1
Exhibit 10.1
ASSET PURCHASE AGREEMENT
AMONG
STA-RITE INDUSTRIES, INC.
AND
THE RIVAL COMPANY
AND
HOLMES PRODUCTS CORP.
2
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
1. PURCHASE AND SALE OF ASSETS.............................................................................1
1.1. Definition of "Business"...................................................................1
1.2. Assets to be Transferred...................................................................1
1.3. Excluded Assets............................................................................3
2. ASSUMPTION OF LIABILITIES...............................................................................3
2.1. Liabilities to be Assumed..................................................................3
2.2. Liabilities Not to be Assumed..............................................................6
3. PURCHASE PRICE -PAYMENT.................................................................................7
3.1. Purchase Price.............................................................................7
3.2. Payment of Purchase Price..................................................................7
3.3. Determination of Final Inventory Value.....................................................8
3.4. Prorations.................................................................................8
3.5. Allocation of Purchase Price...............................................................9
4. REPRESENTATIONS AND WARRANTIES OF COMPANY...............................................................9
4.1. Corporate..................................................................................9
4.2. Authority..................................................................................9
4.3. No Violation..............................................................................10
4.4. Financial Statements and Business Financial Information...................................10
4.5. Tax Matters...............................................................................11
4.6. Inventory.................................................................................11
4.7. Absence of Certain Changes................................................................11
4.8. Absence of Undisclosed Liabilities........................................................12
4.9. No Litigation.............................................................................12
4.10. Licenses and Permits......................................................................12
4.11. Title to and Condition of Purchased Assets................................................12
4.12. Contracts and Commitments.................................................................13
4.13. Intellectual Property.....................................................................14
4.14. Major Customers and Suppliers.............................................................14
4.15. Product Warranty and Product Liability....................................................15
4.16. Affiliates' Relationships to Company......................................................15
4.17. Disclosure................................................................................15
5. REPRESENTATIONS AND WARRANTIES OF BUYER................................................................16
5.1. Corporate.................................................................................16
5.2. Authority.................................................................................16
5.3. No Brokers or Finders.....................................................................16
5.4. Disclosure................................................................................16
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6. OTHER MATTERS .........................................................................................17
6.1. Noncompetition; Confidentiality...........................................................17
6.2. HSR Act Filings...........................................................................18
6.3. Use of Name...............................................................................19
6.4. Sales Tax Matters.........................................................................19
6.5. Access to Information and Records.........................................................19
6.6. Bulk Sales Compliance.....................................................................19
6.7. Identification of Pump Products Following Closing.........................................19
6.8. Termination of Sales Representative Agreements............................................19
7. PRE-CLOSING PERIOD.....................................................................................20
7.1 Conduct of Business Pending the Closing...................................................20
7.2 Transitional Services Agreement...........................................................20
7.3 Completion of Due Diligence Investigation.................................................21
7.4 Updates to Disclosure Schedules...........................................................22
7.5. Consummation of Closing...................................................................22
7.6. Confidentially Pending Closing............................................................22
8. INDEMNIFICATION........................................................................................23
8.1. By Company and Shareholder................................................................23
8.2. By Buyer..................................................................................23
8.3. Indemnification of Third-Party Claims.....................................................23
8.4. Limitations on Indemnification............................................................24
9. CLOSING ..........................................................................................26
9.1. Documents to be Delivered by Company......................................................26
9.2. Documents to be Delivered by Buyer........................................................27
10. RESOLUTION OF DISPUTES.................................................................................28
10.1. Arbitration...............................................................................28
10.2. Arbitrators...............................................................................28
10.3. Procedures; No Appeal.....................................................................28
10.4. Authority.................................................................................28
10.5. Entry of Judgment.........................................................................29
10.6. Confidentiality...........................................................................29
10.7. Continued Performance.....................................................................29
10.8. Tolling...................................................................................29
11. MISCELLANEOUS .........................................................................................29
11.1. Further Assurance.........................................................................29
11.2. Disclosures and Announcements.............................................................29
11.3. Assignment; Parties in Interest...........................................................30
11.4. Law Governing Agreement...................................................................30
11.5. Amendment and Modification................................................................30
11.6. Notice....................................................................................30
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11.7. Expenses..................................................................................31
11.8. Termination...............................................................................32
11.9. Entire Agreement..........................................................................33
11.10. Counterparts..............................................................................33
11.11. Headings..................................................................................33
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated October 1,
1999, by and among Sta-Rite Industries, Inc., a Wisconsin corporation ("Buyer"),
and The Rival Company, a Delaware corporation ("Company") and Holmes Products
Corp., a Massachusetts corporation which is the sole shareholder of the Company
("Shareholder").
RECITALS
A. Company is engaged, through its Simer Pump business
unit, in the design, manufacture, marketing and sale of water systems involving
pumping or drainage, including specifically sump, utility, waterwell and battery
back-up pumps (collectively, "Pump Products"), such business unit being referred
to as "Simer."
B. Buyer desires to purchase from Company, and Company
desires to sell to Buyer, certain of the property, assets and business
relationships of Simer, as set forth herein.
NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows.
1. PURCHASE AND SALE OF ASSETS
1.1. Definition of "Business".
As used herein, "Business" shall mean and include, without
limitation and except as otherwise specifically provided herein, the Company's
operations related solely to Simer on the date hereof and the Purchased Assets
(as hereinafter defined).
1.2. Assets to be Transferred.
Subject to the terms and conditions of this Agreement, on the
Closing Date (as hereinafter defined) Company shall sell, transfer, convey,
assign, and deliver to Buyer (or upon Buyer's request, to one or more
wholly-owned subsidiaries of Buyer as designated by Buyer), and Buyer shall
purchase and accept, certain of the assets, property and business relationships
of Simer owned by the Company and, used, held for use or acquired or developed
for use in the Business or developed in the course of conducting the Business or
by persons employed in the Business (collectively the "Purchased Assets"). The
Purchased Assets shall be limited to the following:
1.2.(a) Personal Property. Those certain fixed assets
described on Schedule 1.2.(a) and all fixed assets of the Company
solely or predominantly related to the Business.
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1.2.(b) Inventory. All inventories of raw materials and
work-in-process described by part number or material type on Schedule
1.2(b)(i) and finished goods described by part number or product code
on Schedule 1.2(b)(ii) and Schedule 1.2(b)(iii), in each case (i) held
by the Company at any location on the Effective Date in connection with
the Business or (ii) converted by the Company from work-in-process or
finished goods identified on Schedule 1.2(b)(iv) either before the
Effective Date or during the term of the "Transitional Services
Agreement" (as hereinafter defined), and such other raw materials,
work-in-process and finished goods held by the Company in connection
with the Business on the Effective Date having a part number, material
type or product code not reflected on Schedule 1.2(b)(i), 1.2(b)(ii),
1.2(b)(iii) or 1.3(e) (the "Unspecified Inventory") but which the
parties mutually agree, using the methodologies utilized in determining
categories of "Inventory" and "Excluded Inventory" (as hereinafter
defined), should be included with the Purchased Assets within the
definition of "Inventory" hereunder (collectively the "Inventory").
1.2.(c) Intellectual Property. All goodwill associated with
Simer products and all Simer Intellectual Property (as hereinafter
defined). For purposes of this Agreement, "Intellectual Property" shall
mean patents, trademarks (whether or not registered), brand names,
trade names, product names, copyrights, trade secrets or other
proprietary ideas, inventions, developments, or designs subject to any
form of legal protection. For purposes of this Agreement, "Simer
Intellectual Property" shall mean all right, title and interest in and
to all Intellectual Property associated with Simer products and
necessary to conduct the Business, including (i) the name "Simer Pump";
(ii) the property listed on Schedule 4.13; and (iii) all claims for
infringement of any such properties or names.
1.2.(d) Contracts. All the Company's rights in, to and under
all purchase orders and sales orders of the Business relating solely to
Simer customer and supplier relationships, including all customer
purchase orders associated with Simer and the agreements, arrangements
and understandings, whether oral or in writing, between Company and the
customers listed on Schedule 4.12(c) hereof (hereinafter "Contracts").
To the extent that any Contract for which assignment to Buyer as
provided herein is not assignable without the consent of another party,
this Agreement shall not constitute an assignment or an attempted
assignment thereof if such assignment or attempted assignment would
constitute a breach thereof. Company and Buyer agree to use their
reasonable best efforts (without any requirement on the part of Buyer
to pay any money or agree to any change in the terms of any such
Contract) to obtain the consent of such other party to the assignment
of any such Contract to Buyer in all cases in which such consent is or
may be required for such assignment. If any such consent shall not be
obtained, Company agrees to cooperate with Buyer for a reasonable time
period after the Closing Date and in any reasonable arrangement
designed to provide for Buyer the benefits intended to be assigned to
Buyer under the relevant Contract, including enforcement at the cost
and for the account of Buyer of any and all rights of Company against
the other party thereto arising out of the breach or cancellation
thereof by such other party or otherwise. If and to the extent that
such arrangement
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cannot be made, Buyer, upon notice to Company, shall have no obligation
pursuant to Section 2.1 or otherwise with respect to any such Contract
and any such Contract shall not be deemed to be a Purchased Asset
hereunder.
1.2.(e) Literature. All sales literature, promotional
literature, catalogs, marketing materials and similar materials
associated with Simer products.
1.2.(f) Records and Files. All records, files, invoices,
customer lists, blueprints, specifications, designs, drawings,
accounting records, business records, and operating data relating
solely to Simer products and related to or necessary for Buyer to
conduct the Business.
