Exhibit 2.1
PROPRIETARY AND CONFIDENTIAL
EXECUTION COPY
PURCHASE AND SALE AGREEMENT
AMONG
JOSLYN HOLDING COMPANY,
XXXXXXX UK INDUSTRIES LIMITED
and
JOSLYN CANADA
(as the Sellers)
and
XXXXXX & XXXXX CORPORATION
(as the Buyer)
June 30, 2007
Table of Contents
Page
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ARTICLE I MEMBERSHIP INTEREST AND ASSET PURCHASE......................................................1
1.1 Sale and Transfer of Membership Interests; Purchase and Sale of Assets;
Assumption of Liabilities......................................................1
1.2 Purchase Price and Related Matters.............................................2
1.3 The Closing....................................................................3
1.4 Post-Closing Adjustment........................................................4
1.5 Consents to Assignment.........................................................5
1.6 Further Assurances.............................................................6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS...............................................6
2.1 Organization, Qualification and Power..........................................6
2.2 Capitalization.................................................................7
2.3 Authority......................................................................7
2.4 Noncontravention...............................................................7
2.5 Financial Statements...........................................................8
2.6 Absence of Certain Changes.....................................................8
2.7 Tax Matters....................................................................8
2.8 Tangible Personal Property.....................................................9
2.9 Designated Owned Real Property.................................................9
2.10 Leased Real Property...........................................................9
2.11 Intellectual Property.........................................................10
2.12 Contracts.....................................................................11
2.13 Entire Business...............................................................12
2.14 Litigation....................................................................12
2.15 Employment Matters............................................................13
2.16 Employee Benefits.............................................................13
2.17 Environmental Matters.........................................................14
2.18 Legal Compliance..............................................................15
2.19 Permits.......................................................................15
2.20 Certain Payments..............................................................15
2.21 Brokers' Fees.................................................................15
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYER................................................15
3.1 Organization..................................................................15
3.2 Authority.....................................................................15
3.3 Noncontravention..............................................................16
3.4 Litigation....................................................................16
3.5 Investment Intent.............................................................16
3.6 Financing.....................................................................16
3.7 Solvency......................................................................16
3.8 Due Diligence by the Buyer....................................................17
ARTICLE IV PRE-CLOSING COVENANTS......................................................................18
4.1 Closing Efforts; Xxxx-Xxxxx-Xxxxxx Act........................................18
4.2 Operation of Business.........................................................18
4.3 Access........................................................................20
4.4 Disclosure Documents..........................................................21
4.5 Elimination of Intercompany Items.............................................21
4.6 Replacement of Guarantees and Letters of Credit...............................21
ARTICLE V CONDITIONS PRECEDENT TO CLOSING............................................................21
5.1 Conditions to Obligations of the Buyer........................................21
5.2 Conditions to Obligations of the Sellers......................................22
ARTICLE VI INDEMNIFICATION............................................................................23
6.1 Indemnification by the Parent.................................................23
6.2 Indemnification by the Buyer..................................................23
6.3 Claims for Indemnification....................................................23
6.4 Survival......................................................................24
6.5 Limitations...................................................................24
6.6 Treatment of Indemnification Payments.........................................27
ARTICLE VII TAX MATTERS................................................................................27
7.1 Preparation and Filing of Tax Returns; Payment of Taxes.......................27
7.2 Allocation of Certain Taxes...................................................28
7.3 Refunds and Carrybacks........................................................29
7.4 Cooperation on Tax Matters; Tax Audits........................................29
7.5 Termination of Tax Sharing Agreements.........................................30
7.6 Scope of Article VII..........................................................30
ARTICLE VIII TERMINATION................................................................................30
8.1 Termination of Agreement......................................................30
8.2 Effect of Termination.........................................................30
ARTICLE IX EMPLOYEE MATTERS...........................................................................31
9.1 Offer of Employment; Continuation of Employment...............................31
9.2 Cessation of Business Benefit Plan Participation; 401(k) Plan Matters.........31
9.3 Employment Related Liabilities................................................31
9.4 Compensation; Employee Benefits; Severance Plans..............................31
9.5 Welfare Plans.................................................................32
9.6 Accrued Personal, Sick or Vacation Time.......................................32
9.7 U.S. WARN Act.................................................................32
9.8 U.S. COBRA....................................................................33
9.9 Post-Employment/Retiree Medical Benefits......................................33
9.10 Retention Bonuses.............................................................33
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ARTICLE X OTHER POST-CLOSING COVENANTS...............................................................33
10.1 Manager, Director and Officer Indemnification.................................33
10.2 Claims Against Managers, Directors and Officers...............................33
10.3 Payment of Certain Monies.....................................................34
10.4 Waiver of Conflicts Regarding Representation; Non-Assertion of Attorney Client
Privilege.....................................................................34
10.5 Use of Names..................................................................34
10.6 Seller Guarantees.............................................................35
ARTICLE XI DEFINITIONS................................................................................36
ARTICLE XII MISCELLANEOUS..............................................................................47
12.1 Press Releases and Announcements..............................................47
12.2 No Third Party Beneficiaries..................................................48
12.3 Treatment of Business Subsidiaries............................................48
12.4 Entire Agreement..............................................................48
12.5 Succession and Assignment.....................................................48
12.6 Notices.......................................................................48
12.7 Amendments and Waivers........................................................49
12.8 Severability..................................................................49
12.9 Expenses......................................................................50
12.10 Specific Performance..........................................................50
12.11 Governing Law.................................................................50
12.12 Submission to Jurisdiction....................................................50
12.13 Bulk Transfer Laws............................................................50
12.14 Construction..................................................................50
12.15 Foreign Exchange Conversions..................................................51
12.16 No Solicitation; Acquisition Proposals........................................52
12.17 Waiver of Jury Trial..........................................................52
12.18 Incorporation of Exhibits and Schedules.......................................52
12.19 Further Representations.......................................................52
12.20 Counterparts and Facsimile Signature..........................................52
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Disclosure Schedule
Schedules:
Schedule 1.2(b) Tax Allocation Principles
Schedule 1.4 Accounting Principles
Schedule 4.3(a) Representatives of the Buyer
Schedule 9.9 Employees Eligible for Retiree Medical
Schedule 9.10 Retention Agreements
Schedule D-1 Asset Seller Real Estate Leases
Schedule D-2 Designated Assumed Liabilities
Schedule D-3 Designated Intellectual Property
Schedule D-4 Designated Excluded Assets
Schedule D-5 Designated Excluded Intellectual Property
Schedule D-6 Designated Excluded Real Property
Schedule D-7 Designated Excluded Trade Fixtures
Schedule D-8 Seller Knowledge Persons
Schedule D-9 Buyer Knowledge Persons
Schedule D-10 Transferred Xxxxxx Xxxxx
Exhibits:
Exhibit A-1 - Form of Membership Interest Assignment
Exhibit A-2 - Form of Share Capital Assignment
Exhibit B - Form of Xxxx of Sale
Exhibit C - Form of Intellectual Property Transfer and License Agreement
Exhibit D - Form of Lease Agreement
Exhibit E - Form of Real Property License Agreement
Exhibit F - Form of Transition Services Agreement
Exhibit G - Form of Assumption Agreement
Exhibit H - Form of Payment Guaranty
Exhibit I - Form of Incidental Agreement
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PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT (the "Agreement") is entered into as of
June 30, 2007 among Joslyn Holding Company, a Delaware corporation (the
"Parent"), Xxxxxxx UK Industries Limited, a private limited company formed under
the laws of the United Kingdom ("Asset Seller 1"), Joslyn Canada, a general
partnership formed under the laws of the province of Ontario, Canada ("Asset
Seller 2"), and Xxxxxx & Xxxxx Corporation, a Tennessee corporation (the
"Buyer"). The Parent, Asset Seller 1 and Asset Seller 2 are each individually
referred to herein as a "Seller" and are collectively referred to herein as the
"Sellers." The Sellers and the Buyer are each individually referred to herein as
a "Party" and are collectively referred to herein as the "Parties."
INTRODUCTION
1. The Business Subsidiaries and the Asset Sellers are engaged, among other
businesses, in the Business.
2. The Buyer desires to purchase from the Parent, and the Parent desires to
sell to the Buyer, the Membership Interests upon the terms and subject to the
conditions set forth herein.
3. The Buyer desires to purchase from the Asset Sellers, and the Asset
Sellers desire to sell to the Buyer, the Acquired Assets, subject to the
assumption of the Assumed Liabilities and upon the terms and subject to the
conditions set forth herein.
4. Each capitalized term used in this Agreement shall have the meaning
ascribed to it in Article XI.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement and other good and valuable
consideration, the receipt of which is hereby acknowledged, the Parties agree as
follows:
ARTICLE I
MEMBERSHIP INTEREST AND ASSET PURCHASE
1.1 Sale and Transfer of Membership Interests; Purchase and Sale of Assets;
Assumption of Liabilities.
(a) Sale and Transfer of Membership Interests. On the basis of
the representations, warranties, covenants and agreements and subject to the
satisfaction or waiver of the conditions set forth in this Agreement, at the
Closing, the Parent shall sell, convey, assign, transfer and deliver to the
Buyer, and the Buyer shall purchase and acquire from the Parent, the Membership
Interests.
(b) Transfer of Assets. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing, each Asset Seller
shall sell, convey, assign, transfer and deliver to the Buyer, and the Buyer
shall purchase and acquire from each Asset Seller, all of the Asset Seller's
right, title and interest in and to the Acquired Assets.
(c) Assumed Liabilities. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing, the Buyer shall
assume and agree to pay, perform and discharge when due the Assumed Liabilities.
(d) Notwithstanding anything in this Agreement or any other
writing to the contrary, the Buyer is assuming only the Assumed Liabilities and
is not assuming any Excluded Liability of any Seller (or any predecessor of any
Seller or any prior owner of all or part of any Seller's business and assets),
whether presently in existence or arising hereafter. All Excluded liabilities
shall be retained by and remain obligations and liabilities of the Sellers.
1.2 Purchase Price and Related Matters.
(a) Purchase Price. In consideration for the sale and transfer
of the Acquired Assets and the Membership Interests, at the Closing, the Buyer
shall assume the Assumed Liabilities as provided in Section 1.1(c) and shall pay
to the Sellers the Purchase Price in cash by wire transfers of immediately
available funds. The Purchase Price is subject to adjustment as provided in
Section 1.4.
(b) Allocation of Purchase Price. The Parent shall prepare and
deliver to the Buyer, within 60 days following the final determination of the
Adjusted Purchase Price pursuant to Section 1.4, a schedule setting forth a
proposed allocation of the Tax Purchase Price among the assets of DPS, JTC and
JHV (including the stock of FPC), the Acquired Assets and the covenants
contained in the Incidental Agreement. Such allocation schedule will be prepared
in a manner consistent with Schedule 1.2(b) attached hereto. If the Buyer does
not deliver a written objection within the 30-day period following the date of
delivery of the Parent's allocation schedule to the Buyer, then effective as of
the close of business on such 30th day (or upon the earlier delivery of notice
by the Buyer to the Parent that Buyer has accepted such allocation schedule),
such allocation schedule shall be deemed to be accepted by the Buyer. If the
Buyer objects to the Parent's schedule within such 30-day period and such
objection is not resolved by the Buyer and the Parent within 15 days following
Buyer's notice to the Parent of such objection, then the Buyer and the Parent
shall jointly engage the Neutral Accountant to resolve the dispute. The Neutral
Accountant shall act as an expert and not as an arbitrator, and the Buyer and
the Parent agree to provide to the Neutral Accountant such information as the
Neutral Accountant may reasonably request in connection with its review. If the
Neutral Accountant determines that the allocation schedule provided by the
Parent was reasonable, such allocation schedule shall be final. If the Neutral
Accountant determines that the allocation schedule provided by the Parent was
unreasonable, the Neutral Accountant shall prepare the allocation schedule based
upon its assessment of the fair value of the assets of DPS, JTC and JHV
(including the stock of FPC), the Acquired Assets and the covenants contained in
the Incidental Agreement, and in a manner consistent with Schedule 1.2(b). The
Parent and the Buyer shall request that the Neutral Accountant provide such
allocation schedule as promptly as practicable. The resolution by the Neutral
Accountant of the matters set forth in this Section 1.2(b) shall be conclusive
and binding upon the Buyer and the Parent. The procedures set forth in this
Section 1.2(b) shall be the sole and exclusive method for resolving disputes
with respect to the allocation of the Tax Purchase Price; provided that this
provision shall not prohibit either Party from instituting litigation to enforce
any ruling of the Neutral Accountant in a court of competent jurisdiction
determined in accordance with Section 12.12. The parties shall file all Tax
Returns in a manner consistent with the allocation schedule as finally
determined pursuant to this Section 1.2(b). The Buyer and the Parent shall share
equally the fees and expenses of the Neutral Accountant for its services under
this Section 1.2(b).
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1.3 The Closing.
(a) Time and Location. The Closing shall take place at the
offices of Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP in Washington, DC (or
remotely by electronic exchange of documents and signatures), commencing at
10:00 a.m., local time, on the Closing Date.
(b) Actions at the Closing.
At the Closing:
(i) the Parent shall execute and deliver to the
Buyer an assignment with respect to the Membership Interests in substantially
the form attached hereto as Exhibit A-1 and Asset Seller 1 shall execute and
deliver to the Buyer an assignment with respect to the Share Capital in
substantially the form attached hereto as Exhibit A-2;
(ii) the Asset Sellers shall execute and deliver a
Xxxx of Sale in substantially the form attached hereto as Exhibit B;
(iii) the Parent or one of its Affiliates (other
than a Business Subsidiary), as licensor, and the Buyer, as licensee, shall
execute and deliver the Intellectual Property Transfer and License Agreement in
substantially the form attached hereto as Exhibit C;
(iv) the Parent or one of its Affiliates (other
than a Business Subsidiary), as landlord, and JTC, as tenant, shall execute and
deliver the Lease Agreement in substantially the form attached hereto as Exhibit
D;
(v) the Parent or one of its Affiliates (other
than a Business Subsidiary), as subtenant, and DPS, as sublandlord, shall
execute and deliver the Real Property License Agreement in substantially the
form attached hereto as Exhibit E;
(vi) the Parent and the Buyer shall execute and
deliver the Transition Services Agreement in substantially the form attached
hereto as Exhibit F;
(vii) the Buyer shall execute and deliver to each
Asset Seller an Assumption Agreement in substantially the form attached hereto
as Exhibit G;
(viii) Xxxxxxx Corporation shall execute and
deliver the Payment Guaranty in substantially the form attached hereto as
Exhibit H;
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(ix) Sellers shall execute and deliver the
Incidental Agreement in substantially the form attached hereto as Exhibit I;
(x) for each Seller Guarantee existing as of the
Closing, the Buyer shall deliver to the Parent either (i) a copy of a
replacement arrangement obtained in accordance with Section 4.6, reasonably
satisfactory to the Sellers, or (ii) an irrevocable standby letter of credit in
favor of the Parent in an annual amount equal to the amount of such Seller
Guarantee, issued by a bank rated A or better by Standard & Poor's, in form and
substance reasonably satisfactory to the Parent;
(xi) the Buyer shall pay to the Sellers the
Purchase Price in cash by wire transfers of immediately available funds in
accordance with the wire transfer instructions delivered to the Buyer by the
Sellers not less than 2 Business Days prior to the Closing; and
(xii) the Parties shall execute and deliver to
each other a cross-receipt evidencing the transactions referred to above.
1.4 Post-Closing Adjustment. The Purchase Price set forth in
Section 1.2(a) shall be subject to adjustment after the
Closing Date as follows:
(a) Within 60 days after the Closing Date, the Buyer shall
cause Xxxxxxx Xxxxxx, Controller of DPS, and Xxxx Xxxxx, Director of Finance of
JHV, under the supervision and direction of the Buyer, to prepare and deliver to
the Parent, on behalf of the Buyer, the Closing Statement. The Closing Statement
shall be prepared on a consistent basis with the accounting principles,
practices, procedures, policies and methods set forth on Schedule 1.4.
(b) The Parent shall deliver to the Buyer, within 60 days
after delivery on behalf of the Buyer to the Parent of the Closing Statement,
either a notice indicating that the Parent accepts the Closing Statement or a
statement describing the Parent's objections to the Closing Statement, which
statement of objections shall describe in reasonable detail the nature and
amount of the Parent's objections. If the Parent does not object to the Closing
Statement delivered by the Buyer, the Closing Statement shall be final and
binding on the Parties.
(c) If the Parent objects to the Closing Statement and any
such objections are not resolved by the Parent and the Buyer within 90 days
after delivery to the Parent of the Closing Statement, the Buyer and the Parent
shall (A) jointly prepare and sign a statement setting forth (1) those
objections (if any) that the Buyer and the Parent have resolved and the
resolution of such objections and (2) those objections that remain unresolved
and (B) engage the Neutral Accountant to resolve such unresolved objections.
