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EXHIBIT 10.30
ASSET PURCHASE AGREEMENT
BY and BETWEEN
XXXXX MATERIAL HANDLING COMPANY
as Buyer
AND
SAMSUNG HEAVY INDUSTRIES CO., LTD.
as Seller
Dated as of June 5, 1998
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TABLE OF CONTENTS
PAGE
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ASSET PURCHASE AGREEMENT................................................ 1
Background.............................................................. 1
Terms................................................................... 1
ARTICLE I THE TRANSACTION.............................................. 1
1.1. Sale and Purchase of Assets........................... 1
1.2. Excluded Assets....................................... 3
1.3. Purchase Price........................................ 4
1.4. Payment of Purchase Price............................. 5
1.5. Allocation of Purchase Price.......................... 6
1.6. Adjustments to Purchase Price......................... 7
1.7. Assumption of Liabilities............................. 8
1.8. Conditions to Each Party's Obligations................ 11
1.9. Conditions to Seller's Obligations.................... 12
1.10. Conditions to Buyer's Obligations..................... 12
1.11. Closing............................................... 13
1.12. Deliveries and Proceedings at Closing................. 14
1.13. Covenants of Seller................................... 15
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER..................... 16
2.1. Organization.......................................... 16
2.2. Authorization and Enforceability...................... 16
2.3. No Violation of Laws or Agreements.................... 16
2.4. Financial Statements.................................. 17
2.5. Undisclosed Liabilities............................... 17
2.6. No Changes............................................ 17
2.7. Taxes................................................. 20
2.8. Inventory............................................. 21
2.9. No Pending Litigation or Proceedings.................. 21
2.10. Contracts; Compliance................................. 21
2.11. Compliance with Laws.................................. 23
2.12. Environmental Matters................................. 23
2.13. Consents.............................................. 27
2.14. Personal Property..................................... 27
2.15. Real Estate........................................... 27
2.16. Transactions with Affiliates.......................... 29
2.17. Condition of Assets................................... 30
2.18. Compensation Arrangements; Officers and Directors..... 30
2.19. Labor Relations....................................... 30
2.20. Products Liability.................................... 31
2.21. Insurance............................................. 31
2.22. Patents and Intellectual Property Rights.............. 32
2.23. Brokerage............................................. 33
2.24. Disclosure............................................ 33
2.25. Mitigation............................................ 33
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER........................ 34
3.1. Organization and Good Standing ................................ 34
3.2. Corporate Power and Authority ................................. 34
3.3. Due Authorization.............................................. 34
3.4. Brokerage...................................................... 34
3.5. No Breaches.................................................... 34
3.6. Disclosure..................................................... 34
3.7. Litigation..................................................... 35
3.8. Mitigation..................................................... 35
ARTICLE IV CERTAIN ADDITIONAL COVENANTS.................................... 35
4.1. Costs, Expenses and Taxes...................................... 35
4.2. Employees of the Business...................................... 35
4.3. Settlement of Boundary Dispute................................. 37
4.4. Indemnification................................................ 37
4.5. Confidentiality and Non-Competition............................ 41
4.6. Access to Information.......................................... 42
4.7. Cooperation.................................................... 43
4.8. Use of Samsung Name............................................ 43
4.9. Transition Services............................................ 43
4.10. Change of Factory Site and Removal of Asbestos................. 44
4.11. Purchase of Forklifts by Seller................................ 45
4.12. Property Taxes................................................. 45
ARTICLE VII MISCELLANEOUS.................................................. 45
5.1. Further Assurances; Cooperation................................ 45
5.2. Nature and Survival of Representations......................... 46
5.3. Notices........................................................ 46
5.4. Successors and Assigns......................................... 46
5.5. Governing Law.................................................. 47
5.6. Headings....................................................... 47
5.7. Amendment and Waiver........................................... 47
5.8. Entire Agreement............................................... 47
5.9. Counterparts................................................... 47
5.10. Governing Language............................................. 47
5.11. Arbitration.................................................... 48
5.12. Termination.................................................... 48
5.13. Willful Failure to Close....................................... 49
5.14. Enforcement and Damages........................................ 49
5.15. Severability................................................... 49
5.16. Construction................................................... 49
LIST OF SCHEDULES AND EXHIBITS............................................. 51
ANNEX A DEFINITIONS........................................................ 53
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ASSET PURCHASE AGREEMENT
This is an ASSET PURCHASE AGREEMENT (the "Agreement"), dated June 5, 1998
by and between XXXXX Material Handling Company, a corporation organized under
the laws of the State of Delaware of the United States, ("Buyer") and Samsung
Heavy Industries Co., Ltd., a corporation organized under the laws of the
Republic of Korea ("Seller"). Buyer and Seller shall sometimes each be referred
to as a Party and collectively as the Parties.
Background
Seller is engaged in the worldwide business of developing, manufacturing,
distributing, marketing and selling forklifts and components and parts related
thereto, including without limitation uprights, axles and transaxles, and
transmissions (the "Business"). The real property and a large portion of the
tangible assets currently used by the Business are located at 0, Xxxxxxx-xxxx,
Xxxxxxxx Xxxx, Xxxxxxxx Province (the "Old Factory"). Seller desires to sell and
transfer to Buyer and Buyer desires to purchase from Seller substantially all
the assets of Seller used or associated with the Business with the exception of
the real estate of the Old Factory which will not be transferred to Buyer. Buyer
will, however, purchase from Seller the factory located at 00-0 Xxxxxx-xxxx,
Xxxxxxxx, Xxxxxxxx Province (the "New Factory"). The transactions described
herein shall take place upon the terms and subject to the conditions set forth
in this Agreement.
Terms
In consideration of the mutual covenants contained herein and with the
intention to be legally bound hereby, the Parties agree as follows:
ARTICLE I
THE TRANSACTION
1.1. Sale and Purchase of Assets. Subject to the terms and conditions
hereof, at the Closing referred to in Section 1.8 below, Seller will sell,
transfer, convey and assign to Buyer, free and clear of all Liens of every kind,
nature and description, except for the Excluded Assets (as defined in Section
1.2) or as otherwise disclosed and agreed in this Agreement, and Buyer will
purchase from Seller, all of the assets as listed on Schedule 1.1 (the "Asset
List") and any other assets that are being used for or are substantially related
to the
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Business including, without limitation, Seller's properties and business as a
going concern and good will and assets existing on the date of Closing,
wherever such assets are located and whether real, personal or mixed, tangible
or intangible, and whether or not any of such assets have any value for
accounting purposes or are carried or reflected on or specifically referred to
in its books or financial statements and Buyer shall also purchase from Seller
the New Factory (collectively, the "Purchased Assets"). The Purchased Assets
shall include, without limitation, all of Seller's right, title and interest in
and to the following, as the same may exist on the Closing Date:
(a) subject to Section 1.2(a), all the real property of the New Factory,
together with the buildings, fixtures, structures and other improvements erected
thereon, and together with all easements, rights and privileges appurtenant
thereto, as more particularly described on the Asset List;
(b) all of Seller's machinery, equipment, tooling, dies, jigs, vehicles,
spare parts and supplies being used for or substantially related to the
Business, including without limitation the items listed on the Asset List;
(c) all of Seller's raw materials, work in progress, parts,
subassemblies, finished goods and other inventories being used for or
substantially related to the Business, wherever located and whether or not
obsolete or carried on Seller's books of account;
(d) all of Seller's other tangible assets being used for or
substantially related to the Business, including office furniture, office
equipment and supplies, computer hardware and software and vehicles;
(e) all of the intellectual property being used for or substantially
related to the Business including, without limitation, trade secrets, patents,
know-how, copyrights and other proprietary processes and all licenses,
sublicenses and other rights relating thereto and all of the trademarks that are
being used for or substantially related to the Business as listed on Schedule
1.1(e);
(f) all of Seller's trade and other notes and accounts receivable of
the Business;
(g) all of Seller's CAD workstations and related software and software
licenses being used for or substantially related to the Business including,
without limitation, CATIA, CADAM and Pro-Engineer, and all of Seller's software
application systems that are being used for or are substantially related to
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the Business and all of Seller's software currently shared between Seller's
construction equipment business and the Business;
(h) all of Seller's books, records, manuals, documents, books of account,
correspondence, sales and credit reports, customer lists, literature,
brochures, advertising material and the like that are used for or are
substantially related to the Business;
(i) all of Seller's rights under leases for personal property used for or
substantially related to the Business, and all of the Seller's rights under
all other contracts, agreements and purchase and sale orders (the "Assigned
Contracts"), as described in Schedule 1.1 hereto;
(j) all of Seller's claims, choses in action, causes of action and
judgments that arose from or are substantially related to the Business;
(k) all transferable or assignable registrations, licenses, permits,
approvals, certificates of occupancy and operating rights held in connection
with the Purchased Assets.
1.2. Excluded Assets. Notwithstanding any other provision of this
Agreement, Seller shall retain all property of any nature, kind and description
other than the Purchased Assets and for the avoidance of doubt the Purchased
Assets shall not include the following assets of the Business (collectively, the
"Excluded Assets"):
(a) all of the Seller's cash, cash in banks, certificates of deposit, cash
equivalents, bank and mutual fund accounts, deposits, securities and bonds and
other similar investments, deferred charges, and other cash equivalents on hand
or on deposit in any financial institution on the Closing Date;
(b) all consideration received by and the rights of the Seller under or
pursuant to this Agreement or any agreement, instrument or document ancillary
hereto;
(c) all notes and receivables owing to Seller on the Closing Date (i) from
any Affiliate of Seller and (ii) that are not of or substantially related to the
Business.
(d) the corporate records of the Seller including, without limitation, its
minute books, articles of incorporation, bylaws, minutes of proceedings, stock
transfer ledger and corporate seal;
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(e) all of Seller's privileged communications;
(f) payments from insurance companies pertaining to claims filed by
Seller prior to the Closing Date and only to the extent relating to any
liability or obligation included within the Excluded Liabilities (as defined in
Section 1.7(b)); and
(g) all assets, properties and rights described in Schedule 1.2(g)
hereto.
1.3. Purchase Price.
(a) The total aggregate purchase price for the Purchased Assets
exclusive of VAT shall be 43.86 billion won (the "Purchase Price") plus the
Assumed Liabilities as set forth in Section 1.7 of this Agreement. The Purchase
Price shall be subject to adjustment as provided in Sections 1.3(b) and (c)
below and in Section 1.6.
(b) If the value of the Korean Won as compared to the US Dollar
varies more than five percent (5%) from the rate of 1601 Korean Won to the US
dollar (the "Base Rate") on the Closing Date, then an adjustment shall be made
to the Purchase Price at Closing so that any exchange fluctuation is shared
equally between the Parties. To determine whether such variance exists, the
Base Rate shall be compared to the average of the basic exchange rate published
by the Korean Financial Telecommunications and Clearing Institute for the three
business days prior to the Closing Date (the "Average Pre-Closing Rate").
(c) Prior to the Closing Date, the Purchase Price shall be adjusted
such that:
(i) any assets on Schedule 1.1 that Xxxxx chooses not to
purchase or is unable to purchase, including but not limited to certain tooling
and fixtures related to the TA40 transaxle line, shall be deducted from the
purchase price except for (1) the 17 forklifts that have already been sold by
Seller which shall not be deducted from the Purchase Price either prior to or
after the Closing and (2) the building (that formerly contained a boiler) that
has been removed from the New Factory Site and which Seller at its own expense
shall rebuild or restore to its original condition to Buyer's reasonable
satisfaction prior to the Closing Date, provided that, if Seller fails to
rebuild or restore such building to Buyer's reasonable satisfaction, Buyer shall
deduct from the Purchase Price the sum of 140 million won, or if Seller has
commenced, but not completed to Buyer's reasonable satisfaction, the rebuilding
or restoration of such building, the portion of the 140 million that in Buyer's
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reasonable judgment is necessary to rebuild or restore such building to its
original condition;
(ii) any assets that are not substantially related to the
forklift business that Buyer does purchase are added to the Purchase Price; and
(iii) one half of the book value of the CAD and CATIA hardware
and software systems shall be added to the Purchase Price.
(d) One day prior to the last day that Seller is obligated to remit
the VAT related to the Purchase Price to the relevant tax authorities, Buyer
shall pay to Seller an amount of money necessary to cover Seller's obligation
to pay the VAT (the "VAT Price"), provided however, that if the tax authorities
deny Buyer's ability to obtain a refund or credit of the VAT Price due to a
characterization of the transactions contemplated herein which is different
then the Parties' characterization, then Seller shall reimburse Buyer the full
amount of the VAT Price within fifteen (15) days of receiving from Buyer a
written confirmation issued by the tax authorities indicating or showing that
the refund or credit of the VAT Price has been denied due to the reasons
described in this sentence (the "VAT Notice"), provided however, that Buyer
shall deliver the VAT Notice to Seller within the statutory period in which
Seller may appeal to the tax office for a refund of the VAT and so as not to
jeopardize Seller's ability to obtain a refund of the VAT. If the refund or
credit of the VAT Price is not granted to Buyer within the statutorily
prescribed period for any reason other than that described in the previous
sentence, Seller shall not be obligated to reimburse Buyer for the VAT Price.
1.4. Payment of Purchase Price. The Purchase Price shall be paid by Buyer
to Seller as follows:
(a) By Buyer's delivery of 43.86 billion won minus the Withheld
Amount (as defined below) in cash by wire transfer or bank check at Closing
made immediately available and in accordance with the instructions of Seller;
(b) By Buyer's assumption at Closing of Seller's liabilities as
required by Section 1.7.
(c) Buyer shall withhold the amount of 10 billion won, subject to
adjustment under Section 1.6(b)(ii), (the "Withheld Amount"), by placing
such amount in a bank account in Buyer's name at Citibank in Korea or another
bank in Korea as mutually agreed upon by the Parties ("the Withhold Account").
The interest, after deduction of taxes and banking charges, earned on
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the Withheld Amount shall be shared equally by the Parties, and Buyer shall pay
or cause to be paid Seller's portion of the interest to Seller on a monthly
basis, and may withdraw or otherwise use its own portion of the interest at any
time and in any manner it sees fit. Buyer shall retain for its own account or
pay the Withheld Amount to Seller in accordance with the following principles:
(i) On the date when Buyer has collected the total amount of
outstanding receivables as of the Closing Date (the "Pre-Closing Receivables")
less the Withheld Amount or beginning on the date 12 months from the Closing
Date, whichever is earlier, (the "Initial Collection Period"), Buyer shall
continue to collect the Pre-Closing Receivables for an additional six (6) month
period (the "Additional Collection Period").
