Final ASSET PURCHASE AGREEMENT BY AND BETWEEN HAMILTON SUNDSTRAND CORPORATION AND SL Montevideo Technology, Inc. Dated as of September 30, 2016 Page -i- -ii- -iii- EXHIBITS Exhibit A Proprietary Information License Agreement Exhibit B Form of...
Exhibit 2.1
Final
BY AND BETWEEN
XXXXXXXX SUNDSTRAND CORPORATION
AND
SL Montevideo Technology, Inc.
_______________________
Dated as of September 30, 2016
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS | 1 | |
SECTION 1.1 |
DEFINITIONS |
1 |
SECTION 1.2 |
OTHER DEFINED TERMS |
8 |
ARTICLE II. PURCHASE AND SALE; CLOSING | 10 | |
SECTION 2.1 |
PURCHASE AND SALE |
10 |
SECTION 2.2 |
PURCHASE PRICE |
10 |
SECTION 2.3 |
CLOSING DATE |
10 |
SECTION 2.4 |
PURCHASED ASSETS |
10 |
SECTION 2.5 |
EXCLUDED ASSETS |
11 |
SECTION 2.6 |
ASSUMED LIABILITIES |
12 |
SECTION 2.7 |
RETAINED LIABILITIES |
13 |
SECTION 2.8 |
CLOSING DELIVERIES |
13 |
SECTION 2.9 |
QUALITY OF EARNINGS ADJUSTMENT |
14 |
SECTION 2.10 |
NET WORKING CAPITAL ADJUSTMENT |
16 |
SECTION 2.11 |
PURCHASE PRICE ALLOCATION |
18 |
SECTION 2.12 |
NON-ASSIGNMENT |
18 |
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLER | 19 | |
SECTION 3.1 |
ORGANIZATION, STANDING AND POWER |
19 |
SECTION 3.2 |
19 | |
SECTION 3.3 |
NO CONFLICTS; CONSENTS |
20 |
SECTION 3.4 |
PROCEEDINGS |
20 |
SECTION 3.5 |
FINANCIAL STATEMENTS |
20 |
SECTION 3.6 |
ABSENCE OF UNDISCLOSED LIABILITIES |
21 |
SECTION 3.7 |
ABSENCE OF CHANGES OR EVENTS |
21 |
SECTION 3.8 |
TITLE TO AND SUFFICIENCY OF ASSETS |
21 |
SECTION 3.9 |
INTELLECTUAL PROPERTY |
21 |
SECTION 3.10 |
LEASED REAL PROPERTY |
22 |
SECTION 3.11 |
CONTRACTS |
23 |
SECTION 3.12 |
COMPLIANCE WITH APPLICABLE LAWS; PERMITS |
24 |
SECTION 3.13 |
ENVIRONMENTAL MATTERS |
24 |
-i-
SECTION 3.14 |
TAXES |
25 |
SECTION 3.15 |
LABOR RELATIONS; EMPLOYEES AND EMPLOYEE BENEFIT PLANS |
25 |
SECTION 3.16 |
INTERCOMPANY ARRANGEMENTS |
26 |
SECTION 3.17 |
BROKERS |
26 |
SECTION 3.18 |
INVENTORY |
26 |
SECTION 3.19 |
CUSTOMERS; SUPPLIERS. |
27 |
SECTION 3.20 |
PRODUCTS |
27 |
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER | 27 | |
SECTION 4.1 |
ORGANIZATION, STANDING AND POWER |
27 |
SECTION 4.2 |
27 | |
SECTION 4.3 |
NO CONFLICTS; CONSENTS |
28 |
SECTION 4.4 |
FINANCIAL ABILITY TO PERFORM |
28 |
SECTION 4.5 |
PROCEEDINGS |
28 |
SECTION 4.6 |
BROKERS |
28 |
SECTION 4.7 |
CERTAIN SERVICES AND BENEFITS PROVIDED BY AFFILIATES |
28 |
ARTICLE V. COVENANTS | 29 | |
SECTION 5.1 |
EFFORTS |
29 |
SECTION 5.2 |
COVENANTS RELATING TO CONDUCT OF BUSINESS |
30 |
SECTION 5.3 |
ACCESS TO INFORMATION; CONFIDENTIALITY |
31 |
SECTION 5.4 |
CONSENTS, APPROVALS, ETC |
32 |
SECTION 5.5 |
[INTENTIONALLY OMITTED] |
33 |
SECTION 5.6 |
EMPLOYEE MATTERS. |
33 |
SECTION 5.7 |
[INTENTIONALLY OMITTED |
35 |
SECTION 5.8 |
NAMES FOLLOWING CLOSING |
35 |
SECTION 5.9 |
INSURANCE |
36 |
SECTION 5.10 |
LITIGATION SUPPORT |
36 |
SECTION 5.11 |
PAYMENTS |
37 |
SECTION 5.12 |
ACKNOWLEDGEMENT BY PURCHASER. |
37 |
SECTION 5.13 |
NONSOLICITATION |
38 |
SECTION 5.14 |
NONCOMPETITION |
39 |
SECTION 5.15 |
CARRIER MARGIN GUARANTEE |
39 |
ARTICLE VI. CERTAIN TAX MATTERS | 40 | |
