EXHIBIT 99.2
ASSET SALE AND PURCHASE AGREEMENT
BY AND AMONG
FDP VIRGINIA, INC.
FRICTION DIVISION PRODUCTS, INC.
FDP BRAKES, INC.
W&W ELECTRONICS LIMITED
U.S. AUTOMOTIVE MANUFACTURING, INC.
US AUTOMOTIVE FRICTION, INC.
AND
QUALITY AUTOMOTIVE COMPANY
TABLE OF CONTENTS
PAGE
1. SALE AND PURCHASE OF ASSETS............................................ 2
1.1. Agreement to Sell and Purchase................................ 2
1.2. Purchased Assets.............................................. 2
1.3. Excluded Assets............................................... 3
1.4. Liabilities................................................... 4
2. CLOSING; DELIVERIES.................................................... 4
2.1. Closing....................................................... 4
2.2. Deliveries at the Closing..................................... 4
3. PURCHASE PRICE......................................................... 4
3.1. Purchase Price and Security Deposit........................... 4
3.2. Payment of Purchase Price..................................... 6
3.3. Risk of Loss.................................................. 6
3.4. Closing Date Adjustment....................................... 6
3.5. Purchase Price Allocation..................................... 7
3.6. Topping Fee................................................... 7
4. REPRESENTATIONS AND WARRANTIES OF SELLER............................... 7
4.1. Organization.................................................. 8
4.2. Corporate Authority........................................... 8
4.3. Assets........................................................ 8
4.4. Seller Contracts.............................................. 8
4.5. Intellectual Property......................................... 9
4.6. Environmental Matters......................................... 9
4.7. Employees..................................................... 10
4.8. Pension and Benefit Plans..................................... 10
4.9. Transactions with Related Parties............................. 10
4.10. No Broker..................................................... 11
4.11. Insurance..................................................... 11
4.12. No Interests in Other Entities................................ 11
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT..................... 11
5.1. Organization.................................................. 11
5.2. Corporate Authority........................................... 11
5.3. Brokers....................................................... 12
6. COVENANTS OF SELLER PENDING CLOSING.................................... 12
7. ADDITIONAL COVENANTS AND AGREEMENTS.................................... 12
7.1. Bankruptcy Action............................................. 12
7.2. Access and Confidential Information........................... 13
7.3. Consents...................................................... 13
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7.4. Liability for Transfer Taxes.................................. 14
7.5. Post Closing Receipts; Cooperation............................ 14
8. MUTUAL CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE.................... 14
9. CONDITIONS TO BUYER'S OBLIGATION TO CLOSE.............................. 14
9.1. Bankruptcy Court Order........................................ 15
9.2. Seller's Closing Documents.................................... 15
9.3. Financing..................................................... 15
9.4. Key Employees................................................. 15
10. CONDITIONS TO SELLER'S OBLIGATIONS TO CLOSE............................ 15
10.1. Buyer's Closing Documents..................................... 15
10.2. Bankruptcy Court Order........................................ 15
11. ACTION TO BE TAKEN AT CLOSING.......................................... 15
11.1. Action to be Taken by Seller.................................. 15
11.2. Action to be Taken by Buyer................................... 16
11.3. Payment of Purchase Price..................................... 16
12. TERMINATION............................................................ 16
12.1. Termination................................................... 16
12.2. Effect of Termination......................................... 17
13. MISCELLANEOUS.......................................................... 17
13.1. Certain Definitions........................................... 17
13.2. Written Agreement to Govern and General Release............... 22
13.3. Severability.................................................. 22
13.4. Notices and Other Communications.............................. 22
13.5. Counterparts.................................................. 23
13.6. Law to Govern................................................. 23
13.7. Successors and Assigns........................................ 23
13.8. Interpretation................................................ 24
13.9. Schedules and Exhibits........................................ 24
13.10. Publicity..................................................... 24
13.11. Modification.................................................. 24
13.12. Waiver of Provisions.......................................... 24
13.13. Expenses...................................................... 25
13.14. Further Assurances............................................ 25
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ASSET SALE AND PURCHASE AGREEMENT
THIS ASSET SALE AND PURCHASE AGREEMENT (this "AGREEMENT") is entered into as of
this 22nd day of January, 2001 by and among FDP Virginia, Inc., a Delaware
corporation ("BUYER"), Friction Division Products, Inc., a New Jersey
corporation ("FDP"), W&W Electronics Limited, a company organized under the laws
of Grenada (collectively with FDP, "PARENT"), FDP Brakes, Inc., a New Jersey
corporation and wholly-owned subsidiary of FDP ("FDP BRAKES"), U.S. Automotive
Manufacturing, Inc., a Delaware corporation ("USAM"), US Automotive Friction,
Inc., a Delaware corporation ("USAF"), and Quality Automotive Company, a
Delaware corporation ("QAC" and together with USAM and USAF, the "SELLER").
RECITALS
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, all of the properties, assets, business operations and
goodwill of Seller used in the manufacturing, assembly and distribution of new
and rebuilt automotive products (the "BUSINESS"), except for the Excluded
Assets; and
WHEREAS, FDP Brakes and Seller are parties to certain
transactions in which Seller received money or other consideration from FDP
Brakes worth $1,420,000 (the "BUYER LOAN") and, in return, Seller granted
security interests to FDP Brakes in certain real property of Seller (the
"CLAIM"); and
WHEREAS, FDP Brakes desires to release and relinquish all of its
interests in the Buyer Loan in exchange for either the Real Property (defined
below) or $1,420,000; and
WHEREAS, IBJ Whitehall Business Credit Corporation (the "BANK")
has a valid and perfected first security interest in all assets of Seller and
the proceeds thereto except for the Real Property, and therefore, shall have
such outstanding security interest at Closing in the Cash Purchase Price for any
amounts due them, which amounts shall be paid at Closing; and
WHEREAS, FDP has agreed to make available to Seller, in addition
to the Purchase Price, the lesser of the amount of: (i) Two Hundred Thousand
Dollars ($200,000) or (ii) ten percent (10%) of the allowed unsecured claims,
for partial consideration of payment to unsecured creditors (the
"CONTRIBUTION"), which Contribution shall not be attached by Bank's liens; and
WHEREAS, Seller plans to file a voluntary petition (the
"PETITION") under Chapter 11 of the United States Bankruptcy Code (the
"BANKRUPTCY CODE") in the United States Bankruptcy Court for the District of
Delaware (the "BANKRUPTCY COURT"); and
WHEREAS, upon the filing of the Petition, Buyer and Seller
contemplate: (a) prompt filing with the Bankruptcy Court of (1) a Motion Seeking
Approval of this Agreement and the transactions contemplated hereby, including
without limitation the sale of the Purchased Assets free and clear of all
interests, liens, claims and encumbrances pursuant to Section 363 of the
Bankruptcy Code and the Topping Fee referenced in SECTION 3.6 hereof (the "SALE
MOTION") and (2) a Motion to Assume and Assign Certain Contracts and Leases
pursuant to Section 365 of the Bankruptcy Code (the "SECTION 365 MOTION"), along
with a motion seeking a hearing on the Sale Motion and the Section 365 Motion
and (b) a Closing no later than the Termination Date following the entry of
orders approving the Sale Motion
("SALE ORDER") and the Section 365 Motion (the "SECTION 365 ORDER"), which
orders shall have become final and non-appealable at least 11 days before the
Termination Date all as further described herein; and
WHEREAS, defined terms used in this Agreement have the meanings
ascribed to them by definition in SECTION 13.1, except as otherwise expressly
provided.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants and agreements hereinafter set forth, the parties hereto hereby
agree as follows:
1. SALE AND PURCHASE OF ASSETS
1.1. AGREEMENT TO SELL AND PURCHASE.
Subject to the terms and conditions hereof and in reliance upon
the representations, warranties, covenants and agreements contained herein, at
the Closing, Seller shall sell, assign, transfer, convey and deliver to Buyer,
and Buyer shall purchase from Seller, the Purchased Assets.
1.2. PURCHASED ASSETS.
For purposes of this Agreement, "PURCHASED ASSETS" means all of
the assets and other rights owned or leased by, or licensed to and used by
Seller in the Business, subject to SECTION 1.3, wherever situated and as same
exists on the Closing Date (as defined in ARTICLE 2), including, without
limitation all of the Seller's right, title, benefit and interest in the
following:
(a) all owned furniture, fixtures, furnishings, machinery,
computers, equipment (mobile or otherwise), inventory, tooling, tools, boxing
dyes, miscellaneous supplies, office materials and other tangible property of
every kind and description used in the Business, including, without limitation,
those described in Schedule 1.2(a);
(b) all Contracts relating to the Business described in SCHEDULE
1.2 (B);
(c) all accounts receivable, notes receivable, prepaid expenses,
and deposits from customers of the Business, all purchase orders placed by
customers for services or products of the Business to the extent the same remain
unfulfilled on the Closing Date and all orders for materials and supplies which
were placed by Seller for the Business with suppliers and which remain
unfulfilled on the Closing Date;
(d) all know-how, formulas, technical information, engineering
and technical data, trade secrets, working knowledge, unpatented inventions,
research and development data, designs, techniques, technologies and procedures
used in the Business (the "KNOW-HOW") and all Seller's rights under Contracts
with any present or past employees, independent contractors or consultants with
respect to (i) the non-disclosure of Know-How, or (ii) the assignment to Seller
of such Person's rights to any Know-How;
(e) all real property used in the Business, including
leaseholds, leases, subleases, easements and other interests of every kind and
description in real property, buildings, structures, fixtures, appurtenances
(including appurtenant rights in and to all streets, roads and public places,
open or
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proposed), towers and antennae, and other improvements thereon, as set forth in
SCHEDULE 1.2(E) (the "REAL PROPERTY");
(f) all rights and claims of Seller related to the Business,
whether known or unknown, absolute or contingent, matured or unmatured, or
otherwise, whether in contract or otherwise, under or pursuant to all
warranties, representations and guarantees made by manufacturers, suppliers or
vendors;
(g) to the maximum extent permitted by Applicable Law, all
permits, approvals, orders, authorizations, consents, licenses, certificates,
franchises, exemptions of, or filings or registrations with, any Governmental
Authority in any jurisdiction, which have been issued or granted to or are owned
or used by Seller primarily in connection with the Business and all pending
applications therefor as described in SCHEDULE 1.2(G);
(h) goodwill and going concern value with access to (and copies
provided at Buyer's expense) all books, records, accounts, checks, payment
records, personnel files, Tax records (including payroll, unemployment, real
estate and other Tax records) and other similar books, records and information
of Seller, including all client and supplier lists related to the Business;
(i) all computer software used primarily in connection with the
Business, wherever situated and as the same exists on the Closing Date,
including the computer software described and set forth in SCHEDULE 1.2(I),
including all databases, software codes (both source and object), functional and
design documentation, maintenance documentation, all programmers' notes with
respect thereto, all automated test software code, and all training manuals and
other information relating thereto and all licenses of computer software held by
Seller, including without limitation, those described and set forth in SCHEDULE
1.2(I) (the "SOFTWARE"); and
(j) all Intellectual Property relating to the Business,
including, without limitation, all rights of Seller to the U.S. Automotive
Manufacturing, Inc. name and all Intellectual Property described in SCHEDULE
1.2(J).
