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Exhibit 10.3
ASSET PURCHASE AND SALE AGREEMENT
BETWEEN
THERMO ANALYTICAL INC.
("SELLER")
AND
LANCASTER LABORATORIES, INC.
("BUYER")
AUGUST 18, 2000
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TABLE OF CONTENTS
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ARTICLE I ASSET PURCHASE.........................................................................1
1.1 Purchase and Sale of Assets; Assumption of Liabilities.......................................1
1.2 Purchase Price and Related Matters..........................................................10
1.3 The Closing.................................................................................14
1.4 Additional Action to Assure Transfer........................................................15
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER..............................................17
2.1 Organization, Qualification and Corporate Power.............................................17
2.2 Authority...................................................................................18
2.3 Noncontravention............................................................................18
2.4 Subsidiaries................................................................................20
2.5 Financial Statements........................................................................20
2.6 Absence of Certain Changes..................................................................20
2.7 Undisclosed Liabilities.....................................................................22
2.8 Tax Matters.................................................................................22
2.9 Tangible Personal Property..................................................................24
2.10 Owned and Leased Real Property..............................................................24
2.11 Intellectual Property.......................................................................26
2.12 Contracts...................................................................................27
2.13 Litigation..................................................................................30
2.14 Labor Matters...............................................................................31
2.15 Employee Benefits...........................................................................32
2.16 Environmental Matters.......................................................................35
2.17 Legal Compliance............................................................................39
2.18 Permits.....................................................................................39
2.19 Entire Business.............................................................................39
2.20 Brokers'Fees................................................................................39
2.21 Insurance...................................................................................40
2.22 Business Relationships with Affiliates......................................................40
2.23 Accounts Receivable.........................................................................40
2.24 Customers and Suppliers.....................................................................40
2.25 Solvency....................................................................................41
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BUYER...............................................41
3.1 Organization................................................................................41
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3.2 Authorization of Transaction................................................................41
3.3 Noncontravention............................................................................42
3.4 Broker's Fees...............................................................................43
3.5 Litigation..................................................................................43
3.6 Solvency....................................................................................43
ARTICLE IV PRE-CLOSING COVENANTS.................................................................44
4.1 Efforts.....................................................................................44
4.2 Hart-Scott-Rodino Act.......................................................................44
4.3 Replacement of Guarantees and Letters of Comfort............................................44
4.4 Conduct of the Business.....................................................................45
4.5 Access......................................................................................47
4.6 Title Examination...........................................................................48
4.7 Environmental Matters.......................................................................50
4.8 Consents and Approvals......................................................................51
4.9 No Negotiations etc.........................................................................51
ARTICLE V CONDITIONS PRECEDENT TO CLOSING.......................................................52
5.1 Conditions to Obligations of Buyer..........................................................52
5.2 Conditions to Obligations of Seller.........................................................55
ARTICLE VI INDEMNIFICATION.......................................................................56
6.1 Indemnification by Seller...................................................................56
6.2 Indemnification by Buyer....................................................................57
6.3 Claims for Indemnification..................................................................58
6.4 Survival....................................................................................61
6.5 Limitations.................................................................................62
6.6 Reliance on Representations and Warranties..................................................64
6.7 Treatment of Indemnification Payments.......................................................64
ARTICLE VII TERMINATION...........................................................................65
7.1 Termination of Agreement....................................................................65
7.2 Effect of Termination.......................................................................66
ARTICLE VIII ENVIRONMENTAL MATTERS.....................................................................66
8.1 Definitions.................................................................................67
8.2 Environmental Indemnification by Seller.....................................................67
8.3 Limitations.................................................................................69
8.4 Environmental Indemnification by Buyer......................................................71
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ARTICLE IX TAX MATTERS...........................................................................71
9.1 Preparation and Filing of Tax Returns; Payment of Taxes.....................................71
9.2 Allocation of Certain Taxes.................................................................73
9.3 Refunds and Carrybacks......................................................................73
9.4 Cooperation on Tax Matters; Tax Audits......................................................74
9.5 Termination of Tax Sharing Agreements.......................................................76
ARTICLE X FURTHER AGREEMENTS....................................................................76
10.1 Access to Information; Record Retention; Cooperation........................................76
10.2 Covenant Not to Compete.....................................................................79
10.3 Disclosure Generally........................................................................81
10.4 Acknowledgments by Parties..................................................................82
10.5 Certain Insurance Matters...................................................................84
10.6 Certain Employee Benefits Matters...........................................................85
10.7 Further Assurances..........................................................................88
ARTICLE XI MISCELLANEOUS.........................................................................89
11.1 Press Releases and Announcements............................................................89
11.2 No Third Party Beneficiaries................................................................89
11.3 Action to be Taken by Affiliates............................................................90
11.4 Entire Agreement............................................................................90
11.5 Succession and Assignment...................................................................90
11.6 Counterparts................................................................................90
11.7 Headings....................................................................................90
11.8 Notices.....................................................................................90
11.9 Governing Law...............................................................................92
11.10 Amendments and Waivers......................................................................92
11.11 Severability................................................................................92
11.12 Expenses....................................................................................93
11.13 Specific Performance........................................................................93
11.14 Submission to Jurisdiction..................................................................93
11.15 Bulk Transfer Laws..........................................................................94
11.16 Construction................................................................................94
11.17 Incorporation of Exhibits and Schedules.....................................................94
11.18 Facsimile Signature.........................................................................94
ARTICLE XII GUARANTEE.............................................................................94
12.1 Seller's Parent Guarantee...................................................................95
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Schedule 1.1(a)(i) Real Property
Schedule 1.1(b)(vii) Excluded Real Property
Schedule 4.3. - Replacement of Guarantees and Letters of Credit
Schedule 4.8. - Required Consents
Disclosure Schedule
Exhibits:
Exhibit A - Form of Bill of Sale
Exhibit B - Intentionally Omitted
Exhibit C - Form of Assumption Agreement
Exhibit D - Form of Opinion of Seller's Counsel
Exhibit E - Form of Opinion of Buyer's Counsel
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TABLE OF DEFINED TERMS
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Defined Term Section
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AAA Rules 6.3(b)
Acquired Assets 1.1(a)
Adjustment Items 1.2(b)
Affiliates 2.6(a)
Affiliate Trade Payables 1.1(d)(i)
Agreed Amount 6.3(b)
Agreement Preliminary Statement
Arbitrator 1.2(b)(v)
Asset Allocation Schedule 1.2(b)
Assumed Liabilities 1.1(d)
Assumption Agreement 1.1(d)
Basket 6.5(b)(iii)
Business Introduction
Business Day 1.3(a)
Business Employee 10.6(a)
Business Material Adverse Effect 2.1(a)
Business Plans 2.15(a)
Business Policies 2.21
Business Properties 2.16(a)(viii)
Buyer Preliminary Statement
Buyer Indemnified Parties 6.1
Buyer Material Adverse Effect 3.3(b)
Buyer Plans 10.6(d)
CERCLA 2.16(a)(i)
Claim Notice 6.3(b)
Claimed Amount 6.3(b)
Closing 1.3(a)
Closing Adjustment 1.2(b)(iv)
Closing Date 1.3(a)
Closing Net Fixed Assets 1.2(b)(ii)
Closing Statement 1.2(b)(iv)
Closing Working Capital 1.2(b)(i)
COBRA 10.6(h)
Code 1.2(b)
Confidentiality Agreement 4.5
Competitive Business 10.2
Damages 6.1; 8.1(b)
Designated Contracts 2.12(b)
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Defined Term Section
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Develop; Development 8.1(c)
Designated Intellectual Property 2.11(a)
Disclosure Schedule Article II
Employee Benefit Plan 2.15(a)
Environment 2.16(a)(iii)
Environmental Law 2.16(a)(v)
Environmental Matters 2.16(a)(vi)
Environmental Notices 2.16(b)(ii)
Equipment 1.1(a)(ii)
ERISA 2.15(a)
ERISA Affiliate 2.15(a)
Excess Environmental Damages 6.5(b)(vi)
Excluded Assets 1.1(b)
Excluded Liabilities 1.1(e)
Final Closing Adjustment 1.2(b)(v)
Financial Statements 2.5
Governmental Entity 2.3(b)
Hart-Scott-Rodino Act 2.3
Indemnified Party 6.3(a)
Indemnifying Party 6.3(a)
Information 10.1(a)
Intellectual Property 1.1(a)(vi)
Inventory 1.1(a)(iii)
Leased Real Property 1.1(a)(i)
Leases 2.10
Materials of Environmental Concern 2.16(a)(iv)
Most Recent Balance Sheet 2.5
Natural Resources Damages 8.1(d)
Net Fixed Assets Adjustment 1.2(b)(ii)
Noncompetition Party 10.2
Noncompetition Period 10.2
Occurrence-Based Business Policies 10.5
Off-Site Liabilities 2.16(a)(vii)
Ordinary Course of Business 2.3(c)
Owned Real Property 1.1(a)(i)
Parties Preliminary Statement
Permits 2.18
Prepaid Assets 1.1(a)(ix)
PS Policies 10.6(f)
Purchase Price 1.2(a)
Real Property 1.1(a)(i)
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Defined Term Section
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Release 2.16(a)(ii)
Required Consents 4.8
Response Costs 8.1(a)
Security Interest 2.3(c)
Seller Preliminary Statement
Seller's 401(k) Plan 10.7(c)
Seller's Parent 12.1
Severance Plan 2.15(g)
Special Environmental Indemnity 6.5(b)(vi)
Tax Affiliate 2.8(c)(iii)
Tax Audit 9.4(b)
Tax Reserves 9.1(a)
Tax Returns 2.8(c)(ii)
Taxes 2.8(c)(I)
Taxing Authority 9.4(a)
Termination Fee 7.2(c)
Title Company 4.6(a)
Transferred Employees 10.6(b)
U.S. GAAP 1.1(d)(I)
WARN 10.6(g)
Working Capital Adjustment 1.2(b)(I)
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ASSET PURCHASE AND SALE AGREEMENT
This ASSET PURCHASE AND SALE AGREEMENT (the "AGREEMENT") is
entered into as of August 18, 2000 between Thermo Analytical Inc., a Delaware
corporation ("SELLER"), and Lancaster Laboratories, Inc., a Minnesota
corporation ("BUYER"). Seller and Buyer are referred to together herein as the
"PARTIES."
INTRODUCTION
1. Seller is engaged, among other activities, in the business of
providing commercial pharmaceutical and environmental testing services, such
business being operated under the name "Lancaster Laboratories" (the
"Business"); and
2. Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, the assets of the Seller relating primarily to the Business
(other than assets excluded pursuant hereto), subject to the assumption of
related liabilities upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement and other good
and valuable consideration, the receipt of which is hereby acknowledged, the
Parties agree as follows:
ARTICLE I
ASSET PURCHASE
1.1 PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES.
(a) TRANSFER OF ASSETS. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in
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this Agreement, on the Closing Date, Seller shall sell, convey, assign, transfer
and deliver to Buyer, and Buyer shall purchase and acquire from Seller, all of
the assets, rights, properties, claims, contracts and business of the Seller at
the Closing Date which are primarily utilized in the Business, of every kind,
nature, character and description, tangible and intangible, real, personal or
mixed, wherever located (the "ACQUIRED ASSETS"), including, without limitation,
the following assets, in each case to the extent utilized primarily in the
Business:
(i) The fee title interest (the "Owned Real
Property") and leasehold title interests (the "Leased Real Property") in real
property described on SCHEDULE 1.1(A)(I) (the "Real Property");
(ii) Seller's right, title and interest in and to the
equipment, furniture, furnishings, fixtures, machinery, vehicles, tools and
other tangible personal property pertaining to the operation of and located at
the Owned Real Property and the Leased Real Property (collectively, the
"EQUIPMENT") and all warranties and guarantees, if any, express or implied,
existing for the benefit of Seller in connection with the Equipment to the
extent transferable;
(iii) The inventory of raw materials, work in
process, finished goods, office supplies, maintenance supplies and packaging
materials of the Business on hand at the Real Property, in transit or in the
distribution system of Seller on the Closing Date, together with Seller's right,
title and interest in and to the spare parts, supplies and promotional materials
and inventory;
(iv) All management information systems, including
hardware and software, to the extent that such systems and software are
transferable by Seller, and all customer lists, vendor lists, catalogs, research
material, technical information, trade secrets, technology,
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know-how, specifications, designs, drawings and processes, and quality control
data, if any; PROVIDED, that Seller shall be solely responsible for all payments
to third parties required to effect the transfer of such systems and software;
(v) Seller's right, title and interest in and to
contracts, maintenance and service agreements, joint venture agreements,
purchase commitments for materials and other services, advertising and
promotional agreements, leases and other agreements (including but not limited
to any agreements of Seller with customers, suppliers, sales representatives,
agents, personal property lessors, personal property lessees, licensors,
licensees, consignors and consignees specified therein), whether or not entered
into in the Ordinary Course of Business, all of which agreements that are
required to be listed on the Disclosure Schedule referencing Section 2.12 are so
listed;
(vi) Seller's right, title and interest in and to the
patents, patent registrations and patent applications, trademarks, trademark
registrations and trademark applications, service marks, service mark
registrations and service mark applications, trade names and logos (together
with the goodwill associated therewith), copyrights, copyright applications and
copyright registrations, inventions, discoveries (whether patentable or
unpatentable), processes, designs, know-how, trade secrets, proprietary data,
customer and supplier lists and other intellectual property of all kinds owned
by Seller ("INTELLECTUAL PROPERTY"), including all rights to sue for past
infringement;
(vii) Seller's licenses, permits or franchises issued
by any federal, state, municipal or foreign authority relating to the
development, use, maintenance or occupation of the
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Real Property or the operation of the Business, to the extent that such
licenses, permits or franchises are transferable;
(viii) Accounts receivable and other receivables of
Seller in existence at the Closing Date (whether or not billed) other than
accounts receivable and other receivables owed by any Affiliate of Seller in
existence at Closing (whether or not billed), (i.e., Seller's right, title and
interest in and to the accounts referred to as "Intercompany - TTT" and
"Intercompany - TMA"), but specifically including trade receivables owed by any
Affiliate of Seller which arose in the Ordinary Course of Business;
(ix) Seller's right to goods and services and all
other economic benefits to be received subsequent to the Closing Date arising
out of prepayments and payments by Seller prior to the Closing Date
(collectively, the "PREPAID ASSETS");
(x) All books (other than stock record books),
records, accounts, ledgers, files, documents, correspondence, employment
records, studies, reports and other printed or written materials;
(xi) All goodwill of the Business; and
(xii) Seller's right, title and interest in and to
the cash accounts referred to as "Petty Cash Fund," "Petty Cash-Other,"
"Cash-Payroll," "Cash-Group Insurance," and "Cash-Flex Account."
(b) EXCLUDED ASSETS. It is expressly understood and agreed
that, notwithstanding anything to the contrary set forth herein, the Acquired
Assets shall not include the following (each, an "EXCLUDED ASSET"):
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(i) The assets (including, without limitation, all
rights, properties, claims, contracts, business, real property, leasehold
interests in real property, equipment, machinery, vehicles, tools and other
tangible personal property) of all businesses conducted by Seller other than the
Business;
(ii) Except as otherwise expressly provided in
Section 10.6, all right, title and interest of Seller in any insurance policies
relating to the Business and all rights of Seller to insurance claims, related
refunds and proceeds arising from or related to (i) the operations of the
Business prior to the Closing (as defined in Section 1.3) and (ii) the Excluded
Assets and Excluded Liabilities (as defined in Section 1.1(e));
(iii) The rights which accrue or will accrue to
Seller under this Agreement;
(iv) All refunds of income taxes relating to Tax
Returns (as defined in Section 2.9(a)) filed or to be filed relating to all
periods ending on or prior to the Closing Date;
(v) All actions, claims, causes of action, rights of
recovery, chooses in action and rights of setoff of any kind arising before, on
or after the Closing Date relating to the items set forth above in this Section
1.1(b) or to any Excluded Liabilities;
(vi) All cash and cash equivalents, bank accounts
referred to as "cash-lockbox," "cash controlled disbursements," and "cash
controlled concentration," certificates of deposit, treasury bills and other
marketable securities of the Seller;
(vii) The leasehold interest in the real property
located in Ann Arbor, Michigan described in Schedule 1.1(b)(vii); and
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(viii) All accounts receivable and other receivables
owed by an Affiliate of Seller in existence at the Closing (whether or not
billed), (i.e., Seller's right, title and interest in and to the accounts
referred to as "Intercompany - TTT" and "Intercompany - TMA"), other than trade
receivables owed by any such Affiliate of Seller which arose in the Ordinary
Course of Business.
(c) INSTRUMENTS OF CONVEYANCE AND TRANSFER. On the Closing
Date, Seller shall:
(i) deliver or cause to be delivered to Buyer:
(A) a Bill of Sale in substantially the form
attached hereto as EXHIBIT A, and
(B) such other deeds, bills of sale,
endorsements, consents, assignments and
other good and sufficient instruments of
conveyance and assignment as the Parties
and their respective counsel shall deem
necessary or appropriate or as may be
required by the jurisdiction of
organization of Seller to vest in Buyer
all right, title and interest of Seller
in and to the Acquired Assets; and
(ii) transfer to Buyer all the books, records, files
and other data (or copies thereof) within the possession of Seller relating to
the Acquired Assets reasonably necessary for the continued operation of the
Business by Buyer.
