- --------------------------------------------------------------------------------
PURCHASE AGREEMENT
between
INGERSOLL-RAND COMPANY
and
GENCOR INDUSTRIES, INC.
Dated as of August 12, 1996
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND TERMS........................... 1
1.1 Specific Definitions............................................... 1
1.2 Other Terms........................................................ 10
1.3 Other Definitional Provisions...................................... 10
ARTICLE II
PURCHASE AND SALE OF THE BUSINESS.................... 10
2.1 Purchase and Sale of Assets......................................... 10
2.2 Excluded Assets..................................................... 11
2.3 Assumption of Liabilities........................................... 12
2.4 Excluded Liabilities................................................ 13
2.5 Purchase Price...................................................... 14
2.6 Post-Closing Adjustment............................................. 14
2.7 Closing............................................................. 15
2.8 Deliveries by Buyer................................................. 18
2.9 Deliveries by Sellers............................................... 18
2.10 Transfer Taxes and Recording Fees................................... 19
2.11 Schedule Updates.................................................... 19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT.............. 20
3.1 Organization and Qualification...................................... 20
3.2 Corporate Authorization............................................. 20
3.3 Consents and Approvals.............................................. 20
3.4 Non-Contravention................................................... 21
3.5 Binding Effect...................................................... 21
3.6 Financial Statements: Absence of Certain
Changes............................................................ 21
3.7 Litigation and Claims............................................... 22
3.8 Taxes............................................................... 23
3.9 Employee Benefits................................................... 23
3.10 Compliance with Laws................................................ 23
3.11 Environmental Matters............................................... 24
3.12 Intellectual Property............................................... 24
3.13 Labor Matters....................................................... 25
3.14 Contracts........................................................... 25
3.15 Entire Business; Title to Property.................................. 26
3.16 Capital Stock; Title................................................ 26
3.17 Options and Other Rights............................................ 27
3.18 Charter Documents; Minute Books..................................... 27
3.19 Finders' Fees....................................................... 27
3.20 No Other Representations or Warranties.............................. 27
-i-
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER .............. 28
4.1 Organization and Qualification....................................... 28
4.2 Corporate Authorization.............................................. 28
4.3 Consents and Approvals............................................... 28
4.4 Non-Contravention.................................................... 28
4.5 Binding Effect....................................................... 29
4.6 Purchase Not for Distribution........................................ 29
4.7 Litigation and Claims................................................ 29
4.8 Finders' Fees........................................................ 29
4.9 Financial Capability................................................. 30
4.10 No Other Representations or Warranties............................... 30
ARTICLE V
COVENANTS .............................. 30
5.1 Access............................................................... 30
5.2 Conduct of Business.................................................. 30
5.3 Best Efforts......................................................... 31
5.4 Settlement of Intercompany
Cancellation of Intercompany and Other Accounts;
Agreements......................................................... 31
5.5 Post-Closing Obligations to Certain Employees........................ 31
5.6 Compliance with WARN, etc............................................ 35
5.7 Further Assurances................................................... 35
5.8 Use of Corporate Name and Symbol; Transition
License.............................................................. 35
5.9 Transition Services.................................................. 36
5.10 Certain Matters Related to Excluded Liabilities...................... 36
5.11 Non-Competition...................................................... 36
ARTICLE VI
TAX MATTERS............................. 37
6.1 Tax Indemnification.................................................. 37
6.2 Tax Related Adjustments.............................................. 40
ARTICLE VII
CONDITIONS TO CLOSING.......................... 42
7.1 Conditions to the Obligations of Buyer and
Parent.............................................................. 42
7.2 Conditions to the Obligations of Buyer................................ 42
7.3 Conditions to the Obligations of Parent............................... 43
ARTICLE VIII
SURVIVAL: INDEMNIFICATION....................... 43
8.1 Survival.............................................................. 43
8.2 Indemnification by Buyer.............................................. 44
8.3 Indemnification by Parent............................................. 44
-ii-
8.4 Indemnification Procedures............................................ 45
8.5 Characterization of Indemnification Payments.......................... 46
8.6 Computation of Losses Subject to
Indemnification...................................................... 46
ARTICLE IX
TERMINATION.............................. 47
9.1 Termination........................................................... 47
9.2 Effect of Termination................................................. 47
ARTICLE X
MISCELLANEOUS............................. 47
10.1 Notices.............................................................. 47
10.2 Amendment; Waiver.................................................... 48
10.3 Binding Effect; No Assignment........................................ 49
10.4 No Third-Party Beneficiaries......................................... 49
10.5 Counterparts......................................................... 49
10.6 Entire Agreement..................................................... 49
10.7 Fulfillment of Obligations........................................... 49
10.8 Parties in Interest.................................................. 49
10.9 Public Disclosure.................................................... 49
10.10 Return of Information............................................... 50
10.11 Expenses............................................................ 50
10.12 Schedules........................................................... 50
10.13 Bulk Transfer Laws.................................................. 50
10.14 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SELECTION OF FORUM................................................ 50
10.15 Headings............................................................ 51
10.16 Severability........................................................ 51
-iii-
SCHEDULES AND EXHIBITS
ANNEXES
Annex 7.2(c) - Opinions of Parent's Counsel
Annex 7.3(c) - Opinions of Buyer's Counsel
SCHEDULES
Schedule 1.1(a) - Company Fixtures and Equipment
Schedule 1.1(b) - Company Leased Real Property
Schedule 1.1(c) - Company Owned Real Property
Schedule 1.1(d) - Composite Marks
Schedule 1.1(e) - Knowledge
Schedule 1.1(f) - Exceptions to Material Adverse Change or Effect
Schedule 1.1(g) - Modified GAAP
Schedule 1.1(h) - Selected Marks
Schedule 1.1(i) - Shared Employees
Schedule 1.1(j) - Transferred Fixtures and Equipment
Schedule 1.1(k) - Transferred Leased Real Property
Schedule 1.1(l) - Inactive Employees
Schedule 2.3(e) - Certain Assumed Litigation
Schedule 3.3 - Consent and Approvals
Schedule 3.4 - Non-Contravention
Schedule 3.6(a) - Financial Statements
Schedule 3.6(c) - Certain Changes
Schedule 3.7(a) - Litigation and Claims
Schedule 3.7(b) - Orders and Judgments
Schedule 3.8(b) - Tax Returns
Schedule 3.9 - Seller/Company Plans
Schedule 3.10 - Compliance with Laws
Schedule 3.11 - Environmental Matters
Schedule 3.12(a) - Intellectual Property
Schedule 3.12(b) - Restrictions on Use of Selected Marks
Schedule 3.12(c) - Restrictions on Use of Intellectual
Property other than Selected Marks
Schedule 3.12(d) - Claims Affecting Intellectual Property
Schedule 3.13 - Labor Matters
Schedule 3.14(a) - Contracts
Schedule 3.14(b) - Validity of Contracts
Schedule 3.14(c) - Contracts in Default
Schedule 3.15(a) - Exceptions to Entire Business
Schedule 3.15(b) - Encumbrances
Schedule 3.16 - Capital Stock; Title
Schedule 3.17 - Options and Other Rights
Schedule 4.3 - Consent and Approvals
Schedule 4.4 - Non-Contravention
Schedule 5.2 - Conduct of Business
-iv-
Schedule 5.5(g) - Severance Benefits; Employees Receiving
Pay Protection
-v-
PURCHASE AGREEMENT
AGREEMENT, dated as of August 12, 1996, between INGERSOLL-RAND COMPANY, a
New Jersey corporation ("Parent"), and GENCOR INDUSTRIES, INC., a Delaware
------
corporation ("Buyer").
-----
W I T N E S S E T H:
-------------------
WHEREAS, Parent is engaged, in part, through its Process Equipment Division
("PED"), in the business of the design, manufacture and marketing of pelleting,
---
grinding and flaking, filtration and sugar processing equipment (the
"Business");
--------
WHEREAS, Parent desires to sell, assign and transfer to Buyer, and Buyer
desires to purchase and assume from Parent, substantially all of the assets and
certain identified liabilities (as specified herein) of the Business, upon the
terms, subject to the conditions and for the consideration set forth in this
Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and in reliance upon the representations and warranties contained
herein, Parent and Buyer agree as follows:
ARTICLE I
---------
DEFINITIONS AND TERMS
---------------------
1.1 Specific Definitions. As used in this Agreement, the following terms
--------------------
shall have the meanings set forth or as referenced below:
"Adjusted Closing Balance Sheet" shall have the meaning set forth in
------------------------------
subsection 2.6(b).
"Affiliates" shall mean, with respect to any Person, at the time in
----------
question, any other Person controlling, controlled by or under common control
with such Person. For purposes of this definition, "control" (including the
-------
terms "controlling", "controlled by" and "under common control with") means the
----------- ------------- -------------------------
possession, direct or indirect, 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 otherwise.
"Agreement" shall mean this Agreement, as the same may be amended or
---------
supplemented from time to time in accordance with the terms hereof.
"Ancillary Agreements" shall mean the Transition Services Agreement.
--------------------
"Assets" of a Person shall mean the assets of such Person, whether tangible
------
or intangible (including trade names,
2
goodwill, licenses, telephone numbers, files, leads, prospects and software),
real or personal, as they exist on the date hereof with such changes, deletions
or additions thereto as may occur from the date hereof to the Closing Date
consistent with the terms and conditions of this Agreement.
"Assumed Liabilities" shall have the meaning set forth in Section 2.3.
-------------------
"Balance Sheet" shall have the meaning set forth in subsection 3.6(a).
-------------
"Base Amount" shall have the meaning set forth in subsection 2.6(d).
-----------
"Books and Records" shall mean all lists, files and documents Relating to
-----------------
customers, suppliers and products of the Business and all general ledgers and
underlying books of original entry and other financial records of the Business.
"Business" shall have the meaning set forth in the recitals hereto.
--------
"Business Day" shall mean any day other than a Saturday, a Sunday or a day
------------
on which banks in New York City are authorized or obligated by law or executive
order to close.
"Buyer" shall have the meaning set forth in the recitals hereto.
-----
"Buyer Defined Contribution Plans" shall have the meaning set forth in
--------------------------------
subsection 5.5(i).
"Buyer Indemnified Parties" shall have the meaning set forth in subsection
-------------------------
8.3(a).
"Buyer's Objection" shall have the meaning set forth in subsection 2.6(b).
-----------------
"Chosen Courts" shall have the meaning set forth in Section 10.14.
-------------
"Claim Notice" shall have the meaning set forth in Section 8.4.
------------
"Closing" shall mean the closing of the transactions contemplated by this
-------
Agreement on the Closing Date.
"Closing Balance Sheet" shall have the meaning set forth in subsection
2.6(a).
---------------------
"Closing Date" shall have the meaning set forth in subsection 2.7(a).
------------
3
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Companies" shall mean, collectively, CPM, Silver Engineering, the CPM
---------
China JV and their Subsidiaries.
"Company Assets" shall mean all Assets of the Companies.
--------------
"Company Contracts" shall mean all Contracts of the Companies.
-----------------
"Company Current Assets" shall mean all Current Assets of the Companies.
----------------------
"Company Employees" shall mean Persons who are employed by the Companies as
-----------------
of the Closing Date, including Inactive Employees.
"Company Fixtures and Equipment" shall mean all Fixtures and Equipment of
------------------------------
the Companies. Schedule 11(a) sets forth a list of the material Company
Fixtures and Equipment as of June 30, 1996.
"Company Governmental Authorizations" shall mean all Governmental
-----------------------------------
Authorizations required to be held by the Companies.
"Company Intellectual Property" shall mean all Intellectual Property of the
-----------------------------
Companies.
"Company Leased Real Property" shall mean all Leased Real Property of the
----------------------------
Companies. Schedule 1.1(b) sets forth a list of the Company Leased Real
Property.
"Company Owned Real Property" shall mean all Owned Real Property of the
---------------------------
Companies. Schedule 1.1(c) sets forth a list of the Company Owned Real
Property.
"Composite Mark" shall mean any trademark, service mark, brand name,
--------------
certification mark, trade name or other indication of origin that includes, in
addition to other terms or symbols, a Seller Mark and which is listed in
Schedule 1.1(d).
"Confidentiality Agreement" shall mean the Agreement, dated November 30,
-------------------------
1995, between Buyer and Parent.
"Contracts" of a Person shall mean all agreements, contracts, leases,
---------
purchase orders, coupon, trade billback, refund and other arrangements,
incentive agreements, commitments and licenses to which such Person is a party
or to which such Person's Assets are subject.
"CPA Firm" shall have the meaning set forth in subsection 2.6(b).
--------
4
"CPM" shall mean California Pellet Mill Company, a California corporation.
---
"CPM Brazil" shall mean CPM Industria e Commercio Ltda., a Brazilian
----------
corporation.
"CPM Brazil Stock" shall mean the 40% equity interest in CPM Brazil owned
-----------------
indirectly by Parent through one or more Sellers.
"CPM China JV" shall mean CPM-Zhengchang Liyang Machinery Company Ltd., a
------------
Chinese-foreign joint venture company.
"CPM China JV Stock" shall mean Parent's equity interest (through
------------------
Ingersoll-Rand China Limited) in 65% of the registered capital of the CPM China
JV.
"CPM Stock" shall mean 43,087 shares of the issued and outstanding common
---------
stock, $10.00 par value per share, of CPM.
"Current Assets" of a Person shall mean, as of the Closing Date, Inventory
--------------
and all other current assets of such Person other than cash (except to the
extent referred to in Schedule 1.1(g)).
"Determination Date" shall mean the close of business on the date
------------------
immediately preceding the Closing Date.
"Employees" shall mean (x) Persons who are exclusively employed in the
---------
Business as of the Closing Date, including Inactive Employees, and (y) Shared
Employees.
"Encumbrances" shall mean liens, charges, encumbrances, security interests,
------------
options or any other restrictions or third-party rights.
"Environmental Claim" shall mean any claim, notice of violation or
-------------------
administrative or judicial action by any governmental authority or other Person
resulting from or alleging the violation of any Environmental Law by any
Company.
"Environmental Law" shall mean any applicable federal, state, local or
-----------------
foreign law, statute, ordinance, rule, regulation, code, order, judgment, decree
or injunction relating to (x) the protection of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking water
supply, surface or subsurface land) or (y) the exposure to, or the use, storage,
recycling, treatment, generation, transportation, processing, handling,
labelling, protection, release or disposal of, Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
-----
amended.
5
"Excluded Assets" shall have the meaning set forth in Section 2.2.
