buyer pursuant
hereto (collectively, the "Buyer Agreements"). All necessary corporate action
has been taken by Buyer with respect to the execution, delivery and performance
by Buyer of this Agreement, the Buyer Agreements and the consummation of the
transactions contemplated hereby and thereby, and no further corporate
authorization will be necessary to authorize the execution and delivery by Buyer
and the performance of its obligations under this Agreement or the Buyer
Agreements. The Buyer Agreements constitute, and when executed and delivered
will constitute, legal, valid and binding agreements of Buyer enforceable
against Buyer in accordance with their terms, except as may be limited by
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and by general equity principles.
4.3 NO CONFLICTS. The execution, delivery and performance by Buyer of this
Agreement, and the consummation of the transactions contemplated hereby, do not
and will not conflict with or result in a violation of or a default under (with
or without the giving of notice or the lapse of time or both) (i) any law
applicable to Buyer or any affiliate thereof, or any of the properties or assets
of Buyer (including the Purchased Assets), (ii) the certificate of incorporation
or by-laws or other organizational documents of Buyer, or (iii) any contract,
agreement or other instrument to which Buyer or any affiliate thereof is a party
or by which Buyer or any of its properties or assets, including the Purchased
Assets, may be bound or affected, except such violations or defaults which would
not, individually or in the aggregate, have a material adverse effect on the
business, properties, financial condition or operations of the Business or (iv)
violate any order, writ, injunction, decree, judgment, ruling, law, rule or
regulation of any federal, state, county, municipal or foreign court or
governmental authority applicable to the Buyer or relating to the Business or
Purchased Assets. No governmental approval or other consent is required to be
obtained or made by Buyer in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
4.4 LITIGATION. There is no legal action, suit, arbitration, governmental
investigation or other legal or administrative proceeding, nor any order, decree
or judgment in progress, pending or in effect, or to the knowledge of Buyer,
threatened against or relating to Buyer in connection with or relating to the
transactions contemplated by this Agreement, and Buyer does not know or have any
reason to be aware of any basis for the same.
4.5 BROKERS. Except for Lincoln International, whose fees will be paid by
Sellers, Buyer has not directly or indirectly dealt with anyone acting in the
capacity of a finder or broker (or investment advisor) and has not incurred, and
shall not incur, any obligation for any finder's, broker's or investment banking
fee related to the transaction contemplated herein.
4.6 NO RELIANCE. The consummation of the transactions contemplated by this
Agreement is not done in reliance upon any warranty or representation by, or
information from, the Sellers of any sort, oral or written, except the
representations and warranties specifically set forth in this Agreement
(including the Schedules hereto). Without limiting the foregoing, Buyer
acknowledges that except as set forth elsewhere in this Agreement, Sellers make
no representations or warranties concerning (i) any future revenues, costs,
expenditures, cash flow, results of operations, financial condition or prospects
that may result from the ownership of the Business or (ii) the condition of the
real and personal property of the Business.
4.7 KNOWLEDGE OF INACCURACIES. Neither ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ nor ▇▇▇ ▇▇▇▇▇▇ have any Actual Knowledge (as defined below), (i) that any
of the representations or warranties of the Sellers in this Agreement are
14
inaccurate in any material respect, (ii) of any material errors in, or material
omissions from the disclosure schedules to this Agreement, or (iii) that the
Sellers are in material breach of any agreement or covenant of this Agreement.
As used in this Section 4.7, Actual Knowledge means the knowledge of such party
(i) which was obtained by information received by such party in writing from
Sellers, including but not limited to, E-mail communications, or (ii) obtained
from any written material that has been included in the "data" room established
by Sellers in connection with this transaction on or prior to the Closing Date.
5. SELLERS' COVENANTS
5.1 CONSENT OF THIRD PARTIES. To the extent that Sellers' rights under any
purchase or sales order or other asset to be assigned to Buyer hereunder may not
be assigned without the consent of another person, which consent has not been
obtained, this Agreement shall not constitute an agreement to assign the same if
an attempted assignment would constitute a breach thereof or be unlawful, and
Sellers shall use their reasonable efforts and Buyer shall cooperate to obtain
any such required consent(s) if deemed necessary and/or advisable as promptly as
practicable. If any such consent shall not be obtained or if any attempted
assignment would be ineffective or would impair Buyer's rights under the
instrument in question so that Buyer would not in effect acquire the benefit of
all such rights, Sellers, to the maximum extent permitted by law and the
instrument, shall use their reasonable efforts to act as Buyer's agent in order
to obtain for it the benefits thereunder and shall cooperate, to the maximum
extent permitted by law and the instrument, with Buyer in any other reasonable
arrangement designed to provide such benefits to Buyer.
6. ADDITIONAL AGREEMENTS
6.1 BULK SALES COMPLIANCE. Buyer hereby waives compliance by Sellers with
the provisions of the Bulk Sales Law of any state, and Sellers warrant and agree
to pay and discharge when due all claims of creditors which could be asserted
against Buyer by reason of such non-compliance to the extent that such
liabilities are not specifically assumed by Buyer under this Agreement.