SECTION 6.1 |
COOPERATION AND EXCHANGE OF INFORMATION |
40 |
-ii-
SECTION 6.2 |
TRANSFER TAXES |
40 |
SECTION 6.3 |
PRORATION OF PROPERTY TAXES |
41 |
ARTICLE VII. CONDITIONS PRECEDENT | 41 | |
SECTION 7.1 |
CONDITIONS TO OBLIGATIONS OF PURCHASER TO CLOSE |
41 |
SECTION 7.2 |
CONDITIONS TO OBLIGATIONS OF SELLER TO CLOSE |
42 |
SECTION 7.3 |
FRUSTRATION OF CLOSING CONDITIONS |
42 |
ARTICLE VIII. TERMINATION; EFFECT OF TERMINATION | 42 | |
SECTION 8.1 |
TERMINATION |
42 |
SECTION 8.2 |
EFFECT OF TERMINATION |
43 |
SECTION 8.3 |
NOTICE OF TERMINATION |
43 |
ARTICLE IX. INDEMNIFICATION | 43 | |
SECTION 9.1 |
SURVIVAL |
44 |
SECTION 9.2 |
INDEMNIFICATION BY SELLER |
44 |
SECTION 9.3 |
INDEMNIFICATION BY PURCHASER |
45 |
SECTION 9.4 |
PROCEDURES |
45 |
SECTION 9.5 |
EXCLUSIVE REMEDY AND RELEASE |
46 |
SECTION 9.6 |
ADDITIONAL INDEMNIFICATION PROVISIONS |
47 |
SECTION 9.7 |
LIMITATION ON LIABILITY |
47 |
SECTION 9.8 |
MITIGATION |
47 |
SECTION 9.9 |
SPECIAL RULE FOR FRAUD |
47 |
SECTION 9.10 |
TAX TREATMENT OF INDEMNITY PAYMENTS |
48 |
ARTICLE X. GENERAL PROVISIONS | 48 | |
SECTION 10.1 |
ENTIRE AGREEMENT |
48 |
SECTION 10.2 |
ASSIGNMENT |
48 |
SECTION 10.3 |
AMENDMENTS AND WAIVERS |
48 |
SECTION 10.4 |
NO THIRD-PARTY BENEFICIARIES |
48 |
SECTION 10.5 |
NOTICES |
48 |
SECTION 10.6 |
SPECIFIC PERFORMANCE |
49 |
SECTION 10.7 |
GOVERNING LAW AND JURISDICTION |
50 |
SECTION 10.8 |
WAIVER OF JURY TRIAL |
50 |
SECTION 10.9 |
SEVERABILITY |
50 |
SECTION 10.10 |
COUNTERPARTS |
51 |
SECTION 10.11 |
EXPENSES |
51 |
SECTION 10.12 |
INTERPRETATION; ABSENCE OF PRESUMPTION |
51 |
-iii-
EXHIBITS
Exhibit A Proprietary Information License Agreement Exhibit B Form of Transition Services Agreement Exhibit C Tax Allocation Schedule
Exhibit D Quality of Earnings Report
SCHEDULES
Section 1.1(a) – Prepaid Expenses
Section 2.4(a) – Assigned Contracts
Section 2.4(c) – Business Intellectual Property
Section 2.4(d) – Business Tangible Property
Section 2.4(g) – Transferrable Business Permits
Section 2.8(b) – Retained Intercompany Agreements
Section 2.10 – Sample Closing Statement
Section 3.3 – No Conflicts; Consents
Section 3.4 – Proceedings
Section 3.5 – Financial Statements
Section 3.8(a) – Sufficiency of Assets
Section 3.8(b) – Liens
Section 3.9(a) – Intellectual Property
Section 3.10 – Leased Real Property
Section 3.11 – Material Contracts
Section 3.12(a) – Compliance with Applicable Laws; Permits
Section 3.13 – Environmental Matters
Section 3.15 – Labor Relations; Employees and Employee Benefit Plans
Section 3.16 – Intercompany Arrangements
Section 3.19 – Customers and Suppliers
Section 3.20 – Product Warranties
Section 5.2 – Covenants Relating to Conduct of Business
Section 5.6(h) - Layoffs
Section 5.13(a) – Key Employees
Section 5.13(b) – Identified Employees
Section 7.1(e) – Required Closing Consents
Section 7.1(f) – Amendments to Long Term Agreements
-iv-
Asset Purchase Agreement, dated as of September 30, 2016 (this “Agreement”), by and between Xxxxxxxx Sundstrand Corporation, a Delaware corporation (“Seller”), and SL Montevideo Technology, Inc., a Minnesota corporation (“Purchaser”).