Each of the Buyer and the Parent shall provide to the Neutral Accountant any
information of such Party that the Neutral Accountant reasonably requests for
purposes of resolving such unresolved objections. The Buyer and the Parent shall
instruct the Neutral Accountant that (X) the scope of its review and authority
shall be limited to resolving such unresolved objections, (Y) the Neutral
Accountant shall act as an expert and not as an arbitrator, and (Z) the Neutral
Accountant shall issue a ruling which sets forth the resolution of each such
unresolved objection and includes a statement setting forth the Closing Working
Capital Amount, reflecting the Neutral Accountant's resolution of such
unresolved objections. The resolution by the Neutral Accountant of such
unresolved objections and the Closing Working Capital Amount prepared by the
Neutral Accountant giving effect thereto shall be conclusive and binding upon
the Buyer and the Sellers. The Buyer and the Sellers agree that the procedures
set forth in this Section 1.4(c) for resolving disputes with respect to the
Closing Statement shall be the sole and exclusive method for resolving any such
disputes; provided that this provision shall not prohibit any Party from
instituting litigation to enforce the determination of the Closing Statement and
the Closing Working Capital Amount by the Neutral Accountant in a court of
competent jurisdiction determined in accordance with Section 12.12. The Buyer
and the Parent shall share equally the fees and expenses of the Neutral
Accountant for its services under this Section 1.4(c).
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(d) If the Target Working Capital Amount exceeds the Closing
Working Capital Amount as shown on the Final Closing Statement by more than the
Collar, the Purchase Price shall be reduced by an amount equal to the difference
between such excess and the Collar and the Parent shall pay to the Buyer, by
wire transfer or other delivery of immediately available funds, within three
Business Days after the date on which the Final Closing Statement is finally
determined pursuant to this Section 1.4, an amount equal to such reduction in
the Purchase Price (plus interest thereon at the rate of 2% per annum,
compounded monthly, from the Closing Date). If the Closing Working Capital
Amount as shown on the Final Closing Statement exceeds the Target Working
Capital Amount by an amount greater than the Collar, the Purchase Price shall be
increased by an amount equal to the difference between such excess and the
Collar and the Buyer shall pay to the Parent, by wire transfer or other delivery
of immediately available funds, within three Business Days after the date on
which the Final Closing Statement is finally determined pursuant to this Section
1.4, an amount equal to such increase in the Purchase Price (plus interest
thereon at the rate of 2% per annum, compounded monthly, from the Closing Date).
If the absolute value of the difference between the Closing Working Capital
Amount and the Target Working Capital Amount is less than or equal to the
Collar, there shall be no adjustment to the Purchase Price.
1.5 Consents to Assignment. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign or
transfer any contract, lease, authorization, license or permit, or any claim,
right or benefit arising thereunder or resulting therefrom, if (a) an attempted
assignment or transfer thereof, without the consent of a third party thereto or
of the issuing Governmental Entity, as the case may be, would constitute a
breach thereof and (b) such consent is not obtained. In such case, (x) such item
shall be withheld from sale pursuant to this Agreement without any reduction in
the Purchase Price, (y) from and after the Closing, the Asset Sellers and the
Buyer will cooperate, in all reasonable respects, to obtain such consent as soon
as practicable after the Closing, and (z) until such consent is obtained, the
Asset Sellers and the Buyer will cooperate, in all reasonable respects, to
provide to the Buyer the benefits under such item (with the Buyer entitled to
all the gains and responsible for all the losses, Taxes, liabilities and/or
obligations thereunder). In particular, in the event that any such consent is
not obtained prior to the Closing, then the Buyer and the Asset Sellers shall
enter into such arrangements (including, without limitation, subleasing or
subcontracting if permitted) to provide to the Parties the economic and
operational equivalent of obtaining such consent and assigning or transferring
such item, including, without limitation, enforcement for the benefit of the
Buyer of all claims or rights arising thereunder, and the performance by the
Buyer of the obligations thereunder on a prompt and punctual basis.
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1.6 Further Assurances. At any time and from time to time after the
Closing Date, as and when requested by any Party hereto, the other Parties shall
promptly execute and deliver, or cause to be executed and delivered, all such
documents, instruments and certificates and shall take, or cause to be taken,
all such further actions as are necessary to evidence and effectuate the
transactions contemplated by this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
The Sellers represent and warrant to the Buyer that the statements
contained in this Article II are true and correct as of the date hereof, except
as set forth in or reasonably ascertainable from the Disclosure Documents. The
inclusion of any information in the Disclosure Documents shall not be deemed to
be an admission or acknowledgment, in and of itself, that such information is
required by the terms hereof to be disclosed, is material to the Business, has
resulted in or would result in a Business Material Adverse Effect, or is outside
the ordinary course of business. The specification of any dollar amount in any
representation or warranty contained in this Article II is not intended to imply
that such amount, or higher or lower amounts, are or are not material for
purposes of this Agreement, and no Party shall use the fact of the setting forth
of any such amount in any dispute or controversy between or among the Parties as
to whether any obligation, item or matter not described herein or included in
the Disclosure Documents is or is not material for purposes of this Agreement.
2.1 Organization, Qualification and Power.
(a) The Sellers. Each of the Sellers is a corporation,
partnership or private limited company, as applicable, duly organized, validly
existing and, where applicable, in good standing under the laws of its
jurisdiction of organization and is duly qualified to conduct business under the
laws of each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities, in each case as they relate
exclusively to the Business, makes such qualification necessary, except for any
such failure to be qualified that would not reasonably be expected to result in
a Business Material Adverse Effect. Each Seller has all requisite corporate,
partnership or private limited company power and authority, as applicable, to
carry on the business in which it is now engaged and to own and use the
properties now owned and used by it.
(b) The Business Subsidiaries. Each Business Subsidiary is a
limited liability company, corporation, or private limited company, as
applicable, duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization and is duly qualified to conduct business
under the laws of each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification necessary, except for any such failure to be qualified that would
not reasonably be expected to result in a Business Material Adverse Effect. Each
Business Subsidiary has all requisite limited liability company, corporate or
private limited company power and authority, as applicable, to carry on the
business in which it is now engaged and to own and use the properties now owned
and used by it.
(c) Charter Documents. The Parent has made available to the
Buyer correct and complete copies of the charter, bylaws, partnership agreement,
limited liability company operating agreement or other comparable governing
documents of each Business Subsidiary (each as amended to date). No Business
Subsidiary is in default under or in violation of any provision of its charter,
bylaws, partnership agreement, limited liability company operating agreement or
other comparable governing documents, as applicable.
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2.2 Capitalization.
(a) All of the Business Subsidiary Interests are owned of
record and beneficially by the Parent, JHV or Asset Seller 1, as applicable, and
the Parent, JHV or Asset Seller 1, as applicable, has good title to the Business
Subsidiary Interests, free and clear of any Security Interest, other than
applicable securities law restrictions.
(b) There are no outstanding or authorized options, warrants,
rights, agreements or commitments to which any Business Subsidiary is a party or
which are binding upon any Business Subsidiary providing for the issuance,
disposition or acquisition of any equity interests of any Business Subsidiary.
There are no outstanding or authorized equity appreciation or similar rights
with respect to any Business Subsidiary. There are no agreements, voting trusts
or proxies with respect to the voting, or registration under the Securities Act,
of any securities of any Business Subsidiary.
2.3 Authority. Each Seller has all requisite corporate, partnership or
private limited company power and authority, as applicable, to execute and
deliver this Agreement and the Ancillary Agreements to which it will be a party
and to perform its obligations hereunder and thereunder. The execution and
delivery by each Seller of this Agreement and such Ancillary Agreements and the
consummation by each Seller of the transactions contemplated hereby and thereby
have been validly authorized by all necessary corporate, partnership or private
limited company action, as applicable, on the part of each Seller. This
Agreement has been, and such Ancillary Agreements will be, validly executed and
delivered by each Seller and, assuming this Agreement and each such Ancillary
Agreement constitute the valid and binding obligation of the Buyer, constitutes
or will constitute a valid and binding obligation of each Seller, enforceable
against each Seller in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and by equitable principles, including, without limitation,
those limiting the availability of specific performance, injunctive relief and
other equitable remedies and those providing for equitable defenses.
2.4 Noncontravention. Subject to compliance with the applicable
requirements of the Antitrust Laws and applicable Environmental Laws, neither
the execution and delivery by any Seller of this Agreement or the Ancillary
Agreements to which such Seller will be a party, nor the consummation by any
Seller of the transactions contemplated hereby or thereby, will:
(a) conflict with or violate any provision of the charter,
bylaws, partnership agreement, limited liability company operating agreement or
other comparable governing document, as applicable, of such Business Subsidiary
or such Seller;
(b) require on the part of any Business Subsidiary or any
Seller any filing with, or any permit, authorization, consent or approval of,
any Governmental Entity, except for any filing, permit, authorization, consent
or approval which if not obtained or made would not reasonably be expected to
result in a Business Material Adverse Effect;
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(c) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of obligations under, create in any party the right to terminate or
modify, or require any notice, consent or waiver under, any contract, lease,
sublease, license, sublicense, franchise, permit, indenture, agreement or
mortgage for borrowed money, instrument of indebtedness or Security Interest to
which any Business Subsidiary or any Seller is a party or by which any Business
Subsidiary or any Seller is bound or to which any of their respective assets is
subject, except for (i) any conflict, breach, default, acceleration or right to
terminate or modify that would not reasonably be expected to result in a
Business Material Adverse Effect or (ii) any notice, consent or waiver the
absence of which would not reasonably be expected to result in a Business
Material Adverse Effect; or
(d) violate any order, writ, injunction or decree specifically
naming, or statute, rule or regulation applicable to any Business Subsidiary or
any Seller or any of or their respective properties or assets, except for any
violation that would not reasonably be expected to result in a Business Material
Adverse Effect.
2.5 Financial Statements. The Disclosure Schedule includes copies of
the Financial Statements. The Financial Statements are derived from the books
and records of the Sellers, have been prepared in accordance with GAAP,
consistently applied throughout the periods involved and fairly present, in all
material respects, the financial condition and combined results of operations
and cash flows of the Business as of the respective dates thereof and for the
periods referred to therein in accordance with such methodologies; provided,
however, the Financial Statements do not include footnotes and may not include
allocations of corporate expenses or reflect rights to receive corporate
services, and the Financial Statements referred to in clause (b) of the
definition of such term are subject to year-end adjustments.
2.6 Absence of Certain Changes. Except as contemplated by this
Agreement, between the Balance Sheet Date and the date of this Agreement, there
have not been any changes in the financial condition or results of operations of
the Business, except for any changes that would not reasonably be expected to
result in a Business Material Adverse Effect.
2.7 Tax Matters.
(a) Each Business Subsidiary and each Asset Seller has filed
or had filed on its behalf all Tax Returns that it was required to file
(separately or as part of a consolidated, combined or unitary group) and all
such Tax Returns were correct and complete to the extent they relate to the
Business, except to the extent that the failure to file any such Tax Return or
the failure of any such Tax Return to be correct and complete would not
reasonably be expected to result in a Business Material Adverse Effect.
(b) Each Business Subsidiary and each Asset Seller has paid
(or had paid on its behalf) all Taxes that are shown to be due and payable on
any such filed Tax Returns.
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(c) Each of DPS, JHV and JTC is a single-member limited
liability company that, for U.S. federal income tax purposes, is disregarded as
an entity separate from its owner as described in Treasury Regulations section
301.7701-3.
2.8 Tangible Personal Property. The applicable Business Subsidiary or
the applicable Asset Seller has good and valid title to, a valid leasehold
interest in or a valid license or right to use, all of the material tangible
personal property reflected on the Most Recent Balance Sheet (other than
property sold, consumed or otherwise disposed of in the ordinary course of
business since the Balance Sheet Date), free and clear of all Security
Interests.
2.9 Designated Owned Real Property. The Disclosure Schedule lists the
Designated Owned Real Property owned as of the date of this Agreement. With
respect to each piece of Designated Owned Real Property:
(a) a Business Subsidiary has good and valid title to such
Designated Owned Real Property, free and clear of any Security Interest, except
for recorded easements, covenants and other restrictions which do not materially
impair the current uses of such Designated Owned Real Property;
(b) there are no leases, subleases or agreements granting to
any party or parties the right of use or occupancy of any portion of such
Designated Owned Real Property;
(c) there are no outstanding options or rights of first
refusal to purchase such Designated Owned Real Property;
(d) there are no outstanding contracts for any improvements to
the Designated Owned Real Property;
(e) Sellers have not received written notice of any revocation
of any governmental permits, licenses and certificates required for the use and
occupancy of the Designated Owned Real Property in its current operations, or
that any revocation is pending or threatened; and
(f) there are no condemnation actions pending (or to Seller's
knowledge, threatened) against the Designated Owned Real Property or any part
thereof or any interest therein.
2.10 Leased Real Property. The Disclosure Schedule lists all material
Leases as of the date of this Agreement. The Sellers have made available to the
Buyer complete and accurate copies of the Leases (as amended to date). With
respect to each such Lease:
(a) the Lease is a valid and binding obligation of the
applicable Business Subsidiary or the applicable Asset Seller (as the case may
be) and, to the knowledge of the Sellers, each other party to such Lease;
(b) no Business Subsidiary nor any Asset Seller, nor, to the
knowledge of the Sellers, any other party to the Lease, is in breach or default
and, to the knowledge of the Sellers, no event has occurred which, with notice
or lapse of time or both, would constitute a breach or default or permit
termination, modification or acceleration thereunder, except for any such breach
or default as would not reasonably be expected to result in a Business Material
Adverse Effect;
9
(c) Sellers have not received written notice of any revocation
of any governmental permits, licenses and certificates required for the use and
occupancy of the real property subject to the Leases in its current operations,
or that any revocation is pending or threatened; and
(d) to the knowledge of the Sellers, there are no condemnation
actions pending or threatened against the real property subject to the Leases or
any part thereof or any interest therein.
2.11 Intellectual Property.
(a) The Disclosure Schedule lists the Designated Intellectual
Property and the owner of each item of Designated Intellectual Property. Sellers
solely own, or possess valid licenses to use, the Designated Intellectual
Property, free and clear of any Security Interest.
(b) No Business Subsidiary nor, with respect to the Business,
any Seller is named in any pending suit, action, claim or proceeding which
involves a claim of infringement of any patents, trademarks, trade names,
service marks, domain names, trade secrets or copyrights of any third party, and
to the knowledge of the Sellers, no such suit, action, claim or proceeding has
been threatened. To the knowledge of the Sellers, the Business as presently
conducted does not infringe or misappropriate any valid patents, trademarks,
trade names, service marks or copyrights of any third party.
(c) To the knowledge of Sellers, no Designated Intellectual
Property is being infringed upon or misappropriated by any third party.
(d) No Designated Intellectual Property has been or is now
involved in any interference, reissue, reexamination, or opposition proceeding.
(e) To the knowledge of the Sellers, each patent and
registered trademark included in the Designated Intellectual Property is valid,
subsisting and enforceable, and each Business Subsidiary and, with respect to
the Business, each Seller has made all necessary filings, recordations and
registration, maintenance and renewal fees to protect and maintain their
interest in the Designated Intellectual Property.
(f) To the extent that any Designated Intellectual Property
has been developed or created by a third party, Sellers or a Business Subsidiary
have a written agreement with such third party with respect thereto and the
Sellers or such Business Subsidiary either (i) have obtained ownership of and
are the exclusive owner of, or (ii) have obtained a license (sufficient for the
conduct of the Business as currently conducted) to such third party's
intellectual property rights in such work, material or invention by operation of
law or by valid agreement.
(g) A Seller or a Business Subsidiary has entered into a
confidentiality agreement with each Business Employee set forth in Section
2.11(g) of the Disclosure Schedule, the form of which has been disclosed to the
Buyer. To the knowledge of Sellers, there has not been any disclosure of any
confidential information or trade secrets regarding the Business that was not
intentionally disclosed by a Seller or Business Subsidiary, except as may have
been disclosed under the terms of a valid and enforceable agreement restricting
the use and disclosure of such information.
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(h) No Business Subsidiary nor any Asset Seller has granted to
any third party any license or right to the commercial use of any of the
Designated Intellectual Property, except for (i) rights and licenses granted in
the ordinary course of business, and (ii) any such license or right to
commercial use that would not reasonably be likely to result in a Business
Material Adverse Effect.
(i) The Parties agree that the only representations and
warranties of the Sellers herein as to any matters related to any intellectual
property (including, without limitation, the Designated Intellectual Property)
are those contained in this Section 2.11.