6.2 FURTHER ASSURANCES. Sellers from time to time after the Closing, at
Buyer's reasonable request and at Buyer's expense, will execute, acknowledge and
deliver to Buyer such other instruments of conveyance and transfer and will take
such other actions and execute and deliver such other documents, certifications
and further assurances as Buyer may reasonably request in order to vest more
effectively in Buyer, or to put Buyer more fully in possession of any of the
Purchased Assets, or to better enable Buyer to complete, perform or discharge
any of the obligations with respect to the Assumed Liabilities. Buyer from time
to time after the Closing, at Sellers reasonable request and at Sellers expense,
will take such actions and provide such information and assistance as Sellers
may reasonably request in order to better enable Sellers to complete, perform or
discharge any of the obligations with respect to the Excluded Liabilities.
6.3 EXPENSES. Whether or not the transaction contemplated by this
Agreement is consummated, all costs and expenses incurred in connection with
this Agreement and the transaction contemplated hereby shall be paid by the
party incurring such expense.
6.4 PUBLICITY. No party shall publish any press release or make any other
public announcement concerning this Agreement or the transactions contemplated
hereby without the prior written consent of each other party; provided, however,
that nothing contained in this Agreement shall prevent any party, after
notification to and consultation with the other party, from making any filings
with governmental authorities that, in its judgment, may be required or
advisable in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby. This Section shall not
prevent any party from engaging in ordinary course business communications.
15
No party will, except as may be required by law, disclose the price terms
of the transaction contemplated by this Agreement without the prior written
consent of the other party.
6.5. OFFERS OF EMPLOYMENT. Buyer agrees that, on the Closing Date, Buyer
shall make offers of employment to each of the individuals listed in SCHEDULE
6.5 except that any employee of the Business who is absent from employment on
the Closing Date due to a leave of absence shall not become an employee of Buyer
until he or she returns to active employment without restrictions or with only
such restrictions as are required to be accommodated under applicable law. Buyer
hereby agrees to assume responsibility for placement of any employee listed on
SCHEDULE 6.5 upon return from a leave of absence to the extent such individual
has a right to reinstatement under the Family and Medical Leave Act or any other
law or any written policy of Sellers covering such rights of an employee of the
Business. Sellers shall be responsible for compliance with the Worker Adjustment
and Retraining Notification Act (WARN) with regard to all employees not listed
on SCHEDULE 6.5 and Buyer agrees to indemnify Sellers from all WARN Act
obligations solely with regard to the individuals listed in SCHEDULE 6.5.
Notwithstanding the foregoing, Buyer shall have no future obligation to continue
the employment of any employee, and no such employee shall be deemed to have any
right to employment other than as explicitly provided herein.
6.5.1 TRANSFEREES. Buyer agrees that individuals who accept
employment with the Buyer ("TRANSFEREES") shall commence to be employed by the
Buyer at substantially the same rate of pay as in effect on the Closing Date
while such individuals were employed by the Business and shall carry-over such
Transferees years of service.
6.5.2 BENEFITS. With the exception of accrued vacation pay on the
books and records of the Sellers as provided for in Section 1.3.1.3, Buyer shall
not assume sponsorship of or responsibility for the employee benefit plans of
the Business, and shall have no responsibility to continue such plans. Buyer
shall provide the Transferees all vacation entitlement earned as employees of
the Business but not yet received as of the Closing Date and to continue for
such Transferees Sellers' vacation policies through the calendar year of the
Closing Date and until thereafter changed by written notice to the Transferees.
Buyer may include Transferees in certain employee benefit plans sponsored by
Buyer. Sellers shall provide Buyer with such information as Buyer may require to
facilitate the inclusion of Transferees into such plans. Buyer shall offer
Transferees health and dental coverage as of the first day of the month
following the Closing Date, such that Sellers shall have no obligations under
Section 4980B of the Code [COBRA] and Buyer agrees to indemnify Sellers from all
such obligations with respect to all Transferees.
6.5.3 SEPARATION PAY. Buyer shall, for a period of twelve (12)
months after the Closing Date, establish and maintain a separation pay program
for Transferees that is substantially equivalent to the separation pay available
to employees under Sellers' separation pay plan. The amount of separation pay
for Transferees available under Sellers' separation pay plan is set forth in
SCHEDULE 6.5.
6.5.4 THIRD PARTY BENEFICIARIES. This Agreement is between the
parties hereto only and nothing herein shall establish any enforceable rights,
legal or equitable, in any person other than Buyer and Sellers, including any
employee of either such party. Any claim, including claims for benefits asserted
by any person with respect to his or her employment with Buyer after the date
hereof shall be governed by the applicable employment policies and such benefit
plans which Buyer shall maintain for its employees, construed under applicable
law. Nothing in this Agreement shall be deemed to restrict the right of Buyer to
deal with Transferees as employees at will in the same manner as it would be
free to deal with such employees in the absence of this Agreement and to
terminate the employment of such Transferees at any time after the Closing Date.
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6.6 NAME CHANGE. Except as otherwise specifically provided in this
Agreement, as of the Closing, Buyer shall cease using the Buildex Trademarks and
shall not adopt any name or term confusingly similar thereto or to any of the
trademarks of the Sellers.
6.7 ACCOUNTS RECEIVABLE INCLUDED IN PURCHASED ASSETS. After the Closing
Date, Sellers shall remit to Buyer weekly by wire transfer the proceeds of all
accounts receivable of the Business as of the Closing Date, which accounts
receivable shall include all accounts receivable from the exclusive customers of
the Business, which accounts receivable Sellers may collect, together with
supporting documentation.