(ii) At the conclusion of the Additional Collection Period,
Buyer shall retain for its own account an amount of the Withheld Amount equal to
the then remaining Pre-Closing Receivables (although in no case greater than the
amount in the Withhold Account) and Buyer shall pay the remainder of the
Withheld Amount to Seller. At this time, Buyer shall also transfer to Seller all
of the remaining Pre-Closing Receivables (including any of the Pre-Closing
Receivables then in litigation) along with any related security interests to
Seller.
(iii) Buyer agrees that Seller may dispatch two (2) of its
employees to assist Buyer's activities in collecting the Pre-Closing Receivables
during the Initial Collection Period and the Additional Collection Period.
(iv) In the event that Buyer withdraws the principal from the
Withheld Amount prior to the conclusion of the Additional Collection Period and
without Seller's prior written consent, Buyer shall be liable to Seller for
liquidated damages in the amount of ten-percent (10%) of the amount of the
principal withdrawn in addition to any other damages that it might be liable for
under applicable law.
(d) Any amounts owing to Buyer or Seller pursuant to Section 1.6 as a
result of an adjustment to the Purchase Price shall be paid by Seller or Buyer
to the other in cash or by bank check within 10 days after the amount is finally
determined pursuant to Section 1.6.
1.5. Allocation of Purchase Price. Buyer and Seller agree that the Purchase
Price shall be allocated among the Purchased Assets in accordance with the
principles of allocation set forth in Schedule 1.5 hereto. Buyer and Seller
shall jointly prepare a definitive allocation of the Purchase Price within 90
days
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following the Closing Date. Buyer and Seller agree that each will report all tax
consequences of the purchase and sale contemplated hereby in a manner consistent
with such allocation.
1.6. Adjustments to Purchase Price.
(a) Post-Closing Balance Sheet Adjustment.
(i) Within 90 days of the Closing Date, Buyer shall prepare
the list of assets and liabilities relating to the Business and shall, at its
expense, prepare and deliver to Seller a statement of the Net Asset Value of the
Business, as of the Closing Date (the "Closing Statement"), as calculated by
independent certified public accountants chosen by Buyer. The Closing Statement
shall be prepared according to Korean Generally Accepted Accounting Principles
("Korean GAAP"), subject to the principles and restrictions of item "2" of
Schedule 1.6.
(ii) Seller shall fully cooperate with Buyer in Buyer's
preparation of the list of assets and liabilities as mentioned in Section
1.6(a)(i) above, and each Party shall fully cooperate with the other Party in
the other Party's preparation of its tax returns for the relevant tax year or
years.
(iii) In the event that Seller disagrees with the Closing
Statement, Seller shall hire an independent certified public accountant at its
own expense, which shall prepare Seller's proposed adjustments to the Closing
Statement within 45 days of Seller's receipt of the Closing Statement using
Korean GAAP. Any dispute (and only those items in dispute) concerning the
Closing Statement which cannot be resolved by the Parties and their respective
independent certified public accountants within 30 days of Buyer's receipt of
Seller's proposed adjustments to the Closing Statement will be submitted no
later than 45 days after such receipt to [ ], or such other
independent accounting firm mutually selected by Buyer and Seller, and the
determination of such firm shall be final and binding on the Parties. All
Parties hereto represent that they have not had a business relationship with
[ ] during the five year period preceding the date of this
Agreement and that they shall not establish such a business relationship between
the date of this Agreement and the final determination of the Closing Statement
pursuant to this Section 1.6(a). The fees and expenses of such third independent
accounting firm shall be borne equally by the Parties.
(b) Adjustment Formula.
(i) If the Net Asset Value (as hereinafter defined) at Closing
as reflected on the Closing Statement is more
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than 58,712 million won (the Net Asset Value as of December 31, 1997 as shown
in Item "1" of Schedule 1.6), then the Purchase Price shall be increased by the
amount of such excess and Buyer shall pay Seller such amount by certified or
bank check. If such Net Asset Value is less than 58,712 million won at Closing,
the Purchase Price shall be reduced by the amount of such deficiency and Seller
shall pay Buyer such amount by certified or bank check. Buyer or Seller, as the
case may be, shall make any payment required as a result of an adjustment to
the Purchase Price pursuant to this Section within 10 days after the amount of
such payment has been finally determined in accordance with Section 1.6(a). As
used herein, "Net Asset Value" shall mean the value of the Purchased Assets
less the Assumed Liabilities where the value of the Purchased Assets and
Assumed Liabilities are calculated in accordance with Korean GAAP, subject to
the principles and restrictions of item "2" of Schedule 1.6.
(ii) With respect to the Withheld Amount, if the amount of
Pre-Closing Receivables is greater than 31,968 million won, then an amount equal
to thirty-two percent (32%) of the increase from 31,968 million won shall be
paid by Seller into the Withhold Account within ten (10) days after the amount
of such increase shall have been determined, provided that, in no case shall
Seller pay more than three (3) billion won into the Withhold Account as a result
of the adjustments contemplated herein. If the amount of Pre-Closing Receivables
is less than 31,968 million won, then an amount equal to thirty-two percent
(32%) of the decrease from 31,968 million won shall be removed from the Withhold
Account by Buyer and paid to Seller within ten (10) days after the amount of
such decrease shall have been determined, provided that, in no case shall Buyer
remove from the Withhold Account and pay to Seller more than three (3) billion
won from the Withheld Amount as a result of the adjustments contemplated herein.
1.7 Assumption of Liabilities.
(a) Assumed Obligations. At the Closing, Buyer shall assume
and agree to perform, pay or discharge, when due, to the extent not theretofore
performed, paid or discharged, and Seller shall be released from all
obligations related to all of (i) Seller's obligations and liabilities under
the Assigned Contracts arising on or after the Closing Date; (ii) all
liabilities and obligations of Seller (including the obligations to make
payments) first arising after the Closing Date under all licenses, permits,
approvals, certificates of occupancy and operating rights held in connection
with the Purchased Assets to the extent such licenses, permits, approvals,
certificates of occupancy and operating rights are included in the Purchased
Assets; (iii) any claims relating to the condition or operation
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of any work in process or other inventories that are a part of the Purchased
Assets; (iv) unfilled sales orders for products or services sold or committed,
but not delivered by Seller as of the Closing Date, to the extent that such
unfilled sales orders are included within the Purchased Assets; (v) liabilities
for materials which have been ordered but have not been delivered to and paid
for by Seller as of the Closing Date, to the extent that such materials have
been ordered in the ordinary course of business and are of a type that would be
included in the Purchased Assets had they been delivered to Seller prior to the
Closing Date; and (vi) the liabilities listed on Schedule 1.7(a). The
obligations and liabilities to be assumed by Buyer pursuant to this Section are
hereinafter sometimes referred to as the "Assumed Liabilities." Except with
respect to the Assumed Liabilities, Buyer does not hereby and shall not assume
or in any way undertake to pay, perform, satisfy or discharge any liabilities
or obligations of Seller, and Seller agrees to pay and satisfy when due any
such liabilities and obligations not assumed by Buyer including the Excluded
Liabilities (as hereinafter defined).
(b) Excluded Liabilities. Except as expressly provided in
Section 1.7(a), Seller shall retain and Buyer shall not assume or be liable for
any liabilities and obligations of Seller, including without limitation the
following; (the "Excluded Liabilities"):
(i) any liabilities or obligations of Seller,
contingent or otherwise, for any indebtedness of Seller;
(ii) the liabilities or obligations of Seller to its
stockholders respecting dividends, distributions to its stockholders in
liquidation, redemptions of stock, or otherwise;
(iii) liabilities or obligations of Seller arising
out of any transactions occurring, or obligations incurred, after the Closing;
(iv) any obligations of Seller for expenses, taxes
or fees but only to the extent levied to Seller or deemed to be borne by Seller
under relevant laws and regulations incident to or arising out of the
negotiation, preparation, approval or authorization of this Agreement or the
consummation of the transactions contemplated hereby, including, without
limitation, all attorneys' and accountants' fees and all brokers' or finder's
fees or commissions payable by Seller;
(v) any obligation of Seller under or arising out
of this Agreement;
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(vi) liabilities to the extent that the Seller is
insured or otherwise indemnified or which would have been covered by insurance
(or indemnification) but for a claim by the insurer (or the indemnitor) that
the insured (or the indemnitees) had breached its obligations under the policy
of insurance (or the contract of indemnity) or had committed fraud in the
insurance application;
(vii) any liability or obligation of Seller to any
Affiliate unless otherwise provided for in this Agreement;
(viii) subject to the terms and conditions provided in
this Agreement, any liabilities or obligations, the existence of which
constitute a breach of the representations, warranties or covenants of Seller
contained in this Agreement;
(ix) subject to the terms and conditions provided in
this Agreement, any obligations or liabilities of Seller to indemnify its
officers, directors employees or agents;
(x) any liability or obligation in respect of the
Excluded Assets;
(xi) all taxes imposed on Seller, including (i) any
tax of any other corporation which tax is assessed against Seller by virtue of
its status, prior to the Closing Date, as a member of any consolidated group of
which such other corporation was also a member and (ii) any taxes imposed as a
result of the consummation of the transaction under this Agreement;
(xii) subject to the terms and conditions provided in
this Agreement, any Environmental Liabilities;
(xiii) except for the Assumed Liabilities, any
obligation or liability arising under any contract, instrument or agreement (1)
that is not transferred to Buyer as part of the Purchased Assets, or (2) that
is not transferred to Buyer because of Seller's failure or inability to obtain
any third party consent required for the transfer or assignment of such
contract or agreement to Buyer, or (3) that relates to any breach or default
(or an event which might, with the passing of time or the giving of notice, or
both, constitute a default) under any contract, instrument or agreement or to
any services to be provided by Seller under any such contract, instrument or
agreement arising out of or relating to periods on or prior to the Closing
Date, or (4) for which Seller received payment prior to the Closing;
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(xiv) any existing or future liabilities to financial
institutions, such as banks, installment financing companies and leasing
companies including but not limited to any existing or future liabilities to
Yonhap Machinery Installment Financing Company and Jeil-Citi Leasing Company,
relating to the sale of Seller's forklifts and/or related parts and components
before the Closing, including but not limited to obligations to reimburse the
amount financed by Seller's customer from the financial institutions,
obligations to provide assistance in relation to collection by the financial
institutions and obligations to pay rent, installment payments or purchase
prices to the relevant financial institution on behalf of the customer in
default; and
(xv) any other liability or obligation of Seller or
its Affiliates including any liability or obligation directly or indirectly
arising out of or relating to the operation of the Business or ownership of the
Purchased Assets on or prior to the Closing Date, whether contingent or
otherwise, fixed or absolute, known or unknown, matured or unmatured, present,
future or otherwise, except for the Assumed Liabilities.
1.8. Conditions to Each Party's Obligations. The obligations of both
Buyer and Seller to consummate the transactions contemplated hereby are subject
to the fulfillment of each of the following conditions on or before the Closing
Date.
(a) No provisions of any applicable law or regulation, and
no judgment, injunction, order or decree shall (i) prohibit the consummation of
the Closing or (ii) restrain, prohibit or otherwise interfere with the
effective operation or enjoyment by Buyer of all or any material portion of the
Purchased Assets or the Business.
(b) Buyer and Seller shall have each received all material
consents, authorizations or approvals from their boards of directors,
governmental agencies and third parties that are a pre-requisite to the Closing
as a matter of law, in form and substance satisfactory to the other Party, and
no such consent, authorization or approval shall have been revoked.
Buyer and Seller agree that in the event that the conditions set forth
in Sections 1.8(a) and (b) herein are not satisfied on or before the Closing
Date, the conditions may be satisfied on or before December 31, 1998, or a
later date mutually agreed in writing between the Parties, in which case the
Parties must comply with their respective obligations to consummate the
transactions as provided in this Agreement.
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1.9 Conditions to Seller's Obligations. The obligations of Seller
to consummate the transaction contemplated hereby are subject to fulfillment of
all of the following conditions on or prior to the Closing Date.
(a) Each and every material representation and warranty
made by Buyer contained in this Agreement shall have been true in all material
respects as of the date when made and shall be true in all material respects at
and as of the Closing Date as if originally made on and as of the Closing Date.
(b) All obligations of Buyer to be performed on or before
the Closing Date shall have been performed in all material respects.
(c) No action shall be threatened or pending before any
court or governmental agency the probable outcome of which would result in the
restraint or prohibition of the consummation of the transactions contemplated
hereby.
1.10 Conditions to Buyer's Obligations. The obligations of Buyer to
consummate the transactions contemplated hereby are subject to the fulfillment
of all of the following conditions on or prior to the Closing Date.
(a) Each and every representation and warranty made by
Seller contained in this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto shall be true in all material respects as
of the date when made and shall be true in all material respects at and as of
the Closing Date as if originally made on and as of the Closing Date.
(b) Seller shall use its best efforts to effectively assign
or if necessary to enter into new contracts and to effectively assign such new
contracts to Buyer (including using its best efforts to obtain all necessary
consents) all of the raw materials vendor contracts (both domestic and
foreign), supply contracts (including all domestic and foreign contracts with
dealers and agents) and technology license contracts, technology assistance
contracts and all similar agreements as listed on Schedule 1.10, provided,
however, that if, in spite of its best efforts, Seller is unable to effectively
assign one or more of the contracts listed on Schedule 1.10 prior to the
Closing, Buyer may waive, at its sole discretion, the assignment of that or
those contracts as a Closing condition. For each contract assigned under this
provision, Seller shall deliver to Buyer at the Closing an assignment agreement
in the form attached herein as Exhibit 1.10. In order to provide Buyer the full
realization and value of every contract listed on Schedule 1.10, Seller agrees
that on and before the Closing, it will, at the
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request and under the direction of Buyer, in the name of Seller or otherwise as
Buyer shall specify take all reasonable action (including without limitation
the appointment of Buyer as attorney-in-fact for Seller) and do or cause to be
done all such things as shall in the reasonable opinion of Buyer be necessary
or proper (a) to assure that the rights of Seller under such contracts,
agreements, permits, franchises, and claims shall be preserved for the benefit
of Buyer and (b) to facilitate receipt of the consideration to be received by
Seller in and under every such contract, agreement, permit, franchise, and
claim, which consideration shall be held for the benefit of, and shall be
delivered to, Buyer. Nothing in this Section shall in any way diminish Seller's
obligations hereunder to use its best efforts to obtain all consents and
approvals and to take all such other actions prior to or at Closing as are
necessary to enable Seller to convey or assign valid title to all the Purchased
Assets to Buyer. The foregoing shall not mean, in any case, that Seller shall
bear any unreasonable out of pocket expenses or costs for such reasonable
action provided for above except such expenses for employment of personnel
currently in charge of such matters.