2.12 Contracts.
(a) The Disclosure Schedule lists all of the following
contracts or agreements included in the Acquired Assets or the Assumed
Liabilities or to which any Business Subsidiary is a party as of the date of
this Agreement (excluding (i) Leases and (ii) any contracts or agreements that
cannot be disclosed to the Buyer due to confidentiality or legal restrictions):
(i) any agreement for the purchase or sale of
products or services that involves payments to be made by or to any Asset Seller
or any Business Subsidiary in excess of US$100,000, other than agreements
executed in the ordinary course of business;
(ii) any lease for personal property from or to
any third party or agreement for the purchase or sale of products or services,
in each case, providing for performance over a period in excess of one year;
(iii) any agreement establishing a partnership or
joint venture;
(iv) any agreement creating, incurring, assuming
or guaranteeing (or that may create, incur, assume or guarantee) indebtedness,
the outstanding balance of which is more than US$50,000 or under which a
Security Interest has been imposed on any material asset of the Business
Subsidiaries or material Acquired Asset, in either case tangible or intangible,
except for Security Interests relating to any capitalized lease financing and
trade payables incurred in the ordinary course of business;
(v) any agreement that prohibits the Business from
freely engaging in business or with any Person anywhere in the world;
(vi) any agreement with any Business Subsidiary's
or any Asset Seller's officers or employees providing annual base compensation
at a rate in excess of US$100,000;
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(vii) severance or termination agreement with any
officer or other employee of the Business;
(viii) any employment, independent contractor or
consulting agreement that is not terminable by a Business Subsidiary without
penalty on not more than thirty (30) days prior notice;
(ix) any agreement relating to the acquisition or
disposition of any business (whether by merger, sale of stock, sale of assets or
otherwise) entered into during the three-year period immediately preceding the
date hereof;
(x) any option, franchise or similar arrangement;
(xi) any agreement with or for the benefit of any
Affiliate of the Sellers or the Business Subsidiaries;
(xii) any agency, dealer, sales representative,
marketing or similar agreement; and
(xiii) any agreement pursuant to which any
Business Subsidiary or (with respect to the Business) any Asset Seller is
obligated to indemnify any other Person for any Taxes;
provided, however, that no agreement referred to in clauses (i) through (xiii)
above need be disclosed unless the applicable Business Subsidiary or the
applicable Asset Seller currently has, or may in the future have, any material
rights or obligations thereunder.
(b) The Sellers have made available to the Buyer a complete
and accurate copy of each Designated Contract, other than any contracts or
agreements that cannot be provided to the Buyer due to confidentiality or legal
requirements. Each Designated Contract is a valid and binding obligation of the
applicable Business Subsidiary or the applicable Asset Seller, as the case may
be, and, to the knowledge of the Sellers, of each other party thereto, except
for any such failure to be valid and binding that would not reasonably be
expected to result in a Business Material Adverse Effect.
2.13 Entire Business. Except for the Excluded Assets, any deferred
items under Section 1.5, the rights granted to the Buyer pursuant to the
Intellectual Property Transfer and License Agreement and the Lease Agreement and
the services provided to the Buyer pursuant to the Transition Services
Agreement, the Acquired Assets, the assets of the Business Subsidiaries and the
Business Subsidiary Interests, collectively, are, when utilized by a labor force
substantially similar to that employed by the Business Subsidiaries and the
Asset Sellers in connection with the Business on the date hereof, adequate to
conduct the Business as currently conducted, except as would not reasonably be
expected to result in a Business Material Adverse Effect.
2.14 Litigation. Except as set forth in the Disclosure Schedule, there
is no (i) litigation, (ii) arbitration or (iii) investigation or proceeding
administered by any Governmental Entity pending or (to the knowledge of the
Sellers) threatened against or involving a Seller or a Business Subsidiary and
relating to the Business or any Acquired Asset. Except as set forth in the
Disclosure Schedule, the Business is not subject to any judgments, decrees,
injunctions, rules or orders of any court, and the Business is not subject to
any governmental restrictions, except for any such judgment, decree, injunction,
rule or order that would not reasonably be expected to, individually or in the
aggregate, result in a Business Material Adverse Effect.
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2.15 Employment Matters.
(a) The Disclosure Schedule sets forth a true and complete
list, as of the date of this Agreement, of (i) all Business Employees whose
annual rate of compensation exceeds US$100,000 per year, along with the position
and the annual rate of compensation of each such person, and (ii) all Business
Employees who are on leave, short term disability, long term disability or
layoff .
(b) No Business Subsidiary nor any Asset Seller is a party to
or bound by any collective bargaining agreement relating to the Business, nor
has any Business Subsidiary or, with respect to the Business, any Asset Seller
experienced, since January 1, 2005, any material strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes.
2.16 Employee Benefits.
(a) The Disclosure Schedule contains a complete and accurate
list of all Business Benefit Plans. Complete and accurate copies of all Business
Benefit Plans maintained solely by any Business Subsidiary or Seller and all
material related trust agreements, insurance contracts, and summary plan
descriptions have been made available to the Buyer, as have summaries of
Business Benefit Plans that cover ERISA Affiliates but are not sponsored by
Business Subsidiaries.
(b) The Business Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination letters
from the Internal Revenue Service to the effect that such Business Benefit Plans
are qualified and the plans and the trusts related thereto are exempt from
federal income Taxes under Sections 401(a) and 501(a), respectively, of the
Code, or the period for obtaining such a determination letter has not yet
closed.
(c) No Business Subsidiary nor any ERISA Affiliate has ever
maintained or been required to contribute to any Employee Benefit Plan subject
to Title IV of ERISA or to any Multiemployer Plan with respect to which any
material liability remains outstanding.
(d) No act or omission has occurred and no condition exists
with respect to any Business Benefit Plan maintained by any Business Subsidiary,
any Asset Seller or any ERISA Affiliate that would subject any Business
Subsidiary or Buyer to any material fine, penalty, Tax or liability of any kind
imposed under ERISA or the Code (other than liabilities for benefits accrued
under Business Benefit Plans for Business Employees and their beneficiaries).
(e) No Business Benefit Plan provides welfare benefits after
termination of employment to any Business Employee (or to any beneficiary of any
such employee), excluding continuation of health coverage required to be
continued under Section 4980B of the Code or other similar applicable laws.
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(f) No payments promised or expected for the Business
Employees related to the transactions contemplated pursuant to this Agreement
would, individually or in the aggregate, be nondeductible under Code Section
280G.
(g) Except as may be included in the Excluded Liabilities,
there are no sale bonuses or other compensation for any Business Employee that
will become payable upon the consummation of the transactions contemplated by
this Agreement; provided that, for the avoidance of doubt, the amounts payable
pursuant to the retention agreements set forth on Schedule 9.10 shall not be
deemed to constitute sale bonuses or other compensation payable upon the
consummation of the transactions contemplated by this Agreement.
(h) The Parties agree that the only representations and
warranties of the Sellers herein as to any employee benefit plans or
arrangements (including the Business Benefit Plans) or ERISA are those contained
in this Section 2.16.
2.17 Environmental Matters.
(a) The Business' operations at the Business Properties are in
compliance with applicable Environmental Laws, except for any failure to comply
with Environmental Laws that would not reasonably be expected to result in a
Business Material Adverse Effect;
(b) There is no pending or (to the knowledge of the Sellers)
threatened civil or criminal litigation, written notice of violation or formal
administrative proceeding, investigation or claim relating to any Environmental
Law involving any of the Business Properties, except for any such litigation,
notice, proceeding, investigation or claim that would not reasonably be expected
to result in a Business Material Adverse Effect; and
(c) The applicable Business Subsidiary or the applicable Asset
Seller has those permits, licenses and approvals required under Environmental
Law to operate the Business Properties as currently operated by such Business
Subsidiary or such Asset Seller, as the case may be, except for any such
permits, licenses or approvals the absence of which would not reasonably be
expected to result in a Business Material Adverse Effect; and
(d) No Materials of Environmental Concern have been Released
by the Business at any Business Property in violation of applicable
Environmental Law, except for any such Release that would not reasonably be
expected to result in a Business Material Adverse Effect; and
(e) No Business Property contains any friable asbestos,
polychlorinated biphenyls or underground storage tanks, except as would not
reasonably be expected to result in a Business Material Adverse Effect.
(f) The Parties agree that the only representations and
warranties of the Sellers herein as to any Environmental Matters or any other
obligation or liability with respect to Materials of Environmental Concern are
those contained in this Section 2.17.
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2.18 Legal Compliance. Each Business Subsidiary and (with respect to
the Business) each Asset Seller is in compliance with all applicable laws
(including rules and regulations thereunder) of any federal, state or foreign
government, or any Governmental Entity, currently in effect with respect to the
Business, except where the failure to comply therewith would not reasonably be
expected to result in a Business Material Adverse Effect. No Business Subsidiary
nor any Asset Seller has received written notice of any pending action, suit,
proceeding or claim relating to the Business alleging any failure to so comply,
except for any that would not reasonably be expected to result in a Business
Material Adverse Effect.
2.19 Permits. The Disclosure Schedule lists all Permits. To the
knowledge of the Sellers, (a) each Permit listed in the Disclosure Schedule is
in full force and effect and no Business Subsidiary nor any Asset Seller is in
violation of or default under any Permit and (b) no suspension or cancellation
of any such Permit has been threatened in writing.
2.20 Certain Payments. To the knowledge of the Sellers, no Business
Subsidiary, nor (to the extent related to the Business) any Seller, nor any of
their respective directors, officers, employees, stockholders, agents and
representatives, acting for or on behalf of any Business Subsidiary or (to the
extent related to the Business) any Seller, has violated the FCPA
2.21 Brokers' Fees. No Business Subsidiary nor any Asset Seller has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement that would
constitute an Assumed Liability or a liability of any Business Subsidiary.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to each Seller that the statements
contained in this Article III are true and correct as of the date hereof.
3.1 Organization. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee.
3.2 Authority. The Buyer has all requisite corporate power and
authority to execute and deliver this Agreement and the Ancillary Agreements to
which it will be a party and to perform its obligations hereunder and
thereunder. The execution and delivery by the Buyer of this Agreement and such
Ancillary Agreements and the consummation by the Buyer of the transactions
contemplated hereby and thereby have been validly authorized by all necessary
corporate action on the part of the Buyer. This Agreement has been, and such
Ancillary Agreements will be, validly executed and delivered by the Buyer and,
assuming this Agreement and each such Ancillary Agreement constitute the valid
and binding obligation of the Sellers, constitutes or will constitute a valid
and binding obligation of the Buyer, enforceable against the Buyer in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium or other similar
laws relating to or affecting the rights of creditors generally and by equitable
principles, including, without limitation, those limiting the availability of
specific performance, injunctive relief and other equitable remedies and those
providing for equitable defenses.
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3.3 Noncontravention. Subject to compliance with the applicable
requirements of the Antitrust Laws and applicable Environmental Laws, neither
the execution and delivery by the Buyer of this Agreement or the Ancillary
Agreements to which the Buyer will be a party, nor the consummation by the Buyer
of the transactions contemplated hereby or thereby, will:
(a) conflict with or violate any provision of the charter or
bylaws of the Buyer;
(b) require on the part of the Buyer any filing with, or
permit, authorization, consent or approval of, any Governmental Entity, except
for any filing, permit, authorization, consent or approval which if not obtained
or made would not reasonably be expected to result in a Buyer Material Adverse
Effect;
(c) conflict with, result in a breach of, constitute (with or
without due notice or lapse of time or both) a default under, result in the
acceleration of obligations under, create in any party any right to terminate or
modify, or require any notice, consent or waiver under, any contract or
agreement to which the Buyer is a party or by which the Buyer is bound, except
for (i) any conflict, breach, default, acceleration or right to terminate or
modify that would not reasonably be expected to result in a Buyer Material
Adverse Effect or (ii) any notice, consent or waiver the absence of which would
not reasonably be expected to result in a Buyer Material Adverse Effect; or
(d) violate any order, writ, injunction or decree specifically
naming, or statute, rule or regulation applicable to, the Buyer or any of its
properties or assets, except for any violation that would not reasonably be
expected to result in a Buyer Material Adverse Effect.
3.4 Litigation. There are no actions, suits, claims or legal,
administrative or arbitratorial proceedings pending against, or, to the Buyer's
knowledge, threatened against, the Buyer which would adversely affect the
Buyer's performance under this Agreement or the consummation of the transactions
contemplated by this Agreement.
3.5 Investment Intent. The Buyer is acquiring the Business Subsidiary
Interests for investment for its own account and not with a view to the
distribution of any part thereof. The Buyer acknowledges that the Business
Subsidiary Interests have not been registered under U.S. federal or any
applicable state securities laws or the laws of any other jurisdiction and
cannot be resold without registration under such laws or an exemption therefrom.
The Buyer further acknowledges that (a) it has such knowledge and experience in
financial and business matters, that it is capable of evaluating the merits and
risks of an investment in the Business Subsidiary Interests, and (b) it can bear
the economic risk of an investment in the Business Subsidiary Interests for an
indefinite period of time.
3.6 Financing. The Buyer has, and at the Closing will have, sufficient
cash or other sources of immediately available funds to enable it to consummate
the transactions contemplated by the Agreement and to fulfill its obligations
hereunder, including, without limitation, payment to the Sellers of the Purchase
Price at the Closing.
3.7 Solvency. Immediately after giving effect to the transactions
contemplated by this Agreement and the closing of any financing to be obtained
by the Buyer or any of its Affiliates in order to effect the transactions
contemplated by this Agreement, the Buyer shall be able to pay its debts as they
become due and shall own property having a fair saleable value greater than the
amounts required to pay its debts (including, without limitation, a reasonable
estimate of the amount of all contingent liabilities). Immediately after giving
effect to the transactions contemplated by this Agreement and the closing of any
financing to be obtained by the Buyer or any of its Affiliates in order to
effect the transactions contemplated by this Agreement, the Buyer shall have
adequate capital to carry on its business. No transfer of property is being made
and no obligation is being incurred in connection with the transactions
contemplated by this Agreement and the closing of any financing to be obtained
by the Buyer or any of its Affiliates in order to effect the transactions
contemplated by this Agreement with the intent to hinder, delay or defraud
either present or future creditors of the Buyer.
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3.8 Due Diligence by the Buyer. The Buyer acknowledges that (1) it has
conducted to its satisfaction an independent investigation of the financial
condition, results of operations, assets, liabilities, properties, projected
operations, workforce and affairs of the Business (including, without
limitation, the Business Subsidiaries, the Acquired Assets and the Assumed
Liabilities) and, in making its determination to proceed with the transactions
contemplated by this Agreement, the Buyer has relied solely on the results of
its own independent investigation and the representations and warranties of the
Sellers set forth in Article II, as qualified and limited by the Disclosure
Documents, (2) such representations and warranties as so qualified and limited
constitute the sole and exclusive representations and warranties of the Sellers
to the Buyer in connection with the transactions contemplated hereby, and (3)
THE SELLERS ARE NOT MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTY AS TO CONDITION, MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR SUITABILITY, AS TO THE BUSINESS OR ANY ASSETS THEREOF
(INCLUDING, WITHOUT LIMITATION, THE ACQUIRED ASSETS AND THE ASSETS OF THE
BUSINESS SUBSIDIARIES) AND IT IS UNDERSTOOD THAT THE BUYER TAKES (TO THE EXTENT
OTHERWISE CONVEYED BY THIS AGREEMENT) THE BUSINESS AND THE ASSETS THEREOF
(INCLUDING, WITHOUT LIMITATION THE ACQUIRED ASSETS AND THE ASSETS OF THE
BUSINESS SUBSIDIARIES) AS IS AND WHERE IS (SUBJECT TO THE BENEFIT OF THE
REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT, AS QUALIFIED AND
LIMITED BY THE DISCLOSURE DOCUMENTS AS UPDATED FROM TIME TO TIME PRIOR TO THE
CLOSING). The Buyer further acknowledges and agrees that any cost estimates,
projections or other predictions that may have been provided to the Buyer or any
of its employees, agents or representatives are not representations or
warranties of the Sellers or any of their Affiliates. The Buyer has no knowledge
that any of the representations and warranties of the Sellers in this Agreement
is not true and correct, and the Buyer has no knowledge of any errors in, or
omissions from, the Disclosure Documents.
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ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Closing Efforts; Xxxx-Xxxxx-Xxxxxx Act.
(a) Subject to the terms hereof, including, without
limitation, Section 4.1(b), each of the Parties shall use commercially
reasonable efforts to take all actions and to do all things reasonably necessary
or advisable to consummate the transactions contemplated by this Agreement,
including, without limitation, using commercially reasonable efforts to: (i)
effect all Governmental Filings and (ii) otherwise comply in all material
respects with all applicable laws and regulations in connection with the
consummation of the transactions contemplated by this Agreement. Each of the
Parties shall promptly notify each of the other Parties of any fact, condition
or event known to it that would reasonably be expected to prohibit, make
unlawful or delay the consummation of the transactions contemplated by this
Agreement.
(b) Without limiting the generality of the foregoing paragraph
(a), each of the Parties shall (or shall cause the appropriate Affiliate thereof
to) (i) promptly (and in any event within three Business Days of the date of
this Agreement) file any Notification and Report Forms and related material that
it may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the Xxxx-Xxxxx-Xxxxxx
Act, (ii) use commercially reasonable efforts to obtain an early termination of
the applicable waiting period under the Xxxx-Xxxxx-Xxxxxx Act, (iii) make any
further filings or information submissions pursuant thereto that may be
reasonably necessary or advisable and (iv) promptly (and in any event within
three Business Days of the date of this Agreement) make any filings or
submissions required under any other Antitrust Laws. Filing fees payable to the
U.S. Treasury under the Xxxx-Xxxxx-Xxxxxx Act shall be borne equally by the
Buyer, on the one hand, and the Sellers, on the other hand. Each of the Parties
shall use commercially reasonable efforts to resolve any objections that may be
asserted by any Governmental Entity with respect to the transactions
contemplated hereby, and shall cooperate with each other to contest any
challenges to the transactions contemplated hereby by any Governmental Entity.