ARTICLE I. DEFINITIONS
Section 1.1 Definitions. As used herein, the following terms have the meanings set forth below:
“Adjustment” means the Purchaser Proposed Adjustment, the Seller Proposed Adjustment or an amount between the Purchaser Proposed Adjustment and the Seller Proposed Adjustment, as finally determined pursuant to Section 2.9.
“Affiliate” means, with respect to any specified Person, any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. For purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”), as used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise. For purposes of this Agreement, neither Seller nor UTC shall be deemed Affiliates of Purchaser nor, as of and after Closing, of the Business.
“Annual Target” means the target number of Measured Product Units as set forth in the table below, for each of the Applicable Years.
2017 | 12,960 | |||
2018 | 8,650 | |||
2019 | 4,330 |
1
“Applicable Year” means any of calendar year 2017, 2018 or 2019, as applicable.
“Business Day” means any day, other than a Saturday, Sunday, or day on which commercial banks are required or authorized to be closed in New York, New York.
“Business Intellectual Property” means (a) Patents listed in Section 2.4(c) of the Seller Disclosure Schedules; and (b) the Know-How used exclusively in the Business or required exclusively for the operation of the Business as currently conducted.
“Carrier” means Carrier Corporation (acting by and through its unincorporated business unit, Carrier Transicold Division).
“Carrier Supply Agreement” means that certain Purchase and Supply Agreement, effective April 1, 2013, by and between Seller (acting by and through its Xxxxxxxx-Sundstrand Electromagnetics Enterprise) and Carrier or subsequent agreements intended to upgrade or replace products provided under the current agreement.
“Cash Amounts” means all cash and cash equivalents, bank and other depositary accounts and safe deposit boxes, demand accounts, certificates of deposit, time deposits, negotiable instruments, securities and brokerage accounts.
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
“Competitive Business” means the design, development, manufacture, marketing, service, distribution, repair, and sale of (a) electric motors, starters or generators for use in commercial hybrid electric vehicles, commercial electric vehicles and refrigeration or (b) the Products or products reasonably similar in form and function by program application to the Products in the aerospace and defense industry. For the avoidance of doubt, no term in this Agreement shall restrict current operations of the Seller or Seller’s Affiliates in the aerospace and defense industry except with respect to the Products or products reasonably similar in form and function by program application to the Products in the aerospace and defense industry.
“Contamination” means the emission, discharge or release of any Hazardous Material to, on, onto or into the environment.
“Contract” means any contract, lease, license, commitment, customer order, loan or credit agreement, indenture, or agreement, other than a Permit or export control authorization.
“Copyright” means the copyrightable works, copyrights, moral rights, mask work rights, database rights and design rights, in each case, other than software, whether or not registered, and registrations and applications for registration thereof that are used exclusively in the Business or used exclusively for the operation of the Business as currently conducted.
“Covered Loss” means, subject to Section 9.7, losses, Liabilities (excluding contingent Liabilities), claims, fines, deficiencies, damages, payments (including those arising out of any settlement or Judgment relating to any Proceeding), Taxes, penalties and reasonable attorneys’ and accountants’ fees and disbursements.
2
“Employee” means the employee(s) of Seller or its Affiliates set forth on Section 3.15(b) of the Seller Disclosure Schedules who are, immediately before the Closing, dedicated to the Business (excluding such employees on short term disability, long term disability or other leave of absence on the Closing Date).
“Environmental Laws” means, collectively, any and all Laws and Judgments relating to Contamination or Hazardous Materials.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means, with respect to any entity, trade or business, any other entity, trade or business that is, or was at the relevant time, a member of a group described in Section 414(b), (c), (m) or (o) of the Code or Section 4001(b)(1) of ERISA that includes or included the first entity, trade or business, or that is, or was at the relevant time, a member of the same “controlled group” as the first entity, trade or business pursuant to Section 4001(a)(14) of ERISA.
“Excluded Taxes” means any Taxes imposed with respect to the Purchased Assets, the Assumed Liabilities or the Business for any Pre-Closing Period or any Taxes imposed on Seller in connection with the sale transaction provided for in this Agreement or on Seller for any period. For purposes of this Agreement, in the case of any Straddle Period, (a) Property Taxes for the Pre-Closing Period shall be equal to the amount of such Property Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the Pre-Closing Period and the denominator of which is the number of days in the entire Straddle Period, and (b) Taxes (other than Property Taxes) for the Pre-Closing Period shall be computed as if such taxable period ended as of the close of business on the Closing Date.
“GAAP” means United States generally accepted accounting principles, consistently applied.
