Exhibit 2.1
EXECUTION COPY
PURCHASE AGREEMENT
dated as of January 13, 2003
by and between
ARROW ELECTRONICS, INC.,
ARROW EUROPE GMBH,
ARROW ELECTRONICS CANADA LTD.,
(collectively, "PURCHASERS")
and
PIONEER-STANDARD ELECTRONICS, INC.,
PIONEER-STANDARD ILLINOIS, INC.,
PIONEER-STANDARD MINNESOTA, INC.,
PIONEER-STANDARD ELECTRONICS, LTD.,
PIONEER-STANDARD CANADA INC.,
(collectively, "SELLERS")
TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which
it is attached but is inserted for convenience only.
PAGE
ARTICLE I SALE OF ASSETS AND SHARES; CLOSING AND OTHER MATTERS.............. 2
1.01 ASSETS........................................................ 2
1.02 LIABILITIES................................................... 6
1.03 SALE OF GMBH SHARES........................................... 8
1.04 PURCHASE PRICE; ALLOCATION; ADJUSTMENT........................ 8
1.05 CLOSING....................................................... 11
1.06 EMPLOYEE MATTERS.............................................. 13
1.07 THIRD-PARTY CONSENTS.......................................... 17
1.08 FURTHER ASSURANCES; POST-CLOSING COOPERATION.................. 17
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLERS........................ 18
2.01 ORGANIZATION OF SELLERS AND THE GMBH SUBSIDIARY............... 18
2.02 AUTHORITY..................................................... 19
2.03 NO CONFLICTS.................................................. 19
2.04 GOVERNMENTAL APPROVALS AND FILINGS............................ 20
2.05 BOOKS AND RECORDS............................................. 20
2.06 FINANCIAL STATEMENTS.......................................... 20
2.07 ABSENCE OF CHANGES............................................ 21
2.08 NO UNDISCLOSED LIABILITIES.................................... 22
2.09 TAXES......................................................... 22
2.10 LEGAL PROCEEDINGS............................................. 23
2.11 COMPLIANCE WITH LAWS AND ORDERS............................... 23
2.12 BENEFIT PLANS................................................. 24
2.13 REAL PROPERTY LEASES.......................................... 24
2.14 WPI SHARES AND GMBH SHARES.................................... 25
2.15 INTELLECTUAL PROPERTY RIGHTS.................................. 25
2.16 CONTRACTS..................................................... 26
2.17 TANGIBLE PERSONAL PROPERTY.................................... 27
2.18 AFFILIATE TRANSACTIONS........................................ 27
2.19 EMPLOYEES; LABOR RELATIONS.................................... 27
2.20 ENVIRONMENTAL MATTERS......................................... 28
2.21 SUBSTANTIAL CUSTOMERS AND SUPPLIERS........................... 29
2.22 ACCOUNTS RECEIVABLE........................................... 29
2.23 INVENTORY..................................................... 30
2.24 PRODUCT WARRANTIES............................................ 30
2.25 NO GUARANTEES................................................. 30
2.26 DELPHI........................................................ 30
2.27 BROKERS....................................................... 31
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASERS.................... 31
3.01 ORGANIZATION.................................................. 31
3.02 AUTHORITY..................................................... 31
3.03 NO CONFLICTS.................................................. 32
3.04 GOVERNMENTAL APPROVALS AND FILINGS............................ 32
3.05 LEGAL PROCEEDINGS............................................. 32
3.06 BROKERS....................................................... 32
ARTICLE IV COVENANTS OF SELLERs............................................. 33
4.01 REGULATORY AND OTHER APPROVALS................................ 33
4.02 HSR FILINGS, FILINGS WITH THE CARTEL OFFICE AND THE
COMPETITION ACT AND WPI FILINGS.......................... 33
4.03 INVESTIGATION BY PURCHASERS................................... 33
4.04 NO SOLICITATIONS.............................................. 34
4.05 CONDUCT OF BUSINESS........................................... 34
4.06 EMPLOYEE MATTERS.............................................. 35
4.07 CERTAIN RESTRICTIONS.......................................... 35
4.08 DELIVERY OF BOOKS AND RECORDS AND OTHER ASSETS................ 36
4.09 RESIGNATION OF MANAGING DIRECTOR OF GMBH SUBSIDIARY........... 36
4.10 NONCOMPETITION................................................ 36
4.11 SELLERS' CONSENTS............................................. 37
4.12 ACCOUNTS RECEIVABLE/LOCK-BOXES................................ 38
4.13 SECURITY DEPOSITS............................................. 38
4.14 TRADEMARK LICENSE............................................. 38
4.15 ASSIGNMENT OF SOFTWARE LICENSE AND SERVICES AGREEMENT......... 38
4.16 NOTICE, CURE AND DISCLOSURE SCHEDULE UPDATE................... 38
4.17 FULFILLMENT OF CONDITIONS/TRANSITION.......................... 39
4.18 TERMINATION OF DISTRIBUTION AGREEMENT......................... 39
ARTICLE V COVENANTS OF PURCHASERS........................................... 39
5.01 REGULATORY AND OTHER APPROVALS................................ 39
5.02 HSR FILINGS, FILINGS WITH THE CARTEL OFFICE, THE TIC AND
TSE AND THE COMPETITION BUREAU........................... 40
5.03 REPLACEMENT OF LETTER OF CREDIT............................... 40
5.04 APPOINTMENT OF MANAGING DIRECTOR OF THE GMBH SUBSIDIARY....... 40
5.05 CHANGE OF NAME OF GMBH SUBSIDIARY............................. 40
5.06 PRODUCT LIABILITIES/RETURNED GOODS............................ 40
5.07 NOTICE AND CURE............................................... 41
5.08 FULFILLMENT OF CONDITIONS..................................... 41
ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASERS.......................... 41
6.01 REPRESENTATIONS AND WARRANTIES................................ 41
6.02 PERFORMANCE................................................... 42
6.03 OFFICER'S CERTIFICATES........................................ 42
6.04 ORDERS AND LAWS............................................... 42
6.05 REGULATORY CONSENTS AND APPROVALS............................. 42
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6.06 SHARE PURCHASE AND TRANSFER AGREEMENT......................... 42
6.07 RELEASE OF LIENS ON ACCOUNTS RECEIVABLE....................... 42
6.08 TRANSITION SERVICES AGREEMENT................................. 43
6.09 REAL PROPERTY LEASE........................................... 43
6.10 OPINION OF COUNSEL............................................ 43
6.11 DELIVERIES.................................................... 43
6.12 PROCEEDINGS................................................... 43
ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLERS............................ 43
7.01 REPRESENTATIONS AND WARRANTIES................................ 43
7.02 PERFORMANCE................................................... 43
7.03 OFFICER'S CERTIFICATES........................................ 43
7.04 ORDERS AND LAWS............................................... 44
7.05 REGULATORY CONSENTS AND APPROVALS............................. 44
7.06 DELIVERIES.................................................... 44
7.07 PROCEEDINGS................................................... 44
ARTICLE VIII TAX MATTERS AND POST-CLOSING TAXES............................. 44
8.01 POST-CLOSING TAXES............................................ 44
8.02 OTHER TAX COVENANTS........................................... 45
ARTICLE IX SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS.................................................. 46
9.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS............................................... 46
ARTICLE X INDEMNIFICATION................................................... 47
10.01 INDEMNIFICATION............................................... 47
10.02 METHOD OF ASSERTING CLAIMS.................................... 48
ARTICLE XI TERMINATION...................................................... 51
11.01 TERMINATION................................................... 51
11.02 EFFECT OF TERMINATION......................................... 51
ARTICLE XII DEFINITIONS..................................................... 52
12.01 DEFINITIONS................................................... 52
ARTICLE XIII MISCELLANEOUS.................................................. 63
13.01 NOTICES....................................................... 63
13.02 BULK SALES ACT................................................ 64
13.03 ENTIRE AGREEMENT.............................................. 65
13.04 EXPENSES...................................................... 65
13.05 PUBLIC ANNOUNCEMENTS.......................................... 65
13.06 CONFIDENTIALITY............................................... 65
13.07 WAIVER........................................................ 65
13.08 JOINT AND SEVERAL LIABILITY................................... 65
13.09 AMENDMENT..................................................... 66
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13.10 NO THIRD PARTY BENEFICIARY.................................... 66
13.11 NO ASSIGNMENT; BINDING EFFECT................................. 66
13.12 HEADINGS...................................................... 66
13.13 INVALID PROVISIONS............................................ 66
13.14 CONSENT TO JURISDICTION AND GOVERNING LAW..................... 66
13.15 COUNTERPARTS.................................................. 67
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EXHIBITS
EXHIBIT A General Assignment and Xxxx of Sale
EXHIBIT B Assumption Agreement
EXHIBIT C Form of Assignment of Software License and Services Agreement
EXHIBIT D Officer's Certificate of Sellers
EXHIBIT E Secretary's Certificate of Sellers
EXHIBIT F Form of Share Purchase and Transfer Agreement for GmbH Shares
EXHIBIT G Form of Transition Service Agreement
EXHIBIT H Form of Opinion of Counsel to Sellers
EXHIBIT I Officer's Certificate of Purchasers
EXHIBIT J Secretary's Certificate of Purchasers
ANNEX A A) Form of Pre-Closing Balance Sheet and Closing Balance Sheet
B) Valuation Principles
ANNEX B Severance Policy
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This PURCHASE AGREEMENT dated as of January 13, 2003 is made and entered
into by and between Arrow Electronics, Inc., a New York corporation ("ARROW"),
Arrow Europe GmbH, a limited liability company incorporated under the Laws of
Germany ("ARROW EUROPE"), Arrow Electronics Canada Ltd., a Canadian corporation
("ARROW CANADA"; each of Arrow, Arrow Europe and Arrow Canada, a "PURCHASER" and
collectively, "PURCHASERS") and Pioneer-Standard Electronics, Inc., an Ohio
corporation ("PIONEER"), Pioneer-Standard Illinois, Inc., a Delaware corporation
("PIONEER ILLINOIS"), Pioneer-Standard Minnesota, Inc., a Delaware corporation
("PIONEER MINNESOTA"), Pioneer-Standard Electronics, LTD., a Delaware limited
partnership ("PIONEER LTD") and Pioneer-Standard Canada Inc., an Ontario
corporation ("PIONEER CANADA"; each of Pioneer, Pioneer Illinois, Pioneer
Minnesota, Pioneer LTD and Pioneer Canada, a "SELLER" and collectively,
"SELLERS"). Capitalized terms not otherwise defined herein have the meanings set
forth in SECTION 12.01.
WHEREAS, Sellers and the GmbH Subsidiary are engaged in the distribution of
semiconductors (including microprocessors, memory and programmable logic
devices, and analog and digital integrated circuits), interconnect, passive and
electromechanical components (including capacitors, connectors, resistors,
switches and power conditioning equipment), power supplies and embedded computer
products, including the business related to the Power and Signal line of
products, and the provision of value added services associated with industrial
electronic products, such as point of use inventory management, memory and logic
device programming, power products integration and modification to customer
specifications and supply chain management programs (collectively, the
"BUSINESS");
WHEREAS, Pioneer owns all of the outstanding capital stock of or equity
interest in Pioneer Illinois, Pioneer Minnesota, Pioneer LTD and Pioneer Canada
and Arrow owns all of the outstanding capital stock of or equity interest in
Arrow Canada and Arrow Europe;
WHEREAS, Pioneer owns one (1) share of capital stock, in the nominal amount
of DM25,000 (the "GMBH SHARES") of Pioneer-Standard Electronics GmbH, a limited
liability company incorporated under the Laws of Germany and registered with the
commercial register at the local court of Xxxxxxxxxx under HRB 3748 (the "GMBH
SUBSIDIARY");
WHEREAS, Pioneer desires to sell, and Arrow desires to purchase, the GmbH
Shares on the terms and subject to the conditions set forth in this Agreement;
WHEREAS, Sellers desire to sell, transfer and assign to Purchasers, and
Purchasers desire to purchase and acquire from Sellers, certain of the assets of
Sellers relating to the operation of the Business, and in connection therewith,
Purchasers have agreed to assume certain of the liabilities of Sellers relating
to the Business, all on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
SALE OF ASSETS AND SHARES; CLOSING AND OTHER MATTERS
1.01 ASSETS. (a) ASSETS TRANSFERRED. On the terms and subject to the
conditions set forth in this Agreement, each Seller will sell, transfer, convey,
assign and deliver to the applicable Purchaser (as described below), and
Purchasers will purchase and pay for, at the Closing, all of the applicable
Seller's right, title and interest in, to and under the following Assets and
Properties of the applicable Seller used or held for use in connection with the
Business, except as otherwise provided in SECTION 1.01(B), as the same shall
exist on the Closing Date (collectively the "ASSETS"); PROVIDED HOWEVER, that
(i) to the extent that Pioneer Canada has any right, title and interest in any
of the Assets (such assets, the "CANADIAN ASSETS"), such Canadian Assets shall
be sold, transferred, conveyed, assigned and delivered to Arrow Canada (so long
as the necessary approvals from the Competition Bureau shall have all been
obtained prior to the Closing or, subsequent to the Closing, such approvals
shall have all been obtained prior to the Drop Dead Date) and (ii) to the extent
that Pioneer, Pioneer Illinois, Pioneer Minnesota, or Pioneer LTD have any
right, title and interest in any of the Assets (such assets, the "U.S. ASSETS"),
such U.S. Assets shall be sold, transferred, conveyed, assigned and delivered to
Arrow; PROVIDED, FURTHER, HOWEVER, that for purposes of this Agreement, (x)
Pioneer Canada shall be the applicable Seller, and Arrow Canada shall be the
applicable Purchaser, of the Canadian Assets, and (y) each of Pioneer, Pioneer
Illinois, Pioneer Minnesota and Pioneer LTD shall be the applicable Seller, and
Arrow shall be an applicable Purchaser, of the U.S. Assets:
(i) INVENTORY. All inventories of finished goods, demonstration
equipment, packaging materials and other accessories related thereto which
are held at, or are in transit from or to, the locations at which the
Business is conducted, or located at customers' premises on consignment, in
each case, which are associated with the suppliers listed on SECTION
1.01(A)(I) OF THE DISCLOSURE SCHEDULE (the "NAMED SUPPLIERS") and are used
or held for use by the applicable Seller in the conduct of the Business,
including any of the foregoing purchased subject to any conditional sales
or title retention agreement in favor of any other Person, together with
all rights of the applicable Seller against suppliers of such inventories
(the "INVENTORY"); PROVIDED, HOWEVER, that Inventory shall not include any
such inventories associated with any of the (A) Terminated Suppliers, (B)
Terminated Business, or (C) Retained Intel Volume Business;
(ii) ACCOUNTS RECEIVABLE. All trade accounts receivable representing
amounts receivable in respect of goods shipped or services rendered by the
Business and all notes, bonds and other evidences of Indebtedness of and
rights to receive payments arising out of sales occurring in the conduct of
the Business and the Security Agreements related thereto (the "ACCOUNTS
RECEIVABLE"); PROVIDED, HOWEVER, that the Accounts Receivable shall not
include any accounts receivable (A) subject to any third party collection
procedures or any other Actions or Proceedings which have been commenced in
connection therewith, (B) that are associated with the Terminated Business
or (C) that are solely related to the Retained Intel Volume Business;
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(iii) BUSINESS CONTRACTS. Subject to SECTION 1.07, all Contracts
(other than the Real Property Leases, the Personal Property Leases and the
Accounts Receivable) to which the applicable Seller is a party and which
are utilized in the conduct of the Business, including without limitation
Contracts relating to suppliers, sales representatives, distributors, open
purchase and sales orders, marketing arrangements, franchise agreements,
manufacturing arrangements and terms and conditions of sale (the "BUSINESS
CONTRACTS"); PROVIDED, HOWEVER, that Business Contracts shall not include
Contracts relating to the (A) Terminated Suppliers, (B) Terminated
Business, or (C) Retained Intel Volume Business (including any purchase
orders with customers or suppliers relating to such Contracts);
(iv) PREPAID EXPENSES. All prepaid expenses and deposits relating to
the Business, other than the Excluded Prepaid Expenses, including but not
limited to the items listed in SECTION 1.01(A)(IV) OF THE DISCLOSURE
SCHEDULE (the "PREPAID EXPENSES");
(v) REAL PROPERTY LEASES. So long as the applicable Seller shall have
delivered to the applicable Purchaser Estoppel Certificates and consents to
assignment from the respective lessors with respect thereto, the leases of
real property relating to the Power and Signal line of business and located
in Solon, Ohio, Fremont, California and Hilden, Germany and listed on
SECTION 1.01(A)(V) OF THE DISCLOSURE SCHEDULE, as to which the applicable
Seller is the lessee, together with any options to purchase the underlying
property and leasehold improvements thereon, and all other rights,
subleases, licenses, permits, deposits and profits appurtenant to or
related to such leases (the "REAL PROPERTY LEASES");
(vi) TANGIBLE PERSONAL PROPERTY. So long as the applicable Seller
shall have delivered to the applicable Purchaser Estoppel Certificates and
consents to assignment from the respective lessors under the Real Property
Leases, all of the applicable Seller's interest in the furniture, fixtures
and improvements, office and other supplies, equipment, computers,
telephone systems and machinery and other tangible personal property (other
than Inventory) used or held for use in the conduct of the Business, which,
except as listed in SECTION 1.01(A)(VI)(A) OF THE DISCLOSURE SCHEDULE, are
located at the sites or facilities subject to the Real Property Leases
(including but not limited to the items listed in SECTION 1.01(A)(VI)(B) OF
THE DISCLOSURE SCHEDULE), including any of the foregoing purchased subject
to any conditional sales or title retention agreement in favor of any other
Person (the "TANGIBLE PERSONAL PROPERTY"); including the rights of the
applicable Seller, if any, to the warranties, express or implied, and
Licenses received from manufacturers and sellers of such Tangible Personal
Property;
(vii) PERSONAL PROPERTY LEASES. So long as the applicable Seller shall
have delivered to the applicable Purchaser Estoppel Certificates and
consents to assignment from the respective lessors under the Real Property
Leases, subject to SECTION 1.06, the leases of Tangible Personal Property
described in SECTION 1.01(A)(VII) OF THE DISCLOSURE SCHEDULE as to which
the applicable Seller is the lessee or sublessee, together with any options
to purchase the underlying property (the "PERSONAL PROPERTY Leases");
3
(viii) INTANGIBLE PERSONAL PROPERTY. The Intellectual Property related
to the Power and Signal line of business listed in SECTION 1.01(A)(VIII) OF
THE DISCLOSURE SCHEDULE (the "INTANGIBLE PERSONAL PROPERTY");
(ix) WPI SHARES. So long as the WPI Necessary Approvals shall have all
been obtained prior to the Closing or, subsequent to the Closing, the WPI
Necessary Approvals shall have all been obtained prior to the Drop Dead
Date, all of Seller's right, title and equity interest in, to and under the
WPI Shares (the "WPI SHARES");
(x) SECURITY DEPOSITS. So long as the applicable Seller shall have
delivered to the applicable Purchaser Estoppel Certificates and consents to
assignment from the respective lessors under the Real Property Leases, all
security deposits deposited by or on behalf of the applicable Seller as
lessee under the Real Property Leases, other than for the Hilden, Germany
lease (the "TENANT SECURITY DEPOSITS"); and
(xi) BOOKS AND RECORDS. All Books and Records used or held for use in
the conduct of the Business or otherwise relating to the Assets, other than
the Excluded Books and Records (the "BUSINESS BOOKS AND RECORDS").
To the extent any of the Business Books and Records are items susceptible to
duplication and are either (x) used in connection with any of Sellers'
businesses other than the Business or (y) are required by Law to be retained by
Sellers, Sellers may deliver photostatic copies or other reproductions from
which, in the case of Business Books and Records referred to in clause (x),
information solely concerning Sellers' businesses other than the Business has
been deleted.
(b) EXCLUDED ASSETS. Notwithstanding anything in this Agreement to the
contrary, the following Assets and Properties of Sellers (the "EXCLUDED ASSETS")
shall be excluded from and shall not constitute Assets:
(i) CASH. Cash (including checks received prior to the close of
business on the Closing Date, whether or not deposited or cleared prior to
the close of business on the Closing Date), commercial paper, certificates
of deposit and other bank deposits, treasury bills and other cash
equivalents;
(ii) INSURANCE. Life insurance policies of officers and other
employees of Sellers and all other insurance policies relating to the
operation of the Business;
(iii) EXCLUDED PREPAID EXPENSES. Prepaid expenses and deposits for (A)
any insurance polices and (B) rent for leases or sub-leases of real
property and personal Property, other than the Tenant Security Deposits and
with respect to the Personal Property Leases (the "EXCLUDED PREPAID
EXPENSES");
(iv) EMPLOYEE BENEFIT PLANS. All assets owned or held by any Benefit
Plans;
(v) TAX REFUNDS, CREDITS AND ASSETS. All refunds or credits,
overpayments or rebates, if any, of Taxes due to or from any Seller for
periods ending on or prior to the Closing Date, and all deferred tax
assets;
4
(vi) REAL AND PERSONAL PROPERTY. All real property and personal
property and leases and sub-leases of real property and personal property
(whether or not used in connection with the Business), other than the Real
Property Leases, Tangible Personal Property and Personal Property Leases;
(vii) EXCLUDED BOOKS AND RECORDS. The minute books, stock transfer
books and corporate seal of Sellers and any other Books and Records
relating to the Excluded Assets or the Retained Liabilities (the "EXCLUDED
BOOKS AND RECORDS");
(viii) LITIGATION CLAIMS. Any rights (including indemnification) and
claims and recoveries under litigation of Sellers against third parties
arising out of or relating to events prior to the Closing Date;
(ix) EXCLUDED CONTRACTS. The rights of Sellers in, to and under all
Contracts of any nature, the obligations of Sellers under which expressly
are not assumed by the applicable Purchaser pursuant to SECTION 1.02(B);
(x) TRADE NAME AND LOGO. Other than the Intangible Personal Property,
all rights to all trademarks, service marks, trademark and service xxxx
applications, and trade names owned by Sellers and utilized in connection
with the Business (the "Retained Intellectual Property"), together with any
and all goodwill associated therewith;
(xi) EXCLUDED BUSINESS. Any Assets and Properties of any of the (A)
Excluded Business, (B) Terminated Suppliers, other than as provided for in
SECTION 1.01(A)(II), (C) Terminated Business, or (D) Retained Intel Volume
Business;
(xii) AGREEMENTS. Sellers' rights under this Agreement and the
Operative Agreements; and
(xiii) RETAINED INTEL VOLUME BUSINESS RESERVES. Any reserves
designated on Sellers' Books and Records as being related to the Accounts
Receivable described in SECTION 1.01(A)(II)(C).
To the extent any Excluded Books and Records relate to the Business, Sellers
will afford Purchasers and their Representatives, during normal business hours,
reasonable access to such portions of such Excluded Books and Records that
relate to the Business and the right to make copies and extracts therefrom.
Further, Sellers agree for such period as is required by Law and in any event
for three (3) years that Sellers shall not destroy or otherwise dispose of any
such Excluded Books and Records, to the extent such Excluded Books and Records
relate to the Business, unless the applicable Seller shall first offer in
writing to surrender such portions of such Excluded Books and Records that
relate to the Business to the applicable Purchaser, and the applicable Purchaser
shall not agree in writing to take possession thereof during the ten (10)
Business Day period after such offer is made.