---------------
"Excluded Liabilities" shall have the meaning set forth in Section 2.4.
--------------------
"Financial Statements" shall have the meaning set forth in subsection
--------------------
3.6(a).
"Fixtures and Equipment" of a Person shall mean all furniture, fixtures,
----------------------
furnishings, machinery, vehicles, equipment (including research and development
equipment) and other tangible personal property owned or leased by such Person.
"Former Employees" shall mean Persons whose employment in the Business
----------------
terminated prior to the Closing Date.
"GAAP" shall mean, with respect to any Company or Transferred Assets,
----
accounting principles generally accepted in the country in which such Company is
incorporated or such Transferred Assets are located.
"Governmental Authorizations" of a Person shall mean all licenses, permits,
---------------------------
certificates and other authorizations and approvals required to carry on such
Person's business as currently conducted under the applicable laws, ordinances
or regulations of any federal, state, local or foreign governmental authority.
"Hazardous Substances" shall mean any hazardous substances within the
--------------------
meaning of 101(14) of CERCLA, 42 U.S.C. (S) 9601(14), or any pollutant or waste
that is regulated under any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended.
"Inactive Employee" shall mean any employee who is temporarily absent from
-----------------
active employment by reason of disability, illness, injury, workers'
compensation, leave of absence or layoff (such employees as of August 1, 1996
being identified in Schedule 1.1(l), which Schedule describes the nature of any
such absence).
"Income Taxes" shall mean all Taxes that are based upon or measured by
------------
income, including alternative or add-on minimum taxes, together with any
interest, penalties or additions imposed with respect thereto.
"Indemnified Parties" shall have the meaning set forth in subsection
-------------------
8.3(a).
"Indemnifying Party" shall have the meaning set forth in Section 8.4.
------------------
6
"Intellectual Property" of a Person shall mean (except to the extent or
---------------------
subject to the rights of any third parties therein) the following intellectual
property of such Person (and the rights associated therewith): trademarks,
service marks, brand names, certification marks, trade dress, assumed names,
trade names and other indications of origin, goodwill associated with the
foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; patents, applications for
patents (including, without limitation, divisions, continuations, continuations-
in-part and renewal applications), and any renewals, extensions or reissues
thereof, in any jurisdiction; non-public information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any other Person; copyrighted works and registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; any similar intellectual property or proprietary
rights; and any claims or causes of action arising out of or related to any
infringement or misappropriation of any of the foregoing.
"Inventory" of a Person shall mean all inventory held for resale and all
---------
raw materials, work in process, finished products, spares, wrapping, supply and
packaging items of such Person (but excluding in any case items which have been
"shipped-in-place" to customers of such Person).
"Knowledge" or any similar phrase means the actual knowledge of certain
---------
management employees of Parent identified on Schedule 1.1(e).
"Laws" shall include any federal, state, foreign or local law, statute,
----
ordinance, rule, regulation, order, judgment or decree.
"Leased Real Property" of a Person shall mean all real property leased on
--------------------
the date hereof by such Person as lessee, including any buildings, structures
and improvements thereon or appurtenances thereto.
"Losses" shall have the meaning set forth in Section 8.2.
------
"Material Adverse Change" or "Material Adverse Effect" shall mean a change
----------------------- -----------------------
or effect, respectively, that is materially adverse to the value of the
Transferred Assets and Company Assets taken as a whole or materially adverse to
the business, financial condition or results of operations of PED taken as a
whole; provided, however, that any change or effect, respectively, identified on
-------- -------
Schedule 1.1(f) shall not constitute a Material Adverse Change or a Material
Adverse Effect.
7
"Modified GAAP" shall mean GAAP, as modified by the principles set forth in
-------------
Schedule 1.1(g).
"Net Worth" shall be determined in accordance with Schedule 1.1(g).
---------
"Notice Period" shall have the meaning set forth in Section 8.4.
-------------
"Owned Real Property" of a Person shall mean all real property owned by
-------------------
such Person on the date hereof, including any buildings, structures and
improvements thereon or appurtenances thereto.
"Parent" shall have the meaning set forth in the recitals hereto.
------
"Participants" shall have the meaning set forth in subsection 5.5(i).
------------
"PED" shall have the meaning set forth in the recitals hereto.
---
"Permitted Encumbrances" shall have the meaning set forth in subsection
----------------------
3.15(b).
"Person" shall mean any natural person, corporation, limited liability
------
company, partnership, limited partnership, firm, joint venture, association,
joint-stock company, trust, business trust, unincorporated organization,
governmental or political subdivision, regulatory body or other entity.
"Plan Transfer Date" shall have the meaning set forth in subsection 5.5(i).
-------------------
"Proposed Settlement" shall have the meaning set forth in subsection
--------------------
6.1(e)(iii).
"Purchase Price" shall mean the purchase price paid pursuant to Section
--------------
2.5, as adjusted pursuant to Section 2.6.
"Related to" or "Relating to" shall mean exclusively related to, or used
---------- -----------
exclusively in connection with, prior to the Closing.
"Required Approvals" shall mean the consents, approvals, waivers,
------------------
authorizations, notices and filings referred to in Sections 3.3 and 4.3 and
Schedules 3.3 and 4.3, other than any such consent, approval, waiver,
authorization, notice or filing which, if not obtained or made, would not have a
Material Adverse Effect and would not materially impair or delay the ability of
Parent, on the one hand, or Buyer, on the other hand, as the case may be, to
effect the Closing.
8
"Selected Marks" shall mean all trademarks included in the Transferred
--------------
Intellectual Property or Company Intellectual Property containing any of the
terms listed on Schedule 1.1(h).
"Seller Defined Contribution Plan" shall have the meaning set forth in
--------------------------------
subsection 5.5(i).
"Seller Indemnified Parties" shall have the meaning set forth in Section
--------------------------
8.2.
"Seller Mark" shall mean any trademark, service mark, brand name,
-----------
certification mark, trade name, corporate name, or other indication of origin,
incorporating or based on the term "Ingersoll-Rand" or the "Ingersoll-Rand"
logo, or any other similar term or symbol.
"Seller/Company Plans" shall have the meaning set forth in Section 3.9.
--------------------
"Sellers" shall mean, collectively, Parent and each Subsidiary of Parent
-------
(other than the Companies) which, immediately prior to the Closing, owns any
Transferred Assets or is subject to any Assumed Liability.
"Shared Employees" shall mean the employees of Sellers who provide services
----------------
to PED and are listed on Schedule 1.1(i).
"Silver Engineering" shall mean Silver Engineering Works, Inc., a Colorado
------------------
corporation.
"Silver Engineering Stock" shall mean 25,000 shares of the issued and
------------------------
outstanding common stock, $1.00 par value per share, of Silver Engineering.
"Stock" shall mean, collectively, the CPM Brazil Stock, the CPM Stock, the
-----
Silver Engineering Stock, the CPM China JV Stock and the Zeig Stock.
"Subsidiary" shall mean, with respect to any Person, a Person 50% or more
----------
of the outstanding voting stock or other ownership interests of which are owned,
directly or indirectly, by such Person or one or more other Subsidiaries of such
Person. For the purposes of this definition, "voting stock" means stock that
ordinarily has voting power for the election of directors, whether at all times
or only so far as no senior class of stock has such voting power by reason of
any contingency.
"Tax Claim" shall have the meaning set forth in subsection 6.1(e) (i)1.
---------
"Tax Returns" shall mean all reports and returns required to be filed with
-----------
respect to Taxes.
9
"Tax Statement" shall have the meaning set forth in subsection 6.61(f)
-------------
(iii).
"Taxes" shall mean all federal, state, local or foreign taxes, including
-----
but not limited to income, gross receipts, windfall profits, goods and services,
value added, severance, property, production, sales, use, license, excise,
franchise, employment, withholding or similar taxes, together with any interest,
additions or penalties with respect thereto and any interest in respect of such
additions or penalties.
"Transfer Costs" shall have the meaning set forth in Section 2.10.
--------------
"Transferred Assets" shall have the meaning set forth in Section 2.1.
------------------
"Transferred Books and Records" shall mean all Books and Records Relating
-----------------------------
to the Transferred Business, except to the extent included in or Related to any
Excluded Assets.
"Transferred Business" shall mean the Business other than as conducted by
--------------------
the Companies.
"Transferred Contracts" shall mean all Contracts of Sellers that are
---------------------
Related to the Business, except to the extent included in the Excluded Assets.
"Transferred Current Assets" shall mean all Current Assets of the Sellers
--------------------------
allocated by Parent to PED.
"Transferred Current Liabilities" shall mean, as of the Closing Date, all
-------------------------------
current liabilities of Sellers allocated by Parent to PED other than accrued and
unpaid federal, state, local and foreign income Taxes with respect to the
taxable periods, or portions thereof ending on or before the Closing Date.
"Transferred Employees" shall mean Persons who are exclusively employed in
---------------------
PED as of the Closing Date, including Inactive Employees, other than Company
Employees.
"Transferred Fixtures and Equipment" shall mean Fixtures and Equipment of
----------------------------------
Sellers that are Related to the Business except to the extent included in the
Excluded Assets. Schedule 1.1(j) sets forth a list of the material Transferred
Fixtures and Equipment as of June 30, 1996.
"Transferred Governmental Authorizations" shall mean all Governmental
---------------------------------------
Authorizations required to be held by the Sellers in the conduct of the
Business.
"Transferred Intellectual Property" shall mean all Intellectual Property of
---------------------------------
the Sellers that is Related to the Business (except to the extent included as
Excluded Assets).
10
"Transferred Leased Real Property" shall mean all Leased Real Property of
--------------------------------
Sellers which is Related to the Business. Schedule 1.1(k) sets forth a list of
the Transferred Leased Real Property.
"Transition Services Agreement" shall have the meaning set forth in Section
-----------------------------
5.9.
"U.K. Pension Plan" shall have the meaning set forth in subsection 5.5(j).
-----------------
"Union Employees" shall have the meaning set forth in subsection 5.5(a).
---------------
"U.S. Employees" shall mean Employees who are employed by PED in the United
--------------
States.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act.
----
"Zeig" shall mean Zeig Sheet Metal Works, Inc., a Texas corporation.
----
"Zeig Stock" shall mean the 251 shares of common stock of Zeig owned by
----------
CPM.
1.2 Other Terms. Other terms may be defined elsewhere in the text of this
-----------
Agreement and, unless otherwise indicated, shall have such meaning throughout
this Agreement.
1.3 Other Definitional Provisions.
-----------------------------
(a) The words "hereof", "herein", and "hereunder" and words of similar
------ ------ ---------
import, when used in this Agreement, shall refer to this Agreement as a whole
and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable meaning when
used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
------- -
ARTICLE II
----------
PURCHASE AND SALE OF THE BUSINESS
---------------------------------
2.1 Purchase and Sale of Assets. On the terms and subject to the
---------------------------
conditions set forth herein, at the Closing, Parent agrees to, and to cause the
other Sellers to, sell, convey, transfer, assign and deliver to Buyer, and Buyer
agrees to purchase from Sellers, all direct or indirect right, title and
interest of Sellers in and to the business and assets Related to the Transferred
Business, whether tangible or intangible, real or personal, as they exist on the
date hereof (except for the
11
Excluded Assets) with such changes, deletions or additions thereto as may occur
as a result of actions not prohibited hereunder from the date hereof to the
Closing Date consistent with the terms and conditions of this Agreement (the
"Transferred Assets"). The Transferred Assets shall include (other than as
- -------------------
specifically limited in clauses (a) through (j) below), all of the direct and
indirect right, title and interest of Sellers in the following:
(a) the Stock (which indirectly represents ownership of the Company
Assets, it being understood that such Company Assets do not constitute
Transferred Assets as defined herein);
(b) the Transferred Leased Real Property;
(c) the Transferred Fixtures and Equipment;
(d) the Transferred Current Assets;
(e) the Transferred Intellectual Property;
(f) the Transferred Contracts;
(g) the Transferred Books and Records;
(h) all prepaid Taxes to the extent such Taxes would, if not prepaid, be
Assumed Liabilities;
(i) all refunds of Taxes to the extent such Taxes are, or if not paid
would be, Assumed Liabilities; and
(j) all transferrable Transferred Governmental Authorizations.
2.2 Excluded Assets. Notwithstanding anything herein to the
---------------
contrary, from and after the Closing, Sellers shall retain all of their direct
and indirect right, title and interest in and to, and there shall be excluded
from the sale, conveyance, assignment or transfer to Buyer hereunder, and the
Transferred Assets shall not include, the following (collectively, the "Excluded
--------
Assets"):
- ------
(a) the assets (including, without limitation, real property, tangible
personal property, intellectual property and contracts) of all
businesses other than the Transferred Business conducted by Parent and
its Subsidiaries and/or other Affiliates (other than the Companies,
CPM Brazil and Zeig);
(b) the capital stock of all Subsidiaries of Parent (other than the
Companies;
12
(c) all cash, investment securities and other short-term and medium-term
investments and non-trade accounts receivable from Sellers and their
Affiliates (except for cash and equivalents of the Companies other
than CPM and Silver Engineering);
(d) all prepaid Taxes to the extent such Taxes are, or if not prepaid
would be, Excluded Liabilities;
(e) all refunds of Taxes to the extent such Taxes are, or if not paid
would be, Excluded Liabilities;
(f) all Tax Returns of Sellers;
(g) all Books and Records which Sellers are required by law to retain or
which were prepared in connection with the sale of the Transferred
Assets, including bids received from other parties and analyses
relating to PED;
(h) the Seller/Company Plans; and
(i) subject to Section 5.8, all rights to the Seller Marks and the
Composite Marks.
2.3 Assumption of Liabilities. On the terms and subject to the
-------------------------
conditions set forth herein, at the Closing, Buyer agrees to assume and
discharge or perform when due all the following debts, liabilities or
obligations (the "Assumed Liabilities"), whether arising before or after the
-------------------
Closing and whether known or unknown, fixed or contingent, in all cases other
than Excluded Liabilities:
(a) all debts, liabilities or obligations that arise out of or are Related
to the Transferred Business and/or the Transferred Assets;
(b) the Transferred Contracts;
(c) the Transferred Current Liabilities;
(d) the Transfer Costs which Buyer has agreed to pay in Section 2.10;
(e) all liabilities with respect to all actions, suits, proceedings,
disputes, claims or investigations arising out of or Related to the
Transferred Business and/or the Transferred Assets, at law, in equity
or otherwise, including all product liability matters and the matters
identified on Schedule 2.3(e); and
(f) all liabilities and obligations relating to the employment or
termination of employment of Transferred Employees with respect to
periods commencing immediately following the Closing including, but
not
13
limited to, disability benefits and retiree medical and life benefits
(whether credited prior to, on or after the Closing Date), except for
medical, life, short-term disability, long-term disability and
workers' compensation benefits for Inactive Employees prior to their
employment by Buyer.