(d) ASSUMED LIABILITIES. On the Closing Date, Buyer shall
deliver to Seller an undertaking (the "ASSUMPTION AGREEMENT"), in the form
attached hereto as EXHIBIT C, pursuant
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to which Buyer shall assume, on and as of the Closing Date, and agree to pay,
perform and discharge when due, upon the terms and subject to the conditions of
this Agreement, all debts, liabilities and obligations whatsoever, other than
Excluded Liabilities (as defined in Section 1.1(e)), relating primarily to the
Business or the Acquired Assets, whether arising before or after the Closing
Date, including, but not limited to, the following liabilities, in each case, to
the extent related primarily to the Business or the Acquired Assets:
(i) All liabilities of the Seller reflected on the
Most Recent Balance Sheet (as defined in Section 2.5) and any other liabilities
of Seller arising out of or pertaining to the Business or the Acquired Assets as
of the date of the Most Recent Balance Sheet which are not required to be
reflected thereon according to United States generally accepted accounting
principles ("U.S. GAAP") incurred in the Ordinary Course of Business, except (x)
to the extent satisfied prior to the Closing Date; (y) which constitute debt,
liabilities or obligations owed by Seller to any of its Affiliates other than
trade payables which arose in the Ordinary Course of Business ("Affiliate Trade
Payables"); or (z) which constitute liabilities or obligations with respect to
Taxes (the responsibility for such liabilities and obligations are discussed in
Section 1(e)(ii) and Article IX);
(ii) All liabilities of Seller arising out of or
pertaining to the Business or the Acquired Assets incurred in the Ordinary
Course of Business (as defined in Section 2.3) subsequent to the date of the
Most Recent Balance Sheet, except (x) to the extent satisfied prior to the
Closing; (y) which constitute debt, liabilities or obligations owed by Seller to
any of its Affiliates other than Affiliate Trade Payables; or (z) which
constitute liabilities or obligations
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with respect to Taxes (the responsibility for such liabilities and obligations
are discussed in Section 1(e)(ii) and Article IX);
(iii) All debts, obligations and liabilities in
respect of the Business or the Acquired Assets arising or incurred by Buyer
after the Closing (other than as a result of any breach by Seller of any of its
obligations to Buyer pursuant to this Agreement);
(iv) All debts, obligations and liabilities of Seller
which arise on account of Buyer's operation of the Business, the use of the
Acquired Assets and/or sale of any products manufactured and/or sold by Buyer on
and after the Closing Date;
(v) All obligations of Buyer, as successor to the
operator of the Business, arising after the Closing and relating to the Business
or the Acquired Assets under the contracts, agreements, commitments and leases
transferred pursuant to Section 1.1(a)(v);
(vi) All liabilities and obligations of Buyer, as
successor to the operator of the Business, arising after the Closing under the
licenses, permits and franchises transferred pursuant to Section 1.1(a)(vii);
(vii) All liabilities and obligations arising after
the Closing out of the ownership, leasing or operation of the Real Property by
Buyer, its successors or assigns;
(viii) All liabilities and obligations in respect of
employee relations and benefits assumed by Buyer pursuant to Section 10.6;
(ix) All liabilities and obligations with respect to
Taxes (as defined in Section 2.8(a)) for which Buyer has expressly assumed
responsibility pursuant to this Agreement in accordance with Article IX;
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(x) All liabilities and obligations for Environmental
Matters (as defined in Section 2.17(a)(vi)) for which Buyer is expressly liable
pursuant to Article VIII;
(xi) All liabilities with respect to all actions,
suits, proceedings, disputes, claims or investigations arising after the Closing
(without regard to the date of the occurrence) and (x) arising out of the
Business, or (y) that otherwise arise out of or are related to the Acquired
Assets.
The debts, liabilities and obligations assumed by Buyer in accordance
with this Section 1.1(d) are sometimes hereinafter referred to as the "ASSUMED
LIABILITIES."
(e) EXCLUDED LIABILITIES. It is expressly understood and
agreed that, notwithstanding anything to the contrary in this Agreement, Assumed
Liabilities shall not include the following (collectively, the "EXCLUDED
LIABILITIES"):
(i) All liabilities arising out of or relating to the
Excluded Assets;
(ii) All liabilities and obligations for which Seller
has expressly assumed responsibility pursuant to this Agreement in accordance
with Articles VIII and IX;
(iii) All debts, liabilities or obligations of Seller
that do not relate primarily to the Business or the Acquired Assets;
(iv) All debts, liabilities or obligations relating
primarily to the Business or the Acquired Assets and owed by Seller to any
Affiliate of Seller other than Affiliate Trade Payables;
(v) All debts, liabilities or obligations of Seller
relating primarily to the Business or the Acquired Assets which arose prior to
the Closing and which have not been
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satisfied prior to the Closing (except for those liabilities specifically
assumed in the subsections under Section 1.1(d));
(vi) All liabilities and obligations of Seller for
costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated by this Agreement; and
(vii) All liabilities and obligations (including
fines, penalties and/or interest) for sales or use taxes to the Commonwealth of
Pennsylvania, if any, which have arisen or may arise with respect to the
activities of the Business prior to Closing.
1.2 PURCHASE PRICE AND RELATED MATTERS.
(a) PURCHASE PRICE. In consideration for the sale and
transfer of the Acquired Assets at the Closing, and subject to the terms and
conditions of this Agreement, Buyer shall on the Closing Date assume the Assumed
Liabilities as provided in Section 1.1(d) hereof and shall transfer to Seller in
immediately available funds an aggregate amount equal to U.S. $72,250,000 (the
"PURCHASE PRICE").
(b) CLOSING ADJUSTMENT. The amount payable to Seller
pursuant to Section 1.2(a) of this Agreement shall be adjusted by adding the
amounts determined under Sections 1.2(b)(i) and 1.2(b)(ii) below:
(i) WORKING CAPITAL ADJUSTMENT. For purposes of this
Agreement, "Working Capital Adjustment" shall mean the amount by which the
Closing Working Capital of the Company is more or less than $9,506,000 (I.E.,
WORKING CAPITAL AS OF MAY 31, 2000). For purposes of this Agreement, "Closing
Working Capital" shall mean (A) the current assets of the Business as of the
Closing Date (excluding cash accounts entitled "cash-lockbox," "cash-
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controlled disbursements" and "cash controlled concentration") being acquired by
Buyer, MINUS (B) the current liabilities of the Business as of the Closing Date
being assumed by Buyer as of the Closing Date (including, without limitation,
liability for accrued vacation, personal and sick time for which Buyer has
assumed liability pursuant to Section 10.6(f) of this Agreement) all as set
forth on the Closing Statement (as defined in Section 1.2(b)(iv) of this
Agreement). If the Closing Working Capital is less than $9,506,000 (I.E.,
WORKING CAPITAL AS OF MAY 31, 2000), then the Working Capital Adjustment shall
be a negative number for purposes of determining the Closing Adjustment (as
defined in Section 1.2(b)(iii) of this Agreement).
(ii) NET FIXED ASSETS ADJUSTMENT. For purposes of
this Agreement, "Net Fixed Assets Adjustment" shall mean the amount by which the
Closing Net Fixed Assets of the Company are more or less than $27,365,000 (I.E.,
NET FIXED ASSETS AS OF MAY 31, 2000). For purposes of this Agreement, "Closing
Net Fixed Assets" shall mean the net fixed assets of the Business as of the
Closing Date, as set forth on the Closing Statement. If the Closing Net Fixed
Assets are less than $27,365,000 (I.E., NET FIXED ASSETS AS OF MAY 31, 2000),
then the Net Fixed Assets Adjustment shall be a negative number for purposes of
determining the Closing Adjustment.
(iii) CLOSING ADJUSTMENT. For purposes of this
Agreement, "Closing Adjustment" shall mean the Net Fixed Assets Adjustment plus
the Working Capital Adjustment.
(iv) CLOSING STATEMENT. Within 45 days after the
Closing Date, Buyer shall cause Ernst & Young LLP to prepare and deliver to
Seller (A) a balance sheet of the Business dated as of the Closing Date
("Closing Statement"), utilizing the books and records of the Business, and (B)
a certificate, signed by an officer of Buyer, setting forth Buyer's
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calculations of the Working Capital Adjustment, Net Fixed Assets Adjustment and
the Closing Adjustment. Buyer shall permit Seller and its representatives to
have reasonable access, upon reasonable notice, to the data, calculations and
information on which the Closing Statement was prepared, and to Buyer's
employees or representatives who assisted in its preparation. Seller shall be
deemed to have accepted the Closing Statement unless, within 30 days after the
date of delivery thereof, Seller gives written notice to Buyer of Seller's
objection to any item thereon. If Seller gives such notice of objection, Seller
and Buyer shall attempt in good faith to resolve the dispute as promptly as
possible. If Seller and Buyer have not been able to agree upon a resolution of
the dispute within 30 days after the date Seller gave such notice of objection
to Buyer, the dispute resolution provisions of Section 1.2(b)(v) hereof shall
apply.
(v) DISPUTE RESOLUTION. If within 30 days after the
date the Closing Statement is delivered to the Seller, the Seller gives written
notice to the Buyer setting forth in reasonable detail any objection of the
Seller to the amounts or calculations set forth in the Closing Statement, then
the Buyer and the Seller shall use good faith commercial efforts to reach
agreement on all differences within the 30-day period following the giving of
such notice by the Seller of its objections. If the Parties resolve any such
dispute, the Closing Adjustment agreed to by the Parties shall be the "Final
Closing Adjustment". If the parties are unable to reach agreement within such
30-day period, unless the Parties mutually agree to continue their effort to
resolve such differences, the matter shall be submitted to the Philadelphia,
Pennsylvania Office of PricewaterhouseCoopers LLP (the "ARBITRATOR") for
resolution as provided below. The Buyer and the Seller shall each be permitted
to present evidence to the Arbitrator. The decision of the Arbitrator as to the
Final Closing Adjustment shall be final and binding upon the Buyer and the
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Seller absent fraud or manifest error. Nothing herein shall be construed to
authorize or permit the Arbitrator (i) to determine any questions or matters
whatsoever under or in connection with this Agreement except for the resolution
of the dispute between the Parties regarding the Final Closing Adjustment, (ii)
to resolve any such dispute by making an adjustment to the Closing Statement
that is outside of the range defined by the respective amounts proposed by the
Parties in the Closing Statement prepared by the Buyer and the dispute notice
given by the Seller, or (iii) to apply any accounting methods, treatments,
principles or procedures other than as described in Section 1.2(b). The Buyer
and the Seller shall share equally the charges of the Arbitrator.
(vi) PAYMENT ADJUSTMENT. Within five days following
the acceptance of the Closing Statement by Seller or the final determination of
the Closing Statement by the Arbitrator pursuant to Section 1.2(b)(v) of this
Agreement, as the case may be, then:
(A) if the Closing Adjustment is a negative
number, Seller shall promptly pay Buyer an amount equal to the absolute value of
the Closing Adjustment by wire transfer of immediately available funds to an
account designated by Buyer; or
(B) if the Closing Adjustment is a positive
number, Buyer shall promptly pay Seller an amount equal to the Closing
Adjustment by wire transfer of immediately available funds to an account
designated by Seller.
(c) ALLOCATION. Prior to the Closing, Buyer and Seller shall
agree upon an allocation schedule (the "ASSET ALLOCATION SCHEDULE") allocating
the Purchase Price and the Assumed Liabilities among the Acquired Assets of
Seller as of the Closing Date. Such Asset Allocation Schedule shall be prepared
in accordance with the rules under Section 1060 of the
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Internal Revenue Code of 1986, as amended (the "CODE"), and the Treasury
Regulations promulgated thereunder. The Parties recognize that the Purchase
Price and Assumed Liabilities do not include Buyer's acquisition expenses and
that Buyer will allocate such expenses appropriately. Seller and Buyer agree to
act in accordance with the computations and allocations contained in the
Allocation Schedule in any relevant Tax Returns or filings (including any forms
or reports required to be filed pursuant to Section 1060 of the Code, the
Treasury Regulations promulgated thereunder or any provisions of local, state
and foreign law ("1060 FORMS")), and to cooperate in the preparation of any 1060
Forms and to file such 1060 Forms in the manner required by applicable law.
1.3 THE CLOSING.
(a) TIME AND LOCATION. The closing of the transactions
contemplated by this Agreement ("CLOSING") shall take place at the offices of
Hale and Dorr LLP in Boston, Massachusetts, commencing at 10:00 a.m., local
time, on September 18, 2000, or, if all of the conditions to the obligations of
the Parties to consummate the transactions contemplated hereby have not been
satisfied in full or waived by such date, on such mutually agreeable later date
as soon as practicable but in no event more than three Business Days (as
hereinafter defined) after the date on which all such conditions to the
obligations of the Parties to consummate the transactions contemplated hereby
first become susceptible of being satisfied or waived (the "CLOSING DATE"). For
purposes of this Agreement, "Business Day" shall mean any day other than a
Saturday or Sunday or a day on which banking institutions located in New York,
New York are permitted or required by law, executive order or governmental
decree to remain closed.
(b) ACTIONS AT THE CLOSING.
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At the Closing:
(i) Seller shall deliver (or cause to be delivered) to Buyer
the various certificates, instruments and documents required to be delivered
under Section 5.1;
(ii) Buyer shall deliver (or cause to be delivered) to
Seller the various certificates, instruments and documents required to be
delivered under Section 5.2;
(iii) Seller shall deliver (or cause to be delivered) to
Buyer an executed Bill of Sale and such other instruments of conveyance as
Buyer may reasonably request in order to effect the sale, transfer,
conveyance and assignment to Buyer of valid ownership of the Acquired Assets;
(iv) Buyer shall deliver to Seller an executed Assumption
Agreement and such other instruments as Seller may reasonably request in
order to effect the assumption by Buyer of the Assumed Liabilities;
(v) Buyer shall deliver to Seller the Purchase Price by wire
transfer of immediately available funds into an account designated by Seller;
(vi) Seller shall deliver to Buyer, or otherwise put Buyer in
possession and control of, all of the Acquired Assets of a tangible nature; and
(vii) Buyer and Seller shall execute and deliver to each other
a cross-receipt evidencing the transactions referred to above.
1.4 ADDITIONAL ACTION TO ASSURE TRANSFER. This Agreement shall not
constitute an agreement to assign any claim, contract, license, lease,
commitment, sales order or purchase order if any attempted assignment of the
same without the consent of the other party thereto would constitute a breach
thereof or in any way affect the rights of the Seller or the Buyer
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thereunder. If such consent is not obtained or if any attempted assignment would
be ineffective or would affect the Seller's rights thereunder so that the Buyer
would not in fact receive all such rights, then the Seller shall act as the
agent for the Buyer in order to obtain for the Buyer the benefits thereunder and
put the Buyer in the same financial position as it would have been in had the
assignment been made. Without limiting the generality of the foregoing, the
Seller shall use commercially reasonable efforts to (i) obtain any such consent
after the Closing Date, at the Buyer's sole cost and expense, until such time as
the consent has been obtained, (ii) provide or cause to be provided to the Buyer
the benefits of any such agreement, lease, contract or other document or
instrument for which consent or waiver has not been obtained, (iii) cooperate in
any arrangement, reasonable and lawful as to the Seller and the Buyer, designed
to provide such benefits to the Buyer, and (iv) enforce for the account of the
Buyer, at the Buyer's sole cost and expense, any rights of the Seller arising
from such agreement, lease, contract or other document or instrument for which
consent has not been obtained against the other party, including, without
limitation, the right to elect to terminate in accordance with the terms thereof
on the advice of the Buyer; and the Buyer shall use all reasonable efforts to
perform the obligations of the Seller arising under such agreement, lease,
contract or other document or instrument for which consent has not been
obtained, to the extent that by reason of the transactions consummated pursuant
to this Agreement, the Buyer has control over the resources necessary to perform
such obligations and Buyer shall reimburse Seller and hold Seller harmless from
and against all liabilities incurred or asserted as a result of Seller's actions
in accordance with the provisions of this Section 1.4 other than liabilities
incurred as a result of Seller's gross negligence, fraud, or willful misconduct.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the disclosure schedule delivered
concurrently herewith (the "DISCLOSURE SCHEDULE"), Seller represents and
warrants to Buyer as of the date hereof as follows:
2.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWER. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is duly qualified to conduct business under the
laws of each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities, in each case as they relate
exclusively to the Business, makes such qualification necessary, except for any
such failures to be qualified that would not reasonably be expected to have a
Business Material Adverse Effect (as defined below). Seller has all requisite
corporate power and authority to carry on the business in which it is now
engaged and to own and use the properties now owned and used by it. For purposes
of this Agreement, "Business Material Adverse Effect" means any change, effect
or circumstance that (i) is materially adverse to the assets, business,
financial condition, results of operations or employee, customer or supplier
relations, of the Business (other than changes that are the result of economic
factors affecting the economy as a whole or changes that are the result of
factors generally affecting the industry or specific markets in which the
Business competes except, in each case, to the extent that such changes
disproportionately affect the Business), or (ii) materially impairs the ability
of Seller to consummate the transactions contemplated by this Agreement;
provided, however, that a "Business Material Adverse Effect" shall not include
any adverse change, effect or circumstance (I) primarily arising
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out of or resulting primarily from actions contemplated by the Parties in
connection with this Agreement, or (II) that is primarily attributable to the
announcement or performance of this Agreement or the transactions contemplated
by this Agreement.
2.2 AUTHORITY. Seller has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement by Seller and the
performance by Seller of its obligations hereunder and the consummation by
Seller of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of Seller. This
Agreement has been duly and validly executed and delivered by Seller and,
assuming this Agreement constitutes the valid and binding agreement of Buyer,
constitutes a valid and binding obligation of Seller, enforceable against Seller
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws relating to or affecting the rights of creditors generally and by
equitable principles, including those limiting the availability of specific
performance, injunctive relief and other equitable remedies and those providing
for equitable defenses.
