EQUITY PURCHASE AGREEMENT Among CROWN HOLDINGS, INC. and CROWN ACQUISITION CORP. Dated as of July 3, 2007
EXHIBIT 2.2
Among
CROWN HOLDINGS, INC.
and
CROWN ACQUISITION CORP.
Dated as of July 3, 2007
This Equity Purchase Agreement (this “Agreement”) is made as of July 3, 2007 by and
among CROWN HOLDINGS, INC., a Minnesota corporation (the “Seller”), and CROWN ACQUISITION
CORP., a Delaware corporation (the “Buyer”).
RECITALS
WHEREAS, the Seller desires to sell to the Buyer and the Buyer desires to purchase from the
Seller on the terms and subject to the conditions set forth herein:
(i) all of the Seller’s right, title and interest in, to and under all of the Equity
Interests of Crown Iron Works Company, a Delaware corporation (“Crown Iron Works”),
held by the Seller which consists of all of the issued and outstanding shares of common
stock of Crown Iron Works (the “Crown Iron Works Interests”);
(ii) all of the Seller’s right, title and interest in, to and under all of the Equity
Interests of Europa Crown Management Ltd., an English company (“Europa Crown”), held
by the Seller which consists of all of the issued and outstanding Equity Interests of Europa
Crown (the “Europa Crown Interests”);
(iii) all of the Seller’s right, title and interest in, to and under all of the Equity
Interests of Europa Crown Limited, an English company (“ECL”), held by the Seller
(the “ECL Interests”);
(iv) all of the Seller’s right, title and interest in, to and under all of the Equity
Interests of Crown Biofuels, LLC, a Minnesota limited liability company (“Crown
Biofuels”), held by the Seller which consists of all of the issued and outstanding
membership interests of Crown Biofuels (the “Crown Biofuels Interests”);
(v) all of the Seller’s right, title and interest in, to and under (i) all of the
Equity Interests of Wuhan Crown Friendship Edible Oil Engineering Co. Ltd., a Chinese
company (“Wuhan Crown”), held by the Seller which consists of 60% of the Equity
Interests of Wuhan Crown (the “Wuhan Crown Equity Interests”), and (ii) that certain
Joint Venture Contract, dated July 26, 2001, as amended by the Amended Joint Venture
Contract in 2003 and as further amended pursuant to the Consent and Waiver dated May 21,
2007 (the “Wuhan Crown JV Agreement”), among the Seller and Wuhan Jinma Food
Industry Technology Co., Ltd. (the “Wuhan Crown JV Interests” and together with the
Wuhan Crown Equity Interests, the “Wuhan Crown Interests”, and the Wuhan Crown
Interests, together with the Crown Iron Works Interests, the Europa Crown Interests, the ECL
Interests and the Crown Biofuels Interests, the “Purchased Interests”);
NOW, THEREFORE, in consideration of the mutual covenants of the parties as hereinafter set
forth and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the following terms have the meanings specified or referred to
in this Article I:
“Access Persons” has the meaning specified in Section 3.20(e).
“Accounts Receivable” has the meaning specified in Section 3.08(a).
“Aggregate Closing Indebtedness” means the aggregate sum of the Closing Indebtedness
Amounts of the Test Parties.
“Agreement” has the meaning specified in the preamble to this Agreement.
“Applicable Accounting Principle” means (i) GAAP with respect to the Seller, Crown
Iron Works, Crown Biofuels and CO2LD, LLC, (ii) UK GAAP with respect to Europa Crown, ECL and ECUK,
and (iii) the China Standard with respect to Wuhan Crown.
“Applicable Domestic Entity” means Crown Iron Works, Crown Biofuels and CO2LD, LLC and
each of their respective Subsidiaries (other than any Subsidiary that constitutes an Applicable
Foreign Entity).
“Applicable Entity” means all of the Applicable Domestic Entities and all of the
Applicable Foreign Entities.
“Applicable Entity Facilities” means any real property, leaseholds or other real
estate interests currently or formerly owned or operated by any of the Applicable Representation
Entities and any buildings, plants, structures, fixtures or equipment currently or formerly owned
or operated by any of the Applicable Representation Entities.
“Applicable Foreign Entity” means Europa Crown, Wuhan Crown, KNM Crown and Hiplex
Technologies and each of their respective Subsidiaries.
“Applicable Material Contract” means any Material Contract of the type specified in
clauses (v), (vi), (vii), (viii), (xiv) or (xv) of
Section 3.15(a).
“Applicable Tax Foreign Entity” means each Applicable Foreign Entity (other than KNM
Crown and Hiplex Technologies) that is required to pay United States federal income taxes
“Applicable Representation Entity” means all of the Applicable Entities (other than
KNM Crown and Hiplex Technologies).
“Balance Sheet Date” has the meaning specified in Section 3.05(a).
“Base Purchase Price” has the meaning specified in Section 2.02(a).
“Benefit Plan” has the meaning specified in Section 3.11(a).
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“Biolux Contracts” has the meaning specified in Section 3.15(e).
“Biolux Project” means the development and supply by one or more of the Applicable
Entities and their affiliates to Nantong Biolux Bioenergy Protein Feed Co. Ltd. or one or more of
its affiliates of 2,100 MTPD rapeseed crushing plant and 818 MTPD biodiesel processing plant and
refining transesterifcation plant with Glycerine as a saleable bi-product, together with any
related equipment, installation, commissioning or civil engineering.
A “Breach” of a representation, warranty, covenant, obligation or other provision of
this Agreement or any other Transaction Document will be deemed to have occurred if there is or has
been any inaccuracy in or breach of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation or other provision.
“Buyer” has the meaning specified in the preamble to this Agreement.
“Buyer Covenant Breach” has the meaning specified in Section 9.03(b).
“Buyer Indemnified Party” has the meaning specified in Section 9.02.
“Buyer’s Advisors” has the meaning specified in Section 5.02.
“CERCLA” means the Comprehensive Environmental Response, Compensation and Liability
Act, as amended (42 U.S.C. Sections 9601, et. seq.).
“China Approval” means all Governmental Authorizations required to be obtained by the
Seller and the Buyer from Chinese Governmental Bodies in connection with the transfer of the Wuhan
Crown Interests from the Seller to the Buyer as contemplated by this Agreement.
“China Standard” means the Accounting Standards for Business Enterprises and
Accounting Systems for Business Enterprises applied in Peoples Republic of China, as in effect on
the date hereof or, with respect to any financial statements, the date such financial statements
were prepared.
“Closing” has the meaning specified in Section 2.04(a).
“Closing Date” has the meaning specified in Section 2.04(a).
“Closing Date Cash Payment” has the meaning specified in Section 2.03(b).
“Closing Date Proceeds” has the meaning specified in Section 2.03(c).
“Closing Indebtedness Amount” shall mean, with respect to each Test Party, the product
of (x) the aggregate Indebtedness of such Test Party as of immediately prior to the Closing on the
Closing Date, times (y) such Test Party’s Closing Test Factor.
“Closing Test Factor” means, with respect to a Test Party, the percentage set forth
opposite such Test Party’s name in the following table:
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| Test Party | Closing Test Factor | |||
Crown Group |
100.00 | % | ||
Hiplex Technologies |
50.00 | % | ||
KNM Crown |
40.00 | % | ||
Wuhan Crown |
60.00 | % | ||
“Combined Crown Entities” means Crown Group (on a consolidated basis), Hiplex
Technologies and KNM Crown.
“Combined Crown Entities Net Working Capital Target” means $12,750,000.
“Combined Crown Entities Net Working Capital Amount” means the sum total of the Net
Working Capital Test Amounts of each of the Combined Crown Entities.
“Company Audited Financial Statements” has the meaning specified in Section
3.05(a).
“Company Interim Balance Sheets” has the meaning specified in Section 3.05(a).
“Company Owned Intellectual Property” means all Intellectual Property that is used or
held for use, in whole or in part, by any Applicable Representation Entity, other than Third Party
Intellectual. Company Owned Intellectual Property includes Company Registered Intellectual
Property.
“Company Registered Intellectual Property” has the meaning specified in Section
3.20(a).
“Company Unaudited Financial Statements” has the meaning specified in Section
3.05(a).
“Competing Business” has the meaning specified in Section 3.21(b).
“Consent” means any approval, consent, ratification, waiver or other authorization
(including any Governmental Authorization).
“Contemplated Transactions” means all of the transactions contemplated by this
Agreement and the other Transaction Documents.
“Contract” means any agreement, contract, obligation, promise, instrument or
undertaking (whether written or oral and whether express or implied) that is legally binding.
“Crown Biofuels” has the meaning specified in the recitals to this Agreement.
“Crown Biofuels Interests” has the meaning specified in the recitals to this
Agreement.
“Crown Group” means, collectively, Crown Biofuels, Crown Iron Works, ECL, ECUK and
Europa Crown on a consolidated basis.
“Crown Iron Works” has the meaning specified in the recitals to this Agreement.
“Crown Iron Works Audited Financial Statements” has the meaning specified in
Section 3.05(a).
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“Crown Iron Works Interests” has the meaning specified in the recitals to this
Agreement.
“Deferred Compensation Obligations” means, with respect to any Person, all obligations
of such Person in respect of all accrued and unpaid bonuses, deferred compensation, severance,
phantom stock awards and other similar payment obligations with respect to current and former
officers and employees of such Person.
“Divestiture Action” has the meaning specified in Section 5.06(b).
“ECL” has the meaning specified in the recitals to this Agreement.
“ECL Audited Financial Statements” has the meaning specified in Section
3.05(a).
“ECL Interests” has the meaning specified in the recitals to this Agreement.
“ECUK” means Europa Crown UK Limited, an English company, which is a wholly-owned
subsidiary of ECL.
“ECUK Audited Financial Statements” has the meaning specified in Section
3.05(a).
“Encumbrance” means any charge, community property interest, condition, equitable
interest, lien, option, pledge, mortgage, hypothecation, easement, servitude, defect of title,
security interest, mortgage, right of first refusal, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise of any other attribute of
ownership.
“Environment” means soil, land, land surface or subsurface strata, surface waters
(including, without limitation, navigable waters, ocean waters, streams, ponds, coastal and inlands
water, drainage basins, and wetlands), sea-bed, river-bed, groundwaters, drinking water supply,
stream sediments, air (including, without limitation, air inside buildings and in other natural and
man-made structures above or below ground), workplace environments, plant and animal life and all
other living organisms, and any other environmental medium or natural resource.
“Environmental, Health and Safety Liabilities” means any obligations or Liabilities
(including any claims, suits or other assertions of obligations or Liabilities) that are:
(a) related to Environmental, human health or the safety of human beings (including
on-site or off-site contamination by Hazardous Materials of the Environment); and
(b) based upon or related to (i) any Environmental Law or (ii) any Order or permit
imposed or issued by any Governmental Body relating to the Environment.
“Environmental Law” means all applicable Legal Requirements, Orders, decrees,
injunctions or judgments that addresses, that is related to or is otherwise concerned with the
Environment or environmental, human health and safety, including safety of workers, Hazardous
Materials or to any Hazardous Activity, including any Legal Requirement relating to any
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emissions, releases or discharges of Hazardous Materials into the Environment, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport, handling, clean-up or control of Hazardous Materials, in each case, as in effect from
time to time either before or after the Closing Date, including any of the above, which were in
force at an earlier date and are no longer in force but under which any Applicable Representation
Entity still has obligations and/or liabilities, including, without limitation, CERCLA, the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901, et. seq.), the Clean
Water Act, as amended (33 U.S.C. Section 1251, et. seq.), the Hazardous Materials Transportation
Act (49 U.S.C. App. Section 1801, et. seq.), the Clean Air Act (42 U.S.C. Section 7401, et. seq.)
the Toxic Substances Control Act (15 U.S.C. Section 2601, et. seq.), the Federal Insecticide,
Fungicide, and Rodenticide Act (7 U.S.C. Section 136, et seq.), or any foreign, state or local
equivalent thereof.
“Equity Interest” means, with respect to any Person, (i) any capital stock, shares,
partnership interests, membership interests or other ownership or equity interests of such Person,
(ii) any other interest or participation that confers on the holder thereof the right to receive a
share of the profits and losses or, or distributions of assets of, such Person, excluding royalty,
commission and compensation payments, and (iii) any warrants, options or other rights to acquire
any of the foregoing.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, or any
successor law, and regulations and rules issued pursuant to that Act or any successor law.
“ERISA Affiliate” means, with respect to any Person, any other Person that, together
with such Person, would be treated as a single employer under IRC § 414.
“Escrow Agent” means a commercial bank or trust company mutually selected by the Buyer
and the Seller.
“Estimated Aggregate Closing Indebtedness” has the meaning specified in Section
2.03(a).
“Estimated Closing Statement” has the meaning specified in Section 2.03(a).
“Estimated Net Working Capital Adjustment Amount” has the meaning specified in
Section 2.03(a).
“Estimated Net Working Capital Amounts” has the meaning specified in Section
2.03(a).
“Estimated Outstanding Transaction Costs” has the meaning specified in Section
2.03(a).
“Europa Crown” has the meaning specified in the recitals to this Agreement.
“Europa Crown Group” means Europa Crown, ECL and ECUK, collectively.
“Europa Crown Interests” has the meaning specified in the recitals to this Agreement.
“Excess Shortfall Amount” has the meaning specified in Section 2.05(d)(ii).
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“Facilities” means, collectively, the Seller Facilities and the Applicable Entity
Facilities.
“Final Purchase Price” has the meaning specified in Section 2.03(b) or
2.03(c), as applicable.
“Financial Statements” has the meaning specified in Section 3.05(a).
“Financing” means the financing transactions contemplated by the Financing
Commitments.
“Financing Commitments” means the letter agreement between Credit Suisse Securities
(USA) LLC, Credit Suisse, Cayman Islands Branch, Bank of Montreal, BMO Capital Markets and Crown
Holdings, Inc., dated as of June 28, 2007.
“Fundamental Representations” has the meaning specified in Section 9.01.
“Fundamental Seller Breach” has the meaning specified in Section 9.02(a).
“Governmental Authorization” means 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” means any: (a) nation, state, county, city, town, village,
district, or other jurisdiction of any nature; (b) federal, state, local, municipal, foreign, 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” means 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, and any other act, business, operation, or thing that unreasonably increases the
danger, or risk of danger, or poses an unreasonable risk of harm to persons or property on or off
the Facilities, or that materially affects the value of the Facilities or the Applicable
Representation Entities.
“Hazardous Materials” means any of the following: (i) “hazardous substance,”
“pollutants” or “contaminants” (as defined in Sections 101(14) and (33) of CERCLA or the
regulations issued pursuant to Section 102 of CERCLA and found at 40 C.F.R. § 302), including any
element, compound, mixture, solution, or substance that is designated pursuant to Section 102 of
CERCLA; (ii) any substance that is designated pursuant to Section 311 (b)(2)(A) of the Federal
Water Pollution Control Act, as amended (33 U.S.C. §§ 1321(b)(2)(A)) (“FWPCA”); (iii)
hazardous waste having the characteristics identified under or listed pursuant to Section 3001 of
the Resource Conservation and Recovery Act, as amended (42 U.S.C. §§ 6901, 6921) (“RCRA”);
(iv) any petroleum, as that term is defined in Section 9001(6) of RCRA; (v) any toxic pollutant
that is listed under Section 307(a) of FWPCA; (vi) hazardous air pollutant that is listed
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under Section 112 of the Clean Air Act, as amended (42 U.S.C. §§ 7401, 7412); (vii) any
imminently hazardous chemical substance or mixture with respect to which action has been or may be
taken pursuant to Section 7 of the Toxic Substances Control Act, as amended (15 U.S.C. §§ 2601,
2606); (viii) source material, special nuclear material, or byproduct material as defined by the
Atomic Energy Act of 1954, as amended (42 U.S.C. § 2011 et seq.); (ix) asbestos,
asbestos-containing material, or urea formaldehyde or material that contains it; (x) waste oil; and
(xi) any other material or substance which is listed, defined, designated, or classified as, or has
been determined to be, hazardous, radioactive, toxic, or a pollutant or a contaminant under or
pursuant to any Environmental Law or is regulated under any Environmental Law.
“Hiplex Technologies” means Hiplex Technologies, Ltd., an English company, of which
Crown Iron Works owns fifty percent (50%) of its Equity Interests.
“Hiplex Technologies Agreements” means the (i) Exclusive License Agreement between
Crown Iron Works and Tulum Ltd., dated September 20, 2005, together with the Contract Assignment
and Assumption Agreement among Crown Iron Works, Hiplex Technologies and Tulum Ltd., dated December
29, 2006; and (ii) Collaboration Agreement among Crown Iron Works, CO2LD, LLC, Hiplex Technologies
and Xxxxxxx-Xxxxxxxxxxxxx Maschinenbau GmbH, dated March 21, 2007.
“HSR Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 or any
successor law, and regulations and rules issued pursuant to that Act or any successor law.
“Indebtedness” means, with respect to any Person, (a) all indebtedness of such Person
for borrowed money (including, without limitation, accrued interest and any premiums, costs or
penalties associated with prepaying any such indebtedness), (b) all obligations of such Person
evidenced by notes, debentures, letters of credit (to the extent drawn and not paid), credit
facilities or other similar instruments or secured by an Encumbrance other than Permitted
Encumbrances, (c) all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person, (d) all obligations for the
deferred purchase price of property or services or past acquisitions, (e) all obligations relating
to foreign currency swaps, interest rate swaps, commodity swaps, options, caps, collars, xxxxxx or
forward exchanges or similar agreements (including, without limitation, any premiums, costs or
penalties associated with terminating any such agreement), (f) all Deferred Compensation
Obligations of such Person (provided, that, for the purposes of calculating the Closing
Indebtedness Amount of any Test Entity, all Deferred Compensation Obligations of such Test Entity
in respect of accrued Crown Companies Annual Bonus for 2007 shall be excluded from the calculation
of such Closing Indebtedness Amount to the extent that such Deferred Compensation Obligations in
respect of accrued Crown Companies Annual Bonus for 2007 are treated as a current liability of such
Test Entity for the purposes of calculating the Net Working Capital Adjustment Amount), (g) all
obligations of such Person as lessee under leases that have been or should be, in accordance with
US GAAP, recorded as capital leases, (h) all obligations in respect of amounts drawn under surety
bonds, performance bonds or letters of credit, and (i) any unpaid interest, fees (whether accrued
or otherwise), prepayment premiums or penalties, make-whole payments, breakage costs, indemnities,
expenses and other obligations or amounts owing on or in respect of any such indebtedness described
in clauses (a) through (i) above or becoming due as a result of the Contemplated
Transactions.
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“Indemnified Party” has the meaning specified in Section 9.04(a).
“Indemnifying Party” has the meaning specified in Section 9.04(a).
“Indemnity Escrow Account” has the meaning specified in Section 2.03(c)(ii).
“Indemnity Escrow Agreement” means an escrow agreement, in a form mutually acceptable
to the Buyer and the Seller, to be entered into at Closing among the Buyer, the Seller and the
Escrow Agent; provided, that, such Indemnity Escrow Agreement shall, among other
things, generally provide that, subject, in each case, to amounts to be retained with respect to
pending claims, (x) on the date that is 18 months following the Closing, to the extent that the
funds then contained in the Indemnity Escrow Account exceed $8,000,000 (the amount by which such
funds exceed $8,000,000 is herein referred to as the “First Release Amount”), a portion of
the funds in the Indemnity Escrow Account in an amount equal to the First Release Amount will be
released from the Indemnity Escrow Account to the Seller, and (y) on the date that is 24 months
following the Closing, all amounts then remaining in the Indemnity Escrow Account will be released
from the Indemnity Escrow Account to the Seller.
“Indemnity Escrow Amount” means $16,000,000.
“Indemnity Threshold” has the meaning specified in Section 9.05(a)
“Independent Accountant” means Ernst & Young LLP.
“Intellectual Property” means all legal rights, title and interest in or to (i) any
patents (including design patents, industrial designs and utility models), patent applications,
patent disclosures, reissues, divisions, continuations-in-part and extensions and inventions
(whether or not patentable and whether or not reduced to practice) and improvements thereto; (ii)
any trademarks, service marks, trade dress, trade names, logos, business, product and corporate
names, Internet addresses and domain names, and slogans; (iii) any copyrights; (iv) all
registrations, applications and renewals for any of the foregoing; (v) any trade secrets,
confidential information, ideas, formulae, compositions, know-how, manufacturing and production
processes and techniques, research and development information, drawings, specifications, designs,
plans, improvements, proposals, technical and computer data, documentation and software, financial,
business and marketing plans, and franchisee, customer and supplier lists and related information;
(vi) any copies and tangible embodiments of any of the foregoing; and (vii) any other proprietary
rights.
“Intercompany Contracts” has the meaning specified in Section 3.21(c).
“IRC” means the Internal Revenue Code of 1986, as amended, or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law.
“IRS” means the United States Internal Revenue Service or any successor agency and, to
the extent relevant, the United States Department of the Treasury.
“KNM Crown” means KNM-CIW Sdn. Bhd., a Malaysian company, in which Crown Iron Works
owns forty percent (40%) of its Equity Interests.
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“KNM Crown Agreements” means the (i) Exclusive Services and Supply Agreement among
Crown Iron Works, KNM Process Systems Sdn. Bhd. and KNM-Crown, dated December 22, 2006, and (ii)
Shareholders Agreement between KNM Renewable Energy Sdn. Bhd. and Crown Iron Works, dated February
9, 2007.
“Knowledge of the Seller” means the actual knowledge of Xxxxxxxx Xxxxxxxx, Xxxxxx
Xxxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxx and Xxxx Xxxxxxxxx; provided, that, any such individual
will be deemed to have “actual knowledge” of a particular fact or other matter if a prudent
individual could be expected to discover or otherwise become aware of such fact or other matter in
the conduct of the duties of the applicable individual in the Ordinary Course of Business.
“Leased Personal Property” has the meaning specified in Section 3.06(b)(ii).
“Leased Real Property” has the meaning specified in Section 3.06(a)(i).
“Legal Requirement” means any federal, state, local, municipal, foreign,
international, multinational, or other administrative Order, decree, judgment, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
“Liability” means any liability or obligation of any kind or nature whatsoever,
whether accrued, absolute, contingent or otherwise, whether known or unknown and whether due or to
become due.
