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Exhibit 10.2
_______________________________________________________________________________
STOCK PURCHASE AGREEMENT
for the Purchase of STANADYNE AUTOMOTIVE HOLDING CORP.
among
SAC, Inc.
a wholly owned subsidiary of
AMERICAN INDUSTRIAL PARTNERS CAPITAL FUND II, L.P.
STANADYNE AUTOMOTIVE HOLDING CORP.
and
Stanadyne Automotive Holding Corp. Shareholders
______________________
November 7, 1997
______________________
_______________________________________________________________________________
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (which, together with the Schedules and Exhibits
attached hereto or incorporated herein by reference, and amendments and
supplements hereto, all being referred to as this "Agreement") is made and
entered into as of the 7th day of November, 1997, by and among SAC, Inc. (the
"Buyer"), a Delaware corporation and wholly owned subsidiary of AMERICAN
INDUSTRIAL PARTNERS CAPITAL FUND II, L.P. ("AIP"), STANADYNE AUTOMOTIVE HOLDING
CORP., a Delaware corporation (the "Company"), Metromedia Company
("Metromedia") and, subject to Section 5.17, all of the other holders of
securities of the Company, which security holders are listed on Schedule
1.2.3 hereof (each, a "Seller" and collectively the "Sellers"). All
capitalized words and terms contained in this Agreement shall have the meanings
set forth in Section 12.1 herein.
R E C I T A L S
WHEREAS, the Sellers are the beneficial and record owners of all of the
issued and outstanding shares of capital stock of the Company and warrants to
purchase capital stock of the Company (the "Warrants"); and
WHEREAS, the Sellers wish to sell to the Buyer and the Buyer wishes to
purchase from the Sellers the shares of capital stock of the Company which they
own and will own upon the exercise of the Warrants and the conversion of the
Preferred Stock (together, the "Shares") upon the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, conditions and agreements hereinafter set forth,
the parties hereto agree as follows:
1. Sale and Purchase of Shares.
1.1 Sale of Shares. At the Closing (as defined in Section 2), the Sellers
shall sell the Shares to the Buyer and the Buyer shall purchase the Shares for
the purchase price provided in Section 1.2.
1.2 Purchase Price and Payment for Shares.
1.2.1 Purchase Price The aggregate purchase price for the Shares (the
"Purchase Price") is Two Hundred and Ten Million Dollars ($210,000,000), less
the sum of all Debt outstanding on the Closing Date, net of cash on hand (as
determined in accordance with GAAP) of the Company and its
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Subsidiaries on the Closing Date, as adjusted pursuant to Section 1.2.2.
1.2.2 Determination of Purchase Price; Adjustment to Purchase Price and
Preliminary Statement;
(a) At least three Business Days prior to the Closing Date, the Sellers
shall in good faith prepare a statement (the "Preliminary Statement")
containing an estimate of (i) the consolidated Working Capital of the Company
and the Subsidiaries ("Estimated Working Capital") immediately prior to the
Closing (ii) a schedule of total Debt anticipated to be outstanding immediately
prior to the Closing ("Preliminary Closing Debt") and (iii) an estimate of
cash that would be reflected on a consolidated balance sheet of the Company and
its Subsidiaries prepared immediately prior to the Closing ("Preliminary
Closing Cash"). For purposes of this Section 1.2.2, "Working Capital" means
the current assets of the Company and its Subsidiaries (excluding cash) less
the current liabilities of the Company and its Subsidiaries (excluding the
current portion of long-term Debt), all in accordance with GAAP, provided that
the Xxxxx Liability shall be treated as a current liability without regard to
GAAP. Based upon the Preliminary Statement, a preliminary determination of the
Purchase Price shall be made (the "Preliminary Purchase Price"), which
Preliminary Purchase Price shall be an amount equal to $210,000,000 less
Preliminary Closing Debt, plus Preliminary Closing Cash, plus or minus the
Estimated Working Capital Allowance determined pursuant to subsection 1.2.2(b).
(b) If Estimated Working Capital is greater than Working Capital as of
August 31, 1997 ("Baseline Working Capital") by more than $1,035,000, the
amount calculated in Subsection 1.2.2(b) shall be increased by the amount by
which Estimated Working Capital exceeds Baseline Working Capital and if
Estimated Working Capital is less than Baseline Working Capital by more than
$1,035,000, the amount calculated in Subsection 1.2.2(b) shall be reduced by
the amount by which Estimated Working Capital is less than Baseline Working
Capital. The amount of such excess or shortfall is referred to as the
"Estimated Working Capital Allowance." Such adjustment to the Purchase Price
shall be reflected in the Preliminary Purchase Price. The Company's (i)
calculation of Baseline Working Capital and (ii) specification of the
methodology and components for calculating the Preliminary Purchase Price, in
each case of (i) and (ii), as agreed to by the parties, are attached hereto as
Schedule 1.2.2(b).
(c) As promptly as practicable following the Closing Date, but in any
event within 90 days thereof, the Buyer shall prepare and deliver to the
Sellers an audited consolidated balance sheet of the Company and the
Subsidiaries as of the Closing (the "Closing Balance Sheet") and a statement
based thereon (the "Closing Statement") setting forth (i) actual Working
Capital ("Actual Working Capital") immediately prior to the Closing, (ii) a
schedule of total Debt outstanding immediately prior to the Closing ("Closing
Debt"), (iii) a calculation of cash on hand that would be reflected on a
consolidated balance sheet of the Company and its Subsidiaries
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prepared immediately prior to the Closing ("Closing Cash") and (iv) a
calculation of the Purchase Price. The Closing Balance Sheet and Closing
Statement shall be prepared in accordance with GAAP. The Sellers and their
representatives shall have reasonable access to the Company's and the
Subsidiaries' books and records and the accountants' work papers related to the
preparation of the Closing Balance Sheet and the Closing Statement. The Buyer
shall pay for all costs and expenses incurred in connection with the
preparation of the Closing Balance Sheet and Closing Statement.
(d) The Purchase Price shall be an amount equal to $210,000,000 less
Closing Debt, plus Closing Cash (the "Final Pre-Adjustment Amount"), plus or
minus the amounts determined below by comparing Actual Working Capital to
Baseline Working Capital. If Actual Working Capital exceeds Baseline Working
Capital by more than $1,035,000, the Final Pre-Adjustment Amount shall be
increased by the amount by which Actual Working Capital exceeds Baseline
Working Capital. If Actual Working Capital is less than Working Capital by
more than $1,035,000, the Final Pre-Adjustment Amount shall be reduced by the
amount by which Actual Working Capital is less than Baseline Working Capital.
(e) If the Preliminary Purchase Price is less than the Purchase Price
(such difference being referred to herein as the "Unpaid Balance"), then, in
addition to the Preliminary Purchase Price payable to the Sellers under
Section 1.2.1, within five (5) Business Days after the final determination of
the Closing Statement and the Purchase Price (whether such determination is
made by agreement of the Sellers and the Buyer or by the Auditor, as provided
herein), the Buyer shall deliver to the Sellers an amount equal to the Unpaid
Balance, together with interest thereon at the Reference Rate (as defined in
Section 12.1) in effect from time to time from the Closing Date until the date
of such payment, in cash in immediately available funds by wire transfer to a
bank account designated in writing by the Sellers prior to the Closing Date.
If the Preliminary Purchase Price is greater than the Purchase Price (such
difference being referred to herein as the "Overpayment"), then, within five
(5) Business Days after the final determination of the Closing Statement and
the Purchase Price (whether such determination is made by agreement of the
Sellers and the Buyer or by the Auditor, as provided herein), the Sellers shall
reimburse to the Buyer an amount equal to the Overpayment, together with
interest thereon at the Reference Rate in effect from time to time from the
Closing Date until the date of such payment, in cash in immediately available
funds by wire transfer to a bank account designated in writing by the Buyer
prior to the Closing Date.
(f) The Closing Statement and the calculation of the Purchase Price shall
be binding upon the parties unless the Sellers give written notice of
disagreement therewith to the Buyer within thirty (30) days after their receipt
of the Closing Statement, specifying in reasonable detail the nature and extent
of such disagreement. If the Sellers disagree with any item on the Closing
Statement, the Sellers shall notify the Buyer of such disagreement in writing
within 30 days after delivery of the Closing
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Statement, which notice shall set forth the basis for such disagreement in
reasonable detail. The Sellers and the Buyer shall thereafter negotiate in
good faith to resolve any such disagreements. If the Buyer and the Sellers
mutually agree upon the Closing Statement and the calculation of the Purchase
Price within thirty (30) days after Sellers' receipt of such notice, such
agreement shall be binding upon the parties. If the Sellers and the Buyer are
unable to resolve any disagreements within thirty (30) days, the Sellers and
the Buyer shall select an Auditor to resolve the disagreements over accounting
matters in accordance with the provision of this Section 1.2.2.
(g) The "Auditor" shall be an independent nationally recognized certified
public accounting firm mutually selected by the Sellers and the Buyer, provided
that if the Sellers and the Buyer are unable to mutually agree upon an Auditor,
the Sellers and the Buyer shall select one of the "big six" accounting firms by
lot after eliminating one firm designated unacceptable by the Sellers and one
firm designated as unacceptable by the Buyer. The Auditor shall have
reasonable access to the Company's and the Subsidiaries' books and records
required to resolve the disputes, and the Auditor shall be directed to address
and resolve solely the individual disputed line items on the Closing Statement.
The Sellers and the Buyer shall use their reasonable efforts to cause the
Auditor to resolve all disagreements over individual line items as soon as
practicable. The resolution of such disagreements by the Auditor shall be in
writing and shall be final and binding on the Sellers and the Buyer. The fees
and expenses of the Auditor shall be paid by the party whose position is, ruled
as by the Auditor, most incorrect.
1.2.3 Payment of Purchase Price. (a) The Purchase Price shall be paid by
the Buyer as follows:
(i) at the Closing, the Buyer shall pay to the Sellers in cash an amount
equal to the Preliminary Purchase Price, which amount shall be paid to the
Sellers in proportion to the number of shares of common stock of the Company
identified on Schedule 1.2.3. (as provided to the Buyer) as owned (or to be
owned through the exercise of the Warrants or the conversion of the Preferred
Stock) by each Seller (the "Share Ownership").
(ii) at the time set forth in Section 1.2.2, the Buyer shall pay to the
Sellers, or the Sellers shall pay to the Buyer, as the case may be, the
payments required to be made under Section 1.2.2 in proportion to their Share
Ownership.
(iii) in the event that the Preferred Stock is not converted to common
shares in accordance with the terms of the Certificate of Designation of the
Preferred Stock, the holders of the Preferred Stock shall receive the amount
required to be paid to such holders upon a redemption of the Preferred Stock
due to a Change of Control (as defined in the Certificate of Designation) and
the balance of this amount payable under Section 1.2.3(i) and (ii) shall be
paid to the owners of common stock and
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Warrants in proportion to the Ownership Percentages.
(iv) in the event that the Signing Condition (as defined in Section 5.17)
has not occurred as provided in Section 5.17 and Metromedia has exercised the
Redemption Option (as defined in Section 5.17), the Company (by sending a
notice of redemption) and the Buyer shall cause the Company to exercise and
diligently pursue all of the Company's rights to redeem and, as applicable,
purchase pursuant to the "Bring-Along" right of the Company as set forth in the
applicable Shareholders' Agreements (the "Bring-Along Right") the Shares of
those Sellers who have not met the Signing Condition (the "Redeemed Shares"),
in accordance with the Subscription Agreement or, as applicable, the
Shareholders' Agreements of such Sellers (the "Redemption"). Any amount
payable to the holder of Redeemed Shares shall reduce the amount payable to the
Sellers pursuant to Section 1.2.3(i) and (ii), and such reduced amount shall be
distributed among the Sellers who have met the Signing Condition, in proportion
to their Share Ownership (subject to the provisions of Section 1.2.3(iii)).
(v) each Seller agrees that the ownership of securities set forth in
respect of such Seller on Schedule 1.2.3.1 is correct and that upon payment of
the amounts as set forth in Section 1.2.3(i), (ii) and (iii), such Seller
shall have no further right to payment in respect of the Purchase Price as
finally determined.
1.3 Delivery of Shares. At the Closing, the Sellers shall deliver to the
Buyer stock certificates representing all of the Shares, duly endorsed in blank
or accompanied by stock powers duly executed in blank, in proper form for
transfer.
2. Closing: Closing Date. The closing of the sale and purchase of the
Shares contemplated hereby (the "Closing") shall take place at the offices of
Xxxxxxxx & Xxxxx, Citicorp Center, 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at
10:00 a.m. local time, on December 8, 1997, or at such other place or such
other time or date as the Buyer and the Sellers agree in writing but in no case
later than December 31, 1997 (the "Scheduled Closing Date"). The time and date
upon which the Closing occurs is herein called the "Closing Date."
3. Representations and Warranties of the Sellers. The Sellers severally
represent and warrant to the Buyer as follows (except that each Seller other
than Metromedia makes only the representations and warranties in Sections 3.2,
3.4, 3.5 and 3.7 and only to the extent that such representations and
warranties pertain to each such Seller individually):
3.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and it
and the Subsidiaries have all requisite corporate power and authority to carry
on their respective businesses as they are now being conducted and to own,
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lease and operate all of their respective properties and assets. The Company
and the Subsidiaries are duly qualified and in good standing to do business in
each jurisdiction in which the nature of their respective businesses or the
ownership, operation or leasing of their respective properties makes such
qualification necessary, except for those jurisdictions where the failure to be
so qualified or in good standing has not had, or may not reasonably be expected
to have, in the aggregate, a Company Material Adverse Effect. Section 3.1 of
the disclosure schedule attached hereto (the "Disclosure Schedule") lists the
directors and officers of the Company and each of the Subsidiaries. The
Company has made available to the Buyer the minute books (containing the
records of meetings of the stockholders, the board of directors, and any
committees of the board of directors) and such minute books are correct and
complete in all material respects. The Company has made available to the Buyer
the stock record books of each of the Company and the Subsidiaries and such
stock record books are true and complete. The Company and the Subsidiaries
have complied in all material respects with their respective Articles of
Incorporation, Certificate of Incorporation and By-laws, as applicable.
Metromedia Company is a general partnership organized under the laws of the
State of Delaware and its general partners are Xxxxxx Xxxxxxxxx and the
following trust: Xxxx X. Xxxxx, Chemical Bank and Xxxxxx Xxxxxxxxx, Trustees
under Trust Agreement between Xxxx X. Xxxxx as Grantor and Xxxx X. Xxxxx and
Manufacturers Hanover Trust Company as Trustees dated May 30, 1984, as Amended
and Restated.
3.2 Corporate Power and Authority; Effect of Agreement. Each of the
Sellers and the Company (i) has the requisite authority and power to execute,
deliver and perform this Agreement and consummate the transactions contemplated
hereby; (ii) the execution, delivery and performance by the Company and such
Seller of this Agreement and the consummation by the Company and such Seller of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company and such Seller; (iii) this
Agreement has been duly and validly executed and delivered by the Company and
such Seller and constitutes the valid and binding obligation of the Company and
such Seller, enforceable in accordance with its terms, subject to (a)
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally, and (b) general principles of equity. Except as
set forth in Section 3.2 of the Disclosure Schedule, the execution, delivery
and performance by the Company and each Seller of this Agreement and the
consummation by the Company and such Seller of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, (w) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both), a default (or give rise to any right of
termination, cancellation or acceleration) under, or require any consent,
waiver, approval or authorization under, any indenture, license, lease,
contract, agreement or other instrument or obligation to which such Seller, the
Company or any Subsidiary, as the case maybe, is a party or by which any of
them or any of their respective properties or assets are bound, (x) violate any
provision of law, rule, regulation, statute, ordinance, governmental or
judicial order, or any other provision having the force or
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effect of law ("Law") to which such Seller or the Company or any Subsidiary, as
the case may be, or any of their respective properties or assets, is subject,
(y) violate any writ, injunction, order, judgment or decree applicable to such
Seller, the Company or any Subsidiary, as the case may be, or any of their
respective properties or assets, or (z) violate any provision of the
Certificate of Incorporation or the By-laws of such Seller (if applicable), the
Company or any Subsidiary, as the case may be; except, in case of (w) (x) and
(y) for events or violations which would not be likely to have a Company
Material Adverse Effect.
3.3 Absence of Certain Changes or Events with Respect to the Company.
Except as set forth in Section 3.3 of the Disclosure Schedule, since December
31, 1996, the Company has not (a) suffered a Company Material Adverse Effect or
(b) materially changed the Company's accounting principles, practices, articles
or methods, except as required by GAAP or applicable Law.
3.4 Litigation. Except as set forth in Section 3.4 of the Disclosure
Schedule, there is no litigation, action, suit, or legal, administrative or
arbitral proceeding or investigation (excluding those relating to Taxes, which
are covered by Section 3.11) ("Action") pending or, to the Knowledge of any
Seller or the Company, threatened against such Seller, the Company or any of
the Subsidiaries to which there is a reasonable likelihood of a determination
which, individually or in the aggregate, would (a) have a Company Material
Adverse Effect, (b) materially hinder or impair the ability of such Seller or
the Company to consummate the transactions contemplated hereby or (c) result in
Liability in excess of $500,000 in the aggregate to the Company or any
Subsidiary. There is no Action pending, or to the Knowledge of any Seller or
the Company, threatened against such Seller, the Company or any of the
Subsidiaries with respect to the consummation of the transactions contemplated
hereby. Section 3.4 of the Disclosure Schedule lists all Actions or series of
related Actions against the Company or any Subsidiary or any predecessor
(whether arising out of similar facts or circumstances, a consistent or
pervasive course of conduct or practice or otherwise) which have been settled
in the last five years in which the Company or any Subsidiary made payments
for amounts in excess of $500,000 (and the amounts paid in settlement thereof)
or settlements which have had or are reasonably likely to have a Company
Material Adverse Effect. Except as set forth in Section 3.4 of the Disclosure
Schedule, neither the Company nor any Subsidiary is a party or subject to or in
default under any order of a Governmental Body.
3.5 Consents. Except as set forth in Section 3.5 of the Disclosure
Schedule, no consent, permit, approval or authorization of, or exemption by, or
filing with, any Governmental Body (other than pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act")) is required in connection with the execution, delivery and performance
by the Company and each Seller of this Agreement or the consummation of the
transactions contemplated hereby, excluding, however, consents, approvals,
authorizations, exemptions and filings, if any,
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which the Buyer (as opposed to any other third party) is required to obtain or
make.
3.6 Subsidiaries. All of the Company's direct and indirect subsidiaries
(the "Subsidiaries") are identified on Section 3.6 of the Disclosure Schedule.
Except as disclosed on the Disclosure Schedule, the Company does not control,
directly or indirectly, any capital stock or other proprietary interest
(whether equity or debt) in, any other Person.
