EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BETWEEN
EAGLE INDUSTRIAL PRODUCTS CORPORATION
AND
THOMAS & BETTS CORPORATION
DATED NOVEMBER 1, 1995
RE: PURCHASE AND SALE OF STOCK OF
AMERACE CORPORATION
TABLE OF CONTENTS
ARTICLE I - PURCHASE AND SALE OF STOCK
1.1 Purchase and Sale of Stock
ARTICLE II - PURCHASE PRICE
2.1 Purchase Price
2.2 Purchase Price Adjustment
2.3 Calculation and Payment of Purchase Price Adjustment
ARTICLE III - SELLER'S REPRESENTATIONS AND WARRANTIES
3.1 Organization
3.2 Authority
3.3 Transaction not a Breach
3.4 Ownership of Stock
3.5 Corporate Information
3.6 Certain Contractual Obligations
3.7 Assets
3.8 Financial Statements
3.9 Change in Condition
3.10 Liabilities
3.11 Compliance with Laws
3.12 Employees
3.13 Tax Matters
3.14 Litigation
3.15 Intellectual Property Rights
3.16 Insurance Policies
3.17 Employee Benefit Plans
3.18 Bank Accounts and Letters of Credit
3.19 Environmental Matters
3.20 Transactions with Affiliates
3.21 Powers of Attorney
3.22 Suppliers and Customers
3.23 Guaranties
3.24 Brokers, Etc.
3.25 Product Warranty
3.26 Joint Ventures
ARTICLE IV - BUYER'S REPRESENTATIONS AND WARRANTIES
4.1 Organization
4.2 Authority
4.3 Transaction not a Breach
4.4 Financial Ability
4.5 No Implied Representations or Warranties
ARTICLE V - OTHER AGREEMENTS OF THE PARTIES
5.1 Continuing Operation of Business
5.2 Inspection
5.3 Access to Records
5.4 Tax Matters
5.5 Filing Under Hart-Scott-Rodino Antitrust Improvements Act of
1976
5.6 Chemical Bank Financing
5.7 Outstanding Letters of Credit
5.8 Repayment of Intercompany Debt
5.9 Cash and Cash Equivalents
5.10 Pension and Savings Plan
5.11 Consents, Releases
5.12 Responsibility for Insurance Coverage
5.13 Transfer Taxes
5.14 Financing
5.15 Notices of Developments
5.16 Exclusivity
5.17 Title Insurance
5.18 Litigation Support
5.19 Transition
5.20 Confidentiality
5.21 Covenant Not to Compete
5.22 Environmental Assessment Protocol; Waiver.
5.23 Medical Benefits; Retiree Welfare Benefit Coverage
5.24 Schedules
ARTICLE VI - CONDITIONS TO OBLIGATIONS OF THE PARTIES
6.1 Conditions to Obligations of Buyer
6.2 Conditions to Obligations of Seller
6.3 Non-Fulfillment of Conditions
ARTICLE VII - CLOSING
7.1 Time, Date and Place of Closing
7.2 Deliveries by Seller at Closing
7.3 Deliveries by Buyer at Closing
7.4 Additional Action to be Taken at Closing
ARTICLE VIII - INDEMNIFICATION
8.1 Survival
8.2 Indemnification of Buyer
8.3 Indemnification of Seller
8.4 Terms of Indemnification
8.5 Limitation of Remedy
8.6 Exclusive Remedy
8.7 Security for Seller's Indemnification Obligations
ARTICLE IX - MISCELLANEOUS
9.1 Notices
9.2 Severability
9.3 Assignment
9.4 Entire Agreement
9.5 Documents
9.6 Third Parties
9.7 Governing Law
9.8 Expenses
9.9 Brokerage
9.10 Schedules
9.11 Press Releases
9.12 Captions
9.13 Counterparts
ARTICLE X - DEFINITIONS
10.1 Certain Definitions
10.2 Certain Terms Defined in Text
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of the 1st day of
November, 1995 by and between Eagle Industrial Products Corporation, a
Delaware corporation ("Seller"), and Thomas & Betts Corporation, a New Jersey
corporation ("Buyer").
WHEREAS, Seller is the owner of all of the issued and outstanding shares
of capital stock (the "Stock") of Amerace Corporation, a Delaware corporation
("Amerace").
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the Stock, upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants of the parties as hereinafter set forth and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as set forth below. Certain terms are defined in
Article X hereof.
ARTICLE I - PURCHASE AND SALE OF STOCK
1.1 PURCHASE AND SALE OF STOCK. Subject to the terms and conditions
set forth in this Agreement, Seller shall sell, assign, transfer and deliver
the Stock to Buyer at the Closing, and Buyer shall purchase the Stock from
Seller at the Closing, for the Purchase Price.
ARTICLE II - PURCHASE PRICE
2.1 PURCHASE PRICE. The purchase price for the Stock shall be Two
Hundred and Twenty Million Dollars ($220,000,000), less the Receivables
Purchase Price (the "Purchase Price"), subject to adjustment as provided in
Section 2.2 hereof. At the Closing, Buyer shall pay the Purchase Price to
Seller, by wire transfer of immediately available federal funds, to an
account designated by Seller in writing at least one business day prior to
the Closing Date, against delivery of certificates representing the Stock,
duly endorsed for transfer or accompanied by an appropriately executed
assignment separate from certificate.
2.2 PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be increased
or decreased by the amount that the Net Worth as set forth on the Closing
Balance Sheet is greater than or less than $226,690,000. The "Closing
Balance Sheet" is identified in Section 2.3(a).
2.3 CALCULATION AND PAYMENT OF PURCHASE PRICE ADJUSTMENT. Since the
financial data required to determine the Closing Balance Sheet will not be
available at the Closing, any adjustment to the Purchase Price will be
calculated and paid in accordance with the following provisions:
(a) Within forty-five (45) days following the Closing, Seller
shall prepare and deliver to Buyer an unaudited Combining Balance Sheet of
Amerace and its Subsidiaries as of the Closing Date, which balance sheet (the
"Closing Balance Sheet") shall be prepared consistently with the principles
applied in the preparation of the unaudited Pro Forma Combining Balance Sheet
of Amerace and its Subsidiaries as of June 30, 1995 attached hereto as
Exhibit A (the "Reference Balance Sheet") (including the same actuarial
assumptions utilized to calculate retiree medical and pension plan
liabilities), except notwithstanding the foregoing, (i) the reserves for
Environmental Liabilities on the Closing Balance Sheet will be $16.3 million
(less any amounts actually paid by the Companies in connection with reserved
Environmental Liabilities from June 30, 1995 to the Closing Date), (ii) the
Closing Balance Sheet shall reflect an accrued expense equal to the amount to
be transferred by the Companies to Seller after the Closing Date pursuant to
the provisions of Section 5.10 (d), (iii) as provided in Section 5.9, and
(iv) the Closing Balance Sheet shall reflect a product warranty reserve to
the extent required by GAAP.
(b) If Buyer agrees with the proposed Closing Balance Sheet
prepared by Seller, then the parties shall execute the Closing Balance Sheet
and proceed to make any payment required pursuant to Section 2.3(c) below, if
applicable. If Buyer disagrees with the proposed Closing Balance Sheet
prepared by Seller, then Buyer may deliver written notice ("Objection
Notice") to Seller objecting to the proposed Closing Balance Sheet. Such
Objection Notice shall (i) be delivered within forty-five (45) days after
Buyer receives the proposed Closing Balance Sheet, (ii) identify those items
on the proposed Closing Balance Sheet to which Buyer objects, and (iii) state
in reasonable detail the reasons for such objection. Any items contained in
the proposed Closing Balance Sheet to which Buyer does not set forth an
objection in such Objection Notice shall be deemed accepted by Buyer. During
the 45-day period following delivery of the Objection Notice, each party will
deliver to the other party any supporting documentation reasonably requested
and necessary to verify disputed items set forth on the proposed Closing
Balance Sheet, calculate the Net Worth, and cooperate fully and in good faith
to resolve any disputes they may have with respect to the proposed Closing
Balance Sheet. If the parties cannot agree on the proposed Closing Balance
Sheet within such 45-day period, any such dispute will be resolved within
sixty (60) days of submission by either party of a request for binding
arbitration by a Big Six accounting firm designated jointly by the accounting
firms of Seller and Buyer (which accounting firm shall not have maintained,
within the preceding 12-month period, a material professional relationship
with either Buyer or Seller) (the "Accounting Firm"). The Accounting Firm
will calculate only those portions of the proposed Closing Balance Sheet that
have not been agreed upon by the parties and its calculation will be based
solely on the books, records and other information relevant to the resolution
of such disputes and available as of the Closing Date, which information
shall be submitted or made available to the Accounting Firm by Seller or
Buyer. Any fees or expenses payable to the Accounting Firm will be shared by
Seller and Buyer as shall be determined by such Accounting Firm, taking into
account the relative merits of the parties' respective adjustment proposals.
(c) Upon the final determination of the Closing Balance Sheet,
whether such determination is made by agreement of the parties or by the
Accounting Firm, in accordance with the foregoing, the parties will proceed
as follows:
(i) If such final determination results in an increase in the
Purchase Price in accordance with Section 2.2 above, then within five
(5) days after such final determination, Buyer will pay to Seller the
amount of such increase.
(ii) If such final determination results in a decrease in the
Purchase Price in accordance with Section 2.2 above, then within five
(5) days after such final determination, Seller will pay to Buyer the
amount of such decrease.
(d) Form of Payment. Payment of a Purchase Price adjustment, if
any, shall be made by wire transfer of immediately available federal funds,
together with interest thereon at LIBOR plus one percent (1%) per annum from
the Closing Date until the date of payment. If such adjustment (including
the interest component, if any) is not paid within five (5) business days
after final determination of the Purchase Price adjustment, then such payment
shall accrue interest at LIBOR plus three percent (3%) from the Closing Date
until the date of actual payment.
(e) Access to Books and Records. After the Closing, Buyer shall
permit Seller, the Accounting Firm (if applicable) and their respective
representatives, during normal business hours, to have reasonable access to
and to examine and make copies of any books and records of the Companies
which are reasonably required for purposes of preparing the Closing Balance
Sheet. After the Closing, Seller shall permit Buyer and their
representatives, during normal business hours, to have reasonable access to,
and to examine and make copies of, the books and records of Amerace and its
Subsidiaries which are in the possession of any of them and are necessary for
Buyer, the Accounting Firm, or their respective representatives to review the
Closing Balance Sheet.
ARTICLE III - SELLER'S REPRESENTATIONS AND WARRANTIES
Seller represents and warrants to Buyer on the date of this Agreement as
follows:
3.1 ORGANIZATION. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each
of the Companies is a corporation duly organized, validly existing and in
good standing under the laws of its respective state of incorporation, and
has all requisite power and authority, corporate and otherwise, to enter into
and perform its obligations under each of the agreements to which it is a
party, to carry on its business as currently conducted, and to consummate the
transactions contemplated hereby. Each of the Companies is duly qualified or
licensed to do business as a foreign corporation, and is in good standing as
such, in each jurisdiction in which it owns or leases real property or in
which the failure to be so qualified or licensed and in good standing could
have a Company Material Adverse Effect.
3.2 AUTHORITY. The execution, delivery, and performance of this
Agreement by Seller have been (or shall be prior to Closing) duly and
properly authorized by proper corporate action in accordance with applicable
law and with its Certificate of Incorporation and By-Laws. This Agreement
is, and the other agreements and instruments to be executed and delivered by
Seller in connection with the transactions contemplated herein will be, the
legal, valid and binding obligation of Seller, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or from time to time affecting the enforcement of creditors'
rights generally and except that the enforceability of Seller's obligations
is subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3.3 TRANSACTION NOT A BREACH. Except as set forth in Schedule 3.3
hereof, neither the execution and delivery of this Agreement nor the
performance by Seller of its obligations hereunder does or will constitute,
result in or give rise to: (i) a breach of or default under the terms,
conditions or provisions of the Certificate of Incorporation or By-Laws of
Seller or of any of the Companies; (ii) a Material breach or violation or
default under any Legal Requirement applicable to the Seller or any of the
Companies; (iii) the acceleration of the time for performance of any
obligation under any Material Contractual Obligation of the Seller or any of
the Companies; (iv) the imposition of any Lien upon or the forfeiture of any
Asset (including, without limitation, any Asset held under a Material
Contractual Obligation of any of the Companies); (v) a breach of or a default
under any Material Contractual Obligation of the Seller or any of the
Companies, or the requirement that any consent under or waiver of any such
Material Contractual Obligation be obtained, except for items listed on
Schedule 3.3 or Schedule 3.7(b), all of which shall have been obtained or
made (to the extent Seller is required to have obtained same pursuant to
Section 5.11), and shall be in full force and effect at the Closing, or (vi)
any right of termination, or any other Material right or cause of action
under any such Material Contractual Obligation. No approval, consent,
waiver, authorization or other order of, and no declaration, filing,
registration, qualification or recording with, any Governmental Authority is
required to be obtained or made by or on behalf of the Seller or any of the
Companies in connection with the execution, delivery or performance of this
Agreement and the consummation of the transactions contemplated hereby,
except for items which shall have been obtained or made and shall be in full
force and effect at the Closing and copies of which shall be delivered to
Buyer on or prior to the Closing Date, and except for those items the failure
to obtain or make which would not have a Material Adverse Effect.
3.4 OWNERSHIP OF STOCK. Except as set forth in Schedule 3.4: (i)
Seller is the beneficial and record owner of all of the issued and
outstanding Stock of Amerace and of such percentage of the capital stock of
each Joint Venture as is set forth on Schedule 3.4; (ii) Amerace is the
beneficial and record owner, directly or indirectly, of all of the capital
stock of all of its Subsidiaries and of its interests in each of the Joint
Ventures, in each case, free and clear of all Liens other than a Lien on the
Stock (and the capital stock of certain of the other Companies' Subsidiaries)
held by Chemical, which Lien shall be released at the Closing; (iii) the
Stock (and the capital stock of each of Amerace's Subsidiaries and of the
Joint Ventures) is validly authorized, duly issued, fully paid and non-
assessable; and (iii) no person or entity has any rights by way of stock
option, convertible security, subscription, warrant, contract or other
agreement or arrangement, written or oral, to purchase or acquire any capital
stock of any Company or of any Joint Venture.
3.5 CORPORATE INFORMATION.
(a) Set forth on Schedule 3.5(a) is the following information with
respect to each of the Companies: (i) its employer identification number;
(ii) its state of incorporation and registered agent in such state; (iii) the
jurisdictions in which it is qualified to do business; (iv) its authorized
capital stock; (v) its issued and outstanding shares of capital stock and
holder thereof; (vi) the names of its directors and the names and titles of
its officers; and (vii) its fiscal year.
(b) Schedule 3.5(b) attached hereto sets forth true copies of the
By-Laws and Certificate of Incorporation of Amerace. Seller has also
delivered to Buyer a true and complete copy of the Certificates of
Incorporation and Bylaws of each of the other Companies, in each case in the
form currently in full force and effect.
3.6 CERTAIN CONTRACTUAL OBLIGATIONS. Set forth on Schedule 3.6 is a
true and complete list of all of the following Contractual Obligations to
which any of the Companies is a party:
(a) All collective bargaining agreements and other labor
agreements; all employment or Material consulting agreements (including,
without limitation, all contracts concerning the management or operation of
any real property owned by any Company) or forms thereof; all Employee
Benefit Plans and all other Material plans, agreements, arrangements or
practices which constitute Compensation or benefits to any of the directors,
officers or employees of the Companies (other than to any Eagle Employee),
excluding any such agreements that are terminable by Seller or any of the
Companies within one (1) year from the date hereof;
(b) All Contractual Obligations under which any of the Companies
is or may become obligated to pay any legal, accounting, brokerage, finder's
or similar fees or expenses in connection with, or incur any severance pay or
special Compensation obligations which would become payable by reason of,
this Agreement or the consummation of the transactions contemplated hereby;
(c) All Contractual Obligations under which any of the Companies
will after the Closing be (i) restricted from carrying on any business or
other activities anywhere in the world or (ii) bound to participate in any
allocation or sharing of Taxes;
(d) All Contractual Obligations (including, without limitation,
options) to: (i) sell or otherwise dispose of any Material Assets except in
the Ordinary Course of Business or (ii) purchase or otherwise acquire any
Material property or properties except in the Ordinary Course of Business;
(e) All Contractual Obligations under which any of the Companies
will have after the Closing any liability or obligation to or for the benefit
of any Affiliate of Seller;
(f) All Contractual Obligations which will survive the Closing
under which any of the Companies has any liability or obligation for Debt or
constituting or giving rise to a Guarantee of any liability or obligation of
any Person (other than another Company), or under which any Person (other
than another Company) has any liability or obligation constituting or giving
rise to a Guarantee of any liability or obligation of the Companies
(including, without limitation, partnership and joint venture agreements);
(g) All (i) distributorship agreements, requirements or other
similar supply agreements, and contracts with any Governmental Authority, and
(ii) all other Contractual Obligations with suppliers, vendors, customers, or
other purchasers or suppliers of goods or services, including, without
limitation, purchase or sales or service orders (representing a binding and
enforceable obligation to purchase or sell goods or services), which are by
their terms stated to involve payments by or on behalf of, or to, the
Companies in excess of $250,000 during the calendar year ended December 31,
1995 or $500,000 over the remaining term of the contract;
(h) All Contractual Obligations constituting a partnership or
joint venture;
(i) All sales representative agreements to which any of the
Companies is party; and
(j) All Contractual Obligations of any of the Companies, in
addition to those set forth in subparagraphs (a) - (i) above, which are
Material to the Business of the Companies considered on a consolidated basis.