2.4 Excluded Liabilities. Notwithstanding any other provision of
--------------------
this Agreement, the liabilities and obligations of Sellers which are not to be
assumed by Buyer hereunder (the "Excluded Liabilities") are the following:
--------------------
(a) all liabilities arising out of or Relating to the Excluded Assets
(other than those liabilities arising out of or Relating to Buyer's
use of the Composite Marks in accordance with subsection 5.8(b));
(b) all liabilities to Former Employees with respect to periods ending
prior to, on or after the Closing Date;
(c) all liabilities to Employees under the Seller/Company Plans with
respect to periods ending on or prior to the Closing Date and any
liabilities, short-term disability, long-term disability and workers
compensation benefits under the Seller/Company Plans for Inactive
Employees (who are Employees) prior to their employment by Buyer, in
all cases other than to the extent arising under the U.K. Pension Plan
or accrued on the Adjusted Closing Balance Sheet;
(d) all liabilities for Taxes imposed with respect to the taxable periods,
or portions thereof, ending on or before the Closing Date in excess of
the amounts accrued on the Adjusted Closing Balance Sheet in respect
thereof;
(e) all liabilities for (i) bonuses granted by Parent to certain Employees
payable based upon the disposition of the Business and (ii) stock-
based incentive compensation granted by Sellers to Employees and
payable for the portion of fiscal year 1996 ending on the Closing Date
pursuant to the Parent's Incentive Stock Plan of 1985, Incentive Stock
Plan of 1990, Incentive Stock Plan of 1995, Management Incentive Unit
Plan or otherwise;
(f) all other liabilities and obligations for which Sellers have expressly
retained responsibility pursuant to this Agreement;
(g) all debts, liabilities or obligations whatsoever that do not arise out
of or are not Related to the Transferred Business or that do not
otherwise arise out
14
of or are not otherwise Related to the Transferred Assets;
(h) debts, liabilities or obligations specified in subsection 2.3(a)
(excluding those also specified in subsections 2.3(b) through 2.3(f))
to the extent not included on the Adjusted Closing Balance Sheet; and
(i) liabilities specified in subsection 2.3(e) (other than with respect to
product liability matters) to the extent not included on the Adjusted
Closing Balance Sheet.
2.5 Purchase Price. On the terms and subject to the conditions set
--------------
forth herein, Buyer agrees to pay Parent the Purchase Price in the aggregate
amount of $72,000,000. The Purchase Price shall be allocated as provided by
mutual agreement of the parties to be negotiated in good faith as soon as
practicable following the Closing Date. Such agreed allocation shall be binding
on Parent and Buyer for all purposes and none of the parties shall take any
position in any Tax Return, report, form, declaration or questionnaire that is
inconsistent with such allocation.
2.6 Post-Closing Adjustment. (a) Within 60 days following the
-----------------------
Closing, Parent shall, at its expense, prepare, or cause to be prepared, and
deliver to Buyer a balance sheet (the "Closing Balance Sheet") which shall set
---------------------
forth the assets and liabilities of PED as of the Determination Date in
accordance with the principles and the methods set forth on Schedule 1.1(g).
(b) Buyer and Buyer's accountants shall, within 60 days after the
delivery by Parent of the Closing Balance Sheet, complete their review of the
Net Worth of PED as derived from the Closing Balance Sheet. In the event that
Buyer determines that the Net Worth of PED as derived from the Closing Balance
Sheet has not been determined on the basis set forth in Schedule 1.1(g), Buyer
shall inform Parent in writing (the "Buyer's Objection"), setting forth a
-----------------
specific description of the basis of Buyer's Objection and the adjustments to
the Net Worth of PED which Buyer believes should be made, on or before the last
day of such 60-day period. Parent shall then have 30 days to review and respond
to Buyer's Objection. If Parent and Buyer are unable to resolve all of their
disagreements with respect to the determination of the foregoing items within 10
days following the completion of Parent's review of Buyer's objection, they
shall refer their remaining differences to Ernst & Young L.L.P. or another
internationally recognized firm of independent public accountants as to which
Parent and Buyer mutually agree (the "CPA Firm"), who shall, acting as experts
--------
and not as arbitrators, determine on the basis of the standards set forth in
Schedule 1.1(g), and only with respect to the remaining differences so
submitted, whether and to what extent, if any, the Net Worth of PED as derived
from the Closing Balance Sheet requires
15
adjustment. Parent and Buyer shall direct the CPA Firm to use its best efforts
to render its determination within 45 days. The CPA Firm's determination shall
be conclusive and binding upon Buyer and Parent. The fees and disbursements of
the CPA Firm shall be shared equally by Buyer, on the one hand, and Parent, on
the other hand. Buyer and Parent shall make readily available to the CPA Firm
all relevant books and records and any work papers (including those of the
parties' respective accountants) relating to the Balance Sheet and the Closing
Balance Sheet and all other items reasonably requested by the CPA Firm. The
"Adjusted Closing Balance Sheet" shall be (i) the Closing Balance Sheet in the
- -------------------------------
event that (x) no Buyer's Objection is delivered to Seller during the 60-day
period specified above, or (y) Parent and Buyer so agree, (ii) the Closing
Balance Sheet, adjusted in accordance with the Buyer's Objection in the event
that Parent does not respond to Buyer's Objection within the 30-day period
following receipt by Parent of Buyer's Objection, or (iii) the Closing Balance
Sheet, as adjusted by either (x) the agreement of Parent and Buyer or (y) the
CPA Firm.
(c) Buyer shall provide Parent and its accountants full access to the
Books and Records, any other information, including work papers of its
accountants, and to any employees to the extent necessary for Parent to prepare
the Closing Balance Sheet. Buyer and its accountants shall have the opportunity
to observe the taking of the Inventory (which may begin prior to the Closing
Date) in connection with the preparation of the Closing Balance Sheet and shall
have full access to all information used by Parent in preparing the Closing
Balance Sheet, including the work papers of its accountants.
(d) Within 10 Business Days following issuance of the Adjusted
Closing Balance Sheet, Buyer or Parent, as the case may be, shall make an
adjustment payment in an amount equal to the difference between (x) $47,900,000
(the "Base Amount") and (y) Net Worth of PED as derived from the Adjusted
----------- ---
Closing Balance Sheet. The adjustment payment, if any, will be made by Parent
to Buyer to the extent that the Net Worth of PED as derived from the Adjusted
Closing Balance Sheet is less than the Base Amount, and by Buyer to Parent to
the extent that Net Worth of PED as derived from the Adjusted Closing Balance
Sheet is greater than the Base Amount, plus, in either case, interest thereon
from the Closing Date through the date of payment at the "prime commercial
lending rate" of Chase Manhattan Bank, N.A., or any successor thereto in New
York, New York on the Closing Date. The adjustment payment payable pursuant to
this subsection 2.6(d) shall be paid by wire transfer of immediately available
funds to an account designated by Buyer, on the one hand, or Parent, on the
other hand, as the case may be.
2.7 Closing. (a) The Closing shall take place at the offices of
-------
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York at 10:00
A.M. (New York City time), on the second business day (the "Closing Date")
------------
following the satisfaction or
16
waiver (by the party entitled to waive the condition) of all conditions to the
Closing set forth in Article VII, but not earlier than September 27, 1996, or at
such other time and place as the parties hereto may mutually agree.
(b) Except as to any Required Approval, notwithstanding anything to
the contrary contained in this Agreement, to the extent that the sale,
assignment, transfer, conveyance or delivery or attempted sale, assignment,
transfer, conveyance or delivery to Buyer of any Transferred Asset is prohibited
by any applicable law or would require any governmental or third-party
authorizations, approvals, consents or waivers and such authorizations,
approvals, consents or waivers shall not have been obtained prior to the
Closing, this Agreement shall not constitute a sale, assignment, transfer,
conveyance or delivery, or any attempted sale, assignment, transfer, conveyance
or delivery, thereof. Following the Closing, and without limiting the
provisions set forth in Section 5.3, the parties shall use reasonable efforts,
and cooperate with each other, to obtain promptly such authorizations,
approvals, consents or waivers; provided, however, that neither any Seller nor
-------- -------
Buyer shall be required to pay any consideration therefor, other than filing,
recordation or similar fees payable to any governmental authority, which fees
shall be shared equally by Buyer, on the one hand, and Parent, on the other
hand. Pending such authorization, approval, consent or waiver, the parties
shall cooperate with each other in any reasonable and lawful arrangements
designed to provide to Buyer the benefits and liabilities of use of such
Transferred Asset. Once such authorization, approval, consent or waiver for the
sale, assignment, transfer, conveyance or delivery of a Transferred Asset not
sold, assigned, transferred, conveyed or delivered at the Closing is obtained,
Parent shall, or shall cause the applicable Seller to, promptly assign,
transfer, convey and deliver, or cause to be assigned, transferred, conveyed and
delivered, such Transferred Asset to Buyer for no additional consideration. To
the extent that any such Transferred Asset cannot be transferred or the full
benefits and liabilities of use of any such Transferred Asset cannot be provided
to Buyer within 50 days following the Closing pursuant to this subsection
2.7(b), then within 30 days Buyer and Parent shall enter into such mutually
acceptable arrangements (including subleasing or contracting if permitted) to
provide to Buyer the economic (taking into account Tax costs and benefits) and
operational equivalent of obtaining such authorization, approval, consent or
waiver and the performance by Buyer of the obligations thereunder. To the extent
that Buyer does not receive all of the benefits of an asset contemplated to have
been a Transferred Asset, including after taking any actions contemplated by the
preceding sentence into account, Buyer shall be entitled to an appropriate
adjustment in the Purchase Price.
17
2.7(c) CPM China JV.
------------
(i) In the event that the consents referred to on Schedule 3.3 with
respect to the transfer of the CPM China Stock to the Buyer shall not have been
obtained by the Closing Date the parties agree as follows:
(A) On the Closing Date an amount equal to the net book value as of
June 30, 1996 of the CPM China JV Stock as reflected on the books and records of
Parent (the "Deposit") shall be segregated from the Purchase Price and deposited
in escrow with the law firm of Greenberg Traurig Hoffman Lipoff Rosen & Quentel
(the "Escrow Agent").
(B) Upon receipt of the consents referred to on Schedule 3.3 and the
documentation necessary to transfer ownership of the CPM China JV Stock to
Buyer, the Escrow Agent shall remit the Deposit (including interest earned
thereon) to Parent.
(C) In the event Parent determines that the CPM China JV cannot or
will not be transferred and that the CPM China JV is to be liquidated, Parent
shall cause at its expense all assets received by the owner of the CPM China JV
Stock in connection with such liquidation to be assigned and delivered to such
location in Asia designated by Buyer. Upon receipt of evidence of such
assignment and delivery, the Escrow Agent shall remit the Deposit less the book
value as reflected on the Adjusted Closing Balance Sheet of the technology
transferred to the CPM China JV by CPM and its Affiliates (including interest on
such net amount) to Parent.
(D) During the period from the Closing Date until the completion of
one of the transactions described in subparagraphs (B) and (C) above, Buyer
shall act as the agent and representative of Parent and its Affiliates with
respect to the operation of the CPM China JV. The results of operations of the
CPM China JV during such period shall be for the account of Buyer, so that no
adjustments based on such results shall be made in the amount due to Parent upon
consummation of either of the transactions described in subparagraph (B) or (C)
above.
(E) As an alternative to the Deposit with the Escrow Agent, Buyer may
provide Parent with a bank guaranty, letter of credit or similar instrument
reasonably acceptable to Parent containing the payment terms outlined in this
Section. In such event, appropriate changes to the provisions of this Section
2.7(c) relating to the escrow arrangement shall be made to conform to the
alternative arrangement.
(F) The provisions of this Section 2.7(c) shall not affect the
provisions of Section 2.6 relating to the Closing Balance Sheet, the Adjusted
Closing Balance Sheet and the adjustment payment.
18
(ii) Parent will be responsible for obtaining the consents necessary
for the transfer of the CPM China JV and Buyer will cooperate to the extent
reasonably necessary in obtaining such consents. In the event any consent
contains conditions which may have an adverse effect on Buyer, Buyer will have
the right to consent to such conditions, such consent not to be unreasonably
withheld.
(iii) In the event the transfer to Buyer of the CPM China JV Stock or
the assets distributed in connection with the liquidation of CPM China JV has
not occurred within nine months of the Closing Date, the sale of the CPM China
JV Stock will be excluded from the transactions contemplated hereby without any
obligation by either party with respect thereto and the Deposit (or other form
of guaranty) shall be released.
2.8 Deliveries by Buyer. At the Closing, Buyer shall deliver to
-------------------
Parent the following:
(a) the Purchase Price in immediately available funds by wire transfer to
an account or accounts which shall have been designated by Parent not less
than two business days prior to the Closing;
(b) such instruments of assumption and other instruments or documents, in
form and substance reasonably acceptable to Parent, as may be necessary to
effect Buyer's assumption of the Assumed Liabilities;
(c) such other instruments and documents, in form and substance reasonably
acceptable to Parent and Buyer, as may be necessary to effect the Closing;
(d) a duly executed copy of each Ancillary Agreement (such agreements to
be in form and substance reasonably acceptable to Buyer); and
(e) the certificates and other documents to be delivered pursuant to
Section 7.3.
2.9 Deliveries by Sellers. At the Closing, Parent shall, and shall
---------------------
cause the other Sellers to, deliver to Buyer the following:
(a) certificates representing all of the Stock, duly endorsed in blank for
transfer or accompanied by duly executed blank stock powers together with
all necessary stock transfer stamps affixed thereto at the expense of Buyer
and/or such other instruments as shall reasonably be required by Buyer to
transfer to Buyer all right, title and interest in and to the Stock, free
and clear of any Encumbrance (other than (i) Encumbrances created by Buyer
and (ii) the requirements of the Federal and state securities laws and
state insurance laws respecting
19
limitations on the subsequent transfer thereof). All such certificates,
stock powers and instruments shall be in form and content reasonably
satisfactory to Buyer and its counsel;
(b) assignments, in form and substance reasonably acceptable to Buyer,
assigning to Buyer all Transferred Intellectual Property;
(c) assignments or, where necessary, subleases, in form and substance
reasonably acceptable to Buyer, assigning or subleasing to Buyer all
Transferred Leased Real Property;
(d) bills of sale, in form and substance reasonably acceptable to Buyer,
transferring to Buyer all other Transferred Assets;
(e) such other instruments or documents, in form and substance reasonably
acceptable to Buyer and Parent, as may be necessary to effect the Closing;
(f) a duly executed copy of each Ancillary Agreement (such agreements to
be in form and substance reasonably acceptable to Buyer); and
(g) the certificates and other documents to be delivered pursuant to
Section 7.2.