3.7 Outstanding Capital Stock. Section 3.7 of the Disclosure Schedule
(Subsection 3.7E of which regarding the individual stock ownership of owners of
the Class A Common Stock of the Company is not being disclosed to such owners
for reasons of confidentiality) sets forth the authorized capital stock of the
Company and each of the Subsidiaries. All of the shares of capital stock of
the Company and the Subsidiaries are duly authorized and are validly issued,
fully paid and non-assessable. Each of the Sellers owns beneficially and of
record, free and clear of any Lien, or owns of record and has full power and
authority to convey free and clear of any Lien, the Shares set forth opposite
its name on the Disclosure Schedule The consummation of the transactions
contemplated hereby will convey to the Buyer good title to such Seller's
Shares, free and clear of all Liens, except for those created by the Buyer or
arising out of the ownership of the Shares by the Buyer (as opposed to any
other third party).
3.8 Options or Other Rights. Except as set forth in Section 3.8 of the
Disclosure Schedule and the Shares, there is not now, and as of Closing there
will not be (including those set forth in Section 3.8 of the Disclosure
Schedule), any capital stock or other equity interests in the Company or any
Subsidiary issued or outstanding, or any right, subscription, right of first
refusal, warrant, call, unsatisfied preemptive right, option or other agreement
of any kind to purchase or otherwise to receive from the Company or any
Subsidiary any of the outstanding, authorized but unissued, unauthorized or
treasury shares of the capital stock or any other security of the Company or
any Subsidiary, and there is no outstanding security of any kind convertible
into such capital stock or right to purchase or otherwise receive such capital
stock.
3.9 Certificate of Incorporation and By-laws. The Sellers have heretofore
delivered to the Buyer a true and complete copy of the Certificate of
Incorporation and By-laws of the Company and each Subsidiary.
3.10 Financial Statements. The audited consolidated statements of
operations, changes in stockholders' equity and cash flows of the Company and
the Subsidiaries for the years ended as of December 31, 1996, December 31, 1995
and December 31, 1994 and the audited consolidated balance sheets of the
Company and the Subsidiaries as of December 31, 1996, December 31, 1995 and
December 31, 1994 (the "Audited Financials"), which have been delivered to the
Buyer, fairly present
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the financial position, results of operations, changes in stockholders' equity
and cash flows of the Company and the Subsidiaries as of the respective dates
thereof, and for the periods covered thereby, in accordance with GAAP applied
on a consistent basis for the periods involved, except as noted therein. The
unaudited consolidated balance sheet of the Company and the Subsidiaries as of
September 30, 1997 and the unaudited consolidated statements of operations,
changes in stockholders' equity and cash flows of the Company and the
Subsidiaries for the nine (9) month period ended September 30, 1997, which have
been delivered to the Buyer, fairly present the financial position, results of
operations, change in stockholders' equity and cash flows of the Company and
the Subsidiaries as of the respective dates thereof, in accordance with GAAP
applied on a consistent basis during the periods involved, except for the
manner of presentation, normally recurring year-end adjustments, which
adjustments will not be material either individually or in the aggregate to the
Company and the Subsidiaries taken as a whole, and the absence of any notes
thereto.
3.11 Tax Matters.
3.11.1 Except as set forth on Schedule 3.11 of the Disclosure Schedule,
(i) the Company and each of its Subsidiaries have paid all federal, state,
county, local, foreign and other taxes, including, without limitation, income
taxes, estimated taxes, excise taxes, sales taxes, use taxes, gross receipts
taxes, franchise taxes, employment and payroll related taxes, social security
contribution payments, property taxes and import duties, whether or not
measured in whole or in part by net income including all deficiencies or other
additions to tax, interest and penalties owed by it, in connection with any
such taxes and social security contributions and any liability of the Company
or any of its Subsidiaries for payment of any of the aforementioned taxes and
social security contributions as a result of any express or implied obligation
to indemnify or otherwise assume or succeed to the liability of another Person
(hereinafter, "Taxes" or, individually, a "Tax") required to be paid by it
through the date hereof and shall timely pay any such Taxes, including
additions, interest and penalties, required to be paid by it after the date
hereof and on or before the Closing Date, except to the extent such Taxes are
adequately provided for on the Audited Financials; (ii) the Company and each of
its Subsidiaries have timely filed all returns for all Taxes that it is
required to file through the date hereof; (iii) the Company shall prepare and
file all returns for all Taxes required to be filed after the date hereof and
on or before the Closing Date; (iv) there are no material ongoing federal,
state, local or foreign audits or examinations of any Tax returns of the
Company or any of its Subsidiaries; (v) there are no outstanding written
requests, agreements, consents or waivers to extend the statutory period of
limitations applicable to the assessment of any Taxes or deficiencies against
the Company or any of its Subsidiaries; (vi) neither the Company nor any of its
Subsidiaries are a party to any agreement with any person other than the
Subsidiaries providing for the allocation or sharing of Taxes; (vii) there are
no liens for Taxes upon the assets of the Company or any of its Subsidiaries,
except liens for Taxes not yet due; (viii) the Company and all of its
Subsidiaries have
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withheld and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder or other third party; (ix) neither the Company nor any of
its Subsidiaries have made any election under Section 341(f) of the Internal
Revenue Code of 1986, as amended (the "Code") (or any corresponding provision
of state, local, or foreign income tax law); (x) no deficiency or proposed
adjustment which has not been settled or otherwise resolved for a material
amount of Tax has been proposed, asserted, or assessed by any taxing authority
against the Company or any of its Subsidiaries, and there is no action, suit,
taxing authority proceeding, or audit now in progress, pending, or, to the
Company's or any of its Subsidiaries' knowledge, threatened against or with
respect to the Company or any of its Subsidiaries; (xi) the Buyer will not be
required to deduct and withhold any amount pursuant to Section 1445(a) of the
Code upon the transfer of the Shares to the Buyer; (xii) neither the Company
nor any of its Subsidiaries will be required to include any item of income in,
or exclude any item of deduction from, taxable income for any taxable period
(or portion thereof) ending after the Closing Date as a result of (A) any
change in method of accounting for a taxable period ending on or prior to the
Closing Date, (B) any closing agreement described in Section 7121 of the Code
(or any corresponding provision of state, local or foreign income Tax law), (C)
any deferred intercompany gain or any excess loss account described in Treasury
Regulations under Section 1502 of the Code (or any corresponding or similar
provision or administrative rule of federal, state, local or foreign income Tax
law) arising prior to the Closing Date, or (D) any installment sale made prior
to the Closing Date; (xiii) neither the Company nor any of its Subsidiaries has
been a member of an affiliated group other than one of which the Company was
the common parent, or filed or been included in a combined, consolidated or
unitary income Tax return, other than one filed by the Company; and (xiv)
neither the Company nor any of the Subsidiaries is obligated (under any
contract entered into on or before the Closing Date) to make any payments that
will be non-deductible under Section 280G of the Code (or any corresponding
provision of state, local or foreign income Tax law).
3.11.2 A certification, dated not more than 30 days prior to the Closing
Date, issued by the Company pursuant to Treasury Regulation Section 1.897-2(h)
that the stock of the Company is not a "United States real property interest"
as defined in Section 897 of the Code shall be delivered to the Buyer prior to
the Closing.
3.12 Real Estate. Section 3.12 of the Disclosure Schedule sets forth (i)
the address and legal description of all real property owned by the Company or
any Subsidiary and all buildings and other structures located on such real
property; (ii) all leases, subleases or other agreements, including all
amendments and other modifications, under which the Company or a Subsidiary is
lessor or lessee of any real property (the "Leases"); (iii) all options held by
the Company or a Subsidiary to purchase or acquire any interest in real
property; and (iv) all options granted by the Company or a Subsidiary to sell
or dispose of any interest in real property. The Company or a Subsidiary is
the owner of record, lessee under the Leases or holder of
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the options, as the case may be, of each of the items set forth on the
Disclosure Schedule free and clear of all Liens, defects, claims, rights of
possession or other encumbrances (except Permitted Liens), and the Company or a
Subsidiary, as applicable, has good and marketable title in and to all owned
real property set forth on the Disclosure Schedule subject to no Liens except
Permitted Liens and Liens in favor of the Banks pursuant to the Credit
Agreement. Such Leases and other agreements are in full force and effect and
the Company and the Subsidiaries have not received notice of any default
thereunder, nor of any condition which would become a default with the giving
of notice, the passage of time, or both. Except as described on Section 3.12
of the Disclosure Schedule, no consent, waiver, approval or authorization is
required from the landlord under any Lease as a result of the execution of this
Agreement or the consummation of the transactions contemplated hereby. There
is no pending or, to the Knowledge of the Sellers or the Company, any
threatened condemnation proceeding affecting any portion of the real property
owned or leased by the Company or any Subsidiary.
3.13 Assets of the Company. Except (i) as set forth in Section 3.13 of
the Disclosure Schedule and (ii) as contemplated by this Agreement, the assets
of the Company and the Subsidiaries include all of the assets and properties
used by the Company and the Subsidiaries in, and material to, the conduct of
the businesses of the Company and the Subsidiaries as currently conducted.
Such assets are in working condition, except where the failure of such assets
to be in working condition will not be reasonably expected to have a Company
Material Adverse Effect.
3.14 Compliance with Law. The conduct of the Company's and the
Subsidiaries' respective businesses and their use of their respective assets
has not violated or conflicted and does not violate or conflict with any Law,
which violation or conflict would be reasonably expected to cause a Company
Material Adverse Effect or, be likely to result in financial penalties in
excess of $1,000,000 in the aggregate to the Company and the Subsidiaries.
Except as set forth in Section 3.14 of the Disclosure Schedule, neither the
Company nor any Subsidiary has received any written communication since June
30, 1994 from any Governmental Body that alleges that either the Company or any
Subsidiary is not in compliance in any material respect with any applicable
Law, except where such noncompliance would not be reasonably expected to have a
Company Material Adverse Effect. All material permits, approvals or other
authorizations required to be obtained and maintained by the Company or each
Subsidiary to conduct their businesses have been obtained, are in full force
and effect and have been complied with and are being complied with in all
material respects, except where such non-compliance would not be reasonably
expected to have a Company Material Adverse Effect.
3.15 Employee Benefit Plans.
3.15.1 Whenever any of the terms set forth below is used in
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this Section 3.15 it shall have the following meaning: (i) "Benefit Plan"
shall mean any plan, agreement, arrangement or commitment which is an
employment, consulting or deferred compensation agreement, or an executive
compensation, incentive bonus, employee pension, profit-sharing, savings,
retirement, stock option, stock purchase or severance pay plan, or a life,
health, disability or accident insurance plan, or a holiday, vacation,
Christmas or other bonus practice or other employee benefit plan, agreement,
arrangement or commitment, including, without limitation, any "employee benefit
plan", as defined in Section 3(3) of ERISA, maintained by or with respect to
which the Company or any Subsidiary has any liability or obligation with
respect to any current or former employee of the Company or any Subsidiary;
(ii) "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended and the regulations promulgated thereunder; (iii) "PBGC" shall mean the
Pension Benefit Guaranty Corporation; and (iv) "Pension Plan" shall mean a
Benefit Plan which is a "pension plan", as defined in Section 3(2) of ERISA.
3.15.2 Section 3.15 of the Disclosure Schedule sets forth a true and
complete list of all Benefit Plans (except for employment agreements required
to be disclosed pursuant to Section 3.17(f) and set forth in Section 3.17(f) of
the Disclosure Schedule).
3.15.3 With respect to each Benefit Plan: Sellers have delivered or made
available to Buyer true and complete copies, if any, of: (i) all plan texts,
related trust agreements or annuity contracts (or other funding instruments)
and other agreements, arrangements and commitments set forth in the Disclosure
Schedule; (ii) all summary plan descriptions (including summaries of material
modifications thereto) and other material employee communications; (iii) the
most recent annual report (Form 5500 series, including all schedules thereto);
(iv) the most recent annual audited financial statements and opinion; (v) the
most recent actuarial valuation; and (vi) the most recent determination letter,
if any, received from the Internal Revenue Service.
3.15.4 All Benefit Plans, related trust agreements or annuity contracts
(or other funding instruments) are legally valid and binding and in full force
and effect.
3.15.5 With respect to each Benefit Plan, except as set forth in the
Disclosure Schedule: (i) The Company and the Subsidiaries have made all
contributions or other payments (including premiums payable to PBGC) due from
them to date on a timely basis and all amounts properly accrued to date as
liabilities of the Company and the Subsidiaries which have not been paid have
been properly recorded on the books of the Company and the Subsidiaries; (ii)
no such Benefit Plan which is subject to Section 302 of ERISA or Section 412 of
the Code has incurred an "accumulated funding deficiency" (as defined in either
such section), whether or not waived; (iii) each such Benefit Plan, related
trust agreement or other funding instrument
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conforms to, and its administration is and has been in material compliance with
(both as to form and operation), the terms of such Benefit Plan all applicable
laws, rules and regulations, including but not limited to ERISA and the Code;
(iv) except as set forth in Section 3.15 of the Disclosure Schedule, each such
Benefit Plan which is intended to qualify under Section 401(a) or 403(a) of the
Code has received a favorable determination letter from the Internal Revenue
Service with respect to its initial qualification (and with respect to all
material subsequent plan amendments), and its related trust has been determined
to be exempt from taxation under Section 501(a) of the Code, and nothing has
occurred since the date of the latest determination letter that would adversely
affect such qualification or exemption; (v) there are no actions, suits, liens
(statutory or otherwise) or claims pending (other than routine claims for
benefits) or, to the Knowledge of Sellers, threatened against or with respect
to the assets of the Company, any Subsidiary or any such Benefit Plan; and (vi)
to the best of Sellers' Knowledge, all Benefit Plans have complied with Title
I, Subtitle B, Part 6 of ERISA and Section 4980B of the Code.
3.15.6 Except as set forth in Section 3.15 of the Disclosure Schedule, no
Pension Plan that is or was subject to Title IV of ERISA has been terminated
within the last six years; no filing of a notice to terminate such a Pension
Plan has been made by the Company or any Subsidiary, no proceeding has been
initiated by PBGC to terminate any such Pension Plan; and neither the Company
nor any Subsidiary has incurred, or reasonably expects to incur, any liability
with respect to any plan termination, whether to the PBGC or otherwise. No
event has occurred, and there exists no condition or set of circumstances which
presents a material risk of a partial termination (within the meaning of
Section 411(d) (3) of the Code) of any Benefit Plan.
3.15.7 Except as set forth in the Benefit Plans identified in Section 3.15
of the Disclosure Schedule, no Benefit Plan provides medical or death benefits
(whether or not insured) with respect to current or former employees of the
Company or any Subsidiary beyond their retirement or other termination of
service, other than (i) coverage mandated by law or (ii) death benefits
provided under any Pension Plan.
3.15.8 There are no reserves, assets, surplus or prepaid premiums under
any Benefit Plan which is a "welfare plan" (as defined in Section 3(1) of
ERISA).
3.15.9 No Benefit Plan is a "multiple employer plan," or a "multiemployer
plan" within the meaning of the Code or ERISA and neither the Company nor any
Subsidiary has any Liability or potential Liability with respect to any such
multiple employer plan or multiemployer plan.
3.15.10 Neither the Company nor any Subsidiary has
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any Liability with respect to any "employee benefit plan" (as defined in
section 3(3) of ERISA) solely by reason of being treated as a single employer
under Section 414 of the Code with any trade, business or entity other than the
Company or any Subsidiary.
3.15.11 The termination of the "Precision Engine Products Corp.
Tallahassee Hourly Pension Plan" ("PEPC Pension Plan") is being and will be
conducted in all respects in compliance with the terms of the PEPC Pension Plan
and the requirements of ERISA and the Code.
3.16 Absence of Undisclosed Liabilities. Except as disclosed in the
Financial Statements (including the notes thereto) or Section 3.16 of the
Disclosure Schedule, the Company and the Subsidiaries do not have any
Liabilities except for (i) those incurred during the ordinary course of
business and consistent with past practice since December 31, 1996 (none of
which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement or
violation of Law), (ii) obligations under executory agreements which are of a
type that would not be required to be reflected on the face of a balance sheet
prepared in accordance with GAAP and (iii) Liabilities (other those described
in clauses (i) and (ii) above) not exceeding $1,000,000 in the aggregate, and
there is no Basis for any such Liability (other those described in clauses (i)
and (ii) above).
3.17 Contracts. Section 3.17 of the Disclosure Schedule lists the
following agreements currently in effect to which the Company or any Subsidiary
is a party or by which the Company or any Subsidiary or any of their respective
properties or assets are bound:
(a) any lease, sublease, license or sublicense of personal property from
or to any third parties providing for payments in excess of $500,000
individually or $1,000,000 in the aggregate;
(b) any sales or purchase orders, commitments, distribution or other
agreements for the purchase or sale of raw materials, commodities, supplies,
goods, products, or other personal property or for the furnishing or receipt of
services which involves consideration of more than the sum of $500,000
individually or $1,000,000 in the aggregate provided, however, for sales or
purchase orders, Section 3.17 of the Disclosure Schedule lists only orders for
customers whose annual purchases exceed $4,000,000;
(c) any partnership, limited liability company or joint venture agreement;
(d) any indenture, mortgage, note, bond or other evidence of Debt (other
than capitalized leases, which are disclosed on Schedule 3.17(a) of the
Disclosure Schedule), any loan, security, credit, factoring or similar
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agreement under which the Company or any Subsidiary has borrowed or may borrow
money or issued any note, bond, indenture or other evidence of Debt for more
than $500,000 individually or $1,000,000 in the aggregate or under which the
Company or any Subsidiary has imposed (or may impose) a Lien on any of its
respective assets, tangible or intangible;
(e) any confidentiality, non-solicitation or non-competition agreement
(other than any confidentiality agreement relating to the proposed sale of the
assets or stock of the Company and/or any Subsidiary) or any agreement which
restricts, limits or prohibits the Company or a Subsidiary from entering into
any new, or expanding any existing line of business or any agreement which
contains geographic or other limitations, prohibitions or restrictions on its
ability to conduct business activities;
(f) any employment, consulting or severance agreement between the Company
or any Subsidiary and any current or former director, officer, consultant or
employee other than any such agreement that does not provide for the payment of
more than $200,000 in the aggregate in any year;
(g) any agreement whereby the Company or any Subsidiary grants any other
person a power of attorney (other than in the ordinary course of business
consistent with past practice which are not material), guarantees the Debt or
Liabilities, in whole or in part, of any other person or indemnifies any other
person against loss or Liability (except for such indemnification which is (i)
made in the ordinary course of business or (ii) would not be reasonably
expected to have a Company Material Adverse Effect);
(h) any agreement under which the Company or any Subsidiary could have
Liabilities in the future relating to the acquisition or disposition of any
material asset or property of the Company' or any Subsidiary for consideration
in excess of $5,000,000, by way of merger, consolidation, purchase, sale or
otherwise, or granting to any person a right at such person's option to
purchase or acquire all or substantially all of the Company's or any
Subsidiary's assets or properties;
(i) any agreement for the construction, acquisition or modification of any
land, building, structure, improvement, fixture or other fixed asset, or for
the incurrence of any other capital expenditure by the Company or any
Subsidiary where the outstanding balance exceeds $100,000 individually or
$250,000 in the aggregate;
(j) any agreement with any manufacturer's representative, distributor or
other independent sales agent that is not terminable by the Company or any
Subsidiary, as applicable, without penalty or payment of compensation on at
least six (6) months' or less notice;
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(k) any agreement with the Company or any Subsidiary, on the one hand, and
one of the Sellers or any officer, director, employee or affiliate of the
Company, any Subsidiary or any Seller or any of any of the Sellers' affiliates,
on the other hand (other than those required to be disclosed pursuant to clause
(d) or (f) of this Section 3.17);
(l) any agreement not otherwise required to be disclosed pursuant to this
Section 3.17 the consequences of a default or termination thereunder would be
reasonably expected to have any Company Material Adverse Effect; and
(m) any agreement not otherwise required to be disclosed pursuant to this
Section 3.17 either involving (i) consideration of more than $500,000
individually or $1,000,000 in the aggregate not entered into the ordinary
course of business or (ii) which is otherwise material to the business of the
Company or any Subsidiary.
