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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
_______________________
Date of Report
(Date of earliest
event reported): July 1, 1998
A. O. Smith Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-475 39-0619790
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
P. O. Box 23972, Milwaukee, Wisconsin 53223-0972
(Address of principal executive offices, including zip code)
(414) 359-4000
(Registrant's telephone number)
Item 2. Acquisition or Disposition of Assets.
On July 1, 1998, A. O. Smith Corporation (the "Company")
acquired substantially all of the assets of the General Electric
Industrial Control Systems Division of General Electric Company, a New
York corporation ("GE"), that related to GE's hermetic electric motors
operations located in Scottsville, Kentucky (the "Facility"), pursuant to
an Asset Purchase Agreement, dated as of May 13, 1998, by and between the
Company and GE (the "Asset Purchase Agreement"). The Company's
acquisition of the assets of GE relating to the Facility is referred to
herein as the "Acquisition."
Pursuant to the Asset Purchase Agreement, except for certain
excluded assets (including cash, tax credits and records, obligations of
affiliates of GE, GE's business name, certain records, GE's corporate
franchise, interests in intellectual property, business information,
certain hedge contracts, rights relating to contingent employees and
computer software), the Company acquired all of the business, rights,
claims and assets of GE relating to the Facility including, but not
limited to, the Facility's (a) owned real property, (b) personal property,
(c) inventories, (d) personal property leases, (e) contracts and purchase
and sales orders, (f) accounts receivable, (g) licenses and permits, and
(h) general intangibles.
As consideration for the assets of GE relating to the
Facility, the Company (i) assumed specified liabilities of GE relating to
the Facility; and (ii) paid $120 million in cash at the closing of the
Acquisition, subject to adjustment. The purchase price paid by the
Company for the assets of GE relating to the Facility was determined on
the basis of arm's length negotiations between the parties. The Company
funded the Acquisition through available cash and proceeds from the
issuance of $30 million in notes to Prudential Insurance Company of
America.
The Asset Purchase Agreement is filed as an exhibit to this
Current Report on Form 8-K and is incorporated herein by reference. The
brief summary of the material provisions of the Asset Purchase Agreement
set forth above is qualified in its entirety by reference to the Asset
Purchase Agreement filed as an exhibit hereto.
GE used the assets relating to the Facility in the
manufacture, production, marketing, distribution, sale and related
research and development of hermetic electric motors. The Company intends
to continue to use such assets for that purpose.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Not applicable.
(b) Pro Forma Financial Information.
Not applicable.
(c) Exhibits.
The exhibit listed in the accompanying Exhibit Index
is filed as part of this Current Report on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
A. O. SMITH CORPORATION
Date: July 15, 1998 By: /s/ W. David Romoser
W. David Romoser
Vice President, General Counsel
and Secretary
A. O. SMITH CORPORATION
EXHIBIT INDEX TO FORM 8-K
Report Dated July 1, 1998
Exhibit
No. Description
(2) Asset Purchase Agreement, dated as of May 13, 1998,
by and between A. O. Smith Corporation and General
Electric Company.*
--------------
*The schedules and exhibits to this document are not being filed herewith.
The registrant agrees to furnish supplementally a copy of any such
schedule or exhibit to the Securities and Exchange Commission upon
request.
ASSET PURCHASE AGREEMENT
BETWEEN
GENERAL ELECTRIC COMPANY
AND
A. O. SMITH CORPORATION
Dated as of May 13, 1998
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . 1
1.1. Definition of "Business". . . . . . . . . . . . . . . . . 1
1.2. Assets to be Transferred . . . . . . . . . . . . . . . . . 1
1.3. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 3
2. ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . 5
2.1. Liabilities to be Assumed . . . . . . . . . . . . . . . . 5
2.2. Liabilities Not to be Assumed . . . . . . . . . . . . . . 6
2.3. Right to Contest . . . . . . . . . . . . . . . . . . . . . 8
3. PURCHASE PRICE - PAYMENT . . . . . . . . . . . . . . . . . . . . 9
3.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . 9
3.2. Consideration . . . . . . . . . . . . . . . . . . . . . . 9
3.3. Determination of Net Asset Value . . . . . . . . . . . . . 10
3.4. Allocation of Purchase Price . . . . . . . . . . . . . . . 13
4. REPRESENTATIONS AND WARRANTIES OF COMPANY . . . . . . . . . . . 13
4.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . 13
4.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . 14
4.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . 14
4.4. Financial Statements . . . . . . . . . . . . . . . . . . . 15
4.5. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . 15
4.6. Accounts Receivable . . . . . . . . . . . . . . . . . . . 15
4.7. Inventory . . . . . . . . . . . . . . . . . . . . . . . . 16
4.8. Absence of Certain Changes . . . . . . . . . . . . . . . . 16
4.9. Absence of Undisclosed Liabilities . . . . . . . . . . . . 17
4.10. No Litigation . . . . . . . . . . . . . . . . . . . . 18
4.11. Compliance With Laws and Orders . . . . . . . . . . . 18
4.12. Title to and Condition of Properties . . . . . . . . . 20
4.13. Insurance . . . . . . . . . . . . . . . . . . . . . . 22
4.14. Contracts and Commitments . . . . . . . . . . . . . . 22
4.15. Labor Matters . . . . . . . . . . . . . . . . . . . . 24
4.16. Employee Benefit Plans . . . . . . . . . . . . . . . . 25
4.17. Employees; Compensation . . . . . . . . . . . . . . . 25
4.18. LPPP . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.19. Major Customers and Suppliers . . . . . . . . . . . . 26
4.20. Product Warranty and Product Liability . . . . . . . . 26
4.21. Certain Relationships to Company . . . . . . . . . . . 27
4.22. Assets and Services Necessary to Business . . . . . . 27
4.23. No Brokers or Finders . . . . . . . . . . . . . . . . 27
4.24. Disclosure . . . . . . . . . . . . . . . . . . . . . . 27
5. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . 27
5.1. Corporate . . . . . . . . . . . . . . . . . . . . . . . . 28
5.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . 28
5.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . 28
5.4. No Brokers or Finders . . . . . . . . . . . . . . . . . . 29
5.5. Financial Capability . . . . . . . . . . . . . . . . . . . 29
6. EMPLOYEES - EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . 29
6.1. Continuation of Employment and Benefit Plans . . . . . . . 29
6.2. Retained Responsibilities . . . . . . . . . . . . . . . . 30
6.3. Payroll Tax . . . . . . . . . . . . . . . . . . . . . . . 30
6.4. Termination Benefits . . . . . . . . . . . . . . . . . . . 30
6.5. Non-Facility Employees . . . . . . . . . . . . . . . . . . 31
6.6. No Third Party Rights . . . . . . . . . . . . . . . . . . 31
7. OTHER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.1. Title Insurance . . . . . . . . . . . . . . . . . . . . . 31
7.2. Surveys . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.3. Certificates of Occupancy . . . . . . . . . . . . . . . . 32
7.4. Confidentiality . . . . . . . . . . . . . . . . . . . . . 32
7.5. Noncompetition . . . . . . . . . . . . . . . . . . . . . . 32
7.6. [intentionally omitted] . . . . . . . . . . . . . . . . . 35
7.7. HSR Act Filings . . . . . . . . . . . . . . . . . . . . . 35
7.8. Product Liability Matters . . . . . . . . . . . . . . . . 36
7.9. Use of Names . . . . . . . . . . . . . . . . . . . . . . . 36
7.10. Licensed Information . . . . . . . . . . . . . . . . . 37
7.11. Access to Information and Records . . . . . . . . . . 37
7.12. Cash Management; Intercompany Accounts . . . . . . . . 39
7.13. Certain Agreements . . . . . . . . . . . . . . . . . . 40
8. FURTHER PRE-CLOSING COVENANTS . . . . . . . . . . . . . . . . . 40
8.1. Conduct of Business Pending the Closing . . . . . . . . . 40
8.2. Further Actions . . . . . . . . . . . . . . . . . . . . . 42
8.3. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 42
8.4. Communication Plan . . . . . . . . . . . . . . . . . . . . 43
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS . . . . . . . . . . 43
9.1. Representations and Warranties True on the Closing Date . 43
9.2. Compliance With Agreement . . . . . . . . . . . . . . . . 44
9.3. Absence of Litigation . . . . . . . . . . . . . . . . . . 44
9.4. Consents and Approvals . . . . . . . . . . . . . . . . . . 44
9.5. Hart-Scott-Rodino Waiting Period . . . . . . . . . . . . . 44
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS . . . . . . . . . 44
10.1. Representations and Warranties True on the Closing
Date . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.2. Compliance With Agreement . . . . . . . . . . . . . . 44
10.3. Absence of Litigation . . . . . . . . . . . . . . . . 44
10.4. Consents and Approvals . . . . . . . . . . . . . . . . 44
10.5. Hart-Scott-Rodino Waiting Period . . . . . . . . . . . 45
11. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . 45
11.1. By Company . . . . . . . . . . . . . . . . . . . . . . 45
11.2. By Buyer . . . . . . . . . . . . . . . . . . . . . . . 46
11.3. Indemnification of Third-Party Claims . . . . . . . . 46
11.4. Payment . . . . . . . . . . . . . . . . . . . . . . . 47
11.5. Limitations on Indemnification . . . . . . . . . . . . 48
11.6. No Waiver . . . . . . . . . . . . . . . . . . . . . . 49
11.7. Set Off . . . . . . . . . . . . . . . . . . . . . . . 49
11.8. Tax and Insurance Offset . . . . . . . . . . . . . . . 49
11.9. Exclusive Remedy . . . . . . . . . . . . . . . . . . . 50
12. CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
12.1. Documents to be Delivered by Company . . . . . . . . . 51
12.2. Documents to be Delivered by Buyer . . . . . . . . . . 51
13. TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . 52
13.1. Right of Termination Without Breach . . . . . . . . . 52
13.2. Termination for Breach . . . . . . . . . . . . . . . . 53
14. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . 54
14.1. Disclosure Schedule . . . . . . . . . . . . . . . . . 54
14.2. Further Assurance . . . . . . . . . . . . . . . . . . 54
14.3. Publicity . . . . . . . . . . . . . . . . . . . . . . 54
14.4. Assignment; Parties in Interest . . . . . . . . . . . 54
14.5. Equitable Relief . . . . . . . . . . . . . . . . . . . 55
14.6. Law Governing Agreement . . . . . . . . . . . . . . . 55
14.7. Amendment and Modification . . . . . . . . . . . . . . 55
14.8. Notice . . . . . . . . . . . . . . . . . . . . . . . . 55
14.9. Expenses . . . . . . . . . . . . . . . . . . . . . . . 57
14.10. Negotiation . . . . . . . . . . . . . . . . . . . . . 58
14.11. Interpretive Provisions . . . . . . . . . . . . . . . 58
14.12. Entire Agreement . . . . . . . . . . . . . . . . . . . 58
14.13. Counterparts . . . . . . . . . . . . . . . . . . . . . 59
14.14. Headings . . . . . . . . . . . . . . . . . . . . . . . 59
SCHEDULES
Schedule 1.2.(a) - Owned Real Property
Schedule 1.2.(d) - Personal Property Leases
Schedule 4.3 - Violation, Conflict, Default
Schedule 4.4 - Financial Statements
Schedule 4.5 - Tax Returns (Exceptions to Representations)
Schedule 4.6 - Accounts Receivable (Aged Schedule)
Schedule 4.7 - Inventory
Schedule 4.8 - Certain Changes
Schedule 4.9 - Off-Balance Sheet Liabilities
Schedule 4.10 - Litigation Matters
Schedule 4.11.(a) - Non-Compliance with Laws
Schedule 4.11.(b) - Licenses and Permits
Schedule 4.11.(c) - Environmental Matters (Exceptions to
Representations)
Schedule 4.12.(a)(i) - Pre-Closing Liens
Schedule 4.12.(a)(ii) - Post-Closing Liens
Schedule 4.12.(b) - Defects
Schedule 4.12.(d) - Condemnations
Schedule 4.14.(a) - Real Property Leases
Schedule 4.14.(c) - Purchase Commitments
Schedule 4.14.(d) - Sales Commitments
Schedule 4.14.(e) - Contingent Employees
Schedule 4.14.(g) - Loan Agreements, etc.
Schedule 4.14.(h) - Guarantees
Schedule 4.14.(i) - Government Contracts
Schedule 4.14.(k) - Material Contracts
Schedule 4.15 - Labor Matters
Schedule 4.16.(a) - Employee Plans/Agreements
Schedule 4.17 - Employees; Compensation
Schedule 4.19.(a) - Major Customers
Schedule 4.19.(b) - Major Suppliers
Schedule 4.19.(c) - Dealers and Distributors
Schedule 4.20 - Product Warranty, Warranty Expense and
Liability Claims
Schedule 4.21 - Contracts with Affiliates
Schedule 4.22 - Assets and Services Necessary to Business
(Excluded)
EXHIBITS
Exhibit 1.1 - Products
Exhibit 1.2.(b) - Personal Property
Exhibit 1.2.(i) - Fort Wayne Assets
Exhibit 2.1.(a) - Assumed Balance Sheet Liabilities
Exhibit 2.1.(b) - Contractual Liabilities
Exhibit 6.1.(a) - Employee Benefits
Exhibit 6.5 - Non-Facility Salaried Employees
Exhibit 7.13.(a) - Technology License Agreement
Exhibit 7.13.(b) - Transition Services Agreement
Exhibit 7.13.(c) - Materials Purchase Agreement
Exhibit 8.4 - Communication Plan
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated as of May 13,
1998, by and between A. O. Smith Corporation, a Delaware corporation
("Buyer"), and General Electric Company, a New York corporation
("Company").
RECITALS
WHEREAS, Company is engaged, through its General Electric
Industrial Control Systems Division (the "Division"), in the design,
manufacture and sale of electric motors.
WHEREAS, Company carries on the Business (as hereinafter
defined) primarily through the Division at Company's facility in
Scottsville, Kentucky (the "Facility").
WHEREAS, Buyer desires to purchase from Company, and Company
desires to sell to Buyer, the operations and substantially all of the
property and assets of the Business, on the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and
conditions hereinafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Definition of "Business". As used herein, "Business" shall
mean the manufacture, production, marketing, distribution, sale and
related research and development by Company, but not by GE Motors Private
Limited, a corporation organized under the laws of Singapore ("Singapore
Sub"), of the Products (as defined on Exhibit 1.1). Such term shall
include, except as otherwise specifically provided herein, all operations
carried on by or related to products associated by trade name or otherwise
with Company or the Division that are related to the Business on the date
hereof. Where the context allows, the term "Business" shall also mean
Company insofar as the operation of the Business, as above defined, is
concerned. As used herein, "Combined Business" shall mean the Business
and the hermetic electric motors operations of Singapore Sub.
1.2. Assets to be Transferred. Subject to the terms and conditions
of this Agreement, and except as provided in Section 1.3, on the Closing
Date Company shall sell, transfer, convey, assign and deliver to Buyer (or
upon Buyer's request, to Buyer's Designees (as defined in Section
14.4.(a))), and Buyer shall purchase and accept, free and clear of all
Liens (as defined in Section 4.12) of any nature whatsoever except those
described in Schedule 4.12.(a)(ii), Permitted Liens (as defined in Section
4.12) and Permitted Real Property Liens (as defined in Section 4.12), all
of the business, rights, claims and assets (of every kind, nature,
character and description, whether real, personal or mixed, tangible or
intangible, accrued, contingent or otherwise, and wherever situated) of
Company (1) used, held for use or acquired or developed for use
exclusively in the Business or (2) located at the Facility, in each case
as such assets or rights exist on the Closing Date, but excluding the
assets described in Section 1.3 (collectively, such assets, other than the
assets subject to such exclusion, are referred to as the "Purchased
Assets"). Company will take all such reasonable steps as may be necessary
to put Buyer in actual possession and operating control of the Purchased
Assets as of the Closing Date. The Purchased Assets shall include, but
not be limited to, all the following assets or rights of Company, if and
only if so used, held for use or acquired or developed exclusively in the
Business or located at the Facility:
1.2.(a) Owned Real Property. All of the real property,
including fixtures, buildings, improvements and all appurtenant
rights, owned by Company and described on Schedule 1.2.(a) (the
"Owned Real Property").
1.2.(b) Personal Property. All machinery, equipment,
vehicles, tools, dies, molds and other tooling (including any rights
in tools, dies, molds and other tooling in the possession of others),
supplies, spare parts, furniture, packaging materials, including,
without limitation, all fixed assets listed on Exhibit 1.2.(b), and
all other personal property not included in inventory (other than
personal property leased pursuant to Personal Property Leases (as
defined in Section 1.2.(d))) (the "Personal Property").
1.2.(c) Inventory. All inventories of raw materials,
work-in-process, component parts and finished goods (including all
such in transit on the Closing Date), together with related packaging
materials (collectively, the "Inventory").
1.2.(d) Personal Property Leases. Rights under all leases
of machinery, equipment, vehicles, furniture and other personal
property leased by Company and described in Schedule 1.2.(d) (the
"Personal Property Leases").
1.2.(e) Contracts. All Company's rights in, to and under
all contracts, purchase orders, sales orders, licenses, leases,
commitments and other agreements (hereinafter "Contracts") of Company
other than Contracts that constitute Unassumed Liabilities (as
defined in Section 2.2).
1.2.(f) Accounts Receivable. All accounts receivable
(including unbilled receivables) owed to the Business and reflected
on the Final Closing Balance Sheet (as defined in Section 3.3.(d)).
1.2.(g) Licenses; Permits. All licenses, permits,
approvals, certifications and listings from governmental authorities
of Company to the extent transferable (the "Licenses").
1.2.(h) General Intangibles. All advance payments and
prepaid items and expenses reflected on the Final Closing Balance
Sheet, all rights of offset and credits, all causes of action,
claims, demands, rights and privileges against third parties
(including without limitation manufacturer and seller warranties of
any goods, fixtures or services provided to Company) and other
intangible rights and assets, including all goodwill associated with
the Business and the Purchased Assets.
1.2.(i) Certain Fort Wayne Assets. The tangible personal
property identified on Exhibit 1.2.(i), which is located at Company's
facility in Fort Wayne, Indiana (the "Fort Wayne Facility").
1.3. Excluded Assets. Any contrary provisions of Section 1.2
notwithstanding, Company shall not sell, transfer, assign, convey or
deliver to Buyer, and Buyer will not purchase or accept, the following
assets of Company (the "Excluded Assets"):
1.3.(a) Cash and Cash Equivalents. All cash and cash
equivalents, other than petty cash balances used at the Facility.
1.3.(b) Consideration. The consideration to be delivered by
Buyer to Company pursuant to this Agreement and all other rights of
Company under this Agreement and the Ancillary Agreements (as defined
in Section 7.13).
1.3.(c) Tax Credits and Records. Foreign, federal, state
and local income and franchise tax credits and tax refund claims and
associated returns and records.
1.3.(d) Certain Obligations of Affiliates. Notes, drafts,
accounts receivable or other obligations for the payment of money,
made or owed to the Business by any Affiliate not arising in the
ordinary course of the Business. For purposes hereof, "Affiliate"
means with respect to any Person (as defined in Section 4.14.(h)),
any other Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with such Person. For purposes of this definition, control
of a Person means the power, direct or indirect, to direct or cause
the direction of the management and policies of such Person whether
by contract or otherwise and, in any event and without limitation to
the foregoing, any Person owning more than 50% of the voting
securities of a second Person shall be deemed to control that second
Person.
