DEFINITIONS
The following terms which appear in this Agreement are defined in the
following Sections:
Term Section or Other Location
Active Employees . . . . . . . . . . . . . . . . . . .. . . . . . . .12.2
Affiliate. . . . . . . . . . . . . . . . . . . . . . .. . . . . . .1.1(b)
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . .Preamble
Assigned Contracts . . . . . . . . . . . . . . . . . . . . . .1.1(a)(vii)
Assumed Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . .2.1
Audit Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.1
Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .8.10(a)
Business . . . . . . . . . . . . . . . . . . . . . .. . . . . . .Preamble
Claim. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Closing. . . . . . . . . . . . . . . . . . . . . . .. . . . . . . .5.1(a)
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(a)
Closing Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . .3.2
Closing Statement of Net Assets. . . . . . . . . . . . . . . . . . . .4.1
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.10(a)
Competing Business . . . . . . . . . . . . . . . . . . . . . . . .15.5(b)
Confidentiality Agreement. . . . . . . . . . . . . . . . . . . . .15.4(a)
Conveyance Instruments . . . . . . . . . . . . . . . . . . . . . . 5.1(d)
Disputable Items . . . . . . . . . . . . . . . . . . . . . . . . . . .4.2
Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12.1
Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Enviromental Assessments . . . . . . . . . . . . . . . . . . . . . 7.1(a)
Environmental Expenses . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
Envirommental Liabilities. . . . . . . . . . . . . . . . . . . . .8.13(b)
Environmental Requirements . . . . . . . . . . . . . . . . . . . .8.13(b)
Environmental Work . . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.10(a)
ERISA Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . .8.10(a)
Excluded Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . .1.2
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .8.4
Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.2
Foreign Plans. . . . . . . . . . . . . . . . . . . . . . . . . . .8.10(f)
Foreign Participants . . . . . . . . . . . . . . . . . . . . . . .8.10(f)
Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . .8.13(b)
HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5.1(b)
Indemnification Deductible . . . . . . . . . . . . . . . . . . . .16.2(c)
Indemnitee . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.4(a)
Indemnitor . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.4(a)
Interim Period . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9
Leased Real Property . . . . . . . . . . . . . . . . . . . . . 1.1(a)(ii)
Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . .1.1(a)(ii)
Term Section or Other Location
Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16.2(a)
Material Adverse Effect. . . . . . . . . . . . . . . . . . . . . . . .8.2
Notice of Breach . . . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
Notice of Claim. . . . . . . . . . . . . . . . . . . . . . . . . .16.4(a)
Owned Real Property. . . . . . . . . . . . . . . . . . . . . . .1.1(a)(i)
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Participant. . . . . . . . . . . . . . . . . . . . . . . . . . . .12.6(b)
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.9(b)
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . . .5.1(d)(i)
Permitted Owned Real Property Exceptions . . . . . . . . . . . . .8.5(a)
Prime Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4.4
Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.1(f)
Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . .3.1
Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . 1.1(b)
Purchased Inventories. . . . . . . . . . . . . . . . . . . . . 1.1(a)(iv)
Purchased Receivables. . . . . . . . . . . . . . . . . . . . . 1.1(a)(v)
Purchased Rights . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)(ix)
Purchased Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . .8.2
Purchaser. . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Purchaser Information. . . . . . . . . . . . . . . . . . . . . . .15.4(c)
Purchaser 401(k) Plan. . . . . . . . . . . . . . . . . . . . . . .12.6(b)
Real Property. . . . . . . . . . . . . . . . . . . . . . . . . 1.1(a)(ii)
Reference Statement of Net Assets. . . . . . . . . . . . . . . . . . .8.4
Related Documents. . . . . . . . . . . . . . . . . . . . . . . . . . .8.1
Representatives. . . . . . . . . . . . . . . . . . . . . . . . . 17.11(a)
Retained Employees . . . . . . . . . . . . . . . . . . . . . . . . . 12.2
Retained Liabilities . . . . . . . . . . . . . . . . . . . . . . . . .2.2
Returns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.15(a)
Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Seller Information . . . . . . . . . . . . . . . . . . . . . . . .15.4(b)
SJBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8.15(c)
Transferred Employees. . . . . . . . . . . . . . . . . . . . . . . . 12.2
U.S. Hourly Pension Plan . . . . . . . . . . . . . . . . . . . . . . 12.5
U.S. Salaried Pension Plan . . . . . . . . . . . . . . . . . . . . . 12.5
Walkaway Amount. . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
Warranty Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . 15.8
Welfare Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 12.9
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of November 23, 1998
("Agreement"), by and between JOHNSON CONTROLS, INC., a Wisconsin corporation,
having a principal place of business at 5757 North Green Bay Avenue, Milwaukee,
WI 53209, together with certain of its subsidiaries, as set forth on Schedule
1.1, being hereinafter collectively referred to as "Seller"), and C&D
TECHNOLOGIES, INC., a Delaware corporation, having a principal place of business
at 1400 Union Meeting Road, Blue Bell, Pennsylvania 19422 ("Parent"), and C&D
ACQUISITION CORP., a Delaware corporation, having a principal place of business
at 1400 Union Meeting Road, Blue Bell, Pennsylvania 19422 ("Purchaser").
WHEREAS, Seller is engaged in the line of business (the "Business")
comprised of the manufacture and sale of industrial batteries including the
Specialty Battery Division ("SBD") of Seller, the shares of Johnson Controls
Battery (UK) Limited and sixty-seven percent (67%) of the shares of Shanghai
Johnson Battery Company, Ltd. ("SJBC"); and
WHEREAS, Seller desires to sell or to cause to be sold to Purchaser and
Purchaser desires to purchase from Seller, subject to the assumption by
Purchaser of certain liabilities of Seller relating to the Business, on the
terms and conditions hereinafter set forth, substantially all of the assets and
properties primarily used in the Business as a going concern.
In consideration of the premises and of the mutual agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
Purchase and Sale
1.1 PURCHASED ASSETS:
(a) On the terms and subject to the conditions set forth in this
Agreement, Seller, together with certain wholly-owned subsidiaries (as
disclosed on Schedule 1.1), hereby agrees to sell, transfer, convey,
assign and deliver to Purchaser, or cause to be sold, transferred,
conveyed, assigned and delivered to Purchaser, and Purchaser agrees to
purchase from Seller together with certain wholly-owned subsidiaries,
free and clear (except as described in Section 8.5(a) below) of all
Encumbrances, as hereinafter defined, all right, title and interest in,
to, and under the assets and properties of every nature, kind and
description, whether real, personal or mixed, tangible or intangible,
used in, held for use primarily in, or pertaining primarily to, the
Business, as hereinafter defined (other than Excluded Assets, as
hereinafter defined), wherever located, as the same shall exist
immediately prior to the Closing, as hereinafter defined, including,
without limitation, the following assets of the Business:
(i) the real property listed on Schedule 8.5(a), together with
all appurtenances thereto and all buildings and other
structures, fixtures and improvements located thereon
(collectively, the "Owned Real Property");
(ii) subject to Section 5.1(e) below, the real property leases
listed on Schedule 8.5(b) (collectively, the "Leases"),
together with all of Seller's interest in all of the
structures, fixtures and improvements located on the real
property covered by such Leases (collectively, the "Leased
Real Property"; and, together with the Owned Real Property,
the "Real Property");
(iii) all machinery and equipment, including, without
limitation, all manufacturing, production, maintenance,
packaging, testing and other machinery, tooling (including
dies and molds) and equipment, vehicles, spare or replacement
parts, computer equipment, furniture, fixtures, plant and
office equipment, supplies and other tangible personal
property, as well as laboratory equipment located at the
Battery Technology Center and used in the Business as
described in Schedule 1.1(a)(iii), and including, without
limitation, all tangible personal property of Seller or its
Affiliates located on the Real Property on the date hereof;
(iv) all inventories, including, without limitation, raw
materials, work-in-process, finished goods, component parts,
returned goods, stores and supplies, packaging, shipping
containers and other materials (collectively, the "Purchased
Inventories");
(v) all accounts and notes receivable (collectively, the
"Purchased Receivables");
(vi) all prepaid expenses relating to the Assumed Liabilities,
as hereinafter defined, including prepaid Taxes as hereinafter
defined, advances, credits and security, utility and other
deposits but excluding prepaid insurance and any prepaid item
the substantial benefit of which will not be usable by the
Purchaser after the Closing;
(vii) subject to Section 5.1(e) below, all rights in and under
all contracts, arrangements, licenses, personal property
leases, commitments, purchase orders, sales orders and other
agreements, including, without limitation, any right to
receive payment for products sold or services rendered, and to
receive goods and services, pursuant to such agreements, and
to assert claims and take other rightful actions in respect of
breaches, defaults and other violations thereof (collectively,
the "Assigned Contracts");
(viii) all operating records, data and other materials
maintained by or on behalf of, or otherwise relating to, the
Business, including, without limitation, all books, records,
sales and sales promotional data, advertising materials,
customer lists and records, credit information, cost and
pricing information, supplier lists and records, business
plans, catalogs, mailing lists, distribution lists,
photographs, production data, engineering records, personnel
and payroll records, manufacturing and quality control records
and procedures, research and development files, intellectual
property disclosures, accounting records, and other materials
related to any of the foregoing items;
2
(ix) subject to Section 1.2(c), 1.2(f) and 8.11, all patents,
trademarks, tradenames, service marks, copyrights, know-how
and trade secrets owned or used by Seller in the Business as
provided in Schedule 8.11 (collectively, the "Purchased
Rights") including, without limitation, the name Dynasty, and
all other names owned by Seller and primarily used in, held
for use in, or otherwise relating to the Business;
(x) subject to Section 1.2(b) below, all Permits, as
hereinafter defined, to the extent they are assignable or
transferable;
(xi) all rights, recoveries, refunds, counterclaims, rights of
set-off and other Claims, as hereinafter defined (known or
unknown, accrued or contingent), against third parties,
including, without limitation, warranty and other contractual
claims, other than any of the foregoing which relate solely to
the Excluded Assets or Retained Liabilities, as hereinafter
defined;
(xii) all warranties, guarantees and letters of credit
received from vendors, suppliers or manufacturers;
(xiii) all of the capital stock and other ownership interests
in the Purchased Subsidiaries, as set out in Schedule 1.1; and
(xiv) all goodwill of the Business.
(b) The assets, properties, interests in properties and rights that are
to be sold, transferred, conveyed and assigned to Purchaser by Seller
hereunder shall be collectively referred to as the "Purchased Assets".
As used in this Agreement, the term "Encumbrances" means, collectively,
all security interests, judgments, liens (other than for taxes not yet
payable), pledges, escrows, claims, options, rights of first refusal,
mortgages and encumbrances; the term "Claim" means any claim, demand,
action, suit or proceeding; and the term "Affiliate" means any other
person or entity that, directly or indirectly, is controlled by or is
under common control with such person.
1.2 EXCLUDED ASSETS: There are excepted from the Purchased Assets and
the term "Purchased Assets" does not mean or include the following assets
(collectively, the "Excluded Assets"):
(a) all cash and cash equivalent items on hand or on deposit and bank
accounts as of the Closing Date of this Agreement;
(b) all Permits to the extent they are not assignable or transferable;
(c) the assets listed in Schedule 1.2(c);
(d) rights to or claims for refunds, overpayments or rebates of Taxes
and other governmental charges for periods ending on or prior to the
Closing Date or for any pro
3
rata portion of a period which straddles the Closing Date and the
benefit of net operating loss or capital loss carryforwards, carrybacks
or other tax credits (of whatever nature) of Seller;
(e) all insurance policies;
(f) the right to use the names "Johnson Controls", "Globe Union" and
"Hoover" and their registered and unregistered trademarks and logos;
PROVIDED, that Purchaser and the Purchased Subsidiaries shall have the
right to sell inventory included in the Purchased Assets containing
such names, marks or logos in the ordinary course and to use existing
marketing and sales material with appropriate stickering and shall, for
six months after the closing, have the right to use the "Johnson
Controls" mark on existing poly molds; and
(g) all assets and properties of Seller and the Purchased Subsidiaries
not used primarily in, held for use primarily in, or pertaining
primarily to, the Business.
1.3 PARENT TO CAUSE PURCHASER TO PERFORM OBLIGATIONS. Parent shall
cause Purchaser to perform each of Purchaser's obligations hereunder.
ARTICLE II
Liabilities
2.1 ASSUMPTION OF LIABILITIES: Subject to the terms and conditions of
this Agreement, on the Closing Date, as hereinafter defined, Seller shall assign
to Purchaser, and Purchaser shall, except as set forth in Section 2.2 below,
assume and agree to perform and discharge the following liabilities and
obligations of Seller:
(a) obligations for the sale and delivery of products not shipped prior
to the close of business on the Closing Date under open sales orders,
open bids and sales contracts included in the Assigned Contracts, which
were accepted or made in the ordinary course of business of the
Business prior to the close of business on the Closing Date and which
were not paid for prior to the Closing Date;
(b) obligations for the purchase of raw materials, supplies and repair
and maintenance materials not received prior to the close of business
on the Closing Date and not included in the Purchased Inventory under
open supply contracts, purchase orders and commitments included in the
Assigned Contracts, which were given or made in the ordinary course of
business of the Business;
(c) liabilities and obligations arising under the Assigned Contracts in
accordance with their respective terms except with respect to any
breaches thereof by the Business occurring prior to the Closing Date,
including, without limitation, payables owed by the Business to Seller
or any of its Affiliates on the Closing Date for goods sold and
delivered in the ordinary course;
(d) (i) an amount limited to one-half of the Environmental Expenses (as
hereinafter defined), but not exceeding $1,750,000; (ii) any
Environmental Liability (as
4
hereinafter defined) based upon a claim made after the fifth
anniversary of the Closing Date resulting solely from environmental
conditions existing at locations other than the Real Property to the
extent those conditions resulted from migration from a condition that
existed on or prior to the Closing Date in, on, under or at the Owned
Real Property, but specifically excluding these offsite matters
referred to in clause (ii) of the definition of Environmental
Liabilities; and (iii) liability for environmental conditions at the
Owned Real Property, which conditions are not remediated by or as a
result of the Environmental Work.
(e) liabilities arising from obligations to Transferred Employees of
the Business relating to periods after the Closing to the extent set
forth in Article XII of this Agreement and liabilities for accrued
vacation and other accruals set forth in Schedule 8.4 to the extent set
forth in Article XII of this Agreement;
(f) liability for suits, claims, proceedings and actions made or
commenced after the Closing Date resulting from actual or alleged harm,
injury or damage to persons, property or business by products sold or
shipped by the Business ("Products") which are sold and shipped after
the Closing Date regardless of when such Products were manufactured, or
when the incident or accident giving rise to such liability occurs;
(g) liability for express or implied warranties of the Business,
including obligations to repair, replace, rework or to make refunds of
amounts paid for Products regardless of when such Products were
manufactured, sold or distributed or when defects became or become
apparent, to the extent provided in Section 15.8;
(h) liability for the recall, notification, retrofit or other
post-manufacture remedial or corrective actions relating to Products,
regardless of when such Products were manufactured, sold or shipped, to
the extent provided in Section 15.8;
(i) liability for all other claims, actions, suits, proceedings or
investigations arising solely out of events occurring after the Closing
Date involving the operations of the Business;
(j) third party bank debt of SJBC and intercompany payables of SJBC,
both as set out in Schedule 8.4 as adjusted at Closing.