The Company and the Subsidiaries have made available to the Buyer a
correct and complete copy of each written agreement required to be listed in
Section 3.17 of the Disclosure Schedule and a written summary setting forth the
terms and conditions of each oral agreement listed in Section 3.17 of the
Disclosure Schedule. Except as set forth in Section 3.17 of the Disclosure
Schedule and except for agreements which, as contemplated by this Agreement,
will be terminated at the Closing, all such agreements are (assuming due
authorization, execution, capacity and delivery by the parties thereto, other
than the Company and any Subsidiary), valid, binding and enforceable
obligations of the parties hereto, in accordance with their terms, except to
the extent that enforceability would not have a Company Material Adverse
Effect, or as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws effecting creditors' rights
generally. Neither the Company nor any Subsidiary is in default in the
observance or the performance of any material term or obligation to be
performed by it under any such agreement, which default has had, or in the
future could be reasonably expected to have a Company Material Adverse Effect,
and to the Knowledge of the Sellers or the Company, no other person is in
default in the observance or the performance of any material term or obligation
to be performed by such Person under any such agreement, which default has had,
or in the future could be reasonably expected to have a Company Material
Adverse Effect.
3.18 Intellectual Property.
(a) Section 3.18 of the Disclosure Schedule sets forth a complete and
correct list of all the following that are owned, used by, licensed to, issued
to or filed by the Company or any Subsidiary:
(i) patented or registered Intellectual Property Rights and
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pending applications for the foregoing;
(ii) material unregistered trademarks, material unregistered service
marks, trade dress, trade names, corporate names, and Internet domain names;
(iii) computer software (other than readily available software or software
purchased or licensed for less than a total cost of $5,000);
(iv) all material licenses or similar agreements or arrangements covering
Intellectual Property Rights to which the Company or a Subsidiary is a party,
either as licensee or licensor, or as a third-party beneficiary;
(v) Except for those Intellectual Property Rights which the Company or any
Subsidiary has, in the exercise of its business judgment, decided not to
register or to terminate or allow to be terminated or expire, the Company or a
Subsidiary has taken and will continue to take commercially reasonable efforts
to maintain and protect all of the Company's Intellectual Property Rights
listed on Section 3.18 of the Disclosure Schedule so as not to adversely affect
the validity or the enforceability thereof; and
(vi) From and after the Closing, at the written request of the Buyer, the
Sellers shall cooperate with the Buyer to cause any Intellectual Property
Rights listed on Section 3.18(a)(i) of the Disclosure Schedule, the transfer of
ownership to the Company or a Subsidiary of which shall not have been, prior to
the Closing, officially recorded with appropriate authorities in any applicable
jurisdiction, to be so officially recorded in the name of the Company, the cost
of which shall be borne by the Sellers, except that Sellers shall bear no such
costs for those Intellectual Property Rights which the Company or any
Subsidiary in the exercise of its reasonable business judgment, decided not to
record.
(b) Except as set forth in Section 3.18 of the Disclosure Schedule:
(i) the Company or a Subsidiary owns and possesses all right, title and
interest in and to, or has a valid and enforceable written license to use, free
and clear of all Liens (other than Permitted Liens which shall be extinguished
at the Closing), all of the Intellectual Property Rights set forth in Section
3.18 of the Disclosure Schedule and all other Intellectual Property Rights
necessary for the operation of their respective businesses as presently
conducted (collectively, the "Company's Intellectual Property Rights");
(ii) no claim by any third party contesting the validity, enforceability,
use or ownership of any of the Company's Intellectual Property Rights
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has been made to the Company or any Subsidiary, is currently outstanding or to
the Knowledge of the Sellers or the Company is threatened, and there are no
grounds for the same;
(iii) no loss or expiration of any of the Company's Intellectual Property
Rights is threatened, pending or reasonably foreseeable, except for patents
expiring at the end of their statutory terms;
(iv) to the Knowledge of the Sellers, or the Company, no third party has
infringed, misappropriated or otherwise conflicted with any of the Company's
Intellectual Property Rights and the Company and the Sellers do not have
Knowledge of any facts that indicate a likelihood of any of the foregoing;
(v) neither the Company nor a Subsidiary has infringed, misappropriated or
otherwise conflicted with, any Intellectual Property Rights of any third party,
which conflict would be reasonably expected to have a Company Material Adverse
Effect, and neither the Company nor the Sellers have Knowledge of any facts
that indicate a likelihood of any of the foregoing;
(vi) no material information relating to the registrability of any of the
Company's Intellectual Property Rights has been withheld from the United States
Patent and Trademark Office or from similar offices in foreign countries;
(vii) with respect to each license or similar agreement or arrangement
covering the Company's Intellectual Property Rights, neither the Company nor
any Subsidiary, nor, to the Knowledge of the Sellers or the Company, any other
party to such license or similar agreement or arrangement, is in material
breach or has repudiated any material provision thereof, and neither the
Company nor the Sellers have Knowledge of any facts that indicate a likelihood
of any of the foregoing; and
(viii) immediately subsequent to the Closing, the Company's Intellectual
Property Rights will be owned or available for use by Buyer on terms and
conditions identical to those under which the Company or a Subsidiary owned or
used the Company's Intellectual Property Rights prior to the Closing, provided,
that Buyer makes any and all governmental filings required to be made by Buyer,
as the owner of the Company.
3.19 Insurance. Section 3.19 of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) currently maintained by or for the benefit of the
Company or any Subsidiary (i) the name of the insurer, (ii) the name of the
policyholder, (iii) the name of each covered insured, (iv) the policy number
and the period of coverage, (v) the scope (including an indication of whether
the coverage was on a claims made,
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occurrence, or other basis) and amount (including a description of how
deductibles and ceilings are calculated and operate) of coverage, and (vi) a
description of any retroactive premium adjustments or other loss-sharing
arrangements. Neither the Company nor any Subsidiary, nor to the Knowledge of
the Company or the Sellers, any other party to any such policy, is in breach or
default (including with respect to the payment of premiums or the giving of
notices), and no event has occurred which, with notice or the lapse of time,
would constitute such a breach or default, or permit termination, modification,
or acceleration, under the policy, and no party to any such policy has
repudiated any provision thereof. Section 3.19 describes any self-insurance
arrangements affecting the Company or any Subsidiary.
3.20 [Intentionally Omitted]
3.21 Labor. Except as set forth in Section 3.21 of the Disclosure
Schedule, the Company has not received notice of and has no Knowledge of any
organizational effort presently being made or, to the Knowledge of the Company
or the Sellers, threatened by or on behalf of any labor union with respect to
any employees of the Company or any Subsidiary and none of the Company's or any
Subsidiary's employees are represented by any labor union. Except as set forth
in Section 3.21 of the Disclosure Schedule, the Company and each Subsidiary is
in compliance with all applicable Laws respecting employment and employment
practices, terms and conditions of employment and wages and hours, except for
such non-compliance as would not be reasonably expected to have a Company
Material Adverse Effect, and is not engaged in any unfair labor practice and,
to the Knowledge of the Company or the Sellers, there is no reasonable Basis
for any unfair labor practice complaint or claim to be asserted against the
Company or any Subsidiary which would reasonably be expected to have a Company
Material Adverse Effect, and there is no labor strike, dispute, slowdown or
stoppage actually pending or, to the Knowledge of the Company or the Sellers,
threatened, against the Company or any Subsidiary. Except as set forth in
Section 3.21 of the Disclosure Schedule, none of the Company or any
Subsidiaries have any labor contracts with any representative of any of the
Company's or any Subsidiary's employees, as applicable. All vacation pay,
severance indemnity (T.F.R.), bonuses, commissions, pension plan and other
employee benefit payments and all social security contributions related thereto
are reflected and have been accrued in the books and records of the Company or
a Subsidiary (as applicable). No Cassa Integrazione Guardagni Ordinania or
Cassa Integrazione Xxxxxxxx Straordinaria proceedings have been applied for
(and no such applications by the Company or any Subsidiary (as applicable) are
pending.
3.22 Terminated Officers. Section 3.22 of the Disclosure Schedule lists
all corporate officers (including directors) of the Company or any Subsidiary
whose employment has been terminated, voluntarily or involuntarily, since
October 1, 1996, together with all claims or Actions that have been filed, or,
to the Knowledge of the Company or the Sellers, threatened with respect to such
employment
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or termination.
3.23 Affiliated Transactions. Except for (a) those agreements or
transactions listed in Section 3.17 of the Disclosure Schedule or contemplated
by this Agreement, (b) fees paid to directors and (c) salaries paid to
officers, neither the Company nor any Subsidiary has, since October 1, 1996,
(i) paid, loaned or advanced any amount to, (ii) sold, transferred or leased
any properties or assets to, or (iii) entered into or continued any agreement,
arrangement, or understanding (written or otherwise) with, any of any of the
Sellers or the Company's, any Subsidiary's or any Seller's officers, directors,
stockholders or affiliates.
3.24 Accounts Receivable and Inventory.
(a) The inventory of the Company and the Subsidiaries is, in all material
respects taken as a whole, merchantable and fit for the purpose for which it
was procured or manufactured, and none of which is slow-moving, obsolete,
damaged or defective, except to the extent appropriate reserves on the audited
consolidated balance sheet of the Company and the Subsidiaries as of December
31, 1996, and the unaudited consolidated balance sheet of the Company and the
Subsidiaries as of September 30, 1997, have been established to reduce the
carrying value of such inventory to the lower of (i) actual costs and (ii) net
realizable value, except where the failure to establish such reserves would not
be reasonably expected to have a Company Material Adverse Effect.
(b) All accounts and notes receivable of the Company and the Subsidiaries
have arisen in the ordinary course of business and the accounts receivable
reserve reflected in the audited consolidated balance sheet of the Company and
the subsidiaries as of December 31, 1996, and the unaudited consolidated
balance sheet of the Company and the Subsidiaries as of September 30, 1997,
were as of a such respective dates adequate and established in accordance with
GAAP consistently applied.
3.25 Disclaimer. EXCEPT AS SPECIFICALLY SET FORTH HEREIN, SELLERS MAKE NO
WARRANTY, EXPRESS OR IMPLIED. IN ANY EVENT, EXCEPT AS SPECIFICALLY PROVIDED
HEREIN, SELLERS MAKE NO WARRANTY OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR
A PARTICULAR PURPOSE, OR QUALITY, AS TO THE ASSETS OF THE COMPANY, OR ANY PART
THEREOF, OR AS TO THE CONDITION OR WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY
DEFECTS THEREIN, WHETHER LATENT OR PATENT. EXCEPT AS SET FORTH IN SECTION
10.2, SELLERS MAKE NO REPRESENTATION OR WARRANTY REGARDING ENVIRONMENTAL
MATTERS, INCLUDING BUT NOT LIMITED TO COMPLIANCE WITH ENVIRONMENTAL
REQUIREMENTS (AS DEFINED IN SECTION 12.1).
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4. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Sellers as follows:
4.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Delaware and has the requisite
corporate power and authority to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
4.2 Corporate Power and Authority; Effect of Agreement. The execution,
delivery and performance by the Buyer of this Agreement and the consummation by
the Buyer of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of the Buyer. This Agreement has
been duly and validly executed and delivered by the Buyer and constitutes a
valid and binding obligation of the Buyer, enforceable in accordance with its
terms, subject to (a) applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights generally and (b) general principles
of equity. The execution, delivery and performance by the Buyer of this
Agreement and the consummation by the Buyer of the transactions contemplated
hereby will not, with or without the giving of notice or the lapse of time, or
both, subject to obtaining any required consents, approvals, authorizations,
exemptions or waivers, (a) violate any provision of Law to which the Buyer is
subject, (b) violate any order, judgment or decree applicable to the Buyer or
(c) violate any provision of the Certificate of Incorporation or the By-laws of
the Buyer; except, in each case, for violations which would not materially
hinder or impair the consummation of the transactions contemplated hereby.
4.3 Consents. No consent, permit, approval or authorization of, or
exemption by, or filing with, any Governmental Body (other than pursuant to the
HSR Act) is required in connection with the execution, delivery and performance
by the Buyer of this Agreement or the taking of any other action contemplated
hereby, excluding, however, consents, approvals, authorizations, exemptions,
waivers and filings, if any, which the Sellers are, or the Company is, required
to obtain or make.
4.4 Sufficiency of Funds. The Buyer has obtained in good faith a letter
from DLJ Capital Funding, Inc. stating that, subject to the satisfaction of
certain conditions, it will lend to the Buyer $30.0 Million (the "Bank Debt"),
and the Buyer has obtained in good faith a letter from Xxxxxxxxx, Xxxxxx &
Xxxxxxxx Securities Corporation stating that it is highly confident that,
subject to the satisfaction of certain conditions, it can place notes in an
amount equal to at least $ 100.0 Million (the "Securities") in order to finance
the transaction contemplated herein. Copies of such letters are attached
hereto as Exhibit 4.4a and Exhibit 4.4b. The Buyer represents and warrants
that it has no reason to believe that the Bank Debt and the Securities cannot
be closed at or prior to Closing, subject to agreements on terms and conditions
satisfactory to the Buyer in its sole discretion.
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4.5 Litigation. There is no Action pending (i) or to the Buyer's
Knowledge, threatened against the Buyer with respect to which there is a
reasonable likelihood of a determination which would have a material adverse
effect on the ability of the Buyer to perform its obligations under this
Agreement or (ii) which seeks to enjoin or obtain damages in respect of the
consummation of the transactions contemplated hereby.
4.6 Purchase for Investment. The Buyer is purchasing the Shares for
investment and not for resale or distribution.
5. Covenants and Agreements. The parties covenant and agree as follows:
5.1 Conduct of Business. From the date hereof through the Closing Date,
unless the Buyer previously consents in writing to the contrary, the Company
and the Subsidiaries shall, and Metromedia shall cause the Company and the
Subsidiaries to:
(a) conduct their businesses only in the ordinary course consistent with
past practice;
(b) make commercially reasonable efforts consistent with past practices to
keep their respective businesses and properties substantially intact and to
preserve existing relationships with customers, suppliers, lessors, licensors,
employees and others with whom the Company and the Subsidiaries deal;
(c) not amend their respective Certificates of Incorporation or By-laws or
similar organizational documents;
(d) not (i) split, combine or reclassify any of their respective capital
stock, (ii) other than dividends (1) required to be paid to the holders of the
Company's Preferred Stock pursuant to any Certificate of Designation or the
Company's Certificate of Incorporation or (2) payable by any Subsidiary to the
Company or any Subsidiary, declare, set aside or pay any dividend or other
distribution payable in cash, stock or property with respect to their
respective capital stock, (iii) except pursuant to the exercise of options,
warrants, conversion rights or other contractual rights existing on the date
hereof and disclosed in Section 3.8 of the Disclosure Schedule, issue or sell
any additional shares of, or securities convertible into or exchangeable for,
or options, warrants, calls, commitments or rights of any kind to acquire,
shares of their respective capital stock, or (iv) except pursuant to agreements
existing on the date hereof, redeem, purchase or otherwise acquire directly or
indirectly any of their respective capital stock;
(e) not, except in the ordinary course of business and
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consistent with past practice or pursuant to agreements disclosed in Section
3.17 of the Disclosure Schedule or pursuant to agreements not required to be
disclosed in Section 3.17 of the Disclosure Schedule, (i) acquire, sell,
license, lease or dispose of any property , or (ii) enter into any commitment
or transaction which individually or in the aggregate would be material to the
Company and the Subsidiaries;
(f) not (i) incur or assume any Debt (other than Company Debt), except in
the ordinary course of business consistent with past practice, (ii) except as
otherwise provided in this Agreement, make any material loans, advances or
capital contributions to, or investments in, any other person (other than to a
Subsidiary), (iii) except in the ordinary course of business consistent with
past practice or pursuant to the Credit Agreement, pledge or otherwise encumber
shares of their respective capital stock, or (iv) except in the ordinary course
of business consistent with past practice or pursuant to the Credit Agreement,
mortgage or pledge any of their respective property, or create any Liens with
respect to such property (other than Permitted Liens);
(g) not (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or division
thereof or any equity interest therein, (ii) except in the ordinary course of
business consistent with past practice or pursuant to agreements disclosed in
Section 3.17 of the Disclosure Schedule or pursuant to agreements not required
to be disclosed in Section 3.17 of the Disclosure Schedule, enter into any
contract or agreement which would be material to the Company and its
Subsidiaries taken as a whole, or (iii) other than capital expenditures made
pursuant to any Contract listed on Schedule 3.17 of the Disclosure Schedule or
provided for in the Company's 1997 capital expenditures budget, which budget
has been delivered or made available to the Buyer, authorize any new capital
expenditure or expenditures which, individually, is in excess of $500,000 or,
in the aggregate, are in excess of $2,000,000;
(h) not change any of the accounting methods used unless required by GAAP;
(i) settle or compromise any Action which after insurance reimbursement is
material individually or in the aggregate to the Company and the Subsidiaries,
without the prior written consent of the Buyer, which consent shall not be
unreasonably withheld;
(j) not adopt or amend in any material respect any collective bargaining
agreement;
(k) not, except for intercompany transactions in the ordinary course of
business and consistent with past practice and payments pursuant to existing
contracts, pay, loan or advance any amount to, or sell, transfer or lease any
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of its assets to, or enter into any arrangement or agreement with any director,
officer, stockholder or Affiliate (other than the Company and any of the
Subsidiaries);
(l) not enter into any lease of real property, except any renewals of
existing leases in the ordinary course of business and consistent with past
practice;
(m) except in the ordinary course of business consistent with past
practice, continue to maintain and protect the Company's Intellectual Property
Rights as not to adversely affect the validity or enforceability of any of the
Company's Intellectual Property Rights;
(n) not slow down the Company's rate of spending for capital expenditures;
and
(o) not authorize or enter into an agreement, whether in writing or
otherwise, to do any of the foregoing.
5.2 Litigation. From the date hereof through the Closing Date, the
Sellers shall notify promptly the Buyer of any Actions that from the date
hereof are threatened or commenced against the Company, any Subsidiary or any
of the Sellers or against any officer or director of the Company, any
Subsidiary or any of the Sellers, and of any requests for additional
information or documentary materials by any Governmental Body pursuant to the
provisions of the HSR Act and the rules promulgated thereunder in the event and
for so long as any party hereto actively is contesting or defending against any
Action, the other party will cooperate with the contesting or defending party
and its counsel in the contest or defense, make available its personnel, and
provide such testimony and access to its books and records as shall be
reasonably necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefor hereunder).