1.3. EXCLUDED ASSETS.
Notwithstanding SECTION 1.2 or anything to the contrary in this
Agreement, the following assets of Seller related to the Business (collectively,
the "EXCLUDED ASSETS") shall be excluded from the definition of Purchased Assets
and retained by Seller to the extent in existence on the Closing Date:
(a) all claims for refunds of any Taxes for all periods ending
on or prior to the Closing Date;
(b) the articles of incorporation, by-laws, minute books, stock
transfer records and other corporate records of Seller;
(c) all claims under insurance policies of Seller relating to
the Business and any unearned premiums thereunder or other rights to refunds
thereunder;
(d) all Benefit Plans;
(e) all claims and causes of action except for those set forth
in SECTION 1.2(F); and
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(f) cash, cash equivalents and marketable securities.
1.4. LIABILITIES.
Notwithstanding anything to the contrary provided herein, Buyer
shall not assume or be responsible for any liabilities or obligations of Seller
(except for prospective obligations under any Contracts which are assigned to
and assumed by Buyer), including, without limitation, any liability or
obligation (a) for Taxes relating to, arising out of, occurring or with respect
to any period on or prior to the Closing Date, (b) relating to employees or
employee benefit plans arising prior to the Closing Date or as a result of the
Closing for severance, bonuses or any other form of compensation to any
employees, agents, directors, or independent contractors of the Seller, whether
or not employed by the Seller after the Closing and whether or not arising under
Applicable law, Benefit Plan or other arrangement with respect thereto, (c)
arising from any Benefit Plan, (d) arising from or related to any employment
discrimination charge, sexual harassment claim or any ERISA claim based on the
acts or omissions of the Seller during the period prior to the Closing Date, (e)
whether known or unknown, arising out of or relating to any Hazardous Substance,
any violation of any Environmental Law or any Environmental Permit or any other
environmental matter, in each case, to the extent existing prior to the Closing,
or (f) for any trade indebtedness incurred in the ordinary course of business
prior to the Closing Date.
2. CLOSING; DELIVERIES
2.1. CLOSING.
Unless this Agreement shall have been terminated in accordance
with the provisions of this Agreement, the consummation of the transactions
under this Agreement (the "CLOSING") shall take place at the offices of Xxxxxx,
Xxxxx & Xxxxxxx LLP at 10:00 a.m. on or after the date ten calendar days
following the satisfaction or waiver of the conditions set forth in ARTICLE 8,
ARTICLE 9, ARTICLE 10 and ARTICLE 11 but no later than the Termination Date (or
at such other time and date as the parties hereafter agree in writing) (the
"CLOSING DATE").
2.2. DELIVERIES AT THE CLOSING.
At the Closing, (i) Seller will deliver to Buyer the various
certificates, instruments, and documents referred to in SECTION 11.1, (ii) Buyer
will deliver to Seller the various certificates, instruments, and documents
referred to in SECTION 11.2, and (iii) Buyer will deliver to Seller the
consideration specified in SECTION 3.1 in accordance with SECTION 3.2.
3. PURCHASE PRICE
3.1. PURCHASE PRICE AND SECURITY DEPOSIT.
(a) For and in consideration of the conveyances and assignments
described herein, Buyer agrees to (i) purchase the Purchased Assets (other than
the Real Property) for an aggregate cash purchase price equal to Seven Million
Two Hundred Fifty Thousand and No Cents (U.S. $7,250,000.00) (as such purchase
price may be adjusted pursuant to SECTIONS 3.3 AND 3.4, the "CASH PURCHASE
PRICE"), and (ii) purchase the Real Property in exchange for the release and
relinquishment all of its rights and interests in the Buyer Loan which is valued
at $1,420,000 (the "BUYER RELEASE" and together with the
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Cash Purchase Price, the "PURCHASE PRICE"). The Cash Purchase Price will be paid
in the manner set forth in Section 3.1(b).
(b) Prior to the date hereof, Buyer has previously deposited or
has had deposited for its account, $200,000 (the "Initial Deposit") with Xxxxxx
Xxxxxxxx LLP (the "Deposit Agent"). Contemporaneously with Buyer's execution and
delivery of this Agreement, Buyer will deposit an additional $550,000 (the
"Signing Deposit") with the Deposit Agent (the Initial Deposit and the Signing
Deposit are collectively referred to herein as the "Security Deposit"). Within
ten (10) days of receipt of the Security Deposit, the Deposit Agent shall invest
such Security Deposit in an interest-bearing account and such Security Deposit
shall be held in escrow by the Deposit Agent in accordance with the terms
hereof. Buyer and Seller understand and agree that the Deposit Agent, while
holding the Security Deposit pursuant to this Section 3.1(b), or any funds
pursuant to Section 3.4(a), is legal counsel to Seller, and that the Deposit
Agent may continue to act as counsel to Seller notwithstanding any dispute that
may arise with regard to the Security Deposit or any funds held pursuant to
Section 3.4(a). Notwithstanding anything in this Agreement to the contrary,
following the filing of the Petition, Deposit Agent may elect to deposit the
Security Deposit or other disputed funds held by it pursuant to Section 3.4(a)
with the Bankruptcy Court pending resolution of the dispute.
(c) Under all circumstances, Four Hundred Thousand Dollars
($400,000) of the Security Deposit and all interest accrued thereon (such amount
the "NON-REFUNDABLE DEPOSIT") shall be paid to and retained by Seller unless one
of the following events occurs:
(i) the Sale Order and the Section 365 Order do not
become final (i.e., either has been stayed or an appeal or petition for review
or rehearing or writ of certiorari has been filed) on or before the Termination
Date, except as a consequence of a breach by Buyer or any of its Affiliates of
its obligations under this Agreement;
(ii) the Bankruptcy Court approves the sale of the
Purchased Assets (or any material portion thereof) to a third party and such
sale has either closed or time for appeal has run; or
(iii) Buyer shall have properly terminated this
Agreement pursuant to Section 12.1(b) (Seller's breach of specified covenants).
(d) Upon the occurrence of any one or more of the events
identified in Section 3.1(c), the entire Security Deposit and all interest
accrued thereon shall be refunded immediately to Buyer.
(e) Upon the termination of this Agreement for any reason other
than an event identified in Section 3.1(c), the Security Deposit less the
Non-Refundable Deposit shall be refunded immediately to Buyer and the
Non-Refundable Deposit shall be released to Seller as liquidated damages.
(f) Upon delivery of the documents pursuant to Sections 11.1 and
11.2, on the Closing Date, (A) Buyer will instruct the Deposit Agent to transfer
and pay the Security Deposit and all interest accrued thereon (the "DEPOSIT
FUNDS") to the Seller by bank draft, certified check or by wire transfer or
delivery of immediately available U.S. funds to a bank account designated by
Seller, (B) Buyer will pay to Seller the remaining amount of the Cash Purchase
Price (net of the Deposit Funds) (the "CASH PAYMENT"), and (C) Buyer will pay to
Seller the Contribution.
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3.2. PAYMENT OF PURCHASE PRICE.
Buyer agrees to pay to Seller, subject to any liens which may
exist at the time of the Closing, the Cash Payment and the Contribution by bank
draft, certified check or by wire transfer or delivery of immediately available
U.S. funds to a bank account designated by Seller at the Closing. Seller agrees
to provide to Buyer and Deposit Agent, wire transfer instructions for payment of
the Cash Payment, the Deposit Funds and the Contribution not less than five
business days prior to the Closing Date.
3.3. RISK OF LOSS.
The risk of loss or damage by fire or other casualty or cause to
the Purchased Assets or the Business until the Closing Date shall be upon
Seller. In the event of such loss or damage prior to the Closing Date, Seller
shall promptly give Buyer notice thereof and Buyer will have the option:
(a) to reduce the Cash Payment by an amount equal to the cost of
repair or, if appropriated, expropriated, seized, destroyed or damaged beyond
repair, by an amount equal to the replacement cost of such assets and to
complete the purchase, in which event, Seller shall be entitled to all proceeds
of insurance and all proceeds and claims relating to the applicable event;
(b) to reduce the Cash Payment by an amount equal to the
deductible amounts of the relevant insurance policies and to complete the
purchase, in which event, all proceeds of insurance paid to Seller and all right
and claims of Seller to any such amounts not paid by the Closing Date shall be
assigned to Buyer; or
(c) to terminate the Agreement if there is a Material Adverse
Effect on the Business.