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1.02 LIABILITIES.
(a) ASSUMED LIABILITIES. In connection with the sale, transfer, conveyance,
assignment and delivery of the Assets pursuant to this Agreement, on the terms
and subject to the conditions set forth in this Agreement, at the Closing, the
applicable Purchaser will assume and agree to pay, perform and discharge when
due, and indemnify and hold the applicable Seller harmless against, the
following obligations of the applicable Seller arising in connection with the
operation of the Business, except as otherwise provided in SECTION 1.02(B), as
the same shall exist on the Closing Date (the "ASSUMED LIABILITIES"), and no
others; PROVIDED, HOWEVER, that to the extent that (i) any of the Assumed
Liabilities relate to the Canadian Assets (such liabilities, the "CANADIAN
LIABILITIES") then Arrow Canada shall pay, perform and discharge when due, and
indemnify and hold harmless Pioneer Canada against such Canadian Liabilities (so
long as the necessary approvals from the Competition Bureau shall have all been
obtained prior to the Closing or, subsequent to the Closing, such approvals
shall have all been obtained prior to the Drop Dead Date) and (ii) any of the
Assumed Liabilities relate to the U.S. Assets (such liabilities, the "U.S.
LIABILITIES"), then Arrow shall pay, perform and discharge when due, and
indemnify and hold harmless Pioneer, Pioneer Illinois, Pioneer Minnesota, and
Pioneer LTD against such U.S. Liabilities:
(i) ACCOUNTS PAYABLE. All obligations of the applicable Seller with
respect to those trade accounts payable associated with the Named Suppliers
and relating to the Business or the Assets, incurred in bona-fide business
transactions in the ordinary course of business, to the extent reflected or
reserved against in the Pre-Closing Balance Sheet or arising in the
ordinary course of business or in accordance with this Agreement thereafter
and are included in the Closing Date Balance Sheet (the "ACCOUNTS
PAYABLE"); PROVIDED, HOWEVER, that the Accounts Payable shall not include
any such accounts payable or other liabilities associated with any of the
(A) Terminated Suppliers, (B) Terminated Business, or (C) Retained Intel
Volume Business.
(ii) OBLIGATIONS UNDER BUSINESS CONTRACTS. All obligations of the
applicable Seller under the Business Contracts arising and to be performed
on or after the Closing Date, and excluding any such obligations arising or
to be performed prior to the Closing Date, including, without limitation,
any breach or other violation by the applicable Seller of any of the
Business Contracts occurring prior to the Closing, whether or not any claim
for such breach or violation has been asserted at or prior to the Closing;
(iii) ACCRUED EXPENSES. All obligations of the applicable Seller with
respect to accrued expenses (including accrued vacation with respect to the
Transferred Employees), to the extent reflected or reserved against in the
Pre-Closing Balance Sheet or arising in the ordinary course of business or
in accordance with this Agreement thereafter and are included in the
Closing Date Balance Sheet (the "ACCRUED EXPENSES"); PROVIDED, HOWEVER,
that the Accrued Expenses shall not include any such accrued expenses with
respect to any Benefit Plan, or associated with any of the (A) Terminated
Suppliers, (B) Terminated Business, or (C) Retained Intel Volume Business;
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(iv) REAL PROPERTY LEASE OBLIGATIONS. All obligations of the
applicable Seller under the Real Property Leases arising and to be
performed on or after the Closing Date, and excluding any such obligations
arising or to be performed prior to the Closing Date; and
(v) PERSONAL PROPERTY LEASE OBLIGATIONS. All obligations of the
applicable Seller under the Personal Property Leases arising and to be
performed on or after the Closing Date, and excluding any such obligations
arising or to be performed prior to the Closing Date.
(b) RETAINED LIABILITIES. Except for the Assumed Liabilities, Purchasers
shall not assume by virtue of this Agreement or the transactions contemplated
hereby, and Sellers shall retain responsibility for, and shall indemnify and
hold harmless Purchasers against, any other liabilities, obligations or
commitments of Sellers or of the Business of any nature whatsoever (including
any Liabilities relating to the Sellers' conduct of the Business or to the
Assets (and the use thereof) at any time on or prior to the Closing Date),
including, without limiting the generality of the foregoing, the following
liabilities of the Business (collectively, the "RETAINED LIABILITIES"):
(i) PLANS. All liabilities and obligations under each of the Benefit
Plans;
(ii) TAXES. All liabilities and obligations for taxes relating to the
Business accrued (whether or not included on the Business Books and
Records) and unpaid for all periods ending on or prior to the Closing Date,
and all liabilities for deferred taxes;
(iii) REAL PROPERTY. All liabilities and obligations under real
property and leases and sub-leases of real property in connection with the
Business other than with respect to the Real Property Leases;
(iv) ACTIONS OR PROCEEDINGS. Other than the one (1) Action specified
in SECTION 1.02(B)(IV) OF THE DISCLOSURE SCHEDULE, all Actions or
Proceedings pending against Sellers or relating to the operation of the
Business prior to the Closing Date, whether or not such Action or
Proceeding has been asserted prior or after the Closing Date;
(v) ENVIRONMENTAL. All obligations relating to any environmental,
health or safety matter (including any liability of or obligation arising
under any Environmental Law or the Real Property Leases) arising out of or
relating to facts, circumstances or conditions existing as of the Closing
Date at, on, in or under the sites or facilities subject to the Real
Property Leases;
(vi) EXCLUDED ASSETS. All obligations of Sellers and their
subsidiaries arising in connection with the Excluded Assets;
(vii) OTHER BUSINESSES. Any obligations of Sellers related to the
businesses of Sellers other than the Business, including any obligations
relating to any of the (A)
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Excluded Business, (B) Terminated Suppliers, (C) Terminated Business, or
(D) Retained Intel Volume Business;
(viii) EMPLOYEES. All obligations of Sellers with respect to Sellers'
employees other than as set forth in SECTION 1.06;
(ix) RETURNED GOODS. All obligations with respect to the Business for
repair or replacement of, or refund for, damaged, defective or returned
goods sold by Sellers prior to the Closing Date (the "RETURNED GOODS"); and
(x) PRODUCT LIABILITIES. All liabilities with respect to the Business
arising out of claims of third parties for damage or injury suffered as the
result of defective products sold by Sellers prior to the Closing Date (the
"PRODUCT LIABILITIES").
1.03 SALE OF GMBH SHARES. So long as the necessary approvals from the
Cartel Office shall have all been obtained prior to the Closing or, subsequent
to the Closing, such approvals shall have all been obtained prior to the Drop
Dead Date, then on the terms and subject to the conditions set forth in this
Agreement, at the Closing, Pioneer agrees to sell to Arrow Europe, and Arrow
Europe agrees to purchase from Pioneer, all of the right, title and interest of
Pioneer in and to the GmbH Shares.
1.04 PURCHASE PRICE; ALLOCATION; ADJUSTMENT. (a) PURCHASE PRICE. The
aggregate purchase price, payable by Purchasers in the manner provided in
SECTION 1.05, shall be an amount equal to the sum of: (i) $55,300,000, (ii)
$217,100,000 (the "ADJUSTED SEPTEMBER BALANCE SHEET NET BOOK VALUE"), (iii) the
Pre-Closing Balance Sheet Adjustment Amount (as defined below), if any, (iv) the
WPI Shares Purchase Price if all of the WPI Necessary Approvals have been
obtained prior to the Closing, and minus the sum of (i) the GmbH Purchase Price
and (ii) the Canadian Purchase Price (the "CLOSING PURCHASE PRICE"). For
purposes of this Agreement, "PRE-CLOSING BALANCE SHEET ADJUSTMENT AMOUNT" shall
mean: (a) if the Estimated Net Book Value is greater than the Adjusted September
Balance Sheet Net Book Value, the amount by which the Estimated Net Book Value
exceeds the Adjusted September Balance Sheet Net Book Value, which amount shall
be added to the Closing Purchase Price, and (b) if the Estimated Net Book Value
is less than the Adjusted September Balance Sheet Net Book Value, the amount
equal to the Adjusted September Balance Sheet Net Book Value less the Estimated
Net Book Value, which amount shall be subtracted from the Closing Purchase
Price.
(b) ALLOCATION OF PURCHASE PRICE. For purposes of this Agreement, "PURCHASE
PRICE" shall mean the Closing Purchase Price, as adjusted as provided in
paragraph (c) below. Purchasers and Sellers shall negotiate in good faith prior
to the Closing Date and determine the allocation of the Purchase Price paid by
each Purchaser for the Assets, other than with respect to (x) the GmbH Shares,
which shall be the GmbH Purchase Price, and (y) the assets and liabilities of
Pioneer Canada, which shall be the Canadian Purchase Price. Each party hereto
agrees (i) that any such allocation shall be consistent with paragraph (a) above
and the requirements of Section 1060 of the Code and the regulations thereunder,
(ii) to complete jointly and to file separately Form 8594 with its Federal
income Tax Return consistent with such allocation for the tax year in which the
Closing Date occurs and (iii) that no party will take a position on any
8
income, transfer or gains Tax Return, before any Governmental or Regulatory
Authority charged with the collection of any such Tax or in any judicial
proceeding, that is in any manner inconsistent with the terms of any such
allocation without the consent of the other party. Arrow Canada and Pioneer
Canada agree to elect jointly in the prescribed form under Section 22 of the
Income Tax Act (Canada) and the equivalent provisions of any applicable
provincial legislation as to the sale of the accounts receivable and other
assets which are included in the Canadian Assets and described in section 22 of
the Income Tax Act (Canada) or the applicable provincial legislation, and to
designate in such election an amount equal to the portion of the Canadian
Purchase Price allocated to such assets pursuant to this Section 1.04 as the
consideration paid by Arrow Canada therefor.
(c) ADJUSTMENT OF PURCHASE PRICE. The Closing Purchase Price shall be
adjusted as of the Closing in the following manner:
(i) NET BOOK VALUE ADJUSTMENT. (A) Two (2) Business Days prior to the
Closing Date, Sellers shall deliver to Purchasers (i) an unaudited balance
sheet with respect to the Net Book Value (the "PRE-CLOSING BALANCE SHEET")
which shall (1) be as of a date not more than five (5) Business Days prior
to the Closing Date, (2) contain the same line item categories as those
contained in the form of the balance sheet attached in ANNEX A hereto and
the balance sheet dated September 30, 2002 (other than the line item
"Investments"), which has been previously provided by Sellers to Purchasers
and is attached hereto as SECTION 1.04(C)(I)(A)(I)(2) OF THE DISCLOSURE
SCHEDULE (the "SEPTEMBER BALANCE Sheet"), (3) be prepared from the Business
Books and Records and in accordance with GAAP, as in effect from time to
time, applied on a basis consistent with the Financial Statements,
PROVIDED, HOWEVER, that, notwithstanding the foregoing, the Pre-Closing
Balance Sheet shall be prepared in accordance with the valuation principles
set forth in ANNEX A hereto (together, the "ACCOUNTING PRINCIPLES"), and
(4) reflect no write-up of any individual asset of the Business which was
included in the Financial Statements and is included in the Pre-Closing
Balance Sheet to a book value greater than its book value in the Financial
Statements, and (ii) a certificate of Sellers (the "PRE-CLOSING
CERTIFICATE") setting forth thereon Sellers' good faith estimate of the Net
Book Value as of the Closing Date (the "ESTIMATED NET BOOK VALUE"), which
shall be derived from and supported by the Pre-Closing Balance Sheet.
(B) As soon as practicable, and in no event later than 45 days
following the Closing Date, Sellers shall prepare and deliver to
Purchasers an audited balance sheet of the Net Book Value as of the
Closing Date (the "CLOSING DATE BALANCE SHEET"), together with a
certificate of Sellers (the "CLOSING DATE CERTIFICATE"), which shall
set forth the Net Book Value as of the Closing Date (the "CLOSING DATE
NET BOOK VALUE") as derived from and supported by the Closing Date
Balance Sheet. Sellers and Purchasers shall split equally the expenses
incurred by Sellers in the preparation of the Closing Date Balance
Sheet. As part of the preparation of the Closing Date Balance Sheet,
Purchasers shall have the right to jointly conduct with Sellers a
complete physical inventory of the Business as of the Closing Date and
the results thereof shall be reflected in the Closing Date Balance
Sheet. The Closing Date Balance Sheet shall (i) contain the same
9
line item categories as those contained in the form of the balance
sheet attached in ANNEX A hereto, the Pre-Closing Balance Sheet and
the September Balance Sheet and (ii) be prepared from the Business
Books and Records and in accordance with the Accounting Principles
used in the preparation of the Pre-Closing Balance Sheet. Purchasers
and their independent public accountant ("PURCHASERS' ACCOUNTANT") may
participate and observe the preparation of the Closing Date Balance
Sheet. Sellers and their independent public accountant ("SELLERS'
ACCOUNTANT") shall make all of their work papers and other relevant
documents in connection with the preparation of the Closing Date
Balance Sheet available to Purchasers and Purchasers' Accountant, and
shall make the persons in charge of the preparation of the Closing
Date Balance Sheet available for reasonable inquiry by Purchasers and
Purchasers' Accountant.
(C) Purchasers shall notify Sellers in writing as soon as
practicable, and in no event more than 30 days, following receipt of
the Closing Date Balance Sheet and the Closing Date Certificate if
they do not agree with the Closing Date Net Book Value set forth
thereon, in which case Purchasers and Purchasers' Accountant, on the
one hand, and Sellers and Sellers' Accountant, on the other, will use
good faith efforts during the thirty (30) day period following the
date Sellers received such notice from Purchasers to resolve any
differences they may have as to the Closing Date Net Book Value. Such
written notice will identify with reasonable specificity the
calculations with which Purchasers disagree or other bases for such
disagreement. If Sellers and Purchasers cannot reach agreement during
such thirty (30) day period, they shall submit their disagreements
within fifteen (15) days after the expiration of such thirty (30) day
period to an independent, nationally-recognized public accounting firm
jointly selected by Sellers' Accountant and Purchasers' Accountant
(the "INDEPENDENT Accountant"), which shall conduct such additional
review as is necessary to resolve the specific disagreements referred
to it and, based thereon, shall determine the Closing Date Net Book
Value. The review of the Independent Accountant will be restricted as
to scope to address only those matters as to which Sellers and
Purchasers have not reached agreement pursuant to the preceding
sentence. The Independent Accountant's determination of the Closing
Date Net Book Value, which shall be completed as promptly as
practicable but in no event later than thirty (30) days following its
selection, shall be confirmed by the Independent Accountant in writing
to, and shall be final and binding on, each of Sellers and Purchasers
for all purposes.
(D) In the event that the Closing Date Net Book Value determined
in accordance with subparagraphs (B) and (C) of this SECTION 1.04(C),
as the case may be (the "FINAL NET BOOK VALUE") is less than the
Estimated Net Book Value (such difference being herein referred to as
the "NET WORTH DEFICIENCY"), then Sellers shall, within three (3)
Business Days following the date of determination of the Final Net
Book Value (the "DETERMINATION DATE"), pay to Purchasers, if the
amount of the Net Worth Deficiency exceeds the Holdback Amount, such
excess amount and Purchasers shall retain the Holdback Amount;
PROVIDED, HOWEVER, that,
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if the amount of the Net Worth Deficiency is less than the Holdback
Amount, Purchasers shall, within three (3) Business Days following the
Determination Date, pay to Sellers, the amount equal to the Holdback
Amount less the Net Worth Deficiency. In the event that the Final Net
Book Value is greater than the Estimated Net Book Value (such
difference being herein referred to as the "NET WORTH EXCESS"),
Purchasers shall, within three (3) Business Days following the
Determination Date, pay to Sellers the amount equal to the sum of the
Net Worth Excess and the Holdback Amount. If the Final Net Book Value
is equal to the Estimated Net Book Value, Purchasers shall, within
three (3) Business Days following the Determination Date, pay to
Sellers the Holdback Amount.
(E) Daily interest shall accrue on the Holdback Amount from the
Closing Date until the payment thereof at an annualized rate equal to
four and one-half percent (4 1/2%). Interest shall be computed on the
basis of a 360-day year comprised of twelve 30-day months. The
interest so payable and the principal amount of the Holdback Amount
shall be payable by wire transfer of immediately available funds to
such account as Sellers may direct by written notice delivered to
Purchasers.
(F) If the Closing Date Net Book Value as determined by the
Independent Accountant is closer to the Closing Date Net Book Value
advocated by (i) Sellers than it is to the Closing Date Net Book Value
advocated by Purchasers, Purchasers shall pay the fees, costs and
expenses of the Independent Accountant for services rendered pursuant
to this Section or (ii) Purchasers than it is to the Closing Date Net
Book Value advocated by Sellers, Sellers shall pay the fees, costs and
expenses of the Independent Accountant for services rendered pursuant
to this Section. Otherwise, such fees, costs and expenses shall be
paid equally by Sellers and Purchasers.
(G) If the sale of the GmbH Shares and/or the Canadian Assets
does not occur on the Closing Date due to the failure to obtain the
necessary approvals of the Cartel Office and/or the Competition Bureau
(as the case may be) but such approval(s) are obtained prior to the
Drop Dead Date, then at the subsequent closing of the sale of the GmbH
Shares and/or the Canadian Assets (as the case may be), the parties
shall apply the principals and adjustment mechanisms set forth in this
SECTION 1.04 to the GmbH Shares and/or the Canadian Assets (as the
case may be) to obtain the same result as if such sale(s) occurred on
the Closing Date.
1.05 CLOSING. (a) The Closing will take place at the offices of Milbank,
Tweed, Xxxxxx & XxXxxx LLP, at 0 Xxxxx Xxxxxxxxx Xxxxx, Xxx Xxxx, XX, or at such
other place as Purchasers and Sellers mutually agree, at 10:00 A.M. local time,
on the Closing Date. At the Closing, Purchasers will pay the Closing Purchase
Price and the Canadian Purchase Price, less five percent (5%) of an amount equal
to the Closing Purchase Price plus the Canadian Purchase Price plus the GmbH
Purchase Price less the WPI Shares Purchase Price (the
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"HOLDBACK AMOUNT"), by wire transfer of immediately available funds to such
accounts as Sellers may reasonably direct by written notice delivered to
Purchasers by Sellers at least two (2) Business Days before the Closing Date.
Simultaneously, (a) each of Pioneer, Pioneer Illinois, Pioneer Minnesota, and
Pioneer LTD will assign and transfer to Arrow all of its right, title and
interest in and to the U.S. Assets and Pioneer Canada will assign and transfer
to Arrow Canada all of its right, title and interest in and to the Canadian
Assets (in each case, free and clear of all Liens, other than Permitted Liens)
by delivery of (i) a General Assignment and Xxxx of Sale substantially in the
form of EXHIBIT A hereto (the "GENERAL ASSIGNMENT"), duly executed by the
applicable Seller, (ii) an assignment of the Intangible Personal Property, duly
executed by the applicable Seller, in form and substance reasonably satisfactory
to the applicable Purchaser, (iii) an assignment of the Real Property Leases,
duly executed by the applicable Seller, in form and substance reasonably
satisfactory to the applicable Purchaser, (iv) a Share Purchase and Transfer
Agreement substantially in the form of EXHIBIT F hereto, duly executed by
Pioneer and notarized in accordance with German Law, and (v) such other good and
sufficient instruments of conveyance, assignment and transfer, in form and
substance reasonably acceptable to Purchasers' counsel, as shall be effective to
vest in the applicable Purchaser good title to the applicable Assets as and to
the extent provided in SECTION 1.01(A) (the General Assignment and the other
instruments referred to in clauses (ii) and (iii) being collectively referred to
herein as the "ASSIGNMENT INSTRUMENTS"); furthermore, Sellers will deliver to
Purchasers a copy of the Deed of Incorporation and the Minute Book of the GmbH
Subsidiary; (b) Arrow will assume from Pioneer, Pioneer Illinois, Pioneer
Minnesota, and Pioneer LTD the due payment, performance and discharge of the
U.S. Liabilities and Arrow Canada will assume from Pioneer Canada the due
payment, performance and discharge of the Canadian Liabilities by delivery of
(i) an Assumption Agreement substantially in the form of EXHIBIT B hereto (the
"ASSUMPTION AGREEMENT"), duly executed by the applicable Purchaser, and (ii)
such other good and sufficient instruments of assumption, in form and substance
reasonably acceptable to Sellers' counsel, as shall be effective to cause the
applicable Purchaser to assume the applicable Assumed Liabilities as and to the
extent provided in SECTION 1.02(A) (the Assumption Agreement and such other
instruments referred to in clause (ii) being collectively referred to herein as
the "ASSUMPTION INSTRUMENTS"); and (c) if all of the WPI Necessary Approvals
have been obtained prior to the Closing, Pioneer will deliver to Arrow
certificates representing all of Pioneer's right, title and interest in and to
the WPI Shares, each such certificate to be duly and validly endorsed in favor
of Arrow or accompanied by a separate stock power duly and validly executed by
Pioneer with requisite stock transfer stamps, if any, and otherwise sufficient
to vest in the applicable Purchaser good and valid title in and to the WPI
Shares. At the Closing, there shall also be delivered to Sellers and Purchasers
the opinions, certificates and other contracts, documents and instruments
required to be delivered under ARTICLES VI and VII.
(b) If all of the consents, approvals and actions of, filings with and
notices to, the Governmental or Regulatory Authorities specified in SECTION
2.14(A) OF THE DISCLOSURE SCHEDULE, if any, necessary to vest in Arrow good and
valid title to the WPI Shares ("WPI NECESSARY APPROVALS"), have not been
obtained prior to the Closing, then Pioneer and Arrow shall use reasonable
efforts to obtain all the WPI Necessary Approvals by such date that is thirty
(30) days after the Closing Date (the "WPI DROP DEAD DATE"). If Pioneer and
Arrow are able to obtain all of the WPI Necessary Approvals by the WPI Drop Dead
Date, then, as promptly as
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practicable after such date (the "WPI APPROVAL DATE") and at such place as
mutually agreed by Pioneer and Arrow: (i) Arrow shall pay the WPI Shares
Purchase Price to Pioneer and (ii) Pioneer shall deliver to Arrow Europe
certificates representing all of Pioneer's right, title and interest in and to
the WPI Shares. If Pioneer and Arrow are unable to obtain all of the WPI
Necessary Approvals by the WPI Drop Dead Date, then Arrow shall not be obligated
to purchase the WPI Shares or pay the WPI Shares Purchase Price to Pioneer.
