EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
Execution Copy
TABLE OF CONTENTS
Page
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1. DEFINITIONS..............................................................................................1
2. SALE AND TRANSFER OF SHARES; CLOSING.....................................................................8
2.1 SHARES..........................................................................................8
2.2 PURCHASE PRICE..................................................................................8
2.3 CLOSING.........................................................................................8
2.4 CLOSING OBLIGATIONS.............................................................................8
2.5 ADJUSTMENT AMOUNT...............................................................................9
2.6 ADJUSTMENT PROCEDURE............................................................................9
3. REPRESENTATIONS AND WARRANTIES OF SELLER.................................................................9
3.1 ORGANIZATION AND GOOD STANDING.................................................................10
3.2 AUTHORITY; NO CONFLICT.........................................................................10
3.3 CAPITALIZATION.................................................................................11
3.4 FINANCIAL STATEMENTS...........................................................................12
3.5 BOOKS AND RECORDS..............................................................................12
3.6 TITLE TO PROPERTIES; ENCUMBRANCES..............................................................13
3.7 CONDITION AND SUFFICIENCY OF ASSETS............................................................14
3.8 ACCOUNTS RECEIVABLE............................................................................14
3.9 INVENTORY......................................................................................14
3.10 NO UNDISCLOSED LIABILITIES.....................................................................15
3.11 TAXES..........................................................................................15
3.12 NO MATERIAL ADVERSE CHANGE.....................................................................16
3.13 EMPLOYEE BENEFITS..............................................................................16
3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS................................21
3.15 LEGAL PROCEEDINGS; ORDERS......................................................................22
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS..........................................................23
3.17 CONTRACTS; NO DEFAULTS.........................................................................24
3.18 INSURANCE......................................................................................26
3.19 ENVIRONMENTAL MATTERS..........................................................................27
3.20 EMPLOYEES......................................................................................29
3.21 LABOR RELATIONS; COMPLIANCE....................................................................29
3.22 INTELLECTUAL PROPERTY..........................................................................29
3.23 CERTAIN PAYMENTS...............................................................................32
3.24 DISCLOSURE.....................................................................................32
3.25 RELATIONSHIPS WITH RELATED PERSONS.............................................................33
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3.26 BROKERS OR FINDERS.............................................................................33
4. REPRESENTATIONS AND WARRANTIES OF BUYER.................................................................33
4.1 ORGANIZATION AND GOOD STANDING.................................................................33
4.2 AUTHORITY; NO CONFLICT.........................................................................33
4.3 SECURITIES MATTERS.............................................................................34
4.4 CERTAIN PROCEEDINGS............................................................................34
4.5 ENVIRONMENTAL ASSESSMENTS......................................................................34
5. INTENTIONALLY OMITTED...................................................................................34
6. INTENTIONALLY OMITTED...................................................................................34
7. ADDITIONAL DELIVERIES...................................................................................34
7.1 CONSENTS.......................................................................................34
7.2 ADDITIONAL DOCUMENTS TO BUYER..................................................................35
7.3 ADDITIONAL DOCUMENTS TO SELLER.................................................................35
8. TAX MATTERS.............................................................................................36
8.1 TAX PERIODS ENDING BEFORE THE CLOSING DATE.....................................................36
8.2 TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE.................................36
8.3 REFUNDS AND TAX BENEFITS.......................................................................36
8.4 COOPERATION ON TAX MATTERS.....................................................................37
8.5 TAX SHARING AGREEMENTS.........................................................................37
8.6 SECTION 338(h)(10) ELECTION....................................................................37
8.7 INDEMNIFICATION FOR POST-CLOSING TRANSACTIONS..................................................37
9. POST CLOSING OBLIGATIONS................................................................................38
9.1 NONCOMPETITION.................................................................................38
9.2 ACCOUNTS RECEIVABLE............................................................................38
9.3 EMPLOYEE BENEFITS..............................................................................38
9.4 USE OF SELLER NAME.............................................................................39
9.5 ULTRA BLUE PRODUCT.............................................................................40
9.6 LICENSE MATTERS................................................................................40
10. INDEMNIFICATION; REMEDIES...............................................................................40
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION.............................................................40
10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER...............................................41
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10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER--ENVIRONMENTAL MATTERS........................42
10.4 CROSS INDEMNITY FOR CERTAIN WORKERS' COMPENSATION CLAIMS.......................................44
10.5 INDEMNITY FOR PRODUCT LIABILITY AND BREACH OF WARRANTY CLAIMS..................................45
10.6 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER................................................45
10.7 LIMITATIONS ON AMOUNT--SELLER..................................................................46
10.8 LIMITATIONS ON AMOUNT--BUYER...................................................................46
10.9 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS..............................................46
10.10 INSURANCE COVERAGE.............................................................................47
10.11 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS....................................................48
10.12 RIGHT OF SET-OFF...............................................................................48
11. GENERAL PROVISIONS......................................................................................48
11.1 EXPENSES.......................................................................................48
11.2 NOTICES........................................................................................48
11.3 JURISDICTION; SERVICE OF PROCESS...............................................................49
11.4 FURTHER ASSURANCES.............................................................................49
11.5 WAIVER.........................................................................................49
11.6 ENTIRE AGREEMENT AND MODIFICATION..............................................................50
11.7 DISCLOSURE LETTER..............................................................................50
11.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS.............................................50
11.9 SEVERABILITY...................................................................................50
11.10 SECTION HEADINGS, CONSTRUCTION.................................................................50
11.11 TIME OF ESSENCE................................................................................51
11.12 GOVERNING LAW..................................................................................51
11.13 COUNTERPARTS...................................................................................51
11.14 CONFIDENTIALITY................................................................................51
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is dated as of March 14, 2003,
by Extrusion Technologies, Inc., a Colorado corporation ("Buyer") and Uponor
North America, Inc., a Delaware corporation (the "Seller").
RECITALS
Seller desire to sell, and Buyer desires to purchase, all of the issued and
outstanding shares (the "Shares") of capital stock of Uponor ETI Company, a
Colorado corporation ("ETI" or the "Company"), for the consideration and on the
terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"Acquired Companies"--the Company and its Subsidiaries, collectively.
"Adjustment Amount"--as defined in Section 2.5.
"Affiliate"--a Person which directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with, a
Person.
"Applicable Contract"--any Contract (a) under which any Acquired Company
has or may acquire any rights, (b) under which any Acquired Company has or may
become subject to any obligation or liability, or (c) by which any Acquired
Company or any of the assets owned or used by it is or may become bound.
"Average Working Capital for 2002"--as defined in Section 2.5.
"Balance Sheet"--as defined in Section 3.4.
"Best Efforts"--the efforts that a prudent Person desirous of achieving a
result would use in similar circumstances to ensure that such result is achieved
as expeditiously as possible; provided, however, that an obligation to use Best
Efforts under this Agreement does not require the Person subject to that
obligation to take actions that would result in a materially adverse change in
the benefits to such Person of this Agreement and the Contemplated Transactions.
"Breach"--a "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been any
material inaccuracy in or breach of, or any material failure to perform or
comply with, such representation, warranty, covenant, obligation,
or other provision, and the term "Breach" means any such inaccuracy, breach,
failure, claim, occurrence, or circumstance.
"Business"--the business of (a) manufacturing large diameter (in excess of
four inches) rigid polyvinyl chloride ("PVC") pipe and selling such PVC pipe in
the United States, Canada and Mexico and (b) manufacturing molded and extruded
polyethylene ("PE") meter boxes, and selling such PE meter boxes in the United
States.
"Buyer"--as defined in the first paragraph of this Agreement.
"Closing"--as defined in Section 2.3.
"Closing Date"--the date and time as of which the Closing actually takes
place.
"Closing Working Capital Statement"--as defined in Section 2.6.
"Company"--as defined in the first paragraph of this Agreement.
"Consent"--any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions"--all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares by Seller to Buyer;
(b) the execution, delivery, and performance of the License Agreement;
(c) the performance by Buyer and Seller of their respective covenants and
obligations under this Agreement; and
(d) Buyer's acquisition and ownership of the Shares and exercise of
control over the Acquired Companies.
"Contract"--any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding, excluding all purchase orders presented by any customer of the Company
and excluding all purchase orders presented by the Company other than for the
purchase of fixed assets.
"Damages"--as defined in Section 10.2.
"Demand Note"--as defined in Section 2.4.
"Disclosure Letter"--the disclosure letter delivered by Seller to Buyer
concurrently with the execution and delivery of this Agreement.
"Encumbrance"--any charge, claim, community property interest, condition,
equitable interest, lien, option, pledge, security interest, right of first
refusal, or restriction of any kind,
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including any restriction on use, voting, transfer, receipt of income, or
exercise of any other attribute of ownership.
"Environment"--soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"Environmental, Health, and Safety Liabilities"--any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions (including
on-site or off-site contamination, occupational safety and health, and
regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial measures
required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remediation," and "response action," include the
types of activities covered by the United States Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, 42 U.S.C. Sections 9601 et
seq., as amended ("CERCLA").
"Environmental Law"--any federal, state or local law, order, rule or
regulation, ordinance or code in effect on the date of this Agreement directed
to, addressing or imposing liability or standards of conduct with respect to or
otherwise relating to: protection of the environment or Releases or Threatened
Releases of Hazardous Materials into the Environment. Without limiting the
generality of the foregoing, these Environmental Laws include the Clean Air Act,
as amended (42 U.S.C. Sections 7401 et seq.); the Clean Water Act, as amended
(33 U.S.C. Sections 1251 et seq.); CERCLA; the Resource Conservation and
Recovery Act of 1976, as amended (42 U.S.C. Sections 6901 et seq.); any
so-called "Superlien" law; the Toxic Substances Control Act, as amended (15
U.S.C. Sections 2601 et seq.); the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Sections 136 et seq.); the Hazardous Materials
Transportation Act, as amended (49 U.S.C. Sections 1801 et seq.); and Executive
Order 11738.
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"ERISA"--the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Facilities"--any real property, leaseholds, or other interests currently
or formerly owned or operated by any Acquired Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Acquired Company.
"Final Working Capital"--as defined in Section 2.5.
"GAAP"--generally accepted United States accounting principles, applied on
a basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in clause (b) of Section 3.4 were prepared.
"Governmental Authorization"--any approval, consent, license, permit,
waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body"--any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official, or entity and any court
or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Activity"--the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment.
"Hazardous Materials"--any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, specifically including petroleum and all derivatives thereof
or synthetic substitutes therefor and asbestos or asbestos containing materials
in effect on the date of this Agreement.
"Indemnified Persons"--as defined in Section 10.2.
"Intellectual Property Assets"--as defined in Section 3.22.
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"Interim Balance Sheet"--as defined in Section 3.4.
"Inventory Valuation Principles"--as defined in Section 3.9.
"IRC"--the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to that Code or any successor law.
"IRS"--the United States Internal Revenue Service or any successor agency,
and, to the extent relevant, the United States Department of the Treasury.
"Knowledge"-- an individual will be deemed to have "Knowledge" of a
particular fact or other matter if such individual is actually aware of such
fact or other matter, or such individual would reasonably be expected to
discover or otherwise become aware of such fact or other matter in the Ordinary
Course of Business.
A Person (other than an individual) will be deemed to have "Knowledge" of a
particular fact if any individual who is currently serving as a director,
officer, partner, executor, or trustee of such Person (or in any similar
capacity) has, or at any time had, Knowledge of such fact or other matter.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty in effect on
the date of this Agreement.
"License Agreement"--shall mean that certain Non-Exclusive License
Agreement of even date herewith between Uponor Innovation AB and ETI.
"Licensed Assets"--shall mean those rights provided to ETI pursuant to the
License Agreement, the Sublicense Agreement and the Trademark License Agreement.
"Note"--as defined in Section 2.4(c).
"Occupational Safety and Health Law"--any Legal Requirement in effect on
the date of this Agreement designed to provide safe and healthful working
conditions and to reduce occupational safety and health hazards.
"Order"--any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator,
excluding wage garnishments and any similar or related orders.
"Ordinary Course of Business"--an action taken by a Person will be deemed
to have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person and
is taken in the ordinary course of the normal day-to-day, month-to-month,
quarterly or annual operations of such Person; and
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(b) such action is not required to be authorized by the board of directors
of such Person (or by any Person or group of Persons exercising similar
authority).
"Organizational Documents"--(a) the articles or certificate of
incorporation and the bylaws of a corporation; (b) any charter or similar
document adopted or filed in connection with the creation, formation, or
organization of a Person; and (c) any amendment to any of the foregoing.
"Permitted Liabilities" -(a) those trade payables and current liabilities
set forth or reserved for on the Closing Working Capital Statement, (b) all long
term deferred tax liabilities set forth or reserved for on the Interim Balance
Sheet and (c) liabilities or obligations incurred in the Ordinary Course of
Business and not past due as of the Closing Date.
"Person"--any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
"Plan"--as defined in Section 3.13.
"Proceeding"--any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"Product Liability Claims"--as defined in Section 10.5.
"Related Person"--with respect to a specified Person other than an
individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor, or
trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or (c).
For purposes of this definition, "Material Interest" means direct or
indirect beneficial ownership (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934) of voting securities or other voting interests
representing at least 5% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 5% of the outstanding
equity securities or equity interests in a Person.
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"Release"--any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping or other releasing into the Environment, whether
intentional or unintentional.
"Representative"--with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
"Securities Act"--the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"Seller"--as defined in the first paragraph of this Agreement.
"Shares"--as defined in the Recitals of this Ag reement.
"Sublicense Agreement"--shall mean that certain Sublicense Agreement of
even date herewith between Uponor Oyj (formerly OY Uponor AB) and ETI.