Each of the Parties shall promptly inform each other of any material
communication received by such Party from the Federal Trade Commission, the
Antitrust Division of the Department of Justice or any other Governmental Entity
regarding any of the transactions contemplated hereby.
4.2 Operation of Business.
(a) Except as contemplated by this Agreement, during the
period from the date of this Agreement until the Closing Date, each Asset Seller
shall use commercially reasonable efforts to, and the Parent shall cause each
Business Subsidiary to use commercially reasonable efforts to, conduct the
operations of the Business in the ordinary course of business consistent with
past practice.
(b) Without limiting the generality of Section 4.2(a), during
the period from the date of this Agreement until the Closing Date, each Asset
Seller shall use commercially reasonable efforts to, and the Parent shall cause
each Business Subsidiary to use its commercially reasonable efforts to, in a
manner and to the extent consistent with the conduct of the Business in the
ordinary course of business consistent with past practice:
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(i) preserve intact the business organization of
the Business;
(ii) keep available the services of its officers
and employees;
(iii) maintain existing material business
relations with third parties;
(iv) pay all accounts payable and similar
obligations with respect to the Business;
(v) maintain its books, accounts and records and
its current pricing policies and terms and conditions of sales; and
(vi) maintain and service the tangible Acquired
Assets in good operating condition and repair, normal wear and tear excepted.
(c) Without limiting the generality of Section 4.2(a), during
the period from the date of this Agreement until the Closing Date, no Seller or
Business Subsidiary will, without the prior written consent of the Buyer, such
consent not to be unreasonably withheld, with respect to the Business:
(i) engage in any new line of business;
(ii) incur or permit to be incurred any obligation
or other liability (absolute, accrued or contingent) in excess of $50,000.00 in
any way affecting the Business or the Acquired Assets, except in the ordinary
course of business consistent with past practice;
(iii) sell, lease, license or otherwise dispose of
any material Acquired Asset, other than in the ordinary course of business
consistent with past practice;
(iv) materially increase the compensation payable
or to become payable to any of the Business Employees, including any such
increase pursuant to any option, bonus, stock purchase, pension, profit-sharing,
deferred compensation, retirement or other plan, arrangement, contract or
commitment or otherwise enter into, alter or extend in any manner the terms of
any employment, severance, consulting or service agreement, or enter into any
retention agreements or agreements for enhanced or extraordinary severance with
any Business Employee, in each case, other than (A) in the ordinary course of
business consistent with past practice or (B) as otherwise contemplated by this
Agreement or agreed by the Parties;
(v) create, incur or assume any indebtedness in
excess of $50,000.00 secured by any material Acquired Asset or grant, create,
incur, or suffer to exist any Security Interest on any material Acquired Asset
that did not exist on the date hereof; or
(vi) agree or commit to do any of the foregoing.
(d) Notwithstanding anything to contrary in paragraph 4.2(a)
through (c) above, each Business Subsidiary and each Asset Seller shall be
permitted to (i) accept capital contributions and loans from any Seller or any
of such Seller's Affiliates, (ii) use any and all cash, cash equivalents and
other short-term liquid investments of the Business to make dividends,
distributions or other payments to any Seller or any Affiliate of any Seller,
(iii) transfer or dispose of any asset, property or right described in the
definition of Excluded Assets, (iv) transfer to any Affiliate of any Seller, or
terminate, the employment of any employee of any Business Subsidiary that is not
engaged exclusively in the Business, and (v) take all actions necessary or
advisable to change its company name. For the avoidance of doubt, the taking of
any action described in any of the foregoing clauses (i) through (v) shall not
constitute a breach of any representation, warranty, covenant or agreement in
this Agreement, the Parent Certificate or any Ancillary Agreement.
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4.3 Access.
(a) Each Seller shall permit the representatives of the Buyer
listed on Schedule 4.3(a) to have access (at reasonable times, on reasonable
prior written notice and in a manner so as not to interfere with the normal
business operations of the Business) to the premises, properties, financial and
accounting records, contracts, and other records and documents, of or pertaining
to the Business. Notwithstanding the foregoing, none of the Sellers shall be
obligated (i) to provide any information, documents or access to any person
unless the Buyer is responsible, pursuant to the terms of the Confidentiality
Agreement, for the use and disclosure of any information obtained by such person
from any Seller, or such person enters into a confidentiality agreement with the
Parent on terms that are substantially the same as those set forth in the
Confidentiality Agreement or (ii) to provide any information, documents or
access that would (A) violate the provisions of any applicable laws or
regulations (including, without limitation, those relating to security clearance
or export controls) or any agreement to which it is a party or (B) cause the
loss of the attorney-client privilege with respect thereto. Prior to the
Closing, the Buyer and its representatives shall not contact or communicate with
the employees, customers and suppliers of any Asset Seller or any Business
Subsidiary in connection with the transactions contemplated by this Agreement,
except with the prior written consent of the applicable Seller.
(b) Notwithstanding anything to the contrary in any other
provision of this Agreement or the Confidentiality Agreement, the Buyer and the
Sellers agree that the Confidentiality Agreement shall remain in full force and
effect in accordance with its terms, that the Confidentiality Agreement shall
survive the Closing or any termination of this Agreement and that any
information provided by or on behalf of any Seller or any of such Seller's
Affiliates to the Buyer pursuant to this Agreement shall be deemed Proprietary
Information (as defined in the Confidentiality Agreement) and treated in
accordance with the Confidentiality Agreement; provided, however, if the Closing
occurs, the Confidentiality Agreement, insofar as it covers information relating
exclusively to the Business, shall terminate effective as of the Closing.
(c) Notwithstanding any provision of this Agreement to the
contrary, the Buyer and its representatives shall not have any access at any
time prior to the Closing to any information regarding pending or proposed bids
for new contracts or subcontracts or any related information where the Buyer or
an Affiliate of the Buyer also has submitted or intends to submit a bid for such
contract or subcontract.
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4.4 Disclosure Documents. From time to time between the date hereof and
the Closing Date, the Sellers shall be entitled to provide to the Buyer written
updates to the Disclosure Documents, disclosing any events or developments that
occurred or any information learned between the date of this Agreement and the
Closing Date. The Sellers' representations and warranties contained in this
Agreement shall be construed for all purposes of this Agreement as being
qualified and limited by the Disclosure Documents, as so updated.
4.5 Elimination of Intercompany Items. Effective as of the Closing, all
payables, receivables, liabilities and other obligations between the Business or
any Business Subsidiary, on the one hand, and any Seller or any of its
Affiliates (other than the Business Subsidiaries), on the other hand, shall be
eliminated except to the extent (a) expressly provided for herein or (b) such
payables, receivables, liabilities and other obligations relate to bona fide
transactions entered into or conducted on substantially prevailing market terms
at substantially prevailing market prices.
4.6 Replacement of Guarantees and Letters of Credit. The Buyer shall
use commercially reasonable efforts to arrange, prior to the Closing, for
replacement arrangements reasonably satisfactory to the Sellers (which shall
include a full and complete release of each Seller and their respective
Affiliates (other than the Business Subsidiaries)) with respect to Seller
Guarantees existing as of the Closing Date.
ARTICLE V
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions to Obligations of the Buyer. The obligation of the Buyer
to consummate the transactions to be consummated at the Closing is subject to
the satisfaction (or waiver by the Buyer) of the following conditions:
(a) the representations and warranties of the Sellers set
forth in Article II shall be true and correct as of the Closing Date as if made
on the Closing Date, except (i) for changes contemplated or permitted by this
Agreement, (ii) for those representations and warranties that address matters
only as of a particular date (which shall be true and correct as of such date,
subject to the following clause (iii)), and (iii) where the failure of any such
representation or warranty to be true and correct would not reasonably be
expected to result in a Business Material Adverse Effect (it being agreed that
any materiality or Business Material Adverse Effect qualification in a
representation and warranty shall be disregarded in determining whether any such
failure would reasonably be expected to result in a Business Material Adverse
Effect for purposes of this clause (iii));
(b) each Seller shall have performed or complied with the
agreements and covenants required to be performed or complied with by it under
this Agreement as of or prior to the Closing, except where the failure to so
perform or comply would not reasonably be expected to result in a Business
Material Adverse Effect;
(c) no judgment, order, decree, stipulation or injunction
enjoining or preventing the consummation of the transactions contemplated by
this Agreement shall be in effect;
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(d) the Parent shall have executed and delivered to the Buyer
the Parent Certificate;
(e) all applicable waiting periods (and any extensions
thereof) under any applicable Antitrust Laws shall have expired or otherwise
been terminated and any consents required thereunder shall have been obtained;
(f) there shall not have occurred since the date of this
Agreement any Business Material Adverse Effect;
(g) there shall not have been disclosed in any written update
to the Disclosure Documents made pursuant to Section 4.4 hereof any Business
Material Adverse Effect of which the Sellers have knowledge on the date of this
Agreement; and
(h) each deliverable of any Seller under Section 1.3(b) shall
have been delivered to the Buyer.
5.2 Conditions to Obligations of the Sellers. The obligation of the
Sellers to consummate the transactions to be consummated at the Closing is
subject to the satisfaction (or waiver by the Sellers) of the following
conditions:
(a) the representations and warranties of the Buyer set forth
in Article III shall be true and correct as of the Closing Date as if made on
the Closing Date, except (i) for those representations and warranties that
address matters only as of a particular date (which shall be true and correct as
of such date, subject to the following clause (ii)), and (ii) where the failure
of any such representation or warranty to be true and correct would not
reasonably be expected to result in a Buyer Material Adverse Effect (it being
agreed that any materiality or Buyer Material Adverse Effect qualification in a
representation and warranty shall be disregarded in determining whether any such
failure would reasonably be expected to result in a Buyer Material Adverse
Effect for purposes of this clause (ii));
(b) the Buyer shall have performed or complied with its
agreements and covenants required to be performed or complied with by it under
this Agreement as of or prior to the Closing, except where the failure to so
perform or comply would not reasonably be expected to result in a Buyer Material
Adverse Effect;
(c) no judgment, order, decree, stipulation or injunction
enjoining or preventing the consummation of the transactions contemplated by
this Agreement shall be in effect;
(d) the Buyer shall have executed and delivered to the Parent
the Buyer Certificate;
(e) all applicable waiting periods (and any extensions
thereof) under any applicable Antitrust Laws shall have expired or otherwise
been terminated and any consents required thereunder shall have been obtained;
and
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(f) each deliverable of the Buyer under Section 1.3(b) shall
have been delivered to the applicable Seller.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification by the Parent. Subject to the terms and conditions
of this Article VI, from and after the Closing, the Parent shall indemnify the
Buyer in respect of, and hold the Buyer harmless against, Damages incurred or
suffered by the Buyer or any Affiliate thereof resulting from or constituting:
(a) any breach of a representation or warranty of the Sellers
contained in this Agreement, any Ancillary Agreement or the Parent Certificate;
(b) any failure by any Seller to perform any covenant or
agreement contained in this Agreement or any Ancillary Agreement; or
(c) any Excluded Liabilities.
6.2 Indemnification by the Buyer. Subject to the terms and conditions
of this Article VI, from and after the Closing, the Buyer shall indemnify each
Seller in respect of, and hold each Seller harmless against, Damages incurred or
suffered by any Seller or any Affiliate thereof resulting from or constituting:
(a) any breach of a representation or warranty of the Buyer
contained in this Agreement, any Ancillary Agreement or the Buyer Certificate;
(b) any failure by the Buyer to perform any covenant or
agreement contained in this Agreement or any Ancillary Agreement;
(c) any Assumed Liabilities; or
(d) the conduct of the Business following the Closing.
6.3 Claims for Indemnification.
(a) Third-Party Claims. Except as set forth in Section 7.4(b),
all claims for indemnification made under this Agreement resulting from, related
to or arising out of a third-party claim against an Indemnified Party shall be
made in accordance with the following procedures. An Indemnified Party shall
give prompt written notification to the Indemnifying Party of the commencement
of any action, suit or proceeding relating to a third-party claim for which
indemnification may be sought or, if earlier, upon the assertion of any such
claim by a third party. Such notification shall include a description in
reasonable detail of the facts constituting the basis for such third-party claim
and the amount of the Damages claimed. At any time after delivery of such
notification, the Indemnifying Party may, upon written notice thereof to the
Indemnified Party, assume control of the defense of such action, suit,
proceeding or claim. If the Indemnifying Party does not assume control of such
defense, the Indemnified Party shall control such defense. The Party not
controlling such defense may participate therein at its own expense. The Party
controlling such defense shall keep the other Parties advised of the status of
such action, suit, proceeding or claim and the defense thereof and shall have
the right to settle such action, suit, proceeding or claim; provided, however,
(i) the Indemnified Party shall not agree to any settlement of such action,
suit, proceeding or claim without the prior written consent of the Indemnifying
Party, and (ii) the Indemnifying Party shall not agree to any settlement of such
action, suit, proceeding or claim without the prior written consent of the
Indemnified Party (which consent shall not be unreasonably withheld, conditioned
or delayed), unless such settlement does not impose equitable relief on the
Indemnified Party or its Affiliates and includes a complete release of the
Indemnified Party and its Affiliates.
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(b) Procedure for Claims. An Indemnified Party wishing to
assert a claim for indemnification under this Article VI shall deliver to the
Indemnifying Party a Claim Notice. Except to the extent otherwise expressly
stated in a written notice, if any, delivered by the Indemnifying Party pursuant
to the terms of this Agreement, the Indemnifying Party shall be deemed to have
contested that the Indemnified Party is entitled to receive any portion or all
of the Damages claimed in such Claim Notice or is otherwise entitled to
indemnification with respect to the matter described in the Claim Notice. If a
dispute relating to a Claim Notice is not resolved within 90 days following the
delivery of the Claim Notice, the Indemnifying Party and the Indemnified Party
shall each have the right to submit such dispute to a court of competent
jurisdiction in accordance with the provisions of Section 12.12.
6.4 Survival. The representations and warranties of the Sellers and the
Buyer set forth in this Agreement, the Parent Certificate and the Buyer
Certificate shall survive the Closing and the consummation of the transactions
contemplated hereby and continue until the date that is 18 months after the
Closing Date, at which time they shall expire. If an indemnification claim is
properly asserted in writing pursuant to Section 6.3 prior to the expiration of
the representation or warranty that is the basis for such claim, then such
representation or warranty shall survive until, but only for the purpose of, the
resolution of such claim.
6.5 Limitations.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the following limitations shall apply to claims under this Article VI
or otherwise made with respect to this Agreement, any Ancillary Agreement or the
Parent Certificate:
(i) No individual claim shall be valid and
assertable against any Seller unless it is for an amount in excess of
US$25,000.00, and provided that such individual claims shall be applied against
the threshold amount set forth in Section 6.5(a)(ii).
(ii) No Seller shall be liable with respect to any
Damages except to the extent that the aggregate amount of all Damages to which
the Buyer has otherwise become entitled under this Article VI exceeds one-half
of one percent (0.5%) of the Adjusted Purchase Price. All reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable
legal fees and reasonable costs of investigation) paid by Buyer (or any
Affiliate of Buyer) in connection with any claims under this Article VI shall be
considered Damages for purposes of determining whether the threshold set forth
in this Section 6.5(a)(ii) has been exceeded, provided, however, no costs of
investigation shall be considered Damages pursuant to the foregoing clause
unless the Buyer provides the Parent with written notice of such investigation
prior to the commencement thereof and, upon Parent's reasonable request,
apprises the Parent of the status, findings and conclusions of such
investigation.
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(iii) No Seller shall be liable with respect to
any Damages to the extent that such Damages, when aggregated with all other
Damages to which the Buyer has become entitled under this Agreement or in
connection with the transactions contemplated hereby, exceed US$28,000,000.00.
(iv) The amount of any Damages to which the Buyer
is entitled with respect to any claim shall be calculated net of any adjustment
to the Purchase Price made pursuant to Section 1.4 and for any accruals,
reserves or provisions therefor reflected in the Final Closing Statement or the
Financial Statements.
