PURCHASE AGREEMENT dated as of October 15, 2007, between GLOBAL BRASS AND COPPER ACQUISITION CO. and OLIN CORPORATION
Exhibit
2.1
dated
as
of October 15, 2007,
between
GLOBAL
BRASS AND COPPER ACQUISITION CO.
and
XXXX
CORPORATION
Page
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Purchase
and Sale of Purchased Companies’ Equity Interests and Transferred Assets;
Assumption of Transferred Liabilities
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||
Sale
of the Purchased Companies’ Equity Interests and the Transferred Assets;
Assumption of the Transferred Liabilities
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2
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|
Transfer
of the Excluded Assets; Excluded Liabilities; Consents of Third
Parties
|
3
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Closing;
Closing Date
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4
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|
Transactions
To Be Effected at the Closing
|
4
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|
Post-Closing
Purchase Price Adjustment
|
5
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|
Representations
and Warranties Relating to the Seller and the Purchased Companies’ Equity
Interests
|
||
Organization,
Standing and Power
|
8
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|
Authority;
Execution and Delivery; Enforceability
|
8
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|
No
Conflicts; Consents
|
9
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|
The
Purchased Companies’ Equity Interests
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10
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Brokers
or Finders
|
10
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|
Representations
and Warranties Relating to the Transferred Entities and the Transferred
Assets
|
||
Organization
and Standing; Books and Records
|
10
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Equity
Interests in the Transferred Entities; Equity Interests in Other
Persons;
Indebtedness
|
11
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|
Authority;
Execution and Delivery; Enforceability
|
12
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|
No
Conflicts; Consents
|
12
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|
Financial
Statements; Undisclosed Liabilities
|
13
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|
Assets
Other than Real Property Interests
|
13
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Real
Property
|
14
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|
Intellectual
Property
|
15
|
|
Contracts
|
16
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|
Permits
|
18
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|
Insurance
|
18
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Taxes
|
18
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Page
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Proceedings
|
20
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Benefit
Plans
|
21
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Absence
of Changes or Events
|
23
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|
Compliance
with Applicable Laws
|
24
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|
Environmental
Matters
|
25
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|
Employee
and Labor Matters
|
26
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|
Transactions
with Affiliates
|
26
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|
Sufficiency
of Assets
|
26
|
|
Customers
|
27
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|
Suppliers;
Raw Materials
|
27
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|
Products;
Product and Service Warranties; Product Liability
|
27
|
|
No
Other Representations or Warranties
|
27
|
|
Representations
and Warranties of the Purchaser
|
||
Organization,
Standing and Power
|
28
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|
Authority;
Execution and Delivery; Enforceability
|
28
|
|
No
Conflicts; Consents
|
29
|
|
Litigation
|
29
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|
Securities
Act
|
29
|
|
Financing
|
29
|
|
Activities
of the Purchaser
|
30
|
|
Solvency
|
30
|
|
Sponsor
Fund Guarantees
|
30
|
|
Going
Concern
|
30
|
|
Brokers
or Finders
|
30
|
|
No
Other Representations and Warranties
|
30
|
|
Pre-Closing
Covenants
|
||
Covenants
Relating to Conduct of Business
|
31
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|
No
Solicitation
|
34
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|
Commercially
Reasonable Efforts; Financing
|
35
|
|
Expenses;
Transfer Taxes
|
39
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|
Tax
Matters
|
40
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|
[INTENTIONALLY
OMITTED]
|
42
|
|
Section 338(g)
Election
|
43
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|
Employee
Matters
|
43
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|
Access
to Information
|
53
|
|
Commercial
Arrangements
|
54
|
|
Release
of Guarantees and Letters of Credit
|
54
|
|
Repayment
of Indebtedness; Intercompany Accounts
|
55
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|
Yamaha-Olin
Metal Joint Venture Agreement
|
55
|
Page
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||
Resignations
|
55
|
|
Monthly
Financial Information
|
56
|
|
Conversions
to LLCs
|
56
|
|
Other
Agreements
|
||
Agreement
Not To Compete; Non-Solicitation of Employees
|
56
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|
Confidentiality
|
57
|
|
Publicity
|
58
|
|
Connecticut
Property Transfer Law; Pre-Closing Environmental Matters
|
58
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|
Use
of Names Following the Closing; Supplies
|
58
|
|
Export
Licenses
|
59
|
|
Arrangements
Pending Subdivision of Real Property; Easements
|
59
|
|
Accounts
Receivable
|
59
|
|
Post-Closing
Cooperation
|
59
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|
Further
Assurances
|
60
|
|
Consents
|
60
|
|
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||
Conditions
to Each Party’s Obligation
|
60
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|
Conditions
to Obligation of the Purchaser
|
60
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|
Conditions
to Obligation of the Seller
|
62
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|
Frustration
of Closing Conditions
|
62
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|
Termination,
Amendment and Waiver
|
||
Termination
|
62
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|
Effect
of Termination; Sponsor Termination Fee; Limitation of
Liability
|
63
|
|
Amendments
and Waivers
|
65
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|
Indemnification
|
||
Tax
Indemnification
|
65
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|
Indemnification
by the Seller
|
66
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|
Threshold;
Cap; De Minimis; Other Limitations
|
67
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|
Survival
of Representations; Covenants; Agreements
|
69
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|
Termination
of Indemnification
|
69
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|
Exclusive
Monetary Remedy; Consequential Damages; Nature of Payments; No
Duplicate
Recovery; Access Rights
|
70
|
Page
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||
Indemnification
by the Purchaser
|
71
|
|
Calculation
of Losses
|
71
|
|
Procedures
|
72
|
|
General
Provisions
|
||
Assignment
|
76
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|
No
Third Party Beneficiaries
|
76
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|
Notices
|
77
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|
Counterparts
|
78
|
|
Entire
Agreement
|
78
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|
Severability
|
78
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|
Governing
Law
|
78
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|
Consent
to Jurisdiction
|
78
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|
Waiver
of Jury Trial
|
79
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|
Enforcement
|
79
|
|
Defined
Terms
|
80
|
|
Exhibits and
Schedules; Interpretation
|
90
|
Exhibits
Purchased
Companies’ Equity Interests and Purchased Company Subsidiaries’ Equity
Interests
|
Form
of Transition Services Agreement
|
Form
of Winchester Supply Agreement
|
Form
of Environmental Access Agreement
|
Form
of Trademark License Agreement
|
Calculation
of Working Capital
|
Arrangements
Pending Subdivision of Real Property;
Easements
|
Balance
Sheet
|
Transferred
Assets and Transferred Liabilities; Excluded Assets and Excluded
Liabilities
|
Knowledge
of the Seller; Knowledge of the
Purchaser
|
iv
PURCHASE
AGREEMENT dated as of October 15, 2007 (this “Agreement”), between GLOBAL
BRASS AND COPPER ACQUISITION CO., a corporation organized under the laws
of the
State of Delaware (the “Purchaser”) and XXXX CORPORATION, a corporation
organized under the laws of Commonwealth of Virginia (the
“Seller”).
Purchase
and Sale of Purchased Companies’ Equity Interests and Transferred Assets;
Assumption of Transferred Liabilities
SECTION
1.01. Sale
of the Purchased Companies’ Equity Interests and the Transferred Assets;
Assumption of the Transferred Liabilities. (a) Upon the
terms and subject to the conditions set forth in this Agreement, at the Closing,
the Seller shall, and shall cause the Subsidiary Transferors to, sell, transfer
and deliver to the Purchaser or its designees, and the Purchaser or its
designees shall purchase and accept from the Transferors, the Purchased
Companies’ Equity Interests and the Transferred Assets free and clear of all
Liens (other than Permitted Liens) for (i) (A) an aggregate purchase price
of $400,000,000 in cash plus (B) the Working Capital Overage, if
any, minus (C) the Working Capital Underage, if any, (the
“Estimated Purchase Price”) payable as set forth below in
Section 1.04(b) and subject to adjustment as set forth in Section 1.05
and (ii) the assumption of the Transferred Liabilities, which the Purchaser
shall, from and after the Closing, pay, perform and discharge when
due.
(b) At
least
two business days prior to the Closing Date, the chief financial officer
of the
Seller shall deliver to the Purchaser a reasonable estimate of Closing Working
Capital (the “Working Capital Estimate”) and the resulting Working
Capital Overage or Working Capital Underage, as the case may be, certifying
that
the estimate has been prepared in accordance with the requirements of this
Article I and that the line items of the Working Capital Estimate have been
calculated in the same manner, using the same methods, as the corresponding
line
item of the Working Capital Amount set forth on Exhibit F hereto was
calculated (except as otherwise provided in Exhibit F hereto),
whether or not doing so is in accordance with generally accepted accounting
principles in the United States of America (“GAAP”). The
foregoing principles are referred to in this Agreement as the “Working
Capital Principles”.
SECTION
1.02. Transfer
of the Excluded Assets; Excluded Liabilities; Consents of Third
Parties. (a) Upon the terms and subject to the
conditions set forth in this Agreement, immediately prior to the Closing,
the
Seller shall, and shall cause its subsidiaries (including the Transferred
Entities) to make, at the expense and risk of the Seller, such contributions,
transfers, assignments and acceptances in form and substance reasonably
acceptable to the parties, such that, upon the consummation of such
contributions, transfers, assignments and acceptances, the Seller or its
designees shall own the Excluded Assets and shall be responsible for the
Excluded Liabilities, without further recourse to any Transferred Entity,
the
Purchaser or its other affiliates. In furtherance of the foregoing,
(i) the Seller shall retain, and neither the Purchaser nor any Transferred
Entity shall acquire, and no Transferred Entity shall retain, any interest
in
the Excluded Assets and (ii) the Seller shall retain, and neither the
Purchaser nor any Transferred Entity shall assume, and no Transferred Entity
shall retain, any Excluded Liability.
(b) Notwithstanding
any other provision in this Agreement to the contrary, no asset, claim, right
or
benefit the assignment or transfer of which is otherwise contemplated by
this
Agreement shall be assigned or transferred if such assignment or transfer
(or
attempt to make such an assignment or transfer) without the consent or approval
of a third party would constitute a breach or other contravention of the
rights
of such third party (such assets being collectively referred to herein as
“Restricted Assets”) until such consent or approval is obtained; and any
assignment or transfer of a Restricted Asset shall be made subject to such
consent or approval being obtained. If any such consent or approval
is not obtained prior to the Closing, (i) the assigning party, upon request
of the other party, shall continue to use its commercially reasonable efforts
to
cooperate with the other party in attempting to obtain any such consent or
approval and (ii) the parties agree to negotiate in good faith with respect
to alternative arrangements (such as a license, sublease or operating agreement)
until such time as such consent or approval has been obtained which would
result
in the assignee party receiving all the benefits and bearing all the costs,
liabilities and burdens with respect to any such Restricted Asset.
SECTION
1.03. Closing;
Closing Date. The closing of the Acquisition (the
“Closing”) shall take place at the offices of Cravath, Swaine &
Xxxxx LLP, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00
a.m., New York City time, on the date specified by the parties, which shall
be no later than the third business day following the satisfaction (or, to
the
extent permitted by applicable Law, the waiver) of the conditions set forth
in
Section 7.01, or, if on such day any condition set forth in
Section 7.02 or Section 7.03 (other than any such condition that by
its nature is to be satisfied at the Closing) has not been satisfied (or,
to the
extent permitted by applicable Law, waived by the party entitled to the benefit
thereof), as soon as practicable after all the conditions set forth in
Article VII (other than such conditions that by their nature are to be
satisfied at the Closing) have been satisfied (or, to the extent permitted
by
applicable Law, waived by the parties entitled to the benefit thereof), or
at
such other place, time and date as shall be agreed between the Purchaser
and the
Seller; provided, however, that in no event shall the Closing occur prior
to 31
calendar days from the date hereof. Notwithstanding the foregoing, if
the Purchaser has not received the proceeds of the Debt Financing on the
date on
which the Closing would otherwise occur pursuant to the immediately preceding
sentence, the Purchaser shall have the right to delay the Closing for up
to 20
calendar days therefrom by providing written notice to the Seller (which
notice
shall include the new date on which the Closing shall occur and shall be
given
no later than the date on which the Closing would otherwise occur pursuant
to
the immediately preceding sentence). The date to which the Closing is
delayed pursuant to the written notice referred to in the immediately preceding
sentence is referred to in this Agreement as the “Extension Date” and the
date on which the Closing takes place is referred to in this Agreement as
the
“Closing Date”. The Closing shall be deemed to be effective as
of the close of business on the Closing Date.
SECTION
1.04. Transactions
To Be Effected at the Closing. At the Closing:
(a) the
Seller shall deliver to the Purchaser or its designees (i) in the case of
the Purchased Companies’ Equity Interests that are certificated, the
certificates representing such Purchased Companies’ Equity Interests, duly
endorsed in blank or accompanied by stock or unit powers duly endorsed in
blank
in proper form for transfer or other proper instruments of transfer, with
appropriate transfer Tax stamps, if any, affixed, (ii) such appropriately
executed deeds (in recordable form), bills of sale, assignments and other
instruments of transfer relating to the Transferred Assets and the Transferred
Liabilities, in the form and substance required by applicable Law and reasonably
acceptable to the Purchaser to demonstrate the sale, transfer, delivery and
assumption of the Transferred Assets and the Transferred Liabilities to or
by
the Purchaser or its designees and (iii) such other documents as the
Purchaser may reasonably request to demonstrate satisfaction of the conditions
and compliance with the covenants set forth in this Agreement, including
the
sale, transfer, delivery and assumption of the Purchased Companies’ Equity
Interests, the Transferred Assets and the Transferred Liabilities to or by
the
Purchaser or its designees;
(b) the
Purchaser or its designees shall deliver to the Seller (i) payment by wire
transfer, to one or more bank accounts designated in writing by the Seller
(such
designation to be made at least two business days prior to the Closing Date),
of
immediately available funds in an amount equal to the Estimated Purchase
Price,
(ii) such appropriately executed deeds (in recordable form), bills of sale,
assignments and other instruments of transfer relating to the Transferred
Assets
and the Transferred Liabilities, in the form and substance required by
applicable Law and reasonably acceptable to the Seller to demonstrate the
sale,
transfer, delivery and assumption of the Transferred Assets and the Transferred
Liabilities to or by the Purchaser or its designees and (iii) such other
documents as the Seller may reasonably request to demonstrate satisfaction
of
the conditions and compliance with the covenants set forth in this Agreement,
including the sale, transfer, delivery and assumption of the Purchased
Companies’ Equity Interests, the Transferred Assets and the Transferred
Liabilities to or by the Purchaser or its designees;
(c) the
Seller shall deliver to the Purchaser a copy, duly executed by the Seller,
and
the Purchaser shall deliver to the Seller a copy, duly executed by the
Purchaser, of the Transition Services Agreement substantially in the form
as set
forth in Exhibit B hereto (the “Transition Services
Agreement”);
(d) the
Seller shall deliver to the Purchaser a copy, duly executed by the Seller,
and
the Purchaser shall deliver to the Seller a copy, duly executed by the
Purchaser, of the Winchester Supply Agreement substantially in the form as
set
forth in Exhibit C hereto (the “Winchester Supply
Agreement”);
(e) the
Seller shall deliver to the Purchaser a copy, duly executed by the Seller,
and
the Purchaser shall deliver to the Seller a copy, duly executed by the
Purchaser, of the Environmental Access Agreement substantially in the form
as
set forth in Exhibit D hereto (the “Environmental Access
Agreement”);
(f) the
Seller shall deliver to the Purchaser a copy, duly executed by the Seller,
and
the Purchaser shall deliver to the Seller a copy, duly executed by the
Purchaser, of the Trademark License Agreement substantially in the form as
set
forth in Exhibit E hereto (the “Trademark License
Agreement”); and
(g) each
of
the Purchaser and the Seller shall deliver to the other party the certificates
referred to in Sections 7.02 and 7.03, as applicable.
SECTION
1.05. Post-Closing
Purchase Price Adjustment. (a) Within 60 days after the
Closing Date, the Purchaser shall prepare and deliver to the Seller (i) a
statement (the “Statement”) setting forth the Closing Working Capital and
(ii) a certificate of the Purchaser stating that the Statement has been prepared
in accordance with the requirements of this Section 1.05.
(b) During
the 30 day period following the Seller’s receipt of the Statement, the Seller
and its advisors (including its accountants) shall be permitted to review
the
working papers of the Purchaser and its accountants relating to the Statement;
provided that the Seller and its advisors (including its accountants)
shall have executed all release letters reasonably requested by the Purchaser
and its accountants in connection therewith. The Statement shall
become final and binding upon the parties on the 30th day following
delivery thereof, unless the Seller gives written notice of its disagreement
with the Statement (the “Notice of Disagreement”) to the Purchaser prior
to such date. Any Notice of Disagreement shall be signed by the
Seller and shall (i) specify in reasonable detail the nature of any
disagreement so asserted, (ii) only include disagreements based on
mathematical errors or based on the Closing Working Capital not being calculated
in accordance with this Article I and (iii) specify what the Seller
reasonably believes is the correct amount of the Closing Working Capital
based
on the disagreements set forth in the Notice of Disagreement, including a
reasonably detailed description of the adjustments applied to the Statement
in
calculating such amount. If the Notice of Disagreement is received by
the Purchaser within the aforementioned thirty day period, then the Statement
(as revised in accordance with this sentence) shall become final and binding
upon the Purchaser and the Seller on the earlier of (i) the date the
Purchaser and the Seller resolve in writing any differences they have with
respect to the matters specified in the Notice of Disagreement or (ii) the
date any disputed matters are finally resolved in writing by the Accounting
Firm. During the thirty day period following the delivery of the
Notice of Disagreement, the Purchaser and the Seller shall seek in good faith
to
resolve in writing any differences that they may have with respect to the
matters specified in the Notice of Disagreement. During such period,
the Purchaser and its advisors (including its accountants) shall have access
to
the working papers of the Seller and its accountants prepared in connection
with
the Notice of Disagreement; provided that the Purchaser and its advisors
(including its accountants) shall have executed all release letters reasonably
requested by the Seller or its accountants in connection
therewith. At the end of such 30 day period, the Purchaser and the
Seller shall submit to an independent accounting firm (the “Accounting
Firm”) for resolution any matters that remain in dispute and which were
properly included in the Notice of Disagreement, in the form of a written
brief. The Accounting Firm shall be an internationally recognized
independent public accounting firm as shall be agreed upon by the parties
hereto
in writing that is not either the Purchaser’s or the Seller’s outside accounting
firm involved with the Closing Working Capital under this
Agreement. The Purchaser and the Seller shall jointly instruct the
Accounting Firm that it (i) shall review only the matters that were
properly included in the Notice of Disagreement and which remain unresolved,
(ii) shall make its determination in accordance with the requirements of
this Section 1.05 and (iii) shall to the extent practicable render its
decision within 30 days from the submission of such matters. Judgment
may be entered upon the determination of the Accounting Firm in any court
having
jurisdiction over the party against which such determination is to be
enforced. The fees, costs and expenses of the Accounting Firm
incurred pursuant to this Section 1.05(b) shall be shared equally by the
Purchaser and the Seller. The fees, costs and expenses of the
Purchaser incurred in connection with its preparation of the Statement, its
review of any Notice of Disagreement and its preparation of its written brief
submitted to the Accounting Firm shall be borne by the Purchaser, and the
fees,
costs and expenses of the Seller incurred in connection with its review of
the
Statement, its preparation, review and certification of the Notice of
Disagreement and its preparation of its written brief submitted to the
Accounting Firm shall be borne by the Seller.
(c) The
Estimated Purchase Price shall be increased by the amount by which the Closing
Working Capital exceeds the Working Capital Estimate, and the Estimated Purchase
Price shall be decreased by the amount by which the Closing Working Capital
is
less than the Working Capital Amount (the Estimated Purchase Price as so
increased or decreased shall hereinafter be referred to as the “Final
Purchase Price”). If the Estimated Purchase Price is less than
the Final Purchase Price, the Purchaser shall, and if the Estimated Purchase
Price is more than the Final Purchase Price, the Seller shall, within five
business days after the Statement becomes final and binding on the parties,
make
payment by wire transfer of immediately available funds of the amount of
such
difference, together with interest thereon at a rate equal to the rate of
interest from time to time announced publicly by Citibank, N.A., as its prime
rate, calculated on the basis of the actual number of days elapsed divided
by
365, from (and including) the Closing Date through (but not including) the
date
of payment.
(d) The
parties acknowledge and agree that the adjustment to the Estimated Purchase
Price, if any, contemplated by this Section 1.05 can only be effected as
intended by the parties if the calculation of the Closing Working Capital
is
done in accordance with the Working Capital Principles. The scope of
the disputes to be resolved by the Accounting Firm shall be limited to whether
there were mathematical errors in the Statement and whether the calculation
of
the Closing Working Capital was done in accordance with this Section 1.05,
and
the Accounting Firm is not to make any other determination, including any
determination as to whether GAAP was followed in calculating the Working
Capital
Amount, the Closing Working Capital or the Statement or as to whether the
Working Capital Amount is correct. Any determinations by the
Accounting Firm, and any work or analyses performed by the Accounting Firm
in
connection with its resolution of any dispute under this Section 1.05, shall
not
be admissible in evidence in any suit, action or other proceeding between
the
parties, other than to the extent necessary to enforce payment obligations
under
Section 1.05(c). With respect to the final calculation of Closing
Working Capital pursuant to the terms of this Agreement, the amount of any
item
determined by the Accounting Firm shall not be greater than the larger of
the
amounts or smaller than the smaller of the amounts as prepared by the Purchaser
or the Seller.
(e) Following
the Closing, the Purchaser shall not take any action with respect to the
accounting books and records of the Business on which the Statement is to
be
based primarily for the purpose of obstructing, preventing or otherwise
affecting the results of the procedures set forth in this Section 1.05
(including the amount of the Closing Working Capital or any other amount
included in the Working Capital Amount or the Statement or the preparation
of
the Statement). From and after the Closing Date through the
resolution of any adjustment to the Estimated Purchase Price contemplated
by
this Section 1.05, the Purchaser shall (i) assist, and shall cause its
subsidiaries (including the Transferred Entities) to assist, the Seller,
its
advisors (including its accountants) and other representatives in the review
of
the Statement and (ii) afford to the Seller, its advisors (including its
accountants) and other representatives, reasonable access during normal business
hours to the personnel, properties, books and records of the Business to
the
extent relevant to the review of the Statement or the adjustment to the
Estimated Purchase Price contemplated by this Section 1.05.
Representations
and Warranties
Relating
to the Seller and the Purchased Companies’ Equity Interests
Except
as
set forth in the letter dated as of the date of this Agreement delivered
by the
Seller to the Purchaser in connection with the execution and delivery of
this
Agreement (the “Seller Letter”) (each section of which qualifies only the
correspondingly numbered representation and warranty and only such other
representations and warranties to the extent a matter in such section is
disclosed in such a manner as to make its relevance to the information called
for by such other representation and warranty reasonably apparent), the Seller
hereby represents and warrants to the Purchaser on the date of this Agreement
and on the Closing Date as follows:
SECTION
2.01. Organization,
Standing and Power. Each Transferor is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which
it is
organized and has all requisite power and authority and possesses all
governmental franchises, licenses, permits, authorizations and approvals
necessary (a) to enable it to own, lease or otherwise hold its assets and
properties and (b) to conduct its business as currently conducted, other
than such franchises, licenses, permits, authorizations and approvals the
lack
of which, individually or in the aggregate, is not reasonably likely to have
a
material adverse effect on the Transferors. The Seller has made
available to the Purchaser complete and correct copies of each Transferor’s
organizational documents, as amended, supplemented or otherwise modified
through
(and including) the date of this Agreement.
SECTION
2.02. Authority;
Execution and Delivery; Enforceability. The Seller has all
requisite corporate power and authority and full legal capacity to execute
this
Agreement and each Transferor has all requisite corporate or partnership
power
and authority, as the case may be, and full legal capacity to execute the
other
agreements and instruments executed and delivered in connection with this
Agreement (such other agreements, the “Ancillary Agreements”) to which it
is, or is specified to be, a party, to fully perform its obligations hereunder
or thereunder and to consummate the Acquisition and the other transactions
contemplated hereby and thereby. The execution and delivery by the
Seller of this Agreement and the execution and delivery by each Transferor
of
the Ancillary Agreements to which it is, or is specified to be, a party and
the
consummation by the Transferors of the Acquisition and the other transactions
contemplated hereby and thereby have been duly authorized by all necessary
action on the part of the Transferors, and no other action on the part of
the
Transferors is necessary to authorize this Agreement or the Ancillary Agreements
or the consummation of the Acquisition or the other transactions contemplated
hereby or thereby. The Seller has duly executed and delivered this
Agreement and, prior to the Closing, each Transferor will have duly executed
and
delivered each Ancillary Agreement to which it is, or is specified to be,
a
party, and, assuming their due execution and delivery by the Purchaser, this
Agreement constitutes the Seller’s, and each Ancillary Agreement to which it is,
or is specified to be, a party will, after execution and delivery by each
Transferor, constitute such Transferor’s, legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other Laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at
Law.
SECTION
2.03. No
Conflicts; Consents. The execution and delivery by the Seller of
this Agreement do not, the execution and delivery by each Transferor of each
Ancillary Agreement to which it is, or is specified to be, a party will not,
and
the consummation of the Acquisition and the other transactions contemplated
hereby and thereby and compliance by the Transferors with the terms hereof
and
thereof will not, conflict with, or result in any violation or breach of,
or
default (with or without notice or lapse of time, or both) under, or give
rise
to a right of, or result in, termination, cancellation or acceleration of
any
obligation or to loss of a material benefit under, or to increased, additional,
accelerated or guaranteed rights or entitlements of any person under, or
result
in the creation of any Lien upon any of the assets or properties of the
Transferors or the Business under, any provision of (a) the certificate of
incorporation or formation, by-laws or other organizational documents of
the
Transferors or any Transferred Entity, (b) any material written contract,
lease, sublease, license, indenture, bond, debenture, note, mortgage, guarantee,
instrument, agreement, deed of trust, conditional sales contract or other
legally binding arrangement, together with modifications and amendments thereto
(each, a “Contract”), to which any Transferor or any Transferred Entity
is a party or by which any of the Transferor’s or the Business’s assets or
properties is bound or (c) subject to the governmental filings and other
matters referred to in the immediately following sentence, any material
judgment, order, writ, injunction, legally binding agreement with a Governmental
Entity, stipulation or decree (each, a “Judgment”) or material statute,
law (including common law), ordinance, code, rule or regulation of a
Governmental Entity (each, a “Law”) applicable to any Transferor or the
Business or any of their assets or properties. No consent, approval,
license, permit, order or authorization (each, a “Consent”) of, or
registration, declaration or filing with, any national, state, county, local,
municipal or other government or any court of competent jurisdiction,
administrative agency or commission or other governmental authority or
instrumentality (each, a “Governmental Entity”) is required to be
obtained or made by or with respect to any Transferor in connection with
the
execution, delivery and performance of this Agreement or any Ancillary Agreement
or the consummation of the Acquisition or the other transactions contemplated
hereby and thereby, other than (A) compliance with and filings under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the “HSR
Act”) and compliance with and filings and approvals under applicable foreign
merger control or competition Laws (the “Foreign Merger Control Laws”),
(B) consents and approvals required for the assignment or novation of, or
pursuant to “change in control” provisions in, governmental contracts,
(C) compliance with and filings under the International Traffic in Arms
Regulations, 22 C.F.R. Parts 120-130 (“ITAR”), (D) compliance with and
filings and notifications under applicable Environmental Laws, including
Sections 22a-134 through 22a-134(e) of the Connecticut General Statutes,
commonly referred to as the Connecticut Property Transfer Law (the
“CPTL”), (E) compliance with and filings under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and
regulations promulgated thereunder, (F) compliance with and filings or
notices required by the rules and regulations of the New York Stock
Exchange (the “NYSE”) and (G) those that may be required solely by
reason of the Purchaser’s (as opposed to any third party’s) participation in the
Acquisition and the other transactions contemplated by this Agreement and
by the
Ancillary Agreements.
SECTION
2.04. The
Purchased Companies’ Equity Interests. The Seller has good and
valid title to the Purchased Companies’ Equity Interests, free and clear of all
Liens and is the record and beneficial owner thereof. Assuming the
Purchaser or its applicable designee, as the case may be, has the requisite
power and authority to be the lawful owner of the Purchased Companies’ Equity
Interests, upon (a) delivery to the Purchaser or its designees at the
Closing of (i) in the case of the Purchased Companies’ Equity Interests
that are certificated, certificates representing such Purchased Companies’
Equity Interests, duly endorsed in blank or accompanied by stock or unit
powers
duly endorsed in blank in proper form for transfer or other proper instruments
of transfer and (ii) in the case of Purchased Companies’ Equity Interests
that are not certificated, proper instruments of transfer and (b) the
Seller’s receipt of the Estimated Purchase Price, good and valid title to the
Purchased Companies’ Equity Interests will pass to the Purchaser or its
designees, free and clear of any Liens, other than those arising from acts
of
the Purchaser or its affiliates.
SECTION
2.05. Brokers
or Finders. No agent, broker, investment banker or other person
is or will be entitled to any broker’s or finder’s fee or any other commission
or similar fee from the Seller or its affiliates (including the Transferred
Entities) in connection with the transactions contemplated by this Agreement,
except Xxxxxxx, Xxxxx & Co., whose fees, costs and expenses will be
paid by the Seller.
Representations
and Warranties
Except
as
set forth in the Seller Letter (each section of which qualifies only the
correspondingly numbered representation and warranty and only such other
representations and warranties to the extent a matter in such section is
disclosed in such a manner as to make its relevance to the information called
for by such other representation and warranty reasonably apparent), the Seller
hereby represents and warrants to the Purchaser on the date of this Agreement
and on the Closing Date as follows:
SECTION
3.01. Organization
and Standing; Books and Records.
(a) Each
Transferred Entity is duly organized, validly existing and, except in any
jurisdiction that does not recognize such concept, in good standing under
the
laws of the jurisdiction in which it is organized. Each Transferred
Entity has all requisite power and authority necessary (i) to enable it to
own, lease or otherwise hold its assets and properties and (ii) to conduct
its business as currently conducted. Each Transferred Entity is duly
qualified and in good standing to do business as a foreign entity in each
jurisdiction in which the conduct or nature of the Business or the ownership,
leasing or holding of the Business’s properties makes such qualification
necessary, except such jurisdictions where the failure to be so qualified
or in
good standing, individually or in the aggregate, is not reasonably likely
to
have a material adverse effect on the Business.
(b) The
Seller has made available to the Purchaser complete and correct copies of
the
organizational documents of each Transferred Entity, each as amended,
supplemented or otherwise modified through (and including) the date of this
Agreement.
SECTION
3.02. Equity
Interests in the Transferred Entities; Equity Interests in Other Persons;
Indebtedness. (a) Section 3.02(a) of the Seller
Letter sets forth the name and the jurisdiction of organization of each
Transferred Entity. Section 3.02(a) of the Seller Letter
sets forth, as of the date of this Agreement and for each Transferred Entity,
the number of authorized equity interests in such Transferred Entity, the
number
of outstanding equity interests in such Transferred Entity and the record
and
beneficial owners thereof. Except for the Transferred Equity
Interests, as of the date of this Agreement, there are no equity interests
in a
Transferred Entity issued, reserved for issuance or outstanding and there
are no
preemptive or similar rights on the part of any holder of any class of
securities of any Transferred Entity. One of the Transferred Entities
has good and valid title to the Purchased Company Subsidiaries’ Equity
Interests, free and clear of all Liens, and is the record and beneficial
owner
thereof. The Transferred Equity Interests have been duly authorized
and validly issued and are fully paid and nonassessable. As of the
date of this Agreement, there are not any bonds, debentures, notes or other
indebtedness of any Transferred Entity having the right to vote (or that
are
convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which holders of the Transferred Equity
Interests may vote (“Transferred Entity Voting Debt”). As of
the date of this Agreement, there are not any options, warrants, rights,
convertible or exchangeable securities, “phantom” stock rights, stock
appreciation rights, stock-based performance units, commitments, Contracts,
arrangements or undertakings to which any Transferred Entity is a party or
by
which any of them is bound (i) obligating any Transferred Entity to issue,
deliver or sell, or cause to be issued, delivered or sold, additional units
of
its equity interests or any security convertible into, or exercisable or
exchangeable for, any equity interest in any Transferred Entity or any
Transferred Entity Voting Debt, (ii) obligating any Transferred Entity to
issue, grant, extend or enter into any such option, warrant, security, right,
unit, commitment, Contract, arrangement or undertaking or (iii) that give
any person the right to receive any economic benefit or right similar to
or
derived from the economic benefits and rights accruing to holders of the
Transferred Equity Interests.
(b) Except
for equity interests in another Transferred Entity, as of the date of this
Agreement, no Transferred Entity owns, directly or indirectly, any equity
interests in any other person.
(c) Section 3.02(c)
of the Seller Letter sets forth a complete and correct list, as of September
30,
2007, of all outstanding indebtedness of each Transferred Entity.