(c) All obligations of Seller to be performed hereunder on
or before the Closing Date shall have been performed in all material respects.
(d) No action shall be threatened or pending before any
court or governmental agency the probable outcome of which would result in (i)
the restraint or prohibition of the consummation of the transactions
contemplated hereby or (ii) the restraint or prohibition of, or interference
with, the effective operation of enjoyment by Buyer of all or any material
portion of the Assets or the Business.
(e) Between the date hereof and the Closing Date, there
shall have been no material adverse change in the Business or the Purchased
Assets.
(f) The transactions contemplated hereby shall have been
approved by the Board of Directors of Seller and the Board of Directors of
Buyer.
1.11 Closing. The closing under this Agreement will take place at
10:00 A.M., Seoul time, on June 30, 1998, or within seven (7) days after the
receipt of all government approvals necessary to implement this transaction,
whichever is later (the "Closing"), at the Shilla Hotel, Seoul, Korea, or at
such other time, date or place as the Parties shall mutually agree. The date on
which Closing occurs is sometimes referred to herein as the "Closing Date."
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1.12. Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries by Seller. Seller will deliver or cause to be
delivered to Buyer:
(i) assignments of all transferable or assignable
licenses, permits and warranties relating to the Purchased Assets or the
Business and of any trademarks, trade names, patents, know-how, patent
applications and the like, duly executed and in recordable form, subject to
Section 1.10 hereof;
(ii) title certificates to the real property and any
motor vehicles included in the Purchased Assets duly executed by the Seller
(together with any other transfer forms or other documents necessary to
effectively transfer any of the tangible Purchased Assets to Buyer including
the real property and the vehicles);
(iii) executed Assignment Agreements in the form of
Exhibit 1.10 for all of the contracts listed on Schedule 1.10, unless with
respect to any individual contract, Buyer has waived such condition;
(iv) powers of attorney to Buyer to endorse all checks
and notes made payable to Seller relating to the trade and other notes and
accounts receivable of Seller that are included in the Purchased Assets;
(v) all the books of account, ledgers, payroll
records, inventory and asset records and other books and documents which are
used for or are substantially related to the Business (other than minute books
relating to directors' and shareholders' meetings and statutory books) in
whatever form and upon whatever media they may be recorded;
(vi) copies of the employment contracts for all of the
Transferred Employees;
(vii) a certified copy of a resolution of the Seller's
board of directors approving the sale of the Purchased Assets and the Business
on the terms of this Agreement and authorizing any one its officers to execute
this Agreement for and on behalf of the Seller; and
(viii) such other instruments of conveyance as shall be
necessary to vest in Buyer good, valid and marketable title to the Purchased
Assets.
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(b) Deliveries by Buyer. At the Closing, Buyer will deliver to
Seller:
(i) the Purchase Price; and
(ii) a certified copy of a resolution of Buyer's board
of directors approving the purchase of the Purchased Assets and Business on the
terms of this Agreement and authorizing any one of its directors or officers to
execute this Agreement for and on behalf of the Seller.
(c) Other Deliveries. Any other documents required to be
delivered pursuant to this Agreement will be exchanged.
1.13. Covenants of Seller. From and after the date hereof and
until the Closing Date, Sellers hereby covenant and agree that:
(a) Business in Ordinary Course. Seller will carry on the
Business in the ordinary and normal course in substantially the same manner as
heretofore, except as otherwise expressly provided herein, and shall notify
Buyer immediately in writing of any changes or deviations from the ordinary and
normal course of business.
(b) Maintain Properties. Seller will maintain and keep the
plant and equipment of or related to the Business and the Old Factory and the
New Factory in as good repair, working order and condition as at present,
except for depreciation due to ordinary wear and tear and damage due to
casualty.
(c) Insurance. Seller will keep in full force and effect
insurance and bonds comparable in amount and scope of coverage to what is now
covering the Business and all assets related thereto.
(d) Perform Contracts. Seller will perform in all material
respects the obligations to be performed under all the contracts and documents
of or relating to the Business.
(e) Maintain Organization. Seller will maintain and preserve
the relationships of or related to the Business with suppliers and customers
and maintain the goodwill of the Business.
(f) Approvals and Consents. As soon as practicable after the
execution of this Agreement, Seller shall take all reasonable action required
to obtain all waivers,
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consents, approvals and agreements and promptly to give all notices, effect all
registrations pursuant to and make all other filings with or submissions to,
any third parties, including governmental authorities, necessary or advisable
to authorize, approve or permit the transactions contemplated hereby. The
foregoing shall not mean, in any case, that Seller shall bear any unreasonable
out of pocket expenses or costs for such reasonable action provided for above
except such expenses for employment of personnel currently in charge of such
matters.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents, warrants and covenants to and with Buyer as
follows:
2.1. Organization. Seller is a corporation duly incorporated,
validly existing and in good standing under the laws of the Republic of Korea.
Seller has all requisite corporate power and authority to own or lease its
properties and assets as now owned or leased, to carry on its businesses as and
where now being conducted and to enter into this Agreement, and perform its
obligations hereunder. The copies of Seller's articles of incorporation and
bylaws, as amended to date, which have been delivered to Buyer, are correct and
complete and are in full force and effect.
2.2. Authorization and Enforceability. The execution, delivery and
performance of this Agreement has been, and such other agreements necessary to
vest in Buyer good, valid and marketable title to the Purchased Assets (the
"Ancillary Agreements") shall have duly authorized by all necessary corporate
action on the part of Seller, including board of directors approval. This
Agreement has been, and at the Closing all the Ancillary Agreements shall have
been duly executed and delivered by Seller, and this Agreement constitutes, and
at Closing the Ancillary Agreements will constitute, the legal, valid and
binding obligations of Seller, enforceable in accordance with their respective
terms.
2.3. No Violation of Laws or Agreements. The execution and delivery
of this Agreement do not, and the consummation of the transactions contemplated
by this Agreement and the compliance with the terms, conditions and provisions
of this Agreement by Seller, will not (a) contravene any provision of Seller's
articles of incorporation or bylaws; (b) conflict with or result in a breach of
or constitute a default (or an event which might, with the passage of time or
the giving of notice or both, constitute a default) under any of the terms,
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conditions or provisions of any indenture, mortgage, loan or credit agreement
or any other agreement or instrument to which Seller is a party or by which it
or any of its assets may be bound or affected except as set forth on Schedule
2.10, or any judgment or order of any court or governmental department,
commission, board, agency or instrumentality, domestic or foreign, or any
applicable law, rule or regulation, (c) result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever upon Seller's assets
or give to others any interests or rights therein, (d) result in the maturation
or acceleration of any liability or obligation of Seller that will not be paid
in full by Seller at Closing (or give others the right to cause such a
maturation or acceleration), or (e) result in the termination of or loss of any
right (or give others the right to cause such a termination or loss) under any
of the Assigned Contracts except as set forth on Schedule 2.10.
2.4. Financial Statements. The books of account and related records
of Seller fairly reflect in a reasonable detail the assets, liabilities and
transactions related to the Business and are in adequate condition for the
preparation of the Financial Statement (as defined below and which shall be
limited only to a balance sheet and a statement of profits and losses) of the
Business in accordance with Korean GAAP applied on a consistent basis. Seller
has delivered to Buyer the unaudited financial statements of the Business as of
12/31/97 (the "Financial Statement") and a balance sheet of the Business at
such date. The Financial Statement of the Business: (i) fairly presents the
financial condition, assets and liabilities of the Business as of December 31,
1997; and (ii) has been prepared in accordance with Korean GAAP consistently
applied. All references in this Agreement to the "Balance Sheet" shall mean the
balance sheet of the Business as of December 31, 1997 included in the Financial
Statement and all references to the "Balance Sheet Date" shall mean December
31, 1997.
2.5. Undisclosed Liabilities. The Business has no liability or
obligation of any nature, whether due or to become due, absolute, contingent or
otherwise, including liabilities for or in respect of national, local or
foreign taxes, customs duties and any interest or penalties related hereto,
except for liabilities that are (a) fully reflected on the Balance Sheet or (b)
incurred in the ordinary course of business since the Balance Sheet Date and
fully reflected as liabilities on the Business's books of account, none of
which individually or in the aggregate has been materially adverse.
2.6. No Changes. Except as disclosed on Schedule 2.6, since the
Balance Sheet Date and until the Closing, the Seller has conducted the Business
only in the ordinary course.
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Without limiting the generality of the foregoing sentence, except as
specifically communicated to Buyer in writing and except for such changes
causing immaterial payment, expense or loss, not in excess of twenty-five
million (25,000,000) won since the Balance Sheet Date, or as otherwise disclosed
on Schedule 2.6 there has not been:
(a) any change in the financial condition, assets, liabilities, net worth
of the Business, except changes in the ordinary course of business, none of
which, individually or in the aggregate has been or will be materially adverse
to the Business;
(b) any damage, destruction or loss, whether or not covered by insurance,
materially adversely affecting the properties, business or prospects of the
Business, or any material deterioration in the operating condition of the assets
of the Business;
(c) any mortgage, pledge or subjection to lien, charge or encumbrance of
any kind of the assets, tangible or intangible of the Business;
(d) any strike, walkout, labor trouble or any other new or continued
event, development or condition of any character which has or could materially
adversely affect the business, properties or prospects of the Business;
(e) any increase in the salaries or other compensation (excluding
increases in the ordinary course of business and consistent with past practice)
payable or to become payable to, or any advance (excluding advances for ordinary
business expenses) or loan to, any officer, director or employee of the
Business, or any increase in, or any addition to, other benefits (including
without limitation any bonus, profit-sharing, pension or other plan) to which
any of its officers, directors or employees may be entitled, or any payments to
any pension, retirement, profit-sharing, bonus or similar plan except payments
in the ordinary course of business and consistent with past practice made
pursuant to any employee benefit plan, or any other payment of any kind to (or
on behalf of) any such officer, director or employee other than payment of base
compensation and reimbursement for reasonable business expenses in the ordinary
course of business;
(f) any making or authorization of any capital expenditures;
(g) any cancellation or waiver of any right material to the operation of
the Business or any
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cancellation or waiver of any debts or claims of substantial value or any
cancellation or waiver of any debts or claims against any Affiliate;
(h) any sale, transfer or other disposition of any assets of the
Business, except sales of assets in the ordinary course of business;
(i) any payment, discharge or satisfaction of any liability or obligation
(whether accrued, absolute, contingent or otherwise) by Seller related to or
affecting the Business, other than the payment, discharge or satisfaction, in
the ordinary course of business, of liabilities or obligations shown or
reflected on the Balance Sheet or incurred in the ordinary course of business
since the Balance Sheet Date;
(j) any adverse change or any threat of any adverse change in Seller's
relations with, or any loss or threat of loss of, Seller's suppliers, clients
or customers, which change or loss would have a material adverse affect on the
Business;
(k) any write-offs as uncollectible of any notes or accounts receivable
of the Business or write-downs of the value of any assets or inventory by
Seller related to the Business other than in immaterial amounts or in the
ordinary course of business consistent with past practice and at a rate no
greater than during the twelve months ended on the Balance Sheet Date;
(l) any change by Seller in any method of accounting or keeping its books
of account or accounting practices related to or affecting the Business;
(m) any creation, incurrence, assumption or guarantee by the Business of
any obligations or liabilities (whether absolute, accrued, contingent or
otherwise and whether due or to become due), except in the ordinary course of
business, or any creation, incurrence, assumption or guarantee by the Business
of any indebtedness for money borrowed;
(n) any payment, loan or advance of any amount to or in respect of, or
the sale, transfer or lease of any properties or assets (whether real, personal
or mixed, tangible or intangible) to, or entering into of any agreement,
arrangement or transaction with, any Affiliate, except for (i) compensation to
the officers and employees of the Business at rates not exceeding the rates of
compensation disclosed on Schedule 2.17 hereto and (ii) reimbursements of or
advances for expenses
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incurred for business-related purposes not exceeding 25 million Won outstanding
in the aggregate at any given time.
(o) any disposition of or failure to keep in effect any rights in, to
or for the use of any patent, trademark, service xxxx, trade name or copyright
included in the Purchased Assets, or, to Seller's Knowledge, any disclosure to
any person not an employee or other disposal of any trade secret, process or
know-how relating to the Business; or
(p) any transaction, agreement or event to which Seller is a party or
a participant relating to the Business outside the ordinary course of the
Business or inconsistent with past practice.
2.7. Taxes. Seller has (a) timely filed all national or local, payroll,
withholding, VAT, excise, sales, use, customs duties, personal property, use
and occupancy, business and occupation, mercantile, real estate, capital stock
and franchise or other tax returns of any kind whatsoever relating to the
Business (all the foregoing taxes, including interest and penalties thereon and
including estimated taxes, being hereinafter collectively called "Taxes" and
individually a "Tax"), (b) has paid all Taxes which are shown to have become due
pursuant to such returns and (c) paid all other Taxes for which a notice of
assessment or demand for payment has been received. All such returns have been
prepared in accordance with all applicable laws and requirements and accurately
reflect the taxable income (or other measure of Tax) of the Party filing the
same. The accruals for Taxes contained in the Balance Sheet are adequate to
cover all liabilities for Taxes relating to the Business for all periods ending
on or before the Balance Sheet Date and nothing has occurred subsequent to that
date to make any of such accruals inadequate as of the Balance Sheet Date. All
Taxes for periods beginning after the Balance Sheet Date have been paid or are
adequately reserved against on the books of Seller. Seller has timely filed all
information returns or reports which are required to be filed and has accurately
reported all information required to be included on such returns or reports. To
Seller's Knowledge, there are no proposed assessments of Tax against Seller or
proposed adjustments to any tax returns filed, pending against Seller. Except as
disclosed on Schedule 2.7, Seller has not received notice that any Tax return is
under examination by any taxing authority. Except as disclosed on Schedule 2.7
hereto, Seller has not executed a waiver or consent extending any statute of
limitation for any tax liability which remains outstanding. Except as disclosed
on Schedule 2.7 hereto, since January 1, 1998, Seller has not (a) joined in or
been required to join in filing a consolidated
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income tax return, or (b) entered into a closing agreement with any taxing
authority.
