EXHIBIT 2(b)(i)
REORGANIZATION,
RECAPITALIZATION AND STOCK PURCHASE AGREEMENT
Dated as of June 29, 1998
By and Between
THE BLACK & XXXXXX CORPORATION,
TRUE TEMPER SPORTS, INC.
AND
TTSI LLC
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01 Definitions....................................... 2
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Reorganization of TTS Business.................... 2
Section 2.02 Recapitalization of TTSI.......................... 3
Section 2.03 Closing Transactions.............................. 3
Section 2.04 Section 338(h)(10) Election; Exchange
Consideration..................................... 5
Section 2.05 Closing........................................... 5
Section 2.06 Estimation and Adjustment of Exchange
Consideration..................................... 6
Section 2.07 Contingent Purchase Price......................... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 3.01 Representations and Warranties of Parent.......... 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer........... 9
ARTICLE V
COVENANTS AND AGREEMENTS OF PARENT
Section 5.01 Conduct of Business............................... 9
Section 5.02 Access to Information; Confidentiality............ 12
Section 5.03 Change of Lockbox Accounts........................ 13
Section 5.04 Access to Information; Cooperation After Closing.. 13
Section 5.05 Maintenance of Insurance Policies................. 14
Section 5.06 Noncompetition.................................... 14
Section 5.07 Debt Financing.................................... 15
Section 5.08 Advice of Changes................................. 15
Section 5.09 No Hire........................................... 15
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality................................... 15
Section 6.02 Provision and Preservation of and Access to
Certain Information; Cooperation...................16
Section 6.03 Insurance; Financial Support Arrangements......... 17
Section 6.04 Use of Intellectual Property...................... 18
Section 6.05 Conduct of TTS Business After Closing............. 19
Section 6.06 Debt Financing.................................... 19
Section 6.07 Certain Environmental Investigations.............. 19
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances................................ 20
Section 7.02 Certain Filings; Consents......................... 20
Section 7.03 Public Announcements.............................. 20
Section 7.04 Intellectual Property............................. 20
Section 7.05 HSR Act........................................... 21
Section 7.06 Certain Environmental Insurance Matters........... 21
Section 7.07 Legal Privileges.................................. 21
Section 7.08 Tax Matters....................................... 21
Section 7.09 Limitations on Confidentiality Restrictions....... 24
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters............ 24
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party....... 24
Section 9.02 Conditions to Obligations of Buyer................ 25
Section 9.03 Conditions to Obligation of Parent and TTSI....... 26
Section 9.04 Updated Disclosure Schedules...................... 26
Section 9.05 Effect of Waiver.................................. 26
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.......................................... 26
Section 10.02 Indemnification................................... 28
Section 10.03 Procedures........................................ 29
Section 10.04 Limitations....................................... 32
ARTICLE XI
TERMINATION
Section 11.01 Termination....................................... 32
Section 11.02 Effect of Termination............................. 33
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices........................................... 33
Section 12.02 Amendments; Waivers............................... 35
Section 12.03 Expenses.......................................... 35
Section 12.04 Successors and Assigns............................ 35
Section 12.05 Disclosure........................................ 35
Section 12.06 Construction...................................... 36
Section 12.07 Entire Agreement.................................. 36
Section 12.08 Governing Law..................................... 37
Section 12.09 Counterparts; Effectiveness....................... 37
Section 12.10 Jurisdiction...................................... 37
Section 12.11 Severability...................................... 37
Section 12.12 Captions.......................................... 37
Section 12.13 Bulk Sales........................................ 37
EXHIBITS
EXHIBIT A Definitions
EXHIBIT B Representations and Warranties of Parent
EXHIBIT C Representations and Warranties of Buyer
EXHIBIT D Employees and Employee Benefit Matters
EXHIBIT E Additional Matters Relating to Product Liability
Issues
ATTACHMENTS
Attachment I Opening Statement
Attachment II Assignment and Assumption Agreement
Attachment III Assignment of United States Trademarks, Trademark
Registrations and Applications for Registration
Attachment IV Assignment of Foreign Trademarks, Trademark
Registrations and Applications for Registration
Attachment V Assignment of United States Patents and Patent
Applications
Attachment VI Assignment of Foreign Patents and Applications for
Patents
Attachment VII Services Agreement
Attachment VIII Reserved
Attachment IX Exchange Consideration Allocation Schedule
Attachment X Intellectual Property (Registrations and Applications
Therefor)
Attachment XI Consents and Approvals Required Prior to Closing
Attachment XII TTSI Financial Statements
Attachment XIII Certain Active Employees
Attachment XIV Terms of Stockholders' and Registration Rights
Agreements
Attachment XV Assignment of U.S. Copyright Registration
-1-
REORGANIZATION, RECAPITALIZATION AND
STOCK PURCHASE AGREEMENT
This Reorganization, Recapitalization and Stock Purchase Agreement
(together with the Exhibits, Schedules and Attachments hereto, this "Agreement")
is made as of the 29th day of June 1998, by and among The Black & Xxxxxx
Corporation, a Maryland corporation ("Parent"), True Temper Sports, Inc., a
Delaware corporation ("TTSI"), and TTSI LLC, a Delaware limited liability
company ("Buyer").
W I T N E S E T H:
WHEREAS, Parent, through certain of its direct and indirect
Subsidiaries, is engaged in the TTS Business and indirectly beneficially owns
all of the issued and outstanding capital stock of TTSI;
WHEREAS, subsequent to the execution and delivery of this Agreement but
prior to the Closing, Parent desires to cause Emhart Industries, Inc., a
Connecticut corporation and an indirect, wholly-owned subsidiary of Parent
("EII"), to make a capital contribution of all of the assets and liabilities of
EII which are used exclusively in or relate exclusively to the TTS Business to
TTSI in exchange for newly issued shares of TTSI Common Stock and TTSI Preferred
Stock and TTSI desires to accept such capital contribution, to issue such shares
of TTSI Common Stock and TTSI Preferred Stock and to assume and agree to pay,
satisfy and discharge such liabilities, all as more fully set forth herein;
WHEREAS, subsequent to the execution and delivery of this Agreement but
prior to the Closing, TTSI desires to acquire from Emhart Inc., a Delaware
corporation and an indirect, wholly-owned subsidiary of Parent ("Emhart"), and
Parent desires to cause Emhart to sell and transfer to TTSI, certain
Intellectual Property used in connection with the TTS Business in exchange for
newly issued shares of TTSI Common Stock and TTSI Preferred Stock, all as more
fully set forth herein;
WHEREAS, subsequent to the execution and delivery of this Agreement but
prior to the Closing, Parent desires to cause certain of its other Subsidiaries
to contribute certain assets used exclusively in the TTS Business to TTSI in
exchange for promissory notes from TTSI payable at Closing and TTSI's assumption
of related liabilities;
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, following the reorganization of the TTS Business contemplated by the
preceding recitals, Parent desires to cause TTSI to incur indebtedness to
facilitate the recapitalization of TTSI, and Buyer desires to assist TTSI to
incur such indebtedness, all as more fully set forth herein;
WHEREAS, Parent desires to cause TTSI, and Buyer desires to assist
TTSI, to use the proceeds of such borrowings to redeem 100% of the TTSI Common
Stock and 100% of the TTSI Preferred Stock then owned by Emhart for an aggregate
consideration of $161,484,126 and 50%
-2-
of the TTSI Common Stock and 50% of the TTSI Preferred Stock then owned by EII
for an aggregate consideration of $26,914,021;
WHEREAS, following such redemption, Buyer desires to purchase, buy and
acquire from EII and Parent desires to cause EII to sell, transfer and convey to
Buyer the Acquired Shares, and Parent and Buyer desire to enter into certain
agreements and arrangements ancillary to such transactions; and
WHEREAS, upon consummation of the transactions contemplated by this
Agreement, (i) Buyer and Buyer's Permitted Assigns will own TTSI Common Stock
representing, in the aggregate, not less than 94.18% of all of the issued and
outstanding shares of TTSI Common Stock and TTSI Preferred Stock representing,
in the aggregate, 94.0% of all of the issued and outstanding shares of TTSI
Preferred Stock, (ii) EII will own 5.82% of all of the issued and outstanding
shares of TTSI Common Stock and 6.0% of all of the issued and outstanding shares
of TTSI Preferred Stock, and (iii) management of the TTSI Business designated by
Buyer will own any remaining shares of TTSI Common Stock.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of the parties contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Capitalized terms used in this Agreement
shall have the meanings specified in this Agreement or in Exhibit A.
ARTICLE II
TRANSACTIONS AND CLOSING
Section 2.01 Reorganization of TTS Business. Upon the terms and subject
to the conditions set forth in this Agreement, the parties agree that following
the execution of this Agreement and prior to consummation of the transactions
contemplated by Sections 2.02 and 2.03, among other things:
(a) TTSI will file an Amended and Restated Certificate of Incorporation
consistent with the terms of this Agreement as agreed to by Buyer and Parent;
(b) Parent will cause EII to contribute the Contributed Assets to TTSI,
free and clear of all Liens (other than Permitted Liens), and TTSI will assume
and agree to pay, satisfy and discharge all of the Assumed Liabilities, all as
contemplated by the Assignment and Assumption Agreement;
-3-
(c) In exchange for the capital contribution contemplated by Section
2.01(b), TTSI will issue 1,000 shares of TTSI Common Stock and 250 shares of
TTSI Preferred Stock to EII, which upon such issuance shall be duly authorized,
fully paid and non-assessable shares of capital stock of TTSI;
(d) Parent shall and will cause Emhart and, to the extent applicable,
EII to sell, transfer and convey to TTSI the Transferred Intellectual Property,
all as contemplated by the Intellectual Property Assignment Agreements;
(e) In exchange for the transfer of the Transferred Intellectual
Property contemplated by Section 2.01(d), TTSI will issue 6,000 shares of TTSI
Common Stock and 750 shares of TTSI Preferred Stock to Emhart, which upon such
issuance shall be duly authorized, fully paid and non-assessable shares of
capital stock of TTSI;
(f) Parent (i) will cause TTSI to establish a branch in each of the
United Kingdom, Australia and Japan and (ii) will cause each of Xxxxxx Fasteners
Limited ("Xxxxxx"), Black & Xxxxxx (Australasia) Pty. Limited ("B&D
Australasia") and Nippon Pop Rivets & Fasteners, Ltd. ("Nippon") to contribute
the assets and liabilities relating exclusively to the TTS Business operations
in the United Kingdom, Australia and Japan, respectively, to TTSI; and
(g) In exchange for the contributions contemplated by Section 2.01(f),
TTSI will issue and deliver to each of Xxxxxx, B&D Australasia and Nippon a
promissory note payable in full at Closing with an initial principal amount
equal to the net book value of the respective contributed assets with a fixed
interest rate equal to 7.5% per annum.
Section 2.02 Recapitalization of TTSI. (a) Upon the terms and subject
to the conditions set forth in this Agreement, the parties agree that following
the execution of this Agreement and immediately prior to Closing, among other
things, Buyer will use commercially reasonable best efforts to assist TTSI in
obtaining debt financing in an aggregate amount of not less than $155,000,000,
together with a revolving credit facility in the amount of $20,000,000, in the
manner contemplated by the Commitment Letters or on other terms reasonably
acceptable to Buyer, the proceeds of which will be used to consummate the
Redemptions and to pay off the promissory notes contemplated by Section 2.01(g).
(b) Buyer may elect at its option to pursue an alternative financing
structure, provided that such structure does not result in any incremental
increase in costs to TTSI.
Section 2.03 Closing Transactions.
(a) Redemption of TTSI Shares. On and subject to the terms and
conditions set forth in this Agreement, at the Closing, TTSI shall:
(i) Redeem all of the issued and outstanding TTSI Common Stock
and TTSI Preferred Stock owned by Emhart by making a cash payment equal
to $161,484,126 by wire transfer of immediately available funds to an
account or
-4-
accounts of Emhart designated by Parent at least two Business Days
prior to Closing; and
(ii) Redeem 1,000 shares of the issued and outstanding TTSI
Common Stock and 125 shares of the issued and outstanding TTSI
Preferred Stock owned by EII by making a cash payment equal to
$26,914,021 by wire transfer of immediately available funds to such
account or accounts of EII designated by Parent at least two Business
Days prior to Closing;
such that, immediately following the consummation of the transactions
contemplated by this Section 2.03(a), EII will own 1,000 shares of TTSI Common
Stock and 125 shares of TTSI Preferred Stock which shares, in the aggregate,
will constitute 100% of the issued and outstanding capital stock of TTSI.
(b) Acquisition of Acquired Shares. On and subject to the terms and
conditions set forth in this Agreement, at the Closing:
(i) Parent shall cause EII to sell, transfer and convey to
Buyer and Buyer's Permitted Assignees, free and clear of all Liens
(other than Permitted Liens) an aggregate of 941.8 shares of TTSI
Common Stock and an aggregate of 117.5 shares of TTSI Preferred Stock;
and
(ii) In consideration for the transfer of the Acquired Shares,
Buyer shall make cash payments equalling, in the aggregate, $14,301,853
by wire transfer of immediately available funds to an account or
accounts of EII designated by Parent at least two Business Days prior
to Closing;
such that, immediately following consummation of the transactions contemplated
by this Section 2.03(b), EII will own 58.2 shares of TTSI Common Stock
representing 5.82% of all the issued and outstanding shares of TTSI Common Stock
and 7.5 shares of TTSI Preferred Stock representing 6.0% of all the issued and
outstanding shares of TTSI Preferred Stock and Buyer and Buyer's Permitted
Assignees will own, in the aggregate, 941.8 shares of TTSI Common Stock
representing 94.18% of all the issued and outstanding shares of TTSI Common
Stock and 117.5 shares of TTSI Preferred Stock representing 94.0% of all the
issued and outstanding shares of TTSI Preferred Stock.
(c) Consent and Waiver by Buyer. By execution and delivery of this
Agreement, Buyer hereby consents to and waives any rights in respect of the
redemption of TTSI Common Stock owned by EII or Emhart contemplated by Section
2.03(a).
(d) Additional Closing Transactions. Upon the terms and subject to the
conditions set forth in this Agreement, the parties agree that at the Closing,
among other things:
-5-
(i) Parent or its Affiliates, as the case may be, and TTSI
shall execute and deliver the Services Agreement with such additions,
deletions and changes as may be agreed to by Buyer and Parent; and
(ii) TTSI, Buyer, Buyer's Permitted Assigns and EII shall
execute and deliver a Stockholders' and a Registration Rights
Agreements containing the provisions contemplated by Attachment XIV.
Section 2.04 Section 338(h)(10) Election; Exchange Consideration.
(a) The parties agree to make an election under Section 338(h)(10) of
the Code (and any corresponding elections under any applicable state, local, or
foreign tax law) with respect to the sale of the Acquired Shares by EII to
Buyer.
(b) The consideration to be paid to Parent and its Affiliates in
connection with the Contemplated Transaction (the "Exchange Consideration")
shall consist of the following:
(i) the aggregate amounts paid by TTSI to redeem shares of
TTSI Common Stock and TTSI Preferred Stock pursuant to Section 2.03(a);
and
(ii) the aggregate amount paid by Buyer to EII in exchange for
the Acquired Shares pursuant to Section 2.03(b); and
(iii) the aggregate amounts payable to Xxxxxx, B&D Australasia
and Nippon pursuant to the promissory notes to be delivered in
accordance with Section 2.01(g) (as so adjusted and together with the
amount contemplated by Section 2.04(b)(i) and 2.04(b)(ii) above, the
"Adjusted Purchase Price"); and
(iv) the assumption by TTSI of the Assumed Liabilities in
accordance with the Transaction Documents.
(c) The Exchange Consideration and each Annual Thiokol Payment shall be
allocated to and among the respective Contributed Assets and Transferred
Intellectual Property as set forth in Attachment IX to this Agreement. Parent,
TTSI and Buyer agree that the allocation of the Exchange Consideration has been
negotiated by them and is consistent with the value of the Contributed Assets
and the principles of Section 1060 of the Code and the regulations promulgated
by the Internal Revenue Service thereunder. Parent, TTSI and Buyer agree that
they shall use the allocation of the Exchange Consideration reflected in
Attachment IX to this Agreement in any Tax Returns or other reports that deal
with the Contemplated Transactions and are filed with any Tax Authority and
shall promptly prepare and timely file such reports and information as may be
required to report the allocation contemplated by this Section 2.04(c).
Section 2.05 Closing. The closing (the "Closing") of the Contemplated
Transactions (other than the transactions contemplated by Section 2.01, which
may occur on an earlier date) shall take place at the offices of Xxxxxxxx &
Xxxxx, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
-6-
10022, on September 24, 1998; provided, however, that if all of the conditions
to Closing set forth in Article IX have not been satisfied (or waived) as of
that date and if closing on that date therefore would be impractical, the
Closing shall take place on the fifth Business Day following the satisfaction or
waiver (by the party entitled to waive the condition) of all conditions to the
Closing set forth in Article IX, or at such other time and place as the parties
to this Agreement may agree. The Closing will occur at 10:00 a.m. on the Closing
Date.
Section 2.06 Estimation and Adjustment of Exchange Consideration.
(a) Not later than two Business Days and not more than five Business
Days prior to the Closing Date, Parent shall deliver to Buyer a statement of net
working capital setting forth, in reasonable detail, Parent's reasonable good
faith calculation of the estimated Net Working Capital of TTSI as of the close
of business on the day prior to the scheduled Closing Date (the "Estimated Net
Working Capital"). To the extent that the Estimated Net Working Capital is less
than $11,600,000, Parent shall contribute, or cause to be contributed, to TTSI
an amount, in cash, equal to such deficiency. To the extent that the Estimated
Net Working Capital exceeds $11,600,000, Parent shall have the right to cause
TTSI to distribute to its shareholders at or immediately prior to the Closing an
amount, in cash, equal to such excess.
(b) Promptly following the Closing Date, but in no event later than 60
days after the Closing Date, Parent shall, at its expense, with the assistance
of Buyer and TTSI prepare and submit to Buyer a statement of net working capital
setting forth, in reasonable detail, Parent's calculation of the actual Net
Working Capital of TTSI as of the close of business on the day prior to the
Closing Date after giving effect to any distribution or contribution made
pursuant to Section 2.06(a) above (the "Proposed Final Net Working Capital
Amount"). In the event Buyer disputes the correctness of the Proposed Final Net
Working Capital Amount, Buyer shall notify Parent of its objections within 45
days after receipt of Parent's calculation of the Proposed Final Net Working
Capital Amount and shall set forth, in writing and reasonable detail, the
reasons for Buyer's objections. If Buyer fails to deliver such notice of
objections within such time, Buyer shall be deemed to have accepted Parent's
calculation. To the extent Buyer does not object, in writing and in reasonable
detail, as required and within the time period contemplated by this Section
2.06(a) to a matter in the statement of net working capital prepared and
submitted by Parent, Buyer shall be deemed to have accepted Parent's calculation
and presentation in respect of the matter and the matter shall not be considered
to be in dispute. Parent and Buyer shall endeavor in good faith to resolve any
disputed matters within 20 days after Parent's receipt of Buyer's notice of
objections. If they are unable to do so, Parent and Buyer shall select a
nationally known independent accounting firm (other than Ernst & Young LLP or
KPMG Peat Marwick LLP to resolve the matters in dispute (in a manner consistent
with Section 2.06(b) and with any matters not in dispute), and the determination
of such firm in respect of the correctness of each matter remaining in dispute
shall be conclusive and binding on Parent and Buyer. The independent
accountant's determination of Net Working Capital of TTSI as of the close of
business on the day prior to the Closing Date shall be within the range
established by Parent and Buyer. The Net Working Capital of TTSI as of the close
of business on the day prior to the Closing Date, as finally determined pursuant
to this Section 2.06(a) (whether by failure of Buyer to deliver notice of
objection, by agreement of Parent and Buyer or by determination of the
-7-
independent accountants selected as set forth above), is referred to herein as
the "Final Net Working Capital Amount."
(c) The Proposed Final Net Working Capital Amount and the Final Net
Working Capital Amount shall be determined in accordance with the accounting
principles, policies, practices and methods utilized in the preparation of the
Opening Statement, as disclosed in the notes to the Opening Statement, except as
otherwise set forth in Note 8 to the Opening Statement.
(d) If the Final Net Working Capital Amount is greater than
$11,600,000, the difference shall be paid to Parent by TTSI with simple interest
thereon from the Closing Date to the date of payment at a floating rate per
annum equal to the per annum interest rate announced from time to time by
Citibank, N.A. as its prime rate in effect. If the Final Net Working Capital
Amount is less than $11,600,000, the difference shall be paid to TTSI by Parent
with simple interest thereon from the Closing Date to the date of payment at a
floating rate per annum equal to the per annum interest rate announced from time
to time by Citibank, N.A. as its prime rate in effect. Such payment shall be
made in immediately available funds not later than five Business Days after the
determination of the Final Net Working Capital Amount by wire transfer to a bank
account designated in writing by the party entitled to receive the payment. Any
payment contemplated by this Section 2.06(d) shall be treated as an increase or
decrease, as the case may be, in the amount paid pursuant to Section 2.03(a) on
a pro rata basis between Emhart and EII.
(e) Parent shall make available and shall cause Ernst & Young LLP to
make available, in accordance with reasonable and customary practices and
professional standards and subject to such reasonable conditions as Ernst &
Young LLP shall impose, the books, records, documents and work papers underlying
the preparation and review of the Opening Statement and the calculation of the
Proposed Final Net Working Capital Amount. TTSI shall make available and shall
cause KPMG Peat Marwick LLP to make available, in accordance with reasonable and
customary practices and professional standards and subject to such reasonable
conditions as KPMG Peat Marwick LLP shall impose, the books, records, documents
and work papers created or prepared by or for TTSI in connection with the review
of the Proposed Final Net Working Capital Amount and the other matters
contemplated by Section 2.06(a).
(f) The fees and expenses, if any, of the accounting firm selected to
resolve any disputes between Parent and TTSI in accordance with Section 2.06(b)
shall be paid one-half by Parent and one-half by TTSI.
Section 2.07 Contingent Purchase Price.
(a) Promptly following the last day of each fiscal year of TTSI after
the Closing Date, but in no event later than 90 days thereafter, TTSI shall
prepare and submit to Parent a statement of TTSI's estimate of the Thiokol
Payment for the preceding fiscal year, setting forth, in reasonable detail,
TTSI's calculation of the Thiokol Payment for that year together with detailed
support for such calculation (the "Proposed Annual Thiokol Payment") and a
certificate of the president of TTSI to the effect that the Proposed Annual
Thiokol Payment was determined in accordance with the provisions of this Section
2.07. In the event that Parent disputes the correctness of the
-8-
Proposed Annual Thiokol Payment, Parent shall notify TTSI of its objections
within 45 days of receipt of TTSI's calculation of the Proposed Annual Thiokol
Payment and shall set forth, in reasonable detail, the reasons for Parent's
objections. If Parent fails to deliver such notice of objections within such
time, Parent shall be deemed to have accepted TTSI's calculation. Parent and
TTSI shall, and Buyer shall cooperate with Parent and TTSI to, endeavor in good
faith to resolve any disputed matters within 20 days after TTSI's receipt of a
notice of objections. If they are unable to do so, Parent and TTSI shall select
a nationally known independent accounting firm (other than Ernst & Young LLP,
KPMG Peat Marwick LLP or TTSI's independent accountants) to resolve the matters
in dispute (in a manner consistent with Section 2.07(b) and with any matters not
in dispute), and the determination of such firm in respect of the correctness of
each matter remaining in dispute shall be conclusive and binding on the parties.
The independent accountants determination of the Thiokol Payment for that year
shall be within the range established by TTSI and Parent. The Thiokol Payment
for that year, as finally determined pursuant to this Section 2.07(a) (whether
by failure of Parent to deliver notice of objections, by agreement of Parent and
TTSI or by determination of the independent accountants selected as set forth
above), is referred to herein as the "Annual Thiokol Payment."
(b) The Annual Thiokol Payment for each fiscal year of TTSI
shall be paid by TTSI to Parent with simple interest thereon from the last date
of the applicable fiscal year to the date of payment at a floating rate per
annum equal to the per annum interest rate announced from time to time by
Citibank, N.A. (or its successors) as its prime rate. Such payment shall be made
within 5 Business Days after the determination of the Annual Thiokol Payment for
the respective fiscal year of TTSI by wire transfer to a bank account designated
by Parent.
(c) TTSI shall make available and shall cause TTSI's
independent accountants to make available, in accordance with reasonable and
customary practices and professional standards and subject to such reasonable
conditions as TTSI's independent accountants shall impose, the books, records,
documents and work papers underlying the preparation and review of the Proposed
Annual Thiokol Payment.