(c) In the event that at Closing all of the conditions precedent set forth
in Articles VI and VII have been satisfied or waived except that the parties
have not obtained the consents, approvals and actions of, filings with and
notices to, (i) the Cartel Office necessary to vest in Arrow Europe good and
valid title to the GmbH Shares and/or (ii) the Competition Bureau necessary to
vest in Arrow good and valid title to the Canadian Assets, then (A) the parties
will consummate the Closing without acquiring the GmbH Shares and/or (as the
case may be) the Canadian Assets and assuming the Canadian Liabilities, (B) the
Net Book Value of the GmbH Subsidiary and/or (as the case may be) of Pioneer
Canada will be excluded from the Pre-Closing Balance Sheet and the Closing
Balance Sheet and (C) Pioneer and Arrow shall use reasonable efforts to obtain
such approvals from the Cartel Office and/or (as the case may be) the
Competition Bureau by such date that is six (6) months after the Closing Date
(the "DROP DEAD DATE"). If Pioneer and Arrow are able to obtain all of such
approvals from the Cartel Office by the Drop Dead Date, then, as promptly as
practicable after such date (the "GMBH APPROVAL DATE") and at such place as
mutually agreed by Pioneer and Arrow: (1) Arrow shall pay the GmbH Purchase
Price to Pioneer and (2) Pioneer shall deliver to Purchasers the executed Share
Purchase and Transfer Agreement and shall deliver such other documents and take
such other actions, if any, sufficient to vest in Arrow Europe good and valid
title in and to the GmbH Shares. If Pioneer and Arrow are unable to obtain all
of such approvals from the Cartel Office by the GmbH Drop Dead Date, then Arrow
shall not be obligated to purchase the GmbH Shares or pay the GmbH Purchase
Price to Pioneer. If Pioneer and Arrow are able to obtain all of such approvals
from the Competition Bureau by the Drop Dead Date, then, as promptly as
practicable after such date (the "CANADIAN APPROVAL DATE") and at such place as
mutually agreed by Pioneer and Arrow: (1) Arrow shall pay the Canadian Purchase
Price to Pioneer and assume the Canadian Liabilities and (2) Pioneer shall
deliver to Arrow Canada all of its right, title and interest in and to the
Canadian Assets. If Pioneer and Arrow are unable to obtain all of such approvals
from the Competition Bureau by the Drop Dead Date, then Arrow shall not be
obligated to purchase the Canadian Assets, assume the Canadian Liabilities or
pay the Canadian Purchase Price to Pioneer. If at the Closing Date the necessary
approvals of the Cartel Office with respect to the GmbH Subsidiary and/or the
Competition Office with respect to Pioneer Canada have not been obtained, the
commencement date for the provision of services under the Transition Services
Agreement with respect to the GmbH Subsidiary and/or the Canada Assets (as the
case may be) shall be deferred until the closing(s) of the sale of the GmbH
Subsidiary and/or the Canada Assets (as the case may be).
1.06 EMPLOYEE MATTERS. (a) SELECTED EMPLOYEES. (i) At or prior to Closing,
the Purchasers will extend offers of employment, commencing as of 12:01 a.m. on
the day following the Closing Date, at such salary, compensation levels and
terms and conditions as such Purchasers may determine, to the Selected
Employees, which offers shall be conditioned on the Closing. Each Selected
Employee who accepts Purchasers' offer of employment shall become an
13
employee of the Purchasers as of 12:01 a.m. on the day following the Closing
Date and shall thereafter be a "TRANSFERRED EMPLOYEE". Purchasers shall assume
all employment obligations accruing or arising after such time with respect to
the Transferred Employees. In addition, Purchasers agree that in connection with
their employment of any Transferred Employees, such Purchasers shall (x) give
full credit for years of service with Sellers for purposes of eligibility and
vesting under Purchasers' Plans, (y) impose no waiting period for benefits
participation, and (z) impose no exclusions from health benefits for
pre-existing medical conditions, other than those medical conditions excluded
under Sellers' health plans.
(ii) Subsequent to the Closing Date, Sellers, in their sole option,
may retain or terminate any Employees other than the Transferred Employees,
and Purchasers shall, within thirty (30) days after receipt of an invoice
from the Sellers setting forth the names of such terminated Employees and
the amounts actually paid by the Sellers to or on behalf of such terminated
Employees, reimburse Sellers for any severance payments actually paid by
Sellers to or on behalf of any terminated Employees pursuant to the
Severance Policy as a result of the Sellers' termination of such Employees
(x) on the day of the Closing or at any time during the two-week period
after the Closing Date, (y) a later date to comply with the WARN ACT, or
(z) with respect to any Employees who are retained by Sellers to provide
services under the Transition Services Agreement, on the day of termination
of such Employees by Sellers provided, HOWEVER, that Purchasers shall not
be obligated to reimburse Sellers for any severance payments made to any
Selected Employees who are offered employment by Purchasers with
substantially equivalent compensation and benefits, in the aggregate, to
that currently being provided by Sellers to each such Selected Employee,
and at the same work location or at a work location that is not more than
fifty (50) miles from such location, and who do not accept the Purchasers'
offer of employment; PROVIDED, FURTHER, that Purchasers shall not be
obligated to reimburse Sellers for any additional severance to any
vice-presidents not required by the Severance Policy as listed on SECTION
2.07 OF THE DISCLOSURE SCHEDULES. To the extent Sellers terminate any
employees after the Closing Date but before expiration of the two-week
period following the Closing Date, Sellers shall be solely responsible for
all employment obligations (other than severance, which shall be addressed
in the manner described in this SECTION 1.06) accruing or arising with
respect to such Employees during such time. Purchasers shall not be
obligated to reimburse Sellers for any such severance payments to Employees
terminated by Sellers after the time periods specified in clauses (x)
through (z) above.
(iii) In the event that Purchasers offer any Selected Employee
employment that is not substantially equivalent in compensation and
benefits, in the aggregate, to that currently being provided by Sellers to
each such Selected Employee, or which involves a change in work location of
fifty (50) or more miles, and any such Selected Employee declines such
employment, Purchasers shall, within thirty (30) days after receipt of an
invoice from Sellers setting forth the names of such Selected Employees and
the amounts actually paid by Sellers to or on behalf of such Selected
Employees, reimburse Sellers for any severance payments Sellers actually
pay to or on behalf of such Selected Employees pursuant to the Severance
Policy.
14
(iv) Sellers hereby represent and warrant to Purchasers that the
transactions contemplated by this Agreement shall not trigger any "change
of control", as such term is defined in any employment agreement or change
of control agreement with or relating to any Employees. In the event that
any claim or demand is made in respect of which an Employee asserts against
or seeks to be collected from any of Purchasers any payments or other
benefits arising in connection with a "change of control", including,
without limitation, as a result of any court of competent jurisdiction or
other competent Governmental or Regulatory Authority determining that a
"change of control" has occurred that would trigger any payments or other
benefits, Sellers shall indemnify and hold harmless Purchasers for all
costs and expenses incurred in defending and/or paying any such claim or
demand and any Losses or Liabilities related thereto.
(v) Nothing contained in this Agreement shall confer upon any
Transferred Employee any right to continued employment by any of
Purchasers, nor shall anything herein interfere with the right of
Purchasers to terminate the employment of any Transferred Employee, with or
without cause, subject to applicable law. No provision of this Agreement
shall create any third party beneficiary rights in any Employee, or any
beneficiary or dependents thereof.
(vi) Sellers hereby waive, with respect to the solicitation of
employment or employment by Purchasers of any Selected Employee, any claims
or rights Sellers may have against Purchasers or any such Selected Employee
under any non-hire, non-solicitation, non-competition, confidentiality or
employment agreement or any cause of action based on similar rights arising
by contract, at common law or by statute or regulation. Sellers hereby
assign, to the extent legally permissible, to Purchasers all of Sellers'
rights to enforce the provisions of any non-competition agreement between
any of Sellers and any Transferred Employee and any non-hire,
non-solicitation, confidentiality, assignment of inventions or similar
agreement between such Sellers and any Transferred Employee.
(vii) During the time that this Agreement shall remain in effect and
for a period of three (3) years following the Closing Date, each of Sellers
agree that it shall take no action, formal or informal, direct or indirect,
to (A) solicit the employment of any Transferred Employees other than
through general advertising not specifically directed at such employees,
(B) hire any Transferred Employees of Purchasers, except as a result of
actions permitted by clause (A) above, or (C) solicit, entice, induce or
encourage any Transferred Employees or any other employee, consultant or
independent contractor of Purchasers to terminate his, her or its
relationship with any of Purchasers in order to become an employee of, or a
consultant or independent contractor to, a person other than Purchasers;
PROVIDED, HOWEVER, that Sellers shall not be restricted from soliciting the
employment of or hiring any Transferred Employees that have previously been
terminated by Purchasers or have terminated their employment with
Purchasers other than as a result of Sellers' violation of this SECTION
1.06(A)(VII).
(b) WARN ACT NOTICES. Sellers shall be responsible for providing any
notices required under the Worker Adjustment and Retraining Notification Act
(the "WARN ACT"), and
15
shall hold harmless and indemnify Purchasers from and against any liability or
damages resulting from Sellers' failure to comply with the WARN Act.
(c) MISCELLANEOUS EMPLOYMENT MATTERS.
(i) Subject to the other provisions of SECTIONS 1.06(A)(I), (A)(II),
(A)(III), and (C)(VI), Purchasers shall not assume any obligations to any
Selected Employee who does not become a Transferred Employee, including,
without limitation, any obligations or liabilities for any dismissal
benefits, severance or restructuring costs, other than as required under
the Severance Policy.
(ii) Except as set forth in SECTION 1.06(A)(I), (A)(II) and (A)(III),
and subject to the terms of SECTION 1.06(C)(VI), Purchasers shall not
assume any obligations to any Employee, including any Transferred Employee,
including, without limitation any wages (including salary and commissions),
vacation pay (other than as provided in SECTION 1.02(A)(III)), severance
pay, sick leave, medical, life insurance, disability and other welfare plan
expenses and benefits of any type or nature, that accrued prior to the
Closing Date.
(iii) Purchasers are not assuming any of the Benefit Plans of any of
the Sellers, and Purchasers shall have no liability whatsoever to employees
of Sellers with respect to accrued or future benefits under any such
Benefit Plans (other than as provided in SECTION 1.02(A)(III)), whether or
not any of such employees are offered employment by, or become employees
of, Purchasers, and Sellers shall defend, indemnify and hold Purchasers
harmless against any claims that they have liability under such Benefit
Plans.
(IV) [Intentionally omitted.]
(v) Prior to the Closing Date, Purchasers shall establish or designate
one or more 401(k) defined contribution plans ("PURCHASERS' 401(K) PLAN")
in which the Transferred Employees shall commence to participate on the day
after the Closing Date. Purchasers shall permit any Transferred Employee
who was covered under a 401(k) defined contribution plan of Sellers
("SELLERS' 401(K) PLAN") to elect a direct rollover of the Transferred
Employee's rollover-eligible distribution (including any outstanding
participant loan) from Sellers' 401(k) Plan to Purchasers' 401(k) Plan.
(vi) Except as expressly limited by this Agreement, Purchasers
acknowledge and assume sole and exclusive responsibility for all decisions
and actions relating to Purchasers' employment of any Employees, including,
but not limited to, any and all decisions to hire or not hire, job
assignments, compensation, and benefits. Accordingly, Purchasers agree to
indemnify and hold harmless Sellers for any and all liability(ies) arising
to Sellers from such decisions, if any, including, but not limited to,
reimbursement of Sellers' attorneys' fees for defending any claims by any
Employees relating to such decisions and actions of Purchasers, PROVIDED,
HOWEVER, that, upon acknowledging Purchasers' obligation therefor,
Purchasers shall have the right to assume control of any defense of such
claims, including without limitation the selection of legal counsel, and,
16
PROVIDED, FURTHER, that Sellers shall not make any payments to or on behalf
of any such Employees in connection with such claims, as settlement
payments or otherwise, without the express written consent of Purchasers.
1.07 THIRD-PARTY CONSENTS. To the extent that any Business Contract or
Personal Property Lease is not assignable without the consent of another party,
this Agreement shall not constitute an assignment or an attempted assignment
thereof if such assignment or attempted assignment would constitute a breach
thereof or a default thereunder. Sellers and Purchasers shall use commercially
reasonable efforts to obtain the consent of such other party to the assignment
of any such Business Contract or Personal Property Lease to Purchasers in all
cases in which such consent is required for such assignment. If any such consent
shall not be obtained, Sellers shall cooperate with Purchasers in any reasonable
arrangement designed to provide for Purchasers the benefits intended to be
assigned to Purchasers under the Business Contract or Personal Property Lease,
including enforcement at the cost and for the account of Purchasers of any and
all rights of Sellers against the other party thereto arising out of the breach
or cancellation thereof by such other party or otherwise. If and to the extent
that such arrangement cannot be made to the reasonable satisfaction of
Purchasers, (a) such Purchasers shall have the right to exclude such Business
Contract or Personal Property Lease from the Assets pursuant to SECTION 1.01,
(b) Purchasers shall have no obligation pursuant to SECTION 1.02 or otherwise
with respect to any such Business Contract or Personal Property Lease, and (c)
such Business Contract or Personal Property Lease shall be excluded from the
Pre-Closing Balance Sheet and the Closing Date Balance Sheet.
1.08 FURTHER ASSURANCES; POST-CLOSING COOPERATION. (a) At any time or from
time to time after the Closing, at Purchasers' request and without further
consideration, Sellers shall execute and deliver to Purchasers such other
instruments of sale, transfer, conveyance, assignment and confirmation, provide
such materials and information and take such other actions as Purchasers may
reasonably deem necessary or desirable in order more effectively to transfer,
convey and assign to Purchasers the Business, and to confirm Purchasers' title
to the Assets.
(b) Except with regard to matters set forth in ARTICLES IX and X, effective
on the Closing Date, Sellers hereby constitute and appoint Purchasers the true
and lawful attorney of Sellers, with full power of substitution, in the name of
Sellers or Purchasers, but on behalf of and for the benefit of Purchasers: (i)
to demand and receive from time to time any and all of the Assets and to make
endorsements and give receipts and releases for and in respect of the same and
any part thereof; (ii) to institute, prosecute, compromise and settle any and
all Actions or Proceedings that Purchasers may deem reasonably proper in order
to collect, assert or enforce any claim, right or title of any kind in or to the
Assets; (iii) to defend or compromise any or all Actions or Proceedings in
respect of any of the Assets; and (iv) to do all such acts and things in
relation to the matters set forth in the preceding clauses (i) through (iii) as
Purchasers shall deem desirable. Sellers hereby acknowledge that the appointment
hereby made and the powers hereby granted are coupled with an interest and are
not and shall not be revocable by them in any manner or for any reason. Sellers
shall deliver to Purchasers at Closing an acknowledged power of attorney to the
foregoing effect executed by Sellers. Purchasers shall indemnify and hold
harmless Sellers from any and all Losses caused by or arising out of any actions
by Purchasers in their exercise of such power of attorney.
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(c) Following the Closing, each party will afford the other party, its
counsel and its accountants, during normal business hours, reasonable access to
the books, records and other data relating to the Business in its possession
with respect to periods prior to the Closing and the right to make copies and
extracts therefrom (provided such access does not unreasonably interfere with
the business operations of each party), to the extent that such access may be
reasonably required by the requesting party in connection with (i) the
preparation of Tax Returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the requirements of any
Governmental or Regulatory Authority, (iv) the determination or enforcement of
the rights and obligations of any party to this Agreement or any of the
Operative Agreements or (v) in connection with any actual or threatened Action
or Proceeding. Further each party agrees for a period as is required by Law and
in any event for three (3) years not to destroy or otherwise dispose of any
books, records and other data relating to the Business unless such party shall
first offer in writing to surrender such books, records and other data to the
other party and such other party shall not agree in writing to take possession
thereof during the ten (10) Business Day period after such offer is made.
(d) If, in order properly to prepare its Tax Returns, other documents or
reports required to be filed with Governmental or Regulatory Authorities or its
financial statements or to fulfill its obligations hereunder, it is necessary
that a party be furnished with additional information, documents or records
relating to the Business not referred to in paragraph (c) above, and such
information, documents or records are in the possession or control of the other
party, such other party shall use its best efforts to furnish or make available
such information, documents or records (or copies thereof) at the recipient's
request, cost and expense.
(e) Notwithstanding anything to the contrary contained in this SECTION
1.08, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
paragraphs (c) or (d) of this Section shall be subject to applicable rules
relating to discovery.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby represent and warrant to Purchasers as follows:
2.01 ORGANIZATION OF SELLERS AND THE GMBH SUBSIDIARY. (a) Each Seller is
duly organized, validly existing and in good standing under the Laws of its
jurisdiction of organization, and has full power and authority to conduct the
Business as and to the extent now conducted and to own, use and lease the
Assets.
(b) The GmbH Subsidiary is a limited liability company (Gesellschaft mit
beschrankter Haftung) duly organized and validly existing under the Laws of the
Germany, and has full power and authority to conduct its business as and to the
extent now conducted and to own, use and lease its Assets and Properties.
SECTION 2.01(B)(I) OF THE DISCLOSURE SCHEDULE lists all lines of business in
which the GmbH Subsidiary is currently participating or engaged. The GmbH
Subsidiary is duly qualified and licensed or admitted to do business in those
jurisdictions
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specified in SECTION 2.01(B)(II) OF THE DISCLOSURE SCHEDULE, which are the only
jurisdictions in which the ownership, use or leasing of its Assets and
Properties, or the conduct or nature of its business, makes such qualification,
licensing or admission necessary, except for those jurisdictions in which the
adverse effects of all such failures by the GmbH Subsidiary to be so qualified,
licensed or admitted can, in the aggregate, be eliminated without material cost
or expense by becoming qualified, licensed or admitted. The name of each
Managing Director (Geschaftsfuhrer) of the GmbH Subsidiary on the date hereof,
is listed in SECTION 2.01(B)(III) OF THE DISCLOSURE SCHEDULE. Sellers have prior
to the execution of this Agreement delivered to Purchasers true and complete
copies of the "Satzung" of the GmbH Subsidiary as in effect on the date hereof.
2.02 AUTHORITY. Each Seller has full power and authority to execute and
deliver this Agreement and the Operative Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby, including without limitation to
sell and transfer (pursuant to this Agreement) the Assets. The execution and
delivery by each Seller of this Agreement and the Operative Agreements to which
it is a party, and the performance by such Seller of its obligations hereunder
and thereunder, have been duly and validly authorized by the Board of Directors
of such Seller, if applicable, and otherwise, in accordance with applicable Law,
no other action on the part of such Seller or its stockholders or partners being
necessary. This Agreement and the Operative Agreements have been duly and
validly executed and delivered by each Seller and constitutes, and upon the
execution and delivery by such Seller of the Operative Agreements to which it is
a party, such Operative Agreements will constitute, legal, valid and binding
obligations of each Seller enforceable against such Seller in accordance with
their terms.
2.03 NO CONFLICTS. The execution and delivery by each Seller of this
Agreement do not, and the execution and delivery by each Seller of the Operative
Agreements to which it is a party, the performance by such Seller of its
obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the articles of incorporation or code of
regulations (or other comparable corporate charter documents) of any Seller
and the GmbH Subsidiary;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in SECTION 2.04 OF THE
DISCLOSURE SCHEDULE, conflict with or result in a violation or breach of
any term or provision of any Law or Order applicable to any Seller or the
GmbH Subsidiary with respect to the Business or to the Assets; or
(c) except as disclosed in SECTION 2.03 OF THE DISCLOSURE SCHEDULE or
other than any customer contracts, purchase orders, sales orders and any
non-disclosure agreements, (i) conflict with or result in a violation or
breach of, (ii) constitute (with or without notice or lapse of time or
both) a default under, (iii) require any Seller or the GmbH Subsidiary to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv) result in
the creation or imposition of any Lien upon any Seller or
19
the GmbH Subsidiary or any of the Assets under, any Contract by which any
Seller or the GmbH Subsidiary, or any of the Assets, is bound.
2.04 GOVERNMENTAL APPROVALS AND FILINGS. Except as disclosed in SECTION
2.04 OF THE DISCLOSURE SCHEDULE and for such filings, if any, required with (i)
the United States Federal Trade Commission (the "FTC") and the Department of
Justice (the "DOJ") pursuant to the HSR Act, (ii) the German Federal Cartel
Office (the "Cartel Office") pursuant to the Gesetz gegen
Wettbewerbsbeschrankungen, (the "GWB") and the Taiwanese Investment Commission
(the "TIC") (iii) Taiwanese Stock Exchange (the "TSE") pursuant to applicable
Taiwanese law, and (iv) the Canadian Competition Bureau (the "COMPETITION
BUREAU") pursuant to the Competition Act of Canada (the "COMPETITION ACT") no
consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority on the part of any Seller or, prior to the Closing Date,
the GmbH Subsidiary is required in connection with the execution, delivery and
performance of this Agreement or any of the Operative Agreements to which it is
a party or the consummation of the transactions contemplated hereby or thereby.
2.05 BOOKS AND RECORDS. (a) Except as set forth in SECTION 2.05 OF THE
DISCLOSURE Schedule, none of the Business Books and Records is recorded, stored,
maintained, operated or otherwise wholly or partly dependent upon or held by any
means (including any electronic, mechanical or photographic process, whether
computerized or not) which (including all means of access thereto and therefrom)
are not under the exclusive ownership and direct control of one or more of
Sellers.
(b) The minute books and other similar records of the GmbH Subsidiary as
made available to Purchasers prior to the execution of this Agreement contain a
true and complete record, in all material respects, of all action taken at all
meetings and by all written consents in lieu of meetings of the stockholders of
the GmbH Subsidiary. Prior to the execution of this Agreement, no transfers of
shares in the GmbH Subsidiary have occurred. The Books and Records of the GmbH
Subsidiary are under the exclusive ownership and direct control of the GmbH
subsidiary.
2.06 FINANCIAL STATEMENTS. Prior to the execution of this Agreement,
Sellers have delivered to Purchasers true and complete copies of the following
financial statements (the financial statements set forth in subparagraphs (a)
and (b) below, collectively, the FINANCIAL STATEMENTS"):
(a) the unaudited balance sheets of the Business as of March 31, 2001
and March 31, 2002, and the unaudited statements of income of the Business
for each of the fiscal years ended as of March 31, 2001 and March 31, 2002;
and
(b) the unaudited balance sheets of the Business as of June 30, 2002
and September 30, 2002, and the related unaudited statements of income of
the Business for the portion of the fiscal year then ended.
Except as set forth in the notes thereto and as disclosed in SECTION 2.06 OF THE
DISCLOSURE SCHEDULE, all such Financial Statements (i) were prepared in
accordance with GAAP as in effect
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from time to time, (ii) fairly present the financial condition and results of
operations of the Business as of the respective dates thereof and for the
respective periods covered thereby, and (iii) were compiled from Business Books
and Records regularly maintained by management and used to prepare the financial
statements of Sellers in accordance with the principles stated therein. With
respect to the statements of income contained in the Financial Statements set
forth in subparagraph (b) above, such statements of earnings do not contain any
extraordinary or non-recurring income or any other income not earned in the
ordinary and customary course of the Business, except as set forth therein.
Sellers have maintained the Business Books and Records in a manner sufficient to
permit the preparation of financial statements in accordance with GAAP as in
effect from time to time.
