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EXHIBIT 99.3
STOCK PURCHASE AND SALE AGREEMENT
dated as of
November 16, 1999,
among
The Sellers Listed
On the Signature Pages Hereto,
GANTON TECHNOLOGIES INC.,
INTERMET CORPORATION,
JJM, LLC,
as the Sellers' Representative,
CERBERUS PARTNERS, L.P.,
as the Guarantor
and
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
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TABLE OF CONTENTS
Page
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ARTICLE I
Defined Terms
Section 1.01. Definitions......................................................................... 1
ARTICLE II
The Transaction
Section 2.01. The Transaction..................................................................... 9
Section 2.02. Allocation of Purchase Price Among the Sellers...................................... 9
Section 2.03. Payment Mechanics................................................................... 9
ARTICLE III
Payment Mechanics
Section 3.01. Payment Mechanics................................................................... 10
ARTICLE IV
The Closing: Effective Time; Conditions of Closing
Section 4.01. The Closing......................................................................... 10
Section 4.02. Effective Time...................................................................... 10
Section 4.03. Risk of Loss........................................................................ 10
Section 4.04. Conditions Precedent to the Obligations of the Sellers.............................. 10
Section 4.05. Conditions Precedent to the Obligations of the Purchaser............................ 12
Section 4.06. Efforts to Close.................................................................... 14
ARTICLE V
Representations and Warranties of the Company and the Sellers
Section 5.01. Corporate Existence and Power....................................................... 15
Section 5.02. Authorization; Binding Effect....................................................... 15
Section 5.03. Contravention....................................................................... 15
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Section 5.04. Consents.................................................................................15
Section 5.05. Capitalization...........................................................................16
Section 5.06. Subsidiaries.............................................................................16
Section 5.07. Financial Information....................................................................16
Section 5.08. Taxes....................................................................................17
Section 5.09. Litigation...............................................................................19
Section 5.10. Permits..................................................................................19
Section 5.11. Compliance with Laws.....................................................................19
Section 5.12. Absence of Certain Changes or Events.....................................................19
Section 5.13. Assets...................................................................................20
Section 5.14. Real Property and Leaseholds.............................................................21
Section 5.15. Equipment, Fixtures and Inventory........................................................22
Section 5.16. Material Contracts.......................................................................22
Section 5.17. Proprietary Rights.......................................................................24
Section 5.18. Customers and Suppliers..................................................................25
Section 5.19. Insurance................................................................................25
Section 5.20. Books and Records........................................................................25
Section 5.21. Environmental Matters....................................................................26
Section 5.22. Employees; ERISA........................................................................27
Section 5.23. Affiliate Transactions...................................................................29
Section 5.24. Company Names; Chief Executive Office....................................................30
Section 5.25. Brokers, Finders.........................................................................30
Section 5.26. Year 2000 Compliance.....................................................................30
Section 5.27. Misstatements............................................................................30
ARTICLE VI
Representations and Warranties of the Sellers
Section 6.01. Power....................................................................................31
Section 6.02. Authorization; Binding Effect............................................................31
Section 6.03. Contravention............................................................................31
Section 6.04. Consents.................................................................................31
Section 6.05. Litigation...............................................................................31
Section 6.06. Compliance with Laws.....................................................................32
Section 6.07. Stock Ownership..........................................................................32
Section 6.08. The Shares...............................................................................32
Section 6.09. Transactions with the Company............................................................32
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ARTICLE VII
Representations and Warranties of the Purchaser
Section 7.01. Corporate Existence and Power...................................................32
Section 7.02. Authorization; Binding Effect...................................................33
Section 7.03. Contravention...................................................................33
Section 7.04. Consents........................................................................33
Section 7.05. Litigation......................................................................33
Section 7.06. Compliance with Laws............................................................33
Section 7.07. Securities Representations......................................................33
Section 7.08. Customer Acknowledgment.........................................................34
ARTICLE VIII
Covenants of the Company and the Sellers
Section 8.01. Conduct of Business Pending Closing.............................................34
Section 8.02. Access to Information; Cooperation..............................................36
Section 8.03. Updating of Schedules...........................................................36
Section 8.04. Resignations....................................................................37
Section 8.05. Shareholder Approval............................................................37
Section 8.06. Appointment of Sellers' Representative..........................................38
Section 8.07. Non-Competition.................................................................38
ARTICLE IX
Covenants of the Purchaser
Section 9.01. Indemnification.................................................................40
Section 9.02. Continuation of Employee Benefit Plans..........................................40
Section 9.03. Financing ......................................................................40
ARTICLE X
Covenants of the Company, the Sellers and the Purchaser
Section 10.01. Disclosures....................................................................41
Section 10.02. Confidentiality................................................................41
Section 10.03. Disclosure; Materiality; No Other Representations or Warranties................41
Section 10.04. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing.......................................................42
Section 10.05. Tax Returns....................................................................42
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Section 10.06. Cooperation on Tax Matters..............................................................46
Section 10.07. Post-Closing Cooperation................................................................46
Section 10.08. Taxes and Fees..........................................................................47
ARTICLE XI
Termination
Section 11.01. Termination.............................................................................47
Section 11.02. Expenses................................................................................47
Section 11.03. Effect of Termination...................................................................48
ARTICLE XII
Indemnification
Section 12.01. Indemnification.........................................................................48
Section 12.02. Notice and Opportunity to Defend........................................................49
Section 12.03. Survival of Indemnification.............................................................51
Section 12.04. Baskets; Limitation on Liability; Allocation of
Liability Among the Sellers.............................................................51
Section 12.05. Reduction for Insurance.................................................................52
Section 12.06. Mitigation..............................................................................52
Section 12.07. No Special or Consequential Damages.....................................................53
Section 12.08. Exceptions..............................................................................53
Section 12.09. Sole and Exclusive Remedy...............................................................53
Section 12.10. Guarantee...............................................................................53
ARTICLE XIII
Miscellaneous
Section 13.01. Notices ................................................................................55
Section 13.02. Counterparts............................................................................56
Section 13.03. Integration.............................................................................56
Section 13.04. Interpretation..........................................................................56
Section 13.05. Accounting Terms and Determinations.....................................................56
Section 13.06. Descriptive Headings....................................................................56
Section 13.07. Incorporation of Schedules and Exhibits.................................................57
Section 13.08. Amendment of Agreement..................................................................57
Section 13.09. Successors and Assigns..................................................................57
Section 13.10. No Waiver; Remedies.....................................................................57
Section 13.11. Severability............................................................................57
Section 13.12. Governing Law...........................................................................57
Section 13.13. No Third-Party Rights...................................................................57
Section 13.14. Submission to Jurisdiction;.............................................................58
Section 13.15. Further Assurances......................................................................58
Section 13.16. Waiver of Jury Trial....................................................................58
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Schedules
Schedule 4.05(m) Debt to be Repaid
Schedule 4.05(p) Certain Employment Agreement Persons
Schedule 5.04 Company Consents
Schedule 5.05 Capitalization
Schedule 5.05(b) Options
Schedule 5.07 Financial Statements
Schedule 5.08 Certain Tax Matters
Schedule 5.09 Litigation
Schedule 5.10 Permits
Schedule 5.11 Certain Regulatory Matters
Schedule 5.12 Absence of Certain Changes or Events
Schedule 5.13 Certain Assets
Schedule 5.14 Real Property and Leaseholds
Schedule 5.15 Equipment, Fixtures and Inventory
Schedule 5.16 Material Contracts
Schedule 5.17 Proprietary Rights
Schedule 5.18 Customers and Suppliers
Schedule 5.19 Insurance
Schedule 5.21 Environmental Matters
Schedule 5.22 Employees
Schedule 5.23 Affiliate Transactions
Schedule 5.24 Company Names; Chief Executive Office
Schedule 5.26 Year 2000 Compliance
Schedule 6.04 Seller Consents
Schedule 6.09 Transactions with the Company
Schedule 7.04 Purchaser Consents
Schedule 8.01 Conduct of Business
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Exhibits
Exhibit 4.05(c) Form of Certificate of an Officer of the Purchaser
Exhibit 4.05(g) Form of Certificate of Secretary of the Purchaser
Exhibit 4.05(q) Form of Amendment to Employment Agreement
Exhibit 4.06(c) Form of Certificate of Officer of the Company and the
Sellers
Exhibit 4.06(h) Form of Certificate of Secretary of the Company and certain
Sellers
Exhibit 4.06(i) Form of Opinion of Counsel for the Company and the Sellers
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STOCK PURCHASE AND SALE AGREEMENT dated as of November 16, 1999, among
(a) GANTON TECHNOLOGIES INC., an Illinois corporation (the "Company"), (b) the
holders of the Common Stock (as defined below) of the Company listed on the
signature pages hereto (each, a "Shareholder", and collectively, the
"Shareholders"), (c) INTERMET CORPORATION, a Georgia corporation (the
"Purchaser"), (d) JJM, LLC, as the Sellers' Representative (as defined below),
(e) CERBERUS PARTNERS, L.P., as the Guarantor (the "Guarantor") and (f) ▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇, solely for the purpose of Section 8.07.
RECITALS
A. The Shareholders own all of the issued and outstanding shares of
Common Stock (the "Shares").
B. On the terms and subject to the conditions contained in this
Agreement the Purchaser desires to acquire from the Shareholders, and the
Shareholders wish to sell to the Purchaser, the Shares, all as set forth herein.
AGREEMENT
In consideration of the premises and the mutual covenants and the
agreements herein set forth, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE I
Defined Terms
Section 1.01. Definitions. As used in this Agreement, the following
terms have the meanings stated:
"Accounts Receivable" means all rights to payments for goods
sold or leased or for services rendered.
"Action" means an action, suit, investigation, litigation,
arbitration, audit or other proceeding, whether civil, criminal or
administrative, in law or equity, before any arbitrator or Governmental
Body.
"Affiliate" of a Person means any other Person that directly
or indirectly controls, is controlled by or is under common control
with, the Person or any of its Subsidiaries.
"Assets" has the meaning stated in Section 5.13(a).
"Balance Sheet" has the meaning stated in Section 5.07(a).
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"Balance Sheet Date" means December 31, 1998.
"Basket Amount" has the meaning stated in Section 12.04(a).
"Benefit Plan" means any Plan or any bonus, pension, profit
sharing, deferred compensation, incentive compensation, stock
ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization,
insurance or other plan, program, arrangement, agreement or commitment
(including any "employee benefit plans" as defined in ERISA) providing
benefits to any current or former employee, officer, shareholder or
director of the Company.
"Business" means the business and operations of the Company as
conducted by the Company on the date of this Agreement.
"Capital Expenditure" of a Person means payments that are made
by the Person for the rental, lease, purchase, construction or use of
any property the value or cost of which under GAAP should be
capitalized and appear on the balance sheet of the Person in the
category of property, plant or equipment, without regard to the manner
in which the payments or the instrument pursuant to which they are made
are characterized by the Person including, without limitation, payments
for the installment purchase of property and payments under Capitalized
Leases.
"Capital Stock" means any and all capital stock of any kind,
including, without limitation, all types of equity, common stock or
preferred stock or any other stock or shares of any kind or any
interests convertible into any such capital stock.
"Capitalized Lease" means any lease that in accordance with
GAAP is or should be capitalized and appear on the balance sheet of the
lessee.
"Closing" has the meaning stated in Section 4.01.
"Closing Date" has the meaning stated in Section 4.01.
"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock, par value $.01 per
share, of the Company.
"Company" has the meaning stated in the heading of this
Agreement.
"Company Stock" has the meaning stated in Section 5.05(a).
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"Consents" means any approval, consent, authorization or order
of, notice to or registration or filing with, any Governmental Body or
other Person.
"Contract" means any agreement, contract, license, lease,
instrument, document, note, bond, mortgage, indenture, guarantee, or
other legally binding commitment or obligation.
"Controlled Group" for any Person at any date means all
members of a controlled group of corporations and all trades or
businesses (whether or not incorporated) under common control which,
together with the Person, are treated as a single employer under
Sections 414(b) or 414(c) of the Code.
"Converted Stock Amount" means a number of shares equal to the
sum of the number of shares of Company Stock outstanding immediately
prior to the Effective Time.
"Debt" of a Person at any date means, without duplication, the
sum of (a) all obligations of the Person (i) for borrowed money, (ii)
evidenced by bonds, debentures, notes or other similar instruments,
(iii) to pay the deferred purchase price of property or services,
except trade accounts payable arising in the ordinary course of
business, (iv) as lessee under Capitalized Leases, (v) under letters of
credit or Guarantees issued for the account of the Person (vi) arising
under acceptance facilities, plus (b) all Debt of others Guaranteed by
the Person, plus (c) all Debt of others secured by a Lien on any asset
of the Person whether or not such Debt is assumed by the Person, plus
(d) the aggregate Unfunded Vested Liabilities under each Plan of the
Person.
"Department of Justice" means the Department of Justice of the
United States of America.
"Dollars" and "$" refer to United States dollars and other
lawful currency of the United States of America from time to time in
effect.
"Effective Time" has the meaning stated in Section 4.02.
"Environmental Laws" means (a) the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42
U.S.C. ss. 9601 et seq. ("CERCLA"), (b) the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq. ("RCRA"), (c) the
Federal Water Pollution Control Act of 1962, as amended, 33 U.S.C. ss.
1251 et seq., (d) the Clean Air Act of 1970, as amended, 42 U.S.C. ss.
7401 et seq., (e) the Hazardous Materials Transportation Act, 49 U.S.C.
ss. 1801 et seq., (f) the Safe Drinking Water Act, 42 U.S.C. ▇▇.▇▇.
300f through 300j, (g) the Toxic Substance Control Act, 15 U.S.C.
▇▇.▇▇. 2601 through 2629, (h) the Occupational Safety and Health Act,
as amended, 29 U.S.C. ss. 651 et seq., (i) the Emergency Planning and
Community
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Right-to-Know Act, as amended, 42 U.S.C. ▇▇.▇▇. 11001 to 11050, in each
case as in effect on the date of this Agreement, and any other federal,
state or local laws, ordinances, codes, rules and regulations as in
effect on the date hereof, any judicial or administrative
interpretations thereof in effect on the date hereof, and any judicial
or administrative orders or judgments, relating to the release or the
threatened release of hazardous substances, health, safety, industrial
hygiene, pollution or environmental matters.
"Equipment" means all tangible personal property of a Person,
including, without limitation, all equipment and machinery in all of
its forms, wherever located, now or hereafter existing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the related regulations and published
interpretations.
"Federal Trade Commission" means the Federal Trade Commission
of the United States of America.
"Fixtures" means all fixtures in all of their forms, wherever
located, now or hereafter existing, including, without limitation, all
accessions, additions, appurtenances and improvements to, parts,
products and replacements of and documents and substitutes for the
foregoing.
"GAAP" means generally accepted accounting principles in the
United States as in effect from time to time, consistently applied
throughout the periods to which reference is made.
"Governmental Body" means any agency, bureau, commission,
court, department, official, political subdivision, tribunal or other
instrumentality of any government, whether federal, state, local,
domestic or foreign.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of the Person directly or indirectly guaranteeing any Debt
of any other Person or in any manner providing for the payment of any
Debt of any other Person or the investment of funds in any other Person
or otherwise protecting the holder of the Debt against loss (whether by
agreement to indemnify, to lease assets as lessor or lessee, to
purchase assets, goods, securities or services, or to take-or-pay or
otherwise), but the term "Guarantee" does not include endorsements for
collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a correlative meaning.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended, and the related regulations and
published interpretations.
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"Hazardous Materials" means any chemicals, materials, wastes
or substances, including, without limitation, asbestos, polychlorinated
biphenyls and petroleum products that are defined regulated, determined
or identified as toxic or hazardous in any Environmental Laws,
including, without limitation, substances defined as "hazardous
substances" "hazardous materials," or "hazardous waste" in the CERCLA,
the Hazardous Materials Transportation Act, 49 U.S.C. ss. 180 et seq.,
or the RCRA, in each case, as in effect on the date hereof.
"Indemnitee" has the meaning stated in Section 12.02(a).
"Indemnitor" has the meaning stated in Section 12.02(a).
"Indemnity Payment" has the meaning stated in Section 12.05.
"Inventory" means all inventory, work in process and raw
materials of the Person in all of its forms, wherever located, now or
hereafter existing.
"Knowledge of the Sellers" means the actual knowledge of (a)
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇, (b) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, (c) ▇▇▇ ▇▇▇▇▇▇, (d) ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, (e) ▇▇▇ ▇▇▇▇▇, (f) ▇▇▇▇ ▇▇▇▇▇▇, (g) ▇▇▇▇ ▇▇▇▇▇ or (h) ▇▇▇
▇▇▇▇▇▇▇.
"Leaseholds" means all real property interests as lessee,
together with all tenements, hereditaments, easements, rights of way,
privileges and appurtenances to those and improvements on or to those
interests.
"Lien" means any mortgage, charge, claim, deed of trust, lien,
pledge, security interest, option or encumbrance of any kind.
