1
Exhibit 10.14
ASSET PURCHASE AGREEMENT
dated as of
March 31, 1996
among
THE B.F. GOODRICH COMPANY,
SOVEREIGN ENGINEERED ADHESIVES, L.L.C.
and
SOVEREIGN SPECIALTY CHEMICALS, L.P.
2
TABLE OF CONTENTS
Page
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I DEFINITIONS............................................................1
1.1 Accounts Receivable..............................................1
1.2 Accounts Payable.................................................1
1.3 Accrued Liabilities..............................................1
1.4 Agreement........................................................2
1.5 ASD Business.....................................................2
1.6 Assumed Liabilities..............................................2
1.7 Assumption Agreement.............................................2
1.8 Business.........................................................2
1.9 Business Assets..................................................2
1.10 Business Records.................................................2
1.11 Closing..........................................................3
1.12 Contracts........................................................3
1.13 Customer List....................................................3
1.14 Environmental Laws...............................................3
1.15 ERISA............................................................3
1.16 Equipment........................................................3
1.17 Excluded Assets..................................................4
1.18 Excluded Liabilities.............................................4
1.19 Facility.........................................................5
1.20 Facility Documents...............................................5
1.21 Governmental Authority...........................................5
1.21A Hazardous Materials..............................................5
1.22 Intellectual Property............................................6
1.23 Inventory........................................................6
1.24 Lien.............................................................6
1.25 Litigation.......................................................6
1.25A Material Adverse Effect or Material Adverse Change...............6
1.26 Ordinary Course of Business......................................6
1.27 Person...........................................................7
1.28 Personal Property................................................7
1.29 Prepaid Expenses.................................................7
1.30 Product Liability................................................7
1.31 Product Warranty Liability.......................................7
1.32 Products.........................................................7
1.33 Schedules........................................................8
1.34 Taxes............................................................8
1.35 Trademarks and Trade Names.......................................8
1.36 Licensed Technology..............................................8
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II SALE OF ASSETS.........................................................9
2.1 Agreement to Sell Business Assets................................9
2.2 Assumption of Liability..........................................9
III PURCHASE PRICE.........................................................9
3.1 Purchase Price...................................................9
3.2 Closing Adjustment of the Purchase Price.........................9
3.3 Payment of Purchase Price.......................................10
3.4 Post-Closing Adjustment of the Purchase Price...................10
3.5 Allocation of Purchase Price to Business Assets.................11
IV REPRESENTATIONS AND WARRANTIES OF SELLER..............................12
4.1 Organization, Standing, and Qualification.......................12
4.2 Authorization; Non-contravention................................12
4.3 Financial Statements............................................13
4.4 Taxes...........................................................13
4.5 Governmental Permits............................................14
4.6 Compliance with Laws............................................14
4.7 Schedule of Certain Assets......................................15
4.8 Litigation and Claims...........................................16
4.9 Enforceability..................................................16
4.10 Title...........................................................16
4.11 Collective Bargaining Agreements................................17
4.12 Employees.......................................................17
4.13 Employee Benefits...............................................18
4.14 ERISA Compliance................................................18
4.15 Environmental Matters...........................................18
4.16 Commissions and Fees............................................21
4.17 Absence of Change or Events.....................................21
4.18 Intellectual Property...........................................22
4.19 Insurance.......................................................23
4.20 Accounts Receivable.............................................23
4.21 Inventory.......................................................23
4.22 Warranties......................................................23
4.23 Customers and Suppliers.........................................24
4.24 Limitation on Representations, and Warranties...................24
V REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................25
5.1 Organization and Standing.......................................25
5.2 Authority.......................................................26
5.3 No Brokers......................................................27
5.4 Non-contravention...............................................27
5.5 Governmental Consents, etc......................................27
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5.6 Legal Proceedings...............................................28
5.7 Financing.......................................................28
5.8 Disclosure......................................................28
5.9 Ongoing Business................................................29
VI COVENANTS.............................................................29
6.1 Confidentiality.................................................29
6.2 Access to Information...........................................30
6.3 Employees; Employee Benefits....................................30
6.4 Wage Reporting..................................................36
6.5 Workers Compensation............................................37
6.6 Conduct of ASD Business.........................................37
6.7 Material Changes................................................37
6.8 Best Efforts....................................................38
6.9 Prorations and Transfer Taxes...................................39
6.10 Assumption of Liabilities.......................................39
6.11 Access to Information After the Closing.........................42
6.12 Taxes...........................................................43
6.13 Seller's Identification.........................................43
6.14 Removal of Seller's Identification..............................43
6.15 Office Supplies.................................................44
6.16 Trademarks, Trade Names, and Technology Acquired By Purchaser...44
6.17 Post-Closing Supply Agreements..................................44
6.18 Post-Closing Issues.............................................44
VII CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS.......................45
7.1 Representations and Warranties..................................45
7.2 Obligations.....................................................45
7.3 Certificate.....................................................45
7.5 HSR Filing......................................................46
7.6 Completion of Environmental Audit...............................46
VIII CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS..........................46
8.1 Representations and Warranties..................................47
8.2 Obligations.....................................................47
8.3 Certificates....................................................47
8.4 No Legal Action.................................................47
8.5 HSR Filing......................................................48
8.6 Completion of Environmental Audit...............................48
IX CLOSING...............................................................48
9.1 Closing.........................................................48
9.2 Seller's Obligations............................................48
9.3 Purchaser's Obligations.........................................49
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9.4 Additional Acts and Documents...................................50
9.5 Consent and Approvals...........................................51
9.6 Accounts Receivable.............................................52
9.7 Exhibited Documents and Schedules...............................52
X ADDITIONAL COVENANTS..................................................52
10.1 Payment of Assumed Liabilities..................................52
10.2 Payment of Excluded Liabilities.................................52
10.3 Seller's Non-Competition Covenant...............................52
10.4 Continued Business Activity.....................................53
10.5 Environmental Audit and Liabilities.............................54
10.6 Taxes...........................................................54
XI INDEMNIFICATION.......................................................55
11.1 Indemnification by Purchaser....................................55
11.2 Indemnification by Seller.......................................56
11.3 Procedure for Indemnification...................................58
11.4 Period of Seller's Indemnity....................................59
11.5 Limitation of Liability.........................................59
11.6 Exclusive Remedy; Survival......................................60
11.7 Special Defense Provisions......................................60
11.8 Special Indemnification by Seller...............................61
11.9 ENFORCEMENT OF COVENANTS........................................62
XII MISCELLANEOUS PROVISIONS..............................................63
12.1 Termination.....................................................63
12.2 Liability on Termination........................................63
12.3 Expenses........................................................63
12.4 Public Announcements............................................63
12.5 Notices.........................................................64
12.6 Benefit of the Agreement........................................65
12.7 Headings........................................................65
12.8 Entire Agreement................................................65
12.9 Gender and Number...............................................65
12.10 Modifications and Waivers.......................................66
12.11 Assignment......................................................66
12.12 Invalid Provisions..............................................66
12.13 Counterparts....................................................66
12.14 Bulk Sales......................................................67
12.15 Governing Law...................................................67
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XIII SOVEREIGN GUARANTY....................................................67
13.1 Guaranty........................................................67
13.2 Guaranty Unconditional..........................................68
13.3 Survival........................................................68
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SCHEDULES AND EXHIBITS
Schedule 1.3 Accrued Liabilities
Schedule 1.12 Contracts
Schedule 1.13 Customer List
Schedule 1.16 Equipment
Schedule 1.17 Excluded Assets
Schedule 1.18 Excluded Liabilities
Schedule 1.19 Facility Description
Schedule 1.32 Products
Schedule 1.35 Trademarks and Trade Names
Schedule 1.36 Licensed Technology
Schedule 3.4 Accounting Principles
Schedule 3.5 Allocation of Purchase Price
Schedule 4.2 Non-Contravention
Schedule 4.3 Financial Statements
Schedule 4.5 Permits
Schedule 4.6 Compliance with Laws
Schedule 4.7 Schedule of Assets
Schedule 4.8 Litigation and Claims
Schedule 4.10 Title to Property
Schedule 4.11 Collective Bargaining Agreements
Schedule 4.12 Employees
Schedule 4.13 Benefit Plans
Schedule 4.14 ERISA Compliance
Schedule 4.15 Environmental Matters
Schedule 4.17 Changes
Schedule 4.18 Intellectual Property
Schedule 4.19 Insurance
Schedule 4.20 Accounts Receivable
Schedule 4.22 Warranties
Schedule 4.23 Customers and Suppliers
Schedule 5.1 Purchaser Organization
Schedule 5.3 Brokers
Schedule 5.5 Purchaser Consents
Schedule 5.7 Financing
Schedule 5.8 Disclosure
Schedule 6.3(b) Certain Claims
Schedule 10.5 Environmental Audit Guidelines
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EXHIBITS
Exhibit A Assumption Agreement
Exhibit B License Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 31st day
of March, 1996, by and between The B.F. Goodrich Company, a New York corporation
("Seller"), and Sovereign Specialty Chemicals, L.P., a Delaware limited
partnership ("Sovereign"), and Sovereign Engineered Adhesives, L.L.C., a
Delaware limited liability company ("Purchaser").
WHEREAS, Seller is engaged in the manufacture and sale of Products through
its ASD business (as such terms are hereinafter defined); and
WHEREAS, Seller desires to sell, transfer and assign to Purchaser, and
Purchaser desires to purchase and acquire from Seller, substantially all of the
assets and properties of the ASD business as a going concern including
assumption of the Assumed Liabilities (as such term is hereinafter defined),
upon the terms and subject to the conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements contained herein, Seller and Purchaser do hereby covenant and agree
as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, the following words shall have the
meanings set forth below:
1.1 Accounts Receivable. The uncollected trade and other accounts
receivable of the Business, net of allowances for doubtful accounts.
1.2 Accounts Payable. The trade accounts payable of the Business as of the
Closing Date.
1.3 Accrued Liabilities. The specific liabilities of the Business which
are more fully described in Schedule 1.3 hereto, which are for the purposes of
this Agreement Assumed Liabilities.
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1.4 Agreement. This Asset Purchase Agreement, together with all Exhibits
and Schedules referred to herein, including any Exhibits which are ancillary
contracts.
1.5 ASD Business. The Adhesives Systems Division business of The B.F.
Goodrich Company, which manufactures and sells the Products, as presently
conducted.
1.6 Assumed Liabilities. The obligations and liabilities of Seller assumed
by Purchaser in accordance with this Agreement.
1.7 Assumption Agreement. The Assumption Agreement whereby Purchaser
assumes the Assumed Liabilities, in the form attached hereto as Exhibit A.
1.8 Business. The commercial activities and operations undertaken by
Seller in the design, development, manufacture, distribution, and sale of
Products and in connection therewith and related thereto, in the ordinary course
of the ASD business.
1.9 Business Assets. All of the Business and the assets, properties, and
rights owned, held, or used by Seller solely in the conduct thereof as a going
concern, including, without limitation, the Inventory, Contracts, Equipment,
Accounts Receivable, Facility, Personal Property, Licensed Technology,
Intellectual Property, Trademarks, and Trade Names, Business Records, and
Customer List, but expressly excluding the Excluded Assets.
1.10 Business Records. All of the books, records, drawings, models. plans,
and information utilized, opened, maintained, and developed by Seller directly
and solely in respect of the ASD business which are necessary or desirable for
the continuation and performance of the Business, but not including the Excluded
Assets.
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1.11 Closing. The closing of the transactions contemplated by this
Agreement, which shall occur as of April 1, 1996, or such other date as
Purchaser and Seller mutually agree upon. The "Closing Date" as referred to
herein shall mean 12:01 A.M. E.S.T. on April 1, 1996.
1.12 Contracts. The agreements, orders, contracts, and other binding
obligations or commitments to which Seller is a party or otherwise bound in
relation to the Business, including, without limitation, the material contracts
listed in Schedule 1.12 attached hereto.
1.13 Customer List. Information and records pertaining to the persons or
entities purchasing the Products from Seller, including the names, addresses,
and the Product information relative to each such customer, including without
limitation the customer information set forth in Schedule 1.13.
1.14 Environmental Laws. Any federal, state or local law, statute, code,
ordinance, rule or regulation, or any order, writ, injunction, judgment or
decree issued by any Governmental Authority pursuant to any of the foregoing,
which governs or regulates any of the following: (i) the emission, discharge or
release of any substance into the air, water, soil, or substrata or (ii) the
generation, treatment, processing, storage, disposal, transport, labeling, or
other management of any solid waste or hazardous waste, or the remediation
thereof. All terms used in this section shall have the same definitions as they
have under Environmental Laws.
1.15 ERISA. The Employee Retirement Income Security Act of 1974, as
amended.
1.16 Equipment. The production, manufacturing, and maintenance machinery
and equipment, tooling and dies, computers (but excluding certain software and
other assets identified herein as Excluded Assets), test equipment, tools,
furniture and office equipment, equipment spare parts, production tooling
including that located with vendors, and all other tangible items of
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equipment utilized directly in the conduct of the Business, whether owned or
leased, including without limitation those which are set forth in Schedule 1.16
attached hereto, but not including the Excluded Assets.
1.17 Excluded Assets. Those assets not being sold or conveyed hereunder to
Purchaser, comprising:
(a) all amounts: (i) due and owing from Seller and its affiliates to
the ASD business and (ii) of cash on hand or on deposit pertaining to the
Business (other than Accounts Receivables);
(b) all books and records of Seller maintained by it from time to
time other than those included in the term Business Records;
(c) Sellers rights under any policies of insurance relating directly
or indirectly to the Business Assets or otherwise associated with the ASD
business and any return of premium arising thereunder;
(d) all rights of any nature in or to the names "The B.F. Goodrich
Company", "BF Goodrich", "Goodrich", "BFG", "Tremco", or any trademark,
trade name, service mark, logo, or design incorporating any such name or
mark or any variation or derivative thereof;
(e) Seller's rights under this Agreement and any other property or
asset listed on Schedule 1.17; and,
(f) all right, title and interest in and to the Licensed Technology,
subject to the provisions of the License Agreement.