The foregoing liabilities and obligations of Seller being assumed by
Purchaser hereunder shall be collectively referred to as the "Assumed
Liabilities".
2.2 RETAINED LIABILITIES: Seller shall retain, and shall remain
exclusively responsible for paying, performing and discharging when due, and
Purchaser shall not assume or have any responsibility for:
(a) all liabilities and obligations relating to or arising out of the
Excluded Assets;
(b) all liabilities and obligations for Taxes based on the income of
Seller
5
arising out of or relating to the operation of the Business on or prior
to the close of business on the Closing Date;
(c) liability for suits, claims, proceedings and actions made or
commenced before or after the Closing Date resulting from actual or
alleged harm, injury or damage to persons, property or business by
products sold or shipped by the Business on or prior to the Closing
Date, regardless of whether those products were manufactured by the
Business or when the incident or accident giving rise to such liability
occurred or occurs;
(d) all liabilities for Environmental Expenses and Environmental
Liabilities not assumed by Purchaser pursuant to Section 2.1(d);
(e) all liabilities and obligations relating to or arising out of the
Benefits Plans or any employee benefit plan, arrangement or policy
established, maintained, sponsored or contributed to by Seller or any
ERISA Affiliates that does not cover or relate to employees of the
Business and all liabilities and obligations relating to the Retained
Employees;
(f) all liabilities and obligations relating to disputes with Mack
Molding Company;
(g) all liabilities for other claims, actions, suits, proceedings or
investigations arising out of events occurring solely on or prior to
the Closing Date involving the operations of the Business.
The liabilities and obligations of Seller which do not constitute
Assumed Liabilities and will be retained by Seller hereunder shall be
collectively referred to as the "Retained Liabilities".
ARTICLE III
Purchase Price
3.1 PURCHASE PRICE: The purchase price payable by Purchaser to Seller
for the Purchased Assets (the "Purchase Price") shall be $135 million plus the
Assumed Liabilities, subject to adjustment as provided in Article IV of this
Agreement.
3.2 PAYMENT AT CLOSING: At the Closing, Purchaser shall transfer to a
bank account designated by Seller the amount called for by this Agreement to be
paid on the Closing Date (the "Closing Payment") by a wire transfer of
immediately available funds.
ARTICLE IV
Determination and Allocation of Adjusted
Purchase Price
4.1 CLOSING STATEMENT OF NET ASSETS: Within (60) calendar days after
the Closing Date, Seller shall prepare, and shall deliver to Purchaser an
unaudited balance sheet (the "Closing Statement of Net Assets") of the Business
as at the close of business on the fiscal
6
month end immediately preceding the Closing Date. The Closing Statement of Net
Assets shall be prepared on a basis consistent with the Reference Statement of
Net Assets (as hereinafter defined), using the Seller's Accounting Principles
(as hereinafter defined) consistently applied and all books, records and
accounts of the Business, shall reflect all reserves, accruals and entries
necessary to reserve fully for all liabilities of the Business and shall fairly
present the financial position of the Business as of the Closing Date in all
material respects. Seller shall certify the Closing Statement of Net Assets as
having been prepared in accordance with this Agreement and as presenting
accurately the consolidated assets and liabilities of the Business as of the
Closing Date. Notwithstanding anything contained herein to the contrary, (i) the
Closing Statement of Net Assets shall include all accruals, reserves and other
adjustments generally made at year end on the same basis as generally made at
year end for items individually in excess of $5,000; and (ii) except to the
extent paid at or prior to the Closing, the full amount of any compensation or
benefits due to employees of the Business (including, without limitation,
salary, incentive compensation, bonuses, deferred compensation, vacation, sick
leave, insurance and benefit plan contributions) with regard to services
rendered through the Closing Date, regardless of when payable, shall be accrued
on the Closing Statement of Net Assets. As of the Closing Date, Seller shall
take a complete physical inventory of the inventory owned by the Business.
Purchaser (or its representatives) shall have the right to observe such physical
inventory and to review the results, work papers and procedures used in
conducting such physical inventory.
4.2 REVIEW OF CLOSING STATEMENT OF NET ASSETS: Purchaser shall have the
right to review the Closing Statement of Net Assets and all work papers relating
thereto and to notify Seller of its dispute of such Closing Statement, provided
that the scope of such dispute shall be limited to whether (i) there exists any
mathematical errors in the Closing Statement of Net Assets; and/or (ii) whether
the Closing Statement of Net Assets was prepared in accordance with Seller's
Accounting Principles (collectively "Disputable Items"). If Purchaser does not
notify Seller of any such dispute within thirty (30) days after the date the
Closing Statement of Net Assets is delivered to Purchaser, then the Closing
Statement of Net Assets delivered by Seller shall be deemed to be final,
conclusive and binding on the parties. If, however, Purchaser notifies Seller in
writing within such period of a Disputable Item and specifies (a) the Disputable
Item and Purchaser's basis for such a position, and (b) the amount of the
adjustment Purchaser proposes with respect to each Disputable Item, the parties
will then attempt to resolve their differences with respect thereto. If the
parties are unable to resolve their dispute, the unresolved Disputable Items
shall be referred, within sixty (60) days after the date the Closing Statement
of Net Assets is delivered to Purchaser, to the Chicago office of Deloitte &
Touche, LLP, certified public accountants, or if such firm is unable to or
unwilling to serve, to another "Big Five" accounting firm selected by the firm
declining to serve; provided such selected firm is not the regular independent
auditor of Seller or Purchaser (the "Firm"). The Firm shall be asked to
determine only whether the Closing Statement of Net Assets met the standards set
forth above in subsections (i) and (ii) and report to Seller and Purchaser upon
all Disputable Items within thirty (30) days after such referral. The decision
of the Firm shall be final, conclusive and binding on the parties hereto. The
fees and expenses of the Firm shall be shared equally by Seller and Purchaser.
4.3 COOPERATION: Representatives of Seller shall be given access to
all books,
7
records and other data of the Business for the purpose of preparing the Closing
Statement of Net Assets. Personnel of the Purchaser may be consulted from time
to time by such representatives.
4.4 SETTLEMENT OF ADJUSTED PURCHASE PRICE: Within 10 days after the
final determination of the Closing Statement of Net Assets, Seller shall pay to
Purchaser the amount by which the Net Asset Value (as hereinafter defined) as
set forth on the Reference Statement of Net Assets exceeds the Net Asset Value
as set forth on the Closing Statement of Net Assets, or Purchaser shall pay to
Seller the amount by which the Net Asset Value as set forth on the Closing
Statement of Net Assets exceeds the Net Asset Value, as set forth on the
Reference Statement of Net Assets, as the case may be. In the event Purchaser
disputes any part of the Closing Statement of Net Assets pursuant to the
provisions of Section 4.2 of this Agreement, those portions of the Closing
Statement of Net Assets which are not in dispute shall be deemed finally
determined, and the payer of any adjustment due in accordance with this Section
4.4 shall nevertheless pay to the payee, within 30 days after the date the
Closing Statement of Net Assets is delivered to Purchaser by Seller, all amounts
then due with respect to such portion of the Closing Statement of Net Assets
which has been deemed finally determined. The amount of the payments described
in this Section 4.4 shall be paid by Seller to Purchaser, or by Purchaser to
Seller, as the case may be, with interest thereon from the Closing Date to the
date of such payment, calculated at a floating rate equal to the "Prime Rate"
quoted by The Chase Manhattan Bank, N.A., New York, New York from time to time
after the Closing Date to the date of payment, in immediately available funds
remitted by wire transfer to a bank designated by the payee thereof.
The parties understand and agree that the adjusted purchase price
mechanism set forth in Sections 4.1 4.5 is not intended to apply to disputes or
questions regarding the Reference Statement of Net Assets or the preparation
thereof, which disputes or questions instead shall be evaluated and decided
under Article XVI as a breach of warranty.
4.5 NET ASSET VALUE. The term "Net Asset Value" with respect to the
Business shall mean the total assets of the Business minus the total
liabilities, in each case as reflected on the Reference Statement of Net Assets
or the Closing Statement of Net Assets, as the case may be, subject to Section
10.16.
4.6 ALLOCATION OF PURCHASE PRICE: Seller agrees, at its sole cost, to
have the Purchased Assets appraised by a firm with expertise in such matters
that is reasonably agreeable to Purchaser. Seller and Purchaser shall mutually
agree on the instructions to the appraisal firm, which shall be jointly retained
by Seller and Purchaser. Seller and Purchaser agree to be bound by the results
of such appraisal and shall allocate the Purchase Price among the Purchased
Assets (including the portion allocated to each Purchased Subsidiary) in
accordance with the relative fair market values of the Purchased Assets as
determined by the appraisal as the same may hereafter be amended to reflect any
changes necessary as a result of any adjustment of the Purchase Price pursuant
to this Article IV, subject to Section 10.16. Seller and Purchaser agree to use
the allocation provided for herein for all purposes in any Federal and state
income or franchise tax return filed by them subsequent to the Closing Date,
including the determination by Seller of taxable gain or loss on the sale of the
Purchased
8
Assets and the determination by Purchaser of its tax basis with respect to the
Purchased Assets. Neither party will file any returns or reports in a manner
which is inconsistent with the appraisal or allocation.
ARTICLE V
Closing Matters
5.1 THE CLOSING:
(a) The purchase and sale (the "Closing") contemplated under this
Agreement shall take place at the offices of Seller, located at 5757
North Green Bay Avenue, Milwaukee, WI or at such other place as the
parties shall mutually agree upon, at 10:00 A.M. local time on February
1, 1999, or such other time or date as the parties shall mutually agree
upon, or such later date as may be required pursuant to paragraph (b)
of this Section 5.1. The date the Closing takes place is herein
referred to as the "Closing Date". The Closing shall be effective as of
12:01 a.m. on the Closing Date.
(b) If all applicable waiting periods under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended (the "HSR Act") and all
equivalent filings relating to the sale and purchase of the Purchased
Subsidiaries, have not expired or been otherwise terminated, by the
date set forth in paragraph (a) of this Section 5.1, the Closing shall,
without the necessity of any action by or consent of any party hereto,
be postponed until five days after the date of expiration or
termination of the last such waiting periods.
(c) At the Closing, Purchaser shall transfer to a bank account
designated by Seller the Closing Payment in accordance with Section 3.2
above.
(d) At the Closing and effective on the Closing Date, Seller shall
execute and deliver (or cause to be executed and delivered) the
following documents to Purchaser (collectively, the "Conveyance
Instruments"):
(i) such deed or deeds as shall be effective to vest in
Purchaser good and marketable fee simple title to all of the
Owned Real Property, free and clear of all Encumbrances,
except for mechanics', carriers', workmen's, repairmen's or
other like liens arising or incurred in the ordinary course of
business regarding claims that are not yet due and payable,
liens for taxes, and other governmental charges which are not
due and payable or which may thereafter be paid without
penalty, (collectively, the "Permitted Liens") and any other
exceptions which may be listed on Schedule 8.5(a);
(ii) bills of sale, endorsements, assignments and other good
and sufficient instruments of sale, transfer, conveyance and
assignment, in form reasonably satisfactory to Purchaser, as
shall be effective to vest in Purchaser good and marketable
title, free and clear of all Encumbrances, to the Purchased
Assets other than the Owned Real Property; and
(iii) share certificates or other documents representing all
of Seller's
9
ownership of the Purchased Subsidiaries properly endorsed for
transfer of Seller's record and beneficial ownership in and to
the Purchased Subsidiaries.
(e) This Agreement shall not constitute an agreement to assign any
contract, license, lease, commitment, sales order or purchase order or
other agreement if an assignment or attempted assignment of the same
without the consent of the other party thereto would constitute a
breach thereof or in any way impair the rights of Seller thereunder.
(f) At the Closing, Seller shall cause any directors or officers of the
Purchased Subsidiaries who are officers or employees of Seller (other
than full-time employees of the Business) to resign or to be removed as
directors and officers thereof.
ARTICLE VI
Transfer After the Closing
6.1 FURTHER INSTRUMENTS AND ACTIONS: From time to time after the
Closing Date, upon request of Purchaser, Seller, without further consideration,
shall cooperate with Purchaser and shall duly execute, acknowledge and deliver
all such further deeds, assignments, transfers, conveyances and powers of
attorney and take such other actions and give such assurances as may be
reasonably required to convey to and vest in Purchaser all right, title and
interest in all the assets, property and business of Seller intended to be
assigned, transferred and conveyed pursuant to and as provided in and subject to
the provisions of this Agreement. Seller shall promptly pay or deliver to
Purchaser any amounts or items which may be received by Seller after the Closing
which constitute Purchased Assets.
6.2 PURCHASED ASSETS REQUIRING CONSENTS: In the event any consent of a
third party legally required for the sale, assignment or transfer to Purchaser
of any Purchased Asset (with respect to which, in the case of consents referred
to in Section 10.4, Purchaser has waived the closing condition) has not been
obtained by the Closing Date then such Purchased Asset shall not be deemed to be
sold or transferred to Purchaser at the Closing, but:
(a) Seller shall cooperate with Purchaser in entering into any
reasonable arrangement designed to provide Purchaser with the benefit
of Seller's rights under or pursuant to such Purchased Asset;
(b) Seller shall cooperate with Purchaser in obtaining any such
required consent or waiver after the Closing; and
(c) upon obtaining all required consents or waivers for such Purchased
Asset, such Purchased Asset shall be deemed to be sold or transferred
to Purchaser as of the receipt of such consents or waivers and Seller
shall execute, without further consideration from Purchaser, any
documents reasonably requested by Purchaser to confirm that such
Purchased Asset has been assigned to Purchaser.
10
ARTICLE VII
Actions Prior to Closing
7.1 ACCESS; NOTICE OF BREACH: (a) For a period ending January 31, 1999,
Seller shall provide Purchaser the opportunity to conduct a full due
diligence review of the Business. For such purposes, Purchaser and its
representatives shall have, at all reasonable times, access to the
Business, the Purchased Assets, and the management staff of the
Business as may be reasonably requested by Purchaser and shall be
permitted to contact customers of the Business, joint venture partners
of the Business and relevant governmental officials without restriction
but with prior notice to and coordination with Seller and shall receive
Seller's full and prompt cooperation regarding such endeavor. As part
of its diligence review, Purchaser shall have the right to retain an
environmental consultant reasonably acceptable to Seller to undertake
environmental assessments of the Real Property including, without
limitation, Phase I and Phase II environmental assessments on the Real
Property (the "Environmental Assessments"). The scope of the
Environmental Assessments shall be agreed upon by Seller and Purchaser
and may include, among other things, intrusive sampling and testing of
soils and groundwater, and integrity testing of underground storage
tanks. Seller shall provide complete and unfettered access to the
Business and the Real Property for as much time as is necessary for the
conduct of the Environmental Assessments. The Environmental Assessments
will be promptly provided to Seller and Purchaser upon their
completion. The Environmental Assessments will make specific
recommendations concerning certain additional investigation,
remediation and/or monitoring to be undertaken at or concerning the
Real Property and/or any adjacent property, the Purchased Assets or the
Business, and other recommendations may be made based upon discoveries
made during implementation of the initial recommendations (the
implementation of such recommendations being the "Environmental Work").