2.3 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "Hart-Scott-Rodino Act"), except as set forth in the Disclosure
Schedule referencing this Section 2.3, neither the execution and delivery of
this Agreement by Seller, nor the consummation by Seller of the transactions
contemplated hereby, will:
(a) conflict with or violate any provision of the charter or
bylaws of Seller;
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(b) require on the part of Seller any filing with, or any
permit, authorization, consent or approval of, any court, arbitrational
tribunal, administrative agency or commission or other governmental or
regulatory authority or agency (a "GOVERNMENTAL ENTITY");
(c) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness, Security Interest or
other arrangement to which Seller is a party or by which Seller is bound or to
which any of its assets are subject. For purposes of this Agreement, "SECURITY
INTEREST" means any mortgage, pledge, security interest, encumbrance, charge or
other lien (whether arising by contract or by operation of law), other than (i)
mechanic's, materialmen's, landlord's and similar liens which, individually or
in the aggregate, do not materially and adversely impair the use or value of the
Acquired Assets, (ii) liens arising under worker's compensation, unemployment
insurance, social security, retirement and similar legislation, (iii) liens on
goods in transit incurred pursuant to documentary letters of credit, in each
case arising in the ordinary course of business consistent in all material
respects with past custom and practice of the Business ("ORDINARY COURSE OF
BUSINESS"), (iv) liens for Taxes not yet due and payable, (v) liens for Taxes
which are being contested in good faith and by appropriate proceedings and for
which reserves have been made specifically on the Most Recent Balance Sheet,
(vi) liens relating to capitalized lease financings or purchase money financings
that have been entered into in the Ordinary Course of Business and have been
specifically reflected on the Most Recent Balance Sheet, and (vii) liens arising
solely by action of Buyer;
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(d) result in the imposition of any Security Interest upon the
Acquired Assets; or
(e) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Seller or any of its properties or assets.
2.4 SUBSIDIARIES. Seller does not, with respect to the Business,
control, directly or indirectly, or have any direct or indirect equity ownership
or other rights of participation in, any corporation, limited liability company,
partnership, trust or other business association.
2.5 FINANCIAL STATEMENTS. Section 2.5 of the Disclosure Schedule
includes copies of the unaudited balance sheet (the "Most Recent Balance Sheet")
and statement of operations for the Business as of and for the fiscal year ended
April 1, 2000 (the "Financial Statements"). Such Financial Statements are based
upon the information contained in the books and records of Seller, which books
and records are complete and accurate in all material respects, have been
prepared in accordance with U.S. GAAP (except for the absence of footnotes) and
fairly present, in all material respects, the financial condition and results of
operations of the Business as of the date thereof and for the period referred to
therein.
2.6 ABSENCE OF CERTAIN CHANGES. Except as contemplated by this
Agreement, since April 1, 2000 there have not been any material adverse changes
in the assets, business, financial condition, results of operations or employee,
customer or supplier relations, of the Business. Except as contemplated by this
Agreement, and except as set forth in the Disclosure Schedule referencing this
Section 2.6, since April 1, 2000 the Business, taken as a whole, has not taken
any of the following actions (or permitted any of the following events to
occur):
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(a) borrowed any amount, except for borrowings from Seller or
its affiliates, as defined in Rule 12b-2 under the Securities Exchange Act of
1934 ("AFFILIATES");
(b) subjected to any Security Interest any Acquired Assets;
(c) sold, assigned or transferred any portion of the Acquired
Assets in a single transaction or series of related transactions in an amount in
excess of $100,000, except in the Ordinary Course of Business;
(d) suffered any extraordinary losses (whether or not covered
by insurance) outside the Ordinary Course of Business and material to the
Business, or waived any rights of material value to the Business;
(e) except in the Ordinary Course of Business, made any
capital expenditures or commitments therefor in an amount in excess of $100,000
in the aggregate;
(f) materially amended the terms of any existing Business Plan
(as defined in Section 2.15);
(g) changed its accounting principles, methods or practices or
the manner it keeps its books and records or changed its practices with regard
to reserves, accruals, sales, receivables, payables or accrued expenses, except
in each case to conform to changes in U.S. GAAP;
(h) sold, assigned, licensed or transferred (including,
without limitation, transfers to any employees of the Business or Affiliates of
Seller) any Intellectual Property used or held for use in the Business;
(i) made or granted any bonus or any wage, salary or
compensation increase to any officer or employee of the Business who earns more
than $75,000 per year or any
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consultant to the Business, or made or granted any material increase in any
employee benefit plan or arrangement, or adopted any material new employee
benefit plan or arrangement or made any commitment or incurred any liability to
any labor organization; or
(j) entered into any agreement or commitment with respect to
any of the matters referred to in paragraphs (a) through (j) of this Section
2.6.
2.7 UNDISCLOSED LIABILITIES. The Business does not have any
liability, obligation or undertaking of any nature (whether accrued, absolute,
unliquidated or otherwise, whether due or to become due, whether known or
unknown and regardless of when asserted), except for (a) liabilities shown on
the Most Recent Balance Sheet, (b) liabilities which have arisen since April 1,
2000 in the Ordinary Course of Business (or none of which is a material
uninsured liability for breach of contract, breach of warranty, tort,
infringement, claim or lawsuit) that are fully reflected in the books and
records of Seller relating primarily to the Business and (c) contractual
liabilities incurred in the Ordinary Course of Business, all of which
contractual liabilities, to the extent they relate to contracts to be included
in the Acquired Assets and will come due prior to the Closing, will be
discharged by Seller prior to Closing.
2.8 TAX MATTERS. Except as set forth in the Disclosure Schedule
referencing this Section 2.8:
(a) Seller has filed all Tax Returns (as defined below) that
it was required to file and all such Tax Returns were correct and complete in
all material respects. Seller has paid all Taxes (as defined below) that are
shown to be due on any such Tax Returns. All Taxes that Seller is or was
required by law to withhold or collect have been duly withheld or collected and,
to the extent required, have been paid to the proper Governmental Entity.
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(b) There are no liens for Taxes upon any of the Acquired
Assets, except liens for Taxes not yet due and payable. No deficiency for any
Taxes has been proposed, asserted or assessed against the Business or the Tax
Affiliates with respect to the ownership or operation of any Acquired Assets or
the Business that has not been resolved and paid in full. No waiver, extension
or comparable consent given by Seller or the Tax Affiliates regarding the
application of the statute of limitations with respect to any Taxes or Tax
Returns is outstanding, nor is any request for any such waiver or consent
pending. There are no unresolved Tax audit or other administrative proceeding or
court proceeding with regard to any Taxes or Tax Returns for which the Seller or
the Business has any continuing obligation, nor is any such Tax audit or other
proceeding pending, nor has there been any notice to Seller by any Tax authority
regarding any such Tax audit or other proceeding.
(c) For purposes of this Agreement:
(i) "Taxes" means all taxes, including without
limitation income, gross receipts, ad valorem, value-added, excise, real
property, personal property, sales, use, transfer, withholding, employment and
franchise taxes imposed by the United States of America or any state, local or
foreign government, or any agency thereof, or other political subdivision of the
United States or any such government, and any interest, penalties, assessments
or additions to tax resulting from, attributable to or incurred in connection
with any tax or any contest or dispute thereof;
(ii) "Tax Returns" means all reports, returns,
declarations, statements, forms or other information required to be supplied to
a taxing authority in connection with Taxes; and
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(iii) "Tax Affiliate" means each of Seller, any
affiliated, combined, consolidated, or unitary group of which Seller is or was a
member, and any Employee Benefit Plan of Seller, as the case may be.
2.9 TANGIBLE PERSONAL PROPERTY. Section 2.9 of the Disclosure
Schedule lists, and Seller has good title to, all of the material tangible
personal property reflected on the Most Recent Balance Sheet and all material
tangible personal property acquired since the date of the Most Recent Balance
Sheet (other than property sold, consumed or otherwise disposed of in the
Ordinary Course of Business since the date of the Most Recent Balance Sheet),
free and clear of all Security Interests. Such items of tangible personal
property, taken as a whole, (i) are suitable for the purposes for which they are
presently used in the Business, and (ii) are in good operating condition and
repair (normal wear and tear excepted).
2.10 OWNED AND LEASED REAL PROPERTY.
(a) The Disclosure Schedule lists the address and legal
description of all Owned Real Property. With respect to the Owned Real Property:
(i) The Seller has good and marketable fee simple
title to the Owned Real Property, free and clear of all mortgages, pledges,
security interests, encumbrances, charges or other liens (whether arising by
contract or by operation of law), other than (A) liens for Taxes not yet due and
payable, (B) liens for Taxes which are being contested in good faith and by
appropriate proceedings, and (C) liens and encumbrances which do not materially
and adversely impair the use of the Owned Real Property for the conduct of the
Business in the manner in which it is currently operated;
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(ii) There are no pending or, to the Seller's
knowledge, threatened condemnation proceedings, lawsuits or administrative
actions with respect to the Owned Real Property;
(iii) All facilities have received all material
approvals of Governmental Entities (including licenses and Permits) required in
connection with the ownership or operation thereof;
(iv) There are no written arrangements granting to
any party or parties the right of use or occupancy of any portion of such
parcel;
(v) There are no outstanding options or rights of
first refusal to purchase such parcel, or any portion thereof or interest
therein;
(vi) There are no parties (other than the Seller) in
possession of such parcel, other than tenants under leases disclosed in the
Disclosure Schedule who are in possession of space to which they are entitled;
and
(vii) Each of the Owned Real Property and the leased
Real Property has access, sufficient for the conduct of the Business as now
conducted, to public roads and to all utilities, including electricity, sanitary
and storm sewer, potable water, natural gas and other utilities, currently used
in the operation of the Business at that location.
(b) The Disclosure Schedule lists all Leased Real Property.
Seller has made available to Buyer correct and complete copies of the leases and
subleases (as amended to date) listed therein (the "Leases"). With respect to
each such Lease:
(i) The Lease is a legal, valid, binding and
enforceable obligation of Seller and, to Seller's knowledge, each other party to
such Lease, except as enforceability may
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be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and by equitable principles, including those limiting the
availability of specific performance, injunctive relief and other equitable
remedies and those providing for equitable defenses;
(ii) Neither Seller nor, to Seller's knowledge, any
other party to the Lease is in breach or default and, to Seller's knowledge, no
event has occurred which, with notice or lapse of time or both, would constitute
a breach or default or permit termination, modification or acceleration
thereunder;
(iii) To Seller's knowledge, there are no disputes,
oral agreements or forbearance programs in effect as to the Lease;
(iv) Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the leasehold or
subleasehold to the Lease; and
(v) There are no pending or, to Seller's knowledge,
threatened condemnation proceedings, lawsuits or administrative actions with
respect to the property subject to the Lease.
2.11 INTELLECTUAL PROPERTY.
(a) The Disclosure Schedule describes under the caption
referencing this Section 2.11 all rights in patents, trademarks, service marks,
trade names and logos, corporate names, registered copyrights, mask works, and
domain name registrations and applications therefor, owned by, licensed to or
otherwise controlled by Seller with respect to the Business or used in,
developed for use in or necessary to the conduct of the Business as now
conducted, together with the identity of the owner thereof. All such rights
required to be disclosed under
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such caption, together with all trade secrets, know-how or other intellectual
property rights owned by, licensed to or otherwise controlled by Seller with
respect to the Business or used in, developed for use in or necessary to the
conduct of the Business as now conducted, together with the identity of the
owner thereof, are collectively referred to herein as the "Designated
Intellectual Property." Seller owns, or is licensed or otherwise possesses valid
rights to use, the Designated Intellectual Property.
(b) Seller has not been named in any suit, action or
proceeding relating to the Business which involves a claim of infringement of
any patents, trademarks, trade names, service marks or copyrights of any third
party. To Seller's knowledge, the Business as presently conducted does not
infringe any valid patents, trademarks, trade names, service marks or copyrights
of any third party.
(c) Seller has performed, in all material respects, the
obligations required to be performed by it under the terms of any agreement
pursuant to which Seller has rights in any Designated Intellectual Property, and
neither Seller nor, to the knowledge of Seller, any third party is in default
under any such agreement.
(d) Except as set forth in the Disclosure Schedule referencing
this Section 2.11, Seller has not granted to any third party any license or
right to the commercial use of any of the Designated Intellectual Property.
2.12 CONTRACTS.
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(a) Except as set forth in the Disclosure Schedule referencing
this Section 2.12, Seller (with respect to the operation or conduct of the
Business) is not a party to, and the Acquired Assets do not include, any
contract, commitment and/or binding understandings (or group of related
contracts, commitments or understandings with the same person or such person's
Affiliates), whether oral or written:
(i) for the lease of personal property from or to
third parties providing for lease payments the remaining unpaid balance of which
is in excess of $50,000;
(ii) for the sale of products or services under which
the undelivered balance of such products and services is in excess of $250,000
or for the purchase of products or services under which the undelivered balance
of such products and services is in excess of $50,000, other than (A) purchase
orders relating to the supply of goods and services to the Business in the
Ordinary Course of Business and (B) agreements relating to the purchase by
Seller of goods and services to the Business in the Ordinary Course of Business
which are cancelable by Seller without penalty, upon 60 days or shorter notice;
(iii) establishing a partnership or joint venture;
(iv) under which it has created, incurred, assumed or
guaranteed (or may create, incur, assume or guarantee) indebtedness (including
capitalized lease obligations) the outstanding amount of which is more than
$250,000 or under which it has imposed (or may impose) a Security Interest on
any Acquired Asset, except for any Security Interests relating to capitalized
lease financing or indebtedness for borrowed money in an aggregate amount of
less than $250,000;
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(v) that prohibits the Business from freely engaging
in business anywhere in the world;
(vi) under which the consequences of a default or
termination would reasonably be expected to have a Business Material Adverse
Effect;
(vii) involving (with respect to the Business)
Seller's or its Affiliates' executive officers or directors;
(viii) for the employment of any individual on a
full-time or part-time basis providing base annual compensation in excess of
$100,000 during fiscal 2001;
(ix) severance, "stay pay" or termination agreement
with any officer or other employee of the Business;
(x) for the sale of any assets or properties of (with
respect to the Business) Seller, other than goods and services in the Ordinary
Course of Business, which involves a payment to be made to Seller in excess of
$100,000;
(xi) for the acquisition by (with respect to the
Business) Seller of any operating business or the capital stock of any other
person;
(xii) agreement relating to any obligation, covenant
or indemnity of (with respect to the Business) Seller with respect to which
Seller is a guarantor or surety or has provided any letter of comfort, letter of
credit, surety bond or other similar assurance to any third party;
(xiii) other than in the Ordinary Course of Business
or in connection with advertising, product promotion or other non-exclusive,
short-term uses, agreement
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involving the licensing of, or assignment or transfer of, any rights in
Designated Intellectual Property; and
(xiv) other agreements involving payments to be made
or received after the date of this Agreement in excess of $250,000; PROVIDED,
HOWEVER, that (x) no agreement referred to in clauses (i) through (xiii) above
need be disclosed unless Seller currently has, or may in the future have, any
rights or obligations thereunder and (y) Leases are not required to be disclosed
in response to any provision of this Section 2.12 and shall not constitute
Designated Contracts (as defined below).
(b) Seller has made available to Buyer a correct and complete
copy of each agreement (as amended to date) required to be listed in Section
2.12 of the Disclosure Schedule (the "DESIGNATED CONTRACTS"). Each Designated
Contract is a legal, valid, binding and enforceable obligation of Seller and, to
Seller's knowledge, of each other party thereto (except as the foregoing may be
limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and by equitable principles, including those limiting the
availability of specific performance, injunctive relief, and other equitable
remedies and those providing for equitable defenses), and there exists no
defaults of Seller or, to Seller's knowledge, any other party thereto. As of the
date of this Agreement, Seller has not received written notice that any party to
a Designated Contract intends to terminate the Designated Contract to which it
is a party.
2.13 LITIGATION. The Disclosure Schedule lists, as of the date of
this Agreement, each (a) judgment, order, decree, stipulation or injunction
binding upon Seller or its property or business and relating to the Business and
(b) claim, complaint, action, suit, proceeding, hearing
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or investigation relating to the Business of or in any Governmental Entity or
before any arbitrator to which Seller is a party or, to Seller's knowledge,
which has been threatened against Seller.
2.14 LABOR MATTERS. Except as set forth in the Disclosure Schedule
referencing this Section 2.14:
(a) Seller is not a party to or bound by any collective
bargaining agreement relating to the Business, nor has Seller experienced, since
January 1, 1998, any strikes, grievances, claims of unfair labor practices or
other collective bargaining disputes. Seller has no knowledge of any
organizational effort being made or threatened since January 1, 1998 by or on
behalf of any labor union with respect to employees of the Business.
(b) To the knowledge of Seller (i) no executive employee of
the Business has any plans to terminate his or her employment, whether in
connection with the transactions contemplated by this Agreement or otherwise,
and (ii) no group of employees in any testing process unit of the Business have
any plans to terminate their employment, whether in connection with the
transactions contemplated by this Agreement or otherwise, where the effect of
the termination of such group of employees would materially impair the ability
of such testing process unit to perform the services which it currently
performs. Seller, with respect to the Business, has complied in all material
respects with all laws relating to the employment and termination of labor,
including provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and other taxes. There
are no workers' compensation claims pending against Seller with respect to the
Business.
(c) To the knowledge of Seller, no employee of the Business is
subject to any secrecy or noncompetition agreement or any other agreement or
restriction of any kind that
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would impede in any material way the ability of such employee to carry out fully
all activities of such employee in furtherance of the Business. Seller owns all
Designated Intellectual Property developed by employees of the Business during
the period of their employment with Seller. No employee or former employee of
the Business has any claim to the ownership of any Designated Intellectual
Property.
(d) Seller has not made any loans (except advances against
accrued salaries or for business travel, lodging or other expenses incurred in
the Ordinary Course of Business) to any employee of the Business who earns more
than $75,000 per year.
2.15 EMPLOYEE BENEFITS.
(a) The Disclosure Schedule contains a complete and accurate
list of all Employee Benefit Plans (as defined below) maintained, or contributed
to, by Seller or any ERISA Affiliate (as defined below) for the benefit of
employees of the Business (and their beneficiaries) (the "BUSINESS PLANS"). For
purposes of this Agreement, "EMPLOYEE BENEFIT PLAN" means any "employee pension
benefit plan" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) other than a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA), any "employee welfare benefit plan"
(as defined in Section 3(1) of ERISA), and, to the extent applicable to more
than one employee, any other written or oral plan, agreement or arrangement
involving direct or indirect compensation, including without limitation
insurance coverage, severance benefits, disability benefits, deferred
compensation, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
compensation. For purposes of this Agreement, "ERISA AFFILIATE" means any entity
which is a member of (i) a controlled group of
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corporations (as defined in Section 414(b) of the Code), (ii) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code),
or (iii) an affiliated service group (as defined under Section 414(m) of the
Code or the regulations under Section 414(o) of the Code), any of which includes
Seller. Complete and accurate copies of all Business Plans and all related trust
agreements, insurance contracts and summary plan descriptions have been made
available to Buyer. Each Business Plan has been administered in all material
respects in accordance with its terms and Seller has met its obligations with
respect to such Business Plan. Seller and the Business Plans are in compliance
in all material respects with the currently applicable provisions of ERISA and
the Code and the regulations thereunder.
