SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 21, 1995
FIGGIE INTERNATIONAL INC.
(Exact name of registrant specified in its charter)
Delaware 1-8591 52-1297376
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
4420 Sherwin Road, Willoughby, Ohio 44094
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 216/953-2700
(not applicable)
(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On July 21, 1995, Figgie International Inc. (the
"Registrant") sold all of the stock in Safway Steel Products Inc.
("Safway"), its wholly-owned subsidiary, to THP United
Enterprises, Inc., a joint venture owned by Thyssen AG and
plettac AG (the "Buyer"). The Registrant received consideration
of $67.2 million in cash of which $7.2 million will be held in
escrow for certain periods described in the Stock Purchase
Agreement, dated July 21, 1995, by and between the Registrant and
the Buyer. The consideration was determined pursuant to arm's-
length negotiations and based on a premium over the $42.1 million
net book value of Safway as of December 31, 1994. The
consideration will be subject to an adjustment, within 75 days
after closing, to the extent that the net book value of Safway as
of the closing date of the transaction is less than or greater
than $42.1 million.
Item 5. Other Events.
On July 21, 1995, the Registrant sold its Figgie Fire
Protection Systems Division (the "Division") to Badger Fire
Protection Inc. (formerly F.B. Acquisition Corp.), a wholly-owned
indirect subsidiary of Williams Holdings PLC. The Division
manufactures: regular and special hazard-fire extinguishing
systems devices under Chemetron (Trademark), Range Guard
(Trademark) and Safety First (Trademark) brand names; protection
sprinkler devices; industrial, consumer and commercial fire
extinguishers; and brass products and fittings for use in
standpipe and fire sprinkler systems and for fire engines and
fire-fighting equipment. The Registrant received $48.1 million
in cash, subject to adjustment based on net assets of the
Division as of June 30, 1995.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Information
Pro forma financial information is not required.
Safway and the Division are treated as discontinued
operations in the Registrant's financial statements for
the fiscal year ended December 31, 1994 and for the
interim period ended March 31, 1995.
(c) Exhibits
(2)(A) Stock Purchase Agreement, dated July 21,
1995, by and between Figgie International
Inc. and THP United Enterprises, Inc.
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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.
FIGGIE INTERNATIONAL INC.
By: /s/ Steven L. Siemborski
Steven L. Siemborski
Senior Vice President and
Chief Financial Officer
Dated: August 4, 1995
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Exhibit Index
Exhibit
(2)(A) Stock Purchase Agreement, dated July 21, 1995, by and
between Figgie International Inc. and THP United
Enterprises, Inc.**
** Schedules and Exhibits are omitted.
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STOCK PURCHASE AGREEMENT
BY AND BETWEEN
FIGGIE INTERNATIONAL INC.
AND
THP UNITED ENTERPRISES, INC.
July 21, 1995
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TABLE OF CONTENTS
Page
1. PURCHASE AND SALE OF SHARES . . . . . . . . . . . 1
1.1 Shares . . . . . . . . . . . . . . . . . . . 1
2. COMPUTATION AND PAYMENT OF PURCHASE PRICE . . . . 1
2.1 Purchase Price . . . . . . . . . . . . . . . 1
2.2 Purchase Price Adjustment . . . . . . . . . . 2
2.3 Intercompany Obligations . . . . . . . . . . 4
2.4 Escrow Accounts . . . . . . . . . . . . . . . 5
3. REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . 9
3.1 Organization; Power; Good Standing . . . . . 9
3.2 Capitalization . . . . . . . . . . . . . . 10
3.3 Binding Agreement and Authority . . . . . . 10
3.4 No Violation or Breach . . . . . . . . . . 10
3.5 Financial Statements . . . . . . . . . . . 11
3.6 Absence of Certain Changes . . . . . . . . 11
3.7 Contracts . . . . . . . . . . . . . . . . . 11
3.8 Taxes . . . . . . . . . . . . . . . . . . . 13
3.9 Real Property . . . . . . . . . . . . . . . 15
3.10 Title to Properties . . . . . . . . . . . . 16
3.11 Litigation . . . . . . . . . . . . . . . . 16
3.12 Compliance with Laws . . . . . . . . . . . 16
3.13 Intellectual Property . . . . . . . . . . . 19
3.14 Transactions with Interested Persons . . . 20
3.15 Employee and Employee Benefit Matters . . . 20
3.16 Insurance . . . . . . . . . . . . . . . . . 24
3.17 Vehicles . . . . . . . . . . . . . . . . . 24
3.18 Certain Contracts . . . . . . . . . . . . . 24
3.19 Officers and Directors . . . . . . . . . . 25
3.20 Brokerage . . . . . . . . . . . . . . . . . 25
3.21 Liabilities . . . . . . . . . . . . . . . . 25
3.22 Seller's Contracts . . . . . . . . . . . . 25
3.23 Accuracy of Representations and Warranties 25
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER . . 25
4.1 Organization; Power . . . . . . . . . . . . 25
4.2 Binding Agreement and Authority . . . . . . 25
4.3 No Defaults . . . . . . . . . . . . . . . . 26
4.4 Litigation . . . . . . . . . . . . . . . . 26
4.5 Available Funds . . . . . . . . . . . . . . 26
4.6 Brokerage . . . . . . . . . . . . . . . . . 26
4.7 Investment Purpose . . . . . . . . . . . . 26
4.8 Accuracy of Representations and Warranties 26
5. COVENANTS . . . . . . . . . . . . . . . . . . . 27
5.1 Access . . . . . . . . . . . . . . . . . . 27
5.2 Press Releases . . . . . . . . . . . . . . 27
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5.3 Regulatory Filings; Consents . . . . . . . 28
5.4 Injunctions . . . . . . . . . . . . . . . . 28
5.5 Operation of the Business . . . . . . . . . 28
5.6 Satisfaction of Conditions . . . . . . . . 30
5.7 Termination of Lease Agreement and Security
Agreement . . . . . . . . . . . . . . . . . 30
5.8 Release of Certain Liens . . . . . . . . . 31
5.9 Litigation . . . . . . . . . . . . . . . . 31
5.10 Resignations . . . . . . . . . . . . . . . 31
5.11 Limitation on Competition . . . . . . . . . 31
5.12 Employee Compensation and Benefit Matters . 32
5.13 Acquisition Proposals . . . . . . . . . . . 32
5.14 Other Tax Matters . . . . . . . . . . . . . 33
5.15 Records . . . . . . . . . . . . . . . . . 37
5.16 Employment Agreement . . . . . . . . . . . 38
6. CONDITIONS TO CLOSING . . . . . . . . . . . . . 38
6.1 Conditions Precedent To The Obligations of the
Buyer and the Seller . . . . . . . . . . . 38
6.2 Additional Conditions Precedent to Obligations of
the Seller . . . . . . . . . . . . . . . . 38
6.2.1 Compliance with Agreement . . . . . 38
6.2.2 Actual or Threatened Actions . . . . 38
6.2.3 Resolutions of the Board of Directors 38
6.2.4 Delivery of Purchase Price . . . . . 38
6.2.5 Opinion of Counsel of the Buyer . . 39
6.2.6 Regulatory Approval; Consents . . . 39
6.2.7 Leases . . . . . . . . . . . . . . . 39
6.2.8 Paint Line Lease . . . . . . . . . . 39
6.2.9 Indemnification Letter . . . . . . . 39
6.3 Additional Conditions Precedent to Obligations of
the Buyer . . . . . . . . . . . . . . . . . 39
6.3.1 Compliance with Agreement . . . . . 39
6.3.2 Delivery of Stock Certificates . . . 39
6.3.3 Termination of Lease Agreement and Security
Agreement . . . . . . . . . . . . . . 39
6.3.4 Release of Certain Liens . . . . . . 40
6.3.5 Resignations . . . . . . . . . . . . 40
6.3.6 Actual or Threatened Actions . . . . 40
6.3.7 Absence of Material Adverse Change . 40
6.3.9 Opinions of Counsel of the Seller . 40
6.3.10 Regulatory Approval; Consents . . . 40
6.3.11 Leases . . . . . . . . . . . . . . 40
6.3.12 Equipment Leases . . . . . . . . . 40
6.3.13 Paint Line Lease . . . . . . . . . 41
6.3.14 Intellectual Property . . . . . . . 41
7. CLOSING . . . . . . . . . . . . . . . . . . . . 41
7.1 Time and Place . . . . . . . . . . . . . . 41
7.2 Documents to be Delivered by the Seller at Closing 41
7.3 Documents to be Delivered by the Buyer at Closing 43
8. INDEMNIFICATION . . . . . . . . . . . . . . . . 44
8.1 Limitations on Liability . . . . . . . . . 44
8.2 Seller's Indemnification . . . . . . . . . 45
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8.3 Buyer's Indemnification . . . . . . . . . . 46
8.4 Defense of Claims . . . . . . . . . . . . . 47
8.5 Indemnification for Taxes . . . . . . . . . 52
8.6 Limitations on Indemnification . . . . . . 52
8.7 Mitigation . . . . . . . . . . . . . . . . 54
8.8 Subrogation . . . . . . . . . . . . . . . . 54
9. SURVIVAL . . . . . . . . . . . . . . . . . . . . 54
10. TERMINATION . . . . . . . . . . . . . . . . . . 55
11. POST-CLOSING COVENANTS . . . . . . . . . . . . . 55
11.1 Corporate Records . . . . . . . . . . . . . 55
11.2 Further Assurances . . . . . . . . . . . . 56
11.3 Seller's Contracts . . . . . . . . . . . . 56
11.4 No Transfer . . . . . . . . . . . . . . . . 56
11.5 Trus Joist Planks . . . . . . . . . . . . . 56
11.6 IBM Lease . . . . . . . . . . . . . . . . . 57
11.7 Recordation of Intellectual Property . . . 57
12. TRANSACTION TAXES . . . . . . . . . . . . . . . 58
13. ASSIGNMENT . . . . . . . . . . . . . . . . . . . 58
14. BROKERAGE . . . . . . . . . . . . . . . . . . . 58
15. SEVERABILITY . . . . . . . . . . . . . . . . . . 58
16. AMENDMENTS AND WAIVERS AND CONSENTS . . . . . . 59
17. BENEFIT . . . . . . . . . . . . . . . . . . . . 59
18. NOTICES . . . . . . . . . . . . . . . . . . . . 59
19. FEES AND EXPENSES . . . . . . . . . . . . . . . 60
20. HEADINGS . . . . . . . . . . . . . . . . . . . . 60
21. CONSTRUCTION . . . . . . . . . . . . . . . . . . 61
22. COUNTERPARTS . . . . . . . . . . . . . . . . . . 61
23. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . 61
24. CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS . . 61
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT, made and entered into as of this 21st day of
July, 1995 (the "Agreement") by and between Figgie International
Inc., a Delaware corporation (the "Seller"), with its principal
place of business at 4420 Sherwin Road, Willoughby, Ohio, and THP
United Enterprises, Inc., a Delaware corporation (the "Buyer"),
with its principal place of business at N14 W23833 Stoneridge
Drive, Suite 400, Waukesha, Wisconsin.
WHEREAS, the Seller is the record and beneficial owner of
all of the issued and outstanding shares of capital stock of
Safway Steel Products Inc., a Delaware corporation (the
"Corporation") (the "Shares"); and
WHEREAS, the Corporation is engaged in the business of the
manufacture, sale, rental, distribution, erection and dismantling
of scaffolding and scaffolding equipment (the "Business"); and
WHEREAS, the Seller desires to sell, assign and deliver
("Transfer") to the Buyer and the Buyer desires to purchase and
accept from the Seller the Shares on the terms and conditions
hereinafter set forth.
NOW THEREFORE, in consideration of the mutual promises and
covenants herein contained and subject to the conditions
hereinafter set forth, the parties agree as follows:
1. PURCHASE AND SALE OF SHARES.
1.1 Shares. On the terms and subject to the
conditions set forth in this Agreement, at the Closing (as
hereinafter defined), the Seller will Transfer to the Buyer and
the Buyer will purchase and accept from the Seller the Shares.
2. COMPUTATION AND PAYMENT OF PURCHASE PRICE.
2.1 Purchase Price. The amount payable by the Buyer
to the Seller for the Shares will be $67,200,000 subject to
adjustment as provided in Section 2.2 (as adjusted, the "Purchase
Price"). Of the aggregate Purchase Price, (a) $59,950,000 will
be payable at the Closing by the Buyer to the Seller in U.S.
dollars by bank wire transfer of immediately available funds to
an account designated in writing by the Seller at least one
business day prior to the Closing Date (as hereinafter defined),
(b) $4,000,000 will be payable at the Closing by the Buyer into
an interest-bearing account to be held in escrow pursuant to the
terms and conditions of an escrow agreement in the form of
Exhibit A hereto (the "Escrow Agreement I"), which $4,000,000
plus interest accrued thereon will be used to satisfy any amounts
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payable pursuant to Section 2.4(a), (c) $3,000,000 will be
payable at the Closing by the Buyer into an interest-bearing
account to be held in escrow pursuant to the terms and conditions
of an escrow agreement in the form of Exhibit B hereto (the
"Escrow Agreement II", and together with the Escrow Agreement I,
the "Escrow Agreements"), which $3,000,000 plus interest accrued
thereon will be used to satisfy any amounts payable pursuant to
Section 2.4(b) and (d) $250,000 will be payable at Closing by the
Buyer into an interest-bearing account to be held in escrow
pursuant to the terms and conditions of an escrow agreement in
the form of Exhibit C hereto (the "Escrow Agreement III"), which
$250,000 plus interest thereon will be used to satisfy any
amounts payable pursuant to Section 2.4(d).
2.2 Purchase Price Adjustment. (a) The Purchase Price
shall be reduced or increased dollar-for-dollar to the extent
that Company Equity (as hereinafter defined) is less than or
greater than $42,110,000. As used in this Agreement, (i)
"Company Equity" shall mean the net book value of the
Corporation's assets and liabilities as reflected on a balance
sheet of the Corporation prepared in accordance with United
States generally accepted accounting principles ("GAAP") as of
the close of business on the Closing Date, but adjusted on a
basis to be consistent with practices and procedures used in
preparing the Balance Sheet (as hereinafter defined), which
practices and procedures are described on Schedule 3.5, and
further adjusted to exclude the net book value of that portion of
"prepaid expense" relating to all of the Trus Joist Planks (as
hereinafter defined), "intercompany receivables", "intercompany
payables", "accrued taxes", "accrued federal income tax", that
portion of "accrued expenses" relating to pension expenses due to
the Seller and vehicle, workers' compensation, product liability
and general liability insurance due to the Seller (the "Closing
Date Balance Sheet"), and (ii) "Balance Sheet" shall mean the
unaudited balance sheet of the Corporation as of December 31,
1994, included as part of Schedule 3.5.
(b) Within 75 calendar days after the Closing
Date (such seventy-fifth day or, if such day is not a business
day, the next business day, the "Delivery Date"), the Seller
shall prepare in accordance with the second sentence of Section
2.2(a) and deliver to the Buyer the Closing Date Balance Sheet,
audited by a nationally recognized independent accounting firm
retained by the Seller (the "Seller's Accountants") in accordance
with generally accepted auditing standards, and the Seller's
computation of Company Equity. The Seller shall instruct the
Seller's Accountants that the auditor's report should be
unqualified as to scope and the auditor's report shall indicate
whether the Closing Date Balance Sheet has been prepared in
accordance with GAAP applied on a basis consistent with the
Balance Sheet and the provisions of this Agreement. The Closing
Date Balance Sheet and Company Equity shall have been adjusted
for all errors known to the Seller or the Seller's Accountants
which individually exceed $5,000, but only in the event and to
the extent that the aggregate of such errors exceeds $100,000.
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The Seller, the Seller's Accountants and their authorized
representatives shall be entitled to review, during normal
business hours, the books, records and work papers relating to
the Corporation in the possession or under the control of the
Corporation and/or the Buyer in order to prepare the Closing Date
Balance Sheet. Upon reasonable notice by the Buyer and upon
execution by the Buyer, the Buyer's Accountants and the Seller's
Accountants of the Third Party Release in the form of Exhibit L
attached hereto (the "Third Party Release"), the Seller will
cause the Seller's Accountants to make available to the Buyer,
the Buyer's accountants (the "Buyer's Accountants") and their
authorized representatives during normal business hours all
working papers prepared in connection with the audit contemplated
by this Section 2.2(b) including but not limited to working
papers related to audit planning, internal control structure
assessment and testing. The Buyer, the Buyer's Accountants and
their authorized representatives shall be entitled to actively
participate in the audit conducted by the Seller's Accountants,
which active participation shall include reviewing the books,
records and work papers relating to the Corporation and
participating in all meetings and discussions among the Seller's
Accountants and officers, employees or directors of the
Corporation relating to the audit. The Buyer agrees that it
shall not unreasonably interfere with the timely preparation of
the Closing Date Balance Sheet. The Buyer further agrees to
cause (i) the Corporation, within 15 business days following the
Closing Date, to close the books of the Corporation as of the
Closing Date, and (ii) the officers and employees of the
Corporation to provide reasonable assistance to the Seller's
Accountants in connection with the preparation of the Closing
Date Balance Sheet. If the Buyer and the Buyer's Accountants
disagree with the Seller's computation of Company Equity, the
Buyer shall notify the Seller in writing of such disagreement,
identifying each item in dispute, within 15 business days after
the Buyer's receipt of the Closing Date Balance Sheet and the
Seller's computation of Company Equity and the Buyer and the
Seller shall attempt in good faith to resolve such disagreement.
If the Seller's Accountants' auditor's report contains a
qualification as to scope, the Buyer and the Buyer's Accountants
shall have the right, with respect to any item as to which the
auditor's report shall contain a qualification as to scope, to
dispute the amount reflected in the Closing Date Balance Sheet
and Company Equity with respect to such item. Upon the
expiration of such 15-day period, any item not contained in such
written notice shall be binding on the Seller and the Buyer. If
the Seller and the Buyer are unable to resolve any disagreement
within 15 calendar days after the Seller's receipt of such notice
of disagreement, the Seller and the Buyer shall submit such
disagreement to Price Waterhouse (or, if Price Waterhouse does
not accept its appointment, then another nationally recognized
independent accounting firm mutually agreed upon by the Seller
and the Buyer) (the "Arbiter") for resolution. Notwithstanding
the foregoing, the amount of any adjustment to the Purchase Price
that is not the subject of disagreement shall be paid to the
Buyer or the Seller, as the case may be, in accordance with and
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subject to the provisions of Section 2.2(c) hereof. The Seller
and the Buyer shall cause the Arbiter, within 30 calendar days
after submitting the disagreement to it for resolution, to
resolve such disagreement and to prepare the definitive Closing
Date Balance Sheet in accordance with the second sentence of
Section 2.2(a) and to compute therefrom the definitive Company
Equity, which definitive Closing Date Balance Sheet and
computation of Company Equity, if made in accordance with the
second sentence of Section 2.2(a), shall be binding on the
parties. The fees and expenses of the Arbiter shall be shared
equally by the Seller and the Buyer.
(c) If the Purchase Price is required to be
adjusted pursuant to Section 2.2(a), then (i) if Company Equity
is greater than $42,110,000, the Buyer shall pay to the Seller
the amount of such excess or (ii) if $42,110,000 is greater than
Company Equity, the Seller shall pay to the Buyer the amount of
such excess. Any payments made by the Buyer or the Seller, as
the case may be, pursuant to this Section 2.2(c) shall be made
within three business days after (i) the determination of any
adjustment to the Purchase Price that is not subject to
disagreement as provided in Section 2.2(b) and (ii) the date of
the final determination of Company Equity pursuant to Section
2.2(b) by bank wire transfer of immediately available funds to
the account designated by the payee, together with interest
thereon from the Closing Date to the date of payment at a rate of
7.00% per annum based on the actual number of days elapsed
divided by 365. Notwithstanding the preceding sentence and
subject to the seventh and eighth sentences of Section 2.2(b), in
the event that the Seller fails to deliver the Closing Date
Balance Sheet on or prior to the Delivery Date, the interest rate
payable on the amount of any adjustment to the Purchase Price
required pursuant to Section 2.2(a) with respect to the number of
calendar days after the Delivery Date until the delivery of the
Closing Date Balance Sheet to the Buyer shall be as follows: (i)
10.00% per annum based on the actual number of days elapsed
divided by 365 in the event that such amount is to be paid by the
Seller to the Buyer pursuant to Section 2.2(a) or (ii) 0% per
annum based on the actual number of days elapsed divided by 365
in the event that such amount is to be paid by the Buyer to the
Seller pursuant to Section 2.2(a). Nothing in this Section 2.2
will limit or otherwise affect the rights of the Buyer under
Section 5.14(b) or the rights of the Buyer, its Affiliates (as
hereinafter defined), the Corporation and their respective
officers, directors, shareholders, employees, agents and
representatives under Section 8.2.