6.8 OTHER CASH RECEIPTS. Sellers agree to receive as custodian of Buyer
and promptly forward on a weekly basis to Buyer all payments Sellers receive on
or after the Closing relating to business conducted by Buyer after the Closing
together with a schedule of such collections. Buyer shall provide Sellers with
wire transfer instructions. In the event Buyer receives payments from Sellers'
customers relating to accounts receivable or other Assets not purchased
hereunder, Buyer shall promptly forward such payments to Sellers, without
deduction, set-off or counterclaim by Buyer.
6.9 CONFIDENTIALITY. Except as necessary for the consummation of the
transactions contemplated by this Agreement, and except as and to the extent
required by law, each party will keep confidential, and shall cause its
representatives, advisors, attorneys and financing sources to keep confidential,
any confidential information ("CONFIDENTIAL INFORMATION") obtained from the
other party (the "Disclosing Party") in connection with the transactions
contemplated by this Agreement. If this Agreement is terminated, each party will
return to the Disclosing Party or destroy all Confidential Information.
Notwithstanding anything otherwise set forth herein, Confidential Information
shall not include (i) publicly known information, (ii) information already known
to the receiving party, (iii) information provided to the receiving party by a
third party, not under an obligation of confidence to the Disclosing Party, and
(iv) information independently developed by the receiving party without use or
reference to the information provided hereunder.
6. 10 COVENANT NOT TO COMPETE OR SOLICIT EMPLOYEES. In furtherance of the
sale of the Business to Buyer and to protect the Business' value and goodwill
and in consideration of the Purchase Price, Sellers agree that, after the
Closing:
6.10.1 For a period ending forty-eight (48) months after the Closing
Date (the "Non-Competitive Period"), neither Sellers nor any of Sellers'
affiliates will directly or indirectly (whether as owner, consultant, manager,
principal, agent, shareholder, partner or otherwise) own, manage, operate,
control, participate in, or be connected in any manner with the ownership,
management, operation, control or otherwise engage in any business which sells,
manufactures produces or licenses the products included within the definition of
the Business as set forth in the first "Whereas" clause on page one of this
Agreement within the United States, Canada or Mexico (the "Competitive
Territory"). The foregoing shall not prevent the Sellers or any affiliate of the
Sellers from acquiring the stock or assets of any entity which derives less than
twenty percent (20%) of its aggregate gross revenues from a Competitive
Business, but in no event shall the aggregate gross revenues from a Competitive
Business be more than Five Million Dollars ($5,000,000) in any trailing
twelve-month period (the "Acquired Entity"); provided, however that once the
Acquired Entity derived more than Five Million Dollars ($5,000,000) of it's
aggregate gross revenues from operating a Competitive Business during the Non
Competitive Period, Sellers or of any Sellers' affiliates, as the ease may be,
shall divest such portion of the Acquired Entity involved in the Competitive
Business within one year from the date when such gross revenues were earned and
shall operate the Competitive Business during such period it is being divested
in the same manner as the Competitive Business has been operated when such gross
revenues were earned.
6.10.2 For a period ending forty-eight (48) months after the Closing
Date, neither Sellers nor any of Sellers'Affiliates will directly induce or
attempt to persuade FPM Heat Treating, ▇.▇. ▇▇▇▇▇▇, and ▇▇▇▇▇ Engineering or any
17
of their affiliates, to terminate or alter their respective business
relationships with the Business.
6.10.3 For a period ending forty-eight (48) months after the Closing
Date, neither Sellers nor any of Sellers' affiliates will solicit to employ,
employ or otherwise retain the services of any person who was employed in the
Business at the Closing Date. For six (6) months after the Closing Date, Sellers
and their affiliates shall be precluded from hiring any individual who is no
longer employed by the Buyer, contacts them on his or her own initiative or who
responds to a general media solicitation not directed specifically at the
employees of the Business.
6.10.4 In addition, for a period of forty-eight (48) months after
the Closing Date, Sellers covenant and agree that neither Sellers nor any of
Sellers' affiliates will divulge any trade secrets, customer lists or other
confidential proprietary information concerning the Business.
6.10.5 Sellers acknowledge that a violation of this Section 6.10 may
cause Buyer or the Business irreparable harm that may not be adequately
compensated for by money damages. Sellers therefore agree that in the event of
any actual or threatened violation of this Section 6.10, Buyer may proceed
against Sellers in law or in equity for such loss, liability, claim, damage,
expenses or other relief as a court may deem appropriate and in addition to such
remedies that Buyer may have, Buyer shall be entitled to seek a temporary
restraining order and to seek preliminary and final injunctive relief against
Sellers or such Affiliate of Sellers to prevent any violations of this Section
6.10, without the necessity of posting a bond. The prevailing party in any
action commenced under this Section 6.10 shall also be entitled to receive
reasonable attorneys' fees and court costs. It is the intent and understanding
of each party hereto that if, in any proceeding before any governmental
authority or arbitrator legally empowered to enforce this Section 6.10, any
term, restriction, covenant or promise in this Section 6.10 is found to be
unreasonable and for that reason unenforceable, then such term, restriction,
covenant or promise shall be deemed modified to the extent necessary to make it
enforceable by such governmental authority or arbitrator.