(h) The Buyer shall have received the written resignations, effective as
of the Closing Date, of such directors and officers of the Companies
(except as to CPM China JV, of which such resignations will consist only of
the designees of the Parent) and the Parent's designee on the Board of
Directors of CPM Brazil, as requested in writing by the Buyer prior to the
Closing Date.
2.10 Transfer Taxes and Recording Fees. All sales, value-added,
---------------------------------
transfer, recording, deed, stamp, grantor or grantee Taxes, fees and charges,
and all other similar costs and expenses of any kind required or customary in
the applicable jurisdiction in connection with the effectuation of the transfer
of the Transferred Assets (and the effective transfer of all Company Assets),
including the transfer of the Stock, and the filing of any required or customary
instruments, whether such Tax, fee, charge, cost or expense is imposed on Buyer
or any Seller (the "Transfer Costs"), shall be the responsibility of, and shall
--------------
be paid one-half by Buyer and one-half by Seller.
2.11 Schedule Updates. By September 24, 1996, Parent shall deliver
----------------
to Buyer updated versions of Schedules 1.1(f), 2.3(e), 3.6(c), 3.7(a), 3.7(b),
3.11, 3.12(d), 3.13, 3.14(a), 3.14(b), 3.14(c) and 3.15(b), such updated
versions to indicate specific additions and deletions, so that such updated
Schedules are current as of September 20, 1996. In the event the Closing
20
is delayed beyond October 10, 1996, Parent shall deliver additional updates of
such Schedules so that they are current as of a date not more than ten days
prior to Closing. Such updated Schedules shall be deemed a part of the
Schedules as in existence on the date of this Agreement, and, other than as
provided in subsection 7.2(a), any reference herein to a Schedule listed above
shall be deemed a reference to such updated Schedule.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent represents and warrants to Buyer as follows:
3.1 Organization and Qualification. Each Seller and Company is a
------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and authority to own and operate its respective Transferred Assets (in the case
of a Seller) or Company Assets (in the case of a Company) and to carry on the
Business as currently conducted by it. Each Seller and Company is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its respective Transferred
Assets (in the case of a Seller) or Company Assets (in the case of a Company) or
the conduct of the Business by it requires such qualification, except where the
failure to be so qualified or in good standing, as the case may be, would not
have a Material Adverse Effect.
3.2 Corporate Authorization. Each Seller has full corporate power
-----------------------
and authority to execute and deliver this Agreement and/or each of the Ancillary
Agreements to which it is a party, if any, and to perform its obligations
hereunder and thereunder. The execution, delivery and performance by each
Seller of this Agreement and/or each of the Ancillary Agreements to which it is
a party, if any, have been duly and validly authorized and no additional
corporate authorization or consent is required in connection with the execution,
delivery and performance by such Seller of this Agreement and/or such Ancillary
Agreements.
3.3 Consents and Approvals. Except as specifically set forth in
----------------------
Schedule 3.3 or as required by the HSR Act, no consent, approval, waiver or
authorization is required to be obtained by Sellers from, and no notice or
filing is required to be given by Sellers to or made by Sellers with, any
federal, state, local or foreign governmental authority or other Person in
connection with the execution, delivery and performance by Sellers of this
Agreement and each of the Ancillary Agreements, other than in all cases where
the failure to obtain such consent, approval, waiver or authorization, or to
give or make such notice or filing, would not have a Material Adverse Effect or
materially impair or delay the ability of Sellers to effect the Closing.
21
3.4 Non-Contravention. Except as set forth on Schedule 3.4, the
-----------------
execution, delivery and performance by each Seller of this Agreement and/or each
of the Ancillary Agreements to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, does not and will not (i) violate
any provision of the charter, bylaws or other organizational documents of such
Seller or any Company, (ii) subject to obtaining the consents referred to in
Section 3.3, to the Knowledge of Parent, conflict with, or result in the breach
of, or constitute a default under, or result in the termination, cancellation or
acceleration (whether after the filing of notice or the lapse of time or both)
of any right or obligation of such Seller or any Company under, or in a loss of
any benefit to which such Seller or any Company is entitled under, any Contract
of such Seller or any Company or result in the creation of any Encumbrance upon
any of the Transferred Assets or Company Assets; or (iii) assuming compliance
with the matters set forth in Sections 3.3 and 4.3, to the Knowledge of Parent,
violate, or result in a breach of or constitute a default under any law, rule,
regulation, judgment, injunction, order, decree or other restriction of any
court or governmental authority to which such Seller or any Company is subject,
including any Governmental Authorization, other than, in the cases of clauses
(ii) and (iii), any conflict, breach, termination, default, cancellation,
acceleration, loss, violation or Encumbrance which, individually or in the
aggregate, would not have a Material Adverse Effect or materially impair or
delay the ability of Parent to perform its obligations hereunder.
3.5 Binding Effect. This Agreement has been duly executed and
--------------
delivered by Parent and constitutes, and each of the Ancillary Agreements when
executed and delivered by the parties thereto will constitute, the valid and
binding obligation of Parent and/or the applicable other Sellers, enforceable
against each such Seller in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
3.6 Financial Statements: Absence of Certain Changes. (a) The
------------------------------------------------
unaudited combined balance sheet of PED at December 31, 1995 (the "Balance
-------
Sheet") and the unaudited combined statements of earnings from operations of PED
for the year ended December 31, 1995 attached as Schedule 3.6(a) (together with
the Balance Sheet, collectively, the "Financial Statements") fairly present, in
----------------------
all material respects, the financial condition of PED as of the date thereof, or
the results of operations for the period then ended, as the case may be and were
prepared in accordance with Modified GAAP. To the best of Parent's Knowledge
since December 31, 1995, there has been no material adverse change in
22
the financial performance of the Business compared to the similar period of the
prior year.
(b) All of the liabilities reflected on the Balance Sheet are Related
to the Business and arose out of or were incurred in the conduct of the
Business.
(c) Except as set forth in Schedule 3.6(c) or otherwise disclosed in
this Agreement, since the date of the Balance Sheet, Sellers and the Companies
have conducted the Business in the ordinary and usual course and, other than in
the ordinary and usual course, have not, with respect to the Business: (i)
sold, assigned, pledged, hypothecated or otherwise transferred any of the
Transferred Assets or Company Assets, other than for such sales, assignments,
pledges, hypothecations or other transfers in the ordinary course of business
which would not have a Material Adverse Effect; (ii) terminated or materially
amended any Contract that is material to the Business, taken as a whole; (iii)
suffered any damage, destruction or other casualty loss (not covered by
insurance) which individually or in the aggregate resulted in damages in excess
of $100,000; (iv) except for normal salary administration for management
employees, other compensation increases in the ordinary course of business or
the bonuses and incentive compensation referred to in subsection 2.4(e),
increased the compensation payable or to become payable by any Seller or Company
to any of the Employees or increased any bonus, insurance, pension or other
employee benefit plan, payment or arrangement made by any Seller or Company, for
or with any such employees; or (v) entered into an agreement to do any of the
foregoing.
3.7 Litigation and Claims. (a) Except as set forth in Schedule
---------------------
3.7(a), there is no civil, criminal or administrative action, suit, demand,
claim, hearing, proceeding or investigation pending or, to the Knowledge of
Parent, threatened, with respect to which any Seller or Company has been
contacted in writing by counsel for the plaintiff or claimant or any other
Person, involving the Business or any of the Transferred Assets or Company
Assets other than those which would not result in liability in excess of
$100,000 individually or, in the case of actions seeking injunctive relief, have
a Material Adverse Effect or materially impair or delay the ability of Sellers
to effect the Closing.
(b) Except as set forth in Schedule 3.7(b), none of the Transferred
Assets or Company Assets is subject to any order, writ, judgment, award,
injunction, or decree of any court or governmental or regulatory authority of
competent jurisdiction or any arbitrator or arbitrators other than those which,
individually or in the aggregate, would not have a Material Adverse Effect or
materially impair or delay the ability of Sellers to effect the Closing.
23
3.8 Taxes. (a) None of the Transferred Assets or Company Assets is
-----
tax-exempt use property within the meaning of section 168(h) of the Code. None
of the Transferred Assets or Company Assets is property that is or will be
required to be treated as being owned by another person pursuant to the
provisions of section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986.
(b) Except as set forth on Schedule 3.8(b), (i) all, Tax Returns
reflecting annual tax liability of more than $3,000 for a particular tax in a
single taxing jurisdiction required to be filed by the Companies on or before
the Closing Date, have been or will be filed when due in accordance with all
applicable laws; (ii) all Taxes shown on such Tax Returns have been or will be
paid in timely fashion or have been accrued for on the relevant Company's
financial statements; (iii) there is no action, suit, proceeding, investigation
(to the Knowledge of Parent), audit or claim now pending with respect to any Tax
of the Companies; (iv) there are no outstanding agreements extending the
statutory period of limitation applicable to any claim for, or the period for
the collection or assessment of, Taxes due from any Company; (v) there are no
liens for any Tax on the assets of the Companies, except for Taxes not yet due
and payable, or on the Stock in the hands of Sellers; and (vi) the Buyer will
not be subject to withholding under section 1445 of the Code with respect to the
sale of the Transferred Assets.
(c) Parent and CPM have filed (or will timely file) a consolidated
federal income tax return for the taxable year immediately preceding the current
year and Parent and the Companies are eligible to make an election under Section
338(h)(10) of the Code with respect to the Companies (except the CPM China JV).
3.9 Employee Benefits. Schedule 3.9 lists each employee benefit
-----------------
plan, as defined in section 3(3) of ERISA (including employee health and health
reinsurance plans), and each bonus or other incentive compensation, severance,
reduction in force, relocation, salary continuation for sickness or other
disability, vacation or educational assistance program which each Seller and
Company maintains, contributes to or has an obligation to contribute to on
behalf of Employees (collectively, the "Seller/Company Plans"). None of the
--------------------
Seller/Company Plans constitutes a "multiemployer plan" (as defined in section
4001(a)(3) of ERISA).
3.10 Compliance with Laws. Except as set forth in Schedule 3.10, the
--------------------
Business is being conducted in compliance with all Laws, except where the
failure so to comply, individually or in the aggregate, would not have a
Material Adverse Effect and PED has all Governmental Authorizations necessary
for the conduct of the Business as currently conducted, other than those the
absence of which would not have a Material Adverse Effect; it
--
24
being understood that nothing in this representation is intended to address any
- ----- ----------
compliance issue that is the subject of any other representation or warranty set
forth herein.
3.11 Environmental Matters. Except as set forth in Schedule 3.11
---------------------
and, in each case, other than as Relates to an Excluded Liability:
(a) the Business is in compliance with all applicable Environmental
Laws and there are no liabilities under any Environmental Law with respect to
the Business (including the Transferred Assets), other than non-compliance or
liabilities which, individually or in the aggregate, would not have a Material
Adverse Effect;
(b) no Seller or Company has received or is in possession of any
notice of any material violation or alleged material violation of, or any
material liability under, any Environmental Law in connection with the Business
(including the Transferred Assets) during the past three years; and
(c) there are no writs, injunctions, decrees, orders or judgments
outstanding, or any actions, suits, proceedings or investigations pending or, to
the Knowledge of Parent, threatened, relating to compliance with or liability
under any Environmental Law affecting the Business or the Transferred Assets or
Company Assets.
3.12 Intellectual Property. (a) Schedule 3.12(a) sets forth a list and
---------------------
description (including the country of registration) of all registered
Transferred Intellectual Property and Company Intellectual Property.
(b) With respect to Selected Marks, except as set forth on Schedule
3.12(b), there are no restrictions that would materially affect the use of the
Selected Marks in connection with the Business and, to the Knowledge of Parent,
the Selected Marks do not infringe upon or otherwise violate the valid and
registered trademark of any other Person.
(c) With respect to Transferred Intellectual Property and Company
Intellectual Property other than the Selected Marks, to the Knowledge of Parent,
except as set forth in Schedule 3.12(c), no product (or component thereof or
process) currently used, sold or manufactured by PED infringes on or otherwise
violates a valid and enforceable patent or registered trademark or registered
copyright of any other Person.
(d) Except as set forth in Schedule 3.12(d), there are no actions or
proceedings pending or, to the Knowledge of Parent, threatened challenging, and,
to the Knowledge of Parent, no Person is infringing or otherwise violating, the
Transferred Intellectual Property or Company Intellectual Property, except
25
for challenges, infringements or violations which, individually or in the
aggregate, would not have a Material Adverse Effect.
3.13 Labor Matters. Except as disclosed on Schedule 3.13:
-------------
(a) no Seller or Company is a party to any labor or collective
bargaining agreement with respect to Employees; no Employees are represented by
any labor organization; and, to the Knowledge of Parent, there are no organizing
activities (including any demand for recognition or certification proceedings
pending or threatened in writing to be brought or filed with the National Labor
Relations Board or other labor relations tribunal) involving any Seller or
Company;
(b) there are no strikes, work stoppages, slowdowns, lockouts, unfair
labor practice charges, arbitrations or grievances pending or threatened in
writing and received by any Seller or Company against or involving any Seller or
Company except for those which, individually or in the aggregate, would not have
a Material Adverse Effect;
(c) there are no complaints, charges or claims against any Seller or
Company pending or, to the Knowledge of Parent, threatened in writing to be
brought or filed with any governmental authority, arbitrator or court based on
or arising out of the employment by any Seller or Company of any Employee except
for those which, individually or in the aggregate, would not have a Material
Adverse Effect; and
(d) with respect to the Business, each Seller and Company is in
compliance with all laws and orders Relating to the employment of labor,
including all such laws and orders Relating to wages, hours, collective
bargaining, discrimination, sexual harassment, civil rights, safety and health,
workers' compensation and the collection and payment of withholding and/or
Social Security Taxes and similar Taxes except for non-compliance which,
individually or in the aggregate, would not have a Material Adverse Effect.