5.3 Consent to Jurisdiction and Service of Process. Except as provided in
Sections 9.3.3 and 10.5.11, any legal Action arising out of or relating to this
Agreement or the transactions contemplated hereby may be instituted in any
state or federal court located in New York County, State of New York, and each
party agrees not to assert, by way of motion, as a defense, or otherwise, in
any such action, suit or proceeding, any claim that it is not subject
personally to the jurisdiction of such court, that its property is exempt or
immune from attachment or execution, that the action, suit or proceeding is
brought in an inconvenient forum, that the venue of the action, suit or
proceeding is improper or that this Agreement or the subject matter hereof may
not be enforced in or by such court, and hereby waives any offsets or
counterclaims in any such action, suit or proceeding. Each party further
irrevocably submits to the jurisdiction of any such court in any such action,
suit or proceeding. Any and all service of process and any other notice in any
such action, suit or proceeding shall be effective
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against any party if given personally or by registered or certified mail,
return receipt requested, or by any other means of mail that requires a signed
receipt, postage prepaid. Nothing herein contained shall be deemed to affect
the right of any party to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against any other party in any
jurisdiction other than New York.
5.4 Expenses. If the transactions contemplated hereby are not consummated,
the parties to this Agreement shall, except as otherwise specifically provided
herein, bear their respective expenses incurred in connection with the
preparation, execution and performance of this Agreement and the transactions
contemplated hereby, including, without limitation, all fees and expenses of
agents, representatives, counsel and accountants. If the transactions
contemplated hereby are consummated, the Buyer shall be entitled to receive
reimbursement from the Sellers (proportionate to their Share Ownership) for the
Seller Expenses which are paid or payable after the Closing, provided that such
reimbursement shall not be made if the following two conditions are satisfied:
(i) the amounts payable for such Seller Expense is reflected in the Closing
Statement and (ii) there is an adjustment to the Final Pre-Adjustment Amount
based on Actual Working Capital, as determined pursuant to Section 1.2.2.
5.5 Indemnification of Brokerage. The Buyer on the one hand and each of
the Sellers and the Company on the other hand represents and warrants to the
other that no broker, finder, agent or similar intermediary has acted on its
behalf in connection with this Agreement or the transactions contemplated
hereby, and that there are no brokerage commissions, finders' fees or similar
fees or commissions payable in connection therewith based on any agreement,
arrangement or understanding with it or any action taken by it, except for
customary transaction fees payable to certain stockholders of the Buyer by the
Company at Closing and a fee payable to American Industrial Partners by the
Buyer. Except as provided in the preceding sentence, each of the Buyer and the
Sellers agrees to indemnify and save the other from any claim or demand for
commission or other compensation by any broker, finder, agent or similar
intermediary claiming to have been employed by or on behalf of such person and
to bear the cost of reasonable legal expenses incurred in defending against any
such claim.
5.6 Further Assurances. Each of the parties shall execute such documents
and other papers and take such further actions as may be reasonably required or
desirable to carry out the provisions hereof and the transactions contemplated
hereby. Each party shall use its commercially reasonable efforts to fulfill or
obtain the fulfillment of the conditions to the Closing. Without limiting the
generality of the foregoing, the parties will use their commercially reasonable
efforts to file with the Federal Trade Commission and the Antitrust Division of
the Department of Justice complete and accurate notification and report forms
with respect to the transactions contemplated hereby pursuant to the HSR Act
and the rules promulgated thereunder,
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and to file such additional information and documentary materials as may be
requested pursuant to such Act, sufficiently in advance of the Closing Date to
allow the period of time specified by such Act and rules, and any extensions
thereof, to expire prior to the Closing Date.
5.7 Confidentiality. The terms of the letter agreement regarding
confidentiality heretofore entered into between Stanadyne Automotive Corp. and
the Buyer, dated July 10, 1997 (the "Confidentiality Agreement"), are herewith
incorporated by reference and shall continue in full force and effect until the
Closing. After the Closing, the Sellers will treat and hold as such all
Confidential Information, refrain from using any Confidential Information
except in connection with this Agreement, and deliver promptly to the Buyer or
destroy, at the request and option of the Buyer, all tangible embodiments (and
all copies) of Confidential Information which are in any of the Sellers'
possession, provided, however, that Sellers shall be able to retain, for tax,
financial, litigation or other reasonable purpose, such Confidential
Information as Sellers shall reasonably deem necessary. In the event that any
Seller is requested or required (by oral question or request for information or
documents in any legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential Information, such
Seller will notify the Buyer promptly of the request or requirement so that the
Buyer may seek an appropriate protective order or waive compliance with the
provisions of this Section 5.7. If, in the absence of a protective order or
the receipt of a waiver hereunder, such Seller is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else
stand liable for contempt, such Seller may disclose the Confidential
Information to the tribunal; provided, however, that such Seller shall use its
commercially reasonable efforts to obtain, at the request of the Buyer, an
order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate. If this Agreement is, for any reason, terminated prior to the
Closing, the Confidentiality Agreement shall continue in full force and effect.
5.8 Establishment of Defined Contribution Plan. Buyer shall establish (or
cause the Company to establish) effective January 1, 1998 a defined
contribution plan ("Buyer's Hourly Savings Plan") for the benefit of those
employees of the Company or its Subsidiaries who were participants in the PEPC
Pension Plan on the date of termination thereof and who, on the Closing Date,
became employees of the Buyer or any of its affiliates ("Transferred Hourly
Savings Participants"). Buyer's Hourly Savings Plan shall provide, to the
extent not inconsistent with Section 401(a)(4) and Section 410(b) of the Code,
benefits pursuant to the requirements listed on Section 5.8 of the Disclosure
Schedule. The Buyer's Hourly Savings Plan shall provide Transferred Hourly
Savings Participants credit for service with the Company, its Subsidiaries,
their affiliates and their respective predecessors prior to the Closing Date
for purposes of vesting and participation.
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5.9 Access to Information. From the date hereof to the Closing, the
Company and the Subsidiaries shall, and the Sellers shall cause the Company and
the Subsidiaries to, (a) give the Buyer and its authorized representatives
reasonable access to all books, records, personnel, officers and other
facilities and properties of the Company and the Subsidiaries and their
respective accountants at reasonable times and upon reasonable prior notice,
(b) permit the Buyer to make such copies and inspections thereof as the Buyer
may reasonably request and (c) cause the Company's and the Subsidiaries'
officers (including dirigenti) to furnish the Buyer with such financial and
operating data and other information with respect to the business and
properties of the Company and the Subsidiaries as the Buyer may from time to
time reasonably request.
5.10 Tax Matters. Neither the Company nor any of its Subsidiaries shall
file any amended Tax return, surrender any right to claim a refund of Taxes or
take any similar action, or omit to take any action relating to the filing of
any Tax return or the payment of any Tax, if such election, adoption, change,
amendment, agreement, settlement, surrender, consent, or other action or
omission would have the effect of materially increasing the present or future
tax liability or materially decreasing any present or future Tax asset (i.e.
net operating loss carry forwards, tax credit carry-forwards or the Tax basis
of depreciable assets) of the Company or any of the Subsidiaries, the Buyer or
any affiliate of the Buyer.
5.11. No Solicitation. From and after the date of this Agreement until the
earlier of (a) the Closing or (b) the termination of this Agreement pursuant to
Section 11.1 hereof, the Sellers shall not, and shall not permit any officer,
director, agent, representative or affiliate of the Company, any Subsidiary or
any Seller to, directly or indirectly: (i) enter into any written or oral
agreement or understanding with any Person (other than the Buyer or its
affiliates) regarding Another Transaction (as defined below); (ii) enter into
or continue any negotiations or discussions with any Person (other than the
Buyer or its affiliates) regarding the possibility of Another Transaction;
(iii) submit, solicit, initiate, encourage, participate in, or facilitate any
proposal or offer (other than a proposal or offer of the Buyer or its
affiliates) regarding Another Transaction; or (iv) except as otherwise required
by Law, provide any non-public financial or other Confidential Information
(including this Agreement and any other materials containing the Buyer's
acquisition proposal and any other financial information, projections or
proposals regarding the Company) to any Person (other than to the Buyer, its
affiliates or their respective representatives) who to the Knowledge of the
Company or the Sellers Know, or who the Company or the Sellers has reason to
believe, would have any interest in participating in Another Transaction. As
used herein, the term "Another Transaction" means the sale of any material
assets of the Company or any Subsidiary (other than the sale of inventory in
the ordinary course) or any sale, merger, consolidation, public offering,
reorganization, dissolution, recapitalization, business combination or similar
transaction involving any of the Company or any of the Company's capital stock
(or rights to acquire such capital
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stock), including, without limitation, the Shares. The Sellers will notify the
Buyer promptly if any third party makes any proposal, offer, inquiry or contact
in respect of Another Transaction.
5.12 Covenant Not to Compete.
(a) Metromedia agrees that for a period of three years from and after the
Closing Date (the "Non-Compete Period"), it will not engage directly or
indirectly in the manufacture of diesel fuel injection systems, fuel system
products, automotive engine components, automotive and truck maintenance
products or fuel additives business similar to that historically engaged in by
the Company (collectively, the "Business") anywhere in the world; provided,
however, that nothing herein shall prohibit Metromedia from (i) being a passive
owner of not more than 5% of the outstanding stock of any class of any other
corporation that engages in the Business, so long as Metromedia has no active
participation in the business of such corporation or (ii) engaging in any
business in which it is currently engaged, either directly or indirectly.
(b) During the Non-Compete Period, Metromedia shall not directly or
indirectly through another entity, induce or attempt to induce any employee of
the Company or any Subsidiary to leave the employ of the Company or any
Subsidiary, or in any way interfere with the relationship among the Buyer, the
Company, the Subsidiaries and any employee thereof.
(c) If, at the time of enforcement of this Section 5.12, a court shall
hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum
period, scope and area permitted by law. Metromedia hereby agrees that the
restrictions contained in this Section 5.13 are reasonable.
(d) In the event of the breach or a threatened breach by Metromedia of
any of the provisions of this Section 5.12, the Buyer, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Metromedia of this
Section 5.12, the Non-Compete Period for Metromedia shall be tolled until such
breach or violation has been duly cured.
5.13 FIRPTA Certificate. The Company will provide the Buyer with a
certificate in accordance with Treasury Regulation Section 1.1445-2(c)(3)
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certifying that the capital stock of the Company does not constitute a U.S.
real property interest.
5.14 Delivery of Monthly Financial Statements. Prior to the Closing, the
Company shall deliver to the Buyer financial statements for each fiscal month
ending after the date of this Agreement (the "Monthly Financial Statements")
within thirty (30) days after the end of such fiscal month. All Monthly
Financial Statements delivered pursuant to this Section 5.14 shall be prepared
in a manner consistent with past practice.
5.15 Company Debt. Metromedia covenants that at or prior to Closing, the
Company or the Subsidiaries, as applicable, (i) will have the right to repay
contemporaneously with the Closing, all of the Company Debt, and (ii) upon
payment of such Company Debt by the Buyer at Closing, the Company and the
Subsidiaries, as applicable, will be immediately able to obtain the release of
all Liens on the assets or capital stock of the Company and the Subsidiaries
securing such Company Debt. Seller shall provide or arrange to be provided to
the Buyer releases and other customary documents from the Banks and other
lenders of Company Debt in form and substance reasonably satisfactory to the
Buyer relating to the repayment of Company Debt.
5.16 Exercise of Warrants, Options or Other Rights. The Company and
each Seller shall take all actions necessary to exercise all options, and
warrants and exercise and covert the Preferred Stock into common stock of the
Company or exercise other rights set forth in Section 3.8 of the Disclosure
Schedule on or prior to Closing.
5.17 Merger or Redemption. The parties covenant that in the event that, at
least twenty-three (23) days prior to the Scheduled Closing Date, all of the
Sellers have not executed this Agreement either personally or by a valid,
enforceable power of attorney (the "Signing Condition"), they shall either, at
the election of Metromedia (i) take all action necessary to cause a merger (the
"Merger") of the Buyer with and into the Company (assuming that the Buyer will
and does take all action required of the Buyer to effect the Merger), effective
as of the Closing and the parties shall amend this Agreement to conform this
Agreement to a merger transaction or (ii) fulfill their respective obligations,
as set forth in Section 1.2.3, to cause the Redemption of the Shares of the
Sellers who have not met the Signing Condition to occur on the Closing and, as
applicable, Metromedia shall cause the Company to exercise the Bring-Along
Right (together, the Redemption Option"). In the event the Redemption Option
is exercised, this Agreement shall be effective as to those Sellers who met the
Signing Condition and, as applicable, had their Shares purchased pursuant to
the Bring-Along Right. Metromedia agrees to indemnify and hold harmless the
Buyer Indemnitees from (1) In the event that the Merger is consummated or the
Redemption Option is exercised, any additional costs, expenses, loss or
Liabilities (including reasonable attorneys' fees) incurred by the Buyer
Indemnitees which would
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not have been incurred if all the Sellers had executed this Agreement and a
stock purchase transaction had been consummated in accordance with the terms of
this Agreement and (2) any Damages incurred as a result of the invalidity or
enforceability of any power of attorney granted to Metromedia by any Seller,
provided, however, that Buyer shall pay, and Metromedia shall have no
obligation to indemnify Buyer Indeminitees for, any attorneys' fees of Buyer
related to the negotiation, preparation and execution of the documents
necessary to cause the Merger or the Redemption, including but not limited to
the Merger agreement. The parties agree that the Merger agreement shall be on
the same terms and conditions as this Agreement, including but not limited to
the Purchase Price, representations and warranties, covenants, and
indemnification, with the only modification being the changes related to the
mechanism for perfecting the Merger and paying the Purchase Price to the holder
of the Shares. The parties further agree that they will act reasonably and in
good faith to effect the Merger, if the Merger is required.
5.18 Sellers' Representative. Each of the Sellers shall appoint
Metromedia as its lawful representative (the "Seller Representative") to take
such actions on behalf of the Sellers as are authorized by this Agreement and
as otherwise may be necessary following the Closing to more effectively
consummate the transactions contemplated by this Agreement. The Seller
Representative shall be authorized, in the name and on behalf of each Seller in
his, her or its capacity as such, to (i) dispute or refrain from disputing any
claim made by the Sellers under this Agreement and the agreements contemplated
hereby, (ii) negotiate or compromise any dispute which may arise under and
exercise or refrain from exercising remedies available under, and made any
determination under, this Agreement and the agreements contemplated hereby, and
sign any releases or other documents with respect to such dispute or remedy,
(iii) waive any condition contained in this Agreement and the agreements
contemplated hereby, (iv) give any and all consents under this Agreement and
the agreements contemplated hereby, and (v) give such instructions and do such
other things and refrain from doing such other things as the Seller
Representative shall deem appropriate to carry out the provisions of this
Agreement and the agreements contemplated hereby. Each of the Sellers agrees
that it shall be bound by all actions taken or omitted to be taken by the
Seller Representatives, all notices received, and agreements and determinations
made, and documents executed and delivered by the Seller Representative under
this Agreement and the agreements contemplated hereby. The Parties shall
acknowledge and agree that the Seller Representative shall have no liability
for acting in its capacity as such, except for such liabilities arising our of
its gross negligence or willful misconduct. Each of the Sellers shall agree to
indemnify and hold the Seller Representative harmless from any claims,
liabilities, costs and expenses (including reasonable attorneys' fees) arising
out of or relating to its actions as Seller Representative hereunder, other
than any such claims, liabilities, costs and expenses finally determined by a
court of competent jurisdiction to have arisen out of such Seller
Representative's gross negligence or willful misconduct. The Sellers agree
that the Buyer shall be entitled to deal exclusively with the Seller
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Representative in respect of all interactions, notices, disputes and other
matters relating to the Seller's obligations under this Agreement and the
Seller Representative agrees to act on behalf of the Sellers in respect of all
such matters.
6. Conditions Precedent to the Obligation of the Buyer to Close. The
obligation of the Buyer to enter into and complete the Closing is subject, at
the option of the Buyer acting in accordance with the provisions of this
Agreement with respect to termination hereof, to the fulfillment on or prior to
the Closing Date of the following conditions, any one or more of which may be
waived by the Buyer:
6.1 Representations and Covenants. The representations and warranties of
the Company, the Subsidiaries and the Sellers contained in this Agreement shall
be true in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date, except for
representations and warranties that speak as of a specific date or time other
than the Closing Date, which shall be true as of such date or time. For
purposes of determining whether a representation or warranty is true for the
purposes of the condition set forth in the first sentence of this Section 6.1,
any requirements in any representation or warranty that an event, fact, or
circumstance be or not be material or cause or not cause a Company Material
Adverse Effect shall be ignored, provided, however, that such representations
and warranties shall be deemed to be true where the failure of such
representations and warranties to be true shall not be materially adverse to
the business, assets, liabilities, financial condition or results of operations
of the Company or the Subsidiaries, taken as a whole. The Sellers shall have
performed and complied in all material respects with all covenants and
agreements required by this Agreement to be performed or complied with by it
on, prior to or as of the Closing Date. The Company and the Sellers shall have
delivered to the Buyer certificates, dated the Closing Date and signed by an
officer of the Company, each of the Sellers and Subsidiary as the case may be,
to the foregoing effect; provided however, that in the event that (a) the
condition of this Section 6.1 shall not be satisfied because one or more
specific representations or warranties of the Company, the Subsidiaries or the
Sellers are not true as of the Closing Date and (b) the Buyer agrees to waive
satisfaction of such condition so that the transactions contemplated herein
will be consummated, then the Company, the Subsidiaries and the Sellers, as the
case may be, shall nevertheless provide the certificates referred to in this
Section 6.1, but such certificates shall exclude those specific representations
and warranties which were not true as of the Closing Date.
6.2 Opinion of Counsel to the Sellers and the Company. The Buyer shall
have received the opinion of counsel of the Company and the Sellers, dated the
date of the Closing, addressed to the Buyer, in form and substance reasonably
satisfactory to the Buyer.
6.3 Litigation. No Action shall have been instituted before any
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Governmental Body, or instituted or threatened by any Governmental Body, to
restrain, modify or prevent the carrying out of the transactions contemplated
hereby, or to seek damages or a discovery order in connection with such
transactions.
6.4 Directors. The Company and the Sellers shall have caused such of the
directors and statutory auditors of the Company and the Subsidiaries as have
been designated by the Buyer to have tendered to the Company or such
Subsidiaries their resignations as directors of the Company and or of such
Subsidiaries, effective as of the Closing Date. The Sellers undertake that
the Shareholders' meetings of Stanadyne Automotive S.p.A. shall be held duly
called on the Closing Date as required to replace the directors and statutory
auditors of Stanadyne Automotive S.p.A. who have resigned and the Sellers shall
have granted to a representative of the Buyer a proxy to attend such meeting
and vote thereon.
6.5 Delivery of Stock Certificates. The Sellers shall have delivered to
the Buyer at the Closing stock certificates representing all of the Shares duly
endorsed in blank or accompanied by stock powers duly executed in blank, in
proper form for transfer.