(d) The fees and expenses, if any, of the accounting firm
selected to resolve any dispute between Parent and TTSI in accordance with
Section 2.07(a) shall be borne by Parent if the Annual Thiokol Payment
determined by the accounting firm selected is closer to the end of the range
established by TTSI or by TTSI if the Annual Thiokol Payment is closer to the
end of the range established by Parent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 3.01 Representations and Warranties of Parent. Parent
represents and warrants to Buyer as set forth in Exhibit B.
-9-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 4.01 Representations and Warranties of Buyer. Buyer represents
and warrants to Parent as set forth in Exhibit C.
ARTICLE V
COVENANTS AND AGREEMENTS OF PARENT
Section 5.01 Conduct of Business. Except with the written consent of
Buyer, as otherwise provided in this Agreement, as set forth in Schedule 5.01 or
required by Applicable Law, or as required by the terms and conditions of
Contracts either disclosed on or not required to be disclosed on Schedule B.12
("Existing Contracts"), from the date of this Agreement until the Closing Date,
Parent shall cause Seller Companies and TTSI to conduct the TTS Business in all
material respects in accordance with the historical and customary operating
practices relating to the conduct of the TTS Business and shall use commercially
reasonable best efforts to preserve intact the TTS Business and the
relationships of Seller Companies and TTSI with third parties in connection with
the TTS Business, and Seller Companies and TTSI shall not:
(i) make any capital expenditure, or group of related capital
expenditures relating to the TTS Business in excess of $100,000 (other
than capital expenditures contemplated by the 1998 capital plan
previously provided to Buyer);
(ii) sell or dispose of more than an aggregate of $250,000 of
assets that would constitute Contributed Assets or Transferred
Intellectual Property if owned, held or used by TTSI on the Closing
Date (other than the sale of Inventory (including obsolete Inventory
whether or not in the ordinary course of business), and any sale made
in the ordinary course of business);
(iii) notwithstanding Section 5.01(ii), sell, transfer,
license or otherwise dispose of, any Transferred Intellectual Property
(except for certain Intellectual Property with registrations that will
expire in the normal course that will not constitute Transferred
Intellectual Property, the license or sale of Intellectual Property in
connection with the Shaft Lab product line or other licenses of
Intellectual Property granted in the ordinary course of business which
do not materially deplete the value of such Intellectual Property prior
to Closing);
(iv) except as contemplated by this Agreement, amend, modify
or supplement TTSI's Certificate of Incorporation or bylaws;
(v) issue any shares of capital stock of TTSI or any options,
warrants or other rights to acquire any shares of capital stock of TTSI
or securities convertible into or exchangeable for shares of TTSI
capital stock, except as contemplated by Section 2.01;
-10-
(vi) incur any indebtedness for money borrowed, other than the
debt financing contemplated by Section 2.02 or intercompany
indebtedness with another Seller Company cancelled at or prior to
Closing;
(vii) terminate or materially reduce the coverage of any
policies of title, liability, fire, workers' compensation, property and
any other form of insurance covering the operations of TTSI or the TTS
Business other than any termination or reduction of any insurance
covering Parent's businesses generally or where such policies are
replaced by policies that are substantially similar in all material
respects to the terminated policies;
(viii) settle any material lawsuit, claim or other material
dispute nor settle any other lawsuit, claim or other dispute if such
settlement imposes a material continuing non-monetary obligation on
TTSI or the TTS Business or any of the Contributed Assets or
Transferred Intellectual Property or any material monetary obligation
that will not be satisfied prior to the Closing or due and payable on
or before the one year anniversary of the Closing Date;
(ix) except as would not otherwise be prohibited by Section
5.01(x) below and except as would not constitute an Assumed Liability,
grant or implement any new or modified severance, termination or other
employee benefit or compensation arrangement or increase or accelerate
any benefits payable under the severance or termination pay policies or
other employee benefit or compensation arrangement with respect to any
Transferred Employee; or
(x) except as otherwise may be permitted or required by this
Agreement or Applicable Law and except as would not constitute an
Assumed Liability, adopt or amend in any material respect any Employee
Plan or Benefit Arrangement in respect of any Transferred Employee or,
other than compensation increases in the ordinary course of business,
with respect to any Transferred Employee whose base compensation is
$75,000 or above of TTSI or the TTS Business, as the case may be,
increase the compensation or fringe benefits of any such Transferred
Employee or pay any benefit not required by any Employee Plan or
Benefit Arrangement with respect to such Transferred Employee as in
effect on the date hereof.
(xi) fail to keep the equipment, machinery and systems used in
the TTS Business in compliance, in all material respects, with all
Applicable Laws and with all licenses and permits, and reasonably
maintain all such assets and replace any thereof which shall be worn
out, lost, stolen, or destroyed, in accordance with past practices
(other than assets that are no longer necessary for the operation of
the TTS Business);
(xii) fail to maintain the files and records of the TTS
Business in the usual, regular and ordinary manner, consistent with
past practices;
(xiii) fail to manage or cause to be managed the collection
and payment of the accounts receivable and accounts payable of the TTS
Business and otherwise maintain and
-11-
manage their respective inventories and other current assets and
current liabilities in the ordinary course of business and consistent
with past practice, including making payment with respect to all of
their respective accounts payable, current maturities of long term debt
and other current payables in a timely manner and in accordance with
the terms of such payable or such indebtedness, as the case may be,
provided that no such indebtedness (other than intercompany
indebtedness) shall be prepaid or otherwise retired in whole or in part
prior to the date on which such indebtedness or portion thereof is due
to be repaid, it being understood that the covenant set forth in this
Section 5.01(xiii) shall not prohibit Parent or the Seller Companies
from disputing any accounts payable in good faith, in the ordinary
course of business and consistent with past practice or require Parent
or the Seller Companies to generally change its practices with respect
to the collection and payment of accounts receivable and accounts
payable;
(xiv) fail to take commercially reasonable steps consistent
with current practices, and to cause any relevant Seller Company to
take commercially reasonable steps consistent with current practices,
to protect all Transferred Intellectual Property and take commercially
reasonable best efforts to prevent any of it from falling into the
public domain;
(xv) enter into any agreement, contract, lease, license,
commitment or instrument (or series of related agreements, contracts,
leases, licenses, commitments or instruments) that would be required to
be listed on Schedule B.12 or accelerate, terminate, modify or cancel
in a manner materially adverse to the TTS Business any agreement,
contract, lease, license, commitment or instrument (or series of
related agreements, contracts, leases, licenses, commitments or
instruments) that is required to be listed on Schedule B.12;
(xvi) impose any material Lien (other than any Lien of the
type that would constitute a Permitted Lien if in existence on the date
hereof) upon any of the Contributed Assets or Transferred Intellectual
Property;
(xvii) make any investment in, any loan to, or any acquisition
of the securities of, other than in the ordinary course of business,
assets of, any other Person (or series of related investments, loans,
and acquisitions) either involving more than $100,000 or outside the
ordinary course of business;
(xviii) make any loan to, or enter into any other transaction
with, any of its directors, officers, or employees, other than in their
capacity as such in connection with employee benefits or compensation
arrangements and in the ordinary course of business consistent with
past practices;
(xix) implement any layoffs of any employee who would
otherwise be a Transferred Employee other than the termination of any
employee in the ordinary course of business;
-12-
(xx) make or pledge to make any charitable or other capital
contribution that would be payable following the closing and not
reflected in the Final Net Working Capital Amount or otherwise
exceeding $50,000; and
(xxi) commit to any of the foregoing.
Section 5.02 Access to Information; Confidentiality.
(a) Except as may be necessary to comply with any Applicable Laws and
subject to any applicable privileges (including, without limitation, the
attorney-client and work-product privileges; provided that Parent and the Seller
Companies shall use commercially reasonable efforts to provide access to Buyer
in a manner that does not violate any applicable privileges), from the date of
this Agreement until the Closing Date, Parent, TTSI and Seller Companies shall
(i) give Buyer and its Representatives reasonable access to the records of TTSI
and Seller Companies relating to the TTS Business during normal business hours
and upon reasonable prior notice, (ii) give Buyer and its Representatives
reasonable access to any facilities the possession of which will be transferred
to Buyer at Closing during normal business hours and upon reasonable prior
notice for the purpose of Buyer's conduct of an environmental audit of such
facilities or documentary diligence, (iii) furnish to Buyer and its
Representatives such financial and operating data and other information relating
to TTSI and the TTS Business as Buyer may reasonably request and (iv) instruct
the employees and Representatives of TTSI and Seller Companies to provide
reasonable cooperation to Buyer in its investigation of the TTS Business.
Without limiting the generality of the foregoing, subject to the limitations set
forth in the first sentence of this Section 5.02(a), from the date of this
Agreement to the Closing Date Parent shall (i) use reasonable commercial efforts
to enable Buyer and its Representatives to conduct, at Buyer's expense, business
and financial reviews, investigations and studies as to the operation of TTSI
and the TTS Business, including any tax, operating or other efficiencies that
may be achieved and (ii) give Buyer and its Representatives access upon
reasonable request to information relating to TTSI and the TTS Business of the
type and with the same level of detail as in the ordinary course of business
currently is being made available to the president or chief financial officer,
or other senior management of the TTS Business. Notwithstanding the foregoing,
neither Buyer nor its Representatives shall have access to personnel records of
any Seller Companies or TTSI relating to individual performance or evaluation
records, medical histories or other information that in Parent's good faith
opinion is sensitive or the disclosure of which could subject TTSI or any Seller
Companies to risk of liability.
(b) For a period of two years after the Closing Date and, with respect
to any confidential information provided to Parent or any Seller Companies
pursuant to Section 2.07, for a period of two years thereafter, Parent and the
Seller Companies will treat and hold as confidential, any confidential
information relating primarily to the operations or affairs of TTSI or the TTS
Business. In the event Parent or any Seller Companies are requested or required
(by oral or written request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand or similar
process or by Applicable Law) to disclose any such confidential information,
then Parent shall notify Buyer promptly of the request or requirement so that
Buyer, at its expense, may seek an appropriate protective order or waive
-13-
compliance with this Section 5.02(b). If, in the absence of a protective order
or receipt of a waiver hereunder, any Seller Companies are, on the advice of
counsel, compelled to disclose such confidential information Parent or Seller
Companies may so disclose the confidential information, provided that Parent or
Seller Companies, as the case may be, shall use reasonable efforts to obtain
reliable assurance that confidential treatment will be accorded to such
confidential information. The provisions of this Section 5.02(b) shall not be
deemed to prohibit the disclosure of confidential information relating to the
operations or affairs of TTSI or the TTS Business by Parent or any Seller
Companies to the extent reasonably required (i) to prepare or complete any
required Tax Returns or financial statements, (ii) in connection with audits or
other proceedings by or on behalf of a Governmental Authority, (iii) in
connection with any insurance or benefits claims, (iv) to the extent necessary
to comply with any Applicable Laws, (v) to provide services to TTSI in
accordance with the terms and conditions of any of the Transaction Documents or
(vi) as Parent reasonably determines to be necessary and not materially
inconsistent with the intentions of this Section 5.02(b) in connection with any
other similar administrative functions in the ordinary course of business. In
addition, the provisions of this Section 5.02(b) shall not apply to information
that (i) is or becomes publicly available other than as a result of a disclosure
by any Seller Company, (ii) is or becomes available to a Seller Company on a
non-confidential basis from a source that, to Parent's knowledge, is not
prohibited from disclosing such information by a legal, contractual or fiduciary
obligation or (iii) is or has been independently developed by a Seller Company
(other than primarily for the TTS Business). This Section 5.02(b) shall not
apply to the use, license or sale of Intellectual Property not constituting
Transferred Intellectual Property.
Section 5.03 Change of Lockbox Accounts. Prior to or immediately after
the Closing, Parent shall take such steps as Buyer may reasonably request to
cause TTSI to be substituted as the sole party having control over any lockbox
or similar bank account maintained exclusively by the TTS Business to which
customers of the TTS Business directly make payments in respect of the TTS
Business or to direct the bank at which any such lockbox or similar account is
maintained to transfer any payments made thereto to an account established by
TTSI. To the extent that TTSI is not substituted as the sole party having
control over any such lockbox account prior to Closing, Parent or the applicable
Seller Company shall pay to TTSI any amount paid to such account following the
Closing with respect to any account receivable constituting part of the
Contributed Assets.
Section 5.04 Access to Information; Cooperation After Closing. On and
after the Closing Date and subject to any applicable privileges (including,
without limitation, the attorney-client and work-product privileges; provided
that Parent and the Seller Companies shall use commercially reasonable efforts
to provide access to Buyer in a manner that does not violate any applicable
privileges), Parent shall, and shall cause each of the other Seller Companies
to, at their expense (i) afford Buyer and its Representatives reasonable access
upon reasonable prior notice during normal business hours, to all employees,
offices, properties, agreements, records, books and affairs of Seller Companies
to the extent relating to the conduct of the TTS Business prior to the Closing
and (ii) cooperate fully with Buyer with respect to matters relating to the
conduct of the TTS Business prior to the Closing, including, without limitation,
in the defense or pursuit
-14-
of any Contributed Asset, Transferred Intellectual Property or Assumed Liability
or any claim or action that relates to occurrences involving the TTS Business
prior to the Closing Date.
Section 5.05 Maintenance of Insurance Policies. Except as otherwise
provided in Exhibit D, on and after the date of this Agreement and until the
Closing Date, Parent shall not take or fail to take any action if such action or
inaction, as the case may be, would adversely affect the applicability of any
insurance (including reinsurance) in effect on the date of this Agreement that
covers all or any part of the assets that would constitute Contributed Assets,
or Transferred Intellectual Property if owned, held or used by any Seller
Companies on the Closing Date, TTSI, the TTS Business or the Transferred
Employees. Except as otherwise provided in Exhibit D or as may otherwise be
agreed in writing by the parties, Parent and its Affiliates shall not have any
obligation to maintain the effectiveness of any such insurance policy after the
Closing Date or to make any monetary payment in connection with any such policy.
Section 5.06 Noncompetition.
(a) Parent covenants and agrees, as an inducement to Buyer to enter
into this Agreement and to consummate the Contemplated Transactions, that for a
period of five years following the Closing Date no Seller Company (for so long
but only for so long as it remains a Seller Company) will, directly or
indirectly, carry on or participate in the ownership, management or control of,
or license Intellectual Property to be used in a manner competitive with the TTS
Business by, any business enterprise (other than the Seller Companies' ownership
interest in TTSI following Closing) that competes anywhere in the world with the
TTS Business as it is being conducted on the Closing Date (a "Competing
Business").
(b) Nothing contained in this Section 5.06 shall limit or restrict the
right of any Seller Company to hold and make investments in securities of any
Person that has securities listed on a national securities exchange or admitted
to trading privileges thereon or actively traded in a generally recognized
over-the-counter market, provided that the aggregate equity interest therein of
Seller Companies does not exceed five percent of the outstanding shares or
interests in such Person at the time of Seller Companies' investment therein.
Notwithstanding any provisions of this Section 5.06 to the contrary, if Parent
or any other Seller Company acquires securities of any Person that is engaged in
a Competing Business, Seller Companies shall not be deemed to be in violation of
this Section 5.06, provided that (A) (i) at the time of acquisition the
Competing Business represents less than one-third of the gross revenues of the
acquired Person for the acquired Person's most recently completed fiscal year
and (ii) Seller Companies use reasonable commercial efforts to divest the
operations of such Competing Business subsequent to such acquisition, or (B) at
the time of acquisition the Competing Business represents less than five percent
of the gross revenues of the acquired Person for the acquired Person's most
recently completed fiscal year.
(c) Parent recognizes and agrees that a breach by Seller Companies of
any of the covenants and agreements in this Section 5.06 could cause irreparable
harm to Buyer, that Buyer's remedies at law in the event of such breach would be
inadequate, and that, accordingly, in the event of such breach a restraining
order or injunction or both may be issued against Seller
-15-
Companies, in addition to any other rights and remedies that may be available to
Buyer under Applicable Law. If this Section 5.06 is more restrictive than
permitted by the Applicable Laws of the jurisdiction in which Buyer seeks
enforcement hereof, this Section 5.06 shall be limited to the extent required to
permit enforcement under such Applicable Laws.
Section 5.07 Debt Financing. Parent shall, and shall cause the Seller
Companies and TTSI to, cooperate in a commercially reasonable manner with Buyer
to assist Buyer to assist TTSI in obtaining the debt financing for TTSI
contemplated by Section 2.02. In no event, however, shall Parent or any Seller
Companies be required to guaranty or otherwise provide any Financial Support
Arrangement in connection with TTSI obtaining the debt financing contemplated by
Section 2.02. Notwithstanding the foregoing sentence, in the event that Parent
elects to cause TTSI to obtain the bridge financing contemplated by the
Commitment Letters in order to satisfy the financing conditions contained in
Article IX, Parent agrees to reimburse TTSI for additional fees payable to the
bridge lenders for the take down of such financing in the amount of up to
$1,875,000 at Closing.
Section 5.08 Advice of Changes. Parent shall advise Buyer promptly in
writing after Parent obtains knowledge of any fact that, if known as of the date
of this Agreement, would have been required to be set forth or disclosed in or
pursuant to this Agreement or the Schedules hereto, or which would result in the
breach by the Parent or any Seller Company of any of its representations,
warranties, covenants or agreements hereunder or which could reasonably be
expected to result in or cause a Material Adverse Effect.
Section 5.09 No Hire. For a period of 12 months following the Closing
Date, no Seller Company shall hire for employment or offer employment to Xxxxx
X. Xxxxxxxx.
ARTICLE VI
COVENANTS AND AGREEMENTS OF BUYER
Section 6.01 Confidentiality. Buyer agrees that all non-public
information provided or otherwise made available in connection with the
Contemplated Transactions to Buyer or any of its Representatives shall be
treated as if provided under the Confidentiality Agreement (whether or not the
Confidentiality Agreement is in effect or has been terminated). The
Confidentiality Agreement shall continue to apply in accordance with its terms
following the Closing to any confidential information of Parent or any Seller
Company that does not relate to the TTS Business or TTSI. In the event that
Buyer or TTSI is requested or required (by oral or written request for
information or documents in any legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process or by Applicable Law) to disclose any
such confidential information, then Buyer and TTSI shall notify Parent promptly
of their request or requirement so that Parent, at its expense, may seek an
appropriate protective order or waive compliance with this Section 6.01. If, in
the absence of a protective order or receipt of a waiver hereunder, Buyer or
TTSI is, on the advice of counsel, compelled to disclose such confidential
information, Buyer or TTSI may so disclose the confidential information,
provided that Buyer or TTSI, as the case
-16-
may be, shall use reasonable commercial efforts to obtain reliable assurance
that confidential treatment shall be accorded to such confidential information.
The provisions of this Section 6.01 shall not be deemed to prohibit the
disclosure of confidential information relating to the operations or affairs of
TTSI or the TTS Business by Buyer to the extent reasonably required (i) to
prepare or complete any required Tax Returns or financial statements, (ii) in
connection with audits or other proceedings by or on behalf of a Governmental
Authority, (iii) in connection with any insurance or benefits claims, or (iv) to
the extent necessary to comply with any Applicable Laws. In addition, the
provisions of this Section 6.01 shall not apply to information that (i) is or
becomes publicly available other than as a result of a disclosure by TTSI or
Buyer, (ii) is or becomes available to TTSI or Buyer on a non-confidential basis
from a source that, to TTSI's and Buyer's knowledge, is not prohibited from
disclosing such information by legal, contractual or fiduciary obligation, or
(iii) is or has been independently developed by TTSI. Nothing in this Section
6.01, however, shall limit or otherwise restrict the applicability of any other
confidentiality or similar provisions included in the Transaction Documents.
Section 6.02 Provision and Preservation of and Access to Certain
Information; Cooperation.
(a) Prior to the Closing Date, Buyer shall provide to Parent promptly
upon its receipt thereof copies of all environmental audit and similar reports
with respect to facilities the possession of which will be transferred to TTSI
in accordance with this Agreement. Buyer shall provide to Parent a copy of all
sampling results, boring logs, analysis and other data and reports regarding any
environmental review conducted by Buyer immediately upon obtaining them.
(b) On and after the Closing Date, TTSI or any successor to the TTS
Business shall preserve all books and records of the TTS Business for a period
of six years commencing on the Closing Date (or in the case of books and records
relating to Tax, employment and employee benefits matters, until such time as
Parent notifies TTSI in writing that all statutes of limitations to which such
records relate have expired), and thereafter, not to destroy or dispose of such
records without giving notice to Parent of such pending disposal and offering
Parent such records. In the event Parent has not requested such materials within
90 days following the receipt of notice from TTSI, TTSI may proceed to destroy
or dispose of such materials without any liability.
(c) From and after the Closing Date and subject to any applicable
privileges (including, without limitation, the attorney-client and work-product
privileges; provided that Buyer and TTSI shall use commercially reasonable
efforts to provide access to Parent in a manner that does not violate any
applicable privileges), Buyer shall at its expense (i) afford Parent and its
Representatives reasonable access upon reasonable prior notice during normal
business hours, to all employees, offices, properties, agreements, records,
books and affairs of Buyer, and provide copies of such information, including,
without limitation, manifests regarding pre-closing disposal of Hazardous
Materials, concerning TTSI and the TTS Business as Parent may reasonably request
for any proper purpose, including, without limitation, in connection with the
matters contemplated by Section 2.06, the preparation of any Tax Returns, in
connection with any judicial, quasi-judicial, administrative, Tax, audit or
arbitration proceeding, in connection
-17-
with the preparation of any financial statements or reports and in connection
with the defense or prosecution of any claims or allegations that relate to or
may relate to Excluded Assets or Excluded Liabilities and (ii) cooperate fully
with Parent as reasonably requested for any proper purpose, including, without
limitation, the defense of or pursuit of any Excluded Liability, Excluded Asset
or Indemnified Claim, or any claim or action that relates to an Excluded
Liability, Excluded Asset or Indemnified Claim.
Section 6.03 Insurance; Financial Support Arrangements.
(a) Buyer acknowledges and agrees that as of the Closing Date, neither
TTSI, the TTS Business, any property owned or leased by any of the foregoing nor
any of the directors, officers, employees (including, without limitation, the
Transferred Employees) or agents of any of the foregoing will be insured under
any insurance policies maintained by Parent or any of its Affiliates, except (i)
in the case of certain claims made policies, to the extent that a claim has been
reported as of the Closing Date, (ii) in the case of a policy that is an
occurrence policy, to the extent the accident, event or occurrence that results
in an insurable loss occurs prior to the Closing Date and has been, is or will
be reported or noticed to the respective carrier by Buyer, TTSI or any Seller
Company in accordance with the requirements of such policies (which claims
Parent shall, at TTSI's cost and expense, pursue diligently on TTSI's behalf and
the net proceeds of which claims (except to the extent they relate to Excluded
Liabilities) shall be remitted promptly to TTSI upon receipt thereof), and (iii)
as otherwise provided in Exhibit D or agreed to in writing by the parties.
Except as otherwise provided in Exhibit D or as otherwise may be agreed to in
writing by the parties, from and after the Closing Date, Parent and its
Affiliates shall have no obligation of any kind to maintain any form of
insurance covering TTSI or all or any part of the Contributed Assets, the
Transferred Intellectual Property, the TTS Business or the Transferred
Employees.
(b) From and after the Closing Date, TTSI agrees to reimburse Parent
within 30 days of receipt of an invoice for any self insurance, retention,
deductible, retrospective premium, cash payment for reserves calculated or
charged on an incurred loss basis and similar items, including but not limited
to associated administrative expenses and allocated loss adjustment or similar
expenses (collectively, "Insurance Liabilities") allocated to TTSI or the TTS
Business by Parent on a basis consistent with past practices resulting from or
arising under any and all current or former insurance policies maintained by
Parent or any of its Affiliates to the extent that such Insurance Liabilities
relate to or arise out of Assumed Liabilities, but only to the extent that the
underlying claim was that of a third party and not a Seller Company. TTSI agrees
that, to the extent any of the insurers under the insurance policies, in
accordance with the terms of the insurance policies, requests or requires
collateral, deposits or other security to be provided with respect to claims
made against such insurance policies relating to or arising from TTSI or the TTS
Business, TTSI shall provide the collateral, deposits or other security or, upon
request of Parent, will replace any collateral, deposits or other security
provided by Parent or any of its Affiliates.
(c) TTSI agrees that, for a period of six years commencing on the
Closing Date, to the extent TTSI maintains product liability or similar
insurance coverage, TTSI will (at Parent's
-18-
cost to the extent of any additional cost therefor, provided that, in the event
there will be such a cost, TTSI will give Parent a reasonable period of time to
determine whether it desires to incur such cost before TTSI commits to such
coverage with respect to Parent) include Parent and its Affiliates as an
additional insured/loss payee on any such policies in respect of which Parent or
its Affiliates has or may have an insurable interest with respect to TTSI or the
TTS Business, the Contributed Assets, Transferred Intellectual Property, any of
the Assumed Liabilities or any facilities the possession of which will be
transferred to TTSI in accordance with this Agreement prior to Closing.