3.4. CLOSING DATE ADJUSTMENT.
(a) Five (5) business days prior to the Closing Date, Seller
shall deliver to Buyer, schedules of (i) the accounts receivable after core
credits, and (ii) the inventory for the Business as of the close of business on
the preceding day (the "CLOSING ADJUSTMENT SCHEDULES"), together with
documentation to support the numbers proposed, prepared in a manner consistent
with the December Adjustment Schedules. Prior to the Closing Date, Buyer shall
review the Closing Adjustment Schedules and discuss with Seller any proposed
adjustments to the Closing Adjustment Schedules which Buyer believes should be
made. If Seller and Buyer mutually agree upon the Closing Adjustment Schedules,
such schedules shall be binding upon the parties hereto for purposes of this
Agreement. If Seller and Buyer disagree upon the Closing Adjustment Schedules
and are unable to resolve any such disagreement prior to the Closing Date, the
parties shall proceed to Closing and shall place the disputed amount of the Cash
Purchase Price of the Closing Adjustment Schedules in escrow with the Deposit
Agent pending resolution of such disputed amount, and the disagreement shall be
referred for final determination to Xxxxxx Xxxxxxxx. The resolution of such
disagreement by Xxxxxx Xxxxxxxx shall be made within 30 days from the Closing
Date and shall be final and binding upon the parties hereto for purposes of this
Agreement. Notwithstanding anything in this Agreement to the contrary, the fees
and expenses, if any, of Xxxxxx Xxxxxxxx shall be borne equally by Buyer and
Seller.
(b) The Cash Purchase Price shall be increased if the aggregate
amount of the Closing Adjustment Schedules exceeds the aggregate amount of the
December Adjustment Schedules or reduced if the aggregate amount of the Closing
Adjustment Schedules is less than the aggregate amount of the
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December Adjustment Schedules, as the case may be, by an amount equal to the
product of (i) the difference between the amount of the Closing Adjustment
Schedules and the December Adjustment Schedules (stated as a positive number)
and (ii) a fraction, the numerator of which is $7,250,000 and the denominator of
which is the amount of the December Adjustment Schedules. For purposes of
example, if the aggregate accounts receivable and inventory on the Closing
Adjustment Schedules is $200,000 higher than the aggregate accounts receivable
and inventory on the December Adjustment Schedules, i.e. $12,114,000, the Cash
Purchase Price shall be increased by $121,700 ($200,000 x
(7,250,000/$11,914,000)) for an adjusted Purchase Price of $7,371,700.
Conversely, if the aggregate accounts receivable and inventory on the Closing
Adjustment Schedules is $200,000 lower than the aggregate accounts receivable
and inventory on the December Adjustment Schedules, i.e. $11,714,000, the Cash
Purchase Price shall be decreased by $121,700, for an adjusted Purchase Price of
$7,128,300.
3.5. PURCHASE PRICE ALLOCATION.
(a) Buyer and Seller shall agree upon an allocation of the
Purchase Price among the Purchased Assets consistent with Section 1060 of the
Code and the Treasury Regulations thereunder within 60 days after the Closing
Date. If Buyer and Seller cannot agree on any such allocation, such dispute
shall be resolved in accordance with SECTION 3.5(B). Each of Buyer and Seller
agrees to file Form 8594 as required by Section 1060 of the Code, and all
federal, state, local and foreign Tax Returns, in accordance with any such
agreed allocation as adjusted as provided herein. Each of Buyer and Seller shall
report the transactions contemplated by this Agreement for federal Tax and all
other Tax purposes in a manner consistent with any such allocation determined
pursuant to this SECTION 3.5. Each of Buyer and Seller agrees to provide the
other promptly with any information required to complete the Form 8594. Buyer
and Seller shall notify and provide the other with reasonable assistance in the
event of an examination, audit or other proceeding regarding any allocation of
the Purchase Price determined pursuant to this SECTION 3.5. Buyer and Seller
shall not take any position in any Tax Return, Tax proceeding or audit that is
inconsistent with such allocation.
(b) In the event that a dispute arises between Seller and Buyer
as to any allocation of Purchase Price under SECTION 3.5(A), Buyer and Seller
shall attempt in good faith to resolve such dispute. If such dispute is not
resolved within 30 days thereafter, Buyer and Seller shall submit the dispute to
an Xxxxxx Xxxxxxxx for resolution with each party presenting its position, which
resolution shall be final, conclusive and binding on Buyer and Seller.
Notwithstanding anything in this Agreement to the contrary, the fees and
expenses of Xxxxxx Xxxxxxxx in resolving the dispute shall be borne equally by
Buyer and Seller.
3.6. TOPPING FEE.
Pursuant to SECTION 3.1, in the event that Buyer is outbid in a
363 Sale of the Purchased Assets (a "SUCCESSFUL COMPETING BID"), Seller will pay
to Buyer a fee of 2% of the aggregate purchase price received by Seller for the
Purchased Assets (exclusive of the Real Property) as a result of such Successful
Competing Bid (the "TOPPING FEE"), subject to Bankruptcy Court approval pursuant
to the Sale Motion.
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4. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer and Parent, on the date
hereof and on the Closing Date, as follows:
4.1. ORGANIZATION.
Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. Seller has all necessary
corporate power and authority to own its properties and to carry on its business
and to enter into and perform its obligations under this Agreement, the other
Seller Documents and the transactions contemplated hereby and thereby.
4.2. CORPORATE AUTHORITY.
The execution, delivery and performance by Seller of this
Agreement and the other Seller Documents and the consummation by Seller of the
transactions contemplated hereby and thereby have been or will be duly
authorized by all requisite corporate action on the part of Seller. This
Agreement has been duly executed and delivered by Seller and constitutes, and
upon execution and delivery of each of the other Seller Documents, such other
Seller Documents will constitute, the legal, valid and binding obligation of
Seller enforceable in accordance with their respective terms, except to the
extent that enforceability may be limited by applicable bankruptcy, insolvency
or similar laws affecting the enforcement of creditors' rights generally and
subject to general principles of equity. .
4.3. ASSETS.
Except as disclosed in SCHEDULE 4.3, Seller has, and at Closing
will have, good title to or a valid leasehold or right to use, all the Purchased
Assets, free and clear of any and all Liens other than Permitted Liens.
4.4. SELLER CONTRACTS.
(a) DISCLOSURE. SCHEDULE 4.4(A) contains a complete and correct
list of all material Contracts to which Seller is party as of the date of this
Agreement primarily in connection with the Business of the types described below
(the "SELLER CONTRACTS"):
(i) employment, consulting, agency, collective bargaining or
other similar Contracts relating to or for the benefit of current, future or
former employees, officers, directors, sales representatives, distributors,
dealers, agents, independent contractors or consultants, the performance of
which will extend over a period of more than one year or involve consideration
in excess of $50,000;
(ii) joint venture, partnership and similar material
Contracts;
(iii) Contracts with respect to which the aggregate amount
that could reasonably be expected to be paid or received thereunder in the
future exceeds $50,000 per annum or Contracts that are otherwise material to the
Business;
(iv) sales agency, manufacturer's representative,
installation, maintenance, marketing or distributorship material Contracts;
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(v) lease Contracts providing for the leasing of personal
property primarily used in, or held for use primarily in connection with, the
Business;
(vi) material Contracts with any employee, director, officer,
stockholder or Affiliate involved in the Business; and
(vii) any material Contract concerning confidentiality,
noncompetition or otherwise limiting the conduct of the Business.
(b) INSPECTION. Seller has made available to Buyer current and
complete and correct copies of all written Seller Contracts, together with all
amendments thereto. Except as set forth on SCHEDULE 4.4(B), there are no current
or pending negotiations with respect to the renewal or repudiation or
cancellation of, or material amendment to, any Seller Contract.
4.5. INTELLECTUAL PROPERTY.
(a) TITLE. SCHEDULE 4.5(A) contains a complete and correct list
of all registered Intellectual Property that is owned, licensed or used by
Seller exclusively for the conduct of the Business (the "INTELLECTUAL PROPERTY
ASSETS"). Except as set forth on SCHEDULE 4.5(A), Seller owns or has sufficient
rights to make, sell or use all Intellectual Property Assets, free from any
Liens (other than Permitted Liens).
(b) TRANSFER. Except as set forth in SCHEDULE 4.5(B),
immediately after the Closing, Buyer will own all of the Intellectual Property
Assets owned by Seller and will have sufficient rights to make, sell or use the
Intellectual Property Assets, free from any Liens (other than Permitted Liens)
on the same terms and conditions as in effect prior to the Closing. Except as
set forth in SCHEDULE 4.5(B), no consent on the part of any other Person is
required to transfer the Intellectual Property Assets to Buyer.
4.6. ENVIRONMENTAL MATTERS.
To the knowledge of Seller:
(a) PERMITS. Seller has been duly issued, and currently has and
will maintain through the Closing Date all Environmental Permits. Seller has not
been notified by any relevant Governmental Authority that any Environmental
Permit will be modified, suspended, canceled or revoked, or cannot be renewed in
the ordinary course of business.
(b) NO VIOLATIONS OR LIABILITIES. In connection with the
Business, Seller has complied and is in compliance in all respects with all
Environmental Permits and all applicable Environmental Laws, except for such
non-compliance as would not reasonably be expected to cause a Material Adverse
Effect.
(c) NO ACTIONS. There are no pending or threatened actions,
suits, orders, claims, legal proceedings or other proceedings, based on, and
neither Seller nor any officer or director thereof has directly or indirectly
received any written notice of any complaint, order, directive, citation, notice
of violation, notice of responsibility, notice of potential responsibility, or
information request or any other written communication from any Governmental
Authority or any other Person arising out of or attributable to: (i) the current
or past presence, Release, or threatened Release of Hazardous Substances at or
from any part of the Real Property or the Purchased Assets; (ii) the off-site
disposal or treatment of
9
Hazardous Substances originating on or from such Real Property or the Purchased
Assets; or (iii) any violation of Environmental Laws or Environmental Permits in
connection with the Business or the Purchased Assets.
(d) LISTINGS. The Real Property is not listed or proposed to be
listed on the National Priorities List or CERCLA or on any equivalent state or
local database or list of properties that require cleanup under Environmental
Laws.