“Loss” means all Liabilities, deficiencies, demands, claims, suits, actions, or causes
of action, assessments, losses, costs, expenses, interest, fines, penalties, actual or punitive
damages or reasonable costs or reasonable expenses of any and all investigations, proceedings,
judgments, remediations, settlements and compromises (including reasonable fees and expenses of
attorneys, accountants and other experts).
“Material Contract” has the meaning specified in Section 3.15(a).
“Multiemployer Plan” has the meaning given to such term in ERISA § 3(37)(A).
“Net Working Capital” shall mean the amount, expressed in United States Dollars, as of
the close of business on the Closing Date, equal to (i) all assets that are required to be
presented as current assets on a balance sheet prepared in accordance with Applicable Accounting
Standards, minus (ii) all liabilities that are required to presented as current liabilities on a
balance sheet prepared in accordance with Applicable Accounting Standards; provided,
that, for the purposes of calculating the Net Working Capital of any Test Entity, (a) with
respect to any Test Entity that is a non-U.S. entity (other than Wuhan Crown), any cash of such
Test Entity that would otherwise be included as a current asset shall be included as a current
asset only to the extent net of any repatriation costs, including without limitation any Taxes,
that would be incurred by the Seller or any of the Applicable Entities in order to distribute or
transfer any such cash from such Test Entity to the Seller as of immediately prior to the Closing
on the Closing Date; provided, that, the provisions of this clause (a)
shall apply only to $3,200,000 of cash held by the Europa Crown Group on the Closing Date
less the amount of cash repatriated by the Europa Crown Group to Crown Iron Works during
the period commencing on the date hereof and terminating on the Closing Date, (b) any Indebtedness
of such Test Entity that would
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otherwise by included as a current liability shall be included as a current liability only to
the extent that such Indebtedness is not included in the calculation of the Closing Indebtedness
Amount of such Test Entity, (c) any Transactions Costs of such Test Entity that would otherwise by
included as a current liability shall be included as a current liability only to the extent that
such Transactions Costs are not included in the calculation of the Outstanding Transactions Costs
of such Test Entity, (d) any deferred income Taxes of such Test Entity shall be excluded as a
current asset or liability, (e) any Deferred Compensation Obligations of such Test Entity, other
than any such Deferred Compensation Obligations in respect of accrued Crown Companies Annual Bonus
for 2007, shall be excluded as a current liability, and (f) to the extent not already included as a
current liability, all outstanding Liabilities of ECUK which are due or past due in respect of its
payment obligations identified in Item (2) of Section 3.15(b) of Schedule 3.15 shall be
included as a current liability.
“Net Working Capital Adjustment Amount” means an amount (which amount may be positive
or negative) equal to the sum of (A) an amount (which amount may be positive or negative) equal to
(x) the Combined Crown Entities Net Working Capital Amount, minus (y) the Combined Crown Entities
Net Working Capital Target, plus (B) an amount (which amount may be positive or negative) equal to
the product of (i) the Closing Test Factor for Wuhan Crown, times (ii) an amount (which amount may
be positive or negative) equal to (x) the Wuhan Crown Net Working Capital Amount, minus (y) the
Wuhan Crown Net Working Capital Target.
“Net Working Capital Test Amount” means, with respect to any Test Party, an amount
(which amount may be positive or negative) equal to the product of (x) the Net Working Capital of
such Test Party, times (y) the Test Factor for such Test Party.
“Order” means any award, decision, decree, writ, 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.
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 operations of such Person; and
(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) and is not
required to be specifically authorized by the parent company (if any) of such Person.
“Organizational Documents” means, with respect to any corporation, its articles or
certificate of incorporation and its bylaws and, with respect to any other Person, its charter or
similar document adopted or filed in connection with its creation, formation or organization and
any related limited liability company agreement (if the Person is a limited liability company),
partnership agreement (if the Person is a partnership) or joint venture agreement (if the Person is
a joint venture), in each case including any amendments thereto and as currently in effect.
“Other Antitrust Law” means any antitrust law, other than the HSR Act, of any
Governmental Body applicable to the consummation of the Contemplated Transactions.
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“Other Benefit Obligations” means all obligations or arrangements legally enforceable
to provide benefits, 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, employment
agreements, sabbatical policies, severance payment policies, or arrangements and any retirement or
deferred compensation plan, incentive compensation plan, stock plan, unemployment compensation
plan, vacation pay, bonus or benefit arrangement, insurance or hospitalization program or any other
fringe benefit arrangements for any current or former employee, director, consultant or agent that
does not constitute a Plan.
“Outside Closing Date” has the meaning specified in Section 8.01(e).
“Outstanding Transaction Costs” shall mean all Transaction Costs of any Applicable
Entity (or which are a Liability of any Applicable Entity) not paid prior to or at Closing
(including pursuant to Section 2.03(c)(i)).
“Owned Personal Property” has the meaning specified in Section 3.06(b)(i).
“PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.
“Pension Plan” has the meaning given in ERISA § 3(2)(A).
“Permitted Encumbrances” means (i) liens securing current Taxes, assessments, fees or
other governmental charges or levies not yet delinquent; (ii) minor imperfections of title which
would not, individually or in the aggregate, reasonably be expected to impair in any material
respect the operations of the businesses of the Applicable Entities, taken as a whole; (iii)
inchoate mechanics and materialmen’s liens for construction in progress; (iv) liens of
warehousemen, carriers, materialmen’s, landlords’, workers’ and other similar liens arising in the
Ordinary Course of Business; (v) liens incurred or deposits made in the Ordinary Course of Business
in connection with workers’ compensation, unemployment insurance, social security and other similar
laws which are not material, individually or in the aggregate; (vi) Encumbrances relating to
conditional sale or other title retention agreements arising in the Ordinary Course of Business;
(vii) Encumbrances that arise under zoning, land use and other similar laws and any easements,
covenants, rights-of-way and other restrictions, whether recorded or referred to in an applicable
lease or unrecorded, other imperfections of title or encumbrances that do not materially impair the
use of the property subject thereto as presently used and which are not violated by the current use
or occupancy or operation of the assets to which they relate; (viii) statutory liens arising out of
operation of law with respect to a Liability incurred in the Ordinary Course of Business and which
is not delinquent, (ix) other Encumbrances arising in the Ordinary Course of Business not securing
Indebtedness and which do not and are not reasonably likely to (A) materially detract from the
value of or materially interfere with the continued use and operation of the assets or properties
to which they relate, as used on the date hereof, or (B) materially interfere with the Ordinary
Course of Business, and (x) Encumbrances securing Indebtedness which will be fully released and
paid at the Closing.
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“Person” means 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” has the meaning given in ERISA § 3(3).
“Plan Sponsor” has the meaning given in ERISA § 3(16)(B).
“Post-Closing Statement” has the meaning specified in Section 2.05(a).
“Pre-Closing Tax Periods” has the meaning specified in Section 5.08(a)(i).
“Proceeding” means 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.
“Products” has the meaning specified in Section 3.23(a).
“Proposal” has the meaning specified in Section 5.03.
“Punch List Items” means minor defaults of a routine and customary type occurring in
the Ordinary Course of Business.
“Purchase Price” has the meaning specified in Section 2.02.
“Purchase Price Escrow Account” has the meaning specified in Section
2.03(c)(iii).
“Purchase Price Escrow Agreement” means an escrow agreement, in a form mutually
acceptable to the Buyer and the Seller, to be entered into at Closing among the Buyer, the Seller
and the Escrow Agent.
“Purchase Price Escrow Amount” means $1,600,000.
“Purchased Interests” has the meaning specified in the recitals to this Agreement.
“Qualified Plan” means any Plan that is intended to meet or purports to meet the
requirements of IRC § 401(a).
“Real Property Laws” has the meaning specified in Section 3.06(a)(vi).
“Related Person” means (a) with respect to a particular individual: (i) each other
member of such individual’s Family; (ii) any Person that is directly or indirectly controlled by
such individual or one or more members of such individual’s Family; (iii) any Person in which such
individual or members of such individual’s Family hold (individually or in the aggregate) a
Material Interest; and (iv) any Person with respect to which such individual or one or more members
of such individual’s Family serves as a director, officer, partner, executor or trustee (or in a
similar capacity); and (b)with respect to a specified Person other than an individual: (i) 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; (ii) any Person that holds
a
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Material Interest in such specified Person; (iii) each Person that serves as a director,
officer, partner, executor or trustee of such specified Person (or in a similar capacity); (iv) any
Person in which such specified Person holds a Material Interest; and (v) any Person with respect to
which such specified Person serves as a general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) the “Family” of an individual includes (i) the
individual, (ii) the individual’s spouse, (iii) a parent, child, sibling, nephew or niece of the
individual or the individual’s spouse, and (iv) any other natural person who resides with such
individual and (b) “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 20% of the outstanding voting power of a Person or equity
securities or other equity interests representing at least 20% of the outstanding equity securities
or equity interests in a Person.
“Release” means any spilling, leaking, pumping, pouring, emptying, injecting,
emitting, discharging, depositing, escaping, leaching, dumping or other releasing into the
Environment, whether intentional or unintentional.
“Representation Material Contract” means, collectively:
(a) any Material Contract; and
(b) any of the following to which (x) any of the Applicable Representation Entities is
a party or by which any Applicable Representation Entity or any of their respective assets
are bound or (y) the Seller is a party or by with the Seller or any of the Seller’s assets
are bound which, in the case of this clause (y), relates to any Applicable Entity or
any Purchased Interest:
(i) all continuing contracts or commitments for the future purchase, sale or
manufacture of products, materials, raw materials, commodities, inventories,
supplies, equipment or services, and all agreements with independent dealers or
manufacturer’s representatives, in each case requiring payment to or from the Seller
or any Applicable Representation Entity in an amount in excess of $1,000,000 per
annum; or
(ii) all other Contracts which has an aggregate future Liability of the Seller
or any Applicable Representation Entity to any Person in excess of $1,000,000.
“Representative” means, 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” means the Securities Act of 1933, as amended, or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
“Seller” has the meaning specified in the preamble to this Agreement.
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“Seller Audited Financial Statements” has the meaning specified in Section
3.05(a).
“Seller Covenant Breach” has the meaning specified in Section 9.02(b).
“Seller Facilities” means any real property, leaseholds or other real estate interests
currently or formerly owned or operated by the Seller and any buildings, plants, structures,
fixtures or equipment currently or formerly owned or operated by the Seller.
“Seller Financial Statements” has the meaning specified in Section 3.05(a).
“Seller Indemnified Party” has the meaning specified in Section 9.03.
“Seller Other Benefit Obligation” means an Other Benefit Obligation owed, adopted or
followed by any Applicable Representation Entity or for which any Applicable Representation Entity
has any Liability, actual or contingent.
“Seller Plan” means all Plans of which any Applicable Representation Entity or an
ERISA Affiliate of any Applicable Representation Entity is or was a Plan Sponsor, or to which any
Applicable Representation Entity or an ERISA Affiliate of any Applicable Representation Entity
otherwise contributes or has contributed, or in which any Applicable Representation Entity or an
ERISA Affiliate any Applicable Representation Entity otherwise participates or has participated, or
with respect to which any Applicable Representation Entity could have any Liability, actual or
contingent. Notwithstanding the foregoing, “Seller Plan” shall not include any Plan for which no
Applicable Representation Entity has any Liability, actual or contingent.
“Seller Unaudited Financial Statements” has the meaning specified in Section
3.05(a).
“Seller VEBA” means a VEBA whose members include employees of any Applicable
Representation Entity.
“Statement of Objections” has the meaning specified in Section 2.05(b).
“Straddle Period” has the meaning specified in Section 5.08(b).
“Subsidiary” means, with respect to any Person (the “Owner”), any corporation
or other Person of which securities or other Equity 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 Equity 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.
“Tax” means any federal, state, local or foreign tax (including any net or gross
income, gross receipts, net proceeds, commercial activities, capital gains, value-added, sales,
use, transfer, registration, license, ad valorem, franchise, bank shares, withholding, payroll,
employment, excise, profits, windfall, deed, stamp, alternative or add-on minimum, service,
occupation, severance, energy, environmental (including taxes under IRC Section 59A), unemployment,
social security (or similar), unemployment, workers’ compensation, capital, premium, value added,
personal property or real property tax), levy, assessment, tariff, duty
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(including any customs duty), estimated or other tax of any kind whatsoever, deficiency or
other fee, and any related charge or amount (including any fine, penalty, interest or addition to
tax), imposed, disputed, assessed or collected by or under the authority of any Governmental Body
or payable pursuant to any tax-sharing agreement or any other Contract relating to the sharing or
payment of any such tax, levy, assessment, tariff, duty, deficiency or fee, including any interest,
penalty or addition thereto, whether disputed or not and including any obligations to indemnify or
otherwise assume or succeed to the Tax liability of any other Person.
“Tax Liability” has the meaning specified in Section 9.02(c).
“Tax Return” means any return (including any information return), report, statement,
declaration, schedule, notice, form, claim for refund 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.
“Test Party” means each of Crown Group (on a consolidated basis), Hiplex Technologies,
KNM Crown and Wuhan Crown.
“Third Party Intellectual Property” has the meaning specified in Section
3.20(a).
“Threatened Release” has the same meaning that such term is given when used in CERCLA.
“Title IV Plans” means all Pension Plans that are subject to Title IV of ERISA, 29
U.S.C. § 1301 et seq., other than Multiemployer Plans.
“Transaction Costs” shall mean all out-of-pocket fees and expenses payable by or on
behalf of any Applicable Entity relating to this Agreement and the other Transaction Documents, the
negotiation, execution and delivery of this Agreement and the other Transaction Documents or the
consummation of the transactions contemplated hereby or thereby, that are incurred by or on behalf
of any Applicable Entity, including all legal, broker, tax, environmental, engineering, accounting,
financial, trustee and other advisory and consulting fees, the payment of any management change of
control, sale of the company or retention bonus or severance amounts, payments and similar
obligations that may become payable in connection with the negotiation, execution and delivery of
this Agreement and the other Transaction Documents or the consummation of the transactions
contemplated hereby or thereby and further including (i) the Seller’s obligation to pay one-half of
all Transfer Taxes pursuant to Section 5.08(d) and (ii) the Seller’s obligation to pay
one-half of all filing fees required with respect to the notification, report and other
requirements of the HSR Act (and any Other Antitrust Law) pursuant to Section 5.06(b).
Notwithstanding anything to the contrary, “Transaction Costs” do not include any such expenses
which are accrued liabilities within the Net Working Capital Adjustment Amount or which are treated
as Indebtedness for the purposes of calculating the Purchase Price.
“Transaction Costs Pay-Off Letters” has the meaning specified in Section
2.03(c)(i).
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“Transaction Documents” means this Agreement and all other agreements, certificates
and instruments contemplated by and being delivered pursuant to or in connection with this
Agreement.
“Transfer Taxes” has the meaning specified in Section 5.08(d).
“UK GAAP” means the United Kingdom Generally Accepted Accounting Practice, as in
effect on the date hereof or, with respect to any financial statements, the date such financial
statements were prepared.
“Ukraine Matter” means any Liability, relating to warranties, extended warranties or
the like, in respect of repair or replacement of two DTDC units in Kakhovka and Donetsk sold by
Crown Iron Works to Xxxxxxx, Inc. agreed to pre-Closing by Xxxxxxx, Inc. and Crown Iron Works or,
if no such pre-Closing agreement exists, then pursuant to an extended warranty granted by Crown
Iron Works to Xxxxxxx, Inc. within the scope of the extended warranty requested by Xxxxxxx, Inc. in
the June 12, 2007 e-mail by Xxxxxxx Xxxxxx at Xxxxxxx, Inc. to Xxxxxxxx Xxxxxxxx.
“Ukraine Matter Cap” means an amount equal to the sum of (x) $400,000, plus (y) in the
event that the aggregate amount of all Losses sustained or incurred by any Buyer Indemnified Party
relating to, resulting from, arising directly or indirectly out of or otherwise by virtue of the
Ukraine Matter (the “Ukraine Losses”) exceeds $400,000, an amount equal to the product of
(i) fifty percent (50%), times (ii) the amount of Ukraine Losses in excess of $400,000.
“Unrestricted Claim” means any Fundamental Seller Breach, Unrestricted Seller Covenant
Breach, Tax Liability or Buyer Covenant Breach.
“Unrestricted Seller Covenant Breach” means any Seller Covenant Breach with respect to
any of the Seller’s covenants, agreements or obligations under Article II or IX or
Section 5.01, 5.07, 5.08, 5.09, 10.01, 10.04 or
10.07.
“US GAAP” means generally accepted accounting principles in the United States as set
forth in pronouncements of the Financial Accounting Standards Board (and its predecessors) and the
American Institute of Certified Public Accountants and, unless otherwise specified, as in effect on
the date hereof or, with respect to any financial statements, the date such financial statements
were prepared.
“VEBA” means a voluntary employees’ beneficiary association under IRC § 501(c)(9).
“Welfare Plan” has the meaning given in ERISA § 3(1).
“Wuhan Crown” has the meaning specified in the recitals to this Agreement.
“Wuhan Crown Audited Financial Statements” has the meaning specified in Section
3.05(a).
“Wuhan Crown Breach” means any Breach of any representation or warranty (other than a
Fundamental Representation) made by the Seller in Article III to the extent, but only to
the extent, that such Breach relates to Wuhan Crown.
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“Wuhan Crown Breach Cap” means an amount equal to the lesser of:
(a) the sum of (x) $2,000,000, plus (y) in the event that the aggregate amount of all
Losses sustained or incurred by any Buyer Indemnified Party relating to, resulting from,
arising directly or indirectly out of or otherwise by virtue of a Wuhan Crown Breach (the
“Wuhan Losses”) exceeds $2,000,000, an amount equal to the product of (i) fifty
percent (50%), times (ii) the amount of Wuhan Losses in excess of $2,000,000; and
(b) $5,000,000.
“Wuhan Crown Equity Interests” has the meaning specified in the recitals to this
Agreement.
“Wuhan Crown Interests” has the meaning specified in the recitals to this Agreement.
“Wuhan Crown JV Agreement” has the meaning specified in the recitals to this
Agreement.
“Wuhan Crown JV Interests” has the meaning specified in the recitals to this
Agreement.
“Wuhan Crown Net Working Capital Target” means $3,000,000.
“Wuhan Crown Net Working Capital Amount” means the Net Working Capital of Wuhan Crown.
ARTICLE II
SALE AND TRANSFER OF PURCHASED INTERESTS
SECTION 2.01 Agreement to Purchase and Sell. At the Closing, the Buyer shall purchase
from the Seller, and the Seller shall sell, convey, assign, transfer and deliver to the Buyer, on
the terms and subject to the conditions set forth in this Agreement, the Purchased Interests.
SECTION 2.02 Purchase Price. The aggregate purchase price for the Purchased Interests
(the “Purchase Price”) shall be equal to:
(a) $160,000,000 (the “Base Purchase Price”);
(b) minus the Aggregate Closing Indebtedness;
(c) plus the Net Working Capital Adjustment Amount (which may be positive or negative);
(d) minus Outstanding Transaction Costs.
SECTION 2.03 Payment of Purchase Price.
(a) Estimated Closing Statement. At least five business days prior to the Closing
Date, the Seller shall deliver to the Buyer a certificate, executed by the Seller, setting forth
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the Seller’s detailed good faith estimates of (i) the Aggregate Closing Indebtedness as
estimated as of the Closing Date (the “Estimated Aggregate Closing Indebtedness”), (ii)
the Wuhan Crown Net Working Capital Amount and the Combined Crown Entities Net Working Capital
Amount as estimated as of the Closing Date (the “Estimated Net Working Capital
Amounts”), (iii) on the basis of the calculations of Estimated Net Working Capital Amounts
set forth in clause (ii), a good faith estimate of the calculation of the Net Working
Capital Adjustment Amount as of the Closing Date (the “Estimated Net Working Capital
Adjustment Amount”), and (iv) Outstanding Transaction Costs as estimated as of the Closing
Date (the “Estimated Outstanding Transaction Costs”) (such certificate, the
“Estimated Closing Statement”). The Estimated Closing Statement shall be prepared on a
basis consistent with the methodologies, practices, estimation techniques, assumptions and
principles used in the Financial Statements (other than the Seller Audited Financial Statements)
and is subject to the approval of the Buyer (not to be unreasonably withheld). The Buyer shall
have the right to review the work papers and analysis of the Seller underlying or utilized in
preparing the Estimated Closing Statement and the calculation of the Purchase Price set forth
therein.
(b) Closing Date Cash Payment. The amount of cash paid to the Seller at Closing by
the Buyer (the “Closing Date Cash Payment”) shall be equal to:
(i) the Base Purchase Price;
(ii) minus the Estimated Aggregate Closing Indebtedness;
(iii) plus the Estimated Net Working Capital Adjustment Amount (which may be
positive or negative);
(iv) minus the Estimated Outstanding Transaction Costs.
(c) Application of Closing Date Cash Payment. At the Closing, the Buyer shall
apply the portions of the Closing Date Cash Payment specified in clauses (i) through
(iii) below on behalf of the Seller as follows:
(i) to pay all Transaction Costs incurred through the Closing as set forth in the
pay-off, release and discharge letters by the Persons to whom such Transaction Costs are
owed in form and substance acceptable to the Buyer and delivered by the Seller to the
Buyer at the Closing (the “Transaction Costs Pay-Off Letters”);
(ii) to deposit the Indemnity Escrow Amount with the Escrow Agent to be held by the
Escrow Agent in an escrow account (the “Indemnity Escrow Account”) pursuant to
the terms of the Indemnity Escrow Agreement; and
(iii) to deposit the Purchase Price Escrow Amount with the Escrow Agent to be held
by the Escrow Agent in an escrow account (the “Purchase Price Escrow Account”)
pursuant to the terms of the Purchase Price Escrow Agreement.
The proceeds from the Closing Date Cash Payment less the amounts set forth in clauses
(c)(i) through (c)(iii) above are referred to as the “Closing Date
Proceeds.” The Buyer shall pay to the Seller at the Closing the Closing Date Proceeds by
wire transfer of immediately available
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funds. Each of the foregoing payments shall be made by
the wire transfer of immediately available funds to such accounts as are indicated by the Seller
in a “funds flow memo” to be delivered by the Seller to the Buyer at least two (2) business days
prior to the Closing Date.
SECTION 2.04 Closing.