2.07 ABSENCE OF CHANGES. Except for the execution, delivery and disclosure
of this Agreement and the transactions to take place pursuant hereto on or prior
to the Closing Date, since September 30, 2002 (a) Sellers and the GmbH
Subsidiary have conducted the Business only in the ordinary course and
consistent with their past practice or as otherwise permitted by SECTION 4.05
hereof and (b) except as disclosed in SECTION 2.07 OF THE DISCLOSURE SCHEDULE,
there has not occurred any Special Closing Condition-Material Adverse Effect, or
any event or development which, individually or together with other such events,
could reasonably be expected to result in a Special Closing Condition-Material
Adverse Effect. Without limiting the foregoing, except as disclosed in SECTION
2.07 OF THE DISCLOSURE SCHEDULE or as otherwise permitted by SECTION 4.05
hereof, there has not occurred, between September 30, 2002 and the date hereof,
any of the following:
(i) (x) any increase in the salary, wages or other compensation of any
Employee whose annual salary is, or after giving effect to such change
would be, $25,000 or more; (y) any establishment or modification of (A)
targets, goals, pools or similar provisions in respect of any fiscal year
under any Benefit Plan or any employment-related Contract or other
compensation arrangement with or for Employees or (B) salary ranges,
increase guidelines or similar provisions in respect of any Benefit Plan or
any employment-related Contract or other compensation arrangement with or
for Employees; or (z) any adoption, entering into or becoming bound by any
Benefit Plan, employment-related Contract or collective bargaining
agreement, or amendment, modification or termination (partial or complete)
of any Benefit Plan, employment-related Contract or collective bargaining
agreement, except to the extent required by applicable Law and, in the
event compliance with legal requirements presented options, only to the
extent the option which Sellers or the GmbH Subsidiary reasonably believed
to be the least costly was chosen;
(ii) any physical damage, destruction or other casualty loss affecting
(A) the Real Property Lease relating to the property located in Solon,
Ohio, or (B) the Inventory, in an aggregate amount exceeding $250,000;
(iii) any material change in (A) any investment, accounting, financial
reporting, inventory, credit, allowance or Tax practice or policy of the
Business or (B) any method of calculating any bad debt, inventory,
contingency or other reserve of the Business for accounting, financial
reporting or Tax purposes;
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(iv) (A) any acquisition or disposition of any Assets, other than
Inventory and Tangible Personal Property in the ordinary course of business
consistent with past practice; or (B) any creation or incurrence of a Lien,
other than a Permitted Lien, on the Business or any of the Assets;
(v) entering into, amending, modifying, terminating (partial or
complete) or granting of a waiver under or giving any consent with respect
to any Contract which is required (or had it been in effect on the date
hereof would have been required) to be disclosed in the SECTION 2.16(A) OF
THE DISCLOSURE SCHEDULE;
(vi) any transaction in connection with the Business with any officer,
director or Affiliate of Sellers or the GmbH Subsidiary (A) outside the
ordinary course of business consistent with past practice or (B) other than
on an arm's-length basis and not covered in (i) above;
(vii) any entering into of a Contract to do or engage in any of the
foregoing after the date hereof; or
(viii) any other transaction involving or development affecting the
Business or the Assets outside the ordinary course of business consistent
with past practice, which individually or in the aggregate exceeds
$250,000.
2.08 NO UNDISCLOSED LIABILITIES. On the date of the execution of this
Agreement, except as reflected or reserved against in the September Balance
Sheet or as disclosed in SECTION 2.08 OF THE DISCLOSURE SCHEDULE, there are no
Liabilities against, relating to or affecting the Business or any of the Assets,
other than Liabilities since September 30, 2002 (i) incurred in the ordinary
course of business consistent with past practice or (ii) which, individually or
in the aggregate, are not material to the Condition of the Business. On the
Closing Date, there are no Liabilities, contingent or otherwise, of the Business
which are, in accordance with SECTION 1.04(C), required to be reserved against
or disclosed on the Pre-Closing Balance Sheet which are not so reserved or
disclosed.
2.09 TAXES. (a) TAX RETURN FILINGS. Each Seller has filed all Tax Returns,
as applicable, relating to the Business and the Assets and the GmbH Subsidiary
required to be filed by applicable Law. All such Tax Returns were true, complete
and correct in all material respects and filed on a timely basis. Each Seller
has paid all Taxes that are due, or claimed or asserted in writing to such
Seller by any taxing authority to be due, from such Seller for the periods
covered by such Tax Returns. The GmbH Subsidiary has timely filed all Tax
Returns required to be filed by applicable Law, and all such returns were true,
complete and correct. The GmbH Subsidiary has paid all Taxes that are due or
claimed or asserted in writing to the GmbH Subsidiary by any taxing authority to
be due, from the GmbH Subsidiary for the periods covered by such Tax Returns.
Pioneer Canada has withheld from each payment made to any of its past or present
employees, officers or directors, and to any non-resident of Canada, the amount
of all taxes and other deductions required to be withheld therefrom, and has
paid the same to the proper Governmental or Regulatory Authority within the time
required under any applicable Laws. Pioneer Canada has remitted to the
appropriate Governmental or Regulatory Authority, when
22
required by law to do so, all amounts collected by it on account of federal
goods and services tax ("GST") and applicable provincial sales taxes.
(b) TAX LIENS. Except for Permitted Liens, there are no Liens for Taxes
upon the Business, any of the Assets or any of the assets of the GmbH
Subsidiary.
(c) AUDIT, ADMINISTRATIVE AND COURT PROCEEDINGS. No audits or other
administrative proceedings or court proceedings are presently pending with
regard to any Taxes or Tax Returns relating to the Business, any of the Assets
or any of the assets of the GmbH Subsidiary.
(d) AVAILABILITY OF TAX RETURNS. Sellers have made available to Purchasers
a complete and accurate copy of the Return of Taxable Business Property for the
accounting period April, 1, 2000 to March 31, 2001, filed with Cuyahoga County,
Ohio.
(e) GST/HSTREGISTRATION. Pioneer Canada is duly registered under the Excise
Tax Act (Canada) with respect to the GST and Harmonized Sales Tax and its
registration number is 13831 7615 RT0001.
(f) RESIDENCE. Pioneer Canada is not a non-resident of Canada within the
meaning of the Income Tax Act (Canada).
2.10 LEGAL PROCEEDINGS. Except as disclosed in SECTION 2.10 OF THE
DISCLOSURE SCHEDULE (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings pending or, to the Knowledge of
Sellers, threatened against, relating to or affecting any Seller or the GmbH
Subsidiary with respect to the Business or any of the Assets which (i) could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements or otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to Purchasers,
or (ii) if determined adversely to Sellers or the GmbH Subsidiary, could
reasonably be expected to result in a Material Adverse Effect;
(b) there are no facts or circumstances Known to Sellers that could
reasonably be expected to give rise to any Action or Proceeding that would be
required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against Sellers or the GmbH Subsidiary
with respect to the Business. There are no responses of counsel to auditors'
requests for information delivered in connection with Sellers' most recently
prepared audited financial statements (together with any updates provided by
such counsel) relating to the Action listed on SECTION 1.02(B)(IV) OF THE
DISCLOSURE SCHEDULE.
2.11 COMPLIANCE WITH LAWS AND ORDERS. Except as disclosed in SECTION 2.11
OF THE DISCLOSURE SCHEDULE, no Seller or GmbH Subsidiary is, or has at any time
within the last
23
five (5) years been, or has received any notice that it is or has at any time
within the last five (5) years been, in violation of or in default under, in any
material respect, any Law or Order applicable to the Business or the Assets
which violation or default would have a Material Adverse Effect.
2.12 BENEFIT PLANS
(a) SECTION 2.12(A) OF THE DISCLOSURE SCHEDULE contains a true and complete
list and description of each of the Benefit Plans (including the Severance
Policy), including any funding mechanism therefor now in effect or required in
the future as a result of the transaction contemplated by this Agreement or
otherwise. None of Sellers or the GmbH Subsidiary has scheduled or agreed upon
future increases of benefit levels (or creations of new benefits) with respect
to any Benefit Plan, and no such increases or creation of benefits have been
proposed, made the subject of representations to Employees or requested or
demanded by Employees under circumstances which make it reasonable to expect
that such increases will be granted. The GmbH Subsidiary has no Benefit Plans
and except as set forth in SECTION 2.12(A) OF THE DISCLOSURE SCHEDULES, Pioneer
Canada has no pension or other retirement plans.
(b) None of the Benefit Plans are subject to Title IV of ERISA and neither
Pioneer nor any member of its "Controlled Group" (defined as any organization
which is a member of a controlled group of organizations within the meaning of
Code sections 414(b), (c), (m) or (o)) has incurred any liability under Title IV
of ERISA; and no event has occurred and no condition exists that would subject
the Business, either directly or by reason of their affiliation with any member
of their "Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Code sections 414(b),
(c), (m) or (o)), to any material tax, fine, lien, penalty or other liability
imposed by ERISA, the Code or other applicable laws, rules and regulations with
respect to any Benefit Plans.
(c) SECTION 2.12(C) OF THE DISCLOSURE SCHEDULE sets forth, on a plan by
plan basis, the present value of benefits payable presently or in the future to
any Employee participating in each unfunded Benefit Plan.
(d) Except as disclosed in SECTION 2.12(D) OF THE DISCLOSURE SCHEDULE, no
payment or benefit under any Benefit Plan, including, without limitation, any
severance or parachute payment plan or agreement, will be established or become
accelerated, vested, funded or payable by reason of any transaction contemplated
under this Agreement.
2.13 REAL PROPERTY LEASES.
(a) Each applicable Seller has a valid and subsisting leasehold estate in
and the right to quiet enjoyment of the sites or facilities subject to the Real
Property Leases for the full term thereof. Each of the Real Property Leases is a
legal, valid and binding agreement, enforceable in accordance with its terms, of
the applicable Seller and to the best of Sellers' Knowledge, of each other
Person that is a party thereto, and except as set forth in SECTION 2.13(A) OF
THE DISCLOSURE SCHEDULE, to the best of Sellers' Knowledge, there is no, nor has
any applicable Seller or the GmbH Subsidiary received any notice of any, default
(or any condition or event
24
which, after notice or lapse of time or both, would constitute a default)
thereunder. Neither of the applicable Sellers nor the GmbH Subsidiary owes any
brokerage commissions with respect to any such leased space.
(b) Each applicable Seller has delivered to the applicable Purchaser prior
to the execution of this Agreement true and complete copies of all Real Property
Leases and similar documents, and all amendments and renewal letters thereof,
with respect to the Real Property Leases.
(c) To Sellers' Knowledge, except as disclosed in SECTION 2.13(C) OF THE
DISCLOSURE SCHEDULE, the facilities, fixtures and other leasehold improvements
with respect to the Real Property Leases are in good operating condition and in
a state of good maintenance and repair, ordinary wear and tear excepted, are
adequate and suitable for the purposes for which they are presently being used.
(d) Except as disclosed in SECTION 2.13(D) OF THE DISCLOSURE SCHEDULE, no
tenant or other party is in possession of any of the sites or facilities subject
to the Real Property Leases.
2.14 WPI SHARES AND GMBH SHARES.
(a) Except as disclosed in SECTION 2.14 OF THE DISCLOSURE SCHEDULE, the WPI
Shares are owned by Pioneer free and clear of all Liens and there are no
shareholder agreements and/or other restrictions on the ability of Pioneer to
sell or Arrow to purchase the WPI Shares. Except as disclosed in SECTION 2.14 OF
THE DISCLOSURE SCHEDULE, upon the completion of the transactions contemplated by
this Agreement, Arrow will acquire, subject to receipt of the WPI Necessary
Approvals prior to the WPI Drop Dead Date and payment of the WPI Shares Purchase
Price, good and valid title to the WPI Shares, free and clear of all Liens, and
there shall be no restrictions on the ability of Arrow to sell or otherwise
transfer such WPI Shares.
(b) The authorized capital stock of the GmbH Subsidiary consists solely of
the GmbH Shares. The GmbH Shares are duly authorized, validly issued,
outstanding, and fully paid. Pioneer owns the GmbH Shares, as legal and
beneficial holder, free and clear of all Liens. There are no outstanding Options
with respect to the GmbH Shares. Except as disclosed in SECTION 2.14 OF THE
DISCLOSURE SCHEDULE, upon the completion of the transactions contemplated by
this Agreement, Arrow Europe will acquire, subject to receipt of the necessary
approvals from the Cartel Office prior to the Drop Dead Date and payment of the
GmbH Purchase Price, good and valid title to the GmbH Shares, free and clear of
all Liens, and there shall be no restrictions on the ability of Arrow Europe to
sell or otherwise transfer such GmbH Shares.
2.15 INTELLECTUAL PROPERTY RIGHTS. Except as disclosed in SECTION 2.15 OF
THE DISCLOSURE SCHEDULE, (i) Sellers own the Intangible Personal Property free
and clear of all Liens, (ii) Sellers have the exclusive right to use the
Intangible Personal Property, (iii) there are no restrictions on the direct or
indirect transfer of such Intangible Personal Property, (iv) Sellers have
delivered to Purchasers prior to the execution of this Agreement documentation
with respect to any invention, process, design, computer program or other
know-how or trade secret
25
included in such Intangible Personal Property, which documentation is accurate
in all material respects and reasonably sufficient in detail and content to
identify and explain such invention, process, design, computer program or other
know-how or trade secret and to facilitate its full and proper use without
reliance on the special knowledge or memory of any Person, (v) Sellers have
taken reasonable security measures to protect the secrecy, confidentiality and
value of the Intangible Personal Property, (vi) to the Knowledge of Sellers,
Sellers' use of the Intangible Personal Property do not infringe on any
Intellectual Property rights of any other Person, and (vii) to the Knowledge of
Sellers, the Intangible Personal Property is not being infringed by any other
Person. Except for the need to access and use (i) Adonix order management
software, (ii) Oracle financials software, (iii) certain "shrink-wrap" software
applications, (iv) the Intangible Personal Property and (v) the Siebel
Assignment, no other Intellectual Property is necessary to operate the Power and
Signal line of business in substantially the same manner as it is presently
being operated.
2.16 CONTRACTS. (a) SECTION 2.16(A) OF THE DISCLOSURE SCHEDULE (with
paragraph references corresponding to those set forth below) contains a true and
complete list of each of the following Contracts or other arrangements (true and
complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to Purchasers prior to the
execution of this Agreement) to which any Seller or the GmbH Subsidiary is a
party in connection with the Business or by which any of the Assets is bound:
(i) other than Contracts provided in SECTION 2.19, (A) all Contracts
(excluding Benefit Plans) providing for a commitment of employment or
consultation services for a specified or unspecified term to, or otherwise
relating to employment or the termination of employment of, any Employee,
the name, position and rate of compensation of each Employee party to such
a Contract and the expiration date of each such Contract; and (B) any
written or unwritten representations, commitments, promises, communications
or courses of conduct (excluding Benefit Plans and any such Contracts
referred to in clause (A)) involving an obligation of any Seller or the
GmbH Subsidiary to make payments in any year, other than with respect to
salary or incentive compensation payments in the ordinary course of
business, to any Employee;
(ii) all partnership, joint venture, or shareholders' Contracts with
any Person in connection with the Business, including any Contracts with
respect to the WPI Shares;
(iii) all Contracts relating to the future disposition or acquisition
of any Assets, other than dispositions or acquisitions of Inventory and
Tangible Personal Property in the ordinary course of business consistent
with past practice;
(iv) all collective bargaining or similar labor Contracts covering any
Employee; and
(v) all other Contracts (other than Benefit Plans and Real Property
Leases) with respect to the Business including Contracts with distributors,
dealers, manufacturer's representatives, sales agencies or franchises with
whom any Seller deals in connection
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with the Business, other than customer contracts, purchase orders, sales
orders and any nondisclosure agreements, that (A) involve the payment or
potential payment, pursuant to the terms of any such Contract, by or to any
Seller or the GmbH Subsidiary of more than $250,000 annually and (B) cannot
be terminated within ninety (90) days after giving notice of termination
without resulting in any material cost or penalty to any Seller.
(b) Each Contract required to be disclosed in SECTION 2.16(A) OF THE
DISCLOSURE SCHEDULE is in full force and effect and constitutes a legal, valid
and binding agreement, enforceable in accordance with its terms, of each party
thereto; and except as disclosed in SECTION 2.16(B) OF THE DISCLOSURE SCHEDULE
none of Sellers or the GmbH Subsidiary, nor, to the Knowledge of Sellers, any
other party to such Contract is, or has received notice that it is, in violation
or breach of or default under any such Contract (or with notice or lapse of time
or both, would be in violation or breach of or default under any such Contract)
in any material respect.
(c) Except as disclosed in SECTION 2.16(C) OF THE DISCLOSURE SCHEDULE, the
execution, delivery and performance by any Seller of this Agreement and the
Operative Agreements to which it is a party, and the consummation of the
transactions contemplated hereby and thereby, will not (A) result in or give to
any Person any right of termination, cancellation, acceleration or modification
in or with respect to, or (B) result in or give to any Person any additional
rights or entitlement to increased, additional, accelerated or guaranteed
payments, under any Contract required to be disclosed in SECTION 2.16(A) OF THE
DISCLOSURE SCHEDULE.
2.17 TANGIBLE PERSONAL PROPERTY. Sellers or the GmbH Subsidiary are in
possession of and have good title to, or have valid leasehold interests in or
valid rights under Contract to use, all the Tangible Personal Property, which is
included in the tangible personal property reflected in the September Balance
Sheet and tangible personal property acquired since September 30, 2002 other
than tangible personal property disposed of since such date in the ordinary
course of business consistent with past practice. All the Tangible Personal
Property is free and clear of all Liens, other than Permitted Liens and Liens
disclosed in SECTION 2.17 OF THE DISCLOSURE SCHEDULE, and, to the Knowledge of
Sellers, is in good working order and condition, ordinary wear and tear
excepted, and its use complies in all material respects with all applicable
Laws.
2.18 AFFILIATE TRANSACTIONS. Except as disclosed in SECTION 2.18(A) OF THE
DISCLOSURE SCHEDULE, (i) no officer, director or Affiliate of Sellers or the
GmbH Subsidiary provides or causes to be provided any assets, services or
facilities used or held for use in connection with the Business, and (ii) the
Business does not provide or cause to be provided any assets, services or
facilities to any such officer, director or Affiliate. Except as disclosed in
SECTION 2.18(B) OF THE DISCLOSURE SCHEDULE, each of the transactions listed in
SECTION 2.18(A) OF THE DISCLOSURE SCHEDULE is engaged in on an arm's-length
basis.
2.19 EMPLOYEES; LABOR RELATIONS.
(a) SECTION 2.19 OF THE DISCLOSURE SCHEDULE contains a list of the name of
each Employee at the date hereof, together with such Employee's position or
function, annual base
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salary or wages and any incentive or bonus arrangement with respect to such
Employee in effect on such date.
(b) Except as disclosed in SECTION 2.19 OF THE DISCLOSURE SCHEDULE, (i) no
Employee is presently a member of a collective bargaining unit and, to the
Knowledge of Sellers, there are no threatened or contemplated attempts to
organize for collective bargaining purposes any of the Employees, and (ii) no
unfair labor practice complaint or sex, age, race or other discrimination claim
has been brought during the last three (3) years against any Seller or the GmbH
Subsidiary with respect to the conduct of the Business before the National Labor
Relations Board, the Equal Employment Opportunity Commission or any other
Governmental or Regulatory Authority.
(c) There has been no work stoppage, strike or other concerted action by
employees of any Seller or the GmbH Subsidiary engaged in the Business in the
last three (3) years. During that period, each Seller has complied in all
material respects with all applicable Laws relating to the employment of labor,
including, without limitation those relating to wages, hours and collective
bargaining.
2.20 ENVIRONMENTAL MATTERS. Each Seller and the GmbH Subsidiary has
obtained all material Licenses which are required under applicable Environmental
Laws in connection with the conduct of the Business or the construction,
operation or ownership of the Assets. Each of such Licenses is in full force and
effect. Each Seller and the GmbH Subsidiary has conducted the Business in
compliance in all material respects with the terms and conditions of all such
Licenses and with any applicable Environmental Law. In addition, except as set
forth in SECTION 2.20 OF THE DISCLOSURE SCHEDULE (with paragraph references
corresponding to those set forth below):
(a) No Order has been issued, no Environmental Claim has been filed, no
penalty has been assessed and no investigation or review is pending or, to the
Knowledge of Sellers, threatened by any Governmental or Regulatory Authority
with respect to any alleged failure by any Seller or the GmbH Subsidiary to
comply with, or any liability under, applicable Environmental Laws, and to the
Knowledge of Sellers there are no facts or circumstances in existence which
could reasonably be expected to form the basis for any such Order, Environmental
Claim, penalty or investigation which could be reasonably expected to result in
a Material Adverse Effect.
(b) To the best of Sellers' Knowledge, none of the sites or facilities
subject to the Real Property Leases contains or includes any of the following:
(i) polychlorinated biphenyls, (ii) asbestos or asbestos-containing material,
and (iii) underground storage tanks.
(c) No oral or written notification of a Release of a Hazardous Material in
connection with the operation of the Business has been, or was required to be,
filed by or on behalf of any Seller, and to the best of Sellers' Knowledge the
sites or facilities subject to the Real Property Leases are not listed or
proposed for listing on the NPL, CERCLIS or any similar state or local list of
sites requiring investigation or clean-up.
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(d) To the Knowledge of Sellers, no Liens have arisen under or pursuant to
any Environmental Law on the sites or facilities subject to the Real Property
Leases, and no federal, state or local Governmental or Regulatory Authority
action has been taken or, to the Knowledge of Sellers, is in process that could
subject such sites or facilities to such Liens.
2.21 SUBSTANTIAL CUSTOMERS AND SUPPLIERS. SECTION 2.21(A) of the Disclosure
Schedule lists the one hundred (100) largest customers of the Business and the
Retained Intel Volume Business, on the basis of revenues for goods sold or
services provided by Sellers for their fiscal year ending March 31, 2002 ("FY
02"). SECTION 2.21(B) of the Disclosure Schedule lists the (25) largest
suppliers for the Business, on the basis of cost of goods or services purchased
by Sellers for FY 02. SECTION 2.21(C) OF THE DISCLOSURE SCHEDULE lists the
following: (a) Seller's Power and Signal top seventy (70) customers on the basis
of revenues showing comparisons of FY 02 versus Sellers' fiscal year beginning
April 1, 2002 ("FY 03") and FY 03 versus FY 02 for the period April 1 through
January 8 for each respective year; (b) Sellers' industrial electronics top one
hundred and fifty (150) customers on the basis of revenues showing comparisons
of FY 02 versus FY 03 and FY 03 versus FY 02 for the period April 1 through
December 31 for each respective year; (c) Sellers' industrial electronics top
eight (80) suppliers on the basis of cost of goods purchased showing comparisons
of FY 02 versus FY 03 and FY 03 versus FY 02 for the same period as stated in
(b); (d) Sellers' Power and Signal top two (2) suppliers on the basis of cost of
goods sold showing a comparison of FY 03 versus FY 02 for the same period as
stated in (a); and (e) a list of customers or suppliers to the Knowledge of
Sellers, as of the date of the execution of this Agreement, that have threatened
to cease or materially reduce purchases, use, sales or provision of services, as
applicable after the date hereof. The information provided in SECTIONS 2.21(A)
THROUGH (D) OF THE DISCLOSURE SCHEDULE, as of the date of this Agreement, is
true and correct in all material respects. Except as disclosed in SECTION
2.21(D) OF THE DISCLOSURE SCHEDULE, to the Knowledge of Sellers, as of the date
of the execution of this Agreement, no such customer or supplier is threatened
with bankruptcy or insolvency.