"Subsidiary"--with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred) are held by the Owner or one or more of its Subsidiaries; when
used without reference to a particular Person, "Subsidiary" means a Subsidiary
of the Company.
"Tax" or "Taxes"--any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under IRC Section
59A), customs duties, capital stock, franchise, profits, withholding, social
security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Tax Return"--any return (including any information return), report,
statement, schedule, notice, form, or other document or information filed with
or submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"Threat of Release"--a substantial likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.
"Threatened"--a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made in
writing or any notice has been given in writing that would lead a prudent Person
to conclude that such a claim, Proceeding, dispute, action, or other matter is
likely to be asserted, commenced, taken, or otherwise pursued in the future.
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"Trademark License Agreement"--shall mean that certain Trademark License
Agreement of even date herewith between Uponor Innovation AB and ETI.
"Ultra Blue Product"--shall have the meaning set forth in Section 1.23 of
the License Agreement.
"WC Formula Percentage"--as defined in Section 10.4.
"Workers' Compensation Claims"--as defined in Section 10.4.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing,
Seller will sell and transfer the Shares to Buyer, and Buyer will purchase the
Shares from Seller.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will be
$22,243,439 plus the Adjustment Amount.
2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will
take place at the offices of Buyer's counsel as of the close of business on
March 13, 2003 (local time), or at such other time and place as the parties may
agree.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Seller will deliver to Buyer certificates representing the
Shares, duly endorsed (or accompanied by duly executed stock powers) for
transfer to Buyer;
(b) Buyer will deliver to Seller a demand note in the amount of
$22,000,000 (the "Demand Note");
(c) Immediately upon receipt of the Shares by Buyer, Buyer shall
cause ETI to issue certificates representing all of the issued and outstanding
shares of ETI's capital stock in Buyer's name, and shall thereafter cause ETI to
deliver to Seller $22,000,000 by wire transfer to an account or accounts
specified by Seller in exchange for return to Buyer of the Demand Note; and
(d) Buyer will deliver to Seller an unsecured promissory note in
form and substance agreeable to the parties for the principal amount of $243,439
(the "Note").
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2.5 ADJUSTMENT AMOUNT
The "Adjustment Amount" (which may be a positive or negative number) will
be equal to the difference between the Average Working Capital for 2002 and the
Final Working Capital. The "Average Working Capital for 2002" shall equal the
sum of current assets less current liabilities for each month of 2002, with the
same adjustments as shown on Schedule 2.5 attached hereto, divided by 12. The
"Final Working Capital" shall equal current assets less current liabilities as
of the Closing Date, with adjustments as shown on Schedule 2.5.
2.6 ADJUSTMENT PROCEDURE
(a) Buyer will prepare or will cause PricewaterhouseCoopers ("PWC")
to prepare a consolidated statement for working capital accounts (all current
assets and current liabilities defined by GAAP, excluding debt or intercompany
amounts) ("Closing Working Capital Statement") of the Company as of the Closing
Date. The Closing Working Capital Statement will fairly present the current
assets and current liabilities of the Company as at the Closing Date (excluding
debt or intercompany amounts), and will reflect the application of accounting
principles consistent with those applied by the Company prior to the Closing
Date. Buyer will deliver the Closing Working Capital Statement to Seller within
sixty days after the Closing Date and shall cause PWC to allow Seller access to
all information and documents upon which the Closing Working Capital Statement
is based. If within thirty days following delivery of the Closing Working
Capital Statement, Seller has not given Buyer notice of its objection to the
Closing Working Capital Statement (such notice must contain a statement of the
basis of Seller's objection), then the amounts reflected in the Closing Working
Capital Statement will be used in computing the Adjustment Amount. If Seller
gives such notice of objection, then the issues in dispute will be submitted to
Ernst & Young LLP, certified public accountants (the "Accountants"), for
resolution. If issues in dispute are submitted to the Accountants for
resolution, (i) each party will furnish to the Accountants such workpapers and
other documents and information relating to the disputed issues as the
Accountants may request and are available to that party or its Subsidiaries (or
its independent public accountants), and will be afforded the opportunity to
present to the Accountants any material relating to the determination and to
discuss the determination with the Accountants; (ii) the determination by the
Accountants, as set forth in a notice delivered to both parties by the
Accountants, will be binding and conclusive on the parties; and (iii) Buyer and
Seller will each bear 50% of the fees of the Accountants for such determination.
(b) On the tenth business day following the final determination of
the Adjustment Amount, if the Purchase Price is greater than the payment made
pursuant to Section 2.4(b), Buyer will pay the difference to Seller, and if the
Purchase Price is less than such aggregate amount, Seller will pay the
difference to Buyer. Payment must be made in immediately available funds by wire
transfer to such bank account as the recipient will specify.
3. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller makes the following representations and warranties to the Buyer with
the intention that the Buyer may rely upon the same and acknowledges that the
same shall survive the Closing of this transaction to the extent herein
provided:
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3.1 ORGANIZATION AND GOOD STANDING
(a) Part 3.1 of the Disclosure Letter contains a complete and
accurate list for each Acquired Company of its name, its jurisdiction of
incorporation, other jurisdictions in which it is authorized to do business, and
its capitalization (including the identity of each stockholder and the number of
shares held by each). Each Acquired Company is a corporation duly organized,
validly existing, and in good standing under the laws of its jurisdiction of
incorporation, with full corporate power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Applicable
Contracts. Each Acquired Company is duly qualified to do business as a foreign
corporation and is in good standing under the laws of those states or other
jurisdictions in which the failure to so qualify would have a material adverse
effect on the business, operations, properties, prospects, assets, or condition
of the Acquired Companies, taken as a whole.
(b) Seller has delivered to Buyer or its counsel copies of the
Organizational Documents of each Acquired Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency or
similar laws and equitable principles relating to or affecting the rights of
creditors generally from time to time in effect. Seller has the absolute and
unrestricted right, corporate power and authority to execute and deliver this
Agreement and to perform its obligations under this Agreement.
(b) Except as set forth in Part 3.2 of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation or
performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of any provision of the Organizational Documents of the Acquired Companies, as
they exist as of the Closing Date;
(ii) except for the antitrust laws of any jurisdiction,
contravene, conflict with, or result in a violation of, or give any Governmental
Body or other Person the right to challenge any of the Contemplated Transactions
or to exercise any remedy or obtain any relief under, any Legal Requirement or
any Order to which any Acquired Company or Seller, or any of the assets owned or
used by any Acquired Company, may be subject;
(iii) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by any Acquired Company or that otherwise relates to
the business of, or any of the assets owned or used by, any Acquired Company;
(iv) contravene, conflict with, or result in a violation
or breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to
10
accelerate the maturity or performance of, or to cancel, terminate, or modify,
any Applicable Contract, as they exist as of the Closing Date; or
(v) result in the imposition or creation of any
Encumbrance, other than any Encumbrance that may be created or imposed by the
Buyer, upon or with respect to any of the assets owned or used by any Acquired
Company.
Except as set forth in Part 3.2 of the Disclosure Letter, neither the
Seller nor any Acquired Company is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 CAPITALIZATION
(a) The authorized equity securities of the Company consist of
50,000 shares of common stock, par value $1.00 per share, of which 2,000 shares
are issued and outstanding and constitute the Shares. Seller is the record and
beneficial owner and holder of the Shares, free and clear of all Encumbrances,
other than any restrictions imposed by state and federal securities laws. With
the exception of the Shares (which are owned by Seller), all of the outstanding
equity securities and other securities of each Acquired Company are owned of
record and beneficially by one or more of the Acquired Companies.
(b) No legend or other reference to any purported Encumbrance, other
than any restrictions imposed by state and federal securities laws, appears upon
any certificate representing equity securities of any Acquired Company. All of
the outstanding equity securities of each Acquired Company have been duly
authorized and validly issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity securities
or other securities of any Acquired Company. None of the outstanding equity
securities or other securities of any Acquired Company was issued in violation
of the Securities Act or any other Legal Requirement. No Acquired Company owns,
or has any Contract to acquire, any equity securities or other securities of any
Person (other than Acquired Companies) or any direct or indirect equity or
ownership interest in any other business (other than Acquired Companies).
(c) Neither the execution and delivery of the License Agreement, the
Sublicense Agreement and the Trademark License Agreement, nor the performance of
any of the obligations thereunder will, directly or indirectly (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation
of any provision of the Organizational Documents of Uponor Innovation AB or
Uponor Oyj, as they exist as of the Closing Date;
(ii) except for the antitrust laws of any jurisdiction,
contravene, conflict with, or result in a violation of any Legal Requirement or
any Order to which Uponor Innovation AB or Uponor Oyj may be subject;
(iii) contravene, conflict with, or result in a violation
of any of the terms or requirements of, or give any Governmental Body the right
to revoke, withdraw,
11
suspend, cancel, terminate, or modify, any Governmental Authorization that is
held by Uponor Innovation AB or Uponor Oyj; or
(iv) contravene, conflict with, or result in a violation
or breach of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate, or modify, any contract to which Uponor Innovation AB
or Uponor Oyj is a party, as such contracts exist as of the Closing Date.
3.4 FINANCIAL STATEMENTS
Seller has delivered to Buyer or its counsel: (a) (i) the balance sheet of
the Company as at December 31, 1997, and the related statement of income,
changes in stockholders' equity, and cash flow for the fiscal year then ended,
together with the report thereon of KPMG or Xxxxxx Xxxxxxxx, as applicable,
independent certified public accountants, and (ii) consolidated balance sheets
of the Acquired Companies as at December 31 in each of the years 1998 through
2001, and the related consolidated statements of income, changes in
stockholders' equity, and cash flow for each of the fiscal years then ended,
together with the report thereon of KPMG or Xxxxxx Xxxxxxxx, as applicable,
independent certified public accountants, (collectively, the "Balance Sheet"),
(b) unaudited consolidated balance sheets of the Acquired Companies as at
December 31, 2002 and the related unaudited consolidated statement of income,
changes in stockholders' equity, and cash flow for the fiscal year then ended
(collectively, the "Interim Balance Sheet"), and (c) unaudited consolidated
balance sheet of the Acquired Companies as at January 31, 2003 and the related
unaudited consolidated statement of income, for the period then ended. Such
financial statements fairly present the financial condition and the results of
operations, changes in stockholders' equity, and cash flow of the Acquired
Companies as at the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP, subject, in the case of
interim financial statements, to normal recurring year-end adjustments (the
effect of which will not, individually or in the aggregate, be materially
adverse) and the absence of notes (that, if presented, would not differ
materially from those included in the Balance Sheet); the financial statements
referred to in this Section 3.4 reflect the consistent application of such
accounting principles throughout the periods involved. No financial statements
of any Person other than the Acquired Companies are required by GAAP to be
included in the consolidated financial statements of the Company.
3.5 BOOKS AND RECORDS
Except as set forth on Part 3.5 of the Disclosure Letter, the books of
account, minute books, stock record books and other records of the Acquired
Companies, all of which have been made available to Buyer, are substantially
complete, and true and correct and have been maintained in accordance with sound
business practices, including the maintenance of an adequate system of internal
controls. The minute books of the Acquired Companies contain accurate records of
all meetings held of, and corporate action taken by, the stockholders, the
Boards of Directors, and committees of the Boards of Directors of the Acquired
Companies, and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, all of those books and records
will be in the possession of the Acquired Companies.
12
3.6 TITLE TO PROPERTIES; ENCUMBRANCES
Part 3.6 of the Disclosure Letter contains a complete and accurate list of
all real property and leasehold interests owned by any Acquired Company. Seller
has delivered or made available to Buyer or its counsel copies of the deeds,
leases and other instruments by which the Acquired Companies acquired such real
property and interests, and copies of all title insurance policies, opinions,
abstracts, and surveys in the possession of Seller or the Acquired Companies and
relating to such property or interests (collectively, the "Title Documents").
Buyer acknowledges that Seller has made no representation or warranty as to the
accuracy or completeness of any of the Title Documents prepared by third parties
and delivered or made available by Seller to Buyer. The Acquired Companies own
(with good and insurable title in the case of real property, subject only to the
matters permitted by the following sentence) all the material properties and
material assets (whether real, personal, or mixed and whether tangible or
intangible) that they purport to own located in the facilities owned or operated
by the Acquired Companies or reflected as owned in the books and records of the
Acquired Companies, including all of the material properties and material assets
reflected in the Balance Sheet and the Interim Balance Sheet (except for assets
held under capitalized leases disclosed or not required to be disclosed in Part
3.17 of the Disclosure Letter and personal property sold since December 31, 2002
in the Ordinary Course of Business), and all of the properties and assets
purchased or otherwise acquired by the Acquired Companies since December 31,
2002 (except for personal property acquired and sold since December 31, 2002 in
the Ordinary Course of Business and consistent with past practice), which
subsequently purchased or acquired properties and assets (other than inventory
and short-term investments) are listed in Part 3.6 of the Disclosure Letter. All
material properties and assets reflected in the Balance Sheet and the Interim
Balance Sheet are free and clear of all Encumbrances and to the Knowledge of
Seller are not, in the case of real property, subject to any rights of way,
building use restrictions, exceptions, variances, reservations, or limitations
of any nature except, with respect to all such properties and assets, (a)
mortgages or security interests shown on the Balance Sheet or the Interim
Balance Sheet as securing specified liabilities or obligations, with respect to
which no default (or event that, with notice or lapse of time or both, would
constitute a default) exists, (b) mortgages or security interests incurred in
connection with the purchase of property or assets after the date of the Interim
Balance Sheet (such mortgages and security interests being limited to the
property or assets so acquired), with respect to which no default (or event
that, with notice or lapse of time or both, would constitute a default) exists,
(c) liens for current taxes not yet due and payable, and (d) with respect to
real property, (i) minor imperfections of title, if any, none of which is
substantial in amount, materially detracts from the value or impairs the use of
the property subject thereto, or impairs the operations of any Acquired Company,
(ii) any easements, covenants, conditions, restrictions and title defects which
are identified, shown, listed or disclosed in the Title Documents and those
identified, listed or disclosed in Exhibit A of the Letter and Acknowledgment
regarding title defects dated as of even date herewith, and (iii) zoning laws
and other governmental land use restrictions that do not impair the present or
the Acquired Companies' anticipated use of the property subject thereto. Unless
otherwise provided in the Title Documents, all buildings, plants, and structures
owned by the Acquired Companies lie wholly within the boundaries of the real
property owned by the Acquired Companies and do not encroach upon the property
of, or otherwise conflict with the property rights of, any other Person.