3.14 Contracts. Schedule 3.14(a) sets forth a list, as of the date
---------
hereof, of each written Contract of any Seller or Company that is Related to and
material to the Business (other than (i) purchase orders in the ordinary and
usual course of business, (ii) any Contract involving the payment of less than
$100,000 per year in the aggregate or with a term of less than one year and
(iii) confidentiality agreements entered into in the usual course of business).
Except as set forth in Schedule 3.14(b), each such Contract is, to the Knowledge
of Parent, in full force and effect and constitutes a legal, valid and binding
obligation of the Seller or Company party thereto, enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights
26
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing. Except as otherwise provided
in Schedule 3.14(c), Parent has no Knowledge of any material default under any
Contract listed on Schedule 3.14(a) which default has not been cured or waived
and would have a Material Adverse Effect.
3.15 Entire Business; Title to Property. (a) Except as set forth in
----------------------------------
Schedule 3.15(a), the Transferred Assets, the Company Assets and the Transition
Services Agreement constitute all the assets, properties and rights necessary to
conduct the Business in all material respects as currently conducted.
(b) Each Seller and Company has good (and, in the case of Owned Real
Property, marketable) title to, or a valid and binding leasehold interest in,
its respective Transferred Assets or Company Assets, as the case may be, free
and clear of all Encumbrances, except (i) as set forth in Schedule 3.15(b); (ii)
any Encumbrances disclosed in the Financial Statements; (iii) liens for Taxes,
assessments and other governmental charges not yet due and payable or due but
being contested in good faith by appropriate proceedings or not delinquent; (iv)
mechanics', workmen's, repairmen's, warehousemen's, carriers', or other like
liens arising or incurred in the ordinary course of business, original purchase
price conditional sales contracts and equipment leases with third parties
entered into in the ordinary course of business; (v) with respect to real
property, (A) easements, quasi-easements, licenses, covenants, rights-of-way and
other similar restrictions, including, without limitation, any other agreements,
conditions or restrictions which would be shown by a current title report or
other similar report or listing, (B) any conditions that may be shown by a
current survey, title report or physical inspection and (C) zoning, building and
other similar restrictions; and (vi) Encumbrances which, individually or in the
aggregate, would not have a Material Adverse Effect (all items included in the
above clauses (i) through (vi), together with any matter set forth in Schedule
3.15(b), are referred to collectively herein as the "Permitted Encumbrances").
----------------------
(c) Parent makes no representation in this Agreement as to the
physical condition or usefulness for a particular purpose of the real or
tangible personal property included in the Transferred Assets or Company Assets.
3.16 Capital Stock; Title. Schedule 3.16 accurately sets forth the
--------------------
authorized capital stock of each Company and the number of shares of each class
of capital stock of each Company that are issued and outstanding as of the date
hereof. The Stock and all of the issued and outstanding shares of capital stock
of the Subsidiaries of CPM are duly authorized, validly issued, fully paid and
non-assessable and all Stock is owned beneficially and of record as set forth in
Schedule 3.16, free and clear of any Encumbrance except as provided in the next
sentence. Upon
27
delivery of the payment for the Stock as herein provided and assuming the Buyer
has the requisite power and authority to be the lawful owner of the Stock, Buyer
will acquire good title thereto, free and clear of any Encumbrance (other than
(i) Encumbrances created by Buyer and (ii) the requirements of the Federal and
state securities laws and state insurance laws respecting limitations on the
subsequent transfer thereof), and will own the percentage of the issued and
outstanding shares of capital stock of CPM, Silver Engineering, CPM Brazil and
Zeig and the registered capital of the CPM China JV set forth on Schedule 3.16.
3.17 Options and Other Rights. Except for and as provided in this
------------------------
Agreement or as set forth on Schedule 3.17, (i) there is no outstanding right,
subscription, warrant, call, unsatisfied preemptive right, option or other
agreement of any kind to purchase or otherwise to receive from any Seller,
Company or other Affiliate of Parent any of the outstanding, authorized but
unissued, unauthorized or treasury shares of the capital stock, registered
capital or any other equity security of any Company (or any interest therein),
(ii) there is no outstanding security of any kind that has been issued by any
Seller, Company or other Affiliate of Parent and that is convertible into or
exchangeable for the capital stock or registered capital of any Company (or any
interest therein) and (iii) there is no outstanding Contract of or binding upon
any Seller, Company or other Affiliate of Parent to purchase, redeem or
otherwise acquire any outstanding shares of the capital stock or registered
capital of any Company.
3.18 Charter Documents; Minute Books. (a) Parent has heretofore
-------------------------------
made available to Buyer true and complete copies of the articles or certificate
of incorporation and by-laws of each Company, in each case as in effect on the
date hereof.
(b) The minute books of each Company accurately reflect in all
material respects all formal actions taken at all meetings and all consents in
lieu of meetings of the stockholders of such Company since January 1, 1990 and
all formal actions taken at all meetings and all consents in lieu of meetings of
the Board of Directors of such Company and all committees thereof since January
1, 1990. All of such minute books have previously been made available for
inspection by Buyer.
3.19 Finders' Fees. Except for Merrill Lynch, Pierce, Fenner & Smith
-------------
Incorporated, whose fees will be paid by Parent, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Parent who might be entitled to any fee or commission from
Parent in connection with the transactions contemplated by this Agreement.
3.20 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Article
28
III, neither Parent nor any other Person makes any other express or implied
representation or warranty on behalf of Sellers.
ARTICLE IV
----------
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Parent as follows:
4.1 Organization and Qualification. Buyer is a corporation duly
------------------------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own and operate and to carry on its business as currently
conducted. Buyer is duly qualified to do business and is in good standing as a
foreign corporation in each jurisdiction where the ownership of its properties
or the operation of its business requires such qualification.
4.2 Corporate Authorization. Buyer has full corporate power and
-----------------------
authority to execute and deliver this Agreement and each of the Ancillary
Agreements, and to perform its obligations hereunder and thereunder. The
execution, delivery and performance by Buyer of this Agreement and each of the
Ancillary Agreements have been duly and validly authorized and no additional
corporate authorization or consent is required in connection with the execution,
delivery and performance by Buyer of this Agreement and each of the Ancillary
Agreements.
4.3 Consents and Approvals. Except as specifically set forth in
----------------------
Schedule 4.3 or as required by the HSR Act, no consent, approval, waiver or
authorization is required to be obtained by Buyer or any Subsidiary of Buyer
from, and no notice or filing is required to be given by Buyer or any Subsidiary
of Buyer to, or made by Buyer or any Subsidiary of Buyer with, any federal,
state, local or other governmental authority or other Person in connection with
the execution, delivery and performance by Buyer of this Agreement and each of
the Ancillary Agreements, other than in all cases where the failure to obtain
such consent, or to give or make such notice or filing, would not have a
Material Adverse Effect or materially impair or delay the ability of Buyer to
effect the Closing.
4.4 Non-Contravention. Except as set forth in Schedule 4.4, the
-----------------
execution, delivery and performance by Buyer of this Agreement and each of the
Ancillary Agreements, and the consummation of the transactions contemplated
hereby and thereby, does not and will not (i) violate any provision of the
charter, bylaws or other organizational documents of Buyer; (ii) subject to
obtaining the consents referred to in Section 4.3, conflict with, or result in
the breach of, or constitute a default under, or result in the termination,
cancellation or acceleration (whether after the filing of notice or the lapse of
time or both) of any right or obligation of Buyer under, or in a loss of any
benefit to which Buyer is entitled under, any Contract of Buyer
29
or result in the creation of any Encumbrance upon any of the Assets of Buyer; or
(iii) assuming compliance with the matters set forth in Sections 3.3 and 4.3,
violate or result in a breach of or constitute a default under any law, rule,
regulation, judgment, injunction, order, decree or other restriction of any
court or governmental authority to which Buyer is subject, including any
Governmental Authorization, other than any conflict, breach, termination,
default, cancellation, acceleration, loss, violation or Encumbrance which,
individually or in the aggregate, would not have a Material Adverse Effect or
materially impair or delay the ability of Buyer to perform its obligations
hereunder.
4.5 Binding Effect. This Agreement has been duly executed and
--------------
delivered by Buyer and constitutes, and each of the Ancillary Agreements when
executed and delivered by the parties thereto will constitute, the valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law)
or by an implied covenant of good faith and fair dealing.
4.6 Purchase Not for Distribution. The Stock will be acquired by
-----------------------------
Buyer for its own account and not with a view to distribution. Buyer has no
present intent to and will not resell, transfer, assign or distribute the Stock,
except in compliance with the registration requirements of the Securities Act of
1933, as amended, and all other U.S. federal or state or foreign securities laws
and regulations, or pursuant to an available exemption therefrom.
4.7 Litigation and Claims. (a) There is no civil, criminal or
---------------------
administrative action, suit, demand, claim, hearing, proceeding or investigation
pending or, to the knowledge of Buyer, threatened, which, individually or in the
aggregate, would materially impair or delay the ability of Buyer to effect the
Closing.
(b) The Buyer is not subject to any order, writ, judgment, award,
injunction, or decree of any court or governmental or regulatory authority of
competent jurisdiction or any arbitrator or arbitrators which, individually or
in the aggregate, would materially impair or delay the ability of Buyer to
effect the Closing.
4.8 Finders' Fees. Except for Southtrust Securities and KPMG-Peat
-------------
Marwick, whose fees will be paid by Buyer, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Buyer or any Subsidiary of Buyer who might be entitled to
any fee or
30
commission from Buyer in connection with the transactions contemplated by this
Agreement.
4.9 Financial Capability. Buyer has, and on the Closing Date will
--------------------
have, sufficient funds to effect the Closing and all other transactions
contemplated by this Agreement.
4.10 No Other Representations or Warranties. Except for the
--------------------------------------
representations and warranties contained in this Article IV, neither Buyer nor
any other Person makes any other express or implied representation or warranty
on behalf of Buyer.
ARTICLE V
---------
COVENANTS
---------
5.1 Access. Prior to the Closing, Parent shall permit Buyer and its
------
representatives to have access, during regular business hours and upon
reasonable advance notice, to the Transferred Assets and the Company Assets,
subject to reasonable rules and regulations of Sellers and the Companies, and
shall furnish or cause to be furnished to Buyer any financial and operating data
and other information that is available with respect to PED as Buyer shall from
time to time reasonably request. Buyer agrees to abide by the terms of the
Confidentiality Agreement with respect to such access and any information
furnished to it or its representatives pursuant to this Section 5.1.
5.2 Conduct of Business. During the period from the date hereof to
-------------------
the Closing, except as otherwise contemplated by this Agreement or as Buyer
shall otherwise agree in writing in advance, Parent covenants and agrees to
conduct, and to cause each Company and other Seller to conduct, the Business in
the ordinary and usual course, and to use reasonable efforts to preserve intact
the Business and their relationships with third parties in respect thereof.
During the period from the date hereof to the Closing, except as otherwise
provided for in this Agreement or as Buyer shall otherwise consent (which
consent shall not be unreasonably withheld), Parent covenants and agrees that
with respect to the Business, other than in the ordinary and usual course or as
set forth in Schedule 5.2, it shall not and shall cause each Company and other
Seller not to:
(i) enter into commitments for new capital expenditures in excess
of $250,000 in the aggregate;
(ii) dispose of or incur, create or assume any Encumbrance on any
individual fixed asset of PED if the greater of the book value or the fair
market value of such fixed asset exceeds $100,000, other than Permitted
Encumbrances;
(iii) enter into any transaction material to PED taken as a
whole;
31
(iv) grant salary or wage increases in excess of 5% or (as it
relates to Employees) materially change or amend any
Seller/Company Plan; or
(v) agree, in writing or otherwise, to do any of the foregoing.
Notwithstanding the foregoing, this Section 5.2 shall not restrict the
ability of any Seller or Company to make distributions of cash or short-term
investments to holders of its capital stock or otherwise to engage in cash
management activities in the ordinary course of business.
5.3 Best Efforts. Parent and Buyer will cooperate and use their
------------
respective best efforts to fulfill the conditions precedent to the other party's
obligations hereunder, including but not limited to securing as promptly as
practicable all consents, approvals, waivers and authorizations required in
connection with the transactions contemplated hereby. Parent and Buyer will
promptly file documentary materials required by the HSR Act and promptly file
any additional information requested as soon as practicable after receipt of
request therefor and will use best efforts to obtain any required approvals
thereunder.
5.4 Settlement of Intercompany Accounts; Cancellation of Intercompany
-----------------------------------------------------------------
and Other Agreements. The parties agree that all intercompany accounts,
- --------------------
including all accounts receivable, (whether or not currently due and payable)
between the Companies, on the one hand, and Parent and its Affiliates (other
than the Companies, CPM Brazil and Zeig), on the other hand, shall be settled in
full on or prior to the Closing Date. Except for the Transition Services
Agreement or as otherwise provided in this Agreement, Parent shall cause any
Contracts between any Company, on the one hand, and Parent and its Affiliates
(other than the Companies, CPM Brazil and Zeig), on the other hand, to be
cancelled to the extent such cancellation can be accomplished without penalty or
liability and Parent represents and warrants that such Contracts can be so
cancelled.
5.5 Post-Closing Obligations to Certain Employees. (a) Buyer shall
---------------------------------------------
assume, as successor employer, the collective bargaining agreements set forth on
Schedule 3.13 relating to Transferred Employees on the Closing Date and shall
offer employment to each of the Employees covered by such agreement ("Union
-----
Employees").
- ---------
(b) (i) Buyer shall offer employment on an "at-will basis" effective
as of the Closing Date to all Transferred Employees who are U.S. Employees
(other than Union Employees); provided, however, that any Inactive Employee who
-------- -------
is absent from active service on the Closing Date by reason of such Inactive
Employee's entitlement to short-term disability, long-term disability or
workers' compensation benefits shall be offered employment by Buyer effective
upon such Inactive Employee's
32
availability to return to active service. Parent shall be responsible for any
obligations or benefits (including health and disability) owed to such Inactive
Employees as a result of occurrences or events arising prior to Closing. Each
offer of employment to a Transferred Employee who is a U.S. Employee shall be at
the same compensation rate and position held by such U.S. Employee immediately
prior to the Closing Date and upon such other terms and conditions of employment
as may be determined by Buyer in its sole discretion; provided, however, that
-------- -------
the offer to each Inactive Employee shall be at terms and on conditions
substantially as favorable to such Inactive Employee as the terms and conditions
applicable immediately prior to the Closing Date and provided, that Buyer may
--------
make a reasonable accommodation in the case of any Inactive Employee who returns
to work following a period of disability and is not fully capable of performing
the functions of his or her former position. Such U.S. Employees who are hired
by Buyer shall be treated no less favorably than similarly situated employees of
Buyer. Subject to the requirements of the preceding sentence, from the Closing
Date through the first anniversary thereof, Buyer shall provide such U.S.