1.3. Excluded Assets.
Company shall retain all of its rights, claims and assets not
described in Section 1.2. Without limiting the generality of the foregoing, and
any contrary provisions of Section 1.2 notwithstanding, Company shall not sell,
transfer, assign, convey or deliver to Buyer, and Buyer will not purchase or
accept the following assets of Company:
1.3.(a) Cash and Cash Equivalents. All cash and cash
equivalents of the Business.
1.3.(b) Consideration. The consideration delivered by Buyer to
Company pursuant to this Agreement.
1.3.(c) Tax Credits and Records. Federal, state and local
income and franchise tax credits and tax refund claims and associated
returns and records which relate to the Purchased Assets. Buyer shall
have reasonable access to such records and may make excerpts therefrom
and copies thereof but only to the extent such records relate to the
Purchased Assets.
1.3.(d) Accounts Receivable. Any accounts receivable of the
Business.
1.3.(e) Excluded Inventory. All inventories of raw materials,
work-in-process and finished goods described on Schedule 1.3.(e) and
any Unspecified Inventory not included in Inventory (collectively the
"Excluded Inventory"). If an item appears on both Schedule 1.3(e) and
another Schedule, Schedule 1.3(e) shall control.
2. ASSUMPTION OF LIABILITIES
2.1. Liabilities to be Assumed.
As used in this Agreement, the term "Liability" shall mean and
include any direct or indirect indebtedness, guaranty, endorsement, claim, loss,
damage, deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, liquidated or unliquidated,
secured or unsecured. Subject to the terms and conditions of this Agreement, on
the Closing Date, Buyer shall assume and agree to perform
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and discharge the following, and only the following, Liabilities of Company
(collectively the "Assumed Liabilities"):
2.1.(a) Contractual Liabilities. Company's Liabilities arising
from and after the Closing Date under and pursuant to all Contracts
described in Section 1.2.(d) above and under the agreements,
arrangements and understandings, whether oral or in writing, between
the Company and the parties referenced on Schedule 4.14.(c) and
identified with an asterisk on such schedule (the "Assumed Contracts"),
including, without limitation, any Liability arising from or relating
to any contract termination, whether terminated by Company or Buyer.
2.1.(b) Liabilities Under Permits and Licenses. Company's
Liabilities arising from and after the Closing Date under any permits
or licenses described in Section 4.10 and assigned to Buyer at the
Closing.
2.1.(c) Post-Closing Product Liabilities. All Liabilities
arising from or relating to the manufacture, supply, marketing and
sale, product warranty and product liability of all Post-Closing Pump
Products (as defined in Section 6.7 below), including all products
manufactured pursuant to the Transitional Services Agreement, all
products manufactured by Buyer incorporating components or parts
manufactured by Company, and all commissions payable to sales
representatives for sales of Pump Products following the Effective
Date.
2.1.(d) Post-Closing Warranty Claims. Upon Closing, Buyer
shall assume responsibility for administering customer and consumer
warranty claims in relation to Pump Products manufactured by Company
prior to the Effective Date ("Pre-Closing Pump Products") which
represent a liability retained by Company under Section 2.2 ("Warranty
Claims"). Subject to the provisions of this Section 2.1(d),
administration of Warranty Claims shall include all matters relating to
the verification, processing and payment of customer and consumer
claims, and the destruction and disposal of Pump Products as to which a
Warranty Claim has been made in accordance with the provisions of this
Section 2.1(d). The Parties' respective obligations relating to
Warranty Claims shall be divided into three categories:
(i) Initial Warranty Period. From the Effective Date
through and including February 15, 2000 (the "Initial Warranty
Period"), Buyer shall administer Warranty Claims in the same
manner as they were administered by Company prior to the
Closing. Company shall reimburse Buyer for one hundred percent
(100%) of all Warranty Claims "Received" (as defined below)
during the Initial Warranty Period.
(ii) Customer Return Claims. Following the Initial
Warranty Period, Buyer shall cause all customers and consumers
other than Ace Hardware Corp. and Tru*Serve Corporation (the
"Return Customers") to return to Buyer's designated facility
all Pre-Closing Pump Products with respect to which a Warranty
Claim is being made ("Warranty Claim Products"). Buyer shall
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retain any Warranty Claim Products with respect to which it
seeks reimbursement from Company in a designated area. On each
"Inspection Day" (as defined below) the Company shall inspect
the Warranty Claim Products received by Buyer through that
date and ascertain which are defective, in accordance with
testing procedures and criteria that are standard and
customary within the industry. Company shall reimburse Buyer
for (A) all Warranty Claims relating to Warranty Claim
Products determined to be defective, (B) all shipping and
handling charges incurred by Buyer in connection with Return
Customers' return of Warranty Claim Products and (C) Buyer's
cost for any personnel or equipment utilized by Company in
connection with its testing of Warranty Claim Products. If
Company fails to inspect Warranty Claim Products on a
designated Inspection Day (unless Buyer has agreed to a
substitute Inspection Day), Company shall be deemed to have
found defective all Warranty Claim Products assembled for
Company's testing through such Inspection Day.
(iii) Percentage Customers. Following the Initial
Warranty Period and with respect to Ace Hardware Corp. and
Tru*Serve Corporation (the "Percentage Customers"), Company
shall reimburse Buyer in accordance with the following
schedule, without reference to whether the Percentage Customer
warranty claim is made for Pump Products for which Company has
warranty liability or for which Buyer has warranty liability
("Percentage Warranty Claims"):
(A) For Percentage Warranty Claims Received
after the Initial Warranty Period and through and
including March 15, 2000, Company shall reimburse
Buyer for seventy five percent (75%) of all
Percentage Warranty Claims;
(B) For Percentage Warranty Claims Received
after March 15, 2000 through and including May 15,
2000, Company shall reimburse Buyer for fifty percent
(50%) of all Percentage Warranty Claims; and
(C) For Percentage Warranty Claims Received
after May 15, 2000 through and including October 15,
2001, Company shall reimburse Buyer for five percent
(5%) of all Percentage Warranty Claims.
Notwithstanding the foregoing, Company shall reimburse Buyer
for all Warranty Claims relating to Pre-Closing Pump Products that have a
product code identified as Excluded Inventory. Furthermore, and notwithstanding
the foregoing, in the event that Buyer reasonably determines that a recall of
Pre-Closing Pump Products from customers and/or consumers, whether or not in
conjunction with any governmental agency, is necessary or commercially
advisable, Buyer shall seek Company's consent to such recall and Company shall
consider such request in a commercially reasonable manner. If Company and Buyer
agree to such a recall, Company shall bear all costs and expenses in connection
therewith. If Company
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and Buyer cannot agree on whether such a recall is required, the parties may
exercise their remedies under this Agreement. If any such recall involves
Pre-Closing Pump Products and Post-Closing Pump Products, Buyer and Company
shall allocate the costs and expenses between themselves based on their pro rata
share of products recalled.
Following Closing and except as may be modified by this
Section 2.1(d), Buyer agrees to administer all warranty claims with respect to
Pump Product, including without limitation Warranty Claims, in substantially the
same manner as it administers warranty claims relating to its own products for
which it bears economic responsibility. Buyer agrees that it shall not take any
actions, or encourage any actions by customers, which could reasonably be
anticipated to result in warranty claims being made with respect to Pump
Products that are not defective, including, without limitation, discontinuing
active manufacture, marketing and sale of Pump Products under the "Simer" name.
Buyer further agrees that during the Initial Warranty Period it shall not make
any material or substantive modifications to Pump Products or the packaging or
terms and conditions of sales and marketing of Pump Products (except that Buyer
may change the packaging of waterwell pumps or sprinkler pumps in a manner that
is not misleading to the customer or consumer). Failure by Buyer to comply with
these covenants shall relieve Company of its reimbursement obligations with
respect to any Warranty Claims affected by such failure unless Buyer can produce
defective Pump Products subject to such Warranty Claims.
For purposes of this Section 2.1(d): the term "Inspection Day"
shall be the periodic dates agreed to by the parties which shall be on or about
the fifteenth day of each month commencing in March 2000 and ending in August
2000, and thereafter on or about the fifteenth day of each November, February,
May and August, provided that there shall be no Inspection Day for a quarter in
which Buyer has no Warranty Claim Products with respect to which it claims
reimbursement under this Section 2.1(d); and the term "Received" means that
Warranty Claim Products or documentary evidence of Warranty Claims have been
actually received by Buyer or Company, or any of their respective affiliates,
agents or representatives.
2.2. Liabilities Not to be Assumed.
Except as and to the extent specifically set forth in Section
2.1, Buyer is not assuming any Liabilities of Company and all such Liabilities
shall be and remain the responsibility of Company, including without limitation
all Liabilities arising from or relating to manufacture, supply, marketing or
sale, product warranty (except as may be limited by Section 2.1(d)) and product
liability of all Pump Products manufactured prior to the Effective Date, and all
commissions payable to sales representatives for sales of Pump Products prior to
the Closing date; provided, however, that with respect to Pump Products
manufactured prior to Closing which have been sold to Buyer under this
Agreement, such Pump Products as sold by Buyer are in the same condition as when
sold by Company to Buyer, and have not been altered or damaged in any way, other
than repackaging of products in a manner which provides substantially similar
consumer information to that provided by Company.
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3. PURCHASE PRICE - PAYMENT
3.1. Purchase Price.
The purchase price (the "Purchase Price") for the Purchased
Assets shall be Twelve Million Four Hundred Thousand Dollars ($12,400,000),
subject to an adjustment based upon the inventory as of the Closing Date (the
"Closing Inventory") (as hereinafter defined).
3.2. Payment of Purchase Price.
The Purchase Price shall be paid by Buyer as follows:
3.2.(a) Assumption of Liabilities. At Closing, Buyer shall
deliver to Company such documents and instruments as are reasonably
required to evidence the assumption of the Assumed Liabilities.