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3.7 CONDITION AND SUFFICIENCY OF ASSETS
(a) To Seller's Knowledge, the buildings, plants and structures of
the Acquired Companies are structurally sound, and are adequate for the uses to
which they are being put, and, except as set forth on Part 3.7 of the Disclosure
Letter, none of such buildings, plants, or structures is in need of maintenance
or repairs except for ordinary, routine maintenance and repairs that are not
material in nature or cost.
(b) To Seller's Knowledge, none of the equipment of the Acquired
Companies is in need of maintenance or repairs except for maintenance and
repairs that are in the Ordinary Course of Business for the Acquired Companies.
3.8 ACCOUNTS RECEIVABLE
All accounts receivable of the Acquired Companies that are reflected on the
Balance Sheet or the Interim Balance Sheet or on the accounting records of the
Acquired Companies as of the Closing Date (collectively, the "Accounts
Receivable") represent or will represent valid obligations arising from sales
actually made or services actually performed in the Ordinary Course of Business.
Unless paid prior to the Closing Date, the Accounts Receivable are current and
collectible net of the respective reserves shown on the Balance Sheet or the
Interim Balance Sheet or on the accounting records of the Acquired Companies as
of the Closing Date (which reserves are adequate and calculated consistent with
past practice and, in the case of the reserve as of the Closing Date, will not
represent a substantially greater percentage of the Accounts Receivable as of
the Closing Date than the reserve reflected in the Interim Balance Sheet
represented of the Accounts Receivable reflected therein and will not represent
a material adverse change in the composition of such Accounts Receivable in
terms of aging). Subject to such reserves, each of the Accounts Receivable
either has been collected or, to Seller's Knowledge, will be collectible in
full, without any set-off, within 180 days after the day on which it first
becomes due and payable. There is no contest, claim or return, other than in the
Ordinary Course of Business, under any Contract with any obligor of an Account
Receivable relating to the amount or validity of such Account Receivable. Part
3.8 of the Disclosure Letter contains a complete and accurate list of all
Accounts Receivable as of the date of the Interim Balance Sheet, which list sets
forth the aging of such Accounts Receivable.
3.9 INVENTORY
Part 3.9 of the Disclosure Letter describes the valuation principles
applied by the Seller to its inventory (the "Inventory Valuation Principles").
The inventory of the Acquired Companies, whether or not reflected in the Balance
Sheet or the Interim Balance Sheet, has been valued on the Balance Sheet or the
Interim Balance Sheet or on the accounting records of the Acquired Companies as
of the Closing Date, as the case may be, in accordance with the Inventory
Valuation Principles. The Inventory Valuation Principles are applied in
accordance with GAAP. The quantities of each item of inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of the Acquired Companies.
14
3.10 NO UNDISCLOSED LIABILITIES
(a) Except as set forth in Part 3.10 of the Disclosure Letter, the
Acquired Companies have no material liabilities or material obligations of any
nature (whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Interim Balance
Sheet and current liabilities incurred in the Ordinary Course of Business since
the date thereof.
(b) Except as set forth on Part 3.10(b) of the Disclosure Letter,
none of the Acquired Companies has any outstanding liability, indebtedness, or
obligations to any of their Affiliates, whether or not evidenced by any note,
guaranty or other instrument, whether arising under any agreement or otherwise,
whether direct or indirect, absolute or contingent, primary or secondary, due or
to become due, now existing or hereafter arising, all of which shall be
terminated at closing except as set forth on the Disclosure Letter.
3.11 TAXES
(a) The Acquired Companies have filed or caused to be filed (on a
timely basis) all Tax Returns that are or were required to be filed by or with
respect to any of them, either separately or as a member of a group of
corporations, pursuant to applicable Legal Requirements. Except for Tax Returns
which are filed on a combined or consolidated basis, Seller has delivered to
Buyer or its counsel copies of, and Part 3.11 of the Disclosure Letter contains
a complete and accurate list of, all United States federal and state income Tax
Returns filed since 1999. Seller has also provided Buyer with pro forma federal
income Tax Returns for the Acquired Companies for all years since 1999. The
Acquired Companies have paid, or made provision for the payment of, all Taxes
that have or may have become due pursuant to Tax Returns or otherwise, or
pursuant to any assessment received by Seller or any Acquired Company, except
such Taxes, if any, as are not delinquent or which are listed in Part 3.11 of
the Disclosure Letter and are being contested in good faith and as to which
adequate reserves (determined in accordance with GAAP) have been provided in the
Balance Sheet and the Interim Balance Sheet.
(b) The United States federal and state income Tax Returns of each
Acquired Company subject to such federal and state income Taxes have been
audited by the IRS or relevant state tax authorities or are closed by the
applicable statute of limitations for all taxable years through 1999, except
with respect to net operating loss carry forwards. Part 3.11 of the Disclosure
Letter contains a complete and accurate list of all audits of all such income
Tax Returns, including a reasonably detailed description of the nature and
outcome of each audit. All deficiencies proposed as a result of such audits have
been paid, reserved against, settled, or, as described in Part 3.11 of the
Disclosure Letter, are being contested in good faith by appropriate proceedings.
Part 3.11 of the Disclosure Letter describes all adjustments to the United
States federal income Tax Returns filed by any Acquired Company or any group of
corporations including any Acquired Company for all taxable years since 1999,
and the resulting deficiencies proposed by the IRS. Except as described in Part
3.11 of the Disclosure Letter, neither the Seller nor any Acquired Company has
given or been requested to give waivers or extensions (or is or would be subject
to a waiver or extension given by any other Person) of any statute of
limitations
15
relating to the payment of United States federal or state income Taxes of any
Acquired Company or for which any Acquired Company may be liable.
(c) The charges, accruals, and reserves with respect to Taxes on the
Interim Balance Sheet are adequate (determined in accordance with GAAP) and are
at least equal to the Acquired Companies' liabilities for Taxes with respect to
2002 and all prior periods. There exists no proposed Tax assessment against any
Acquired Company except as disclosed in the Balance Sheet or in Part 3.11 of the
Disclosure Letter. No consent to the application of Section 341(f)(2) of the IRC
has been filed with respect to any property or assets held, acquired, or to be
acquired by any Acquired Company. All Taxes that any Acquired Company is or was
required by Legal Requirements to withhold or collect have been duly withheld or
collected and, to the extent required, have been paid to the proper Governmental
Body or other Person.
(d) All Tax Returns filed by (or that include on a consolidated
basis) any Acquired Company are true, correct, and complete. There is no tax
sharing agreement that will require any payment by, or to, any Acquired Company
after the date of this Agreement.
(e) The composition of the long-term deferred tax liability is
entirely related to the deferred book-tax differences in the depreciation of the
Acquired Companies' assets.
3.12 NO MATERIAL ADVERSE CHANGE
Since December 31, 2002, there has not been any material adverse change in
the business, operations, properties, prospects, assets, or condition of the
Acquired Companies, taken as a whole, and no event has occurred or circumstance
exists (other than changes in the general economic or industry conditions
affecting the Business) that may result in such a material adverse change.
3.13 EMPLOYEE BENEFITS
(a) As used in this Section 3.13, the following terms have the
meanings set forth below.
(i) "Company Other Benefit Obligation" means an Other
Benefit Obligation owed, adopted, or followed by an Acquired Company or an ERISA
Affiliate of an Acquired Company.
(ii) "Company Plan" means all Plans of which an Acquired
Company or an ERISA Affiliate of an Acquired Company is or was a Plan Sponsor,
or to which an Acquired Company or an ERISA Affiliate of an Acquired Company
otherwise contributes or has contributed, or in which an Acquired Company or an
ERISA Affiliate of an Acquired Company otherwise participates or has
participated. All references to Plans are to Company Plans unless the context
requires otherwise.
(iii) "Company VEBA" means a VEBA whose members include
employees of any Acquired Company or any ERISA Affiliate of an Acquired Company.
16
(iv) "ERISA Affiliate" means, with respect to an Acquired
Company, any other person that, together with the Company, would be treated as a
single employer under IRC Section 414.
(v) "Multi-Employer Plan" has the meaning given in ERISA
Section 3(37)(A).
(vi) "Other Benefit Obligations" means all legally
enforceable obligations, arrangements, or customary practices, to provide
benefits, other than salary, as compensation for services rendered, to present
or former directors, employees, or agents, other than obligations, arrangements,
and practices that are Plans. Other Benefit Obligations include consulting
agreements under which the compensation paid does not depend upon the amount of
service rendered, sabbatical policies, severance payment policies, and fringe
benefits within the meaning of IRC Section 132.
(vii) "Pension Plan" has the meaning given in ERISA Section
3(2)(A).
(viii) "Plan" has the meaning given in ERISA Section 3(3).
(ix) "Plan Sponsor" has the meaning given in ERISA Section
3(16)(B).
(x) "Qualified Plan" means any Plan that meets or
purports to meet the requirements of IRC Section 401(a).
(xi) "Title IV Plans" means all Pension Plans that are
subject to Title IV of ERISA, 29 U.S.C. Sections 1301 et seq., other than
Multi-Employer Plans.
(xii) "VEBA" means a voluntary employees' beneficiary
association under IRC Section 501(c)(9).
(xiii) "Welfare Plan" has the meaning given in ERISA Section
3(1).
(b) Part 3.13(b) of the Disclosure Letter contains a complete and
accurate list of all Company Plans and Company Other Benefit Obligations.
Neither the Acquired Companies nor any ERISA Affiliate of an Acquired Company
sponsors, maintains or contributes to or has ever sponsored, maintained or
contributed to a Company VEBA, a Plan that is a defined benefit Pension Plan, a
Title IV Plan, a Multi-Employer Plan, or any Plan that provides for the
provision of post-retirement benefits other than pensions (except to the extent
required under ERISA Sections 601 et seq. and IRC Section 4980B).
(c) Part 3.13(c) of the Disclosure Letter contains a complete and
accurate list of (i) all ERISA Affiliates of the Acquired Companies, and (ii)
all Plans of which any such ERISA Affiliate is or was a Plan Sponsor, in which
any such ERISA Affiliate participates or has participated, or to which any such
ERISA Affiliate contributes or has contributed, but limited to those Plans in
which employees of the Acquired Companies were eligible to participate.
17
(d) Part 3.13(d) of the Disclosure Letter sets forth the financial
cost of all obligations owed under any Company Plan or Company Other Benefit
Obligation that is not subject to the disclosure and reporting requirements of
ERISA.
(e) Seller has delivered to Buyer, or will deliver to Buyer within
twenty days of the date of this Agreement:
(i) all documents that set forth the terms of each
Company Plan or Company Other Benefit Obligation and of any related trust,
including (A) all plan descriptions and summary plan descriptions of Company
Plans for which Seller or the Acquired Companies are required to prepare, file,
and distribute plan descriptions and summary plan descriptions, and (B) all
summaries and descriptions furnished to participants and beneficiaries regarding
Company Plans and Company Other Benefit Obligations for which a plan description
or summary plan description is not required;
(ii) all Acquired Company personnel, payroll, and
employment manuals and policies;
(iii) all collective bargaining agreements pursuant to
which contributions have been made or obligations incurred (including both
pension and welfare benefits) by the Acquired Companies, and all collective
bargaining agreements pursuant to which contributions are being made or
obligations are owed by such entities;
(iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) all insurance policies purchased by or to provide
benefits under any Company Plan;
(vi) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent contractors
that relate to any Company Plan or Company Other Benefit Obligation;
(vii) all reports submitted within the four years preceding
the date of this Agreement by third party administrators, actuaries, investment
managers, consultants, or other independent contractors with respect to any
Company Plan or Company Other Benefit Obligation;
(viii) a sample notification to employees of the Acquired
Companies of their rights under ERISA Sections 601 et seq., Sections 701 et seq.
and IRC Section 4980B;
(ix) the Form 5500 filed in each of the most recent three
plan years with respect to each Company Plan, including all schedules thereto
and, where required, the opinions of independent accountants;
(x) all notices that were given by any Acquired Company
or any ERISA Affiliate of an Acquired Company or any Company Plan to the IRS,
the Department of Labor, or any participant or beneficiary, pursuant to statute,
within the four years preceding the
18
date of this Agreement, including notices that are expressly mentioned elsewhere
in this Section 3.13;
(xi) all notices that were given by the IRS or the United
States Department of Labor to any Acquired Company, any ERISA Affiliate of an
Acquired Company, or any Company Plan within the four years preceding the date
of this Agreement; and
(xii) with respect to Qualified Plans, the most recent determination letter for
each Plan of the Acquired Companies that is a Qualified Plan.
(f) Except as set forth in Part 3.13(f) of the Disclosure Letter:
(i) The Acquired Companies have performed all of their
respective material obligations under all Company Plans or Company Other Benefit
Obligations. The Acquired Companies have made appropriate entries in their
financial records and statements for all obligations and liabilities under such
Plans, and Obligations that have accrued but are not due.