1.3.(e) Business Name. Any rights in or to the use of the
name, mark, trade name, trademark or service mark incorporating
"General Electric," "General Electric Company" or the letters "GE",
or derivations thereof, or any of the logos of Company, except to the
extent provided in Section 7.9.
1.3.(f) Assets Related to Unassumed Liabilities. Any
property, right or asset arising from and directly related to the
defense, compromise, discharge or satisfaction of any of the
Unassumed Liabilities.
1.3.(g) Certain Records. All records, files and data
pertaining primarily to any of the Excluded Assets or any of the
Unassumed Liabilities.
1.3.(h) Corporate Franchise. Company's franchise to be a
corporation and its certificate of incorporation, by-laws, corporate
seal, minute books, stock books and other corporate records
pertaining to its corporate existence.
1.3.(i) Fort Wayne and Other Assets. Other than the
tangible personal property identified on Exhibit 1.2.(i), any asset
or property located at the Fort Wayne Facility or any other facility
of Company (other than the Facility, the leased storage space
disclosed on Schedule 4.14.(a) or any space disclosed on Schedule
4.7) on the Closing Date.
1.3.(j) LPPP. All Company's interests in any LPPP (as
defined in the Technology License Agreement referred to in Section
7.13.(a) (the "Technology License Agreement")), as to which Buyer's
rights shall be limited to those set forth in the Technology License
Agreement and in Section 7.9.
1.3.(k) Business Information. Subject to Section 7.10, all
advertising material, sales literature, promotional literature,
catalogs and similar or related materials, all books, records and
files of Company of every kind, whether relating to past or current
operations, including without limitation invoices, books of account,
general, financial and personnel records, customer and vendor lists,
and operating, advertising, promotional and marketing records and
files, plans, production records, quality control records, packaging
supply specifications, marketing plans, sales records and histories,
market research data, label and shipping carton dies, films,
photographs, color separations, prints, plates and graphic materials
and artwork, including all amendments, correspondence and related
materials with regard to any of the foregoing, all computerized books
and records and all other documents or other embodiments of
information of Company and all correspondence and other documents
(collectively, the "Business Information").
1.3.(l) Foreign Currency and Commodity Hedge Contracts. All
Company's rights in, to and under foreign currency hedges,
derivatives or any other type of instrument intended to eliminate or
diminish foreign currency risk with respect to the Business ("Foreign
Currency Hedge Contracts") or any commodity options, puts, calls or
similar agreements with respect to commodities used by the Business
("Commodity Hedge Contracts").
1.3.(m) Contract Employees. The rights of Company under and
pursuant to Company's agency contract relating to contingent
employees at the Facility.
1.3.(n) Computer Software. All computer source codes,
programs and other software, including all machine readable code,
printed listings of code, documentation and related property and
information of Company relating to the Business.
1.4. Nonassignable Contracts and Rights. Notwithstanding anything
to the contrary in this Agreement, no Contracts, Personal Property Leases,
Licenses, properties, rights or other assets of Company shall be deemed
sold, transferred or assigned to Buyer pursuant to this Agreement if the
attempted sale, transfer or assignment thereof to Buyer without the
consent or approval of another party or governmental entity would be
ineffective or would constitute a breach of the terms thereof or a
violation of any law or regulation or would in any other way adversely
affect the rights of Company (or Buyer as transferee or assignee)
thereunder and such consent or approval is not obtained on or prior to the
Closing Date. In such case, to the extent possible, (i) the beneficial
interest in or to such Contracts, properties, rights or assets
(collectively, the "Beneficial Rights") shall in any event pass as of the
Closing Date to Buyer under this Agreement; and (ii) pending such consent
or approval, Buyer shall assume or discharge the obligations of Company
under such Beneficial Rights (to the extent such obligations are Assumed
Liabilities) as agent for Company, and Company shall act as Buyer's agent
in the receipt of any benefits, rights or interest received from the
Beneficial Rights. Buyer and Company shall use all commercially
reasonable efforts (and bear their respective costs of such efforts)
without payment of any material penalty, fee or any other amounts to any
third parties, subject to Section 14.9, to obtain and secure any and all
consents and approvals that may be necessary to effect the legal and valid
sale, transfer or assignment of the Contracts, properties, rights or
assets underlying the Beneficial Rights to Buyer without material change
in any of the material terms or conditions of such Contracts, properties,
rights or assets, including without limitation their formal assignment or
novation, if advisable. After the Closing, Buyer and Company will
continue to use their commercially reasonable efforts to obtain any such
consents or approvals. Buyer and Company will make or complete such
transfers as soon as reasonably possible and cooperate with each other in
any other reasonable arrangement designed to provide for Buyer the
benefits of such Contracts, properties, rights and assets including
enforcement at the cost and for the account of Buyer of any and all rights
of Company against the other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise, and to provide for
the discharge of any liability or obligation under such Contracts,
properties, rights or assets, to the extent such liability or obligation
constitutes an Assumed Liability. If and to the extent that an
arrangement reasonably acceptable to Buyer with respect to Beneficial
Rights cannot be made, Buyer, upon notice to Company, shall have no
obligation pursuant to Section 2.1 or otherwise with respect to any such
Contract, property, right or other asset and any such Contract, property,
right or other asset shall not be deemed to be a Purchased Asset, and the
related Liability shall not be deemed an Assumed Liability, hereunder.
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed. As used in this Agreement, the
term "Liability" shall mean and include any direct or indirect
indebtedness, guaranty, endorsement, claim, loss, damage, deficiency,
cost, liability, expense, obligation or responsibility, fixed or unfixed,
known or unknown, asserted or unasserted, liquidated or unliquidated,
secured or unsecured. Subject to the terms and conditions of this
Agreement, including without limitation Section 2.2, on the Closing Date,
Buyer shall assume and agree to perform and discharge when and as due any
and all Liabilities of Company exclusively relating to or exclusively
arising in connection with the Business and the Purchased Assets
(collectively the "Assumed Liabilities"), including without limitation:
2.1.(a) Final Closing Balance Sheet Liabilities. The
accounts payable and accrued Liabilities reflected or reserved
against on the Final Closing Balance Sheet under the captions
identified on Exhibit 2.1.(a) exclusively relating to or exclusively
arising in connection with the Business and the Purchased Assets.
2.1.(b) Contractual Liabilities. Company's Liabilities
arising under and pursuant to the following Contracts:
(i) All Contracts described in any of Schedules
1.2.(d) or 4.14.(a) or Exhibit 2.1.(b).
(ii) Every other Contract entered into by Company
exclusively in connection with the operation of the Business
(A) prior to the date hereof or (B) after the date hereof and
prior to the Closing in compliance with Section 8.1.
The Contracts described in subsections 2.1.(b)(i) and (ii) above are
hereinafter collectively described as the "Assumed Contracts."
2.1.(c) Liabilities Under Permits and Licenses. Company's
Liabilities arising under any permits or licenses assigned to Buyer.
2.1.(d) Warranty Liabilities. Any Liability of Company for
contractual warranty obligations pursuant to Company's product
warranties relating to any Product manufactured at the Facility
("Assumed Warranty Liabilities").
Except as provided in this Section 2.1, Buyer shall not assume any
Liabilities of Company.
2.2. Liabilities Not to be Assumed. Notwithstanding anything to
the contrary set forth herein, including without limitation Section 2.1,
Buyer is not assuming any Liabilities of Company of the following kind,
character, nature and description (collectively, the "Unassumed
Liabilities"), and all such Liabilities shall be and remain the
responsibility of Company.
2.2.(a) Certain Contracts. The obligations of Company under
and pursuant to the following contracts and leases:
(i) Foreign Currency Hedge Contracts and
Commodity Hedge Contracts; and
(ii) Company's agency Contract relating to
contingent employees at the Facility.
2.2.(b) Taxes Arising from Transaction. Any income or
similar taxes applicable to, imposed upon or arising out of the sale
or transfer of the Purchased Assets to Buyer and the other
transactions contemplated by this Agreement.
2.2.(c) Taxes. Any Liability of Company (whether or not
arising out of the Business) for Taxes (as hereinafter defined),
except that (i) Liability for transfer, registration and recording
Taxes arising out of the consummation of the transactions
contemplated by this Agreement shall be governed by Section 14.9.(c)
and (ii) Liability for ad valorem, real property or personal property
taxes exclusively relating to or exclusively arising in connection
with the Business shall constitute Assumed Liabilities. As used
herein, "Taxes" shall mean income, profit, payroll, social security,
turnover, withholding, franchise, gross receipts, sales, use,
transfer, registration, recording, value added, ad valorem, real or
personal property, excise, occupation, customs, import and export or
other taxes and governmental fees imposed by the United States, any
foreign country, any state, municipality, subdivision or agency of
the United States or any foreign country or any other governmental or
other authority charged with levying taxes or fees, and all interest,
penalties, deficiencies and assessments due on account thereof
whether disputed or undisputed.
2.2.(d) Insured Claims. Liabilities arising out of or
relating to events occurring prior to the Closing that are covered by
the insurance policies of Company in effect on or prior to the
Closing Date, but only to the extent Company receives proceeds
thereunder.
2.2.(e) Product Liability. Any Liability of Company in the
nature of product liability, including, without limitation, any
Liability for claims made for injury to person, damage to property or
other damage arising from, caused by or arising out of the design,
manufacture, assembly, appropriateness for use, application,
installation, sale, lease or license of any Product, or the rendering
of any service, by Company prior to the Closing ("Product
Liability"), except that Product Liability in respect of Products
that Buyer ships after the Closing shall constitute Assumed
Liabilities.
2.2.(f) Litigation. Any Liability arising prior to the
Closing with respect to any claim, complaint, action, suit,
proceeding, arbitration or other alternative dispute resolution
procedure, investigation or inquiry, whether civil, criminal or
administrative ("Litigation"), described in Schedule 4.10.
2.2.(g) Workers Compensation. Any Liability of Company
based upon workers compensation.
2.2.(h) Employee Obligations. Except as expressly provided
in Article 6, any Liability of Company under any Employee
Plan/Agreement (as defined in Section 4.16.(a)) or the rights,
obligations and liabilities incident to or incurred in connection
with any Employee Plan/Agreement, including without limitation
Liabilities of Company for incentive or bonus payments and
Liabilities of Company associated with SFAS No. 87, 88, 106 and 112
accruals whether relating to current or former employees of Company
in the Business, or for pay-in-lieu-of-notice, severance or
termination pay.
2.2.(i) Environmental Liabilities. All Liabilities arising
under any Environmental Law (as defined in Section 4.11.(c)) in
connection with any Environmental Action (as defined below) to the
extent any such Environmental Action or Liability (A) is related in
any way to Company's or any previous owner's or operator's ownership,
operation or occupancy of the Business or the properties and assets
being transferred to Buyer, and (B) in whole or in part occurred,
existed, arose out of conditions or circumstances that existed, or
was caused on or before the Closing Date, whether or not known to
Buyer. As used herein, "Environmental Action" means any pollution,
threat to the environment, or exposure to, or manufacture,
processing, distribution, use, treatment, generation, existence,
transport, handling, holding, removal, abatement, remediation,
recycling, reclamation, management, disposal, emission, discharge,
storage, escape, seepage, leakage or release of, or threatened
release of, any Waste (as defined below). As used herein, "Waste"
means pollutants, contaminants, chemicals, compounds or toxic,
hazardous or petroleum or petroleum-based substances or wastes, waste
waters or byproducts, including asbestos, polychlorinated biphenyls
("PCBs") or urea formaldehyde (which asbestos, PCBs or urea
formaldehyde are as of the Closing Date in noncompliant form or
condition), or addressed by any Environmental Law. The Liabilities
excluded pursuant to this Section 2.2.(i) include, without
limitation, Liabilities arising under any applicable federal or state
Environmental Law, including, without limitation, the Federal
Comprehensive Environmental Response, Compensation and Liability Act,
as amended, 42 U.S.C. Section 9601 et seq. ("CERCLA").
2.2.(j) Special Bonuses. Liabilities resulting from any
special incentive or other bonus agreements or arrangements between
Company and any of its employees relating primarily to the
consummation of the transactions contemplated by this Agreement,
except to the extent awarded or entered into at the written request
of Buyer.
2.3. Right to Contest. The assumption of and agreement by Buyer to
pay, perform and discharge, as the case may be, the Assumed Liabilities
shall not prohibit Buyer from contesting with a third party, in good faith
and at the sole expense of Buyer, the amount, validity or enforceability
of any of the Assumed Liabilities.
3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price. The purchase price (the "Purchase Price") for
the Purchased Assets shall be $120,000,000, minus (i) the amount, if any,
by which the Net Asset Value (as defined in Section 3.3.(b)) as reflected
on the Final Closing Balance Sheet (as defined in Section 3.3.(d)) is less
than $22,515,000, plus (ii) the amount, if any, by which the Net Asset
Value as reflected on the Final Closing Balance Sheet exceeds $22,515,000.
3.2. Consideration. For and in consideration of the transfer to
Buyer of the Purchased Assets, Buyer shall take the actions described in
subsections (a) through (b) below:
3.2.(a) Assumption of Liabilities. At the Closing, Buyer
shall deliver to Company such documents and instruments as are
reasonably required to evidence the assumption of the Assumed
Liabilities.
3.2.(b) Cash to Company. At the Closing, Buyer shall
deliver to Company, in cash, the sum of $120,000,000, minus (i) the
amount, if any, by which the Net Asset Value as reflected on the
Estimated Closing Balance Sheet (as defined in Section 3.3.(c)) is
less than $22,515,000, plus (ii) the amount, if any, by which the Net
Asset Value as reflected on the Final Closing Balance Sheet exceeds
$22,515,000.
3.2.(c) Adjustment of Final Cash Purchase Price. On or
before the tenth business day following the final determination of
the Final Closing Balance Sheet (such date being hereinafter referred
to as the "Settlement Date"), either (i) Company shall pay to Buyer
the amount, if any, by which the estimated Net Asset Value as
reflected on the Estimated Closing Balance Sheet exceeds the Net
Asset Value as reflected on the Final Closing Balance Sheet, together
with interest on the amount being paid from the Closing Date to the
date of the payment at a rate per annum equal to the 90-day London
Inter-Bank Offered Rate ("LIBOR") on the Closing Date; or (ii) Buyer
shall pay to Company the amount, if any, by which the Net Asset Value
as reflected on the Final Closing Balance Sheet exceeds the estimated
Net Asset Value as reflected on the Estimated Closing Balance Sheet,
together with interest on the amount being paid from the Closing Date
to the date of payment at a rate per annum equal to the 90-day LIBOR
on the Closing Date. Either party may, in its discretion, make a
payment pursuant to this Section 3.2.(c) prior to the determination
of the Final Closing Balance Sheet for the purpose of reducing the
interest it may be obligated to pay pursuant to such provisions.
3.2.(d) Method of Payment. All payments under this Section
3.2 shall be made by wire transfer of immediately available funds to
an account, which the recipient has designated at least 48 hours
prior to the time for payment specified herein to the party making
such a payment.
3.3. Determination of Net Asset Value.
3.3.(a) Definition of "Balance Sheet". The term "Balance
Sheet" as used herein shall mean a schedule in the form of a balance
sheet of the Business showing the book values of Company, as of a
specified time, of the respective categories of assets and
liabilities set forth in the Recent Balance Sheet (as defined in
Section 4.4), but reflecting (to the extent required to be reflected
in accordance with Company's APP (as hereinafter defined)) only the
Purchased Assets and the Assumed Liabilities. Each Balance Sheet
shall be prepared in accordance with accounting principles and
practices applied on a basis consistent with that used in the
preparation of the Recent Balance Sheet, including those accounting
principles and practices and deviations from GAAP (as defined in
Section 4.4) disclosed on Schedule 4.4 ("Company's APP"), except that
the practices disclosed on Schedule 4.4 and identified as relating
only to the Recent Balance Sheet shall not be used. Each Balance
Sheet shall be in form and level of detail as nearly as possible
identical to the Recent Balance Sheet, and accompanied by schedules
setting forth in reasonable detail all assets and liabilities
included therein. Notwithstanding the foregoing, the Estimated
Closing Balance Sheet and the Final Closing Balance Sheet shall be
prepared in accordance with the following: (i) in valuing Inventory,
there shall be such adjustments as are required to reflect the
results of any physical inventory or cycle counts of the Inventory
that have been taken by Company, provided that Buyer or its internal
or external auditors may take a physical inventory, which Company may
observe, in connection with the Closing, which shall be valued in
accordance with Company's APP relating to Inventory, and no value
shall be given for any Inventory (A) that is beyond the shelf life
for such Inventory or (B) as to which the customer has informed
Company that the Product model is obsolete and the customer will not
order the model from Company; (ii) all accrued liabilities shall be
sufficient for the payment in full of the liabilities to which they
relate and accrued expenses shall reflect all accruals of a character
that would be reflected in a manner consistent with a year end
balance sheet (reflecting, however, a partial year accrual to the
extent appropriate); (iii) there shall be established a reserve in
accordance with Company's APP for all anticipated costs and expenses
in connection with the Assumed Warranty Liabilities; (iv) there shall
be no value for intangible assets of the Business; (v) prepaid
expenses shall be valued at not more than the net realizable value
that Buyer can obtain from such assets; and (vi) accounts receivable
shall be stated net of a reserve in accordance with Company's APP for
doubtful accounts and anticipated collection expenses.
3.3.(b) Definition of "Net Asset Value." The term "Net
Asset Value" shall mean the dollar amount by which the book value of
the Purchased Assets exceeds the book value of the Assumed
Liabilities, as reflected in the Final Closing Balance Sheet or
Estimated Closing Balance Sheet, as applicable. Only Purchased
Assets and Assumed Liabilities shall be considered in the calculation
of Net Asset Value.
3.3.(c) Estimated Closing Balance Sheet. For purposes of
determining the Net Asset Value and the Purchase Price payable by
Buyer at the Closing, not less than ten (10) business days prior to
the Closing Date, Company shall, in consultation with Buyer, prepare
and deliver to Buyer a Balance Sheet as of the close of business on
the business day immediately prior to the Closing Date (hereinafter,
the "Effective Time") which shall represent Company's reasonable
estimate of the Final Closing Balance Sheet. In the event Buyer
shall object to any of the information set forth on Company's
estimate of the Final Closing Balance Sheet or accompanying
schedules, the parties shall negotiate in good faith and agree on
appropriate adjustments such that such balance sheet and accompanying
schedules reflect a reasonable estimate of the Final Closing Balance
Sheet and the Net Asset Value to be reflected on the Final Closing
Balance Sheet, but in the absence of such agreement, a balance sheet
and accompanying schedules reflecting the average of all items
represented by Company's reasonable estimate of the Final Closing
Balance Sheet and Buyer's reasonable estimate of the Final Closing
Balance Sheet shall be used to establish the estimated Balance Sheet
for purposes of determining the payment to be made by Buyer to
Company on the Closing Date (the estimated balance sheet as agreed to
by the parties pursuant to this subsection, or in the absence of such
agreement, a balance sheet reflecting all agreed-upon items and the
numerical average of all disputed items, is herein referred to as the
"Estimated Closing Balance Sheet"). In connection with the
determination of the Estimated Closing Balance Sheet, Company shall
provide to Buyer such information and detail as Buyer shall
reasonably request.