"Losses" has the meaning stated in Section 12.01(a).
"Material Contract" has the meaning stated in Section 5.16(a).
"Material Adverse Effect" means a material adverse effect upon
any of (a) the Business, results of operations, the Assets, the
liabilities, condition (financial or otherwise), or prospects of the
Company, (b) the legality, validity or enforceability of the Sale
Documents, or (c) the ability of the Company or any Seller to perform
any of their material obligations under the Sale Documents, except, in
each case, for a material adverse effect due to (i) changes in general
economic, regulatory or political conditions, (ii) changes affecting
the die-casting or the automotive industries generally, (iii) union or
labor related issues with respect to the Company's customers, (iv)
customer reactions or responses to the transactions contemplated by the
Sale Documents, including, without limitation, customers terminating,
canceling, modifying or amending Material Contracts or
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purchase orders with the Company, or (v) the negotiation of a new
agreement with the Company's unions, so long as the resulting agreement
does not contain economic terms which, when taken as a whole, are
economically more detrimental overall to the Company than the terms the
union has initially requested, as such terms are set forth in the
attachments to Schedule 8.01; provided, that the Company agrees to keep
the Purchaser informed of the status of the negotiations and to consult
with the Purchaser from time to time with respect to such negotiations.
"Material Consents" means the Consents set forth on Schedule
5.04, Schedule 6.04 and Schedule 7.04, in each case, that are marked
with an asterisk.
"Notices" has the meaning stated in Section 13.01.
"Options" means the options to purchase shares of the Common
Stock of the Company set forth on Schedule 5.05(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Per Share Amount" means (a) the Purchase Price, divided by
(b) the Converted Stock Amount.
"Permit" means any permit, license, franchise, approval,
consent, permission, notice, waiver, certification, registration,
qualification, clearance or other authorization issued, granted or
given by or under the authority of any Governmental Body or pursuant to
any federal, state or local Regulation.
"Permitted Liens" means all (a) Liens securing Debt of the
Company existing on the date hereof, (b) Liens for Taxes or
governmental assessments, charges or claims the payment of which is not
yet due, (c) Liens imposed by applicable Regulation such as mechanics',
materialmen's, landlords', warehousemen's and carriers' Liens, and
other similar Liens, securing obligations incurred in the ordinary
course of business, to the extent that such liabilities do not exceed
$50,000 in the aggregate, (d) Liens under workers' compensation,
unemployment insurance, Social Security, or similar legislation, to the
extent that such liabilities do not exceed $50,000 in the aggregate,
(e) Liens incurred in the ordinary course of business for sums not yet
delinquent or immaterial in amount and being contested in good faith,
to the extent such liabilities are adequately reserved for in the
Financial Information, and (f) easements, rights-of-way, restrictions
and other similar covenants or encumbrances which, in the aggregate, do
not materially interfere with the operation of the Business.
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"Person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity
or organization, including a Governmental Body.
"Plan" of a Person means an employee pension benefit plan
covered by Title IV of ERISA or subject to the minimum funding
standards under Section 412 of the Code and is either (a) maintained by
the Person or any member of its Controlled Group or (b) maintained
pursuant to a collective bargaining agreement or any other arrangement
under which more than one employer makes contributions and to which the
Person or any member of its Controlled Group is then making or accruing
an obligation to make contributions or has within the preceding two
plan years made contributions.
"Prohibited Transaction" means any transaction described in
Section 406 of ERISA or Section 4975 of the Code, for which an
exemption does not apply.
"Proprietary Rights" means all copyrights, trademarks,
trademark registrations, service marks, trade names, patents, licenses,
inventions, technology, processes and other intellectual property
rights.
"Purchase Price" means an amount equal to $110,000,000.
"Purchaser" has the meaning stated in the heading of this
Agreement, and its successors and permitted assigns.
"Purchaser Indemnified Person" has the meaning stated in
Section 12.01(a).
"Real Property" means all real property interests, other than
as lessee, together with all tenements, hereditaments, easements,
rights of way, privileges and appurtenances to those interests and
improvements and fixtures on or to those interests.
"Regulation" means each applicable law, constitution, statute,
rule, regulation or order by any Governmental Body and each writ,
judgment, injunction, decree or award of any Governmental Body.
"Relevant Property" means (a) any Real Property or Leasehold
currently owned or operated by the Company, (b) any Real Property or
Leasehold owned or operated by the Company or its predecessors prior to
the Closing Date, and (c) any real property directly adjacent to any
Real Property or Leasehold currently or formerly owned or operated by
the Company or its predecessors.
"Reportable Event" means any event stated in Section 4043 of
ERISA.
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"Restricted Payment" means (a) any dividend or other
distribution of any kind on any shares of a Person's Capital Stock and
(b) any payments in cash or otherwise, on account of the purchase,
redemption, retirement or acquisition of (i) any shares of a Person's
Capital Stock or (ii) any option, warrant or other right to acquire
shares of a Person's Capital Stock.
"Sale Documents" means this Agreement, all documents executed
in connection with the transactions contemplated hereby and all other
instruments by which the Shares are transferred by the Sellers to the
Purchaser.
"Securities Act" has the meaning stated in Section 7.07.
"Seller" means each Shareholder and "Sellers" means all of the
Shareholders.
"Seller Indemnified Person" has the meaning stated in Section
12.01(b).
"Sellers' Representative" has the meaning stated in Section
8.06.
"Shareholder" has the meaning stated in the heading of this
Agreement.
"Shares" has the meaning stated in the recitals of this
Agreement.
"Significant Customer" has the meaning stated in Section
5.18(a).
"Subsidiary" of a Person means any Person of which Capital
Stock or other ownership interests having ordinary voting power to
elect a majority of the board of directors, the manager or other
persons performing similar functions are at the time directly or
indirectly owned by the Person.
"Tax" or "Taxes" means all taxes, charges, fees, levies,
duties, imposts, deposits, withholdings, restrictions and other similar
governmental charges, together with all fines, interest, penalties,
additions to tax or other tax, assessment or charge of any kind, in
each case, whether or not disputed.
"Tax Representations" has the meaning stated in Section
12.03(a).
"Tax Return" means any federal, state, local or foreign
report, return, declaration or other form relating to Taxes, including
any schedule thereto or amendment thereof.
"Termination Date" has the meaning stated in Section 11.01(b).
"Third Party Claim" has the meaning stated in Section
12.02(a).
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"Unfunded Vested Liabilities" of a Person means, with respect
to any Benefit Plan at any time, the excess of (a) the present value of
all vested nonforfeitable benefits under the Benefit Plan over (b) the
fair market value of all Benefit Plan assets allocable to those
benefits, all determined as of the then most recent valuation date for
the Benefit Plan, but only to the extent that the excess represents a
potential liability of the Person or any member of its Controlled Group
to the PBGC or the Benefit Plan under Title IV of ERISA.
ARTICLE II
The Transaction
Section 2.01. The Transaction. Upon the terms and subject to the
conditions of this Agreement, at the Closing, for an aggregate amount payable by
the Purchaser to the Sellers equal to the Purchase Price, the Purchaser agrees
to purchase, accept and acquire from the Sellers, and each of the Sellers,
severally, and not jointly and severally, agrees to sell, assign, convey and
deliver to the Purchaser, the Shares (in the amounts set forth opposite each
such Seller's name on Schedule 5.05(a) hereof). Immediately prior to the
Effective Time, each Option outstanding immediately prior to the Effective Time
will be canceled.
Section 2.02. Allocation of Purchase Price Among the Sellers. As
consideration for the sale, transfer, assignment, conveyance and delivery of the
Shares to the Purchaser pursuant to this Agreement, each Shareholder will be
entitled to receive an amount equal to the product of (i) the Per Share Amount,
multiplied by (ii) the number of Shares surrendered by such Shareholder to the
Purchaser.
Section 2.03. Payment Mechanics. All payments to be made by, or on
behalf of, the Company (a) in order to cancel the Options set forth on Schedule
5.05(a), (b) to pay the "stay" bonuses listed on Schedule 5.12(vi), and (c) to
pay the SARs listed on Schedule 5.12(c)(vi) will only be made by the Company out
of (a) available cash generated in the ordinary course of the Company's
business, (b) increasing the Company's Debt described on Schedule 4.05(m), or
(c) from proceeds received by the Sellers in connection with the transactions
contemplated by the Sale Documents. The Sellers represent and warrant that the
aggregate amount of the payments to be made (i) in respect of "stay" bonuses
will not exceed $1,500,000 (including the payments to be made in connection with
the Diversified Diemakers, Inc. transaction) and (ii) in respect of all of the
amounts referred to in the preceding sentence (including the "stay" bonuses will
not exceed $20,000,000 (including the payments to be made in connection with the
Diversified Diemakers, Inc. transaction).
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ARTICLE III
Payment Mechanics
Section 3.01. Payment Mechanics. Upon the terms and subject to the
conditions of this Agreement, as payment in full of the Purchase Price for the
purchase of the Shares, at the Closing, the Purchaser will pay to the Sellers'
Representative, by wire transfer of immediately available funds, an amount in
cash equal to the Purchase Price. Each Shareholder shall be entitled to receive
an amount in cash equal to the product of (i) the Per Share Amount, multiplied
by (ii) the number of Shares surrendered by such Shareholder to the Purchaser.
ARTICLE IV
The Closing; Effective Time; Conditions of Closing
Section 4.01. The Closing. The closing of the sale, transfer,
assignment, conveyance and delivery of the Shares as contemplated by the Sale
Documents (the "Closing"), will take place at the offices of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m.
(New York City time), on December 15, 1999, or, if later, within five business
days of the satisfaction or waiver of all conditions to closing contained in
this Agreement, or at such other location or time as the parties may agree in
writing, but in no event later than the Termination Date (such date of the
Closing being hereinafter referred to as the "Closing Date").
Section 4.02. Effective Time. The sale, transfer, assignment,
conveyance and delivery of the Shares contemplated by the Sale Documents will be
effective as of 12:01 a.m. New York City time on the Closing Date (such time
being referred to herein as the "Effective Time").
Section 4.03. Risk of Loss. Until the Closing, any loss of or damage
to the Assets from fire, casualty or any other occurrence will be the
responsibility of the Company and the Sellers.
Section 4.04. Conditions Precedent to the Obligations of the Sellers.
The obligations of the Sellers under the Sale Documents are expressly subject to
the fulfillment of each of the following conditions, unless waived by the
Sellers' Representative in writing, at or before the Closing:
(a) Representations and Warranties. The representations and
warranties of the Purchaser contained in the Sale DocumentS shall have
been true and correct in all material respects when made and on and as
of the Closing Date with the same force and effect as though made on
and as of the Closing Date.
(b) Performance of Agreements. The Purchaser shall have
performed and complied in all material respects with all of its
covenants and other obligations contained in the Sale Documents
required to be performed or complied with by the Purchaser at or before
the Closing.
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(c) Compliance Certificate. The Sellers' Representative shall
have received a certificate of the President or a Vice President of the
Purchaser substantially in the form of Exhibit 4.04(c) as to the
fulfillment of the conditions set forth in Section 4.04(a) and Section
4.04(b).
(d) Consents. The Sellers' Representative shall have received
copies of all of the Material Consents. The "ultimate parent entity"
(as defined in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) of the Purchaser shall have
made all necessary filings and obtained all necessary consents and
clearances required under the Hart_Scott_Rodino Act, and any waiting
period required under the Hart_Scott_Rodino Act shall have expired or
have been terminated early.
(e) No Actions. There shall be no (i) Action pending or
threatened by or before any Governmental Body or by any other Person
(A) challenging or seeking to restrain or prohibit the transactions
contemplated by the Sale Documents or (B) seeking to obtain from the
Sellers or the Company in connection with the transactions contemplated
by the Sale Documents any damages that are material in relation to the
Purchase Price, or (ii) Regulation in effect that has had or could
reasonably be expected to have any of the consequences referred to in
clause (i) above.
(f) Purchase Price. The Sellers' Representative shall have
received the Purchase Price by wire transfer of immediately available
funds.
(g) Secretary's Certificate. The Sellers' Representative shall
have received a certificate of the Secretary or an Assistant Secretary
of the Purchaser, substantially in the form of Exhibit 4.04(g), with
respect to (i) the articles of incorporation of the Purchaser, (ii) the
bylaws of the Purchaser, (iii) the resolutions of the Board of
Directors of the Purchaser approving each Sale Document to which the
Purchaser is a party and the other documents to be delivered by it
under the Sale Documents and the performance of the obligations of the
Purchaser thereunder and (iv) the names and true signatures of the
officers of the Purchaser authorized to sign each Sale Document to
which it is a party and the other documents to be delivered by it under
the Sale Documents.
(h) Good Standing Certificate. The Sellers' Representative
shall have received a certificate of the Secretary of State of the
jurisdiction in which the Purchaser is organized, dated as of a recent
date, as to the good standing of the Purchaser and as to the charter
documents of the Purchaser on file in the office of the Secretary of
State.
Section 4.05. Conditions Precedent to the Obligations of the Purchaser.
The obligations of the Purchaser under the Sale Documents are expressly
subject to the fulfillment of each of the following conditions, unless waived by
the Purchaser in writing, at or before the Closing:
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(a) Representations and Warranties. The representations and
warranties of the Sellers and the Company contained in the Sale
Documents shall have been true and correct in all material respects
when made and on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date.
(b) Performance of Agreements. Each of the Company and the
Sellers shall have performed and complied in all material respects with
all of their covenants and other obligations contained in the Sale
Documents required to be performed or complied with by them at or
before the Closing.
(c) Compliance Certificate. The Purchaser shall have received
a certificate of (i) the President or a Vice President of the Company
and (ii) of each of the Sellers, in each case, substantially in the
form of Exhibit 4.05(c) as to the fulfillment of the conditions set
forth in Section 4.05(a) and Section 4.05(b).
(d) Consents. The Purchaser shall have received copies of all
Material Consents. The "ultimate parent entity" (as defined in the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) of the Company shall have made all necessary
filings and obtained all necessary consents and clearances required
under the Hart_Scott_Rodino Act, and any waiting period required under
the Hart_Scott_Rodino Act shall have expired or have been terminated
early.
(e) No Actions. There shall be no (i) Action pending or
threatened by or before any Governmental Body or by any other Person
(A) challenging or seeking to restrain or prohibit the transactions
contemplated by the Sale Documents, or (B) seeking to obtain from the
Purchaser or any of its Affiliates in connection with the transactions
contemplated by the Sale Documents any damages that are material in
relation to the Purchaser or any of its Affiliates, or (ii) Regulation
in effect that has had or could reasonably be expected to have any of
the consequences referred to in clause (i) above.
(f) Material Adverse Effect. There shall have been no change
that would have a Material Adverse Effect since the date of this
Agreement.
(g) Shares; Shareholder Approval; Options. The Purchaser shall
have received the certificates representing all of the issued and
outstanding Shares, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank. The requisite number of shareholders of
the Company shall have approved the transactions contemplated by the
Sale Documents. All of the outstanding Options shall have been canceled
and the Purchaser shall have received from each holder of Options an
agreement stating (or other evidence satisfactory to the Purchaser)
that all Options held by such individual have been canceled.
(h) Secretary's Certificate. The Purchaser shall have received
a certificate of the Secretary or an Assistant Secretary of each of the
Company and the Sellers (which are
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corporations or other entities), substantially in the form of Exhibit
4.05(h), with respect to (i) the articles of incorporation of the
Company and such Sellers, (ii) the bylaws of the Company and such
Sellers, (iii) the resolutions of the Board of Directors and the
stockholders of the Company and the Sellers approving each Sale
Document to which the Company or any such Seller is a party and the
other documents to be delivered by it under the Sale Documents and the
performance of the obligations of the Company or any such Seller
thereunder, and (iv) the names and true signatures of the officers of
the Company and each such Seller authorized to sign each Sale Document
to which it is a party and the other documents to be delivered by it
under the Sale Documents.
(i) Opinion of Counsel. The Purchaser shall have received an
opinion of ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇, counsel for the Company and
the Sellers, substantially in the form of Exhibit 4.05(i) and Thomson
Coburn, Illinois counsel to the Company.
(j) Good Standing Certificate. The Purchaser shall have
received a certificate of the Secretary of State of the jurisdiction in
which the Company is organized, dated as of a recent date, as to the
good standing of the Company and as to the charter documents of the
Company on file in the office of the Secretary of State.
(k) Resignations. The members of the Board of Directors of the
Company designated by the Purchaser pursuant to Section 8.04 shall have
resigned from the Board of Directors of the Company.
(l) Minute Books. The Company shall have delivered to
Purchaser all minute books, stock transfer books, stock certificate
books and corporate seals of the Company.
(m) Debt Repayment. At or prior to the Closing (i) the Sellers
shall have repaid in full, including all interest, penalties,
termination charges or other charges, the outstanding Debt described on
Schedule 4.05(m), (ii) the Purchaser shall have received evidence of
such repayment and (iii) the holders of such Debt shall have released
or agreed in writing to release all Liens on any of the Assets.