6.11 SUPPLY OF WARRANTY PARTS. In order to enable Sellers to honor
warranty obligations retained by the Sellers pursuant to Section 1.4, Buyer
agrees to sell products to the Sellers at the then current OEM price. If Buyer
decides to discontinue any such products, then Buyer shall make available to
Sellers product-specific tooling, drawings and design information and any other
information required to produce the discontinued products or provide the
necessary warranty support for such discontinued products (the "Warranty Parts
Information"), at the then wholesale fair market value of such Warranty Parts.
6.12 THIRD PARTY CONSENTS. To the extent that the transfer of Sellers'
rights under any Purchase or Sales Order or other contract or right, entitlement
or other asset to be assigned to Buyer hereunder may not be assigned without the
consent of another person, which consent has not been obtained, this Agreement
shall not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and Sellers shall use their
best efforts and Buyer shall cooperate to obtain any such required consent(s) if
deemed necessary and/or advisable as promptly as practicable. If any such
consent shall not be obtained or if any attempted assignment would be
ineffective or would impair Buyer's rights under the instrument in question so
that Buyer would not in effect acquire the benefit of all such rights, Sellers,
to the maximum extent permitted by law and the instrument, shall act as Buyer's
agent in order to obtain for it the benefits hereunder and shall cooperate, to
the maximum extent permitted by law, to provide such benefits to Buyer
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6.13 REBATES. Sales rebates for each of the qualified customers are booked
each month in the Income Statement and the liability is accrued on the Balance
Sheet. The full year rebate amounts are generally paid out to qualified
customers once a year.
6.13.1 The approximate sales rebate calculation as of the Closing
("Estimated Rebate Accrual Amount") shall be based on the actual sales for
January 1, 2006 through the day immediately prior to the Closing Date, with the
exception of Genflex Roofing Systems, which is fully accrued as of November 30,
2006. Sellers shall transfer to Buyer the Estimated Rebate Accrual Amount for
each of the qualified customers on the Closing Date with the calculation for
each such customer's rebate as listed on SCHEDULE 6.13.1.
6.13.2 The Buyer shall pay the sales rebate due to each qualified
customer from the day immediately following the Closing Date until December 31,
2006 (the "December Rebate Amount"). The Buyer shall pay the rebates to each
qualified customer for the full year of 2006 in accordance with Sellers' prior
practice, to the extent it is fully accrued on Sellers' Balance Sheet at the
Closing Date, no later than February 15, 2007. Sellers will provide Buyer the
Estimated Rebate Accrual Amount for 2006 through the day prior to the Closing
Date.
6.14 HEAT TREAT SERVICES. After the Closing Date, Sellers have agreed to
pay directly to FPM, LLC (or FPM's moving contractor) fifty (50) percent of the
costs incurred for the removal of one heat treat furnace; and Sellers have
agreed to pay to a floor repair contractor fifty (50) percent for the related
floor repair costs at the 1349 Facility. It is estimated that Sellers' cost for
such removal and floor repairs is in the amount of $200,000. FPM plans to use
the furnace being moved to continue to service the heat treatment needs of the
Buyer.
7. CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. All obligations of Buyer
under this Agreement are subject, at the option of Buyer, to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
7.1.1 Sellers shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed by it prior to or at the Closing.
7.1.2 All covenants, agreements and obligations required by the
terms of this Agreement to be performed by Sellers at or before the Closing
shall have been duly and properly performed in all material respects.
7.1.3 All representations and warranties of Sellers contained herein
or in any document delivered pursuant hereto shall be true and correct in all
material respects at and as of the date of the Closing.
7.1.4 On the Closing Date, no suit, action or other proceeding, or
injunction or final judgment relating thereto, shall be threatened or be pending
before any court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby, and no investigation that might result in any such suit,
action or proceeding shall be pending or threatened.
7.1.5 The Purchased Assets shall not have been damaged or destroyed
(other than sales of inventory in the ordinary course of business).
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7.1.6 All documents required to be delivered to Buyer at or prior to
the Closing shall have been so delivered including, but not limited to:
7.1.6.1 Good Standing Certificate;
7.1.6.2 Company Officer's Certificate as to (i) the
representations and warranties of the Company
contained in Section 3, which shall be true and
correct on and as of the Closing Date with the
same effect as though such representations and
warranties had been made on and as of the Closing
Date and (ii) the Company shall have performed and
complied with all agreements, obligations, and
conditions contained in this Agreement that are
required to be performed or complied with by it on
or before the Closing Date;
7.1.6.3 Legal Opinion of Sellers' counsel in the form
attached hereto as Exhibit 7.1.6.3;
7.1.6.4 Transition Services Agreement by and between Buyer
and Sellers;
7.1.6.5 Assignment and Assumption Agreement by and among
Buyer, Sellers, and AMB-SGP CIF-Illinois
("Landlord"); and
7.1.6.6 Assignment and Assumption Agreement.
7.2 CONDITIONS PRECEDENT TO SELLERS' OBLIGATIONS. All obligations of
Sellers under this Agreement are subject, at the option of Sellers, to the
fulfillment or satisfaction, prior to or at the Closing, of each of the
following conditions precedent:
7.2.1 Buyer shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to be
performed by it prior to or at the Closing.