1.18 Excluded Liabilities. The obligations and liabilities existing or
arising in respect of the Business and Business Assets which are expressly
retained by Seller and identified in
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Schedule 1.18 hereto, together with any other obligation and liability of Seller
in respect of the ASD business or otherwise which is not an "Assumed Liability".
1.19 Facility. All of the real property comprising the Akron Plant and
related buildings and structures, as are more fully defined and described in
Schedule 1.19 together with all improvements and fixtures thereon, and all
easements and appurtenances inuring thereto.
1.20 Facility Documents. The documents necessary to transfer the legal
title to the Facility from Seller to Purchaser, comprising: (i) a warranty deed
and (ii) a survey of the Facility. Subject to the terms and conditions of this
Agreement, Seller will reasonably cooperate with Purchaser to secure the
issuance of title insurance with respect to the Facility, to be paid for by
Purchaser, in form reasonably satisfactory to Purchaser.
1.21 Governmental Authority. Any Federal, State, County, City, Village,
Municipal, or other domestic governmental department, commission, board, bureau,
agency, authority, or instrumentality.
1.21A Hazardous Materials. For the purposes of this Agreement only, any
toxic substance, hazardous substance, hazardous material, hazardous chemical, or
hazardous waste defined, regulated or qualifying as such in (or for the purposes
of, any Environmental Law in effect on the Closing Date, and shall include, but
not be limited to, petroleum, including crude oil or any fraction thereof which
is liquid at standard conditions of temperature or pressure (60 degrees
Fahrenheit and 14.7 pounds per square inch absolute), and any radioactive
material, including but not limited to any source, special nuclear, or
by-product material as defined at 42 U.S.C. ss.2011, et seq., as amended or
hereafter amended, but specifically excluding asbestos containing materials
(ACM) incorporated into any building, equipment, or structure.
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1.22 Intellectual Property. All lights in and to the patents, copyrights,
trademarks, service marks, trade names, packaging, inventions, proprietary
technical information, technical know-how, and other intellectual property used
solely and directly in the conduct of the Business (the "Intellectual
Property"), as is more fully described in Schedule 4.18 hereto, but excluding
the Excluded Assets.
1.23 Inventory. The raw materials, work-in-process, finished goods and
capitalized labor/overhead owned or possessed by Seller in connection with the
Business, including without limitation the items identified in Schedule 1.23
attached hereto, net of the Inventory Reserve (but not net of the LIFO
adjustment).
1.24 Lien. Any security interest, mortgage, pledge, lien, claim, charge,
encumbrance, title retention agreement, or lessees interest under a capital
lease, in, of or on any of the Facility, the Business Assets or the Personal
Property.
1.25 Litigation. The litigation and claims identified in Schedule 4.8
hereto.
1.25A Material Adverse Effect or Material Adverse Change. One or more
occurrences, events, or changes in circumstance which occurs prior to Closing
and which causes Purchaser to Incur a liability after Closing in respect of the
Business in excess of $100,000 individually or $200,000 in the aggregate, and
which is not otherwise retained or indemnified against by Seller hereunder or as
a matter of law; subject always to the provisions of Section 11.4 and 11.5
hereof.
1.26 Ordinary Course of Business. The operation of the Business in a
manner, and in accordance with policies and practices, consistent with past
custom and practice of operations and administration.
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1.27 Person. An individual, a partnership, a joint venture, a corporation,
a trust, an unincorporated organization, or any other legal or juridical entity.
1.28 Personal Property. The personal property of Seller utilized in the
conduct of the Business, whether owned or leased, not otherwise described or
defined herein, including without limitation the items identified and set forth
in Schedule 1.28 attached hereto, but not including the Excluded Assets.
1.29 Prepaid Expenses. Prepaid expenses arising in the ordinary course of
the Business, as set forth in the Balance Sheet and the Closing Balance Sheet.
1.30 Product Liability. The liability of the manufacturer or seller of an
article for injury to persons, damage to property or any other cost, damage or
expense resulting from a defect in or the condition of such article or the
warnings or instructions with respect to such article, or consequential,
punitive or other similar costs or damages arising as a result thereof, whether
payable under the principles of strict liability, contract, tort, or other
applicable law excluding, however, any liability, costs, or expense which is
Product Warranty Liability (as defined herein).
1.31 Product Warranty Liability. The liability of the manufacturer or
seller of an article to service, repair, or replace such article (including all
costs thereof, whether for materials or labor or otherwise), or to refund the
purchase price thereof, pursuant to the terms of a product warranty given by
such manufacturer or seller, or otherwise arising under or established by law
with respect to such article.
1.32 Products. That group of products which has been designed, developed,
and/or produced and which is presently sold or offered for sale by the ASD
business of Seller, including all of the commercially produced products itemized
by product name and number on Schedule 1.32
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hereto; provided, however, that the term "Products" shall not include any
products or applications designed, developed, produced, sold or offered for sale
by Seller or its affiliates at any time which are now within the product lines
or capabilities of any business of Seller or its affiliates other than the ASD
business. Any one of the Products is referred to herein as a "Product."
1.33 Schedules. The schedules attached hereto. Information disclosed in
any schedule shall be deemed disclosed in any other schedule to which it may be
applicable, whether or not expressly set forth in such other schedule.
1.34 Taxes. Any federal, state, local, provincial, or foreign income,
gross receipts, license, poll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes imposed pursuant to
Section 59A of the Code), custom duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, or other tax, fee, assessment, or charge of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
1.35 Trademarks and Trade Names. The trade names, trademarks (whether
registered or unregistered), trade designations, fictitious names, service
marks, or applications therefor used by Seller directly and solely in the
conduct of the Business, including all applications for registration related
thereto, to the extent identified in Schedule 1.35, but excluding the Excluded
Assets.
1.36 Licensed Technology. The technology, trade secrets, know-how,
patents, copyrights, trademarks and trade names, and other technical information
used directly (but not solely) by Seller in respect of the Business, including
the items described in Schedule 1.36 hereof, which shall be licensed to
Purchaser by Seller pursuant to the express provisions of this Agreement.
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ARTICLE II
SALE OF ASSETS
2.1 Agreement to Sell Business Assets. Upon the terms and subject to the
conditions set forth in this Agreement, on the Closing Date Seller shall sell,
convey, transfer, assign, and deliver to Purchaser and Purchaser shall purchase
and acquire from Seller, all of Seller's right, title, and interest in and to
the Business and the Business Assets, at the price and in accordance with the
allocation set forth in Article III.
2.2 Assumption of Liability. Pursuant to the provisions of Section 6.10
Purchaser shall assume or undertake certain of the duties, obligations, or
liabilities of Seller in respect of the Business and Business Assets; and
execute, deliver, or perform certain of the agreements, warranties, or
undertakings between Seller and any other person or entity, in respect of the
Business and Business Assets.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. In consideration of the sale, transfer, conveyance,
assignment, and delivery of the Business and Business Assets by Seller to
Purchaser and the mutual covenants, undertakings, and agreements herein
contained, Purchaser shall pay to Seller the amount of Fifteen Million U.S.
Dollars ($15,000,000.00), hereinafter referred to as the "Purchase Price", as
adjusted pursuant to Section 3.2 hereof.
3.2 Closing Adjustment of the Purchase Price. Seller shall prepare and,
not less than five (5) business days prior to the Closing deliver to Purchaser,
an unaudited, pro forma balance sheet for the ASD business as of the close of
business on January 31, 1996 (the "Closing Balance Sheet").
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The Closing Balance Sheet shall be prepared on a basis consistent with the
Financial Statements (as such term is defined in Section 4.3). On the basis of
the Closing Balance Sheet, the parties shall calculate the change in the
respective amounts shown for Accounts Receivable, Prepaid Expenses, Accrued
Liabilities, and Inventory from the Balance Sheet (as such term is defined in
Section 4.3) to the Closing Balance Sheet. The resulting amount (whether
positive or negative in value) shall be referred to as the "Adjustment to
Purchase Price". The Purchase Price shall be automatically adjusted at the
Closing by the amount of the Adjustment to Purchase Price.
3.3 Payment of Purchase Price. On the Closing Date, Purchaser shall pay to
Seller the full amount of the Purchase Price, as adjusted pursuant to Section
3.2, by wire transfer in immediately available funds to Seller's commercial bank
account in the United States, which Seller shall identify in writing at least
twenty-four (24) hours prior to the Closing.
3.4 Post-Closing Adjustment of the Purchase Price. Within thirty (30) days
after the Closing, Seller shall make any adjustments necessary to finalize the
Closing Balance Sheet as of the close of business on the Closing Date (the
"Final Closing Balance Sheet") and furnish a copy thereof to Purchaser and to
Ernst & Young LLP (E&Y) within such period. The parties shall jointly retain E&Y
to conduct an audit of the respective amounts shown for Accounts Receivable,
Prepaid Expenses, Accrued Liabilities, and Inventory in the Final Closing
Balance Sheet. In conducting such audit, E&Y will verify that the amounts shown
for Accounts Receivable, Prepaid Expenses, Accrued Liabilities and Inventory in
the Final Closing Balance Sheet were accounted for in accordance with the
internal accounting policies of Seller as described in Schedule 3.4. Upon the
completion of such procedures, but in any event not more than ninety (90) days
from the Closing Date, E&Y shall issue concurrently to the parties: (i) its
audit report setting forth its conclusions and adjustments (if any)
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to the Final Closing Balance Sheet; and (ii) a special report which is limited
to a tabulation of the difference in the respective amounts shown for Accounts
Receivable, Prepaid Expenses, Accrued Liabilities, and Inventory from the
Balance Sheet to Final Closing Balance Sheet, and the resultant purchase price
adjustment. Any difference between the purchase price adjustment amount so
calculated by E&Y and the amount of the Adjustment to Purchase Price made at
Closing shall be promptly settled by cash payment between the parties. The fees
and expenses of E&Y in performing such work will be invoiced to and borne by the
Purchaser and Seller on a 50/50 basis. It is understood and agreed that no other
findings, conclusions, adjustments, qualifications, or recommendations of E&Y
resulting from or arising in connection with its audit of the Final Closing
Balance Sheet shall be material to the parties for the purposes of this Section
3.4 or included by E&Y in its special report for the purposes of this Section
3.4. Notwithstanding the foregoing, the parties have agreed that for the
purposes of the foregoing audit of Accrued Liabilities, the frozen medical
accrual of $92,000 shall not be audited or adjusted in connection therewith, the
parties having stipulated and accepted $92,000 as the final number for the
purposes of this item. Detail regarding the frozen medical accrual is included
with Schedule 3.4.
3.5 Allocation of Purchase Price to Business Assets. The parties mutually
agree that the Purchase Price shall be allocated among the Business Assets in
the manner required by Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"). In making such allocation, the allocations as set forth in
Schedule 3.5 hereto shall apply, and each of the Purchaser and Seller shall file
Form 8594 with the Internal Revenue Service reflecting such allocation of the
Purchase Price. In the event of any adjustments to the Purchase Price pursuant
to Sections 3.2 or 3.4 hereof, the allocation shall be deemed to be amended in
order to conform to such adjustment.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser that, except as set
forth in the Schedules:
4.1 Organization, Standing, and Qualification. Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of New York, having all corporate power and authority to enter into this
Agreement and to execute, deliver, and perform its obligations hereunder. Seller
is duly qualified to carry on the ASD business as now being conducted, and to
own, lease, or operate its properties in the State of Ohio and in each other
jurisdiction in which the ASD business is now being conducted, except where the
failure to so qualify would not have a Material Adverse Effect. Seller and its
Board of Directors shall on or before the Closing Date have taken all action
required by law, its Certificate of Incorporation, its By-laws or otherwise, to
authorize the execution and delivery of this Agreement, and the consummation of
the transactions contemplated herein.
4.2 Authorization; Non-contravention. The execution, delivery, and
performance by Seller of this Agreement are within Seller's corporate authority
and power, and, except as set forth in Schedule 4.2: (i) require no consent,
approval, or authorization of any Governmental Authority; (ii) do not contravene
or constitute a default under any material provision of applicable law, statute,
code, ordinance, rule, or regulation; and, (iii) will not result in the creation
or imposition of any Lien on any of the Business Assets. The execution and
delivery of this Agreement by Seller do not, and the consummation by Seller of
the transactions contemplated hereby will not, violate any provision of the
Certificate of Incorporation or By-laws of Seller or violate or result (with or
without the giving of notice or the lapse of time or both) in a violation of any
provision of, or result in the acceleration
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of or entitle any party to accelerate (whether after the giving of notice or the
lapse of time or both) any obligation under, or result in the creation or
imposition of any Lien of any kind upon the property or assets of Seller
pursuant to any provision of, any mortgage, Lien, lease, agreement, license,
instrument, or law to which Seller is a party or by which Seller or any of its
properties or assets are bound.
4.3 Financial Statements. Seller has delivered to Purchaser the following
financial statements prepared by Seller, copies of which are appended in
Schedule 4.3 (hereinafter collectively referred to as the "Financial
Statements"):
(a) unaudited Pro-Forma Assets and Liabilities Statement for the ASD
business at December 31, 1994 (the "Balance Sheet") (December 31, 1994
hereinafter referred to as the "Balance Sheet Date") and at December
31,1995; and (b) unaudited Pro-Forma Adjusted Income Statement for the ASD
business for the periods ended December 31, 1994 and December 31, 1995.
The Financial Statements have been prepared by Seller in accordance with
its internal accounting policies, and fairly present the assets and liabilities
and results of operations of the Business as of such dates (subject to pro forma
adjustments which have been made in the preparation thereof).