(d) Parent, TTSI and, prior to Closing, Buyer agree that they shall in
good faith seek to obtain the release of Parent and its Affiliates from all
obligations under all Financial Support Arrangements maintained by Parent or any
of its Affiliates in connection with TTSI or the TTS Business.
(e) If, at any time after the Closing Date, (i) any amounts are drawn
on or paid under any Financial Support Arrangement where Parent or any of its
Affiliates is obligated to reimburse the Person making such payment or (ii)
Parent or any of its Affiliates pays any amounts under, or any fees, costs or
expenses relating to, any Financial Support Arrangement, TTSI shall indemnify
and hold Parent and its Affiliates harmless and pay Parent such amounts promptly
after receipt from Parent of notice thereof accompanied by written evidence of
the underlying payment obligation.
Section 6.04 Use of Intellectual Property. Each of Buyer and TTSI
acknowledge and agrees that except as otherwise specifically contemplated by the
Transaction Documents neither TTSI nor Buyer is obtaining any rights in or to
use any Intellectual Property. Buyer and TTSI further acknowledge and agree that
notwithstanding any provision to the contrary in the Transaction Documents,
Buyer and TTSI shall not use, and each shall cause their respective Affiliates
not to use, any trademark, logo or tradename of Parent or any Affiliate of
Parent (other than those listed on Attachment X as Transferred Intellectual
Property and transferred to Buyer under the terms of this Agreement) or any
trademarks, logos or trade names that are confusingly similar thereto or that
are a translation or transliteration thereof into any language or alphabet.
Without limiting the generality of the foregoing, Buyer and TTSI shall not use,
and shall cause their respective Affiliates not to use (i) the words "The Black
& Xxxxxx Corporation," "Emhart Inc.," "Emhart Industries, Inc.," "Black &
Xxxxxx," "Emhart" or any derivatives, translations or transliterations of any of
the foregoing or (ii) the words "True Temper" or any derivative, translation or
transliteration thereof in violation of the Huffy Trademark Agreement; provided,
however, that with respect to any work-in-progress, preprinted stationery,
invoices, receipts, forms, advertising and promotional materials, training and
source literature, packaging material or other supplies that TTSI has in
inventory after the Closing which bears the name "The Black & Xxxxxx
Corporation," "Black & Xxxxxx," "Emhart Inc.," "Emhart Industries, Inc." or
"Emhart," Parent hereby grants to TTSI a paid-up license to use such names on
such inventory; provided, further, that TTSI agrees to use its reasonable best
efforts to exhaust such inventory in the ordinary course of business as soon as
is reasonably practicable after the Closing. The provisions of this Section 6.04
shall survive the Closing indefinitely.
-19-
Section 6.05 Conduct of TTS Business After Closing. From and after the
Closing, TTSI shall, and Buyer shall cause TTSI (and any successor or assign in
respect of the TTS Business) to, conduct the TTS Business in all respects in
accordance with each of the 1959 TTSI Consent Decree and the 1961 TTSI Consent
Decree for so long as either such decree is in force and binding upon the TTS
Business. The provisions of this Section 6.05 shall survive the Closing
indefinitely.
Section 6.06 Debt Financing. Buyer shall use its commercially
reasonable best efforts to assist TTSI to obtain the debt financing contemplated
by Section 2.02. In this regard, and without limiting the generality of the
foregoing, Buyer shall take all action within its control which is necessary or
appropriate and consistent with commercially reasonable best efforts to secure
the debt financing contemplated by the Commitment Letters or other financing
satisfactory to Buyer. Buyer shall not amend or otherwise modify the Commitment
Letters (or any term or condition thereof) in any respect that would materially
and adversely affect the ability of TTSI to obtain such financing without the
prior written consent of Parent.
Section 6.07 Certain Environmental Investigations.
(a) Buyer agrees that, if Buyer decides to conduct prior to
Closing an environmental audit or similar review of the TTS Business that
involves testing, drilling or sampling at any facility, possession of which is
contemplated to be transferred to TTSI, Buyer shall be permitted to do so,
provided Buyer will so advise Parent and will give Parent sufficient prior
written notice to enable Parent's Representatives to be present during any such
testing, drilling or sampling and to review and comment on any work plans
related to such audit or review. Buyer further agrees to arrange for split
samples to be taken in connection with any such auditor review. Buyer agrees
that it will conduct such testing, drilling, or sampling, including disposal of
all materials associated with such activities, such as drill cuttings, waste
water, and sampling equipment, at Buyer's sole cost and expenses and in
accordance with all Applicable Laws, including Environmental Laws. If the
Closing contemplated by the Transaction Documents is not consummated for any
reason, Buyer agrees to restore each facility at which any such testing,
drilling or sampling was conducted to its condition prior to the commencement of
Buyer's environmental audit or similar review.
(b) All information obtained from Buyer's environmental review
shall be kept confidential and Buyer shall not provide it to any Person other
than Parent. In the event that Buyer's environmental review discloses conditions
at any of Seller Companies' facilities that may require notice to a Governmental
Authority prior to Closing, Parent shall determine what reporting, if any, is
necessary and shall conduct such reporting.
-20-
ARTICLE VII
COVENANTS AND AGREEMENTS OF THE PARTIES
Section 7.01 Further Assurances. Subject to the terms and conditions of
this Agreement, each party shall use commercially reasonable best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary or desirable under Applicable Laws to consummate the
Contemplated Transactions. Parent and Buyer shall execute and deliver, and shall
cause Seller Companies and TTSI, as appropriate or required and as the case may
be, to execute and deliver such other documents, certificates, agreements and
other writings and to take such other actions as may be necessary or desirable
to consummate or implement the Contemplated Transactions. Except as otherwise
expressly set forth in the Transaction Documents, nothing in this Section 7.01
shall require any Seller Companies, TTSI or Buyer to make any payments in order
to obtain any consents or approvals necessary or desirable in connection with
the consummation of the Contemplated Transactions (other than any payments
specifically required by the term of any Contract).
Section 7.02 Certain Filings; Consents. Parent and Buyer shall
cooperate with one another and use their respective commercially reasonable best
efforts (i) in determining whether any action by or in respect of, or filing
with, any Governmental Authority is required, or any actions, consents,
approvals or waivers are required to be obtained from parties to any material
Contracts, in connection with the consummation of the Contemplated Transactions
and (ii) subject to the terms and conditions of this Agreement, in taking such
actions or making any such filings, furnishing information required in
connection therewith and seeking timely to obtain any such actions, consents,
approvals or waivers.
Section 7.03 Public Announcements. Prior to the Closing, Parent and
Buyer shall consult with each other before issuing any press release or making
any public statement with respect to this Agreement or the Contemplated
Transactions and, except as may be required by Applicable Law or any listing
agreement with any national or international securities exchange, shall not
issue any such press release or make any such public statement prior to such
consultation. Notwithstanding the foregoing, no provision of this Agreement
shall relieve Buyer from any of its obligations under the Confidentiality
Agreement, or terminate any of the restrictions imposed upon Buyer under Section
6.01.
Section 7.04 Intellectual Property.
(a) Buyer and TTSI acknowledge and agree that TTSI shall hold all
Transferred Intellectual Property constituting part of the Contributed Assets
subject to any licenses thereof granted by Seller Companies prior to the Closing
Date that have been disclosed to Buyer in writing or that are immaterial in the
aggregate, are granted in connection with the license or sale of Intellectual
Property in connection with the Shaft Lab product line or are incurred in the
ordinary course of business after the date of this Agreement and prior to
Closing and do not materially deplete the value of such Intellectual Property.
-21-
(b) Buyer and TTSI further acknowledge and agree that the transfer of
Transferred Intellectual Property to TTSI shall not affect the right of Seller
Companies to use, disclose or otherwise freely deal with any know-how, trade
secrets and other technical information not constituting Transferred
Intellectual Property or Contributed Assets; provided, however, that the
foregoing shall not constitute a license to the Seller Companies under any
patents included among the Transferred Intellectual Property.
Section 7.05 HSR Act. Parent and Buyer shall use their respective
commercially reasonable best efforts to cause the prompt expiration or
termination of any applicable waiting period under the HSR Act in respect of the
Contemplated Transactions, including, without limitation, complying as promptly
as practicable with any requests for additional information.
Section 7.06 Certain Environmental Insurance Matters. Notwithstanding
any provision to the contrary in this Agreement, this Section 7.06 shall
constitute Parent's and Buyer's agreement regarding the allocation of insurance
proceeds with respect to matters that arise under or relate to Environmental
Laws that are comprised, in whole or in part, of Environmental Liabilities that
constitute Assumed Liabilities (the "Environmental Insurance Claims"). Each of
Buyer and TTSI acknowledges and agrees that, notwithstanding any other
provisions of the Transaction Documents, Parent shall control the Environmental
Insurance Claims and shall have the right to compromise or settle any
Environmental Insurance Claims; provided, however, that without the prior
written consent of Buyer, Parent shall not have the right to enter into any
compromise or settlement of any Environmental Insurance Claim that (i) imposes
any liability, obligation or responsibility on TTSI or (ii) imposes any
condition, restriction or limitation on the operation or conduct of the TTS
Business. Parent agrees to act in good faith and with reasonable prudence to
maximize recovery (after costs and Taxes) with respect to the Environmental
Insurance Claims and shall allocate any recovery received with respect to such
Environmental Insurance Claims, first, to the costs incurred to collect such
recovery (whether incurred before or after Closing) and, second, to all net Tax
costs related to such recovery. Any recovery remaining shall be apportioned
equitably between Parent and TTSI. Any obligations assumed in any such
compromise or settlement of the Environmental Insurance Claims shall be
apportioned between Parent or the applicable Seller Company and TTSI in the same
proportion as a recovery would be allocated pursuant to this Section 7.06.
Section 7.07 Legal Privileges. Parent, Buyer and TTSI acknowledge and
agree that all attorney-client, work product and other legal privileges that may
exist with respect to TTSI and the TTS Business (including, without limitation,
with respect to the Contributed Assets, Transferred Intellectual Property,
Excluded Assets, Assumed Liabilities and Excluded Liabilities) shall, from and
after the Closing Date, be deemed joint privileges of Seller Companies, Buyer
and TTSI. Each of Seller Companies, TTSI and Buyer shall use all commercially
reasonable efforts after the Closing Date to preserve all such privileges and
none of Seller Companies, TTSI nor Buyer shall knowingly waive any such
privilege without the prior written consent of the other party (which consent
shall not be unreasonably withheld or delayed).
-22-
Section 7.08 Tax Matters.
(a) The parties hereto recognize that the transactions that are
contemplated by this Agreement constitute a fully taxable sale for all Tax
purposes of all of the assets of the TTS Business to TTSI. Except as provided
below, it is the intention of the parties that Seller Companies will accept
liability for and pay any and all Taxes based on the income of TTSI due for or
attributable to Tax periods ending on or before the Closing Date and that
portion related to the operation of the Business on or prior to the Closing Date
for any Tax period ending after the Closing Date. Seller Companies will accept
liability for and pay any and all Taxes attributable to the transfer of assets
to TTSI. Seller Companies will accept liability for and pay all Taxes
attributable to the deemed sale of assets pursuant to the Section 338(h)(10)
election; provided, however, for those state jurisdictions which do not respect
or allow the Section 338(h)(10) election contemplated by Section 2.05, Seller
Companies will pay Taxes on the sale of stock of TTSI, but their respective
obligations to pay Taxes on the deemed asset sale under the Section 338(h)(10)
election will be reduced correspondingly, thereby causing the Contemplated
Transactions to be subject to Tax only once for any state or local purposes.
Accordingly, the Buyer will indemnify Seller Companies to the extent of any
double Tax imposed by such states.
(b) (i) Parent will file with the appropriate Tax Authorities all Tax
Returns required to be filed on its behalf and on behalf of TTSI for any taxable
period ending on or before the Closing Date, and Parent will include the taxable
income of TTSI (to the extent permitted by Applicable Law) for each such period
in its consolidated federal income Tax Return and in any consolidated, combined
or unitary Tax Return (including Tax Returns based on or measured by net income)
filed by Parent or any Affiliate thereof in which such income can be included
under Applicable Law. TTSI will furnish Tax information to Parent for inclusion
in such consolidated, combined or unitary Tax Returns filed by Parent or an
Affiliate thereof for the period which includes the Closing Date. Parent and its
Affiliates agree that they will take commercially reasonable efforts to treat
the transactions contemplated by this Agreement as being a fully taxable sale of
all of the assets of the TTS Business pursuant to a taxable transfer under the
Code and the Section 338(h)(10) election of the Code at the time of the transfer
of Contributed Assets and Transferred Intellectual Property to TTSI. As a
result, all Contributed Assets and Transferred Intellectual Property will have a
basis equal to their fair market value for purposes of determining any gain
under the deemed sale resulting from the 338(h)(10) election.
(ii) TTSI will, and Buyer will cause TTSI to, file with the
appropriate Tax Authorities all Tax Returns required to be filed by TTSI or any
of its Affiliates for any taxable period ending after the Closing Date and will
remit any Taxes due in respect of such Tax Returns. Parent will pay to TTSI the
Taxes for which Parent or any Seller Company is liable pursuant to Section
7.08(b)(i) and 7.08(c) hereof, but which are payable in respect of Tax Returns
to be filed by TTSI pursuant to this Section 7.08(b)(ii) within 10 Business Days
prior to the due date (taking account of any extensions of time for filing) for
the filing of such Tax Returns but no earlier than 20 Business Days after such
Tax Returns and the tax allocation calculations have been submitted to Parent
for review and approval.
-23-
(c) Parent will be liable for and will pay, and hereby indemnifies,
TTSI for all Taxes, resulting from TTSI ceasing to be a member of any affiliated
group (as defined in Section 1504(a) of the Code without regard to the
limitations contained in Section 1504(d) of the Code) that includes Parent or
any of its predecessors; Taxes imposed on any member of Parent's affiliated
group for any taxable year (i) under Treas. Reg. Section 1.1502-6 (or any
similar provision of state, local or foreign law), (ii) as a transferee or
successor of a member of Parent's affiliated group, or (iii) by contract or
otherwise; amounts pursuant to any guaranty, indemnification, tax sharing, or
similar agreement made on or before the Closing Date relating to the sharing of
liability for payment of Taxes; and any real estate transfer Taxes or charges
resulting from transactions described in Section 2.01 hereof, for any taxable
year ending on or prior to the Closing Date and for the portions of such taxable
year or period ending on or prior to the Closing Date (or, in the case of
consolidated, combined or unitary Tax Returns, including Parent, any period
including the Closing Date) and any costs and expenses (including, without
limitation, costs of collection and attorneys' fees) arising out of or resulting
from Parent's liability and indemnity for Taxes hereunder. Parent will be
entitled to retain any refund of Taxes with respect to TTSI or the TTS Business
relating to any such periods. To apportion appropriately any income Taxes
relating to any taxable year or period that begins before and ends after the
Closing Date, the parties hereto will, to the extent permitted by Applicable
Law, elect with the relevant Tax Authority to terminate the taxable year as of
the Closing Date (provided, however, that any Taxes related to the transfer of
assets or the Section 338(h)(10) election will be determined as provided in
Section 7.08(a) hereof). In any case where Applicable Law does not permit any
company to treat the Closing Date as the end of a taxable year of such
corporation, then whenever it is necessary to calculate the liability for income
or franchise Taxes of such company for a portion of a taxable year, such
determination will (unless otherwise agreed to in writing by Buyer and Parent)
be determined by a closing of such corporation's books at the close of business
on the Closing Date, except that exemptions, allowances or deductions that are
calculated on an annual basis, such as the deduction for depreciation, will be
apportioned on a daily basis. To apportion appropriately any Taxes, other than
income or franchise Taxes, relating to any taxable year or period that begins
before and ends after the Closing Date, (i) ad valorem Taxes (including, without
limitation, real and personal property Taxes) will be accrued on a daily basis
over the period for which the Taxes are levied, or if it cannot be determined
over what period the Taxes are being levied, over the fiscal period of the
relevant Tax Authority, in each case irrespective of the lien or assessment date
of such Taxes, and (ii) franchise and other privilege Taxes not measured by
income will be accrued on a daily basis over the period to which the privilege
relates.
(d) (i) Parent will be entitled to control the defense of any
audits of or administrative or court proceedings relating to Parent's or any of
its Affiliate's consolidated, combined or unitary Tax Returns which relate to
the operations of the TTS Business for periods ending prior to the Closing Date.
(ii) Buyer and TTSI will give notice to Parent of any Tax
claim relating to any taxable year or period that includes the Closing Date, and
will keep Parent and its counsel informed of the progress of, and the issues
involved in, the same, in each case which may be the subject of indemnification
by Parent pursuant to this Agreement. Buyer and TTSI will be entitled
-24-
to control the defense and resolution of any such audits or proceedings,
provided, however, that if Buyer, TTSI or any of their Affiliates settles any
Tax claim for the portion of a taxable year or period ending on or prior to or
after the Closing Date or including the Closing Date which may be the subject of
indemnification by Parent pursuant to this Agreement without the prior written
consent of Parent, which consent will not be unreasonably withheld, Parent will
be released from any indemnification or other obligations hereunder in respect
of such matter.
(e) The parties hereto will provide such necessary information as any
other party hereto may reasonably request in connection with the preparation of
such party's Tax Returns, or to respond to or contest any audit, prosecute any
claim for refund or credit or otherwise satisfy the provisions of Applicable Law
relating to Taxes of each party hereto or their respective Affiliates.
(f) The obligations of the parties set forth in this Section 7.08
relating to Taxes will, except as otherwise agreed in writing, be unconditional
and absolute and will remain in effect without limitation as to time or amount
of recovery by any party hereto until thirty (30) days after the expiration of
the applicable statute of limitations governing the Tax to which such
obligations relate (after giving effect to any agreement extending or tolling
such statute of limitations).
Section 7.09 Limitations on Confidentiality Restrictions. The parties
hereby agree that the provisions relating to confidentiality contained in
Sections 5.02 and 6.01 and the provisions of the Confidentiality Agreement shall
not apply to the disclosure of any information relating primarily to TTSI or the
TTS Business in a registration statement, offering memorandum, offering circular
or similar or related document, which is created and used in connection with the
placement of any debt or equity financing by TTSI.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
Section 8.01 Employees and Employee Benefit Matters. The parties agree
as to employee and employee benefit matters as set forth in Exhibit D.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.01 Conditions to the Obligations of Each Party. The
obligations of Parent and Buyer to consummate the Closing are subject to the
satisfaction (or waiver) of the following conditions:
-25-
(a) any applicable waiting period under the HSR Act relating to the
Contemplated Transactions shall have expired or been terminated;
(b) no provision of any Applicable Law and no judgment, injunction,
order or decree shall prohibit the Closing, and no action or proceeding shall be
pending before any court, arbitrator or Governmental Authority with respect to
which counsel reasonably satisfactory to Parent and Buyer shall have rendered a
written opinion that there is a substantial likelihood of a determination that
would materially restrain or prohibit the Closing or otherwise have a material
adverse effect on the transactions contemplated hereby or Buyer's right to own
or exercise rights with respect to any capital stock of TTSI;
(c) all actions by or in respect of or filings with any Governmental
Authority required to permit the consummation of the Closing shall have been
obtained; and
(d) Parent or TTSI, as the case may be, shall have obtained the
consents, approvals or permits contemplated by Attachment XI.
Section 9.02 Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the Closing are subject to the satisfaction (or waiver by
Buyer) of the following further conditions:
(a) (i) Each of Parent and TTSI shall have performed in all material
respects all of its obligations under the Transaction Documents required to be
performed by it on or prior to the Closing Date, (ii) the representations and
warranties of Parent contained in the Transaction Documents shall be true and
correct at and as of the date of this Agreement and as of the Closing Date, as
if made at and as of each such date, except that those representations and
warranties which are by their express terms made as of a specific date shall be
true and correct only as of such date, in each case except for inaccuracies that
could not reasonably be expected to have a Material Adverse Effect on the TTS
Business, and (iii) Buyer shall have received a certificate signed by an
executive officer of Parent to the foregoing effect;
(b) the transactions contemplated by Section 2.01 shall have occurred
in accordance with the terms of this Agreement;
(c) Parent or the applicable Seller Company shall have executed and
delivered, on or before the Closing Date, the Transaction Documents that are
required to be signed by a Seller Company;
(d) there shall not have occurred from March 29, 1998 to the Closing a
material adverse effect on the assets, properties, business, financial
condition, results of operations or prospects of the TTS Business taken as a
whole;
(e) TTSI shall have obtained the financing contemplated by the
Commitment Letters or on other terms satisfactory to Buyer; and
-26-
(f) TTSI shall not be obligated for any indebtedness for borrowed money
other than as contemplated by Section 2.02.
Section 9.03 Conditions to Obligation of Parent and TTSI. The
obligation of Parent and TTSI to consummate the Closing is subject to the
satisfaction (or waiver by Parent) of the following further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations under the Transaction Documents required to be performed by it at or
prior to the Closing Date, (ii) the representations and warranties of Buyer
contained in the Transaction Documents shall be true and correct at and as of
the date of this Agreement and as of the Closing Date, as if made at and as of
each such date, except that those representations and warranties which are by
their express terms made as of a specific date shall be true and correct only as
of such date, in each case except for inaccuracies that could not reasonably be
expected to have a Material Adverse Effect on Buyer, and (iii) Parent shall have
received a certificate signed by an executive officer of Buyer to the foregoing
effect;
(b) The transactions contemplated by Section 2.02 and Section 2.03(a)
shall have been consummated in accordance with the terms of this Agreement; and
(c) Buyer shall have executed and delivered, on or before the Closing
Date, the Transaction Documents that are required to be signed by Buyer.
Section 9.04 Updated Disclosure Schedules. At any time prior to the
Closing, Parent shall be entitled to deliver to Buyer updates to or
substitutions of the Disclosure Schedules provided that such updates or
substitutions are clearly marked as such and are addressed to Buyer at the
address listed in Section 12.01. In the event that Parent delivers updated or
substitute Disclosure Schedules on or after the third day before any scheduled
closing date, Buyer shall be entitled to extend the scheduled closing date to
the third day after it receives the updated or substitute Disclosure Schedules,
or if such day is not a Business Day, to the next Business Day. The delivery by
Parent of updated or substitute Disclosure Schedules shall not prejudice any
rights of Buyer under this Agreement, including but not limited to the right to
claim that the representations and warranties of Parent, when made on the date
of this Agreement, were untrue.
Section 9.05 Effect of Waiver. Any waiver by Buyer of the conditions
specified in clause (ii) of Section 9.02(a), and any waiver by Parent of the
conditions specified in clause (ii) of Section 9.03(a), if made knowingly and in
writing, shall also be deemed a waiver of any claim for Damages as the result of
the matters waived.
-27-
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.01 Survival.
(a) None of the representations, warranties, covenants or agreements of
the parties contained in any Transaction Document or in any certificate or other
writing delivered pursuant to any Transaction Document or in connection with any
Transaction Document shall survive the Closing, except for:
(i) the representations and warranties in Sections X.00, X.00
X.00, X.00(x) and B.14 shall survive indefinitely;
(ii) the representations and warranties in Section B.15 shall
not survive the Closing Date;
(iii) the representations and warranties in Sections B.18 and
B.20 shall survive until 30 days after the expiration of the applicable
statute of limitations (or extensions or waivers thereof);
(iv) the representations and warranties in Exhibit B (other
than those Sections of Exhibit B referenced in the preceding clauses
(i), (ii) and (iii)), shall survive for a period that is the earlier to
occur of the date on which audited financial statements for TTSI are
delivered to the Company by its independent auditors for TTSI's year
ended December 31, 1999 or 18 months following the Closing Date;
(v) the representations and warranties in Sections C.01, C.02,
C.09 and C.10 shall survive indefinitely;
(vi) the representations and warranties in Exhibit C (other
than those Sections of Exhibit C referenced in the preceding clause
(v)) shall survive for a period of one year from the Closing Date;
(vii) the covenants and agreements set forth in Section 2.07
shall survive until payment of the final Annual Thiokol Payment
contemplated thereby; and
(viii) those covenants and agreements set forth in the
Transaction Documents that, by their terms, are to have effect after
the Closing Date shall survive for the period contemplated by the
covenants and agreements, or if no period is expressly set forth,
indefinitely.