SECTION
3.03. Authority;
Execution and Delivery; Enforceability. Each Transferred Entity
has all requisite power and authority to execute the Ancillary Agreements
to
which it is, or is specified to be, a party, to perform fully its obligations
thereunder and to consummate the transactions contemplated
thereby. The execution and delivery by each Transferred Entity of the
Ancillary Agreements to which it is, or is specified to be, a party and the
consummation by each Transferred Entity of the transactions contemplated
thereby
have been duly authorized by all necessary action on the part of each
Transferred Entity, and no other action on the part of any Transferred Entity
is
necessary to authorize the Ancillary Agreements or the consummation of the
transactions contemplated thereby. Prior to the Closing, each
Transferred Entity will have duly executed and delivered each Ancillary
Agreement to which it is, or is specified to be, a party, and each Ancillary
Agreement to which it is, or is specified to be, a party will, after the
Closing, constitute its legal, valid and binding obligation, enforceable
against
it in accordance with such Ancillary Agreement’s terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other Laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at
Law.
SECTION
3.04. No
Conflicts; Consents. The execution and delivery by any
Transferred Entity of each Ancillary Agreement to which it is, or is specified
to be, a party will not, and the consummation of the transactions contemplated
thereby and compliance by the Transferred Entities with the terms thereof
will
not, conflict with, or result in any violation or breach of, or default (with
or
without notice or lapse of time, or both) under, or give rise to a right
of, or
result in, termination, cancellation or acceleration of any obligation or
to
loss of a material benefit under, or to increased, additional, accelerated
or
guaranteed rights or entitlements of any person under, or result in the creation
of any Lien upon any of the assets or properties of the Business or any
Transferred Entity under, any provision of (a) the certificate of
incorporation or formation, by-laws or other organizational documents of
any
Transferred Entity, (b) any material Contract to which any Transferred
Entity is a party or by which any of the Business’s assets or properties is
bound or (c) subject to the governmental filings and other matters referred
to in the immediately following sentence, any material Judgment or material
Law
applicable to the Business or any Transferred Entity or any of their assets
or
properties. No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to the Business or any Transferred Entity in connection with the
execution, delivery and performance of this Agreement or any Ancillary Agreement
or the consummation of the Acquisition or the other transactions contemplated
hereby and thereby, other than (A) compliance with and filings under the
HSR Act and compliance with and filings and approvals under Foreign Merger
Control Laws, (B) consents and approvals required for the assignment or
novation of, or pursuant to “change in control” provisions in, governmental
contracts, (C) compliance with and filings under ITAR, (D) compliance with
and filings and notifications under applicable Environmental Laws, including
the
CPTL, (E) those that may be required solely by reason of the Purchaser’s
(as opposed to any third party’s) participation in the Acquisition and the other
transactions contemplated by this Agreement and by the Ancillary Agreements
and
(F) the filing of the relevant instruments in the requisite jurisdictions
in order to create or perfect Liens granted to secure the indebtedness and
other
obligations incurred as a result of the consummation of the Debt
Financing.
SECTION
3.05. Financial
Statements; Undisclosed Liabilities. (a) Section 3.05(a)
of the Seller Letter sets forth complete and correct copies of the following
financial statements (collectively, the “Financial
Statements”): (i) the audited combined consolidated balance
sheets of the Business as of December 31, 2005 and 2006, and the related
audited combined consolidated statements of income, net investment and cash
flows for the fiscal years then ended (including the notes contained therein
or
annexed thereto) (the financial statements described in this clause (i) are
referred to as the “Audited Financial Statements”) and (ii) the
unaudited combined consolidated balance sheet of the Business as of
August 31, 2007, and the related unaudited combined consolidated statement
of income, net investment and cash flows for the eight month period then
ended
and for the corresponding period of the prior year (the financial statements
described in this clause (ii) are collectively referred to as the
“Unaudited Financial Statements”). The Financial Statements
have been prepared in conformity with GAAP as consistently applied to the
Business (except in each case as described in the notes thereto) and fairly
present in accordance with GAAP (subject to, in the case of the Unaudited
Financial Statements, (A) normal, recurring year-end audit adjustments
which adjustments will be similar in nature to those made in connection with
the
Audited Financial Statements and will not be material to the Business as
compared to those made in connection with the Audited Financial Statements
and
(B) the absence of footnotes) the combined consolidated financial
condition, assets, liabilities, results of operations and cash flows of the
Business as of the dates thereof and for the periods indicated.
(b) No
Transferred Entity has any liability or obligation of any nature (whether
accrued, absolute, contingent, unasserted or otherwise), except (i) as
disclosed or reserved against on the face of the Balance Sheet or the notes
thereto, (ii) for liabilities and obligations incurred in the ordinary
course of business since the date of the Balance Sheet, (iii) for Taxes and
(iv) liabilities and obligations that, individually and in the
aggregate, are not reasonably likely to have a material adverse effect on
the
Business.
SECTION
3.06. Assets
Other than Real Property Interests. (a) The Transferors or
one of the Transferred Entities has good and valid title to or valid leases
of
all the material assets reflected on the balance sheet included in the Unaudited
Financial Statements or thereafter acquired, other than those disposed of
since
the date of the balance sheet included in the Unaudited Financial Statements
in
the ordinary course of business, in each case free and clear of all liens,
security interests, pledges, mortgages, leases, subleases, licenses, covenants,
charges, easements, rights of way, restrictions on real property interests,
encroachments or similar exceptions (collectively, “Liens”), except for
(i) such Liens as are set forth in Section 3.06(a) of the
Seller Letter (all of which shall be discharged at or prior to Closing,
(ii) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens
arising or incurred in the ordinary course of business with respect to a
liability that is not yet due or delinquent or as to which adequate reserves
are
maintained, Liens arising under original purchase price conditional sales
contracts and equipment leases with third parties entered into in the ordinary
course of business and Liens for Taxes and (iii) other imperfections of
title or other similar encumbrances not securing the payment of indebtedness,
if
any, that, individually and in the aggregate, do not impair, and are not
reasonably likely to impair, the continued use and operation of the assets
to
which they relate in the conduct of the Business as currently conducted (the
Liens described in clauses (i) through (iii) above, together with
the Liens referred to in clauses (ii) through (v) of
Section 3.07(a), are referred to collectively as “Permitted
Liens”).
(b) Section 3.06(a) does
not relate to real property or interests in real property, such items being
the
subject of Section 3.07, or to Intellectual Property, such items being the
subject of Section 3.08.
SECTION
3.07. Real
Property. (a) Section 3.07(a) of the Seller
Letter sets forth a complete and correct list, as of the date of this Agreement,
of all real property and interests in real property that are owned by the
Seller
or its subsidiaries (other than the Transferred Entities) and are exclusively
or
primarily used in the Business and all real property and interests in real
property that are owned by the Transferred Entities (each, an “Owned
Property”), in each case, including the name of the entity owning each such
Owned Property (each a “Property Owning
Entity”). Section 3.07(a) of the Seller Letter sets
forth a complete and correct list, as of the date of this Agreement, of all
real
property and interests in real property of which the Seller or its subsidiaries
(other than the Transferred Entities) is a lessee, sublessee, licensee or
occupant and that are exclusively or primarily used in the Business and all
real
property and interests in real property of which the Transferred Entities
is a
lessee, sublessee, licensee or occupant (each, a “Leased
Property”). Each Property Owning Entity has good and valid fee
title to each Owned Property it owns (including any and all improvements
located
thereon) and each Leasing Entity has good and valid title to the leasehold
estates in all Leased Property it leases (an Owned Property or a Leased Property
being sometimes referred to herein, individually, as a “Transferred Real
Property”), in each case free and clear of all Liens, except (i) Liens
described in clauses (ii) and (iii) of Section 3.06(a),
(ii) such Liens as are set forth in Section 3.07(a) of the
Seller Letter (all of which shall be discharged at or prior to Closing),
(iii) leases, subleases and similar agreements set forth in
Section 3.07(a) of the Seller Letter, (iv) easements,
covenants, rights-of-way and other similar restrictions of record and (v)
(A) zoning, building and other similar restrictions and (B) Liens that
have been placed by any developer, landlord or other third person on property
over which the Seller or one of its subsidiaries has easement rights or on
any
Leased Property and subordination or similar agreements relating thereto.
None of the items set forth in clauses (i) and (iii) through
(v) above, individually or in the aggregate, is reasonably likely to impair
the continued use and operation of the Transferred Real Property to which
it or
they relate in the conduct of the Business as currently conducted.
(b) Section 3.07(b)
of the Seller Letter sets forth, as of the date of this Agreement, each lease,
sublease, license or occupancy agreement in respect of a Leased Property
(each,
a “Lease”), which schedule sets forth the date of and parties to each
Lease and any amendments or modifications thereto (each of the Seller or
any of
its subsidiaries a party thereto, a “Leasing Entity”). Each
Lease is, as of the date of this Agreement, a legal, valid and binding
obligation of the Leasing Entity party thereto and is in full force and
effect. As of the date of this Agreement, the Leasing Entity is in
possession of each applicable Leased Property. As of the date of this
Agreement, neither the lessee under any Lease (or sublessee in the case of
a
sublease) nor, to the knowledge of the Seller, any other party to such Lease
is
in material breach or material default under such Lease and, to the knowledge
of
the Seller, no event has occurred and no condition exists which, with the
giving
of notice or lapse of time or both, would constitute such a default or
breach. The Seller has made available to the Purchaser a complete and
correct copy of each Lease, in each case as amended, supplemented or otherwise
modified through (and including) the date of this Agreement.
(c) Neither
Seller nor any of its subsidiaries has received written notice of any pending,
threatened or contemplated condemnation proceeding affecting the Transferred
Real Property or any part thereof or of any sale or other disposition of
the
Transferred Real Property or any part thereof in lieu of
condemnation.
(d) Except
as
set forth in a Lease, neither the Seller nor any of its subsidiaries owns,
holds, has granted or is obligated under any option, right of first offer,
right
of first refusal or other contractual right to purchase, acquire, sell or
dispose of the Transferred Real Property or any portion thereof or interest
therein.
SECTION
3.08. Intellectual
Property. (a) Section 3.08(a) of the Seller
Letter sets forth a complete and correct list, as of the date of this Agreement,
of (i) all Intellectual Property owned by the Seller or its subsidiaries
and exclusively or primarily used in the Business (the “Owned Intellectual
Property”) and (ii) all licenses under which the Seller or its
subsidiaries are licensees to Intellectual Property owned by third parties
and
exclusively or primarily used in the Business (the “Licensed Intellectual
Property”) and all licenses under which the Seller or its subsidiaries are
licensees to Transferred Technology owned by third parties, with the exception
of “off the shelf” software. The Owned Intellectual Property and the
Licensed Intellectual Property are referred to collectively as the
“Transferred Intellectual Property.” With respect to all Owned
Intellectual Property that is registered or subject to an application for
registration, Section 3.08(a) of the Seller Letter sets forth a
list, as of the date of this Agreement, of all jurisdictions in which such
Owned
Intellectual Property is registered or registrations have been applied for
and
all registration and application numbers. To the knowledge of the
Seller, all such registrations and applications are valid, subsisting, in
full
force and effect, and have not been or are not, as applicable, cancelled,
expired, abandoned or otherwise terminated, and payment of all due renewal
and
maintenance fees in respect thereof, and all filings related thereto, have
been
duly made. As of the date of this Agreement, (i) the Seller or one of
its subsidiaries is the sole and exclusive owner, free and clear of all Liens
(other than Permitted Liens), of all Owned Intellectual Property and all
Transferred Technology owned by the Seller or such subsidiary, (ii) has the
right to license, without payment to any other person, any patent included
in
the Owned Intellectual Property within the relevant jurisdiction and (iii)
has
the right to prevent others from making, selling, importing or using, without
payment to any other person, products based on any patent included in the
Owned
Intellectual Property within the relevant jurisdiction. As of the
date of this Agreement, the Seller or one of its subsidiaries has a valid
written license with respect to all Licensed Intellectual Property and all
material Transferred Technology that is licensed to the Seller or its
subsidiaries. Neither the Seller nor its applicable subsidiary is in
default in any material respect under any such license. The consummation of
the Acquisition and the other transactions contemplated by this Agreement
do not
conflict in any material respect with, materially alter or impair any rights
in
and to any Transferred Intellectual Property or any Transferred
Technology.
(b) As
of the
date of this Agreement, neither the Seller nor any Transferred Entity has
granted any license of any kind relating to any Technology that is owned
by or
licensed to the Seller or its subsidiaries and exclusively or primarily used
in
the Business (the “Transferred Technology”) or Transferred Intellectual
Property, or the marketing or distribution thereof, except for non-exclusive
licenses to end users in the ordinary course of business. To the
knowledge of the Seller, the conduct of the Business as currently conducted
does
not violate, conflict with or infringe the Intellectual Property or Technology
of any other person. As of the date of this Agreement, no claims are
pending or, to the knowledge of the Seller, threatened, against the Seller
or
one of its subsidiaries by any person with respect to the ownership, validity,
enforceability, effectiveness or use in the Business of any Intellectual
Property or Technology and, since January 1, 2005 through (and including)
the date of this Agreement, neither the Seller nor any Transferred Entity
has
received any written communication alleging that the Seller or one of its
subsidiaries violated any rights relating to Intellectual Property or Technology
of any person. To the knowledge of the Seller, no third party is
infringing or otherwise violating the Owned Intellectual Property and there
is
no litigation currently pending or, to the knowledge of the Seller, threatened
alleging the same. All trade secrets and confidential information
that are part of Transferred Technology have been maintained in confidence
in
accordance with protection procedures customarily used in the industry to
protect rights of like importance. To the Seller’s knowledge, all
computer software programs used in the conduct of the Business perform in
material conformance with their documentation and are free from any material
software defect.
SECTION
3.09. Contracts. (a) Except
as set forth on Section 3.09(a) of the Seller Letter, as of the date of
this Agreement, neither a Transferred Entity nor the Business is a party
to or
bound by any:
(i) employment
agreement of any employee or former employee on a full-time, part-time,
consulting or other basis providing annual compensation in excess of $100,000
for any such person employed in the United States and $200,000 for any such
person employed outside of the United States or providing material severance,
retention or change of control benefits;
(ii) collective
bargaining agreement or other contract with any labor organization, union
or
association, other than any mandatory national collective bargaining
agreement;
(iii)
Contract
with (A) the Seller or one of its affiliates (other than a Transferred
Entity) or (B) any current or former director, officer or employee of a
Transferred Entity or any affiliate of the Seller (other than any employment
agreement);
(iv)
Contract
that, following the Closing, (A) restricts the ability of the Business to
compete in any business or with any person in any geographic area,
(B) provides for exclusivity or any similar requirement, (C) requires
the Business to grant “most favored nation” pricing or terms or
(D) restricts the ability of the Business to solicit or hire any
person;
(v)
Contract
(excluding purchase orders issued in the ordinary course of business) involving
payment by a Transferred Entity of more than $1,000,000 or extending for
a term
more than 180 days from the date of this Agreement;
(vi)
Contract
(excluding sale orders issued in the ordinary course of business) involving
the
obligation of a Transferred Entity to deliver products or services for payment
of more than $1,000,000 or extending for a term more than 180 days from the
date
of this Agreement;
(vii) commodity
agreement, interest rate agreement or currency agreement;
(viii)
Contract
with respect to any joint venture, partnership or similar
arrangement;
(ix)
Contract
for the lease of personal property to or from any person providing for lease
payments in excess of $250,000 per annum;
(x)
Contract
under which a Transferred Entity has incurred, assumed or guaranteed any
indebtedness or under which it has created a Lien on any of its assets, tangible
or intangible, other than a Permitted Lien;
(xi)
Contract
under which a Transferred Entity has advanced or loaned any other person
amounts
in the aggregate exceeding $250,000;
(xii)
Contracts
for acquisitions of the capital stock or assets of another person (whether
by
merger, stock or asset purchase) consummated, or that are expected to be
consummated, after January 1, 2002 for a purchase price in excess of $2,500,000,
other than Contracts for acquisitions of inventory, supplies and equipment
made
in the ordinary course of business;
(xiii)
Contracts
entered into since January 1, 2006 involving any resolution or settlement
of any
actual or threatened litigation, arbitration, claim or other dispute with
a
value of greater than $250,000;
(xiv)
Contracts
with Governmental Entities or other Contracts where, to the knowledge of
the
Seller, the ultimate consumer of goods or services supplied is a Governmental
Entity;
(xv)
Contracts
requiring that a U.S. Government facility security clearance be maintained,
or
for which a facility security clearance has in fact been issued or maintained;
or
(xvi)
other
Contracts that are material to the Business, taken as a whole.
(b) Each
Contract set forth in Section 3.09(a) of the Seller Letter (the
“Transferred Contracts”) is, as of the date of this Agreement, a legal,
valid and binding obligation of the Seller or one of its subsidiaries,
enforceable against the Seller or the applicable subsidiary in accordance
with
its terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other Laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at Law. As of the date of this Agreement, neither the
Seller nor the subsidiary of the Seller that is party to a Transferred Contract
nor, to the knowledge of the Seller, any other party to such Transferred
Contract is in material breach or default under such Transferred
Contract. The Seller has made available to the Purchaser a complete
and correct copy of each Transferred Contract, in each case as amended,
supplemented or otherwise modified through (and including) the date of this
Agreement, except, in the case of any employment agreement, that a redacted
version of such agreement has been provided in the event that the Seller
or its
affiliates is prohibited from such agreement making available to the Purchaser
as the result of applicable Laws relating to the safeguarding of data
privacy.
SECTION
3.10. Permits.
Section 3.10 of the Seller Letter sets forth a complete and correct
list, as of the date of this Agreement, of all material certificates, licenses,
permits, authorizations, registrations and approvals issued or granted by
a
Governmental Entity (“Permits”) in connection with the Business to the
Seller or its subsidiaries, each of which are validly held by the Seller
or one
of its subsidiaries, and the holder thereof has complied, as of the date
of this
Agreement, in all material respects with all terms and conditions
thereof. All such Permits are in full force and effect and, since
January 1, 2005 through (and including) the date of this Agreement, no Seller
or
Transferred Entity has received written notice of any suit, action or other
proceeding relating to the revocation or modification of any Permit or that
the
Business has not complied in any material respect with any
Permit. The Business possesses all Permits necessary to own, lease
and operate the assets of the Business and to conduct the Business as currently
conducted.
SECTION
3.11. Insurance. Since
January 1, 2006 through (and including) the Closing Date, the Seller or its
subsidiaries maintained policies of fire and casualty, liability and other
forms
of insurance in such amounts, with such deductibles and against such risks
and
losses as were reasonable for the Business and its assets. Section
3.11 of the Seller Letter sets forth a list of all claims made by the Seller
or any of its subsidiaries under any policy of insurance since January 1,
2006
through (and including) the date of this Agreement with respect to the Business
or its assets.
SECTION
3.12. Taxes. (a) The
Transferred Entities and any affiliated group of which any Transferred Entity
is
or has been a member have filed or caused to be filed in a timely manner
(within
any applicable extension periods) all income and other material Tax Returns
required to be filed by applicable national, state, county, local, municipal
or
other Tax Laws. All such Tax Returns were complete and correct in all
material respects. All material Taxes with respect to taxable periods
covered by such Tax Returns (whether or not shown on any Tax Return), and
all
other material Taxes for which any Transferred Entity is liable (other than
Taxes not yet due and payable, for which adequate provision has been made),
have
been timely paid in full or are being contested in good faith.
(b) There
are
no outstanding agreements extending or waiving the statutory period of
limitations applicable to any claim for, or the period for the collection
or
assessment or reassessment of, material Taxes due from the Transferred Entities
and no request for any such waiver or extension is currently pending, other
than
pursuant to extensions of time to file Tax Returns obtained in the ordinary
course.
(c) No
material Tax Return of any Transferred Entity is under audit or examination
by
any Taxing Authority, and no written notice of any such an audit or examination
has been received by the Seller. No written claim has been received
by the Seller from a Taxing Authority in a jurisdiction where any Transferred
Entity does not currently file Tax Returns that such Transferred Entity or
such
affiliated group is or may be subject to taxation by that
jurisdiction.
(d) Each
deficiency resulting from any audit or examination relating to Taxes of a
Transferred Entity or a Transferred Asset by any Taxing Authority has been
fully
and timely paid.
(e) None
of
the assets of any Transferred Entity, and no Transferred Asset, is subject
to a
Tax lien, except for Taxes not yet due and payable.
(f) No
Transferred Entity has taken any reporting position on a Tax Return (relating
to
a year for which the statute of limitations has not yet expired), which
reporting position (i) if not sustained would be reasonably likely, absent
disclosure, to give rise to a penalty for substantial understatement of federal
income Tax under Section 6662 of the Code (or any similar provision of
state, local, or foreign Tax Law), and (ii) has not adequately been
disclosed on such Tax Return in accordance with Section 6662(d)(2)(B) of
the Code (or any similar provision of state, local, or foreign Tax
Law).
(g) No
Transferred Entity has constituted a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a
distribution of shares qualifying for tax-free treatment under Section 355
of the Code (i) in the two years prior to the date of this Agreement or
(ii) in a distribution that could otherwise constitute part of a “plan” or
“series of related transactions” (within the meaning of Section 355(e) of
the Code) in conjunction with the transactions contemplated by this
Agreement.
(h) No
Transferred Entity has agreed, or is required to make, any adjustment under
Section 481(a) of the Code, and to the knowledge of the Seller, no
Governmental Entity has proposed any such adjustment or change in accounting
method.
(i) Any
adjustment of a material amount of Taxes of the Transferred Entities made
by the
Internal Revenue Service (the “IRS”), which adjustment is required to be
reported to the appropriate state, local, or foreign governmental authorities,
has been so reported.
(j) No
Transferred Entity (i) has executed, entered into, or is the subject of a
closing agreement pursuant to Section 7121 of the Code or any similar
provision of state, local or foreign Law, or (ii) is subject to any private
letter ruling of the IRS or comparable ruling of any other Taxing
Authority.
(k) There
is
no Contract, agreement, plan, or arrangement covering any person that,
individually or collectively, could give rise to the payment of any amount
as a
result of the transactions contemplated by this Agreement that would not
be
deductible by the Purchaser or any Transferred Entity by reason of
Section 280G of the Code.
SECTION
3.13. Proceedings.
Section 3.13 of the Seller Letter sets forth a list, as of the date
of this Agreement, of each pending or, to the knowledge of the Seller,
threatened suit, action, demand, arbitration, investigation, other proceeding
or
claim of any nature, civil, criminal, regulatory or otherwise, in law or
in
equity arising out of the conduct of the Business or to which any Transferred
Entity is a party that (a) alleges damages or other liabilities in excess
of $200,000, (b) seeks any injunctive relief affecting the Business or
(c) is reasonably likely to give rise to any legal restraint on or
prohibition against the transactions contemplated by this
Agreement. As of the date of this Agreement, neither the Business nor
any Transferred Entity is a party or subject to or in default in any material
respect under any Judgment. This Section 3.13 does not relate to
matters with respect to Intellectual Property, which are the subject of
Section 3.08, to Permits, which are the subject of Section 3.10, to
Taxes, which are the subject of Section 3.12, to benefit matters, which are
the subject of Section 3.14, to environmental matters, which are the
subject of Section 3.17, or to employee and labor matters, which are the
subject of Section 3.18.
SECTION
3.14. Benefit
Plans. (a) Each “employee benefit plan”, as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), each stock option, stock purchase or other equity
compensation, incentive compensation, deferred compensation, change of control
or severance plan, arrangement or policy, retention, salary continuation,
vacation, sick leave, disability, death benefit, group insurance,
hospitalization, medical, dental, life (including all individual life insurance
policies as to which the Seller or any of its subsidiaries is the owner,
the
beneficiary or both), Code Section 125 “cafeteria” or “flexible” benefit,
employee loan, educational assistance and each other employee fringe benefit
plan, arrangement or policy, whether written or oral, formal or informal,
including (i) each “employee welfare benefit plan” (as defined in
Section 3(1) of ERISA) or “employee pension benefit plan” (as defined in
Section 3(2) of ERISA), and (ii) other employee benefit plan, program,
policy, practice, agreement or arrangement, whether or not subject to ERISA,
in
each case that is currently sponsored, maintained or otherwise contributed
to by
the Seller, any of its subsidiaries or any other person that, together with
the
Seller, is treated as a single employer under Section 414(b), (c), (m) or
(o) of the Code (each, a “Seller Commonly Controlled Entity”) for the
benefit of (i) any employee of the Seller or its affiliates who works
exclusively or primarily for the Business or (ii) any other employee of the
Seller or its affiliates who provides significant services to the Business
and
is listed on Section 3.14(a) of the Seller Letter (subject to the revision
of same by mutual agreement of the Seller and the Purchaser not more than
30 days following the date of this Agreement) (the employees described in
the foregoing clauses (i) and (ii) (other than those set forth in
Section 3.14(a) of the Seller Letter under the caption “Retained
Employees”) are collectively referred to herein as the “Business
Employees”), other than any plan, arrangement or policy mandated by
applicable Law or any “multiemployer plan” (within the meaning of
Section 3(37) of ERISA), is referred to herein as a “Seller Benefit
Plan”. Each Seller Benefit Plan or portion thereof
(i) sponsored by a Transferred Entity, (ii) that the Purchaser or any
of its affiliates has explicitly agreed to assume pursuant to this Agreement
or
(iii) that the Purchaser or any of its affiliates is required to assume
under applicable Law is referred to herein as an “Assumed Benefit
Plan”. Each employment, change in control, retention and
severance agreement between the Seller or any of its affiliates, on the one
hand, and any Business Employee, on the other hand, is referred to herein
as a
“Seller Benefit Agreement”. Each Seller Benefit Agreement
(i) to which any Transferred Entity is a party, (ii) that the
Purchaser or any of its affiliates has explicitly agreed to assume pursuant
to
this Agreement or (iii) that the Purchaser or any of its affiliates is
required to assume under applicable Law is referred to herein as an “Assumed
Benefit Agreement”. Section 3.14(a)(i) of the
Seller Letter is a complete and correct list, as of the date of this Agreement,
of each material Seller Benefit Plan and each material Seller Benefit
Agreement. Section 3.14(a)(i) of the Seller Letter
identifies each material Assumed Benefit Plan and material Assumed Benefit
Agreement. The Seller has made available to the Purchaser complete
and correct copies, as of the date of this Agreement, of (A) each material
Seller Benefit Plan and material Seller Benefit Agreement, (B) any related
trust agreement or other funding instrument with respect to any material
Assumed
Benefit Plan or material Assumed Benefit Agreement, (C) the most recent
annual report on Form 5500 (including all schedules and attachments
thereto) filed with the Internal Revenue Service with respect to each Assumed
Benefit Plan (if any such report was required by applicable Law), (D) the
most recent IRS determination or opinion letter, if applicable, with respect
to
each Assumed Benefit Plan, and (E) the most recent summary plan description
for each material Seller Benefit Plan for which a summary plan description
is
required by applicable Law.
(b) Each
Assumed Benefit Plan has been administered in accordance with its terms and
in
compliance with the applicable provisions of ERISA, the Code, all other
applicable Laws and the terms of all applicable collective bargaining
agreements, except where, individually or in the aggregate, any failures
to be
so administered are not reasonably likely to be material to the Business,
taken
as a whole. Except as are not, individually or in the aggregate,
reasonably likely to be material to the Business, taken as a whole, all required
reports, returns, notices, descriptions and other documentation (including
Form 5500 annual reports, summary annual reports, PBGC-1’s, and summary
plan descriptions) have been filed or distributed correctly and on a timely
basis with respect to each Assumed Benefit Plan. As of the date of
this Agreement, the Seller has not received written notice of any pending
or in
progress, and, to the knowledge of the Seller, there are no threatened
(i) investigations by any Governmental Entity, termination proceedings or
other claims with respect to an Assumed Benefit Plan (except routine claims
for
benefits payable under the Assumed Benefit Plans) or (ii) suits, actions or
other proceedings against or involving any Assumed Benefit Plan or asserting
any
rights to or claims for benefits under any Assumed Benefit Plan, in each
case,
that, individually or in the aggregate, are reasonably likely to be material
to
the Business, taken as a whole. As of the date of this Agreement, to
the knowledge of the Seller, no audits or proceedings have been initiated
with
respect to any Assumed Benefit Plan pursuant to the Employee Plans Compliance
Resolution System or similar proceedings or are pending with the IRS or
Department of Labor.
(c) No
Assumed Benefit Plan is subject to Title IV of ERISA or Section 412 of
the Code. Upon and following the consummation of the transactions
contemplated by this Agreement, none of the Purchaser or any Transferred
Entity
would reasonably be expected to incur any liability (i) under
Section 302 of ERISA, Title IV of ERISA, Section 412 of the Code
or the Coal Industry Retiree Health Benefit Act of 1992, as amended or
(ii) for violation of the continuation coverage requirements of
Section 601 et seq. of ERISA and
Section 4980B of the Code (collectively, “COBRA”) or the group
health requirements of Sections 9801 et seq. of the
Code and Sections 701 et seq. of ERISA, in each case,
that is due to the Seller’s status (or former status) as part of a Seller
Commonly Controlled Entity.
(d) The
only
“multiemployer plan” (within the meaning of Section 3(37) of ERISA) to
which the Seller and its affiliates are obligated to contribute on behalf
of the
Business Employees is the I.A.M. National Pension Fund (the “IAM
Fund”).
(e) All
contributions (including all employer contributions and employee salary
reduction contributions) which are required to have been made under applicable
Law or contract have been made in accordance with applicable Law or contract
to
each Assumed Benefit Plan that is an employee benefit plan and, except as
are
not, individually or in the aggregate, reasonably likely to be material to
the
Business, taken as a whole, all contributions for any period ending on or
before
the Closing Date which are not yet due under applicable Law or contract have
been paid to each such employee benefit plan or accrued in accordance with
GAAP.
(f) There
have been no prohibited transactions within the meaning of Section 406 of
ERISA or Section 4975 of the Code with respect to any Assumed Benefit Plan
that has not been exempted under Section 408 of ERISA or Section 4975
of the Code. Except as are not, individually or in the aggregate,
reasonably likely to be material to the Business, taken as a whole, no fiduciary
has any liability for breach of fiduciary duty or any other failure to act
or
comply with the requirements of ERISA, the Code or any other applicable Laws
in
connection with the administration or investment of the assets of any Assumed
Benefit Plan.
(g) Assuming
that the Purchaser complies with its obligations to make offers of employment
to
the Business Employees in accordance with Section 5.08(a), neither the
execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby shall (i) result in any material payment
(including severance, change in control or otherwise) becoming due to any
Business Employee under any Seller Benefit Plan or Seller Benefit
Agreement, (ii) materially increase any benefits otherwise payable under
any Seller Benefit Plan or Seller Benefit Agreement to any Business Employee
or
(iii) result in the acceleration of time of payment or vesting of any such
benefits under any Seller Benefit Plan or Seller Benefit Agreement, except,
in
the case of the foregoing clauses (i), (ii), and (iii), for any payments or
benefits for which the Seller or any of its affiliates (other than any
Transferred Entity) shall be solely liable.
(h) The
Seller has not announced orally or in writing an intention to create any
additional employee benefit or compensation plans, policies or arrangements
that
would be Assumed Benefit Plans if created and, except as may be required
by
applicable law, has not announced orally or in writing an intention to
materially modify, suspend or terminate any Assumed Benefit Plan or Assumed
Benefit Agreement.
(i) Section 3.14(i)
of the Seller Letter sets forth a list, as of the date of this Agreement,
of
each Assumed Benefit Plan that provides retiree health, medical, life insurance
or death benefits to any Business Employee, except as may be required under
COBRA or any applicable non-U.S. Law.
SECTION
3.15. Absence
of Changes or Events. (a) From the date of the Balance
Sheet through (and including) the date of this Agreement, there has not been
any
material adverse effect on the Business.
(b) From
the
date of the Balance Sheet through (and including) the date of this Agreement,
the Business has been conducted in the ordinary course, and in substantially
the
same manner as previously conducted.
(c) Since
the
date of the Balance Sheet through (and including) the date of this
Agreement:
(i) the
Business has not amended the organizational documents of any Transferred
Entity;
(ii) the
Business has not declared, set aside or paid any dividend or made any other
distribution to the holders of the equity interests in any Transferred Entity,
other than dividends or other distributions paid or payable to another
Transferred Entity;
(iii) the
Business has not redeemed or otherwise acquired any shares of equity interests
in, or any other securities of, a Transferred Entity or issued (A) any
equity interest in, or any other security of, a Transferred Entity, (B) any
option or warrant for, or any security convertible into, or exercisable or
exchangeable for, any equity interests in, or any other security of, a
Transferred Entity, (C) “phantom” stock rights, stock appreciation rights,
stock-based performance units, commitments, Contracts, arrangements or
undertakings to which any Transferred Entity is a party or by which any of
them
is bound (1) obligating any Transferred Entity to issue, deliver or sell,
or cause to be issued, delivered or sold, additional units of its equity
interests or any security convertible into, or exercisable or exchangeable
for,
any equity interest in any Transferred Entity or any Transferred Entity Voting
Debt, (2) obligating any Transferred Entity to issue, grant, extend or
enter into any such option, warrant, security, right, unit, commitment,
Contract, arrangement or undertaking or (3) that give any person the right
to receive any economic benefit or right similar to or derived from the economic
benefits and rights accruing to holders of the Transferred Equity Interests
or
(D) any bond, debenture, note or other indebtedness having the right to
vote (or convertible into, or exercisable or exchangeable for, securities
having
the right to vote) on any matters on which the holders of equity interests
in a
Transferred Entity may vote;
(iv) the
Business has not split, combined or reclassified any of the equity interests
in
any Transferred Entity, or issued any other security in respect of, in lieu
of
or in substitution for the equity interests in any Transferred
Entity;
(v) the
Business has not loaned, advanced, invested or made a capital contribution
of
any amount to or in any person, other than (A) advances in the ordinary
course of business or (B) loans, advances, investments or capital
contributions to or in another Transferred Equity;
(vi) the
Business has not commenced any litigation, other than (i) litigation in
connection with the collection of accounts receivable or (ii) litigation as
a result of suits, actions or other proceedings commenced against the
Business;
(vii) the
Business has not changed the fiscal year of any Transferred Entity, revalued
any
of its material assets or made any change in any method of accounting or
accounting practice or policy (including procedures with respect to the payment
of accounts payable and collection of accounts receivable), except as required
by GAAP or applicable Law;
(viii) the
Business has not made, revoked or changed any material Tax election, adopted
or
changed any material Tax accounting method or period, filed any material
amended
Tax Return, settled any material Tax claim or assessment or consented to
any
extension or waiver of the statute of limitations period applicable to any
Tax
claim or assessment, or surrendered any right to claim a Tax refund, offset
or
other reduction in Tax liability; or
(ix) the
Business has not agreed to make any capital expenditures, other than (A)
as set
forth in the Capital Expenditure Budget attached in Section 3.15 of the
Seller Letter (the “Cap Ex Budget”) and (B) capital expenditures made
prior to the date of this Agreement.