(ii) No statement, either written or oral, has been made
by any Acquired Company to any Person with regard to any Plan or Other Benefit
Obligation that was not in accordance with the Plan or Other Benefit Obligation
and that could have a material adverse economic consequence to any Acquired
Company or to Buyer.
(iii) The Acquired Companies, with respect to all Company
Plans and Company Other Benefits Obligations, are, and each Company Plan and
Company Other Benefit Obligation is, in material compliance with ERISA, the IRC,
and other applicable Legal Requirements including the provisions of such Legal
Requirements expressly mentioned in this Section 3.13, and with any applicable
collective bargaining agreements.
(A) No non-exempt transaction prohibited by
ERISA Section 406 and no "prohibited transaction" under IRC Section 4975(c) that
has not been corrected has occurred with respect to any Company Plan.
(B) Neither the Seller nor any Acquired Company has
any material liability to the IRS with respect to any Plan, including any
liability imposed by Chapter 43 of the IRC.
(C) Neither the Seller nor any Acquired Company has
any material liability under ERISA Section 502.
(D) All filings required by ERISA and the IRC as to
each Plan have been timely filed, and all notices and disclosures to
participants required by either ERISA or the IRC have been timely provided, or
to the extent such filings or notices were not provided timely, no such filing
or notice could have a material adverse economic consequence to any Acquired
Company or to Buyer.
(E) All contributions and payments made or accrued
with respect to all Company Plans or Company Other Benefit Obligations are
intended to be
19
deductible under IRC Section 162 or Section 404. No amount or any asset of
any Company Plan is subject to tax as unrelated business taxable income.
(iv) Each Company Plan can be terminated within thirty
days, without payment of any additional contribution or amount and without the
vesting or acceleration of any benefits promised by such Plan, unless otherwise
required by law.
(v) Since December 31, 2002, there has been no
establishment or amendment of any Company Plan, Company VEBA, or Company Other
Benefit Obligation.
(vi) No event has occurred or circumstance exists (other
than changes in the general economic or industry conditions affecting the
Business) that could result in a material increase in premium costs of Company
Plans and Company Other Benefit Obligations that are insured, or a material
increase in benefit costs of such Plans and Obligations that are self-insured.
(vii) Other than claims for benefits submitted by
participants or beneficiaries, neither Seller nor any Acquired Company has
received any written notice of a claim against, or legal proceeding involving,
any Company Plan or Company Other Benefit Obligation.
(viii) Each Qualified Plan of each Acquired Company is
intended to be qualified in form and operation under IRC Sections 401(a) et
seq.; each trust for each such Plan is intended to be exempt from federal income
tax under IRC Sections 501(a) et seq. To Seller's Knowledge, no event has
occurred or circumstance exists that will or could give rise to disqualification
or loss of tax-exempt status of any such Plan or trust.
(ix) Seller, all Acquired Companies and all ERISA
Affiliates of Acquired Companies have materially complied with the provisions of
ERISA Sections 601 et seq. and Sections 701 et seq. and IRC Section 4980B.
(x) No payment that is owed or may become due to any
director, officer, employee, or agent of any Acquired Company will be
non-deductible to the Acquired Companies or subject to tax under IRC Section
280G or Section 4999; nor will any Acquired Company be required to "gross up" or
otherwise compensate any such person because of the imposition of any excise tax
on a payment to such person.
(xi) The consummation of the Contemplated Transactions
will not result in the payment, vesting, or acceleration of any benefit, except
to the extent required by law.
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3.14 COMPLIANCE WITH LEGAL REQUIREMENTS; GOVERNMENTAL AUTHORIZATIONS
(a) Except as set forth in Part 3.14 of the Disclosure Letter:
(i) each Acquired Company is, and has been, in material
compliance with each Legal Requirement that is or was applicable to it or to the
conduct or operation of its business or the ownership or use of any of its
assets;
(ii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) (A) may constitute or result in a
material violation by any Acquired Company of, or a material failure on the part
of any Acquired Company to comply with, any Legal Requirement, or (B) may give
rise to any obligation on the part of any Acquired Company to undertake, or to
bear all or any portion of the cost of, any material remedial action of any
nature; and
(iii) no Acquired Company has received any written notice
or other written communication from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential material violation of,
or material failure to comply with, any Legal Requirement, or (B) any actual,
alleged, possible, or potential obligation on the part of any Acquired Company
to undertake, or to bear all or any portion of the cost of, any material
remedial action of any nature.
(b) Part 3.14 of the Disclosure Letter contains a complete and
accurate list of each Governmental Authorization that is held by any Acquired
Company or that otherwise relates to the business of, or to any of the assets
owned or used by, any Acquired Company. Each Governmental Authorization listed
or required to be listed in Part 3.14 of the Disclosure Letter is valid and in
full force and effect. Except as set forth in Part 3.14 of the Disclosure
Letter:
(i) each Acquired Company is, and has been, in compliance
with all of the terms and requirements of each Governmental Authorization
identified or required to be identified in Part 3.14 of the Disclosure Letter;
(ii) no event has occurred or circumstance exists that may
(with or without notice or lapse of time) (A) constitute or result directly or
indirectly in a material violation of or a material failure to comply with any
term or requirement of any Governmental Authorization listed or required to be
listed in Part 3.14 of the Disclosure Letter, or (B) result directly or
indirectly in the revocation, withdrawal, suspension, cancellation, or
termination of, or any modification to, any material Governmental Authorization
listed or required to be listed in Part 3.14 of the Disclosure Letter;
(iii) no Acquired Company has received any written notice
or other written communication from any Governmental Body or any other Person
regarding (A) any actual, alleged, possible, or potential material violation of
or material failure to comply with any term or requirement of any Governmental
Authorization, or (B) any actual, proposed, possible, or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to any
material Governmental Authorization; and
21
(iv) all applications required to have been filed for the
renewal of the Governmental Authorizations listed or required to be listed in
Part 3.14 of the Disclosure Letter have been duly filed on a timely basis with
the appropriate Governmental Bodies, and all other material filings required to
have been made with respect to such Governmental Authorizations have been duly
made on a timely basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed in Part 3.14 of the Disclosure
Letter collectively constitute all of the material Governmental Authorizations
necessary to permit the Acquired Companies to lawfully conduct and operate their
businesses in the manner they currently conduct and operate such businesses and
to permit the Acquired Companies to own and use their assets in the manner in
which they currently own and use such assets.
3.15 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.15 of the Disclosure Letter, there
is no pending Proceeding:
(i) that has been commenced by or against any Acquired
Company or, to Seller's Knowledge, that otherwise relates to or may affect the
business of, or any of the assets owned or used by, any Acquired Company; or
(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, the
Seller's obligations in connection with any of the Contemplated Transactions.
To the Knowledge of Seller and the Acquired Companies, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or circumstance
exists that may give rise to or serve as a basis for the commencement of any
such Proceeding against any Acquired Company. Seller has delivered to Buyer or
its counsel copies of all pleadings, correspondence, and other documents
relating to each Proceeding listed in Part 3.15 of the Disclosure Letter. The
Proceedings listed in Part 3.15 of the Disclosure Letter will not have a
material adverse effect on the business, operations, assets, condition, or
prospects of any Acquired Company.
(b) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) there is no Order to which any of the Acquired
Companies, or any of the assets owned or used by any Acquired Company, is
subject;
(ii) the Seller is not subject to any Order that relates
to the business of, or any of the assets owned or used by, any Acquired Company;
and
(iii) to the Knowledge of Seller and the Acquired
Companies, no officer, director, agent, or employee of any Acquired Company is
subject to any Order that prohibits such officer, director, agent, or employee
from engaging in or continuing any conduct, activity, or practice relating to
the business of any Acquired Company.
22
(c) Except as set forth in Part 3.15 of the Disclosure Letter:
(i) each Acquired Company is, and has been, in compliance
with all of the terms and requirements of each Order to which it, or any of the
assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a material
violation of or material failure to comply with any term or requirement of any
Order to which any Acquired Company, or any of the assets owned or used by any
Acquired Company, is subject; and
(iii) no Acquired Company has received any written notice
or other written communication from any Governmental Body or any other Person
regarding any actual, alleged, possible, or potential material violation of, or
material failure to comply with, any term or requirement of any Order to which
any Acquired Company, or any of the assets owned or used by any Acquired
Company, is or has been subject.
3.16 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.16 of the Disclosure Letter, since December
31, 2002, the Acquired Companies have conducted their businesses only in the
Ordinary Course of Business and, except for this Agreement and the transactions
contemplated hereby, there has not been any:
(a) change in any Acquired Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Acquired Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Acquired Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock;
(b) amendment to the Organizational Documents of any Acquired
Company;
(c) payment or increase by any Acquired Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee or entry into any
employment, severance, or similar Contract with any director, officer, or
employee;
(d) adoption of, or increase in the benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan for or with any employees of any Acquired
Company;
(e) damage to or destruction or loss of any asset or property of any
Acquired Company, whether or not covered by insurance, materially and adversely
affecting the properties, assets, business, financial condition, or prospects of
the Acquired Companies, taken as a whole;
(f) entry into, termination of, or receipt of notice of termination
of (i) any license, distributorship, dealer, sales representative, joint
venture, credit, or similar agreement, or (ii) any
23
Contract or transaction involving a total remaining commitment by or to any
Acquired Company of at least $25,000;
(g) sale (other than sales of inventory in the Ordinary Course of
Business), lease, or other disposition of any material asset or material
property of any Acquired Company or mortgage, pledge, or imposition of any lien
or other encumbrance on any material asset or material property of any Acquired
Company, including the sale, lease, or other disposition of any of the
Intellectual Property Assets;
(h) cancellation or waiver of any claims or rights with a value to
any Acquired Company in excess of $25,000;
(i) material change in the accounting methods used by any Acquired
Company; or
(j) agreement, whether oral or written, by any Acquired Company to
do any of the foregoing.
3.17 CONTRACTS; NO DEFAULTS
(a) Part 3.17(a) of the Disclosure Letter contains a complete and
accurate list, and Seller has delivered to Buyer or its counsel true and
complete copies, of:
(i) each Applicable Contract that involves performance of
services or delivery of goods or materials by one or more Acquired Companies of
an amount or value in excess of $50,000;
(ii) each Applicable Contract that involves performance of
services or delivery of goods or materials to one or more Acquired Companies of
an amount or value in excess of $50,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold or
other interest in, any real or personal property (except personal property
leases and installment and conditional sale agreements having a value per item
or aggregate payments of less than $100,000 or with terms of less than one
year);
(iv) other than (A) the License Agreement between Oy
Uponor AB and Vinidex Tubemakers PTY Limited dated 1991, (B) the Memorandum of
Agreement between Corma Inc. and Uponor B.V. dated as of January 1, 1992, (C)
License between Uponor BV and Scepter Manufacturing Company Limited, Inc. of Xxx
Xxxxx, Xxxxxxx, Xxxxxx dated September 6, 1988, and (D) License between Uponor
BV and Camron Inc., Xxxxxxxx, Xxxxxx, Xxxxxx dated March 30, 1990, each
licensing agreement or other Applicable Contract with respect to patents,
trademarks, copyrights, or other intellectual property, including agreements
with current or former employees, consultants, or contractors regarding the
appropriation or the non-disclosure of any of the Intellectual Property Assets;
24
(v) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee representative
of a group of employees;
(vi) each joint venture, partnership, and other Applicable
Contract (however named) involving a sharing of profits, losses, costs, or
liabilities by any Acquired Company with any other Person (other than another
Acquired Company or the Seller);
(vii) each Applicable Contract containing covenants that in
any way purport to restrict the business activity of any Acquired Company or any
Affiliate of an Acquired Company or limit the freedom of any Acquired Company or
any Affiliate of an Acquired Company to engage in any line of business or to
compete with any Person;
(viii) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct payments
for goods;
(ix) each material Applicable Contract entered into other
than in the Ordinary Course of Business that contains or provides for an express
undertaking by any Acquired Company to be responsible for consequential damages;
(x) each Applicable Contract for capital expenditures in
excess of $25,000;
(xi) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by any Acquired
Company other than in the Ordinary Course of Business; and
(xii) each material amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
(b) Except as set forth in Part 3.17(b) of the Disclosure Letter,
Seller has not acquired and shall not acquire any rights under, and Seller has
not and shall not become subject to any obligation or liability under, any
Applicable Contract.
(c) Except as set forth in Part 3.17(c) of the Disclosure Letter,
each Contract identified or required to be identified in Part 3.17(a) of the
Disclosure Letter is in full force and effect and is valid and, to the Acquired
Companies' Knowledge, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or similar laws and
equitable principles relating to or affecting the rights of creditors generally
from time to time in effect.
(d) Except as set forth in Part 3.17(d) of the Disclosure Letter:
(i) each Acquired Company is and has been in material
compliance with all applicable terms and requirements of each Contract under
which such Acquired Company has or had any obligation or liability or by which
such Acquired Company or any of the assets owned or used by such Acquired
Company is or was bound;
25
(ii) to the Acquired Companies' Knowledge, each other
Person that has or had any obligation or liability under any Contract under
which an Acquired Company has or had any rights is and has been in material
compliance with all applicable terms and requirements of such Contract;
(iii) except for this Agreement and the transactions
contemplated hereby, to the Acquired Companies' Knowledge, no event has occurred
or circumstance exists that (with or without notice or lapse of time) may
contravene, conflict with, or result in a violation or breach of, or give any
Acquired Company or other Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(iv) no Acquired Company has given to or, to the Acquired
Companies' Knowledge, received from any other Person any written notice or other
written communication regarding any actual, alleged, possible, or potential
violation or breach of, or default under, any Contract involving obligations to
or by any Acquired Company in excess of $25,000.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to any
Acquired Company under current or completed Contracts with any Person.