(v) The amount of Damages recoverable by the Buyer
under this Agreement shall be reduced by (i) the amount of any payment
receivable by the Buyer (or any Affiliate thereof) with respect such Damages
from any insurance provider or any other third party (or that the Buyer or any
of its Affiliates would have been entitled to receive had the Buyer or its
Affiliates maintained adequate and customary insurance policies for the Business
and the Business Subsidiaries), and (ii) the amount of any Tax benefit realized
or realizable by the Buyer (or any Affiliate thereof) which is attributable to
the Damages to which such claim relates. For purposes of this Section 6.5(a)(v),
the Tax benefit realizable by the Buyer (or any Affiliate thereof) shall be
determined as of the date of the receipt of payment from Parent (or any
Affiliate thereof) by calculating the present value of all expected reductions
in Tax payments attributable to any expected deductions or decreases in income
associated with the Damages to which such claim relates, assuming that the Buyer
is always subject to a total combined Tax rate of 40% and using a discount rate
of 8% (compounded monthly). The Buyer shall use commercially reasonable efforts
to pursue, and to cause its Affiliates to pursue, all insurance claims, other
third party payments and Tax benefits to which it may be entitled in connection
with any Damages it incurs. If the Buyer (or an Affiliate) becomes entitled to
receive any insurance or other third party payment in connection with any claim
for Damages for which it has already received a payment from the Parent (or any
Affiliate thereof), it shall pay to the Parent, within 30 days after such
payment becomes receivable, an amount equal to the excess of (A) the amount
previously received by the Buyer from the Parent (or any of its Affiliates) with
respect to such claim plus the amount of such insurance or other third party
payment, over (B) the amount of Damages to which the Buyer has become entitled
under this Agreement in connection with such claim.
(vi) In no event shall any Seller have any
obligation or liability for:
(A) any Damages that are consequential, in the
nature of lost profits (including, without limitation, loss of profit or
revenue, any multiple of reduced cash flow or any adjustment based on price to
earnings or similar ratios), interference with operations, or loss of customers,
tenants, lenders, investors or buyers, diminution in the value of property,
special or punitive or otherwise not actual out-of-pocket damages except to the
extent arising in connection with a third-party claim);
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(B) any Damages arising from or relating to,
directly or indirectly, any matter disclosed in, or reasonably ascertainable
from, the Disclosure Documents or any other matter or facts (including, without
limitation, the breach or nonfulfillment of any representation, warranty,
covenant, agreement or condition in this Agreement, the Parent Certificate or
any Ancillary Agreement) of which the Buyer has knowledge on or before the
Closing Date;
(C) any Damages arising from or relating to,
directly or indirectly, a breach that is remedied by or on behalf of the Sellers
or for which the Buyer receives compensation within a reasonable period of time
after the Sellers receive notice of such breach;
(D) any Damages arising from or relating to,
directly or indirectly, any legislation or accounting principle not in force on
the date hereof (or any alteration or repeal of any legislation or accounting
principle in force on the date hereof), or which takes effect retroactively, or
occurs as a result of any increase in the rate of Tax in force on the date
hereof or any change in the practices of the relevant Governmental Entity
(including changes in the interpretation of relevant legislation or accounting
principles);
(E) any Damages arising from or relating to,
directly or indirectly, any act, omission or transaction carried out by or at
the request, or with the consent of, the Buyer or any Affiliate thereof before,
on or after the Closing Date, including, without limitation, any change in the
accounting policies, practices or procedures of the Business or any of the
Business Subsidiaries after the Closing;
(F) any Damages that, at the time the claim
alleging such Damages are notified to the Sellers, are contingent or otherwise
not capable of being quantified unless (and solely to the extent) such Damages
cease to be contingent and become capable of being quantified prior to the date
that is 36 months after the Closing Date; or
(G) any Damages claimed in any Claim Notice
received by the Sellers more than 18 months after the Closing Date.
(vii) The Buyer shall (and shall cause its
Affiliates to) use commercially reasonable efforts to pursue all legal rights
and remedies available in order to minimize the Damages to which it may be
entitled under this Agreement.
(b) All costs and expenses (including, without limitation,
legal fees and costs of investigation) incurred by such Seller (or any Affiliate
thereof) in connection with the defense of third party claims under Section 6.3
shall, solely for purposes of determining whether the cap set forth in Section
6.5(a)(iii) has been exceeded, be considered Damages to which the Buyer has
become entitled under this Agreement or in connection with the transaction
contemplated hereby.
(c) Effective as of the Closing, the Buyer hereby waives and
releases (and shall cause each Business Subsidiary to waive and release), any
claim any Business Subsidiary may have against any Seller or its Affiliates as
of the Closing Date, except for claims that directly relate to an inter-company
item described in clause (b) of Section 4.5.
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(d) From and after the Closing, except with respect to (i)
claims for equitable relief, including, without limitation, specific
performance, made with respect to breaches of any covenant or agreement
contained in this Agreement or the Ancillary Agreements and (ii) claims subject
to resolution in accordance with the procedures set forth in Sections 1.2(b) and
1.4, the rights provided to the Parties under this Article VI shall be the sole
and exclusive remedies of the Parties and their respective Affiliates with
respect to claims under this Agreement or otherwise relating to the transactions
contemplated hereby. Without limiting the generality of the foregoing, in no
event shall any Party, its successors or permitted assigns be entitled to claim
or seek rescission of the transactions contemplated by this Agreement.
(e) Warranty expenses ("RT Warranty Expenses") reasonably paid
by the Buyer as a result of any design or manufacturing defect (existing prior
to the date of the Closing) in the discontinued radio product manufactured by
Sellers' Xxxxx Xxxxxxxx division (the " RT Warranty Matter") shall be considered
Damages solely for purposes of determining whether the threshold in 6.5(a)(ii)
has been exceeded, but (i) solely to the extent that RT Warranty Expenses
exceed, in the aggregate, $335,000 and (ii) do not exceed, in the aggregate,
$829,000. For the avoidance of doubt, Buyer is assuming all RT Warranty Expenses
and all liabilities related to the RT Warranty Matter and Sellers shall have no
obligation to indemnify Buyer for the RT Warranty Matter.
6.6 Treatment of Indemnification Payments. All indemnification payments
made under this Agreement shall be treated by the Parties as an adjustment to
the Adjusted Purchase Price.
ARTICLE VII
TAX MATTERS
7.1 Preparation and Filing of Tax Returns; Payment of Taxes.
(a) The Sellers shall be responsible for the preparation and
filing of (i) all Tax Returns of the Sellers for all periods (including the
consolidated, unitary and combined Tax Returns for the Sellers which include the
operations of the Business for any period or portion thereof ending on or before
the Closing Date), (ii) all Tax Returns for Income Taxes of any Business
Subsidiary for all taxable periods that end on or before the Closing Date, (iii)
all Tax Returns for Income Taxes of any Business Subsidiary for any period
beginning before the Closing Date and ending after the Closing Date and (iv) all
other Tax Returns of any Business Subsidiary that are required to be filed
(taking into account extensions) prior to the Closing Date. The Sellers shall
make or cause to be made all payments required with respect to any such Tax
Returns. The Buyer shall promptly reimburse the Sellers for the amount of any
such Taxes paid by the Sellers to the extent such Taxes are (i) Assumed
Liabilities, (ii) Taxes attributable (as determined under Section 7.2) to any of
the Business Subsidiaries, the Acquired Assets or the operations of the Business
for periods or portions thereof beginning after the Closing Date or (iii)
included in the Tax Reserves.
(b) The Buyer shall be responsible for the preparation and
filing of all other Tax Returns for the Business Subsidiaries, the Acquired
Assets, and the Business. The Buyer shall make all payments required with
respect to any such Tax Returns. Buyer shall promptly reimburse Sellers to the
extent that actual Taxes payable by Buyer for periods or portions thereof ending
on or before the Closing Date are less than the amount of the Tax Reserves
established for such Taxes.
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(c) The Buyer shall not cause or permit the filing of any
amended Tax Return with respect to any of the Business Subsidiaries for any
period ending on or before, or including, the Closing Date without the Parent's
consent.
(d) The Buyer shall be responsible for the payment of any
transfer, sales, use, stamp, conveyance, value added, recording, registration,
documentary, filing and other non-income Taxes and administrative fees
(including, without limitation, notary fees) arising in connection with the
consummation of the transactions contemplated by this Agreement.
(e) The Buyer shall be responsible for the payment of any and
all Taxes attributable to the acts or omissions of the Buyer or the Buyer's
Affiliates occurring after the Closing.
(f) The Buyer shall not make, or cause or permit to be made,
an election under section 338 of the Code with respect to the acquisition of the
Share Capital or with respect to FPC.
(g) The Buyer shall not cause or permit any Tax attribute
(including any Tax losses) of FPC arising in a period beginning after the
Closing Date to be carried back to a period ending on or before the Closing
Date.
7.2 Allocation of Certain Taxes.
(a) The Buyer and the Sellers agree that if any Business
Subsidiary is permitted but not required under applicable foreign, state or
local Tax laws to treat the Closing Date as the last day of a taxable period,
the Buyer and the Sellers shall treat such day as the last day of a taxable
period.
(b) In the case of any period that includes, but does not end
on, the Closing Date, Taxes attributable to the portion of the period ending on
the Closing Date shall be determined as follows: (A) real, personal and
intangible property Taxes of the Business Subsidiaries or that relate to the
Acquired Assets for the portion of the period ending on the Closing Date shall
equal the amount of such Taxes for the entire period multiplied by a fraction,
the numerator of which is the number of days in the portion of the period ending
on the Closing Date and the denominator of which is the total number of days in
the period; and (B) any other Taxes for the portion of the period ending on the
Closing Date shall be computed as if the period ended as of the close of
business on the Closing Date; provided that any Taxes resulting from
transactions occurring on the Closing Date after the Closing other than in the
ordinary course of business shall be attributed to the portion of the period
beginning after the Closing Date. Taxes for a period that includes, but does not
end on, the Closing Date that are not attributable to the portion of the period
ending on the Closing Date pursuant to the preceding sentence shall be
attributable to the portion of the period beginning after the Closing Date.
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7.3 Refunds and Carrybacks.
(a) The Sellers shall be entitled to any refunds (including,
without limitation, any interest paid thereon) or credits of Taxes with respect
to the Business Subsidiaries, the Acquired Assets or the operations of Business
attributable to taxable periods or portions thereof ending on or before the
Closing Date.
(b) The Buyer and/or its Affiliates, as the case may be, shall
be entitled to any refunds (including, without limitation, any interest paid
thereon) or credits of Taxes with respect to the Business Subsidiaries, the
Acquired Assets or the operations of Business attributable to taxable periods,
or portions thereof, beginning after the Closing Date.
(c) The Buyer shall promptly forward to or reimburse the
Sellers for any such refunds (including, without limitation, any interest paid
thereon) or credits due the Sellers after receipt thereof, and the Sellers shall
promptly forward to the Buyer or reimburse the Buyer for any such refunds
(including, without limitation, any interest paid thereon) or credits due the
Buyer after receipt thereof.
7.4 Cooperation on Tax Matters; Tax Audits.
(a) The Buyer and the Sellers and their respective Affiliates
shall cooperate in the preparation of all Tax Returns for any Tax periods for
which one Party could reasonably require the assistance of the other Party in
obtaining any necessary information. Such cooperation shall include, but not be
limited to, furnishing in a timely manner any information within a Party's
possession or subject to that Party's control as may be reasonably requested by
the Party filing such Tax Returns. Such cooperation and information also shall
include, but not be limited to, provision of powers of attorney for the purpose
of signing Tax Returns and defending audits and promptly forwarding copies of
appropriate notices and forms or other communications received from or sent to
any Taxing Authority which relate to the Business Subsidiaries, the Acquired
Assets or the Business. The Buyer and the Sellers and their respective
Affiliates shall make their respective employees and facilities available on a
mutually convenient basis to explain any documents or information provided
hereunder.
(b) The Sellers shall have the right, at their own expense, to
control any Tax Audit, initiate any claim for refund, contest, resolve and
defend against any assessment, notice of deficiency, or other adjustment or
proposed adjustment relating to (i) any Taxes or Tax Returns of any Seller, (ii)
any Income Taxes or Tax Returns for Income Taxes of any Business Subsidiary for
any period beginning before the Closing Date, and (iii) any other Taxes or Tax
Returns of or relating to any Business Subsidiary, the Acquired Assets or the
operations of the Business with respect to which the Sellers could have
indemnification responsibility hereunder. The Buyer shall have the right, at its
own expense, to control any other Tax Audit, initiate any other claim for
refund, and contest, resolve and defend against any other assessment, notice of
deficiency, or other adjustment or proposed adjustment relating to Taxes or Tax
Returns with respect to the Business Subsidiaries, the Acquired Assets or the
operations of the Business; provided that, with respect to any item the
adjustment of which may cause any Seller to become obligated to make any payment
hereunder or that could otherwise affect adversely the Taxes of any Seller, the
Buyer shall consult with the Sellers with respect to the resolution of any such
issue, and not settle any such issue, or file any amended Tax Return relating to
such issue, without the consent of the Sellers. This Section 7.4(b) rather than
Section 6.3(a) shall govern with respect to the allocation of responsibility for
the conduct of Tax Audits, claims for Tax refunds, and proceedings relating to
assessments, notices of deficiency or other adjustments or proposed adjustments
relating to Taxes.
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7.5 Termination of Tax Sharing Agreements. All Tax sharing agreements
or similar arrangements with respect to or involving the Business shall be
terminated prior to the Closing Date and, after the Closing Date, the Buyer and
its Affiliates shall not be bound thereby or have any liability thereunder for
amounts due in respect of periods ending on or before the Closing Date.
7.6 Scope of Article VII. For the avoidance of doubt, any claim by any
Party relating to a breach by another Party of its obligations under this
Article VII shall be pursued in accordance with the procedures for
indemnification claims, and shall otherwise be subject to the terms, conditions
and limitations, set forth in Article VI.
ARTICLE VIII
TERMINATION
8.1 Termination of Agreement. The Parties may terminate this Agreement
prior to the Closing as provided below:
(a) the Parties may terminate this Agreement by mutual written
consent;
(b) either the Buyer or the Parent may terminate this
Agreement by giving written notice to the other in the event that any Seller (in
the case of a termination by the Buyer) or the Buyer (in the case of a
termination by the Parent) is in material breach of any representation,
warranty, covenant or agreement contained in this Agreement that would cause the
conditions set forth in Section 5.1(a) or Section 5.1(b) (in the case of a
material breach by any Seller) or the conditions set forth in Section 5.2(a) or
5.2(b) (in the case of a material breach by the Buyer) not to be satisfied and
(ii) is not cured within 30 days following delivery of written notice of such
breach by the Buyer (in the case of a material breach by any Seller) or the
Parent (in the case of a material breach by the Buyer) to the other; and
(c) the Buyer or the Parent may terminate this Agreement by
giving written notice to the other if the Closing shall not have occurred on or
before 60 days after the date hereof by reason of the failure of (i) in the case
of a termination by the Buyer, any condition precedent under Section 5.1 (unless
the failure results from a breach by the Buyer of any representation, warranty,
covenant or agreement contained in this Agreement) or (ii) in the case of a
termination by the Parent, any condition precedent under Section 5.2 (unless the
failure results from a breach by any Seller of any representation, warranty,
covenant or agreement contained in this Agreement).
8.2 Effect of Termination. If any Party terminates this Agreement
pursuant to Section 8.1, except for Article XI and Sections 4.3(b), 6.5, 12.1,
12.9, 12.11 and 12.12 (which provisions shall survive any such termination), all
obligations of the Parties hereunder shall terminate without any liability of
any Party to the other Parties. Notwithstanding the foregoing, but subject to
the limitations set forth in Section 6.5, termination of this Agreement shall
not relieve any Party from liability for any Damages resulting from fraudulent
or willful breach, prior to such termination, of any covenant or agreement set
forth in this Agreement.
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ARTICLE IX
EMPLOYEE MATTERS
9.1 Offer of Employment; Continuation of Employment. The Parties hereto
intend that there shall be continuity of employment with respect to all Business
Employees. The Buyer shall offer employment commencing on the Closing Date to
all Asset Seller Business Employees, including, without limitation, those on
vacation, military leave, leave of absence (whether paid or unpaid), disability
or layoff, on the terms set forth in Section 9.4.
9.2 Cessation of Business Benefit Plan Participation; 401(k) Plan
Matters. Except as otherwise provided in this Article IX or as otherwise
required by applicable law, the Business Employees shall cease to participate in
or accrue further benefits under the Business Benefit Plans immediately prior to
the Closing, other than with respect to Business Benefit Plans maintained solely
with respect to Business Employees, and Sellers shall take (or cause their ERISA
Affiliates to take) all actions necessary to cease such participation and
accrual immediately prior to the Closing. Effective as of the Closing, all
Business Employees who participate in the Seller's 401(k) Plan shall cease to
participate in such plan. To the extent allowable under Section 401(k) of the
Code and regulations issued thereunder, Business Employees shall be eligible to
receive, at their election, a distribution of their account balance from the
Seller's 401(k) plan. Seller shall amend Seller's 401(k) Plan (or shall cause
its Affiliates to amend the appropriate Affiliate 401(k) Plan) to the extent
necessary to cease such participation and permit such distributions and
rollovers of participant loans, and shall not place any New Buyer Employee's
loan under such 401(k) Plan in default unless the New Buyer Employee fails to
elect a rollover within 90 days of the date the rollover is offered to such New
Buyer Employee. Buyer shall cause a 401(k) plan maintained by Buyer to accept
rollovers of such distributions and participant loans to the extent permissible.