“Governmental Entity” means any national, state, local, supranational or foreign government or any court of competent jurisdiction, administrative agency or commission or other national, state, local, supranational or foreign governmental authority or instrumentality.
“Hazardous Material” means any substance, pollutant, contaminant, material and waste that is classified in any applicable Environmental Law as “hazardous,” “toxic,” “dangerous,” a “pollutant,” a “contaminant” or words of similar meaning, including asbestos, asbestos-containing materials, polychlorinated biphenyls, petroleum or petroleum products, radioactive materials and radon gas.
“Intellectual Property” means (a) Patents, (b) Trademarks, (c) Copyrights, and (d) intellectual property rights arising from or in respect of the Know-How.
“Judgment” means any judgment, injunction, order or decree of any Governmental Entity.
3
“Know-How” means processes, methods, designs, formulae, technical information, trade secrets, know-how, drawings, blueprints, designs, quality assurance and control procedures, design tools, simulation capability, manuals and technical information provided to employees, customers, suppliers, agents, or licensees, research data concerning historic and current research and development efforts, including design of experiments and results of successful and unsuccessful designs and experiments, records, books or other indication of the foregoing.
“Knowledge” means the knowledge, with respect to Seller, of Xxxxxx XxXxxxxx (Manager, Human Resources and Labor Relations – Electric, Environmental and Engine Systems), Xxxxxxx Xxxxxx (Manager, Environment, Health and Safety), Xxxxxxx Xxxxxxx (General Manager – Electric Systems), and Xxxxx Xxxxxx (Controller, Electric Systems) after making investigation of the subject matter with employees and personnel of the Seller who report directly to such individual.
“Law” means any national, state, local, supranational or foreign law, statute, code, order, ordinance, rule, regulation or treaty (including any Tax treaty), in each case promulgated by a Governmental Entity.
“Leased Real Property” means the leased property located at 0000 000xx Xx. Xxx. 000, Xxxxxxxx Xxxxxxx, Wisconsin, at which the Business is located.
“Liabilities” means all debts, liabilities, guarantees, assurances, commitments and obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured, liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due, whenever or however arising (including whether arising out of any Contract or tort based on negligence or strict liability).
“Lien” means any mortgage, lien, pledge, security interest, charge, easement, lease, sublease, covenant, right of way, claim, restriction or encumbrance of any kind.
“Major Quality Escape” means (a) any material defect that reaches the original equipment manufacturer customer which does not have a Carrier approved remediation plan in place thirty (30) days following identification of such issue or (b) breach of the quality or delivery requirements in the Carrier Supply Agreement resulting in a termination by Carrier of the Carrier Supply Agreement.
“Material Adverse Effect” means any event, change or effect that is or could reasonably be expected to be materially adverse to the Purchased Assets or the Business, including the financial condition or results of operations of the Business taken as a whole; provided, however, that no such event, effect or change resulting or arising from or in connection with any of the following matters shall be deemed by itself or by themselves, either alone or in combination, to constitute or contribute to a Material Adverse Effect: (a) the general conditions in the industries in which the Business operates, including competition in any of the geographic areas in which the Business operates; (b) general political, economic, financial or capital market conditions (including interest rates); (c) any act of civil unrest, war or terrorism, including an outbreak or escalation of hostilities involving the United States or any other country or the declaration by the United States or any other country of a national emergency or war; (d) any conditions resulting from natural or manmade disasters or other acts of God; (e) the failure of the financial or operating performance of Seller or the Business to meet internal, Purchaser or analyst projections, forecasts or budgets for any period (but not including the underlying causes of such failure) (provided, that this clause (e) shall not be construed as implying that Seller is making any representation or warranty herein with respect to any internal, Purchaser or analyst projections, forecasts or budgets); (f) any action taken or omitted to be taken by or at the written request of Purchaser, or compliance with applicable Law or the covenants and agreements contained in this Agreement; (g) the execution, announcement, pendency or consummation of this Agreement, the Transaction or the other transactions contemplated hereby, or the identity of Purchaser; or (h) changes in any Law or GAAP or other applicable accounting principles or standard or any interpretations thereof; provided, further, that any event, effect or change referred to in clause (a) or (b) of the foregoing proviso may constitute a Material Adverse Effect, but only to the extent that such event, effect or change has a materially disproportionate impact on the Business compared to other businesses that operate in the industries in which the Business operates.
4
“Measured Product Units” means units of (1) Product ordered by Carrier or its Affiliates under the Carrier Supply Agreement and (2) Carrier orders for replacement/upgrade products under the Carrier Supply Agreement (if applicable).
“Minor Quality Escape Threshold” means less than 2,000 parts per million defects averaged over the course of a calendar year.
“Net Working Capital” means the current assets minus the current liabilities (such categories being set forth in the Sample Closing Statement) of the Business as of immediately prior to Closing on the Closing Date, but not including the Retention Bonus Amount.
