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EXHIBIT 10.16
PART 1 OF 2
ASSET PURCHASE AGREEMENT
GREAT BEND INDUSTRIES DIVISION
OF
XXXX-XXXXXX CORPORATION
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ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS............................................ 1
1.1. Definition of "Business"...................................... 1
1.2. Assets to be Transferred...................................... 1
1.3. Excluded Assets............................................... 3
2. ASSUMPTION OF LIABILITIES.............................................. 3
2.1. Liabilities to be Assumed..................................... 3
2.2. Liabilities Not to be Assumed................................. 4
3. PURCHASE PRICE - PAYMENT............................................... 5
3.1. Purchase Price................................................ 5
3.2. Payment of Purchase Price..................................... 5
3.3. Determination of Net Asset Value.............................. 6
3.4. Prorations.................................................... 8
4. REPRESENTATIONS AND WARRANTIES OF COMPANY.............................. 9
4.1. Corporate..................................................... 9
4.2. Authority..................................................... 9
4.3. No Violation.................................................. 10
4.4. Business Financial Statements................................. 10
4.5. Absence of Certain Changes.................................... 10
4.6. No Litigation................................................. 11
4.7. Compliance With Laws.......................................... 11
4.8. Environmental................................................. 11
4.9. Title to Properties........................................... 12
4.10. Contracts and Commitments..................................... 12
4.11. Employee Benefit Plans........................................ 13
4.12. Employment Compensation....................................... 13
4.13. Trade Rights.................................................. 14
4.14. Major Customers and Suppliers................................. 14
4.15. No Brokers or Finders......................................... 14
4.16. Extraordinary Warranty Expense................................ 15
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT..................... 15
5.1. Corporate..................................................... 15
5.2. Authority..................................................... 15
5.3. No Violation.................................................. 15
5.4. No Brokers or Finders......................................... 16
6. EMPLOYEES - EMPLOYEE BENEFITS - TRANSITION............................. 16
6.1. Business Employees............................................ 16
6.2. Data Processing............................................... 17
6.3. Payroll Tax................................................... 17
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6.4. Employee Benefit Plans........................................ 17
6.5. Continued Supply to Company................................... 17
7. OTHER MATTERS.......................................................... 17
7.1. Environmental Matters......................................... 17
7.2. Escrow Agreement.............................................. 19
7.3. HSR Act Filings............................................... 19
7.4. Access to Information and Records............................. 19
7.5. Collection of Accounts Receivable............................. 20
7.6. Litigation Cooperation........................................ 20
7.7. Product Marking............................................... 21
7.8. Xxxxxxx Receivable/Inventory.................................. 21
8. FURTHER COVENANTS OF COMPANY........................................... 21
8.1. Conduct of Business Pending the Closing....................... 21
8.2. Consents...................................................... 22
8.3. Other Action.................................................. 22
8.4. Disclosure.................................................... 22
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS............................ 22
9.1. Representations and Warranties True on the Closing Date....... 23
9.2. Compliance With Agreement..................................... 23
9.3. Xxxx-Xxxxx-Xxxxxx Waiting Period.............................. 23
9.4. Termination of Lease for Airport Facility..................... 23
9.5. Environmental Report/Environmental Indemnity.................. 23
9.6. Absence of Certain Events/Conditions.......................... 24
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS.......................... 24
10.1. Representations and Warranties True on the Closing Date....... 24
10.2. Compliance With Agreement..................................... 24
10.3. Xxxx-Xxxxx-Xxxxxx Waiting Period.............................. 24
10.4. Environmental Costs........................................... 24
11. INDEMNIFICATION........................................................ 25
11.1. By Company.................................................... 25
11.2. By Buyer and Parent........................................... 25
11.3. Indemnification of Third-Party Claims......................... 25
11.4. Payment....................................................... 26
11.5. Limitations on Indemnification................................ 26
12. CLOSING................................................................ 27
12.1. Documents to be Delivered by Company.......................... 27
12.2. Documents to be Delivered by Buyer............................ 28
13. TERMINATION............................................................ 29
13.1. Right of Termination Without Breach........................... 29
13.2. Termination for Breach........................................ 29
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14. COVENANT NOT TO COMPETE................................................ 30
14.1. Non-Competition............................................... 30
14.2. Enforcement................................................... 30
14.3. Injunctive Relief............................................. 30
15. RESOLUTION OF DISPUTES................................................. 31
15.1. Arbitration................................................... 31
15.2. Arbitrators................................................... 31
15.3. Procedures; No Appeal......................................... 31
15.4. Authority..................................................... 31
15.5. Entry of Judgment............................................. 31
15.6. Confidentiality............................................... 31
15.7. Continued Performance......................................... 31
15.8. Tolling....................................................... 31
15.9. Escrow Agent Unnecessary...................................... 32
16. MISCELLANEOUS.......................................................... 32
16.1. Further Assurance............................................. 32
16.2. Disclosures and Announcements................................. 32
16.3. Assignment; Parties in Interest............................... 32
16.4. Law Governing Agreement....................................... 32
16.5. Amendment and Modification.................................... 32
16.6. Notice........................................................ 32
16.7. Expenses...................................................... 34
16.8. Entire Agreement.............................................. 34
16.9. Counterparts.................................................. 35
16.10. Headings...................................................... 35
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated April 9,
1997, by and among KAYDON CORPORATION, a Delaware corporation ("Parent"), KAYDON
ACQUISITION VIII, INC., a Delaware corporation and a wholly-owned subsidiary of
Parent ("Buyer"), and XXXX-XXXXXX CORPORATION, a Wisconsin corporation
("Company").
RECITALS
A. Company is engaged, through its Great Bend Industries
Division, in the manufacture and sale of hydraulic cylinders.
B. The Great Bend Industries Division business is
carried on at a leased facility located at 0000 0xx Xxxxxx, Xxxxx Xxxx, Xxxxxx
(the "Main Facility") and leased facilities known as buildings H and J in the
Bestec complex of the Westport Addition to the City of Great Bend, Kansas (the
"Airport Facility) (together the Main Facility and the Airport Facility are
sometimes referred to as the "Facilities").
C. Buyer desires to purchase from Company, Parent
desires to cause Buyer to purchase from Company and Company desires to sell to
Buyer, the business and substantially all of the property and assets of
Company's Great Bend Industries Division, as set forth herein.
NOW THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
hereinafter set forth, and intending to be legally bound hereby, the parties
hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Definition of "Business". As used herein, the term "Business"
shall mean the business of the Great Bend Industries Division of Company at the
Facilities.
1.2. Assets to be Transferred. Subject to the terms and conditions
of this Agreement, on the Closing Date (as hereinafter defined) Company shall
sell, transfer, convey, assign, and deliver to Buyer, and Buyer shall purchase
and accept, the following assets of the Business owned by Company:
1.2.(a) Leased Real Property. The leases of real property
with respect to the Main Facility (the "Real Property Leases") as
described in Schedule 1.2.(a) with respect to the real property
described thereon (the "Leased Real Property").
1.2.(b) Personal Property. All machinery, equipment,
vehicles, tools, supplies, spare parts, furniture and all other
personal property owned by the Company located at the Facilities not
included in inventory (other than personal property leased pursuant to
Personal Property Leases as hereinafter defined).
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1.2.(c) Inventory. All inventories of raw materials,
work-in-process and finished goods of the Business owned by the Company
on the Closing Date, together with related packaging materials
(collectively the "Inventory").
1.2.(d) Personal Property Leases. All leases of machinery,
equipment, vehicles, furniture and other personal property utilized by
the Business at the Facilities (the "Personal Property Leases")
described in Schedule 1.2.(d).
1.2.(e) Trade Rights. Any Trade Rights of the Business owned
by the Company. As used herein, the term "Trade Rights" shall mean and
include: (i) all trademark rights, business identifiers, trade dress,
service marks, trade names, and brand names, all registrations thereof
and applications therefor and all goodwill associated with the
foregoing; (ii) all copyrights, copyright registrations and copyright
applications, and all other rights associated with the foregoing and
the underlying works of authorship; (iii) all patents and patent
applications and all intellectual property rights associated therewith;
(iv) all contracts or agreements granting any right, title, license or
privilege under the intellectual property rights of any third party;
(v) all inventions, mask works and mask work registrations, know-how,
discoveries, improvements, designs, trade secrets, shop and royalty
rights, employee covenants and agreements respecting intellectual
property and non-competition and all other types of intellectual
property; and (vi) all claims for infringement or breach of any of the
foregoing described in Schedule 1.2.(e).
1.2.(f) Contracts. All the Company's rights in, to and under
all contracts, purchase orders and sales orders (hereinafter
"Contracts") of the Business, including but not limited to, the
Contracts listed in Schedule 1.2(f). To the extent that any Contract
for which assignment to Buyer is provided herein is not assignable
without the consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof if such
assignment or attempted assignment would constitute a breach thereof.
Company and Buyer agree to use their reasonable best efforts (without
any requirement on the part of Buyer to pay any money or agree to any
change in the terms of any such Contract) to obtain the consent of such
other party to the assignment of any such Contract to Buyer in all
cases in which such consent is or may be required for such assignment.
If any such consent shall not be obtained, Company agrees to cooperate
with Buyer in any reasonable arrangement designed to provide for Buyer
the benefits intended to be assigned to Buyer under the relevant
Contract.
1.2.(g) Computer Software and Hardware. Except as described
in Section 1.3.(e), all computer hardware of the Business owned by the
Company at the Facilities and all of Company's right, title and
interest, if any, in and to computer software utilized in conjunction
with such computer hardware.
1.2.(h) Literature. All sales literature, promotional
literature, catalogs and similar materials of the Business owned by the
Company.
1.2.(i) Records and Files. All records, files, invoices,
customer lists, blueprints, specifications, designs, drawings,
accounting records, business records, operating data and other data of
the Business owned by the Company.
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1.2.(j) Notes and Accounts Receivable. All notes, drafts and
accounts receivable of the Business, except for those described in
Section 1.3.(f) hereof.
1.2.(k) Licenses; Permits. All licenses, permits and
approvals of the Business, including those described in Schedule
1.2.(k).
1.2.(l) Business Name. Company's right, title and interest in
the name "Great Bend Industries," and all rights to use or allow others
to use such name.
1.3. Excluded Assets. Company shall retain all of its rights,
claims and assets not described in Section 1.2. Without limiting the generality
of the foregoing, and any contrary provisions of Section 1.2 notwithstanding,
Company shall not sell, transfer, assign, convey or deliver to Buyer, and Buyer
will not purchase or accept the following assets of Company:
1.3.(a) Cash and Cash Equivalents. All cash and cash
equivalents, other than xxxxx cash balances at Facilities of the
Business.
1.3.(b) Consideration. The consideration delivered by Buyer
to Company pursuant to this Agreement.
1.3.(c) Tax Credits and Records. Federal, state and local
income and franchise tax credits and tax refund claims and associated
returns and records.
1.3.(d) Insurance. All policies of insurance, including all
prepaid insurance.
1.3.(e) Computer Software and Hardware. The "Symix" software
and all computer hardware utilized in connection with "Symix" listed on
Schedule 1.3.(e).
1.3.(f) Intercompany Receivable. Intercompany accounts
receivable of the Business from the Company or any subsidiary or
affiliate of the Company.
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed. As used in this Agreement, the term
"Liability" shall mean and include any direct or indirect indebtedness,
guaranty, endorsement, claim, loss, damage, deficiency, cost, expense,
obligation or responsibility, fixed or unfixed, known or unknown, asserted or
unasserted, liquidated or unliquidated, secured or unsecured. Subject to the
terms and conditions of this Agreement, on the Closing Date, Buyer shall assume
and agree to perform and discharge (and Parent shall cause Buyer to assume and
agree to perform and discharge) the following Liabilities of Company
(collectively the "Assumed Liabilities"):
2.1.(a) Final Closing Balance Sheet Liabilities. The
liabilities and obligations reflected or reserved against on the Final
Closing Business Balance Sheet (as hereinafter defined).
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2.1.(b) Contractual Liabilities. Company's Liabilities
arising from and after the Closing Date under and pursuant to (i) all
purchase orders and sales orders of the Business, (ii) all contracts
described in any of Schedules 1.2.(a), 1.2.(d), 1.2.(f), 4.10.(d),
(iii) all other contracts entered into in the ordinary course of
business of the Business other than contracts relating to employees or
employee benefits which are assumed only to the extent otherwise
expressly assumed under this Agreement.
The Contracts described in this subsection 2.1.(b) above are
hereinafter collectively described as the "Assumed Contracts."
2.1.(c) Liabilities Under Permits and Licenses. Company's
Liabilities arising from and after the Closing Date under all permits
or licenses of and assigned to Buyer at the Closing.
2.1.(d) Product Liability. Except as and to the extent set
forth in Section 2.2.(c), Company's liabilities and obligations arising
out of or relating to or resulting from past and present products of
the Business, for products liability, which term shall include any
liability or obligation of Company for claims made for injury to
person, damage to property or other damage (whether made in product
liability, tort, breach of warranty or otherwise).
2.1.(e) Product Warranty. Companies liabilities and
obligations with respect to products of the Business under and pursuant
to the Business' product warranties.
2.1.(f) Environmental Liabilities. All liability from and
relating to the generation, management, handling, transportation,
treatment, storage, disposal, delivery, discharge, release or emission
of any Hazardous Substances (as hereinafter defined) by Company, or any
action, omission or condition affecting the environment arising from
the conduct of the Business, except to the extent such liability
relates to a Company Off-Site Release (as hereinafter defined) or to
the extent Company retains responsibility pursuant to Company's
indemnification in Section 11.1(d) of this Agreement or pursuant to the
Environmental Indemnity Agreement referred to in Section 9.5 of this
Agreement.
2.1.(g) Other Liabilities. Except as provided in Section
2.1(b) or 2.2, all other Liabilities of the Business incurred in the
ordinary course of business of the Business.