(e) ENVIRONMENTAL INFORMATION. Seller has made available to
Buyer all information, including without limitation all audits, studies,
analyses and test results, in the possession, custody or control of Seller
relating to (i) the environmental conditions on, under or about the Real
Property, and (ii) Hazardous Substances used, managed, handled, transported,
treated, generated, stored or Released by in connection with the Business.
(f) UNDERGROUND STORAGE TANKS, ETC. Except as disclosed on
SCHEDULE 4.6(F), there are no (i) underground storage tanks, active or
abandoned, (ii) polychlorinated biphenyl-containing equipment or (iii)
asbestos-containing material located on the Real Property.
(g) RELEASES. Except as disclosed on SCHEDULE 4.6(G), no
Releases of Hazardous Substances have occurred at, from, in, to, on or under the
Real Property, except in accordance with Environmental Laws and except as would
not have a Material Adverse Effect.
4.7. EMPLOYEES.
(a) EXISTING EMPLOYEES. SCHEDULE 4.7(A) lists the name of each
employee of Seller (each, an "EXISTING EMPLOYEE" and collectively, the "EXISTING
EMPLOYEES"). With respect to each such Existing Employee, Seller has provided to
Buyer such Existing Employee's position with Seller, initial employment date and
such Existing Employee's fiscal year 2000 and current salary or hourly wage,
bonus or incentive compensation, total taxable compensation, accrued vacation
and other employment benefits. Except as disclosed in SCHEDULE 4.7(A), no oral
understandings currently exist between any executive officer or other
representative of Seller authorized to enter into such understandings on behalf
of Seller and any Existing Employee regarding changes in compensation, promotion
or any other change in status since December 31, 2000.
(b) LABOR RELATIONS. Seller is not party to any collective
bargaining or similar agreement with respect to the employees involved in the
Business. There is no strike, labor, dispute, slowdown, stoppage or other
material interference with or impairment by labor of the Business actually
pending or, to Seller's knowledge, threatened against Seller with respect to the
Business. Seller has complied in all material respects with all Applicable Laws
relating to employment or the workplace, including, without limitation,
provisions relating to wages, hours, collective bargaining, safety and health,
work authorization, equal employment opportunity, immigration, withholding,
unemployment compensation, workers compensation, employee privacy and right to
know.
4.8. PENSION AND BENEFIT PLANS.
SCHEDULE 4.8 contains a complete and correct list of all Benefit
Plans, and the name and general description of each such Benefit Plan.
10
4.9. TRANSACTIONS WITH RELATED PARTIES.
Except as set forth in SCHEDULE 4.9, neither any present or
former officer, director, stockholder or Affiliate of Seller, nor any Affiliate
thereof, is currently a party to any transaction or Contract with Seller
relating to the Business, including, without limitation, any Contract providing
for the employment of, furnishing of services by, rental of the Purchased Assets
from or to, or otherwise requiring payments to, any such officer, director,
stockholder or Affiliate.
4.10. NO BROKER.
Except for the fees of Phoenix Management, which are the
responsibility of Seller, Seller has no liability or obligation to pay any
broker or finder or investment banker entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Seller for which Buyer
could become liable or obligated.
4.11. INSURANCE.
SCHEDULE 4.11 contains a complete and correct list of all
insurance policies (specifying the insurer, the amount of coverage, the type of
insurance and the annual premium) maintained by Seller with respect to the
Business. Such policies are owned solely by Seller and will be outstanding and
in effect until the Closing.
4.12. NO INTERESTS IN OTHER ENTITIES.
No shares of any other corporation or any ownership or other
investment interest, either of record, beneficially or equitably, in any
association, partnership, joint venture or other Person are included in the
Purchased Assets.
5. REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and each Parent, as applicable, hereby represent and
warrant to Seller, on the date hereof and on the Closing Date, as follows:
5.1. ORGANIZATION.
Each of Buyer and each Parent are duly organized, validly
existing and in good standing under the laws of the State of its formation. Each
of Buyer and each Parent has all necessary corporate power, authority, and
capacity to own its property, to carry on its business, and to enter into and
perform its obligations under this Agreement and the other Buyer Documents and
to carry out the transactions contemplated hereby and thereby.
5.2. CORPORATE AUTHORITY.
The execution, delivery and performance by each of Buyer and
each Parent of this Agreement and the other Buyer Documents to which it is a
party and the consummation by Buyer and each Parent of the transactions
contemplated hereby or thereby have been duly authorized by all requisite
corporate action on the part of Buyer and each Parent, as applicable. This
Agreement has been duly
11
executed and delivered by each of Buyer and each Parent and constitutes, and
upon execution and delivery by each of Buyer and each Parent of each of the
other Buyer Documents to which it is a party, such Buyer Documents will
constitute, the legal, valid and binding obligation of Buyer and each Parent, as
applicable, enforceable against Buyer and each Parent in accordance with their
respective terms, except to the extent that enforceability may be limited by
applicable bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and subject to general principles of equity.
5.3. BROKERS.
No broker or finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Buyer or Parent for which Seller could become liable or obligated.
6. COVENANTS OF SELLER PENDING CLOSING
Except as otherwise contemplated by this Agreement and except
for the filing of the Petition and Bankruptcy cases and action required or
reasonably necessary in connection with the Petition and Bankruptcy cases,
during the period from the date hereof through the Closing Date, Seller will
conduct the operations of the Business in the ordinary and usual course,
consistent with past and current practices, subject to the restrictions and
limitations imposed upon it as a Debtor-in-Possession, and will purchase
materials and services and maintain employees to effectively manufacture
products to fulfill, in all material respects, all customer orders, all to the
extent the officers, directors and management employees of Seller reasonably
determine such actions to be in the best interests (including the future
prospects) of the Business. Seller shall maintain in full force and effect all
existing casualty, liability and other insurance through the day following the
Closing Date in amounts not less than those in effect on the date hereof, except
for changes in such insurance that are made in the ordinary course of business
consistent with past practice or reasonably necessary in connection with the
Petition and Bankruptcy cases.
7. ADDITIONAL COVENANTS AND AGREEMENTS
7.1. BANKRUPTCY ACTION.
(a) Within ten (10) days of the date hereof, Seller shall file a
voluntary petition under Chapter 11 of the Bankruptcy Code with the Bankruptcy
Court.
(b) Buyer acknowledges and agrees that Seller does not have the
authority to sell the Purchased Assets and to close under the terms and
provisions of this Agreement without having first obtained the prior approval of
the Bankruptcy Court. As promptly as practicable after the date hereof and in no
event later than ten (10) days after the date hereof, after consultation with
Buyer and its counsel, Seller shall file and serve the Sale Motion and the
Section 365 Motion, the form and content of each such motion being reasonably
acceptable to Buyer and its counsel (together, the "EXPEDITED MOTION"), and
shall use its best efforts to cause the Bankruptcy Court to enter the Sale Order
as promptly as practicable and in any event no later than twenty (20) days after
the date hereof. Seller agrees to promptly make any filings, to take all actions
and to use its best efforts to obtain any and all other approvals and orders
necessary or appropriate for the consummation of the transactions contemplated
hereby.
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(c) The form of Sale Order shall contain the protections Buyer
deems reasonably necessary under Section 363 of the Bankruptcy Code and
otherwise shall be in form and substance reasonably satisfactory to Buyer. The
form of Sale Order shall provide, INTER ALIA, (i) that Buyer is a good faith
purchaser pursuant to Section 363(m) of the United States Bankruptcy Code (11
U.S.C. ss.363), (ii) that the sale of the Purchased Assets is free and clear of
all liens, claims and encumbrances, (iii) the sale of the Purchased Assets is
exempt from any documentary, stamp, transfer or other like tax pursuant to
Section 1146(c) of the Bankruptcy Code and (iv) approval of Seller's execution,
delivery and performance of the Agreement and the transactions contemplated
hereunder. The form of Section 365 Order shall authorize Seller to assume and
assign the Contracts pursuant to Sections 365 (a) and (b) of the Bankruptcy Code
and nullifying any provisions that restrict the assignability of the Contracts.
(d) Seller hereby agrees that the Expedited Motion shall provide
that an auction for the sale of Seller's assets shall be held prior to the
approval of this Agreement by the Bankruptcy Court and that any offer made by
any third party (a "QUALIFYING BID") must (i) be provided to Seller and Seller's
counsel at least three business days prior to the hearing (including therewith a
copy of such Qualifying Bid), (ii) be on at least as favorable terms and
conditions as are provided for in this Agreement, and (iii) provide for a
purchase price for the Purchased Assets that is more than the Purchase Price,
taking into consideration that the value to the Seller of Buyer's Release is
equal to $1,420,000, plus the Topping Fee plus an initial increment of $50,000.
The Expedited Motion also shall seek approval for bid procedures at an auction
that provides (x) for an open auction and (y) bid increments, after the initial
increment, of $50,000.
(e) Each of Buyer and Seller agree to take any and all
reasonably necessary actions required in order to obtain such Sale Order and
Section 365 Order.
7.2. ACCESS AND CONFIDENTIAL INFORMATION.
Seller shall afford to Buyer and its representatives reasonable
access during normal business hours beginning on the date hereof to the books,
records, offices, Contracts, officers, employees, consultants and contractors of
the Business and to such other information relating to the Business as Buyer
shall reasonably request. If the Closing shall not occur, Buyer shall return to
Seller all written material containing or reflecting any such information, and
Buyer shall not retain any copies, extracts or other reproductions in whole or
in part of such written material and shall destroy all documents, memoranda,
notes and other writings (or portions of any such writings, if applicable)
prepared by Buyer or any of its advisors based on such information and upon
written request provide a certification to Seller that such destruction has
occurred. All information furnished or to be furnished by Seller or its agents
to Buyer shall be kept confidential (notwithstanding any termination of this
Agreement); PROVIDED, HOWEVER, that such confidentiality obligation shall not
apply to (a) disclosure to the extent necessary to meet the requirements of
Applicable Law (subject to giving Seller notice as promptly as possible of the
intention to make such disclosure and providing Seller the opportunity to seek a
protective order), or (b) any information which (i) was already in Buyer's
possession from a source other than Seller without an obligation of
confidentiality prior to the disclosure thereof by Seller or its agents, (ii)
was generally known to the public prior to the disclosure thereof, (iii) became
known to the public through no fault of Buyer, or (iv) was disclosed to Buyer by
a third party not known by Buyer to be bound by an obligation of
confidentiality.