2.3 Intercompany Obligations. Effective immediately
prior to the Closing, all intercompany obligations owing from the
Seller, or any Affiliate or Subsidiary (as hereinafter defined)
of the Seller to the Corporation or owing from the Corporation to
the Seller or any Affiliate or Subsidiary of the Seller will be
netted against each other and the resulting balance will be
charged or credited to the retained earnings of the Corporation.
As a result, as of the Closing there will be no further liability
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with respect to the obligations so discharged between the Seller,
any Affiliate or Subsidiary of the Seller and the Corporation,
except for certain contractual obligations specifically
contemplated pursuant to the terms of this Agreement.
2.4 Escrow Accounts. (a) The amount of any
Indemnifiable Losses (as hereinafter defined) paid by the Buyer
or the Corporation, as the case may be, with respect to which the
Seller is liable pursuant to Sections 8.2(c), (d) and/or (e),
shall be disbursed first to the Buyer or the Corporation, as the
case may be, from amounts held in escrow under the Escrow
Agreement I in accordance with the terms thereof and to the
extent the amounts held in escrow under the Escrow Agreement I
are less than the amount of such Indemnifiable Losses, the
remaining amount of any such Indemnifiable Losses shall be
disbursed to the Buyer or the Corporation, as the case may be,
from amounts held in escrow under the Escrow Agreement II in
accordance with the terms thereof. The Seller shall not be
liable to the Buyer or the Corporation, as the case may be, in
respect of Indemnifiable Losses to the extent that such
Indemnifiable Losses are fully satisfied from amounts held in
escrow under the Escrow Agreement I or the Escrow Agreement II.
In the event the Seller assumes the defense of any Third Party
Claim (as hereinafter defined) pursuant to Section 8.4 and pays
any costs or expenses in connection with such defense and/or pays
to a party or entity which is not a party to this Agreement or an
Affiliate of a party to this Agreement an amount which, in each
case, if paid by the Buyer or the Corporation, would constitute
an Indemnifiable Loss with respect to which the Seller is liable
pursuant to Section 8.2(c), (d) and/or (e), then, in each case,
such amount shall be disbursed from amounts held in escrow
pursuant to the Escrow Agreement I to the Seller. In the event
the amounts held in escrow pursuant to the Escrow Agreement I are
less than the amount to be so disbursed, the Seller shall have no
recourse to the Buyer, the Corporation or any amounts held in
escrow pursuant to the Escrow Agreement II. On the fifth
anniversary of the Closing Date (or if such date is not a
business day, on the next business day) any amounts then held in
escrow pursuant to the Escrow Agreement I shall be disbursed to
the Buyer; provided, however, that in the event that there are
any Escrow I Pending Claims (as hereinafter defined), the escrow
agent under the Escrow Agreement I shall retain in escrow an
amount equal to an estimate (as mutually agreed to by the Seller
and the Buyer or, if the Seller and the Buyer are unable to
agree, as determined by the Arbiter as described below in this
Section 2.4(a)) of the anticipated Indemnifiable Losses
associated with any claims pending as of one day prior to the
fifth anniversary of the Closing Date for which the Seller is
liable pursuant to Section 8.2(c), 8.2(d) and/or 8.2(e) ("Escrow
I Pending Claims"). On such fifth anniversary of the Closing
Date (or if such date is not a business day, on the next business
day) the Buyer shall provide the Seller with a list of Escrow I
Pending Claims and the Buyer and the Seller shall promptly
thereafter attempt in good faith to reach an agreement as to an
estimate of anticipated Indemnifiable Losses associated
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therewith. In the event that the Buyer and the Seller are unable
to so agree within 10 calendar days after the fifth anniversary
of the Closing Date, such disagreement shall be submitted to the
Arbiter for resolution. The Buyer and the Seller shall cause the
Arbiter to resolve such disagreement within 30 calendar days and
to prepare a statement, signed by the Arbiter, setting forth an
estimate of the anticipated Indemnifiable Losses associated with
each Escrow I Pending Claim, which estimate shall be binding on
the Seller and the Buyer. The fees and expenses of the Arbiter
shall be equally shared by the Seller and the Buyer. Upon the
final resolution and disposition of each Escrow I Pending Claim,
the amount, if any, by which the amount retained in escrow
pursuant to this Section 2.4(a) with respect to such Escrow I
Pending Claim (and which has not been previously released by the
escrow agent in accordance with the provisions of the Escrow
Agreement I) exceeds the Indemnifiable Losses incurred by the
Buyer or the Corporation in respect of such Escrow I Pending
Claim shall be disbursed to the Buyer, provided that such amount
shall only be disbursed to the Buyer to the extent that the
remaining amounts, if any, retained in escrow pursuant to this
Section 2.4(a) exceed the estimated amount of anticipated
Indemnifiable Losses associated with any then-unresolved or
disposed of Escrow I Pending Claims (which estimated amount was
agreed to by the Buyer and the Seller as described above or was
set forth in the statement prepared by the Arbiter as described
above).
(b) The amount of any Indemnifiable Losses (i)
paid by the Buyer or the Corporation, as the case may be, with
respect to which the Seller is liable pursuant to Section 8.2(a),
8.2(b), 8.2(f), 8.2(g), 8.2(h) or 8.2(i) or Section 5.14(b) or
(ii) paid by the Buyer or the Corporation, as the case may be,
with respect to which the Seller is liable pursuant to Section
8.2(c), 8.2(d) and/or 8.2(e) (to the extent that such
Indemnifiable Losses partially or in their entirety exceed the
amounts held in escrow under the Escrow Agreement I) shall in
each case be disbursed to the Buyer or the Corporation, as the
case may be, from amounts held in escrow under the Escrow
Agreement II in accordance with the terms thereof. The Seller
shall not be liable to the Buyer or the Corporation, as the case
may be, in respect of such Indemnifiable Losses to the extent
that such Indemnifiable Losses are fully satisfied from amounts
held in escrow under Escrow Agreement II. On October 31, 1997
(or if such date is not a business day, on the next business
day), any amounts held in escrow pursuant to the Escrow Agreement
II shall be disbursed to the Seller; provided, however, that in
the event there are any 1997 Escrow II Pending Claims (as
hereinafter defined) the escrow agent under the Escrow Agreement
II shall retain in escrow an amount equal to an estimate (as
mutually agreed to by the Seller and the Buyer or, if the Seller
and the Buyer are unable to agree, as determined by the Arbiter
as described below in this Section 2.4(b)) of the anticipated
Indemnifiable Losses associated with any claims pending as of one
business day prior to October 31, 1997 for which the Seller is
liable pursuant to Sections 8.2(a), (b), (f), (g), (h) or (i) or
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Section 5.14(b) or Sections 8.2(c), (d) or (e) to the extent the
amounts held under escrow pursuant to the Escrow Agreement I are
insufficient to satisfy in full such claims ("1997 Escrow II
Pending Claims"). On October 31, 1997 (or if such date is not a
business day, on the next business day) the Buyer shall provide
the Seller with a list of 1997 Escrow II Pending Claims and the
Buyer and the Seller shall promptly thereafter in good faith
attempt to reach an agreement as to an estimate of anticipated
Indemnifiable Losses associated therewith. In the event that the
Buyer and the Seller are unable to so agree within 10 calendar
days after October 31, 1997, such disagreement shall be submitted
to the Arbiter for resolution. The Buyer and the Seller shall
cause the Arbiter to resolve such disagreement within 30 calendar
days and to prepare a statement, signed by the Arbiter, setting
forth an estimate of the anticipated Indemnifiable Losses
associated with each 1997 Escrow II Pending Claim, which estimate
shall be binding on the Seller and the Buyer. The fees and
expenses of the Arbiter shall be equally shared by the Seller and
the Buyer. On October 31, 1998 (or if such date is not a
business day, on the next business day), any amounts still held
in escrow pursuant to the Escrow Agreement II shall be disbursed
to Seller; provided, however, that in the event there are any
1998 Escrow II Pending Claims (as hereinafter defined) the escrow
agent under the Escrow Agreement II shall retain in escrow an
amount equal to an estimate (as mutually agreed to by the Seller
and the Buyer or, if the Seller and the Buyer are unable to
agree, as determined by the Arbiter as described below in this
Section 2.4(b)) of the anticipated Indemnifiable Losses
associated with any claims pending as of one business day prior
to October 31, 1998 for which the Seller is liable pursuant to
Sections 8.2(a) (other than breaches of any representation or
warranty which result in an Indemnifiable Loss with respect to
which the Seller is liable pursuant to Sections 8.2(c), 8.2(d) or
8.2(e)), (b), (f), (g), (h) or (i) or Section 5.14(b) ("1998
Escrow II Pending Claims"). On October 31, 1998 (or if such date
is not a business day, on the next business day) the Buyer shall
provide the Seller with a list of 1998 Escrow II Pending Claims
and the Buyer and the Seller shall promptly thereafter in good
faith attempt to reach an agreement as to an estimate of
anticipated Indemnifiable Losses associated therewith. In the
event that the Buyer and the Seller are unable to so agree within
10 calendar days after October 31, 1998, such disagreement shall
be submitted to the Arbiter for resolution. The Buyer and the
Seller shall cause the Arbiter to resolve such disagreement
within 30 calendar days and to prepare a statement, signed by the
Arbiter, setting forth an estimate of the anticipated
Indemnifiable Losses associated with each 1998 Escrow II Pending
Claim, which estimate shall be binding on the Seller and the
Buyer. The fees and expenses of the Arbiter shall be equally
shared by the Seller and the Buyer. Upon the final resolution
and disposition of each 1997 Escrow II Pending Claim or 1998
Escrow II Pending Claim, the amount, if any, by which the amount
retained in escrow pursuant to this Section 2.4(b) with respect
to such 1997 Escrow II Pending Claim or 1998 Escrow II Pending
Claim, as the case may be (and which has not been previously
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released by the escrow agent in accordance with the provisions of
the Escrow Agreement II), exceeds the Indemnifiable Losses
incurred by the Buyer or the Corporation in respect of such 1997
Escrow I Pending Claim or 1998 Escrow II Pending Claim shall be
disbursed to the Seller, provided that such amount shall only be
disbursed to the Seller to the extent that the remaining amounts,
if any, retained in escrow pursuant to this Section 2.4(b) exceed
the estimated amount of anticipated Indemnifiable Losses
associated with any then-unresolved or disposed of 1997 Escrow II
Pending Claims or 1998 Escrow II Pending Claims, as the case may
be, (which estimated amounts were agreed to by the Buyer and the
Seller as described above or were set forth in the statements
prepared by the Arbiter as described above).
(c) At least 10 calendar days prior to
withdrawing funds held in escrow pursuant to Escrow Agreement I
or Escrow Agreement II, the party intending to withdraw such
funds shall notify the other party hereto of such impending
withdrawal and shall discuss with such other party the basis for
such withdrawal; provided, however, it is expressly understood
and agreed by the parties hereto that no consent of such other
party is necessary for any withdrawal of funds held in escrow
pursuant to the Escrow Agreement I or the Escrow Agreement II and
such other party shall in no event seek to impede or impose any
restrictions or limitations on the intended withdrawal of funds;
provided, further that nothing herein contained shall impede,
restrict or otherwise limit the right of the party not
withdrawing funds from bringing any lawsuit subsequent to such
withdrawal against such party having withdrawn funds (the
"Withdrawing Party") contesting such withdrawal. In the event
such other party brings a lawsuit against the Withdrawing Party
contesting such Withdrawing Party's withdrawal of funds from
escrow and a court of competent jurisdiction determines that the
Withdrawing Party withdrew funds from escrow to which such party
was not entitled pursuant to this Section 2.4, then the
Withdrawing Party shall be liable to the party who contested such
withdrawal (the "Contesting Party") for a percentage of the
reasonable costs, including, without limitation, reasonable
attorney's fees incurred and paid by the Contesting Party in
connection with such lawsuit, which percentage shall be computed
by dividing the amount of the withdrawal that should not have
been withdrawn as determined by such court by the amount of the
withdrawal that the Contesting Party alleges should not have been
made. The Withdrawing Party shall pay to the Contesting Party
such percentage of such Contesting Party's reasonable costs as
calculated pursuant to this Section 2.2(c) promptly upon receipt
from the Contesting Party of evidence of payment of such costs.
The amount of any withdrawal that should not have been withdrawn
as determined by such court shall be promptly reimbursed by the
Withdrawing Party into the applicable escrow account, plus
interest thereon in an amount equal the total amount of interest
that would have accrued on such amount in such escrow account;
provided, however, that in the event such escrow account has been
closed, the Withdrawing Party shall promptly pay such amount that
should not have been withdrawn to the party that would have been
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entitled thereto upon the closure of such escrow account, plus
interest thereon in an amount equal the total amount of interest
that would have accrued on such amount in such escrow account.
(d) Of the $250,000 deposited by the Buyer into
escrow pursuant to the Escrow Agreement III, (i) $125,000 shall
be used to secure the performance of the Seller's obligation
pursuant to Section 11.8 of this Agreement to obtain proper
recordation in the Corporation's name of the trademark
registration number 9259 ("Canada IP") with the appropriate
foreign governmental authority in Canada and (ii) $125,000 shall
be used to secure the performance of the Seller's obligation
pursuant to Section 11.8 of this Agreement to obtain the proper
recordation in the Corporation's name of the trademark
registration number 458027 and the patent numbers 157548 and
164124 ("Mexico IP") with the appropriate foreign governmental
authority in Mexico. Upon the Seller satisfying its obligation
to obtain the proper recordation in the Corporation's name of the
Canada IP, the escrow agent under the Escrow Agreement III shall
disburse to the Seller $125,000 plus (A) one-half of the total
interest earned on the amount held in escrow thereunder in the
event that no disbursement has previously been made pursuant to
Section 2.4(d)(ii) above or (B) the remaining amount held in
escrow thereunder in the event that the disbursement provided for
in Section 2.4(d)(ii) above has previously been made. Upon the
Seller satisfying its obligation to obtain the proper recordation
in the Corporation's name of the Mexico IP, the escrow agent
under the Escrow Agreement III shall disburse to the Seller
$125,000 plus (A) one-half of the total interest earned on the
amount held in escrow thereunder in the event that no
disbursement has previously been made pursuant to Section
2.4(d)(ii) above or (B) the remaining amount held in escrow
thereunder in the event that the disbursement provided for in
Section 2.4(d)(i) above has previously been made. On the
eighteenth month anniversary of the date hereof (or if such date
is not a business day, then on the next business day), any
amounts remaining in escrow under Escrow Agreement III shall be
released from escrow and disbursed to the Buyer.
(e) Nothing in this Section 2.4 will limit or
otherwise affect the rights of the Buyer under Section 5.14(b) or
the rights of the Buyer, its Affiliates, the Corporation and
their respective officers, directors, shareholders, employees,
agents and representatives under Section 8.2.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller
represents and warrants to the Buyer as follows:
3.1 Organization; Power; Good Standing. The Seller is
duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate
power and authority to own and hold the Shares. The Corporation
is duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate
power and authority to own, lease, operate and otherwise hold its
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assets owned, leased, operated or otherwise held by it and to
carry on the Business as now being conducted. The Corporation is
duly qualified to do business as a foreign corporation in each
jurisdiction set forth on Schedule 3.1 and is in good standing
under the laws of each such jurisdiction. There is no other
jurisdiction in which the nature of its Business or the character
or location of its assets, properties or operations requires
qualification.
3.2 Capitalization. Except as set forth on Schedule
3.2, the Seller owns, and upon the Closing the Buyer will own,
free and clear of any mortgages, liens, security interests,
pledges, charges, restrictions or other encumbrances
(collectively, "Liens") the number of Shares listed on Schedule
3.2, which Shares represent all of the issued and outstanding
shares of capital stock of the Corporation. The Shares are duly
authorized, validly issued and outstanding, fully paid and
nonassessable. Except as listed on Schedule 3.2, the Corporation
does not, directly or indirectly, own (beneficially or of record)
any stock or other ownership interests in, or control, any other
entity. Except for the Shares and except as set forth on
Schedule 3.2, there are no shares of capital stock of the
Corporation authorized, issued or outstanding and there are no
outstanding subscriptions, options, warrants, rights, convertible
securities or any other agreements or commitments of any
character relating to the issued or unissued capital stock or
other securities of the Corporation obligating the Corporation to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of the Corporation or
obligating the Corporation to grant, extend or enter into any
subscription, option, warrant, right, convertible security or
other similar agreement or commitment. Except as set forth on
Schedule 3.2, there are no voting trusts or other agreements or
understandings to which the Corporation is a party with respect
to the voting of the capital stock of the Corporation.
3.3 Binding Agreement and Authority. The Seller has
the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. All corporate action required to be taken
for the due authorization of the execution and delivery by the
Seller of this Agreement and the consummation of the transactions
contemplated hereby has been duly taken by the Seller. This
Agreement has been duly executed and delivered by the Seller and,
assuming the due execution and delivery by the Buyer, constitutes
the valid and binding obligation of the Seller, enforceable
against it in accordance with its terms.
3.4 No Violation or Breach. The execution and
delivery of this Agreement by the Seller do not, and the
consummation by the Seller of the transactions contemplated
hereby will not:
(a) require the consent, waiver, approval,
license or authorization of, or the registration or filing of any
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document or report with, any person, entity or Governmental
Entity (as hereinafter defined) other than (i) filings under the
Hart-Scott-Rodino Antitrust Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act") and (ii) as
described on Schedule 3.4(a);
(b) with or without the giving of notice or the
passage of time, or both, conflict with or result in any breach
or violation of any provision of, or constitute a default under,
or give rise to a right of termination, cancellation or
acceleration of the performance of, any Contract (as hereinafter
defined) to which the Corporation is a party or to which the
Corporation or any of its assets are subject, or result in the
creation of any Lien upon any of the assets of the Corporation;
(c) with or without the giving of notice or the
passage of time, or both, conflict with or violate any domestic
or foreign statute, law, ordinance, rule, regulation, order,
judgment, decree or common law obligation in effect as of the
date hereof ("Law") of any domestic or foreign court, government,
governmental agency, authority, entity or instrumentality
("Governmental Entity"); and
(d) conflict with or violate the Certificate of
Incorporation or By-laws of the Seller or the Corporation.
3.5 Financial Statements. Attached as Schedule 3.5
are the unaudited balance sheets of the Corporation or the
Division (as hereinafter defined), as the case may be, as of
December 31, 1991, December 31, 1992, December 31, 1993, December
31, 1994 and March 31, 1995 and the related unaudited statements
of operations and retained earnings for the years then ended, or
in the case of the unaudited balance sheet of the Corporation as
of March 31, 1995, the period then ended (the "Unaudited
Financial Statements"). The Unaudited Financial Statements
present fairly in all material respects the financial position of
the Corporation as of their respective dates and the results of
its operations for the years then ended in conformity with GAAP
consistently applied except as described on Schedule 3.5.
3.6 Absence of Certain Changes. Except as set forth
in Schedule 3.6, since December 31, 1994, (i) there has not been
any material adverse change in the Corporation's relations with
any of its suppliers or customers, (ii) there has not been any
material adverse change in the financial position, results of
operations, cash flows or Business of the Corporation and (iii)
the Corporation has not taken any action which would have
constituted a violation of Section 5.5 if Section 5.5 had applied
to it since December 31, 1994.