3.18 INSURANCE
(a) Seller has delivered to Buyer or its counsel:
(i) true and complete copies of all policies of insurance
to which any Acquired Company is a party or under which any Acquired Company, or
any director of any Acquired Company, in his or her capacity as such, is or has
been covered at any time within the three years preceding the date of this
Agreement; and
(ii) to the Acquired Companies' Knowledge, any statement
by the auditor of any Acquired Company's financial statements with regard to the
adequacy of such entity's coverage or of the reserves for claims.
(b) Part 3.18(b) of the Disclosure Letter describes:
(i) any self-insurance arrangement by or affecting any
Acquired Company, including any reserves established thereunder;
(ii) any contract or arrangement, other than a policy of
insurance, for the transfer or sharing of any risk by any Acquired Company
(other than with another Acquired Company or Seller); and
(iii) all obligations of the Acquired Companies in any
calendar year to third parties with respect to insurance (including such
obligations under leases and service agreements) and identifies the policy under
which such coverage is provided.
26
(c) Part 3.18(c) of the Disclosure Letter sets forth, by year, for
the current policy year and each of the two preceding policy years:
(i) a summary of the loss experience under each policy;
(ii) a statement describing each claim under an insurance
policy for an amount in excess of $50,000, which sets forth:
(A) the name of the claimant;
(B) a description of the policy by insurer, type of
insurance, and period of coverage; and
(C) the amount and a brief description of the claim;
and
(iii) a statement describing the loss experience for all
claims that were self-insured, including the number and aggregate cost of such
claims.
(d) Except as set forth on Part 3.18(d) of the Disclosure Letter,
all policies to which any Acquired Company is a party or that provide coverage
to any Acquired Company, or any director or officer of an Acquired Company, in
his or her capacity as such:
(i) are valid, outstanding, and enforceable;
(ii) taken together, provide adequate insurance coverage
for the assets and the operations of the Acquired Companies for all risks
normally insured against by a Person carrying on the same business or businesses
as the Acquired Companies;
(iii) are sufficient for material compliance with all Legal
Requirements and Applicable Contracts; and
(iv) do not provide for any retrospective premium
adjustment or other experience-based liability on the part of any Acquired
Company.
3.19 ENVIRONMENTAL MATTERS
Except as set forth in part 3.19 of the Disclosure Letter:
(a) Each Acquired Company is, and at all times has been, in material
compliance with any Environmental Law. No Seller or Acquired Company or any of
them or any other Person for whose conduct they are or may be held to be
responsible has received, and to the Knowledge of Seller and the Acquired
Companies, has no basis to expect to receive any actual or Threatened order,
notice, or other communication from (i) any Governmental Body or private citizen
acting in the public interest, or (ii) the current or prior owner or operator of
any Facilities or (iii) any other party, of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or Threatened
obligation to undertake or bear the cost of any Environmental, Health, and
Safety Liabilities with respect to any of the Facilities or with respect to any
property or facility at or to which Hazardous Materials were generated,
27
manufactured, refined, transferred, imported, used, or processed by Seller, any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the Knowledge of Seller and the
Acquired Companies, Threatened claims, Encumbrances, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities.
(c) Neither the Seller nor any Acquired Company has received, and to
the knowledge of Seller and the Acquired Companies, has no basis to expect to
receive any citation, directive, inquiry, notice, Order, summons, warning, or
other communication that relates to Hazardous Activity, Hazardous Materials, or
any alleged, actual, or potential violation or failure to comply with any
Environmental Law, or of any alleged, actual, or potential obligation to
undertake or bear the cost of any Environmental, Health, and Safety Liabilities
with respect to any of the Facilities or with respect to any property or
facility to which Hazardous Materials generated, manufactured, refined,
transferred, imported, used, or processed by Seller, any Acquired Company, or
any other Person for whose conduct they are or may be held responsible, have
been transported, treated, stored, handled, transferred, disposed, recycled, or
received.
(d) To the Knowledge of Seller, neither Seller nor any Acquired
Company has any Environmental, Health, and Safety Liabilities with respect to
the Facilities or at any property geologically or hydrologically adjoining the
Facilities.
(e) Neither Seller, nor any Acquired Company, or to the Knowledge of
Seller and the Acquired Companies, any other Person, has permitted or conducted,
or is aware of, any Hazardous Activity conducted with respect to the Facilities
except in material compliance with all applicable Environmental Laws.
(f) To the Knowledge of Seller, there has been no Release or Threat
of Release, of any Hazardous Materials at or from the Facilities or at any other
locations where any Hazardous Materials were generated, manufactured, refined,
transferred, produced, imported, used, or processed from or by the Facilities,
whether by Seller, any Acquired Company, or any other Person.
(g) Seller has delivered to Buyer or its counsel true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by Seller or any Acquired Company pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by Seller, any Acquired Company, or any other Person for whose
conduct they are or may be held responsible, with Environmental Laws.
(h) To the Knowledge of Seller, there are no above ground or
underground storage tanks or xxxxx at the Facilities.
28
3.20 EMPLOYEES
(a) No director or, to the Knowledge of the Acquired Companies, any
employee of any Acquired Company is a party to, or is otherwise bound by, any
agreement or arrangement, including any confidentiality, noncompetition, or
proprietary rights agreement, between such employee or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his duties as an employee or director of the
Acquired Companies, or (ii) the ability of any Acquired Company to conduct its
business, including any Proprietary Rights Agreement with Seller by any such
employee or director. To Seller's Knowledge, except as set forth in Part 3.20(a)
of the Disclosure Letter, no director, officer, or other key employee of any
Acquired Company has provided notice that he or she intends to terminate his or
her board service or employment with such Acquired Company.
(b) With respect to retired employees and directors of the Acquired
Companies, or their dependents, none are receiving benefits or scheduled to
receive benefits in the future.
3.21 LABOR RELATIONS; COMPLIANCE
Part 3.21 of the Disclosure Letter contains a complete and accurate list,
and Seller has delivered to Buyer or its counsel true and complete copies, of
any collective bargaining or other labor Contract to which any Acquired Company
is a party. Except as set forth in Part 3.21 of the Disclosure Letter, there has
not been, there is not presently pending or existing, and to Seller's Knowledge
there is not Threatened, (a) any strike, slowdown, picketing, work stoppage, or
employee grievance process, (b) any Proceeding against or affecting any Acquired
Company relating to the alleged violation of any Legal Requirement pertaining to
labor relations or employment matters, including any charge or complaint filed
by an employee or union with the National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting any of the Acquired Companies or their premises, or (c) any
application for certification of a collective bargaining agent. To Seller's
Knowledge, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute. There is no lockout of any
employees by any Acquired Company, and no such action is contemplated by any
Acquired Company. Each Acquired Company has complied in all material respects
with all Legal Requirements relating to employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes, occupational
safety and health, and plant closing. To the Acquired Companies' Knowledge, no
Acquired Company is liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure to comply
with any of the foregoing Legal Requirements.
3.22 INTELLECTUAL PROPERTY
(a) The term "Intellectual Property Assets" includes:
(i) the names ETI, Ultra Rib, Ultra Blue, Ultra Corr,
Mid-States Plastics, all fictional business names, trading names, registered and
unregistered trademarks, service marks, and applications (collectively,
"Marks");
29
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and
unpublished works (collectively, "Copyrights");
(iv) all rights in mask works (collectively, "Rights in
Mask Works"); and
(v) all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints; in each case owned, used, or
licensed by any Acquired Company as licensee or licensor, and which in each case
have value and which a reasonably prudent operator of the Business would have
maintained as a trade secret, except for any such rights for which the license
is merely implied by the sale of a product, and except for any such rights
relating to commonly available software programs with a value of less than $500
for which an Acquired Company is the licensee pursuant to a perpetual, paid-up
license (collectively, "Trade Secrets").
(b) Agreements--Part 3.22(b) of the Disclosure Letter contains a
complete and accurate list and summary description, including any royalties paid
or received by the Acquired Companies, of all Contracts relating to the
Intellectual Property Assets to which any Acquired Company is a party or by
which any Acquired Company is bound. There are no outstanding and, to Seller's
Knowledge, no Threatened disputes or disagreements with respect to any such
Contract.
(c) Know-How Necessary for the Business. To Seller's Knowledge, the
Intellectual Property Assets are all those necessary for the operation of the
Acquired Companies' businesses as they are currently conducted. One or more of
the Acquired Companies either (i) is the owner of all right, title, and interest
in and to each such Intellectual Property Asset, free and clear of all liens,
security interests, charges, encumbrances, equities, and other adverse claims
against such ownership, or (ii) has the right to use without further payment to
a third party each such Intellectual Property Asset, except as provided in the
License Agreement and the Sublicense Agreement.
(d) Patents
(i) Part 3.22(d) of the Disclosure Letter contains a
complete and accurate list and summary description of all Patents.
(ii) All of the issued Patents owned by the Acquired
Companies are currently in compliance with formal legal requirements applicable
following the issuance of the Patent in order to keep the Patents in effect
(including payment of filing, examination, maintenance and annuity fees and
proofs of working), and are not subject to any maintenance or annuity fees or
taxes or similar obligations falling due within ninety days after the Closing
Date.
(iii) No Patent owned by the Acquired Companies has been or
is now involved in any interference, reissue, reexamination, or opposition
proceeding. To Seller's Knowledge, there is no potentially interfering patent or
patent application of any third party.
30
(iv) To Seller's Knowledge, no Patent owned by the
Acquired Companies is infringed or has been challenged or threatened with a
challenge in any way and there has been no allegation of invalidity or
unenforceability as to any claim. To Seller's Knowledge, none of the products
manufactured and sold, nor any process or know-how used, by any Acquired Company
infringes or is alleged to infringe any patent or other proprietary right of any
other Person.
(e) Trademarks
(i) Part 3.22(e) of Disclosure Letter contains a complete
and accurate list and summary description of all Marks.
(ii) All Marks owned by the Acquired Companies that have
been registered with the United States Patent and Trademark Office are currently
in compliance with all formal legal requirements applicable following the
issuance of the Marks in order to keep the Marks in effect (including the timely
post-registration filing of affidavits of use and incontestability and renewal
applications) and are not subject to any maintenance fees or taxes or similar
obligations falling due within ninety days after the Closing Date.
(iii) No Xxxx owned by the Acquired Companies has been or
is now involved in any opposition, invalidation, or cancellation and, to
Seller's Knowledge, no such action is Threatened with the respect to any of the
Marks.
(iv) To Seller's Knowledge, there is no potentially
interfering trademark or trademark application of any third party.
(v) To Seller's Knowledge, no Xxxx owned by the Acquired
Companies is infringed or has been challenged or threatened with a challenge in
any way. To Seller's Knowledge, none of the Marks used by any Acquired Company
infringes or is alleged to infringe any trade name, trademark, or service xxxx
of any third party.
(f) Copyrights
(i) Part 3.22(f) of the Disclosure Letter contains a
complete and accurate list and summary description of all registered Copyrights
owned by the Acquired Companies.
(ii) All the registered Copyrights owned by the Acquired
Companies have been registered and are currently in compliance with formal legal
requirements applicable following the issuance of the Copyrights in order to
keep the Copyrights in effect and are not subject to any maintenance fees or
taxes or similar obligations falling due within ninety days after the date of
Closing.
(iii) To Seller's Knowledge, (A) no registered Copyright
owned by the Acquired Companies is infringed or has been challenged or
threatened with a challenge in any way, and (B) none of the subject matter of
any of the registered Copyrights owned by the Acquired Companies infringes or is
alleged to infringe any copyright of any third party or is a derivative work
based on the work of a third party.
31
(g) Trade Secrets
(i) To Seller's Knowledge, the documentation relating to
the Trade Secrets, taken as a whole, is sufficient in detail and content to
identify and explain it and to allow its proper use without reliance on the
knowledge or memory of any individual.
(ii) Seller and the Acquired Companies have taken all
reasonable precautions to protect the secrecy, confidentiality, and value of
their Trade Secrets.
(iii) One or more of the Acquired Companies has good title
and, to Seller's Knowledge, an absolute (but not necessarily exclusive) right to
use the Trade Secrets. To Seller's Knowledge, the Trade Secrets owned by the
Acquired Companies are not part of the public knowledge or literature and have
not been used, divulged, or appropriated either for the benefit of any Person
(other than one or more of the Acquired Companies, Seller or its parent company)
or to the detriment of the Acquired Companies. To Seller's Knowledge, no Trade
Secret owned by the Acquired Companies is subject to any adverse claim or has
been challenged or threatened in any way.
(h) Ultra Blue Product
Except as provided in Part 3.22(h) of the Disclosure Letter, other than the
Acquired Companies (i) Seller has not granted to any Person any license or
rights to manufacture or sell the Ultra Blue Product within the United States,
Canada or Mexico and (ii) Seller has not disclosed to, or assisted, any Person
within the United States, Canada or Mexico in learning or practicing, any trade
secret or confidential information related to the Ultra Blue Product.
3.23 CERTAIN PAYMENTS
No Acquired Company or director or officer of any Acquired Company, or to
Seller's Knowledge any agent, employee or any other Person associated with or
acting for or on behalf of any Acquired Company, has directly or indirectly (a)
made any contribution, gift, bribe, rebate, payoff, influence payment, kickback,
or other payment to any Person, private or public, regardless of form, whether
in money, property, or services (i) to obtain favorable treatment in securing
business, (ii) to pay for favorable treatment for business secured, (iii) to
obtain special concessions or for special concessions already obtained, for or
in respect of any Acquired Company or any Affiliate of an Acquired Company, or
(iv) in violation of any Legal Requirement, or (b) established or maintained any
fund or asset that has not been recorded in the books and records of the
Acquired Companies.