(a) Closing Date. The closing of the purchase and sale of the Purchased Interest
provided for in this Agreement (the “Closing”) will take place, subject to the
conditions in Articles VI and VII, at the offices of Mayer, Brown, Xxxx & Maw
LLP, 00 X. Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx, at 10:00 a.m. on the third business day after the
conditions set forth in Articles VI and VII (other than those conditions that by
their nature are to be satisfied by actions taken at the Closing, but subject to the
satisfaction or waiver of those conditions) have been satisfied or waived, or at such other
place, time and date as may be agreed by the Seller and the Buyer. The date on which the
Closing occurs is referred to in this Agreement as the “Closing Date”.
(b) Closing Deliveries. At the Closing:
(i) The Seller will deliver to the Buyer:
(1) certificates representing the Purchased Interests, duly endorsed for
transfer (or accompanied by duly executed stock or other Equity Interest powers
in form and substance reasonably acceptable to the Buyer), customary instruments
of assignment in respect of any Purchased Interests that are not certificated
and such other additional assignment and assumption agreements as shall be
necessary to effect the transfer of the Purchased Interests as reasonably
requested by the Buyer;
(2) each other Transaction Document to which the Seller is a party,
executed by the Seller;
(3) the certificates referred to in Sections 6.01, 6.02 and
6.08, in form and substance reasonably acceptable to the Buyer;
(4) a certificate of the Secretary of the Seller, dated as of the Closing
Date, with respect to the incumbency of corporate officers of the Seller and
their signatures, the corporate good standing of the Seller, the Organization
Documents of the Seller and the corporate director and stockholder resolutions
of the Seller authorizing the transactions contemplated by this Agreement and
the other Transaction Documents, in form and substance reasonably acceptable to
the Buyer;
(5) a certificate of the Secretary (or other applicable officer) of each
Applicable Entity, with respect to corporate or other applicable good standing
of such Applicable Entity to the extent good standing is a recognized
concept in the applicable jurisdiction where the Applicable Entity is organized
and the Organization Documents of such Applicable Entity, in form and substance
reasonably acceptable to the Buyer; and
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(6) each other document reasonably requested by the Buyer to be delivered
at the Closing by the Seller or any of the Applicable Entities.
(ii) The Buyer will deliver to the Seller:
(1) the Closing Date Cash Proceeds in the manner set forth in Section
2.03(c);
(2) each other Transaction Document to which the Buyer is a party, executed
by the Buyer;
(3) the certificates referred to in Sections 7.01 and 7.02,
in form and substance reasonably acceptable to the Seller;
(4) a certificate of the Secretary of the Buyer, dated as of the Closing
Date, with respect to the incumbency of corporate officers of the Buyer and
their signatures, the corporate good standing of the Buyer, the Organizational
Documents of the Buyer and the corporate director resolutions of the Buyer
authorizing the transactions contemplated by this Agreement and the other
Transaction Documents, in form and substance reasonably acceptable to the
Seller; and
(5) each other document reasonably requested by the Seller to be delivered
at the Closing by the Buyer.
SECTION 2.05 Purchase Price Adjustment.
(a) Post-Closing Statement. Within ninety (90) days after the Closing Date, the
Buyer shall prepare and deliver to the Seller a statement (the “Post-Closing Statement”)
evidencing its determination of (i) the Aggregate Closing Indebtedness as of the Closing Date,
(ii) the Wuhan Crown Net Working Capital Amount and the Combined Crown Entities Net Working
Capital Amount as of the Closing Date, (iii) on the basis of the calculations of Net Working
Capital Amounts set forth in clause (ii), the Net Working Capital Adjustment Amount as
of the Closing Date, (iv) Outstanding Transaction Costs as of the Closing Date, and (v) on the
basis of the amounts specified in clauses (i) through (iv) above, the Purchase
Price. The Post-Closing Statement shall be derived from the balance sheets of the Applicable
Entities as of the Closing Date, prepared in accordance with and on a basis consistent with the
basis on which the Financial Statements (other than the Seller Audited Financial Statements)
were prepared, and which excludes the impact of any of the transactions contemplated by this
Agreement. The Seller shall have the right to review the work papers
and analysis of the Buyer underlying or utilized in preparing the Post-Closing Statement
and the calculation of the Purchase Price set forth therein.
(b) Statement of Objections. The Seller may object to the Buyer’s determination of
the Purchase Price as set forth in the Post-Closing Statement by delivery of a detailed written
statement of objections (a “Statement of Objections”) (stating the basis of the
objections with reasonable specificity and the Seller’s calculations of the objected amounts) to
the Buyer within thirty (30) days following delivery to the Seller of such Post-Closing
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Statement. If the Seller timely delivers such Statement of Objections, then the Buyer and the
Seller shall seek in good faith to resolve all disagreements set forth in such Statement of
Objections within twenty (20) days following the delivery thereof to the Buyer. If the Seller
does not deliver a Statement of Objections to the Buyer within such 30-day period, the
Post-Closing Statement proposed by the Buyer and, based thereon, the Purchase Price and each
component thereof contained therein shall be considered final and binding upon the parties. The
Purchase Price, if and as finally determined by this clause (b), is herein referred to
as the “Final Purchase Price.”
(c) Disputes. In the event the Buyer and the Seller are unable to agree on the
Final Purchase Price in accordance with clause (b) above within twenty (20) days
following the delivery of a Statement of Objections to the Buyer, either party may elect, by
written notice to the other party, to have such disagreement resolved by the Independent
Accountant. The Independent Accountant shall make a final and binding resolution of the
Purchase Price. No appeal from such determination shall be permitted. The Independent
Accountant shall be further instructed to use every reasonable effort to perform its services
within thirty (30) days after submission of the Post-Closing Statement to it, and in any case,
as soon as practicable after such submission. The costs and expenses for the services of the
Independent Accountant shall be borne by Buyer and Seller in proportion (on an aggregate overall
basis) based on how far off in terms of dollars such party’s calculation of the Purchase Price
was from the Purchase Price determined by the Independent Accountant. Judgment upon any award
or decision by the Independent Accountant may be enforced by any court having jurisdiction
thereof. The Purchase Price, if and as finally determined by this clause (c), is herein
referred to as the “Final Purchase Price.”
(d) Post-Closing Adjustment Payments. If the Final Purchase Price as finally
determined is:
(i) less than the Closing Date Cash Payment by an amount less than the amounts then
contained in the Purchase Price Escrow Account, then, within five (5) business days of
final determination of the Final Purchase Price, the Seller and the Buyer shall take all
actions necessary under the Purchase Price Escrow Agreement to cause the Escrow Agent to
(x) release to the Buyer from the Purchase Price Escrow Account the amount by which the
Closing Date Cash Payment exceeds the Final Purchase Price, and (y) release to the
Seller all amounts remaining in the Purchase Price Escrow Account after giving effect to
the release to the Buyer pursuant to the foregoing clause (x);
(ii) less than the Closing Date Cash Payment by an amount greater than the amounts
then contained in the Purchase Price Escrow Account (the difference of (A) the Closing
Date Cash Payment, minus (B) the Final Purchase Price, minus (C) the amount of funds
then contained in the Purchase Price Escrow Account is herein referred to as the
“Excess Shortfall Amount”), then, within five (5) business days of final
determination of the Final Purchase Price, (x) the Seller and the Buyer shall take all
actions necessary under the Purchase Price Escrow Agreement to cause the Escrow Agent to
release to the Buyer from the Purchase Price Escrow Account all amounts then contained
in the Purchase Price Escrow Account, and (y) the Seller
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shall pay or cause to be paid
to the Buyer the Excess Shortfall Amount by wire transfer of immediately available funds
to such bank account of the Buyer as the Buyer shall specify in writing to the Seller;
or
(iii) greater than the Closing Date Cash Payment, then, within five (5) business
days of final determination of the Final Purchase Price, (x) the Seller and the Buyer
shall take all actions necessary under the Purchase Price Escrow Agreement to cause the
Escrow Agent to release to the Seller from the Purchase Price Escrow Account all amounts
then contained in the Purchase Price Escrow Account, and (y) the Buyer shall pay to the
Seller the amount by which the Final Purchase Price exceeds the Closing Date Cash
Payment, in immediately available funds, by wire transfer to such bank account or
accounts of the Seller as the Seller shall specify in writing to the Buyer.
SECTION 2.06 Allocation. The Purchase Price, and any other consideration paid to the
Seller hereunder, shall be allocated among the Purchased Interests in accordance with IRC Sections
338 and 1060 (and similar provisions for state, local, and foreign law, as appropriate) pursuant to
the allocation schedule attached hereto as Schedule 2.06. The Buyer shall provide the
Seller with Schedule 2.06 within 60 days after the Closing Date. If the Seller disagrees
with any items reflected on such schedule, then the Seller shall send, within 10 business days
after its receipt of Schedule 2.06 from the Buyer, written notice to the Buyer of such
disagreement and the Seller’s reasons for so disagreeing, in which case the Buyer and the Seller
shall use their good faith efforts to resolve the disagreement. To the extent the Buyer and the
Seller cannot agree on a mutually acceptable allocation of the Purchase Price for the purposes of
Schedule 2.06, such allocation shall be made by the Independent Accountant, whose decision
shall be final and binding upon the parties hereto and whose fees and expenses shall be shared
equally by the Buyer and the Seller. Neither the Seller nor the Buyer will take a position on any
income Tax Return, before any Governmental Body charged with the collection of any income Tax, or
in any judicial proceeding that is in any way inconsistent with the terms of this Section
2.06, and the Seller and the Buyer shall file all necessary forms with the applicable
authorities in a manner consistent with this allocation. The allocation schedule in Schedule
2.06 shall be adjusted to reflect any adjustments to the Purchase Price made pursuant to the
terms of this Agreement.
SECTION 2.07 Withholding. The Buyer shall be entitled to deduct and withhold from the
consideration otherwise payable to any person pursuant to this Agreement such amounts as it is
required to deduct and withhold with respect to the making of such payment under any provision of
federal, state, local or foreign tax law. If the Buyer so withholds amounts, such amounts shall
be treated for all purposes of this Agreement as having been paid to the Seller in respect of
which the Buyer made such deduction and withholding.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Buyer as set forth in this Article III.
SECTION 3.01 Organization and Good Standing.
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(a) The Seller is a corporation duly organized, validly existing and in good standing under
the laws of the State of Minnesota, 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 this Agreement and the other Transaction
Documents to which it is a party. The Seller is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature of the
activities conducted by it, requires such qualification, unless any such failure to be so
qualified would not reasonably be expected to have a material adverse effect on (x) the Seller’s
ability to consummate timely the Contemplated Transactions or (y) the business, assets,
properties, financial condition or prospects of the Seller and the Applicable Entities, taken as
a whole. Except as set forth on Schedule 3.01(a), (x) the Seller has no Subsidiaries
other than the Applicable Entities, (y) the Seller does not own any Equity Interests in any
Person other than the Applicable Entities and (z) the Seller does not have any agreement or any
other obligation to acquire any Equity Interests of, or make any equity investments or capital
contributions in, any Person other than the Applicable Entities as set forth in the Material
Contracts described on Schedule 3.15(a).
(b) Each Applicable Entity is duly organized, validly existing and in good standing under
the laws of its jurisdiction of incorporation, formation or organization, as applicable, with
full power and authority to conduct its business as it is now being conducted and to own or use
the properties and assets that it purports to own or use. Each Applicable Entity and is duly
qualified to do business as a foreign corporation and is in good standing under the laws of each
state or other jurisdiction in which either the ownership or use of the properties owned or used
by it, or the nature of the activities conducted by it, requires such qualification, unless any
such failure to be so qualified would not reasonably be expected to have a material adverse
effect on the business, assets, properties, financial condition or prospects of such Applicable
Entity. Schedule 3.01(b) sets forth a complete and accurate list of the exact legal
name of each Applicable Entity, together with each such Applicable Entity’s jurisdiction of
incorporation, formation or organization and each of the jurisdictions in which each such
Applicable Entity is authorized to do business. The Seller has delivered or made available to
the Buyer true, correct and complete copies of the Organizational Documents of each Applicable
Entity.
(c) Except as set forth on Schedule 3.01(c), (x) no Applicable Entity owns any
Equity Interests in any Person and (z) no Applicable Entity has any agreement or any other
obligation to acquire any Equity Interests of, or make any equity investments or capital
contributions in, any Person other than the Applicable Entities as set forth in the Material
Contracts described on Schedule 3.15(a).
SECTION 3.02 Authority; No Conflict.
(a) The Seller has the requisite corporate power and authority to execute and deliver this
Agreement and each of the other Transaction Documents to which it is, or will become, a party,
to perform its obligations hereunder and thereunder, and to consummate the Contemplated
Transactions. The execution, delivery and performance by the Seller of this Agreement and each
of the other Transaction Documents to which it is, or will become, a
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party and the consummation
of the Contemplated Transactions have been duly authorized by all requisite corporate action on
the part of the Seller, including the approval of the Seller’s board of directors and
stockholders. The Seller has duly executed and delivered this Agreement, and on the Closing
Date will have duly executed and delivered each of the other Transaction Documents to which it
is a party. This Agreement constitutes, and on the Closing Date each of the other Transaction
Documents to which the Seller is a party will constitute, the legal, valid and binding
obligations of the Seller enforceable against it in accordance with their respective terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors’ rights generally and general principles of equity.
(b) Except as set forth on Schedule 3.02(b), neither the execution and delivery of
this Agreement or any of the other Transaction Documents to which the Seller is a party nor the
consummation or performance of any of the Contemplated Transactions will, directly or indirectly
(with or without notice, the lapse of time, or both):
(i) contravene, conflict with or result in a violation or breach of (A) any
provision of the Organizational Documents of the Seller or any Applicable Entity, or (B)
any resolution adopted by the board of directors or other similar governing body or the
stockholders, members or other equity holders of the Seller or any Applicable Entity;
(ii) contravene, conflict with or result in a violation or breach 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 the Seller or any Applicable Entity, or any of the properties or
assets owned or used by any of them, may be subject;
(iii) contravene, conflict with or result in a violation or breach 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 the
Seller or any Applicable Entity or that otherwise relates to the
business of, or any of the properties or assets owned or used by the Seller or any
Applicable Entity;
(iv) cause any Applicable Entity to become subject to, or to become liable for the
payment of, any Tax;
(v) result in the imposition or creation of any Encumbrance, other than Permitted
Encumbrances, upon or with respect to any of the assets owned or used by any Applicable
Entity; or
(vi) result in any violation of, or constitute a default under, any Representation
Material Contract to which any Applicable Entity is a party or by which any Applicable
Entity or any of their respective assets are bound.
(c) Except as set forth on Schedule 3.02(c), neither the Seller nor any Applicable
Entity is or will be required to give any notice to, make any filing with, or obtain any
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Consent
from any Person in connection with the execution, delivery or performance of this Agreement or
any of the other Transaction Documents or the consummation of any of the Contemplated
Transactions.
SECTION 3.03 Title to Purchased Interests. The Seller is and will be on the Closing
Date the record and beneficial owner and holder of, and has good, valid and marketable title to,
all of the Purchased Interests, free and clear of all Encumbrances, other than Permitted
Encumbrances. At the Closing, good, valid and marketable title to the Purchased Interests will
pass to the Buyer, free and clear of all Encumbrances, other than Permitted Encumbrances.
SECTION 3.04 Capitalization.
(a) Schedule 3.04(a) sets forth a true and correct list of (i) the authorized
capital stock (to the extent applicable) and other Equity Interests of each Applicable Entity as
authorized by the Organizational Documents and (ii) the issued and outstanding shares of capital
stock (to the extent applicable) and other Equity Interests of each Applicable Entity. All of
the issued and outstanding shares of capital stock (to the extent applicable) and other Equity
Interests of each Applicable Entity are owned beneficially and of record by the Persons, and in
the respective amounts, set forth on Schedule 3.04(a).
(b) All of the issued and outstanding shares of capital stock (to the extent applicable)
and other Equity Interests of each Applicable Entity have been duly authorized and validly
issued and are fully paid and non-assessable and are owned by the holders thereof free and clear
of all Encumbrances to the extent the same are recognized concepts in the jurisdiction of
organization of such Applicable Entity. None of the issued and outstanding shares of capital
stock and other Equity Interests of any Applicable Entity has been issued in violation of, and
are not subject to, any preemptive, subscription or similar rights under any applicable Legal
Requirement, the Organizational Documents of any Applicable Entity, or any Contract to which any
Applicable Entity is a party or by which such Person or any of its respective assets are bound.
There are no unpaid declared or accrued unpaid dividends with respect to the Equity Interests of
any Applicable Entity.
(c) Except as set forth in Schedule 3.04(c), (i) there are no outstanding bonds,
debentures, notes or other obligations the holders of which have the right to vote (or which are
convertible into or exercisable for securities having the right to vote) with the holders of any
Equity Interest of any Applicable Entity on any matter, (ii) there are no outstanding options,
warrants, calls, subscriptions, convertible or exchangeable securities or other rights,
agreements or commitments which obligate any Applicable Entity to issue, transfer or sell any
Equity Interests of any Applicable Entity, (iii) there are no obligations, contingent or
otherwise, of any Applicable Entity to repurchase, redeem or otherwise acquire any Equity
Interests of, or capital contribution in, any Applicable Entity, (iv) no Applicable Entity is
under any obligation, contingent or otherwise, by reason of any agreement or otherwise to
register the offer and sale or resale of any of its securities under the Securities Act or the
securities laws of any other jurisdiction, (v) there are no “phantom” equity rights, profits
interest, performance equity rights, profit participations or other similar agreements or
commitments that give any Person the right to receive any benefit or rights similar to any
rights enjoyed by or accruing to the holders of any Equity Interests in any Applicable Entity,
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and (vi) there are no stockholders agreements, voting agreements, limited liability company
agreement, joint venture agreement, voting trusts, proxies or other agreements to which any
Applicable Entity is a party.
SECTION 3.05 Financial Statements.
(a) The Seller has delivered or made available to the Buyer copies of:
(i) the audited consolidated balance sheets of the Seller and its Subsidiaries as
at December 31, 2004, December 31, 2005 and December 31, 2006 and the related audited
consolidated statements of operations, of cash flows and of stockholders’ equity of the
Seller and its Subsidiaries for the years then ended (collectively, the “Seller
Audited Financial Statements”);
(ii) the audited balance sheets of the Crown Iron Works as at December 31, 2004,
December 31, 2005 and December 31, 2006, and the related audited statements of
operations and retained earnings, and cash flows of Crown Iron Works for the years then
ended (collectively, the “Crown Iron Works Audited Financial Statements”);
(iii) the audited balance sheet of ECL at November 30, 2004, November 30, 2005 and
November 30, 2006, and the related audited statements of income and cash flows for the
year then ended (collectively, the “ECL Audited Financial Statements”);
(iv) the audited balance sheets of ECUK at November 30, 2006, and the related
audited statements of the profit and loss account for period from February 7, 2006 to
November 30, 2006 (collectively, the “ECUK Audited Financial Statements”)
(v) the audited balance sheet of Wuhan Crown at December 31, 2004, December 31,
2005 and December 31, 2006, and the related audited statements of the profit and loss
account and cash flow for the year then ended (collectively, the
“Wuhan Crown Audited Financial Statements”, and together with the Seller
Audited Financial Statements, Crown Iron Works Audited Financial Statements, ECL Audited
Financial Statements, and ECUK Audited Financial Statements, the “Company Audited
Financial Statements”); and
(vi) the unaudited balance sheet of Crown Iron Works, Europa Crown, ECL, ECUK,
Crown Wuhan, CO2LD, LLC and Crown Biofuels, each as at March 31, 2007 (collectively, the
“Company Interim Balance Sheets”, and the related statements of operations for
the three month period then ended (together with the Crown Iron Consolidated Unaudited
Financial Statements, collectively, the “Company Unaudited Financial
Statements;” and the Company Unaudited Financial Statements together with the
Company Audited Financial Statements, the “Financial Statements”).
Except as set forth on Schedule 3.05(a) or as set forth in the report of the independent
accountants or in the footnotes thereto, each of the Financial Statements have been prepared
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in
accordance with the Applicable Accounting Principle consistently applied and presents fairly in
all material respects the consolidated financial position, results of operations and cash flows
of Seller or the Applicable Entity, as applicable, as at the dates and for the periods indicated
therein (subject, in the case of the Unaudited Financial Statements, to normal year-end
adjustments which are not, individually or in the aggregate, material and the absence of
complete footnotes). The Seller and the Applicable Entities maintain books and records that are
accurate in all material respects and such books and records are maintained in all material
respects in accordance with good business practice and all applicable Legal Requirements. The
Seller and the Applicable Entities maintain a system of internal accounting controls sufficient
to provide reasonable assurances that transactions are recorded as necessary to permit
preparation of its financial statements in accordance with the Applicable Accounting Principle.
As of December 31, 2006, no financial statements of any Person other than the Seller and its
Subsidiaries were required by US GAAP to be included in the consolidated financial statements of
the Seller and no financial statements of any Person other than an Applicable Entity and its
Subsidiaries were required by the Applicable Accounting Principle to be included in the
consolidated financial statements of such Applicable Entity. For the purposes hereof, December
31, 2006 is referred to as the “Balance Sheet Date”.
(b) Except as set forth on Schedule 3.05(b), there is no Liability, debt or
obligation of or claim against any of the Applicable Entities and their respective Subsidiaries
of a type normally reflected or reserved for on a balance sheet prepared in accordance with the
Applicable Accounting Principle, except for Liabilities, debts, obligations or claims (i)
reflected or reserved for on the applicable Company Interim Balance Sheet or disclosed in the
notes thereto, or (ii) that have arisen since the date of the applicable Company Interim Balance
Sheet in the ordinary course of business which are not, individually or in the aggregate,
material to the financial condition or operating results of the Seller and its Subsidiaries.
(c) None of the Applicable Entities guarantee any Indebtedness of any other Person.
SECTION 3.06 Title to Properties; Encumbrances.
(a) Real Property.
(i) None of the Applicable Representation Entities owns any real estate.
Schedule 3.06(a)(i) sets forth all the real property leased by any Applicable
Representation Entity (the “Leased Real Property”) and, with respect to each
Leased Real Property, accurately identifies (x) the particular Applicable Representation
Entity that is the lessee of such Leased Real Property and (y) the lessor of such Leased
Real Property.
(ii) Each Applicable Representation Entity has good and valid title to the
leasehold in all Leased Real Property leased by such Applicable Representation Entity,
free and clear of all Encumbrances, except Permitted Encumbrances.
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(iii) Neither the Seller nor any Applicable Representation Entity has received
written notice of, and, to the Knowledge of the Seller, there has not been threatened
and there does not exist any condemnation or eminent domain proceeding, lawsuit or
administrative action relating to any of the Leased Real Property which would materially
and adversely affect the lessee’s use or occupancy thereof.