3.7 Contracts. Except as described on Schedule 3.7,
as of the date hereof, neither the Corporation nor the Seller (to
the extent relating primarily to the Business and being material
to the Corporation) is a party to or bound by any contract,
agreement, lease commitment or arrangement or other legally
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binding contractual right or obligation (collectively
"Contracts") that is of a type described below:
(a) Any employment, severance or consulting
Contract, or any distributorship, agency or manufacturer's
representative Contract, that is not terminable at will by the
Corporation without liability or penalty;
(b) Any Collective Bargaining Agreement (as
hereinafter defined) with any collective bargaining group or
labor union;
(c) Any indenture, mortgage, loan or credit
Contract under which the Corporation has borrowed any money or
issued any note, bond, indenture or other evidence of
indebtedness for borrowed money, or guaranteed indebtedness for
money borrowed by others, other than such of the foregoing under
which the Corporation has no current or future obligation or
liability;
(d) Any Contract for the sale of any assets of
the Corporation (other than sales in the ordinary course of
business consistent with past practice) or the grant of any
preferential rights to purchase any assets of the Corporation;
(e) Any Contract with respect to a joint venture
or partnership arrangement;
(f) Any Contract granting a power of attorney;
(g) Any Contract with respect to letters of
credit, surety or other bonds or pursuant to which any of the
Corporation's assets are or are to be subjected to a Lien;
(h) Any Contract limiting or restricting the
ability of the Corporation from entering into or engaging in any
market or line of business;
(i) Any guarantee, indemnity or similar Contract
(except for any rental, construction or manufacturing Contracts,
in each case, involving aggregate future payments by or to the
Corporation of less than $100,000) pursuant to which the
Corporation could (whether or not subject to contingencies) be
required to make payments with respect to or as a result of
losses, costs or expenses paid or incurred by another person or
entity or any retrospective premium or rating agreement;
(j) Any Contract with the Seller, any Affiliate
or Subsidiary of the Seller or to which any officer or director
thereof are parties;
(k) Any Contract regarding the filing of Tax
Returns (as hereafter defined) or relating in whole or in part to
the sharing of tax benefits or liabilities (including tax
indemnities);
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(l) Any Contract relating to the release,
transportation or disposal of Hazardous Materials (as hereinafter
defined) or the clean-up, abatement or other action in connection
with Environmental Conditions (as hereinafter defined); or
(m) Any Contract which (i) involves aggregate
future payments by or to the Corporation in excess of $50,000
other than purchase or sales orders (including rental,
construction and manufacturing Contracts) entered into in the
ordinary course of the conduct of the Business consistent with
past practice which, in each case, involve aggregate future
payments by or to the Corporation of less than $250,000, (ii) is
reasonably likely to result in a material adverse effect on the
financial condition, results of operation, Business or prospects
of the Corporation, taken individually or as a whole, or (iii) to
the knowledge of the Seller, is otherwise material to the
Corporation.
Except as set forth on Schedule 3.7, each Contract listed,
referenced to or described on Schedule 3.7 is a valid and binding
obligation of the Corporation and is in full force and effect.
Except as set forth on Schedule 3.7, the Corporation and the
Seller (to the extent relating primarily to the Business and
being material to the Corporation) have performed the obligations
required to be performed by them through the date hereof under
each of such Contracts and neither the Corporation nor the Seller
(to the extent relating primarily to the Business and being
material to the Corporation) is (with or without the lapse of
time or the giving of notice, or both) in breach or default
thereunder, and as of the Closing will have performed all
obligations required to be performed by it through the Closing
Date under each of such Contracts and not be in such breach or
default. Except as described on Schedule 3.7, to the knowledge
of the Seller, each other party to any such Contract, other than
the Corporation or the Seller, is not (with or without the lapse
of time or the giving of notice, or both) in breach or default
under any such Contract. Except as listed on Schedule 3.4(a), no
consent, waiver, approval, license or authorization of any
person, entity or Governmental Entity is required (a) under any
Contract to which the Corporation is a party or is bound in
connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby or (b)
in connection with any sublease or assignment by the Seller or an
Affiliate of the Seller, as the case may be, to the Corporation
of its rights under any Contract described on Schedule 3.18.
3.8 Taxes. (a) For purposes of this Agreement:
(i) "Seller's Group" shall mean any "affiliated group"
(as defined in Section 1504(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), without regard to the
limitations contained in Section 1504(b) of the Code) that
includes the Seller or any predecessor of or successor to
the Seller (or another such predecessor or successor);
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(ii) "Tax Returns" shall mean all reports, returns,
statements, forms or other documents or information required
to be filed with a taxing authority with respect to the
Taxes (as hereinafter defined) of the Corporation or the
Seller's Group including, without limitation, consolidated
federal income tax returns of the Seller's Group; and
(iii) "Taxes" shall mean all federal, state, local or
foreign income, gross receipts, windfall profits, severance,
property, production, sales, use, license, excise,
franchise, employment, withholding, alternative minimum or
add-on minimum or similar taxes imposed on the income,
properties or operations (including without limitation any
tax required to be withheld with respect to any payments
made or deemed to have been made by the Corporation or the
Seller's Group) of the Corporation or the Seller's Group,
together with any interest, additions or penalties with
respect thereto and any interest in respect of such
additions or penalties.
(b) Except as set forth in Schedule 3.8(b),
(i) all Tax Returns that are required to be filed on or before
the Closing Date, taking into account any extensions for the
filing thereof, by or with respect to any member of the Seller's
Group, whether collectively or individually, including the
Corporation, have been or will be timely filed; (ii) all such Tax
Returns were or, when filed, will be true, correct and complete
in all material respects and all Taxes required to be paid with
respect to such Tax Returns have been or will be timely paid in
full; (iii) all deficiencies asserted or assessments made with
respect to the Corporation as a result of any examination of any
Tax Return by any taxing authority have been paid in full;
(iv) no issues that have been raised with respect to the
Corporation by the relevant taxing authority in connection with
the examination of any of the Tax Returns referred to in clause
(i) are currently pending in any audit or other administrative
proceeding or court proceeding; and (v) no waivers of statutes of
limitation have been given by or requested with respect to any
Taxes of the Seller's Group.
(c) The Seller is not a foreign person within the
meaning of, and no tax is required to be withheld as a result of
the transfer contemplated by this Agreement pursuant to,
Section 1445 of the Code.
(d) As a result of the Buyer's purchase of the
Shares, neither the Corporation nor the Buyer will be obligated
to make a payment to an individual that would be a "parachute
payment" to a "disqualified individual" as those terms are
defined in Section 280G of the Code without regard to whether
such payment is reasonable compensation for personal services
performed or to be performed in the future.
(e) The Corporation is a member of an affiliated
group of corporations within the meaning of Section 1504(a) of
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the Code which files a consolidated federal income tax return of
which another member of the Seller's Group is the common parent.
(f) Neither the Seller nor any member of the
Seller's Group has executed or entered into any closing agreement
pursuant to Section 7121 of the Code, or any predecessor
provision thereof, or any similar provision of state or local
law.
(g) Neither the Seller nor any member of the
Seller's Group has filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to
any disposition of a subsection (f) asset (as such term is
defined in Section 341(f)(4) of the Code) owned by the
Corporation.
(h) None of the assets owned by the Corporation
is property that is required to be treated as owned by any other
person pursuant to Section 168(f)(8) of the Internal Revenue Code
of 1954, as amended, as in effect immediately prior to the
enactment of the Tax Reform Act of 1986, or is "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(i) The transactions contemplated and effected by
the Lease Agreement (as hereinafter defined) and any Contracts
entered into in connection therewith did not cause the Seller or
the Corporation to cease to be the owner, for Tax purposes, of
the equipment that is the subject of the Lease Agreement.
(j) Except for the Tax Allocation Agreement
between the Seller and the Corporation, dated as of June 22,
1994, attached as Schedule 3.8(j) (the "Tax Allocation
Agreement"), (i) there are and have been no Tax allocation
agreements in effect between or among the Corporation, the
Seller, and any member of the Seller's Group, and (ii) no amount
is or will be due to or from the Corporation and the Seller or
any member of the Seller's Group on account of any Tax.
3.9 Real Property. (a) Schedule 3.9(a) contains a
complete list and description of all real estate owned by the
Corporation and of all leases of real property to which the
Corporation is a party or to which it is bound. True and correct
copies of all such leases have previously been delivered by the
Seller to the Buyer. The real estate owned and the leaseholds
described in Schedule 3.9(a) represent all of the real estate
interests used, owned or occupied by the Corporation as of the
date hereof. The Corporation has good and marketable title to
such real estate and leaseholds and has full and exclusive right
to the occupation and use of the real estate interests described
on Schedule 3.9(a), subject only to the terms of the applicable
leases. Except as set forth on Schedule 3.9(a), each lease
listed and described on Schedule 3.9(a) is a valid and binding
obligation of the Corporation and is in full force and effect.
Except as set forth on Schedule 3.9(a), the Corporation has
performed the obligations required to be performed by it through
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the date hereof under each of such leases and the Corporation is
not (with or without the lapse of time or the giving of notice,
or both) in breach or default thereunder, and as of the Closing
will have performed all obligations required to be performed by
it through the Closing Date under each of such leases and not be
in such breach or default. Except as described on Schedule
3.9(a), to the knowledge of the Seller, each other party to any
such lease, other than the Corporation, is not (with or without
the lapse of time or the giving of notice, or both) in breach or
default under any such lease.
(b) To the best knowledge of the Seller without
due inquiry or investigation, attached as Schedule 3.9(b) is a
complete list of the real property previously owned or leased by
the Corporation, the Division or the Seller (to the extent
relating to the Division) during the last ten years.
3.10 Title to Properties. Except as set forth in
Schedule 3.10, the Corporation has good and marketable title to
all of its personal property and other assets, free and clear of
all Liens.
3.11 Litigation. (a) Except as set forth on Schedule
3.11, there are (i) no claims, suits, investigations,
administrative proceedings, arbitrations or other proceedings
("Legal Proceedings") including without limitation those relating
to alleged product liability, service liability, combination
product/service liability, warranty or recall liability or
obligation (collectively "Product/Service Liability"), workers'
compensation liability, employer's liability (including
intentional tort), occupational-disease liability or
environmental, health and safety liability (collectively
"Workers' Compensation Liability") pending against the
Corporation and/or the Seller (to the extent relating to the
Division) or any judgment, order, writ, injunction or decree of
any Governmental Entity ("Orders") to which the Corporation or
the Seller (to the extent relating to the Division) is subject
and (ii) to the knowledge of the Seller, no Legal Proceedings
threatened against the Corporation and/or the Seller (to the
extent relating to the Division) by any person, entity or
Governmental Entity.
(b) The Corporation is not in default under, and
has not failed to comply with, the terms of (i) any Orders, or
(ii) any Contract entered into with any Governmental Entity to
settle any claim of alleged non-compliance with applicable Law
(collectively, "Consent Decrees"), or (iii) any settlement that
is binding upon the Corporation. Schedule 3.11 sets forth a list
of all Orders, Consent Decrees and settlements that are binding
upon the Corporation and that remain in effect as of the date
hereof.
3.12 Compliance with Laws. (a) Except as set forth on
Schedule 3.12(a), and except with respect to the environmental
matters covered by Section 3.12(b) and (c), neither the
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Corporation nor, to the knowledge of the Seller, the Seller (to
the extent relating to the Division) is in violation of any Order
or in violation of any Law and there are currently in effect all
licenses, consents, approvals and permits of Governmental
Entities and professional associations required for the operation
and conduct of the Business.
(b) Except as set forth on Schedule 3.12(b), to
the knowledge of the Seller, neither the Corporation nor the
Seller (to the extent relating to the previously existing
unincorporated Safway Scaffolding Division of the Seller (the
"Division")), has any liability under any Environmental Law (as
hereinafter defined) applicable to the currently or previously
owned or leased real property or any facilities or operations
thereon of the Corporation or the Seller (to the extent relating
to the Division). Except as set forth in Schedule 3.12(b), (i)
to the knowledge of the Seller, the Corporation and the Seller
(to the extent relating to the Division) are in compliance with
all Environmental Law and to the knowledge of the Seller there
exist no Environmental Conditions with respect to the
Corporation, the Business or any currently or previously owned or
leased properties or any facilities or operations thereon of the
Corporation or the Seller (to the extent relating to the
Division); (ii) to the knowledge of the Seller, none of the
Corporation, the Division or the Seller (to the extent relating
to the Division) has generated, manufactured, refined,
transported, treated, stored, handled, disposed, transferred,
produced, or processed any Hazardous Material or any solid waste,
except as in compliance with all applicable Environmental Laws,
nor, to the knowledge of the Seller, has any reportable Release
or Threat of Release (each as hereinafter defined) of any
Hazardous Material occurred, except as set forth in Schedule
3.12(b); (iii) no Lien has been imposed on any assets of the
Corporation or the Seller (to the extent relating to the
Division) by any Governmental Entity at the federal, state, or
local level in connection with the presence of any Hazardous
Material; (iv) except as set forth in Schedule 3.12(b), none of
the Corporation, the Division or the Seller (to the extent
relating to the Division) has since 1989 (A) entered into or been
subject to any Order with respect to Environmental Laws; (B)
received any notice under the citizen suit provision of any
Environmental Law; (C) received any written request for
information, notice, demand letter, administrative inquiry, or
formal complaint or claim with respect to any Environmental
Condition; or (D) been subject to or threatened with any
governmental or citizen enforcement action, and to the knowledge
of the Seller there is no state of facts or events with respect
to which there exists a substantial likelihood that any of the
matters described above in Section 3.12(b)(iv)(A)-(D) will be
forthcoming; (v) the Corporation and/or the Seller (to the extent
relating to the Division) and as indicated on Schedule 3.12(b)
has all Permits (as hereinafter defined) necessary for its
activities and operations, which Permits are listed on Schedule
3.12(b) and are fully transferable to the Buyer with the consent
of the issuing body to the extent required by any applicable Law;
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(vi) neither the Corporation nor the Seller (to the extent
relating to the Division) is, to the knowledge of Seller, in
violation of or has violated in the past any applicable Laws
relating to asbestos, lead based paints or solvents, (vii) except
to the extent in compliance with applicable Law, to the knowledge
of the Seller, no polychlorinated biphenyls are currently used,
stored or have been disposed at any of the currently leased real
properties of the Corporation and (viii) except to the extent in
compliance with applicable Law, to the knowledge of the Seller
without due inquiry or investigation, no polychlorinated
biphenyls are currently used, stored or have been disposed at any
of the previously owned or leased real properties of the
Corporation or the Seller (to the extent relating to the
Division).
(c) Without limiting the generality or effect of
the foregoing, to the knowledge of the Seller, Schedule 3.12(c)
lists or describes (i) all on-site and off-site locations where
the Corporation or the Seller (to the extent relating to the
Division) has stored, disposed or arranged for the storage or
disposal of any Hazardous Materials used in connection with or
relating to the Business, and (ii) all underground and above
ground storage tanks located at any of the currently or
previously owned or leased real properties of the Corporation or
the Seller (to the extent relating to the Division) and the
contents of such tanks. Except with respect to those matters set
forth on Schedule 3.12(c), each of the currently owned and leased
real properties of the Corporation or the Seller (to the extent
relating to the Division), all facilities and operations thereon
and all alterations and improvements thereto, comply with any and
all Contracts with, Permits and Orders of all Governmental
Entities regarding any Environmental Condition.
(d) For purposes of this Agreement, the following
terms have the following meanings:
"Environment" shall mean soil, surface waters,
groundwaters, land, stream sediments, surface or subsurface
strata, ambient air or any other environmental medium.
"Environmental Condition" shall mean any condition with
respect to the Environment on or off-site, or health or safety,
whether or not yet discovered, which has resulted in the past or
does result in the future in any damage, loss, cost, expense,
claim, demand, order, or liability to or against the Corporation,
the Seller (to the extent relating to the Division) or the Buyer
by any third party (including, without limitation, any Government
Entity), including, without limitation, any condition resulting
from the operation of the Business prior to the Closing Date by
the Corporation or the Division or any activity or operation
formerly conducted by the Corporation or the Division.
"Environmental Law" shall mean any federal, state or
local environmental or health and safety-related Law, whether
existing as of the date hereof or previously enforced and all
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rules and regulations thereunder, including without limitation
the Resource Conservation and Recovery Act (42 U.S.C. 6901 et
seq.), as amended, the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. 9601 et seq.), as
amended ("CERCLA"), the Federal Clean Water Act (33 U.S.C. 1251
et seq.), as amended, The Occupational Safety and Health Act (29
U.S.C. 651 et seq.), as amended, or any other federal, state or
local environmental, health and safety Law, whether existing as
of the date hereof or previously enforced.
"Hazardous Material" shall mean any pollutant, toxic
substance, hazardous waste, hazardous material, hazardous
substance or oil as defined in or regulated pursuant to any
Environmental Law.
"Permit" shall mean any permit, license, approval,
consent or authorization issued by a Governmental Entity.
"Release" shall mean any releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, disposing or dumping into the Environment.
"Threat of Release" shall mean a state of facts
existing on or before the Closing Date that are known to the
Seller with respect to which there exists a substantial
likelihood of a Release which requires action to prevent or
mitigate damage to the Environment which may result from such
Release.
3.13 Intellectual Property. Schedule 3.13 contains a
complete list of all trade names, trademarks, service marks,
registered copyrights, patents, patent applications, computer
software and royalty rights used in or necessary for the conduct
of the Business as of the date hereof and all licenses pertaining
to any of the foregoing (collectively, the "Scheduled IP", and,
together with all trade secrets and unregistered copyrights used
in or necessary for the conduct of the Business as of the date
hereof, collectively, the "Intellectual Property"). No
Intellectual Property is used by the Corporation pursuant to a
license from a third party or is licensed by the Corporation to a
third party except pursuant to a license listed on Schedule 3.13.
Except as set forth on Schedule 3.13, the Corporation (i) owns
free and clear of all Liens all of the Scheduled IP (other than
the Scheduled IP that is used pursuant to a license disclosed on
Schedule 3.13), (ii) has the legal right to use all of the
Scheduled IP that is used pursuant to a license, (iii) owns, free
and clear of all Liens or has the legal right to use, all of the
other Intellectual Property as it is used as of the date hereof
and (iv) has paid all required filing and registration fees in
connection with the Scheduled IP. Except as set forth on
Schedule 3.13, neither the Seller, nor the Corporation, has
received any written notice (that has not been subsequently
satisfied or withdrawn), nor to the knowledge of the Seller, has
there been any assertion against the Corporation of any
infringement, dilution, unfair competition or material conflict
with the asserted rights of others in connection with the use by
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the Corporation of any of the Intellectual Property in the
conduct of the Business. All of the patents, copyright
registrations and trademark and service mark registrations listed
in Schedule 3.13 are valid and in full force and effect, are held
of record in the Corporation's name, free and clear of any Liens,
and, except as set forth in Schedule 3.13, to the knowledge of
the Seller, are not subject to any pending cancellation or
reexamination proceeding or other proceeding or written claim
challenging their extent or validity. With respect to the
Scheduled IP, except as described on Schedule 3.13, the
Corporation is the applicant of record in all pending patent
applications and all applications for trademark, service mark or
copyright registration, and no action of opposition or
interference or final refusal has been received by the
Corporation in connection with any such application. Except as
disclosed on Schedule 3.13, the Corporation is not a party to or
bound by any Contract or Order which limits the use by the
Corporation of any Intellectual Property.
3.14 Transactions with Interested Persons. Except as
set forth on Schedule 3.14, the Corporation has no obligation to
indemnify, or to make any payment of money to, the Seller, any
Affiliate or Subsidiary of the Seller, or to any person who is or
was an officer, director or employee of the Corporation or the
Seller or any Affiliate or Subsidiary of the Seller, except for
salaries for services rendered and expenses (including employee
benefits and other related benefits) previously incurred in the
ordinary course of business consistent with past practice.
Schedule 3.14 sets forth each Contract to which the Corporation
is a party or is bound entered into with the Seller, any
Affiliate or Subsidiary of the Seller or any person who is or was
an officer, director or employee of the Corporation, the Seller
or any Affiliate or Subsidiary of the Seller.