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7.3. CONSENTS.
Seller shall use all reasonable efforts to obtain, with the
cooperation of the Buyer, prior to Closing, all consents, waivers and other
approvals which shall be required in order to effectuate the transactions
contemplated hereby. Seller and Buyer shall use all reasonable efforts to
satisfy promptly the conditions to the Closing specified in this Agreement.
Seller and Buyer shall furnish to each other and to each other's counsel all
such information as may be reasonably required in order to effectuate the
foregoing actions.
7.4. LIABILITY FOR TRANSFER TAXES.
Buyer and Seller shall each be responsible for one-half (1/2) of
the timely payment of all sales (including, without limitation, bulk sales),
use, value added, documentary, stamp, gross receipts, registration, transfer,
conveyance, excise, recording, license and other similar Taxes and fees
("TRANSFER TAXES") arising out of or in connection with or attributable to the
transactions affected pursuant to this Agreement. Seller shall file all required
sales tax notifications as promptly as practicable following the date hereof and
shall provide to Buyer copies of any such filings. Seller and Buyer shall use
all reasonable efforts to minimize the amount of all Transfer Taxes and
cooperate in providing each other with the information necessary to prepare and
review such Tax Returns.
7.5. POST CLOSING RECEIPTS; COOPERATION.
(a) ADMINISTRATION OF ACCOUNTS. If at any time following the
Closing, Seller or Buyer receives, or comes into possession of, any of the
Purchased Assets or Excluded Assets or any receipts, proceeds, checks,
securities or other property of any kind comprising, arising out of or derived
from the Purchased Assets or the Business or Excluded Assets (including any
check, notes or cash in payment of any account receivable or other intangible
constituting part of the Purchased Assets or Excluded Assets), Seller or Buyer,
as applicable, shall immediately deliver the same to the appropriate party, with
such endorsements, transfers or assignments as may be necessary or desirable to
ensure that such party receives the immediate and full benefit thereof.
(b) AUDITS. Following the Closing Date, Seller and Buyer shall
cooperate reasonably with each other in connection with any audit or review by
any Governmental Authority or other party with respect to the Business. Upon
reasonable request, at the expense of the party requesting assistance, each
party will make available appropriate personnel and provide pertinent records to
enable the other party to assist in any such audit or review.
(c) OTHER COOPERATION. The parties shall cooperate from and
after the Closing Date, and take all reasonable steps to provide for a smooth
and orderly transition of the Business to Buyer, including, without limitation,
the transition of the employees, payroll, management information systems,
e-mail, computer systems, customers and Contracts, and other assets.
8. MUTUAL CONDITIONS PRECEDENT TO OBLIGATIONS TO CLOSE
Unless waived in whole or in part by Seller and Buyer, the
obligations of the parties hereto to consummate the transactions contemplated by
this Agreement shall be subject to the satisfaction, on or before the Closing
Date, that no order, injunction, judgment or decree by any
14
Governmental Authority shall be in effect which enjoins, restrains or prohibits
the consummation of the transactions contemplated by this Agreement.
9. CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
The obligations of Buyer to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions, unless otherwise waived in
writing in whole or in part by Buyer:
9.1. BANKRUPTCY COURT ORDER.
The Bankruptcy Court shall have entered the Sale Order and the
Section 365 Order and such orders shall have become final and non-appealable.
9.2. SELLER'S CLOSING DOCUMENTS.
Seller shall have delivered all other Contracts and documents
required to be delivered by Seller at the Closing, including without limitation,
those described in SECTION 11.1.
9.3. FINANCING.
Buyer shall have obtained the financing necessary to consummate
the transactions contemplated herein.
9.4. KEY EMPLOYEES.
The key employees identified on EXHIBIT A are employed with the
Seller at the Closing Date.
10. CONDITIONS TO SELLER'S OBLIGATIONS TO CLOSE
The obligations of Seller to consummate the transactions
contemplated by this Agreement are subject to the satisfaction, on or before the
Closing Date, of each of the following conditions, unless otherwise waived in
writing in whole or in part by Seller:
10.1. BUYER'S CLOSING DOCUMENTS.
Buyer shall have delivered all other Contracts and documents
required to be delivered by it at the Closing, including without limitation,
those described in SECTION 11.2.
10.2. BANKRUPTCY COURT ORDER.
The Bankruptcy Court shall have entered the Sale Order and the
Section 365 Order and such orders shall have become final and non-appealable.
15
11. ACTION TO BE TAKEN AT CLOSING
11.1. ACTION TO BE TAKEN BY SELLER.
At the Closing, Seller shall deliver to Buyer the following:
(a) an executed xxxx of sale and assignment, dated as of the
Closing Date, conveying all of the Purchased Assets (except for the Real
Property) substantially in the form attached hereto as EXHIBIT B (the "XXXX OF
SALE");
(b) all executed documents necessary to transfer title of the
Real Property to Buyer;
(c) all such other general instruments of transfer, assignment
and conveyance, assignments, evidences of consent, waiver or other approval, and
other instruments or documents in form and substance satisfactory to Buyer, as
shall be necessary to evidence or perfect the sale, assignment, transfer and
conveyance of the Purchased Assets to Buyer and effectively vest in Buyer all
right, title and interest in the Purchased Assets free and clear of any and all
Liens (other than Permitted Liens), together with possession (or constructive
possession, in the case of intangibles) thereof, all in accordance with the
terms and conditions of this Agreement;
(d) a certified copy of the resolutions adopted by the Board of
Directors of Seller authorizing or ratifying this Agreement and authorizing the
consummation by Seller of the transactions contemplated hereby and by the other
Seller Documents;
(e) a copy of the Sale Order and Section 365 Order;
(f) all of the Non-Competition Agreements; and
(g) such other certificates, instruments, opinions or documents
as Buyer may reasonably request in order to effect and document the transactions
contemplated hereby.
11.2. ACTION TO BE TAKEN BY BUYER.
At the Closing, Buyer shall deliver to Seller the following:
(a) a certified copy of the resolutions duly adopted by Board of
Directors of Buyer authorizing or ratifying this Agreement and authorizing the
consummation by such Buyer of the transactions contemplated hereby and by the
other Buyer Documents; and
(b) a full release and relinquishment of all rights in the
Claim.
11.3. PAYMENT OF PURCHASE PRICE.
Upon delivery of the documents pursuant to SECTIONS 11.1 and
11.2, Buyer shall (i) cause the Deposit Agent to pay the Deposit Funds to Seller
in accordance with SECTION 3.1(F); and (ii) pay the Cash Payment to Seller in
accordance with SECTION 3.2(A).
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12. TERMINATION
12.1. TERMINATION.
Subject to the provisions of SECTION 12.2, this Agreement may be
terminated at any time before the Closing only under any one or more of the
following circumstances:
(a) by mutual written consent of Seller and Buyer;
(b) by Buyer, upon written notice to Seller, if there has been a
material breach by Seller of any of its covenants under ARTICLE 6 or SECTION
7.1, 7.2 OR 7.3;
(c) by Seller, upon written notice to Buyer, if there has been a
material breach by Buyer of any representation, warranty, covenant or agreement
contained herein, or any such representation or warranty shall have become
untrue, and such breach or condition has not been promptly cured within thirty
days following receipt by Buyer of written notice of such breach;
(d) by Seller or Buyer, if the Closing has not occurred on or
before the Termination Date;
(e) by either party if the Bankruptcy Court approves the sale of
the Purchased Assets (or any material portion thereof) to a third party pursuant
to SECTION 3.1(C)(II); or
(f) by either party pursuant to SECTION 3.3.
12.2. EFFECT OF TERMINATION.
In the event of termination of this Agreement, as provided
above, this Agreement shall forthwith become void and there shall be no
liability hereunder on the part of Seller or Buyer, except (i) as provided for
in SECTION 3.1(C), (D) AND (E) and (ii) that the agreements with respect to
confidentiality contained in SECTION 7.2 and the Agreement respecting expenses
contained in SECTION 13.13 shall survive the termination hereof.
13. MISCELLANEOUS
13.1. CERTAIN DEFINITIONS.
As used herein, the following terms have the meanings set forth
below:
"AFFILIATE" shall mean a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first Person. "Control" (including the terms
"controlled by" and "under common control with") means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
policies of a person, whether through the ownership of voting securities, by
contract or credit arrangement, as trustee or executor, or otherwise.
"APPLICABLE LAW" shall mean all applicable provisions of all (i)
constitutions, treaties, statutes, laws (including the common law), rules,
regulations, ordinances, codes or orders of any
17
Governmental Authority, (ii) governmental approvals and (iii) orders, decisions,
injunctions, judgments, awards and decrees of or agreements with any
Governmental Authority.
"ASSUMED LIABILITIES" has the meaning given to it in Section
1.4.
"BANK" has the meaning given to it in the Recitals.
"BANKRUPTCY CODE" has the meaning given to it in the Recitals.
"BANKRUPTCY COURT" has the meaning given to it in the Recitals.
"BENEFIT PLAN" means (x) any pension plan, 401(k) plan,
profit-sharing plan, health or welfare plan, and any other employee benefit plan
(within the meaning of Section 3(3) of ERISA) that is maintained or sponsored by
the Seller or to which the Seller contributes or for which the Seller otherwise
has or may have any liability, contingent or otherwise, either directly or as a
result of an ERISA Affiliate, and (y) any other benefit arrangement, obligation
or practice, whether or not legally enforceable, to provide benefits, other than
salary, as compensation for services rendered, to one or more present or former
employees, directors, agents, or independent contractors, that is maintained or
sponsored by the Seller or to which the Seller contributes or for which the
Seller otherwise has or may have any liability, contingent or otherwise, either
directly or as a result of an ERISA Affiliate, including, without limitation,
employment agreements, severance policies or agreements, executive compensation
arrangements, incentive arrangements, sick leave, vacation pay, salary
continuation, consulting or other compensation arrangements, workers'
compensation, bonus plans, stock option, stock grant or stock purchase plans,
medical insurance, life insurance, tuition reimbursement programs or scholarship
programs, any plans subject to section 125 of the Code, and any plans providing
benefits or payments in the event of a change of ownership or control.