Seller has heretofore made available to Buyer (and as requested by Buyer has
delivered to Buyer) a true and complete copy (or, in the case of oral
Contracts, a full and accurate written summary, or in the case of "form"
agreements, a copy of the standard form) of each of the Contractual
Obligations listed on Schedule 3.6, each as in effect on the date hereof and
(except as otherwise required by this Agreement) as it will be in effect at
the Closing, including, without limitation, all amendments (such Contractual
Obligations, together with the Leases, Licenses, and Insurance Policies, but
excluding the Employee Benefit Plans, being referred to herein collectively
as the "Contracts"). Each Contract is, and after giving effect to the
Closing hereunder and the consummation of the transactions contemplated
hereby will be, Enforceable by the Company party thereto against each Person
party thereto, except: (i) as otherwise required by the terms of this
Agreement, (ii) for such failures to be so enforceable as do not and will not
have a Company Material Adverse Effect and (iii) as such enforceability may
be limited by (A) bankruptcy, insolvency, reorganization or other similar
laws affecting creditors' rights generally and (B) general principles of
equity (whether considered in a proceeding at law or in equity). No breach
or default by the Companies under any of the Contracts has occurred and is
continuing, and no event has occurred which with notice or lapse of time
would constitute such a breach or default or permit termination, modification
or acceleration by any other Person under any of the Contracts, except in
each such case as has not had and will not have a Company Material Adverse
Effect. To the Knowledge of Seller, no breach or default by any other Person
under any of the Contracts has occurred and is continuing, and no default has
occurred which with notice or lapse of time would constitute such a breach or
default or permit termination, modification or acceleration by the Companies
under any of the Contracts, except in each such case as has not had and will
not have a Company Material Adverse Effect. None of the Companies has
assigned any of its rights or obligations under any of the Contracts (except
for collateral assignments to Chemical, if any, which will be released at
Closing).
3.7 ASSETS. Except as set forth on Schedule 3.7:
(a) Title to Assets. The Companies have good and marketable title
to, or, in the case of property held under lease or other Contractual
Obligation, a valid and enforceable right to use under an Enforceable Lease
or License, all of their properties, rights and assets, whether real,
personal or intellectual and whether tangible or intangible (collectively,
the "Assets"), including, without limitation, all properties, rights and
assets reflected in the Reference Balance Sheet or in the Closing Balance
Sheet (except as sold or otherwise disposed of since the date of the
Reference Balance Sheet and the Closing Balance Sheet, respectively, in the
Ordinary Course of Business or as otherwise required by this Agreement). The
Assets are not subject to any Material Lien which will survive the Closing,
except as described in Schedule 3.7(a).
(b) Real Property and Equipment. Schedule 3.7(b) lists each lease or
other Contractual Obligation (including all amendments) under which any
Equipment having a cost or aggregate capital lease obligations in excess of
$50,000 is held or used or under which any Real Property (without regard to
cost or rental obligation) is leased or used by any of the Companies (the
"Leases") and whether any consents are required under such Lease in
connection with the transactions contemplated by this Agreement. The Seller
has delivered to Buyer true and complete copies of each Lease in effect on
the date hereof and (except as otherwise required by this Agreement) as it
will be in effect at the Closing, including, without limitation, all
amendments. Schedule 3.7(b) lists (i) all of the Real Property that is owned
and, for each such property, the date acquired (if such information is
reasonably available), any Material Liens (which will survive the Closing)
encumbering such property and the principal amount of indebtedness secured by
each such Material Lien and (ii) the addresses of each other location, if
any, at which is located any Equipment or inventory (other than tooling).
(c) Permits, Certificates, etc. Set forth in Schedule 3.7(c) is a list
of all permits held by the Companies in connection with the present use and
operation of the Real Property and the occupancy thereof. None of the
Companies has received any written notice that any Governmental Authority or
other licensing authority or association will revoke, cancel, rescind, modify
in a Material manner or refuse to renew in the ordinary course any such
Material permits.
(d) Undisturbed Possession, etc. With respect to each parcel of Real
Property, one of the Companies is in possession of the property or the estate
under the applicable Lease, and Seller has no Knowledge of any other Persons
claiming any conflicting tenancy or occupancy rights.
(e) Absence of Certain Notices. Except as set forth in Schedule
3.7(e), and except with respect to any violations of Environmental Laws or
any violations of the Americans with Disabilities Act of 1990 and the rules
and regulations promulgated thereunder, or any similar state or local law,
rule or regulation, none of the Companies has received any written notice (i)
of any Material violation of any zoning restrictions and ordinances, health,
building, life, safety and fire codes and ordinances affecting any of the
Real Property, or (ii) of any eminent domain, condemnation or similar
proceeding pending or threatened, or any decree or order relating thereto,
which matters described in clauses (i) or (ii) above will materially affect
the current use of any Real Property, building or improvement by the Company.
(f) No Material Damages. None of the Companies has received any
written notice of, nor do any of the Companies have any Knowledge of, any
Material destruction, damage or casualty having occurred with respect to any
of the Real Property after June 30, 1995, in each case which will have a
Material Adverse Effect.
(g) Benefit of Leases. With respect to the Leases, to Seller's
Knowledge, no event has occurred which (with the giving of notice or the
passage of time or both), would impair any right of the Companies to exercise
and obtain the benefit of any options contained in any Lease; the Companies
have not received any written notices of any Material default under any
Lease, nor to Seller's Knowledge has any event occurred which (with the
giving of notice or the passage of time or both) would constitute a Material
default or termination of, any Lease; nor have the Companies received any
written notice of any Material default under any ground lease, prime lease,
mortgage or deed of trust of any lessor, any prime lessor or with respect to
any Real Property which could ultimately result in a repossession under or
termination of any of the Leases or impair any right of the Companies under
any of the Leases.
3.8 FINANCIAL STATEMENTS.
Seller has delivered to Buyer the following unaudited financial
statements: Pro Forma Combining Balance Sheets of Amerace and its
Subsidiaries as of June 30, 1995 and September 30, 1995 and Pro Forma
Combining Statements of Earnings Before Interest and Taxes of Amerace and its
Subsidiaries for the year ended December 31, 1994, the six months ended June
30, 1995, and the nine months ended September 30, 1995, and accompanying
notes thereto, copies of which are attached hereto as Schedule 3.8 (the
"Financial Statements").
Except as otherwise indicated in the Financial Statements or on
Schedule 3.8, the Financial Statements have been prepared in accordance with
GAAP and the Companies' internal financial systems, using accounting methods
and procedures which have been consistently applied throughout the periods
and fairly present, in all material respects, the financial condition and
results of operations of the Companies as of and for the periods then ended.
3.9 CHANGE IN CONDITION. Except for the matters set forth in Schedule
3.9, since June 30, 1995:
(a) The Business has been conducted only in the Ordinary Course of
Business (except as otherwise required by the terms of this Agreement);
(b) None of the Companies has incurred or otherwise become liable
in respect of any Debt or become liable in respect of any Guarantee which, in
each case, will survive the Closing;
(c) Amerace has not declared or made any Distribution except for
distributions of Cash and the Distribution to Seller of shares of common
stock of Falcon Building Products, Inc.;
(d) None of the Companies has: (i) sold, leased to others or
otherwise disposed of any of its assets (except for sales of inventory and
receivables or other transactions in the Ordinary Course of Business and
except as otherwise required by the terms of this Agreement); (ii) entered
into any Contractual Obligation other than this Agreement relating to (A) the
purchase of any equity security of any Person, (B) the purchase of assets
constituting a business or (C) any merger, consolidation or other business
combination with any Person which is not a Company; (iii) cancelled or
compromised any Debt or claim (except in the Ordinary Course of Business);
(iv) sold, transferred, licensed or otherwise disposed of any Intangibles;
(v) waived or released any right of Material value except for fair
consideration; or (vi) instituted, settled or agreed to settle any Material
Action.
(e) None of the Companies has mortgaged, pledged or subjected to
any Material Lien any of its property, business or Assets other than Liens
disclosed on Schedule 3.9(f);
(f) Except as set forth on Schedule 3.12, none of the Companies
has (i) to Seller's Knowledge, encountered any labor union organizing
activities, (ii) had any actual or threatened employee strikes, work
stoppages, slow-downs or lock-outs, (iii) made any changes in the rate of
Compensation payable or paid or agreed or orally promised to pay,
conditionally or otherwise, any extra Compensation, or severance or vacation
pay, to any director, officer, manager, employee, consultant or agent of a
Company (other than in each case increases granted in the Ordinary Course of
Business, which increases will not have a Company Material Adverse Effect),
or (iv) to Seller's Knowledge, had any change in its relationships with its
employees, customers or suppliers, which would result in a Company Material
Adverse Effect;
(g) None of the Companies has except in the Ordinary Course of
Business or as contemplated by this Agreement (i) made any change in its
customary methods of accounting or accounting practices (including its
establishment of reserves), or in its pricing, billing, payment, collection
or credit policies or practices or (ii) granted any extensions of credit or,
(iii) failed to pay any creditor any amount owed to such creditor when due;
(h) None of the Companies has made any Material gifts or sold,
leased, transferred or exchanged any Material property for less than the fair
value thereof;
(i) None of the Companies has committed to make any capital
expenditures, except for those contemplated by capital expenditure budgets
previously provided to Buyer or those which do not individually exceed
$500,000 or exceed, in the aggregate, $1,000,000.
(j) None of the Companies has entered into any Contractual
Obligation to do any of the things referred to in clauses (a) through (i)
above; and
(k) To the Knowledge of Seller, no Company Material Adverse Effect
or Material Adverse Effect has occurred, nor has any event or series of
events occurred which directly affect the Companies and which pose a Material
risk of a Company Material Adverse Effect or Material Adverse Effect.
3.10 LIABILITIES. After giving effect to the Closing hereunder and the
consummation of the transactions contemplated hereby, none of the Companies
will have as of the Closing Date any liabilities or obligations which have
had or resulted, or which to the Knowledge of Seller, are reasonably likely
to have or result in, any Company Material Adverse Effect and which would be
required to be disclosed in and reserved for in a balance sheet prepared in
accordance with GAAP, other than those liabilities or obligations which shall
be disclosed to Buyer and are set forth on and reserved for in the Closing
Balance Sheet.
3.11 COMPLIANCE WITH LAWS. The operations of the Business as heretofore
or currently conducted were not and are not in violation of, nor are any of
the Companies in default under, any Legal Requirement, except for such
violations or defaults listed on Schedules 3.6, 3.7(e), 3.11, 3.12, 3.13,
3.17 or 3.19 (or any of the other Schedules hereto which would require
disclosure of any such violations or defaults as a violation or default) or
as have not had a Company Material Adverse Effect. The Companies have been
duly granted and continue to hold, and at the Closing will hold, all
licenses, permits, consents, approvals, franchises and other authorizations
under any Legal Requirement or necessary for the conduct of the Business as
currently conducted or currently proposed to be conducted (the "Permits"),
except such as will not have a Company Material Adverse Effect. All of the
Permits are now and after giving effect to the Closing will be in full force
and effect, except such as will not have a Company Material Adverse Effect.
Schedule 3.11 includes a list of all Permits and applications therefor that
are Material to the Business. None of the Companies has received any notice
that any Governmental Authority or other licensing authority or association
will revoke, cancel, rescind, modify in a Material manner or refuse to renew
in the Ordinary Course of Business any of the Permits set forth on Schedule
3.11. The provisions of this Section 3.11 shall not be deemed to apply to
any Legal Requirements arising under Environmental Laws or relating to the
physical condition or other matters affecting the real property owned or
leased by the Companies or other matters referred to in Section 3.7 hereof.
3.12 EMPLOYEES. To the Knowledge of the Seller, no executive or key
employee has given notice to a Company to the effect that such executive or
key employee plans to terminate employment with any of the Companies. To the
Knowledge of Seller, none of the Companies has committed any unfair labor
practice, nor experienced any strikes, grievances or other collective
bargaining disputes, except as set forth in Schedule 3.12. To the Knowledge
of Seller and except as set forth on Schedule 3.12, no facts, circumstances
or conditions exist that are reasonably likely to result in an Action
alleging an illegal employment practice. To the Knowledge of Seller and
except as set forth on Schedule 3.12, no organizational effort is presently
being made or threatened, by or on behalf of any labor union with respect to
employees of any of the Companies.
3.13 TAX MATTERS
Taxes
(a) Each of the Companies has filed all Tax Returns that it was
required to file and such Tax Returns were correct and complete in all
Material respects. All Taxes owed by any of the Companies shown on any such
Tax Return have been paid. Except as disclosed on Schedule 3.13(a), none of
the Companies currently is the beneficiary of any extension of time within
which to file any Tax Return. No notice has been received from an authority
of a jurisdiction where any of the Companies does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction. Except as set
forth on Schedule 3.13(a), there are no Liens on any of the Assets of any of
the Companies that arose in connection with any failure (or alleged failure)
to pay any Tax.
(b) Each of the Companies has withheld and paid all Taxes required
to have been withheld and paid in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder or other third
party.
(c) There is no dispute or claim (asserted in writing by the
applicable authority or as to which the Seller has Knowledge based upon
notice received from any agent of such authority) concerning any Tax
liability of any of the Companies.
(d) Except as set forth on Schedule 3.13(d), none of the Companies
has waived any statute of limitations in respect of any state, local or
foreign Income Taxes or other Taxes or agreed to any extension of time with
respect to any state, local or foreign Income Tax or other Tax assessment or
deficiency.
Income Taxes
(e) None of the Companies has filed a consent under Code Sec.
341(f) concerning collapsible corporations. None of the Companies has made
any payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make any
payments that will not be deductible under Code Sec. 280G. None of the
Companies has been a United States real property holding corporation within
the meaning of Code Sec. 897(c)(2) during the applicable period specified in
Code Sec. 897(c)(1)(A)(ii). Each of the Companies has disclosed on Ultimate
Parent's federal Income Tax Returns all positions taken therein that could
give rise to a substantial understatement of federal Income Tax within the
meaning of Code Sec. 6662. Except as set forth on Schedule 3.13(e) (which
identifies certain agreements which will terminate upon Closing), none of the
Companies is a party to any federal Income Tax allocation or sharing
agreement. Except as set forth on Schedule 3.13(e), none of the Companies
has been since September 29, 1989 a member of an Affiliated Group filing a
consolidated federal Income Tax Return or any affiliated, combined or unitary
group other than a group the common parent of which was Ultimate Parent.
(f) Schedule 3.13(f) sets forth the following information with
respect to each of the Companies (or, in the case of clause (B) below, with
respect to each of the Subsidiaries) as of the most recent practicable date
(as well as on an estimated pro forma basis as of the Closing giving effect
to the consummation of the transactions contemplated hereby): (A) the federal
Income Tax basis of the Companies in their assets; and (B) the federal Income
Tax basis of the stockholder(s) of the Subsidiary in its stock (or the amount
of any excess loss account); and (C) the amount of any net operating loss,
net capital loss, unused investment or other credit, unused foreign tax, or
excess charitable contribution allocable to the Companies on July 31, 1994.
Seller will provide to Buyer within 45 days of the filing of Ultimate
Parent's consolidated federal Income Tax Returns for the period ending July
31, 1996, the amount of these aforementioned attributes for the period ending
July 31, 1996, respectively.
(g) Each Affiliated Group has filed all federal Income Tax Returns
that it was required to file for each taxable period during which any of the
Companies was a member of the group. Seller has delivered (or shall deliver
to Buyer within 45 days of their filing if permitted to be filed after the
date hereof) to Buyer correct and complete copies of all pro forma federal
Income Tax Returns, of the Affiliated Group of which the Companies are
members since September 29, 1989. All such federal Income Tax Returns were
correct and complete in all respects. All federal Income Taxes owed since
September 29, 1989 by any Affiliated Group (whether or not shown on any
federal Income Tax Return) have been paid for each taxable period during
which any of the Companies was a member of the Affiliated Group.
(h) Except as disclosed on Schedule 3.13(h), there is no dispute
or claim (asserted in writing by the Internal Revenue Service as to which
Seller has Knowledge based upon notice received from any agent of such
authority) concerning any federal Income Tax liability of any Affiliated
Group for any taxable period during which any of the Companies was a member
of the Affiliated Group. Except as disclosed on Schedule 3.13(h), no
Affiliated Group has waived any statute of limitations in respect of any
federal Income Taxes or agreed to any extension of time with respect to an
federal Income Tax assessment or deficiency for any taxable period during
which any of the Companies was a member of the Affiliated Group. There are
no Liens on any of the Assets of any of the Companies that arose in
connection with any failure (or alleged failure) to pay any federal Income
Tax.
(i) Each of the Companies (or the affiliated, combined or unitary
group to which they now or previously belong) has filed all state, local and
foreign Income Tax Returns that it was required to file and such Income Tax
Returns were correct and complete in all respects. All state, local and
foreign Income Taxes owed by any of the Companies (or the affiliated,
combined or unitary group to which they now or previously belong) (whether or
not shown on any Tax Return) have been paid. Except as set forth on Schedule
3.13(i), none of the Companies currently is the beneficiary of any extension
of time within which to file any Income Tax Return for the period ending on
or before the Closing Date. No notice has been received from an authority
claiming jurisdiction where any of the Companies does not file Income Tax
Returns that it is or may be subject to taxation by that jurisdiction.