3.2.(b) Cash to Company. At the Closing, Buyer shall deliver
to Company the sum of Twelve Million Four Hundred Thousand Dollars
($12,400,000) (the "Initial Purchase Price") adjusted as follows (the
"Initial Adjusted Purchase Price"):
(i) if the Closing Inventory Value, as defined below,
is less than $5,700,000, such difference shall be deducted
from the Initial Purchase Price; or
(ii) if the Closing Inventory Value is greater than
$5,700,000 such difference shall be added to the Initial
Purchase Price.
3.2.(c) Adjustment of Final Purchase Price. Within five (5)
business days following the "Settlement Date" (as hereinafter defined),
the Initial Adjusted Purchase Price shall be further adjusted as
follows (as so adjusted, the "Final Purchase Price"):
(i) if the Final Inventory Value, as defined below,
is less than the Closing Inventory Value, such difference
shall be paid by Company to Buyer; or
(ii) if the Final Inventory Value is greater than the
Closing Inventory Value, such difference shall be paid by
Buyer to Company.
3.2.(d) Method of Payment. All payments under this Section 3.2
shall be made by wire transfer of immediately available funds to an
account designated by the recipient not less than 48 hours prior to the
time for payment specified herein.
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3.3. Determination of Final Inventory Value.
3.3.(a) Determination of Closing Inventory Value.
A "Closing Inventory" shall be determined on the Closing Date
based upon the Company's book costed stock status inventory records for the
Inventory as of October 1, 1999. The Closing Inventory shall be valued in
accordance with Company's standard cost, as periodically updated consistent with
past practice, except for those items listed on Schedule 1.2(b)(iii) which shall
be valued in accordance with the percentages of standard cost set forth on such
Schedule (the "Closing Inventory Value").
3.3.(b) Determination of Final Inventory Value.
From time to time after the Closing, Buyer shall remove
Inventory from Company's premises to fulfill customer orders and otherwise. No
later than the sixtieth (60th) day (or the next business day if such day is a
Saturday, Sunday or holiday) following the Closing, or such earlier date as
Buyer shall designate (the "Settlement Date"), Buyer shall have removed all
Inventory from Company's premises except Inventory which consists of raw
materials or components Company retains to use in the manufacture of goods for
Buyer under the Transitional Services Agreement (the "Retained Inventory"). All
Inventory, including the Retained Inventory, shall be recorded at the time of
removal from Company's premises but no later than the Settlement Date, and shall
be valued in accordance with Company's standard cost, as periodically updated
consistent with past practice (the "Final Inventory Value"). Company shall
credit the standard cost of any Retained Inventory against invoices for
manufactured goods incorporating such Retained Inventory in accordance with the
Transitional Services Agreement.
3.3.(c) Use of Inventory by Company.
Buyer acknowledges that between the Closing Date and the
Settlement Date, Company may utilize Inventory that consists of raw materials or
work-in-process to manufacture finished goods pursuant to the Transitional
Services Agreement, and may substitute newly acquired or manufactured raw
materials or work-in-process in substitution for such Inventory, which shall be
included in the Final Inventory Value.
3.4. Prorations.
The following prorations relating to the Purchased Assets will
be made as of the Effective Date, with Company liable to the extent such items
relate to any time period up to and including the Effective Date and Buyer
liable to the extent such items relate to periods subsequent to the Effective
Date. The net amount of all such prorations will be settled and paid on or prior
to January 31, 2000:
3.4.(a) Personal property taxes and other taxes, if any, on or
with respect to the Purchased Assets; provided that special assessments
for work actually commenced or levied prior to the date of this
Agreement shall be paid by Company.
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3.4.(b) All other items normally adjusted in connection with
similar transactions, including but not limited to cooperative
advertising and items of a nature described on Schedule 3.4.(b).
Company agrees to furnish Buyer with such documents and other
records as shall be reasonably requested in order to confirm all proration
calculations.
3.5. Allocation of Purchase Price.
The Final Purchase Price (including the assumption by Buyer of
the Assumed Liabilities) shall be allocated among the Purchased Assets for tax
purposes in accordance with Schedule 3.5. Company and Buyer will follow and use
such allocation in all tax returns, filings or other related reports made by
them to any governmental agencies. To the extent that disclosures of this
allocation are required to be made by the parties to the Internal Revenue
Service ("IRS") under the provisions of Section 1060 of the Internal Revenue
Code of 1986, as amended (the "Code") or any regulations thereunder, Buyer and
Company will disclose such reports to the other prior to filing with the IRS.
4. REPRESENTATIONS AND WARRANTIES OF COMPANY
Company makes the following representations and warranties to
Buyer, each of which is true and correct on the date hereof, shall be unaffected
by any investigation heretofore or hereafter made by Buyer, or any knowledge of
Buyer other than as specifically disclosed in the Disclosure Schedule delivered
to Buyer at the time of the execution of this Agreement, and shall survive the
Closing for the applicable period in Section 8.4 (a).
4.1. Corporate.
4.1.(a) Organization. Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware.
4.1.(b) Corporate Power. Company has all requisite corporate
power and authority to own, operate and lease properties in relation to
the Business, to carry on the Business as and where such is now being
conducted, to enter into this Agreement and the other documents and
instruments to be executed and delivered by Company pursuant hereto and
to carry out the transactions contemplated hereby and thereby.
4.2. Authority.
The execution and delivery of this Agreement and the other
documents and instruments to be executed and delivered by Company pursuant
hereto and the consummation of the transactions contemplated hereby and thereby
have been duly authorized by the Board of Directors of Company. No other or
further corporate act or proceeding on the part of Company or its shareholders
is necessary to authorize this Agreement or the other documents and instruments
to be executed and delivered by Company pursuant hereto or the
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consummation of the transactions contemplated hereby and thereby, and it is not
intended that Company be dissolved or its remaining operations terminated. This
Agreement constitutes, and when executed and delivered, the other documents and
instruments to be executed and delivered by Company pursuant hereto will
constitute, valid binding agreements of Company, enforceable in accordance with
their respective terms, except as such may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally, and by
general equitable principles.
4.3. No Violation.
Except as set forth on Schedule 4.3, neither the execution and
delivery of this Agreement or the other documents and instruments to be executed
and delivered by Company pursuant hereto, nor the consummation by Company of the
transactions contemplated hereby and thereby (a) will violate any applicable
federal or state law or order of any governmental agency or court of competent
jurisdiction, (b) except for requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "HSR Act") to the extent applicable, will require
any authorization, consent, approval, exemption or other action by or notice to
any Government Entity (including, without limitation, under any "plant-closing"
or similar law), or (c) subject to obtaining the consents referred to in
Schedule 4.3, if any, will violate or conflict with, or constitute a default (or
an event which, with notice or lapse of time, or both, would constitute a
default) under, or will result in the termination of, or accelerate the
performance required by, or result in the creation of any Lien (as defined in
Section 4.11.(a)), upon any of the Purchased Assets, any term or provision of
the Certificate of Incorporation or By-laws of Company or of any contract,
commitment, understanding, arrangement, agreement or restriction of any kind or
character to which Company is a party and which affects the Purchased Assets;
provided that the Company makes no representation or warranty with respect to
the requirement for any consents or approvals which may be required to effect a
transfer of any Assumed Contracts from Company to Buyer.
4.4. Financial Statements and Business Financial Information.
Included as Schedule 4.4(a) are the summary financial
schedules for the Business for the twelve months ending June 30, 1996, June 30,
1997, June 30, 1998 and the eleven months ending May 31, 1998 and May 31, 1999
as previously provided to Buyer by Company and updated for the one month periods
June 30, 1999 and July 31, 1999 (collectively the "Financial Information"). The
Financial Information has been prepared in accordance with the books and records
of the Company, having been extracted from the Financial Statements of the
Company, which Financial Statements have been prepared in accordance with
generally accepted accounting principles, applied on a basis consistent with
prior applications of those principles, subject to year end adjustments in the
case of any interim financial statements.
The Company further represents, and Buyer acknowledges, that
due to the fact that Simer is a business unit of the Company, the Financial
Information reflects pro rata allocations for Simer's portion of certain Company
expenses, such as corporate overhead,
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space, information systems and other support functions, rather than actual
expenses relating to the Business.
4.5. Tax Matters.
Other than liens for taxes not yet due and payable, there are
no unpaid taxes which are a lien on any of the Purchased Assets. There have been
no examinations pending against, no claims have been asserted against, and there
are no unexpired waivers of any statute of limitations with respect to any taxes
which could become a lien on any of the Purchased Assets.
4.6. Inventory.
Except for components or parts manufactured by Company
incorporated into products manufactured by Buyer or by Company pursuant to the
Transitional Services Agreement after the Effective Date (as provided in Section
2.1(c)), all Inventory is of a quality usable and saleable in the ordinary
course of the Business. All work-in-process is of a quality ordinarily produced
in accordance with the requirements of the orders to which such work-in-process
is identified, and will require no rework with respect to services performed
prior to Closing, except as provided for in the Transitional Services Agreement.
Company makes no representation or warranty with respect to the saleability of
the Inventory except as expressly provided herein.