Employees with employee benefits which are in the aggregate substantially
comparable to those currently provided by the Parent and its Subsidiaries to
such U.S. Employees.
(ii) Buyer shall offer employment, effective on and after the Closing
Date, to all Transferred Employees who are not U.S. Employees (other than Union
Employees) on terms and conditions of employment, including salary, incentive
compensation and benefits, which are substantially similar in the aggregate to
those presently paid to or received by such Employees. Buyer shall exercise
reasonable efforts to persuade such Employees to accept such offers of
employment. Buyer shall be liable for the cost of termination by Buyer on or
after the Closing Date of any Transferred Employee who is not a U.S. Employee
and Buyer shall indemnify Seller for any claims for severance or notice of pay
in lieu thereof made against Seller by any such Employee terminated by Buyer.
(c) Buyer shall ensure that all Company Employees will be employed by
the Companies on and immediately after the Closing Date on substantially the
same terms as (including salary, job responsibility and location), and with
respect to employee benefit plans and programs, on terms which in the aggregate
are substantially equivalent to, those provided to such Company Employees on the
day immediately preceding the Closing Date. Notwithstanding the foregoing,
Buyer shall have no obligation to continue to provide benefits of the type
referred to in Section 2.4(e)(ii).
(d) Buyer shall, subject to subsection 5.5(f), grant all Employees
(other than Union Employees) credit for purposes of eligibility (including
eligibility for early retirement benefits or subsidies), vesting and benefit
accrual (but with appropriate offsets so as not to duplicate benefits) under
Buyer's employee
33
benefit plans (including vacation and severance) for their service with Seller
and the Companies prior to the Closing Date, to the same extent such service had
been taken into account under the Seller/Company Plans, and with Buyer on and
after the Closing Date.
(e) Buyer shall provide a medical plan as of the Closing Date so as
to ensure uninterrupted coverage of all U.S. Employees and, to the extent not
otherwise provided, all other Employees (in all cases, other than Union
Employees). Such medical plan shall grant credit for amounts paid by such
Employees during the applicable plan year, including the Closing Date, shall not
exclude preexisting conditions and, subject to Buyer's right to amend or
terminate after the first anniversary of the Closing Date, shall provide for
retiree medical and life insurance benefits for such Employees substantially
similar to the medical and life insurance plans of Seller and the Companies in
effect immediately prior to the Closing Date (true and correct copies of which
have been provided to Buyer).
(f) Buyer shall provide, without duplication of benefits, all
Employees (other than Union Employees) with vacation time rather than cash in
lieu of vacation time for all vacation earned, accrued and unpaid through the
Closing Date (unless such Employee elects otherwise), but only to the extent
accrued or otherwise reserved for in the Adjusted Closing Balance Sheet. Buyer
shall promptly reimburse Seller for any accrued vacation required to be paid for
any reason to such Employees by any Seller or Company, but only to the extent
accrued or otherwise reserved for in the Closing Adjusted Balance Sheet.
(g) Buyer shall discharge Parent's obligations in respect of the
agreements dated November 7, 1995 with certain employees listed on
Schedule 5.5(g).
(h) Except as otherwise provided in subsection 5.5(i) and 5.5(j), (i)
Parent shall retain sponsorship of the Seller/Company Plans and Buyer shall not
be entitled to any assets of the Seller/Company Plans and (ii) if Buyer
maintains or establishes a defined contribution plan, such plan shall, subject
to applicable law, accept rollovers by Employees (other than Union Employees)
and employee loans by U.S. Employees.
(i) As soon as practicable after the Closing Date, Parent shall (i)
cause the trustees of the Parent's Savings and Stock Investment Plan and
Retirement Account Plan (each, a "Seller Defined Contribution Plan") to
--------------------------------
segregate, in accordance with the spinoff provisions set forth under Section
414(1) of the Code, the assets of the Seller Defined Contribution Plans
representing the full then-vested account balances of employees of the Company
who participate therein ("Participants") for all periods of participation
------------
through the Closing Date (including, as applicable, all employee and employer
contributions attributable thereto); (ii) make all required filings and
submissions to
34
appropriate governmental agencies; and (iii) make all required amendments to the
Seller Defined Contribution Plans and related trust agreements necessary to
provide for such segregation and the transfers of assets described in this
subsection 5.5(i). The Seller Defined Contribution Plans shall be amended to
provide that contributions thereto with respect to the Participants for periods
after the Closing Date shall cease as of the Closing Date. Buyer shall (x) give
Parent written notice of the name of the trustee of the defined contribution
plans (the "Buyer Defined Contribution Plans") it designates to receive a
--------------------------------
transfer of assets and liabilities from the Seller Defined Contribution Plans
accompanied by a copy of the most recent favorable determination letters for
such plans received by Buyer as promptly as possible after the Closing Date, but
in any event prior to the date of the transfer of such assets and liabilities
(the "Plan Transfer Date"); and (y) as soon as practicable after the Closing
------------------
Date, make all required filings and submissions to appropriate governmental
agencies. As soon as practicable after the Closing Date, Parent shall cause the
trustees of the Seller Defined Contribution Plans to transfer in cash or in the
form of guaranteed insurance contracts the full account balances of all
Participants (including any notes held by the Seller Defined Contribution Plans
in respect of participant loans) which account balances shall have been credited
with appropriate earnings, if any, attributable to the period ending on the
close of business of the last day of the month preceding the Plan Transfer Date,
reduced by any benefit or withdrawal payments in respect of Participants prior
to the Plan Transfer Date, to the trustees of the Buyer Defined Contribution
Plans. In consideration of the transfer of assets hereunder, Buyer shall cause
the Buyer Defined Contribution Plans to assume the corresponding liabilities for
benefits of the Participants for whom assets were transferred.
(j) With respect to Employees who are members of the Ingersoll-Rand
Holdings Limited Retirement Benefits Plan (1974) (the "U.K. Pension Plan"),
-----------------
Parent shall cause, subject to the consent of individual members, the transfer
of an amount in respect of each such member to an appropriately approved pension
arrangement nominated by each such member. The amount of such transfer will be
the cash value at the time of payment of the member's benefits, whether
prospective or contingent (but excluding lump sum payments on death in service),
payable under the U.K. Pension Plan and determined by reference to the member's
Pensionable Service (as defined in the U.K. Pension Plan) credited under the
U.K. Pension Plan prior to the Closing Date and Pensionable Earnings (as defined
in the U.K. Pension Plan) projected to retirement or such member's earlier death
or withdrawal.
The actuarial assumptions used to determine the value of each such
member's benefits will be those adopted for the April 6, 1996 actuarial
valuation of the U.K. Pension Plan. The earnings data used to determine the
value of each such member's benefits will be the Pensionable Earnings of such
member as of
35
the Closing Date. This will increase in accordance with the actuarial
assumptions to the assumed age of retirement, or earlier death or withdrawal of
the member.
5.6 Compliance with WARN, etc. With respect to the Employees, Buyer
--------------------------
will timely give all notices required to be given under WARN or other similar
statutes or regulations of any jurisdiction relating to any plant closing or
mass layoff or as otherwise required by any such statute. For this purpose,
Buyer shall be deemed to have caused a mass layoff if, inter alia, the mass
----- ----
layoff would not have occurred but for Buyer's failure to employ the Employees
in accordance with the terms of this Agreement.
5.7 Further Assurances. At any time after the Closing Date, Parent,
------------------
on the one hand, and Buyer, on the other hand, shall, or shall cause a Seller or
Company to, promptly execute, acknowledge and deliver any other assurances or
documents reasonably requested by Buyer or Parent, as the case may be, and
necessary for them or it to satisfy their or its respective obligations
hereunder or obtain the benefits contemplated hereby.
5.8 Use of Corporate Name and Symbol; Transition License. (a)
----------------------------------------------------
Except as set forth in subsection 5.8(b), after the Closing, Buyer shall not use
the Seller Marks or the Composite Marks.
(b) As promptly as practicable, but in no event later than 60 days
following the Closing Date, Buyer shall, and cause the Companies to, remove,
strike over or otherwise obliterate all Seller Marks and Composite Marks from
all materials constituting their properties and assets, including, without
limitation, any business cards, schedules, stationery, displays, signs,
promotional materials, manuals, forms and other materials, if such materials are
distributed or made available or proposed to be distributed or made available to
third parties; provided that (i) Buyer and the Companies shall immediately cease
--------
using invoice forms and purchase and sale contract forms, and no later than 30
days after the Closing Date cease using stationery and business cards,
containing Seller Marks and Composite Marks and (ii) nothing herein contained
shall require or be construed to require Buyer or the Companies to cause
customers of Buyer or the Companies to take any action with respect to property
of the Buyer or the Companies in the possession of any such customers. Buyer
agrees that none of it, the Companies nor any of its or their Affiliates shall
make any use of the Seller Marks or, except as expressly permitted pursuant to
the immediately preceding sentence, the Composite Marks from and after the
expiration of 60 days after the Closing Date.
(c) Parent agrees that, without limiting in any way Sellers' right to
use the Seller Marks, Sellers shall cease using all Composite Marks following
the Closing Date.
36
5.9 Transition Services. On the Closing Date, Buyer and Parent shall
-------------------
cause to be executed and delivered a transition services agreement (the
"Transition Services Agreement") pursuant to which, for a period of six months
- ------------------------------
following the Closing Date, Sellers or Affiliates of Sellers shall make
available to Buyer the support and administrative services currently being
provided to the Business on a basis, and for a price, to be agreed upon.
5.10 Certain Matters Related to Excluded Liabilities. (a) Parent
-----------------------------------------------
shall have the right, which may be exercised in its sole discretion, to manage
and control the handling of, to assume the defense of and to settle or otherwise
compromise claims relating to Excluded Liabilities where settlement involves
only the payment of monetary damages, it being understood that with respect to
other settlements of claims relating to Excluded Liabilities, Buyer shall have
the right to consent to the entry of any settlement, which consent shall not be
unreasonably withheld.
(b) With respect to all Excluded Liabilities, the Buyer shall cause
the Buyer Indemnified Parties to cooperate with Parent, provide Parent as
promptly as possible with notices and other information received by such parties
as well as all relevant materials, information and data requested by Parent and
shall grant Parent, without charge, reasonable access to employees of the
Business and, in the case of liabilities covered by Section 8.3(a)(ii), to the
Company Owned Real Property, Transferred Leased Real Property and Company Leased
Real Property, including the right to conduct environmental tests thereon and to
take samples therefrom. The Buyer shall cause the Buyer Indemnified Parties not
to defend, settle, compromise or make any payments with respect to claims
relating to Excluded Liabilities.
5.11 Non-Competition. For a period of three (3) years from the
---------------
Closing, Parent shall not, directly or indirectly through one or more of its
Subsidiaries, engage in the manufacturing, sale or provision of any goods or
services which compete with any manufacturing, goods or services offered by PED
as of the date of this Agreement; provided, however, that this Section 5.11
--------
shall not prohibit Parent or its Subsidiaries from (i) purchasing, owning,
managing or operating any business which would otherwise be deemed in violation
of the covenant not to compete contained in this Section 5.11, where such
business (x) is included within an entity or business purchased by Parent or one
of its Subsidiaries after the date hereof and (y) accounts for less than ten
percent (10%) of the combined revenues of all entities or businesses purchased
in such transaction on the date of purchase; (ii) acquiring or owning not more
than five percent (5%) of the outstanding voting securities (or securities
convertible into voting securities) of any company whose securities are listed
and actively traded on any national, international or regional securities
exchange or over-the-counter market; or (iii) taking any other actions expressly
contemplated
37
by this Agreement. In the event that during such three year period, (A) Parent
acquires a business described in subsection (i) above and (B) determines that it
desires to sell such business, Parent will provide Buyer with the opportunity to
make an offer to purchase such business.
ARTICLE VI
----------
TAX MATTERS
-----------
6.1 Tax Indemnification. (a) Buyer and Parent agree to jointly make
-------------------
an irrevocable election under Section 338(h)(10) of the Code, on Form 8023, and,
if requested by Buyer, any comparable election under state, local or foreign tax
law, no later than the 15th day of the month beginning after the month in which
the Closing occurs or within the required period for any comparable state, local
or foreign election.
(b) Parent shall be responsible for, shall pay or cause to be paid,
and shall indemnify and hold harmless Buyer and its Affiliates (including, after
the Closing, the Companies) from and against any and all (i) Taxes of, or
payable by (including by reason of Treasury Regulation (S) 1.1502-6), the
Companies (or any predecessors) with respect to any taxable period ending on or
before the Closing Date, or as a result of the Closing (other than Transfer
Taxes allocable to Buyer under Section 2.10), as well as any and all Income
Taxes incurred in any jurisdiction as a result of any Section 338(h)(10), or any
comparable state, local or foreign, election, (ii) Parent's portion of any Taxes
of the Companies described in subsection 6.1(d), and (iii) the Parent's portion
of Taxes described in Section 2.10 but with respect to clauses (i) and (ii) only
to the extent that such Taxes (a) exceed the accrual for Taxes of the Companies
on the Adjusted Closing Balance Sheet and (b) have not been paid by, or on
behalf of, the Companies prior to the Closing Date.
(c) Buyer agrees to indemnify and hold harmless Parent and its
Affiliates from and against (and Parent and its Affiliates shall have no
liability under subsection 6.1(b) on account of) (i) any and all Taxes of the
Companies (or any predecessors) to the extent of the accrual therefor on the
Adjusted Closing Balance Sheet and (ii) Buyer's portion of the Taxes described
in Section 2.10.
(d) Parent and Buyer shall, to the extent permitted by applicable
law, elect with the relevant taxing authority to close the taxable period of the
Companies on the Closing Date. In any case where applicable law does not permit
any Company to close its taxable year on the Closing Date, then Income Taxes
attributable to the taxable period of such Company beginning on or before and
ending after the Closing Date shall be allocated (i) to Parent for the period up
to and including the Closing Date and (ii) to Buyer for the period subsequent to
the Closing Date. Any allocation required to determine any Income Taxes
attributable to any period beginning on or before and ending
38
after the Closing Date shall be made by means of a closing of the books and
records of each of the Companies as of the close of business on the Closing Date
and, to the extent not susceptible to such allocation, by apportionment on the
basis of elapsed days.