"XXXX OF SALE" has the meaning given to it in SECTION 11.1.
"BUSINESS" has the meaning given to it in the Recitals.
"BUYER DOCUMENTS" shall mean, collectively, this Agreement, the
Xxxx of Sale and all exhibits and schedules attached hereto or thereto.
"BUYER LOAN" has the meaning given to it in the Recitals.
"BUYER RELEASE" has the meaning given to it in SECTION 3.1.
"BUYER'S BREACH" has the meaning given to it in SECTION 3.1.
"CASH PAYMENT" has the meaning given to it in SECTION 3.1.
"CASH PURCHASE PRICE" has the meaning given to it in SECTION
3.1.
"CERCLA" the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 X.X.X.xx. 9601 et. seq.
"CLAIM" has the meaning given to it in the recitals.
18
"CLOSING ADJUSTMENT SCHEDULES" has the meaning given to it in
SECTION 3.4.
"CLOSING" has the meaning given to it in SECTION 2.1. "CLOSING
DATE" has the meaning given to it in SECTION 2.1.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act
of 1985, P.L. 99-272, as amended.
"CODE" means the Internal Revenue Code of 1986, as amended, and
all laws and regulations promulgated pursuant thereto or in connection
therewith.
"CONTRACTS" means all agreements, contracts, leases,
commitments, understandings and other instruments and arrangements by which any
of the Purchased Assets are bound or to which Seller is a party or by which
Seller is bound primarily in connection with the Business or the Purchased
Assets.
"CONTRIBUTION" has the meaning given to it in the recitals.
"COPYRIGHTS" has the meaning given to it in the definition of
Intellectual Property.
"DECEMBER ADJUSTMENT SCHEDULES" means the schedules attached
hereto as EXHIBIT C, of (i) accounts receivable after core credits as of
December 31, 2000 and (ii) inventory pursuant to the year end physical
inventory, identifying the value of such inventory and describing the method of
such valuation.
"DEPOSIT AGENT" has the meaning given to it in SECTION 3.1.
"DEPOSIT FUNDS" has the meaning given to it in SECTION 3.1.
"ENVIRONMENTAL LAWS" means all Applicable Laws relating to the
protection of the environment, to human and worker health and safety, or to any
emission, discharge, generation, processing, generation, treatment, storage,
abatement, remediation, manufacture, distribution, disposal, Release, threatened
Release or transportation of any Hazardous Substances, including, without
limitation, CERCLA, the Resource Conservation and Recovery Act, and similar
state laws,
"ENVIRONMENTAL PERMITS" means any federal, state and local
permit, license, registration, consent, order, administrative consent order,
certificate, approval or other authorization with respect to Seller necessary
for the conduct of the Business as currently conducted under any Environmental
Law.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and all Applicable Laws promulgated pursuant thereto or in
connection therewith.
"ERISA AFFILIATE" means any person that, together with the
Seller, is or was at any time treated as a single employer under Section 414 of
the Code or Section 4001 of ERISA and any general partnership of which the
Seller is or has been a general partner.
"EXCLUDED ASSETS" has the meaning given to it in SECTION 1.3.
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"EXISTING EMPLOYEE" has the meaning given to it in SECTION 4.7.
"EXPEDITED MOTION" has the meaning given to it in SECTION 7.1.
"GAAP" means generally accepted accounting principles in the
United States applied on a basis consistent with past practice.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
state or other political subdivision thereof or any entity (including, without
limitation, a court) exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"HAZARDOUS SUBSTANCES" means any hazardous or toxic wastes,
substances, radiation, or materials (whether solids, liquids or gases) which are
listed or regulated under any Environmental Law, including but not limited to
asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls,
petroleum or petroleum-derived substances or wastes, radon gas or related
materials.
"INITIAL DEPOSIT" has the meaning given to it in SECTION 3.1.
"INTELLECTUAL PROPERTY" means any and all United States and
foreign: (i) patents and patent applications (including docketed patent
disclosures awaiting filing, reissues, reexaminations, renewals, provisionals,
divisions, continuations-in-part and extensions); (ii) trademarks, service
marks, trade names, trade dress, logos, business and product names, slogans, and
registrations and applications for registration thereof (the "TRADEMARKS");
(iii) copyrights (including software and data compilations) and registrations
thereof ("COPYRIGHTS"); and (iv) inventions, processes, designs, formulae,
computer software, trade secrets, know-how, industrial models, confidential and
technical information, manufacturing, engineering and technical drawings,
product specifications and confidential business information.
"INTELLECTUAL PROPERTY ASSETS" has the meaning given to it in
SECTION 4.5.
"INTERIM BALANCE SHEET" means the unaudited balance sheet of
Seller as of September 30, 2000.
"IRS" means the Internal Revenue Service.
"KNOW-HOW" has the meaning given to it in SECTION 1.2.
"KNOWLEDGE" will be deemed to be present with respect to Seller
or Buyer when the matter in question was brought to the attention of or, if due
diligence had been exercised, would have been brought to the attention of, any
executive officer of Seller or the employees of Seller on the one hand, or any
executive officer of Buyer, on the other hand.
"LIEN" means any mortgage, pledge, hypothecation, right of
others, claim, security interest, encumbrance, lease, sublease, license,
occupancy agreement, adverse claim or interest, easement, covenant,
encroachment, burden, title defect, title retention agreement, voting trust
agreement, interest, equity, option, lien, right of first refusal, charge or
other restrictions or limitations of any nature whatsoever, including but not
limited to such as may arise under any material Contracts or government
Contracts.
20
"MATERIAL ADVERSE EFFECT" means any event, occurrence, fact,
condition, change or effect that is materially adverse to the business,
operations, results of operations or financial condition of the Business or the
Purchased Assets taken as a whole.
"NON-COMPETITION AGREEMENT" means a Non-Compete Agreement
between each of the key employees identified on EXHIBIT A and Buyer, in the form
attached hereto as EXHIBIT D.
"NON-REFUNDABLE DEPOSIT" has the meaning given to it in SECTION
3.1.
"PERMITTED LIENS" means (i) Liens reserved against in the
Interim Balance Sheet, to the extent so reserved, except for Liens relating to,
arising out of or with respect to any Excluded Assets, (ii) Liens for Taxes not
yet due and payable or which are being contested in good faith and by
appropriate proceedings, (iii) liens created by, arising out of, or specifically
contemplated or permitted by this Agreement, or (iv) materialmen's, mechanics',
workmen's, repairmen's, employees' or other like liens arising in the course of
construction or in the ordinary course of operation or maintenance, in each such
case securing obligations which are not delinquent or which are being contested
in good faith and for which adequate reserves are included in the Interim
Balance Sheet, or securing obligations which are bonded in a reasonable manner.
"PERSON" means any natural person, firm, partnership,
association, corporation, company, trust, business trust, Governmental Authority
or other entity.
"PETITION" has the meaning given to it in the Recitals.
"PURCHASE PRICE" has the meaning given to it in SECTION 3.1.
"PURCHASED ASSETS" has the meaning given to it in SECTION 1.2,
as modified by SECTION 1.3.
"QUALIFYING BID" has the meaning given to it in SECTION 7.1.
"REAL PROPERTY" has the meaning given to it in SECTION 1.2.
"RELEASE" means any releasing, disposing, discharging,
injecting, spilling, leaking, leaching, pumping, dumping, emitting, escaping,
emptying, seeping, dispersal, migration, transporting, placing and the like,
including without limitation, the moving of any materials through, into, or
upon, any land, soil, surface water, ground water or air, or otherwise entering
into the environment.
"SALE MOTION" has the meaning given to it in the Recitals.
"SALE ORDER" has the meaning given to it in the Recitals.
"SECTION 365 MOTION" has the meaning given to it in the
Recitals.
"SECTION 365 ORDER" has the meaning given to it in the Recitals.
"SECURITY DEPOSIT" has the meaning given to it in SECTION 3.1.
"SELLER CONTRACTS" has the meaning given to it in SECTION 4.4.
21
"SELLER DOCUMENTS" shall mean, collectively, this Agreement, the
Xxxx of Sale, the Non-Competition Agreements and all exhibits and schedules
attached hereto or thereto.
"SIGNING DEPOSIT" has the meaning given to it in SECTION 3.1.
"SOFTWARE" has the meaning given to it in SECTION 1.2.
"SUCCESSFUL COMPETING BID" has the meaning given to it in
SECTION 3.6.
"TAX" any federal, state, provincial, local, foreign, or any
other income, alternative, minimum, accumulated earnings, personal holding
company, franchise, capital stock, net worth, capital, profits, windfall
profits, gross receipts, value added, sales, use, goods and services, excise,
customs duties, transfer, conveyance, mortgage, registration, stamp,
documentary, recording, premium, severance, environmental (including taxes under
Section 59A of the Code), real property, personal property, AD VALOREM,
intangibles, rent, occupancy, license, occupational, employment, unemployment
insurance, social security, disability, workers' compensation, payroll, health
care, withholding, estimated or other similar tax, duty or other governmental
charge or assessment or deficiencies thereof, (including all interest and
penalties thereon and additions thereto whether disputed or not).
"TAX RETURN" any return, report declaration, form, claim for
refund or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"TERMINATION DATE" means the date which is fifty-five days from
the date of the filing of the Petition unless otherwise mutually agreed to in
writing by the parties.
"TOPPING FEE" has the meaning given to it in SECTION 3.6.
"TRADEMARKS" has the meaning given to it in the definition of
Intellectual Property.
"TRANSFER TAXES" has the meaning given to it in SECTION 7.4.