3.15 Employee and Employee Benefit Matters.
(a) Schedule 3.15(a)(i) lists each employee
benefit plan as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
which covers any current or former employee of the Corporation
and which is or was maintained or contributed to by the Seller or
any Affiliate of the Seller and as to which there may be further
liabilities or obligations by the Corporation (an "Employee
Benefit Plan"). Schedule 3.15(a)(ii) lists each employment or
severance contract or arrangement, each stock option plan, stock
appreciation right plan, executive compensation practice and
other executive perquisite, each plan or arrangement providing
for insurance coverage, severance, termination or similar
coverage and each written compensation policy and practice which
covers any current or former employee, director or agent of the
Corporation, which is maintained or contributed to by the Seller,
any Affiliate of the Seller or the Corporation, and which is not
an Employee Benefit Plan (a "Benefit Arrangement").
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(b) Each Employee Benefit Plan (other than a
multiemployer plan) and each Benefit Arrangement complies in all
material respects, and has been operated, administered and, where
applicable, amended, in all material respects, in accordance with
its terms and all applicable Laws, and no "reportable event"
(other than those for which the 30-day notice to the Pension
Benefit Guaranty Corporation has been waived), "prohibited
transaction" (other than those for which there is an available
exemption) (as such terms are defined in ERISA and the Code, as
applicable) has occurred with respect to any Employee Benefit
Plan during the five years preceding the Closing Date. Each
Employee Benefit Plan (other than a multiemployer plan) intended
to qualify under Section 401(a) of the Code has received a
determination letter concluding that such plan so qualifies, and
to the knowledge of the Seller and the Corporation, no event has
occurred, amendment been adopted or action been taken which would
cause such determination letter to be revoked.
(c) The Seller or the Corporation has delivered
or made available to the Buyer complete and correct copies of
each Employee Benefit Plan (other than a multiemployer plan),
each Benefit Arrangement, any trust agreements, funding
agreements or insurance contracts relating thereto and, if
applicable (i) the most recent actuarial valuation report,
(ii) the last filed Form 5500 or 5500-C and Schedules A and B
thereto or equivalent documents required to be filed in foreign
jurisdictions, (iii) the summary plan description currently in
effect and all material modifications thereto, (iv) the last
financial statements, and (v) the most recent determination
letter (or equivalent document in a foreign jurisdiction) issued
with respect to each such plan or arrangement.
(d) Except as set forth on Schedule 3.15(d),
there are no actions or claims existing or pending (other than
routine claims for benefits) or, to the knowledge of the Seller,
threatened with respect to any Employee Benefit Plan (other than
a multiemployer plan) or Benefit Arrangement.
(e) All contributions required to be made by the
Seller or the Corporation under applicable Law or the terms of
any Employee Benefit Plan (other than a multiemployer plan),
Benefit Arrangement or Collective Bargaining Agreement to each
Employee Benefit Plan and each Benefit Arrangement have been made
within the time prescribed by such Law, plan, arrangement or
Collective Bargaining Agreement. There does not exist any
accumulated funding deficiency within the meaning of either
Section 412 of the Code or Section 302 of ERISA as to any
Employee Benefit Plan (other than a multiemployer plan). There
has not been issued any waiver of the minimum funding standards
imposed by the Code with respect to any such Employee Benefit
Plan.
(f) No Employee Benefit Plan (other than a
multiemployer plan) that is or was subject to Title IV of ERISA
(a "Pension Plan") has been terminated during the immediately
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preceding 5 calendar years; no proceeding has been initiated to
terminate any Pension Plan; and neither the Seller nor the
Corporation has incurred any liability, whether to the Pension
Benefit Guaranty Corporation or otherwise, except for required
premium payments, which payments have been made when due and
benefit payments payable in the ordinary course.
(g) No Employee Benefit Plan (other than a
multiemployer plan) or Benefit Arrangement provides medical or
death benefits (whether or not insured) with respect to current
or former employees of the Corporation beyond their retirement or
other termination of service (other than (i) coverage mandated by
Law, provided solely at the former employee's cost, or (ii) death
benefits under any Pension Plan).
(h) The present value of all "benefit
liabilities" (whether or not vested) (as defined in Section
4001(a)(16) of ERISA) under each Pension Plan did not exceed as
of the most recent plan actuarial valuation date, and will not to
the knowledge of the Seller exceed as of the Closing Date, the
then current fair market value of the assets of such plan. For
purposes of determining the present value of benefit liabilities
under any such plan, the actuarial assumptions and methods used
under such plan for the most recent plan actuarial valuation
shall be used and all benefits provided under such plan shall be
deemed to be fully vested.
(i) Except as disclosed on Schedule 3.15(i) and
except for any actions (including, without limitation, with
respect to employment, termination, severance payments or
obligations, employee benefits, employee benefit plans and
arrangements (including Employee Benefit Plans, Benefit
Arrangements, Pension Plans and multiemployer plans) and
salaries), of the Buyer with respect to any current or former
director, officer or employee of the Corporation, the execution
and performance of transactions contemplated by this Agreement
will not accelerate the time of payment or vesting, or increase
the amount of any compensation due to any current employee or
former employee or independent contractor or director or former
director.
(j) Except as set forth on Schedule 3.15(j), no
Employee Benefit Plan is a "multiple employer plan" or a
"multiemployer plan", within the meaning of the Code or ERISA or
the regulations promulgated thereunder, and neither the Seller
nor the Corporation (i) has made any contributions to or
participated in any such multiple employer plan or multiemployer
plan during the immediately preceding 5 calendar years, or
(ii) has any liability with respect to any such plan, which
liability has not been fully paid as of the date hereof. As of
the Closing Date, neither the Seller nor the Corporation (i) will
have completely or partially withdrawn from any Employee Benefit
Plan which is a multiemployer plan during the immediately
preceding 5 calendar years, or (ii) will be subject to any
withdrawal liability as described in Section 4201 of ERISA for
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any withdrawal from any Employee Benefit Plan which occurred on
or prior to the Closing Date (including, without limitation, any
withdrawal deemed to have occurred as a result of the
transactions contemplated by this Agreement). To the knowledge
of the Seller, no Employee Benefit Plan which is a multiemployer
plan fails to qualify under Section 401(a) of the Code or is in
reorganization within the meaning of Part 3 of Subtitle E of
Title IV of ERISA, and to the knowledge of the Seller no
condition exists which presents a risk of any such Plan going
into reorganization. No event has occurred which could
reasonably be expected to result in a "partial withdrawal" under
Section 4205 of ERISA with respect to any Employee Benefit Plan
which is a multiemployer plan, and the Corporation does not have
any contingent liability under Section 4204 of ERISA. If the
Seller and/or the Corporation were to incur a complete withdrawal
(as described in Section 4203 of ERISA) from all of the Employee
Benefit Plans which are multiemployer plans as of the Closing
Date, the aggregate withdrawal liability, as determined under
Section 4201 of ERISA, with respect to all such multiemployer
plans would not exceed $1,000,000. The Seller has delivered to
the Buyer a schedule showing the contributions to each of such
multiemployer plans for the most recent five plan years
immediately preceding the date hereof.
(k) The Corporation (except as a result of any
actions taken by the Buyer) (i) is in compliance with all
applicable Laws respecting employment, employment practices,
terms and conditions of employment and wages and hours
(including, but not limited to, the Worker Adjustment Retraining
Notification Act, the Americans with Disability Act of 1990 and
the Family and Medical Leave Act of 1993 ("FMLA")), in each case,
with respect to employees, former employees, independent
contractors, directors and former directors of the Corporation,
(ii) has withheld all amounts required by Law or by agreement to
be withheld from the wages, salaries and other payments to the
employees, former employees, independent contractors, directors
and former directors of the Corporation, (iii) is not liable for
any arrears of wages or any taxes or any penalty for failure to
comply with any of the foregoing, and (iv) is not liable for any
payment to any trust or other fund or to any Governmental Entity,
with respect to unemployment compensation benefits, social
security or other benefits for employees, former employees,
independent contractors, directors or former directors of the
Corporation. Schedule 3.15(k) sets forth a list of all persons
who are, or are expected to be, on leave as of the Closing Date
and the Seller shall notify the Buyer in writing prior to the
Closing Date of which persons are on leave covered by the FMLA as
of the Closing Date and which persons are on leave not covered by
the FMLA.
(l) The Corporation is not a borrower or a
guarantor under any loan, and is not otherwise obligated to make
any contribution to, any employee stock ownership plan (as
defined in Section 4975(e)(7) of the Code).
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(m) Schedule 3.15(m) sets forth each collective
bargaining or labor agreement or memorandum of understanding
which covers current or former employees of the Corporation (a
"Collective Bargaining Agreement"). Except as set forth on
Schedule 3.15(m) hereto, (i) to the knowledge of the Seller,
there is no union organizational activity currently underway at
the Corporation, (ii) neither the Seller nor the Corporation is
engaged in, or has received any written notice during the current
or preceding year of, any unfair labor practice, and no such
complaint is pending before the National Labor Relations Board or
any other agency having jurisdiction thereof, and (iii) during
the immediately preceding twelve calendar months there has not
been any, and, to the knowledge of the Seller, there is no
threatened, labor strike, work stoppage or slowdown pending
against the Seller (to the extent relating to the Division) or
the Corporation and, to the knowledge of the Seller, no pending
lockout by the Seller (to the extent relating to the Division) or
the Corporation. Each of the Seller and the Corporation has
satisfied and performed fully its obligations under each
Collective Bargaining Agreement, and under any order,
conciliation contract or settlement contract by which the Seller
(to the extent relating to the Division or the Business) or the
Corporation is bound or to which either the Seller (to the extent
relating to the Division or the Business) or the Corporation is
subject concerning employment related matters.
3.16 Insurance. Schedule 3.16 lists all policies of
insurance covering occurrences as of, or claims made on, the date
hereof ("Current Insurance Policies") in respect of which the
Corporation is the owner, insured or beneficiary, or covering any
of its property or assets or relating to the Business, and
indicates for each such policy a description of the risks
insured, the carrier, the dollar limits of coverage, any
deductible (or self-insured retention) and the policy period.
3.17 Vehicles. The Master Lease dated January 1, 1986
between the Seller and Figgie Leasing Corporation (the "Master
Lease") with respect to which the Seller has been causing the
Corporation to pay all lease payments thereunder relating to
those vehicles and equipment used by the Corporation in exchange
for the use of such vehicles and equipment (i) has been
terminated with respect to the vehicles and equipment identified
on Schedule 3.17 and title to such vehicles and equipment, prior
to the date hereof, has been transferred to the Corporation at a
cost of $1.00 per vehicle or item of equipment and (ii) the
Corporation has no liability whatsoever to the lessor thereunder
relating to the vehicles or equipment identified on Schedule
3.17.
3.18 Certain Contracts. The Seller has delivered to
the Buyer true and complete copies of all Contracts (or if any
such Contract is an oral arrangement, the principal terms of such
arrangement) relating to any real property, personal property or
services used by the Corporation to which the Seller (which for
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purposes of this Section 3.18 shall include any Affiliate of the
Seller other than the Corporation), and not the Corporation, is a
party which involve future annual payments by or to the Seller in
excess of $10,000, which Contracts are described on Schedule
3.18.
3.19 Officers and Directors. Schedule 3.19 sets forth
a list of all officers and directors of the Corporation as of the
date hereof.
3.20 Brokerage. Neither the Corporation nor the Seller
has made any agreement or taken any other action which might
cause the Buyer to become obligated for any broker's fee or
commission as a result of the transactions contemplated
hereunder.
3.21 Liabilities. (a) Except as set forth on any
Schedule to this Agreement, the Corporation does not have any
obligations or liabilities of any nature (whether known, unknown,
accrued, absolute, contingent, unliquidated or otherwise and
regardless of when such liability or obligation was or is
asserted) arising out of any action or inaction prior to the
Closing Date, with respect to or based upon transactions,
occurrences or events occurring, or facts or circumstances
existing, at or prior to the Closing, except (i) those
liabilities reflected on or fully reserved against on the Balance
Sheet or (ii) liabilities which have arisen since December 31,
1994 in the ordinary course of business consistent with past
practice.
3.22 Seller's Contracts. Each of the Contracts and
Permits listed on Schedule 8.3 hereto relate primarily to the
Corporation.
3.23 Accuracy of Representations and Warranties. The
representations and warranties of the Seller contained herein are
true and correct on the date hereof and will be true and correct
on the Closing Date with the same force and effect as if made on
and as of the Closing Date.
4. REPRESENTATIONS AND WARRANTIES OF THE BUYER. The Buyer
represents and warrants to the Seller as follows:
4.1 Organization; Power. The Buyer is duly organized,
validly existing and in good standing under the laws of the State
of Delaware. On or prior to the Closing Date, the Buyer will
have the requisite power and authority to consummate the
transactions contemplated hereby.
4.2 Binding Agreement and Authority. The Buyer has
the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions
contemplated hereby. All corporate action required to be taken
for the due authorization of the execution and delivery by the
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Buyer of this Agreement and the consummation of the transactions
contemplated hereby has been duly taken by the Buyer. This
Agreement has been duly executed and delivered by the Buyer and,
assuming the due execution and delivery by the Seller,
constitutes the valid and binding obligation of the Buyer,
enforceable against it in accordance with its terms.
4.3 No Defaults. The execution and delivery of this
Agreement by the Buyer do not, and the consummation by the Buyer
of the transactions contemplated hereby will not, with or without
the giving of notice or the passage of time, or both, (a) require
the consent, waiver, approval, license or authorization of, or
the registration or filing of any document or report with, any
person, entity or Governmental Entity other than (i) filings
under the HSR Act and (ii) as disclosed on Schedule 4.3;
(b) conflict with or violate any Law of any Governmental Entity;
(c) conflict with or violate the Certificate of Incorporation or
By-Laws of the Buyer; or (d) conflict with or result in any
breach or violation of any provision of, or constitute a default
under, or give rise to a right of termination, cancellation or
acceleration of the performance of, any material contract,
commitment, agreement, understanding, arrangement or restriction
of any kind to which the Buyer is a party or to which the Buyer
or any of its assets are subject, or result in the creation of
any Lien upon any of the assets of the Buyer.
4.4 Litigation. There are no actions, proceedings or
investigations pending or, to the knowledge of the Buyer,
threatened against or affecting the Buyer which would prevent it
from consummating the transactions contemplated hereby.
4.5 Available Funds. The Buyer has the funds required
to pay the Purchase Price and consummate the transactions
contemplated hereby.
4.6 Brokerage. The Buyer has not made any agreement
or taken any other action which might cause the Seller to become
obligated for any broker's fee or commission as a result of the
transactions contemplated hereunder.
4.7 Investment Purpose. The Buyer is buying the
Shares for investment only and not with a view to resale in
connection with any distribution of any of the Shares except in
compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and all other applicable securities laws. The
Buyer understands and hereby agrees that the Shares have not been
registered under the Securities Act or under the securities laws
of any state and that the Shares may not be sold, transferred,
offered for sale, pledged, hypothecated or otherwise disposed of
in the absence of an effective registration under the Securities
Act except pursuant to a valid exemption from such registration.
4.8 Accuracy of Representations and Warranties. The
representations and warranties of the Buyer contained herein are
true and correct on the date hereof and will be true and correct
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on the Closing Date with the same force and effect as if made on
and as of the Closing Date.
5. COVENANTS.
5.1 Access.
(a) Prior to the Closing, upon reasonable notice
from the Buyer to the Seller, the Seller will (i) afford to the
officers, attorneys, accountants, bankers or other authorized
representatives of the Buyer reasonable access during normal
business hours to the properties, facilities, books and records
of the Corporation, to the individuals listed on Schedule 5.1 and
to the attorneys, accountants and other authorized
representatives of the Corporation ("Representatives") and
(ii) cause the Representatives to cooperate, in each case so as
to afford the Buyer a reasonable opportunity to make such review,
examination and investigation of the Corporation as the Buyer may
reasonably desire to make. The Buyer will be permitted to make
extracts from or to make copies of such books and records as may
be reasonably necessary. Prior to the Closing, the Seller will
furnish to the Buyer, or cause to be furnished to the Buyer, such
financial and operating data and other information pertaining to
the Corporation and the operation of the Business, past and
present, as the Buyer may reasonably request. Prior to the
Closing Date, the Buyer shall hold such documents, information
and material in confidence unless and until such time as such
information otherwise becomes publicly available and, in the
event of the termination of this Agreement and upon request by
the Seller, shall deliver to the Seller all documents and other
written material so obtained by the Buyer.
(b) Prior to the Closing, the Seller will permit
the Buyer, or independent environmental consultants chosen by the
Buyer at its sole discretion, to inspect, audit and test any or
all of the real property currently owned or leased by the
Corporation as described in Schedule 3.9(a) for the existence of
any and all Environmental Conditions and any and all violations
of Environmental Laws (the "Environmental Assessment"). The
Seller will cooperate with the Buyer and its environmental
consultants in connection with the Environmental Assessment. The
scope, sequence and timing of the Environmental Assessment will
be at the sole discretion of the Buyer.
5.2 Press Releases. Prior to the Closing, the Buyer
will not, the Seller will not, and the Seller will cause the
Corporation to not, issue or cause the publication of any press
release or other public announcement with respect to this
Agreement or the transactions contemplated hereby without the
prior consent of the Buyer (in the case of the Seller or the
Corporation) or the Seller (in the case of the Buyer), which
consent will not be unreasonably withheld; provided, however,
that nothing herein will prohibit any party from issuing or
causing publication of any such press release or public
announcement to the extent that such party determines such action
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to be required by Law in which event the party making such
determination will allow the other party reasonable time (to the
extent practicable) to comment on such release or announcement in
advance of its issuance.
5.3 Regulatory Filings; Consents. (a) After the date
hereof, the Buyer and the Seller will cause to be filed as
promptly as practicable with the United States Federal Trade
Commission and the United States Department of Justice any
supplemental information which may be requested pursuant to the
HSR Act with respect to the consummation of the transactions
contemplated by this Agreement. All filings made pursuant to the
HSR Act will comply in all material respects with the
requirements of the respective Laws pursuant to which they are
made.
(b) Without limiting the generality or effect of
Section 5.3(a), each of the parties will (i) use reasonable
efforts to comply as expeditiously as possible with all lawful
requests of Governmental Entities for additional information and
documents pursuant to the HSR Act and (ii) not (A) except as
required by any Governmental Entity, extend any waiting period
under the HSR Act or (B) enter into any agreement with any
Governmental Entity not to consummate the transactions
contemplated by this Agreement, except with the prior consent of
the other party hereto.
(c) Without limiting the generality or effect of
Section 5.3(a) and (b), the Seller and the Buyer, to the extent
applicable, will use its reasonable best efforts to obtain the
governmental and other approvals, consents or waivers listed on
Schedule 3.4(a).
5.4 Injunctions. Without limiting the generality or
effect of any other provision hereof, if any United States, state
or foreign court having jurisdiction over any party issues or
otherwise promulgates any Order prior to the Closing which
prohibits the consummation of the transactions contemplated
hereby, the parties will use their respective reasonable efforts
to have such Order dissolved or otherwise eliminated as promptly
as possible and, prior to or after the Closing, to pursue the
underlying litigation diligently and in good faith; provided,
however, that in no event will such reasonable efforts require
either party as a condition to or as a result of dissolving or
eliminating such Order to pay damages, other than any incidental
costs of such litigation, or to accept any hold-separate order,
agree to any divestiture or any limitation on the conduct by the
Buyer, the Corporation and the Seller of their respective
businesses or other action which would have an adverse effect on
the value to the Buyer or to the Seller of the transactions
contemplated hereby.