(b) There are no termination proceedings or other claims
(except claims for benefits payable in the normal operation of the Employee
Benefit Plans and proceedings with respect to qualified domestic relations
orders), suits or proceedings against or involving any Business Plan or
asserting any rights or claims to benefits under any Business Plan, or, to
Seller's knowledge, investigations by any Governmental Entity involving any
Business Plan that, in any instance, would reasonably be expected to cause
material liability to the Buyer.
(c) The Business Plans that are intended to be qualified under
Section 401(a) of the Code have received determination letters from the Internal
Revenue Service to the effect that such Business Plans are qualified and the
plans and the trusts related thereto are exempt from federal income Taxes under
Sections 401(a) and 501(a), respectively, of the Code. To Seller's knowledge, no
condition exists with respect to any Business Plan that would adversely affect
the Tax qualification of such Business Plan.
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(d) The Disclosure Schedule lists each multiemployer plan to
which Seller or any ERISA Affiliate contributes or is obligated to contribute
for the benefit of employees of the Business. Neither Seller nor any ERISA
Affiliate has withdrawn from any multiemployer plan in a complete or partial
withdrawal which has resulted in any withdrawal liability which has not been
satisfied in full. All required contributions to any such multiemployer plan
have been made in full.
(e) There are no unfunded obligations under any Business Plan,
other than an Employee Benefit Plan intended to be qualified under Section
401(a) of the Code, providing welfare benefits after termination of employment
to any employee of the Business (or to any beneficiary of any such employee),
excluding continuation of health coverage required to be continued under Section
4980B of the Code or other applicable laws.
(f) No act or omission has occurred and no condition exists
with respect to any Business Plan maintained by Seller or any ERISA Affiliate
that would subject Seller or any ERISA Affiliate to any material fine, penalty,
Tax or liability of any kind imposed under ERISA or the Code (other than
liabilities for benefits accrued under Business Plans for employees of Seller
and their beneficiaries).
(g) Seller does not maintain or contribute to any plans
providing severance benefits to, or for the benefit of, any employee of the
Business ("Severance Plans"). Accordingly, for purposes of this Agreement, the
term "Business Plans" shall not include any Severance Plan.
(h) No persons other than employees of the Business (and their
beneficiaries) currently participate in, or are otherwise entitled to, any
benefits under the Business Plans.
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2.16 ENVIRONMENTAL MATTERS.
(a) When used in this Agreement, the following terms have the
meanings provided below.
(i) "CERCLA" shall mean the Federal Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, and
in effect on the Closing Date.
(ii) "RELEASE" shall have the meaning assigned to
that term in CERCLA.
(iii) "ENVIRONMENT" shall have the meaning assigned
to that term under CERCLA.
(iv) "MATERIALS OF ENVIRONMENTAL CONCERN" means any
substance which is (i) defined as a hazardous substance, hazardous material or
hazardous waste under any Environmental Law (as in effect on the Closing Date),
(ii) oil, petroleum and petroleum products or any derivative thereof; (iii)
hazardous, toxic, corrosive, flammable, explosive, infectious, radioactive or
carcinogenic; or (iv) regulated pursuant to any Environmental Law.
(v) "ENVIRONMENTAL LAW" means any federal, state,
provincial, or local law or ordinance, statute, rule, regulation or common law
as in effect on the Closing Date relating to protection of human health and
safety, occupational health and safety, the Environment or natural resources and
wildlife, including, without limitation, any law or regulation pertaining to (A)
treatment, storage, disposal, transportation or generation of Materials of
Environmental Concern; (B) air, water and noise pollution; (C) groundwater and
soil contamination; or (D) the Release or threatened Release of Materials of
Environmental Concern.
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(vi) "ENVIRONMENTAL MATTERS" means any liability
arising under Environmental Law.
(vii) "OFF-SITE LIABILITIES" means Environmental
Matters and/or liability arising under Environmental Law resulting from any
transportation, treatment, storage, disposal or Release, or the arrangement
therefor, of any Materials of Environmental Concern by the Business or any of
its Affiliates, agents, contractors or predecessors in interest, to or at any
property, location, site or facility other than a Business Property.
(viii) "BUSINESS PROPERTIES" means the Real Property.
(b) Except as specifically identified in the Disclosure
Schedule:
(i) Seller, the Business, and the Business's
operations at the Business Properties have been and are in compliance in all
material respects with applicable Environmental Laws, except for any failures to
comply with Environmental Laws that would not reasonably be expected to have a
Business Material Adverse Effect;
(ii) there is and since May 1, 1995 there has been no
pending civil or criminal litigation, written notice of violation, order,
demand, allegation, citation, directive, summons, penalty, fine or liability
arising under any Environmental Law (collectively, "Environmental Notices") and
Seller and the Business have not been the subject of any administrative
proceeding, investigation or information request relating to any Environmental
Law or Environmental Matters involving any of the Business, Business Properties
or any business or property formerly owned or operated by the Business, except
for such Environmental Notices that would not reasonably be expected to have a
Business Material Adverse Effect; and
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(iii) Seller and the Business have and are in
compliance with those permits, licenses and approvals required under
Environmental Law (as listed in the Disclosure Schedule referencing this Section
2.16) to operate the Business and the Business Properties as currently operated
by Seller, except for any such permits, licenses or approvals the absence of
which would not reasonably be expected to have a Business Material Adverse
Effect, and no such permits, licenses and approvals will be revoked, terminated
or not renewed as a result of the transactions contemplated by this Agreement.
(c) Since May 1, 1995, the Business has not used, handled,
generated, produced, manufactured, treated, stored, disposed of, recycled or
transported any Materials of Environmental Concern on, under, about, to or from
the Business Properties in violation of any Environmental Law, except for such
violations which would not reasonably be expected to have a Business Material
Adverse Effect. Since May 1, 1995, there is and has been no Release or
threatened Release of any Materials of Environmental Concern beneath or from the
Business Properties or any real property formerly owned or operated by the
Business.
(d) Except as specifically identified in the Disclosure
Schedule:
(i) with respect to Seller, the Business, Business
Properties and, to Seller's knowledge any property formerly owned or operated by
Seller with respect to the Business, there is and since May 1, 1995 has been no
actual or, to Seller's knowledge, threatened order, directive, demand,
allegation, citation, summons, fine, penalty, claim, investigation or
remediation concerning a Release of Materials of Environmental Concern that
would reasonably be expected to be an Environmental Matter or have a Business
Material Adverse Effect; and
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(ii) with respect to Seller and the Business, there
is and since May 1, 1995 has been no actual or, to Seller's knowledge,
threatened directive, demand, allegation, citation, summons, fine, penalty or
claim for Off-Site Liabilities relating to the Business that would reasonably be
expected to be an Environmental Matter or have a Business Material Adverse
Effect.
(e) Except as specifically identified in the Disclosure
Schedule: (i) no aboveground or underground storage tanks used for storage of
any Materials of Environmental Concern are currently or were formerly located on
the Business Properties; (ii) no asbestos-containing material is located on the
Business Properties in a condition that violates any Environmental Laws and no
such material has been removed or abated; and (iii) there are no PCBs at the
Business Properties.
(f) To the knowledge of the Seller, there are no past or
present events, conditions, circumstances, activities, practices, incidents,
actions or plans of Seller, either collectively, individually or severally,
which reasonably would be expected to prevent continued compliance with
Environmental Laws, or which reasonably would be expected to give rise to any
liability under, Environmental Laws that would have a Business Material Adverse
Effect. There are no liens or assessments relating to Environmental Matters
against Seller, the Business or the Business Properties.
(g) The Parties agree that the only representations and
warranties of Seller herein as to any Environmental Matters are those contained
in this Section 2.17. Without limiting the generality of the foregoing, Buyer
specifically acknowledges that the representations and warranties contained in
Sections 2.13, 2.17 and 2.18 do not relate to Environmental Matters.
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2.17 LEGAL COMPLIANCE. Except as set forth in the Disclosure
Schedule referencing this Section 2.17, Seller is (with respect to the Business)
in compliance in all material respects with all applicable laws (including rules
and regulations thereunder) of any federal, state or foreign government, or any
Governmental Entity, currently in effect with respect to the Business. Except as
set forth in the Disclosure Schedule referencing this Section 2.17, Seller has
not received written notice of any pending action, suit, proceeding, hearing,
investigation, claim, demand or notice relating to the Business alleging any
failure to so comply.
2.18 PERMITS. (a) Seller has obtained and is not in material
violation of or default under any material permit, license, franchise or
authorization from any Governmental Authority used in its business or operations
as presently conducted and material to the business or operations of the
Business (collectively, the "Permits") and (b) no Permit will be revoked,
terminated prior to its normal expiration date or not renewed solely as a result
of the consummation of the transactions contemplated by this Agreement.
2.19 ENTIRE BUSINESS. The Acquired Assets collectively constitute,
when utilized by a labor force substantially similar to that employed by Seller
in connection with the Business on the date hereof, all of the assets necessary
to conduct the Business in all material respects as currently conducted. The
only business operated by Seller under the name "Lancaster Laboratories" is the
business of Seller headquartered in Lancaster, Pennsylvania.
2.20 BROKERS' FEES. Except as set forth in the Disclosure Schedule,
Seller has no liability or obligation to pay any fees or commissions to any
broker, finder or agent with respect to the transactions contemplated by this
Agreement.
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2.21 INSURANCE. The Disclosure Schedule lists each material
insurance policy maintained by Seller that relates or provides coverage with
respect to any Acquired Assets or the Business (the "Business Policies"). All of
such Business Policies are in full force and effect and, to Seller's knowledge,
Seller is not in default with respect to its obligations under any of such
Business Policies, except for any failures to be in full force and effect or
defaults that would not reasonably be expected to have a Business Material
Adverse Effect.
2.22 BUSINESS RELATIONSHIPS WITH AFFILIATES. The Disclosure
Schedule lists any written agreements with respect to the Business whereby any
Affiliate of Seller directly or indirectly (a) owns any property or right,
tangible or intangible, which is used in the Business, (b) owes any money to
Seller or is owed money by Seller or (c) has any other business or contractual
relationship with Seller.
2.23 ACCOUNTS RECEIVABLE. The accounts receivable of the Business
reflected on the Most Recent Balance Sheet and those arising thereafter are
valid receivables created in the Ordinary Course of Business, are reasonably
expected to be collectible in the face value thereof, net of the reserve for
doubtful accounts set forth in the Most Recent Balance Sheet, and are not
subject to valid counterclaims or set-off.
2.24 CUSTOMERS AND SUPPLIERS. Under the caption referencing this
Section 2.24, the Disclosure Schedule lists the ten largest customers and the
ten largest suppliers of the Business for the fiscal year ended April 1, 2000,
and sets forth opposite the name of each customer and supplier the approximate
percentage of net sales or purchases by the Business attributable to each such
customer or supplier for each such period. Since April 1, 2000, no customer or
supplier listed on the Disclosure Schedule under the caption referencing this
Section 2.24 has given
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written notice to Seller that it will stop or materially decrease the rate of
business done with the Business.
2.25 SOLVENCY. Immediately after giving effect to the transactions
contemplated by this Agreement, Seller shall be able to pay its debts as they
become due and shall own property having a fair saleable value greater than the
amounts required to pay its debts (including a reasonable estimate of the amount
of all contingent liabilities, discounted by the probability the collection from
Seller on such contingent liabilities will occur). Immediately after giving
effect to the transactions contemplated by this Agreement, Seller shall have
adequate capital to carry on its business. No transfer of property is being made
and no obligation is being incurred in connection with the transactions
contemplated by this Agreement with the intent to hinder, delay or defraud
either present or future creditors of Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as of the date hereof as
follows:
3.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation.
3.2 AUTHORIZATION OF TRANSACTION. Buyer has all requisite
corporate power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution and delivery of this Agreement
by Buyer and the performance by Buyer of this Agreement and its obligations
hereunder and the consummation by Buyer of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate action on
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the part of Buyer. This Agreement has been duly and validly executed and
delivered by Buyer and, assuming this Agreement constitutes the valid and
binding obligation of Seller, constitutes a valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws relating to or affecting
the rights of creditors generally and by equitable principles, including those
limiting the availability of specific performance, injunctive relief and other
equitable remedies and those providing for equitable defenses.
3.3 NONCONTRAVENTION. Subject to compliance with the applicable
requirements of the Hart-Scott-Rodino Act, neither the execution and delivery of
this Agreement by Buyer, nor the consummation by Buyer of the transactions
contemplated hereby, will:
(a) conflict with or violate any provision of the charter or
bylaws of Buyer;
(b) require on the part of Buyer any filing with, or permit,
authorization, consent or approval of, any Governmental Entity, other than any
filing, permit, authorization, consent or approval which if not obtained or made
would not reasonably be expected to have a material adverse effect on the
assets, business, financial condition results of operations or employee,
customer or supplier relations, of Buyer or on the ability of Buyer to
consummate the transactions contemplated by this Agreement (a "BUYER MATERIAL
ADVERSE EFFECT");
(c) conflict with, result in breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of, create in any party any right to accelerate, terminate, modify
or cancel, or require any notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage
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for borrowed money, instrument of indebtedness, Security Interest or other
arrangement to which Buyer is a party or by which Buyer is bound or to which any
of its assets are subject; or
(d) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to Buyer or any of its properties or assets
3.4 BROKER'S FEES. Buyer has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
3.5 LITIGATION. There are no actions, suits, claims or legal,
administrative or arbitratorial proceedings pending against, or, to Buyer's
knowledge, threatened against, Buyer which would adversely affect Buyer's
performance under this Agreement or the consummation of the transactions
contemplated by this Agreement.
3.6 SOLVENCY. Immediately after giving effect to the transactions
contemplated by this Agreement and the closing of any financing to be obtained
by Buyer or any of its Affiliates in order to effect the transactions
contemplated by this Agreement, Buyer shall be able to pay its debts as they
become due and shall own property having a fair saleable value greater than the
amounts required to pay its debts (including a reasonable estimate of the amount
of all contingent liabilities), discounted by the probability the collection
from Buyer on such contingent liabilities will occur. Immediately after giving
effect to the transactions contemplated by this Agreement and the closing of any
financing to be obtained by Buyer or any of its Affiliates in order to effect
the transactions contemplated by this Agreement, Buyer shall have adequate
capital to carry on its business. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated by
this Agreement and the
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closing of any financing to be obtained by Buyer or any of its Affiliates in
order to effect the transactions contemplated by this Agreement with the intent
to hinder, delay or defraud either present or future creditors of Buyer.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 EFFORTS. Each of the Parties shall use commercially reasonable
efforts to take all actions and to do all things necessary, proper or advisable
to consummate the transactions contemplated by this Agreement.
4.2 HART-SCOTT-RODINO ACT. Each of the Parties (i) will, within
five business days after the date of this Agreement, file (or cause to be
filed) any Notification and Report Forms and related material that it may be
required to file with the Federal Trade Commission and the Antitrust Division
of the United States Department of Justice under the Hart-Scott-Rodino Act,
(ii) shall use commercially reasonable efforts to obtain an early termination
of the applicable waiting period with respect to such filing, and (iii) shall
make any further filings or information submissions pursuant thereto that may
be necessary, proper or advisable. Buyer shall bear the filing fees
associated with such filings under the Hart-Scott-Rodino Act and Seller shall
be responsible for all of its costs associated with Seller's preparation of
its filing thereunder.
4.3 REPLACEMENT OF GUARANTEES AND LETTERS OF COMFORT. Unless
otherwise agreed to in writing by Seller, Buyer shall arrange, prior to the
Closing, for replacement arrangements (which shall include a full and complete
release of Seller and its Affiliates), including, to the extent required,
guarantees and letters of comfort, reasonably satisfactory to Seller, with
respect
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to all letters of credit and other borrowings of the Business listed on Schedule
4.3 to this Agreement which are subject to any guarantee, covenant, indemnity,
letter of comfort or similar assurance provided by Seller or any of its
Affiliates as of the Closing Date.
4.4 CONDUCT OF THE BUSINESS. In connection with the Acquired
Assets and the Business, Seller agrees to observe each term set forth in this
Section 4.4 and agrees that, from the date hereof until the Closing Date, unless
otherwise consented to by Buyer in writing:
(a) Except as specifically contemplated by this Agreement,
including Section 10.6, the Business shall be conducted only in, and Seller
shall not take any action except in, the Ordinary Course of Business, on an
arm=s-length basis and in accordance in all material respects with all
applicable laws, rules and regulations;
(b) Seller shall not, directly or indirectly, do or permit to
occur any of the following insofar as they relate to or would otherwise
adversely affect the operation of the Business or the Acquired Assets: (i) sell,
pledge, dispose of or encumber any of the Acquired Assets, except in the
Ordinary Course of Business; (ii) amend or propose to amend Seller's Articles of
Incorporation or Bylaws; (iii) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation, partnership, joint
venture or other business organization or division or material assets thereof;
(iv) incur any indebtedness for borrowed money or issue any debt securities
except the borrowing of working capital in the Ordinary Course of Business; (v)
permit any accounts payable owed to trade creditors to remain outstanding other
than in the Ordinary Course of Business; (vi) accelerate, beyond the normal
collection cycle, collection of any accounts receivable; or (vii) enter into or
propose to enter into,
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or modify or propose to modify, any agreement, arrangement or understanding with
respect to any of the matters set forth in this Section 4.4(b);
(c) Seller shall not, directly or indirectly, (i) enter into
or modify any employment, severance or similar agreements or arrangements with
any Business Employees who earn less than $75,000 per year, except in the
Ordinary Course of Business; (ii) enter into or modify any employment, severance
or similar agreements with any Business Employees who earn $75,000 or more per
year or (iii) in the case of Business Employees who earn in excess of $75,000
per year, take any action with respect to the grant of any bonuses or salary
increases or with respect to any increase of benefits payable in effect on the
date hereof;
(d) Seller shall not adopt or amend any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, trust, fund or group arrangement for
the benefit or welfare of any group of Business Employees or any such plan,
agreement, trust, fund or arrangement for the benefit or welfare of any
individual Business Employee;
(e) Seller shall not cancel or terminate its current
insurance policies covering the Acquired Assets and the Business or cause any
of the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies providing coverage
equal to or greater than the coverage under the canceled, terminated or
lapsed policies for substantially similar premiums are in full force and
effect;
(f) Seller shall (i) use its commercially reasonable efforts
to preserve intact the organization and goodwill of the Business, keep available
the services of the Business Employees as a group and maintain satisfactory
relationships with suppliers, distributors,
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customers and others having business relationships with Seller in connection
with the Business; (ii) confer with representatives of Buyer as reasonably
requested by Buyer to report operational matters and the general status of
ongoing operations with respect to the Business; (iii) not intentionally take
any action which would render, any representation or warranty made by it in this
Agreement (including, without limitation, the representations and warranties set
forth in Section 2.6 of this Agreement) untrue at the Closing; and (iv) notify
Buyer of any emergency or other change in the normal course of the Business or
in the operation of the properties of the Business and of any governmental or
third party complaints, investigations or hearings (or communications indicating
that the same may be contemplated) if such emergency, change, complaint,
investigation or hearing would be reasonably likely to have a Business Material
Adverse Effect;
(g) Seller shall not change any of its methods of accounting in
effect at April 1, 2000, other than those required by GAAP; and
(h) Seller shall not take any actions to create any Security
Interest in the Acquired Assets or which would prevent the transfer to Buyer of
good and marketable title to the Acquired Assets at the Closing.