Except as set forth on Schedule 3.13(i) there are no Liens on any of the
Assets of any of the Companies that arose in connection with any failure (or
alleged failure) to pay any state, local or foreign Income Tax.
(j) There is no dispute or claim (asserted in writing by the
applicable authority or as to which the Seller has Knowledge based upon
notice received from any agent of such authority) concerning any state, local
or foreign Income Tax liability of any of the Companies (or the affiliated,
combined or unitary group to which they now or previously belong). Schedule
3.13(j) lists all federal, state, local and foreign Income Tax Returns filed
with respect to any of the Companies (or the affiliated, combined or unitary
group to which they now or previously belong) for taxable periods ended on or
after September 29, 1989, indicates those income Tax Returns that have been
audited, and indicates those Income Tax Returns that currently are the
subject of audit. Seller has delivered to Buyer correct and complete copies
of all state, local, and foreign Income Tax Returns of the Companies (or the
affiliated, combined or unitary group to which they now or previously belong)
since September 29, 1989, and all state, local and foreign examination
reports, and statements of deficiencies assessed against or agreed to by any
of the Companies (or the affiliated, combined or unitary group to which they
now or previously belong), relating thereto September 29, 1989, but only to
the extent they pertain to the Companies.
(k) None of the Companies has any liability for the Taxes or
Income Taxes of any Person other than the Companies (A) under Treas. Reg.
Section1.1502-6 (or any similar provision of state, local, or foreign law),
(B) as a transferee or successor, (C) by contract, or (D) otherwise.
3.14 LITIGATION. Except as disclosed on Schedule 3.14 and Schedule 3.19
attached hereto, there is no Action against any of the Companies pending (or
to the Knowledge of Seller, threatened), which if determined adversely to any
of the Companies would have a Company Material Adverse Effect. There is no
Action pending (or, to the Knowledge of the Seller, threatened), which seeks
rescission of, seeks to enjoin the consummation of, or otherwise relates to,
this Agreement or any of the transactions contemplated hereby. No
Governmental Order has been issued which has had or will have a Company
Material Adverse Effect.
3.15 INTELLECTUAL PROPERTY RIGHTS. Schedule 3.15 lists and identifies
all trade and product names; patents, patent applications, and unpatented
proprietary developmental records; trademarks, service marks, logos and
copyrights (including registrations and applications); trade secrets, trade
dress, know-how and other proprietary or confidential information; computer
software; and all other intellectual or intangible property and rights; in
each case that are directly or indirectly owned, licensed or otherwise used
by the Companies, in the conduct of the Business or otherwise (the
"Intangibles"); provided, however, that there has been only generally
described on such Schedule 3.15 such of the Intangibles as are not readily
susceptible to listing (the "Unlisted Intangibles"). Schedule 3.15 also
lists and identifies the term of each Contractual Obligation (including all
amendments) under which any Intangible is held or used by the Companies, in
the conduct of the Business or otherwise (the "Licenses"). Except as
disclosed on Schedule 3.15, all Intangibles are owned solely by the Companies
or licensed to them under a perpetual License not requiring payment of any
royalty or fee. Except as disclosed on Schedule 3.15, there is no Material
Contractual Obligation under which the Companies are liable as licensor with
respect to any Intangibles and none of the Companies has granted licenses to
any third party with respect to any of the Intangibles. To the Knowledge of
Seller, the manufacture, use or sale by the Companies of any products in the
Business and the use by the Companies of the Intangibles does not and has not
infringed any rights of any third party, worldwide, and (to the Knowledge of
Seller) no activity of any third party infringes upon the rights of the
Companies with respect to any of the Intangibles.
3.16 INSURANCE POLICIES. Schedule 3.16 sets forth the following
information with respect to each insurance policy (including policies
providing property, casualty, liability, auto and workers' compensation
coverage and bond and surety arrangements) to which any of the Companies has
been a party, a named insured, or otherwise the beneficiary of coverage at
any time within the past five (5) years to the extent the records of the
Companies contain such information:
(a) the name, address, and telephone number of the agent;
(b) the name of the insurer, the name of the policy holder, and
the name of each covered insured;
(c) the policy number and the period of coverage;
(d) the scope (including an indication of whether the coverage was
on a claims made, occurrence, or other basis) and amount (including a
description of how deductibles, sublimits and ceilings are calculated and
operate) of coverage; and
(e) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
Schedule 3.16 describes any self-insurance arrangements affecting any of the
Companies which will survive the Closing. Schedule 3.16 identifies those
insurance policies of which the insured entity is a Company, if any (the
"Insurance Policies"), which will continue in full force and effect following
the Closing Date with respect to occurrences, or claims made, during the
applicable policy period, in each case, as indicated on Schedule 3.16.
Except as set forth in Schedule 3.16, with respect to each such insurance
policy: (i) the policy is legal, valid, binding, enforceable, and in full
force and effect; (ii) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby, except as otherwise
provided in this Agreement; (iii) to Seller's Knowledge, none of the
Companies nor any other party to the policy is in Material breach or default
(including with respect to the payment of premiums or the giving of notices),
and no event has occurred which, with notice or the lapse of time, would
constitute such a Material breach or default, or permit termination,
modification, or acceleration, under the policy; and (iv) to Seller's
Knowledge, no party to the policy has repudiated any material provision
thereof. Buyer acknowledges that coverage under all insurance policies (to
the extent maintained by Seller or its Affiliates other than the Companies)
will cease as of the Closing Date with respect to occurrences after the
Closing Date.
3.17 EMPLOYEE BENEFIT PLANS.
(a) Plans. Except as and to the extent identified in Schedule
3.17(a) attached hereto, the Companies do not maintain or contribute to any
Employee Benefit Plan. A true, correct and complete copy of each Employee
Benefit Plan, as amended, or an explanation of the material terms of such
plan if the plan is not in writing, has been delivered or made available to
the Buyer. With respect to each such plan, the Seller has previously
delivered or made available to Buyer copies of the following documents, as
applicable: (a) the trust agreement, as amended, (b) the most recent summary
plan description, (c) the most recent annual report (Form 5500 series), (d)
the most recent actuarial report, (e) insurance contracts, (f) policy
statements, and (g) the most recent Internal Revenue Service determination
letter. Within fifteen (15) days after Closing, Seller will also provide
Buyer with the most complete and accurate information in its possession
regarding the age, salary, service, and other relevant information as of a
date satisfactory to Buyer for each employee and former employee covered
under any such plan. No such plan has been or will be amended in any respect
prior to the Closing Date that would materially increase the expense of
maintaining such plan.
(b) Pension Plans. Except as set forth in Schedule 3.17(b)
attached hereto, each of the Pension Plans listed in Schedule 3.17(a)
intended to be qualified under Section 401(a) of the Code has received within
the last three (3) years a favorable determination letter from the Internal
Revenue Service to the effect that it is qualified under Section 401(a) of
the Code, or application has been or will be made for such determination
letter prior to the end of the remedial amendment period applicable to such
plan, and the plan sponsor will amend the plan as requested by the Internal
Revenue Service in connection with the determination request. Except as
disclosed in Schedule 3.17(b), with respect to each Pension Plan: (i) each
such plan has been administered and operated in all Material respects in
accordance with its terms and the provisions of ERISA and the Code (including
regulations issued thereunder) and other applicable laws; (ii) no
determination letter has been revoked or threatened to be revoked; (iii) no
such plan has been amended since the date of its most recent determination
letter or application therefore in any respect that could adversely affect
its qualification or could materially affect the cost of maintaining such
plan; and (iv) other than claims for benefits arising in the ordinary course
of the administration and operation of the plan, there are no claims,
investigations, suits, audits or arbitrations which are pending or, to the
knowledge of Seller, threatened, against the plan or any fiduciary of such
plan, and there is no basis to anticipate any such claim, investigation, suit
or audit. Except as disclosed on Schedule 3.17(b), with respect to any
Pension Plan and any employee pension benefit plan (within the meaning of
Section 3(2) of ERISA) maintained by an entity which is treated as a single
employer with a Company pursuant to Section 414(b), (c), (m), or (o) of the
Code ("ERISA Affiliate"): (i) neither such plan nor any person acting as a
fiduciary with respect to such plan has engaged in a transaction prohibited
under Section 406 or 407 of ERISA or Section 4975 of the Code, which could
subject any such plan or fiduciary to any Material tax or penalty imposed by
Section 4975 of the Code or Section 502 of ERISA; (ii) to the Knowledge of
Seller, no person acting as a fiduciary with respect to such plan has
participated in or is aware of a breach of fiduciary duty which could subject
any fiduciary to any Material liability or penalty under ERISA; (iii) none of
such plans has incurred any accumulated funding deficiency (whether or not
waived), as that term is defined in Section 302 of ERISA or Section 412 of
the Code; and (iv) all contributions required to be made to each such plan
prior to the Closing Date have been made on a timely basis.
(c) Title IV Plans. Except as disclosed on Schedule 3.17(c), with
respect to each Pension Plan and each employee pension benefit plan
maintained by an ERISA Affiliate that is subject to Title IV of ERISA: (i)
no reportable event under Section 4043 of ERISA has occurred (other than a
reportable event for which the notice requirement has been waived by the
PBGC); (ii) all PBGC premiums due to date have been paid; (iii) no Company
nor any ERISA Affiliate has filed a notice of intent to terminate such plan
nor adopted any amendment to treat such plan as terminated; and (iv) the PBGC
has not instituted proceedings to terminate such plan.
(d) Welfare Plans. Each Welfare Plan has been maintained in all
material respects in accordance with its terms and the provisions of the Code
and ERISA (including regulations thereunder) and other applicable laws.
Other than claims for benefits arising in the ordinary course of the
administration and operation of the plans, there are no claims,
investigations, suits, audits or arbitrations which are pending or threatened
against any plan or any fiduciary of any plan. Except as disclosed on
Schedule 3.17(d), with respect to any plan, or any employee welfare benefit
plan maintained by an ERISA Affiliate, neither such plan nor any person
acting as a fiduciary to such plan, has engaged in a transaction prohibited
under Section 406 or 407 of ERISA or a breach of fiduciary duty under ERISA
that could subject any such plan or fiduciary to any Material tax, liability
or penalty imposed by Section 409 or 502 of ERISA. Each plan which is a
group health plan has complied at all times and will continue to comply
through the Closing Date with the health care continuation coverage
requirements of Section 4980B of the Code and Part 6 of Title 1 of ERISA.
(e) Multi-Employer Plans. Except as disclosed in Schedule
3.17(e), no Pension Plan is a multi-employer plan within the meaning of
Section 3(37) or 4001(a)(3) of ERISA. Except as disclosed in Schedule
3.17(e), neither any Company nor any ERISA Affiliate has any liability for
withdrawal liability demanded by any multi-employer plan for a complete or
partial withdrawal from such plan, and there is no basis to anticipate that
any such demand will be made. Except as disclosed in Schedule 3.17(e), the
Companies and all ERISA Affiliates have made all contributions due to any
multi-employer plan described in Schedule 3.17(e).
(f) Non-ERISA Plans. Except as disclosed in Schedule 3.17(f), with
respect to each Employee Benefit Plan, other than a Pension Plan or a Welfare
Plan: (i) each such plan has been administered and operated in all Material
respects in accordance with its terms and applicable laws; and (ii) other
than claims for benefits arising in the ordinary course of the administration
and operation of the plan, there are no claims, investigations, suits, audits
or arbitrations which are pending or, to the Knowledge of Seller, threatened,
against the plan or any fiduciary of such plan, and there is no basis to
anticipate any such claim, investigation, suit or audit.
3.18 BANK ACCOUNTS AND LETTERS OF CREDIT. Attached hereto as Schedule
3.18 is a list of each bank, savings and loan, trust company, brokerage house
or other financial institution in which any Company has an account or lock-
box management and the number of each such account, and a description of all
letters of credit for which such Company is the account party.
3.19 ENVIRONMENTAL MATTERS.
(a) to the Knowledge of Seller, the reserves for Environmental
Liabilities to be set forth in the Closing Balance Sheet prepared pursuant to
Section 2.3(a) are adequate to cover the Companies' currently known
Environmental Liabilities;
(b) except for the Identified Environmental Matters identified by
Buyer pursuant to the Environmental Protocol set forth in Schedule 5.22,
neither Seller nor the Companies caused or contributed to or has Knowledge of
any Areas of Environmental Concern:
(i) at the New Mexico facility;
(ii) at the three (3) New Jersey facilities set forth on
Schedule 3.19 other than those which have been documented and disclosed
to the applicable Governmental Authority as part of Seller's or the
Companies' compliance with the New Jersey Environmental Cleanup
Responsibility Act ("ECRA") or the New Jersey Industrial Site Recovery
Act ("ISRA");
(iii) at the New Hampshire facility other than those which
have been documented and disclosed to the applicable Governmental
Authority as part of the investigation relating to the Savage Municipal
Well Superfund site;
(c) neither Seller nor the Companies have received notice of any
Environmental Liabilities relating to the Companies' Joint Ventures in
Belgium, Japan, and Taiwan from any Governmental Authority having
jurisdiction over environmental matters;
(d) except for the Identified Environmental Matters identified by
Buyer pursuant to the Environmental Protocol set forth in Schedule 5.22, to
the Knowledge of Seller, the Disclosed Environmental Matters set forth in
Schedule 3.19 represent a complete list of all Environmental Liabilities of
the Companies;
(e) the Seller and the Companies have provided to Buyer the
opportunity to review all substantial documentary information of which they
have Knowledge and possession or control regarding (x) the Disclosed
Environmental Liabilities; (y) Environmental Liabilities or Areas of
Environmental Concern associated with the properties and the businesses
currently owned or operated by the Companies; and (z) Environmental
Liabilities or Areas of Environmental Concern associated with the properties
and the businesses formerly owned or operated by the Companies;
(f) except for the Disclosed Environmental Matters set forth in
Schedule 3.19 or the Identified Environmental Matters identified by Buyer
pursuant to the Environmental Protocol set forth in Schedule 5.22, to the
Knowledge of Seller, each of the currently owned or operated properties and
businesses of the Companies is in compliance with all applicable
Environmental Laws;
(g) except for the Disclosed Environmental Matters set forth in
Schedule 3.19 or the Identified Environmental Matters identified by Buyer
pursuant to the Environmental Protocol set forth in Schedule 5.22, to the
Knowledge of Seller, the Companies have complied with applicable
Environmental Laws in effect at the time in connection with the use, disposal
or storage of Hazardous Materials at off-site landfills or at other
facilities, including other properties currently owned or operated by the
Companies.
(h) except for the Disclosed Environmental Matters set forth in
Schedule 3.19 or the Identified Environmental Matters identified by Buyer
pursuant to the Environmental Protocol set forth in Schedule 5.22, to the
Knowledge of Seller, there are no actual or threatened Environmental
Liabilities with respect to : (x) noncompliance with any applicable
Environmental Laws, or (y) the presence or Release or threatened Release of
any Hazardous Materials, or (z) personal injury, wrongful death, or other
tortious conduct relating specifically to any Hazardous Materials used,
manufactured, sold, or disposed of by or on behalf of the Companies;
(i) except for the Disclosed Environmental Matters set forth in
Schedule 3.19 or the Identified Environmental Matters identified by Buyer
pursuant to the Environmental Protocol set forth in Schedule 5.22, to the
Knowledge of Seller, no event has occurred or condition exists or operating
practice is being employed that will likely give rise to any Environmental
Liability of either the Companies or, after Closing, the Buyer, under any
Environmental Laws; and
(j) to the Knowledge of Seller, any asbestos containing material
contained in any of the buildings or structures currently used by the
Companies is either in good condition or is otherwise not causing airborne
concentrations of asbestos fibers above limits set by Environmental Laws.
3.20 TRANSACTIONS WITH AFFILIATES. Except for the matters set forth on
Schedule 3.6 pursuant to clause (e) of Section 3.6 and clearly identified on
such Schedule as an affiliate relationship (the "Affiliate Relationships"),
and except as contemplated by Section 5.8, no Affiliate of the Seller or
Amerace (other than an Eagle Employee) is an officer, director, employee,
consultant, competitor, customer, distributor, supplier or vendor of, or is
party to any Material Contractual Obligation with, the Companies. There are
no operating Assets, including Real Property, Equipment, Intangibles,
franchises, know-how, or proprietary or confidential knowledge that any such
Affiliate (other than the Companies) owns or is licensed or otherwise has the
right to use which are used in, or necessary to the conduct of the Business;
it being acknowledged, however, that Seller or its Affiliates currently
provide various professional, administrative, accounting, cash management,
financial, insurance, and other similar services to or for the benefit of the
Companies and own certain assets related thereto.
3.21 POWERS OF ATTORNEY. There are no outstanding powers of attorney
executed on behalf of any of the Companies except to custom's brokers and
other powers of attorney set forth on Schedule 3.21.
3.22 SUPPLIERS AND CUSTOMERS. To Seller's Knowledge, none of the
Companies has received notice that any of its ten largest suppliers or ten
largest customers intends to cancel its relationship with it.
3.23 GUARANTIES. Except as set forth on Schedule 3.23, none of the
Companies has delivered a Guarantee of any Debt of any other Person other
than another Company.