9.3 Employment Related Liabilities. The Buyer shall assume liability
for and shall pay directly to the appropriate Business Employee (or reimburse
the Parent or the Asset Sellers for amounts that any of them pay to any such
Business Employee) any amounts to which any Business Employee becomes entitled
under any Business Benefit Plan or individual arrangement, applicable law or
otherwise that exists or arises (or may be deemed to exist or arise) as a result
of, or in connection with (i) the sale of the Business hereunder, (ii) the
Buyer's failure to offer employment or to employ Business Employees in
accordance with Section 9.1 or applicable local law, (iii) the employment of any
Business Employee on or after the Closing Date, (iv) any change or proposed
change to the remuneration, benefits, terms and conditions of employment, or the
working conditions of any Business Employee after the Closing Date, (v) the
failure of any Business Employee to accept initial or continued employment with
the Buyer or its Affiliates and (vi) the termination of employment of any
Business Employee on or after the Closing Date.
9.4 Compensation; Employee Benefits; Severance Plans. Beginning on the
Closing Date, the Buyer shall, for the period ending twelve (12) months after
the Closing Date, provide each New Buyer Employee with total cash compensation
(including, without limitation, base salary and bonus opportunity) that is no
less favorable in the aggregate than such New Buyer Employee's total cash
compensation immediately prior to the Closing Date. Beginning on the Closing
Date, the Buyer shall also, for the period ending twelve (12) months after the
Closing Date, maintain (or cause its Affiliates to maintain) Buyer Plans that
are no less favorable in the aggregate than the Business Benefit Plans in effect
immediately prior to the Closing; provided, however, that any equity or
equity-based Business Benefit Plans (such as stock option plans and restricted
stock plans) shall be disregarded for this purpose. The Buyer will give credit
for past service with the Sellers or their Affiliates under all the Buyer Plans
including, without limitation, severance pay plans, to all New Buyer Employees,
to the same extent such service was credited under similar plans of the Sellers
and their Affiliates in which the New Buyer Employees participated prior to the
Closing Date; provided, however, that such service shall not be taken into
account for purposes of benefit accrual under any Buyer Plan that is intended to
be qualified under section 401(a) of the Code. Notwithstanding anything to the
contrary in this Agreement, beginning on the Closing Date, the Buyer shall, for
the period ending twelve (12) months after the Closing Date, maintain (or cause
its Affiliates to maintain) a severance pay plan, program or practice for the
benefit of each New Buyer Employee that is no less favorable than the plan,
program or practice in effect immediately prior to the Closing Date with respect
to such New Buyer Employee.
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9.5 Welfare Plans. With respect to any Buyer Plan that is an "employee
welfare benefit plan" (as defined in Section 3(1) of ERISA) or any plan directly
or indirectly maintained or contributed to by the Buyer providing similar
benefits to an "employee welfare benefit plan" (as defined in Section 3(1) of
ERISA), the Buyer shall (a) cause to be waived any pre-existing condition
limitations or actively-at-work requirements and (b) give effect, in determining
any deductible and maximum out-of-pocket limitations, to claims incurred and
amounts paid by, and amounts reimbursed to, such New Buyer Employees with
respect to similar plans maintained by the Sellers or any of their Affiliates
for such New Buyer Employees immediately prior to the Closing Date. The Buyer
shall make appropriate arrangements to allow the use by New Buyer Employees of
any amounts available under any cafeteria plan or flexible spending account (as
defined in Section 125 of the Code) which was maintained by the Sellers or any
of their Affiliates for such New Buyer Employees.
9.6 Accrued Personal, Sick or Vacation Time. With respect to any
accrued but unused personal, sick or vacation time to which any New Buyer
Employee is entitled pursuant to the PSV Policies, the Buyer shall assume the
liability for such accrued personal, sick or vacation time and allow such New
Buyer Employee to use such accrued personal, sick or vacation time; provided,
however, that if the Buyer deems it necessary to disallow any such New Buyer
Employee from taking such accrued personal, sick or vacation time, the Buyer
shall be liable for and pay in cash to each such New Buyer Employee an amount
equal to such personal, sick or vacation time in accordance with the terms of
the PSV Policies; and provided, further, that the Buyer shall be liable for and
pay in cash an amount equal to such accrued personal, sick or vacation time to
any New Buyer Employee whose employment terminates for any reason subsequent to
the Closing Date.
9.7 U.S. WARN Act. The Buyer agrees to provide any required notice
under WARN and any other similar applicable law and to otherwise comply with any
such law with respect to any "plant closing" or "mass layoff" (as defined in
WARN) or similar event affecting employees and occurring on or after the Closing
Date or arising as a result of the transactions contemplated hereby. The Buyer
shall assume sole responsibility for any liabilities or obligations arising
under WARN or other applicable law resulting from the actions (or inactions) of
the Buyer, its Affiliates and, to the extent related to the Business Employees,
the Sellers from the transactions contemplated hereby, whether before, on, or
after the Closing Date and for any later actions covered by WARN or any similar
law.
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9.8 U.S. COBRA. The Buyer agrees to provide any required notice under
COBRA and any other similar applicable law on or after the Closing Date. The
Buyer shall assume sole responsibility for any liabilities or obligations
arising under COBRA or other similar applicable law resulting from the actions
(or inactions) of the Buyer or its Affiliates on or after the Closing Date or
from the transactions contemplated hereby, and shall provide COBRA coverage for
former employees (and their beneficiaries) of the Business who are receiving or
eligible to receive COBRA as of the Closing Date.
9.9 Post-Employment/Retiree Medical Benefits. The Buyer will adopt or
amend a plan under which it will assume all obligations of any Seller or its
Affiliates for any post-employment or other retiree medical benefits to any
Business Employees (and their dependents). Business Employees entitled to
post-retirement medical benefits are identified on Schedule 9.9 hereto. The
Sellers or their Affiliates will retain or assume all post-employment or retiree
medical benefits obligations with respect to former employees of the Business
whose employment with the Business terminated before the Closing Date.
9.10 Retention Bonuses. The Buyer shall assume all obligations of any
Seller (or any of its Affiliates) under the retention agreements set forth on
Schedule 9.10; provided, however, that upon Buyer's payment under any such
agreement of any amount that is payable with respect to service until the
Closing (after taking into account any required performance factors), but
excluding severance or other post-employment obligations that Buyer is assuming,
Parent shall reimburse the Buyer for such payment within 15 Business Days after
the Buyer delivers notice to the Parent that such payment has been made and the
amount thereof.
ARTICLE X
OTHER POST-CLOSING COVENANTS
10.1 Manager, Director and Officer Indemnification. The Buyer shall not
take, cause or permit to be taken or caused by any person any action to alter or
impair any exculpatory or indemnification provisions, now existing in the
charter or limited liability company operating agreement of any Business
Subsidiary, for the benefit of any individual who served as a manager, director
or officer of any Business Subsidiary at any time prior to the Closing Date,
except for any changes that may be required to conform with changes in
applicable law and any changes that do not affect the application of such
provisions to acts or omissions of such individuals prior to the Closing Date.
10.2 Claims Against Managers, Directors and Officers. Buyer shall not
make, and shall cause the Business Subsidiaries and their respective Affiliates
not to make, any claims against the current or former directors, managers or
officers of the Business Subsidiaries for their actions or omissions in their
capacity as directors, managers or officers of the Business Subsidiaries that
took place on or before the Closing Date.
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10.3 Payment of Certain Monies. In the event that any Asset Seller (or
an Affiliate thereof) pays or discharges, after the Closing, any Assumed
Liabilities, the Buyer shall reimburse such Asset Seller or Affiliate for the
amount so paid or discharged within 30 days of being presented with written
evidence of such payment or discharge. Buyer shall promptly forward to Parent
all monies received by Buyer or its Affiliates (including, without limitation,
the Business Subsidiaries) following the Closing with respect to any Excluded
Asset.
10.4 Waiver of Conflicts Regarding Representation; Non-Assertion of
Attorney Client Privilege.
(a) Buyer waives and will not assert, and agrees to cause each
Business Subsidiary and each of its other subsidiaries to waive and to not
assert, any conflict of interest arising out of or relating to any
representation, after the Closing, of any Seller, any Business Subsidiary or any
Affiliate of any Seller, or any of their respective officers, employees,
directors or managers in any matter involving this Agreement, any Ancillary
Agreement or any other agreements or transactions contemplated hereby or thereby
(including, without limitation, any litigation, arbitration, mediation or other
proceeding), by any legal counsel that has represented any such party prior the
Closing.
(b) Buyer waives and will not assert, and agrees to cause each
Business Subsidiary and each of its other Affiliates to waive and to not assert,
any attorney-client privilege with respect to any communication concerning this
Agreement and the transactions contemplated thereby occurring on or prior to the
Closing between any legal counsel and any Seller, any Business Subsidiary or any
Affiliate of any Seller, or any of their respective officers, employees,
directors and managers, it being the intention of the Parties that all such
rights to such attorney-client privilege and to control such attorney-client
privilege shall be retained by the Sellers, and their respective Affiliates to
the extent that the privilege involves communications concerning this Agreement
and the transaction contemplated thereby.
10.5 Use of Names.
(a) No Seller is conveying any ownership rights in, or (except
as expressly set forth in Section 10.5(b) or the Intellectual Property Transfer
and License Agreement) granting any license to use, any Seller Xxxx to the Buyer
or any of its Affiliates and, after the Closing, the Buyer shall, and shall
cause each of its Affiliates (including, without limitation, the Business
Subsidiaries) to, not use in any manner any Seller Xxxx. In the event the Buyer
violates any of its obligations under this Section 10.5, the Sellers and their
Affiliates may proceed against it in law or in equity for such damages or other
relief as a court may deem appropriate. The Buyer acknowledges that a violation
of this Section 10.5 may cause the Sellers and their Affiliates irreparable harm
which may not be adequately compensated for by money damages. The Buyer
therefore agrees that in the event of any actual or threatened violation of this
Section 10.5, the Sellers and any of their Affiliates shall be entitled, in
addition to other remedies that they may have, to a temporary restraining order
and to preliminary and final injunctive relief against the Buyer or such
Affiliate of the Buyer to prevent any violations of this Section 10.5, without
the necessity of posting a bond.
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(b) The Buyer and the Business Subsidiaries shall have a
non-exclusive, non-transferable, fully-paid and royalty-free license (without
the right to sublicense such rights) to use, solely in connection with the
conduct of the Business in the ordinary course consistent with past practice,
the Seller Marks:
(i) on finished goods, work in process and raw
materials inventory and packaging existing as of the Closing Date or on order
from suppliers of the Business as of the Closing Date, until supplies of such
inventory and packaging have been depleted, provided that any such item is
marked or labeled with a sticker or stamp to the effect that the Business, the
Business Subsidiaries and their Affiliates are not affiliated with Xxxxxxx
Corporation and provided further that the foregoing right to use the Seller
Marks shall terminate not later than the first anniversary of the Closing Date;
(ii) for a period of 120 days following the
Closing Date, on products of the Business manufactured by Buyer after the
Closing Date;
(iii) for a period of 120 days following the
Closing Date, on existing product catalogs and product brochures that are (A)
used as of the Closing Date in the Business and (B) are included in the Acquired
Assets or the assets of the Business Subsidiaries, provided that any such
catalog or brochure is marked or labeled with a sticker or stamp to the effect
that the Business, the Business Subsidiaries and their Affiliates are not
affiliated with the Sellers or Xxxxxxx Corporation; and
(iv) for a period of not more than 90 days
following the Closing Date, in any website content that is (A) used as of the
Closing Date in the Business and (B) included in the Acquired Assets or the
assets of the Business Subsidiaries, provided that the Buyer and the Business
Subsidiaries shall use commercially reasonable efforts to remove the Seller
Marks from such content and all websites maintained by the Buyer or any of its
Affiliates.
(c) Notwithstanding anything to the contrary in this Section
10.5, from and after the Closing, the Buyer shall, and shall cause each of its
Affiliates to, make clear in all correspondence, communications or other
dissemination of information regarding the Business or any Business Subsidiary
made by the Buyer or any of its Affiliates that the Business, the Business
Subsidiaries and their Affiliates are no longer affiliated with the Sellers or
Xxxxxxx Corporation.
10.6 Seller Guarantees. If any Seller Guarantee is not replaced and
released as of the Closing as provided in Section 4.6, the Buyer shall fulfill
all obligations of the applicable Seller and/or its Affiliates under such Seller
Guarantees and shall reimburse the Sellers and their Affiliates for all
premiums, payments and other carrying costs of such Seller Guarantee
attributable to or for periods after the Closing Date, within three (3) Business
Days after receipt of invoices therefor. In the event that after the Closing
Date any Seller or an Affiliate is required to reimburse a letter of credit
issuer for any drawing under a Seller Guarantee, or is required to make any
payment under a Seller Guarantee (other than carrying costs as provided above),
then the Buyer shall reimburse such Seller or Affiliate within three (3)
Business Days after demand for the payment of such amount.
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ARTICLE XI
DEFINITIONS
For purposes of this Agreement, each of the following terms shall have
the meaning set forth below.
"Acquired Assets" shall mean, solely to the extent not an Excluded
Asset, all assets, properties and rights of each Asset Seller of every kind,
nature, character and description, tangible and intangible, real, personal or
mixed, wherever located, existing as of the Closing which are utilized primarily
in the Business, including the following assets, in each case to the extent
owned by an Asset Seller as of the Closing and utilized primarily in the
Business:
(a) all accounts receivable and other receivables, whether or
not billed;
(b) all inventory of raw materials, work in process, finished
goods, office supplies, maintenance supplies and packaging materials, together
with spare parts, supplies, promotional materials and inventory;
(c) all Designated Intellectual Property, computers,
equipment, furniture, furnishings, fixtures, machinery, vehicles, tools and
tooling and other tangible personal property and all warranties and guarantees,
if any, express or implied, existing for the benefit of an Asset Seller in
connection therewith to the extent transferable;
(d) the leasehold interests to the Asset Seller Leased
Facilities, except as provided in Section 1.5;
(e) all contracts or agreements, except as provided in Section
1.5;
(f) all technical information, trade secrets, technology,
know-how, specifications, designs, drawings and processes and quality control
data, and other confidential business information, including, without
limitation, customer lists and vendor lists;
(g) to the extent transferable, all licenses, permits,
authorizations or franchises issued by any Governmental Entity;
(h) all goods and services and all other economic benefits to
be received subsequent to the Closing arising out of prepayments and payments by
an Asset Seller prior to the Closing;
(i) all books (other than stock record books and minute books
of the Sellers, but including stock records and minute books of the Business
Subsidiaries), records, accounts, ledgers, files, documents, correspondence,
studies, reports and other printed or written materials, subject to any
restrictions imposed by applicable law on the transfer of employee files;
(j) the Share Capital;
36
(k) all goodwill; and
(l) the Transferred Xxxxxx Xxxxx.
"Adjusted Purchase Price" shall mean the Purchase Price as adjusted
pursuant to Section 1.4.
"Affiliate" shall have the meaning assigned to it in Rule 12b-2 of the
Securities and Exchange Act of 1934.
"Agreement" shall have the meaning set forth in the Preliminary
Statement of this Agreement.
"Ancillary Agreements" shall mean the agreements and instruments
referred to in clauses (i) through (ix) in Section 1.3(b) of this Agreement.
"Antitrust Laws" shall mean the Xxxx-Xxxxx-Xxxxxx Act, the Xxxxxxx Act,
the Xxxxxxx Act, the Federal Trade Commission Act, and any other federal, state
or foreign law, regulation or decree designed to prohibit, restrict or regulate
actions for the purpose or effect of monopolization or restraint of trade.
"Asset Seller 1" shall have the meaning set forth in the first
paragraph of this Agreement.
"Asset Seller 2" shall have the meaning set forth in the first
paragraph of this Agreement.
"Asset Seller Business Employees" shall mean all employees of the Asset
Sellers exclusively engaged in the Business.
"Asset Seller Leased Facilities" shall mean the facilities covered by
the real property leases or subleases described on Schedule D-1.
"Asset Sellers" shall mean Asset Seller 1 and Asset Seller 2.
"Assumed Liabilities" shall mean all liabilities and obligations, of
every kind, nature, character and description (whether known or unknown, whether
absolute or contingent, whether liquidated or unliquidated and whether due or to
become due) (i) of each Business Subsidiary (and each of its predecessors), (ii)
set forth on Schedule D-2, and (iii) to the extent relating to the Business or
the Acquired Assets as now or previously conducted or constituted, of each
Seller (and each of its predecessors) and each of its Affiliates, including,
without limitation, the following liabilities and obligations, to the extent
relating to the Business or the Acquired Assets as now or previously conducted
or constituted:
(a) all liabilities required by GAAP to be shown on a balance
sheet of the Business;
37
(b) all liabilities and obligations under all contracts or
agreements, except as provided in Section 1.5;
(c) all liabilities and obligations under licenses, permits,
authorizations or franchises issued by any Governmental Entity;
(d) all liabilities and obligations which arise on account of
the sale of any products manufactured and/or sold before, on or after the
Closing;
(e) all liabilities and obligations for Environmental Matters
or liability under common law with respect to Materials of Environmental
Concern;
(f) all liabilities and obligations in respect of employees or
employee benefits;
(g) all liabilities and obligations for any Taxes, other than
any liability or obligation for Income Taxes for any period or portion thereof
ending on or before the Closing Date;
(h) all liabilities and obligations arising out of or relating
to any deferred items under Section 1.5;
(i) all liabilities with respect to all actions, suits,
proceedings, disputes, claims or investigations;
(j) all liabilities and obligations arising out of or relating
to the repair, rework, replacement or return of, or any claim for breach of
warranty in respect of or refund of the purchase price of, products or goods;
and
(k) all liabilities and obligations arising out of or relating
to any product liability claim, including, without limitation, injury to or
death of persons, damage to or destruction of property or any worker's
compensation claim, relating to products or goods.