7.2.2 All covenants, agreements and obligations required by the
terms of this Agreement to be performed by Buyer at or before the Closing shall
have been duly and properly performed in all material respects.
7.2.3 All representations and warranties of Buyer contained herein
or in any document delivered pursuant hereto shall be true and correct in all
material respects at and as of the date of the Closing.
7.2.4 On the Closing Date, no suit, action or other proceeding, or
injunction or final judgment relating thereto, shall be threatened or be pending
before any court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit or to obtain damages or other relief
in connection with this Agreement or the consummation of the transactions
contemplated hereby, and no investigation that might result in any such suit,
action or proceeding shall be pending or threatened.
7.2.5 All documents required to be delivered to Sellers at or prior
to the Closing shall have been so delivered including, but not limited to:
7.2.5.1 Good Standing Certificate;
7.2.5.2 Company Officer's Certificate as to (i) the
representations and warranties of the Company
contained in Section 4, which shall be true and
correct on and as of the Closing Date with the
same effect as though such representations and
warranties had been made on and as of the Closing
Date and (ii) the Company shall have performed and
complied with all agreements, obligations, and
conditions contained in this Agreement that are
required to be performed or complied with by it on
or before the Closing Date;
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7.2.5.3 Legal Opinion of Buyer's counsel in the form
attached hereto as Exhibit 7.2.5.3;
7.2.5.4 Transition Services Agreement by and between Buyer
and Sellers;
7.2.5.5 Assignment and Assumption Agreement by and among
Buyer, Sellers and AMB-SGP, CIF-Illinois
("Landlord"); and
7.2.5.6 Assignment and Assumption Agreement.
7.2.6 Buyer shall have paid the Purchase Price to Sellers.
8. THE CLOSING The Closing (the "CLOSING") of the sale and purchase of the
Purchased Assets shall take place on December 28, 2006 at 10:00 AM (Central
time) at the offices of ITW, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, or at
such other time and place as the parties may mutually agree upon in writing. The
date of the Closing is herein referred to as the "Closing Date".
8.1 PLACE AND DATE. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place on December 28, 2006 at the offices
of ITW, or at such other time and place upon which the parties may agree and
shall be effective at 11:59 p.m. on such date. The day on which the Closing
actually occurs is herein sometimes referred to as the "CLOSING DATE."
8.2 ITEMS TO BE DELIVERED AT CLOSING. At the Closing and subject to the
terms and conditions herein contained:
8.2.1 Sellers will deliver to Buyer the following:
8.2.1.1 a general instrument of sale, and conveyance,
assignment, transfer and delivery with respect to all of the
Purchased Assets, such instrument to be in the form of
SCHEDULE 8.2.1.1 hereto;
8.2.1.2 assignment of all patents, trademarks, services marks
listed on SCHEDULE 1.1.6, and applications for any of them,
showing Sellers as assignor and Buyer as assignee, in a form
recordable with the appropriate government authority;
8.2.1.3 all of the Purchased Assets;
8.2.1.4 waivers and releases of liens if any; and
8.2.1.5 All documents and agreements referred to in
Section 7.1.6 hereto unless otherwise waived by the Buyer.
8.2.2 Buyer will deliver to Sellers the following:
8.2.2.1 Purchase Price by wire transfer in immediately
available funds; and
8.2.2.2 All documents and agreements referred to in
Section 7.2.5 hereto unless otherwise waived by the Sellers.
8.2.3 Buyer shall disburse funds in accordance with SCHEDULE 2.1
hereof.
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9. INDEMNIFICATION
9.1 SELLERS' INDEMNIFICATION. Subject to the consummation of the
transaction contemplated by this Agreement and to the express limitations of
this Section 9, Sellers agree that Sellers will indemnify, save and hold
harmless Buyer from and against cost, expense, damage, liability, loss or
deficiency suffered or incurred (including reasonable attorneys' fees) by Buyer
(hereinafter "BUYER LOSSES") arising out of or resulting from:
9.1.1 Any inaccuracy in any representation or the breach of any
warranty by the Sellers in or pursuant to this Agreement;
9.1.2 Any failure of the Sellers duly to perform or observe any
term, provision, covenant, agreement, or condition in this Agreement required on
the part of the Sellers to be performed or observed prior to, at, or after the
Closing;
9.1.3 Any and all debts, liabilities or obligations of Sellers,
direct or indirect, fixed, contingent or otherwise, which exist at or as of the
date of the Closing or which arise after the Closing, from any act, omission,
transaction, circumstance, production or sale of goods or services, state of
facts or other condition which occurred or existed on or before the date of the
Closing, whether or not then known, due or payable, except to the extent (a)
reflected or reserved against on the face of the Financial Statements, and (b)
specifically assumed by Buyer pursuant to the terms of Section 1.3;
9.1.4 Any and all losses, liabilities or damages suffered or
incurred by Buyer by reason of or in connection with the failure of Sellers to
assume, pay, perform, or discharge any Excluded Liability; and
9.1.5 Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing.