3.24 BROKERS, ETC. Except as specified in Schedule 3.24, no broker,
finder, investment bank or similar agent is entitled to any brokerage,
finder's or other fee, Compensation or reimbursement of expenses in
connection with the transactions contemplated by this Agreement based upon
agreements or arrangements made by or on behalf of (or the conduct of)
Amerace or any of its Affiliates, and Seller shall bear all such fees,
Compensation and reimbursement of expenses.
3.25 PRODUCT WARRANTY. Seller has made available to Buyer and shall
deliver upon the request of Buyer true and complete copies of the standard
terms and conditions of sale or lease for each of the Companies (containing
applicable guaranty, warranty and indemnity provisions).
3.26 JOINT VENTURES. Except as set forth in Schedule 3.26, Seller has
no Knowledge of any fact that is likely to result, in the foreseeable future,
in a material impairment of the value of any Company's investment in a Joint
Venture.
3.27 DISCLOSURE. This Agreement and the Exhibits and Schedules hereto
(but excluding for these purposes any financial statements), considered as a
whole, does not and will not contain any untrue statement of a Material fact
relating to the Companies or Seller, and does not omit or will not omit to
state a Material fact necessary in order to make the statements contained
herein not misleading, in each case if such Material fact or omission (i) is
Known to Seller at the time of making (or omitting to make) such statement
and (ii) would be likely to result in a Material Adverse Effect.
Notwithstanding the foregoing, in the event any item or matter is set forth
in a Schedule which requires disclosure of certain "Material" matters, the
inclusion of such item or matter in such Schedule shall not cause such item
or matter to be deemed "Material" unless such item or matter otherwise
satisfies the definition of "Material", and in no event shall the inclusion
of non-Material information in a Schedule requiring disclosure of Material
matters be deemed to be a breach of such representation or of the
representation set forth in this Section 3.27.
ARTICLE IV - BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller on the date of this Agreement as
follows:
4.1 ORGANIZATION. Buyer is a corporation duly organized and validly
existing under the laws of the State of New Jersey and has all requisite
power and authority, corporate and otherwise, to enter into and perform its
obligations under this Agreement and to consummate the transactions
contemplated hereby.
4.2 AUTHORITY. The execution, delivery, and performance of this
Agreement by Buyer have been (or shall be prior to Closing) duly and properly
authorized by proper corporate action in accordance with applicable law and
with the Articles of Incorporation and By-Laws of Buyer. This Agreement and
the other agreements and instruments to be executed and delivered by Buyer in
connection with the transactions contemplated hereby will be, the legal,
valid and binding obligations of Buyer, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or from time to time affecting the enforcement of creditors' rights generally
and except that the enforceability of Buyer's obligations is subject to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.3 TRANSACTION NOT A BREACH. Except as specified in Schedule 4.3,
hereof neither the execution and delivery of this Agreement nor the
performance by Buyer of its obligations hereunder does or will constitute,
result in or give rise to: (i) a breach of or default under the terms,
conditions or provisions of the Certificate of Incorporation or By-Laws of
Buyer; (ii) a Material breach or violation or default under any Legal
Requirement applicable to the Buyer; or (iii) a breach of or a default under
any Material Contractual Obligation of the Buyer, or the requirement that any
consent under or waiver of any such Contractual Obligation be obtained,
except for consents which shall have been obtained or made and shall be in
full force and effect at the Closing. No approval, consent, waiver,
authorization or other order of, and no declaration, filing, registration,
qualification or recording with, any Governmental Authority is required to be
obtained or made by or on behalf of the Buyer in connection with the
execution, delivery or performance of this Agreement and the consummation of
the transactions contemplated hereby, except for items which shall have been
obtained or made and shall be in full force and effect at the Closing and
copies of which shall be delivered to Buyer on or prior to the Closing Date,
and except for those items the failure to obtain or make which would not have
a Material Adverse Effect.
4.4 FINANCIAL ABILITY. Buyer has freely available to it sufficient
funds (or binding commitments to provide sufficient funds) to perform all of
its obligations under this Agreement, including the payment of the Purchase
Price and the Receivables Purchase Price when due. Upon Seller's request,
Buyer shall furnish Seller with proof of the sufficiency of its funds.
4.5 NO IMPLIED REPRESENTATIONS OR WARRANTIES. Except as specifically
and expressly provided in this Agreement, Buyer acknowledges that Seller has
not made, and Buyer is not relying on, any representation, warranty or
covenant with respect to the transactions contemplated hereby.
ARTICLE V - OTHER AGREEMENTS OF THE PARTIES
5.1 CONTINUING OPERATION OF BUSINESS. From the date hereof until the
Closing, the Seller will not cause or permit any of the Companies to engage
in any practice, take any action, or enter into any transaction outside the
Ordinary Course of Business. Without limiting the generality of the
foregoing, the Seller will not cause or permit any of the Companies to (i)
make any Distribution (other than Distributions permitted pursuant to Section
3.9; provided, however, that on the Closing Date foreign accounts of the
Companies shall contain sufficient cash to cover outstanding checks), (ii)
issue or sell, to grant options, warrants or rights to purchase or subscribe
to, or enter into any arrangement or contract with respect to the issuance or
sale of any of its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock, or make changes in
its capital structure; (iii) acquire any equity or ownership interest in any
businesses, and not to merge with, liquidate into or otherwise combine with
any other business, person or entity, except in each case transactions solely
among the Companies which are either (A) fully disclosed in a Schedule 5.1
attached to this Agreement or (B) fully disclosed in writing to, and approved
in writing by, Buyer prior to consummation of each transaction; (iv) make any
capital expenditures, or commit to make any capital expenditures, other than
capital expenditures which are contemplated by capital expenditure budgets
previously provided to Buyer or those which do not individually exceed
$500,000 or exceed, in the aggregate, $1,000,000; or (v) otherwise engage in
any practice, take any action, or enter into any transaction of the sort
described in Section 3.9 above. Notwithstanding the provisions of this
Section 5.1, nothing herein shall limit the right of the Seller or the
Companies to take any action necessary or appropriate to assure that the
representations and warranties of Seller hereunder shall be true as of the
Closing Date or take action otherwise permitted under any other provision of
this Agreement.
5.2 INSPECTION. From the date hereof until the Closing, Seller will
give Buyer and its representatives (upon reasonable advance notice and during
normal business hours) reasonable access to the Companies' properties, books,
and records for the purpose of making preparations for the continued post-
closing operation of the Companies, and Buyer will furnish to Seller and its
representatives all such information and documents relating to Buyer as
Seller may reasonably request. Each of the parties will treat, and will
cause its representatives to treat, all information that is received under
this Section 5.2, if not in the public domain, as Confidential Information in
accordance with Section 5.20 and the Confidentiality Agreement.
5.3 ACCESS TO RECORDS. Except as provided in Section 5.4(i) below,
Buyer shall cause each Company to retain its books and records as they
physically exist on the Closing Date for a period of five (5) years (or such
longer time period as typically maintained by similar companies or as may be
required by law), from the Closing Date. Seller shall have access to such
books and records on reasonable notice during normal business hours for any
reasonable and necessary purpose; provided that to the extent Seller's
request for access is made in connection with, or contemplation of, any
litigation between Seller and Buyer (or involving any of the Companies),
Seller's right to obtain such access shall be solely governed by the
discovery provisions of the applicable rules of civil procedure. If Seller
desires copies of any such books and records during or after such retention
period, it shall notify Buyer and will be permitted to nave copies or make
copies of such books and records, provided that Seller bears the costs and
expenses of such copying.
5.4 TAX MATTERS.
(a) Tax Sharing Agreements. Any Tax or Income Tax sharing
agreement between Seller and its Affiliates (including the Ultimate Parent)
and any of the Companies is terminated as of the Closing Date and will have
no further effect for any taxable year (whether the current year, a future
year, or a past year).
(b) Tax and Income Tax Returns for Periods Through the Closing
Date. Seller will be responsible to prepare and file all Tax and Income Tax
Returns, and to pay all Taxes and Income Taxes for the Companies (or the
affiliated, combined or unitary group to which they now or previously belong)
through the Closing Date with respect to all periods ending on or before the
Closing Date. Seller and/or Ultimate Parent will include the income of the
Companies (including any deferred income triggered into taxable income by
Treas. Reg. Section1.1502-13 and Treas. Reg. Section1.1502-14 and any Excess
Loss Accounts taken into income under Treas. Reg. Section1.1502-19) on the
consolidated federal Income Tax Return of the Ultimate Parent for all periods
through the Closing Date and pay any Income Taxes attributable to such
income. The Companies will furnish Income Tax information to Ultimate Parent
for inclusion in the consolidated federal Income Tax Return of the Ultimate
Parent for the period which includes the Closing Date in accordance with the
Companies' past custom and practice. Seller and Ultimate Parent will allow
the Buyer an opportunity to review and comment upon such Income Tax Returns
(including any amended Income Tax Returns) to the extent that they relate to
the Companies. The income of the Companies will be allocated to the period
up to and including the Closing Date and the period after the Closing Date by
closing the books of the Companies as of the end of the Closing Date. To the
extent possible under applicable law, Seller and/or Ultimate Parent will file
all Income Tax Returns for the Companies for the period up to and including
the Closing Date by using a short tax year that ends on the Closing Date, and
Seller and/or Ultimate Parent shall pay all Income Taxes shown as due on such
Income Tax Returns.
(c) Audits. No party shall request a Tax or Income Tax audit of
Seller, or the Companies, or of any Affiliate of Seller or any of the
Companies, and Buyer shall not, without the prior written consent of Seller,
extend any statute of limitations with respect to Taxes or Income Taxes owed
by any of the foregoing entities. To the extent Buyer suffers or realizes an
Income Tax Detriment as a result of Income Tax audit adjustments made after
the Closing Date which pertain to the Companies for the periods up to or
including the Closing Date, Seller shall pay to Buyer the value of such
Income Tax Detriment within thirty (30) days of its determination. If Buyer
and Seller are unable to agree on the value of an Income Tax Detriment, the
dispute shall be submitted to the Accounting Firm, whose determination shall
be binding.
(d) Carrybacks. Ultimate Parent will immediately pay to the Buyer
any Income Tax refund (or reduction in Income Tax liability) resulting from a
carryback of a post-acquisition Income Tax attribute of any of the Companies
into the Ultimate Parent consolidated Income Tax Return, when such refund or
reduction is realized by the Affiliated Group. Ultimate Parent will
cooperate with the Companies in obtaining such refunds (or reduction in
Income Tax liability), including through the filing of amended Income Tax
Returns or refund claims. The Buyer agrees to indemnify and hold harmless
Ultimate Parent for any Income Taxes resulting from the disallowance of such
post-acquisition Income Tax attributes on audit or otherwise.
(e) Retention of Carryovers. Ultimate Parent will not elect to
retain any net operating loss carryovers or capital loss carryovers of the
Companies under Treas. Reg. Section1.1502-20(g).
(f) Tax Returns and Foreign Income Tax Returns for Periods
Beginning Before and Ending After the Closing Date. With respect to all Tax
Returns and Income Tax Returns (but specifically excluding federal, state and
local Income Tax Returns) for periods ending after the Closing Date but
relating to periods preceding the Closing Date (including without limitation,
all state and local Tax Returns for sales, use, payroll, withholding,
employment, excise, property, intangible and franchise taxes), Buyer shall be
responsible for causing the Companies to prepare and file such Tax Returns,
and the Companies shall be responsible for making any required payments with
respect to such Tax Returns and shall hold Seller harmless from and against
any such required payments. Seller will cause the estimated amount of such
Tax liabilities through the Closing Date to be properly accrued by the
Companies and such amounts shall be reflected on the Closing Balance Sheet.
(g) Refunds. Any refunds or credits of Income Taxes attributable
to a pre-Closing Tax period for which Ultimate Parent or Seller is liable for
Income Taxes under Section 5.4(b) shall be for the account of Ultimate Parent
or Seller, as applicable.
(h) Reimbursement for Income Tax Benefit. If any Adverse
Consequences for Income Taxes arise for which Seller has agreed to hold Buyer
harmless pursuant to paragraph (b) above, and if the adjustment giving rise
to such Adverse Consequences results in an Income Tax Benefit to Buyer or
Companies for any period after the Closing, Buyer or Companies, after receipt
of such benefit, will promptly pay to Seller the value of such Income Tax
Benefit, but only to the extent the aggregate of such adjustments exceeds
$500,000. If Buyer and Seller are unable to agree on the value of an Income
Tax Benefit, the dispute shall be submitted to the Accounting Firm, whose
determination shall be binding.
(i) Maintenance of Records and Assistance. Ultimate Parent and
Buyer shall each maintain (or, in the case of Buyer, cause the Companies to
maintain) the books and records that relate to any Tax Return or Income Tax
Return of a Company or any consolidated return of Ultimate Parent for a
period of not less than seven years following the filing date of such Tax
Return or Income Tax Return or consolidated return, shall thereafter give the
other party at least 30 days' notice of its intention to destroy any such
records and shall, at the other party's request and expense, to the extent
such records relate to a Company, turn over any such records to the other
party instead of destroying them. As soon as practicable after a request by
Seller or Buyer ("Requesting Party"), Seller or Buyer, as the case may be
(the "Delivering Party"), shall deliver to the Requesting Party such
information and data and make available such knowledgeable persons employed
at the time of the request by the Delivering Party as the Requesting Party
may reasonably request, in order to enable the Requesting Party to complete
and file all Tax Returns or Income Tax Returns which it is required to file
with respect to the activities or assets of a Company or to respond to audits
by any taxing authorities with respect to such activities or assets. The
Delivering Party's obligation under this paragraph to permit the Requesting
Party access to and to review the foregoing materials is conditioned upon the
Requesting Party's execution of a reasonable confidentiality agreement with
respect thereto, together with an undertaking that such access and review are
requested solely for the purposes described in this Section 5.4.
(j) Notice. If Buyer or a Company becomes aware of any assessment,
official inquiry, examination or proceeding that could result in an official
determination with respect to any Tax or Income Tax for which Seller could be
liable pursuant to this Agreement, Buyer shall promptly so notify Seller in
writing. If Seller becomes aware of any official inquiry, examination or
proceeding that could result in an official determination with respect to any
Tax or Income Tax for which Buyer or a Company could be liable pursuant to
this Agreement, Seller shall promptly so notify Buyer in writing.
5.5 FILING UNDER HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976.
(a) General. Seller and Buyer acknowledge that the transactions
contemplated by this Agreement require filings with the FTC and the Antitrust
Division under the Antitrust Improvements Act.
(b) Filings. Seller and Buyer shall each promptly file with the
FTC and the Antitrust Division the notifications and reports required to be
filed pursuant to the Antitrust Improvements Act and shall undertake in good
faith to file promptly any supplemental information which may be requested in
connection therewith, which notifications and reports compiled and filing of
supplemental information will comply, in all material respects with the
requirements of such Antitrust Improvements Act. Seller and Buyer shall each
furnish the other with such information as either may reasonably request to
make such filings.
(c) Appeal. In the event that the Antitrust Division brings suit
seeking to prevent or restrain the transactions contemplated by this
Agreement or in the event the FTC issues a complaint or petitions a court to
enjoin the transactions contemplated by this Agreement, then Seller and Buyer
shall jointly determine whether to appeal or contest an adverse decision or
action of the FTC or the Antitrust Division or terminate this Agreement
without further liability or obligation to the Parties, except that the
obligations contained in Sections 9.8 and 9.9, the second sentence of
Section 5.2, and Section 5.20 shall survive such termination.
5.6 CHEMICAL BANK FINANCING. The Stock and substantially all of the
Companies' Assets are subject to Liens held pursuant to the Chemical
Agreements which Seller shall cause to be released at the Closing. Seller
also shall cause Chemical to deliver a written confirmation that following
such release of Liens the Companies will have no liabilities to Chemical as
of the Closing.
5.7 OUTSTANDING LETTERS OF CREDIT. Buyer shall replace, as of the
Closing, outstanding letters of credit issued for the benefit of the
Companies based on the credit, or at the risk, of Seller or its Affiliates
(other than the Companies). With respect to those letters of credit Buyer is
unable to replace as of Closing, Buyer shall deliver at Closing a letter of
credit (or cash) in the amount of such outstanding letters of credit as
security; Seller will allow for a reduction in such letters of credit (or
return cash to Buyer) if after the Closing Date the requirement to provide
such letters of credit is reduced or eliminated. With respect to letters of
credit provided relating to the self-insured retention referenced in
Section 5.12(a) hereof, Buyer shall provide to Seller a letter of credit in
an amount equal to the balance sheet reserves of Seller, specific to the
Companies, with respect to such retention, as of the date immediately prior
to the Closing Date, with such other terms as are contained in the letters of
credit provided by Seller (or its Affiliates) to its insurance carriers.
5.8 REPAYMENT OF INTERCOMPANY DEBT. Except as set forth in Schedule
5.8(a), or as otherwise contemplated by this Agreement, concurrent with or
prior to the Closing, the entire amount of Debt owed by any Company to the
Seller and/or its Affiliates shall be deemed to constitute a capital
contribution of Seller to Amerace and the entire amount of Debt owed by the
Seller and/or its Affiliates to any Company, outstanding on the Closing Date,
shall be cancelled and/or forgiven without the further payment of any money
in connection therewith. Notwithstanding the foregoing, Intercompany
payables owed by the Companies to Seller and/or its Affiliates for goods or
services provided in the Ordinary Course of Business through the Closing Date
and as set forth in Schedule 5.8(b) shall not be cancelled at the Closing and
shall be reflected on the Closing Balance Sheet and the foregoing provisions
shall not be applicable to any obligations relating to Taxes or Environmental
Laws which shall be governed by the provisions of Sections 5.4 and 5.22
hereof. Certain other obligations of the nature set forth on Schedule 5.8(b)
may be incurred after the Closing Date, and such obligations shall not be
reflected on the Closing Balance Sheet.