2.8. Inventory. All of the inventories of the Business, including that
reflected in the Balance Sheet, are valued at cost being determined on a
first-in, first-out basis, except as disclosed in the Financial Statements.
Except for the obsolete inventory identified and included in the Purchased
Assets, all of the inventories of the Business reflected in the Balance Sheet
and all such inventories acquired since the Balance Sheet Date consist of items
of a quality and quantity usable and saleable in the ordinary course of business
within a reasonable period of time and at normal profit margins (other than
normal trade discounts regularly offered by the Business for prompt payment or
quantity purchase), and all of the raw materials and work in process inventory
of the Business reflected in the Balance Sheet and all such inventories acquired
since the Balance Sheet Date can reasonably be expected to be consumed in the
ordinary course of business within a reasonable period of time. A physical
inventory shall be taken during the week prior to the Closing Date. Attached
hereto is Schedule 2.8 which sets forth the value of the Business's inventory of
finished goods, work in process and raw materials as of December 31, 1997
according to the internal accounting records of the Seller as of said date.
2.9. No Pending Litigation or Proceedings. Except as set forth on Schedule
2.9 hereto, there are no actions, suits, investigations, proceedings or claims
pending or, to Seller's Knowledge, threatened against or affecting the Business
of Seller or Seller's agents or their assets of or related to the Business, by
or before any court or governmental department, agency or instrumentality, and
to Seller's Knowledge, there is no basis for any such action, suit,
investigation, proceeding or claim. There are presently no outstanding
judgments, decrees or orders of any court or any governmental or administrative
agency, against or, to Seller's Knowledge, affecting the Business.
2.10. Contracts; Compliance. Except as listed on Schedule 2.10 hereto,
Seller is not a party to or bound by any contract or commitment, oral or
written, formal or informal related to or affecting the Business, of the
following types:
(a) mortgages, indentures, security agreements or other agreements
and instruments relating to the borrowing of money, the extension of credit or
the granting of liens or encumbrances;
(b) employment and consulting agreements (forms for each type of such
agreement have been attached to Schedule 2.19);
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(c) union or other collective bargaining agreements;
(d) powers of attorney;
(e) sales agency, manufacturers representative and
distributorship agreements or other distribution or commission arrangements;
(f) licenses of patent, trade secrets, know-how, trademark,
copyrights and other intellectual property rights;
(g) agreements, orders or commitments for the purchase of
services, raw materials, supplies or finished products from any one supplier
for an amount in excess of 10 million Won.
(h) agreements, orders or commitments for the sale of
products or services for more than 10 million Won to any single purchaser;
(i) contracts or options relating to the sale by Seller of
any asset of the Business, other than sales of inventory in the ordinary course
of business;
(j) bonus, profit-sharing, compensation, stock option,
pension, retirement, deferred compensation, accrued vacation pay, group
insurance, welfare agreements or other plans, agreements, trusts or
arrangements for the benefit of employees;
(k) agreements or commitments for capital expenditures in
excess of 10 million won for any single project;
(l) joint venture agreements;
(m) agreements requiring the consent of any party thereto
to the consummation of the transactions contemplated hereby;
(n) agreements with any Affiliate;
(o) lease agreements under which it is either lessor or
lessee;
(p) agreements, contracts or commitments for any charitable
or political contribution; or
(q) other agreements, contracts and commitments which are
material to the Business, or which involve
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payments or receipts of more than 100 million won in any single year, or which
were entered into other than in the ordinary and usual course of business.
All such contracts and other commitments are in full force and effect;
all parties to such contracts and other commitments have complied with the
provisions thereof; no such party is in default under any of the terms thereof;
and no event has occurred that with the passage of time or the giving of notice
or both would constitute a default by any party under any provision thereof.
Set forth on Schedule 2.10 hereto is a summary of unfilled firm purchase orders
of the Business as of the date hereof other than any unfilled firm purchase
order which has a value of less than 20 million won.
2.11. Compliance with Laws. Schedule 2.11 hereto sets forth a list of
all material permits, certificates, licenses, orders, registrations,
franchises, authorizations and other approvals from all national, local and
foreign governmental and regulatory bodies held by Seller that relate to or
effect the Business or the New Factory. The Seller holds and is in compliance
with all material permits, certificates, licenses, orders, approvals,
registrations, franchises and authorizations required under all laws, rules and
regulations in connection with the Business and the New Factory, and, to
Seller's Knowledge, all of such permits, certificates, licenses, orders,
approvals, registrations, franchises and authorizations are in full force and
effect. The Seller has complied with all applicable statutes, rules,
regulations and orders, national and local, which, if not complied with, would
have a material adverse effect on the Business or the New Factory. No notice,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and, to Seller's Knowledge, no investigation or
review is pending or threatened by any governmental or other entity (a) with
respect to any alleged violation by Seller of any law, ordinance, rule,
regulation or order of any governmental entity relating to or affecting the
Business or the New Factory (b) with respect to any alleged failure by Seller
to have any permit, certificate, license, approval, registration or
authorization required in connection with the Business or the New Factory.
2.12. Environmental Matters.
(a) Except as disclosed on Schedule 2.12 hereto or in the
site assessments of the Owned Real Properties performed by or on behalf of
Buyer (true and complete copies of which Buyer has delivered to Seller):
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(i) The Business and the New Factory are in compliance with and are not in
violation of any national or local statutory or regulation, rule, order,
ordinance, guideline, direction, or notice, relating to the environment, public
health and safety, and employee health and safety, including those relating to
Hazardous Substances ("Environmental Laws").
(ii) Seller holds and is in compliance with all necessary or required
environmental permits, certificates, consent or other settlement agreements,
licenses, approvals, registrations and authorizations required under all
Environmental Laws that relate to or affect the Business ("Environmental
Permits") or the New Factory as being used as of the date of this Agreement, and
all of such Environmental Permits are valid and in full force and effect. All
such Environmental Permits held by Seller are listed on Schedule 2.12 hereto and
any that are not transferable are so designated. Seller has made or will make
before the Closing timely application for renewals of all such Environmental
Permits for which Environmental Laws require that applications must be filed on
or before the Closing to maintain the Environmental Permits in full force and
effect after the Closing Date. Buyer shall bear any fees, cost or other expenses
incurred in making such filings or applications to the extent to which Buyer
receives a benefit from the Environmental Permit obtained as a result of such
filing or application.
(iii) No consent, approval or authorization of, or registration or filing
with any Person, including any environmental governmental Authority or
regulatory agency, is required in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
Seller (with Buyer's reasonable assistance) has or will prepare and file all
applications for the transfer of all Environmental Permits, at Buyer's expense,
that must be transferred as a result of the consummation of the transactions
contemplated by this Agreement.
(iv) No notice, citation, summons or order has been issued or served upon,
no complaint has been filed, no penalty has been assessed and, to Seller's
Knowledge, no investigation or review is pending or threatened by any Authority
or Person: (a) with respect to any alleged violation by Seller of any
Environmental Law relating to or affecting the Business or the New Factory; or
(b) with respect to any alleged failure by Seller to have any Environmental
Permit relating to or affecting the Business or the New Factory; or (c) with
respect to any use, possession, generation, treatment, storage, recycling,
transportation or disposal (collectively "Management") of any Hazardous
Substances by or on behalf of Seller or, to Seller's
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knowledge, its predecessors relating to or affecting the Business or the New
Factory.
(v) Seller has not received any request for information, notice of claim,
demand, order or notification for which it or any of its predecessors are or
may be potentially responsible with respect to any investigation or clean-up of
any threatened or actual Release of any Hazardous Substance relating to or
affecting the Business or the New Factory.
(vi) Except for Hazardous Substances stored or used in the ordinary course
of their manufacturing processes, in quantities and in a manner (1) not in
violation of any applicable law, or (2) which has not or is not reasonably
likely to create a condition which requires investigation, remediation or other
responsive action or responsibility or liability under Environmental laws, to
Seller's knowledge neither the Seller nor any Affiliate of Seller has used,
generated, treated, stored for more than 90 days, recycled or disposed of any
Hazardous Substances on the New Factory or on any property now owned, operated
or leased by Seller or any Affiliate of Seller or on any formerly owned,
operated or leased property that is related in any way to the Business, nor has
anyone else during the period that such property or the New Factory has been
owned, operated or leased by Seller or, to Seller's Knowledge, during any other
period, treated, stored for more than 90 days, recycled or disposed of any
Hazardous Substances on any property now owned, operated or leased by Seller or
any Affiliate of Seller or on any formerly owned, operated or leased property.
Notwithstanding the provisions of this Section 2.12(a)(vi), Seller acknowledges
that asbestos has been used in one or more buildings of the Old Factory and has
or may have been used in one or more buildings of the New Factory and agrees to
be liable for damages relating to such asbestos as specified in Section 4.10(b)
of this Agreement.
(vii) To Seller's Knowledge, no polychlorinated biphenyls are or have been
present at the New Factory or at any property now owned, operated or leased by
Seller or any Affiliate of Seller during the period that such property was
owned, operated or leased by Seller that is in any way related to the Business,
nor are there any underground storage tanks, active or abandoned, at such
property or at the New Factory.
(viii) To Seller's Knowledge, no Hazardous Substance generated by Seller
or any Affiliate of Seller that is any way related to the Business or the New
Factory has been recycled, treated, stored, disposed of or transported by any
entity in violation of any Environmental Law or in a manner which has created
or is reasonably likely to create any liability or responsibility under any
Environmental Law.
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(ix) No Hazardous Substance has been Released at, on, about or under
by Seller or, to Seller's Knowledge is present in the New Factory or in any
property now owned, operated or leased by Seller or any Affiliate of Seller that
is in any way related to the Business which requires investigation, remediation
or other response action. Notwithstanding the provisions of this Section
2.12(a)(ix), Seller acknowledges that asbestos has been used in one or more
buildings of the Old Factory and has or may have been used in one or more
buildings of the New Factory and agrees to be liable for damages relating to
such asbestos as specified in Section 4.10(b) of this Agreement.
(x) There are no environmental Liens on the New Factory or on any
properties owned or leased by Seller or any Affiliate of Seller which would
materially impair Buyer's ability to lawfully operate the Business as such
Business was operated prior to the Closing Date and, to Seller's knowledge, no
government actions have been taken or are in process or pending which could
subject any of such properties to such Liens.
(xi) No deed or other instrument of conveyance of real property to
Seller or any Affiliate of Seller with respect to real property presently owned,
operated or leased by Seller contains a restriction relating to the actual or
suspected presence of Hazardous Substances, which restriction would materially
impair Buyer's ability to lawfully operate the Business as such Business was
operated prior to the Closing Date.
(xii) To Seller's Knowledge, there are no facts or circumstances
(other than the possible presence of asbestos in one or more buildings of the
Old Factory and the New Factory) related to environmental matters concerning
real property owned, operated or leased by Seller that could reasonably be
expected to lead to any further environmental claims against Seller, or Buyer
under current law.
(xiii) There have been no environmental inspections, investigations,
studies, audits, tests, reviews or other analyses conducted by or at the
direction of Seller or, in the possession of Seller indicating the presence of
any Hazardous Substance at the New Factory (other than asbestos) in or on any
property or business now or previously owned, operated, or leased by Seller or
any Affiliate of Seller in any way related to the Business in material violation
of any Environmental Law or which has created a condition which requires
investigation, remediation or other response action under Environmental Law
which have not been provided to Buyer prior to the date hereof.
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2.13. Consents. Except for the contracts listed on Schedule 1.10 and
except as set forth on Schedule 2.13 (the implementation schedule), no consent,
approval or authorization of, or registration or filing with, any Person, is
required in connection with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
2.14. Personal Property. The Seller owns all of its tangible personal
property and assets relating to or affecting the Business, including the
properties and assets reflected in the Balance Sheet (except those disposed of
in the ordinary course of business since the Balance Sheet Date); and at the
Closing none of such properties or assets will be subject to any mortgage,
pledge, lien, restriction, encumbrance, claim, security interest, charge or any
other matter affecting title, except, (a) minor imperfections of title, none of
which, individually or in the aggregate, materially detracts from the value of
or impairs the use of the affected properties or impairs any operations of the
Seller, (b) liens for current taxes not yet due and payable, or (c) as
disclosed on Schedule 2.14 hereto (the "Personal Property Permitted
Encumbrances"). All tangible personal property, assets, equipment or other
personal property consigned or leased to Seller, whether used exclusively in
the operation of the Business or shared by the Business with Seller's
construction equipment business, are listed on Schedule 2.14.
2.15. Real Estate.
(a) Schedule 2.15 hereto contains a true, correct and complete
list of all real properties included in the Purchased Assets (collectively, the
"Real Properties") separately indicating the nature of Seller's interest
therein. Except as set forth on Schedule 2.15 hereto, no other Person has any
oral or written right, agreement or option to acquire, lease, sublease or
otherwise occupy all or any portion of such Real Properties. Seller has not
received any written or oral notice for assessment for public improvements
against any of the Real Properties which remains unpaid and, to Seller's
Knowledge, no such assessment has been proposed. There is no pending
condemnation, expropriation, eminent domain or similar proceeding affecting all
or any portion of any of the Real Properties and, to Seller's Knowledge, no
such proceeding is contemplated.
(b) Except as disclosed on Schedule 2.15 hereto:
(i) Seller has good and marketable title to the Real
Properties owned by Seller (the "Owned Real Properties" or "Owned Real
Property"). The Owned Real Property is free and clear of any and all Liens,
exceptions, items,
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encumbrances, easements, restrictions and other matters either of record or not
of record which either individually or in the aggregate, could prohibit or
adversely interfere with Buyer's use of such property except (a) matters set
forth on Schedule 2.15 and referred to as the "Exceptions that will not exist at
Closing" (the "Exceptions That Will Not Exist at Closing"), (b) matters set
forth on Schedule 2.15, none of which is material in amount and none of which,
individually or in the aggregate, impairs, or grants or evidences rights which
if exercised would impair, the use of the affected property in the manner such
property is currently being used, or impairs the current operations of the
Business, (c) defects of title, conditions, easements, encroachments, covenants
or restrictions, if any, none of which is material in amount and none of which,
individually or in the aggregate, materially impairs, or grants or evidences
rights which if exercised would materially impair, the use of the affected
property in the manner such property is currently being used, or impairs the
current operations of the Business, and (d) zoning or land use ordinances, none
of which, to Seller's knowledge, individually or in the aggregate, impairs the
use of the affected property in the manner such property is currently being used
or impairs the current operations of the Business (collectively, the "Permitted
Real Property Encumbrances"). No material default or breach exists under any of
the covenants, conditions, restrictions, rights-of-way or easements, if any,
affecting all or any portion of the Owner Real Properties.