4.7. Absence of Certain Changes.
Except as and to the extent set forth in Schedule 4.7 or as
disclosed to Buyer by any third party pursuant to Buyers investigations, since
July 31, 1999 and solely in relation to the Purchased Assets, there has not
been:
4.7.(a) No Adverse Change. Any material adverse change in the
financial condition, assets, Liabilities, business, prospects or
operations of the Business;
4.7.(b) No Damage. Any material loss, damage or destruction,
whether covered by insurance or not, in connection with or affecting
the Business or the Purchased Assets;
4.7.(c) No Disposition of Property. Any material sale, lease
or other transfer or disposition of any assets of Company that are
Purchased Assets (or would have been Purchased Assets had no sale,
lease, transfer or disposition occurred), except for the sale of
inventory items in the ordinary course of business;
4.7.(d) No Liens. Any Lien made on any of the assets of
Company that are Purchased Assets (or would become Purchased Assets if
not sold, leased, transferred or disposed of prior to the Closing
Date);
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4.7.(e) No Amendment of Contracts. Any entering into,
amendment or termination by Company of any material contract in
connection with or affecting the Business, or any waiver of material
rights thereunder, other than in the ordinary course of business;
4.7.(f) Credit. Any grant of credit to any customer of the
Business or distributor of its products on terms or amounts more
favorable than those which have been extended to such customer or
distributor in the past, any other change in terms of any credit
heretofore extended, or any other change of Company's policies or
practices with respect to the granting of credit in connection with the
Business, all of which such changes are other than in the ordinary
course of business.
4.8. Absence of Undisclosed Liabilities.
Except as and to the extent specifically disclosed in the
Financial Information, or in Schedule 4.8, the Business does not have any
material Liabilities, other than commercial liabilities and obligations incurred
since the date of the Financial Information in the ordinary course of business
and consistent with past practice and none of which has or will have a material
adverse effect on the financial condition or results of operations of the
Business by Buyer after the Closing. Except as and to the extent described in
the Financial Information or in Schedule 4.8, Company has no knowledge of any
basis for the assertion against Company of any material liability in connection
with or affecting the Business or the Purchased Assets, and there are no
circumstances, conditions, happenings, events or arrangements, contractual or
otherwise, which may give rise to such Liabilities, except commercial
liabilities and obligations incurred in the ordinary course of the Business and
consistent with past practice.
4.9. No Litigation.
Except as set forth in Schedule 4.9 and Schedules 4.15.(b)(i)
and 4.15.(b)(ii), there is no Litigation pending or, to the Company's knowledge,
threatened against Company or its directors (in such capacity) that in any way
involves the Business, the Purchased Assets or the Assumed Liabilities, nor does
Company know, or have grounds to know, of any basis for any such Litigation
other than product liability Litigation. Company has no reason to believe that
the Simer Pump Products will be subject to any product liability Litigation
except as consistent with past claims including those reflected on Schedules
4.15.(a)(ii), 4.15.(b)(i) and 4.15.(b)(ii). Neither Company, the Purchased
Assets nor the Assumed Liabilities is subject to any order of any Government
Entity. For purposes of this Agreement, "Litigation" shall refer to any action,
suit, proceeding, arbitration, investigation or inquiry, whether civil, criminal
or administrative.
4.10. Licenses and Permits.
Company has all licenses, permits, approvals, authorizations
and consents of all Government Entities and all certification organizations
required for the conduct of the Business. All such licenses, permits, approvals,
authorizations and consents are in full force
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and effect. The Business (including its operations, properties and assets) is
and has been in compliance with all such permits and licenses, approvals,
authorizations and consents.
4.11. Title to and Condition of Purchased Assets.
4.11.(a) Marketable Title. Company has, and Buyer will receive
at Closing, good and marketable title to all the Purchased Assets, free
and clear of all liens (statutory or otherwise), security interests,
claims, pledges, licenses, equities, options, conditional sales
contracts, assessments, levies, reservations, restrictions, exceptions,
limitations, or charges of any nature whatsoever (collectively,
"Liens") except those described in Schedule 4.11(a) which will be
terminated at or prior to Closing. None of the Purchased Assets are
subject to any restrictions with respect to the transferability thereof
and the Company has unrestricted power to sell, assign, convey and
deliver the Purchased Assets to Buyer, except those Assumed Contracts
requiring consent or as to which Company makes no representation or
warranty as described in Section 4.3 above.
4.11.(b) Condition. To the best of the Company's knowledge,
all tangible assets constituting Purchased Assets hereunder are in good
operating condition and repair, free from any material defects. All
tangible assets constituting Purchased Assets hereunder have been
maintained consistent with the standards generally followed in the
industry and are sufficient to carry on the Business as conducted
during the 12 months preceding Closing. Company's entire obligation
pursuant to the representation contained in this Section 4.11.(b),
whether under the indemnification provisions of Section 8.1 or
otherwise, shall be limited to the net book value of the specific
assets giving rise to any such claim. All claims pursuant to this
Section 4.11.(b) must be brought within three (3) months of the Closing
Date.
4.12. Contracts and Commitments.
4.12.(a) Purchase Commitments. Company has provided Buyer with
data reflecting open purchase orders for the Business; none of which
reflects purchase commitments beyond three months.
4.12.(b) Sales Commitments. Company has provided Buyer with
data reflecting open sales orders for the Business. Company has no
sales contracts or commitments in connection with or affecting the
Business or the Purchased Assets except those made in the ordinary
course of business, at arm's length, and no such contracts or
commitments are for a sales price which would result in a material loss
to the Business nor reflect sales commitments beyond three months.
4.12.(c) Contracts With Affiliates and Certain Others. Except
as disclosed on Schedule 4.12(c), Company has no agreement,
understanding, contract or commitment (written or oral) in connection
with or affecting the Business or the Purchased Assets with any
Affiliate or any other officer, employee, agent, consultant,
distributor, dealer or franchisee that is not cancelable by Company on
notice of not
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longer than 30 days without liability, penalty or premium of any nature
or kind whatsoever.
4.12.(d) Powers of Attorney. The Company has not given a power
of attorney, which is currently in effect, to any person, firm or
corporation which is outside the ordinary course for the Business and
would have a material, adverse affect on Buyer's ability to operate the
Business.
4.12.(e) Contracts Subject to Renegotiations. Company is not a
party to any contract with any governmental body which is subject to
renegotiation in connection with or affecting the Business or the
Purchased Assets.
4.13. Intellectual Property.
Schedule 4.13 lists all Simer Intellectual Property which is
registered or for which application has been made as of the date hereof. Company
has received no notices or claims which would materially affect the validity or
enforceability of the Simer Intellectual Property, and Company has received no
notice of any claimed conflict between the Simer Intellectual Property and any
claimed Intellectual Property rights of others. Except as disclosed on Schedule
4.11(a), Company has not granted any license or made any assignment of Simer
Intellectual Property, and Company does not pay any royalties or consideration
for the right to use the Simer Intellectual Property. Company is not infringing
and has not infringed upon any Intellectual Property rights of another in the
operation of the Business, nor to the Company's knowledge, is any other person
infringing on the Simer Intellectual Property or the rights of the Company
thereto. All patents and registered marks of the Company are valid, enforceable
and in good standing, and there are no equitable defenses to enforcement based
on any act or omission by the Company.
4.14. Major Customers and Suppliers.
4.14.(a) Major Customers. Schedule 4.14.(a) contains a list of
the 20 largest customers of the Business as of June 30, 1999
(determined on the basis of the total dollar amount of gross sales)
showing the total dollar amount of gross sales to each such customer
(the "Customers"). Schedule 4.14.(a) also summarizes other information
regarding customers of the Business previously disclosed to Buyer by
Company. Except as set forth on Schedule 4.14.(a), (i) Company has
received no written notice from any of the Customers that such Customer
will discontinue a substantial portion of its business with Simer,
which notice states a schedule or time period for such discontinuation,
(ii) to the best of Company's knowledge (based solely on inquiry of
Gary Frandsen, William Yager and Ira Morgenstern), no Customer has
informed any of such named individuals that such Customer will
discontinue a substantial portion of its business with Simer and has
informed such individual of a schedule or time period for such
discontinuation and (iii) to the best of Company's knowledge (based
solely on inquiry of Gary Frandsen, William Yager and Ira Morgenstern),
no Customer has informed any of such named individuals that such
Customer will discontinue purchasing Simer Pump Products solely as a
result of
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Buyer's purchase of the Purchased Assets and the continuation of the
Business following the Closing.
4.14.(b) Major Suppliers. Company has no knowledge or
information of any facts indicating, nor any other reason to believe,
that any of the current suppliers to Simer will not continue to be
suppliers to the Business after the Closing and will not continue to
supply the Business with substantially the same quantity and quality of
goods at competitive prices.
4.14.(c) Dealers and Distributors. Schedule 4.14.(c) contains
a list of all sales representatives, dealers, distributors and
franchisees of the Business, together with a representative copy of any
written sales representative, dealer, distributor and franchise
contract.
4.15. Product Warranty and Product Liability.
4.15.(a) Schedule 4.15.(a)(i) contains a true, correct and
complete copy of Company's standard warranty or warranties for sales of
products associated with Simer and being sold by the Company as of the
date hereof. The Company has made available to Buyer all of its product
warranty claim data, including history of service costs and other data
related to returns, repairs and replacement of Simer products. Schedule
4.15.(a)(ii) contains a complete and accurate listing of all product
warranty claims during the past twelve (12) months for Simer products
manufactured by the Company.
4.15.(b) Schedule 4.15.(b)(i) contains a description of all
product liability claims and similar Litigation relating to Simer
products which are presently pending or which to Company's knowledge
are threatened, or which have been asserted or commenced against
Company within the last five (5) years, in which a party thereto either
requests injunctive relief or alleges damages in excess of $10,000
(whether or not covered by insurance). Schedule 4.15.(b)(ii) contains a
description of consumer claims under $10,000 within the last five (5)
years. Products related to the Business have been designed and
manufactured so as to meet and comply with all governmental standards
and specifications currently in effect, and have received all
governmental approvals necessary to allow their sale and use. To the
best of Company's knowledge and except for those product features (or
lack thereof) that have been alleged to constitute a defect in design
or manufacture of Pump Products in those matters described on Schedules
4.15.(a)(ii), 4.15.(b)(i) and 4.15.(b)(ii) there are no defects in
design or manufacture of Pump Products which would adversely affect
performance or create an unusual risk of injury to persons or property.