5.5 Operation of the Business. Except as expressly
provided herein or in Schedule 5.5 or as otherwise consented to
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by the Buyer in writing, until the Closing, the Seller will cause
the Corporation to:
(a) Conduct its Business in the ordinary course
consistent in all material respects with past practice, including
without limitation billing, shipping and collection practices,
marketing and sales practices, inventory transactions and payment
of accounts payable; use reasonable, good faith efforts to
(i) keep its Business intact, preserve and maintain the goodwill
of its Business and the Corporation's relationships with its
respective customers, suppliers, distributors, licensors and
others with whom the Corporation has material business
relationships, and (ii) keep available to the Buyer the services
of the present officers and employees of the Corporation (other
than those who are also employees of the Seller); and
(b) Without limiting the generality of the
foregoing, not: (i) amend its Certificate of Incorporation or
By-Laws; (ii) declare, set aside or pay any dividend or make any
distribution on or with respect to shares of its capital stock;
(iii) make any cash payments to the Seller or any Affiliate of
the Seller other than pursuant to, and in accordance with the
terms of, a Contract listed on Schedule 3.7; (iv) issue, grant,
sell, assign or pledge any shares of, or rights of any kind to
acquire any shares of, the capital stock of the Corporation, or
purchase, redeem or otherwise acquire any shares of such capital
stock; (v) enter into any merger, consolidation, recapitalization
or other business combination or reorganization; (vi) create,
incur or assume any indebtedness for borrowed money (other than
in the ordinary course of business consistent with past practice;
provided, however, that a loan from a bank or other financial
institution shall not constitute an ordinary course transaction)
unless repaid in full prior to Closing; (vii) assume, guarantee,
endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations or
liabilities of any other person or entity in excess of $10,000,
except for endorsements of negotiable instruments or relocation
or other benefits provided to employees in the ordinary course of
business consistent with past practice; (viii) grant any
severance or termination pay or benefit in excess of $10,000,
other than in accordance with policies or agreements of the
Corporation in effect on the date hereof; (ix) sell, transfer,
license, fail to keep in effect or otherwise dispose of any
Intellectual Property; (x) waive, release, grant or transfer any
rights of material value or modify or change in any material
respect any existing Contract, other than in the ordinary course
of business consistent with past practice; (xi) make commitments
for any single capital project which would exceed $50,000 in
capital expenditures; (xii) make any change in any method of
accounting or accounting practice, except as may be required by
Law or by GAAP; (xiii) enter into any employment Contract with
respect to the performance of personal services which is not
terminable at will without obligation or liability by the
Corporation; (xiv) fail to continue its existing practices, or to
change such practices if required to comply with applicable Law,
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relating to repair and maintenance of the assets owned, leased or
otherwise held by the Corporation; (xv) except for the equipment
subject to the equipment leases between the Seller and General
Electric Capital Corporation ("GECC") identified in item 14 on
Schedule 3.7 (the "GECC Leases") and the equipment subject to the
leases between BancBoston Leasing Inc. ("BancBoston") and the
Seller ("BancBoston Leases") identified in item 15(b) on Schedule
3.7, purchase, sell, lease or dispose of, or subject to Lien, any
assets owned, leased or otherwise held by the Corporation other
than in the ordinary course of business of the Business
consistent with past practice, except with respect to real
property which may not be purchased, sold, leased or disposed of,
or subjected to any Lien without the prior written consent of the
Buyer; (xvi) make, change or revoke any election with respect to
Taxes except where the election (A) does not affect the
Corporation; or (B) is consistent with prior practice and will
not adversely affect, before or after the Closing, the Buyer or
the Corporation; (xvii) enter into any closing or other agreement
or settlement with respect to Taxes, except where such closing or
other agreement or settlement is with respect to taxable years in
which the Corporation was not a member of the Seller's Group;
(xviii) make any loans, advances or capital contributions to or
investments in any person or entity, other than to any supplier
or customer as an extension of credit in the ordinary course of
business consistent with past practice; (xix) enter into any
Contract with respect to any of the foregoing; or (xx) undertake
any action or activity or fail to take any action which would
result in any violation or breach of any representation, warranty
or covenant of the Seller contained herein.
5.6 Satisfaction of Conditions. Without limiting the
generality or effect of any other provision hereof, prior to the
Closing, each of the parties hereto will use reasonable efforts
with due diligence and in good faith to satisfy promptly all
conditions required hereby to be satisfied by such party in order
to expedite the consummation of the transactions contemplated
hereby.
5.7 Termination of Lease Agreement and Security
Agreement. Effective on or prior to the Closing, the Seller will
have caused (a) the Corporation to be fully released from all
obligations and liabilities with respect to (i) the Lease
Agreement, dated as of March 29, 1993, as amended by the
Amendment Agreement, dated as of May 12, 1993, by and between
Continental Bank (formerly known as Continental Bank, National
Association), not in its individual capacity but solely as
trustee under the Trust Agreement (as defined therein) and the
Seller, as further amended by Amendment No. 2 to Lease, dated as
of July 29, 1994, Waiver No. 1 to Amendment No. 2 to Lease, dated
as of July 29, 1994 and Amendment No. 3 to Lease, dated as of
April 13, 1995, as amended prior to the date hereof and together
with any Contracts entered into in connection therewith, each as
amended prior to the date hereof (collectively, the "Lease
Agreement"), and (ii) the Amended and Restated Lessee Security
Agreement, dated July 29, 1994 from the Seller to Continental
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Bank, not in its individual capacity but solely as trustee under
the Trust Agreement, as amended prior to the date hereof and any
Contracts entered into in connection therewith, each as amended
prior to the date hereof (collectively, the "Security
Agreement"), (b) good and marketable title to all assets subject
to the Lease Agreement or the Security Agreement to have been
transferred to the Corporation and (c) all Liens on any of the
assets or securities of the Corporation (including without
limitation the Shares) arising from or related to such Lease
Agreement and Security Agreement to be terminated and released.
5.8 Release of Certain Liens. Prior to or at the
Closing, the Seller shall deliver to the Buyer UCC-3 termination
statements and any other releases or similar documents necessary
to release any Liens on any of the assets of the Corporation
("Lien Releases") by instruments in form and substance
satisfactory to the Buyer and its counsel.
5.9 Litigation. The Seller will promptly notify the
Buyer of any Legal Proceeding which after the date hereof is
commenced against the Corporation or the Seller (to the extent
relating to the Division) or against any director, officer,
employee, consultant, agent or shareholder thereof with respect
to the affairs of the Corporation or the Business.
5.10 Resignations. Effective as of the Closing, the
Seller will cause to be removed or will deliver to the Buyer the
written resignations of all of the Corporation's directors and
officers other than Marc J. Wilson and Jon P. Weber.
5.11 Limitation on Competition. For a period of five
years after the Closing, the Seller will not, and will cause its
Affiliates and Subsidiaries not to, directly or indirectly own,
manage, operate, finance, join, control or participate in the
ownership, management, operation, financing or control of, or be
associated as a director, partner or representative in connection
with, any profit or not-for-profit business or enterprise that
directly competes with the Business as of the date hereof in the
United States or elsewhere. For purposes of this Agreement, the
Buyer and the Seller agree that the business conducted by
Snorkel-Economy Corporation ("Snorkel"), a division of the
Seller, as of the date hereof consisting of the manufacture,
sale, rental, distribution, erection, dismantling, and servicing
of power elevated (including by means of a cranking system)
aerial work platforms (including trailer mounted booms, self-
propelled scissor lifts or self-propelled articulating and
telescoping booms) (the "Snorkel Business"), does not directly
compete with the Business as of the date hereof in the United
States or elsewhere, and nothing contained herein shall prohibit
or otherwise restrict the Seller, its Affiliates or Subsidiaries
from at any time, directly or indirectly owning, managing,
operating, financing, joining, controlling or participating in
the ownership, management, operation, financing or control of, or
being associated as a director, partner or representative with,
any profit or not-for-profit business or enterprise that engages
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in the Snorkel Business in the United States or elsewhere.
Nothing contained herein, however, shall prohibit the Seller or
any Affiliate of the Seller from acquiring and owning, for
investment purposes only, up to five percent (5%) of the
outstanding equity securities of any entity engaged in a business
that competes with the Business if such equity securities of any
such entity are available to the general public for purchase on a
national securities exchange. In the event that this Section
5.11 is determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of
time or over too large a geographical area or by reason of its
being too extensive in any other respect or for any other reason,
it will be interpreted to extend only over the longest period of
time for which it may be enforceable, and/or over the largest
geographical area as to which it may be enforceable and/or to the
maximum extent in all other aspects as to which it may be
enforceable, all as determined by such court in such action. The
Seller acknowledges that a breach of this Section 5.11 will cause
irreparable damage to the Corporation and the Buyer, the exact
amount of which will be difficult or impossible to ascertain, and
that the Corporation's remedies at Law for any such breach will
be inadequate. Accordingly, the Seller agrees that upon a breach
of this Section 5.11, the Corporation and the Buyer will be
entitled, in addition to any other legal remedies available to
it, to apply in any court of competent jurisdiction for
injunctive relief or any other appropriate decree of specific
performance in order to enjoin such breach or threatened breach.
5.12 Employee Compensation and Benefit Matters. Except
as set forth in Schedule 5.12, from and after the date hereof
until the Closing Date, (a) the Corporation shall not adopt,
enact, authorize, ratify, approve, cause or suffer to exist any
material increase in the compensation or benefits of any
employee, former employee, independent contractor, director or
former director of the Corporation (other than normal periodic
increases in the ordinary course of business that are made in
accordance with established policies of the Corporation or as
required pursuant to any Contract), (b) neither the Seller nor
the Corporation shall adopt, enact, authorize, ratify, approve,
cause or suffer to exist any material amendment, modification,
implementation or termination of any Employee Benefit Plan or
Benefit Arrangement (other than any such amendment, modification,
implementation or termination required under applicable Law or
the terms of an Employee Benefit Plan or a Benefit Arrangement or
a Collective Bargaining Agreement), or (c) neither the Seller nor
the Corporation shall adopt, enact, authorize, ratify, approve,
cause or suffer to exist any material amendment, modification,
implementation or termination of any Collective Bargaining
Agreement (other than any such amendment, modification,
implementation or termination required under applicable Law or
under the terms of any Employee Benefit Plan, Benefit Arrangement
or Collective Bargaining Agreement).
5.13 Acquisition Proposals. During the period (the
"Pre-Closing Covenant Period") between the date hereof and the
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earliest to occur of (a) the Closing, and (b) the termination of
this Agreement, neither the Seller nor the Corporation will, and
the Seller and the Corporation will instruct their respective
officers, directors, employees, agents, advisors or other
representatives not to, solicit, initiate or consider any
proposals or offers from any person or entity relating to, or
enter into (or continue) any discussions concerning, any
acquisition or purchase of all or a material amount of the assets
of, or any securities of, or any merger, consolidation or
business combination with, the Corporation (any such transaction,
a "Competitive Transaction"). During the Pre-Closing Covenant
Period, the Seller and the Corporation will promptly notify the
Buyer in the event of any proposal or offer in respect of a
Competitive Transaction.
5.14 Other Tax Matters.
(a) Section 338(h)(10).
(i) Election. At the request of the Buyer, the Seller
shall make a joint election with the Buyer under
Section 338(h)(10) of the Code and under any similar
provisions of state, local or foreign law with respect to
the purchase of the Shares (the "Section 338(h)(10)
Election"). The Seller represents that its sale of the
Shares is eligible for, and the Buyer represents that it is
qualified to make, such election. If the Section 338(h)(10)
Election is made, the Seller and the Buyer shall on the
Closing Date exchange executed copies of Internal Revenue
Service Form 8023A, required schedules thereto and any
similar state, local and foreign forms. If any additions or
changes are required to these forms as a result of
information which is first available after the Closing Date,
the parties will promptly negotiate in good faith to agree
on such changes.
(ii) Allocation of Purchase Price. If the Section
338(h)(10) Election is made, the Buyer shall determine the
deemed purchase price for the Shares (which deemed purchase
price will include the Corporation's liabilities) and
provide the Seller within 120 days after the Closing Date an
allocation of that price among the assets of the Corporation
that are deemed to have been acquired pursuant to
Section 338(h)(10) of the Code or any state, local or
foreign law equivalent which conforms in all respects to the
requirements of the Code and the regulations promulgated
thereunder, as well as any applicable state, local or
foreign law. The Buyer and the Seller shall use such
allocation for purposes of all reports and returns with
respect to Taxes, including, if applicable, Internal Revenue
Service Form 8594 or any equivalent statement.
(b) Liability for Taxes and Related Matters.
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(i) Seller's Liability for Taxes. The Seller shall be
liable for and shall indemnify the Buyer for all Taxes
(including without limitation any obligation to contribute
to the payment of a Tax determined on a consolidated,
combined or unitary basis with respect to a group of
corporations that includes or included the Corporation, and
Taxes resulting from the Corporation ceasing to be a member
of the Seller's Group, or attributable to the Buyer's deemed
election pursuant to Section 338(g) of the Code and the
joint election to be made or deemed made under
Section 338(h)(10) of the Code and any state, local or
foreign law equivalents) (A) imposed on the Seller's Group
(other than the Corporation) for any taxable year and
(B) imposed on the Corporation or for which the Corporation
may otherwise be liable (1) for any taxable year or period
that ends on or before the Closing Date, (2) with respect to
any taxable year or period beginning before and ending after
the Closing Date (including, but not limited to any state or
local "one-day" return resulting from the elections to be
made under Sections 338(g) and 338(h)(10) of the Code and
any similar state, local or foreign laws; provided, that any
such "one-day" return shall not be included if the
applicable state or local jurisdiction requires the Seller
to recognize gain or loss with respect to the sale of the
Shares), the portion of such taxable year or period ending
on and including the Closing Date or (3) arising out of a
breach or inaccuracy of any representation contained in
Section 3.8. Except as set forth in clause (v) of this
Section 5.14(b), the Seller shall be entitled to any refund
of Taxes of the Corporation attributable to such periods.
(ii) Buyer's Liability for Taxes. The Buyer shall be
liable for and shall indemnify the Seller for the Taxes of
the Corporation for any taxable year or period that begins
after the Closing Date and, with respect to any taxable year
or period beginning before and ending after the Closing
Date, the portion of such taxable year beginning after the
Closing Date. The Buyer shall be entitled to any refund of
Taxes of the Corporation attributable to such periods.
(iii) Taxes for Short Taxable Year. The Seller and the
Buyer shall close the taxable period of the Corporation as
of the close of business on the Closing Date, unless such
action is prohibited by Law. In any case where applicable
Law prohibits the Corporation from closing its taxable year
on the Closing Date then, for purposes of clauses (i) and
(ii) of this Section 5.14(b), the determination of the Taxes
of the Corporation for the portion of the year or period
ending on, and the portion of the year or period beginning
after, the Closing Date shall be determined on the basis of
an interim closing of the books as of the close of business
on the Closing Date, except that exemptions, allowances or
deductions that are calculated on an annual basis, such as
the deduction for depreciation, shall be ratably apportioned
on a time basis.
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(iv) Adjustment to Purchase Price. Any payment by the
Buyer or the Seller under this Section 5.14 will be an
adjustment to the Purchase Price unless a determination (as
defined in Section 1313 of the Code) with respect to the
Indemnitee (as hereinafter defined) causes any such payment
not to constitute an adjustment to the Purchase Price for
United States federal income tax purposes.
(v) Carryforwards of Losses. The Buyer will cause the
Corporation to elect, where permitted by Law, to carry
forward any net operating loss, net capital loss, charitable
contribution or other item arising after the Closing Date
that would, absent such election, be carried back to a
taxable period of the Corporation ending on or before the
Closing Date in which the Corporation filed a consolidated,
combined or unitary Tax Return with the Seller or any
Affiliate of the Seller.
(vi) Preparation and Filing of Tax Returns. With
respect to any taxable period in 1995 ending on or prior to
the Closing Date for which a Tax Return is required to be
filed after the Closing Date, the Buyer shall cause the
Corporation to prepare on a basis consistent with past
practices, under the direction of the Seller, all Tax
Returns of the Corporation and shall promptly cause the
Corporation to provide to the Seller, on the earlier of (A)
February 1, 1996 and (B) at least 15 business days prior to
the due date, including any extensions, for the filing
thereof, such Tax Returns together with such tax information
material relevant to such Tax Returns, including schedules
and work papers, and as to the method of computation of
separate taxable income or other relevant measure of income
of the Corporation. Following receipt of any Tax Returns
prepared by the Corporation, the Seller shall promptly
notify the Buyer and the Corporation if it disputes any of
the information contained in such Tax Return. The parties
shall cooperate to promptly resolve any such dispute and the
Seller and the Corporation shall be responsible for their
respective professional fees and expenses incurred in
connection therewith. The Seller shall file, or cause to be
filed, when due all Tax Returns that are required to be
filed by or with respect to the Corporation for taxable
years or periods ending on or before the Closing Date and
shall pay any Taxes due in respect of such Tax Returns, and
the Buyer shall file or cause to be filed when due all Tax
Returns that are required to be filed by or with respect to
the Corporation for taxable years or periods ending after
the Closing Date and shall pay any Taxes due in respect of
such Tax Returns. The Seller shall pay the Buyer the Taxes
for which the Seller is liable pursuant to
Section 5.14(b)(i) but which are payable with Tax Returns to
be filed by the Buyer pursuant to the previous sentence at
least 15 days prior to the due date for the filing of such
Tax Returns.
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(vii) Contest Provisions. The Buyer shall notify the
Seller in writing within 10 business days after actual
receipt by the Buyer, any of its Affiliates or the
Corporation of written notice of any pending or threatened
federal, state, local or foreign Tax audits or assessments
which may affect the Tax liabilities of the Corporation for
which the Seller would be required to indemnify the Buyer
pursuant to Section 5.14(b)(i). Failure of the Buyer to
comply with the notification requirement set forth in the
preceding sentence shall relieve the Seller of its
indemnification obligations with respect to such liabilities
but only in the event and to the extent that the Seller was
prejudiced by such failure. The Seller shall have the sole
right to represent the Corporation's interests in any Tax
audit or administrative or court proceeding relating to
taxable periods ending on or before the Closing Date, and to
employ counsel of its choice at its expense.
Notwithstanding the foregoing, the Seller shall not be
entitled to settle, either administratively or after the
commencement of litigation, any claim for Taxes which would
adversely affect the liability for Taxes of the Buyer or the
Corporation for any period after the Closing Date
(including, but not limited to, the imposition of income tax
deficiencies, the reduction of asset basis or cost
adjustments, the lengthening of any amortization or
depreciation periods, the denial of amortization or
depreciation deductions or the reduction of loss or credit
carryforwards) without the prior written consent of the
Buyer. Such consent shall not be unreasonably withheld, and
shall not be necessary to the extent that the Seller has
indemnified the Buyer against the effects of any such
settlement.
The Seller shall be entitled to participate at its
expense in the defense of any claim for Taxes for a year or
period ending after the Closing Date which may be subject to
indemnification by the Seller pursuant to Section 5.14(b)(i)
and, with the written consent of the Buyer, and at its sole
expense, may assume the entire defense of such Tax claim.
Neither the Buyer nor the Corporation may agree to settle
any Tax claim for the portion of the year or period ending
on the Closing Date which may be the subject of
indemnification by the Seller under Section 5.14(b)(i)
without the prior written consent of the Seller, which
consent shall not be unreasonably withheld. The Buyer shall
have the sole right to represent the Corporation's interests
in the defense of any claim for Taxes relating to taxable
periods beginning on or after the Closing Date.
(c) Assistance and Cooperation. After the
Closing Date, each of the Seller and the Buyer shall:
(i) assist (and cause their respective Affiliates and
Subsidiaries to assist) the other party in preparing any Tax
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Returns or reports which such other party is responsible for
preparing and filing in accordance with this Section 5.14;
(ii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns
of the Corporation;
(iii) make available to the other and to any taxing
authority as reasonably requested all information, records
and documents relating to Taxes of the Corporation;
(iv) provide timely notice to the other in writing of
any pending or threatened Tax audits or assessments of the
Corporation for taxable periods for which the other may have
a liability under this Section 5.14; and
(v) furnish the other with copies of all
correspondence received from any taxing authority in
connection with any tax audit or information request with
respect to any such taxable period.
(d) Survival of Obligations. The obligations of
the parties set forth in this Section 5.14 shall be unconditional
and absolute and shall remain in effect for the period of the
relevant statute of limitations applicable to the Taxes at issue.
5.15 Records. On the Closing Date the Seller will
deliver or cause to be delivered to the Buyer (to the extent they
exist) all original agreements, documents, books, records and
files relating to the Corporation (collectively, the "Records")
in the possession or under the control of the Seller or any of
its Affiliates other than the Corporation (collectively, "Post-
Closing Affiliates") to the extent not in the possession of the
Corporation or the Buyer, subject to the following exceptions:
(a) The Buyer recognizes that certain Records may
contain only incidental information relating to the Corporation
or may primarily relate to the Seller or the Post-Closing
Affiliates, or the businesses of the Seller or the Post-Closing
Affiliates, and that the Seller and the Post-Closing Affiliates
may retain such Records and the Seller will at the Buyer's
request made at any time specifying the items needed deliver
appropriately excised copies of such Records; and
(b) The Seller and the Post-Closing Affiliates
may retain any Tax Returns and related schedules or work papers,
but will promptly make available to the Buyer or the Buyer's
representatives copies of such Tax Returns and related schedules
or work papers or information appearing on such Tax Returns or in
related documents which relates to the Corporation or which the
Buyer will reasonably request to fulfill tax-related or financial
obligations or obligations under this Agreement.