(iv) With respect to each Leased Real Property lease:
(1) such lease is in full force and effect and is legal, valid, binding and
enforceable against the Applicable Representation Entity party thereto and, to
the Knowledge of the Seller, against the other parties thereto;
(2) the Seller has delivered or made available to the Buyer true, complete
and accurate copies of such lease, and such lease has not been modified in any
respect, except to the extent that such modifications are disclosed by the copy
delivered or made available to the Buyer;
(3) no Applicable Representation Entity, nor, to the Knowledge of the
Seller, any other party, is in default in any respect under such lease, and to
the Knowledge of the Seller, no event or circumstance exists which, with the
delivery of notice, the passage of time, or both, would constitute such a breach
or default, or permit the termination, modification or acceleration of rent
under such lease;
(4) to the Knowledge of the Seller, no security deposit or portion thereof
deposited with respect to any such lease has been applied in respect of a breach
or default under such lease which has not be been redeposited in full;
(5) no Applicable Representation Entity has subleased, licensed or
otherwise granted any other party the right to use or occupy such Leased Real
Property or any portion thereof; and
(6) except as set forth on Schedule 3.06(a)(i), the Contemplated
Transactions do not require the Consent of any other party to any of such
leases, will not result in a breach of or default under such lease, and will not
otherwise cause such lease to cease to be legal, valid, binding, enforceable and
in full force and effect on identical terms following the Closing Date.
(v) All buildings, improvements and fixtures, and components of the Leased Real
Property are in good operating condition in all material respects, reasonable wear and
tear and scheduled maintenance excepted, and are sufficient for the continued operation
of the respective businesses of the Applicable Representation Entities immediately
following Closing as presently conducted.
(vi) Neither the Seller nor any Applicable Representation Entity has received any
notice of violation of any applicable building, zoning, subdivision, health and safety
and other land use laws (collectively, the “Real Property Laws”) and, to the
Knowledge of the Seller, there is no basis for the issuance of any such
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notice or the
taking of any action for any such violation. To the Knowledge of the Seller, all
utilities needed for the continued operations of the businesses of the Applicable
Representation Entities, such as water, oil, gas, electrical, telecommunications, sewer
or storm and waste water systems, have been installed and are operational and sufficient
for the continued operation of the businesses of the Applicable Representation Entities
immediately following Closing as presently conducted.
(b) Personal Property.
(i) Schedule 3.06(b)(i) sets forth all the tangible assets and personal
property owned by the Applicable Representation Entities and having a net book value as
of the Balance Sheet Date in excess of $100,000 (the “Owned Personal Property”).
(ii) Schedule 3.06(b)(ii) sets forth all the tangible assets and personal
property leased by the Applicable Representation Entities having a net book value as of
the Balance Sheet Date in excess of $100,000 (the “Leased Personal Property”).
(iii) The Applicable Representation Entities have valid and legal, good and
marketable title to the Owned Personal Property free and clear of all Encumbrances,
except Permitted Encumbrances.
(iv) The Applicable Representation Entities have a valid leasehold interest in all
Leased Personal Property free and clear of all Liens, except Permitted Encumbrances.
(v) With respect to each Leased Personal Property lease:
(1) such lease is in full force and effect and is legal, valid, binding and
enforceable against the Applicable Representation Entity party thereto and, to
the Knowledge of the Seller, against the other parties thereto;
(2) the Seller has delivered or made available to the Buyer true, complete
and accurate copies of such lease, and such lease has not been modified in any
respect, except to the extent that such modifications are disclosed by the copy
delivered or made available to the Buyer;
(3) no Applicable Representation Entity, nor, to the Knowledge of the
Seller, any other party, is in default in any respect under such lease, and to
the Knowledge of the Seller, no event has occurred or circumstance exists which,
with the delivery of notice, the passage of time, or both, would constitute such
a breach or default, or permit the termination, modification or acceleration of
rent under such lease;
(4) no security deposit or portion thereof deposited with respect to any
such lease has been applied in respect of a breach or default under such lease
which has not be been redeposited in full;
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(5) no Applicable Representation Entity has subleased, licensed or
otherwise granted any other party the right to use such Leased Personal
Property; and
(6) the Contemplated Transactions do not require the Consent of any other
party to any of such leases, will not result in a breach of or default under
such lease, and will not otherwise cause such lease to cease to be legal, valid,
binding, enforceable and in full force and effect on identical terms following
the Closing Date.
(vi) All Owned Personal Property and Leased Personal Property currently used in the
business of the Applicable Representation Entities is in good operating condition in all
material respects, reasonable wear and tear and scheduled maintenance excepted, and is
sufficient for the continued operation of the businesses of the Applicable
Representation Entities immediately following Closing as presently conducted.
SECTION 3.07 Condition and Sufficiency of Assets. The buildings, plants, structures
and equipment of the Applicable Representation Entities that are currently used in the business of
the Applicable Representation Entities are in good operating condition in all material respects,
reasonable wear and tear and scheduled maintenance excepted, and are adequate for the uses to which
they are being put. The building, plants, structures and equipment of the Applicable
Representation Entities are sufficient for the conduct of the business of the Applicable
Representation Entities immediately after the Closing in substantially the same manner as conducted
prior to the Closing. Buyer agrees and acknowledges that the specific property and historical
artifacts and artwork set forth on Schedule 3.07 are the personal property of Seller’s
shareholders. None of the property and historical artifacts and artwork set forth on Schedule
3.07 is required in connection with the operation of the Applicable Entities.
SECTION 3.08 Accounts and Notes Receivable.
(a) Except as set forth on Schedule 3.08(a), all accounts and notes receivable of
the Applicable Representation Entities that are reflected on the applicable Company Interim
Balance Sheet as of the date thereof or on the accounting records of the Applicable
Representation Entities as of the Closing Date (collectively, the “Accounts Receivable”)
represent bona fide obligations of the respective account debtors arising in the Ordinary Course
of Business and, to the Knowledge of the Seller, except as reflected in a reserve account
included in the applicable Company Interim Balance Sheet, are not subject to any offsets or
counterclaims other than those which may arise in the Ordinary Course of Business.
(b) Schedule 3.08(b) contains a complete and accurate list of all Accounts
Receivable of the Applicable Representation Entities as of the date of the applicable Company
Interim Balance Sheets. The Applicable Representation Entities have valid and legal, good and
marketable title to their respective Accounts Receivable, free and clear of all Encumbrances,
except for Permitted Encumbrances.
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SECTION 3.09 Inventory. The inventory of the Applicable Representation Entities will,
on the Closing Date, consist of items that are good and merchantable and of a quality and quantity
that are usable and, with respect to finished goods, saleable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of which have been adequately
reserved for in accordance with the Applicable Accounting Principle in the applicable Company
Interim Balance Sheet. The Applicable Representation Entities have valid and legal, good and
marketable title to their respective inventory, free and clear of all Encumbrances, except for
Permitted Encumbrances.
SECTION 3.10 Taxes.
(a) The Seller and each of the Applicable Representation Entities has timely filed or
caused to be timely filed all material Tax Returns that are or were required to be filed as of
the date hereof pursuant to applicable Legal Requirements. All such Tax Returns were complete
and accurate in all material respects when filed, and all Taxes shown to be due on such Tax
Returns have been timely paid in full. The Seller has delivered or has caused to have been
delivered or made available to the Buyer copies of all such Tax Returns filed after January 1,
2000. The Seller and each of the Applicable Representation Entities has paid, made or shall
make prior to the Closing Date adequate provision in its books and records (with the provision
for Seller and each of the Applicable Representation Entities being in accordance with the
Applicable Accounting Principle) for all accrued Taxes through the close of the month preceding
the date hereof, except such Taxes, if any, as are listed on Schedule 3.10(a) and are
being contested in good faith.
(b) Neither the Seller nor any Applicable Representation Entity 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 relating to the payment of Taxes of the Seller or
any Applicable Representation Entity or for which the Seller or any Applicable Representation
Entity may be liable. There is no pending or, to the Knowledge of the Seller,
threatened action, audit, proceeding or investigation by any Tax authority with respect to
the assessment or collection of any Taxes of the Seller or any of the Applicable Representation
Entities. All Taxes that either the Seller or any Applicable Representation Entity is or was
required by Legal Requirements to withhold or collect have been duly withheld or collected.
(c) The Seller is not a foreign person within the meaning of IRC Section 1445(f)(3).
(d) No Tax Return that includes the business or operations of the Seller or any Applicable
Representation Entity relating to a Taxable period for which the applicable statute of
limitations has not expired has ever been audited or investigated by any Taxing authority. To
the Knowledge of the Seller, no facts exist which would constitute grounds for the assessment of
any material additional Taxes by any Taxing authority with respect to the taxable years covered
in such Tax Returns. No material issues have been raised in any examination by any Tax
authority in writing with respect to the business or operations of the Seller or any Applicable
Representation Entity which, by application of similar principles, reasonably could be expected
to result in a proposed adjustment to the Liability for Taxes for any other period not so
examined.
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(e) Neither the Seller nor any Applicable Domestic Entity nor any Applicable Tax Foreign
Entity has made or become obligated to make, or will as a result of any event connected with the
Contemplated Transactions become obligated to make, any “excess parachute payment” as defined in
Section 280G of the IRC (without regard to subsection (b)(4) thereof) or any payment that would
not be deductible pursuant to Section 162(m) of the IRC.
(f) Neither the Seller nor any Applicable Domestic Entity nor any Applicable Tax Foreign
Entity has been a party to a transaction that has been reported as a reorganization within the
meaning of IRC section 368, or distributed as a corporation (or been distributed) in a
transaction that is reported to qualify under IRC section 355.
(g) Neither the Seller nor any Applicable Domestic Entity (A) has been a member of an
affiliated group filing a consolidated federal income Tax Return (other than a group the common
parent of which was the Seller) or (B) has Liability for the Taxes of any Person (other than the
Seller or any Applicable Representation Entity) under Treas. Reg. §1.1502-6 (or any similar
provisions of state, local, or foreign law), as transferee or successor, by contract or
otherwise.
(h) Neither the Seller nor any Applicable Representation Entity has filed an amendment
within the preceding twelve months to an income Tax Return that was filed by or, on behalf of,
the Seller or any Applicable Representation Entity.
(i) No claim has been made in writing in the past five years by any Governmental Body in a
jurisdiction where the Seller or any Applicable Representation Entity does not file Tax Returns
that asserted that the Seller or any Applicable Representation Entity has income that is
allocated, apportioned or otherwise sourced to, or are or may be subject to taxation under, that
jurisdiction.
(j) Any tax sharing policy of the Seller and any of the Applicable Representation Entities
shall be terminated as it applies to the Applicable Representation Entities prior to the Closing
and the Applicable Representation Entities will not have any obligations with respect to such a
any tax sharing agreement or policy from and after the Closing.
(k) Neither the Seller nor any Applicable Domestic Entity nor any Applicable Tax Foreign
Entity is required to include in income any adjustment pursuant to IRC Section 481(a) by reason
of a voluntary change in accounting method initiated by the Seller or any Applicable
Representation Entity and the Seller has no knowledge that the IRS has proposed any such
adjustment or change in accounting method.
(l) None of the assets or properties of the Applicable Domestic Entities or Applicable Tax
Foreign Entities is an asset or property that Buyer or any of its affiliates is or will be
required to treat as being (i) owned by any other Person pursuant to the provisions of Section
168(f)(8) of the IRC as amended, and in effect immediately before the enactment of the Tax
Reform Act of 1986, or (ii) tax-exempt use property within the meaning of Section 168(h)(1) of
the IRC.
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(m) Neither the Seller nor any Applicable Domestic Entity nor any Applicable Tax Foreign
Entity has been a party to a “reportable transaction” as such term is defined in Treasury
Regulation Section 1.6011-4(b)(1) or to a transaction that is or is substantially similar to a
“listed transaction,” as such term is defined in Treasury Regulation Section 1.6011-4(b)(2).
(n) Each of Crown Biofuels, Europa Crown, ECL, ECUK and CO2LD, LLC qualifies (and has since
the date of its formation qualified), and will qualify immediately after the Closing Date, to be
treated as a partnership or entity disregarded as separate from its owners for United States
federal income tax purposes, and none of the Seller, Crown Biofuels, Europa Crown, ECL, ECUK,
CO2LD, LLC or the IRS has taken a position inconsistent with such treatment. Each of the
Applicable Representation Entities (other than Crown Biofuels, Crown Iron Works, Europa Crown,
ECL, ECUK, CO2LD, LLC and the Seller) is treated as a C-corporation for United States federal
income tax purposes, and none of the Seller, any Applicable Representation Entity, or the IRS
has taken a position inconsistent with such treatment.
(o) The Seller qualifies as an S corporation within the meaning of IRC Section 1361 and
1362 and will be an S Corporation up to and including the Closing Date. Crown Iron Works
qualifies (and has since the date of each such entity’s formation qualified) as a “qualified
subchapter S subsidiary” within the meaning of IRC Section 1361(b)(3) and is treated as an
entity disregarded as separate from its owner for United States federal income tax purposes, and
none of the Seller, any Applicable Domestic Entity, or the IRS has taken a position inconsistent
with such treatment.
SECTION 3.11 Employee Benefits.
(a) Schedule 3.11(a) sets forth a true and correct list of all Seller Plans, Seller
Other Benefit Obligations, and Seller VEBAs of any Applicable Representation Entity
(“Benefit Plans”). A true and correct copy of each of the Benefit Plans listed on
Schedule 3.11(a), and all contracts relating thereto, or the funding thereof, including,
without limitation and to the extent applicable, all trust agreements, insurance contracts,
administration contracts, investment management agreements, subscription and participation
agreements, and recordkeeping agreements, each as in effect on the date hereof, has been
supplied to the Buyer. In the case of any Benefit Plan that is not in written form, the Buyer
has been supplied with an accurate description of such Benefit Plan as in effect on the date
hereof. A true and correct copy of the most recent annual report, actuarial report,
accountant’s opinion of the relevant Benefit Plan’s financial statements, summary plan
description and IRS determination letter with respect to each Benefit Plan, to the extent
applicable or required under ERISA or IRC, and a copy of the most recent schedule of assets held
with respect to any funded Benefit Plan has been supplied to the Buyer, and there have been no
material changes in the financial condition in the respective plans from that stated in the
annual reports and actuarial reports supplied.
(b) Except as set forth on Schedule 3.11(b):
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(i) The Seller and each Applicable Representation Entity has performed, in all
material respects, all of its obligations under all Benefit Plans. The Seller and each
Applicable Representation Entity has made appropriate entries in its financial records
and statements for all obligations and Liabilities under such Benefit Plans that have
accrued but are not due, and for a pro rata amount of the contributions that would
otherwise have been made in accordance with past practices and applicable law for the
applicable contribution period that includes the Closing Date.
(ii) No statement, either written or, to the Knowledge of the Seller, oral, has
been made by the Seller or any Applicable Representation Entity to any Person with
regard to any Benefit Plan that was not in accordance with such Benefit Plan and that
could have an adverse economic consequence to Seller or any Applicable Representation
Entity or to the Buyer.
(iii) The Seller and each Applicable Representation Entity, with respect to all
Benefit Plans, is, and each Benefit Plan is, in full compliance, in form and operation,
with ERISA, the IRC and other applicable Legal Requirements including the provisions of
such Legal Requirements expressly mentioned in this Section 3.11, and with any
applicable collective bargaining agreement, and no notice has been issued by any
governmental authority questioning or challenging such compliance no event has occurred
that will or could cause any such Benefit Plan to fail to comply with such requirements.
(iv) To the Knowledge of the Seller, no transaction prohibited by ERISA § 406 and
no “prohibited transaction” under IRC § 4975(c) have occurred with respect to any Seller
Plan, and none of the Seller, any Applicable Representation Entity or any of their
respective ERISA Affiliates has engaged in any such prohibited transaction.
(v) Neither the Seller nor any Applicable Representation Entity has any Liability
to the IRS with respect to any Benefit Plan, including any Liability imposed by Chapter
43, 47 or 68 of the IRC.
(vi) Neither the Seller nor any Applicable Representation Entity has any Liability
to the PBGC with respect to any Seller Plan, or has any Liability under ERISA § 302 or §
4971.
(vii) All filings required of the Seller or any Applicable Representation Entity by
ERISA, the IRC or any other applicable Legal Requirement as to each Seller Plan have
been timely filed, and all notices and disclosures to participants required by ERISA,
the IRC or any other applicable Legal Requirement have been timely provided.
(viii) All contributions and payments made or accrued with respect to all Benefit
Plans are deductible under IRC § 162 or § 404. No amount, or any asset of any Seller
Plan or Seller VEBA, is subject to tax as unrelated business taxable income.
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(ix) Unless otherwise prohibited by ERISA, IRC or other applicable Legal
Requirement, each Seller Plan can be terminated within ninety days, without payment of
any additional contribution or amount and without the vesting or acceleration of any
benefits promised by such Seller Plan (with the exception of Crown Iron Works’ 401(k)
plan).
(x) No event within the control of the Seller or any Applicable Representation
Entity has occurred or circumstance exists that could result in a material increase in
premium costs of the Benefit Plans that are insured or a material increase in benefit
costs of such Benefit Plans that are self-insured.
(xi) Other than routine, non-material claims for benefits submitted by participants
or beneficiaries in the ordinary course, no claim against, or legal proceeding
involving, any Benefit Plan is pending, to the Knowledge of the Seller, or threatened
and, to the Knowledge of the Seller, no facts exist that could give rise to any such
claims or legal proceedings.
(xii) Each Qualified Plan of the Seller or any Applicable Representation Entity is
qualified in form and operation under IRC § 401(a) and each trust for each such
Qualified Plan is exempt from federal income tax under IRC § 501(a). Each Seller VEBA
is exempt from federal income tax. No event has occurred or circumstance exists
(including making any amendments to the Plan) that will or could give rise to
disqualification or loss of tax-exempt status of any such Plan or trust.
(xiii) Neither the Seller, any Applicable Representation Entity nor any ERISA
Affiliate of the Seller or any Applicable Representation Entity maintains a Plan that is
subject to ERISA § 302 or IRC § 412.
(xiv) No Seller Plan is a Title IV Plan.
(xv) The Seller and each Applicable Representation Entity has paid all amounts due
to the PBGC pursuant to ERISA § 4007.
(xvi) Neither the Seller nor any Applicable Representation Entity nor any ERISA
Affiliate of the Seller or any Applicable Representation Entity has ceased operations at
any facility or has withdrawn from any Title IV Plan in a manner that would subject to
such entity to Liability under ERISA § 4062(e), § 4063 or § 4064.
(xvii) Neither the Seller nor any Applicable Representation Entity nor any ERISA
Affiliate of the Seller or any Applicable Representation Entity has filed a notice of
intent to terminate any Plan that is a Title IV Plan or has adopted any amendment to
treat any such Title IV Plan as terminated. The PBGC has not instituted proceedings to
treat any Seller Plan as terminated. No event has occurred or circumstance exists that
may constitute grounds under ERISA § 4042 for the termination of, or the appointment of
a trustee to administer, any Seller Plan that is a Title IV Plan.
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(xviii) No amendment has been made, or is reasonably expected to be made, to any
Seller Plan that has required or could require the provision of security under ERISA §
307 or IRC § 401(a)(29).
(xix) No accumulated funding deficiency within the meaning of IRC § 412(a) and
ERISA § 302(a)(2), whether or not waived, exists with respect to any Seller Plan that is
subject to the requirements of IRC § 412 and ERISA § 302; no event has occurred or
circumstance exists that may result in an accumulated funding deficiency as of the last
day of the current plan year of any such Plan.
(xx) The actuarial report for each Seller Plan that is a defined benefit Pension
Plan of the Seller or any Applicable Representation Entity and each ERISA Affiliate of
the Seller or any Applicable Representation Entity fairly presents the financial
condition and the results of operations of each such Plan in accordance with US GAAP.
(xxi) Since the last valuation date for each Seller Plan that is a defined benefit
Pension Plan of the Seller or any Applicable Representation Entity and each ERISA
Affiliate of the Seller or any Applicable Representation Entity, no event has occurred
or circumstance exists that would increase the amount of benefits under any such Plan or
that would cause the excess of Plan assets over benefit liabilities (as defined in ERISA
§4001) to decrease, or the amount by which such benefit liabilities exceed assets to
increase.
(xxii) No reportable event (as defined in ERISA § 4043 and in regulations issued
thereunder) has occurred with respect to a Seller Plan that is a Title IV Plan.
(xxiii) None of the Seller, any Applicable Representation Entity nor any ERISA
Affiliate of the Seller or any Applicable Representation Entity has any Liability under
Title IV of ERISA and there are no facts or circumstances that may
give rise to any Liability of the Seller, any Applicable Representation Entity or
the Buyer under Title IV of ERISA as result of the Contemplated Transactions.
(xxiv) None of the Seller, any Applicable Representation Entity nor any ERISA
Affiliate of the Seller or any Applicable Representation Entity has established,
maintained or contributed to or otherwise participated in, or had an obligation to
maintain, contribute to or otherwise participate in, any Multiemployer Plan, any defined
benefit Pension Plan or any VEBA.
(xxv) None of the Seller, any Applicable Representation Entity nor any ERISA
Affiliate of the Seller or any Applicable Representation Entity has withdrawn from any
Multiemployer Plan with respect to which there is any outstanding Liability as of the
date of this Agreement. No event has occurred or circumstance exists as of the date of
this Agreement that presents a risk of the occurrence of any withdrawal from, or the
participation, termination, reorganization or insolvency of, any Multiemployer Plan that
could result in any Liability of the Seller, any Applicable Representation Entity or the
Buyer to a Multiemployer Plan.
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(xxvi) None of the Seller, any Applicable Representation Entity nor any ERISA
Affiliate of the Seller or any Applicable Representation Entity has received notice from
any Multiemployer Plan that it is in reorganization or is insolvent, that increased
contributions may be required to avoid a reduction in plan benefits or the imposition of
any excise tax, or that such Plan intends to terminate or has terminated.
(xxvii) No Multiemployer Plan to which the Seller, any Applicable Representation
Entity or any ERISA Affiliate of the Seller or any Applicable Representation Entity
contributes or has contributed is a party to any pending merger or asset or liability
transfer or is subject to any proceeding brought by the PBGC.