13.2. WRITTEN AGREEMENT TO GOVERN AND GENERAL RELEASE.
This Agreement (together with the Schedules and Exhibits hereto
and the other instruments and documents delivered pursuant hereto) sets forth
the entire understanding and supersedes all prior oral and written agreements
among the parties relating to the subject matter contained herein, and merges
all prior discussions among them.
Subject to and effective upon Closing, Seller and its Affiliates
or related parties shall, and in consideration of the Purchase Price and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, to fully and forever release and discharge Xxxx X. Xxxxxx,
Buyer, Parent, each in their individual capacity and as an officer and/or
director and in all other capacities, and their successors and assigns, from any
and all rights, claims, demands, agreements, contracts, covenants, promises,
actions, suits, causes of action, obligations, bonds, variances, controversies,
debts, costs, sums of money, expenses, accounts, damages, judgments, losses and
liabilities of whatever kind or nature, in law or in equity or otherwise,
whether known or unknown which the Seller and its Affiliates or related parties
ever had, now has, or shall in the future have, or which their successors
assigns or representatives shall or may in the future have, for any reason
whatsoever arising
22
out of or relating to the facts and circumstances existing at any time prior to
the execution of this Agreement.
13.3. SEVERABILITY.
The parties expressly agree that it is not their intention to
violate any public policy, statutory or common laws, rules, regulations,
treaties or decisions of any Governmental Authority. If any provision of this
Agreement is judicially or administratively interpreted or construed as being so
in violation, such provision shall be inoperative and the remainder this
Agreement shall remain binding upon the parties hereto.
13.4. NOTICES AND OTHER COMMUNICATIONS.
Any notice or other communication required, contemplated or
permitted by this Agreement by any party shall be in writing and shall be deemed
served (a) when personally delivered, (b) when transmitted via facsimile machine
to the party for whom it is intended at the number shown below, (c) on the next
business day after delivery to a reputable overnight courier for next business
day delivery, or (d) five business days after deposit in the mail, registered or
certified mail, return receipt requested, postage prepaid, addressed, in the
case of deliveries made pursuant to clause (c) or (d), as follows:
If to Buyer: Friction Division Products, Inc.
P. O. Xxx 0000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxx
With copies to:
Xxxxxx, Xxxxx & Xxxxxxx, LLP
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxx, Xx.
Facsimile: 000-000-0000
If to Seller:
U.S. Automotive Manufacturing, Inc.
Box 0000
Xxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxx
With a copy to:
Xxxxxx Xxxxxxxx, LLP
3000 Two Xxxxx Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
or to such other address or addresses as any addressee may designate for itself
by written notice served in accordance herewith.
23
13.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts,
and each counterpart shall constitute an original instrument, but all such
separate counterparts shall constitute one and the same agreement.
13.6. LAW TO GOVERN.
The validity, construction and enforceability of this Agreement
shall be governed in all respects by the laws of the Commonwealth of
Pennsylvania, without regard to its conflict of law rules.
13.7. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto including but not limited to the Seller, the
Seller as Debtor, the Seller as Debtor-in-Possession, any Trustee appointed in
any case filed or pending under Chapter 7 or 11 of the Bankruptcy Code and their
respective successors and assigns; PROVIDED, HOWEVER, that no party may assign
its rights and obligations hereunder without the prior written consent of the
other party hereto.
13.8. INTERPRETATION.
The masculine, feminine or neuter pronouns used herein shall be
interpreted without regard to gender, and the use of the singular or plural
shall be deemed to include the other whenever the context so requires. The
headings in this Agreement are inserted for convenience of reference only and
shall not be a part of or control or affect the meaning of this Agreement.
Unless otherwise expressly stated herein, all references herein to Articles,
Sections and paragraphs are to Articles, Sections and paragraphs in this
Agreement and all references herein to Schedules and Exhibits are to Schedules
and Exhibits to this Agreement. The phrase "including" shall mean "including,
without limiting the generality of the foregoing." The parties have each been
represented by counsel in connection with the negotiation of this Agreement. The
fact that any provision hereof may have been drafted by counsel for a given
party shall not be taken into consideration in interpreting such provision.
13.9. SCHEDULES AND EXHIBITS.
The Schedules and Exhibits referred to herein and attached to
this Agreement are incorporated herein by such reference as if fully set forth
in the text hereof.
13.10. PUBLICITY.
During the period beginning on the date of this Agreement and
ending on the Closing Date, Buyer shall have the right to disclose the
transactions contemplated hereby to any third party, including existing
customers of the Business. In addition, Seller shall have the right to make all
disclosures and to provide such notice and undertake such advertising required
of it by the Bankruptcy Court in connection with the Sale Motion or any other
matter related directly or indirectly thereto.
24
13.11. MODIFICATION.
The parties to this Agreement may, by mutual written consent
executed by the authorized officers of Buyer and Seller, modify or supplement
this Agreement in such manner as may be mutually agreed upon by them in writing.
13.12. WAIVER OF PROVISIONS.
The terms, covenants, representations, warranties and conditions
of this Agreement may be waived only by a written instrument executed by the
party waiving compliance. The failure of any party at any time to require
performance of any provisions hereof shall, in no manner, affect the right at a
later date to enforce the same. No waiver by any party of any condition, or
breach of any provision, term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
13.13. EXPENSES.
Except as otherwise provided in this Agreement or as otherwise
agreed by the parties, each party shall bear its own expenses incident to this
Agreement and the transactions contemplated hereby, including without
limitation, all fees of counsel, accountants and consultants provided that, if
any party breaches this Agreement any non-breaching party shall be entitled to
reimbursement from the breaching party of its reasonable attorneys' fees
incurred in connection with the enforcement of its rights hereunder (whether or
not judicial proceedings are instituted).
13.14. FURTHER ASSURANCES.
At any time on or after the Closing, the parties hereto shall
each perform such acts, execute and deliver such instruments, assignments,
endorsements and other documents and do all such other things consistent with
the terms of this Agreement as may be reasonably necessary to accomplish the
transactions contemplated in this Agreement or otherwise carry out the purpose
of this Agreement and the other Buyer Documents and Seller Documents.
(SIGNATURES APPEAR ON THE FOLLOWING PAGE)
25
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed on its behalf by its officer thereunto duly authorized,
all on or as of the day and year first above written.
PARENT
FDP BRAKES, INC. FRICTION DIVISION PRODUCTS, INC.
By: /s/ XXXX X. XXXXXX By: /s/ XXXX X. XXXXXX
------------------ ------------------
Name: Name: Xxxx X. Xxxxxx
Title: Title: President
W&W ELECTRONICS LIMITED
By: XXXX X. XXXXX
------------------
Name: Xxxx X. Xxxxx
Title: President
SELLER
U.S. AUTOMOTIVE MANUFACTURING, INC. US AUTOMOTIVE FRICTION, INC.
By: /s/ XXXXXX XXXXXXXXX By: /s/ XXXXXX XXXXXXXXX
-------------------- --------------------
Name: Name:
Title: President Title: President
QUALITY AUTOMOTIVE COMPANY
By: /s/ XXXXXX XXXXXXXXX
----------------------
Name:
Title: President
BUYER
FDP VIRGINIA, INC.
By: /s/ XXXX X. XXXXXX
------------------
Name: Xxxx X. Xxxxxx
Title: President
26
EXHIBIT A
KEY EMPLOYEES
Xxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx
Xxxxxxx Xxxxxx
A-1
EXHIBIT B
GENERAL XXXX OF SALE AND
ASSIGNMENT AGREEMENT
THIS GENERAL XXXX OF SALE AND ASSIGNMENT AGREEMENT is made as of
January 22, 2001, by and among FDP Virginia, Inc., a Delaware corporation
("Buyer"), U.S. Automotive Manufacturing, Inc., a Delaware corporation ("USAM"),
US Automotive Friction, Inc., a Delaware corporation ("USAF"), and Quality
Automotive Company, a Delaware corporation ("QAC" and collectively with USAM and
USAF, the "Seller").
W I T N E S S E T H
WHEREAS, pursuant to an Asset Sale and Purchase Agreement dated as of
January 22, 2001 (the "Purchase Agreement") by and among Buyer, Friction
Division Products, Inc., a New Jersey corporation ("FDP"), W&W Electronics
Limited, a company organized under the laws of Grenada (collectively with FDP,
"Parent") and Seller, the Seller desires to effectuate the sale, assignment,
transfer and delivery to Buyer of the Purchased Assets, other than Real Property
which is being assigned and transferred pursuant to a separate instrument, all
in accordance with and subject to the terms and conditions set forth in the
Purchase Agreement; and
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Purchase Agreement.
NOW THEREFORE, in consideration of the terms and conditions of the
Purchase Agreement and contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Subject to the terms of the Purchase Agreement, Seller hereby
grants, sells, conveys, assigns, transfers, conveys and delivers to Buyer
(and/or its successors and assigns) all of Seller's right, title and interest,
legal and equitable, in and to all of the Purchased Assets, wherever located, to
have and to hold the same, including the appurtenances thereof, unto Buyer
(and/or its successors and assigns) forever, to its and their own proper use and
behalf.
2. Seller hereby covenants and agrees that, at any time and from
time to time after the delivery of this instrument, at Buyer's request and at
the expense of Buyer, its successors and assigns will do, execute, perform,
acknowledge and deliver, or will cause to be done, executed, performed,
acknowledged and delivered, any and all such further acts, deeds and documents,
conveyances, transfers, assignments, powers of attorney and assurances, and
afford Buyer such assistance, as Buyer reasonably may require for the purpose of
vesting in the Buyer the full benefit of the Purchased Assets or to more
effectively grant, sell, convey, assign, transfer or deliver to Buyer any of the
Purchased Assets.
3. Nothing in this instrument, express or implied, is intended or
shall be construed to confer upon or give to any person, firm or corporation
other than Buyer or Seller, or their respective successors and assigns, any
remedy or claim under or by reason of this instrument or any term, covenant,
condition, promise or agreement hereof, and all of the terms, covenants,
conditions, promises
B-1
and agreements contained in this instrument shall be for the sole and exclusive
benefit of Buyer and Seller and their respective successors and assigns.