6.6 Xxxx-Xxxxx-Xxxxxx. The parties shall have filed with the Federal
Trade Commission and the Antitrust Division of the Department of Justice
complete and accurate notification and report forms with respect to the
transactions contemplated hereby, pursuant to the HSR Act and the rules
promulgated thereunder, and the waiting period required to expire under such
Act and rules, including any extension thereof, shall have expired prior to the
Closing Date.
6.7 Consents. All authorizations, approvals or consents listed in Exhibit
6.7 and those required to permit (i) the consummation of the transaction
contemplated hereby and (ii) the Company and the Subsidiaries to conduct their
respective business after the Closing Date on the same basis as conducted prior
to the date hereof shall have been obtained and be in full force and effect,
except where the failure to have obtained any such authorizations, approvals or
consents would not reasonably be expected to result in a Liability in excess of
$500,000 to the Company and the Subsidiaries, or materially interfere with the
business of the Company or any Subsidiary, taken as a whole.
6.8 No Company Material Adverse Change. Between January 1, 1997 and the
Closing Date there shall have been no Company Material Adverse Change (other
than those disclosed hereunder), provided that a Company Material Adverse
Change shall be deemed to have occurred if, to the knowledge of the Company, an
event, fact or circumstance has occurred which is substantially likely to
result in a Company Material Adverse Change within 21 months after the date
hereof.
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6.9 Financing. The Buyer shall have obtained financing, acceptable to the
Buyer in its sole discretion, to consummate the transactions contemplated
hereby.
6.10 Title Insurance. A title insurance company selected by the Buyer (the
"Title Company") shall be willing to insure at standard rates the Company's and
the Subsidiary's (as applicable) marketable title in and to any owned real
property in fee simple, free and clear of all Liens (other than Permitted Liens
and matters disclosed in Section 3.12 of the Disclosure Schedule) including
such endorsements and affirmative coverages as the Buyer shall reasonably
require including without limitation non-imputation endorsements. The Sellers
shall provide all such affidavits and indemnities as the Title Company
reasonably shall require in order to afford such coverages. The Sellers shall
have timely paid any and all real property transfer, transfer gains, stamp and
other similar taxes, if any, assessed in connection with the transactions
contemplated by this Agreement and shall have delivered evidence satisfactory
to the Buyer and the Title Company of the payment of such taxes. The Buyer
shall have received a survey of all real property owned by the Company or any
Subsidiary, conforming to the minimum Standard Detail Requirements jointly
established and approved in 1992 by ALTA and ACSM certified to the Company and
the Title Company and showing no defects, encroachments or encumbrances other
than other than the matters disclosed in Section 3.12 of the Disclosure
Schedule. Such real property shall be in substantially the same condition and
repair as that on the date of this Agreement, reasonable wear and tear
excepted. If required pursuant to the terms of any lease described in Section
3.12 of the Disclosure Schedule, the Buyer shall have received from each
landlord under such lease a consent to the transactions contemplated by this
Agreement, in form and substance reasonably satisfactory to the Buyer.
6.11 Certificates. The Buyer shall have received from the Company or the
Subsidiaries, as applicable:
(a) certificates executed by the secretary of the Company certifying as to
the resolutions of the board of directors of the Company and the Shareholders
authorizing the execution, delivery and consummation of the transaction
contemplated by this Agreement;
(b) a certificate of the secretary of the Company certifying as to the
incumbency of the officers of the Company and as to the signatures of such
officers who have executed documents delivered at the Closing on behalf of the
Company;
(c) a certificate, dated within three Business Days of the Closing Date,
of the Secretary of State of the State of Delaware establishing that the
Company is in existence and otherwise is in good standing to transact business
in its
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state of incorporation, and certificates, dated within three business Days of
the Closing Date, of the Secretary of State of the states of incorporation of
each of the Subsidiaries establishing that each of the Subsidiaries is in
existence and otherwise is in good standing to transact business is its state
of incorporation; and
(d) a certificate, dated within twenty-one days of the Closing Date, of
the Secretaries of State of the States in which the Company is qualified to do
business, to the effect that the Company is qualified to do business and is in
good standing as a foreign corporation in each of such states, and
certificates, dated within twenty-one days of the Closing Date, of the
Secretaries of State of the states in which each of the Subsidiaries is
qualified to do business, to the effect that each of the Subsidiaries is
qualified to do business and is in good standing as a foreign corporation in
each of such states.
6.12 Execution of Agreement by All Sellers or Merger. Either (a) this
Agreement shall have been executed by all of the Sellers, either individually
or by Metromedia on behalf of any non-individual signing Seller, as authorized
pursuant to a valid power of attorney for such purpose executed by such Seller
in favor of Metromedia or (b) the Merger shall have occurred.
7. Conditions Precedent to the Obligation of the Sellers to Close. The
obligation of the Sellers to enter into and complete the Closing is subject, at
the option of the Sellers acting in accordance with the provisions of this
Agreement with respect to termination hereof, to the fulfillment of the
following conditions, any one or more of which may be waived:
7.1 Representations and Covenants. The representations and warranties of
the Buyer contained in this Agreement shall be true in all material respects on
and as of the Closing Date with the same force and effect as though made on and
as of the Closing Date. For purposes of determining whether a representation
and warranty is true for the purposes of the condition set forth in the first
sentence of this Section 7.1, any requirements in the representations and
warranties that an event, fact or circumstance be or not be material shall be
ignored provided, however, that such representations and warranties shall be
deemed to be true where the failure of such representations and warranties to
be true shall not be material to any Seller. The Buyer shall have performed
and complied in all material respects with all covenants and agreements
required by this Agreement to be performed or complied with by it on, or prior
to, or as of, the Closing Date. The Buyer shall have delivered to the Sellers
a certificate, dated the Closing Date and signed by an officer of the Buyer to
the foregoing effect; provided however, that in the event that (A) the
condition in this Section 7.1 shall not be satisfied because one or more
specific representations or warranties of the Buyer are not true as of the
Closing Date and (B) the Sellers agree to waive satisfaction of such condition
so that the transactions contemplated herein will be consummated, then the
Buyer shall nevertheless provide the certificates referred to in
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this Section 7.1, but such certificates shall exclude those specific
representations and warranties which were not true as of the Closing Date.
7.2 Opinion of Counsel to the Buyer. The Sellers shall have received the
opinion of Xxxxxxxx & Xxxxx, counsel to the Buyer, dated the date of the
Closing, addressed to the Sellers, in form and substance reasonably
satisfactory to the Sellers.
7.3 Litigation. No Action shall have been instituted before any
Governmental Body, or instituted or threatened by any Governmental Body, to
restrain, modify or prevent the carrying out of the transactions contemplated
hereby, or to seek damages or a discovery order in connection with such
transaction.
7.4 Xxxx-Xxxxx-Xxxxxx The parties shall have filed with the Federal Trade
Commission and the Antitrust Division of the Department of Justice complete and
accurate notification and report forms with respect to the transactions
contemplated hereby, pursuant to the HSR Act and the rules promulgated
thereunder, and the waiting period required to expire under such Act and rules,
including any extension thereof, shall have expired prior to the Closing Date.
7.5 Payment. The Buyer shall have delivered to the Sellers at the Closing
the Preliminary Purchase Price by wire transfer of immediately available funds.
7.6 Certificates. The Sellers shall have received from the Buyer the
following:
(a) certificates executed by the secretary of the Buyer, certifying as to
the resolutions of the board of directors of the Buyer and the stockholders of
the Buyer authorizing the execution, delivery and consummation of the
transaction contemplated by this Agreement;
(b) a certificate of the secretary of the Buyer certifying as to the
incumbency of the officers of the Buyer, and as to the signatures of such
officers who have executed documents delivered at the Closing on behalf of the
Buyer;
(c) a certificate, dated within three Business Days of the Closing Date,
of the Secretary of State of the State of Delaware establishing that the Buyer
is in existence and otherwise is in good standing to transact business in its
state of incorporation; and
(d) a certificate from AICF, certifying that it has contributed the equity
portion of the Purchase Price to Buyer.
8. Survival of Representations, Warranties and Covenants. Except
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as otherwise expressly provided in this Agreement, all representations and
warranties of the parties made in this Agreement or in any certificate or other
document delivered pursuant hereto or in connection herewith shall expire at
the Closing; provided, however that notwithstanding anything to the contrary
contained herein the representations and warranties of the parties contained in
this Agreement shall survive until eighteen (18) months subsequent to the
Closing Date, except that (a) the representations and warranties contained in
Sections 3.7 (relating to outstanding capital stock), 3.8 (relating to options
or other rights), and 3.11 (relating to Tax matters) and 3.21 (relating to
Labor) shall survive indefinitely and not expire (except pursuant to applicable
statutes of limitations) and (b) representations and warranties contained in
Section 10 (relating to environmental matters) shall survive until, and expire
on, the third anniversary of the Closing Date; and, provided further, however,
that the covenants contained herein shall survive without limitation as to time
(except pursuant to applicable statutes of limitations).
9. Indemnification.
9.1 General Indemnification of Buyer. From and after the Closing Date and
subject to the terms and conditions of this Section 9.1, Buyer and its
directors, officers, employees, affiliates, controlling persons, stockholders,
agents, and representatives, and their successors and assigns (collectively,
the "Buyer Indemnitees") shall be indemnified and held harmless to the extent
set forth in this Section 9 by Sellers (proportionate to their ownership of
shares) in respect of any damage, loss, Liability and expense (including
reasonable attorneys' fees) (collectively, "Damages") asserted against or
actually incurred by any Buyer Indemnitee as a result of any misrepresentation
in or breach of or failure to perform any representation, warranty, covenant
and/or agreement made by Sellers or the Company (for covenants of the Company,
solely with respect to pre-Closing matters only) in this Agreement; provided,
however, that the Sellers' obligation to indemnify the Buyer Indemnitees
pursuant to Section 9.1 hereof in respect of breaches of representations and
warranties (other than representations and warranties made in Sections 3.2, 3.7
or 3.8) is subject to the following limitations:
(i) the Buyer Indemnitees shall not be entitled to recover from the
Sellers in respect of any claim for Damages resulting from a single inaccuracy
or breach unless such Damages equal or exceed $150,000; provided, however that
all claims for Damages directly arising out of the same facts or events
resulting in such inaccuracy or breach shall be treated as a single claim. For
the purposes of determining whether there has been a breach or an inaccuracy in
respect of any representation or warranty for the purpose of Section 9.1, any
requirement that an event or fact be or not be material or cause, or fail to
cause, a Company Material Adverse Effect shall be ignored; and
(ii) the Sellers shall have no obligation under this Section 9.1
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unless and until the aggregate amount of Damages so incurred by Buyer
Indemnitees in the aggregate for which Buyer Indemnitees are entitled to
indemnification under this Section 9.1 plus the aggregate amount for which
Buyer Indemnitees are entitled to indemnification under Section 10.3.3 exceeds
$2,000,000, whereupon Sellers shall be liable to indemnify the Buyer
Indemnitees for all such Damages in excess of such amount up to a maximum
amount equal to $35,000,000;
The indemnification provisions of this Section 9 shall be the sole and
exclusive remedy of the Buyer Indemnitees, except as provided in Sections 10
and 11. The Sellers shall be obligated to indemnify the Buyer Indemnitees only
for those claims giving rise to Damages as to which the Buyer Indemnitees have
given the Sellers written notice of the basis of such claim thereof prior to
the end of the Survival Period.
Notwithstanding the foregoing, the indemnification obligations of Buyer
under Section 9.5 and Section 10 shall be set forth in such sections and shall
not be subject to the provisions of this Section 9.1. Notwithstanding anything
to the contrary set forth in this Agreement, the Buyer Indemnitees shall be
indemnified and held harmless by the Sellers (proportionate to their Share
Ownership) for (i) any Damages asserted against or actually incurred by any
Buyer Indemnitee arising out of any requirements imposed by the Internal
Revenue Service as a condition of issuing determinations that the Precision
Engine Products Tallahassee Hourly Pension Plan and the Stanadyne Automotive
Corp. Pension Plan are qualified under Section 401(a) of the Code as amended
for the provisions of the Tax Reform Act of 1986 and subsequent legislation and
(ii) the aggregate amount of the Xxxxx Liability, if any, which the Company
actually pays to Xxxxx. Notwithstanding that the Buyer Indemnitees shall be
indemnified and held harmless by the Sellers proportionate to their Share
Ownership, the Buyer Indemnitees shall be entitled to recover from Metromedia
any and all Damages for which the Buyer Indemnitees are entitled to
indemnification under this Agreement (other than Damages asserted against or
actually incurred by any Buyer Indemnitee as a result of any misrepresentation
in or breach of any Several Representation by any Seller other than Metromedia)
without having to seek any recourse first against the other Sellers. For
purpose of this Agreement "Several Representation" shall mean any
representation or warranty in Sections 3.2, 3.4, 3.5 or 3.7 which pertain to a
Seller individually. Notwithstanding anything to the contrary set forth in
this Agreement, Buyer shall not be indemnified by Metromedia for any Damages
asserted against or actually incurred by the Buyer as a result of any
misrepresentation in or breach of any Several Representation by any Seller
other than Metromedia. Each Seller agrees that Metromedia may elect to seek,
and is entitled to contribution and recovery from such Seller, proportionate to
such Seller's Share Ownership, for any and all Damages recovered from
Metromedia by the Buyer Indemnitees pursuant to this Agreement (except for
Damages recovered as a result of any misrepresentation in or breach of or
failure to perform by Metromedia any Several Representation), provided,
however, that in the event that Metromedia elects not to
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seek such contribution and recovery, this provision shall be of no effect.
9.2 Indemnification of Sellers. From and after the Closing Date, Sellers
and their respective directors, officers, employees, affiliates, controlling
persons, stockholders, agents, and representatives, and their successors and
assigns (collectively, the "Seller Indemnitees") shall each be indemnified and
held harmless to the extent set forth in this Section 9 by Buyer in respect of
any and all Damages asserted against or actually incurred by Sellers
Indemnities (i) as a result of any misrepresentation in or breach of or failure
to perform any representation, warranty, covenant or agreement made by Buyer in
this Agreement or (ii) except as may be limited by Section 10, resulting from
Buyer's operation of the Company and is subsidiaries or ownership of the Shares
after the Closing Date, provided, that the foregoing clause (ii) shall not be
deemed to modify the obligations of Sellers under Section 9.1 and provided,
further, that in the event of a conflict between this clause (ii) and Section
9.1, the provisions of Section 9.1 shall prevail. Buyer's obligation to
indemnify the Sellers Indemnitees pursuant to Section 9.2 hereof is subject to
the following limitations:
(i) the indemnification provisions of this section 9 shall be the sole and
exclusive remedy of the Sellers Indemnitees, except as provided in Sections 10
and 11; and
(ii) the Buyer shall be obligated to indemnify the Sellers Indemnitees
only for those claims giving rise to Damages as to which the Sellers
Indemnitees have given the Buyer written notice of the basis of such claim
thereof prior to the end of the Survival Period.
9.3 Claims for Indemnification; Arbitration.
9.3.1. If any party shall believe that it is entitled to indemnification
pursuant to this Section 9 in respect of any Damages (an "Indemnitee"), such
Indemnitee shall promptly give the appropriate indemnifying party notice of
such claim (a "Notice of Claim"). Any such Notice of Claim shall set forth in
reasonable detail and to the extent then known the basis for such claim for
indemnification and the amount of the claim, to the extent specified or
otherwise known. The failure of such Indemnitee to give the Notice of Claim
for indemnification promptly shall not adversely affect such Indemnitee's right
to indemnity hereunder except to the extent that the defense of any claim is
prejudiced by such failure.
9.3.2. No Person shall have any claim or cause of action as a result of
any misrepresentation in or breach of or failure to perform any representation,
warranty, covenant, agreement or obligation of any Indemnifying Party referred
to in this Section 9 against any affiliate, stockholder, director, officer,
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employee, consultant or agent of such Indemnifying Party, unless any of the
foregoing is a successor or assign of such Indemnifying Party. Nothing set
forth in this Section 9 shall be deemed to prohibit or limit any Indemnitee's
right at any time before, on or after the Closing Date, to seek injunctive or
other equitable relief for the failure of any Indemnifying Party to perform any
covenant or agreement contained herein.
9.3.3 (a) All claims, disputes, controversies and other matters relating
to the parties respective indemnification obligations under this Agreement
(including the parties' respective indemnification obligations pursuant to
Section 10) shall be settled by preliminary negotiation between the Buyer on
the one hand and the Sellers on the other hand. If such preliminary
negotiation is unsuccessful within 30 business days, then either party may
refer the dispute to binding arbitration in accordance with procedures set
forth in this Section 9.3.3. Without limiting the mandatory arbitration
provision set forth in this Section 9.3.3, each party hereby (i) waives the
right to bring an action in any court of competent jurisdiction with respect to
any such claims, controversies and disputes (other than any such action to
enforce the award or other remedy resulting from any arbitration pursuant to
this Section 9.3.3), and (ii) waives the right to trial by jury in any suit,
action or other proceeding brought on, with respect to or in connection with
this Agreement.
(b) Upon filing of a notice of demand for binding arbitration by either
party, arbitration with the American Arbitration Association, or comparable
association if the American Arbitration Association is no longer in existence,
shall be commenced and conducted as follows:
(i) All claims, disputes, controversies and other matters in question
shall be referred to and decided and settled by a standing panel of three
arbitrators, one selected by the Buyer, one by the Sellers and the third by the
two arbitrators so selected. Selection of arbitrators shall be made within
thirty days after the date of the first notice of demand given pursuant to this
Section 9.3.3(b) and within thirty days after any resignation, disability or
other removal of such arbitrator. Following appointment, each arbitrator shall
remain a member of the standing panel, subject to refusal only for just cause
or resignation disability. Each of the Sellers hereby agrees that such
standing panel shall hear all claims, whether or not all Sellers have the same
interest in each claim, and that the Seller Representative shall select the
arbitrator on behalf of all of the Sellers.
(ii) The cost of each arbitration proceeding, including without limitation
the arbitrator's compensation and expenses, hearing room charges, court
reporter transcript charges, shall be borne by the parties as determined by the
arbitrators in accordance with the terms of this Agreement. The arbitrators
are specifically instructed to award attorneys' fees for instances of abuse of
the discovery process.
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(iii) The site of the arbitration shall be in New York, New York unless
the Buyer and the Sellers agree otherwise.
(iv) The arbitrators shall have the power and authority to, and to the
fullest extent practicable shall, abbreviate arbitration discovery in a manner
that is fair to the Buyer and the Sellers in order to expedite the conclusion
of each alternative dispute resolution proceeding.
(v) The arbitration shall be governed by, and all rights and obligations
specifically enforceable under and pursuant to, the Federal Arbitration Act.
(vi) The arbitrators are empowered to render an award of general
compensatory damages and equitable relief (including, without limitation,
injunctive relief). The award rendered by the arbitrators (i) shall be final,
(ii) shall not constitute a basis for collateral estoppel as to any issue and
(iii) shall not be subject to vacation or modification. The arbitrators shall
render any award or otherwise conclude the arbitration no later than 90 days
after the date notice is given pursuant to this Section 9.3.3, and shall submit
a written report providing the basis, in reasonable detail, for its decision.