The representations, warranties, covenants and agreements referenced in the
preceding clauses (i) and (iii) through (vii) are referred to herein as the
"Surviving Representations or Covenants." It is understood and agreed that, (i)
before the Closing the remedies expressly set
-28-
forth in Article XI are the sole and exclusive remedies for any breach of any
representation, warranty, covenant or agreement and (ii) following the Closing
the sole and exclusive remedy with respect to any breach of any representation,
warranty, covenant or agreement (other than (1) with respect to a breach of the
terms of a covenant or agreement, as to which Buyer or Parent, as the case may
be, shall be entitled to seek specific performance or other equitable relief and
(2) with respect to claims for fraud) shall be a claim for Damages (whether by
contract, in tort or otherwise, and whether in law, in equity or both) made
pursuant to this Article X.
(b) Except as otherwise provided in this Agreement, Parent, its
Affiliates and their respective Representatives and successors on the one hand,
and TTSI and Buyer for itself, its Affiliates, TTSI and their respective
Representatives and successors, on the other hand, effective as of the Closing,
release and discharge one another from any and all Damages (whether by contract,
in tort or both, and whether in law, in equity or both), rights of subrogation
and contribution and remedies of any nature whatsoever, known or unknown,
relating to or arising out of Environmental Liabilities or Environmental Laws,
in either case, arising in connection with or in any way relating to TTSI or the
TTS Business.
Section 10.02 Indemnification.
(a) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(a), Buyer hereby indemnifies Parent and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them, arising out of or related in any way to any misrepresentation or
breach of any Surviving Representation or Covenant made or to be performed by
Buyer pursuant to any of the Transaction Documents. Effective as of the Closing
and subject to the limitations set forth in Section 10.04(a), TTSI hereby
indemnifies Parent and its Affiliates and their respective directors, officers,
employees and agents against, and agrees to hold them harmless from any and all
Damages incurred or suffered by any of them arising out of or related in any way
to (i) any misrepresentation or breach of any Surviving Representation or
Covenant made or to be performed by Buyer or TTSI pursuant to any of the
Transaction Documents, (ii) except as otherwise contemplated by Sections
10.02(b)(iii), 10.04(b)(ii) and Exhibit D, any Assumed Liabilities (including,
without limitation, TTSI's failure to perform or in due course pay or discharge
any Assumed Liability), (iii) any Financial Support Arrangement, (iv) any
matters for which indemnification is provided under Exhibit D (it being
understood that the terms of such indemnification shall be governed by and
subject to the terms of Exhibit D) or (v) any liabilities or obligations arising
in connection with or in any way relating to TTSI or the TTS Business (but only
where and to the extent conducted on or after the Closing Date), or a facility
the possession of which is transferred to TTSI after the date of this Agreement
and at or prior to the Closing (but only during a period in which TTSI or any of
its Affiliates or successors owns or leases such facility), or the use,
ownership or operation of such facilities by TTSI or an Affiliate of TTSI, or a
successor of TTSI or such Affiliate, whether vested or unvested, contingent or
fixed, actual or potential, which arise under or relate to Environmental Laws to
the extent conditions underlying such liabilities arise out of, relate to, are
based on or result from any action taken by any Person other than a Seller
Company or a willful or intentional failure by any such person to take action on
or after the Closing Date, including,
-29-
without limitation, (A) Remedial Actions, (B) personal injury, wrongful death,
economic loss or property damage claims, (C) claims for natural resource
damages, (D) violations of Applicable Law or (E) any other Damages with respect
to such Environmental Laws. Buyer hereby indemnifies Parent and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them and caused by any actions taken or failure to act by Buyer or any of
its Representatives in connection with any environmental audit or similar review
of the TTS Business that involves testing, drilling or sampling at any facility
possession of which is contemplated to be transferred to TTSI, including,
without limitation, (A) Remedial Actions, (B) personal injury, wrongful death,
economic loss or property damage claims, (C) claims for natural resource
damages, (D) violations of Applicable Law, or (E) any other Damages with respect
to such Environmental Laws excluding any such Damages arising from pre-existing
conditions of contamination which are identified but are not exacerbated by such
audit or review.
(b) Effective as of the Closing and subject to the limitations set
forth in Section 10.04(b), Parent hereby indemnifies Buyer, TTSI and their
Affiliates and their respective directors, officers, employees and agents
against, and agrees to hold them harmless from any and all Damages incurred or
suffered by any of them arising out of or related in any way to (i) any
misrepresentation or breach of any Surviving Representation or Covenant made or
to be performed by the Seller Companies pursuant to any Transaction Document,
(ii) any Excluded Liabilities (including, without limitation, Parent's (or any
other Seller Company's) failure to perform or in due course pay or discharge any
Excluded Liability), (iii) any Environmental Liabilities to the extent the
conditions underlying arise out of, relate to, are based on or result from
actions taken (or failures to take action), conditions existing or events
occurring prior to the Closing, (iv) any matters for which indemnification is
provided under Exhibit D (it being understood that the terms of such
indemnification shall be governed by and subject to the terms of Exhibit D) or
(v) any indemnification paid by TTSI to any of its directors as a result of a
claim by any Person (other than Buyer, TTSI or any of their respective
Affiliates, any Permitted Assigns or any other Person (other than a Seller
Company) who purchases shares of capital stock of TTSI) against such directors
that is a result of any action taken by such directors on or prior to Closing.
Section 10.03 Procedures.
(a) If Parent or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(a), or if Buyer or any of its Affiliates or any of their directors,
officers, employees and agents, shall seek indemnification pursuant to Section
10.02(b), the Person seeking indemnification (the "Indemnified Party") shall
give written notice to the party from whom such indemnification is sought (the
"Indemnifying Party") promptly (and in any event within 30 days) after the
Indemnified Party (or, if the Indemnified Party is a corporation, any officer or
employee of the Indemnified Party) becomes aware of the facts giving rise to
such claim for indemnification (an "Indemnified Claim") specifying in reasonable
detail the factual basis of the Indemnified Claim, stating the amount of the
Damages, if known, the method of computation thereof, containing a reference to
the provision of the Transaction Documents in respect of which such Indemnified
Claim arises and demanding
-30-
indemnification therefor. The failure of an Indemnified Party to provide notice
in accordance with this Section 10.03 shall not constitute a waiver of that
party's claims to indemnification pursuant to Section 10.02, except to the
extent that (i) any such failure or delay in giving notice causes the amounts
paid by the Indemnifying Party to be greater than they otherwise would have been
or otherwise results in prejudice to the Indemnifying Party or (ii) such notice
is not delivered to the Indemnifying Party prior to the expiration of the
applicable survival period set forth in Section 10.01. If the Indemnified Claim
arises from the assertion of any claim, or the commencement of any suit, action,
proceeding or Remedial Action brought by a Person that is not a party hereto (a
"Third Party Claim"), any such notice to the Indemnifying Party shall be
accompanied by a copy of any papers theretofore served on or delivered to the
Indemnified Party in connection with such Third Party Claim.
(b) (i) Upon receipt of notice of a Third Party Claim from an
Indemnified Party pursuant to Section 10.03(a), the Indemnifying Party will be
entitled to assume the defense and control of such Third Party Claim subject to
the provisions of this Section 10.03. After written notice by the Indemnifying
Party to the Indemnified Party of its election to assume the defense and control
of a Third Party Claim, the Indemnifying Party shall not be liable to such
Indemnified Party for any legal fees or expenses subsequently incurred by such
Indemnified Party in connection therewith. Notwithstanding anything in this
Section 10.3 to the contrary, if the Indemnifying Party does not assume defense
and control of a Third Party Claim as provided in this Section 10.3, the
Indemnified Party shall have the right to defend such Third Party Claim, subject
to the limitations set forth in this Section 10.03, in such manner as it may
deem appropriate. Whether the Indemnifying Party or the Indemnified Party is
defending and controlling any such Third Party Claim, they shall select counsel,
contractors, experts and consultants of recognized standing and competence,
shall take all steps necessary in the investigation, defense or settlement
thereof, and shall at all times diligently and promptly pursue the resolution
thereof. The party conducting the defense thereof shall at all times act as if
all Damages relating to the Third Party Claim were for its own account and shall
act in good faith and with reasonable prudence to minimize Damages therefrom.
The Indemnified Party shall, and shall cause each of its Affiliates, directors,
officers, employees, and agents to, cooperate fully with the Indemnifying Party
in connection with any Third Party Claim.
(ii) Subject to the provisions of Section 10.03(b)(iii) and
Section 10.03(b)(iv), the Indemnifying Party shall be authorized to consent to a
settlement of, or the entry of any judgment arising from, any Third Party
Claims, and the Indemnified Party shall consent to a settlement of, or the entry
of any judgment arising from, such Third Party Claims; provided, that the
Indemnifying Party shall (1) pay or cause to be paid all amounts arising out of
such settlement or judgment concurrently with the effectiveness thereof; (2)
shall not encumber any of the assets of any Indemnified Party or agree to any
restriction or condition that would apply to such Indemnified Party or to the
conduct of that party's business; and (3) shall obtain, as a condition of any
settlement or other resolution, a complete release of each Indemnified Party.
Except to the extent of the foregoing, no settlement or entry of judgment in
respect of any Third Party Claim shall be consented to by any Indemnifying Party
or Indemnified Party without the express written consent of the other party.
-31-
(iii) Notwithstanding the provisions of Section 10.03(b)(i),
Buyer shall manage all Remedial Actions conducted with respect to facilities
which constitute Contributed Assets, provided that Parent and its
Representatives shall have the right, consistent with Buyer's right to manage
such Remedial Actions as aforesaid, to participate fully in all decisions
regarding any Remedial Action, including reasonable access to sites where any
Remedial Action is being conducted, reasonable access to all documents,
correspondence, data, reports or information regarding the Remedial Action,
reasonable access to employees and consultants of Buyer with knowledge of
relevant facts about the Remedial Action and the right to attend all meetings
and participate in any telephone or other conferences with any Government
Authority or other third party regarding the Remedial Action.
(iv) In the case of the indemnification contemplated by
Section 10.02(b)(iii), in the event that the Indemnifying Party desires to
settle the matters referenced therein or consent to the entry of any judgment
arising thereunder and the Indemnified Party does not wish to consent to such
settlement or entry of judgment, the Indemnified Party shall have no obligation
to consent to the settlement or entry of judgment provided that it agrees in
writing to pay and be responsible for 100% of any Damages; provided that the
Indemnified Party shall not be required to consent to any settlement or agree to
be responsible for the payment of Damages thereafter incurred with respect to
any matter the settlement or entry of judgment of which would require the
consent of such Indemnified Party pursuant to Section 10.03(b)(ii). The
obligation of an Indemnified Party that rejects any proposed settlement offer or
entry of any such judgment to pay and be responsible for 100% of any Damages in
accordance with this Section 10.03(b)(iv) shall be conditioned upon and subject
to the payment by the Indemnifying Party, within five Business Days of the date
such Indemnified Party provides the written agreement contemplated by the
preceding sentence, of an amount, in immediately available funds, equal to the
portion of the total settlement that would have been payable by the Indemnifying
Party according to the percentage sharing arrangement contemplated by Section
10.04(b)(ii). Thereafter, the Indemnified Party shall be solely responsible for
any Damages and for the defense of the matter that is the subject of the
proposed settlement or entry of judgment. Notwithstanding the foregoing, an
Indemnifying Party may, at its option and expense, participate in the defense of
any Indemnified Claim.
(v) In furtherance of and not in limitation of the provisions
of this Section 10.03, with respect to product liability matters and other
matters contemplated by Exhibit E, Parent and Buyer covenant and agree as set
forth in Exhibit E.
(c) If the Indemnifying Party and the Indemnified Party are unable to
agree with respect to a procedural matter arising under Section 10.03(b)(iii),
the Indemnifying Party and the Indemnified Party shall, within 10 days after
notice of disagreement given by either party, agree upon a third-party referee
("Referee"), who shall be an environmental attorney or environmental consultant
as appropriate under the circumstances and who shall have the authority to
review and resolve the disputed matter. The parties shall present their
differences in writing (each party simultaneously providing to the other a copy
of all documents submitted) to the Referee and shall cause the Referee promptly
to review any facts, law or arguments either the Indemnifying Party or the
Indemnified Party may present. The Referee shall be retained to resolve specific
differences between the parties within the range of such differences. Either
party may request
-32-
that all discussions with the Referee by either party be in each other's
presence. The decision of the Referee shall be final and binding unless both the
Indemnifying Party and the Indemnified Party agree. The parties shall share
equally all costs and fees of the Referee.
(d) If an Indemnifying Party makes any payment on an Indemnified Claim,
the Indemnifying Party shall be subrogated, to the extent of such payment, to
all rights and remedies of the Indemnified Party to any insurance benefits or
other claims or benefits of the Indemnified Party with respect to such claim.
Section 10.04 Limitations. Notwithstanding anything to the contrary in
this Agreement or in any of the Transaction Documents (other than in Section
7.08, but, except to the extent of Assumed Liabilities):
(a) Buyer and TTSI shall only have liability to Parent or any other
Person hereunder with respect to the representations and warranties described in
clause (i) of Section 10.02(a) if such matters were the subject of a written
notice given by the Indemnified Party pursuant to Section 10.03(a) within the
period following the Closing Date specified for each respective matter in
Section 10.01. Effective as of the Closing, and subject to the limitations set
forth in Section 10.04(a), Buyer hereby indemnifies Parent and its Affiliates
and their respective directors, officers, employees and agents against, and
agrees to hold them harmless from any and all Damages incurred or suffered by
any of them, arising out of or related in any way to any misrepresentation or
breach of any Surviving Representation or Covenant made or to be performed by
Buyer pursuant to any of the Transaction Documents.
(b) Parent shall only have liability to Buyer, TTSI or any other Person
hereunder:
(i) with respect to the representations and
warranties described in clause (i) of Section 10.02(b), (y) to the
extent that the aggregate Damages of all Indemnified Parties as the
result thereof exceed $5,000,000 but are not greater than an amount
equal to $5,000,000 plus 25% of the Adjusted Purchase Price (it being
understood that Parent's maximum liability under Section 10.02(b)(i)
with respect to representations and warranties and this Section
10.04(b)(i) shall be an amount equal to 25% of the Adjusted Purchase
Price), and (z) if such matters were the subject of a written notice
given by the Indemnified Party pursuant to Section 10.03(a) within the
period following the Closing Date specified for each respective matter
in Section 10.01; and
(ii) with respect to the matters described in clause
(iii) of Section 10.02(b), to the extent of (x) 50% of the first
$10,000,000 and (y) 80% of all amounts over $10,000,000 of the
aggregate Damages incurred and paid within five years following the
Closing Date by all Indemnified Parties as the result thereof based on
the use of the facilities constituting Contributed Assets.
-33-
ARTICLE XI
TERMINATION
Section 11.01 Termination. The Transaction Documents may be terminated
at any time prior to the Closing:
(i) by mutual written agreement of Parent and Buyer;
(ii) by Parent or Buyer if the Closing shall not have been
consummated on or before September 30, 1998; provided, however, that
neither Parent nor Buyer may terminate the Transaction Documents
pursuant to this clause (ii) if the Closing shall not have been
consummated on or before September 30, 1998, by reason of the failure
of such party or any of its Affiliates to perform in all material
respects any of its or their respective covenants or agreements
contained in the Transaction Documents;
(iii) by either Parent or Buyer if there shall be any
Applicable Law that makes consummation of the Contemplated Transactions
illegal or otherwise prohibited or if consummation of the Contemplated
Transactions would violate any order, decree or judgment of any
Governmental Authority having competent jurisdiction;
(iv) by Buyer if there shall have occurred following March 29,
1998 a material adverse effect on the assets, properties, business,
financial condition, results of operations or prospects of the TTS
Business taken as a whole; and
(v) by Buyer or Parent if the other party shall have
materially breached any representation or warranty or any covenant
hereunder and such breach prevents or renders impossible the
satisfaction of any of the conditions to Closing set forth herein;
provided, that as a condition to the right of a party to elect to
terminate this Agreement pursuant to the immediately preceding proviso,
the parties shall first provide 10 Business Days prior written notice
to the other party specifying in reasonable detail the nature of the
condition that such party has concluded will not be satisfied, and the
other party shall be entitled during such 10 Business Day period to
take any actions it may elect consistent with the terms of this
Agreement such that the condition reasonably could be expected to be
satisfied prior to the expiration of such time period.
Any party desiring to terminate this Agreement pursuant to this Section 11.01
shall give written notice of such termination to the other parties to this
Agreement.
Section 11.02 Effect of Termination. If this Agreement is terminated as
permitted by Section 11.01, such termination shall be without liability of any
party (or any Affiliate, stockholder, director, officer, employee, agent,
consultant or Representative of such party) to any other party to this
Agreement; provided, however, that if the Contemplated Transactions fail to
close as a result of a breach of the provisions of any Transaction Document by
Parent or Buyer, such party shall be fully liable for any and all losses and
other damages incurred or suffered by
-34-
the other party as a result of all such breaches if the other party is ready,
willing and able to otherwise satisfy in all material respects its obligations
under the Transaction Documents. Notwithstanding the foregoing, the provisions
of Sections 6.01 and 12.03 and this Section 11.02 shall survive any termination
hereof pursuant to Section 11.01.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including telecopy or similar
writing) and shall be given,
if to Parent (or TTSI prior to Closing):
c/o The Black & Xxxxxx Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and
Chief Financial Officer
Telecopy: (000) 000-0000
with a copy to:
The Black & Xxxxxx Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Senior Vice President and
General Counsel
Telecopy: (000) 000-0000
and
Miles & Stockbridge P.C.
00 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
-35-
if to Buyer (or TTSI after Closing):
TTSI LLC
c/o Cornerstone Equity Investors, LLC
000 0xx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Xxxxx, Esquire
Telecopy: (000) 000-0000
or to such other address or telecopy number and with such other copies, as such
party may hereafter specify by notice to the other parties. Each such notice,
request or other communication shall be effective (i) if given by telecopy, when
such telecopy is transmitted to the telecopy number specified in this Section
12.01 and evidence of receipt is received or (ii) if given by any other means,
upon delivery or refusal of delivery at the address specified in this Section
12.01.
Section 12.02 Amendments; Waivers.
(a) Subject to the provisions of Section 9.04, any provision of the
Transaction Documents may be amended or waived prior to the Closing Date if, and
only if, such amendment or waiver is in writing and signed, in the case of an
amendment, by Parent and Buyer, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege under any Transaction Document shall operate as a waiver thereof nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 12.03 Expenses. Except as otherwise provided in the Transaction
Documents, all costs and expenses incurred in connection with the Transaction
Documents shall be paid by the party incurring such cost or expense; provided
that TTSI shall not incur any material costs or expenses on behalf of Parent or
any Seller Company in connection with the transactions contemplated hereby
(except for any costs, expenses or fees associated with the transfer of the
Japanese country club membership to TTSI under the terms of that membership).
Notwithstanding the foregoing, after Closing, TTSI may pay reasonable costs,
expenses and fees incurred by Buyer, Cornerstone Equity Investors IV, LP, or
Cornerstone Equity Investors, LLC
-36-
in connection with the Contemplated Transactions, including a closing fee to
Cornerstone Equity Investors LLC or one of its Affiliates.
Section 12.04 Successors and Assigns. The provisions of the Transaction
Documents shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other party, provided the Buyer may assign
its or TTSI's rights hereunder to an agent for the financing sources in
connection with the Contemplated Transactions, as collateral security for TTSI's
obligations, and Buyer may assign its rights to purchase Acquired Shares to
Permitted Assignees.
Section 12.05 Disclosure. Certain information set forth in the
Disclosure Schedules has been included and disclosed solely for informational
purposes and may not be required to be disclosed pursuant to the terms and
conditions of the Transaction Documents. The disclosure of any such information
shall not be deemed to constitute an acknowledgement or agreement that the
information is required to be disclosed in connection with the representations
and warranties made in the Transaction Documents or that the information is
material, nor shall any information so included and disclosed be deemed to
establish a standard of materiality or otherwise used to determine whether any
other information is material.
Section 12.06 Construction. As used in the Transaction Documents, any
reference to the masculine, feminine or neuter gender shall include all genders,
the plural shall include the singular, and the singular shall include the
plural. With regard to each and every term and condition of the Transaction
Documents, the parties understand and agree that the same have or has been
mutually negotiated, prepared and drafted, and that if at any time the parties
desire or are required to interpret or construe any such term or condition or
any agreement or instrument subject hereto, no consideration shall be given to
the issue of which party actually prepared, drafted or requested any term or
condition of the Transaction Documents.
Section 12.07 Entire Agreement.
(a) The Transaction Documents and any other agreements contemplated
thereby (including, to the extent contemplated herein, the Confidentiality
Agreement) constitute the entire agreement among the parties with respect to the
subject matter of such documents and supersede all prior agreements,
understandings and negotiations, both written and oral, between the parties with
respect to the subject matter thereof.
(b) The parties hereto acknowledge and agree that no representation,
warranty, promise, inducement, understanding, covenant or agreement has been
made or relied upon by any party hereto other than those expressly set forth in
the Transaction Documents. Without limiting the generality of the disclaimer set
forth in the preceding sentence, (i) neither Parent nor any of its Affiliates
has made or shall be deemed to have made any representations or warranties, in
any presentation or written information relating to TTSI or the TTS Business
given or to be given in connection with the Contemplated Transactions, in any
filing made or to be made by or on behalf of Parent or any of its Affiliates
with any Governmental Authority, and no statement,
-37-
made in any such presentation or written materials, made in any such filing or
contained in any such other information shall be deemed a representation or
warranty hereunder or otherwise, (ii) neither Parent nor any of its Affiliates
has made or shall be deemed to have made any representations or warranties in
respect of the accounting or tax treatment to be afforded Buyer, TTSI or the TTS
Business in respect of the Contemplated Transactions, and (iii) Parent, on its
own behalf and on behalf of the other Seller Companies, expressly disclaims any
implied warranties, including but not limited to warranties of fitness for a
particular purpose and warranties of merchantability. Buyer acknowledges that
Parent has informed it that no Person has been authorized by Parent or any of
its Affiliates to make any representation or warranty in respect of TTSI or the
TTS Business or in connection with the Contemplated Transactions, unless in
writing and contained in this Agreement or in any of the Transaction Documents
to which they are a party.
(c) Except as expressly provided herein or in any other Transaction
Document, no Transaction Document or any provision thereof is intended to confer
upon any Person other than the parties hereto any rights or remedies hereunder.
Section 12.08 Governing Law. Except as otherwise provided in any of the
Transaction Documents, this Agreement and the other Transaction Documents shall
be construed in accordance with and governed by the law of the State of Delaware
(without regard to the choice of law provisions thereof).
Section 12.09 Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by the other party hereto.
Section 12.10 Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, any of the Transaction Documents or the Contemplated Transactions shall be
brought in the United States District Court for the District of Delaware (or, if
subject matter jurisdiction is unavailable, any of the state courts of the State
of Delaware), and each of the parties hereby consents to the exclusive
jurisdiction of such court (and of the appropriate appellate court) in any such
suit, action or proceeding and waives any objection to venue laid therein.
Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the State of Delaware. Without
limiting the foregoing, Parent, TTSI and Buyer agree that service of process
upon such party at the address referred to in Section 12.01, together with
written notice of such service to such party, shall be deemed effective service
of process upon such party.
Section 12.11 Severability. Any provision of the Transaction Documents
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions of the
Transaction Documents or affecting the validity or enforceability of such
provision in any other jurisdiction. To the extent any provision of the
Transaction Documents is determined to be prohibited or unenforceable in any
jurisdiction Parent and Buyer agree to use reasonable
-38-
commercial efforts, and agree to cause the other Seller Companies and TTSI, as
the case may be, to use reasonable commercial efforts, to substitute one or more
valid, legal and enforceable provisions that, insofar as practicable implement
the purposes and intent of the prohibited or unenforceable provision.
Section 12.12 Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
Section 12.13 Bulk Sales. Buyer and TTSI hereby waive compliance by
Parent and each Seller Company, in connection with the Contemplated
Transactions, with the provisions of Article 6 of the Uniform Commercial Code as
adopted in the States of Tennessee, California, Maryland and Mississippi, and as
adopted in any other states or jurisdictions where any of the Contributed Assets
or Transferred Intellectual Property are located, and any other applicable bulk
sales or similar laws with respect to or requiring notice to Parent's (or any
Seller Company) creditors, as the same may be in effect on the date of such
contribution or transfer, as the case may be. Parent shall indemnify and hold
harmless TTSI against any and all liabilities (other than liabilities in respect
of Assumed Liabilities) which may be asserted by third parties against TTSI as a
result of noncompliance with any such bulk sales or similar law.
IN WITNESS WHEREOF, the parties hereto caused this Agreement to be duly
executed by their respective authorized officers on the day and year first above
written.