2.22 ACCOUNTS RECEIVABLE. Except as set forth in SECTION 2.22 OF THE
DISCLOSURE SCHEDULE, the Accounts Receivable (i) arose from bona fide sales
transactions in the ordinary course of business and are payable on ordinary
trade terms, (ii) are legal, valid and binding obligations of the respective
debtors enforceable in accordance with their terms, (iii) are not subject to any
valid set-off or counterclaim, (iv) do not represent obligations for goods sold
on consignment, on approval or on a sale-or-return basis or subject to any other
repurchase or return arrangement, (v) are collectible in the ordinary course of
business consistent with past practice in the aggregate recorded amounts
thereof, net of any applicable reserve reflected on the Pre-Closing Balance
Sheet and the Closing Date Balance Sheet, and (vi) are not the subject of any
Actions or Proceedings brought by or on behalf of any Seller or the GmbH
Subsidiary. SECTION 2.22 OF THE DISCLOSURE Schedule sets forth a description of
any security arrangements and collateral securing the repayment or other
satisfaction of the Accounts Receivable (the "SECURITY AGREEMENTS"). All steps
necessary to render all such security arrangements legal, valid, binding and
enforceable, and to give and maintain for Sellers or the GmbH Subsidiary a
perfected security interest in the related collateral, have been taken. Sellers
and the GmbH Subsidiary have each provided adequate reserves for Accounts
Receivable in accordance with GAAP.
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2.23 INVENTORY. Except as set forth in SECTION 2.23(A) OF THE DISCLOSURE
SCHEDULE, none of the Inventory was purchased from a source other than the
manufacturer thereof or a distributor duly licensed or franchised to distribute
such items by such manufacturer and, except for Inventory purchased for customer
specific requirements (so long as such Inventory is subject to a contract for
the purchase thereof by such customer), all such items of Inventory meet the
requirements for return to the manufacturer under the applicable franchise
agreement other than as a result of quantity limitations with respect to such
return rights. All the Inventory is good and merchantable and consists of a
quality and quantity usable and salable in the ordinary course of business
consistent with past practice, net of any applicable reserve reflected on the
Pre-Closing Balance Sheet and the Closing Date Balance Sheet. Except as set
forth on SECTION 2.23(B) OF THE DISCLOSURE SCHEDULE, all items included in the
Inventory are the property of Sellers or the GmbH Subsidiary, free and clear of
any Lien other than Permitted Liens, have not been pledged as collateral, are
not held by Sellers or the GmbH Subsidiary on consignment from others and
conform in all material respects to all standards applicable to such inventory
or its use or sale imposed by Governmental or Regulatory Authorities. Except as
set forth on SECTION 2.23(C) OF THE DISCLOSURE SCHEDULE, none of the Sellers or
the GmbH Subsidiary have sold any inventory of the Business, which the purchaser
thereof has the right to return to Sellers or the GmbH Subsidiary or cause the
seller thereof to repurchase for any reason except (i) pursuant to the standard
product warranties of Sellers or the GmbH Subsidiary for product quality or
mistake in shipment or implied warranties at law for title against infringement
and (ii) to the extent the same will be reflected in reserves on the Closing
Date Balance Sheet.
2.24 PRODUCT WARRANTIES. (a) Attached hereto as SECTION 2.24(A) OF THE
DISCLOSURE Schedule are copies of Sellers' and the GmbH Subsidiary's standard
terms and conditions for products of the Business sold by Sellers or the GmbH
Subsidiary prior to the Closing Date. Except as set forth on SECTION 2.24(B) OF
THE DISCLOSURE SCHEDULE, none of Sellers or the GmbH Subsidiary have made any
other written warranties relating to the products of the Business that would
materially increase the warranty obligations of the Business taken as a whole.
(b) There are no pending claims against Sellers or the GmbH Subsidiary with
respect to the Business on account of product warranties or with respect to the
sale by Sellers or the GmbH Subsidiary of defective or inferior products that
would have a Material Adverse Effect.
2.25 NO GUARANTEES. Except as set forth in SECTION 2.25 OF THE DISCLOSURE
SCHEDULES, none of the Assumed Liabilities is guaranteed by or subject to a
similar contingent obligation of any other Person, nor have Sellers guaranteed
or become subject to a similar contingent obligation in respect of the
Liabilities of any customer, supplier or other Person to whom Sellers sell goods
or provide services in the conduct of the Business or with whom Sellers
otherwise have significant business relationships in the conduct of the
Business.
2.26 DELPHI. (a) The Distributor Supply Agreement dated September 1, 1999
(the "DISTRIBUTOR SUPPLY AGREEMENT") between Delphi Packard Electric Systems, a
division of Delphi Automotive Systems LLC, a Delaware limited liability company
("DELPHI PACKARD ELECTRIC"), and Pioneer, the Distributor Supply Agreement
effective June 15, 2001 Addendum (the
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"DISTRIBUTOR SUPPLY AGREEMENT ADDENDUM") between Delphi Packard Electric,
Pioneer and Delphi Connections Systems, a division of Delphi Packard Electric
("DELPHI CONNECTIONS") and the Delphi Europe Product Distribution Agreement
dated December 6, 2000 (the "EUROPEAN AGREEMENT") between Delphi Automotive
Systems Deutschland GmbH, a German limited liability company ("DELPHI EUROPE"),
and both Pioneer and the GmbH Subsidiary represent the only agreements between
any of Pioneer, the GmbH Subsidiary, Delphi Packard Electric, Delphi Europe or
Delphi Connections regarding distribution services relating to the Delphi line
of products, except for (i) agreements, contracts and other instruments entered
into in the ordinary course of business pursuant to such agreements, and (ii)
the draft Distributor Supply Agreement dated January 1, 2003 between Delphi
Packard Electric and Pioneer, amending or superceding the Distributor Supply
Agreement, a complete and accurate copy of which has been provided to
Purchasers.
(b) The Distributor Supply Agreement, the Distributor Supply Agreement
Addendum and the European Agreement are in full force and effect and no party
has delivered to any other party notice of default under either agreement and to
the best of Sellers' knowledge, no default exists under either agreement.
2.27 BROKERS. Except for JPMorgan Chase & Co., whose fees, commissions and
expenses are the sole responsibility of Sellers, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Sellers directly with Purchasers without the intervention of any Person on
behalf of Sellers in such manner as to give rise to any valid claim by any
Person against Purchasers for a finder's fee, brokerage commission or similar
payment.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASERS
Purchasers hereby represent and warrant to Sellers as follows:
3.01 ORGANIZATION. Each Purchaser is duly organized, validly existing and
in good standing under the Laws of its jurisdiction of organization. Each
Purchaser has full power and authority to enter into this Agreement and the
Operative Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.
3.02 AUTHORITY. The execution and delivery by each Purchaser of this
Agreement and the Operative Agreements to which it is a party, and the
performance by each Purchaser of its obligations hereunder and thereunder, have
been duly and validly authorized by the Board of Directors of such Purchaser, if
applicable, and otherwise, in accordance with applicable Law, no other action on
the part of such Purchaser or its stockholders being necessary. This Agreement
has been duly and validly executed and delivered by each Purchaser and
constitutes, and upon the execution and delivery by each Purchaser of the
Operative Agreements to which it is a party, such Operative Agreements will
constitute, legal, valid and binding obligations of such Purchaser enforceable
against such Purchaser in accordance with their terms.
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3.03 NO CONFLICTS. The execution and delivery by each Purchaser of this
Agreement do not, and the execution and delivery by each Purchaser of the
Operative Agreements to which it is a party, the performance by such Purchaser
of its obligations under this Agreement and such Operative Agreements and the
consummation of the transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the terms,
conditions or provisions of the certificate of incorporation or by-laws (or
other comparable corporate charter document) of any Purchaser;
(b) subject to obtaining the consents, approvals and actions, making the
filings and giving the notices set forth in SECTION 3.04, conflict with or
result in a violation or breach of any term or provision of any Law or Order
applicable to any Purchaser or any of its Assets and Properties; or
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require any Purchaser to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of any Contract by which any Purchaser is bound.
3.04 GOVERNMENTAL APPROVALS AND FILINGS. Except for such filing, if any,
required with (i) the FTC and the DOJ pursuant to the HSR Act, (ii) the Cartel
Office pursuant to the GWB, (iii) the TIC and TSE pursuant to applicable
Taiwanese Law and (iv) the Competition Bureau pursuant ot the Competition Act,
no consent, approval or action of, filing with or notice to any Governmental or
Regulatory Authority on the part of any Purchaser is required in connection with
the execution, delivery and performance of this Agreement or the Operative
Agreements to which it is a party or the consummation of the transactions
contemplated hereby or thereby.
3.05 LEGAL PROCEEDINGS. There are no Actions or Proceedings pending or, to
the knowledge of Purchasers, threatened against, relating to or affecting
Purchasers or any of their Assets and Properties which could reasonably be
expected to result in the issuance of an Order restraining, enjoining or
otherwise prohibiting or making illegal the consummation of any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
3.06 BROKERS. Except for Xxxxxxx Xxxxx & Co., whose fees, commissions and
expenses are the sole responsibility of Purchasers, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Purchasers directly with Sellers without the intervention of any Person on
behalf of Purchasers in such manner as to give rise to any valid claim by any
Person against Sellers for a finder's fee, brokerage commission or similar
payment.
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ARTICLE IV
COVENANTS OF SELLERs
Each Seller covenants and agrees with Purchasers that, at all times from
and after the date hereof until the Closing and, with respect to any covenant or
agreement by its terms to be performed in whole or in part after the Closing,
for the period specified therein or, if no period is specified therein,
indefinitely, each Seller will comply with all covenants and provisions of this
ARTICLE IV, except to the extent Purchasers may otherwise consent in writing.
4.01 REGULATORY AND OTHER APPROVALS. Sellers will, and will cause the GmbH
Subsidiary to, as promptly as practicable, (a) take all commercially reasonable
steps necessary or desirable to obtain all the consents, approvals or actions
of, make all filings with and give all notices to Governmental or Regulatory
Authorities or any other Person required of Sellers to consummate the
transactions contemplated hereby and by the Operative Agreements, including
without limitation those described in SECTIONS 2.03 AND 2.04 OF THE DISCLOSURE
SCHEDULE (b) provide such other information and communications to such
Governmental or Regulatory Authorities or other Persons as Purchasers or such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) cooperate with Purchasers in connection with the
performance of its obligations under SECTIONS 5.01 AND 5.02. Sellers will
provide prompt notification to Purchasers when any such consent, approval,
action, filing or notice referred to in clause (a) above is obtained, taken,
made or given, as applicable, and will advise Purchasers of any communications
(and, unless precluded by Law, provide copies of any such communications that
are in writing) with any Governmental or Regulatory Authority or other Person
regarding any of the transactions contemplated by this Agreement or any of the
Operative Agreements.
4.02 HSR FILINGS, FILINGS WITH THE CARTEL OFFICE AND THE COMPETITION ACT
AND WPI FILINGS. In addition to and not in limitation of Sellers' covenants
contained in SECTION 4.01, Sellers will (a) take promptly all actions necessary
to make the filings required of Sellers or their Affiliates under the HSR Act,
the GWB, any applicable Taiwanese Law or the Competition Act, (b) comply at the
earliest practicable date with any request for additional information received
by Sellers or their Affiliates from the FTC or the DOJ pursuant to the HSR Act,
the Cartel Office pursuant to the GWB, the TIC and TSE pursuant to applicable
Taiwanese Law or the Competition Bureau pursuant to the Competition Act and (c)
cooperate with Purchasers in connection with Purchasers' filing under the HSR
Act, the GWB, applicable Taiwanese Law or the Competition Act and in connection
with resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement commenced by either the FTC or the DOJ or state
attorneys general, the Cartel Office the TIC and TSE or the Competition Bureau.
4.03 INVESTIGATION BY PURCHASERS. Promptly following the date hereof up and
until the Closing Date, Sellers will, and will cause the GmbH Subsidiary to, (a)
provide Purchasers and their officers, directors, employees, agents, counsel,
accountants, financial advisors, consultants and other representatives
(collectively, "REPRESENTATIVES") with full access, upon reasonable prior notice
and during normal business hours (provided such access does not
33
unreasonably interfere with the Business operations), to the Assets, the
Employees and such other officers, employees and agents of Sellers and the GmbH
Subsidiary who have any responsibility for the conduct of the Business, and use
commercially reasonable efforts to make their accountants so available, (b)
furnish Purchasers and their Representatives with all such information and data
(including without limitation copies of Business Contracts, Benefit Plans and
other Business Books and Records then within Sellers' control and business
contracts, benefit plans and other Books and Records then within the control of
the GmbH Subsidiary) concerning the Business, the Assets and the Assumed
Liabilities as Purchasers or any of such other Persons reasonably may request in
connection with such investigation, and (c) furnish Purchasers and their
Representatives with all applicable portions of accounting records, employment
records, contracts, and other Books and Records, all to the extent that they
relate solely to the Employees and such information is then within Sellers'
control.
4.04 NO SOLICITATIONS. Sellers will not take, nor will they permit any
Affiliates of Sellers (or authorize or permit any investment banker, financial
advisor, attorney, accountant or other Person retained by or acting for or on
behalf of Sellers or any such Affiliates) to take, directly or indirectly, any
action to solicit, encourage, receive, negotiate, assist or otherwise facilitate
(including by furnishing confidential information with respect to the Business
or permitting access to the Assets and Properties and Books and Records of
Sellers) any offer or inquiry from any Person concerning the direct or indirect
acquisition of the Business by any Person other than (i) any Purchasers or their
Affiliates or (ii) any other Person which has proposed any Business Combination
to which any Seller or any Affiliate of any Seller is a party and which directly
or indirectly involves the Business, PROVIDED that the Person making such
proposal expressly recognizes the rights of Purchasers hereunder in a written
instrument reasonably satisfactory to Purchasers. If any Seller or any such
Affiliate (or any such Person acting for or on their behalf) receives from any
Person any offer, inquiry or informational request referred to above, such
Seller will promptly advise such Person, by written notice, of the terms of this
SECTION 4.04 and will promptly, orally and in writing, advise Purchasers of such
offer, inquiry or request and deliver a copy of such notice to Purchasers.
4.05 CONDUCT OF BUSINESS. Except as expressly contemplated by SECTIONS 4.06
and 4.07 and subject to the impact, if any, of the execution of this Agreement
and public disclosure of the transactions provided for herein or in any of the
Operative Agreements, Sellers will, and will cause the GmbH Subsidiary to,
operate the Business only in the ordinary course consistent with past practice.
Without limiting the generality of the foregoing, Sellers will, and will cause
the GmbH Subsidiary to:
(a) use commercially reasonable efforts in the ordinary course of Sellers'
Business consistent with past practice to (i) preserve the present business
organization and reputation of the Business, (ii) to the extent applicable,
maintain the Assets in good working order and condition, ordinary wear and tear
excepted, and (iii) maintain the good will of customers, suppliers, lenders and
other Persons to whom Sellers or the GmbH Subsidiary sell goods or provide
services or with whom Sellers or the GmbH Subsidiary otherwise have significant
business relationships in connection with the Business and (iv) continue sales,
marketing and promotional activities relating to the Business;
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(b) except to the extent required by applicable Law, (i) cause the Business
Books and Records to be maintained in the usual, regular and ordinary manner,
and (ii) not permit any material change in any investment, accounting, financial
reporting, inventory, credit, allowance or Tax practice or policy of Sellers or
the GmbH Subsidiary that would have a Material Adverse Effect; and
(c) comply, in all material respects, with all Laws and Orders applicable
to the Business, and promptly following receipt thereof to give Purchasers
copies of any notice received from any Governmental or Regulatory Authority or
other Person alleging any violation of any such Law or Order.
4.06 EMPLOYEE MATTERS. Except as may be required by Law, Sellers will, and
will cause the GmbH Subsidiary to, refrain from directly or indirectly:
(a) making any representation or promise, oral or written, to any Employee
concerning any Benefit Plan, except for statements as to the rights or accrued
benefits of any Employee under the terms of any Benefit Plan;
(b) making any increase in the salary, wages or other compensation of any
Employee other than stay bonuses in amounts mutually agreed to by Sellers and
Purchasers;
(c) except as listed on SECTION 4.06(C) OF THE DISCLOSURE SCHEDULE,
adopting, entering into or becoming bound by any Benefit Plan, severance-related
or employment-related Contract or collective bargaining agreement with respect
to the Business or any of the Employees, or amending, modifying or terminating
(partially or completely) any such Benefit Plan, severance-related or
employment-related Contract or collective bargaining agreement, except to the
extent required by applicable Law and, in the event compliance with legal
requirements presents options, only to the extent that the option which Sellers
reasonably believe to be the least costly is chosen; PROVIDED, HOWEVER, that
nothing in this SECTION 4.06(C) shall prohibit Sellers from (i) hiring
individuals for the positions or functions and at the annual base salary or
wages and any incentive or bonus arrangement, all as listed on SECTION 4.06(C)
OF THE DISCLOSURE SCHEDULE or (ii) terminating any Employees prior to the
Closing Date, provided, in the case of any such terminations, that Purchasers
shall have no obligation to offer employment to any such terminated Employees,
and Sellers shall retain and shall indemnify Purchasers for any Liability with
respect to any such Employees terminated by Sellers; or
(d) establishing or modifying any (i) targets, goals, pools or similar
provisions in respect of any fiscal year under any Benefit Plan or any
employment-related Contract or other compensation arrangement with or for
Employees or (ii) salary ranges, increase guidelines or similar provisions in
respect of any Benefit Plan or any employment-related Contract or other
compensation arrangement with or for Employees.
4.07 CERTAIN RESTRICTIONS. Sellers will, and will cause the GmbH Subsidiary
to, refrain from:
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(a) acquiring or disposing of any Assets, other than Inventory and Tangible
Personal Property in the ordinary course of business consistent with past
practice, or creating or incurring any Lien, other than a Permitted Lien, on any
Assets;
(b) entering into, amending, modifying, terminating (partially or
completely), granting any waiver under or giving any consent with respect to any
Business Contract material to the Condition of the Business, other than customer
contracts, purchase orders and sales orders with customary business terms
entered into in the ordinary course consistent with past practice;
(c) violating, breaching or defaulting under, in any material respect, or
taking or failing to take any action that (with or without notice or lapse of
time or both) would constitute a material violation or breach of, or default
under, any term or provision of any Business Contract (unless such breach,
default or violation is cured prior to Closing);
(d) incurring, purchasing, canceling, prepaying or otherwise providing for
a complete or partial discharge in advance of a scheduled payment date with
respect to, or waiving any right of Sellers under, any Liability of or owing to
Sellers in connection with the Business, other than in the ordinary course of
business consistent with past practice;
(e) engaging in any transaction with respect to the Business with any
officer, director or Affiliates of Sellers, either outside the ordinary course
of business consistent with past practice or other than on an arm's-length
basis; or
(f) entering into any Contract to do or engage in any of the foregoing.
4.08 DELIVERY OF BOOKS AND RECORDS AND OTHER ASSETS. On the Closing Date,
Sellers will deliver or make available to Purchasers at a location to be
designated by Purchasers prior to the Closing all of the Business Books and
Records and such other Assets (other than Inventory) as are in Sellers'
possession at other locations, and if at any time after the Closing Sellers
discover in their possession or under their control any other Business Books and
Records or other Assets (other than Inventory), it will forthwith deliver such
Business Books and Records or other Assets to Purchasers.
4.09 RESIGNATION OF MANAGING DIRECTOR OF GMBH SUBSIDIARY. On the Closing
Date, Sellers will deliver to Purchasers a Letter of Resignation, effective as
of the Closing Date, executed by the Managing Director of the GmbH Subsidiary
and addressed to Arrow Europe.
4.10 NONCOMPETITION. (a) Sellers will, for a period of three (3) years from
the Closing Date, refrain from, either alone or in conjunction with any other
Person, or directly or indirectly through their present or future Affiliates:
(i) causing or attempting to cause (A) any client, customer or
supplier of the Business to terminate or materially reduce its business
with Purchasers or any of their Affiliates but only in relation to the
Business or (B) any officer, employee or consultant of Purchasers or any of
their Affiliates engaged in the Business to resign or sever a relationship
with Purchasers or any of their Affiliates;
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(ii) disclosing or using any confidential or secret information
relating to the Business or any client, customer or supplier of the
Business (other than information that (A) is or becomes generally available
to the public other than as a result of disclosure by Sellers or any of
their Affiliates or (B) is required to be disclosed under Laws or judicial
or other governmental action); or
(iii) participating or engaging in (other than through the ownership
of 5% or less of any class of securities registered under the Securities
Exchange Act of 1934, as amended), or otherwise lending assistance
(financial or otherwise) to any Person participating or engaged in, any of
the lines of business which comprised the Business on the Closing Date;
PROVIDED, HOWEVER, that (1) the restrictions referred to in this SECTION 4.10
shall not apply with respect to any of the (A) Excluded Business, (B) Terminated
Suppliers, (C) Terminated Business, or (D) Retained Intel Volume Business and
(2) in the event that the necessary approvals from the Cartel Office regarding
the GmbH Subsidiary and/or the Competition Bureau regarding Pioneer Canada are
not obtained by the Closing, the restrictions referred to in this SECTION 4.10
shall not apply to GmbH Subsidiary and/or (as the case may be) Pioneer Canada
and Sellers shall be entitled to operate the businesses of GmbH Subsidiary
and/or Pioneer Canada (as the case may be) during the time the parties are
seeking such consent(s) pursuant to SECTION 1.05(C).
(b) The parties hereto recognize that the Laws and public policies of the
various states of the United States or elsewhere may differ as to the validity
and enforceability of covenants similar to those set forth in this Section. It
is the intention of the parties that the provisions of this Section be enforced
to the fullest extent permissible under the Laws and policies of each
jurisdiction in which enforcement may be sought, and that the unenforceability
(or the modification to conform to such Laws or policies) of any provisions of
this Section shall not render unenforceable, or impair, the remainder of the
provisions of this Section. Accordingly, if any provision of this Section shall
be determined to be invalid or unenforceable, such invalidity or
unenforceability shall be deemed to apply only with respect to the operation of
such provision in the particular jurisdiction in which such determination is
made and not with respect to any other provision or jurisdiction.
(c) The parties hereto acknowledge and agree that any remedy at Law for any
breach of the provisions of this Section would be inadequate, and Sellers hereby
consent to the granting by any court of an injunction or other equitable relief,
without the necessity of actual monetary loss being proved, in order that the
breach or threatened breach of such provisions may be effectively restrained.
4.11 SELLERS' CONSENTS. Sellers shall use their commercially reasonable
efforts to promptly obtain the consents of the lenders under Sellers'
Receivables Sales Program to the sale of the Accounts Receivable to Purchasers
and the release of any Lien with respect thereto (the "SELLERS' CONSENTS").
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4.12 ACCOUNTS RECEIVABLE/LOCK-BOXES. At the Closing, Sellers shall assign
to Purchasers such lock-boxes that are solely related to the Business. To the
extent Sellers receive any payments on the Accounts Receivable following the
Closing Date, Sellers shall segregate such Accounts Receivable, deliver reports
no later than the Business Day immediately following receipt of such payments to
Purchasers, and shall make payments of such receipts to Purchasers on the
Business Day immediately following such receipts becoming good funds. To the
extent Purchasers receive any payments due to Sellers other than on the Accounts
Receivable, in each case, following the Closing Date, Purchasers shall segregate
such receipts, deliver reports of such payments to Sellers no later than the
Business Day immediately following receipt of such payments, and make payments
of such receipts to Sellers on the Business Day immediately following such
receipts becoming good funds.
