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)February 22, 1996
-----------------
FAIRCHILD INDUSTRIES, INC.
- -----------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 1-3102 52-0579835
- ---------------- ----------------- ----------------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
of incorporation)
Washington Dulles International Airport
300 West Service Road, P.O. Box 10803
Chantilly, Virginia 22021-9998
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (703) 478-5800
--------------
NONE
- -----------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition of Disposition of Assets
On February 22, 1996, pursuant to the Asset Purchase
Agreement dated as of January 23, 1996 (the "Purchase
Agreement"), Fairchild Industries, Inc. (the "Registrant")
through its subsidiaries VSI Corporation, D-M-E Europe
(U.K.) Limited and D-M-E Normalien GmbH (collectively, the
"Sellers") completed its sale to Cincinnati Milacron Inc.
("CMI") and its subsidiaries of all of the assets,
properties and other rights owned, used or held for use by
the Sellers in connection with the Sellers' business of
developing, producing, manufacturing, marketing, selling and
distributing mold bases, mold components, moldmaking tools
and supplies, polishing equipment, electronic temperature
and pressure control equipment, runnerless molding systems
and process controls and Computer Aided Design and Computer
Aided Manufacturing hardware and software for the plastics
industry (the "Business"). The sale included the Sellers'
voting stock or other interests in each of VSI International
N.V., D-M-E France S.A.R.L., D-M-E of Canada Ltd. and
several joint ventures. A copy of the Purchase Agreement is
filed herewith as Exhibit 2.1 and reference is made thereto
for the complete terms and conditions thereof.
The sale price (which is subject to adjustment following an
audit of the closing date balance sheet of the Business) is
$245,376,555. The sale price is based on a target net
tangible asset value, representing the book value of all
assets reflected on the closing date balance sheet of the
Business (excluding goodwill and net of any applicable
contra-asset accounts) acquired by CMI and its subsidiaries
less the amount of all liabilities reflected on the closing
date balance sheet and assumed by CMI and its subsidiaries.
The sale price consists of $74,000,000 in cash, $62,300,000
of which was received on January 26, 1996 and $11,700,000 of
which was received on February 22, 1996, and two 8%
promissory notes in the aggregate principal amount of
$171,376,555. The promissory notes mature one year
following the closing date; provided that The Fairchild
Corporation, may require prepayment of, and CMI may at its
option prepay, such notes after the six month anniversary of
the closing date.
<PAGE>
Item 7. Financial Statements and Exhibits.
Pro Forma Financial Information
Attached hereto are unaudited proforma condensed separated
balance sheets as of December 31, 1995 and pro forma
condensed separated consolidated statements of earnings for
the year ended June 30, 1995 and the six months ended
December 31, 1995. This pro forma financial data give
effect to the Company's disposition of the Business.
Exhibits
The following Exhibit is included with this Form 8-K.
Exhibit
Number Description of Exhibit
------- ----------------------
2.1 Asset Purchase Agreement dated as of January 23,
1996, between Cincinnati Milacron Inc., a Delaware
corporation, The Fairchild Corporation, a Delaware
corporation, RHI Holdings, Inc., a Delaware
corporation, and the Designated Purchasers and
Sellers named therein. (Schedules and Exhibits
have been omitted pursuant to Rule 6.01(b)(2) of
Regulation S-K. Such Schedules are listed and
described in the Asset Purchase Agreement. The
Registrant hereby agrees to furnish to the
Securities and Exchange Commission, upon its
request, any or all such omitted Schedules and
Exhibits.)
<PAGE>
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.
FAIRCHILD INDUSTRIES, INC.
Date: March , 1996 By: /s/ Michael T. Alcox
----------------------
Michael T. Alcox
Vice President
<PAGE>
Exhibit Sequential
Number Description of Exhibit Page Number
- ------- ---------------------- -----------
2.1 Asset Purchase Agreement
dated as of January 23,
1996, between Cincinnati
Milacron Inc., a Delaware
corporation, The Fairchild
Corporation, a Delaware
corporation, RHI Holdings,
Inc., a Delaware corporation,
and the Designated Purchasers
and Sellers named therein.
(Schedules and Exhibits have
been omitted pursuant to Rule
6.01(b)(2) of Regulation S-K.
Such Schedules are listed and
described in the Asset Purchase
Agreement. The Registrant
hereby agrees to furnish to the
Securities and Exchange
Commission, upon its request,
any or all such omitted Schedules
and Exhibits.)
FAIRCHILD INDUSTRIES, INC.
PRO FORMA CONDENSED SEPARATED FINANCIAL STATEMENTS (UNAUDITED)
The Following unaudited pro forma condensed separated
balance sheet as of December 31, 1995, and the pro forma
condensed separated consolidated statements of earnings for the
year ended June 30, 1995 and the six months ended December 31,
1995, give effect to the Company's disposition of the D-M-E
Company ("DME"). The pro forma information is based on the
historical financial statements of the Company and DME giving
effect to the transaction and assumptions and adjustments
specified in the accompanying notes to the pro forma financial
statements.
The unaudited pro forma statements of the Company are not
necessarily indicative of the results or financial position that
actually would have occurred if the disposition of DME had been
in effect since July 1, 1994 and July 1, 1995, nor are they
necessarily indicative of future results or financial position of
the Company. The pro forma financial statements should be read
in conjunction with the audited financial statements and notes
thereto included in the Company's June 30, 1995 Form 10-K.
<PAGE>
FAIRCHILD INDUSTRIES, INC.
PRO FORMA CONDENSED SEPARATED BALANCE SHEET
December 31, 1995
(in thousands)
<TABLE>
<S> <C> <C>
Historical Pro Forma
--------------------- -----------------------
ASSETS FII DME Adjustments FII
------ ---------- ---------- ------------ ---------
Cash $ 6,329 $ $ 74,000 (1)
(74,000)(2) $ 6,329
Accounts receivable 60,425 60,425
Notes receivable-current 171,377 (1) 171,377
Inventories 67,967 67,967
Prepaid expenses and other
current assets 8,136 8,136
Net current assets of
discontinued operations 34,609 (34,166) 443
---------- ---------- --------- ---------
Total Current Assets 177,466 (34,166) 171,377 314,677
Property, plant and equipment 209,799 209,799
Accumulated depreciation (93,372) (93,372)
Net noncurrent assets of
discontinued operations 85,577 (85,528) 49
Goodwill 138,456 138,456
Other assets 64,836 64,836
---------- ---------- --------- ---------
Total Assets $ 582,762 $(119,694) $171,377 $634,445
========== ========== ========= =========
LIABILITIES
- -----------
Bank notes payable and current
maturities of long term debt $ 74,598 $ $(67,303)(2) $ 7,295
Accounts payable 26,444 26,444
Intercompany notes payable 23,405 23,405
Other accrued liabilities 50,962 7,341 (1) 58,303
Accrued income tax 41,420 (1) 41,420
---------- ---------- --------- ---------
Total Current Liabilities 175,409 -- (18,542) 156,867
Long-term debt, less current
maturities 188,427 (6,697)(2) 181,730
Other long-term liabilities 54,551 54,551
Noncurrent income taxes 17,884 17,884
Redeemable preferred stock 16,691 16,691
---------- ---------- --------- ---------
Total Liabilities 452,962 -- (25,239) 427,723
Stockholders' equity:
Series B preferred stock 230,200 230,200
Series C preferred stock 24,015 24,015
Common stock 140 (3,826) 3,826 (1) 140
Paid-in capital 2,925 (100,084) 100,084 (1) 2,925
Retained earnings (130,124) (15,784) 15,784 (1)
76,922 (1) (53,202)
Cumulative translation
adjustment 2,644 2,644
---------- ---------- --------- ---------
Total Stockholders' Equity 129,800 (119,694) 196,616 206,722
Total Liabilities and
Stockholders' Equity $ 582,762 $(119,694) $171,377 $634,445
========== ========== ========= =========
</TABLE>
See Notes to Pro Forma Condensed Separated Financial Statements.
<PAGE>
FAIRCHILD INDUSTRIES, INC.
PRO FORMA CONDENSED SEPARATED STATEMENT OF EARNINGS
For the year ended June 30, 1995
(in thousands)
<TABLE>
<S> <C> <C>
Historical Pro Forma
--------------------- -----------------------
FII DME Adjustments FII
Revenue: ---------- ---------- ----------- ---------
Sales $ 508,612 $(167,769) $340,843
Other income, net 2,908 396 3,304
---------- ---------- --------- ---------
511,520 (167,373) -- 344,147
Cost and expenses:
Cost of sales 392,802 (110,152) 282,650
Selling, general and
administrative 85,383 (30,208) 55,175
Research and development 4,100 (1,114) 2,986
Amortization of goodwill 5,842 (1,637) 4,205
---------- ---------- --------- ---------
488,127 (143,111) -- 345,016
Operating income (loss) 23,393 (24,262) -- (869)
Interest expense 35,284 (60) (6,463)(3) 28,761
Interest income (184) 18 (13,710)(3) (13,876)
---------- ---------- --------- ---------
Net interest expense 35,100 (42) (20,173) 14,885
Investment income, net 924 924
Equity in earnings of
affiliates 762 (762) --
Minority interest (121) 156 35
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations before taxes (10,142) (24,826) 20,173 (14,795)
Income tax provision (benefit) 2,017 (10,410) 7,061 (1,332)
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations $ (12,159) $ (14,416) $ 13,113 $(13,462)
========== ========== ========= =========
</TABLE>
See Notes to Pro Forma Condensed Separated Financial Statements.
<PAGE>
FAIRCHILD INDUSTRIES, INC.
PRO FORMA CONDENSED SEPARATED STATEMENT OF EARNINGS
For the six months ended December 31, 1995
(in thousands)
<TABLE>
<S> <C> <C>
Historical Pro Forma
--------------------- -----------------------
FII DME Adjustments FII
Revenue: ---------- ---------- ----------- ---------
Sales $ 175,197 $ (*) $175,197
Other income, net 350 350
---------- ---------- --------- ---------
175,547 -- -- 175,547
Cost and expenses:
Cost of sales 138,048 138,048
Selling, general and
administrative 26,364 26,364
Research and development 44 44
Amortization of goodwill 2,132 2,132
Restructuring 285 285
---------- ---------- --------- ---------
166,873 -- -- 166,873
Operating income (loss) 8,674 -- -- 8,674
Interest expense 17,889 (3,232)(3) 14,657
Interest income (172) (6,855)(3) (7,027)
---------- ---------- --------- ---------
Net interest expense 17,717 -- (10,087) 7,630
Minority interest 20 20
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations before taxes (9,023) -- 10,087 1,064
Income tax provision (benefit) (1,626) 3,530 1,904
---------- ---------- --------- ---------
Earnings (loss) from continuing
operations $ (7,397) $ -- $ 6,556 $ (841)
========== ========== ========= =========
</TABLE>
* - Results of DME were included as part of earnings from discontinued
operations for the six months ended December 31, 1995.
See Notes to Pro Forma Condensed Separated Financial Statements.
<PAGE>
FAIRCHILD INDUSTRIES, INC.
NOTES TO PRO FORMA CONDENSED SEPARATED FINANCIAL STATEMENTS
On February 22, 1996, the Company completed the sale of DME to Cincinnati
Milacron for $74,000,000 in cash and $171,377,000 in 8% promissory notes
which mature one year following the closing of the sale. The pro forma
financial statements separate (i) the assets and liabilities of DME from the
Company's consolidated balance sheets at December 31, 1995, and (ii) the
results of operations of DME from the Company's consolidated statement of
earnings for the year ended June 30, 1995 and six months ended December 31,
1995. In separating the entities, the following pro forma adjustments have
been made.
(1) Reflects the sale of certain assets and liabilities of DME in
exchange for cash and notes receivable, reduced by accrued expenses
(incentive compensation, legal, audit and other associated fees) incurred for
the disposition as follows:
December 31,
1995
------------
Cash $ 74,000,000
Notes receivable 171,377,000
Other accrued expenses (7,341,000)
------------
Net proceeds received 238,036,000
Carrying value of net assets sold 119,694,000
------------
Nonrecurring gain before taxes 118,342,000
Taxes payable (35% statutory tax rate) 41,420,000
------------
Net gain on sale $ 76,922,000
============
(2) Cash received was immediately used to reduce bank loans(with
interest rates of approximately 8.73% in fiscal 1995) as follows:
December 31,
1995
Bank notes payable and current maturities ------------
of debt $ 67,303,000
Long-term debt, less current maturities 6,697,000
------------
Total $ 74,000,000
============
(3) For purposes of presenting the pro forma condensed separated
statement of earnings, the following adjustments (which are expected to be
recurring) have been made:
<TABLE>
<S> <C> <C>
Six Months
Ended Year Ended
December 31, June 30,
1995 1995
Increase (decrease) in earnings: ----------- -----------
Interest expense from revised debt
structures (see Note 2) $ 3,232,000 $ 6,463,000
Interest income from notes receivable 6,855,000 13,710,000
Tax effects of the above adjustments (3,530,000) (7,061,000)
----------- -----------
Net adjustments $ 6,556,000 $13,113,000
=========== ===========
</TABLE>
(4) The pro forma statement of earnings has not been adjusted for non-
recurring credits or charges that are expected to be incurred within the
ensuing year. Such non-recurring items omitted from the pro forma statement
of earnings represents the gain, net of tax, on the sale of DME of
$76,922,000. See Note 1.
Exhibit 2.1
EXECUTION COPY
ASSET PURCHASE AGREEMENT
dated as of
January 23, 1996,
between
CINCINNATI MILACRON INC.,
THE FAIRCHILD CORPORATION,
RHI HOLDINGS, INC.
AND
THE DESIGNATED PURCHASERS AND SELLERS NAMED HEREIN
[Purchase and Sale of D-M-E Division]
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Terms
SECTION 1.01. Definitions............................. 2
SECTION 1.02. Other Terms............................. 13
SECTION 1.03. Other Definitional Provisions........... 13
ARTICLE II
Purchase and Sale of Acquired Assets
SECTION 2.01. Purchase and Sale....................... 13
SECTION 2.02. Acquired Assets and Excluded
Assets................................ 14
SECTION 2.03. Assumption of Certain Liabilities....... 18
SECTION 2.04. Purchase Price.......................... 20
SECTION 2.05. Purchase Price Adjustment............... 22
SECTION 2.06. Allocation of Purchase Price............ 23
SECTION 2.07. Mail, etc............................... 24
ARTICLE III
The Closing
SECTION 3.01. Closing................................. 25
SECTION 3.02. Transactions To Be Effected at the
Closing............................... 25
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of
Parent, RHI and Sellers............... 26
SECTION 4.02. Representations and Warranties of
Purchaser............................. 48
<PAGE>
ARTICLE V
Covenants
SECTION 5.01. Conduct of Business..................... 50
SECTION 5.02. Access to Information................... 53
SECTION 5.03. Legal Requirements...................... 53
SECTION 5.04. Noncompetition.......................... 54
SECTION 5.05. Nonassignable Contracts and
Permits; Required Consents............ 55
SECTION 5.06. Notices of Certain Events............... 55
SECTION 5.07. Tax Matters............................. 56
SECTION 5.08. Insurance............................... 58
SECTION 5.09. Financial Information................... 58
SECTION 5.10. Bulk Transfer Laws...................... 59
SECTION 5.11. Further Assurances; Cooperation
After Closing; Unwind Transactions.... 59
SECTION 5.12. Confidentiality......................... 60
SECTION 5.13. Public Announcements.................... 61
SECTION 5.14. Intercompany Accounts................... 61
SECTION 5.15. Purchased Entity Indebtedness........... 62
SECTION 5.16. Purchased Entity Cash Balances.......... 62
SECTION 5.17. Accounts Receivable..................... 62
SECTION 5.18. Assignment of Promissory Notes and
Letter of Credit..................... 62
SECTION 5.19. Charlevoix Facility..................... 63
ARTICLE VI
RESERVED
ARTICLE VII
Post-Closing Covenants
Relating to Employees and Benefit Plans
SECTION 7.01. Offer of Employment; U.S.
Employees............................. 64
SECTION 7.02. Employee Benefits....................... 65
SECTION 7.03. Foreign Employees and Plans............. 67
<PAGE>
ARTICLE VIII
Conditions Precedent
SECTION 8.01. Conditions to Each Party's
Obligation............................ 68
SECTION 8.02. Conditions to the Obligation of
Purchaser............................. 68
SECTION 8.03. Conditions to the Obligation of
Parent and Sellers.................... 70
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination............................. 71
SECTION 9.02. Amendments and Waivers.................. 72
ARTICLE X
Survival; Indemnification
SECTION 10.01. Survival............................... 72
SECTION 10.02. Indemnification by Parent and RHI...... 73
SECTION 10.03. Indemnification by Purchaser........... 74
SECTION 10.04. Losses Net of Insurance, etc........... 75
SECTION 10.05. Termination of Indemnification......... 75
SECTION 10.06. Indemnification Procedures Related
to Third Parties..................... 75
SECTION 10.07. Other Procedures....................... 78
SECTION 10.08. Adjustment to Purchase Price........... 78
ARTICLE XI
General Provisions
SECTION 11.01. Notices................................ 78
SECTION 11.02. Interpretation......................... 80
SECTION 11.03. Severability........................... 80
SECTION 11.04. Counterparts........................... 80
SECTION 11.05. Entire Agreement; No Third Party
Beneficiaries........................ 80
SECTION 11.06. Governing Law.......................... 81
SECTION 11.07. Consent to Jurisdiction................ 81
SECTION 11.08. Expenses............................... 81
<PAGE>
SECTION 11.09. Assignment............................. 81
SECTION 11.10. Right of Set-off....................... 82
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 1.01(a) - Union Pension Funding Amount
Schedule 1.01(b) - Designated Purchasers
Schedule 1.01(c) - Joint Ventures
Schedule 1.01(d) - June 30, 1995 Adjustment Amounts
Schedule 1.01(e) - Purchased Entities (other than
Joint Ventures)
Schedule 1.01(f) - Sellers
Schedule 2.06 - Allocation Statement
Schedule 4.01(a) - Foreign Qualifications
Schedule 4.01(b) - Non-Contravention
Schedule 4.01(c) - Equity Interests
Schedule 4.01(d)-1 - Financial Statements
Schedule 4.01(d)-2 - Accounting Principles
Schedule 4.01(e) - Other Liabilities
Schedule 4.01(f) - Compliance with Applicable Laws
Schedule 4.01(g) - Litigation; Decrees
Schedule 4.01(h)(i) - Non-Acquired Assets
Schedule 4.01(h)(ii) - Title to Acquired Assets
Schedule 4.01(h)(iii) - Equipment
Schedule 4.01(h)(iv) - Equipment Condition
Schedule 4.01(h)(v) - Liens
Schedule 4.01(i) - Real Property
Schedule 4.01(j) - Intellectual Property and Know-
how
Schedule 4.01(k) - Insurance
Schedule 4.01(l)(i) - Contracts
Schedule 4.01(l)(ii) - Acquired Contracts
Schedule 4.01(l)(iii) - Nonassignable Acquired Contracts
Schedule 4.01(m) - Oral Contracts
Schedule 4.01(n) - Affiliate Arrangements
Schedule 4.01(o) - Permits
Schedule 4.01(p) - Certain Changes
Schedule 4.01(t) - Tax Agreements
Schedule 4.01(u)-1 - Employees
Schedule 4.01(u)-2 - Other Functions
Schedule 4.01(u)-3 - Agreements with Transferred
Employees
Schedule 4.01(v)(i) - Benefit Plans
Schedule 4.01(v)(ii) - Benefit Plan Proceedings
Schedule 4.01(v)(v) - Prohibited Transactions
Schedule 4.01(v)(ix) - Welfare Plan Funding
Schedule 4.01(v)(x) - Additional Benefits
Schedule 4.01(w) - Environmental Matters
Schedule 4.01(x) - Financial Projections
Schedule 4.02(b) - Non-Contravention
Schedule 5.01(v) - Non-Ordinary Course Liens
<PAGE>
Schedule 5.01(ix) - Employment Contracts
Schedule 5.05 - Required Consents
Schedule 5.14 - Intercompany Accounts
Schedule 5.15 - Purchased Entity Indebtedness
Schedule 5.16 - Purchased Entity Cash Balances
Schedule 7.01 - Active Employees
Schedule 7.02(a) - Welfare Plans
Schedule 7.02(d) - Benefit Plans
Schedule 7.03 - Foreign Plans
Exhibit A - Form of Secured Promissory Note
Exhibit B - Form of Unsecured Promissory Note
Exhibit C - Form of Belgian Promissory Note
Exhibit D - Form of Letter of Credit
<PAGE>
ASSET PURCHASE AGREEMENT dated as of
January 23, 1996 (this "Agreement"), between
CINCINNATI MILACRON INC., a Delaware
corporation ("Purchaser"), and the other
Designated Purchasers (as defined herein) set
forth on the signature pages hereto and THE
FAIRCHILD CORPORATION, a Delaware corporation
("Parent"), RHI HOLDINGS, INC., a Delaware
corporation ("RHI"), and the Sellers (as
defined herein) set forth on the signature
pages hereto.
WHEREAS, Sellers are engaged throughout the world in
the development, production, manufacturing, marketing, sale and
distribution of mold bases, mold components, moldmaking tools and
supplies, polishing equipment, electronic temperature and
pressure control equipment, runnerless molding systems and
process controls and Computer Aided Design and Computer Aided
Manufacturing ("CAD/CAM") hardware and software for the plastics
industry, all as described in Parent's Annual Report on Form 10-K
for the fiscal year ended June 30, 1995 (collectively, the
"Business"); and
WHEREAS, Parent desires to cause Sellers to sell and
Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, the Business and all of the assets,
properties and other rights owned, used or held for use by
Sellers in connection with the Business, including all of the
voting stock or other interests owned by Parent and Sellers in
the Purchased Entities (as defined herein), upon the terms and
subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and undertakings contained herein and for other good
and valuable consideration, the receipt and sufficiency
<PAGE>
2
of which is hereby acknowledged, the parties hereto hereby agree
as follows:
ARTICLE I
Definitions and Terms
SECTION 1.01. Definitions. As used in this Agreement,
the following terms shall have the following meanings:
"Accounting Principles" shall have the meaning set
forth in Section 4.01(d)-2.
"Accounts Receivable" shall mean all accounts, notes
and other receivables of Sellers and their Affiliates on the
Closing Date that arise out of sales of the Business.
"Acquired Assets" shall have the meaning set forth in
Section 2.02(a).
"Acquired Contracts" shall have the meaning set forth
in Section 2.02(a).