4.4 Taxes. Seller has to the best of its knowledge timely filed all Tax
returns relating to the Business which are required to be filed in connection
therewith for periods up to and including the date of this Agreement with
Federal, state, local, and municipal authorities, and Seller has paid, accrued
or timely protested all Taxes shown on such returns or any related reports or
forms. There is no pending claim by any Governmental Authority where Seller does
not file Tax returns claiming
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that Seller is or may be subject to taxation by that Governmental Authority in
respect of the Business. There are no Liens on any of the Business Assets which
have arisen in connection with any failure or alleged failure to pay any Tax in
respect of the Business. Seller has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder, or other third party.
4.5 Governmental Permits. All material governmental permits, licenses,
certificates, approvals, and authorizations required to conduct the Business at
the Facilities have been obtained by Seller, including without limitation those
which are set forth in Schedule 4.5, and such items are, to the best of Sellers
knowledge, valid and in full force and effect in all material respects. Seller
has not received any notice of violation, and is not to its knowledge otherwise
in violation in any material respect, of any of such permits, licenses,
certificates, approvals, or authorizations set forth in Schedule 4.5, other than
violations which would not in the aggregate have a Material Adverse Effect upon
the ability of Purchaser to conduct. the Business after Closing. No additional
permit, license, or certificate is required from any Governmental Authority in
connection with the conduct of the Business other-than any which, if not
obtained, would not in the aggregate have a Material Adverse Effect upon the
ability of Purchaser to conduct the Business after Closing.
4.6 Compliance with Laws. Except as set forth in Schedule 4.6, Seller has
materially complied with the laws, rules, regulations, ordinances, orders,
judgments, and decrees applicable to the Business, other than violations which
would not in the aggregate have a Material Adverse Effect on the ability of
Purchaser to conduct the Business after Closing. There is no action or
proceeding pending or, to the knowledge of Seller threatened, against Seller
which seeks to restrain or enjoin the consummation of the transactions
contemplated by this Agreement. Seller is not in violation of
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any pending order or decree entered against it by any Governmental Authority,
other than violations which would not in the aggregate have a Material Adverse
Effect on the ability of Purchaser to conduct the Business after Closing.
4.7 Schedule of Certain Assets. Attached hereto as Schedule 4.7 are
schedules describing or identifying:
(a) the Facilities;
(b) the Accounts Receivable;
(c) the Equipment;
(d) the Contracts;
(e) the Inventory;
(f) the Personal Property;
(g) the Customer List; and
(h) the Trademarks and Trade Names.
Except as indicated in Schedule 4.7 all of the Contracts are valid, binding,
enforceable, and in full force and effect in all material respects with respect
to Seller and, to the best of Seller's knowledge, with respect to the other
parties thereto; Seller has no written notice of any default under such
Contracts; and, to the best of Seller's knowledge no consent is required for the
transfer of any Contract by reason of the transactions contemplated herein.
Except as disclosed in Schedule 4.7, Seller is not and, to the best of Seller's
knowledge no other party thereto is in material default (and no event has
occurred which, with the passage of time or the giving of notice, or both, would
constitute a material default) under any of the Contracts.
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4.8 Litigation and Claims. Except as set forth in Schedule 4.8 hereof,
there is no action, claim, proceeding, suit, litigation, arbitration, worker's
compensation claim, labor dispute, grievance, or other legal or administrative
proceeding pending in respect of the ASO business, nor to the best of Seller's
knowledge are any of the same threatened by or against Seller relating to the
ASD business or the Facility, before or by any Governmental Authority, which, if
adversely determined, would have a material adverse affect on the ASO business.
4.9 Enforceability. This Agreement, when duly authorized, executed, and
delivered by Purchaser and Seller, will be a valid and binding obligation of
Seller enforceable in accordance with its terms (subject as to the enforcement
of remedies, to applicable laws governing the recovery of attorneys' fees;
public policy considerations; bankruptcy, reorganization, insolvency,
moratorium, or other similar laws affecting the enforcement of creditors' or
obligees' rights generally from time to time in effect, and subject to general
principles of equity including those limiting the right to obtain specific
performance of obligations of Seller thereunder).
4.10 Title. Seller has, and on the Closing Date will have, valid title to
the Business Assets, free and clear of all Liens, except: (a) Liens set forth in
Schedule 4.10; (b) liens for Taxes not yet due and payable or which are being
contested by Seller in good (c) easements, restrictions, or other matters of
record; and, (d) other minor encumbrances or imperfections of title which do not
materially detract from the value of or interfere with the present use or
operation of the property affected thereby (all matters referred to in
subsections (a) through (d) inclusive being referred to as "Permitted Liens").
Except as disclosed in Section 4.10, Seller has good and marketable title to (or
valid leasehold or contractual interests in) the Personal Property (other than
Intellectual Property with respect to which separate and exclusive warranties
are made in Section 4.18), free and clear of
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all Liens. The documents of transfer to be executed and delivered by Seller at
the Closing will be sufficient to convey good and marketable title to the
Business Assets to Purchaser in accordance with their respective terms, free and
clear of all Liens other than Permitted Liens or as may be imposed by Purchaser.
The Business Assets include all of the properties, assets, lights, contracts,
leases, easements, licenses, and Personal Property utilized by the Seller in the
conduct of the Business as of the date hereof and necessary for the conduct of
the Business as presently conducted, other than (i) the Excluded Assets; (ii)
permits, interests, or registrations which are not transferrable; and (iii) the
rights, title, and interest retained by Seller in respect of the Licensed
Technology.
4.11 Collective Bargaining Agreements. Except as set forth in Schedule
4.11, there are no collective bargaining agreements between Seller and any labor
union representing any employees of Seller in respect of the Business governing
the terms of employment of any such employees.
4.12 Employees. Schedule 4.12 lists the job title and classification of
each employee currently employed by Seller exclusively in connection with the
ASD business and the compensation and bonuses paid to each such employee from
January 1, 1995 to December 31, 1995. Since the Balance Sheet Date, no
compensation materially in excess of that reflected in Schedule 4.12 except as
disclosed therein and no bonuses have been paid or raises given to any employees
employed by Seller in connection with the Business, other than in the ordinary
course of business and in amounts consistent with Seller's past practice. There
is no unfair labor practice claim against the Seller pending before the National
Labor Relations Board with respect to the Business, or any strike, dispute,
slowdown, or stoppage pending or, to the best knowledge of Seller, threatened
against or involving the Business.
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4.13 Employee Benefits. Schedule 4.13 identifies any (i) "employee benefit
plan" within the meaning of Section 3(3) of ERISA; (ii) profit sharing, pension,
retirement, deferred compensation, bonus, stock option, stock purchase, 401(k),
severance, health, welfare, or incentive plan or agreement; (iii) written plan
or policy providing for "fringe benefits" to its employees, including but not
limited to vacation, paid holiday, personal leave, medical, hospitalization,
dental, life insurance, employee discount, educational benefit, severance, or
similar programs; and (iv) written employment agreement (in the case of the
plans, agreements, policies, and programs described in clauses (i), (ii), (iii),
and (iv), individually, a "Plan," and collectively the "Plans") to which Seller
is a party covering the employees of the Business. None of the Plans constitutes
a multi-employer plan as defined in Section 4001 (a)(3) of ERISA. Seller has
provided Purchaser with copies of documents or plan summaries as to each such
Plan.
4.14 ERISA Compliance. Except as disclosed in Schedule 4.14, each Plan (as
defined in Section 4.13) that is intended to be a "qualified" plan is qualified
within the meaning of Section 401(a) of the Code and the trust maintained
pursuant thereto is exempt from federal income taxation under Section 501(a) of
the Code; there are no liens on the assets of such Plans; and, favorable
determination letters that remain effective have been obtained from the Internal
Revenue Service for such Plans evidencing their compliance with applicable
provisions of the Code. Seller has complied in all material respects with all
laws, rules, regulations, ordinances, orders, judgments, or decrees applicable
to the Business relating to the Plans, including ERISA.
4.15 Environmental Matters.
(a) Except as disclosed on Schedule 4.15, Seller and each property,
operation, and facility that Seller may "own", 'operate" or "control" (as
each such term is defined by
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applicable Environmental Laws and other local, state and federal laws,
rules and regulations and case law in effect on the Closing Date as the
same apply to environmental matters) with respect to the ASD business: (i)
complies in all material respects with all such Environmental Laws; (ii)
is not subject to any judicial or administrative proceeding alleging the
violation of any such Environmental Law; (iii) within the past twelve
months, has not received any notice (A) that it maybe in violation of any
such Environmental Law, (B) alleging that it is or may be responsible for
any response, cleanup, or corrective action, including but not limited to
any remedial investigation/feasibility studies, under any such
Environmental Law; (iv) to Seller's knowledge, is not the subject of
federal or state investigation evaluating whether any investigation,
remedial action, or other response is needed to respond to spillage,
disposal or release, or threatened release into the environment of any
Hazardous Material; (v) to Seller's knowledge, has not filed any notice
under or relating to any such Environmental Law indicating or reporting
any past or present spillage, disposal, or release into the environment
of, or treatment, storage or disposal of, any Hazardous Material which
spill, release, treatment, storage, or disposal has not been performed
and/or addressed in accordance with such Environmental Laws, and there
exists no basis for such notice irrespective of whether such notice was
actually filed; and (vi) to Seller's knowledge, has no contingent
liability in connection with any actual or potential spillage, disposal,
or release into the environment of, or otherwise, with respect to any
Hazardous Material, whether on any premises owned or occupied by Seller or
on any other premises. Except as disclosed on Schedule 4.15 and in this
Section 4.15, to Seller's knowledge there are no Hazardous Materials on,
in or under any property or facilities
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"owned," "operated," or "controlled" (as each such term is defined by
applicable Environmental Laws and other state and federal laws and case
law in effect on the Closing Date as the same apply to environmental
matters) by Seller with respect to the ASD business, excepting such
Hazardous Materials used in accordance with all applicable Environmental
Laws in effect on the Closing Date.
(b) Certain equipment and structures located on the Property contain
asbestos containing materials (ACM) the repair or removal of which is
subject to state and federal statutory and/or regulatory requirements.
Purchaser assumes as an Assumed Liability full responsibility and
liability for any repairs or removal of any ACM that is undertaken by
Purchaser or at Purchaser's direction after Closing unless on the Closing
Date the condition of such ACM is not in compliance with Environmental
Laws in effect on the Closing Date, as reflected in the report entitled
"Asbestos Containing Building Material Update in Building 276", dated
March 25, 1996, a copy of which is attached to Schedule 4.15, in which
event Seller shall bear sole responsibility for any required remedial
actions to achieve compliance.
(c) Except as disclosed in Schedules 4.15 or 10.5, to Seller's
knowledge there are no (i) underground storage tanks located on the
Property, or (ii) units, conditions or sites located on the Property which
are subject to any liabilities or requirements under either the Resource
Conservation and Recovery Act, 42 U SC, Section 6901, et seq., or under
the Comprehensive Environmental Response, Compensation and Liability Act,
42 USC, Section 9601, et seq., as respectively amended, or the regulations
respectively promulgated thereunder.
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(d) There are no electrical transformers, capacitors, or other
equipment containing polychlorinated bipheyls (PCBs) located on the
property, the use or disposal of which would require special handling,
marking, or use of approved PCB disposal sites-as required under the Toxic
Substances Control Act, 15 USC, Section 2601, et seq., as amended.
4.16 Commissions and Fees. Seller has retained Einhorn Associates as
financial advisor in connection with the transactions contemplated by this
Agreement and is responsible for its fees. Seller has utilized no other finder,
broker, or similar source in connection therewith.
4.17 Absence of Change or Events. Except as expressly contemplated by this
Agreement or as set forth on Schedule 4.17, since December 31, 1995 the ASD
business has not, other than in the Ordinary Course of Business:
(a) mortgaged or pledged any Business Asset or subjected any such
asset to any Lien;
(b) sold, assigned, conveyed, transferred, canceled, or waived any
property, tangible asset, proprietary right, or other intangible asset or
right which would constitute a Business Asset if it were held by Seller on
the Closing Date;
(c) increased benefits or benefit plan costs or changed bonus,
insurance, pension, compensation, or other benefit plans or arrangements
made for or with or covering any officers or employees of the ASD
business;
(d) made commitments for capital expenditures relating to the ASD
business, which, in the aggregate, would exceed $50,000;
(e) granted any bonus or any increase in wages, salary, or other
compensation to any employee of the ASD business listed on Schedule 4.12;
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(f) suffered damages, destruction, or casualty losses which, in the
aggregate, exceed $25,000 to any asset or property of Seller;
(g) granted any license or sublicense of any rights under or with
respect to any Intellectual Property; or
(h) agreed to do any of the foregoing.
Schedule 4.17 also sets forth the agreement of the parties with respect to
certain items which have arisen since December 31, 1995.
4.18 Intellectual Property. Attached hereto as Schedule 4.18 is a list and
brief description of the Intellectual Property. Seller has furnished Purchased
with copies of all material license agreements to which Seller is a party,
either as licensor or licensee, with respect to any Intellectual Property.
Except for Intellectual Property which is licensed or leased from a third party,
Seller is the owner of all Intellectual Property, free and clear of all Liens
and free from any contractual restrictions. Except as described on Schedule 4.18
hereto, Seller has a valid and enforceable license or lease (as against the
licensor or lessor) to use or to license, all such Intellectual Property,
without the payment of any royalty or similar payment, except as specified in
the applicable agreements. Except as disclosed on Schedule 4.18, no claim by any
third party contesting the validity, enforceability, use or ownership of any
Intellectual Property has been made, is currently outstanding or, to the best of
Seller's knowledge, threatened. Except as disclosed on Schedule 4.18, and except
as to any circumstance or event which would not have a Material Adverse Effect:
(i) to the best of Seller's knowledge Seller is not infringing any patent night,
trade name, copyright, or trademark right of others; (ii) Seller is not aware of
any infringement by others of any such rights owned by Seller; and (iii) no
contract, agreement, or understanding between Seller and any party exists which
would
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prevent the continued use of the Intellectual Property by Seller or,
following the Closing, the Purchaser in a manner consistent with Seller's use
prior to the Closing.