3.3.(d) Final Closing Balance Sheet. The Balance Sheet of
the Business prepared as of the Effective Time shall be prepared as
follows:
(i) Within sixty (60) days after the Closing,
Company will prepare a Balance Sheet as of the Effective Time
(the "Preliminary Closing Balance Sheet"), and Buyer will
cooperate in the preparation of such Preliminary Closing
Balance Sheet. Company will prepare such Balance Sheet in
accordance with this Section 3.3. The Preliminary Closing
Balance Sheet shall (i) set forth the amount of the Net Asset
Value in the Preliminary Closing Balance Sheet and (ii) be
accompanied by a calculation of the amount of any adjustment
to the Purchase Price to be paid and by whom pursuant to
Section 3.2.(c).
(ii) Within thirty (30) days following the
delivery to it of the Preliminary Closing Balance Sheet, Buyer
may object to any of the information contained in the
Preliminary Closing Balance Sheet or the accompanying
schedules which could effect the necessity or amount of any
payment by Buyer or Company pursuant to Section 3.2.(c). Any
such objection shall be made in writing and delivered to
Company within such time period, shall include detailed
itemization of Buyer's objections and its reasons therefor,
and shall state Buyer's determination of the amount of the Net
Asset Value. If no such objection is delivered to Company
within such time period, then Buyer shall be deemed to have
accepted the Preliminary Closing Balance Sheet.
(iii) If Buyer shall deliver a timely objection to
the Preliminary Closing Balance Sheet, then Buyer and Company
shall promptly meet and in good faith attempt to resolve any
dispute or disagreement. In connection with any such dispute
or disagreement, each of Buyer and Company shall provide the
other with a written calculation of the aggregate amount that
should be recorded on the Preliminary Closing Balance Sheet as
of the Closing Date for any items in dispute based upon its
position with respect to such disputed items. In the event of
a dispute or disagreement relating to the Preliminary Closing
Balance Sheet or schedules which Buyer and Company are unable
to resolve within thirty (30) days following Company's receipt
of Buyer's objections, either party may elect to have all such
disputes or disagreements ("Disputes") resolved by Arthur
Andersen or, in the event Arthur Andersen is unable or
unwilling to resolve the Disputes, Coopers & Lybrand (the
"Third Accounting Firm"). In connection with the engagement
of the Third Accounting Firm, each of the parties shall
execute reasonable engagement letters and shall supply all
such other documents and information reasonably required by
the Third Accounting Firm. Without limiting the obligations
of the parties under this Section 3.3, each party shall be
permitted to submit such data and information to the Third
Accounting Firm as such party deems appropriate. The Third
Accounting Firm shall make a resolution of the disputes and
disagreements relating to the Preliminary Closing Balance
Sheet as of the Effective Time and the calculation of Net
Asset Value, which shall be final and binding for purposes of
this Article 3. The Third Accounting Firm shall be instructed
to use every reasonable effort to perform its services within
15 days of submission of the Preliminary Closing Balance Sheet
to it and, in any case, as soon as practicable after such
submission. In resolving any Dispute, the Third Accounting
Firm (1) shall utilize the criteria set forth in Section
3.3.(a), and (2) shall not assign a value to any item greater
than the greatest value for such item claimed by either
Company or Buyer or less than the smallest value for such item
claimed by either Company or Buyer, in each case, as presented
to the Third Accounting Firm.
(iv) As used in this Agreement, the term "Final
Closing Balance Sheet" shall mean the balance sheet of the
Business as of the Effective Time as finally determined for
purposes of this Article 3, whether by acquiescence of Buyer
in the figures supplied by Company in accordance with Section
3.3 (d)(i) and (ii), by negotiation and agreement of the
parties or by the Third Accounting Firm in accordance with
Section 3.3 (d)(iii).
(v) If the Net Asset Value as reflected on the
Final Closing Balance Sheet is closer in amount to the Net
Asset Value as reflected in Buyer's objections delivered
pursuant to Section 3.3(d)(ii) ("Buyer's Amount") than to the
Net Asset Value as reflected in the Preliminary Closing
Balance Sheet ("Company's Amount"), then Company shall bear
all fees and expenses of the Third Accounting Firm. If,
however, the Net Asset Value as reflected on the Final Closing
Balance Sheet is closer in amount to Company's Amount than
Buyer's Amount, then Buyer shall bear all such fees and
expenses of the Third Accounting Firm. Such payment shall be
made in accordance with the provisions of Section 3.2.(c) on
the Settlement Date.
3.4. Allocation of Purchase Price. Within ninety (90) days
following the Closing Date, representatives of Buyer and Company shall
meet and discuss the allocation of the amount of the Purchase Price and
the value of the other consideration delivered in accordance with Section
3.2 among the Purchased Assets that each party reasonably believes is
appropriate. Within one hundred twenty (120) days following the Closing
Date, Buyer shall deliver to Company Buyer's reasonable determination,
taking into account in good faith the discussion between the
representatives of Buyer and Company, of the allocation of the Purchase
Price and such values among the Purchased Assets, which determination
shall be subject to Company's consent, which consent shall not be
unreasonably withheld. Company and Buyer covenant and agree that they
will follow and use such allocation in all tax returns, filings or other
related reports made by them to any governmental agencies. To the extent
that disclosures of this allocation are required to be made by the parties
to the Internal Revenue Service ("IRS") under the provisions of Section
1060 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
regulations thereunder, Buyer and Company will disclose such reports to
the other prior to filing with the IRS.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company makes the following representations and warranties to Buyer,
each of which is true and correct on the date hereof and shall be
unaffected by any investigation heretofore or hereafter made by Buyer, or
any knowledge of Buyer other than as specifically disclosed in the
Disclosure Schedule (as defined in Section 14.1) delivered to Buyer at the
time of the execution of this Agreement in accordance with Section 14.1.
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly
organized, validly existing and in good standing under the laws of
the State of New York.
4.1.(b) Corporate Power. Company has all requisite
corporate power and authority to own, operate and lease their
properties, to carry on the Business as and where such is now being
conducted, to enter into this Agreement and the other documents and
instruments to be executed and delivered by Company pursuant hereto
and to carry out the transactions contemplated hereby and thereby.
4.1.(c) Qualification. Company is duly licensed, qualified
or admitted to do business as a foreign corporation, and is in good
standing, in each jurisdiction wherein the character of its
properties that are Purchased Assets or the nature of the Business
makes such licensing or qualification necessary, except for such
failures to be so licensed, qualified or admitted and in good
standing, which, individually or in the aggregate, could not
reasonably be expected to have a material adverse effect on the
business, assets, financial condition or results of operations of the
Business taken as a whole (a "Material Adverse Effect").
4.1.(d) No Subsidiaries. No portion of the Business is
conducted by Company by means of any subsidiary or any other
corporation, partnership or other entity in which Company has an
equity or other ownership interest.
4.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by
Company pursuant hereto and the consummation of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action. No other or further corporate act or proceeding on the
part of Company or its shareholders is necessary to authorize this
Agreement or the other documents and instruments to be executed and
delivered by Company pursuant hereto or the consummation of the
transactions contemplated hereby and thereby. This Agreement constitutes,
and when executed and delivered, the other documents and instruments to be
executed and delivered by Company pursuant hereto will constitute, valid
and binding agreements of Company, enforceable in accordance with their
respective terms.
4.3. No Violation. Except as set forth on Schedule 4.3, neither
the execution and delivery of this Agreement or the other documents and
instruments to be executed and delivered by Company pursuant hereto, nor
the consummation by Company of the transactions contemplated hereby and
thereby (a) will violate any Law or Order applicable to Company or the
Business, (b) except for applicable requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (the "HSR Act"), will require any
authorization, consent, approval, exemption or other action by or notice
to any Government Entity (as defined in Section 4.11.(a)) (including,
without limitation, under any "plant-closing" or similar law), (c) will
conflict with or result in a violation of the Certificate of Incorporation
or By-laws of Company, or (d) subject to obtaining the consents referred
to in Schedule 4.3, will violate or conflict with, or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or
accelerate the performance required by Company under, or result in the
creation of any Lien upon any of the assets of Company under, any
contract, commitment, understanding, arrangement, agreement or restriction
of any kind or character to which Company is a party or by which Company
or any of its assets or properties may be bound, except for such (x)
violations, (y) authorizations, consents, approvals, exemptions or notices
the failure to obtain or the failure to provide and (z) conflicts,
defaults, terminations, accelerations and Liens which, individually or in
the aggregate, could not reasonably be expected to result in a Material
Adverse Effect.
4.4. Financial Statements. Included as Schedule 4.4 are financial
statements of the Business (collectively, the "Financial Statements"),
consisting of (i) balance sheets of the Business as of December 31, 1997
and 1996 (the former such balance sheet sometimes referred to herein as
the "Recent Balance Sheet"), and (ii) statements of income and expense of
the Business for the years ended December 31, 1997, 1996, and 1995. All
of such financial statements (i) present fairly the financial position and
results of operations of the Business at such dates and for the periods
indicated, giving effect to certain estimated allocations and charges for
services disclosed on Schedule 4.22, (ii) have been prepared on a basis
consistent with the accounting principles and practices set forth in
Schedule 4.4, and (iii) except as set forth on Schedule 4.4 have been
prepared in accordance with generally accepted accounting principles in
the United States ("GAAP").
4.5. Tax Matters. Except as set forth on Schedule 4.5: (i) all
federal, state, foreign, county, local and other Tax returns relating
primarily to the Business or the Purchased Assets, or required to be filed
by or on behalf of Company in any jurisdiction in which the character of
the properties that are Purchased Assets or the nature of the Business
makes licensing or qualification to do business as a foreign corporation
necessary or any political subdivision thereof, have been completely and
accurately prepared and timely filed and the related Taxes paid or
adequately accrued; (ii) Company has duly withheld and paid all Taxes that
it is required to withhold and pay relating to salaries and other
compensation heretofore paid to the employees of the Business; and (iii)
Company has not received any notice of underpayment of Taxes or other
deficiency that has not been paid and there are outstanding no agreements
or waivers extending the statutory period of limitations applicable to any
Tax return or report relating primarily to the Business or the Purchased
Assets, or required to have been filed by Company in any jurisdiction in
which the character of the properties that are Purchased Assets or the
nature of the Business makes licensing or qualification to do business as
a foreign corporation necessary or any political subdivision thereof.
4.6. Accounts Receivable. Schedule 4.6 contains an aged schedule
of accounts receivable of the Business as of a recent date, including a
description of whether such notes, drafts and accounts receivable are
obligations of an Affiliate or a third party. All accounts receivable of
the Business reflected on such aged schedule, and incurred since the date
thereof, represent arm's-length sales made in the ordinary course of
business; to the knowledge of Company, are subject to no counterclaim or
setoff, and are not in dispute. All accounts receivable of the Business
reflected on the Final Closing Balance Sheet will represent arm's-length
sales made in the ordinary course of business and, to the knowledge of
Company, will be subject to no counterclaim or set-off.
4.7. Inventory. All inventory of the Business reflected on the
Recent Balance Sheet is valued in accordance with Company's APP. All
inventory purchased since the date of the Recent Balance Sheet consists of
a quality and quantity usable and saleable in the ordinary course of
business except to the extent that such inventory has been disposed of,
reserved or written off. Schedule 4.7 contains an aged schedule of
finished goods inventory of the Business as of a recent date. Except as
set forth in Schedule 4.7, all inventory of the Business is located on
premises owned or leased by Company which premises, or leaseholds thereof,
constitute Purchased Assets. Except with respect to any slow or
delinquent payment in the ordinary course of the Business with respect to
any account payable or receivable, to the knowledge of Company, neither
Company nor any customer of the Business is in material breach of the
terms of any obligation to the other, and to the knowledge of Company, no
valid grounds exist for any set-off of amounts billable to such customers
on the completion of orders to which work-in-process relates. The
Business will have on hand as of the Closing Date such quantities of raw
materials, work-in-process and finished goods as are reasonably required
to continue the Business consistent with past practice.
4.8. Absence of Certain Changes. Except as and to the extent set
forth in Schedule 4.8, since the date of the Recent Balance Sheet there
has not been:
4.8.(a) No Adverse Change. Any material adverse change in
the conduct, financial condition, assets, Liabilities, business,
prospects or operations of the Business taken as a whole other than
any change arising after the date hereof, directly or indirectly,
from an adverse customer reaction to the announcement of the
execution of this Agreement or otherwise relating to the transactions
contemplated hereby;
4.8.(b) No Damage. Any material loss, damage or destruction
to tangible real or personal property, whether covered by insurance
or not, in connection with or affecting the Business or the Purchased
Assets;
4.8.(c) No Increase in Compensation. Any material increase
in the compensation, salaries, commissions or wages payable or to
become payable to any employee of the Business or whose compensation
is reflected in the Financial Statements (including, without
limitation, any increase or change adverse to Company pursuant to any
bonus, pension, profit sharing, retirement or other plan or
commitment) or any bonus or other employee benefit granted, made or
accrued, except (i) with respect to hourly employees of the Business,
those made in accordance with Company's International Union of
Electronic, Electrical, Salaried, Machine, and Furniture Workers
1997-2000 Wage Agreement relating to a facility of Company not used
in the Business included on Schedule 4.16.(a), and (ii) with respect
to the salaried employees of the Facility listed in Schedule 4.8,
those made in accordance with the compensation information with
respect to such employees and any salaried employee positions that
are unfilled, which is included in Schedule 4.8;
4.8.(d) No Commitments. Any commitment or transaction by
Company in connection with or affecting the Business (including,
without limitation, any borrowing or capital expenditure) other than
in the ordinary course of business consistent with past practice;
4.8.(e) No Disposition of Property. Any sale, lease or
other transfer or disposition of any properties or assets of Company
that are Purchased Assets (or would have been Purchased Assets had no
sale, lease or other transfer or disposition occurred), except for
sales of inventory items in the ordinary course of business;
4.8.(f) No Amendment of Contracts, Rights. Any material
amendment or early termination by Company of any material contract in
connection with or affecting the Business, or any release or waiver
of any material claims or rights by Company in respect of the
Business, other than in the ordinary course of business;
4.8.(g) Loans and Advances. Any loan or advance by the
Business (other than advances in the ordinary course of business in
accordance with past practice);
4.8.(h) Credit. Any grant of credit to any existing
customer of the Business or distributor of its products on terms or
in amounts materially more favorable than those that have been
extended to such customer or distributor in the past, any other
material change in the terms of any credit heretofore extended, or
any other material change of Company's policies or practices with
respect to the granting of credit in connection with the Business;
4.8.(i) LPPP. Any agreement or settlement regarding the
breach or infringement of any LPPP or similar rights, modification or
agreement to modify any existing rights with respect thereto; or
4.8.(j) Discharge of Obligations. Any discharge,
satisfaction or agreement to satisfy or discharge any Liability
relating to the Business, other than current Liabilities shown on the
Recent Balance Sheet and current Liabilities incurred since the date
of the Recent Balance Sheet in the ordinary course of business.
4.9. Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the Recent Balance Sheet, or in
Schedule 4.9, Company does not have any Liabilities relating to the
Business that would constitute Assumed Liabilities, other than:
4.9.(a) commercial Liabilities incurred since the date of
the Recent Balance Sheet in the ordinary course of business and
consistent with past practice and none of which has or will have a
Material Adverse Effect after the Closing; or
4.9.(b) Liabilities disclosed in this Agreement or any
Schedule to this Agreement, or which are of the type or kind required
to be disclosed in the Schedules but are not disclosed solely because
they fall below the minimum threshold amount, term or materiality of
the disclosures required by the terms of this Agreement to be set
forth in such Schedules.
4.10. No Litigation. Except as set forth in Schedule 4.10, there is
no Litigation, pending or, to the knowledge of Company, threatened against
Company involving the Business, the Purchased Assets or the Assumed
Liabilities. The information reflected on Schedule 4.10 concerning
historical Litigation to which Company has been a party involving the
Business, the Purchased Assets or the Assumed Liabilities is true and
correct. Except as set forth in Schedule 4.10, none of Company, the
Purchased Assets or the Assumed Liabilities is subject to any Order.
4.11. Compliance With Laws and Orders.
4.11.(a) Compliance. Except as set forth in
Schedule 4.11.(a), the Business (including each and all of its
operations, practices, properties and assets) is in compliance with
all applicable federal, state, municipal, foreign or other statutes,
laws, ordinances, rules or regulations, including without limitation
the Foreign Corrupt Practices Act and the regulations promulgated
thereunder (collectively, "Laws"), and orders, writs, injunctions,
judgments, plans or decrees (collectively, "Orders") of any court,
arbitrator, department, commission, board, bureau, agency, authority,
instrumentality or other body, whether federal, state, municipal,
foreign or other (collectively, "Government Entities"), including,
without limitation, those applicable to discrimination in employment,
occupational safety and health, trade practices, competition and
pricing, product warranties, zoning, building and sanitation,
employment, retirement and labor relations, product advertising and
the Environmental Laws, except for instances of noncompliance where
neither the costs and penalties associated with noncompliance nor the
costs associated with rectifying the noncompliance, individually or
in the aggregate with those associated with other instances of
noncompliance subject to this or similar exceptions under this
Section 4.11, would have a Material Adverse Effect. Company has not
received notice of any violation or alleged violation of any Laws or
Orders with respect to the operations of the Business. All reports
and returns required to be filed by Company with any Government
Entity have been filed, and were accurate and complete when filed,
except for instances of noncompliance where neither the costs and
penalties associated with noncompliance nor the costs associated with
rectifying the noncompliance, individually or in the aggregate with
those associated with other instances of noncompliance subject to
this or similar exceptions under this Section 4.11, would have a
Material Adverse Effect. Without limiting the generality of the
foregoing, Company has not received notice that, and to the knowledge
of Company no Person has made any threat against Company to assert a
claim that, the operation of the Business as it is now conducted or
any condition existing at or otherwise affecting the Facility, in any
manner, constitutes a nuisance or other tortious interference with
the rights of any person or persons in such a manner as to give rise
to or constitute the grounds for a suit, action, claim or demand by
any such person or persons seeking compensation or damages or seeking
to restrain, enjoin or otherwise prohibit any aspect of the conduct
of the Business or the manner in which it is now conducted.
4.11.(b) Licenses and Permits. Company has all material
licenses, permits, approvals, authorizations and consents of all
Government Entities required, and all exemptions from requirements to
obtain or apply for any of the foregoing, for the conduct of the
Business and the operation of the Facility as conducted and operated
to date, except for instances of noncompliance where neither the
costs and penalties associated with noncompliance nor the costs
associated with rectifying the noncompliance, individually or in the
aggregate with those associated with other instances of noncompliance
subject to this or similar exceptions under this Section 4.11, would
have a Material Adverse Effect. All such licenses, permits,
approvals, authorizations and consents are listed and described in
Schedule 4.11.(b), are in full force and effect and, except as set
forth on Schedule 4.11.(b) and except for such licenses, permits,
approvals, authorizations and consents that are obtainable by Buyer
after the Closing Date in the ordinary course of business, are
assignable to Buyer in accordance with the terms hereof. Except as
set forth in Schedule 4.11.(b), the Business (including its
operations, properties and assets) is and has been in compliance with
all such permits and licenses, approvals, authorizations and
consents, except for instances of noncompliance where neither the
costs and penalties associated with noncompliance nor the costs
associated with rectifying the noncompliance, individually or in the
aggregate with those associated with other instances of noncompliance
subject to this or similar exceptions under this Section 4.11, would
have a Material Adverse Effect.