"Acquired Intellectual Property" shall mean all
Intellectual Property that is used or held for use in connection
with the Business.
"Acquired Know-how" shall mean all Know-how that is
used or held for use in connection with the Business.
"Active Employees" shall have the meaning set forth in
Section 7.01.
"Affiliate" shall mean, with respect to any Person, any
other Person that directly or indirectly controls, is controlled
by or is under common control with such first Person; provided
that for purposes of this Agreement, the Joint Ventures shall be
deemed not to be Affiliates of Parent or Sellers.
"Assumed Liabilities" shall have the meaning set forth
in Section 2.03(a).
"Assumed Tax Liabilities" shall mean Tax Liabilities
for value-added Taxes, real property Taxes, personal and
intangible property Taxes and payroll Taxes.
<PAGE>
3
"Benefit Plan" shall have the meaning set forth in
Section 4.01(v).
"Books and Records" shall have the meaning set forth in
Section 2.02(a).
"Business" shall have the meaning set forth in the
recitals hereto.
"business day" shall mean any day other than any
Saturday, Sunday or other day on which commercial banks in New
York, New York are required or authorized by law or regulation to
close.
"CAD/CAM" shall have the meaning set forth in the
recitals hereto.
"Capital Lease Obligation" shall mean any obligation of
any Seller to pay rent or other amounts under a lease of (or
other arrangements conveying the right to use) real or personal
property of any Seller which is required to be classified and
accounted for as a capital lease or a liability on the face of a
balance sheet of any Seller in accordance with GAAP, and the
amount of such obligation shall be the capitalized amount thereof
in accordance with GAAP, and the stated maturity thereof shall be
the earlier of (x) the date of the last payment of rent or any
other amount due under such lease and (y) the first date upon
which such lease may be terminated by the lessee without payment
of a penalty.
"CERCLA" shall have the meaning set forth in this
Section 1.01 under the definition of "Environmental Laws".
"Closing" shall have the meaning set forth in Section
3.01.
"Closing Date" shall have the meaning set forth in
Section 3.01.
"Closing Date Balance Sheet" shall mean a balance sheet
of the Business as of the Closing Date audited by Sellers'
independent public accountants, Arthur Andersen LLP, prepared in
accordance with the Accounting Principles; provided that in the
event the Closing Date shall occur on a date other than the last
day of an accounting period for the U.S. and foreign operations
of the Business, the Closing Date Balance Sheet shall reflect the
assets and liabilities of such U.S. or foreign operations, as the
case may be, as of the last day of the accounting period for such
U.S. or foreign operations, respectively, so long as such last
day is a date not more than three business days before or after
the Closing Date.
<PAGE>
4
"Closing Date Net Tangible Asset Value" shall mean the
book value of all assets reflected on the Closing Date Balance
Sheet (excluding goodwill and net of any applicable contra-asset
accounts) less the amount of all liabilities reflected on the
Closing Date Balance Sheet; provided, however, that
notwithstanding that such reflection or exclusion may not be
consistent with the Accounting Principles, the following
adjustments shall be made, without duplication, in determining
the Closing Date Net Tangible Asset Value:
(i) the calculation of the Closing Date Net Tangible
Asset Value shall exclude any Excluded Assets and Excluded
Liabilities reflected on the Closing Date Balance Sheet;
(ii) the calculation of the Closing Date Net Tangible
Asset Value shall exclude any assets and any liabilities of
any Purchased Entity reflected on the Closing Date Balance
Sheet that would be Excluded Assets and Excluded
Liabilities, as the case may be, were the Purchased Entity a
Seller hereunder; and
(iii) the calculation of the Closing Date Net Tangible
Asset Value shall reflect as an asset the amount set forth
in Schedule 1.01(a), representing estimated amounts in
respect of amounts accrued from the Closing Date through
October 1, 1996 for Transferred Employees by Parent for
credited services under the D-M-E Company, IAM #15 Hillside
Employee's Retirement Income Plan.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Contingent Reserve Amount" shall have the meaning set
forth in Section 2.03(a)(iv).
"Contingency Reserves" shall mean, collectively, the
four line items included in other accrued liabilities on a
balance sheet of the Business specified as "Other-U.S.A.",
"Other-Foreign", "Contingency-D-M-E U.S.A." and
"Contingency-D-M-E of Canada".
<PAGE>
5
"Contracts" shall mean all contracts, leases,
indentures, agreements, commitments and all other legally binding
arrangements, in each case whether oral or written.
"control" shall mean the power to direct the affairs of
a Person by reason of ownership of voting stock or other equity
interests, by contract or otherwise.
"Designated Purchaser" shall mean Purchaser or any of
the corporations set forth on Schedule 1.01(b) hereto.
"Environmental Laws" shall mean any and all applicable
treaties, laws, regulations, ordinances, enforceable
requirements, binding determinations, orders, decrees, judgments,
injunctions, permits, approvals, authorizations, licenses or
binding agreements issued, promulgated or entered into by any
Governmental Entity, relating to the environment, preservation or
reclamation of natural resources, or to the management, Release
or threatened Release of or exposure to Hazardous Substances,
including the Comprehensive Environmental Response, Compensation,
and Liability Act, 42 U.S.C. Section 9601 et seq. ("CERCLA"), the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
seq., the Clean Air Act, 42 U.S.C. Section 7401 et seq., the
Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq., the
Occupational Safety and Health Act, 29 U.S.C. Section 651 et
seq., the Emergency Planning and Community Right-to-Know Act of
1986, 42 U.S.C. Section 11001 et. seq., the Safe Drinking Water
Act, 42 U.S.C. Section 300(f) et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801 et seq., and any
similar or implementing state or local law, and any non-U.S. laws
and regulations of similar import, and all amendments or
regulations promulgated thereunder.
"Environmental Liabilities" shall mean any and all
Losses arising from or related to any claim, proceeding,
investigation, response or removal action, remediation or other
clean-up brought, prosecuted or undertaken by Purchaser, any
Designated Purchaser, any Governmental Entity or any other Person
on the basis of any violation of any Environmental Laws or
pursuant to any requirement imposed under any Environmental Laws,
and arising from pre-Closing operations, events, circumstances or
conditions at, on, under or emanating from, or as a result of any
pre-Closing off-site disposal of Hazardous Substances from, any
of the Real Property or any other property currently or formerly
owned, operated or leased by Sellers in connection with the
<PAGE>
6
Business or currently or formerly owned, operated or leased by
the Purchased Entities.
"Environmental Permits" shall mean all permits,
licenses, approvals or authorizations from any Governmental
Entity required under Environmental Laws for the operation of the
Business.
"Equipment" shall have the meaning set forth in Section
2.02(a).
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"Excluded Assets" shall have the meaning set forth in
Section 2.02(b).
"Excluded Joint Ventures" shall mean Partes Para Moldes
D-M-E S.A., a Mexican corporation, and D-M-E Iberica S.A., a
Spanish corporation.
"Excluded Liabilities" shall have the meaning set forth
in Section 2.03(b).
"Existing Seller Indebtedness" shall mean (i) every
obligation of Sellers and their Affiliates (other than the
Purchased Entities) for money borrowed, (ii) every obligation of
Sellers and their Affiliates (other than the Purchased Entities)
evidenced by bonds, debentures, notes or other similar
instruments, (iii) every reimbursement obligation of Sellers and
their Affiliates (other than the Purchased Entities) with respect
to letters of credit, bankers' acceptances or similar facilities,
(iv) every obligation of Sellers and their Affiliates (other than
the Purchased Entities) incurred as the deferred purchase price
of property (but excluding trade accounts payable), (v) every
Capital Lease Obligation of such Persons (other than the
Purchased Entities) and (vi) every obligation of the type
referred to in clauses (i) through (v) of another Person the
payment of which any Seller or any of Sellers' Affiliates (other
than the Purchased Entities) has guaranteed or for which any
Seller or any of Sellers' Affiliates (other than the Purchased
Entities) is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise.
"Financial Statements" shall have the meaning set forth
in Section 4.01(d)-1.
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7
"Foreign Plans" shall have the meaning set forth in
Section 4.01(v)(xii).
"Foreign Purchase Agreements" shall mean the Belgian
Branch Purchase Agreement between VSI Corporation and D-M-E
Belgium N.V., the Belgian Share Purchase Agreement between VSI
Corporation and D-M-E Company, the German Asset Transfer
Agreement between D-M-E Normalien GmbH and Cincinnati Milacron
Kunststoffmaschinen Vertriebs- und Service GmbH, the German Real
Property Transfer Agreement between D-M-E Normalien GmbH and
Cincinnati Milacron Kunststoffmaschinen Vertriebs- und Service
GmbH and the Agreement between D-M-E Europe (U.K.) Limited and
D-M-E UK Limited, all of which agreements shall be entered into
on the Closing Date in connection with the transactions
contemplated hereby.
"GAAP" shall mean United States generally accepted
accounting principles as in effect on the date of this Agreement.
"Governmental Entity" shall mean any court,
administrative or regulatory agency or commission, crown
corporation or other governmental authority or instrumentality,
domestic, foreign or supranational.
"Hazardous Substances" shall mean all explosive or
regulated radioactive materials or substances, hazardous or toxic
materials, wastes or chemicals, petroleum and petroleum products
(including crude oil or any fraction thereof), asbestos or
asbestos containing materials, and all other materials or
chemicals regulated pursuant to any Environmental Law, including
materials listed in 49 C.F.R. Section 172.101 and materials
defined as hazardous pursuant to Section 101(14) of CERCLA (as
defined above in the definition of "Environmental Laws").
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Inactive Employees" shall have the meaning set forth
in Section 7.01.
"Indebtedness" shall mean all (i) secured and
unsecured debt for borrowed money or for deferred purchase
price of property or evidenced by notes, bonds or other
instruments, (ii) lease obligations which would normally be
capitalized under GAAP and (iii) obligations under direct or
indirect guarantees of (including obligations (contingent or
<PAGE>
8
otherwise) to assure a creditor against loss in respect of)
indebtedness or obligations of others of types referred to in
(i) and (ii) above. For purposes of the foregoing definition,
there shall be excluded any and all trade payables.
"Indemnified Party" shall have the meaning set forth
in Section 10.04.
"Indemnifying Party" shall have the meaning set
forth in Section 10.06.
"India Joint Venture" shall have the meaning set
forth in Section 5.11(d).
"India Purchase Price" shall have the meaning set
forth in Section 5.11(d).
"Intellectual Property" shall mean (i) Patents, (ii)
Patent applications, (iii) Trademarks, (iv) Trade Names, (v)
copyrights and (vi) service marks, and all applications
relating to all of the foregoing, including, where applicable,
all divisions, extensions, renewals and reissues.
"Inventory" shall have the meaning set forth in
Section 2.02(a).
"ISRA" shall have the meaning set forth in this
Section 1.01 under the definition of "Property Transfer Laws".
"Joint Ventures" shall mean, collectively, the
corporations set forth on Schedule 1.01(c) hereto.
"June 30, 1995 Balance Sheet" shall have the meaning
set forth in Section 4.01(d).
"June 30, 1995 Net Tangible Asset Value" shall mean
$68,746,555, which represents $73,370,000 adjusted as set
forth on Schedule 1.01(d).
"Know-how" shall mean trade secrets, know-how
(including product know-how and use and application know-how),
formulas, processes, product designs, inventions,
specifications, quality control procedures, manufacturing,
engineering and other drawings, technology, technical
information, safety information, lab journals, engineering
data and design and engineering specifications, research
<PAGE>
9
records, market surveys and promotional literature, customer
and supplier lists and similar data, including all depictions,
descriptions, drawings and plans thereof.
"Letter of Credit" shall have the meaning set forth in
Section 2.04(c).
"Lien" shall mean any lien, mortgage, claim, charge,
security interest, easement, right-of-way, pledge or other
encumbrance.
"Losses" shall have the meaning set forth in Section
10.02.
"Patents" shall mean patents (including all reissues,
divisions, continuations, continuations in part and extensions
thereof) and patent disclosures docketed and all other patent
rights.
"Pension Plan" shall have the meaning set forth in
Section 4.01(v).
"Permits" shall have the meaning set forth in Section
2.02(a).
"Permitted Encumbrances" shall have the meaning set
forth in Section 4.01(i).
"Permitted Liens" shall have the meaning set forth in
Section 4.01(h)(v).
"Person" shall mean any individual, corporation,
partnership, joint venture, trust, business association,
organization, Governmental Entity or other entity.
"Product Liability Claims" shall mean all liabilities
and obligations with respect to any product liability claims
(including personal injury claims and property damage claims)
arising in connection with the use or operation of any Products
manufactured or shipped by Parent, Sellers, the Purchased
Entities or any of their respective Affiliates before the
Closing.
"Products" shall mean any products currently or
formerly developed, produced, marketed, sold or distributed
by the Business, including mold bases, mold components,
moldmaking tools and supplies, polishing equipment,
electronic temperature and pressure control equipment,
<PAGE>
10
runnerless molding systems and process controls and CAD/CAM
hardware and software for the plastics industry.
"Promissory Notes" shall have the meaning set
forth in Section 2.04(a).
"Property Transfer Laws" shall mean the California
Hazardous Substance Account Act, Cal. Health and Safety Code
Section 25359.7; Illinois Responsible Property Transfer Act
of 1988, 765 ILCS Sections 90/1 to 90/7; the Natural
Resources & Environmental Protection Act, Mich. Comp. Laws
Section 324.20116; the Minnesota Environmental Response and
Liability Act, Minn. Sta. Section 115B.16; New Jersey
Industrial Site Recovery Act, N.J. Stat. Ann. Section 13.1K
et seq., ("ISRA"), the Pennsylvania Solid Waste Management
Act, Pa. Cons. Stat. Ann. tit. 35 Section 6018.405; and the
Pennsylvania Hazardous Sites Cleanup Act, Pa. Cons. Stat.
Ann. tit. 35 Section 6020.512; and any comparable provisions
in Belgium.
"Purchase Price" shall have the meaning set forth
in Section 2.04(a).
"Purchase Price Adjustment" shall have the meaning
set forth in Section 2.05.
"Purchased Entities" shall mean, collectively,
each of the Joint Ventures and the other corporations and
entities set forth on Schedule 1.01(e) hereto.
"Purchaser Indemnified Parties" shall have the
meaning set forth in Section 10.02.
"Real Property" shall mean all real property and
interests in real property owned, leased, used or held for
use in connection with the Business.
"Release" shall mean any spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching, emanation or migration of any Hazardous Substance
in, into, onto or through the environment (including ambient
air, surface water, ground water, soils, land surface,
subsurface strata, workplace or structure).
"Required Consents" shall have the meaning set
forth in Section 5.05.
"Secured Notes" shall have the meaning set forth
in Section 2.04(a).
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11
"Seller Indemnified Parties" shall have the
meaning set forth in Section 10.03.
"Sellers" shall mean, collectively, the
corporations and entities set forth on Schedule 1.01(f)
hereto.
"Shares" shall mean all the issued and outstanding
shares of all classes of capital stock of, or any other
equity interest in, the Purchased Entities held by Parent or
any Seller.
"Specified Contingent Liabilities" shall mean (i)
all Environmental Liabilities, (ii) all Product Liability
Claims and (iii) without duplication, the contingent and
accrued liabilities of the type included within the
categories specifically identified in the notes to the
Closing Date Balance Sheet as the categories of liabilities
that make up the Contingency Reserves (but excluding any
such liabilities to the extent such liabilities otherwise
represent Excluded Liabilities).
"Tax" or "Taxes" shall mean all Federal, state,
local, foreign or other governmental taxes, assessments,
duties, fees, levies or similar charges of any kind,
including all environmental, excise, property, education,
occupation, use, intangibles, sales, value-added, payroll,
employment and other withholding taxes and all Canadian (and
political subdivisions thereof) license fees, registration
fees and governmental pension plan premiums, and including
all interest, penalties and additions imposed with respect
to such amounts or for failure to timely file a Tax Return.
"Tax Liabilities" shall mean all liabilities or
obligations of Parent, Sellers, any Purchased Entity (and
any Person with which any Purchased Entity has been
affiliated for any Tax purposes on or prior to the Closing
Date) or any of their respective Affiliates (including under
any agreement relating to Taxes) for (A) Taxes for taxable
periods ending on or before the Closing Date and (B) Taxes
for the portion ending on the Closing Date of any taxable
period that includes but does not end on the Closing Date,
including any Taxes relating to the transactions
contemplated by this Agreement. For purposes of calculating
the amount of Taxes described in clause (B) of the preceding
sentence, the Tax liabilities attributable to any such
portion shall be, in the case of any Tax, the amount of any
such Tax accruing, or with respect to the activities of any
Purchased Entity occurring, on or before the Closing Date.
<PAGE>
12
Tax Liabilities shall include all liabilities or obligations
for Taxes of Parent, Sellers, any Purchased Entity (and any
Person with which any Purchased Entity has been affiliated
for any Tax purposes on or prior to the Closing Date) or any
of their respective Affiliates (including under any
agreement relating to Taxes) resulting directly or
indirectly from the transactions contemplated by this
Agreement (including all Taxes arising as a result of the
settlement of intercompany accounts pursuant to Section
5.14, the recognition of any "deferred intercompany gain",
the TransferCo Elections or the transfer of assets to
TransferCo prior to the Closing); provided that Tax
Liabilities shall not include Transfer Taxes.
"Tax Return" shall mean any return (including
information returns), report, declaration or statement
relating to Taxes, including any schedule or attachment
thereto or amendment thereof.
"Third Party Claims" shall have the meaning set
forth in Section 10.06.
"Trademarks" shall mean trademarks, registrations
thereof, pending applications therefor and such unregistered
rights as may exist through use.
"Trade Names" shall mean trade names, brand marks,
trade dress, brand names, logos and all other names and
slogans embodying Business or Product goodwill for which no
trademark registration has been obtained and for which no
application is pending.
"TransferCo" shall mean BOE, Inc., a Delaware
corporation.
"TransferCo Elections" shall have the meaning set
forth in Section 5.07(b).
"Transfer Taxes" shall mean all transfer, stock
transfer, documentary, sales, use, registration and other
similar Taxes (including all applicable real estate transfer
Taxes and notary fees) and related amounts (including any
penalties, interest and additions to Tax) incurred in
connection with the transfer of assets to TransferCo in
connection with the transactions contemplated hereby and the
transfer of the Acquired Assets from Sellers to Purchaser or
any Designated Purchaser.
<PAGE>
13
"Transferred Employees" shall have the meaning set
forth in Section 7.01.
"Unsecured Note" shall have the meaning set forth
in Section 2.04(a).
"VSI Corporation" shall mean VSI Corporation, a
Delaware corporation.
"Welfare Plan" shall have the meaning set forth in
Section 4.01(v).
SECTION 1.02. Other Terms. Other terms may be
defined elsewhere in the text of this Agreement and, unless
otherwise indicated, shall have such meaning throughout this
Agreement.
SECTION 1.03. Other Definitional Provisions. (a)
The words "hereof", "herein" and "hereunder" and words of
similar import, when used in this Agreement, shall refer to
this Agreement as a whole and not to any particular
provision of this Agreement.
(b) Whenever the word "primarily" is used in this
Agreement with respect to a given subject, it shall be
deemed to be followed by the words "or exclusively".
(c) Whenever the words "included", "includes" or
"including" are used in this Agreement, they shall be deemed
to be followed by the words "without limitation".
(d) The terms defined in the singular shall have a
comparable meaning when used in the plural, and vice versa.
(e) The terms "dollars", "Dollars" and "$" shall
mean United States dollars.
ARTICLE II
Purchase and Sale of Acquired Assets
SECTION 2.01. Purchase and Sale. Upon the terms
and subject to the conditions of this Agreement, Parent
agrees to cause Sellers and Sellers agree to sell, assign,
transfer, convey and deliver to the Designated Purchasers,
at the Closing, free and clear of any and all Liens, other
than Permitted Liens and Permitted Encumbrances (and as to
<PAGE>
14
the Shares, good, valid and marketable title, subject only
to limitations on transfer under applicable securities
laws), and Purchaser agrees to purchase and accept, or cause
any Designated Purchaser to purchase and accept, from
Sellers at the Closing, the Acquired Assets and all right,
title and interest of Sellers therein. It is specifically
understood and agreed by the parties hereto that Purchaser
may designate itself or one or more of the other Designated
Purchasers to acquire all or specified portions of the
Acquired Assets and to benefit from the representations,
warranties and covenants contained in this Agreement,
including the covenant not to compete set forth in Section
5.04.
SECTION 2.02. Acquired Assets and Excluded Assets.
(a) The term "Acquired Assets" means the Shares and all the
assets, business, properties, production facilities
(including real property, buildings, machines, technical
equipment, tools and other appliances, furniture, fixtures
and other equipment), contracts, claims and other rights of
Sellers of whatever kind and nature, tangible or intangible,
real or personal, existing or hereafter acquired, and
wherever located, other than the Excluded Assets, that are
owned, held or used by Sellers and that are used or held for
use in connection with the Business, including all of
Parent's and Sellers' right, title and interest in and to
the following assets (all of which shall be deemed to
constitute assets that are used or held for use in
connection with the Business):
(i) the Real Property;
(ii) all personal property and interests therein,
including machinery, equipment, furniture, office
equipment, communications equipment, vehicles, spare
and replacement parts, fuel, accessories, tools and
other tangible property, including the items listed on
Schedule 4.01(h)(iii), that are used or held for use in
connection with the Business (collectively, the
"Equipment");
(iii) all Products and, to the extent used in the
production of such Products or otherwise related
thereto, raw materials, work-in-process, finished
goods, supplies, parts and other inventories
(collectively, the "Inventory");
(iv) all Accounts Receivable;
<PAGE>
15
(v) all prepaid expenses, deposits and claims for
refunds (including claims for refunds with respect to
the Assumed Tax Liabilities), leases and rentals, that
relate to or arise out of operations of the Business,
but excluding any such expenses, deposits and claims to
the extent relating to Excluded Assets or Excluded
Liabilities;
(vi) all Acquired Intellectual Property and
Acquired Know-how;
(vii) all permits, licenses, franchises, approvals
and authorizations from any Governmental Entity that
are owned or held by any Seller that relate to the
operations of the Business, including those items
listed on Schedule 4.01(o) (collectively, the
"Permits");
(viii) all rights under Contracts to which any
Seller is a party or by which any Seller is bound that
are used or held for use in connection with the
Business (the "Acquired Contracts");
(ix) all of Sellers' rights, claims, credits,
causes of action or rights of set-off against third
parties relating solely to the Acquired Assets,
including unliquidated rights under manufacturers' and
vendors' warranties;
(x) all computer software programs and computer
data that relate to or are used or held for use in
connection with the Business;
(xi) all goodwill associated with the Business or
the Acquired Assets, together with the right to
represent to third parties that the Designated
Purchasers are successors to the Business; and
(xii) all books of accounts, general, financial,
accounting and personnel records, files, invoices,
present and former customers' and suppliers' lists and
other data, whether in hard copy or computer format,
relating to the Business or to the Acquired Assets and
any information relating to Taxes of the Business,
including copies of any Tax Returns reflecting the
assets, operations or income of the Business
(collectively, "Books and Records").