3.24 DISCLOSURE
(a) No representation or warranty of Seller in this Agreement and no
statement in the Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
(b) There is no fact known to Seller that has specific application
to Seller or any Acquired Company (other than general economic or industry
conditions) and that materially adversely affects or, as far as Seller can
reasonably foresee, materially threatens, the assets,
32
business, prospects, financial condition, or results of operations of the
Acquired Companies (on a consolidated basis) that has not been set forth in this
Agreement or the Disclosure Letter.
3.25 RELATIONSHIPS WITH RELATED PERSONS
Except as set forth in Part 3.25 of the Disclosure Letter, neither the
Seller nor any Related Person of Seller (except any Acquired Company) has any
interest in any property (whether real, personal, or mixed and whether tangible
or intangible), used in or pertaining to the Acquired Companies' businesses.
Neither the Seller nor any Related Person of Seller (except any Acquired
Company) is, or has owned (of record or as a beneficial owner) an equity
interest or any other financial or profit interest in, a Person that has (i) had
business dealings or a material financial interest in any transaction with any
Acquired Company, or (ii) engaged in competition with any Acquired Company with
respect to any line of the products or services of such Acquired Company in any
market presently served by such Acquired Company. Except as set forth in Part
3.25 of the Disclosure Letter, neither the Seller nor any Related Person of
Seller (except any Acquired Company) is a party to any Contract or understanding
with, whether written or oral, or has any claim or right against, any Acquired
Company.
3.26 BROKERS OR FINDERS
Seller and its agents have incurred no obligation or liability, contingent
or otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement other than the Letter
Agreement dated June 28, 2002 by and between Stonebridge Associates, LLC and
Uponor Oyj, and Seller will forever indemnify and hold Buyer harmless in full
from any such payment alleged to be due by or through Seller.
4. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer makes the following representations and warranties to Seller with the
intention that Seller may rely upon the same and acknowledges that the same
shall survive the Closing of this transaction to the extent herein provided:
4.1 ORGANIZATION AND GOOD STANDING
Buyer is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Colorado.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Buyer has the absolute and unrestricted right, power, and authority to execute
and deliver this Agreement and to perform its obligations under this Agreement.
(b) Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will give any Person the right to
prevent, delay, or otherwise interfere with any of the Contemplated Transactions
pursuant to:
33
(i) any provision of Buyer's Organizational Documents;
(ii) any resolution adopted by the board of directors or
the stockholders of Buyer;
(iii) any Legal Requirement or Order to which Buyer may be
subject; or
(iv) any Contract to which Buyer is a party or by which
Buyer may be bound.
Except as set forth in Schedule 4.2, Buyer is not and will not be required
to obtain any Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of any of the
Contemplated Transactions.
4.3 SECURITIES MATTERS
Buyer is acquiring the Shares for its own account and not with a view to
their distribution within the meaning of Section 2(a)(11) of the Securities Act.
Buyer is an accredited investor, as such term is defined in the Securities Act.
4.4 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Buyer and
that challenges, or may have the effect of preventing, delaying, making illegal,
or otherwise interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 ENVIRONMENTAL ASSESSMENTS
The Phase I and Phase II environmental site assessments referenced in
Section 7.3(g) are the only environmental site assessments commissioned by Buyer
with respect to any of the Acquired Companies or their properties.
5. INTENTIONALLY OMITTED.
6. INTENTIONALLY OMITTED
7. ADDITIONAL DELIVERIES
7.1 CONSENTS
Each of the Consents identified in Part 3.2 of the Disclosure Letter, and
each Consent identified in Schedule 4.2, must have been obtained and must be in
full force and effect.
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7.2 ADDITIONAL DOCUMENTS TO BUYER
Seller must have caused the following documents to be delivered to Buyer:
(a) an opinion of counsel to Seller, dated the Closing Date; (b)
executed estoppel certificates as set forth on Schedule 7.2(b) dated as of a
date not more than 15 days prior to the Closing Date;
(c) all certificates, schedules, exhibits, and attachments in
completed form and specifying the information required by the provisions of this
Agreement;
(d) Articles of Incorporation of Seller and each Acquired Company
certified by the Office of the Secretary of State for the state of organization
of each entity;
(e) Bylaws of Seller and each Acquired Company certified by Seller's
Secretary;
(f) Certificate of Good Standing for Seller and each Acquired
Company dated no earlier than fifteen (15) days prior to the Closing Date (or,
if not possible, as close as possible to the Closing Date);
(g) certified copies of corporate resolutions of Seller authorizing
it to enter into the transactions contemplated herein;
(h) releases of security interests in the assets of any Acquired
Company, if any; and
(i) duly executed License Agreement, Sublicense Agreement and
Trademark License Agreement;
(j) such other documents as Buyer may reasonably request for the
purpose of enabling its counsel to provide the opinion referred to in Section
7.3(a).
7.3 ADDITIONAL DOCUMENTS TO SELLER
Buyer must have caused the following documents to be delivered to Seller:
(a) an opinion of counsel to Buyer, dated the Closing Date;
(b) all certificates, schedules, exhibits, and attachments in
completed form and specifying the information required by the provisions of this
Agreement;
(c) Articles of Incorporation of Buyer certified by the Colorado
Secretary of State;
(d) Certificate of Good Standing for Buyer dated no earlier than ten
(10) days prior to the Closing Date;
35
(e) certified copies of corporate resolutions of Buyer authorizing
it to enter into the transactions contemplated herein;
(f) such other documents as Seller may reasonably request for the
purpose of enabling its counsel to provide the opinion referred to in Section
7.2(a); and
(g) true and complete copies of Phase I and Phase II environmental
site assessments, with attachments, of the Facilities commissioned by Buyer in
contemplation of this transaction.
8. TAX MATTERS.
The following provisions shall govern the allocation of responsibility as
between Buyer and Seller for certain tax matters following the Closing Date:
8.1 TAX PERIODS ENDING BEFORE THE CLOSING DATE.
Buyer shall prepare or cause to be prepared and file or cause to be filed
all Tax Returns for the Acquired Companies for all periods ending on or prior to
the Closing Date which are filed after the Closing Date other than income Tax
Returns with respect to periods for which a consolidated, unitary or combined
income Tax Return of Seller will include the operations of the Acquired
Companies. Buyer shall permit Seller to review and comment on each such Tax
Return described in the preceding sentence prior to filing and shall make such
revisions to such Tax Returns as are reasonably requested by Seller. For income
Tax Returns attributable to the short period commencing January 1, 2003 and
ending on the Closing Date, the Parties shall use the closing of the books
method to allocate income or loss to such period.
8.2 TAX PERIODS BEGINNING BEFORE AND ENDING AFTER THE CLOSING DATE.
Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of the Acquired Companies for Tax periods which begin before the
Closing Date and end after the Closing Date.
8.3 REFUNDS AND TAX BENEFITS.
Refunds that are received by Buyer or the Acquired Companies, and any
amounts credited against Tax to which Buyer or the Acquired Companies become
entitled, that relate to Tax periods or portions thereof ending on or before the
Closing Date shall be for the account of Seller, and Buyer shall pay over to
Seller any such refund or the amount of any such credit within fifteen (15) days
after receipt or entitlement thereto, except to the extent that such refund
would create a liability for payment of Taxes by an Acquired Company after the
Closing Date. In addition, to the extent that a claim for refund or a proceeding
results in a payment or credit against Tax by a taxing authority to the Buyer or
the Acquired Companies of any amount accrued on the Closing Financial
Statements, the Buyer shall pay such amount to Seller within fifteen (15) days
after receipt or entitlement thereto.
36
8.4 COOPERATION ON TAX MATTERS.
Buyer and Seller shall, and Buyer shall cause the Acquired Companies to,
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section and any
audit, litigation or other proceeding with respect to Taxes. Such cooperation
shall include the retention, for a commercially reasonable period of time, and
(upon the other party's request) the provision of material records and material
information which are reasonably relevant to any such audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Buyer and Seller agree to, and Buyer shall cause the Acquired
Companies to, (A) retain all material books and records with respect to Tax
matters pertinent to the Acquired Companies relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Seller, any extensions
thereof) of the respective taxable periods, and to abide by all record retention
agreements entered into with any taxing authority, and (B) give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, Buyer or Seller, as
the case may be, shall, and Buyer shall cause the Acquired Companies to, allow
the other party to take possession of such books and records. Buyer and Seller
further agree, upon request, to use their best efforts to obtain any material
certificate or other material document from any governmental authority or any
other Person as may be necessary to mitigate, reduce or eliminate any material
Tax that could be imposed (including, but not limited to, with respect to the
transactions contemplated hereby).
8.5 TAX SHARING AGREEMENTS.
All tax sharing agreements or similar agreements with respect to or
involving the Acquired Companies shall be terminated as of the Closing Date and,
after the Closing Date, the Acquired Companies shall not be bound thereby or
have any liability thereunder.
8.6 SECTION 338(h)(10) ELECTION.
Upon mutual agreement by Seller and Buyer, Seller and Buyer shall join in
making an election under IRC Section 338(h)(10) (and any corresponding elections
under state, local or foreign tax law) with respect to the purchase and sale of
the stock of the Acquired Companies hereunder.
8.7 INDEMNIFICATION FOR POST-CLOSING TRANSACTIONS.
Buyer shall indemnify Seller for any additional tax owed by Seller
(including tax owed by Seller due to this indemnification payment) resulting
from any transaction engaged in by the Acquired Companies not in the ordinary
course of business occurring on the Closing Date after Buyer's purchase of the
Shares.
37
9. POST CLOSING OBLIGATIONS
9.1 NONCOMPETITION
For the period beginning on the Closing Date and ending on the fifth
anniversary of the Closing Date, Seller shall not, directly or indirectly,
whether individually or as a shareholder (except as a shareholder owning 1% or
less of the outstanding capital stock of a publicly traded corporation),
partner, member, consultant, creditor, or agent of any Person:
(a) Except as set forth on Part 9.1 of the Disclosure Letter, enter
into, engage in, or promote or assist (financially or otherwise), directly or
indirectly, any business which engages in, or intends to be engaged in, the
Business; or
(b) Induce or encourage any employee, officer, director, agent,
supplier, or independent contractor of any Acquired Company or Buyer to
terminate his or its relationship with such Acquired Company or Buyer, or
otherwise interfere or attempt to interfere in any way with Acquired Companies'
and Buyer's relationships with their respective employees, officers, directors,
agents, suppliers, independent contractors, or others; or
(c) Employ or engage any person listed on Part 9.1(c) of the
Disclosure Letter.
9.2 ACCOUNTS RECEIVABLE
(a) Buyer shall cause the Company, at its expense, for a period of
180 days following the Closing Date, to (i) administer the collection of the
Accounts Receivable, (ii) maintain, available for inspection on reasonable
demand of Seller, appropriate records of all material collections, and (iii)
exercise good faith reasonable efforts, consistent with the past practices of
the Seller, to collect the Accounts Receivable (but not including any referral
of accounts to attorneys for collection or the commencement of legal
proceedings).
(b) At the end of such 180-day period, Buyer shall have the option
to cause the Company either to (i) sell any un-collected Accounts Receivable to
Seller for such disposition as the Seller may choose to make at a price mutually
agreeable to the Company and the Seller, or (ii) keep any un-collected Accounts
Receivable.
9.3 EMPLOYEE BENEFITS
(a) For a period not to exceed ninety (90) days following the
Closing Date, Buyer shall provide benefits to the employees of the Acquired
Companies under its Plans and Other Benefit Obligations that are substantially
similar to the benefits under the Plans and Other Benefit Obligations maintained
by Seller in which the employees are eligible prior to the Closing Date;
provided, however, that nothing in this Section 9.3(a) shall prohibit or
restrict Buyer from amending or terminating any Plans and Other Benefit
Obligations in accordance with the terms of such Plans and Other Benefit
Obligations, the provisions of any collective bargaining agreement or applicable
law.
(b) For all purposes under any Plan or Other Benefit Obligation
sponsored by Buyer, including, without limitation, severance, vacation,
eligibility and vesting in any Qualified
38
Plan and eligibility in any Welfare Plan, employees of any Acquired Company
shall be given credit for all service with an Acquired Company or any ERISA
Affiliate of an Acquired Company rendered prior to the Closing Date.
(c) With respect to all employees of an Acquired Company,
preexisting condition exclusions or actively-at-work requirements of any Buyer
Welfare Plan shall apply only to the extent permitted by the terms of such
Welfare Plan, the provisions of any collective bargaining agreement or
applicable law. Buyer shall give all employees of an Acquired Company full
credit under any Welfare Plan sponsored or maintained by Buyer for all
co-payments, deductibles, out-of-pocket maximums and any other annual
limitations to the extent satisfied in the plan year in which the Closing occurs
(or the year in which such employees commence participation in Buyer's Welfare
Plans, if later) as if there was no change in coverage with respect to such
employees.
(d) As soon as practicable following the Closing Date, Buyer shall
accept a trust-to-trust transfer of the accounts of all Acquired Company
employees under any Qualified Plan sponsored or maintained by Seller to a
Qualified Plan maintained or sponsored by Buyer or a Buyer ERISA Affiliate.
(e) Seller shall retain all obligations and liabilities for
processing and paying all claims incurred by Acquired Company employees under
any Seller Welfare Plan in accordance with the terms of the applicable Plan for
the period up to and including the Closing Date; provided that all such claims
must be submitted to Seller within the time prescribed by the applicable Plan.