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5.16 Employment Agreement. Prior to the Closing, the
Seller will allow the Buyer to negotiate the terms of such
employment agreements with such of the current management-level
employees of the Corporation as the Buyer may choose in its sole
discretion.
6. CONDITIONS TO CLOSING.
6.1 Conditions Precedent To The Obligations of the
Buyer and the Seller. The obligations of each of the Buyer and
the Seller under this Agreement to consummate the transactions
contemplated hereby are subject to the satisfaction on or prior
to the Closing Date of the following conditions (a) there shall
not have been entered a preliminary or permanent injunction,
temporary restraining order or other Order or decree in any
jurisdiction, the effect of which restrains or prohibits the
Closing, and (b) the waiting period (and any extension thereof)
applicable to the consummation of the transactions contemplated
by this Agreement under the HSR Act, if any, shall have expired
or been terminated.
6.2 Additional Conditions Precedent to Obligations of
the Seller. The obligations of the Seller under this Agreement
to consummate the transactions contemplated hereby are subject to
the satisfaction, at or prior to the Closing, of all of the
following conditions, any one or more of which may be waived at
the option of the Seller in its sole discretion:
6.2.1 Compliance with Agreement. The Buyer will
have performed all obligations and agreements and complied with
all covenants contained in this Agreement to be performed or
complied with by it at or prior to the Closing Date, and there
will be delivered to the Seller a certificate to that effect
signed by an officer of the Buyer and dated the Closing Date.
6.2.2 Actual or Threatened Actions. There will
not be any actual or threatened action or proceeding by or before
any court or other individual, administrative or Governmental
Entity which seeks to restrain, prohibit or invalidate the
transactions contemplated by this Agreement or which might
materially adversely affect the Seller after the Closing Date.
6.2.3 Resolutions of the Board of Directors. The
Seller will have received from the Buyer certified copies of the
resolutions of its Board of Directors approving this Agreement
and authorizing the consummation of the transactions contemplated
hereby.
6.2.4 Delivery of Purchase Price. The Buyer will
have delivered to the Seller the portion of the Purchase Price
payable at Closing as provided in Section 2.1 and will have
deposited $4,000,000 with the escrow agent pursuant to the Escrow
Agreement I, deposited $3,000,000 with the escrow agent pursuant
to the Escrow Agreement II and deposited $250,000 with the escrow
agent pursuant to the Escrow Agreement III.
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6.2.5 Opinion of Counsel of the Buyer. The
Seller will have received an opinion of counsel of the Buyer,
dated the Closing Date, in the form of Exhibit D hereto.
6.2.6 Regulatory Approval; Consents. The Seller
will have received notice from the Federal Trade Commission that
the waiting period under the HSR Act has terminated and each of
the governmental and other approvals, consents or waivers listed
on Schedule 4.3 (other than those marked with an asterisk) shall
have been obtained and be in full force and effect as of the
Closing.
6.2.7 Leases. The Seller will have received from
the Buyer executed copies of the five leases for the
Corporation's facilities located on the Seller's properties in
Cleveland, Dallas, Detroit, Los Angeles and Milwaukee (the
"Leases") and the five related Memoranda of Lease (with attached
legal descriptions), which Leases shall be substantially in the
form attached hereto as Exhibit E.
6.2.8 Paint Line Lease. The Seller will have
received from the Buyer an executed copy of the lease with
respect to the paint line at the Goose Creek, South Carolina
facility (the "Paint Line Lease") in the form attached hereto as
Exhibit F.
6.2.9 Indemnification Letter. The Seller will
have received an indemnification letter in the form of Exhibit G
attached hereto (the "Indemnification Letter") duly executed by
the Corporation.
6.3 Additional Conditions Precedent to Obligations of
the Buyer. The obligations of the Buyer under this Agreement to
consummate the transactions contemplated hereby are subject to
the satisfaction, at or prior to the Closing, of all of the
following conditions, any one or more of which may be waived at
the option of the Buyer in its sole discretion:
6.3.1 Compliance with Agreement. The Seller will
have performed all obligations and agreements and complied with
all covenants contained in this Agreement to be performed or
complied with by it at or prior to the Closing Date, and there
will be delivered to the Buyer a certificate to that effect
signed by an officer of the Seller dated the Closing Date.
6.3.2 Delivery of Stock Certificates. There will
be delivered to the Buyer by the Seller certificates representing
the Shares, duly endorsed in blank for transfer or accompanied by
duly executed stock powers endorsed in blank to the Buyer.
6.3.3 Termination of Lease Agreement and Security
Agreement. The Buyer will have received the Payoff Letter, the
Release Letter, the Release of Lien, the Intellectual Property
Release and the Assignment of Undivided Interest, each in the
form attached hereto as Exhibit H, and applicable UCC-3
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termination statements, each duly executed by Bank of America
Illinois (formerly known as Continental Bank), and all the other
parties thereto.
6.3.4 Release of Certain Liens. The Seller will
have delivered to the Buyer the Lien Releases.
6.3.5 Resignations. The Buyer will have received
the written resignations of all directors and officers of the
Corporation other than Marc J. Wilson and Jon P. Weber.
6.3.6 Actual or Threatened Actions. There will
not be any actual or threatened action or proceeding by or before
any court or other individual, administrative or Governmental
Entity which seeks to restrain, prohibit or invalidate the
transactions contemplated by this Agreement or which might
materially adversely affect the Corporation after the Closing
Date.
6.3.7 Absence of Material Adverse Change. There
will have been no materially adverse change in the financial
condition, Business or properties of the Corporation since
December 31, 1994.
6.3.8 Resolutions of the Board of Directors. The
Buyer will have received from the Seller certified copies of the
resolutions of its Board of Directors approving this Agreement
and authorizing the consummation of the transactions contemplated
hereby.
6.3.9 Opinions of Counsel of the Seller. The
Buyer will have received an opinion of (a) LeBoeuf, Lamb, Greene
& MacRae, dated the Closing Date, in the form of Exhibit I
hereto, and (b) Robert D. Vilsack, Esq., in-house counsel at the
Seller, dated the Closing Date, in the form of Exhibit J hereto.
6.3.10 Regulatory Approval; Consents. The Buyer
will have received notice from the Federal Trade Commission that
the waiting period under the HSR Act has terminated and each of
the governmental and other approvals, consents or waivers listed
on Schedule 3.4(a) (other than those marked with an asterisk)
shall have been obtained and be in full force and effect as of
the Closing.
6.3.11 Leases. The Buyer will have received from
the Seller executed copies of the Leases and the five related
Memoranda of Lease (with attached legal descriptions).
6.3.12 Equipment Leases. The Buyer will have
received (i) UCC-3 termination statements duly executed by GECC
releasing any Liens it has on the equipment (the "GECC
Equipment") subject to the GECC Leases (the "GECC UCC-3s"); (ii)
copy of a Bill of Sale duly executed by GECC transferring to the
Seller all GECC's right, title and interest in and to the GECC
Equipment ("GECC Bill of Sale I"); (iii) a Bill of Sale duly
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executed by the Seller transferring to the Corporation all the
Seller's right, title and interest in and to the GECC Equipment
("GECC Bill of Sale II"); (iv) a letter from GECC acknowledging
that the GECC Leases have been terminated ("GECC Termination
Letter"); (v) UCC-3 termination statements duly executed by
BancBoston releasing any Liens it has on the equipment
("BancBoston Equipment") subject to the BancBoston Leases (the
"BancBoston UCC-3s"); (vi) a copy of the Bill of Sale duly
executed by BancBoston transferring to the Seller all
BancBoston's right, title and interest in and to the BancBoston
Equipment ("BancBoston Bill of Sale I"); (vii) a Bill of Sale
duly executed by the Seller transferring to the Corporation all
the Seller's right, title and interest in and to the BancBoston
Equipment ("BancBoston Bill of Sale II") and (viii) a letter from
BancBoston acknowledging that the BancBoston Leases have been
terminated ("BancBoston Termination Letter").
6.3.13 Paint Line Lease. The Buyer will have
received from the Seller an executed copy of the Paint Line
Lease.
6.3.14 Intellectual Property. The Buyer will
have received evidence satisfactory to it that the Scheduled IP
identified on Annex B to Schedule 3.13 has been properly recorded
in the name of the Corporation (or a filing for such recordation
has been made) in each of the applicable foreign jurisdictions
with the appropriate foreign governmental entities (to the extent
such recordations or filings are available on the Closing Date).
6.3.15 IRS Form 8023A. The Buyer will have
received an IRS Form 8023A duly executed by the Seller, to be
held in escrow by the Buyer and filed with the Buyer's executed
Form 8023A if the Buyer makes the Section 338(h)(10) Election, or
returned to the Seller if the Buyer does not make the Section
338(h)(10) Election.
7. CLOSING.
7.1 Time and Place. The closing of the purchase and
sale of the Shares (the "Closing") will take place by the
simultaneous exchange of executed original counterparts of this
Agreement, delivery of the Shares (as provided in Section 6.3.2)
and the delivery of the Purchase Price (as provided in Section
2.1), together with all documents, opinions and certificates
contemplated hereby, at the offices of Jones, Day, Reavis &
Pogue, 599 Lexington Avenue, New York, New York on July 21, 1995,
or on such other date or at such other place as the parties
hereto may mutually agree (the "Closing Date").
7.2 Documents to be Delivered by the Seller at
Closing. The Seller will deliver to the Buyer at the Closing the
following:
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(a) The opinions of counsel for the Seller dated
as of the Closing Date, as provided in Section 6.3.9;
(b) A certificate executed by a duly authorized
officer of the Seller as to the matters described in Section
6.3.1;
(c) Certificates representing all of the Shares
duly endorsed in blank for transfer or accompanied by duly
executed stock powers endorsed in blank to the Buyer;
(d) The written resignations of all the directors
and officers of the Corporation other than Marc J. Wilson and Jon
P. Weber;
(e) A receipt signed by the Seller for the
payment of the portion of the Purchase Price paid to the Seller
at Closing ($59,950,000);
(f) The Escrow Agreement I, Escrow Agreement II
and Escrow Agreement III, each duly executed by the Seller;
(g) The Corporation's original minute books,
stock certificates and corporate record books (including unissued
stock certificates and all cancelled stock certificates),
Certificate of Incorporation and By-Laws and all amendments
thereto;
(h) Payoff Letter, Release Letter, Release of
Lien, Intellectual Property Release, Assignment of Undivided
Interest and applicable UCC-3 termination statements, each duly
executed by Bank of America Illinois (formerly known as
Continental Bank), and all the other parties thereto;
(i) The Lien Releases;
(j) A certification from the Seller under
Section 1445(b)(2) of the Code and the rules and regulations
thereunder, in form reasonably acceptable to the Buyer, stating
that the Seller is not a foreign person;
(k) Evidence reasonably satisfactory to the Buyer
that the governmental and other approvals, consents or waivers
listed on Schedule 3.4(a) (other than those marked with an
asterisk) shall have been obtained and are in full force and
effect as of the Closing;
(l) The Leases duly executed by the Seller;
(m) The assignment and assumption agreement
relating to the leases between Randolph Computer Corporation
("Randolph") and the Seller, duly executed by the Seller and
consented to by Randolph;
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(n) The assignment and assumption agreement
relating to the Contracts listed on Schedule 7.2(n) duly executed
by the Seller;
(o) A master vehicle and equipment lease in the
form attached hereto as Exhibit K duly executed by Associates
Leasing Inc. (the "Associates Master Lease");
(p) the Paint Line Lease duly executed by the
Seller;
(q) A transitional services agreement by and
between the Seller and the Corporation in the form attached
hereto as Exhibit L duly executed by the Seller (the
"Transitional Services Agreement");
(r) GECC UCC-3s, GECC Bill of Sale I, GECC Bill
of Sale II, GECC Termination Letter, BancBoston UCC-3s,
BancBoston Bill of Sale I, BancBoston Bill of Sale II and
BancBoston Termination Letter;
(s) IRS Form 8023A duly executed by the Seller;
and
(t) Such other agreements, documents or
instruments customary for the consummation of the transactions
contemplated hereby.
7.3 Documents to be Delivered by the Buyer at Closing.
At the Closing the Buyer will deliver to the Seller the
following:
(a) The portion of the Purchase Price payable to
the Seller at Closing as provided in Section 2.1;
(b) The opinion of counsel for the Buyer, dated
as of the Closing Date, in the form of Exhibit D hereto;
(c) A certificate executed by a duly authorized
officer of the Buyer certifying as to the matters described in
Section 6.2.1;
(d) The Escrow Agreement I, Escrow Agreement II
and Escrow Agreement III, each duly executed by the Buyer and the
Corporation;
(e) Evidence that the Buyer has deposited
$4,000,000 with the escrow agent pursuant to the Escrow Agreement
I, deposited $3,000,000 with the escrow agent pursuant to the
Escrow Agreement II and deposited $250,000 with the escrow agent
pursuant to the Escrow Agreement III;
(f) The assignment and assumption agreement
relating to the Contracts listed on Schedule 7.2(n) duly executed
by the Corporation;
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(g) The assignment and assumption agreement
relating to the leases between Randolph and the Seller, duly
executed by the Corporation;
(h) The Associates Master Lease duly executed by
the Corporation;
(i) the Paint Line Lease duly executed by the
Corporation;
(j) The Transitional Services Agreement duly
executed by the Corporation;
(k) GECC UCC-3s, GECC Bill of Sale I, GECC Bill
of Sale II, GECC Termination Letter, BancBoston UCC-3s,
BancBoston Bill of Sale I, BancBoston Bill of Sale II and
BancBoston Termination Letter;
(l) The Indemnification Letter duly executed by
the Corporation; and
(m) Such other agreements, documents or
instruments customary for the consummation of the transactions
contemplated hereby.
8. INDEMNIFICATION.
8.1 Limitations on Liability. (a) For purposes of
this Agreement, (i) "Indemnity Payment" means any amount of
Indemnifiable Losses required to be paid pursuant to this
Agreement, (ii) "Indemnitee" means any person or entity entitled
to indemnification under this Agreement, (iii) "Indemnifying
Party" means any person or entity required to provide
indemnification under this Agreement, (iv) "Third Party Claim"
means any threat, demand, action, suit, administrative
proceeding, investigation or audit or other proceeding made or
brought by any person or entity who or which is not a party to
this Agreement or an Affiliate of a party to this Agreement,
(v) "Notice of Claim for Indemnity" means a written notice given
in accordance with this Agreement, which if based upon a Third
Party Claim against any Indemnitee, includes copies of all
material notices and documents received by the Indemnitee with
respect to such Third Party Claim and indicates the estimated
amount, if reasonably practicable, of the Indemnifiable Loss that
has been or may be sustained by the Indemnitee, or if based upon
an alleged breach of a representation, warranty or covenant
contained in this Agreement, which does not relate to, result
from or arise out of a Third Party Claim (a "Direct Claim"), and
which relates to, results from or arises out of an event or
circumstance discovered by the Indemnitee which constitutes a
reasonable basis for the Indemnitee to conclude that such event
or circumstances will lead to the incurrence of an Indemnifiable
Loss by reason of such alleged breach, whether or not the
Indemnifiable Loss is actually suffered or sustained prior to the
expiration of the applicable survival period, includes in
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reasonable detail the event or circumstance which gives rise to
the claim for indemnification and indicates the estimated amount,
if reasonably practicable, of the Indemnifiable Loss that has
been or may be sustained by the Indemnitee, and (vi)
"Indemnifiable Losses" means any and all loss, liability, claim,
demand, obligation, damage, deficiency, cost or expense
(including without limitation reasonable attorneys' fees and
expenses), including without limitation environmental damages,
response costs (including response costs under CERCLA or any
comparable state, local or foreign law), remediation expenses and
disbursements incurred by an Indemnitee, including without
limitation any of the foregoing relating to, resulting from or
arising out of any action, suit, administrative proceeding,
investigation, audit or other proceeding brought by any person or
entity or Governmental Entity and any settlement or compromise
thereof, reduced by the amount of any Third-Party Recovery (as
hereinafter defined).
(b) No Indemnifying Party may assert any offset
or similar right in respect of its obligations hereunder based
upon any actual or alleged breach of any representation, warranty
or covenant in this Agreement; provided, however, that the
inability to assert any such offset or similar right pursuant to
this sentence will not of itself result in a waiver of any such
actual or alleged breach, which may, subject to the limitations
herein contained, be asserted pursuant to this Agreement.
(c) Any Indemnifiable Loss (or portion thereof)
satisfied by withdrawal of funds held under the Escrow Agreements
shall, upon such withdrawal, no longer constitute an
Indemnifiable Loss. Any termination of Escrow Agreement I or
Escrow Agreement II, or the fact that there are insufficient
funds held under escrow pursuant to Escrow Agreement I or Escrow
Agreement II to satisfy in full any Indemnifiable Losses to which
such Escrow Agreements relate, shall not limit or otherwise
affect the rights of the Buyer, its Affiliates, the Corporation
and their respective officers, directors, shareholders,
employees, agents and representatives under Section 8.2.
8.2 Seller's Indemnification. Subject to Sections
8.1, 8.4, 8.5, 8.6, 8.7, 8.8 and 9, the Seller will indemnify,
defend and hold the Buyer, its Affiliates, the Corporation and
their respective officers, directors, shareholders, employees,
agents and representatives, harmless from and against any and all
Indemnifiable Losses relating to, resulting from or arising out
of (a) any inaccuracy in or breach by the Seller of any of the
representations or warranties of the Seller contained in this
Agreement; (b) any breach by the Seller of any covenant of the
Seller contained in this Agreement (other than the covenants of
the Seller contained in Section 5.14, the indemnification
obligations of which are governed by Section 5.14); (c) any
claim by any person (other than any of the Corporation's or the
Seller's (to the extent relating to the Division) current or
former employees) or entity relating to Product/Service Liability
and involving any accident, trauma, claim, disease, injury,
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exposure, condition or event ("Occurrence") that (i) commenced on
or prior to the Closing Date or (ii) commenced after the Closing
Date provided such Product/Service Liability relates to, results
from or arises out of the laminated scaffold planks manufactured
by Trus Joist (the "Trus Joist Planks") sold by the Corporation
prior to the Closing Date or currently owned by the Corporation
and rented or leased to a person or entity, provided that any
indemnification pursuant to this clause (ii) shall only apply to
Indemnifiable Losses relating to that portion of Product/Service
Liability which is determined (either by a court of competent
jurisdiction, and if a court does not make such determination,
such determination shall be made by mutual agreement among the
Seller, the Buyer and the Corporation) to be attributable to the
Trus Joist Planks and shall expressly not apply to Indemnifiable
Losses relating to that portion of such Product/Service Liability
which is determined (as described above in this clause (ii)) to
be attributable to any factor other than the Trus Joist Planks;
(d) any Workers' Compensation Liability, to the extent that such
Workers' Compensation Liability arises out of or relates to any
claim by any of the Corporation's or the Seller's (to the extent
relating to the Division) current or former employees with
respect to any Occurrence that commenced prior to the Closing
Date; (e) any alleged general liability for any bodily injury or
property damage ("General Liability") to the extent that such
General Liability arises out of or relates to the operation of
the Business or the ownership or lease of properties, facilities
or equipment by the Corporation or the Seller (to the extent
relating to the Division) prior to the Closing Date and which
does not relate to, result from, or arise out of any
Product/Service Liability or any Workers' Compensation Liability
described in Sections 8.2(c) or (d); (f) any Environmental
Condition (whether known or unknown on the Closing Date),
existing on or prior to the Closing Date or any violation of any
Environmental Law applicable to the Corporation, the Business or
the Seller (to the extent relating to the Division) or any of the
Corporation's or the Seller's (to the extent relating to the
Division) current or former facilities or operations, existing on
or prior to the Closing Date (whether or not known on the Closing
Date); (g) any accumulated funding deficiency within the meaning
of either Section 412 of the Code or Section 302 of ERISA as to
any Employee Benefit Plan or any such deficiency that would exist
but for the application of an alternative minimum funding
standard; (h) any failure of the current fair market value of the
assets of each Pension Plan to equal or exceed the present value
of all "benefit liabilities" (whether or not vested) (as defined
in Section 4001(a)(16) of ERISA) under such Pension Plan during
the period beginning on the most recent actuarial valuation date
of the Pension Plan and ending on the Closing Date and (i) any
breach by the Seller of the covenants contained in Section 5.7 of
this Agreement.