“On Time Delivery Threshold” means on time delivery greater than 98% of the time, averaged over the course of a calendar year.
“Ordinary Course” means, with respect to any Person, in the ordinary course of that Person’s business consistent with past practice, including as to the quantity, quality and frequency.
“Patents” means patents, patent applications (including patents issued thereon) and statutory invention registrations, including reissues, divisions, continuations, continuations in part, extensions and reexaminations thereof.
“Performance Metrics” means, collectively, the On Time Delivery Threshold and the Minor Quality Escape Threshold.
“Permits” means permits, approvals, authorizations, consents, licenses or certificates issued by any Governmental Entity.
5
“Permitted Liens” means the following Liens: (a) Liens for Taxes, assessments or other governmental charges or levies that are not yet due or payable or that are being contested by appropriate Proceedings or that may thereafter be paid without penalty; (b) statutory Liens of landlords and Liens of carriers, warehousemen, mechanics, materialmen, workmen, repairmen and other Liens imposed by Law and on a basis consistent with past practice or in the Ordinary Course of the Business for amounts that are not delinquent; (c) Liens incurred or deposits made in the Ordinary Course of the Business and on a basis consistent with past practice in connection with workers’ compensation, unemployment insurance or other types of social security; (d) defects or imperfections of title, easements, declarations, covenants, rights-of-way, restrictions and other charges, instruments or encumbrances affecting title to real estate; (e) zoning ordinances, variances, conditional use permits and similar regulations, permits, approvals and conditions; (f) Liens not created by or consented to by Seller or any of its Subsidiaries that affect the underlying fee interest of any Leased Real Property, including master leases or ground leases and any set of facts that an accurate up-to-date survey would show; provided, however, that (with respect to this clauses (e) and (f) only) if, and only if, any such item does not materially interfere with the ordinary conduct of the Business, as a whole.
“Person” means any individual, firm, corporation, partnership, limited liability company, trust, joint venture, Governmental Entity or other entity.
“Pre-Closing Period” means any taxable period ending on or prior to the Closing Date and, in the case of any Straddle Period, the portion of such period ending on and including the Closing Date.
“Prepaid Expenses” means rent, insurance, and other prepaid items that have not yet expired as reflected in Section 1.1(a) of the Seller Disclosure Schedules.
“Proceeding” means any judicial, administrative or arbitral actions, suits, audits, investigations or proceedings by or before any Governmental Entity.
“Product Recall Liabilities” means any Liabilities (a) arising in connection with (i) a recall of a Product instituted or required by a Governmental Entity, or (ii) a “fleet defect”, as defined in the Supply Agreement by and between BAE Systems Controls Inc. and Seller dated March 12, 2015, or (iii) an “Epidemic Failure”, as defined in the Carrier Supply Agreement, or (b) for warranty claims for Products sold prior to the Closing in excess of $610,000 in the aggregate in any twelve (12) month period following the Closing.
“Products” means all of Seller’s products and services that are designed, developed, manufactured, marketed, serviced, distributed, repaired, and/or sold by the Business.
“Property Taxes” means real, personal and intangible ad valorem property Taxes.
“Purchase Price” means the Base Purchase Price, as adjusted pursuant to Section 2.9 and Section 2.10.
“Representatives” of a Person means any officer, director or employee of such Person or any investment banker, attorney, accountant or other advisor or representative of such Person.
“Seller Benefit Plan” means each compensation or benefits plan, program or arrangement (including those subject to ERISA, employment agreements, cash or equity-based bonus or incentive arrangements, severance arrangements, vacation policies and health and welfare plans) sponsored, maintained or contributed to or by UTC, Seller, or any other Subsidiaries of UTC or any of their respective ERISA Affiliates, for the benefit of any Employees (and any employees of the Business who, but for their termination of employment, would have been Employees).
6
“Seller Disclosure Schedules” means those certain Seller Disclosure Schedules dated as of the date of this Agreement, provided by Seller to Purchaser.
“Seller Payment” means, for any Applicable Year, an amount equal to the Shortfall for such Applicable Year multiplied by $350.
“Shortfall” means, for any Applicable Year, the positive difference, if any, between the applicable Annual Target and the sales under the Carrier Supply Agreement of Measured Product Units to Carrier for the Applicable Year.
“Straddle Period” means any taxable period that begins on or before the Closing Date and ends after the Closing Date.
“Subsidiary” means with respect to any Person, any corporation, limited liability company or other entity whether incorporated or unincorporated, of which (i) such first Person directly or indirectly owns or controls at least a majority of the securities or other interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions or (ii) such first Person is a general partner or managing member.
“Target Net Working Capital” means $5,384,000.