It is agreed that Seller shall conduct and control the Environmental
Work, including any negotiations or contacts with the government
officials. Based on the findings of the Environmental Assessments, or
discoveries made during conduct of the Environmental Work, Seller shall
promptly notify the appropriate governmental authorities as required
under Environmental Requirements (as hereinafter defined). Seller shall
promptly provide to Purchaser copies of all scopes of work, sampling
data, notices to or from government officials or a third party, test
results, evaluations, reports and correspondence concerning the
Environmental Work. The Environmental Work shall be deemed complete
when Seller receives "no further action" letters from relevant
government officials or agencies with respect to all the Environmental
Work. The costs and expenses of undertaking the Environmental
Assessments and the Environmental Work, including the fees and expenses
of attorneys and environmental consultants, are collectively referred
to herein as the "Environmental Expenses". The obligations of the
partners under this Agreement shall not be affected by any delay in
completing the Environmental Assessments or Environmental Work until
after the end of the due diligence period referred to herein or the
Closing.
(b) By the close of business on January 25, 1999, Purchaser shall
deliver to Seller a written list describing in reasonable detail all
material breaches of representations and warranties contained in
Article VII hereof which Purchaser has discovered or have been
disclosed since the date of this Agreement that are not reflected on
the Reference Statement of Net assets or disclosed on any Schedule
hereto, together with the amount, if any, reasonably
11
calculated as a proposed adjustment to the Purchase Price (or to the
extent an amount cannot be reasonably calculated, then a reasonable
estimate of such amount) ("Notice of Breach"). Prior to Closing, Seller
and Purchaser shall meet and attempt to resolve whether and to what
extent such breaches will be reflected in a Purchase Price adjustment
to be recognized in the Closing Payment; provided, however, that any
such Purchase Price adjustment agreed to between the parties shall be
subject to the Indemnification Deductible (as defined below). If, prior
to Closing, Seller and Purchaser are unable to resolve the extent to
which such breaches will be reflected in a Purchase Price adjustment,
such Notice of Breach shall, after Closing, be deemed a Notice of Claim
pursuant to Section 16.4 hereof.
7.2 OBTAINING OF CONSENTS:
(a) As soon as possible after the date hereof, each party shall (i)
cooperate with the other to make all necessary filings, including
without limitation, filings under the HSR Act and equivalent foreign
laws and regulations, and (ii) use commercially reasonable efforts to
make all other necessary filings with all governmental bodies or other
regulatory authorities to obtain licenses, permits, approvals,
authorizations and consents of all third parties required for the sale,
assignment or transfer to Purchaser of any of the Purchased Assets or
the consummation of any of the transactions contemplated by this
Agreement.
(b) Seller shall bear the cost of complying with or obtaining the
consent to or approval of the transactions contemplated hereby of any
governmental or other third party, including without limitation, any
such approval or consent required by any safety, health, environmental
or other applicable law or regulation. Each party hereto shall provide
to the other party such information as the other party may reasonably
request in order to enable it to prepare such filings. Each party
hereto shall also use its respective commercially reasonable efforts to
expedite any governmental or other third party review and to obtain all
such necessary consents, approvals, licenses and permits as promptly as
practicable; provided, than neither Purchaser nor any of its affiliates
shall be required to dispose of any assets in connection with the
obtaining of any consent, approval, license or Permit.
7.3 ACTIONS OF SELLER AND CONDUCT OF BUSINESS:
(a) Seller shall use commercially reasonable efforts to perform and
satisfy all conditions to Closing to be performed or satisfied by
Seller under this Agreement by the Closing Date or such other date by
which performance is required hereunder.
(b) From the date hereof through the Closing Date, unless otherwise
agreed in writing by Purchaser, Seller shall not, except as required or
expressly permitted pursuant to the terms hereof, make any material
change in the conduct of the Business or the Purchased Assets or enter
into any material transaction other than in the ordinary course of
business and shall continue to conduct the Business and cause each of
the Purchased Subsidiaries to conduct their respective businesses in
the ordinary course of business. Prior to the Closing, Seller shall use
all reasonable efforts to preserve for Purchaser the goodwill of the
customers and suppliers of the Business and others having business
relations with Seller with respect to the Business, and shall do all
things reasonably requested by Purchaser for such
12
purpose. Prior to the Closing, Seller shall promptly advise Purchaser
in writing of the commencement or threat against Purchaser of any suit,
litigation or legal proceeding against Seller or the Purchased
Subsidiaries or with regard to the transactions contemplated hereby.
Prior to the Closing, Seller shall cause all casualty and liability
insurance coverage currently in effect with respect to the Purchased
Assets or the Business to remain in effect and apply all insurance
proceeds in respect of casualty to the Purchased Assets to the
replacement or rebuilding of the Purchased Assets; provided, that the
foregoing shall not affect Purchaser's rights in the event the
representation contained in Section 8.12 is not correct as of the
Closing.
(c) Without limiting the generality of the foregoing, from the date
hereof through the Closing Date, unless otherwise agreed in writing by
Purchaser, Seller shall not with respect to the Business, and shall not
permit any Purchased Subsidiary to:
(i) sell, lease, license or otherwise dispose of, or agree to
sell, lease, license or otherwise dispose of, any interest in
any of the Purchased Assets of the Business that are material,
individually or in the aggregate, to the Business, taken as a
whole, except for sales of inventory in the ordinary course of
business consistent with past practice;
(ii) permit, allow or subject any of the Purchased Assets to
any material mortgage, pledge, security interest, encumbrance
or lien or suffer such to be imposed, except for Permitted
Liens;
(iii) except in the ordinary course of business, consistent
with past practice or as required by law or pursuant to the
terms of a collective bargaining agreement, increase in any
manner the compensation of, or enter into any new bonus or
incentive agreement or arrangement with, any of the Business'
employees or amend any Benefit Plan or Foreign Plan with
respect to any employees of the Business; or
(iv) enter into one or more new agreements or contracts which
require the delivery by it of performance bonds in amounts
exceeding, in aggregate, twenty-five thousand dollars
($25,000);
(v) enter into any agreements other than in the ordinary
course of business; or
(vi) make any capital expenditures exceeding, in the
aggregate, $250,000, except as set forth in Schedule
7.3(c)(vi);
7.4 ACTIONS OF PURCHASER: Purchaser shall use commercially reasonable
efforts to perform and satisfy all conditions to Closing to be performed or
satisfied by Purchaser under this Agreement by the Closing Date or such other
date by which performance is required hereunder.
7.5 PUBLIC ANNOUNCEMENTS: From and after the date hereof and through
the Closing Date, Seller and Purchaser shall consult with each other before
issuing any press releases or
13
otherwise making any public statements with respect to this Agreement and the
transactions contemplated hereby.
7.6 NO NEGOTIATIONS. Prior to the Closing, Seller shall not, nor shall
it give its permission to or authorize any officer, director, employee or
representative to, solicit or enter into negotiations or discussions of any kind
with any party, other than Purchaser or Parent, for the purchase and sale of all
or any portion of the Business or any of the Purchased Assets except with regard
to the sale of finished goods inventory in the ordinary course of business.
ARTICLE VIII
Representations and Warranties of Seller
Seller represents and warrants to Purchaser as follows:
8.1 ORGANIZATION AND AUTHORITY: Seller is a corporation duly organized,
validly existing and in good standing under the laws of Wisconsin, and Seller
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted, to execute and
deliver this Agreement and all other agreements, instruments and documents to be
delivered by Seller hereunder (the "Related Documents") and to perform the
obligations to be performed by it hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby.
8.2 PURCHASED SUBSIDIARIES: Except for the corporations listed on
Schedule 1.1 (the "Purchased Subsidiaries"), the Business does not currently own
any capital stock or other proprietary interest, directly or indirectly, in any
corporation or other entity or interest in any joint venture, whether or not a
separate legal entity is formed thereby. Schedule 1.1 correctly sets forth the
corporate name and the jurisdiction of incorporation with respect to each
Purchased Subsidiary. Each Purchased Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted and
is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or the nature of the business conducted by it makes such
qualification necessary except for any non-qualification which does not have a
material adverse effect on the business, operations, properties, prospects or
condition (financial or other) (a "Material Adverse Effect") of the Business.
The complete articles or certificate of incorporation and by-laws of each
Purchased Subsidiary, including in each case all amendments thereto, have been
provided to Purchaser. All the outstanding shares of the capital stock of each
class of each Purchased Subsidiary have been validly issued and are fully paid
and nonassessable and are owned, beneficially and of record, by Seller free and
clear of any Encumbrances. None of the Purchased Subsidiaries has issued any
securities, limited liability company interests or other ownership interests in
violation of any preemptive or similar rights and there are no outstanding (i)
securities or other ownership interests convertible into or exchangeable for any
shares of capital stock or other ownership interest of any of the Purchased
Subsidiaries; (ii) subscriptions, options, warrants, calls, commitments,
preemptive rights or other rights of any kind (absolute, contingent or
otherwise) entitling any third party to acquire or otherwise
14
receive from any of the Purchased Subsidiaries any shares of capital stock or
other securities or ownership interests; or (iii) contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any capital stock or ownership interests of any of the Purchased
Subsidiaries, any such convertible or exchangeable securities, or any such
subscriptions, options, warrants or rights. There are no shares of stock or
other securities, limited liability company interests or other ownership
interests of the Purchased Subsidiaries reserved for issuance for any purpose.
All capital contributions required to be made to SJBC prior to the Closing have
been made, and there are no remaining obligations of the Business to make
capital contributions to SJBC.
8.3 CORPORATE ACTION: NO CONFLICT: The execution and delivery by Seller
of this Agreement and the Related Documents and Seller's performance of the
transactions contemplated hereby and thereby have been duly authorized by all
requisite corporate action of Seller. This Agreement has been duly and validly
executed and delivered by Seller and is, and each of the Related Documents when
executed and delivered by Seller in accordance with its terms will be, the valid
and binding obligation of Seller, enforceable against Seller in accordance with
their respective terms, except as limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights generally. Except as
set forth in Schedule 8.3, neither the execution, delivery or performance by
Seller of this Agreement or any of the Related Documents, nor the consummation
by Seller of the transactions contemplated hereby or thereby, nor compliance by
Seller with any provision hereof or thereof will (i) conflict with or result in
a breach of any provision of the charter or by-laws of Seller or any Purchased
Subsidiary or (ii) violate any provision of law, statute, rule or regulation, or
any order, writ, injunction, permit, judgment or decree of any court or other
governmental or regulatory authority or (iii) result in a breach of, or
constitute a default under (with or without notice, lapse of time or both) or
result in the invalidity of, or accelerate the performance required by or cause
or give rise to any right of acceleration or termination of any right or
obligation pursuant to, or require the consent of the other party to, any
Assigned Contract or any agreement set forth as an exhibit to Seller's Annual
Report on Form 10-K for Seller's last fiscal year or any Quarterly Reports on
Form 10-Q or Current Reports on Form 8-K filed with the Securities and Exchange
Commission since the end of Seller's last fiscal year; (iv) result in the
creation of, or with the passage of time result in the creation of, any
Encumbrance upon any assets or properties of the Business; or (v) require the
Seller or any Purchased Subsidiary to obtain any consent of or make any filing
with any governmental entity or other person (other than as referred to in
clause (iii) above), except as may be required under the HSR Act, except where
the failure to obtain any such consent or make any such filing would have a
Material Adverse Effect on the Business.
8.4 FINANCIAL STATEMENTS AND RELATED MATTERS: Set forth in Schedule 8.4
hereto is an unaudited Statement of Net Assets of the Business as at September
30, 1998 (the "Reference Statement of Net Assets") and related unaudited
statements of income of the Business for the indicated period then ended. Such
financial statements are collectively referred to herein as the "Financial
Statements." The Financial Statements have been prepared from the books and
records of the Business, and the Reference Statement of Net Assets has been
prepared in accordance with (the accounting principles ("Seller's Accounting
Principles") attached as Schedule 8.4, consistently applied. The accounting
books and records
15
of the Business are accurate and complete in all material respects. The Business
has no direct or indirect liabilities, losses or obligations of any nature,
whether absolute, accrued, contingent or otherwise, that would be required to be
reflected on a balance sheet or the notes thereto prepared in accordance with
GAAP consistently applied other than (i) liabilities reflected, accrued or
reserved for in the Reference Statement of Net Assets; (ii) liabilities
disclosed in the Schedules to this Agreement; (iii) liabilities incurred in the
ordinary course of business subsequent to the date of the Reference Statement of
Net Assets and not inconsistent with past practice; (iv) liabilities or
performance obligations arising in the ordinary course of business (and not as a
result of a breach or default by the Seller or any Purchased Subsidiary out of
or under agreements, contracts, leases, arrangements or commitments to which the
Seller or a Purchased Subsidiary was a party as of the Balance Sheet Date; or
(v) liabilities under this Agreement.
8.5 REAL PROPERTY:
(a) Schedule 8.5(a) sets forth a list of all Owned Real Property and
all rights of the Business to acquire real property. Except for
Permitted Liens and the matters listed on Schedule 8.5(a)
(collectively, the "Permitted Owned Real Property Exceptions"), Seller
or a Purchased Subsidiary has good and marketable title to the Owned
Real Property, free and clear of all Encumbrances or other matters
affecting title.
(b) Schedule 8.5(b) sets forth a list of all Leases. Each Lease is in
full force and effect and all rent and other sums and charges payable
thereunder by Seller or a Purchased Subsidiary are current and no
notice of default by Seller or a Purchased Subsidiary or termination
under any Lease is outstanding. A complete and correct copy of each
Lease has been provided to Purchaser. All material work required to be
done by the Business as a tenant on such Real Property has been duly
performed.
(c) The improvements on the Real Property located in Milwaukee,
Wisconsin do not contain any interior or exterior structural defects or
any material defects in the plumbing, electrical, mechanical, heating,
ventilating or air conditioning systems. Such improvements do not
contain any conditions that would constitute a threat to worker health
or safety or conditions which would have a material adverse effect on
the ability of the Business to be conducted at such facility as
presently conducted. There has been no damage to any portion of the
Real Property caused by fire or other casualty which has not yet been
fully repaired or restored. All roofs and basements are in good
condition and free of leaks. There has been no notice from any
insurance company requesting the performance of any work or alteration
with respect to the Real Property.
(d) All Real Property has adequate water, sewer and electric supply for
its present use.
(e) To the Knowledge (as hereinafter defined) of Seller, there is no
pending or contemplated annexation or condemnation or similar
proceeding affecting all or any portion of the Real Property, proposed
or pending proceeding to change or redefine the zoning classification
of all or any portion of the Real Property and no pending imposition of
16
any special or other assessments for which Purchaser or a Purchased
Subsidiary would be responsible.
8.6 TANGIBLE ASSETS OTHER THAN OWNED REAL PROPERTY: Other than Owned
Real Property, which is the subject of Section 8.5 hereof, Seller and the
Purchased Subsidiaries have good, valid and marketable title to all the material
tangible assets of the Business, except those sold or otherwise disposed of in
the ordinary course of business consistent with Section 7.3(b), free and clear
of all Encumbrances, except for Permitted Liens and those tangible assets
subject to leases as set forth on Schedule 8.7. All material equipment included
in the Purchased Assets is in good working order and condition, ordinary wear
and tear excepted, and has been maintained in accordance with normal commercial
practice in all material respects. Except for the Excluded Assets, the Purchased
Assets comprise all assets necessary to operate the Business as presently
conducted in all material respects.