(xxviii) Neither the Seller nor any Applicable Representation Entity has any
Liability for providing, under any Benefit Plan or otherwise, any post-retirement
medical, life insurance, or other welfare benefits, other than statutory liability for
providing group health plan continuation coverage under Part 6 of Title I of ERISA and
IRC § 4980B.
(xxix) Each Benefit Plan that constitutes a “group health plan” (as defined in
ERISA § 607(1) or IRC § 4980B(g)(2)), including any plans of current and former
affiliates that must be taken into account under sections IRC §§ 4980B and 414(t) or
ERISA § 601, has been operated in material compliance with applicable law, including
without limitation, the coverage requirements of IRC § 4980B and ERISA § 601 to the
extent such requirements are applicable.
(xxx) Except to the extent required by ERISA, IRC or other applicable Legal
Requirement, the consummation of the Contemplated Transactions will not result in the
payment, vesting or acceleration of any benefit under any Seller Plan or Seller Other
Benefit Obligation.
(xxxi) None of the assets of any Benefit Plan is invested in securities of the
Seller, any Applicable Representation Entity or any ERISA Affiliate of the Seller or any
Applicable Representation Entity.
SECTION 3.12 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth on Schedule 3.12(a):
(i) the Seller, to the extent related to the Applicable Entities or the Purchased
Interests, and each Applicable Representation Entity is in compliance with the Legal
Requirements that are applicable to it or to the conduct or operation of its business or
the ownership or use of any of its assets; and
(ii) no event or circumstance exists that constitutes a violation by the Seller, to
the extent related to the Applicable Entities or the Purchased Interests, or any
Applicable Representation Entity of, or a failure on the part of the Seller, to the
extent related to the Applicable Entities, or any Applicable Representation Entity to
comply with, any Legal Requirement.
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(b) Except as set forth on Schedule 3.12(b):
(i) the Seller, to the extent related to the Applicable Entities or the Purchased
Interests, and each Applicable Representation Entity is in material compliance with all
of the terms and requirements of each Governmental Authorization necessary (A) for the
lawful conduct or operation of its business as currently conducted, or (B) to permit it
to own and use its assets in the manner in which it currently owns and uses such assets;
(ii) no event or circumstance exists that (A) constitutes directly or indirectly a
violation of or a failure by the Seller, to the extent related to the Applicable
Entities or the Purchased Interests, or any Applicable Representation Entity to comply
with any term or requirement of any Governmental Authorization, or (B) will result
directly or indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization; and
(iii) all applications required to have been filed on behalf of the Seller, to the
extent related to the Applicable Entities or the Purchased Interests, and each of the
Applicable Representation Entities for the renewal of Governmental Authorizations have
been duly filed with the appropriate Governmental Bodies, and all other filings required
to have been made with respect to such Governmental Authorizations have been duly made
with the appropriate Governmental Bodies.
SECTION 3.13 Legal Proceedings; Orders.
(a) Except as set forth on Schedule 3.13(a), there are no Proceedings pending or,
to the Knowledge of the Seller, threatened against (i) the Seller, to the extent related to the
Applicable Entities or the Purchased Interests, or any Applicable Representation Entity, (ii)
any Applicable Representation Entities’ officers, directors, employees, agents or
stockholders in their capacity as such, (iii) to the extent related to the Applicable Entities
or the Purchased Interests, any of the Seller’s officers, directors, employees, agents or
stockholders in their capacity as such or (iv) any of the Seller’s, to the extent related to the
Applicable Entities or the Purchased Interests, or any Applicable Representation Entity’s
respective properties or businesses, to the Knowledge of the Seller, and, except for Punch List
Items, there are no facts which constitute a valid basis for any such claim. There are no
Proceedings pending or, to the Knowledge of the Seller, threatened against the Seller or any
Applicable Representation Entity with respect to this Agreement or the Contemplated
Transactions, and to the Knowledge of the Seller, no fact or circumstance exists which
constitutes a valid basis for any such Proceeding.
(b) Except for orders and rulings of general applicability (such as Executive Orders, Equal
Employment Opportunity Commission rulings and similar rulings and orders), in each case, to the
extent not specifically naming the Seller or any Applicable Representation Entity, or as
otherwise set forth on Schedule 3.13(b):
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(i) there is no Order to which the Seller or any of the assets owned or used by the
Seller, is subject, in each case, to the extent related to the Applicable Entities or
the Purchased Interests;
(ii) there is no Order to which any Applicable Representation Entity or any of the
assets owned or used by any Applicable Representation Entity, is subject;
(iii) the Seller is not subject to any Order that relates to the business of, or
any of the assets owned or used by the Seller, in each case, to the extent related to
the Applicable Entities or the Purchased Interests; and
(iv) none of the Applicable Representation Entities is subject to any Order that
relates to the business of, or any of the assets owned or used by any Applicable
Representation Entity.
(c) Except as set forth on Schedule 3.13(c):
(i) the Seller is in material 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 subject, in each
case, to the extent related to the Applicable Entities or the Purchased Interests;
(ii) each Applicable Representation Entity is in material 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 subject;
(iii) no event or circumstance exists that constitutes or will result in (with or
without notice or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which the Seller or any of the assets owned or used by the
Seller, is subject, in each case, to the extent related to the Applicable Entities or
the Purchased Interests; and
(iv) no event or circumstance exists that constitutes or will result in (with or
without notice or lapse of time) a violation of or failure to comply with any term or
requirement of any Order to which any Applicable Representation Entity, or any of the
assets owned or used by any Applicable Representation Entity, is subject.
(d) All of the Proceedings and Orders required to be set forth on either Schedule
3.13(a) or Schedule 3.13(b) are fully covered by insurance policies (or other
indemnification agreements with third parties) and are being defended by the insurers (or such
third parties). Except as set forth on Schedule 3.13(d), (i) none of the Applicable
Representation Entities has entered into any agreement to settle or compromise any Proceeding or
Order pending or threatened against it that has involved any obligation other than the payment
of money (which has been satisfied in full) or for which any Applicable Representation Entity
has any continuing obligation and (ii) the Seller has not entered into any agreement to settle
or compromise any Proceeding or Order pending or threatened against it that has involved any
obligation of any Applicable Representation Entity other than the payment of money (which
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has
been satisfied in full) or for which any Applicable Representation Entity has any continuing
obligation.
SECTION 3.14 Absence of Certain Changes and Events. Since the Balance Sheet Date
until the date hereof, each of the Applicable Entities and, to the extent related to the Applicable
Entities, the Seller has conducted its business only in the Ordinary Course of Business and there
has not been any material and adverse change on the business, assets, properties, financial
condition or prospects of the Applicable Entities, taken as a whole. Such a material and adverse
change excludes any effect resulting from or relating to (i) general political or economic
conditions, general financial and capital market conditions (including interest rates) or general
effects on any of the industries in which the Applicable Entities are engaged which, in each such
case, does not disproportionately affect any Applicable Entity, or, in each case, any changes
therein (including as a result of (x) an outbreak or escalation of hostilities involving the United
States or any other country or the declaration by the United States or any other country of a
national emergency or war, or (y) the occurrence of any other calamity or crisis (including any act
of terrorism)), (ii) any action taken by the Seller or any of the Applicable Entities at the
written request of the Buyer or that is specifically required by this Agreement, or (iii) any
action taken by the Buyer or any of its affiliates or Representatives. Without limitation of the
foregoing and except as set forth on Schedule 3.14, since the Balance Sheet Date until the
date hereof, none of the Applicable Representation Entities nor, to the extent related to any
Applicable Representation Entity or any Purchased Interest, the Seller has:
(a) taken any action that, if taken after the date of this Agreement, would constitute a
breach of any of the covenants set forth in Section 5.01;
(b) declared, set aside, made, set a record date for or paid any dividend or other
distribution in respect of its capital stock or other Equity Interests or otherwise purchased or
redeemed, directly or indirectly, any shares of its capital stock or other Equity Interests;
(c) issued or sold any shares of any class of its capital stock or other Equity Interest,
or any securities convertible into or exchangeable for any such shares or Equity Interest, or
issued, sold, granted or entered into any subscription, options, warrants,
conversion or other rights, agreements, commitments, arrangements or understandings of any
kind, contingently or otherwise, to purchase or otherwise acquire any such shares or interest or
any securities convertible into or exchangeable for any such shares or Equity Interest;
(d) effected, or adopted any plan with respect to, any recapitalization, reorganization,
reclassification, merger, stock split or like change in its capitalization or adopted a plan of
complete or partial liquidation or dissolution;
(e) incurred any material obligation or Liability except in the Ordinary Course of
Business;
(f) discharged or satisfied any material Encumbrance, other than those required to be
discharged or satisfied, or paid any obligation or Liability, absolute, accrued, contingent or
otherwise, whether due or to become due, other than (i) current liabilities shown on the Audited
Financial Statements (other than the Seller Audited Financial Statements), (ii)
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current
liabilities incurred since the date thereof in the Ordinary Course of Business, and (iii)
intercompany Liabilities owed by any Applicable Entity to another Applicable Entity;
(g) subjected any of its assets or properties to any material Encumbrance other than any
Permitted Encumbrance or an Encumbrance to be released at or prior to the Closing;
(h) sold, transferred, leased to others or otherwise disposed of any of its assets, except
in the Ordinary Course of Business or fixed assets having an aggregate value of less than
$100,000, or canceled or compromised any debt or claim, individually or in the aggregate, in
excess of $100,000, or waived or released any right of substantial value;
(i) (x) entered into, amended, terminated or waived any Representation Material Contract or
any material right or benefit under any Representation Material Contract except in the Ordinary
Course of Business, (y) entered into, amended, terminated or waived any Applicable Material
Contract or any material right or benefit under any Applicable Material Contract or (z) received
any written notice of termination of any Material Contract;
(j) suffered any damage, destruction or loss (whether or not covered by insurance) in
excess of $100,000 to any of its assets or properties;
(k) accelerated the delivery or sale of products or services, or offered discounts or price
protection on the sale of products or services or premiums on the purchase of raw materials,
except in the Ordinary Course of Business;
(l) made any changes in the selling, distribution, advertising, promotion, terms of sale or
collection, purchase or payment practices of the Seller and the Applicable Representation
Entities other than in the Ordinary Course of Business;
(m) purchased, ordered or otherwise acquired inventory in excess of reasonably forecasted
requirements in the Ordinary Course of Business;
(n) paid, loaned or advanced any amount to, or sold, transferred or leased any of its
assets to, or entered into any agreement or arrangement with, the Seller or any other
Related Person of any Applicable Representation Entity (other than another Applicable
Entity);
(o) changed in any material respect its accounting practices, policies or principles except
as required by applicable accounting principles;
(p) made or changed any material Tax election, changed an annual accounting period, adopted
or changed any accounting method with respect to Taxes, filed any amended Tax Return, entered
into any material closing agreement with respect to Taxes or a Tax Return, settled or
compromised any Proceeding with respect to any material Tax claim or assessment, surrendered any
right to claim a refund of Taxes, consented to any extension or waiver of the limitation period
applicable to any Tax claim or assessment relating to the Seller or any of the Applicable
Representation Entities, or taken any other similar action relating to the filing of any
material Tax Return or the payment of any material Tax;
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(q) entered into any new employment, severance, change of control or bonus Contract or
granted to any executive officer or employee any increase in compensation, severance or
termination pay, change in control bonus or any other benefits, except in the case of employees
other than executive officers in the Ordinary Course of Business;
(r) established, adopted, amended, authorized, suspended, or terminated any Seller Plan;
(s) made or committed to make any capital expenditures or capital additions or
improvements, individually or in the aggregate, in excess of $100,000;
(t) acquired any assets (other than inventory and other assets in the Ordinary Course of
Business) involving an amount, individually or in the aggregate, in excess of $100,000;
(u) instituted, settled or agreed to settle any Proceeding before any Governmental Body,
other than in the Ordinary Course of Business;
(v) acquired (whether by merger, consolidation, recapitalization or otherwise) the shares
of capital stock or any other Equity Interest in, or a substantial portion of the assets of, and
Person or any division or business thereof;
(w) transferred or granted any material rights or licenses under, or entered into any
settlement regarding the infringement of, the Intellectual Property of any of the Applicable
Representation Entities or entered into any licensing or similar agreements or arrangements with
respect thereto (other than any shrink-wrap software license), other than in the Ordinary Course
of Business;
(x) entered into any agreement containing covenants that in any way purport to restrict the
business activity of the Seller or any of the Applicable Representation Entities or limit the
freedom of the Seller or any of the Applicable Representation Entities to engage in any line of
business or compete with any Person;
(y) made any amendment or changes in the Organization Documents of any Applicable
Representation Entity;
(z) moved, by dividend, distribution, investment, contribution or transfer or otherwise,
any cash between or among any Applicable Representation Entities; or
(aa) entered into a written agreement to take any of the foregoing actions.
SECTION 3.15 Contracts; No Defaults.
(a) Schedule 3.15(a) sets forth a true and complete list as of the date hereof, and
the Seller has provided access to the Buyer to the true and complete copies (including all
amendments and extensions thereof) or, if oral, an accurate and complete description of all
terms, of each of the following to which either (x) any of the Applicable Representation
Entities is a party or by which any Applicable Representation Entity or any of their
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respective
assets are bound or (y) the Seller is a party or by with the Seller or any of the Seller’s
assets are bound which, in the case of this clause (y), relates to any Applicable Entity
or any Purchased Interest (each, a “Material Contract”) notwithstanding anything to the
contrary set forth below:
(i) all loan agreements, indentures, mortgages, notes, installment obligations,
capital leases, or other agreements or instruments relating to Indebtedness of Seller or
any Applicable Representation Entity;
(ii) all continuing contracts or commitments for the future purchase, sale or
manufacture of products, materials, raw materials, commodities, inventories, supplies,
equipment or services, and all agreements with independent dealers or manufacturer’s
representatives, in each case, other than any such contracts or commitments entered into
in the Ordinary Course of Business;
(iii) (x) all collective bargaining, employment, severance and other similar
agreements, (y) any agreement requiring a change of control or parachute payments from
the Seller or any Applicable Representation Entity or requiring any other payment to be
made by the Seller or any Applicable Representation Entity in connection with the
Contemplated Transactions, and (z) any other type of contract or understanding between
the Seller or any Applicable Representation Entity and any of their respective officers
or employees;
(iv) all Contracts with any Person under which (i) the Seller or any Applicable
Representation Entity is lessee of, or holds or uses, any machinery, equipment, vehicle
or other tangible personal property owned by any Person or (ii) the Seller or any
Applicable Representation Entity is a lessor or sublessor of, or makes available for use
by any person, any tangible personal property owned or leased by the Seller or any
Applicable Representation Entity, in any such case which have an aggregate future
Liability or receivable, as the case may be, in excess of $100,000;
(v) all Contracts pursuant to which the Seller or any Applicable Representation
Entity is obligated to make in the future, any advance, loan, extension of credit,
capital contribution or other debt or equity investment in any Person;
(vi) all Contracts granting to any Person a right of first refusal or option to
purchase any assets;
(vii) all Contracts providing for any acquisition or divestiture of any business or
material assets or any business combination;
(viii) all Contracts with any customer of the Seller or any Applicable
Representation Entity that contains so-called “most favored nation” provisions or any
similar provision requiring an Applicable Representation Entity to offer any person
terms or concessions at least as favorable as those offered to one or more other
parties;
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(ix) all Contracts with performance guarantees outside the Ordinary Course of
Business;
(x) all Contracts entered into outside the Ordinary Course of Business;
(xi) all mortgage, pledge, security agreement, deed of trust or other instrument
granting an Encumbrance other than Permitted Encumbrances upon any asset of the Seller
or any Applicable Representation Entity;
(xii) all joint venture, partnership, limited liability company or other similar
agreement or arrangement;
(xiii) all Contracts involving a sharing of profits, losses, costs or Liabilities
by the Seller or any Applicable Representation Entity with any other Person;
(xiv) all Contracts with any Related Person of the Seller or any Applicable
Representation Entity; and
(xv) all agreements containing covenants that in any way purport to restrict the
business activity of the Seller or any Applicable Representation Entity or limit the
freedom of the Seller or any Applicable Representation Entity to engage in any line of
business or to compete with any Person.
(b) Except (A) for Punch List Items or (B) as disclosed on Schedule 3.15(b), (i)
neither the Seller nor any Applicable Representation Entity is in default under any
Representation Material Contract and, to the Knowledge of the Seller, no other party to any
Representation Material Contract is in default, (ii) no event has occurred which (with or
without notice or lapse of time or both) would become a breach or default under, or would
otherwise permit modification, cancellation, acceleration or termination of, any Representation
Material Contract or any rights or obligations thereunder or would result in the creation of or
right to obtain any Encumbrance (other than a Permitted Encumbrance) upon, or any Person
obtaining any right to acquire, any assets, rights or interests of the Seller
or any of the Applicable Representation Entities, and (iii) no party to any Material
Contract has waived or repudiated any rights or obligations under such Material Contract.
Except as disclosed on Schedule 3.15(b): (i) each Representation Material Contract is
in full force and effect and is a valid and binding obligation of the Seller or the applicable
Applicable Representation Entity party thereto and, to the Knowledge of the Seller, the other
parties thereto; and (ii) neither the Seller nor any of the Applicable Representation Entities
has received written notice from any party to a Representation Material Contract that such party
intends either to modify, cancel or terminate such Representation Material Contract.
(c) Except as disclosed on Schedule 3.15(c), to the Knowledge of the Seller, no
officer, agent or employee of any the Seller or any Applicable Representation Entity is bound by
any Contract that purports to limit the ability of such officer, agent or employee to (A) engage
in or continue any conduct, activity or practice relating to the business of any Applicable
Representation Entity, or (B) assign to the Seller or any Applicable Representation Entity or to
any other Person any rights to any invention, improvement or discovery.
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(d) Except as disclosed on Schedule 3.15(d), the loss or termination of all of the
Seller’s or Applicable Representation Entity’s rights under, or the acceleration of all of the
Seller’s or Applicable Representation Entity’s obligations under, any Contract to which the
Seller or any Applicable Representation Entity is a party or by which the Seller or any
Applicable Representation Entity or any of their respective assets are bound that is not a
Material Contract would not reasonably be expected to have a material adverse effect on the
business, assets, properties, financial condition or prospects of the Applicable Representation
Entities, taken as a whole.
(e) Schedule 3.15(e) sets forth a true and complete list, and the Seller has
provided access to the Buyer to the true and complete copies (including all amendments and
extensions thereof) or, if oral, an accurate and complete description of all terms, of each
Contract pertaining or relating to the Biolux Project to which any of the Applicable Entities is
a party or by which any Applicable Entity or any of their respective assets are bound or
pursuant to which any Applicable Entity has any obligations or Losses (collectively, the
“Biolux Contracts”).
SECTION 3.16 Insurance.
(a) The Seller has delivered or have caused to have been delivered or made available to the
Buyer:
(i) a true and complete copy of each policy of insurance to which any Applicable
Representation Entity is a party or under which any Applicable Representation Entity or
any of their assets are covered;
(ii) a true and complete copy of each pending application of any Applicable
Representation Entity, if any, for policies of insurance; and
(iii) any statement by the auditor of the Seller’s financial statements with regard
to the adequacy of the Seller’s or any Applicable Representation Entity’s coverage or of
the reserves for claims.
(b) Schedule 3.16(b) sets forth a true and correct list of:
(i) any self-insurance arrangement by or affecting any Applicable Representation
Entity, including any reserves established thereunder; and
(ii) any contract or arrangement, other than a policy of insurance, for the
transfer or sharing of any risk by the Seller or any Applicable Representation Entity.
(c) Except as set forth on Schedule 3.16(c):
(i) All policies to which any Applicable Representation Entity is a party:
(1) are sufficient for material compliance with the Legal Requirements to
which any Applicable Representation Entity is bound; and
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(2) will continue in full force and effect immediately following the
consummation of the Contemplated Transactions.
(ii) No Applicable Representation Entity has received (A) any refusal of coverage
or any notice that a defense will be afforded with reservation of rights, or (B) any
notice of cancellation or any other indication that any insurance policy is no longer in
full force or effect or will not be renewed or that the issuer of any policy is not
willing or able to perform its obligations thereunder.
(iii) The Seller has not received (A) any refusal of coverage or any notice that a
defense will be afforded with reservation of rights, or (B) any notice of cancellation
or any other indication that any insurance policy is no longer in full force or effect
or will not be renewed or that the issuer of any policy is not willing or able to
perform its obligations thereunder, in each case, to the extent related to any
Applicable Entity or any Purchased Interests.
(iv) Each of the Applicable Representation Entities and, to the extent related to
any Applicable Entity or for which any Applicable Entity may have any Liability, the
Seller has paid all premiums due, and has otherwise performed all of its obligations,
under each policy to which the Seller or any Applicable Representation Entity is a party
or that provides coverage to the Seller or any Applicable Representation Entity.
SECTION 3.17 Environmental Matters.
(a) None of the Applicable Representation Entities is, or for the previous three years, has
been, in violation of any applicable Environmental Law or in default under, or in violation of,
any Order relating to the Environment. The Seller is not, nor for the previous three years, has
been, in violation of any applicable Environmental Law or in default under,
or in violation of, any Order relating to the Environment, in each case, to the extent
related to any Applicable Entity or for which any Applicable Entity may have any Liability. To
the Knowledge of the Seller, there is no investigation, enforcement action or regulatory action
pending or threatened against or affecting the Seller or any of the Applicable Representation
Entities by any Governmental Body.
(b) With respect to the Environment, no Governmental Body has ordered any of the Applicable
Representation Entities to take any remedial or other corrective action to comply with any
Environmental Law, Order or any Governmental Authorization.
(c) Each of the Applicable Representation Entities have obtained, possess, and are in
material compliance with all Governmental Authorizations required under any Environmental Law.
The Seller has obtained, possess, and are in material compliance with all Governmental
Authorizations required under any Environmental Law, in each case, to the extent related to any
Applicable Entity or for which any Applicable Entity may have any Liability.
(d) Neither the Seller nor any of the Applicable Representation Entities has received:
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(i) any written claim or written notice of any violation, lien, complaint,
Proceeding, Order or other written claim or notice to the effect that it is or may be
liable to any Person as a result of the environmental condition of any of the Applicable
Representation Entity Facilities, or the Release or Threatened Release of any Hazardous
Material;
(ii) any written claim or written notice of any violation, lien, complaint,
Proceeding, Order or other written claim or notice to the effect that it is or may be
liable to any Person as a result of the environmental condition of any of the Seller
Facilities, or the Release or Threatened Release of any Hazardous Material, in each
case, for which any Applicable Representation Entity may have any Liability; or
(iii) any letter or request for information under Section 104 of the CERCLA, or
comparable state Legal Requirements.