5.9 CASH AND CASH EQUIVALENTS. The parties acknowledge that Buyer is
not relying upon the existence of any Cash held by the Companies (or by other
entities in which the Companies hold interests) as of the Closing and agrees
that Seller may cause the Companies (or such other entities) to transfer to
Seller, prior to the Closing, all or a portion of the Cash (subject to the
provisions of Section 5.1(i)). Buyer agrees to fund Companies' outstanding
checks drawn on domestic accounts as of the Closing Date, as they are
presented for payment and the accounts payable on the Closing Balance Sheet
shall include the amount of such outstanding checks.
5.10 PENSION AND SAVINGS PLAN.
(a) Seller shall cause the trustee of the Savings Plan to
transfer, to the trustee of a qualified defined contribution plan maintained
by the Buyer or an entity which is treated as a single employer with the
Buyer pursuant to Section 414(b), (c) or (m) of the Code ("Buyer Affiliate"),
either currently existing or hereinafter established by the Buyer or a Buyer
Affiliate (the "Transferee Savings Plan"), in cash or in marketable
securities acceptable to the Buyer, the entire value of each Transferred
Employee's accounts under the Savings Plan as determined under the provisions
of the Savings Plan. "Transferred Employee" means each employee of a Company
on the Closing Date who is a participant in the Savings Plan. Unless
otherwise agreed by Seller and the Buyer, the transfer shall occur within
ninety (90) calendar days after the Buyer obtains and presents to Seller a
determination letter issued by the Internal Revenue Service evidencing that
the Transferee Savings Plan is qualified under the applicable provisions of
the Code, or evidence reasonably satisfactory to Seller that an application
for a determination letter for the Transferee Savings Plan has been filed
with the Internal Revenue Service prior to the end of the applicable remedial
amendment period, or other evidence satisfactory to Seller that the
Transferee Savings Plan is qualified under the applicable provisions of the
Code. Such evidence of qualification shall be provided by the Buyer within
sixty (60) days of the Closing Date.
(b) After the transfers described above, none of the Seller, its
ERISA Affiliates, nor the Savings Plan shall have any liability or obligation
to pay or otherwise provide to the Transferred Employees any benefits accrued
or provided for under the Savings Plan, and the Buyer shall assume full
liability for such benefits; provided that the Buyer shall have no liability
whatsoever for any failure by Seller, its employees, agents or affiliates to
operate the Savings Plan on a qualified basis in compliance with the terms of
the plan and applicable law prior to the Closing Date. All Transferred
Employees shall cease active participation in the Savings Plan as of the
Closing Date.
(c) The Transferee Savings Plan (i) shall provide that all
benefits transferred to such plans pursuant to Sections 5.10(a) shall remain
fully vested; and (ii) shall recognize the service with the Companies of the
Transferred Employees who participated in the Savings Plan immediately prior
to the Closing Date for eligibility and vesting purposes under the Transferee
Savings Plan.
(d) Prior to the Closing, each Company shall pay to the trustee of
the Savings Plan all required Employer and Employee Contributions of such
Company to the Savings Plan for all calendar months ending twenty (20) days
or more prior to the Closing Date. Within forty-five (45) days after the
Closing, each Company shall pay to the trustee of the Savings Plan all
required Employer and Employee Contributions to the Savings Plan for any
calendar month ending less than twenty (20) days prior to the Closing Date
and for the calendar month in which the Closing Date occurs. For purposes of
this paragraph, the Employee Contributions shall be those amounts withheld or
required to be withheld from employees' compensation for the period prior to
and including the Closing Date, and Employer Contributions shall be the
Employer Contributions that would be required to be made with respect to such
Employee Contributions.
(e) The Parties agree that after the Closing Date the Companies
shall have no liability with respect to any unpaid contributions to the Cash
Balance Plan.
5.11 CONSENTS, RELEASES. Prior to or at the Closing, Seller shall: (i)
obtain the release of all Liens in the Stock and other Assets of the
Companies securing Debts of Seller or any Affiliate (other than a Company) of
Seller (including, without limitation Liens held by lenders pursuant to the
Chemical Agreements); and (ii) use commercially reasonable efforts to obtain
such Material consents or waivers from third parties necessary to consummate
the transactions contemplated hereunder as are set forth in Schedule 5.11.
5.12 RESPONSIBILITY FOR INSURANCE COVERAGE.
(a) Liability and Workers Compensation Insurance. Some or all of
the Companies are insured parties under current general liability, products
liability, auto liability, employers' liability and workers' compensation
insurance policies of Seller or its Affiliates other than a Company (a
"Seller Insured Entity") as set forth on Schedule 5.12(a), which provide
coverage on an "occurrence" basis during the applicable policy period (the
"Current Insurance"). As between Seller Insured Entity and a Company, Seller
Insured Entity shall be responsible and liable for all claims associated with
occurrences prior to the Closing of a category or type subject to coverage
under the Current Insurance but only to the extent, it (or a third party on
its behalf) actually receives insurance proceeds or protection relating
thereto (a "Covered Claim"). To the extent such Covered Claim is subject to
a deductible or self-insured retention, or the liability exceeds the proceeds
received, or such insurance proceeds are not otherwise available, the
applicable Company shall be responsible and liable for said amount and shall
reimburse Seller Insured Entity within thirty (30) days of receipt of a
request for reimbursement, with interest accruing at the rate of 10% per
annum for payments not received within such thirty (30) day period. In the
event Seller determines to enter into a "buy-out agreement" with an insurance
carrier pursuant to which Seller pays consideration to eliminate the
deductible or self-insured retention with respect to all or a portion of a
particular policy period, then Seller shall notify Buyer of its intention to
enter into such transaction and the terms thereof. Buyer shall have thirty
(30) days from the receipt of such notice to elect to participate in such
transaction by irrevocably agreeing to pay its portion of the consideration
paid by Seller. If Buyer elects not to so participate, it will continue to
be charged pursuant to this Section 5.12(a) as though such buy-out
transaction had not occurred.
(b) Seller Insured Entity or its insurer shall have sole right to
assume and conduct the defense of any Covered Claims; provided however that
in the event a Covered Claim could result in liability to any Company in an
amount exceeding $5,000, any decisions with respect to disposition of the
claim shall be made on a joint basis by Seller and Buyer, and Buyer shall
have the right to participate in the defense of such claim at its own
expense. Seller Insured Entity shall not be obligated to Buyer for any legal
or other expenses incurred with respect to the defense of Covered Claims.
Buyer shall cause the Companies to cooperate in the defense of the Covered
Claims and to provide records and other information necessary or appropriate
to such defense, as requested by Seller Insured Entity or its insurer. Buyer
shall not take any action, or omit to take any action, which may materially
adversely affect the availability of insurance coverage with respect to
Covered Claims. At the Closing, the Seller will provide Buyer with a
Certificate of Insurance for all Current Insurance of the Seller.
5.13 TRANSFER TAXES. Seller agrees to pay any documentary, stock
transfer, or other similar taxes, if any, and any other transfer taxes, if
any, imposed by reason of this transaction.
5.14 FINANCING. Buyer shall use commercially reasonable efforts to
fulfill any conditions contained in any third party financing commitments
intended to satisfy Buyer's obligations hereunder.
5.15 NOTICES OF DEVELOPMENTS. Each Party will give prompt written
notice to the others of any Material adverse development of which it has
Knowledge causing a breach of any of its own representations and warranties
contained in this Agreement. No disclosure by any Party pursuant to this
Section 5.15, however, shall be deemed to amend or supplement the Schedules
hereto or to prevent or cure any misrepresentation, breach of warranty, or
breach of covenant, except as provided in Section 8.5 hereof.
5.16 EXCLUSIVITY. The Seller will not (and the Seller will not cause or
permit any of the Companies to) (i) solicit, initiate, or encourage the
submission of any proposal or offer from any Person relating to the
acquisition of any capital stock or other voting securities, or any
substantial portion of the assets of, any of the Companies (including any
acquisition structured as a merger, consolidation, or share exchange) or (ii)
participate in any discussions or negotiations regarding, furnish any
information with respect to, assist or participate in, or facilitate in any
other manner any effort or attempt by any Person to do or seek any of the
foregoing. The Seller will not vote its Stock of Amerace in favor of any
such acquisition structured as a merger, consolidation, or share exchange.
5.17 TITLE INSURANCE. Within ten (10)business days after execution of
this Agreement, the Seller will cause the Companies to deliver to Buyer the
most current version in their possession, if any, of a title insurance policy
and survey for each parcel of Real Property that any of the Companies owns,
other than the Real Property located in Stillwater, Oklahoma and Crawford
County, Ohio. To the extent reasonably requested by Buyer, Seller will
provide prior to Closing updated title insurance policies (including all
endorsements requested by Buyer) and surveys with respect to such owned Real
Property, other than the Real Property located in Stillwater, Oklahoma and
Crawford County, Ohio. The cost of such title insurance policies and surveys
shall be shared equally by Seller and Buyer.
5.18 LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
audit, hearing, investigation, charge, complaint, claim, or demand in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice,
plan, occurrence, event, incident, action, failure to act, or transaction on
or prior to the Closing Date involving any of the Companies, each Party will
cooperate with the other and its counsel in the contest or defense, make
available its personnel, and provide such testimony and access to its books
and records as shall be necessary in connection with the contest or defense,
all at the sole cost and expense of the contesting or defending Party (unless
the contesting or defending Party is entitled to indemnification therefor
under Section 8 below).
5.19 TRANSITION. The Seller will take no action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier, or other business associate of any of the Companies from
maintaining the same business relationships with the Companies after the
Closing as it maintained with the Companies prior to the Closing, except for
those relationships maintained by the Companies indirectly through Seller or
its Affiliates (other than a Company) which are not intended to survive the
Closing. The Seller will refer all customer inquiries relating to the
Business of the Companies to the Buyer from and after the Closing.
5.20 CONFIDENTIALITY. The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of the Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in its
possession. In the event that the Seller is requested or required (by oral
question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential Information, Seller will notify the Buyer promptly
of the request or requirement so that the Buyer may seek an appropriate
protective order or waive compliance with the provision of this Section 5.20.
If, in the absence of a protective order or the receipt of a waiver hereunder
the Seller is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for contempt,
that Seller may disclose the Confidential Information to such tribunal;
provided, however, that the Seller shall use its reasonable best efforts to
obtain, at the reasonable request of the Buyer, an order or other assurance
that confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as the Buyer shall
designate. The foregoing provision shall not apply to any Confidential
Information which is generally available to the public immediately prior to
the time of disclosure. Notwithstanding the foregoing, nothing herein shall
require Seller to return or destroy, or prevent Seller from using, any
Confidential Information required by it in order to perform any obligation,
or defend against any liability, of the Companies retained pursuant to the
terms hereof, by operation of law, or otherwise.
5.21 COVENANT NOT TO COMPETE.
(a) Seller agrees that, during the period beginning on the Closing
Date and ending on the fifth anniversary thereof (the "Non-Competition
Period"), Seller will not, and will use its best efforts to cause Seller's
Subsidiaries not to, directly or indirectly, or by or through any other
Person, whether as a shareholder, partner, joint venturer or, consultant,
engage or invest in, or consult with or to, any business which directly
competes with the Business in the United States or in any other geographic
area in which the Companies conduct business as of the date hereof or as of
the Closing Date; provided, however, that ownership or acquisition by the
Seller and its Subsidiaries of an aggregate (calculated for the Seller and
its Subsidiaries, collectively) of less than five percent (5%) of the
outstanding stock of any publicly traded company shall not in itself
constitute a violation of this Section 5.21(a); and, provided, further, that
nothing herein shall restrict the right of Seller or its Subsidiaries to own
an interest in (including an interest constituting control) or engage in any
other relationship with any Person, provided no more than ten percent (10%)
of the revenues of such Person are generated from businesses which directly
compete with the Business.
(b) Seller agrees that during the period beginning on the Closing
Date and ending on the second anniversary of the Closing Date, Seller will
not Knowingly, and will use its best efforts to cause Seller's Subsidiaries
not to, directly or indirectly, solicit or hire any key employee of the
Companies, assist in the solicitation or hiring of such key employee by any
other Person, or encourage any such key employee to terminate his or her
employment with the Companies.
(c) Seller acknowledges and agrees that, (i) it regards the
restrictions contained in Sections 5.20 and 5.21 as reasonable and designed
to provide the Buyer with limited, legitimate and reasonable protection
against subsequent diminution of the value of the Companies attributable to
any actions of any Seller or any of its Subsidiaries contrary to such
covenants and (ii) because the legal remedies of the Buyer may be inadequate
in the event of a breach of, or other failure to perform, any of the
covenants and obligations set forth in Sections 5.20 and 5.21, the Buyer may,
in addition to obtaining any other remedy or relief available to them
(excluding consequential, indirect and exemplary damages), obtain specific
enforcement of Sections 5.20 and 5.21 and other equitable remedies. Seller
also acknowledges and agrees that no breach by the Buyer of, or other failure
by the Buyer to perform, any of the covenants or obligations of the Buyer
under this Agreement or otherwise shall relieve such Seller of any of its
obligations under Sections 5.20 and 5.21.
(d) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this Section 5.21 is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or
phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision,
and this Agreement shall be enforceable as so modified after the expiration
of the time within which the judgment may be appealed.
5.22 ENVIRONMENTAL ASSESSMENT PROTOCOL; WAIVER.
(a) During the period after the date hereof and ending not later
than November 30, 1995, or such other date as is agreed to in writing by the
Seller, Buyer may conduct environmental Site assessments and Environmental
Laws compliance audits (collectively, "Environmental Assessment") of the Real
Property of the Companies and the operations of the Companies at each such
Site in accordance with the provisions of the Environmental Assessment
Protocol as set forth on Schedule 5.22.
(b) Excepting only the specific contractual remedies provided in
this Agreement, Buyer hereby forever waives and releases Seller from any and
all claims, causes of action or remedies that Buyer may no have or hereafter
acquire against Seller, whether under any statute, ordinance, regulation,
theory or principle of common law or otherwise, for any Environmental
Liabilities arising from or related to conditions or past practices on any
properties currently owned or operated or previously owned or operated by any
of the Companies (including any subsidiaries, divisions or operating units of
the Companies), including, without limitation, any claims under any
Environmental Laws.
5.23 MEDICAL BENEFITS; RETIREE WELFARE BENEFIT COVERAGE.
(a) Medical Insurance. Buyer acknowledges that employees of the
Companies shall be ineligible to participate in any employee welfare benefit
plans maintained by Seller or its ERISA Affiliates after the Closing and
agrees that none of Seller, its ERISA Affiliates or any employee welfare
benefit plan (within the meaning of Section (3)(1) of ERISA) maintained by
Seller or its ERISA Affiliates shall be liable for any claim incurred by an
employee of the Companies after the Closing, and the Company shall bear all
such liability, if any. For purposes of the preceding sentence, a claim
shall be deemed incurred when the service which results in such claim is
rendered, irrespective of when the illness or injury giving rise to such
services, was first contracted or incurred.
(b) Retiree Welfare Benefits. Buyer acknowledges and agrees that
it is assuming as of the Closing Date all liability related to retiree
welfare benefits under the Employee Benefit Plans described in Schedule
3.17(a) for current or future retirees of the Companies, including retirees
of Amerace's predecessor entities or of businesses or companies previously
owned by a Company. Buyer agrees that none of Seller, its ERISA Affiliates
or any employee welfare benefit plan (within the meaning of Section (3)(1) of
ERISA) maintained by Seller or its ERISA Affiliates shall have any liability
related to retiree welfare benefits under the Employee Benefit Plans
described in Schedule 3.17(a) to which a current or future retiree of a
Company, or of Amerace's predecessor entities or of businesses or companies
previously owned by a Company may become entitled after the Closing Date.
This Section 5.23(b) is not intended to create any third-party beneficiary
rights in any Persons not a party to this Agreement.
5.24 SCHEDULES. As soon as reasonably practicable following the
execution of this Agreement and at least ten (10) days prior to the Closing,
Seller shall deliver to Buyer all Schedules required by this Agreement.
ARTICLE VI - CONDITIONS TO OBLIGATIONS OF THE PARTIES
6.1 CONDITIONS TO OBLIGATIONS OF BUYER. All obligations of Buyer under
this Agreement with respect to the Closing are subject to the fulfillment of
each of the following conditions:
(a) Each and every representation and warranty of Seller contained
in this Agreement shall be true in all Material respects as of the Closing
Date.
(b) Seller shall have performed and complied in all Material
respects with all covenants required by this Agreement to be performed or
complied with by it prior to or at the Closing.
(c) No Action shall be pending before any Governmental Authority
which presents a substantial risk of the restraint or prohibition of the
transactions contemplated by this Agreement or the incurrence of Material
damages in connection therewith, or which might adversely affect the right of
the Buyer to own the Stock and control Amerace and its Subsidiaries, or
otherwise adversely affect the right of any of the Companies to own their
respective assets and operate their businesses (and no such Governmental
Order shall be in effect).