Notwithstanding the foregoing provisions of this Section 4.4, prior to
the Closing, the Seller shall have the right to convert to a limited liability
company organized under the laws of Delaware.
4.5 ACCESS. Subject to compliance with applicable laws and regulations,
and contractual obligations of Seller regarding classified information, security
clearance, proprietary information of third parties and procurement sensitive
information, Seller shall permit the
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representatives of Buyer to have reasonable access (at reasonable times, on
reasonable prior notice and in a manner so as not to interfere unreasonably with
the normal business operations of the Business) to the premises, properties,
financial and accounting records, Tax Returns and other information with respect
to Taxes, contracts, other records and documents, and personnel, of or
pertaining to the Business for reasonable business purposes (it being
acknowledged by Buyer that Buyer has completed its due diligence investigation
and that the purpose of this provision is not to permit further due diligence).
Buyer acknowledges that it remains bound by the Confidentiality Agreement, dated
March 28, 2000, previously entered into between Buyer and Seller (the
"Confidentiality Agreement"). Prior to the Closing, Buyer and its
representatives shall not contact or communicate with the employees, customers
and suppliers of Seller in connection with the transactions contemplated by this
Agreement except with the prior written consent of Seller, which consent will
not unreasonably be withheld.
4.6 TITLE EXAMINATION.
(a) TITLE EVIDENCE. Buyer shall, at its expense, obtain, at least
20 days prior to Closing, a commitment for a title insurance policy reasonably
acceptable to Buyer with respect to the Owned Real Property. Such title
insurance policy shall be issued by Chicago Title Insurance Company or another
title insurance company acceptable to Seller and Buyer (the "Title Company")
covering such properties in the amount set forth opposite each such Owned Real
Property on the Disclosure Schedule referencing Section 2.10. Such commitment
for title insurance shall show that fee simple estate for each such Owned Real
Property is vested in Seller (and will be vested in Buyer as of the Closing
Date), and that each such Owned Real Property has access to open public streets
and that Seller has the legal right to use all parking, driveway
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and access facilities required for operation of the facilities of Seller located
at such locations and such other endorsements as Buyer may reasonably require.
The commitment shall commit to issue such title insurance policies to Buyer
which shall include ALTA extended coverage with all standard coverage exceptions
deleted so as to afford full extended form coverage with affirmative
endorsements to ensure the foregoing and that any covenants, conditions,
easements, restrictions and the like applicable thereto have not been violated.
(b) UCC SEARCHES. Buyer shall, at its expense, obtain reports of
UCC searches as to Seller, made of the Uniform Commercial Code records in the
Commonwealth of Pennsylvania, and federal and state tax lien searches as to
Seller for all business locations thereof. Buyer shall not have any obligation
to obtain any release for any liens disclosed in such search prior to Closing.
(c) SURVEYS. Buyer shall, at its expense, obtain a registered land
survey, certified to a current date in favor of Buyer and the Title Company,
showing the boundaries and monuments of the tracts or parcels of the Owned Real
Property together with the location of all existing and proposed buildings,
improvements, easements (identified by document number), roadways and utilities,
including but not limited to those shown on the title insurance commitments
referred to in this Section 4.6. Such survey shall show the coincidence of
common or shared boundary lines of particular tracts or parcels with no gaps or
overlaps and shall show all tracts or parcels to be free from encroachments onto
or from adjoining tracts or parcels. The legal description of the tracts or
parcels so surveyed shall be set forth on said survey and shall be identical
with the legal description set forth on the Disclosure Schedule.
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(d) TITLE POLICY. Buyer shall, at its expense, obtain at Closing
the title insurance policies to be issued by the Title Company pursuant to the
title commitment referenced above (or a suitably marked up title commitment
initiated by the Title Company undertaking promptly to issue such title policy).
4.7 ENVIRONMENTAL MATTERS. To the extent not completed prior to the
date hereof:
(a) BUYER'S ACCESS. Seller shall cooperate with Buyer and its
representatives and agents in their efforts to produce an environmental
assessment of the Real Property and/or an environmental audit of the Business.
Seller shall allow Buyer and its representatives and agents access to the Real
Property, at all reasonable times prior to Closing upon reasonable prior notice
and without charge, for the purpose of conducting such inspections, reviews,
inventories, observations, tests, analyses, examinations and investigations as
Buyer may desire, subject to the conditions and limitations set forth in this
Agreement (including, without limitation, a Phase I audit and if requested by
Buyer as a result of the identification by such Phase I audit of the likely
presence of Materials of Environmental Concern and reasonably approved by
Seller, Phase II soil borings and tests, chemical tests and the installation of
monitoring wells). At all reasonable times before Closing, on written request,
Seller shall allow Buyer and its designated representatives and agents access to
all plans and specifications for improvements on the Real Property, if any, and
all current and historical maintenance records, licenses, permits, reports,
certificates, correspondence with governmental authorities or other items
relating to the construction, operation or environmental assessment of the Real
Property and/or the environmental audit of Seller for the purposes of reviewing
and making photocopies (or other reproductions) of the same. To the extent that
such items are not reasonably reproducible by
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mechanical means, Seller shall make the nonreproductible items available for
inspection by Buyer or its designated representatives or agents at Seller's
executive offices or at such other location as may be mutually acceptable. On
request, Seller shall make reasonably available, for the purpose of interviews
with Buyer and its designated representatives and agents, such employees and
representatives of Seller as may have knowledge useful in the environmental
assessment of the Real Property and/or the environmental audit of Seller.
(b) COST. Buyer shall pay the expense of performing a Phase I
environmental audit for the Real Property. If such Phase I audit recommends any
Phase II environmental testing (including, without limitation, soil borings,
soil samples and ground water samples) and such Phase II testing is approved by
Seller pursuant to paragraph (a) above, Buyer shall bear the expense of such
Phase II testing and preparing any written report in connection therewith. On
request, Buyer shall provide Seller with the work product resulting from the
activities of Buyer and its designated representatives under this paragraph.
4.8 CONSENTS AND APPROVALS. Seller shall, at its expense, obtain, or
cause to be obtained, those consents and approvals set forth on Schedule 4.8
attached hereto (the "Required Consents").
4.9 NO NEGOTIATIONS ETC. Until the earlier to occur of the Closing or
the termination of this Agreement pursuant to Article 7, neither Seller nor any
Affiliate of Seller shall, directly or indirectly, through any officer,
director, agent or otherwise, solicit, initiate or encourage submission of any
proposal or offer from any person or entity (including any of its or their
officers or employees) relating to any liquidation, dissolution,
recapitalization, merger, consolidation or acquisition or purchase of all or a
material portion of the Acquired Assets or the
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Business, or any equity interest in Seller (to the extent it would adversely
affect the ability of Seller to consummate the transactions contemplated by this
Agreement) or other similar transaction or business combination involving
Seller, the Acquired Assets or the Business, or participate in any negotiations
regarding or otherwise furnish information to, cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by any
other person or entity to do or seek any of the foregoing. Seller shall promptly
notify Buyer if any such proposal or offer, or any inquiry from or contact with
any person with respect thereto, is made and shall promptly provide Buyer with
such information regarding such proposal, offer, inquiry or contact as Buyer may
reasonably request.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligation of Buyer to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by Buyer) of the following conditions:
(a) Seller shall have obtained the Required Consents;
(b) the representations and warranties of Seller set forth in
Article II shall be true and correct at and as of the Closing Date as if made as
of the Closing Date, except (i) for changes contemplated or permitted by this
Agreement (including, without limitation, changes to the representations and
warranties set forth in Sections 2.1 and 2.2 of this Agreement to reflect
Seller's conversion to a limited liability company), (ii) for those
representations and warranties that address matters only as of a particular date
(which shall be true and correct as of such date,
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subject to clause (iii) below), and (iii) where the failure of the
representations and warranties to be true and correct would not reasonably be
expected to have a Business Material Adverse Effect (it being agreed that this
clause (iii) shall be inapplicable to any portion of a representation and
warranty which already contains a Business Material Adverse Effect
qualification);
(c) Seller shall have performed or complied in all material
respects with the agreements and covenants required to be performed or complied
with by it under this Agreement as of or prior to the Closing;
(d) Seller shall have delivered to Buyer a certificate to the
effect that each of the conditions specified in clauses (a) through (c) of this
Section 5.1 is satisfied in all respects;
(e) There shall not be threatened, instituted or pending any action
or proceeding, before any Governmental Entity (i) seeking to make illegal,
restrain or prohibit the consummation of the transactions contemplated hereby,
(ii) seeking to prohibit direct or indirect ownership or operation by Buyer of
all or a material portion of the Business or the Acquired Assets, or (iii)
seeking to invalidate or render unenforceable any material provision of this
Agreement;
(f) There shall not be any action taken, or any statute, rule,
regulation, judgment, order or injunction enacted, entered, enforced,
promulgated, issued or deemed applicable to the transactions contemplated hereby
by any Governmental Entity which would reasonably be expected to result,
directly or indirectly, in any of the consequences referred to in Section
5.1(e);
(g) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated;
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(h) Buyer shall have received all of the items required to be
delivered to it pursuant to Section 1.3(b);
(i) Between the date of this Agreement and the Closing Date, there
shall not have occurred any Business Material Adverse Effect, nor shall there
have been any change, event or condition that, with the passage of time, would
reasonably be expected to result in a Business Material Adverse Effect nor shall
any customer of the Business who accounted for more than five percent (5%) of
the revenue of the Business for the Business' prior fiscal year, have terminated
its relationship with or have notified Buyer, Seller or the Business of its
intention to terminate its relationship with, the Business as a result of the
announcement of this Agreement or the transactions contemplated hereby;
(j) Buyer shall have received a written opinion from Hale and Dorr
LLP, counsel for Seller, dated as of the Closing Date, addressed to Buyer and
satisfactory to Buyer's counsel, substantially in the form attached hereto as to
EXHIBIT D;
(k) Buyer shall have obtained, pursuant to the financing
commitments delivered to Buyer and made available to Seller on or before the
date of this Agreement, funds which will be in an amount sufficient and adequate
to finance the payment of the Purchase Price, and the reasonable working capital
requirements of the Business after the Closing; and
(l) all actions to be taken by Seller in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Buyer.
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5.2 CONDITIONS TO OBLIGATIONS OF SELLER. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the
satisfaction (or waiver by Seller) of the following conditions:
(a) Intentionally Omitted;
(b) the representations and warranties of Buyer set forth in
Article III shall be true and correct at and as of the Closing Date as if made
as of the Closing Date, except (i) for changes contemplated or permitted by this
Agreement, (ii) for those representations and warranties that address matters
only as of a particular date (which shall be true and correct as of such date,
subject to clause (iii) below), and (iii) where the failure of the
representations and warranties to be true and correct would not reasonably be
expected to have a Buyer Material Adverse Effect (it being agreed that this
clause (iii) shall be inapplicable to any portion of a representation and
warranty that already contains a Buyer Material Adverse Effect qualification);
(c) Buyer shall have performed or complied with in all material
respects its agreements and covenants required to be performed or complied with
by it under this Agreement as of or prior to the Closing;
(d) Buyer shall have delivered to Seller a certificate to the
effect that each of the conditions specified in clauses (b) and (c) of this
Section 5.2 is satisfied in all respects;
(e) no action, suit or proceeding shall be pending by or before any
Governmental Entity wherein an unfavorable judgment, order, decree, stipulation
or injunction would reasonably be expected to (i) prevent consummation of any of
the transactions contemplated by this
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Agreement or (ii) cause any of the transactions contemplated by this Agreement
to be rescinded following consummation, and no such judgment, order, decree,
stipulation or injunction shall be in effect;
(f) all applicable waiting periods (and any extensions thereof)
under the Hart-Scott-Rodino Act shall have expired or otherwise been terminated;
(g) Seller shall have received all of the items required to be
delivered to it pursuant to Section 1.3(b);
(h) Seller shall have received a written opinion from Dorsey &
Whitney LLP, counsel for the Buyer, dated as of the Closing Date, addressed to
Seller and satisfactory to Seller's counsel, substantially in the form attached
hereto as EXHIBIT E; and
(i) all actions to be taken by Buyer in connection with the
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the transactions
contemplated hereby shall be reasonably satisfactory in form and substance to
Seller.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION BY SELLER. Subject to the terms and conditions of
this Article VI, from and after the Closing, Seller shall indemnify in full
Buyer and its officers, directors, employees, agents and partners (collectively,
the "Buyer Indemnified Parties") in respect of, and defend and hold the Buyer
Indemnified Parties harmless from and against, any and all debts, obligations
and other liabilities, monetary damages, fines, fees, penalties, interest
obligations, deficiencies, losses, costs and expenses (including without
limitation reasonable attorneys' fee
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and expenses) (collectively, "Damages") whether or not actually paid prior to
the expiration of any indemnification obligation hereunder which any Buyer
Indemnified Party may suffer, sustain, incur or become subject to:
(a) resulting from, relating to or constituting any (i)
misrepresentation or breach of warranty of Seller contained in this Agreement or
the certificate of Seller delivered at the Closing pursuant to Section 5.1(d) or
(ii) failure to perform any covenant or agreement of Seller contained in this
Agreement; or
(b) resulting from, relating to or constituting Excluded
Liabilities or other liabilities for which this Agreement specifically provides
that Buyer has no responsibility.
Damages specifically include amounts claimed by third parties
prior to the expiration of the applicable indemnification obligation hereunder
whether or not any amounts are incurred by the indemnified parties in respect
thereof prior to the expiration of such indemnification obligation; provided
that the indemnified party shall have notified the indemnifying party with
reasonable specificity regarding the nature of such claim.
6.2 INDEMNIFICATION BY BUYER. Subject to the terms and conditions of
this Article VI, from and after the Closing, Buyer shall indemnify Seller in
respect of, and hold Seller harmless against, any and all Damages incurred or
suffered by Seller or any Affiliate thereof:
(a) resulting from, relating to or constituting (i) any
misrepresentation, breach of warranty of Buyer contained in this Agreement or
the certificate of Buyer delivered at the Closing pursuant to Section 5.2(d) or
(ii) failure to perform any covenant or agreement of Buyer contained in this
Agreement;
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(b) resulting from, relating to or constituting the conduct of the
business or operations of the Business from and after the Closing;
(c) resulting from or relating to Buyer's 401(k) Plan following the
completion of the transfer of assets and liabilities from Seller's 401(k) Plan
(as defined in Section 10.7(c)) pursuant to Section 10.7(c) (except for any
Damages resulting from Seller's actions or omissions); or
(d) resulting from, relating to or constituting Assumed Liabilities
or other liabilities for which this Agreement specifically provides that Seller
has no responsibility.
6.3 CLAIMS FOR INDEMNIFICATION.
(a) THIRD-PARTY CLAIMS. All claims for indemnification made under
this Agreement resulting from, related to or arising out of a third-party claim
against an Indemnified Party (as defined below) shall be made in accordance with
the following procedures. A person entitled to indemnification under this
Article VI (an "INDEMNIFIED PARTY") shall give prompt (but in all events, at
least five business days prior to the date that an answer to any such claim is
due to be filed) written notification to the person from whom indemnification is
sought (the "INDEMNIFYING PARTY") of the commencement of any action, suit or
proceeding relating to a third-party claim for which indemnification may be
sought or, if earlier, upon the assertion of any such claim by a third party.
Within 30 days after delivery of such notification, the Indemnifying Party may,
upon written notice thereof to the Indemnified Party, assume control of the
defense of such action, suit, proceeding or claim with counsel reasonably
satisfactory to the Indemnified Party. If the Indemnifying Party does not assume
control of such defense, the Indemnified Party shall control such defense. The
Party not controlling such defense may participate therein at its own
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expense; provided that if the Indemnifying Party assumes control of such defense
and the Indemnified Party reasonably concludes, based on advice from counsel,
that the Indemnifying Party and the Indemnified Party have conflicting interests
with respect to such action, suit, proceeding or claim, the reasonable fees and
expenses of counsel to the Indemnified Party solely in connection therewith
shall be considered "DAMAGES" for purposes of this Agreement; provided, however,
that in no event shall the Indemnifying Party be responsible for the fees and
expenses of more than one counsel for all Indemnified Parties. The Party
controlling such defense shall keep the other Party advised of the status of
such action, suit, proceeding or claim and the defense thereof and shall
consider recommendations made by the other Party with respect thereto. The
Indemnified Party shall not agree to any settlement of such action, suit,
proceeding or claim without the prior written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld or delayed. The Indemnifying
Party shall not agree to any settlement of such action, suit, proceeding or
claim that does not include a complete release of the Indemnified Party from all
liability with respect thereto or that imposes any liability or obligation on
the Indemnified Party without the prior written consent of the Indemnified
Party, which shall not be unreasonably withheld, conditioned or delayed.