Seller shall further retain all obligations and liabilities with respect to (i)
the provision of continuation coverage required pursuant to ERISA Sections 601
et seq. and IRC Section 4980B for those Acquired Company employees who are not
hired by Buyer and who experienced a "qualifying event" (as defined in ERISA
Sections 601 et seq. and IRC Section 4980B) prior to Closing; and (ii) the
provision of short-term or long-term disability benefits for those Acquired
Company employees who are not hired by Buyer and who experienced a disability
prior to Closing. Buyer shall assume all obligations with respect to the
provision of continuation coverage required pursuant to ERISA Sections 601 et
seq. and IRC Section 4980B or the provision of short-term or long-term
disability benefits for those Acquired Company employees who are hired by Buyer
and those employees on a leave of absence from an Acquired Company on the
Closing Date.
9.4 USE OF SELLER NAME
From and after the Closing Date, Buyer shall refrain from, and shall cause
the Company to cease, using the name "Uponor" for any purpose. Notwithstanding
the immediately preceding sentence, the Company shall be permitted to sell its
existing stock of products and use its existing marketing literature that may
contain the name "Uponor" for a period of up to six months after the Closing
Date, and shall be permitted to use its existing business cards for a period of
up to one month after the Closing Date, provided that the Buyer exercises, and
causes the Company to exercise, Best Efforts to replace such products, marketing
literature and business cards as promptly as possible after the Closing Date.
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9.5 ULTRA BLUE PRODUCT
From and after the Closing Date, without the prior written consent of
Buyer, in its sole discretion (which consent shall not be unreasonably delayed),
Seller covenants that (a) it shall refrain from granting to any Person any
license or other rights to manufacture or sell the Ultra Blue Product in the
United States, Canada or Mexico and (b) it shall not disclose any trade secrets,
or confidential information relating thereto, owned or licensed by Seller or its
Affiliates within (i) Canada, Mexico or the United States, or (ii) elsewhere,
except where the disclosure is made subject to confidentiality restrictions and
is otherwise disclosed in a manner consistent with reasonable business efforts
regarding maintenance of trade secrets, including but not limited to disclosure
to an Affiliate of Seller or disclosure in connection with the sale of shares or
assets (in whatever transaction form) of Seller or any of its Affiliates.
9.6 LICENSE MATTERS
If as a result of any default by Buyer under any loan agreements, Buyer is
prevented from paying royalties under the License Agreement, Sublicense
Agreement or Trademark License Agreement, Buyer shall refrain from making any
payment of dividends to its parent company, PW Eagle, Inc., or any successor
thereto, provided however that Buyer and or its subsidiaries shall not be
prevented from making any payment pursuant to a tax sharing agreement or other
arrangement relating to the payment of Taxes owing by Buyer and its
subsidiaries.
10. INDEMNIFICATION; REMEDIES
10.1 SURVIVAL; RIGHT TO INDEMNIFICATION
(a) All representations, warranties, covenants, and obligations in
this Agreement, the Disclosure Letter, the supplements to the Disclosure Letter
and any other certificate or document delivered pursuant to this Agreement will
survive the Closing as provided in this Section 10. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
(b) The sole recourse and remedy of the Buyer, the Seller and the
other Indemnified Persons for any inaccuracy in or breach of, or any other claim
with respect to, any representation or warranty or alleged representation or
warranty by or on behalf of the Seller or the Acquired Companies, on the one
hand, or the Buyer on the other hand, contained in or made pursuant to this
Agreement or any other certificate, instrument, or document delivered pursuant
hereto, shall be under the provisions of and to the extent provided in this
Section 10. Each of the Buyer, the Seller and the other Indemnified Persons
(including, after the Closing, the Acquired Companies) shall comply with this
Section 10 and shall not assert any inaccuracy, breach or claim or seek any
recourse or remedy in respect thereof other than under the provisions of this
Section 10.
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10.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER
Seller will indemnify and hold harmless Buyer, the Acquired Companies, and
their respective Representatives, stockholders, controlling persons, and
affiliates, but excluding the stockholders of PW Eagle, Inc. or any successor
thereto (collectively, the "Indemnified Persons") for, and will pay to the
Buyer, the Acquired Companies and their Indemnified Persons the amount of, any
loss, liability, claim, damage, CONSEQUENTIAL AND INCIDENTAL DAMAGES (ONLY WITH
RESPECT TO ANY BREACH OF THE REPRESENTATIONS CONTAINED IN SECTION 3.22, THE
COVENANTS CONTAINED IN SECTION 9.5 OR AS SPECIFICALLY PROVIDED IN SECTION 10.5),
LOST PROFITS (ONLY WITH RESPECT TO ANY BREACH OF THE REPRESENTATIONS CONTAINED
IN SECTION 3.22 OR THE COVENANTS CONTAINED IN SECTION 9.5) and expense
(including actual costs of defense and reasonable attorneys' fees), whether or
not involving a third-party claim, to the extent that such loss, liability,
claim, damage and expense exceeds the amount, if any, reserved for such loss,
liability, claim, damage or expense on the Final Working Capital Statement
(collectively, "Damages"), arising directly or indirectly from or in connection
with:
(a) any Breach of a representation or warranty made by Seller in
this Agreement, the Disclosure Letter or any other certificate delivered by
Seller pursuant to this Agreement which was within the actual knowledge of Xxxxx
Xxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxxxx and Xxxxx Xxxxx;
(b) any Breach of any representation or warranty made by Seller in
this Agreement, the Disclosure Letter or any other certificate delivered by
Seller pursuant to this Agreement, provided that except as set forth in Section
10.2(c) and 10.2(h), a claim for indemnity is made to Seller within one year
after the Closing Date;
(c) any Breach of any representation or warranty in Sections 3.3(a),
3.11 and 3.13, provided that a claim for indemnity is made to Seller on or
before forty-five days following the expiration of statutes of limitation with
respect to matters covered therein (giving effect to any waiver, mitigation, or
extension thereof);
(d) any Breach by Seller of any covenant or obligation of Seller in
this Agreement, provided that a claim for indemnity is made to Seller within
forty-five days after the covenant expires;
(e) except as set forth in Sections 10.3, 10.4 and 10.5, any
liability or obligation of any Acquired Company relating to, arising out of, or
incurred during periods prior to or on the Closing Date other than the Permitted
Liabilities, provided that a claim for indemnity is made to Seller within one
year of the Closing Date;
(f) any matter listed on Schedule 10.2(f), to the extent such matter
occurred prior to the Closing Date;
(g) any proceeding brought by an employee or former employee of an
Acquired Company relating to or arising out of such claimant's employment with
an Acquired Company on or prior to the Closing Date, provided that a claim for
indemnity is made to Seller on or
41
before forty-five days following the expiration of statutes of limitation with
respect to matters covered therein (giving effect to any waiver, mitigation, or
extension thereof); and
(h) a Breach of a representation or warranty contained in Section
3.22, provided that a claim for indemnity is made to Seller within eight years
of the Closing Date.
Notwithstanding anything to the contrary in this Agreement, obligations and
liabilities of any Acquired Company under contracts or agreements entered into
prior to the Closing Date will not be deemed to relate to or arise out of any
period prior to, and will not accrue or be incurred until, the date on which
performance by the Acquired Company is due under such contracts or agreements.
10.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY SELLER--ENVIRONMENTAL
MATTERS.
In addition to the provisions of Section 10.2, and notwithstanding anything
to the contrary in Section 10.4 below, Seller will indemnify and hold harmless
Buyer, the Acquired Companies, and their Indemnified Persons for, and will pay
to Buyer, the Acquired Companies, and their Indemnified Persons the amount of,
any Damages (including costs of cleanup, containment, or other remediation)
arising directly or indirectly, from or in connection with:
(a) any Environmental, Health, and Safety Liabilities, except those
disclosed on Part 3.19 to the Disclosure Letter, arising out of or relating to:
(i) (A) the operation or condition at any time on or prior to the Closing Date
of the Facilities, or (B) any Hazardous Materials or other contaminants that
were present on the Facilities on or prior to the Closing Date; or (ii) (A) any
Hazardous Materials, wherever located, that were, or were allegedly, generated,
transported, stored, treated, Released, or otherwise handled by Seller or any
Acquired Company or by any other Person for whose conduct they are or may be
held responsible at any time on or prior to the Closing Date, or (B) any
Hazardous Activities that were, or were allegedly, conducted by Seller or any
Acquired Company or by any other Person for whose conduct they are or may be
held responsible on or prior to the Closing Date;
(b) any bodily injury (including illness, disability, and death, and
regardless of when any such bodily injury occurred, was incurred, or manifested
itself), personal injury, property damage (including trespass, nuisance,
wrongful eviction, and deprivation of the use of real property), or other damage
of or to any Person, including any employee or former employee of Seller or any
Acquired Company, or any other Person for whose conduct they are or may be held
responsible, arising out of conduct described in (a) above; or
(c) any Environmental, Health, and Safety Liabilities arising out of
or relating to the failure of an Acquired Company at any time on or prior to the
Closing Date to obtain and maintain Governmental Authorization pursuant to
Environmental Law, and have in effect written plans and procedures pursuant to
Environmental Law, provided that a claim for indemnity is made to Seller within
one year of the Closing Date, and provided further that a claim for indemnity of
a penalty or fine issued pursuant to Environmental Law for such noncompliance
need not be made within one year of the Closing Date;
42
(d) The procedure described in Section 10.9 will apply to any claim
solely for monetary damages relating to a matter covered by this Section 10.3.
(i) In accordance with the requirements set forth on
Schedule 10.3(d), Seller will be entitled to control any cleanup, any related
Proceeding, and, except as provided in the following sentence, any other
Proceeding with respect to which indemnity may be sought under this Section
10.3.
(ii) Seller's selection of consultants and contractors to
perform any cleanup, any related Proceeding or any other Proceeding with respect
to which indemnity may be sought under this Section 10.3 shall be subject to the
review and approval of Buyer, which approval shall not be unreasonably withheld
or delayed.
(iii) Seller's consultants and contractors shall promptly
prepare a schedule for completing any cleanup, any related Proceeding or any
other Proceeding with respect to which indemnity may be sought under this
Section 10.3, subject to the review and approval of Buyer, which approval shall
not be unreasonably withheld or delayed. Any amendments to such schedule shall
be subject to the review and approval of Buyer, which approval shall not be
unreasonably withheld or delayed.
(iv) Buyer shall afford Seller's consultants and
contractors reasonable access to its facilities, employees and all relevant
documents and records regarding any cleanup, any related Proceeding or any other
Proceeding with respect to which indemnity may be sought under this Section
10.3. Seller, Buyer and their respective employees, consultants and contractors
agree to cooperate with each other to complete in a timely and cost-effective
manner any cleanup, any related Proceeding or any other Proceeding with respect
to which indemnity may be sought under this Section 10.3.
(e) Seller's payment of Damages under paragraphs (a) and (b) above
shall be limited to the percentages set forth in the following table:
When Claim Made to Seller Seller's Percentage
------------------------- -------------------
On or before the 2nd anniversary
of the Closing 100%
After 2nd anniversary but on or
before the 3rd 83.33%
After 3rd anniversary but on or
before the 4th 66.66%
After 4th anniversary but on or
before the 5th 49.99%
After 5th anniversary but on or
before the 6th 33.33%
After 6th anniversary but on or
before the 7th 16.66%
After the 7th anniversary 0%
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10.4 CROSS INDEMNITY FOR CERTAIN WORKERS' COMPENSATION CLAIMS.
Notwithstanding anything to the contrary in this Agreement, except for
breaches of representations and warranties set forth in Articles 3 and 4 above,
the rights and obligations of Seller and Buyer as between each other, with
respect to claims by employees or former employees based on occupational injury,
illness or death, before and/or after the Closing Date ("Workers' Compensation
Claims") shall be governed by this Section 10.4 and not the general indemnity
provisions of Section 10.2 above. As between themselves, and without conferring
any benefit on any third Person: (i) Seller shall indemnify, defend and hold
Buyer, the Acquired Companies and their Indemnified Persons harmless with
respect to any Workers' Compensation Claims that arise out of or were caused
during employment by the claimant with any Acquired Company on or prior to the
Closing Date that are reported to Seller or an Acquired Company on or prior to
the Closing Date or Buyer or an Acquired Company after the Closing Date; (ii)
Buyer shall indemnify, defend and hold Seller and its Indemnified Persons
harmless with respect to any Workers' Compensation Claims that arise out of or
were caused during employment by the claimant with an Acquired Company after the
Closing Date and are reported to Buyer or an Acquired Company after the Closing;
and (iii) notwithstanding clauses (i) and (ii), with respect to any Workers'
Compensation Claims that arise out of or were caused during employment by the
claimant with an Acquired Company both before and after the Closing Date and are
reported to Buyer or an Acquired Company after the Closing Date:
(a) the respective liabilities of Seller and Buyer shall be apportioned in
accordance with the clear and convincing evidence that such Workers'
Compensation Claim was caused before and after the Closing Date, respectively,
and
(b) to the extent there is not clear and convincing evidence to apportion
the respective liabilities of Seller and Buyer relating to any Workers'
Compensation Claims to periods before and after the Closing Date in accordance
with Section 10.4(a),
(I) Seller shall indemnify, defend and hold Buyer, the Acquired
Companies and their Indemnified Persons harmless for Seller's WC Formula
Percentage (as defined below) of such Workers' Compensation Claims, and
(II) Buyer shall indemnify, defend and hold Seller and its
Indemnified Persons harmless for Buyer's WC Formula Percentage of such
Workers' Compensation Claims. As used in this Section 10.4, "WC Formula
Percentage" means a percentage calculated by dividing the number of years
(rounded to the nearest whole year) of employment by the claimant with an
Acquired Company while such Acquired Company was owned, directly or
indirectly, by the indemnitor under this Section 10.4 by the total number
of years (rounded to the nearest whole year) of employment by the claimant
with an Acquired Company prior to and after the Closing Date. Seller and
Buyer hereby mutually waive as to each other all rights of subrogation
based on payments to workers hereunder and all rights of immunity or
limitation of liability based on federal, state or local laws.