4.11.(c) Environmental Matters. The applicable Laws and
common law principles relating to pollution or protection of human
health or the environment, including Laws relating to Environmental
Actions or Waste, including, without limitation, the Clean Water Act,
the Clean Air Act, the Resource Conservation and Recovery Act, the
Toxic Substances Control Act and CERCLA, as amended, and their state
and local counterparts are herein collectively referred to as the
"Environmental Laws". Without limiting the generality of the
foregoing provisions of this Section 4.11, the Business and the Real
Property (as defined in Section 4.12.(c)) are, to the best of
Company's knowledge, in full compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental
Laws or contained in any regulations, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder. Except as set forth in
Schedule 4.11.(c), there is no Litigation nor any demand, claim,
hearing, notice of violation or demand letter pending or threatened
against Company with respect to the Business or the Real Property or,
to Company's knowledge, against any person whose liability therefor
may have been retained or assumed by or could be imputed or
attributed to the Business relating in any way to the Environmental
Laws or any Order issued, entered, promulgated or approved
thereunder. To the best of Company's knowledge, except as set forth
in Schedule 4.11.(c), there are no past, present or future events,
conditions, circumstances, activities, practices, incidents, actions,
omissions or plans which may interfere with or prevent compliance or
continued compliance by the Business with the Environmental Laws or
with any Order issued, entered, promulgated or approved thereunder,
or which may give rise to any Liability, including, without
limitation, Liability under CERCLA or similar state or local Laws, or
otherwise form the basis of any Litigation, hearing, notice of
violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling, or the emission, discharge, release
or threatened release into the environment, of any Waste. Except as
provided in Schedule 4.11.(c), to the knowledge of Company there are
no pending, proposed or required changes to Environmental Laws
(including any standards, criteria or guidance used by a Government
Entity to enforce such laws) with respect to which the Business may
be required to incur any costs outside the ordinary course of
business (including, without limitation, for capital expenditures,
process changes and changes in material usage) in order to achieve or
ensure compliance with such laws.
4.11.(d) Foreign Corrupt Practices. To the knowledge of
Company, neither Company in respect of the Business nor any director,
officer, agent, employee or other person associated with or acting on
behalf of Company in respect of the Business or the Business has
violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977.
4.12. Title to and Condition of Properties.
4.12.(a) Marketable Title. Except as set forth on Schedule
4.12.(a)(i), Company has good and marketable title to all the
Purchased Assets (or, where the Purchased Assets represent leasehold
interests in or rights under Contract to use assets, such interests
or rights are valid), free and clear of all mortgages, liens
(statutory or otherwise), security interests, claims, pledges,
licenses, equities, options, conditional sales contracts,
assessments, levies, easements, covenants, conditions, reservations,
encroachments, hypothecations, equities, restrictions, rights-of-way,
exceptions, limitations, charges, possibilities of reversion, rights
of refusal or encumbrances of any nature whatsoever (collectively,
"Liens") except Permitted Liens; and, in the case of real property,
municipal and zoning ordinances and easements for public utilities
and other similar easements, any matter of record in the recorder's
office for the county in which the Owned Real Property is located
(except for monetary encumbrances, such as mortgages, deeds of trust,
security interests, liens and money judgments), and matters that
would be reflected by an accurate survey of the Owned Real Property,
none of which materially interfere with the use of the real property
as currently utilized or materially adversely affect the
marketability of the real property ("Permitted Real Property Liens").
Except as set forth on Schedule 4.12(a)(i), no Owned Real Property or
material tangible Personal Property that Company owns is subject to
any restrictions with respect to the transferability thereof. At
Closing, Buyer will receive good and marketable title to all the
Purchased Assets (or, where the Purchased Assets represent leasehold
interests in or rights under Contract to use assets, valid interests
or rights to use such assets), free and clear of all Liens of any
nature whatsoever except those described in Schedule 4.12.(a)(ii),
Permitted Liens and Permitted Real Property Liens. For purposes of
this Agreement, "Permitted Lien" shall mean and include (i) any Lien
for taxes not yet due or delinquent or being contested in good faith
by appropriate proceedings, or (ii) any Lien arising in the ordinary
course of business by operation of Law with respect to a Liability
that is not yet due or delinquent or being contested in good faith by
appropriate proceedings, in the case of each of clause (i) and clause
(ii), where the related Liabilities have been accrued or reserved
against in the Recent Balance Sheet in accordance with Company's APP
or incurred since the date of the Recent Balance Sheet and reflected
as a payable on the books and records of Company.
4.12.(b) Condition. All tangible assets (real and personal)
constituting Purchased Assets hereunder are in working order, which
working order is substantially the same as the condition of such
assets during 1997 (other than ordinary wear and tear). Except as
disclosed on Schedule 4.12.(b), to Company's knowledge, all
buildings, plants and other structures owned or otherwise utilized by
Company in operating the Business are in good condition and repair
and have no structural defects or material defects affecting the
plumbing, electrical, sewerage, or heating, ventilating or air
conditioning systems. Buyer acknowledges the Facility is 24 years
old and has been used exclusively for electric motor manufacturing
purposes. Company has provided Buyer with true and correct copies of
the most recent Factory Mutual Reports with respect to the Facility.
4.12.(c) Real Property. Schedule 1.2.(a) sets forth all real
property owned, used or occupied by Company in operating the Business
(the "Real Property"), including a brief description of all land
(including the street address and approximate acreage of such land)
and all plants, buildings or other structures located thereon
(including the approximate square footage of such structures). There
are now in full force and effect duly issued certificates of
occupancy permitting the Owned Real Property and improvements located
thereon to be legally used and occupied as the same are now
constituted. There is not any claim of adverse possession or
prescriptive rights involving any of the Owned Real Property. No
public improvements have been commenced and to Company's knowledge
none are planned that in either case may result in special
assessments against or otherwise materially adversely affect any
Owned Real Property. Company has no notice or knowledge of any (i)
planned or proposed increase in assessed valuations of any Owned Real
Property, (ii) Order requiring repair, alteration, or correction of
any existing condition affecting any Owned Real Property or the
systems or improvements thereat, (iii) condition or defect which
could give rise to an order of the sort referred to in clause (ii)
above (other than such conditions or defects which are Environmental
Actions), or (iv) underground storage tanks being present on any of
the Owned Real Property at any time. All electric, gas, water,
sewage, communications and other utilities on the Owned Real Property
are consistent with such utilities used in the operation of the
Business during 1997. All installation charges in respect of such
utilities have been paid in full.
4.12.(d) No Condemnation, Expropriation or Similar Action.
Except as set forth on Schedule 4.12(d), neither the whole nor any
portion of the Purchased Assets is subject to any Order to be sold
and Company has not received notice that any portion of the Purchased
Assets is being condemned, expropriated or otherwise taken by any
Government Entity with or without payment of compensation therefor.
To Company's knowledge, there is no existing, proposed or
contemplated plan to construct, modify or realign any street,
highway, power lines, or pipelines that would materially adversely
affect current use or occupancy of any Owned Real Property. To the
best of Company's knowledge, no such condemnation, expropriation,
taking or other action has been planned, scheduled or proposed.
4.13. Insurance. Company has in effect policies of fire, liability,
product liability, workers compensation, health and other forms of
insurance with respect to the Business and the Purchased Assets, true and
correct copies of which are available to Buyer upon request. No notice of
cancellation or termination has been received with respect to any such
policy. Company has not been refused any insurance nor has its coverage
been limited by the insurance carrier with respect to any aspect of the
operations of the Business since January 1, 1993.
4.14. Contracts and Commitments.
4.14.(a) Real Property Leases. Except as set forth in
Schedule 4.14.(a), Company has no leases of real property used or
held for use in connection with the Business or the Purchased Assets.
Schedule 4.14.(a) sets forth the material terms of such leases.
4.14.(b) Personal Property Leases. Except as set forth in
Schedule 1.2.(d), Company has no leases of personal property used or
held for use in connection with the Business or the Purchased Assets
involving any remaining consideration, termination charge or other
expenditure in excess of $10,000 per individual lease.
4.14.(c) Certain Purchase Commitments. The documents
identified on Schedule 4.14.(c) set forth true and correct
information concerning (i) the Division's weighted average cost per
pound of copper and aluminum for 1997 and (ii) the Business' weighted
average cost per pound of steel for 1997.
4.14.(d) Certain Sales Commitments. Except as set forth in
Schedule 4.14.(d), Company has no sales Contracts to customers or
distributors in connection with or affecting the Business or the
Purchased Assets that aggregate in excess of $5,000,000 or that
pursuant to the terms of such Contracts Company expects to aggregate
in excess of $5,000,000, to any one customer or distributor (or group
of affiliated customers or distributors). Company has no sales
Contracts in connection with or affecting the Business or the
Purchased Assets except those made in the ordinary course of
business, at arm's length. All outstanding bids and sales proposals
of Company relating to the Business have been entered into or made in
the ordinary course of business.
4.14.(e) Contracts with Certain Persons. Except as set forth
in Schedule 4.14.(e), Company has no Contract (written or oral) in
connection with or affecting the Business or the Purchased Assets
with any employee, agent or consultant that is not cancelable by
Company on notice of not longer than thirty (30) days without
liability, penalty or premium of any nature or kind whatsoever or
under which the Business could incur obligations in excess of
$10,000. Schedule 4.14.(e) sets forth the number of contingent
employees of the Business as of the date of the Recent Balance Sheet.
4.14.(f) Collective Bargaining Agreements. Company is not a
party to any collective bargaining agreements with any unions,
guilds, shop committees or other collective bargaining groups
representing or purporting to represent employees of the Business.
4.14.(g) Loan Agreements. Except as set forth in
Schedule 4.14.(g), Company is not obligated under any loan agreement,
promissory note, letter of credit, or other evidence of indebtedness
relating to the Business as a signatory, guarantor or otherwise,
which obligation constitutes or gives rise or could by its terms,
through the giving of notice or any other events short of judgment by
a court, give rise to a Lien against any Purchased Asset.
4.14.(h) Guarantees. Except as disclosed on
Schedule 4.14.(h), Company has not guaranteed the payment or
performance of any obligation of any Person, agreed to indemnify any
Person or act as a surety, or otherwise agreed to be contingently or
secondarily liable for the obligations of any Person, in connection
with the Business or in any other way that affects the Business or
the Purchased Assets. For purposes hereof, "Person" means any
natural person, corporation, partnership, proprietorship, other
business organization, trust, union, association or Governmental
Entity.
4.14.(i) Government Contracts. Except as set forth in
Schedule 4.14.(i), Company is not a party to any contract with any
governmental body in respect of the Business.
4.14.(j) Burdensome or Restrictive Agreements. Except as set
forth in the Technology License Agreement, Company is not a party to
nor is it bound by any Contract in connection with or affecting the
Business or the Purchased Assets (i) requiring Company to assign any
interest in any trade secret or proprietary information constituting
Purchased Assets hereunder, (ii) prohibiting or restricting Company
in the operation of the Business from competing in any business or
geographical area or soliciting customers or otherwise restricting it
from carrying on the Business anywhere in the world or (iii) relating
to the location of employees or minimum number of employees to be
employed by Company with respect to the Business.
4.14.(k) Other Material Contracts. Company has no Contract
or commitment of any nature affecting the Business and involving
consideration or other expenditure in excess of $250,000, or which is
otherwise individually material to the operations of the Business,
except as described in Schedule 4.14.(k) or in any other Schedule.
4.14.(l) No Default. Except with respect to any slow or
delinquent payment in the ordinary course of the Business with
respect to any account payable or receivable, (i) Company is not in
default in any material respect under any Contract relating to its
operation of the Business, nor has any event or omission occurred
which through the passage of time or the giving of notice, or both,
would constitute a default in any material respect thereunder or
cause the acceleration of any of Company's obligations thereunder or
result in the creation of any Lien on any Purchased Asset, in each
case, except for such defaults as individually or in the aggregate
are not having and could not reasonably be expected to have a
Material Adverse Effect and (ii) to Company's knowledge, no third
party is in default in any material respect under any such Contract
or commitment to which Company is a party, nor has any event or
omission occurred which, through the passage of time or the giving of
notice, or both, would constitute a default in any material respect
thereunder by a third party, or give rise to an automatic termination
by Company based on actions or omissions of a third party, or the
right of discretionary termination thereof by Company based on
actions or omissions of a third party.
4.14.(m) No Leases. No leases in respect of the Business are
financing or capital leases, as determined under Financial Accounting
Standard No. 13 having an aggregate liability in excess of $100,000.
4.15. Labor Matters. Except as set forth in Schedule 4.15, within
the last five years Company has not experienced any labor disputes, union
organization attempts or any work stoppage due to labor disagreements in
connection with the Business. In its operation of the Business, except to
the extent set forth in Schedule 4.15, (a) Company is not engaged in any
unfair labor practice; (b) there is no unfair labor practice charge or
complaint against Company pending or, to Company's knowledge, threatened;
(c) there is no labor strike, dispute, request for representation,
slowdown or stoppage actually pending or, to Company's knowledge,
threatened against or affecting Company nor any secondary boycott with
respect to products of the Business; (d) to the knowledge of Company,
there are no organizational efforts, representation campaigns, elections
or proceedings being undertaken or threatened involving any employees of
the Business; and (e) there are no administrative charges or court
complaints against Company concerning alleged employment discrimination or
other employment related matters pending or, to Company's knowledge,
threatened before the U.S. Equal Employment Opportunity Commission or any
Government Entity. Since the date of the Recent Balance Sheet, the
Business has not had any material adverse change in its contribution rate
or its experience rating for unemployment compensation purposes in any
applicable state.
4.16. Employee Benefit Plans.
4.16.(a) Disclosure. Schedule 4.16.(a) sets forth all
pension, thrift, savings, profit sharing, retirement, incentive bonus
or other bonus, medical, dental, life, accident insurance, benefit,
employee welfare, disability, group insurance, stock purchase, stock
option, stock appreciation, stock bonus, executive or deferred
compensation, hospitalization and other similar fringe or employee
benefit plans, programs and arrangements, and any employment or
consulting contracts, "golden parachutes," collective bargaining
agreements, severance agreements or plans, vacation and sick leave
plans, programs, arrangements and policies, including, without
limitation, all "employee benefit plans" (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), all employee manuals, and all written or binding oral
statements of policies, practices or understandings relating to
employment, which are provided to, for the benefit of, or relate to,
any persons employed at any time by Company in its operation of the
Business ("Business Employees"). The items described in the
foregoing sentence are hereinafter sometimes referred to collectively
as "Employee Plans/Agreements," and each individually as an "Employee
Plan/Agreement." True and correct copies of all the Employee
Plans/Agreements, including all amendments thereto, have heretofore
been provided to Buyer.
4.16.(b) Compliance. Each of the Employee Benefit
Plans/Agreements is in compliance with ERISA in all material
respects. The terms of this Agreement will not violate or affect the
terms of any Employee Benefit Plans/Arrangements or have a Material
Adverse Effect.
4.17. Employees; Compensation. Schedule 4.17 contains a true and
correct list of (a) all Business Employees physically assigned to and
located at the Facility (which employees, other than those denoted on
Schedule 4.17 as excluded from such term, are hereinafter referred to as
"Facility Employees") and (b) certain Business Employees located at the
Fort Wayne Facility who are available for hire by Buyer ("Available
Employees"). Schedule 4.17 also sets forth each such employee's title and
location and indicates if the employee is not an active, full-time
employee of Company.
4.18. LPPP. The representations of Company set forth in the form of
Technology License Agreement attached hereto as Exhibit 7.13.(a) are true
and correct in all material respects.
4.19. Major Customers and Suppliers.
4.19.(a) Major Customers. Schedule 4.19.(a) describes the
customers, including distributors, of the Business, which have
accounted, collectively, for not less than 90% of the aggregate sales
of the Business, for each of the two (2) most recent fiscal years
(determined on the basis of the total dollar amount of gross sales)
showing the total dollar amount of gross sales to each such customer
during each such year and whether such customer is an Affiliate.
4.19.(b) Major Suppliers. Schedule 4.19.(b) describes the
suppliers to the Business, which have accounted, collectively, for
not less than 80% of the aggregate gross purchases of the Business
for the most recent fiscal year (determined on the basis of the total
dollar amount of gross purchases) showing the total dollar amount of
gross purchases from each such supplier during such year and whether
such supplier is an Affiliate.
4.19.(c) Dealers and Distributors. Schedule 4.19.(c)
contains (i) a list by product line of all sales representatives,
dealers, distributors, franchisees and other third parties performing
similar functions of the Business, (ii) representative copies of all
sales representative, dealer, distributor, franchise and other
applicable contracts and policy statements and (iii) a description of
all substantial modifications or exceptions.
4.20. Product Warranty and Product Liability. Schedule 4.20
contains a true, correct and complete copy of Company's standard warranty
or warranties for sales of Products, and except as expressly identified
therein, there are no warranties, deviations from standard warranties,
commitments or obligations with respect to the return, repair, repurchase
or replacement of Products. Schedule 4.20 sets forth the aggregate
monthly cost to the Business of performing warranty obligations for the
thirty-six (36) months ending February 1998. Schedule 4.20 also contains
a description of all pending product warranty claims where the amount in
question exceeds, or is reasonably likely to exceed, $25,000. Except as
disclosed on Schedule 4.20, during the last three years, (a) none of the
Products has been the subject of any epidemic field failure, and Company
has received no notice from any customer of any facts or conditions that
exist which could reasonably be expected to result in such an epidemic
field failure and (b) Company has not made voluntary concessions or
payments not charged to warranty expense as an accommodation to customers
that have claimed a Product is defective exceeding $25,000 in each case.
Except as set forth on Schedule 4.20, on the date of this Agreement, all
Products have been rated and approved by Underwriters Laboratories and, to
the extent required in light of their use, Canadian Standards Association.
Company is in compliance in all materials respects with all requirements
relating to such ratings and approvals, and Company has not received any
notice that such ratings or approvals may be revoked or withdrawn. The
Products include any and all products currently offered by Company in
respect of the Business and all products under development pursuant to
development projects that have been approved by the General Manager of the
Business.
4.21. Certain Relationships to Company. All leases, contracts,
agreements or other arrangements concerning the Business between Company
and any Affiliate or officer or director of Company or between the
Business and other business units of Company are described on
Schedule 4.21.
4.22. Assets and Services Necessary to Business. Except as set
forth in Schedule 4.22, the Purchased Assets and the rights to be granted
under the Technology License Agreement comprise all property, assets and
rights of Company, tangible and intangible (including LPPP), material to
the conduct of the Business as presently conducted, except for the assets
described on Schedule 4.12.(a)(ii). Without limitation, the Purchased
Assets have the respective production capabilities set forth on Schedule
4.22. Schedule 4.22 lists all services provided by employees of Company
or its Affiliates (other than employees located at the Facility) that
relate to the Business.
4.23. No Brokers or Finders. The services of a broker, finder or
agent have not been used by Company in connection with any of the
transactions contemplated hereby or by the Ancillary Agreements and no
brokers', finders' or financial advisors' fee will become payable by Buyer
by reason of acts or omissions of Company as a result of the execution of
this Agreement or the Ancillary Agreements or the consummation of the
transactions contemplated hereby or thereby. Company will hold harmless
and indemnify Buyer, and its officers, directors, employees and
shareholders from and against any claim for brokers', finders' or
financial advisors' fees made by any Person claiming to have provided
services to Company with respect to the transactions contemplated by this
Agreement and the Ancillary Agreements, including costs or expenses
incurred in connection with the defense of any suit claiming such fees, or
in any other manner pertaining to claims for such fees.