8.3 Buyer's Indemnification. Subject to Sections 8.1,
8.4, 8.5, 8.6, 8.7, 8.8 and 9, the Buyer will indemnify, defend
and hold the Seller, its Affiliates, and their respective
officers, directors, shareholders, employees, agents and
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representatives, harmless from and against any and all
Indemnifiable Losses relating to, resulting from or arising out
of (a) any inaccuracy in or breach by the Buyer of any of the
representations or warranties of the Buyer contained in this
Agreement; (b) any breach by the Buyer of any covenant of the
Buyer contained in this Agreement (other than covenants of the
Buyer contained in Section 5.14, the indemnification obligations
of which are governed by Section 5.14); (c) any Contract listed
on Schedule 8.3 to the extent (and only to the extent) such
Indemnifiable Losses result from or arise out of any act or
failure to act by the Buyer or the Corporation after the Closing
Date; (d) except for Indemnifiable Losses for which Seller is
liable under Sections 8.2(a), 8.2(b), 8.2(g) and 8.2(h), any act
of the Corporation or Buyer from and after the Closing Date with
respect to the Corporation's present or former employees for the
payment of any accrued wages, salaries, vacation pay, sick pay,
severance obligations, and any other employee benefits or
entitlements as of the Closing Date, pursuant to any employee
benefit plan, fund, program, contract, policy or arrangements,
whether by reason of any applicable law or otherwise, including
under WARN, COBRA or otherwise; and (e) any withdrawal liability
with respect to any partial or complete withdrawal occurring from
and after the Closing Date from any multiemployer plan under the
Contracts identified in item 6 of Schedule 8.3.
8.4 Defense of Claims. (a) If any Indemnitee receives
notice of the assertion or commencement of any Third Party Claim
against such Indemnitee with respect to which an Indemnifying
Party is or may be obligated to provide indemnification under
this Agreement, the Indemnitee will promptly give such
Indemnifying Party a Notice of Claim for Indemnity, which notice
will in any event be given not later than 30 calendar days after
receipt of such notice of such Third Party Claim. The
Indemnifying Party and the Indemnitee will cooperate in good
faith in evaluating and determining how the defense of such Third
Party Claim should be administered. It is the intent of the
parties that the party which is most likely to be liable for the
monetary relief relating to a Third Party Claim should have the
right to defend such Third Party Claim unless such Third Party
Claim also seeks relief other than monetary damages, remediation
or other monetary relief, in which case the Indemnifying Party
will have no right to assume the defense thereof; provided,
however, that the right of the Indemnifying Party to assume the
defense of a Third Party Claim will be subject to its prior
undertaking in writing fully to indemnify the Indemnitee with
respect thereto pursuant to the terms of this Agreement;
provided, however, that in the event that subsequent to any such
assumption of the defense of a Third Party Claim by the Seller,
the Seller discovers that the state of facts as presented in the
Third Party Claim were incorrect and as a result thereof the
Seller is not the party most likely to be liable for the monetary
relief related to such Third Party Claim, the Seller shall
promptly notify the Buyer and the Corporation of such facts and
shall allow the Buyer and/or the Corporation to thereafter assume
the defense of such Third Party Claim and the Seller's prior
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undertaking to be fully liable with respect thereto shall be
limited with respect to such Third Party Claim to the
Indemnifiable Losses for which the Seller is liable pursuant to
this Agreement. The preceding sentence shall in no event apply
in the event of a Third Party Claim that relates to, results from
or arises out of any Trus Joist Planks with respect to which the
Seller is liable pursuant to Section 8.2(c), the defense of which
in all cases may be assumed by the Seller without a requirement
of such undertaking and the Seller's liability relating thereto
shall be governed by Section 8.2(c). Notwithstanding the third
sentence of this Section 8.4(a), if within ten calendar days
after receipt by the Indemnifying Party of a Notice of Claim for
Indemnity relating to a Third Party Claim, the Indemnifying Party
and the Indemnitee have not agreed to the administration of the
defense of such Third Party Claim, both the Indemnifying Party
and the Indemnitee will jointly administer the defense of such
Third Party Claim; provided, however, that the provisions of this
sentence shall not apply to the defense of any Third Party Claim
that was pending as of the Closing Date that seeks no relief
other than monetary damages, remediation or other monetary
relief, and such claims will continue to be administered by the
Seller. If during the course of any such joint administration of
the defense of any Third Party Claim that arises after the
Closing Date that seeks no relief other than monetary damages,
remediation or other monetary relief, the Indemnifying Party and
the Indemnitee are unable to agree upon the administration of
such defense, the Indemnifying Party shall have the right to make
the ultimate determinations and decisions with respect to the
administration of such defense. If during the course of any
joint administration of the defense of a Third Party Claim that
was pending as of the Closing Date and that seeks relief other
than monetary damages, remediation or other monetary relief, the
Indemnifying Party and the Indemnitee are unable to agree upon
the administration of the defense, the Buyer and/or the
Corporation shall have the right to make the ultimate
determinations and decisions with respect to matters other than
relating to monetary relief and the Seller shall have the right
to make the ultimate determinations and decisions with respect to
matters relating to monetary relief. The parties hereto agree to
cooperate in good faith in any joint administration of any Third
Party Claim. In any joint administration of a Third Party Claim,
the Indemnitee shall bear its own attorney's fees and other costs
and such amounts shall be deemed to not constitute Indemnifiable
Losses. It is the intent of the parties that the Seller and
Buyer and/or the Corporation shall jointly administer the defense
of any Third Party Claim pending as of the Closing Date that
seeks monetary damages, remediation or other monetary relief and
also seeks relief other than monetary damages, remediation or
other monetary relief.
(b) If the Indemnifying Party has assumed the
defense of a Third Party Claim as provided herein, the
Indemnifying Party will not be liable for any legal expenses
subsequently incurred by the Indemnitee in connection with the
defense thereof; provided, however, that if (i) a Third Party
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Claim that arose post-closing initially sought but ceases to
seek, solely monetary damages, monetary remediation or other
monetary relief or (ii) the Indemnifying Party fails to take
reasonable steps necessary to defend in good faith such Third
Party Claim within ten calendar days (or such shorter period as
may be required to defend in good faith such Third Party Claim)
after receiving written notice from the Indemnitee that the
Indemnitee believes the Indemnifying Party has failed to take
such steps, the Indemnitee may assume its own defense, and the
Indemnifying Party will be liable for all reasonable costs or
expenses paid or incurred in connection therewith. The
Indemnitee shall at the Indemnifying Party's expense, make
available to the Indemnifying Party and its attorneys,
accountants or other duly designated agents all books and records
of the Indemnitee relating to any such action, suit or
proceeding, and the parties hereto agree to render to each other
assistance (at their own expense) as they may reasonably require
of each other in order to ensure the proper and adequate defense
of any such action, suit or proceeding. The Indemnitee shall be
entitled, with counsel selected by the Indemnitee, to participate
in (but not control), at its own expense, the defense of any
claim or litigation which the Indemnifying Party has, in
accordance with the provisions of subparagraph (a) above, assumed
the defense of, and to be kept fully informed of the status
thereof at all stages, including the right to receive, at the
Indemnitee's expense, copies of all pleadings and other material
papers in connection with such claim or litigation. Without the
prior written consent of the Indemnitee, the Indemnifying Party
will not enter into any compromise or settlement of any Third
Party Claim which would lead to liability or create any financial
or other obligation on the part of the Indemnitee for which the
Indemnifying Party has not undertaken in writing fully to
indemnify the Indemnitee with respect thereto or which commits
the Indemnitee to take, or forbear to take, any action (other
than ministerial actions incident to settlement of such Third
Party Claim). If a firm written offer is made to compromise or
settle a Third Party Claim without (A) leading to liability or
the creation of a financial or other obligation on the part of
the Indemnitee for which the Indemnifying Party has not
undertaken in writing fully to indemnify the Indemnitee or
(B) committing the Indemnitee to take or forbear to take any
action (other than ministerial actions incident to settlement),
and the Indemnifying Party desires to accept and agree to such
offer, the Indemnifying Party will give written notice to the
Indemnitee to that effect. If the Indemnitee fails to consent to
such firm offer within ten calendar days after its receipt of
such notice, the Indemnitee may continue to contest or defend
such Third Party Claim and, in such event, the maximum liability
of the Indemnifying Party as to such Third Party Claim will not
exceed the amount of such settlement offer, plus costs and
expenses paid or incurred by the Indemnitee through the end of
such ten calendar day period.
(c) If the defense of a Third Party Claim is not
assumed by the Indemnifying Party as provided in
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subparagraph (a) above, then the Indemnitee may (to the extent
that the Indemnitee determines to do so in its sole discretion)
conduct any such proceeding as it may deem appropriate, may take
whatever action it deems necessary or appropriate to resolve or
settle such claim or dispute, but shall in no event have any
obligation to defend any such claim or proceeding or to appeal
any adverse finding or determination or defend the appeal by any
other party to a favorable determination, it being understood and
agreed that any actions taken or omitted with respect to the
foregoing shall not avoid, reduce or mitigate the Indemnifying
Party's liability hereunder. The parties hereto expressly agree
that the Seller shall have no right to assume the defense of any
Third Party Claim that (i) solely seeks relief other than
monetary damages or (ii) that seeks monetary damages, remediation
or other monetary relief and also seeks relief other than
monetary damages, remediation or other monetary relief; provided,
however, that such right shall not relate to any Third Party
Claim pending on the Closing Date (except for any right to
jointly administer such Third Party Claim as may be provided in
this Agreement). Notwithstanding the first sentence of this
Section 8.4(c), in the event a Third Party Claim seeks monetary
damages, remediation or other monetary relief and also seeks
relief other than monetary damages, remediation or other monetary
relief, the Indemnitee may only settle any monetary portion of
such Third Party Claim in accordance with the provisions of
Section 8.4(d). The Indemnifying Party shall nevertheless, at
its own expense, make available to the Indemnitee and its
attorneys and accountants all books and records of the
Indemnifying Party relating to such proceedings or litigation,
and shall render to the Indemnitee such assistance as may be
reasonably requested by the Indemnitee. The Indemnifying Party
shall be entitled, with counsel selected by it, to participate in
(but not control), at its own expense, the defense of any claim
or litigation which the Indemnifying Party has not assumed in
accordance with the provisions of subparagraph (a) above, in
which event the Indemnifying Party shall be kept fully informed
by the Indemnitee of the status thereof at all stages and shall
have the right to receive from the Indemnitee, at the
Indemnifying Party's expense, a copy of all pleadings and other
material papers in connection with such claim or litigation.
(d) Notwithstanding anything in this Article 8 to the
contrary, the parties hereto agree that the Corporation shall
have the right to settle any Third Party Claim if, in the
Corporation's sole reasonable judgment, such Third Party Claim
could have a detrimental effect on the Business or on its
relationship with the third party claimant. Prior to entering
into any such settlement for which the Seller would have any
monetary liability to the Buyer or the Corporation pursuant to
Section 8.2, the Buyer shall cause the Corporation to attempt in
good faith to reach an agreement with the Seller as to the
monetary portion of the settlement. In the event the Seller and
the Corporation are unable to reach an agreement within 10
calendar days after the Corporation notifies the Seller of its
desire to settle any such Third Party Claim, the Buyer may cause
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the Corporation to enter into a settlement with such third party
and, within 3 business days thereafter, the Buyer shall cause the
Corporation to notify the Seller of the monetary portion of such
settlement and the Corporation (as shall be caused by the Buyer)
and the Seller shall attempt in good faith to mutually agree upon
the amount (not to exceed 100%) of the monetary portion of such
settlement which shall be deemed to be an Indemnifiable Loss
incurred by the Corporation). Such determination shall be made
by the parties within 30 calendar days after such notification
from the Corporation to the Seller. The amount of the monetary
portion of such settlement which the Seller does not dispute
shall constitute an Indemnifiable Loss incurred by the
Corporation. Whether the amount of the monetary portion of such
settlement which the Seller disputes should constitute an
Indemnifiable Loss incurred by the Corporation shall be
determined by an independent third party to be mutually agreed
upon by the Seller and the Buyer; provided, however, that prior
to such determination the Seller shall have no obligation to pay
to any third party (or to reimburse the Corporation or the Buyer,
as the case may be) the amount of the monetary portion of such
settlement which the Seller disputes, which amount shall be paid
by the Buyer or the Corporation, as the case may be, to such
third party; provided, further, that in no event shall the Buyer
or the Corporation seek to withdraw such disputed amount of the
monetary portion of the settlement from Escrow I or Escrow II
unless and until such amount is finally determined to constitute
an Indemnifiable Loss in accordance with the procedures set forth
in this Section 8.4(d). In the event the Seller and the Buyer
are unable to agree on the selection of such independent third
party within 15 calendar days after the settlement, the Seller
and the Buyer will jointly request the American Arbitration
Association to promptly select an independent third party to
resolve the dispute and the Seller and the Buyer agree to and the
Buyer will cause the Corporation to, abide by such independent
selection (provided such independent third party has no prior or
present relationship to the Buyer, the Seller or the
Corporation). Such independent third party shall be required to
resolve such dispute within 30 calendar days after submission of
such dispute to such third party. The resolution of the dispute
by such third party shall be set forth in a written statement by
such third party setting forth such third party's determination
of the portion of such disputed amount, if any, which constitutes
an Indemnifiable Loss incurred by the Corporation or the Buyer,
as the case may be, which determination shall be binding on the
Seller, the Corporation and the Buyer. Such third party shall
reach a determination as to the resolution of such dispute using
whatever procedures such third party deems appropriate, which
procedures may include a review of documents and information
submitted by the Seller, the Corporation or the Buyer,
discussions with officers or employees of the Seller, the
Corporation or the Buyer, a review of information provided by, or
discussions with, experts in a relevant field; provided, however,
that such procedures shall in no event (i) include the taking of
any depositions or the conducting of any other discovery, (ii)
include any formal arbitration proceeding or (iii) impose a
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burden of proof on one party greater or different than the burden
of proof imposed on the other party. The fees and expenses of
the independent third party shall be borne by the parties as
follows: (i) the Seller shall pay the proportion of such fees and
expenses computed by dividing the amount that the independent
third party determines constitutes an Indemnifiable Loss incurred
by the Corporation by the total disputed amount submitted to such
independent third party for resolution and (ii) the Corporation
shall pay the remainder of such fees and expenses.
(e) Any Direct Claim will be asserted by giving
the Indemnifying Party a Notice of Claim for Indemnity as
promptly as reasonably possible after any officer or director of
the Indemnitee becomes aware thereof, but in no event later than
30 calendar days after any such officer or director becomes aware
thereof.
(f) A failure to give timely notice (other than
within the time survival period specified herein) or to include
any specified information in any notice as provided in this
Section 8 will not affect the rights or obligations of any party
hereunder except and only to the extent that, as a result of such
failure, the rights of the Indemnifying Party are materially
prejudiced.
(g) If the amount of any Indemnifiable Loss, at
any time subsequent to the making of an Indemnity Payment, is
reduced by recovery, settlement or otherwise under or pursuant to
any insurance coverage, or pursuant to any claim, recovery,
settlement against or with any person or entity which is not an
Affiliate of the Indemnitee (a "Third Party Recovery"), the
amount of such reduction, in each case less any costs, expenses,
premiums or taxes incurred in connection therewith, together with
interest thereon from the date of payment thereof at the so-
called "prime" or "reference" rate of interest for the relevant
period as reported in The Wall Street Journal, will promptly be
repaid by the Indemnitee to the Indemnifying Party.
8.5 Indemnification for Taxes. Notwithstanding
anything in this Article 8 to the contrary, any Indemnifiable
Losses or Third Party Claims based on, attributable to or
resulting from any misrepresentation or the breach or inaccuracy
of any representation or warranty made by the Seller in Section
3.8, or the failure to comply with any covenant or agreement on
the part of the parties hereto contained in Section 5.14, will be
governed exclusively by Section 5.14. Claims for indemnification
arising under or with respect to Sections 3.8 or 5.14 may not be
made unless notice of such claims has been given prior to the
expiration of the applicable statute of limitations.
8.6 Limitations on Indemnification.
(a) No Indemnitee will be entitled to recovery
under Sections 8.2 or 8.3 for any Indemnifiable Loss unless and
until the aggregate amount of claims which may be asserted for
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Indemnifiable Losses exceeds $400,000, and then only to the
extent of the excess.
(b) Notwithstanding any other provision of this
Agreement to the contrary, other than Section 8.6(c), the
indemnification obligations of the Seller under Section 8.2 and
the Buyer under Section 8.3 will not exceed $13,000,000.
(c) Notwithstanding any other provision hereof,
(i) Sections 8.6(a) and (b) will not apply to breaches of
Sections 3.2, 3.8, 3.12(b), 3.12(c), 3.15, or 5.14 or Seller's
indemnification obligations set forth in Sections 8.2(c), (d),
(e), (f), (g), (h) or (i), (ii) Section 8.6(b) will not apply to
breaches of Section 3.5 and (iii) Section 8.6(b) will not apply
in the case of fraud.
(d) Neither the Buyer nor the Corporation shall
be entitled to indemnification for any Indemnifiable Loss
pursuant to Sections 8.2(a) or (b) to the extent that such
Indemnifiable Loss is fully covered pursuant to the provisions of
Sections 8.2(c), (d), (e), (f), (g), (h) or (i); provided,
however, that notwithstanding the above, in the event an
Indemnifiable Loss is partially covered by Section 8.2(c), (d),
(e), (f), (g), (h) or (i) and is partially covered by 8.2(a) or
(b), the Buyer or the Corporation shall be entitled to recover
under more than one of such provisions so long as the total
recovery does not exceed the amount of the Indemnifiable Loss.
(e) The Seller's indemnification obligations
pursuant to 8.2(c)(ii) shall terminate upon the earlier of (i)
the date any Trus Joist Plank that is owned by the Corporation
and rented or leased to a person or entity on the date hereof is
returned to the Corporation or (ii) the one year anniversary of
the Closing Date; provided, however, with respect to any Trus
Joist Planks that were sold by the Corporation prior to the
Closing Date, the Seller's indemnification obligations shall
continue indefinitely until such date, if ever, that any such
previously sold Trus Joist Plank is returned to the Corporation
for any reason, including, without limitation, due to a sales
return or a manufacturer's product recall.
(f) No Indemnifiable Losses shall be payable by
Seller with respect to (i) any claim by any person or entity
relating to Product/Service Liability and involving any
Occurrence that commenced after the Closing Date other than
relating to, resulting from or arising out of any Trus Joist
Plank sold by the Corporation prior to the Closing Date or
currently owned by the Corporation and rented or leased to a
person or entity (which shall constitute Indemnifiable Losses for
which the Seller is liable pursuant to Section 8.2(c) subject to
the provisions of Section 8.6(e)), (ii) any Workers' Compensation
Liability to the extent such Workers' Compensation Liability
arises out of or relates to any claim by any of the Corporation's
current employees with respect to any Occurrence that commenced
on or after the Closing Date, or (iii) any alleged General
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Liability to the extent that such General Liability arises out of
or relates to the operation of the Business or the ownership or
lease of properties, facilities or equipment by the Corporation
on or after the Closing Date, in each case, regardless of whether
such claim or liability results in or constitutes a breach of any
representation, warranty or covenant contained in this Agreement.