(b) PROCEDURE FOR OTHER CLAIMS. An Indemnified Party wishing to
assert a claim for indemnification under this Article VI which is not subject to
Section 6.3(a) shall deliver to the Indemnifying Party a written notice (a
"CLAIM NOTICE") which contains (i) a description and the amount, if known (the
"CLAIMED AMOUNT") of any Damages incurred by the Indemnified Party, (ii) a
statement that the Indemnified Party is entitled to indemnification under this
Article VI and a reasonable explanation of the basis therefor, and (iii) a
demand for payment
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in the amount of such Damages. Within 30 days after delivery of a Claim Notice,
the Indemnifying Party shall deliver to the Indemnified Party a written response
in which the Indemnifying Party shall: (I) agree that the Indemnified Party is
entitled to receive all of the Claimed Amount (in which case such response shall
be accompanied by a payment by the Indemnifying Party to the Indemnified Party
of the Claimed Amount, by check or by wire transfer), (II) agree that the
Indemnified Party is entitled to receive part, but not all, of the Claimed
Amount (the "AGREED AMOUNT") (in which case such response shall be accompanied
by a payment by the Indemnifying Party to the Indemnified Party of the Agreed
Amount, by check or by wire transfer), or (III) contest that the Indemnified
Party is entitled to receive any of the Claimed Amount. If the Indemnifying
Party in such response contests the payment of all or part of the Claimed
Amount, the Indemnifying Party and the Indemnified Party shall use good faith
efforts to resolve such dispute. If such dispute is not resolved within 60 days
following the delivery by the Indemnifying Party of such response, the
Indemnifying Party and the Indemnified Party shall each have the right to submit
such dispute to binding arbitration in New York, New York. All claims shall be
settled by three arbitrators in accordance with the Commercial Arbitration Rules
then in effect of the American Arbitration Association ("AAA Rules"). The
Indemnifying Party and the Indemnified Party shall each designate one arbitrator
within the earlier to occur of (i) 30 days after the delivery of the
Indemnifying Party's notice contesting the Claimed Amount, and (ii) 15 days
after receipt of a proposed list of arbitrators from the American Arbitration
Association. The Indemnifying Party and the Indemnified Party shall cause such
designated arbitrators mutually to agree upon and designate a third arbitrator;
provided, however, that (i) failing such agreement within 45 days of delivery of
the
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Indemnifying Party's response contesting the Claimed Amount, the third
arbitrator shall be appointed in accordance with the AAA Rules and (ii) if
either the Indemnifying Party or the Indemnified Party fail to timely designate
an arbitrator, the dispute shall be resolved by the one arbitrator timely
designated. The Indemnifying Party and the Indemnified Party shall pay the fees
and expenses of their respectively designated arbitrators and shall bear equally
the fees and expenses of the third arbitrator. The Indemnifying Party and the
Indemnified Party shall cause the arbitrators to decide the matter to be
arbitrated pursuant hereto within 60 days after the appointment of the last
arbitrator. The arbitrators' decision shall relate solely to whether the
Indemnified Party is entitled to receive the Claimed Amount (or a portion
thereof) pursuant to the applicable terms of this Agreement. The final decision
of the arbitrator, or a majority of the arbitrators in the case of three
arbitrators, shall be furnished to the Indemnifying Party and the Indemnified
Party in writing and shall constitute a conclusive determination of the issue in
question, binding upon the Indemnifying Party and the Indemnified Party, and
shall not be contested by any of them. Such decision may be used in a court of
law only for the purpose of seeking enforcement of the arbitrators' award.
6.4 SURVIVAL.
(a) The representations and warranties of Seller and Buyer set
forth in this Agreement shall survive the Closing and the consummation of the
transactions contemplated hereby and continue until midnight on that day which
is 545 days after the Closing Date, at which time they shall expire.
Notwithstanding the foregoing, (i) the representations and warranties of Seller
contained in Sections 2.1 and 2.2 and the first sentence of Section 2.9 and of
Buyer contained in Sections 3.1 and 3.2 shall survive the Closing and the
consummation of the
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transactions contemplated hereby without limitation, (ii) the representations
and warranties of Seller contained in Section 2.15 to the extent they relate to
Tax matters shall survive until the expiration of the applicable statute of
limitations, and (iii) the representations and warranties of Seller contained in
Sections 2.8 and 2.16 shall expire upon the occurrence of the Closing.
(b) Any valid claim that is properly asserted in writing pursuant
to Section 6.3 prior to the expiration as provided in Section 6.4(a) of the
representation or warranty that is the basis for such claim shall survive until
such claim is finally resolved and satisfied.
6.5 LIMITATIONS.
(a) Except with respect to claims based on actual fraud or made
pursuant to Article VIII or Article IX, the rights of the Indemnified Parties
under this Article VI shall be the sole and exclusive remedies of the
Indemnified Parties and their respective Affiliates with respect to claims
resulting from or relating to any misrepresentation, breach of warranty or
failure to perform any covenant or agreement contained in this Agreement or
otherwise relating to the transactions that are the subject of this Agreement.
The rights of the Parties under Article VIII shall be the sole and exclusive
remedy of the Parties with respect to the subject matter of Article VIII. The
rights of the Parties under Article IX shall be the sole and exclusive remedy of
the Parties with respect to the subject matter of Article IX. Without limiting
the generality of the foregoing three sentences, in no event (other than actual
fraud where damages would not be an adequate remedy) shall Buyer, its successors
or permitted assigns be entitled to claim or seek rescission of the transactions
consummated under this Agreement.
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(b) Notwithstanding anything to the contrary contained in this
Agreement, each of the following four limitations shall apply to the respective
obligation of the parties pursuant to Sections 6.1, 6.2, 8.2 and 8.4:
(i) the aggregate liability of each of Buyer and Seller for the
sum of all Damages under this Article VI and Article VIII shall not exceed an
amount equal to $10,000,000; (
ii) no individual claim or series of related claims for
indemnification under Sections 6.1(a)(i), 6.2(a)(i), 8.2(a)(i) or 8.2(a)(ii)
shall be valid and assertable unless it is (or they are) for an amount in excess
of $5,000;
(iii) Seller shall only be liable for that portion of the sum
of (A) Damages under clause (a)(i) of Section 6.1, (B) Damages under clauses
(a)(i) and (ii) of Section 8.2, and (iii) Damages in excess of $250,000 under
clause (a)(iii) of Section 8.2 which, in the case of (A), (B), and (C), exceeds
an aggregate amount of $1,500,000 (the "Basket") (it being understood that
Seller shall not be liable, in any event, for the first $1,500,000 of said
Damages);
(iv) Buyer shall be liable under clause (a)(i) of Section 6.2
and under 8.4(a) for only that portion of the aggregate Damages under clause
(a)(i) of Section 6.2 and Section 8.4(a) which exceeds $1,500,000 (it being
understood that Buyer shall not be liable, in any event, for the first
$1,500,000 of said Damages); and
(v) the amount of any Damages for which indemnification is
provided under this Article and Articles VIII and IX shall be calculated net of
any associated accruals or reserves reflected on the books of the Business as of
the Closing Date; PROVIDED, HOWEVER, that
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the foregoing limitations in clauses (ii), (iii) and (iv) above shall not apply
to a claim described in paragraph (b) of Section 6.1 or paragraphs (b) through
(d) of Section 6.2.
(c) Except as provided in clause (iii) of Section 8.4(a), in no
event shall any Indemnifying Party be responsible and liable for any Damages or
other amounts under this Article VI or under Article VIII that are
consequential, in the nature of lost profits, diminution in value, damage to
reputation or the like, special or punitive or otherwise not actual Damages.
(d) Seller shall not have any right of contribution against the
Business with respect to any breach by Seller of any of its representations,
warranties, covenants or agreements.
(e) The amount of any Damages for which indemnification is provided
under this Article VI or under Article VIII shall be reduced by any related
recoveries which the Indemnified Party has received under insurance policies or
other related payments received from third parties and any Tax benefits actually
received by the Indemnified Party or any of its Affiliates.
6.6 RELIANCE ON REPRESENTATIONS AND WARRANTIES. Buyer agrees that to
the extent Buyer, on or prior to the Closing Date, has received information that
a representation or warranty of Seller is untrue or incorrect in any respect,
such that Buyer understands, or would reasonably be expected to understand, that
such untruth or inaccuracy has resulted in a Business Material Adverse Effect
having occurred or would reasonably be expected to result in a Business Material
Adverse Effect occurring, Buyer shall have no rights under Articles VI by reason
of such untruth or inaccuracy.
6.7 TREATMENT OF INDEMNIFICATION PAYMENTS. All indemnification payments
made under this Agreement shall be treated by the Parties as an adjustment to
the Purchase Price.
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ARTICLE VII
TERMINATION
7.1 TERMINATION OF AGREEMENT. The Parties may terminate this Agreement
prior to the Closing as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) Buyer may terminate this Agreement by giving written notice to
Seller, or Seller may terminate this Agreement by giving written notice to
Buyer, in each case, if the other Party is in material breach of a covenant or
agreement of such Party hereunder or in the event any representation or warranty
of such other Party ceases to be accurate in all material respects, and such
representation or warranty is not rendered accurate or such breach is not
remedied within ten days of delivery of written notice thereof by the Party
seeking to terminate this Agreement to the other Party;
(c) Buyer may terminate this Agreement by giving written notice to
Seller if the Closing shall not have occurred on or before September 15, 2000 by
reason of the failure of any condition precedent under Section 5.1 hereof
(unless the failure results primarily from a breach by Buyer of any
representation, warranty, covenant or agreement contained in this Agreement);
and
(d) Seller may terminate this Agreement by giving written notice to
Buyer if the Closing shall not have occurred on or before September 15, 2000 by
reason of the failure of any condition precedent under Section 5.2 hereof
(unless the failure results primarily from a
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breach by Seller of any representation, warranty, covenant or agreement
contained in this Agreement).
7.2 EFFECT OF TERMINATION.
(a) Except as set forth in Section 7.2 (b), if any Party terminates
this Agreement pursuant to Section 7.1, all obligations of the Parties hereunder
shall terminate without any liability of any Party to the other Parties.
(b) Termination of this Agreement pursuant to clause (b) of Section
7.1 by reason of a breach prior to the time of such termination of any covenant
or agreement contained in this Agreement (but not by reason of a breach of any
representation and warranty) shall not relieve a defaulting or breaching Party
(whether or not it is the terminating Party) from any liability to the other
Parties. In addition, if such termination is by Seller, then Goldner, Hawn,
Johnson & Morrison Incorporated shall pay all reasonable and documented
out-of-pocket expenses incurred by Seller in connection with the transactions
contemplated by this Agreement (i.e., fees and expenses of outside legal counsel
and other experts, travel and similar expenses only).
(c) Notwithstanding any other provision contained in this Agreement
to the contrary, the Confidentiality Agreement shall survive the termination of
this Agreement for any reason.
ARTICLE VIII
ENVIRONMENTAL MATTERS
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8.1 DEFINITIONS. For purposes of this Agreement, the following terms
have the meanings provided below.
(a) "RESPONSE COSTS" means all "response costs" under CERCLA and
all costs recoverable pursuant to any other Environmental Law.
(b) "DAMAGES" has the meaning assigned to that term under Section
6.1 and, for purposes of this Article VIII, shall include Response Costs.
(c) "DEVELOP" and "DEVELOPMENT" mean (i) the construction,
substantial reconstruction, refurbishment, renovation, or modification, or
relocation or enlargement of any building or structure; any change in use of any
building or land or any change in zoning or government land use approval, (ii)
any extension of any use of land, or (iii) any clearing, grading or other
movement of land.
(d) "NATURAL RESOURCES DAMAGES" means "damages" to "natural
resources," as those terms are defined under CERCLA or analogous state and
provincial laws.
8.2 ENVIRONMENTAL INDEMNIFICATION BY SELLER.
(a) Subject to the terms and conditions of this Article VIII, with
respect to any claim properly asserted in writing by Buyer prior to the second
anniversary of the Closing Date, Seller shall indemnify Buyer in respect of, and
hold Buyer harmless against:
(i) any Damages incurred or suffered by the Buyer Indemnified
Parties as a result of any failure by Seller to comply with any applicable
Environmental Law prior to the Closing Date in connection with the Business;
PROVIDED THAT such Damages result directly from (A) compliance by Buyer or any
Affiliate thereof with an order or other enforceable directive issued by a
Governmental Entity or by a court in a proceeding commenced
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by a Governmental Entity which establishes a mandatory obligation to rectify
such failure to comply with applicable Environmental Law, (B) the mandatory
obligation of the Business or any Affiliate of Buyer to pay a fine or penalty
which is imposed by a Governmental Entity or a court in a proceeding commenced
by a Governmental Entity as a result of such failure to comply with applicable
Environmental Law, or (C) the mandatory obligation under Environmental Law of
the Business, the Buyer or any Affiliate of Buyer to remediate such
non-compliance to the minimum level necessary to satisfy the responsible
Governmental Entity in order to meet the cleanup criteria applicable to the
activities of the Business, as and where conducted at the Business Property on
the Closing Date;
(ii) any Damages incurred or suffered by the Buyer Indemnified
Parties as a result of any Off-Site Liabilities, claims under Environmental
Laws, Environmental Matters or Release of Materials of Environmental Concern to
the Environment in connection with the Business that occurred prior to the
Closing Date; and
(iii) any Damages (including the reasonable costs incurred for
environmental consultants) incurred or suffered by the Buyer Indemnified Parties
as a result of actions necessary to obtain a determination from the applicable
state Governmental Entity that no further remedial actions are necessary in
order to address contamination in groundwater, as indicated by the groundwater
analytical data identified in Section 2.16 of the Disclosure Schedule.
(b) Buyer shall give prompt written notification to Seller of the
commencement of any action, suit or proceeding for which indemnification under
this Section 8.2 may be sought or, if earlier, upon the assertion of any claim
or commencement of any inquiry
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for which indemnification under this Section 8.2 may be sought, whereupon,
except for claims arising under Section 8.2(a)(iii), Seller shall assume
exclusive control of the defense and settlement of such action, suit,
proceeding, claim or inquiry. Without limiting the generality of the foregoing
and except as expressly provided in this Article VIII, if a mandatory obligation
of the kind specified in Section 8.2(a) exists: (i) Seller shall determine,
control and undertake the actions to be taken in order to comply with or satisfy
such mandatory obligation and (ii) Buyer shall be provided reasonable notice and
opportunity to comment (at its own cost and expense) upon Seller's plans for
addressing such mandatory obligation.
(c) In addition to the agreements of the Parties set forth in
Section 10.1, Buyer shall, and shall cause its Affiliates to, reasonably
cooperate with Seller (as Seller may reasonably direct) in connection with the
prosecution, defense, settlement or performance of Seller's agreements in this
Section 8.2.
8.3 LIMITATIONS.
(a) The provisions of Section 6.5 are applicable to this
Article VIII.
(b) Intentionally Omitted.
(c) Seller shall have no liability under Sections 8.2(a) or
8.2(b) for any Damages in any way arising out of or related to an actual or
proposed Development at a Business Property after the Closing, provided,
however, this subparagraph (c) shall not limit any Indemnification Obligations
of the Seller under Article VIII that arose before Seller acted with respect to
any Development or proposed Development, to the extent, and only to the extent
any Damages suffered by Buyer is not increased by such Development or proposed
Development.
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(d) Buyer shall not be entitled to indemnification under this
Article VIII if a mandatory obligation arises as a result of Buyer's voluntary
disclosure to a third party (other than an Affiliate of Buyer) of information or
data, except to the extent that it would be unlawful not to provide such
information to that third party. The limitation contained in this paragraph
8.3(d) shall not apply to any disclosure to a state Governmental Entity in
connection with Buyer's actions pursuant to Section 8.2(a)(iii).
(e) This Article VIII shall be the sole and exclusive remedy
of (i) Buyer and its Affiliates against Seller or any of its Affiliates, and
their respective present or former officers, directors and employees, agents,
attorneys or contractors, and (ii) Seller and its Affiliates against Buyer or
any of its Affiliates, and their respective present or former officers,
directors and employee, agents, attorneys or contractors, for any and all
claims, Damages or other matters related directly or indirectly to the Business
and which arise under Environmental Laws, or with respect to Materials of
Environmental Concern.
(f) Buyer and Seller hereby waive (and shall cause their
respective Affiliates and the respective successors and assigns of Buyer, Seller
and their respective Affiliates to waive) any right to seek contribution or
other recovery from each other or their respective Affiliates or any present or
former officer, director or employee, agent attorney or contractor of Buyer,
Seller or any of their respective subsidiaries with respect to events related
directly or indirectly to the Business prior to the Closing that Buyer and its
Affiliates or any of them may now or in the future have under any Environmental
Law providing for any remedy or right of recovery with respect to Environmental
Matters or Materials of Environmental Concern other than as expressly provided
for in this Article VIII. Buyer and Seller hereby release (and shall
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cause their respective Affiliates and the respective successors and assigns of
Buyer, Seller and their respective Affiliates to release) each other and their
respective Affiliates and all present or former officers, directors and
employees, agents, attorneys or contractors of Buyer, Seller or any of their
respective subsidiaries from any and all such claims, demands and causes of
action.
8.4 ENVIRONMENTAL INDEMNIFICATION BY BUYER.
(a) Except as otherwise specifically provided in this Article
VIII, Buyer shall indemnify Seller and its Affiliates in respect of, and hold
Seller and its Affiliates harmless against, any and all Damages arising from or
related to (i) Off-Site Liabilities, including, without limitation, any Natural
Resources Damages; (ii) all claims under Environmental Law arising from or
related to alleged or actual exposures of employees or third parties to
Materials of Environmental Concern; (iii) diminution in property values or other
property damage claims arising from any Releases of Materials of Environmental
Concern; and (iv) all other Environmental Matters, in each case, related to
Buyer's operation of the Business after the Closing Date.