2.2. Liabilities Not to be Assumed. Except as and to the extent
specifically set forth in Section 2.1, Buyer is not assuming any Liabilities of
Company and all such Liabilities shall be and remain the responsibility of
Company. Notwithstanding the provisions of Section 2.1, Buyer is not assuming
and Company shall not be deemed to have transferred to Buyer the following
Liabilities of Company:
2.2.(a) Income and Franchise Taxes. Any Liability of Company
for Federal income taxes and any state or local income, profit or
franchise taxes (and any penalties or interest due on account thereof)
or any liability for sales, bulk sales use,
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transfer, stamp or document taxes except to the extent reflected or
reserved against on the Final Closing Business Balance Sheet.
2.2.(b) Accounts Payable. Accounts payable of the Business.
2.2.(c) Product Liability. Company's liabilities and
obligations arising out of or relating to or resulting from past and
present products of the Business manufactured and sold prior to the
Closing Date, for products liability, which term shall include any
liability or obligation of Company for claims made for injury to
person, damage to property or other damage (whether made in product
liability, tort, breach of warranty or otherwise), with respect to
occurrences on or prior to April 30, 1998.
2.2.(d) Indebtedness. Any indebtedness for borrowed money for
the Business and the capitalized leases listed on Schedule 2.2.(d)
except the Lease Agreement dated August 1, 1994 between Company and
Central Kansas Development Corporation.
2.2.(e) Intercompany Payables. Intercompany payables of the
Business to the Company or any subsidiary or affiliate of the Company.
2.2.(f) Environmental Liabilities. Liabilities of the Company
relating to a release (as that term is most broadly defined by any
federal, state or local statute pertaining to the protection of the
environment) by the Company of any Hazardous Substances (as hereinafter
defined) prior to Closing at any location other than the Leased Real
Property ("Property"), including but not limited to any liabilities
arising out of the generation, management, handling, transportation,
treatment, storage, disposal, delivery, discharge or emission of
Hazardous Substances not at the Property. Such releases will be
referred to in this Agreement as "Company Off-Site Releases".
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price. The purchase price (the "Purchase Price") for
the Purchased Assets shall be Twenty Two Million Dollars ($22,000,000) plus or
minus, as the case may be, the difference between Seven Million Eight Thousand
Five Hundred Nine Dollars ($7,008,509) and the Net Asset Value at the Effective
Time.
3.2. Payment of Purchase Price. Buyer and Parent, jointly and
severally, agree to pay the Purchase Price. The Purchase Price shall be paid by
Buyer (and Parent shall cause the Purchase Price to be paid by Buyer) as
follows:
3.2.(a) Assumption of Liabilities. At the Closing, Buyer
shall deliver to Company such documents and instruments as are
reasonably required to evidence the assumption of the Assumed
Liabilities.
3.2.(b) Cash to Escrow Agent. At the Closing, Buyer shall
deliver to the Escrow Agent, under the Escrow Agreement (as defined in
Section 7.2), the sum of Two Million Dollars ($2,000,000).
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3.2.(c) Cash to Company. At the Closing, Buyer shall deliver
to Company the sum of Twenty Two Million Dollars ($22,000,000) less the
amount paid to the Escrow Agent pursuant to Subsection 3.2.(b) above,
plus or minus, as the case may be the difference between Seven Million
Eight Thousand Five Hundred Nine Dollars ($7,008,509) and the Net Asset
Value as reflected on the Estimated Business Closing Balance Sheet.
3.2.(d) Adjustment of Final Cash Purchase Price. On or before
the fifth (5th) business day following the final determination of the
Final Closing Business Balance Sheet (as hereinafter defined) (the
"Settlement Date"): (a) if the Net Asset Value as reflected on the
Estimated Business Closing Balance Sheet exceeds the Net Asset Value as
reflected on the Final Closing Business Balance Sheet, then the Escrow
Agent shall disburse to the Buyer, an amount equal to the sum of the
amount by which the Net Asset Value as reflected on the Estimated
Closing Business Balance Sheet exceeds the Net Asset Value as reflected
on the Final Closing Business Balance Sheet plus interest on such
amount accrued from the Closing Date to the date of payment at a rate
equal to the average interest rate paid on the Escrow Fund during the
period (if the Net Asset Value as reflected on the Estimated Closing
Business Balance Sheet exceeds the Net Asset Value as reflected on the
Final Closing Business Balance Sheet (plus interest on such amount as
aforesaid) by an amount greater than the amount held in Escrow, then
the Buyer shall be entitled, in addition to amounts received from the
Escrow Agent to receive from Company a payment so that the total amount
received from the Escrow Agent, plus the payment from Company to Buyer
shall equal the amount by which the Net Asset Value of Company as
reflected on the Estimated Closing Business Balance Sheet exceeds the
Net Asset Value as reflected on the Final Closing Business Balance
Sheet, plus interest at the average interest rate paid on the Escrow
Fund during the period), (b) if the Net Asset Value as reflected on the
Final Closing Business Balance Sheet exceeds the Net Asset Value as
reflected on the Estimated Closing Business Balance Sheet, then the
Buyer shall pay to the Company an amount equal to the sum of the amount
by which the Net Asset Value as reflected on the Final Closing Business
Balance Sheet exceeds the Net Asset Value as reflected on the Estimated
Closing Business Balance Sheet plus interest on such amount accrued
from the Closing Date to the date of payment at a rate equal to the
average interest rate paid on the Escrow Fund during the period.
3.2.(e) Method of Payment. All payments under this Section
3.2 shall be made in the form of certified or bank cashier's check
payable to the order of the recipient or, at the recipient's option, by
wire transfer of immediately available funds to an account designated
by the recipient not less than forty-eight (48) hours prior to the time
for payment specified herein.
3.3. Determination of Net Asset Value.
3.3.(a) Definition of "Business Balance Sheet". The term
"Business Balance Sheet" as used herein shall mean a schedule in the
form of a corporate balance sheet showing the net book values, as of a
specified time, of the respective categories of assets and liabilities
set forth in the Recent Business Balance Sheet (as defined in
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Section 4.4), but reflecting only the Purchased Assets and the Assumed
Liabilities. Each Business Balance Sheet shall be in form and level of
detail as nearly as possible identical to, and in its accounting
principles and policies consistent in every respect with, the Recent
Business Balance Sheet (except that inventory shall be based on a
physical inventory, except that there shall be no reserve for bad debts
and except that there shall be established a "Warranty Reserve" in the
amount of Two Hundred Fifty Thousand Dollars ($250,000)), and
accompanied by schedules setting forth in reasonable detail all assets
and liabilities included therein. Each Business Balance Sheet or its
accompanying schedules shall contain sufficient detail of the Purchased
Assets and Assumed Liabilities for the determination of Net Asset Value
as defined below.
3.3.(b) Definition of "Net Asset Value." The term "Net Asset
Value" shall mean the dollar amount by which the net book value of the
Purchased Assets exceeds the net book value of the Assumed Liabilities,
both as reflected in the Final Closing Business Balance Sheet or
Estimated Closing Business Balance Sheet, as applicable. Only Purchased
Assets and Assumed Liabilities shall be considered in the calculation
of Net Asset Value.
3.3.(c) Estimated Closing Business Balance Sheet. For
purposes of determining the Net Asset Value and the Purchase Price
payable by the Buyer at the Closing, not less than ten (10) business
days prior to the Closing Date, Company shall, in consultation with the
Buyer, prepare and deliver to Buyer a Business Balance Sheet as of the
close of business on the Closing Date (hereinafter the "Effective
Time") which shall represent Company's reasonable estimate of the Final
Closing Business Balance Sheet (the "Estimated Closing Business Balance
Sheet").
3.3.(d) Final Closing Business Balance Sheet. The Final
Closing Business Balance Sheet prepared as of the Effective Time shall
be prepared as follows:
(i) As of the Effective Time, Company shall take
a physical inventory. Within forty-five (45) days after the
Closing Date, Company shall deliver to Buyer a Business
Balance Sheet as of the Effective Time. Such Business Balance
Sheet shall be accompanied by detailed schedules of the
Purchased Assets (except that there shall be no reserve for
bad debts) and Assumed Liabilities and setting forth the
amount of any adjustment to the Purchase Price to be paid and
by whom pursuant to Section 3.2.(d) hereof.
(ii) Within thirty (30) days following the
delivery of the Business Balance Sheet referred to in (i)
above, Buyer may object to any of the information contained in
said balance sheet or accompanying schedules which could
affect the necessity or amount of any payment by Buyer or
Company pursuant to Section 3.2.(d) hereof. Any such objection
shall be made in writing and shall state Buyer's determination
of the amount of the Net Asset Value.
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(iii) In the event of a dispute or disagreement
relating to the balance sheet or schedules which Buyer and
Company are unable to resolve, either party may elect to have
all such disputes or disagreements resolved by an accounting
firm of nationally recognized standing (the "Third Accounting
Firm") to be mutually selected by Company and Buyer or, if no
agreement is reached, by Company's accountants and Buyer's
accountants. The Third Accounting Firm shall make a resolution
of the Business Balance Sheet as of the Effective Time and the
calculation of Net Asset Value, which shall be final and
binding for purposes of this Article 3. The Third Accounting
Firm shall be instructed to use every reasonable effort to
perform its services within fifteen (15) days of submission of
the balance sheet to it and, in any case, as soon as
practicable after such submission. The fees and expenses for
the services of the Third Accounting Firm shall be shared by
Buyer and Company as follows:
Company shall pay a percentage of such fees and
expenses equal to A/(A+B) and Buyer shall pay a percentage of
such fees and expenses equal to B/(A+B), where A is equal to
the absolute value of the difference (in dollars) between Net
Asset Value as finally determined by the Third Accounting Firm
and Net Asset Value as reflected in the objection prepared and
delivered by Company in accordance with Section 3.3.(d)(ii),
and B is equal to the absolute value of the difference (in
dollars) between Net Asset Value as finally determined by the
Third Accounting Firm and Net Asset Value as reflected in the
report prepared and delivered by Buyer in accordance with
Section 3.3.(d)(i). As used in this Agreement, the term "Final
Closing Business Balance Sheet" shall mean the Business
Balance Sheet as of the Effective Time as finally determined
for purposes of this Article 3, whether by acquiescence of
Company in the figures supplied by Buyer in accordance with
Section 3.3.(d)(i), by negotiation and agreement of the
parties or by the Third Accounting Firm in accordance with
Section 3.3.(d)(iii).
(iv) Buyer and Company agree to permit the other,
their accountants and their respective representatives, during
normal business hours, to have reasonable access to, and to
examine and make copies of, all books and records of the
Business and access to representatives of their accountants,
which documents and access are necessary to prepare and review
the Business Balance Sheet. In addition, Buyer's accountants
shall have the opportunity to observe the taking of the
inventory in connection with the preparation of such balance
sheet.
3.4. Prorations. The following prorations relating to the Purchased
Assets will be made as of the Effective Time, with Company liable to the extent
such items relate to any time period up to and including the Effective Time if
not already taken into account on the Final Closing Business Balance Sheet and
Buyer liable to the extent such items relate to periods subsequent to the
Effective Time. Except as otherwise specifically provided herein, the net amount
of all such prorations will be settled and paid on the Settlement Date as
provided by Section 3.2.(d) hereof:
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3.4.(a) Personal property taxes, real estate taxes and
assessments and other taxes, if any, on or with respect to the
Purchased Assets.
3.4.(b) Rents, additional rents, taxes and other items
payable by Company under any lease, license, permit, contract or other
agreement or arrangement to be assigned to or assumed by Buyer.
3.4.(c) The amount of rents, taxes and charges for sewer,
water, fuel, telephone, electricity and other utilities.
3.4.(d) All other items normally adjusted in connection with
similar transactions.
If the actual expense of any of the above items for the billing period
within which the Effective Time falls is not known on the Settlement Date, the
proration shall be made based on the expense incurred in the previous billing
period, for expenses billed less often than quarterly, and on the average
expense incurred in the preceding three billing periods, for expenses billed
quarterly or more often. Company agrees to furnish Buyer with such documents and
other records as shall be reasonably requested in order to confirm all proration
calculations.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company makes the following representations and warranties to Buyer.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Wisconsin.
4.1.(b) Corporate Power. Company has all requisite corporate
power and authority to own, operate and lease its properties, to carry
on its business as and where such is now being conducted, to enter into
this Agreement and the other documents and instruments to be executed
and delivered by Company pursuant hereto and to carry out the
transactions contemplated hereby and thereby.
4.1.(c) No Subsidiaries. No portion of the Business is
conducted by the Company by means of any subsidiary or any other
interest in any corporation, partnership or other entity.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Company
pursuant hereto and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by the Board of Directors of Company. No other
or further corporate act or proceeding on the part of Company or its
shareholders is necessary to authorize this Agreement or the other documents and
instruments to be executed and delivered by Company pursuant hereto or the
consummation of the transactions contemplated hereby and thereby. This Agreement
constitutes,
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and when executed and delivered, the other documents and instruments to be
executed and delivered by Company pursuant hereto will constitute, valid binding
agreements of Company, enforceable in accordance with their respective terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally, and by general equitable principles.
4.3. No Violation. Except as set forth on Schedule 4.3, neither the
execution and delivery of this Agreement or the other documents and instruments
to be executed and delivered by Company pursuant hereto, nor the consummation by
Company of the transactions contemplated hereby and thereby (a) except for
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx"), will require any authorization, consent, approval,
exemption or other action by or notice to any government entity, or (b) subject
to obtaining the necessary consents or giving of notices, will violate or
conflict with, or constitute a default under any term or provision of the
Articles of Incorporation or By-laws of Company or of any contract, commitment,
understanding, arrangement, agreement or restriction of any kind or character to
which Company is a party or by which Company or any of its assets or properties
may be bound or affected.
4.4. Business Financial Statements. Included as Schedule 4.4. are
financial statements of the Business (the "Business Financial Statements"),
consisting of (i) balance sheets of the Business as of December 31, 1995 and as
of December 31, 1996, (the latter such balance sheet sometimes referred to
herein as "Recent Business Balance Sheet"), and (ii) statements of income and
expense of the Business for the years then ended. All of such financial
statements were prepared from and consistent in all respects with, such
financial reports as have been prepared and used by the Company in the ordinary
course in managing the Business and measuring and reporting its operating
results; have been prepared from the financial records of the Company, which
financial records of the Company were compiled in accordance with generally
accepted accounting principles.