"Balance Sheet Date" shall mean March 31, 2007.
"Business" shall mean the business of the Sellers and the Business
Subsidiaries, as now or previously conducted or constituted, of manufacturing,
marketing, selling, distributing and providing services in connection with (a)
transient voltage surge suppressor products used for the purpose of protecting
critical process controls from electrical transients in the commercial,
industrial, telecommunications and residential markets; digital static transfer
switches used for the purpose of providing consistent power to high availability
loads from two power sources in both the datacenter and industrial markets;
power distribution equipment both with and without transformers used for the
purpose of distributing computer grade power to computer loads for datacenter
markets; single phase output uninterruptible power supply systems providing
single phase continuous power for critical process control systems in the
retail, industrial and petro-chemical markets; and delivery of professional
services providing preventative maintenance and reactive repair for the
foregoing products; and (b) high voltage (above 4 kilovolt) capacitor switches,
sectionalizers, air disconnect switches, automatic reclosers and controls,
submersible multi-way switches, faulted circuit indicators, vacuum interrupter
attachments for air disconnect switches, transfer switches, current sensors and
communication for above products used in distribution and transmission primarily
in the electric utility and industrial substation markets, electric steel
melting and holding furnace switches, vacuum capacitors used for high voltage RF
capacitors in broadcast, semiconductor processing; vacuum contactors, vacuum
relays, vacuum interrupters, loss of vacuum detection used for high voltage
switching noted above and mining, aerospace and defense; overhead light lowering
devices, photoelectric controls, electronic ballasts, radio frequency monitoring
used for highway and municipal lighting.
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"Business Day" shall mean any day other than (i) a Saturday or Sunday
or (ii) a day on which banking institutions located in New York, New York are
permitted or required by law, executive order or governmental decree to remain
closed.
"Business Benefit Plans" shall mean any Business Subsidiary Benefit
Plan or any Employee Benefit Plan maintained, or contributed to, by any Asset
Seller, or any ERISA Affiliate for the benefit of Business Employees (and their
beneficiaries) that are material to the Business.
"Business Employees" shall mean all employees of the Business
Subsidiaries and the Asset Seller Business Employees.
"Business Material Adverse Effect" shall mean any change, effect,
event, condition or circumstance that (a) is materially adverse to the business,
assets, liabilities, financial condition or results of operations of the
Business as a whole (other than changes, effects, events, conditions or
circumstances that are the result of economic factors affecting the economy as a
whole or that are the result of factors affecting the industry or specific
markets in which the Business competes, so long as the Business is not
disproportionately affected thereby), or (b) materially impairs the ability of
the Sellers to consummate the transactions contemplated by this Agreement;
provided, however, that a "Business Material Adverse Effect" shall not include
any adverse change, effect or circumstance (A) arising out of or resulting from
actions contemplated by the Parties in connection with this Agreement, (B) that
is attributable to the announcement or performance of this Agreement or the
transactions contemplated by this Agreement, (C) any change in accounting
requirements or principles or any change in applicable Laws or the
interpretation thereof occurring after the date of this Agreement, or (D)
national or international political or social conditions, whether or not
pursuant to the declaration of a national emergency or war, or the occurrence of
any military or terrorist attack.
"Business Properties" shall mean the Designated Owned Real Property and
the real property leased pursuant to the Leases.
"Business Subsidiary Interests" shall mean the Membership Interests,
the Share Capital and all of the issued and outstanding shares of capital stock
of FPC.
"Business Subsidiaries" shall mean JHV, JTC, DPS, FPC and RTL.
"Buyer" shall have the meaning set forth in the first paragraph of this
Agreement.
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"Buyer Certificate" shall mean a certificate to the effect that each of
the conditions specified in clauses (a) through (c) (insofar as clause (c)
relates to a judgment, order, decree, stipulation or injection against the
Buyer) of Section 5.2 is satisfied.
"Buyer Material Adverse Effect" shall mean a material adverse effect on
the ability of the Buyer to consummate the transactions contemplated by this
Agreement.
"Buyer Plans" shall mean employee benefit plans, agreements, programs,
policies and arrangements for the benefit of each New Buyer Employee.
"Claim Notice" shall mean a written notice which contains (i) a
reasonably specific description and amount of any Damages incurred by the
Indemnified Party, (ii) a statement that the Indemnified Party is entitled to
indemnification under Article VI and a reasonable explanation of the basis
therefor, and (iii) a demand for payment in the amount of such Damages.
"Closing" shall mean the closing of the transactions contemplated by
this Agreement.
"Closing Date" shall mean the date as soon as practicable (but in no
event more than three Business Days) after the first date on which the
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (excluding the delivery of any documents to be delivered at
the Closing by any of the Parties, it being understood that the occurrence of
the Closing shall remain subject to the delivery of such documents) have been
satisfied or waived.
"Closing Statement" shall mean a statement calculating the Closing
Working Capital Amount.
"Closing Working Capital Amount" shall mean the Acquired Assets and the
assets of the Business Subsidiaries, in each case, that constitute current
assets (within the meaning of GAAP) as of the Closing Date less the Assumed
Liabilities that constitute current liabilities (within the meaning of GAAP) as
of the Closing Date; provided, however, the following items shall be excluded
from the calculation of the Closing Working Capital Amount: (i) intercompany
items eliminated in accordance with Section 4.5, (ii) $115,000 charge incurred
by the Business' Xxxxx Xxxxxxxx division in connection with certain inventory
write offs and all accruals for the RTL Warranty Matter by such division, (iii)
accrued liability for the Graybar Electronics litigation against DPS, (iv) cash
and cash equivalents and similar investments, bank accounts, commercial paper,
certificates of deposit, Treasury bills and other marketable securities, (v) the
current portion of long-term debt, and (vi) Taxes payable.
"COBRA" shall mean the Consolidated Omnibus Budget Reconciliation Act
of 1986.
"Code" shall mean the Internal Revenue Code of 1986.
"Collar" shall mean US$100,000.00.
"Confidentiality Agreement" shall mean the confidentiality agreement
dated March 13, 2007 between the Buyer and Xxxxxxx Corporation.
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"Damages" shall mean any and all out-of-pocket, monetary damages,
fines, fees, penalties and expenses actually paid (excluding attorneys' fees,
costs of investigation, and indirect, incidental, punitive and consequential
damages such as lost profits and lost business opportunities).
"Designated Contracts" shall mean each contract and agreement listed in
Section 2.12 of the Disclosure Schedule.
"Designated Intellectual Property" shall mean all patents, patent
applications, registered trademarks, trademark applications, domain names and
copyright registrations listed on Schedule D-3.
"Designated Owned Real Property" shall mean all real property owned by
any Business Subsidiary.
"Disclosure Documents" shall mean the Disclosure Schedule, the other
Schedules hereto and the materials, documents, reports and other information
relating to the Sellers and the Business made available to the Buyer on the
"Livewire" datasite administered by Xxxxxxx Corporation and accessible at
xxxx://xxxxxxxx.xxxxxxxxxxx.xxx.
"Disclosure Schedule" shall mean the disclosure schedule provided by
the Sellers to the Buyer on the date hereof.
"DPS" shall mean Xxxxxxx Power Solutions LLC, a Delaware limited
liability company.
"FCPA" shall mean the United States Foreign Corrupt Practices Act of
1977.
"Employee Benefit Plan" shall mean (a) any "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) other than a Multiemployer Plan, (b)
any "employee welfare benefit plan" (as defined in Section 3(1) of ERISA), and
(c) to the extent applicable to more than one employee, any other written or
oral plan, agreement or arrangement involving compensation, including insurance
coverage, severance benefits, disability benefits, deferred compensation,
bonuses, stock options, stock purchase, phantom stock, stock appreciation or
other forms of incentive compensation or post-retirement compensation, or fringe
benefits, but excluding any Employee Benefit Plan required to be maintained or
contributed to under foreign law.
"Environment" shall mean any surface water, ground water, drinking
water supply, land surface or subsurface strata, or ambient air.
"Environmental Law" shall mean any foreign, federal, state, provincial,
or municipal statute, rule or regulation as in effect on the Closing Date
relating to the protection of the Environment or occupational health and safety.
"Environmental Matters" shall mean any legal obligation or liability
arising under Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974.
41
"ERISA Affiliate" shall mean any entity which is a member of (a) a
controlled group of corporations (as defined in Section 414(b) of the Code), (b)
a group of trades or businesses under common control (as defined in Section
414(c) of the Code), or (c) an affiliated service group (as defined under
Section 414(m) of the Code or the regulations under Section 414(o) of the Code),
any of which includes any Business Subsidiary or any Asset Seller.
"Excluded Assets" shall mean (i) all assets, properties and rights of
each Seller and Business Subsidiary of every kind, nature, character and
description, tangible and intangible, real, personal or mixed, wherever located,
which are utilized by such Seller (or any of its Affiliates) or Business
Subsidiary primarily in a business other than the Business and (ii) the
following assets of each Seller:
(a) all cash and cash equivalents or similar investments, bank
accounts, commercial paper, certificates of deposit, Treasury bills and other
marketable securities;
(b) all assets, properties or rights listed on, or arising
under any contracts or agreements listed on, Schedule D-4;
(c) all insurance policies and related refunds and proceeds;
(d) all rights which accrue or will accrue to the benefit of
the Sellers under this Agreement or the Ancillary Agreements;
(e) all rights relating to refunds or recoupment of Taxes,
except to the extent such rights result from payment by the Buyer of a Tax that
is an Assumed Liability;
(f) all actions, claims, causes of action, rights of recovery,
choses in action and rights of setoff of any kind arising before, on or after
the Closing relating to any other Excluded Asset or any Excluded Liability;
(g) all patents and patent applications, any patent
applications that are filed based on the invention disclosures, all copyrights
and copyright registrations, and all computer software and management
information systems set forth on Schedule D-5, including, without limitation,
all rights to xxx for past infringement;
(h) all real property set forth on Schedule D-6;
(i) all shares of the capital stock or other ownership
interests of the Asset Sellers;
(j) all fixtures in the property owned or leased by any Seller
that are affixed to the real estate and are integral to the use or operation of
the property without regard to the specific business conducted on the property
(including, without limitation, HVAC systems, security systems, fire suppression
systems, plumbing, lighting, fencing, telephone switches and floor covering),
but excluding trade fixtures unless such trade fixtures are listed on Schedule
D-7; and
42
(k) all assets, contracts, rights, services and other
resources generally made available by Xxxxxxx Corporation to its Subsidiaries or
enjoyed by any Seller or Business Subsidiary as a result of its status as a
Subsidiary of Xxxxxxx Corporation, including, without limitation, DBS services,
procurement assistance, legal and accounting assistance and other corporate
services.
"Excluded Liabilities" shall mean, solely to the extent not an Assumed
Liability, all liabilities and obligations of any Seller:
(a) relating exclusively to the Excluded Assets;
(b) under the agreements listed on Schedule D-4;
(c) under this Agreement and the Ancillary Agreements;
(d) all indebtedness outstanding under any bank credit
agreement or other agreement for borrowed money to which any Seller or Business
Subsidiary is a party as an obligor, guarantor or otherwise;
(e) except to the extent expressly assumed by Buyer hereunder,
all liabilities or obligations of any nature whatsoever arising under any
Employee Benefit Plan and any other liability or obligation related to
compensation or benefits to any employees, agents or independent contractors (or
the beneficiaries of any such persons) of the Business (including former
employees, agents or independent contractors (or the beneficiaries of any such
persons)) to the extent the event giving rise thereto occurred on or prior to
the Closing Date or that results from or arises out of any action or inaction on
or prior to the Closing Date of any Seller or any Affiliate, officer, director,
employee, agent, representative or subcontractor of any Seller; provided that,
for the avoidance of doubt, all liabilities and obligations under the retention
agreements set forth on Schedule 9.10 are Assumed Liabilities, subject to the
Sellers' reimbursement obligation with respect to the retention bonuses payable
thereunder in accordance with the proviso of Section 9.10; and
(f) for costs and expenses incurred in connection with this
Agreement or the consummation of the transactions contemplated by this Agreement
(including any fees for financial advisors engaged by or on behalf of the
Sellers and any sale bonuses or other compensation for any Business Employee
that will become payable upon the consummation of the transactions contemplated
by this Agreement).
"Final Closing Statement" shall mean Closing Statement as finally
determined in accordance with Section 1.4(c).
"Financial Statements" shall mean (a) the unaudited consolidated
balance sheets and consolidated statements of operations and cash flows of the
Business as of and for the fiscal year ended December 31, 2006 and (b) the
unaudited consolidated balance sheet and consolidated statement of operations of
the Business as of and for the year-to-date period ended as of the Balance Sheet
Date.
"FPC" shall mean Xxxxxx Xxxxxx Co., a California corporation.
43
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Entity" shall mean any court, arbitrational tribunal,
administrative agency or commission or other governmental or regulatory
authority or agency.
"Governmental Filings" shall mean all registrations, filings and
notices with or to Governmental entities.
"Xxxx-Xxxxx-Xxxxxx Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976.
"Incidental Agreement" shall mean the agreement delivered pursuant to
Section 1.3(b)(ix).
"Income Taxes" shall mean any Taxes imposed upon or measured by net
income.
"Indemnified Party" shall mean the party entitled to indemnification
under Article VI of this Agreement.
"Indemnifying Party" shall mean the party from whom indemnification is
sought by the Indemnified Party.
"Intellectual Property Transfer and License Agreement" shall mean the
License Agreement delivered at the Closing pursuant to Section 1.3(b)(iii).
"JHV" shall mean Joslyn Hi-Voltage Company, LLC, a Delaware limited
liability company.
"JTC" shall mean Xxxxxxxx Technology Company, LLC, a Delaware limited
liability company.
"knowledge" shall mean the actual knowledge, after reasonably diligent
inquiry, of the individuals named on Schedule D-8 in the case of the Sellers,
and the individuals named on Schedule D-9 in the case of the Buyer.
"Leases" shall mean any lease or sublease included in the Acquired
Assets or pursuant to which any Business Subsidiary leases or subleases from
another party any real property.
"Lease Agreement" shall mean the Lease Agreement delivered at the
Closing pursuant to Section 1.3(b)(iv).
"Materials of Environmental Concern" shall mean any hazardous
substance, pollutant or contaminant, as those terms are defined under the
federal Comprehensive Environmental Response, Compensation and Liability Act of
1980, solid waste and hazardous waste, as those terms are defined in the Federal
Resource Conservation and Recovery Act (as in effect on the date of this
Agreement) and oil, petroleum and petroleum products.
44
"Membership Interests" shall mean all of the outstanding membership
interests of DPS, JHV and JTC.
"Most Recent Balance Sheet" shall mean the unaudited consolidated
balance sheet of the Business as of the Balance Sheet Date.
"Multiemployer Plan" shall mean a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA).
"Neutral Accountant" shall mean the Washington, DC office of
PricewaterhouseCoopers LLP or, in the event that circumstances create an actual
conflict of interest that would impair such Person's ability to impartially
determine any issue presented to it pursuant to this Agreement, the Washington
DC office of a nationally recognized certified public accounting firm mutually
agreed upon by the Parent and the Buyer.
"New Buyer Employees" shall mean each Asset Seller Business Employee
who accepts the Buyer's offer of employment and who commences working with the
Buyer on the Closing Date and each employee of any Business Subsidiary on the
Closing Date.
"Parent" shall have the meaning set forth in the first paragraph of
this Agreement.
"Parent Certificate" shall mean a certificate to the effect that each
of the conditions specified in clauses (a) through (c) (insofar as clause (c)
relates to a judgment, order, decree, stipulation or injunction against any
Seller) of Section 5.1 is satisfied.
"Parties" shall mean the Sellers and the Buyer collectively.
"Permits" shall mean all permits, licenses, franchises or
authorizations from any Governmental Authority included in the Acquired Assets
or held by any Business Subsidiary.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a Governmental Entity.
"PSV Policies" shall mean the personal, sick or vacation policies
applicable to each New Buyer Employee immediately prior to the Closing Date.
"Purchase Price" shall mean US$280,000,000.00.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, or disposing into
the Environment.
"RTL" shall mean Xxxxx Xxxxxxxx Limited, a private limited company
formed under the laws of the United Kingdom.