4.19 Insurance. Attached hereto as Schedule 4.19 is a list of all policies
of fire, liability, or other forms of insurance and all fidelity bonds held by
or applicable to the ASD business or the Business Assets.
4.20 Accounts Receivable. All Accounts Receivable that have been recorded
on the books of the Business are bona fide and represent amounts validly due for
goods sold or services rendered in the Ordinary Course of Business. Except as
disclosed on Schedule 4.20 hereto (a) all of such Accounts Receivables are free
and clear of any Liens other than Liens created by Purchaser; (b) to the best of
Seller's knowledge none of such Accounts Receivables is subject to any offsets
or claims of offset; and (c) to the best of Seller's knowledge none of the
obligors of such Accounts Receivables has given notice that it will refuse to
pay the full amount or any portion thereof. No material change in accounting or
collection policies with respect to accounts receivable has occurred since
December 31, 1994.
4.21 Inventory. All Inventory on the books of the Business are utilizable
to Purchaser and are saleable at the lower of cost or market value. No material
change in accounting policy with respect to Inventory has occurred since
December 31, 1994.
4.22 Warranties. Except as disclosed in Schedule 4.22, there is no
outstanding claim, action, or proceeding against Seller and, to Seller's
knowledge, no threatened claim, action, or proceeding against Seller for Product
Liability or for breach of Product Warranty Liability to any customer of the ASD
business.
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4.23 Customers and Suppliers. Attached hereto as Schedule 4.23 is a list
of the Business' ten largest customers, as measured by gross revenues generated
by the sale of Products to such customers for the ten-month period ended October
31, 1995, and Schedule 4.23 also lists the Business' five largest suppliers, as
measured by billings from such suppliers during the ten-month period ending
October 31, 1995. Schedule 4.23 also sets forth a description of all
intercompany services provided by the Seller to the Business during the
ten-month period ending October 31, 1995, and the costs allocated to the
Business for such services.
4.24 Limitation on Representations, and Warranties. Except for the
representations and warranties set forth in this Agreement, the Business and
Business Assets are being sold "AS IS, WHERE IS." EXCEPT AS OTHERWISE EXPRESSLY
STATED ABOVE OR AS STATED IN THIS AGREEMENT, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES WHATSOEVER CONCERNING THE ASSUMED LIABILITIES, BUSINESS ASSETS, OR
THE BUSINESS, EXPRESS OR IMPLIED, ORAL, OR WRITTEN, AND SELLER HEREBY
SPECIFICALLY DISCLAIMS THE IMPLIED WARRANTY OF MERCHANTABILITY AND THE IMPLIED
WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. WITH RESPECT TO THE SELLER'S
REPRESENTATIONS AND WARRANTIES WHICH ARE CONTAINED IN THIS AGREEMENT, THE SELLER
SHALL ONLY BE LIABLE TO THE PURCHASER FOR DAMAGES TO THE EXTENT CAUSED SOLELY
AND DIRECTLY BY SELLER'S BREACH OF ANY SUCH REPRESENTATIONS OR WARRANTIES (OTHER
THAN DAMAGES AS A RESULT OF FRAUD). IN NO EVENT SHALL SELLER BE LIABLE FOR
CONSEQUENTIAL, INCIDENTAL, OR SPECIAL DAMAGES ARISING, DIRECTLY OR INDIRECTLY,
FROM ANY SUCH BREACH OR OTHERWISE, AND IN ANY EVENT, SELLER'S CUMULATIVE
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LIABILITY TO PURCHASER FOR BREACH OF REPRESENTATIONS OR WARRANTY OR OTHER CLAIMS
SHALL BE LIMITED IN THE AGGREGATE TO PROVEN COMPENSATORY DAMAGES, NOT TO EXCEED
THE PURCHASE PRICE (AS FINALLY DETERMINED AND ADJUSTED), PROVIDED, THAT IF AT
THE TIME OF SUCH BREACH PURCHASER IS IN DEFAULT UNDER ANY DEBT, OBLIGATION, OR
ASSUMED LIABILITY ASSUMED HEREUNDER, THEN THE AFORESAID LIMITATION ON LIABILITY
SHALL BE THE FINAL PURCHASE PRICE LESS THE REMAINING PRINCIPAL AMOUNT OF ANY
SUCH ASSUMED DEBT, OBLIGATION, OR ASSUMED LIABILITY IN RESPECT OF WHICH
PURCHASER IS IN DEFAULT.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser and Sovereign jointly and severally represent and warrant to
Seller that:
5.1 Organization and Standing. Purchaser is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware and qualified to do business in Ohio, and has full power and
authority to conduct its business as it is now being conducted and to own and
lease its properties and assets. Sovereign owns ninety-five percent (95%) of the
membership interests of Purchaser. Sovereign is a limited liability partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has full power and authority to conduct its business as
it is now being conducted and to own and lease its properties and assets.
Schedule 5.1 sets forth the names and addresses of the principal limited
partners and the general partner of Sovereign, as well as the percentage
interest owned or controlled by each. The copies of the Certificate of
Authorization and LLC Operating Agreement of Purchaser, as well as
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the Limited Partnership Agreement of Sovereign, are in full force and effect,
and complete and correct copies are attached to Schedule 5.1. Sovereign
Specialty Chemicals, Inc. ("SSCI") is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full power and authority to conduct its business and to enter into and perform
under the Limited Partnership Agreement. First Chicago Equity Corporation
("FCC") is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and has full power and authority to
conduct its business and to enter into and perform under the Limited Partnership
Agreement. The execution, delivery, and performance of and under the Limited
Partnership Agreement by SSCI and FCC has been duly authorized by all necessary
corporate action, respectively, and is a valid, binding, and enforceable
obligation of SSCI and FCC, respectively.
5.2 Authority. The execution, delivery, and performance of this Agreement
and the other transactions contemplated hereby have been duly authorized by
Purchaser and Sovereign by all necessary legal action, and this Agreement, when
duly authorized, executed, and delivered by Purchaser, Sovereign and Seller,
will be the valid and binding obligation of Purchaser and Sovereign enforceable
in accordance with its terms (subject as to the enforcement of remedies, to
applicable laws governing the recovery of attorneys' fees, public policy
considerations, bankruptcy, reorganization, insolvency, moratorium, or other
similar laws affecting the enforcement of creditors' or obligees' rights
generally from time to time in effect; and subject to general principles of
equity, including those limiting the right to obtain specific performance of
obligations of Purchaser thereunder).
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5.3 No Brokers. Except as set forth in Schedule 5.3 hereto, neither
Sovereign nor Purchaser have entered into any agreement or incurred any
obligation, directly or indirectly, for the payment of any brokers or finder's
fee or commission, or any other payment to any person or entity in connection
with this Agreement or the transactions contemplated hereby, and neither
Sovereign nor Purchaser is otherwise obligated to pay any such fee, commission,
or other payment and is not aware of any basis for any claim by any other
payment and is not aware of any basis for any claim by any person or entity for
the payment of such a fee, commission, or other payment.
5.4 Non-contravention. The execution and delivery of this Agreement by
Sovereign and Purchaser do not, and the consummation of the transactions
contemplated hereby by them will not, violate any provision of the limited
partnership agreement of Purchaser or violate or result (with or without the
giving of notice or the lapse of time or both) in a violation of any provision
of, or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or the lapse of time or both) any obligation under,
or result in the creation or imposition of any Lien of any kind upon the
property or assets of Sovereign or Purchaser pursuant to any provision of, any
mortgage, lien, lease, agreement, license, instrument, law, ordinance,
regulation, order, arbitration award, judgment, or decree to which Sovereign or
Purchaser is a party or by which Sovereign or Purchaser or any of their
properties or assets are bound.
5.5 Governmental Consents, etc. Except as set forth in Schedule 5.5, no
consent, authorization, order or approval of, or filing or registration with,
any governmental commission, board or other regulatory body is required for or
in connection with the execution and delivery by Sovereign or Purchaser of this
Agreement and the consummation of the transaction contemplated on its part
hereby.
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5.6 Legal Proceedings. There is no action, proceeding, or governmental
investigation pending or, to the best knowledge of Sovereign or Purchaser,
threatened against Sovereign or Purchaser which (i) seeks to restrain or enjoin
the consummation of the transactions contemplated by this Agreement or (ii)
could reasonably be expected to restrain or enjoin the consummation of the
transactions contemplated by this Agreement. Neither Sovereign nor Purchaser is
in violation of any term of any judgment, decree, injunction, or order
outstanding against it, which violation could reasonably be expected to
materially and adversely affect Sovereign's or Purchaser's ability to consummate
the transactions contemplated by this Agreement.
5.7 Financing. Purchaser has secured binding, unconditional commitments as
set forth in Schedule 5.7 from one or more commercial banks to provide all funds
required to consummate the transactions contemplated hereby and, after the
Closing Date, to fully perform the Assumed Liabilities, including without
limitation the Contracts, and to otherwise perform its obligations hereunder.
Purchaser has delivered to Seller copies of such binding commitment(s) and such
copies are complete and correct.
5.8 Disclosure. Except for facts and circumstances which Purchaser has
disclosed in Schedule 5.8, there is no fact or circumstance known to Sovereign
or Purchaser or their respective employees, agents, or representatives by reason
of due diligence or otherwise that gives either of them any reason to believe
that any representation or warranty of Seller contained in this Agreement
(including any Schedule hereto) or any collateral agreement will not be true and
correct in any material respect on and as of the date hereof and the Closing
Date. As of the Closing Date, Purchaser has had adequate and sufficient
opportunity and access to conduct such investigations and reviews as it
considers desirable or appropriate in order to conduct due diligence, and
Purchaser
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accepts the Business and Business Assets in their present condition
subject only to the terms and conditions hereof.
5.9 Ongoing Business. It is the intention of Purchaser in acquiring the
Business and Business Assets to operate them as an ongoing business for the
foreseeable future. Neither Sovereign nor Purchaser have any plan or intention
to liquidate or substantially terminate or relocate any portion of the Business
as presently conducted.
ARTICLE VI
COVENANTS
6.1 Confidentiality. Purchaser agrees that, unless and until such time as
the transactions contemplated by this Agreement are consummated, Purchaser and
its advisors, accountants, counsel, employees, banks, and agents (collectively,
the "Restricted Parties") shall not disclose to any third party nor use for its
or their own benefit, or otherwise use to the detriment of Seller or its
affiliates, any information received from Seller or its affiliates with respect
to the Business, Business Assets, or Assumed Liabilities including, but not
limited to, information concerning Seller's trade secrets, customers,
manufacturing processes, or pricing, and shall return to Seller the originals
and all copies of any documents, materials, summaries, and other information
received or derived by Purchaser hereunder or pursuant hereto; provided,
however, that nothing herein shall be deemed to prevent use (a) by any
Restricted Party other than Purchaser and its employees of information which is
demonstrated to have been known by such Restricted Party independently from the
disclosure of such information by Seller or (b) by any Restricted Party of
information which thereafter becomes publicly known or available without
disclosure by any Restricted Party, or which is rightfully received by such
party from a third party.
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6.2 Access to Information. Upon reasonable notice and during regular
business hours, Seller will give Purchaser and its attorneys, accountants, and
other representatives reasonable access to Seller's ASD business personnel, the
Facility and the Business Records, and will furnish to Purchaser such
information with respect to the Business as Purchaser may from time to time
reasonably request.
6.3 Employees; Employee Benefits. Purchaser agrees to offer employment,
beginning on the Closing Date, to all of Seller's non-union employees who are
employed in the Business, except for Mr. Clifford C. Pearson, whose continuing
employment is governed by a contract between Seller and Mr. Pearson, in the same
or in substantially comparable positions, and with at least the same rate of
base compensation and with comparable bonus and commission opportunities as are
existing for such employees immediately prior to the Closing Date, and to
maintain the position and compensation level of such employees for a reasonable
period of time after the Closing Date. Purchaser further agrees to enter into a
collective bargaining agreement between the Purchaser and the United
Steelworkers of America, and to offer employment under the terms thereof,
beginning on the Closing Date, to Seller's union employees of the Business.
Non-union employees who are on a leave of absence or are not working due to a
short-term or long-term disability as of the Closing Date will remain the
responsibility of Seller until they are able to return to work, at which time
they will be offered employment by Purchaser in accordance with the provisions
of this section. All employees who accept offers of employment made to them
hereunder shall be referred to herein as the "Hired Employees." Purchaser agrees
that it shall not terminate any Hired Employees for a reasonable period of time
after the Closing Date except for poor job performance, an act or omission on
the part of the Hired Employee being terminated that would constitute "just
cause," or a material
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adverse change in the Business. In the event that a Hired Employee who is
terminated, whether such termination is actual or constructive, for any reason
within one year of the Closing Date should become entitled as a result to
severance, other benefits, or any other amounts of any kind from Seller solely
as a result of such termination, including any payments that may arise as a
result of the application of the WARN Act to the termination, Purchaser shall
indemnify Seller in full for all such severance costs or other benefits or other
amounts. Such indemnification shall include any reasonable attorney's fees or
costs incurred by Seller in defending against any claim for severance, benefits,
or other amounts made by any Hired Employee.
Purchaser agrees to provide the Hired Employees who are not subject to a
collective bargaining agreement with a program of benefits which is reasonably
similar, in the aggregate, in the reasonable opinion of Seller, to the program
of benefits being provided to the Hired Employees by Seller immediately prior to
the Closing Date. With respect to the Hired Employees whose employment is
subject to a collective bargaining agreement, Purchaser agrees to offer a
program of benefits which is reasonably similar, in the aggregate, in the
reasonable opinion of Seller, for each Hired Employee to the program of benefits
provided immediately prior to the Closing to such Hired Employees by Seller. The
following subparagraphs set forth certain specific covenants of Purchaser and
agreements between the parties with respect to particular benefits to be
provided to the Hired Employees by Purchaser pursuant to this section.