4.5. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 4.5, since the date of the Recent Business Balance Sheet there
has not been:
4.5.(a) No Adverse Change. Any material adverse change in the
operations of the Business;
4.5.(b) No Damage. Any material loss, damage or destruction,
whether covered by insurance or not, in connection with or affecting
the Business or the Purchased Assets;
4.5.(c) No Increase in Compensation. Any material increase in
the compensation, salaries or wages payable or to become payable to any
employee or agent of Company who is employed in the Business or whose
compensation is reflected in the Business Financial Statements
(including, without limitation, any material increase in any bonus,
pension, profit sharing, retirement or other plan or commitment);
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4.5.(d) No Labor Disputes. Any material labor dispute or
disturbance, other than routine individual grievances which are not
material to the financial condition or results of operations of the
Business;
4.5.(e) No Disposition of Property. Any material sale, lease
or other transfer or disposition of any material assets of Company that
are Purchased Assets (or would have been Purchased Assets had no sale,
lease, transfer or disposition occurred), except for the sale of
inventory items in the ordinary course of business; or
4.5.(f) No Unusual Events. Any other material event or
condition not in the ordinary course of Company's operation of the
Business.
4.6. No Litigation. Except as set forth in Schedule 4.6 there is no
material action, suit or arbitration proceeding ("Litigation") pending or, to
the knowledge of officers of the Company, threatened against Company or its
directors (in such capacity) that involves the Business, the Purchased Assets or
the Assumed Liabilities. Except as set forth in Schedule 4.6, neither Company,
nor the Purchased Assets nor the Assumed Liabilities is subject to any judgment,
order, writ or injunction of any court, arbitrator or governmental agency
relating to the Business.
4.7. Compliance With Laws. Except as set forth in Schedule 4.7, the
Business (including each and all of its operations, practices, properties and
assets) is in substantial compliance with all material respects with all
applicable federal, state, local and foreign laws, ordinances, orders, rules and
regulations, including, without limitation, those applicable to discrimination
in employment, occupational safety and health, building and sanitation,
employment, retirement and labor relations and product advertising; provided
that there is excepted from this representation and warranty any representation
and warranty with respect to Environmental Laws, which are the subject of
Section 4.8 below. Except as set forth in Schedule 4.7, Company has not received
notice of any violation or alleged violation of, such laws, ordinances, orders,
rules or regulations with respect to the operations of the Business. All reports
required to be filed by Company with respect to the Business with any Government
Entity have been filed, and were accurate and complete when filed.
4.8. Environmental. To the knowledge of officers of the Company and
the President of the Great Bend Industries Division and except as disclosed on
Schedule 4.8 or in the Kejr Reports referred to in Section 7.1 or in the
Environmental Report referred to in Section 7.1, with respect to the Business:
4.8.(a) Company is in substantial compliance in all material
respects with all Environmental Laws (as hereinafter defined).
4.8.(b) Company has received no written communication,
whether from a governmental authority, citizens group, lender, employee
or otherwise, that alleges that Company is not in substantial
compliance in all material respects with any Environmental Law.
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4.8.(c) Company does not currently hold nor is Company
obligated to hold any permits, licenses, registrations or other
federal, state or local governmental authorizations pursuant to the
Environmental Laws.
4.8.(d) Company has not received any written notice of any
civil, criminal or administrative action, claim, demand, investigation
or notice alleging violation of Environmental Laws ("Environmental
Claim") pending or threatened against (i) Company, (ii) any person or
entity whose liability for any Environmental Claim Company has or may
have retained or assumed either contractually or by operation of law,
or (iii) any real or personal property which Company owns, leases or
manages or participates in the management of, or previously owned,
leased or managed, or participated in the management of, or in which
Company holds or has previously held a security interest in connection
with a loan or loan participation, other than such as would not, either
individually or in the aggregate, have a material adverse effect on the
business, results of operations, financial condition, assets or
liabilities of Business.
4.9. Title to Properties. Company has good and marketable title to
all the Purchased Assets, free and clear of all mortgages, liens (statutory or
otherwise), security interests, claims, pledges, licenses, equities, options,
conditional sales contracts, assessments, levies, easements, covenants,
reservations, restrictions, rights-of-way, exceptions, limitations, charges or
encumbrances of any nature whatsoever (collectively, "Liens") except those
described in Schedule 4.9 or the other Schedules hereto; liens which will be
satisfied upon the payment of liabilities reflected or reserved against the
Final Closing Business Balance Sheet; and, in the case of real property, Liens
for taxes not yet due or which are being contested in good faith by appropriate
proceedings (and which have been sufficiently accrued or reserved against in the
Recent Business Balance Sheet), municipal and zoning ordinances and easements
for public utilities, none of which interfere with the use of the property as
currently utilized ("Permitted Real Property Liens") and except that Company is
making no representations or warranties regarding any intellectual property
including patents, trademarks, applications therefor, engineering and production
information and know-how except as set forth in Section 4.13.
4.10. Contracts and Commitments.
4.10.(a) Real Property Leases. Except as set forth in Schedule
1.2.(a), Company has no leases of real property used or held for use in
connection with the Business or the Purchased Assets.
4.10.(b) Personal Property Leases. Except as set forth in
Schedule 1.2.(d), Company has no leases of personal property used or
held for use in connection with the Business or the Purchased Assets
involving consideration or other expenditure in excess of Twenty-Five
Thousand Dollars ($25,000) involving performance over a period of more
than thirty-six (36) months after the Effective Time.
4.10.(c) Collective Bargaining Agreements. Except as set forth
in Schedule 4.10.(c), Company is not a party to any collective
bargaining agreements with any unions, guilds, shop committees or other
collective bargaining groups representing
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or purporting to represent employees of the Business. Copies of all
such agreements have heretofore been delivered to Buyer.
4.10.(d) Other Material Contracts. Company has no lease,
license, contract or commitment of any nature affecting the Business
and involving consideration or other expenditure in excess of
Twenty-Five Thousand Dollars ($25,000), or involving performance over a
period of more than thirty-six (36) months after the Effective Time,
except as described in Schedule 4.10.(d) or in any other Schedule. To
the knowledge of officers of the Company, Company is not in material
default under any contract or agreement identified in Schedules
1.2.(a), 1.2.(d), 4.10.(c) or 4.10.(d).
4.11. Employee Benefit Plans.
4.11.(a) Disclosure. Schedule 4.11.(a) sets forth all pension,
thrift, savings, profit sharing, retirement, incentive bonus or other
bonus, medical, dental, life, accident insurance, benefit, employee
welfare, disability, group insurance, stock purchase, stock option,
stock appreciation, stock bonus, executive or deferred compensation,
hospitalization and other similar fringe or employee benefit plans,
programs and arrangements, and any employment or consulting contracts,
"golden parachutes," collective bargaining agreements, severance
agreements or plans, vacation and sick leave plans, programs,
arrangements and policies, including, without limitation, all "employee
benefit plans" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), for the benefit of
any persons employed by Company in its operation of the Business
("Business Employees"). The items described in the foregoing sentence
are hereinafter sometimes referred to collectively as "Employee
Plans/Agreements," and each individually as an "Employee
Plan/Agreement." A true and correct description and copies of all the
Employee Plans/Agreements, including all amendments thereto, have
heretofore been provided to Buyer. No Employee Plan/Agreement is a
"multiemployer plan" (as defined in Section 4001 of ERISA) and the
Company has never been a contributing employer to such a multiemployer
plan at a time or in a manner which could expose Buyer, directly or
indirectly, to withdrawal liability.
4.11.(b) Payments and Compliance. With respect to each
Employee Plan/Agreement, (i) all payments due from Company to date have
been made and all amounts properly accrued to date as Liabilities of
Company (and all amounts not yet accrued but which will accrue or
become due with respect to periods of employment prior to the Closing
Date) which have not been paid and will be paid by the Company or will
be reflected in the Final Closing Balance Sheet; (ii) Company has
substantially complied with, and each such Employee Plan/Agreement
conforms in all material respects in form and operation to, all
applicable laws and regulations, including but not limited to ERISA and
the Code, and (iii) there are no actions, suits or claims pending
(other than routine claims for benefits) or threatened with respect to
such Employee Plan/Agreement or against the assets of such Employee
Plan/Agreement.
4.12. Employment Compensation. Schedule 4.12 contains a list of all
Employees of the Business as of a date not more than thirty (30) days prior to
the date hereof. Such list
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is substantially accurate in all material respects. Except (i) as listed on the
attached Schedule 4.12 or in any other Schedule hereto, (ii) to the extent
reflected or reserved against on the Final Closing Business Balance Sheet, or
(iii) pursuant to Employee Plans/Agreements described in Section 4.11.(a), there
is no material claim of any employee or any former employee of Company for any
unpaid compensation or remuneration of any nature, including, without
limitation, contingent salaries, incentive payments, pension benefits (whether
or not vested), (excluding benefits to be paid in the future from pension trusts
established and administered for such purpose by Company), medical expense
reimbursement, vacation pay, severance payments and other awards, interests and
payments.
4.13. Trade Rights. Schedule 4.13 lists all Trade Rights of the type
described in clauses (i), (iii) or (iv) of Section 1.2.(e) which are or were
used, held for use, or acquired or developed for use in the Business, or
developed in the course of conducting the Business or by persons employed in the
Business, specifying whether such Trade Rights are owned, controlled, used or
held (under license or otherwise) by Company, and also indicating which of such
Trade Rights are registered. To the knowledge of officers of the Company, in
order to conduct the Business, as such is currently being conducted or proposed
to be conducted, Company does not require any Trade Rights that it does not
already have. To the knowledge of officers of the Company, Company is not
infringing and has not infringed any Trade Rights of another in the operation of
the Business, nor is any other person infringing the Trade Rights of Company.
Company has not granted any license or made any assignment of any Trade Right
listed on Schedule 4.13, and no other person has any right to use any such Trade
Right. Company does not pay any royalties or other consideration for the right
to use any Trade Rights of others. There is no Litigation pending or to the
knowledge of officers of the Company threatened to challenge Company's right,
title and interest with respect to its continued use and right to preclude
others from using any Trade Rights of Company.
4.14. Major Customers and Suppliers.
4.14.(a) Major Customers. Schedule 4.14.(a) contains a list of
the ten (10) largest customers of the Business for each of the two (2)
most recent fiscal years (determined on the basis of the total dollar
amount of net sales). Officers of the Company have no knowledge or
information of any facts indicating that any of the customers listed on
Schedule 4.14.(a) will not continue to be customers of the Business
after the Closing.
4.14.(b) Major Suppliers. Schedule 4.14.(b) contains a list of
the ten (10) largest suppliers to the Business for each of the two (2)
most recent fiscal years (determined on the basis of the total dollar
amount of purchases). Officers of the Company have no knowledge or
information of any facts indicating that any of the suppliers listed on
Schedule 4.14.(b) will not continue to be suppliers to the Business
after the Closing.
4.15. No Brokers or Finders. Neither Company nor any of its
directors, officers, employees, shareholders or agents have retained, employed
or used any broker or finder in connection with the transaction provided for
herein or in connection with the negotiation thereof.
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4.16. Extraordinary Warranty Expense. Except for the products which
are the subject of the Xxxxxxx Disputed Receivable, the Business does not have
any liability under the Business' product warranties for damaged or defective
products (including products not made to allowed tolerances) which have resulted
from recurring similar defects in materials or workmanship (as opposed to
normal, occasional or usual deficiencies), which recurring similar defects are
found in a substantial number of the same products manufactured for a single
customer, which will result in warranty expense exceeding the warranty reserve
set forth on the Final Closing Business Balance Sheet.
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent, jointly and severally, make the following
representations and warranties to Company:
5.1. Corporate.
5.1.(a) Organization. Buyer and Parent are each corporations
duly organized, validly existing and in good standing under the laws of
the State of Delaware.
5.1.(b) Corporate Power. Buyer and Parent each have all
requisite corporate power to enter into this Agreement and the other
documents and instruments to be executed and delivered by Buyer and/or
Parent and to carry out the transactions contemplated hereby and
thereby.
5.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer and
Parent pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of Buyer
and the Board of Directors of Parent. No other corporate act or proceeding on
the part of Buyer or Parent or their shareholders is necessary to authorize this
Agreement or the other documents and instruments to be executed and delivered by
Buyer and/or Parent pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when executed
and delivered, the other documents and instruments to be executed and delivered
by Buyer and/or Parent pursuant hereto will constitute, valid and binding
agreements of Buyer and/or Parent, as the case may be, enforceable in accordance
with their respective terms, except as such may be limited by bankruptcy,
insolvency, reorganization or other laws affecting creditors' rights generally,
and by general equitable principles.
5.3. No Violation. Except as set forth on Schedule 5.3, neither the
execution and delivery of this Agreement or the other documents and instruments
to be executed and delivered by Buyer and/or Parent pursuant hereto, nor the
consummation by Buyer and Parent of the transactions contemplated hereby and
thereby (a) except for applicable requirements of the HSR Act, will require any
authorization, consent, approval, exemption or other action by or notice to any
Government Entity, or (b) subject to obtaining the necessary consents or giving
of Notices, will violate or conflict with, or constitute a default under any
term or provision of the Articles of Incorporation or By-laws of Buyer or of
Parent or of any contract, commitment,
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understanding, arrangement, agreement or restriction of any kind or character to
which Buyer or Parent is a party or by which Buyer or Parent or any of their
respective assets or properties may be bound or affected.
5.4. No Brokers or Finders. Neither Buyer, Parent nor any of their
respective directors, officers, employees or agents have retained, employed or
used any broker or finder in connection with the transaction provided for herein
or in connection with the negotiation thereof.