THE BLACK & XXXXXX CORPORATION
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President and Controller
TRUE TEMPER SPORTS, INC.
By: /s/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
Vice President
TTSI LLC
By: /s/ XXXXX X. XXXXXXX
Xxxxx X. Xxxxxxx
EXHIBIT A
DEFINITIONS
(a) The following terms have the following meanings:
"Acquired Shares" means the shares of capital stock of TTSI to be
acquired by Buyer from EII, all as contemplated by Section 2.03(b).
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such other
Person. For purposes of determining whether a Person is an Affiliate, the term
"control" shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a Person,
whether through ownership of securities, contract or otherwise. For purposes of
this Agreement, TTSI shall not be deemed to be an Affiliate of Parent or any
other Seller Companies after Closing.
"Amory Facility" means the TTS Business' steel shaft manufacturing
facility located in Amory, Mississippi.
"Applicable Law" means, with respect to any Person, any domestic or
foreign, federal, state or local statute, law, ordinance, rule, administrative
interpretation, regulation, order, writ, injunction, decree or other requirement
of any Governmental Authority (including any Environmental Law) applicable to
such Person or any of their respective properties, assets, officers, directors,
employees, consultants or agents (in connection with such officer's, director's,
employee's, consultant's or agent's activities on behalf of such Person).
"Assignment and Assumption Agreement" means the Assignment and
Assumption Agreement to be entered into by EII and TTSI, in the form
contemplated by Attachment II (with such changes as may be required to satisfy
any requirements of Applicable Law in any country or jurisdiction where
Contributed Assets are located) and any other similar agreements contemplated by
this Agreement executed and delivered by EII and TTSI in connection with the
sale, assignment and transfer by EII or a Seller Company of Contributed Assets
and the assumption by EII And TTSI of Assumed Liabilities, as the same may be
amended from time to time.
"Assumed Liabilities" means all debts, liabilities and obligations of
Seller Companies, to the extent relating to or arising out of the operation,
affairs and conduct of the TTS Business, the Contributed Assets or the TTSI
Leases, of any kind, character or description, whether liquidated or
unliquidated, known or unknown, fixed or contingent, accrued or unaccrued,
absolute, determined, determinable or indeterminable or otherwise, whether or
not reflected or reserved against in the Opening Statement or in the calculation
of the Final Net Working Capital Amount and whether presently in existence or
arising hereafter, except for Excluded Liabilities, including but not limited to
the following:
(i) all debts, liabilities and obligations relating to the TTS
Business, the Contributed Assets or the Transferred Intellectual Property,
whether accrued, liquidated, contingent, matured or unmatured, at or prior to
the date the transactions contemplated by Section 2.01 are consummated, that (a)
are set forth on, reflected or referred to in the Opening Statement, (b) are
disclosed in any of the Disclosure Schedules delivered hereunder, (c) would be
subject to disclosure in any of the Disclosure Schedules delivered in connection
with any of Parent's representations and warranties but for the materiality
standards contained in such representation and warranty, (d) are reflected in
the Final Net Working Capital Amount as determined in accordance with Section
2.06 herein (including without limitation accounts payable and reserves
reflected as contra-asset accounts) or (e) are otherwise a liability or
obligation that TTSI is expressly assuming in accordance with this Agreement;
(ii) all liabilities and obligations arising under Contracts,
whether or not the Contracts have been completed or terminated prior to the
Closing Date, including, without limitation, any such liabilities and
obligations arising from or relating to the performance or non-performance of
the Contracts by TTSI, Buyer or any other Person, whether arising prior to, on
or after the Closing Date, except to the extent they constitute Excluded
Liabilities and except to the extent that a claim of non-performance, breach or
other violation has been asserted prior to Closing and is not otherwise included
within clause (xi);
(iii) all liabilities and obligations in respect of employees
and former employees of TTSI or the TTS Business, and beneficiaries of employees
and former employees of TTSI or the TTS Business, including, without limitation,
liabilities and obligations under or relating to WARN or any similar state or
local law to the extent relating to or arising out of any actions taken by TTSI
or Buyer or any Affiliate of either of the foregoing on or after the Closing
Date, except to the extent otherwise required by Exhibit D to be retained by
Parent or Seller Companies;
(iv) all liabilities and obligations in respect of Transferred
Employees and dependents and beneficiaries of Transferred Employees under (A)
Employee Plans to the extent listed or referred to in Schedule B.20, (B) post
employment medical, dental, or life insurance benefits, and (C) Benefit
Arrangements to the extent such Benefit Arrangements are listed on or referred
to in Schedule B.20, but in the case of the foregoing clause (C) limited to an
amount equal to the extent that such liabilities or obligations are reflected in
the Final Net Working Capital Amount or cash equal to such liabilities or
obligations is transferred to TTSI on the Closing Date, plus $100,000, except to
the extent otherwise required by Exhibit D to be retained by Parent or Seller
Companies;
(v) all liabilities and obligations relating to claims of
manufacturing or design defects with respect to any product sold or service
provided by TTSI prior to, on or after the Closing Date, including liabilities
and obligations in respect of investigations regarding product safety, product
recall and related matters, except to the extent they constitute Excluded
Liabilities;
(vi) all liabilities and obligations relating to warranty
obligations or services with respect to any product manufactured or sold or
service provided by TTSI or the TTS Business prior to, on or after the Closing
Date;
(vii) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, to the extent relating to or arising out of
conditions at, or the current or former operations of TTSI or the TTS Business
at, the facilities owned or leased by TTSI or the TTS Business as of the date
the transactions contemplated by Section 2.01(ii) of this Agreement are
consummated and included in the Contributed Assets (whether by fee ownership or
leasehold interest), except to the extent they constitute Excluded Liabilities;
(viii) all liabilities and obligations relating to the TTSI
Leases, whether arising prior to, on or after the Closing Date;
(ix) all Tax liabilities and obligations relating to sales and
use taxes, gross receipts taxes, property taxes, licenses, employee and employer
withholding and unemployment taxes and other non-income Taxes relating
exclusively to TTSI or the TTS Business;
(x) all liabilities and obligations arising from or relating
to governmental, judicial or adversarial proceedings (public or private),
litigation, suits, arbitration, disputes, claims, causes of action or
investigations (collectively, "Proceedings") arising from or directly or
indirectly relating to the TTS Business, any Contributed Assets or any
Transferred Intellectual Property, whether or not accrued, liquidated,
contingent, matured, unmatured, or known or unknown to Parent or Buyer at or
prior to the Closing, except for liabilities and obligations of a type
contemplated by the foregoing clause (v), which shall be governed by such
clause; and
(xi) all liabilities and obligations relating to the ownership
by TTSI or any of its successors of the Contributed Assets, directly or
indirectly relating to the Transferred Employees, the lease of properties under
the TTSI Leases or otherwise, or the conduct of the TTS Business or any other
business, in each case, arising from actions occurring after the Closing Date,
including, without limitation, any and all Proceedings in respect thereof.
"Benefit Arrangements" means all life and health insurance,
hospitalization, retirement, savings, bonus, deferred compensation, incentive
compensation, severance pay, disability and fringe benefit plans, holiday or
vacation pay, profit sharing, seniority, and other policies, practices,
agreements or statements of terms and conditions providing employee or executive
compensation or benefits to employees of the TTS Business or any of their
dependents, which are maintained by Seller Companies and constitute Assumed
Liabilities, other than an Employee Plan.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks in New York, New York are authorized or required by
law to close.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commitment Letters" means the following letters expressing the
commitment of reputable third parties relating to the debt financing
contemplated by Section 2.02: (i) that certain letter, dated June 28, 1998
(including the Annexes attached thereto) from DLJ Capital Funding, Inc. and
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation to Cornerstone Equity
Investors IV, L.P. regarding the commitment to provide certain senior secured
financing and (ii) that certain letter dated June 28, 1998 (including the
Annexes attached thereto) from DLJ Bridge Financing, Inc. to Cornerstone Equity
Investors IV, L.P. regarding the commitment to provide certain bridge financing.
"Confidentiality Agreement" means the letter agreement dated March 13,
1998, by and between Parent and Buyer, as the same has been or may be amended
from time to time.
"Contemplated Transactions" means the transactions contemplated by the
Transaction Documents.
"Contracts" means all contracts, agreements, leases (including leases
of real property), licenses, commitments, sales and purchase orders, and other
undertakings of any kind, whether written or oral, relating exclusively to the
TTS Business other than Employee Plans and Benefit Arrangements.
"Contributed Assets" means, other than Excluded Assets and Transferred
Intellectual Property, all of the assets, properties, rights, licenses, permits,
Contracts, causes of action and business of every kind and description as the
same shall exist on the date of the contributions contemplated by Section
2.01(ii) of this Agreement, wherever located, real, personal or mixed, tangible
or intangible, owned by, leased by or in the possession of Parent or any Seller
Company, whether or not reflected in the books and records thereof, and held or
used exclusively in the conduct of the TTS Business as the same shall exist on
the date of the capital contribution of EII contemplated by Section 2.01 of this
Agreement, and including, without limitation, except as otherwise specified
herein, all direct or indirect right, title and interest of Parent or any Seller
Company in, to and under:
(i) the Olive Branch Property, together with all buildings,
fixtures, easements, rights of way, and improvements thereon and appurtenances
thereto to the extent relating to the TTS Business;
(ii) the rights and interests of Seller Companies under the
TTSI Leases;
(iii) all personal property and interests therein (other than
Intellectual Property), including machinery, equipment, furniture, office
equipment, communications equipment, vehicles, storage tanks, spare and
replacement parts, fuel and other tangible property (and interests in any of the
foregoing) owned by any Seller Company that are used exclusively in connection
with the TTS Business;
(iv) all Inventory that is owned by Seller Companies and held
for sale, use or consumption exclusively in the TTS Business;
(v) all Contracts;
(vi) all accounts, accounts receivable and notes receivable
whether or not billed, accrued or otherwise recognized in the Opening Statement
or taken into account in the determination of the Final Net Working Capital
Amount, together with any unpaid interest or fees accrued thereon or other
amounts due with respect thereto of Seller Companies that relate exclusively to
the TTS Business, and any security or collateral for any of the foregoing;
(vii) all expenses that have been prepaid by Seller Companies
relating exclusively to the operation of the TTS Business, including but not
limited to ad valorem Taxes, lease and rental payments;
(viii) all of Parent's or any of Seller Companies' rights,
claims, credits, causes of action or rights of set-off against Persons other
than Seller Companies relating exclusively to the TTS Business or the
Contributed Assets, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties;
(ix) all transferable franchises, licenses, permits or other
governmental authorizations owned by, or granted to, or held or used by, Seller
Companies and exclusively related to the TTS Business;
(x) except to the extent a Seller Company is required to
retain the originals pursuant to any Applicable Law (in which case copies will
be provided to TTSI upon request), all business books, records, files and
papers, whether in hard copy or computer format, of a Seller Company used
exclusively in the TTS Business, including, without limitation, books of
account, invoices, engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of present and former
suppliers, lists of present and former distributors, lists of present and former
customers, personnel and employment records of present or former employees,
documentation developed or used for accounting, marketing, engineering,
manufacturing, or any other purpose relating to the conduct of the TTS Business
at any time prior to the Closing;
(xi) the right to represent to third parties that TTSI is the
successor to the TTS Business; and
(xii) all insurance proceeds (except to the extent relating to
Excluded Assets or Excluded Liabilities or to the extent relating to or arising
out of Environmental Insurance Claims), net of any retrospective premiums,
deductibles, retention or similar amounts, arising out of or related to damage,
destruction or loss of any property or asset of or used exclusively in
connection with the TTS Business to the extent of any damage or destruction that
remains unrepaired, or to the extent any property or asset remains unreplaced at
the Closing Date.
"Damages" means all demands, claims, actions or causes of action,
assessments, losses, damages, costs, expenses, liabilities, judgments, awards,
fines, sanctions, penalties, charges and amounts paid in settlement, including,
without limitation, reasonable costs, fees and expenses of attorneys, experts,
accountants, appraisers, consultants, witnesses, investigators and any other
agents or representatives of such Person (with such amounts to be determined net
of any resulting Tax benefit actually received or realized and net of any refund
or reimbursement of any portion of such amounts actually received or realized,
including, without limitation, reimbursement by way of insurance or third party
indemnification), but specifically excluding (i) any costs incurred by or
allocated to an Indemnified Party with respect to time spent by employees of the
Indemnified Party or any of its Affiliates, (ii) any lost profits or opportunity
costs or exemplary or punitive damages (except to the extent assessed in
connection with a third-party claim with respect to which the Person against
which such damages are assessed is entitled to indemnification hereunder) and
(iii) the decrease in the value of any Contributed Asset to the extent that such
valuation is based on any use of the Contributed Asset other than its use as of
the Closing Date.
"Disclosure Schedules" means the Disclosure Schedules dated the date of
this Agreement relating to this Agreement, as amended from time to time in
accordance with this Agreement.
"EBIT Contribution" means revenues derived from the Thiokol Contract,
less (i) cost of sales of the Thiokol Contract, (ii) direct selling, general and
administrative costs of the Thiokol Contract, and (iii) an amount equal to
indirect non-promotional selling, general and administrative costs of TTSI times
the ratio of revenues derived from the Thiokol Contract to total revenues of
TTSI.
"EII" means Emhart Industries, Inc., a Delaware corporation.
"Emhart" means Emhart Inc., a Delaware corporation.
"Employee Plans" means each "employee benefit plan" as defined in
Section 3(3) of ERISA, maintained or contributed to by Parent or any of its
Affiliates which provides benefits to employees of TTSI or the TTS Business or
their dependents.
"Encumbrances" means Liens, title defects, encumbrances, easements and
restrictions, invalidities of leasehold interests.
"Environmental Claim" means any written or oral notice, claim, demand,
action, suit, complaint, proceeding or other communication by any third Person
alleging liability or potential liability (including without limitation
liability or potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resource damages, property damage, personal
injury, fines or penalties) arising out of, relating to, based on or resulting
from (i) the presence, discharge, emission, release or threatened release of any
Hazardous Substances at any location, (ii) circumstances forming the basis of
any violation or alleged violation of any Environmental Laws, or (iii) otherwise
relating to obligations or liabilities under any Environmental Laws.
"Environmental Laws" means any and all past, present or future federal,
state, local and foreign statutes, laws, regulations, ordinances, judgments,
orders, permits, codes, or injunctions, and all common law, which (i) impose
liability for or standards of conduct concerning the manufacture, processing,
generation, distribution, use, treatment, storage, disposal, cleanup, transport
or handling of Hazardous Substances including, The Resource Conservation and
Recovery Act of 1976, as amended, The Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, The Superfund Amendment and
Reauthorization Act of 1984, as amended, The Toxic Substances Control Act, as
amended, the Occupational Safety and Health Act of 1970, as amended, to the
extent it relates to the handling of and exposure to hazardous or toxic
materials or similar substances, and any other so-called "Superfund" or
"Superlien" law or (ii) otherwise relate to the protection of human health or
the environment.
"Environmental Liabilities" means all liabilities to the extent arising
in connection with or in any way relating to the TTS Business or Parent's or any
of its Affiliates' use or ownership thereof, whether vested or unvested,
contingent or fixed, actual or potential, which arise under or relate to
Environmental Laws including, without limitation, (i) Remedial Actions, (ii)
personal injury, wrongful death, economic loss or property damage claims, (iii)
claims for natural resource damages, (iv) violations of law or (v) any Damages
with respect thereto. Notwithstanding the foregoing, Environmental Liabilities
shall not include any increased liabilities resulting from or arising out of a
use of a facility constituting a Contributed Asset other than an industrial use.
"ERISA" means the Employee Retirement Income Security act of 1974, as
amended.
"Excluded Assets" means:
(i) all cash and cash equivalents of Seller Companies,
including, without limitation, cash and cash equivalents used as collateral for
letters of credit, advance payments, deposits with utilities, insurance
companies and other Persons, except to the extent taken into account in the
determination of the Final Net Working Capital Amount;
(ii) all original books and records that Seller Companies
shall be required to retain pursuant to any Applicable Law (in which case copies
of such books and records to the extent relating to the TTS Business shall be
provided to TTSI upon request), or that contain information relating to any
business or activity of Seller Companies not forming a part of the TTS Business,
or any employee of a Seller Company that is not a Transferred Employee;
(iii) all Tax assets of any Seller Companies, other than Tax
assets relating to sales and use taxes, gross receipts taxes, property taxes,
licenses, employee and employer withholding and unemployment taxes and other
non-income related taxes relating exclusively to the TTS Business;
(iv) all assets of Seller Companies not held or owned by or
used exclusively in connection with the TTS Business;
(v) all rights and claims of Seller Companies under any of the
Transaction Documents and the agreements and instruments delivered to Seller
Companies by Buyer pursuant to any of the Transaction Documents;
(vi) all accounts receivable, notes receivable or similar
claims or rights (whether or not billed or accrued) of the TTS Business from any
Seller Companies;
(vii) all capital stock or any other securities of any Seller
Companies or any other Person;
(viii) all Intellectual Property not used or held for use
exclusively in the TTS Business;
(ix) all assets related to Excluded Liabilities, including,
without limitation, any reserve on the books of Parent or TTSI relating to any
labor grievances filed by employees prior to Closing;
(x) all ownership and leasehold interests of Seller Companies
in respect of the facility, real property, fixtures and equipment located at or
constituting the Seneca and Xxxxxxxx Facilities; and
(xi) all accounts receivable, notes receivable or similar
claims or rights of Seller Companies arising out of or relating to any judgments
entered by a court or arbitrator prior to the Closing Date in favor of Seller
Companies, except to the extent taken into account in the determination of the
Final Net Working Capital Amount.
"Excluded Liabilities" means the following liabilities and obligations:
(i) all liabilities and obligations of Seller Companies not
arising out of the conduct of the TTS Business, except as otherwise specifically
provided in the Transaction Documents;
(ii) except as otherwise specifically provided in the
Transaction Documents, all liabilities or obligations for any Tax arising from
or with respect to the Contributed Assets or the operations of the TTS Business
prior to the date on which the transactions contemplated by Section 2.01 of this
Agreement are consummated, other than Tax liabilities or obligations relating to
sales and use taxes, gross receipts taxes, property taxes, licenses, employee
and employer withholding and unemployment taxes and other non-income related
taxes;
(iii) all liabilities or obligations, whether presently in
existence or arising after the date of this Agreement, in respect of accounts
payable, notes payable (including intercompany promissory notes and similar
financing arrangements) or similar obligations (whether or not billed or
accrued) to Seller Companies, except for amounts accrued by the TTS Business and
not billed by Seller Companies to the TTS Business as of the date on which the
transaction contemplated by Section 2.01 of this Agreement are consummated in
respect of accounts payable, notes payable or similar obligations relating to
specific services provided to and specific expenses paid on behalf of the TTS
Business by Seller Companies;
(iv) all liabilities or obligations, whether presently in
existence or arising after the date of the Agreement, relating to fees,
commissions or expenses owed to any broker, finder, investment banker,
accountant, attorney or other intermediary or advisor employed by Seller
Companies in connection with the Contemplated Transactions;
(v) all liabilities or obligations retained by Parent pursuant
to Exhibit D;
(vi) except to the extent otherwise covered by Exhibit D, all
liabilities or obligations related to Excluded Assets;
(vii) all liabilities or obligations related to claims of
manufacturer or design defects with respect to any products sold or services
provided by the TTS Business prior to, on or after the Closing Date, including
liabilities and obligations in respect of investigations regarding product
safety, product recall and related matters, to the extent but only to the extent
relating to products manufactured or sold prior to the Closing Date;
(viii) all Environmental Liabilities, whether arising prior
to, on or after the date on which the transactions contemplated by Section 2.01
are consummated, (1) relating to the disposal prior to the date on which the
transactions contemplated by Section 2.01(ii) are consummated of Hazardous
Substances at locations that at the time of such disposal were not owned or
leased by a Seller Company or any of its predecessors, it being understood and
agreed that the migration of Hazardous Substances in soil or groundwater from a
facility included in the Contributed Assets to surrounding properties shall not
be considered a disposal of Hazardous Substances, or (2) relating to or arising
out of conditions at, or the current or former operations at, any facilities not
included in the Contributed Assets (whether by fee ownership or leasehold
interest) (including any predecessors to such facilities);
(ix) all Environmental Liabilities, whether arising prior to,
on or after the Closing Date, relating to the operations at the Seneca and
Xxxxxxxx Facilities; and
(x) all liabilities or obligations of Seller Companies
relating to worker's compensation and labor grievances filed against Seller
Companies on or prior to Closing.
"Financial Support Arrangements" means any obligations, contingent or
otherwise, of a Person in respect of any indebtedness, obligation or liability
(including assumed indebtedness, obligations or liabilities) of another Person,
including but not limited to remaining obligations or liabilities associated
with indebtedness, obligations or liabilities that are assigned, transferred or
otherwise delegated to another Person, if any, letters of credit and standby
letters of credit (including any related reimbursement or indemnity agreements),
direct or indirect guarantees, endorsements (except for collection or deposit in
the ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, agreements to purchase
or repurchase such indebtedness, obligation or liability or any security
therefor or to provide funds for the payment or discharge thereof, agreements to
maintain solvency, assets, level of income or other financial condition,
agreements to make payment other than for value received and any other financial
accommodations.
"GAAP" means Generally Accepted Accounting Principles in the United
States as in effect on the date of the Agreement consistently applied.
"Governmental Authority" means any foreign, domestic, federal,
territorial, state or local governmental authority, quasi-governmental
authority, instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization or any regulatory, administrative or other
agency, or any political or other subdivision, department or branch of any of
the foregoing.
"Hazardous Substances" means (i) substances defined as "hazardous
substances," "hazardous materials" or "hazardous waste" pursuant to The
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or The Resource Conservation and Recovery Act of 1976, as amended, (ii)
substances defined as "hazardous wastes" in the regulations adopted and
publications promulgated pursuant to any of said laws, (iii) substances defined
as "toxic substances" in The Toxic Substances Control Act, as amended, and (iv)
petroleum, its derivatives and petroleum products, and asbestos and asbestos
containing materials.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Huffy Trademark Agreement" means the Trademark Agreement
dated as of November 7, 1990, by and between Emhart Industries, Inc. and H.C.A.,
Inc. regarding the assignment of rights with respect to the True Temper
trademarks.
"Intellectual Property" means all patents, copyrights, technology,
know-how, processes, trade secrets, inventions, proprietary data, formulae,
specifications, research and development data and computer software programs;
all trademarks, trade names, trade dress, service marks and service names; all
registrations, applications, recordings, licenses whether as licensee or
licensor and common-law rights relating thereto, all rights to xxx at law or in
equity for any infringement or other impairment thereto, including the right to
receive all proceeds and damages therefrom, and all rights to obtain renewals,
continuations, continuations in a part, reissues, reexaminations, divisions or
other extensions of legal protections pertaining thereto; and all other United
States, state and foreign intellectual property.
"Intellectual Property Assignment Agreements" means the Assignment of
United States Trademarks, Trademark Registrations and Applications for
Registration, the Assignment of Foreign Trademarks, Trademark Registrations and
Applications for Registration, the Assignment of United States Patents and
Patent Applications, the Assignment of Foreign Patents and Application for
Patents and the Assignment of U.S. Copyright Registrations, in the forms
contemplated by Attachments III, IV, V, VI and XV to this Agreement.
"Inventory" means all items of inventory notwithstanding how classified
in the financial records of Seller Companies, including all raw materials,
work-in-process and finished goods.
"Lien" means, with respect to any asset, any mortgage, lien, claim,
pledge, charge, security interest or other encumbrance of any kind in respect of
such asset.
"Material Adverse Effect" means (i) with respect to TTSI or the TTS
Business, a material adverse effect on the assets, properties, business,
financial condition or results of operations of the TTS Business taken as a
whole, or (ii) with respect to any other Person, a material adverse effect on
the assets, properties, business, financial condition or results of operations
of such Person and its Subsidiaries taken as a whole.
"Net Working Capital" means (i) all Contributed Assets that are current
assets of the TTS Business, minus (ii) all Assumed Liabilities that are current
liabilities of the TTS Business, in each case calculated in accordance with the
practices and policies that were employed in the preparation of the Opening
Statement, determined consistent with the Opening Statement and the notes
thereto.
"1959 TTSI Consent Decree" means the Final Judgment dated August 20,
1959 in connection with Civil Action Xx. 00 X 0000 xx xxx Xxxxxx Xxxxxx District
Court for the Northern District of Illinois, Eastern Division.
"1961 TTSI Consent Decree" means the Final Judgment dated August 1,
1961, in connection with Civil Action Xx. 00 X 0000 xx xxx Xxxxxx Xxxxxx
District Court for the Northern District of Illinois, Eastern Division.