(ii) The current zoning of each of the Owned Real Properties
permits the operator of such property to use such property for the Buyer's
intended use thereof, provided that such use is similar to Seller's use thereof
or otherwise disclosed to Seller. Seller has not made any application for a
rezoning of any of the Owned Real Properties. To Seller's Knowledge, there are
no proposed or pending change to any zoning affecting any of the Owned Real
Properties.
(iii) All utilities, including without limitation, potable
water, sewer, gas, electric, telephone, and other public utilities and all storm
water drainage required by law or necessary for the operation of the Owned Real
Properties, (1) either enter the Owned Real Properties through open public
streets adjoining the Owned Real Properties, or, if they pass through adjoining
private land, do so in accordance with valid public or private easements or
rights of way which will inure to the benefit of Buyer, (2) are installed,
connected, operating and adequate for the operation of the Business as it has
been previously conducted by Seller, with all installation and connection
charges paid in full, including, without limitation, connection and the right to
discharge sanitary waste into the collector system of the appropriate sewer
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utility, and (3) are adequate (in both quality and quantity) to service the
Owned Real Properties for their respective use in the business as presently
conducted thereon.
(iv) Each of the Owned Real Properties is located
along one or more dedicated public streets or has access thereto. All curb-cut
and street-opening permits or licenses required for vehicular access to and from
the Real Properties to any adjoining public street or to any parking spaces
utilized in connection with the Owned Real Property have been obtained and paid
for, are in full force and effect and shall inure to the benefit of Buyer.
(v) The improvements located on the Owned Real
Properties, including the roof, structure, soil, elevators, walls, heating,
ventilation, air conditioning, plumbing, electrical, drainage, fire alarm,
communications, security and exhaust systems and their component parts, or other
improvements on or forming a part of the Owned Real Properties, are adequate for
the operation of the Business as it has been previously conducted by Seller.
Seller has not received any notification of and there are no outstanding or
incomplete work orders in respect of any of the buildings, improvements or other
structures constructed on the Owned Real Properties or of any current
non-compliance with applicable statutes and regulations or building and zoning
by-laws and regulations.
(c) Except as set forth on Schedule 2.15 hereto, there
are no deeds of trust or mortgages which are a Lien upon the Owned Real
Properties.
2.16 Transactions with Affiliates. Except as disclosed on Schedule
2.16, no Affiliate has:
(a) borrowed money or loaned money to the Seller in
connection with the Business or the New Factory which remains outstanding;
(b) any contractual or other claims, express or
implied, of any kind whatsoever against Seller in connection with the Business
or the New Factory;
(c) any interest in any property or assets used by
Seller in connection with the Business or the New Factory; or
(d) is engaged in any other transaction with Seller
relating to or affecting the Business or the New Factory (other than employment
relationships at the salaries disclosed in Schedule 2.16 hereto).
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2.17. Condition of Assets. The buildings at the New Factory and
the buildings, machinery, equipment, tools, furniture, improvements and other
fixed assets of the Seller used in or related to or affecting the Business,
including those reflected in the Balance Sheet, are adequate for the operation
of the Business as it has been previously conducted by the Seller.
2.18. Compensation Arrangements; Officers and Directors. Schedule
2.18 hereto sets forth the following information:
(a) The names and current annual salary, including any
bonus, if applicable, of all present directors, officers and employees of
Seller at the rank of kwajang or higher who work in connection with the
Business together with a statement of the full amount of all remuneration paid
by Seller to each such person during the 12 month period preceding the date
hereof.
(b) the names and titles of each trustee, fiduciary or plan
administrator of each employee benefit plan of the Seller.
2.19. Labor Relations.
(a) Schedule 2.19 hereto contains a true and complete list
of all current employees of Seller that Seller asserts are necessary to the
operation of the Business ("Employees"), together with their respective job
titles and current annual compensation and bonuses or bonus eligibility (if
any), as of the date hereof. Schedule 2.19 shall have been updated as of the
Closing, if necessary. Except for those individuals identified on Schedule
2.19, there are no employees hired by and currently working for Seller
necessary to the operation of the Business.
(b) Schedule 2.19 contains a list of all written employment
policies, practices, manuals, handbooks, procedures, and terms and conditions
of employment of Seller that are applicable to Employees. Except as listed on
Schedule 2.19, there are no employment policies, practices, manuals, handbooks,
procedures or terms or conditions of employment that are applicable to
Employees.
(c) Schedule 2.19 contains a list of all current, or if
expired and not renewed, the most recent, employment, labor or collective
bargaining agreements with any of the Employees. Except as listed on Schedule
2.19, there are no employment, labor or collective bargaining agreement, or
governmental or administrative charges, affecting or concerning
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the Employees, pending or to Seller's knowledge threatened against Seller.
(d) Except as set forth on Schedule 2.19, there are no
consulting, contracting or independent contracting agreements with any person
retained or employed in connection with the Assets or the Business.
(e) The overall relations of Seller with its employees are
good. There are no unfair labor practice complaints against Seller pending or,
to Seller's Knowledge, threatened. There is no labor strike, dispute, slow down
or stoppage actually pending or, to Seller's Knowledge, threatened against or
involving Seller. No employee grievance which might to Seller's Knowledge have
an adverse effect on Seller or the conduct of the Business is pending. No
private agreement restricts Seller from relocating, closing or terminating any
of its operations or facilities. Except as disclosed in Schedule 2.19, Seller
has not in the past twelve (12) months experienced any work stoppage or slow
down or, to the best of Seller's Knowledge committed any unfair labor practice.
2.20. Products Liability. Except for lawsuits, claims, damages
and expenses adequately covered by the Seller's insurance, there are no (a)
liabilities of Seller, fixed or contingent, asserted or, to Seller's Knowledge,
unasserted, with respect to any product liability or any similar claim that
relates to any product manufactured and sold by Seller to others in connection
with the Business, or (b) liabilities of Seller, fixed or contingent, asserted
or, to Seller's Knowledge, unasserted, with respect to any claim for the breach
of any express or implied product warranty or any other similar claim with
respect to any product manufactured and sold by Seller to others other than
standard warranty obligations (to replace, repair or refund) made by the Seller
in the ordinary course of business to purchasers of its products in connection
with the Business.
2.21. Insurance. Attached hereto as Schedule 2.21 is a
complete and correct list of all policies of insurance relating to the Business
or the New Factory of which Seller is the owner, insured or beneficiary, or
covering any of the property of the Business, true, correct and complete copies
of which have been delivered to Buyer, indicating for each policy the carrier,
the insured, type of coverage, the amounts of coverage, deductible, premium
rate, cash value if any, expiration date and any pending claims thereunder. All
such policies are in full force and effect. The coverages provided by such
policies are reasonable, in both scope and mount, in light of the risks
attendant to the Business and the New Factory. Seller has paid-in-full all
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premiums due on such policies as of the Closing Date. To Seller's Knowledge,
there is no default with respect to any provision contained in any such policy,
nor has there been any failure to give any notice or present any claim under any
such policy in a timely fashion or in the manner or detail required by the
policy. Except as set forth on Schedule 2.21, there are no outstanding unpaid
premiums or claims under such policies. No notice of cancellation or non-renewal
with respect to, or disallowance of any claim under, any such policy has been
received by Seller. Except as set forth on Schedule 2.21, Seller has not been
refused any insurance, nor has its coverage been limited by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the last five years. Except as set forth on Schedule 2.21, all
products liability and general liability policies maintained by or for the
benefit of the Seller during the last five (5) years have been "occurrence"
policies and not "claims made" policies. All product liability and general
liability policies relating to the manufacture and sale of forklifts and related
parts and components manufactured and sold by Seller prior to the Closing Date
shall remain in place for at least five (5) years from the Closing Date,
provided that, if Seller does not maintain such insurance then any claim or
lawsuit including attachments and injunctions made or sought against Buyer or
its assets relating to the manufacture and sale of forklifts and related parts
and components by the Seller prior to the Closing may be tendered by Buyer to
Seller within 20 days of Buyer being notified of such claim or lawsuit and
Seller shall defend such claim or lawsuit as if it had been originally brought
against Seller and shall hold Buyer harmless from any liability, suits, losses
or damages including attorneys' fees resulting from such claim or lawsuit.
2.22. Patents and Intellectual Property Rights. Attached hereto as
Schedule 2.22 is a correct list of all patents, patent applications, trademarks,
service marks and trade names, copyrights, intellectual property licenses, logos
and the like, held, owned or used by the Seller in connection with the Business
(all the above collectively referred to as the "IP Rights"), and as to all such
IP Rights that are registered, all of such registrations, and as to all such IP
Rights for which registration has been applied, such applications are valid and
in good standing. To Seller's Knowledge, none of the IP Rights infringes upon
(nor has any claim been made that any of them infringes) the patents, trademarks
or other rights of others. Except as set forth on Schedule 2.22, to Seller's
Knowledge, the manufacture, sale or use of any products now or heretofore
manufactured or sold by Seller did not and does not infringe (nor has any claim
been made that any such action infringes) the patents or intellectual property
rights of others. The Seller owns or possesses adequate licenses or other rights
(at
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reasonable market costs) to use all patent, patent applications, copyrights,
trademarks, service marks and tradenames necessary to conduct the Business as
now conducted. Except as set forth on Schedule 2.22, there is no agreement to
which Seller is a party or to which Seller is legally bound and no restriction
or Liens, materially and adversely affecting the use by Seller and, after the
Closing, the use by Buyer, of any of the IP Rights. There is no pending
litigation or other legal action with respect to any of the IP Rights, and no
order, holding, decision or judgment has been rendered by any Authority, and no
agreement, consent or stipulation exists to which, in any such event, Seller is
a party or of which Seller has knowledge, which would prevent Seller, or after
the Closing, Buyer, from using any of the IP Rights.
2.23 Brokerage. Seller has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transaction contemplated hereunder.
2.24 Disclosure. No representation or warranty by Seller in this
Agreement, and no exhibit, certificate or schedule furnished or to be furnished
to Buyer pursuant hereto, or in connection with the transactions contemplated
hereby, contains or will contain any untrue statement of a material fact, or
omits or will omit to state a material fact necessary to make the statements or
facts contained herein or therein not misleading or necessary to provide Buyer
with proper information as to the Seller and the Purchased Assets. Seller shall
disclose to Buyer at Closing any information then in the possession of Seller
that indicates that Buyer is in breach of this Agreement or which may provide
the basis for a claim by Seller that Buyer has breached this Agreement.
2.25 Mitigation. The Parties acknowledge that the representations
and warranties set forth above shall, in any case not be interpreted as
limiting or restricting Buyer's general obligation at law, if any, to prevent
and/or mitigate any loss or damages which it may incur after the Closing in
connection with or involving the Business or the Purchased Assets to be
transferred under this Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
3.1. Organization and Good Standing. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware, U.S.A.
3.2. Corporate Power and Authority. Buyer has all requisite
corporate power and authority to make, execute, deliver and perform this
Agreement and all other agreements, documents and instruments to which it is a
party or is otherwise obligated which are executed, delivered or performed
pursuant to this Agreement.
3.3. Due Authorization. The execution, delivery and performance of
this Agreement and all other agreements, documents and instruments to which
Buyer is a party or is otherwise obligated which are to be executed, delivered
or performed pursuant to this Agreement have been duly authorized by all
necessary corporate action on the part of Buyer, and this Agreement constitutes
and any other instruments to be delivered by Buyer at Closing, when executed
and delivered at Closing, will constitute, the legal, valid and binding
obligations of Buyer, enforceable against it in accordance with their
respective terms.
3.4. Brokerage. Buyer has not made any agreement or taken any other
action which might cause anyone to become entitled to a broker's fee or
commission as a result of the transactions contemplated hereunder.
3.5. No Breaches; Etc. The execution, delivery and performance of
this Agreement and the other agreements contemplated by this Agreement and the
consummation of the transactions contemplated by this Agreement do not and will
not result in any breach or acceleration of any of the terms or conditions of
its articles of incorporation or bylaws, or of any mortgage, bond, indenture,
contract, agreement, license or other instrument or obligation to which Buyer
is a party. The execution, delivery and performance of this Agreement or the
other agreements contemplated by this Agreement will not result in the material
violation of any statute, regulation, judgment, writ, injunction or decree of
any court, threatened or entered in a proceeding or action in which Buyer is,
was or may be bound.
3.6. Disclosure. No representation or warranty by Buyer in this
Agreement, and no exhibit, certificate or schedule furnished or to be furnished
to Seller pursuant hereto, or in
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connection with the transactions contemplated hereby, contains or will contain
any untrue statement of a material fact, or omits or will omit to state a
material fact necessary to make the statements or facts contained herein or
therein not misleading or necessary to provide Seller with proper information
as to the Buyer and the Purchase Assets. Buyer shall disclose to Seller at
Closing any information then in the possession of Buyer that indicates that
Seller is in breach of this Agreement or which may provide the basis for a
claim by Buyer that Seller has breached this Agreement.
3.7. Litigation. There is no action, suit, proceeding or
investigation pending, or, to Buyer's knowledge, threatened, against or related
to Buyer or its respective properties or business which would be reasonably
likely to adversely affect or restrict Buyer's ability to consummate the
transactions contemplated by this Agreement, and there is no reasonable basis
known to Buyer for any such action that may result in such effect and is
probable of assertion.
3.8. Mitigation. The Parties acknowledge that the representations and
warranties set forth above shall, in any case not be interpreted as limiting or
restricting Seller's general obligation at law, if any, to prevent and/or
mitigate any loss or damages which it may incur after the Closing in connection
with the transfer of the Business or the Purchased Assets to Buyer under this
Agreement.
ARTICLE IV
CERTAIN ADDITIONAL COVENANTS
4.1. Costs, Expenses and Taxes. Unless otherwise provided for
herein, Buyer and Seller will each pay all their own expenses incurred in
connection with this Agreement and the transactions contemplated hereby,
including (a) all costs, expenses and Taxes to the extent levied to each Party,
and (b) all accounting, legal and appraisal fees and settlement charges.
4.2. Employees of the Business. Not later than one week prior to the
Closing, the Parties shall finalize a list of employees to be transferred from
Seller to Buyer and such list shall include no more than 180 of Seller's
permanent employees (the "Transferred Employees"). The transfer from Seller to
Buyer of the Transferred Employees shall be subject to the following basic
principles:
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(a) All of the Transferred Employees shall have the right to
elect to be (i) formally terminated as employees of Seller or (ii) transferred
to Buyer as a continuation of their current employment.