6. EMPLOYEES - EMPLOYEE BENEFITS - TRANSITION
6.1. Business Employees. Certain of the Company's employees
("Bargaining Unit Employees") are represented by the International Association
of Machinists and Aerospace Workers District No. 70 (the "Union"). The Union and
the Company are parties to a collective bargaining agreement effective June 19,
1995 through June 14, 1998 (the "Collective Bargaining Agreement"). Buyer does
not agree to assume the Collective Bargaining Agreement. Instead, prior to the
Effective Time, Buyer will consult with the Union regarding modifications
desired by Buyer to the Collective Bargaining Agreement to become effective at
such time as Buyer becomes a successor employer under the National Labor
Relations Act. At Buyer's election exercised by notice to the Company at the
Closing, Buyer shall either (i) enter into a new collective bargaining agreement
with the Union incorporating the modifications agreed to by the Buyer and the
Union; or (ii) offer employment to substantially all Bargaining Unit Employees
conditioned upon their acceptance of initial terms and conditions of employment
as established by Buyer; provided, however, that any such initial terms and
conditions of employment shall include the Bargaining Unit Employee's wage rate
at the time of Closing. Buyer represents to the Company that following the
Closing it will comply with any obligations Buyer may have under the National
Labor Relations Act to recognize the Union.
With respect to all other employees of the Business at the
Effective Time (other than employees who were represented by the Union prior to
the Effective Time), all such employees shall become employees of Buyer (it
being understood that Buyer is not making any commitment to maintain such
employees as employees for any specific period of time or at any specific pay or
benefit levels, but at their base hourly or salaried pay rates at the Effective
Time). With respect to all employees of the Business who become employees of the
Buyer at the Effective Time, Buyer shall thereupon be solely responsible for all
pay and benefits with respect to such employees for services rendered after the
Effective Time. With respect to all employees of the Business at the Effective
Time, Buyer shall also pay or otherwise satisfy all properly accrued and
disclosed vacation, holiday and sick time due to employees of the Business at
the Effective Time. After the Effective Time, Buyer shall also be responsible
for any "COBRA" obligations for any current or former employees of the Business
and their dependents.
Buyer agrees to assume full responsibility for compliance with
any plant closing or similar laws, including WARN Act notices, if any, which may
be required as a result of employment losses caused by the transactions provided
for herein or by reason of any events occurring at or after the Effective Time.
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6.2. Data Processing. After the Effective Time and until December
31, 1997, or such earlier date as Buyer shall notify Company of its election to
terminate such assistance and services, Company agrees to provide data
processing assistance and services to the Business as conducted by Buyer after
the Effective Time. Such data processing assistance and services shall be of
substantially the same kind and amount as Company is at the Effective Time
providing to the Business from its Waukesha Headquarters facility. Such
assistance and services shall be provided without charge to Buyer for the period
from the Effective Time through August 12, 1997. For the period August 13, 1997
through August 31, 1997, Buyer shall pay Company the amount of Four Thousand
Nine Hundred Seventy-Four ($4,974) for such assistance and services; such amount
to be due in advance on or before August 13, 1997. Thereafter, Buyer shall pay
Company the amount of Eight Thousand One Hundred Sixteen ($8,116) per month for
such assistance and services; such amount to be paid in advance on the first day
of each month during the continuance of such assistance and services.
6.3. Payroll Tax. Company agrees to make a clean cut-off of payroll
and payroll tax reporting with respect to the Affected Employees paying over to
the federal, state and city governments those amounts respectively withheld or
required to be withheld for employment through the Effective Time. Company also
agrees to issue, by the date prescribed by IRS Regulations, Forms W-2 for wages
paid through the Effective Time. Except as set forth in this Agreement, Buyer
shall be responsible for all payroll and payroll tax obligations after the
Effective Time for Affected Employees.
6.4. Employee Benefit Plans.
6.4.(a) Defined Contribution Plans. Company shall cause the
interest of each of the Business' Employees as of the Effective Time in
the Xxxx-Xxxxxx Retirement and Savings Plan and Trust to be fully
vested and nonforfeitable as of the Effective Time. In all other
respects, each such person shall be treated as any other terminated
participant in accordance with the provisions of said plan.
6.4.(b) No Third-Party Rights. Nothing in this Agreement,
express or implied, is intended to confer upon any of Company's
employees, former employees, collective bargaining representatives, job
applicants, any association or group of such persons or any affected
employees any rights or remedies of any nature or kind whatsoever under
or by reason of this Agreement, including, without limitation, any
rights of employment.
6.5. Continued Supply to Company. Buyer agrees following the
Closing and until Buyer provides at least ninety (90) days notice of its
termination of the arrangement, to continue to supply Company on reasonable
terms and conditions, hydraulic cylinders for use in Company's collision repair
product line.
7. OTHER MATTERS
7.1. Environmental Matters.
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7.1.(a) Environmental Due Diligence. Buyer acknowledges that
Kejr Science Group, Inc. performed an environmental site assessment of
the Main Facility in 1994 (the ("Kejr Reports"). The Buyer shall prior
to closing arrange and pay for an environmental investigation and
assessment (the "Environmental Report"), of the Leased Real Property
("Property") as set forth in Subsection 7.1.(b) below. The
Environmental Report shall be completed prior to Closing and shall be
delivered to Company not later than ten (10) days prior to Closing.
Buyer agrees that it will treat all information obtained from the
Company or otherwise obtained as a result of its review and
investigation of the Business as confidential information, and shall
not, unless otherwise required by law, disclose such information to any
persons other than the parties, their legal counsel, environmental
consultants, and institutional lenders.
7.1.(b) Contents of Environmental Report. The Environmental
Report, as directed by Buyer, shall update and supplement the Kejr
Reports, shall evaluate the Property for compliance with Environmental
Laws, shall express an opinion as to compliance with such laws and more
specifically (i) shall, to the extent feasible, specifically identify
any Hazardous Substances released on the Property by Company or its
predecessors which are then present on, under or adjacent to the
Property ("Identified Company Releases"); (ii) shall, to the extent
feasible, specifically identify any Hazardous Substances released by a
third party which are then present on or under the Property
("Identified Third Party Releases"); and (iii) shall, to the extent
feasible, specifically identify any Company Off-Site Releases.
Notwithstanding the foregoing, the scope and nature of the
Environmental Report and the investigation of the Property conducted by
Buyer is within Buyer's reasonable discretion. In the event Company
believes the investigation or the Environmental Report fails to
adequately characterize Hazardous Substances or their source, or is
otherwise deficient, then Company, at its own cost and expense may
undertake such additional testing, studies or evaluation as Company
deems appropriate.
7.1.(c) Company Cooperation. Company shall cooperate with the
Buyer's consultant as reasonably requested by Buyer to prepare the
Environmental Report, including but not limited to providing reasonable
access to the Property and reasonable access to necessary records. At
Buyer's reasonable request, Company shall arrange interviews with
appropriate employees of the Company.
7.1.(d) Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below.
(i) "Hazardous Substances" shall mean, without
limitation, any material or substance: (i) the presence of
which requires investigation, remediation or any other
response under any federal, state or local statute,
regulation, ordinance, order, action, policy, or common law;
or (ii) which is or becomes defined as a "hazardous waste,"
"hazardous substance," "pollutant", or "contaminant" under any
federal, state, or local statute, regulation, rule, or
ordinance or amendments thereto including, without limitation,
the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. ss.9601 et seq.) and/or the Resource
Conservation
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and Recovery Act (42 U.S.C. ss.6901 et seq.); (iii) which is
toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic, or otherwise hazardous
or dangerous and is or becomes regulated by any governmental
authority, department, commission, board, agency, or
instrumentality of the United States, the state of Kansas or
any political subdivision thereof; or (iv) the presence of
which on the Property causes or threatens to cause a nuisance
or other damage or harm upon such properties or to other
properties, poses or threatens to pose a hazard to the health
or safety of persons on or about the Property or other
properties, or poses or threatens to pose a harm to the
environment or natural resources wherever they may be located;
or (v) the presence of which on properties other than the
Property could constitute a trespass; or (vi) which contains
gasoline, diesel fuel, or other petroleum hydrocarbons; or
(vii) which contains polychlorinated biphenyls (PCBs),
asbestos, urea formaldehyde foam insulation, radon gas,
asbestos or asbestos-containing materials or lead-based paint.
(ii) "Environmental Laws" shall mean, without
limitation, any federal, state, county or municipal statute,
ordinance, regulations, rule, order, judgment or decree or
common law pursuant to any federal or state court decision
applicable to the Property, including without limitation the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. ss. 9601 et seq.)
("CERCLA"), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. ss. 6901 et seq.), the comparable state
laws relating to Hazardous Materials and the regulations
adopted and publications promulgated pursuant to such federal,
state or local laws and regulations.
7.2. Escrow Agreement. At the Closing, Company and Buyer shall
execute and deliver an Escrow Agreement (the "Escrow Agreement") in the form of
Exhibit 1 hereto.
7.3. HSR Act Filings. To the extent such filings have not been
completed prior to the execution of this Agreement, each of Company and Buyer
shall, in cooperation with the other, file any reports or notifications that may
be required to be filed by it under the HSR Act, with the Federal Trade
Commission and the Antitrust Division of the Department of Justice, and shall
furnish to the other all such information in its possession as may be necessary
for the completion of the reports or notifications to be filed by the other.
Prior to making any communication, written or oral, with the Federal Trade
Commission, the Antitrust Division of the federal Department of Justice or any
other governmental agency or authority or members of their respective staffs
with respect to this Agreement or the transactions contemplated hereby, the
Company shall consult with Buyer.
7.4. Access to Information and Records.
7.4.(a) Prior to Closing. During the period prior to the
Closing, Company shall give Buyer, its counsel, accountants and other
representatives (i) reasonable access during normal business hours to
all of the properties, books, records, contracts and documents of
Company relating to the Business or the Purchased Assets
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or Assumed Liabilities for the purpose of such inspection,
investigation and testing as Buyer deems appropriate (and Company shall
furnish or cause to be furnished to Buyer and its representatives all
information with respect to the Business Buyer may request); and (ii)
reasonable access to employees, agents and representatives of the
Business for the purpose of such meetings and communications as Buyer
reasonably desires; and (iii) with the prior written consent of Company
in each instance and subject to such reasonable terms and conditions as
Company shall require, Company shall arrange for joint visits of
Company and Buyer with the four (4) largest customers (in terms of the
Business' sales to such customers during the preceding twelve (12)
months) of the Business.
7.4.(b) After Closing. After the Closing, each party will
afford the other party, its counsel, accountants and other
representatives, during normal business hours, reasonable access to the
books, records and other data in such party's possession relating
directly or indirectly to the properties, liabilities or operations of
the Business, with respect to periods prior to the Closing, and the
right to make copies and extracts therefrom, to the extent that such
access may be reasonably required by the requesting party for any
proper business purpose. Each party agrees for a period extending eight
(8) years after the Closing not to destroy or otherwise dispose of any
such records without first offering in writing to surrender such
records to the other party, which party shall have ten (10) days after
such offer to agree in writing to take possession thereof.
7.5. Collection of Accounts Receivable. Company shall use its
commercially reasonable efforts to collect for Buyer's account all accounts
receivable balances set forth on the Final Closing Balance Sheet and shall
promptly remit to Buyer all amounts collected. To facilitate collection of
accounts receivable, Buyer agrees to reasonably discharge its obligations under
and pursuant to the Business' product warranties as assumed by Buyer pursuant to
Paragraph 2.1.(e). Company shall apply all accounts receivable payments received
from customers to the specific invoices for which such payments are submitted if
correlation of specific invoices with such payments is reasonably possible and,
if such correlation is not reasonably possible, then such payments shall be
applied to that customer's oldest outstanding accounts receivable balance first.
Buyer shall promptly transfer, assign and deliver to the Company all of Buyer's
right, title and interest in and to any receivables reflected in the Final
Closing Business Balance Sheet which are not collected within one hundred twenty
(120) days following Closing. Buyer shall reasonably assist in collection
efforts following the transfer of such receivables. Buyer will not adjust any
accounts receivable balances reflected on the Final Closing Business Balance
Sheet without the written consent of the Company, which consent shall not be
unreasonably withheld. Notwithstanding anything contained in this Section 7.5 to
the contrary, Company shall undertake collection efforts in substantially the
same manner after the Closing as is customary in the collection of accounts
receivable arising from Company's business prior to the Closing Date, provided
that Company shall not be required to file suit, employ the services of a
collection agency or commence any other official proceeding in order to collect
any delinquent accounts included in Company's accounts receivable.
7.6. Litigation Cooperation. The parties agree after the Closing to
cooperate with one another in connection with any litigation, claim, action or
proceeding involving the Business including without cost (except reimbursement
of out-of-pocket expenses), providing copies of
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drawings and other documents and providing employees as witnesses or otherwise
to assist in such litigation, all as reasonably requested from time to time by
the parties.
7.7. Product Marking. Buyer agrees that with respect to all
products of the Business manufactured or sold after the closing Date that it
will xxxx such products so that such can be clearly identified as having been
manufactured or sold after the Closing Date.
7.8. Xxxxxxx Receivable/Inventory. The Business has for several
years supplied Xxxxxxx America ("Xxxxxxx") and currently supplies Xxxxxxx
several different hydraulic cylinders. There is presently a dispute with Xxxxxxx
regarding one of the hydraulic cylinders. Xxxxxxx has debited the receivable due
from Xxxxxxx to the Business for a portion of the problem and Company
anticipates that at the Effective Time there will be a receivable due from
Xxxxxxx in the amount of approximately One Hundred Thousand Dollars ($100,000)
which as a result of the foregoing is disputed by Xxxxxxx (the "Xxxxxxx Disputed
Receivable"). Xxxxxxx has shipped back to the company the product from which the
Xxxxxxx Disputed Receivable arose, but such product (the "Xxxxxxx Disputed
Product") has not been reflected on the books of the Business as inventory.
Company has agreed to "rework" certain of the Xxxxxxx Disputed Product and
subject to Xxxxxxx'x successful testing of such reworked product, Xxxxxxx has
agreed to accept and pay for such reworked product after the Effective Time.