"Non US Benefit Arrangements" means Benefit Arrangements in respect of
Non US Transferred Employees.
"Non US Transferred Employees" means Transferred Employees who are not
US Transferred Employees.
"Olive Branch Property" means the real property owned by Seller
Companies located at 0000 Xxxxxxxxx Xxxxx, Xxxxx Xxxxxx, Xxxxxxxxxxx 00000.
"Opening Statement" means the special purpose statement of net assets
of the TTS Business at March 29, 1998, together with the notes thereto, as
attached in Attachment I to this Agreement.
"Permitted Assigns" means any Person to which Buyer assigns its right
to purchase Acquired Shares hereunder, provided that (i) such assignment will
not jeopardize the exemption or exemptions from registration under applicable
securities and blue sky laws pursuant to which the Acquired Shares are being
transferred, and (ii) such Person delivers to Parent evidence satisfactory to
Parent that such Person has agreed to be bound by the provisions of Section
2.03(b) and such Person makes the representations and warranties contained in
Sections C.8 and C.9 of Exhibit C for the benefit of the Seller Companies and
agrees to indemnify, defend and hold harmless Parent and its Affiliates and
their respective directors, officers, employees and agents for any breach of
such representations and warranties.
"Permitted Liens" means any of the following:
(i) Liens for Taxes that (x) are not yet due or delinquent or
(y) are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been made or are not required under GAAP;
(ii) statutory Liens or landlords', carriers', warehousemen's,
mechanic's, suppliers', materialmen's or other like Liens arising in the
ordinary course of business with respect to amounts not yet overdue or amounts
being contested in good faith by appropriate proceedings and for which
appropriate reserves have been made or are not required under GAAP;
(iii) easements, rights of way, restrictions and other similar
charges or encumbrances on real property interests, that, individually or in the
aggregate, do not materially interfere with the ordinary course of operation of
the TTS Business or the use of any such real property for its current uses;
(iv) with respect to real property, title defects or
irregularities that do not in the aggregate materially impair the use of such
real property for its current use;
(v) rights and licenses granted to others in Intellectual
Property prior to the date of this Agreement or, prior to Closing, the license
or sale of Intellectual Property in connection with the Shaft Lab product line
or other licenses of Intellectual Property granted in the ordinary course of
business which do not materially deplete the value of such Intellectual Property
prior to Closing;
(vi) with respect to any of the TTSI Leases where any Seller
Company is a lessee, any Lien affecting the interest of the landlord thereunder;
and
(vii) Encumbrances disclosed in the Disclosure Schedules or
taken into account in the Opening Statement.
"Person" means an individual, a corporation, a general partnership, a
limited partnership, a limited liability company, limited liability partnership,
an association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"Redemptions" shall mean the purchase by TTSI of shares of TTSI Common
Stock from EII and Emhart as contemplated by Section 2.03(a).
"Remedial Action(s)" means the investigation, clean-up or remediation
of contamination or environmental or damage caused by, related to or arising
from the generation, use, handling, treatment, storage, transportation,
disposal, discharge, release, or emission of Hazardous Substances, including,
without limitation, investigations, response, removal and remedial actions under
The Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, corrective action under The Resource Conservation and Recovery
Act of 1976, as amended, and clean-up requirements under similar state
Environmental Laws.
"Representatives" means (i) with respect to Buyer, any of the
"Representatives" as defined in the Confidentiality Agreement and (ii) with
respect to Parent, each of its respective directors, officers, advisors,
attorneys, accountants, employees or agents.
"Securities Act" means the Securities Act of 1933, as amended.
"Seller Companies" means Parent and its Subsidiaries, other than TTSI.
"Seneca and Xxxxxxxx Facilities" means those former manufacturing
facilities of the TTS Business located in Seneca, South Carolina and Wheatley,
Arkansas.
"Services Agreement" means the Services Agreement in the form
contemplated by Attachment VII to this Agreement, as amended from time to time.
"Stockholders' and Registration Rights Agreements" means the
Stockholders' Agreement and Registration Rights Agreement in the forms to be
entered into in accordance with Section 2.03(d)(ii), as amended from time to
time.
"Subsidiary" as it relates to any Person, shall mean with respect to
any Person, any corporation, partnership, joint venture or other legal entity of
which such Person, either directly or through or together with any other
Subsidiary of such Person, owns more than 50% of the voting power in the
election of directors or their equivalents, other than as affected by events of
default.
"Tax Authority" shall mean a foreign or United States federal, state or
local Governmental Authority having jurisdiction over the assessment,
determination, collection or imposition of any Tax, as the context requires.
"Tax Returns" means all returns (including information returns),
declarations, reports, estimates and statements regarding Taxes, required to be
filed with any Tax Authority, including any claims for refund and any amendments
to any of the foregoing.
"Taxes" means all taxes, charges, fees, levies or other assessments,
including without limitation, all net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, estimated, severance, stamp, occupation, property
or other taxes, customs, duties, fees, assessments or charges of any kind
whatsoever, together with any interest and any penalties, additions to tax or
additional amounts imposed by any Tax Authority.
"Thiokol Contract" means the Teaming Agreement between Thiokol
Corporation and True Temper Sports dated January 13, 1997-March 9, 1997,
Purchase Order No. 41125 dated Xxxxx 0, 0000, Xxxxxxxx Order No. 36986, dated
March 14, 1997, renewed December 2, 1997, together with the initial production
contract relating thereto.
"Thiokol Payment" means 25% of EBIT Contribution derived from TTSI's
sales to Thiokol pursuant to the Thiokol Contract.
"Transaction Documents" means this Agreement, the Assignment and
Assumption Agreement, the Services Agreement, the Stockholders' and Registration
Rights Agreements, the Intellectual Property Assignment Agreements and any
exhibits or attachments to any of the foregoing, as the same may be amended from
time to time.
"Transferred Intellectual Property" shall mean all Intellectual
Property owned by or licensed to any of the Seller Companies and used or held
for use exclusively in the TTS Business, including the goodwill of the TTS
Business symbolized thereby, it being understood and agreed that the
Intellectual Property used or held for use exclusively in the TTS Business that
is patented, registered or as to which an application for patent or registration
is pending, along with all material unregistered trademarks, servicemarks, trade
names and copyrights used or held for use exclusively in the TTS Business, is
listed as "Transferred Intellectual Property" on Attachment X.
"TTS Business" means the True Temper Sports business as presently
conducted by Seller Companies involving the development, manufacturing,
marketing or sale of steel and composite golf club shafts, tubular steel and
composite components for the bicycle, automotive and recreational sports
industries and high performance, lightweight, low-cost composite cylinders for
rocket motor cases, ordnance, and space structure applications.
"TTSI Common Stock" means the shares of common stock, $1.00 par value
per share, of TTSI.
"TTSI Financial Statements" means the (i) Unaudited Balance Sheet of
TTSI as of Xxxxx 00, 0000, (xx) Unaudited Statements of Earnings for each of the
three month periods ended March 29, 1998 and Xxxxx 00, 0000, (xxx) the Balance
Sheets of TTSI at December 31, 1997 and 1996, and (iv) the Statements of
Earnings of TTSI for each of the three years ended December 31, 1997, 1996 and
1995, including in each case all notes thereto, all as set forth in Attachment
XII to this Agreement.
"TTSI Leases" means the real property leases relating to the facilities
used exclusively by the TTS Business, as the same may be amended and
supplemented from time to time, including the interests of Seller Companies in
any related fixtures, improvements and personal property located therein.
"TTSI Preferred Stock" means shares of preferred stock of TTSI with
such voting powers, full or limited, or no voting powers, and such designations,
preferences and relative, participating, optional or other special rates, and
qualifications, limitations or restrictions thereof, as shall be agreed to by
Buyer and Parent and expressed in the Amended and Restated Certificate of
Incorporation.
"US Benefit Arrangements" means Benefit Arrangements in respect of US
Transferred Employees.
"US Transferred Employees" means Transferred Employees employed by the
TTS Business in the United States.
"WARN" means the Worker Adjustment Retraining and Notification Act, as
amended.
"West Coast Technical Center" means the TTS Business facility located
in Carlsbad, California.
(b) "To the knowledge," "known by" or "known" (and any similar phrase) means (i)
with respect to Parent, to the actual knowledge of any of the Senior Vice
President and Chief Financial Officer, the Senior Vice President and General
Counsel, the Treasurer or the Controller of Parent, and shall be deemed to
include a representation that a reasonable investigation or inquiry of the
subject matter thereof has been made by such individuals, (ii) with respect to
Buyer, to the actual knowledge of the Chief Financial Officer, the General
Counsel, the Treasurer or the Controller of Buyer, and shall be deemed to
include a representation that a reasonable investigation or inquiry of the
subject matter thereof has been made by such individuals or (iii) with respect
to TTSI, Xxxxx X. Xxxxxxxx and Xxxx X. Xxxxx.
(c) Each of the following terms is defined in the Section set forth opposite
such term:
Term Section
Active Employee....................................................D.01
Adjusted Purchase Price............................................2.04
Agreement......................................................Preamble
Annual Thiokol Payment.............................................2.07
B&D Australasia....................................................2.01
Buyer..........................................................Preamble
Closing............................................................2.05
Competing Business.................................................5.06
Controlled Group...................................................B.20
EII............................................................Recitals
Emhart.........................................................Recitals
Encumbrances....................................................... A
Environmental Insurance Claims.....................................7.06
Estimated Net Working Capital......................................2.06
Exchange Consideration.............................................2.04
Existing Contracts.................................................5.01
Final Net Working Capital Amount...................................2.06
Indemnified Claim.................................................10.03
Indemnified Party.................................................10.03
Indemnifying Party................................................10.03
Insurance Liabilities..............................................6.03
Leased Real Property...............................................B.07
Nippon.............................................................2.01
Owned Real Property................................................B.07
PBGC...............................................................B.20
Proceedings....................................................... A
Prohibited Transaction............................................ B.20
Proposed Final Net Working Capital Amount..........................2.06
Referee...........................................................10.03
Remaining Recovery.................................................7.06
Reportable Events..................................................B.20
Parent.........................................................Preamble
Parent's Hourly Pension Plan.......................................D.08
Parent's Salaried Pension Plan.....................................D.07
Parent's Savings Plan..............................................D.09
Proposed Annual Thiokol Payment....................................2.07
Successor Hourly Pension Plan......................................D.08
Successor Salaried Pension Plan....................................D.07
Successor Savings Plan.............................................D.09
Surviving Representations or Covenants............................10.01
Third Party Claim.................................................10.03
Transferred Employees..............................................D.01
TTSI...........................................................Preamble
Xxxxxx.............................................................2.01
EXHIBIT B
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent hereby represents and warrants to Buyer, that:
B.01 Corporate Existence and Power. Each of Parent, Emhart, EII and
TTSI is a corporation duly incorporated, validly existing and in good standing
under the laws of the state or jurisdiction of its incorporation and has all
corporate powers and all governmental licenses, authorizations, consents and
approvals required to carry on the TTS Business as now conducted and as
contemplated to be conducted upon consummation of the transactions contemplated
by Section 2.01, except where the failure to have such licenses, authorizations,
consents and approvals does not have a Material Adverse Effect on the TTS
Business. Each of Parent, Emhart, EII and TTSI, as the case may be, is duly
qualified to do business as a foreign corporation in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
make such qualification necessary to carry on the TTS Business as now conducted
and as contemplated to be conducted upon consummation of the transactions
contemplated by Section 2.01, except where the failure to be so qualified does
not have a Material Adverse Effect on the TTS Business.
B.02 Corporate Authorization. The execution, delivery and
performance by Parent and TTSI of each of the Transaction Documents to which it
is a party and the consummation by Parent and TTSI of the Contemplated
Transactions are within their respective corporate powers and have been duly
authorized by all necessary corporate action on their respective parts. The
execution, delivery and performance by Seller Companies other than Parent and
TTSI of the Transaction Documents to which a Seller Company other than Parent is
a party and the consummation by such Seller Company of the Contemplated
Transactions are within such Seller Company's corporate powers and, as of the
respective date of execution thereof, will have been duly authorized by all
necessary corporate action on its part. Each of the Transaction Documents to
which it is a party constitutes or will constitute as of the respective date of
execution thereof a legal, valid and binding agreement of the applicable Seller
Company, enforceable against it in accordance with its terms (i) except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, including the effect of
statutory and other laws regarding fraudulent conveyances and preferential
transfers and (ii) subject to the limitations imposed by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding at law or in equity).
B.03 Governmental Authorization. The execution, delivery and
performance by each Seller Company of the Transaction Documents to which it is a
party require no action by or in respect of, or consent or approval of, or
filing with, any Governmental Authority other than:
(i) compliance with any applicable requirements of
the HSR Act;
(ii) filing of an amendment to the Certificate of
Incorporation of TTSI to increase authorized capital;
(iii) compliance with the terms and conditions under
which any industrial revenue or other bonds were issued (or leases
related thereto) in connection with financing the acquisition, lease,
development or improvement of any Owned Real Property, Leased Real
Property or any machinery or equipment used in connection with the TTS
Business;
(iv) compliance with the terms and conditions of the
1959 TTSI Consent Decree and the 1961 TTSI Consent Decree;
(v) the filing of applicable documentation with
Governmental Authorities in each of the United Kingdom, Japan and
Australia for the establishment of branches in those countries as
contemplated by Section 2.01(f);
(vi) actions, consents, approvals or filings set
forth in Schedule B.03 or otherwise expressly referred to in this
Agreement; and
(vii) such other consents, approvals, authorizations,
permits and filings the failure to obtain or make would not have, in
the aggregate, a Material Adverse Effect on TTSI or the TTS Business
after giving effect to or as the result of the transactions
contemplated by Section 2.01.
B.04 Non-Contravention. Except as set forth in Schedule B.04, assuming
compliance with the matters referred to in Section B.03, the execution, delivery
and performance by Parent or any Seller Company of the Transaction Documents do
not and will not (i)(A) contravene or conflict with the charter or bylaws of
Parent or any Seller Company, (B) contravene or conflict with or constitute a
violation of any provisions of any Applicable Law binding upon Parent or any
Seller Company that is applicable to the TTS Business; (C) constitute a default
under or give rise to any right of termination, cancellation or acceleration of,
or to a loss of any benefit relating exclusively to the TTS Business to which
Parent or any Seller Company is entitled under, any Contract binding upon Parent
or any Seller Company and relating exclusively to the TTS Business or by which
any of the Contributed Assets is or may be bound or any license, franchise,
permit or similar authorization held by Parent or any Seller Company relating
exclusively to the TTS Business except, in the case of clauses (B) and (C), for
any such contravention, conflict, violation, default, termination, cancellation,
acceleration or loss that could not reasonably be expected to have a Material
Adverse Effect on the TTS Business or (ii) result in the creation or imposition
of any Lien on any Contributed Asset, other than Permitted Liens.
B.05 Capitalization of TTSI. As of the date hereof, the authorized
capital stock of TTSI consists of 1,000 shares, all of one class called Common
Stock, par value $1.00 per share. As of the date hereof, EII owns 1,000 shares
of TTSI Common Stock representing 100% of all of the issued and outstanding
shares of TTSI Common Stock. Following the consummation of the transactions
contemplated by Section 2.01 and prior to the Closing, (i) the authorized
capital stock of TTSI will consist of 8,000 shares of TTSI Common Stock and
1,000 shares of TTSI Preferred Stock, (ii) EII will own 2,000 shares of TTSI
Common Stock and 250 shares of TTSI Preferred Stock, (iii) Emhart will own 6,000
shares of TTSI Common Stock and 750 shares of TTSI Preferred Stock, and (iv) the
shares of TTSI Common Stock and TTSI Preferred Stock owned by EII and Emhart, in
the aggregate, will constitute 100% of the issued and outstanding capital stock
of TTSI. Other than as contemplated by this Agreement, there are not now, and as
of Closing there will not be, any options, warrants or other rights to acquire
or securities convertible into or exchangeable for shares of capital stock or
any stock appreciation, phantom stock or similar rights of TTSI outstanding.
Each outstanding share of capital stock of TTSI has been duly authorized and is
validly issued, fully paid and nonassessable. In addition, (i) there are no
rights of first refusal, rights of first offer, or other similar rights
affecting TTSI's outstanding or unissued capital stock, and (ii) there are no
Liens affecting any of the outstanding shares of TTSI capital stock.
B.06 Organizational Instruments; Subsidiaries. Parent has made
available to Buyer complete and accurate copies of the Certificate of
Incorporation and Bylaws of TTSI, in each case as amended to date. TTSI is not
in violation of any provision of its Certificate of Incorporation or Bylaws.
TTSI does not have any Subsidiaries nor does TTSI directly or indirectly own or
have the power to vote shares of capital stock or other ownership interests of
any Person.
B.07 Financial Statements.
(a) Except as set forth in the notes to the Opening Statement,
the Opening Statement has been prepared in conformity with GAAP applied on a
consistent basis and presents fairly, in all material respects, the net assets
of the TTS Business as of March 29, 1998.
(b) Subject to the provisions of B.07(c) below, the TTSI
Financial Statements present fairly in all material respects the financial
position and results of operations of TTSI at the dates and for the periods set
forth therein, in conformity with (i) GAAP applied on a consistent basis other
than as described therein or in the notes thereto and (ii) the principles and
procedures set forth in the notes thereto.
(c) Notwithstanding anything contained herein or in the TTSI
Financial Statements to the contrary, neither Seller Companies nor TTSI make any
representation or warranty as to (i) goodwill reflected in the TTSI Financial
Statements or (ii) any accounting treatment which may or may not be available to
TTSI or Buyer upon consummation of the Contemplated Transactions or in
connection with the debt financing contemplated by Section 2.02, including,
without limitation, the availability of leveraged recapitalization accounting
treatment and the existence of goodwill (or the amount thereof) that is or may
be required to be reflected in the TTSI Financial Statements or any financial
statements of TTSI covering periods after the TTSI Financial Statements.
B.08 Absence of Certain Changes. Except for matters that would be
permitted in accordance with Section 5.01 if they occurred after the date of
this Agreement or as set forth in Schedule B.08, from March 29, 1998 to the date
of this Agreement, there has not been any material adverse change in the
business, financial condition or results of operations of the TTS Business taken
as a whole and there has not been:
(a) any event or occurrence that has had a Material Adverse
Effect on the TTS Business, other than those resulting from changes, whether
actual or prospective, in general conditions applicable to the industries in
which the TTS Business is involved or general economic conditions;
(b) any damage, destruction or other casualty loss affecting
the TTS Business or any assets that would constitute Contributed Assets or
Transferred Intellectual Property if owned, held or used by Parent or any of the
Seller Companies on the date on which the transactions contemplated by Section
2.01 are consummated that has a value in excess of $250,000;
(c) other than this Agreement, any transaction or commitment
made, or any Contract entered into, by Parent or any Seller Company relating
primarily to the TTS Business or any assets that would constitute Contributed
Assets or Transferred Intellectual Property if owned, held or used by Parent or
any of the Seller Companies on the date on which the transactions contemplated
by Section 2.01 are consummated (including the acquisition or disposition of any
assets) or any termination or amendment by Parent or any Seller Company of any
Contract or other right relating primarily to the TTS Business, in either case,
which would be prohibited by the provisions of Section 5.01 of the Agreement if
it were so made, entered, amended or modified;
(d) any sale or other disposition, other than as contemplated
by this Agreement, of more than $50,000 individually or $250,000 in the
aggregate of assets (other than the sale of Inventory (including obsolete
Inventory whether or not made in the ordinary course of business) in the
ordinary course of business) that would constitute Contributed Assets or
Transferred Intellectual Property if owned, held or used by any Seller Companies
on the date on which the transactions contemplated by Section 2.01 are
consummated;
(e) any increase in the compensation of any current employee
of the TTS Business other than as would be permitted under Section 5.01 and
other than nondiscretionary increases pursuant to Employee Plans or Benefit
Arrangements disclosed in Schedule B.20 or referenced in Exhibit D; and
(f) any cancellation, compromise, waiver or release by Parent
or any Seller Company of any claim or right (or a series of related rights and
claims) related to the TTS Business, other than cancellations, compromises,
waivers or releases in the ordinary course of business.
B.09 Sufficiency of and Title to the Contributed Assets.
(a) Except as set forth in Schedule B.09, the Contributed
Assets and the Transferred Intellectual Property, together with the services to
be provided to TTSI after Closing pursuant to the Services Agreement,
constitute, and on the Closing Date will constitute, all of the tangible and
intangible assets and services that are necessary for TTSI to operate the TTS
Business in the same manner in all material respects as such operations have
heretofore been conducted.
(b) Except as set forth in Schedule B.09, subject to the
receipt of any consents or approvals of any other Person, upon consummation of
the Contemplated Transactions, TTSI will have acquired good and marketable title
in and to, or a valid leasehold interest in, each of the Contributed Assets and
Transferred Intellectual Property that were used in the TTS Business to generate
the financial and operating results that are reflected in the Opening Statement
and the TTSI Financial Statements (other than any such Contributed Assets that
are consumed in the ordinary conduct of the TTS Business prior to Closing and in
a manner consistent with Section 5.01), free and clear of all Liens, except for
Permitted Liens.
(c) Schedule B.09 includes a true and complete list of all
real property owned by Seller Companies (or real property which Seller Companies
have a right to acquire in connection with the operation of the TTS Business)
which is included in the Contributed Assets (collectively, the "Owned Real
Property"). Schedule B.09 sets forth (i) the address of each parcel of Owned
Real Property and (ii) the owner of such Owned Real Property.
(d) Schedule B.09 includes a true and complete list of all
agreements (together with any amendments thereof) pursuant to which Seller
Companies lease, sublease or otherwise occupy (whether as landlord, tenant,
subtenant or other occupancy arrangement) any real property used in, or relating
to, the TTS Business (collectively, the "Leased Real Property"). Schedule B.09
sets forth (i) the address or location of each parcel of Leased Real Property
and (ii) the owner of the leasehold, subleasehold or occupancy interest for each
Leased Real Property.
B.10 No Undisclosed Liabilities. There are no liabilities (including
indebtedness for borrowed money) of Parent or any Seller Company relating to the
TTS Business that will constitute Assumed Liabilities of any kind whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise,
other than:
(a) liabilities disclosed in or provided for in the Opening
Statement or the TTSI Financial Statements and liabilities for matters reflected
in the determination of the Final Net Working Capital Amount;
(b) liabilities (i) disclosed in Schedule B.10, (ii) related
to any contract, agreement, lease, license, commitment, sales or purchase order
or other undertaking disclosed in the Disclosure Schedules or (iii) related to
any Employee Plan or Benefit Arrangements identified in Exhibit D or disclosed
in Schedule B.20, other than, with respect to clause (iii) those arising from
any breach, non-performance or other violation of any of the foregoing or any
fiduciary duty relating thereto;
(c) liabilities incurred in the ordinary course of business
consistent with past practice since March 29, 1998;
(d) liabilities which in the aggregate are not in excess of
$100,000 not required to be accrued for or reserved against in accordance with
GAAP as of March 29, 1998; and
(e) with respect to the bring down of this representation and
warranty as of the Closing Date, liabilities which in the aggregate are not in
excess of $100,000 not required to be accrued for or reserved against in
accordance with GAAP (or the other policies and procedures set forth in the
notes to the Opening Statement) as of the Closing Date.
B.11 Litigation. Except as set forth in Schedule B.11 or reserved
against or described in the Opening Statement, there is no action, suit,
investigation or proceeding pending against, or to the knowledge of Parent,
threatened against or affecting, the TTS Business or any Contributed Asset or
Transferred Intellectual Property before any Governmental Authority that could
reasonably be expected to result in damages, in the aggregate, in excess of
$100,000.
B.12 Material Contracts.