<PAGE>
16
(b) Notwithstanding anything herein to the
contrary, from and after the Closing, each Seller shall
retain all of its right, title and interest in and to, and
there shall be excluded from the sale, conveyance,
assignment, transfer or delivery to the Designated
Purchasers, any assets, business, properties, production
facilities (including real property, buildings, machines,
technical equipment, tools and other appliances, furniture,
fixtures and other equipment), contracts, claims and other
rights of Sellers of whatever kind and nature, tangible or
intangible, real or personal, existing or hereafter
acquired, and wherever located, that are owned, held or used
by Sellers and that are not used or held for use in
connection with the Business (collectively, the "Excluded
Assets"), including all of Sellers' right, title and
interest in and to the following assets (all of which shall
be deemed to constitute assets that are not used or held for
use in the Business):
(i) all real property that is not Real Property;
(ii) all personal property and interests therein,
including machinery, equipment, furniture, office
equipment, communications equipment, vehicles, spare
and replacement parts, fuel, accessories, tools and
other tangible property, that is not Equipment;
(iii) all products that are not Products and all
raw materials, work-in-process, finished goods,
supplies, parts and other inventories that are not
Inventory;
(iv) all accounts receivable that are not Accounts
Receivable;
(v) all cash and cash equivalents held by Sellers;
(vi) all prepaid expenses, deposits and claims for
refunds, leases and rentals, that relate to or arise
out of operations other than operations of the Business
or any such expenses, deposits and claims for refunds
(including claims for refunds with respect to Tax
Liabilities, other than the Assumed Tax Liabilities) to
the extent relating to Excluded Assets or Excluded
Liabilities;
(vii) all Intellectual Property and Know-how that
is not Acquired Intellectual Property or Acquired
Know-how;
<PAGE>
17
(viii) all permits, licenses, franchises,
approvals and authorizations from any Governmental
Entity that are owned or held by any Seller that are
not Permits;
(ix) all rights under Contracts that are not
Acquired Contracts;
(x) all of Sellers' rights, claims, credits,
causes of action or rights of setoff against third
parties not relating solely to the Acquired Assets,
including unliquidated rights under manufacturers' and
vendors' warranties;
(xi) all computer software programs and computer
data that do not relate to and are not used or held for
use in connection with the Business;
(xii) all goodwill that is not goodwill associated
with the Business or the Acquired Assets;
(xiii) all books of accounts, general, financial,
accounting and personnel records, files, invoices,
present and former customers' and suppliers' lists and
other data, whether in hard copy or computer format,
that are not Books and Records;
(xiv) all amounts held in respect of Pension Plan
obligations, other than amounts held in respect of
Foreign Plans set forth in Schedule 7.03;
(xv) all the shares of capital stock or other
equity interest in the Excluded Joint Ventures and, if
repurchased pursuant to Section 5.11(d), the India
Joint Venture;
(xvi) any assets repurchased by Sellers pursuant
to the provisions of Section 5.11(c);
(xvii) all rights of Sellers under this Agreement
and any other agreements, instruments (including any
rights in the Promissory Notes and the Letter of
Credit) and certificates delivered in connection with
this Agreement; and
(xviii) all rights, claims, demands and judgments
not relating solely to the Acquired Assets.
(c) Notwithstanding anything to the contrary in
this Section 2.02, to the extent an asset is included in the
<PAGE>
18
calculation of Closing Date Net Tangible Asset Value (as
finally determined in accordance with Section 2.05), such
asset shall be deemed to be an Acquired Asset, whether or
not such asset is listed as an Excluded Asset under Section
2.02(b).
SECTION 2.03. Assumption of Certain Liabilities.
(a) Upon the terms and subject to the conditions of this
Agreement, at the Closing, Purchaser agrees to cause the
Designated Purchasers to assume, pay, perform and discharge
when due, all liabilities or obligations listed in this
Section 2.03, and only such liabilities or obligations
listed in this Section 2.03 (except as otherwise
specifically provided in this Agreement), whether arising
before or after the Closing and whether known or unknown,
fixed or contingent (the "Assumed Liabilities"):
(i) all liabilities set forth on the Closing Date
Balance Sheet, other than any such liabilities that are
Excluded Liabilities;
(ii) all liabilities and obligations of Sellers
arising under or pursuant to the Acquired Contracts,
the Permits, the Acquired Intellectual Property and the
Acquired Know-how;
(iii) all liabilities and obligations relating to
employee benefit plans, programs or arrangements
associated with or relating to any Transferred
Employee, but only to the extent such liabilities and
obligations are expressly assumed by any Designated
Purchaser pursuant to Article VII of this Agreement;
(iv) the Specified Contingent Liabilities in an
amount equal to (and no amounts in excess of) the
aggregate amount (the "Contingent Reserve Amount") of
the Contingency Reserves reflected or shown on the
Closing Date Balance Sheet; and
(v) all other liabilities and obligations of
Parent and Sellers to the extent relating to the
Business other than the Excluded Liabilities; provided,
however, that with respect to any such other liability
or obligation not relating exclusively to the Business,
the Designated Purchasers shall only assume that
portion of such liability or obligation that is
allocable to the Business on a pro rata basis.
<PAGE>
19
(b) Notwithstanding anything herein to the
contrary or any other writing to the contrary, Purchaser
shall cause the Designated Purchasers to assume only the
Assumed Liabilities, and nether the Purchaser nor any other
Designated Purchaser shall assume any other liability or
obligation of Parent or any Seller (or any predecessor owner
of all or part of its business and assets) of whatever
nature whether presently in existence or arising hereafter.
All such other liabilities and obligations ahll be retained
by and remain obligations of Parent or Sellers (or any such
predecessor owner) (all such liabilities and obligations not
being assumed being herein referred to as the "Excluded
Liabilities"). Without limiting the generality of the
foregoing, the Excluded Liabilities shall include the
following:
(i) all liabilities and obligations which are
attributable to any of the Excluded Assets, or
associated with the realization of the benefits of any
of the Excluded Assets;
(ii) the Tax Liabilities, other than the Assumed
Tax Liabilities in an amount equal to (and no amounts
in excess of) the amount of any specific reserve
therefor reflected or shown on the Closing Date Balance
Sheet;
(iii) the Existing Seller Indebtedness, other than
Capital Lease Obligations reflected on the Closing Date
Balance Sheet in an amount not in excess of $100,000 in
the aggregate and other than as set forth in Schedule
5.14;
(iv) all liabilities and obligations relating to
compensation and any pension, deferred compensation,
vacation, medical benefit, life insurance, severance of
other employee health or safety matters (other than
worker's compensation) and any other employee benefit
plans, programs or arrangements associated with or
relating to any Transferred Employee or any other
employee or former employee employed in the Business
and all liabilities and obligations relating to or
arising from the employment or cessation of employment
of any such employee (including, but not limited to,
all liabilities and obligations under any severance
plan or arrangement of Parent, Sellers, the Purchased
Entities or their respective Affiliates), except to the
extent such liabilities and obligations are expressly
assumed pursuant to Article VII of this Agreement;
<PAGE>
20
(v) all liabilities and obligations arising from
worker's compensation claims relating to pre-Closing
events;
(vi) all Specified Contingent Liabilities to the
extent the aggregate amount of Specified Contingent
Liabilities exceeds the Contingent Reserve Amount;
(vii) all liabilities and obligations to the
extent arising from the Excluded Joint Ventures;
(viii) all liabilities and obligations covered,
but only to the extent covered, by any insurance policy
maintained by Parent, Sellers, the Purchased Entities
or any of their respective Affiliates; and
(ix) all other liabilities and obligations of
Parent and Sellers to the extent not relating to the
Business; provided, however, that with respect to any
such other liability or obligation not relating
exclusively to the Business, Parent and Sellers shall
only retain that portion of such liability or
obligation that is not allocable to the Business on a
pro rata basis.
(c) Notwithstanding anything to the contrary in
this Section 2.03, to the extent a liability is included in
the calculation of Closing Date Net Tangible Asset Value (as
finally determined in accordance with Section 2.05), such
liability shall (in an amount equal to (and no amount in
excess of) the amount included in such calculation) be
deemed to be an Assumed Liability, whether or not such
liability is listed as an Excluded Liability under Section
2.03(b).
SECTION 2.04. Purchase Price. (a) In consideration
of the sale, assignment, transfer, conveyance and delivery
to the Designated Purchasers of the Acquired Assets,
Purchaser (or any other Designated Purchaser) on the Closing
Date shall (i) pay to VSI Corporation (or any other Seller
designated by Parent) Sixty-Two Million Three Hundred
Thousand Dollars ($62,300,000) (the "Cash Payment") by wire
transfer of immediately available funds to the account or
accounts designated by Parent in a written notice received
by Purchaser at least two business days prior to the Closing
and (ii) deliver to VSI Corporation promissory notes (the
"Promissory Notes") payable to VSI Corporation (or any other
Seller designated by Parent in a written notice received by
Purchaser at least two business days prior to the Closing)
<PAGE>
21
in the form of, and containing the terms set forth in,
Exhibits A, B and C hereto, consisting, respectively, of (A)
a Promissory Note or Notes (the "Secured Notes") in an
aggregate principal amount of One Hundred Sixty-Six Million
Dollars ($166,000,000), (B) a Promissory Note (the
"Unsecured Note") in an aggregate principal amount of Five
Million Three Hundred Seventy-Six Thousand Five Hundred
Fifty-Five Dollars ($5,376,555) and (C) a Promissory Note in
the aggregate principal amount of Eleven Million Seven
Hundred Thousand Dollars ($11,700,000) (the "Belgian Note").
The sum of the Cash Payment and the aggregate principal
amount of the Promissory Notes shall equal Two Hundred
Forty-Five Million Three Hundred Seventy-Six Thousand Five
Hundred Fifty-Five Dollars ($245,376,555), subject to
adjustment as provided in Section 2.05 (as so adjusted, the
"Purchase Price").
(b) Within ten business days following the final
determination of the Purchase Price Adjustment in accordance
with Section 2.05:
(i) if the Purchase Price Adjustment is a positive
dollar amount, Purchaser shall pay to Parent by wire
transfer of immediately available funds to the account
designated in a written notice to Purchaser an amount
equal to the Purchase Price Adjustment plus simple
interest at a rate of eight percent (8%) per annum on
the dollar amount of the Purchase Price Adjustment from
the Closing Date to the date of payment; or
(ii) if the Purchase Price Adjustment is a
negative dollar amount, Parent shall pay to Purchaser
by wire transfer of immediately available funds to an
account designated by Purchaser in a written notice to
Parent an amount equal to the Purchase Price
Adjustment, expressed as a positive number, plus simple
interest at a rate of eight percent (8%) per annum on
the dollar amount of the Purchase Price Adjustment,
expressed as a positive number, from the Closing Date
to the date of payment.
(c) At the Closing, Purchaser shall provide to VSI
Corporation a letter of credit (the "Letter of Credit") to be
in effect for a term of six months and 15 days from the date
of the Closing issued by a bank rated 'A' or better on the
date notice of such bank is provided by Purchaser by a
nationally recognized rating agency (such bank to be
specified by Purchaser in a notice to Parent no more than 10
days prior to the Closing) in an amount equal to the
<PAGE>
22
aggregate principal amount of the Secured Notes to secure
payment of the Secured Notes, in the form attached hereto as
Exhibit D, with such additions and completions as shall be
necessary for issuance. The cost of obtaining the Letter of
Credit (including, but not limited to, commitment and facing
fees and reasonable fees of counsel) shall be borne equally
by Parent and Purchaser.
SECTION 2.05. Purchase Price Adjustment. (a) The
Purchase Price shall be adjusted on a dollar for dollar basis,
upward or downward, to account for the difference between the
Closing Date Net Tangible Asset Value and the June 30, 1995
Net Tangible Asset Value (the "Purchase Price Adjustment").
The Purchase Price Adjustment shall be equal to the value of
the Closing Date Net Tangible Asset Value (as finally
determined in accordance with this Section 2.05) minus the
June 30, 1995 Net Tangible Asset Value.
(b) Within sixty (60) days following the Closing
Date, Parent shall cause Arthur Andersen LLP to prepare, and
Parent shall deliver to Purchaser, the Closing Date Balance
Sheet and a calculation of the Closing Date Net Tangible Asset
Value. The Closing Date Balance Sheet shall include
appropriate footnotes thereto, including a footnote
specifically identifying the categories of liabilities that
make up the Contingency Reserves. Purchaser shall cause the
Designated Purchasers to afford to Parent, Arthur Andersen LLP
and Parent's counsel, employees and other representatives
access upon request during normal business hours during such
sixty (60)-day period to all the properties, books, contracts,
commitments, Tax Returns and records of the Business (whether
intercompany or intracompany), and during such period shall
furnish promptly to Parent or Arthur Andersen LLP any
information concerning the Business (whether intercompany or
intracompany) as Parent or Arthur Andersen LLP may reasonably
request, in each case for the purpose of preparing the Closing
Date Balance Sheet.
(c) Unless Purchaser notifies Parent in writing
within sixty (60) days after receipt of the Closing Date
Balance Sheet and Parent's calculation of the Closing Date
Net Tangible Asset Value that Purchaser objects to the
calculation of such Closing Date Net Tangible Asset Value,
and specifies in reasonable detail the basis for such
objection and the amount in dispute (the "Notice of
Objection"), the Closing Date Net Tangible Asset Value shall
become final and binding upon the parties for purposes of
the Purchase Price Adjustment to be made pursuant to this
<PAGE>
23
Section 2.05. During the sixty (60)-day period following
Purchaser's receipt of the Closing Date Balance Sheet,
Purchaser and its representatives shall have the right to
review all books and working papers of Parent and its
accountants related to the preparation of the Closing Date
Balance Sheet. If Purchaser provides such Notice of
Objection to Parent within such sixty (60)-day period,
Parent and Purchaser shall negotiate in good faith to
resolve the issues set forth in the Notice of Objection,
during the thirty (30)-day period following Parent's receipt
thereof. During such thirty (30)-day period, Parent and its
representatives shall have the right to review all the
working papers of Purchaser and its accountants related to
the Notice of Objection, the calculations therein and the
bases therefor. If Parent and Purchaser are unable to
resolve such objections within such thirty (30)-day period,
the disputed matters shall be submitted to Deloitte & Touche
LLP (or, if such firm declines to act, to another nationally
recognized public accounting firm mutually agreed upon by
Parent and Purchaser and, if Parent and Purchaser are unable
to so agree within ten (10) days after the end of such
thirty (30)-day period, then Parent and Purchaser shall each
select such a firm and such firms shall jointly select a
third firm to resolve the disputed matters). The decision of
the accounting firm shall be made by a writing delivered to
Parent and Purchaser, which writing shall contain a
certification that the accounting firm made its
determination in conformity with the provisions of this
Agreement; and such decision with respect to the disputed
matters shall be final and binding on the parties. The fees,
costs and expenses of the accounting firm retained to
resolve any such dispute shall be borne equally by Parent
and Purchaser. Any extensions of the time periods provided
for in this Section 2.05(c) shall be a mutually agreed upon
by the parties in each party's sole discretion.
SECTION 2.06. Allocation of Purchase Price. (a)
Schedule 2.06 sets forth, on a country-by-country basis,
the allocation of the consideration hereunder for Tax
purposes (including the allocation to the covenant not to
compete described in Section 5.04). Within sixty (60) days
after the Closing, Purchaser shall deliver to Parent a
proposed allocation statement setting forth Purchaser's
proposed allocation of the consideration hereunder for Tax
purposes in accordance with Schedule 2.06, pursuant to
Sections 338 and 1060 of the Code and any other applicable
Tax laws. Within thirty (30) days following the delivery
of the proposed allocation statement to Parent, Parent may
propose changes (which shall be in accordance with
<PAGE>
24
Schedule 2.06) to the proposed allocations if Parent
provides a reasonably detailed explanation of the reasons
therefor; if no such statement is received by Purchaser by
the end of such thirty (30)-day period, the allocation
statement proposed by Purchaser shall become final. Parent
and Purchaser shall negotiate in good faith to resolve the
discrepancies between Parent's proposed changes and
Purchaser's allocation statement, and if Parent and
Purchaser cannot resolve such discrepancies within thirty
(30) days after Parent proposes its changes, then the
discrepancies shall be referred to an accounting firm in
accordance with the provisions of Section 2.05(c),
provided that the accounting firm shall be directed to
resolve the discrepancies in accordance with Schedule
2.06. The fees, costs and expenses of such accounting firm
shall be borne equally by Parent and Purchaser.
(b) The allocation determined pursuant to
Section 2.06(a) (the "Allocation Statement") shall be
revised from time to time on a basis mutually agreed upon
by Purchaser and Parent to reflect any adjustment to the
consideration hereunder for Tax purposes.
(c) Purchaser, Parent and Sellers shall file and
cause to be filed all Tax Returns, and execute such other
documents as may be required by any taxing authority, in a
manner consistent with the Allocation Statement as revised
in accordance with Section 2.06(b). Purchaser shall
prepare the required Internal Revenue Service forms
pursuant to Sections 1060 and 338(h)(10) of the Code (and
the Treasury Regulations thereunder) relating to the
transactions contemplated by this Agreement based on the
Allocation Statement as revised in accordance with Section
2.06(b) and deliver such forms to Parent and Sellers.
Purchaser, Parent and Sellers shall file, or cause the
filing of, such forms with each relevant taxing authority.
SECTION 2.07. Mail, etc. Effective upon the
Closing Date, the Designated Purchasers shall have the
right to receive and open all mail, packages and other
communications addressed to any Seller that appear to
relate exclusively to the Business, and each Seller agrees
promptly to deliver to the Purchaser any mail, packages or
other communications received directly or indirectly by
such Seller that relate exclusively to the Business. Each
Designated Purchaser shall promptly deliver to any Seller
all mail, packages and other communications received by it
which relate to such Seller but do not relate exclusively
to the Business. Each Designated Purchaser shall have the
<PAGE>
25
right and authority to collect, for its own account, all
receivables and other items which shall be transferred or
are intended to be transferred to the Designated Purchaser
as provided in this Agreement, and to endorse with the
name of any Seller any checks or drafts received on
account of any such receivables or other items, and each
Seller shall promptly transfer or deliver to the Purchaser
any cash or other property received directly or indirectly
by such Seller in respect of such receivables and other
items.
ARTICLE III
The Closing
SECTION 3.01. Closing. The closing of the
transactions contemplated hereby (the "Closing") shall
take place at 10:00 a.m. (New York City time) at the
offices of Cravath, Swaine & Moore, Worldwide Plaza, 825
Eighth Avenue, New York, New York 10019, on January 26,
1996, or, if all of the conditions set forth in Article
VIII have not been satisfied or waived as of such date,
then on the second business day following the satisfaction
or waiver of such conditions set forth in Article VIII, or
at such other time, date and place as shall be fixed by
agreement among the parties hereto. The Closing shall be
deemed effective as of the close of business in New York
City on the date of the Closing (the "Closing Date"). The
acquisition of Shares of Purchased Entities or assets of
Sellers located outside the United States shall take place
on the Closing Date at such place (or places) and time (or
times) in the jurisdiction (or jurisdictions) as the
parties shall agree upon.
SECTION 3.02. Transactions To Be Effected at the
Closing. At the Closing:
(a) Parent shall cause Sellers to, and Sellers
shall, deliver to the Designated Purchasers: (i) such
appropriately executed special warranty deeds in
recordable form (with respect to the Real Property), bills
of sale, endorsements, consents, assignments and other
good and sufficient instruments of transfer relating to
the Acquired Assets in form and substance reasonably
satisfactory to Purchaser and its counsel to vest in the
Designated Purchasers all of Sellers' right, title and
interest in, to and under the Acquired Assets, and as to
the Shares, certificates representing the Shares, together
with appropriate transfer documents, so as to vest in the
Designated Purchasers good, valid and marketable title
<PAGE>
26
(subject only to limitations on transfer under applicable
securities laws) to such Shares, (ii) duly executed
assignment and assumption agreements (including the
Foreign Purchase Agreements) in appropriate form and (iii)
such other documents as Purchaser or its counsel may
reasonably request at least two business days prior to the
Closing Date to demonstrate satisfaction or waiver of the
conditions and compliance with the agreements set forth
herein; and
(b) Purchaser shall deliver to Parent (or any
Seller designated by Parent pursuant to Section 2.04) (i)
the Cash Payment, the Promissory Notes and the Letter of
Credit pursuant to Section 2.04, (ii) duly executed
assignment and assumption agreements (including the
Foreign Purchase Agreements) in appropriate form and (iii)
such other documents as Parent or its counsel may
reasonably request at least two business days prior to the
Closing Date to demonstrate satisfaction or waiver of the
conditions and compliance with the agreements set forth
herein.
ARTICLE IV
Representations and Warranties
SECTION 4.01. Representations and Warranties of
Parent, RHI and Sellers. Parent, RHI and each Seller,
jointly and severally, hereby represent and warrant to
Purchaser and the other Designated Purchasers as follows:
(a) Organization, Standing and Power. Parent and
each Seller is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction in which it is incorporated; and each Seller
has the requisite corporate power and authority to own,
directly or indirectly, the Acquired Assets owned by it
and to carry on the operations of the Business as
presently being conducted by it and is duly qualified or
licensed to do business and is in good standing in each of
the jurisdictions listed opposite such Seller's name on
Schedule 4.01(a), which are all the jurisdictions in which
the nature of the activities of the Business conducted or
the character of the Acquired Assets owned, used or held
for use therein require such qualification or licensing
and the failure to be so qualified or licensed would
adversely affect in any material respect the continuing
conduct of the Business by such Seller as heretofore
conducted, the value of the Acquired Assets or the amount
of the Assumed Liabilities.