(e) (i) Buyer shall notify Parent within 30 days of the commencement
of any claim, audit, examination, or other proposed change or adjustment by any
taxing authority of which Buyer has knowledge concerning any Tax covered by
subsection 6.1(b) (each a "Tax Claim"). Such notice shall contain factual
---------
information (to the extent known by Buyer or any Company) describing the
asserted Tax Claim in reasonable detail and shall include copies of any notice
or other document received from any taxing authority in respect of any such
asserted Tax Claim. If Buyer fails to give Parent notice within 30 days of the
commencement of any such Tax Claim of which Buyer has notice and Parent is
materially adversely affected thereby, Parent shall not have any obligation
under subsection 6.1(b) to indemnify for any Income Taxes arising out of such
Tax Claim.
(ii) Except as provided in subsection 6.1(e)(iii), Parent shall have
the sole right to represent the Companies' interests in any Tax audit or
administrative or court proceeding relating to Taxes described in subsection
6.1(b) and to employ counsel of its choice.
(iii) With respect to any taxable period of any Company beginning
before and ending after the Closing Date, Buyer and Parent shall jointly control
the defense and settlement of any Tax audit or administrative or court
proceeding relating to Income Taxes and each party shall cooperate with the
other party at its own expense and there shall be no settlement or closing or
other agreement with respect thereto without the consent of the other party,
which consent will not be unreasonably withheld; provided, however, that if
-------- -------
either party shall refuse to consent to any settlement, closing or other
agreement that the other party proposed to accept (a "Proposed Settlement"),
-------------------
then (1) the liability with respect to the subject matter of the Proposed
Settlement of the party who proposed to accept the Proposed Settlement shall be
limited to the amount that such liability would have been if the Proposed
Settlement had been accepted and (2) the other party shall be responsible for
all expenses incurred thereafter in connection with the contest of such Tax
audit or proceeding except to the extent that the final settlement imposes less
liability on the party who proposed to accept the Proposed Settlement than the
Proposed Settlement would have imposed.
(f) (i) Parent shall prepare or cause to be prepared, and shall file
or cause to be filed, all Tax Returns which include any Company or its assets or
operations for all taxable periods of the Companies ending on or before the
Closing Date.
39
Parent shall pay or cause to be paid all Taxes shown as due on such Tax Returns.
(ii) Except as set forth in subsection 6.1(f)(iii) below, Buyer shall
be responsible for filing all other Tax Returns required to be filed after the
Closing Date by or on behalf of the Companies, or with respect to their assets
and operations.
(iii) With respect to any Income Tax Return required to be filed by
Buyer for a taxable period of any Company beginning on or before the Closing
Date and ending after the Closing Date, Buyer shall deliver, at least 20 days
prior to the due date for filing such Income Tax Return (including extensions),
to Parent a statement setting forth the amount of Income Tax for which Parent is
responsible pursuant to subsection 6.1(d) (the "Tax Statement") and copies of
---------------
such Income Tax Return. Seller shall have the right to review such Income Tax
Return and Tax Statement prior to the filing of such Income Tax Return and to
suggest to Buyer any reasonable changes to such Income Tax Returns. Parent and
Buyer agree to consult and resolve in good faith any issue arising as a result
of the review of such Income Tax Return and the Tax Statement and mutually to
consent to the filing as promptly as possible of such Income Tax Return. In the
event the parties are unable to resolve any dispute within ten days following
the delivery of such Income Tax Return and the Tax Statement, the parties shall
jointly request the CPA Firm to resolve any issue in dispute as promptly as
possible. If the CPA Firm is unable to make a determination with respect to any
disputed issue within five Business Days prior to the due date (including
extensions) for the filing of the Income Tax Return in question, then Buyer may
file such Income Tax Return on the due date (including extensions) therefor
without such determination having been made and without Parent's consent.
Notwithstanding the filing of such Income Tax Return, the CPA Firm shall make a
determination with respect to any disputed issue, and the amount of Income Taxes
that are allocated to Seller pursuant to subsection 6.1(d) shall be as
determined by the CPA Firm. The fees and expenses of the CPA Firm shall be paid
one-half by Buyer and one-half by Parent. Not later than (1) five Business Days
before the due date for the payment of Income Taxes with respect to such Income
Tax Return or (2) in the event of a dispute, five Business Days after notice to
Parent of the resolution thereof, Parent shall pay to Buyer an amount equal to
the Income Taxes shown on the Tax Statement as being allocable to Parent
pursuant to subsection 6.1(d) or in such notice (as the case may be).
(g) From and after the Closing, Parent and Buyer shall cooperate
fully with each other and make available or cause to be made available to each
other for consultation, inspection and copying (at such other party's expense)
in a timely fashion such personnel, tax data, Tax Returns and filings, files,
books, records, documents, financial, technical and operating data,
40
computer records and other information as may be reasonably required (i) for the
preparation by Buyer or Parent of any Tax Returns, elections, consents or
certificates required to be prepared and filed by Buyer or Parent or (ii) in
connection with any audit or proceeding relating to Taxes relating to the
Transferred Assets or the Business for which Buyer or Parent is responsible.
(h) Parent and Buyer shall provide to each other, and Buyer shall
cause each of the Companies to provide to Parent, full access, at any reasonable
time and from time to time, at the business location at which the Books and
Records are maintained, after the Closing Date, to such Tax data of each of the
Companies as Parent or Buyer, as the case may be, may from time to time
reasonably request and will furnish, and request the independent accountants and
legal counsel of Parent, Buyer or any Company to furnish to Parent or Buyer, as
the case may be, such additional Tax and other information and documents in the
possession of such persons as Parent or Buyer may from time to time reasonably
request.
(i) Any claim for indemnity hereunder may be made at any time prior
to 60 days before the expiration of the applicable Tax statute of limitations
with respect to the relevant taxable period (including all periods of extension,
whether automatic or permissive).
(j) The party seeking indemnification or other payment pursuant to
this Section 6.1 (Parent or Buyer, as the case may be) shall give the other
party written notice of claim for indemnification or payment, which notice shall
include a calculation of the amount of the requested indemnity or other payment
and shall furnish to the other party copies of all books, records and other
information reasonably requested by the other party to the extent necessary to
substantiate such claim and verify the amount thereof. If reasonably necessary
in order to make or substantiate a claim (or to determine if a claim should be
made), each party shall be permitted access to the other party's books, records
and other information in connection therewith. The party requested to make any
indemnity or other payment pursuant to this Section 6.1 shall deliver to the
party requesting payment, within 30 days after receiving both the foregoing
notice and all books, records and other information reasonably requested by it,
a detailed statement describing its objections (if any) thereto. The parties
shall use reasonable efforts to resolve any such objections, but if they do not
obtain a final resolution within 30 days (or any longer period mutually agreed
to by the parties) after the party requesting indemnification (or other payment)
has received the statement of objections, the CPA Firm shall resolve any
remaining objections.
6.2 Tax Related Adjustments. (a) If Buyer or any of its Affiliates
-----------------------
(including, with respect to taxable periods (or portions thereof) after the
Closing Date, the Companies) realizes
41
during any taxable period a Tax benefit which is attributable to any liability
for Income Taxes (or the adjustment or other event or circumstance giving rise
thereto) for which Buyer has been indemnified under subsection 6.1(b) or for
which Parent is otherwise responsible pursuant to the terms of this Agreement,
Buyer shall notify Parent as to any such Tax Benefit within 60 days from the
date Buyer receives notice of such refund or actual reduction in Taxes. If any
amount is owed by Parent to Buyer and is not in dispute, at Buyer's election,
Buyer will describe in said notice its application of such amount owed by
Parent, as an offset against such net Tax benefit owed by Buyer to Parent. Buyer
shall pay to Parent with such notice, the amount of the net Tax benefit, reduced
by any such amount owed by Parent which is not in dispute. If Parent disagrees
with Buyer's offset, Parent and Buyer will resolve the dispute in accordance
with Section 6.1(j).
(b) Except as provided in subsection 6.2(c), Buyer shall pay to Parent
any refund of Taxes received after the Closing Date by Buyer or any of its
Affiliates (including the Companies) relating to Taxes imposed on or with
respect to Parent or any of its Affiliates (including the Companies) with
respect to any taxable period (or portion thereof) ending on or prior to the
Closing Date, as follows. Buyer shall notify Parent of such refund within 60
days from the date Buyer receives notice of such refund. If any amount is owed
by Parent to Buyer and is not in dispute, at Buyer's election, Buyer will
describe in said notice its application of such amount owed by Parent, as an
offset against such refund owed by Buyer to Parent. Buyer shall pay to Parent
with such notice, the amount of the refund (including interest received
thereon), reduced by any such amount owed by Parent which is not in dispute. If
Parent disagrees with Buyer's offset, Parent and Buyer will resolve the dispute
in accordance with Section 6.1(j). Buyer shall, if Parent requests, cause the
relevant entity to file for and obtain any refunds or equivalent amounts to
which Parent is entitled under this subsection 6.2(b). Buyer shall permit Parent
to control the prosecution of any such refund claim, and shall cause the
relevant entity to authorize by appropriate powers of attorney such Persons as
Parent shall designate to represent such entity with respect to such refund
claim.
(c) Buyer agrees that it shall not cause or permit any Company to
carry back to any taxable period ending on or prior to the Closing Date any net
operating loss, loss from operations or other Tax attribute as to which an
election may be made, and pursuant to the foregoing, Buyer agrees to make or
cause to be made such election (and all similar elections) and further agrees
that Parent has no obligation under this Agreement to return or remit any refund
or other Tax benefit attributable to a breach by Buyer of the foregoing
undertaking.
42
ARTICLE VII
-----------
CONDITIONS TO CLOSING
---------------------
7.1 Conditions to the Obligations of Buyer and Parent. The
-------------------------------------------------
obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver) prior to the Closing of the following conditions:
(a) HSR Act. All filings under the HSR Act shall have been made and
-------
any required waiting period under such laws (including any extensions
thereof obtained by request or other action of any governmental authority)
applicable to the transactions contemplated hereby shall have expired or
been earlier terminated.
(b) No Injunctions. No court or governmental authority of competent
--------------
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, non-appealable judgment, decree, injunction
or other order which is in effect on the Closing Date and prohibits the
consummation of the Closing.
(c) Consents and Approvals. All Required Approvals (other than those
----------------------
related to CPM China JV) shall have been obtained.
7.2 Conditions to the Obligations of Buyer. The obligation of Buyer
--------------------------------------
to effect the Closing is subject to the satisfaction (or waiver) prior to the
Closing, of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Parent contained herein shall have been true and correct in
all material respects when made and shall be true and correct in all
material respects as of the Closing (in all cases without giving effect to
any updated Schedules delivered pursuant to Section 2.11), as if made as of
the Closing (except that representations and warranties that are made as of
a specific date need be true in all material respects only as of such
date), and Buyer shall have received certificates to such effect dated the
Closing Date and executed by a duly authorized officer of Parent.
(b) Covenants. The covenants and agreements of Parent to be
---------
performed on or prior to the Closing shall have been duly performed in all
material respects, and Buyer shall have received certificates to such
effect dated the Closing Date and executed by a duly authorized officer of
Parent.
(c) Legal Opinions. Buyer shall have received the opinions of
--------------
Parent's counsel, dated as of the Closing Date, addressed to Buyer in form
and substance reasonably satisfactory to Buyer.
43
(d) Ancillary Agreements. Parent, Sellers, or Affiliates of Sellers, as
--------------------
the case may be, shall have executed and delivered the Ancillary
Agreements.
(e) No Material Adverse Change. Since the date of the Balance Sheet,
--------------------------
PED shall not have suffered (i) a Material Adverse Change, other than
changes resulting from a change in general economic or market conditions or
matters affecting the feed processing equipment industry generally, or (ii)
any material casualty loss affecting the Transferred Assets or the
Transferred Business.
7.3 Conditions to the Obligations of Parent. The obligation of
---------------------------------------
Parent to effect the Closing is subject to the satisfaction (or waiver) prior to
the Closing of the following conditions:
(a) Representations and Warranties. The representations and
------------------------------
warranties of Buyer contained herein shall have been true and correct in
all material respects when made and shall be true and correct in all
material respects as of the Closing, as if made as of the Closing (except
that representations and warranties that are made as of a specific date
need be true in all material respects only as of such date), and Parent
shall have received a certificate to such effect dated the Closing Date and
executed by a duly authorized officer of Buyer.
(b) Covenants. The covenants and agreements of Buyer to be performed
---------
on or prior to the Closing shall have been duly performed in all material
respects, and Parent shall have received a certificate to such effect dated
the Closing Date and executed by a duly authorized officer of Buyer.
(c) Legal Opinions. Parent shall have received the opinions of the
--------------
Buyer's counsel, dated as of the Closing Date, addressed to Parent in form
and substance reasonably satisfactory to Parent.
(d) Ancillary Agreements. Buyer shall have executed and delivered
--------------------
the Ancillary Agreements.
ARTICLE VIII
------------
SURVIVAL: INDEMNIFICATION
-------------------------
8.1 Survival. The representations and warranties contained in this
--------
Agreement shall survive the Closing only for the applicable period set forth in
this Section 8.1. All of the representations and warranties of Parent contained
in this Agreement and all claims and causes of action with respect thereto shall
terminate upon expiration of 18 months after the Closing Date, except that (i)
the representations and warranties in Sections 3.1 through 3.5 and Section 3.8
(to the extent
44
relating to Taxes) shall have no expiration date, (ii) the representations and
warranties in subsection 3.6(a) (to the extent relating to Income Taxes) and
Section 3.11 shall not survive the Closing and (iii) the representations and
warranties contained in Section 3.12(c) shall expire as to products sold prior
to the Closing Date upon the expiration of the statute of limitations applicable
to infringement actions with respect to such products. The representations and
warranties of Buyer contained in this Agreement shall have no expiration date.
Notwithstanding the foregoing, in the event notice of any claim for
indemnification under Section 8.2 or subsection 8.3(a)(i) is given (within the
meaning of Section 10.1) within the applicable survival period, the
representations and warranties that are the subject of such indemnification
claim shall survive until such time as such claim is finally resolved.