SECTION
3.16. Compliance
with Applicable Laws. The Business is in compliance in all
material respects with all applicable Laws. None of the Seller or any
Transferred Entity has received any written communication since January 1,
2005 through (and including) the date of this Agreement from any person that
alleges that the Business is not in compliance in any material respect with
any
applicable Law. This Section 3.16 does not relate to matters
with respect to Intellectual Property, which are the subject of
Section 3.08, to Permits, which are the subject of Section 3.10, to
Taxes, which are the subject of Section 3.12, to benefit matters, which are
the subject of Section 3.14, to environmental matters, which are the
subject of Section 3.17, or to employee and labor matters, which are the
subject of Section 3.18.
SECTION
3.17. Environmental
Matters. (a)
(i) The
Business is in material compliance with all Environmental Laws, has all material
Permits required under Environmental Law for its operations as presently
conducted, and is in material compliance with such Permits. Seller
has not received any (A) written communication that alleges that the
Business is not in material compliance with, or has material liability under,
any Environmental Law or (B) written request for information from any
Governmental Entity pursuant to any Environmental Law which is reasonably
likely
to result in material liability under any Environmental Law.
(ii) There
are
no material Environmental Claims pending or, to the knowledge of the Seller,
threatened in connection with the Business.
(iii) There
have been no Releases of any Hazardous Materials at, under or from any facility
or property currently, and, to the knowledge of the Seller, there have been
no
Releases of any Hazardous Materials at, under or from any facility or property
formerly, owned or operated by the Business, in each case, that would reasonably
be expected to form the basis of a material Environmental Claim against the
Business.
(b) The
Seller has made available to the Purchaser copies of all material environmental
reports, studies and assessments concerning the current or former operations,
assets or properties of the Business which are in the possession or control
of
the Seller or its subsidiaries as of the date of this Agreement.
SECTION
3.18. Employee
and Labor Matters. Since January 1, 2006 through (and
including) the date of this Agreement, (a) there has not been nor is there
pending or, to the knowledge of the Seller, threatened any labor strike,
walk-out, slowdown, work stoppage or lockout with respect to the Business,
(b) the Seller has not received written notice of any unfair labor practice
charges against the Business that are pending before the National Labor
Relations Board or any similar state, local or foreign Governmental Entity
and
(c) the Seller has not received written notice of any pending or in
progress and, to the knowledge of the Seller, there are no threatened, suits,
actions or other proceedings in connection with the Business before the Equal
Employment Opportunity Commission or any similar state, local or foreign
Governmental Entity responsible for the prevention of unlawful employment
practices, except, in the case of each of clauses (a), (b) and
(c) above, for any such matters that, individually or in the aggregate, are
not reasonably likely to be material to the Business, taken as a
whole. Except as is not, individually or in the aggregate, reasonably
likely to be material to the Business, taken as a whole, the Seller is operating
the Business in compliance with all applicable foreign, federal, state and
local
Laws relating to employment, employment standards, employment of minors,
employment discrimination, health and safety, labor relations, withholding,
wages and hours, workplace safety and insurance and/or pay equity (collectively,
“Labor Laws”). As of the date of this Agreement, no Business
Employee, at the officer level or above, has given notice to the Seller that
such employee intends to terminate his or her employment with the Seller
(other
than as a result of a transfer of employment to the Purchaser and its
affiliates). To the knowledge of the Seller, no employee of the
Business is in any material respect in violation of any material term of
any
employment contract, non-disclosure agreement or non-competition
agreement. Prior to the Closing, the Seller shall (in consultation
with the Purchaser) have provided notice of the transactions contemplated
by
this Agreement to each labor union that represents any Business Employees
and
shall have satisfied in all material respects any bargaining obligations
relating to the transactions contemplated by this Agreement, in each case,
to
the extent required by applicable Law or any applicable collective bargaining
agreement identified on Section 3.18 of the Seller Letter
(collectively, the “CBAs”). The Seller is currently operating
the Business in a manner that, if continued by the Purchaser, would not
reasonably be expected to result in a “plant closing” or “mass layoff”(within
the meaning of the Worker Adjustment and Retraining Notification Act of 1988,
as
amended, the “WARN Act”) with respect to any current or former Business
Employee.
SECTION
3.19. Transactions
with Affiliates. Except for employment relationships and the
payment of compensation and benefits in the ordinary course of business,
none of
the Transferred Entities or the Business is a party to any Contract with,
or
involving the making of any payment, benefit or transfer of assets to, an
affiliate of such Transferred Entity (other than a Transferred
Entity). Neither the Seller nor its affiliates possess, directly or
indirectly, any financial interest in a material supplier, customer, lessor,
lessee, or competitor of the Business; provided, that ownership of
securities of a company whose securities are registered under the Securities
Exchange Act of 1934, as amended, of five percent (5%) or less of any class
of
such securities shall not be deemed to be a financial interest for purposes
of
this Section 3.19. Except as provided for in this Agreement, no
Contract between a Transferred Entity, on the one hand, and the Seller or
any of
its affiliates (other than a Transferred Entity), on the other hand, will
continue in effect subsequent to the Closing.
SECTION
3.20. Sufficiency
of Assets. The Transferred Assets, the assets and properties that
will be owned by the Transferred Entities immediately following the Closing,
the
assets and properties of which any Transferred Entity will be a lessee,
sublessee or licensee immediately following the Closing and the assets and
properties which the Transferred Entities will have the right to use pursuant
to
the Transition Services Agreement or the Trademark License Agreement, comprise
all the assets and properties (tangible or intangible) currently employed
by the
Business. Such assets and properties will be sufficient for the
conduct of the Business immediately following the Closing in substantially
the
same manner as currently conducted.
SECTION
3.21. Customers.
Section 3.21 of the Seller Letter lists the names of the 30 largest
customers of the Business measured by dollar value for the 12 months ended
June
30, 2007 and sets forth opposite the name of each customer the amount of
conversion sales by the Business to such customer during such
period. As of the date of this Agreement, none of the customers
listed in Section 3.21 of the Seller Letter has notified either the
Seller or any of its subsidiaries in writing that it intends to cancel or
terminate its relationship with the Business and, to the knowledge of the
Seller
as of the date of this Agreement, no such customer intends to cancel, terminate
or materially and adversely alter its relationship with the
Business.
SECTION
3.22. Suppliers;
Raw Materials. Section 3.22 of the Seller Letter lists the
names of the 30 largest suppliers from which the Business ordered raw materials,
supplies, merchandise and other goods and services measured by dollar value
for
the 12 months ended June 30, 2007. As of the date of this Agreement,
none of the suppliers listed in Section 3.22 of Seller Letter has
notified either the Seller or any of its subsidiaries in writing that it
intends
to cancel or terminate its relationship with the Business and, to the knowledge
of Seller as of the date of this Agreement, no such supplier intends to cancel,
terminate or materially and adversely alter its relationship with the
Business.
SECTION
3.23. Products;
Product and Service Warranties; Product Liability. Since
January 1, 2006 through (and including) the date of this Agreement,
(a) except for ordinary course customer returns and allowances, the
products manufactured and sold by the Business and the services provided
by the
Business conform with all applicable contractual commitments and warranties
in
all material respects and (b) there have been no material product liability
claims, suits, actions or proceedings against the Transferors or any Transferred
Entity that involves products manufactured and sold by the Business arising
out
of any injury to any individual or property as a result of the use of any
such
product. Section 3.23 of the Seller Letter sets forth all
material product liability claims settled by the Transferors or any Transferred
Entity relating to the Business since January 1, 2006 through (and including)
the date of this Agreement.
SECTION
3.24. No
Other Representations or Warranties. Except for the
representations and warranties contained in Article IV or in any
certificate delivered by the Purchaser in connection with the Closing, the
Seller acknowledges that neither the Purchaser nor any other person on behalf
of
the Purchaser makes or has made any other express or implied representation
or
warranty with respect to the Acquisition or the other transactions contemplated
by this Agreement, with respect to the Purchaser or with respect to any other
information provided or made available to the Seller by the Purchaser in
connection with the transactions contemplated by this Agreement.
Representations
and Warranties of the Purchaser
The
Purchaser hereby represents and warrants to the Seller on the date of this
Agreement and on the Closing Date as follows:
SECTION
4.01. Organization,
Standing and Power. The Purchaser is duly organized, validly
existing and in good standing under the Laws of the jurisdiction in which
it is
organized and has all requisite power and authority and possesses all material
governmental franchises, licenses, permits, authorizations and approvals
necessary (a) to enable it to own, lease or otherwise hold its assets and
properties and (b) to conduct its business as currently
conducted. The Purchaser has made available to the Seller complete
and correct copies of its organizational documents, as amended, supplemented
or
otherwise modified through (and including) the date of this
Agreement.
SECTION
4.02. Authority;
Execution and Delivery; Enforceability. The Purchaser has full
power and authority and full legal capacity to execute this Agreement and
the
Ancillary Agreements to which it is, or is specified to be, a party, to fully
perform its obligations hereunder and thereunder and to consummate the
Acquisition, the Financing and the other transactions contemplated hereby
and
thereby. The execution and delivery by the Purchaser of this
Agreement and the Ancillary Agreements to which it is, or is specified to
be, a
party and the consummation by the Purchaser of the Acquisition, the Financing
and the other transactions contemplated hereby and thereby have been duly
authorized by all necessary action on the part of the Purchaser, and no other
action on the part of the Purchaser is necessary to authorize this Agreement
or
the Ancillary Agreements or the consummation of the Acquisition, the Financing
or the other transactions contemplated hereby or thereby. The
Purchaser has duly executed and delivered this Agreement and, prior to the
Closing, will have duly executed and delivered each Ancillary Agreement to
which
it is, or is specified to be, a party, and, assuming their due execution
and
delivery by the Seller, this Agreement constitutes, and each Ancillary Agreement
to which it is, or is specified to be, a party will, after execution and
delivery by the Purchaser, constitute, its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other Laws affecting
creditors’ rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at
Law.
SECTION
4.03. No
Conflicts; Consents. The execution and delivery by the Purchaser
of this Agreement do not, the execution and delivery by the Purchaser of
each
Ancillary Agreement to which it is, or is specified to be, a party will not,
and
the consummation of the Acquisition, the Financing and the other transactions
contemplated hereby and thereby and compliance by the Purchaser with the
terms
hereof and thereof will not, conflict with, or result in any violation or
breach
of, or default (with or without notice or lapse of time, or both) under,
or give
rise to a right of, or result in, termination, cancellation or acceleration
of
any obligation or to loss of a material benefit under, or to increased,
additional, accelerated or guaranteed rights or entitlements of any person
under, or result in the creation of any Lien upon any of the assets or
properties of the Purchaser, under any provision of
(a) the organizational documents of the Purchaser, (b) any
material Contract to which the Purchaser is a party or by which any of the
Purchaser’s assets or properties is bound or (c) subject to the
governmental filings and other matters referred to in the immediately following
sentence, any Judgment or Law applicable to the Purchaser or any of its assets
or properties. No Consent of, or registration, declaration or filing
with, any Governmental Entity is required to be obtained or made by or with
respect to the Purchaser in connection with the execution, delivery and
performance of this Agreement or any Ancillary Agreement or the consummation
of
the Acquisition, the Financing or the other transactions contemplated hereby
and
thereby, other than (A) compliance with and filings under the HSR Act and
compliance with and filings and approvals under Foreign Merger Control Laws,
(B) consents and approvals required for the assignment or novation of, or
pursuant to “change in control” provisions in, governmental contracts, (C)
compliance with and filings under ITAR, (D) compliance with and filings and
notifications under applicable Environmental Laws, including the CPTL, and
(E) the filing of the relevant instruments in the requisite jurisdictions
in order to create or perfect Liens granted to secure the indebtedness and
other
obligations incurred as a result of the consummation of the Debt
Financing.
SECTION
4.04. Litigation. There
are not any (a) outstanding Judgments applicable to the Purchaser or any of
its affiliates, (b) suit, action, demand, arbitration, investigation, other
proceeding or claim of any nature, civil, criminal, regulatory or otherwise,
pending or, to the knowledge of the Purchaser, threatened against the Purchaser
or any of its affiliates or (c) investigations by any Governmental Entity
that are, to the knowledge of the Purchaser, pending or threatened against
the
Purchaser or any of its affiliates that, individually or in the aggregate,
are
reasonably likely to have a material adverse effect on the
Purchaser.
SECTION
4.05. Securities
Act. The Transferred Equity Interests are being acquired for
investment only and not with a view to any public distribution thereof, and
the
Purchaser shall not offer to sell or otherwise dispose of the Transferred
Equity
Interests so acquired by it in violation of any of the registration requirements
of the United States Securities Act of 1933, as amended.
SECTION
4.06. Financing. Complete
and correct executed copies of the Financing Commitments have been delivered
to
the Seller on or prior to the date of this Agreement. There are no
conditions or other contingencies to the funding of the Financing other than
those contained in the Financing Commitments. Except to the extent
permitted by Section 5.03(b), none of the Financing Commitments has been
amended, supplemented or otherwise modified and the commitments contained
in the
Financing Commitments have not been reduced, terminated, withdrawn or rescinded
in any respect. The Financing Commitments are in full force and
effect and are the legal, valid and binding obligations of the Purchaser
and, to
the Purchaser’s knowledge, the applicable counterparties thereto. To
the knowledge of the Purchaser, no event has occurred which, with or without
notice, lapse of time or both, would constitute a default or breach on the
part
of the Purchaser under any term or condition of the Financing
Commitments. The Purchaser has fully paid any commitment fees or
other fees incurred in connection with the Financing that have become due
and
payable. The Financing, when funded in accordance with the Financing
Commitments, will provide funds at the Closing sufficient to consummate the
Acquisition and the other transactions contemplated by this Agreement and
to pay
the related fees and expenses associated therewith. As of the date of
this Agreement, assuming the accuracy of the representations and warranties
of
the Seller set forth in Articles II and III, the Purchaser has no reason
to
believe that any of the conditions or other contingencies to the Financing
will
not be satisfied upon the satisfaction (or, to the extent permitted by
applicable Law) waiver of the conditions set forth in Article VII or that
the
Financing will not be available to the Purchaser at the Closing.
SECTION
4.07. Activities
of the Purchaser. The Purchaser was formed solely for the purpose
of engaging in the transactions contemplated by this Agreement, has not engaged
in any business activities or conducted any operations (other than in connection
with the transactions contemplated by this Agreement) and, prior to the Closing,
will not have incurred liabilities or obligations of any nature (other than
in
connection with the transactions contemplated by this Agreement).
SECTION
4.08. Solvency. Assuming
the accuracy of the representations of the Seller set forth in Article II
and Article III of this Agreement, immediately after the Closing and after
giving effect to the transactions contemplated by this Agreement, including
the
Financing, the payment of the Estimated Purchase Price and the payment of
all
fees and expenses related to the transactions contemplated by this Agreement,
each of the Purchaser and the Transferred Entities will be Solvent.
SECTION
4.09. Sponsor
Fund Guarantees. Each Sponsor Fund Guarantee is in full force and
effect and is the valid, binding and enforceable obligation of the applicable
Sponsor Fund, subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other Laws affecting creditors’ rights generally and subject to
general principles of equity, regardless of whether considered in a proceeding
in equity or at Law. To the knowledge of the Purchaser, no event has
occurred which, with or without notice, lapse of time or both, would constitute
a default on the part of any Sponsor Fund under its Sponsor Fund
Guarantee.
SECTION
4.10. Going
Concern. Without prejudice to the Purchaser’s rights to operate
the Business following the Closing in its sole discretion, the Purchaser
is
acquiring the Business as a going concern for the purpose of carrying out
a
business that is similar to the Business following the Closing.
SECTION
4.11. Brokers
or Finders. No agent, broker, investment banker or other person
engaged by or on behalf of the Purchaser or any of its affiliates is or will
be
entitled to any broker’s or finder’s fee or any other commission or similar fee
in connection with the transactions contemplated by this Agreement.
SECTION
4.12. No
Other Representations and Warranties. Except for the
representations and warranties contained in Article II and Article III
or in any certificate delivered by the Seller pursuant to this Agreement,
the
Purchaser acknowledges that neither the Seller nor any person on behalf of
the
Seller makes or has made any other express or implied representation or warranty
(including as to merchantability or fitness for any particular purpose) with
respect to the Acquisition or the other transactions contemplated by this
Agreement, with respect to the Seller or the Business or with respect to
any
other information provided or made available to the Purchaser in connection
with
the transactions contemplated by this Agreement (including in any “data rooms”
or management presentations). None of the Seller or its affiliates
shall have or be subject to any liability or indemnification obligation to
the
Purchaser or its affiliates resulting from the distribution to the Purchaser,
or
the Purchaser’s use of, any such information.
SECTION
5.01. Covenants
Relating to Conduct of Business. Except as set forth in
Section 5.01 of the Seller Letter, as otherwise expressly
contemplated or permitted by the terms of this Agreement or with the prior
written consent of the Purchaser (which consent shall not be unreasonably
withheld or delayed), from the date of this Agreement through (and including)
the Closing Date, the Seller shall, and shall cause its subsidiaries to,
conduct
the Business in the ordinary course in substantially the same manner as
previously conducted and use its commercially reasonable efforts to keep
intact
the Business, keep available the services of the Business’s current officers,
employees, contractors and consultants, preserve the Business’s assets and
properties and preserve the Business’s relationships with customers, suppliers,
licensors, licensees, distributors and others with whom they deal. In
addition (and without limiting the generality of the foregoing), except as
set
forth in Section 5.01 of the Seller Letter or otherwise expressly
contemplated or permitted by the terms of this Agreement, from the date of
this
Agreement through (and including) the Closing Date, the Seller shall not
permit,
and shall cause its subsidiaries not to permit, the Business to do any of
the
following without the prior written consent of the Purchaser:
(a) amend
the
organizational documents of any Transferred Entity;
(b) declare,
set aside or pay any dividend or make any other distribution to the holders
of
equity interests in any Transferred Entity, other than (i) dividends or
other distributions paid or payable to another Transferred Entity and
(ii) dividends or other distributions made to withdraw cash and cash
equivalents of the Transferred Entities;
(c) redeem
or
otherwise acquire any equity interests in, or any other securities of, a
Transferred Entity or issue (i) any equity interests in, or any other
security of, a Transferred Entity, (ii) any option or warrant for, or any
security convertible into, or exercisable or exchangeable for, any equity
interests in, or any other security of, a Transferred Entity,
(iii) “phantom” stock rights, stock appreciation rights, stock-based
performance units, commitments, Contracts, arrangements or undertakings to
which
any Transferred Entity is a party or by which any of them is bound
(A) obligating any Transferred Entity to issue, deliver or sell, or cause
to be issued, delivered or sold, additional units of its equity interests
or any
security convertible into, or exercisable or exchangeable for, any equity
interest in any Transferred Entity or any Transferred Entity Voting Debt,
(B) obligating any Transferred Entity to issue, grant, extend or enter into
any such option, warrant, security, right, unit, commitment, Contract,
arrangement or undertaking or (C) that give any person the right to receive
any economic benefit or right similar to or derived from the economic benefits
and rights accruing to holders of the Transferred Equity Interests or
(iv) any bond, debenture, note or other indebtedness having the right to
vote (or convertible into, or exercisable or exchangeable for, securities
having
the right to vote) on any matters on which the holders of equity interests
in a
Transferred Entity may vote;
(d) split,
combine or reclassify any of the equity interests in any Transferred Entity,
or
issue any other security in respect of, in lieu of or in substitution for
the
equity interests in any Transferred Entity;
(e) loan,
advance, invest or make a capital contribution to or in any person, other
than
(i) advances in the ordinary course of business or (ii) loans,
advances, investments or capital contributions to or in a Transferred
Equity;
(f) (i) incur
any indebtedness or assume, guarantee, endorse or otherwise become liable
or
responsible (whether directly, contingently or otherwise) for the indebtedness
of any other person, other than in the ordinary course of business or
(ii) mortgage, pledge or create a security interest in any material assets
of the Business, tangible or intangible;
(g) repay
any
indebtedness or guarantees of any such indebtedness, other than (i) in the
ordinary course of business consistent with past practice or (ii) as
contemplated by Section 5.12;
(h) cancel
any material indebtedness other than as contemplated by
Section 5.12;
(i) sell,
transfer or lease any of its assets to, or enter into any agreement or
arrangement with, the Seller or any of its affiliates, except for
(A) transactions among the Business and (B) intercompany sales and
purchases of goods and services (and payments for such sales and purchases)
in
the ordinary course of business consistent with past practice;
(j) acquire
by merging or consolidating with, or by purchasing a substantial portion
of the
assets of, or by purchasing all of or substantial equity interests in, any
other
person or its business or acquire any material assets, other than
(A) assets acquired in the ordinary course of business consistent with past
practice or (B) assets acquired in compliance with clause (k) of
this Section 5.01;
(k) incur
any
capital expenditure, other than (i) as contemplated by the Cap Ex Budget
and
(ii) capital expenditures made to repair, replace or rebuild assets of the
Business that are damaged or destroyed after the date of this
Agreement;
(l) sell,
lease, license or otherwise dispose of any of its assets or properties, other
than assets sold, leased, licensed or otherwise disposed of in the ordinary
course of business consistent with past practice;
(m) pay,
discharge, settle or satisfy any liabilities or obligations (whether absolute,
accrued, asserted or unasserted, contingent or otherwise), other than the
payment, discharge, settlement or satisfaction (i) of liabilities or
obligations as required by the terms of any applicable Judgment or Law,
(ii) of liabilities or obligations constituting indebtedness, (iii) of
liabilities or obligations reflected or reserved against on the Balance Sheet
or
incurred since the date of the Balance Sheet in the ordinary course of business
or (iv) of liabilities or obligations that, in the aggregate, do not exceed
$500,000;
(n) waive,
discharge, settle, release, grant or transfer any claim, right, action or
suit
of material value;
(o) commence
any litigation, other than (i) litigation in connection with the collection
of accounts receivable, (ii) litigation to enforce the terms of this
Agreement or (iii) litigation as a result of suits, actions or other
proceedings commenced against the Business;
(p) enter
into or renew (i) any Contract that has a term of more than one year and
that is
not terminable on not more than 60 days prior notice without the payment
of any
penalty, (ii) any Contract with a value (net of metal costs) in excess of
$3,500,000, (iii) any Contract with respect to any joint venture, partnership
or
similar arrangement, (iv) any commodity agreement, interest rate agreement
or
currency agreement, other than commodity agreements entered into to hedge
fluctuations in the price of raw materials purchased or to be purchased to
fill
accepted customer orders or (v) any Contract that, following the Closing,
(A) materially restricts the ability of the Business to compete in any
business or with any person in any geographic area, (B) provides for
exclusivity or any similar requirement, (C) requires the Business to grant
“most favored nation” pricing or terms or (D) restricts the ability of the
Business to solicit or hire any person;
(q) enter
into, amend in any material respect, terminate or renew any lease of real
property;
(r) amend,
supplement, otherwise modify or terminate any Lease(other than a lease of
real
property), other than amendments, supplements or other modifications in the
ordinary course of business;
(s) (A) enter
into, adopt, amend in any material respect or terminate any Assumed Benefit
Plan, Assumed Benefit Agreement or any CBA, (B) grant any material increase
in the compensation or benefits of, or pay or otherwise grant any bonus not
required by any Seller Benefit Plan, Seller Benefit Agreement or other written
agreement to, any Business Employee or (C) enter into any contract to do
any of the foregoing, except, in the case of clauses (A), (B) and (C),
(1) to the extent required by applicable Law, (2) as may be required
under any Seller Benefit Plan or Seller Benefit Agreement or (3) with respect
to
any Seller Benefit Plan, Seller Benefit Agreement or other written agreement
that is not an Assumed Benefit Plan, Assumed Benefit Agreement or a CBA or
in
the case of clause (B), (x) in the ordinary course of business, (y) as
would relate to a substantial number of other similarly situated employees
of
the Seller or its affiliates (other than the Transferred Entities), or (z)
for
any actions described in each of clauses (B) and (C) for which the Seller
or its
affiliates (other than the Transferred Entities) shall be solely obligated,
and
which would not result in a material liability to the Purchaser;
(t) change
the fiscal year of any Transferred Entity, revalue any of its material assets
or
make any change in any method of accounting or accounting practice or policy
(including procedures with respect to the payment of accounts payable and
collection of accounts receivable), except as required by the mandatory
provisions of GAAP or applicable Law;
(u) make,
revoke or change any material Tax election, adopt or change any material
Tax
accounting method or period, file any material amended Tax Return, settle
any
material Tax claim or assessment, consent to any extension or waiver of the
statute of limitations period applicable to any Tax claim or assessment,
except
for consents made in the ordinary course of business consistent with past
practice, or surrender any right to claim a Tax refund, offset or other
reduction in Tax liability, except in the ordinary course of business consistent
with past practice; or
(v) authorize
any of, or commit or agree to take, the foregoing actions.
SECTION
5.02. No
Solicitation. From the date of this Agreement through (and
including) the Closing Date, the Seller shall not, and shall not authorize
or
permit any of its affiliates or its or their directors, officers, employees,
investment bankers, attorneys, accountants or other representatives to,
(a) solicit, initiate or knowingly encourage or approve any other bid,
(b) enter into any agreement with respect to any other bid or
(c) participate in any discussions or negotiations regarding, or furnish to
any person any information with respect to, or take any other action to
knowingly facilitate any inquiries or the making of any proposal that
constitutes, or may reasonably be expected to lead to, any other
bid.
SECTION
5.03. Commercially
Reasonable Efforts; Financing. (a) Commercially
Reasonable Efforts. (i) Upon the terms and subject to
the conditions set forth in this Agreement, each party shall use its
commercially reasonable efforts to cause the Closing to occur and to consummate
the Acquisition, the Financing and the other transactions contemplated by
this
Agreement, including taking all reasonable actions necessary to comply promptly
with all legal requirements that may be imposed on it or any of its affiliates
with respect to the Closing. In furtherance of the foregoing, each
party shall use its commercially reasonable efforts to take, or cause to
be
taken, all appropriate action, do, or cause to be done, all things necessary,
proper or advisable under applicable Laws, and to execute and deliver such
instruments and documents as may be required to carry out the provisions
of this
Agreement and to consummate the Acquisition, the Financing and the other
transactions contemplated hereby.
(ii) Each
party shall, and shall cause each of its affiliates to, use its commercially
reasonable efforts to take all actions and to do, cause to be done, and assist
and cooperate with the other party in doing, all things necessary or desirable
to (A) make any filing or declaration with, give any notices to, or obtain
any Consent of, any Governmental Entity which filing, declaration, notice
or
Consent is necessary or desirable in connection with the Acquisition and
the
other transactions contemplated hereby, including filings, notifications
and
Consents under applicable Environmental Laws, applications on behalf of the
Purchaser or any affiliate of Purchaser for the Permits listed in Section
3.10(1) of the Seller Letter, Permit revisions for the Permits listed in
Section 3.10(2), (3) and (4) of the Seller Letter and such
applications as are necessary to accomplish compliance with Environmental
Laws,
if any, for the air emissions sources listed in Section 3.10(5) of the
Seller Letter, and filings, notifications and Consents under applicable federal
communications laws (and to the extent not received the parties shall enter
into
a shared use agreement with respect to the same in form and substance reasonably
satisfactory to the Purchaser) and (B) obtain all consents from third
persons necessary or appropriate to permit the consummation of the Acquisition
and the other transactions contemplated hereby; provided, however,
that the parties shall not be required to pay or commit to pay any amount
to (or
incur any obligation in favor of) any person from whom such consent may be
required. In furtherance (and not in limitation of) the
foregoing:
(1) The
Purchaser and the Seller shall, as promptly as reasonably practicable after
the
date of this Agreement, file with all applicable U.S. and foreign Governmental
Entities any notices and applications necessary to obtain merger control
or
competition Law approval for the Acquisition; provided that each of the
Seller and the Purchaser shall have the right to review and provide comments
on
any such notices and applications prior to their filing. Without
limiting the foregoing, the Purchaser and the Seller shall, as promptly as
reasonably practicable after the date of this Agreement, file with the United
States Federal Trade Commission (the “FTC”) and the United States
Department of Justice (the “DOJ”) the notification and report form, if
any, required under the HSR Act for the transactions contemplated by this
Agreement. Subject to reasonable confidentiality restrictions, the
Purchaser and the Seller shall each furnish to the other such necessary
information and reasonable assistance as the other may reasonably request
in
connection with its preparation of any filing or submission that is necessary
under the HSR Act or any Foreign Merger Control Law. The Purchaser
and the Seller shall comply promptly with any inquiry or request for additional
information from any Governmental Entity and shall promptly provide any
supplemental information requested in connection with the filings made hereunder
pursuant to the HSR Act or any Foreign Merger Control Law. Each party
shall use its commercially reasonable efforts to obtain any clearance or
approval, and to cause the expiration or termination of any waiting period,
required under the HSR Act and any Foreign Merger Control Law for the
consummation of the transactions contemplated by this Agreement. Each
party shall not, and shall cause its affiliates not to, enter into, or
consummate any acquisition or license agreement which would present a material
risk of making it materially more difficult to obtain any approval or
authorization for the Acquisition under the HSR Act or any Foreign Merger
Control Law. For purposes of this Section 5.03, “commercially
reasonable efforts” shall include (A) opposing any action for a temporary,
preliminary or permanent injunction against the Acquisition, (B) entering
into a
consent decree containing the Purchaser’s agreement to hold separate and divest
the products and assets of the Business as may be required by any Governmental
Entity and (C) responding to any request for additional information issued
by the FTC or DOJ, as applicable; provided, however, that,
notwithstanding anything in this Agreement to the contrary, nothing in this
Agreement shall require the Purchaser to implement any divesture or agree
to any
other condition or consent decree or enter into any contract if doing so
would
reasonably be expected, individually or in the aggregate, to have an adverse
impact (other than a de minimis adverse impact) on the
Business.
(2) Each
party shall (A) promptly inform, and provide copies to, the other party of
any communication received from, or given by it to, any Governmental Entity
with
respect to obtaining clearance or approval, or the expiration or termination
of
any waiting, notice or review periods, for the Acquisition under the HSR
Act,
any Foreign Merger Control Law and ITAR, (B) to the extent practicable and
subject to reasonable confidentiality restrictions, provide the other party
and
its counsel with advance notice of, and the opportunity to participate in,
any
discussion, telephone call or meeting with any Governmental Entity in respect
of
any filing, investigation or other inquiry in connection with the Acquisition
and to participate in the preparation for such discussion, telephone call
or
meeting and (C) to the extent permitted by applicable Law and subject to
reasonable confidentiality restrictions, consult with each other prior to
filing
or submitting documents or entering into discussions with any Governmental
Entity and give each other advance notice to engage in meaningful consultation
with respect thereto.
(iii) Notwithstanding
anything in this Agreement to the contrary, the failure to obtain any consent
or
approval required in connection with a Restricted Asset, after the party
responsible for obtaining the same has used its commercially reasonable efforts
to obtain such consent or approval, shall not, individually or in the aggregate,
constitute a material adverse effect on the Purchaser, on the Seller or on
the
Business, as applicable, a breach of any representation, warranty, covenant
or
agreement under this Agreement or any certificate delivered pursuant to this
Agreement or a failure of any condition under this Agreement.
(b) Financing. (i) The
Purchaser shall, and shall cause its affiliates to, use commercially reasonable
efforts to take, or cause to be taken, all appropriate action, do, or cause
to
be done, all things reasonably necessary, proper or advisable under applicable
Laws, and to execute and deliver, or cause to be executed and delivered,
such
instruments and documents as may be reasonably required, to arrange and
consummate the Financing on or prior to the Closing on the terms and subject
only to the conditions contained in the Financing Commitments, including
using
its commercially reasonable efforts to cause the conditions in the Financing
Commitments that are within the Purchaser’s control to be satisfied and to cause
the financial institutions providing the Debt Financing to fund the Debt
Financing.