<PAGE>
27
(b) Authority; Non-Contravention. Parent and
each Seller has all corporate power and authority to
execute and deliver this Agreement and the other
agreements, instruments and certificates to be executed
and delivered pursuant hereto and to consummate the
transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on
the part of Parent and each Seller and, to the extent
applicable, the stockholders of Parent and each Seller,
and the execution and delivery of the other agreements,
instruments and certificates to be executed and delivered
pursuant hereto and the consummation of the transactions
contemplated thereby have been authorized by all necessary
corporate action on the part of Parent and each Seller
and, to the extent applicable, the stockholders of Parent
and each Seller. This Agreement has been duly executed and
delivered by Parent and each Seller party hereto and
constitutes, and each other agreement, instrument and
certificate to be executed and delivered pursuant hereto
when duly executed and delivered by Parent and each Seller
party thereto will constitute, legal, valid and binding
obligations of Parent and each such Seller enforceable
against it in accordance with their terms. The execution
and delivery of this Agreement does not, and of the other
agreements, instruments and certificates to be executed
and delivered pursuant hereto will not, and the
consummation of the transactions contemplated hereby and
thereby and the compliance with the terms hereof and
thereof will not (i) violate any law, judgment, order,
decree, statute, ordinance, rule and regulation applicable
to Parent or any Seller, (ii) conflict with any provision
of Parent's or any Seller's certificate of incorporation
or by-laws, (iii) except as set forth in Schedule 4.01(b),
conflict with any material Contract to which Parent or any
Seller is a party or by which Parent or any Seller or any
of Parent's or Sellers' property is bound or (iv) require
any consent, approval, notice, order or authorization of,
or the registration, declaration or filing with, any
Governmental Entity or any other Person (including any
stockholder, bondholder or other creditor of Parent or any
Seller), other than (A) the filing of a premerger
notification report by Parent and Sellers under the HSR
Act, (B) such filings and consents as may be required
under Property Transfer Laws, (C) such premerger filings
and notifications as may be required pursuant to the laws
of Belgium, Germany and France and (D) as otherwise set
forth on Schedule 4.01(b).
<PAGE>
28
(c) Purchased Entities. Except as disclosed in
Schedule 4.01(c), neither Parent nor any Seller owns any
stock or has any other equity interest in, or controls,
directly or indirectly, any corporation, association,
partnership, joint venture or other entity engaged directly
or indirectly in the Business (other than the Purchased
Entities, the Sellers and the Excluded Joint Ventures). None
of Parent, any Seller, any of their respective Affiliates or
any Purchased Entity (other than the Joint Ventures) is a
party to any joint venture, partnership, cooperation or
other similar agreement or arrangement relating to the
Business except as disclosed in Schedule 4.01(c). Each
Purchased Entity is a corporation duly organized, validly
existing and, to the extent applicable, in good standing
under the laws of the jurisdiction of its organization, as
shown in Schedule 4.01(c). Each Purchased Entity has the
corporate power and authority to own, lease and operate its
assets and conduct the Business, and each Purchased Entity
(other than the Joint Ventures) is duly qualified or
licensed to do business in each of the jurisdictions listed
opposite such Purchased Entity's name in Schedule 4.01(c),
which are all the jurisdictions in which the nature of the
activities conducted or the character of the assets owned,
used or held for use by such Purchased Entity require such
qualification or licensing and the failure to be so
qualified or licensed would adversely affect in any material
respect the continuing conduct of the Business by such
Purchased Entity as heretofore conducted, the value of the
Acquired Assets or the amount of the Assumed Liabilities.
The authorized capital stock of each Purchased Entity and
the Shares are set forth in Schedule 4.01(c). The Shares are
duly authorized, validly issued, fully paid and, to the
extent applicable, nonassessable, were not issued in
violation of any preemptive or other right of any Person to
acquire securities of any Purchased Entity and, except as
disclosed in Schedule 4.01(c), includes in the aggregate all
the capital stock of the Purchased Entities. Except as
disclosed in Schedule 4.01(c), there is no outstanding
option, convertible security, preemptive right, warrant,
call or agreement (other than this Agreement) relating to
any of the Shares or which may require the issuance of
shares or other securities of any of the Purchased Entities.
TransferCo is a newly formed Delaware corporation that,
other than the transfer of assets to TransferCo in
connection with the transactions contemplated hereby, has
not, prior to the date hereof, conducted any operations,
acquired any assets or incurred any liabilities. Except as
disclosed in Schedule 4.01(c), Sellers have, and will
<PAGE>
29
continue to have, to and including the Closing Date, good,
marketable (subject only to limitations on transfer under
applicable securities laws) and indefeasible title to all
the Shares and the absolute right to sell, assign, transfer
and deliver such Shares to the Designated Purchasers
pursuant to this Agreement, free and clear of all claims,
security interests, Liens, pledges, charges, escrows,
options, proxies, rights of first offer, rights of first
refusal, preemptive rights, mortgages, hypothecations, prior
assignments, title retention agreements, indentures,
security agreements or any other encumbrances of any kind
("Adverse Claims"). Upon transfer of such Shares to the
Designated Purchasers at the Closing, the Designated
Purchasers will have good, marketable (subject only to
limitations on subsequent transfer under applicable
securities laws and, in the case of the Shares of any Joint
Venture, under the joint venture agreement or governing
document of such Joint Venture) and indefeasible title to
and ownership of the Shares, free and clear of all Adverse
Claims.
(d) Financial Statements. (i) Attached hereto
as Schedule 4.01(d)-1 are (A) the audited combined balance
sheets of the Business at June 30, 1995 (the "June 30, 1995
Balance Sheet"), (B) the audited combined statements of
income of the Business for the fiscal year ended June 30,
1995, (C) the audited combined statements of stockholder's
equity of the Business at June 30, 1995, (D) the audited
combined statements of cash flows of the Business for the
fiscal year ended June 30, 1995, (E) the unaudited combined
balance sheets of the Business at September 30, 1995,
(F) the unaudited combined statements of income of the
Business for the three-month period ended September 30,
1995, (G) for the months ended October 31, 1995,
November 30, 1995, and December 31, 1995, the unaudited
combined balance sheets of the Business and the unaudited
combined statements of income of the Business (such
financial statements, together with the Closing Date Balance
Sheet and any other financial statements delivered to
Purchaser pursuant to Section 5.09(a), being herein referred
to collectively as the "Financial Statements") and (H) the
audit opinion of Arthur Andersen LLP in connection with the
financial statements set forth above in clauses (A) through
(D) of this Section 4.01(d). The Financial Statements
fairly present or, in the case of Closing Date Balance Sheet
and any other financial statements delivered to Purchaser
pursuant to Section 5.09(a), will fairly present the
financial condition of the Business as of the date thereof,
or the period then ended, as the case may be. The financial
<PAGE>
30
statements set forth above in clauses (A) through (D) and
the Closing Date Balance Sheet were or, in the case of
Closing Date Balance Sheet, will be prepared in accordance
with GAAP as interpreted and applied historically by
Parent and Sellers using such methodologies, including
such exceptions to GAAP, as are described in Schedule
4.01(d)-2 (the "Accounting Principles"). The financial
statements set forth above in clauses (E), (F) and (G)
were, and any other financial statements delivered to
Purchaser pursuant to Section 5.09(a) will be, prepared in
a manner consistent in all respects with the Accounting
Principles (subject to, in the case of interim reports,
normally recurring accruals).
(ii) All of the liabilities reflected on the
June 30, 1995 Balance Sheet and the Closing Date Balance
Sheet are or, in the case of Closing Date Balance Sheet,
will be related to the Business and arose or, in the case
of Closing Date Balance Sheet, will arise only out of or
were incurred or, in the case of Closing Date Balance
Sheet, will be incurred only in connection with the
conduct of the Business.
(e) No Undisclosed Liabilities. There are no
Assumed Liabilities or other liabilities of the Business
of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of
circumstances which could reasonably be expected to result
in any such liability, other than:
(i) liabilities as and to the extent fully
reflected or reserved for on the June 30, 1995
Balance Sheet;
(ii) liabilities disclosed on Schedule 4.01(e);
(iii) liabilities for the payment or performance
of obligations required by the terms of Acquired
Contracts;
(iv) Excluded Liabilities; and
(v) other liabilities incurred since the date of
the June 30, 1995 Balance Sheet arising in the
ordinary course of business (except any incurred
since such date not in compliance with Section
4.01(p)).
(f) Compliance with Applicable Laws. Except as
set forth in Schedule 4.01(f), Parent, each Seller and each
<PAGE>
31
of the Purchased Entities is in compliance in all material
respects with all material laws, regulations, rules and
orders of all Governmental Entities applicable to it which
relate to the Business. Except as set forth in Schedule
4.01(f), none of Parent, Sellers or the Purchased Entities
(other than the Joint Ventures) has received any written
notice that any investigation or review by any
Governmental Entity with respect to the Business is
pending or that any such investigation or review is
contemplated. This paragraph (f) does not relate to
Environmental Laws to which Section 4.01(w) is exclusively
applicable.
(g) Litigation; Decrees. Except as set forth in
Schedule 4.01(g), there are no claims, actions, suits,
proceedings or investigations pending or, to the knowledge
of Parent or any Seller, threatened before any
Governmental Entity or arbitrator against Parent, any
Seller or any of the Purchased Entities that individually
or in the aggregate would reasonably be expected to
adversely affect the condition (financial or otherwise) or
operations of the Business, the value of the Acquired
Assets or the amount of the Assumed Liabilities, or which
seek to restrain, enjoin or otherwise prevent the
consummation of the transactions contemplated by this
Agreement. Parent and Sellers have made available to
Purchaser copies of all court papers and other documents
in their (or their counsel's) possession with respect to
the matters referred to in Schedule 4.01(g). Except as set
forth in Schedule 4.01(g), there is no outstanding order,
writ, judgment, stipulation, injunction, decree,
determination, award or other order of any Governmental
Entity or arbitrator against Parent, any Seller or any of
the Purchased Entities that adversely affects the
condition (financial or otherwise) or operations of the
Business, the value of the Acquired Assets or the amount
of the Assumed Liabilities.
(h) Acquired Assets. (i) The Acquired Assets
constitute, and on the Closing Date will constitute, all of
the assets and property of the Business, except for the
Excluded Assets (including any assets that may be
repurchased by Sellers pursuant to Sections 5.11(c) or (d)),
the assets of the Excluded Joint Ventures and as set forth
in Schedule 4.01(h)(i). Neither Parent, any Seller nor any
of their respective Affiliates owns or controls any assets,
properties or other rights, other than the Acquired Assets,
that are used or held for use in or are necessary to the
Business, except for the Excluded Assets, the assets of the
Excluded Joint Ventures and as set forth in Schedule
4.01(h)(i). There are no facilities, services, assets,
<PAGE>
32
Intellectual Property or Know-how used or held for use in
the Business that are shared with any other businesses or
operations of Parent, Sellers or their respective
Affiliates, except as set forth in Schedule 4.01(h)(i).
(ii) Except as set forth in Schedule 4.01(h)(ii),
Sellers have good, valid, marketable and indefeasible title
to all Acquired Assets comprised of real and personal
tangible property and, upon consummation of the transactions
contemplated in this Agreement, the Designated Purchasers
will have acquired good, valid, marketable and indefeasible
title to such Acquired Assets, and all of Sellers' right,
title and interest in Acquired Assets comprised of
intangible property, in each case, free and clear of all
Liens, except Permitted Liens and Permitted Encumbrances.
(iii) Schedule 4.01(h)(iii) lists all Equipment
with a book value of $100,000 or more, which any Seller
owns, leases or subleases, and any Liens thereon, specifying
in the case of leases or subleases the name of the lessor or
sublessor, the lease term and basic annual rent.
(iv) Except as set forth in Schedule 4.01(h)(iv),
the Equipment has been reasonably maintained consistent with
practices generally followed in the industry in the
jurisdiction of its location and is substantially suitable
for its present use.
(v) No Acquired Asset is subject to any Lien,
except:
(A) Liens set forth in Schedule 4.01(h)(v);
(B) Liens for Taxes not yet due or being contested
in good faith (and for which adequate accruals or
reserves have been established on the June 30, 1995
Balance Sheet and the Closing Date Balance Sheet, as of
their respective dates);
(C) Liens afforded by law, such as mechanics',
workmen's, materialmen's, landlords', carriers' or
other like Liens, in each case arising in the ordinary
course of business, which secure payment of obligations
which are not past due or which are being diligently
contested in good faith by appropriate proceedings; or
(D) Liens which (I) do not materially detract from
the value of the Acquired Assets as now used, (II) do
not materially interfere with any present use of the
<PAGE>
33
Acquired Assets and (III) have arisen only in the
ordinary course of the Business (Liens referenced in
clauses (A), (B), (C) and (D) are collectively referred
to as the "Permitted Liens").
(i) Real Property. Schedule 4.01(i) contains a
list, by deed reference or otherwise, of all Real Property,
other than Real Property owned, leased, used or held for use
by the Joint Ventures. Except as set forth on Schedule
4.01(i), Sellers and the Purchased Entities (other than the
Joint Ventures), as the case may be, have good and
marketable title in fee simple to the Real Property listed
on Schedule 4.01(i) as being owned by them, in each case
free and clear of all Liens (including Liens for Taxes,
other than Taxes not yet due and payable or Taxes being
properly contested in good faith), mortgages, security
interests, charges, claims, leases, survey exceptions,
options, rights of first refusal or first offer, easements,
restrictions, rights-of-way or other encumbrances of any
nature whatsoever, except for the permitted encumbrances
described in Schedule 4.01(i) ("Permitted Encumbrances").
Each Joint Venture has good and marketable title in fee
simple to any Real Property reflected as being owned by it
on the financial statements of such Joint Venture, free and
clear of all Liens, other than Liens disclosed in the
financial statements of such Joint Venture and Liens that do
not materially detract from the value of such Real Property,
as reflected on the financial statements of such Joint
Venture. The uses for which the buildings, facilities and
other improvements located on the Real Property (the
"Improvements") are zoned do not materially restrict, or in
any material manner impair, the use of the Improvements for
purposes of the Business, and none of Parent, Sellers or the
Purchased Entities has received any written notice from any
Governmental Entity that the construction of the
Improvements does not comply in all material respects with
all applicable building and zoning codes, deed restrictions,
ordinances and rules. Sellers and the Purchased Entities
(other than the Joint Ventures), as the case may be, are the
lessees of each of the leasehold estates listed in Schedule
4.01(i) as being leased by them, and Sellers and the
Purchased Entities, except as set forth in Schedule 4.01(i),
are in possession of each of the premises purported to be
leased by them. Except as set forth in Schedule 4.01(i),
none of Parent, Sellers or the Purchased Entities (other
than the Joint Ventures) has received any written notice
from any landlord or Governmental Entity of any claim
(including any Lien for Taxes, other than Taxes not yet due
and payable or Taxes being properly contested in
<PAGE>
34
good faith) which is adverse to the rights of any such
Seller or Purchased Entity in any leasehold estate. None of
Parent, Sellers or the Purchased Entities (other than the
Joint Ventures) has received any written notice from any
party to any lease that such lease is in default under the
terms thereof. The leases set forth in Schedule 4.01(i) are
the only leases of real property to which Sellers or any of
their Affiliates are parties pertaining to the Business
which are material to the Business. Except as disclosed in
Schedule 4.01(i), there is no pending or, to the knowledge
of Parent or any Seller, threatened condemnation,
expropriation, eminent domain or similar proceeding with
respect to the Real Property or the Improvements. True,
complete and correct copies of the deeds, title insurance
policies, surveys (in their possession), mortgages,
agreements, leases and other documents granting or relating
to Sellers' or the Purchased Entities' (other than the Joint
Ventures) ownership or leasing of the Real Property and the
Improvements have been delivered or made available to
Purchaser.
(j) Intellectual Property and Know-how. (i)
Schedule 4.01(j) sets forth a list of all Acquired
Intellectual Property. Except as set forth in Schedule
4.01(j), the Acquired Intellectual Property has been duly
registered in, filed in or issued by the United States
Copyright Office or the United States Patent and Trademark
Office, the appropriate offices in the various states of the
United States and the appropriate offices of such other
jurisdictions indicated in Schedule 4.01(j).
(ii) Except as set forth in Schedule 4.01(j),
Sellers or the Purchased Entities are the sole and exclusive
owners of all of the Acquired Intellectual Property and have
received no written notice from any other Person pertaining
to or challenging the right of Sellers or the Purchased
Entities to use any of the Acquired Intellectual Property,
Acquired Know-how or any rights thereunder. Except as set
forth in Schedule 4.01(j), Sellers and the Purchased
Entities have not granted any licenses or similar rights in
and have no obligation to grant licenses or similar rights
in any of the Acquired Intellectual Property or in the
Acquired Know-how to any other Person. Except as set forth
in Schedule 4.01(j), Sellers and the Purchased Entities have
not filed any claim with any Governmental Entity of a
violation or infringement by others of their rights in the
Acquired Intellectual Property or in the Acquired Know-how.
Except as set forth in Schedule 4.01(j), there are no
interferences, oppositions, reexaminations or other
<PAGE>
35
contested proceedings, either pending or, to the knowledge
of Parent or any Seller, threatened in any Federal, state,
local or foreign court or before any other Governmental
Entity or otherwise, relating to any Acquired Intellectual
Property.
(k) Insurance Coverage. Schedule 4.01(k) sets
forth a list of all insurance policies and fidelity bonds
(other than any policies and bonds held by the Joint
Ventures) relating to the Acquired Assets, the business and
operations of the Business and its employees. Parent and
Sellers have previously provided to Purchaser copies of all
such policies and bonds. There is no claim by Parent, any
Seller or any of their respective Affiliates pending under
any of such policies or bonds as to which coverage
pertaining to the Business has been questioned, denied or
disputed by the underwriters of such policies or bonds or in
respect of which such underwriters have reserved their
rights. All premiums payable under all such policies and
bonds have been timely paid and Parent, Sellers and their
respective Affiliates have otherwise complied fully with the
terms and conditions of all such policies and bonds. Such
policies of insurance and bonds (or other policies and bonds
providing substantially similar insurance coverage) have
been in effect since January 1, 1990 and remain in full
force and effect. Except as set forth in Schedule 4.01(k),
Parent, Sellers and their respective Affiliates do not
self-insure and have not self-insured any material risks
with respect to the Acquired Assets.
(l) Contracts. (i) None of Parent, Sellers, the
Purchased Entities (other than the Joint Ventures) or their
respective Affiliates is a party to or bound by any of the
following types of Contracts relating to the Business:
(A) any Contract for the employment of any officer
or with any labor union, except as set forth in
Schedule 4.01(l)(i)(A);
(B) any Contract which will not be discharged at
or prior to the Closing relating to the borrowing or
lending of money or the guarantee of any obligations
for borrowed money or otherwise, excluding endorsements
made for purposes of collection in the ordinary course
of business, except as set forth in Schedule
4.01(l)(i)(B);
(C) any Contract granting any right of first
offer, right of first refusal or similar preferential
<PAGE>
36
right to purchase in respect of any of the Acquired
Assets, except as set forth in Schedule 4.01(l)(i)(C);
(D) any Contract for the purchase of materials,
supplies, goods, services, equipment or other assets
providing for aggregate payments by Sellers or the
Purchased Entities (other than the Joint Ventures) in
excess of $50,000 or more, except as set forth in
Schedule 4.01(l)(i)(D);
(E) any sales, distribution or other similar
Contract providing for the sale of materials, supplies,
goods, services, equipment or other Acquired Assets
that provides for aggregate payments to Sellers or the
Purchased Entities (other than the Joint Ventures) of
$50,000 or more, except as set forth in Schedule
4.01(l)(i)(E);
(F) any license, franchise or similar agreement,
other than any oral license, franchise or similar
agreement that imposes monetary obligations not in
excess of $10,000 and will be fully performed (or may
be terminated or canceled without penalty and without
further obligation) within 18 months from the date
hereof, and except as set forth in Schedule
4.01(l)(i)(F);
(G) any agreement that explicitly limits the
freedom of Sellers or the Purchased Entities (other
than the Joint Ventures) to compete in any line of
business or with any Person or in any area or to own,
operate, sell, transfer, pledge or otherwise dispose of
or encumber any Acquired Asset or which would so limit
the freedom of any Designated Purchaser after the
Closing Date, except as set forth in Schedule
4.01(l)(i)(G);
(H) any agreement (other than any agreement all
the parties of which, following the Closing, will
consist of Purchased Entities and/or entities
controlled by Purchaser) with or for the benefit of any
Affiliate of Sellers, except as set forth in Schedule
4.01(l)(i)(H);
(I) any consignment agreement or arrangement
relating to the sale of Inventory, other than any oral
consignment agreement or arrangement relating to the
sale of Inventory that imposes monetary obligations not
in excess of $10,000 and will be fully performed (or
<PAGE>
37
may be terminated or canceled without penalty and
without further obligation) within 18 months from the
date hereof, and except as set forth in Schedule
4.01(l)(i)(I);
(J) any Contract that imposes monetary obligations
in excess of $10,000 and that may not be fully
performed (or terminated or canceled without penalty
and without further obligation) within 18 months from
the date hereof, except as set forth in Schedule
4.01(l)(i)(J);
(K) any requirements or output Contracts or other
Contracts providing for purchases from or sales to any
Person(s) on an exclusive basis, except as set forth in
Schedule 4.01(l)(i)(K); or
(L) any other Contract not made in the ordinary
course of business which is material to the Business,
except as set forth in Schedule 4.01(l)(i)(L).
(ii) Except as set forth in Schedule 4.01(l)(ii),
all Acquired Contracts that impose monetary obligations in
excess of $50,000 are in full force and effect and Sellers
and the Purchased Entities have performed all material
obligations required to be performed by them to date under
such Acquired Contracts and Sellers and the Purchased
Entities are not (with or without the lapse of time or the
giving of notice, or both) in breach or default in any
material respect thereunder and, to the knowledge of Parent
or any Seller, no other party to any of such Acquired
Contracts is (with or without the lapse of time or the
giving of notice, or both) in breach or default in any
material respect thereunder. None of Parent, Sellers or any
of their respective Affiliates has received any written
notice that any party to any Acquired Contract (other than
purchase orders canceled in the ordinary course of business
and not in the aggregate material to the Business) intends
to cancel or terminate such Acquired Contract.
(iii) Each distribution agreement, joint venture
agreement, license agreement, manufacturer's representation
agreement, consulting agreement and employment agreement
that is an Acquired Contract and each other material
Acquired Contract, other than the Acquired Contracts set
forth in Schedule 4.01(l)(iii), are freely assignable by
Sellers or the Purchased Entities (other than the Joint
Ventures) to the Designated Purchasers.