(a) Except as set forth in Schedule B.12 and except for
Contracts that do not constitute Assumed Liabilities, no Seller Company, with
respect to the TTS Business, is, and as of Closing TTSI will not be, party to or
otherwise bound by or subject to:
(i) any written employment, severance, consulting or
sales representative Contract which contains an obligation (excluding
commissions) to pay more than $100,000 per year and constitutes an
Assumed Liability;
(ii) any Contract containing any covenant limiting
the freedom of Seller Companies, with respect of the TTS Business or
the operations of the TTS Business, to engage in any line of business
or compete with any Person in any geographic area if such Contract will
be binding on TTSI after the Closing;
(iii) any Contract in effect on the date of this
Agreement relating to the disposition or acquisition of the assets of,
or any interest in, any business enterprise which relates to the TTS
Business other than the purchase and sale of inventory or the license
or sale of Intellectual Property in connection with the Shaft Lab
product line or other licenses of Intellectual Property granted in the
ordinary course of business which do not materially deplete the value
of such Intellectual Property prior to Closing;
(iv) any Financial Support Arrangements;
(v) any indebtedness for borrowed money of the TTS
Business (other than intercompany indebtedness that will be paid or
otherwise cancelled at or prior to Closing) that will constitute an
Assumed Liability if in existence on the date on which the transactions
contemplated by Section 2.01 are consummated;
(vi) any offset agreement entered into in connection
with an international sales transaction and relating to any Contract
that imposes on the TTS Business an obligation to perform that will
continue in effect on or after the Closing Date;
(vii) any agreement that places any Lien (other than
a Permitted Lien) on the Contributed Asset or any of the Transferred
Intellectual Property;
(viii) any agreements regarding leasing of any
material property (real or personal) as lessor or lessee;
(ix) any license or other grant of any rights or
interest in any Transferred Intellectual Property (other than any such
license or grant that would not be prohibited under Section 5.01);
(x) any warranty or indemnification agreement with
respect to the sale or distribution of its products;
(xi) any material agreement or contract with a
distributor, broker, sales agent or the like; and
(xii) any other agreement of any type involving
payments of more than $250,000 annually.
(b) Except as disclosed in Schedule B.12, each Contract
disclosed in Schedule B.12 is a legal, valid and binding obligation of Parent
(or the applicable Seller Company) enforceable against Parent (or the applicable
Seller Company) in accordance with its terms (except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally,
including the effect of statutory and other laws regarding fraudulent
conveyances and preferential transfers, and subject to the limitations imposed
by general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity), and Parent (or the applicable
Seller Company) is not in material default and has not failed to perform any
material obligation thereunder, and, to the knowledge of Parent, there does not
exist any event, condition or omission which would constitute a material breach
or default (whether by lapse of time or notice or both) by any other Person.
B.13 Licenses and Permits. To the knowledge of Parent, except as set
forth in Schedule B.13, Parent (or the appropriate Seller Company) has and
immediately following the Closing TTSI will have all licenses, franchises,
permits and other similar authorizations affecting, or relating in any way to,
the TTS Business required by law to be obtained by Parent (or the appropriate
Seller Company) or, following the Closing, TTSI to permit Parent or TTSI to
conduct the TTS Business in substantially the same manner as the TTS Business
has heretofore been conducted. As of Closing, except as set forth in Schedule
B.13, TTSI will have all licenses, franchises, permits and other similar
authorizations necessary for the conduct of the TTS Business, except where the
failure to have any such license, franchise, permit or other similar
authorization could not reasonably be expected to have a Material Adverse Effect
on the TTS Business.
B.14 Finders' Fees. Except for Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, whose fees and expenses relating exclusively to the sale of the TTS
Business by Parent will be paid by Parent, there is no investment banker,
broker, finder or other intermediary that has been retained by or is authorized
to act on behalf of Parent or any Seller Company or TTSI who might be entitled
to any fee or commission from Parent or Buyer or any of their Affiliates upon
consummation of the Contemplated Transactions.
B.15 Environmental Compliance. Except as disclosed in Schedule B.15 and
except as reserved against or specifically identified in the Opening Statement,
Parent the TTS Business is and has been in material compliance with all
applicable Environmental Laws, and has obtained all material permits, licenses
and other authorizations that are required under applicable Environmental Laws.
Except as set forth in Schedule B.15 and except as reserved against or
specifically identified in the Opening Statement, (i) the TTS Business is and
has been in material compliance with the terms and conditions under which the
permits, licenses and other authorizations referenced in the preceding sentence
were issued or granted, (ii) Seller Companies hold all permits required by
Environmental Laws that are appropriate to conduct the TTS Business as presently
conducted in all material respects and to operate the Contributed Assets in all
material respects as they are presently operated; (iii) no suspension,
cancellation or termination of any permit referred to in clause (ii) is pending
or threatened; (iv) Parent has not received written notice of any material
Environmental Claim relating to or affecting the TTS Business or the Contributed
Assets, and there is no such threatened Environmental Claim; (v) no Hazardous
Substance is present at the facilities constituting Contributed Assets in a
manner to give rise to a material Environmental Liability; and (vi) Parent, in
connection with the TTS Business or the Contributed Assets, has not entered
into, agreed in writing to, or is subject to any judgment, decree, order or
other similar requirement of any Governmental Authority under any Environmental
Laws.
B.16 Compliance with Laws. Except as set forth in Schedule B.16, for
violations or infringements of Environmental Laws, the operation of the TTS
Business and condition of the Contributed Assets and the Transferred
Intellectual Property have not violated or infringed, and do not violate or
infringe, in any material respect any material Applicable Law or any material
order, writ, injunction or decree of any Governmental Authority.
B.17 Intellectual Property. Except as set forth in Schedule B.17:
(a) Parent (or a Seller Company) owns, free and clear of all
Liens other than Permitted Liens, and subject to any licenses granted by Seller
Companies prior to the date of this Agreement, or after the date of this
Agreement and prior to Closing in accordance with Section 5.01, all right, title
and interest in the Transferred Intellectual Property;
(b) The operation of the TTS Business as heretofore conducted
does not conflict with, infringe upon or violate the Intellectual Property
rights of any other Persons and none of the Seller Companies have received any
written notices or claims with respect to the TTS Business alleging infringement
or misappropriation of any Intellectual Property of any third party or
contesting the validity, enforceability, use or ownership of the Transferred
Intellectual Property (including, without limitation, any demands or offers to
license any Intellectual Property from any third party, except as previously
disclosed to Buyer, except to the extent that such conflict, infringement or
violation has not had, and cannot reasonably be expected to have, a Material
Adverse Effect on the TTS Business;
(c) Parent (or a Seller Company) has the right to use all
Intellectual Property used by the TTS Business and necessary for the continued
operation of the TTS Business in substantially the same manner as its operations
have heretofore been conducted;
(d) Upon the consummation of the Closing hereunder, (i) TTSI
will be vested with all of Parent's (or the Seller Company's) rights, title and
interest in, and Parent's (or the Seller Company's) rights and authority to use
in connection with the TTS Business, all of the Transferred Intellectual
Property and (ii) the Transferred Intellectual Property, and any other interests
in Intellectual Property transferred hereunder collectively constitute all
rights and interests in Intellectual Property which are necessary for the
continued operation of the TTS Business as a whole in substantially the same
manner as its operations have heretofore been conducted;
(e) Neither Parent nor any of the Seller Companies has
received any written notice of any infringement or misappropriation by any third
party with respect to the Transferred Intellectual Property;
(f) To the knowledge of Parent and each of the Seller
Companies, all of the desktop software and all of the Oracle financial software
necessary for the conduct of the TTS Business will operate without interruption
and/or malfunction due to the recognition and processing of dates on and beyond
January 1, 2000, except to the extent that a failure to do so could not
reasonably be expected to have a Material Adverse Effect on the TTS Business.
The TTS Business has commenced review of its CNC manufacturing computer software
located at the Amory Facility and the Olive Branch Facility. This review is in
its early stages and no year 2000 remediation plans have been finalized. To the
knowledge of Parent and TTSI, there exists sufficient time to remediate any
material non-compliance issues that may arise with respect to the CNC
manufacturing computer software such that the CNC manufacturing computer
software will operate without interruption and/or malfunction due to the
recognition and processing of dates on and beyond January 1, 2000 except to the
extent that failure to do so could not reasonably be expected to have a Material
Adverse Effect on the TTS Business.
(g) Notwithstanding the provisions of this Section B.17,
Parent makes no representation or warranty, and no such representation or
warranty shall be implied, that any of such Intellectual Property is valid or
enforceable.
B.18 Taxes.
(a) Except as set forth in Schedule B.18, Parent and each
Seller Company has exercised reasonable care in the preparation of, and has duly
and timely filed, all applicable material Tax Returns with respect to all Taxes
required to be filed prior to the date hereof and, as of the Closing Date will
have exercised reasonable care in the preparation of, and will have timely
filed, all applicable Tax Returns with respect to Taxes required to have been
filed prior to the Closing Date, except where the failure to exercise reasonable
care or to file such Tax Returns could not reasonably be expected to have a
Material Adverse Effect on the TTS Business. Except as set forth in Schedule
B.18, all Taxes shown on the Tax Returns or pursuant to any declarations or
assessments received by Parent and each Seller Company (including estimated
Taxes), have been duly and timely paid, except when the failure to make payment
could not reasonably be expected to have a Material Adverse Effect on the TTS
Business, and no such Taxes have created a Lien (other than a Permitted Lien)
against or impair the ability to transfer the Contributed Assets to TTSI free
and clear of any Lien (other than a Permitted Lien) in accordance with the terms
of this Agreement. Except as set forth in Schedule B.18, all such Tax Returns
are true, correct and complete in all material respects, except where the
failure to be true, correct and complete could not reasonably be expected to
have a Material Adverse Effect on the TTS Business. Except as set forth in
Schedule B.18, there exists no Tax deficiency or unpaid Tax assessed by any
Governmental Authority against Parent or any Seller Company, except where such
deficiency or assessment could not reasonably be expected to have a Material
Adverse Effect on the TTS Business.
(b) As of the date of this Agreement, Schedule B.18 contains a
list of all states and other jurisdictions where Seller Companies have filed Tax
Returns during the past three years with respect to Contributed Assets or
Transferred Intellectual Property.
(c) (i) TTSI has filed all material Tax Returns that it
was required to file. All such Tax Returns were correct and complete in all
material respects. All Taxes owed by TTSI (whether or not shown on any Tax
Return) have been paid. TTSI is not currently the beneficiary of any extension
of time within which to file any Tax Return, other than as disclosed on Schedule
B.18 or as a result of being a member of a combined or a consolidated group for
Tax purposes. There are no Liens on any of the assets of TTSI that arose in
connection with any failure (or alleged failure) to pay any Tax.
(ii) TTSI has withheld and paid all material Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholders, or other third
party.
(iii) Neither Parent nor any Seller Company expects
any authority to assess any additional Taxes for any period for which Tax
Returns have been filed for TTSI, other than as disclosed on Schedule B.18 or as
a result of being a member of a combined or a consolidated group for Tax
purposes. There is no dispute or claim concerning any Tax Liability of TTSI
either (A) claimed or raised by any authority in writing or (B) as to which any
of the Parent or any Seller Company has knowledge based upon personal contact
with any agent of such authority, other than as disclosed on Schedule B.18 or as
a result of being a member of a combined or a consolidated group for Tax
purposes. Schedule B.18 lists all federal, state, local, and foreign income Tax
Returns filed with respect to TTSI for taxable periods ended on or after
December 31, 1993, indicates those Tax Returns that have been audited, and
indicates those Tax Returns that currently are the subject of audit.
(iv) TTSI has not waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
assessment or deficiency, other than as disclosed on Schedule B.18 or as a
result of being a member of a combined or a consolidated group for Tax purposes.
(v) TTSI has not filed a consent under Code Section
341(f) concerning collapsible corporations. TTSI has not made any payments, is
not obligated to make any payments, and is not a party to any agreement that
under certain circumstances could obligate it to make any payments that will not
be deductible under Code Section 280G. TTSI has not been a United States real
property holding corporation within the meaning of Code Section 897(c)(2) during
the applicable period specified in Code Section 897(c)(1)(A)(ii).
B.19 Insurance. Schedule B.19 contains a correct and complete list of
all material policies of insurance held by any Seller Companies that are in
effect on the date of this Agreement and that are applicable to the TTS
Business. None of the insurance carriers listed in Schedule B.19 are related to
or affiliated with Parent, other than Shenandoah Insurance, Inc., and Parent has
not received notice or any other indication from any insurer or agent (other
than Shenandoah Insurance, Inc.) of any intent to cancel or not to renew any of
the insurance policies listed in Schedule B.19, except for cancellations or
failures to renew that will occur as a result of the Closing.
B.20 Employee Benefit Matters.
(a) Schedule B.20 lists each Employee Plan and material
Benefit Arrangement which covers Transferred Employees and each collective
bargaining agreement covering Transferred Employees.
(b) Except as set forth in Schedule B.20, with respect to the
TTS Business:
(i) neither Parent nor any member of its "Controlled
Group" (defined as any organization which is a member of a controlled
group of organizations within the meaning of Code Sections 414(b), (c),
(m) or (o)) has ever contributed to or had any liability to a
multi-employer plan, as defined in Section 3(37) of ERISA;
(ii) no fiduciary of any funded Employee Plan has
engaged in a nonexempt "prohibited transaction" (as that term is
defined in Section 4975 of the Code and Section 406 of ERISA) which
could subject Buyer to a penalty tax imposed by Section 4975 of the
Code;
(iii) no Employee Plan that is subject to Section 412
of the Code has incurred an "accumulated funding deficiency" within the
meaning of Section 412 of the Code, whether or not waived;
(iv) each Employee Plan and Benefit Arrangement has
been established and administered in all material respects in
accordance with its terms, the terms of any applicable collective
bargaining agreements and in compliance with Applicable Law;
(v) TTSI has not incurred and Parent is not aware of
any facts which would result in TTSI incurring any liability under
Title IV of ERISA other than for the payment of premiums to the Pension
Benefit Guaranty Corporation ("PBGC"), all of which, to the knowledge
of Parent, have been paid when due with respect to any plan that TTSI
or any member of its controlled group (within the meaning of Code
Section 414) maintains or ever has maintained or to which any of them
contributes or ever has been required to contribute;
(vi) no defined benefit Employee Plan has been
terminated; nor have there been any "reportable events" (as that term
is defined in Section 4043 of ERISA and the regulations thereunder),
other than reportable events arising directly from the Contemplated
Transactions, which would present a risk that an Employee Plan would be
terminated by the PBGC in a distress termination;
(vii) each Employee Plan intended to qualify under
Section 401 of the Code has received a determination letter that it is
so qualified and to the knowledge of Parent, no event has occurred with
respect to any such Employee Plan which could cause the loss of such
qualification or exemption;
(viii) with respect to each Employee Plan listed in
Schedule B.20, Parent has made available to Buyer the most recent true
and complete copy (where applicable) of (A) the plan document; (B) the
most recent determination letter; (C) any summary plan description; (D)
Form 5500; (E) the most recent actuarial report; and (6) a complete
copy of any collective bargaining agreement pursuant to which any
Employee Plan or Benefit Arrangement is maintained;
(ix) with respect to the Transferred Employees, there
are no post-retirement medical or health plans in effect (other than as
required under Section 4980B of the Code);
(x) there are no actions, claims or investigations
pending or, to the knowledge of Parent threatened, against any Employee
Plan, Benefit Arrangement, or any administrator, fiduciary or sponsor
thereof with respect to the TTS Business, other than benefit claims
arising in the normal course of operation of such Employee Plan or
Benefit Arrangement;
(xi) none of the Employee Plans or Benefit
Arrangements obligates TTSI to pay any separation, severance,
termination or similar benefit solely as a result of any transaction
contemplated by this Agreement or solely as a result of a change in
control or ownership;
(xii) none of the Employee Plans or Benefit
Arrangements has unfunded liabilities that are Assumed Liabilities
(other than those relating to post employment medical, dental and life
insurance benefits);
(xiii) the post-retirement medical benefits liability
set forth in the TTSI audited December 31, 1997 financial statements
was calculated in accordance with Financial Accounting Statement 106
based on claim experience which is reasonably representative of that
historically incurred by the Parent Company and its Affiliates in the
aggregate and such claim experience is not materially different from
that which was historically incurred by the TTS Business;
(xiv) assets under the Parent's Hourly Pension Plan
(as such term is defined in Section D.08) may be transferred to the
Successor Hourly Pension Plan (as such term is defined in Section D.08)
in accordance with Section D.08 of this Agreement without violating the
collective bargaining agreement or other Applicable Law;
(xv) all Employee Plans and material Benefit
Arrangements required under any collective bargaining agreement or
Applicable Law relating to the bargaining unit employees of the TTS
Business are listed or referred to on Schedule B.20; and
(xvi) to the knowledge of Parent no organizational
effort is presently being made or threatened by or on behalf of any
labor union with respect to employees of any of the nonunionized TTS
Business locations. Except for the matters referenced in Items 1 and 19
of Schedule B.11 of the Disclosure Schedule, with respect to the TTS
Business, no labor strike, work stoppage or slowdown, or other material
labor dispute is underway or, to the knowledge of Parent, threatened.
Section B.21. No Material Shared Assets/Liabilities. Except to the
extent contemplated by the services to be provided under the Services Agreement,
there is no material asset, tangible or intangible, necessary for the conduct of
the TTS Business as it has historically been conducted the use of which is
shared by the TTS Business and any business of Parent or any of the Seller
Companies other than the TTS Business. There is no material Assumed Liability
the obligation for which is shared by the TTS Business and any business of
Parent or any of the Seller Companies other than the TTS Business.
EXHIBIT C
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Parent that:
C.01 Organization and Existence. Buyer is a limited liability company
duly formed, validly existing and in good standing under the laws of the state
of its formation and has all powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted and as contemplated to be conducted in connection with the
transactions contemplated hereby, except where the failure to have such
licenses, authorizations, consents and approvals has not had and may not
reasonably be expected to have, a Material Adverse Effect on Buyer. As of the
Closing Date, Buyer will be duly qualified to do business as a foreign
corporation in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities (after giving effect to the
Contemplated Transactions) make such qualification necessary to carry on its
business as now conducted, except, in the case of Buyer, for those jurisdictions
where failure to be so qualified has not had, and may not reasonably be expected
to have, a Material Adverse Effect on Buyer.
C.02 Corporate Authorization. The execution, delivery and performance
by Buyer of the Transaction Documents and the consummation by each of Buyer of
the Contemplated Transactions are within the powers of Buyer and have been (or,
prior to the Closing, will have been) duly authorized by all necessary action on
the part of Buyer. Each of the Transaction Documents to which Buyer is party
constitutes a legal, valid and binding agreement of Buyer, enforceable against
Buyer in accordance with its terms (i) except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or affecting creditors'
rights generally, including the effect of statutory and other laws regarding
fraudulent conveyances and preferential transfers and (ii) subject to the
limitations imposed by general equitable principles (regardless of whether such
enforceability is considered in a proceeding at law or in equity).
C.03 Governmental Authorization. Except as set forth on Schedule C.03,
the execution, delivery and performance by Buyer of the Transaction Documents
require no action by or in respect of, consents or approvals of, or filing with,
any governmental body, agency, official or authority other than compliance with
any applicable requirements of the HSR Act.
C.04 Non-Contravention. The execution, delivery and performance by
Buyer of the Transaction Documents do not and will not (i) contravene or
conflict with the articles of organization or limited liability company
agreement of Buyer, (ii) assuming compliance with the matters referred to in
Section C.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to Buyer, or (iii) constitute a default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Buyer or to a loss of any benefit to which Buyer is entitled under
any provision of any agreement, contract or other instrument binding upon Buyer
or any license, franchise, permit or other similar authorization held by Buyer,
except, in the case of clauses (ii) and (iii), for any such contravention,
conflict, violation, default, termination, cancellation, acceleration or loss
that could not reasonably be expected to have a Material Adverse Effect on Buyer
taken as a whole.
C.05 Finders' Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of Buyer who might be entitled to any fee or commission from Parent or Buyer (or
any of their Affiliates) upon consummation of the Contemplated Transactions.
C.06 Litigation. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened against or affecting,
Buyer before any court or arbitrator or any Governmental Authority that in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
Contemplated Transactions.
C.07 Financing. Buyer has or will have prior to Closing available to it
cash, marketable securities or other investments, or presently available sources
of credit, to enable it to purchase the Acquired Shares as contemplated by
Section 2.03(b) and Buyer will use its commercially reasonable best efforts to
assist TTSI to have available to it prior to Closing borrowings sufficient to
consummate the Redemptions and to pay off the promissory notes to be delivered
to Xxxxxx, B&D Australasia and Nippon pursuant to Section 2.01(g). As of the
date hereof, Buyer has delivered true, correct and complete copies of the
Commitment Letters to Parent. The copies of the Commitment Letters delivered to
Parent include all of the terms and conditions of the financings contemplated
therein, including but not limited to the conditions to any such financings, and
there are no other terms or conditions applicable to such financings.
C.8 Investment Representations. The Buyer is acquiring the Acquired
Shares for its own account and not with a view to or for sale in connection with
any distribution other than in accordance with federal and state securities
laws. The Buyer has received from Parent all information that is requested and
considers necessary or appropriate for deciding whether to purchase the Acquired
Shares. The Buyer further represents that it has had an opportunity to ask
questions and receive answers from Parent, the Seller Companies and TTSI
regarding the terms and conditions of its acquisition of the Acquired Shares.
The Buyer has experience as an investor in securities of companies and
acknowledges that it can bear the economic risk of its investment in the
Acquired Shares. The Buyer has (i) by reason of its business or financial
experience or the business or financial experience of its professional advisers
who are unaffiliated with, and who are not compensated by, Parent or the Seller
Companies or any affiliate thereof, directly or indirectly, has the capacity to
protect is own interest in connection with its purchase of the Acquired Shares.
The Buyer has the financial capacity to bear the risk of this investment and has
received from Parent, TTSI and the Seller Companies all information that it
requested and considers necessary or appropriate for deciding whether to
purchase the Acquired Shares. The Buyer is an "Accredited Investor" within the
meaning of Rule 501(a) of Regulation D under the Securities Act.
C.9 Restrictive Legends. The Buyer understands that the Acquired Shares
will be "restricted securities" under the Securities Act, in as much as they are
being acquired from an affiliate of TTSI in a transaction not involving a public
offering, and that, under the Securities Act, and applicable regulations
thereunder, such securities may be resold without registration under the
Securities Act, only in certain limited circumstances. The Buyer understands
that the certificates evidencing the Acquired Shares will bear the legend set
forth below, together with any other legends required by the applicable state
securities laws:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE
SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION
THEREFROM. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND THE RIGHTS OF HOLDERS THEREOF ARE
SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER
RESTRICTIONS, AND THE HOLDER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE, INCLUDING ANY FUTURE
HOLDERS IS BOUND BY THE TERMS OF THE STOCKHOLDERS'
AND REGISTRATION RIGHTS AGREEMENTS BETWEEN THE
ORIGINAL PURCHASER, THE COMPANY AND CERTAIN OTHER
STOCKHOLDERS (COPIES OF WHICH MAY BE OBTAINED FROM
THE COMPANY).
EXHIBIT D
EMPLOYEES AND EMPLOYEE BENEFIT MATTERS
I. Employees and Employment.
D.01 General. In connection with the Contemplated Transactions, and on
or before the Closing Date, the employment of all Active Employees of the TTS
Business including, without limitation, employees based in the TTS Business
headquarters in Memphis, Tennessee, employees based in the Olive Branch
Facility, the Amory Facility and the West Coast Technical Center and the
employees listed on Attachment XIII, shall be transferred to TTSI such that the
employment of such persons shall be considered continuous employment under
Applicable Law. "Active Employee" shall mean any individual who is actively
employed by TTSI or any Seller Company in connection with the TTS Business or is
on authorized leave of absence, military service (without restriction) or
lay-off with recall rights (without restriction) with respect to the TTS
Business and where applicable shall include independent contractors. The Active
Employees who are employed at any time on or after the Closing Date with Buyer
or TTSI are herein collectively referred to as "Transferred Employees." Buyer
shall ensure that such employment shall be at the same workplace and on the same
terms and conditions as those under which such employees are currently employed
by Seller Companies and the employment of each Transferred Employee shall be
continued by Buyer or TTSI for the maximum applicable termination notice period
to which the Seller Companies may be subject under Applicable Law as a result of
the Contemplated Transactions. From and after the Closing Date, except as
otherwise provided herein, Buyer and TTSI shall assume all obligations under any
agreements, contracts or Applicable Law relating to the terms and conditions of
employment of all Active Employees of the TTS Business, and Buyer and TTSI shall
be responsible for any liability or obligations arising out of or pertaining to
the termination of employment of, hiring of or failure or refusal to hire any
Active Employee of the TTS Business on and after the Closing Date.
No later than three days prior to Closing, Parent shall provide buyer
with a listing of each Active Employee and the status of each such Active
Employee, including whether such Active Employee is actively employed, on leave
of absence (and the reason for such leave of absence) or on lay-off with recall
rights.
D.02 Labor Agreements. TTSI shall recognize the applicable labor
unions, collective bargaining representative, trade unions or work councils
representing any employees of the TTS Business as the exclusive collective
bargaining representatives of such employees with respect to wages, hours,
fringe benefits and other terms and conditions of employment to the extent so
recognized by Seller Companies for all such employees who are within the
appropriate bargaining unit as determined by Applicable Law. TTSI shall become a
successor employer under any labor or collective bargaining agreements and Buyer
and TTSI agree to honor the terms of and to assume all obligations of the Seller
Companies under existing collective bargaining agreements in respect of such
unionized employees from and after the Closing Date and all legal obligations
arising from such recognition or assumption.