Buyer agrees to reasonably cooperate with Company in reworking (as and to the
extent reasonably requested by Company) the Xxxxxxx Disputed Product and
otherwise in assisting Company to collect the Xxxxxxx Disputed Receivable. To
the extent such costs are not appropriately billed to, and actually collected
from, Xxxxxxx, Company shall promptly, upon the submission of invoices therefor,
reimburse Buyer for Buyer's reasonable cost of labor and material (but not
burden) incurred by Buyer in reworking (as and to the extent reasonably
requested by Company) the Xxxxxxx Disputed Product ("Buyer Xxxxxxx Reworking
Costs"). At the end of one (1) year following Closing, Company shall pay to
Buyer the amount, if any, of the Xxxxxxx Disputed Receivable out of the amount
held in Escrow which is not actually collected within one (1) year following
Closing. Company and Buyer agree that the Xxxxxxx Disputed Receivable shall be
reflected on the Estimated Closing Business balance Sheet and the Final Closing
Business Balance Sheet at its full value and that the Xxxxxxx Disputed Product
shall not be reflected as inventory on the Estimated Closing Business Balance
Sheet on the Final Closing Business Balance Sheet. The agreement set forth in
this Section 7.8 shall constitute the parties entire agreement of the parties
with respect to the matters which are the subject hereof and shall supersede the
other provisions of this Agreement that may otherwise be applicable.
8. FURTHER COVENANTS OF COMPANY
Company covenants and agrees as follows:
8.1. Conduct of Business Pending the Closing. From the date hereof
until the Closing, except as otherwise approved in writing by the Buyer:
8.1.(a) No Changes. Company will carry on the Business
diligently and substantially in the same manner as heretofore and will
not make or institute any material changes in its methods of purchase,
sale, management, accounting or operation.
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8.1.(b) Maintain Organization. Company will use reasonable
efforts to maintain, preserve, renew and keep in favor and effect the
existence, rights and franchises of the Business and will use
reasonable efforts to preserve the Business intact, to keep available
to Buyer the present officers and employees of the Business, and to
preserve for Buyer its present relationships with suppliers and
customers and others having business relationships with the Business.
8.1.(c) No Breach. Company will not do or omit any act, or
permit any omission to act, which may cause a material breach of any
contract, commitment or obligation material to the Business, or any
breach of any representation, warranty, covenant or agreement made by
Company herein, or which would have required disclosure on Schedule 4.5
had it occurred after the date of the Recent Business Balance Sheet and
prior to the date of this Agreement.
8.1.(d) New Contracts. No contract or commitment will be
entered into, and no purchase of raw materials or supplies and no sale
of goods or services (real, personal, or mixed, tangible or intangible)
will be made, by or on behalf of Company in connection with its
operation of the Business, except contracts, commitments, purchases or
sales which are in the ordinary course of business and consistent with
past practice.
8.1.(e) Maintenance of Property. Company shall use, operate,
maintain and repair all property constituting Purchased Assets
hereunder in a normal business manner.
8.1.(f) Interim Financials. Company will provide Buyer with
interim monthly financial statements of the Business as and when they
are available.
8.2. Consents. Company will use reasonable efforts prior to Closing
to obtain all consents necessary for the consummation of the transactions
contemplated hereby including those described in Schedule 8.2.
8.3. Other Action. Company shall use reasonable efforts to cause
the fulfillment at the earliest practicable date of all of the conditions to the
parties' obligations to consummate the transactions contemplated in this
Agreement.
8.4. Disclosure. Company shall have a continuing obligation to
promptly notify Buyer in writing with respect to any matter hereafter arising or
discovered which, if existing or known at the date of this Agreement, would have
been required to be set forth or described in any Schedule hereto.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing Date
shall be subject to the satisfaction prior to or at the Closing of each of the
following conditions:
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9.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Company in this Agreement, and the
statements contained in the Disclosure Schedule or in any instrument, list,
certificate or writing delivered by Company pursuant to this Agreement, shall be
true and correct in all material respects when made and shall be true and
correct in all material respects at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing Date,
except for any changes permitted by the terms of this Agreement or consented to
in writing by Buyer. Buyer's actions pursuant to Section 6.1 with respect to the
Collective Bargaining Agreement, the Bargaining Unit Employees and other
employees of the Business shall be solely the responsibility of Buyer and Buyer
and/or Parent shall not be entitled to claim that the conditions provided for in
this Section 9.1 has not been satisfied as a result of any event, fact or
circumstance which results directly or indirectly, in whole or in part, from any
actions by Buyer and/or Parent pursuant to Section 6.1 or otherwise.
9.2. Compliance With Agreement. Company shall have in all material
respects performed and complied with all of its agreements and obligations under
this Agreement which are to be performed or complied with by Company prior to or
on the Closing Date, including the delivery of the closing documents specified
in Section 12.1.
9.3. Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
9.4. Termination of Lease for Airport Facility. Company shall have
terminated the lease with respect to the Airport Facility and all material,
equipment and other assets of Company shall be removed from the Airport Facility
and all such equipment and assets which are material to Company's operations
shall have been placed into the Main Facility in a functional manner.
9.5. Environmental Report/Environmental Indemnity. Buyer shall have
received either of the following:
9.5.(a) The Environmental Report identified in section 7.1(a)
of this Agreement which does not identify any recognized environmental
conditions ("RECs") (as defined in the ASTM E 1527 Standards on
Environmental Site Assessments for Commercial Real Estate, 2nd. ed.)
which are also Identified Company Releases or which are also Identified
Third Party Releases which Buyer reasonably determines to pose a
substantial risk of material cost, liability or expense to Buyer or a
significant potential for material interference with Buyer's intended
uses or operations at the Property; or
9.5.(b) An Environmental Indemnity Agreement, substantially
in the form attached hereto as Exhibit 2, in which Company agrees to
remediate or otherwise address to the reasonable satisfaction of Buyer
all RECs which are:
(i) Identified Company Releases; and
(ii) Identified Third Party Releases which Buyer
reasonably determines to pose a substantial risk of material
cost, liability or expense to
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Buyer or a significant potential for material interference
with Buyer's intended uses or operations at the Property.
9.6. Absence of Certain Events/Conditions. There shall not have
been, and Buyer shall not have discovered any event, fact or circumstance
(including without limitation fire, flood, explosion, act of God, act of any
government, governmental subdivision or governmental agency, decreased customer
demand or termination or modification of an advantageous contract or business
relationship of the Business, whether or not any such event is covered by
insurance) which shows that there has been, since the date of the Recent
Business Balance Sheet any material adverse change in the assets or operations
of the Business. Buyer's actions pursuant to Section 6.1 with respect to the
Collective Bargaining Agreement, the Bargaining Unit Employees and other
employees of the Business shall be solely the responsibility of Buyer and Buyer
and/or Parent shall not be entitled to claim that the condition provided for in
this Section 9.6 has not been satisfied as a result of any event, fact or
circumstance which results directly or indirectly, in whole or in part, from any
actions by Buyer (and/or Parent) pursuant to Section 6.1 or otherwise.
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following conditions:
10.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Buyer and Parent in this Agreement
shall be true and correct in all material respects when made and shall be true
and correct in all material respects at and as of the Closing Date as though
such representations and warranties were made or given on and as of the Closing
Date.
10.2. Compliance With Agreement. Buyer and Parent shall have in all
material respects performed and complied with all of Buyer's and Parent's
agreements and obligations under this Agreement which are to be performed or
complied with by Buyer and Parent prior to or on the Closing Date, including the
delivery of the closing documents specified in Section 12.2.
10.3. Xxxx-Xxxxx-Xxxxxx Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
10.4. Environmental Costs. Company's anticipated expenditures which
would be incurred under and pursuant to the proposed Environmental Indemnity
Agreement referred to in Section 9.5 shall not exceed Fifty Thousand Dollars
($50,000).
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11. INDEMNIFICATION
11.1. By Company. Subject to the terms and conditions of this
Article 11, Company hereby agrees to indemnify, defend and hold harmless Buyer
and Parent, and their respective directors, officers, employees and controlled
and controlling persons (hereinafter "Buyer's affiliates"), from and against all
Claims asserted against, resulting to, imposed upon, or incurred by Buyer,
Parent, Buyer's affiliates, the Business or the Purchased Assets, directly or
indirectly, by reason of, arising out of or resulting from (a) the inaccuracy or
breach of any representation or warranty of Company contained in or made
pursuant to this Agreement; (b) the breach of any covenant of Company contained
in this Agreement; (c) all accounts receivable reflected on the Final Closing
Business Balance Sheet which are not actually collected within one hundred
twenty (120) days following Closing (the "Accounts Receivable Adjustment"), (d)
any Claims initiated by a third party, including, without limitation, any
federal, state or local governmental agency, department or section against Buyer
with respect to any Identified Third Party Releases, provided such Claims are
initiated prior to April 30, 2005, or (e) any Claim of or against Company, the
Purchased Assets or the Business not specifically assumed by Buyer pursuant
hereto. As used in this Article 11, the term "Claim" shall include (i) all
Liabilities; (ii) all losses, damages (including, without limitation,
consequential damages), judgments, awards, settlements, costs and expenses
(including, without limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs and attorneys fees and expenses); and
(iii) all demands, claims, actions, costs of investigation, causes of action,
proceedings and assessments, whether or not ultimately determined to be valid.
11.2. By Buyer and Parent. Subject to the terms and conditions of
this Article 11, Buyer and Parent, jointly and severally, hereby agree to
indemnify, defend and hold harmless Company, its directors, officers, employees
and controlling persons, from and against all Claims asserted against, resulting
to, imposed upon or incurred by any such person, directly or indirectly, by
reason of or resulting from (a) the inaccuracy or breach of any representation
or warranty of Buyer and/or Parent contained in or made pursuant to this
Agreement; (b) the breach of any covenant of Buyer and/or Parent contained in
this Agreement; and (c) all Claims of or against Company specifically assumed by
Buyer pursuant hereto, including any Claim under and pursuant to the WARN Act
and any Claim arising out of any liability assumed by Buyer pursuant to
paragraph 2.1 of this Agreement.
11.3. Indemnification of Third-Party Claims. The obligations and
liabilities of any party to indemnify any other under this Article 11 with
respect to Claims relating to third parties shall be subject to the following
terms and conditions:
11.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") prompt written notice of any such Claim, and the Indemnifying
Party will undertake the defense thereof by representatives chosen by
it. So long as the Indemnifying Party is defending any such Claim
actively and in good faith, the Indemnified Party shall not settle such
Claim. The Indemnified Party shall make available to the Indemnifying
Party or its representatives all records and other materials required
by them and in the possession or under the control of the
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Indemnified Party, for the use of the Indemnifying Party and its
representatives in defending any such Claim, and shall in other
respects give reasonable cooperation in such defense.
11.3.(b) Failure to Defend. If the Indemnifying Party, within
a reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim, on behalf of and for the account and risk of the
Indemnifying Party, and the Indemnifying Party shall thereafter have no
right to challenge the Indemnified Party's defense, compromise,
settlement or consent to judgment.
11.3.(c) Indemnified Party's Rights. Anything in this Section
11 to the contrary notwithstanding, the Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which does
not include as an unconditional term thereof the giving by the claimant
or the plaintiff to the Indemnified Party of a release from all
Liability in respect of such Claim.
11.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 11, which payment may be
accomplished in whole or in part, at the option of the Indemnified Party, by the
Indemnified Party setting off any amount owed to the Indemnifying Party by the
Indemnified Party. To the extent set-off is made by an Indemnified Party in
satisfaction or partial satisfaction of an indemnity obligation under this
Article 11 that is disputed by the Indemnifying Party, upon a subsequent
determination by final judgment not subject to appeal that all or a portion of
such indemnity obligation was not owed to the Indemnified Party, the Indemnified
Party shall pay the Indemnifying Party the amount which was set off and not owed
together with interest from the date of set-off until the date of such payment
at an annual rate equal to the average annual rate in effect as of the date of
the set-off, on those three maturities of United States Treasury obligations
having a remaining life, as of such date, closest to the period from the date of
the set-off to the date of such judgment. Upon judgment, determination,
settlement or compromise of any third party Claim, the Indemnifying Party shall
pay promptly on behalf of the Indemnified Party, and/or to the Indemnified Party
in reimbursement of any amount theretofore required to be paid by it, the amount
so determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnified Party with respect thereto, unless in the case of a
judgment an appeal is made from the judgment. If the Indemnifying Party desires
to appeal from an adverse judgment, then the Indemnifying Party shall post and
pay the cost of the security or bond to stay execution of the judgment pending
appeal. Upon the payment in full by the Indemnifying Party of such amounts, the
Indemnifying Party shall succeed to the rights of such Indemnified Party, to the
extent not waived in settlement, against the third party who made such third
party Claim.
11.5. Limitations on Indemnification.
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11.5.(a) Time Limitation. No claim or action shall be brought
under this Article 11 for breach of a representation or warranty after
the lapse of two (2) years following the Closing.
11.5.(b) Amount Limitation. An Indemnified Party shall not be
entitled to indemnification under this Article 11 for breach of a
representation or warranty except to the extent the aggregate of the
Indemnifying Party's indemnification obligations to the Indemnified
Party pursuant to this Article 11 (but for this Section 11.5.(b))
exceeds Fifty Thousand Dollars ($50,000).
12. CLOSING
The closing of this transaction ("xxx Xxxxxxx") shall take place at the
offices of Xxxxx & Xxxxxxx, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, at
10:00 A.M. on May 12, 1997, or at such other time and place as the parties
hereto shall agree upon. Such date is referred to in this Agreement as the
"Closing Date".
12.1. Documents to be Delivered by Company. At the Closing, Company
shall deliver to Buyer the following documents, in each case duly executed or
otherwise in proper form:
12.1.(a) Bills of Sale. Bills of sale and such other
instruments of assignment, transfer, conveyance and endorsement as will
be sufficient in the opinion of Buyer and its counsel to transfer,
assign, convey and deliver to Buyer the Purchased Assets as
contemplated hereby.
12.1.(b) Compliance Certificate. A certificate signed by the
chief executive officer of Company that each of the representations and
warranties made by Company in this Agreement is true and correct in all
material respects on and as of the Closing Date with the same effect as
though such representations and warranties had been made or given on
and as of the Closing Date (except for any changes permitted by the
terms of this Agreement or consented to in writing by Buyer), and that
Company has performed and complied with all of Company's obligations
under this Agreement which are to be performed or complied with on or
prior to the Closing Date.