(n) UCC Searches. Purchaser shall have received current
Uniform Commercial Code and state, local and federal tax, sales and
unemployment compensation tax, judgment, bankruptcy and similar lien
searches (paid for by the Purchaser) showing no Liens against the
Assets, other than Permitted Liens and other than as set forth on the
disclosure Schedules.
(o) FIRPTA Certificates. Purchaser shall have received from
each Seller a certificate executed by such Seller that, as of the
Closing Date, the Seller is not a "foreign person" within the meaning
of Section 1445 of the Code and the Regulations thereunder, in form and
substance acceptable to counsel for the Purchaser.
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(p) Termination of Employment Agreement. The Employment
Agreement between the Company and the Person set forth on Schedule
4.05(p) shall have been terminated and shall be of no further force or
effect including the obligation of the Company to grant or repurchase
Options thereunder and the Purchaser shall have received evidence of
such termination.
(q) Amendment to Employment Agreement. ▇▇▇▇▇▇▇ and the Company
shall have entered into and delivered the amendment, in the form
attached hereto as Exhibit 4.05(q), to the Employment Agreement between
▇▇▇▇▇▇▇ and the Company.
(r) "Stay" Bonuses and SARs. The Company shall have paid the
"stay" bonuses to the persons listed on Schedule 5.12(vi) and the stock
appreciation rights (the "SARs") set forth on Schedule 5.12(c)(vi) and
the Purchaser shall have received from each holder of SARs an agreement
stating (or other evidence satisfactory to the Purchaser) that all SARs
held by such individual have been canceled.
Section 4.06. Efforts to Close.
(a) Purchaser's Efforts. The Purchaser will use its commercially
reasonable efforts to cause the satisfaction of the conditions set forth in
Section 4.04 which are within the Purchaser's control and to cause the
transactions contemplated by the Sale Documents to be consummated, in each case,
on or prior to the Termination Date.
(b) Company's and Sellers' Efforts. Each of the Sellers and the Company
will use their respective commercially reasonable efforts to cause the
satisfaction of the conditions set forth in Section 4.05 which are within such
parties' control and to cause the transactions contemplated by the Sale
Documents to be consummated, in each case, on or prior to the Termination
Date.
ARTICLE V
Representations and Warranties of the Company and the Sellers
Each of the Company and the Sellers represents and warrants to the
Purchaser as of the date hereof and as of the Closing Date as follows:
Section 5.01. Corporate Existence and Power. The Company (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (b) is duly qualified under the
laws of each jurisdiction in which qualification is required to own, lease or
license its properties or to carry on the Business, except where the failure to
have such status would not have a Material Adverse Effect and (c) has all
necessary corporate power and authority required to own the Assets, to carry on
the Business and to execute and deliver each of the Sale Documents and to
consummate the transactions contemplated thereby.
Section 5.02. Authorization; Binding Effect. The execution and
delivery by the Company of each of the Sale Documents to which it is a party,
the performance by it of its obliga-
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tions under such Sale Documents and the consummation of the transactions
contemplated thereby has been duly authorized by all necessary corporate action
This Agreement has been duly executed and delivered by the Company, and each of
the other Sale Documents to which the Company is or may become a party is, or
when executed and delivered in accordance with this Agreement will be, legal,
valid and binding obligations of the Company enforceable against it in
accordance with its terms.
Section 5.03. Contravention. Neither the execution, delivery and
performance of the Sale Documents by the Company nor the consummation of the
transactions contemplated thereby will (with or without notice or lapse of time
or both) (a) violate or breach any provision of the Company's certificate of
incorporation or bylaws, (b) violate or breach any Regulation by which the
Company or any of the Assets are bound or affected, (c) assuming the receipt of
all of the Consents set forth on Schedule 5.04 and Schedule 6.04 prior to the
Closing, breach or result in a default under, result in the acceleration of,
create in any Person the right to accelerate, terminate, modify or cancel or
require any notice under, any Material Contract, except with respect to
subparagraph (b) and (c) of this Section 5.03, for such violations, breaches,
defaults or other events which would not have a Material Adverse Effect.
Section 5.04. Consents. Except for the Consents set forth on Schedule
5.04, all Consents have been obtained which are required in connection with
(a) the due execution, delivery and performance by the Company of the Sale
Documents, and (b) the consummation of the transactions contemplated by the Sale
Documents by the Company.
Section 5.05. Capitalization.
(a) Authorized, Issued and Outstanding Shares. The authorized Capital
Stock of the Company consists of only 6,000,000 shares of Common Stock. As of
the date of this Agreement, only 1,000,000 shares of Common Stock (the "Company
Stock") are issued and outstanding, all of which shares have been duly
authorized, validly issued and are fully paid and nonassessable. Except for such
Company Stock, there are no other shares of Capital Stock of the Company
outstanding. Schedule 5.05(a) sets forth the number of issued and outstanding
shares of each class of the Company's Capital Stock, the names of the record
owners thereof, and the number of shares held by each such owner.
(b) Rights, Options, Warrants, Etc. Except as set forth on Schedule
5.05(b), (i) there are no preemptive rights on the part of any holder of any
Capital Stock of the Company, and (ii) there are no securities, options,
warrants, puts, calls, subscriptions or rights or agreements outstanding that
obligate the Company to issue, sell, purchase or redeem any shares of its
Capital Stock of any class or any securities convertible into or exchangeable
for any such shares. No shares of Capital Stock of the Company are held in the
Company's treasury and no shares of Capital Stock of the Company are reserved
for issuance.
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(c) No Other Agreements. Except as set forth on Schedule 5.05(c), there are
no voting trusts, stockholder agreements, or proxies in effect with respect to
the voting or transfer of any of the Company Stock.
Section 5.06. Subsidiaries. The Company owns no interest in and does not
control, directly or indirectly, any Subsidiary, except for Racine Sales and
Engineering Inc., Comtech Inc. and Tessel, Inc., which Subsidiaries (a) do not
currently conduct any operations, (b) do not own any assets and (c) have no
liabilities.
Section 5.07. Financial Information.
(a) Balance Sheets. The audited balance sheets of the Company dated as of
the Balance Sheet Date (the "Balance Sheet") and December 31, 1997 and the
unaudited balance sheet of the Company dated October 30, 1999 (including the
footnotes to such financial statements), copies of which are attached hereto as
Schedule 5.07(a), except as set forth on Schedule 5.07(a), were prepared in
accordance with GAAP and fairly present the financial position of the Company as
of their respective dates.
(b) Other Financial Statements. The audited statements of operations,
statements of changes in shareholder's equity and statements of cash flows of
the Company for the 12-month periods ended on the Balance Sheet Date and
December 31, 1997, and the unaudited statement of operations and statement of
cash flows of the Company for the 10-month period ended October 30, 1999
(including the footnotes to such financial statements), copies of which are
attached hereto as Schedule 5.07(b), except as set forth on Schedule 5.07(b),
were prepared in accordance with GAAP (except with respect to the unaudited
statements, for the absence of footnotes and subject to year end adjustments)
and fairly present the results of operations, changes in shareholder's equity
(except for the interim statements which do not include changes in shareholder's
equity) and cash flows of the Company for such period (the balance sheets
described in subsection (a) above, and the other financial statements described
in subsection (b) being referred to herein as the "Financial Information").
(c) Accounts Payable and Accounts Receivable. All of the accounts payable
of the Company reflected in the Balance Sheet were, and those reflected on the
books of the Company on the Closing Date will have been, as of the Closing Date,
incurred in the ordinary course of the Company's business. All Accounts
Receivable of the Company reflected in the Balance Sheet have arisen, and those
reflected on the books of the Company on the Closing Date will arise, from bona
fide transactions in the ordinary course of business of the Company. The
charges, accruals and reserves on the books of the Company in respect of the
accounts payable and the Accounts Receivable were calculated in a manner
consistent with past practice. The Company has not accelerated the collection of
its Accounts Receivable, or slowed down the payment of accounts payable, in each
case, outside the ordinary course of the Company's business.
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(d) Accounting Changes. Except as set forth on Schedule 5.07(d), during the
Company's two previous fiscal years, the Company has not changed any material
accounting methods or principles used in recording transactions on its books or
in preparing its financial statements. The Company has not agreed or is not
required to make any adjustments pursuant to Section 481(a) of the Code or any
similar provision of state or local Tax law by reason of a change in accounting
method initiated by the Company nor has the Company made any application that is
currently pending with any Governmental Body requesting permission for any
changes in accounting methods that relate to the Business or the Assets. To the
Knowledge of the Sellers, neither the Internal Revenue Service nor other
applicable Taxing authority has proposed any such adjustment or change in
accounting method.
Section 5.08. Taxes.
(a) Filing of Tax Returns and Payment of Taxes. Except as set forth on
Schedule 5.08(a), the Company has timely paid or made provision for all Taxes
required to be paid by the Company and has filed all federal, state, local and
foreign Tax Returns that are required to be filed by it and have paid all Taxes
due pursuant to those Tax Returns. All such Tax Returns were correct and
complete in all material respects when filed. The Company has made available to
the Purchaser correct and complete copies of its United States federal income
Tax Returns for the fiscal years ended December 31, 1996 through December 31,
1998. The charges, accruals and reserves on the books of the Company in respect
of Taxes were calculated in a manner consistent with GAAP, F.A.S.B. No. 5 and
past practice. Except as set forth on Schedule 5.08(a), the Company has
established a Tax reserve or account payable in an amount sufficient for all
accrued and unpaid federal, state, county and local and foreign Taxes of the
Company, whether or not disputed, including any penalties, interest and related
charges and fees in connection therewith, for all complete fiscal periods of the
Company.
(b) Withholding Taxes. All Taxes that the Company is required to withhold
or collect have been withheld or collected and, to the extent required, have
been paid over to the proper Governmental Body on a timely basis. Proper amounts
have been withheld by the Company from its employees in compliance with Tax
withholding provisions of applicable federal, state, local and foreign
Regulations.
(c) Audits. Schedule 5.08(c) sets forth a correct and complete list of all
audits of the Company by any Taxing authority in the past three years. Except as
set forth on Schedule 5.08(c), no such audit is in progress. There were no
material adjustments to the Company's Tax Returns as a result of any such audit.
All deficiencies proposed as a result of such examinations or audits have been
paid or finally settled. The Company has not received any written notice of any
pending or threatened audit by the Internal Revenue Service or any state, local
or foreign Taxing authority related to the Company's Tax Returns or Tax
liability for any period and no claim for special assessment or collection of
Taxes has been asserted in writing against the Company.
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(d) Waivers. The Company has not entered into any agreements for any waiver
or for the extension of any statute of limitations governing the time of
assessment or collection of any federal, state or local Taxes or the filing of
any Tax Return.
(e) Claims by Certain Jurisdictions. Except as set forth in Schedule
5.08(e), to the Knowledge of the Sellers, no claim has been made by any Taxing
authority in a jurisdiction where the Company does not file Tax Returns that the
Company is or may be subject to Taxation in that jurisdiction.
(f) Other Tax Matters.
(i) The Company has not executed any closing agreement pursuant to Section
7121 of the Code or any predecessor provision thereof, or any similar provision
of state, local or foreign Tax law.
(ii) The Company has not filed a consent pursuant to Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any disposition of
a subsection (f) asset (as such term is defined in Section 341(f)(4) of the
Code) owned by the Company. (iii) None of the assets owned by the Company is
property that is required to be treated as owned by any other Person pursuant to
Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, as in effect
immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
Section 5.09. Litigation. Except as set forth on Schedule 5.09, there is
no material Action or any lawsuit pending, or to the Knowledge of the Sellers,
threatened, (a) against the Company, (b) that questions the validity of any of
the Sale Documents or (c) affecting any of the Assets or the Business.
Section 5.10. Permits. The Company holds all material Permits necessary
to enable it to own the Assets and to conduct the Business, all such Permits are
in full force and effect and, to the Knowledge of the Sellers, all such Permits
were validly issued. Schedule 5.10 sets forth a correct and complete list of all
such Permits. The Company is not in violation of or in default under any Permit
which violation or default would have a Material Adverse Effect. Section 5.11.
Compliance with Laws.
(a) General Compliance. Except as set forth on Schedule 5.11, the Company
is in compliance in all material respects with each Regulation and Permit
applicable to the Business and the Assets.
(b) Specific Regulations. On the Closing Date, the "ultimate parent entity"
(as defined in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) of the Company will be in full
compliance with all of the provisions of
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the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act in connection with the transactions contemplated by
the Sale Documents.
Section 5.12. Absence of Certain Changes or Events. Except as set forth on
Schedule 5.12, since the Balance Sheet Date (except for item (ix) below which is
since October 30, 1999), (a) there has not occurred any change that has had a
Material Adverse Effect, (b) the Company has conducted its business only in the
ordinary course; provided, however, that nothing in the Sale Documents shall
limit or impair the ability of the Company to repay outstanding Debt from
available cash, provided such cash is generated in the ordinary course of
business, including, without limitation, all receipts, checks and items in the
Company's "lock-box" as of the Closing (whether or not such receipts, checks or
items have cleared), and such repayment shall not constitute a breach of this
Section 5.12, and (c) the Company has not done or experienced any of the
following:
(i)(A) Transferred any material portion of the Assets, other than
sales of Inventory in the ordinary course of business or (B) permitted any
portion of the Assets to become subject to any Liens;
(ii) Canceled, settled or compromised any material Debt owed to the
Company;
(iii) Made any loan or advance to any Person, or Guaranteed any
obligation of any Person, in each case in excess of $300,000;
(iv) Made or acquired any investment in any Person, merged,
consolidated with, or entered into a business combination with any Person,
or sold substantially all of its assets to any other Person;
(v) Entered into any Contract with any of its Affiliates or any of
the Sellers;
(vi) Except in the ordinary course of business, paid or agreed to
pay any bonus, extra compensation, pension or severance pay, or otherwise
materially increased the wage, salary or compensation (of any nature) to
its directors, officers or employees earning more than $100,000 per year;
(vii) Suffered any damage, destruction or casualty loss or any taking
of the Assets, by condemnation or eminent domain, in each case, in excess
of $300,000 in the aggregate;
(viii) Made any material change in the Company's method of doing
business or made any change in its accounting principles or practices
unless required by GAAP;
(ix) Since October 30, 1999 only (A) accelerated the collection of
Accounts Receivable, or slowed down the payment of accounts payable, in
each case, outside the
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ordinary course of business or outside the stated terms (if any) for such
Accounts Receivable or accounts payable or (B) made or paid any dividend or
distribution in respect of the Company's capital stock; or
(x) Entered into any Contract to do any of the foregoing.
Section 5.13. Assets.
(a) Condition of Assets. Subject to the provisions of clause (d) below,
except as set forth on Schedule 5.13(a), all of the material properties and
material assets, including, without limitation, all Real Property, Leaseholds,
Equipment, Fixtures, Inventory, Contract rights and Proprietary Rights owned,
leased or used by the Company (such properties and assets being the "Assets")
are in good condition and repair, except for ordinary wear and tear which does
not have a Material Adverse Effect.
(b) Title to the Assets. Subject to the provisions of clause (d) below,
except as set forth on Schedule 5.13(b), the Company has good and marketable
title to, or right to use, all of the Assets. The COMPANY'S interest in each of
the Assets is free and clear of all Liens, except for Permitted Liens.
(c) No Adverse Impact on Assets. Subject to the provisions of clause (d)
below), assuming the receipt of all of the Consents set forth on Schedule 5.04
and Schedule 6.04 on or prior to the Closing, except as set forth on Schedule
5.13(c), following the consummation of the transactions contemplated by the Sale
Documents, the Company will continue to own, lease or have the right to use, its
respective interest in the Assets.
(d) Limitation on Representation. Notwithstanding any provision of the Sale
Documents to the contrary, without limiting the representation in the first
sentence of Section 5.16(c), neither the Company nor any of the Sellers makes
any representation or warranty, express or implied, with respect to (i) the
continuation, termination, cancellation, modification or amendment by any of the
Company's customers of any of the Material Contracts or relationship with the
Company's customers or (ii) the ownership or right of the Company to use any of
the customer's Equipment.
Section 5.14. Real Property and Leaseholds.
(a) Schedule. Schedule 5.14 sets forth a correct and complete list and
legal description of all Real Property and all Leaseholds in which the Company
has an interest and its location. The Company has good, marketable and insurable
title, in fee simple, to the Real Property, subject to Permitted Liens. Except
as set forth in Schedule 5.14, none of the Real Property is subject to any lease
or sublease. The Company has a valid leasehold interest in each of the
Leaseholds. Except as set forth on Schedule 5.14(a), each of the Leaseholds is
the subject of a written lease agreement, and to the Knowledge of the Sellers,
there are no oral terms inconsistent with the
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written terms thereof. The Real Property and Leaseholds are adequate for the
conduct of the Business as conducted by the Company on the date of this
Agreement.