“Tax” means any tax of any kind, including any federal, state, local or foreign income, estimated, sales, use, ad valorem, receipts, value added, goods and services, profits, license, withholding, payroll, employment, unemployment, excise, premium, property, customs, unclaimed property, net worth, capital gains, transfer, stamp, documentary, social security (or similar), environmental, alternative or add-on minimum, occupation, and any other duty, assessment, or governmental charge, together with all interest, penalties and additions imposed with respect to such amounts.
“Tax Proceeding” means any audit, examination, contest, litigation or other Proceeding with or against any Taxing Authority.
“Tax Return” means any return, declaration, report, claim for refund or information return or statement required to be filed with any Taxing Authority relating to Taxes, including any amendment thereof.
“Taxing Authority” means any Governmental Entity responsible for the administration or the imposition of any Tax.
“Trademarks” means the registered and unregistered trademarks, service marks, trade names, service names, trade dress and logos, including all goodwill associated therewith, and registrations and applications for registration thereof, and all reissues, extensions and renewals of any of the foregoing that are used exclusively in the Business or required exclusively for the operation of the Business as currently conducted. In no event shall any Names be deemed a Trademark.
7
“Transaction Documents” means this Agreement, the Proprietary Information License Agreement, the Transition Services Agreement and the General Xxxx of Sale.
“Transferred Names” means the names "Electromagnetic Enterprise", "eMe" and any derivatives thereof, and the goodwill related thereto, if any. In no event shall any Names be deemed Transferred Names.
“UTC” means United Technologies Corporation.
“WARN” means the Worker Adjustment Retraining and Notification Act, 29 U.S.C. Section 2101 et seq., as amended.
Section 1.2 Other Defined Terms. In addition, the following terms shall have the meanings ascribed to them in the corresponding section of this Agreement:
Term | Section |
Accounting Firm |
2.10(d) |
Accounting Principles |
2.10(b) |
Adjustment Determination Date |
2.9(e) |
Adjustment Review Period |
2.9(c) |
Adjustment Standard |
2.9(b) |
Adjustment Statement |
2.9(b) |
Agreement |
Preamble |
Allocation Schedule |
2.11 |
Approvals |
2.12 |
Assumed Liabilities |
2.6 |
Balance Sheet Date |
3.5 |
Business |
Recitals |
Business Balance Sheet |
3.5 |
Business Financial Statements |
3.5 |
Business Intellectual Property |
2.4(b) |
Business Permits |
3.12(b) |
Business Tangible Property |
2.4(d) |
Cap |
9.2(a) |
Closing |
2.3 |
Closing Date |
2.3 |
Closing Statement |
2.10(b) |
Confidentiality Agreement |
5.3(b) |
De Minimis Claim |
9.2(b) |
Deductible |
9.2(b)(i) |
Determination |
2.10(e) |
Determination Date |
2.10(f) |
Discussion Period |
2.9(d) |
Dispute Notice |
2.9(d) |
8
Excluded Assets |
2.5 |
Fundamental Representations |
9.1(a) |
General Assignment and Xxxx of Sale |
2.8(a)(v) |
Identified Employee |
5.13(b) |
Indemnified Party |
9.4(a) |
Indemnifying Party |
9.4(a) |
Inventory |
2.4(f) |
Key Employee |
5.13(a) |
Lease |
3.10 |
Material Contracts |
3.11(a) |
Material Customers |
3.19(a) |
Material Suppliers |
3.19(b) |
Names |
5.8(a) |
Original Phase I Assessment |
5.8(a) |
Outside Date |
8.1(d) |
Post-Closing Statement |
2.9(c) |
Proprietary Information License Agreement |
2.8(a)(iii) |
Purchased Assets |
2.4 |
Purchaser |
Preamble |
Purchaser Indemnified Parties |
9.2(a) |
Purchaser Material Adverse Effect |
4.1 |
Purchaser Proposed Adjustment |
2.9(a) |
Purchaser’s Allocation |
2.11 |
QOE |
2.9(a) |
Resale Certificate |
2.8(a)(vi) |
Retained Liabilities |
2.7 |
Retention Bonus Amount |
5.6(a) |
Review Period |
2.10(c) |
Sample Closing Statement |
2.10(a) |
Seller |
Preamble |
Seller Indemnified Parties |
9.3(a) |
Seller Proposed Adjustment |
2.9(b) |
Seller’s Allocation Notice |
2.11 |
Shortfall Certificate |
5.15(a) |
Shortfall Dispute Notice |
5.15(a) |
Shortfall Review Priod |
5.15(a) |
Third Party Claim |
9.4(a) |
Transaction |
Recitals |
Transfer Taxes |
6.2 |
Transferred Employees |
5.6(a) |
Transition Services Agreement |
2.8(a)(iv) |
Working Capital Adjusted Purchase Price |
2.10(g) |
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ARTICLE II. PURCHASE AND SALE; CLOSING
Section 2.3 Closing Date. The closing of the Transaction (the “Closing”) shall take place effective at 11:59 pm New York City time, at the offices of Seller, on the third Business Day following the date on which the last of the conditions set forth in Article VII (other than those conditions that are to be satisfied by action taken at the Closing, but subject to the satisfaction or waiver of such conditions at the Closing) have been satisfied (or, to the extent permitted, waived by the parties entitled to the benefits thereof) or at such other place, time and date as may be agreed among Seller and Purchaser. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date.”