9.2 BUYER'S INDEMNIFICATION. Subject to the consummation of the
transaction contemplated by this Agreement and to the express limitations of
this Section 9, Buyer agrees that Buyer will indemnify, save and hold harmless
Sellers from and against any cost, expense, damage, liability, loss or
deficiency suffered or incurred (including but not limited to all reasonable
costs and expenses, including reasonable attorneys' fees) by Sellers
(hereinafter "SELLERS LOSSES") arising out of or resulting from:
9.2.1 Any inaccuracy in any representation or the breach of any
warranty by the Buyer in or pursuant to this Agreement;
9.2.2 Any failure of the Buyer to duly perform or observe any term,
provision, covenant, agreement, or condition in this Agreement required on the
part of the Buyer to be performed or observed prior to, at, or after the
Closing;
9.2.3 Any and all losses, liabilities or damages suffered or
incurred by Sellers by reason of or in connection with the failure of Buyer to
assume, pay, perform or discharge any Assumed Liability; and
9.2.4 Any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing.
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9.3 CLAIMS PROCEDURES FOR INDEMNIFICATION.
9.3.1 NOTICE. If following the Closing a party to this Agreement (a
"CLAIMANT") wishes to make a claim for indemnity (the "CLAIM") against another
party (the "INDEMNITOR"), the Claimant shall promptly give the Indemnitor
written notice of the basis for and existence of the Claim ("CLAIM NOTICE"),
setting forth all specifics of the Claim then known by the Claimant.
9.3.2 RESPONSE. If the Claim derives from a third-party claim or
action against the Claimant, the Indemnitor (i) may within ten (10) days of
receiving the Claim Notice stipulate in writing that it is obligated to
indemnify for the Claim, and (ii) if it does so, may thereafter promptly defend
against the Claim in Claimant's name and on it's behalf, at Indemnitor's own
cost and expense, with counsel reasonably satisfactory to the Claimant.
9.3.3 ASSUMPTION OF CLAIM. If Indemnitor assumes the Claim, Claimant
may at its sole cost and expense retain counsel of its own choosing, and
(subject to negotiation of a joint defense agreement) Indemnitor will share
relevant information with Claimant's counsel and consult with him as to
disposition of the Claim. However, Indemnitor will retain ultimate control over
the defense or settlement of the Claim (in which the Claimant will cooperate),
with the proviso that Indemnitor may not without Claimant's consent (which shall
not be unreasonably withheld) agree to the entry of any order for non-monetary
relief which will be binding on Claimant, its assets or operations. Each party
as a potential Claimant agrees that it will make available to any Indemnitor all
of its relevant books and records and will, at the Indemnitor's request and
expense, reasonably cooperate (and cause its officers, directors and employees
to cooperate) with the Indemnitor in the defense of the Claim.
9.3.4 REJECTION OF CLAIM. If Indemnitor fails to respond
affirmatively within ten (10) days of receipt of a Claim Notice, it will be
deemed to have denied responsibility for the Claim. If Indemnitor denies
responsibility for the Claim (or if it assumes the defense of the Claim, but
subsequently fails to pursue the defense in good faith) the Claimant may assume
the defense of the Claim with counsel of its own choosing, and the cost of
counsel will then be subject to indemnity pursuant to this Section 9. If
Claimant assumes the defense of a Claim, it shall have the sole right and
authority to conduct the defense and/or settle the Claim on such terms as it
deems appropriate, but (subject to negotiation of a joint defense agreement)
shall share information concerning the Claim with Indemnitor or its counsel.
10. LIMITATION ON INDEMNIFICATION
10.1 TERM. Buyer's right to indemnification under Section 9 shall apply
only to those matters written notice of which shall have been delivered not
later than March 31, 2008 ; PROVIDED, HOWEVER, that as to notices with respect
to claims arising from (i) product liabilities related to or arising from
Sellers' conduct of the business prior to the Closing ("Product Liability
Claims")or (ii) breaches of the representations, warranties and covenants
contained in Sections 3.1 Corporate Status, 3.2 Corporate Power and Authority,
3.5 Tax, 3.8 Title to Properties and 3.15 Environmental Matters, the term shall
be five years from the Closing Date.
10.2 EXTENSION FOR CERTAIN CLAIMS. If, prior to the expiration of any of
said periods set forth in Section 10.1 above, Buyer or Sellers, as the case may
be, shall give written notice to the other identifying any covenant, agreement,
representation or warranty which is inaccurate or has otherwise been breached,
setting forth in reasonable detail facts and circumstances showing that Buyer or
Sellers have suffered or incurred or reasonably may be expected to suffer or
incur any damage, liability, loss or deficiency arising out of or resulting from
such inaccuracy or breach, then the indemnity contained in Section 9 shall
survive with respect to such covenant, agreement, representation or warranty
until the Sellers or Buyer, as the case may be, has indemnified and saved and
held the other harmless therefrom or such matter is otherwise resolved.
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10.3 BASKET. There shall be a threshold for all Claims asserted by either party
against the other. The Claimant shall be entitled to indemnification or to
reimbursement of associated costs and expenses if and to the extent the
aggregate amount of all such Claims and associated costs and expenses asserted
against the other party equals or exceeds One Hundred Thousand Dollars
($100,000) ("BASKET"); notwithstanding anything in this Section 10.3, all Claims
arising from breaches of the representations, warranties and covenants contained
in Sections 3.1 Corporate Status, 3.2 Corporate Power and Authority, 3.5 Tax,
3.8 Title to Properties, shall not be subject to the limitation of the Basket
and the amount of indemnification for all such Claims shall be from the first
dollar of such Claims without regard to the Basket.