4.13 SECURITY DEPOSITS. Each applicable Seller will take all commercially
reasonable actions to transfer to the applicable Purchaser on the Closing Date
all of such Seller's right, title and interest in and to the Tenant Security
Deposits.
4.14 TRADEMARK LICENSE.
(a) Purchasers will, as promptly as practicable following the Closing Date,
but in no event later than six (6) months after the Closing Date, remove or
obliterate all of the Retained Intellectual Property from its signs, purchase
orders, invoices, sales orders, labels, letterheads, shipping documents and
other materials, and Purchasers shall not put into use after the Closing Date
any such materials not in existence on the Closing Date that bear any Retained
Intellectual Property or any names, marks or logos similar thereto.
Notwithstanding the foregoing, Purchasers shall be entitled for a period of six
(6) months following the Closing Date to use (i) any signs, purchase orders,
invoices, sales orders, labels, letterheads or shipping documents that otherwise
constitute Assets existing on the Closing Date, and (ii) any Inventory that
bears any Retained Intellectual Property or any name, xxxx or logo similar
thereto that otherwise constitute Assets. Purchasers understand and acknowledge
that they do not have and they will not claim, any right, title or interest in
or to the Retained Intellectual Property, except the limited right to use the
Retained Intellectual Property in connection with the purposes expressly set
forth herein.
(b) Sellers will not object to Purchasers' use of the Power and Signal name
and will not claim any right, title and interest in or to such name. Sellers
covenant and agree not to use the Power and Signal name subsequent to the
Closing.
4.15 ASSIGNMENT OF SOFTWARE LICENSE AND SERVICES AGREEMENT. At the Closing
or as promptly as practicable thereafter, Pioneer shall execute and deliver an
assignment agreement in the form of EXHIBIT C (the "SIEBEL ASSIGNMENT
AGREEMENT"), together with such changes as shall be mutually agreed to by
Sellers and Purchasers, which agreement, in part, shall provide Purchaser with a
license of 50 seats to use the Delphi Software, including the consent of Siebel
Systems, Inc. to such assignment agreement.
4.16 NOTICE, CURE AND DISCLOSURE SCHEDULE UPDATE. Sellers will notify
Purchasers in writing (where applicable, through updates to the Disclosure
Schedule) of, and
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contemporaneously will provide Purchasers with true and complete copies of any
and all information or documents relating to, and will use commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes Known to Sellers,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Sellers under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Sellers
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. No notice given pursuant to this
SECTION 4.16 shall have any effect on the representations, warranties, covenants
or agreements contained in this Agreement for purposes of determining
satisfaction of any condition contained herein or shall in any way limit
Purchasers' right to seek indemnity under ARTICLE X.
4.17 FULFILLMENT OF CONDITIONS/TRANSITION. Sellers will execute and deliver
at the Closing each Operative Agreement that Sellers are required hereby to
execute and deliver as a condition to the Closing, will take all commercially
reasonable steps necessary or desirable and proceed diligently and in good faith
to satisfy each other condition to the obligations of Purchasers contained in
this Agreement and will not take or fail to take any action Known to Sellers
that could reasonably be expected to result in the nonfulfillment of any such
condition. Promptly following the date hereof, up and until the Closing Date,
Sellers shall provide Purchasers and their Representatives with full access,
upon reasonable prior notice and during normal business hours, to the Business
in order to transition the Business from Sellers to Purchasers, and will use
reasonable efforts, to the extent permitted by Law, to assist and participate in
such transition.
4.18 TERMINATION OF DISTRIBUTION AGREEMENT. Sellers shall terminate the
Distribution and Service Agreement, dated October 31, 2000, by and between
Pioneer, Pioneer LTD and the GmbH Subsidiary prior to the closing of the sale of
the GmbH Shares.
ARTICLE V
COVENANTS OF PURCHASERS
Each Purchaser covenants and agrees with Sellers that, at all times from
and after the date hereof until the Closing, and, with respect to any covenant
or agreement by its terms to be performed in whole or in part after the Closing,
for the period specified therein, each Purchaser will comply with all covenants
and provisions of this ARTICLE V, except to the extent Sellers may otherwise
consent in writing.
5.01 REGULATORY AND OTHER APPROVALS. Purchasers will, as promptly as
practicable, (a) take all commercially reasonable steps necessary or desirable
to obtain all consents, approvals or actions of, make all filings with and give
all notices to Governmental or Regulatory Authorities or any other Person
required of Purchasers to consummate the transactions contemplated hereby and by
the Operative Agreements, including without limitation those described in
SECTIONS 3.03 AND 3.04 hereto, (b) provide such other information and
communications to such Governmental or Regulatory Authorities or other Persons
as Sellers or such Governmental or Regulatory Authorities or other Persons may
reasonably request in
39
connection therewith and (c) cooperate with Sellers in connection with the
performance of their obligations under SECTIONS 4.01 AND 4.02. Purchasers will
provide prompt notification to Sellers when any such consent, approval, action,
filing or notice referred to in clause (a) above is obtained, taken, made or
given, as applicable, and will advise Sellers of any communications (and, unless
precluded by Law, provide copies of any such communications that are in writing)
with any Governmental or Regulatory Authority or other Person regarding any of
the transactions contemplated by this Agreement or any of the Operative
Agreements.
5.02 HSR FILINGS, FILINGS WITH THE CARTEL OFFICE, THE TIC AND TSE AND THE
COMPETITION Bureau. In addition to and without limiting Purchasers' covenants
contained in SECTION 5.01, Purchasers will (i) take promptly all actions
necessary to make the filings required of Purchasers or their Affiliates under
the HSR Act, the GWB applicable Taiwanese Law or the Competition Act, (ii)
comply at the earliest practicable date with any request for additional
information received by Purchasers or their Affiliates from the FTC or the DOJ
pursuant to the HSR Act, the Cartel Office pursuant to the GWB, the TIC and TSE
pursuant to applicable Taiwanese Law and the Competition Bureau pursuant to the
Competition Act, and (iii) cooperate with Sellers in connection with Sellers'
filing under the HSR Act, the GWB, applicable Taiwanese Law or the Competition
Bureau and in connection with resolving any investigation or other regulatory
inquiry concerning the transactions contemplated by this Agreement commenced by
either the FTC or the DOJ or state attorneys general, the Cartel Office or the
TIC and TSE or the Competition Bureau.
5.03 REPLACEMENT OF LETTER OF CREDIT. Purchasers shall obtain the
substitution or replacement of the Letter of Credit on commercially reasonable
terms to Purchasers.
5.04 APPOINTMENT OF MANAGING DIRECTOR OF THE GMBH SUBSIDIARY. Promptly
after the Closing, and in any event within one (1) Business Day after the
Closing, Arrow Europe will take all action necessary to appoint a Managing
Director of the GmbH Subsidiary. Arrow Europe will cause the GmbH Subsidiary to
promptly take all action necessary to have the resignation of the Managing
Director according to SECTION 4.09 duly recorded in the commercial register of
the GmbH Subsidiary.
5.05 CHANGE OF NAME OF GMBH SUBSIDIARY. Promptly after the Closing, and in
any event within forty-five (45) Business Days after the Closing, Purchasers
shall take all action necessary, or shall cause the GmbH Subsidiary to take all
action necessary to change its name to a name which does not contain elements
of, and is otherwise not likely to be confused with, "Pioneer" or any other name
included in the Retained Intellectual Property, and, thereafter, the GmbH
Subsidiary shall cease using the "Pioneer-Standard Electronics GmbH" name and
any derivative thereof.
5.06 PRODUCT LIABILITIES/RETURNED GOODS. In the event that any person
asserts a claim for any Product Liabilities or for Returned Goods in connection
with any products supplied by a Named Supplier and sold by the Business prior to
the Closing Date, Purchasers shall provide reasonable assistance to Sellers to
notify the supplier of such product of the claim and to request such supplier to
fulfill its responsibility in respect of such claim. In the event that the
40
supplier does not assume responsibility for any such claim, Purchasers shall, at
the request of Sellers, provide replacement product to Sellers at cost.
5.07 NOTICE AND CURE. Purchasers will notify Sellers in writing of, and
contemporaneously will provide Sellers with true and complete copies of any and
all information or documents relating to, and will use all commercially
reasonable efforts to cure before the Closing, any event, transaction or
circumstance, as soon as practicable after it becomes known to Purchasers,
occurring after the date of this Agreement that causes or will cause any
covenant or agreement of Purchasers under this Agreement to be breached or that
renders or will render untrue any representation or warranty of Purchasers
contained in this Agreement as if the same were made on or as of the date of
such event, transaction or circumstance. No notice given pursuant to this
Section shall have any effect on the representations, warranties, covenants or
agreements contained in this Agreement for purposes of determining satisfaction
of any condition contained herein or shall in any way limit Sellers' right to
seek indemnity under ARTICLE X.
5.08 FULFILLMENT OF CONDITIONS. Purchasers will execute and deliver at the
Closing each Operative Agreement that Purchasers are hereby required to execute
and deliver as a condition to the Closing, will take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
each other condition to the obligations of Sellers contained in this Agreement
and will not take or fail to take any action that could reasonably be expected
to result in the nonfulfillment of any such condition.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASERS
The obligations of Purchasers hereunder to purchase the Assets and to
assume and to pay, perform and discharge the Assumed Liabilities are subject to
the fulfillment, at or before the Closing, of each of the following conditions
(all or any of which may be waived in whole or in part by Purchasers in their
sole discretion):
6.01 REPRESENTATIONS AND WARRANTIES.
(a) Except as otherwise provided in SECTION 6.01(B), the representations
and warranties made by Sellers in this Agreement (other than those made as of a
specified date earlier than the Closing Date) shall be true and correct in all
material respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date, and any representation or
warranty made as of a specified date earlier than the Closing Date shall have
been true and correct in all material respects on and as of such earlier date.
(b) With respect to the representations and warranties made by Sellers in
SECTIONS 2.07(ii), 2.07(VIII), 2.08, 2.10, 2.16(B), 2.16(C), or 2.19(B), such
representations and warranties shall be true and correct on and as of the
Closing Date (or, as to any representation or warranty made as of a specified
date earlier than the Closing Date, such earlier date), except if
41
such failure to be true and correct does not constitute a Special Closing
Condition - Material Adverse Effect.
6.02 PERFORMANCE. Each Seller shall have performed and complied with, in
all material respects, each agreement, covenant and obligation required by this
Agreement (other than any agreement, covenant, or obligation under SECTION 4.07)
to be so performed or complied with by each Seller at or before the Closing.
6.03 OFFICER'S CERTIFICATES. Each Seller shall have delivered to Purchasers
a certificate, dated the Closing Date and executed in the name and on behalf of
such Seller by the Chairman of the Board, the President or any Executive or
Senior Vice President of such Seller, substantially in the form and to the
effect of EXHIBIT D hereto, and a certificate, dated the Closing Date and
executed by the Secretary or any Assistant Secretary of such Seller,
substantially in the form and to the effect of EXHIBIT E hereto.
6.04 ORDERS AND LAWS. There shall not be in effect on the Closing Date any
Order or Law restraining, enjoining or otherwise prohibiting or making illegal
the consummation of any of the transactions contemplated by this Agreement or
any of the Operative Agreements or which could reasonably be expected to
otherwise result in a material diminution of the benefits of the transactions
contemplated by this Agreement or any of the Operative Agreements to Purchasers,
and there shall not be pending or threatened on the Closing Date any Action or
Proceeding in, before or by any Governmental or Regulatory Authority which could
reasonably be expected to result in the issuance of any such Order or the
enactment, promulgation or deemed applicability to Purchasers or the
transactions contemplated by this Agreement or any of the Operative Agreements
of any such Law.
6.05 REGULATORY CONSENTS AND APPROVALS. Subject to SECTION 1.05(B) with
respect to the WPI Necessary Approvals and SECTION 1.05(C) with respect to the
necessary approvals from the Competition Bureau regarding Pioneer Canada and the
necessary approvals from the Cartel Office regarding the GmbH Subsidiary, all
consents, approvals and actions of, filings with and notices to any Governmental
or Regulatory Authority necessary to permit Purchasers and Sellers to perform
their obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (a) shall have been
duly obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to Purchasers, (c) shall not be subject to the satisfaction of any
condition that has not been satisfied or waived and (d) shall be in full force
and effect, and all terminations or expirations of waiting periods imposed by
any Governmental or Regulatory Authority necessary for the consummation of the
transactions contemplated by this Agreement and the Operative Agreements,
including under the HSR Act shall have occurred.
6.06 SHARE PURCHASE AND TRANSFER AGREEMENT. Pioneer shall have executed and
delivered a Share Purchase and Transfer Agreement with respect to the GmbH
Shares in the form of EXHIBIT F (the "SHARE PURCHASE AND TRANSFER AGREEMENT").
6.07 RELEASE OF LIENS ON ACCOUNTS RECEIVABLE. Sellers shall have obtained
the Sellers' Consents, including, without limitation, evidence in form and
substance reasonably
42
satisfactory to Purchasers that any Liens on the Accounts Receivable pursuant to
Sellers' Receivables Sales Program have been or, simultaneously with the
Closing, will be released by the lenders thereunder.
6.08 TRANSITION SERVICES AGREEMENT. Sellers shall have executed and
delivered a transition services agreement in the form of EXHIBIT G (the
"TRANSITION SERVICES AGREEMENT").
6.09 REAL PROPERTY LEASE. For the Real Property Lease relating to the
Solon, Ohio facility, Pioneer shall have delivered to Arrow an Estoppel
Certificate and consent to assignment from the lessor thereunder in form and
substance reasonably satisfactory to Purchasers.
6.10 OPINION OF COUNSEL. Purchasers shall have received the opinion of
Xxxxxx, Halter & Xxxxxxxx LLP, counsel to Pioneer, dated the Closing Date,
substantially in the form and to the effect of Exhibit H, hereto.
6.11 DELIVERIES. Sellers shall have delivered to Purchasers the General
Assignment and the other Assignment Instruments.
6.12 PROCEEDINGS. All proceedings to be taken on the part of Sellers in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchasers, and Purchasers shall have received copies of all such
documents and other evidences as Purchasers may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder to sell the Assets are subject to the
fulfillment, at or before the Closing, of each of the following conditions (all
or any of which may be waived in whole or in part by Sellers in their sole
discretion):
7.01 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties made by Purchasers in this Agreement shall be true and correct in all
material respects on and as of the Closing Date as though such representation or
warranty was made on and as of the Closing Date.
7.02 PERFORMANCE. Purchasers shall have performed and complied with, in all
material respects, each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by Purchasers at or before the
Closing.
7.03 OFFICER'S CERTIFICATES. Each Purchaser shall have delivered to Sellers
(a) a certificate, dated the Closing Date and executed in the name and on behalf
of such Purchaser by the Chairman of the Board, the President or any Executive
or Senior Vice President of such Purchaser, or in the case of Arrow Europe, a
Managing Director with sole power of
43
representation or two Managing Directors with joint power of representation of
Arrow Europe, substantially in the form and to the effect of EXHIBIT I hereto,
(b) a certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary of such Purchaser, or in the case of Arrow Europe, a
Managing Director with sole power of representation or two Managing Directors
with joint power of representation of Arrow Europe, substantially in the form
and to the effect of EXHIBIT J hereto, and (c) an excerpt from the Commercial
Register of Arrow Europe, dated the Closing Date.
7.04 ORDERS AND LAWS. There shall not be in effect on the Closing Date any
Order or Law that became effective after the date of this Agreement restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements.
7.05 REGULATORY CONSENTS AND APPROVALS. Subject to SECTION 1.05(B) with
respect to the WPI Necessary Approvals and SECTION 1.05(C) with respect to the
necessary approvals from the Competition Bureau regarding Pioneer Canada and the
necessary approvals from the Cartel Office regarding the GmbH Subsidiary, all
consents, approvals and actions of, filings with and notices to any Governmental
or Regulatory Authority necessary to permit Sellers and Purchasers to perform
their obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (a) shall have been
duly obtained, made or given, (b) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived and (c) shall be in full
force and effect, and all terminations or expirations of waiting periods imposed
by any Governmental or Regulatory Authority necessary for the consummation of
the transactions contemplated by this Agreement and the Operative Agreements,
including under the HSR Act, shall have occurred.
7.06 DELIVERIES. Purchasers shall have delivered to Sellers the Assumption
Agreement and the other Assumption Instruments.
7.07 PROCEEDINGS. All proceedings to be taken on the part of Purchasers in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Sellers, and Sellers shall have received copies of all such
documents and other evidences as Sellers may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
ARTICLE VIII
TAX MATTERS AND POST-CLOSING TAXES
8.01 POST-CLOSING TAXES. (a) (i) Sellers shall be responsible for and
indemnify and hold harmless Purchasers from and against (A) all Taxes relating
to ownership of the Assets during periods (or portions thereof) ending on or
before the Closing Date and (B) all Taxes payable by the GmbH Subsidiary with
respect to periods, or portions thereof, ending on or before the Closing Date.
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(ii) For purposes of this SECTION 8.01, other than with respect to
income taxes, whenever it is necessary to determine the liability for Taxes
of Sellers for a portion of a taxable year or period that begins before and
ends after the Closing Date, the determination of such Taxes for the
portion of the year or period ending on, and the portion of the year or
period beginning after, the Closing Date shall be determined based upon the
relative number of days in the portion of the taxable period up to and
including the Closing Date and the portion of the taxable period subsequent
to the Closing Date. With respect to income taxes, Sellers' liability for
Taxes shall be determined based on a closing of the books of the relevant
entity, as of the close of business on the Closing Date.
(b) (i) Sellers shall timely prepare (or cause to be prepared) and timely
file (or cause to be timely filed) all Tax Returns relating to the Assets for
any taxable year or period ending on or before the Closing Date which are
required to be filed on or before the Closing Date.
(ii) Purchasers shall prepare (or cause to be prepared) and timely
file (or cause to be timely filed) all Tax Returns relating to the Assets
and the GmbH Subsidiary for any taxable year or period, if any, that
commences prior to the Closing Date and ends subsequent to the Closing
Date. Purchasers shall provide Sellers with a copy of each Tax Return for
Sellers' review and comment at least 30 days prior to the due date for
filing such Tax Return. Sellers shall, at least ten (10) Business Days
prior to the due date for filing any such Tax Return, remit to Purchasers
the amount allocated or payable by Sellers to it with respect to such
period pursuant to SECTION 8.01(A)(II).
(iii) Purchasers will cause the GmbH Subsidiary to prepare and timely
file all Tax Returns of the GmbH Subsidiary for any taxable year or period
ending on or before the Closing Date which are not required to be filed on
or before the Closing Date. Purchasers shall provide Sellers with a copy of
each Tax Return for Sellers' review and comment at least 30 days prior to
the due date for filing such Tax Return. Sellers shall, at least 10
Business Days prior to the due date for filing any such Tax Return, remit
to Purchasers the amount shown as due on such Tax Return.
(c) Sellers shall be liable for all Transfer Taxes. Sellers shall pay any
such Transfer Taxes when due and upon request by Purchasers, shall provide
Purchasers an official receipt or other evidence of payment. If Purchasers pay
any Transfer Tax, Sellers shall, within three (3) Business Days after receipt by
Sellers of a notice regarding Purchasers' payment of such taxes, reimburse
Purchasers for payment of such Taxes.
8.02 OTHER TAX COVENANTS. (a) (i) All powers of attorney, if any, granted
by Sellers with respect to Taxes relating to any of the Assets or the GmbH
Subsidiary shall be revoked as of the Closing Date.
(ii) Between the date of this Agreement and the Closing, each of the
Sellers will not and will ensure that the GmbH Subsidiary does not (A) make
any change to its Tax accounting methods, any new election with respect to
Taxes or any modification or
45
revocation of any existing election with respect to Taxes which could
affect the Assets or (B) settle or otherwise dispose of any Tax audit,
dispute, or other Tax proceeding that could affect the Assets, in each case
without Purchasers' express written consent thereto.
(b) (i) Subject to the provisions of this SECTION 8.02, Sellers shall have
the right, at their own expense, to control, manage and be responsible for any
audit, contest, claim, proceeding or inquiry with respect to Taxes relating to
the Assets for any taxable year or period ending on or before the Closing Date
and shall have the right to settle or contest in their discretion any such
audit, contest, claim or proceeding; PROVIDED, HOWEVER, that (x) no settlement
or disposition of any such proceeding shall be made without Purchasers' written
consent if the same could reasonably be expected to affect Purchasers' potential
liability for Taxes in any taxable period or portion of a taxable period ending
after the Closing Date; (y) Purchasers shall control any proceeding relating to
a taxable period that begins before, and ends after, the Closing Date; and (z)
Purchasers shall have the right to attend and participate in (but not control)
at their own expense, any proceeding (insofar as it relates to the Assets) the
control of which is allocated to Sellers pursuant to this SECTION 8.02 (B)(I).
(ii) Except for proceedings the control of which is determined
pursuant to SECTION 8.02(B)(I), Purchasers shall, at their own expense,
control, manage and solely be responsible for any audit, contest, claim,
proceeding or inquiry with respect to Taxes for any taxable year or period
ending after the Closing Date, and shall have the exclusive right to settle
or contest any such audit, contest, claim, proceeding or inquiry without
the consent of any other party.
(c) Pioneer Canada shall furnish to the Purchasers prior to or at Closing a
certificate obtained by Pioneer Canada from each provincial or territorial tax
authority where such certificate is required to be obtained confirming that no
retail sales tax or health services tax (including applicable interest and
penalties) is payable with respect to the Canadian Assets. Furthermore, Pioneer
Canada shall obtain a certificate pursuant to any applicable provincial retail
sales tax, health services tax or similar Laws confirming that all taxes
collectible or payable by Pioneer Canada under such Laws have been paid.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
9.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Notwithstanding any right of Purchasers (whether or not exercised) to
investigate the Business or any right of any party (whether or not exercised) to
investigate the accuracy of the representations and warranties of the other
party contained in this Agreement, Sellers and Purchasers have the right to rely
fully upon the representations, warranties, covenants and agreements of the
other contained in this Agreement. The representations, warranties, covenants
and agreements of Sellers and Purchasers contained in this Agreement will
survive the Closing (a) indefinitely with respect to (i) the representations and
warranties contained in SECTIONS 2.02, 2.27, 3.02 and 3.06 and (ii) the
covenants and agreements contained in SECTIONS 1.01, 1.02,
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13.04 and 13.06, (b) until sixty (60) days after the expiration of all
applicable statutes of limitation (including all periods of extension, whether
automatic or permissive) with respect to matters covered by SECTIONS 2.09, 2.12,
2.19 and 2.20 and ARTICLE VIII, (c) until such date that is eighteen (18) months
after the Closing Date, in the case of all other representations and warranties
and any covenant or agreement to be performed in whole or in part on or prior to
the Closing or (d) with respect to each other covenant or agreement contained in
this Agreement, until sixty (60) days following the last date on which such
covenant or agreement is to be performed or, if no such date is specified,
indefinitely; PROVIDED that any representation, warranty, covenant or agreement
that would otherwise terminate in accordance with clause (b), (c) or (d) above
will continue to survive if a Claim Notice or Indemnity Notice (as applicable)
shall have been timely given under ARTICLE X on or prior to such termination
date, solely as to any claim or demand subject to such Claim Notice or Indemnity
Notice, until the related claim for indemnification has been satisfied or
otherwise resolved as provided in ARTICLE X.