(a) Any and all Contracts primarily related to the Business (the “Assigned Contracts”) including the Contracts with customers, in each case as disclosed on Section 2.4(a) of the Seller Disclosure Schedules; provided that in no event shall any Contracts solely among Seller and its Affiliates be deemed an Assigned Contract or a Purchased Asset except those Contracts with Affiliates set forth on Section 2.4(a) of the Seller Disclosure Schedules;
(b) the Lease (including any deposits thereunder) and the rights to the Leased Real Property as set forth in the Lease;
(c) The Business Intellectual Property, the Transferred Names and the Copyrights and the Trademarks used exclusively in the Business or required exclusively for the operation of the Business as currently conducted;
(d) All tangible assets that relate exclusively to the Business including all equipment, tooling, fixed assets, personal property and office furniture located at the Leased Real Property and tangible assets set forth on Section 2.4(d) of the Seller Disclosure Schedules (the “Business Tangible Property”);
(e) Any notes, debentures, trade receivables (current and noncurrent) and other accounts receivable, other than from Seller and any of its Subsidiaries arising out of the Assigned Contracts or sales of Products to customers of the Business;
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(f) The raw materials, work-in-process, finished goods, supplies and other inventories relating exclusively to the Business or the Assigned Contracts and located at the Leased Real Property (collectively, the “Inventory”);
(g) The transferable Business Permits listed in Section 2.4(g) of the Seller Disclosure Schedules;
(h) The Prepaid Expenses;
(i) All goodwill in the Business; and
(j) Any and all documents, instruments, papers, books, records, books of account, files and data (including customer and supplier lists, and repair and performance records), catalogs, brochures, sales literature, promotional materials, certificates and other documents to the extent exclusively relating to the Business or the Purchased Assets or the Employees and located at the Leased Real Property and in the possession of the Seller, other than (i) any books, records or other materials that the Seller are required by Law to retain (copies of which, to the extent permitted by Law, will be made available to Purchaser upon Purchaser’s reasonable request) and (ii) copies of employment records for Transferred Employees reasonably requested by Purchaser to comply with the covenants set forth in Section 5.6; provided, that, with respect to any such books, records or other materials that are Purchased Assets pursuant to this clause (j), Seller shall be permitted to keep (A) one (1) copy of such books, records or other materials to the extent required to demonstrate compliance with applicable Law or pursuant to internal compliance procedures, and (B) such books, records or other materials in the form of so-called “back-up” electronic tapes in the Ordinary Course of the Business.
A single asset may fall within more than one of clauses (a) through (j) in this Section 2.4; such fact does not imply that (i) such asset shall be transferred more than once or (ii) any duplication of such asset is required. Anything to the contrary in this Agreement notwithstanding, no Intellectual Property that does not fall within clause (c) or clause (j) of this Section 2.4 will be deemed to be included in any other clause of this Section 2.4.
(a) Any and all assets related to the Seller Benefit Plans;
(b) Any and all loans and advances, if any, by the Seller to any of its Affiliates;
(c) Any and all Intellectual Property, other than the Business Intellectual Property and the Transferred Names, Copyrights and Trademarks included in the Purchased Assets;
(d) Any and all Contracts other than the Assigned Contracts;
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(e) Except for the Leased Real Property, all owned and leased real property and other interests in real property;
(f) Any and all refunds or credits of or against Excluded Taxes;
(g) Tax Returns and other books and records related to Taxes paid or payable by Seller or any of its Affiliates;
(h) Any and all Cash Amounts;
(i) Any and all insurance policies and binders and interests in insurance pools and programs and self-insurance arrangements whether or not relating to the Business, for all periods before, through and after the Closing, including any and all refunds and credits due or to become due thereunder and any and all claims, rights to make claims and rights to proceeds on any such insurance policies for all periods before, through and after the Closing;
(j) Any and all non-transferrable Business Permits; and
(k) Any and all other assets of Seller not specifically included in the Purchased Assets.
The Parties acknowledge and agree that neither Purchaser nor any of its Subsidiaries will acquire or be permitted to retain any direct or indirect right, title and interest in any Excluded Assets. For the avoidance of doubt, no right, title and interest in and to the Intellectual Property described in this Section 2.5 are being acquired by Purchaser.