8.7 CONTRACTS, CUSTOMERS AND SUPPLIERS: (a) To the Knowledge of Seller,
Schedule 8.7 lists all material contracts, agreements, guarantees of
payment or performance, licenses, leases of personal property or
conditional sales contracts and all sales agency, sales representative
and severance agreements, and all employment and consulting agreements
providing for annual base payments in excess of $75,000, relating to or
affecting the Business which extend beyond the Closing Date, other than
(i) purchase orders and sales orders entered into in the ordinary
course of business and (ii) contracts which by their terms terminate or
are unconditionally terminable by Seller without penalty within one
year after the date hereof and which individually involve a commitment
for less than $125,000. Except as set forth on Schedule 8.7, Seller and
each Purchased Subsidiary have in all material respects performed all
the obligations required to be performed by them to date, and are not
in default in any respect under any Assigned Contract except for
possible defaults which do not in any material respect impair the
ability of the Business to conduct its operations as heretofore
conducted.
(b) There has not been any adverse change and there are no facts known
to Seller (or facts which arise between the date hereof and the
Closing) which may reasonably be expected to indicate that any adverse
change may occur in the business relationship of the Business with any
customer or supplier accounting for more than $500,000 of goods or
services provided during the 12 months prior to the date hereof; a list
of the ten largest customers and seven largest suppliers of the
Business (by dollar amounts) over the past 12 months is set forth in
Schedule 8.7. Contact names, phone numbers and addresses for such
customers and suppliers will be provided within five days of the date
hereof. Except as set forth in Schedule 8.7, neither the Seller nor, to
its Knowledge, any officer, director, relative or Affiliate of Seller
owns any interest in any person or entity which is a supplier or
customer of the Business (other than less than 5% of interests in
publicly-traded companies) or has any contractual arrangements with the
Business. Neither Seller nor any Purchased Subsidiary is engaged in
material disputes with any of its sales representatives or agents.
Except as set forth on Schedule 8.7, each such sales representative or
agent has remitted to Seller or a Purchased Subsidiary all amounts
collected from customers and owed to Seller nor any Purchased
Subsidiary. Except as set forth on Schedule 8.7, the Business has no
liability to Affiliates or third parties for indebtedness other than
trade payables for goods provided in the ordinary course of business
which are current, including without limitation indebtedness to
financial
17
institutions or any guaranty of the obligations of any other person;
and except as provided in Section 2.1(j) any such liability,
indebtedness or obligation will be terminated, contributed to capital
or otherwise provided for at Seller's expense on or prior to the
Closing Date.
8.8 LITIGATION: Except as set forth on Schedule 8.8, there have not
been during the past three years, nor are there presently, any claims, actions,
suits, or investigations pending, or to the Knowledge of Seller threatened,
against Seller or any Purchased Subsidiary affecting the Business, Purchased
Assets or Assumed Liabilities, or against the transactions contemplated by this
Agreement, at law or in equity or before or by any court or other governmental
agency or instrumentality, domestic or foreign, or any arbitral body an adverse
outcome of which would have a Material Adverse Effect on the Business or a
material adverse effect on the ability of Seller to consummate the transactions
contemplated hereby. Except as set forth on Schedule 8.8, there are no charges
or complaints of discrimination pending before the Equal Employment Opportunity
Commission or any state or local agency with respect to the Business. There is
no outstanding order, injunction or decree affecting the Business or the ability
of Seller to consummate the transactions contemplated hereby.
8.9 COMPLIANCE WITH LAW:
(a) Except as set forth on Schedule 8.9(a), each of Seller, with
respect to the Business, and the Purchased Subsidiaries, is duly
complying and has during the past three years duly complied, in all
material aspects, in respect of its business, operations and
properties, with applicable laws, rules, regulations, orders, building
and other codes, zoning and other ordinances, permits, authorizations,
judgments and decrees of all governmental entities. Except as set forth
on Schedule 8.9(a), Seller has no Knowledge of any present or past
failure so to comply or of any past or present events, activities or
practices of the Business which may be construed to indicate
interference with or prevention of continued compliance in any material
respect, with any laws, rules or regulations or which may give rise to
any common law or statutory liability, or otherwise form the basis of
any material claim, action, suit, proceeding, hearing or investigation
against the Business.
(b) Each of Seller, with respect to the Business, and the Purchased
Subsidiaries, has duly obtained all permits, concessions, grants,
franchises, licenses and other governmental authorizations and
approvals (collectively, "Permits") necessary for the conduct of its
business; each of the foregoing is set forth in Schedule 8.9(b) and is
in full force and effect; there are no proceedings pending or, to the
Knowledge of the Seller, threatened which may result in the revocation,
cancellation, suspension or modification thereof; and the consummation
of the transactions contemplated hereby will not result in any such
revocation, cancellation, suspension or modification.
This Section 8.9 does not relate to environmental matters, it being the
intent of the parties that the only Section relating to environmental matters
shall be Section 8.13.
8.10 EMPLOYEE BENEFIT PLANS:
(a) Schedule 8.10(a) lists all the employee benefit plans, policies and
18
arrangements (whether or not written, insured or self-insured)
including, without limitation, each "employee benefit plan" (as defined
in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) and each other profit sharing, compensation,
fringe benefit, health, life, stock option, bonus, deferred
compensation, excess, supplemental executive compensation, cafeteria,
employee stock purchase, vacation, sickness, post- retirement,
disability, severance, change in control, retention, individual
employment, consulting or other plan, policy, arrangement, trust fund
or agreement established, sponsored, maintained or contributed to (or
with respect to which any obligation to contribute has been undertaken)
by Seller or any ERISA Affiliate during the last six years with respect
to active or retired U.S. employees of the Business or their
beneficiaries (the "Benefit Plans"). For purposes of this Agreement, an
"ERISA Affiliate" is any entity that would be deemed a "single
employer" with the Seller under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code") or Section 4001
of ERISA.
(b) All Benefit Plans are maintained and operated in all material
respects in accordance with their respective terms and are in
compliance in all material respects with the applicable requirements of
law, including without limitation ERISA and the Code.
(c) Except as set forth on Schedule 8.10(c),each Benefit Plan which is
intended to qualify under Section 401(a) of the Code has received a
favorable determination letter that it is so qualified and that its
trust is exempt from taxation, and Seller is not aware of any facts
which caused or could reasonably be expected to cause such favorable
determination letters to be revoked or the loss of qualification or
exemption.
(d) Neither Seller nor any ERISA Affiliate maintains or contributes to,
has maintained or contributed to, has been required to contribute to or
has any liability with respect to a "multi-employer plan," as such term
is defined in Section 414(f) of the Code or Sections 3(37) or 4001(a)
of ERISA, with respect to current or former employees of the Business.
(e) No "reportable event" within the meaning of Section 4043(b) of
ERISA has occurred, or is expected to occur, and the consummation of
the transactions contemplated by this Agreement will not result in a
reportable event. No amounts payable under any Benefit Plan will fail
to be deductible for federal income tax purposes by virtue of Sections
280G of the Code. Except as set forth on Schedule 8.10(e), neither the
Company nor any ERISA Affiliate has any unfunded liabilities pursuant
to any Benefit Plan that is an employee pension plan under Section 3(2)
of ERISA.
(f) Schedule 8.10(f) lists all employee benefit plans maintained by
Seller or the Business (collectively, the "Foreign Plans") for the
benefit of current salaried and hourly non-U.S. employees ("Foreign
Participants") and persons claiming through them, as well as former
salaried and hourly non-U.S. employees of the Business other than a
plan (or contribution to a plan) that is a governmental plan. Each
Foreign Plan intended to qualify as tax-registered or tax-favored plan
under a foreign jurisdiction is the subject of a favorable
determination or similar approval, to the extent available, of the
applicable foreign governmental authorities and nothing has occurred or
is expected to occur that impaired or
19
could impair such determination or approval or result in the
imposition of any penalty or liability. With respect to each Foreign
Plan, the fair market value of the assets of each funded Foreign Plan,
the liability of each insurer for any Foreign Plan funded through
insurance or the book reserve established for any Foreign Plan,
together with any accrued contributions, is sufficient to procure or
provide for the accrued benefit obligations, as of the date of this
Agreement, with respect to all current and former participants in such
Foreign Plan according to the actuarial assumptions and valuations most
recently used to determine employer contributions to such Foreign Plan,
which shall be reasonable, and no transaction contemplated by this
Agreement shall cause such assets or insurance obligations to be less
than such benefit obligations. Seller and each Purchased Subsidiary has
performed, in all material respects, all obligations required with
respect to each Foreign Plan and each Foreign Plan is maintained and
operated in all material respects in accordance with its terms and is
in compliance in all material respects with applicable law. Each
Foreign Plan covers solely employees of the Purchased Subsidiaries and
does not cover employees of Seller or any ERISA Affiliate other than
the Purchased Subsidiaries.
(g) All payments required by any Benefit Plan, any Foreign Plan, any
collective bargaining agreement or other agreement, or by law
(including, without limitation, all contributions, insurance premiums,
or intercompany charges) have been made on a timely basis and, with
respect to all periods through the date of the Closing, shall have been
made prior to the Closing or provided for by Seller, as applicable, by
full accruals on the financial statements relating to the Business.
Except as contemplated under Sections 12.5 and 12.6 hereunder, the
consummation of the transactions contemplated by this Agreement will
not give rise to any liability, including, without limitation,
liability for severance pay, unemployment compensation, termination pay
or withdrawal liability, or accelerate the time of payment or vesting
or increase the amount of compensation or benefits due to any employee
or director of the Business (whether current, former, or retired) or
their beneficiaries solely by reason of such transactions. Neither the
Seller nor any ERISA Affiliate, or any officer or employee thereof, has
made any promises or commitments, whether legally binding or not, to
create any additional plan, agreement, or arrangement, or to modify or
change any existing Benefit Plan or Foreign Plan as it relates to the
Business.
8.11 PURCHASED RIGHTS: EXCEPT AS SET FORTH IN SCHEDULE 8.11,
(a) Seller or a Purchased Subsidiary owns, possesses, or has the right
to use all the Purchased Rights. Except as set forth in Schedule 8.11,
such Purchased Rights comprise all intellectual property necessary for
the Business to operate as presently conducted in all material
respects.
(b) To the Knowledge of Seller, no product or service manufactured,
marketed, distributed or sold or proposed to be manufactured, marketed,
distributed or sold by the Business, or any intellectual property
otherwise used by the Business, infringes, misappropriates or misuses
any rights of any other person; and there is no pending or, to the
Knowledge of Seller, threatened Claim against Seller, the Business or
any Purchased Subsidiary contesting the validity of or right to use any
of the Purchased Rights or any intellectual property licensed to the
Business pursuant to an Assigned Contract. Except as set
20
forth on Schedule 8.11, neither the Seller, on behalf of the Business,
nor any Purchased Subsidiary, has asserted any claim against any other
person that such person has violated, infringed, misappropriated or
misused any Purchased Right or any intellectual property licensed to
the Business pursuant to an Assigned Contract, nor, to the Knowledge of
Seller, is there any basis for such an assertion. Invention assignment
and confidentiality agreements in the form previously provided to the
Purchaser have been obtained form substantially all employees of the
Business.
8.12 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
Schedule 8.12and Section 7.3, since the date of the Reference Statement of Net
Assets, the Business has been conducted only in the ordinary course and
consistent with past practice, and since such date neither Seller, with respect
to the Business, nor any Purchased Subsidiary has suffered any Material Adverse
Effect on the Business; suffered any material damage, destruction or casualty
loss (whether or not covered by insurance); granted any increase in the rate or
terms of compensation payable or to become payable to any of its directors,
officers or key employees, except increases occurring in the ordinary course of
business in accordance with its customary practices; amended or granted any
increase in the rate or terms of any employee benefit plan payment or
arrangement; entered into any material agreement except agreements in the
ordinary course of business, or any employment or severance agreement; made any
change in its accounting methods, principles or practices; borrowed or agreed to
borrow any funds for which Purchaser or a Purchased Subsidiary would be liable
after the Closing; paid, discharged or satisfied any claim, liability or
obligation in excess of $250,000, other than the payment, discharge or
satisfaction of liabilities and obligations incurred in the ordinary course of
business and consistent with past practice; prepaid any obligation having a
fixed maturity of more than 90 days form the date such obligation was issued or
incurred; not paid, within a reasonable date of when due, consistent with past
practice, any accounts payable in excess of $250,000 in the aggregate, or sought
the extension of the payment date of any accounts payable in excess of $250,000
in the aggregate; written down the value of any inventory; permitted or allowed
any of its Property or assets to be subjected to any Encumbrance, except for
liens for Permitted Encumbrances and Encumbrances specifically set forth in the
schedules hereto; written off as uncollectible any notes or accounts receivable
in excess of $250,000; agreed to guaranty the obligations of any other person or
entity; granted any person or entity any power of attorney; canceled any debts
or waived any claims or rights in excess of $100,000; sold, transferred or
otherwise disposed of any of its properties or assets in excess of $100,000 in
the aggregate, except for the sale of inventory in the ordinary course of
business and consistent with past practice; disposed of, abandoned or permitted
to lapse any rights to the use of any Purchased Rights or disposed of or
disclosed, or permitted to be disclosed (except as necessary in the conduct of
its business), to any person other than representatives of Purchaser, any trade
secret, formula, process, know-how or similar information not theretofore a
matter of public knowledge; made any capital expenditures or commitments in
excess of $250,000 in the aggregate for repairs or additions to property, plant,
equipment or tangible capital assets; amended or taken steps to amend the
organizational documents of any Purchased Subsidiary; suffered any loss or
become aware of any prospective loss of any customers, suppliers, distributors,
accounts, product line or sales or management personnel; or agreed, whether in
writing or otherwise, to take any action described in this Section 8.12.
21
8.13 ENVIRONMENTAL MATTERS:
(a) To the Knowledge of Seller, the Business and the Purchased Assets
are in compliance with Environmental Requirements, except for such
noncompliances as would not have a Material Adverse Effect on the
Business. "Environmental Requirements"shall mean all federal, state and
local statutes, regulations, and ordinances and the common law
concerning pollution or protection of human health, safety or the
environment, including without limitation all those relating to the
presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing,
processing, discharge, release, threatened release, control, or cleanup
of any hazardous materials, substances or wastes, as such requirements
are enacted and in effect on or prior to the Closing Date.