12.1.(c) Opinion of Counsel. A written opinion of Xxxxx &
Lardner, counsel to Company, dated as of the Closing Date, addressed to
Buyer, substantially in the form of Exhibit 3 hereto.
12.1.(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Company authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
12.1.(e) Escrow Agreement. The Escrow Agreement duly executed
by Company and the Escrow Agent in the form of Exhibit 1 hereto.
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12.1.(f) Other Documents. All other documents, instruments or
writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement and such other certificates of authority and
documents as Buyer may reasonably request.
12.2. Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver to Company, and Parent shall cause Buyer to deliver to Company,
the following documents, in each case duly executed or otherwise in proper form:
12.2.(a) Cash Purchase Price. To Company a certified or bank
cashier's check (or wire transfer) as required by Section 3.2.(c)
hereof, and to the Escrow Agent, a certified or bank cashier's check
(or wire transfer) as required by Section 3.2.(c) hereof.
12.2.(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Company and its counsel to evidence the assumption of
Company debts, liabilities and obligations as provided for in Article
2.
12.2.(c) Compliance Certificate. A certificate signed by the
chief executive officer of Buyer that the representations and
warranties made by Buyer in this Agreement are true and correct on and
as of the Closing Date with the same effect as though such
representations and warranties had been made or given on and as of the
Closing Date (except for any changes permitted by the terms of this
Agreement or consented to in writing by Company), and that Buyer has
performed and complied with all of Buyer's obligations under this
Agreement which are to be performed or complied with on or prior to the
Closing Date.
12.2.(d) Opinion of Counsel. A written opinion of Xxxxx,
Xxxxxx & Irish, counsel to Buyer and Parent, dated as of the Closing
Date, addressed to Company, in substantially the form of Exhibit 4
hereto.
12.2.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer and Parent authorizing
and approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
12.2.(f) Escrow Agreement. The Escrow Agreement duly executed
by Buyer and the Escrow Agent in the form of Exhibit 1 hereto.
12.2.(g) Other Documents. All other documents, instruments or
writings required to be delivered to Company at or prior to the Closing
pursuant to this Agreement and such other certificates of authority and
documents as Company may reasonably request.
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13. TERMINATION
13.1. Right of Termination Without Breach. This Agreement may be
terminated without further liability of any party at any time prior to the
Closing:
13.1.(a) by written agreement of Buyer, Parent and Company, or
13.1.(b) by either Buyer and Parent or by Company if the
Closing shall not have occurred on or before June 30, 1997, provided
the terminating party has not, through breach of a representation,
warranty or covenant, prevented the Closing from occurring on or before
such date.
13.2. Termination for Breach.
13.2.(a) Termination by Buyer. If (i) there has been a
material violation or breach by Company of any of the agreements,
representations or warranties contained in this Agreement which has not
been waived in writing by Buyer and Parent, or (ii) there has been a
failure of satisfaction of a condition to the obligations of Buyer and
Parent which has not been so waived, including but not limited to the
provisions of Paragraph 9.5 hereof, or (iii) Company shall have
attempted to terminate this Agreement under this Article 13 or
otherwise without grounds to do so, then Buyer and Parent may, by
written notice to Company at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 13.2.(c) hereof.
13.2.(b) Termination by Company. If (i) there has been a
material violation or breach by Buyer or Parent of any of the
agreements, representations or warranties contained in this Agreement
which has not been waived in writing by Company, or (ii) there has been
a failure of satisfaction of a condition to the obligations of Company
which has not been so waived, or (iii) Buyer and/or Parent shall have
attempted to terminate this Agreement under this Article 13 or
otherwise without grounds to do so, then Company may, by written notice
to Buyer and Parent at any time prior to the Closing that such
violation, breach, failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 13.2.(c) hereof.
13.2.(c) Effect of Termination. Termination of this Agreement
pursuant to this Section 13.2 shall not in any way terminate, limit or
restrict the rights and remedies of any party hereto against any other
party which has violated, breached or failed to satisfy any of the
representations, warranties, covenants, agreements, conditions or other
provisions of this Agreement prior to termination hereof. In addition
to the right of any party under common law to redress for any such
breach or violation, each party whose breach or violation has occurred
prior to termination shall jointly and severally indemnify each other
party for whose benefit such representation, warranty, covenant,
agreement or other provision was made ("indemnified party") from and
against all losses, damages (including, without limitation,
consequential damages), costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated
matter), penalties, court costs, and attorneys fees and expenses)
asserted against,
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resulting to, imposed upon, or incurred by the indemnified party,
directly or indirectly, by reason of, arising out of or resulting from
such breach or violation. Subject to the foregoing, the parties'
obligations under Section 16.7 of this Agreement shall survive
termination.
14. COVENANT NOT TO COMPETE
14.1. Non-Competition. Following the Closing, and for a period of
ten (10) years following the Closing, Company agrees not to directly or
indirectly engage or participate in the business of the manufacture of hydraulic
cylinders for sale to original equipment manufacturers or, as replacement parts
therefor, in competition with the business conducted by Buyer utilizing the
purchased assets and business (a "Competing Business"). Nothing herein shall
prohibit Company from manufacturing hydraulic cylinders for its own use or the
use of subsidiaries and affiliates (and as replacement parts for products
manufactured by the Company, its subsidiaries or affiliates) in substantially
the same manner and to substantially the same extent as Company now manufactures
hydraulic cylinders for its own use or use of its subsidiaries and affiliates.
Nothing herein shall prohibit any person or entity from owning five percent (5%)
or less of a publicly traded company which conducts a business which is
competitive with Buyer's business. The foregoing covenant not to compete shall
not be deemed violated, if in connection with an acquisition by the Company, (i)
it acquires as a part thereof a business engaged in a "Competing Business"
providing that such Competing Business comprises for the twelve (12) months
prior to the acquisition no more than twenty percent (20%) (measured by sales)
of the acquired business and Buyer disposes of such Competing Business within
two (2) years following the acquisition or (ii) it acquires as a part thereof a
business engaged in the manufacture of hydraulic cylinders utilized by the
acquired business, continues such manufacture of hydraulic cylinders for
utilization of the acquired business in substantially the same manner and to
substantially the same extent as at the date of acquisition.
14.2. Enforcement. The provisions of the covenant contained in this
Section 14 are severable and independent and shall be interpreted and applied
consistently with requirements of reasonableness and equity. If any provision of
the covenant contained in this Section 14 shall be held to be invalid or
otherwise unenforceable, in whole or in part, the remainder of the provisions,
or the enforceable parts thereof, shall not be affected thereby.
14.3. Injunctive Relief. Buyer and Company acknowledge that
compliance by Company with the covenant contained in this Section 14 is
necessary to protect the interests of Buyer and that a breach of the covenant
contained in this Section 14 will result in irreparable and continuing damage to
Buyer for which there will be no adequate remedy at law. Company hereby agrees,
without intending to limit the remedies available to Buyer, that Buyer and its
successors and assigns shall be entitled to injunctive relief with respect to
the covenant contained in this Section 14 in addition to such other and further
relief as may be appropriate.
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15. RESOLUTION OF DISPUTES
15.1. Arbitration. Any dispute, controversy or claim arising out of
or relating to this Agreement or any contract or agreement entered into pursuant
hereto or the performance by the parties of its or their terms shall be settled
by binding arbitration held in Milwaukee, Wisconsin in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect.
15.2. Arbitrators. If the matter in controversy (exclusive of
attorney fees and expenses) shall appear, as at the time of the demand for
arbitration, to exceed One Million Dollars ($1,000,000), then the panel to be
appointed shall consist of three neutral arbitrators; otherwise, one neutral
arbitrator.
15.3. Procedures; No Appeal. The arbitrator(s) shall allow such
discovery as the arbitrator(s) determine appropriate under the circumstances and
shall resolve the dispute as expeditiously as practicable, and if reasonably
practicable, within one hundred twenty (120) days after the selection of the
arbitrator(s). The arbitrator(s) shall give the parties written notice of the
decision, with the reasons therefor set out, and shall have thirty (30) days
thereafter to reconsider and modify such decision if any party so requests
within ten (10) days after the decision. Thereafter, the decision of the
arbitrator(s) shall be final, binding, and nonappealable with respect to all
persons, including (without limitation) persons who have failed or refused to
participate in the arbitration process.
15.4. Authority. The arbitrator(s) shall have authority to award
relief under legal or equitable principles, including interim or preliminary
relief, and to allocate responsibility for the costs of the arbitration and to
award recovery of attorneys fees and expenses in such manner as is determined to
be appropriate by the arbitrator(s).
15.5. Entry of Judgment. Judgment upon the award rendered by the
arbitrator(s) may be entered in any court having in personam and subject matter
jurisdiction. Company, Buyer and each Shareholder hereby submit to the in
personam jurisdiction of the Federal and State courts in Wisconsin, for the
purpose of confirming any such award and entering judgment thereon.
15.6. Confidentiality. All proceedings under this Article 15, and
all evidence given or discovered pursuant hereto, shall be maintained in
confidence by all parties.
15.7. Continued Performance. The fact that the dispute resolution
procedures specified in this Article 15 shall have been or may be invoked shall
not excuse any party from performing its obligations under this Agreement and
during the pendency of any such procedure all parties shall continue to perform
their respective obligations in good faith, subject to any rights to terminate
this Agreement that may be available to any party and to the right of setoff
provided in Section 11.4 hereof.
15.8. Tolling. All applicable statutes of limitation shall be tolled
while the procedures specified in this Article 15 are pending. The parties will
take such action, if any, required to effectuate such tolling.
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15.9. Escrow Agent Unnecessary. The parties agree that the escrow
agent under and as identified in the Escrow Agreement is not a necessary party
to and shall not be joined in or made party to any arbitration proceeding
commenced under this Article 15.
16. MISCELLANEOUS
16.1. Further Assurance. From time to time, at Buyer's request and
without further consideration, Company will execute and deliver to Buyer such
documents and take such other action as Buyer may reasonably request in order to
consummate more effectively the transactions contemplated hereby and to vest in
Buyer good, valid and marketable title to the business and assets being
transferred hereunder.
16.2. Disclosures and Announcements. Both the timing and the content
of all disclosure to third parties and public announcements concerning the
transactions provided for in this Agreement by either Company, Parent or Buyer
shall be subject to the approval of the other parties in all essential respects,
except that no approval shall be required but prior written notice shall be
given as to any statements and other information which a party may submit to the
Securities and Exchange Commission, any stock exchange or such party's
stockholders or be required to make pursuant to any rule or regulation of the
Securities and Exchange Commission or otherwise required by law.
16.3. Assignment; Parties in Interest.
16.3.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other party.
16.3.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
16.4. Law Governing Agreement. This Agreement may not be modified or
terminated orally, and shall be construed and interpreted according to the
internal laws of the State of Delaware, excluding any choice of law rules that
may direct the application of the laws of another jurisdiction.
16.5. Amendment and Modification. Buyer and Company may amend,
modify and supplement this Agreement in such manner as may be agreed upon by
them in writing.
16.6. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a) personally
delivered; (b) sent by telecopier, facsimile transmission or other electronic
means of transmitting written documents; or (c) sent to the parties at their
respective addresses indicated herein by registered or certified U.S. mail,
return receipt requested and postage prepaid, or by private overnight mail
courier service. The respective addresses to be used for all such notices,
demands or requests are as follows:
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(a) If to Buyer or to Parent, to:
Kaydon Corporation
Arbor Shoreline Office Park
19345 XX 00 Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx Xxxxxx, President
and Chief Executive Officer
Facsimile: 813/524-3629
(with a copy to)
Xxxxx, Xxxxxx & Irish
000 Xxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: 616/726-3404
or to such other person or address as Buyer and Parent shall furnish to Company
in writing.
(b) If to Company, to:
Xxxx-Xxxxxx Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx, President
and Chief Executive Officer
Facsimile: 414/542-7890
(with a copy to)
Xxxxxxx X. XxXxxxxxx
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Facsimile: (000) 000-0000
or to such other person or address as Company shall furnish to Buyer and Parent
in writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this paragraph,
such communication shall be deemed delivered the next business day after
transmission (and sender shall bear the burden of proof of delivery); if sent by
overnight courier pursuant to this paragraph, such communication shall be deemed
delivered upon receipt; and if sent by U.S. mail pursuant to this paragraph,
such communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as
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of the date of such failure or refusal. Any party to this Agreement may change
its address for the purposes of this Agreement by giving notice thereof in
accordance with this Section.
16.7. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
16.7.(a) Brokerage. Company represents and warrants to Buyer
and Parent, and Buyer and Parent represent and warrant to Company, that
there is no broker involved or in any way connected with the transfer
provided for herein. Buyer and Parent, jointly and severally, agree to
hold Company harmless from and against all claims for brokerage
commissions or finder's fees incurred through any act of Buyer or
Parent in connection with the execution of this Agreement or the
transactions provided for herein. Company agrees to hold Buyer and
Parent harmless from and against all claims for brokerage commissions
or finder's fees incurred through any act of Company in connection with
the execution of this Agreement or the transactions provided for
herein.
16.7.(b) Expenses to be Paid by Buyer. Buyer shall pay, and
Buyer and Parent shall jointly and severally indemnify, defend and hold
Company harmless from and against, each of the following:
(i) Transfer Taxes. Any sales, use, excise,
transfer or other similar tax imposed with respect to the
transactions provided for in this Agreement, and any interest
or penalties related thereto.
(ii) Environmental Audit. The fees and other
expenses relating to the environmental audit performed
pursuant to Section 7.1 hereof.
16.7.(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its counsel
and other agents in connection with the transactions contemplated
hereby.
16.7.(d) Costs of Litigation or Arbitration. The parties agree
that (subject to the discretion, in an arbitration proceeding, of the
arbitrator as set forth in Section 15.4) the prevailing party in any
action brought with respect to or to enforce any right or remedy under
this Agreement shall be entitled to recover from the other party or
parties all reasonable costs and expenses of any nature whatsoever
incurred by the prevailing party in connection with such action,
including without limitation attorneys' fees and prejudgment interest.
16.8. Entire Agreement. This instrument embodies the entire
agreement between the parties hereto with respect to the transactions
contemplated herein, and there have been and are no agreements, representations
or warranties between the parties other than those set forth or provided for
herein.