(a) Retirement Plan.
(1) 401(k) Plan. Commencing on the Closing Date, Hired
Employees who are eligible to participate in the Seller's Retirement
Plus Savings Plan ("Seller's Savings Plan") shall be eligible to
participate in a defined contribution plan
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of Purchaser (the "Purchaser's Savings Plan") which contains a
Section 401(k) feature, and which is otherwise substantially similar
in all respects to the Seller's Savings Plan. The Purchaser's
Savings Plan shall not fail to be considered substantially similar
merely because the plan contains different investment options than
those presently offered under Seller's Savings Plan, so long as a
range of investment options is offered. It shall also not fail to be
considered substantially similar because the Company match provided
under it totals $.50 per dollar on the first 6% of earnings
contributed to the Plan rather than the dollar-for-dollar match
provided under the Seller's Savings Plan, nor shall it fail to be
considered substantially similar because the Company match provided
under Purchaser's Savings Plan is not invested in Purchaser's Stock.
The parties agree that each participant in the Seller's Savings Plan
shall have the light to make an elective transfer of his or her
account balance in that Plan to the Purchaser's Savings Plan, under
the rules set forth in Treasury Reg. ss.1.411(d)-4. The Purchaser's
Savings Plan shall contain provisions pursuant to which participants
may make eligible rollover distributions, as such term is defined in
the Internal Revenue Code, from the Seller's Savings Plan and from
the qualified profit sharing plan of the Seller's known as the Akron
URW Chemicals and Adhesives Defined Contribution Plan into the
Purchaser's Savings Plan. The Purchaser's Savings Plan will
recognize service with Seller for all purposes for which service is
a criterion in the Plan. Purchaser also agrees to offer Hired
Employees who are covered by a collective bargaining agreement
participation in the Purchaser's
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Savings Plan on substantially the same conditions as they currently
are eligible to participate in Seller's Retirement Plus Savings Plan
for Wage Employees.
(2) Defined Benefit Pension Plan. Purchaser agrees to
establish a defined benefit pension plan substantially similar in
all respects to Seller's Retirement Program For Salaried Employees,
for those Hired Employees who are currently participants in the
Retirement Program For Salaried Employees. Under such plan of
Purchaser, each Hired Employee will be credited with service with
Seller for purposes of determining eligibility and vesting under the
Purchaser's plan, but not for benefit calculation purposes. Whether
such benefits substantially similar shall be determined using the
actuarial and interest rate assumptions used by Seller under the
Retirement Program For Salaried Employees.
(b) Welfare Benefit Plans. By not later than January 1, 1997,
Purchaser shall establish group medical, dental, life, dependent life,
disability, accident, and other welfare and fringe programs for the Hired
Employees which shall be reasonably similar to the welfare benefit plans
provided by Seller to the Hired Employees immediately prior to the Closing
Date. Seller agrees, however, that to be comparable, Purchaser need not
offer health or dependent care reimbursement accounts to the Hired
Employees or provide the so-called "flex credits" provided by the Seller
to its employees. Purchaser agrees that such plans shall not contain any
pre-existing condition exclusions, evidence of insurability provisions,
waiting period requirements and similar provisions and shall recognize
service for all purposes for which service is a criterion under
Purchaser's welfare benefit plans. Purchaser further agrees that such
welfare benefit plans shall be offered to those Hired Employees
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whose employment is covered by a collective bargaining agreement, as well
as provided to all other Hired Employees.
Seller agrees that until such time as Purchaser establishes separate
welfare benefit plans in accordance with the above paragraph, Seller shall
administer welfare benefit plans established by Purchaser which mirror the
comparable plans of Seller which presently cover the Hired Employees.
Buyer understands that any such agreement with respect to an insured
benefit plan, such as Seller's Long Term Disability Income Plan, is
contingent on obtaining the consent of the insurer to such agreement, in
such form as is satisfactory to the Seller. Purchaser agrees that such
plans shall be authorized by its Board of Directors prior to the Closing
Date and shall be effective as of such date. With respect to the medical,
dental, vision, and prescription drug coverages to be administered by
Seller hereunder, Purchaser agrees that it shall reimburse Seller and be
responsible for all charges which arise under such plans, except as set
forth in Schedule 6.3(b), for services rendered between the Closing Date
and the date on which separate non-mirror benefit plans are established by
Buyer, regardless of when the injury, illness, or condition giving rise to
such services occurred. Purchaser further agrees that Seller shall have no
responsibility under its plans for any charges which arise under such
plans for services which are rendered after the date on which separate,
non-mirror benefit plans are established by Purchaser. With respect to
welfare benefit plans other than those providing medical, dental, vision,
and prescription drug coverage, Purchaser agrees to reimburse Seller for
any amounts incurred by Seller under such plans for claims which arise
between the Closing Date, and the date on which E3uyer establishes
separate, non-mirror benefit plans, and agrees that Seller shall have no
responsibility under its plans
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for any claim for such benefit which arises after the date on which
separate, non-mirror benefit plans are established. Purchaser also agrees
to pay the administrative costs incurred by Seller in operating its
welfare benefit plans which are attributable to the Business during the
period of administration, in accordance with the formula used by Seller
prior to the Closing Date, and any additional costs directly incurred by
Seller as a result of its administering of the welfare benefit plans
hereunder. Purchaser agrees to indemnify and hold Seller harmless against
any claims, demands, liabilities, judgments, or losses of any kind which
may be incurred by Seller as a result of its agreement under this
paragraph. Seller further reserves the right to immediately terminate its
agreement under this paragraph if it reasonably determines that its
likelihood of obtaining repayment from Purchaser hereunder is jeopardized.
Seller further agrees to reimburse Purchaser for any medical or
prescription drug costs, whether premium costs or medical expense
reimbursements paid under the plan, incurred in the 12-month period which
begins on the Closing, attributable to claim(s) identified in Schedule
6.3(b), up to a total reimbursement of $100,000. Seller's obligation shall
not extend to any medical services rendered to or incurred by such
individual after 12 months have elapsed from the Closing Date.
Seller agrees to be responsible for providing any notice required
under Part 6 of Title I of ERISA and Section 4980B of the Code
(collectively "COBRA") for all Hired Employees as a result of the sale of
the Business to Purchaser. Purchaser agrees to indemnify Seller for any
costs incurred by Seller in providing continuation coverage under COBRA to
any Hired Employees as a result of Purchaser failing to provide the Hired
Employees with
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medical benefits sufficient to relieve Seller of the obligation to provide
continuation coverage to such employees.
(c) Retiree Medical Coverage. Hired Employees who are eligible to
retire from Seller as of the Closing Date shall, together with their
spouses and other eligible dependents, be entitled to retiree medical and
life insurance coverage from Seller, under the plans of Seller then in
effect, which coverage shall be secondary to the medical coverage provided
to such employees of Purchaser while they are actively employed by
Purchaser. Purchaser shall indemnify and reimburse Seller in full for any
costs incurred by Seller under Seller's retiree medical plans with respect
to any Hired Employees (including their spouses and eligible dependents)
during the period when such employees are employed by Purchaser, as a
result of the fact that such employees are not then receiving medical
coverage from Purchaser, whether due to the fact that such employees
elected to waive coverage under the Purchaser's medical plan, or
otherwise. Seller shall have no obligation to Purchaser with respect to
retiree medical coverage of any Hired Employee who did not meet the
requirements for retiree medical coverage under Seller's retiree medical
plans as of the Closing Date. It is understood that those salaried Hired
Employees who qualify for retiree medical coverage on the Closing Date may
elect it at that time or later, up to the date on which they terminate
employment with the Purchaser.
6.4 Wage Reporting. Seller shall furnish each Hired Employee one
Wage and Tax Statement (IRS Form W-2) for wages paid by Seller. Purchaser
shall furnish IRS Forms W-2 covering the period from the Closing Date
through the end of the year in which the
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Closing Date occurs. Both parties shall comply with the provisions of
Section 4 of Rev. Proc. 84-77.
6.5 Workers Compensation. Purchaser shall assume as an Assumed Liability
full responsibility for all workers compensation claims that have been filed by
employees of the Business before the Closing Date by employees who were
employees of the Business when such claims were incurred, and shall indemnify
and hold Seller harmless against all claims, payments, expenses, costs and
losses incurred or accrued by Seller with respect to or arising out of such
claims, or Purchaser's assumption of such obligations. Purchaser will also be
responsible for all workers compensation claims that are filed by Hired
Employees on and after the Closing Date, including claims for injuries or
illnesses that result from aggravation of pre-existing conditions that were in
existence prior to or as of the Closing Date. In assuming responsibility for
existing worker's compensation claims, the parties nevertheless acknowledge that
Seller, as a self-insured employer under the Ohio Workers' Compensation statutes
retains ultimate responsibility for said claims, and the pates agree to
cooperate to the extent necessary to insure that the handling of such claims is
consistent with this paragraph, with Seller's underlying obligation under Ohio
State law and with the agreement of Purchaser to provide indemnification against
said claims.
6.6 Conduct of ASD Business. From and after the date hereof, through and
including the Closing Date, Seller shall operate the ASD business in the usual,
ordinary and normal course, and, in all material respects, consistent with
operations prior to the date hereof.
6.7 Material Changes. Except for transactions entered into in the Ordinary
Course of Business, without the prior written consent or Purchaser, Seller shall
not, after the date hereof and before the Closing Date, with respect to the ASD
business: (a) enter into any contract of
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employment with, or materially increase the compensation paid or payable to, or
enter into any new arrangements with, any of its officers, employees, or agents
or pay or become committed to pay any of the foregoing bonuses or other special
compensation other than in the ordinary course; (b) make any single capital
expenditure in an amount exceeding $50,000, or any capital expenditures which in
the aggregate exceed $250,000; or (c) sell, transfer, assign or encumber, or
agree to sell, transfer, assign or encumber, any of the Assets, other than the
sale of Inventory, Equipment, and Personal Property and collection of Accounts
Receivable in the Ordinary Course of Business.
6.8 Best Efforts. Seller and Purchaser shall use their respective
reasonable best efforts to obtain all consents and to cause any governmental and
regulatory licenses, permits, and approvals which are legally transferable to
Purchaser to be so transferred at the Closing (and Purchaser shall cooperate
with Seller in such manner as Seller reasonably may request). Subject to the
terms and conditions of this Agreement, Seller and Purchaser shall use their
respective best efforts and take all reasonable actions to bring about their
respective timely performance of this Agreement. The Seller and Purchaser will
each use their respective reasonable best efforts (without incurring expense or
payment to any third party or instituting litigation) to obtain consents of all
third parties and Governmental Authorities necessary to the consummation of the
transactions contemplated by this Agreement. To the extent that Seller's rights
under any agreement, contract, commitment, lease, or other Business Asset may
not be assigned without the consent of another person which has not been
obtained at or prior to Closing, this Agreement shall not constitute an
agreement to assign the same if an attempted assignment would constitute a
breach thereof or be unlawful, and Seller shall use reasonable best efforts
(without incurring expense or payment to any third party or instituting
litigation) to obtain any such required consent(s) as promptly as possible. If
any such consent shall
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not be obtained or if any attempted assignment would be ineffective or would
impair Purchaser's right under the asset in question so that Purchaser would not
in effect acquire the full benefit of all such rights, Seller, to the maximum
extent permitted by law and the asset to be assigned, shall act after the
Closing as Purchaser's agent in order to obtain for it the full benefits
thereunder and shall cooperate, to the maximum extent permitted by law and the
asset to be assigned, with Purchaser in any other reasonable arrangement
designed to provide such benefits to Purchaser; provided that Seller shall not
be required to incur any expense or payment to any third party, to institute
litigation or to otherwise incur cost in connection with the foregoing.
6.9 Prorations and Transfer Taxes. Real estate taxes, personal property
taxes, utilities, and other pro-ratable items not included in the Assumed
Liabilities shall be adjusted ratably as of the Closing Date. All applicable
state, federal, and local sales, use, and transfer taxes payable in connection
with the transactions contemplated hereby shall be allocated and paid by the
Seller. Purchaser shall reimburse Seller for 50% of the amount of such taxes
actually paid by Seller.
6.10 Assumption of Liabilities. Except as expressly provided in this
Agreement, Purchaser shall not assume any liabilities or obligations of Seller.
Purchaser hereby undertakes, assumes and agrees to perform, pay, honor, satisfy,
fulfill, and discharge the following, hereinafter referred to as the "Assumed
Liabilities", whether liquidated, unliquidated, accrued, absolute, contingent,
or otherwise:
(a) any and all obligations, liabilities, or commitments
specifically undertaken or assumed by Purchaser pursuant to the terms of
this Agreement, including without limitation the Accrued Liabilities and
the matters described in Section 4.15(b) hereof, in accordance with the
provisions thereof;
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(b) any and all unperformed and unfulfilled liabilities,
obligations, and commitments required to be performed and fulfilled by
Seller under the terms of the Contracts and the other executory contracts,
agreements, purchase, and sales orders, leases, licenses, commitments, and
undertakings of the Business entered into in the Ordinary Course of
Business, whether or not set forth in Schedule 1.12, or which have been
entered into between the date hereof and Closing in the Ordinary Course of
Business;
(c) any and all liability for accrued vacation for all of the Hired
Employees for all relevant periods prior to Closing, together with the
other liabilities which collectively comprise the Accrued Liabilities;
(d) any and all liability and responsibility for workers'
compensation claims as set forth in Section 6.5;
(e) any and all liabilities and obligations relating to claims
asserted at any time on or after the Closing Date by any person or entity
(including the expense of defense and settlement thereof) for or relating
to personal injury, wrongful death, or property damage which occur on or
after the Closing Date, including without limitation claims which involve
allegations of Product Warranty Liability or Product Liability, which is
actually or allegedly caused by, arising out of or resulting from Products
or services sold or provided by Purchaser, whether directly or indirectly,
in the conduct of the ASD business; and,
(f) other than Accounts Payable and intercompany liabilities, any
and all liabilities, obligations, and commitments incurred in the Ordinary
Course of Business since the Balance Sheet Date and in accordance with the
terms of this Agreement.