<PAGE>
38
(m) Oral Contracts. Schedule 4.01(m) sets forth a
summary of the respective material terms of, and course of
dealing under, each oral Contract (other than oral Contracts
of the Joint Ventures) that (i) imposes monetary obligations
(on a per Contract basis) in excess of $10,000 or may not be
fully performed (or terminated or canceled without penalty
or further obligation) within 18 months from the date hereof
and (ii) is related to the Business.
(n) Affiliate Arrangements. Schedule 4.01(n) sets
forth all arrangements, Contracts and understandings, and
all transactions (other than arrangements, Contracts,
understandings and transactions all the parties to which,
following the Closing, will consist of Purchased Entities
and/or entities controlled by Purchaser) occurring since
July 1, 1994, between Parent, Sellers, the Purchased
Entities and any of their respective Affiliates relating to
the Business.
(o) Permits. Schedule 4.01(o) sets forth a list of
each material Permit (other than Permits held by the Joint
Ventures), together with the name of the Governmental Entity
issuing such Permit. Except as set forth on Schedule
4.01(o), such Permits are valid and in full force and effect
and, assuming the related Required Consents have been
obtained prior to the Closing Date, are transferable by
Sellers and the Purchased Entities (other than the Joint
Ventures), and none of such Permits will, assuming the
related Required Consents have been obtained prior to the
Closing Date, be terminated or impaired or become terminable
as a result of the transactions contemplated by this
Agreement. Upon consummation of such transactions, the
Designated Purchasers will, assuming the related Required
Consents have been obtained prior to the Closing Date, have
all of Sellers' right, title and interest in the Permits.
(p) Absence of Certain Changes. Since June 30,
1995, the Business has been conducted in the ordinary course
of business consistent with past practice, and there has not
been:
(i) any event, occurrence, development or state of
circumstances (other than the effect of a downturn in
general economic conditions in any economic market in
which any Seller or Purchased Entity operates the
Business) which has had or, to the knowledge of Parent
or any Seller, could reasonably be expected to have a
material adverse effect on the assets, business,
<PAGE>
39
results of operations or condition (financial or
otherwise) of the Business;
(ii) any material damage, destruction or other
casualty loss (whether or not covered by insurance)
affecting the Business, any material Acquired Asset or
the Acquired Assets taken as a whole;
(iii) except as set forth in Schedule 4.01(p), any
labor dispute (other than routine individual
grievances), proceeding or, to the knowledge of Parent
or any Seller, activity by a labor union or
representative thereof to organize any employees of the
Business, which employees were not subject to a
collective bargaining agreement at June 30, 1995, or
any lockouts, strikes, slowdowns, work stoppages or, to
the knowledge of Parent or any Seller, threats thereof
by or with respect to such employees; or
(iv) except as set forth in Schedule 4.01(p), any
action taken by Parent, any Seller or any Purchased
Entity (other than the Joint Ventures) that, if taken
after the date of the this Agreement, would constitute
a breach of the covenants in Section 5.01 (other than
paragraphs (ii), (iii), (ix), (x) and (xiv) thereof).
(q) Inventories. (i) The inventories set forth in
the June 30, 1995 Balance Sheet were properly stated therein
at the lesser of cost or fair market value determined in
accordance with GAAP consistently maintained and applied by
Sellers. Since June 30, 1995, the inventories related to the
Business have been maintained in the ordinary course of
business. All of the inventory recorded on the June 30, 1995
Balance Sheet (net of reserves reflected or shown thereon)
consists of, and all Inventory on the Closing Date Balance
Sheet (net of reserves reflected or shown thereon) will
consist of, items of a quality useable or saleable in the
normal course of the Business consistent with past practices
and are and will be in quantities sufficient for the normal
operation of the Business in accordance with past practice.
Inventory shall not be considered "useable and saleable" if
such Inventory has been held in the Business for more than
36 months (determined for purposes hereof on a first
in-first out ("FIFO") basis).
(ii) With respect to the Business, since June 30,
1995, Parent, Sellers and the Purchased Entities have not
engaged in any trade loading practices or any other
<PAGE>
40
promotional sales or discount activity with any customers or
distributors with the intent of accelerating to pre-Closing
periods sales to the trade or otherwise that would otherwise
be expected to occur in post-Closing periods or any other
promotional sales or discount activity outside the ordinary
course of business consistent with past practice.
(iii) Since June 30, 1995, Parent, Sellers and the
Purchased Entities have not produced Inventory in excess of
amounts that would be expected to be produced by the
Business in post-Closing periods or otherwise in excess of
amounts of Inventory produced by the Business in the
ordinary course of business consistent with past practice.
(r) Accounts Receivable. All Accounts Receivable
of Parent and Sellers (and any Purchased Entity whose
Accounts Receivable are included in any Financial
Statements) relating to the Business, whether reflected on
the June 30, 1995 Balance Sheet or subsequently created,
have arisen, and all such Accounts Receivable that arise
prior to the Closing Date will arise, from bona fide
transactions in the ordinary course of business. All such
Accounts Receivable (including Accounts Receivable from
Purchased Entities) are or will be good and collectible
within one hundred twenty (120) days in North America and
one hundred fifty (150) days outside of North America
following the Closing Date at the aggregate recorded amounts
thereof, net of any applicable reserves for doubtful
accounts reflected on the Closing Date Balance Sheet.
(s) Products. There is no design defect with
respect to any of the Products (excluding any Products that
have been discontinued and are no longer held as Inventory
by any Seller or Purchased Entity), and each such Product
sold prior to Closing contains adequate warnings, presented
in a reasonably prominent manner, in accordance with
applicable laws, rules and regulations and current industry
practice with respect to contents and use of such Product.
(t) Taxes. (i) Parent, Sellers and their
respective Affiliates have timely filed, after giving effect
to any applicable extensions, all Tax Returns required to be
filed with respect to the Acquired Assets or the income or
activities of the Business. All Taxes attributable to the
Acquired Assets or the income or activities of the Business
have been paid, except for Taxes that are not yet due and
payable and have been properly accrued as current
liabilities or are being properly contested in good faith.
No taxing authority is asserting any deficiency, and no
<PAGE>
41
Liens for Taxes exist, with respect the Acquired Assets or
the income or activities of the Business. No Acquired Asset
(including the Shares of any Purchased Entity) (A) that is a
United States real property interest within the meaning of
Section 897 of the Code is being sold by a Seller that is
not a United States person for purposes of such Section or
(B) is subject to a safe harbor lease under former Section
168(f)(8) of the Internal Revenue Code of 1954. Except as
set forth in Schedule 4.01(t), no agreements (including Tax
sharing agreements) relating to Taxes exist between any
Purchased Entity and any other Person. Any agreements of
Parent, Sellers or any of their Affiliates (other than the
Purchased Entities), on the one hand, and any Purchased
Entity, on the other hand, relating to Taxes shall terminate
on or prior to the Closing Date.
(ii) The amount of the reserves for real property
Taxes, personal property Taxes and payroll Taxes reflected
on the Closing Date Balance Sheet will be adequate to pay
all Assumed Tax Liabilities.
(u) Employees. Schedule 4.01(u)-1 sets forth a
complete and correct list of the names of all employees as
of the last payroll date prior to the date of this Agreement
employed by the Sellers and the Purchased Entities (other
than the Joint Ventures) in connection with the Business,
including the present rate of each such employee's cash
compensation, present title and years of service. None of
such employees, and no employee of Parent, Sellers or their
respective Affiliates, with respect to the Business, is
eligible for payments that are "parachute payments" under
Section 280G of the Code. Except as set forth in Schedule
4.01(u)-2, no persons employed by Parent, Sellers, the
Purchased Entities (other than the Joint Ventures) or any of
their respective Affiliates, other than the employees listed
in Schedule 4.01(u)-1, are performing any functions in
connection with the Business. With respect to Transferred
Employees, except as set forth in Schedule 4.01(u)-3, there
are no agreements for the payment of any bonus, severance,
pension, share of profits, retirement allowance, shares,
insurance, hospitalization or any other employee benefit in
addition to salary or like remuneration that is payable upon
consummation of or in connection with the transactions
contemplated by this Agreement, and consummation of the
transactions contemplated by this Agreement will not
accelerate the time of payment or vesting, or increase the
amount, of compensation due any Transferred Employee.
<PAGE>
42
(v) Employee Benefit Plans.
(i) Schedule 4.01(v)(i) sets forth a list of each Benefit
Plan covering any present or former officers, employees or
directors of the Business. For purposes of this
Section 4.01(v), the term "Benefit Plan" means each
"employee pension benefit plan" (as defined in Section 3(2)
of ERISA, hereinafter a "Pension Plan"), "employee welfare
benefit plan" (as defined in Section 3(1) of ERISA,
hereinafter a "Welfare Plan") and each other plan,
arrangement or policy (written or oral) relating to stock
options, stock purchases, compensation (other than normal
payroll practices), deferred compensation, severance, fringe
benefits or other employee benefits, in each case maintained
or contributed to, or required to be maintained or
contributed to, by Parent, Sellers or their respective
Affiliates or any other Person that together with Parent or
Sellers, is treated as a single employer under
Section 414(b), (c), (m) or (o) of the Code (each, together
with Parent and Sellers, a "Commonly Controlled Entity") for
the benefit of any present or former officers, employees or
directors employed in the United States. Except as
reflected in the Financial Statements or as set forth in
Schedule 4.01(v)(i), neither Parent nor any Seller nor any
Commonly Controlled Entity has any obligations with respect
to retiree health benefits under any Benefit Plan. Parent
and Sellers have delivered (or, in the case of clause (4)
below, made available) to Purchaser true, complete and
correct copies of (1) each Benefit Plan with respect to the
Business (or, in the case of any unwritten Benefit Plans,
descriptions thereof), (2) the most recent annual report on
Form 5500 filed with the Internal Revenue Service with
resect to each Benefit Plan with respect to the Business (if
any such report was required by applicable law), (3) the
most recent summary plan description (or similar document)
for each Benefit Plan with respect to the Business for which
such a summary plan description is required by applicable
law or was otherwise provided to plan participants or
beneficiaries and (4) each trust agreement and insurance or
annuity contract relating to any Benefit Plan with respect
to the Business. Except as set forth in
Schedule 4.01(v)(i), to the knowledge of Parent or any
Seller, each such Form 5500 and each such summary plan
description (or similar document) was and is as of the date
hereof true, complete and correct in all material respects.
(ii) Each Benefit Plan has been administered in
all material respects in accordance with its terms, except
as otherwise required by applicable law or to maintain its
tax qualified status. Parent, Sellers and their Commonly
<PAGE>
43
Controlled Entities and all the Benefit Plans are in
compliance in all material respects with the applicable
provisions of ERISA, the Code, and all other applicable
laws. Except as set forth in Schedule 4.01(v)(ii), to the
knowledge of Parent or any Seller, there are no
investigations by any Governmental Entity, termination
proceedings or other claims (except claims for benefits
payable in the normal operation of the Benefit Plans), suits
or proceedings against or involving any Benefit Plan or
asserting any rights to or claims for benefits under any
Benefit Plan that could reasonably be expected to give rise
to any liability in or with respect to the Business, and, to
the knowledge of Parent or any Seller, there are no facts
that could reasonably be expected to give rise to any
liability in or with respect to the Business in the event of
any such investigation, claim, suit or proceeding.
(iii) (1) All contributions to, and payments from,
the Benefit Plans that may have been required to be made by
Parent, Sellers and their Commonly Controlled Entities in
accordance with the terms of the Benefit Plans, any
applicable collective bargaining agreement and, when
applicable, Section 302 of ERISA or Section 412 of the Code,
have been timely made (except to the extent any failure to
contribute or pay would not result in a liability in or with
respect to the Business), (2) there has been no application
for or waiver of the minimum funding standards imposed by
Section 412 of the Code with respect to any Benefit Plan
that is a Pension Plan, (3) no Pension Plan had an
"accumulated funding deficiency" within the meaning of
Section 412(a) of the Code as of the end of the most
recently completed plan year and (4) there are no
outstanding liabilities or claims with respect to any
Pension Plan previously maintained and terminated by Parent,
Sellers or any Commonly Controlled Entity, in each case
which could reasonably be expected to result in a liability
in or with respect to the Business.
(iv) To the knowledge of Parent or any Seller, no
event has occurred and no circumstances exist that would
reasonably be expected to adversely affect the tax
qualification of any Benefit Plan that is intended to be a
tax qualified plan under Sections 401(a) and 501(a) of the
Code and result in a liability in or with respect to the
Business.
(v) Schedule 4.01(v)(v) discloses whether:
(1) any "prohibited transaction" (as defined in Section 4975
of the Code or Section 406 of ERISA) has occurred that
<PAGE>
44
involves the assets of any Benefit Plan which could
reasonably be expected to result in a liability in or
with respect to the Business; (2) any prohibited
transaction has occurred that could subject Parent,
Sellers or the Commonly Controlled Entities, any of
their employees, or, to the knowledge of Parent or any
Seller, a trustee, administrator or other fiduciary of
any trust created under any Benefit Plan to the tax or
sanctions on prohibited transactions imposed by Section
4975 of the Code or Title I of ERISA which could
reasonably be expected to result in a liability in or
with respect to the Business; (3) any Pension Plan has
been terminated or has been the subject of a
"reportable event" (as defined in Section 4043 of ERISA
and the regulations thereunder other than any
reportable event occurring by reason of the
transactions contemplated by this Agreement or a
reportable event for which notice to the Pension
Benefit Guaranty Corporation has been waived) which
could reasonably be expected to result in a liability
in or with respect to the Business; and (4) Parent,
Sellers or any Commonly Controlled Entity or any
trustee, administrator or other fiduciary of any
Benefit Plan or any agent of any of the foregoing has
engaged in any transaction or acted in a manner that
could, or has failed to act so as to, subject Parent,
Sellers or any Commonly Controlled Entity to a risk of
incurring liability for breach of fiduciary duty under
ERISA or any other applicable law and which could
reasonably be expected to result in a liability in or
with respect to the Business.
(vi) Neither Parent or Sellers nor any Commonly
Controlled Entity has incurred any liability to a Pension
Plan (other than for contributions not yet due) or to the
Pension Benefit Guaranty Corporation (other than for the
payment of premiums not yet due) that would result in a
liability in or with respect to the Business, which
liability has not been fully paid as of the date hereof.
(vii) Neither Parent or Sellers nor any Commonly
Controlled Entity has (a) engaged in a transaction
described in Section 4069 of ERISA that could reasonably
be expected to result in a liability in or with respect to
the Business at any time after the date hereof or (b)
acted or failed to act in a manner that could reasonably
be expected to result in fines, penalties, taxes or
related charges imposed in or with respect to the Business
under Section 502(c), (i) or (1) of ERISA, Section 4071 of
ERISA or Chapter 43 of the Code.
<PAGE>
45
(viii) Neither Parent or Sellers nor any
Commonly Controlled Entity have withdrawn from, or failed
to make any required contributions to, any "multiemployer
plan" (as defined in Section 4001(a)(3) of ERISA) within
the preceding five years.
(ix) The list of Welfare Plans with respect to
the Business in Schedule 4.01(v)(ix) discloses whether
each Welfare Plan is (i) unfunded, (ii) funded through a
"welfare benefit fund", as such term is defined in Section
419(e) of the Code, or other funding mechanism or (iii)
insured. Each such Welfare Plan may be amended or
terminated without liability (other than liability for the
payment of claims incurred and benefits accrued or
payable) to Parent, Seller or any Commonly Controlled
Entity at any time after the Closing Date. Neither Parent
or Sellers nor any Commonly Controlled Entity has failed
to comply in all material respects with the applicable
requirements of Section 4980B(f) of the Code with respect
to each Benefit Plan that is a group health plan, as such
term is defined in Section 5000(b)(1) of the Code, which
failure could reasonably be expected to result in a
liability in or with respect to the Business.
(x) Except as set forth in Schedule 4.01(v)(x),
the transactions contemplated by this Agreement will not,
either alone or in conjunction with the termination (or
constructive termination) of the employment of any
employee of the Business, entitle any such employee to any
additional benefits or any acceleration of the time of
payment or vesting of any benefits under any Benefit Plan.
(xi) Sellers shall make available to Purchaser
all Form W-2s of the executive officers of the Business
for calendar years 1990 through 1994.
(xii) All benefit plans maintained outside of
the United States (the "Foreign Plans") are in material
compliance with all applicable laws and regulations
(including all laws and regulations relating to non-
discrimination) and have been operated in all material
respects with the plans' respective terms. There are no
material unfunded liabilities under or in respect of the
Foreign Plans, and all contributions or other payments
required to be made to or in respect of the Foreign Plans
prior to the Closing Date have been made or will be made
prior to the Closing Date. The representations and
warranties of Sellers under the Foreign Purchase Agreements
<PAGE>
46
in respect of employees and Foreign Plans are true and
correct.
(w) Environmental Matters. Except as set forth
in Schedule 4.01(w):
(A) the Sellers, with respect to the Business,
and the Purchased Entities have secured, and are in
material compliance with, all material Environmental
Permits, all of which Environmental Permits are
freely transferable under the circumstances of the
transactions contemplated hereby, and the Sellers,
with respect to the Business, and the Purchased
Entities are in material compliance with all
Environmental Laws;
(B) none of Parent, Sellers or their respective
Affiliates has received any communication from any
Governmental Entity that alleges that any of the
Sellers, with respect to the Business, or any of the
Purchased Entities is not in compliance in any
material respect with any Environmental Laws or
Environmental Permits, except with respect to matters
that have been fully and finally resolved;
(C) the Sellers, with respect to the Business,
and the Purchased Entities have not entered into or
agreed to any currently effective court decree or
order, and the Sellers, with respect to the Business,
and the Purchased Entities are not subject to any
currently effective judgment, decree or order
relating to compliance with any Environmental Law or
to investigation or cleanup of a Hazardous Substance
under any Environmental Law;
(D) no Lien has been attached, asserted, or to
the best knowledge of Parent or any Seller,
threatened to or against the Acquired Assets or any
real or personal property of any of the Purchased
Entities pursuant to any Environmental Law;
(E) there has been no treatment, storage,
disposal or release of any Hazardous Substance on the
Real Property or any property owned, operated or
leased by the Purchased Entities that could
reasonably be expected to lead to material liability;
(F) with respect to the Business, neither
Parent, Sellers, the Purchased Entities nor any of
their respective Affiliates has received a CERCLA 104(e)
<PAGE>
47
information request or has been named a potentially
responsible party for any National Priorities List
site under CERCLA or any site under analogous state
law or received an analogous notice or request from
any non- U.S. Governmental Entity, which notice,
request or any resulting inquiry or litigation has
not been fully and finally resolved without
possibility of reopening;
(G) there are no aboveground tanks in excess of
400 gallons capacity or underground storage tanks on,
under or about the Real Property or any property
owned, operated or leased by the Purchased Entities
and any former aboveground or underground tanks on
such property have been removed in accordance with
all Environmental Laws and no residual contamination,
if any, remains at such sites in excess of applicable
standards;
(H) there are no polychlorinated biphenyls
("PCBs") leaking from any article, container or
equipment on, under or about the Real Property or any
property owned, operated or leased by the Purchased
Entities, there are no such articles, containers or
equipment containing PCBs with a capacity in excess
of two pounds and there is no asbestos containing
material in a condition or location currently
constituting a violation of any Environmental Law at,
on, under or within such properties; and
(I) Parent and Sellers have provided to
Purchaser true and complete copies, or access to, of
all written environmental assessment materials and
reports in their possession that have been prepared
by or on behalf of Parent and Sellers with respect to
the Business, the Acquired Assets and the Purchased
Entities during the past five years.
(x) Financial Projections. Parent and Sellers
are not aware of any fact or information that would lead
them to believe that the financial projections for fiscal
1996 as to operating profits attached hereto as Schedule
4.01(x) relating to the Business are incorrect or
misleading in any material adverse respect.
(y) Contingency Reserves. The Contingency
Reserves shown on the June 30, 1995 Balance Sheet are
consistent with past practice, and the Contingent Reserve
Amount will be adequate to pay all Specified Contingent
Liabilities.
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48
(z) Brokers. There is no investment banker,
broker, finder, financial advisor or other intermediary
which has been retained by or is authorized to act on
behalf of Parent or Sellers who might be entitled to any
fee or commission from Parent or Sellers in connection
with the transactions contemplated by this Agreement.
(aa) No Illegal Payments. None of Parent,
Sellers, the Purchased Entities or, to the best knowledge
of Parent or any Seller, any Affiliate, officer, agent or
employee thereof, directly or indirectly, has, during the
past five (5) years, on behalf of or with respect to
Parent, any Seller, any Purchased Entity or any Affiliate
thereof, (i) made, in connection with the Business, any
unlawful domestic or foreign political contributions, (ii)
made, in connection with the Business, any payment or
provided services which were not legal to make or provide
or which Parent, any Seller, any Purchased Entity or any
Affiliate thereof or any such officer, employee or other
Person should have known were not legal for the payee or
the recipient of such services to receive, (iii) received,
in connection with the Business, any payment or any
services which were not legal for the payer or the
provider of such services to make or provide, (iv) had any
transactions or payments related to the Business which are
not recorded in its accounting books and records or, if
occurring during the periods covered thereby, not
disclosed in the Financial Statements or (v) had any
off-book bank or cash accounts or "slush funds" related to
the Business.
SECTION 4.02. Representations and Warranties of
Purchaser. Purchaser and each Designated Purchaser,
jointly and severally, hereby represent and warrant to
Parent and Sellers as follows:
(a) Organization, Standing and Power. Purchaser
and each Designated Purchaser is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and
has the requisite corporate power and authority to carry
on its business as now being conducted.