Since 1992, none of the Pump Products has been the subject of any
voluntary or involuntary recall campaign involving an aggregate cost in
excess of $500,000 or any voluntary or involuntary recall campaign
required by, or performed in cooperation with, any governmental agency.
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4.16. Affiliates' Relationships to Company.
No Affiliate has any direct or indirect interest in (i) any
entity which does business with Company in connection with the operation of, or
is competitive with, the Business, or (ii) any property, asset or right which is
used by Company in the conduct of the Business.
4.17. Disclosure.
No representation or warranty by Company in this Agreement,
nor any statement, certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of Company pursuant to this Agreement or in connection
with transactions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact necessary to
make the statements contained therein not misleading.
5. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to
Company, each of which is true and correct on the date hereof, shall be
unaffected by any investigation heretofore or hereafter made by Company, or any
notice to Company, and shall survive the Closing of the transactions provided
for herein.
5.1. Corporate.
5.1.(a) Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Wisconsin.
5.1.(b) Corporate Power. Buyer has all requisite corporate
power to enter into this Agreement and the other documents and
instruments to be executed and delivered by Buyer and to carry out the
transactions contemplated hereby and thereby.
5.2. Authority.
The execution and delivery of this Agreement and the other
documents and instruments to be executed and delivered by Buyer pursuant hereto
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by the Board of Directors of Buyer. No other corporate act
or proceeding on the part of Buyer or its shareholders is necessary to authorize
this Agreement or the other documents and instruments to be executed and
delivered by Buyer pursuant hereto or the consummation of the transactions
contemplated hereby and thereby. This Agreement constitutes, and when executed
and delivered, the other documents and instruments to be executed and delivered
by Buyer pursuant hereto will constitute, valid and binding agreements of Buyer,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
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5.3. No Brokers or Finders.
Neither Buyer nor any of its directors, officers, employees or
agents have retained, employed or used any broker or finder in connection with
the transaction provided for herein or in connection with the negotiation
thereof.
5.4. Disclosure.
No representation or warranty by Buyer in this Agreement, nor
any statement, certificate, schedule, document or exhibit hereto furnished or to
be furnished by or on behalf of Buyer pursuant to this Agreement or in
connection with transactions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statements contained therein not misleading.
6. OTHER MATTERS
6.1. Noncompetition; Confidentiality.
As an inducement to Buyer to execute this Agreement and
complete the transactions contemplated hereby, and in order to preserve the
goodwill associated with the Business, Company hereby covenants and agrees as
follows:
6.1.(a) Covenant Not to Compete. For a period of seven (7)
years from the Closing Date, Company and Shareholder will not, directly
or indirectly, within the United States or within any foreign
countries,
(i) engage in continue in or carry on any business
which competes with the Business or is substantially similar
thereto, including owning or controlling any financial
interest in any corporation, partnership, firm or other form
of business organization which is so engaged;
(ii) consult with, advise or assist in any way,
whether or not for consideration, any corporation,
partnership, firm or other business organization which is now
or becomes a competitor of Buyer in any aspect with respect to
the Business or Purchased Assets which Buyer is acquiring
hereunder, including, but not limited to, advertising or
otherwise endorsing the products of any such competitor;
soliciting customers or otherwise serving as an intermediary
for any such competitor; loaning money or rendering any other
form of financial assistance to or engaging in any form of
business transaction on other than an arms' length basis with
any such competitor; or
(iii) engage in any practice the sole intent of which
is to evade the provisions of this covenant not to compete,
provided, however, that Buyer expressly agrees that Company may market,
distribute or sell, at its sole discretion, the Excluded Inventory
after Closing, and that such
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activities are not prohibited by and shall not be considered a breach
of this Section 6.1.(a). In the event Company, subsequent to Closing,
acquires an entity or business (or an interest in an entity or
business) a part or division of which competes with the Business or is
substantially similar thereto, Buyer agrees that Company shall have a
period of six (6) months after closing such acquisition to divest of
all competitive operations and that such acquisition and divestiture
shall not be prohibited by or deemed a breach of this Section 6.1(a).
The parties agree that Buyer may sell, assign or otherwise transfer
this covenant not to compete, in whole or in part, to any person,
corporation, firm or entity that purchases all or part of the Business
or the Purchased Assets. In the event a court of competent jurisdiction
determines that the provisions of this covenant not to compete are
excessively broad as to duration, geographical scope or activity, it is
expressly agreed that this covenant not to compete shall be construed
so that the remaining provisions shall not be affected, but shall
remain in full force and effect, and any such over broad provisions
shall be deemed, without further action on the part of any person, to
be modified, amended and/or limited, but only to the extent necessary
to render the same valid and enforceable in such jurisdiction.
6.1.(b) Covenant of Confidentiality. Subsequent to the
Closing, Company shall hold in confidence any confidential information
concerning the Business, the Purchased Assets or the Assumed
Liabilities and will not disclose, publish or make use of the same
without the consent of Buyer unless and until such information shall
have ceased to be confidential as evidenced by general public knowledge
or availability through public sources, or unless disclosure is
required under order of a court or other body having jurisdiction,
provided that Company shall have given prior notice to Buyer of any
hearing or other proceeding in which the matter of such disclosure is
to be heard. For purposes hereof, "confidential information" shall mean
and include, without limitation, all Intellectual Property which is a
Purchased Asset, all customer lists and customer information of the
Business, and all other information concerning the processes, sources
of supply, raw materials processing methods, inventory conversion
costs, apparatus, equipment, packaging, products, marketing and
distribution methods of the Business, not previously disclosed to or
already available to the public.
6.1.(c) Equitable Relief for Violations. Company agrees that
the provisions and restrictions contained in this Section 6.1 are
necessary to protect the legitimate continuing interests of Buyer in
acquiring the Business through the purchase of the Purchased Assets and
the assumption of the Assumed Liabilities, and that any violation or
breach of these provisions will result in irreparable injury to Buyer
for which a remedy at law would be inadequate and that, in addition to
any relief at law which may be available to Buyer for such violation or
breach and regardless of any other provision contained in this
Agreement, Buyer shall be entitled to injunctive and other equitable
relief as a court may grant after considering the intent of this
Section 6.1.
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6.2. HSR Act Filings.
To the extent any HSR Act Filings are necessary and such
filings have not been completed prior to the execution of this Agreement, each
of Company and Buyer shall, in cooperation with the other, file any reports or
notifications that may be required to be filed by it under the HSR Act, with the
Federal Trade Commission and the Antitrust Division of the Department of
Justice, and shall furnish to the other all such information in its possession
as may be necessary for the completion of the reports or notifications to be
filed by the other. Prior to making any communication, written or oral, with the
Federal Trade Commission, the Antitrust Division of the federal Department of
Justice or any other governmental agency or authority or members of their
respective staffs with respect to this Agreement or the transactions
contemplated hereby, the Company shall consult with Buyer. Company and Buyer
shall share equally the cost of any filings required under the HSR Act.
6.3. Use of Name.
Following the Closing and except as allowed by Section
6.1.(a), neither Company nor any Affiliate shall, without the prior written
consent of Buyer, make any use of the name "Simer Pump" or any other Simer trade
names or names confusingly similar thereto, except as may be necessary for
Company to pay its liabilities, prepare tax returns and other reports, and to
otherwise wind up and conclude its business.
6.4. Sales Tax Matters.
The Company shall pay all sales tax, if any, assessed in
conjunction with the transaction contemplated herein, by any governmental entity
with jurisdiction.
6.5. Access to Information and Records.
After the Closing, each party will afford the other party, its
counsel, accountants and other representatives, upon reasonable request and
during normal business hours, reasonable access to the books, records and other
data in such party's possession relating to the Purchased Assets, with respect
to periods prior to the Closing, and the right to make copies and extracts
therefrom, to the extent that such access may be reasonably required by the
requesting party for any proper business purpose, and provided Company may deny
access to information with respect to its other business operations which
Company deems confidential. Each party agrees for a period extending six years
after the Closing not to destroy or otherwise dispose of any such records
without first offering in writing to surrender such records to the other party,
which party shall have ten (10) days after such offer to agree in writing to
take possession thereof.
6.6. Bulk Sales Compliance.
Buyer and Company waive compliance with any applicable
provisions of the bulk sales or bulk transfer statutes of all states having
jurisdiction.
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6.7. Identification of Pump Products Following Closing.
Following Closing, Buyer shall cause all products which it
manufactures or causes to be manufactured that are the same as, or could pass in
the trade for, the Pump Products, whether or not using the Purchased Assets and
whether or not bearing the "Simer" name (the "Post-Closing Pump Products"), to
be imprinted with a cord tag identifying the date of manufacture, which tag
shall be of a color not used at any time by Company in its manufacture of the
Pump Products. Such cord tag shall be affixed to any such products in a way that
permits identification of the cord tag to a specific product.
6.8. Termination of Sales Representative Agreements.
Immediately following Closing, Company shall notify sales
representatives currently authorized to sell Simer products that their
representation on the Simer product line will terminate thirty (30) days from
the date of notice. Company will further notify such sales representatives that
they will receive commissions only on products shipped prior to expiration of
the thirty (30) day period. Within ten (10) days after receiving documentation
evidencing all commissions paid by Company to sales representatives on Simer
products shipped during this thirty (30) day period, Buyer agrees to reimburse
Company for that total amount. Company shall use its best efforts to coordinate
communications with such sales representatives with Buyer's designated sales
personnel. Notwithstanding the foregoing, Company shall not send notification or
terminate its contracts, agreements, understandings or other relationships,
whether written or oral, with any entity listed on Schedule 4.12(c).