9.4 Defense of Claims.
9.4.1 In connection with any claim which may give rise to indemnity under
this Section 9 resulting from or arising out of any claim or proceeding against
an Indemnitee by a person that is not a party hereto, the Indemnifying Party
may (unless such Indemnitee elects not to seek indemnity hereunder for such
claim), upon written notice to the relevant Indemnitee, assume the defense of
any such claim or Proceeding if all Indemnifying Parties with respect to such
claim or proceeding jointly acknowledge in writing to the Indemnitee its right
to indemnity pursuant hereto in respect of the entirety of such claim (as such
claim may have been modified through written agreement of the parties) and
provide in writing assurances, reasonably satisfactory to such Indemnitee, that
the Indemnifying parties will be financially able to satisfy such claim in full
if such claim or proceeding is decided adversely. If the Indemnifying parties
assume the defense of any such claim or proceeding, the Indemnifying Party
shall select counsel reasonably acceptable to such Indemnitee to conduct the
defense of such claim or proceeding, shall take all steps necessary in the
defense or settlement thereof and shall at all times reasonably diligently and
promptly pursue the resolution thereof. If the Indemnifying Parties shall have
assumed the defense of any claim or proceeding in accordance with this Section
9.4, the Indemnifying Parties shall be authorized to consent to a settlement
of, or the entry of any judgment arising from, any such claim or proceeding,
with the consent of the Indemnitee, which consent will be not unreasonably
withheld or delayed; provided, that no such consent shall be required from such
Indemnitee if the Indemnifying Parties
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shall pay or cause to be paid all amounts arising out of such settlement or
judgment concurrently with the effectiveness thereof; provided, further, that
the Indemnifying Parties shall not be authorized to encumber any of the assets
of any Indemnitee or to agree to any restriction that would apply to any
Indemnitee or to its conduct of business; and provided, further, that a
condition to any such settlement shall be a complete release of such Indemnitee
and its affiliates, officers, employees and, if named as a defendant,
consultants and agents with respect to such claim. Each Indemnitee shall be
entitled to participate in the defense of any such action at its own cost and
expense. Each Indemnitee shall, and shall cause each of its affiliates,
officers, employees, consultants and agents to, cooperate fully with the
Indemnifying Parties in the defense of any claim or Proceeding being defended
by the Indemnifying Parties pursuant to this Section 9.4.
9.4.2 If the Indemnifying Parties do not assume the defense of any claim
or proceeding resulting therefrom in accordance with the terms of this Section
9.4.1, such Indemnitee may defend against such claim or proceeding in the
manner as it may deem appropriate, including settling such claim or proceeding
after giving notice of the same to the Indemnifying Parties, on such terms as
such Indemnitee may deem appropriate. If the Indemnifying Parties seek to
question the manner in which such Indemnitee defended such claim or proceeding
or the amount of or nature of any such settlement, the Indemnifying Parties
shall have the burden to prove by a preponderance of the evidence that such
Indemnitee did not defend such claim or proceeding in a reasonably prudent
manner.
9.5 Tax Indemnity.
9.5.1 Subject to the provisions of Section 9.5.3, the Sellers shall be
liable for, and shall hold the Buyer and the Company and each of its
Subsidiaries harmless from and against, any and all Taxes due or payable by, or
on behalf of, the Company and each of its Subsidiaries for any taxable year or
tax period ending on or before the Closing Date.
9.5.2 Subject to the provisions of Section 9.5.3, for any taxable year or
tax period beginning after the Closing Date, the Buyer and the Company shall be
liable for, and shall hold the Sellers harmless from and against, any and all
Taxes due or payable by the Company and each of its Subsidiaries or by the
Sellers with respect to the Company and each of its Subsidiaries.
9.5.3 Any Taxes for a tax period beginning before the Closing Date and
ending after the Closing Date shall be apportioned between the Sellers and the
Buyer in the case of real and personal property taxes, on a per diem basis and,
in the case of other Taxes, based on the actual operations of the Company
during the portion of such period ending on the Closing Date and the portion of
such period beginning on the day following the Closing Date, and each such
portion of such
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period shall be deemed to be a tax period subject to the provisions of
Sections 9.5.1 and 9.5.2, above.
9.5.4 Any refunds or credits of Taxes relating to a taxable year or tax
period (including a period deemed to be a tax period under Section 9.5.3) (i)
shall be for the account of the Buyer if such refund is attributable to the
carry back of a loss to such period from any period ending after the Closing
Date or if such period ends after the Closing Date, and (ii) shall be for the
account of the Sellers in all other cases. The Buyer shall, and shall cause
the Company to, use its best efforts to seek and shall cause the Company to
forward to or to reimburse the Sellers for any such refunds or credits due the
Sellers after receipt thereof, and the Sellers shall promptly forward or
reimburse the Buyer for any refunds or credits due the Buyer after receipt
thereof.
9.5.5 If the Buyer or the Company becomes aware of any assessment,
official inquiry, examination or proceeding that could give rise to an official
determination with respect to Taxes due or payable for any taxable year or tax
period ending on or before the Closing Date (including a period deemed to be a
tax period ending on or before the Closing Date under Section 9.5.3), the Buyer
shall promptly so notify the Sellers in writing. If the Sellers become aware
of any official inquiry, examination or proceeding that could result in an
official determination with respect to Taxes due or payable by the Buyer or the
Company, the Sellers shall promptly so notify the Buyer in writing.
9.5.6 The Sellers shall have the right, at the Sellers' expense, to
conduct the contest and/or settlement of any issue raised in any official
inquiry, examination or proceeding that could give rise to an official
determination with respect to Taxes due or payable for any taxable year or tax
period ending on or before the Closing Date (including a period deemed to be a
tax period ending on or before the Closing Date under Section 9.5.3). The
Buyer shall cooperate with the Sellers, as the Sellers may reasonably request,
in any such inquiry, examination or proceeding.
9.5.7 Any contest and/or settlement of any issue raised in an official
inquiry, examination or proceeding that could result in an official
determination with respect to Taxes due or payable that relate to a period
deemed to be a tax period ending on or before the Closing Date under Section
9.5.3 and to a period deemed to be a tax period beginning after the Closing
Date under Section 9.5.3 shall be conducted jointly by the Buyer and the
Sellers and a settlement (at the administrative level or during the course of
judicial proceedings) may only be entered into with the consent of both the
Buyer and the Sellers, which consent shall not be unreasonably withheld.
9.5.8 Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 9 (and the representations and warrants set
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forth in Section 3.11) shall survive until the expiration of the applicable
statute of limitations.
10. Environmental Indemnity
10.1 Representations and Warranties and Covenant of Buyer.
10.1.1 To the Knowledge of Buyer, except as set forth on Schedule 10.3.2
("Schedule 10.3.2 Matters") or as set forth on Schedule 10 ("Known
Environmental Matters"), there are no matters, conditions, situations, or
remedial or compliance obligations which individually could reasonably be
expected to give rise to Environmental Liabilities of the Company or the
Subsidiaries of $150,000 or more. For the purposes of this Section 10, Consent
Order No. HM-786 shall not be deemed one individual matter, condition,
situation, or remedial or compliance obligation.
10.1.2 Buyer has provided Sellers with a complete list and description of
all environmental issues related to the Company and the Subsidiaries that were
provided to Buyer by Environ Corporation, Buyer's environmental consultant,
pursuant to Environ Corporation's environmental due diligence of the Company
and the Subsidiaries.
10.1.3 No environmental investigations (except visual observations) of the
soil, sediments, surface water, groundwater, or the subsurface or any intrusive
environmental investigations with respect to the Company or the Subsidiaries
are currently planned or being undertaken by Buyer.
10.1.4 The Company shall serve as responsible party, certifier, and
signatory to all documents related to any so-called "transaction-triggered" or
"responsible party transfer" Environmental Requirements, including, but not
limited to the requirements of Section 22a-134 et seq. of the Connecticut
General Statutes, provided that Sellers acknowledge that certain
transaction-triggered requirements may ultimately be subject to Sellers'
indemnification under this Agreement. In particular, for purposes of Sections
22a-134 et seq. of the Connecticut General Statutes, the Company shall serve as
"Certifying Party," Sellers shall serve as "transferor," and Buyer shall serve
as "transferee." Prior to the Closing Date, Sellers shall prepare, or arrange
for the Company to prepare, the required Property Transfer Program Form and the
Environmental Condition Assessment Form, provided that, prior to the Closing
Date, Sellers shall permit Buyer a reasonable opportunity to comment on draft
versions of such forms, and the final versions of such forms shall be
reasonably satisfactory to Buyer. Within 10 days following the Closing Date,
Buyer shall ensure that the Company submits the completed forms to the
Connecticut Department of Environmental Protection, as required. Nothing in
this Section 10.1.4 shall limit, restrict or otherwise affect the
indemnification obligations of the Sellers under this Agreement.
10.2 Representation and Warranty of Sellers.
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10.2.1 To the Knowledge of Sellers and the Company, except as set forth on
Schedule 10.3.2 ("Schedule 10.3.2 Matters") or as set forth on Schedule 10
("Known Environmental Matters"), there are no matters, conditions, situations,
or remedial or compliance obligations which individually could reasonably be
expected to give rise to Environmental Liabilities of the Company or the
Subsidiaries of $150,000 or more. For purposes of this Section 10, Consent
Order No. HM-786 shall not be deemed one individual matter, condition,
situation, or remedial or compliance obligation. In addition, characterization
of a matter, condition, situation, or remedial or compliance obligation as a
"Known Environmental Matter" or a "Schedule 10.3.2 Matter" is not an admission
that such matter will give rise to Environmental Liabilities of the Company or
the Subsidiaries of $150,000 or more.
10.3 Environmental Indemnification of Buyer.
10.3.1. In accordance with the terms and provisions of this Section 10,
Sellers shall indemnify and hold harmless the Buyer Indemnitees for all
Environmental Liabilities arising from Known Environmental Matters.
10.3.2 In accordance with the terms and provisions of this Section 10,
Sellers shall indemnify and hold harmless the Buyer Indemnitees and assume
Principal Management for Environmental Liabilities arising from Schedule 10.3.2
Matters, provided that, Sellers' obligation to indemnify the Buyer Indemnitees
under this Section 10.3.2 is subject to the following limitations:
(i) Sellers shall conduct and pay for all pre-remedial costs of
investigating each Schedule 10.3.2 Matter;
(ii) Buyer shall pay for, and Sellers shall have no liability or
obligation to pay for any costs (including the costs of any additional
investigation that is required after remedial efforts have begun) arising
from a Schedule 10.3.2 Matter until Buyer has paid the first $20,000 of
such remedial costs arising from such Schedule 10.3.2 Matter (the "Buyer
Remediation Obligation");
(iii) Additional remediation costs arising from each Schedule 10.3.2
Matter in excess of the Buyer Remediation Obligation in respect of such
matter shall be shared equally by Buyer and Sellers on a dollar-for-dollar
basis provided that the maximum expenditure by Buyer for all such
additional remediation costs arising from 10.3.2 Matters in excess of the
Buyer Remediation Obligation shall not exceed $300,000 in the aggregate
excluding the Buyer Remediation Obligation. Any such additional
remediation costs arising from Schedule 10.3.2 Matters in excess of such
amount shall be the responsibility of Sellers.
10.3.3 In accordance with the terms and provisions of this Section
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10 and subject to certain other provisions of this Agreement, Sellers shall
indemnify and hold harmless the Buyer Indemnitees for Other Environmental
Liabilities, provided that, Sellers shall have no indemnification obligation
for any Other Environmental Liability unless (a) any such Other Environmental
Liability constitutes or results from a Required or Prudent Environmental
Action, (b) a Notice of Claim describing the basis for the Other Environmental
Liability is received by Sellers on or before the third anniversary of the
Closing Date, and (c) before the third anniversary of the Notice of Claim,
Required or Prudent Environmental Action is necessary with respect to the Other
Environmental Liability that is described in the Notice of Claim.
Notwithstanding anything to the contrary, Sellers shall have no obligation to
indemnify the Buyer Indemnitees for any Buyer Exacerbation. In addition,
Sellers' obligation to indemnify the Buyer Indemnitees for Other Environmental
Liabilities is subject to the following limitations:
(i) Sellers shall have no obligation to indemnify the Buyer Indemnitees
for an indemnification claim in respect of any Other Environmental
Liabilities arising from any single matter unless such Other Environmental
Liabilities arising from such matter equal or exceed $150,000, provided
that all claims for indemnification for Other Environmental Liabilities
arising out of the same facts, events, or conditions shall be treated as a
single matter. For purposes of this obligation, a single order, directive,
or Connecticut Transfer Act obligation that addresses or requires to be
addressed multiple issues that do not arise out of the same facts, events,
or conditions shall not be considered a single matter.
(ii) Sellers shall have no obligation under this Section 10.3.3 unless and
until the aggregate amount of Other Environmental Liabilities incurred by
the Buyer Indemnitees and the aggregate amount of Damages incurred by Buyer
Indemnities under Section 9.1 exceed $2,000,000, whereupon Sellers shall be
liable to indemnify the Buyer Indemnitees for all such Other Environmental
Liabilities in excess of such amount up to a maximum amount equal to
$35,000,000, less any amounts for which Sellers have indemnified the Buyer
Indemnitees pursuant to Section 9.1 of this Agreement.
10.3.4 In the event that Buyer assigns its rights and delegates its
obligations hereunder pursuant to Section 12.7, such assignment shall not be
permitted unless such assignee agrees to be bound by Buyer's obligations and
responsibilities under this Section 10. Should such assignment occur, for
purposes of this Section 10, "Buyer" shall be read to include such assignee.
10.3.5 Environmental Liabilities arising from the matters set forth on
Schedule 10.3.5 shall constitute Other Environmental Liabilities.
10.4 Environmental Indemnification of Seller.
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10.4.1 Buyer shall hold harmless and indemnify the Seller Indemnitees for
any Buyer Exacerbation.
10.5 Procedures and Conditions Pertaining to Indemnification of Buyer or
Sellers for Environmental Matters.
10.5.1 The following procedures and conditions shall pertain to the
indemnification of Buyer Indemnitees or Seller Indemnitees for Environmental
Liabilities. In the event of a conflict between this Section 10 and any other
Section of this Agreement, this Section 10 shall control.
10.5.2 If any party shall believe that it is entitled to indemnification
with respect to Environmental Liabilities (an "Indemnitee"), it shall submit a
Notice of Claim to the Indemnifying Party. Any such Notice of Claim shall set
forth in reasonable detail and to the extent then known, the basis of such
claim for indemnification and the amount of the claim to the extent specified
or otherwise known. The failure of such Indemnitee to give the Notice of Claim
for indemnification promptly shall not adversely affect such Indemnitee's right
to indemnity hereunder except to the extent that the recipient is prejudiced by
such failure or in the case of a Notice of Claim by Buyer, or to the extent
there has been Buyer Exacerbation. Notwithstanding the foregoing, Sellers shall
have no indemnification obligation for any Other Environmental Liability unless
a Notice of a Claim describing the basis for the Other Environmental Liability
is received by Sellers on or before the third anniversary of the Closing Date.
10.5.3 Upon receipt of a Notice of Claim and after all applicable dollar
thresholds for indemnification have been met, the Indemnifying Party shall be
entitled to assume Principal Management of all or a portion of the claim. To
assume Principal Management, the Indemnifying Party must provide to the
Indemnitee within 30 days of said notice, or such shorter period as may be
dictated by exigent circumstances, written notice (i) that it intends to assume
primary responsibility for all or a portion of the claim (to the extent Sellers
assume Principle Management it shall be on behalf of the Company or its
Subsidiaries), (ii) that the Indemnitee has a right to indemnity pursuant
hereto in respect of all or a portion of such claim, and (iii) that the
Indemnifying Party will be financially able to fully satisfy such claim. In
the event the Indemnifying Party does not elect to undertake Principal
Management of all or a portion of such claim, the Indemnitee shall assume
Principal Management. Any acknowledgment by the Indemnifying Party that the
Indemnitee is entitled to indemnification shall be without prejudice to any of
the Indemnifying Party's rights to seek indemnity or contribution from any
third parties (as well as from the Indemnitee, to the extent such indemnity or
contribution right is provided for under this Agreement). As of the Closing
Date, Sellers are deemed to have received notice of, and assumed Principal
Management with respect to the matters designated with an asterisk on the Known
Environmental Matters Schedule.
10.5.4 The party not exercising Principal Management with respect
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to a particular claim or portion thereof shall be entitled, at its sole cost and
expense, to reasonably participate with the party exercising Principal
Management. Such participation may include, without limitation: (i) the right
to receive copies of all reports, workplans and analytical data submitted to
Governmental Bodies, all notices or other letters or documents received from
Governmental Bodies, any other documentation and correspondence material to
the claim, and notices of material meetings; (ii) the opportunity to attend and
participate in such material meetings, provided that at such meetings the party
not exercising Principal Management shall not impair or impede the good faith
efforts and objectives of the party exercising Principal Management to address,
complete and resolve the claim; and (iii) the right of reasonable consultation
with the party exercising Principal Management. In addition, during the period
when either party is undertaking Principal Management, such party shall: (iv)
give the other party reasonable advance notice of, and a reasonable opportunity
to participate in, material decisions with respect thereto, (v) obtain the other
party's consent prior to undertaking any material action, provided that such
consent shall not be unreasonably withheld or delayed.
10.5.5 Unless a Required or Prudent Environmental Action, Indemnitee shall
not (i) take any action which could reasonably be expected to initiate or
encourage a claim by a third party, including any Governmental Body, concerning
an Environmental Matter that is subject to indemnification pursuant to this
Section 10, or (ii) offer unsolicited information to Governmental Bodies
regarding such Environmental Matter or otherwise initiate, advance, or
encourage any additional inspections or claims or expand the scope of any
inspection or claim regarding such Environmental Matter. During the period a
party is undertaking Principal Management with respect to an Environmental
Matter, the other party shall not, except to the extent it is a Required or
Prudent Environmental Action, initiate contact or engage in communications with
any Governmental Body concerning such Environmental Matter without first
obtaining the other party's consent, provided that such consent shall not be
unreasonably withheld or delayed. Provided Buyer undertakes good faith efforts
to promptly notify Sellers and to allow Sellers to undertake Principal
Management, Buyer may take such action as is reasonable under the circumstances
to respond to an imminent and substantial threat to human health or the
environment arising from such Environmental Matter that is subject to
indemnification pursuant to this Section 10, and such action shall be included
as Environmental Liabilities arising from such Environmental Matter. Buyer
shall not initiate or conduct any environmental investigations (except for
visual observations) of the soil, sediments, surface water, groundwater, or the
subsurface or any intrusive environmental investigations with respect to the
Company or the Subsidiaries (iii) related to Known Environmental Matters, and
(iv) prior to the third anniversary of the Closing Date, without Sellers'
consent, which shall not be unreasonably withheld or delayed, Buyer shall not
initiate or conduct any environmental investigations (except for visual
observations) of the soil, sediments, surface water, groundwater, or the
subsurface or any intrusive environmental investigations with respect to the
Company or the Subsidiaries related to Other Environmental Liabilities or
Schedule 10.3.2
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Matters. Notwithstanding the above but subject to the other applicable
provisions of this Agreement, Buyer may initiate and conduct environmental
investigations of the soil, sediments, surface water, groundwater, or the
subsurface or any intrusive environmental investigations with respect to (v) a
matter for which Buyer has Principal Management, (vi) a matter for which
Sellers have Principal Management, and such investigations are a Required or
Prudent Environmental Action, provided that Buyer shall not undertake such
investigations if Sellers are exercising good faith with respect to its
Principal Management of such Matter unless Buyer believes, in Buyer's
reasonable judgment, that Buyer's failure to conduct such investigations would
cause Buyer to violate the law or would result in a material increase in
Environmental Liabilities that would not be subject to indemnification of Buyer
Indemnitees by Sellers with respect to such matter or (vii) a matter for which
the dollar thresholds or other conditions for indemnification have not been
met, and such investigations are a Required or Prudent Environmental Action,
provided that Buyer shall initiate or conduct any such investigation under
subsection (vi) or (vii) of this Section 10.5.5 in good faith and in a
responsible and reasonable manner, and provided that prior to initiating or
conducting any such investigation Buyer shall notify Sellers and allow the
Sellers to reasonably participate in such investigation at Sellers' expense.