"RT Warranty Expenses" shall have the meaning set forth in Section
6.5(e).
"RT Warranty Matter" shall have the meaning set fort in Section 6.5(e).
"Securities Act" shall mean the Securities Act of 1933.
45
"Security Interest" shall mean any mortgage, pledge, security interest,
encumbrance, charge or other lien (whether arising by contract or by operation
of law), other than (a) mechanic's, materialmen's, landlord's and similar liens,
(b) liens arising under worker's compensation, unemployment insurance, social
security, retirement and similar legislation, (c) liens on goods in transit
incurred pursuant to documentary letters of credit, in each case arising in the
ordinary course of business, (d) liens for Taxes not yet due and payable, (e)
liens for Taxes which are being contested in good faith and by appropriate
proceedings, (f) liens relating to capitalized lease financings or purchase
money financings that have been entered into in the ordinary course of business,
(g) liens arising solely by action of the Buyer, and (h) liens that would not
reasonably be expected to result in a Business Material Adverse Effect.
"Seller" shall have the meaning set forth in the first paragraph of
this Agreement.
"Sellers" shall have the meaning set forth in the first paragraph of
this Agreement.
"Seller's 401(k) Plan" shall mean the defined contribution plan
qualified under Section 401 of the Code sponsored by the Parent.
"Seller Guarantees" shall mean all letters of credit, guarantees,
covenants, indemnities or similar assurance provided by any Seller or any of
their respective Affiliates (other than the Business Subsidiaries) to the extent
relating to the Business.
"Seller Marks" shall mean (other than the trademarks, trade names,
service marks and domain names included in the Designated Intellectual Property
and the Transferred Xxxxxx Xxxxx) all business names, trade names and trademarks
of any Seller or any Affiliate of any Seller, any derivative thereof, or any
word that is similar in sound or appearance to any of the foregoing and, for the
avoidance of doubt, shall include all business names trade names and trademarks
consisting of, or that include, the name "XXXXXXX" or (other than the
Transferred Xxxxxx Xxxxx) "JOSLYN".
"Share Capital" shall mean all of the issued and outstanding share
capital of RTL.
"Subsidiary" shall mean any corporation, partnership, trust, limited
liability company or other non-corporate business enterprise in which the Parent
(or another Subsidiary) holds stock or other ownership interests representing
more than 50% of the voting power of all outstanding stock or ownership
interests of such entity.
"Target Working Capital Amount" shall mean the average of the Acquired
Assets and the assets of the Business Subsidiaries, in each case, that
constitute current assets (within the meaning of GAAP), less the Assumed
Liabilities that constitute current liabilities (within the meaning of GAAP), as
of the financial closing of each month for the six months immediately preceding
the month in which the Closing occurs; provided, however, the following items
shall be excluded from the calculation of the Target Working Capital Amount: (i)
intercompany items eliminated in accordance with Section 4.5, (ii) $115,000
charge incurred by the Business' Xxxxx Xxxxxxxx division in connection with
certain inventory write offs and all accruals for the RTL Warranty Matter by
such division, (iii) accrued liability for the Graybar Electronics litigation
against DPS, (iv) cash and cash equivalents and similar investments, bank
accounts, commercial paper, certificates of deposit, Treasury bills and other
marketable securities, (v) the current portion of long-term debt, and (vi) Taxes
payable.
46
"Tax Audit" shall mean any audit or examination of Taxes by any Taxing
Authority.
"Taxes" shall mean all taxes, including income, gross receipts, ad
valorem, value-added, excise, real property, personal property, sales, use,
transfer, withholding, employment, social security charges and franchise taxes
imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of the United
States or any such government, and any interest, penalties, assessments or
additions to tax resulting from, attributable to or incurred in connection with
any tax or any contest or dispute thereof.
"Taxing Authority" shall mean any applicable governmental authority
responsible for the imposition of Taxes.
"Tax Purchase Price" shall mean the amount of the Adjusted Purchase
Price, the liabilities of the Business Subsidiaries (other than any such
liabilities for which Buyer is indemnified pursuant to this Agreement), the
Assumed Liabilities, and other relevant items (if any), determined in a manner
consistent with Section 1060 of the Code and the Treasury Regulations
thereunder.
"Tax Reserves" shall mean the accruals or reserves for Taxes, if any,
on the Final Closing Statement.
"Tax Returns" shall mean all reports, returns, declarations,
statements, forms or other information required to be supplied to a Taxing
Authority in connection with Taxes.
"Transition Services Agreement" shall mean the Transition Services
Agreement delivered at the Closing pursuant to Section 1.3(b)(vi).
"Transferred Xxxxxx Xxxxx" shall mean the trademarks, trade names,
service marks and domain names set forth on Schedule D-10.
"WARN" shall mean the Worker Adjustment and Retraining Notification
Act.
ARTICLE XII
MISCELLANEOUS
12.1 Press Releases and Announcements. No Party shall issue (and each
Party shall cause its Affiliates not to issue) any press release or public
disclosure relating to the subject matter of this Agreement without the prior
written approval of the other Parties; provided, however, that any Party may
make any public disclosure it believes in good faith is required by law,
regulation or stock exchange rule (in which case the disclosing Party shall
advise the other Party or Parties and the other Party or Parties shall, to the
extent permitted by Law, have the right to review and comment on such press
release or announcement, and the disclosing Party shall incorporate all
reasonable comments of the other Party, prior to its publication). The Buyer
shall not, and shall cause each of its Affiliates not to, at any time, divulge,
disclose or communicate to others in any manner whatsoever, information or
statements which disparage or are intended to disparage any Seller, any of their
Affiliates, or any of their respective business reputations.
47
12.2 No Third Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any person other than the Parties and their respective
successors and permitted assigns and, to the extent specified herein, their
respective Affiliates.
12.3 Treatment of Business Subsidiaries. Prior to the Closing, each
Business Subsidiary will be deemed, for purposes of this Agreement, to be an
Affiliate of the Sellers and not of the Buyer. Following the Closing, each
Business Subsidiary will be deemed, for purposes of this Agreement, to be an
Affiliate of the Buyer and not of the Sellers.
12.4 Entire Agreement. This Agreement (including the Ancillary
Agreements and the Disclosure Documents) and the Confidentiality Agreement
constitute the entire agreement among the Buyer, on the one hand, and the
Sellers, on the other hand. This Agreement supersedes any prior agreements or
understandings among the Buyer, on the one hand, and the Sellers, on the other
hand, and any representations or statements made by or on behalf of any Seller
or any of their respective Affiliates to the Buyer, whether written or oral,
with respect to the subject matter hereof, other than the Confidentiality
Agreement, the Ancillary Agreements and the Disclosure Documents, and the
parties hereto specifically disclaim reliance on any such prior representations
or statements to the extent not embodied in this Agreement, the Ancillary
Agreements or the Disclosure Documents.
12.5 Succession and Assignment. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder without the
prior written approval of the Parent (in the case of an assignment by the Buyer)
or the Buyer (in the case of an assignment by any Seller), which written
approval shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, this Agreement, and all rights, interests and obligations hereunder,
may be assigned, without such consent, to any Affiliate of the Parent or any
entity that acquires all or substantially all of the Parent's business or
assets. This Agreement shall be binding upon and inure to the benefit of the
Parties and their respective successors and permitted assigns.
12.6 Notices. All notices, requests, demands, claims and other
communications hereunder shall be in writing. Any notice, request, demand, claim
or other communication hereunder shall be deemed duly delivered four Business
Days after it is sent by registered or certified mail, return receipt requested,
postage prepaid, or one Business Day after it is sent for next Business Day
delivery via a reputable nationwide overnight courier service, in each case to
the intended recipient as set forth below:
48
If to the Buyer: Copy to:
--------------- --------
Xxxxxx & Xxxxx Corporation Xxxxxx & Xxxxx Corporation
0000 X&X Xxxx. 0000 X&X Xxxx.
Xxxxxxx, Xxxxxxxxx 00000 Xxxxxxx, Xxxxxxxxx 00000
Telecopy: (000)000-0000 Telecopy: (000)000-0000
Attention: Chief Executive officer Attention: Vice President -
General Counsel
If to any Seller: Copy to:
----------------- --------
Joslyn Holding Company WilmerHale
c/x Xxxxxxx Corporation 0000 Xxxxxxxxxxxx Xxxxxx, XX
0000 Xxxxxxxxxxxx Xxxxxx, XX Xxxxxxxxxx, XX 00000
12th Floor Telecopy: x0 000 000 0000
Xxxxxxxxxx, XX 00000 Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: x0 000 000 0000
Attention: Vice President,
Corporate Development
Any Party may give any notice, request, demand, claim, or other communication
hereunder using any other means (including, without limitation, personal
delivery, expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail) and any such communication shall be deemed delivered (a)
upon machine or server confirmation if given by telecopy or electronic mail or
(b) if not given by telecopy or electronic mail, when actually received by the
Party for whom it is intended. Any Party may change the address to which
notices, requests, demands, claims and other communications hereunder are to be
delivered by giving the other Parties notice in the manner herein set forth.
12.7 Amendments and Waivers. The Parties may mutually amend or waive
any provision of this Agreement at any time. No amendment or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by all of the Parties. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.
12.8 Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction. If the final judgment of a court of
competent jurisdiction declares that any term or provision hereof is invalid or
unenforceable, the Parties agree that the body making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
49
12.9 Expenses. Except as otherwise specifically provided to the
contrary in this Agreement, each of the Parties shall bear its own costs and
expenses (including, without limitation, legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
12.10 Specific Performance. Each Party acknowledges and agrees that the
other Party or Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each Party agrees that the other
Party or Parties may be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter.
12.11 Governing Law. This Agreement and any disputes hereunder shall be
governed by and construed in accordance with the internal laws of the State of
Delaware without giving effect to any choice or conflict of law provision or
rule (whether of the State of Delaware or any other jurisdiction) that would
cause the application of laws of any jurisdiction other than those of the State
of Delaware.
12.12 Submission to Jurisdiction. Each Party (a) submits to the
exclusive jurisdiction of any state or federal court sitting in the State of
Delaware in any action or proceeding arising out of or relating to this
Agreement, (b) agrees that all claims in respect of such action or proceeding
may be heard and determined only in any such court, (c) waives any claim of
inconvenient forum or other challenge to venue in such court, and (d) agrees not
to bring any action or proceeding arising out of or relating to this Agreement
in any other court. Each Party agrees to accept service of any summons,
complaint or other initial pleading made in the manner provided for the giving
of notices in Section 12.6 Nothing in this Section 12.12 however, shall affect
the right of any Party to serve such summons, complaint or initial pleading in
any other manner permitted by law.
12.13 Bulk Transfer Laws. Buyer and Sellers hereby waive compliance by
Buyer and Sellers with the bulk sales law, bulk transfer law and any other
similar laws in any applicable jurisdiction in respect of the transactions
contemplated by this Agreement. Sellers shall indemnify Buyer from, and hold
Buyer harmless against, any liabilities, damages, costs and expense resulting
from or arising out of (a) the parties' failure to comply with any such laws in
respect of the transactions contemplated by this Agreement and (b) any action
brought or levy made as a result thereof except to the extent that such damages
arise from the Buyer's failure to satisfy Assumed Liabilities.
12.14 Construction.
-------------
(a) The language used in this Agreement shall be deemed to be
the language chosen by the Parties to express their mutual intent, and no rule
of strict construction shall be applied against any Party.
50
(b) Any reference to any federal, state, local, or foreign
statute or law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
(c) The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(d) All references herein to "Articles", "Sections",
"Exhibits" and "Schedules" shall be deemed to be references to Articles and
Sections of, and Exhibits and Schedules to, this Agreement unless the context
shall otherwise require.
(e) All references to "$", "Dollars" or "US$" refer to
currency of the United States of America.
(f) The defined terms herein shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
(g) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
(h) Unless otherwise expressly provided herein, any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including,
without limitation, by waiver or consent (in the case of agreements or
instruments) and by succession of comparable successor statutes and references
to all attachments thereto and instruments incorporated therein (in the case of
statutes).
(i) Unless otherwise expressly provided herein, all accounting
terms used herein shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered
hereunder shall be prepared, in accordance with GAAP.
12.15 Foreign Exchange Conversions. If any amount to be paid,
transferred, allocated, indemnified, reimbursed or calculated pursuant to, or in
accordance with, the terms of this Agreement or any Exhibit or Schedule
(including, without limitation, the Disclosure Schedule) referred to herein
(including, without limitation, the calculation, payment or reimbursement of
Damages under Article VI hereof) is originally stated or expressed in a currency
other than United States Dollars, then, for the purpose of determining the
amount to be so paid, transferred, allocated, indemnified, reimbursed or
calculated, such amount shall be converted into United States Dollars at the
exchange rate between those two currencies most recently quoted in The Wall
Street Journal in New York as of the Business Day immediately prior to (or, if
no such quote exists on such Business Day, on the closest Business Day prior to)
the day on which the Party required to make such payment, transfer,
indemnification, reimbursement or calculation first becomes obligated to do so
hereunder (or, in the case of Article VI hereof, would have first become
obligated to do so but for the operation of Section 6.5(a) hereof); provided,
however, that nothing in this Section 12.15 shall be deemed to require any Party
to make any foreign currency conversion or other similar calculation that
violates or conflicts with, or otherwise causes a Party to violate, applicable
law or GAAP.
51
12.16 No Solicitation; Acquisition Proposals. From the date of this
Agreement until the Closing Date or until this Agreement is terminated or
abandoned as provided in Article VIII, no Seller shall, directly or indirectly,
through any officer, director, employee, stockholder, agent or affiliate or
otherwise, except in furtherance of the transactions contemplated by this
Agreement, (a) solicit, initiate or encourage submission of proposals or offers
from any person relating to any acquisition or purchase of a material amount of
the assets of, or any equity interest in, or any merger, consolidation or
business combination with, the Business or the Acquired Assets (an "Acquisition
Proposal"); (b) participate in any discussions or negotiations regarding, or
furnish to any other person any information with respect to, or otherwise
cooperate in any way with or assist, facilitate or encourage any Acquisition
Proposal by any person; (c) enter into any agreement, arrangement or
understanding with respect to an Acquisition Proposal; or (d) sell, transfer, or
otherwise dispose of, or enter into any agreement, arrangement or understanding
with respect to, any interest in the Acquired Assets or the Business. Each
Seller, jointly and severally, represents and warrants to Buyer that it has
terminated, without creating any liability for the Business or any Business
Material Adverse Effect on the transactions contemplated by this Agreement, all
discussions and negotiations regarding any Acquisition Proposals and any
agreements, arrangements and understandings with respect to any Acquisition
Proposal or with respect to any interest in the Acquired Assets or the Business.
12.17 Waiver of Jury Trial. To the extent permitted by applicable law,
each Party hereby irrevocably waives all rights to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Agreement or the transactions contemplated
hereby or the actions of any Party in the negotiation, administration,
performance and enforcement of this Agreement.
12.18 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
12.19 Further Representations. Each of the Sellers, on the one hand,
and the Buyer, on the other hand, acknowledges and represents that it has been
represented by its own legal counsel in connection with the transactions
contemplated by this Agreement, with the opportunity to seek advice as to its
legal rights from such counsel. Each of the Sellers, on the one hand, and the
Buyer, on the other hand, further represents that it is being independently
advised as to the tax consequences of the transactions contemplated by this
Agreement and is not relying on any representation or statements made by the
other as to such tax consequences.
12.20 Counterparts and Facsimile Signature. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
but all of which together shall constitute one and the same instrument. This
Agreement may be executed by facsimile signature.
[Signature Page Follows]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
JOSLYN HOLDING COMPANY
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXXX UK INDUSTRIES LIMITED
By: /s/ Xxxxx X. Xxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxx
Title: Director
JOSLYN CANADA
By: /s/ Xxxxx X. Xxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
XXXXXX & XXXXX CORPORATION
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Operating Officer
The following Exhibits and Schedules to the Purchase and Sale Agreement have
been omitted or partially omitted in accordance with Item 601(b)(2) of
Regulation S-K.
EXHIBITS:
Exhibit A-1 - Form of Membership Interest Assignment
Exhibit A-2 - Form of Share Capital Assignment
Exhibit B - Form of Xxxx of Sale
Exhibit C - Form of Intellectual Property Transfer and License Agreement
Exhibit D - Form of Lease Agreement
Exhibit E - Form of Real Property License Agreement
Exhibit F - Form of Transition Services Agreement
Exhibit G - Form of Assumption Agreement
Exhibit H - Form of Payment Guaranty
Exhibit I - Form of Incidental Agreement
SCHEDULES:
Schedules 1.2(b) - 9.10
Schedules D-1 - D-10
Sellers Disclosure Schedule
Xxxxxx & Xxxxx Corporation will furnish supplementally a copy of any omitted or
partially omitted schedule or exhibit to the Securities and Exchange Commission
upon request; provided, however, that Xxxxxx & Xxxxx Corporation may request
confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of
1934, as amended, for any schedule or exhibit so furnished.