(b) Liens. Except as set forth on Schedule 5.14(b), no work has been
performed on, or materials supplied to, any of the Real Property or Leaseholds
currently owned or leased by the Company within the applicable statutory period
which would give rise to any mechanic's or materialmen's Liens, except for such
Liens that would constitute Permitted Liens.
(c) Condemnation and Eminent Domain. Except as set forth on Schedule
5.14(c), there is no pending or, to the Knowledge of the Sellers, threatened
condemnation or eminent domain proceeding with respect to any of the Real
Property or Leaseholds.
(d) Real Estate Taxes. Except as set forth in Schedule 5.14(d), (i) there
are no Taxes or assessments other than ordinary real estate taxes pending or
payable against any of the Real Property or Leaseholds and, to the Knowledge of
the Sellers, there are no contingencies existing under which any special
assessment for real estate Taxes may be retroactively filed against any of the
Real Property or Leaseholds currently owned or leased by the Company, and (ii)
to the Knowledge of the Sellers, there is no proposed special assessment with
respect to Taxes that may affect any of the Real Property or Leaseholds
currently owned or leased by the Company.
(e) No Restrictions. Except as set forth on Schedule 5.14(e), and except
for Permitted Liens, there are no easements or rights of way across,
encroachments by improvements on adjoining premises, or encroachments on
adjoining premises with respect to any of the Real Property or Leaseholds that
would as of the date hereof or as of the Closing Date, materially affect the
ability of the Company to conduct the Business as currently conducted by the
Company on the date of this Agreement.
Section 5.15. Equipment, Fixtures and Inventory.
(a) Possession. Schedule 5.15(a) sets forth a correct and complete list and
description of all Equipment and Fixtures in which the Company has an interest.
Except as set forth on Schedule 5.15(a), the Company is in possession of the
Equipment and Fixtures in which the Company has an interest.
(b) Inventory. Schedule 5.15(b) sets forth the Inventory of the Company.
Except as set forth on Schedule 5.15(b), all Inventory classified as such in the
Balance Sheet, and all additions to Inventory since that date, consist of items
which are usable or saleable in the ordinary course of the business of the
Company and are carried on the Balance Sheet at the lower of cost or market
value consistent with past practice, except that the raw materials (whether or
not incorporated into a part) are carried at their original cost in accordance
with "last-in, first-out" accounting consistent with past practice. The charges,
accruals and reserves on the books of the Company in
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respect of obsolete and slow moving Inventory were calculated in a manner
consistent with past practice.
Section 5.16. Material Contracts.
(a) Schedule of Material Contracts. Schedule 5.16 sets forth a correct and
complete list of all of the Material Contracts to which the Company is a party
or by which the Business or the Assets are bound or subject. As used in this
Agreement, "Material Contracts" means all:
(i) mortgages, deeds of trust, indentures, security agreements,
pledge agreements or other Contracts granting a Lien (other than Permitted
Liens) to any Person;
(ii) credit agreements, loan agreements, indentures, Guarantees,
Capitalized Leases, notes, debentures, bonds, interest rate swaps, interest
rate or foreign exchange or other hedging agreements, and other evidences
of Debt in respect of which the Company is obligated or liable;
(iii) Contracts under which the Company has made or agreed to make
any advance, loan, extension of credit or capital contribution to, or other
investment in, any Person, and all joint venture, partnership and limited
liability company agreements to which the Company is a party;
(iv) Contracts under which the Company (A) has a Leasehold interest
or (B) is the lessor or sublessor of Real Property;
(v) Contracts under which the Company is lessee or lessor of any
personal property involving aggregate payments of more than $300,000 in any
12-month period;
(vi) Contracts for any Capital Expenditure involving aggregate
payments of at least $300,000 in any 12-month period;
(vii) Contracts for the sale or purchase of assets, goods, materials,
supplies, machinery or services (other than Capital Expenditures), in each
case, either (A) involving aggregate payments of at least $300,000 in any
12-month period or (B) involving aggregate payments of at least $150,000 in
any 12-month period which is not terminable by the Company within 12
months;
(viii) Contracts pursuant to which the Company licenses (as licensee
or licensor) any material Proprietary Rights;
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(ix) Contracts for the sale of any material portion of the Company's
assets (other than for the sale of goods in the ordinary course of the
Company's business), involving more than $300,000 in the aggregate;
(x) Contracts which require the Company to deal on an exclusive
basis with any Person or restrict the Company from doing any kind of
business or from doing business with any Person or in any geographic area
or from competing with any Person;
(xi) Employment or consulting Contracts and Contracts with any labor
union or other collective bargaining group and all Contracts relating to
Benefit Plans;
(xii) Contracts with any shareholder, director, officer or other
Affiliate of the Company or any Seller and all shareholders' agreements,
proxies, voting trusts, or powers of attorney to act on behalf of the
Company;
(xiii) sales agency, dealer, distribution, brokerage or franchise
Contracts; and (xiv) Other Contracts to which the Company is a party or by
or to which it or any of the Assets or the Business is bound or subject
which has an aggregate future liability, benefit or right to payment to any
Person in excess of $300,000 and which are not in the ordinary course of
the Company's business.
(b) Copies of Material Contracts. Prior to the date of this Agreement, the
Company has furnished to the Purchaser correct and complete copies of all
Material Contracts; provided, however, that to the extent that the Company has
not disclosed certain confidentiality agreements to the Purchaser, the Company
represents and warrants that such confidentiality agreements contain normal and
customary terms typically found in confidentiality agreements of this nature.
(c) Enforceability. Except as specifically set forth below (i) each of the
Material Contracts (A) has been duly authorized, executed and delivered (other
than purchase orders and oral Contracts which are not executed or delivered) by
the Company and is in full force and effect and (B) is a legal, valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms or (ii) to the Knowledge of the Sellers, except as set forth on
Schedule 5.16(c), there exists no default under any of the Material Contracts by
the Company. The Purchaser expressly acknowledges and agrees, that
notwithstanding any provision of the Sale Documents to the contrary, without
limiting the representation set forth in the immediately preceding sentence, (A)
neither the Company nor any of the Sellers makes any representation or warranty,
express or implied, with respect to the continuation, termination, cancellation,
modification or amendment by the Company's customers of any of the Material
Contracts or relationship with the Company's customers, and (B) the Purchaser
will assume the risk of, and neither the Company nor any of the Sellers will
have any liability with respect to, the Company's customers terminating,
canceling, modifying or amending any Material Contract or relationship
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with any of the Company's customers, whether or not such customers have the
legal right to so terminate, modify, cancel or amend such Material Contracts.
(d) Liens and Debt. Schedule 5.16(d)(i) sets forth a correct and complete
list and description of all of the Liens (other than Permitted Liens) attaching
to the Assets, and Schedule 5.16(d)(ii) sets forth a correct and complete list
and description of the Debt outstanding and which may be outstanding under each
of the Material Contracts described in Section 5.16(a)(ii).
Section 5.17. Proprietary Rights.
(a) Ownership or Right to Use. Schedule 5.17(a) sets forth a correct and
complete list of all Proprietary Rights in which the Company has an interest.
The Company owns, or has the right to use, all material Proprietary Rights
necessary to conduct the Business as currently conducted by the Company.
(b) Agreements. Except as set forth on Schedule 5.17(b), the Company has
not granted any options or licenses relating to Proprietary Rights owned or used
by the Company. The Company is not bound by or a party to any options or
licenses relating to the Proprietary Rights of any other Person.
(c) No Infringement. No claim is pending, or to the Knowledge of the
Sellers, threatened, against the Company claiming or alleging that (i) the
operation of the Business by the Company infringes upon the material Proprietary
Rights of any other Person or (ii) any material Proprietary Rights owned or used
by the Company is invalid or unenforceable by the Company.
(d) Confidentiality of Proprietary Rights. Except as set forth on Schedule
5.17(d), the Proprietary Rights owned or used by the Company which are
confidential have been maintained in confidence in accordance with protection
procedures customarily used in the industry of the Company to protect rights of
similar importance.
Section 5.18. Customers and Suppliers.
(a) Customers. Schedule 5.18 sets forth a correct and complete list of the
five most significant customers (by revenue to the Company) of the Company
during the 10-month period ended October 30, 1999 (each, a "Significant
Customer") and the amount for which each such customer was invoiced during such
period.
(b) Suppliers. Except as set forth on Schedule 5.18, the Company does not
have any supplier from whom it purchased more than 10% of the goods, supplies or
Inventory which it purchased during the 10-month period ended October 30, 1999.
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Section 5.19. Insurance. The Company is insured under currently
effective insurance policies or binders of insurance issued in favor of the
Company in such types and amounts and covering such risks and subject to such
exclusions and limitations as are consistent with customary practices and
standards of companies engaged in business and operations substantially similar
to those of the Company. Schedule 5.19 sets forth a correct and complete list of
all insurers currently providing the insurance to the Company referred to in the
immediately preceding sentence. Except as set forth on Schedule 5.19, the
Company does not self-insure any material risks.
Section 5.20. Books and Records. The (a) records and books of account
of the Company are correct and complete in all material respects, (b) minute
books of the Company contain materially accurate records of all meetings of the
shareholders and the board of directors (including committees) of the Company,
and (c) stock books and ledgers of the Company correctly record all transfers
and issuances of all Capital Stock of the Company.
Section 5.21. Environmental Matters. To the Knowledge of the Sellers, and
except as set forth in the Environmental Reports or on Schedule 5.21, as of the
Closing Date:
(a) Compliance With Environmental Laws. The Company and its operations
and Real Property and Leaseholds currently owned or used by the Company
are, and at all times have been, in compliance in all material respects
with all Environmental Laws.
(b) Release of Hazardous Materials. (i) No Hazardous Materials have
been released, deposited, spilled, discharged or disposed of on or under
any Real Property or Leasehold currently owned or operated by the Company
in violation of Environmental Laws or applicable Permits and (ii) during
the times that any formerly owned or operated Real Property or Leaseholds
were owned or operated by the Company or its predecessors only, no
Hazardous Materials were released, deposited, spilled, discharged or
disposed of on or under any such Real Property or Leasehold in violation of
Environmental Laws or applicable Permits.
(c) No Actions. There is no pending or threatened Action alleging or
claiming that the Company:
(i) has failed to comply with any Environmental Law,
(ii) has any liability for, or is required to take any remedial
or other responsive action resulting from the disposal, depositing,
discharge, leaking or other release of any Hazardous Materials with
respect to any Relevant Property, or
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(iii) has any liability for, or is required to take any remedial
or other responsive action resulting from the use, possession,
generation, treatment, release, storage, recycling, transportation or
disposal of any Hazardous Materials.
(d) No Notices. Neither the Company nor any of the Sellers has
received any written notice from any Governmental Body (i) with respect to
the listing or proposed listing of any Relevant Property as a facility
subject to a claim under CERCLA or any comparable state Environmental Law
or (ii) stating that the Company has any liability with respect to any Real
Property that is subject to an existing or potential claim under CERCLA or
any comparable state Environmental Law.
(e) Permits. The Company possesses all material Permits required under
any applicable Environmental Law. All such Permits are valid and in full
force and effect. The Company, its Assets and the operation of the Business
are in compliance in all material respects with the terms and conditions of
all such Permits.
(f) Underground Storage Tanks. There (i) are no underground storage
tanks located on any Real Property or Leaseholds currently owned or used by
the Company and, (ii) as of the times any formerly owned or operated Real
Property or Leaseholds were owned or operated by the Company or its
predecessors only, there were no underground storage tanks on any such Real
Property or Leasehold.
(g) Reports. The Company has delivered or otherwise made available to
the Purchaser complete and correct copies and results of all written
reports and studies, which reports and studies are set forth on Schedule
5.21(g) (the "Environmental Reports") possessed by the Company or any
Seller relating to any Hazardous Materials in, on or beneath any of the
Company's Real Property or Leaseholds or regarding the Company's compliance
with any applicable Environmental Laws. Absent fraud or willful misconduct
on the part of the Company or the Sellers with respect to such
Environmental Reports, neither the Company nor the Sellers makes any
representation or warranty, express or implied, as to the accuracy or
completeness of any such Environmental Reports.
Section 5.22. Employees; ERISA.
(a) Schedule of Employees. Schedule 5.22(a) sets forth a correct and
complete list and description as of the Balance Sheet Date or October 30, 1999,
as the case may be, of (i) all of the employees, officers and directors of the
Company and each employee's, officer's and director's place of employment,
compensation, bonus criteria, deferred or contingent compensation, pension,
accrued vacation and sick pay (except with respect to salaried employees),
severance, "golden parachute" and other like benefits and term of employment, in
effect as of the date of this Agreement and (ii) the names of all former or
retired employees, if any, of the Company who are receiving or are entitled to
receive any pension payments not covered by a fully funded pension plan of the
Company or by any union pension related to a collective bargaining agreement to
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which the Company is a party, their ages, and their current annual funded and
unfunded pension benefits. Except as set forth on Schedule 5.22(a), there are no
insurance policies on the lives of any directors, officers or employees of the
Company the premiums of which are paid or contributed to by the Company. The
payments set forth on Schedule 5.22(a) are accrued for in the Financial
Information in accordance with GAAP.
(b) Employment Agreements. Except as set forth on Schedule 5.22(b), the
Company has not entered into and is not bound by (i) any employment, consulting
or severance Contract with any of its employees or (ii) any collective
bargaining agreements with its employees.
(c) Benefit Plans. Schedule 5.22(c), sets forth a list of all Benefit Plans
maintained by the Company with respect to its present or former officers,
directors or employees. None of the Sellers, the Company or other members of a
Controlled Group with the Company or any Seller has completely or partially
withdrawn under Section 4201 or 4204 of ERISA from a multi-employer pension plan
within the past six years. Each of the Company and the other members of a
Controlled Group has met its minimum funding requirements under ERISA with
respect to all of their Benefit Plans and none of them has an Unfunded Vested
Liability that has not been fully reserved for in the Financial Information in
accordance with past practice. None of the Company's Plans has been terminated
so as to result, directly or indirectly, in any liability, contingent or
otherwise, to the Company under Title IV of ERISA. No Action has been initiated
by the PBGC to terminate any such Plan or to appoint a trustee for any such
Plan. Except for the transactions contemplated by the Sale Documents, no
Reportable Event has occurred within the last three years with respect to any
such Plan for which the 30-day notice requirement to PBGC has not been waived
which could result in any material liability to the Company. The transactions
contemplated by the Sale Documents will not result in any event described in
Section 4062(e) of ERISA. To the Knowledge of the Sellers, no event has occurred
in connection with the Company or any of its Benefit Plans which would cause the
Company or any such Benefit Plan to have any material liability under ERISA, the
Code or any other Regulation applicable to any of the Company's Benefit Plans,
including Section 406, 409, 502(i), 502(l), 4069, or 4212c) of ERISA, or Part 6
of Title I of ERISA, or Section 4971, 4972, 4975, 4976, 4977 or 4980B of the
Code.
(d) Plan Qualifications. Each of the Company's Benefit Plans which is an
"employee pension benefit plan" (as defined in Section 3(2) of ERISA) and
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the Internal Revenue Service (the "IRS") that the Plan
is qualified and that its related trust has been determined to be exempt from
taxation under Section 501(a) of the Code. To the Knowledge of the Sellers, no
events or circumstances have occurred (other than changes for which the remedial
amendment period under Section 401(b) of the Code has not expired) since the
date of such letters that will materially adversely affect the qualification or
exemption of such Plan. No Benefit Plan sponsored by the Company is under audit,
nor, to the Knowledge of the Sellers, is any such audit pending.
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(e) Absence of Transaction Entitlements. Except as set forth on Schedule
5.22(e), the consummation of the transactions contemplated by the Sale Documents
will not (i) entitle any current or former employee of the Company or any group
of such employees to any payment from the Company other than payments pursuant
to the Company's Benefit Plans, (ii) increase the amount of compensation due to
any such employee, (iii) accelerate the time of vesting of any compensation,
stock incentive or other benefit of any such employee or (iv) result in any
"parachute payment" under Section 280G of the Code, whether or not such payment
is considered to be reasonable compensation for services rendered.
(f) No Post-Retirement Benefits. Except with respect to the Benefit Plans
set forth on Schedule 5.22(c), the Company has no liability with respect to an
obligation to provide benefits, including death or medical benefits (whether or
not insured) with respect to any Person beyond their retirement or other
termination of service with the Company other than (i) coverage mandated by Part
6 of Title I of ERISA or Section 4980B of the Code or state Regulations, (ii)
retirement or death benefits under any employee pension plan, (iii) disability
benefits under any employee welfare plan that have been fully provided for by
insurance or otherwise, (iv) deferred compensation benefits accrued as
liabilities on the books of the Company, or (v) benefits in the nature of
severance pay. The obligations set forth on Schedule 5.22(c) have been accrued
for in the Financial Information in accordance with past practice.