Such reasonable participation may include, at Sellers' option, without
limitation: (1) the right of reasonable consultation with Buyer and such
entity performing such investigation on behalf of Buyer regarding the
scope, nature, and advisability of such investigation; (2) the right to
promptly receive all material information, copies of all workplans, reports,
and analytical data with respect to such investigation, any other documentation
and correspondence material to the investigation, and notices of material
meetings; (3) reasonable opportunity to attend and participate in such material
meetings, provided that at such meetings Seller not impair or impede the good
faith efforts and objectives of Buyer to initiate, conduct, or complete the
investigation; and (4) the right to receive reasonable advance notice of and
reasonable opportunity to participate in material decisions with respect
thereto with the understanding that Sellers shall not have a veto right with
respect to such decisions; and (5) reasonable opportunity to attend and
participate in such investigation, including, but not limited to, collecting
split samples, at Sellers' expense.
10.5.6 The party undertaking Principal Management for any matter hereunder
shall manage the matter in good faith and in a responsible and reasonably cost
effective manner, and any activities conducted in connection therewith shall be
commenced reasonably promptly and pursued reasonably diligently and in a
commercially reasonable and technically feasible manner, subject to the
schedules and approvals required by the applicable Governmental Body. If the
party undertaking Principal Management fails to comply with these requirements,
the other party shall have the right to take Principal Management of the
matter. The parties agree to reasonably cooperate with one another in
connection with addressing any environmental matter that is subject to
indemnification under this Agreement, including but not limited to cooperating
to obtain contribution or indemnification or other funding
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with respect to such matter from third parties or a Governmental Body and
cooperating with the efforts of the party undertaking Principal Management to
obtain any consents required to secure maximum flexibility that is reasonably
practicable under federal and state remediation standard regulations and
achieve a reasonably cost effective investigation and remediation (including
institutional controls including but not limited to certain deed restrictions)
that will not unreasonably interfere with the operations of the Company, unless
or to the extent such interference or impairment is caused by Buyer's
misconduct or negligence. In particular, remediation may include deed
restrictions that prohibit use of the property for residential or commercial
purposes, limit the property to industrials uses, limit or restrict the use of
groundwater beneath the property (provided that such groundwater was not
previously being used) or limit or restrict the use of soils beneath the
existing buildings at the property. Except with respect to the "Southeast
Corner" as provided for in detail below, such remediation may not include deed
restrictions that require that a cap or cover be maintained over a portion of
the property, or that otherwise unreasonably interfere with or unreasonably
limit the ability or opportunity to expand existing buildings, parking lots, or
other structures on the property, or construct additional structures on the
property. Notwithstanding the foregoing, Buyer agrees that Sellers are
permitted to record such deed restrictions as may be desirable to reduce the
cost or need for investigation or remediation in the Southeast Corner Project
Area as set forth on Schedule 10.5.6.
10.5.7 In the event it undertakes Principal Management of any
Environmental Matter, Sellers shall, upon reasonable notice to Buyer, have
reasonable access to the relevant facility of Buyer. Buyer shall also provide
Sellers reasonable access to its employees, and relevant non-privileged records
and documents. Buyer shall also allow Sellers the reasonable incidental use of
electricity at its premises. Sellers shall be responsible for the pro rata
cost of any sustained use of electricity by Sellers, such as for a groundwater
remediation system. Sellers shall undertake all activities that it conducts or
coordinates hereunder in accordance with Environmental Requirements, and in a
manner that does not unreasonably interfere with the day-to-day operation of
the relevant facility of Buyer. Notwithstanding the foregoing, Buyer
understands that certain remediation actions could be subject to technical
limitations, or mandated under Environmental Requirements, or otherwise be
required by a Governmental Body, which might require relocating machinery
and/or disrupting operations temporarily without materially impairing such
operations. The parties agree to cooperate with and use reasonable efforts to
reduce any such relocation or disruption costs. Sellers shall take such
precautions as may reasonably be necessary to minimize physical damage to
Buyer's facility or property, and shall indemnify Buyer with respect to such
damage, unless or to the extent such damage is caused by Buyer's misconduct or
negligence. Buyer is aware and agrees to permit Sellers to utilize a portion of
the Warehouse Building at the Company's Windsor, Connecticut facility for the
installation, maintenance and operation of groundwater and soil remediation
systems, an area more fully described as being approximately the 45 foot by 60
foot portion of the Warehouse Building located immediately to the east and
northeast of that
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portion of the building labeled "Waste Storage" in an attachment to a letter
dated July 8, 1997 from Xxxxx Xxxxx to Xxxxx Xxxxxxx in response to a letter
dated June 17, 1997 from Xx. Xxxxxxx to Xx. Xxxxx regarding Consent Order No.
HM-786 (as shown on Schedule 10.5.7, with cross-hatch markings indicating the
approximately 45-foot by 60-foot portion) without cost to Sellers.
10.5.8 An Environmental Matter shall be deemed to have been adequately
completed, resolved, and discharged to the extent that: (i) any investigation,
removal, remedial, cleanup, corrective, or compliance action ("Remedial
Action") reasonably mitigates the threats to human health or the environment
that were the basis for the Remedial Action and achieves compliance with
Environmental Requirements as reasonably interpreted and applied, taking into
account all relevant facts and circumstances, including without limitation,
reasonable and customary interpretation by the local business community and the
same or similar industry or complies with any written directive or order of any
Governmental Body (subject to either party's right to challenge or negotiate
with such Governmental Body regarding the appropriateness or scope of such
directive or order in good faith and in compliance with law), (ii) all assessed
fines, penalties, and damages have been paid, settled, or resolved, except
where none are assessed, and (iii) all alleged related governmental and third
party actions have been paid, settled, or resolved, except where none are
imposed. Sellers shall not be required to render any affected industrial
facility suitable for use beyond use as a industrial property, provided that
any Remedial Action undertaken with respect to an Environmental Matter shall
meet all lawful requirements imposed by a Governmental Body. Sellers shall be
responsible for any costs arising out of changes in Environmental Requirements,
including changes in action levels or cleanup standards promulgated thereunder,
during the period from the Closing Date until the completion of a Remedial
Action. Any costs arising out of changes in Environmental Requirements after
the completion of a Remedial Action an Environmental Matter shall be the
responsibility of the Buyer.
10.5.9 Within 45 days after the Closing Date, Sellers and Buyer shall each
provide the other written notice of a primary and authorized contact for
communications regarding environmental matters subject to indemnification
pursuant to this Agreement. Written notice shall be provided if a party's
contact is changed.
10.5.10 To the extent Seller assumes Principal Management with respect to
an Environmental Matter it shall be on behalf of the Company or the
Subsidiaries.
10.5.11 All claims, disputes, controversies, and other matters related to
an Environmental Matter subject to indemnification under this Agreement
(including without limitation the management, investigation, remediation,
completion, settlement, or resolution of such matter) or related to the
respective indemnification obligations of the parties with respect to an
Environmental Matter (collectively "Environmental
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Indemnification Disputes") shall be subject to arbitration pursuant to Section
9.3.3, as supplemented and modified by this Section 10.5.11. In the event of a
conflict between Section 9.3.3 and this Section 10.5.11, this Section 10.5.11
shall control. To reduce the cost of arbitration and to accelerate the
arbitration process, a single arbitrator shall be used for Environmental
Indemnification Disputes. The arbitrator shall be selected in accordance with
the rules of the American Arbitration Association. The arbitrator shall be
knowledgeable with respect to Environmental Requirements in the state or
jurisdiction in which the matter is located that gave rise to the Environmental
Indemnification Dispute. The same arbitrator shall arbitrate subsequent
Environmental Indemnification Disputes in the same jurisdiction, unless a party
requests within seven days after the filing of the demand for arbitration with
respect to the subsequent Environmental Indemnification Dispute that a
different arbitrator be selected. If, as a result of exigent circumstances,
deadlines imposed by a Governmental Body, or other circumstances outside the
control of the parties, an Environmental Indemnification Dispute must be
resolved on an expedited schedule, the time frames set forth in Section 9.3.3
shall be shortened, as appropriate and permitted by the arbitrator or as
mutually agreed to by the parties. To the extent reasonably practicable, all
related or similar Environmental Indemnification Disputes shall be consolidated
so as to avoid duplicative, or similar and repetitive arbitration proceedings.
In order to speed up the resolution of any Environmental Indemnification
Disputes that may arise with respect to the Company's Windsor, Connecticut
facility, within 90 days after the Closing Date the parties shall arrange for
an arbitrator for such matters to be selected in accordance with the rules of
the American Arbitration Association, regardless of whether any Environmental
Indemnification Disputes have arisen during such time, and such arbitrator
shall arbitrate Environmental Indemnification Disputes that may arise with
respect to the Company's Windsor, Connecticut facility, unless a party requests
that a different arbitrator be selected in accordance with the procedures
herein.
11. Termination of Agreement.
11.1 Termination. This Agreement may be terminated prior to the Closing
as follows:
(i) at the election of the Sellers, if any one or more of the conditions
to the obligation of the Sellers to close has not been fulfilled as of the
Scheduled Closing Date; provided, however that such conditions have not
occurred because of a breach of this Agreement by the Sellers, the Company or
any Subsidiary;
(ii) at the election of the Buyer, if any one or more of the conditions to
the obligation of the Buyer to close has not been fulfilled as of the Scheduled
Closing Date; provided, however that such conditions have not occurred because
of a breach of this Agreement by the Buyer;
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(iii) at the election of the Sellers, if the Buyer (A) has materially
breached any representation, warranty, covenant or agreement contained in this
Agreement and such breach would have materially affected the Buyer's ability to
consummate the transactions contemplated hereby or (B) has breached or failed
in any material respect to perform or comply with any of its material covenants
and agreements contained herein; provided, however that if any such breach or
failure is curable by the Buyer through the exercise of its commercially
reasonable efforts and for so long as the Buyer shall be so using its
commercially reasonable efforts to cure such breach or failure, the Sellers may
not terminate this Agreement pursuant to this Section 11.1(iii) unless such
breach or failure is not cured within 30 days after notice by the Sellers;
(iv) at the election of the Buyer, if the Sellers, the Company or any
Subsidiary (A) have materially breached any representation, warranty, covenant
or agreement contained in this Agreement and such breach would have caused a
Company Material Adverse Effect or (B) have breached or failed in any material
respect to perform or comply with any of its material covenants and agreements
contained herein; provided, however that if any such breach of failure is
curable by the Sellers, the Company or the Subsidiaries, as applicable, through
the exercise of their respective commercially reasonable efforts and for so
long as the Sellers, the Company or the Subsidiaries, as applicable, shall be
so using its commercially reasonable efforts to cure such breach or failure,
the Buyer may not terminate this Agreement pursuant to this Section 11.1(iv)
unless such breach or failure is not cured within 30 days after notice by the
Buyer;
(v) at the election of the Sellers or the Buyer if any Governmental Body
shall have issued an order, decree or ruling or taken any other action (which
order, decree, ruling or other action the parties hereto shall use their
commercially reasonable best efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the material transactions
contemplated by this Agreement and such order, decree, ruling or other action
shall have become final and non-appealable; or
(vi) at any time on or prior to the Closing Date, by mutual written
consent of the Sellers and the Buyer.
If this Agreement so terminates, it shall become null and void and have no
further force or effect, except as provided in Section 11.2. Notwithstanding
anything herein to the contrary, if this Agreement is terminated pursuant to
Section 11.1 (i) or (ii) (to the extent that such termination under Section
11.1(i) or (ii) is based on a breach of covenant, agreement, representation or
warranty by a party hereto), or (iii) or (iv), the Sellers (if the Agreement is
so terminated pursuant to Section 11.1(i) or terminated pursuant to Section
11.1(iii)) and the Buyer (if the Agreement is so terminated pursuant to Section
11.1(ii) or terminated pursuant to Section 11.1(iv)) shall be liable to any
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Buyer Indemnitee or any Seller Indemnitee, as applicable, (x) for all Damages
actually incurred by such party (which Damages, for purposes of this provision
shall be deemed to include any Damages incurred by the Company or any
Subsidiary, each of which shall, for purposes of this provision, be deemed to
be a Seller Indemnitee) as a result of a breach by the other party of any
covenant or other agreement contained in this Agreement (with respect to
Sellers' breach, other than breaches of Sections 5.2 and 5.10 and breaches of
Section 5.1(a) with respect to which Seller does not have Knowledge) and (y)
for all Damages actually incurred by such party as a result of a breach by the
other party of any representation or warranty contained in this Agreement,
provided that such Damages shall be limited to an amount equal to the
reasonable out-of-pocket fees and expenses actually incurred by such party
(which, in the case of the Sellers, shall include such fees and expenses
actually incurred by the Company or any Subsidiary) in connection with the
transactions contemplated by this Agreement, including, without limitation,
investigation of the Company, the negotiation and preparation of this
Agreement and the obtaining of financing for the transaction contemplated by
this Agreement. In addition, nothing contained in this Section 11.1 shall
impair the right of any party to compel specific performance by the other
party of its obligations under this Agreement. In addition, nothing contained
in this Section 11 shall be deemed to impair the right of any party to compel
specific performance by the other party of its obligations under this Agreement.
11.2 Effect of Termination. If this Agreement is terminated and the
transactions contemplated hereby are not consummated as described above, this
Agreement shall become void and of no further force and effect, except for the
continuing obligation of the Buyer pursuant to Section 5.7 to keep certain
matters confidential and not to use any information and data obtained by it
from the Company and except for the provisions of Sections 5.3, 5.4, 5.5 and
12.2 which shall continue in full force and effect.
12. Miscellaneous.
12.1 Certain Definitions. As used in this Agreement, the following terms
have the following meanings unless the context otherwise requires:
(i) "Affiliate" with respect to any Person, means any other Person
controlling, controlled by or under common control with such Person.
(ii) "Banks" means all of the banks who are parties to the Credit
Agreement.
(iii) "Basis" means any past or present fact, situation, circumstance,
status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for
any specified consequence.
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(iv) "Business Day" means any day other than Saturday, Sunday or public
holiday on which commercial banks in New York, New York are required to be
closed.
(v) "Company Debt" means any outstanding indebtedness of the Company,
including without limitation accrued interest, fees, penalties and premiums or
payments in addition to principal, which is outstanding under (i) the Credit
Agreement dated as of February 2, 1995, as amended by, and among Stanadyne
Automotive Corp., the Company, The Bank of New York and Kleinwort Xxxxxx
Limited (as Agent) (the "Credit Agreement"), or (ii) the existing overdraft
facility of Stanadyne S.P.A.
(vi) "Company Material Adverse Change" means a material adverse change in
the business, assets, liabilities, financial condition or results of operations
of the Company or the Subsidiaries, taken as a whole, provided that any event,
occurrence, development or state of circumstances or facts or changes which is
applicable to or resulting from changes to the United States economy or the
industry in which the Company and/or its subsidiaries operate generally shall
be excluded from such determination.
(vii) "Company Material Adverse Effect" means a material adverse effect on
the business, assets, liabilities, financial condition or results of operations
of the Company or the Subsidiaries, taken as a whole.
(viii) "Confidential Information" means any proprietary, confidential or
non-public information concerning the Company or any Subsidiary.
(ix) "Contracts and other Agreements" means all contracts, agreements,
understandings, indentures, notes, bonds, loans, instruments, leases,
mortgages, franchises, licenses, commitments or other binding arrangements,
express or implied.
(x) "Debt" means, without duplication, (a) any outstanding indebtedness of
the Company or Subsidiaries in respect of borrowed money (including, without
limitation, accrued interest, fees, penalties and premiums or payments in
addition to principal) evidenced by bonds, notes, debentures or other similar
instruments or letters of credit (or reimbursement obligations in respect
thereof), banker's acceptance or any overdraft facility, (b) outstanding
capitalized indebtedness under any lease which, in accordance with GAAP, would
be required to be shown as a liability on the face of a balance sheet of the
Company or any Subsidiary on such date, (c) the balance deferred and unpaid of
the purchase price of any property or services which is not a current liability
included in the definition of Working Capital and would be required to be shown
as a liability on the face of a balance sheet of the Company or
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any Subsidiary on such date, in each case in accordance with GAAP (e.g. that
portion of any purchased equipment which, as part of the purchase price, was
paid by giving a note with a term of greater than one year to the seller of such
equipment; a fee for services which have been fully performed but which is
payable on a long term basis, such as in installments over a three-year period),
except any such balance that constitutes an accrued expense or account payable,
in each case incurred in the ordinary course of business. "Debt" shall not
include, without limitation, (i) the amount of the deferred purchase price for
assets acquired by Stanadyne SpA in 1991 from Xxxxx associated with the Bari,
Italy operations, which amount is included in the current accrued expense
accounts of the Company and which amount, as of August 31, 1997 was $813,000
(the "Xxxxx Liability") or (ii) any accumulated post-retirement, post-employment
or pension benefit obligation, post-employment or pension as required to be
reported under GAAP.
(xi) "Document or other papers" means any document, agreement, instrument,
certificate, notice, consent, affidavit, letter, telegram, telex, statement,
schedule (including any to this Agreement), exhibit (including any Exhibit to
this Agreement) or any other paper whatsoever.
(xii) "GAAP" means United States generally accepted accounting principles.
(xiii) "Governmental Body" means any government or political subdivision
thereof, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision, or any
judicial, quasi-judicial or regulatory body.
(xiv) "Intellectual Property Rights" means any and all patents, patent
applications, trademarks, service marks, trademark or service xxxx applications
and registrations, trade and corporate names, Internet domain names,
copyrights, copyright applications and registrations, trade secrets, know-how
(including but not limited to ideas, formulae, compositions, manufacturing and
production processes and techniques, research and development information,
drawings, specifications, designs, plans, proposals, and technical data),
technology, computer software and software systems, business and marketing
plans, customer and supplier lists, confidential information and all other
proprietary property, rights and interests.
(xv) "Knowledge" means with respect to the Sellers or the Company, the
knowledge after due inquiry of any Seller or any officer, director or
management level employee of any of the Company, any Subsidiary or any Seller,
and with respect to the Buyer, the knowledge after due inquiry of any officer,
director or management level employee of the Buyer.