(b) The procedures set forth in Section 6.3 shall apply with
respect to any claim for indemnification made by Seller or its Affiliates
pursuant to this Article VIII.
ARTICLE IX
TAX MATTERS
9.1 PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF TAXES.
(a) Seller shall be responsible for the preparation and filing
of all Tax Returns for Seller for all periods as to which Tax Returns are due
after the Closing Date (including the consolidated, unitary and combined Tax
Returns for Seller which include the operations of the
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Business for any period ending on or before the Closing Date). Seller shall make
or cause to be made all payments required with respect to any such Tax Returns.
Buyer shall promptly reimburse Seller for the amount of any such Taxes paid by
Seller to the extent such Taxes are attributable (as determined under Section
9.2 hereof) to periods following the Closing Date.
(b) Buyer shall be responsible for the preparation and filing
of all other Tax Returns for the Business. Buyer shall make all payments
required with respect to any such Tax Returns; provided, however, that Seller
shall promptly reimburse Buyer to the extent any payment Buyer is required to
make relates to the operations of the Business for any period ending (or deemed
pursuant to Section 9.2(b) to end) on or before the Closing Date.
(c) Any Tax Return to be prepared and filed for taxable
periods beginning before the Closing Date and ending after the Closing Date
shall be prepared on a basis consistent with the last previous Tax Return, and
Buyer shall consult with Seller concerning each such Tax Return and report all
items with respect to the period ending on the Closing Date consistent with the
past practices of the Business; provided, however, that subject to the
provisions of Section 9.4 hereof, if the Buyer is advised by counsel that the
filing of any Tax Return and the reporting on such Tax Return of any item in
accordance with the past practices of the Business would be likely to subject
Buyer to any penalties or fines, Buyer may file such Tax Return without regard
to such past practices to the extent required to avoid such penalties and fines.
Buyer shall provide Seller with a copy of each proposed Tax Return (and such
additional information regarding such Tax Return as may reasonably be requested
by Seller) at least 20 days prior to the filing of such Tax Return.
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(d) Buyer and Seller shall each be responsible for the payment
of one-half of any transfer, sales, use, stamp, conveyance, value added,
recording, registration, documentary, filing and other non-income Taxes arising
in connection with the consummation of the transactions contemplated by this
Agreement.
9.2 ALLOCATION OF CERTAIN TAXES.
(a) Buyer and Seller agree that if Seller is permitted but not
required under applicable foreign, state or local Tax laws to treat the Closing
Date as the last day of a taxable period, Buyer and Seller shall treat such day
as the last day of a taxable period. Buyer and Seller agree that for purposes of
the allocation of Taxes they will treat the Business as if it ceased to be owned
by Seller as of the close of business on the Closing Date.
(b) Any Taxes for a taxable period beginning before the
Closing Date and ending after the Closing Date with respect to the Business
shall be paid by Buyer, and the Taxes for such period shall be apportioned for
purposes of Section 9.1 between Seller and Buyer based on the actual operations
of the Business during the portion of such period ending on the Closing Date and
the portion of such period beginning on the day following the Closing Date, and
for purposes of the provisions of Section 9.1 and 9.3, each portion of such
period shall be deemed to be a taxable period (whether or not it is in fact a
taxable period).
9.3 REFUNDS AND CARRYBACKS.
(a) Seller shall be entitled to any refunds (including any
interest paid thereon) or credits of Taxes attributable to taxable periods
ending (or deemed pursuant to Section 9.2(b) to end) on or before the Closing
Date.
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(b) Buyer and/or its Affiliates, as the case may be, shall be
entitled to any refunds (including any interest paid thereon) or credits of
Taxes attributable to taxable periods beginning (or deemed pursuant to Section
9.2(b) to begin) after the Closing Date.
(c) Buyer shall forward to or reimburse Seller for any refunds
(including any interest paid thereon) or credits due Seller after receipt
thereof, and Seller shall promptly forward to Buyer or reimburse Buyer for any
refunds (including any interest paid thereon) or credits due Buyer after receipt
thereof.
9.4 COOPERATION ON TAX MATTERS; TAX AUDITS.
(a) Buyer and Seller and their respective Affiliates shall
cooperate in the preparation of all Tax Returns for any Tax periods for which
one Party could reasonably require the assistance of the other Party in
obtaining any necessary information. Such cooperation shall include, but not be
limited to, furnishing prior years' Tax Returns or return preparation packages
to the extent related to the Business illustrating previous reporting practices
or containing historical information relevant to the preparation of such Tax
Returns, and furnishing such other information within such Party's possession
requested by the Party filing such Tax Returns as is relevant to their
preparation. Such cooperation and information also shall include without
limitation provision of powers of attorney for the purpose of signing Tax
Returns and defending audits and promptly forwarding copies of appropriate
notices and forms or other communications received from or sent to any
applicable governmental authority responsible for the imposition of Taxes (the
"TAXING AUTHORITY") which relate to the Business, and providing copies of all
relevant Tax Returns to the extent related to the Business, together with
accompanying schedules and related workpapers, documents relating to rulings or
other determinations by any Taxing
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Authority and records concerning the ownership and Tax basis of property, which
the requested Party may possess. Buyer and Seller and their respective
Affiliates shall make their respective employees and facilities available on a
mutually convenient basis to explain any documents or information provided
hereunder.
(b) Seller shall have the right, at its own expense, to
control any audit or examination by any Taxing Authority ("TAX AUDIT"), initiate
any claim for refund, contest, resolve and defend against any assessment, notice
of deficiency, or other adjustment or proposed adjustment relating to any and
all Taxes for any taxable period ending on or before the Closing Date with
respect to the Business. Buyer shall have the right, at its own expense, to
control any other Tax Audit, initiate any other claim for refund, and contest,
resolve and defend against any other assessment, notice of deficiency, or other
adjustment or proposed adjustment relating to Taxes with respect to the
Business; provided that, with respect to (i) any state, local or foreign Taxes
for any taxable period beginning before the Closing Date and ending after the
Closing Date and (ii) any item the adjustment of which may cause Seller to
become obligated to make any payment pursuant to Section 9.1(a) hereof, Buyer
shall consult with Seller with respect to the resolution of any issue that would
affect Seller, and not settle any such issue, or file any amended Tax Return
relating to such issue, without the consent of Seller. Where consent to a
settlement is withheld by Seller pursuant to this Section, Seller may continue
or initiate any further proceedings at its own expense, provided that any
liability of Buyer, after giving effect to this Agreement, shall not exceed the
liability that would have resulted had Seller not withheld its consent.
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9.5 TERMINATION OF TAX SHARING AGREEMENTS. All Tax sharing
agreements or similar arrangements with respect to or involving the Business
(other than as set forth in this Article IX) shall be terminated prior to the
Closing Date and, after the Closing Date, Buyer and its Affiliates shall not be
bound thereby or have any liability thereunder for amounts due in respect of
periods ending on or before the Closing Date.
ARTICLE X
FURTHER AGREEMENTS
10.1 ACCESS TO INFORMATION; RECORD RETENTION; COOPERATION.
(a) ACCESS TO INFORMATION. Subject to compliance with
applicable laws and regulations regarding classified information and security
clearance, following the Closing, each Party shall afford to the other Party and
to the other Party's Affiliates, authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable efforts
to give access to third parties possessing information and providing reasonable
access to its own employees who are in possession of relevant information) and
duplicating rights during normal business hours in a manner so as not to
interfere unreasonably with the conduct of business to all non-privileged
records, books, contracts, instruments, documents, correspondence, computer data
and other data and information (collectively, "INFORMATION") within the
possession or control of such Party or its Affiliates, relating to the Business
prior to the Closing, insofar as such access is reasonably required by the other
Party. Information may be requested under this Section 10.1(a) for, without
limitation, financial reporting and accounting matters, preparing financial
statements, preparing and filing of any Tax Returns, prosecuting any
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claims for refund, defending any Tax claims or assessment, preparing securities
law or exchange filings, prosecuting, defending or settling any litigation,
Environmental Matter or insurance claim, performing this Agreement and the
transactions contemplated hereby, and all other proper business purposes.
(b) ACCESS TO PERSONNEL. Following the Closing, each Party
shall use reasonable efforts to make available to the other Party, upon written
request, such Party's and its Affiliates' officers, directors, employees and
agents to the extent that such persons may reasonably be required in connection
with any legal, administrative or other proceedings in which the requesting
Party may from time to time be involved relating to the Business prior to the
Closing or for any other matter referred to in Section 10.1(a).
(c) REIMBURSEMENT. A Party providing Information or personnel
to another Party under Section 10.1(a) or (b) shall be entitled to receive from
the recipient, upon the presentation of invoices therefor, payments for such
amounts, relating to supplies, disbursements and other out-of-pocket expenses,
as may reasonably be incurred in providing such Information; PROVIDED, HOWEVER,
that no such reimbursements shall be required for the salary or cost of fringe
benefits or similar expenses pertaining to employees or directors of the
providing Party or its Affiliates.
(d) RETENTION OF RECORDS. Except as otherwise required by law
or agreed to in writing by the Parties, each Party shall (and shall cause its
Affiliates to) use reasonable efforts to preserve all Information in its
possession pertaining to the Business prior to the Closing until December 31,
2007. Notwithstanding the foregoing, in lieu of retaining any specific
Information, any Party may offer in writing to the other Party to deliver such
Information to the
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other Party and, if such offer is not accepted within 90 days, the offered
Information may be disposed of at any time.
(e) PREPARATION OF SELLER FINANCIAL STATEMENTS. Following the
Closing, Buyer shall cause the Business to prepare and provide to Seller and its
Affiliates all information relating to the Business reasonably required for
Seller and its Affiliates to prepare the financial statements of Seller and its
Affiliates for all fiscal periods within the fiscal year ending March 31, 2001.
During the period of preparation of the audited accounts of Seller, Buyer shall
use reasonable efforts to provide Seller (and its auditors) with reasonable
access, upon prior written notice, during normal business hours and so as not to
interfere unreasonably with the operation of the Business, to the Business, its
financial management, including the financial directors of the Business and any
accountant's work papers, and their books, accounts and records and will be able
to review the work being carried out in accordance with this Section.
(f) CONFIDENTIALITY. Each of Buyer and Seller shall hold, and
shall use reasonable efforts to cause its Affiliates, consultants and advisors
to hold, in strict confidence all Information concerning the other furnished to
it by the other Party or the other Party's representatives at any time prior to
Closing or pursuant to this Section 10.1 (except to the extent that such
Information (i) is or becomes generally available to the public other than as a
result of a disclosure by the receiving Party in violation of the terms of this
Section 10.1, (ii) is or becomes available to the receiving Party from a source
other than the other Party, provided that such source is not, to the knowledge
of the receiving Party at the time of receipt, bound by a confidentiality
agreement with or other contractual, legal or fiduciary obligation of
confidentiality to the other Party or any other party with respect to such
information, or (iii) was
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or is independently developed by the receiving Party after Closing without
utilizing any Information or violating any of the receiving Party's obligations
under this Agreement), and each Party shall not release or disclose such
Information to any other person, except its auditors, attorneys, financial
advisors, bankers and other consultants and advisors, unless compelled to
disclose such Information by judicial or administrative process or by other
requirements of law or so as not to violate the rules of any stock exchange;
PROVIDED, HOWEVER, that in the case of disclosure compelled by judicial or
administrative process, the disclosing Party shall (to the extent permitted by
applicable law) notify the non-disclosing party promptly of the request or
requirement so that the non-disclosing party may seek an appropriate protective
order or waive compliance with the provisions of this Section 10.1(f). If, in
the absence of a protective order or the receipt of a waiver hereunder, a Party
is compelled to disclose any Information by judicial or administrative process,
such Party may so disclose the Information; provided, however, that, at the
written request of the non-disclosing Party, the disclosing party shall use
commercially reasonable efforts to obtain, at the expense of the non-disclosing
Party, an order or other assurance that confidential treatment will be accorded
to such portion of the Information required to be disclosed.
10.2 COVENANT NOT TO COMPETE. During the period commencing on the
Closing Date and continuing until the third anniversary of the Closing Date (the
"Noncompetition Period"), Seller shall not (and shall cause each Noncompetition
Party (as defined below) not to), directly or indirectly (including, without
limitation, through third parties) own, manage, operate, control, conduct,
solicit, invest in, lend money to, render services to (other than administrative
services that are unrelated to the primary function of the business such as,
without limitation, payroll,
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janitorial and child care), act as agent for, acquire or hold any interest
whatsoever in (except as otherwise permitted below), any business in competition
with the business activities conducted by the Business on the Closing Date (a
"Competitive Business"); provided, however, that the foregoing covenants shall
not prohibit, or be interpreted as prohibiting, any Noncompetition Party from:
(a) continuing anywhere in the world in any type of business
conducted by any Noncompetition Party on the date hereof, which is not part of
the Business;
(b) entering into any relationship with a person or entity not
owned, managed, operated or controlled by any Noncompetition Party for purposes
primarily unrelated to a Competitive Business;
(c) making equity investments in publicly owned companies
which conduct a Competitive Business, provided such investments do not confer
control of any such Competitive Business upon any Noncompetition Party; or
(d) acquiring any person or entity which conducts a
Competitive Business if either:
(i) in the calendar year prior to such acquisition,
the revenues of such person or entity from its Competitive Business do not
constitute more than 25% of the total revenues of such person or entity; or
(ii) the applicable Noncompetition Party promptly
commences and thereafter pursues until the earlier to occur of the expiration of
the Noncompetition Period and 12 months after such acquisition, the transfer of
that portion of the business of such person or
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entity as constitutes a Competitive Business upon terms and conditions and at a
price determined by the applicable Noncompetition Party in its sole discretion.
For purposes of the Agreement, "NONCOMPETITION PARTY" means each of
Seller and any direct or indirect majority-owned subsidiaries of Thermo Electron
Corporation, a Delaware corporation ("Thermo Electron") while (but only while)
such entity is a direct or indirect majority-owned subsidiary of Thermo
Electron.
The obligations under this Section 10.2 shall apply to all markets,
domestic or foreign, in which the Business operated prior to the Closing Date,
or in which Buyer operates the Business after the Closing Date.
Section 10.2A NONSOLICITATION. During the Noncompetition Period,
neither Seller nor any Noncompetition Party, shall, directly or indirectly: (i)
solicit for employment any Business Employee; (ii) induce or attempt to induce
any Business Employee to refuse the employment offer of or leave the employ of
Buyer or (iii) hire any Business Employee prior to the last date such Business
Employee was employed by Buyer (or any Affiliate of Buyer) without the prior
written consent of Buyer (which consent may be given or withheld in Buyer's sole
discretion).
10.3 DISCLOSURE GENERALLY.
(a) Any information furnished in the Disclosure Schedule (or
any update thereto) shall be deemed to modify all of Seller's representations
and warranties to which such information logically relates. The inclusion of any
information in the Disclosure Schedule (or any update thereto) shall not be
deemed to be an admission or acknowledgment, in and of itself, that such
information is required by the terms hereof to be disclosed, is material to the
Business, has or would have a Business Material Adverse Effect, or is outside
the Ordinary Course of
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Business. For purposes of this Agreement, the terms "to Seller's knowledge,"
"known by Seller" or other words of similar meaning shall mean the actual
knowledge of J. Wilson Hershey, Wesley C. Neumann, Thomas E. Wolgemuth or
Timothy S. Oostdyk, without any obligation of investigation, and shall not refer
to the knowledge of any other person or entity; provided that each of such
individuals shall be deemed to have read and understood all of the
representations and warranties of Seller and the matters disclosed in the
Disclosure Schedule with respect thereto.
(b) From time to time commencing on the date of this Agreement
and until the Closing Date, Seller shall deliver to Buyer written notice of any
event or development that would (i) render any statement, representation or
warranty of Seller in this Agreement (including the Disclosure Schedule)
inaccurate or incomplete in any material respect or (ii) constitute or result in
a breach by Seller of, or a failure by Seller to comply with, any agreement or
covenant in this Agreement applicable to it. Any disclosure made by Seller
pursuant to clause (i) of the prior sentence which specifically references the
provisions of this Section 10.3(b) shall be deemed to amend and supplement the
Disclosure Schedule for all purposes of this Agreement (except for Buyer's right
to terminate this Agreement pursuant to clause (b) of Section 7.1, which right
(A) must be initiated by Buyer giving notice of a breach, as required by clause
(b) of Section 7.1 (provided, however, that notwithstanding the provisions of
Section 7.1, Buyer shall have five days in which to exercise such termination
right in the event such disclosure is made by Seller within five (5) days of the
Closing Date, and the Closing Date shall be extended accordingly), and (B) will
be subject to Sellers' right to cure under clause (b) of Section 7.1).
10.4 ACKNOWLEDGMENTS BY PARTIES.
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(a) Buyer acknowledges that it has conducted to its
satisfaction an independent investigation of the financial condition, results of
operations, assets, liabilities and properties of the Business and, in making
its determination to proceed with the transactions contemplated by this
Agreement, Buyer has relied on the results of its own independent investigation
and the representations and warranties of Seller expressly and specifically set
forth in Article II of this Agreement, including the Disclosure Schedules, and
the certificate of Seller to be delivered pursuant to Section 5.1(d). SUCH
REPRESENTATIONS AND WARRANTIES BY SELLER CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF SELLER TO BUYER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY, AND BUYER UNDERSTANDS, ACKNOWLEDGES AND AGREES
THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE WHETHER
EXPRESS, IMPLIED OR STATUTORY (INCLUDING, BUT NOT LIMITED TO, ANY RELATING TO
THE FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS, ASSETS OR
LIABILITIES OF THE BUSINESS AND ANY SET FORTH IN THE CONFIDENTIAL OFFERING
MEMORANDUM PREVIOUSLY DELIVERED TO BUYER) ARE SPECIFICALLY DISCLAIMED BY SELLER.