(b) To the Knowledge of Seller and except as set forth on Schedule
8.13, the Business has not received any written notice, report or
other information regarding any actual or alleged material violation
of Environmental Requirements, or any Environmental Liabilities,
including any investigatory, remedial or corrective obligations,
relating to the Business or the Purchased Assets arising under
Environmental Requirements, the subject of which would have a Material
Adverse Effect on the Business. For purposes of this Agreement, the
term "Environmental Liabilities" shall mean any claims, judgments,
damages (including punitive damages), losses, penalties, fines,
liabilities, encumbrances, liens, violations, costs, and expenses
(including attorneys' and consultants' fees) of investigation,
remediation, monitoring, or defense of any matter relating to human
health, safety, or the environment of whatever kind or nature by any
party, entity, authority which are incurred as a result of (i) the
existence (or alleged existence) prior to or on the Closing Date of
materials regulated under Environmental Requirements ("Hazardous
Substances") in, on, under, at, or emanating from the Real Property,
the Purchased Assets, or any real property formerly owned, leased,
operated, or managed by Seller or any Purchased Subsidiary; (ii) the
offsite transportation, treatment, storage, or disposal (or alleged
offsite transportation, treatment, storage, or disposal) of Hazardous
Substances generated by Seller or any Purchased Subsidiary; or (iii)
the violation of or non-compliance with (or alleged violation of or
non-compliance with) any Environmental Requirements by Seller or any
Purchased Subsidiary, or which otherwise arise under Environmental
Requirements as a result (or allegedly as a result) of the acts or
omissions of Seller or any Purchased Subsidiary.
(c) Seller and the Purchased Subsidiaries have all the Permits
necessary for the conduct of the Business and for the operation of or
on the Purchased Assets which are required under the Environmental
Requirements, all of which are set forth on Schedule 8.13 (the
"Environmental Permits"). Seller and the Purchased Subsidiaries are in
material compliance with the terms and conditions of all such
Environmental Permits and, to the Knowledge of Seller, no reason exists
why Purchaser and the Purchased Subsidiaries would not be capable of
continued operation of the Business and the Purchased Assets in full
compliance with the Environmental Permits and Environmental
Requirements.
22
(d) Neither Seller nor any Purchased Subsidiary has contractually, by
operation of law, by Environmental Requirements, or otherwise assumed
or succeeded to any environmental liabilities of any predecessors or
any other person or entity which relate in any way to the Business or
the Purchased Assets.
(e) Except as set forth on Schedule 8.13, there are no conditions
existing with respect to the Business or any Purchased Asset that
require, or which with the giving of notice or the passage of time or
both will reasonably likely require, remedial or corrective action,
removal, monitoring, or closure pursuant to Environmental Requirements.
(f) This Section 8.13 contains the sole and exclusive representations
and warranties of Seller with respect to any environmental matters,
including without limitation any arising under any Environmental
Requirements.
8.14 ACCOUNTS RECEIVABLE; INVENTORY; Product Warranty: Except as
provided on Schedule 8.14, the Purchased Receivables represent sales actually
made in the ordinary course of business for goods or services delivered or
rendered in bona fide arm's-length transactions in accordance with the standard
credit practices of the Business, have not been extended or rolled over in order
to make them current, are not subject to counterclaims or setoffs and constitute
only valid, undisputed claims. Except as provided in Schedule 8.14 or reserved
for in Schedule 8.4, the Purchased Inventories do not include any items which
are obsolete, damaged, below standard quality, non-merchantable or slow moving
(i.e., items that are for discontinued or expected to be discontinued product
lines, or items that (A) have not been used or sold within 12 months prior to
the date hereof or (B) are in quantities exceeding the amount that has been used
or sold within that 12-month period). Except for the Telcom product line, which
is dealt with under Section 15.8, Seller has no reason to expect that, after the
Closing, there will be any increase in the rates of claims relating to
warranties for any line of the products sold by the Business from the rate for
that product line reflected in Schedule 8.14. To the Knowledge of Seller,
Schedule 8.14 sets forth in reasonable detail an accurate and complete summary
of all product warranty claims made by customers of the Business from January 1,
1997 to the date hereof and also sets forth a brief description of each express
warranty, service or repair policy applicable to the products sold by the
Business.
8.15 TAX MATTERS:
(a) In relation to the Purchased Subsidiaries and except as set forth
on Schedule 8.15, (i) Seller has paid all Taxes (as hereinafter
defined) required to be paid through the date hereof and will pay all
Taxes required to be paid by it for periods ending on or prior to the
Closing Date and has filed or will, prior to the Closing, file all
returns, declarations of estimated Tax, Tax reports, information
returns and statements required to be filed by it prior to the Closing
(other than those for which extensions shall have been granted prior to
Closing) relating to any Taxes with respect to any income, properties
or operations of Seller prior to the Closing (collectively, "Returns");
(ii) as of the time of filing, the Returns correctly reflected (and, as
to any Returns not filed as of the date hereof, will correctly reflect)
the facts regarding the income, business, assets, operations,
activities and status of Seller and any other
23
information required to be shown therein; (iii) Seller has timely paid
or, if not yet due, made provisions on its books and records for all
Taxes relating to the operations of the Business that have been shown
as due and payable on the Returns that have been filed; and (iv) Seller
has adequately accrued for any unpaid Taxes relating to any period
ending prior to the Closing Date.
(b) As of the Closing Date, there are no outstanding federal, state or
local tax assessments from any taxing or governmental authority against
which the Purchased Assets have been levied, or which have given rise
to any security interest or other encumbrance thereon.
(c) "Taxes" means all income taxes (including any tax on or based upon
net income, or gross income, or income as specially defined, or
earnings, or profits, or selected items of income, earnings or profits)
and all gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property or windfall profits taxes, real property
tax, alternative or add-on minimum taxes, customs duties or other
taxes, fees, assessments or charges of any kind whatsoever, together
with any interest and any penalties, additions to tax or additional
amounts imposed by any governmental authority.
8.16 LABOR MATTERS: Except as disclosed on Schedule 8.16, (a) neither
Seller nor any Purchased Subsidiary is a party to or subject to any collective
bargaining agreement with any labor organization with respect to any operations
of the Business; (b) there are no agreements with labor unions, work councils or
associations representing employees of the Business, and no unions or other
collective bargaining units have been certified or recognized by any of Seller,
with respect to the Business, or the Purchased Subsidiaries as representing any
of its employees and there are no existing union organizing efforts or
representation questions with respect to any of the employees of the Business;
and (c) there is no labor strike or dispute, grievance, arbitration proceeding,
slowdown or stoppage, or charge of unfair labor practice actually pending,
threatened against or affecting the Business, nor have there been any of the
foregoing within the past three years. Schedule 8.16 sets forth a list of all
employees of the Business with an annual base salary in excess of $100,000 and
all individuals who are consultants and independent contractors of the Business
who have during the last 12 months received, or who are entitled to receive in
the future, annual compensation in excess of $100,000. Purchaser has been
provided with accurate and complete copies of all personnel manuals and policies
of the Business.
8.17 QUESTIONABLE PAYMENTS. To the Knowledge of Seller, none of the
Seller, with respect to the Business, the Purchased Subsidiaries or any
director, officer, agent, employee, or any other person acting on behalf of the
Seller, with respect to the Business, or any of the Purchased Subsidiaries, has,
directly or indirectly, used any corporate funds for unlawful contributions,
gifts, entertainment, or other unlawful expenses; made any unlawful payment to
federal, state, local or foreign government officials or employees or to
political parties or campaigns; established or maintained any unlawful fund of
corporate monies or other assets; made or received any bribe, or any unlawful
rebate, payoff, influence payment, kickback or other payment; given any favor or
gift which is not deductible for federal income tax purposes;
24
or made any bribe, kickback, or other payment of a similar or comparable nature,
to any federal, state, local or foreign governmental or non-governmental person,
regardless of form, whether in money, property, or services, to obtain favorable
treatment in securing business or to obtain special concessions, or to pay for
favorable treatments for business or for special concessions secured.
8.18 DISCLOSURE. The representations and warranties contained in
Sections 8.1-8.17, inclusive, do not intentionally and fraudulently contain any
untrue statement of a material fact or intentionally and fraudulently omit to
state any material fact necessary in order to make the statements contained
therein not misleading. While Seller has attempted in good faith to cross
reference between Schedules, the parties agree that any item disclosed in any
Schedule or listed in the index to the Data Room established by Seller and
provided to Purchaser prior to the date hereof, has for all purposes and for all
subdivisions of Article VIII been disclosed by Seller to the extent, for such
purposes and for all subdivisions of Article VIII for which a reasonable
reference can be drawn from the item as disclosed in the Data Room or a Schedule
hereto; provided, that no information that has been redacted shall be deemed to
have been provided to Purchaser. Except where information has been specifically
identified as being redacted, all copies of documents provided to Purchaser
prior to the date hereof are true, complete and correct copies of such
documents.
ARTICLE IX
Representations and Warranties of Purchaser
Purchaser represents and warrants:
9.1 ORGANIZATION AND AUTHORITY: Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Delaware, and
Purchaser has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being conducted, to
execute and deliver this Agreement and the Related Documents and to perform the
obligations to be performed by it hereunder and thereunder, and to consummate
the transactions contemplated hereby and thereby.
9.2 CORPORATE ACTION; NO CONFLICT: The execution, delivery and
performance by Purchaser of this Agreement and the Related Documents to be
delivered by Purchaser and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been duly and
validly executed and delivered by Purchaser and is, and each of the Related
Documents when executed and delivered by Purchaser in accordance with its terms
will be, the valid and binding obligation of Purchaser, enforceable in
accordance with the terms thereof, except as limited by bankruptcy, insolvency,
reorganization or similar laws affecting creditors rights generally and except
that the term "enforceable" shall not be deemed to include the availability of
the remedy of specific performance or any other equitable remedy available in
the discretion of a court. Neither the execution, delivery or performance by
Purchaser of this Agreement or any Related Document, nor the consummation by
Purchaser of the transactions contemplated hereby or thereby, nor compliance by
Purchaser with any provision hereof or thereof will (i) conflict with or result
in a breach of any provision of the
25
charter or by-laws of Purchaser or (ii) violate any provision of law, statute,
rule or regulation or any order, writ, injunction, permit, judgment or decree of
any court or other governmental or regulatory authority applicable to Purchaser
or (iii) result in a breach of, or constitute a default under (with or without
notice, lapse of time or both) or result in the invalidity of, or accelerate the
performance required by or cause or give rise to any right of acceleration or
termination of any right or obligation pursuant to, or require the consent of
the other party to, any agreement set forth as an exhibit to Parent's Annual
Report on Form 10-K for Parent's last fiscal year or any Quarterly Reports on
Form 10-Q or Current Reports on Form 8-K filed with the Securities and Exchange
Commission since the end of Parent's last fiscal year, to the extent such
agreements will be in effect on the Closing Date; (iv) result in the creation
of, or with the passage of time result in the creation of, any Encumbrance upon
any assets or properties of the Purchaser, or (vii) require Parent to obtain any
consent of or make any filing with any governmental entity, except as may be
required under the HSR Act, except where the failure to obtain any such consent
or make any such filing would have a material adverse effect on the business,
operations, properties, prospects or condition (financial or other) of Parent.
ARTICLE X
Conditions to Obligations of Purchaser
The obligations of Purchaser under this Agreement are, at its option,
subject to the fulfillment, on or before the Closing Date, of each of the
following conditions precedent:
10.1 PERFORMANCE OF COVENANTS: Seller shall have performed and complied
with all terms, covenants and conditions required by this Agreement to be
performed or complied with by it on or before the Closing Date.
10.2 REPRESENTATIONS AND WARRANTIES: The representations and warranties
of Seller contained in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date as though such
representations and warranties had been made as of the Closing Date, except (a)
with respect to breaches or alleged breaches of the representations and
warranties contained in Article VIII that are included in a Notice of Breach
delivered pursuant to Section 7.1, where the bona-fide claims for a proposed
adjustment to Purchase Price are no greater than an aggregate of $15 million
(the "Walkaway Amount"); (b) to the extent of changes or developments
contemplated by the terms of this Agreement; and (c) for representations and
warranties that speak as of a specific date or time (which need only be true and
correct as of such date or time); and Purchaser shall have received at the
Closing a certificate of an officer of Seller, dated as of the Closing Date, to
such effect.
10.3 OPINION OF COUNSEL: Purchaser shall have received from Seller's
counsel an opinion dated the Closing Date as to matters related to SJBC, in form
and substance reasonably satisfactory to Purchaser
10.4 GOVERNMENT FILINGS; CONSENTS AND APPROVALS: All applicable waiting
periods (including any extensions thereof) required under the HSR Act and, all
equivalent regulations which require filings to be made in respect of the
Purchased Subsidiaries, shall have expired
26
or been terminated, without the threat or initiation of legal action by the
relevant government authority. All other required governmental and third-party
consents and approvals and all Permits necessary for Purchaser to operate the
Business in all material respects as conducted by Seller on the date hereof
shall have been obtained without the imposition of terms that would have an
adverse effect on Purchaser or the Business.
10.5 NO PROCEEDINGS: There shall not be pending or threatened, any
claim, suit, action or other proceeding brought by a governmental agency before
any court or governmental agency, seeking to prohibit or restrain the
transactions contemplated by this Agreement or seeking damages in connection
therewith.
10.6 AUTHORIZATION: All action necessary to authorize the execution,
delivery and performance by Seller of this Agreement and each of the Related
Documents and the consummation of the transactions contemplated hereby and
thereby shall have been duly and validly taken by Seller, and Seller shall have
full power and right to consummate the transactions contemplated hereby and
thereby.
10.7 SECRETARY'S CERTIFICATE: Seller shall have delivered to Purchaser
a certificate of the Secretary or Assistant Secretary of Seller as to the
corporate resolutions authorizing the execution and delivery of this Agreement
and the transactions contemplated thereby and the incumbency and authority of
the person(s) signing this Agreement and the Related Documents for Seller.
10.8 RESIGNATION. Purchaser shall have received the written evidence of
the resignation or removal of those persons referred to in Section 5.1(f) from
all positions with any of the Purchased Subsidiaries.
10.9 RELOCATION OF R&D LABORATORY. The equipment listed in Schedule
1.1(a)(iii) and the 10 employees connected therewith shall have been relocated
to the Keefe Avenue facility.
10.10 ACCOUNTS RECEIVABLE AGING. Purchaser shall have received a true,
complete and correct accounts receivable aging of the Business as the last month
end prior to the Closing Date.
10.11 TITLE INSURANCE. Purchaser shall have obtained owners policies of
title insurance on the Owned Real Property in amounts, and containing only such
exceptions, as are satisfactory to Purchaser.
10.12 TAXES FOR JOHNSON CONTROLS BATTERY (U.K.) Ltd. Seller shall
provide Purchaser with evidence that it has made estimated tax payments equal to
its pro-rated tax liability for the operations of Johnson Control Batteries
(U.K.) Ltd. through the Closing, which shall have been made within five days
prior to the Closing Date.
10.13 FINANCING. Purchaser shall have obtained financing for the
acquisition and ongoing operations of the Business on terms acceptable to
Purchaser.
27
10.14 SUPPLY ARRANGEMENTS. At Purchaser's election, Seller and
Purchaser shall have entered into a five-year supply arrangement pursuant to
which Purchaser may purchase lead for the Business on the same terms as Seller
is able to purchase it on the date hereof; provided, that if any such lead is
provided to Seller by third party providers on the date hereof pursuant to
supply agreements having a term of less than five years from the Closing Date,
Purchaser shall have the right to "piggyback" on any renewals of Seller's
existing agreements with those suppliers upon the same terms and conditions as
Seller for up to a total of five years. At Purchaser's election, Seller and
Purchaser shall have entered into an agreement pursuant to which Seller would
add the capital equipment it would need to supply Purchaser's needs for poly
jars for the Business for a minimum of five years at prices in effect on the
date hereof and tooling to produce poly jars for such period at an agreed upon
price.