(b) Authority; Non-Contravention. Purchaser and
each other Designated Purchaser has all corporate power and
authority to execute and deliver this Agreement and the
other agreements, instruments (including the Promissory
Notes) and certificates to be executed and delivered
pursuant hereto and to consummate the transactions
contemplated hereby and thereby. The execution and delivery
<PAGE>
49
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all
necessary corporate action on the part of Purchaser and each
Designated Purchaser and, to the extent applicable, the
stockholders of Purchaser and each Designated Purchaser, and
the execution and delivery of the other agreements,
instruments (including the Promissory Notes) and
certificates to be executed and delivered pursuant hereto
and the consummation of the transactions contemplated
thereby have been authorized by all necessary corporate
action on the part of Purchaser and each Designated
Purchaser and, to the extent applicable, the stockholders of
Purchaser and each Designated Purchaser. This Agreement has
been duly executed and delivered by Purchaser and each
Designated Purchaser party hereto and constitutes, and each
other agreement, instrument (including each Promissory Note)
and certificate to be executed and delivered pursuant hereto
when duly executed and delivered by Purchaser and each
Designated Purchaser party thereto will constitute, legal,
valid and binding obligations of Purchaser and each such
Designated Purchaser, enforceable against it in accordance
with their terms. The execution and delivery of this
Agreement does not, and of the other agreements, instruments
(including the Promissory Notes) and certificates to be
executed and delivered pursuant hereto will not, and the
consummation of the transactions contemplated hereby and
thereby and the compliance with the terms hereof and thereof
will not (i) violate any law, judgment, order, decree,
statute, ordinance, rule and regulation applicable to
Purchaser or any Designated Purchaser, (ii) conflict with
any provision of Purchaser's or any Designated Purchaser's
certificate of incorporation or by-laws, (iii) except as set
forth on Schedule 4.02(b), conflict with any material
Contract to which Purchaser or any Designated Purchaser is a
party or by which Purchaser or any Designated Purchaser or
any of Purchaser's or the Designated Purchasers' property is
bound or (iv) require any consent, approval, notice, order
or authorization of, or the registration, declaration or
filing with, any Governmental Entity or any other Person
(including any stockholder, bondholder or other creditor of
Purchaser or any Designated Purchaser), other than the
filing of a premerger notification report by the Purchaser
under the HSR Act, such premerger filings or notifications
as may be required pursuant to the laws of Belgium, Germany
and France and as otherwise set forth on Schedule 4.02(b).
(c) Brokers. There is no investment banker,
broker, finder, financial advisor or other intermediary
(other than J.P. Morgan Securities Inc., the fees and
<PAGE>
50
expenses of which will be paid by Purchaser) which has been
retained by or is authorized to act on behalf of Purchaser
or any Designated Purchaser who might be entitled to any fee
or commission from Purchaser or any Designated Purchaser in
connection with the transactions contemplated by this
Agreement.
(d) Purchaser has sufficient internally generated
funds and/or committed funding to provide Purchaser (or any
other Designated Purchaser) with sufficient funds to pay the
Purchase Price, including the payment in full in cash of the
Promissory Notes.
ARTICLE V
Covenants
SECTION 5.01. Conduct of Business. During the
period from the date hereof to the Closing, except as
expressly provided in this Agreement or as Purchaser shall
otherwise consent in writing, Parent shall cause each Seller
and each Purchased Entity (other than the Joint Ventures) to
and each Seller and each Purchased Entity (other than the
Joint Ventures) shall conduct the Business in the ordinary
course of business consistent with past practices, including
with respect to capital expenditures relating to the
Business, and use its commercially reasonable efforts to
preserve intact the business, organization and reputation of
the Business, keep available the services of its employees
and preserve the Business' relationships with suppliers,
customers and others having business dealings with the
Business. Notwithstanding anything in the foregoing to the
contrary, during the period from the date hereof to the
Closing, except (a) as otherwise expressly contemplated by
this Agreement or (b) as Purchaser shall otherwise consent
in writing, Parent shall and shall cause each Seller and
each Purchased Entity (other than the Joint Ventures) to and
each Seller and each Purchased Entity (other than the Joint
Ventures) shall:
(i) not sell, lease, license or otherwise dispose
of any Acquired Assets except (A) pursuant to existing
Contracts and commitments or (B) in the ordinary course
of business consistent with past practice;
(ii) not solicit or encourage, or take any action
to facilitate, any inquiries or the making of any
proposal to acquire all or any material portion of the
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51
Acquired Assets, other than the transactions
contemplated by this Agreement (a "Competing Bid"), or
agree to endorse any Competing Bid;
(iii) not take any action that would or could
reasonably be expected to result in any of the
representations and warranties of Parent, RHI and
Sellers set forth in this Agreement becoming untrue, in
any of the conditions of the Closing set forth in
Article VIII not being satisfied, in any material
Acquired Asset becoming less valuable or in the
Acquired Assets taken as a whole becoming materially
less valuable;
(iv) not incur, assume or guarantee any
Indebtedness with respect to the Business other than
Indebtedness that will not be Assumed Liabilities or
that will be paid in full prior to Closing as provided
in Section 5.15, except as set forth in Schedule 5.15;
(v) except as set forth in Schedule 5.01(v), not
create or incur any Lien on any Acquired Asset other
than in the ordinary course of business consistent with
past practice and other than any Liens (A) securing any
Indebtedness that will not be Assumed Liabilities and
(B) that will be released on or prior to the Closing;
(vi) not enter into any transaction, commitment or
Contract relating to the Business (including the
acquisition or disposition of any assets), or
relinquish any Contract or right, in either case,
material to the Business taken as a whole, other than
transactions, commitments and Contracts in the ordinary
course of business consistent with past practice and
those contemplated by this Agreement;
(vii) not enter into, with respect to the
Business, any Contract that imposes monetary
obligations in excess of $10,000 and that may not be
fully performed (or terminated or canceled without
penalty and without further obligation) within 18
months from the date hereof, or any requirements or
output Contracts or other Contracts providing for
purchases from or sales to any Person(s) on an
exclusive basis;
(viii) not make any change in any method of
accounting or accounting practice with respect to the
Business, except for any such change after the date
<PAGE>
52
hereof required by reason of a concurrent change in
GAAP;
(ix) other than as required by the existing terms
of any existing Contract or as set forth in Schedule
5.01(ix), not (A) enter into any employment, deferred
compensation, severance, retirement or other similar
agreement with any employee of the Business (or any
amendment to any such existing agreement), (B) grant
any severance or termination pay to any such employee,
(C) make any change in compensation or other benefits
(other than changes in respect of non- management
employees made in the ordinary course of business
consistent with past practice) payable to any such
employee pursuant to any severance or retirement plans
or policies or (D) transfer any employee of the
Business out of or transfer any employee into, the
Business (other than the hiring and firing of non-
management employees in the ordinary course of business
consistent with past practice);
(x) not approve any change in the capital
expenditure policy of the Business as reflected in the
budget for the Business for the fiscal year ending June
30, 1996 or approve any capital expenditure not
budgeted for the Business for the fiscal year ending
June 30, 1996 in excess of $100,000, or enter into any
Contract or other commitment having a payment
obligation in the aggregate in excess of $100,000, with
respect to the Business;
(xi) not engage in, with respect to the Business,
any trade loading practices or any other promotional
sales or discount activity with any customers or
distributors with the intent of accelerating to pre-
Closing periods sales to the trade or otherwise that
would otherwise be expected to occur in post-Closing
periods or any other promotional sales or discount
activity outside the ordinary course of business
consistent with past practice;
(xii) not produce Inventory in excess of, or fail
to produce Inventory in amounts comparable to, amounts
that would be expected to be produced by the Business
in post-Closing periods or otherwise in amounts in
excess of or below those amounts of Inventory produced
by the Business in the ordinary course of business
consistent with past practice;
<PAGE>
53
(xiii) make any Tax election, change its method of
Tax accounting or settle any claim relating to Taxes,
in each case with respect to the Business; and
(xiv) comply in all material respects with all
requirements of all applicable Property Transfer Laws.
If at any time during such period Parent or
Sellers become aware of any material adverse change in the
assets, condition (financial or otherwise) or operation of
the Business, or of any Competing Bid, Parent or Sellers
shall promptly notify Purchaser with respect thereto.
SECTION 5.02. Access to Information. Parent and
Sellers shall afford to Purchaser and its accountants,
counsel, employees and other representatives access upon
request during normal business hours during the period prior
to the Closing to all the properties, books, contracts,
commitments, Tax Returns and records of the Business
(whether intercompany or intracompany), and, during such
period, shall furnish promptly to Purchaser any information
concerning the Business (whether intercompany or
intracompany) as Purchaser may reasonably request. Purchaser
acknowledges that any information being provided to it or
its representatives by Parent or Sellers pursuant to this
Agreement is subject to the terms of Section 5.12 regarding
confidentiality. In addition, following the Closing, Parent
and Sellers, on the one hand, and the Designated Purchasers,
on the other hand, shall afford the other and its
representatives access upon request during normal business
hours to all properties, books, contracts, commitments, Tax
Returns and records of or relating to the Business in order
to allow such other party to comply with its obligations
under, or to remedy breaches of representations and
warranties set forth in, this Agreement (including, in the
case of Parent and Sellers, Section 5.19).
SECTION 5.03. Legal Requirements. (a) Purchaser,
each Designated Purchaser, Parent and each Seller shall take
all reasonable actions necessary to comply promptly with all
legal requirements which may be imposed on it or any of its
Affiliates with respect to the Closing (including the prompt
filing of the premerger notification report under the HSR
Act or under any comparable foreign laws or regulations and
the furnishing of all information required thereunder) and
will promptly cooperate with and furnish information to each
other and to other parties in connection with any such legal
requirements.
<PAGE>
54
(b) Purchaser and each Designated Purchaser hereby
waive the time period for the environmental disclosure
required under the Illinois Responsible Property Transfer
Act ("IRPTA"). Purchaser, each Designated Purchaser, Parent
and each Seller are aware of the purpose and intent of the
IRPTA disclosure document.
SECTION 5.04. Noncompetition. (a) Parent and RHI
each agree that (i) for a period of five years (subject to
reduction in each jurisdiction pursuant to Section 5.04(b)
below) from the Closing Date, it shall not, and shall not
permit any of its Affiliates (so long as they are
Affiliates) to, engage, either directly or indirectly, as a
principal or for its own account or solely or jointly with
others, or as stockholders in any corporation or joint stock
association, in any business that competes with the Business
as it exists on the Closing Date or (ii) for a period of
five years from the Closing Date, employ or solicit, or
receive or accept the performance of services by, any
Transferred Employee; provided that the foregoing shall not
restrict or prevent (A) any purchase of a noncontrolling
interest (not to exceed 5% of the economic or voting
interest therein) in a publicly traded entity or (B) the
employment of any Transferred Employee whose employment is
actually terminated by Purchaser or any Designated
Purchaser.
(b) It is the intention of the parties that if any
of the restrictions or covenants contained herein is held to
cover a geographic area or to be for a length of time which
is not permitted by the applicable law of any jurisdiction,
or in any way construed to be too broad or to any extent
invalid, such provision shall not be construed to be null,
void and of no effect, but to the extent such provision
would be valid or enforceable under the applicable law of
such jurisdiction, a court of competent jurisdiction shall
construe and interpret or reform this Section 5.04 to
provide for a covenant in such jurisdiction having the
maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as
shall be valid and enforceable under such applicable law.
Parent and Sellers acknowledge that Purchaser and the other
Designated Purchasers would be irreparably harmed by any
breach by Parent, any Seller or any of their respective
Affiliates of this Section 5.04 and that there would be no
adequate remedy at law or in damages to compensate Purchaser
and the other Designated Purchasers for any such breach.
<PAGE>
55
(c) As soon as practicable after the Closing,
Parent shall cause Sellers and their Affiliates to take all
such actions as are required to, and to use its commercially
reasonable efforts to cause the Excluded Joint Ventures to,
change the names of such Sellers and their Affiliates or
Excluded Joint Ventures, as the case may be, at such time to
exclude, and to otherwise refrain from or discontinue the
use of, the name "D-M-E" (or any derivative thereof).
Purchaser acknowledges that Parent and Sellers do not
control the Excluded Joint Ventures.
SECTION 5.05. Nonassignable Contracts and Permits;
Required Consents. If any Acquired Contract or Permit (i) is
not assignable without the consent of any party thereto,
(ii) may by its terms be terminated or cancelled upon
assignment or (iii) is not by its terms assignable, Parent
shall and shall cause each Seller to and each Seller shall
use its commercially reasonable efforts to obtain the
consent or approval of any required parties thereto to
effect such assignment. If such consent or approval cannot
be obtained, this Agreement shall not constitute an
agreement to effect such assignment. Except for any consents
to assignment related to those Contracts and Permits listed
in Schedule 5.05 (the "Required Consents"), if Parent and
Sellers are unable to obtain the consent to the assignment
of any Contract or Permit prior to the Closing, the Closing
shall nevertheless take place and, thereafter, Parent shall,
upon request of any Designated Purchaser, use its
commercially reasonable efforts to provide the Designated
Purchasers with the benefits and burdens of any such
Acquired Contracts that would have accrued to and would have
been the obligations of the Designated Purchasers if
following the Closing such consent or approval had been
obtained, and for such purpose but without limitation,
Parent and each Seller, on the one hand, and each Designated
Purchaser, on the other hand, shall execute and deliver to
the other such documents or instruments as the other or the
other's counsel may reasonably request as necessary for such
purpose reasonably promptly after any such request.
SECTION 5.06. Notices of Certain Events. Each
party hereto shall promptly notify the other party hereto
of:
(a) any notice or other communication from any
Person alleging that the consent of such Person is or
may be required in connection with the transactions
contemplated by this Agreement;
<PAGE>
56
(b) any notice or other communication from any
Governmental Entity in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or
proceedings commenced or, to its knowledge, threatened,
relating to the consummation of the transactions
contemplated by this Agreement.
SECTION 5.07. Tax Matters. (a) Purchaser, on one
hand, and Parent, on the other hand, shall equally bear all
Transfer Taxes. Parent, Sellers and Purchaser shall
cooperate in timely making and filing all Tax Returns as may
be required to comply with the provisions of any Transfer
Tax laws. To the extent legally able to do so, Purchaser
shall deliver to Parent and Sellers exemption certificates
satisfactory in form and substance to Parent and Sellers
with respect to Transfer Taxes if such delivery would reduce
the amount of Transfer Taxes that would otherwise be
imposed.
(b) Purchaser and Parent shall jointly make, or
cause to be made, the election under Section 338(h)(10) of
the Code and under every comparable provision of state and
local law with respect to the purchase of the stock of
TransferCo (the "TransferCo Elections"). Purchaser and
Parent shall, and shall cause their respective Affiliates
to, cooperate to take all actions necessary to effect and
preserve timely TransferCo Elections with respect to
TransferCo in accordance with United States Treasury
regulation Section 1.338(h)(10) and any comparable
provisions of state and local law, and to take no position
inconsistent with treating the sale of the shares of
TransferCo as valid elections under Section 338(h)(10) of
the Code and comparable provisions of state and local law.
(c) Purchaser shall pay any Tax resulting from an
election by Purchaser (or any Designated Purchaser) under
Section 338 of the Code with respect to any Purchased
Entity; provided, however, that Sellers shall pay any Tax
resulting from the TransferCo Elections.
(d) Parent shall and shall cause Sellers to and
Sellers shall terminate by the Closing any agreement or
practice relating to Taxes between Parent, Sellers or any of
their Affiliates (other than the Purchased Entities), on the
one hand, and any Purchased Entity, on the other hand.
<PAGE>
57
(e) At the Closing, Parent shall and shall cause
Sellers to and Sellers shall deliver to Purchaser duly
executed certificates satisfactory to Purchaser certifying
that the transactions contemplated hereby are exempt from
withholding under Section 1445 of the Code.
(f) Purchaser and each other Designated Purchaser
shall retain the Books and Records for a period of six years
following the Closing Date and shall not dispose of any
material Books and Records thereafter, except in accordance
with Purchaser's policies governing record retention and
destruction of records and after giving 30 days' notice to
Parent and Sellers. Purchaser or any other Designated
Purchaser shall provide Parent or any Seller with copies of
any Books and Records as Parent or any Seller may reasonably
request, at the cost and expense of Parent or such Seller,
reasonably promptly after any such request. Purchaser and
Parent shall, and shall cause their respective Affiliates
to, cooperate in the preparation of Tax Returns and in the
conduct of audits and examinations, which cooperation shall
include making relevant books and records reasonably
available and providing reasonable access to necessary
personnel.
(g) No later than 10 days prior to the due date
for filing, Purchaser shall provide to Parent copies of Tax
Returns for taxable periods that include but do not end on
the Closing Date to be filed by any Purchased Entities more
than 51% of the voting power of which is owned by Purchaser
immediately after the Closing and shall provide Parent the
opportunity to comment on such Tax Returns.
(h) Purchaser shall cause D-M-E of Canada, Ltd.,
D-M-E France S.A.R.L. and VSI International N.V. not to make
any distribution of property during the period beginning on
the Closing Date and ending June 30, 1996 that would result
in a diminution of the earnings and profits of such entity
for Federal income tax purposes.
(i) Purchaser, Parent and Sellers agree to use the
alternative procedure specified in Section 5 of Revenue
Procedure 84-77, 1984-2 C.B. 753, and Purchaser shall
furnish to employees Internal Revenue Service Forms W-2 that
include the wages paid, and the taxes withheld, in the
calendar year ended December 31, 1996, by any of Sellers and
Purchaser. Notwithstanding the foregoing, Purchaser shall
have no obligation to use such alternative procedure, and
such agreement shall be void ab initio, unless Parent and
Sellers provide, on magnetic media compatible with the data
<PAGE>
58
processing systems of Purchaser, all information necessary
or useful in preparing such Forms and related reporting
information to the Internal Revenue Service.
SECTION 5.08. Insurance. Parent shall and shall
cause Sellers to and Sellers shall, until the Closing,
maintain insurance policies with respect to the Acquired
Assets, the business and operation of the Business and its
employees at presently existing levels, and the proceeds of
any such insurance policy relating to the Business shall,
notwithstanding anything herein to the contrary, be included
as part of the Acquired Assets, except to the extent such
proceeds relate to any Excluded Assets or Excluded
Liabilities. With respect to insurance of Parent and Sellers
covering liability to third parties that is written on an
occurrence basis, to the extent Parent or Sellers receive
payment in respect of any claim relating to a liability that
constitutes or would constitute an Assumed Liability and has
not been discharged prior to Closing, Parent or Sellers will
either apply such amounts to discharge (to the extent of
such amounts) such liability prior to the Closing or will
pay over such amounts to Purchaser at or after Closing, in
either case promptly after receipt thereof by Parent or
Sellers. Parent shall and shall cause Sellers to and Sellers
shall, to the extent permissible under the terms of such
insurance policies and applicable law, cause the Designated
Purchasers to be named beneficiaries in respect of any
claims relating to Assumed Liabilities which had not been
discharged by Parent or Sellers prior to Closing.
SECTION 5.09. Financial Information. (a) So long
as the Closing shall not have occurred prior thereto, within
15 days following the end of any month ending after the date
hereof but prior to the Closing, Parent shall cause to be
prepared, and shall deliver or cause to be delivered to
Purchaser, for such month, unaudited combined balance sheets
of the Business and unaudited combined statements of income
of the Business.
(b) After the Closing, upon reasonable written
notice, each of Purchaser and Parent shall furnish, and
cause their respective accountants, counsel and other
representatives to furnish, to the other party and such
other party's respective accountants, counsel and other
representatives access, during normal business hours, to
such information (including records pertinent to the
Business) and assistance relating to the Business and the
transactions contemplated hereby as is reasonably necessary
<PAGE>
59
for financial reporting and accounting matters and the
preparation and filing of any reports or forms (including
filings with the U.S. Securities and Exchange Commission).
SECTION 5.10. Bulk Transfer Laws. Purchaser hereby
waives, to the extent applicable, compliance by Parent and
Sellers with the provisions of any so-called "bulk transfer
law" or similar law of any jurisdiction in connection with
the sale of the Acquired Assets to the Designated
Purchasers. Parent and Sellers shall indemnify and hold
harmless each Designated Purchaser against any and all
liabilities (other than Assumed Liabilities) that may be
asserted by third parties against such Designated Purchaser
as a result of noncompliance with any such bulk transfer law
or similar law.
SECTION 5.11. Further Assurances; Cooperation
After Closing; Unwind Transactions. (a) Parent and each
Seller shall, at its own cost and expense (unless such costs
and expenses have otherwise been allocated pursuant to this
Agreement), use its commercially reasonable efforts to
facilitate and effect the implementation of the transfer of
the Acquired Assets to the Designated Purchasers and, for
such purpose but without limitation, Parent shall and shall
cause Sellers to and Sellers shall, from and after the
Closing, execute and deliver to the Designated Purchasers
such assignments, deeds, bills of sale, consents and other
instruments as Purchaser or its counsel may reasonably
request as necessary for such purpose reasonably promptly
after any such request. In the event that any uncollected
Accounts Receivable are reassigned to Parent in accordance
with Section 5.17, the Designated Purchasers shall execute
and deliver to Parent such assignments, consents and other
instruments as Parent or its counsel may reasonably request
as necessary to allow Parent to collect such uncollected
Accounts Receivable, reasonably promptly after any such
request.
(b) In the event that at any time after the
Closing Parent or any Seller becomes aware that any Acquired
Assets were not transferred to the Designated Purchasers by
Sellers at the Closing, Parent or Sellers shall promptly
notify Purchaser to that effect and shall reasonably
cooperate with Purchaser to transfer such Acquired Assets to
the Designated Purchasers. In the event that after the
Closing Purchaser becomes aware that any assets that are not
Acquired Assets were transferred to the Designated
Purchasers at the Closing, Purchaser shall promptly notify
Parent to that effect and shall reasonably cooperate with
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Parent and Sellers to transfer such assets to Parent and/or
its designees.
(c) In the event that following the Closing the
Belgian Competition Council shall issue a "prohibition
decision" or similar objection (a "Belgian Objection") to
the acquisition of the Business in Belgium by any Designated
Purchaser, such Designated Purchaser shall, as soon as
practicable, reassign and transfer all the Acquired Assets
located in Belgium to Sellers, and Sellers shall assume all
Assumed Liabilities that were assumed at Closing by the
Designated Purchasers in respect of the Business in Belgium.
Upon issuance of a Belgian Objection, the Designated
Purchasers shall have the right to, and shall, immediately
set-off against payment of the Belgian Note the full amount
of principal of and accrued interest on such Belgian Note,
and thereafter, the Belgian Note shall be cancelled.
(d) In the event that D-M-E Company (India)
Limited, an Indian corporation (the "India Joint Venture"),
shall not have obtained, prior to the first anniversary of
the Closing Date, all consents, permits or authorizations
from Governmental Entities necessary to allow the India
Joint Venture to sell products in India manufactured by the
India Joint Venture in India (the "Required India Permits"),
the Purchaser shall, on such first anniversary (or as soon
as practicable thereafter) cause the Designated Purchaser
holding the equity interest in the India Joint Venture to
reassign and transfer the equity interest held by such
Designated Purchaser to Parent (or any entity designated by
Parent). Upon such reassignment and transfer, Parent shall
pay, or cause to be paid to Purchaser, an amount equal to
the carrying value of the India Joint Venture reflected on
the Closing Date Balance Sheet (the "India Purchase Price");
provided that in the event the Designated Purchaser shall
have set-off any amount against the Unsecured Note in
respect of the India Purchase Price pursuant to Section
11.10(b), Parent shall deduct such set-off amount from the
payment referred to above, and the principal amount of the
Unsecured Note shall be permanently reduced by such set-off
amount. Parent agrees to reimburse the Designated Purchasers
for all reasonable fees and out-of-pocket expenses incurred
by the Designated Purchasers in connection with reassigning
and transferring the India Joint Venture to Parent and in
connection with effecting the set-off of the India Purchase
Price.