(g) Delivery of Plan Documents. The Company has delivered to Purchaser with
respect to each of the Company's Benefit Plans for which the following exists:
(i) a copy of the three most recent Forms 5500 with respect to each
Benefit Plan, including financial statements and actuarial valuations filed
with the IRS;
(ii) a copy of the summary plan description, together with each
summary of material modifications required under ERISA with respect to such
Benefit Plan in the past three years, all material employee communications
relating to such Benefit Plan, and, unless the Benefit Plan is embodied
entirely in an insurance policy to which the Company is a party, a true and
complete copy of such Benefit Plan;
(iii) if the Benefit Plan is funded through a trust or any third party
funding vehicle (other than an insurance policy), a copy of the trust or
other funding agreement; and
(iv) the most recent determination letter received from the IRS with
respect to each Benefit Plan that is intended to be a "qualified plan"
under Section 401(a) of the Code.
(h) Labor Relations. Except as set forth in Schedule 5.22(h), (i) there is
no unfair labor practice complaint against the Company pending before any
Governmental Body, (ii) there is no labor strike, dispute, slowdown or stoppage,
or, to the Knowledge of the Sellers, any current (as
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of the date of this Agreement) union organizing effort or campaign pending
against or involving the Company and (iii) the Company has timely prepared and
filed all appropriate forms (including Immigration and Naturalization Service
Form I-9) required by any relevant Governmental Body.
(i) Workers' Compensation. Except as set forth on Schedule 5.22(i), there
are no material liabilities to any of the Company's employees relating to
workers' compensation benefits that are not fully insured against by third-party
insurance carriers.
Section 5.23. Affiliate Transactions. Except as set forth on Schedule 5.23,
to the Knowledge of the Sellers, (a) none of the Company's or any Seller's
Affiliates or any Seller has entered into any material transaction or Contract
with the Company within the past 12 months other than an employment
relationship, (b) no Contract with any of the Company's or any Seller's
Affiliate or any Seller will continue in effect after the Closing and (c) none
of the Company's or any Seller's Affiliates or any Seller will have any interest
in any portion of the Assets after the Closing.
Section 5.24. Company Names; Chief Executive Office. Except as set forth on
Schedule 5.24, the Company has not operated or conducted any business under any
name other than the name ascribed to the Company in this Agreement. The location
of the chief executive office and chief place of business of the Company is set
forth on Schedule 5.24.
Section 5.25. Brokers, Finders. Neither the Company nor any Seller has
retained any broker or finder in connection with the transactions contemplated
herein, and is not obligated and has not agreed to pay any brokerage or finder's
commission, fee or similar compensation.
Section 5.26. Year 2000 Compliance. To the Knowledge of the Sellers, all
Date Data and Date-Sensitive Systems of the Company are Year 2000 Compliant,
except where the failure to be Year 2000 Compliant will not have a Material
Adverse Effect. The Company has not received any written notice from any of its
suppliers or customers that any such supplier or customer is not Year 2000
Compliant. "Date Data" means any data of any type that includes date information
or which is otherwise derived from, dependent on or related to date information.
"Date-Sensitive System" means any software or hardware system or component,
including any electronic or electronically controlled system or component, that
processes any Date Data and that is installed by the Company for its internal
use, or which the Company sells to third parties. "Year 2000 Compliant" means
(i) with respect to Date Data, that such data is in proper format and accurate
for all dates in the twentieth and twenty-first centuries, and (ii) with respect
to Date-Sensitive Systems, that each such system accurately processes all Date
Data, including for the twentieth and twenty-first centuries, without any
material loss of functionality or performance.
Section 5.27. Misstatements. No representation or warranty of the Company
or any of the Sellers contained in the Sale Documents, contains or will contain
on the Closing Date any material misstatement of fact or omits or will omit on
the Closing Date to state a material fact
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necessary to make the statement contained therein not materially misleading;
provided, however, that notwithstanding any provision of the Sale Documents to
the contrary, without limiting the representation in the first sentence of
Section 5.16(c), neither the Company nor any of the Sellers makes any
representation or warranty, express or implied, with respect to (a) the
continuation, termination, cancellation, modification or amendment by the
Company's customers of any of the Material Contracts or relationship with the
Company's customers or (b) the ownership or right of the Company to use any of
the customer's Equipment.
ARTICLE VI
Representations and Warranties of the Sellers
Each Seller, severally, and not jointly and severally, with respect to
itself only, hereby represents and warrants to the Purchaser as of the date
hereof and as of the Closing Date as follows:
Section 6.01. Power. Such Seller is either (a) an individual or (b) a
limited liability company or limited partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization. Such Seller has either (a) full legal capacity and legal right or
(b) the necessary limited liability company or partnership power and authority
to execute and deliver the Sale Documents, to perform its obligations thereunder
and to consummate the transactions contemplated thereby.
Section 6.02. Authorization; Binding Effect. The execution and delivery by
each Seller which is an entity of each of the Sale Documents to which it is a
party, the performance by it of its obligations under such Sale Documents and
the consummation of the transactions contemplated thereby has been duly
authorized by all necessary limited liability company or partnership action, as
the case may be. This Agreement has been duly executed and delivered by such
Seller, and each of the Sale Documents to which such Seller is or may become a
party is, or when executed and delivered in accordance with this Agreement will
be, legal, valid and binding obligations of such Seller enforceable against it
in accordance with its terms.
Section 6.03. Contravention. Neither the execution, delivery and
performance of the Sale Documents by such Seller nor the consummation of the
transactions contemplated thereby will (with or without notice or lapse of time
or both) (a) in the case of a Seller which is an entity, violate or breach any
provision of such Seller's organizational documents, (b) violate or breach any
material Regulation by which such Seller or any of its material properties or
assets may be bound or affected, or (c) assuming the receipt of all of the
Consents set forth on Schedule 5.04 and Schedule 6.04 prior to the Closing,
breach or result in a default under any material Contract to which such Seller
is a party or by which it or any of its material properties or assets may be
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bound or affected. Section 6.04. Consents. Except for the Consents set forth on
Schedule 6.04, all Consents have been obtained which are required in connection
with (a) the due execution, delivery and performance by such Seller of the Sale
Documents, and (b) the consummation of the transactions contemplated by the Sale
Documents by such Seller.
Section 6.05. Litigation. There is no Action pending, or to the knowledge
of such Seller, threatened, against such Seller that involves any of the
transactions contemplated by the Sale Documents or any material property or
assets owned or used by such Seller that, if determined adversely to such
Seller, would materially and adversely affect the ability of such Seller to
perform its obligations under the Sale Documents.
Section 6.06. Compliance with Laws. Such Seller is not in violation of or
default with respect to any Regulation applicable to it or its business,
properties or operations, which violation or default would materially and
adversely affect the ability of such Seller to perform its obligations under the
Sale Documents.
Section 6.07. Stock Ownership. Such Seller is the record and beneficial
owner of the respective number of Shares set forth opposite such Seller's name
on Schedule 5.05(a). Such Seller's right, title and interest in such Shares are
free and clear of all Liens or restrictions on transfer.
Section 6.08. The Shares. Such Seller has good and marketable title to its
Shares. Upon delivery to the Purchaser at the Closing of certificates
representing the Shares, duly endorsed by such Seller for transfer to the
Purchaser, and upon such Seller's receipt of its portion of the Purchase Price
in accordance with Article III of this Agreement, good and marketable title to
such Shares will pass to the Purchaser, free and clear of any Liens except for
Liens created or imposed by the Purchaser.
Section 6.09. Transactions With the Company. Except set forth in Schedule
6.09, (a) except for the Aircraft Transfer, such Seller has not entered into any
transaction or Contract with the Company within the past 12 months other than an
employment relationship, (b) no Contract between such Seller and the Company
will continue in effect after the Closing and (c) such Seller will not have any
interest in any portion of the Assets after the Closing.
ARTICLE VII
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Company and the Sellers as of
the date hereof and as of the Closing Date as follows:
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Section 7.01. Corporate Existence and Power. The Purchaser (a) is a
corporation duly incorporated, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (b) is duly qualified under the
laws of each jurisdiction in which qualification is required to own, lease or
license its properties or to carry on its business, and (c) has all necessary
corporate power and authority required to own its properties, to carry on its
business and to execute and deliver each of the Sale Documents and to consummate
the transactions contemplated thereby.
Section 7.02. Authorization; Binding Effect. The execution and delivery by
the Purchaser of each of the Sale Documents to which it is a party, the
performance by it of its obligations under such Sale Documents and the
consummation of the transactions contemplated thereby has been duly authorized
by all necessary corporate action. This Agreement has been duly executed and
delivered by the Purchaser, and each of the other Sale Documents to which the
Purchaser is or may become a party is, or when executed and delivered in
accordance with this Agreement will be, the legal, valid and binding obligations
of the Purchaser enforceable against it in accordance with its terms.
Section 7.03. Contravention. Neither the execution, delivery and
performance of the Sale Documents by the Purchaser nor the consummation of the
transactions contemplated thereby will (with or without notice or lapse of time
or both) (a) violate or breach any provision of the Purchaser's articles of
incorporation or bylaws, (b) violate or breach any Regulation by which the
Purchaser or any of its properties or assets may be bound or affected or (c)
assuming the receipt of all Consents set forth on Schedule 7.04 prior to the
Closing, breach or result in a default under any material Contract to which the
Purchaser is a party or by which the Purchaser or any of its properties or
assets may be bound or affected. Section 7.04. Consents. Except for the
Consents set forth on Schedule 7.04, all Consents have been obtained which are
required in connection with (a) the due execution, delivery and performance by
the Purchaser of the Sale Documents, and (b) the consummation of the
transactions contemplated by the Sale Documents.
Section 7.05. Litigation. There is no Action pending, or to the knowledge
of the Purchaser, threatened, against the Purchaser that involves any of the
transactions contemplated by the Sale Documents or any property owned, licensed,
leased or used by the Purchaser that, if determined adversely to the Purchaser,
would materially and adversely affect the ability of the Purchaser to perform
its obligations under any Sale Document.
Section 7.06. Compliance with Laws. The Purchaser is not in violation of
or default with respect to any Regulation applicable to it or its business,
properties or operations, which violation or default would materially and
adversely affect the ability of the Purchaser to perform its obligations under
the Sale Documents. On the Closing Date, the "ultimate parent entity" (as
defined in the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act) of the Purchaser will be in full
compliance with all of the provisions of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act.
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Section 7.07. Securities Representations. The Purchaser understands and
acknowledges that the sale of the Shares is not being registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws, on the grounds that such sale is exempt under the Securities
Act and such state securities laws. The Purchaser is acquiring the Shares
hereunder for investment, solely for the Purchaser's own account and not with a
view to, or for resale in connection with, the distribution or other disposition
thereof in violation of the Securities Act. The Purchaser is an "accredited
investor" as defined in Rule 501 promulgated under the Securities Act and has
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of an investment in the Shares and the
Company.
Section 7.08. Customer Acknowledgment. Notwithstanding any provision of the
Sale Documents to the contrary, without limiting the representation in the first
sentence of Section 5.16(c), the Purchaser expressly acknowledges and agrees
that (a) neither the Company nor any of the Sellers makes any representation or
warranty, express or implied, with respect to (i) the continuation, termination,
cancellation, modification or amendment by the Company's customers of any of the
Material Contracts or relationship with the Company's customers or (ii) the
ownership or right of the Company to use any of the customer's Equipment and (b)
the Purchaser will assume the risk, and neither the Company nor any of the
Sellers will have any liability with respect to (i) the termination,
cancellation, modification or amendment of any Material Contract or relationship
with any of the Company's customers, whether or not such customers have the
legal right to so terminate, modify, cancel or amend such Material Contracts or
(ii) the Company's loss of the right to use or operate any of the Company's
customer's Equipment.
ARTICLE VIII Covenants of the Company and the Sellers
Section 8.01. Conduct of Business Pending Closing. The Company and the
Sellers agree that, pending the Closing, the Sellers and the Company will use
their respective commercially reasonable efforts to, except for the Aircraft
Transfer (a) conduct their business in the ordinary course of business;
provided, however, that nothing in the Sale Documents shall limit or impair the
ability of the Company to repay the outstanding Debt described on Schedule
4.05(m) from available cash, provided such cash is generated in the ordinary
course of business, including, without limitation, all receipts, checks and
items in the Company's "lock-box" as of the Closing (whether or not such
receipts, checks or items have cleared), and such repayment shall not constitute
a breach of this Section 8.01, and (b) not engage in any practice, take any
action, fail to take any action or enter into any transaction that would
reasonably be expected to (i) cause any of the representations and warranties of
the Company or the Sellers contained in the Sale Documents to be materially
untrue, inaccurate or incorrect at any time, or (ii) result in any of the
conditions set forth in Section 4.05 not being satisfied on the Termination
Date. Without limiting the generality of the foregoing, except (i) as set forth
on Schedule 8.01, or (ii) as otherwise expressly provided in or contemplated by
the Sale Documents, during the period from the date of this Agreement to the
Closing Date, the Company shall not, and the Sellers shall not permit the
Company to, without the prior written consent of the Purchaser:
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(a) enter into any Material Contract or amend in any material manner any
existing Material Contract, except in the ordinary course of business,
(b) sell, lease, encumber or otherwise dispose of a material portion of the
Assets, except in the ordinary course of business,
(c) assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
Person,
(d) make any loans, advances or capital contributions to, or investments
in, any other Person,
(e) materially change any of the accounting principles or practices used by
it,
(f) make any Tax election that would affect any material Tax liability of
the Company or settle or compromise any material Tax liability,
(g) adopt any amendments to the Company's Certificate of Incorporation or
By-Laws,
(h) grant any stock-related, performance or similar awards or bonuses,
(i) enter into any new, or amend any existing, employment, severance,
consulting or salary continuation agreements with any of the Company' s
officers, directors or employees, earning more than $100,000 per year, or grant
any increases in the compensation or benefits payable to the Company's officers,
directors or employees, earning more than $100,000 per year,
(j) issue, sell, grant options or rights to purchase, pledge, or authorize
the issuance, sale, grant of options or rights to purchase or pledge any of the
Shares,
(k) acquire or redeem or amend the terms of any the Company Common Stock,
(l) enter into, amend, or extend any collective bargaining or other labor
agreement,
(m) accelerate the collection of Accounts Receivable, or slow down the
payment of accounts payable, in each case, outside the ordinary course of the
Company's business, or outside the stated terms (if any) for payment of such
Accounts Receivable or accounts payable, or
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(n) make or pay any dividend or other distribution in respect of any of the
Company's capital stock.
Section 8.02. Access to Information; Cooperation.
(a) Access to Information. The Company and the Sellers understand and
acknowledge that the Purchaser requires reasonable access to the Company, the
Assets and the Business, from the date of this Agreement through the Closing
Date. During the period from the date of this Agreement through the Closing
Date, the Company and the Sellers agree that the Company will give the Purchaser
and its authorized representatives reasonable access during regular business
hours to all properties, facilities, personnel, Material Contracts, books and
records of the Company; provided, however, that, without limiting the
Purchaser's right of access to the Company's buildings, the Purchaser shall not
undertake any physical, intrusive or sub-surface investigations of the
structures, Real Property or Leaseholds and shall not unreasonably interfere
with the Company's operations.
(b) Cooperation. During the period from the date of this Agreement through
the Closing Date, the Company and the Sellers agree that the Sellers and the
Company will cause their respective directors, officers, employees, accountants,
counsel (without waiving any privilege), consultants and other representatives
to reasonably cooperate with the Purchaser in carrying out the transactions
contemplated by the Sale Documents.
Section 8.03. Updating of Schedules.
(a) Delivery of Updates. The Company agrees that it will promptly notify
the Purchaser of (i) any matter that existed as of the date of this Agreement
and should have been set forth or described in the Schedules required under
Article V or VI hereof and (ii) any matter hereafter arising which, if existing
on the date hereof, would have been required to be set forth or described in the
Schedules required under Article V or VI hereof, in each case, by delivery of
appropriate updates to all such Schedules to the Purchaser on or before the
Closing Date.
(b) Effects of Updates. In the event that such updates to the Schedules set
forth any items or changes which would, in the good faith reasonable discretion
of the Purchaser, cause the Company or the Purchaser to suffer or incur a
liability, net of any offsetting benefit to the Company or the Purchaser (which
was not previously disclosed to the Purchaser) (a "New Liability"), the parties
will agree on the value of such New Liability as set forth in clause (c) below.