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It is expressly agreed that Purchaser has not assumed or agreed to
perform, pay, or discharge, and that Seller hereby undertakes, assumes, and
agrees to perform, pay, honor, satisfy, fulfill, and discharge, the Excluded
Liabilities, whether liquidated, unliquidated, accrued, absolute, contingent, or
otherwise, including without limitation;
(u) all liabilities and obligations of any kind existing as of the
Closing of a nature characterized as an intercompany liability on the
Balance Sheet or Closing Balance Sheet (including any item removed as a
pro forma adjustment), and any similar item otherwise owed between Seller
and the ASD business other than items arising from arms-length commercial
transactions (such as the sale of Products);
(v) all Accounts Payable of the Business as of the Closing Date;
(w) claims, demands, damages, costs, expenses, losses, liabilities,
penalties, fines, suits, and proceedings (including attorney's fees) which
arise as the result of (i) the enforcement of Environmental Laws in effect
on the Closing Date resulting from the operation of the ASD business, the
sale of Products or Seller's activities at the Facility on or prior to the
Closing Date during the period of Seller's ownership, possession, or
control thereof; (ii) conditions caused, events occurring, or activities
at the Facility or with respect to the Business on or prior to the Closing
Date which result in any emission, disposal, deposit, contamination, or
discharges of Hazardous Materials; or (iii) the storage or release of
Hazardous Materials in the buildings, structures, and all other
improvements at the Facility on or prior to the Closing Date which storage
or release gives rise to a regulatory obligation to remediate same under
Environmental Laws in effect on the Closing Date, together with
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ACM conditions for which Seller shall bear sole responsibility pursuant to
Section 4.15(b) of this Agreement;
(x) any and all liabilities and obligations relating to claims
asserted by any person or entity (including the expense of defense and
settlement thereof) for or relating to personal injury, wrongful death, or
property damage, including without limitation claims which involve
allegations of Product Warranty Liability or Product Liability, which is
actually or allegedly caused by, arising out of or resulting from Products
or services sold or provided by Seller, whether directly or indirectly, in
the conduct of the ASD business prior to the Closing Date;
(y) all liabilities and obligations of Seller for Taxes, other than
for Taxes which are expressly identified herein as Accrued Liabilities;
and,
(z) any of the litigation and claims required to be set forth in
Schedule 4.8 hereof.
6.11 Access to Information After the Closing. After Closing, Purchaser
shall cooperate with Seller and grant Seller's employees and agents during
normal business hours reasonable access to Purchaser's management and personnel
and to the records of Purchaser relating to the operation of the Business during
the period it was owned and operated by Seller for the purpose of:
(a) any Tax examination of Seller or its affiliates for preparation
of any Tax return of Seller or its affiliates;
(b) any claim or litigation involving Seller or its affiliates
(including claims or investigations arising under or in connection with
this Agreement);
(c) any investigation of Seller or its affiliates relating to the
Business conducted by any governmental organizations;
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(d) any matter relating to any indemnification, representation,
warranty, covenant, or any other term of this Agreement; or
(e) any reasonable business purpose.
It is specifically agreed that Purchaser shall cooperate with Seller at Seller's
expense in Seller's continued defense of the litigation and claims described in
Schedule 4.8 hereto, and shall provide technical advice and assistance in
connection therewith as reasonably required by Seller.
6.12 Taxes. Purchaser shall prepare and file all federal, state, and local
income, sales, personal property, or similar Tax returns in connection with the
operation of the Business on and after the Closing Date.
6.13 Seller's Identification. It is expressly understood that Purchaser
acquires no right, title, or interest in and to the trademarks, trade names,
and/or trade designations "The B.F. Goodrich Company", "BFGoodrich", "Goodrich",
"BFG", "Tremco", or in and to any other trademark, trade names, or trade
designation which identifies Seller as The B.F.Goodrich Company.
6.14 Removal of Seller's Identification. Purchaser shall within six (6)
months after the Closing: (a) remove or otherwise permanently and completely
obliterate all trademarks, trade names, and/or trade designations which identify
Seller from the Facility and from all Products transferred hereunder as existing
Inventory or Business Assets on the Closing Date; and, (b) remove or permanently
or completely obliterate from any molds, dies, or other equipment used for
making Products, any trademarks, trade names, and/or trade designations that
identify Seller. In connection with Products manufactured or sold by Purchaser
after the Closing Date that include any trademark, trade name, or trade
designation that identifies Seller (to the extent permitted herein) Purchaser
will nevertheless identify such Products as having been manufactured by
Purchaser. The provisions of
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this Section 6.14 shall not in any way limit or restrict the indemnities
provided by Purchaser nor expand the indemnities provided by Seller herein with
respect to Products sold after the Closing Date.
6.15 Office Supplies. Except to the extent permitted under Section 6.14
hereof, Purchaser agrees not to use any office stationary, invoices, vouchers,
catalogs, brochures, product literature, publications, MSDS, business cards, and
other office supplies which bear any trademark, trade name, or trade designation
that in any way identifies Seller unless it first removes, obscures by a label,
or permanently and completely obliterates the designation of Seller from such
materials.
6.16 Trademarks, Trade Names, and Technology Acquired By Purchaser.
Notwithstanding the foregoing provisions, Seller has agreed to and shall, as of
the Closing Date, assign, transfer, and convey to Purchaser all of its right,
title, and interest in and to the Trademarks and Trade Names identified in
Schedule 1.35. On the Closing Date, Seller and Purchaser shall execute and
deliver License Agreement(s) substantially in the form of the document(s)
annexed hereto as Exhibit B, wherein Seller transfers to Purchaser the Licensed
Technology for use by Purchaser in the Business.
6.17 Post-Closing Supply Agreements. The ASD business as heretofore
conducted by Seller has included transactions wherein: (i) various divisions of
Seller supply materials or goods to the ASD business; and (ii) the ASD business
sells Products to various divisions of Seller. Purchaser and Seller will review
these arrangements and will, prior to the Closing Date, establish arrangements
for the continuity of supply after Closing.
6.18 Post-Closing Issues. With respect to environmental conditions for
which Seller is liable hereunder, Seller will continue to monitor developments
and the proposed regulations under Ohio law with respect to a potential filing
by Seller with respect to the Facility (at Seller's expense)
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under the Ohio Brownfield Program, Ohio Revised Code Section 3746.01, et seq.
(the "Program"). The parties shall reasonably cooperate in all respects relative
to Seller's performance and discharge of its liabilities hereunder, including
such actions as Seller may determine to take under the Program, and in
connection therewith Purchaser shall provide to Seller such access to the
Facility, its records and information and personnel as may be reasonably
required in connection with such actions by Seller.
ARTICLE VII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
All obligations of Purchaser under this Agreement are subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, any of which conditions may be waived by Purchaser in its sole
discretion:
7.1 Representations and Warranties. The representations and warranties
made by Seller herein or in any document delivered pursuant hereto shall be
complete, true, and correct in all material respects when made and as of the
Closing Date.
7.2 Obligations. Seller shall have performed and complied in all material
respects with all obligations, covenants, agreements, and conditions, including
completion of the delivery required under Section 9.2, required hereunder to be
performed or complied with by it at or before the Closing Date.
7.3 Certificate. There shall be delivered to Purchaser a certificate
executed by Seller, dated as of the Closing Date, which (i) certifies that the
conditions set forth in Sections 7.1and 7.2 hereof have been fulfilled and (ii)
provides any information or particulars required to update the
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representations and warranties of Seller in respect of the period from the date
hereof through the Closing Date in order to permit such certification to be
made.
7.4 No Legal Action. No action or proceeding shall have been instituted or
threatened before any court or government body to restrain, prohibit, or
invalidate the sale of the Business and Business Assets contemplated by this
Agreement. No temporary restraining order or preliminary or permanent injunction
or other order, decree, or ruling shall have been issued by a court of competent
jurisdiction or by a governmental, regulatory, or administrative agency or
commission, and no statute, rule, regulation, or executive order shall have been
promulgated or enacted by any governmental authority or shall be in effect,
which would prevent the consummation of the transactions contemplated hereby or
cause same to be unlawful.
7.5 HSR Filing. All filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall have been made and the waiting
period thereunder including any extensions thereof shall have expired or
terminated.
7.6 Completion of Environmental Audit. The environmental audit report
referred to in Section 10.5 shall have been completed and delivered to Seller
and Purchaser.
ARTICLE VIII
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
All obligations of Seller under this Agreement are subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions, any of which conditions may be waived by Seller in its sole
discretion:
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8.1 Representations and Warranties. The representations and warranties
made by Purchaser herein or in any document delivered pursuant hereto shall be
true, complete and correct in all material respects when made and as of the
Closing Date.
8.2 Obligations. Purchaser shall have performed and complied in all
material respects with all obligations, covenants, agreements, and conditions,
including completion of the delivery required under Section 9.3, required
hereunder to be performed or complied with by Purchaser at or before the Closing
Date.
8.3 Certificates. There shall be delivered to Seller a certificate
executed by an authorized officer or representative of Purchaser, dated as of
the Closing Date, which (i) certifies that the conditions set forth in Sections
8.1 and 8.2 hereof have been fulfilled and (ii) provides any information or
particulars required to update the representations and warranties of Purchaser
in respect of the period from the date hereof through the Closing Date in order
to permit such certification to be made.
8.4 No Legal Action. No action or proceeding shall have been instituted or
threatened before any court or governmental body to restrain, prohibit, or
invalidate the sale of the Business and Business Assets contemplated by this
Agreement. No temporary restraining order or preliminary or permanent injunction
or other order, decree, or ruling shall have been issued by a court of competent
jurisdiction or by a governmental, regulatory, or administrative agency or
commission, and no statute, rule, regulation, or executive order shall have been
promulgated or enacted by any governmental authority or shall be in effect,
which would prevent the consummation of the transactions contemplated hereby or
cause same to be unlawful.
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8.5 HSR Filing. All filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, shall have been made and the waiting
period thereunder including any extensions thereof shall have expired or
terminated.
8.6 Completion of Environmental Audit. The environmental audit report
referred to in Section 10.5 shall have been completed and delivered to Seller
and Purchaser.
ARTICLE IX
CLOSING
9.1 Closing. The Closing shall take place on the Closing Date, at the
offices of Kirkland and Ellis in Chicago, Illinois, or at such other place as
Seller and Purchaser may mutually agree. All documents and other instruments
required to be delivered at Closing shall be regarded as having been delivered
simultaneously, and no document or other instrument shall be regarded as having
been delivered until all have been delivered.
9.2 Seller's Obligations. On the Closing Date, Seller shall deliver to
Purchaser:
(a) such bills of sale, endorsements, assignments, and other
appropriate instruments of conveyance, all in form and substance
reasonably satisfactory to legal counsel for Purchaser as shall be
necessary to for the purpose of transferring, assigning, and conveying to
Purchaser on the Closing Date all of Seller's light, title, and interest
in and to the Business and the Business Assets in accordance with the
terms and conditions hereof, and to otherwise consummate the transactions
contemplated by this Agreement, including, without limitation, the
Facility Documents;
(b) the legal opinion of Seller's Assistant General Counsel, dated
as of the Closing Date, in a form reasonably satisfactory to legal counsel
for Purchaser;
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(c) the Contracts, Business Records, and similar written documents
pertaining or relating to the Business Assets;
(d) a Certificates of Good Standing for Seller's issued by the
Secretary of States of New York and Ohio;
(e) a certificate signed by Seller's Secretary or Assistant
Secretary which certifies (i) the resolutions of the Board of Directors of
Seller approving and authorizing the execution, delivery, and performance
of this Agreement and the instruments, documents, and transactions
contemplated herein and (ii) the names and signatures of the officers of
the Purchaser authorized to execute and deliver all such instruments;
(f) all contracts, files, documents, data, records, and information
of Seller relating to the conduct of the ASD business or the Business
Assets, all of which may be delivered to the custody of Purchaser at
offices of the Business;
(g) UCC termination statements necessary to release any UCC-1
statements (if any) affecting the Business Assets;
(h) copies of all consents, assignments, and waivers received by
Seller for the consummation of the transaction contemplated by this
Agreement; and
(i) all other documents required to be delivered by Seller to
Purchaser at Closing under the provisions of this Agreement.
9.3 Purchaser's Obligations. On the Closing Date, Purchaser shall deliver
to Seller:
(a) payment of the adjusted Purchase Price to be paid at Closing
pursuant to Article 3;
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(b) such documentation as is necessary or required to evidence the
assumption of the Assumed Liabilities (including, without limitation, the
Assumption Agreement);
(c) the legal opinion of counsel for Purchaser, dated as of the
Closing Date, in a form reasonably satisfactory to legal counsel for
Seller;
(d) a Certificate of Good Standing for Purchaser issued by the
Secretary of States of Delaware and Ohio;
(e) a certificate signed by the Secretary or President of the
general partner of Sovereign which certifies (1) the resolutions of the
Board of Directors of the general partner of Sovereign approving and
authorizing the execution, delivery, and performance of this Agreement and
the instruments, documents, and transactions contemplated herein and (2)
the names and signatures of the officers of the general partner of
Sovereign authorized to execute and deliver all such instruments.
(f) a certificate signed by the Chairman of the Board of Managers, a
Manager or the President of Purchaser which certifies; (i) the resolutions
of the Board of Managers
approving the execution, delivery and performance of this Agreement and
the instruments, documents and transactions contemplated herein, and (ii)
the names and signatures of all officers and/or members of Purchaser
authorized to execute and deliver all such instruments.