7. PRE-CLOSING PERIOD
7.1. Conduct of Business Pending the Closing.
From the date hereof until the Closing (the "Pre-Closing
Period"), except as otherwise approved in writing by the parties, Company and
Buyer covenant as follows:
7.1.(a) No Changes. Company will carry on the Business in the
ordinary course consistent with past practice.
7.1.(b) Maintain Organization. Company will take such action
as may be necessary to maintain and preserve the Company's present
relationships with suppliers and customers and others having business
relationships with the Business.
7.1.(c) No Breach. Company will not do or omit any act, or
permit any omission to act, which may cause a breach of any material
contract, commitment or obligation, or any breach of any
representation, warranty, covenant or agreement made by Company herein.
7.1.(d) No Material Contracts. No contract or commitment will
be entered into, and no purchase or sale will be made, by or on behalf
of the Business, except contracts, commitments, purchases or sales
which are in the ordinary course of
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business and consistent with past practice, are not material to the
Business (individually or in the aggregate), involve obligations
arising or coming due within ninety (90) days of Closing, and would not
have been required to be disclosed in the Disclosure Schedule had they
been in existence on the date of this Agreement.
7.1.(e) Maintenance of Property. Company shall use, operate,
maintain and repair all personal property that constitutes a Purchased
Asset of the Business in the ordinary course of business and consistent
with past practice.
7.2. Transitional Services Agreement.
During the Pre-Closing Period, the parties shall negotiate and
prepare an agreement governing transition services to be provided subsequent to
Closing and such additional terms and conditions as the parties may agree to
(the "Transitional Services Agreement"). The Transitional Services Agreement
shall follow the guidelines set forth on Exhibit A and such other terms as the
parties may agree to, provided that the following terms are not subject to
renegotiation and must be included in the Transitional Services Agreement,
except with the consent of both parties:
(i) The quantity of goods to be produced under the
Transitional Services Agreement shall be set forth in a
binding forecast mutually agreeable to the parties; the
binding forecast for manufacture of motors may be increased,
but not decreased, on at least six (6) weeks advance notice
and subject to acceptance by Company; provided, however, in
the event the parties acting in good faith cannot agree to a
binding forecast, neither party shall be obligated to enter
into the Transitional Services Agreement;
(ii) Buyer shall purchase the goods manufactured by
the Company pursuant to the Transitional Services Agreement
under binding forecasts at Company's standard costs for such
goods (as periodically adjusted consistent with past
practice), plus 15%. For quantities in excess of the binding
forecast, the percentage previously described shall be 20%,
rather than 15%.
(iii) Company shall manufacture finished goods in a
manner consistent with past manufacturing practices and
methods, which shall be Company's sole representation and
warranty relating to the goods; and
(iv) Buyer shall bear all risk, obligation and
liability, and shall expressly indemnify Company, with respect
to all goods manufactured by Company from and after the time
that such goods have left Company's manufacturing facilities.
The parties shall exercise good faith in the negotiation of the Transitional
Services Agreement.
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7.3. Completion of Due Diligence Investigation.
Company and Buyer shall use their best efforts to contact
certain of Company's customers pursuant to Buyer's "due diligence"
investigation. Buyer shall have the right to designate seven (7) of the
following customers for such contact: Menards, Ace Hardware Corp., Tru Serv,
Northern Tool and Equipment, Mills, Riggs, United Hardware Co., AGIS (Benelux),
and BSH (Germany). Company and Buyer shall use their best efforts (i) to prepare
a mutually agreeable script to utilize in customer contacts and (ii) to schedule
and complete customer contacts as soon as possible after execution of this
Agreement, including without limitation by making personnel involved in such
process available at all reasonable times. Company personnel to participate in
customer contacts are William Yager and/or Ira Morgenstern and Buyer personnel
to participate in customer contacts are Carl Peterson and/or Jeff Bryant, and/or
such other persons as Buyer may designate. Such investigation shall be completed
prior to 9:00 a.m. Central Standard Time on the fifth business day after the
date of execution of this Agreement. In the event Buyer does not exercise its
option pursuant to Section 11.8(a) to terminate this Agreement prior to 9:00
a.m. Central Standard Time on the fifth business day after the date of execution
of this Agreement, such option shall be deemed waived unless the parties have
mutually agreed in writing to an extension of such time period with respect to
any one or more specified customers due to the unavailability of such
customer(s) during the stated investigation period, and in the case of any such
extension the right to terminate under Section 11.8(a) shall relate solely
during such extended period to such customer(s).
7.4. Updates to Disclosure Schedules.
During the Pre-Closing Period, Company shall have the right to
update any Disclosure Schedules; provided, however, that any such update,
modification or change to any Disclosure Schedule constituting a material
adverse change in the Business shall be deemed a permissible basis for
termination of this Agreement by Buyer without penalty pursuant to Section 11.8.
7.5. Consummation of Closing.
During the Pre-Closing Period and through the Closing, the
parties shall use their respective best efforts to fulfill and perform all
conditions, covenants and obligations on their respective parts to be fulfilled
and performed under this Agreement prior to Closing, and to cause the
consummation of the transactions contemplated by this Agreement on the Closing
Date. Compliance by a party with its obligations under this Section 7.5 shall be
a condition to the obligations of the other party to close the transactions
contemplated by this Agreement.
7.6. Confidentially Pending Closing.
Each of Buyer (on the one hand) and Company and Shareholder
(on the other) shall hold in confidence any confidential information of the
other party disclosed by such other party pursuant to the negotiation of, and
consummation of the transactions contemplated by, this Agreement, and will not
disclose, publish or make use of the same except as contemplated
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by this Agreement without the consent of the other party, unless and until such
information shall have ceased to be confidential as evidenced by general public
knowledge or availability through public sources, or unless disclosure is
required under order of a court or other body having jurisdiction, provided that
the party from whom such disclosure is being sought shall have given prior
notice to the other party of any hearing or other proceeding in which the matter
of such disclosure is to be heard. For purposes of this Section 7.6, the term
"confidential information" shall mean and include Intellectual Property,
customer lists and customer information, all other information concerning
manufacturing processes, engineering drawings, sources of supply, raw materials
processing methods, inventory conversion costs, apparatus, equipment, packaging,
products, marketing and distribution methods. Each party will disclose the
confidential information of the other party to its employees, agents, advisors
and representatives on a need-to-know basis only, and only to such employees,
agents, advisors and representatives who are aware of, and agree to be bound by,
the confidentiality obligations of this Section 7.6.
In the event of a Closing under this Agreement, the
confidentiality obligations of Buyer relating to "confidential information" of
Company as defined in Section 6.1(b) shall terminate; provided that the other
obligations of Company and Buyer under this Section 7.6 shall remain in full
force and effect for a period of two (2) years following the Closing. In the
event there is no Closing under this Agreement, the parties' confidentiality
obligations under this Section 7.6 shall remain in full force and effect for two
(2) years following the date hereof and each party shall immediately return to
the other party all copies of materials which constitute confidential
information of such other party.
8. INDEMNIFICATION
8.1. By Company and Shareholder.
Subject to the terms and conditions of this Article 8, Company
and Shareholder hereby agree to indemnify, defend and hold harmless Buyer, and
its directors, officers, employees and controlled and controlling persons
(hereinafter "Buyer's affiliates"), from and against all Loss asserted against,
resulting to, imposed upon, or incurred by Buyer, Buyer's affiliates, the
Business or the Purchased Assets, directly or indirectly, by reason of, arising
out of or resulting from (a) the inaccuracy or breach of any representation or
warranty of Company contained in or made pursuant to this Agreement (regardless
of whether such breach is deemed "material"); (b) the breach of any covenant of
Company contained in this Agreement (regardless of whether such breach is deemed
"material"); or (c) the failure of Company or Shareholder to pay or discharge
any liability other than an Assumed Liability. As used in this Article 8, the
term "Loss" shall include all losses, damages (including, without limitation,
consequential damages), judgments, awards, settlements, costs and expenses
(including, without limitation, interest (including prejudgment interest in any
litigated matter), penalties, court costs and reasonable attorneys fees and
expenses).
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8.2. By Buyer.
Subject to the terms and conditions of this Article 8, Buyer
hereby agrees to indemnify, defend and hold harmless Company and Shareholder,
their directors, officers, employees and controlling persons, from and against
all Loss asserted against, resulting to, imposed upon or incurred by any such
person, directly or indirectly, by reason of or resulting from (a) the
inaccuracy or breach of any representation or warranty of Buyer contained in or
made pursuant to this Agreement (regardless of whether such breach is deemed
"material"); (b) the breach of any covenant of Buyer contained in this Agreement
(regardless of whether such breach is deemed "material"); (c) the failure by
Buyer to pay or discharge any Assumed Liabilities; or (d) Buyer's operation of
the Business following Closing, including, without limitation, the marketing,
sale and use of any Pump Products manufactured by Company pursuant to the
Transitional Services Agreement, regardless of any insurance coverage which may
be maintained by Company.
8.3. Indemnification of Third-Party Claims.
The obligations and liabilities of any party to indemnify any
other under this Article 8 with respect to Loss relating to third parties shall
be subject to the following terms and conditions:
8.3.(a) Notice and Defense. The party or parties to be
indemnified (whether one or more, the "Indemnified Party") will give
the party from whom indemnification is sought (the "Indemnifying
Party") prompt written notice of any claim, action or proceeding which,
if successful, might result in a claim for indemnification under
Section 8.1 or 8.2 (a "Claim"), and the Indemnifying Party will
undertake the defense thereof by representatives chosen by it. Failure
to give such notice shall not affect the Indemnifying Party's duty or
obligations under this Article 8, except to the extent the Indemnifying
Party is prejudiced thereby. So long as the Indemnifying Party is
defending any such Claim actively and in good faith, the Indemnified
Party shall not settle such Claim. The Indemnified Party shall make
available to the Indemnifying Party or its representatives all records
and other materials required by them and in the possession or under the
control of the Indemnified Party, for the use of the Indemnifying Party
and its representatives in defending any such Claim, and shall in other
respects give reasonable cooperation in such defense.