4.24. Disclosure. No representation or warranty by Company in this
Agreement, nor any certificate furnished or to be furnished by or on
behalf of Company pursuant to this Agreement, Schedule or Exhibit hereto
contains any untrue statement of material fact or omits a material fact
necessary to make the statements contained therein not misleading. Each
copy of an original document included in any Schedule is a true and
correct copy of such document and includes all material exhibits,
schedules, amendments, supplements or other modifications to such
document. The documents that Company has furnished to Buyer and that are
listed or otherwise referenced in any Schedule are true, accurate and
complete copies of such documents in all material respects.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Company,
each of which is true and correct on the date hereof and shall be
unaffected by any investigation heretofore or hereafter made by Company or
any notice to Company.
5.1. Corporate.
5.1.(a) Organization. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware.
5.1.(b) Corporate Power. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out
the transactions contemplated hereby and thereby.
5.2. Authority. The execution and delivery of this Agreement and
the other documents and instruments to be executed and delivered by Buyer
pursuant hereto and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by the Board of Directors of
Buyer. No other corporate act or proceeding on the part of Buyer or its
shareholders is necessary to authorize this Agreement or the other
documents and instruments to be executed and delivered by Buyer pursuant
hereto or the consummation of the transactions contemplated hereby and
thereby. This Agreement constitutes, and when executed and delivered, the
other documents and instruments to be executed and delivered by Buyer
pursuant hereto will constitute, valid and binding agreements of Buyer,
enforceable in accordance with their respective terms.
5.3. No Violation. Neither the execution and delivery of this
Agreement or the other documents and instruments to be executed and
delivered by Buyer pursuant hereto, nor the consummation by Buyer of the
transactions contemplated hereby and thereby (a) will violate any Law or
Order applicable to Buyer, (b) except for applicable requirements of the
HSR Act, will require any authorization, consent, approval, exemption or
other action by or notice to any Government Entity (including, without
limitation, under any "plant-closing" or similar law), (c) will conflict
with or result in a violation of the Certificate of Incorporation or By-
Laws of Buyer, (d) will violate or conflict with, or constitute a default
(or an event which, with notice or lapse of time, or both, would
constitute a default) under, or will result in the termination of, or
accelerate the performance required by Buyer under, or result in the
creation of any Lien upon any of the assets of Buyer under, any term or
provision of the certificate of incorporation or by-laws of Buyer or of
any contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which Buyer is a party or by which
Buyer or any of its assets or properties may be bound or affected or (e)
otherwise require Buyer to obtain any consent or approval of or make any
filing or provide any notice to any Person as a result or under the terms
of any contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which Buyer is a party or by which
any of its assets or properties is bound or affected, except for such (x)
violations, (y) authorizations, consents, approvals, exemptions or notices
the failure to obtain or the failure to provide and (z) conflicts,
defaults, terminations, accelerations and Liens, which, individually or in
the aggregate, could not reasonably be expected to result in a material
adverse effect on the business, assets, financial condition or results of
operations of Buyer taken as a whole.
5.4. No Brokers or Finders. The services of a broker, finder or
agent have not been used by Buyer in connection with any of the
transactions contemplated hereby or by the Ancillary Agreements and no
brokers', finders' or financial advisors' fee will become payable by
Company by reason of acts or omissions of Buyer as a result of the
execution of this Agreement or the Ancillary Agreements or the
consummation of the transactions contemplated hereby or thereby. Buyer
will hold harmless and indemnify Company and its officers, directors,
employees and shareholders from and against any claim for brokers',
finders' or financial advisors' fees made by any Person claiming to have
provided services to Buyer with respect to the transactions contemplated
by this Agreement and the Ancillary Agreements, including costs or
expenses incurred in connection with the defense of any suit claiming such
fees, or in any other manner pertaining to claims for such fees.
5.5. Financial Capability. Buyer has funds available under Buyer's
revolving credit facility and immediately available cash that, in the
aggregate, are sufficient to enable Buyer to pay the Purchase Price.
6. EMPLOYEES - EMPLOYEE BENEFITS
6.1. Continuation of Employment and Benefit Plans.
6.1.(a) Affected Employees. Effective on the Closing Date,
Buyer shall offer employment, as a "successor employer" (as such term is
used or defined in the Employee Benefit Plans/Agreements), to all Facility
Employees who are active employees of the Business immediately prior to
the Effective Time. The Facility Employees who accept Buyer's employment
offer are hereinafter referred to as "Affected Employees." Buyer shall
provide the Affected Employees with coverage under a "group health plan"
(as defined in Section 4980B(g)(2) of the Code) sufficient to prevent any
"qualified beneficiary" (as defined in Section 4980B(g)(1) of the Code)
under any medical plan applicable to the Affected Employees from incurring
a loss of coverage by reason of the sale of the Business. Buyer agrees to
cause the benefit plans applicable to the Affected Employees to recognize
all previous service with Company or its Affiliates for the purpose of
determining eligibility and vesting (provided that service with Company or
its Affiliates will not be counted for purposes of benefit accrual under
any pension plan of Buyer). Buyer agrees to cause its group health plan
to recognize all deductibles and coinsurance payments accrued by the
Affected Employees prior to the Closing Date and, except to the extent any
Affected Employee is subject to any preexisting condition limitation under
any Company Employee Plan/Agreement, to waive any preexisting condition
limitations for the Affected Employees. Buyer agrees that for the
remainder of the calendar year in which the Closing occurs and for the
succeeding year in the event the Closing takes place on December 31, the
vacation and holiday plan offered to Affected Employees shall be equal to
and in place of what Company would have provided the Affected Employees
had they remained employees of Company. Effective upon the Closing, Buyer
shall provide to Affected Employees the benefits described in Exhibit
6.1.(a) for a period of at least twelve (12) months following the Closing
Date. Buyer shall not be under an obligation to provide the Affected
Employees with coverage under an employee stock ownership plan unless
Buyer currently maintains such a plan.
6.1.(b) Employee Plans/Agreements. Except as expressly
provided in this Agreement, Buyer assumes no liability with respect to,
and receives no right or interest in, any Employee Plan/Agreement. At the
close of business on the Closing Date, all Affected Employees shall cease
participation in all Employee Plans/Agreements, except with respect to
benefits accrued as of, or claims incurred and payable on, the Closing
Date and respecting Employee Plans/Agreements which, by their terms,
permit continuing participation (at the liability and expense of Company)
based on termination for transfer to a successor employer. All Affected
Employees shall be fully vested in their benefits accrued in any pension,
retirement, profit sharing, 401(k) or similar plan of Company as of the
Closing Date. Buyer will provide Company with such information as is
reasonably required concerning Affected Employees in order to enable
Company to determine whether, and if so, when, an Affected Employee will
be entitled to any benefits under any Employee Plans/Agreements.
6.2. Retained Responsibilities. Company agrees to satisfy, or
cause its insurance carriers to satisfy, all claims for benefits, whether
insured or otherwise (including, but not limited to, workers'
compensation, life insurance, medical and disability programs), under
Company's employee benefit programs brought by, or in respect of, Affected
Employees and other employees and former employees of Company, which
claims arise out of events occurring on or prior to the Closing Date, in
accordance with the terms and conditions of such programs or applicable
workers' compensation statutes without interruption as a result of the
employment by Buyer of any such employees after the Closing Date.
6.3. Payroll Tax. Company and Buyer agree that, with respect to
Affected Employees and other Business Employees who accept employment with
Buyer upon the Closing, they respectively meet the definitions of
"predecessor" and "successor" as defined in Revenue Procedure 96-60. For
purposes of reporting employee remuneration to the Internal Revenue
Service on Forms W-2 and W-3 for the calendar year within which the
Closing Date occurs, Company and Buyer will utilize the "Alternative
Procedure" described in Section 5 of Revenue Procedure 96-60. Company and
Buyer agree that, for purposes of reporting employee remuneration for
Federal Insurance Contributions Act ("FICA") purposes for the calendar
year within which the Closing Date occurs, Company meets the definition of
"predecessor" and Buyer meets the definition of "successor" as defined in
IRS Regulation Section 31.3121(a)(1)-1(b). Company shall supply to Buyer,
with respect to all Affected Employees, all cumulative payroll information
as of the Closing Date that Buyer shall require in order to employ IRS
Regulation Section 31.3121(a)(1)-1(b).
6.4. Termination Benefits. Buyer shall be solely responsible for,
and shall pay or cause to be paid, severance payments and other
termination benefits, if any, to Affected Employees who may become
entitled to such benefits by reason of any events occurring after Closing.
If any action on the part of Company prior to the Closing, or if the sale
to Buyer of the Business and the Purchased Assets pursuant to this
Agreement or the transactions contemplated hereby, or if the failure by
Buyer to hire as a permanent employee of Buyer any employee of Company,
shall directly or indirectly result in any Liability (i) for severance
payments or termination benefits or (ii) by virtue of any state, federal
or local "plant-closing" or similar law, then such Liability shall be the
sole responsibility of Company.
6.5. Non-Facility Employees. Company acknowledges that Buyer may
desire to offer employment to the Business Employees identified on Exhibit
6.5. Company shall not discourage any such employee from accepting
employment with Buyer, offer such employees additional salary, benefits or
other compensation as an incentive to remain an employee of Company or
otherwise impede Buyer's efforts to hire such employees.
6.6. No Third Party Rights. Nothing in this Agreement, express or
implied, is intended to confer upon any of Company's employees, former
employees, collective bargaining representatives, job applicants, any
association or group of such persons or any Affected Employees any rights
or remedies of any nature or kind whatsoever under or by reason of this
Agreement, including, without limitation, any rights of employment.
7. OTHER MATTERS
7.1. Title Insurance. Company shall cooperate with Buyer to enable
Buyer to obtain, at the Closing, title insurance commitments, issued by a
title insurance company or companies reasonably satisfactory to Buyer,
agreeing to issue to Buyer standard form owner's policies of title
insurance with respect to all Owned Real Property, together with a copy of
each document to which reference is made in such commitments. Such
cooperation by Company shall include, without limitation, providing the
title insurance company with such affidavits, certificates or indemnities
as the title insurance company may reasonably require. Buyer shall be
responsible for the premium for such title insurance commitments. Such
policies shall be standard ALTA Form 1992 owner's policies in the full
amount of that portion of the Purchase Price allocated respectively to
each subject parcel of Owned Real Property under Section 3.4, insuring
good and marketable title thereto (expressly including all easements and
other appurtenances) and shall include extended coverage deleting all of
the standard exceptions and endorsements for the following: gap coverage,
zoning 3.1, access, location, owner's comprehensive and contiguity. All
policies shall insure title in full accordance with the representations
and warranties set forth herein and shall be subject only to such
conditions and exceptions as shall be reasonably acceptable to Buyer, and
shall contain such additional endorsements as Buyer shall reasonably
request.
7.2. Surveys. Company shall cooperate with Buyer to enable Buyer
to obtain, at Buyer's expense, not less than 15 days prior to the Closing,
surveys of all Owned Real Property prepared in accordance with ALTA/ASCM
standards, certified to Buyer and the title insurance company or
companies, each dated no more than ninety (90) days prior to the Closing
and each detailing the legal description, the perimeter boundaries, all
improvements located thereon, all easements and encroachments, rights of
way, utilities, rights and other matters (whether above or below ground)
encumbering or affecting each such parcel of Owned Real Property and such
other matters as may be reasonably requested by Buyer or the title
insurance companies, each containing a surveyor certificate reasonably
acceptable to Buyer and the title insurance companies, and each prepared
by a registered land surveyor satisfactory to Buyer licensed to practice
in such state in which the Owned Real Property is located.
7.3. Certificates of Occupancy. At or as soon as practicable after
the Closing, Company, at its expense, shall provide to Buyer certificates
of occupancy (or their equivalent) in the final form to the extent
required by applicable law for the buildings, improvements and facilities
comprising the Owned Real Property, which have been issued by each
Government Entity having jurisdiction thereof and which certificates shall
be without any violations thereunder, together with original or certified
copies of all licenses, permits and governmental authorizations relating
thereto.
7.4. Confidentiality. During the period prior to the Closing and
thereafter for a period of five (5) years, Buyer and Company shall each
protect the documents and information that Company has furnished or
disclosed to Buyer in connection with the transactions contemplated by
this Agreement (whether before or after the date hereof) and that have not
been previously disclosed to the public with the same degree of care that
each party applies to protect its confidential and proprietary information
generally. While Buyer acknowledges that certain restrictions on the
dissemination and use of documents and information and other obligations
contained in the Confidentiality Agreements (as defined in Section 14.12)
continue to be appropriate in light of the specific information at issue,
Company acknowledges that the Confidentiality Agreements were entered into
between Buyer and Company prior to the execution of this Agreement and
therefore contain certain restrictions on the dissemination and use of
documents and information by Buyer and other obligations that may be
overly restrictive in the context of Buyer's pre-Closing diligence efforts
and transition planning and in the context of post-Closing operations.
Notwithstanding such restrictions, Company shall consider in good faith
and not unreasonably withhold its agreement to deviations from the
restrictions in particular or general cases at the request of Buyer.
7.5. Noncompetition.
7.5.(a) Company. Subject to the Closing, and as an
inducement to Buyer to execute this Agreement and complete the
transactions contemplated hereby, and in order to preserve the
goodwill associated with the Business, Company hereby covenants and
agrees that for a period of three (3) years from the Closing Date,
Company will not, and Company will cause Singapore Sub not to,
directly or indirectly:
(i) engage in, continue in or carry on the
manufacture of any 30 frame, 40 frame or 50 frame hermetic
electric motors where Company knows the use is in the field of
use of HVAC compressors ("Restricted Motors") in North America
(including Central America); without limitation, Company or
Singapore Sub may manufacture Restricted Motors outside of
North America and may ship such Restricted Motors into North
America;
(ii) use or allow the use of the name "General
Electric," "General Electric Company" or the letters "GE", or
derivations thereof, or any of the logos of Company (the
"Restricted Names"), on Restricted Motors manufactured in
North America;
(iii) solicit for employment any person who was an
employee of Company in connection with the Business prior to
the Closing and who accepts employment with Buyer in
connection with the Closing without the prior consent of
Buyer, unless such person has been otherwise separated from
employment by Buyer for at least 180 days and provided that
nothing herein contained shall be deemed to restrict Company
from effecting any general solicitation for employment; or
(iv) give any other business unit or Affiliate of
Company or any Person any of the rights covered by the
Technology License Agreement for the purpose of manufacturing
Restricted Motors in North America;
provided, however, that the foregoing shall not prohibit the
ownership of securities of any corporation or other business entity
engaged in a Competitive Business that is listed on a national
securities exchange or traded in the national over-the-counter market
in an amount which shall not exceed 5% of the outstanding shares of
any such corporation or other entity. The parties agree that the
geographic scope of this covenant not to compete shall extend
throughout North America. The parties agree that Buyer may sell,
assign or otherwise transfer this covenant not to compete, in whole
but not in part, upon reasonable advance notice to Company, to any
person, corporation, firm or entity that purchases all or part of the
Business or the Purchased Assets. Buyer and Company agree that the
restrictions set forth in this Section 7.5 shall apply to the
Division and Singapore Sub and shall not apply to any other business
unit or Affiliate of Company, including, but not limited to, General
Electric Capital Service, Inc. or its subsidiaries (including,
without limitation, General Electric Capital Corporation and
Employers Reinsurance Corporation), General Electric Investment
Corporation, General Electric Investment Management Incorporated or
any other business unit or Affiliate of Company engaged in financial
services businesses), except that the restrictions set forth in
Section 7.5.(a)(ii) shall apply to any other business unit or
Affiliate of Company and the restrictions set forth in this
Section 7.5 shall apply to other divisions or business units or
Affiliates under the circumstances described below. Subject to
Section 7.5.(b), for a period of three (3) years from the Closing
Date, Company agrees that as a condition precedent to any sale,
transfer or other conveyance of any electric motor production plant
of the Division or a Sale Transaction (as defined in Section
7.5.(b)), the seller thereof will require the buyer or other
transferee thereof to execute a noncompetition agreement in favor of
and for the benefit of Buyer identical in all material respects to
the provisions contained in clauses (i), (ii) (to the extent rights
to use the Restricted Names are sold, transferred or otherwise
conveyed) and (iv) (to the extent rights covered by the Technology
License Agreement are sold, transferred or otherwise conveyed) of
this Section 7.5.(a) (a "Buyer Noncompetition Agreement"). In the
event the Division is incorporated separate from Company, and unless
the context clearly indicates otherwise, each provision of this
Section 7.5 that uses the term "Company" shall be read to include the
Division in its corporate form, and thereafter Company and the
Division in its corporate form shall both continue to be bound by
this Section 7.5. In the event (x) any electric motor production
plant of the Division or (y) any winding line of Singapore Sub used
to manufacture Restricted Motors (the "Singapore Assets") are
transferred to any other division or business unit of Company, and
unless the context clearly indicates otherwise, each provision of
this Section 7.5 that uses the term "Company" shall be read to
include such other division or business unit with respect to such
assets, and thereafter Company and such other division or business
unit shall both continue to be bound by this Section 7.5 with respect
to such assets.
7.5.(b) Right of First Refusal. If, during the period of
three (3) years from the Closing Date, Company, its Affiliates and/or
Singapore Sub (as applicable, the "Selling Parties") desire to be
committed to effect a Sale Transaction, then, at Company's option,
Company may offer Buyer a Right of First Refusal with respect to such
Sale Transaction. As used herein, "Sale Transaction" shall mean any
arm's length transaction or series of related transactions whereby,
directly or indirectly, (x) any material assets of Singapore Sub or
fifty percent (50%) or more (whether voting, financial or otherwise)
of the outstanding equity interests of Singapore Sub (the "Singapore
Stock") would be sold, transferred or otherwise conveyed to, or
acquired by, a Person other than the Company or any of its Affiliates
(a "Buying Third Party"), whether by merger, consolidation,
reorganization, joint venture, partnership, purchase, lease,
strategic alliance, sale of stock or assets, or other business
combination, and (y) as a result of such transaction or series of
related transactions a Buying Third Party, directly or indirectly,
would own the Singapore Assets or fifty percent (50%) or more
(whether voting, financial or otherwise) of the outstanding equity
interests of a Person that owns the Singapore Assets. As used
herein, "Right of Refusal" shall mean that the Selling Parties,
before committing to effect a Sale Transaction, shall first offer to
Buyer the Sale Transaction, subject to the following procedure: (i)
in such event, the Selling Parties shall provide to Buyer a written
notice (the "Sale Notice"), which shall describe the purchase price
at which the Selling Parties intend to offer the Sale Transaction
(the "Offer Price"), offering such Sale Transaction to Buyer for a
purchase price that is equal to the Offer Price; (ii) the Selling
Parties shall provide Buyer access to books, records and facilities
relating to the Singapore Assets and the business of Singapore Sub as
Buyer shall request to enable Buyer to consider the Selling Parties'
offer, subject to Buyer's execution of appropriate confidentiality
agreements; (iii) if, within thirty (30) days (assuming prompt
compliance and cooperation of the Selling Parties with the due
diligence requests of Buyer pursuant to clause (ii)) of receiving the
Sale Notice, Buyer accepts such offer and elects, by written notice
to the Selling Parties ("Buyer's Acceptance"), to commit to a Sale
Transaction with the Selling Parties, then the Selling Parties shall
be required to negotiate in good faith with Buyer a definitive
agreement to consummate the Sale Transaction for a purchase price
that is equal to the Offer Price; (iv) if, at the end of such thirty-
day period (assuming prompt compliance and cooperation of the Selling
Parties with the due diligence requests of Buyer pursuant to clause
(ii)), Buyer has not accepted such offer, or upon the termination in
good faith of negotiations by either party of the negotiations
pursuant to clause (iii) after a negotiating period of sixty (60)
days from the date the Selling Parties receive Buyer's Acceptance,
then the Selling Parties shall be free for a period of six (6) months
to consummate the Sale Transaction with the Buying Third Party for a
purchase price equal to or not less than ninety percent (90%) of the
Offer Price and otherwise on terms and conditions substantially the
same as in the Sale Notice; and (v) if the Selling Parties desire to
enter into a definitive agreement for a Sale Transaction with the
Buying Third Party (A) for a purchase price less than ninety percent
(90%) of the Offer Price or otherwise on terms and conditions not
substantially the same as in the Sale Notice or (B) after the six-
month period under clause (iv) has expired, then clauses (i), (ii)
and (iii) of this Section 7.5.(b) shall again apply to any subsequent
offer for a Sale Transaction to a Buying Third Party. If Company
offers Buyer a Right of First Refusal with respect to a Sale
Transaction and Buyer does not accept the Selling Parties' offer with
respect to a Sale Transaction pursuant to clause (iii), then the
Selling Parties shall not be obligated to require the Buying Third
Party in such Sale Transaction to execute a Buyer Noncompetition
Agreement.