(g) all other documents and payments required to be delivered by
Purchaser to Seller at Closing under the provisions of this Agreement.
9.4 Additional Acts and Documents. At any time and from time to time after
the Closing, Purchaser and Seller will execute and deliver such other
instruments of sale, transfer, conveyance, assignment, and confirmation and take
such actions as are necessary or desirable in order to
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effectively transfer, convey, and assign to Purchaser and to confirm Purchaser's
ownership of and title to the Business and Business Assets.
9.5 Consent and Approvals. This Agreement shall not constitute an
agreement to assign or transfer any interest in any instrument, contract, lease,
permit, or other agreement or arrangement or any claim, right, or benefit
arising thereunder or resulting therefrom, if an assignment or transfer or an
attempt to make such an assignment or transfer without the consent of a third
party would constitute a breach or violation thereof; and any transfer or
assignment to Purchaser by Seller of any interest under any such instrument,
contract, lease, permit, or other agreement or arrangement that requires the
consent of a third party shall be made subject to such consent or approval being
obtained. In the event any such consent or approval is not obtained on or prior
to the Closing Date, Seller shall continue to use commercially reasonable
efforts to obtain any such approval or consent after the Closing Date until such
time as such consent or approval has been obtained, and Seller will cooperate
with Purchaser in any lawful and economically feasible arrangement to provide
that Purchaser shall receive Seller's interest in the benefits under any such
instrument, contract, lease, permit, or other agreement or arrangement,
including performance by such Seller as agent, if economically feasible,
provided that Purchaser snail undertake to pay or satisfy the corresponding
liabilities for the enjoyment of such benefit to the extent Purchaser would have
been responsible therefor if such consent or approval had been obtained.
Purchaser shall pay and discharge, and shall indemnify and hold Seller harmless
from and against, any and all out-of-pocket costs (other than its internal
administrative costs) of seeking to obtain or obtaining any such consent or
approval after the Closing Date.
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9.6 Accounts Receivable. Seller agrees to promptly transfer to Purchaser
any cash or other property which Seller may receive after Closing in respect of
the Accounts Receivable transferred to Purchaser hereunder.
9.7 Exhibited Documents and Schedules. Seller and Purchaser shall at
Closing execute and deliver the agreements annexed hereto as Exhibits A and B.
ARTICLE X
ADDITIONAL COVENANTS
10.1 Payment of Assumed Liabilities. Purchaser shall pay or perform when
due all Assumed Liabilities, provided, however, that nothing contained herein
shall require Purchaser to pay, perform, or discharge any Assumed Liability so
long as: (i) Purchaser shall, in good faith, be diligently contesting, or
causing to be contested the amount or validity thereof; (ii) execution thereof
against Seller has been stayed; and (iii) Purchaser provides Seller with a
complete defense and indemnity with respect to all matters arising out of such
contest.
10.2 Payment of Excluded Liabilities. Seller shall pay or perform when due
all Excluded Liabilities, provided, however, that nothing contained herein shall
require Seller to pay, perform, or discharge any Excluded Liability so long as:
(i) Seller shall, in good faith, be diligently contesting or causing to be
contested the amount or validity thereof; (ii) execution thereof against
Purchaser has been stayed; and (iii) Seller provides Purchaser with a complete
defense and indemnity with respect to ail matters arising out of such contest.
10.3 Seller's Non-Competition Covenant. In consideration of Purchaser
entering into and fulfilling its obligations under this Agreement, and ancillary
to the sale of the Business and Business Assets as provided herein, Seller
agrees that, without the prior written consent of Purchaser, it and
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its current affiliates and subsidiaries shall not, for a period of four (4)
years after the Closing Date, directly or indirectly: (a) engage in any
Competing Activity (as hereinafter defined) within the geographic area in which
Seller has conducted the Business, it being understood and agreed by the parties
that such geographic area is world-wide; (b) either for its own benefit or
purposes or the benefit or purposes of any other person, interfere with, attempt
to divert, entice away, or accept any business from any person who was listed in
the Customer List, if for the purpose of a Competing Activity; or (c) solicit
for employment by Seller any Hired Employee. For the purposes of this Agreement,
"Competing Activity" means any participation in, or other ownership or
organization of, any person or entity, which, directly or indirectly, is engaged
in, or hereafter engages in, the design, development, manufacture, distribution
or sale of any Product, whether Seller is acting as an agent, consultant,
investor, partner, shareholder, proprietor or in any representative capacity.
Provided, however, that nothing herein shall prevent or prohibit Seller or its
affiliates or subsidiaries in any way from conducting any activities other than
the ASD business or prohibit Seller from acquiring, investing in, controlling,
or otherwise having an interest in a business so long as not more than ten
percent (10%) of such business' sales and profits are derived from an operation
which is a Competing Activity, or from acquiring, investing in, or otherwise
having an interest in not more than a ten percent (10%) equity interest or
capital stock interest in a business whose sales and profits are derived from a
Competing Activity.
10.4 Continued Business Activity. It is understood and agreed that, any
activity of Seller which is conducted after Closing in a manner consistent with
its prior practice as a part of any of the divisions, business units, or
segments of Seller or its affiliates other than the ASD business as constituted
and operated on and after December 31, 1994, whether as the commencement,
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continuation, or restructuring of any such activity, shall be deemed not to
constitute a Competing Activity for the purposes of the foregoing Section 10.3,
and nothing in this Agreement shall restrict or limit, or be deemed to restrict
or limit, any such activity as may be hereafter conducted by Seller.
10.5 Environmental Audit and Liabilities. The parties have agreed to share
equally the expenses of an environmental audit of the Facility, conducted by
Environmental Mitigation Group ("EMG"), which audit report is attached here in
Schedule 10.5. Seller shall not be obligated by reason of this Agreement to
undertake any actions or to expend any funds in response to or as a consequence
of any matter or condition identified in EMG's report. EMG's report shall serve
as a baseline for future reference by the parties for the purposes of this
Agreement.
10.6 Taxes.
(a) Except as otherwise provided herein, and except as to items
which are Accrued Liabilities, Purchaser shall not be liable at any time
for, and Seller shall indemnify and hold Purchaser harmless from and
against, any Taxes which may be assessed against or incurred by Seller in
respect of the Business for any period ending on or prior to the Closing
Date, whether resulting from any audit or review conducted prior to or
subsequent to the Closing or otherwise. Seller shall be entitled to
recover and retain any refunds of Taxes paid in respect of all periods
ending on or prior to the Closing Date, except in respect of any Taxes
which are Accrued Liabilities.
(b) It is understood and agreed that, in connection with the sale of
certain real or personal property (whether owned or leased), certain
general or leasehold taxes which are assessed on an annual basis will be
prorated as of the Closing Date. The prorations will be based upon the
best information available at the time, and Purchaser and Seller agree
that
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when the relevant information is finalized as evidenced by issuance of the
relevant tax bills by the appropriate taxing body, any over- or
underpayment resulting from the earlier prorating of estimated figures
will be promptly adjusted by cash payment between parties.
(c) In the event Seller or Purchaser pay any amount which another is
obligated to pay pursuant to this Section 10.6, then the party so paying
shall be promptly reimbursed in cash by the other party.
(d) Purchaser shall be responsible and liable for, and shall
indemnify and hold Seller harmless against, any and all Taxes arising out
of or assessed against the Business and Business Assets in respect of the
operation or ownership, use, or transfer thereof after the Closing Date.
ARTICLE XI
INDEMNIFICATION
11.1 Indemnification by Purchaser. Purchaser agrees to indemnify, defend,
and hold harmless Seller, its affiliates and their respective officers,
directors, shareholders, employees, agents, successors, and assigns from and
against any liability, obligation, claim, cause of action, loss, cost, damage,
and expense of any kind or amount whatsoever, including reasonable attorneys'
fees and court costs incurred in prosecuting or defending same, but excluding
consequential damages (Seller's "Losses"), incurred or suffered by one or more
of said parties, arising out of or resulting from:
(a) The breach of any representation or warranty made by Purchaser
in this Agreement;
(b) The breach of or failure to perform any covenant, obligation, or
agreement of Purchaser set forth herein;
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(c) The Assumed Liabilities;
(d) Any liability relating to the Business or the Business Assets
claimed to arise under any Environmental Law, as now or hereafter enacted,
reauthorized or amended, arising out of facts or circumstances occurring
on or after the Closing Date, or otherwise arising out of or resulting
from the operation of the Business or the sale of Products after the
Closing Date; provided, however, that Purchaser shall not be required to
indemnify Seller hereunder if and to the extent any such claim by
Purchaser arises from facts or circumstances in respect of which Seller
has indemnified Purchaser pursuant to Section 11.2; and,
(e) Claims, demands, damages, costs, expenses, losses, liabilities,
penalties, fines, suits, and proceedings (including attorney fees) arising
or resulting from (1) conditions caused, events occurring, or activities
at the Facility or with respect to the Business after the Closing Date
which result in any emission, disposal, deposit, contamination, or
discharges of hazardous substances or regulated substances or (2) the
existence, storage, or presence of hazardous substances or regulated
substances in the buildings, structures, and all other improvements at the
Facility on or after the Closing Date and the remediation thereof except
to the extent Seller has provided indemnification pursuant to Section 11.2
hereof .
11.2 Indemnification by Seller. Seller shall indemnify, defend, and hold
harmless Purchaser, its officers, directors, shareholders, employees, agents,
successors, and assigns and against any liability, obligation, claim, cause of
action, loss, cost, damage, and expense of any kind or amount whatsoever,
including reasonable attorneys' fees and court costs fees incurred in
prosecuting or defending same, but excluding consequential damages (Purchaser's
"Losses") incurred or suffered by any one or more of said parties, arising out
of or resulting from:
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(a) The breach of any representation or warranty made by Seller in
this Agreement;
(b) The breach of or failure to perform any covenant, obligation, or
agreement of Seller set forth herein;
(c) The Excluded Liabilities;
(d) Claims, demands, damages, costs, expenses, losses, liabilities,
penalties, fines, suits, and proceedings (including attorney's fees) which
arise as the result of (i) the enforcement of Environmental Laws in effect
on the Closing Date resulting from the operation of the ASD business, the
sale of Products or Seller's activities at the Facility on or prior to the
Closing Date during the period of Seller's ownership, possession, or
control thereof; (ii) conditions caused, events occurring, or activities
at the Facility or with respect to the Business on or prior to the Closing
Date which result in any emission, disposal, deposit, contamination, or
discharges of Hazardous Materials; or (iii) the storage or release of
Hazardous Materials in the buildings, structures, and all other
improvements at the Facility on or prior to the Closing Date which storage
or release gives rise to a regulatory obligation to remediate same under
Environmental Laws in effect on the Closing Date, together with ACM
conditions for which Seller shall bear sole responsibility pursuant to
Section 4.15(b) of this Agreement; and,
(e) Any brokers' commission, finders' fees, or other like payments
incurred or alleged to have been incurred by Seller in connection with the
sale of the Assets and the consummation of the transactions contemplated
by this Agreement.
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11.3 Procedure for Indemnification. If any party hereto shall claim
indemnification hereunder arising from any claim or demand of a third party, the
party seeking indemnification (the "Indemnitee") shall promptly notify the party
from whom indemnification is sought (the "Indemnitee") in writing of the basis
for such claim or demand, setting forth the nature of the claim or demand in
reasonable detail. The indemnitor shall have the right to compromise or, if
appropriate, defend at its own cost and through counsel of its own choosing, any
claim or demand of any third party giving rise to such claim for
indemnification. Such notice and opportunity to compromise or defend, if
applicable, shall be conditions precedent to any asserted liability under this
indemnity. In the event the indemnitor undertakes to compromise or defend any
such claim or demand, it shall promptly notify the indemnitee in writing of its
intention to do so. The indemnitee shall fully cooperate with the indemnitor and
its counsel in the defense or compromise of such claim or demand. After the
assumption of the defense by the indemnitor, the indemnitor shall be liable for
any out-of-pocket legal or other expenses subsequently incurred in connection
with such defense, but the indemnitee may participate in such defense at its own
expense. No settlement of a third-party claim or demand defended by the
indemnitee shall be made without the written consent of the indemnitor. The
indemnitor shall not, except with the written consent of the indemnitee, consent
to the entry of a judgment or settlement which does not include as an
unconditional term thereof, the giving by all claimants which have or could
assert claims against indemnitee (including, without limitation, Claims for
Contribution or indemnity) to the indemnitee an unconditional and complete
release from all liability in respect of such third-party claim or demand.
Indemnitee will have the right to review and approve the form of release, which
approval will not be unreasonably withheld or delayed. If either party shall
claim 'indemnification hereunder for any claim other than third-party
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claims, the indemnitee shall promptly notify the indemnitor in writing of the
basis for such claim, setting forth the nature and amount of the claim in
reasonable detail, and after determination of the validity of such claim, which
the parties shall promptly pursue, payment therefor shall be made by the
indemnitor. Notwithstanding the foregoing, the indemnitor will not be entitled
to control the defense of a claim, and will pay the reasonable fees and expenses
of legal counsel retained by indemnitee, in the event a court of competent
jurisdiction rules that the indemnitor has breached its obligation herein to
defend such claim, or if the indemnitor is insolvent, bankrupt, or otherwise
unable or unwilling to pay the costs of defending such claim.
11.4 Period of Seller's Indemnity. The indemnities contained in Section
11.2 of this Agreement shall expire two (2) years from the Closing Date, except
with respect to (i) Losses as to which notice has been given pursuant to Section
11.3 within such period, in which case the indemnification period shall be
extended until final resolution of such Loss; (ii) the indemnities set forth in
Section 11.2(d) which shall expire four (4) years from the Closing Date; and
(iii) indemnities provided herein by Seller with respect to Taxes which shall
survive for the period of the applicable statute of limitations.