(ii) The
Purchaser shall not agree to or permit any material amendment, supplement
or
other modification of, or waive any of its rights under, any Financing
Commitments or the definitive agreements relating to the Financing without
the
Seller’s prior written consent, not to be unreasonably withheld, except that the
Purchaser may amend, supplement or otherwise modify the Debt Financing
Commitments if such amendment, supplement or other modification would not
be
reasonably likely to materially impair or delay the funding of the Debt
Financing or the Closing (it being understood that, subject to the requirements
of this clause (ii), such amendment, supplement or other modification
(1) does not contain additional or modified conditions or other
contingencies to the funding of the Debt Financing relative to those contained
in Debt Financing Commitments and (2) is otherwise not reasonably likely
to
impair or delay the funding of the Debt Financing or the Closing (it being
understood than, subject to the requirements of this clause (ii), such
amendment, supplement or other modification of the Debt Financing Commitments
may provide for the assignment of a portion of the Debt Financing Commitment
to
additional agents or arrangers and grant such persons approval rights with
respect to certain matters as are customarily granted to additional agents
or
arrangers).
(iii) If
any
portion of the Financing becomes unavailable on the terms and conditions
contained in the Financing Commitments, the Purchaser shall promptly notify
the
Seller, and the Purchaser shall use its commercially reasonable efforts to
obtain, as promptly as practicable following the occurrence of such event,
replacement commitments on terms that will enable the Purchaser to consummate
the transactions contemplated by this Agreement and that are not less favorable
in the aggregate (as determined by the Purchaser in its reasonable judgment)
to
the Purchaser and the Seller than those contained in the Financing
Commitments. The Purchaser shall deliver to the Seller complete and
correct copies of all amendments, supplements, other modifications or agreements
pursuant to which any amended, supplemented, modified or replacement commitments
shall provide the Purchaser with any portion of the Financing; provided
that the Purchaser may redact from any such copies the fee amounts and pricing
information payable to their Financing sources.
(iv) The
Seller shall, and shall cause its subsidiaries to, and shall use its
commercially reasonable efforts to cause its and its subsidiaries’ independent
accountants, legal counsel and other advisors to, provide such reasonable
cooperation in connection with the arrangement of the Debt Financing as may
be
reasonably requested by the Purchaser or their Financing sources, including
(A) participation in meetings, drafting sessions, presentations, road shows
and due diligence sessions, (B) using commercially reasonable efforts to
furnish the Purchaser and its Debt Financing sources with the Required Financial
Information and such other information and projections reasonably requested
by
the Purchaser in connection with the Debt Financing, (C) assisting the
Purchaser and its Debt Financing sources in the preparation of (1) offering
documents and other informational and marketing materials and documents to
be
used for the Debt Financing and (2) materials for rating agency
presentations, (D) reasonably cooperating with the marketing efforts of the
Purchaser and its Debt Financing sources, including using commercially
reasonable efforts to cause the syndication of the Debt Financing to benefit
materially with Seller’s and Company’s existing lending relationships,
(E) reasonably facilitating the pledging of collateral including real
property collateral and execution and delivery of definitive agreements relating
to the Financing and customary deliverables and (F) using commercially
reasonable efforts to obtain accountants’ “comfort letters”, accountants’
consent letters, legal opinions, customary landlord lien and access waivers,
surveys, appraisals and title insurance as reasonably requested by the
Purchaser; provided that none of the Seller nor any of its subsidiaries
shall be required to pay any commitment or other fee or incur any other
liability in connection with the Debt Financing; and provided further
that such requested cooperation does not unreasonably interfere with the
ongoing
operations of the Seller and its subsidiaries. The Purchaser shall,
promptly upon request by the Seller, reimburse the Seller for all reasonable
and
documented out-of-pocket costs incurred by the Seller or any of its subsidiaries
in connection with such cooperation. The Seller shall have the right
to consent to the use of its and its subsidiaries’ logos in connection with the
Debt Financing.
(v) The
Purchaser shall keep the Seller reasonably informed on a timely basis of
any
material developments relating to the Financing.
(vi) The
Purchaser acknowledges that the information being provided to it in connection
with the Financing is subject to the terms of Section 6.02(a).
(vii) The
Seller understands that the majority of the Purchase Price will be financed
with
proceeds of the Debt Financing, which will be provided by third party
sources. The Seller accordingly acknowledges that the obligations of
the Purchaser under this Section 5.03(b) do not require the Purchaser or
any of
its affiliates to provide the Debt Financing themselves if such third party
sources fail to provide the Debt Financing or to guarantee that such third
party
sources will provide the Debt Financing but only requires that the Purchaser
use
its commercially reasonable efforts to arrange and consummate the Debt
Financing.
(viii) In
the
event the Seller or any Transferred Entity suffers on or prior to the Closing
any casualty or loss to any building, structure, material fixture or material
improvement included within the Transferred Real Property, the Seller shall
assign to the Purchaser insurance proceeds sufficient to cover such casualty
or
loss or otherwise make adequate provisions to bear the cost of the repair
or
replacement of such building, structure, material fixture or material
improvement.
SECTION
5.04. Expenses;
Transfer Taxes. (a) Except as provided in the
following sentence, Section 1.05(b), paragraph (b) of this
Section 5.04, Section 5.06(f), Section 6.06(b),
Section 6.09(b) and Section 8.02(e), each party shall bear its and its
affiliates’ fees, costs and expenses (including fees, costs and expenses of
legal counsel and other representatives and consultants) incurred by them
in
connection with the negotiation of this Agreement and the Ancillary Agreements
and consummation of the Acquisition, the Financing and the other transactions
contemplated hereby or thereby. Notwithstanding the foregoing, all
fees, costs and expenses (including fees, costs and expenses of legal counsel)
incurred in connection with compliance with and filings and approvals under
merger control and competition Laws, including the HSR Act, shall be shared
equally by the Purchaser, on the one hand, and the Seller, on the other
hand.
(b) All
sales, use, value added, transfer, stamp, registration, documentary, excise,
real property transfer or gains, or similar Taxes (the “Transfer Taxes”)
applicable to the transfer of the Transferred Assets, the Excluded Assets
or the
Purchased Companies’ Equity Interests shall be shared equally by the Purchaser,
on the one hand, and the Seller, on the other hand. Each party shall
use commercially reasonable efforts to avail itself of any available exemptions
from any such Transfer Taxes, and to cooperate with the other in providing any
information and documentation that may be necessary to obtain such
exemptions. The Purchaser, the Seller and the Transferred Entities
shall jointly file all required returns and similar statements and take all
other actions under all applicable transfer notification statutes and
regulations and all applicable Tax statutes and regulations that are required
to
be made or taken by the parties in connection with or as a result of the
transactions contemplated by this Agreement.
SECTION
5.05. Tax
Matters. (a) Return Filings. For any
taxable period of the Transferred Entities that includes (but does not end
on)
the Closing Date, the Purchaser shall timely prepare (or cause to be prepared)
and file with the appropriate Taxing Authorities all Tax Returns required
to be
filed on a basis consistent with past practices of the Business and shall
pay
(or cause to be paid) all Taxes due with respect to such Tax Returns;
provided, however, that the Seller shall pay the Purchaser at
least five days before such Tax Return is due any amount owed by the Seller
pursuant to Section 9.01(a) with respect to the taxable periods covered by
such Tax Returns. For any taxable period of the Transferred Entities
that ends on or before the Closing Date, the Seller shall timely prepare
and
file with the appropriate Taxing Authority all Tax Returns required to be
filed;
provided that if such Tax Return is required to be filed by a Transferred
Entity after the Closing Date, the Seller shall deliver such Tax Return to
the
Purchaser which shall sign and file such Tax Return; and provided further
that any such Tax Return described in this sentence shall be prepared, on
a
basis consistent with the past practices of the Business and in accordance
with
applicable Law. The Seller shall pay all Taxes due with respect to
such Tax Returns and, if such Tax Return is to be filed by the Purchaser,
shall
pay the Purchaser at least five days before such Tax Return is due any amount
shown as due on such Tax Return.
(b) The
Seller shall include the income of the Transferred Entities (including any
deferred income triggered into income under Treasury Regulations
Sections 1.1502-13 and 1.1502-14 and any excess loss accounts taken into
income under Treasury Regulations Section 1.1502-19, and any income
triggered under any comparable provisions of state, local or foreign law)
resulting from or related to transactions contemplated by this Agreement
and
arising on or before the Closing Date on the relevant Seller group consolidated,
combined and unitary Tax Returns for all periods through and including the
Closing Date and pay any federal, foreign, state or local income Taxes
attributable to such income.
(c) Cooperation. The
Purchaser and the Seller shall reasonably cooperate, and shall cause their
affiliates, officers, employees, agents, auditors and representatives to
reasonably cooperate, in preparing and filing all Tax Returns, including
maintaining and making available to each other all records necessary in
connection with Taxes and in resolving all suits, claims, actions,
investigations, proceedings or audits (collectively, “Actions”) with
respect to all taxable periods relating to Taxes involving or otherwise relating
to the Transferred Entities or Transferred Assets. The Seller and its
affiliates will need access, from time to time, after the Closing Date, to
certain accounting and Tax records and information held by the Transferred
Entities to the extent such records and information pertain to events occurring
prior to the Closing Date; therefore, the Purchaser shall, and shall cause
each
Transferred Entity to, (i) use its commercially reasonable efforts to
properly retain and maintain such records for ten (10) years and shall
thereafter provide the Seller with written notice prior to any destruction,
abandonment or disposition, (ii) transfer such records to the Seller upon
its written request prior to any such destruction, abandonment or disposition
and (ii) allow the Seller and its agents and representatives (and agents or
representatives of any of its affiliates), at times and dates mutually
acceptable to the parties, to inspect, review and make copies of such records
as
the Seller may deem necessary or appropriate from time to time, such activities
to be conducted during normal business hours and at the Seller’s
expense. Any information obtained under this Section 5.05(c)
shall be kept confidential, except as may be otherwise necessary in connection
with the filing of Tax Returns or in the conduct of an audit or other
Action.
(d) Refunds
and Credits. Any refund or credit of Taxes, or any tax benefit or
reduction (including as a result of any overpayment of Taxes in prior periods)
accruing to the Purchaser or any of its affiliates as a result of the ownership
of the Business (each, a “Tax Asset”) attributable to any taxable period
ending on or before the Closing Date shall be for the account of the Seller,
unless any such refund or credit (i) is attributable to the carryback from
a
Post-Closing Tax Period of items of loss, deductions or other Tax items of
the
Transferred Entities (or any of their affiliates, including the Purchaser)
or
(ii) relates to the shift in timing of the incurrence of tax liabilities
from a
Pre-Closing Tax Period to a Post-Closing Tax Period. Any Tax Asset
attributable to any Straddle Period shall be apportioned between the Purchaser
and the Seller in accordance with the principles of Section
9.01(c). Each party shall forward, and shall cause its affiliates to
forward, to the party entitled pursuant to this Section 5.05(d) to receive
the
amount or economic benefit of the Tax Asset within 10 days after such Tax
Asset
is received or after such Tax Asset is allowed or applied against another
Tax
liability, as the case may be.
(e) Tax
Sharing Agreements. The Seller shall cause the provisions of any
agreement relating to the sharing, allocation or indemnification of Taxes,
or
any similar agreement, contract or arrangement (collectively, “Tax Sharing
Agreements”) between the Seller or any of their affiliates (other than the
Transferred Entities) and any Transferred Entity to be terminated on or before
the Closing Date. After the Closing Date, no party shall have any
rights or obligations under any such Tax Sharing Agreement.
(f) Closing
Date. On the Closing Date, the Purchaser shall cause each
Transferred Entity to conduct its business in the ordinary course in
substantially the same manner as currently conducted and on the Closing Date
shall not permit any Transferred Entity to effect any extraordinary transactions
(other than any such transactions expressly required by applicable law or
by
this Agreement) that could result in Tax liability to any Transferred Entity
in
excess of Tax liability associated with the conduct of its business in the
ordinary course.
(g) Purchase
Price Adjustments. The Purchaser and the Seller agree to treat
any amounts payable pursuant to Section 5.05(c) or Article IX as
adjustments to the Purchase Price for all Tax purposes, unless a final
determination causes any such payment not to be treated as an adjustment
to the
Purchase Price for U.S. Federal income Tax purposes. Neither the
Purchaser nor the Seller shall file any Tax Return, or take a position with
a
Taxing Authority, that (i) is inconsistent with the Allocation or
(ii) treats the transactions contemplated by this Agreement in a manner
inconsistent with the terms of this Agreement, unless required to do so by
a
final determination and after which prompt notice thereof shall be given
to the
other parties to this Agreement.
(h) Purchase
Price Allocation. (i) The Purchaser and the Seller
agree to allocate for all Tax purposes the Purchase Price (taking into account
any adjustments under Section 5.05(f)), of the Transferred Assets and the
stock of the Purchased Companies, the amount of the liabilities of the Purchased
Companies that are liabilities for income tax purposes and any other relevant
items among the Transferred Assets and the stock of the Purchased Companies
in
accordance with Section 1060 of the Code and the Treasury Regulations
thereunder (the “Asset Allocation”).
(ii) The
Purchaser shall deliver a draft of the Asset Allocation (the “Proposed Asset
Allocation”) to the Seller for its consent, which consent shall not be
unreasonably withheld, delayed or conditioned, no later than 90 days after
the
Closing Date. Except as provided in subparagraphs (j) and (k) of this
Section 5.05, at the close of business on the 30th day after delivery of
the Proposed Asset Allocation, the Proposed Asset Allocation shall become
binding upon the Purchaser and the Seller and shall be the Asset
Allocation.
(iii) The
Seller shall raise any objection to the Proposed Asset Allocation in writing
within 30 days of the delivery of the Proposed Asset Allocation. The
Purchaser and the Seller shall negotiate in good faith to resolve any
differences for 30 days after delivery of any objection by the
Seller. If the Purchaser and the Seller reach written agreement
amending the Proposed Asset Allocation, the Proposed Asset Allocation, as
so
amended, shall become binding upon Purchaser and Seller and shall be the
Asset
Allocation.
(iv) If
the
Purchaser and the Seller cannot agree on the appropriate allocation within
the
30-day period set forth in subparagraph (j) above, then all remaining
disputed items shall be submitted for resolution by an Accounting Firm mutually
selected by the Purchaser and the Seller (the “Allocation Accounting
Firm”). The Allocation Accounting Firm shall make a final
determination as to the disputed items within 30 days after such
submission. Such determination shall be final, binding and conclusive
on the Purchaser and the Seller and shall be the Asset
Allocation. The fees and expenses of the Allocation Accounting Firm
shall be shared equally between the Purchaser and the Seller.
(v) The
Asset
Allocation shall be amended to reflect any adjustments to the Purchase Price
under this Agreement. Except as required by applicable law, the
Purchaser and the Seller shall, and shall cause their affiliates to, file
all
Tax returns consistent with the Asset Allocation, as so amended.
SECTION
5.06. [INTENTIONALLY
OMITTED]
SECTION
5.07. Section 338(g)
Election. The Purchaser shall be permitted to make an election
under Section 338(g) of the Code with respect to the transfer of any
eligible Transferred Entity that is not a U.S. Transferred Entity (a “Foreign
Transferred Entity”); provided that any additional Taxes imposed on
the Seller or any of its affiliates as a result of such an election shall
be
subject to indemnification pursuant to Section 9.01(b). If the
Purchaser intends to make an election under Section 338(g) of the Code, the
Purchaser shall first give reasonable notice to the Seller. The
Seller shall then notify the Purchaser, within a reasonable period of time,
of
any increase in Tax liability that may result from such an
election. Upon receiving notice from the Seller, the Purchaser may
choose whether to make, or refrain from making, such election.
SECTION
5.08. Employee
Matters. (a) Effective as of the Closing, the Purchaser
shall, or shall cause its affiliates to, make offers of employment (which
offers
shall be in compliance with the Purchaser’s covenants set forth in this
Section 5.08) to, or continue the employment of, as applicable, each
Business Employee who is actively employed by Seller or its affiliates as
of the
Closing Date (each, an “Active Employee”). The Seller shall
not knowingly take any action to discourage any Business Employee from accepting
such offer of employment. For purposes of this Agreement, any
Business Employee who is not actively at work on the Closing Date due to
an
approved leave of absence (including due to vacation, holiday, sick leave,
workers compensation, maternity or paternity leave, military leave, jury
duty,
bereavement leave or injury, but not including due to unauthorized leave
of
absence or lay-off), other than short-term or long-term disability leave,
in
compliance with the applicable policies of the Seller and its affiliates,
shall
be considered an Active Employee. The Purchaser will comply, and will
cause its affiliates to comply, with the requirements of all applicable CBAs
relating to the rights of any laid-off employee of the Business who is not
actively at work on the Closing Date due to a lay-off to be recalled to active
employment with the Purchaser or its affiliates following the Closing
Date. With respect to each Business Employee who is not actively at
work as of the Closing Date due to short-term or long-term disability leave
(each, a “Disabled Employee”), effective as of the date on which such
Disabled Employee presents himself or herself to the Purchaser for active
employment following the Closing Date, provided such Disabled Employee is
cleared for work and presents himself or herself to the Purchaser for active
employment within 180 days following the Closing Date, (i) in the case
of any such Disabled Employee who was employed by a Transferred Entity
immediately prior to the date such employee’s disability leave began, the
Purchaser shall continue the employment of such Disabled Employee and
(ii) in the case of any such Disabled Employee who was employed by the
Seller or one of its affiliates (other than a Transferred Entity) immediately
prior to the date such employee’s disability leave began, the Purchaser shall,
or shall cause its affiliates to, make an offer of employment (which offer
shall
be in compliance with the Purchaser’s covenants set forth in this
Section 5.08) to such Disabled Employee, in each case, with job
responsibilities that are substantially similar to such Disabled Employee’s job
responsibilities with the Seller or its affiliates immediately prior to the
date
such employee commenced disability leave, to the same extent, if any, as
the
Seller or its affiliates would have been required to re-employ such Disabled
Employee if the transactions contemplated by this Agreement had not occurred,
in
accordance with applicable Law and any applicable collective bargaining
agreement. Business Employees who transfer to the Purchaser or one of
its affiliates, as of the effective date of such transfer, shall be referred
to
as “Transferred Employees”, and the date that such Business Employee
transfers to the Purchaser or one of its affiliates shall be referred to
as the
“Transfer Date”. In the case of (i) any Active Employee or
(ii) any Disabled Employee who was employed by a Transferred Entity immediately
prior to the date such employee’s disability leave began, the Transfer Date
shall be the Closing Date; provided, however, that, except as
relates to any Assumed Benefit Plan, the Purchaser and its affiliates shall
have
no liabilities or obligations with respect to any such Disabled Employee
unless
and until such employee presents himself or herself to the Purchaser or its
affiliates for active employment in accordance with this Section
5.08(a). In the case of any Disabled Employee who was employed by the
Seller or one of its affiliates (other than a Transferred Entity) immediately
prior to the date such employee’s disability leave began, the Transfer Date
shall be the date such employee commences active employment with the Purchaser
or its affiliates. The Seller and the Purchaser intend that the
transactions contemplated by this Agreement shall not constitute a severance
of
employment of any Transferred Employee prior to or upon the consummation
of the
transactions contemplated by this Agreement, and that Transferred Employees
will
have continuous and uninterrupted employment immediately before and immediately
after the consummation of the transactions contemplated by this
Agreement.
(b) During
the period from the Closing Date until the 12-month anniversary of the Closing
Date (such period, the “Continuation Period”), the Purchaser or its
affiliates shall provide each Transferred Employee with (i) a base salary
or rate of base pay that is at least equal to such Transferred Employee’s base
salary or rate of base pay immediately prior to the Closing (provided that
such
base salary or rate of base pay is either the same as in effect on the date
of
this Agreement or has been modified only to the extent permitted by Section
5.01(s)) and (ii) other compensation and employee benefits that, in the
aggregate, are substantially comparable to the compensation and employee
benefits provided to each such Transferred Employee immediately prior to
the
Closing (without regard to any changes made pursuant to the authority set
forth
in Section 5.01(s) except for cash bonuses paid in the ordinary course
consistent with Section 5.08(r)); provided that (A) none of the Purchaser
or any of its affiliates shall have any obligation to (i) issue, or adopt
any
plans or arrangements providing for the issuance of equity or equity based
compensation, (ii) provide post-retirement medical coverage unless such coverage
is both (x) required pursuant to the terms of the CBAs and (y) applicable
solely
to Transferred Employees (other than Retiree Medical Eligible Employees)
and
(iii) provide a U.S. qualified or non-qualified defined benefit pension plan
unless such coverage is both (x) required pursuant to the terms of the CBAs
and
(y) applicable solely to Transferred Employees, (B) no such plans or
arrangements of the Seller or its affiliates shall be taken into account
in
determining whether compensation and employee benefits are substantially
comparable in the aggregate and (C) the Seller’s recently approved defined
contribution benefit plan described in Section 5.08(b) of the Seller
Letter shall be taken into account in determining whether compensation and
employee benefits of 401(k) Covered Employees are substantially comparable
in
the aggregate. Notwithstanding the foregoing or any other provision
of this Agreement to the contrary, in the case of any Transferred Employee
whose
employment with the Seller or its affiliates is covered by a collective
bargaining agreement immediately prior to the Closing (a “Represented
Employee”), during the Continuation Period, the Purchaser and its affiliates
shall be permitted to make changes to such Transferred Employee’s compensation
and benefits to the extent permitted under the applicable collective bargaining
agreement. Except as otherwise specifically provided in this
Agreement, the active participation and accrual of benefits of the Transferred
Employees in the Seller Benefit Plans (other than the Assumed Benefit Plans)
and
the other employee compensation, benefit and perquisite plans, programs and
arrangements of the Seller and its affiliates shall terminate effective as
of
12:01 a.m. on each Transferred Employee’s Transfer Date. Except
as required by applicable Law, nothing herein shall (1) guarantee
employment of any Transferred Employee for any period of time after the Closing
Date or preclude the ability of the Purchaser to terminate the employment
of any
Transferred Employee for any reason or no reason, or (2) other than as set
forth in Sections 5.08(c), (l) and (q), require the Purchaser to continue
any
particular employee benefit plan or arrangement after the Closing
Date. No provision of this Section 5.08 shall create any third
party beneficiary or other rights in any current or former employee of the
Seller, the Business or the Purchaser (including any dependent or beneficiary
thereof) or any other person or modify or create any employee benefit
plan. Except as set forth in this Section 5.08(b) and Sections
5.08(c), (l) and (q) or as required by applicable Law, the Purchaser and
its
affiliates, as applicable, shall have the right in their sole discretion
to
amend, modify, terminate or adjust benefit levels under any and all employee
benefit plans and arrangements after the Closing Date, and, except as set
forth
in Sections 5.08(c), (l) and (q) or as required by applicable Law, nothing
in this Section 5.08 shall be construed to limit any rights that the
Purchaser or any of its affiliates may have under any such plan or arrangement
to amend, modify, terminate or adjust any particular plan or
arrangement. No provision of this Section 5.08 is intended to
modify, amend or create any employee benefit plan or arrangement of the Seller
or the Purchaser or any affiliate of the Purchaser.
(c) Without
limiting the generality of Section 5.08(b), during the Continuation Period,
the Purchaser shall, or shall cause its affiliates to, provide each Transferred
Employee (other than any Represented Employee) whose employment is terminated
by
the Purchaser or its affiliates during the Continuation Period with severance
and other separation benefits that, in the aggregate, are no less favorable
than
what would be provided to such Transferred Employee pursuant to the Seller’s
severance plan as in effect as of the date of this Agreement (a complete
and
correct copy of which has been delivered to the Purchaser), taking into
account
such Transferred Employee’s service with the Purchaser and its affiliates
following the Closing and all Pre-Closing Service; provided,
however, that no such Transferred Employee will be entitled to
any of the
severance or separation benefits pursuant to this Section 5.08(c) unless
and
until such Transferred Employee executes a release of claims in favor of
both
the Seller and the Purchaser, each of their subsidiaries and each of their
respective predecessors, successors, parents and affiliates, and their
respective present and former officers, directors, employees and agents,
and
such release becomes effective and irrevocable.
(d) From
and
after each Transferred Employee’s Transfer Date, the Purchaser shall, or shall
cause its affiliates to, credit service accrued by Transferred Employees
with,
or otherwise recognized for benefit plan purposes by, the Seller and its
affiliates (as well as service with any predecessor employer of the Seller
or
any its affiliates, to the extent service with the predecessor employer is
recognized by the Seller or any of its affiliates) as of such Transferred
Employee’s Transfer Date (“Pre-Closing Service”) for purposes of
eligibility to participate, vesting, level of benefits and benefit accruals
and,
to the extent required by any applicable CBA, for purposes of early retirement
eligibility and early retirement subsidies, in each case, under any employee
benefit plans and arrangements and employment-related entitlements sponsored,
maintained or contributed to by the Purchaser or its affiliates to the same
extent recognized by the Seller and its affiliates immediately prior to such
Transferred Employee’s Transfer Date, except (i) for benefit accrual purposes
under any defined benefit pension plan of the Purchaser or its affiliates,
(ii)
for eligibility purposes under any post-retirement welfare benefit plan of
the
Purchaser or its affiliates, except as required pursuant to the terms of
any
applicable CBA, or (iii) to the extent such credit would result in duplication
of benefits for the same period of service.
(e) With
respect to any welfare benefit plans maintained for the benefit of Transferred
Employees or their dependents on and after each Transferred Employee’s Transfer
Date, the Purchaser shall (i) cause there to be waived any pre-existing
condition limitations, exclusions and actively-at-work requirements with
respect
to participation and coverage, to the extent waived or satisfied under the
Seller Benefit Plans in effect as of the date immediately prior to such
Transferred Employee’s Transfer Date and (ii) give effect, in determining
any deductible and maximum out-of-pocket limitations, to claims incurred
and
amounts paid by, and amounts reimbursed to, such Transferred Employees or
their
dependents in the plan year in which such Transferred Employee’s Transfer Date
occurs for purposes of satisfying any applicable deductible or out-of-pocket
requirements under any similar welfare benefit plans in which such Transferred
Employees or their dependents participate at or following the relevant Transfer
Date.
(f) The
Seller shall be responsible for providing such continuation coverage, within
the
meaning of COBRA, as is required pursuant to COBRA in respect of any Business
Employee or “qualified beneficiary” (as defined in COBRA) of a Business Employee
who incurs a “qualifying event” prior to 12:01 a.m. on the Closing;
provided that, in the event that such Business Employee is covered by an
employee welfare benefit plan that is an Assumed Benefit Plan, the Purchaser
shall be responsible for such continuation coverage, regardless of whether
such
Business Employee incurs a qualifying event before, on or after the Closing
Date. The Purchaser shall be responsible for providing such
continuation coverage as is required under COBRA in respect of any Transferred
Employee or qualified beneficiary of a Transferred Employee, in each case,
who
incurs a qualifying event at or following 12:01 a.m. on the Closing Date
and any Business Employee described in the proviso in the immediately preceding
sentence.
(g) Notwithstanding
any other provision of this Agreement to the contrary, the Seller shall retain
all liabilities, obligations and commitments with respect to any non-qualified
defined benefit pension and non-qualified defined contribution plans of the
Seller (including the Supplemental Deferral Benefit Retirement Plan, the
Senior
Executive Pension Plan and the Supplemental Contributing Employee Ownership
Plan), which liabilities, obligations and commitments, other than those that
relate to the Benefit Restoration Plan, shall be considered Excluded Liabilities
for purposes of this Agreement. On or prior to the Closing, the
Seller shall cause to be satisfied all liabilities, obligations and commitments
with respect to the Chase Brass & Copper Company Benefit Restoration Plan
and shall be entitled to the value of the assets in the account that was
previously established to satisfy the liabilities under such
plan. Notwithstanding any other provision of this Agreement to the
contrary, the Seller shall retain all liabilities, obligations and commitments
with respect to any stock incentive plan and employee stock purchase plan
that
relates to shares of the Seller’s common stock (other than the Seller
401(k) Plan, to the extent that a rollover is elected in accordance with
Section 5.08(p)), and all awards granted under such plans, which
liabilities, obligations and commitments shall be considered Excluded
Liabilities for purposes of this Agreement. Upon the Closing, the
Seller shall fully vest (i) all Seller contributions to the Seller 401(k)
Plan
and (ii) any other U.S. tax-qualified and supplemental defined contribution
plans in which Transferred Employees participate.
(h) The
Seller agrees to allow each Transferred Employee who, immediately prior to
the
Closing, has satisfied the eligibility criteria to receive benefits under
the
Seller’s post-retirement medical plans to participate in, and receive benefits
from, the Seller’s post-retirement medical plans upon such employee’s
eligibility to commence benefits in accordance with the terms of such medical
plans as in effect from time to time. Solely in the case of any
Transferred Employee who is within two years of satisfying such eligibility
criteria as of the Closing, the Seller agrees to recognize such Transferred
Employee’s service with the Purchaser or its affiliates for purposes of
satisfying such eligibility criteria. In the event that any such
Transferred Employee is terminated by the Purchaser or its affiliates without
cause (as reasonably determined in the Purchaser’s discretion) prior to the
second anniversary of the Closing, provided that, in the case of any
Transferred Employee whose employment is terminated by the Purchaser during
the
Continuation Period, such Transferred Employee satisfies the release requirement
set forth in Section 5.08(c), except to the extent prohibited by any
applicable CBA, such Transferred Employee shall be deemed to have satisfied
the
service-related eligibility criteria to receive benefits under the Seller’s
post-retirement medical plans as of the date the release of claims executed
by
such Transferred Employee becomes effective and
irrevocable. Notwithstanding any provision of this Agreement to the
contrary, (i) nothing herein shall prohibit the Seller from amending,
modifying or terminating any of its post-retirement welfare plans or prevent
the
application of any such amendment, modification or termination to any
Transferred Employee, provided any such amendment, modification or
termination is applied on substantially the same basis to all similarly situated
active and retired employees of the Seller (it being understood that status
as a
Transferred Employee shall not in and of itself make the Transferred Employees
“similarly situated”) and the Seller shall indemnify and hold harmless the
Purchaser from all costs, expenses or other damages that may result to the
Purchaser as a result of actions taken by the Seller or its affiliates in
connection with, or as a result of any such amendment, modification or
termination, (ii) the Purchaser shall provide, or cause its affiliates to
provide, the Transferred Employees described in this Section 5.08(h) (such
employees, the “Retiree Medical Eligible Employees”) with medical
coverage under the Purchaser’s plans on the same basis as such coverage is
provided to other similarly situated Transferred Employees for so long as
such
Retiree Medical Eligible Employees remain actively employed with the Purchaser
or any of its affiliates, (iii) if the employment of any Retiree Medical
Eligible Employee is involuntarily terminated, such Retiree Medical Eligible
Employee shall be entitled to post-employment medical coverage pursuant to
the
Purchaser’s severance plan that is applicable to such Transferred Employee on
the same basis as such coverage is provided to other similarly situated
Transferred Employees who have been terminated for the period required pursuant
to the applicable Purchaser’s severance plan, if any and (iv) while a
Retiree Medical Eligible Employee remains eligible for coverage under the
Purchaser’s plans in accordance with the preceding clauses (ii) and (iii),
such Retiree Medical Eligible Employee shall not be permitted to receive
post-retirement medical benefits pursuant to the Seller’s plans. For
the avoidance of doubt, and notwithstanding anything in this Agreement to
the
contrary, the Purchaser shall not be obligated to provide post-retirement
medical coverage to any Transferred Employee unless and to the extent
post-retirement medical coverage is required by the applicable CBAs to be
provided to Transferred Employees (other than Retiree Medical Eligible
Employees) covered by the CBAs. No provision of this
Section 5.08 is intended to modify, amend or create any employee benefit
plan or arrangement of the Seller or the Purchaser or any of their
affiliates.
(i) Except
as
otherwise required under applicable Law, the Seller shall be responsible
in
accordance with its welfare plans in effect prior to the Closing for all
reimbursement claims (such as medical and dental claims) for expenses incurred,
and for all non-reimbursement claims (such as life insurance and disability
claims) incurred, under any Seller Benefit Plans that are “employee welfare
benefit plans” (within the meaning of Section 3(1) of ERISA) prior to the
Closing by Employees and their dependents and beneficiaries. Except
as otherwise required under applicable Law, the Purchaser shall be responsible
for all reimbursement claims (such as medical and dental claims) for expenses
incurred, and for all non-reimbursement claims (such as life insurance and
disability claims) incurred from and after 12:01 a.m. on the Closing Date
by any Transferred Employee (and his or her dependents and beneficiaries)
under
any welfare benefit plans of the Purchaser or its affiliates. Except
as otherwise provided under applicable Law, for purposes of this
Section 5.08(i), a claim shall be deemed to be incurred as
follows: (1) life, accidental death and dismemberment,
disability and business travel accident insurance benefits, upon the death,
accident or illness giving rise to such benefits and (2) health, dental and
prescription drug benefits (including in respect of any hospital confinement),
upon provision of the related services, materials or
supplies. Notwithstanding any provision of this Section 5.08(i)
to the contrary, in the case of any Disabled Employee, the Seller shall retain
liability for all welfare benefit claims (including medical, dental and
disability claims) incurred prior to the date such employee becomes actively
employed by the Purchaser or its affiliates.