8.7 Mitigation. The Buyer shall cause the Corporation
to take such actions as may be requested by the Seller to
mitigate the damages relating to such matter for which the Seller
is liable pursuant to Section 8.2 to the extent such actions are
reasonably acceptable to the Buyer and the Corporation and are
not detrimental to the Business (which determination shall be
made by the Buyer); provided, however, that the aggregate costs
and expenses of any such actions shall be borne solely by the
Seller; provided, however that in the event the Buyer does not
take an action requested by the Seller with respect to a matter
for which the Seller is liable pursuant to Section 8.2, the
Seller shall not be liable to the Buyer for any punitive damages
assessed by a court of competent jurisdiction after the date of
the Seller's request for such action. Notwithstanding the
provisions of this Section 8.7, the Seller does not waive any
rights or remedies it may have under statute or common law in
connection with mitigation of damages.
8.8 Subrogation. Upon the payment in full (or other
satisfaction) of any Indemnifiable Loss hereunder and compliance
by the Indemnifying Party with its obligations under Section 8.2
in respect of such Indemnifiable Loss, the Indemnifying Party
shall, to the extent of such Indemnity Payment, be subrogated to,
and entitled to an assignment of, all of the rights of the
Indemnitee against any third person or entity (other than an
insurance company that provides insurance to the Indemnitee or an
Affiliate of the Indemnitee) in respect of such Indemnifiable
Loss, and the Indemnitee shall, at the sole cost and expense of
the Indemnifying Party, execute such instruments and shall take
such actions that may be reasonably necessary to evidence and
perfect such rights. Any recovery by the Indemnifying Party in
respect of such Indemnifiable Loss in excess of the amount of the
related Indemnity Payment to the Indemnitee shall be promptly
paid by the Indemnifying Party to the Indemnitee upon its receipt
by the Indemnifying Party. Notwithstanding anything to the
contrary contained herein, with respect to any Indemnifiable Loss
relating to, resulting from or arising out of the sale, rental or
use of the Trus Joist Planks for which the Indemnifying Party has
made an Indemnity Payment to the Indemnitee, the Indemnifying
Party shall not be required to pay to the Indemnitee the amount
of any recovery by it in excess of such Indemnity Payment.
9. SURVIVAL. Each of the representations and warranties
contained in this Agreement or in any certificate or other
instrument delivered at Closing, will survive the Closing and
remain operative and in full force until the first to occur of
(i) 60 days following the close of the Corporation's next full
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calendar year after the Closing Date or (ii) February 28, 1997;
provided, however, the representations and warranties contained
in Sections 3.2, 3.12(b) and (c) and 3.15 shall survive
indefinitely and the representations and warranties contained in
Section 3.8 shall survive until the expiration of the applicable
statute of limitation. Any claim for indemnification with
respect to any breach of a representation or warranty which is
not asserted pursuant to the giving of a Notice of Claim for
Indemnity within such survival period may not be pursued. Any
claim for indemnification asserted within such specified periods
of survival pursuant to the giving of a Notice of Claim for
Indemnity will be timely made for purposes hereof. The covenants
and agreements contained in this Agreement will survive the
Closing and remain in effect indefinitely.
10. TERMINATION. Prior to the Closing, this Agreement may
be terminated and the transactions contemplated hereby may be
abandoned (a) by the mutual consent of the Buyer and the Seller;
(b) by either the Buyer or the Seller if the Closing does not
occur on or prior to July 31, 1995; provided, however, that the
right to terminate this Agreement under this Section 10(b) will
not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before
such date; (c) by either the Buyer or the Seller if either of
them is precluded by an Order from consummating the transactions
contemplated hereby. In the event of any termination pursuant to
this Section 10, no party hereto (or any of its directors or
officers) will have any liability or further obligation to the
other party hereto, except for obligations under Section 19.
11. POST-CLOSING COVENANTS.
11.1 Corporate Records. (a) After the Closing Date,
the Buyer will, and will cause the Corporation to, and the Seller
will, and will cause the Post-Closing Affiliates to, retain all
Records required to be retained pursuant to obligations imposed
by any applicable Law; provided, however, that the Seller will
not be required to retain those Records specified in Section
5.15(a). Except as provided in the immediately preceding
sentence, the Buyer will, and will cause the Corporation to, and
the Seller will, and will cause the Post-Closing Affiliates to,
use all reasonable efforts to retain all Records for a period of
seven years after the Closing Date. After the end of such
seven-year period, before disposing, or permitting any Post-
Closing Affiliate or the Corporation to dispose, of any such
Records, the Seller or the Buyer, as the case may be, will use
its best efforts to give notice to such effect to the other party
and to give the other party, at such other party's cost and
expense, an opportunity to remove and retain all or any part of
such Records as such other party may elect.
(b) After the Closing Date, upon reasonable
notice, each of the Buyer and the Seller will give, or cause to
be given, to the representatives, employees, counsel and
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accountants of the other access, during normal business hours, to
Records relating to periods prior to or including the Closing
Date and will permit such persons to examine and copy such
Records, to the extent reasonably necessary to the other party in
connection with Tax and financial reporting matters (including
without limitation any Tax Return relating to state or local real
property transfer or gains Taxes), audits, governmental
investigations and other business purposes; provided, however,
that nothing herein will obligate any party to take actions that
would unreasonably disrupt the normal course of its business,
violate the terms of any contract to which it is a party or to
which it or any of its assets is subject or grant access to any
of its proprietary, privileged or classified information. The
Seller and the Buyer each will provide or will make available to
such party access to, and assistance from, employees of the other
(including with respect to the Buyer, the Corporation) whose
assistance is reasonably required in connection with the purposes
described in the preceding sentence.
11.2 Further Assurances. At any time or from time to
time after the Closing, the Seller and the Buyer will execute and
deliver such other documents or instruments and take all such
further action as may be reasonably requested by the other in
order to evidence the consummation of the transactions
contemplated by this Agreement, including, but not limited to,
any applicable notice, application, disclosure, recordation or
remediation pursuant to any Environmental Laws or any state
property transfer Laws.
11.3 Seller's Contracts. The Buyer hereby covenants
and agrees that from and after the Closing Date, the Corporation
shall, upon the expiration of the term of any Contract or Permit
listed on Schedule 8.3 (including any renewals thereof, provided
that the Buyer agrees not to renew any such Contract if such
renewal would extend the term thereof beyond the second
anniversary of the Closing Date), (i) terminate all such
Contracts and Permits listed on Schedule 8.3, or (ii) enter into
new Contracts and Permits in the name of the Corporation, and not
in the name of the Seller or any Affiliate of the Seller;
provided, however, that the Corporation shall not enter into new
Contracts or Permits to the extent that the Seller or any
Affiliate of the Seller shall as a condition thereto remain
liable as a guarantor or otherwise under such Contract or Permit.
11.4 No Transfer. The Buyer hereby covenants and
agrees that upon the later of (i) 140 calendar days after the
Closing Date or (ii) final payment of all amounts payable with
respect to the adjustment to the Purchase price pursuant to
Section 2.2(a), it shall not transfer the Shares to any person or
entity or cause or allow the Corporation to sell a substantial
portion of the Corporation's assets to any person or entity.
11.5 Trus Joist Planks. The Buyer hereby covenants and
agrees that, from and after the Closing Date, it shall: (i) at
the cost and expense of the Corporation or the Buyer, destroy or
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cause to be destroyed the Trus Joist Planks held in the inventory
of the Corporation and, upon their return to the Corporation,
destroy or cause to be destroyed the Trus Joist Planks that are
presently owned by the Corporation and rented or leased to a
person or entity, (ii) cause the Corporation to provide
reasonable assistance to Trus Joist in connection with any recall
by Trus Joist of the Trus Joist Planks (such reasonable
assistance shall not include any assistance in the defense of any
litigation), (iii) cause the Corporation to continue the current
program relating to the replacement of the Trus Joist Planks (the
"Replacement Program") and (iv) from and after the Closing Date
until the first anniversary of the Closing Date, cause the
Corporation to provide the Seller, on a bi-monthly basis, a good
faith estimate of the status of the Replacement Program.
11.6 IBM Lease. The Buyer hereby covenants and agrees
that until the first to occur of (i) 120 calendar days after the
Closing Date and (ii) the date that the IBM Lease is assigned to
the Buyer as described below, the Buyer shall cause the
Corporation to pay to the Seller its pro-rata portion of the IBM
Lease payments relating to equipment used by the Corporation
which is due and payable by the Seller to IBM Credit Corporation
("IBM") pursuant to the Lease Agreement between the Seller and
IBM (identified in item 13 on Schedule 3.7) (the "IBM Lease").
During such 120-day period, the Buyer and the Seller hereby
covenant to use their reasonable best efforts to obtain the
consent of IBM to the assignment by the Seller of such IBM Lease
to the Corporation; provided however, that if such consent to
assignment is not obtained by such one hundred twentieth day, the
Seller shall purchase from IBM the equipment subject to the IBM
Lease and, promptly thereafter, sell to the Corporation such
equipment at the same purchase price paid by the Seller therefor
or a purchase price of $500,000, whichever is less. The Seller
hereby covenants and agrees that in the event of such acquisition
from IBM, the Seller shall obtain from IBM the applicable UCC-3
termination statements, bills of sale and a letter acknowledging
the termination of the IBM Lease. The Seller further covenants
that upon the sale of such equipment to the Corporation, the
Seller shall provide to the Corporation a bill of sale from the
Seller to the Corporation, and copies of such above-referenced
UCC-3 termination statements and a copy of such letter of
termination.
11.7 Recordation of Intellectual Property. The Seller
hereby covenants and agrees, at its sole cost and expense, to
diligently and in good faith cause any such instruments or
documents to be prepared, signed, notarized, legalized, filed and
recorded and to take any such further actions as may be necessary
or advisable in connection with filing and/or recording the
Scheduled IP identified on Annex B to Schedule 3.13 in the name
of the Corporation in each of the applicable foreign
jurisdictions with the appropriate foreign governmental
authority. Within five business days after the Seller's receipt
of a document necessary for such recordation that requires an
additional signature, the Seller shall send, by hand or by a
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nationally recognized overnight courier service, such document to
such office or person as may be necessary to obtain such
signature. The Seller shall within five business days thereafter
contact such office or person to which such document was sent to
confirm its receipt and that such needed signature will be
obtained as promptly as reasonably practicable. Within five
business days after receipt by the Seller of any fully signed
document necessary for filing and/or recordation of such
Scheduled IP, the Seller shall send by a nationally recognized
overnight courier service such document to the Seller's foreign
legal counsel with instructions that such filing and/or
recordation should be made promptly. All costs associated with
such foreign legal counsel and such filing and/or recordation
shall be borne by the Seller. The Seller shall contact such
foreign legal counsel within five business days after sending
such document to such counsel to confirm that such foreign
counsel has received such document and has submitted (or will
submit as promptly as reasonably practicable) such document for
filing and/or recordation with the appropriate foreign
governmental authority. The Seller hereby covenants and agrees
to send copies of all correspondence sent or received by the
Seller throughout this process of obtaining signatures and
ultimately filing and recording such documents with the
appropriate governmental authority to the Corporation within
seven business days after the day on which such correspondence is
initially sent or received by the Seller.
12. TRANSACTION TAXES. The Seller and the Buyer will share
equally all sales, transfer, documentary and other transaction
related taxes, if any, payable in connection with this Agreement
and the transfers made hereunder up to an aggregate maximum
amount of $500,000 (i.e., $250,000 each); provided, however, any
such taxes payable in excess of $500,000 will be borne solely by
the Seller.
13. ASSIGNMENT. No assignment of rights or obligations
under this Agreement may be made by any party hereto without the
express written consent of the other party except that the Buyer
need not obtain the Seller's prior written consent to assign the
Buyer's rights and obligations hereunder to an Affiliate or
Subsidiary of the Buyer, but such assignment will not release the
Buyer from its obligations hereunder.
14. BROKERAGE. Each of the parties hereto will be
responsible for their own brokerage commissions, investment
banking, financial advisors, finder's fees or similar
compensation with respect to the transactions contemplated by
this Agreement.
15. SEVERABILITY. Any provision of this Agreement held to
be invalid under applicable Law will not render this Agreement
invalid as a whole and in such event, such provision will be
interpreted so as to best accomplish the intent of the parties
within the limits of applicable Law.
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16. AMENDMENTS AND WAIVERS AND CONSENTS. No amendment
hereof will be effective unless evidenced by an instrument in
writing duly executed by the parties hereto. Either the Buyer or
the Seller by written notice to the other may (a) extend the time
for performance of any of the obligations or other actions of the
other under this Agreement, (b) waive any inaccuracies in the
representations or warranties of the other contained in this
Agreement, (c) waive compliance with any of the conditions or
covenants of the other contained in this Agreement, or (d) waive
or modify performance of any of the obligations of the other
under this Agreement; provided, however, that neither the Buyer
nor the Seller may, without the prior written consent of the
other, make or grant such extension of time, waiver of
inaccuracies or compliance or waiver or modification of
performance with respect to its (or any of its Affiliates')
representations, warranties, conditions or covenants hereunder.
Except as provided in the immediately preceding sentence, no
action taken pursuant to this Agreement will be deemed to
constitute a waiver of compliance with any representations,
warranties or covenants contained in this Agreement and will not
operate or be construed as a waiver of any subsequent breach,
whether of a similar or dissimilar nature.
17. BENEFIT. This Agreement will be binding upon and inure
to the benefit of the parties hereto and their respective
successors and assigns. This Agreement is not intended nor will
it confer upon any other person any rights or remedies.
18. NOTICES. All notices, demands and requests required or
permitted to be given under the provisions of this Agreement will
be in writing and will be deemed duly given when delivered in
person or when dispatched by electronic facsimile transfer (upon
confirmation of receipt by a facsimile operator, and confirmed in
writing by postage prepaid first class mail simultaneously
dispatched) or three business days after having been dispatched
by a nationally recognized overnight courier service or five
business days after having been deposited in the United States
mail, postage prepaid, addressed as follows:
If to the Seller:
L. A. Harthun
Senior Vice President-International
General Counsel and Secretary
Figgie International, Inc.
4420 Sherwin Road
Willoughby, Ohio 44094
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with a copy to:
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
125 West 55th Street
New York, New York 10019-5380
Attention: Michael Groll, Esq.
Facsimile: (212) 424-8500
If to the Buyer:
THP United Enterprises, Inc.
N14 W23833 Stoneridge Drive, Suite 400
Waukesha, Wisconsin 53188
Attention: Marc J. Wilson
Facsimile: (414) 523-6519
with a copy to:
plettac AG
Kobbinghauser Hammer
D-58829 Plettenberg
Germany
Attention: Dr. Jurgen F. Schwericke,
Chairman of the Management Board
Facsimile: 011-49-214-306-2135
and
Thyssen, Inc.
400 Renaissance Center
Suite 1700
Detroit, Michigan 48243
Attention: Werner Caspers
Facsimile: (313) 567-5667
and
Jones, Day, Reavis & Pogue
599 Lexington Avenue
New York, New York 10022
Attention: Karl G. Herold, Esq.
Facsimile: (212) 755-7306
or to such other address as any party may designate in writing to
the other party.
19. FEES AND EXPENSES. Each party will be obligated to pay
its own fees and expenses incurred with respect to the
transactions contemplated by this Agreement.
20. HEADINGS. The headings employed in this Agreement
(including the Schedules hereto) are for the convenience of
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reference only and do not form a part hereof and are not intended
to affect the meaning or interpretation of this Agreement.
21. CONSTRUCTION. This Agreement will be construed and
enforced in accordance with the laws of the State of New York,
without giving effect to the conflicts of laws provisions
thereof.
22. COUNTERPARTS. This Agreement may be executed in
several counterparts, and as so executed will constitute one
agreement, binding on all of the parties hereto.
23. ENTIRE AGREEMENT. Each of the representations,
warranties, covenants and agreements of any party hereto
contained in this Agreement or any Schedule hereto or any
certificate delivered by or on behalf of such party pursuant to
and which makes reference to this Agreement will be deemed
incorporated and contained in this Agreement and will constitute
representations and warranties of such party. This Agreement
(including the Schedules hereto) supersedes any other agreement,
whether written or oral, that may have been made or entered into
by any party or any of their respective Affiliates (or by any
director, officer or representative thereof) with respect to the
subject matter hereof. This Agreement (together with the
Schedules hereto) constitutes the entire agreement by and among
the parties hereto with respect to the subject matter hereof and
there are no agreements or commitments by or among such parties
or their Affiliates with respect to the subject matter hereof
except as expressly set forth herein. No investigation or
receipt of information by or on behalf of the Buyer will diminish
or obviate any of the representations, warranties, covenants or
agreements of the Seller under this Agreement or the conditions
to obligations of the Buyer under this Agreement. No
investigation or receipt of information by or on behalf of the
Seller will diminish or obviate any of the representations,
warranties, covenants or agreements of the Buyer under this
Agreement or the conditions to obligations of the Seller under
this Agreement.
24. CERTAIN INTERPRETIVE MATTERS AND DEFINITIONS. (a)
Unless the context otherwise requires, (i) all references to
Sections or Schedules are to Sections or Schedules of or to this
Agreement, (ii) each term defined in this Agreement has the
meaning assigned to it, (iii) "or" is disjunctive but not
necessarily exclusive, (iv) words in the singular include the
plural and vice versa, (v) the terms "Affiliate" and "Subsidiary"
have the meanings given to such terms in Rule 405 of the
Securities Act of 1933, as amended, (vi) all references to a
"business day" will be to any day other than a weekend day or a
day which is a holiday in either Germany or the United States and
(vii) "knowledge of the Seller" means to the best knowledge of
any current officer or director of the Seller or the Corporation.
All references to "$" or dollar amounts will be to lawful
currency of the United States of America.
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(b) No provision of this Agreement will be
interpreted in favor of, or against, either party hereto by
reason of the extent to which any such party or its counsel
participated in the drafting thereof or by reason of the extent
to which any such provision is inconsistent with any prior draft
hereof or thereof.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
FIGGIE INTERNATIONAL INC.
By:
Name:
Title:
THP UNITED ENTERPRISES, INC.
By:
Name:
Title:
By:
Name:
Title:
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TABLE OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 3.1 Foreign Qualifications
Schedule 3.2 Capitalization
Schedule 3.4(a) Consents
Schedule 3.5 Financial Statements
Schedule 3.6 Occurrence of Certain Changes Since
December 31, 1994
Schedule 3.7 Contracts
Schedule 3.8(b) Tax Returns
Schedule 3.8(j) Tax Allocation Agreement
Schedule 3.9(a) Real Property Currently Leased
Schedule 3.9(b) Real Property Previously Owned or Leased
Schedule 3.10 Title to Properties
Schedule 3.11 Litigation
Schedule 3.12(a) Compliance With Laws
Schedule 3.12(b) Compliance With Environmental Laws
Schedule 3.12(c) Storage/Disposal of Hazardous Materials
Schedule 3.13 Intellectual Property
Schedule 3.14 Transactions with Interested Persons
Schedule 3.15(a)(i) Employee Benefit Plans
Schedule 3.15(a)(ii) Employee Benefit Arrangements
Schedule 3.15(d) Actions or Claims Related to Employee
Benefit Plans or Arrangements
Schedule 3.15(i) Severance and Accelerated Compensation
Schedule 3.15(j) Multiple Employer or Multiemployer Plans
Schedule 3.15(k) Employee Leaves of Absence
Schedule 3.15(m) Collective Bargaining Agreements
Schedule 3.16 Insurance
Schedule 3.17 Vehicles
Schedule 3.18 Certain Contracts
Schedule 3.19 Officers and Directors
Schedule 4.3 Consents
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Schedule 5.1 Access
Schedule 5.5 Operation of the Business
Schedule 5.12 Employee Compensation and Benefit
Matters
Schedule 7.2(n) Contracts to be Assumed
Schedule 8.3 Certain Contracts
EXHIBITS
Exhibit A Escrow Agreement I
Exhibit B Escrow Agreement II
Exhibit C Escrow Agreement III
Exhibit D Opinion of Jones, Day, Reavis & Pogue
Exhibit E Form of Real Estate Lease
Exhibit F Form of Paint Line Lease
Exhibit G Payoff Letter, Release Letter, Release
of Lien, Intellectual Property Release
and Assignment of Undivided Interest
Exhibit H Opinion of LeBoeuf, Lamb, Greene &
MacRae, L.L.P.
Exhibit I Opinion of Robert D. Vilsack, Esq.
Exhibit J
Associates Master Lease
Exhibit K Transitional Services Agreement
Exhibit L Third Party Release
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