(d) The "waiting period" (as defined under the Antitrust
Improvements Act), shall have expired or been terminated.
(e) Since June 30, 1995, there shall not have occurred any
Material Adverse Effect with respect to the Companies.
(f) All consents and approvals required under the terms of the
Chemical Agreements with respect to the transaction contemplated by this
Agreement shall have been received and all Liens on the Stock or Assets of
any Company created or existing under the terms of the Chemical Agreements
shall have been (or concurrent with the Closing shall be) released.
(g) The results of Buyer's completed Environmental Assessment
shall be satisfactory to Buyer.
(h) Buyer shall have received the Schedules required to be
delivered by Seller pursuant to this Agreement, and such Schedules shall be
in form and substance acceptable to Buyer.
(i) The Board of Directors of Buyer shall have approved the
Buyer's execution, delivery and performance of this Agreement.
6.2 CONDITIONS TO OBLIGATIONS OF SELLER. All of the obligations of
Seller hereunder with respect to the Closing are subject to the fulfillment
of each of the following conditions:
(a) Each and every representation and warranty of Buyer contained
in this Agreement shall be true in all Material respects as of the Closing
Date.
(b) Buyer shall have performed or complied in all Material
respects with all covenants required by this Agreement to be performed or
complied with by it prior to or at Closing.
(c) No Action shall be pending before any Governmental Authority
which presents a substantial risk of the restraint or prohibition of the
transactions contemplated by this Agreement or the obtaining of Material
damages in connection therewith (and no such Governmental Order shall be in
effect).
(d) The "waiting period" (as defined under the Antitrust
Improvements Act), shall have expired or been terminated.
(e) All consents and approvals required under the terms of the
Chemical Agreements with respect to the transaction contemplated by this
Agreement shall have been received and all Liens on the Stock or Assets of
the Companies created or existing under the terms of the Chemical Agreements
shall have been (or concurrent with the Closing shall be) released.
(f) Amerace shall have reassumed those environmental obligations
of the Companies previously assumed by Eagle Environmental Management, Inc.
pursuant to the terms of that certain Subscription Agreement dated July 22,
1994.
(g) The results of Buyer's completed Environmental Assessment
shall be satisfactory to Seller.
(h) Seller and/or the Companies shall have taken the actions
described in Schedule 6.2(h) hereof.
(i) The Board of Directors of Seller shall have approved the
Seller's execution, delivery and performance of this Agreement.
6.3 NON-FULFILLMENT OF CONDITIONS.
(a) This Agreement may be terminated at any time prior to the
Closing:
(i) by mutual written consent of Buyer and Seller; or
(ii) by Buyer by written notice to Seller if any of the
conditions set forth in Section 6.1 hereof shall not have been fulfilled
on or prior to the Closing and shall not have been waived in writing by
Buyer, subject to the right of Seller to delay the Closing for not more
than thirty (30) days in order to satisfy such conditions; or
(iii) by Seller by written notice to Buyer if any of the
conditions set forth in Section 6.2 hereof shall not have been fulfilled
on or prior to the Closing and shall not have been waived in writing by
Seller subject to the right of Buyer to delay the Closing for not more
than thirty (30) days in order to satisfy such conditions; or
(iv) by either Seller or Buyer, by written notice to the
other, if the Closing has not occurred, for any reason whatsoever, on or
before December 31, 1995.
(b) If this Agreement is terminated by Buyer pursuant to
Section 6.3(a)(ii) or (iv) hereof, or by Buyer and Seller pursuant to
Section 6.3(a)(i) hereof, all further obligations of the parties hereunder
shall terminate, except that the obligations contained in this Section
6.3(b), Sections 9.8 and 9.9, the second sentence of Section 5.2, and Section
5.20 shall survive said termination, and nothing herein will eliminate the
right of Buyer to seek the remedy of specific performance.
(c) If this Agreement is terminated by Seller pursuant to
Section 6.3(a)(iii) or (iv) hereof, or by Buyer and Seller pursuant to
Section 6.3(a)(i) hereof, all further obligations of the parties hereunder
shall terminate, except that the obligations contained in this
Section 6.3(c), Sections 9.8 and 9.9, the second sentence of Section 5.2, and
Section 5.20 shall survive said termination, and nothing herein will
eliminate the right of Seller to seek damages or other remedies for breach of
this Agreement.
ARTICLE VII - CLOSING
7.1 TIME, DATE AND PLACE OF CLOSING. This transaction which is the
subject of this Agreement shall be closed on December 15, 1995 at 9:00 a.m.,
or such earlier date as shall be ten (10) days after delivery of all required
Schedules, if the waiting period under the Antitrust Improvements Act has
expired or been terminated, or on such other date and time as the parties
shall mutually agree upon in writing. The Closing shall take place at the
offices of Buyer's counsel in Chicago, Illinois.
7.2 DELIVERIES BY SELLER AT CLOSING. At the Closing, Seller will
deliver to Buyer the following documents:
(a) Share certificates representing all of the Stock, duly
endorsed for transfer to Buyer or with separate stock transfer powers duly
endorsed by Seller for transfer of the Stock to Buyer.
(b) Certificates of the Secretary of State of Delaware, and of the
respective States (or other jurisdictions) of incorporation of each of the
other Companies, evidencing the corporate good standing of Seller and the
Companies.
(c) Such releases and other documents as are necessary to evidence
the release of Liens which secure Debt of Seller or its Affiliates (other
than a Company) (including those Liens in favor of Chemical) on the Stock and
the Assets of the Companies.
(d) The minute book, stock records and corporate seal of each
Company, to the extent in existence and available.
(e) Resignations of all members of the Board of Directors of the
Companies, to be effective as of the Closing.
(f) The opinion of Rosenberg & Liebentritt, P.C., counsel for
Seller, in a form acceptable to Buyer and its counsel.
(g) A certificate of Seller, executed by a duly authorized officer
of Seller, certifying that the conditions set forth in Section 6.1 have been
satisfied.
(h) A copy of a resolution of Seller's Board of Directors
certified by Seller's Secretary as having been duly adopted and being in full
force and effect, authorizing Seller's execution and performance of this
Agreement.
(i) Consents referred to on Schedule 3.3 and such other consents
as are necessary to avoid terminations, defaults or penalties under the
Contracts disclosed pursuant to Section 3.6; provided that except for
consents referred to on Schedule 3.3 which shall be delivered at Closing, no
such consent will be required for any Contract if the failure to obtain such
consent would not have a Material Adverse Effect upon of the applicable
Company.
(j) The Ultimate Parent Guaranty in a form mutually acceptable to
the Seller and Buyer, executed by a duly authorized officer of Ultimate
Parent.
(k) Such other documents as may be reasonably requested by Buyer
in connection with the Closing of the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to Buyer.
7.3 DELIVERIES BY BUYER AT CLOSING. At the Closing, Buyer will deliver
to Seller:
(a) A bank wire transfer in the amount required by Section 2.1
hereof.
(b) The opinion of McBride Baker & Coles, counsel for Buyer, in a
form acceptable to Seller and its counsel.
(c) A copy of a resolution of Buyer's Board of Directors certified
by Buyer's Secretary as having been duly adopted and being in full force and
effect, authorizing Buyer's execution and performance of this Agreement.
(d) A certificate of Buyer, executed by a duly authorized officer
of Buyer, certifying that the conditions set forth in Section 6.2 have been
satisfied.
(e) The letters of credit (or cash) required pursuant to the
provision of Section 5.7 hereof.
(f) Such other documents as may be reasonably requested by Seller
in connection with the Closing of the transactions contemplated by this
Agreement, all in form and substance reasonably satisfactory to Seller.
7.4 ADDITIONAL ACTION TO BE TAKEN AT CLOSING. At the Closing, the
following parties will take the following actions:
(a) Buyer shall pay the Receivables Purchase Price to Bank of
America, as Trustee, as contemplated in the Receivables Sale Agreement.
ARTICLE VIII - INDEMNIFICATION
8.1 SURVIVAL. The representations, warranties and covenants of the
Parties in this Agreement and in any other, certificates and documents
delivered in connection therewith shall survive the Closing and continue in
effect notwithstanding any investigation by or on behalf of either Party as
set forth below. The indemnification obligations of Seller contained in
Section 8.2 shall terminate as to any claim of inaccuracy or breach by Seller
of which Buyer shall not have given notice to Seller on or before twenty-four
(24) months from the Closing Date or, in the case of representations made
pursuant to Section 3.19 or with respect to the indemnification obligations
contained in Section 8.2(iv), the fifth anniversary of the Closing Date;
provided however that notwithstanding the foregoing in the case of all claims
relating to (i) fraud by Seller for the period prior to and including the
Closing, and (ii) all claims relating to Taxes or Income Taxes, such claims
may be brought until the date which is 30 days after the expiration of the
applicable statute of limitations after giving effect to all tolling periods
or extensions to such applicable statutes of limitations available at, or
imposed by, law or equity or agreed to by Seller. The indemnification
obligations of Buyer contained in Section 8.3 shall terminate as to any claim
of inaccuracy or breach by Buyer of which Seller shall not have given notice
to Buyer on or before twenty-four (24) months from the Closing Date. All
covenants of the Parties that are to be performed at or prior to the Closing
shall terminate at Closing. All covenants of the Parties that are to be
performed after Closing shall continue and expire in accordance with their
respective terms. The date on which the respective periods of survival
specified above terminate are each referred to as a "Cutoff Date", provided
that any claim with respect to the breach of any representation or warranty
which would otherwise terminate after the Cutoff Date shall survive until the
final adjudication or settlement of any such matter if notice of any
inaccuracy or breach thereof, including a reasonably detailed description of
such alleged inaccuracy or breach, shall have been given in writing to Buyer
or Seller, as the case may be, on or prior to the Cutoff Date, and further
provided that the representations and warranties set forth in Section
3.1, 3.2, 3.3, 3.4, 4.1, 4.2 and 4.3 shall continue without limit as to time.
8.2 INDEMNIFICATION OF BUYER. Except as otherwise provided in this
Article 8, Seller shall indemnify andhold harmless Buyer, its officers,
directors, employees, stockholders, agents and Affiliates from and against,
and shall reimburse such parties for, any Adverse Consequences arising from
or related to any of the following: (i) any breach of or inaccuracy in any
representation of or warranty made by or on behalf of Seller in this
Agreement (including, without limitation, the Schedules hereto) or in any
document, instrument or certificate delivered pursuant hereto; or (ii) any
breach or violation of any covenant or agreement made by or on behalf of
Seller in this Agreement (including, without limitation, the Schedules
hereto) or in any document, instrument or certificate delivered pursuant
hereto; or (iii) any state of facts or condition relating to Seller or any of
its Affiliates (other than the Companies or their predecessor entities),
whether before, at or after the Closing; or (iv) (A) the presence on or
before the Closing Date of Hazardous Materials on, in, or under properties
formerly, but not as of the Closing Date, owned or operated by any of the
Companies (including by any former subsidiaries, divisions or operating units
of the Companies); or (B) the presence at off-site facilities of Hazardous
Materials which were generated by (or which otherwise originated at) any of
the Companies (including at any former subsidiaries, divisions or operating
units of the Companies) prior to the Closing Date at properties formerly, but
not as of the Closing Date, owned or operated by any of the Companies
(including by any former subsidiaries, divisions or operating units of the
Companies); or (C) the presence on or before the Closing Date of Hazardous
Materials on, in or under properties currently (i.e., as of the Closing Date)
owned or operated by any of the Companies; or (D) the presence at off-site
facilities of Hazardous Materials which were generated by (or which otherwise
originated at) any of the Companies (including at any former subsidiaries,
divisions or operating units of the Companies) prior to the Closing Date at
properties currently (i.e., as of the Closing Date) owned or operated by any
of the Companies. Seller shall be responsible for all Adverse Consequences
claimed for any breach of any representation or warranty herein, or
indemnification with respect thereto pursuant to clauses (i) or (ii) above,
only after such time and to the extent that the aggregate amount of such
Adverse Consequences claimed for all of such breaches, calculated after
taking into account the net amount of any recovery or benefit described in
Section 8.4(b) below ("Buyer's Net Claim"), exceeds $1,500,000. Seller shall
be responsible for all Adverse Consequences resulting from the matters
referenced in clause (iv) (A) or (B) above, only after such time and to the
extent that Buyer's Net Claim with respect thereto exceeds $1,500,000.
Seller shall be responsible for all Adverse Consequences resulting from the
matters referred to in clause (iv) (C) or (D) above only after such time and
to the extent that Buyer's Net Claim with respect thereto exceeds $2,000,000;
provided, however that Buyer and Seller shall each be responsible for fifty
percent (50%) of Buyer's Net Claim in excess of $2,000,000 but less than
$7,000,000, and provided, further that Buyer shall be solely responsible for
Buyer's Net Claim resulting from such matters in excess of $7,000,000 in the
aggregate. Except as otherwise provided in this Agreement to the contrary,
(A) Buyer shall not be entitled to indemnification from Seller with respect
to any Adverse Consequences to the extent that the amount of such item is
reflected or reserved against in the Closing Balance Sheet, (B) only when
Buyer's Net Claim pursuant to clauses (i) or (ii) above exceeds $1,500,000
(or exceeds the other amounts specified above with respect to clause (iv))
shall Buyer be entitled to indemnification from Seller pursuant to such
clauses, and then only to the extent of Buyer's Net Claim in excess of
$1,500,000, (or in excess of such other amounts specified above with respect
to clause (iv)) and (C) under no circumstances shall the aggregate amount of
payments made by Seller pursuant to clauses (i), (ii) or (iv) above exceed
$22,000,000. Furthermore, Buyer shall not be entitled to indemnification for
any Adverse Consequences claimed for any breach of any representation or
warranty herein which is asserted after the Cutoff Date. Notwithstanding
anything in this Section 8.2 to the contrary, none of the indemnification
obligations of Seller with respect to Adverse Consequences which relate to
(x) matters referred to in clause (iii) above, (y) Income Taxes, or (Z) any
obligations relating to the Purchase Price adjustment provided for in Section
2.3, are subject to, or limited by, the dollar limitations referred to above,
and Seller shall be responsible for all such Adverse Consequences and any
Purchase Price adjustment required to be paid by Seller from the first dollar
of liabilities or adjustment, as applicable. Notwithstanding anything in
this Section 8.2 to the contrary, Seller's obligations under Section 8.2(iv)
shall not apply to (i) any Disclosed Environmental Matters set forth in
Schedule 3.19, (ii) any Identified Environmental Matters identified by Buyer
pursuant to the Environmental Protocol set forth in Schedule 5.22, or
(iii) any matter for which Buyer may assert a claim against Seller for the
breach of a representation or warranty under Section 8.2(i), above (i.e.,
if Buyer may assert a claim against Seller for a breach of a representation
or warranty under Section 8.2(i), above and/or assert a claim against Seller
under this Section 8.2(iv), Buyer shall only assert a claim against Seller
under Section 8.2(i), above).
8.3 INDEMNIFICATION OF SELLER. Except as otherwise provided in this
Article 8, Buyer shall indemnify and hold harmless Seller, its officers,
directors, employees, stockholders, agents and Affiliates from and against,
and shall reimburse such parties for any Adverse Consequences arising from or
related to any of the following: (i) any breach of or inaccuracy in any
representation or warranty made by or on behalf of Buyer in this Agreement
(including, without limitation, the Schedules hereto) or in any document,
instrument or certificate delivered pursuant hereto; or (ii) any breach or
violation of any covenant or agreement made by or on behalf of Buyer in this
Agreement (including, without limitation, the Schedules hereto) or in any
document, instrument or certificate delivered pursuant hereto; or (iii) any
state of facts or condition relating to the Companies or their predecessor
entities following the Closing, provided such Adverse Consequences do not
relate to any matter for which the Buyer is entitled to indemnification from
Seller under the provisions of Section 8.2 or would have been entitled to
indemnification but for the conditions contained in Section 8.2 that the
aggregate of Buyer's Net Claim must exceed $1,500,000 and be less than
$22,000,000. Buyer's obligation to indemnify Seller pursuant to Section
8.3(iii) above shall include, without limitation, those Actions of the
Companies listed on Schedule 8.3(iii) hereto which include as party
defendants Seller, or Affiliates of Seller other than the Companies, which
Actions relate to the Companies (the "Company Actions"). Buyer shall be
responsible for all Adverse Consequences claimed for any breach of any
representation or warranty herein, or indemnification with respect thereto
pursuant to clauses (i) or (ii) above, only after such time and to the extent
that the aggregate amount of such Adverse Consequences claimed for all of
such breaches, calculated after taking into account the net amount of any
recovery or benefit described in Section 8.4(b) below ("Seller's Net Claim"),
exceeds $1,500,000. Except as otherwise provided in this Agreement to the
contrary, (A) only when Seller's Net Claim exceeds $1,500,000 shall Seller be
entitled to indemnification from Buyer pursuant to clauses (i) or (ii) above,
and then only to the extent of Seller's Net Claim in excess of $1,500,000,
and (B) under no circumstances shall the aggregate amount of payments made by
Buyer pursuant to clauses (i) or (ii) above exceed $22,000,000. Furthermore,
Seller shall not be entitled to indemnification for any Adverse Consequences
claimed for any breach of any representation or warranty herein which is
asserted after the Cutoff Date. Notwithstanding anything in this Section 8.3
to the contrary, the indemnification obligations of Buyer with respect to
Adverse Consequences which relate to (x) matters referred to in clause (iii)
above or (y) any obligations relating to the Purchase Price adjustment
provided by Section 2.3, are not subject to, or limited by, the dollar
limitations referred to above, and Buyer shall be responsible for all such
Adverse Consequences and any Purchase Price adjustment required to be paid by
Buyer from the first dollar of liabilities or adjustment, as applicable.