(j) Notwithstanding
any provision in this Agreement to the contrary, except as specifically provided
in this Section 5.08(j), the Purchaser and its affiliates shall be
responsible for all claims that are properly accrued on the Statement or
that
relate to a reserve that is reflected on the Statement and which are incurred
by
Transferred Employees prior to or on the Closing under the workers compensation
plans of the Seller and its affiliates, it being understood that all such
liabilities shall constitute Transferred Liabilities with respect to which
the
Seller shall be entitled to indemnification from the Purchaser pursuant to
Section 9.07; provided, however, that in the case of any
Disabled Employee, the Seller shall retain liability for workers compensation
claims incurred prior to the date such employee becomes actively employed
by the
Purchaser or its affiliates. The Purchaser and its affiliates shall
administer all such workers compensation claims in a commercially reasonable
manner and in accordance with the past practices of the Seller and its
affiliates.
(k) Except
as
specifically provided in the immediately following sentence, after the Closing,
the Seller agrees to assume and/or retain and shall indemnify the Purchaser
and
the Transferred Entities against all liabilities and obligations arising
out of
or relating to any and all liabilities with respect to any employee benefit
plan
or arrangement that relates to employees of the Seller or any Seller Commonly
Controlled Entity that is subject to Section 302 of ERISA, Title IV of
ERISA, COBRA, Section 412 of the Code, the Coal Industry Retiree Health
Benefit Act of 1992, as amended or any other statute that imposes liability
on a
so-called controlled group basis with reference to any provision of
Section 52(a) or Section 414 of the Code or Section 4001 of
ERISA, as applicable, that is due to the Seller’s and the Transferred Entities’
status as part of a Seller Commonly Controlled Entity (such liability,
collectively, “Controlled Group Liability”). Notwithstanding
the foregoing, the provisions of the immediately preceding sentence shall
be
deemed not to apply to, and the term “Controlled Group Liability” shall not
include, any liabilities or obligations with respect to (i) any Assumed Benefit
Plan or (ii) the IAM Fund to the extent it relates to the Business.
(l) As
of the
Closing Date, the Purchaser shall have in effect flexible spending reimbursement
accounts under a cafeteria plan qualifying under Section 125 of the Code
(the “Purchaser Cafeteria Plan”). The Purchaser shall cause
the Purchaser Cafeteria Plan to accept a spin-off of the flexible spending
reimbursement accounts of each Transferred Employee who participates in a
cafeteria plan of the Seller (the “Seller Cafeteria Plan”) immediately
prior to the Closing Date (each, an “FSA Participant”) and to honor and
continue through December 31 of the year in which the Closing occurs (the
“FSA Participation Period”) the elections made by each FSA Participant
under the Seller Cafeteria Plan in respect of such flexible spending
reimbursement accounts that are in effect immediately prior to the
Closing. As soon as practicable following the Closing Date, the
Seller shall cause to be transferred from the Seller Cafeteria Plan to the
Purchaser Cafeteria Plan the excess, if any, of the aggregate accumulated
contributions to the flexible spending reimbursement accounts made by
Transferred Employees prior to the Closing during the year in which the Closing
occurs over the aggregate reimbursement payouts made to the Transferred
Employees prior to the Closing for such year from such accounts. From
and after the Closing, the Purchaser shall assume and be solely responsible
for
all claims by Transferred Employees under the flexible spending reimbursement
accounts of the Seller Cafeteria Plan incurred at any time during the calendar
year in which the Closing Date occurs, whether incurred prior to, on or after
the Closing Date, that have not been paid in full as of the Closing
Date. For purposes of this paragraph, a claim for reimbursement shall
be deemed to have been incurred on the date on which the charge or expense
giving rise to such claim is incurred. Nothing herein shall prevent
the Purchaser from amending, modifying or terminating the Purchaser Cafeteria
Plan at any time after December 31 of the year in which the Closing
occurs.
(m) Effective
as of the Closing, each Transferred Employee who is a participant as of such
employee’s Transfer Date in one or more Seller Benefit Plans that is a U.S.
tax-qualified defined benefit pension plan (as applicable, a “Seller Pension
Plan”) shall cease accruing benefits under such Seller Pension Plan and,
except as required by applicable Law or as set forth in this
Section 5.08(m), service with any employer following such employee’s
Transfer Date shall not be taken into account for any purpose under such
Seller
Pension Plan. Notwithstanding the foregoing, in the case of any
Transferred Employee who is a participant in a Seller Pension Plan as of
such
employee’s Transfer Date but who has not satisfied the vesting criteria or the
eligibility criteria to receive an unreduced retirement benefit or an early
retirement subsidy under such plan as of such employee’s Transfer Date (each
such Transferred Employee, a “Pension Service Employee”), such Pension
Service Employee shall be given credit for service with the Purchaser and
its
affiliates following the Closing solely for purposes of vesting of benefits
and
eligibility for unreduced retirement benefits and early retirement subsidies
under such Seller Pension Plan. The Seller shall undertake to
identify each Pension Credit Employee prior to the Closing and, promptly
following the Closing, the Seller shall provide the Purchaser with a list
of
each Transferred Employee who the Seller has identified as a Pension Service
Employee. Within 10 Business Days following the termination of
employment of any Pension Service Employee listed on the schedule for any
reason, the Purchaser shall provide the Seller with a notice which specifies
the
date on which such Pension Service Employee’s employment terminated and the
circumstances of such termination (i.e., whether such termination was due
to the employee’s voluntary resignation, death or disability or was a
termination by the Purchaser or its affiliates with or without
cause). For the avoidance of doubt, in no event will the Purchaser or
any of its affiliates be deemed to sponsor or contribute to or have liability
under or with respect to any Seller Pension Plan as a result of the recognition
of the service of any Pension Seller Employee with the Purchaser or its
affiliates, in accordance with this Section 5.08(m). Notwithstanding any
other
provision in this Agreement to the contrary, following the Closing, the Seller
or its affiliates shall retain, or shall cause the Seller Pension Plans to
retain, all assets and liabilities that relate to benefits accrued by
Transferred Employees prior to the Closing pursuant to the Seller Pension
Plans
and shall make payments to Transferred Employees with vested rights thereunder
in accordance with the terms of the applicable Seller Pension Plan as in
effect
from time to time; provided, however, that except as required by
law or the terms of the applicable Seller Pension Plan, as in effect from
time
to time, no Transferred Employee shall be permitted to commence receiving
benefits pursuant to any Seller Pension Plan until such Transferred Employee’s
employment with the Purchaser has terminated.
(n) The
Purchaser will assume the CBAs identified on Section 5.08(n) of the
Seller Letter effective as of the Closing (including the obligation to honor
the
terms and conditions thereof and any obligations thereunder requiring a
successor to recognize a particular labor union as authorized representative
of
an employee group or for any other purpose) on terms and conditions no less
favorable than those in effect on the date of this Agreement. As of
the Closing Date, the Purchaser or one of its affiliates shall be the “Employer”
for purposes of each such CBA and the Purchaser and its affiliates shall
have
sole responsibility for all obligations and liabilities arising from and
after
12:01 a.m. on the Closing Date under the CBAs, and shall indemnify and hold
harmless the Seller and its affiliates with respect to the CBAs for actions
which occur after 12:01 a.m. on the Closing Date.
(o) The
Seller and Purchaser intend that while ownership of the Transferred Entities
will change as a result of the consummation of the transactions contemplated
by
this Agreement, such transactions will not constitute a complete or partial
withdrawal by the Seller or any Transferred Entity from the IAM
Fund. For so long as the Purchaser or its affiliates are obligated to
contribute to the IAM Fund pursuant to the applicable collective bargaining
agreement, the Purchaser will be obligated to contribute to the IAM Fund
for
substantially the same number of contribution base units for which the Seller
and its affiliates had an obligation to contribute thereto with respect to
the
Business Employees. If the Purchaser withdraws from the IAM Fund in a
complete withdrawal, or a partial withdrawal with respect to operations covered
by the applicable collective bargaining agreement, the Purchaser will be
liable
to the IAM Fund, it being understood that any such liability would constitute
a
Transferred Liability with respect to which the Seller would be entitled
to
indemnification from the Purchaser pursuant to Section 9.07.
(p) The
Seller shall provide to the Purchaser, no later than five calendar days prior
to
the Closing Date, a list of all employees or former employees of the Seller
who
have suffered an “employment loss” (as defined in the WARN Act), during the
ninety calendar day period preceding 12:01 a.m. on the Closing Date at each
“single site of employment” (as defined in WARN) that relates to the Business
and the date of such employment loss and applicable site of employment for
each
such person. If, from and after 12:01 a.m. on the Closing Date, the
Purchaser operates the Business of the Seller in the same manner operated
by the
Seller during the six-month period prior to the Closing Date, the Purchaser
will
not incur any liability under WARN or any similar state or local
statute. Subject to the foregoing representation, the Purchaser shall
indemnify and hold harmless the Seller and its affiliates with respect to
any
liability under the WARN Act or any similar state statute arising from the
actions of the Purchaser or its affiliates from and after 12:01 a.m. on the
Closing Date.
(q) Effective
as of the Closing Date, the Purchaser shall establish or otherwise have in
effect a defined contribution plan that includes a qualified cash or deferred
arrangement within the meaning of Section 401(k) of the Code (the
“Purchaser 401(k) Plan”) that will provide benefits to Transferred
Employees participating in one or more defined contribution plans of the
Seller
or its affiliates that include a cash or deferred arrangement within the
meaning
of Section 401(k) of the Code (as applicable, the “Seller
401(k) Plan”). Each Transferred Employee participating in
the Seller 401(k) Plan as of such employee’s Transfer Date shall become a
participant in the Purchaser 401(k) Plan as of such employee’s Transfer
Date. The accounts of Transferred Employees under the Seller
401(k) Plan shall be distributable according to the terms of the Seller
401(k) Plan. Upon the Closing, the Seller shall fully vest (i)
all Seller contributions to the Seller 401(k) Plan and (ii) any other U.S.
tax-qualified and supplemental defined contribution plans in which Transferred
Employees participate. The Purchaser shall cause the Purchaser
401(k) Plan to accept “direct rollovers” (within the meaning of
Section 401(a)(31) of the Code) of distributions from the Seller
401(k) Plan to Transferred Employees (including direct rollovers of
outstanding loans and any promissory notes or other documents evidencing
such
loans) if such rollovers are elected in accordance with applicable Law by
such
Transferred Employees during the one year period following the Transferred
Employee’s Transfer Date on terms mutually agreeable to the Seller and the
Purchaser. The Seller and the Purchaser shall cooperate with each
other (and cause the trustees of the Seller 401(k) Plan and the Purchaser
401(k) Plan to cooperate with each other) with respect to the rollover of
the distributions to the Purchaser 401(k) Plan. During the
Continuation Period, the Purchaser shall cause the Purchaser 401(k) Plan to
maintain for the benefit of the 401(k) Covered Employees the level of employer
contributions detailed in Section 5.08(b) of the Seller
Letter. For the avoidance of doubt, the Seller shall have no
responsibility for any failure of the Purchaser to properly administer the
Purchaser 401(k) Plan in accordance with its terms and applicable Law, including
without limitation any failure to properly administer the accounts of
Transferred Employees and their beneficiaries who have effected a direct
rollover of their account balances from the Seller 401(k) Plan to the Purchaser
401(k) Plan, and the Purchaser shall indemnify and hold harmless the Seller
and
its affiliates from all costs, expenses or other damages that may result
to the
Seller and its affiliates from any such failure.
(r) With
respect to the calendar year in which the Closing occurs, the Seller shall
retain all liabilities, obligations and commitments for the portion of any
annual cash bonuses that relate to the portion of such year that elapses
prior
to the Closing Date. The Seller shall make a prorated annual cash
bonus payment to each Transferred Employee the amount (if any) of which shall
be
equal to the product of (i) the amount (if any, and as determined in
accordance with the following sentence) that would have been payable to such
Transferred Employee in respect of such employee’s annual cash bonus had such
Transferred Employee remained employed by the Seller for the full calendar
year
(such amount with respect to each Transferred Employee, the “Annual Bonus
Amount”) multiplied by (ii) a fraction, the numerator of which is the
number of days in the calendar year during which the Closing occurs that
elapse
prior to the Closing, and the denominator of which is 365. The Seller
shall determine the Annual Bonus Amount, if any, for each Transferred Employee
using a good faith, reasonable methodology (which need not be the same for
each
Transferred Employee) consistent with past practice as to methodology (including
targets), including by basing such amount upon target bonus or upon actual
performance. Such prorated annual cash bonuses shall be paid not
later than 30 days following the Closing Date.
(s) The
Seller has entered into a severance agreement with the Business Employee
set
forth in Section 5.08(s)(i) of the Seller
Letter. Effective as of the Closing, Purchaser shall, or shall cause
its affiliates, to assume and honor such employment agreement pursuant to
its
terms as in effect on the Closing Date. On and following the Closing
Date, Purchaser or one of its affiliates shall be deemed to be the employer
for
all purposes pursuant to such severance agreement, provided the Business
Employee executes a written acknowledgement of the assumption of the severance
agreement by the Purchaser. The Seller has also entered into a letter
agreement regarding international assignment or relocation with each of the
Business Employees set forth in Section 5.08(s)(ii) of the Seller
Letter. Effective as of the Closing, the Purchaser shall, or shall
cause its affiliates, to assume and honor each such letter agreement pursuant
to
its terms as in effect on the Closing Date.
(t) The
Seller has entered into a change in control severance agreement with the
Business Employee set forth in Section 5.08(t) of the Seller
Letter. Effective as of the Closing Date, the Seller will take all
such actions (if any) as are necessary to cause, in a manner that does not
create any obligation upon or liability of the Purchaser or any Transferred
Entity, such Business Employee to have no further rights pursuant to such
change
in control severance agreement.
(u) Notwithstanding
Section 5.08(b) or any other provision of this Agreement to the contrary,
if the applicable Laws of any country or any collective bargaining agreements
require the Purchaser or its affiliates (i) to maintain the same Terms and
Conditions of Employment (as defined below) that relate to any Transferred
Employee following such employee’s Transfer Date or (ii) to continue or
cause to be continued any employment contract of any Transferred Employee
that
is required under any applicable non-U.S. law and described on
Section 5.08(u) of the Seller Letter, in the case of
clauses (i) and (ii), the Purchaser shall maintain, or cause to the
maintained, the same Terms and Conditions of Employment that relate to such
Transferred Employee or shall continue, or cause to be continued, such
Transferred Employee’s employment contract for the period required under
applicable Law or by the applicable collective bargaining
agreements. “Terms and Conditions of Employment” shall mean
the rights of Transferred Employees according to their individual terms and
conditions of employment with the Seller and its affiliates prior to the
relevant Transfer Date and, where applicable, under collective bargaining
agreements.
(v) From
and
after the Closing, the Purchaser and the Transferred Entities shall, jointly
and
severally, indemnify the Seller against, and hold each of them harmless from,
any Loss suffered or incurred by the Seller (without duplication for
(i) any indemnification provided for in Section 9.01(b) and
(ii) any indemnification that may be sought under more than one clause of
Section 9.07) arising from, relating to or otherwise in respect of any
discontinuance, suspension or modification on or after the Closing of any
Assumed Benefit Plan.
(w) Prior
to
the Closing, the Purchaser and its representatives shall be given reasonable
advance notice of and shall have the right to be present at and participate
in
any meetings or negotiations relating to transactions contemplated by this
Agreement with any union or similar organized labor group representing Business
Employees (it being agreed that the Seller shall be the spokesperson at any
such
meetings or negotiations).
SECTION
5.09. Access
to Information. (a) To the extent consistent with
applicable Law, the Seller shall, and shall cause the Business to, afford
to the
Purchaser and its accountants, counsel and other representatives (including
surveyors) reasonable access, upon reasonable notice during normal business
hours during the period prior to the Closing, to all the personnel, properties,
books, Contracts, commitments, Tax Returns and records of the Business, and,
during such period, shall furnish promptly to the Purchaser any information
concerning the Business and its assets as the Purchaser may reasonably request;
provided, however, that such access (a) shall not permit the
Purchaser to perform environmental studies in respect of the Business or
its
assets and (b) does not unreasonably disrupt the normal operations of the
Seller or the Business.
(b) The
Seller will retain all books and records (other than the books and records
transferred to the Purchaser pursuant to this Agreement) relating to the
Business in accordance with the Seller’s record retention policies as currently
in effect. During the six-year period beginning on the Closing Date,
the Seller shall not dispose of or permit the disposal of any such books
and
records not required to be retained under such policies without first giving
60
days’ prior written notice to the Purchaser offering to surrender the same to
the Purchaser at the Purchaser’s expense.
SECTION
5.10. Commercial
Arrangements. Except as contemplated by this Agreement and for
Contracts or other arrangements set forth in Section 5.10 of the
Seller Letter, all Contracts or other arrangements between the Seller or
its
affiliates (other than the Transferred Entities), on the one hand, and the
Transferred Entities, on the other hand, shall be canceled and terminated
at or
prior to the Closing.
SECTION
5.11. Release
of Guarantees and Letters of Credit. (a) The Purchaser
shall use commercially reasonable efforts to cause (i) to be
unconditionally released or extinguished in full the guarantees or sureties
(whether or not of indebtedness), together with any ancillary obligations
thereto, issued by the Seller or any of its affiliates (other than the
Transferred Entities) on behalf of the Business or any Transferred Entity
and
that are listed on Section 5.11 of the Seller Letter, without further
recourse to the Seller or its applicable affiliate and (ii) the Seller and
its affiliates (other than the Transferred Entities) to be unconditionally
released in full from any liability or obligation in respect of any letter
of
credit issued for the account of the Business or in connection with any
liability or obligation of the Business and that are listed on Section 5.11
of
the Seller Letter, without further recourse to the Seller or its applicable
affiliate. If any guarantee, surety, letter of credit or ancillary
obligation referred to in the preceding sentence is not unconditionally released
or extinguished in full on or prior to the Closing, the Purchaser shall or
shall
cause one or more letters of credit, from financial institutions, in amounts
and
on terms reasonably satisfactory to the Seller and the Purchaser, to be issued
for the benefit of the Seller or its applicable affiliate to guarantee the
reimbursement to the Seller or such affiliate of any amounts paid by it under
or
in respect of any such guarantee, surety, letter of credit or obligation,
which
letters of credit (or renewals thereof) shall remain in full force and effect
until such guarantee, surety, letter of credit or obligation has been
unconditionally released or extinguished in full. The Purchaser and
its subsidiaries shall, on a joint and several basis, shall indemnify and
hold
harmless the Seller and its affiliates from and against any Losses suffered
or
incurred by them in connection with any of the foregoing guarantees, sureties,
liabilities or obligations.
(b) At
or
prior to the Closing, the Seller shall or shall cause (i) to be
unconditionally released or extinguished in full all guarantees or sureties
(whether or not of indebtedness), together with any ancillary obligations
thereto, issued by any Transferred Entity on behalf of the Seller or any
of its
affiliates (other than guarantees or sureties issued on behalf of another
Transferred Entity or in respect of the Business), without further recourse
to
the applicable Transferred Entity and (ii) the Transferred Entities to be
unconditionally released in full from any liability or obligation in respect
of
any letter of credit issued for the account of the Seller or any of its
affiliates (other than letters of credit issued for the account of the Business
or in connection with any liability or obligation of the Business), without
further recourse to the applicable Transferred Entity. The Seller and
its affiliates shall, on a joint and several basis, indemnify and hold harmless
the Purchaser and its affiliates from and against any Losses suffered or
incurred by them in connection with any of the foregoing guarantees, sureties,
liabilities or obligations.
SECTION
5.12. Repayment
of Indebtedness; Intercompany Accounts.
(a) Prior
to the Closing, the Seller (i) shall assume, extinguish, repay or
contribute as equity, or shall cause to be assumed, extinguished, repaid
or
contributed as equity, all indebtedness and ancillary obligations thereto
(including interest) owed by any Transferred Entity or the Business to any
person (including the Seller and its affiliates), other than indebtedness
owed
to another Transferred Entity; provided that if on the Closing
Date the aggregate amount of indebtedness owed by any non-U.S. Transferred
Entity to any U.S. Transferred Entity exceeds the aggregate amount of
indebtedness owed by any non-U.S. Transferred Entity to any U.S. Transferred
Entity on September 30, 2007 as set forth on Section 3.02(c) of the
Seller Letter by more than $5,000,000, the Seller shall repay, or shall cause
the repayment of, all such excess indebtedness, and (ii) shall, and shall
cause
its affiliates to, repay in full all indebtedness and ancillary obligations
thereto (including interest) it or they owe to any Transferred Entity, other
than indebtedness and ancillary obligations thereto owed by one Transferred
Entity to another Transferred Entity.
(b) Prior
to
the Closing, the Seller shall, and shall cause its affiliates (including
the
Transferred Entities) to, settle or extinguish all intercompany receivables
and
payables that were incurred on or prior to the Closing and that arose between
the Seller or its affiliates (other than the Transferred Entities), on the
one
hand, and the Transferred Entities, on the other hand.
SECTION
5.13. Yamaha-Xxxx
Metal Joint Venture Agreement. At or prior to the Closing, the
Purchaser shall assume all of the obligations of the Seller under the Joint
Venture Agreement dated as of June 15, 1987, between the Seller and Nippon
Gakki Co., Ltd. in accordance with the terms thereof.
SECTION
5.14. Resignations. On
the Closing Date, the Seller shall cause to be delivered to the Purchaser
duly
signed resignations, effective as of the close of business on the Closing
Date,
of all directors and officers (or persons performing similar functions) of
each
Transferred Entity.
SECTION
5.15. Monthly
Financial Information. As soon as reasonably practicable after it
is available but in any event not later than 15 business days after the end
of
each month, commencing with the month ending on September 30, 2007, the Seller
shall provide to the Purchaser the monthly financial information package
respecting the Business prepared for the senior managers of the Seller for
such
month.
SECTION
5.16. Conversions
to LLCs. Prior to the Closing, the Seller shall cause each
Transferred Entity organized under the laws of any constituent state of the
United States of America to be converted to a limited liability company and
to
be treated as a disregarded entity and a branch of the Seller for U.S. Federal
income tax purposes.
Other
Agreements
SECTION
6.01. Agreement
Not To Compete; Non-Solicitation of Employees. (a) The
Seller understands that the Purchaser shall be entitled to protect and preserve
the going concern value of the Business to the extent permitted by Law and
that
the Purchaser would not have entered into this Agreement absent the provisions
of this Section 6.01 and, therefore, from the Closing Date until
(i) the fifth anniversary of the Closing Date with respect to the Primary
Metals Business and (ii) the third anniversary of the Closing Date with
respect to the Fabrication Business, the Seller shall not, and shall cause
each
of its affiliates not to engage in activities or businesses, invest or acquire
any interest in any person or establish any new businesses, engaged in the
Primary Metals Business or the Fabrication Business (“Competitive
Activities”); provided, however, that (i) the Seller and its
affiliates not shall be prohibited from investing in securities of any company
that is listed on a national securities exchange or traded on NASDAQ provided
that, in the case of the Seller or any affiliate of the Seller that is not
a
retirement, pension, medical or other benefit plan (where a fiduciary of
the
beneficiaries of such plan exercises independent investment oversight over
the
assets of such plan), the Seller or such affiliate does not hereafter own,
or
have the right to acquire, more than 5% of the outstanding voting securities
of
a company engaged in Competitive Activities and (ii) the term “Competitive
Activities” shall exclude the conversion of copper, copper alloy, aluminum and
stainless steel strip, sheet, strip, foil, rod, welded tube and plate into
components that are intended to be included into the final products of the
Seller and its subsidiaries.
(b) From
the
date of this Agreement through (and including) the first anniversary of the
Closing Date, the Seller shall not, and shall cause each of its affiliates
not
to directly or indirectly solicit, recruit or hire any Transferred Employees
or
directly or indirectly solicit or encourage any Transferred Employee to leave
the employment of the Purchaser or its affiliates; provided that the
Seller and its affiliates shall not be prohibited from making general
solicitations of employment that are not specifically targeted at Transferred
Employees.
(c) Except
as
otherwise specifically required by this Agreement, from the date of this
Agreement through (and including) the first anniversary of the Closing Date,
the
Purchaser shall not, and shall cause each of its affiliates not to directly
or
indirectly solicit, recruit or hire any employee of the Seller or its affiliates
other than the Business Employees (such employees, the “Remaining
Employees”) or directly or indirectly solicit or encourage any Remaining
Employee to leave the employment of the Seller or its affiliates;
provided that the Purchaser and its affiliates shall not be prohibited
from making general solicitations of employment that are not specifically
targeted at Remaining Employees.
(d) Section 6.01(a)
shall be deemed not breached as a result of the acquisition following the
Closing Date and subsequent ownership by the Seller or any of its affiliates
of
a person that engages, directly or indirectly, in Competitive Activities
if such
Competitive Activities account for less than 20% of such person’s consolidated
annual revenues and earnings; provided, however, that no such
acquired person shall be permitted to use the names “Xxxx Metals” or “Xxxx
Brass” or any other name that in the reasonable opinion of the Purchaser is
confusingly similar to the names “Xxxx Metals” or “Xxxx Brass” (it being
understood that nothing in this Section 6.01(d) shall be deemed to restrict
the
use of the name Xxxx in any corporate name).
(e) It
is the
desire and intent of the parties to this Agreement that the provisions of
Section 6.01(a) shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought. It is expressly understood and agreed that although the
Seller and the Purchaser consider the provisions of Section 6.01(a) to be
reasonable, if a judicial determination is made by a court of competent
jurisdiction that the time or territory or any other restriction contained
in
this Agreement is an unenforceable restriction against the Seller, the
provisions of this Agreement shall not be rendered void but shall be deemed
amended to apply as to such maximum time and territory and to such maximum
extent as such court may judicially determine or indicate to be
enforceable. If any particular provisions or portion of
Section 6.01(a) shall be adjudicated to be unenforceable, the amendment
contemplated by the immediately preceding sentence shall apply only with
respect
to the operation of such Section in the particular jurisdiction in which
such adjudication is made.
(f) The
parties recognize that the performance of the obligations
under Section 6.01(a) by the Seller is special, unique and
extraordinary in character, and that in the event of the breach by Seller
of the
terms and conditions of Section 6.01(a) to be performed by Seller, the
Purchaser and its affiliates shall be entitled, if they so elect, to obtain
damages for any breach, or to enforce the specific performance thereof by
the
Seller.
SECTION
6.02. Confidentiality.
(a) The Purchaser acknowledges that the information being provided to
it in connection with the Acquisition, the Financing and the consummation
of the
other transactions contemplated hereby is subject to the terms of the
confidentiality agreement dated as of May 16, 2007 (the “Confidentiality
Agreement”), between KPS Capital Partners and the Seller, the terms of which
are incorporated herein by reference. Effective upon, and only upon,
the Closing, the Confidentiality Agreement shall terminate with respect to
information relating to the Business.
(b) The
Seller shall keep confidential, and shall cause its affiliates and subsidiaries
and its and their advisors, consultants, employees and agents to keep
confidential, all information relating to the Business following the
Closing. The provisions of this Section 6.02(b) shall not apply
to any disclosure by the Seller, its affiliates or subsidiaries or its or
their
advisors, consultants, employees or agents (i) of any information, documents
or
materials which are or become publicly available (other than by reason of
a
breach of this 6.02(b)) or (ii) required by applicable Law or court
process. The covenant set forth in this Section 6.02(b) shall
terminate on the fifth anniversary of the Closing Date.
SECTION
6.03. Publicity. The
Purchaser and the Seller shall consult with each other before issuing, and
give
each other the opportunity to review and comment upon, any press release
or
other public statements with respect to the transactions contemplated by
this
Agreement, including the Acquisition, and shall not, and shall not permit
their
subsidiaries to, issue any such press release or make any such public statement
prior to such consultation, except as such party may reasonably conclude
may be
required by applicable Law, court process or by obligations pursuant to any
listing agreement with any national securities exchange or national securities
quotation system. The parties agree that the initial press release to
be issued with respect to the transactions contemplated by this Agreement
shall
be in the form heretofore agreed to by the parties.
SECTION
6.04. Connecticut
Property Transfer Law; Pre-Closing Environmental Matters. The
Seller shall, at its sole cost and expense, (a) with respect to the
Transferred Real Properties located in the State of Connecticut, comply with
all
requirements of the CPTL as it applies to the Acquisition and any other
transactions contemplated by this Agreement and (b) continue to be
responsible for the Pre-Closing Environmental Matters. The Seller
shall not be obligated under this Section 6.04 to perform investigative or
remedial action (a) at levels more stringent than industrial cleanup
standards or other applicable minimum standards, including environmental
land
use restrictions, or (b) at costs greater than those reasonably necessary
to bring a condition into compliance with Environmental Law or to satisfy
the
requirements of a Governmental Entity. The Seller shall be a
Controlling Party within the meaning of Section 9.09(d) with respect to any
actions (including any litigation, remedial action or negotiation and the
scope
and timing thereof) in connection with its obligations under this
Section 6.04. In accordance with the Environmental Access
Agreement, after the Closing, the Purchaser shall provide to the Seller access
to any facilities subject to the CPTL and any other facilities related to
the
Pre-Closing Environmental Matters.
SECTION
6.05. Use
of
Names Following the Closing; Supplies. (a) To
the extent necessary, promptly following the Closing, the Purchaser shall
cause
each Transferred Entity to change its corporate name to a name not including
or,
in the reasonable judgment of the Seller, not confusingly similar to
“Xxxx”. Except as permitted pursuant to the Trademark License
Agreement, from and after the Closing Date, the Purchaser and its affiliates
(including the Transferred Entities) shall not use the name “Xxxx” or any other
name that, in the reasonable judgment of the Seller, is confusingly similar
to
“Xxxx”.
(b) From
and
after the Closing Date, the Purchaser shall not, and shall cause its affiliates
(including the Transferred Entities) not to, use stationery, purchase order
forms and other similar paper goods or supplies that state or otherwise indicate
thereon that the Business or any Transferred Entity is a division, unit or
subsidiary of the Seller.
SECTION
6.06. Export
Licenses. The Purchaser and the Seller shall, and shall cause
their subsidiaries to, use their commercially reasonable efforts to cause
the
export licenses and other authorizations issued to the Seller by the Department
of State of the United States of America solely in respect of the Business
to be
transferred to the Purchaser or its designees as promptly as practicable
after
the Closing. Prior to the transfer of such export licenses and other
authorizations to the Purchaser or its designees, the Purchaser shall not,
and
shall cause the Business not to, export any products if such export would
violate ITAR.
SECTION
6.07. Arrangements
Pending Subdivision of Real Property; Easements. With respect to
the Seller’s facilities at East Alton, Illinois, the provisions of
Exhibit G hereto shall apply and are hereby incorporated into this
Agreement.
SECTION
6.08. Accounts
Receivable. The Purchaser shall use its commercially reasonable
efforts to collect amounts due and owing on each account receivable of the
Business outstanding as of the Closing Date transferred to Purchaser pursuant
to
the terms of this Agreement. If at any time the Purchaser or any of
its affiliates receives amounts in respect of any Uncollectible Account for
which the Seller has indemnified the Purchaser or any of its affiliates,
the
Purchaser shall, and shall cause such affiliates to, pay over to the Seller
an
amount equal to the indemnity payment made by the Seller.
SECTION
6.09. Post-Closing
Cooperation. (a) The Purchaser, on the one hand, and
the Seller, on the other hand, shall cooperate with each other, and shall
cause
their affiliates and their officers, employees, agents, auditors and
representatives to cooperate with each other, after the Closing to facilitate
the orderly transition of the Business to the Purchaser after the Closing
and to
minimize any disruption to the Business that might result from the transactions
contemplated by this Agreement. After the Closing, upon reasonable
written notice, the Purchaser, on the one hand, and the Seller, on the other
hand, shall furnish or cause to be furnished to the other and the other’s
affiliates and their officers, employees, counsel, auditors and representatives
access, during normal business hours, to such books, records, manuals and other
information and assistance relating to the Business (to the extent within
the
control of such party) as is reasonably necessary for financial reporting,
accounting and Tax matters or other reasonable purposes.
(b) The
Purchaser, on the one hand, and the Seller, on the other hand, shall reimburse
the other for reasonable documented out-of-pocket costs and expenses incurred
in
assisting the other pursuant to this Section 6.09. Neither party
shall be required by this Section 6.09 to take any action that would
unreasonably interfere with the conduct of its business or unreasonably disrupt
its normal operations (or, in the case of the Purchaser, those of the
Business).
SECTION
6.10. Further
Assurances. From time to time after the Closing, as and when
reasonably requested by any party, the other party shall execute and deliver,
or
cause to be executed and delivered, all such documents, conveyances, assurances
and instruments and shall take, or cause to be taken, all such further or
other
actions as such party may reasonably require to confirm and assure the rights
and obligations provided for in this Agreement and to consummate the
transactions contemplated by this Agreement, including, in the case of the
Seller, executing and delivering to the Purchaser such assignments, deeds,
bills
of sale, consents, applications for Permits or transfer of Permits, and other
instruments as the Purchaser may reasonably request as necessary or desirable
for such purpose.
SECTION
6.11. Consents. The
Seller and the Purchaser shall, in connection with obtaining the permits,
approvals, authorizations and consents set forth on Section 6.11 of the Seller
Letter (the “Material Consents”), share equally in the costs and expenses
of obtaining the same and in all Losses incurred by the Purchaser, its
affiliates or the Business as a result of the failure to obtain any of the
Material Consents.