8.3.(b) Failure to Defend. If the Indemnifying Party, within a
reasonable time after notice of any such Claim, fails to defend such
Claim actively and in good faith, the Indemnified Party will (upon
further notice) have the right to undertake the defense, compromise or
settlement of such Claim, and the Indemnifying Party shall thereafter
have no right to challenge the Indemnified Party's defense, compromise
or settlement, provided that any payment, settlement or compromise of
such Claim shall include a full and final release of the Indemnifying
Party.
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8.4. Limitations on Indemnification.
8.4.(a) Time Limitation. No claim or action shall be brought
under this Article 8 or otherwise for breach of a representation or
warranty after the lapse of two (2) years following the Closing.
Regardless of the foregoing, however, or any other provision of this
Agreement:
(i) There shall be no such time limitation on claims
or actions brought for breach of any representation or
warranty made in or pursuant to Sections 4.1, 4.2, and
4.11.(a) or for breaches of any covenants contained in Article
6 herein. There shall be no time limitation on claims or
actions based on the fraud of Company except for any
applicable statute of limitations.
(ii) Any claim or action brought for breach of any
representation or warranty made in or pursuant to Section 4.5
may be brought at any time until the underlying tax obligation
is barred by the applicable period of limitation under federal
and state laws relating thereto (as such period may be
extended by waiver).
(iii) Any claim made by a party hereunder by a demand
for arbitration in accordance with Article 10 hereof for
breach of a representation or warranty prior to the
termination of the survival period for such claim shall be
preserved despite the subsequent termination of such survival
period.
(iv) If any act, omission, disclosure or failure to
disclosure shall form the basis for a claim for breach of more
than one representation or warranty, and such claims have
different periods of survival hereunder, the termination of
the survival period of one claim shall not affect a party's
right to make a claim based on the breach of representation or
warranty still surviving.
(v) Any claim made by Buyer hereunder pursuant to
Section 4.11.(b) must be brought within three (3) months of
the Closing.
8.4.(b) Minimum Amount. Except with respect to claims for
breaches of representations or warranties contained in Sections 4.1,
4.2 and 4.11.(a), covenants contained in Sections 6.1, 6.3, 6.4 and
7.6, and discharge of any liabilities (other than Assumed Liabilities)
pursuant to Section 2, the Company and Shareholder shall have no
liability with respect to the breach of any representation, warranty or
with respect to any indemnification under Section 8.1 hereof, unless
the aggregate of the Indemnifying Party's indemnification obligations
to the Indemnified Party pursuant to this Article 8 (but for this
Section 8.4.(b)) exceeds $100,000; and then only for the amount by
which such aggregate exceeds $100,000.
8.4.(c) Aggregate Amount Limitation. Except with respect to
claims for breaches of warranties contained in Section 4.1, 4.2,
4.11.(a) and 4.11.(b) (as to which amount limitations are set forth in
such Section 4.11.(b)), claims for breach of the
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covenants contained in Section 6.1, 6.3, 6.4 and 7.6, and discharge of
liabilities (other than Assumed Liabilities) pursuant to Section 2, the
Company and Shareholder shall have no liability with respect to the
breach of any representation, warranty, covenant or obligation to be
performed or complied with under this Agreement or with respect to any
indemnification under Section 8.1 hereof, in excess of a total
aggregate amount of fifty percent (50%) of the Final Purchase Price.
Notwithstanding the foregoing, nothing contained in this Agreement
shall limit the Company's or the Shareholder's liability under this
Agreement to the extent such liability results from fraud of the
Company or Shareholder.
8.4.(d) Indemnification as Exclusive Remedy. The
indemnification provided in this Article 8 shall be the exclusive
post-closing remedy available to the parties for any breach of any
representation, warranty, covenant or agreement contained in this
Agreement or any other documents, instruments or agreements executed
and delivered in conjunction with the transactions contemplated hereby;
provided however, that either party shall be entitled to seek
injunctive relief to enforce the provisions of Sections 6.1, 6.3, 6.4,
6.5, 6.7, 6.8 or 7.6.
8.4.(e) Limitation on Indemnification. Notwithstanding the
foregoing, neither the Company and the Shareholder nor the Buyer will
be entitled to indemnification with respect to punitive damages, except
in the case of fraud or willful misconduct by the other party. Any
indemnification amounts payable by an Indemnifying Party under Section
8.1 or 8.2 hereof shall be calculated after giving effect to (i) any
proceeds (net of retro-premium adjustments and other expenses) actually
received by an Indemnified party from insurance policies covering the
damage that is the subject of such claim for indemnity; and (ii) the
actual recognized tax benefit resulting from such damage.
9. CLOSING
The closing of this transaction ("the Closing") shall take
place at the offices of Posternak, Blankstein & Lund, L.L.P. in Boston,
Massachusetts at 10:00 A.M. on October 8, 1999, or at such other time and place
as the parties hereto shall agree upon. Such date is referred to in this
Agreement as the "Closing Date". Upon Closing, the purchase and sale of the
Purchased Assets shall be deemed consummated at 12:00.01 a.m. on the Closing
Date (the "Effective Date").
9.1. Documents to be Delivered by Company.
At the Closing, Company shall deliver to Buyer the following
documents, in each case duly executed or otherwise in proper form:
9.1.(a) Bills of Sale. Bills of sale and such other
instruments of assignment, transfer, conveyance and endorsement as will
be sufficient in the opinion of Buyer and its counsel to transfer,
assign, convey and deliver to Buyer the Purchased Assets as
contemplated hereby.
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9.1.(b) Opinion of Counsel. A written opinion of Posternak,
Blankstein & Lund, L.L.P., counsel to Company, dated as of the Closing
Date, addressed to Buyer, in a form reasonably acceptable to Buyer.
9.1.(c) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Company and the Board of
Directors of Shareholder authorizing and approving this Agreement and
the consummation of the transactions contemplated by this Agreement.
9.1.(d) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Buyer pursuant to the terms hereof.
9.1.(e) Assignment of Intellectual Property Rights.
Assignments of the Intellectual Property to be transferred in a form
agreed to by the parties.
9.1.(f) Compliance Certificate. A certificate signed by an
executive officer of Company that each of the representations and
warranties made by Company in this Agreement is true and correct in all
material respects on and as of the Closing Date, and that Company has
performed and complied with all of Company's obligations under this
Agreement which are to be performed or complied with on or prior to the
Closing Date.
9.1.(g) Transitional Services Agreement. The Transitional
Services Agreement.
9.1.(h) Accounts Receivable. A list of accounts receivable of
the Business as of the day prior to the Closing Date.
9.1.(i) Purchase Order Information. A report detailing all
purchase orders of the Company as of the day prior to the Closing Date.
9.1.(j) Lien Releases. Evidence of termination of all Liens in
a form reasonably satisfactory to Buyer.
9.1.(k) Other Documents. All other documents, instruments or
writings required to be delivered to Buyer at or prior to the Closing
pursuant to this Agreement and as are necessary to vest in the Buyer
title to the Purchased Assets, and such other certificates of authority
and documents as Buyer may reasonably request to consummate the
transaction contemplated hereby.
9.2. Documents to be Delivered by Buyer.
At the Closing, Buyer shall deliver to Company the following
documents, in each case duly executed or otherwise in proper form:
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9.2.(a) Cash Purchase Price. To Company, funds by wire
transfer as required by Section 3.2.(b) and (d).
9.2.(b) Assumption of Liabilities. Such undertakings and
instruments of assumption as will be reasonably sufficient in the
opinion of Company and its counsel to evidence the assumption of
Company debts, liabilities and obligations as provided for in Article
2.
9.2.(c) Opinion of Counsel. A written opinion of Foley &
Lardner, counsel to Buyer, dated as of the Closing Date, addressed to
Company, in a form reasonably acceptable to Company.
9.2.(d) Certified Resolutions. A certified copy of the
resolutions of the Board of Directors of Buyer authorizing and
approving this Agreement and the consummation of the transactions
contemplated by this Agreement.
9.2.(e) Incumbency Certificate. Incumbency certificates
relating to each person executing any document executed and delivered
to Company by Buyer pursuant to the terms hereof.
9.2.(f) Compliance Certificate. A certificate signed by an
executive officer of Buyer that the representations and warranties made
by Buyer in this Agreement are true and correct on and as of the
Closing Date, and that Buyer has performed and complied with all of
Buyer's obligations under this Agreement which are to be performed or
complied with on or prior to the Closing Date.
9.2.(g) Transitional Services Agreement. The Transitional
Services Agreement.
9.2.(h) Other Documents. All other documents, instruments or
writings required to be delivered to Company at or prior to the Closing
pursuant to this Agreement and such other certificates of authority and
documents as Company may reasonably request to consummate the
transaction contemplated hereby.
10. RESOLUTION OF DISPUTES
10.1. Arbitration.
Any dispute, controversy or claim arising out of or relating
to this Agreement or any contract or agreement entered into pursuant hereto or
the performance by the parties of its or their terms shall be settled by binding
arbitration held in Chicago, Illinois in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, except
as specifically otherwise provided in this Article 10. Notwithstanding the
foregoing, Buyer may, in its discretion, apply to a court of competent
jurisdiction for equitable relief from any violation or threatened violation of
the covenants of Company and/or any Shareholder under Section 6.1 of this
Agreement.