(e) To the Knowledge of the Seller, none of the operations of any of the Applicable
Representation Entities is the subject of any investigation by a Governmental Body evaluating
whether any remedial action is needed to respond to a Release or Threatened Release of any
Hazardous Material at the Applicable Representation Entity Facilities or at any location to
which any of them have sent Hazardous Materials for treatment, storage or disposal.
(f) To the Knowledge of the Seller, none of the operations of the Seller is the subject of
any investigation by a Governmental Body evaluating whether any remedial action is needed to
respond to a Release or Threatened Release of any Hazardous Material at the Seller Facilities or
at any location to which any of them have sent Hazardous Materials for treatment, storage or
disposal, in each case, for which any Applicable Representation Entity may have any Liability.
(g) None of the Applicable Representation Entities is now subject to any Environmental,
Health and Safety Liabilities. The Seller is no now subject to any Environmental, Health and
Safety Liabilities for which any Applicable Entity may have any Liability.
(h) There has been no Release or Threatened Release of Hazardous Materials at, onto or
under any of the Applicable Representation Entity Facilities which has not been compliant with
or authorized under applicable Environmental Laws, or, to the Knowledge of the Seller, at any
location to which any of the Applicable Representation Entities have sent Hazardous Materials
for treatment, storage or disposal.
(i) There has been no Release or Threatened Release of Hazardous Materials at, onto or
under any of the Seller Facilities which has not been compliant with or authorized under
applicable Environmental Laws, or, to the Knowledge of the Seller, at any location to which the
Seller has sent Hazardous Materials for treatment, storage or disposal, in each case, for which
any Applicable Representation Entity may have any Liability.
(j) There are no Proceedings pending, or to the Knowledge of the Seller, threatened against
any of the Applicable Representation Entities alleging the violation of, or
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Liability under,
Environmental Laws. There are no Proceedings pending, or to the Knowledge of the Seller,
threatened against the Seller alleging the violation of, or Liability under, Environmental Laws,
in each case, for which any Applicable Representation Entity may have any Liability.
(k) To the Knowledge of the Seller, no expenditure, including any capital expenditure,
materially in excess of that routinely incurred by the respective Applicable Representation
Entities during the two years prior to the Closing Date will be required to maintain compliance
by the applicable Applicable Representation Entity with all Environmental Laws for the period
from the Closing Date until two years thereafter.
(l) Except as set forth on Schedule 3.17(j), neither the Seller nor any of the
Applicable Representation Entities has entered into any consent decree or other agreement in
settlement of any alleged violation of or Liability under any applicable Environmental Law.
SECTION 3.18 Employees.
(a) Schedule 3.18(a) sets forth a complete list of, and indicates the applicable
employer of, all officers, directors and employees of the Seller or any Applicable
Representation Entity that received cash compensation from the Seller or any Applicable
Representation Entity (including cash bonuses) in excess of $100,000 during the year ended
December 31, 2006.
(b) To the Knowledge of the Seller, no employee of any Applicable Representation Entity is
a party to, or is otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition or proprietary rights agreement, between such employee and any
other Person that in any way adversely affects (i) the performance of such employee’s duties as
an employee of the Seller or any Applicable Representation Entity, or
(ii) the ability of the Seller or of any Applicable Representation Entity to conduct its
business.
SECTION 3.19 Labor Relations; Compliance. Except as set forth in Schedule
3.19, none of the Applicable Representation Entities is a party to or bound by any collective
bargaining agreement, and there are no other labor unions, work councils or other organizations
representing or, to the Knowledge of the Seller, purporting or attempting to represent any employee
of any of the Applicable Representation Entities. No strike, slowdown, picketing, work stoppage,
concerted refusal to work overtime or other similar labor activity with respect to any current
employee of any of the Applicable Representation Entities is currently ongoing or, to the Knowledge
of the Seller, currently threatened, nor has there been any such activity within the last three
years. Each of the Applicable Representation Entities have complied in all material respects with
all applicable provisions of applicable Legal Requirements pertaining to the employment or
termination of employment of any Person, including, without limitation, all such applicable Legal
Requirements relating to labor relations, equal employment, fair employment practices,
entitlements, prohibited discrimination, immigration status, Tax information reporting, employment
and withholding Taxes or other similar employment practices or acts. There is no unfair labor
practice, charge or complaint or other Proceeding pending or, to the Knowledge of the Seller,
threatened against any of the Applicable Representation Entities before the National
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Labor
Relations Board or any similar Governmental Body. Except as would not reasonably be expected to
have a material adverse effect on the business, assets, properties, financial condition or
prospects of the Applicable Representation Entities, taken as a whole, and none of the Applicable
Representation Entities is a party to, or otherwise bound by, any consent decree with, or citation
by, any Governmental Body relating to employees or employment practices. None of the Applicable
Representation Entities has closed any plant or facility or implemented any early retirement,
separation or window program within the past three years, and none of the Applicable Representation
Entities planned or announced any such action or program for the future.
SECTION 3.20 Intellectual Property.
(a) Schedule 3.20(a)(i) sets forth a complete and accurate list that includes all
Intellectual Property owned by any of the Applicable Representation Entities that is registered
or subject to an application for registration, including the jurisdictions where registered or
where applications have been filed, and all registration or application numbers, as applicable
(the “Company Registered Intellectual Property”). Schedule 3.20(a)(ii) sets
forth a complete and correct list of all Intellectual Property that a third party has licensed
to any Applicable Representation Entity, except for commercially available, off-the-shelf,
click-wrap, shrink-wrap or similar licenses (the “Third Party Intellectual Property”).
Except as set forth on Schedule 3.20(a)(iii), the Applicable Representation Entities are
the sole and exclusive owner or has the right to use, sell, license or transfer, as the case may
be, all Intellectual Property necessary to operate their respective business as presently
conducted or proposed to be conducted, free and clear of all Encumbrances or other third party
rights, except Permitted Encumbrances. Except as set forth on Schedule 3.20(a)(iv), the
Applicable Representation Entities are the sole owners of, and have valid title to, free and
clear of all Encumbrances except for Permitted Encumbrances, all of the Company Owned
Intellectual Property. Except as set forth on Schedule 3.20(a)(v), no claims have been
made by the Seller or the Applicable Representation Entities that any Person is infringing,
misappropriating,
diluting or otherwise violating any Company Owned Intellectual Property, and, to the
Knowledge of the Seller, no Person is infringing, misappropriating, diluting or otherwise
violating any Company Owned Intellectual Property. All of the Applicable Representation
Entities’ rights in and to the Company Owned Intellectual Property are valid and enforceable.
No item of Company Registered Intellectual Property has lapsed, expired, or been abandoned or
cancelled, or is subject to any pending or threatened in writing, opposition, cancellation,
interference, domain name dispute or other proceeding.
(b) Except as set forth on Schedule 3.20(b), to the Knowledge of the Seller, none
of the Applicable Representation Entities is in default in the performance, observance or
fulfillment of any obligation, covenant or condition contained in any Contract pursuant to which
any third party is authorized to use any Company Owned Intellectual Property or pursuant to
which an Applicable Representation Entity is licensed to use any material Intellectual Property
owned by a third party.
(c) Except as set forth on Schedule 3.20(c), there are no claims pending or, to the
Knowledge of the Seller, threatened in writing (i) against any Applicable Representation Entity
relating to the infringement, misappropriation, dilution or other violation of the Intellectual
Property rights of any Person or (ii) challenging the ownership, use,
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protectability,
registerability, validity or enforceability of any Company Owned Intellectual Property; and to
the Knowledge of the Seller there is no basis for any such claims.
(d) The Applicable Representation Entities have taken reasonable measures, as appropriate,
to maintain and protect the proprietary nature of the Company Owned Intellectual Property, and
to maintain in confidence all trade secrets and confidential information that any Applicable
Representation Entity owns or uses, and, except as set forth on Schedule 3.20(d), to the
Knowledge of the Seller, there have been no unauthorized disclosure or uses of the Company Owned
Intellectual Property or any other trade dress or confidential information that any Applicable
Representation Entity owns or uses.
(e) All current and prior employees, agents, consultants, contractors and other
representatives of the Applicable Representation Entities who have or had access to confidential
or proprietary information of any Applicable Representation Entity that is currently used in the
business of such Applicable Representation Entity (the “Access Persons”) have a legal
obligation of confidentiality to the Applicable Representation Entities with respect to all
confidential or proprietary information of the Applicable Representation Entities to which such
Access Persons have or have had access. All inventions, discoveries, and ideas currently used
in the business of an Applicable Representation Entity, whether or not patented or patentable or
otherwise protectable under Legal Requirements, conceived by employees or independent
contractors of the Applicable Representation Entities or reduced to practice during the course
of their employment or pursuant to their engagement by an Applicable Representation Entity, and
all works of authorship currently used in the business of an Applicable Representation Entity,
whether or not copyrighted or copyrightable or otherwise protectable under Legal Requirement,
created or developed by employees or contractors of the Applicable Representation Entities
during the course of their employment or pursuant to their engagement by an Applicable
Representation Entity are the sole and unrestricted property of the Applicable Representation
Entities, and no Applicable
Representation Entity owes any obligation of any payment, other than for services rendered,
in this respect to any such present or former employee or independent contractor of any
Applicable Representation Entity.
(f) Except as set forth on Schedule 3.20(f), to the Knowledge of the Seller, there
have been no unauthorized disclosure or uses of the Company Owned Intellectual Property of the
Applicable Representation Entities or any other trade dress or confidential information that any
Applicable Representation Entity owns or uses and no material threat of unauthorized disclosure
or use of the Company Owned Intellectual Property of the Applicable Representation Entities is
known to exist.
(g) The consummation of the Contemplated Transactions will not result in the loss or
impairment of any of the Applicable Representation Entities’ rights in or to own, use or hold
for use any of the Intellectual Property that is owned, used or held for use by such Applicable
Representation Entity immediately prior to the date hereof.
(h) Except as set forth on Schedule 3.20(h), the Applicable Representation Entities
(i) have not granted any right or interest to any Person in connection with the Company Owned
Intellectual Property and (ii) are not obligated to pay any royalties,
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licensing fees or other
amounts to any Person with respect to any of the Intellectual Property that is owned, used or
held for use by any Applicable Representation Entity.
SECTION 3.21 Relationships with Related Persons.
(a) Except as set forth on Schedule 3.21(a), there are no loans, leases or other
continuing transactions between (i) any of the Applicable Representation Entities, on the one
hand, and (ii) the Seller or any present or former stockholder, Equity Interest holder, director
or officer of the Seller or any of the Applicable Entities or any Related Person (other than an
Applicable Entity) of any of the foregoing, on the other hand.
(b) Except as set forth on Schedule 3.21(b), no Related Person of the Seller has an
equity interest or any other financial or profit interest in any Person (other than the
Applicable Representation Entities) that (i) has a material financial interest in any
transaction with any Applicable Representation Entity, or (ii) engages in competition with any
of the Applicable Entities with respect to any line of the products or services of any
Applicable Entity (a “Competing Business”) in any market presently served by any
Applicable Entity, except for less than one percent of the outstanding capital stock of any
Competing Business that is publicly traded on any recognized exchange or in the over-the-counter
market.
(c) Schedule 3.21(c) sets forth a true and correct list of all Contracts between
any Applicable Entity, on the one hand, and the Seller or any of its post-Closing Related
Persons, on the other hand (the “Intercompany Contracts”). Except as set forth on
Schedule 3.21(c), (i) neither the Seller nor any of its post-Closing Related Persons has
any claim or right against any Applicable Entity and (ii) no Applicable Entity has any Liability
to the Seller or any of its post-Closing Related Persons.
SECTION 3.22 Brokers or Finders. Except as set forth on Schedule 3.22, none
of the Applicable Entities nor any of their
respective Representatives, have incurred any obligation or Liability, contingent or
otherwise, for brokerage or finders’ fees or agents’ commissions or other similar payment in
connection with this Agreement.
SECTION 3.23 Product Liability.
(a) Except as set forth on Schedule 3.23(a) (and except for Punch List Items), each
product manufactured, sold, leased, licensed, delivered or installed by, or service performed
by, any of the Applicable Representation Entities (collectively, the “Products”) is, and
at all times has been, (a) in material compliance with all applicable Legal Requirements, (b)
fit for the ordinary purposes for which it is intended to be used and (c) in material conformity
with any and all contractual obligations, express and implied warranties, promises and
affirmations of fact made by any Applicable Representation Entity. There is no design defect
with respect to any Product.
(b) Except as set forth on Schedule 3.23(b)(i), there is no Proceeding to which any
Applicable Representation Entity is a party pending, or to the Knowledge of the Seller,
threatened relating to, or otherwise involving, alleged defects in the Products provided by any
Applicable Representation Entity, or the failure of any such Products or services to meet
certain specifications, and, to the Knowledge of the Seller and except for Punch List Items,
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there is no basis for any of the foregoing. Schedule 3.23(b)(ii) sets forth all
concluded actions (including the disposition thereof) against any Applicable Representation
Entity since January 1, 2003 relating to, or otherwise involving, alleged defects in the
products or services provided by any Applicable Representation Entity, or the alleged failure of
any such services or products to meet certain specifications. There have been no voluntary or
mandatory recalls, field fix or retrofit of any Product and to the Knowledge of the Seller,
there is no basis for any of the foregoing. None of the Applicable Representation Entities has
any Liability (and, to the Knowledge of the Seller, there is no basis for any present or future
action giving rise to any such Liability) arising out of any injury to any Person or property as
a result of any services provided by any Applicable Representation Entity, or the ownership,
possession, or use of the Products and no Person has asserted a written claim alleging that any
Applicable Representation Entity is responsible for any Liability arising out of any injury to
Persons or property caused by any Product.
SECTION 3.24 Improper Payments. None of Applicable Representation Entities has made
any improper foreign payment (as defined in the Foreign Corrupt Practices Act of 1977, as amended).
SECTION 3.25 Customers and Suppliers. Schedule 3.25 sets forth a complete and
accurate list, for each of the fiscal years ended on December 31, 2005 and December 31, 2006, (a)
the twenty (20) largest customers (or, in the case of Europa Crown, ECL or ECUK, the ten (10)
largest customers) of each of the Applicable Representation Entities (measured by aggregate sales
or xxxxxxxx) during such period, indicating aggregate sales and xxxxxxxx and the existing
contractual obligations with each such customer by product or service provided and (b) the ten (10)
largest suppliers of materials, products or services to each of the Applicable Representation
Entities (measured by the aggregate amount purchased by the Applicable Representation Entities) for
such period. To the Knowledge of the Seller, the relationships of the Applicable
Representation Entities with the customers and the suppliers listed on, or required to be
listed on, Schedule 3.25 are good commercial working relationships and none of such
customers or the suppliers has canceled, terminated or otherwise materially altered (including any
material reduction in the rate or amount of sales or purchases or material increase in the prices
charged or paid, as the case may be) or notified any Applicable Representation Entity of any
intention to do any of the foregoing or otherwise threatened in writing to cancel, terminate or
materially alter (including any material reduction in the rate or amount of sales or purchases, as
the case may be) its relationship with any Applicable Representation Entity. To the Knowledge of
the Seller, there exists no condition or state of facts or circumstances involving customers or
suppliers that can reasonably be expected to materially impair the conduct of the business of the
Applicable Representation Entities after the Closing from manner in which such is currently being
conducted.
SECTION 3.26 Joint Venture Arrangements.
(a) None of the Applicable Entities nor, to the Knowledge of the Seller, any other party to
any of the Hiplex Technologies Agreements is in default under (nor does there exist any
condition that, with notice or lapse of time or both, could cause such a default under) any of
the Hiplex Technologies Agreements.
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(b) None of the Applicable Entities nor, to the Knowledge of the Seller, any other party to
any of the KNM Crown Agreements is in default under (nor does there exist any condition that,
with notice or lapse of time or both, could cause such a default under) any of the KNM Crown
Agreements.
SECTION 3.27 Accuracy of Information. The schedules to this Agreement and any
certificates or other written information furnished to the Buyer or the Buyer’s Representatives by
or on behalf of the Seller or any Applicable Entity pursuant to this Agreement or in connection
with the Contemplated Transactions do not contain any material misstatement of fact or omit to
state a material fact or any fact necessary to make the statements contained therein not
misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer hereby represents and warrants to the Seller as follows:
SECTION 4.01 Organization and Good Standing. The Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of Delaware.
SECTION 4.02 Authority; No Conflict.
(a) The Buyer has the requisite corporate power and authority to execute and deliver this
Agreement and each of the other Transaction Documents to which it is, or will become, a party,
to perform its obligations hereunder and thereunder, and to consummate the Contemplated
Transactions. The execution, delivery and performance by the Buyer of this
Agreement and each of the other Transaction Documents to which it is, or will become, a
party and the consummation of the Contemplated Transactions have been duly authorized by all
requisite corporate action on the part of the Buyer. The Buyer has duly executed and delivered
this Agreement, and on the Closing Date will have duly executed and delivered each of the other
Transaction Documents to which it is a party. This Agreement constitutes, and on the Closing
Date each of the other Transaction Documents to which the Buyer is a party will constitute, the
legal, valid and binding obligations of the Buyer enforceable against it in accordance with
their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other laws affecting creditors’ rights generally and general principles of equity.
(b) Neither the execution and delivery of this Agreement each of the other Transaction
Documents to which it is a party by the Buyer nor the consummation or performance of any of the
Contemplated Transactions by the Buyer will directly or indirectly give any Person the right to
prevent, delay or otherwise interfere with any of the Contemplated Transactions pursuant to:
(i) any provision of the Buyer’s Organizational Documents;
(ii) any resolution adopted by the board of directors of the Buyer or the owners of
its Equity Interests; or
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(iii) any Legal Requirement or Order to which the Buyer the may be subject.
(c) Neither the execution and delivery of this Agreement or any of the other Transaction
Documents to which the Buyer is a party nor the consummation or performance of any of the
Contemplated Transactions by the Buyer will, directly or indirectly (with or without notice, the
lapse of time, or both):
(i) contravene, conflict with or result in a violation or breach of (A) any
provision of the Organizational Documents of the Buyer, or (B) any resolution adopted by
the board of directors or other similar governing body or the stockholders, members or
other equity holders of the Buyer; or
(ii) contravene, conflict with or result in a violation or breach 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 the Buyer, or any of the properties of Buyer may be subject.
(d) Except as set forth on Schedule 4.02(d), the Buyer is not and will not be
required to give any notice to, make any filing with, or obtain any Consent from any Person in
connection with the execution, delivery or performance of this Agreement or any of the other
Transaction Documents or the consummation of any of the Contemplated Transactions.
SECTION 4.03 Investment Intent. The Buyer is acquiring the Purchased Interests for
its own account and not with a view to their distribution
within the meaning of Section 2(11) of the Securities Act. The Buyer confirms that the Seller
has made available to the Buyer and its Representatives the opportunity to ask questions of the
officers and management employees of the Seller and the Applicable Entities and to acquire such
additional information about the business and financial condition of the Seller and the Applicable
Entities as the Buyer has requested, and all such information has been received.
SECTION 4.04 Certain Proceedings. There is no pending Proceeding that has been
commenced against the Buyer and that challenges, or may have the effect of preventing, delaying,
making illegal or otherwise interfering with, any of the Contemplated Transactions and no such
Proceeding has been threatened.
SECTION 4.05 Brokers or Finders. Buyer and its officers and 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.
ARTICLE V
COVENANTS
SECTION 5.01 Operation of the Businesses of the Seller and the Applicable Entities.
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(a) From the date hereof until the Closing, except as expressly required by this Agreement
or as otherwise consented to by the Buyer in writing, which consent shall not be unreasonably
withheld or delayed (provided that such consent shall not be deemed to be unreasonably withheld
or delayed if the action or transaction with respect to which such consent is requested would,
in the reasonable determination of the Buyer, adversely effect the value of the Applicable
Entities or the Contemplated Transactions in any manner), the Seller agrees to use, and agrees
to cause each of the Applicable Entities to use, its commercially reasonable efforts to (i)
carry on the businesses of the Applicable Entities and, to the extent applicable to the
Applicable Entities, the Seller in the Ordinary Course of Business, maintain the books, accounts
and records of the Applicable Entities and, to the extent applicable to the Applicable Entities,
the Seller in the usual, regular and ordinary manner consistent with past practices, preserve
intact in all material respects the present business organization of the Applicable Entities
and, to the extent applicable to the Applicable Entities, the Seller, maintain the properties
and assets of the Applicable Entities and, to the extent applicable to the Applicable Entities,
the Seller in good operating condition and repair, keep available the services of the present
officers and significant employees of the Applicable Entities and, to the extent applicable to
the Applicable Entities, the Seller, and preserve the relationship with customers and suppliers
of the Applicable Entities and, to the extent applicable to the Applicable Entities, the Seller
and others having business dealings with the Seller and the Applicable Entities; and (ii) not
take any action or omit to take any action, which action or omission would result in a Breach of
any of the representations and warranties of the Seller set forth herein that would entitle
Buyer to terminate this Agreement under Section 8.01(b).
(b) Without limiting the generality of Section 5.01(a), except as set forth on
Schedule 5.01(b), neither the Seller nor any of the Applicable Entities shall, without
the written consent of the Buyer, which consent shall not be unreasonably withheld or delayed
(provided that such consent shall not be deemed to be unreasonably withheld or delayed if
the action or transaction with respect to which such consent is requested would, in the
reasonable determination of the Buyer, adversely effect the value of the Applicable Entities or
the Contemplated Transactions in any manner) (x) take any action or engage in any transaction
that would have been required to be set forth on Schedule 3.14 had such action or
transaction occurred after the Balance Sheet Date but prior to the date hereof, or (y) enter
into, amend, terminate or waive any Biolux Contract or any material right or benefit under any
Biolux Contract.
SECTION 5.02 Access and Investigation. From the date hereof until the Closing, the
Seller will, and will cause each Applicable Entity and their respective Representatives to, afford
the Buyer and its Representatives and prospective lenders and their Representatives (collectively,
the “Buyer’s Advisors”) reasonable access, during normal business hours and upon reasonable
prior notice, to each Applicable Entity’s personnel, properties, contracts, books and records, and
other documents and data, and (b) furnish the Buyer and the Buyer’s Advisors with such additional
financial, operating and other data and information as the Buyer may reasonably request;
provided, however, that such investigation shall be conducted in a manner so as to
minimize any unreasonable disruptions to the operations of the business of the Applicable Entities.