EXCEPT IN THE EVENT OF ACTUAL FRAUD, BUYER ALSO ACKNOWLEDGES THAT ITS SOLE AND
EXCLUSIVE RECOURSE IN RESPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT
IS TO ASSERT RIGHTS OF BUYER PURSUANT TO ARTICLE VI, ARTICLE VIII AND ARTICLE
IX.
(b) In making its determination to proceed with the
transactions contemplated by this Agreement, Seller has relied on the results of
its own independent investigation and the
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representations and warranties of Buyer expressly and specifically set forth in
Article III of this Agreement, including the Disclosure Schedules, and the
certificate of Buyer to be delivered pursuant to Section 5.2(c). SUCH
REPRESENTATIONS AND WARRANTIES BY BUYER CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF BUYER TO SELLER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY, AND SELLER UNDERSTANDS, ACKNOWLEDGES AND
AGREES THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE
WHETHER EXPRESS, IMPLIED OR STATUTORY (INCLUDING, BUT NOT LIMITED TO, ANY
RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS,
ASSETS OR LIABILITIES OF BUYER ARE SPECIFICALLY DISCLAIMED BY BUYER. EXCEPT IN
THE EVENT OF ACTUAL FRAUD, SELLER ALSO ACKNOWLEDGES THAT ITS SOLE AND EXCLUSIVE
RECOURSE IN RESPECT OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IS TO
ASSERT RIGHTS OF SELLER PURSUANT TO ARTICLE VI, ARTICLE VIII AND ARTICLE IX.
10.5 CERTAIN INSURANCE MATTERS. Seller shall maintain, and shall
not take any steps to prospectively or retrospectively cancel, buy-out or remove
the Business or Seller as an additional named insured from, any and all Business
Policies providing coverage for all periods prior to the Closing with respect to
any events, occurrences or matters occurring prior to the Closing (the
"Occurrence-Based Business Policies") (subject in each case to the deductibles,
limits and other terms and conditions of such policies). Buyer shall be entitled
to the benefit of, and Seller shall pay to Buyer, any amounts and/or recoveries
received by Seller under any Occurrence-Based
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Business Policies in respect of any Assumed Liabilities (subject to the
deductibles, limits and other terms and conditions of such policies).
10.6 CERTAIN EMPLOYEE BENEFITS MATTERS.
(a) PRE-CLOSING CONDUCT; OTHER LIABILITIES. Seller shall be
under no obligation to terminate the employment of any employee of Seller
engaged in the Business (a "BUSINESS EMPLOYEE") prior to the Closing Date. Buyer
shall be liable for any amounts to which any Business Employee becomes entitled
under any Employee Benefit Plan that exists or arises (or may be deemed to exist
or arise) under any applicable law or otherwise, as a result of, or in
connection with, (i) the sale of the Business hereunder, (ii) the employment of
any Business Employee after the Closing and (iii) the termination of employment
of any Business Employee after the Closing.
(b) OFFER OF EMPLOYMENT; CONTINUATION OF EMPLOYMENT. The
Parties hereto intend that there shall be continuity of employment with respect
to all Business Employees. Buyer shall offer employment commencing after the
Closing to all Business Employees, including those on vacation, leave of
absence, disability or layoff, on the terms set forth in Section 10.6(d). Buyer
will give credit for past service of the Business Employees with Seller or its
Affiliates for purposes of eligibility, vesting and benefits level, but for no
other purpose. Those persons who accept Buyer's offer of employment and who
commence working with Buyer on the Closing Date shall hereafter be referred to
as "TRANSFERRED EMPLOYEES."
(c) 401(k) PLAN TRANSFER. Effective as of the Closing Date,
Seller shall take all actions necessary to cause the Buyer to assume all
responsibilities and obligations as the
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employer maintaining the Lancaster Laboratories Savings (401(k)) Plan (the
"SELLER'S 401(k) PLAN"), and the Buyer agrees to such assumption.
(d) COMPENSATION; EMPLOYEE BENEFITS. Effective as of the
Closing Date, Buyer shall assume all of the Business Plans other than any
employee stock purchase plan. Starting immediately following the Closing, Buyer
shall, for a period ending on the date twelve (12) months after the Closing
Date, provide each Transferred Employee with total cash compensation (including
base salary and bonus opportunity at least equal to those in effect on the date
hereof) that is no less favorable in the aggregate to such Transferred
Employee's total cash compensation immediately prior to the Closing Date.
Starting on the Closing Date, Buyer shall also, for a period ending on the date
twelve (12) months after the Closing Date, maintain (or cause its subsidiaries
to maintain) employee benefit plans, agreements, programs, policies and
arrangements for the benefit of each Transferred Employee that are no less
favorable in the aggregate than the Employee Benefit Plans in effect immediately
prior to the Closing Date with respect to employees of Buyer ("BUYER PLANS");
provided, however, Buyer shall not be required to maintain an employee stock
purchase plan for the benefit of the Transferred Employees. Notwithstanding
anything to the contrary in this Agreement, starting on the Closing Date, Buyer
shall, for a period ending on the date twelve (12) months after the Closing
Date, maintain (or cause its subsidiaries to maintain) a severance pay plan,
program or practice for the benefit of each Transferred Employee that is no less
favorable than the plan, program or practice in effect immediately prior to the
Closing Date with respect to such Transferred Employee.
(e) WELFARE PLANS. With respect to any Buyer Plan that is a
"welfare benefit plan" (as defined in Section 3(1) of ERISA) or any Buyer Plan
that would be a "welfare benefit
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plan" (as defined in Section 3(1) of ERISA) if it were subject to ERISA, Buyer
shall (i) cause to be waived any pre-existing condition limitations (except any
limitations in effect under Seller's welfare benefit plans), (ii) give effect,
in determining any deductible and maximum out-of-pocket limitations, to claims
incurred and amounts paid by, and amounts reimbursed to, such employees with
respect to similar plans maintained by Seller immediately prior to the Closing
Date and (iii) recognize all credited service for purposes of eligibility and
vesting and level of benefits to the same extent such service was recognized
under similar plans maintained by Seller immediately prior to the Closing Date.
Buyer shall make appropriate arrangements to allow the use by Transferred
Employees of any accrued benefits under any cafeteria plan (as defined in
Section 125 of the Code) which was maintained by Seller or any of its Affiliates
for such Transferred Employees.
(f) ACCRUED VACATION, PERSONAL OR SICK TIME. With respect to
any accrued but unused vacation, personal or sick time to which any Transferred
Employee is entitled pursuant to the vacation, personal or sick policies
applicable to such Transferred Employee immediately prior to the Closing Date
(the "PS POLICIES"), Buyer shall assume the liability for such accrued vacation,
personal or sick time and allow such Transferred Employee to use such accrued
vacation, personal or sick time; provided, however, that if Buyer deems it
necessary to disallow such Transferred Employee from taking such accrued
vacation, personal or sick time, Buyer shall be liable for and pay in cash to
each such Transferred Employee an amount equal to such vacation, personal or
sick time in accordance with the terms of the PS Policies; and PROVIDED,
FURTHER, that Buyer shall be liable for and pay in cash an amount equal to such
accrued
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vacation, personal or sick time to any Transferred Employee whose employment
terminates for any reason subsequent to the Closing Date.
(g) U.S. WARN ACT. Buyer agrees to provide any required notice
under the Worker Adjustment and Retraining Notification Act ("WARN") and any
other applicable law and to otherwise comply with any such statute with respect
to any "plant closing" or "mass layoff' (as defined in WARN) or similar event
affecting employees and occurring after the Closing Date or arising as a result
of any actions of the Buyer taken in connection with the transactions
contemplated hereby. Buyer shall indemnify and hold harmless Seller and its
Affiliates with respect to any liability under WARN or other applicable law
arising from the actions (or inactions) of Buyer or its Affiliates after the
Closing Date.
(h) U.S. COBRA. Buyer agrees to provide any required notice
under the Consolidated Omnibus Budget Reconciliation Act of 1986 ("COBRA") and
any other applicable law on or after the Closing Date with respect to Buyer
Plans. Buyer agrees to assume all COBRA liabilities for former employees of the
Business. Buyer shall indemnify and hold harmless Seller and its Affiliates with
respect to any liability under COBRA or other applicable law arising from the
actions (or inactions) of Buyer or its Affiliates on or after the Closing Date
or arising as a result of any actions of the Buyer taken in connection with the
transactions contemplated hereby.
10.7 FURTHER ASSURANCES. At any time and from time to time after
the Closing, as and when requested by a Party hereto and at such Party's
expense, the other Party shall promptly execute and deliver, or cause to be
executed and delivered, all such documents and instruments
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and shall take, or cause to be taken, all such further or other actions as such
other Party may reasonably request to evidence and effectuate the transactions
contemplated by this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 PRESS RELEASES AND ANNOUNCEMENTS. No Party shall issue (and each
Party shall cause its Affiliates not to issue) any press release or public
disclosure relating to the subject matter of this Agreement without the prior
written approval of the other Party; provided, however, that any Party may make
any public disclosure it believes in good faith is required by law, regulation
or stock exchange rule (in which case the disclosing Party shall advise the
other Party and the other Party shall have the right to review such press
release or announcement prior to its publication).
11.2 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer
any rights or remedies upon any person (including with respect to any employee
or former employee of Seller, Buyer or any of their Affiliates, any Transferred
Employees and any Business Employees, any right to employment or contractual
employment for any specified period) other than the Parties and their respective
successors and permitted assigns and, to the extent specified herein, their
respective Affiliates; provided, however, that the provisions of Article VI and
Article VIII are intended for the benefit of the entities and individuals
specified therein and their respective legal representatives, successors and
assigns.
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11.3 ACTION TO BE TAKEN BY AFFILIATES. The Parties shall cause
their respective Affiliates to comply with all of the obligations specified in
this Agreement to be performed by such Affiliates.
11.4 ENTIRE AGREEMENT. This Agreement (including the documents
referred to herein) and the Confidentiality Agreement constitute the entire
agreement between Buyer, on the one hand, and Seller, on the other hand. This
Agreement supersedes any prior understandings, agreements, or representations by
or between Buyer, on the one hand, and Seller, on the other hand, whether
written or oral, with respect to the subject matter hereof (other than the
Confidentiality Agreement), including, without limitation, that certain letter
agreement dated June 28, 2000 between the Seller and Goldner Hawn Johnson &
Morrison.
11.5 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
11.6 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but both of which
together shall constitute one and the same instrument.
11.7 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
11.8 NOTICES. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand,
claim or other communication
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hereunder shall be deemed duly delivered one business day after it is sent by
(a) a courier service guaranteeing delivery within one business day or
(b) telecopy or facsimile transmission, provided electronic confirmation of
successful transmission is received by the sending Party and a confirmation
copy is sent on the same day as the telecopy or facsimile transmission by
certified mail, return receipt requested, in each case to the intended
recipient as set forth below:
<TABLE>
<CAPTION>
IF TO BUYER: COPY TO:
<S> <C>
Lancaster Laboratories, Inc. Dorsey & Whitney LLP
5250 Wells Fargo Center Pillsbury Center South
90 South Seventh Street 220 South Sixth Street
Minneapolis, MN 55402 Minneapolis, MN 55402
Telecopy: (612) 338-2860 Telecopy: (612) 340-8738
Attention: Van Zandt Hawn Attention: Robert A. Rosenbaum, Esq.
IF TO SELLER: COPIES TO:
Thermo Analytical Inc. Thermo Electron Corporation
245 Winter Street, Suite 300 81 Wyman Street
Waltham, MA 02541 P.O. Box 9046
Telecopy: (781) 370-1501 Waltham, MA 02254-9046
Attention: Brian Holt Telecopy: (617) 622-1283
Attention: General Counsel
Hale and Dorr LLP
60 State Street
Boston, MA 02109
Telecopy: (617) 526-5000
Attention: Kenneth A. Hoxsie, Esq.
</TABLE>
Any Party may give any notice, request, demand, claim, or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telex, ordinary mail, or electronic mail),
but no such notice, request, demand, claim or other communication shall be
deemed to have been duly given unless and until it actually is
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received by the Party for whom it is intended. Any Party may change the address
to which notices, requests, demands, claims and other communications hereunder
are to be delivered by giving the other Parties notice in the manner herein set
forth.
11.9 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
laws of any jurisdiction other than those of the State of Delaware.
11.10 AMENDMENTS AND WAIVERS. The Parties may mutually amend or
waive any provision of this Agreement at any time. No amendment or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by both of the Parties. No waiver by either Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
11.11 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision
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that is valid and enforceable and that comes closest to expressing the intention
of the invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed.
11.12 EXPENSES. Except as otherwise specifically provided to the
contrary in this Agreement, each of the Parties shall bear its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby.
11.13 SPECIFIC PERFORMANCE. Each Party acknowledges and agrees that
the other Party would be damaged irreparably in the event any of the provisions
of Sections 10.1(f), 10.2 and 10.2A of this Agreement are not performed in
accordance with their specific terms or otherwise are breached. Accordingly,
each Party agrees that the other Party may be entitled to an injunction or
injunctions to prevent breaches of the provisions of Sections 10.1(f), 10.2 and
10.2A of this Agreement and to enforce specifically such sections of this
Agreement in any action instituted in any court of the United States or any
state thereof having jurisdiction over the Parties and the matter.
11.14 SUBMISSION TO JURISDICTION. Each Party (a) submits to the
exclusive jurisdiction of any state or federal court sitting in the State of
Delaware in any action or proceeding arising out of or relating to this
Agreement, (b) agrees that all claims in respect of such action or proceeding
may be heard and determined only in any such court, and (c) agrees not to bring
any action or proceeding arising out of or relating to this Agreement in any
other court. Each Party waives any defense of inconvenient forum to the
maintenance of any action or proceeding so brought and waives any bond, surety
or other security that might be required of the other Party with respect
thereto. Either Party may make service on the other Party by sending or
delivering a copy of the
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process to the Party to be served at the address and in the manner provided for
the giving of notices in Section 11.8. Nothing in this Section 11.14, however,
shall affect the right of any Party to serve legal process in any other manner
permitted by law.
11.15 BULK TRANSFER LAWS. Buyer acknowledges that Seller will not
comply with the provisions of the bulk transfer laws of any jurisdiction in
connection with the transaction contemplated by this Agreement.
11.16 CONSTRUCTION. The language used in this Agreement shall be
deemed to be the language chosen by the Parties hereto to express their mutual
intent, and no rule of strict construction shall be applied against any Party.
Any reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder, unless
the context requires otherwise. All references to "$", "Dollars" or "US$" refer
to currency of the United States of America.
11.17 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
11.18 FACSIMILE SIGNATURE. This Agreement may be executed by
facsimile signature.
ARTICLE XII
GUARANTEE
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12.1 SELLER'S PARENT GUARANTEE. Thermo TerraTech Inc., a Delaware
corporation ("Seller's Parent") hereby unconditionally guarantees the due and
punctual payment and performance of all of the Seller's obligations set forth in
this Agreement. This guaranty is an irrevocable guaranty of payment (and not
just of collection) and shall continue in effect notwithstanding any extension
or modification of the terms of this Agreement, any assumption of any such
guaranteed obligation by any other party or any other act or event that might
otherwise operate as a legal or equitable discharge of Seller's Parent under
this Article XII. This guarantee is in no way conditioned upon any requirement
that the Buyer first attempt to collect or enforce any guaranteed obligation
from or against the Seller. So long as any obligation of the Seller to the Buyer
under this Agreement remains unpaid or undischarged, Seller's Parent hereby
waives (but only with respect to the Buyer and its Affiliates and not as to any
other parties) all rights to subrogation arising out of any payment by Seller's
Parent under this Article XII.
The obligations of Seller's Parent hereunder shall be absolute and
unconditional irrespective of the validity, legality or enforceability of this
Agreement or any other document related hereto, and shall not be affected by or
contingent upon (i) the liquidation or dissolution of, or the merger or
consolidation of the Seller with or into any corporation, or any sale or
transfer by the Seller of all or any part of its property or assets, (ii) the
bankruptcy, receivership, insolvency, reorganization or similar proceedings
involving or affecting the Seller, (iii) any modification, alteration, amendment
or addition of or to this Agreement, or (iv) any disability or any other defense
of the Seller or any other person and any other circumstance whatsoever (with or
without notice to or knowledge of Seller's Parent) which may or might in any
manner or to
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any extent vary the risks of Seller's Parent or might otherwise constitute a
legal or equitable discharge of a surety or a guarantor or otherwise.
Seller's Parent hereby waives all special suretyship defenses and
protest, notice of protest, demand for performance, diligence, notice of any
other action at any time taken or omitted by the Buyer and, generally, all
demands and notices of every kind in connection with this Article XII and the
Seller's obligations hereby guaranteed, and which Seller's Parent may otherwise
assert against the Buyer.
This Article XII shall continue to be effective or shall be reinstated,
as the case may be, if at any time payment or performance of any of the
obligations of the Seller under this Agreement is rescinded or must otherwise be
restored or returned by the Buyer upon the insolvency, bankruptcy or
reorganization of the Seller or otherwise.
Seller's Parent acknowledges that each of the waivers set forth above
is made with full knowledge of its significance and consequences and under the
circumstances the waivers are reasonable and not contrary to public policy. If
any of said waivers is determined to be contrary to any applicable law or public
policy, such waivers shall be effective only to the extent permitted by law.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
Thermo Analytical Inc.
By: /s/ Brian D. Holt
______________________________
Name: Brian D. Holt
______________________________
Title: President
_____________________________
Lancaster Laboratories, Inc.
By: /s/ Van Zandt Hawn
_____________________________
Name: Van Zandt Hawn
_____________________________
Title: President
_____________________________
The undersigned has executed this Agreement solely for the purpose of
becoming bound by Section 11.14 and Section 12.1.
THERMO TERRATECH INC.
By: /s/ Christine L. Leonard
________________________________
Name: Christine L. Leonard
______________________________
Title: Vice President Finance
_____________________________
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The undersigned has executed this Agreement solely for the purpose of
becoming bound by Section 7.2(b).
GOLDNER, HAWN, JOHNSON &
MORRISON INCORPORATED
By: /s/ Van Zandt Hawn
_______________________
Name: Van Zandt Hawn
_____________________
Title: Managing Director
______________________
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