SECTION 5.12. Confidentiality. (a) The
Confidentiality Agreement dated November 10, 1995, between
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Purchaser and Parent shall remain in full force and effect
until the Closing, at which time it shall terminate.
(b) For a period of five (5) years from the
Closing Date, Parent shall and shall cause Sellers to and
Sellers shall keep, and use their best efforts to cause
their respective Affiliates, officers, directors, employees
and agents to keep, confidential all information proprietary
to the Business that has been acquired by Parent or any
Seller through its ownership and management of the Business,
including information acquired from Purchaser, provided that
the foregoing restriction shall not apply to information
that (i) is previously known on a non-confidential basis to
Parent or Sellers, (ii) is or hereafter becomes generally
available in the public domain through no fault of Parent or
Sellers, (iii) is lawfully acquired by Parent or Sellers
from a source other than Purchaser or (iv) is required to be
disclosed in compliance with the applicable laws or
regulations of a Governmental Entity having competent
jurisdiction; provided, however, that with respect to clause
(iv) above, Parent and Sellers shall take all reasonable
measures to assure confidential treatment of such disclosed
information. Parent and each Seller agrees that Purchaser
(or any other Designated Purchaser) shall be entitled to
specific performance and injunctive relief as remedies for
any breach of this Section 5.12. Such remedies shall not be
deemed to be the exclusive remedies for a breach of this
Section 5.12 by Parent, any Seller or any of their
respective Affiliates, officers, directors, employees and
agents, but shall be in addition to all other remedies
available at law or equity.
SECTION 5.13. Public Announcements. Prior to the
Closing Date, Purchaser and Parent agree to consult with
each other before any party hereto or any of their
respective Affiliates issues any press release or makes any
public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be
required by applicable law or any listing agreement with any
national securities exchange, will not issue, or permit to
be issued, any such press release or make, or permit to be
made, any such public statement prior to such consultation.
SECTION 5.14. Intercompany Accounts. Parent and
Sellers shall settle or terminate, or cause to be settled or
terminated, prior to the Closing all Indebtedness owed by
Parent, Sellers and their respective Affiliates (other than
Purchased Entities) to the Purchased Entities and all
Indebtedness owed by the Purchased Entities to Parent,
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62
Sellers and their respective Affiliates (other than
Purchased Entities), except as otherwise set forth in
Schedule 5.14.
SECTION 5.15. Purchased Entity Indebtedness. On or
prior to the Closing Date, Parent and Sellers shall cause
each Purchased Entity to settle or otherwise discharge all
of its outstanding Indebtedness, except as otherwise set
forth in Schedule 5.15.
SECTION 5.16. Purchased Entity Cash Balances.
Parent and Sellers shall cause each Purchased Entity, as of
the Closing Date, to hold the minimum cash balance as set
forth with respect to each such Purchased Entity in
Schedule 5.16.
SECTION 5.17. Accounts Receivable. To the extent
any of the Accounts Receivable represented in Section
4.01(r) fail to be collected within one hundred twenty (120)
days in North America and one hundred fifty (150) days
outside of North America following the Closing Date, then,
at the end of such 120-day or 150-day period, as the case
may be, beginning on the Closing Date, (a) Parent shall or
shall cause Sellers to pay to Purchaser amounts due and
uncollected under such Accounts Receivable, net of any
reserves reflected on the Closing Date Balance Sheet
therefor and (b) Purchaser shall assign or cause the other
Designated Purchasers to assign all such uncollected
Accounts Receivable to Parent, as directed by Parent in
writing at least three days following the end of such
120-day or 150-day period. In the event that any Designated
Purchaser shall collect on such Accounts Receivable in the
aggregate an amount in excess of the aggregate amount of
such uncollected receivables reflected on the Closing Date
Balance Sheet, net of reserves, such Designated Purchaser
shall promptly pay such excess amount to Parent. Payments
received from any customer shall be applied to the oldest
outstanding invoice of such customer unless such customer
shall direct that such payment shall be applied to another
invoice as a result of a good faith dispute in respect of
such oldest invoice. The designation on any form of payment
that such payment shall be applied to a specific invoice
shall not, in and of itself, be deemed to be notice of a
good faith dispute of any older unpaid invoice.
SECTION 5.18. Assignment of Promissory Notes and
Letter of Credit. Parent and Sellers shall not (and shall
cause any other Person to whom assignment shall have been
appropriately made pursuant to this Section 5.18 not to)
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63
sell, pledge, assign or otherwise transfer any of the
Promissory Notes (or any portion thereof) or the Letter of
Credit to any other Person, other than to Parent, RHI or any
Person that is a direct or indirect wholly owned subsidiary
of RHI; provided that any assignment to any wholly owned
subsidiary shall cease to be effective with respect to any
such wholly owned subsidiary that ceases to be a direct or
indirect wholly owned subsidiary of RHI. Notwithstanding
anything in this Section 5.18 to the contrary, Parent and
Sellers (or any authorized assignee) may assign the Letter
of Credit to, and may pledge, pursuant to a pledge agreement
containing customary terms, conditions and remedies, the
Promissory Notes to, the lenders (the "Lenders") and their
agents under the Restated and Amended Credit Agreement dated
as of July 27, 1992, as amended, among RHI, Fairchild
Industries, Inc. and VSI Corporation (or any extension,
renewal or replacement, in whole or in part, thereof), and
the Lenders, or such agents, may exercise any remedies
provided by such pledge agreement. The transfer of more than
50% of the voting interest in any entity holding a
Promissory Note shall be deemed to be an assignment of such
Promissory Note and shall be subject to the restrictions of
this Section 5.18.
SECTION 5.19. Charlevoix Facility. With respect to
the facility and real property of Sellers located at 6342
Ferry Avenue, Charlevoix, Michigan 49720 (the "Charlevoix
Facility"), in addition to and in no way diminishing
Sellers' obligations to cooperate after Closing, as set
forth in Section 5.11 hereof, or Sellers' indemnification
obligations as set forth in Sections 10.01 and 10.02 hereof,
Sellers or their designated representatives, agents and
consultants shall conduct and conclude, to the satisfaction
of Purchaser, the following activities (which activities
shall be at Purchaser's expense to the extent assumed
pursuant to Section 2.03(a)(iv), and thereafter at Parent
and Sellers' expense): (i) overseeing the groundwater
monitoring project at the Charlevoix Facility, including any
follow-up sampling of tetrachloroethylene or any other
Hazardous Substance, until groundwater sampling sufficient
to satisfy all requirements of the Michigan Department of
Natural Resources ("MDNR") has been conducted and MDNR has
approved the termination of such groundwater sampling, (ii)
negotiating with MDNR concerning groundwater sampling and
removal of the Charlevoix Facility from the so-called 307
List and (iii) obtaining a no further action letter and any
other closure documentation necessary from MDNR to signify
that the remediation of the site is complete and the
Charlevoix Facility will no longer be considered for
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64
inclusion on the so-called 307 List as the result of any
pre-Closing conditions. In conducting these activities,
Sellers shall consult with Purchaser's representatives,
including, but not limited to, the plant manager of the
Charlevoix Facility and any other personnel whom Purchaser
may designate in its reasonable discretion, and Parent and
Sellers shall not, and shall not permit their
representatives, agents and consultants to, without the
prior written consent (which consent shall not be
unreasonably withheld) of Purchaser, make any filings with,
or transmit any material correspondence to, any Governmental
Entity. To the extent the activities listed above are
performed at the expense of Purchaser, Purchaser shall
reimburse Parent or Sellers for its out-of-pocket expenses
within 30 days following receipt of appropriate
documentation of such expenses.
ARTICLE VI
RESERVED
ARTICLE VII
Post-Closing Covenants Relating to
Employees and Benefit Plans
SECTION 7.01. Offer of Employment; U.S.
Employees. On the Closing Date, the Designated Purchasers
will offer employment to all Active Employees of the
Business. The names of the Active Employees of the Business
are listed on Schedule 7.01. The Designated Purchasers
shall also offer employment on or following the Closing Date
to any Active Employee whose name is inadvertently omitted
by Sellers from the list on Schedule 7.01 once Purchaser is
made aware of such omission. The Active Employees and any
Inactive Employees (as defined herein) that the Designated
Purchasers shall offer, pursuant to the last sentence of
this Section 7.01, employment to shall be referred to,
collectively, as "Transferred Employees". The terms and
conditions of any offer of employment will be determined by
the Designated Purchasers in their sole discretion, but
initially following the Closing Date such offer, with
respect to salary or wages and job responsibilities of non-
bargaining unit employees, will be on substantially
comparable terms and conditions to those in effect
immediately prior to the Closing; provided, however, that
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65
nothing herein shall preclude the Designated Purchasers from
modifying such terms and conditions as it deems appropriate
following the Closing Date. Except as specifically provided
in Section 7.02, any and all liabilities or expenses relating
to or arising out of the employment, or cessation of the
employment, of (i) any Active or Inactive Employee (whether
or not a Transferred Employee) on or prior to close of
business on the Closing Date, (ii) any Inactive Employee from
and after the close of business on the Closing Date until
such individual is offered employment by the Designated
Purchasers and commences employment and (iii) any employee or
former employee employed by the Business who is not an Active
or Inactive Employee, before, on or following the Closing
Date, will, in each case, be the sole responsibility of
Parent and Sellers. "Active Employees" means all active U.S.
nonbargaining unit employees and bargaining unit employees
whose employment is related to the Business, including
employees on temporary leave for purposes of jury or annual
two-week national service/military duty, employees on
vacation or a regularly scheduled day off from work, employees on short-term
disability or a medical leave of absence and the employees
(other than former employees) set forth on Schedule 7.01 and
indicated as being employees who on the Closing Date will be
on an approved nonmedical leave of absence. In the sole
discretion of the Designated Purchasers, the Designated
Purchasers may offer employment to (i) any nonbargaining
unit employees and bargaining unit employees who, as of the
Closing Date, are receiving long-term disability benefits,
if and when they become available to return to active
employment and (ii) to the individuals listed on
Schedule 7.01, which individuals, as of the Closing Date,
are on leave and are receiving worker's compensation
payments (collectively, "Inactive Employees").
SECTION 7.02. Employee Benefits. (a) From and
after the Closing Date, the Designated Purchasers shall
offer such employee benefit plans and arrangements as they
deem appropriate in their sole discretion; provided,
however, that such plans and arrangements shall be no less
favorable in the aggregate than those offered by the
Designated Purchasers to their similarly situated employees.
Neither Purchaser nor any other Designated Purchaser shall
assume as of the Closing Date any liability or obligation
under any of the Benefit Plans except for (i) Parent's and
Sellers' obligations relating to accrued but untaken
vacation, variable holidays, tuition pay, sick pay and
internal commissions with respect to Transferred Employees,
Inactive Employees and former employees, in an amount equal
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to (and no amounts in excess of) the amount of any specific
reserve therefor reflected or shown on the Closing Date
Balance Sheet, (ii) sponsorship of the Group Retirement
Savings Plan sponsored by 450500 Ontario Limited and the DME
of Canada Limited Employees Retirement Plan (as amended
January 1, 1989) and the assets held in trusts or annuity
contracts thereunder, (iii) all obligations to make payment
to Transferred Employees, Inactive Employees and former
employees with respect to claims incurred (or, in the case
of life insurance, premiums due) prior to the Closing Date
that have not been satisfied by Parent or Sellers as of the
Closing Date under the Welfare Plans set forth in Schedule
7.02(a) ("Run-Off Claims") in an amount equal to (and no
amounts in excess of) the amount of any specific reserve
therefor reflected or shown on the Closing Date Balance
Sheet and (iv) sponsorship of the DME Healthcare
Reimbursement Account Plan. Parent and Sellers agree to
cooperate with the Designated Purchasers in determining the
validity of any claims made by Transferred Employees under
the Welfare Plans listed in Schedule 7.02(a). Nothing herein
shall be construed as requiring the Designated Purchasers to
continue the Welfare Plans listed in Schedule 7.02(a) or
similar plans from and after the Closing Date.
(b) The Designated Purchasers shall (i) assume, in
an amount equal to (and no amounts in excess of) the amount
of any specific reserve therefor reflected or shown on the
Closing Date Balance Sheet, all liabilities and obligations
under Sellers' annual bonus profit sharing plan with respect
to the Transferred Employees participating therein, (ii)
continue such annual bonus profit sharing plan through the
end of the current plan year ending June 30, 1996, and (iii)
make payments to such Transferred Employees in accordance
with the terms of such plan as currently in effect on the
date hereof. The Designated Purchasers shall also assume all
liabilities and obligations under Sellers' executive bonus
and mid-management bonus plans accrued as of the Closing
Date with respect to the Transferred Employees, prorated for
the portion of the plan year completed as of the Closing
Date and based upon performance through the Closing Date to
the extent such performance is in excess of the budgeted
targets set for the current year under such plan, and make
payment of such prorated amount to each participant therein
after the amount of the bonus awards under such plan have
been determined following the completion of the audit of the
Closing Date Balance Sheet.
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(c) Parent and Sellers shall fully vest as of the
Closing Date all Transferred Employees in their benefits
accrued under Parent's and Sellers' applicable defined
contribution plans (including, but not limited to, all
401(k) plans) as of the Closing Date and shall pay or
provide such benefits in accordance with the respective
terms of such plans as if such Transferred Employees had
terminated employment as of the Closing Date. Except as
otherwise required by law, Parent and each Seller shall
continue to credit, for vesting purposes, under its
applicable defined benefit pension plans, all service of the
Transferred Employees with the Designated Purchasers or
their Affiliates following the Closing Date as if such
service had been rendered to Parent and Sellers and shall
make distributions under such plans to the Transferred
Employees following their respective dates of termination of
employment with the Designated Purchasers pursuant to the
terms of such plans. The Designated Purchasers shall provide
on a timely basis information as to any such terminated
Transferred Employees reasonably necessary to allow Parent
and Sellers to make the distributions contemplated by this
paragraph.
(d) The Designated Purchasers shall assume, in an
amount equal to (and no amounts in excess of) the amount of
any specific reserve therefor reflected or shown on the
Closing Date Balance Sheet as the accumulated post-
retirement benefit obligations for Transferred Employees who
are fully eligible active participants and other active
participants, all of Sellers' liabilities and obligations
with respect to Transferred Employees for post-retirement
medical and dental benefits under the Benefit Plans set
forth in Schedule 7.02(d). Sellers shall retain all other
liabilities and obligations for post-retirement medical and
dental benefits under the Benefit Plans, including with
respect to retirees and other former employees of the
Business as of the Closing Date.
SECTION 7.03. Foreign Employees and Plans.
Subject to applicable law and the provisions in respect of
employees and plans set forth in the Foreign Purchase
Agreements, on the Closing Date, the Designated Purchasers
will offer employment on substantially comparable terms
and conditions to those in effect immediately prior to the
Closing (provided, however, that nothing herein shall be
construed as limiting the Designated Purchasers' right to
modify such terms and conditions following the Closing) to
all employees listed on Schedule 7.03 whose employment is
related to the Business and who are employed outside of the
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United States, and shall assume the Foreign Plans set
forth in Schedule 7.03. The Designated Purchasers shall
also offer employment on or following the Closing Date to
any employee whose name is inadvertently omitted by
Sellers from the list on Schedule 7.03 once Purchaser is
made aware of such omission.
ARTICLE VIII
Conditions Precedent
SECTION 8.01. Conditions to Each Party's Obliga-
tion. The obligation of Purchaser, Parent and Sellers to
consummate the transactions contemplated to occur at the
Closing shall be subject to the satisfaction or waiver
thereby prior to the Closing of each of the following
conditions:
(a) HSR and Other Approvals. Any applicable
waiting period under the HSR Act relating to the
transactions contemplated hereby shall have expired or
been terminated, and all other material authorizations,
consents, orders or approvals of, or regulations,
declarations or filings with, or expirations of applicable
waiting periods imposed by any Governmental Entity
necessary for the consummation of the transactions
contemplated hereby (including all required premerger
notifications and clearances in Germany and France) shall
have been obtained or filed or shall have occurred.
(b) No Injunctions or Restraints. No court or
Governmental Entity of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, judgment, decree, temporary
restraining order, preliminary or permanent injunction or
other legal restraint or prohibition which is in effect on
the Closing Date and prohibits the consummation of the
Closing.
SECTION 8.02. Conditions to the Obligation of
Purchaser. The obligation of Purchaser to consummate the
transactions contemplated to occur at the Closing shall be
subject to the satisfaction or waiver thereby prior to the
Closing of each of the following conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Parent and Sellers set forth
in this Agreement shall be true and correct in all material
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respects as of the date of this Agreement and as
of the time of the Closing as though made at and as of
such time, except in the case of representations and
warranties made as of a specific date, which shall be true
and correct in all material respects as of such date; and
Purchaser shall have received a certificate to such effect
from Parent, RHI and each Seller signed in each case by an
authorized officer thereof;
(b) Performance of Obligations of Parent and
Sellers. Parent and Sellers shall have performed or
complied in all material respects with all obligations and
covenants required to be performed or complied with by
Parent and Sellers under this Agreement prior to the Clos-
ing, and Purchaser shall have received a certificate to
such effect from Parent, RHI and each Seller signed in
each case by an authorized officer thereof;
(c) Bills of Sale. Parent or Sellers shall have
delivered to the Designated Purchasers general bills of
sale, endorsements, consents, assignments, deeds and other
good and sufficient instruments of transfer as Purchaser
deems reasonably necessary and appropriate to vest in the
Designated Purchasers all of Sellers' right, title and
interest in, to and under the Acquired Assets;
(d) No Material Adverse Change. Since June 30,
1995, the Business shall not have suffered an effect,
event, change, fact or condition (other than the effect of
a downturn in general economic conditions in any economic
market in which any Seller or Purchased Entity operates
the Business) that is, or is reasonably likely to be,
materially adverse to the value of the Business taken as a
whole or materially adverse to the business, assets,
condition (financial or otherwise) or results of
operations of the Business taken as a whole;
(e) Required Consents. Notwithstanding any other
provision of this Agreement, Parent or Sellers shall have
arranged or obtained all the Required Consents, and Parent
and Sellers shall have obtained all necessary consents
required under ISRA;
(f) No Injunction; No Litigation. No provision
of any applicable law or regulation and no judgment,
injunction, order or decree shall restrain, prohibit or
otherwise interfere with the effective operation or
enjoyment by the Designated Purchasers of all or any
material portion of the Acquired Assets. There shall not be
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pending or threatened by any Governmental Entity any
suit, action or proceeding (or by any other Person any
suit, action or proceeding which has a reasonable
likelihood of success), (i) challenging or seeking to
restrain or prohibit the purchase and sale of any material
portion of the Acquired Assets or any of the other
transactions contemplated by this Agreement or seeking to
obtain from any Designated Purchaser in connection with
the purchase and sale of the Acquired Assets any damages
that are material in relation to the Business, (ii)
seeking to prohibit or limit the ownership or operation by
the Designated Purchasers of any material portion of the
Business, or to compel the Designated Purchasers to
dispose of or hold separate any material portion of the
Business or Acquired Assets or (iii) seeking to prohibit
the Designated Purchasers from effectively controlling in
any material respect any portion of the Business; and
(g) Other Documents. Parent or Sellers shall
have furnished to Purchaser such other documents relating
to Parent's and each Seller's corporate existence and
authority (including copies of resolutions of the
respective board of directors of Parent and each Seller),
absence of Liens (other than Permitted Liens and Permitted
Encumbrances) and such other matters as Purchaser or its
counsel may reasonably request at least two business days
prior to the Closing Date.
SECTION 8.03. Conditions to the Obligation of
Parent and Sellers. The obligation of Parent and Sellers
to consummate the transactions contemplated to occur at
the Closing shall be subject to the satisfaction or waiver
thereby prior to the Closing of each of the following
conditions:
(a) Representations and Warranties. The repre-
sentations and warranties of Purchaser and the other
Designated Purchasers set forth in this Agreement shall be
true and correct in all material respects as of the date
of this Agreement and as of the time of the Closing as
though made at and as of such time, except in the case of
representations and warranties made as of a specific date,
which shall be true and correct in all material respects
as of such date; and Parent shall have received a
certificate to such effect from Purchaser and each other
Designated Purchaser signed, in each case, by an
authorized officer thereof;
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71
(b) Performance of Obligations of Purchaser.
Purchaser and each other Designated Purchaser shall have
performed or complied in all material respects with all
obligations and covenants required to be performed or
complied with by Purchaser and each other Designated
Purchasers under this Agreement prior to the Closing, and
Parent shall have received a certificate to such effect
from Purchaser and each other Designated Purchaser signed,
in each case, by an authorized officer thereof;
(c) No Injunction; No Litigation. There shall
not be pending or threatened by any Governmental Entity
any suit, action or proceeding (or by any other Person any
suit, action or proceeding which has a reasonable
likelihood of success), challenging or seeking to restrain
or prohibit the purchase and sale of any material portion
of the Acquired Assets or any of the other transactions
contemplated by this Agreement; and
(d) Other Documents. Purchaser and each other
Designated Purchaser shall have furnished to Parent such
other documents relating to Purchaser's and each other
Designated Purchaser's corporate existence and authority
(including copies of resolutions of the respective board
of directors of Purchaser and each other Designated
Purchaser) and such other matters as Parent or its counsel
may reasonably request at least two business days prior to
the Closing Date.
ARTICLE IX
Termination, Amendment and Waiver
SECTION 9.01. Termination. (a) Notwithstanding
anything to the contrary in this Agreement, this Agreement
may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing: (i) by mutual
written consent of Parent and Purchaser or (ii) by Parent
or Purchaser, if the Closing does not occur on or prior to
January 31, 1996; provided, however, that the party
seeking termination pursuant to this clause (ii) is not in
material breach of any of its representations, warranties,
covenants or agreements contained in this Agreement.
(b) In the event of termination by Parent or
Purchaser pursuant to this Section 9.01, written notice
thereof shall forthwith be given to the other party and the
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72
transactions contemplated by this Agreement shall be
terminated, without further action by any party.