(b) With respect to the Transferred Employees who elect to
terminate their employment with Seller, Seller shall pay, in a timely manner in
accordance with the requirements of the Labor Standards Act and current company
practices, all salary, bonuses, allowances, severance, unused leave (including
the pro rata portion of accrued but unused leave attributable to the portion of
the 1998 calendar year prior to closing) and any other monetary obligations or
claims relating to the Transferred Employees' employment with Seller or its
Affiliates that may have accrued to those personnel prior to their separation.
Seller represents and warrants that the amount paid by it to such personnel
will be adequate to fully satisfy all of their claims relating to each of their
terms of employment at Seller or any Affiliate of Seller. For the portion of
the 1998 calendar year after the Closing Date, each of the Transferred
Employees who have elected to terminate shall receive the pro rata portion of
paid leave days that are attributable to this portion of the 1998 Calendar
Year. For subsequent years, each of the Transferred Employees who have elected
to terminate shall receive the same number of paid leave days that they would
have received had they continued to be employees of Buyer, provided that
Buyer's agreement to this provision shall in no way be interpreted as
obligating Buyer to pay any severance to the Transferred Employees relating to
their years of service at any company other than Buyer.
(c) With respect to the Transferred Employees who elect to
carry over their employment into Buyer, Seller shall, as part of the purchase
price adjustment under Section 1.6 of this Agreement, pay to Buyer, in each
case, the value of all unpaid wages, accrued severance, unused leave and other
rights that have accrued to such personnel prior to commencement of their
employment with buyer, whether or not under any existing employment, labor or
collective bargaining agreement or under any such agreements entered into after
the Closing Date but with retroactive application extending to before the
Closing Date. Buyer shall be responsible for the full amount of severance and
other benefits of such employees from the commencement of their employment with
Buyer. Seller represents and warrants that the amount paid to Buyer from Seller
under this Section 4.2(c) will be adequate to fully satisfy all claims of these
employees relating to each of their terms of employment at Seller or any
Affiliates of Seller.
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(d) Prior to the Closing, Seller shall deliver to Buyer a list
indicating the election of each Transferred Employee as described in Section
4.2(a) above.
(e) Buyer agrees that it will treat the Transferred Employees
fairly, and except as permitted or authorized by the laws of Korea, Buyer
agrees that it will not terminate any of the Transferred Employees. In the
event that Buyer transfers the Business to a third party within three years of
the Closing Date, Buyer shall ensure that the third party be bound by this
Section 4.2(e) until the date three years from the Closing Date has passed.
(f) Buyer agrees that for a period of three (3) years from the
Closing Date, buyer will notify and discuss with Seller in advance any transfer
of the Business to a third party other than an Affiliate, provided that, in no
event shall Seller have any right to in any way prevent or hinder such transfer.
4.3. Settlement of Boundary Dispute. Seller shall use its best
efforts to settle to Buyer's satisfaction the boundary dispute concerning the
1.3 meter strip of land at the New Factory that is adjacent to the property of
Xxxx Xxx and Xxx Hwan prior to the Closing Date and Seller shall be obligated
to settle the dispute to Buyer's satisfaction by no later than 90 days from the
Closing Date. Seller further agrees to fully (i) defend Buyer against any
lawsuits, claims, attachments or injunctions and (ii) indemnify Buyer for any
claims, damages or losses resulting to Buyer that may at any time arise from or
related to this boundary dispute.
4.4. Indemnification.
(a) General Indemnification Obligations
(i) Indemnification by Seller. Seller hereby agrees to
indemnify and hold harmless Buyer from and against:
(1) any and all Damages arising out of or
resulting from any misrepresentation, breach of warranty or nonfulfillment of
any agreement on the part of Seller contained in this Agreement or in any
certificate, instrument, agreement or other document furnished or to be
furnished to Buyer pursuant hereto or in connection with the transactions
contemplated hereby;
(2) any and all Damages arising out of or
resulting from any liabilities of Seller of any nature, whether due or to
become due, whether accrued, absolute,
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contingent or otherwise existing on the Closing Date or arising out of any
transactions entered into, or any state of facts existing, prior to such date,
except the Assumed Liabilities;
(3) any Damages arising out of or resulting from any claim asserted
against Buyer with respect to Excluded Liabilities;
(4) any and all Damages arising from claims brought by Transferred
Employees who have elected to terminate their employment with Seller in
relation to these employees' terms of employment with Seller or and Affiliate
of Seller, including but not limited to claims for severance pay resulting from
the increase in any employee's wage during his or her period of employment with
Buyer; and
(5) Damages arising from the presence at or removal of asbestos from
one or more buildings of the Old Factory or the New Factory as set forth in
Section 4.10 of this Agreement;
(6) any secondary tax liability of the Buyer under the National Tax
Basic Law and the Local Tax Law for the taxes of Seller that have accrued prior
to the Closing Date; and
(7) any and all Damages arising out of the failure of Seller to
obtain a shareholders' resolution approving this Agreement and the transactions
described herein and with respect to this Section 4.4(a)(i)(7) Seller agrees to
fully defend Buyer against any lawsuits, claims, attachments or injunctions.
(ii) Indemnification by Buyer. Buyer hereby agrees to indemnify and hold
harmless Seller from and against:
(1) any Damages arising out of or resulting from any
misrepresentation, breach of warranty or nonfulfillment of any agreement
on the part of Buyer contained in this Agreement or in any certificate,
instrument, agreement or other document furnished or to be furnished to Seller
in connection with the transactions contemplated hereby;
(2) any Damages resulting from or arising out of the failure by
Buyer to pay or discharge, or cause to be paid or discharged, any of the
Assumed Liabilities; and
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(3) any Damages arising out of or resulting from any claim asserted
against Seller with respect to Assumed Liabilities.
(iii) For purposes of this Agreement, "Damages" means the aggregate
amount of all damages, claims, losses, obligations, liabilities (including any
governmental penalty, fines or punitive damages), deficiencies, interest, costs
and expenses arising out of or relating to a matter and any actions, judgments,
costs and expenses (including reasonable attorneys' fees and all other expenses
incurred in investigating, preparing or defending any litigation or proceeding,
commenced or threatened) incident to such matter or to the enforcement of this
Agreement, including, but not limited to, reasonable fees incurred by the Party
entitled to indemnification under this Agreement.
(b) Indemnification Cap. The maximum aggregate liability of Seller or
Buyer in respect of all claims shall not exceed the Purchase Price.
(c) General Indemnification Procedures.
(i) Buyer and Seller shall cooperate in the defense or prosecution of any
claim, action, suit or proceeding asserted against either of them by a party
other than a Party hereto or an Affiliate of any Party hereto in respect of
which indemnity may be sought hereunder (a "Third Party Claim") and shall
furnish such records, information and testimony, and attend such conferences,
discovery proceedings, hearings, trials and appeals, as may be reasonably
requested in connection therewith.
(ii) Except as otherwise provided in this Agreement, no action or claim
for Damages resulting from breaches of the representations and warranties of
Seller or Buyer shall be brought or made after 24 months following the Closing,
except that such time limitation shall not apply to (i) claims for
misrepresentations or breaches of warranty relating to Section 2.7 (relating to
Taxes) which may be asserted until 60 days after the running of the applicable
statute of limitations with respect to the taxable period to which the
particular claim relates, (ii) claims relating to asbestos under Sections 2.12,
4.3(a)(5) and 4.10 of this Agreement that have been brought against Buyer by
third parties within five years following the Closing Date, (iii) any claims
arising from Section 4.4(a)(i)(7) above which shall have no time limit and
(iv) any claims which have been the subject of a written notice from Buyer to
Seller prior to the expiration of the applicable period under this Section
4.4(c)(ii), which notice specifies in reasonable detail the nature of the
claim.
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(iii) Notwithstanding anything to the contrary in this Section 4.4, no
limitation or condition of liability provided in this Section shall apply to
the breach of any of the representations and warranties contained herein if
such representation or warranty was made with actual knowledge that it
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements or facts contained therein not
misleading.
(iv) If there shall be a judicial determination that any Party (the
"Indemnified Party") seeking indemnification from another Party (the
"Indemnifying Party") under this Agreement is not entitled to such
indemnification in the amount originally claimed by a third party, then the
Indemnifying Party shall be entitled to reimbursement from the Indemnified
Party for its costs and expenses, including reasonable attorneys' fees,
incurred in the defense of the claim for such indemnity pro rata, to the
extent that the amount awarded is less than the amount originally claimed.
(v) Following the receipt by either Party of a complaint initiating a
lawsuit in respect of a Third Party Claim in respect of which indemnity may be
sought from either Party hereunder, within a reasonable time after such receipt,
the receiving Party shall give the other Party notice of such Third Party
Claim.
(vi) Buyer shall notify Seller and Seller shall notify Buyer of any claim
for Damages. Such notice shall describe, to the extent reasonably available,
the nature of the claim, the proposed remedy and the cost to remedy or to
satisfy the claim. Buyer and Seller shall, in good faith, consult with the
other Party and give the other Party a reasonable opportunity to propose an
alternative method to remedy or satisfy the claim. Provided, however, that if
the nature of the claim is such that, in Buyer and Seller's judgment, the above
notice and opportunity provisions could reasonably be expected to cause further
Damages or would otherwise not be appropriate under the circumstances, then the
prior notice and opportunity shall not be required. Neither Buyer nor Seller
shall be required in any event to adopt the method proposed by the other Party.
Buyer and Seller's failure to give the other Party the prior notice and
opportunity or to adopt the method proposed, shall not bar in any event either
Party from asserting an indemnification claim against the other under and
subject to the terms and conditions described in this Section 4.4, but, in any
such claim, the failure of either Party to give prior notice and opportunity,
or to adopt the method proposed shall be admissable evidence if either Party
shall contest the reasonableness of the amount of the Damages that it may
recover from the other Party.
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4.5 Confidentiality and Non-Competition
(a) Confidentiality. From and after the Closing, Seller shall,
and shall cause its Affiliates and representatives to, keep confidential and not
disclose to any other Person or use for his or its own benefit or the benefit
of any other Person any trade secrets or other confidential proprietary
information in its possession or control regarding Seller or their respective
businesses and operations. The obligations of the Seller under this Section
4.5(a) shall not apply to information which (i) is or becomes generally
available to the public without breach of the commitment provided for in this
Section; or (ii) is required to be disclosed by law, order or regulation of a
court or tribunal or governmental authority; provided, however, that, in any
such case, Seller shall notify Buyer as early as reasonably practicable prior to
disclosure to allow Buyer to take appropriate measures to preserve the
confidentiality of such information.
(b) Non-competition. For a period of eight (8) years or longer
(the "Non-Competition Term") from and after the Closing, Seller shall not,
directly or indirectly, (i) own, manage, operate, join, control or participate
in the ownership, management, operation or control of, or be connected as an
officer, director, employee, stockholder, partner or otherwise with, (1) an
entity engaged in the Business or the forklift industry, or (2) any entity using
the name "Xxxxx" (collectively, the "Competing Businesses" or each such business
a "Competing Business"), or (ii) solicit, employ, retain as a consultant,
interfere with or attempt to entice away from Buyer, its Affiliates, or any
successor to any of the foregoing, any individual who is, has agreed to be or
within one year of such solicitation, employment, retention, interference or
enticement has been, employed or retained by Buyer, its Affiliates or any
successor to any of the foregoing in a senior executive capacity or as a general
manager or sales, manufacturing, or technical employee. Ownership of not more
than five percent (5%) of the outstanding stock of any publicly traded company
engaging in a Competing Business shall not, in and of itself, be a violation of
this Section 4.5(b). The restrictive covenant contained in this Section 4.5(b)
is a covenant independent of any other provision of this Agreement, and the
existence of any claim which Seller may allege against Buyer, whether based on
this Agreement or otherwise, shall not prevent the enforcement of this covenant.
Seller agrees that a breach by Seller of this Section 4.5(b) shall cause
irreparable harm to Buyer, and its Affiliates, that Buyer's remedies at law for
any breach or threat of breach by Seller of the provisions of this Section
4.5(b) shall be inadequate, and that Buyer shall be entitled to an injunction or
injunctions to prevent breaches of this Section 4.5(b) and to
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enforce specifically the terms and provisions hereof, in addition to any other
remedy to which Buyer may be entitled at law or in equity. The Non-Competition
Term shall be tolled with respect to Seller during any period of violation of
this covenant not to compete by Seller. At the end of the eighth year at
Seller's written request, Buyer and Seller shall enter into good faith
negotiations to terminate Seller's obligations under this Section 4.5(b),
provided that if no mutual agreement is reached to terminate Seller's
obligations under this Section 4.5(b), then Seller's obligation shall
continue for an additional two years from the expiration of the eighth year.
In the event that this covenant not to compete shall be determined by any court
of competent jurisdiction to be unenforceable by reason of its extending for too
long a period of time or over too large a geographical area or by reason of its
being too extensive in any other respect, it shall be interpreted to extend only
over the longer period of time for which it may be enforceable, and/or over the
largest geographical area as to which it may be enforceable and/or to the
maximum extent in all other aspects as to which it may be enforceable, all as
determined by such court in such action.
4.6 Access to Information. Seller and Buyer shall reasonably
cooperate with each other after the Closing so that (subject to any limitations
that are reasonably required to preserve any applicable attorney-client
privilege) each Party has access without causing excessive hardship to normal
operations to the business records, contracts and other information existing at
the Closing Date and relating to Seller (whether in the possession of Seller or
Buyer) (including copies thereof) as is reasonably necessary for the (a)
preparation for or the prosecution or defense of any suit, action, litigation or
administrative, arbitration or other proceeding or investigation (other than one
by or on behalf of a Party to this Agreement) by or against Buyer or Seller (b)
preparation and filing of any Tax Return or election relating to Seller and any
audit by any taxing authority of any returns of Buyer or Seller relating
thereto, (c) preparation and filing of any other documents required by
governmental or regulatory bodies and (d) transfer of data to Buyer relating to
the Seller. The Party requesting such information and assistance shall reimburse
the other Party for all out-of-pocket costs and expenses incurred by such Party
in providing such information and in rendering such assistance. The access to
files, books and records contemplated by this Section 4.6 shall be during normal
business hours and upon not less than two (2) business days prior written
request, and shall identify the scope of the information to be reviewed and
shall be subject to such further reasonable limitations as the Party having
custody or control thereof may impose to preserve the confidentiality of
information contained therein, and shall not
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extend to material subject to a claim of privilege unless expressly waived by
the Party entitled to claim the same.