10.4 CAP. The maximum amount of indemnification owed by either party to
the other, shall not exceed, in the aggregate, fifty percent (50%) of the
Purchase Price; provided, however, that when a Claim arising from breaches of
the representations, warranties and covenants contained in Sections 3.1
Corporate Status, 3.2 Corporate Power and Authority, 3.5 Tax, and 3.8 Title to
Properties and 3.15 Environmental Matters, the maximum amount of indemnification
owed by Sellers may exceed, in the aggregate
10.5 MATERIALITY. For purposes of this Agreement, in determining whether
there is an inaccuracy in, or action, omission or statement of facts
inconsistent with, any representation or warranty, the terms "material" and
"materially," when applicable to such representation or warranty shall mean a
claim, loss, liability, fine, violation or other similar or like expenses which
exceed twenty-five thousand dollars ($25,000), and "material adverse effect,"
when applicable to such representation and warranty shall mean an effect that
has occurred to the financial condition or results of operations of the Business
which exceeds $25,000 for each individual claim or group of claims arising from
the same or similar events, conditions or causes of conduct for which
indemnification is being sought.
10.6 KNOWLEDGE. For purposes of this Agreement, any reference to "the
knowledge of" or to "the best knowledge of" Sellers, when modifying any
representation or warranty and when applied to the operations of the Business or
to the Purchased Assets, shall mean that ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ Spring, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ each
have no actual knowledge, whether or not obtained in the exercise of their
respective corporate responsibilities, that such representation and warranty is
not true and correct to the same extent as provided in the applicable
representation and warranty, and further that such persons have taken no actions
to avoid obtaining actual knowledge of any such matters.
10.7 FURTHER MATTERS. No liability will be recoverable by or on behalf of
Buyer in respect of any representation, warranty or covenant to the extent that
the event giving rise thereto was caused by compliance with the requirements of
this Agreement. In no event will consequential, exemplary or punitive damages be
recoverable with respect to this Agreement by any party hereto.
10.8 EXCLUSIVITY. Except in the case of fraud, willful misconduct or
criminal conduct, the remedies provided in Section 9 shall be exclusive of any
other rights or remedies which might be available to a party upon the occurrence
of any event described in Sections 9.1 or 9.2 hereof, either under this
Agreement or at law or in equity. Nothing contained herein, however, shall
preclude a party from seeking injunctive or other equitable relief under
circumstances where such relief is available, with the proviso that the moving
party shall not be entitled to ancillary relief in the nature of damages or fee
awards unless specifically provided for in this Agreement.
10.9 INSURANCE COVERAGE. If a claim for indemnification is covered by
insurance, such claim for indemnification shall be reduced by the amount
actually received by Buyer from the insurance carrier. Buyer shall make the
reasonable commercial efforts necessary to pursue such insurance claim. However,
Buyer may, concurrent with continuing to pursue such insurance claim, make a
24
claim for indemnification to Sellers pursuant to this Section 10.9 hereof and
shall be entitled to receive payment on account of such Claim pursuant to
Sections 9 and 10 hereof regardless of whether or not the insurance carrier has
already paid for the corresponding insurance claim. Once Sellers pay the
indemnification claim to Buyer, Buyer shall continue to pursue such insurance
coverage or assign such claim to Sellers and any monies received by Buyer at any
time from any insurance carrier regarding such claim, shall be paid to Sellers
by Buyer up to the full indemnified claim amount previously paid by Sellers.
Notwithstanding anything otherwise set forth above, the parties agree that the
proceeds of any environmental insurance secured by Buyer shall not be subject to
this Section 10.9 and Sellers shall have no claim or entitlement thereunder or
right to indemnification reduction.
11. DISPUTES
11.1 DISPUTE RESOLUTION. Any dispute arising out of or relating to this
Agreement, including, but not limited to, claims for indemnification pursuant to
Section 9, shall be resolved in accordance with the procedures specified in this
Section 11, which shall be the sole and exclusive procedures for the resolution
of any such disputes; provided, that all disputes with respect to the Purchase
Price adjustment of Section 2.3 hereof shall be resolved solely as set forth in
Section 2.3.
11.2 NEGOTIATION BETWEEN EXECUTIVES. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between representatives of the Sellers and
representatives of the Buyer. All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement negotiations for
purposes of the Federal Rules of Evidence and State Rules of Evidence.
11. 3 LITIGATION. If the dispute has not been resolved as provided herein
within thirty (30) days of the initiation of such negotiation between
executives, either party may initiate litigation (upon prior written notice to
the other party).
11.4 PROVISIONAL REMEDIES. The procedures specified in this Section shall
be the sole and exclusive procedures for the resolution of disputes between the
parties arising out of or relating to this Agreement; provided, however, that
either party, without prejudice to the above procedures, may file a complaint
(for statue of limitations or venue reasons) or seek preliminary injunction or
other provisional judicial relief, if in its sole judgment such action is
necessary to avoid irreparable damage or to preserve the status quo. Despite
such action, the parties will continue to participate in good faith in the
procedures specified in this Section.