(c) Determination of Value of New Liability. For a period of five business
days following the receipt by the Purchaser of a Schedule update setting forth a
New Liability, regardless of whether such New Liability is alleged to be greater
or less than $1,000,000, the Purchaser and the Sellers shall negotiate
reasonably in good faith to reach an agreement on the value of such New
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Liability. In the event that the Purchaser and the Sellers are unable to reach
such an agreement within such five business day period, the Purchaser's
Accountants and the Sellers' Accountants will attempt to reach such an
agreement, and any resolution by them will be final, binding and conclusive on
the parties hereto. If the Purchaser's Accountants and the Sellers' Accountants
are unable to reach a resolution with such effect within five business days
after receipt of such written notice of dispute, the Purchaser's Accountants and
the Seller's Accountants will submit the issue to an accounting firm of
international reputation which is independent of the Company, the Purchaser and
the Sellers (the "Independent Accounting Firm") which will, within five business
days after such submission, determine and report to the Purchaser and the
Sellers the value of such New Liability, and such report will be final, binding
and conclusive on the parties hereto. The fees and disbursements of the
Independent Accounting Firm will be split equally between the Seller and the
Purchaser. In no event shall the final value of the New Liability be greater
than the value originally alleged by the Purchaser.
(d) Payment of Value of New Liability. In the event that a New Liability
shall have a value (as finally determined in accordance with the provisions of
clause (c) above) (i) in excess of $1,000,000, such updates to the Schedules
will not be effective for determining the satisfaction of the conditions to
closing set forth in Article IV, or (ii) less than $1,000,000, such updates to
the Schedules shall be effective for purposes of determining the satisfaction of
the conditions to closing set forth in Article IV, the aggregate Purchase Price
shall be reduced by the amount of such New Liability and within five business
days of the final resolution of the value of the New Liability, the Sellers
shall pay the amount of such New Liability to the Purchaser.
(e) Effect of Provision. Notwithstanding the provisions of this Section
8.03 to the contrary, unless a New Liability has a value in excess of
$1,000,000, in no event shall any of the provisions of this Section 8.03 be
construed to permit the parties to delay or cancel the Closing, it being
understood that the dispute resolution mechanics and payment of any adjustment
to the Purchase Price are contemplated to take place either simultaneously with,
or after, the Closing.
Section 8.04. Resignations. On the Closing Date, the Sellers shall
cause to be delivered to the Purchaser duly signed resignations, effective upon
the Closing, of all of the directors of the Company designated in writing by the
Purchaser at least five business days prior to the Closing.
Section 8.05. Shareholder Approval. Each of the Shareholders agrees to vote
all of their shares of Company Stock in favor of the Sale Documents and the
transactions contemplated thereby.
Section 8.06. Appointment of Sellers' Representative. The Sellers hereby
appoint JJM, LLC as the Sellers' Representative (the "Sellers' Representative")
to act as the agent of the Shareholders for the purpose of the Sale Documents
and the transactions contemplated herein and therein, including, without
limitation, receiving and allocating the payments made pursuant to the Sale
Documents. The Sellers' Representative hereby accepts such appointment. The
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Shareholders agree that the Sellers' Representative shall have the power and
authority to make decisions on behalf of all of the Shareholders and that the
Purchaser shall have the right to rely on such authority of, and decisions made
by, the Sellers' Representative with respect to the Sale Documents and the
transactions contemplated thereby. Each of the Sellers, severally, and not
jointly and severally, agrees to indemnify and hold the Sellers' Representative
harmless from and against any and all Losses incurred by the Sellers'
Representative arising out of or relating to any action taken or omitted to be
taken by the Sellers' Representative, except to the extent that any such Losses
result from the bad faith, gross negligence or willful misconduct of the
Sellers' Representative.
Section 8.07. Non-Competition.
(a) Non-Compete. Each of ▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇, Gantec II, LLC and JJM, LLC
agree that they will not, either directly or indirectly, including, without
limitation, through any Affiliate controlled by ▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇ (the
"Restricted Parties"), for a period of two years following the Closing Date (i)
engage, individually, or as an officer, director, employee, agent, consultant,
shareholder, partner, manager, investor, lender or in any other capacity, in any
Competitive Business, or (ii) directly or indirectly solicit, bid for or accept
any business from a customer or potential customer with respect to the
manufacture or sale of products that would constitute a Competitive Business.
(b) Competitive Business. For purposes of this Agreement, the term
"Competitive Business" means a business whose products or activities compete
with the products or activities of the Company consisting of the diecasting of
non-ferrous products for the automotive industry in North America.
Notwithstanding the foregoing, the parties agree that the following activities
will not, for purposes of this Agreement, be deemed to be a Competitive
Business:
(i) engaging in an activity that produces (x) aluminum products
that, because of their size or other characteristics, are required to be
manufactured using diecasting machines having a capacity in excess of 1,800
tons, or (y) products that are produced by a process other than high
pressure diecasting,
(ii) engaging in the business of machining parts in the automotive or
other industries,
(iii) engaging in an activity that produces products that would
otherwise constitute a Competitive Business if such products are further
used by the Restricted Parties internally in operations owned by the
Restricted Parties as a part of a larger assembly, which assembly is not a
product the sale of which would constitute a Competitive Business,
provided, that this exception will not apply to internal use which
constitutes only machining of raw and unprocessed diecast products, or
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(iv) engaging in an activity that results from the acquisition
by any of the Restricted Parties of an ongoing business, a part of
which would otherwise constitute a Competitive Business, provided that
(x) the part that would otherwise be a Competitive Business does not
constitute more than 15% of the total annual sales of such acquired
business or more than $35,000,000 in total annual sales volume of such
acquired business, (y) such part of the acquired business that would
otherwise constitute a Competitive Business is divested to an unrelated
purchaser within 120 days of its acquisition by the Restricted Parties,
and (z) the Restricted Parties shall not, pending such divestiture,
solicit or accept new business for such part of the acquired business
that would otherwise constitute a Competitive Business.
(c) Non-Solicitation. Each of the Restricted Parties agrees that they
will not, for a period of two years following the Closing Date solicit, hire,
attempt to solicit, or endeavor to cause any current (as of the Closing Date)
member of the management of the Company to leave his or her employment or induce
or attempt to induce any current (as of the Closing Date) member of management
of the Company to breach his or her employment agreement with the Company;
provided, however, that notwithstanding the foregoing provision, the Restricted
Parties shall not be prohibited from, and shall be entitled to:
(i) hire ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇") and/or ▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇"), provided that if a Restricted Party shall hire ▇▇▇▇▇▇▇,
such Restricted Party shall be responsible for, and agrees to hold the
Company and the Purchaser harmless from, any and all severance
obligations to ▇▇▇▇▇▇▇ that the Company would otherwise be responsible
for, without application to the Basket Amount, and
(ii) hire any member of management of the Company whose
employment with the Company is terminated by the Company or the
Purchaser after the Closing.
(d) Remedies for Breach. Each of Gantec II, JJM, LLC and ▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇ acknowledges and agrees that money damages may not be an adequate
remedy for any breach of the provisions of this Section 8.07 by a Restricted
Party. Therefore, in the event of any breach by a Restricted Party of any of the
provisions of this Section 8.07, the Purchaser may apply to any court of
competent jurisdiction at law or equity, for specific performance or injunctive
relief or both or other equitable relief in order to enforce violations of the
provisions of this Section 8.07.
ARTICLE IX
Covenants of the Purchaser
Section 9.01. Indemnification. The Purchaser will cause the Company to
keep in effect the provisions in its certificate of incorporation and by-laws
with respect to indemnification no
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less favorable to the directors, officers and other agents of the Company than
those contained therein on the date of this Agreement, which provisions shall
not be amended, repealed or otherwise modified for a period of at least six
years from the Closing Date in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Closing Date were
directors, officers or other agents of the Company in respect of actions or
omissions at or prior to the Closing, including, without limitation, the
transactions contemplated by the Sale Documents.
Section 9.02. Continuation of Employee Benefit Plans. The Purchaser
will cause the Company to maintain, for a period of at least one year following
the Closing Date, Benefit Plans that will provide substantially similar benefits
to the employees of the Company (as of the Closing Date) as the employee
benefits provided to such employees pursuant to the Company's Benefit Plans as
in effect in the date of this Agreement; provided, however, that the Purchaser
shall not be required to continue (a) the Company's Executive Life Insurance
Plan, except with respect to employees whose existing employment agreements
provide for such a benefit, or (b) the Company's Deferred Compensation Plan.
Solely to the extent that such liabilities and obligations are adequately
reserved for in the Financial Information, the Purchaser will cause the Company
to honor, and make the payments in respect of, the Company's pre-existing bonus
and incentive plans for the benefit of the Company's officers and employees for
the fiscal year ended December 31, 1999, such bonuses and incentives to be
calculated excluding the effects of the transactions contemplated by the Sale
Documents; provided, however, that to the extent that an employee of the Company
is terminated prior to the date on which such bonuses are actually paid, such
employee will be entitled to receive a pro rata portion of such bonus
(calculated based on the number of days of the year that have elapsed up to
December 31, 1999).
Section 9.03. Financing. The Purchaser expressly acknowledges and
agrees that (a) the Purchaser's obligation to consummate the transactions
contemplated by the Sale Documents is not subject to the Purchaser's receipt of
financing, (b) it is not a condition to the Purchaser's obligation to consummate
the transactions contemplated by the Sale Documents that the Purchaser obtain
any financing and (c) the Purchaser shall be liable to the Sellers, as provided
in Section 11.02, if the transactions contemplated by the Sale Documents are not
consummated by the Termination Date due to the Purchaser's failure to obtain
financing or inability to pay the Purchase Price at the Closing. The Purchaser
agrees to keep the Sellers informed from time to time of the status of the
Purchaser's financing and to provide the Sellers with copies of any commitment
letters received by the Purchaser from its Lenders.
ARTICLE X
Covenants of the Company, the Sellers and the Purchaser
Section 10.01. Disclosures. The Company, the Sellers and the Purchaser
agree that, except as required by applicable law, the Sellers and the Company
will not, nor will any director, officer, employee or other representative of
the Company or the Sellers, nor will the Purchaser or
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any director, officer, employee or other representative of the Purchaser,
without the prior written consent of the other parties hereto, make (a) any
press release or any similar public announcement concerning the transactions
contemplated by the Sale Documents, or (b) any communication to any of the
Company's suppliers, lenders, creditors, distributors, employees, customers or
others having business or financial relationships with the Company or any other
public statement, pertaining to the Sale Documents or the transactions
contemplated thereby. In the event that either party is required by applicable
law to make a public announcement or disclosure with respect to the transactions
contemplated by the Sale Documents, such disclosing party will use its best
efforts to give the other party hereto prior notice of such announcement or
disclosure, and to the extent practicable, such other party shall have the right
to consult with the disclosing party with respect to the contents of such
announcement or disclosure. The Purchaser shall not contact or communicate with
any of the Company's customers without the prior written consent of the Company.
Section 10.02. Confidentiality. The Company, the Sellers and the
Purchaser agree that, except as required by applicable law, the Sellers, the
Company will, and the Purchaser will, hold, and each of them will cause their
respective directors, officers, employees, accountants, counsel, financial
advisors and other representatives and Affiliates to hold, any non-public
information supplied by the other party hereto in confidence using the same
safeguards to protect such confidential information as such party has
established to protect its own confidential information. In the event of the
termination of this Agreement for any reason, the Company, the Sellers and the
Purchaser each agree to promptly return or destroy any and all such information
provided by any other party and all copies thereof as well as any analyses,
compilations, extracts, forecasts or other studies prepared by either the
Company or the Purchaser which contain or otherwise reflect such confidential
information or any part thereof.
Section 10.03. Disclosure; Materiality; No Other Representations or
Warranties.
(a) Disclosure. Any item set forth on a schedule to any of the Sale
Documents shall be considered an exception to all of the representations and
warranties even if not specifically cross-referenced or referred to in such
schedule.
(b) Materiality. Except to the extent that the representation and
warranty to which a schedule to any of the Sale Documents relates so provides,
the mere inclusion of an item on such a schedule as an exception to a
representation or warranty shall not be deemed an admission by the Company or
the Sellers that such an item represents a material exception or fact, event or
circumstance or that such item is reasonably likely to cause a Material Adverse
Effect.
(c) No Other Representations or Warranties. The Sellers, the Company
and the Purchaser further agree that the representations and warranties
contained in the Sale Documents are the only representations and warranties made
by the respective parties and supercede and
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replace any and all other representations or warranties of the respective
parties, whether written or oral, whenever or however made.
Section 10.04. ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Filing.
(a) Filing. Each of the Company, the Sellers and the Purchaser, will
use their respective commercially reasonable efforts to comply with any
applicable requirements under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act relating to filing and
furnishing information to the Department of Justice and the Federal Trade
Commission, including, without limitation, (i) assisting in the preparation and
filing of the "Antitrust Improvements Act Notification and Report Form for
Certain Mergers and Acquisitions" and taking all other action required by 16
C.F.R. Parts 801-803 (or any successor form or Regulation), (ii) complying with
any additional request for documents or information made by the Department of
Justice or the Federal Trade Commission or by a court and (iii) causing all
Affiliates of the "ultimate parent entity" of the party within the meaning of
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act to cooperate and assist in the filing and compliance.
(b) Right To Terminate. In the event that the consummation of the
transactions contemplated by the Sale Documents is challenged (which for
purposes of this Agreement does not include a mere additional request for
documents or information) by the Department of Justice or the Federal Trade
Commission or any other Governmental Body, then the Purchaser or the Sellers
will have the right to terminate this Agreement immediately upon giving notice
of such termination to the other parties hereto.
Section 10.05. Tax Returns.
(a) Through the Closing Date. (i) The Company will, and the
Shareholders will cause the Company to, timely file (taking into account any
extensions received from the relevant Tax authorities) all Tax Returns required
by applicable Regulations to be filed by the Company on or prior to the Closing
Date or with respect to Tax periods ending on or prior to the Closing Date, (ii)
such Tax Returns shall be true, correct and complete in all material respects
and (iii) all Taxes indicated as due and payable on such Tax Returns shall be
paid or will be paid by the Company as and when required by applicable
Regulations. Such Tax Returns shall be prepared on a basis consistent with those
prepared for prior taxable periods unless a different treatment of any item is
required by an intervening change in law, and copies of such Tax Returns shall
be provided to the Purchaser not less than five business days prior to filing.
(b) After the Closing Date. Except for Tax Returns with respect to Tax
periods ending on or prior to the Closing Date, the Purchaser shall cause the
Company to timely file (taking into account any extensions received from the
relevant Tax authorities) all Tax Returns required by applicable Regulations to
be filed by the Company after the Closing Date, it being understood that all
Taxes indicated as due and payable on such returns shall be the responsibility
of the Company (and not the Sellers), except for any and all Taxes imposed on
the Company in respect of its
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income, business, property or operations for which the Company may otherwise be
liable for any period ending prior to the Closing Date which amounts shall be
the responsibility of the Sellers pursuant to Section 10.05(a) and which the
Sellers shall pay (as and when required by law (or reimburse to Purchaser)).
(c) Sharing of Certain Pre-Closing Tax Benefits.
(i) Payment of Certain Pre-Closing Tax Benefits. The parties hereto
agree that all Special Compensation Payments (as defined below) attributable to
the transactions contemplated by the Sale Documents shall be paid by the Company
on the Closing Date and deducted by the Company on its federal income Tax Return
for the period ending on or prior to the Closing Date. In addition, the Company
and the Purchaser agree that such amounts shall be deducted for all appropriate
state and local income Tax purposes in the relevant state and local income Tax
Returns for the taxable period of the Company which includes the Closing Date.
The Purchaser agrees to pay to the Sellers, within five business days
after (x) the Sellers and the Company file the Company's federal income Tax
Return for the period ending on the Closing Date and (y) the filing of a state
or local Tax Return which includes deductions relating to the Special
Compensation Payments, an amount equal to one-half of the Federal Pre-Closing
Tax Benefit (as defined below) or the State Pre-Closing Tax Benefit (as defined
below), as the case may be, attributable to such Tax Returns (the aggregate
amount of such payments being the "Net Tax Benefit").
The Purchaser agrees to use its best efforts to cause the Company to
receive the Pre-Closing Tax Benefits and agrees (except as may be required by
the Code or applicable Treasury Regulations) not to take any action (or position
on any income Tax Return or otherwise) which might impair or reduce the amount
of the Pre-Closing Tax Benefits available to the Company.
For purposes of this Agreement, the term "Special Compensation
Payments" means all payments to be made by, or on behalf of, the Company (a) in
order to cancel the Options set forth on Schedule 5.05(a), and (b) to pay the
SARs listed on Schedule 5.12(c)(vi).
(ii) Calculation of Pre-Closing Tax Benefits.
(A) Federal Pre-Closing Tax Benefit. Within 30 days following the
Closing Date, the Sellers shall prepare and deliver to the Purchaser:
(I) a federal income Tax Return for the Company for the period
ending as of the Closing Date and a copy of the Company's federal
income Tax Return for the period ended December 31, 1998, which Tax
Returns shall not include any deduction or adjustment for the Special
Compensation Payments (the "Federal Pre-Compensation Tax Returns"),
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(II) a federal income Tax Return for the Company for the
period ending as of the Closing Date and an amended federal income Tax
Return for the Company for the period ended December 31, 1998, which
Tax Returns will include a deduction and an adjustment (in the case of
the 1998 Tax Return) for the Special Compensation Payments (the
"Federal After Compensation Tax Returns"), and
(III) a statement setting forth the calculation of the Federal
Pre-Closing Tax Benefit (as defined below).