4.7 Cooperation
(a) With respect to the Excluded Liabilities, Buyer agrees to
reasonably cooperate with Seller, at no cost to Buyer, in connection with
Sellers' defense of any claims or lawsuit relating thereto, including, without
limitation, making available to Seller for inspection and copying business
records of the Buyer pertaining to such claims or lawsuits and making employees
of the Buyer available as needed from time to time for interviews, trial
testimony and similar appearances; provided, however, that Buyer is reimbursed
by Seller for any costs or expenses including any salary, wages or other
compensation paid by Buyer to its employees during the period such employees are
made available to Seller pursuant to this section, and that such cooperation
does not unreasonably interfere with Buyer's operation of its business.
(b) Seller agrees to cooperate with Buyer in Buyer's efforts to
obtain certain tax exemptions available to foreign invested companies or
purchasers of the Business or New Factory, provided that Seller shall not be
obligated to bear any costs in relation to such cooperation.
4.8 Use of Samsung Name
(a) For a period of three (3) years from the date commencement
of normal commercial production at the New Factory and during the Transition
Period (as defined below), Buyer may use, in relation to the Business and its
products, the Samsung name and all other trademarks, tradenames or logos that
are currently used in the Business as well as any updated versions of such
trademarks, tradenames and logos. The terms and conditions of such usage shall
be as set forth in Exhibit 4.8(a).
(b) Unless prohibited by applicable law, for a period of six (6)
months from the Closing Date, Buyer may brand forklifts manufactured in the
United States for sale in Asia and Europe on the terms and conditions as set
forth in Exhibit 4.8(b).
4.9 Transition Services
(a) Seller shall ensure that Buyer may use the Old Factory for a
period of not less than six (6) months from the Closing Date (the "Transition
Period"), subject to the consent of any third party who comes to own the Old
Factory (i.e., Volvo).
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(b) During the Transition Period, Seller shall use its best
efforts to ensure that the Business is continued to be provided with all of the
services and parts and components currently provided to the Business by Seller
or any Person affiliated with Seller on the same terms and conditions as such
services and parts and components are now being provided to the Business,
provided however, that Seller shall bear no unreasonable costs to secure such
services.
(c) During the Transition Period, Seller shall use its best
efforts to ensure that all Services currently made available to the employees of
the Business at the Old Factory including, without limitation, cafeteria, clinic
and human welfare services continue to be provided to those employees on the
same terms and conditions as such services are now being provided to them,
provided however, that Seller shall not be obligated to bear any costs to secure
such services.
(d) Seller shall use its best efforts to ensure that Samsung
Data Systems enters into an agreement with Buyer to provide MIS services to
Buyer.
4.10 Change of Factory Site and Removal of Asbestos
(a) The tangible assets, as designated by Buyer, other than the
real property of the Old Factory shall be moved to the New Factory. All
expenses associated with this transfer shall be borne by Seller including,
without limitation, expenses involved in detaching the assets from the Old Site
and delivering the assets to the new site, provided however, that expenses for
cleaning and painting the equipment, tooling, dies and jigs to be moved to the
New Factory shall be shared equally by the Parties. Seller shall also be
responsible for tearing down the portions of the New Factory currently dedicated
to offices as prescribed by buyer on schedule 4.10 including paying all expenses
associated with such process. Buyer shall be responsible for expenses associated
with installing the assets at the New Site.
(b) Asbestos
(i) Seller shall bear all costs and liabilities in
connection with the presence of asbestos in the Old Factory and the removal of
asbestos from the Old Factory. With respect to the New Factory, Seller agrees
that in the process of tearing down the portions of the New Factory as
prescribed by the buyer on Schedule 4.10, Seller will remove any and all
asbestos contained in and around the torn down portions or released as a result
of the tear down at Sellers sole expense and to Buyer's reasonable satisfaction
and Seller shall be liable for
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any claim arising from the presence of or removal of asbestos from those torn
down portions or releases resulting from such tear down. Buyer agrees that it
will be liable for any claim from third parties arising from the presence or
removal of asbestos from those portions of the New Factory that Seller is not
obligated, pursuant to this Article 4.10, to tear down.
(ii) If, within two and one-half (2-1/2) years from the
Closing Date, a law or regulation passes in Korea requiring that all asbestos be
removed from the New Factory, then Seller shall at its sole expense remove all
asbestos from the New Factory and be liable for any claim resulting from the
presence of such asbestos and from its removal. If Seller fails to remove such
asbestos within 30 days of Buyer's request, Buyer shall have the right to remove
such asbestos at Seller's expense.
4.11 Purchase of Forklifts by Seller. Seller shall use its best
efforts to ensure that Seller and all of its Affiliates of Seller purchase from
Buyer all of the forklifts that they purchase for a period of not less than
three (3) years from the Closing Date. During this time period, Buyer shall
charge Seller and its Affiliates the best price Buyer offers to other companies.
4.12 Property Taxes. Any and all taxes, charges, public imposts,
fees, and the like (collectively "Property Taxes") which are assessed on or
are required to be paid by Buyer for the first time after the Closing but prior
to the end of the calendar year in which the Closing occurs, in relation to, or
as a result of, ownership of the real properties (including land and buildings)
acquired from Seller or the operation of business at the place(s) acquired
from Seller shall be shared by Seller and Buyer on the basis of the number of
days of their respective holding of the real properties or operation of business
during the calendar year in which Property Taxes are assessed. Property Taxes
shall include, but not be limited to, property tax on buildings, global land tax
on land, business place tax, and any and all surtaxes on these taxes.
ARTICLE V
MISCELLANEOUS
5.1 Further Assurances; Cooperation. At and after the Closing,
Seller will execute and deliver such further instruments of conveyance and
transfer as Buyer may reasonably request to convey and transfer effectively to
Buyer the Purchased Assets or to put Buyer in actual possession and control of
the business of the Seller.
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5.2. Nature and Survival of Representations. The representations,
warranties, covenants and agreements of Buyer and Seller contained in this
Agreement, and all statements contained in this Agreement or any Exhibit or
Schedule hereto or any certificate delivered pursuant to this Agreement or in
connection with the transactions contemplated hereby, shall be deemed to
constitute representations, warranties, covenants and agreements of the
respective Party delivering the same. All such representations, warranties,
covenants and agreements shall survive the Closing hereunder subject to Section
4.4 hereof. Except for the representation and warranties expressly contained in
this Agreement, the Parties make no other representations or warranties and no
additional representations and warranties may be implied.
5.3. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or, if mailed, by certified or registered
mail, postage prepaid, to the other Party at the following addresses (or at such
other address as shall be given in writing to any Party to the other):
If to Buyer, to:
General Counsel
Xxxxx Material Handling Company
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Xxxxxx Xxxxxx of America
With a required copy to:
Representative Director
Xxxxx Material Handling Asia
00-0 Xxxxxx-xxxx
Xxxxxxxx, Xxxxxxxx Xxxxxxxx
Xxxxxxxx of Korea
If to Seller to:
President
Samsung Heavy Industries Co., Ltd.
Dongnam Tower
000-00 Xxxxxx-Xxxx, Xxxxxxx-Xx
Xxxxx, Xxxxxxxx of Korea
5.4. Successors and Assigns. This Agreement, and all rights and
powers granted hereby, will bind and inure to the benefit of the Parties hereto
and their respective successors and assigns. Without limiting the foregoing,
prior to the Closing.
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Buyer may assign all of its rights and obligations under this Agreement to a
Korean affiliate of Buyer without further consent of Seller. Following such
assignment, all references to the Buyer in this Agreement shall be considered
references to the assignee under this Section 5.4 as if the assignee had
originally executed this Agreement and Buyer shall be relieved of any and all
liability under this Agreement.
5.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Republic of Korea, without regard
to its conflict of law provisions.
5.6. Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute part of this Agreement, nor shall they affect its meaning,
construction or effect.
5.7. Amendment and Waiver. The Parties may by mutual agreement amend
this Agreement in any respect, and any Party, as to such Party, may (a) extend
the time for the performance of any of the obligations of any other Party, (b)
waive any inaccuracies in representations by any other Party, (c) waive
compliance by any other Party with any of the agreements contained herein and
performance of any obligations by such other Party, and (d) waive the
fulfillment of any condition that is precedent to the performance by such Party
of any of its obligations under this Agreement. To be effective, any such
amendment or waiver must be in writing and be signed by the Party against whom
enforcement of the same is sought.
5.8. Entire Agreement. This Agreement and the Schedules hereto,
each of which is hereby incorporated herein, set forth all of the promises,
covenants, agreements, conditions and undertakings between the Parties hereto
with respect to the subject matter hereof, and supersede all prior and
contemporaneous agreements and understandings, inducements or conditions,
express or implied, oral or written.
5.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute one and the same instrument.
5.10 Governing Language. The English language text of the Agreement
shall prevail over any translation thereof.
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5.11 Arbitration
(a) Any dispute arising under this Agreement which is not
settled after good faith attempts by the Parties to amicably resolve such
dispute shall be resolved by final and binding arbitration. The arbitration
shall be held in Seoul, Korea if the arbitration is brought by Buyer and
Lexington, Kentucky U.S.A. if the arbitration is brought by Seller in
accordance with the Rules of Conciliation and Arbitration of the International
Chamber of Commerce ("ICC Rules") as then existing and shall be heard and
determined by an arbital tribunal composed of three (3) arbitrators. Each of the
Parties shall appoint one arbitrator each, and both of such arbitrators shall
appoint a third arbitrator who shall serve as the Chairman of such arbitral
tribunal, provided that such third arbitrator is not a citizen of the U.S.A. or
Korea. If either Party fails or decides against appointing an arbitrator within
a period of thirty (30) days of the appointment of the first arbitrator, or if
the arbitrators designated by the Parties fail or otherwise are unable to
appoint the third arbitrator within thirty (30) days of the appointment of the
second arbitrator, then the remaining arbitrator(s) shall be selected by the
President of the International Chamber of Commerce, Seoul, Korea, which shall
act as the appointing authority.
(b) All arbitration proceedings shall be conducted in the
English language and the arbitral award (the "Award") shall be rendered no later
than six (6) months from the commencement of the arbitration or as otherwise
provided by the ICC Rules, unless otherwise extended by the arbitral tribunal
for no more than an additional six (6) months for reasons that are just and
equitable.
(c) The Parties expressly understand and agree that the Award
shall be the sole, exclusive, final and binding remedy between them regarding
any and all Disputes presented to the arbitral tribunal. Each Party hereby
expressly waives any and all rights that such Party may have with respect to a
judicial review of the Award in the courts of any country. Application shall be
made to any court having jurisdiction over the Party (or its assets) against
whom the Award is rendered for a judicial acceptance of the Award and an order
of enforcement.
(d) Notwithstanding any other provision of this Agreement, either
Party shall be entitled to seek preliminary injunctive relief from any court of
competent jurisdiction pending the final decision or award of the arbitrators.
5.12 Termination. This Agreement may be terminated upon the
occurrence of any of the following events:
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(a) the mutual agreement of all the Parties to terminate the
Agreement;
(b) if the Closing does not take place prior to October 31,
1998, provided that the right of any Party to terminate this
Agreement under this Clause (b) shall not be available to
any Party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure
of the Closing Date to occur on or before such date; or
(c) by any Party if any court of competent jurisdiction shall
have issued an order, decree or ruling or taken any other
action enjoining or otherwise prohibiting the transactions
contemplated under this Agreement and such order, decree or
ruling or other action has become final and nonappealable.
5.13 Willful Failure to Close. If the Closing does not occur due to
the fact that either Seller or Buyer has willfully or intentionally breached
their obligations under this Agreement then the breaching Party shall pay the
non-breaching Party liquidated damages in the amount of five percent (5%) of the
Purchase Price.
5.14 Enforcement and Damages. Buyer and Seller agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms of were
otherwise breached. It is accordingly agreed that each of Buyer and Seller shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions of this
Agreement, this being in addition to any other remedy, including without
limitation damages, to which it is entitled at law or in equity.
5.15 Severability. If at any time subsequent to the date hereof, any
terms or provisions of this Agreement shall be determined by any court of
competent jurisdiction to be partially or wholly illegal, void or unenforceable,
such provision shall be of no force and effect to the extent so determined, but
the illegality or unenforceability of such term or provision shall have no
effect upon and shall not impair the legality or enforceability of any other
term or provision of this Agreement.
5.16 Construction. The Parties acknowledge that each Party and its
counsel have reviewed and revised this Agreement
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and that any rule of construction to the effect that any ambiguities are to be
resolved against the drafting Party shall not be employed in the interpretation
of this Agreement or any amendments, schedules or exhibits hereto.
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement on the day and year first above written.
XXXXX Material Handling Company
/s/ XXXXX X. XXXXXXX
-----------------------
By: Xxxxx X. Xxxxxxx
Title: Vice President
Samsung Heavy Industries Co., Ltd.
/s/ X.X. XXX
-----------------------------
By: X.X. Xxx
Title: CEO and Vice President
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LIST OF SCHEDULES AND EXHIBITS
Schedule 1.1 Asset List & Description of Real Estate of New Factory
Schedule 1.1(e) Trademarks being Used in the Business
Schedule 1.2(g) Other excluded Assets
Schedule 1.5 Allocation of Purchase Price
Schedule 1.6 Restrictions on Adjustment
Schedule 1.7(a) List of Assumed Liabilities
Schedule 1.10 Contracts to be Assigned
Exhibit 1.10 Assignment Agreement for Certain Contracts Listed on
Schedule 1.10
Schedule 2.6 Changes Since Balance Sheet Date
Schedule 2.7 Taxes
Schedule 2.8 Inventory
Schedule 2.9 Pending Litigation
Schedule 2.10 Contracts; Unfilled Firm Purchase Orders
Schedule 2.11 Permits
Schedule 2.12 Environmental Matters
Schedule 2.13 Consents (the Implementation Schedule)
Schedule 2.14 Personal Property Permitted Encumbrances
Schedule 2.15 Real Estate
Schedule 2.16 Transactions With Affiliates
Schedule 2.18 Compensation Arrangements; Officers and Directors
Schedule 2.19 Employees
Schedule 2.21 Insurance
Schedule 2.22 Patents, Trademarks, Etc.