ARTICLE X
INDEMNIFICATION
10.01 INDEMNIFICATION. (a) Subject to paragraphs (c) and (d) of this
Section and the other Sections of this ARTICLE X, Sellers shall indemnify the
Purchasers Indemnified Parties in respect of, and hold each of them harmless
from and against, any and all Losses suffered, incurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out of or
relating to (i) any breach of representation or warranty or nonfulfillment of or
failure to perform any covenant or agreement on the part of Sellers contained in
this Agreement, (ii) a Retained Liability, (iii) any liabilities, obligations or
commitments of Sellers or of the GmbH Subsidiary of any nature whatsoever
relating to the GmbH Subsidiary from Liabilities arising at any time on or prior
to the Closing Date; (iv) any liabilities, obligations or commitments for
reimbursement for excess gross margins related to the Power and Signal line of
business but only to the extent such liabilities, obligations or commitments
relate to or arise out of Sellers' actions on or prior to the Closing Date; (v)
any brokerage or finders' fees arising out of the transactions contemplated
hereby owing to any party engaged by Sellers; (vi) any losses or expenses
arising out of the failure to obtain, prior to the Closing, an Estoppel
Certificate and consent to assignment from the lessor, in form and substance
reasonably satisfactory to Purchasers, of the Real Property Leases relating to
the Fremont, California and the Hilden, Germany real properties or (vii) any
liability, obligation or commitment of Sellers arising out of or related to the
Action listed in SECTION 1.02(B)(IV) OF THE DISCLOSURE SCHEDULES to the extent
such liability, obligation or commitment relates to or arises out of a sale by
any Seller occurring on or prior to the Closing Date (provided that for purposes
of this clause (vii), "Losses" shall not include any court costs, fees of
attorneys, accountants and other experts or other expenses of or incurred in
connection with such Action).
(b) Subject to the other Sections of this ARTICLE X, Purchasers shall
indemnify the Sellers Indemnified Parties in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to (i) any breach of representation or warranty or nonfulfillment
of or failure to perform any covenant or agreement on the part of
47
Purchasers contained in this Agreement, (ii) an Assumed Liability, or (iii) any
brokerage or finders' fees arising out of the transactions contemplated hereby
owing or to any party engaged by Purchasers.
(c) No amounts of indemnity shall be payable in the case of a claim by a
Purchasers Indemnified Party under SECTION 10.01(A)(I) (A) unless and until the
Purchasers Indemnified Parties have suffered, incurred, sustained or become
subject to Losses referred to in such Section in excess of 1% of the Purchase
Price in the aggregate, in which event the Purchasers Indemnified Parties shall
be entitled to claim the full amount of such Losses; and (B) after the
Purchasers Indemnified Parties have received payments from Sellers in respect of
claims made under such Section of an amount equal to 30% of the Purchase Price;
PROVIDED that this paragraph (c) shall not apply to (x) a breach of a
representation or warranty contained in SECTION 2.02, 2.03, 2.04, 2.09 or 2.27,
or the breach of a covenant contained in SECTION 1.07, 4.09, 13.04 or 13.06, (y)
Sellers' obligations hereunder with respect to Retained Liabilities and
Purchasers' obligations hereunder with respect to the Assumed Liabilities, and
(z) any claims based on either party's fraud.
(d) No amounts of indemnity shall be payable in the case of a claim by a
Purchasers Indemnified Party under SECTION 10.01(A)(I) to the extent (i) the
subject matter of the claim is covered by and paid pursuant to a warranty or
indemnification from a third party or (ii) a Loss directly results from the
termination of any Business Contract with any Named Supplier (other than Power
and Signal) by such Named Supplier other than for cause or the termination of
any Business Contract with any customer by such customer other than for cause.
Notwithstanding anything to the contrary provided for in this Agreement, to the
extent that the Closing Purchase Price has been adjusted pursuant to SECTION
1.04(C) and Purchasers are paid for any claim in connection therewith,
Purchasers shall not be entitled to a "second" payment under SECTION
10.01(A)(I), as a result of any breach of representation or warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Sellers contained in this Agreement, for the same claim, based on the identical
facts and circumstances.
10.02 METHOD OF ASSERTING CLAIMS. All claims for indemnification by any
Indemnified Party under SECTION 10.01 will be asserted and resolved as follows:
(a) In the event any claim or demand in respect of which an Indemnified
Party might seek indemnity under SECTION 10.01 is asserted against or sought to
be collected from such Indemnified Party by a Person other than Sellers or any
Affiliates of Sellers or of Purchasers (a "THIRD PARTY CLAIM"), the Indemnified
Party shall deliver a Claim Notice with reasonable promptness to the
Indemnifying Party. If the Indemnified Party fails to provide the Claim Notice
with reasonable promptness after the Indemnified Party receives notice of such
Third Party Claim, the Indemnifying Party will not be obligated to indemnify the
Indemnified Party with respect to such Third Party Claim to the extent that the
Indemnifying Party's ability to defend has been irreparably prejudiced by such
failure of the Indemnified Party. The Indemnifying Party will notify the
Indemnified Party as soon as practicable within the Dispute Period whether the
Indemnifying Party disputes its liability to the Indemnified Party under SECTION
10.01 and whether the Indemnifying Party desires, at its sole cost and expense,
to defend the Indemnified Party against such Third Party Claim.
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(i) If the indemnifying Party nofifies the Indemnified Party within
the Dispute Period that the Indemnifying Party desires to defend the
Indemnified Party with respect to the Third Party Claim pursuant to this
SECTION 10.02(A), then the Indemnifying Party will have the right to
defend, with counsel reasonably satisfactory to the Indemnified Party, at
the sole cost and expense of the Indemnifying Party, such Third Party Claim
by all appropriate proceedings, which proceedings will be vigorously and
diligently prosecuted by the Indemnifying Party to a final conclusion or
will be settled at the discretion of the Indemnifying Party (but only with
the consent of the Indemnified Party, which consent will not be
unreasonably withheld in the case of any settlement as to which the
Indemnified Party will be indemnified in full). The Indemnifying Party will
be deemed to have waived its right to dispute its liability to the
Indemnified Party under SECTION 10.01 with respect to any Third Party Claim
as to which it elects to control the defense. The Indemnifying Party will
have full control of such defense and proceedings, including any compromise
or settlement thereof; PROVIDED, HOWEVER, that the Indemnified Party may,
at the sole cost and expense of the Indemnified Party, at any time prior to
the Indemnifying Party's delivery of the notice referred to in the first
sentence of this Section 10.02(a)(i), file any motion, answer or other
pleadings or take any other action that is reasonably necessary or
appropriate to protect the Indemnified Party's interests; and PROVIDED
FURTHER, that if requested by the Indemnifying Party, the Indemnified Party
will, at the sole cost and expense of the Indemnifying Party, provide
reasonable cooperation to the Indemnifying Party in contesting any Third
Party Claim that the Indemnifying Party elects to contest. The Indemnified
Party may retain separate counsel to represent it in, but not control, any
defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this SECTION 10.02(A)(I), and the
Indemnified Party will bear its own costs and expenses with respect to such
separate counsel except as provided in the preceding sentence and except
that the Indemnifying Party will pay the costs and expenses of such
separate counsel if (x) in the Indemnified Party's good faith judgment, it
is advisable, based on advice of counsel, for the Indemnified Party to be
represented by separate counsel because a conflict or potential conflict
exists between the Indemnifying Party and the Indemnified Party or (y) the
named parties to such Third Party Claim include both the Indemnifying Party
and the Indemnified Party and the Indemnified Party determines in good
faith, based on advice of counsel, that defenses are available to it that
are unavailable to the Indemnifying Party. Notwithstanding the foregoing,
the Indemnified Party may retain or take over the control of the defense or
settlement of any Third Party Claim the defense of which the Indemnifying
Party has elected to control if the Indemnified Party irrevocably waives
its right to indemnity under SECTION 10.01 with respect to such Third Party
Claim.
(ii) If the Indemnifying Party fails to notify the Indemnified Party
within the Dispute Period that the Indemnifying Party desires to defend the
Third Party Claim pursuant to SECTION 10.02(A), or if the Indemnifying
Party gives such notice but fails to prosecute diligently or settle the
Third Party Claim, then the Indemnified Party will have the right to
defend, at the sole cost and expense of the Indemnifying Party, the Third
Party Claim by all appropriate proceedings, which proceedings will be
prosecuted by the Indemnified Party in good faith or will be settled at the
discretion of the Indemnified
49
Party (with the consent of the Indemnifying Party, which consent will not
be unreasonably withheld). The Indemnified Party will have full control of
such defense and proceedings, including any compromise or settlement
thereof; PROVIDED, HOWEVER, that if requested by the Indemnified Party, the
Indemnifying Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnified Party and its
counsel in contesting any Third Party Claim which the Indemnified Party is
contesting. Notwithstanding the foregoing provisions of this SECTION
10.02(A)(II), if the Indemnifying Party has notified the Indemnified Party
within the Dispute Period that the Indemnifying Party disputes its
liability hereunder to the Indemnified Party with respect to such Third
Party Claim and if such dispute is resolved in favor of the Indemnifying
Party in the manner provided in clause (iii) below, the Indemnifying Party
will not be required to bear the costs and expenses of the Indemnified
Party's defense pursuant to this SECTION 10.02(A)(II) or of the
Indemnifying Party's participation therein at the Indemnified Party's
request, and the Indemnified Party will bear all costs and expenses and
reimburse the Indemnifying Party in full for all reasonable costs and
expenses incurred by the Indemnifying Party in connection with such
litigation. The Indemnifying Party may participate in, but not control, any
defense or settlement controlled by the Indemnified Party pursuant to this
SECTION 10.02(A)(II), and the Indemnifying Party will bear its own costs
and expenses with respect to such participation.
(iii) If the Indemnifying Party notifies the Indemnified Party that it
does not dispute its liability to the Indemnified Party with respect to the
Third Party Claim under SECTION 10.01 or fails to notify the Indemnified
Party within the Dispute Period whether the Indemnifying Party disputes its
liability to the Indemnified Party with respect to such Third Party Claim,
the Loss arising from such Third Party Claim will be conclusively deemed a
liability of the Indemnifying Party under SECTION 10.01 and the
Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand following the final determination thereof. If the
Indemnifying Party has timely disputed its liability with respect to such
claim, the Indemnifying Party and the Indemnified Party will proceed in
good faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the Resolution Period, such dispute shall be
resolved by litigation in a court of competent jurisdiction.
(b) In the event any Indemnified Party should have a claim under SECTION
10.01 against any Indemnifying Party that does not involve a Third Party Claim,
the Indemnified Party shall deliver an Indemnity Notice with reasonable
promptness to the Indemnifying Party. Subject to SECTION 9.01, the failure by
any Indemnified Party to give the Indemnity Notice shall not impair such party's
rights hereunder except to the extent that an Indemnifying Party demonstrates
that it has been irreparably prejudiced thereby. If the Indemnifying Party
notifies the Indemnified Party that it does not dispute the claim described in
such Indemnity Notice or fails to notify the Indemnified Party within the
Dispute Period whether the Indemnifying Party disputes the claim described in
such Indemnity Notice, the Loss arising from the claim specified in such
Indemnity Notice will be conclusively deemed a liability of the Indemnifying
Party under SECTION 10.01 and the Indemnifying Party shall pay the amount of
such Loss to the Indemnified Party on demand following the final determination
thereof. If the
50
Indemnifying Party has timely disputed its liability with respect to such claim,
the Indemnifying Party and the Indemnified Party will proceed in good faith to
negotiate a resolution of such dispute, and if not resolved through negotiations
within the Resolution Period, such dispute shall be resolved by litigation in a
court of competent jurisdiction.
ARTICLE XI
TERMINATION
11.01 TERMINATION. Subject to the terms and conditions set forth in ARTICLE
IV and ARTICLE VI of this Agreement, this Agreement may be terminated, and the
transactions contemplated hereby may be abandoned:
(a) at any time before the Closing, by mutual written agreement of Sellers
and Purchasers;
(b) any time after April 30, 2003, by Sellers or Purchasers upon
notification of the non-terminating party by the terminating party if the
Closing shall not have occurred on or before such date and such failure to
consummate is not caused by a breach of this Agreement by the terminating party;
PROVIDED, however, that if the parties are diligently and in good faith
progressing to Closing, either party may extend such date, with written
notification thereof to the other party for an additional one thirty (30) day
period; or
(c) at any time before the Closing, by Purchasers, in the event that (i)
any court of competent jurisdiction or other competent Governmental or
Regulatory Authority shall have issued an order making illegal or otherwise
restricting, preventing or prohibiting the transactions contemplated by this
Agreement due to the fact that Sellers' stockholder approval may be necessary,
or (ii) Sellers' boards of directors determine to seek stockholder approval for
the transactions contemplated by this Agreement.
11.02 EFFECT OF TERMINATION. If this Agreement is validly terminated
pursuant to SECTION 11.01, this Agreement will forthwith become null and void,
and there will be no liability or obligation on the part of Sellers or
Purchasers (or any of their respective officers, directors, employees, agents or
other representatives or Affiliates), except as provided in the next succeeding
sentence and except that the provisions with respect to expenses in SECTION
13.04 and confidentiality in SECTION 13.06 will continue to apply following any
such termination. Notwithstanding any other provision in this Agreement to the
contrary, (i) upon termination of this Agreement pursuant to SECTION 11.01(B),
Sellers will remain liable to Purchasers for any willful breach of this
Agreement by Sellers existing at the time of such termination, and Purchasers
will remain liable to Sellers for any willful breach of this Agreement by
Purchasers existing at the time of such termination, and Sellers or Purchasers
may seek such remedies, including damages and fees of attorneys, against the
other with respect to any such breach as are provided in this Agreement or as
are otherwise available at Law or in equity, and (ii) upon termination of this
Agreement by Purchasers pursuant to SECTION 11.01(C), Sellers shall reimburse
Purchasers for their expenses incurred in connection with this Agreement and the
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Operative Agreements and the transactions contemplated hereby and thereby,
including, without limitation, any fees, commissions and expenses of Xxxxxxx
Sachs & Co.
ARTICLE XII
DEFINITIONS
12.01 DEFINITIONS. (a) DEFINED TERMS. As used in this Agreement, the
following defined terms have the meanings indicated below:
"ACCOUNTING PRINCIPLES" has the meaning ascribed to it in SECTION
1.04(C)(I).
"ACCOUNTS PAYABLE" has the meaning ascribed to it in SECTION 1.02(A)(I).
"ACCOUNTS RECEIVABLE" has the meaning ascribed to it in SECTION
1.01(A)(II).
"ACCRUED EXPENSES" has the meaning ascribed to it in SECTION 1.02(A)(III).
"ACTIONS OR PROCEEDINGS" means any action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit.
"AFFILIATE" means any Person that directly, or indirectly through one of
more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise and, in
any event and without limitation of the previous sentence, any Person owning ten
percent (10%) or more of the voting securities of another Person shall be deemed
to control that Person.
"AGREEMENT" means this Purchase Agreement and the Exhibits, Annex, the
Disclosure Schedule and the Schedules hereto and the certificates delivered in
accordance with SECTIONS 6.03 and 7.03, as the same shall be amended from time
to time.
"APPROVAL DATE" has the meaning ascribed to it in SECTION 1.05(C).
"ARROW" has the meaning ascribed to it in the forepart of this Agreement.
"ARROW CANADA" has the meaning ascribed to it in the forepart of this
Agreement.
"ARROW EUROPE" has the meaning ascribed to it in the forepart of this
Agreement.
"ASSETS" has the meaning ascribed to it in SECTION 1.01(A).
"ASSETS AND PROPERTIES" of any Person means all assets and properties of
every kind, nature, character and description (whether real, personal or mixed,
whether tangible or
52
intangible, whether absolute, accrued, contingent, fixed or otherwise and
wherever situated), including the goodwill related thereto, operated, owned or
leased by such Person, including without limitation cash, cash equivalents,
investment assets, accounts and notes receivable, chattel paper, documents,
instruments, general intangibles, real estate, equipment, inventory, goods and
Intellectual Property.
"ASSIGNMENT INSTRUMENTS" has the meaning ascribed to it in SECTION 1.05(A).
"ASSUMED LIABILITIES" has the meaning ascribed to it in SECTION 1.02(A).
"ASSUMPTION AGREEMENT" has the meaning ascribed to it in SECTION 1.05(A).
"ASSUMPTION INSTRUMENTS" has the meaning ascribed to it in SECTION 1.05(A).
"BENEFIT PLAN" means any Plan established by any Seller, or any predecessor
or Affiliates of Sellers, existing at the Closing Date or prior thereto, to
which any Seller contributes or has contributed on behalf of any Employee,
former employee or director of the Business, whether formal or informal, oral or
written, legally binding or not, under which any Employee or former employee of
the Business has any present or future right to benefits or under which any
Seller has any present or future liability.
"BOOKS AND RECORDS" of any Person means all files, documents, instruments,
papers, books and records relating to the business, operations, condition of
(financial or other), results of operations and Assets and Properties of such
Person, including without limitation financial statements, Tax Returns and
related work papers and letters from accountants, budgets, pricing guidelines,
ledgers, journals, deeds, title policies, minute books, stock certificates and
books, stock transfer ledgers, Contracts, Licenses, customer lists, computer
files and programs, retrieval programs, operating data and plans and
environmental studies and plans.
"BUSINESS" has the meaning ascribed to it in the forepart of this
Agreement, PROVIDED, HOWEVER, that the Business shall not include the Excluded
Business or any other business relating to the Terminated Suppliers/Businesses.
"BUSINESS BOOKS AND RECORDS" has the meaning ascribed to it in SECTION
1.01(A)(XI).
"BUSINESS COMBINATION" means with respect to any Person, any merger,
consolidation or combination to which such Person is a party, any sale,
dividend, split or other disposition of capital stock or other equity interests
of such Person or any sale, dividend or other disposition of all or
substantially all of the Assets and Properties of such Person.
"BUSINESS CONTRACTS" has the meaning ascribed to it in SECTION
1.01(A)(III).
"BUSINESS DAY" means a day other than Saturday, Sunday or any day on which
banks located in the States of Ohio and New York are authorized or obligated to
close.
"CANADIAN ASSETS" has the meaning ascribed to it in SECTION 1.01(A).
53
"CANADIAN LIABILITIES" has the meaning ascribed to it in SECTION 1.02(A).
"CANADIAN PURCHASE PRICE" means US$530,880 plus the Net Book Value of the
Canadian Assets as shown on the Pre-Closing Balance Sheet, as adjusted on the
Closing Date Balance Sheet.
"CARTEL OFFICE" has the meaning ascribed to it in SECTION 2.04.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the rules and regulations promulgated
thereunder.
"CERCLIS" means the Comprehensive Environmental Response, Compensation and
Liability Information System, as provided for by 40 C.F.R.ss.300.5.
"CLAIM NOTICE" means written notification pursuant to SECTION 10.02(A) of a
Third Party Claim as to which indemnity under SECTION 10.01 is sought by an
Indemnified Party, enclosing a copy of all papers served, if any, and specifying
the nature of and basis for such Third Party Claim and for the Indemnified
Party's claim against the Indemnifying Party under SECTION 10.01, together with
the amount or, if not then reasonably determinable, the estimated amount,
determined in good faith, of the Loss arising from such Third Party Claim.
"CLOSING" means the closing of the transactions contemplated by SECTION
1.05.
"CLOSING DATE" means (a) the last Business Day of the month, but not less
than five (5) Business Days after the day, during which the last of the
consents, approvals, actions, filings, notices or waiting periods described in
or related to the filings described in SECTIONS 6.04, 6.05, 6.08 and 6.11, and
SECTIONS 7.04 and 7.05 has been obtained, made or given or has expired, as
applicable, or (b) such other date as Purchasers and Sellers mutually agree upon
in writing.
"CLOSING DATE BALANCE SHEET" has the meaning ascribed to it in SECTION
1.04(C)(I)(B).
"CLOSING DATE CERTIFICATE" has the meaning ascribed to it in SECTION
1.04(C)(I)(B).
"CLOSING DATE NET BOOK VALUE" has the meaning ascribed to it in SECTION
1.04(C)(I)(B).
"CLOSING PURCHASE PRICE" has the meaning ascribed to it in SECTION 1.04(A).
"CODE" means the Internal Revenue Code of 1986, as amended, and the rules
and regulations promulgated thereunder.
"COMMISSION" has the meaning ascribed to it in SECTION 2.04.
"COMPETITION ACT" has the meaning ascribed to it in SECTION 2.04.
"COMPETITION BUREAU" has the meaning ascribed to it in SECTION 2.04.
54
"CONDITION OF THE BUSINESS" means the business, condition (financial or
otherwise), result of operations of the Assets or the Business.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality, Non-Interference and
Standstill Agreement, dated October 4, 2002, entered into by and between Pioneer
and Arrow.
"CONTRACT" means any contract, lease, license, evidence of Indebtedness,
mortgage, indenture, security agreement, purchase order, sales order or other
agreement, practice or arrangement, understanding or commitment (whether written
or oral).
"DETERMINATION DATE" has the meaning ascribed to it in SECTION
1.04(C)(I)(D).
"DISCLOSURE SCHEDULE" means the record delivered to Purchasers by Sellers
herewith and dated as of the date hereof, containing all lists, descriptions,
exceptions and other information and materials as are required to be included
therein by Sellers pursuant to this Agreement.
"DISPUTE PERIOD" means the period ending thirty (30) days following receipt
by an Indemnifying Party of either a Claim Notice or an Indemnity Notice.
"DOJ" has the meaning ascribed to it in SECTION 2.04.
"DROP DEAD DATE" has the meaning ascribed to it in SECTION 1.05(C).
"EMPLOYEE" means each employee, officer or consultant of any Seller or of
the GmbH Subsidiary engaged full time exclusively in the conduct of the Business
or as otherwise agreed by Sellers and Purchasers, as such employees are listed
on SECTION 2.19 OF THE DISCLOSURE SCHEDULE.
"ENVIRONMENTAL CLAIM" means, with respect to any Person, any written or
oral notice, claim, demand or other communication (collectively, a "CLAIM") by
any other Person (including, without limitation, any Governmental Authority)
alleging or asserting such Person's liability for investigatory costs, cleanup
costs, Governmental or Regulatory Authority response costs, damages to natural
resources or other property, personal injuries, fines or penalties arising out
of, based on or resulting from (a) the presence, or Release into the
environment, of any Hazardous Material at any location, whether or not owned by
such Person, or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law.
"ENVIRONMENTAL LAW" means any Law or Order relating to the regulation or
protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants,
chemicals or industrial, toxic or hazardous substances or wastes into the
environment, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of pollutants,
contaminants, chemicals or industrial, toxic or hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
55
"ESTIMATED NET BOOK VALUE" has the meaning ascribed to it in SECTION
1.04(C)(I).
"ESTOPPEL CERTIFICATE" means the written certification, issued not more
than thirty (30) days prior to the Closing Date by a lessor, sublessor or other
party to a lease or occupancy agreement, stating (a) that such lease or
occupancy agreement is (i) in full force and effect and (ii) has not been
modified or amended except as described therein, (b) that Sellers have paid all
rental payments which are due for all periods ending on the Closing Date, (c)
that no default or event of default exists thereunder, and (d) that to the best
of the knowledge of the issuer thereof, no event has occurred which, with the
giving of notice or lapse of time or both, would be a default or event of
default thereunder.