44
10.5 INDEMNITY FOR PRODUCT LIABILITY AND BREACH OF WARRANTY CLAIMS.
(a) Notwithstanding anything to the contrary in this Agreement, Seller
shall indemnify, defend and hold Buyer and the Acquired Companies harmless with
respect to any Damages (including incidental and consequential damages) arising
out of or related to breach of product warranty, strict liability in tort,
negligent manufacture or product, or other liability arising from the Acquired
Companies' manufacture or sale of their products prior to the Closing Date
(hereafter collectively referred to as "Product Liability Claims") to the extent
not covered by any insurance proceeds received by the indemnified party, and
except as set forth in Section 10.5(b).
Seller's liability under this Section 10.5(a) shall be limited to the
percentages set forth in the following table:
When Claim Made to Seller Seller's Percentage
------------------------- -------------------
On or before the 2nd anniversary
of the Closing 100%
After 2nd anniversary but on or
before the 3rd 83.33%
After 3rd anniversary but on or
before the 4th 66.66%
After 4th anniversary but on or
before the 5th 49.99%
After 5th anniversary but on or
before the 6th 33.33%
After 6th anniversary but on or
before the 7th 16.66%
After the 7th anniversary 0%
(b) Seller will indemnify and hold harmless Buyer, the Acquired Companies,
and their Indemnified Persons for, and will pay to the Indemnified Persons the
amount of Damages equal to, the value of any defective product manufactured or
sold by the Acquired Companies on or prior to the Closing Date, provided that a
claim for indemnity is made to Seller within two years after the Closing Date.
10.6 INDEMNIFICATION AND PAYMENT OF DAMAGES BY BUYER
Buyer will indemnify and hold harmless Seller and its Indemnified Persons,
and will pay to Seller and its Indemnified Persons the amount of any Damages
arising directly or indirectly from or in connection with:
(a) any Breach of any representation or warranty made by Buyer in
this Agreement or in any certificate delivered by Buyer pursuant to this
Agreement, provided that a claim for indemnity is made to Buyer within one year
of the Closing Date;
(b) any Breach by Buyer of any covenant or obligation of Buyer in
this Agreement, provided that a claim for indemnity is made to Buyer within
forty-five days after the covenant expires; and
45
(c) any claim by any Person for liabilities or obligations of (i)
Buyer relating to, arising out of, or incurred during periods before and after
the Closing Date or (ii) any Acquired Company relating to, arising out of, or
incurred during periods after the Closing Date, except as set forth in Section
10.4 above.
10.7 LIMITATIONS ON AMOUNT--SELLER
Seller will have no liability (for indemnification or otherwise) with
respect to the matters described in clauses (b), (c), (d) and (e) of Section
10.2 or clause (c) of Section 10.3 unless the Damages suffered for any
individual claim or related claims are at least $50,000 and until the total of
all Damages with respect to such matters exceeds $300,000, and then only for the
amount by which such Damages exceed $300,000. Seller's obligation to provide
indemnity under Section 10.2(b), (d) and (e) and Section 10.3(c) is subject to
an aggregate cumulative cap equal to twenty-five percent (25%) of the Purchase
Price. Seller's obligation to provide indemnity under Section 10.2(h) and any
provisions of the License Agreement, Sublicense Agreement and Trademark License
Agreement that would also be breached if indemnification is available to Buyer
under Section 10.2(h), is subject to an aggregate cumulative cap equal to the
aggregate royalties actually paid by the Acquired Companies, or their
Affiliates, and received by one of Seller's Affiliates (excluding royalties
payable to Vinidex under the Vinidex Agreement (as each such term is defined in
the Sublicense Agreement)) under the License Agreement, Sublicense Agreement and
Trademark License Agreement. Notwithstanding the foregoing, the limitation on
Seller's liability set forth in this Section 10.7 shall not apply to claims for
indemnity under Section 10.3(c) for a penalty or fine issued pursuant to
Environmental Law.
10.8 LIMITATIONS ON AMOUNT--BUYER
Buyer will have no liability (for indemnification or otherwise) with
respect to the matters described in clauses (a) or (b) of Section 10.6 unless
the Damages suffered for any individual claim or related claims are at least
$50,000 and until the total of all Damages with respect to such matters exceeds
$300,000, and then only for the amount by which such Damages exceed $300,000.
However, this Section 10.8 will not apply to any Breach of any of Buyer's
representations and warranties of which an officer of Buyer had actual knowledge
at any time prior to the date on which such representation and warranty is made,
and Buyer will be liable for all Damages with respect to such known Breaches.
10.9 PROCEDURE FOR INDEMNIFICATION--THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section
10.2, 10.4, 10.5, 10.6 or (to the extent provided in the last sentence of
Section 10.3(e)) Section 10.3 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the indemnifying party demonstrates
that the defense of such action is prejudiced by the indemnifying party's
failure to give such notice.
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(b) If any Proceeding referred to in Section 10.9(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Proceeding, the indemnifying party will be entitled to
participate in such Proceeding and, to the extent that it wishes (unless (i) the
indemnifying party is also a party to such Proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate, or
(ii) the indemnifying party fails to provide reasonable assurance to the
indemnified party of its financial capacity to defend such Proceeding and
provide indemnification with respect to such Proceeding), to assume the defense
of such Proceeding with counsel reasonably satisfactory to the indemnified party
and, after notice from the indemnifying party to the indemnified party of its
election to assume the defense of such Proceeding, the indemnifying party will
not, as long as it diligently conducts such defense, be liable to the
indemnified party under this Section 10 for any fees of other counsel or any
other expenses with respect to the defense of such Proceeding, in each case
subsequently incurred by the indemnified party in connection with the defense of
such Proceeding, other than reasonable costs of investigation. If the
indemnifying party assumes the defense of a Proceeding, (i) it will be
conclusively established for purposes of this Agreement that the claims made in
that Proceeding are within the scope of and subject to indemnification; (ii) no
compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within
twenty days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
Proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the indemnified party may, by notice to the indemnifying party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the indemnifying party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
(d) Seller hereby consents to the non-exclusive jurisdiction of any
court in which a Proceeding is brought against any Indemnified Person for
purposes of any claim that an Indemnified Person may have under this Agreement
with respect to such Proceeding or the matters alleged therein, and agree that
process may be served on Seller with respect to such a claim anywhere in the
world.
10.10 INSURANCE COVERAGE
Prior to seeking indemnification under this Section 10, Buyer, Seller and
any Acquired Company shall exercise reasonable good faith efforts to obtain any
insurance proceeds to which
47
it may be entitled with respect to any Damages suffered by such Person, and any
claim for indemnification under this Section 10 shall be reduced by the amount
of any insurance proceeds to which such Person may be entitled with respect to
the such Damages.
10.11 PROCEDURE FOR INDEMNIFICATION--OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom indemnification is
sought.
10.12 RIGHT OF SET-OFF
Upon final determination by a court of competent jurisdiction of the
Buyer's right to any amount under this Section 10, Buyer may set off such amount
against (a) all amounts otherwise payable under the Note and the License
Agreement, and (b) fifty percent of amounts payable under the Sublicense
Agreement. The exercise of such right of set-off by Buyer in good faith will not
constitute an event of default under the Note, the License Agreement or the
Sublicense Agreement. Neither the exercise of nor the failure to exercise such
right of set-off will constitute an election of remedies or limit Buyer in any
manner in the enforcement of any other remedies that may be available to it.
11. GENERAL PROVISIONS
11.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to
this Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of its Representatives. In the
event of termination of this Agreement, the obligation of each party to pay its
own expenses will be subject to any rights of such party arising from a breach
of this Agreement by another party.
11.2 NOTICES
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by facsimile
(with written confirmation of receipt), provided that a copy is mailed by
certified mail, return receipt requested, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service (receipt
requested), in each case to the appropriate addresses and facsimile numbers set
forth below (or to such other addresses and facsimile numbers as a party may
designate by notice to the other parties):
Seller: Uponor North America, Inc.
00000 Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, XX 00000
Attention: Jyri Luomakoski, Chairman
Facsimile No.: 000-000-0000
48
with a copy to: Holland & Xxxx LLP
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxxxxxx Xxxxx
Facsimile No.: 303-295-8261
Buyer: Extrusion Technologies, Inc.
000 Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxx West
Facsimile No.: 000-000-0000
with a copy to: Xxxxxxxxxx & Xxxxx, P.A.
0000 Xxxxxxxxx Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Attention: K. Xxxx Xxxxxx
Facsimile No.: 000-000-0000
11.3 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Minnesota, County of Hennepin, or, if it
has or can acquire jurisdiction, in the United States District Court for the
District of Minnesota, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
11.4 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and deliver to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
11.5 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and
not alternative. Neither the failure to exercise, nor any delay by any party in
exercising, any right, power, or privilege under this Agreement or the documents
referred to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power, or
privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or
49
renunciation of the claim or right unless in writing signed by the other party;
(b) no waiver that may be given by a party will be applicable except in the
specific instance for which it is given; and (c) no notice to or demand on one
party will be deemed to be a waiver of any obligation of such party or of the
right of the party giving such notice or demand to take further action without
notice or demand as provided in this Agreement or the documents referred to in
this Agreement.
11.6 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with
respect to its subject matter (including the Letter of Intent between Buyer and
Seller dated November 14, 2002) and constitutes (along with the documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
11.7 DISCLOSURE LETTER
The disclosures in any portion of the Disclosure Letter shall be considered
made for purposes of all portions of the Disclosure Letter.
11.8 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other party, which will not be unreasonably withheld,
except that Buyer may assign any of its rights, but not its obligations, under
this Agreement to any Subsidiary of Buyer. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement, including but not limited to Article
10, will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
11.9 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any
court of competent jurisdiction, the other provisions of this Agreement will
remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
11.10 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience
only and will not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of such
gender or number as the circumstances require. Unless otherwise expressly
provided, the word "including" does not limit the preceding words or terms.
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11.11 TIME OF ESSENCE
With regard to all dates and time periods set forth or referred to in this
Agreement, time is of the essence.
11.12 GOVERNING LAW
This Agreement will be governed by the laws of the State of Colorado,
except any laws of such state that would result in the application of the laws
of any jurisdiction other than those of the State of Colorado.
11.13 COUNTERPARTS
This Agreement may be executed in two or more counterparts, each of which
will be deemed to be an original copy of this Agreement and all of which, when
taken together, will be deemed to constitute one and the same agreement.
11.14 CONFIDENTIALITY
Either party to this Agreement (and each employee, representative, or other
agent of each party) may disclose to any and all Persons, the tax treatment and
tax structure of the transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment and tax structure.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date first written above.
EXTRUSION TECHNOLOGIES, INC.
By: /s/ Xxxxxx West
----------------------------
Its: Secretary
----------------------
UPONOR NORTH AMERICA, INC.
By: /s/ Jyri Luomakoski
----------------------------
Jyri Luomakoski, Chairman
52
Disclosure Letter:
-----------------
Part 3.1 -- Organization and Good Standing
Part 3.2 -- Authority; No Conflict; Consents
Part 3.5 -- Books and Records
Part 3.6 -- Title to Properties; Encumbrances
Part 3.7 -- Condition and Sufficiency of Assets
Part 3.8 -- Accounts Receivable
Part 3.9 -- Inventory
Part 3.10 -- No Undisclosed Liabilities
Part 3.10(b) -- Outstanding Liability, Indebtedness or Obligations to Affiliates
Part 3.11 -- Taxes
Part 3.13(b) -- Employee Benefits - Company Plans and Benefit Obligations
Part 3.13(c) -- Employee Benefits - ERISA Affiliates
Part 3.13(d) -- Financial Cost of Obligations Under Company Plan or Benefit
Obligation Not Subject to Disclosure and Reporting Requirements
Of ERISA
Part 3.13(f) -- ERISA Material Obligations
Part 3.14 -- Compliance with Legal Requirements; Governmental Authorizations
Part 3.15 -- Legal Proceedings; Orders
Part 3.16 -- Absence of Certain Changes and Events
Part 3.17(a) -- Contracts; No Defaults
Part 3.17(b) -- Contract Obligations
Part 3.17(c) -- Contracts Not in Force
Part 3.17(d) -- Material Compliance
Part 3.18(b) -- Insurance - Self-Insurance; Risk Sharing
Part 3.18(c) -- Insurance - Loss Experience; Claims
Part 3.18(d) -- Insurance - Policies
Part 3.19 -- Environmental Matters
Part 3.20(a) -- Employees
Part 3.21 -- Labor Relations; Compliance
Part 3.22(b) -- Intellectual Property - Agreements
Part 3.22(d) -- Intellectual Property - Patents
Part 3.22(e) -- Intellectual Property - Trademarks
Part 3.22(f) -- Intellectual Property - Copyrights
Part 3.22(h) Ultra Blue Product Licenses
Part 3.25 -- Relationships with Related Persons
Part 9.1 -- Noncompetition
Part 9.1(c) -- Employees
Schedules:
---------
Schedule 2.5 -- Adjustments
Schedule 4.2 -- Consents
Schedule 7.2(b) -- Estoppel Certificates
Schedule 10.2(f) -- Matters for Indemnification
Schedule 10.3(d) -- Control of Environmental
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