The Buyer shall not contact any customers, suppliers, distributors or employees of the Applicable
Entities without the prior written consent of the Seller, which consent shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, if reasonably requested by
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the Buyer upon
recommendation of the Buyer’s Advisors of a specific scope of work, the Seller shall cause the
Applicable Entities to permit environmental testing and sampling of their respective properties;
provided, that, if any such testing or sampling damages any such property, the Buyer, at
its reasonable cost and expense, will restore such property to the reasonably similar condition as
existed before the testing or sampling.
SECTION 5.03 Exclusivity. From the date hereof until the Closing, the Seller will
not, and the Seller will cause each of its Representatives, each of the Applicable Entities and
each of their respective Representatives to not: (a) initiate, solicit or seek, directly or
indirectly, any inquiries or the making or implementation of any proposal or offer with respect to
a merger, acquisition, consolidation, recapitalization, liquidation, dissolution, equity investment
or similar transaction involving, or any purchase of all or any substantial portion of the assets
or any equity securities of, the Seller or any Applicable Entity (any such proposal or offer being
hereinafter referred to as a “Proposal”); (b) engage in any negotiations concerning, or
provide any confidential information or data to, or have any substantive discussions with, any
person relating to a Proposal; (c) otherwise cooperate in any effort or attempt to make, implement
or accept a Proposal; or (d) enter into any Contract with any Person relating to a Proposal. The
Seller shall promptly notify the Buyer if any inquiries, proposals or offers related to a Proposal
are received by, any confidential information or data is requested from, or any negotiations or
discussions related to a Proposal are sought to be initiated or continued with the Seller, any
Applicable Entity or any of their respective Representatives. The Seller shall, and the Seller
shall cause each of its Representatives, each of the Applicable Entities and each of their
respective Representatives to, immediately cease any existing activities, discussions, negotiations
with any Persons with respect to any Proposal.
SECTION 5.04 Restriction on Transfer. From the date hereof until the Closing, the
Seller hereby agrees that it will not transfer, assign or otherwise dispose of any of the Purchased
Interests, or any interest therein.
SECTION 5.05 Notification of Events. From the date hereof until the Closing, the
Seller shall give written notice to the Buyer promptly following the Seller becoming aware of (i)
the occurrence, or failure to occur, of any event that has caused or would reasonably be likely to
cause any representation or warranty of the Seller contained in this Agreement to (x) have been
untrue or inaccurate in any respect as of the date of this Agreement or (y) be untrue or inaccurate
in any respect as of the Closing Date, (ii) the failure of the Seller to comply with or satisfy in
any respect any covenant to be complied with by the Seller hereunder, (iii) any other Breach of any
of the representations, warranties, covenants or obligations of the Seller set forth herein or (iv)
any change or event having a material adverse effect on the business, assets, properties, financial
condition or prospects of the Seller and the Applicable Entities; provided,
however, that no notice delivered by the Seller to the Buyer pursuant to this Section
5.05 shall be deemed to amend or supplement any of the representations or warranties of the
Seller set forth herein (or any of the Schedules referred to therein) or to prevent or cure any
Breach hereunder.
SECTION 5.06 Further Actions.
(a) Subject to clause (c) below, from the date hereof to the Closing, each party
hereto agrees to use its reasonable efforts to take all actions and to do all things necessary
or
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appropriate to consummate the Contemplated Transactions, including, without limitation, (i)
filing or supplying all applications, notifications and information required to be filed or
supplied by it pursuant to applicable Legal Requirements, (ii) obtaining all material Consents
(including all Governmental Authorizations) necessary to be obtained by it in order to
consummate the Contemplated Transactions, and (iii) coordinating and cooperating with the other
parties in exchanging such information and providing such reasonable assistance as may be
reasonably requested by such other party.
(b) In furtherance and not in limitation of the provisions of clause (a) above,
each of the Seller and Buyer agrees to make an appropriate filing of a notification and report
form pursuant to the HSR Act and to make such other filings as are required under any Other
Antitrust Law with respect to this Agreement and the transactions contemplated hereby as
promptly as practicable after the date of this Agreement but in any event not later than fifteen
(15) business days after the date of this Agreement, and to supply as promptly as practicable
any additional information and documentary material that may be requested pursuant to the HSR
Act and Other Antitrust Laws. Each of the Seller and the Buyer will use their commercially
reasonable efforts to cause the expiration or termination of the applicable waiting periods
under the HSR Act and the receipt of required approvals under the HSR Act and Other Antitrust
Laws as soon as practicable (including by requesting early termination of the HRS Act waiting
period); provided, however, that, in no event shall the Buyer or any of its
Related Persons or “ultimate parent entities” be required to take or agree to take any
Divestiture Action. The Seller and the Buyer agree not to extend, directly or indirectly, any
waiting period under the HSR Act or to enter into any agreement with a Governmental Body to
delay or not to consummate the transactions contemplated by this Agreement, except with
the prior written consent of the other party. Each of the Seller and the Buyer will (x)
promptly notify the other party of any written communication to that party from any Governmental
Body located in the United States and, to the extent practicable, outside of the United States
and, subject to applicable Legal Requirements, if practicable, permit the other party to review
in advance any proposed written communication to any such Governmental Body and incorporate the
other party’s reasonable comments, (y) not agree to participate in any substantive meeting or
discussion with any such Governmental Body in respect of any filing, investigation or inquiry
concerning this Agreement or the transactions contemplated hereby unless it consults with the
other party in advance and, to the extent permitted by such Governmental Body, gives the other
party the opportunity to attend, and (z) furnish the other party with copies of all
correspondence, filings and written communications between them and their Related Persons and
their respective Representatives on one hand, and any such Governmental Body or its staff on the
other hand, with respect to this Agreement and the transactions contemplated hereby. If any
administrative or judicial action or proceeding is instituted (or threatened to be instituted)
challenging the transactions contemplated by this Agreement as violative of the HSR Act or any
Other Antitrust Law, or if any statute, rule, regulation, executive order, decree, injunction or
administrative order is enacted, entered, promulgated or enforced (or threatened to be enacted,
entered, promulgated or enforced) by a Governmental Body that would make such transactions
illegal or would otherwise prohibit or materially impair or delay the consummation of such
transactions, each of the Seller and the Buyer shall use its commercially reasonable efforts to
prevent the institution of and to contest and resist any such action or proceeding and shall use
its commercially reasonable efforts to prevent the enactment, entering, promulgation or
enforcement of, and to have vacated, lifted,
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reversed or overturned, any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that is in effect and
that prohibits, prevents or restricts or materially delays the consummation of the transactions
contemplated by this Agreement and to have such statute, rule, regulation, executive order,
decree, injunction or administrative order repealed, rescinded or made inapplicable so as to
permit consummation of such transactions; provided, however, that, in no event
shall the Buyer or any of its Related Persons or “ultimate parent entities” be required to take
or agree to take any Divestiture Action. The Seller and the Buyer shall each pay half of all
filing fees required with respect to the notification, report and other requirements of the HSR
Act (and any applicable Other Antitrust Law); provided, that, the Seller’s
obligation to pay half of all filing fees shall only be payable as an Outstanding Transaction
Cost upon the Closing. For purposes hereof, “Divestiture Action” shall mean (i) making
any proposals, executing or carrying out any agreements or submitting to legal requirements
imposed by a Governmental Body providing for the license, sale or other disposition or separate
holding (through the establishment of a trust or otherwise) of any assets or the holding
separate of any Equity Interests in any Applicable Entity or imposing or seeking to impose any
limitation on the ability of the Buyer or any its Related Persons or “ultimate parent entities”
to conduct their respective business or own such assets or Equity Interests or to acquire, hold
or exercise full rights of ownership of the Purchased Interests or (ii) otherwise take any step
to avoid or eliminate any impediment which may be asserted by a Governmental Body.
(c) From and after the Closing, each party hereto agrees to use its reasonable efforts to
take all actions and to do all things necessary or appropriate to obtain the China Approval as
promptly as reasonably practicable following the Closing.
SECTION 5.07 Public Announcement. The Buyer and the Seller hereby agree that, prior
to Closing, neither the Buyer nor the Seller shall issue any press release or otherwise make any
public statement or announcement with respect to the existence or termination of this Agreement or
the transactions described herein without the prior written consent of the other. Following
Closing, the Buyer and the Seller shall make a joint public statement or announcement concerning
the transactions described herein but excluding the terms (including Purchase Price) of the
transaction.
SECTION 5.08 Tax Matters. The following provisions shall govern the allocation of
responsibility concerning certain tax matters between the Buyer and the Seller following the
Closing Date:
(a) Taxable Periods Ending On or Before the Closing Date.
(i) The Buyer shall prepare and timely file, or shall cause, as applicable, each of
the Applicable Entities to prepare and timely file, all Tax Returns for all taxable
periods ending on or prior to the Closing Date (the “Pre-Closing Tax Periods”)
that are required to be filed by the Applicable Entities after the Closing Date. The
Seller shall pay or cause to be paid all Taxes due with respect to the Pre-Closing Tax
Periods. The Buyer and the Seller agree that all such Tax Returns shall be filed in a
manner consistent with prior Tax Returns filed, as applicable, by the Applicable
Entities, unless and to the extent otherwise required by applicable Legal Requirement.
A copy of each such Tax Return described in this Section 5.08(a)(i)
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shall be
provided to the Seller within 30 days prior to the due date (including extensions) for
the filing thereof, and the Seller shall have the right to comment on each such Tax
Return and suggest reasonable changes thereto in good faith, which the Buyer shall
incorporate therein.
(ii) Further, with respect to each Applicable Entity characterized as a partnership
for United States federal income tax purposes, the Seller shall make or cause to be made
an election pursuant to IRC Section 754 for each taxable period within which the Closing
Date occurs.
(b) Taxable Periods Beginning Before and Ending After the Closing Date. The Buyer
shall prepare or cause to be prepared and file or cause to be filed any Tax Returns of the
Applicable Entities for taxable periods that begin before the Closing Date and end after the
Closing Date (a “Straddle Period”). Buyer shall pay or cause to be paid with such Tax
Returns all Taxes due in connection therewith, subject to Section 9.02(c). Any Taxes
relating to Straddle Periods shall be apportioned between the pre-Closing Date period and
post-Closing Date period, (i) in the case of any ad valorem taxes, based on a per diem basis,
and, (ii) in the case of other Taxes, based on an interim closing of the books as of Closing
Date, with a deemed short taxable year ending on and including the Closing Date and a second
deemed short taxable year beginning on and including the day after the Closing Date (provided
that exemptions, allowances or deductions that are calculated on an annual basis (including
depreciation and amortization deductions) shall be allocated between the period ending on the
Closing Date and the period after the Closing Date in proportion to the number of days in each
period). A copy of each such Tax Return described in this shall be provided
to the Seller within 30 days prior to the due date (including extensions) for the filing
thereof and the Seller shall have the right to comment on each such Tax Return and suggest
reasonable changes thereto in good faith, which the Seller shall incorporate therein.
(c) Tax Refunds.
(i) The Seller shall pay to the Buyer an amount equal to any Tax refunds that are
received by the Seller after the Closing Date which relate to Tax periods commencing
after the Closing Date. In addition, the Seller shall pay to the Buyer a percentage of
any Tax refunds that are received by the Seller after the Closing Date which relate to a
Straddle Period, which percentage shall be equal to the same percentage of the related
Tax liability that was apportioned to the Buyer pursuant to clause (b) above.
Any payments required to be made pursuant to this clause (i) shall be made
within fifteen (15) days after the Seller’s receipt of the applicable Tax refund.
(ii) Solely to the extent that such Tax refund was not taken into account in the
calculation of the Net Working Capital Adjustment Amount, the Buyer shall pay to the
Seller a percentage of any Tax refunds that are received by an Applicable Entity after
the Closing Date which relate to a Straddle Period, which percentage shall be equal to
the same percentage of the related Tax liability that was apportioned to the Seller
pursuant to clause (b) above. Any payments required to be made pursuant
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to this
clause (i) shall be made within fifteen (15) days after the related Applicable
Entity’s receipt of the applicable Tax refund.
(d) Transfer Taxes. Fifty percent (50%) of all transfer, documentary, stamp,
sales, use, value added, registration and other such Taxes (including all applicable real estate
transfer or gains Taxes) and related fees (including any penalties, interest and additions to
Tax) incurred in connection with this Agreement and the transactions contemplated hereby
(collectively, the “Transfer Taxes”) shall be allocated to, and paid by, each of the
Buyer and the Seller.
(e) Cooperation on Tax Matters. The Buyer shall provide to the Seller, and the
Seller shall provide to the Buyer, such material and relevant information, without charge and in
a timely fashion, as each may reasonably request of the other, in connection with the filing of
Tax Returns pursuant to this Section 5.08 and any audit, litigation or other proceeding
with respect to Taxes imposed on the Applicable Entities. Such cooperation shall include the
retention and (upon the other party’s request, at the other party’s cost and expense and at the
time and place mutually agreed upon by the parties) the provision of records and information
that 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, to the extent such information and/or
explanation is readily available and within the control of the party to which such request is
made. The responsibility to retain records and information shall include the responsibility to
(i) retain such records and information as are required to be retained by any applicable Tax
authority and (ii) retain such records and information in machine-readable format where
appropriate such that the requesting party shall be able to readily access such records and
information. The Buyer agrees (A) to retain all books and records with respect to Tax
matters pertinent to the Applicable Entities relating to any Pre-Closing Tax Period, and to
abide by all record retention arrangements entered into with any Tax authority with respect
thereto, and (B) to give the Seller reasonable written notice and receive the consent of the
Seller, which consent shall not be unreasonably withheld, prior to transferring, destroying or
discarding any such books and records.
(f) Conduct of Tax Controversy Proceedings. The Buyer shall have the sole right to
control and make all decisions regarding the interests of any Applicable Entity in any Tax audit
or administrative or court proceeding relating to Taxes, including selection of counsel and
selection of a forum for such contest, provided, however, that in the event such
audit or proceeding relates to Taxes for which the Seller is responsible and has agreed to
indemnify the Buyer pursuant to Section 9.02(c) hereof, (a) the Buyer and the Seller
shall cooperate in the conduct of any audit or proceeding relating to such period and (b) the
Seller shall have the right to participate in such audit or proceeding at the Seller’s sole cost
and expense.
(g) Certificate of Non-Foreign Status. The Seller shall deliver at Closing a
certificate of its non-foreign status that complies with Treasury Regulation Section
1.1445-2(b)(2).
(h) Tax Treatment. Except to the extent such treatment is inconsistent with other
provisions of this Agreement, any payments made pursuant to the provisions of this Section
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5.08 shall be treated by the Buyer and the Seller for income Tax purposes as an adjustment
to the Purchase Price.
SECTION 5.09 Termination of Agreements. Except as set forth on Schedule 5.09,
at or prior to the Closing, all Intercompany Contracts shall be terminated as between any
Applicable Entity, on the one hand, and the Seller or any of its post-Closing Related Persons, on
the other hand, without any further force and effect, and there shall be no further obligations or
Liabilities of any of the relevant parties thereunder following the Closing. All accounts between
any Applicable Entity, on the one hand, and the Seller or any of its post-Closing Related Persons,
on the other hand, shall be settled in full prior to the Closing Date.
SECTION 5.10 Financing.
(a) The Buyer shall use its commercially reasonable efforts to arrange the Financing on the
terms and conditions described in the Financing Commitments.
(b) Prior to Closing, in order to assist with the Financing, the Seller shall, and shall
cause the Applicable Entities to, provide such commercially reasonable assistance and
cooperation as the Buyer and its affiliates may reasonably request, including, but not limited
to, cooperation in the preparation of any offering memorandum, confidential information
memorandum, bank book or similar document, rating agency presentations and business projections,
using their commercially reasonable efforts to obtain customary “comfort” letters and legal
opinions, furnishing the Buyer and its financing sources with financial and other pertinent
information regarding the Applicable Entities as may reasonably be requested, cooperating with
administrative agents, initial purchasers or placement agents, entering into
customary agreements with lenders, administrative agents, underwriters, initial purchasers
or placement agents, facilitating the pledge of collateral, including, without limitation,
taking any actions and executing any documents reasonably requested by the Buyer in connection
therewith, and making senior management of the Seller and the Applicable Entities reasonably
available for facilitating customary due diligence and participation in meetings and customary
bank or “roadshow” presentations. The Buyer shall, upon request by the Seller, reimburse the
Seller for all reasonable out-of-pocket costs incurred by the Seller in connection with any of
the activities described in this Section 5.10(b)
ARTICLE VI
CONDITIONS PRECEDENT TO THE BUYER’S OBLIGATION TO CLOSE
The Buyer’s obligation to purchase the Purchased Interests and to take the other actions
required to be taken by the Buyer at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by Buyer, in whole or in
part):
SECTION 6.01 Accuracy of Representations. All of the representations and warranties
of the Seller set forth in this Agreement which are qualified by materiality or material adverse
effect or words of similar effect shall be true and correct as of the Closing Date as though made
on and as of the Closing Date (except to the extent such representations and warranties expressly
relate to a specific date, in which case such representations and warranties shall be true and
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correct as of such date), and all of the representations and warranties of the Seller set forth in
this Agreement which are not so qualified shall be true and correct in all material respects as of
the Closing Date as though made on and as of the Closing Date (except to the extent such
representations and warranties expressly relate to a specific date, in which case such
representations and warranties shall be true and correct in all material respects as of such
date), and the Buyer shall have received a certificate signed by an officer of the Seller and dated
the Closing Date to such effect.
SECTION 6.02 Seller’s Performance. The Seller shall have performed all obligations
required to be performed by it under this Agreement at or prior to the Closing, including without
limitation the applicable covenants contained in Article V, in all material respects, and
the Buyer shall have received a certificate signed by an officer of the Seller and dated the
Closing Date to such effect.
SECTION 6.03 Consents. The Seller shall have obtained and shall have delivered to the
Buyer, in each case, in form and substance reasonably acceptable to the Buyer, copies of all
Governmental Authorizations (other than the China Approval) required to be obtained (or the
expiration or termination of any required waiting period) by the Seller or any the Applicable
Entities in connection with the execution and delivery of this Agreement and the other Transaction
Documents and the consummation of the Contemplated Transactions.
SECTION 6.04 No Proceedings. There must not have been commenced or threatened against
any Person any Proceeding (a) involving any challenge to, or seeking damages or other
relief in connection with, any of the Contemplated Transactions, or (b) that may have the
effect of preventing, delaying, making illegal, or otherwise interfering with any of the
Contemplated Transactions.
SECTION 6.05 No Prohibition. No temporary restraining order, preliminary or permanent
injunction or other Order preventing the consummation of the Contemplated Transactions shall be in
effect, and no Legal Requirement shall have been enacted or shall be deemed applicable to the
Contemplated Transactions which makes the consummation of the Contemplated Transactions illegal.
SECTION 6.06 Receipt of Financing. Each of the conditions (including the negotiation
and execution of definitive documentation reasonably satisfactory to the Buyer) set forth in the
Financing Commitments shall have been satisfied and the Buyer shall have received the proceeds of
the financings contemplated by the Financing Commitments, in the amounts and on the terms set forth
therein.
SECTION 6.07 Escrow Agreements. The Seller and the Escrow Agent shall have each
executed and delivered the Indemnity Escrow Agreement and the Purchase Price Escrow Agreement.
SECTION 6.08 Pay-Off Letters. The Seller shall have delivered to the Buyer executed
copies of the Transaction Costs Pay-Off Letters, each of which shall be in form and substance
reasonably acceptable to the Buyer.
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SECTION 6.09 Confidentiality, Noncompetition, Nonsolicitation, an Nondisparagement
Agreements. Each of the persons set forth on Schedule 6.09 shall have executed and
delivered to the Buyer a Confidentiality, Noncompetition, Nonsolicitation and Nondisparagement
Agreement in a form reasonably acceptable to the Buyer.
SECTION 6.10 CO2LD Agreement. The Buyer, the Seller, Xxxx Xxxxx and CO2LD, LLC, if
appropriate, shall have entered into agreements in form and substance reasonably acceptable to the
Buyer pursuant to which (i) the Buyer will be assigned a 50.67% economic interest in CO2LD, LLC
(which may take the form of an equity interest or a contractual right as agreed to by the parties),
(ii) each of the holders of equity interests in CO2LD, LLC will grant the Buyer a customary right
of first refusal with respect to any future transfer of such equity interests to a third party
(which right of first refusal will provide that the Buyer will have the opportunity to purchase all
such equity interests at a price equal to 49.33% of the price offered by such third party) and
(iii) CO2LD, LLC and each of the holders of equity interests in CO2LD, LLC will agree that, in
connection with any sale of CO2LD, LLC to any third party (whether pursuant to an equity transfer,
merger, asset sale or similar disposition transaction or liquidity event), contemporaneously with
any distributions or proceeds being received by any of the holders of equity interests in CO2LD,
LLC, the Buyer will receive an amount equal to 50.67% of the net proceeds received by CO2LD or such
equity holders, as applicable, in connection with such sale. Any non-equity arrangement shall be
tax neutral to the members of CO2LD, LLC when compared to an equity interest arrangement.
ARTICLE VII
CONDITIONS PRECEDENT TO THE SELLER’S OBLIGATION TO CLOSE
The Seller’s obligation to sell the Purchased Interests and to take the other actions required
to be taken by the Seller at the Closing is subject to the satisfaction, at or prior to the
Closing, of each of the following conditions (any of which may be waived by the Seller, in whole or
in part):
SECTION 7.01 Accuracy of Representations. All of the representations and warranties
of the Buyer set forth in this Agreement which are qualified by materiality or material adverse
effect or words of similar effect shall be true and correct as of the Closing Date as though made
on and as of the Closing Date (except to the extent such representations and warranties expressly
relate to a specific date, in which case such representations and warranties shall be true and
correct as of such date), and all of the representations and warranties of the Buyer set forth in
this Agreement which are not so qualified shall be true and correct in all material respects as of
the Closing Date as though made on and as of the Closing Date (except to the extent such
representations and warranties expressly relate to a specific date, in which case such
representations and warranties shall be true and correct in all material respects as of such
date), and the Seller shall have received a certificate signed by an officer of the Buyer and dated
the Closing Date to such effect.