8.2 Indemnification by Buyer. Buyer hereby agrees that it shall
------------------------
indemnify, defend and hold harmless Sellers, their Affiliates and, if
applicable, their respective directors, officers, shareholders, partners,
attorneys, accountants, agents and employees and their heirs, successors and
assigns (the "Seller Indemnified Parties") from, against and in respect of any
--------------------------
damages, claims, losses, charges, actions, suits, proceedings, deficiencies,
Taxes, interest, penalties, and reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees, removal costs, remediation
costs, closure costs, fines, penalties and expenses of investigation and ongoing
monitoring) (collectively, the "Losses") imposed on, sustained, incurred or
------
suffered by or asserted against any of the Seller Indemnified Parties, directly
or indirectly, relating to or arising out of (i) any breach of any
representation or warranty made by Buyer contained in this Agreement for the
period such representation or warranty survives, (ii) the Assumed Liabilities,
and (iii) the breach of any covenant or agreement of Buyer contained in this
Agreement, except in all cases to the extent any such matter is specifically
addressed in Article .
8.3 Indemnification by Parent. (a) Parent hereby agrees that it
-------------------------
shall indemnify, defend and hold harmless Buyer, its Affiliates and, if
applicable, their respective directors, officers, shareholders, partners,
attorneys, accountants, agents and employees (other than the Employees) and
their heirs, successors and assigns (the "Buyer Indemnified Parties" and,
-------------------------
collectively with the Seller Indemnified Parties, the "Indemnified Parties")
-------------------
from, against and in respect of any Losses imposed on, sustained, incurred or
suffered by or asserted against any of the Buyer Indemnified Parties, directly
or indirectly, relating to or arising out of (i) subject to the provisions of
subsection 8.3(b), any breach of any representation or warranty made by Seller
contained in this Agreement for the period such representation or warranty
survives, (ii) all Excluded Liabilities and all liabilities resulting from (x)
the existence or imposition of any obligation under any Environmental Law to
remediate or to contribute or pay any amount towards
45
remediation at any property to which the Companies disposed or arranged for the
disposal of Hazardous Substances prior to the Closing, (y) contamination
existing on the Closing Date in violation of current applicable law by Hazardous
Substances at Company Owned Real Property, Company Leased Real Property or
Transferred Leased Real Property and (z) any Environmental Claims (including the
matter disclosed in Schedule 3.11) pending as of the Closing, but in the case of
clauses (x) and (y), solely to the extent claimed or alleged by a government
agency or other Person prior to the third anniversary of the Closing Date; and
(iii) subject to the provisions of subsection 8.3(b), the breach of any covenant
or agreement of Seller contained in this Agreement, except in all cases to the
extent any such matter is specifically addressed in Article VI. Buyer
acknowledges that this Article VIII constitutes Buyer's sole remedy with respect
to any of the matters referred to herein including, without limitation, any
Losses or liability under any Environmental Law or with respect to any Hazardous
Substance, and expressly waives any other rights or causes of action, including
under any Environmental Law or with respect to any claim involving the presence
of or exposure to any Hazardous Substance.
(b) Parent shall not be liable to the Buyer Indemnified Parties for
any Losses with respect to the matters contained in subsection 8.3(a)(i) (other
than with respect to Section 3.8) and subsection 8.3 (a)(ii) (other than items
described in subclause (z) thereof) except to the extent the Losses therefrom
exceed an aggregate amount equal to $400,000 and then only for all such Losses
in excess thereof up to an aggregate amount equal to $36,000,000.
8.4 Indemnification Procedures. With respect to third-party claims,
--------------------------
all claims for indemnification by any Indemnified Party under this Article VIII
shall be asserted and resolved as set forth in this Section 8.4. In the event
that any written claim or demand for which Buyer or Parent, as the case may be
(an "Indemnifying Party"), would be liable to any Indemnified Party hereunder is
------------------
asserted against or sought to be collected from any Indemnified Party by a third
party, such Indemnified Party shall promptly, but in no event more than 15 days
following such Indemnified Party's receipt of such claim or demand, notify the
Indemnifying Party of such claim or demand and the amount or the estimated
amount thereof to the extent then feasible (which estimate shall not be
conclusive of the final amount of such claim or demand) (the "Claim Notice").
------------
The Indemnifying Party shall have 90 days from the personal delivery or mailing
of the Claim Notice (the "Notice Period") to notify the Indemnified Party (a)
-------------
whether or not the Indemnifying Party disputes the liability of the Indemnifying
Party to the Indemnified Party hereunder with respect to such claim or demand
and (b) whether or not it desires to defend the Indemnified Party against such
claim or demand. All costs and expenses incurred by the Indemnifying Party in
defending such claim or demand shall be a liability of, and shall be paid by,
the Indemnifying Party;
46
provided, however, that the amount of such costs and expenses that shall be a
- -------- -------
liability of the Indemnifying Party hereunder shall be subject to the
limitations set forth in subsection 8.3(b). Except as hereinafter provided, in
the event that the Indemnifying Party notifies the Indemnified Party within the
Notice Period that it desires to defend the Indemnified Party against such claim
or demand, the Indemnifying Party shall have the right to defend the Indemnified
Party by appropriate proceedings and shall have the sole power to direct and
control such defense. If any Indemnified Party desires to participate in any
such defense, it may do so at its sole cost and expense. The Indemnified Party
shall not settle a claim or demand without the consent of the Indemnifying
Party. The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party, settle, compromise or offer to settle or compromise any
such claim or demand on a basis which would result in the imposition of a
consent order, injunction or decree which would restrict the future activity or
conduct of the Indemnified Party or any Subsidiary or Affiliate thereof. If the
Indemnifying Party elects not to defend the Indemnified Party against such claim
or demand, whether by not giving the Indemnified Party timely notice as provided
above or otherwise, then the amount of any such claim or demand or, if the same
be contested by the Indemnified Party, then that portion thereof as to which
such defense is unsuccessful (and the reasonable costs and expenses pertaining
to such defense), shall be the liability of the Indemnifying Party hereunder,
subject to the limitations set forth in subsection 8.3(b). To the extent the
Indemnifying Party shall direct, control or participate in the defense or
settlement of any third-party claim or demand, the Indemnified Party will give
the Indemnifying Party and its counsel access to, during normal business hours,
the relevant business records and other documents, and shall permit them to
consult with the employees and counsel of the Indemnified Party. The Indemnified
Party shall use its best efforts in the defense of all such claims.
8.5 Characterization of Indemnification Payments. All amounts paid
--------------------------------------------
by Buyer or Parent, as the case may be, under Article II (other than subsection
2.7(b)), Article V, Article VI or this Article VIII shall be treated as
adjustments to the Purchase Price for all Tax purposes.
8.6 Computation of Losses Subject to Indemnification. The amount of
------------------------------------------------
any Loss for which indemnification is provided under this Article VIII shall (i)
be computed net of any insurance proceeds or Tax benefits (determined based upon
the highest statutory rate) received or receivable by the Indemnified Party in
connection with such Loss and (ii) exclude consequential damages.
47
ARTICLE IX
----------
TERMINATION
-----------
9.1 Termination. This Agreement may be terminated at any time prior
-----------
to the Closing:
(a) by agreement of Buyer and Parent;
(b) by either Buyer or Parent by giving written notice of such termination
to the other, if the Closing shall not have occurred on or prior to
November 11, 1996; provided that the right to terminate this Agreement
-------- ----
under this subsection 9.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the
cause of, or resulted in, the failure of the Closing to occur on or before
such date; or
(c) by either Buyer or Parent if there shall be in effect any law or
regulation that prohibits the consummation of the Closing or if
consummation of the Closing would violate any non-appealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction; or
(d) by Parent if, as a result of action or inaction by the Buyer, the
Closing shall not have occurred on or prior to the date that is 10 Business
Days following the date on which all of the conditions to Closing set forth
in Section 7.1 and 7.2 are satisfied or waived; or
(e) by Buyer if, as a result of action or inaction by the Parent, the
Closing shall not have occurred on or prior to the date that is ten
Business Days following the date on which all of the conditions to Closing
set forth in Sections 7.1 and 7.3 are satisfied or waived.
9.2 Effect of Termination. In the event of the termination of this
---------------------
Agreement in accordance with Section 9.1, this Agreement shall thereafter become
void and have no effect, and no party hereto shall have any liability to the
other party hereto or their respective Affiliates, directors, officers or
employees, except for the obligations of the parties hereto contained in this
Section 9.2 and in Sections 10.1, 10.9, 10.10, 10.11 and 10.12, and except that
nothing herein will relieve any party from liability for any breach of this
Agreement prior to such termination.
ARTICLE X
---------
MISCELLANEOUS
-------------
10.1 Notices. All notices or other communications hereunder shall be
-------
deemed to have been duly given and made if in writing and if served by personal
delivery upon the party for whom it is intended, if delivered by registered or
certified mail, return receipt requested, or by a national courier service,
48
or if sent by facsimile transmission; provided that the facsimile transmission
is promptly confirmed by telephone confirmation thereof, to the person at the
address set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
To Buyer: Gencor Industries, Inc.
5201 North Orange Blossom Trail
Orlando, Florida 32810
Attn: John E. Elliott
Telephone: (407) 290-6000
Fax: (407) 299-8241
with a copy to:
Greenberg Traurig Hoffman Lipoff Rosen & Quentel, P.A.
111 North Orange Avenue
Suite 2050
Orlando, Florida 32801
Attn: Randolph H. Fields, Esq.
Telephone: (407) 420-1000
Fax: (407) 420-5909
To Parent: Ingersoll-Rand Company
200 Chestnut Ridge Road
Woodcliff Lake, New Jersey 07675
Attn: Patricia Nachtigal, Esq.
Telephone: (201) 573-0123
Fax: (201) 573-3516
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017-3954
Attn: James M. Cotter, Esq.
Telephone: (212) 455-2000
Fax: (212) 455-2502
10.2 Amendment; Waiver. Any provision of this Agreement may be
-----------------
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Buyer and Parent, or in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
49
10.3 Binding Effect; No Assignment. (a) This Agreement shall be
-----------------------------
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns and legal
representatives.
(b) Neither this Agreement, nor any right hereunder, may be assigned
by any party without the written consent of the other parties hereto.
10.4 No Third-Party Beneficiaries. Nothing in this Agreement is
----------------------------
intended or shall be construed to give any Person, other than the parties
hereto, any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision contained herein.
10.5 Counterparts. This Agreement may be executed by the parties
------------
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and which together shall constitute one and
the same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all of the parties hereto.
10.6 Entire Agreement. This Agreement (including all Schedules and
----------------
Annexes hereto and the Ancillary Agreements) contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings, oral or written, with
respect to such matters, except for the Confidentiality Agreement which will
remain in full force and effect for the term specified therein.
10.7 Fulfillment of Obligations. Any obligation of any party to any
--------------------------
other party under this Agreement or any of the Ancillary Agreements, which
obligation is performed, satisfied or fulfilled by an Affiliate of such party,
shall be deemed to have been performed, satisfied or fulfilled by such party per
such action by such Affiliate.
10.8 Parties in Interest. This Agreement shall inure to the benefit
-------------------
of and be binding upon the parties hereto and their respective successors and
permitted assigns. Nothing in this Agreement, express or implied, is intended
to confer upon any Person other than Buyer, Parent, the Indemnified Parties or
their respective successors or permitted assigns, any rights or remedies under
or by reason of this Agreement.
10.9 Public Disclosure. Notwithstanding anything herein to the
-----------------
contrary, each of the parties to this Agreement hereby agrees with the other
party or parties hereto that, except as may be required to comply with the
requirements of any applicable Laws and the rules and regulations of each stock
exchange upon which the securities of one of the parties (or its Affiliate) is
listed (in which case the disclosing party shall use its reasonable best efforts
to advise the other party or
50
parties prior to making such disclosure), no press release or similar public
announcement or communication shall, whether prior to or subsequent to the
Closing, be made or caused to be made concerning the execution or performance of
this Agreement unless specifically approved in advance by all parties hereto.
Subject to the prior sentence, Parent and Buyer shall cooperate with each other
in the development and distribution of all news releases and other public
announcements with respect to this Agreement or any of the transactions
contemplated hereby.
10.10 Return of Information. If for any reason whatsoever the
---------------------
transactions contemplated by this Agreement are not consummated, Buyer shall
promptly return to Parent all Books and Records furnished by Sellers, PED or any
of their respective agents, employees or representatives (including all copies,
if any, thereof), and shall not (except as required by law) use or disclose the
information contained in such Books and Records for any purpose or make such
information available to any other entity or person.
10.11 Expenses. Except as otherwise expressly provided in this
--------
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be borne by the party incurring
such expenses.
10.12 Schedules. The disclosure of any matter in any schedule to
---------
this Agreement shall be deemed to be a disclosure for all purposes of this
Agreement to which such matter could reasonably be expected to be pertinent, but
shall expressly not be deemed to constitute an admission by Buyer or Parent or
to otherwise imply that any such matter is material for the purposes of this
Agreement.
10.13 Bulk Transfer Laws. Buyer acknowledges that Sellers have not
------------------
taken, and do not intend to take, any action required to comply with any
applicable bulk sale or bulk transfer laws or similar laws and Buyer waives the
right to any claim, suit or action with respect to, or Losses arising from, such
non-compliance.
10.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM.
-------------------------------------------------------------
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS
OF THE STATE OF NEW YORK. EACH PARTY HERETO AGREES THAT IT SHALL BRING ANY
ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS AGREEMENT,
WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN THE UNITED
STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE SUPREME COURT
OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK (THE "CHOSEN COURTS") AND
-------------
(I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN COURTS, (II)
WAIVES ANY OBJECTION TO LAYING VENUE IN ANY
51
SUCH ACTION OR PROCEEDING IN THE CHOSEN COURTS AND (III) WAIVES ANY OBJECTION
THAT THE CHOSEN COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION
OVER ANY PARTY HERETO.
10.15 Headings. The heading references herein and the table of
--------
contents hereto are for convenience purposes only, do not constitute a part of
this Agreement and shall not be deemed to limit or affect any of the provisions
hereof.
10.16 Severability. The provisions of this Agreement shall be deemed
------------
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof. If any
provision of this Agreement, or the application thereof to any Person or any
circumstance, is invalid or unenforceable, (a) a suitable and equitable
provision shall be substituted therefor in order to carry out, so far as may be
valid and enforceable, the intent and purpose of such invalid or unenforceable
provision and (b) the remainder of this Agreement and the application of such
provision to other Persons or circumstances shall not be affected by such
invalidity or unenforceability, nor shall such invalidity or unenforceability
affect the validity or enforceability of such provision, or the application
thereof, in any other jurisdiction.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.
INGERSOLL-RAND COMPANY
By: /s/ Ronald Heller
___________________________
Name: Ronald Heller
Title: Secretary
GENCOR INDUSTRIES, INC.
By: /s/ John E. Elliott
___________________________
Name: John E. Elliott
Title: Executive Vice President