"EXCLUDED ASSETS" has the meaning ascribed to it in SECTION 1.01(B).
"EXCLUDED BUSINESS" means anything other than the Business, including
Sellers' distribution and resale of mid-range computer products, computer
systems, software and services engaged by Sellers' Computer Systems Division.
"EXCLUDED BOOKS AND RECORDS" has the meaning ascribed to it in SECTION
1.01(B)(VII).
"EXCLUDED PREPAID EXPENSES" has the meaning ascribed to it in Section
1.01(b)(iii).
"FINAL NET BOOK VALUE" has the meaning ascribed to it in SECTION
1.04(C)(I)(D).
"FINANCIAL STATEMENTS" means the financial statements delivered to
Purchasers pursuant to SECTION 2.06.
"FTC" has the meaning ascribed to it in SECTION 2.04.
"GAAP" means generally accepted accounting principles in the United States
or Canada, as applicable, consistently applied throughout the specified period
and in the immediately prior comparable period.
"GENERAL ASSIGNMENT" has the meaning ascribed to it in SECTION 1.05(A).
"GMBH PURCHASE PRICE" means US$729,960 plus the Net Book Value of the GmbH
Subsidiary as shown on the Pre-Closing Balance Sheet.
"GMBH SHARES" has the meaning ascribed to it in the forepart of this
Agreement.
"GMBH SUBSIDIARY" has the meaning ascribed to it in the forepart of this
Agreement.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
56
"GST" has the meaning ascribed to it in SECTION 2.09(A).
"GWB" has the meaning ascribed to it in SECTION 2.04.
"HAZARDOUS MATERIAL" means (A) any petroleum or petroleum products,
explosives, radioactive materials, asbestos in any form that is or could become
friable, urea formaldehyde foam insulation and transformers or other equipment
that contain polychlorinated biphenyls (PCBs); (B) any chemicals or other
materials or substances which are now or hereafter become defined as or included
in the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants" or words of similar import under any
Environmental Law; and (C) any other chemical or other material or substance,
exposure to which is now or hereafter prohibited, limited or regulated by any
Governmental or Regulatory Authority under any Environmental Law.
"HOLDBACK AMOUNT" has the meaning ascribed to it in SECTION 1.05(A).
"HSR ACT" means Section 7A of the Xxxxxxx Act (Title II of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended) and the rules
and regulations promulgated thereunder.
"INDEBTEDNESS" of any Person means all obligations of such Person (i) for
borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business),
(iv) under capital leases and (v) in the nature of guarantees of the obligations
described in clauses (i) through (iv) above of any other Person.
"INDEMNIFIED PARTY" means any Person claiming indemnification under any
provision of ARTICLE X.
"INDEMNIFYING PARTY" means any Person against whom a claim for
indemnification is being asserted under any provision of ARTICLE X.
"INDEMNITY NOTICE" means written notification pursuant to SECTION 10.02(B)
of a claim for indemnity under ARTICLE X by an Indemnified Party, specifying the
nature of and basis for such claim, together with the amount or, if not then
reasonably determinable, the estimated amount, determined in good faith, of the
Loss arising from such claim.
"INDEPENDENT ACCOUNTANT" has the meaning ascribed to it in SECTION
1.04(C)(I)(C).
"INTELLECTUAL PROPERTY" means all patents and patent rights, trademarks and
trademark rights, trade names and trade name rights, service marks and service
xxxx rights, service names and service name rights, brand names, inventions,
processes, formulae, copyrights and copyright rights, trade dress, business and
product names, logos, slogans, trade secrets, industrial models, processes,
designs, methodologies, computer programs (including all source codes) and
related documentation, technical information, manufacturing, engineering and
57
technical drawings, know-how and all pending applications for and registrations
of patents, trademarks, service marks and copyrights.
"INTANGIBLE PERSONAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(A)(VIII).
"INVENTORY" has the meaning ascribed to it in SECTION 1.01(A)(I).
"KNOWLEDGE OF SELLERS" or "KNOWN TO SELLERS" means the actual knowledge of
any officer or director of Sellers or any employees of Sellers listed in SECTION
12.01(A) OF THE DISCLOSURE SCHEDULE.
"LAWS" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision or of any Governmental or Regulatory Authority.
"LETTER OF CREDIT" means any letter of credit, in lieu of a security
deposit, obtained by Pioneer in connection with the real property lease of the
Power and Signal facility located in Hilden, Germany.
"LIABILITIES" means all Indebtedness, obligations and other liabilities of
a Person (whether absolute, accrued, contingent, fixed or otherwise, or whether
due or to become due).
"LICENSES" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"LIENS" means any mortgage, pledge, assessment, security interest, lease,
lien, adverse claim, Tax, levy, charge or other encumbrance of any kind, or any
conditional sale Contract, title retention Contract or other Contract to give
any of the foregoing.
"LOSS" means any and all damages, fines, fees, penalties, deficiencies,
losses and expenses (including without limitation interest, court costs, fees of
attorneys, accountants and other experts or other expenses of litigation or
other proceedings or of any claim, default or assessment).
"MATERIAL ADVERSE EFFECT" means an adverse effect on the Condition of the
Business, taken as a whole, reasonably expected to result in the occurrence of a
Loss to the Business, individually, not in the aggregate, equal to or greater
than $2,500,000; except to the extent resulting from (i) any change in general
United States or global economic conditions, or (ii) any change in general
economic conditions in the industry in which the Business operates which changes
do not affect Sellers disproportionately relative to other entities, or (iii)
the termination of any Business Contract with any Named Suppliers (other than
Power and Signal) by such Named Supplier other than for cause, or (iv) the
termination of any Business Contract with any customer by such customer other
than for cause.
58
"NAMED SUPPLIERS" has the meaning ascribed to it in SECTION 1.01(A)(I).
"NET BOOK VALUE" means the amount by which (i) the value of the Accounts
Receivable, Inventory, Tangible Personal Property, Intangible Personal Property,
and Prepaid Expenses, exceeds (ii) the value of the Accounts Payable and Accrued
Expenses.
"NET WORTH DEFICIENCY" has the meaning ascribed to it in SECTION
1.04(C)(I)(D).
"NET WORTH EXCESS" has the meaning ascribed to it in SECTION 1.04(C)(I)(D).
"NPL" means the National Priorities List under CERCLA.
"OPERATIVE AGREEMENTS" means, collectively, the General Assignment and the
other Assignment Instruments, the Assumption Agreement and the other Assumption
Instruments and any support or other agreements to be entered into in connection
with the transaction.
"OPTION" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of such Person or
(ii) receive or exercise any benefits or rights similar to any rights enjoyed by
or accruing to the holder of shares of capital stock of such Person, including
any rights to participate in the equity or income of such Person or to
participate in or direct the election of any directors or officers of such
Person or the manner in which any shares of capital stock of such Person are
voted.
"ORDER" means any writ, judgment, decree, injunction or similar order of
any Governmental or Regulatory Authority (in each such case whether preliminary
or final).
"PERMITTED LIEN" means (i) any Lien for Taxes not yet due or being
contested in good faith by appropriate proceedings for which adequate reserves
have been established in accordance with GAAP, (ii) any statutory Lien arising
in the ordinary course of business by operation of Law with respect to a
Liability that is not yet due or delinquent for which adequate reserves have
been established in accordance with GAAP, (iii) any minor imperfection of title
or similar Lien which individually or in the aggregate with other such Liens
does not materially impair the value of the property subject to such Lien or the
use of such property in the conduct of the Business; and (iv) any purchase money
security interest or similar Lien.
"PERSON" means any natural person, corporation, limited liability company,
general partnership, limited partnership, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
"PERSONAL PROPERTY LEASES" has the meaning ascribed to it in SECTION
1.01(A)(VII).
"PIONEER" has the meaning ascribed to it in the forepart of this Agreement.
59
"PIONEER CANADA" has the meaning ascribed to it in the forepart of this
Agreement.
"PIONEER ILLINOIS" has the meaning ascribed to it in the forepart of this
Agreement.
"PIONEER LTD" has the meaning ascribed to it in the forepart of this
Agreement.
"PIONEER MINNESOTA" has the meaning ascribed to it in the forepart of this
Agreement.
"PLAN" means any bonus, incentive compensation, deferred compensation,
pension, profit sharing, retirement, fringe benefit stock purchase, stock
option, stock ownership, stock appreciation rights, phantom stock, leave of
absence, layoff, vacation, day or dependent care, legal services, cafeteria,
life, health, accident, disability, workmen's compensation or other insurance,
severance, change-in-control, employment, separation or other employee benefit
plan, practice, policy, agreement or arrangement of any kind, whether written or
oral, including, but not limited to, any "employee benefit plan" within the
meaning of Section 3(3) of ERISA (including, without limitation multiemployer
plans within the meaning of Section 3(37) of ERISA.
"PRE-CLOSING BALANCE SHEET" has the meaning ascribed to it in SECTION
1.04(C)(I)(A).
"PRE-CLOSING BALANCE SHEET ADJUSTMENT AMOUNT" has the meaning ascribed to
it in SECTION 1.04(A).
"PRE-CLOSING CERTIFICATE" has the meaning ascribed to it in SECTION
1.04(C)(I).
"PREPAID EXPENSES" has the meaning ascribed to it in SECTION 1.01(A)(IV).
"PRODUCT LIABILITIES" has the meaning ascribed to it in SECTION 1.02(B)(X).
"PURCHASE PRICE" has the meaning ascribed to it in SECTION 1.04(B).
"PURCHASERS" has the meaning ascribed to it in the forepart of this
Agreement.
"PURCHASERS INDEMNIFIED PARTIES" means Purchasers and their officers,
directors, employees, agents and Affiliates.
"PURCHASERS' ACCOUNTANT" has the meaning ascribed to it in SECTION
1.04(C)(I)(B).
"PURCHASERS' 401(K) PLAN" has the meaning ascribed to it in SECTION
1.06(C)(V).
"REAL PROPERTY LEASES" has the meaning ascribed to it in SECTION
1.01(A)(V).
"RELEASE" means any release, spill, emission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into the indoor
or outdoor environment.
"REPRESENTATIVES" has the meaning ascribed to it in SECTION 4.03.
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"RESOLUTION PERIOD" means the period ending thirty (30) days following
receipt by an Indemnified Party of a written notice from an Indemnifying Party
stating that it disputes all or any portion of a claim set forth in a Claim
Notice or an Indemnity Notice.
"RETAINED INTEL VOLUME BUSINESS" means all business that Sellers conduct
with Intel except for the semi-conductor business.
"RETAINED INTELLECTUAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(B)(X).
"RETAINED LIABILITIES" has the meaning ascribed to it in SECTION 1.02(B).
"RETURNED GOODS" has the meaning ascribed to it in SECTION 1.02(B)(IX).
"SECURITY AGREEMENTS" has the meaning ascribed to it in SECTION 2.22.
"SELECTED EMPLOYEES" means those Employees who will be identified by
Purchasers prior to the Closing to receive offers of employment in accordance
with SECTION 1.06.
"SELLERS" has the meaning ascribed to it in the forepart of this Agreement.
"SELLERS' ACCOUNTANT" has the meaning ascribed to it in SECTION
1.04(C)(I)(B).
"SELLERS' CONSENTS" has the meaning ascribed to it in SECTION 4.11.
"SELLERS INDEMNIFIED PARTIES" means Sellers and their officers, directors,
employees, agents and Affiliates.
"SELLERS' 401(K) PLAN" has the meaning ascribed to it in SECTION
1.06(C)(V).
"SEVERANCE POLICY" means Seller's Severance Pay Policy, as in effect prior
to August 1, 2002 and attached hereto as ANNEX B.
"SHARE PURCHASE AND TRANSFER AGREEMENT" has the meaning ascribed to it in
SECTION 6.06.
"SIEBEL ASSIGNMENT AGREEMENT" has the meaning ascribed to it in SECTION
4.15.
"SIEBEL SOFTWARE" means the (Siebel Sales Enterprise) software, licensed by
Seller pursuant to the Software License Agreement between Pioneer and Siebel
Systems, Inc., effective September 10, 1996.
"SPECIAL CLOSING CONDITION-MATERIAL ADVERSE EFFECT" means an adverse effect
on the Condition of the Business, taken as a whole, reasonably expected to
result in the occurrence of a Loss to the Business, individually or in the
aggregate, equal to or greater than $25,000,000, or result in there being
insufficient Inventory to conduct the Power and Signal line of business in the
ordinary course in all material respects consistent with past practice; except
to the extent
61
resulting from (i) any change in general United States or global economic
conditions, or (ii) any change in general economic conditions in the industry in
which the Business operates which changes do not affect Sellers
disproportionately relative to other entities, or (iii) the termination of any
Business Contract with any Named Suppliers (other than Power and Signal) by such
Named Supplier other than for cause, or (iv) the termination of any Business
Contract with any customer by such customer other than for cause.
"TANGIBLE PERSONAL PROPERTY" has the meaning ascribed to it in SECTION
1.01(A)(VI).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties, tariffs,
imposts, and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect thereto)
imposed by any government or taxing authority, including, without limitation,
taxes or other charges on or with respect to income, franchises, windfall or
other profits, gross receipts, property, sales, use, goods and services, capital
stock, payroll, employment, social security, workers' compensation, unemployment
compensation, or net worth; taxes or other charges in the nature of excise,
withholding, ad valorem, stamp, transfer, value added, or gains taxes; license,
registration and documentation fees; and customs' duties, tariffs, and similar
charges.
"TAX RETURNS" means all returns, reports and forms required to be filed
with respect to Taxes.
"TENANT SECURITY DEPOSITS" has the meaning ascribed to it in SECTION
1.01(A)(X).
"TERMINATED BUSINESS" means the kitting business.
"TERMINATED SUPPLIERS" means the suppliers of any terminated franchised
lines of the Business listed on SECTION 12.01(B) OF THE DISCLOSURE SCHEDULE,
together with any other suppliers of the Business that terminate their
respective franchised lines of Business from the date of the Agreement until
Closing.
"THIRD PARTY CLAIM" has the meaning ascribed to it in SECTION 10.02(A).
"TRANSFER TAXES" means all sales, transfer, filing, recordation,
registration and similar taxes and fees arising from or associated with the sale
of the Assets to Purchasers.
"TRANSFERRED EMPLOYEE" has the meaning ascribed to it in SECTION
1.06(A)(I).
"TRANSITION SERVICES AGREEMENT" has the meaning ascribed to it in SECTION
6.08.
"U.S. ASSETS" has the meaning ascribed to it in SECTION 1.01(A).
"U.S. LIABILITIES" has the meaning ascribed to it in SECTION 1.02(A).
"WARN ACT" has the meaning ascribed to it in SECTION 1.06(B).
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"WPI APPROVAL DATE" has the meaning ascribed to it in SECTION 1.05(B).
"WPI DROP DEAD DATE" has the meaning ascribed to it in SECTION 1.05(B).
"WPI NECESSARY APPROVALS" has the meaning ascribed to it in SECTION
1.05(B).
"WPI SHARES" has the meaning ascribed to it in SECTION 1.01(A)(IX).
"WPI SHARES BOOK VALUE" means the book value of the WPI Shares, as
reflected on the September Balance Sheet.
"WPI SHARES PURCHASE PRICE" means the fair market value of the WPI Shares,
based on the average closing price on the exchange on which the WPI Shares are
principally traded for the ten (10) consecutive trading days ending five (5)
Business Days (i) prior to the Closing, if all of the WPI Necessary Approvals
are obtained prior to the Closing Date, or (ii) prior to the Approval Date, if
the WPI Necessary Approvals are not obtained prior to the Closing Date but are
obtained prior to the Drop Dead Date.
(b) CONSTRUCTION OF CERTAIN TERMS AND PHRASES. Unless the context of this
Agreement otherwise requires, (i) words of any gender include each other gender;
(ii) words using the singular or plural number also include the plural or
singular number, respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; (iv) the terms
"Article" or "Section" refer to the specified Article or Section of this
Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of Sellers in connection with the Business. Whenever this Agreement
refers to a number of days, such number shall refer to calendar days unless
Business Days are specified. All accounting terms used herein and not expressly
defined herein shall have the meanings given to them under GAAP.
ARTICLE XIII
MISCELLANEOUS
13.01 NOTICES. All notices, requests and other communications hereunder
must be in writing and will be deemed to have been duly given only if delivered
personally or by facsimile transmission or mailed (first class postage prepaid)
to the parties at the following addresses or facsimile numbers:
If to Purchasers, to:
ARROW ELECTRONICS, INC.
00 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx Xxxxx, Senior Vice President and General Counsel
63
with a copy to:
MILBANK, TWEED, XXXXXX & XXXXXX LLP
0 Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
If to Sellers, to:
PIONEER-STANDARD ELECTRONICS, INC.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Chief Executive Officer
with a copy to:
XXXXXX, HALTER & XXXXXXXX LLP
1400 XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxxx X. Xxxxxxx, Esq.
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
13.02 BULK SALES ACT. (a) Subject to paragraph (b), to the extent the
transactions contemplated in this Agreement are deemed to be subject to
compliance with the terms of any applicable Bulk Sales Act, Sellers shall be
solely responsible for compliance therewith and Sellers shall indemnify
Purchasers from and against any liabilities arising from a failure to comply.
(b) WAIVER OF BULK SALES LEGISLATION. The parties agree that the sale of
the Assets by the Sellers to the Purchasers pursuant to this Agreement may be
considered to constitute a "sale in bulk" within the meaning of the Bulk Sales
Act (Ontario) and the comparable legislation of other Canadian jurisdictions the
laws of which may apply to the transactions
64
contemplated in this Agreement. The parties agree that compliance with the
provisions of such Act and such comparable legislation, if any, is not
practicable and therefore the Purchasers agree to waive compliance with the said
provisions and the Sellers hereby covenant and agree to fully indemnify and hold
harmless the Purchasers from and against any and all actions, proceedings,
suits, claims, liabilities, damages, expenses and demands arising, directly or
indirectly, as a result of or in relation to the failure of the Sellers to
comply with the requirements of such Act and such comparable legislation, if
any, in connection with the transactions contemplated in this Agreement.
13.03 ENTIRE AGREEMENT. This Agreement, the Confidentiality Agreement and
the Operative Agreements supersede all prior discussions and agreements between
the parties with respect to the subject matter hereof and thereof and contain
the sole and entire agreement between the parties hereto with respect to the
subject matter hereof and thereof.
13.04 EXPENSES. Except as otherwise expressly provided in this Agreement
(including without limitation as provided in SECTION 10.02), whether or not the
transactions contemplated hereby are consummated, each party will pay its own
costs and expenses incurred in connection with the negotiation, execution and
closing of this Agreement and the Operative Agreements and the transactions
contemplated hereby and thereby (including in connection with any filings to be
made to obtain the necessary approvals from the FTC or DOJ, the GWB, the TIC or
TSE and the Competition Bureau, PROVIDED, HOWEVER, that Sellers shall bear the
costs, fees and expenses in connection with the notarization of the Share
Purchase and Transfer Agreement.
13.05 PUBLIC ANNOUNCEMENTS. Sellers and Purchasers shall furnish the other
with a draft of any press release to be issued concerning the transactions
contemplated by this Agreement prior to the release thereof and as far in
advance of their disclosure as practicable and shall in good faith consult with
and consider the suggestions of the other party concerning the nature and scope
of the information it proposes to disclose.
13.06 CONFIDENTIALITY. Any information or material obtained by Purchasers
or their Representatives and by Sellers or their representatives pursuant to
this Agreement shall be treated as "Material", as defined by the Confidentiality
Agreement, and shall be governed by the terms of such Confidentiality Agreement.
13.07 WAIVER. Any term or condition of this Agreement may be waived at any
time by the party that is entitled to the benefit thereof, but no such waiver
shall be effective unless set forth in a written instrument duly executed by or
on behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by Law or otherwise afforded, will be cumulative and not
alternative.
13.08 JOINT AND SEVERAL LIABILITY. All of the obligations of Sellers to
Purchasers under this Agreement shall be joint and several, and all of the
obligations of Purchasers to Sellers under this Agreement shall be joint and
several.
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13.09 AMENDMENT. This Agreement may be amended, supplemented or modified
only by a written instrument duly executed by or on behalf of each party hereto.
13.10 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under ARTICLE X.
13.11 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any right,
interest or obligation hereunder may be assigned by any party hereto without the
prior written consent of the other party hereto and any attempt to do so will be
void, except (a) for assignments and transfers by operation of Law and (b) that
Purchasers may assign any or all of their rights, interests and obligations
hereunder (including without limitation their rights under ARTICLE X) to (i) a
wholly-owned subsidiary, provided that any such subsidiary agrees in writing to
be bound by all of the terms, conditions and provisions contained herein or (ii)
any post-Closing purchaser of the Business or a substantial part of the Assets
but no such assignment referred to in clause (i) or (ii) shall relieve
Purchasers of their obligations hereunder. Subject to the preceding sentence,
this Agreement is binding upon, inures to the benefit of and is enforceable by
the parties hereto and their respective successors and assigns.
13.12 HEADINGS. The headings used in this Agreement have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
13.13 INVALID PROVISIONS. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under any present or future Law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (a) such provision will be fully
severable, (b) this Agreement will be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part hereof and (c) the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom.
13.14 CONSENT TO JURISDICTION AND GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the Laws of the State of New York
applicable to a contract executed and performed in such State, without giving
effect to the conflicts of laws principles thereof. Any judicial proceeding
brought with respect to this Agreement must be brought in any federal or state
court of competent jurisdiction in any state of the United States, and, by the
execution and delivery of this Agreement, each party (i) accepts, generally and
unconditionally, the non-exclusive jurisdiction of any courts and any related
appellate court in the State of New York, and irrevocably agrees to be bound by
any judgment rendered by such courts in connection with this Agreement and (ii)
irrevocably waives any objection it may now or hereafter have as to the venue of
any such suit, action or proceeding brought in such a court or that such court
is an inconvenient forum. In furtherance of the preceding clause, so long as
this Agreement is in effect, Purchasers and Sellers (if it is not a New York
corporation and is not qualified to do business in New York as a foreign
corporation) will at all times have an authorized agent in the City of New York,
upon whom process may be served in any legal action or proceeding in any court
of competent jurisdiction in the State of New York arising out of or in
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connection with this Agreement. Sellers hereby irrevocably appoint CT
Corporation System, as its agent for service of process in New York with respect
to all disputes arising out of or in connection with this Agreement.
13.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officer of each party as of the date first above written.
PURCHASERS
ARROW ELECTRONICS, INC.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President
ARROW EUROPE GMBH
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Managing Director
ARROW ELECTRONICS CANADA LTD.
By: /s/ Xxxxx X. Xxxxx
-------------------------------------
Name: Xxxxx X. Xxxxx
Title: Authorized Signatory
SELLERS
PIONEER-STANDARD ELECTRONICS, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President and Chief Executive Officer
PIONEER-STANDARD ILLINOIS, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President and Chief Executive Officer
PIONEER-STANDARD MINNESOTA, INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President and Chief Executive Officer
PIONEER-STANDARD ELECTRONICS, LTD.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President and Chief Executive Officer
PIONEER-STANDARD CANADA INC.
By: /s/ Xxxxxx Xxxxx
-------------------------------------
Name: Xxxxxx Xxxxx
Title: President and Chief Executive Officer