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Exhibit 4.8(a) Trademark License Agreement
Exhibit 4.8(b) Trademark License Agreement for U.S. Production
Exhibit 4.10 Portions of New Factory to be Torn Down by Seller
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ANNEX A
DEFINITIONS
"Additional Collection Period" has the meaning as described in
Section 1.4(c).
"Affiliate" or "Affiliates" means any Person(s) directly or indirectly
controlling, controlled by or under common control with such Person, and
includes any Person who is an officer, director or employee of such Person. As
used in this definition, "controlling" (including, with its correlative
meanings, "controlled by" and "under common control with") means possession,
directly or indirectly, of power to direct or cause the direction of management
or policies, whether through ownership of securities, partnership or other
ownership interests, by contract or otherwise.
"Ancillary Agreements" has the meaning as described in Section 2.2.
"Asset List" has the meaning as described in Section 1.1.
"Authority" means any national or local or foreign governmental or
regulatory entity, or any department, agency, authority or political
subdivision thereof.
"Average Pre-Closing Rate" has the meaning as described in Section
1.3.
"Business" has the meaning as described in Background Section.
"Closing" has the meaning as described in Section 1.11.
"Closing Statement" has the meaning as described in Section 1.6.
"Competing Businesses" or "Competing Business" have the meanings as
described in Section 4.4(b).
"Damages" has the meaning as described in Section 4.3(a)(iii).
"Employees" has the meaning as described in Section 2.19.
"Environmental Law" has the meaning as described in Section
2.12(a)(ii).
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"Environmental Liabilities" means any liabilities (including costs of
remediation) known or unknown, foreseen or unforeseen, whether contingent or
otherwise, fixed or absolute, present or future, asserted against or incurred by
Buyer or the Business arising out of or relating to (1) environmental conditions
first occurring or existing prior to the Closing (whether disclosed or
undisclosed) including, without limitation, the presence, Release, threat of
Release, Management or exposure of or to Hazardous Materials (each as defined
herein) at, on, in or under any property now or previously owned, operated or
leased by Seller, the Business or any of its Affiliates or predecessors (whether
into the air, soil, ground or surface waters on-site or off-site); (2) the
off-site transportation, storage, treatment, recycling or disposal of Hazardous
Materials Managed, Released or generated prior to the Closing by Seller or the
Business or any of its Affiliates or predecessors or generated in connection
with any of their operations; or (3) any violation of any Environmental Law
first occurring or existing prior to the Closing (including, without limitation,
costs and expenses for pollution control equipment required to bring the
Business into compliance with Environmental Laws and fines, penalties and
defense costs incurred for such reasonable time after the Closing as it takes
Buyer to come into compliance).
"Excluded Assets" has the meaning as described in Section 1.2.
"Excluded Liabilities" has the meaning as described in Section 1.7(b).
"Financial Statement" has the meaning as described in Section 2.4.
"Hazardous Substances" means any hazardous, toxic or polluting
materials, substances, wastes, pollutants or contaminants (including, without
limitation, petroleum and petroleum products, PCBs, radioactive materials,
asbestos or asbestos-containing materials).
"Indemnified Party" and "Indemnifying Party" have the meanings as
described in Section 4.3(b)(iv).
"Initial Collection Period" has the meaning as described in Section
1.4(c).
"Leases" has the meaning as described in Section 2.15(b).
"Lien" or "Liens" means any lien, charge, claim, pledge, security
interest, conditional sale agreement or other
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title retention agreement, lease, tenancy, ground rent, license, mortgage,
security agreement, covenant, condition, restriction, right-of-way, easement,
encroachment, option, judgment or of other encumbrance of matter of title.
"Management" has the meaning as described in Section 2.14(a)(iv).
"Managed" has a similar meaning appropriate for the context.
"MIS Services" has the meaning as described in Exhibit 4.9.
"New Factory" has the meaning as described in the Background Section.
"Non-Competition Term" has the meaning as described in Section 4.4(b).
"Old Factory" has the meaning as described in the Background Section.
"Owned Real Properties" has the meaning as described in Section
2.15(c).
"PCBs" means polychlorinated biphenyls.
"Permitted Real Property Encumbrances" has the meaning as described
in Section 2.15(c).
"Person" means any individual, a corporation, a partnership, an
association, a trust or other entity or organization, including an Authority.
"Personal Property Permitted Encumbrances" has the meaning as
described in Section 2.14.
"Pre-Closing Receivables" has the meaning as described in Section
1.4(b).
"Purchased Assets" has the meaning as described in Section 1.1.
"Purchase Price" has the meaning as described in Section 1.3.
"Real Properties" has the meaning as described in Section 2.15(a).
"Released" means released, spilled, leaked, pumped, poured, emitted,
emptied, discharged, injected, escaped, leached,
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disposed, or dumped and other similar terms. "Release" when used as a verb has
the same meaning, but in the present tense, and when used as a noun has a
similar meaning appropriate for the context.
"Seller's Knowledge" means the knowledge of Seller, after due inquiry
(unless otherwise provided).
"Taxes" and "Tax" have the meanings as described in Section 2.7.
"Transferred Employees" has the meaning as described in Section 4.2.
"Transition Period" has the meaning as described in Section 4.8.
"VAT Price" has the meaning as described in Section 1.3(b).
"Withheld Amount" has the meaning as described in Section 1.4(c).
"Withhold Account" has the meaning as described in Section 1.4(c).
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TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made as of the ______ day of
__________, 1998 between Samsung Heavy Industries, Co., Ltd., a Korean Company
(hereinafter "Licensor") and Xxxxx Material Handling Asia, Inc., a Korean
Company (hereinafter "Licensee") (the Licensor and Licensee are hereinafter
collectively referred to as the "Parties").
WHEREAS:
1. Pursuant to the Asset Purchase Agreement entered into between Licensor and
Xxxxx Material Handling Company on June 5, 1998 (the "Asset Purchase
Agreement") and subsequent assignment of the Asset Purchase Agreement to
Licensee, the Licensor agreed to license to the Licensee the trademarks
attached as Schedule I (the "Trademarks"); and
2. All capitalized terms and expressions, not otherwise defined herein,
shall have the respective meanings assigned thereto in the Asset
Purchase Agreement;
NOW THEREFORE, in consideration of the mutual promises stated herein, the
Parties agree as follows:
Article 1 Grant of License
1.1 By Closing, Licensor shall (i) obtain an exclusive trademark license from
Samsung Electronics Co., Ltd. and (ii) grant to Licensee a non-exclusive
sublicense thereof.
1.2 Licensee shall use the Trademarks in the form and in the manner consistent
with this Agreement and the Samsung CI Manual attached hereto. Licensee
shall use the Trademarks in any new form and manner and with new legends
as may be adopted by Licensor from time to time.
1.3 Licensor shall record Licensee with the Korean Industrial Property Office
as a non-exclusive licensee of the Trademarks. Licensee shall bear any
costs and all costs associated with the registration of the rights granted
herein.
Article 2 Consideration
2.1 The consideration for Licensee's use of the Trademarks shall be three
(3) percent of the total sum of all of Licensee's or its affiliates'
gross sales of forklifts bearing the
61
Trademarks based on the ex-factory price which shall in no case include:
(a) Sales, turnover and other taxes, including without limitation,
VAT on sale invoices;
(b) Packaging and transportation on shipments to customers; and
(c) Credits allowed for goods sold and returned.
2.2 Licensee shall pay the consideration on a quarterly basis and at such
time Licensee shall provide Seller with a certified report showing the
basis for such quarterly payment.
Article 3 Ownership of Trademark
Licensee recognizes Licensor's ownership of and title to the Trademarks, and
shall not claim adversely to Licensor's right, title, or interest in and to the
Trademarks.
Article 4 Term
The term of this Agreement shall commence as of its signing and shall last for
a period of three (3) years from the date of normal commercial production at
the New Factory and during the Transition Period. Upon the conclusion of the
term of this Agreement, Licensee shall discontinue any and all use of the
Trademarks unless otherwise agreed to by the parties. Licensee shall at no time
after the expiration of the term attempt to register or to use, or to aid any
third party in attempting to register or to use, any trademark(s) or service
xxxx(s) in any country which may be confusingly similar to the Trademarks. This
covenant shall survive the expiration of the term. Following expiration of the
term, Licensee shall also cooperate with Licensor in order to cancel any
existing Korean recordation or registration of Licensee as a licensed user of
the Trademarks.
Article 5 Termination
This Agreement and the sub-license granted hereby may be terminated immediately
by either Party upon any material breach of the terms herein, provided that,
the non-breaching Party shall provide notice of the breach to the breaching
Party, and the breaching Party shall have 30 days following the receipt of such
notice to cure such breach.
62
Article 6 Dispute Resolution and Governing Law
This Agreement shall be governed by the choice of law and choice of forum
provisions as specified in the Asset Purchase Agreement.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed
by their authorized representatives as of the day and year first written above.
Samsung Heavy Industries, Co., Ltd. Xxxxx Material Handling Asia, Inc.
By:_______________________________ By:______________________________
Title:____________________________ Title:___________________________
63
Exhibit I
Licensed Trademarks
Samsung Xxxx & Logo
64
[KOREAN LANGUAGE]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PANTONE 286C]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PROCESS (C100)]
[PROCESS (M50)]
65
[KOREAN LANGUAGE]
[KOREAN LANGUAGE (PANTONE 286C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (PANTONE 677C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (40%)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (100%)]
[SAMSUNG LOGO]
66
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[SAMSUNG LOGO]
67
FX 25B [KOREAN LANGUAGE]
[FX 25B ILLUSTRATION]
[FORKLIFT ILLUSTRATION]
68
FX10BR [KOREAN LANGUAGE]
[ILLUSTRATION WITH SAMSUNG LOGO]
[ILLUSTRATION OF DEVICE]
00
XXXXXXXXX XXXXXXX XXXXXXXXX XXX
XXXXXX XXXXXX PRODUCTION
THIS TRADEMARK LICENSE AGREEMENT ("Agreement") is made as of the ____ day of
_______, 1998 between Samsung Heavy Industries, Co., Ltd., a Korean Company
(hereinafter "Licensor") and Xxxxx Material Handling Company, a Delaware Company
(hereinafter "Licensee") (the Licensor and Licensee are hereinafter collectively
referred to as the "Parties").
WHEREAS:
1. Pursuant to the Asset Purchase Agreement entered into between Licensor and
Xxxxx Material Handling Company on June 5, 1998 (the "Asset Purchase
Agreement") the Licensor agreed to license to the Licensee the trademarks
attached as Schedule I (the "Trademarks"); and
2. All capitalized terms and expressions, not otherwise defined herein, shall
have the respective meanings assigned thereto in the Asset Purchase
Agreement;
NOW THEREFORE, in consideration of the mutual promises stated herein, the
Parties agree as follows.
Article 1 Grant of License
1.1 By Closing, Licensor shall (i) obtain an exclusive trademark license from
Samsung Electronics Co., Ltd. and (ii) grant to Licensee a non-exclusive
sublicense thereof.
1.2 Licensee shall use the Trademarks in the form and in the manner consistent
with this Agreement and the Samsung CI Manual attached hereto. Licensee
shall use the Trademarks in any new form and manner and with new legends as
may be adopted by Licensor from time to time.
1.3 Licensor shall record Licensee with the relevant intellectual or industrial
property office as a non-exclusive licensee of the Trademarks. Licensee
shall bear any costs and all costs associated with the registration of the
rights granted herein.
Article 2 Consideration
2.1 The consideration for Licensee's use of the Trademarks shall be three (3)
percent of the total sum of all of Licensee's or its affiliates' gross
sales of forklifts bearing the
70
Trademarks based on the ex-factory price which shall in no case include:
(a) Sales, turnover and other taxes, including without limitation,
VAT on sale invoices;
(b) Packaging and transportation on shipments to customers; and
(c) Credits allowed for goods sold and returned.
2.2 Licensee shall pay the consideration on a quarterly basis and at such time
Licensee shall provide Seller with a certified report showing the basis for
such quarterly payment.
Article 3 Ownership of Trademark
Licensee recognizes Licensor's ownership of and title to the Trademarks, and
shall not claim adversely to Licensor's right, title, or interest in and to the
Trademarks.
Article 4 Term
The term of this Agreement shall commence as of its signing and shall last for
a period of six (6) months from the Closing Date. Upon the conclusion of the
term of this Agreement, Licensee shall discontinue any and all use of the
Trademarks unless otherwise agreed to by the parties. Licensee shall at no time
after the expiration of the term attempt to register or to use, or to aid any
third party in attempting to register or to use, any trademark(s) or service
xxxx(s) in any country which may be confusingly similar to the Trademarks. This
covenant shall survive the expiration of the term. Following expiration of the
term, Licensee shall also cooperate with Licensor in order to cancel any
existing Korean recordation or registration of Licensee as a licensed user of
the Trademarks.
Article 5 Termination
This Agreement and the sub-license granted hereby may be terminated immediately
by either Party upon any material breach of the terms herein, provided that,
the non-breaching Party shall provide notice of the breach to the breaching
Party, and the breaching Party shall have 30 days following the receipt of such
notice to cure such breach.
71
Article 6 Dispute Resolution and Governing Law
This Agreement shall be governed by the choice of law and choice of forum
provisions as specified in the Asset Purchase Agreement.
IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be
executed by their authorized representatives as of the day and year first
written above.
Samsung Heavy Industries, Co., Ltd. Xxxxx Material Handling Company
By: /s/ X.X. Xxx By: /s/ Xxxxx X. Xxxxxxx
------------------------ ------------------------
Title: /s/ CEO Title: /s/ Vice President
--------------------- ---------------------
72
Exhibit I
Licensed Trademarks
Samsung Xxxx & Logo
73
[KOREAN LANGUAGE]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PANTONE 286C]
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[PROCESS (C100)]
[PROCESS (M50)]
74
[KOREAN LANGUAGE]
[KOREAN LANGUAGE (PANTONE 286C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (PANTONE 677C)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (40%)]
[SAMSUNG LOGO]
[KOREAN LANGUAGE (100%)]
[SAMSUNG LOGO]
75
[KOREAN LANGUAGE]
[SAMSUNG LOGO]
[SAMSUNG LOGO]
76
FX 25B [KOREAN LANGUAGE]
[FX 25B ILLUSTRATION]
[FORKLIFT ILLUSTRATION]
77
FX10BR [KOREAN LANGUAGE]
[ILLUSTRATION WITH SAMSUNG LOGO]
[ILLUSTRATION OF DEVICE]