10.15 OTHER AGREEMENTS. Seller and Purchaser shall have entered into
agreements providing for the continuation of all service, license, supply and
other agreements and arrangements between Seller, its ultimate parent company or
any of their respective Affiliates and the Business, other than with respect to
back- office services, on terms reasonably acceptable to Purchaser and Seller.
These arrangements will include, among other things, an agreement having a term
of at least five years concerning the provision of technical services, products,
distribution and licenses regarding industrial and SLI batteries to SJBC, a
distribution agreement with Johnson Controls S.P.A., a license or sub-license of
the Lemulsen patent and other trademark and technology license agreements.
Seller and Purchase shall have also entered into the Transition Services
Agreement referred to in Section 13.13.
10.16 CHINA. If all conditions to Closing are satisfied other than
conditions with respect to SJBC, then, notwithstanding anything contained in
this Agreement to the contrary:
(a) the Closing shall proceed as to all components of the Business
other than SJBC;
(b) all representations, warranties, covenants, conditions, indemnities
and other provisions of this Agreement (and any other agreements
entered into between Seller and Purchaser at the Closing) relating to
SJBC shall continue in full force and effect until the consummation of
the acquisition of SJBC by Purchaser (the "SJBC Closing"); provided,
that either party may terminate the obligation of Purchaser and Seller
to consummate the SJBC Closing if the SJBC Closing has not occurred on
or prior to the close of business on November 23, 1999 or such other
date as the parties may agree;
(c) Purchaser, Seller and their respective Affiliates shall enter into
all interim agreements reasonably necessary for the business of SJBC to
continue being conducted as conducted on the date hereof, on terms
reasonably agreeable to the parties;
(d) on the Closing Date, the cash portion of the Purchase Price payable
by Purchaser shall be $120 million, and the assets and liabilities of
SJBC shall be excluded from the Reference Statement of Net Assets and
the Closing Statement of Net Assets for the purpose of the post-closing
adjustment pursuant to Article IV;
28
(e) prior to the SJBC Closing, SJBC shall be permitted to manufacture,
sell and distribute industrial batteries in China and elsewhere in the
world as provided for in existing agreements between SJBC and Seller on
behalf of the Business;
(f) prior to the SJBC Closing, Seller shall not permit SJBC to make any
dividends or distributions, and shall cause SJBC to apply all cash
generated by the SJBC business in excess of normal operational needs to
(i) capital expenditures required under the joint venture agreement of
SJBC or otherwise approved by Purchaser and (ii) the repayment of
third-party indebtedness and intercompany trade payables owing to
Seller and its Affiliates;
(g) no portion of the Purchase Price will be allocated to SJBC until
after the SJBC Closing;
(h) at the SJBC Closing, Purchaser shall pay the remaining $15 million
cash portion of the initial Purchase Price to Seller, which shall be
subject to adjustment as provided in Article IV based on a separate
Closing Statement of Net Assets being prepared for SJBC;
(i) at the SJBC Closing, the actions contemplated by Article V to have
taken place at the Closing with respect to SJBC shall take place; and
(j) on the SJBC Closing Date, the agreements and arrangements referred
to in Section 10.15 with respect to the SJBC portion of the Business
shall be entered into.
ARTICLE XI
Conditions to Obligations of Seller
The obligations of Seller under this Agreement are, at its option,
subject to the fulfillment, on or before the Closing Date, of each of the
following conditions precedent:
11.1 PERFORMANCE OF COVENANTS: Purchaser shall have performed and
complied with all terms, covenants and conditions required by this Agreement to
be performed or complied with by it on or before the Closing Date.
11.2 REPRESENTATIONS AND WARRANTIES: The representations and warranties
of Purchaser contained in this Agreement shall be true and correct in all
material respects as the date hereof and as of the Closing Date, as though made
on and as of the Closing Date, except to the extent of changes or developments
contemplated by the terms of the Agreement, and except for representations and
warranties that speak as of a specific date or time (which need only be true and
correct as of such date or time); and Seller shall have received at the Closing
a certificate of an officer of Purchaser, dated as of the Closing Date, to such
effect.
11.3 NOTICE OF BREACH: There shall not have been delivered by Purchaser
Notices of Breach under Section 7.1 which set forth bona-fide claims for
proposed adjustments to the Purchase Price which are greater in the aggregate
than the Walkaway Amount.
11.4 GOVERNMENT FILINGS: All applicable waiting periods (including any
extensions
29
thereof) required under the HSR Act and all equivalent laws and regulations
which require filings to be made in respect of the Purchased Subsidiaries, shall
have expired or been terminated, without the threat or initiation of legal
action by the relevant government authority.
11.5 AUTHORIZATION: All action necessary to authorize the execution,
delivery and performance of this Agreement and each of the Related Documents,
and the consummation of the transactions contemplated hereby and thereby shall
have been duly and validly taken by Purchaser, and Purchaser shall have full
power and right to consummate the transactions contemplated hereby and thereby.
ARTICLE XII
Employee Matters
12.1 SCOPE OF SECTION: This Article XII contains the covenants and
agreements of the parties with respect to (a) the status of employment of the
employees of Seller employed in the Business (the "Employees"), and (b) employee
benefit plans.
12.2 EMPLOYMENT STATUS: Purchaser shall offer employment to all of the
Employees who are Active Employees of the Business on the Closing Date (except
those employees listed on Schedule 12.2, who shall be treated in the manner
described in such Schedule); provided, however, any such offer of employment
shall be contingent on the consummation of the Closing. Employees who are on an
approved leave of absence and who have a right to return to work in the Business
or whose employment is covered by a collective bargaining agreement and who are
on layoff with a right under such agreement to return to work in the Business or
who are on short-term (including pregnancy leave) or military leave are to be
considered actively employed, but that Employees on long-term medical and/or
workers compensation disability, and Employees whose employment has terminated
or will terminate prior to the Closing Date are not to be considered actively
employed. For the purposes of this Agreement (i) the terms "right to return to
work", "short-term disability", "long-term disability", and "pregnancy leave"
shall be construed in accordance with the personnel policies of the Business
covering Employees as of the Closing Date (if applicable), and (ii) Employees
who are actively employed in the Business on the Closing Date, as herein
defined, shall be referred to as "Active Employees". Active Employees who
affirmatively accept Purchaser's offer of employment are hereinafter
collectively called "Transferred Employees" and all Employees who are not
Transferred Employees are hereinafter collectively called "Retained Employees."
Notwithstanding the foregoing, nothing herein shall be construed as to prevent
Purchaser from terminating the employment of any Transferred Employee at any
time after the Closing Date for any reason (or no reason). Subject to applicable
law and to the terms of any collective bargaining agreement that Purchaser
assumes or is required to assume as a result of this Agreement or under
applicable law, as of the Closing Date, Purchaser shall offer employment to each
Active Employee at a base salary level equivalent to his/her current base salary
and shall provide employee benefits, including, without limitation, medical and
dental benefits, which are comparable to those benefits provided generally by
Purchaser to its employees who are not Transferred Employees. Notwithstanding
the foregoing, the parties hereto acknowledge that, subject to the terms of any
collectively bargaining agreement
30
assumed by Purchaser under Section 12.8, Purchaser retains, in its sole
discretion, the right to amend and/or terminate any or all of its employee
benefit plans or programs from time to time. Seller shall deliver to Purchaser
as of the Closing Date all personnel files relating to Transferred Employees.
12.3 PRIOR SERVICE. With regard to non-represented Transferred
Employees who performed at least one year of service with Seller prior to the
Closing, Purchaser shall cause each employee benefit plan or compensation
arrangement established, maintained or contributed to by Purchaser to grant any
such Transferred Employee credit for all service with Seller for purposes of
eligibility and vesting (and not for benefit accrual purposes) with respect to
any employee pension benefit plan, as defined in Section 3(2) of ERISA, that is
intended to be qualified under Section 401(a) of the Code, and, to the extent
consistent with Purchaser's plans and policies, for purposes of eligibility and
determining the amount of any benefit with respect to any vacation program and
any employee welfare benefit plan as defined in Section 3(1) of ERISA
(including, without limitation, Purchaser's severance plans and policies in
effect from time to time).
12.4 VACATION. As of the Closing Date, Purchaser shall assume all
obligations of Seller to Transferred Employees for any accrued vacation pay
entitlement, provided that such obligations shall have been accrued on the
Closing Statement of Net Assets.
12.5 PENSION PLANS: The Johnson Controls Pension Plan (the "U. S.
Salaried Pension Plan") covers substantially all current non-represented
Employees of the Business who are employed in the United States. The Johnson
Controls Pension Plan Battery Division Hourly Employees (the "U. S. Hourly
Pension Plan") cover substantially all current represented Employees of the
Business who are employed in the United States. Effective as of the Closing
Date, all Active Employees of the Business who have completed at least one year
of service as of the Closing Date (i) shall be vested in their accrued benefit
earned through the Closing Date, and (ii) be eligible for a normal, early or
deferred vested retirement benefit under the U. S. Salaried Pension Plan or the
U. S. Hourly Pension Plan, as applicable, based upon such Employees having
terminated employment with Seller on the Closing Date, and such Employee's age
and years of service under the applicable plan as of that date. Distribution of
the normal, early or deferred vested retirement benefit accrued by any Active
Employee, including without limitation, the time of benefit payment and the form
in which the benefit is payable, shall be determined in accordance with the
applicable terms of the U. S. Salaried Pension Plan or U. S. Hourly Pension
Plan.
12.6 DEFINED CONTRIBUTION PLANS:
(a) The accounts under the Johnson Controls Savings Plan of all Active
Employees of the Business who participate in such Savings Plan on the
Closing Date shall be fully vested as of the Closing Date and shall be
distributable according to the terms of such plan. Seller acknowledges
that on and after the Closing Date the account balances of such Active
Employees shall be distributable from such Savings Plan in accordance
with Section 401(k)(10) of the Code.
31
(b) Purchaser shall permit any Transferred Employee who has an account
balance under the Savings Plan (a "Participant") to rollover (whether
by direct or indirect rollover, as selected by such Participant) his or
her "eligible rollover distribution" (as defined under Section
402(c)(4) of the Code) in the form of cash, a promissory note (as
described below) or any combination thereof from the Savings Plan to a
retirement plan maintained by Purchaser intended to qualify under
Section 401(a) of the Code and which contains a cash or deferred
feature under Section 401(k) of the Code ("Purchaser 401(k) Plan").
Purchaser 401(k) Plan shall not impose any waiting periods, service
requirements or other limitations that would prohibit any Participant
from rolling over an eligible rollover distribution from the Savings
Plan into Purchaser 401(k) Plan. Seller and the Savings Plan shall not
place any Participant's plan loan into default or declare a default
with respect to any plan loan so long as such Participant transfers his
or her account balance under the Savings Plan, together with the
promissory note evidencing the plan loan, together with the applicable
loan documentation, to Purchaser 401(k) Plan through a direct rollover.
Such loan shall be assumed and continued by Purchaser 401(k) plan in a
manner substantially similar to the Savings Plan. Purchaser shall amend
Purchaser 401(k) Plan and Seller shall amend the Savings Plan to the
extent necessary in order to effectuate the transactions contemplated
under this Section 12.6. Seller and Purchaser shall cooperate with each
other (and cause the trustees of the Savings Plan and Purchaser 401(k)
Plan to cooperate with each other) with respect to the rollover of the
distributions to the Participants.
12.7 TAX-FREE SPENDING PLANS: The accounts under the Johnson Controls
Tax-Free Spending Plan of all Active Employees who participate in such Spending
Plan on the Closing Date, shall be available according to the terms of such plan
for the reimbursement of eligible claims incurred while the Active Employee was
covered under the plan.
12.8 UNION CONTRACTS: Purchaser shall assume all collective bargaining
agreements and union affiliations in effect with any Purchased Subsidiary.
Purchaser acknowledges that at Closing it will become a successor employer under
such collective bargaining agreements and/or union affiliations and agrees to
assume, perform and discharge all obligations of Seller under such agreements
upon Closing solely with respect to periods on and after the Closing Date.
Seller acknowledges that it shall retain any and all obligations and liabilities
relating to the Benefit Plans for Active Employees for periods prior to Closing
whose employment is covered by a collective bargaining agreement and that
Purchaser shall be entitled, under any such collective bargaining agreement, to
offset any benefit offered to such represented Employees by the same type of
benefit required to be paid to such represented Employees from any Benefit Plan
in order to avoid duplication of benefits.
12.9 WELFARE BENEFIT PLANS - INTERIM SERVICES: Seller agrees, as an
accommodation to Purchaser, that Purchaser may elect at any time prior to
Closing to have Seller continue to operate its 401(k), medical, dental, tax-free
spending, life insurance and disability plans ("Welfare Benefits") for the
benefit of the Transferred Employees during an interim period (the "Interim
Period") commencing on the Closing Date, and ending, for such benefits, on the
earlier of a date specified by Purchaser for such benefits or the first day of
Purchaser's first fiscal quarter coinciding with the last day of or next
following the end of the six (6) month period after the Closing Date; provided
that Transferred Employees shall not be eligible for
32
a matching contribution under Seller's 401(k) plan with respect to periods on
and after the Closing Date. Notwithstanding the foregoing, Purchaser may elect
to have Seller continue to provide Welfare Benefits to the Transferred Employees
with or without 401(k) benefits. The purpose of this arrangement is to
facilitate benefit coverage until Purchaser is able to establish successor plans
for the Business. The parties agree that Purchaser is fully responsible for
benefits which are payable after the Closing Date as the result of the continued
operation of these plans for the Business. This Section 12.9 shall not be
construed to impose upon Seller any liability or responsibility under Seller's
or the Business plans except as expressly set forth in this Agreement.
Notwithstanding the foregoing, Seller shall maintain and operate such Welfare
Benefits in compliance with applicable law including, without limitation, ERISA
and the Code. During the Interim Period such Welfare Benefits shall be provided
to such Transferred Employees, new hires and their respective eligible
dependents through the Seller's existing plans and shall be identical to the
benefits afforded such individuals under Seller's applicable Welfare Benefit
plans immediately prior to the Closing Date, subject to any general amendments
or modifications made by the Seller to such Welfare Benefits. Solely with
respect to the Transferred Employees, Purchaser agrees to pay Seller, or if so
determined by Seller, any administrative representative of Seller, the premium
rates and other direct costs actually payable or incurred under, or
contributions made to, Seller's or the Business Welfare Benefit plans maintained
by Seller under this Section 12.9 for the Transferred Employees plus any
reasonable third party administrative service fees related to such premiums or
direct costs as well as any reasonable and necessary related administrative and
other expenses incurred by Seller for any such continued coverage thereunder.
12.10 EMPLOYMENT AGREEMENTS. Prior to the Closing Date, Seller shall
use its best efforts to cause the termination of all agreements, effective on
the Closing, between any Employee and Seller which permits any such Employee to
return to the employ of Seller within the two (2) year period following the
Closing Date and Seller shall use its best efforts to obtain the consent of any
such Employee to the termination. Purchaser will offer to each of those
Employees the opportunity to enter into employment or severance agreements with
Purchaser, effective as of the Closing Date, on mutually agreeable terms.