(xvi) "Liability" means any liability or obligation (whether
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known or unknown, whether absolute or contingent, whether liquidated or
unliquidated, and whether due or to become due).
(xvii) "Lien" means any lien, pledge, mortgage, security interest, claim,
lease, license, charge, option, right of first refusal, easement, servitude,
transfer restriction under any shareholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
(xviii) "Permitted Liens" means (i) Liens for Taxes or other governmental
charges or levies which are not delinquent or are being contested in good faith
and by appropriate proceedings, and, if required by GAAP, with respect to which
adequate reserves have been established, and are being maintained in accordance
with GAAP, (ii) mechanic's, worker's, materialmen's and other like Liens
arising in the ordinary course of business in respect of obligations which are
not delinquent or which are being contested in good faith and by appropriate
proceedings, and, if required by GAAP, with respect to which adequate reserves
have been established, and are being maintained, in accordance with GAAP, and
(iii) Liens arising in the ordinary course of business for sums being contested
in good faith and by appropriate proceedings, and, if required by GAAP, with
respect to which adequate reserves have been established, and are being
maintained, in accordance with GAAP.
(xix) "Person" means any individual, corporation, limited liability
company, general, limited or limited liability partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
(xx) "Preferred Stock" means the Cumulative Convertible Preferred Stock
issued by the Company pursuant to the Certificate of Designation of the Company
dated as of February 8, 1989, as amended (the "Certificate of Designation").
(xxi) "Property" means real, personal or mixed property, tangible or
intangible.
(xxii) "Reference Rate" means the amount which the Chase Manhattan Bank
announces from time to time as its reference rate.
(xxiii) "Seller Expenses" means any out-of-pocket fee, expense or cost
incurred by the Company, any of the Sellers or any of their Subsidiaries or
Affiliates prior to Closing which is paid by the Company in connection with the
transactions or actions contemplated in this Agreement, including without
limitation, out-of-pocket fees, expenses, or costs for the repayment of Debt at
the Closing, the preparation of Financial Statements as required by the
Agreement (except as expressly provided to the contrary in this Agreement) and
the negotiation,
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preparation and execution of this Agreement and any other closing documents
"Seller Expenses" shall also include any bonuses or similar amounts payable
to employees of the Company or its Subsidiaries for reducing the Debt of the
Company or its Subsidiaries.
In addition to the aforementioned terms, the following terms have the
following meanings unless the context otherwise requires:
(v) "Environmental Requirements" means all federal, state, local, and
foreign statutes, regulations, ordinances and other provisions having the force
or effect of law, all final judicial and administrative orders, all contractual
obligations and all common law concerning pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, hazardous
substances or hazardous wastes, pesticides, petroleum, asbestos, or
polychlorinated biphenyls, as in effect on or prior to the Closing Date.
(vi) "Environmental Liabilities" means any Damages (excluding for this
purpose consequential damages, which includes, but is not limited to, damages
associated with business disruption, diminution of value, or lost profits) with
respect to any liabilities or any investigatory, remedial or corrective
obligations, arising from Environmental Requirements.
(vii) "Other Environmental Liabilities" shall mean Environmental
Liabilities arising from Schedule 10.3.5 Matters and Environmental Liabilities
(other than Environmental Liabilities arising from a Known Environmental Matter
or a Schedule 10.3.2 Matter) which arise from facts, events, conditions or
matters occurring or in existence prior to the Closing Date, but excluding any
Buyer Exacerbation.
(viii) "Buyer Exacerbation" shall mean any Environmental Liabilities (1)
caused by Buyer through its negligent or its willful or wanton misconduct (2)
arising from a condition or matter that was reasonably within the knowledge of
Buyer at the Closing Date and exacerbated by Buyer after the Closing Date (by
action or inaction or a change in the operation of the business or use of the
premises or facility), unless exacerbated as a result of the constraints set
forth in Sections 10.5.4, 10.5.5, and 10.5.6, or (3) caused by Buyers active
use, management or disposal of hazardous materials or hazardous wastes.
(ix) "Required or Prudent Environmental Action" shall mean any action
(including the payment of fines, penalties, or damages) that is (1)
specifically imposed or required by any written directive or order of any
Governmental
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Body (2) reasonably necessary to address an imminent and substantial threat to
human health or the environment or (3) required by Environmental Requirements
as reasonably interpreted and applied, taking into account all relevant facts
and circumstances, including without limitation, reasonable and customary
interpretation by the local business community and the same or similar industry.
(x) "Environmental Matter" shall mean Known Environmental Matters,
Schedule 10.3.2 Matters, and any matter that gives rise to Other Environmental
Liabilities.
(xi) "Principal Management" shall mean the right to (1) hire and discharge
consultants, contractors, and experts, (2) obtain any tests, reports, and
surveys necessary to define and delineate the extent of any contamination or
regulatory noncompliance, (3) contact, communicate with, negotiate with, and
challenge Governmental Bodies, make any reports to such Bodies, submit any
remediation or compliance plans to such Bodies, negotiate with such Bodies, and
otherwise deal with such Bodies, (4) select and implement remedial measures,
(5) prepare work plans for any remediation of contamination or correction of
noncompliance, and (6) conduct or direct any such remediation of contamination
or correction of noncompliance.
12.2 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made without advance
approval thereof by the Sellers and the Buyer.
12.3 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, telegraphed,
telexed, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, telegraphed, telexed or sent by facsimile transmission
or, if mailed, two days after the date of deposit in the United States mails,
as follows:
(i) if to the Buyer, to: SAC, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax No.000-000-0000
Attention: Xxxxxxx Xxxxxxxxx
(ii) if to the Sellers, to: Metromedia Company
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention: General Counsel
Fax No. 000-000-0000
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(iii) if to the Company, to: Stanadyne Automotive Holding
Corp. c/o Metromedia Company
Xxx Xxxxxxxxxxx Xxxxx
Xxxx Xxxxxxxxxx, XX 00000
Attention: General Counsel
Fax No. 000-000-0000
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
12.4 Entire Agreement. This Agreement and the collateral agreements
executed in connection with the consummation of the transactions contemplated
herein, along with the Confidentiality Agreement, contain the entire agreement
among the parties with respect to the purchase of the Shares and related
transactions, and supersede all prior agreements, written or oral, with respect
thereto.
12.5 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
The rights and remedies of any party based upon, arising out of or otherwise in
respect of any inaccuracy in or breach of any representation, warranty,
covenant or agreement contained in this Agreement shall in no way be limited by
the fact that the act, omission, occurrence or other state of facts upon which
any claim of any such inaccuracy or breach is based may also be the subject
matter of any other representation, warranty, covenant or agreement contained
in this Agreement (or in any other agreement between the parties) as to which
there is no inaccuracy or breach.
12.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed entirely within such State.
12.7 Binding Effect; No Assignment; No Third Party Rights. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and legal representatives. This Agreement is not
assignable except by operation of Law (including a merger of Buyer into an
Affiliate); provided, however, that the Buyer may assign its rights and
delegate its obligations hereunder (i)
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to any Affiliate, in which case Buyer shall remain liable under this Agreement,
(ii) to any person in connection with a sale of all or substantially all of the
assets of the Buyer, (iii) to any person who acquires all of the capital stock
of Buyer, and (iv) to any person providing financing to the Buyer or its
Affiliates. This Agreement is made solely for the benefit of the Buyer and the
Sellers and shall not give rise to any rights of any kind to third parties.
12.8 Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
12.9 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be
an original, but all such counterparts shall together constitute one and the
same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all of the parties hereto.
12.10 Exhibits and Schedules. The Exhibits and Schedules are a part of
this Agreement as if fully set forth herein. All references herein to
sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require. Seller shall be entitled to supplement or revise the Disclosure
Schedule from time to time prior to the Closing Date (provided that any changes
made shall not be material) and such Disclosure Schedule, as so supplemented or
revised shall be deemed to be the Disclosure Schedule, provided that for
purposes of determining the existence of a breach of any representation or
warranty or covenant for purposes of Section 9, no such supplement of or
revision to the Disclosure Schedule shall be effective.
12.11 Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SAC, Inc.
/s/ Xxxxxxx Xxxxxxxxxx
By____________________________
Name: Xxxxxxx X. Xxxxxxxxxx
Title: President
STANADYNE AUTOMOTIVE HOLDING CORP.
/s/ Xxxx Xxxxx
By____________________________
Name: Xxxxxxx X. Xxxxx
Title: Vice President, Chief
Financial Officer
SELLERS: METROMEDIA COMPANY
/s/ Xxxxxx Xxxxxx
BY:______________________________
Name: Xxxxxx Xxxxxx
Title: CFO, Senior Vice President
and Treasurer
[ADDITIONAL SIGNATURE PAGES TO BE ADDED
FOR EACH SIGNING SELLER]
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AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT
THIS AMENDMENT NO. 1 (THIS "AMENDMENT") dated as of December 8, 1997 to
Stock Purchase Agreement dated as of November 7, 1997 (the "Agreement") by and
between Stanadyne Automotive Holding Corp., a Delaware corporation (the
"Company"), SAC, Inc., a Delaware corporation, Metromedia Company, a Delaware
general partnership and the holders of the securities of the Company.
WHEREAS, the parties desire to amend the Agreement, on the terms and
conditions set forth below;
NOW, THEREFORE, in consideration of the mutual premises and covenants
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
1. CAPITALIZED TERMS. All capitalized terms used but not defined herein shall
have the meanings ascribed to them in the Agreement.
2. AMENDMENTS.
2.1 Subsection 1.2.2(a) of the Agreement is hereby amended by adding the
following immediately prior to the end of the second sentence of Subsection
1.2.2(a):
"and provided further that Working Capital shall be calculated without
regard to any direct or indirect impact resulting from the vesting of or
payments in respect of those previously unvested "promote" shares of the
Sellers who are employees of the Company which are being vested by
Amendment No. 1 to the Amended and Restated Management Equity
Participation Promotion Agreement of each such Seller".
2.2 Subsection 1.2.3(a) of the Agreement is hereby amended as follows:
a. The following language is added immediately prior to the end of
Subsection 1.2.3(a)(i):
", provided, however that the Buyer shall, upon written instruction
from Metromedia, as Seller Representative, pay, on behalf of
Sellers, the expenses of Sellers in connection with this
transaction as designated by Metromedia, to such account(s)
designated by Metromedia. The Preliminary Purchase Price and
Purchase Price shall be reduced by an amount equal to the amount of
such expenses of Sellers paid by the Buyer as provided above".
b. The term "Schedule 1.2.3.1" in Subsection 1.2.3(a)(v) is replaced
by the term "Schedule 1.2.3".
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c. The following language is added immediately after Subsection 1.2.3(a)(v):
"(vi) Notwithstanding anything herein to the contrary, no
payments of Preliminary Purchase Price, or payments under Section
1.2.3(ii), shall be payable by Buyer in respect of shares of
Common Stock transferred by employees of the Company to Buyer
prior to the Closing."
2.3 Section 3 of the Agreement is hereby amended by deleting the word
"each" from the last line of Section 3.
2.4 Section 5 of the Agreement is hereby amended by adding the following
immediately prior to the introduction to Section 5:
"(except that each Seller other than Metromedia makes only the
covenants and agreements set forth in this Section 5 which pertain to
such Seller individually)".
2.5 Section 5.4 of the Agreement is hereby amended by replacing the
second sentence with the following language:
"If the transactions contemplated hereby are consummated, the Buyer
shall be entitled to receive reimbursement from Metromedia (who is
making such reimbursement on behalf of all of the Sellers proportionate
to their Share Ownership) for the Seller Expenses which are paid or
payable after the Closing (the "Seller Expense Reimbursement"), provided
that the Seller Expense Reimbursement shall not be made if the following
two conditions are satisfied: (i) the amounts payable for such Seller
Expense are reflected in the Closing Statement and (ii) there is an
adjustment to the Final Pre-Adjustment Amount based on Actual Working
Capital, as determined pursuant to Section 1.2.2. In the event that the
Buyer is entitled to the Seller Expense Reimbursement and there is an
Unpaid Balance to be paid to the Sellers pursuant to Section 1.2.2(e),
the Seller Expense Reimbursement shall be made by reducing the Unpaid
Balance payment by the amount of the Seller Expense Reimbursement. If
the Seller Expense Reimbursement exceeds the Unpaid Balance, the Seller
Expense Reimbursement shall be paid to the Buyer by (x) a reduction of
the Unpaid Balance in its entirety and (y) the payment by Metromedia (on
behalf of the Sellers proportionate to their Share Ownership) equal to
the amount by which the Seller Expense Reimbursement exceeds the Unpaid
Balance."
2.6 Section 5.5 of the Agreement is hereby amended as follows:
a. In the first sentence, second line, the phrase "the Sellers" is
replaced by "Metromedia."
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b. In the first sentence, the phrase "and a fee payable to American
Industrial Partners by the Buyer" is replaced by the phrase ",a
fee payable to American Industrial Partners by the Buyer and a fee
payable by the Sellers to Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation (which fee shall be paid by the Buyer on behalf of the
Sellers and which shall reduce the Preliminary Purchase Price and
Purchase Price by the amount of such fee, as provided in Section
1.2.3(i))".
c. In the last sentence, the phrase "the Sellers" is replaced by
"Metromedia".
2.7 Section 5.16 of the Agreement is hereby amended by adding the following
immediately after the first sentence thereof :
"In the event that a Warrant is not exercised or a share of the
preferred stock of the Company ("Preferred Stock") is not converted into
common stock of the Company ("Common Stock"), the holder thereof shall
be entitled to receive the amount of Preliminary Purchase Price and
Purchase Price that it would have been entitled to receive had the
Warrant been exercised or the Preferred Stock converted into Common
Stock, provided that the holder surrenders the security to the Buyer or
the Company at or prior to the Closing or otherwise take steps,
reasonably satisfactory to the Buyer, to extinguish its rights under
such security, and upon such payments of Purchase Price, such holder
shall have no further right to receive any payments in respect of such
securities."
2.8 Section 6.12 of the Agreement is hereby amended by adding the phrase "or
Redemption" immediately after the phrase "(b) the Merger".
2.9 Section 9.1 of the Agreement is hereby amended as follows:
a. the phrase "the Sellers (proportionate to their ownership of
shares)" in the sixth line of the first paragraph of Section 9.1 is
replaced by "Metromedia" and the phrase "the Sellers" in the
twelfth line of the first paragraph of Section 9.1 is replaced by
"Metromedia's".
b. the terms "the Sellers" and "The Sellers" are replaced, in each
instance in which either term appears from (and including)
Subsection (i) of Section 9.1 to the end of the paragraph
immediately preceding the last paragraph of Section 9.1, by
"Metromedia".
c. The term "Sellers" is replaced by "Metromedia" in the fifth line of
Subsection (ii) of Section 9.1.
d. The phrase ",less any amounts for which Metromedia has indemnified
the d.
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Buyer Indemnitees pursuant to Section 10.3.3 of this Agreement" is
added immediately prior to the end of Subsection (ii) of Section
9.1.
e. The phrase "the Sellers (proportionate to their Share Ownership)" is
replaced by "Metromedia" in the second sentence of the last paragraph
of Section 9.1.
f. The third sentence of the last paragraph of Section 9.1 is deleted in
its entirety.
g. The last two sentences of the last paragraph of Section 9.1 are
amended in their entirety to read as follows:
"Notwithstanding anything to the contrary set forth in this
Agreement, each Seller shall indemnify Buyer Indemnitees for any
Damages asserted against or actually incurred by the Buyer
Indemnitees as a result of any misrepresentation in or breach of
any Several Representation by such Seller, but no Seller shall
have any Indemnification obligation to Buyer Indemnitees with
respect to any Several Representation of any other Seller."
h. The last paragraph of Section 9.1 is hereby amended by adding the
following sentence immediately after the end of such paragraph:
"The limitations set forth in Section 9.1(i) shall not apply to any
indemnification obligation of Metromedia to Buyer Indemnitees
relating to Section 6.10, which obligation arises from any payments
made by any Buyer Indemnitee with respect to the two mechanic's liens
(or indemnification therefor) filed in Xxxx County against the
Company's Tallahassee site (identified in Book number 2014, Page 0253
and Book number 2024, Page 1945)."
2.10 Section 9.2 of the Agreement is hereby amended by changing the word
"Indemnities" to "Indemnitees" in the first sentence thereof.
2.11 Subsection 9.5.1 is hereby amended by changing the phrase "the
Sellers" to "Metromedia" in the first sentence thereof and by adding the
following new sentence immediately following the first sentence thereof:
"Each of the Sellers agrees that any payments made by Metromedia to
Buyer pursuant to this Section 9.5 are being paid by Metromedia on
behalf of all of the Sellers and each Seller agrees to reimburse
Metromedia, in proportion to such Seller's Share Ownership, for such
payments. Such reimbursement shall be made by each Seller within
fifteen (15) days of such Seller's receipt of a written notice from
Metromedia setting forth in reasonable detail the basis for, and
amount of, such Seller's reimbursement obligation."
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2.12 Subsection 9.5.4 is hereby amended by changing the phrase "the
Sellers" to Metromedia" in the last sentence thereof.
2.13 Subsection 10.3.3 is hereby amended by changing the word "Indemnities"
to "Indemnitees" in the first sentence of part (ii) thereof.
2.14 Section 10 is hereby amended by adding the following language
immediately after Section 10.5:
"10.6 For purposes of (i) the indemnification provisions of this
Section 10 and (ii) Section 10.2.1, the term "Sellers" shall mean only
Metromedia."
2.15 The Disclosure Schedule to the Agreement is hereby amended by
replacing the first page of the Disclosure Schedule, Schedules 1.2.3, 3.1, 3.7,
3.8, 3.11 and the last pages of Schedules 3.17(b) and 3.18(a)(ii) thereto with,
respectively, the first page of the Disclosure Schedule, Schedules 1.2.3, 3.1,
3.7, 3.8 and 3.11 and the last pages of Schedules 3.17(b) and 3.18(a)(ii)
attached hereto.
3. MISCELLANEOUS.
3.1. Except as specifically provided herein, nothing contained in this
Amendment shall be deemed to modify in any respect the terms, provisions or
conditions of the Agreement, and such terms, provisions and conditions shall
remain in full force and effect. The Agreement, as amended by this Amendment,
contains the entire agreement of the parties with respect to the subject matter
hereof and may be changed only by a written agreement signed by the parties
hereto.
3.2. This Amendment shall be binding upon and inure to the benefit of the
parties hereto and their respective permitted successors and assigns.
[space intentionally omitted ]
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
day and year first above written.
STANADYNE AUTOMOTIVE HOLDING CORP.
/s/ Xxxxxx Xxxxxx
By:__________________________
By: Xxxxxx Xxxxxx
Title: CFO, Senior Vice President
and Treasurer
SAC, INC.
/s/ Xxxxxxx X. Xxxxxxxxxx
By:__________________________
By: Xxxxxxx X. Xxxxxxxxxx
Title: President
METROMEDIA COMPANY
/s/ Xxxxxx Xxxxxx
By:__________________________
By: Xxxxxx Xxxxxx
Title: Senior Vice President
[OTHER SELLERS ON SEPARATE SIGNATURE PAGE]
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