Conditions
Precedent
SECTION
7.01. Conditions
to Each Party’s Obligation. The obligation of the Purchaser and
the Seller to consummate the Acquisition is subject to the satisfaction or
(to
the extent permitted by applicable Law) waiver of the following
conditions:
(a) Governmental
Approvals. The waiting period under the HSR Act and any Foreign
Merger Control Laws applicable to the Acquisition shall have expired or been
terminated.
(b) No
Injunctions or Restraints. No Law or Injunction enacted, entered,
promulgated, enforced or issued by any Governmental Entity or other legal
restraint or prohibition preventing the consummation of the Acquisition shall
be
in effect.
SECTION
7.02. Conditions
to Obligation of the Purchaser. The obligation of the Purchaser
to consummate the Acquisition is subject to the satisfaction (or, to the
extent
permitted by applicable Law, waiver by the Purchaser) of the following
conditions:
(a) Representations
and Warranties. The representations and warranties of the Seller
set forth in (i) Articles II and III (other than the representations
set forth in Sections 2.02, 2.04, 2.05, 3.01, 3.02 and 3.03 (collectively
the “Class I Representations”)) shall be true and correct as of the
Closing Date, with the same effect as though made as of the Closing Date
(except
to the extent such representations and warranties expressly relate to an
earlier
date, in which case as of such earlier date), except to the extent that the
facts or matters as to which such representations and warranties are not
so true
and correct as of the Closing Date (without giving effect to any qualifications
and limitations as to “materiality” or “material adverse effect” set forth
therein), individually or in the aggregate, are not reasonably likely to
have a
material adverse effect on the Seller or on the Business and (ii) the Class
I Representations of the Seller (A) qualified as to “materiality” or “material
adverse effect” shall be true and correct and (B) not so qualified shall be true
and correct in all material respects, in each case as of the Closing Date,
with
the same effect as though made as of the Closing Date (except to the extent
such
representations and warranties expressly relate to an earlier date, in which
case as of such earlier date). The Purchaser shall have received a
certificate signed by an authorized officer of the Seller to such
effect.
(b) Performance
of Obligations of the Seller. The Seller shall have performed or
complied in all material respects with all obligations and covenants required
by
this Agreement to be performed or complied with by the Seller by the time
of the
Closing, and the Purchaser shall have received a certificate signed by an
authorized officer of the Seller to such effect.
(c) No
Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred a material adverse effect on the Business.
(d) FIRPTA
Certificate. The Seller shall have delivered to the Purchaser at
the Closing a certificate, in form and substance reasonably satisfactory
to the
Purchaser, certifying that the acquisition of U.S. Purchased Companies and
the
Transferred Real Property that is not owned by a Purchased Company is exempt
from withholding pursuant to the Foreign Investment in Real Property Tax
Act.
(e) Lien
Release. The Purchaser shall have received evidence of the
release of all Liens, other than Permitted Liens, on the Transferred Assets
in
form and substance reasonably satisfactory to the Purchaser and any accounts
receivable or other assets that constitute Transferred Assets subject to
any
securitization or other similar arrangement shall have been transferred to
Purchaser or a Transferred Entity in form and substance reasonably acceptable
to
Purchaser.
(f) Deliverables. The
Purchaser shall have received all agreements, instruments and other
documentation to be delivered by the Seller or its affiliates pursuant to
Section 1.04.
SECTION
7.03. Conditions
to Obligation of the Seller. The obligations of the Seller to
consummate the Acquisition is subject to the satisfaction (or, to the extent
permitted by Law, waiver by the Seller) of the following
conditions:
(a) Representations
and Warranties. The representations and warranties of the
Purchaser set forth in Article IV shall be true and correct as of the
Closing Date, with the same effect as though made as of the Closing Date
(except
to the extent such representations and warranties expressly relate to an
earlier
date, in which case as of such earlier date), except to the extent that the
facts or matters as to which such representations and warranties are not
so true
and correct as of the Closing Date (without giving effect to any qualifications
and limitations as to “materiality” or “material adverse effect” set forth
therein), individually or in the aggregate, are not reasonably likely to
have a
material adverse effect on the Purchaser. The Seller shall have
received a certificate signed by an authorized officer of the Purchaser to
such
effect.
(b) Performance
of Obligations of Purchaser. The Purchaser shall have performed
or complied in all material respects with all obligations and covenants required
by this Agreement to be performed or complied with by the Purchaser by the
time
of the Closing, and the Seller shall have received a certificate signed by
an
authorized officer of the Purchaser to such effect.
(c) Deliverables. The
Seller shall have received all agreements, instruments and other documentation
to be delivered by the Purchaser or its affiliates pursuant to
Section 1.04.
SECTION
7.04. Frustration
of Closing Conditions. Neither the Purchaser, on the one hand,
nor the Seller, on the other hand, may rely on the failure of any condition
set
forth in this Article VII to be satisfied if such failure was caused by
such party’s failure to act in good faith or to comply with its obligations
under this Agreement.
Termination,
Amendment and Waiver
SECTION
8.01. Termination. (a) Notwithstanding
any other provision in this Agreement to the contrary, this Agreement may
be
terminated and the Acquisition and the other transactions contemplated by
this
Agreement abandoned at any time prior to the Closing:
(i) by
mutual
written consent of the Purchaser and the Seller;
(ii) by
the
Seller if any of the conditions set forth in Section 7.01 or
Section 7.03 shall have become incapable of fulfillment, and shall not have
been waived by the Seller; provided that failure of the Purchaser to
receive the proceeds of the Financing in an amount sufficient to consummate
the
transactions contemplated by this Agreement shall not result in a termination
right pursuant to this Section 8.01(ii) if the Purchaser shall have
performed in all material respects its obligations under this
Agreement;
(iii) by
the
Purchaser if any of the conditions set forth in Section 7.01 or
Section 7.02 shall have become incapable of fulfillment, and shall not have
been waived by the Purchaser;
(iv) by
the
Purchaser or the Seller, if the Closing does not occur on or prior to
April 15, 2008; or
(v) by
the
Seller, if the Purchaser or its designees shall not have received the proceeds
of the Financing in an amount sufficient to consummate the transactions
contemplated by this Agreement on or prior to (A) if the Closing shall not
have
been delayed in accordance with Section 1.03, the date on which the Closing
should occur in accordance with the first sentence of Section 1.03 or (B)
if the
Closing shall have been delayed in accordance with Section 1.03, the Extension
Date;
provided,
however, that the party seeking termination pursuant to clause (ii),
(iii), (iv) or (v) is not then in material breach of any of its
representations, warranties, covenants or agreements contained in this
Agreement.
(b) If
this
Agreement is terminated by the Purchaser or the Seller pursuant to this
Section 8.01, written notice thereof shall forthwith be given to the other
party and the transactions contemplated by this Agreement shall be terminated,
without further action by any party. If the transactions contemplated
by this Agreement are terminated as provided herein:
(i) the
Purchaser shall return all documents and other material received from the
Seller, its affiliates or their advisors or representatives relating to the
transactions contemplated by this Agreement, whether so obtained before or
after
the execution of this Agreement, to the Seller; and
(ii) all
confidential information received by the Purchaser with respect to the Business
shall be treated in accordance with the Confidentiality Agreement, which
shall
remain in full force and effect notwithstanding the termination of this
Agreement.
SECTION
8.02. Effect
of Termination; Sponsor Termination Fee; Limitation of
Liability. (a) If this Agreement is terminated
pursuant to Section 8.01, this Agreement shall become null and void and of
no further force and effect, except for the provisions of
(i) Sections 2.05 and 4.11 relating to brokers and finders,
(ii) Section 5.04 relating to expenses,
(iii) Section 6.02(a) relating to the obligation of Purchaser to keep
confidential certain information and data obtained by it,
(iv) Section 6.03 relating to publicity, (v) Section 8.01
and this Section 8.02 and (vi) Article X. Subject to
paragraph (c) of this Section 8.02, nothing in this Section 8.02
shall be deemed to release any party from any liability for any intentional
breach by such party of the terms and provisions of this Agreement or to
impair
the right of any party to compel specific performance by any other party
of its
obligations under this Agreement.
(b) If
this
Agreement is terminated by the Seller pursuant to Section 8.01(a)(v), the
Purchaser shall pay, by wire transfer of immediately available funds, the
Sponsor Termination Fee to the Seller as promptly as reasonably practicable
(and, in any event, within five business days) following such
termination.
(c) Notwithstanding
any other provision in this Agreement to the contrary, (i) if the Purchaser
becomes obligated to pay the Sponsor Termination Fee in accordance with
Section 8.02(b) and the Purchaser is not in breach of this Agreement such
that (but for the Purchaser’s failure to satisfy its obligations under
Section 1.01) the conditions set forth in Section 7.03(a) and 7.03(b)
would otherwise be satisfied (other than receipt of the certificates referred
to
therein) (any such event, a “Non-Breach Financing Failure”), and provided
the Seller is not in breach of its obligations under this Agreement such
that
the conditions set forth in Sections 7.02(a) and 7.02(b) are satisfied (other
than receipt of the certificates referred to therein), then the Seller’s
termination of this Agreement pursuant to Section 8.01(a)(v) and the
receipt of payment of the Sponsor Termination Fee pursuant to paragraph
(b) of this Section 8.02 shall be the sole and exclusive legal or
equitable remedy of the Seller and its subsidiaries against the Purchaser
and
any of its former, current or future general or limited partners, members
or
stockholders or against any of their former, current or future directors,
officers, employees, affiliates, general or limited partners, stockholders,
managers, members or agents (each a “Specified Person”) for any Losses
suffered as a result of the breach of any representation, warranty, covenant
or
agreement contained in this Agreement or the failure of the Acquisition to
be
consummated, and upon payment of the Sponsor Termination Fee in accordance
with
paragraph (b) of this Section 8.02, none of the Specified Persons
shall have any further liability or obligation relating to or arising out
of
this Agreement or the transactions contemplated by this Agreement, other
than
for fraud and (ii) in no event if the Closing does not occur, whether or
not this Agreement shall have been terminated, shall the Seller and its
subsidiaries, as a group, on the one hand, or the Specified Persons, as a
group,
on the other hand, be liable for any Losses relating to or arising out of
this
Agreement or the transactions contemplated by this Agreement in excess of
$20,000,000 in the aggregate for each such group (inclusive of any obligation
to
pay the Sponsor Termination Fee), it being agreed that, except as provided
in
Section 10.10, payment of such amount shall be the sole and exclusive legal
or
equitable remedy available to a party in the event that the Closing does
not
occur, and none of the Seller, its subsidiaries or any Specified
Person shall have any further liability or obligation relating to or arising
out
of this Agreement or the transactions contemplated by this Agreement, other
than
for fraud. The parties acknowledge and agree that nothing in this
Section shall be deemed to affect their right to specific performance to
the extent set forth in Section 10.10.
(d) The
Purchaser and the Seller acknowledge and agree that (i) the agreements
contained in this Section 8.02 are an integral part of the transactions
contemplated by this Agreement, (ii) without these agreements, neither the
Purchaser nor the Seller would have entered into this Agreement and
(iii) the damages resulting from termination of this Agreement under
circumstances where the Sponsor Termination Fee is payable are uncertain
and
incapable of accurate calculation and the amounts payable pursuant to paragraph
(b) of this Section 8.02 are reasonable forecasts of the actual
damages which may be incurred and constitute liquidated damages and not a
penalty.
(e) If
the
Purchaser fails to pay the Sponsor Termination Fee due pursuant to paragraph
(b)
of this Section 8.02 when due, and, in order to obtain such payment, the
Seller commences a suit, action or other proceeding that results in a judgment
against the Purchaser, the Purchaser shall pay to the Seller its costs and
expenses (including attorneys’ fees and expenses) in connection with such suit,
action or other proceeding, together with interest on the Sponsor Termination
Fee from (and including) the date such payment was required to be made through
(but not including) the date of payment at the prime rate of Citibank, N.A.
in
effect on the date such payment was required to be made; provided that
this paragraph (e) shall not be construed to limit the rights of any party
to seek prejudgment interest on damages assessed against the other party
subject
to the limitations set forth in Section 8.02(c) and
Section 10.10.
SECTION
8.03. Amendments
and Waivers. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties. By an
instrument in writing the Purchaser, on the one hand, or the Seller, on the
other hand, may waive compliance by the other with any term or provision
of this
Agreement that such other party was or is obligated to comply with or
perform. Any such waiver shall only be effective in the specific
instance and for the specific and limited purpose for which it was given
and
shall not be deemed a waiver of any other provision of this Agreement or
of the
same breach or default upon any recurrence thereof. No failure on the
part of any party to exercise and no delay in exercising any right hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
of
any right hereunder preclude any other or further exercise thereof or the
exercise of any other right.
Indemnification
SECTION
9.01. Tax
Indemnification. (a) From and after the Closing, the Seller
shall indemnify the Purchaser, its affiliates (including the Transferred
Entities) and each of their stockholders, members, partners, directors,
officers, employees, agents, advisors and representatives (the “Purchaser
Indemnitees”) against and hold them harmless from any Losses arising from,
relating to or otherwise in respect of (i) except as provided in
Section 9.01(b), any Taxes imposed on the Business with respect to any
Pre-Closing Tax Period, (ii) any Taxes that may be imposed on the Business
as a result of being a member of a consolidated, combined, unitary or similar
group of corporations or other taxpayers at any time on or prior to the Closing
Date and (iii) any Transfer Taxes for which the Seller is liable under
Section 5.04(b).
(b) From
and
after the Closing, the Purchaser and the Transferred Entities shall, jointly
and
severally, indemnify the Seller, its affiliates and each of their stockholders,
members, partners, directors, officers, employees, agents and representatives
(the “Seller Indemnitees”) and hold them harmless from any Losses arising
from, relating to or otherwise in respect of (i) any Taxes imposed on the
Business with respect to any Post-Closing Tax Period, (ii) any Taxes that
may be imposed on the Business as a result of being a member of a consolidated,
combined, unitary or similar group of corporations or other taxpayers at
any
time after the Closing Date, (iii) any Transfer Taxes for which the
Purchaser is liable under Section 5.04(b), (iv) any Tax liability
resulting from an election by the Purchaser under Section 338(g) of the
Code as contemplated by Section 5.07 and (v) any breach by the
Purchaser or any of its affiliates of any covenant contained in
Sections 5.05, 5.06 and 5.07.
(c) In
the
case of any taxable period that includes (but does not end on) the Closing
Date
(a “Straddle Period”):
(i) real,
personal and intangible property Taxes (“Property Taxes”) of the Business
for the Pre-Closing Tax Period shall be allocated to the Pre-Closing Tax
Period
on a pro rata basis (based on the number of days during such taxable
period elapsed on or prior to the Closing Date). If at the time of
Closing, the tax rate or the assessed valuation for the year in which the
Closing occurs has not yet been fixed, Property Taxes shall be prorated based
upon the tax rate and the assessed valuation established for the previous
tax
year; and
(ii) the
Taxes
of the Business (other than Property Taxes) for the Pre-Closing Tax Period
shall
be computed as if such taxable period ended as of the close of business on
the
Closing Date.
(d) Overlap. To
the extent that any indemnification provided for in this Section 9.01 may
overlap or conflict with any indemnification contained in Section 9.02, the
provisions of this Section 9.01 shall govern.
SECTION
9.02. Indemnification
by the Seller. From and after the Closing, the Seller shall
indemnify the Purchaser Indemnitees against, and hold them harmless from,
any
loss, liability, claim, obligation, damage or expense, including reasonable
legal fees, costs and expenses, which shall include, for the avoidance of
doubt,
all reasonable legal fees, costs and expenses of enforcing a Purchaser
Indemnitee’s or Seller Indemnitee’s rights pursuant to this Article IX
(collectively, “Losses”), suffered or incurred by such Purchaser
Indemnitees (without duplication for (i) any indemnification provided for
in Section 9.01(a) and (ii) any indemnification that may be sought
under more than one clause of this Section 9.02) arising from, relating to
or otherwise in respect of:
(a) any
breach of any representation or warranty of the Seller contained in
Articles II or III of this Agreement or in any certificate delivered
by the Seller pursuant to this Agreement;
(b) any
breach of any covenant of the Seller contained in this Agreement;
(c) any
liability or obligation under Environmental Law in connection with the Business,
including the operation thereof (other than any Pre-Closing Environmental
Matters or relating to any Excluded Assets), to the extent arising out of
actions, events or failures to act occurring prior to the Closing or arising
out
of conditions existing on or prior to the Closing, including any liability
or
obligation under Environmental Law to investigate or remediate any Release
of
Hazardous Materials, in connection with the operation of the Business, occurring
on or prior to the Closing;
(d) any
Excluded Liability (including Pre-Closing Environmental Matters);
(e) Uncollectible
Accounts;
(f) any
fees,
costs, expenses or other payments incurred or owed by the Seller or any
Transferred Entity to any agent, broker, financial advisor, investment banker
or
other person that is or will be entitled to any broker’s or finder’s fee or any
other commission or similar fee in connection with any of the transactions
contemplated by this Agreement; or
(g) any
liability, obligation or commitment to the extent arising out of any claim,
suit, action or other proceeding (whether now known or pending or arising
after
the date of this Agreement) related to any litigation, general liability,
auto
liability, workers’ compensation, product warranty or product liability of the
Business (other than any Pre-Closing Accrued Liability) in respect of events
occurring on or prior to the Closing.
SECTION
9.03. Threshold;
Cap; De Minimis; Other
Limitations. The Seller shall not be required to indemnify any
Purchaser Indemnitee, and shall not have any liability:
(a) under
clause (a) of Section 9.02 unless the aggregate of all Losses for
which the Seller would, but for this clause (a), be liable thereunder
exceeds on a cumulative basis an amount equal to $5,000,000 (the “Basket
Amount”), and then only to the extent of any such excess; provided
that claims for indemnification arising out of a breach of the Class 1
Representations or the representations and warranties set forth in Section
3.20
shall not be subject to the Basket Amount but instead shall be recoverable
in
full on a dollar-for-dollar basis;
(b) under
clause (a) of Section 9.02 in excess of $30,000,000 (the
“Cap”); provided that claims for indemnification arising out of a
breach of a Class 1 Representation or the representations and warranties
set
forth in Section 3.20 shall not be subject to the Cap but instead shall not
exceed $400,000,000; and
(c) under
clause (a), (c) or (g) of Section 9.02 for any individual item or series of
related items where the Loss relating thereto is less than $25,000 (the
“Mini-Basket Amount”); provided that claims for indemnification arising
out of a breach of the Class I Representations or the representations and
warranties set forth in Section 3.20 shall not be subject to the
Mini-Basket Amount but instead shall be recoverable in full on a
dollar-for-dollar basis;
(d) under
clause (c) of Section 9.02 unless the aggregate of all Losses for which the
Seller would, but for this clause (d), be liable thereunder exceeds on a
cumulative basis an amount equal to $1,000,000, and then only to the extent
of
any such excess;
(e) under
clause (c)of Section 9.02 for any Losses for which the Seller would, but
for this clause (e), be liable, in excess of:
(i) 75%
of
any such Losses in respect of claims arising prior to the second anniversary
of
the Closing Date (and the Purchaser Indemnitee shall be responsible for the
remaining 25% of any such Losses);
(ii) 50%
of
any such Losses in respect of claims arising on or after the second anniversary
of the Closing Date but prior to the fourth anniversary of the Closing Date
(and
the Purchaser Indemnitee shall be responsible for the remaining 50% of any
such
Losses); and
(iii) 25%
of
any such Losses in respect of claims arising on or after the fourth anniversary
of the Closing Date but prior to the seventh anniversary of the Closing Date
(and the Purchaser Indemnitee shall be responsible for the remaining 75%
of any
such Losses);
(f) under
clause (c) of Section 9.02 in excess of $30,000,000;
(g) under
clause (c) of Section 9.02 to the extent (i) (A) such
liability arises out of any invasive investigation undertaken by or on behalf
of
the Purchaser other than as reasonably required by Environmental Law or by
a
Governmental Entity, except for any invasive investigation undertaken by
or on
behalf of the Purchaser (x) as reasonably required to respond to a bona
fide emergency or (y) in connection with any activities to decommission,
close, expand, repair or relocate operations that are reasonably required
by
applicable Environmental Law in connection with the relevant activity;
(B) such liability arises out of (1) any invasive investigation undertaken
on or prior to the second anniversary of the Closing Date by the Purchaser
in
connection with the sale of the Purchaser, any of the Transferred Entities
or
any of the Transferred Real Properties or (2) any invasive investigation
undertaken after the second anniversary of the Closing Date in connection
with
the sale of the Purchaser, any of the Transferred Entities or any of the
Transferred Real Property that is not reasonably required by the Purchaser
in
order to complete the sale; or (C) any Purchaser Indemnitee performs
remediation of conditions otherwise indemnifiable under 9.02(c) in excess
of
industrial cleanup standards or other applicable minimum standards, including
standards based upon environmental land use restrictions and engineering
controls, and/or incurs costs in excess of those reasonably necessary to
bring a
condition into compliance with Environmental Law or to satisfy the requirements
of a Governmental Entity, or (ii) such liability or obligation arises out
of any post-Closing exposure to Hazardous Materials to the extent such Hazardous
Materials were released after the Closing Date; provided, however,
that notwithstanding anything to the contrary contained in this Section 9.03(g),
in no event shall the Seller be required to indemnify any Purchaser Indemnitee,
nor shall Seller have any liability for, the costs of any investigation of
environmental conditions unless required by Environmental Law or Governmental
Entity;
(h) under
clause (e) of Section 9.02 unless the aggregate of all Losses for which the
Seller would, but for this clause (h), be liable thereunder exceeds on a
cumulative basis an amount equal to $1,000,000, and then only to the extent
of
any such excess; and
(i) under
clause (g) of Section 9.02 for any Losses for which the Seller would, but
for this clause (i), be liable, in excess of:
(i) 75%
of
any such Losses in respect of claims arising prior to the first anniversary
of
the Closing Date (and the Purchaser Indemnitee shall be responsible for the
remaining 25% of any such Losses);
(ii) 50%
of
any such Losses in respect of claims arising on or after the first anniversary
of the Closing Date but prior to the second anniversary of the
Closing Date (and the Purchaser Indemnitee shall be responsible for the
remaining 50% of any such Losses);
(iii) 25%
of
any such Losses in respect of claims arising on or after the second anniversary
of the Closing Date but prior to the third anniversary of the Closing Date
(and
the Purchaser Indemnitee shall be responsible for the remaining 75% of any
such
Losses); and
(j) notwithstanding
any other provision of this Agreement to the contrary, for any Loss arising
from, relating to or otherwise in respect of matters covered by
Sections 9.02(g) and 9.03(i), except pursuant to Sections 9.02(g) and
9.03(i).
SECTION
9.04. Survival
of Representations; Covenants; Agreements. The representations,
warranties, covenants and agreements contained in this Agreement shall survive
the Closing as follows: (a) the representations and warranties
in Articles II, III and IV (other than the Class I Representations and
Sections 3.12, 3.17 and 3.23) shall survive until the date that is eighteen
months after the Closing Date, (b) the Class I Representations shall
survive indefinitely, (c) the representations and warranties in
Section 3.12 and the covenants contained in Sections 5.05, 5.06 and
5.07 shall survive for 60 days following the expiration of the applicable
statute of limitations (after giving effect to any extension thereof),
(d) the representations and warranties in Section 3.17 and 3.23 and
the covenants contained in Sections 5.02 and 5.03 shall not survive the
Closing, (e) the covenants contained in Sections 6.01 and
6.02(b) shall survive in accordance with their terms and (f) all other
covenants and agreements contained in this Agreement shall survive
indefinitely.
SECTION
9.05. Termination
of Indemnification. (a) The obligations to indemnify
and hold harmless any person (i) pursuant to 9.01 shall terminate 60 days
following the expiration of the applicable statute of limitations (after
giving
effect to any extension thereof), (ii) pursuant to Section 9.02(a) or
9.07(a) shall terminate when the applicable representation or warranty
terminates pursuant to Section 9.04, (iii) pursuant to
Section 9.02(b) or Section 9.07(b) shall terminate 90 days after the
applicable covenant terminates pursuant to Section 9.04, (iv) pursuant
to Section 9.02(c) shall terminate on the seventh anniversary of the
Closing Date, (v) pursuant to Section 9.02(e) shall terminate on the date
that is 13 months after the Closing Date, (vi) pursuant to Section 9.02(g)
shall terminate on the third anniversary of the Closing Date and
(vii) pursuant to the other clauses of Section 9.02 and
Section 9.07 shall not terminate; provided, however, that all
such obligations to indemnify and hold harmless shall not terminate with
respect
to any item as to which the person to be indemnified shall have, before the
expiration of the applicable period, previously made a claim by delivering
a
notice of such claim pursuant to Section 9.09 to the party providing the
indemnification.
(b) For
purposes of calculating the amount of any Loss in connection with a claim
by any
Purchaser Indemnitee or Seller Indemnitee with respect to a breach of any
representation or warranty made by the Seller or the Purchaser, as the case
may
be, for which indemnification is sought pursuant to this Article IX (but
not for purposes of determining whether such a breach has occurred), all
“material adverse effect” and other materiality references in the
representations and warranties set forth in Article II, Article III
and Article IV, as applicable, shall be disregarded.
SECTION
9.06. Exclusive
Monetary Remedy; Consequential Damages; Nature of Payments; No Duplicate
Recovery; Access Rights. (a) Except as otherwise
specifically provided in this Agreement or in the Transition Services Agreement,
the Winchester Supply Agreement, the Environmental Access Agreement or the
Trademark License Agreement, the Purchaser and the Seller acknowledge that
their
exclusive monetary remedy after the Closing with respect to any claims relating
to this Agreement, the transactions contemplated by this Agreement and the
Business and its assets and liabilities (other than for fraud) shall be pursuant
to the indemnification provisions set forth in this
Article IX. In furtherance of the foregoing, each of the
Purchaser and the Seller, for itself and its affiliates (including the
Transferred Entities), waives, from and after the Closing, to the fullest
extent
permitted under applicable Law, any and all rights, claims and causes of
action
(other than claims of, or causes of action arising from, fraud) for monetary
damages it may have against the other or its affiliates arising under this
Agreement, any document or certificate delivered in connection herewith,
any
applicable Law (including the Federal Comprehensive Environmental Response,
Compensation, and Liability Act and any other Environmental Law), common
law or
otherwise, except pursuant to the indemnification provisions set forth in
this
Article IX.
(b) Neither
the Purchaser, any Transferred Entity nor the Seller shall be liable or
otherwise responsible to any other person for consequential, incidental,
special
or punitive damages arising out of, or relating to, this Agreement or the
transactions contemplated by this Agreement, the performance or breach of
this
Agreement or any liability or obligation retained or assumed under this
Agreement except to the extent such damages are an element of a Third Party
Claim against the Purchaser, any Transferred Entity or the Seller which is
the
object of indemnification hereunder.
(c) Notwithstanding
any other provision in this Agreement to the contrary, no indemnified party
shall be entitled to indemnification under this Article IX with respect to
any Loss to the extent that such Loss was reflected in the calculation of
the
adjustment to Purchase Price pursuant to Section 1.05.
(d) Each
party shall, and shall cause each of their subsidiaries to, afford to the
other
party and its accountants, counsel and other representatives reasonable access,
upon reasonable notice during normal business hours, to relevant personnel
knowledgeable of, and properties, books and records of their respective
businesses reasonably related to, the nature and the amount of Losses for
which
indemnification is being, or was sought, from it pursuant to clause (c) or
(g) of Section 9.02.
SECTION
9.07. Indemnification
by the Purchaser. From and after the Closing, the Purchaser and
the Transferred Entities shall, jointly and severally, indemnify the Seller
Indemnitees against, and hold each of them harmless from, any Loss suffered
or
incurred by the Seller Indemnities (without duplication for (i) any
indemnification provided for in Section 9.01(b) and (ii) any
indemnification that may be sought under more than one clause of this
Section 9.07) arising from, relating to or otherwise in respect
of:
(a) any
breach of any representation or warranty of the Purchaser contained in
Article IV of this Agreement or in any certificate delivered by the
Purchaser pursuant to this Agreement;
(b) any
breach of any covenant of Purchaser contained in this Agreement;
(c) any
Transferred Liability, including the obligation of the Purchaser to indemnify
the Seller pursuant to Sections 9.03(e) and 9.03(i); or
(d) any
fees,
costs, expenses or other payments incurred or owed by the Purchaser or any
of
its affiliates (other than the Transferred Entities) to any agent, broker,
financial advisor, investment banker or other person that is or will be entitled
to any broker’s or finder’s fee or any other commission or similar fee in
connection with any of the transactions contemplated by this
Agreement.
SECTION
9.08. Calculation
of Losses. The amount of any Loss for which indemnification is
provided under this Article IX (other than Losses under Sections 9.02(c)
and (g)) shall be net of any amounts actually recovered by the Purchaser
or its
subsidiaries under insurance policies with respect to such Loss. The
amount of any Loss for which indemnification is provided under this
Article IX shall be (a) increased to take account of any net Tax cost
incurred by the indemnified party arising from the receipt of indemnity payments
hereunder (grossed up for such increase) and (b) reduced to take account of
any net Tax benefit actually realized by the indemnified party arising from
the
incurrence or payment of any such Loss in the year of such Loss or any other
year preceding or including the date on which the indemnity payment is made
or
any taxable year within five taxable years after the taxable year in which
such
Loss occurs. Except as otherwise provided in this Section 9.08, in
any case where the Purchaser or its subsidiaries recovers from third parties
any
amount in respect of a matter with respect to which an indemnifying party
has
indemnified it pursuant to this Article IX, such indemnified party shall
promptly pay over to the indemnifying party the amount so recovered (after
deducting therefrom the full amount of the expenses incurred by it in procuring
such recovery), but not in excess of any amount previously so paid by the
indemnifying party to or on behalf of the indemnified party in respect of
such
matter.
SECTION
9.09. Procedures. (a) Third
Party Claims. (i) In order for a person (the
“indemnified party”) to be entitled to any indemnification provided for
under Section 9.02 or Section 9.07 in respect of, arising out of or
involving a claim made by any person against the indemnified party (a “Third
Party Claim”), such indemnified party must notify the indemnifying party in
writing (and in reasonable detail) of the Third Party Claim promptly following
receipt by such indemnified party of notice of the Third Party Claim;
provided, however, that failure to give such notification shall
not affect the indemnification provided hereunder except and only to the
extent
the indemnifying party shall have been prejudiced as a result of such failure
(except that the indemnifying party shall not be liable for any expenses
incurred during the period in which the indemnified party failed to give
such
notice). Thereafter, the indemnified party shall deliver to the
indemnifying party, promptly following the indemnified party’s receipt thereof,
copies of all notices and documents (including court papers) received by
the
indemnified party relating to the Third Party Claim.
(ii) If
a
Third Party Claim is made against an indemnified party, the indemnifying
party
shall be entitled to participate in the defense thereof and, if it so chooses,
to assume the defense thereof by written notice to the indemnified party
within
45 days of the receipt of the notice received pursuant to
Section 9.09(a)(i) with counsel selected by the indemnifying party;
provided that such counsel is not reasonably objected to by the
indemnified party; provided, further, that notwithstanding the
foregoing, the indemnifying party shall not be entitled to assume control
of
such defense and shall pay the reasonable fees and expenses of counsel
(reasonably acceptable to the indemnifying party) retained by the indemnified
party if (A) the claim for indemnification relates to or arises in
connection with any criminal proceeding, action, indictment, allegations
or
investigation, (B) the claim seeks an injunction or equitable relief
against the indemnified party; (C) the indemnifying party failed or is
failing to reasonably prosecute or defend such claim, or (D) if the
claim is subject to the Cap, (1) amounts remaining under the Cap are $2,000,000
or less and (2) such claim together with all outstanding and unresolved claims
that are subject to the Cap could reasonably be expected to give rise to
Losses
which are more than twice the remaining amount indemnifiable by such
indemnifying party with respect to such claims pursuant to this
Article IX. Should the indemnifying party be entitled and so
elect to assume the defense of a Third Party Claim, the indemnifying party
shall
not be liable to the indemnified party for any legal expenses subsequently
incurred by the indemnified party in connection with the defense
thereof. If the indemnifying party assumes such defense in accordance
with this Agreement, the indemnified party shall have the right to participate
in the defense thereof and to employ counsel, at its own expense, separate
from
the counsel employed by the indemnifying party, it being understood that
the
indemnifying party shall control such defense. The indemnifying party
shall be liable for the fees, costs and expenses of counsel employed by the
indemnified party for any period during which the indemnifying party has
not
assumed the defense thereof (other than during any period in which the
indemnified party shall have failed to give notice of the Third Party Claim
as
provided above) and with respect to any Third Party Claim where the indemnifying
party was prohibited from assuming such defense pursuant to this
Section 9.09. If the indemnifying party chooses to defend or
prosecute a Third Party Claim, all the indemnified parties shall cooperate
in
the defense or prosecution thereof. Such cooperation shall include
the retention and (upon the indemnifying party’s request) the provision to the
indemnifying party of records and information that are reasonably relevant
to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. No party shall admit (except as required by Law) any
liability with respect to, or compromise, settle or discharge, any Third
Party
Claim without the prior written consent of the other party; provided,
however, that if such admission of liability, settlement, compromise
or
discharge does not subject the Purchaser Indemnitees to any remedy (other
than
the payment of money) and provides for the full and unconditional release
of the
Purchaser Indemnitees from all liability in connection with such Third Party
Claim, then, at the request of the Seller, the Purchaser Indemnitees shall
agree
to such admission of liability, settlement, compromise or discharge as long
as
the Seller pays in full the amounts payable in connection with such admission
of
liability, settlement, compromise or discharge. All claims under
Section 9.02 or Section 9.07 other than Third Party Claims shall be
governed by Section 9.09(b).