7.5.(c) Enforcement. In the event a court of competent
jurisdiction determines that the provisions of this covenant not to
compete are excessively broad as to duration, geographical scope or
activity, it is expressly agreed that this covenant not to compete
shall be construed so that the remaining provisions shall not be
affected, but shall remain in full force and effect, and any such
over broad provisions shall be deemed, without further action on the
part of any person, to be modified, amended and/or limited, but only
to the extent necessary to render the same valid and enforceable in
such jurisdiction. Company agrees that the terms and conditions of
this Section 7.5 are reasonable and necessary for the protection of
the Business, and the trade secrets and confidential information
related thereto and for the prevention of damage or loss to Buyer and
the Business as a result of action taken by Company.
7.6. [intentionally omitted]
7.7. HSR Act Filings. Company and Buyer shall each file or cause
to be filed with the Federal Trade Commission (the "FTC") and the United
States Department of Justice (the "DOJ")any notifications required to be
filed under the HSR Act with respect to the transactions contemplated
hereby and Buyer and Company shall bear the costs and expenses of their
respective filings. Company and Buyer shall use their respective
commercially reasonable efforts to make such filings promptly (and in any
event within five (5) business days following the date hereof), to respond
to any requests for additional information made by either of such agencies
and to cause the waiting periods under the HSR Act to terminate or expire
at the earliest possible date (but the parties shall not be obligated to
request early termination of the applicable waiting period) and to resist
in good faith, at each of their respective cost and expense (including the
institution or defense of legal proceedings), any assertion that the
transactions contemplated hereby constitute a violation of the antitrust
laws, all to the end of expediting consummation of the transactions
contemplated hereby. As used in the foregoing sentence, Buyer's
"commercially reasonable efforts" shall include an obligation to use
commercially reasonable efforts to gain customer support for the
transactions contemplated hereby, which may be evidenced by letters of
support or otherwise. Each of Company and Buyer shall consult with the
other prior to any meetings, by telephone or in person, with the staff of
the FTC or the DOJ, and each of Company and Buyer shall have the right to
have a representative present at any such meeting.
7.8. Product Liability Matters. At or prior to the Closing,
Company, at its expense, shall cause Buyer to be named as an additional
insured under each of its occurrence-type policy or policies of insurance
insuring against claims for personal injury and property damage arising
out of or resulting from any products manufactured in the Business by
Company prior to the Closing Date. At the Closing, Company shall deliver
to Buyer one or more certificates of insurance evidencing that the
insurance to be obtained by it pursuant to this Section is in effect and
providing for notification to Buyer at least ten (10) days prior to the
effective date of any termination or cancellation of such insurance.
Following the Closing, Buyer shall continue to utilize Company's date code
system presently in effect or a similar system which will permit the
manufacturer of the products of the Business to be determined.
7.9. Use of Names. For a period of fifteen months following the
Closing, Buyer shall be permitted, and is hereby licensed, to use in the
conduct and operation of the Business (a) the Purchased Assets consisting
of tooling in existence on the Closing Date that bears the name "General
Electric," "General Electric Company" or the letters "GE", or derivations
thereof, or any of the logos of Company (collectively, the "Licensed
Marks"); provided, however, that, to the extent that it becomes necessary
for Buyer to replace any such tooling during such fifteen-month period in
the ordinary course of business, Buyer shall replace such tooling with
tooling that does not bear the Licensed Marks ("Buyer Tooling"); provided
further, that Buyer shall replace all such tooling with Buyer Tooling by
the end of such fifteen-month period; (b) the work-in-process inventories
included in the Purchased Assets or produced after the Closing with
tooling that bears the Licensed Marks pursuant to clause (a); provided,
however, that Buyer shall make Reasonable Identification Efforts (as
defined below); and (c) the existing finished goods included in the
Purchased Assets that bear the Licensed Marks to the extent necessary to
exhaust such finished goods; provided, however, that, if such finished
goods are packaged as of the Closing, then Buyer shall indicate with a
label on the packaging, without any obligation to open such packaging,
that such finished goods are sold by Buyer; provided further, that, if
such finished goods are not packaged as of the Closing, then Buyer shall
make Reasonable Identification Efforts. Notwithstanding the foregoing,
after the end of such fifteen-month period, to the extent the finished
goods bearing the Licensed Marks and the work-in-process inventories
produced with tooling that bears the Licensed Marks pursuant to clause (a)
have not been exhausted, Buyer shall be permitted, and is hereby licensed,
to use in the conduct and operation of the Business such finished goods
and work-in-process inventories to the extent necessary to exhaust such
finished goods and work-in-process inventories; provided, however, that
Buyer shall make Reasonable Identification Efforts with respect to work-
in-process inventories and shall open any packaging for such finished
goods and make Reasonable Identification Efforts. Notwithstanding the
foregoing, Buyer shall not represent or hold itself out as representing
Company and shall indemnify Company for any loss, damage, cost or expense
incurred by Company as a result of Buyer's use of the Licensed Marks. The
foregoing rights granted to Buyer are subject to Company's rights, at
reasonable times and upon reasonable notice, to inspect Buyer's inventory
used in the Business following the Closing to assure itself in a
reasonable manner that the quality of finished goods that bear the
Licensed Marks is reasonably consistent with the quality of finished goods
inventory as of the Closing and that Buyer is complying with this Section
7.9. As used herein, "Reasonable Identification Efforts" shall mean the
use by Buyer of commercially reasonable efforts to identify as sold by
Buyer finished goods or work-in-process inventories, as the case may be,
that bear the Licensed Marks through a prominent identification stamp or
otherwise, subject to Underwriters Laboratories limitations. To the
extent any packaging materials included in Personal Property at the
Closing contain the Licensed Marks (other than those packaging materials
which are on finished goods at the Closing as to which Buyer shall make
Reasonable Identification Efforts), Buyer shall cover such Licensed Marks
before using such packaging materials in the operation of the Business.
7.10. Licensed Information. Effective as of the Closing, Company
hereby grants and agrees to grant to Buyer and its subsidiaries a
perpetual, worldwide, paid-up, non-exclusive license to use the Business
Information (a) related to or used in the Business or (b) located at the
Facility (the "Licensed Information"), and such license may be assigned,
extended, sublicensed or otherwise transferred, in whole or in part, by
Buyer to any other party. Company will furnish Licensed Information
located at the Facility to Buyer on the Closing Date, and at the request
of Company, Buyer shall make copies of such Licensed Information for
Company following the Closing. Company will furnish Licensed Information
that is not located at the Facility on the Closing Date to Buyer as soon
as possible after the Closing Date, but in no event later than sixty (60)
days after the Closing Date, and pending such delivery, Company shall
provide access to such Licensed Information in accordance with Section
7.11.(b). Notwithstanding the foregoing, as to any books, records,
contracts, other documents or data of Company relating to the Purchased
Assets or the Business that includes information not relating to the
Purchased Assets or the Business (other than in a nominal or
inconsequential manner) ("Other Information"), Company shall not be
obligated to make Other Information available, but Company shall (i) to
the extent practicable, redact (physically, electronically or otherwise)
the Other Information or (ii) use commercially reasonable efforts to
prepare and present the information Buyer requests in any other reasonable
manner such that Other Information is not made available to Buyer.
7.11. Access to Information and Records.
7.11.(a) Prior to Closing. During the period commencing on
the date hereof and ending on the Closing, Company shall, and shall
cause its officers, employees, agents and advisors (who shall not
include attorneys) to, furnish to Buyer, its officers, employees
(including without limitation internal auditors), agents and
advisors, at reasonable times and, upon reasonable notice, (i) such
access to the Facility as Buyer may from time to time reasonably
request with due regard to minimizing disruption of the Business,
including, but not limited to, for the purposes of an environmental
investigation; (ii) such access to the properties, books, records,
contracts and other documents of Company relating to the Purchased
Assets or the Business as Buyer may from time to time reasonably
request, at such places in the United States as Company shall deem
appropriate but subject to Buyer's reasonable approval, including
without limitation the right to inspect, examine and audit all
documents; provided, however, that such right shall not include the
right to photocopy documents other than those where such photocopying
is reasonably necessary to enable Buyer to effectively analyze the
information contained therein, in which case photocopying will be
allowed subject to control procedures consistent with those in effect
between the parties prior to the date hereof; and (iii) such access
to financial and operating data and other information with respect to
the Business and the properties of the Business, as Buyer may from
time to time reasonably request, at such places in the United States
as Company shall deem appropriate but subject to Buyer's reasonable
approval, including without limitation the right to inspect, examine
and audit all documents; provided, however, that such right shall not
include the right to photocopy documents other than those where such
photocopying is reasonably necessary to enable Buyer to effectively
analyze the information contained therein, in which case photocopying
will be allowed subject to control procedures consistent with those
in effect between the parties prior to the date hereof.
Notwithstanding the foregoing, (A) Company shall have no obligation
to make available any information that, in the reasonable opinion of
Company's legal counsel, would result in a violation of any law, rule
or regulation applicable to Company and (B) as to any books, records,
contracts, other documents or data of Company relating to the
Purchased Assets or the Business that includes Other Information
(other than in a nominal or inconsequential manner), Company shall
not be obligated to make Other Information available, but Company
shall (1) to the extent practicable, redact (physically,
electronically or otherwise) the Other Information or (2) use
commercially reasonable efforts to prepare and present the
information Buyer requests in any other reasonable manner such that
Other Information is not made available to Buyer. Further, during
such period, with the prior consent of Company in each instance
(which consent shall not be unreasonably withheld), Buyer and its
officers, employees, agents, independent accountants and advisors
shall have access to the vendors identified on Schedule 4.19.(b), the
customers identified on Schedule 4.19.(a), officers and employees of
Company involved in the Business and others having business dealings
with Company for the purpose of performing Buyer's due diligence
investigation. Company may be represented at such meetings or
conversations by its legal counsel or such other representatives as
it may reasonably request.
7.11.(b) After Closing. After the Closing, each party will
afford the other party, its counsel, accountants and other
representatives, during normal business hours on reasonable notice,
reasonable access to the books, records and other data in such
party's possession relating directly or indirectly to the properties,
liabilities or operations of the Business, with respect to periods
prior to the Closing, and the right to make copies and extracts
therefrom at its expense, to the extent that such access may be
reasonably required by the requesting party for any proper business
purpose (other than in connection with a dispute between the parties
relating to the transaction contemplated by this Agreement).
Notwithstanding the foregoing, (i) neither party shall have any
obligation to make available any information that, in the reasonable
opinion of such party's legal counsel, would result in a violation of
any law, rule or regulation applicable to such party and (ii) as to
any books, records, contracts, other documents or data of Company
relating to the Purchased Assets or the Business that includes Other
Information (other than in a nominal or inconsequential manner),
neither party shall be obligated to make Other Information available,
but each shall (1) to the extent practicable, redact (physically,
electronically or otherwise) the Other Information such that Other
Information is not made available to the other party or (2) use
commercially reasonable efforts to prepare and present the
information the other party requests in any other reasonable manner.
Each party agrees to maintain such records in accordance with its
records retention policy.
7.11.(c) Audited Financial Statements. Without limiting
Company's obligations under Section 7.11.(b), upon the Closing or
sooner with the consent of Company, which shall not be unreasonably
withheld, Buyer may arrange, at Buyer's expense, to have such
financial statements for the Business audited as Buyer is required to
file with the Securities and Exchange Act in a Current Report on Form
8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended.
7.12. Cash Management; Intercompany Accounts.
7.12.(a) As soon as practicable after the Closing, Company
and Buyer shall jointly send written notices to the customers of the
Business to the effect that, immediately following the Closing, all
payments in connection with the Business shall be made to an account
designated by Buyer. Effective upon the Closing, Company grants to
Buyer the authority, coupled with an interest, to receive, endorse,
cash, deposit, and provide a receipt for any checks, drafts,
documents and instruments relating to accounts receivable of the
Business included in the Purchased Assets that are in the name of
Company.
7.12.(b) For a period of sixty (60) days after the Closing,
on the first business day of each week after the Effective Time, and
thereafter, promptly following receipt of receipts in respect of
Purchased Assets, (i) Company shall send Buyer a notice identifying
all items received during the prior week in Company's lockbox and
lockbox account that constitute receipts in respect of Purchased
Assets and (ii) Company shall forward receipts in respect of
Purchased Assets to Buyer by wire transfer to an account designated
by Buyer.
7.13. Certain Agreements. At the Closing, Buyer and Company shall
enter into the following agreements (collectively, the "Ancillary
Agreements"):
7.13.(a) Technology License Agreement. A Technology License
Agreement in the form attached hereto as Exhibit 7.13.(a).
7.13.(b) Certain Post-Closing Services. An agreement in the
form attached hereto as Exhibit 7.13.(b) (the "Transition Services
Agreement") pursuant to which Company shall perform certain services
for Buyer on the terms and conditions set forth in the Transition
Services Agreement and such other terms and conditions to which
Company and Buyer agree. Prior to the Closing, at the request of
either party, Company and Buyer shall negotiate in good faith with
respect to more detailed descriptions of the services to be provided
under the Transition Services Agreement.
7.13.(c) Materials Purchase Agreement. A Materials Purchase
Agreement in the form attached hereto as Exhibit 7.13.(c).
8. FURTHER PRE-CLOSING COVENANTS
8.1. Conduct of Business Pending the Closing. Company covenants
that from the date hereof until the Closing, except as otherwise approved
in writing by Buyer:
8.1.(a) No Changes. Company will carry on the Business in
the ordinary course of business and will not make or institute any
material changes in its methods of purchase, sale, management,
accounting or operation. Company shall use commercially reasonable
efforts to keep Buyer informed as to any material developments in the
operations and activities of the Business.
8.1.(b) Maintain Organization. Company will take such
reasonable action as may be necessary to maintain, preserve, renew
and keep in favor and effect the existence and material rights,
qualifications, licenses, permits, consents, authorizations,
regulations and franchises of the Business and will use its
commercially reasonable efforts to preserve the Business intact, to
keep available to Buyer the employees of Company identified on
Schedule 4.17, and to preserve for Buyer its present relationships
with suppliers and customers and others having business relationships
with the Business. Without limitation, Company will not promote or
transfer any Facility Employee or Available Employee such that such
employee will no longer be available to Buyer at the Closing.
Notwithstanding the foregoing, Company will not hire replacements to
fill the positions of plant manager, human resources manager or
health and safety manager at the Facility.
8.1.(c) No Breach. Except with respect to any slow or
delinquent payment in the ordinary course of the Business with
respect to any account payable or receivable, Company will not do any
act and shall use commercially reasonable efforts not to omit any act
(other than actions taken or omitted in connection with the actions
taken in accordance with the transactions contemplated hereby) that
would cause (i) a breach having material damage to the Business of
any contract, commitment or obligation material to the Business, or
(ii) any material breach of any representation, warranty, covenant or
agreement made by Company herein, or that would have required
disclosure on Schedule 4.8 had it occurred after the date of the
Recent Balance Sheet and prior to the date of this Agreement.
8.1.(d) No Extraordinary Contracts. No Contracts of any
type will be entered into by or on behalf of Company in the
operations of the Business except Contracts that are in the ordinary
course of business.
8.1.(e) No Capital Expenditures. No individual capital
expenditure in excess of $100,000 (except pursuant to a Contract
disclosed pursuant to Section 4.14), no individual commitment to make
a capital expenditure in excess of $100,000 and no capital
expenditures or commitments to make a capital expenditure that in the
aggregate are in excess of $500,000 (except pursuant to a Contract
disclosed pursuant to Section 4.14), will be made by or on behalf of
Company in connection with the operation of the Business.
8.1.(f) Maintenance of Property. Company shall use,
operate, maintain and repair all property constituting Purchased
Assets hereunder in a manner consistent with past practice, ordinary
wear and tear excepted.
8.1.(g) Interim Financial Information. Company will provide
Buyer with interim monthly financial information relating to the
Business and other management reports reasonably available to
Company.
8.1.(h) No Negotiations. Company will not, directly or
indirectly, entertain or discuss a possible sale or other disposition
of substantially all of the assets of the Business (other than
inventory and immaterial assets in the ordinary course of business),
through the acquisition of stock or assets or otherwise, with any
other Person or provide any information to any Person (other than
information that is traditionally provided in the ordinary course of
Company's business operations to third parties where Company and its
officers, directors and agents have no reason to believe that such
information may be utilized to evaluate a possible acquisition of the
Business). The foregoing provisions of this Section 8.1.(h) shall
apply solely to the Division and any office or function within
Company that would have the express corporate authority to bind the
Division or force the Division to act and shall not apply to any
other business unit or Affiliate of Company, including, but not
limited to, General Electric Capital Service, Inc. or its
subsidiaries (including, without limitation, General Electric Capital
Corporation and Employers Reinsurance Corporation), General Electric
Investment Corporation, General Electric Investment Management
Incorporated or any other of Company's Affiliates engaged in
financial services businesses.
8.1.(i) Licenses of LPPP. Company in respect of the
Business shall not negotiate or enter into any license of any LPPP,
whether as licensor or as licensee that would materially affect the
conduct of the Business.
8.1.(j) Relocation of Property. Company shall not relocate
any tangible Personal Property from the Facility to any other
facility or property of Company or an Affiliate other than in the
ordinary course of business.