The Purchaser shall have a period of 15 days following the receipt of
such Tax Returns from the Sellers to reasonably object to the calculation of the
Federal Pre-Closing Tax Benefit. If the Purchaser shall reasonably object to the
calculation of the Federal Pre-Closing Tax Benefit, such dispute will be
resolved in accordance with the provisions of Section 10.05(c)(iii) below.
For purposes of this Agreement, the term "Federal Pre-Closing Income
Tax Benefit" means an amount equal to the excess, if any of (a) the aggregate
amount of federal income Taxes paid and payable by the Company as set forth on
the Federal Pre-Compensation Tax Returns, over (b) the aggregate amount of
federal income Taxes payable by the Company as set forth on the Federal After
Compensation Tax Returns (taking into account the refund payable to the Company
due to the overpayment of Taxes by the Company for the year ended December 31,
1998).
(B) State and Local Pre-Closing Tax Benefit. At least 45 days prior to
the date on which the Company or the Purchaser shall be required to file a state
or local income Tax Return covering the period including the Closing Date, the
Purchaser shall prepare and deliver to the Sellers' Representative:
(I) such state or local income Tax Return for the Company for
such period and a copy of the Company's state or local income Tax
Return (for the appropriate state or local jurisdiction) for the period
ended December 31, 1998, which Tax Returns shall not include any
deduction or adjustment for the Special Compensation Payments (the
"State Pre-Compensation Tax Returns"),
(II) such state or local income Tax Return for the Company for
such period and an amended state or local income Tax Return (for the
appropriate state or local jurisdiction) for the Company for the period
ended December 31, 1998, which Tax Returns will include a deduction and
an adjustment (in the case of the 1998 Tax Return) for the Special
Compensation Payments (the "State After Compensation Tax Returns"), and
(III) a statement setting forth the calculation of the State
Pre-Closing Tax Benefit with respect to such state or local authority
(as defined below).
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The Sellers' Representative shall have a period of 15 days following
the receipt of such Tax Returns from the Purchaser to reasonably object to the
calculation of the State Pre-Closing Tax Benefit. If the Sellers' Representative
shall reasonably object to the calculation of such State Pre-Closing Tax
Benefit, such dispute will be resolved in accordance with the provisions of
Section 10.05(c)(iii) below.
For purposes of this Agreement, the term "State Pre-Closing Income Tax
Benefit" with respect to each such state or local income Tax Return means an
amount equal to the excess, if any of (a) the aggregate amount of state or
local, as the case may be, income Taxes paid and payable by the Company as set
forth on such State Pre-Compensation Tax Returns, over (b) the aggregate amount
of state or local, as the case may be, income Taxes payable by the Company as
set forth on such State After Compensation Tax Returns (taking into account the
refund payable to the Company due to the overpayment of Taxes by the Company for
the year ended December 31, 1998); provided, however, that if the Company is not
permitted under applicable state or local income Tax laws to carry back any
losses resulting from the payment of such Special Compensation Payments, the
Purchaser shall, if permitted under applicable state or local income Tax law,
carry forward such loss to the next available period and determine the State
Pre-Closing Income Tax Benefit in accordance with the provisions of clause (B)
above.
(iii) Dispute Resolution. In the event that the Purchaser shall object
to the calculation of the Federal Pre-Closing Tax Benefit, or the Sellers'
Representative shall object to the calculation of any State Pre-Closing Tax
Benefit, in each case as provided above, the Purchaser and the Sellers'
Representative shall negotiate reasonably in good faith to reach an agreement on
the amount of such Federal Pre-Closing Tax Benefit or State Pre-Closing Tax
Benefit, as the case may be. In the event that the Purchaser and the Sellers'
Representative are unable to reach such an agreement within such five business
day period, the Purchaser's Accountants and the Sellers' Accountants will
attempt to reach such an agreement, and any resolution by them will be final,
binding and conclusive on the parties hereto. If the Purchaser's Accountants and
the Sellers' Accountants are unable to reach a resolution with such effect
within five business days after receipt of such written notice of dispute, the
Purchaser's Accountants and the Seller's Accountants will submit the issue to an
accounting firm of international reputation which is independent of the Company,
the Purchaser and the Sellers (the "Independent Accounting Firm") which will,
within twenty business days after such submission, determine and report to the
Purchaser and the Sellers the amount of such Federal Pre-Closing Tax Benefit or
State Pre-Closing Tax Benefit, as the case may be, and such report will be
final, binding and conclusive on the parties hereto. The fees and disbursements
of the Independent Accounting Firm will be split equally between the Sellers'
Representative and the Purchaser.
(iv) Indemnification. In the event that the Purchaser shall actually
pay the Net Tax Benefit to the Sellers, and it shall be finally determined by a
court of competent jurisdiction that the Company was not entitled to receive all
or a portion of the Pre-Closing Tax Benefit, the Sellers agree to indemnify and
hold the Purchaser Indemnified Persons harmless (on an after tax
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basis) from any and all Losses that may be incurred by the Purchaser Indemnified
Persons due to the payment of the Net Tax Benefit to the Sellers. Such right to
indemnification shall survive for a period of six months after the termination
of the statute of limitations on any Regulation applicable to the Company's Tax
Returns for the period ended on or prior to the Closing Date.
Section 10.06. Cooperation on Tax Matters. The Sellers and the
Purchaser shall reasonably cooperate with and shall cause their officers,
employees, agents, accountants and representatives to cooperate with each other
as necessary in connection with preparing and filing all Tax Returns, reports
and forms relating to Taxes with respect to the Company for all Tax periods with
respect to the Company, including maintaining and making available to the
Sellers and the Purchaser and their officers, employees, agents, accountants and
representatives all records reasonably necessary in conjunction with any audit
relative to such Taxes and in resolving all disputes and proceedings with
respect to any such Tax periods.
Section 10.07. Post-Closing Cooperation.
(a) Access After the Closing. From and after the Closing, the Purchaser
shall cause the Company to provide the Sellers with reasonable access to the
Company, the Assets and its books and records for any reasonable business
purpose relating to the Sellers' interest in and involvement with the Company.
(b) Cooperation. From and after the Closing, the Purchaser, the Sellers
and the Company each agree to furnish or cause to be furnished to one another,
upon request, as promptly as practicable, such information and assistance
relating to the Assets, the Business and the Company's books and records as is
reasonably necessary for the filing of all Tax returns, and making of any
election related to Taxes, the preparation for any audit by any taxing
authority, and the prosecution or defense of any Action related to Taxes or the
operation of the Business prior to the Closing Date. From and after the Closing,
the Purchaser, the Sellers and the Company will cooperate with each other in the
conduct of any audit or other Action related to Taxes or the operation of the
Business prior to the Closing and each shall execute and deliver such other
documents as are necessary to carry out the intent of this Section. The Sellers
will use their commercially reasonable efforts to cause the Company's
Accountants to consent to the public filing of the Company's audited financial
statements by the Purchaser in its public filings. The Purchaser will be
responsible for and shall pay, any fee required by the Company's Accountants in
connection with the granting of such consent and any modifications or procedures
undertaken by the Sellers' Accountants in connection with the preparation of the
necessary financials in connection therewith.
Section 10.08. Taxes and Fees. The Sellers, on the one hand, and the
Purchaser, on the other hand, will each be responsible for and will duly and
timely pay one half of any (a) Taxes, including, without limitation, stock
transfer Taxes, sales and use Taxes and real property gains and transfer Taxes
and (b) filing fees, including, without limitation the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ filing
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fee, recording charges, registration costs and expenses, in each case, directly
or indirectly attributable to or arising out of the conveyance, transfer and
assigning of the Shares to the Purchaser pursuant to the Sale Documents. Except
as otherwise required by law, the Purchaser will be responsible for filing any
Tax Returns and complying with any procedures required in connection with all
Taxes resulting from such transfer.
ARTICLE XI
Termination
Section 11.01. Termination. The obligations of the parties under the
Sale Documents may be terminated at any time prior to the Closing by:
(a) the mutual consent of the Sellers' Representative and the
Purchaser;
(b) the Sellers' Representative, if the conditions set forth
in Section 4.04 shall not have been satisfied by December 21, 1999,
unless such date shall be extended by mutual agreement of the Sellers'
Representative and the Purchaser (such date being the "Termination
Date");
(c) the Purchaser, if the conditions set forth in Section 4.05
shall not have been satisfied by the Termination Date; or
(d) the Purchaser or the Sellers, under Section 10.04(b).
Section 11.02. Expenses. Each of the parties hereto will bear its own
legal and accounting charges and other expenses arising from the negotiation,
preparation and execution of the Sale Documents; provided, however, that if the
Sellers' Representative shall terminate this Agreement pursuant to Section
11.01(b) due to (a) the Purchaser's failure to obtain sufficient financing to
consummate the transactions contemplated by the Sale Documents, or (b) inability
to pay the Purchase Price at the Closing, in each case on or prior to the
Termination Date, the Purchaser shall be liable for, and shall pay to the
Sellers immediately following such termination (but in no event later than two
business days following the Termination Date) an amount in cash equal to
$2,037,037.04. The parties agree that such payment shall constitute liquidated
and stipulated damages. As acknowledged by the parties, the full extent of the
Sellers' and the Company's damages in the event of such a termination can not be
accurately anticipated or determined, and the amount of liquidated damages does
not constitute a penalty.
Section 11.03. Effect of Termination. In the event of a termination of
this Agreement under Section 11.01, this Agreement will become void and of no
further force or effect, except for the provisions of (a) Section 10.01 relating
to public disclosures, (b) 10.02 relating to obligations to return or destroy
and keep certain information confidential, (c) Section 11.02 relating to the
payment of expenses, and (d) this Section 11.03. Notwithstanding any provision
of the Sale Documents to the contrary, neither the termination of this
Agreement, not anything
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contained in this Section 11.03 will be deemed to release any party from any
liability for breach by any such party of the terms and provisions of the Sale
Document or to impair the right of any party to compel specific performance by
the other parties of their obligations under the Sale Documents.
ARTICLE XII
Indemnification
Section 12.01. Indemnification. (a) Indemnification and Release by the
Company and the Sellers. Each of the Company (only if the Closing does not
occur) and the Sellers, jointly and severally (subject to the provisions of
Section 12.04), will indemnify and defend the Purchaser and its Affiliates and
each of their respective shareholders, partners, members, managers, directors,
officers, employees, agents and Affiliates (collectively, the "Purchaser
Indemnified Persons") against and hold each Purchaser Indemnified Person
harmless from any and all liabilities, obligations, losses, damages, Actions,
judgments, costs, expenses or claims, including, without limitation, reasonable
attorneys' fees and expenses (collectively, "Losses"), that the Purchaser
Indemnified Persons suffer or sustain arising out of or due to:
(i) any inaccuracy or breach of any of the representations
and warranties of the Company or any Seller contained in any Sale
Document or in any certificate delivered thereunder;
(ii) the nonfulfillment or breach of any covenant,
undertaking, agreement or other obligation of the Company or any Seller
contained in any Sale Document or in any certificate delivered
thereunder; and
(iii) the Company's liability (net of any related Tax benefit
or deduction to the Company or the Purchaser), if any, with respect to
the Michigan Single Business Tax for the fiscal years ended December
31, 1997 and December 31, 1998 or any other state Taxes payable by the
Company with respect to the period prior to the Closing Date.
(b) Indemnification and Release by the Purchaser. The Purchaser will
indemnify and defend the Company (only if the Closing does not occur) and the
Sellers and each of their respective shareholders, partners, members, managers,
directors, officers, employees, agents and Affiliates (collectively, the "Seller
Indemnified Persons") against and hold each Seller Indemnified Person harmless
from any and all Losses that the Seller Indemnified Persons suffer or incur
arising out of or due to:
(i) any inaccuracy or breach of any of the representations
and warranties of the Purchaser contained in any Sale Document or in
any certificate delivered thereunder; and
(ii) the nonfulfillment or breach of any covenant,
undertaking, agreement or other obligation of the Purchaser contained
in any Sale Document or in any certificate delivered thereunder.
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Section 12.02. Notice and Opportunity to Defend.
(a) Indemnification Mechanics. If there occurs an event which a party
hereto asserts is an indemnifiable event pursuant to Section 12.01 hereof, the
party seeking indemnification (the "Indemnitee") will promptly notify the party
obligated to provide indemnification (the "Indemnitor"). If such event involves
a claim or Loss by a Person or entity other than a Purchaser Indemnified Person
or a Seller Indemnified Person (a "Third Party Claim"), the Indemnitee will give
the Indemnitor written notice of such claim or Loss, specifying the amount
thereof, if any. Delay or failure to so notify the Indemnitor will only relieve
the Indemnitor of its obligations to the extent, if at all, that it is actually
prejudiced by reason of such delay or failure. The Indemnitor will have a period
of 20 calendar days in which to respond thereto. If the Indemnitor accepts
responsibility, then the Indemnitor will be obligated to compromise or defend,
at its own expense, such matter, and the Indemnitor will provide the Indemnitee
with such assurances as may be reasonably required by the Indemnitee to assure
that the Indemnitor will assume and be responsible for the entire liability at
issue. If the Indemnitor fails to assume the defense of such matter within such
20 calendar day period or does not respond within such 20 calendar day period,
the Indemnitee against which such matter has been asserted will (upon delivering
notice to such effect to the Indemnitor) have the right to undertake, at the
Indemnitor's cost and expense, the defense, compromise or settlement of such
matter on behalf of the Indemnitee. In any event, the Indemnitee will have the
right to participate at its own expense in the defense of such asserted
liability; provided, however, that the Indemnitor will pay the expenses of such
defense if the Indemnitee is advised by counsel in writing that there are one or
more legal defenses available to the Indemnitee that are different from or
additional to those available to the Indemnitor (in which case, if the
Indemnitee notifies the Indemnitor in writing, the Indemnitor will not have the
right to assume the defense of such asserted liability on behalf of the
Indemnitee). The Indemnitor will not be liable for any settlement of any Action
effected without its written consent, but if settled with its written consent or
if there be a final judgment for the plaintiff in any such Action, the
Indemnitor agrees to indemnify and hold harmless the Indemnitee from and against
any Loss by reason of such settlement or judgment.
(b) Non-Third Party Claims. In the event any Indemnitee should have a
claim against the Indemnitor under Section 12.01 that does not involve a Third
Party Claim being asserted against or sought to be collected from such
Indemnitee, the Indemnitee will deliver written notice of such claim with
reasonable promptness to the Indemnitor. Delay or failure to so notify the
Indemnitor will only relieve the Indemnitor of its obligations to the extent, if
at all, that it is actually prejudiced by reason of such delay or failure. If
the Indemnitor does not notify the Indemnitee in writing within 60 calendar days
following its receipt of such notice that the Indemnitor disputes its liability
to the Indemnitee under Section 12.01 (which dispute may be as to the validity
of such claim, the amount thereof or both), such claim specified by the
Indemnitee in such notice will conclusively be deemed a liability of the
Indemnitor under Section 12.01 and the Indemnitor will pay the amount of such
liability to the Indemnitee on demand or, in the case of any notice in which the
amount of the claim (or any portion thereof) is estimated, on such later date
when the amount of such claim (or such portion thereof) becomes finally
determined. If the Indemnitor has
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timely disputed its liability with respect to such claim, as provided above, the
Indemnitor and the Indemnitee will proceed in good faith to negotiate a
resolution of such dispute and, if not resolved through negotiations, such
dispute will be resolved by litigation in an appropriate court of competent
jurisdiction.
(c) Contribution. If the indemnification provided for in this Article
XII is prohibited under applicable law to an Indemnitee (other than by reason of
exceptions provided in this Section) then the Indemnitor, in lieu of
indemnifying the Indemnitee, will contribute to the amount paid or payable by
the Indemnitee as a result of the Losses in such proportion as is appropriate to
reflect the relative fault of the Indemnitor on the one hand and of the
Indemnitee on the other in connection with the events or circumstances which
resulted in the Losses as well as any other relevant equitable considerations.