ARTICLE XIII
Obligations After Closing
13.1 ACCESS: In connection with any of the Retained Liabilities or any
financial audit of Seller or any Claim, tax audit or other governmental
investigation of Seller for any matter relating to any period prior to the
Closing, or for any other reasonable and lawful purpose, Purchaser shall, upon
request, permit Seller and its representatives to have access, at reasonable
times during normal business hours and in a manner which is not unreasonably
disruptive to the operations of Purchaser, to the Purchased Records and work
papers, books and records of Purchaser relating to the Business. Purchaser shall
maintain in an orderly manner, and shall not dispose of, the Purchased Records
or such work papers, books and records during the six year period beginning with
the Closing without Seller's consent. Following the expiration of such six-year
period, Purchaser may dispose of the Purchased Records or such work papers,
books and records at any time upon giving 90 days prior written notice to
Seller, unless Seller agrees to take possession thereof within such 90 days at
no
33
expense to Purchaser.
13.2 ALLOCATION OF TAXES:
(a) All Taxes related to the Business accrued or accruable with respect
to events occurring prior to the Closing Date shall be borne by Seller
except as accrued on the Closing Statement of Net Assets. For this
purpose, the Closing Date shall be treated as the last day of a taxable
period, whether or not the taxable period in fact ends on such period.
All Taxes related to the Business accrued or accruable with respect to
events occurring after the close of business on the Closing Date will
be borne by Purchaser.
(b) Except as accrued on the Closing Statement of Net Assets, the real
and personal property Taxes with respect to any Purchased Assets shall
be prorated based on the ratio of number of days in the pre-Closing
period to the number of days in the actual taxable period with respect
to which Tax is assessed, irrespective of when such Taxes are due,
become a lien or are assessed. Sales and use Taxes shall be deemed to
accrue as property is purchased, sold, used or transferred. All other
Taxes shall accrue in accordance with generally accepted accounting
principles.
(c) Purchaser and Seller shall each pay one-half of all transfer Taxes
(including, without limitation, documentary, stamp gross receipts,
registration, conveyance, excise, records and similar Taxes) arising
out of, in connection with, or attributable to the transactions
contemplated by this Agreement.
13.3 TRANSITION SERVICES: For a reasonable period of time following the
Closing, Seller agrees to provide to Purchaser such support services as may be
required for the transition of the Business to Purchaser. The terms of such
transition services shall be mutually agreed and set forth in a separate
Transition Services Agreement to be executed as of the Closing Date.
13.4 POST-CLOSING PAYMENTS: From and after the Closing Date, Purchaser
shall pay and perform, as and when due, the Assumed Liabilities, and Seller
shall pay and perform, as and when due, all liabilities and obligations relating
to the Business other than Assumed Liabilities, regardless of whether such
obligations or liabilities arise before or after the Closing.
13.5 FURTHER ASSURANCES: From time to time after the Closing, without
further consideration, the parties shall cooperate with each other and shall
execute and deliver instruments of transfer or assignment, or such other
documents to the other party as such other party reasonably may request to
evidence or perfect Purchaser's right, title and interest to the Purchased
Assets, and otherwise carry out the transactions contemplated by this Agreement.
13.6 ORIFICE PASTING MACHINES. Purchaser shall not use the orifice
pasting machines included in the Purchased Assets or acquired pursuant to the
following sentence for the manufacture of starting, lighting or ignition
batteries other than in China, and shall not dispose of such machines except in
connection with a sale of its industrial battery business in which
34
the purchaser agrees to be bound by the provisions of this sentence. Seller
shall supply Purchaser from time to time after the Closing with such additional
orifice pasting machines as Purchaser may request for a price equal to the
manufacturer's price plus 10%.
ARTICLE XIV
Notices
All notices, consents, approvals or other notifications required of the
parties under this Agreement shall be in writing and shall be deemed properly
served if delivered personally or sent by registered or certified mail (return
receipt requested), facsimile or nationally- recognized courier or overnight
delivery service addressed to such other party at the address set forth below,
or at such other address as may hereafter be designated by either party in
writing, and shall be deemed delivered (i) five business days after being sent
by mail or (ii) when actually delivered if sent by mail, facsimile, courier or
overnight delivery service (or the next business day if delivered after regular
business hours or on a Saturday, Sunday or holiday).
(a) If to Seller:
Johnson Controls, Inc.
5757 North Green Bay Avenue
Milwaukee, WI 53209
Attention: Vice President and General Counsel
Facsimile # 414-228-2077
(b) If to Purchaser or Parent:
C&D TECHNOLOGIES, INC.
1400 Union Meeting Road
Blue Bell, Pennsylvania 19422
Attention: Chairman
Facsimile # 215-619-7841
with a copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Steven L. Kirshenbaum, Esq.
Facsimile # 212-969-2900
35
ARTICLE XV
Further Covenants
15.1 COOPERATION BY PURCHASER: In the event Seller is required to
defend against, or desires to prosecute, any action, suit or proceeding arising
out of a claim pertaining to the business or operations of the Business prior to
the Closing Date, Purchaser shall provide such assistance and cooperation,
including, without limitation, witnesses and documentary or other evidence as
may reasonably be requested by Seller in connection with its defense. Seller
shall reimburse Purchaser for its reasonable out-of-pocket expenses incurred in
providing such assistance and cooperation.
15.2 COOPERATION BY SELLER: In the event Purchaser is required to
defend against, or desires to prosecute, any action, suit or proceeding arising
out of a claim pertaining to a liability assumed or asset acquired by Purchaser
pursuant to this Agreement relating to the business or operations of the
Business, Seller shall provide such assistance and cooperation, including
without limitation, witnesses and documentary or other evidence, as may
reasonably be requested by Purchaser in connection with its defense. Purchaser
shall reimburse Seller for its reasonable out-of-pocket expenses incurred in
providing such assistance.
15.3 COOPERATION ON TAX, ACCOUNTING AND OTHER MATTERS:
(a) Purchaser and Seller agree to furnish or cause to be furnished to
each other, upon request, as promptly as practicable, such information
(including access to books and records) and assistance relating to the
Business as is reasonably necessary for the filing of any Return, for
the preparation for any audit, for the prosecution or defense of any
claim relating to any proposed adjustment with respect to Taxes, for
year-end accounting requirements and any reports or documents to be
filed with any regulatory agency or for any other reasonable purpose.
Neither Purchaser nor Seller shall agree to settle or permit the
settlement of any Tax liability or compromise any claims with respect
to Taxes, which settlement or compromise may materially affect the
liability for Taxes (or right to Tax benefits of the other party,
without such other party's prior consent, which consent shall not be
unreasonably withheld.
(b) Purchaser and Seller agree to retain or cause to be retained all
books and records pertinent to the Business (including the Returns,
documents and records relating to the assets and properties of both)
until the applicable period for assessment under applicable law (giving
effect to any and all properly claimed and valid extensions or waivers)
has expired, and to abide by or cause the compliance with all record
retention agreements entered into with any governmental or taxing
authority.
(c) Purchaser and Seller shall cooperate with each other in the conduct
of any audit or other proceedings involving the Business for any Tax
and shall execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this Section
15.3.
(d) Purchaser shall have the right to timely prepare and file, and
cause to
36
be timely prepared and filed when due, any Tax return that is required
to include the operations, ownership, assets or activities of the
Purchased Subsidiaries for any period ending on or prior to the Closing
Date to the extent such Tax returns are not filed as of the Closing
Date.
(e) Purchaser and Seller will, upon request, provide the other with all
information that is required to report pursuant to Section 6043 of the
Code and all Treasury Department Regulations promulgated thereunder.
15.4 CONFIDENTIALITY:
(a) Purchaser acknowledges that all information provided to any of it
and its Affiliates, agents and representatives by Seller and its
Affiliates, agents and representatives is subject to the terms of a
confidentiality agreement between or on behalf of Seller and Purchaser
(the "Confidentiality Agreement"), the terms of which are hereby
incorporated herein by reference. Effective upon, and only upon, the
Closing, the Confidentiality Agreement shall terminate; provided,
however, that Purchaser acknowledges that the Confidentiality Agreement
shall terminate only with respect to information provided to any of
Purchaser and its Affiliates, agents or representatives that relates
primarily to the Business or otherwise is used in the ordinary course
of business of the Business; and provided further, however, that
Purchaser acknowledges that any and all information provided or made
available to any of it and its Affiliates, agents and representatives
by or on behalf of the Sellers (other than information relating
primarily to Purchased Assets or the Business) shall remain subject to
the terms and conditions of the Confidentiality Agreement after the
Closing Date.
(b) Purchaser agrees that, after the Closing Date, Purchaser shall, and
shall use all reasonable efforts to cause its directors, officers,
employees, advisors and Affiliates to, keep the Seller Information (as
defined below) confidential following the Closing Date, except that any
such Seller Information required by law or legal or administrative
process to be disclosed may be disclosed without violating the
provisions of this Section 15.4. For purposes of this Agreement, the
term "Seller Information" shall mean all information concerning the
Seller or its Affiliates, including (A) any trade secrets, know-how and
other confidential technical, business and financial information, other
than information that relates primarily to the Business or the
Purchased Assets or otherwise is used in the ordinary course of
business of the Business and other than any such information that is
available to the public on the Closing Date, or thereafter becomes
available to the public other than as a result of a breach of this
Section 15.4(b).
(c) Seller agrees that, after the Closing Date, Seller shall, and shall
use all reasonable efforts to cause its directors, officers, employees,
advisors and Affiliates to, keep the Purchaser Information (as defined
below) confidential following the Closing Date, except that any such
Purchaser Information required by law or legal or administrative
process to be disclosed may be disclosed without violating the
provisions of this Section 15.4. For purposes of this Agreement, the
term "Purchaser Information" shall mean all information concerning the
Business or the Purchaser or its Affiliates, including any trade
secrets, know- how and other confidential technical business and
financial information, other than information that is used in the
ordinary course of business of Seller and other than
37
any such information that is available to the public on the Closing
Date, or thereafter becomes available to the public other than as a
result of a breach of this Section 15.4(c).
15.5 COVENANT NOT TO COMPETE:
(a) In consideration of the benefits to Seller hereunder and in order
to induce Purchaser to enter into this Agreement, each Seller hereby
covenants and agrees that for a period of five (5) years after the
Closing Date, Seller shall not, and shall cause its majority owned
Affiliates to not, directly or indirectly, anywhere in the world,
engage in, conduct, manage, operate or control, or participate, in any
manner whatsoever, in the ownership, management, operation or control
of, any business which competes with the Business as it is conducted as
of the Closing Date, except that this non-compete obligation shall not
apply as follows:
(b) The provisions of this Section 15.5 shall not preclude Seller from
acquiring control of an entity which has as a portion of its business
which competes with the Business (the "Competing Business"), but which
primarily is engaged in other lines of business; provided further,
however, that in the event Seller directly or indirectly acquires such
a Competing Business during such period, then whatever entity has
acquired such Competing Business shall (i) limit the competing Business
solely to the production of competing products which the Competing
Business was obligated to produce pursuant to contracts which were
entered into prior to, and not in anticipation of such acquisition, it
being understood and agreed that the Competing Business will not renew
any such contract upon expiration of the term or any extended term in
effect at the time of such acquisition and (ii) discontinue the
Competing Business or dispose of the Competing Business to a
non-affiliated entity within twelve (12) months of the date of such
acquisition. Purchaser shall be offered the right to acquire the
Competing Business prior to the time it is offered to any other person
or entity; if Purchaser declines to acquire the Competing Business,
Seller may then offer it for sale to other persons or entities on terms
that are, in the aggregate, no more favorable to the acquirer of the
Competing Entity than those that were offered to Purchaser.
(c) The provisions of this Section 15.5 shall not preclude Seller from
owning or participating in joint ventures in existence on the date
hereof which continue to operate industrial battery businesses in
India, Latin America or Mexico, in the same fashion as of the date
hereof.
(d) Buyer acknowledges that nothing hereunder precludes Seller's
ability to develop, manufacture or sell batteries, including AGM
batteries, for starting, lighting or ignition.
(e) The parties hereto intend that the covenant contained in this
Section 15.5 shall be deemed a series of separate covenants for each
appropriate jurisdiction. If, in any judicial proceeding, a court shall
refuse to enforce all the separate covenants deemed included in this
Section 15.5 on grounds that, taken together, they cover too extensive
a geographic area, the parties intend that those covenants (taken in
order of the least populous jurisdictions) which, if eliminated would
permit the remaining separate covenants to be enforced in that
proceeding, shall, for the purpose of such proceeding, be deemed
eliminated
38
from the provisions of this Section 15.5.
15.6 NON-SOLICITATION OF EMPLOYEES. Neither Seller, nor any of their
respective Affiliates, shall directly or indirectly, for itself or on behalf of
any other person, hire any employee of Purchaser or the Business or Parent, as
the case may be, or any of their respective subsidiaries or induce or attempt to
induce any such employee to leave his or her employment. Neither Purchaser,
Parent nor the Business shall, directly or indirectly, for itself or on behalf
of any other person, hire any employee of Seller's remaining Battery business,
or induce or attempt to induce any such employee to leave his or her employment.
These reciprocal objections shall continue for a period of three years from the
date hereof, except as the parties may otherwise agree. The foregoing shall not
apply to the making of general solicitations for employment (as opposed to the
hiring of individuals recruited through general solicitations), or to employees
who have not been employed by Parent or Seller, or any of their respective
affiliates, as the case may be, for ninety (90) days.
15.7 NON-SOLICITATION OR INTERFERENCE WITH CUSTOMERS AND SUPPLIERS.
Neither Seller nor any of its Affiliates shall, directly or indirectly, for
itself or on behalf of any other person, solicit, divert, take away or attempt
to take away any of Purchaser's customers with respect to the Business or the
patronage of any such customers with respect to the Business or in any way
interfere with, disrupt or attempt to disrupt any then existing relationships
between Purchaser and any of such customers or contact or enter into any
business transaction with any such customers or suppliers or other persons for
any such purpose at any time within five (5) years from the date hereof.
15.8 PRODUCT REPLACEMENT AND REPAIRS. Purchaser will honor all
outstanding warranties and guaranties and other claims for replacements and
repairs, relating to products or services of the Business shipped, sold or
furnished by Seller prior to the Closing Date ("Warranty Claims"). A customer's
rights under Warranty Claims shall be determined by Purchaser pursuant to the
Seller's policies or contractual obligations relating to such customer as of the
Closing Date. The cost of honoring Warranty Claims shall be computed at
Purchaser's then generally prevailing labor rates and prices. Seller shall
reimburse Purchaser, upon invoice, for the cost of all Warranty Claims in excess
of the amount of the reserves specifically included therefor on the Closing
Balance Sheet that are incurred within four years after the Closing Date for the
Telcom product line. Purchaser shall be responsible for the cost of all other
Warranty Claims. Purchaser shall, upon request, provide Seller with reasonable
documentation related to Warranty Claims for which reimbursement is sought
hereunder.
15.9 CERTAIN ACCOUNTS RECEIVABLE. If upon 120 calendar days after the
Closing Date any accounts receivable included in the Purchased Assets remain
uncollected and at least 60 days past due of their respective terms, Purchaser
may assign such accounts receivable to Seller by written notice of such
assignment to Seller specifying the accounts and amounts involved. Seller shall
thereupon pay to Buyer in cash the face amount of such assigned accounts
receivable within 10 calendar days. Both parties shall thereafter continue to
cooperate in Seller's collection of such accounts receivable.