(iii) Notwithstanding
the foregoing, in respect of any Third Party Claim for which indemnification
is
sought pursuant to Section 9.03(e) or Section 9.03(i), the parties
agree that the defense of any such Third Party Claim shall be jointly controlled
and administered by the Purchaser and the Seller and that no such Third Party
Claim shall be settled, compromised or discharged without the consent of
the
Purchaser and the Seller, not to be unreasonably withheld.
(b) Other
Claims. If any indemnified party should have a claim against any
indemnifying party under Section 9.02 or Section 9.07 that does not
involve a Third Party Claim being asserted against or sought to be collected
from such indemnified party, the indemnified party shall promptly deliver
notice
of such claim to the indemnifying party after obtaining knowledge of such
claim. The failure by any indemnified party so to notify the
indemnifying party shall not relieve the indemnifying party from any liability
that it may have to such indemnified party under Section 9.02 or
Section 9.07, except to the extent that the indemnifying party shall have
been prejudiced by such failure. If the indemnifying party does not
notify the indemnified party within 45 calendar days following its receipt
of such notice that the indemnifying party disputes its liability to the
indemnified party under Section 9.02 or Section 9.07, such claim
specified by the indemnified party in such notice shall be conclusively deemed
a
liability of the indemnifying party under Section 9.02 or Section 9.07
and the indemnifying party shall pay the amount of such liability to the
indemnified party on demand or, in the case of any notice in which the amount
of
the claim (or any portion thereof) is estimated, on such later date when
the
amount of such claim (or such portion thereof) becomes finally
determined.
(c) Procedures
Relating to Indemnification of Tax Claims.
(i) Promptly
after a party (the “Tax Indemnified Party”) becomes aware of the
existence of a Tax issue that may give rise to an indemnification claim under
Section 9.01 (a “Tax Controversy”) by it against the other party
(the “Tax Indemnifying Party”), the Tax Indemnified Party shall notify
the Tax Indemnifying Party of the Tax issue and thereafter shall promptly
forward to the Tax Indemnifying Party copies of the relevant portion of any
notice or other document received from any Taxing Authority and communications
with any Taxing Authority relating to such Tax Controversy; provided,
however, that a failure to give such notice will not affect such
other
party’s rights to indemnification under this Article IX, except to the
extent that such party is actually prejudiced thereby. Any
out-of-pocket expenses incurred in handling, settling or contesting a Tax
Controversy shall be borne by the Tax Indemnifying Party.
(ii) Except
as
otherwise provided in this Section 9.09(c)(ii), after the Closing Date,
(except in the case of any Tax Controversy relating to a Tax Return of any
consolidated, combined or unitary group of which the Transferred Entities
were
members, (a “Pre-Closing Consolidated Return”)), the Purchaser shall
control the conduct, through counsel of its own choosing, of any Tax Controversy
with respect to any of the Transferred Entities. In the case of a
Contest after the Closing Date that relates solely to Taxes for which the
Purchaser is indemnified under 9.01(a) (including any Pre-Closing Consolidated
Returns), the Seller may elect to control the handling, settling or contesting
of any such Tax Controversy, but the Purchaser shall have the right to
participate in such Tax Controversy (except in the case of a Tax Controversy
that relates to a Pre-Closing Consolidated Return) at its own
expense. The Seller shall not settle, compromise and/or concede any
portion of such Tax Controversy (except in the case of a Tax Controversy
that
relates to a Pre-Closing Consolidated Return) without obtaining the Purchaser’s
written consent, which consent shall not be unreasonably withheld, delayed
or
conditioned. In the case of a Tax Controversy that relates both to
Taxes for which Purchaser is indemnified under Section 9.01(a) and Taxes
for which Seller is indemnified under 9.01(b), the Purchaser shall control
the
conduct of such Tax Controversy, but the Seller shall have the right to
participate in such Tax Controversy at its own expense, and the Purchaser
shall
not settle, compromise and/or concede such Tax Controversy without the consent
of the Seller, which consent shall not be unreasonably withheld, delayed
or
conditioned. The Tax Indemnifying Party shall keep the Tax
Indemnified Party reasonably informed as to the progress of any Tax proceeding
with respect to a Tax Controversy to the extent such Tax proceeding relates
to
Taxes payable by or with respect to the Transferred Entities or Transferred
Assets and shall consider in good faith any written comments or suggestions
regarding such Tax proceeding from the Tax Indemnified Party.
(d) Procedures
Relating to Indemnification for Environmental Matters.
(i) Upon
any
indemnified party becoming aware of any claim, the occurrence of any event,
or
the existence of any of facts, in respect of which such indemnified party
will
bring, or may seek to bring, an indemnification claim under this Agreement
arising out of or relating to any violation of, or liability pursuant to,
any
Environmental Law, the indemnified party will provide written notice (each,
an
“Environmental Claim Notice”) to the indemnifying party within 30 days of
the indemnified party becoming aware of any claim, event or fact described
above; provided, however, that failure to give such notification
shall not affect the indemnification provided hereunder except to the extent
the
indemnifying party shall have been prejudiced as a result of such
failure.
(ii) After
receipt of an Environmental Claim Notice, the indemnifying party shall have
the
right, but not the obligation, to control the defense, or investigate or
remediate any condition relating to the subject matter of such Environmental
Claim Notice (the “Environmental Matter”); provided that if after
60 days of receipt of such Environmental Claim Notice the indemnifying party
does not notify the indemnified party that it intends to exercise such right,
then the indemnified party may control such defense.
(iii) The
party
that controls the defense, investigation or remediation of an Environmental
Matter (the “Controlling Party”) shall (A) keep the other party (the
“Non-Controlling Party”) reasonably informed of the progress and status
of the defense, remediation or investigation activities, (B) keep accurate
records of the costs of all such activities and (C) provide the
Non-Controlling Party with copies of such records upon request of the
Non-Controlling Party. The Non-Controlling Party shall reasonably
cooperate in connection with such defense, remediation or investigation
activities and shall furnish such records, information and testimony and
attend
such conferences, discovery proceedings, hearings, trials, and appeals as
may be
reasonably requested by the Controlling Party in connection
therewith. The Controlling Party shall have full control over any
actions (including any litigation, remedial action or negotiation, and the
scope
and timing thereof) in connection therewith.
(iv) The
Controlling Party shall (A) cause to be furnished to the Non-Controlling
Party drafts of all proposed remediation plans or other written submissions
relating to the Environmental Matter not less than ten business days prior
to
the date on which they are to be submitted to any Governmental Entity or
other
applicable person, (B) give the Non-Controlling Party a reasonable
opportunity to comment thereon and (C) consider in good faith all changes
proposed by the Non-Controlling Party.
(v) In
connection with an Environmental Matter, the Seller shall have the right,
but
not the obligation, at reasonable times and after reasonable notice, to enter
on
the applicable facilities of the Business (A) if the Seller is the
Controlling Party, to conduct reasonable and necessary investigation or
remediation of such Environmental Matter and (B) if the Seller is the
Non-Controlling Party, to monitor the Purchaser’s performance of any
investigation or remediation with respect to the Environmental Matter or
to
conduct its own independent subsurface investigation at its own
expense. The Seller shall use its commercially reasonable efforts to
minimize any interference with the Business and the Purchaser’s operations at
such facilities in connection with the Seller’s conduct of any such
investigation or remediation.
(vi) Notwithstanding
any other provision in this Agreement to the contrary, neither the Purchaser
nor
the Seller shall have any obligation to indemnify the other (A) for Losses
related to Environmental Matters to the extent such Losses were incurred
or
exacerbated due to the acts or omissions of the other, including Losses incurred
as a result of any Release of Hazardous Materials by the other or (B) with
respect to attorney, consultant or other expert fees or expenses incurred
by any
indemnified party related to an Environmental Matter after the indemnifying
party exercised its right to be the Controlling Party.
General
Provisions
SECTION
10.01. Assignment. This
Agreement and the rights and obligations hereunder shall not be assignable
or
transferable by any party (including by operation of law in connection with
a
merger or consolidation of such party) without the prior written consent
of the
other party; provided that the Purchaser may assign this Agreement (a) to
any affiliate of the Purchaser, (b) for collateral purposes to any lender
providing Debt Financing to the Purchaser or (c) subsequent to the Closing,
to any transferee of all or substantially all of the assets of the
Business. Any attempted assignment in violation of this
Section 10.01 shall be null and void.
SECTION
10.02. No
Third Party Beneficiaries. Except as provided in (a) the
provisions of Section 5.08 specifically relating to indemnification of an
affiliate of the Seller or the Purchaser, as the case may be, and
(b) Article IX, this Agreement is for the sole benefit of the parties
and their permitted successors and assigns and nothing herein expressed or
implied shall give or be construed to give to any person, other than the
parties
and such successors and assigns, any legal or equitable rights
hereunder.
SECTION
10.03. Notices. All
notices or other communications required or permitted to be given hereunder
shall be in writing and shall be delivered by hand or sent by facsimile or
sent,
postage prepaid, by registered, certified or express mail or overnight courier
service and shall be deemed given when so delivered by hand or facsimile,
or if
mailed, three days after mailing (or, one business day in the case of express
mail or overnight courier service) to the parties at the following addresses
or
facsimiles (or at such other address for a party as shall be specified by
like
notice):
(a) if
to the
Purchaser,
Global
Brass and Copper Acquisition Co.
c/o
KPS
Capital Partners, LP
000
Xxxx
Xxxxxx, 00xx
Xxxxx
Xxx Xxxx,
XX 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention
of Xxxxxxx Xxxxxx
with
a
copy to:
Xxxx,
Weiss, Rifkind, Xxxxxxx & Xxxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx,
XX 00000-0000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention
of Xxxx X. Xxxxxxx, Esq.
(b) if
to the
Seller,
Xxxx
Corporation
000
Xxxxxxxxxx Xxxxx, Xxxxx 0000
Xx.
Xxxxx, Xxxxxxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention
of Xxxxxx Pain, Esq.
with
a
copy to:
Cravath,
Swaine & Xxxxx LLP
000
Xxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Telephone: (000)
000-0000
Facsimile: (000)
000-0000
Attention
of Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxx
X.
Xxxxxx, Esq.
Notices
delivered by facsimile shall have the same legal effect as if such notice
had
been delivered in person.
SECTION
10.04. Counterparts. This
Agreement may be executed in one or more counterparts, all of which shall
be
considered one and the same agreement, and shall become effective when one
or
more such counterparts have been signed by each of the parties and delivered
to
the other party. Delivery of an executed counterpart of a signature
page of this Agreement by facsimile or other electronic imaging means shall
be
effective as delivery of a manually executed counterpart of this
Agreement.
SECTION
10.05. Entire
Agreement. This Agreement, the Ancillary Agreements, the
Confidentiality Agreement, the Seller Letter, the Financing Commitments and
exhibits hereto and thereto, contain the entire agreement and understanding
among the parties with respect to the subject matter hereof and supersede
all
prior agreements and understandings relating to such subject
matter.
SECTION
10.06. Severability. If
any term or provision of this Agreement is invalid, illegal or incapable
of
being enforced by any applicable Law or public policy, all other conditions
and
provisions of this Agreement shall nonetheless remain in full force and effect
so long as the economic and legal substance of the transactions contemplated
by
this Agreement is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties shall negotiate
in
good faith to modify this Agreement so as to effect the original intent of
the
parties as closely as possible in a mutually acceptable manner in order that
the
transactions contemplated by this Agreement are consummated as originally
contemplated to the fullest extent possible.
SECTION
10.07. Governing
Law. This Agreement shall be governed by, and construed in
accordance with, the Laws of the State of New York, regardless of the Laws
that might otherwise govern under applicable principles of conflicts of Laws
thereof.
SECTION
10.08. Consent
to Jurisdiction. (a) Each party irrevocably submits to
the exclusive jurisdiction of the Supreme Court of the State of New York
sitting in New York County and of the United States District Court for the
Southern District of New York, and any appellate court from any thereof, in
any suit, action or other proceeding arising out of or relating to this
Agreement or any transaction contemplated by this Agreement, or for recognition
or enforcement of any judgment, and each party irrevocably and unconditionally
agrees that all claims in respect of any such suit, action or other proceeding
may be heard and determined in such New York State or, to the extent
permitted by applicable Law, in such Federal court. The parties agree
that a final judgment in any such suit, action or other proceeding shall
be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or
in any other manner provided by applicable Law.
(b) Each
party irrevocably and unconditionally waives, to the fullest extent permitted
by
applicable Law, any objection which it may now or hereafter have to the laying
of venue of any suit, action or other proceeding arising out of or relating
to
this Agreement or any transaction contemplated by this Agreement in any court
referred to in the first sentence of paragraph (a) of this
Section 10.08. Each party irrevocably and unconditionally
waives, to the fullest extent permitted by applicable Law, the defense of
an
inconvenient forum to the maintenance of any suit, action or other proceeding
arising out of or relating to this Agreement or any transaction contemplated
by
this Agreement in any court referred to in the first sentence of paragraph
(a) of this Section 10.08.
(c) Each
party consents, to the fullest extent permitted by applicable Law, to service
of
any process, summons, notice or document in the manner provided for notices
in
Section 10.03. Nothing in this Agreement will affect the right
of any party to serve process in any other manner permitted by applicable
Law.
SECTION
10.09. Waiver
of Jury Trial. Each party hereby waives, to the fullest extent
permitted by applicable Law, any right it may have to a trial by jury in
respect
to any litigation, directly or indirectly, arising out of or relating to
this
Agreement or any transaction contemplated by this Agreement. 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 have been induced to enter
into this Agreement by, among other things, the mutual waivers and
certifications in this Section 10.09.
SECTION
10.10. Enforcement. The
parties agree that irreparable damage would occur and that the parties would
not
have any adequate remedy at Law if any of the provisions of this Agreement
were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that (a) the Purchaser shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement and
(b)
the Seller shall be entitled to an injunction or injunctions to prevent breaches
of Section 5.03 and to enforce specifically the Purchaser’s obligations to
consummate the Acquisition if the conditions set forth in Article VII shall
have
been satisfied or waived by the party entitled to the benefit thereof (other
than such conditions that by their nature are to be satisfied at the Closing)
and the Financing Commitments are available to be drawn down by the Purchaser
but are not so drawn down as a result of the Purchaser refusing to do so
in
breach of this Agreement, in each case, in the Supreme Court of the State
of
New York sitting in New York County (and, if such Supreme Court of the
State of New York shall be unavailable, in any other New York State
court or in the United States District Court for the Southern District of
New York), and any appellate court from any thereof, this being in
addition, subject to Section 8.02(c), to any other remedy to which any
party is entitled at Law or in equity. Notwithstanding the first
sentence of this Section 10.10, the parties acknowledge that, prior to the
Closing, the Seller shall not have the right to specifically enforce the
provisions of this Agreement except to the extent set forth in clause (b)
of the
preceding sentence. For the avoidance of doubt, the parties agree
that (x) in the event of a Non-Breach Financing Failure, the Seller’s sole and
exclusive remedy shall be the right to terminate this Agreement pursuant
to
Section 8.01(a)(v) and to receive payment of the Sponsor Termination
Fee, (y) except in the case of fraud, the maximum aggregate amount of money
damages payable by the Purchaser under this Agreement shall not exceed
$20,000,000 in the aggregate and (z) in all events, including the grant of
any
equitable relief, except in the case of fraud, the maximum aggregate amount
payable by the Sponsor Funds pursuant to the Sponsor Fund Guarantees shall
be
the Sponsor Termination Fee or $20,000,000, as applicable.
SECTION
10.11. Defined
Terms. (a) Certain Defined
Terms. For purposes of this Agreement, the following terms shall
have the following meanings:
“401(k)
Covered Employee” means any Transferred Employee who is (a) a non-union
salaried employee, (b) a non-union hourly employee in Cuba, Missouri or (c)
a
non-union hourly employee in Waterbury, Connecticut.
“affiliate”
means, with respect to any person, another person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such person.
“Balance
Sheet” means the audited combined consolidated balance sheet of the Business
as of December 31, 2006 attached as Exhibit H
hereto.
“Business”
means the Seller’s copper, brass and other copper alloy sheet, strip, foil, rod,
welded tube, plate, fabricated parts and stainless steel and aluminum strip
manufacturing and distribution business and its related research and development
activities and excludes the Seller’s ammunition and ammunition component
manufacturing and distribution business and its related research and development
activities.
“business
day” means any day on which banks are not required or authorized to close
in
The City of New York, New York.
“Closing
Working Capital” means the Working Capital as of the close of business in
East Alton, Illinois on the Closing Date.
“Code”
means the Internal Revenue Code of 1986, as amended.
“commodity
agreement” means any commodity futures contract, commodity derivative
instrument, commodity option or other similar agreement, instrument or
arrangement.
“control”
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of a person, whether through
the
ownership of voting securities, by contract or otherwise.
“currency
agreement” means any currency exchange contract, currency swap agreement,
currency derivative instrument or other agreement, instrument or arrangement
designed to hedge currency exchange risk.
“Debt
Financing” means the debt financing provided to the Purchaser or its
designees pursuant to the Debt Financing Commitments.
“Environmental
Claim” means any administrative, regulatory or judicial action, suit, order,
demand, claim, other proceeding or written notice of noncompliance or violation
by or from any person alleging liability arising out of, based on or resulting
from (a) the presence or Release of, or exposure to, any Hazardous
Materials at any location or (b) the failure to comply with any
Environmental Law.
“Environmental
Laws” means any applicable Law, Judgment or Permit issued, promulgated or
entered into, by or with any Governmental Entity relating to (a) pollution,
preservation or reclamation of natural resources, (b) the protection of
human health or the environment (including ambient air, surface water,
groundwater, soils, land surface or subsurface strata) or (c) human
exposure to Hazardous Materials.
“Equity
Financing” means the equity financing to be provided to the Purchaser or its
designees pursuant to the Equity Financing Commitments.
“equity
interests” means shares of capital stock, membership interests in a limited
liability company, partnership interests, beneficial interests in a trust
or
other equity ownership interests in a person, and any warrants, options or
other
rights entitling the holder thereof to purchase or acquire any such equity
interest.
“Excluded
Assets” has the meaning set forth on Exhibit I hereto under the
caption “Excluded Assets”.
“Excluded
Liabilities” has the meaning set forth on Exhibit I hereto under
the caption “Excluded Liabilities”.
“Fabrication
Business” means the portion of the Business consisting of manufacturing and
distributing copper, brass and other copper alloys fabricated parts and the
related research and development activities but excluding the ammunition
and
ammunition component manufacturing and distribution business and related
research and development activities.
“Financing”
means the Debt Financing and the Equity Financing.
“Hazardous
Materials” means (a) any petroleum (including crude oil or any fraction
thereof) or asbestos or asbestos-containing materials and (b) any other
wastes, materials, chemicals or substances prohibited, limited or regulated
pursuant to any Law, Judgment or Permit.
“indebtedness”
means, without duplication, (i) indebtedness for borrowed money or
indebtedness issued or incurred in substitution or exchange for indebtedness
for
borrowed money, (ii) indebtedness evidenced by any note, bond, debenture,
mortgage or other debt instrument or debt security, (iii) obligations under
any interest rate agreement, currency agreement or commodity agreement entered
into in connection with the Business’ inventory reduction program,
(iv) obligations under any performance bond or letter of credit,
(v) all capitalized lease obligations and purchase money liens,
(vi) guarantees (including so called take or pay or keep well agreements)
with respect to any indebtedness, obligation, claim or liability of any other
person of a type described in clauses (i) through (v) above, and (vii)
for clauses (i) through (vi) above, all accrued interest thereon, if
any, and any termination fees, prepayment penalties, “breakage” cost or similar
payments associated with the repayment of or default under such
indebtedness.
“Intellectual
Property” means any patent (including all reissues, divisions,
continuations, continuations-in-part and extensions thereof), patent
application, patent right, unpatented invention, trademark, trademark
registration, trademark application, servicemark, trade name, business name,
logo, brand name, copyright, copyright registration, design, design
registration, domain name, Internet address or any right to any of the
foregoing.
“interest
rate agreement” means any interest rate protection agreement (including
interest rate swaps, caps, floors, collars, derivative instruments and similar
agreements) or other agreement, instrument or arrangement designed to hedge
interest rate risk.
“invasive
investigation” means any investigation of environmental conditions involving
procedures that are more invasive than those customarily performed in connection
with a Phase I study (including drilling or sampling); provided that the
term “invasive investigation” shall not include any drilling or sampling solely
for the purpose of collecting geological information to be used in construction
engineering (as opposed to investigation of potential environmental
contamination) as part of the operation of the Business.
“knowledge”
means, with respect to the Seller on any matter in question, the actual
knowledge of any person set forth in Exhibit J hereto under the
caption “Seller’s knowledge”; “knowledge” means, with respect to the
Purchaser on any matter in question, the actual knowledge of any person set
forth in Exhibit J hereto under the caption “Purchaser’s
knowledge.”
“material
adverse effect” on or with respect to the Business means any state of facts,
change, development, condition, effect, event or occurrence (any such item,
an
“Effect”) that is materially adverse to the assets, properties, business,
financial condition or results of operations of the Business; provided,
however, that in no event shall any Effect resulting from any of
the
following, be deemed to constitute or be taken into account in determining
whether there has been, or is reasonably likely to be, a material adverse
effect
on the Business: any Effect relating to (i) the economy in
general, (ii) the economic, business, financial or regulatory environment
generally affecting the industries in which the Business operates (including
changes in the cost of metals, energy, electricity or transportation) except
to
the extent such Effect has a disproportionate effect on the Business,
(iii) an act of terrorism or an outbreak or escalation of hostilities or
war (whether declared or not declared) or any natural disasters or any national
or international calamity or crisis except to the extent such Effect involves
the properties or assets of the Business or has a disproportionate effect
on the
Business, (iv) changes in applicable Law or GAAP or the enforcement thereof
after the date of this Agreement, (v) the failure of the Business to meet
projections or forecasts, in and of itself (for the avoidance of doubt, any
underlying cause for any such failure shall not be excluded by this clause
(v))
or (vi) the announcement or pendency of the Acquisition or this Agreement
or the performance of and compliance with the terms of this Agreement, including
any loss of employees, any cancellation of or delay in customer orders or
any
disruption in supplier, distributor, partner or similar relationships; “material
adverse effect” on or with respect to the Seller, the Transferors or the
Purchaser means any Effect that (a) prevents or materially impedes or
delays the consummation of the Acquisition or the other transactions
contemplated by this Agreement or (b) has a material adverse effect on the
ability of the Seller, the Transferors or the Purchaser, as the case may
be, to
perform its or their obligations under this Agreement and the Ancillary
Agreements.
“other
bid” means any proposal for a merger, sale of securities, sale of
substantial assets or similar transaction involving the Business or any
Transferred Entity, other than (a) the transactions contemplated by this
Agreement and (b) the sale of assets in the ordinary course of
business.
“Other
Business Contracts” shall have the meaning assigned to such term in
Exhibit I hereto.
“person”
means any individual, firm, corporation, partnership, limited liability company,
trust, joint venture, association, Governmental Entity, unincorporated entity
or
other entity.
“Pre-Closing
Accrued Liabilities” means any liability, obligation or commitment arising
out of any claim, suit, action or other proceeding (whether now known or
pending
or arising after the date of this Agreement) related to any litigation, general
liability, auto liability, workers’ compensation, product warranty or product
liability of the Business in respect of events occurring on or prior to the
Closing to the extent such amounts are reflected in the Statement (including
in
reserves) as finally determined pursuant to Section 1.05.
“Pre-Closing
Environmental Matters” means:
(a) the
matters set forth in Item 1. of Section 3.17 (Environmental Matters) of the
Seller Letter;
(b) with
respect to the Transferred Real Properties located in the State of Connecticut,
compliance obligations under the CPTL as it applies to the Acquisition and
any
other transactions contemplated by this Agreement, as set forth in
Section 6.04 of this Agreement;
(c) with
respect to the East Alton, IL facility, corrective action/compliance obligations
under the Resource Conservation and Recovery Act for the Releases set forth
in
the documents referenced in Item 2. of Section 3.17 (Environmental Matters)
of the Seller Letter;
(d) the
matters set forth in Items 3., 4., and 14. of Section 3.17 (Environmental
Matters) of the Seller Letter;
(e) any
liability or obligation in connection with the off-site transportation or
disposal of Hazardous Materials arising out of any pre-Closing operations
of the
Business including the matters set forth in Items 5. through 8 and 10. of
Section 3.17 (Environmental Matters) of the Seller Letter and the matter
set forth in Item 9. of Section 3.17 (Environmental Matters) of the Seller
Letter to the extent such liability or obligation has not been recovered
after
commercially reasonable efforts to pursue such recovery from BP pursuant
to the
Settlement Agreement and Mutual Release described in Item 9. of Section 3.17
(Environmental Matters) of the Seller Letter;
(f) any
liability or obligation in connection with the “Xxxxxxx, Xxxxxxx” and “Xxxxx,
Xxxx Xxxx” matters set forth in Section 3.13 of the Seller
Letter;
(g) any
liability or obligation in connection with a facility of the Business to
the
extent related to pre-Closing human exposure to Hazardous Materials, including
asbestos-containing materials.
“Post-Closing
Tax Period” means any taxable period (or portions thereof) that begins after
the Closing Date.
“Pre-Closing
Tax Period” means any taxable period (or portions thereof) ending on or
prior to the Closing Date.
“Primary
Metals Business” means the Business other than the Fabrication
Business.
“Purchase
Price” means the Estimated Purchase Price or the Final Purchase Price, as
applicable.
“Release”
means any release, spill, emission, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching, dumping, pouring, emanation or
migration of any Hazardous Material in, into, onto or through the environment
(including ambient air, surface water, ground water, soils, land surface
or
subsurface strata) or within any building, structure, facility or
fixture.
“Required
Financial Information” means financial and other information regarding the
Business of the type and in the form customarily included in confidential
information memoranda used to syndicate bank credit facilities similar to
the
Debt Financing.
“Seller
Retained Trademarks” means the trademarks set forth under the caption
“Seller Retained Trademarks” in Section 3.08 of the Seller
Letter.
“Solvent”,
when used with respect to any person, means that, as of any date of
determination, (a) the amount of the “fair saleable value” of the assets of such
person on a going concern basis will, as of such date, exceed (i) the value
of
all “liabilities of such person, including contingent and other liabilities” as
of such date, as such quoted terms are generally determined in accordance
with
applicable Federal Laws governing determinations of the insolvency of debtors
and (ii) the amount that will be required to pay the probable liabilities
of
such person on its existing debts (including contingent liabilities) as such
debts become absolute and matured, (b) such person will not have, as of such
date, an unreasonably small amount of capital for the operation of the
businesses in which it is engaged or proposed to be engaged following such
date
and (c) such person will be able to pay its liabilities, including contingent
and other liabilities, as they mature. For purposes of this
definition, each of the phrases “not have an unreasonably small amount of
capital for the operation of the businesses in which it is engaged or proposed
to be engaged” and “able to pay its liabilities, including contingent and other
liabilities, as they mature” means that such person will be able to generate
enough cash from operations, asset dispositions or refinancing, or a combination
thereof, to meet its obligations as they become due.
“Sponsor
Termination Fee” means $10,000,000.
“subsidiary”
means, with respect to any person, another person (a) an amount of the
voting securities, other voting ownership or voting partnership interests
of
which is sufficient to elect at least a majority of such other person’s Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly
by
such person or by another subsidiary of such person or (b) of which such
person or another subsidiary of such person is a general partner or managing
member.
“Subsidiary
Transferors” means XX Xxxxx Company, LTC Reserve Corp. and Waterbury Rolling
Xxxxx, Inc.
“Tax”
or “Taxes” means all national, state, county, local, municipal and other
taxes, assessments, duties or similar charges of any kind whatsoever, including
all corporate franchise, income, sales, use, ad valorem, receipts,
value added, profits, license, withholding, payroll, employment, excise,
premium, property, customs, net worth, capital gains, transfer, stamp,
documentary, social security, environmental, alternative minimum, occupation,
recapture and other taxes, and including all interest, penalties and additions
imposed with respect to such amounts, and all amounts payable pursuant to
any
agreement or arrangement with respect to Taxes, including as a result of
being a
member of an affiliated, consolidated, combined, unitary or aggregate
group.
“Taxing
Authority” means any national, state, county, local, municipal or other
government, any subdivision, agency, commission or authority thereof, or
any
quasi-governmental body exercising Tax regulatory authority.
“Tax
Return” or “Tax Returns” means all returns, declarations of estimated
tax payments, reports, estimates, information returns and statements, including
any related or supporting information with respect to any of the foregoing,
filed or to be filed with any Taxing Authority in connection with the
determination, assessment, collection or administration of any
Taxes.
“Technology”
means all trade secrets, confidential information, inventions, know-how,
formulae, processes, procedures, research records, records of inventions,
test
information, market surveys, marketing and process know-how and computer
software programs, including, all source code, object code, specifications,
designs and documentation related thereto.
“Transferred
Assets” has the meaning set forth on Exhibit I hereto under the
caption “Transferred Assets”.
“Transferred
Liabilities” has the meaning set forth on Exhibit I hereto under
the caption “Transferred Liabilities”.
“Uncollectible
Account” means any account receivable of the Business outstanding as of the
Closing Date that remains uncollected one year from the date it was
due.
“Working
Capital” means, as of any time, the sum of cash, cash equivalents, net
receivables, inventory and prepaid expenses as of such time minus the sum
of accounts payable and accrued liabilities as of such time, in each case
of the
Business determined on a combined consolidated basis and calculated in the
same
manner, using the same methods, as the corresponding line items of the Working
Capital Amount set forth on Exhibit F hereto, except as otherwise
provided in Exhibit F hereto.
“Working
Capital Amount” means $581,154,000.
“Working
Capital Overage” shall exist when (and shall be equal to the amount by
which) the Working Capital Estimate exceeds the Working Capital
Amount.
“Working
Capital Underage” shall exist when (and shall be equal to the amount by
which) the Working Capital Amount exceeds the Working Capital
Estimate.