(c) If this Agreement is terminated and the
transactions contemplated hereby are abandoned as
described in this Section 9.01, this Agreement shall
become null and void and of no further force and effect,
except for the provisions of (i) this Section 9.01, (ii)
Section 5.13 relating to public announcements and (iii)
Section 11.08 regarding certain expenses. Nothing in this
Section 9.01 shall be deemed to release any party from any
liability for any breach by such party of the terms and
provisions of this Agreement.
SECTION 9.02. Amendments and Waivers. This
Agreement may not be amended except by an instrument in
writing signed by or on behalf of each of the parties
hereto. Purchaser may waive compliance by Parent or any
Seller, and Parent may waive compliance by Purchaser or
any other Designated Purchaser, by an instrument in
writing signed by or on behalf of the party waiving
compliance, with any term or provision of this Agreement
that the other party was or is obligated to comply with or
perform.
ARTICLE X
Survival; Indemnification
SECTION 10.01. Survival. The representations and
warranties of Parent, Sellers, Purchaser and the other
Designated Purchasers contained in this Agreement shall
survive the Closing for the period set forth in this
Section 10.01; provided that Sellers and the Designated
Purchasers (other than Purchaser) shall not be liable for
any breaches of such representations and warranties or any
other breaches of this Agreement. All of the
representations and warranties of Parent and Sellers on the
one hand, and Purchaser and the other Designated Purchasers
on the other, contained in this Agreement and all claims and
causes of action with respect thereto shall terminate upon
expiration of 20 months after the Closing Date, except that
the representations and warranties contained in
Sections 4.01(a), 4.01(b), 4.01(c), 4.01(h)(i) and (ii),
4.01(t), 4.01(w), 4.01(y), 4.02(a) and 4.02(b) shall expire
20 business days following the expiration of the applicable
statute of limitations. In the event notice of any claim
for indemnification under Section 10.02 or Section 10.03
hereof shall have been given within the applicable survival
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period, the representations and warranties that are the
subject of such indemnification claim shall survive solely
as they relate to such claim so given within the
applicable survival period until such time as such claim
is finally resolved.
SECTION 10.02. Indemnification by Parent and
RHI. (a) Parent and RHI shall, jointly and severally,
indemnify and defend Purchaser, the other Designated
Purchasers and their respective Affiliates and their
respective officers, directors and employees, (the
"Purchaser Indemnified Parties") against, and agrees to
hold them harmless from, any loss, liability, claim,
charge, action, suit, proceeding, assessed interest,
penalty, damage, Tax or expense (including reasonable
legal fees and expenses) (collectively, "Losses") imposed
on, sustained, incurred or suffered by or asserted against
any of the Purchaser Indemnified Parties for or on account
of or arising from or in connection with or otherwise with
respect to (i) the failure of Parent or any Seller to pay
or otherwise discharge when due and payable the Excluded
Liabilities (or the payment or discharge by a Purchaser
Indemnified Party of any liability or obligation of any
Purchased Entity that, had such Purchased Entity been a
Seller hereunder, would have been an Excluded Liability),
(ii) subject to the limitation set forth in Section
10.02(b) below, any breach or failure of a representation
or warranty by Parent or any Seller contained in this
Agreement, (iii) any breach of any covenant of Parent or
any Seller contained in this Agreement or in any other
agreements, instruments or certificates to be executed and
delivered pursuant hereto and (iv) any claims made by
retirees or other former employees of the Business for
post-retirement medical and dental benefits under the
Benefit Plans set forth in Schedule 7.02(d).
(b) Parent and RHI shall not be liable to the
Purchaser Indemnified Parties for any Losses with respect
to those matters contained in Section 10.02(a)(ii) except
to the extent the Losses therefrom exceed $500,000 and
then only for all such Losses in excess thereof up to an
aggregate amount equal to the Purchase Price; provided that
this Section 10.02(b) shall not apply to Losses related to
breach or failure of the representations contained in
Sections 4.01(a), 4.01(b), 4.01(c), 4.01(h)(i) and (ii),
4.01(t)(ii) and 4.01(y). Without otherwise limiting the
applicability of the foregoing sentence, to the extent any
breach or failure of a representation or warranty by Parent
or any Seller contained in this Agreement arises out of a
Specified Contingent Liability, such Specified Contingent
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74
Liability shall be deemed not to be a Loss to the extent
the Contingency Reserve is applicable to such Specified
Contingent Liability pursuant to Section 2.03(a)(iv). In
addition, in determining the obligations of Parent and RHI
under this Article X for any Losses sustained by any Joint
Venture, (i) any Loss shall be limited to the diminution
in book value of such Joint Venture occurring as a result
of such Loss as reflected on the balance sheet of the
entity then holding the equity interest in such Joint
Venture and (ii) the aggregate of all such Losses
sustained by such Joint Venture shall be limited to the
book value attributable to such Joint Venture on the
Closing Date Balance Sheet; provided that this sentence
shall in no way limit the ability of any Purchaser
Indemnified Party to recover for any Losses sustained
directly by a Purchaser Indemnified Party.
(c) The rights and obligations of any Designated
Purchaser under this Section 10.02 shall be freely
assignable by such Designated Purchaser (or other entity
to whom assignment shall have been appropriately made
pursuant to this Section 10.02(c)) to any majority owned
subsidiary of any Designated Purchaser that is a successor
in interest of any assets or real property of the
Business; provided that such assignment shall cease to be
effective with respect to any majority owned subsidiary
that ceases to be a majority owned subsidiary of any
Designated Purchaser.
SECTION 10.03. Indemnification by Purchaser.
Purchaser hereby agrees to indemnify and defend Parent,
Sellers and their respective Affiliates and their respective
officers, directors and employees (the "Seller Indemnified
Parties") against, and agrees to hold them harmless from,
any Losses imposed on, sustained, incurred or suffered by or
asserted against any of the Seller Indemnified Parties for
or on account of or arising from or in connection with or
otherwise with respect to (i) any Assumed Liability,
(ii) any breach or failure of a representation or warranty
by Purchaser contained in this Agreement, (iii) any breach
of any covenant of Purchaser contained in this Agreement or
in any other agreements, instruments or certificates to be
executed and delivered pursuant hereto, (iv) any claims by
Transferred Employees for additional benefits arising solely
from any changes made in the post-retirement medical and
dental benefits provided after the Closing by any Designated
Purchaser from the post-retirement medical and dental
benefits offered as of the date hereof under the Benefit
Plans set forth in Schedule 7.02(d) or (v) any liabilities
<PAGE>
75
of or related to the Business arising out of events
occurring after the Closing.
SECTION 10.04. Losses Net of Insurance, etc. The
amount of any Loss (including any Tax) for which
indemnification is provided under this Article X shall be
net of any amounts recovered or recoverable by the Person
indemnified pursuant to this Article X (the "Indemnified
Party") under insurance policies with respect to such
Losses and shall be (i) increased to take account of any
net Tax cost incurred by the Indemnified Party arising
from the receipt or accrual of indemnity payments
hereunder (grossed up for such increase) and (ii) reduced
to take account of any net Tax benefit realized by the
Indemnified Party arising from the incurrence or payment
of any such Loss. Any indemnification payment hereunder
shall initially be made without regard to this paragraph
and shall be increased or reduced to reflect any such net
Tax cost (including gross-up) or net Tax benefit only
after the Indemnified Party has actually realized such
cost or benefit. For purposes of this Agreement, an
Indemnified Party shall be deemed to have "actually
realized" a net Tax cost or net Tax benefit to the extent
that, and at such time as, the amount of Taxes payable by
such Indemnified Party is increased above or reduced
below, as the case may be, the amount of Taxes that such
Indemnified Party would be required to pay but for the
receipt of the indemnity payment or the incurrence or
payment of such loss, liability, claim, damage or expense.
SECTION 10.05. Termination of Indemnification.
The obligations to indemnify and hold harmless any party
pursuant to Sections 10.02 and 10.03 shall not terminate.
SECTION 10.06. Indemnification Procedures Related
to Third Parties. (a) In order for an Indemnified Party to
be entitled to any indemnification provided for under this
Agreement in respect of, arising out of or involving a claim
or demand made by any Person against the Indemnified Party
(a "Third Party Claim"), such Indemnified Party must notify
the indemnifying party (the "Indemnifying Party") in
writing, and in reasonable detail, of the Third Party Claim
within 30 business days after receipt by such Indemnified
Party of written notice of the Third Party Claim; provided,
however, that failure to give such notification shall not
affect the indemnification provided hereunder except to the
extent the Indemnifying Party shall have been actually
prejudiced as a result of such failure. Thereafter, the
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76
Indemnified Party shall deliver to the Indemnifying Party,
within five business days after the Indemnified Party's
receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnified Party
relating to the Third Party Claim.
(b) If a Third Party Claim is made against an
Indemnified Party, the Indemnifying Party shall be entitled
to participate in the defense thereof and, if it so chooses
and acknowledges in writing its obligation to indemnify the
Indemnified Party therefor, to assume the defense thereof
with counsel selected by the Indemnifying Party; provided
that such counsel is not reasonably objected to by the
Indemnified Party. Should the Indemnifying Party so elect to
assume the defense of a Third Party Claim, the Indemnifying
Party shall not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof. If the Indemnifying
Party assumes such defense, the Indemnified Party shall have
the right to participate in the defense thereof and to
employ counsel, at its own expense, separate from the
counsel employed by the Indemnifying Party, it being
understood that the Indemnifying Party shall control such
defense. The Indemnifying Party shall be liable for the
reasonable fees and expenses of counsel employed by the
Indemnified Party for any period during which the
Indemnifying Party has failed to assume the defense thereof.
(c) If the Indemnifying Party so elects to assume
the defense of any Third Party Claim, all of the Indemnified
Parties shall cooperate with the Indemnifying Party in the
defense or prosecution thereof. Such cooperation shall
include the retention and (upon the Indemnifying Party's
request) the provision to the Indemnifying Party of records
and information which are reasonably relevant to such Third
Party Claim, and making employees available on a mutually
convenient basis to provide additional information and
explanation of any material provided hereunder. If the
Indemnifying Party shall have assumed the defense of a Third
Party Claim and acknowledges in writing its obligation to
indemnify the Indemnified Party therefor, the Indemnified
Party shall not admit any liability with respect to, or
settle, compromise or discharge, such Third Party Claim
without the Indemnifying Party's prior written consent. If
the Indemnifying Party shall have assumed the defense of a
Third Party Claim, the Indemnified Party shall agree to any
settlement, compromise or discharge of a Third Party Claim
which the Indemnifying Party may recommend and which by its
<PAGE>
77
terms obligates the Indemnifying Party to pay the full
amount of the liability in connection with such Third Party
Claim, which releases the Indemnified Party completely in
connection with such Third Party Claim and which would not
otherwise adversely affect the Indemnified Party (including,
in the case of a Third Party Claim by a taxing authority, by
adversely affecting the Indemnified Party's (or any of its
Affiliates') items of credit, gain, income, loss or
deduction in any taxable period).
(d) Notwithstanding the foregoing, the
Indemnifying Party shall not be entitled to assume the
defense of any Third Party Claim (and shall be liable for
the reasonable fees and expenses of counsel incurred by the
Indemnified Party in defending such Third Party Claim) if
the Third Party Claim seeks an order, injunction or other
equitable relief or relief for other than money damages
against the Indemnified Party which the Indemnified Party
reasonably determines, after conferring with its outside
counsel, cannot be separated from any related claim for
money damages. If such equitable relief or other relief
portion of the Third Party Claim can be so separated from
that for money damages, the Indemnifying Party shall be
entitled to assume the defense of the portion relating to
money damages. The indemnification required by Sections
10.02 and 10.03 in respect of Third Party Claims shall be
made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when any
loss, liability, claim, damage or expense that is subject to
Sections 10.02 or 10.03 is actually incurred. All claims
under Section 10.02 or 10.03 other than Third Party Claims
shall be governed by Section 10.07.
(e) To the extent an indemnification claim for any
amount due under Section 10.02 or 10.03 may be asserted
under more than one subsection thereof, a party may assert a
claim for indemnification for such amount under each
applicable subsection, but such party may not recover more
than once for such amount. In addition, in connection with
any Loss for which indemnification may be sought by an
Indemnified Party under this Article X (other than in
connection with any Third Party Claim), the Indemnified
Party shall not seek recovery for consequential or
speculative damages arising as a result thereof unless such
Indemnified Party shall have determined in good faith that
such Loss incurred pertains to the intrinsic value of the
transactions contemplated by this Agreement.
<PAGE>
78
SECTION 10.07. Other Procedures. In the event any
Indemnified Party should have a claim against the
Indemnifying Party under Section 10.02 or 10.03 that does
not involve a Third Party Claim being asserted against or
sought to be collected from such Indemnified Party, the
Indemnified Party shall deliver notice of such claim with
reasonable promptness to the Indemnifying Party. The failure
by an Indemnified Party so to notify the Indemnifying Party
shall not relieve the Indemnifying Party from any liability
which it may have to such Indemnified Party under Section
10.02 or 10.03, except to the extent that the Indemnifying
Party shall have been materially prejudiced as a result of
such failure. The indemnification required by Sections 10.02
and 10.03 in respect of claims other than Third Party Claims
shall be paid promptly after such Loss is incurred.
SECTION 10.08. Adjustment to Purchase Price.
Parent, Sellers and Purchaser shall treat any indemnity
payment under this Agreement as an adjustment to the
Purchase Price for Tax purposes, unless a final
determination with respect to the Indemnified Party causes
any such payment not to be treated as an adjustment to the
Purchase Price for United States Federal income tax
purposes.
ARTICLE XI
General Provisions
SECTION 11.01. Notices. All notices and other
communications hereunder shall be in writing (including
wire, telefax or similar writing) and shall be sent,
delivered or mailed, addressed, or telefaxed:
(a) if to Purchaser or any other Designated
Purchaser, to:
Cincinnati Milacron Inc.
4701 Marburg Avenue
Cincinnati, OH 45209
Attention of Wayne F. Taylor, Esq.
General Counsel
Telephone: (513) 841-8287
Telefax: (513) 841-7166
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79
with a copy to:
James M. Edwards, Esq.
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Telephone: (212) 474-1688
Telefax: (212) 474-3700
(b) if to Parent, RHI or Sellers, to:
The Fairchild Corporation
Washington Dulles International Airport
300 West Service Road
P.O. Box 10803
Chantilly, VA 22021
Attention of Donald E. Miller, Esq.
General Counsel
Telephone: (703) 478-5945
Telefax: (703) 478-5775
with a copy to:
Daniel J. Zubkoff, Esq.
Cahill Gordon & Reindel
Eighty Pine Street
New York, NY 10005
Telephone: (212) 701-3466
Telefax: (212) 269-5420
Each such notice, request or other communication shall be
given (i) by hand delivery, (ii) by nationally recognized
courier service or (iii) by telefax, receipt confirmed. Each
such notice, request or communication shall be effective
(i) if delivered by hand or by nationally recognized courier
service, when delivered at the address specified in this
Section 11.01 (or in accordance with the latest unrevoked
written direction from such party) and (ii) if given by
telefax, when such telefax is transmitted to the telefax
number specified in this Section 11.01 (or in accordance
with the latest unrevoked written direction from such
party), and the appropriate confirmation is received.
<PAGE>
80
SECTION 11.02. Interpretation. When a reference is
made in this Agreement to a Section, Schedule or Exhibit,
such reference shall be to a Section, Schedule or Exhibit of
this Agreement unless otherwise indicated. The table of
contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. All accounting
terms not defined in this Agreement shall have their
meanings under GAAP.
SECTION 11.03. Severability. The provisions of
this Agreement shall be deemed severable and the invalidity
or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application
thereof to any person or entity or any circumstance, is
found to be invalid or unenforceable in any jurisdiction,
(a) a suitable and equitable provision shall be substituted
therefor in order to carry out, so far as may be valid and
enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this
Agreement and the application of such provision to other
persons, entities or circumstances shall not be affected by
such invalidity or unenforceability, nor shall such
invalidity or unenforceability affect the validity or
enforceability of such provision, or the application
thereof, in any other jurisdiction.
SECTION 11.04. Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be
deemed an original and all of which shall, taken together,
be considered one and the same agreement, it being
understood that both parties need not sign the same
counterpart.
SECTION 11.05. Entire Agreement; No Third Party
Beneficiaries. This Agreement, including all Exhibits and
Schedules hereto, together with the Foreign Purchase
Agreements and the Confidentiality Agreement dated November
10, 1995, between Purchaser and Parent (which
Confidentiality Agreement shall terminate in accordance with
Section 5.12(a)), (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both
written and oral, among the parties with respect to the
subject matter hereof and thereof and (b) is not intended to
confer upon any person other than the parties hereto any
rights or remedies hereunder.
<PAGE>
81
SECTION 11.06. Governing Law. This Agreement shall
be governed by and construed in accordance with the laws of
the State of New York applicable to contracts made and to be
fully performed in such state, regardless of the laws that
might otherwise govern under applicable principles of
conflicts of law.
SECTION 11.07. Consent to Jurisdiction. Each of
Purchaser, each other Designated Purchaser, Parent, RHI and
each Seller irrevocably submits to the non-exclusive
jurisdiction of the United States District Court for the
Southern District of New York located in the borough of
Manhattan in the City of New York, or if such court does not
have jurisdiction, the Supreme Court of the State of New
York, New York County, for the purposes of any suit, action
or other proceeding arising out of this Agreement or any
transaction contemplated hereby. Each of Purchaser, each
other Designated Purchaser, Parent, RHI and each Seller
further agrees that service of any process, summons, notice
or document by U.S. registered mail to such party's
respective address set forth in Section 11.01 (or in the
case of a Designated Purchaser, Purchaser's address, and in
the case of a Seller or RHI, Parent's address) shall be
effective service of process for any action, suit or
proceeding in New York with respect to any matters to which
it has submitted to jurisdiction as set forth above in the
immediately preceding sentence. Each of Purchaser, each
other Designated Purchaser, Parent, RHI and each Seller
irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising
out of this Agreement or the transactions contemplated
hereby in (a) the United States District Court for the
Southern District of New York or (b) the Supreme Court of
the State of New York, New York County, and hereby further
irrevocably and unconditionally waives and agrees not to
plead or claim in any such court that any such action, suit
or proceeding brought in any such court has been brought in
an inconvenient forum.
SECTION 11.08. Expenses. Whether or not the
Closing takes place, all costs and expenses incurred in
connection with this Agreement and the transactions
contemplated hereby shall be borne by the party incurring
such cost or expense (unless such cost or expense shall have
otherwise been allocated pursuant to this Agreement).
SECTION 11.09. Assignment. Unless otherwise
provided therein, neither this Agreement nor any of the
rights or obligations hereunder shall be assigned by any of
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82
the parties hereto without the prior written consent of the
other parties, except that (i) any party may assign all its
rights and obligations to the assignee of all or
substantially all of the assets of such party, provided that
such party shall in no event be released from its
obligations hereunder without the prior written consent of
the other parties, and (ii) Purchaser and each other
Designated Purchaser may assign (without relieving itself of
responsibility under this Agreement) any and all of its
rights hereunder to any majority owned subsidiary of
Purchaser or any other Designated Purchaser that is a
successor in interest of any assets or real property of the
Business, provided that such assignment shall cease to be
effective with respect to any majority owned subsidiary that
ceases to be a majority owned subsidiary of Purchaser or any
other Designated Purchaser. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their
respective successors and assigns.
SECTION 11.10. Right of Set-off. (a) Purchaser or
any other Designated Purchaser shall have the right to
set-off amounts against payment of the Belgian Note as
provided in Section 5.11(c).
(b) In the event that the Purchase Price
Adjustment shall have been finally determined in accordance
with Section 2.05, the Purchase Price Adjustment shall have
been finally determined to be a negative dollar amount and
Parent shall not have yet paid to Purchaser the amount of
the Purchase Price Adjustment, expressed as a positive
number, Purchaser or any other Designated Purchaser shall
have the right to set-off against payment of the Unsecured
Note when due and payable the amount of such finally
determined Purchase Price Adjustment, expressed as a
positive number. If the Purchase Price Adjustment shall not
yet have been finally determined in accordance with
Section 2.05 (other than as a result of the failure of
Purchaser or any other Designated Purchaser to comply with
the provisions of Section 2.05), Purchaser or any other
Designated Purchaser shall have the right to set-off against
payment of the Unsecured Note when due and payable the
amount set forth in the Notice of Objection until the
Purchase Price Adjustment shall be finally determined in
accordance with Section 2.05. In addition, in the event
that the India Joint Venture shall not have obtained the
Required India Permits prior to the date that the Unsecured
Note becomes due and payable, Purchaser or any other
Designated Purchaser shall have the right to set-off against
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83
payment of the Unsecured Note when due and payable an amount
equal to the India Purchase Price until such time as the
Required India Permits shall have been obtained (subject to
permanent set-off pursuant to Section 5.11(d)). Within five
business days after receiving all the Required India
Permits, Purchaser shall pay any amounts set-off in respect
of the India Purchase Price (subject to permanent set-off
pursuant to Section 5.11(d)) to Parent or its designee.
(c) Purchaser and each other Designated Purchaser
hereby waives, to the fullest extent permitted by law, any
right, other than the rights of set-off explicitly set forth
in Sections 11.10(a) and (b), it may have from time to time
to set-off any amounts which may be, or claimed to be, due
and owing from Parent and/or any Seller under this Agreement
or otherwise against its obligations under the Belgian Note
and the Unsecured Note, and Purchaser and each other
Designated Purchaser hereby waives, to the fullest extent
permitted by law, without exception, any right it may have
from time to time to set-off any amounts which may be, or
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84
claimed to be, due and owing from Parent and/or any Seller
against its obligations under the Secured Notes.
IN WITNESS WHEREOF, PARENT, RHI, the SELLERS
signatory hereto, PURCHASER and the other DESIGNATED
PURCHASERS signatory hereto have caused this Agreement to be
signed by their respective officers thereunto duly
authorized, all as of the date first written above.
CINCINNATI MILACRON INC.,
by
Name:
Title:
D-M-E COMPANY,
by
Name:
Title:
CHARTRETAIL LIMITED,
by
Name:
Title:
D-M-E BELGIUM N.V.,
by
Name:
Title:
CINCINNATI MILACRON
KUNSTSTOFFMASCHINEN VERTRIEBS-
UND SERVICE GMBH,
by
Name:
Title:
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85
THE FAIRCHILD CORPORATION,
by
Name:
Title:
RHI HOLDINGS, INC.,
by
Name:
Title:
VSI CORPORATION,
by
Name:
Title:
D-M-E NORMALIEN GMBH,
by
Name:
Title:
D-M-E EUROPE (UK) LIMITED,
by
Name:
Title:
