<PAGE>
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: APRIL 23, 1999
HIGH VOLTAGE ENGINEERING CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 1-4737 04-2035796
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(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification No.)
401 EDGEWATER PLACE, SUITE 680, WAKEFIELD, MASSACHUSETTS 01880
- --------------------------------------------------------------------------------
Address of principal executive offices
Registrant's telephone number, including area code: (781) 224-1001
---------------
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On April 23, 1999, the Registrant consummated a sale of substantially
all of its assets used in or held for use in connection with the operation of
the business of its Natvar division, a manufacturer of disposable medical
tubing, for $26 million in cash, to a wholly owned subsidiary of Tekni-Plex,
Inc.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Not applicable.
*(b) UNAUDITED PRO FORMA CONSDENSED CONSOLIDATED FINANCIAL DATA.
High Voltage Engineering Corporation and Subsidiaries Unaudited
Pro Forma Condensed Consolidated Balance Sheet as of
January 23, 1999
High Voltage Engineering Corporation and Subsidiaries Unaudited
Pro Forma Condensed Consolidated Statement of Operations for
the Fiscal Year Ended April 25, 1998
High Voltage Engineering Corporation and Subsidiaries Unaudited
Pro Forma Condensed Consolidated Statement of Operations for
the Nine Months Ended January 23, 1999
(c) Exhibits.
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<CAPTION>
Exhibit Number Description
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<S> <C>
*2.1 Asset Purchase Agreement, among
Tekni-Plex, Inc., Natvar
Holdings, Inc. and High Voltage
Engineering Corporation, dated
as of April 8, 1999.
*Filed Herewith
</TABLE>
SIGNATURE
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.
Dated: May 7, 1999
HIGH VOLTAGE ENGINEERING
CORPORATION
By: /s/ Joseph W. McHugh, Jr.
--------------------------
Name: Joesph W. McHugh, Jr.
Title: Vice President and
Chief Financial Officer
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA
The following Unaudited Pro Forma Condensed Consolidated Balance Sheet
presents the pro forma financial position of High Voltage Engineering
Corporation (the "Company") as if the disposition of Natvar Company ("Natvar")
had occurred on January 23, 1999. The following Unaudited Pro Forma Condensed
Consolidated Statements of Operations for the fiscal year ended April 25, 1998
and the nine months ended January 23, 1999 present the results of operations of
the Company as if the disposition of Natvar had occurred at the beginning of the
periods presented. In the opinion of management, all necessary adjustments have
been made to fairly present this pro forma information.
<PAGE>
HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JANUARY 23, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
------------------------
HISTORICAL ADJUSTMENTS COMBINED
---------- ----------- -----------
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.......... $ 20,898 $ 24,750 45,648
Restricted cash.................... 3,447 -- 3,447
Accounts receivable -- net......... 52,006 1,250 50,229
(1,000)
(2,027)
Refundable income taxes............ 608 -- 608
Inventories........................ 41,637 (641) 40,996
Prepaid expenses and other current
assets........................... 1,717 (8) 1,709
--------- ----------- -----------
Total current assets............. 120,313 22,324 142,637
PROPERTY, PLANT AND EQUIPMENT --
Net................................. 57,956 (4,359) 53,597
INVESTMENT IN JOINT VENTURE.......... 1,763 -- 1,763
ASSETS HELD FOR SALE................. 3,812 -- 3,812
OTHER ASSETS -- Net.................. 15,737 -- 15,737
COST IN EXCESS OF NET ASSETS
ACQUIRED............................ 28,335 (1,527) 26,808
--------- ----------- -----------
$ 227,916 $ 16,438 $ 244,354
--------- ----------- -----------
--------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' (DEFICIENCY) EQUITY
CURRENT LIABILITIES
Current maturities of long-term
debt obligations................. $ 2,527 $ -- $ 2,527
Foreign credit line................ 123 -- 123
Accounts payable................... 19,643 (996) 18,647
Accrued interest................... 7,248 -- 7,248
Accrued liabilities................ 24,156 (552) 25,144
1,540
Advance payments by customers...... 6,806 -- 6,806
Federal, foreign and state income
taxes payable.................... 3,412 7,194 3,412
(7,194)
Deferred income taxes.............. 1,527 -- 1,527
--------- ----------- -----------
Total current liabilities........ 65,442 (8) 65,434
REDEEMABLE PUT WARRANTS.............. 2,590 -- 2,590
LONG-TERM OBLIGATIONS, LESS CURRENT
MATURITIES.......................... 174,128 -- 174,128
DEFERRED INCOME TAXES................ 2,724 -- 2,724
OTHER LIABILITIES.................... 6,713 -- 6,713
COMMITMENT AND CONTINGENCIES.........
REDEEMABLE PREFERRED STOCK........... 33,925 -- 33,925
STOCKHOLDERS' (DEFICIENCY) EQUITY.... (57,606) 9,252 (41,160)
7,194
--------- ----------- -----------
$ 227,916 $ 16,438 $ 244,354
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JANUARY 23, 1999
(DOLLARS IN THOUSANDS)
Adjustments reflect pro forma for the disposition of Natvar total
consideration of $26,000,000 for net assets of $7,014, net of $1,540 of
transaction related expenses, expense related to the acceleration of a Company
incentive compensation plan, severance, and $7,194 of taxes in connection with
the gain on the sale offset by an adjustment to the valuation allowance.
<PAGE>
HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED APRIL 25, 1998
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
-----------------------
HISTORICAL ADJUSTMENTS COMBINED
---------- ----------- -----------
<S> <C> <C> <C>
Net sales......................................... $ 234,380 $ (16,473) $ 217,907
Cost of sales..................................... 151,360 (12,186) 139,174
---------- ----------- -----------
Gross profit.................................... 83,020 (4,287) 78,733
Administrative and selling expenses............... 52,067 (2,775) 49,292
Research and development expenses................. 15,663 (207) 15,456
Write off of purchased in-process research and
development...................................... 8,100 -- 8,100
Restructuring charge.............................. 293 (107) 186
Reimbursed environmental and litigation
costs -- net..................................... 3,633 -- 3,633
Other............................................. 540 (89) 451
---------- ----------- -----------
Income from operations.......................... 2,724 (1,109) 1,615
Interest expense.................................. 18,819 (660) 18,159
Interest income................................... (1,008) -- (1,008)
---------- ----------- -----------
Loss from continuing operations before
income taxes, discontinued operations
and extraordinary item........................ (15,087) (449) (15,536)
Income taxes (credit)............................. (430) -- (430)
---------- ----------- -----------
Loss from continuing operations before
discontinued operations and
extraordinary item............................ (14,657) (449) (15,106)
Preferred dividends............................. (3,085) -- (3,085)
Accretion of redeemable preferred stock......... (270) -- (270)
---------- ----------- -----------
Loss applicable to common stockholders
before extraordinary item........................ $ (18,012) $ (449) $ (18,461)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
<PAGE>
HIGH VOLTAGE ENGINEERING CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED JANUARY 23, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA
-------------------------
HISTORICAL ADJUSTMENTS COMBINED
---------- ------------ -----------
<S> <C> <C> <C>
Net sales...................................... $ 188,478 $ (11,692) $ 176,786
Cost of sales.................................. 123,437 (7,876) 115,561
---------- ----------- -----------
Gross profit................................. 65,041 (3,816) 61,225
Administrative and selling expenses............ 39,947 (1,865) 38,082
Research and development expenses.............. 13,489 -- 13,489
Restructuring charge........................... 390 -- 390
Reimbursed environmental and litigation costs
-- net....................................... 292 -- 292
Other.......................................... (690) 171 (519)
---------- ----------- -----------
Income from operations....................... 11,613 (2,122) 9,491
Interest expense............................... 14,677 (598) 14,079
Interest income................................ (961) -- (961)
---------- ----------- -----------
Loss from continuing operations before
income taxes, discontinued operations
and extraordinary item..................... (2,103) (1,524) (3,627)
Income taxes................................... 807 -- 807
---------- ----------- -----------
Loss from continuing operations before
discontinued operations and
extraordinary item......................... (2,910) (1,524) (4,434)
Preferred dividends.......................... (3,182) -- (3,182)
Accretion of redeemable preferred stock...... (286) -- (286)
---------- ----------- -----------
Loss applicable to common stockholders
before extraordinary item.................... $ (6,378) $ (1,524) $ (7,902)
---------- ----------- -----------
---------- ----------- -----------
</TABLE>
<PAGE>
Exhibit 2.1
-----------------------------------------
ASSET PURCHASE AGREEMENT
among
TEKNI-PLEX, INC.
NATVAR HOLDINGS, INC.
and
HIGH VOLTAGE ENGINEERING CORPORATION
Dated as of April 8, 1999
-----------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE I
PURCHASE AND SALE
<S> <C> <C>
SECTION 1.01 Acquired Assets...........................................................
SECTION 1.02 Excluded Assets...........................................................
SECTION 1.03 Determinations as to Mixed-Use Assets.....................................
ARTICLE II
EXCLUSION AND ASSUMPTION OF CERTAIN LIABILITIES
SECTION 2.01 Excluded Liabilities......................................................
SECTION 2.02 Assumed Liabilities.......................................................
ARTICLE III
PURCHASE PRICE
SECTION 3.01 Purchase Price............................................................
ARTICLE IV
CLOSING
SECTION 4.01 Time and Place............................................................
SECTION 4.02 Transactions at Closing...................................................
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 5.01 Organization and Standing; Authority......................................
SECTION 5.02 Authorization of Agreement; Validity......................................
SECTION 5.03 No Conflict...............................................................
SECTION 5.04 Sufficiency of and Title to the Acquired Assets...........................
SECTION 5.05 Financial Statements......................................................
SECTION 5.06 Absence of Certain Changes................................................
SECTION 5.07 Contracts.................................................................
SECTION 5.08 Real Property; Personal Property..........................................
SECTION 5.09 Equipment.................................................................
SECTION 5.10 Location of Inventories...................................................
SECTION 5.11 Intellectual Property.....................................................
SECTION 5.12 Customers.................................................................
SECTION 5.13 Litigation, etc...........................................................
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 5.14 Labor Relations...........................................................
SECTION 5.15 Pensions and Benefits.....................................................
SECTION 5.16 Compliance with Laws, Etc.................................................
SECTION 5.17 Licenses, Permits and Authorizations......................................
SECTION 5.18 Tax Matters...............................................................
SECTION 5.19 Environmental Matters.....................................................
SECTION 5.20 Brokers...................................................................
SECTION 5.21 Foreign Corrupt Practices.................................................
SECTION 5.22 Required Consents.........................................................
SECTION 5.23 Receivables...............................................................
SECTION 5.24 Inventories...............................................................
SECTION 5.25 Products..................................................................
SECTION 5.26 Bulk Sales Laws...........................................................
SECTION 5.27 Governmental Approvals....................................................
SECTION 5.28 Projections...............................................................
SECTION 5.29 Disclosure................................................................
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
SECTION 6.01 Organization and Standing.................................................
SECTION 6.02 Authorization of Agreement; Validity......................................
SECTION 6.03 No Conflict...............................................................
SECTION 6.04 Governmental Approvals....................................................
SECTION 6.05 Brokers...................................................................
ARTICLE VII
CONDUCT OF BUSINESS PENDING CLOSING
SECTION 7.01 Full Access...............................................................
SECTION 7.02 Carry on in Regular Course................................................
SECTION 7.03 No General Increases......................................................
SECTION 7.04 Sale of Assets............................................................
SECTION 7.05 Insurance.................................................................
SECTION 7.06 Preservation of Organization..............................................
SECTION 7.07 No Shopping...............................................................
SECTION 7.08 Maintenance of Contracts..................................................
SECTION 7.09 Notice of Certain Events..................................................
SECTION 7.10 Closing Conditions........................................................
SECTION 7.11 Actions with respect to Representations and Warranties....................
ARTICLE VIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
SECTION 8.01 Representations and Warranties............................................
SECTION 8.02 Compliance with Agreement.................................................
SECTION 8.03 No Material Adverse Change................................................
SECTION 8.04 HSR Act Notification......................................................
SECTION 8.05 Officer's Certificate.....................................................
SECTION 8.06 Opinion of Counsel........................................................
SECTION 8.07 Due Diligence Investigation...............................................
SECTION 8.08 No Litigation.............................................................
SECTION 8.09 Documentation.............................................................
SECTION 8.10 Escrow Agreement..........................................................
SECTION 8.11 Related Party Confidentiality Agreements..................................
SECTION 8.12 Required Consents.........................................................
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
SECTION 9.01 Representations and Warranties............................................
SECTION 9.02 Compliance with Agreement.................................................
SECTION 9.03 HSR Act Notification......................................................
SECTION 9.04 No Litigation.............................................................
SECTION 9.05 Documentation.............................................................
SECTION 9.06 Escrow Agreement..........................................................
ARTICLE X
EMPLOYEES AND EMPLOYEE BENEFITS
SECTION 10.01 Hiring Employees..........................................................
ARTICLE XI
CERTAIN COVENANTS
SECTION 11.01 HSR Act Compliance........................................................
SECTION 10.02 Third Party Consents......................................................
SECTION 11.03 Access to Books and Records...............................................
SECTION 11.04 Use of Seller's Name......................................................
SECTION 11.05 Closing Conditions........................................................
SECTION 11.06 Closing Date Balance Sheet and EBITDA.....................................
ARTICLE XII
TAX MATTERS
SECTION 12.01 General...................................................................
SECTION 12.02 Cooperation on Tax Matters; Conduct of Proceedings........................
SECTION 12.03 Allocation of Transfer and Property Taxes.................................
SECTION 12.04 Scope of Article XII......................................................
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C>
ARTICLE XIII
TERMINATION
SECTION 13.01 Termination...............................................................
SECTION 13.02 Effect of Termination.....................................................
SECTION 13.03 Remedies upon Termination.................................................
ARTICLE XIV
CONFIDENTIALITY
ARTICLE XV
DEFINITIONS
ARTICLE XVI
GENERAL
SECTION 16.01 Survival of Representations and Warranties................................
SECTION 16.02 Expenses; Certain Taxes...................................................
SECTION 16.03 Assigns...................................................................
SECTION 16.04 Entire Agreement, Etc.....................................................
SECTION 16.05 Construction..............................................................
SECTION 16.06 Governing Law.............................................................
SECTION 16.07 Notices...................................................................
SECTION 16.08 Counterparts..............................................................
SECTION 16.09 Section Headings..........................................................
SECTION 16.10 Public Statements or Releases.............................................
ARTICLE XVII
PARENT GUARANTY
SECTION 17.01 Guaranty..................................................................
ARTICLE XVIII
INDEMNIFICATION
SECTION 18.01 Indemnification by the Seller.............................................
SECTION 18.02 Indemnification by the Parent and the Buyer...............................
SECTION 18.03 Procedures................................................................
SECTION 18.04 Limitations on Indemnification............................................
ARTICLE XIX
NON-COMPETITION AGREEMENT
SECTION 19.01 Non-competition Agreement.................................................
</TABLE>
<PAGE>
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<TABLE>
<CAPTION>
<S> <C>
EXHIBITS:
Exhibit A Form of Escrow Agreement
Exhibit B Form of Assumption Agreement
Exhibit C Form of Legal Opinion of Bingham Dana LLP
SCHEDULES:
Schedule 1.01(a) Land
Schedule 1.01(b) Real Estate Leases
Schedule 1.01(c) Plants, Fixtures, Machinery, Equipment, Etc.
Schedule 1.01(d) Personal Property Leases
Schedule 1.01(f) Purchase and Sale of Utilities, Goods, Materials and Services; Etc.
Schedule 1.01(g) Intellectual Property
Schedule 1.01(h) Licenses, Permits Etc. with Government Entities
Schedule 1.02(b) Excluded Assets - Computers, Software, Communication, or Data
Network Systems
Schedule 1.02(o) Agreements and Contracts
Schedule 1.03 Mixed-Use Assets
Schedule 2.02(a) Assumed Liabilities - Trade Accounts Payable
Schedule 2.02(b) Assumed Liabilities - Accrued Expenses
Schedule 3.01 Estimated Allocation of Purchase Price
Schedule 5.03 Conflicts
Schedule 5.04 Title to Acquired Assets
Schedule 5.05A Financial Statements
Schedule 5.05B Exceptions to GAAP in Financial Statements provided in 5.05
Schedule 5.05C Liabilities Not on Balance Sheet
Schedule 5.06 Certain Changes
Schedule 5.07 Contracts
Schedule 5.09-1 Equipment (Non-Negative Net Book Value)
Schedule 5.09-2 Equipment (Other)
Schedule 5.10 Inventory Locations
Schedule 5.11 Intellectual Property Claims
Schedule 5.12 Customers
Schedule 5.15(a) Pensions and Benefits
Schedule 5.17 Licenses, Permits, and Authorizations
Schedule 5.19 Environmental Matters
Schedule 5.19(b) List of Environmental Reports
Schedule 5.22 Required Consents
Schedule 15 Seller Knowledge Parties
</TABLE>
<PAGE>
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT dated as of April 8, 1999, by and among High
Voltage Engineering Corporation, a Massachusetts corporation (the "SELLER"),
Tekni-Plex, Inc., a Delaware corporation (the "PARENT") and Natvar Holdings,
Inc., a Delaware corporation (the "BUYER").
WHEREAS, the Seller owns certain assets used in the business of plastic
extrusion, primarily related to the manufacture of disposable specialty bulk
medical grade plastic tubing used primarily in medical devices and for
less-invasive surgical procedures, which business is conducted by the Seller
under the name Natvar Company at facilities located in Clayton, North Carolina
and Lakewood, Colorado and leased warehouse space located at Norwood,
Massachusetts and San Diego, California (the "NATVAR FACILITIES"), with the
business currently being conducted by the Seller with such assets being referred
to hereafter as "NATVAR"; and
WHEREAS, the Buyer wishes to purchase or acquire from the Seller, and
the Seller wishes to sell, assign and transfer to the Buyer, all of the assets
and properties of the Seller relating to or used or held for use in connection
with the conduct of the business and operations of Natvar as currently conducted
by the Seller, and the Buyer has agreed to assume certain liabilities of the
Seller relating to Natvar, all for the purchase price and upon the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the promises and mutual covenants
contained in this Agreement, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
SECTION 1.01. ACQUIRED ASSETS. Subject to the terms and conditions set
forth in this Agreement, at the Closing referred to in Article IV hereof, the
Seller shall sell, assign, transfer and deliver to the Buyer, and the Buyer
shall purchase, acquire and take assignment and delivery of, free and clear of
all Encumbrances, other than Permitted Encumbrances, all of the Seller's right,
title and interest in and to all of the assets owned or leased by the Seller and
relating to, or used or held for use in connection with, the conduct of the
business or operations of Natvar, with the exception of the Excluded Assets (as
defined in Section 1.02 hereof) (all of which assets, other than the Excluded
Assets, are hereinafter referred to collectively as the "ACQUIRED ASSETS"). The
Acquired Assets shall include, but not be limited to, the following:
(a) that certain parcel of land described in SCHEDULE 1.01(a)
hereto, together with any and all buildings, plants and other
structures and improvements thereon owned
<PAGE>
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by the Seller, and any and all rights and privileges of the Seller
pertaining thereto or to any of such buildings, plants or other
structures or improvements, and, to the extent constituting real
property, any and all fixtures, machinery, installations, equipment
and other property owned by the Seller and attached thereto or located
thereon (the "REAL PROPERTY");
(b) all of the Seller's title to, interest in and rights under
the real estate leases (the "REAL ESTATE LEASES") described on SCHEDULE
1.01(b) hereto, relating to the properties described therein and
buildings, plants and other structures and improvements thereon and, to
the extent covered by the Real Estate Leases, any and all fixtures,
machinery, installations, equipment and other property attached thereto
or located thereon (the "LEASED REAL PROPERTY");
(c) to the extent not included in the Acquired Assets pursuant
to the foregoing paragraphs (a) and (b), or covered by the Real Estate
Leases or the Personal Property Leases (as defined below), any and all
plants, fixtures, machinery, equipment, installations, furniture,
office equipment, communications equipment, tools, spare and
replacement parts, supplies, materials, fuel and other personal
property of the Seller used or held for use in connection with the
conduct of the business or operations of Natvar, and including without
limitation any computers assigned to Natvar Employees that may not be
located at the Natvar Facilities, and including all rights, title and
interests of the Seller in those items described on SCHEDULE 1.01(c)
hereto, with such additions and deletions thereto as may arise, or may
have arisen, from the date as of which such Schedule was prepared, in
the ordinary course of business prior to the Closing consistent with
the Seller's obligations under Article VII hereof (the "EQUIPMENT");
(d) all of the Seller's title to, interest in and rights under
all of the leases of personal property used or held for use in
connection with the conduct of the business or operations of Natvar,
including without limitation the leases described on SCHEDULE 1.01(d)
hereto (the "PERSONAL PROPERTY LEASES");
(e) all of the Seller's inventories held for use in the
business or operations of Natvar, including raw materials, work in
process and finished goods (the "INVENTORIES");
(f) all of the Seller's rights under the purchase orders,
contracts, arrangements, and agreements for the purchase or sale of
utilities, goods, materials and services, including without limitation,
distribution agreements, supply agreements, joint venture or teaming
agreements, license agreements, personal property leases and
development contracts, which relate to or are used or held for use in
connection with the conduct of the business or operations of Natvar,
including without limitation the items described on SCHEDULE 1.01(f)
hereto;
(g) all of the Seller's rights with respect to all
Intellectual Property (as defined in Article XV hereof) that relates to
or is used or held for use in connection with the
<PAGE>
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conduct of the business or operations of Natvar, including without
limitation the Intellectual Property described on SCHEDULE 1.01(g)
hereto;
(h) to the extent transferable, all of the Seller's rights
with respect to any licenses, permits, concessions, orders,
authorizations, approvals or registrations from, of or with any
Governmental Entity (as defined in Article XV hereof) that relate to or
are used or held for use in connection with the conduct of the business
or operations of Natvar, including without limitation the items
described on SCHEDULE 1.01(h) hereto;
(i) all trade accounts receivable of the Seller (billed or
unbilled), generated in connection with the business or operation of
Natvar on or prior to the Closing Date;
(j) subject to Section 11.02 hereof, all records of the Seller
relating to the business or operations of Natvar, whether in hard copy
or electronic format, including, without limitation, property records,
production records, purchasing and sales records, personnel and payroll
records, customer lists, supplier lists, credit records, accounting
records and such other records relating to the business of Natvar as
the Buyer may reasonably require to conduct the business or operations
of Natvar subsequent to the Closing;
(k) all deferred charges, advance payments, prepaid items,
security and other deposits, claims for refunds, rights to receive or
claims for insurance proceeds, rights of offset, and credits of all
kinds, relating to the Acquired Assets or Natvar;
(l) all of Seller's rights, claims, credits, causes of action
or rights of set-off against third parties relating to the Acquired
Assets, including without limitation rights under manufacturers' or
vendors' warranties;
(m) all goodwill associated with the Acquired Assets or
Natvar, including the exclusive right to use the name "Natvar" and any
and all trade names, trademarks and servicemarks that the Seller uses
or has used in connection with operating Natvar (other than trade
names, trademarks and servicemarks that relate solely to the Seller or
any business other than Natvar including, without limitation, the name
and mark "High Voltage Engineering Corporation", the name and mark
"High Voltage Engineering", in whole or in part, and any name or mark
derived from or including either of the foregoing) and the Intellectual
Property described in paragraph (g) above; and
(n) all of the Seller's rights under any confidentiality
agreements relating to the operations and business of Natvar entered
into by any Natvar Employees and the Seller prior to the Closing Date;
SECTION 1.02. EXCLUDED ASSETS. Notwithstanding the foregoing, the
Seller is not selling, and the Buyer is not purchasing, pursuant to this
Agreement, any of the following assets (the "EXCLUDED ASSETS"), all of which
shall not be "Acquired Assets":
<PAGE>
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(a) any of the Seller's cash, marketable or other securities,
commercial paper and cash equivalents or other investments, on hand or
in bank accounts, and all of the Seller's bank accounts (other than the
proceeds of any sale of, and any other consideration received in
exchange for, Acquired Assets sold or otherwise disposed of other than
pursuant to this Agreement which, for purposes of this Section 1.02(a),
shall not include inventory sold in the ordinary course of business);
(b) any computers owned by the Seller and located at the
Seller's facilities in Wakefield, Massachusetts, or New York, New York
(the "SELLER OFFICES"), and any software embodied in any such
computers, any communication or data network systems not used or held
for use in connection with the conduct of the business or operations of
Natvar, including but not limited to the computers and software
described on SCHEDULE 1.02(b);
(c) (i) the name and mark "High Voltage Engineering
Corporation", the name and mark "High Voltage Engineering", in whole or
in part, and any name or mark derived from or including either of the
foregoing; and (ii) any other Intellectual Property of the Seller not
used or held for use in connection with the business or operations of
Natvar and the goodwill associated therewith;
(d) all of the office equipment, furniture, supplies,
communication equipment and other personal property of the Seller
located at the Seller Offices;
(e) all insurance policies of the Seller and the rights to
claims thereunder (except with respect to rights to receive or claims
for insurance proceeds that relate to the Acquired Assets), including
any claims for workers-compensation arising with respect to any
employees of the Seller on or prior to the Closing Date;
(f) all corporate, financial and tax records of the Seller and
its other businesses not relating to the business or operations of
Natvar or located at the Seller Offices;
(g) all personnel files of any employees of the Seller who are
not Assumed Employees (as defined in Section 10.01 hereof);
(h) all books and records pertaining to both the Seller's
other businesses and the business and operations of Natvar, provided
that Seller shall furnish copies of such books and records to the Buyer
to the extent relevant to the operation of the business of Natvar;
(i) the consideration received by the Seller pursuant to this
Agreement;
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(j) the Seller's rights under the Escrow Agreement, dated as
of March 25, 1998, among the Seller, Hilec, Inc. and Harris Bank
Winnetka, N.A. as Escrow Agent, and the related asset purchase
agreement;
(k) all indemnity and contribution rights granted to Seller
with respect to Excluded Liabilities and any and all rights or assets
arising from and related to the defense, release, compromise,
discharge, administration, management or satisfaction by Seller of the
Excluded Liabilities;
(l) all of Seller's rights, claims, actions, causes of action,
vendor, supplier and similar claims, judgments and demands of whatever
nature relating to Excluded Assets;
(m) all guarantees, letters of credit, bank drafts and similar
items given by the Seller for the benefit of Natvar, including but not
limited to any guarantees of bank loans or lines of credit;
(n) all of Seller's deferred charges, advance payments,
prepaid items, security and other deposits, claims for refunds, rights
of offset, and credits of all kinds, relating to the Excluded Assets or
to the Excluded Liabilities;
(o) the Seller's rights under those contracts listed on
SCHEDULE 1.02(o); and
(p) the Seller's rights to the personal property and real
property in Woodbridge, New Jersey, formerly used in connection with
the operation of the business of Natvar.
SECTION 1.03. DETERMINATIONS AS TO MIXED-USE ASSETS. Although the Buyer
and the Seller have attempted to distinguish which of the assets of the Seller
are to be Acquired Assets and which are to be Excluded Assets, the Seller and
the Buyer shall cooperate in good faith to resolve any disputes that may arise
as to whether any specific assets (including, without limitation, any contracts
and agreements) of the Seller are Acquired Assets or Excluded Assets. With
respect to any contracts or licenses applicable to both the business or
operations of Natvar and other businesses of the Seller, including without
limitation those described on SCHEDULE 1.03 hereto, the Seller and the Buyer
will cooperate to structure contractual arrangements providing each of them with
the relevant rights and obligations under such contract or license necessary for
the conduct of their respective businesses. These arrangements may take the form
of a subcontract or sublicense or causing the other party to such contract or
license to agree to split the contract or license into two separate agreements.
ARTICLE II
EXCLUSION AND ASSUMPTION OF CERTAIN LIABILITIES
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SECTION 2.01 EXCLUDED LIABILITIES. Notwithstanding any provision hereof
or any schedule or exhibit hereto and regardless of any disclosure to the Buyer,
the Buyer shall not assume any liabilities, obligations or commitments of the
Seller of any nature whatsoever, whether known or unknown, contingent or
otherwise, whether in existence now or in the future, other than the Assumed
Liabilities, as such term is defined and specifically described below. All
liabilities, obligations or commitments that are not specified below as Assumed
Liabilities shall be and hereinafter are referred to as "EXCLUDED LIABILITIES".
SECTION 2.02 ASSUMED LIABILITIES. Subject to the terms and conditions
set forth herein, at the Closing, the Buyer shall assume, and agree to pay,
honor and discharge when due all of the following liabilities relating to the
Acquired Assets and the business or operations of Natvar, to the extent such
liabilities arise on or after (or, in the case of the trade accounts payable and
accrued expenses described in subparagraphs (a) and (b) below, exist at) the
Closing Date (collectively, the "ASSUMED LIABILITIES"):
(a) all trade accounts payable of Natvar, including any
accruals, incurred in the ordinary course of business, consistent with
past practices and with the Seller's obligations under Article VII
hereof, outstanding as of the Closing Date, including but not limited
to those set forth on SCHEDULE 2.02(a), but only to the extent of the
respective accruals therefor on the Closing Date Balance Sheet;
(b) those accrued expenses of Natvar set forth on SCHEDULE
2.02(b), the amounts of which as of March 27, 1999 are set forth on
SCHEDULE 2.02 (b), but only to the extent of the respective accruals
therefor on the Closing Date Balance Sheet;
(c) any and all liabilities, obligations and commitments
arising out of the Real Property Leases and Personal Property Leases
that are assigned to the Buyer hereunder, but not including any
obligation, liability or commitment (including without limitation any
breach thereof or any circumstance, condition or event that with the
passage of time or the giving of notice would constitute such a breach)
in existence, occurring or relating to an event or circumstance that
related to an event prior to or on the Closing Date;
(d) any and all liabilities, obligations and commitments
arising out of the contracts that are assigned to the Buyer hereunder,
including liabilities for product warranty claims, product returns, and
performance guarantees, but not including any such obligation,
liability, or commitment (including without limitation any breach
thereof or any circumstance, condition or event that with the passage
of time or giving of notice would constitute such a breach) in
existence, occurring or relating to an event or circumstance that
occurred prior to or on the Closing Date; and
(e) liabilities in respect of Assumed Employees but only to
the extent specifically accrued and set forth on the Closing Date
Balance Sheet.
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ARTICLE III
PURCHASE PRICE
SECTION 3.01 PURCHASE PRICE. The aggregate purchase price for the
Acquired Assets (the "PURCHASE PRICE") is $26,000,000. At the Closing, the Buyer
shall pay the Purchase Price to the Seller, as follows:
(a) cash in the amount of $24,750,000 by wire transfer of same
day funds to an account designated by the Seller by written notice to
the Buyer at least two business days prior to the Closing Date (or, if
not so designated, by certified or bank check payable to the order of
the Seller); and
(b) cash in the amount of $1,250,000 by wire transfer of same
day funds to an account designated pursuant to the Escrow Agreement
(the "ESCROW AGREEMENT") to be entered into on the Closing Date among
the Buyer, the Seller, the Parent and LaSalle National Bank as Escrow
Agent (the "ESCROW Agent"), and in the form of EXHIBIT A hereto, to be
held and disbursed in accordance with the terms thereof.
The Purchase Price shall be allocated among the Acquired Assets in the
manner set forth on SCHEDULE 3.01 hereto. The Buyer and Seller shall report the
purchase and sale of the Acquired Assets, including, without limitation, in all
federal, foreign, state, local and other Tax Returns (as defined in Article XV
hereof) prepared and filed by or for either of the Buyer or the Seller, in
accordance with the basis of allocation set forth on SCHEDULE 3.01 hereto. The
Buyer shall be permitted to update SCHEDULE 3.01 from time to time after the
date hereof upon notice to the Seller. The Buyer and the Seller further agree
that they will prepare and file asset acquisition statements on Form 8594
reflecting such allocation with their Federal income tax returns for the taxable
year that includes the Closing Date, and each party will provide the other party
with a copy of its Form 8594 prior to the filing thereof.
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ARTICLE IV
CLOSING
SECTION 4.01. TIME AND PLACE. The closing of the transfer and delivery
of all documents and instruments necessary to consummate the transactions
contemplated by this Agreement (the "CLOSING") shall be held at the offices of
Bingham Dana LLP, 150 Federal Street, Boston, Massachusetts, at 10:00 A.M.
Boston time, on the later of (i) April 22, 1999, or (ii) the fifth business day
after receipt of all necessary governmental approvals under the HSR Act, or at
such other time and place as the parties may mutually agree, PROVIDED, HOWEVER,
that in the event that all necessary governmental approvals under the HSR Act
are received during the five business day period immediately preceding April 22,
1999, the parties shall use their respective commercially reasonable best
efforts to cause the Closing to occur on such date. The actual date on which the
closing occurs shall be referred to herein as the "CLOSING DATE".
SECTION 4.02. TRANSACTIONS AT CLOSING. At the Closing:
(a) The Seller shall duly execute and deliver to the Buyer or its
nominee or nominees such bills of sale, certificates of title, deeds, consents
and other instruments of assignment or transfer with respect to the Acquired
Assets as the Buyer may reasonably request to vest in the Buyer all of the
Seller's right, title and interest in and to the Acquired Assets.
(b) The Buyer shall deliver the Purchase Price by wire transfer to the
accounts of the Seller and the Escrow Agent as specified in Section 3.01.
(c) The Buyer shall assume the Assumed Liabilities relating to the
business and operations of Natvar by executing and delivering to the Seller an
Assumption Agreement, substantially in the form attached hereto as EXHIBIT B
(the "ASSUMPTION AGREEMENT").
(d) The Buyer, the Seller, the Parent, and the Escrow Agent shall
execute and deliver the Escrow Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as of the date hereof
and as of the Closing Date as follows:
SECTION 5.01. ORGANIZATION AND STANDING; AUTHORITY. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts and has all requisite corporate power and
authority, and all licenses, authorizations, permits, consents and approvals
reasonably necessary, to carry on the business or
<PAGE>
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operations of Natvar as now conducted. The Seller is duly licensed or qualified
to do business as a foreign corporation and is in good standing in each
jurisdiction where its conduct of the business and operations of Natvar make
such licensing or qualification necessary, except where the failure to be so
licensed or qualified or in good standing would not or will not have a Material
Adverse Effect (as defined in Article XV).
SECTION 5.02. AUTHORIZATION OF AGREEMENT; VALIDITY. The Seller has all
requisite corporate power and authority to enter into this Agreement, to perform
all of its agreements and obligations hereunder in accordance with its terms,
and to sell, transfer, assign and deliver to the Buyer all of the Acquired
Assets. All corporate action on the part of the Seller and by its officers,
directors and stockholders necessary for the authorization, execution and
delivery of, and the performance by the Seller of its obligations under, this
Agreement has been taken, and no further consent or authorization of the Seller,
its Board of Directors, its stockholders, any governmental agency or
organization (other than pursuant to the HSR Act) or any other person or entity
is required. This Agreement has been duly executed and delivered by the Seller
and constitutes the legal, valid and binding obligation of the Seller,
enforceable against the Seller in accordance with its terms, except as such
validity, binding effect or enforcement may be limited by bankruptcy, insolvency
or similar laws affecting creditors' rights generally or by equitable principles
relating to the availability of remedies.
SECTION 5.03. NO CONFLICT. Except as set forth in SCHEDULE 5.03 hereto,
the execution and delivery of this Agreement, the performance and compliance by
the Seller with the terms hereof, and the consummation of all of the
transactions contemplated hereby, will not either currently, or after notice or
lapse of time or both:
(a) conflict with or result in a violation of any provision of
the Articles of Organization, By-Laws or other organizational documents
of the Seller;
(b) conflict with or result in a violation by the Seller of
any statute, regulation, order, law, ordinance or restriction
applicable to the Seller;
(c) establish, trigger, conflict with or convey any rights of
third parties, including without limitation, preemptive rights or
rights of first refusal or first offer;
(d) conflict with or constitute, with or without the passage
of time and giving of notice, a default or breach under any provision
of any instrument or contract included in the Acquired Assets or by
which any of the Acquired Assets are bound or affected, or result in
the creation of any Encumbrance (as defined in Article XV) on any of
the Acquired Assets; or
(e) result in a violation by the Seller of any judgment, order
or decree of any court or judicial or quasi-judicial tribunal
applicable to the Seller.
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SECTION 5.04. SUFFICIENCY OF AND TITLE TO THE ACQUIRED ASSETS. Except
for the Excluded Assets, the Acquired Assets constitute all of the property and
assets of the Seller relating to or used or held for use in connection with the
conduct of the business or operations of Natvar and, except as set forth on
SCHEDULE 5.04, are adequate to conduct the business of Natvar as currently
conducted by the Seller. The Seller owns or has the right to sell, assign,
transfer and deliver all of the Acquired Assets. At and as of the Closing,
except as set forth on SCHEDULE 5.04 the Seller will convey to the Buyer, and
the Buyer will acquire, good and marketable title (with respect to the Real
Property, in fee simple) to, or (with respect to Real Property Leases or
Personal Property Leases) a valid leasehold interest in, the Acquired Assets,
free and clear of all Encumbrances (as defined in Article XV hereof) except for
Permitted Encumbrances (as defined in Article XV hereof).
SECTION 5.05. FINANCIAL STATEMENTS. The Seller has furnished to the
Buyer, and attached as SCHEDULE 5.05A hereto are, copies of the following
financial statements (collectively, the "FINANCIAL STATEMENTS"): (i) the
unaudited consolidated balance sheets, statements of cash flow and statements of
income, as of and for the fiscal years ended April 25, 1998, and April 26, 1997
relating to the business and operations of Natvar, and (ii) unaudited
consolidated balance sheets, statements of cash flow and statements of income,
(the "MOST RECENT FINANCIAL STATEMENTS") as of and for the eleven (11) fiscal
months ended March 27, 1999 relating to the business and operations of Natvar.
Except as set forth on SCHEDULE 5.05B hereto, the Financial Statements have
been, and the Closing Date Balance Sheet (as defined in Article XV below) will
be, prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby and fairly present, or will fairly present (in the
case of the Closing Date Balance Sheet), in all material respects the financial
condition of Natvar as of such dates and the results of its operations and cash
flows for the periods then ended; provided, however, that the Most Recent
Financial Statements and the Closing Date Balance Sheet shall be subject to
normal year-end adjustments (which are not material) and lack footnotes and
other presentation items. Except as set forth on SCHEDULE 5.05(C), the Seller
has, and will have on the Closing Date, no liabilities, contingent or otherwise,
relating to the business or operations of Natvar other than liabilities
reflected on the balance sheet included in the Most Recent Financial Statements
or as will be reflected on the Closing Date Balance Sheet or will be Excluded
Liabilities, or incurred in the ordinary course of business which, under GAAP,
are not and will not be, required to be reflected in such financial statements
(including the footnotes to such financial statements, if any).
SECTION 5.06. ABSENCE OF CERTAIN CHANGES. Except as set forth on
SCHEDULE 5.06 hereto, from April 25, 1998 to the later to occur of (i) the date
of this Agreement and (ii) the Closing Date, Natvar has been operated only in
the ordinary course consistent with past practices and, during the period
beginning on the date of this Agreement and ending on the Closing Date, with the
Seller's obligations under Article VII hereof, and there has not been:
(a) any change, or any event, occurrence, development or
circumstance which, individually or in the aggregate, could result in a
change, in the condition (financial or otherwise), results of
operations, assets, liabilities or business of Natvar which has had or
could reasonably be expected to have a Material Adverse Effect;
<PAGE>
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(b) any acquisition or disposition by the Seller outside the
ordinary course of business of any asset or property relating to or
used or held for use in connection with the conduct of the business or
operations of Natvar;
(c) any damage, destruction or casualty loss to any asset or
property of the Seller and relating to or used or held for use in
connection with the conduct of the business or operations of Natvar
(other than any Excluded Assets), whether or not covered by insurance,
which has had or could reasonably be expected to have a Material
Adverse Effect;
(d) any material increase in (or commitment to increase) the
compensation, pension or other benefits payable or to become payable to
any of the officers, employees, agents or representatives of Natvar or
any bonus payments or arrangements made to or with any of them, that
will constitute an Assumed Liability, other than (i) increases
amounting to less than $1,500 individually on an annual basis and
effected on a basis consistent with the past practice of the Seller
and, during the period beginning on the date of this Agreement and
ending on the Closing Date, consistent with the Seller's obligations
under Article VII hereof, and (ii) any increase required under the
terms of any of the benefit plans listed on SCHEDULE 5.15(a) hereto;
(e) any voluntary forgiveness or cancellation of any debt or
claim of Natvar or any voluntary waiver of any right of material value
other than compromises of accounts receivable in the ordinary course of
business consistent with the past practice of the Seller and, during
the period beginning on the date of this Agreement and ending on the
Closing Date, consistent with the Seller's obligations under Article
VII hereof;
(f) the imposition of any Encumbrance on any of the assets of
Natvar (other than any Excluded Assets), except for Permitted
Encumbrances;
(g) any disposition of or lapse of any intellectual property
right or termination of any agreement under which the Seller (insofar
as it relates to the business or operations of Natvar) has any right or
license;
(h) any lapse, termination or expiration of any Contract (as
defined below);
(i) any intercompany transactions relating to the business or
operations of Natvar with any Affiliate of the Seller;
(j) any change in any method of accounting or accounting
practices by the Seller (except as may have been required by a change
in generally accepted accounting principles);
<PAGE>
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(k) any capital expenditure for additions or improvements to
property, plant or equipment of the Seller and relating to or used or
held for use in connection with the business or operations of Natvar in
excess of $25,000, or any commitments to make any such capital
expenditures after the date hereof in excess of $5,000; or
(l) any notice from a customer whose purchases from Natvar
exceeded Twenty-five Thousand Dollars ($25,000) of Natvar's revenues
during fiscal 1998 or fiscal 1999 stating such customer's intention to
terminate or substantially curtail its relationship with the Seller.
SECTION 5.07. CONTRACTS. Except for contracts, commitments, plans,
agreements and licenses listed on SCHEDULES 1.01(b), 1.01(d), 1.01(f), 1.02(o)
and 5.07 hereto (collectively, the "CONTRACTS"), as of the date of this
Agreement, the Seller (insofar as it relates to the business or operations of
Natvar) is not a party to or otherwise bound by any contract, commitment, plan,
agreement or license, including without limitation:
(a) any contract (other than purchase orders which are not
contracts) to sell products or provide services to any customer;
(b) any purchase order providing for a payment in excess of
$50,000 or a delivery date more than six months after the date of such
purchase order;
(c) any contract or agreement with any director, officer or
employee of Natvar;
(d) any contract for the lease or sublease as lessee, lessor,
sublessee or sublessor of real or personal property relating to or used
or held for use in connection with the conduct of the business or
operations of Natvar, or any license of computer software relating to
or used or held for use in connection with the business or operations
of Natvar;
(e) any contract for the purchase or sale of any assets or
property relating to or used or held for use in connection with the
conduct of the business or operations of Natvar;
(f) any contract or agreement containing non-competition
covenants limiting the freedom of the Seller to operate Natvar or to
sell, assign, transfer, deliver or otherwise dispose of any assets or
property relating to or used or held for use in connection with the
business or operations of Natvar or which would so limit the freedom of
the Buyer after the Closing Date, or any exclusive licensing agreement
with respect to any Intellectual Property used in the business or
operations of Natvar;
(g) any partnership, joint venture, teaming, consortium, or
other similar contract, arrangement or agreement relating to the
business or operations of Natvar;
<PAGE>
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(h) any development contracts relating to the business or
operations of Natvar;
(i) any contract or agreement for guaranty, indemnity or
suretyship of Indebtedness of Natvar; or
(j) any agency, dealer, franchise or similar agreement
relating to the business or operations of Natvar.
Each Contract is a valid and legally binding agreement of the Seller
and has not expired or been terminated. Neither the Seller nor, to the knowledge
of the Seller, any other party to any Contract, is, as of the date of this
Agreement, in default in complying with any provisions thereof, nor does there
exist any occurrence or circumstance which, with the passage of time or giving
of notice would constitute such a default, except for any such default that
would not or will not have a Material Adverse Effect. As of the date of this
Agreement, the Seller has not received any written notice of the intention of
any party to terminate, extend or renew any Contract. The Seller has delivered
true and complete copies of all of the Contracts to the Buyer.
SECTION 5.08. REAL PROPERTY; PERSONAL PROPERTY.
(a) SCHEDULES 1.01(a) and 1.01(b) hereto set forth a complete and
accurate list as of the date of this Agreement of all of the real property
relating to or used or held for use in connection with the business or
operations of Natvar other than the Seller Offices. SCHEDULE 1.01(b) sets forth
a complete and accurate list as of the date of this Agreement of all of the
leases pursuant to which Seller currently maintains a leasehold interest in any
real property related to or used or held for use in the business of Natvar other
than the Seller Offices.
(b) SCHEDULE 1.01(d) sets forth a complete and accurate list as of the
date of this Agreement of all of the leases pursuant to which Seller maintains a
leasehold interest in any of the personal property other than any Excluded
Assets relating to or used or held for use in connection with the business or
operations of Natvar.
SECTION 5.09. EQUIPMENT. SCHEDULE 1.01(b) hereto includes a complete
and accurate list as of the date of this Agreement of all of the equipment of
the Seller relating to or used or held for use in connection with the business
or operations of Natvar, other than any Excluded Assets. SCHEDULE 5.09-1 hereto
sets forth a complete and accurate list as of the date of this Agreement of all
of the equipment relating to or used or held for use in connection with the
business or operations of Natvar (other than any Excluded Assets) with a net
book value greater than zero. SCHEDULE 5.09-2 sets forth a list, prepared by the
Seller in the exercise of its commercially reasonable best efforts, of all other
material items of equipment of the Seller relating to or held for use in
connection with the business or operations of Natvar other than that equipment
located in the Seller Offices. Notwithstanding the foregoing, the list of
equipment set forth on SCHEDULE 5.09-2 is not intended to be an exhaustive list
of all equipment of the Seller.
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SECTION 5.10. LOCATION OF INVENTORIES. SCHEDULE 5.10 hereto specifies
all locations at which Inventories are held for use in the business or
operations of Natvar .
SECTION 5.11. INTELLECTUAL PROPERTY.
(a) SCHEDULE 1.01(g) hereto sets forth a list of all of the
Intellectual Property used in the business and operations of Natvar. The Buyer
shall, as of the Closing Date, have the right to use, hold for use, transfer,
sublicense or otherwise exploit all such Intellectual Property set forth in
SCHEDULE 1.01(g) hereto, in a manner not materially different than that in which
such Intellectual Property is or may be used, held for use, transferred,
sublicensed or otherwise exploited by the Seller in the conduct of the business
of Natvar as of the date hereof and as of the Closing Date. Set forth on
SCHEDULE 1.01(g) is the following information with respect to each such
Intellectual Property Right: (i) the nature of such Intellectual Property Right;
(ii) the owner, if not the Seller, of such Intellectual Property Right; (iii)
the jurisdictions in which such Intellectual Property Right has been issued or
registered or an application for issuance or registration has been filed; (iv)
the registration or application numbers; and (v) the termination or expiration
dates. SCHEDULE 1.01(g) also sets forth, with respect to any license or
sublicense of any such Intellectual Property Right, (i) the identity of the
licensee or sublicensee, (ii) a description of the nature and subject matter
thereof, (iii) the amount of any royalty payments and (iv) the termination or
expiration dates.
(b) The Seller owns or has the right to use all material Intellectual
Property used in the business or operations of Natvar on the date hereof and as
of the Closing Date. Such Intellectual Property is not subject to any material
Encumbrances, other than Permitted Encumbrances. The Seller has used
commercially reasonable measures to protect the secrecy, confidentiality and
value of the material Intellectual Property used in the business or operations
of Natvar. To the knowledge of the Seller, no material Intellectual Property
used in the business or operations of Natvar (other than unregistered
copyrights) has been used, divulged or appropriated for the benefit of any
Person other than the Seller, except where such use, divulgence or appropriation
has not had and will not have a Material Adverse Effect.
(c) Except as set forth on SCHEDULE 5.11, the Seller has no knowledge,
and has not, since April 25, 1998, made any claim in writing, of a violation,
infringement, misuse or misappropriation by others of rights of the Seller to or
in connection with any Intellectual Property used in the business or operations
of Natvar. The Seller has not disclosed any Intellectual Property to any Person,
including without limitation any processes or formulae, research and development
results or other know-how, relating to business or operations of Natvar other
than to its employees with a need to know such information.
(d) There is no pending or, to the knowledge of the Seller,
threatened claim by any third Person of a violation, infringement, misuse or
misappropriation by the Seller in connection with the business or operations
of Natvar of any patents, trademarks, copyrights, mask works or trade secrets
owned by any third Person, or of the invalidity or any patent included in
Intellectual Property used primarily in the business and operations of
Natvar. The conduct of the business of
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Natvar by the Buyer following the Closing in the manner currently conducted by
the Seller will not result in the infringement of any patent, trademark,
copyright, mask work or trade secret owned by any third Person. There are no
interferences or other contested inter partes proceedings, either pending or, to
the knowledge of the Seller, threatened, in any domestic or foreign copyright
office, patent and trademark office or any other Governmental Entity relating to
any pending application with respect to any material Intellectual Property used
in the business or operations of Natvar.
SECTION 5.12. CUSTOMERS. SCHEDULE 5.12 hereto sets forth a list of the
top fifty customers or paying accounts on the basis of gross sales of Natvar for
the eleven fiscal month period ending on March 27, 1999.
SECTION 5.13. LITIGATION, ETC. No proceeding, arbitration, action or
suit is pending or, to the knowledge of the Seller, threatened against the
Seller with respect to the business or operations of Natvar or the Acquired
Assets or any Natvar Employee (as defined in Article XV) (insofar as it relates
to the business or operations of Natvar or any of the Acquired Assets).
SECTION 5.14. LABOR RELATIONS. There is no charge pending or, to the
knowledge of the Seller, threatened against the Seller (or, to the knowledge of
the Seller, any facts or circumstance that could reasonably be expected to lead
to or form the basis of any such charge) alleging, with respect to any Natvar
Employee, any violation of any federal, state or local statute or regulation
relating to employment and employment practices, including without limitation
the Occupational Health and Safety Act of 1970, as amended ("LABOR LAWS AND
REGULATIONS"), or any violation of any collective bargaining agreement, any
unlawful discrimination in employment practices or any unfair labor practices
before any court, agency, or other judicial or arbitral body, except for any
such violation that would not have a Material Adverse Effect. There is no labor
strike, dispute, slow-down or work stoppage actually pending or, to the Seller's
knowledge, threatened against the Seller (with respect to Natvar Employees). No
Natvar Employees are covered by any collective bargaining agreement, and no
collective bargaining agreement or other labor union agreement or agreement with
organized labor for Natvar Employees is currently being negotiated or pending
negotiation and, to the knowledge of the Seller, there are no activities or
proceedings by a labor union to organize any Natvar Employees. Except as set
forth on SCHEDULE 5.14 hereto, there has been no material concerted work
stoppage with respect to the business or operations of Natvar during the last
three years. Except as set forth on SCHEDULE 5.14, the Seller is, and upon the
consummation of the transactions contemplated hereby will be, in full compliance
with the requirements of the Labor Laws and Regulations, including without
limitation, the Worker Adjustment and Retraining Notification Act of 1988, as
amended (the "WARN ACT"), and any similar state or local laws relating to
layoffs or employment termination.
SECTION 5.15. PENSIONS AND BENEFITS.
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(a) Except as set forth on SCHEDULE 5.15(a) hereto, as of the date of
this Agreement, the Seller does not maintain or have any obligation to make
contributions to, any employee benefit plan (an "ERISA PLAN") within the meaning
of Section 3(3) of the United States Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any other retirement, profit sharing, stock
option, stock bonus or other benefit program (a "NON-ERISA PLAN", and
collectively with the ERISA Plans, the "PLANS"), in either case, for the benefit
of any Natvar Employee. The Seller has heretofore delivered or made available to
the Buyer copies or complete and accurate summaries of each such ERISA Plan and
Non-ERISA Plan and any associated funding instruments and, with respect to any
such ERISA Plan, the most recently completed annual report (with any required
attachments), the most recent IRS determination letter, and any other advisory
opinions or rulings applicable to such Plan.
(b) All of the Plans have been maintained and operated in all material
respects in accordance with all federal, state, provincial and local laws
applicable to such plans, and the terms and conditions of the respective plan
documents.
SECTION 5.16. COMPLIANCE WITH LAWS, ETC. The Seller (insofar as it
relates to the business or operation of Natvar) is in compliance with all laws,
statutes, governmental regulations and all judicial or administrative tribunal
orders, judgments, writs and injunctions applicable to it, except for any
non-compliance that would not or will not have a Material Adverse Effect.
SECTION 5.17. LICENSES, PERMITS AND AUTHORIZATIONS. SCHEDULE 5.17
hereto sets forth a list of all material licenses, franchises and other permits
of or with any Governmental Authority held by the Seller and related to the
business and operation of Natvar (collectively, "PERMITS"). Except as provided
in SCHEDULE 5.17, to the Seller's knowledge, all such Permits are in full force
and effect.
SECTION 5.18. TAX MATTERS. The Seller has filed all Income Tax Returns
that it was required to file (insofar as they relate to the business or
operation of Natvar), and has paid all Income Taxes shown thereon as owing
(insofar as they relate to the operation of Natvar), except where the failure to
file any such Income Tax Return or to pay Income Taxes would not or will not
have a Material Adverse Effect. Neither the Seller nor any of its subsidiaries
is the subject of any pending or, to the Seller's knowledge, threatened inquiry,
investigation or administrative or legal proceeding by the Internal Revenue
Service, the taxing authorities of any state or local jurisdiction or other
Governmental Entity which would or will have a Material Adverse Effect.
SECTION 5.19. ENVIRONMENTAL MATTERS. (i) Except as referenced on
SCHEDULE 5.19 hereto, Natvar is in full compliance with all applicable
Environmental Laws (as defined in Article XV), and there are no liabilities of
or relating to the Seller of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, arising under or relating to
any Environmental Law which relates to the Real Property or the Leased Real
Property or the business or operations of Natvar, and there are no facts, events
or circumstances that could reasonably be expected to result in or provide the
basis for any such liability.
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(ii) Natvar has all Permits required under Environmental Laws
for the business and operation of Natvar as presently conducted (the
"ENVIRONMENTAL PERMITS") and there are no violations, investigations or
proceedings either in existence, pending nor, to the knowledge of the
Seller, threatened, with respect to the Environmental Permits. The
Environmental Permits are valid and in full force and effect, are
transferable and will not be terminated or impaired or become
terminable as a result of the transactions contemplated hereby.
(iii) Except with respect to the former property of the Seller
located in Woodbridge, New Jersey, since January 1, 1989, no notice,
notification, demand, request for information, citation, summons,
complaint or order has been received by the Seller, no complaint has
been filed, no investigation, action, claim, suit, proceeding or review
is pending or, to the knowledge of the Seller, is threatened by any
Person against, the Seller which relates to the Real Property or the
Leased Real Property or the business or operations of Natvar nor has
any penalty been assessed against the Seller which relates to the Real
Property or the Leased Real Property or the business or operations of
Natvar with respect to any alleged violation of any Environmental Law
or liability thereunder.
(iv) No Hazardous Substance has been discharged, generated,
treated, manufactured, handled, stored, transported, emitted, released,
disposed of or is present at any of the Real Property or the Leased
Real Property in violation of any Environmental Law or which would
(either individually or in the aggregate) require remedial measures or
other action (including a cessation of any operations of Natvar) by the
Seller.
(v) All environmental investigations, studies, audits, tests,
reviews or other analyses conducted by the Seller in relation to any
Real Property or Leased Real Property since July 24, 1991, or in the
possession of the Seller, have been delivered to the Buyer prior to the
date hereof and are listed on SCHEDULE 5.19(b).
(vi) For purposes of this Section 5.19, the term "Seller"
shall include any entity which is, in whole or in part, a predecessor
of the Seller and with respect to which the Seller or the Buyer could
be held liable under the Environmental Laws with respect to the Real
Property or the Leased Real Property or any other assets acquired by
the Buyer hereunder.
SECTION 5.20. BROKERS. No finder, broker, agent or other intermediary,
other than Mesirow Financial, whose fees shall be the responsibility of the
Seller, has worked for or on behalf of the Seller in connection with the
negotiation or consummation of the transactions contemplated hereby.
SECTION 5.21. FOREIGN CORRUPT PRACTICES. Neither the Seller, nor any of
its subsidiaries nor any director, officer, agent, employee or other person
acting on behalf of the Seller or any subsidiary has, in connection with the
business or operations of Natvar, (i) used any
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corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity, (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or
employee, (iii) violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or
employee.
SECTION 5.22. REQUIRED CONSENTS. SCHEDULE 5.22 sets forth each Contract
and Permit (including without limitation any Environmental Permit) that requires
the consent or other action of any Person as a result of the execution, delivery
and performance of this Agreement or in order to assign or transfer such
Contract or Permit to the Buyer ("REQUIRED CONSENTS").
SECTION 5.23. RECEIVABLES. All accounts, notes and other receivables
relating to Natvar and reflected in the balance sheet contained in the Most
Recent Financial Statements (other than receivables that have been collected
since the date of such balance sheet), or that will be reflected in the Closing
Date Balance Sheet, are, or will be (with respect to the Closing Date Balance
Sheet), valid and fully collectible in the stated amount thereof, subject to the
aggregate reserve for doubtful accounts established for all of such accounts and
set forth in the Most Recent Financial Statements or on the Closing Date Balance
Sheet.
SECTION 5.24. INVENTORIES. Since April 25, 1998, the Inventories have
been maintained in the ordinary course of business, and are owned by the Seller
free and clear of all Encumbrances, other than Permitted Encumbrances. Subject
to the reserve for excess and obsolete inventory that will be set forth on the
Closing Date Balance Sheet, all of the Inventories held by the Seller as of the
Closing Date will consist of items of usable and saleable quality and will be
sufficient in quantity as of the Closing Date for the operation of the business
and operations of Natvar in accordance with past practice.
SECTION 5.25. PRODUCTS. All of the products produced or sold by the
Seller in connection with the operation of Natvar are and have been (i)
manufactured in full compliance in all material respects with all applicable
federal, state, local and foreign laws and regulations, and (ii) fit for the
ordinary purposes for which such products are intended to be used in conformity
in all material respects with any representations or warranties made by the
Seller in connection with the sale thereof. There exists no design defect with
respect to any such product, each of which prominently displays adequate
warnings in accordance with applicable laws, rules and regulations, and with
industry practice.
SECTION 5.26. BULK SALES LAWS. As of the Closing Date, the Seller will
have complied with all "bulk sales", "bulk transfer" or similar laws of any
state relating to the transfer of the Acquired Assets.
SECTION 5.27. GOVERNMENTAL APPROVALS. No consent, approval or
authorization of or registration, designation, declaration or filing with any
Governmental Entity, on the part of the Seller, is required in connection with
the consummation of any of the transactions contemplated hereby, except for any
approval, authorization, registration, designation,
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declaration or filing that, if not obtained or made, would not have a material
Adverse Effect, other than compliance with the applicable requirements of the
HSR Act.
SECTION 5.28. PROJECTIONS. All financial projections provided by the
Seller to the Buyer excepting those made in the Confidential Memorandum,
prepared on behalf of the Seller by Mesirow Financial (the "CONFIDENTIAL
MEMORANDUM"), were made by the Seller in good faith and based upon assumptions
believed by the Seller to be reasonable at the time made.
SECTION 5.29. DISCLOSURE. The written information provided by the
Seller to the Buyer with respect to the business, operations and financial
condition of the Seller as it relates to Natvar (other than the information
contained in the Confidential Memorandum, with respect to which the Seller makes
no representations or warranties), all of such information being referred to
hereinafter as the "DISCLOSURE INFORMATION", is not untrue or misleading in any
respect material to the transactions contemplated hereby and does not contain a
material misstatement of fact relating to the business, operations and financial
condition of the Seller as it relates to Natvar, PROVIDED that the Seller shall
have no liability under this Section 5.29 with respect to any untrue or
misleading information, or any material misstatement of fact if such untrue or
misleading information, or material misstatement of fact, is corrected or
contradicted by a preponderance of other written information provided by the
Seller to the Buyer, and PROVIDED, FURTHER, that the Seller shall have no
liability under this Section 5.29 with respect to any untrue or misleading
information, or any material misstatement of fact, unless such untrue or
misleading information, or material misstatement of fact, is material to all of
the transactions contemplated hereby taken as a whole.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
SECTION 6.01. ORGANIZATION AND STANDING. Each of the Buyer and the
Parent is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has all requisite corporate power
and authority to enter into this Agreement, to perform all of its agreements and
obligations hereunder in accordance with its terms and, with respect to the
Buyer, to purchase the Acquired Assets from the Seller.
SECTION 6.02. AUTHORIZATION OF AGREEMENT; VALIDITY. Each of the Buyer
and the Parent has obtained all necessary corporate authorizations and approvals
required for the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby. This Agreement has been duly executed
and delivered by each of the Buyer and the Parent and constitutes the legal,
valid and binding obligation of the Buyer and the Parent enforceable against
such entity in accordance with its terms, except as such validity,
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binding effect or enforcement may be limited by bankruptcy, insolvency or
similar laws affecting creditors' rights generally or by equitable principles
relating to the availability of remedies.
SECTION 6.03. NO CONFLICT. Except as set forth in SCHEDULE 6.03 hereto,
the execution and delivery of this Agreement, the performance and compliance by
the Buyer or the Parent with the terms hereof, and the consummation of all the
transactions contemplated hereby, will not either currently, or after notice or
lapse of time or both:
(a) conflict with or result in a violation of any provision of
the Certificate of Incorporation, By-Laws or other organizational
documents of the Buyer or the Parent; or
(b) conflict with or result in a violation by the Buyer or the
Parent of any statute, regulation, order, law, ordinance or restriction
applicable to the Buyer; or
(c) result in a violation by the Buyer or the Parent of any
judgment, order or decree of any court or judicial or quasi-judicial
tribunal applicable to the Buyer or the Parent.
SECTION 6.04. GOVERNMENTAL APPROVALS. No consent, approval or
authorization of or registration, designation, declaration or filing with any
Governmental Entity, on the part of the Buyer or the Parent, is required in
connection with the consummation of any of the transactions contemplated hereby,
except for any approval, authorization, registration, designation, declaration
or filing that, if not obtained or made, would not have a material adverse
effect on the Buyer's or the Parent's ability to consummate the transactions
contemplated hereby, other than compliance by the Buyer with the applicable
requirements of the HSR Act.
SECTION 6.05. BROKERS. No finder, broker, agent or other intermediary
has worked for or on behalf of the Buyer in connection with the negotiation or
consummation of the transactions contemplated hereby.
ARTICLE VII
CONDUCT OF BUSINESS PENDING CLOSING
The Seller covenants and agrees that, from and after the date of this
Agreement and until the Closing, except as otherwise specifically consented to
or approved by the Buyer in writing:
SECTION 7.01. FULL ACCESS. The Seller shall afford to the Buyer and its
authorized representatives such access during normal business hours to all
properties, books, records, contracts and documents of Natvar as the Buyer shall
reasonably request in connection with its review of Natvar, and the Seller shall
furnish or cause to be furnished to the Buyer and its authorized representatives
all such financial and other information with respect to the business or
operations of Natvar as the Buyer may reasonably request. Any such investigation
shall be on
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reasonable prior notice and shall be carried out in such a manner as to minimize
any disruption of the business or operations of Natvar.
SECTION 7.02. CARRY ON IN REGULAR COURSE. Except as may be otherwise
contemplated by this Agreement or required by any of the documents listed in any
Schedule to this Agreement, the Seller shall carry on the business or operations
of Natvar in the ordinary course consistent with past practice.
SECTION 7.03. NO GENERAL INCREASES. Except for any increase required
under the terms of any benefit plan referred to in Section 5.15 and any increase
in compensation that will not constitute an Assumed Liability, the Seller shall
not (i) grant any general or uniform increase in the rates of pay of employees
of Natvar, except for increases in salary or wages in the ordinary course
operation of Natvar consistent with past practice, or (ii) grant any general,
uniform or individual increase in the benefits under any bonus or pension plan
or other contract or commitment for the benefit of any employee of Natvar, or to
increase the compensation payable or to become payable to officers, key salaried
employees or representatives of Natvar, or (iii) increase any bonus, insurance,
pension or other benefit plan, payment or arrangement made to, for or with any
such officers, key salaried employees or representatives.
SECTION 7.04. SALE OF ASSETS. The Seller shall not sell, offer for
sale, agree to sell, assign, transfer, deliver or otherwise dispose of any
assets relating to or used or held for use in connection with the business or
operations of Natvar except (i) pursuant to existing obligations under the
Contracts; and (ii) inventories in the ordinary course consistent with past
practice.
SECTION 7.05. INSURANCE. The Seller shall maintain insurance coverage
for Natvar comparable to the insurance coverage currently in effect.
SECTION 7.06. PRESERVATION OF ORGANIZATION. Except as may be otherwise
specifically required by this Agreement, the Seller shall use its commercially
reasonable best efforts under the applicable circumstances to keep the
organization and material business relationships of Natvar intact in all
material respects.
SECTION 7.07. NO SHOPPING. Prior to any termination of this Agreement
pursuant to Article XIII hereof, the Seller shall not solicit or enter into any
agreement with respect to the sale of all or any substantial portion of Natvar
or of the Acquired Assets, to any Person other than the Buyer.
SECTION 7.08. MAINTENANCE OF CONTRACTS. The Seller (i) will not
terminate any Contract, (ii) will not take any action or fail to take any action
that would constitute a default or breach under any Contract and (iii) will
notify the Buyer of any proposed new contract or agreement, or any scheduled or
proposed extension or renewal of any Contract, a reasonable period of time prior
thereto, and enter into such proposed new contract or agreement, or grant such
extension or renewal, only upon the consent of the Buyer, such consent not to be
unreasonably withheld.
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SECTION 7.09. NOTICES OF CERTAIN EVENTS. The Seller shall promptly
notify the Buyer of:
(a) any notice or 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;
(b) any notice or communication from any Governmental Entity
in connection with the transactions contemplated hereby;
(c) any actions, suits, claims, investigations or proceedings
commenced or to its knowledge, threatened against, relating to,
involving or otherwise affecting (i) the business or operations of
Natvar, (ii) any current or former Natvar Employee relating to the
business or operations of Natvar or (iii) the ability of the Seller to
perform its obligations under this Agreement;
(d) the damage or destruction by fire or other casualty of any
Acquired Asset or part thereof, or in the event that any Acquired Asset
or part thereof becomes the subject of any proceeding or, to the
knowledge of the Seller, threatened proceeding for the purpose of
taking all or any part thereof or right relating thereto by
condemnation, eminent domain or other similar governmental action;
(e) any notice from a customer whose purchases from Natvar
exceeded Twenty-five Thousand Dollars ($25,000) or more of Natvar's
sales during fiscal 1997, fiscal 1998 or the first eleven months of
fiscal 1999, stating such customer's intention to terminate or
substantially curtail its relationship with the Seller; and
(f) the occurrence of any event that causes any of the
representations and warranties of the Seller in this Agreement to be or
become untrue or inaccurate in any material respect.
SECTION 7.10. CLOSING CONDITIONS. The Seller shall use its commercially
reasonable best efforts to satisfy, or cause the satisfaction of, the conditions
set forth in Article VIII below.
SECTION 7.11. ACTIONS WITH RESPECT TO REPRESENTATIONS AND WARRANTIES.
The Seller shall not (i) knowingly take any action that would make any
representation or warranty of the Seller made herein inaccurate or untrue in any
material respect at or as of any time prior to the Closing; or (ii) knowingly
refrain from taking any action that would prevent such representation or
warranty from being inaccurate or untrue in any material respect at or as of
such time, PROVIDED that the Seller shall be entitled to take any actions, or
refrain from taking any actions, that it proposes to take or refrain from taking
in furtherance of a valid business purpose upon the consent of the Buyer, such
consent not to be unreasonably withheld.
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ARTICLE VIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
The obligation of the Buyer to consummate the Closing is subject to the
satisfaction prior to or at the Closing of each of the following conditions (to
the extent noncompliance is not waived in writing by the Buyer):
SECTION 8.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Seller in this Agreement shall have been correct in all
material respects when made and shall be correct in all material respects at and
as of the Closing with the same effect as though such representations and
warranties had been made on and as of the Closing (except for any such
representations or warranties that speak as of a particular date, which
representations and warranties shall remain correct in all material respects as
of such date).
SECTION 8.02. COMPLIANCE WITH AGREEMENT. The Seller shall have
performed and complied in all material respects with all of its obligations
under this Agreement to be performed or complied with by it prior to or at the
Closing and shall have obtained all approvals and consents necessary to enter
into this Agreement and to perform all of the transactions contemplated hereby,
in each case in form and substance reasonably satisfactory to the Buyer, and no
such consent or approval shall have been suspended, made conditional or revoked.
SECTION 8.03. NO MATERIAL ADVERSE CHANGE. There shall have been, since
April 25, 1998, no material adverse change in the business, operations, assets,
financial condition or results of operation of Natvar taken as a whole.
SECTION 8.04. HSR ACT NOTIFICATION. The Seller shall have obtained
notification that the waiting period, or any extensions thereof, under the HSR
Act have expired or been terminated and in respect of the notifications of the
Buyer and the Seller pursuant to the HSR Act, the applicable waiting period and
any extensions thereof shall have expired or been terminated.
SECTION 8.05. OFFICER'S CERTIFICATE. The Seller shall have delivered to
Buyer at the Closing, a certificate, duly executed by the Chief Executive
Officer or the Chief Financial Officer of the Seller, certifying (i) that the
conditions in each of Sections 8.01, 8.02, 8.03 and 8.08 have been satisfied,
(ii) that the Tangible Net Worth is not less than $5,500,000 on such date and
(iii) that the EBITDA for Natvar for its 1999 fiscal year is not less than
$3,600,000. Buyer shall have the right to rely on such certificate, and to seek
remedies in the event of its inaccuracy, as though it were a representation or
warranty of the Seller made herein, subject to the limitations of Sections 16.01
and 18.04.
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SECTION 8.06. OPINION OF COUNSEL. The Seller shall have delivered to
the Purchaser opinions, dated as of the Closing Date, of (i) Bingham Dana LLP,
counsel for the Seller, in the form of EXHIBIT C hereto; and (ii) of counsel to
the Seller licensed to practice in the State of North Carolina covering, in the
case of the opinion from counsel licensed to practice in the State of North
Carolina, such matters and in form reasonably satisfactory to the Seller.
SECTION 8.07. DUE DILIGENCE INVESTIGATION. The Buyer shall have
completed its due diligence investigation of the Seller and the business and
operations of Natvar, including without limitation an environmental audit of the
Real Property and the Leased Real Property, and Buyer shall be satisfied in its
sole discretion with the results of any such investigation.
SECTION 8.08. NO LITIGATION. There shall not be any instituted, pending
or threatened action or proceeding by any Person before any court, or
governmental authority or agency, whether domestic or foreign, seeking to
restrain, prohibit or otherwise interfere with the transactions contemplated by
this Agreement or the ownership or operation of the Acquired Assets by the
Buyer, and no notice thereof shall have been received by the Buyer or the
Seller.
SECTION 8.09. DOCUMENTATION. The Buyer shall have received such
documents as it shall reasonably request relating to the corporate organization
of the Seller and the authority of the Seller to enter into this Agreement and
to consummate the transactions contemplated hereby, in form and substance
reasonably satisfactory to the Buyer.
SECTION 8.10. ESCROW AGREEMENT. The Seller and the Escrow Agent shall
have executed and delivered the Escrow Agreement and the Escrow Agreement shall
be in full force and effect.
SECTION 8.11. RELATED PARTY CONFIDENTIALITY AGREEMENTS. Each of the
persons named on SCHEDULE 15 shall have executed and delivered to the Buyer a
confidentiality agreement in form reasonably satisfactory to the Buyer.
SECTION 8.12. REQUIRED CONSENTS. The Buyer shall have received all of
the Required Consents, and such consents shall be in the form reasonably
satisfactory to the Buyer.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of the Seller to consummate the Closing is subject to
the satisfaction at or prior to the Closing of each of the following conditions
(to the extent noncompliance is not waived in writing by the Seller):
SECTION 9.01. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Buyer in this Agreement shall have been correct in all
material respects
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when made and shall be correct in all material respects at and as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of such date.
SECTION 9.02. COMPLIANCE WITH AGREEMENT. The Buyer shall have performed
and complied in all material respects with all of its obligations under this
Agreement to be performed or complied with by it prior to or at the Closing.
SECTION 9.03. HSR ACT NOTIFICATION. In respect of the notifications of
the Buyer and the Seller pursuant to the HSR Act (as defined in Article XV
hereof), the applicable waiting period and any extensions thereof shall have
expired or been terminated.
SECTION 9.04. NO LITIGATION. There shall not be any instituted, pending
or threatened action or proceeding by any Person before any court, or
governmental authority or agency, whether domestic or foreign, seeking to
restrain, prohibit or otherwise interfere with the transactions contemplated by
this Agreement or the ownership or operation of the Acquired Assets by the
Buyer, and no notice thereof shall have been received by the Buyer or the
Seller.
SECTION 9.05. DOCUMENTATION. The Seller shall have received such
documents as it shall reasonably request relating to the corporate organization
of the Buyer and the authority of the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, in form and substance
reasonably satisfactory to the Seller.
SECTION 9.06. ESCROW AGREEMENT. The Buyer and the Seller shall have
executed and delivered the Escrow Agreement and the Escrow Agreement shall be in
full force and effect.
ARTICLE X
EMPLOYEES AND EMPLOYEE BENEFITS
SECTION 10.01. HIRING EMPLOYEES.
(a) The Buyer may, in its sole discretion, offer employment to any
current Natvar Employee, but is under no obligation to employ or to offer
employment to any Natvar Employee or any other Person. All employees accepting
employment with the Buyer at or prior to the Closing are referred to in this
Agreement as "ASSUMED EMPLOYEES." The Seller will be solely responsible for the
cost of any bonus or payment to (whether as severance or otherwise), or increase
in compensation or benefits of, any employee, officer or director of the Seller
that is not an Assumed Liability or that arises out of or in connection with the
transactions contemplated by this Agreement, including without limitation the
failure by such Person to be employed by or to receive an offer of employment
from the Buyer at or prior to the Closing.
(b) The Buyer agrees that, for a period of 60 days after the Closing
Date, it will not cause any of the Assumed Employees hired by it to suffer
"employment loss" for purposes of the
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WARN Act if such employment loss could create any liability for the Seller,
unless the Buyer delivers notices under the WARN Act in such a manner and at
such a time that the Seller bears no liability with respect thereto.
(c) Except as otherwise specified in paragraph (a) above, the Buyer
shall bear the cost of any severance or other obligation owed to any Assumed
Employee arising out of the termination of such employee's employment with the
Buyer or one of its Affiliates after the Closing Date, including any obligations
or liabilities that may arise from any claim that such termination was wrongful
or in violation of applicable law.
ARTICLE XI
CERTAIN COVENANTS
SECTION 11.01. HSR ACT COMPLIANCE
The Buyer and the Seller shall (a) as promptly as practicable after the
date hereof, and in no event later than April 12, 1999, make such filings as may
be required by the HSR Act with respect to the transactions contemplated hereby,
provided that the Buyer and the Seller shall use their respective best efforts
to make such filings on April 9, 1999, (b) respond promptly to inquiries from
the Department of Justice and the Federal Trade Commission in connection with
such filings, (c) file or cause to be filed as promptly as practicable with the
Department of Justice and Federal Trade Commission any supplemental information
that may be requested pursuant to the HSR Act, and (d) seek the earliest
possible termination or waiver of the waiting period under such statute. The
Buyer and the Seller shall also file or cause the filing of the notices,
applications and requests with federal, state, local and foreign governmental
authorities described in SCHEDULE 11.01 hereto.
SECTION 11.02. THIRD PARTY CONSENTS.
(a) Notwithstanding anything to the contrary in this Agreement, this
Agreement shall not constitute an agreement to assign or transfer any
instrument, contract, lease, permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting therefrom if an
assignment or transfer or an attempt to make such an assignment or transfer
without the consent of a third party would constitute a breach or violation
thereof; and any transfer or assignment to the Buyer by the Seller of any
interest under any such instrument, contract, lease, permit or other agreement
or arrangement that requires the consent of a third party shall be made subject
to such consent or approval being obtained. In the event any such consent or
approval is not obtained on or prior to the Closing Date, the Seller shall
continue to use its best efforts (but not including the payment of money) to
obtain any such consent or approval after the Closing Date until such time as
such consent or approval has been obtained, and the Seller will cooperate with
the Buyer in any lawful and economically feasible arrangement to provide that
the Buyer shall receive the interest of the Seller in the benefits under any
such instrument, contract, lease or
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permit or other agreement or arrangement, including performance by the Seller,
as agent, sublessor or sublicensor, if economically feasible, whereby the Seller
would enforce all rights thereunder on behalf of the Buyer, PROVIDED that the
Buyer shall undertake to pay or satisfy the corresponding liabilities for the
enjoyment of such benefit to the extent the Buyer would have been responsible
therefor hereunder if such consent or approval had been obtained. The Seller
shall pay and discharge, and shall indemnify and hold the Buyer harmless from
and against, any and all out-of-pocket costs of seeking to obtain or obtaining
any such consent or approval after the Closing Date.
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SECTION 11.03. ACCESS TO BOOKS AND RECORDS.
(a) The Buyer agrees to cooperate with and to make available to the
Seller such documents, books, records or information relating to the business or
operations of Natvar as the Seller may reasonably require after the Closing.
(b) The Buyer agrees to preserve and protect all books, records, files
and data referred to in paragraph (a) above for a period of six (6) years after
the Closing Date.
(c) The Buyer agrees not to destroy any files or records which are
subject to this Section 11.03 (i) for the period described in clause (b) of this
Section 11.03, and (ii) thereafter, without giving at least thirty (30) days'
notice to the Seller. Upon receipt of such notice, the Seller may (A) cause to
be delivered to it the files or records intended to be destroyed, at the
Seller's expense, or (B) notify the Buyer that the Seller will pay the cost of
storing and maintaining such files or records (including any necessary costs of
moving such files or records to a location under control of the Seller).
SECTION 11.04. USE OF SELLER'S NAME. The Buyer agrees that promptly
after the Closing Date it will cease using any references to the Seller, or any
of its respective Affiliates, including any such use in connection with the use
of existing supplies of labels, signs, letterhead and other printed materials,
except that the Buyer may use stocks of catalogs and other promotional materials
existing in the hands of the Seller on the Closing Date and included in the
Acquired Assets, but only to the extent that they are stickered so as to
indicate that Natvar is no longer affiliated with the Seller. The Seller agrees
that from and after the Closing Date, it will cease using the name "Natvar" or
any reference thereto in its advertising or promotional material, except to the
extent provided in the prior sentence.
SECTION 11.05. CLOSING CONDITIONS. The Buyer shall use its commercially
reasonable best efforts to cause the satisfaction of the conditions set forth in
Article IX above.
SECTION 11.06. CLOSING DATE BALANCE SHEET AND EBITDA. On or prior to
the seventh business date after the Closing Date, the Seller shall deliver to
the Buyer a balance sheet of the Acquired Assets and the Assumed Liabilities as
of the end of the day on the Closing Date prepared by the Seller (the "CLOSING
DATE BALANCE Sheet"), and a calculation of EBITDA for the period between
April 26, 1998 and the earlier of the Closing Date or April 24, 1999. The
Buyer shall give the Seller all access to the books and records of Natvar
included in the Acquired Assets, as well as to any Assumed Employees,
determined by the Seller to be necessary for the preparation of such Closing
Date Balance Sheet and EBITDA calculation. The Closing Date Balance Sheet and
EBITDA calculation shall be certified to be true and accurate by the Chief
Financial Officer of the Seller and shall contain the Seller's calculation of
the Tangible Net Worth as of the end of the day on the Closing Date and
EBITDA for such period. From and after the delivery of the Closing Date
Balance Sheet and EBITDA calculation, the Seller shall grant the Buyer
reasonable access, upon reasonable notice and at reasonable times, to the
workpapers
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of the Seller and its accountants, if any, used in connection with the
preparation of the Closing Date Balance Sheet and the EBITDA calculation.
ARTICLE XII
TAX MATTERS
SECTION 12.01. GENERAL. The Seller shall remain responsible for all
Income Taxes (as defined in Article XV hereof) of the Seller payable in
connection with the operation of Natvar prior to the Closing. The Seller shall
also remain responsible for the filing of all related Tax Returns (as defined in
Article XV hereof).
SECTION 12.02. COOPERATION ON TAX MATTERS; CONDUCT OF PROCEEDINGS.
(a) The Buyer and the Seller shall cooperate fully, as and to the
extent reasonably requested by the other party, in connection with the
preparation and filing of Tax Returns pursuant to this Article XII, any Tax
Returns to be filed by the Seller with regard to the period ending on the
Closing Date and any audit, litigation or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to such preparation and filing and to any audit, litigation or other proceeding
relating thereto and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder.
(b) The Buyer and Seller shall treat and report the transactions
contemplated by this Agreement in all respects consistently for the purposes of
any federal, state or local tax in accordance with Section 3.01.
(c) The Seller shall be responsible for defending any audit, litigation
or other proceeding with respect to any Taxes of the Seller for which the Seller
is wholly or partially responsible for payment pursuant to this Article XII and
shall have the authority to negotiate, compromise and settle any such audit,
litigation or other proceeding.
SECTION 12.03. ALLOCATION OF TRANSFER AND PROPERTY TAXES. (a) All
excise, sales, use, value added, registration stamp, recording, documentary,
conveyancing, franchise, property, transfer, gains and similar Taxes, levies,
charges and fees including any deficiencies, interest, penalties, additions to
Tax or additional amounts excluding any Income Taxes (collectively, "TRANSFER
TAXES") incurred in connection with the transactions contemplated by this
Agreement shall be borne by the Seller. Buyer and Seller shall use reasonable
efforts to minimize the amount of all Transfer Taxes and shall cooperate in
providing each other with any appropriate resale exemption certifications and
other similar documentation. The party that is required by applicable law to
make the filings, reports or returns and to handle any audits or controversies
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with respect to any applicable Transfer Taxes shall do so, and the other party
shall cooperate with respect thereto as necessary at the originally responsible
party's expense.
(b) All real property taxes, personal property taxes and similar AD
VALOREM obligations levied with respect to the Acquired Assets for a taxable
period which includes (but does not end on) the Closing Date (collectively, the
"APPORTIONED OBLIGATIONS") shall be apportioned between Seller and Buyer based
on the number of days of such taxable period which fall on or before the Closing
Date (this and any other tax period which includes one or more days falling on
or before the Closing Date, a "PRE-CLOSING TAX PERIOD") and the number of days
of such taxable period after the Closing Date (a "POST-CLOSING TAX PERIOD").
Seller shall be liable for the proportionate amount of such taxes that is
attributable to the Pre-Closing Tax Period, and Buyer shall be liable for the
proportionate amount of such taxes that is attributable to the Post-Closing Tax
Period. Upon receipt of any bill for real or personal property taxes relating to
the Acquired Assets, each of Seller and Buyer shall present a statement to the
other setting forth the amount of reimbursement to which each is entitled under
this Section together with such supporting evidence as is reasonably necessary
to calculate the proration amount. The proration amount shall be paid by the
party owing it to the other within 30 days after delivery of such statement. In
the event that either Seller or Buyer shall make any payments for which it is
entitled to reimbursement under this Section, the other party shall make such
reimbursement promptly but in no event later than ten (10) days after the
presentation of a statement setting forth the amount of reimbursement to which
the presenting party is entitled along with such supporting evidence as is
reasonably necessary to calculate the amount of reimbursement. In the event that
other party disagrees with the presenting party's calculation, the parties shall
promptly negotiate in good faith to resolve the disagreement. If the parties are
unable to reach agreement within ten (10) days following the initiation of such
negotiations, the disagreement will be resolved by an accounting firm mutually
chosen by the Seller and the Buyer within two (2) business days thereafter. The
cost of such accounting firm shall be borne by the party whose calculations are
most at variance with those of such accounting firm.
SECTION 12.04. SCOPE OF ARTICLE XII.
(a) The provisions of this Article XII shall govern the allocation of
responsibility between the Seller and the Buyer for Taxes of Natvar.
(b) Claims under this Article XII may be made by the Buyer and the
Seller at any time prior to the expiration of the statute of limitations
applicable to the Tax matter to which the Claim relates.
ARTICLE XIII
TERMINATION
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SECTION 13.01. TERMINATION. This Agreement may be terminated at any
time prior to the Closing without liability to the terminating party on account
of such termination (provided the terminating party is not otherwise in default
or in breach of this Agreement), other than as a consequence of the intentional
breach or the intentional default by the terminating party by:
(a) the written agreement of the Buyer and the Seller; or
(b) written notice to the Seller from Buyer, if there is any
material breach of any representation, warranty, covenant or agreement
on the part of the Seller set forth in this Agreement, or if a
representation or warranty of the Seller shall be untrue in any
material respect, in either case, such that the condition specified in
Section 8.01 hereof would not be satisfied at the Closing (a
"TERMINATING SELLER BREACH"), except that, if such Terminating Seller
Breach is curable by the Seller through the exercise of its reasonable
best efforts, then, for a period of up to 30 days from the date that
written notice of the Terminating Seller Breach is given to the Seller
by the Buyer (the "SELLER CURE PERIOD"), but only as long as the Seller
continues to use its reasonable best efforts to cure such Terminating
Seller Breach, such termination shall not be effective, and such
termination shall become effective only if the Terminating Seller
Breach is not cured within the Seller Cure Period; or
(c) written notice to Buyer from the Seller, if (i) there is
any material breach of any representation, warranty, covenant or
agreement on the part of Buyer set forth in this Agreement, or if a
representation or warranty of Buyer shall be untrue in any material
respect, in either case, such that the condition specified in Section
9.01 hereof would not be satisfied at the Closing (a "TERMINATING BUYER
BREACH"), except that, if such Terminating Buyer Breach is curable by
Buyer through the exercise of its reasonable best efforts, then, for a
period of up to 30 days from the date that written notice of the
Terminating Buyer Breach is given to the Buyer by the Seller (the
"BUYER CURE PERIOD"), but only as long as Buyer continues to exercise
such reasonable best efforts to cure such Terminating Buyer Breach,
such termination shall not be effective, and such termination shall
become effective only if such Terminating Buyer Breach is not cured
within the Buyer Cure Period; or
(d) the Buyer or the Seller by written notice to the other
party if the transactions contemplated hereby shall not have been
consummated on or before June 30, 1999, without default by either the
Buyer or the Seller hereunder, unless such date shall be extended by
the mutual written consent of the Seller and the Buyer; or
(e) the Buyer or the Seller by written notice to the other
party if there shall be any law or regulation that makes the
consummation of the transactions contemplated hereby illegal or
otherwise prohibited or would violate any non-appealable final order,
decree or judgment of any court or Governmental Entity.
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SECTION 13.02. EFFECT OF TERMINATION. In the event of the termination
of this Agreement pursuant to the provisions of Section 13.01 hereof:
(a) each party will redeliver all documents, work papers and
other material of the other party or parties relating to the
transactions contemplated hereby including such memoranda, notes,
lists, records or other documents compiled or derived from such
material, whether so obtained before or after the execution hereof, to
the party furnishing the same; and
(b) all information received by any party hereto with respect
to the business of the other parties or their affiliated companies
shall remain subject to the terms of the Confidentiality Agreement (as
defined in Article XIV hereof); and
(c) the provisions of Articles XIV, XV and XVI shall survive
any termination of this Agreement.
SECTION 13.03. REMEDIES UPON TERMINATION. If this Agreement is
terminated as provided herein, no party (nor any stockholder, director, officer,
employee, agent, consultant or representative of such party) shall have any
liability to any other party; PROVIDED, HOWEVER, that if such termination is the
result of (i) the failure of a party to use its appropriate efforts to fulfill a
condition to the performance of the obligations of another party, (ii) the
failure of a party to perform a covenant made by such party herein or other
obligation of such party herein, or (iii) a material breach by a party of any
representation or warranty made by such party herein, then such party shall be
fully liable for any and all damages, losses, liabilities and expenses
(including without limitation reasonable expenses of investigation and
reasonable attorney's fees and expenses) (collectively, "DAMAGES") incurred by
the other party as a result of such failure or breach.
ARTICLE XIV
CONFIDENTIALITY
Any and all information disclosed by the Buyer or the Parent to the
Seller or by the Seller to the Buyer or the Parent in connection with the
negotiations leading to and the execution of this Agreement, or in furtherance
thereof, which information was not already known to the Seller, the Buyer or the
Parent, as the case may be, is and shall remain confidential respectively to the
Seller, the Buyer and the Parent and their respective affiliates, employees and
agents. Each of the Seller, the Buyer and the Parent agrees not to divulge or
disclose or use for its benefit or purposes not associated with and necessary
for the performance of their respective obligations hereunder or the
consummation of the transactions contemplated hereby any such information at any
time in the future unless it has otherwise become public other than by breach
hereof by any of the Seller, the Buyer or the Parent. The information intended
to be protected hereby shall include, but not be limited to, financial
information, customers, sales representatives, and
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anything else having an economic or pecuniary benefit to the Seller, the Buyer
or the Parent, respectively.
ARTICLE XV
DEFINITIONS
As used herein the following terms not otherwise defined have the
following respective meanings:
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. As used in this definition the term "CONTROL" (including the terms
"CONTROLLED BY" and "UNDER COMMON CONTROL WITH") means, with respect to the
relationship between or among two or more Persons, the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or indirectly,
of securities having the power to elect a majority of the board of directors or
similar body governing the affairs of such Person.
"EBITDA" means the amount calculated as the income from operations
generated by Natvar for a particular period to which is added back all amounts
of depreciation, amortization and management fees charged to Natvar by the
Seller.
"ENCUMBRANCE" means all liens, security interests, pledges, charges,
mortgages, conditional sales agreements, title retention agreements and other
encumbrances.
"ENVIRONMENTAL LAW" means any applicable Federal, state, local or
foreign law, treaty, judicial decision, regulation, rule, judgment, order,
decree, injunction, permit, agreement or governmental restriction, each as in
effect on or prior to the Closing Date, relating to the environment or to any
Hazardous Substance.
"GOVERNMENTAL ENTITY" means any government or any court, arbitral
tribunal, administrative agency or commission or other governmental or other
regulatory authority or agency, Federal, state, local, transnational or foreign.
"HAZARDOUS SUBSTANCE" means any substance, pollutant, contaminant,
chemical, waste or material, including petroleum, its derivatives, by-products,
and other hydrocarbons, that is listed, identified in, or regulated under any
applicable Federal, state, local or foreign law, treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit, agreement or
governmental restriction.
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"HSR ACT": the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
"INCOME TAXES" means any Taxes based upon or related to income,
including any Taxes calculated in whole or in part based upon net revenues.
"INDEBTEDNESS" as applied to any Person, means all indebtedness of such
Person to any other Person for borrowed money, whether current or funded, or
secured or unsecured and all such Indebtedness of any other Person which is
directly or indirectly guaranteed by such Person or which such Person has agreed
(contingently or otherwise) to purchase or otherwise acquire or in respect of
which it has otherwise assured against loss, but not including the endorsement
of checks and similar instruments.
"INTELLECTUAL PROPERTY" means any and all United States and foreign:
(A) patents (including design patents, industrial designs and utility models)
and patent applications (including docketed patent disclosures awaiting filing,
reissues, divisions, continuations, continuations-in-part and extensions),
patent disclosures awaiting filing determination, inventions and improvements
thereto; (B) trademarks, service marks, trade names, trade dress, domain names,
logos, business and product names, slogans, and registrations and applications
for registration thereof; (C) copyrights (including software) and registrations
thereof; (D) inventions, processes, designs, formulae, trade secrets, know-how,
research and development, ideas, engineering notebooks, industrial models,
confidential and technical information, manufacturing, engineering and technical
drawings, product specifications and confidential business information; (E) mask
work and other semiconductor chip rights and registrations thereof; (F)
intellectual property rights similar to any of the foregoing; (G) Software,
firmware; (H) copies and tangible embodiments thereof (in whatever form or
medium, including electronic media) and (i) licenses of any of the foregoing.
"KNOWLEDGE OF THE SELLER" or "TO THE SELLER'S KNOWLEDGE" means and is
limited to the actual knowledge of the persons named on SCHEDULE 15 hereto.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on (i) the
business, operations, properties, financial condition, or results of operations
of Natvar or the Acquired Assets taken as a whole, (ii) the rights of the Buyer
taken as a whole in connection with the consummation of the transactions
contemplated by this Agreement; or (iii) the ability of the Seller to perform
its obligations under this Agreement.
"NATVAR EMPLOYEE" means any individual employed by the Seller (whether
part-time or full-time) whose activities or duties relate primarily to the
business or operations of Natvar.
"NON-INCOME TAXES" means any Taxes other than Income Taxes.
"PERMITTED ENCUMBRANCES" means Encumbrances that (i) arise out of Taxes
not in default and payable without penalty or interest or the validity of which
is being contested in good faith by appropriate proceedings, (ii) are
mechanics', carriers', workers', repairmen's, or other similar
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liens that with respect to an Acquired Asset, could not reasonably be expected
to interfere with the use of such Acquired Asset in the conduct of the normal
business operations of Natvar, (iii) arise in connection with any agreement or
instrument existing on the date hereof and constituting part of the Acquired
Assets, or relate to restrictions on transfer embodied in the terms of such
agreement or instrument, (iv) represent the rights of customers, suppliers and
subcontractors in the ordinary course of business under contracts or under
general principles of commercial law or (v) that, with respect to an Acquired
Asset, could not reasonably be expected to interfere with the use of such
Acquired Asset in the conduct of the normal business operations of Natvar.
"PERSON" means any corporation, association, partnership, limited
liability company, organization, business, individual, government or political
subdivision thereof or governmental agency.
"TANGIBLE NET WORTH" means the difference, as of a particular date,
between (i) the sum of Natvar's accounts receivable, Inventories, pre-paid
assets and fixed assets (net), but only to the extent that any of the foregoing
are included in the Acquired Assets; MINUS (ii) the sum of all of Natvar's trade
accounts payable and accrued expenses, but only to the extent that any of the
foregoing are included in the Assumed Liabilities.
"TAX" Any federal, state, provincial, local, or foreign income, gross
receipts, franchise, estimated, alternative minimum, add-on minimum, sales, use,
transfer, registration, value added, excise, natural resources, severance,
stamp, occupation, premium, windfall profit, environmental, customs, duties,
real property, personal property, capital stock, intangibles, social security,
unemployment, disability, payroll, license, employee, or other tax or levy, of
any kind whatsoever, including any interest, penalties, or additions to tax in
respect of the foregoing.
"TAX RETURN" Any return, declaration, report, claim for refund,
information return, or other document (including any related or supporting
estimates, elections, schedules, statements, or information) filed or required
to be filed in connection with the determination, assessment, or collection of
any Tax or the administration of any laws, regulations, or administrative
requirements relating to any Tax.
<PAGE>
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ARTICLE XVI
GENERAL
SECTION 16.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of the parties hereto contained in this Agreement
or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing until the second anniversary of
the Closing Date; PROVIDED, HOWEVER , that (i) the representations and
warranties contained in Section 5.04 and Section 5.19 shall survive
indefinitely; and (ii) the representations and warranties contained in Section
5.15 and Section 5.18, respectively, shall survive until the expiration of the
statute of limitations applicable to the matters covered thereby (giving effect
to any waiver, mitigation or extension thereof), if later.
SECTION 16.02. EXPENSES; CERTAIN TAXES. Except as otherwise
specifically provided herein, each party shall pay its own expenses and costs
incidental to the preparation of this Agreement and to the consummation of the
transactions contemplated hereby.
SECTION 16.03. ASSIGNS. This Agreement may not be assigned in whole or
in part by either party hereto without the prior written consent of the other
party. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, successors and permitted assigns.
SECTION 16.04. ENTIRE AGREEMENT, ETC. This Agreement (including the
Schedules and Exhibits, the Escrow Agreement and the Confidentiality Agreement)
contains the entire understanding of the parties, supersedes all prior
agreements and understandings relating to the subject matter hereof and shall
not be amended except by a written instrument hereafter signed by each of the
parties hereto. No provision hereof may be waived other than by a written
instrument signed by the party against whom enforcement of any such waiver is
sought. Nothing in this Agreement is intended to confer upon any Person other
than the parties hereto any rights or remedies hereunder.
SECTION 16.05. CONSTRUCTION. The language used in this Agreement will
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction will be applied against any party.
SECTION 16.06. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the internal laws (and not the
choice-of-law rules) of the State of New York. Each party hereby irrevocably
submits to the non-exclusive jurisdiction of the state and federal courts
sitting in the City of New York, borough of Manhattan, for the adjudication of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that
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the venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way any
right to serve process in any manner permitted by law.
SECTION 16.07. NOTICES. All notices, requests, payments, instructions
or other documents to be given hereunder shall be in writing or by written
telecommunication, and shall be deemed to have been duly given if delivered
personally or if mailed by certified mail, return receipt requested, postage
prepaid, or sent by written telecommunication, as follows:
If to the Seller, to:
High Voltage Engineering Corporation
401 Edgewater Place, Suite 680
Wakefield, MA 01880
Attention: Joseph W. McHugh, Jr.
Facsimile: (781) 224-1011
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with copies sent contemporaneously to:
Michael P. O'Brien, Esq.
Johan V. Brigham, Esq.
Bingham Dana LLP
150 Federal Street
Boston, Massachusetts 02110
Facsimile: (616) 951-8736
If to the Buyer, to:
Dr. F. Patrick Smith
Chairman and Chief Executive Officer
Tekni-Plex, Inc.
201 Industrial Parkway
Branchburg Township
Somerville, New Jersey 08876
Facsimile: (908) 722 - 4967
with a copy sent contemporaneously to:
Solomon, Zauderer, Ellenhorn, Frischer & Sharp
45 Rockefeller Plaza
New York, New York 10111
Attn: Robert L. Mazzeo, Esq.
Jonathan P. Hughes, Esq.
Facsimile: (212) 956 - 4068
SECTION 16.08. COUNTERPARTS. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
(which delivery may be made by facsimile transmission with an original to follow
by first class mail) shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 16.09. SECTION HEADINGS. All enumerated subdivisions of this
Agreement are herein referred to as "section" or "subsection." The headings of
sections or subsections are for reference only and shall not limit or control
the meaning thereof.
SECTION 16.10. PUBLIC STATEMENTS OR RELEASES. The parties hereto each
agree that prior to the Closing no party to this Agreement shall make, issue or
release any public announcement, statement or acknowledgment of the existence
of, or reveal the status of, this Agreement or the transactions provided for
herein, without first obtaining the consent of the other party hereto. Nothing
contained in this Section 16.10 shall prevent any party from making such public
announcements as such party may consider necessary in order to satisfy such
party's
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legal obligations, provided that such disclosing party shall to the extent
practicable give prior notice to the other party of the contents of, and
requirement for, such disclosure.
ARTICLE XVII
PARENT GUARANTY
SECTION 17.01. GUARANTY. The Parent hereby irrevocably guarantees to
the Seller that the obligations of the Buyer under this Assumption Agreement
shall be promptly performed and complied with in full when due, in accordance
with the terms of the Asset Purchase Agreement.
ARTICLE XVIII
INDEMNIFICATION
SECTION 18.01. INDEMNIFICATION BY THE SELLER. The Seller hereby agrees
to indemnify the Buyer and the Parent, and their respective officers, directors
and Affiliates (each a "BUYER INDEMNIFIED PARTY"), and to hold each of them
harmless from any and all Damages incurred or suffered by such Buyer Indemnified
Party arising out of or in connection with:
(i) any misrepresentation or breach of warranty made by the
Seller pursuant to this Agreement;
(ii) any breach of any covenant or agreement made or to be
performed by the Seller pursuant to this Agreement; or
(iii) any Excluded Liabilities,
SECTION 18.02. INDEMNIFICATION BY THE PARENT AND THE BUYER. The Parent
and the Buyer hereby jointly and severally indemnify the Seller, and its
officers, directors and Affiliates (each a "SELLER INDEMNIFIED Party") against
and agree to hold each of them harmless from any and all Damages incurred or
suffered by a Seller Indemnified Party arising out of or in connection with:
(i) any misrepresentation or breach of warranty made by the
Parent or the Buyer pursuant to this Agreement;
(ii) any breach of covenant or agreement made or to be performed
by the Parent or the Buyer pursuant to this Agreement; or
(iii) any Assumed Liabilities.
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SECTION 18.03. PROCEDURES. The party seeking indemnification hereunder
(the "INDEMNIFIED PARTY") agrees to give prompt notice to the party against whom
indemnity is sought (the "INDEMNIFYING PARTY") of the assertion of any claim, or
the commencement of any suit, action or proceeding in respect of which indemnity
may be sought hereunder. The Indemnifying Party shall be entitled to, upon
notice to the Indemnified Party, participate in but not, without the consent of
the Indemnified Party, control the defense of any such suit, action or
proceeding at its own expense. The Indemnifying Party shall not be liable
hereunder for any settlement effected without its consent of any claim,
litigation or proceeding in respect of which indemnity may be sought hereunder.
SECTION 18.04. LIMITATIONS ON INDEMNIFICATION. (a) The Seller shall not
be required to indemnify a Buyer Indemnified Party under Section 18.01 except to
the extent that the aggregate amount of Damages for which the Indemnified Party
is otherwise entitled to indemnification pursuant to such section exceeds the
greater of (i) $100,000; or (ii) the amount by which the Tangible Net Worth of
the Buyer set forth on the Closing Date Balance Sheet exceeds $5,500,000,
whereupon the Indemnified party shall be entitled to be paid each dollar of such
Damages for which recovery may be sought in excess of the amount, if any, by
which the Tangible Net Worth of the Buyer set forth on the Closing Date Balance
Sheet exceeds $5,500,000, subject to the limitations on maximum recovery set
forth in Section 18.04(c).
(b) The Buyer shall not be required to indemnify a Seller Indemnified
Party under Section 18.02 except to the extent that the aggregate amount of
Damages for which the Indemnified Party is otherwise entitled to indemnification
pursuant to such section exceeds $100,000, whereupon the Indemnified Party shall
be entitled to be paid each dollar of such Damages for which recovery may be
sought, subject to the limitations on maximum amount of recovery set forth in
Section 18.04(c).
(c) The aggregate Damages payable by an Indemnifying Party pursuant to
Section 18.01 and Section 18.02 with respect to all claims (other than any
claims with respect to the representations and warranties of the Seller
contained in Section 5.19) shall not exceed $15,000,000 (the "INDEMNITY CAP").
The aggregate Damages payable by an Indemnifying Party pursuant to Section 18.01
with respect to the representations and warranties of the Seller contained in
Section 5.19 shall not be subject to the Indemnity Cap.
(d) No Indemnifying Party shall be liable for any Damages pursuant to
Section 18.01 or Section 18.02 unless a written claim for indemnification in
accordance with Section 18.03 is given by the Indemnified Party to the
Indemnifying Party with respect thereto within two years after the Closing,
except that this time limitation shall not apply to any Damages related to or
arising directly or indirectly out of breaches of the Seller's representations
and warranties set forth in Sections 5.04 or Section 5.19, which may be pursued
indefinitely, or arising directly or indirectly out of any breaches of the
Seller's representations and warranties set forth in Sections 5.15 and 5.18,
respectively, which may be pursued until the expiration of the statute of
limitations applicable to the matters covered thereby (giving effect to any
waiver, mitigation or extension thereof), if later.
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(e) The Buyer agrees that its rights to pursue claims with respect to
breaches of representations and warranties, other than pursuant to Section 18.01
hereof, shall be limited to the same extent that the Buyer's rights under such
Section 18.01 are limited by the provisions of this Section 18.04, PROVIDED,
that this limitation shall not apply in the case of any other claim.
(f) Neither the delivery of the Disclosure Information, nor any other
investigation conducted by the Buyer or any of its representatives shall modify,
amend or otherwise affect the Buyer's right to rely on the Seller's
representations and warranties contained in this Agreement.
ARTICLE XIX
NON-COMPETITION AGREEMENT
SECTION 19.01. NON-COMPETITION AGREEMENT. (a) The Seller agrees that
prior to the third anniversary of the Closing Date, the Seller will not, without
the prior consent of the Buyer, engage, either directly or indirectly, as a
principal or for its own account or jointly with others, or as a stockholder,
partner, member or investor in any corporation or other entity, in any business
that engages, within the United States or any foreign location in which any
business or operations of Natvar are currently conducted, in the business of
Natvar as it is currently conducted by the Seller, PROVIDED that the Seller
shall be permitted to engage in the type of operations currently being operated
by Natvar solely for its own consumption or for inclusion in other products
manufactured by the Seller that are not the same type of products being marketed
and sold by Natvar.
(b) If any provision contained in this Article XIX is for any reason
held by a court of competent jurisdiction to cover a geographic area or to be
for a length of time that is not permitted under applicable law, or that is in
any way too broad or to any extent invalid, such court shall construe and
interpret this Article to provide for a covenant with the maximum enforceable
geographic area, time period and other provisions as shall be valid and
enforceable. The Seller acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer and that the remedy or
remedies at law for any such breach will be inadequate and agrees, in the event
of any such breach, in addition to all other available remedies, to an
injunction restraining any breach and requiring immediate and specific
performance of such obligations without the necessity of showing economic loss.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HIGH VOLTAGE ENGINEERING CORPORATION
By: /s/ Joseph W. McHugh, Jr.
-------------------------------
Name: Joseph W. McHugh, Jr.
Title: Vice President and Chief Financial Officer
TEKNI-PLEX, INC.
By: /s/ F. Patrick Smith
-------------------------------
Name: F. Patrick Smith
Title: Chief Executive Officer
NATVAR HOLDINGS, INC.
By: /s/ F. Patrick Smith
-------------------------------
Name: F. Patrick Smith
Title: Chief Executive Officer