8.2. Further Actions. Subject to the terms and conditions hereof,
Company and Buyer shall use their commercially reasonable efforts to take,
or cause to be taken, all action and to do, or cause to be done, and to
cooperate fully with each other with respect to, all things necessary,
proper or advisable to consummate and make effective the transactions
contemplated by this Agreement, including using all commercially
reasonable efforts: (a) to obtain prior to the Closing Date all licenses,
permits, consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to Contracts with Company that are
necessary for the consummation of the transactions contemplated by this
Agreement; (b) to effect all necessary registrations and filings
(including but not limited to the filings contemplated by Section 7.7);
and (c) to cause the fulfillment at the earliest practicable date of all
of the conditions to the parties' obligations to consummate the
transactions contemplated in this Agreement; provided, however, that none
of Company, its Affiliates, Buyer or Buyer's affiliates (as defined in
Section 11.1) shall be required to (i) subject to Section 14.9, make any
material payments or (ii) enter into or amend any contractual arrangements
in connection with any obligations of any of them contained in this
Section 8.2 in a manner that is materially disadvantageous to the
Business. Without limiting the generality of the foregoing or the
provisions of this Section 8.2, (A) Company shall use commercially
reasonable efforts to assist Buyer in replicating all of Company's
Underwriters Laboratories, Canadian Standards Association and similar
product testing service association approvals and certifications related
to the Business and (B) promptly following the execution of this
Agreement, Company shall provide to Buyer copies of all documents in
Company's possession and control necessary for Buyer to file the necessary
applications requesting the approval of any Government Entities to the
assignment of any licenses, permits, approvals, certifications and
listings of Company and all exemptions therefor to Buyer for which Company
has not received approvals. With regard to consents from third parties to
the Contracts described in Schedule 4.14.(k) and from customers, suppliers
and dealers or distributors as described or identified on Schedules
4.19.(a), 4.19.(b) and 4.19.(c), respectively, Company shall initiate
contact to obtain such consents only in conjunction and cooperation with
Buyer.
8.3. Disclosure. Company shall have a continuing obligation to
promptly notify Buyer in writing with respect to any matter hereafter
arising or discovered which, if existing or known at the date of this
Agreement, would have been required to be set forth or described in the
Disclosure Schedule, but no such disclosure shall cure any breach of any
representation or warranty which is inaccurate. For purposes of
determining the accuracy of the representations and warranties of Company
contained in Article 4 in order to determine the fulfillment of the
conditions in Section 9.1, the Disclosure Schedule shall be deemed to
include only that information contained therein on the date hereof and
shall be deemed to exclude any information contained in any subsequent
supplement or amendment thereto.
8.4. Communication Plan. Company and Buyer shall make such
releases, announcements, statements and other communications with respect
to the transactions contemplated hereby to their respective employees,
customers, suppliers and other third parties in accordance with and
pursuant to the Communication Plan attached hereto as Exhibit 8.4.
8.5. Environmental Remediation, Reports. Prior to the Closing,
Company shall use its best efforts to remediate (a) the PCB contamination
associated with the release referenced in the Release Report to the
National Response Center dated November 19, 1988 (the "PCB Contamination")
and (b) any other Environmental Actions that are described in any Schedule
or discovered prior to the Closing, whether by Company or Buyer (the "Pre-
Closing Environmental Actions"), to meet all standards set forth under
applicable Environmental Laws. In undertaking such remediation
activities, Company shall not unreasonably interfere with the operations
of the Business. Company shall provide Buyer the opportunity to review
and comment in advance upon all work plans, investigations and other
environmental remediation activities, including but not limited to the PCB
remediation, that are conducted on or related to the Real Property prior
to the Closing Date. Buyer shall provide any comments in a reasonable
time period so as to not delay Company's activities. To the extent
Company does not remediate the PCB Contamination or any Pre-Closing
Environmental Actions prior to the Closing, Company shall remediate such
PCB Contamination and Pre-Closing Environmental Actions in accordance with
the Remediation Activity Procedures (as defined in Section 11.1). As soon
as practicable after the date hereof, Company will deliver to Buyer all
environmental studies in the possession and control of Company or any of
its current or former contractors relating to the Business or the Real
Property.
9. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
Each and every obligation of Buyer to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
each of the following conditions:
9.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Company in this Agreement
shall be true and correct when made and shall be true and correct in all
material respects (except that statements in any representations and
warranties that expressly include a standard of materiality shall be true
and correct in all respects) at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing
Date except (a) to the extent that any such representations and warranties
were made as of a specified date and as to such representations and
warranties the same shall continue on the Closing Date to have been true
in all material respects as of the specified date, (b) for any changes
permitted by the terms of this Agreement or consented to in writing by
Buyer, and (c) to the extent that any failure of such representations and
warranties to be true and correct in all material respects would not,
individually or in the aggregate, have a Material Adverse Effect.
9.2. Compliance With Agreement. Company shall have in all material
respects performed and complied with all of its agreements and obligations
under this Agreement which are to be performed or complied with by Company
prior to or on the Closing Date, including the delivery of the closing
documents specified in Section 12.1.
9.3. Absence of Litigation. No Litigation shall have been
commenced seeking to enjoin the transactions contemplated hereby.
9.4. Consents and Approvals. All authorizations, approvals,
notices, consents and waivers that are required to effect the transactions
contemplated hereby, the failure to obtain or the failure to provide,
individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect, shall have been received, and executed
counterparts thereof shall have been delivered to Buyer not less than two
business days prior to the Closing.
9.5. Hart-Scott-Rodino Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
10. CONDITIONS PRECEDENT TO COMPANY'S OBLIGATIONS
Each and every obligation of Company to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of
the following conditions:
10.1. Representations and Warranties True on the Closing Date. Each
of the representations and warranties made by Buyer in this Agreement
shall be true and correct when made and shall be true and correct in all
material respects (except that statements in any representation and
warranties that expressly include a standard or materiality shall be true
and correct in all respects) at and as of the Closing Date as though such
representations and warranties were made or given on and as of the Closing
Date except to the extent that any such representations and warranties
were made as of a specified date and as to such representations and
warranties the same shall continue on the Closing Date to have been true
in all material respects as of the specified date.
10.2. Compliance With Agreement. Buyer shall have in all material
respects performed and complied with all of Buyer's agreements and
obligations under this Agreement which are to be performed or complied
with by Buyer prior to or on the Closing Date, including the delivery of
the closing documents specified in Section 12.2.
10.3. Absence of Litigation. No Litigation shall have been
commenced seeking to enjoin the transactions contemplated hereby.
10.4. Consents and Approvals. All authorizations, approvals,
notices, consents and waivers required to be described pursuant to Section
5.3 shall have been received, and executed counterparts thereof shall have
been delivered to Buyer not less than two business days prior to the
Closing.
10.5. Hart-Scott-Rodino Waiting Period. All applicable waiting
periods related to the HSR Act shall have expired.
11. INDEMNIFICATION
11.1. By Company. Subject to the terms and conditions of this
Article 11, Company hereby agrees to indemnify, defend and hold harmless
Buyer, and its directors, officers, employees and controlled and
controlling persons (hereinafter "Buyer's affiliates") from and against
all Claims asserted against, resulting to, imposed upon, or incurred by
Buyer, Buyer's affiliates, the Business or the Purchased Assets by reason
of, arising out of or resulting from, directly or indirectly, (a) the
inaccuracy or breach of any representation or warranty of Company
contained in or made pursuant to this Agreement or the Technology License
Agreement (ignoring, for purposes of determining the existence of any such
inaccuracy or breach or the amount of Claims with respect thereto, any
"materiality" or similar qualifier set forth in such representation or
warranty); (b) the breach of any covenant of Company contained in or made
pursuant to this Agreement or the Technology License Agreement (regardless
of whether such breach is deemed "material"); (c) the Unassumed
Liabilities (including any matter described in Section 2.2 that by law may
also be deemed to be a Liability of Buyer); or (d) all Claims alleging
Liability under any Environmental Law in connection with any Environmental
Action arising from environmental Liabilities retained by Company pursuant
to Section 2.2.(l) that (A) is related in any way to Company's or any
previous owner's or operator's ownership, operation or occupancy of the
Business, properties and assets being transferred to Buyer, and (B) in
whole or in part occurred, existed, arose out of conditions or
circumstances that existed, or was caused on or before the Closing Date,
whether or not known to Buyer. As used in this Article 11, the term
"Claim" shall include (i) all Liabilities, losses and damages, judgments,
awards, penalties and settlements (in each case, excluding consequential
damages, lost profits or punitive damages other than those awarded to a
third party other than an Indemnified Party (as defined in
Section 11.3.(a))); (ii) all demands, claims, suits, actions, causes of
action, proceedings and assessments, whether or not ultimately determined
to be valid; and (iii) all costs and expenses (including, without
limitation, interest (including prejudgment interest in any litigated or
arbitrated matter), court costs and reasonable fees and expenses of
attorneys, consultants, expert witnesses and other investigative costs) of
investigating, defending or asserting any of the foregoing or of enforcing
this Agreement. With respect to Claims brought pursuant to clause (a) or
(d) above in connection with any Environmental Action solely regarding the
condition of the Facility, the following presumptions shall apply: (x) if
the discovery of evidence of an Environmental Action occurs during the
first eighteen months following the Closing Date, then there shall be a
rebuttable presumption that the Environmental Action in whole or in part
occurred, existed, arose out of conditions or circumstances that existed,
or was caused on or before the Closing Date; (y) if the discovery of
evidence of an Environmental Action occurs during the period from the end
of the eighteenth month following the Closing Date, until the end of the
thirtieth month after the Closing Date, then there shall be no presumption
as to the date that the Environmental Action in whole or in part occurred,
existed, arose out of conditions or circumstances that existed, or was
caused; and (z) if the discovery of evidence of an Environmental Action
occurs after the end of the thirtieth month following the Closing Date,
then there shall be a rebuttable presumption that the Environmental Action
in whole or in part occurred, existed, arose out of conditions or
circumstances that existed, or was caused after the Closing Date. The
presumptions set forth in clauses (x), (y) and (z) above shall not apply
to any Claims related to the PCB Contamination or Pre-Closing
Environmental Actions, which Claims shall be Unassumed Liabilities. With
respect to Claims in connection with any Environmental Action, for which
Company is required to indemnify Buyer hereunder, Company may determine to
undertake any necessary investigation and remediation activities under its
direction; provided, however, that prior to directing such investigation
and remediation activities, Company shall provide Buyer with written
acknowledgment of its obligation to indemnify Buyer with respect to such
Claim in accordance with this Agreement; provided further, that in such
circumstances, Company shall (i) not unreasonably interfere with Buyer's
operations; (ii) provide Buyer with an opportunity to review and comment
(which review and comment shall be made expediently so as not to cause
unreasonable delay) in advance upon all work plans, investigations and
other environmental remediation activities, and incorporate all reasonable
comments provided by Buyer; (iii) allow Buyer to participate in any
communications with applicable governmental authorities related to such
work; and (iv) not agree to any restrictions on the use or operation of
the property (including but not limited to groundwater or soil use
restrictions) without Buyer's prior written consent (collectively, the
"Remediation Activity Procedures)".
11.2. By Buyer. Subject to the terms and conditions of this Article
11, Buyer hereby agrees to indemnify, defend and hold harmless Company,
its directors, officers, employees and controlling persons and other
Affiliates from and against all Claims asserted against, resulting to,
imposed upon or incurred by any such person by reason of or resulting
from, directly or indirectly, (a) the inaccuracy or breach of any
representation or warranty of Buyer contained in or made pursuant to this
Agreement or the Technology License Agreement (ignoring, for purposes of
determining the existence of any such inaccuracy or breach or the amount
of Claims with respect thereto, any "materiality" or similar qualifier set
forth in such representation or warranty); (b) the breach of any covenant
of Buyer contained in this Agreement or the Technology License Agreement
(regardless of whether such breach is deemed "material"); or (c) all
Assumed Liabilities and other Claims of or against Company specifically
assumed by Buyer pursuant hereto.
11.3. Indemnification of Third-Party Claims. The following
provisions shall apply to any Claim with respect to which Company or Buyer
has an indemnification obligation pursuant to this Agreement which is (i)
a suit, action or arbitration proceeding filed or instituted by, or the
making of any claim or demand by, any third party, or (ii) any other form
of proceeding or assessment instituted by any Government Entity (a "Third
Party Claim"):
11.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") prompt written notice of any such Claim. The Indemnifying
Party may undertake and control the defense and/or settlement
thereof, subject to Section 11.3.(c), by representatives chosen by it
if the Indemnifying Party admits it has an indemnification obligation
hereunder with respect to such Claim, in which case such assumption
will constitute the Indemnifying Party's undertaking to pay, subject
to Section 11.4, all Claims incurred in connection therewith. With
the consent of the Indemnified Party, the Indemnifying Party may
undertake the defense of any Third Party Claim without admitting that
it has an indemnification obligation hereunder. Failure to give
notice of a Third Party Claim shall not affect the Indemnifying
Party's duty or obligations under this Article 11, except to the
extent the Indemnifying Party is prejudiced thereby. So long as the
Indemnifying Party has undertaken the defense of any such Claim and
has not abandoned such defense, the Indemnified Party shall not
settle such Claim. The Indemnified Party shall make available to the
Indemnifying Party or its representatives all records and other
materials required by them and in the possession or under the control
of the Indemnified Party, for the use of the Indemnifying Party and
its representatives in defending any such Claim, and shall in other
respects give reasonable cooperation in such defense.
11.3.(b) Failure to Defend. If the Indemnifying Party,
within a reasonable time after notice of any such Claim, fails to
undertake the defense of any Third Party Claim or if the Indemnifying
Party has undertaken but abandoned such defense, then the Indemnified
Party will (upon further notice) have the right to undertake the
defense, compromise or settlement of such Claim or consent to the
entry of a judgment with respect to such Claim, and the Indemnifying
Party shall thereafter have no right to challenge the Indemnified
Party's defense, compromise, settlement or consent to judgment, but
the Indemnifying Party shall retain the right to deny that it has
indemnification obligations hereunder.
11.3.(c) Indemnified Party's Rights. Anything in this
Article 11 to the contrary notwithstanding, (i) if there is a
reasonable probability that a Claim may materially and adversely
affect the Indemnified Party other than as a result of money damages
or other money payments, then, without prejudice to the Indemnifying
Party's right to challenge the Indemnified Party's defense,
compromise, settlement or consent to judgment, the Indemnified Party
shall have the right to undertake the defense, compromise or
settlement of such Claim or consent to the entry of a judgment with
respect to such Claim and (ii) an Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or
compromise any Claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the Indemnified Party of a release from
all Liability in respect of such Claim.
11.4. Payment. The Indemnifying Party shall promptly pay the
Indemnified Party any amount due under this Article 11. Upon judgment,
determination, settlement or compromise of any Third Party Claim, the
Indemnifying Party shall pay promptly on behalf of the Indemnified Party,
and/or to the Indemnified Party in reimbursement of any amount theretofore
required to be paid by it, the amount so determined by judgment,
determination, settlement or compromise and all other Claims of the
Indemnified Party with respect thereto, unless in the case of a judgment
an appeal is made from the judgment. If the Indemnifying Party desires to
appeal from an adverse judgment, then the Indemnifying Party shall post
and pay the cost of the security or bond to stay execution of the judgment
pending appeal. Upon the payment in full by the Indemnifying Party of
such amounts, the Indemnifying Party shall succeed to the rights of such
Indemnified Party, to the extent not waived in settlement, against the
third party who made such Third Party Claim.
11.5. Limitations on Indemnification. Except for any cause of
action for fraud:
11.5.(a) Time Limitation. No claim or action shall be
brought under this Article 11 for breach of a representation or
warranty after the lapse of three (3) years following the Closing.
Regardless of the foregoing, however, or any other provision of this
Agreement:
(i) Any claim or action brought for breach of any
representation or warranty made in or pursuant to Section 4.5,
Section 4.11.(c), Section 4.12.(a) or Section 4.16 may be
brought at any time until the underlying obligation is barred
by the applicable period of limitation under federal and state
laws relating thereto (as such period may be extended by the
Indemnifying Party's waiver).
(ii) Any claim made by a party hereunder by
delivering written notice to the other party, including
without limitation pursuant to Section 14.10, relating to, or
filing a suit or action in a court of competent jurisdiction
or a court reasonably believed to be of competent jurisdiction
for, a breach of a representation or warranty prior to the
termination of the survival period for such claim shall be
preserved despite the subsequent termination of such survival
period.
(iii) If any act, omission, disclosure or failure
to disclose shall form the basis for a claim for breach of
more than one representation or warranty, and such claims have
different periods of survival hereunder, the termination of
the survival period of one claim shall not affect a party's
right to make a claim based on the breach of representation or
warranty still surviving.
11.5.(b) Amount Limitation. Except with respect to claims
for breaches of representations or warranties contained in Sections
4.11.(c) and 4.20 (as to which the following limitations shall not
apply):
(i) an Indemnified Party shall not be entitled to
indemnification under this Article 11 for breach of a
representation or warranty unless the aggregate of the
Indemnifying Party's indemnification obligations to the
Indemnified Party pursuant to this Article 11 (but for this
Section 11.5.(b)) exceeds $1,200,000; but in such event, the
Indemnified Party shall be entitled to indemnification in full
for all breaches of representations and/or warranties; and
(ii) an Indemnifying Party shall not have any
liability for indemnification obligations under this
Article 11 for a breach of a representation or warranty to the
extent (but only to the extent) the aggregate of the
Indemnifying Party's indemnification obligations to the
Indemnified Party pursuant to this Article 11 with respect to
claims for breaches of representations or warranties (but for
this Section 11.5.(b)) exceeds $12,000,000.
11.6. No Waiver. The closing of the transactions contemplated by
this Agreement shall not constitute a waiver by any party of its rights to
indemnification hereunder, regardless of whether the party seeking
indemnification has knowledge of the breach, violation or failure of
condition constituting the basis of the Claim at or before the Closing,
and regardless of whether such breach, violation or failure is deemed to
be "material". No representation, warranty or covenant contained in this
Agreement or in any Schedule or Exhibit hereto or any document or
instrument executed and delivered pursuant hereto shall merge into the
deeds, bill of sale, assignments, documents, agreements and instruments to
be delivered at Closing on the Closing Date.
11.7. Set Off. If either Company or Buyer shall fail to pay any
amounts that it is obligated to pay to the other under this Agreement,
including any amounts which it is obligated to pay pursuant to the
indemnification obligations set forth in this Article 11, then Company or
Buyer may, in addition to any other rights and remedies which may be
available to it, set off all or any portion of such amounts against any
amounts due and owing from Buyer to Company hereunder. Any amounts so set
off shall be deemed to have been paid to Company or Buyer, as the case may
be, as of the date written demand for payment of the amount in question
was given to Company or Buyer, as the case may be.
11.8. Tax and Insurance Offset. The computation of Claims shall be
subject to the following: (a) Claims shall be adjusted to give credit to
the Indemnifying Party for any tax benefits that the Indemnifying Party
demonstrates are available to the Indemnified Party by virtue, or as a
result, of the matter for which the Indemnified Party is being indemnified
(net of detrimental tax consequences resulting to the Indemnified Party by
virtue of such indemnification payments); (b) if the Indemnified Party
demonstrates that any recovery from the Indemnifying Party pursuant to its
indemnification obligations results in any tax detriment to the
Indemnified Party (net of tax benefits available to the Indemnified Party
by virtue, or as a result, of the matter for which the Indemnified Party
is being indemnified), then Claims shall be increased such that the net
amount retained by the Indemnified Party after deduction of any net tax
detriment shall be equal to the amount of the Claim absent this
adjustment; and (c) Claims shall be adjusted to give credit to the
Indemnifying Party for any amounts actually and irrevocably recovered by
the Indemnified Party with respect to the matter for which the Indemnified
Party is being indemnified under insurance policies for the benefit of the
Indemnified Party that reduce a Claim that would otherwise be sustained,
(i) net of an increase that will occur, or that is reasonably likely to
occur, in insurance premiums payable by the Indemnified Party, whether by
retrospective or retroactive premium adjustments or any other premium
increase under the policy or policies under which the claim is made or any
other policy, where the increase results directly from filing the claim
and (ii) less, dollar for dollar, the amount by which the claim when filed
or at any time during the applicable policy period, either singly or in
the aggregate with all other claims made under the applicable policy or
policies, exceeds a policy coverage limit; provided, however, that this
clause (c) shall apply only if this provision does not constitute an
improper waiver of the insurer's rights of subrogation against the
Indemnifying Party. Notwithstanding the foregoing, Buyer shall not have
any obligation or liability to pay for the maintenance of coverage for
Buyer or Company under any of Buyer's policies of insurance after the
Closing, or to name Company as an additional insured or to obtain approval
for any waiver of rights of subrogation. The Indemnified Party agrees to
take all reasonable action, including amendment of its tax returns, to
realize tax benefits referred to in clauses (a) and (b), and the
Indemnifying Party's accountants shall have access to all necessary
information of the Indemnified Party related to relevant calculations.