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10.2. Arbitrators.
If the matter in controversy (exclusive of attorney fees and
expenses) shall appear, as at the time of the demand for arbitration, to exceed
$1,000,000, then the panel to be appointed shall consist of three neutral
arbitrators; otherwise, one neutral arbitrator.
10.3. Procedures; No Appeal.
The arbitrator(s) shall allow such discovery as the
arbitrator(s) determine appropriate under the circumstances and shall resolve
the dispute as expeditiously as practicable, and if reasonably practicable,
within 120 days after the selection of the arbitrator(s). The arbitrator(s)
shall give the parties written notice of the decision, with the reasons therefor
set out, and shall have 30 days thereafter to reconsider and modify such
decision if any party so requests within 10 days after the decision. Thereafter,
the decision of the arbitrator(s) shall be final, binding, and nonappealable
with respect to all persons, including (without limitation) persons who have
failed or refused to participate in the arbitration process.
10.4. Authority.
The arbitrator(s) shall have authority to award relief under
legal or equitable principles, including interim or preliminary relief, and to
allocate responsibility for the costs of the arbitration and to award recovery
of attorneys fees and expenses in such manner as is determined to be appropriate
by the arbitrator(s).
10.5. Entry of Judgment.
Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having in personam and subject matter jurisdiction.
10.6. Confidentiality.
All proceedings under this Article 10, and all evidence given
or discovered pursuant hereto, shall be maintained in confidence by all parties.
10.7. Continued Performance.
The fact that the dispute resolution procedures specified in
this Article 10 shall have been or may be invoked shall not excuse any party
from performing its obligations under this Agreement and during the pendency of
any such procedure all parties shall continue to perform their respective
obligations in good faith, subject to any rights to terminate this Agreement
that may be available to any party.
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10.8. Tolling.
All applicable statutes of limitation shall be tolled while
the procedures specified in this Article 10 are pending. The parties will take
such action, if any, required to effectuate such tolling.
11. MISCELLANEOUS
Information set forth in the Disclosure Schedule specifically
refers to the article and section of this Agreement to which such information is
responsive and such information shall not be deemed to have been disclosed with
respect to any other article or section of this Agreement or for any other
purpose, except as specified in the Disclosure Schedules.
11.1. Further Assurance.
From time to time, at Buyer's request and without further
consideration, Company will execute and deliver to Buyer such documents and take
such other action as Buyer may reasonably request in order to consummate more
effectively the transactions contemplated hereby and to vest in Buyer good,
valid and marketable title to the Purchased Assets.
11.2. Disclosures and Announcements.
Both the timing and the content of all disclosure to third
parties and public announcements concerning the transactions provided for in
this Agreement by either Company or Buyer shall be subject to the approval of
the other in all essential respects, except that either party's approval shall
not be required as to any statements and other information which the other party
may submit to the Securities and Exchange Commission, the New York Stock
Exchange, its stockholders or be required to make pursuant to any rule or
regulation of the Securities and Exchange Commission or the New York Stock
Exchange or otherwise required by law.
11.3. Assignment; Parties in Interest.
11.3.(a) Assignment. Except as expressly provided herein, the
rights and obligations of a party hereunder may not be assigned,
transferred or encumbered without the prior written consent of the
other party. Notwithstanding the foregoing, Buyer may, without consent
of the other party, cause one or more subsidiaries of Buyer to carry
out all or part of the transactions contemplated hereby; provided,
however, that Buyer shall, nevertheless, remain liable for all of its
obligations, and those of any such subsidiary to Company hereunder.
11.3.(b) Parties in Interest. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by the respective
successors and permitted assigns of the parties hereto. Nothing
contained herein shall be deemed to confer upon any other person any
right or remedy under or by reason of this Agreement.
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11.4. Law Governing Agreement.
This Agreement may not be modified or terminated orally, and
shall be construed and interpreted according to the internal laws of the State
of Delaware, excluding any choice of law rules that may direct the application
of the laws of another jurisdiction.
11.5. Amendment and Modification.
Buyer and Company may amend, modify and supplement this
Agreement in such manner as may be agreed upon by them in writing.
11.6. Notice.
All notices, requests, demands and other communications
hereunder shall be given in writing and shall be: (a) personally delivered; (b)
sent by telecopier, facsimile transmission or other electronic means of
transmitting written documents; or (c) sent to the parties at their respective
addresses indicated herein by registered or certified U.S. mail, return receipt
requested and postage prepaid, or by private overnight mail courier service. The
respective addresses to be used for all such notices, demands or requests are as
follows:
(a) If to Buyer, to:
Sta-Rite Industries, Inc..
293 Wright Street
Delavan, Wisconsin 53115
Attention: Karen E. Spors
Facsimile: 414-728-7555
(with a copy to)
Foley & Lardner
Attention: Joseph B. Tyson, Jr.
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Facsimile: 414-297-4900
or to such other person or address as Buyer shall furnish to Company in writing.
(b) If to Company, to:
Holmes Products Corp.
233 Fortune Blvd.
Milford, MA 01757
Attention: Senior Vice-President Finance
Facsimile: 508-634-1211
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(with a copy to)
POSTERNAK, BLANKSTEIN & LUND, L.L.P.
100 Charles River Plaza
Boston, MA 02114
Attention: Donald H. Siegel, P.C.
Facsimile: 617-367-2315
or to such other person or address as Company shall furnish to Buyer in writing.
If personally delivered, such communication shall be deemed
delivered upon actual receipt; if electronically transmitted pursuant to this
paragraph, such communication shall be deemed delivered the next business day
after transmission (and sender shall bear the burden of proof of delivery); if
sent by overnight courier pursuant to this paragraph, such communication shall
be deemed delivered upon receipt; and if sent by U.S. mail pursuant to this
paragraph, such communication shall be deemed delivered as of the date of
delivery indicated on the receipt issued by the relevant postal service, or, if
the addressee fails or refuses to accept delivery, as of the date of such
failure or refusal. Any party to this Agreement may change its address for the
purposes of this Agreement by giving notice thereof in accordance with this
Section.
11.7. Expenses.
Regardless of whether or not the transactions contemplated
hereby are consummated:
11.7.(a) Brokerage. Except as to Goldsmith, Agio, Helms and
Company, who shall be compensated by Company, Company and Buyer each
represent and warrant to each other that there is no broker involved or
in any way connected with the transfer provided for herein. Buyer
agrees to hold Company harmless from and against all claims for
brokerage commissions or finder's fees incurred through any act of
Buyer in connection with the execution of this Agreement or the
transactions provided for herein. Company agrees to hold Buyer harmless
from and against all other claims for brokerage commissions or finder's
fees incurred through any act of Company in connection with the
execution of this Agreement or the transactions provided for herein.
11.7.(b) Expenses to be Paid by Company. Company shall pay,
and shall indemnify, defend and hold Buyer harmless from and against,
each of the following:
(i) Transfer Taxes. Any sales, use, excise, transfer
or other similar tax imposed with respect to the transactions
provided for in this Agreement, and any interest or penalties
related thereto.
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(ii) Professional Fees. All fees and expenses of
Company's legal, accounting, investment banking and other
professional counsel in connection with the transactions
contemplated hereby.
11.7.(c) Other. Except as otherwise provided herein, each of
the parties shall bear its own expenses and the expenses of its counsel
and other agents in connection with the transactions contemplated
hereby.
11.8. Termination.
This Agreement may be terminated at any time prior to Closing:
(a) by Buyer, in the event Buyer, in its sole
discretion, is not satisfied with the results of Buyer's investigation
with respect to customers of the Company subject to the limitations set
forth in Section 7.3; or
(b) by either party, in the event the parties do not
enter into the Transitional Services Agreement as provided for in
Sections 8.1.(g) and 8.2.(g); or
(c) by either party in the event the Closing does not
occur on or before October 8, 1999; or
(d) by Buyer, in the event that any update,
modification or change to any Disclosure Schedule by Company pursuant
to Section 7.4 reflects or constitutes a material adverse change in the
Business.
Termination of this Agreement shall be without penalty to either party unless
one party terminates the Agreement pursuant to Section 11.8(b) or 11.8(c) as a
result of the other party's breach of the covenants contained in Sections 7.2,
7.3, 7.5, 9.1 or 9.2, in which case the non-breaching party shall be entitled to
available remedies at law or equity.
11.9. Entire Agreement.
This instrument embodies the entire agreement between the
parties hereto with respect to the transactions contemplated herein, and there
have been and are no agreements, representations or warranties between the
parties other than those set forth or provided for herein.
11.10. Counterparts.
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument. This Agreement and any agreements
referenced herein or required pursuant to the Closing may be executed and
delivered by facsimile signature. The parties agree to deliver original
signatures promptly following execution of facsimile signatures.
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11.11. Headings.
The headings in this Agreement are inserted for convenience
only and shall not constitute a part hereof.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date and year first above written.
THE RIVAL COMPANY ("Company")
By: /S/ Ira B. Morgenstern
-------------------------------
Name: Ira B. Morgenstern
-------------------------------
Title: Senior Vice President -- Finance
--------------------------------
HOLMES PRODUCTS CORP. ("Shareholder")
By: /S/ Ira B. Morgenstern
-------------------------------
Name: Ira B. Morgenstern
-------------------------------
Title: Senior Vice President - Finance
--------------------------------
STA-RITE INDUSTRIES, INC. ("Buyer")
By: /S/ Thomas M. Rettler
---------------------------------
Name: Thomas M. Rettler
---------------------------------
Title: Vice President - Finance
---------------------------------
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