11.5 Limitation of Liability. Purchaser's right to indemnification under
this Agreement in relation to the transactions contemplated herein shall be
limited to a maximum recovery from Seller of $10,000,000, and Purchaser agrees
this shall constitute Purchaser's sole and exclusive remedy with respect to
Purchaser's Losses except as a result of fraud by Seller. Seller shall have no
obligation to indemnify Purchaser pursuant to this Agreement unless (a) the
claim for indemnity is in excess of $10,000 and (b) the total of all claims in
excess of $10,000 is in excess of $150,000. In the event the threshold on
liability for indemnification in clause (b) of this Section 11.5 is
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satisfied, Seller shall be liable for the entire amount (up to an aggregate of
$10,000,000) of all such claims which in total are in excess of $100,000, and
then only to the extent of such excess. Purchaser waives the light to be
indemnified by Seller with respect to any Losses to the extent of (i) any
insurance proceeds or other recovery received by it (in excess of any applicable
uninsured deductible or retention) with respect to Losses for which
indemnification by Seller would otherwise be required hereunder or (ii) any
reduction of any taxes otherwise payable by Purchaser resulting from a Loss,
after taking into account any taxes imposed upon any indemnity payment.
Notwithstanding anything to the contrary contained in this Agreement (except as
provided in Section 11.9), Seller shall not be liable under the indemnification
provisions of this Article II hereof or otherwise have any liability for any
misrepresentation or breach of warranty under this Agreement or otherwise have
any liability in connection with the transactions contemplated by this
Agreement, other than in an amount which is in the aggregate recoverable after
giving effect to the provisions and limitations of this Section 11.5.
11.6 Exclusive Remedy; Survival. The parties hereto agree that the
remedies provided by this Article shall be exclusive with respect to the matters
described in Sections 11.1 and 11.2. The representations and warranties of
Seller and Purchaser set forth in this Agreement shall expire two (2) years
after the Closing Date, and Seller's and Purchaser's respective liability with
respect thereto (including indemnification in respect of same) shall
automatically and absolutely expire, terminate and be extinguished at the end of
such two (2) year period, except as otherwise expressly provided in this
Agreement.
11.7 Special Defense Provisions. The provisions of Section 11.3 shall be
subject to the following provisions. In the event any Loss shall arise in
respect of any alleged exposure to Products
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or to materials contained therein or used in the production of Products, wherein
the period of exposure commences in respect of Products sold by Seller prior to
the Closing Date and terminates after the commencement of the sale of Products
by Purchaser on and after the Closing Date, then liability shall be allocated
based on the respective quantities of Products sold or based on the respective
time of exposure, whichever is more relevant to the Loss in question. At such
time as any such Loss is asserted, Purchaser and Seller shall reasonably
cooperate to determine which party is more likely to have the greater percentage
of any potential liability, and the party so mutually identified shall take the
lead in defending such action. The costs of defense shall be initially paid on
an estimated, mutually-agreed percentage basis. If the parties are unable to
agree as to which party should assume the defense, then the party which has been
named defendant shall assume the defense (or if both are named parties, then
they shall each defend themselves), and the total costs of defense shall be
borne on a 50/50 basis. The aforesaid allocations of defense costs shall be made
on a preliminary basis only, and shall be subject to final adjustment as between
Seller and Purchaser upon the final determination of the actual percentage
liability of the parties. If such final determination shall indicate that
neither party is liable for the alleged Loss, then the defense costs shall
remain allocated on the same basis as the preliminary allocation, unless
otherwise agreed by the parties. The foregoing shall not apply to any item
included in Schedule 4.8.
11.8 Special Indemnification by Seller. Notwithstanding anything to the
contrary in this Article 11 (including the limitations in Section 11.4, 11.5 and
11.6 hereof), Seller shall indemnify, defend and hold harmless Purchaser, its
officers, directors, shareholders, employees, agents, successors and assigns
from and against any liability, obligation, claim, cause of action, loss, cost,
damage and expense of any kind or amount whatsoever, including reasonable
attorneys' fees and
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court costs fees incurred in prosecuting or defending same, but excluding
consequential damages (Purchaser's "Losses"), incurred or suffered by any one or
more of said parties, arising out of or resulting from any claim or threatened
claim that either the Purchaser or the Seller, or any person in the chain of
distribution or use from Seller or Purchaser, has infringed on U.S. Patent
5,234,757 or 5,397,611 or any divisional, continuation, continuation-in-part or
reissue thereof, or any foreign patents corresponding to any of the foregoing
relating to expandable syntactic films. The obligations of Seller set forth
above shall apply only if (a) Purchaser promptly informs Seller in writing of
any claim or threatened claim within thirty (30) days of Purchaser receiving
written notice of such claim or threatened claim, (b) Seller is given exclusive
control of the defense of such claim and all negotiations relating to its
settlement, and (c) Purchaser shall assist Seller in all necessary respects in
defense of such claim including providing Seller reasonable and timely access to
any documents, employees, or the like required for the defense of such claims.
11.9 ENFORCEMENT OF COVENANTS. NOTWITHSTANDING ANYTHING CONTAINED IN THIS
AGREEMENT TO THE CONTRARY (INCLUDING WITHOUT LIMITATION THE PROVISIONS OF
SECTIONS 4.24,11.4,11.5 AND 11.6 HEREOF), THE PURCHASER SHALL HAVE THE RIGHT TO
ENFORCE ANY COVENANT CONTAINED IN THIS AGREEMENT AT ANY TIME HEREAFTER
(INCLUDING, WITHOUT LIMITATION, THE PERFORMANCE BY SELLER OF ANY EXCLUDED
LIABILITY), INCLUDING THE RIGHT TO SEEK SPECIFIC PERFORMANCE OF SUCH COVENANTS
OR ANY OTHER REMEDIES.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Termination. This Agreement may be terminated at any time prior to
the Closing,
(a) by mutual consent of Purchaser and Seller;
(b) by Seller if the Closing has not occurred prior to a date thirty
(30) days after the waiting period under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, has expired or been terminated; or
(c) by Seller if the Closing Date has not occurred by May 15, 1996.
12.2 Liability on Termination. In the event of termination of this
Agreement as provided in Section 12.1, above, neither party hereto shall
have any liability hereunder of any nature whatsoever to the other,
including any liability for damages, provided that this Section 12.2 shall
not preclude liability for a willful act, or a willful failure to act, in
violation or breach of the terms and conditions hereof.
12.3 Expenses. Except as otherwise specifically provided herein, each
party shall pay its own expenses, including fees of counsel and accountants
incurred in connection with the Acquisition Agreements and the transactions
contemplated thereby.
12.4 Public Announcements. From and after the date hereof and prior to the
Closing Date, except as Purchaser and Seller may otherwise agree, neither
Purchaser nor Seller shall make any release of information regarding matters
relating to the transactions contemplated hereby except: (i) Purchaser and
Seller may each continue such communications with their respective employees,
customers, licensees, suppliers, lenders, lessors, and other particular groups
as may be legally required or necessary or appropriate and not inconsistent with
the best interest of the other party or
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the prompt consummation of the transactions contemplated by this Agreement or
(ii) as required by law; provided, however, that Purchaser and Seller shall use
their best efforts to consult with each other prior to making any public
announcement regarding matters relating to the transactions contemplated by this
Agreement.
12.5 Notices. All notices or other communications required or permitted by
this Agreement shall be in writing and shall be deemed to have been duly given
(i) upon receipt if delivered in person, (ii) one (1) business day after notice
is sent by Federal Express or other national overnight courier of comparable
stature, or (iii) three (3) days after such notice is mailed by certified or
registered mail, return receipt requested, postage prepaid, and addressed as
follows:
(i) if to Purchaser or Sovereign:
Sovereign Engineered Adhesives, L.L.C.
Sovereign Specialty Chemicals, L.P.
225 W. Washington Street, Suite 220
Chicago, Illinois 60606
Attn: President
with copies to:
First Chicago Equity Capital
Three First National Plaza, Suite 1210
Chicago, Illinois 60670-0610
Attn: Burton E. McGillivray
and
Davis, Graham & Stubbs, L.L.C.
1225 New York Avenue, Suite 1200
Washington, DC 20005-3919
Attn: Christopher J. Hagan, Esq.
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(ii) if to Seller,
BFGoodrich Specialty Chemicals
9911 Brecksville Road
Cleveland, Ohio 44141-3247
Attn: Vice President - Legal
or to such other addresses as may be specified by either party hereto pursuant
to notice given by such party in accordance with the provisions of this Section
12.5.
12.6 Benefit of the Agreement. This Agreement shall be binding upon the
parties hereto and their respective permitted successors and assigns and shall
inure to the benefit of the parties hereto and their permitted successors and
assigns. This Agreement does not and is not intended to confer any lights or
remedies hereunder upon any person other than the parties hereto and their
respective permitted successors and assigns.
12.7 Headings. The headings used in this Agreement are for convenience
only, shall not be deemed to constitute a part hereof, and shall not be deemed
to limit, characterize or in any way affect the provisions of this Agreement.
12.8 Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof, and no
other representations, warranties, promises, agreements, statements, or
understandings regarding the subject matter hereof shall be of any force or
effect unless in writing, executed by the party to be bound and dated on or
subsequent to the date hereof.
12.9 Gender and Number. Wherever from the context it appears appropriate,
each item stated in either the singular or the plural shall include the singular
and the plural, pronouns stated in either the masculine, feminine, and neuter
gender, and terms defined in Article I hereof in either the
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singular or the plural may be used in either the singular or plural herein
without otherwise changing the meaning thereof.
12.10 Modifications and Waivers. No change, modification, or waiver of any
provision of this Agreement shall be valid or binding unless it is in writing
dated subsequent to the date hereof and signed by the parties intended to be
bound. No waiver of any breach, term, or condition of this Agreement by either
party shall constitute a subsequent waiver of the same or any other breach,
term, or condition.
12.11 Assignment. This Agreement may not be assigned by either party
without prior written consent of the other party, which consent will not be
unreasonably withheld; provided, however, that Purchaser may assign its rights
hereunder to LaSalle National Bank as security for its secured financing
obtained to fund this transaction or any modification or replacement thereof.
12.12 Invalid Provisions. If any provision of this Agreement is deemed or
held to be illegal, invalid, or enforceable, this Agreement shall be considered
divisible and inoperative as to such provision to the extent it is deemed to be
illegal, invalid, or unenforceable, and in all other respects this Agreement
shall remain in full force and effect provided, however, that d any provision of
this Agreement is deemed or held to be illegal, invalid, or unenforceable there
shall be added hereto automatically a provision as similar as possible to such
illegal, invalid, or unenforceable provision and be legal, valid, and
enforceable. Further, should any provision contained in this Agreement ever be
reformed or rewritten by any judicial body of competent jurisdiction, such
provision as so reformed or rewritten shall be binding upon all parties hereto.
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12.13 Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.14 Bulk Sales. Purchaser hereby waives compliance by Seller with the
provisions of the Bulk Sales Laws of any state, and Seller warrants and agrees
to pay and discharge when due all bona fide claims of creditors of Seller
actually made against Purchaser or which have been or will be asserted against
Purchaser by reason of such non-compliance to the extent that such liabilities
are not included within the Assumed Liabilities under this Agreement. Seller
indemnities and agrees to hold Purchaser harmless from, against and in respect
of (and shall on demand reimburse Purchaser for) any loss, liability, cost, or
reasonable expense, including, without limitation, reasonable attorneys' fees,
suffered or incurred by Purchaser by reason of the failure of Seller to pay or
discharge such claims, provided any such claims are promptly disclosed to Seller
pursuant to the indemnity procedures set forth in Article XI hereof.
12.15 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Ohio.
ARTICLE XIII
SOVEREIGN GUARANTY
13.1 Guaranty. Sovereign hereby unconditionally guarantees the full and
prompt performance by its wholly-owned subsidiary, Purchaser, of each and every
covenant, obligation, indemnity or undertaking of Purchaser hereunder, and
Sovereign shall cause Purchaser at all times to perform same in accordance with
the terms and conditions of this Agreement. Upon failure of Purchaser to
perform, discharge, satisfy or deliver pursuant to any such covenant,
obligation,
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indemnity or undertaking hereunder, Sovereign shall forthwith on demand by
Seller perform in place of Purchaser as though Sovereign had been the Purchaser
hereunder in place of Purchaser.
13.2 Guaranty Unconditional. The obligations of Sovereign hereunder shall
be unconditional and absolute, and without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(a) any extension, renewal, settlement, compromise, waiver or
release of any obligation of Purchaser under this Agreement;
(b) any modification or amendment of this Agreement;
(c) any change in the corporate existence, structure or ownership of
Purchaser or any insolvency, bankruptcy, reorganization, or similar
proceeding affecting Purchaser or its assets, or the dissolution of
Purchaser;
(d) any act or omission to act or delay of any kind by Purchaser,
Seller or any other person or entity or any other circumstance whatsoever
which might, but for the provisions of this paragraph, constitute a legal
or equitable discharge of Purchaser's or Sovereign's obligations
hereunder.
13.3 Survival. Notwithstanding any other provision hereof, the provisions
of this Article 13 shall survive. the Closing as independent obligations and
covenants of Sovereign.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
SELLER:
THE B. F. GOODRICH COMPANY
By: /s/ Steven Esakov
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Title: V.P. Strategic Planning & Commercial Development
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SOVEREIGN:
SOVEREIGN SPECIALTY CHEMICALS, L.P.,
a Delaware limited partnership
By: SOVEREIGN CHEMICAL CORPORATION,
Delaware corporation, its General Partner
By: /s/ Robert B. Covalt
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Title: CEO
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PURCHASER:
SOVEREIGN ENGINEERED ADHESIVES, L.L.C.
a Delaware limited liability company
By: Sovereign Specialty Chemicals, L.P.
a Delaware limited partnership, its Manager
By: Sovereign Chemicals Corporation,
a Delaware corporation, its General Partner
By: /s/ Robert B. Covalt
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Title: CEO
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