The relative fault of the Indemnitor on the one hand and of the Indemnitee on
the other will be determined by reference to, among other things, those Persons'
relative intent, knowledge, access to information and opportunity to correct or
prevent the events or circumstances resulting in the Losses. The amount paid or
payable by a Person as a result of the Losses will include any legal or other
fees or expenses reasonably incurred by such Person in connection with
investigating or defending any Action. " \l 2
Section 12.03. Survival of Indemnification. The representations,
warranties, covenants and agreements of the parties contained in the Sale
Documents (except for the provisions of Articles II or III which shall survive
for an unlimited period of time) or in any document delivered pursuant thereto
and the rights to indemnification under this Agreement with respect thereto will
survive the Closing Date and will remain in full force and effect thereafter for
a period of 18 months after the Closing Date and will be effective with respect
to any inaccuracy therein or breach thereof, notice of which has been given
within such 18 month period; provided, however, that:
(a) the representations and warranties set forth in Section
5.08 (the "Tax Representations") and the rights to indemnification
under Section 12.01(a)(i) with respect thereto will survive the Closing
and will remain in full force and effect thereafter for a period ending
six months after the termination of the statute of limitations on any
Regulation applicable to the matters covered in such Tax
Representations, and will be effective with respect to any inaccuracy
therein or breach thereof, notice of which has been given to the
Sellers within such period;
(b) the representations and warranties set forth in Section
5.21 and the rights to indemnification under Section 12.01(a)(i) with
respect thereto will survive the Closing Date and will remain in full
force and effect thereafter for a period of four years after the
Closing Date and will be effective with respect to any inaccuracy
therein or breach thereof, notice of which has been given to the
Sellers within such four year period; and
(c) the representations and warranties set forth in Sections
5.01, 5.02, 5.05(a) and (b), 6.01, 6.02, 6.07 and 6.08 and the rights
to indemnification under Section 12.01(a)(i)
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with respect thereto will survive the Closing and will remain in full
force and effect thereafter for an unlimited period of time after the
Closing Date.
Section 12.04. Baskets; Limitation on Liability; Allocation of
Liability Among the Sellers.
(a) Basket. Notwithstanding any provision of the Sale Documents to the
contrary, the Purchaser Indemnified Persons and the Seller Indemnified Persons
will not be entitled to recover Losses under Section 12.01 unless and until the
amount of such Losses suffered, sustained, or incurred by the asserting party,
or to which such party becomes subject, by reason of inaccuracy or breach of any
representations, warranties, covenants or agreements thereunder, exceeds
$500,000 calculated on a cumulative basis (for all Losses) and not per item
basis (the "Basket Amount"), and then such party will only be entitled to
recover Losses in excess of the Basket Amount; provided, however, that the
Basket Amount shall be reduced by the amount of Losses suffered, sustained, or
incurred by such party, or to which such party becomes subject, by reason of
inaccuracy or breach of any representations, warranties, covenants or agreements
under Section 12.01 of the Stock Purchase and Sale Agreement, dated as of the
date hereof, among certain of the Sellers, the Purchaser and the other parties
thereto; provided, further, however, that the Purchaser Indemnified Persons
shall be entitled to recover any Losses under Section 12.01(a)(iii) from the
first dollar of such Losses and any such indemnification payments made in
respect thereof shall not count towards the Basket Amount.
(b) Limitations on Liability of the Purchaser. Notwithstanding any
provision of the Sale Documents to the contrary, the liability of the Purchaser
for indemnification under this Agreement (except with respect to indemnification
for breaches of any provision of Articles II or III hereof, which liability
shall not exceed the Purchase Price) shall not exceed $13,500,000 in the
aggregate (the "Purchaser Liability Cap"); provided, however, that the amount of
the Purchaser Liability Cap shall be reduced by the amount of indemnification
payments made by the Purchaser under Section 12.01 of the Stock Purchase and
Sale Agreement, dated as of the date hereof, among certain of the Sellers, the
Purchaser and the other parties thereto.
(c) Limitations on Liability of the Company and the Sellers.
Notwithstanding any provision of the Sale Documents to the contrary, the
aggregate liability of the Company and the Sellers for indemnification under
this Agreement (except with respect to indemnification for breaches of any
provision of Articles II or III hereof or inaccuracies of the representations
set forth in Section 5.05(a) and (b), 6.07 or 6.08, which liability shall not
exceed the Purchase Price) shall not exceed $13,500,000 (the "Seller Liability
Cap"); provided, however, that the amount of the Seller Liability Cap shall be
reduced by the amount of indemnification payments made by the Company and the
Sellers under Section 12.01 of the Stock Purchase and Sale Agreement, dated as
of the date hereof, among certain of the Sellers, the Purchaser and the other
parties thereto.
Section 12.05. Reduction for Insurance. The amount which an Indemnitor
is required to pay to, for, or on behalf of any Indemnitee pursuant to this
Article XII will be reduced, including, without limitation, retroactively, by
any insurance proceeds which may reasonably be recovered
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by the Indemnitee in reduction of the related Loss. Amounts required to be paid,
as so reduced, are hereinafter sometimes called an "Indemnity Payment". If an
Indemnitee has received, or if an Indemnitor has paid on the Indemnitee's
behalf, an Indemnity Payment in respect of a Loss and the Indemnitee
subsequently receives, directly or indirectly, insurance proceeds in respect of
such Loss, then such Indemnitee will promptly pay to the Indemnitor the amount
of such insurance proceeds, or, if less, the amount of the Indemnity Payment.
The parties hereto agree that the foregoing will not affect the subrogation
rights of any insurance companies making payments hereunder.
Section 12.06. Mitigation. Each of the parties covenants and agrees
that it will use its commercially reasonable efforts to mitigate any Losses with
respect to which such party is or may become entitled to be indemnified by the
other party pursuant to this Agreement or any of the other Sale Documents.
Section 12.07. No Special or Consequential Damages. Notwithstanding
anything to the contrary contained in any of the Sale Documents, no party shall
be liable to or otherwise responsible to any Seller Indemnified Person or
Purchaser Indemnified Person, as the case may be, or any of their respective
successors or assigns, for consequential, incidental or special damages or for
lost profits with respect to any indemnifiable claims under this Article XII,
except to the extent such damages are asserted against an indemnified party by a
third party.
Section 12.08. Exceptions. Notwithstanding anything to the contrary
contained in any of the Sale Documents if (a) at the time of executing this
Agreement, any party hereto, or any of their representatives or Affiliates, has
any actual knowledge that there exists a breach or inaccuracy of any of the
representations or warranties contained in any of the Sale Documents made by
another party hereto, then the party making such representation or warranty
shall have no liability under the Sale Documents by reason of that breach or
inaccuracy, and that representation or warranty will be deemed modified for all
purposes of the Sale Documents to reflect the facts or circumstances that
constitute or give rise to such breach or inaccuracy, or (b) at the time of the
Closing, any party hereto, or any of their representatives or Affiliates, has
any actual knowledge that any of the conditions to Closing have not been
satisfied, and the party having such knowledge nonetheless elects to proceed
with the Closing, then, upon the consummation of the Closing, the party having
such knowledge shall be considered to have waived any such failure of condition
and shall have no claim against the other parties hereto with respect thereto.
Section 12.09. Sole and Exclusive Remedy. Notwithstanding any provision
of the Sale Documents to the contrary, the Sellers, the Company and the
Purchaser hereby agree that in the absence of fraud, the indemnification
provisions set forth in this Article XII shall be the Purchaser Indemnified
Persons' and the Seller Indemnified Persons' sole and exclusive remedy for
breaches or inaccuracies of any of the representations and warranties contained
in the Sale Documents or the breach or non-performance of any covenant or
agreement contained in the Sale Documents. Except for such rights to
indemnification under this Article XII and in the absence of fraud, none of the
Seller Indemnified Persons nor the Purchaser Indemnified Persons shall have any
other
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claim or remedy relating to the transactions (or the failure thereof)
contemplated by the Sale Documents (whether resulting from breach or otherwise).
Section 12.10. Guarantee.
(a) Guarantee. Subject to all of the limitations on liability set forth
in this Article XII and under Section 10.05(c)(iii), the Guarantor hereby
unconditionally and irrevocably guarantees the due and prompt payment of the
indemnification obligations of the Sellers under Article XII of this Agreement
(the "Guaranteed Obligations"). If the Guarantor fails to pay any amount owing
under this Section 12.10, the Purchaser shall have all of the rights and
remedies provided by law. This guaranty is a guaranty of payment and not of
collection. Therefore, the Purchaser can insist that the Guarantor pay the
Guaranteed Obligations immediately when due, and the Purchaser is not required
to attempt to collect first from any Seller or the Company. The obligation of
the Guarantor shall be irrevocable and absolute.
(b) Obligations Not Affected. The Purchaser may release any of the
Sellers or the Company from its liability for the Guaranteed Obligations, either
in whole or in part, without affecting the obligations of the Guarantor under
this Section 12.10. The Guarantor's obligations under this Section 12.10 shall
not be released or affected by (i) the voluntary or involuntary liquidation,
sale or other disposition of all or substantially all of the assets of any
Seller or the Company, or any receivership, insolvency, bankruptcy,
reorganization or other similar proceedings affecting any Seller or the Company
or any of their respective assets or (ii) any change in the composition or
structure of any Seller, the Company or the Guarantor, including a merger or
consolidation with any other Person.
(c) Obligations Not Affected by Bankruptcy. The Guarantor further
agrees that if any payments to the Purchaser on the Guaranteed Obligations are
invalidated in whole or in part, declared to be fraudulent or preferential, set
aside or required to be repaid to a trustee, receiver or any other party under
any bankruptcy act or code, state or federal law, common law or equitable
doctrine, the obligations of the Guarantor under this Section 12.10 shall remain
in full force and effect (or are reinstated as the case may be) until payment in
full of those amounts.
(d) Waivers. The Guarantor waives any right it may have to receive
notice of the following matters before the Purchaser enforces any of its rights:
(i) the Purchaser's acceptance of this guarantee, (ii) any default by the
Company or any Seller under the Sale Documents, (iii) any demand, (iv) any
action that the Purchaser takes regarding any Seller or the Company regarding
the Guaranteed Obligations or any other obligation which it might be entitled to
by law or under any other agreement.
(e) Representations of the Guarantor. The Guarantor hereby represents
that (i) the execution and delivery of this Agreement and the performance by the
Guarantor of its obligations hereunder do not violate any law applicable to the
Guarantor, conflict with any material agreement by which it is bound or require
the consent or approval of any Governmental Body or
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any third party, (ii) that this Agreement constitutes the valid and binding
agreement of the Guarantor enforceable against the Guarantor in accordance with
its terms, (iii) that the Guarantor is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (iv) that
the execution and delivery of this Agreement and the performance of its
obligations hereunder are within its powers and have been duly authorized by all
necessary action and do not contravene the terms of its agreement of limited
partnership.
ARTICLE XIII
Miscellaneous
Section 13.01. Notices. All notices, requests, demands and other
communications to any party or given under any Sale Document (collectively,
"Notices") will be in writing and delivered personally, by overnight courier or
by registered mail to the parties at the following address or sent by
telecopier, with confirmation received, to the telecopy number specified below
(or at such other address or telecopy number as will be specified by a party by
like notice given at least five calendar days prior thereto):
(a) If to the Purchaser (or the Company after the Closing), at:
Intermet Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
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(b) If to the Sellers, the Sellers' Representative, ▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇▇▇▇▇ or the Guarantor (or the Company before the Closing), at:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇
One Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
All Notices will be deemed delivered when actually received.
Section 13.02. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, and by different parties hereto in
separate counterparts, each of which when executed will be deemed an original,
but all of which taken together will constitute one and the same instrument.
Section 13.03. Integration. The Sale Documents contain and constitute
the entire agreement of the parties with respect to the subject matter hereof
and supersedes all prior negotiations, agreements and understandings, whether
written or oral, of the parties hereto.
Section 13.04. Interpretation. As used in this Agreement, references
to the singular will include the plural and vice versa and references to the
masculine gender will include the feminine and neuter genders and vice versa, as
appropriate. Unless otherwise expressly provided in this Agreement (a) the words
"hereof", "herein" and "hereunder" and words of similar import when used in this
Agreement will refer to this Agreement as a whole and not to any particular
provision of this Agreement and (b) article, section, subsection, schedule and
exhibit references are references with respect to this Agreement unless
otherwise specified. References in this Agreement to any law or regulation will
refer to such laws and regulations as from time to time amended and to any laws
or regulations successor thereto. Unless the context otherwise requires, the
term "including" will mean "including, without limitation."
Section 13.05. Accounting Terms and Determinations. Unless otherwise
specified, all accounting terms will be interpreted, all accounting
determinations will be made, all records and books of account will be kept and
all financial statements required to be prepared or delivered will be prepared
in accordance GAAP, applied on a basis consistent with the most recent audited
financial statements of the type referred to in Section 5.07.
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Section 13.06. Descriptive Headings. The headings in this Agreement and
in the Schedules are included for convenience of reference only and will not
affect in any way the meaning or interpretation of this Agreement.
Section 13.07. Incorporation of Schedules and Exhibits. The Schedules
and Exhibits hereto are incorporated into this Agreement and will be deemed a
part hereof as if set forth herein in full. References to "this Agreement" and
the words "herein", "hereof" and words of similar import refer to this Agreement
(including the Schedules and Exhibits) as an entirety. In the event of any
conflict between the provisions of this Agreement and any Schedule or Exhibit,
the provisions of this Agreement will control. Capitalized terms used in the
Schedules have the meanings assigned to them in this Agreement. The Section
references referred to in the Schedules are to Sections of this Agreement,
unless otherwise expressly indicated.
Section 13.08. Amendment of Agreement. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 13.09. Successors and Assigns. This Agreement will be binding
upon and inures to the benefit of and is enforceable by the respective
successors and permitted assigns of the parties hereto. This Agreement and the
rights and obligations of the parties hereto may not be assigned by any party
hereto without the prior written consent of all other parties hereto. Any
assignment or attempted assignment in contravention of this Section will be void
ab initio and will not relieve the assigning party of any obligation under this
Agreement.
Section 13.10. No Waiver; Remedies. No failure or delay by any party
in exercising any right, power or privilege under this Agreement will operate as
a waiver of the right, power or privilege. A single or partial exercise of any
right, power or privilege will not preclude any other or further exercise of the
right, power or privilege or the exercise of any other right, power or
privilege. The rights and remedies provided in the Sale Documents will be
cumulative and not exclusive of any rights or remedies provided by law.
Section 13.11. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement will
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto will
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the extent possible.
Section 13.12. Governing Law. This Agreement will be governed by, and
construed in accordance with, the laws of the state of New York applicable to
contracts executed in and to be performed entirely within that state, without
reference to conflicts of laws provisions.
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Section 13.13. No Third-Party Rights. This Agreement is not intended,
and will not be construed, to create any rights in any parties other than the
Company, the Sellers, the Sellers' Representative and the Purchaser, and no
Person, including, without limitation, the officers, directors and employees of
the Company, may assert any rights as third-party beneficiary hereunder, except
as provided in Article XII.
Section 13.14. Submission to Jurisdiction. Any Action with respect to
any Sale Document may be brought in the courts of the State of New York or of
the United States of America for the Southern District of New York, and each of
the Company, the Sellers and the Purchaser hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
these courts. Each of the Company, the Sellers and the Purchaser hereby
irrevocably waives any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any Action in those jurisdictions.
The Company and the Sellers further irrevocably consent to the service of
process of any of the courts referred to above in any Action by the mailing of
copies of the process to the Company and the Sellers as provided in Section
13.01. Service effected as provided in this manner will become effective ten
calendar days after the mailing of the process.
Section 13.15. Further Assurances. Promptly upon reasonable request by
any party hereto, the Purchaser, the Company and the Sellers shall (with the
expenses paid by the party responsible as provided in this Agreement) correct
any defect or error that may be discovered in any Sale Document or in the
execution, acknowledgment or recordation of the Sale Document and execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all such further acts, deeds, conveyances, pledge
agreements, mortgages, deeds of trust, trust deeds, assignments, estoppel
certificates, financing statements and continuations, notices of assignment,
transfers, certificates, assurances and other instruments as the Purchaser may
require from time to time in order (a) to carry out more effectively the
purposes of each Sale Document, (b) to enable the Purchaser to exercise and
enforce its rights and remedies and collect any payments and proceeds under each
Sale Document and (c) to transfer, preserve, protect and confirm to the
Purchaser the rights granted or now or hereafter intended to be granted to the
Purchaser under each Sale Document or under each other instrument executed in
connection with any Sale Document to which the Sellers are or may become
parties.
Section 13.16. Waiver of Jury Trial. Each party waives any right to a
trial by jury in any Action to enforce or defend any right under any Sale
Document or any amendment, instrument, document or agreement delivered or to be
delivered in connection with any Sale Document and agrees that any Action will
be tried before a court and not before a jury.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
SHAREHOLDERS:
GANTEC II, LLC,
By: Gantec Management, LLC, its Manager,
By:
-----------------------------------------------------
Name:
Title:
JJM, LLC, for itself and as the Sellers' Representative,
By:
-----------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇
Manager
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COMPANY:
GANTON TECHNOLOGIES INC.
By:
-----------------------------------------------------
Name:
Title:
PURCHASER:
INTERMET CORPORATION
By:
-----------------------------------------------------
Name:
Title:
GUARANTOR:
CERBERUS PARTNERS, L.P., solely for the purpose of
providing the guarantee set forth in Section 12.10,
By: Cerberus Associates, LLC, its General Partner,
By:
-----------------------------------------------------
Name:
Title:
RESTRICTED PARTY:
--------------------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇▇, solely for the purpose of
agreeing to the provisions of Section 8.07
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