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16.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16.10. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
Where any group or category of items or matters is defined collectively in the
plural number, any item or matter within such definition may be referred to
using such defined term in the singular number.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
XXXX-XXXXXX CORPORATION
By:/s/ Xxxxxx X. Xxxxxxx
-----------------------------------------------------
Xxxxxx X. Xxxxxxx, President and Chief Executive
Officer
KAYDON CORPORATION
By:/s/ Xxxxxxx Xxxxxx
-----------------------------------------------------
Xxxxxxx Xxxxxx, President and
Chief Executive Officer
KAYDON ACQUISITION VIII, INC.
By:/s/ Xxxxxxx Xxxxxx
-----------------------------------------------------
Xxxxxxx Xxxxxx, Treasurer
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EXHIBIT 10.16
PART 2 OF 2
ESCROW AGREEMENT
ESCROW AGREEMENT (the "Escrow Agreement"), dated as of the _____ day of
May, 1997, is by and among XXXX-XXXXXX CORPORATION, a Wisconsin corporation (the
"Company"), KAYDON ACQUISITION VIII, INC., a Delaware corporation (the "Buyer')
and FIRSTAR TRUST COMPANY (the "Escrow Agent").
RECITALS:
A. Pursuant to that certain Asset Purchase Agreement (the
"Purchase Agreement"), dated as of April 9, 1997, by and among, inter alia, the
Kaydon Corporation, Buyer and the Company, the Buyer has agreed to purchase from
the Company the business and substantially all of the assets of the Company's
Great Bend Industries Division.
B. The amount that the Buyer has agreed to pay to the Company as
consideration pursuant to the Purchase Agreement was in part determined and
agreed to by the Buyer on the basis of the estimated Net Asset Value of the
Business, all as set out more fully in the Purchase Agreement.
C. Upon final determination of the Final Closing Business Balance
Sheet of the Company, the Purchase Agreement provides that certain adjustments
to the Purchase Price are to be made and payments made in respect thereof (any
such payment required to be made by the Company being hereinafter referred to as
the "Company Payable Adjustment").
D. The Company Payable Adjustment, if any, is first to be paid
from the Escrow Fund as hereinafter provided.
E. Pursuant to Section 7.8 of the Purchase Agreement, Company has
agreed to reimburse Buyer for "Buyer Xxxxxxx Reworking Costs" (as defined in the
Purchase Agreement), if any, and Company and Buyer have agreed to set aside in a
separate fund under this Escrow Agreement the estimated Buyer Xxxxxxx Reworking
Costs in the amount of Eleven Thousand Seven Hundred Eighty Dollars ($11,780)
(the "Xxxxxxx Rework Fund"). Also, pursuant to Section 7.8 of the Purchase
Agreement, Company has agreed at the end of one (1) year following Closing, to
pay Buyer the amount, if any, of the Xxxxxxx Disputed Receivable in the amount
of Eighty-Four Thousand Four Hundred Twenty Dollars ($84,420) which is not
actually collected within one (1) year following Closing (any payment required
to be made by Company as a result of the Xxxxxxx Disputed Receivable not being
fully collected being hereinafter referred to as the "Xxxxxxx Receivable
Adjustment").
F. Pursuant to Section 11.1(c) of the Purchase Agreement, Company
has agreed to indemnify Buyer for all accounts receivable reflected on the Final
Closing Business Balance Sheet which are not actually collected within one
hundred twenty (120) days following the closing except for the Xxxxxxx Disputed
Receivable which is the subject of (E) above (any payment required to be made by
Company being hereinafter referred to as the "Accounts Receivable Adjustment").
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G. Pursuant to Sections 11.1(a), (b) and (d) of the Purchase
Agreement, the Company has agreed to indemnify, defend and hold harmless the
Buyer from and against certain other Claims, if any, as defined and set forth in
the Purchase Agreement.
H. The Purchase Agreement contemplates execution and delivery of
this Escrow Agreement providing for the escrow of cash to be held for the
payment, under certain circumstances, of the Company Payable Adjustment, if any,
and of any claim or claims for indemnity, if any, by the Buyer, in accordance
with certain provisions of the Purchase Agreement, and under certain
circumstances, the costs of Response Actions.
I. The Company and the Buyer desire that the Escrow Agent act as
escrow agent, and the Escrow Agent is willing to so act, all upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the above and of the mutual
covenants and agreements herein contained, and of other good and valuable
consideration, the receipt and sufficiency of which the parties hereto hereby
acknowledge, the parties hereto agree as follows:
1. Defined Terms. Unless otherwise specified herein, all defined
terms used but not otherwise defined herein shall have the respective meanings
assigned to them in the Purchase Agreement.
2. Deposits. Pursuant to Section 3.2(b) of the Purchase
Agreement, at the time of the Closing under the Purchase Agreement, the Buyer
shall deposit with the Escrow Agent the amount of Two Million Dollars
($2,000,000) (referred to herein as the "Escrow Fund"), which shall be held by
the Escrow Agent as the object of, and in accordance with, the escrow
arrangement created hereby. Pursuant to Section 3.2 of the Purchase Agreement,
the deposit of the Escrow Fund shall be a credit to the Purchase Price in the
amount of the Escrow Fund.
3. Acknowledgement of Receipt. The Escrow Agent hereby
acknowledges receipt of the Escrow Fund and agrees to act as escrow agent under
this Escrow Agreement.
4. Account. The Escrow Agent shall record the amount initially
credited to such account and all subsequent transactions with respect to such
account pursuant to this Escrow Agreement.
5. Disbursement of Escrow Fund. (a) The Buyer shall be entitled
to payment from the Escrow Fund to the extent Buyer is entitled to indemnity
under Article 11 of the Purchase Agreement, to the extent the Buyer is entitled
to payment under Section 3.2(d) of the Purchase Agreement, and to the extent the
Buyer is entitled to payment under Section 7.8 of the Purchase Agreement.
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(b) On or before the expiration of five (5) days
following the final determination of the Final Closing Business Balance
Sheet in accordance with the Purchase Agreement, (i) if there is a
Company Payable Adjustment, then the Escrow Agent shall distribute to
the Buyer an amount equal to the lesser of (A) the Company Payable
Adjustment, together with interest thereon from the Closing Date to the
date of distribution thereof at a rate equal to the average interest
rate paid on the Escrow Fund during such period, or (B) the Escrow Fund
and all Earnings (as hereinafter defined) thereon, (ii) if there is no
Company Payable Adjustment, then the Escrow Agent shall distribute to
the Company the aggregate sum of Five Hundred Thousand Dollars
($500,000), together with interest thereon from the Closing Date to the
date of distribution thereof at a rate equal to the average interest
rate paid on the Escrow Fund during such period, and (iii) if a Company
Payable Adjustment exists but is less than Five Hundred Thousand
Dollars ($500,000), then the Escrow Agent shall pay an amount equal to
the Company Payable Adjustment, together with interest thereon from the
Closing Date to the date of distribution thereof at a rate equal to the
average interest rate paid on the Escrow Fund during such period, to
the Buyer and an amount equal to the difference between the Company
Payable Adjustment and Five Hundred Thousand Dollars ($500,000),
together with interest thereon from the Closing Date to the date of
distribution thereof at a rate equal to the average interest rate paid
on the Escrow Fund during such period, to the Company. Amounts payable
pursuant to this Section 5(b) shall be paid in accordance with the
terms of (i) a joint written notice of the Buyer and the Company
providing instructions therein or (ii) the issuance of a judgment,
order or decree by any court of competent jurisdiction sitting in the
County of Milwaukee in the State of Wisconsin or the United States
District Court for the Eastern District of Wisconsin.
(c) On 121st day following the closing, (i) if
there is an Accounts Receivable Adjustment, then the Escrow Agent shall
distribute to the Buyer an amount equal to the lesser of (A) the
Accounts Receivable Adjustment, together with interest thereon from the
Closing Date to the date of distribution thereof at a rate equal to the
average interest rate paid on the Escrow Fund during such period, or
(B) the Escrow Fund and all Earnings thereon, (ii) if there is no
Accounts Receivable Adjustment, then the Escrow Agent shall distribute
to the Company the aggregate sum of Nine Hundred Three Thousand Eight
Hundred Dollars ($903,800), together with interest thereon from the
Closing Date to the date of distribution thereof at a rate equal to the
average interest rate paid on the Escrow Fund during such period, and
(iii) if an Accounts Receivable Adjustment exists but is less than Nine
Hundred Three Thousand Eight Hundred Dollars ($903,800), then the
Escrow Agent shall pay an amount equal to the Accounts Receivable
Adjustment, together with interest thereon from the Closing Date to the
date of distribution thereof at a rate equal to the average interest
rate paid on the Escrow Fund during such period, to the Buyer and an
amount equal to the difference between the Accounts Receivable
Adjustment and Nine Hundred Three Thousand Eight Hundred Dollars
($903,800), together with interest thereon from the Closing Date to the
date of distribution thereof at a rate equal to the average interred
rate paid on the Escrow Fund during such period, to the Company.
Amounts payable pursuant to this Section 5(c) shall be paid in
accordance with the terms of (i) a joint written notice of the Buyer
and the Company providing instructions therein or (ii) the issuance of
a judgment, order or decree by any court of competent jurisdiction
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sitting in the County of Milwaukee in the State of Wisconsin or the
United States District Court for the Eastern District of Wisconsin.
(d) On 365th day following the closing, (i) if
there is an Xxxxxxx Receivable Adjustment, then the Escrow Agent shall
distribute to the Buyer an amount equal to the lesser of (A) the
Xxxxxxx Receivable Adjustment, together with interest thereon from the
Closing Date to the date of distribution thereof at a rate equal to the
average interest rate paid on the Escrow Fund during such period, or
(B) the Escrow Fund and all Earnings thereon, (ii) if there is no
Xxxxxxx Receivable Adjustment, then the Escrow Agent shall distribute
to the Company the aggregate sum of Eighty-Four Thousand Four Hundred
Twenty Dollars ($84,420), together with interest thereon from the
Closing Date to the date of distribution thereof at a rate equal to the
average interest rate paid on the Escrow Fund during such period, and
(iii) if an Xxxxxxx Receivable Adjustment exists but is less than
Eighty-Four Thousand Four Hundred Twenty Dollars ($84,420), then the
Escrow Agent shall pay an amount equal to the Xxxxxxx Receivable
Adjustment, together with interest thereon from the Closing Date to the
date of distribution thereof at a rate equal to the average interest
rate paid on the Escrow Fund during such period, to the Buyer and an
amount equal to the difference between the Xxxxxxx Receivable
Adjustment and Eighty-Four Thousand Four Hundred Twenty Dollars
($84,420), together with interest thereon from the Closing Date to the
date of distribution thereof at a rate equal to the average interred
rate paid on the Escrow Fund during such period, to the Company.
Amounts payable pursuant to this Section 5(d) shall be paid in
accordance with the terms of (i) a joint written notice of the Buyer
and the Company providing instructions therein or (ii) the issuance of
a judgment, order or decree by any court of competent jurisdiction
sitting in the County of Milwaukee in the State of Wisconsin or the
United States District Court for the Eastern District of Wisconsin.
(e) If the Buyer shall determine prior to April
30, 1999 that it has a Claim against the Company pursuant to the
provisions of Article 11(a), (b) or (d) of the Purchase Agreement, the
Buyer shall so notify the Escrow Agent and the Company. The Company
shall give notice of objection or consent to such Claim to each of the
Buyer and the Escrow Agent within thirty (30) days after their receipt
of the Buyer's notice, which notice of objection shall consent to or
dispute the matters set forth in the notice of the Claim and shall
specify the amount in dispute, if any. Promptly following delivery by
the Company of a notice of objection or consent or, in the absence of
the delivery by the Company of a notice of objection or consent within
such 30-day period, then the Escrow Agent shall satisfy the undisputed
amount of such Claim promptly following such 30-day period by delivery
to the Buyer, out of the Escrow Fund of an amount equal to either (i)
the amount of such Claim if either (x) a consent is delivered by the
Company or (y) the Company fails to deliver a notice of objection or
consent during such 30-day period or (ii) that portion of the Buyer's
Claim that is not in dispute, if any, in the case a notice of objection
is delivered by the Company. Failure of the Company to deliver a notice
of objection within such 30-day period shall constitute an irrevocable
waiver on the part of the Company of its right to dispute the Claim
made by the Buyer.
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(f) If the Escrow Agent receives a notice of
objection within such thirty-day period, then, concurrently with the
payment to the Buyer of any undisputed amount of such Claim, if any, in
accordance with Section 5(e) hereof, the Escrow Agent shall account for
the amount in dispute as a separate fund (a "Disputed Fund"). If a
notice of objection is timely given and the Company and the Buyer fail
to reach agreement as to the disposition of any Claim within thirty
(30) days after receipt by the Buyer and the Escrow Agent of the notice
of objection, the Company and the Buyer, may proceed to enforce their
respective rights through proceedings in accordance with the Purchase
Agreement. The Escrow Agent shall distribute the amounts accounted for
as a Disputed Fund promptly upon delivery of and in accordance with the
terms of (i) a joint written notice of the Buyer and the Company
providing instructions therein and certifying that the dispute with
respect to any amount deposited in such Disputed Fund has been finally
resolved or (ii) any judgment, order or decree issued by any court of
competent jurisdiction sitting in the County of Milwaukee in the State
of Wisconsin or the United States District Court for the Eastern
District of Wisconsin directing the Escrow Agent as to the proper
distribution of any amount so held. The Company or the Buyer shall
deliver to the Escrow Agent a certified copy of any judgment, order or
decree in any such legal proceedings. The Escrow Agent shall act upon
such judgment, order or decree which has become final in like manner as
though it constituted the joint instructions of the Company and of the
Buyer.
(g) With respect to the Xxxxxxx Rework Fund,
Buyer shall be entitled to reimbursement from such fund for Buyer
Xxxxxxx Reworking Costs. Buyer may from time to time notify the Escrow
Agent and the Company that it has a claim for reimbursement for Buyer
Xxxxxxx Reworking Costs ("Buyer Swing Reworking Costs Claim").