4. Neither the making nor the acceptance of this instrument shall
enlarge, restrict or otherwise modify the terms of the Purchase Agreement.
5. This instrument is being executed by Seller and shall be binding
upon Seller, its successors and assigns for the uses and purposes set forth and
referred to above, and shall be effective the date hereof. This instrument is
being executed by Buyer and shall be binding upon Buyer, its successors and
assigns for the uses and purposes set forth and referred to above, and shall be
effective the date hereof.
6. This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Pennsylvania in the United States of
America, without regard to its conflict of law rules.
7. This Agreement may be executed in any number of counterparts, and
each counterpart shall constitute an original instrument, but all such separate
counterparts shall constitute one and the same agreement.
(SIGNATURE PAGE FOLLOWS)
B-2
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed effective as of the date first above written.
BUYER
FDP Virginia, Inc.
By:
-----------------------------------
Name: Xxxx X. Xxxxxx
Title:
--------------------------------
SELLER
U.S. Automotive Manufacturing, Inc.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
US Automotive Friction, Inc.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Quality Automotive Company
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
B-3
EXHIBIT C
DECEMBER ADJUSTMENT SCHEDULES
1. $4,027,000 Accounts Receivable
2. $7,887,000 Inventory as of December 29, 2000.
C-1
EXHIBIT D
FORM OF CONFIDENTIALITY,
NON-COMPETITION AND NON-SOLICITATION AGREEMENT
In consideration of my new employment with FDP Virginia, Inc., a Delaware
Corporation (the "Company"), and intending to be legally bound, I agree as
follows:
1. CONFIDENTIALITY.
(a) "CONFIDENTIAL INFORMATION" means any and all data and information
relating to the Company's Business (as defined below), whether or not it
constitutes a trade secret, which is or has been disclosed to me or of which I
became aware as a consequence of my employment or relationship with the Company,
and which is not generally known by the public, including, but not limited to,
information acquired in the course of my employment that relates to the Company,
or its parent, subsidiaries or affiliates, including, but not limited to, trade
secrets, intellectual property, intellectual property rights, engineering and
technical data, technologies, equipment, processes, designs, drawings, research,
new product development plans, manufacturing and production schedules and plans,
customer lists, potential customer lists, supplier lists, employees and
personnel matters, business projections and plans, strategies, accounting or
market research studies or analyses, cost or pricing information, terms of
agreements and potential agreements with customers and suppliers, software
programs and codes, other intellectual property and any other financial or other
information of a confidential nature or which pertains to the Company's Business
or the business of its parent, subsidiaries or affiliates or any of its or their
employees, customers, suppliers, consultants, or licensees which otherwise could
reasonably be considered to be confidential.
(b) In consideration of my new employment with the Company, my being
offered access to said Confidential Information and trade secret information,
the Company's investment in me, and the other good and valuable consideration
set forth herein, I agree, during my employment and thereafter, not to (i) use
or exploit in any manner any Confidential Information for myself or for any
person or entity other than the Company, (ii) remove any Confidential
Information, or any reproduction thereof, from the possession or control of the
Company, (iii) disclose, divulge or publish the Confidential Information without
express written authorization of the Board of Directors of the Company (the
"BOARD") or (iv) treat Confidential Information otherwise than in a confidential
manner. I further agree that I shall take all reasonable precautions to prevent
myself and any of the Company's employees, representatives, associates or
agents, as is in my power and authority to do so, from disclosing or publishing
any Confidential Information to any person, partnership, association,
corporation, or other entity other than the Company.
2. RETURN OF COMPANY PROPERTY. I agree that upon the termination of my
employment with the Company for whatever reason or at any other time upon
request, I shall deliver to the Company, without retaining any copies, all
documents, papers, records, accords, notes, agenda, memoranda, plans,
information and other property of all and any description whatsoever relating to
the affairs of the Company.
3. NON-COMPETITION; NON-SOLICITATION. In consideration of my new employment
with the Company, my being offered access to said Confidential Information and
trade secret information, the Company's investment in me, and the other good and
valuable consideration set forth herein, I agree that during the period of my
employment with the Company and for a period of one (1) year thereafter, I shall
D-1
not directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, stockholder, consultant, investor or otherwise with, or use or
permit my name to be used in connection with, any person, business or enterprise
which directly engages in the business of manufacturing, assembly and
distribution of new and rebuilt automotive brake products (the "COMPANY'S
BUSINESS") which is now or hereafter located within Virginia, Maryland, the
District of Columbia or Pennsylvania; PROVIDED, HOWEVER, that nothing contained
in this Agreement shall prohibit such party from owning in the aggregate less
than one percent (1%) of the publicly traded stock of any company. I further
agree that during my employment with the Company and for a period of one (1)
year after the termination of my employment for whatever reason, I shall not:
(a) directly or indirectly solicit, entice or induce any Customer (as
defined below) to become a customer of any other person, firm or corporation
with respect to the Company's Business or to cease doing business with the
Company or its parent, subsidiaries or affiliates, absent prior written consent
of the Board, and I shall not approach any such person, firm or corporation for
such purpose or authorize or knowingly approve, encourage or assist the taking
of such actions by any other person, firm or corporation; or
(b) directly or indirectly solicit, recruit or hire any part-time or
full-time employee, representative or consultant of the Company or its parent,
subsidiaries or affiliates to work for a third party other than the Company or
its parent, subsidiaries or affiliates or engage in any activity that would
cause any employee, representative or consultant to violate any agreement with
the Company or its parent, subsidiaries or affiliates.
For purposes of this Agreement, "CUSTOMER" means any person or entity which at
the time of my termination of employment for whatever reason shall be, or shall
have been within two (2) years prior to such time, an existing customer of the
Company or its parent, subsidiaries or affiliates.
4. ENFORCEMENT.
(a) I acknowledge and agree that the scope, duration and geographic
coverage of restrictions imposed in this Agreement are fair and reasonable, and
that such restrictions are intended solely to protect the legitimate interests
of the Company, rather than to prevent me from earning a livelihood. I recognize
that the Company competes throughout Virginia, Maryland, the District of
Columbia and Pennsylvania, and that my access to Confidential Information makes
it necessary for the Company to restrict my post-employment activities in the
market in which the Company competes, and in which my access to Confidential
Information and other proprietary information could be used to the detriment of
the Company. I further acknowledge and agree that the Company will be making a
substantial investment in me and that the Company may need time to recruit,
hire, train and/or establish any successor to my responsibilities in order to
ensure that it is not subjected to an unfair competitive disadvantage. In the
event that any of the restrictions, or any part thereof, in this Agreement is
determined to be unenforceable because of the scope, duration or geographic
coverage, I agree that a court or the Company shall have the power to modify the
restriction(s) or any part thereof, so as to preserve and protect the legitimate
interests of the Company as described in this Agreement, and without negating or
impairing any other restrictions or agreements set forth herein, and that, in
its reduced form, such restriction(s) shall then be enforceable and shall be
enforced.
D-2
(b) I acknowledge and agree that if I should breach any of the covenants,
restrictions and agreements contained herein, irreparable loss and injury would
result to the Company, and that damages arising out of such a breach may be
difficult or impossible to ascertain, and which cannot be reasonably or
adequately compensated in an action at law. I therefore agree that, in addition
to all other remedies provided at law or at equity, the Company shall be
entitled as a matter of right to petition for and obtain injunctive relief,
including but not limited to, temporary restraining order, preliminary
injunction, permanent injunction, or other interim or conservatory relief, with
regard to any threatened or actual breach or violation by me of any covenant
contained in this Agreement. The remedies granted to the Company in this
Agreement are cumulative and are in addition to remedies otherwise available to
the Company at law or in equity. If the Company resorts to the courts for the
enforcement of a covenant contained in this Agreement, such covenant shall be
extended for a period of time equal to the period of such breach, which extended
period shall commence on the later to occur of (i) the date on which the
original (unextended) term of such covenant is scheduled to terminate or (ii)
the date of the final court order (without further right of appeal) enforcing
such covenant. I shall not seek, and I hereby waive any requirement for, the
securing of a bond or proving actual damages in connection with the Company's or
its parent, subsidiaries or affiliates, successors or assigns' seeking or
obtaining any injunctive or equitable relief in connection with these covenants
or any other obligations under this Agreement. If, despite the foregoing
waivers, a court would nonetheless require posting of a bond, the parties agree
that a $1,000 bond would be a fair and reasonable amount, particularly in light
of the difficulty in quantifying the actual loss caused by an injunction.
5. SEVERABILITY. I agree that each covenant, paragraph and division of this
Agreement is intended to be severable and distinct, and that if any covenant,
paragraph, subparagraph, provision or term of this Agreement is deemed to be
unlawful or unenforceable, such a determination shall not impair the legitimacy
or enforceability of any other provision in this Agreement.
6. NO WAIVER. I agree that if the Company delays or fails to take action to
remedy any threatened or actual breach by me of this Agreement or any portion
thereof, such delay or inaction by the Company shall not operate or be construed
as a waiver of any subsequent threatened or actual breach by me of the same or
any other provision, agreement or covenant.
7. ASSIGNMENT. I agree that the Company may assign this Agreement to any of
its successors by merger, acquisition or otherwise, and that this Agreement
shall inure to the benefit of any such successor.
8. NO CONFLICTING OBLIGATIONS. I represent that I am not a party to any
existing agreement which would prevent me from entering into and performing this
Agreement, and I shall not enter into any other agreement that is in conflict
with my obligations under this Agreement.
9. CHOICE OF LAW. This Agreement shall be deemed to made in, and in all
respects shall be interpreted, construed and governed by and in accordance with
the laws of the Commonwealth of Virginia, without giving effect to any conflicts
of law.
----------------- ----------------------
Witness NAME
----------------- FDP VIRGINIA, INC.
Witness
D-3
By:
---------------------------------
Title:
------------------------------
D-4