D.03 Recalled or Rehired Employees. Buyer and TTSI confirm that any
employees of the TTS Business that are laid off or on leave as of the Closing
Date and who are recalled or rehired by Buyer or TTSI or return from leave on or
after the Closing Date will be recalled or rehired by Buyer or TTSI or returned
to employment in compliance with any applicable agreements, contracts or
Applicable Law and will be accorded the benefits otherwise provided to
Transferred Employees by Buyer or TTSI. Buyer further agrees that during the
term of such leave or layoff, Buyer, in accordance with the terms of such plans
and arrangements and Applicable Law, shall credit such employee with service and
shall provide benefits under TTSI's plans.
D.04 Negotiations with Employees or Employee Representatives. If and to
the extent that any provisions of this Agreement are or may be subject to
negotiation with employees, or applicable labor unions, trade unions or work
councils, by policy, contract, collective agreement or Applicable Law, the
Seller Companies, Buyer and TTSI shall cooperate fully in such negotiations.
D.05 Termination and Plant Closing Notices; WARN. Parent shall provide
or cause to be provided any notices to the employees of the TTS Business that
may be required under any Applicable Law, including but not limited to WARN or
any similar state or local law, with respect to events that occur prior to the
reorganization of the TTS Business. Buyer shall provide any such notices to
Active Employees with respect to events that occur as a result of the
Contemplated Transactions, and to Transferred Employees with respect to events
that occur on and after the Closing Date. Buyer shall not take, and shall cause
TTSI not to take, any action after the Closing that would cause any termination
of employees by Seller Companies that occur on or before the Closing Date to
constitute a "plant closing" or "mass layoff" under WARN or any similar state or
local law, or create any liability to the Seller Companies for employment
termination under Applicable Law. Seller shall provide Buyer, upon request, with
a list of employees terminated prior to Closing who may be affectd under WARN or
similar state or local law.
D.06 Immigration Matters. Buyer acknowledges that the Contemplated
Transactions may trigger certain obligations under the immigration laws of the
countries where the TTS Business operates. Buyer shall be solely responsible for
compliance with all requirements of such immigration laws and agrees to make any
necessary filings with the appropriate Governmental Authority to ensure the
continued employment eligibility of the Transferred Employees.
II. United States Employee Benefit Matters.
D.07 Salaried Employee Pension Plans.
(a) As soon as practicable after the Closing Date, with effect
as of the Closing Date, TTSI shall establish a defined benefit plan ("Successor
Salaried Pension Plan"). As soon as practicable following the earlier of
delivery to Parent of a favorable determination letter from the Internal Revenue
Service regarding the qualified status of the Successor Salaried Pension Plan or
the issuance of indemnities satisfactory to the Parent in its sole discretion,
Parent shall cause the transfer from The Black & Xxxxxx Pension Plan ("Parent's
Salaried Pension Plan") to the Successor Salaried Pension Plan of assets (in
accordance with paragraphs (c) and (d) below) and liabilities which are
attributable to the Active Employees who are participants in the Parent's
Salaried Pension Plan as of the Closing Date.
(b) The Active Employees shall be eligible to participate
under the Successor Salaried Pension Plan for a period of at least one year
following the Closing Date on the same terms and conditions as provided to the
Active Employees under Parent's Salaried Pension Plan immediately prior to the
Closing Date. Service with Parent or any of its Affiliates prior to the Closing
Date which was recognized under Parent's Salaried Pension Plan shall be
recognized for the same purposes under the Successor Salaried Pension Plan.
(c) The amount of assets to be transferred from the Parent's
Salaried Pension Plan shall be equal to the Projected Benefit Obligation ("PBO")
as determined in accordance with the Financial Accounting Standards Board
Statement 87 ("FAS 87") and which is attributable to the Active Employees who
are participants in Parent's Salaried Pension Plan as of the Closing Date (the
"Transfer Amount"). Determination of the PBO shall be in accordance with the
actuarial demographic assumptions used by the Seller's actuary in preparing the
January 1, 1996 actuarial report for Parent's Salaried Pension Plan and the
economic assumptions used by Parent for its December 31, 1997 FAS 87 year end
disclosures. The above-described calculation of the amount to be transferred
from the Parent's Salaried Pension Plan to the Successor Salaried Pension Plan
shall be made by Seller's actuary and reviewed by Buyer's actuary.
(d) All assets transferred under this Section D.07 shall be
made in cash. The transfer contemplated herein shall comply with all
requirements of Sections 414(l) and 401(a)(12) of the Code and in no event shall
the Transfer Amount be less than the amount determined pursuant to Section
414(l) of the Code, using an interest rate of 5.75%. Pending completion of the
transfers contemplated by this Section D.07, any benefits that are payable to
Active Employees under the Parent's Salaried Pension Plan shall be paid or
continue to be paid out of such plan. The Transfer Amount will be adjusted on a
pro-rata basis (based on the ratio of the PBO calculated under this Section D.07
versus the total PBO for Parent's Salaried Pension Plan, calculated as of the
Closing Date) to reflect the actual asset performance of the Parent's Salaried
Pension Plan from the Closing Date to the first day of the month prior to the
date of transfer and credited with interest from that date until the date of
transfer at the rate of 7.5% per year, and adjusted to reflect benefit payments
and expenses paid after the Closing Date by the Parent's Salaried Pension Plan
which are related to the obligations being transferred to the Successor Salaried
Pension Plan. Pending the completion of such transfers, Parent will cooperate
with Buyer with respect to plan administration, disbursement of benefits and
other pertinent information.
(e) The Successor Salaried Pension Plan and TTSI shall be
liable for benefits with respect to Active Employees accrued under the Parent's
Salaried Pension Plan prior to the Closing Date to the extent of the assets
transferred in accordance with this Section D.07. The Buyer agrees that neither
Parent nor Parent's Salaried Pension Plan shall have any further responsibility
with respect to the assets and liabilities so transferred.
D.08 Hourly Paid Employee Pension Plans.
(a) As soon as practicable after the Closing Date, with effect
as of the Closing Date, TTSI shall establish a defined benefit plan ("Successor
Hourly Pension Plan"). As soon as practicable following the earlier of delivery
to Parent of a favorable determination letter from the Internal Revenue Service
regarding the qualified status of the Successor Hourly Pension Plan, or the
issuance of indemnities satisfactory to the Parent, in its sole discretion
Parent shall cause the transfer from the Pension Plan for Hourly Employees of
the True Temper Sports Division represented by the United Steelworkers of
America ("Parent's Hourly Pension Plan") to the Successor Hourly Pension Plan of
assets (in accordance with paragraph (c) and (d) below) and liabilities which
are attributable to the Active Employees who are participants in the Parent's
Hourly Pension Plan as of the Closing Date.
(b) The Active Employees shall be eligible to participate
under the Successor Hourly Pension Plan in accordance with any applicable
collective bargaining agreement and Applicable Law. Service with Parent or any
of its Affiliates prior to the Closing Date which was recognized under Parent's
Hourly Pension Plan shall be recognized for the same purposes under the
Successor Hourly Pension Plan.
(c) The amount of assets to be transferred from the Parent's
Hourly Pension Plan shall be equal to the Projected Benefit Obligation ("PBO")
as determined in accordance with the Financial Accounting Standards Board
Statement 87 ("FAS 87") and which is attributable to the Active Employees who
are participants in Parent's Hourly Pension Plan as of the Closing Date (the
"Transfer Amount"). Determination of the PBO shall be in accordance with the
actuarial demographic assumptions used by Seller's actuary in preparing the
January 1, 1996 actuarial report for Parent's Hourly Pension Plan and the
economic assumptions used by Parent for its December 31, 1997 FAS 87 year end
disclosures. The above-described calculation of the amount to be transferred
from the Parent's Hourly Pension Plan to the Successor Hourly Pension Plan shall
be made by Seller's actuary and reviewed by Buyer's actuary.
(d) All assets transferred under this Section D.08 shall be
made in cash. The transfer contemplated herein shall comply with all
requirements of Sections 414(l) and 401(a)(12) of the Code and in no event shall
the Transfer Amount be less than the amount determined pursuant to Section
414(l) of the Code, using an interest rate of 5.75%. Pending completion of the
transfers contemplated by this Section D.08, any benefits that are payable to
Active Employees under the Parent's Hourly Pension Plan shall be paid or
continue to be paid out of such plan. The Transfer Amount will be adjusted on a
pro-rata basis (based on the ratio of the PBO calculated under this Section D.08
versus the total PBO for Parent's Hourly Pension Plan, calculated as of the
Closing Date) reflect the actual asset performance of the Parent's Hourly
Pension Plan from the Closing Date to the first day of the month prior to the
date of transfer and credited with interest from that date until the date of
transfer at the rate of 7.5% per year, and adjusted to reflect benefit payments
and expenses paid after the Closing Date by the Parent's Hourly Pension Plan
which are related to the obligations being transferred to the Successor Hourly
Pension Plan. Pending the completion of such transfers, Parent will cooperate
with Buyer with respect to plan administration, disbursement of benefits and
other pertinent information.
(d) The Successor Hourly Pension Plan shall be liable for
benefits with respect to Active Employees accrued under the Parent's Hourly
Pension Plan prior to the Closing Date to the extent of the assets transferred
in accordance with this Section D.08. The Buyer agrees that neither Parent nor
Parent's Salaried Pension Plan shall have any further responsibility with
respect to the assets and liabilities so transferred.
D.09 Savings Plans.
(a) Parent shall cause the trustee of The Black & Xxxxxx
Retirement Savings Plan ("Parent's Savings Plan") to transfer, as of the
transfer date specified below, the full account balances of the Active Employees
under Parent's Savings Plan, to the Successor Savings Plan (as hereinafter
defined). To the extent permissible under Parent's Savings Plan and to the
extent participants' account balances are invested in Parent's stock, such
assets shall be transferred to the Successor's Savings Plan in kind. Parent,
Buyer and TTSI shall make any and all filings and submissions to the appropriate
Governmental Authorities, and shall make any necessary plan amendments arising
in connection with the transfer of assets from Parent's Savings Plan to the
Successor Savings Plan.
(b) As soon as practicable after the Closing Date, TTSI shall,
and Buyer shall cause TTSI to, establish or designate an individual account plan
for the benefit of Active Employees who were participants in Parent's Savings
Plan (the "Successor Savings Plan"), shall take all necessary action, if any, to
qualify the Successor Savings Plan under the applicable provisions of the Code
and shall make any and all filings and submissions to the appropriate
Governmental Authorities required to be made by it in connection with the
transfer of assets contemplated hereby. The Successor Savings Plan shall provide
that those Transferred Employees and their beneficiaries who were participants
in Parent's Savings Plan shall receive credit for all service and compensation
with Parent or any of its Affiliates prior to the Closing Date for all purposes,
to the same extent as such service and compensation are recognized under
Parent's Savings Plan immediately prior to the Closing Date. TTSI shall, and
Buyer shall cause TTSI to, take all action required or appropriate to vest fully
all such Transferred Employees in their entire account balances transferred to
the Successor Savings Plan and, to the extent required under Section 411(d)(6)
of the Code, to protect and preserve all benefits, rights and features relating
to those account balances transferred from Parent's Savings Plan. As soon as
practicable following the earlier of the delivery to Parent of a favorable
determination letter from the Internal Revenue Service regarding the qualified
status of the Successor Savings Plan or the issuance of indemnities satisfactory
to Parent in its sole discretion, Parent shall cause the trustee of Parent's
Savings Plan, to transfer the full account balances of Transferred Employees
under Parent's Savings Plan as of the transfer date to the appropriate trustee
designated by TTSI and Buyer under the trust agreement forming a part of the
Successor Savings Plan; provided, that assets consisting of notes or other
instruments evidencing loans made to participating Transferred Employees shall
be transferred in such form to the Successor Savings Plan.
(c) Effective as of the date of the transfer of assets
contemplated by this Section D.09, TTSI shall assume all of the liabilities and
obligations of Parent or any of its Affiliates in respect of the account
balances accumulated by Transferred Employees under Parent's Savings Plan (to
the extent that assets relating to such account balances have been transferred
to the Successor Savings Plan), and the Successor Savings Plan assumes all
liabilities and obligations of Parent's Savings Plan with respect to all account
balances under Parent's Savings Plan of such US Transferred Employees (to the
extent that assets relating to such account balances have been transferred to
the Successor Savings Plan). Neither Buyer, TTSI nor any of their respective
Affiliates shall assume any other obligations or liabilities arising under or
attributable to Parent's Savings Plan and neither Parent nor any of its
Affiliates shall assume any liabilities or obligations under or attributable to
the Successor Savings Plan. Prior to the transfer of assets contemplated by this
Section D.09, TTSI, if consented to by the applicable Transferred Employee,
shall withhold from such Transferred Employee's pay, loan repayments relating to
any outstanding loan to such Transferred Employee under Parent's Savings Plan
and shall promptly forward those withholdings to Parent's Savings Plan.
D.10 Health and Welfare Plans; Benefit Arrangements.
(a) For a period of one year following the Closing Date, TTSI
shall ensure, and Buyer shall cause TTSI to ensure, that the US Transferred
Employees are provided benefits that are substantially equivalent on an
aggregate basis (and "substantially identical" with respect to health benefit
coverage for purposes of satisfying Section 4980B of the Code) to those provided
under the Employee Plans and Benefit Arrangements as in effect for those US
Transferred Employees immediately prior to the Closing Date, it being understood
and agreed that such benefits provided by TTSI shall include health, medical,
dental, life, disability and severance benefits. Notwithstanding anything to the
contrary in the preceding sentence, Buyer shall take commercially reasonable
steps for purposes of TTSI providing health benefit coverage to US Transferred
Employees on the Closing Date through CIGNA and agrees that such health benefit
coverage will be "substantially identical" to that provided under Parent's group
health plan as in effect immediately prior to the Closing Date for purposes of
satisfying Section 4980B of the Code; provided, however, that if such health
benefit coverage is not in place as of the Closing Date, Parent agrees to
provide continuation coverage to US Transferred Employees (and their covered
dependents) to the extent required by Section 4980B of the Code. Parent, at its
option, may provide and administer continuation coverage and benefit claims
under its group health plan and in such event TTSI shall reimburse Parent for
the reasonable and customary cost of the provision and administration of
benefits thereunder for the TTSI employees and covered dependents. Parent agrees
to cooperate and assist Buyer and TTSI as is reasonably necessary to put such
TTSI's health benefit coverage in place.
(b) In furtherance and not in limitation of the provisions of
this Section D.10, as of the Closing Date, TTSI shall, and Buyer shall cause
TTSI to, (i) establish severance plans, agreements and arrangements with the
same terms and conditions as those provided under the applicable severance
agreements, plans or arrangements listed on Schedule B.20, (ii) maintain such
severance agreements, plans and arrangements for a period of at least one year
following the Closing Date, and (iii) pay any benefits to any US Transferred
Employees that they may be entitled to receive under such severance agreements,
plans or arrangements. In furtherance and not in limitation of the provisions of
this Section D.10, as of the Closing Date, TTSI shall assume the obligations of
Seller Companies under the individual employee severance agreements listed on
Schedule B.20.
(c) With respect to any US Transferred Employee (including any
beneficiary or dependent thereof), except as expressly set forth herein, Seller
Companies shall retain (i) all liabilities and obligations arising under any
group life, accident, medical, dental or disability plan or similar arrangement
(whether or not insured) to the extent that such liability or obligation relates
to claims incurred (whether or not reported) on or prior to the Closing Date,
and (ii) all liabilities and obligations arising under any worker's compensation
laws to the extent such liability or obligation relates to the period prior to
the Closing Date.
(d) Any group health plan, disability plan or other plans
established or designated by TTSI after closing for the benefit of US
Transferred Employees shall not contain any exclusion or limitation with respect
to any preexisting condition.
(e) In furtherance and not in limitation of the provisions of
this Section D.10, TTSI covenants and agrees that in 1998 it shall continue the
annual incentive plan arrangements in effect for the individuals listed in
Attachment B.20-A to Schedule B.20 on the basis set forth in Attachment B.20-A
and shall not amend or otherwise modify such arrangements. Buyer covenants and
agrees to take all actions necessary or appropriate after the Closing to cause
TTSI to satisfy its obligations under this Section D.10(e).
D.11 Post-Retirement Medical and Life Insurance.
(a) Seller Companies shall retain responsibility for providing
health, medical, dental, hospitalization, life insurance or similar benefits
(including, without limitation, reimbursement for Medicare premiums) to any
employee or former employee of the TTS Business (other than US Transferred
Employees) who retires or has retired on or before the Closing Date. TTSI and
Buyer shall be responsible for providing any post-retirement medical, life or
similar benefits to US Transferred Employees.
(b) Notwithstanding the provisions of this Exhibit D,
including but not limited to the provisions of this Section D.11, Seller
Companies may amend, modify or terminate any plans or arrangements providing
post-retirement health, medical, dental, hospitalization, life insurance or
similar benefits (including, without limitation, reimbursement for Medicare
premiums) to any employee or former employee of the TTS Business, subject in
each case to the provisions of Applicable Law.
(c) Except as may be required by Applicable Law, Buyer shall
not be obligated by this Agreement to provide post-retirement, health, medical,
dental, hospitalization, life insurance or similar benefits (including, without
limitation, reimbursement for Medicare premiums), or any particular level of
such benefits, to US Transferred Employees.
D.12 Supplemental Plans. Parent shall retain all liability and
obligation with respect to Active Employees under the Black & Xxxxxx Executive
Deferred Compensation Plan, the Black & Xxxxxx Supplemental Executive Retirement
Plan, the Black & Xxxxxx Supplemental Pension Plan and the Black & Xxxxxx
Supplemental Retirement Savings Plan.
III. Other Country Employee Benefit Matters.
D.13 General. For a period of one year following the Closing Date,
Buyer and TTSI shall ensure that the Non-US Transferred Employees are provided
benefits that are substantially similar to those provided under the Non-U.S.
Benefit Arrangements as in effect for those Non-US Transferred Employees
immediately prior to the Closing Date, it being understood that each Non-US
Transferred Employee shall receive credit for all service and compensation with
Seller Companies and any of their predecessors or Affiliates prior to the
Closing Date for all purposes other than Benefit Service to the same extent that
service and compensation are recognized immediately prior to the Closing.
D.14 Severance/Termination Indemnities. In furtherance and not in
limitation of the provisions of Section D.12, for a period of at least one year,
TTSI shall provide severance programs and termination indemnities with the same
terms and conditions as those provided by the Seller Companies or TTSI to the
Non-US Transferred Employees immediately prior to the Closing and agrees to pay
any benefit to Non-US Transferred Employees to which they may be entitled under
such severance programs and/or termination indemnities applicable to Buyer and
its Affiliates with respect to events that occur on or after the Closing Date or
as a result of the Contemplated Transactions, or applicable to Parent and its
Affiliates as a result of the Contemplated Transactions.
VII. General.
D.15 No Third Party Beneficiaries. No provision of this Exhibit D or
any other provision in the Transaction Documents shall create any third party
beneficiary or other rights in any employee or former employee (including any
beneficiary or dependent thereof) of Parent or of any of its Affiliates in
respect of continued employment (or resumption of employment) with Parent,
Buyer, TTSI or any of their Affiliates, and no provision of this Exhibit D shall
create any such rights in any such individuals in respect of any benefits that
may be provided, directly or indirectly, under any Employee Plan or Benefit
Arrangement, or any plan or arrangement which may be established by Buyer, TTSI
or any of their Affiliates. Subject to Applicable Law, unless otherwise provided
herein, no provision of this Agreement shall constitute a limitation on rights
to amend, modify or terminate, either before or after Closing, any such Employee
Plan or Benefit Arrangement of the Parent or any of its Affiliates.
D.16 Indemnification by Buyer. Effective as of the Closing, Buyer
hereby indemnifies Parent and its Affiliates and their respective directors,
officers, employees and agents against, and agrees to hold them harmless from,
any and all Damages arising out of or pertaining to (i) the termination of
employment of, hiring of or failure or refusal to hire, any Active Employee of
the TTS Business on or after the Closing; (ii) in relation to any Active
Employee any modification of the pay, benefits or other terms and conditions of
employment of any Active Employee on or after the Closing; and (iii) any breach
of any covenants of the Buyer contained in this Exhibit D.
D.17 Indemnification by Parent. Effective as of the Closing, Parent
hereby indemnifies Buyer and TTSI and agrees to hold each harmless from any and
all Damages arising out of or pertaining to any breach of any covenants of the
Parent or its Affiliates contained in this Exhibit D.
EXHIBIT E
ADDITIONAL MATTERS RELATING TO PRODUCT LIABILITY ISSUES
Parent and Buyer acknowledge and agree that each has a continuing
interest in ensuring that claims involving alleged product defects and product
safety are handled by TTSI after the Closing in a manner that minimizes
liability of the parties and otherwise protects the parties' interests. This
Exhibit E sets forth certain additional procedures, covenants and agreements
relating to product liability and related matters in respect of products sold
and services provided by TTSI or the TTS Business that, among other things, are
intended to enhance the parties' ability to achieve these objectives.
E.01 With respect to liabilities and obligations relating to claims of
manufacturing or design defects, the parties have agreed that certain of these
liabilities and obligations will constitute Assumed Liabilities for which TTSI
will be responsible and certain of these liabilities and obligations will
constitute Excluded Liabilities for which Seller Companies will be responsible.
Because (i) it is likely that TTSI may receive the initial notice or claim with
respect to liabilities and obligations that ultimately prove to be Seller
Companies' responsibility and vice versa and (ii) in many cases it is critical
to the defense of such claims that products and the location in which the
alleged incident occurs be inspected as soon as practicable, each of Parent,
TTSI and Buyer agree to give immediate notice to the other party in the event
that they receive notice of a claim involving or potentially involving claims of
manufacturing or design defects where the party first receiving such notice
reasonably believes that the responsibility for the liability or obligation, if
any, will be that of the other party or if there is any doubt as to which party
ultimately will be responsible for any related liabilities or obligations. Each
of Parent, TTSI and Buyer also agree with respect to each claim of manufacturing
or design defects that they will perform a prompt, diligent and continuing
investigation to determine whether the claim is an Assumed Liability or an
Excluded Liability, and agree to give immediate notice to the other parties at
any time if the investigation reveals that the responsibility for the liability
or obligation, if any, will be that of the other party if there is any doubt as
to which party ultimately will be responsible for any related liabilities or
obligations. Each of Parent, TTSI and Buyer agree that the party providing such
notice will thereafter cooperate with the other party to permit the other party
to conduct its own investigation, and the party providing such notice will
provide to the other party reports on the status of the claim and subject to the
provisions of Article X an opportunity to participate in the defense of the
claim, at its own cost and expense. To expedite the review of these issues and
ensure that both parties' rights and defenses are preserved, Parent, TTSI and
Buyer shall provide such notice as follows:
if to Parent, or TTSI prior to Closing:
The Black & Xxxxxx Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxx, Xxxxxxxx 00000
Attention: Product Liability Counsel
if to Buyer, or TTSI after Closing:
True Temper Sports, Inc.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: President
E.02 To the extent that either Parent, TTSI or Buyer (or any of their
directors, officers, advisors, attorneys, accountants, employees, insurers or
agents) conducts an investigation or other inquiry into any events or
circumstances that lead to a claim of manufacturing or design defects in respect
of a product or product line generally or a specific claim or allegation and the
results of such investigation or inquiry relate to or otherwise affect the
liabilities or obligations of the other party hereunder, Parent, TTSI or Buyer,
as the case may be, agree to share any information obtained as a result of the
investigation or inquiry, in each case subject to the express provisions of
Section 7.07 of this Agreement.
E.03 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Parent, TTSI and Buyer each agree from time to time to designate
individuals within their respective organizations as an "Engineering/Safety
Assurance Liaison" and a "Claims Liaison" for the purpose of coordinating the
defense of claims involving products sold and services provided by TTSI or the
TTS Business. The initial individuals serving in these capacities shall be
designated in writing by Parent, TTSI and Buyer at Closing and, thereafter, may
be changed from time to time by notice to the other party.
E.04 To assist each of the parties to this Agreement with the defense
of claims involving allegations of manufacturing or design defects and with
compliance with each parties' respective legal obligations under this Agreement
and otherwise, Parent, TTSI and Buyer each agree from time to time to provide
the other party access to all information as provided in Section 5.04 and
Section 6.02. Without limiting the generality of those provisions, Parent, TTSI
and Buyer acknowledge and agree that the aforementioned information and access
includes the existing databases relating to consumer complaints, claims and
litigation, whether maintained at the headquarters of the TTS Business or
otherwise, access to personnel and engineering and design drawings or documents
and any other relevant information.