8.4 TERMS OF INDEMNIFICATION. The indemnification obligations set
forth in this Article 8 are subject to the following:
(a) Notification of Claim. Promptly after the assertion of any
claim by a third party or occurrence of any event which may give rise to a
claim for indemnification from a party obligated to indemnify another party
(the "Indemnitor") under this Article 8, the party seeking indemnity
hereunder (an "Indemnitee") shall notify the Indemnitor in writing of such
claim, with reasonable particularity, and, with respect to claims by third
parties, advise the Indemnitor whether the Indemnitee intends to contest
same. Buyer hereby acknowledges receipt of notice from Seller satisfying the
requirements of this Section 8.4(a) regarding the Company Actions.
(b) Recoveries. The Indemnitee shall be deemed to have suffered
an Adverse Consequence for which the Indemnitor shall be liable for
indemnification only to the extent that the Indemnitee has not received any
recovery or benefit with respect thereto from any third party, person or
entity (including without limitation insurance benefits, recoveries under any
counterclaims or set-off, or Income Tax Benefits obtained as a result of such
Adverse Consequence); and if the Indemnitee received such a recovery or
benefit after receipt of payment of a loss, then the amount of such recovery
or benefit (but not exceeding the amount of such payment), net of reasonable
expenses incurred in obtaining the recovery or benefit shall be paid to the
Indemnitor. Each Indemnitee shall diligently pursue such recover of any such
insurance benefits counterclaims, setoffs or Income Tax Benefits. Without
limiting the foregoing, in the event that a claim or benefit is created in
connection with the occurrence of an Adverse Consequence which has not been
collected or otherwise enjoyed by the Indemnitee at the time payment with
respect to the Adverse Consequence is made, the Indemnitee shall assign such
benefit or claim to the Indemnitor as a condition to the payment of such
Adverse Consequence, or, if such claim or benefit is not assignable under
applicable laws, the Indemnitee shall attempt in good faith to collect such
claim or benefit.
(c) Defense. With respect to any third party claim or Action that
could give rise to indemnity under this Agreement, the Indemnitor shall be
entitled to assume the defense thereof, and after notice from the Indemnitor
to the Indemnitee of its election so to assume the defense thereof, the
Indemnitor shall not be liable to the Indemnitee under the foregoing
indemnity agreement for any legal or other expenses subsequently incurred by
the Indemnitee in connection with the defense thereof. Any party which
receives notice of a claim for indemnification may agree to assume the
defense thereof conditional upon the final determination of its
indemnification obligation, and any such assumption of defense shall not
prejudice its right to contest its indemnification obligation. Regardless of
which Party is controlling the defense of any claim that could give rise to
indemnity under this Agreement, (i) both the Indemnitor and Indemnitee shall
act in good faith and (ii) no settlement of such claim may be agreed to
without the written consent of the Indemnitor, which consent shall not be
unreasonably withheld, or, in the case the settlement requires actions,
forbearance or payments by Indemnitee, without the consent of such Indemnitee
(as to such matters) which consent shall not be unreasonably withheld. The
controlling party shall deliver, or cause to be delivered, to the other party
copies of all correspondence, pleadings, motions, briefs, appeals or other
written statements relating to or submitted in connection with the defense of
any such claim, and timely notices of any hearing or other court proceeding
relating to such claim. Parties shall mutually agree regarding the ongoing
defense of Company Actions handled by insurance carriers.
8.5 LIMITATION OF REMEDY. In the event that, after the date hereof but
prior to the Closing Date, either party shall discover and disclose in
writing to the other party (the "Receiving Party") notice of any fact,
circumstance or event (a "Disclosed Matter") which either currently results
or with the passage of time could result, in a breach of any representation,
warranty or covenant of the disclosing party hereunder, then the sole remedy
of the Receiving Party upon receipt of such notification shall be to exercise
its rights of termination, if applicable, pursuant to Section 6.3(a) of this
Agreement if such Disclosed Matter has not been remedied on or before the
Closing; provided, however, if such rights of termination are available but
not exercised by the Receiving Party, under no circumstances shall the
Receiving Party be entitled to seek indemnification under this Article 8
following the Closing with respect to such Disclosed Matter.
8.6 EXCLUSIVE REMEDY. From and after the Closing Date, the
indemnification provided in this Article 8 shall constitute the sole and
exclusive remedy of the Parties with respect to the breach of any
representation, warranty, or covenant of any Party under this Agreement
except as may be otherwise expressly provided in Section 8.5 or otherwise in
this Agreement.
8.7 SECURITY FOR SELLER'S INDEMNIFICATION OBLIGATIONS. In order to
secure its indemnification obligations under this Agreement, at the Closing
Seller at its sole expense will provide Buyer with a guaranty of Ultimate
Parent in the form mutually acceptable to Buyer and Seller (which shall
provide for alternative security in the form of a letter of credit in the
event the net worth of Ultimate Parent is substantially reduced) ("Ultimate
Parent Guaranty"). The Ultimate Parent Guaranty shall expire (i) with regard
to indemnification obligations for a breach of a representation, warranty or
covenant contained in Sections 3.13 or 5.4 pertaining to Taxes or Income
Taxes, upon the expiration of the applicable Tax or Income Tax statute of
limitations; provided that the term of such guaranty shall be extended to
cover the period of any extension of any applicable Tax or Income Tax statute
of limitations (whether initiated by Seller, its Affiliates or the Companies
(but in the last case, only if extended with the consent of Seller or its
Affiliates) or effected through the assessment of Tax or Income Tax, the
delivery of any notice of deficiency concerning Tax or Income Tax, or
otherwise by operation of applicable law) with respect to periods prior to or
including the Closing Date; (ii) with respect to indemnification obligations
for a breach of a representation, warranty or covenant contained in Section
3.19 or the indemnification obligations contained in Section 8.2 (iv), on the
fifth (5th) anniversary of the Closing Date and, (iii) with respect to any
other indemnification obligations of Seller, twenty-four (24) months
following the Closing Date.
Notwithstanding the above to the contrary, if at the time the Ultimate
Parent Guaranty referred to above (or any portion thereof) is to expire and
Seller or Ultimate Parent has received notice of an indemnification claim
with respect to such portion, the term of the applicable portion of the
Ultimate Parent Guaranty shall be extended until such time as the claim for
indemnification has been determined. The aggregate obligations of Ultimate
Parent under clauses (ii) and (iii) above shall not exceed $22,000,000.
ARTICLE IX - MISCELLANEOUS
9.1 NOTICES. Any notices hereunder shall be in writing and shall be
deemed to have been given and received when delivered by hand or by telecopy
or other facsimile transaction, or the first business day after sent by
overnight courier with instructions for next day delivery (such as Federal
Express):
If to Seller: Eagle Industrial Products Corporation
c/o Eagle Industries, Inc.
Two North Riverside Plaza
Suite 1100
Chicago, Illinois 60606
Attention: Gus J. Athas
Senior Vice President and General Counsel
with a copy to: Rosenberg & Liebentritt, P.C.
Two North Riverside Plaza
Suite 1515
Chicago, Illinois 60606
Attention: Alisa M. Singer, Esq.
If to Buyer: Thomas & Betts Corporation
1555 Lynnfield Road
Memphis, Tennessee 38119
Attention: Jerry Kronenberg, Esq.
with copies to: McBride Baker & Coles
500 West Madison Street
40th Floor
Chicago, Illinois 60661
Attention: Anne Hamblin Schiave, Esq.
or at such other address or addresses as the parties may from time to time
specify by notice in writing to the other parties, given in the manner
provided in this Section.
9.2 SEVERABILITY. The unenforceability or invalidity of any provision
of this Agreement shall not affect the enforceability or validity of any
other provision.
9.3 ASSIGNMENT. Neither this Agreement nor any interest hereunder
shall be assigned or transferred by Seller or Buyer. Notwithstanding the
foregoing, the rights and obligations of Seller under this Agreement may be
assigned after the Closing Date to any Person who shall concurrently acquire
all or substantially all of the assets of Seller and shall assume Seller's
obligations hereunder. Subject to the foregoing, this Agreement shall inure
to the benefit of and shall be binding upon Seller and Buyer and their
respective, permitted successors and assigns.
9.4 ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement
sets forth the entire understanding of the parties with respect to the
subject matter hereof and may be modified only by instruments signed by both
of the parties hereto. Any and all prior or collateral representations,
promises and conditions in connection with the subject matter hereof and any
representations, promise or condition not incorporated herein or made a part
hereof, in each case other than the Confidentiality Agreement, shall not be
binding upon either party. This Agreement cannot be modified, or amended
except by a written instrument signed by both Parties.
9.5 DOCUMENTS. Each party will execute all documents and take such
other actions as the other party may reasonably request in order to
consummate the transactions provided for herein and to accomplish the
purposes of this Agreement. This Agreement may be executed simultaneously in
one or more counterparts, each of which shall be deemed an original but all
of which together shall constitute one and the same instrument.
9.6 THIRD PARTIES. Nothing in this Agreement is intended to confer any
right or remedy under or any reason of this Agreement on any person other
than the Parties and their respective successors and assigns.
9.7 GOVERNING LAW. This Agreement shall be construed and governed in
accordance with the laws of the State of Illinois, without regard to
principles of conflicts of law. The Parties acknowledge the State of
Illinois to be the proper venue for any Action brought to enforce the rights
of any Party hereunder.
9.8 EXPENSES. Each Party hereto shall pay its own expenses and costs
incurred in connection with the negotiation and consummation of this
Agreement and the transactions contemplated hereby; except that Seller shall
be responsible for and pay all applicable sales, transfer, documentation,
use, filing and other taxes and fees (other than income taxes) that may
become due and payable as a result of the sale, transfer and delivery of the
Stock, whether levied on Buyer, Seller or the Company.
9.9 BROKERAGE. Seller and Buyer represent that they have not dealt
with any brokers in connection with this transaction with the exception of
Smith Barney Inc., whose fee Seller agrees to pay, and Morgan Stanley, Inc.,
whose fee Buyer agrees to pay. Seller and Buyer shall indemnify and hold the
other harmless from and against any and all claims of all other brokers and
finders, claiming by, through or under said party and in any way related to
this Agreement, including, without limitation, attorneys' fees in connection
with such claims.
9.10 SCHEDULES. The Schedules attached to this Agreement are
incorporated herein and shall be part of this Agreement for all purposes.
Disclosures made in any one Schedule shall be deemed to apply to all other
Schedules relating to similar subject matter and having a similar intended
disclosure purpose.
9.11 PRESS RELEASES. Neither Seller nor Buyer shall issue any press
release regarding the execution of this Agreement or the consummation of the
transactions contemplated hereby without the prior written consent of the
other. Notwithstanding the foregoing, either Party may issue, upon prior
consultation with the other Party, such press releases as the issuing Party's
legal counsel deems required by the Securities Exchange Act of 1934, other
state or federal securities laws or by the rules of any exchange upon which
the issuing party's securities may be listed.
9.12 CAPTIONS. Section and subsection headings are included herein, or
in any Exhibit or Schedule hereto, for convenience or reference only and
shall not constitute a part of this Agreement for any other purpose or be
given substantive effect.
9.13 COUNTERPARTS. This Agreement may be executed in various
counterparts, each of which shall be deemed an original and all of which
together shall constitute a single instrument.
ARTICLE X - DEFINITIONS
For purposes of this Agreement, any amendments hereto and any Exhibit or
Schedule hereto, and in addition to terms defined elsewhere, herein, the
following terms shall have the following meanings except as otherwise
expressly provided or the context shall otherwise require:
10.1 CERTAIN DEFINITIONS.
"Action" shall mean any written claim, action, cause of action or
suit (in contract or tort or otherwise), arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority.
"Adverse Consequences" shall mean any and all losses, damages,
injuries, deficiencies, demands, obligations, liabilities, awards (including,
without limitation, awards of punitive or treble damages or interest but
excluding indirect or consequential damages), assessments, amounts paid in
settlement, judgments, orders, decrees, fines, penalties, and other
sanctions, costs and expenses (including, without limitation, reasonable
legal costs and expenses and costs and expenses of collection) and shall
include any Income Taxes paid or payable as a result of the receipt of an
indemnification payment or a payment under the Ultimate Parent Guaranty
hereunder, net of any Income Tax Benefits resulting from the Adverse
Consequence which is the subject of the indemnification payment.
"Affiliate" means with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with, such Person. For purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by" and
"under common control with") means the possession directly or indirectly of
the power to direct or cause the direction of the management and policies of
a Person, whether through the ownership of voting securities or by contract
or otherwise.
"Affiliated Group" shall mean any affiliated group within the
meaning of Code Sec. 1504.
"Agreement" means this Agreement and all Schedules and Exhibits
hereto, as the same may be amended from time to time.
"Americans With Disabilities Act" shall mean The Americans With
Disabilities Act of 1990 and the rules and regulations promulgated
thereunder, or any similar state or local law, rule or regulation.
"Antitrust Division" shall mean the Antitrust Division of the
Department of Justice.
"Antitrust Improvements Act" shall mean the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
"Area(s) of Environmental Concern" shall mean any area(s) on, in,
under, beneath, or approximately about the property in question which has
(have) been impacted in any way by Hazardous Materials so as to likely give
rise to Environmental Liabilities.
"Business" shall mean the businesses of the Companies as such
businesses are currently conducted.
"Buyer" shall mean Thomas & Betts Corporation.
"Cash" shall mean as of any date of determination, cash and cash
equivalents on deposit in domestic and foreign accounts.
"Cash Balance Plan" shall mean the Eagle Industrial Products
Corporation Cash Balance Pension Plan.
"Chemical" shall mean Chemical Bank, as Administrative Agent and
Citicorp North America, Inc. as Collateral Agent.
"Chemical Agreements" means the Amended and Restated Credit
Agreement dated as of October 28, 1994 among Seller, Chemical Bank as
Administrative Agent, Citicorp North America, Inc. as Collateral Agent and
the various lender parties thereto and all related agreements, instruments
and documents.
"Closing" means the closing of the transaction contemplated by this
Agreement as provided in Article 7 hereof.
"Closing Balance Sheet" shall mean the unaudited Combining Balance
Sheet of Amerace and its Subsidiaries as of the Closing Date prepared in
accordance with Sections 2.3 and 3.8.
"Closing Date" means the date of Closing.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company" or "Companies" shall mean Amerace and each of its
Subsidiaries (excluding Excluded Subsidiaries and the Joint Ventures).
"Company Material Adverse Effect" shall mean with respect to any
Company, any adverse change or effect on the business, operations, assets or
condition, financial or otherwise, of such Company or of any division or
business operating unit of such Company, which if considered either singly or
together with all other adverse changes and effects with respect to which
this phrase is used in the Agreement with respect to such Company or any
division or business operating unit of such Company, is material to such
Company or any division or business operating unit of such Company.
"Compensation", as applied to any Person, shall mean all salaries,
compensation, remuneration or bonuses of any character, and medical,
surgical, dental, hospital, disability, unemployment, retirement, pension,
vacation, severance, insurance or fringe benefits of any kind, or other
payments or benefits of any kind whatsoever made or provided directly or
indirectly by or on behalf of the Company to such Person or members of the
immediate family of such Person.
"Confidential Information" means any information of a proprietary
nature concerning the businesses and affairs of the Companies that is not
already generally available to the public.
"Confidentiality Agreement" means that certain Confidentiality
Agreement by and between Eagle Industries, Inc. and Buyer entered into prior
to the date of this Agreement.
"Contractual Obligation" shall mean, with respect to any Person,
any binding and enforceable executory contract, agreement, deed, mortgage,
lease, license, indenture, commitment, undertaking, arrangement or
understanding, written or oral, or other document or agreement, including,
without limitation, any document or instrument evidencing or otherwise
relating to any Debt but excluding the Charter and By-laws of such Person, to
which or by which such Person is a party or otherwise subject or bound or to
which or by which any property or right of such Person is subject or bound.
"Debt" of any Person shall mean all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred and paid in the Ordinary
Course of Business), (iv) under capital leases, or (v) in the nature of
Guarantees of the obligations described in clauses (i) through (iv) above of
any other Person.
"Deferred Intercompany Transaction" has the meaning set forth in
Treas. Reg. Section1.1502-13.
"Distribution" shall mean, with respect to any equity security
issued by any Person, (i) the declaration or payment of any dividend on or in
respect of any equity security; (ii) the purchase, redemption or other
retirement of any equity security, directly or indirectly through an
Affiliate or otherwise; and (iii) any other distribution on or in respect of
any shares of any class of such capital stock or beneficial interest or other
equity security.
"Eagle" shall mean Eagle Industries, Inc. a Delaware corporation.
"Eagle Employee" shall refer to those directors, officers and
employees of Eagle or any Affiliate of Eagle (other than a Company) which are
currently also directors or officers of a Company, which latter position is
to terminate as of the Closing Date.