(b) Other
Defined Terms. For purposes of this Agreement, each of the
following terms is defined in the Section set forth opposite such
term:
Term
|
Section
|
Accounting
Firm
|
1.05(b)
|
Acquisition
|
Recitals
|
Actions
|
5.05(c)
|
Active
Employee
|
5.08(a)
|
Agreement
|
Preamble
|
Allocation
Accounting Firm
|
5.05(h)(iv)
|
Ancillary
Agreements
|
2.02
|
Annual
Bonus Amount
|
5.08(r)
|
Asset
Allocation
|
5.05(h)
|
Assumed
Benefit Agreement
|
3.14(a)
|
Term
|
Section
|
Assumed
Benefit Plan
|
3.14(a)
|
Basket
Amount
|
9.03(a)
|
Business
Employees
|
3.14(a)
|
Cap
|
9.03(b)
|
Cap
Ex Budget
|
3.15(c)(ix)
|
CBAs
|
3.18
|
Class
I Representations
|
7.02(a)
|
Closing
|
1.03
|
Closing
Date
|
1.03
|
COBRA
|
3.14(c)
|
Competitive
Activities
|
6.01(a)
|
Confidentiality
Agreement
|
6.02(a)
|
Consent
|
2.03
|
Continuation
Period
|
5.08(b)
|
Contract
|
2.03
|
Controlled
Group Liability
|
5.08(k)
|
Controlling
Party
|
9.09(d)(iii)
|
CPTL
|
2.03
|
Debt
Financing Commitments
|
Recitals
|
Disabled
Employee
|
5.08(a)
|
DOJ
|
5.03(a)(ii)(1)
|
Environmental
Access Agreement
|
1.04(e)
|
Environmental
Claim Notice
|
9.09(d)(i)
|
Environmental
Matter
|
9.09(d)(ii)
|
Equity
Financing Commitments
|
Recitals
|
ERISA
|
3.14(a)
|
Estimated
Purchase Price
|
1.01(a)
|
Exchange
Act
|
2.03
|
Extension
Date
|
1.03
|
Final
Purchase Price
|
1.05(c)
|
Financial
Statements
|
3.05(a)
|
Financing
Commitments
|
Recitals
|
Foreign
Merger Control Laws
|
2.03
|
Foreign
Transferred Entity
|
5.07
|
FSA
Participant
|
5.08(l)
|
FSA
Participation Period
|
5.08(l)
|
FTC
|
5.03(a)(ii)(1)
|
GAAP
|
1.01(b)
|
Governmental
Entity
|
2.03
|
HSR
Act
|
2.03
|
IAM
Fund
|
3.14(d)
|
indemnified
party
|
9.09(a)(i)
|
IRS
|
3.12(i)
|
ITAR
|
2.03
|
Judgment
|
2.03
|
Term |
Section
|
Labor
Laws
|
3.18
|
Law
|
2.03
|
Lease
|
3.07(b)
|
Leased
Property
|
3.07(a)
|
Leasing
Entity
|
3.07(b)
|
Licensed
Intellectual Property
|
3.08(a))
|
Liens
|
3.06(a)
|
Losses
|
9.02
|
Material
Consents
|
6.11
|
Mini-Basket
Amount
|
9.03(c)
|
Non-Breach
Financing Failure
|
8.02(c)
|
Non-Controlling
Party
|
9.09(d)(iii)
|
Notice
of Disagreement
|
1.05(b)
|
NYSE
|
2.03
|
Owned
Intellectual Property
|
3.08(a)
|
Owned
Property
|
3.07(a)
|
Pension
Service Employee
|
5.08(m)
|
Permits
|
3.10
|
Permitted
Liens
|
3.06(a)
|
Pre-Closing
Consolidated Return
|
9.09(c)(ii)
|
Pre-Closing
Service
|
5.08(d)
|
Property
Owning Entity
|
3.07(a)
|
Property
Taxes
|
9.01(c)(i)
|
Proposed
Asset Allocation
|
5.05(h)(ii)
|
Purchased
Companies
|
Recitals
|
Purchased
Companies’ Equity Interests
|
Recitals
|
Purchased
Company Subsidiaries
|
Recitals
|
Purchased
Company Subsidiaries’ Equity Interests
|
Recitals
|
Purchaser
|
Preamble
|
Purchaser
401(k) Plan
|
5.08(q)
|
Purchaser
Cafeteria Plan
|
5.08(l)
|
Purchaser
Indemnitees
|
9.01(a)
|
Remaining
Employees
|
6.01(c)
|
Represented
Employee
|
5.08(b)
|
Restricted
Assets
|
1.02(b)
|
Retained
Employees
|
3.14(a)
|
Retiree
Medical Eligible Employees
|
5.08(h)
|
Seller
|
Preamble
|
Seller
401(k) Plan
|
5.08(q)
|
Seller
Benefit Agreement
|
3.14(a)
|
Seller
Benefit Plan
|
3.14(a)
|
Seller
Cafeteria Plan
|
5.08(l)
|
Seller
Commonly Controlled Entity
|
3.14(a)
|
Seller
Indemnitees
|
9.01(b)
|
Seller
Letter
|
Article
II
|
Term | Section |
Seller
Pension Plan
|
5.08(m)
|
Specified
Person
|
8.02(c)
|
Sponsor
Fund Guarantees
|
Recitals
|
Sponsor
Funds
|
Recitals
|
Statement
|
1.05(a)
|
Straddle
Period
|
9.01(c)
|
Tax
Asset
|
5.05(d)
|
Tax
Controversy
|
9.09(c)(i)
|
Tax
Indemnified Party
|
9.09(c)(i)
|
Tax
Indemnifying Party
|
9.09(c)(i)
|
Tax
Sharing Agreements
|
5.05(e)
|
Terms
and Conditions of Employment
|
5.08(u)
|
Third
Party Claim
|
9.09(a)(i)
|
Trademark
License Agreement
|
1.04(f)
|
Transfer
Date
|
5.08(a)
|
Transfer
Taxes
|
5.04(b)
|
Transferors
|
Recitals
|
Transferred
Contracts
|
3.09(b)
|
Transferred
Employees
|
5.08(a)
|
Transferred
Entities
|
Recitals
|
Transferred
Entity Voting Debt
|
3.02(a)
|
Transferred
Equity Interests
|
Recitals
|
Transferred
Intellectual Property
|
3.08(a)
|
Transferred
Real Property
|
3.07(a)
|
Transferred
Technology
|
3.08(b)
|
Transition
Services Agreement
|
1.04(c)
|
Unaudited
Financial Statements
|
3.05(a)
|
WARN
Act
|
3.18
|
Winchester
Supply Agreement
|
1.04(c)
|
Working
Capital Estimate
|
1.01(b)
|
Working
Capital Principles
|
1.01(b)
|
SECTION
10.12. Exhibits and
Schedules; Interpretation. When a reference is made in this
Agreement to a party or to an Article, Section, Annex, Exhibit or Schedule,
such reference shall be to a party to, an Article or Section of, or an
Annex, Exhibit or Schedule to, this Agreement, unless otherwise
indicated. All Annexes, Exhibits and Schedules annexed
hereto or referred to herein are hereby incorporated in and made part of
this
Agreement as if set forth in full herein. The table of contents and
the headings contained in this Agreement, or any Annex, Exhibit or
Schedule to this Agreement, are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include”, “includes”, “including” or
“such as” are used in this Agreement, they shall be deemed to be followed by the
words “without limitation”. The word “will” shall be construed to
have the same meaning and effect as the word “shall.” The words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The word “or” when used in this
Agreement is not exclusive. The word “extent” in the phrase “to the
extent” shall mean the degree to which a subject or other thing extends, and
such phrase shall not mean simply “if”. Whenever used in this
Agreement, any noun or pronoun shall be deemed to include the plural as well
as
the singular and to cover all genders. This Agreement shall be
construed without regard to any presumption or rule requiring construction
or
interpretation against the party drafting or causing any instrument to be
drafted. All terms defined in this Agreement shall have their defined
meanings when used in any Annex, Exhibit or Schedule to this Agreement or
any
certificate or other document made or delivered pursuant hereto, unless
otherwise defined therein. Any agreement, instrument or statute
defined or referred to herein means such agreement, instrument or statute
as
from time to time amended, supplemented or modified, including (x) (in the
case of agreements or instruments) by waiver or consent and (in the case
of
statutes) by succession of comparable successor statutes and (y) all
attachments thereto and instruments incorporated therein. The words
“asset” and “property” shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights. References
to a person are also to its permitted successors and assigns. When a
reference is made in this Agreement to the Business, such reference shall
also
be a reference to the Transferred Entities if the context so
requires.
90
IN
WITNESS WHEREOF, each of the Purchaser and the Seller has duly executed this
Purchase Agreement as of the date first written above.
GLOBAL
BRASS AND COPPER ACQUISITION CO.,
|
|
by
|
|
/s/ Xxxxxxx Xxxxxx | |
Name:
Xxxxxxx Xxxxxx
Title:
|
XXXX
CORPORATION,
|
|
by
|
|
/s/ Xxxxxx X. Xxxx | |
Name:
Xxxxxx X. Xxxx
Title:
Chairman, President and Chief Executive
Officer
|
Purchased
Companies’ Equity Interests and
Purchased
Company Subsidiaries’ Equity Interests
Number
of Equity Interests
|
Percentage
of all Outstanding Equity Interests
|
|
Xxxx
Corporation
|
||
XX
Xxxxx Caribe, Inc.
|
100
|
100%
|
XX
Xxxxx Foils, Inc.
|
100
|
100%
|
XX
Xxxxx West, Inc.
|
100
|
100%
|
Xxxxx
Metals, Inc.
|
1,000
|
100%
|
Chase
Industries, Inc.
|
1,000
|
100%
|
Olin
Asia Pacific Pte Ltd.
|
3,002,728
|
100%
|
Olin
Brass Japan, Inc.
|
600
|
100%
|
Olin
Fabricated Metal Products, Inc.
|
1,000
|
100%
|
Olin
Global Services Mexico S.A. de C.V.
|
49
|
98%
|
Olin
Industrial (Hong Kong) Limited
|
100
|
100%
|
Olin
Mexico S.A. de C.V.
|
5,000
(fixed capital)
|
100%
of fixed capital
|
Yamaha-Olin
Metal Corporation
|
4,800
|
50%
|
Chase
Industries, Inc.
|
||
Chase
Brass & Copper Company
|
1,000
|
100%
|
Xxxx
Industrial (Hong Kong) Limited
|
||
Xxxx
Luotong Metals (GZ) Corporation
|
Registered
Capital
|
80%
|
Xxxx
Fabricated Products (GZ) Co., Ltd.
|
Registered
Capital
|
100%
|
Olin
Mexico S.A. de X.X.
|
||
Xxxx
Global Services Mexico S.A. de C.V.
|
1
|
2%
|
XX
Xxxxx West, Inc.
|
||
Olin
Mexico S.A. de C.V.
|
10,159,407
(variable
capital)
|
100%
of variable capital
|
Form
of Transition Services Agreement
Form
of Winchester Supply Agreement
Form
of Environmental Access Agreement
Form
of Trademark License Agreement
Calculation
of Working Capital
“Closing
Working Capital” shall specifically exclude any Excluded Assets or Excluded
Liabilities and will include the line items set forth below under the column
entitled “Closing Working Capital”.Closing Working Capital will exclude any
amounts related to Taxes, intangible assets, inter-company balances and items
resulting as part of the transaction (e.g. accrued transaction
expenses).
Closing
Working Capital
|
Working
Capital Amount
|
|
Cash:
|
See
Note #3
|
$ 0
|
Cash
Equivalents:
|
0
|
|
Net
Receivables:
|
To
be determined based on the following:
Accounts
Receivable minus the sum of (a) Allowance for Doubtful Accounts (see
Note #1) and (b) Provision for Credit Memos/Customer
Returns
|
229,293,000
|
Inventory:
|
To
be determined based on the following:
Pounds
of metal valued at market price as of the close of business as
of the
Closing Date (i.e. COMEX (copper) and LME spot (nickel, tin, and
zinc))
for traded market based pricing items, or average purchase price
for the
last month in which purchases of other items were made.
Capitalized
manufacturing cost and storeroom supplies inventory will be valued
based
on the book value as of the Closing Date measured consistently
with past
practices regardless whether such measurement is in accordance
with GAAP
and will not include any capitalization of manufacturing
variances.
Inventories
will exclude the reserve for LIFO.
|
501,442,000
|
Prepaid
Expenses:
|
To
be determined based on the following:
· Employee
travel advances
· Prepaid
rent associated primarily with rented Oster facilities in Allentown,
Pa.
and Warwick, R.I.,
·
Unamortized
signing bonuses associated with the union contract in East Xxxxx
signed in
December, 2005 and the Chase Brass union contract signed in June,
2007
· Deposits
·
The
market value of outstanding metal and utility contracts or other
derivative instruments related to the ongoing operation of business,
net
of required broker deposits
· All
other prepaid expenses and other current assets acquired by the
Seller
|
2,967,000
|
Accounts
Payable:
|
To
be determined based on the following:
Includes
trade and other payables.
|
(120,695,000)
|
Accrued
Liabilities:
|
To
be determined based on the following including, but not limited
to:
·
Accrued
earned and unpaid wages and salaries, including accrued vacation
pay
previously carried on the corporate books
· Accrued
but unpaid payroll taxes
· Accrued
property taxes
· Accrued
workers compensation costs
· Accrued
but unpaid utility costs
· Accrued
but unpaid freight delivery and receipt costs
· Accrued
but unpaid membership dues
·
Accrued
but unpaid professional service costs including, but not limited
to
attorneys, accountants, and consultants
· Accrued
but unpaid costs for services and goods received
· Accrued
repairs and maintenance/shutdown costs
· Accrued
moving expenses
· Accrued
manufacturing expenses
· Accrued
other sundry liabilities
·
Accrued
asset retirement obligations recorded in compliance with FAS 143
which
were previously carried on the corporate books
·
The
market value of outstanding metal and utility contracts or other
derivative instruments related to the ongoing operation of the
business,
net of required broker deposits
·
Excludes
items retained by the Seller
|
(34,453,000)
|
Negotiated
Fixed Adjustment
|
2,600,000
|
|
$581,154,000
|
Note
#1- Special Accounts Receivable indemnity: As provided for
in Article IX of the Purchase Agreement, the Seller is providing an
indemnity for Uncollectible Accounts, subject to a $1,000,000 deductible;
as
such, the reserve for bad debts will be stated at $1,000,000 at closing
consistent with the amount reflected in net receivables above.
Note
#2- Prepaid expenses or accrued liabilities, as appropriate, will
include the market value of outstanding metal contracts or any other derivative
instruments, net of any broker deposits (to the extent such deposits are
transferred to the Purchaser).
Note
#3- For the avoidance of doubt, the Seller will retain the liabilities
for outstanding checks which have not cleared against the Seller’s accounts on
or prior to the date of Closing.
Note
#4 - The Purchaser will prepare the Statement and Closing Working
Capital in the same manner, using the same methods, as the corresponding
line
items of the Working Capital Amount. In addition, the following principles
will be followed in preparing the Closing Working Capital.
·
|
Raw
materials metals inventory will be valued at its market price at
Closing
as described above.
|
·
|
Allowance
for doubtful accounts will be $1,000,000, consistent with Note
#1.
|
·
|
Prepaid
expenses will exclude prepaid
insurance.
|
·
|
Accrued
vacation expenses previously included on the Seller’s corporate books will
be recorded on the Business’s books measured on a consistent basis with
that liability included in accrued liabilities
above.
|
·
|
Accrued
asset retirement obligations previously recorded on the Seller’s corporate
books will be recorded on the Business’s
books.
|
·
|
Accrued
incentive related expenses will be retained by the Seller and will
be
zero.
|
·
|
Accrued
medical expenses will be retained by the Seller and will be zero
or
otherwise will be included at the same amount as reflected in net
working
capital above if other than zero.
|
·
|
Accrued
thrift plan or pension contributions will be retained by the Seller
and
will be zero.
|
·
|
The
Negotiated Fixed Adjustment will be
zero..
|
Arrangements
Pending Subdivision of Real Property; Easements
As
“Owned
Property” includes portions of the Seller’s East Alton, Illinois facility (the
“East Xxxxx Facility”; the portion of the East Xxxxx Facility that is
Owned Property is referred to as the “Transferable East Xxxxx Real
Property” and the portion of the East Xxxxx Facility that is not Owned
Property is referred to as the “Excluded East Xxxxx Real Property”), it
is the intent of the parties that the Transferable East Xxxxx Real Property
be
subdivided (at the Purchaser’s sole cost and expense) whether pursuant to formal
subdivision procedures required by local Law or possibly accomplished as
an
informal subdivision permitted under local Law, in either case so as to have
the
East Xxxxx Owned Real Property constitute one or more separate tax lots distinct
from the Excluded East Xxxxx Real Property. Such subdivision, whether
by formal subdivision procedure or other informal subdivision procedure
permitted under local Law, resulting in the establishment of the East Xxxxx
Owned Real Property as one or more separate tax lots is referred to as the
“Subdivision”. The cost of any improvements, alterations or
additions legally required to be made on the Transferable East Xxxxx Real
Property in order to accomplish the Subdivision, as reasonably agreed to
by the
Purchaser and the Seller, shall be equally borne by the Purchaser, on the
one
hand, and the Seller, on the other hand.
The
Seller has advised the Purchaser that it is unlikely that the Subdivision
can be
accomplished prior to the Closing. However, the Seller shall use
commercially reasonable efforts to effectuate the Subdivision prior to Closing
in a manner reasonably agreed to by the Purchaser and the Seller;
provided that, notwithstanding any provision in the Purchase Agreement
dated as of October 15, 2007 (the “Purchase Agreement”), between the
Purchaser and the Seller to the contrary (including Sections 1.01 and 1.04(a)
of
the Purchase Agreement), the failure to accomplish the Subdivision prior
to the
Closing and the consequent inability of the Seller to convey fee ownership
of
the Transferable East Xxxxx Real Property or any circumstances resulting
therefrom shall not, absent the failure of the Seller to so use commercially
reasonable efforts, constitute a material adverse effect on the Purchaser,
on
the Seller or on the Business, a breach of any representation, warranty,
covenant or agreement under the Purchase Agreement or any certificate delivered
pursuant to the Purchase Agreement or a failure of any condition under the
Purchase Agreement.
If
the
Subdivision has not been accomplished prior to the Closing for any reason,
at
the Closing:
1. The
Seller shall lease all of the land of the Transferable East Xxxxx Real Property
to the Purchaser pursuant to a triple net lease (the “East Xxxxx Lease”)
which shall be for a term of 99 years at a fixed annual rent of $1 per
year. The East Xxxxx Lease shall contain a covenant by the Seller, in
its capacity as landlord thereunder, that the Seller’s interest in the East
Xxxxx Lease and the Seller’s fee ownership of the land of the Transferable East
Xxxxx Real Property shall remain vested in the Seller or one of its subsidiaries
during the term of the East Xxxxx Lease. The East Xxxxx Lease shall,
with respect to the Purchaser, in its capacity as tenant thereunder, to the
extent not set forth in this Exhibit G, impose upon the Purchaser all the
obligations, and afford the Purchaser all the rights, with respect to the
land
of the Transferable East Xxxxx Real Property as would customarily be found
in a
triple net lease. The East Xxxxx Lease shall afford the Purchaser
free and unrestricted rights of assignment, subletting, alteration, use,
development and all other rights with respect to the Transferable East Xxxxx
Real Property and the leasehold interest therein, the intent being that the
Purchaser shall be the beneficial and economic owner of the land of the
Transferable East Xxxxx Real Property, and shall have all rights and obligations
accruing with respect to the Transferable East Xxxxx Real Property, except
for
the fact that record title to the land thereof will be held by the Seller
or one
of its subsidiaries. The Seller shall also covenant in the East Xxxxx
Lease not to mortgage or otherwise encumber the land of the Transferable
East
Xxxxx Real Property or any residual interest that the Seller may have in
and to
any Improvements. The East Xxxxx Lease shall further provide that,
from and after the Closing, the Purchaser and its subsidiaries shall, jointly
and severally, indemnify the Seller Indemnitees against, and hold each of
them
harmless from, any Loss suffered or incurred by the Seller Indemnities arising
from, relating to or otherwise in respect of its ownership of the land of
the
Transferable East Xxxxx Real Property after the Closing Date (including as
a
result of the actions or omissions of the Purchaser or its affiliates,
contractors, agents or invitees), other than Losses for which Seller indemnifies
the Purchaser Indemnitees pursuant to Section 9.02 of the
Agreement. The East Xxxxx Lease shall not be terminable for any
reason whatsoever (other than a taking by eminent domain of all of the
Transferable East Xxxxx Real Property).
2. The
Seller shall, at the Closing, convey to the Purchaser fee title to all buildings
and improvements (and all fixtures, equipment and machinery forming part
thereof) located on the Transferable East Xxxxx Real Property (collectively,
as
the same may be altered, added to, replaced or otherwise modified, the
“Improvements”). The Seller shall, at the Closing, execute a
non-warranty deed (and all required Transfer Tax forms as may be necessary
to
enable the deed to be placed of record) conveying title to the Improvements
to
the Purchaser. All Transfer Taxes and recording fees in connection
with such conveyance shall be shared equally, by the Purchaser, on the one
hand,
and the Seller, on the other hand.
During
the term of the East Xxxxx Lease, the Purchaser shall be responsible for
the
performance of all repairs and maintenance of the Transferable East Xxxxx
Real
Property (the land and the Improvements) and shall observe and perform all
obligations under the East Xxxxx Lease.
The
Purchaser shall have the right at any time during the term of the East Xxxxx
Lease to proceed to accomplish the Subdivision at the Purchaser’s cost and
expense. At the Purchaser’s request, the Seller shall cooperate with
the Purchaser to accomplish the Subdivision; provided that such requested
cooperation does not unreasonably interfere with the ongoing operations of
the
Seller and its subsidiaries. Upon the Subdivision being approved, the
Seller shall execute a non-warranty deed (and all required Transfer Tax forms
as
may be necessary to enable the deed to be placed of record) conveying title
to
the land of the Transferable East Xxxxx Real Property to the
Purchaser. All Transfer Taxes and recording fees in connection with
such conveyance shall be shared equally, by the Purchaser, on the one hand,
and
the Seller, on the other hand.
From
and
after the Closing, upon the request of either party, the other party shall
grant
any easement or right of way that is necessary (in the reasonable judgment
of
the parties) for the continued operation of the business of such party and
its
subsidiaries (consistent with the level, manner and type of usage as of the
Closing Date); provided that the foregoing shall not require the granting
of any easement or right of way if such easement or right of way would
unreasonably disrupt the normal operation of the granting party or its
affiliates.
Balance
Sheet
All
the
assets, properties, goodwill and rights of whatever kind and nature, real
or
personal, tangible or intangible, that are owned by or leased to the Seller
or
its subsidiaries (including the Subsidiary Transferors but excluding the
Transferred Entities) and exclusively or primarily used in, exclusively or
primarily held for use by or exclusively or primarily relating to the Business,
including the following assets and properties but excluding the Excluded
Assets:
(a) all
accounts receivable arising out of the operation or conduct of the
Business;
(b) (i) all
raw materials, work-in-process, finished goods, supplies, parts, spare parts,
packaging materials and all other inventories and supplies that are owned
by the
Seller or its subsidiaries (other than the Transferred Entities) on the Closing
Date and that, on the Closing Date, are located on the Transferred Real
Properties described in clause (d) below; provided that the
foregoing shall not include raw materials, work-in-process, finished goods,
supplies, parts, spare parts, packaging materials and other inventories and
supplies owned by the Seller or its subsidiaries (other than the Transferred
Entities) that are being stored on a Transferred Real Property pursuant to
the
terms of the Transition Services Agreement only to the extent such amounts
are
also not included in the Statement and (ii) all other raw materials,
work-in-process, finished goods and products, supplies, parts, spare parts
and
other inventories and supplies (including in transit, on consignment or in
the
possession of any third party) that are owned by the Seller or its subsidiaries
(including the Subsidiary Transferors but excluding the Transferred Entities)
on
the Closing Date and exclusively or primarily used in the operation or conduct
of the Business;
(c) all
other
tangible personal property and interests therein, including all machinery,
equipment, furniture, furnishings, fixtures, computers and vehicles, that
are
owned by or leased to the Seller or its subsidiaries (including the Subsidiary
Transferors but excluding the Transferred Entities) on the Closing Date and
exclusively or primarily used in the operation or conduct of the
Business;
(d) all
Transferred Real Properties that are owned by or leased to the Seller or
its
subsidiaries (including the Subsidiary Transferors but excluding the Transferred
Entities) on the Closing Date;
(e) all
Transferred Intellectual Property and all Transferred Technology that is
owned
by or licensed to the Seller or its subsidiaries (including the Subsidiary
Transferors but excluding the Transferred Entities) on the Closing Date
including the Intellectual Property set forth on Section 3.08(a) of the
Seller Letter, but excluding the Seller Retained Trademarks;
(f) all
Contracts to which the Seller or its subsidiaries (including the Subsidiary
Transferors but excluding the Transferred Entities) are a party or by which
the
Seller or its subsidiaries (including the Subsidiary Transferors but excluding
the Transferred Entities) are bound that are exclusively or primarily used
in,
or that arise exclusively or primarily out of, the operation or conduct of
the
Business (the “Other Business Contracts”);
(g) to
the
extent permitted by applicable Law, all Permits and other governmental
authorizations issued or granted exclusively or primarily in connection with
the
Business to the Seller or its subsidiaries (including the Subsidiary Transferors
but excluding the Transferred Entities);
(h) all
assets with respect to any Seller Benefit Plan that (i) are transferred to
any employee benefit plan maintained by the Purchaser or its affiliates as
expressly provided in Section 5.08 or (ii) transfer automatically to
the Purchaser or its affiliates in connection with the assumption of any
Assumed
Benefit Plan;
(i) all
rights, claims and credits to the extent relating to any other Transferred
Asset
or any Transferred Liability, including any such items arising under guarantees,
warranties, indemnities and similar rights in favor of the Seller or its
subsidiaries (including the Subsidiary Transferors but excluding the Transferred
Entities) in respect of any such Transferred Asset or any Transferred
Liability;
(j) all
original agreements, documents, books, records, ledgers, original Tax Returns,
files and other materials (in any form or medium), including records and
files
stored on computer disks or tapes or any other storage medium (collectively,
“Records”) of the Seller or its subsidiaries (including the Subsidiary
Transferors but excluding the Transferred Entities) exclusively or primarily
relating to the Business (including all advertising matter, catalogues, price
lists, correspondence, mailing lists, lists of customers, distribution lists,
photographs, production data, sales and promotional materials and records,
purchasing materials and records, personnel records, manufacturing and quality
control records and procedures, blueprints, research and development files,
data
books, media materials and plates, accounting records and sales order files
exclusively or primarily relating to the Business), other than (i) original
consolidated, combined or unitary Tax Returns, (ii) Records prepared in
connection with the Acquisition, including bids received from other persons
and
analyses relating to the Business, (iii) file copies of the Records
retained by the Seller, (iv) personnel records to the extent they may not
be
transferred in accordance with applicable Law and (v) all financial and Tax
records relating to the Business to the extent that they constitute a part
of
the Seller’s or any of its affiliate’s general ledger;
(k) all
prepaid expenses, advance payments and security deposits exclusively or
primarily relating to the Business excluding (i) such of the foregoing that
will
not benefit the Purchaser and (ii) deposits relating to commodity agreements
entered into in connection with the Business’ inventory reduction
program;
(l) all
rights to causes of action, lawsuits, judgments, claims and demands of any
nature available to or being pursued by the Seller or its subsidiaries
(including the Subsidiary Transferors but excluding the Transferred Entities)
to
the extent relating to the Business or the ownership, use, function or value
of
any Transferred Asset, whether arising by way of counterclaim or
otherwise;
(m) all
rights of the Seller or its subsidiaries (other than the Transferred Entities)
under any confidentiality agreement entered into in connection with the
transactions contemplated by this Agreement; and
(n) all
goodwill generated by or associated with the Business.
Notwithstanding
the foregoing or anything else in this Agreement to the contrary, “Transferred
Assets” shall not include (i) the assets, properties, goodwill or rights set
forth in Section 1.02(a) of the Seller Letter and such items shall be
deemed “Excluded Assets”.
All
the
liabilities, obligations and commitments of the Seller and its subsidiaries
(including the Subsidiary Transferors but excluding the Transferred Entities)
to
the extent related to the Business, including the following liabilities but
excluding the Excluded Liabilities:
(a) all
accounts payable arising out of the operation or conduct of the Business
to the
extent such amounts are reflected in the Statement as finally determined
pursuant to Section 1.05;
(b) all
liabilities, obligations and commitments under the Other Business
Contracts;
(c) all
liabilities, obligations or commitments to the extent they relate to or arise
out of any Transferred Asset, or to the extent they arise out of the ownership
or operation by the Purchaser and its subsidiaries of any Transferred Asset
or
to the extent they are associated with the realization of benefits of any
Transferred Asset;
(d) all
liabilities, obligations and commitments to the extent such amounts are
reflected in the Statement as finally determined pursuant to
Section 1.05;
(e) all
liabilities, obligations and commitments set forth in
Section 1.01(b) of the Seller Letter;
(f) all
employment and employee benefits-related liabilities, obligations, commitments,
claims and losses relating to (i) the Transferred Employees (or any
dependent or beneficiary of any Transferred Employee) that (A) arise out of
or are incurred on or after 12:01 a.m. on the relevant Transfer Date, (B)
the Purchaser or its affiliates have specifically agreed to assume pursuant
to
this Agreement, (C) relate to an Assumed Benefit Plan or Assumed Benefit
Agreement, (D) transfer automatically to the Purchaser or its affiliates
under applicable non-U.S. Law or as a result of the transfer of the Transferred
Entities to the Purchaser or (E) are reflected in the Statement or
(ii) the failure of the Purchaser or its affiliates to offer employment to
any Business Employee in accordance with Section 5.08 (clauses (i) and
(ii), collectively, the “Covered Employee Liabilities”);
(g) any
liability, obligation or commitment to the extent arising out of any claim,
suit, action or other proceeding (whether now known or pending or arising
after
the date of this Agreement) related to any litigation, general liability,
auto
liability, workers’ compensation, product warranty or product liability of the
Business (including any Pre-Closing Accrued Liability) in respect of events
occurring on or prior to the Closing (it being understood that such matters
are
addressed by Section9.03(i));
(h) any
liability or obligation under Environmental Law in connection with the Business,
including the operation thereof (other than any Pre-Closing Environmental
Matters), to the extent arising out of actions, events or failures to act
occurring prior to the Closing or arising out of conditions existing on or
prior
to the Closing, including any liability or obligation under Environmental
Law to
investigate or remediate any Release of Hazardous Materials, in connection
with
the operation of the Business, occurring on or prior to the Closing (it being
understood that such matters are addressed by Section 9.03(e)) (it being
understood that any liability, obligation or commitment to the extent it
arises
out of the ownership or operation of any real property or interests in real
property that are or were owned or operated by or leased to the Seller or
its
subsidiaries (other than the Transferred real Properties) shall be an Excluded
Liability);
(i) all
other
liabilities, obligations and commitments to the extent arising out of the
operation or conduct of the Business after the Closing Date.
All
the
following assets, properties, goodwill and rights of whatever kind and nature,
real or personal, tangible or intangible, that are owned by or leased to
the
Seller or its subsidiaries:
(a) all
assets, properties, goodwill and rights set forth in Section 1.02(a)
of the Seller Letter;
(b) all
cash
and cash equivalents, except to the extent reflected in the Closing Working
Capital;
(c) all
rights, claims and credits to the extent relating to any other Excluded Asset
or
any Excluded Liability, including any such items arising under insurance
policies, guarantees, warranties, indemnities and similar rights in respect
of
any such Excluded Asset or any Excluded Liability;
(d) except
as
otherwise specifically provided in Section 5.08 or for assets that transfer
automatically to the Purchaser or its affiliates in connection with the
assumption of any Assumed Benefit Plan, all the assets of and all the assets
relating to the Seller Benefit Plans;
(e) all
rights of the Seller under this Agreement and the Ancillary
Agreements;
(f) all
current and prior insurance policies and all rights of any nature with respect
thereto, including all insurance recoveries thereunder and rights to assert
claims with respect to any such insurance recoveries;
(g) (i) all
original consolidated, combined or unitary Tax Returns, (ii) Records
prepared in connection with the Acquisition, including bids received from
other
persons and analyses relating to the Business and (iii) file copies of the
Records retained by the Seller;
(h) all
rights of the Seller or its affiliates (including the Transferred Entities)
under any confidentiality (other than confidentiality agreements with other
potential acquisitions of the Business which shall be Transferred Assets),
non-use or similar Contract with any employee or contractor of the Seller
or its
affiliates but only to the extent that such rights relate to any business
other
than the Business;
(i) all
financial and Tax records relating to the Business to the extent that they
constitute a part of the Seller’s or any of its affiliate’s general
ledger;
(j) deposits
relating to commodity agreements entered into in connection with the Business’
inventory reduction program;
(k) the
assets deemed Excluded Assets pursuant to the last paragraph under the caption
“Transferred Assets” in this Exhibit; and
(l) any
Tax
Assets for the account of the Seller pursuant to
Section 5.05(d).
All
the
following liabilities, obligations and commitments of the Seller and its
subsidiaries (including the Transferred Entities) whether or not related
to the
Business and whether or not disclosed in the Seller Letter:
(a) each
liability, obligation or commitment to the extent arising out of the operation
or conduct by the Seller or its subsidiaries of any business other than the
Business;
(b) each
liability, obligation or commitment identified in Section 1.02(a) of
the Seller Letter;
(c) each
liability, obligation or commitment to the extent it relates to or that arises
out of any Excluded Asset, or to the extent it arises out of the distribution
to, or ownership or operation by, the Seller of any Excluded Asset or to
the
extent it is associated with the realization of the benefits of any Excluded
Asset;
(d) Pre-Closing
Environmental Matters;
(e) all
employment and employee benefits-related liabilities, obligations, commitments,
claims and losses relating to employees of the Seller, its affiliates or
any
Seller Commonly Controlled Entity, other than the Covered Employee
Liabilities;
(f) each
liability, obligation or commitment for Taxes imposed upon the Seller or
attributable to the Transferred Assets for periods up to and including the
Closing Date;
(g) all
indebtedness of the Business and/or the Transferred Entities, other than
indebtedness owed by one Transferred Entity to another Transferred
Entity;
(h) all
liabilities arising from the breach of any non-competition obligations of
Seller
or the Subsidiary Transferors set forth in any contracts being transferred
to
the Purchaser pursuant to the terms of this Agreement; and
(i) all
accounts payable arising out of the operation or conduct of the Business
to the
extent in excess of amounts with respect to accounts payable reflected in
the
Statement as finally determined pursuant to Section 1.05 (including all
amounts owed to the US Mint that are more than 60 days past due as of the
Closing Date).
Knowledge
of the Seller; Knowledge of the Purchaser
Seller’s
knowledge
Xxxxxx
X.
Xxxxx
Xxxxxxx
X. Xxxxxx (with respect to tax and insurance matters)
Xxxxx
X.
Xxxxxx
Xxxxxxx
X. Xxxxxx (with respect to benefits, human resources and other employee
matters)
Naoroze
X. Xxxxxx (with respect to suppliers and purchasing matters)
G.
Xxxxx
Xxxxx
Xxxxxxx
X. Xxxxxxxxx
Xxxxx
X.
Xxxxxxxx (with respect to information technology matters)
Xxxxxxx
X. Xxxxx
Xxxxxx
X.
XxXxxxx (with respect to benefits, human resources and other employee
matters)
Xxxx
X.
Xxxxxx
Xxxx
X.
Xxxxxxxx (with respect to environmental matters)
Xxxxx
X.
Xxxxxxxx (with respect to intellectual property matters)
Xxxxxx
X.
Xxxx
Xxxx
X.
Xxxxxx
Xxxxxxxx
X. Xxxxxxxxxx
Purchaser’s
knowledge
Xxxxxxx
Xxxxxx
Xxxxx
Xxxxxx
Xxxx
Xxxxxx
Xxxxx
Xxxxxxx