11.9. Exclusive Remedy. Except as set forth in Section 14.5, the
indemnification provided in this Article 11 shall be the exclusive remedy
and recourse available to any party to this Agreement with respect to the
inaccuracy of any representation or warranty contained in or made pursuant
to this Agreement, the breach of any covenant contained in or made
pursuant to this Agreement, or any other claim or cause of action arising
under, by virtue of or pursuant to this Agreement.
12. CLOSING
Unless this Agreement shall have been terminated and the transaction
herein contemplated shall have been abandoned pursuant to Article 13, and
provided that the conditions to the Closing set forth in Article 9 and
Article 10 are satisfied or waived, the closing with respect to the
transactions provided for in this Agreement (the "Closing") shall take
place at the offices of Foley & Lardner, 777 East Wisconsin Avenue,
Milwaukee, Wisconsin, at 10:00 a.m., Milwaukee time, on the later of (a)
June 30, 1998 or (b) the fifth business day after the satisfaction or
waiver of the conditions to the Closing set forth in Section 9.5 and
Section 10.5; or at such other time, date and place as the parties hereto
shall agree. Notwithstanding the foregoing, if the Closing does not take
place in accordance with the preceding sentence because any condition to
the obligations of Company or Buyer under this Agreement is not met on
that date, then either party may postpone the Closing from time to time to
any designated subsequent business day not more than five (5) business
days after the original or postponed date on which the Closing was to
occur by delivering notice of such postponement on the date the Closing
was to occur. The actual time and date of the Closing are herein called
the "Closing Date." Assuming the Closing occurs, the Closing shall be
deemed to be effective as of the Effective Time.
12.1. Documents to be Delivered by Company. At the Closing, Company
shall deliver to Buyer the following documents, in each case duly executed
or otherwise in proper form:
12.1.(a) Deeds, Bills of Sale. Warranty deeds to real estate
and bills of sale and such other instruments of assignment, transfer,
conveyance and endorsement as will be sufficient in the opinion of
Buyer and its counsel to transfer, assign, convey and deliver to
Buyer the Purchased Assets as contemplated hereby.
12.1.(b) Compliance Certificates. A certificate signed by
the chief executive of the Division (or such party to whom the chief
executive may delegate) that, except as set forth in any updates
delivered pursuant to Section 8.3, each of the representations and
warranties made by Company in this Agreement is true and correct in
all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made or
given on and as of the Closing Date (except to the extent that any
such representations and warranties were made as of a specified date
and as to such representations and warranties the same shall continue
on the Closing Date to have been true in all material respects as of
the specified date and except for any changes permitted by the terms
of this Agreement or consented to in writing by Buyer), and that
Company has performed and complied in all material respects with all
of Company's obligations under this Agreement which are to be
performed or complied with on or prior to the Closing Date.
12.1.(c) Ancillary Agreements. The Ancillary Agreements
referred to in Section 7.13, duly executed by Company.
12.1.(d) Certified Resolutions. A certified copy of a
standing resolution of the Board of Directors of Company authorizing
the chief executive of the Division (or such party to whom the chief
executive may delegate) to approve the execution and delivery of this
Agreement and the consummation of the transactions contemplated by
this Agreement.
12.1.(e) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Buyer by Company pursuant to the terms hereof.
12.1.(f) Other Documents. All other documents, instruments
or writings required to be delivered to Buyer at or prior to the
Closing pursuant to this Agreement or otherwise necessary to
effectuate the intent hereof and such other certificates of authority
and documents as Buyer may reasonably request.
12.2. Documents to be Delivered by Buyer. At the Closing, Buyer
shall deliver to Company the following documents, in each case duly
executed or otherwise in proper form:
12.2.(a) Cash Purchase Price. To Company, via wire transfer,
the cash payment required by Section 3.2.(b).
12.2.(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Company and its counsel to evidence the assumption of
Liabilities as provided for in Article 2.
12.2.(c) Compliance Certificate. A certificate signed by an
officer of Buyer reasonably acceptable to Company that the
representations and warranties made by Buyer in this Agreement are
true and correct on and as of the Closing Date with the same effect
as though such representations and warranties had been made or given
on and as of the Closing Date (except for any changes permitted by
the terms of this Agreement or consented to in writing by Company),
and that Buyer has performed and complied with all of Buyer's
obligations under this Agreement which are to be performed or
complied with on or prior to the Closing Date.
12.2.(d) Ancillary Agreements. The Ancillary Agreements
referred to in Section 7.13, duly executed by Buyer.
12.2.(e) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
12.2.(f) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Company by Buyer pursuant to the terms hereof.
12.2.(g) Other Documents. All other documents, instruments
or writings required to be delivered to Company at or prior to the
Closing pursuant to this Agreement and such other certificates of
authority and documents as Company may reasonably request.
13. TERMINATION
13.1. Right of Termination Without Breach. This Agreement may be
terminated without further liability of any party at any time prior to the
Closing:
13.1.(a) by mutual written agreement of Buyer and Company;
13.1.(b) by Buyer upon notification to Company if the Closing
shall not have occurred on or before August 15, 1998, unless (i) the
Closing shall not have occurred because of the failure of the
conditions set forth in Sections 9.5 and 10.5 to be satisfied or
waived or (ii) the Closing shall not have occurred because of the
failure of the conditions set forth in Sections 9.3 and 10.3 to be
satisfied or waived due to the commencement of litigation under
antitrust laws in either of which cases Buyer may not provide such
notification to Company until after four (4) months following the
date hereof, provided that Buyer has not, through breach of a
representation, warranty or covenant, prevented the Closing from
occurring on or before such date; or
13.1.(c) by Company upon notification to Buyer if the Closing
shall not have occurred on or before August 15, 1998; provided,
however, that if (i) a request for additional information pursuant to
the terms of the HSR Act has been issued or (ii) the parties have
received communications from the staff of the FTC or the DOJ
indicating that the issuance of such a request is likely, then
Company may provide such notification to Buyer on or after twenty-
nine (29) days following the date the notifications of Buyer and
Company required to be filed under the HSR Act are filed with the FTC
and the DOJ; provided further, that if the FTC, the DOJ or another
third party has initiated litigation under antitrust laws to enjoin
the transactions contemplated hereby or if the parties have received
communications from the staff of the FTC or the DOJ indicating that
it is their intent to commence such litigation, then Company may
provide such notification to Buyer at any time until the FTC, the DOJ
or the other third party has terminated such litigation or the
parties have received communications from the staff of the FTC or the
DOJ indicating that it is not their intent to commence such
litigation, provided in each case that Company has not, through
breach of a representation, warranty or covenant, prevented the
Closing from occurring on or before such date.
13.2. Termination for Breach.
13.2.(a) Termination by Buyer. If (i) an event has occurred
such that a condition to the obligations of Buyer cannot be satisfied
or (ii) Company shall have attempted to terminate this Agreement
under this Article 13 or otherwise without grounds to do so, and such
failure or wrongful termination attempt has not been cured, within
ten (10) days after notice thereof is given to Company, then Buyer
may, by written notice to Company at any time prior to the Closing
that such failure or wrongful termination attempt is continuing,
terminate this Agreement with the effect set forth in
Section 13.2.(c). Notwithstanding the foregoing, if Buyer has
breached a representation, warranty or covenant in any material
respect, then Buyer may not terminate this Agreement on the basis of
such breach.
13.2.(b) Termination by Company. If (i) an event has
occurred such that a condition to the obligations of Company cannot
be satisfied or (ii) Buyer shall have attempted to terminate this
Agreement under this Article 13 or otherwise without grounds to do
so, and such failure or wrongful termination attempt has not been
cured, within ten (10) days after notice thereof is given to Buyer,
then Company may, by written notice to Buyer at any time prior to the
Closing that such failure or wrongful termination attempt is
continuing, terminate this Agreement with the effect set forth in
Section 13.2.(c). Notwithstanding the foregoing, if Company has
breached a representation, warranty or covenant in any material
respect, then Company may not terminate this Agreement on the basis
of such breach.
13.2.(c) Effect of Termination. Termination of this
Agreement pursuant to this Section 13.2 shall not in any way
terminate, limit or restrict the rights and remedies of any party
hereto against any other party which has violated, breached or failed
to satisfy any of the representations, warranties, covenants,
agreements, conditions or other provisions of this Agreement prior to
termination hereof. Subject to the foregoing, the parties'
obligations under Sections 7.7 and 14.9 of this Agreement shall
survive termination.
14. MISCELLANEOUS
14.1. Disclosure Schedule. Company has prepared the schedules
hereto (individually, a "Schedule" and collectively, the "Disclosure
Schedule") and delivered them to Buyer. Information set forth in the
Disclosure Schedule specifically refers to the article and section of this
Agreement to which such information is responsive, and such information
shall not be deemed to have been disclosed with respect to any statement
in any article and section that is not qualified by reference to the
pertinent schedule or, except with regard to information set forth on the
face of any Schedule that makes reasonably apparent its applicability to
any other Schedule, with respect to any other article or section of this
Agreement or for any other purpose. The Disclosure Schedule shall not
vary, change or alter the language of the representations and warranties
contained in this Agreement.
14.2. Further Assurance. From time to time, at Buyer's reasonable
request and expense and without further consideration, Company will
execute and deliver to Buyer such documents and take such other action as
Buyer may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
14.3. Publicity. Company and Buyer agree that, from the date hereof
through the Closing Date, no public release, announcement or statement
concerning the terms hereof or transactions contemplated hereby shall be
issued or made by any party hereto without the prior consent of the other
party hereto (which consent shall not be unreasonably withheld), except as
such release, announcement or statement (x) may, in the judgment of the
releasing party, based upon an opinion of legal counsel to such party, be
required by law or the rules or regulations of any United States
securities exchange applicable to such releasing party, in which case the
party required to make the release or announcement shall allow the other
party reasonable time to comment on such release or announcement in
advance of such issuance or (y) is made in accordance with the
Communications Plan attached hereto as Exhibit 8.4.
14.4. Assignment; Parties in Interest.
14.4.(a) Assignment. Except as expressly provided herein,
the rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other party and any attempt to do so will be void and of no effect.
Notwithstanding the foregoing, Buyer may, without consent of Company,
designate any one or more of its direct or indirect wholly owned
subsidiaries ("Buyer's Designees") to purchase a portion of the
Purchased Assets and to assume a portion of the Assumed Liabilities,
and Buyer's Designees shall be entitled to the benefit of the
representations, warranties, covenants and agreements, to the extent
applicable, made by Company in this Agreement or any document or
instrument executed and delivered pursuant hereto; provided, however,
that Buyer shall remain liable for all of its obligations under this
Agreement to which such designation relates.
14.4.(b) Parties in Interest. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, solely
the parties hereto and their respective successors and permitted
assigns. Nothing contained herein is intended or shall be deemed to
confer upon any other person any right or remedy under or by reason
of this Agreement, other than a person entitled to indemnification
under Article 11.
14.5. Equitable Relief. The parties hereto agree that any breach of
Company's obligation to consummate the sale of the Purchased Assets on the
Closing Date and to execute and deliver the Ancillary Agreements, any
breach of Buyer's obligation to consummate the sale of the Purchased
Assets on the Closing Date and to execute and deliver the Ancillary
Agreements, any breach of any noncompetition obligation imposed by Section
7.5 or any breach by a party of its obligations imposed by Section 7.7,
will result in irreparable injury to the nonbreaching party for which a
remedy at law would be inadequate; and that, in addition to any relief at
law which may be available to the nonbreaching party for such breach and
regardless of any other provision contained in this Agreement, the
nonbreaching party shall be entitled to such injunctive and other
equitable relief as a court may grant. This Section 14.5 shall not be
construed to limit the nonbreaching party's right to obtain equitable
relief for other breaches of this Agreement under general equitable
standards.
14.6. Law Governing Agreement. This Agreement shall be construed
and interpreted according to the internal laws of the State of New York,
excluding any choice of law rules or conflicts of laws principles that may
cause the application of the laws of another jurisdiction.
14.7. Amendment and Modification. Buyer and Company may amend,
modify and supplement this Agreement only by a written instrument duly
executed by or on behalf of each party hereto.
14.8. Notice. All notices, requests, demands and other
communications hereunder shall be given in writing and shall be: (a)
personally delivered; (b) sent by telecopier, facsimile transmission or
other electronic means of transmitting written documents; or (c) sent to
the parties at their respective addresses indicated herein by registered
or certified U.S. mail, return receipt requested and postage prepaid, or
by private overnight mail courier service. The respective addresses to be
used for all such notices, demands, requests and other communications are
as follows:
(a) If to Company, to:
General Electric Company
1636 Broadway, Bldg. 31-1
Ft. Wayne, Indiana 46802
Attention: Mr. Paul A. Boggs
Facsimile: (219) 439-3220
(with a copy to)
General Electric Company
6465 East Johns Crossing, Suite 300
Duluth, Georgia 30097
Attention: Mr. Ralph A. Ford
Facsimile: (770) 999-7090
(and to)
King & Spalding
191 Peachtree Street
Atlanta, Georgia 30303-1763
Attention: Mr. Hector E. Llorens, Jr.
Facsimile: (404) 572-5149
or to such other person or address as Company shall furnish to Buyer in
writing.
(b) If to Buyer, to:
A. O. Smith Corporation
11270 West Park Place
P.O. Box 23972
Milwaukee, Wisconsin 53223-0972
Attention: Mr. Glen R. Bomberger
Facsimile: (414) 359-7450
(with a copy to)
A. O. Smith Corporation
11270 West Park Place
P.O. Box 23972
Milwaukee, Wisconsin 53223-0972
Attention: Mr. W. David Romoser
Facsimile: (414) 359-7450
(and to)
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202-5367
Attention: Mr. Patrick G. Quick
Facsimile: (414) 297-4900
or to such other person or address as Buyer shall furnish to Company in
writing.
If personally delivered, such communication shall be deemed delivered
upon actual receipt; if electronically transmitted pursuant to this
paragraph, such communication shall be deemed delivered the next business
day after transmission (and sender shall bear the burden of proof of
delivery and confirmation of receipt); if sent by overnight courier
pursuant to this paragraph, such communication shall be deemed delivered
upon receipt; and if sent by U.S. mail pursuant to this paragraph, such
communication shall be deemed delivered as of the date of delivery
indicated on the receipt issued by the relevant postal service, or, if the
addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address
for the purposes of this Agreement by giving notice thereof in accordance
with this Section.
14.9. Expenses. Regardless of whether or not the transactions
contemplated hereby are consummated:
14.9.(a) Brokerage. Buyer agrees to indemnify and hold
Company harmless from and against all claims for brokerage
commissions or finder's fees incurred through any act of Buyer or
Buyer's representatives in connection with the execution of this
Agreement or the Ancillary Documents or the transactions provided for
herein or therein. Company agrees to indemnify and hold Buyer
harmless from and against all claims for brokerage commissions or
finder's fees incurred through any act of Company or Company's
representatives in connection with the execution of this Agreement or
the Ancillary Documents or the transactions provided for herein or
therein.
14.9.(b) Expenses to be Paid by Company. Company shall pay,
and shall indemnify, defend and hold Buyer harmless from and against,
each of the following all fees and expenses of Company's legal,
accounting, investment banking and other professional counsel in
connection with the transactions contemplated hereby.
14.9.(c) Transfer Taxes. Buyer and Company shall each pay
50% of any sales, use, excise, transfer or other similar tax imposed
with respect to the transactions provided for in this Agreement, and
any interest or penalties related thereto.
14.9.(d) Consent Fees. Buyer and Company shall each pay 50%
of any consent fees, royalties or similar payments, if any, required
to be paid in connection with the transfer of the Purchased Assets
(including any interest charge or penalty with respect thereto, but
excluding prepayment penalties or fees associated with any leases)
without regard to whether such expenses are imposed on Buyer or
Company, or any one of them, except that neither party shall be
liable for consent fees, royalties or similar payment incurred
without the party's consent, which consent shall not be unreasonably
withheld or delayed.
14.9.(e) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its
counsel and other agents in connection with the transactions
contemplated hereby.
14.10. Negotiation. In the event of any dispute or disagreement
between Company and Buyer as to the interpretation of any provision of, or
the performance of obligations under, this Agreement (except for such
disputes or disagreements regarding the Final Closing Balance Sheet, which
shall be resolved exclusively pursuant to Section 3.3.(d)), the matter,
upon written request of either party, shall be referred to representatives
of the parties for decision, each party being represented by a senior
executive officer who has no direct operational responsibility for the
matters contemplated by this Agreement (the "Representatives"). The
Representatives shall promptly meet in a good faith effort to resolve the
dispute. If the Representatives do not agree upon a decision within
thirty (30) calendar days after reference of the matter to them, Buyer and
Company shall be free to exercise the remedies available to them under
this Agreement or otherwise. Notwithstanding anything to the contrary set
forth in this Section 14.10, if Company or Buyer determine in good faith
that delay in the exercise of any remedies available to it under this
Agreement or otherwise during the 30 calendar day period referenced in the
immediately preceding sentence would result in material harm or prejudice
to it or its interests, it shall be free to exercise such remedies prior
to the expiration of such 30 calendar day period.
14.11. Interpretive Provisions. Whenever used in this Agreement, "to
Company's knowledge," "to the best of Company's knowledge" or "to the
knowledge of Company" shall mean the knowledge of Larry Reynolds, Debby
Berg and the senior management personnel responsible for the operations of
the Business (including without limitation those located at the Facility)
and the employees of Company responsible for the negotiation of this
Agreement.
14.12. Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto), the Confidentiality Agreement dated October 2, 1997 and
the related letter agreements dated January 14, 1998, February 26, 1998
and May 13, 1998, between Buyer and Company, as amended (collectively, the
"Confidentiality Agreements"), the Joint Defense Agreement executed on
behalf of Buyer and Company on February 10, 1998, the Ancillary Agreements
and the letter agreement dated May 13, 1998, between Buyer and Company,
relating to certain payment obligations by Buyer, constitute the entire
agreement between the parties hereto with respect to the subject matter
hereof and thereof, and there have been and are no agreements,
representations or warranties between the parties other than those set
forth or provided for herein.
14.13. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.14. Headings. The headings in this Agreement are inserted for
convenience only and shall not constitute a part hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
A. O. SMITH CORPORATION
("Buyer")
By: /s/ W. David Romoser
Title: Vice President
GENERAL ELECTRIC COMPANY
("Company")
By: /s/ Ralph A. Ford
Title: General Counsel - GEICS