(h) The Company shall give notice of objection
or consent to such claim for Buyer Xxxxxxx Reworking Costs Claim to
each of the Buyer and the Escrow Agent within thirty (30) days after
their receipt of the Buyer's notice, which notice of objection shall
consent to or dispute the matters set forth in the notice of a Buyer
Xxxxxxx Reworking Costs Claim and shall specify the amount in dispute,
if any. Promptly following delivery by the Company of a notice of
objection or consent or, in the absence of the delivery by the Company
of a notice of objection or consent within such 30-day period, then the
Escrow Agent shall satisfy the undisputed amount of such Buyer Xxxxxxx
Reworking Costs Claim promptly following such 30-day period by delivery
to the Buyer, out of the Xxxxxxx Rework Fund of an amount equal to
either (i) the amount of such Buyer Xxxxxxx Reworking Costs Claim if
either (x) a consent is delivered by the Company or (y) the Company
fails to deliver a notice of objection or consent during such 30-day
period or (ii) that portion of the Buyer Xxxxxxx Reworking Costs Claim
that is not in dispute, if any, in the case a notice objection is
delivered by the Company. Failure of the Company to deliver a notice of
objection within such 30-day period shall constitute an irrevocable
waiver on the part of the Company of its right to dispute Buyer Xxxxxxx
Reworking Costs Claim made by the Buyer.
(i) If the Escrow Agent receives a notice of
objection within such thirty-day period, then, concurrently with the
payment to the Buyer of any undisputed amount
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of such Claim, if any, in accordance with Section 5(h) hereof, the
Escrow Agent shall account for the amount in dispute as a separate fund
(a "Disputed Fund"). If a notice of objection is timely given and the
Company and the Buyer fail to reach agreement as to the disposition of
any Claim within thirty (30) days after receipt by the Buyer and the
Escrow Agent of the notice of objection, the Company and the Buyer, may
proceed to enforce their respective rights through proceedings in
accordance with the Purchase Agreement. The Escrow Agent shall
distribute the amounts accounted for as a Disputed Fund promptly upon
delivery of and in accordance with the terms of (i) a joint written
notice of the Buyer and the Company providing instructions therein and
certifying that the dispute with respect to any amount deposited in
such Disputed Fund has been finally resolved or (ii) any judgment,
order or decree issued by any court of competent jurisdiction sitting
in the County of Milwaukee in the State of Wisconsin or the United
States District Court for the Eastern District of Wisconsin directing
the Escrow Agent as to the proper distribution of any amount so held.
The Company or the Buyer shall deliver to the Escrow Agent a certified
copy of any judgment, order or decree in any such legal proceedings.
The Escrow Agent shall act upon such judgment, order or decree which
has become final in like manner as though it constituted the joint
instructions of the Company and of the Buyer.
(j) The Escrow Agent shall deliver all money's
remaining in the Escrow Fund together with all earnings at any time
accruing on the Escrow Fund ("Earnings"), less any amounts held as
Disputed Funds, less any amount in the Xxxxxxx Rework Fund and less the
amount of Two Hundred Fifty Thousand Dollars ($250,000), to Company at
the close of business on December 31, 1997.
(k) The Escrow Agent shall deliver all moneys
remaining in the Escrow Fund, together with all earnings or other
income at any time accruing on the Escrow Fund ("Earnings"), less any
amounts held as Disputed Funds, to the Company at the close of business
on April 30, 1999; provided, however, that if the Buyer makes a notice
of Claim on or after April 1, 1999 and the Company have neither
objected nor consented to the payment of such Claim by April 30, 1999,
then the amount of such Claim shall be held as Disputed Funds if the
Company gives notice of objection within thirty (30) days after the
date of the Claim.
(l) Upon the release of any Disputed Funds to
the Buyer or the Company, the Buyer or the Company (as applicable) also
shall be entitled to receive all Earnings thereon.
(m) Upon the release of any amount held in a
Disputed Fund that is not paid over to the Buyer, in respect of the
Claim for which such amount was originally deposited in such Disputed
Fund, such amount shall be paid in the following manner and order of
priority:
(A) First, to the Buyer in respect of
indemnification for any other Claim paid or payable to the
Buyer pursuant to Section 5 hereof with respect to which
written notice was given by the Buyer to the Escrow Agent
prior to the close of business on April 30, 1999, and for
which the amount, if any, previously
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paid to the Buyer was less than the amount to which the Buyer
was entitled with respect to such Claim;
(B) Second, to the Disputed Fund in respect of
indemnification of any other disputed Claim for which the
Buyer gave written notice to the Escrow Agent pursuant to
Section 5 hereof prior to the close of business on April 30,
1999, and for which the amount, if any, previously set aside
in a Disputed Fund was less than the amount of the disputed
Claim;
(C) Third, prior to the close of business on
April 30, 1999, to the Escrow Agent to be held or paid in
accordance with the provisions hereof;
(D) Fourth, following the close of business on
April 30, 1999, pursuant to the provisions of Section 5(k)
hereof.
6. Investments. (a) The Escrow Fund and Earnings and the
full amount of any Disputed Funds shall be invested by the Escrow Agent in
short-term government securities, government repurchase agreements, commercial
paper rated the highest grade by Xxxxx'x Investors Service, Inc. or by Standard
& Poor's Corporation with a maturity date not later than March 31, 1998, money
market funds invested in the foregoing, short-term certificates of deposit
issued by commercial banks having a combined capital surplus and undivided
profits of not less than One Hundred Million Dollars ($100,000,000) or other
similar short-term highly-liquid investments of equal or greater security as the
foregoing, or in U.S. Treasury Notes having a maturity of date not later than
April 30, 1999, as shall be directed in writing by the Company, with interest
thereon to be accumulated and reinvested until disbursed. In the absence of
instructions from the Company, the Escrow Agent shall invest the Escrow Fund and
Earnings and any Disputed Funds in any of the foregoing instruments. Any
interest or profit realized on any investment of the Escrow Fund and Earnings
and any Disputed Fund, respectively, shall be made part of the Escrow Fund and
Earnings and of such Disputed Fund, respectively, and shall be held and
disbursed in accordance with the provisions of Section 5 of this Escrow
Agreement. Except as otherwise specifically noted herein, the Escrow Agent is
not obligated to render any statements or notices of nonperformance hereunder to
any party hereto, but in its discretion may inform any party hereto, or its
authorized representative, of any matters pertaining to this Escrow Agreement.
(b) Receipt or investment of the Escrow Fund
shall be confirmed by the Escrow Agent as soon as practicable by account
statements unless otherwise indicated any discrepancies shall be noted to the
Escrow Agent within a reasonable time prior to the next account statement.
Failure to inform the Escrow Agent in writing of any discrepancies shall be
deemed confirmation of the description of the Escrow Fund listed on the report,
regardless of any variations from that described herein. Unless otherwise
directed, the Escrow Agent may use a broker-dealer of its own selection,
including a broker-dealer owned by or affiliated with the Escrow Agent or with
any of its affiliates. All brokerage costs and expenses shall be for the account
of the parties hereto. The Escrow Agent shall not be liable for losses on any
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47
investments, market risk due to premature liquidation, or other actions taken in
compliance with this Escrow Agreement or appropriate written instructions. The
parties shall provide the Escrow Agent with written certification of their
respective taxpayer identification numbers or appropriate foreign taxpayer
exemptions prior to any investment. Failure to provide such information may
subject the non-providing party to a penalty and may cause the Escrow Agent to
be required to withhold tax on any interest payable hereunder. All payments of
income shall be subject to applicable United States withholding regulations as
then in force. Notwithstanding the foregoing, the Escrow Agent may, in its
discretion, accept directions or instruction whether given orally (in person or
by telephone), or by telegraph, cable, radio or facsimile transmission, which in
each case the Escrow Agent reasonably believes to be genuine, but the Escrow
Agent shall not be liable for executing, for failing to execute, or for any
mistake in the execution of, any such order except in case of willful misconduct
or gross negligence.
7. Escrow Agent Not a Party. The parties to this Escrow Agreement
understand and agree that the Escrow Agent is not, and shall in no event be
deemed, (a) a principal, participant or beneficiary of the underlying
transactions giving rise to this Escrow Agreement or (b) a party to, or bound
by, any other agreement out of which this escrow may arise.
8. Obligations of Escrow Agent; Reliance. The Escrow Agent shall
be obligated only for the performance of such duties as are specifically set
forth herein. The Escrow Agent may rely on, and shall be protected in acting or
in refraining from acting based upon, any written notice, request, waiver,
consent, certificate, receipt, authorization, or other paper, document or
instrument that the Escrow Agent reasonably believes to be genuine and to have
been signed or presented by the proper party or parties hereto or their
respective officers, representatives or agents.
9. Interpleader. If the Escrow Agent becomes a party to any
litigation or dispute by reason hereof, it is hereby authorized to deposit with
the clerk of a court of competent jurisdiction any and all cash, securities or
other property held by it pursuant hereto and, thereupon, shall stand fully
relieved and discharged of any further duties hereunder. If the Escrow Agent is
threatened to be made a party to litigation by reason hereof, it is authorized
to interplead all interested parties in any court of competent jurisdiction and
to deposit with the clerk of such court any and all cash, securities or other
property held by it pursuant hereto and, thereupon, shall stand fully relieved
and discharged of any further duties hereunder.
10. Resignation of Escrow Agent. The Escrow Agent may resign for
any reason upon ten (10) days' written notice to the Buyer and to the Company.
Upon the expiration of such ten (10) days' notice, the Escrow Agent may deliver
all cash or property in its possession under this Escrow Agreement to any
successor escrow agent appointed by the other parties hereto or, if no successor
escrow agent has been appointed, to any court of competent jurisdiction in the
County of Milwaukee, State of Wisconsin. Upon such delivery in either case, the
Escrow Agent's obligations hereunder shall cease and terminate. The Escrow
Agent's sole responsibility from the time of the expiration of the ten (10)
days' notice set forth above in this
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paragraph until such termination shall be to keep safely the Escrow Fund and
Earnings and Disputed Funds, if any, and to deliver the same to a person
designated by the appropriate parties executing this Escrow Agreement or in
accordance with the directions of a final order or judgment of a court of
competent jurisdiction.
11. Escrow Agent.
(a) The Escrow Agent shall be entitled to receive
compensation for its regular services as Escrow Agent in accordance with the fee
schedule attached, and shall be reimbursed for all reasonable expenses it incurs
in fulfilling its obligations under this Agreement, including fees and
disbursements of legal counsel. Such compensation and any reimbursement for
expenses shall be paid from time to time as incurred equally by Buyer and
Company. Accounts of disbursements made hereunder shall be promptly made to
Buyer and the Company
(b) In taking any action hereunder, the Escrow Agent
shall be protected in relying upon any notice, paper or other document believed
by it to be genuine or upon any evidence deemed by it to be sufficient, and in
no event shall be liable for any act performed or omitted to be performed by it
hereunder in the absence of gross negligence or willful misconduct. The Escrow
Agent may consult with counsel in connection with its duties hereunder and shall
be fully protected by any act taken, suffered or permitted by it in good faith
in accordance with the advice of such counsel. The Escrow Agent shall not be
bound in any way by any agreement or contract (other than this Escrow Agreement
and the relevant provisions of the Agreement) between any of the parties hereto
or thereto (whether or not it has knowledge thereof) and its only duties or
responsibilities shall be to hold the Escrow Fund and to dispose of it in
accordance with the terms of this Escrow Agreement and the Agreement.
(c) The Escrow Agent hereby accepts its appointment and
agrees to act as Escrow Agent under the terms and conditions of this Escrow
Agreement.
12. Notices. All claims, notices, objections and other
communications hereunder shall be in writing and shall be deemed to have been
duly given on the date delivered or mailed, certified mail, as follows:
If to the Company, to:
Xxxx-Xxxxxx Corporation
0000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
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With a copy to:
Xxxxxxx X. XxXxxxxxx
Xxxxx & Lardner
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000-0000
If to Buyer, to:
Kaydon Acquisition VIII, Inc.
Arbor Shoreline Office Park
19345 XX 00 Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Secretary
Facsimile: 813/524-3629
With a copy to:
Xxxxx, Xxxxxx & Irish
000 Xxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxx, Xxxxxxxx 00000-0000
Facsimile: 616/726-3404
If to Escrow Agent, to:
Firstar Trust Company
Corporate Trust Department
000 Xxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other or additional persons or addresses as the respective Company,
Buyer or Escrow Agent shall furnish to each of the other parties in writing.
13. Binding Effect. This Escrow Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs,
executors, successors and assigns.
14. Amendments. This Escrow Agreement may be amended or modified
at any time or from time to time in a writing executed by each of the Company,
Buyer and the Escrow Agent.
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15. Governing Law. This Escrow Agreement shall be construed and
enforced in accordance with the laws applicable to the construction and
enforcement of the Agreement as set forth in Section 15 thereof.
16. Counterparts. This Escrow Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be necessary
for every party hereto to sign each counterpart but only that each party shall
sign at least one counterpart.
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IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement as of the day and year first above written.
XXXX-XXXXXX CORPORATION
(the "Company")
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx, President
KAYDON ACQUISITION VIII, INC.
(the "Buyer")
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx X. Xxxxxx, Secretary
FIRSTAR TRUST COMPANY
(the "Escrow Agent")
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------
Xxxxxxx Xxxxxx, Assistant Vice President
Attest: /s/ Xxxxxx Xxxx
----------------------------------------
Xxxxxx Xxxx, Assistant Secretary
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SCHEDULE OF ESCROW AGENT'S CUSTOMARY FEES
ACCEPTANCE FEE:
Flat fee payable upon execution of Escrow Agreement. $1,000.00
ADMINISTRATION FEE:
Annual Administration Fee with the first year paid up front. $1,000.00
SPECIAL OR EXTRAORDINARY SERVICES:
Reimbursement of agent fees incurred by the Escrow Agent, including but not
limited to attorney's fees and expenses incurred with outside counsel if
required.
MISCELLANEOUS:
Out-of-pocket expenses, i.e., postage, stationery, travel expenses, etc.
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