SECTION 7.02 Buyer’s Performance. The Buyer shall have performed all obligations
required to be performed by it under this Agreement at or prior to the Closing, including without
limitation the applicable covenants contained in Article V, in all material respects, and
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the Seller shall have received a certificate signed by an officer of the Buyer and dated the
Closing Date to such effect.
SECTION 7.03 No Proceedings. There must not have been commenced or threatened against
any Person any Proceeding (a) involving any challenge to, or seeking damages or other relief in
connection with, any of the Contemplated Transactions, or (b) that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the Contemplated
Transactions.
SECTION 7.04 No Prohibition. No temporary restraining order, preliminary or permanent
injunction or other Order preventing the consummation of the Contemplated Transactions shall be in
effect, and no Legal Requirement shall have been enacted or shall be deemed applicable to the
Contemplated Transactions which makes the consummation of the Contemplated Transactions illegal.
SECTION 7.05 Escrow Agreements. The Buyer and the Escrow Agent shall have each
executed and delivered the Indemnity Escrow Agreement and the Purchase Price Escrow Agreement.
SECTION 7.06 HSR Approval. The waiting period applicable to the consummation of the
Contemplated Transactions under the HSR Act shall have expired or been terminated.
ARTICLE VIII
TERMINATION
SECTION 8.01 Termination Events. This Agreement may be terminated at any time prior
to the consummation of the Closing under the following described circumstances:
(a) upon the mutual written consent of the Buyer and the Seller;
(b) by the Buyer upon delivery of written notice thereof to the Seller if (i) the Buyer is
not then in material Breach of this Agreement and (ii) there shall have been any Breach by the
Seller (which has not been waived) of one or more of its representations or warranties,
covenants or agreements set forth in this Agreement, which Breach or Breaches (A) would give
rise to the failure of a condition set forth in Section 6.01 or 6.02 and (B)
shall not have been cured within ten (10) days following receipt by the Seller of written notice
from the Buyer of such Breach or such longer period in the event that (x) such Breach cannot
reasonably be expected to be cured within such 10-day period but could reasonably be expected to
by cured prior to the Outside Closing Date, and (y) the Seller is diligently pursuing such cure;
(c) by the Seller upon delivery of written notice thereof to the Buyer if (i) the Seller is
not then in material Breach of this Agreement and (ii) there shall have been any Breach by the
Buyer (which has not been waived) of one or more of its representations or warranties, covenants
or agreements set forth in this Agreement, which Breach or Breaches (A) would give rise to the
failure of a condition set forth in Section 7.01 or 7.02 and (B) shall not have
been cured within ten (10) days following receipt by the Buyer of written notice from the
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Seller
of such Breach or such longer period in the event that (x) such Breach cannot reasonably be
expected to be cured within such 10-day period but could reasonably be expected to by cured
prior to the Outside Closing Date, and (y) the Buyer is diligently pursuing such cure;
(d) by either the Buyer or the Seller upon delivery of written notice thereof to the other
party hereto in the event that an injunction, restraining order or other Order restraining or
prohibiting the consummation of the Contemplated Transactions shall have become final and
non-appealable; provided, that, the party seeking to terminate this Agreement pursuant
to this clause (d) shall have used its commercially reasonable efforts to have such
order, injunction or other Order vacated;
(e) by either the Buyer or the Seller upon delivery of written notice thereof to the other
party hereto if the Closing has not occurred (other than through the failure of the party
seeking to terminate this Agreement to comply fully with its obligations under this Agreement
unless good faith efforts were used to comply or to cure noncompliance) on or before September
9, 2007 or such later date as the parties may agree in writing or such earlier date when events
have occurred which make it impossible to close the Contemplated Transaction by September 9,
2007 (the “Outside Closing Date”).
SECTION 8.02 Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 8.01, this Agreement shall forthwith become null and void and have no
effect, without any liability on the part of any party or its Related Persons, trustees,
directors, officers, shareholders or Representatives and all rights and obligations of each party
hereto shall cease except for the agreements contained in Article X; provided that
the termination of this Agreement will not relieve a Breaching party from liability for any Breach
of this Agreement before its termination.
ARTICLE IX
INDEMNIFICATION; REMEDIES
SECTION 9.01 Survival of Representations, Warranties and Covenants; Time Limits on
Indemnification Obligations. All representations, warranties, covenants and agreements of the
Buyer and the Seller contained in this Agreement, any other Transaction Document and any
certificate or other document provided hereunder or thereunder shall survive the execution and
delivery of this Agreement and the Closing hereunder for a period of eighteen (18) months following
the Closing, except for (i) the representations and warranties set forth in Sections 3.01
(Organization and Good Standing), 3.02 (Authority; No Conflict), 3.03 (Title to
Purchased Interests), 3.04 (Capitalization) and 3.22 (Brokers or Finders) (collectively,
the “Fundamental Representations”) which shall survive indefinitely, (ii) the
representations and warranties set forth in Sections 3.10 (Taxes), 3.11 (Employee
Benefits) and 3.17 (Environmental Matters) which shall survive for a period of twenty four
(24) months following the Closing, and (iii) the agreements and covenants set forth in Article
5 or otherwise set forth herein (to the extent that, in each such case, such agreement or
covenant expressly requires performance by any party hereto following the Closing) which shall
survive indefinitely except as they may be limited by a specific period of time expressly set forth
therein; provided, however, that any representation, warranty, covenant or
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agreement that would otherwise terminate in accordance with this sentence will continue to survive
if a claim for indemnification based upon a Breach of such representation, warranty, covenant or
agreement shall have been given prior to such termination date until the related claim for
indemnification has been satisfied or otherwise resolved as provided in Article IX.
SECTION 9.02 Indemnification by the Seller. Except as limited by Section
9.05, from and after the Closing, the Seller shall indemnify, defend and hold harmless the
Buyer, the Applicable Entities and their respective Representatives and Related Persons (each, a
“Buyer Indemnified Party”) from and against, and the Seller shall promptly pay to a Buyer
Indemnified Party or reimburse a Buyer Indemnified Party for, any and all Losses, whether or not
involving a third-party’s claim, sustained or incurred by any Buyer Indemnified Party relating to,
resulting from, arising directly or indirectly out of or otherwise by virtue of:
(a) (x) any Breach of any Fundamental Representation made by the Seller (a “Fundamental
Seller Breach”), (y) any Wuhan Crown Breach, or (z) any Breach (other than a Wuhan Crown
Breach) of any other representation or warranty made by the Seller in this Agreement or any of
the other Transaction Documents;
(b) any Breach of any covenant or other obligation of the Seller in this Agreement or any
of the other Transaction Documents (a “Seller Covenant Breach”);
(c) any Liability (a “Tax Liability”) for Taxes (i) of the Seller, (ii) of any
Applicable Entity that are (x) attributable to a Pre-Closing Tax Period or (y) attributable to
the portion of any Straddle Period up to and including the Closing Date, in each case, except to
the extent that any such Liability for Taxes is taken into account in computing the Net Working
Capital Adjustment Amount as finally determined in accordance with Section 2.05, (iii)
under U.S. Treasury Regulation section 1.1502-6 (or any similar provision under state, local or
foreign law) attributable to any Person other than the Applicable Entities or (iv) resulting
from the failure of (A) the Seller to qualify as an S-corporation within the meaning of IRC
Section 1361 and 1362 at any time on or prior to the Closing Date or (B) Crown Iron Works to
qualify as a “qualified subchapter S subsidiary” within the meaning of IRC Section 1361(b)(3) at
any time prior to the Closing Date; provided, that, for the purposes of clause
(c)(ii), in each case of Straddle Period, (A) there shall be a deemed short taxable year
ending on and including the Closing Date and a second deemed short taxable year beginning on and
including the day after such date and (B) any Taxes for such Straddle Period shall be
apportioned between the pre-Closing Date period and post-Closing Date period in accordance with
Section 5.08(b); or
(d) the Ukraine Matter.
SECTION 9.03 Indemnification by the Buyer. Except as limited by Section 9.05,
from and after the Closing, the Buyer agrees to indemnify, defend and hold harmless the Seller and
its Representatives and Related Persons (each, a “Seller Indemnified Party”) from and
against, and to promptly pay to a Seller Indemnified Party or reimburse a Seller Indemnified Party
for, any and all Losses, whether or not involving a third-party’s claim, sustained or incurred by
any Seller Indemnified Party relating to, resulting from, arising directly or indirectly out of or
otherwise by virtue of:
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(a) any breach of or any inaccuracy in any representation or warranty made by the Buyer in
this Agreement or any of the other Transaction Documents; or
(b) any breach of or failure to perform any covenant or obligation of the Buyer in this
Agreement or any of the other Transaction Documents (a “Buyer Covenant Breach”).
SECTION 9.04 Indemnification Procedure.
(a) Third-Party Claims. Except in case of claims with respect to Taxes, any
contest of which shall be conducted pursuant to Section 5.08(f), within 20 days after
receipt by a party entitled to indemnification hereunder (the “Indemnified Party”) of
written notice of the assertion or the commencement of any proceeding by a third-party with
respect to any matter for which such Indemnified Party will seek indemnity under Section
9.02 or 9.03, the Indemnified Party shall give written notice thereof to the party
obligated to indemnify Indemnified Party (the “Indemnifying Party”), which notice shall
include a description of the proceeding, the amount thereof (if known and quantifiable) and the
basis for the proceeding (if known), and thereafter shall keep the Indemnifying Party reasonably
informed with respect thereto; provided, however, that any delay in the Indemnified
Party’s delivery of such notice to the Indemnifying Party shall not prejudice the Indemnified
Party’s right to receive indemnification unless, and then only to the extent that, the
Indemnifying Party is actually
prejudiced by such delay. Any Indemnifying Party shall be entitled to participate in the
defense of such action, lawsuit, proceeding, investigation or other claim giving rise to an
Indemnified Party’s claim for indemnification at such Indemnifying Party’s expense, and at its
option (subject to the limitations set forth below) shall be entitled to assume the defense
thereof by appointing a reputable counsel reasonably acceptable to the Indemnified Party to be
the lead counsel in connection with such defense; provided that the Indemnified Party
shall be entitled to participate in the defense of such claim and to employ counsel of its
choice for such purpose; provided that the fees and expenses of such separate counsel
shall be borne by the Indemnified Party (other than any fees and expenses of such separate
counsel that are incurred between the date Indemnified Party provides to the Indemnifying Party
notice of the claim and the date the Indemnifying Party effectively assumes control of such
defense which, notwithstanding the foregoing, shall be borne by the Indemnifying Party, and
except that the Indemnifying Party shall pay all of the fees and expenses of such separate
counsel if the Indemnified Party has been advised by counsel that a reasonable likelihood exists
of a conflict of interest between the Indemnifying Party and the Indemnified Party).
Notwithstanding the foregoing, the Indemnifying Party shall not be entitled to assume control of
such defense (unless otherwise agreed to in writing by the Indemnified Party) and shall pay the
fees and expenses of counsel retained by the Indemnified Party if (1) the claim for
indemnification relates to or arises in connection with any criminal or quasi-criminal
proceeding, action, indictment, allegation or investigation; (2) the claim seeks an injunction
or equitable relief against the Indemnified Party; (3) the Indemnified Party has been advised by
counsel that a reasonable likelihood exists of a conflict of interest between the Indemnifying
Party and the Indemnified Party; (4) upon petition by the Indemnified Party, the appropriate
court rules that the Indemnifying Party failed or is failing to vigorously prosecute or defend
such claim; or (5) 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. If the Indemnifying Party shall
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control the
defense of any such claim, (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 hereunder by such Indemnifying Party and (ii) the Indemnifying Party shall
obtain the prior written consent of the Indemnified Party, which shall not be unreasonably
withheld or delayed, before consenting to the entry of any judgment in respect of or entering
into any settlement of a claim or ceasing to defend such claim if, pursuant to or as a result of
such entry, settlement or cessation, (x) injunctive or other equitable relief will be imposed
against the Indemnified Party, (y) such settlement does not expressly and unconditionally
release the Indemnified Party from all Liabilities and obligations with respect to such claim
without prejudice, or (z) it result in Losses or Liabilities to the Indemnified Party which,
when taken together with other existing claims under this Article IX, would not be fully
indemnified hereunder.
(b) 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
which notice shall include the amount or estimated amount of such claim. If the Indemnifying
Party notifies the Indemnified Party that it does not dispute the claim or the estimated amount
of such claim, or fails to notify the Indemnified Party within 30 days after delivery of a
notice of a claim that the Indemnifying Party disputes the claim or the estimated amount of the
claim, the estimated amount of the claim specified in such notice shall be
deemed conclusively to be a Loss that, subject to the other provisions of this Article
IX, is to be indemnified hereunder. If the Indemnifying Party does so notify the
Indemnified Party, the Indemnified Party and the Indemnifying Party will proceed, in good faith,
to agree on the amount, if any, of such indemnification claim. If the Indemnified Party and
Indemnifying Party are unable to agree on the amount of such indemnification claim within thirty
(30) days after such notice by the Indemnifying Party to the Indemnified Party, then either
party may commence a litigation proceeding with respect to such claim.
SECTION 9.05 Limitations on Indemnities.
(a) Deductible. Notwithstanding Sections 9.02 and 9.03 and except
with respect to the Ukraine Matter or any Unrestricted Claim, neither the Seller nor the Buyer
shall have any obligation to provide indemnification under Section 9.01 or 9.02,
as applicable, unless and until such time as the aggregate amount of all Losses for which the
Buyer Indemnified Parties or Seller Indemnified Parties would otherwise be entitled to receive
indemnification hereunder exceeds an aggregate threshold of $1,000,000 (the “Indemnity
Threshold”), and in such case, the Buyer Indemnified Parties or Seller Indemnified Parties,
as applicable, shall be entitled to recover the amount of such claims only in excess of the
Indemnity Threshold.
(b) Aggregate Cap. Notwithstanding Sections 9.02 and 9.03 and
except with respect to any Unrestricted Claim, (x) the aggregate indemnification liability of
the Seller or the Buyer (as the case may be) under this Article IX (including, with
respect to the Seller, in connection with a Wuhan Crown Breach and any claims in respect of the
Ukraine Matter) shall in no event exceed $16,000,000, (y) the aggregate indemnification
liability of the Seller under Section 9.02(a) with respect to a Wuhan Crown Breach shall
in no event exceed the Wuhan Crown Breach Cap, and (z) the aggregate indemnification liability
of the Seller under
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Section 9.02(d) with respect to the Ukraine Matter shall in no event
exceed the Ukraine Matter Cap.
(c) Calculation of Losses.
(i) For purposes of determining the amount of any Losses under Sections
9.02 or 9.03, such amount shall exclude any and all consequential, lost
profits or revenues, cost of capital, loss of business reputation or opportunity, or
special and punitive damages, except to the extent such damages were actually awarded,
paid or incurred in a third party claim.
(ii) For purposes of determining the amount of any Losses under Sections
9.02 or 9.03, all qualifications as to materiality or material adverse
effect contained in any representation or warranty shall be disregarded.
(iii) For purposes of determining the amount of any Losses under Sections
9.02 or 9.03, the amount of any Losses shall be (a) reduced by the Tax
benefit actually received by the Indemnified Party from the Tax deductible costs and
expenses within the indemnified Losses and (b) increased by any Tax detriment actually
suffered by the Indemnified Party as a result of the indemnified Losses,
including any Taxes imposed on the Indemnified Party with respect to the receipt of
any indemnity payment made under this Article IX.
(d) Insurance Proceeds. Any indemnity payment due hereunder shall be reduced by
any insurance proceeds actually realized by and paid to the applicable Indemnified Party under
any insurance policy in respect of the applicable Loss (net of any related costs and expenses,
including any correspondent increase in insurance premiums or other charge backs);
provided, that this clause (d) shall not be deemed to impose any obligation upon
and Applicable Entity or any Buyer Indemnified Party to bring any lawsuit or effect any other
extraordinary action to seek recovery from any insurance carrier for any such Losses.
(e) Source of Recourse.
(i) General Indemnity Recourse. The Buyer Indemnified Parties’ sole source
of recourse for indemnifiable Losses under Section 9.02 (other than in respect
of an Unrestricted Claim) shall be the right to seek recourse from the funds then
contained in the Indemnity Escrow Account in accordance with the Indemnity Escrow
Agreement.
(ii) Unrestricted Claims. Notwithstanding the foregoing provisions of this
clause (e), although the Buyer Indemnified Parties shall have the right to seek
recourse from the funds then contained in the Indemnity Escrow Account in connection
with any Unrestricted Claim, the Buyer Indemnified Parties shall additionally have the
right, subject to the other limitations contained in this Section 9.05, to seek
recourse directly from the Seller in respect of any such Unrestricted Claim.
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SECTION 9.06 Treatment of Indemnification Payments. The parties agree to treat any
indemnification payments made pursuant to this Article IX as adjustments to the Purchase
Price for income Tax purposes (which treatment the Buyer and the Seller acknowledges is consistent
with current Tax provisions of applicable Legal Requirements) unless they are required to treat
such payments otherwise as a result of a change in the Tax provisions of applicable Legal
Requirements or interpretation thereof in a court case or binding regulation.
SECTION 9.07 Exclusive Remedy after Closing. The indemnification provisions of this
Article IX shall (in the absence of fraud, willful misconduct or intentional breach), after
the Closing, be the sole and exclusive remedy (other than equitable remedies) of the parties for
any breach of the obligations, covenants, agreements, representations and warranties set forth in
this Agreement, or for any other claims or causes of actions arising out of, relating to or in
connection with the transactions contemplated hereby or thereby, whether based upon breach of
contract, tort or otherwise.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 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 agents, representatives, counsel and accountants.
SECTION 10.02 Confidentiality. Between the date of this Agreement and the Closing
Date, the Buyer and the Seller will maintain in confidence, and will cause their respective
Representatives and, in the case of the Seller, the Applicable Entities and their Representatives
to maintain in confidence, any written, oral or other information obtained in confidence from
another party in connection with this Agreement or the Contemplated Transactions, unless (a) such
information is already known to such party or to others not bound by a duty of confidentiality or
such information becomes publicly available through no fault of such party, (b) the use of such
information is necessary or appropriate in making any filing or obtaining any consent or approval
required for the consummation of the Contemplated Transactions, or (c) the furnishing or use of
such information is required by or necessary or appropriate in connection with legal proceedings.
SECTION 10.03 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), or (b) when received by the addressee, if sent by a
nationally recognized overnight delivery service (receipt requested), in each case to the
appropriate addresses and telecopier numbers set forth below (or to such other addresses as a party
may designate by notice to the other parties):
| If to the Seller: | Xxxxx Xxxxxxxx | |||
| 0000 Xxxxxx Xxxx | ||||
| Xxxxx, XX 00000 |
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| with a copy (which shall | ||||
| not constitute notice) to: | Xxxxxxxxxx & Xxxxx, P.A. | |||
| 000 Xxxxxx Xxxxxx, Xxxxx 0000 | ||||
| Xxxxxxxxxxx, Xxxxxxxxx 00000 | ||||
| Attention: Xxxxxx X. Xxxxxxxx | ||||
| If to the Buyer: | CPM Acquisition Corporation | |||
| 0000 Xxxxxxx Xxxxxx | ||||
| Xxxxxxxx, XX 00000 | ||||
| Attention: Xxx X. Xxxxxxx | ||||
| with a copy (which shall | ||||
| not constitute notice) to: | Mayer, Brown, Xxxx & Maw LLP | |||
| 0000 Xxxxxxxx | ||||
| Xxx Xxxx, XX 00000 | ||||
| Attention: Xxxxxx X. Xxxxxx, Esq. |
SECTION 10.04 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.
SECTION 10.05 Waiver. The rights and remedies of the parties to this Agreement are
cumulative and not alternative. Neither the failure 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 Legal Requirement, (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 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.
SECTION 10.06 Entire Agreement and Modification. This Agreement supersedes all prior
agreements between the parties with respect to its subject matter (including that certain letter
agreement, dated February 6, 2007, among the Buyer and Crown Iron Works), with the exception of the
Non-Disclosure Agreement, dated October 17, 2006, among the Buyer and Crown Iron Works (which shall
survive until the Closing), 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.
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SECTION 10.07 Assignments, Successors and No Third-Party Rights. The Buyer may not
assign any of its rights or obligations under this Agreement without the prior consent the Seller,
and the Seller may not assign any of its rights or obligations under this Agreement without the
prior consent of the 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 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.
SECTION 10.08 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, then the other provisions of this Agreement
shall remain in full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree shall remain in full force and effect to the extent not held
invalid or unenforceable.
SECTION 10.09 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, (i) the word
“including” does not limit the preceding words or terms and (ii) the word “dollar” or “dollars” and
the symbol “$” mean U.S. dollars.
SECTION 10.10 Governing Law. This Agreement will be governed by the laws of the State
of New York without regard to conflicts of law principles.
SECTION 10.11 Jurisdiction; Waiver of Jury Trial. Each party irrevocably agrees that
any legal action, suit or proceeding against them arising out of or in connection with this
Agreement or the Contemplated Transactions or disputes relating hereto (whether for breach of
contract, tortious conduct or otherwise) shall be brought exclusively in the United States District
Court for the District of Minnesota, Fourth Division, or, if such court does not have subject
matter jurisdiction, the state courts of Minnesota located in Hennepin County and hereby
irrevocably accepts and submits to the exclusive jurisdiction and venue of the aforesaid courts in
personam, with respect to any such action, suit or proceeding. Each party hereby waives to the
fullest extent permitted by Legal Requirements, any right it may have to a trial by jury in respect
of any litigation directly or indirectly arising out of, under or in connection with this Agreement
or the Contemplated Transactions or disputes relating hereto. Each party (a) certifies that no
representative, agent or attorney of any other party has represented, expressly or otherwise, that
such other party would not, in the event of litigation, seek to enforce the foregoing waiver and
(b) acknowledges that it and the other parties hereto have been induced to enter into this
Agreement by, among other things, the mutual waivers and certifications in this Section
10.11.
SECTION 10.12 Counterparts. This Agreement may be executed in one 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.
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[Signatures Follow]
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date
first written above.
| CROWN HOLDINGS, INC. | ||||||
| By: | /s/ Xxxxxxxx X. Xxxxxxxx | |||||
| Name: | ||||||
| Title: | President | |||||
| CROWN ACQUISITION CORP. | ||||||
| By: | /s/ Xxx Xxxxxxx | |||||
| Name: | ||||||
| Title: | Chief Executive Officer | |||||