39
ARTICLE XVI
Survival of Representations and Warranties
and Indemnification
16.1 SURVIVAL:
None of the representations and warranties in this Agreement and in any
other document delivered in connection herewith shall survive the Closing,
except that the representation contained in Section 8.18 shall survive the
Closing for a period lasting until the first anniversary of the Closing.
Purchaser may not and shall not make any claim against Seller in respect of the
representations and warranties contained in Section 8.1 through and including
Section 8.17 unless such breach was described in the Notice of Breach delivered
by Purchaser to Seller prior to Closing in accordance with the provisions of
Section 7.1 hereof. To the extent any such breach is included in the Notice of
Breach and the parties proceed to Closing notwithstanding their respective
rights under Sections 10.2 and 11.3 hereof, then Seller shall indemnify
Purchaser pursuant to the terms of Section 16.2 below. Nothing contained herein
shall limit Claims with regard to Retained Liabilities or breaches of covenants
or agreements, which shall be independent of Claims with regard to breaches of
representations and warranties.
16.2 INDEMNIFICATION BY SELLER:
(a) From and after the Closing Date, Seller shall defend, indemnify and
hold harmless Purchaser and its directors, shareholders, officers,
employees, agents, consultants, representatives, Affiliates, successors
and assigns from and against any and all loss, liability, damage or
expense (including reasonable legal fees and expenses collectively
"Losses"), which any of them incurs as a result of (i) a breach of any
representation or warranty contained in Section 8.1 to and including
Section 8.17 (without regard to materiality or Material Adverse Effect
qualifications contained therein), provided such breach was included in
the Notice of Breach delivered by Purchaser to Seller prior to Closing
in accordance with the provisions of Section 7.1 hereof; (ii) a breach
of the representation and warranty contained in Section 8.18; provided,
that Purchaser was not aware of such breach and failed to give Seller
timely notice thereof; (iii) any Retained Liabilities; and (iv) any
breach of any covenant or agreement contained herein or in any other
document executed and delivered at the Closing.
(b) The amount of any Losses incurred by Purchaser shall be reduced as
follows:
(i) by the net amount Purchaser recovers (after deducting all
attorneys' fees, expenses and other costs of recovery), from
any insurer or other third party liable for such Losses; and
(ii) where and to the extent the issue giving rise to any such
Losses was specifically reserved for in the Closing Statement
of Net Assets or gave rise to the payment of a post-closing
adjustment amount as described in Section 4.4.
40
(c) Purchaser shall be entitled to indemnification under Section 16.2
(a)(i) only to the extent that the aggregate amount of such Losses
(adjusted as provided in paragraph (b) of this Section 16.2) exceeds a
deductible amount of $1.5 million (the "Indemnification Deductible"),
in which event the Losses shall be the amount, if any, which exceeds
the Indemnification Deductible, provided the aggregate amount payable
in respect of indemnification under Section 16.2 (a)(i) shall not
exceed the Walkaway Amount.
(d) The indemnity provided in this Section 16.2 shall be the sole and
exclusive remedy of Purchaser after the Closing Date with respect to
any and all claims relating to the subject matter of this Agreement
other than for fraud. In furtherance of the foregoing, Purchaser hereby
waives, from and after the Closing, to the fullest extent permitted
under applicable law, any and all rights, claims and causes of action
it may have against Seller relating to the subject matter of this
Agreement arising under or based upon any federal, state, local or
foreign statute law, ordinance, rule or regulation or otherwise except
as otherwise provided under this Section 16.2 and for fraud.
16.3 INDEMNIFICATION BY PURCHASER: Purchaser shall indemnify and hold
harmless Seller and its directors, shareholders, officers, employees,
agents, consultants, representatives, Affiliates, successors and
assigns from and against any and all Losses which any of them may incur
arising out of any Assumed Liabilities.
16.4 INDEMNIFICATION PROCEDURE:
(a) Any party seeking indemnification hereunder (the "Indemnitee")
shall notify the parties liable for such indemnification (each an
"Indemnitor") in writing of any event, omission or occurrence which the
Indemnitee has determined has given or could give rise to Losses which
are indemnifiable hereunder (such written notice being hereinafter
referred to as a "Notice of Claim"). In all cases, such notice shall be
given promptly, in accordance with the relevant provisions of the
Agreement regarding notice; provided, that the failure of any
Indemnitee to give notice as provided in this Section 16. 4 shall not
relieve the Indemnitor of its obligations under this Article XVI unless
such failure shall materially adversely affects the Indemnitor. A
Notice of Claim shall specify in reasonable detail the nature and any
particulars of the event, omission or occurrence giving rise to a right
of indemnification. The Indemnitor shall satisfy its obligations
hereunder, as the case may be, within 30 days of its receipt of a
Notice of Claim; provided, however, that so long as the Indemnitor is
in good faith defending a claim pursuant to Section 16.4(b) below, its
obligation to indemnify the Indemnitee with respect thereto shall be
suspended. To the extent the parties disagree as to whether any Losses
are indemnifiable hereunder, such matters shall be resolved pursuant to
Section 17.11 hereunder; provided, that during the pendency of any such
dispute, the party seeking indemnification may defend the Loss for
which indemnification is sought, and if it is determined that the Loss
is one that is subject to indemnification, the Indemnitor shall be
bound by all actions taken by the party seeking indemnification during
the pendency of such dispute.
(b) With respect to any third party claim, demand, suit, action or
proceeding which is the subject of a Notice of Claim, the Indemnitor
shall, in good faith and
41
at its own expense, defend, contest or otherwise protect against any
such claim, demand, suit, action or proceeding with legal counsel of
its own selection. The Indemnitee shall have the right, but not the
obligation, to participate in the defense thereof through counsel of
its own choice and shall have the right, but not the obligation, to
assert any and all cross claims or counterclaims it may have; provided,
that the fees and expenses of counsel to Indemnitee shall be at the
Indemnitee's own expense unless (a) the employment of such counsel and
the payment of such fees and expenses both shall have been specifically
authorized by the Indemnitor in connection with the defense of such
claim, demand, suit, action or proceeding, or (b) the Indemnitee shall
have reasonably concluded and specifically notified the Indemnitor that
there may be specific defenses available to it which are different from
or additional to those available to the Indemnitor, or that such
action, suit or proceeding involves or could have an effect upon
matters beyond the scope of the indemnity agreements contained herein
(in which case the Indemnitor, to the extent made necessary by such
different or additional defense or other effects, shall not have the
right to direct the defense of such claim, demand, suit, action or
proceeding on behalf of the Indemnitee). So long as the Indemnitor is
defending in good faith any such third party claim, demand, suit,
action or proceeding, the Indemnitee shall at all times cooperate, the
expense of the Indemnitor, in all reasonable ways with, make its
relevant files and records available for inspection and copying by, and
make its employees available or otherwise render reasonable assistance
to, the Indemnitor. In the event that the Indemnitor fails to timely
defend, contest or otherwise protect against any such third party
claim, demand, suit, action or proceeding, the Indemnitee shall have
the right, but not the obligation, for the account of the Indemnitor to
defend, contest, assert cross claims or counterclaims, or otherwise
protect against, the same and may make any compromise or settlement
thereof. The Indemnitor shall make no settlement without Indemnitee's
consent of any claims which Indemnitor has undertaken to defend, unless
(i) the Indemnitor fully indemnifies the Indemnitee for all Losses;
(ii) the Indemnitee receives an unconditional release with respect to
the facts underlying the claim; (iii) there is no finding or admission
of violation of law by, or effect on any other claims that may be made
against, the Indemnitee; and (iv) the relief granted in connection
therewith requires no action or inaction on the part of and has no
other material effect on the Indemnitee.
ARTICLE XVII
Miscellaneous
17.1 BROKER COMPENSATION: Each of the parties hereto agrees to
indemnify the other against and hold the other harmless from any and all
liabilities (including, without limitation, cost of counsel fees in defending
against such liabilities) for brokerage commissions or finder's fees in
connection with the transactions contemplated by this Agreement, insofar as such
claims shall be based on arrangements or agreements made or claimed to have been
made by or on behalf of Seller or Purchaser, respectively. Seller shall pay the
fee of Salomon Smith Barney Inc. for its services in connection with the
transactions contemplated by this Agreement.
17.2 BULK SALES ACT: Purchaser waives compliance by Seller with any
bulk sales law which may be applicable to the transactions contemplated by this
Agreement; provided, however that Seller agrees to indemnify Purchaser and hold
it harmless from any loss, damage,
42
liability, and expenses (including reasonable legal fees) resulting from such
noncompliance.
17.3 EXPENSES: Each of the parties hereto shall pay its own expenses in
connection with the negotiation and preparation of this Agreement and the
Related Documents; provided, that Seller shall pay all expenses of the Business
in connection with the transactions contemplated hereby.
17.4 BINDING AGREEMENT: This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, provided that neither party shall assign this Agreement without the
prior written consent of the other party hereto, and in no event will any
assignment relieve the assigning party of its obligations hereunder.
17.5 ENTIRE AGREEMENT: This Agreement (including the Exhibits and
Schedules hereto) (a) constitutes the entire agreement between the parties
hereto with respect to the purchase and sale of the Purchased Assets and the
other transactions contemplated hereby, (b) supersedes all prior negotiations
and oral or written understandings, if any, and (c) may not be amended or
supplemented except by an instrument in writing signed by both parties hereto.
Neither party makes any representation or warranty except as provided herein.
Waiver by any party of any breach of or failure to comply with any provision of
this Agreement by the other party shall not be construed as, or constitute, a
continuing waiver of such provision, or a waiver of any other breach of, or
failure to comply with, any other provision of this Agreement. No waiver of any
such breach or failure or of any term or condition of this Agreement shall be
effective unless in a written notice signed by the waiving party and delivered,
in the manner required for notices generally, to each affected party.
17.6 GOVERNING LAW: This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of Wisconsin.
17.7 NO RIGHTS OF THIRD PARTIES: Nothing in this Agreement is intended
to confer any right on any person other than the parties to it and their
respective successors and assigns; nor is anything in this Agreement intended to
modify or discharge the obligation or liability of any third person to any party
to this Agreement, nor shall any provision give any third person any right of
subrogation or action over against any party to this Agreement. Without limiting
the generality of the foregoing, no employee (whether former, current or future)
of either Purchaser, Seller or any Purchased Subsidiary (or any beneficiary
thereof) shall be treated as a third party beneficiary or have any rights or
interests hereunder.
17.8 COUNTERPARTS: This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
17.9 HEADINGS; Table of Contents: The headings of the sections of this
Agreement and the table of contents at the forepart of this Agreement are
inserted for convenience only and shall not constitute a part hereof nor affect
the rights of the parties hereto.
43
17.10 Termination:
(a) TERMINATION EVENTS. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned under any of the following circumstances.
(i) by the mutual written consent of Seller and Purchaser at
any time prior to the Closing Date;
(ii) by Seller if any of the conditions set forth in Article
XI shall have become incapable of fulfillment at any time or
are not fulfilled at Closing, and shall not have been waived
by Seller;
(iii) by Purchaser if any of the conditions set forth in
Article X shall have become incapable of fulfillment at any
time or are not fulfilled at Closing, and shall not have been
waived by Purchaser;
(iv) by either party at any time prior to the Closing Date, if
Purchaser has, in good faith, sent a Notice of Breach to
Seller informing Seller of (a) breaches of representations and
warranties under Section 8.1-8.17 which total, in the
aggregate, more than the Walkaway Amount, and the parties,
after good faith discussions, are unable to reach a mutually
agreeable resolution, or (b) breach of the representation and
warranty contained in Section 8.18; or
(v) by either party if the Closing has not occurred by the
close of business on May 1, 1999.
(b) NOTICE OF TERMINATION. In the event of termination of this
Agreement by Seller or Purchaser pursuant to this Section 17.10,
written notice thereof shall be given to the other party and the
transactions contemplated by this Agreement shall be abandoned, without
further action by any party. If the transactions contemplated by this
Agreement are abandoned as provided herein:
(i) Purchaser shall return all documents and copies and other
materials received from or on behalf of Seller relating to the
transactions contemplated hereby, whether so obtained before
or after the execution hereof, to the Seller;
(ii) all confidential information received by Purchaser with
respect to the Business shall be treated in accordance with
the Confidentiality Agreement, which shall remain in full
force and effect notwithstanding the termination of this
Agreement; and
(iii) this Agreement shall become void and of no further force
and effect, except for the provisions of (i) Section 15.4
relating to the obligations of each of Purchaser and Seller to
keep confidential certain information and data obtained by it,
(ii) Section 7.5 relating to publicity, (iii) Section 17.3
relating to certain expenses, (iv)
44
Section 17.1 relating to broker's or finder's fees, and (v)
this Section 17.10. Nothing in this Section 17.10 shall be
deemed to release any party from any liability for any breach
by such of the terms and provisions of this Agreement, to
impair the right of any party to compel specific performance
by another party or its or their obligations under this
Agreement, or to waive any rights of any party under law not
otherwise waived in this Agreement.
17.11 DISPUTE RESOLUTION.
(a) NEGOTIATION. In the event of any dispute or disagreement between
Seller and Purchaser as to the interpretation of any provision of this
Agreement, the performance of obligations hereunder, or any other
disputed matter, such matter, upon written request of either party,
shall be referred to representatives of the parties for decision, each
party being represented by a senior executive officer who has no direct
operational responsibility for the matters contemplated by this
Agreement (the "Representatives"). The Representatives shall promptly
meet in a good faith effort to resolve the dispute. If the
Representatives do not agree upon a decision within thirty (30)
calendar days after reference of the matter to them, either Purchaser
or Seller shall be free to exercise all remedies otherwise available to
them.
(b) JURISDICTION. Each of the parties agrees that any dispute,
controversy or claim arising out of or in connection with this
Agreement or any alleged breach hereof shall be referred to the
Delaware Business Court pursuant to its rules and procedures. Either
party may bring an action in such Court and the other party shall
hereby be deemed to have consented to personal jurisdiction within the
State of Delaware for such purpose and the jurisdiction of such Court
and its rules, and hereby waives any defense to any such action based
on the doctrine of forum non conveniens.
17.12 REPRESENTATION BY COUNSEL; INTERPRETATION. The Seller and
Purchaser acknowledge that each of them has been represented by counsel in
connection with this Agreement and the transactions contemplated hereby.
Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived.
17.13 KNOWLEDGE OF SELLER. The term "Knowledge" as used with respect to
Seller in this Agreement means the actual knowledge after due inquiry of
Seller's management employees who shall be defined as those employees listed on
Schedule 17.13.
17.14 DOLLAR AMOUNTS. All dollar amounts referred to in this Agreement
are in United States Dollars.
45
17.15 PASSAGE OF TITLE AND RISK OF LOSS. Legal title,
equitable title and risk of loss with respect to the Purchased Assets will not
pass to Purchaser until the Purchased Assets are transferred at Closing.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written
JOHNSON CONTROLS, INC.
BY /s/ Keith Wandell
-----------------
Title: President - JCI GI
C&D TECHNOLOGIES, INC.
BY /s/ A. Weber
-----------------
Title: Chairman & CEO
C&D ACQUISITION CORP.
BY /s/ A. Weber
------------------
Title: Chairman & CEO
46