"Employee Benefit Plan" means any (a) Pension Plan, including any
multi-employer plan within the meaning of Section 3(37) of ERISA, (b) Welfare
Plan, or (c) other plan, program or arrangement for the benefit of any
employee, director, consultant or agent of a Company (whether pursuant to
contract, arrangement, custom or understanding), that does not constitute an
"employee benefit plan" within the meaning set forth in Section 3(3) of
ERISA, including, without limitation, any retirement or deferred compensation
plan, incentive compensation plan, stock option plan, stock plan,
unemployment compensation plan, or vacation pay, severance pay or bonus
arrangement.
"Enforceable" shall mean, with respect to any Contractual
Obligation, that such Contractual Obligation is the legal, valid and binding
obligation of the Person in question, substantially enforceable against such
Person in accordance with its terms.
"Environmental Assessment Protocol" shall mean the principles set
forth on Schedule 5.22.
"Environmental Law(s)" shall mean any and all Legal Requirements
relating to the protection of the environment, including without limitation,
Legal Requirements regulating air pollution, water pollution, noise control,
wetlands, water courses, natural resources, wildlife, Hazardous Materials, or
any other activities or conditions which impact or relate to the environment,
or the protection of human health from exposure to Hazardous Materials.
Environmental Laws shall include, without limitation, the federal
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"), the Resource Conservation and Recovery Act ("RCRA"), the Clean
Air Act, the Water Pollution Control Act, the Emergency Planning and
Community Right to Know Act ("EPCRA"), the Oil Pollution Act, and the Toxic
Substances Control Act ("TSCA"), the Occupational Safety and Health Act
("OSHA")(but only with respect to the provisions which address the protection
of human health from exposure to Hazardous Materials), and various analogous
state laws and local laws.
"Environmental Liabilities" means any and all liabilities, written
claims or demands, assessments, obligations, asserted causes of action, legal
orders, damages, losses, costs, expenses, injuries, or judgments arising out
of, relating to, or resulting from the presence, generation, use, handling,
transport, recycling, reclamation, disposal, treatment, storage, or Release
of any Hazardous Materials, or the failure or alleged failure to comply with
any Environmental Law. Environmental Liabilities include any necessary cost
of investigation, remediating, removing, or disposing of any Hazardous
Materials, any required medical monitoring of or treatment to persons exposed
or allegedly exposed to such Hazardous Materials, and other related and
necessary costs or expenses, including without limitation, reasonable
attorney's and consultant's fees and reasonable disbursements.
"Equipment" shall mean all of the tangible personal property other
than inventory included in the Assets.
"ERISA" shall mean the federal Employee Retirement Income Security
Act of 1974 or any successor statute, and the rules and regulations
thereunder, and in the case of any referenced section of any such statute,
rule or regulation, any successor section thereto, collectively and as from
time to time amended and in effect.
"Excess Loss Account" has the meaning set forth in Treas. Reg.
Section1.1502-19.
"Excluded Subsidiaries" shall mean those Subsidiaries of Amerace
set forth in Schedule 10.1(A) hereof.
"FTC" shall mean the Federal Trade Commission.
"GAAP" means generally accepted accounting principles, as defined
by the United States Financial Accounting Standards Board (i) with respect to
the Closing Balance Sheet, as of June 30, 1995, or (ii) with respect to any
other financial statement referred to herein, as of the respective dates of
such financial statement.
"Governmental Authority" shall mean any U.S. federal, state or
local or any foreign government, governmental authority, regulatory or
administrative agency, governmental commission, court or tribunal (or any
department, bureau or division thereof) or any arbitral body.
"Governmental Order" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with
any Governmental Authority.
"Guarantee" shall mean any of the following entered into by a
Company which shall survive the Closing and which relates to a Person which
is not a Company (i) any guarantee of the payment or performance of, or any
contingent obligation in respect of, any Debt of any other Person, (ii) any
other arrangement whereby credit is extended to one obligor on the basis of
any promise or undertaking of another Person (A) to pay the Debt of such
obligor, (B) to purchase any obligation owed by such obligor, (C) to purchase
or lease assets (other than inventory in the Ordinary Course of Business)
under circumstances that would enable such obligor to discharge one or more
of its obligations, or (D) to maintain the capital, working capital, solvency
or general financial condition of such obligor, and (iii) any liability as a
general partner of a partnership or as a venturer in a joint venture in
respect of Debt of such partnership or venture.
"Hazardous Materials" shall mean (i) oil or other petroleum
products; (ii) "hazardous wastes" as defined by RCRA or any similar
Environmental Law; (iii) "hazardous substances" as defined by CERCLA or any
similar Environmental Law; (iv) "hazardous materials" as defined by the
federal Hazardous Materials Transportation Act or any similar state or local
law, regulation, ordinance or order; (v) "pollutants" as defined by the
federal Clean Water Act or Clean Air Act, or similar Environmental Laws; (vi)
asbestos, PCBs, and other substances regulated by TSCA or any similar
Environmental Laws; (vii) "hazardous chemicals" as defined by OSHA's Hazard
Communication Standard; (viii) radioactive materials subject to the federal
Atomic Energy Act or any similar state or local law, regulation, ordinance or
order; and (ix) any other pollutant, contaminant, chemical, or substance
defined or regulated as hazardous or toxic by an Environmental Law.
"Income Tax" shall mean any federal, state, local or foreign tax
based on or measured by, income, estimated, alternative minimum, add-on
minimum and environmental (including Code Section 59A), including, without
limitation, all interest, penalties and additions with respect to any of the
foregoing.
"Income Tax Benefit" shall mean, for Income Tax purposes, any
reduction in taxable income, increase in tax deduction, increase in basis of
assets, increase in tax credit, or any change in the character of income or
deduction that results in a net decrease in Income Tax liability of Buyer or
any of the Companies and shall be determined by including the net Income
Taxes paid by reason of receipt of an indemnification payment or other
reimbursement due hereunder relating to the Income Tax Benefit.
"Income Tax Detriment" shall mean for Income Tax purposes, any
increase in taxable income, decrease in tax deduction, decrease in basis of
assets, decrease in tax credit, or any change in the character of income or
deduction that results in a net increase in the Income Tax liability of
Buyer or any of the Companies, and shall be determined by including the net
Income Tax paid by reason of the receipt of an indemnification payment or
other reimbursement due hereunder or any payment due under the Ultimate
Parent Guaranty, in each case related to the Income Tax Detriment.
"Income Tax Return" shall mean all consolidated or pro forma
federal Income Tax returns, separate state, local or foreign Income Tax
returns, claims for refund of Income Tax, and declarations of estimated
Income Tax, or other statement relating to Income Tax and any schedule or
attachments to any of the foregoing or amendments thereto.
"Intercompany" means, with respect to any transaction, obligation,
agreement or account, a transaction, obligation, agreement or account between
any one of the Companies and Seller or any of its Affiliates (other than one
of the Companies).
"Joint Ventures" shall mean Euromold S.A., Fujimold Ltd., Taimold
Electrical Ltd.
"Knowledge," "to the knowledge of", "to the best knowledge of",
"Known" or other words or phrases of similar or correlative meaning used with
reference to Seller or any Company means the current actual knowledge of
those officers and employees of Seller and the Companies primarily
responsible for supervision and management of financial, human resource and
operational matters at each of the Seller and the Companies and the divisions
or operating units of the Seller and the Companies (a true and complete list
of such officers and employees is set forth as Schedule 10.1(B) hereto).
"Legal Requirement" shall mean any U.S. federal (including, without
limitation, the Foreign Corrupt Practices Act), state or local or any foreign
law, statute, ordinance, code, order, rule, regulation, promulgation, or any
Governmental Order, or any license, franchise, consent, approval, permit or
similar right granted under any of the foregoing, all as from time to time in
effect.
"LIBOR" shall mean the effective London Interbank Offered Rate for
deposits in United States dollars with maturity periods of one month, as
published from time to time in the Wall Street Journal, Midwest Edition.
"Lien" shall mean any mortgage, pledge, lien, security interest,
charge, claim, attachment, equity, encumbrance, restriction on transfer (or,
in the case of capital stock, restrictions on the transfer or voting of such
securities), conditional sale or other title retention device or arrangement
(including, without limitation, a capital lease), transfer for the purpose of
subjection to the payment of any Debt, or restriction on the creation of any
of the foregoing, whether relating to any property or right or the income or
profits therefrom; provided, however, that the term "Lien" shall not include
(i) statutory liens for Taxes to the extent that the payment thereof is not
in arrears or otherwise due, (ii) encumbrances in the nature of zoning
restrictions, easements, rights or restrictions of record on the use of real
property if the same do not materially impair the use of such property in the
Business as currently conducted, (iii) statutory or common law liens to
secure landlords, lessors or renters under leases or rental agreements
confirmed to the premises rented to the extent that no payment or performance
under any such lease or rental agreement is in arrears or is otherwise due,
(iv) deposits or pledges made in connection with, or to secure payment of,
worker's compensation, unemployment insurance, old age pension programs
mandated under applicable Legal Requirements or other social security, (v)
statutory or common law liens in favor of carriers, warehousemen, mechanics
and materialmen, statutory or common law liens to secure claims for labor,
materials or supplies and other like liens, which secure obligations to the
extent that (A) payment of such obligations is not in arrears or otherwise
due and (B) such liens do not and will not, individually or in the aggregate,
have a Company Material Adverse Effect or materially affect the use of any
Real Property, and (vi) restrictions on transfer of securities imposed by
applicable state and federal securities laws.
The term "Material" shall be determined with reference to the
purpose and intent of the particular provision without regard to a particular
dollar amount or any dollar amount, provided, however, the Parties agree that
"Material" shall be presumed to include, when used with reference to the
items set forth below, any Amount in Issue equal to or greater than the
Threshold Amount. "Threshold Amount" shall mean the lesser of (x) 5% of the
earnings before interest and taxes for the year ended December 31, 1994 of
the particular Company, as set forth in Schedule 10.1(C), or (y) $500,000.
In determining the "Amount in Issue" with respect to the following items, the
following principles shall apply: (i) with respect to a Contract,
Contractual Obligation or other obligation, the Amount in Issue is the amount
of the contracting party is obligated to pay or is committed to pay within
one year, with regard to a Contractual Obligation or other obligation that
cannot otherwise be canceled on 90 days' notice; (ii) with respect to an
asset, property or right, the Amount in Issue is the replacement cost; (iii)
with respect to a contingent obligation, the Amount in Issue is the
reasonable estimate of the maximum amount of exposure; (iv) with respect to
a contractual breach or default, the Amount in Issue is the amount obligated
to be paid as a consequence of such breach or default; (v) with respect to a
permit or license, the Amount in Issue is the cost of obtaining the permit or
license; (vi) with respect to a Lien, the Amount in Issue is the cost to
release the Lien; (vii) with respect to a risk, the Amount in Issue is the
amount of loss or damages likely to result from the risk; (viii) with
respect to a Legal Requirement, the Amount in Issue is the cost of compliance
with the Legal Requirement; (ix) with respect to the term "Respects", the
Amount in Issue is the dollar amount of deviation from complete accuracy; or
(x) with respect to a loss or damage, the Amount in Issue is the cost to
repair or replace.
"Material Adverse Effect" shall mean, with respect to any Person,
any adverse change in or effect on the business, operations, assets or
condition, financial or otherwise, of such Person (on a combined basis with
such Person's Subsidiaries, if applicable or, in the case of any Company, on
a combined basis with all other Companies) which, when considered either
singly or together with all other adverse changes and effects with respect to
which such phrase is used in this Agreement with respect to such Person, is
material to such Person (on a combined basis with such Person's Subsidiaries,
if applicable or, in the case of any Company, on a combined basis with all
other Companies).
"Net Worth" shall mean the excess of the assets of Amerace and its
Subsidiaries over the liabilities of Amerace and its Subsidiaries on a
combining basis as set forth on the Closing Balance Sheet.
"Ordinary Course of Business" shall mean the ordinary course of
Business generally consistent with past custom and practice, with such
variations therefrom as may be appropriate (as determined in good faith by
the Persons conducting such business) to respond to prevailing facts,
circumstances and conditions.
"Parties" shall mean the Seller and the Buyer.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Pension Plan" means an employee pension benefit plan within the
meaning of Section 3(2) of ERISA that is maintained or contributed to by a
Company.
"Person" means and includes natural persons, corporations, limited
liability companies, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or
not legal entities, and governments and agencies and political subdivisions
thereof and their respective permitted successors and assigns (or in the case
of a governmental person, the successor functional equivalent of such
Person).
"Purchase Price" shall have the meaning ascribed to it in
Section 2.1, but shall take into account any adjustments pursuant to
Section 2.2.
"Real Property" shall mean all of the real property and fixtures
and other improvements constituting real property included in the Assets.
"Receivables Agreement" means the Receivables Sale Agreement to be
entered into between Buyer and Bank of America, Illinois, as Trustee, and
attached hereto as Exhibit 10.1(ee).
"Receivables Purchase Price" means an amount equal to the
receivables purchase price payable to Bank of America, Illinois, as Trustee,
pursuant to the Receivables Agreement.
"Release" shall mean any and all releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, dumping, and any other means by which any Hazardous
Substances are introduced into or travel through the environment.
"Savings Plan" shall mean the Eagle Industrial Products Corporation
Employee Savings Plan.
"Seller" shall mean Eagle Industrial Products Corporation, a
Delaware corporation.
"Site" shall mean the Real Property and each other area of real
property at any time owned or leased by the Company or any of its
Subsidiaries or any predecessor entity or with respect to which the Company
or any of its Subsidiaries or any predecessor entity was the operator.
"Subsidiary" shall mean any Person of which Amerace (or other
specified Person) shall own directly or indirectly through a subsidiary, a
nominee arrangement or otherwise at least a majority of the outstanding
capital stock (or other shares of beneficial interest) entitled to vote
generally or at least a majority of the partnership, joint venture or similar
interests, or in which the Amerace (or other specified Person) is a general
partner or joint venturer without limited liability, but shall not include
any of the Joint Ventures.
"Tax" shall mean any (and in the plural "Taxes" shall mean all)
gross receipts, franchise, sales, use, transfer, registration, value added,
excise, natural resources, severance, stamp, occupation, premium, profit,
windfall profit, customs, duties, real property, personal property, capital
stock, intangibles, social security, employment, unemployment, disability,
payroll, license, employee, and other tax, withholding taxes, assessments,
imposts, levies, and other charges of every kind and nature arising under or
imposed by any Legal Requirement, including, without limitation, all
interest, penalties and additions with respect to any of the foregoing, but
excluding Income Taxes.
"Tax Return" shall mean all federal, state, local, and foreign Tax
returns, Tax reports, claims for refund of Tax, and declarations of estimated
Tax, or other statement relating to Taxes and any schedule or attachments to
any of the foregoing or amendments thereto, but excluding Income Tax Returns.
"Ultimate Parent" means Great American Management and Investment,
Inc., a Delaware corporation.
"Welfare Plan" means an employee welfare benefit plan
within the meaning of Section 3(1) of ERISA that is maintained or contributed
to by a Company.
10.2 CERTAIN TERMS DEFINED IN TEXT. The following terms are defined in
the Sections of the Agreement referenced below:
Section
Term Reference
"Accounting Firm" Section 2.3(a)
"Affiliate Relationships" Section 3.20
"Amerace" Recitals
"Assets" Section 3.7(a)
"Buyer Affiliate" Section 5.10(a)
"Buyer's Net Claim" Section 8.2
"Closing Balance Sheet" Section 2.3(a)
"Company Action" Section 8.3
"Contract" Section 3.6
"Covered Claim" Section 5.12(a)
"Current Insurance" Section 5.12(a)
"Cutoff Date" Section 8.1
"Delivering Party" Section 5.4(i)
"Disclosed Environmental
Matters" Section 3.19
"Disclosed Matter" Section 8.5
"ECRA" Section 3.19(b)
"ERISA Affiliate" Section 3.17(b)
"Financial Statements" Section 3.8
"Identified Environmental
Matters" Schedule 5.22
"Indemnitee" Section 8.4
"Indemnitor" Section 8.4
"Insurance Policies" Section 3.16
"Intangibles" Section 3.15
"ISRA" Section 3.19(b)
"Leases" Section 3.7(b)
"Licenses" Sectoin 3.15
"Non-Competition Period" Section 5.21
"Objection Notice" Section 2.3(a)
"Permits" Section 3.11
"Receiving Party" Section 8.5
"Reference Balance Sheet" Section 2.3(a)
"Requesting Party" Section 5.4(i)
"Seller Insured Entity" Section 5.12(a)
"Seller's Net Claim" Section 8.3
"Stock" Recitals
"Transferred Employee" Section 5.10(a)
"Transferee Savings Plan" Section 5.10(c)
"Ultimate Parent
Guaranty" Section 8.7
"Unlisted Intangibles" Section 3.15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
BUYER: SELLER:
Thomas & Betts Corporation Eagle Industrial Products Corporation
By: /s/ Jerry Kronenberg By: /s/ Gus J. Athas
---------------------- --------------------
Jerry Kronenberg Gus J. Athas
Vice-President Senior Vice-President
ULTIMATE PARENT:
Great American Management & Investment, Inc.
By: /s/ Gus J. Athas
--------------------
Gus J. Athas, Senior Vice President
(Solely for the purpose of agreeing to
deliver the Ultimate Parent Guaranty and the
other specific undertakings and obligations
of Ultimate Parent contained in the above
Agreement)