11.5 PERFORMANCE TO CONTINUE. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
11.6 TOLLING STATUE OF LIMITATIONS. All applicable statues of limitations
and defenses based upon the passage of time shall be tolled while the procedures
specified in Section 11.2 are pending. The parties will take such action, if any
requires, to effectuate such tolling.
12. INTELLECTUAL PROPERTY LICENSE To the extent any intellectual property owned
by or licensed to the Sellers as of the Closing, including without limitation,
any patent, patent rights, trademark, trade secret or copyright rights,
inventions, processes, formulas, proprietary rights, proprietary knowledge,
computer software, source or object codes, trade secrets relating to or arising
from any proprietary process, used in the conduct of the Business by Sellers is
not otherwise transferred hereunder, Sellers hereby grant Buyer a non-exclusive
royalty-free, paid up irrevocable license to use such intellectual property
(with the right to sublicense) to conduct the Business throughout the World.
Such limited license shall be fully transferable and assignable in the event of
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any future sale or transfer of the Business, or any material portion thereof.
Buyer hereby grants to ITW an exclusive, royalty-free, paid-up irrevocable
license (with the right to sublicense) to make, have made, offer for sale, sell
and/or import any invention claimed in any patent and/or patent application
listed on SCHEDULE 12 in any business other than the Business.
13. MISCELLANEOUS
13.1 ENTIRE AGREEMENT. This writing constitutes the entire agreement of
the parties with respect to the subject matter hereof and may not be modified,
amended or terminated except by a written agreement specifically referring to
this Agreement signed by all of the parties hereto. Any and all previous
agreements and understandings between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement.
13.2 WAIVER. No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or default
of the same or similar nature.
13.3 ASSIGNMENT. This Agreement may not be assigned by operation of law or
otherwise, except that the Buyer may assign its rights to any direct or indirect
wholly-owned subsidiaries of the Buyer, provided that no such assignment shall
relieve Buyer of its obligations hereunder, and the Buyer may collaterally
assign to any secured lender providing a credit facility to the Buyer all of the
Buyer's right, title and interest in and to this Agreement, including, but not
limited to, (a) all rights of the Buyer to receive monies due or to become due
to it hereunder or in connection herewith; (b) all rights of the Buyer to
indemnification and claims for damages or other relief pursuant to or in respect
hereof; (c) all rights of the Buyer to perform and exercise remedies hereunder;
and (d) all proceeds, collections, recoveries and rights of subrogation with
respect to the foregoing.
13.4 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or mailed by
registered or certified mail (return receipt requested), email or facsimile to
the parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
If to Buyer: OMG Roofing, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
Vice President and General Counsel
With a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP
Park Avenue Tower
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
If to Sellers: Illinois Tool Works Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
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With a copy to: Illinois Tool Works Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
13.5 HEADINGS. The paragraph headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said paragraphs.
13.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall be deemed an original.
13.7 FACSIMILE SIGNATURES. Signatures delivered by facsimile for this
Agreement or any document delivered at Closing shall be binding to the same
extent as an original. At the request of any party, each other party shall
re-execute original forms of such documents and deliver them to all other
parties.
13.8 GOVERNING LAW. This Agreement and all amendments thereof shall be
governed by and construed in accordance with the laws of the State of Delaware
without reference to its conflict of law principles. Each of the parties hereby
irrevocably and unconditionally consents to submit to the jurisdiction of the
courts of the State of Delaware and the courts of the United States of America
located in the State of Delaware for any actions, suits or proceedings arising
out of or relating to this Agreement and the transactions contemplated hereby.
13.9 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
13.10 EXPENSES. The parties hereto shall pay their own expenses, including
without limitation their legal fees and expenses, incidental to the preparation
of this Agreement, the carrying out of the provisions of this Agreement and the
consummation of the transactions contemplated hereby.
13.11 NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and their successors and assigns, and they shall not be construed as
conferring any rights on any other persons.
13.12 SCHEDULES AND EXHIBITS. All Exhibits and Schedules referred to
herein are intended to be and hereby are specifically made a part of this
Agreement. If a document or matter is disclosed in any Exhibit or Schedule of
this Agreement, it shall be deemed to be disclosed for all purposes of this
Agreement without the necessity of specific repetition or cross-reference.
13.13 GUARANTY. All obligations, including representations, warranties,
commitments and covenants of the Buyer owing to the Sellers shall be
unconditionally and absolutely guaranteed by OMG, Inc., a Delaware corporation
and parent of Buyer ("Parent"). The liability of Parent shall not be reduced,
impaired or affected in any way (other than on account of payment) by reason of
(a) any lack of prior enforcement of any rights under this Agreement against
Buyer, (b) any failure to proceed against Buyer in advance of proceedings
against Parent, or (c) the commencement of any bankruptcy, reorganization,
liquidation, dissolution or receivership proceeding or case filed by or against
Buyer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date and year first above written.
OMG ROOFING, INC. ILLINOIS TOOL WORKS INC.
BY: BY:
/s/ /s/
-------------------------------------- --------------------------------------
ITS: ITS:
OMG, INC. ITW CANADA, REPRESENTED BY ITS
GENERAL PARTNER ITW CANADA
MANAGEMENT COMPANY
BY: BY:
/s/ /s/
-------------------------------------- --------------------------------------
ITS: ITS:
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