(a) Liabilities arising out of or relating to the Assigned Contracts initially arising or accruing following the Closing which are not the result of or caused by any breach or default by Seller prior to the Closing (other than warranty claims as contemplated by Section 2.6(c) below);
(b) Liabilities with respect to the deferred revenue of the Business to the extent included in the Net Working Capital;
(c) warranty claims in the Ordinary Course of the Business for repair or replacement only of Products sold prior to Closing pursuant to written warranties extended to customers, but specifically excluding any and all Product Recall Liabilities;
(d) trade accounts payable to vendors and suppliers for Products for which payment is not due until following the Closing Date to the extent included in the Net Working Capital; and
(e) all wages and employee benefits of the Employees payable after the Closing Date to the extent included in the Net Working Capital.
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A single Liability may fall within more than one of clauses (a) through (e) in this Section 2.6; such fact does not imply that (i) such Liability shall be transferred more than once or (ii) any duplication of such Liability is required. The fact that a Liability may be excluded under one clause does not imply that it is not intended to be included under another.
(a) Except as set forth in Section 5.6, any and all Liabilities related to the Seller Benefit Plans;
(b) All loans and advances, if any, by any Affiliate of Seller to Seller;
(c) All Liabilities arising out of or related to Contracts of Seller other than the Assigned Contracts;
(d) All Excluded Taxes;
(e) Except as set forth in Section 2.6(c), all Liabilities arising out of the sale of Products which were sold on or prior to the Closing Date;
(f) all Liabilities arising out of or related to the Excluded Assets; and
(g) Liabilities with respect to acts, omissions, events or circumstances relating to the current or former employees of the Busines that occurred or existed prior to the Closing, including those occurrences, events, incidents and accidents that have occurred prior to the Closing Date but are not discovered until after the Closing Date.
The Parties acknowledge and agree that neither Purchaser nor any of its Subsidiaries will assume or be responsible for any Retained Liabilities.
(i) payment, by wire transfer(s) to one or more bank accounts designated in writing by Seller (such designation to be made by Seller at least two (2) Business Days prior to the Closing Date), an amount in immediately available Dollars equal to the Base Purchase Price;
(ii) the certificate to be delivered pursuant to Section 7.2(c);
(iii) a counterpart of the Proprietary Information License Agreement substantially in the form attached as Exhibit A hereto (the “Proprietary Information License Agreement”), duly executed by Purchaser;
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(iv) a counterpart of the Transition Services Agreement substantially in the form attached as Exhibit B hereto (the “Transition Services Agreement”), duly executed by Purchaser;
(v) a counterpart of the General Assignments and Assumptions and Bills of Sale for the Purchased Assets and Assumed Liabilities, by and between Seller and Purchaser (the “General Assignment and Xxxx of Sale”), duly executed by Purchaser;
(vi) the resale certificate for the Inventory (“Resale Certificate”), duly executed by Purchaser.
(b) At the Closing, Seller shall deliver, or cause to be delivered, to Purchaser the following:
(i) the certificate to be delivered pursuant to Section 7.1(c);
(ii) a counterpart of the Proprietary Information License Agreement duly executed by Seller;
(iii) a counterpart of the Transition Services Agreement duly executed by Seller;
(iv) a counterpart of the General Assignment and Xxxx of Sale, duly executed by Seller;
(v) a duly executed certificate of non-foreign status from Seller, substantially in the form of the sample certification set forth in Treasury Regulation Section 1.1445-2(b)(2)(iv)(B); and
(vi) evidence that the Contracts exclusively related to the Business by and between Seller and any Affiliate have been terminated, other than those Contracts set forth on Section 2.8(b) of the Seller Disclosure Schedules.
(b) Within sixty (60) days following the Closing, Seller shall deliver to Purchaser (i) a statement (the “Adjustment Statement”) setting forth the amount of the adjustment to the Purchaser Proposed Adjustment, if any, that Seller believes is required (the “Seller Proposed Adjustment”) so that the cost of sales and operating expenses of the Business for the period of January 1, 2016 to June 30, 2016 as originally presented by Seller to Purchaser for such period are properly reflected in accordance with the Adjustment Standard, and (ii) documentation to support the Seller Proposed Adjustment, if any, set forth in the Adjustment Statement. “Adjustment Standard” shall mean prepared in accordance with GAAP and the standard accounting policies of United Technologies Corporation so long as such accounting policies are in accordance with GAAP, with the unreconciled and unexplained balances for the cost of sales and operating expenses as noted in item F on page 6 of the QOE reflected as if they were to be audited.
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(c) Purchaser shall have sixty (60) days (the “Adjustment Review Period”) from the date of receipt by Purchaser of the Adjustment Statement to review the Seller Proposed Adjustment and the related documentation. During the Adjustment Review Period and, if applicable, the Discussion Period, Purchaser and its accountants, attorneys and other Representatives shall have reasonable access during normal business hours to the books and records of Seller or any other documents on which the Seller Proposed Adjustment is based, or which may be reasonably required by Purchaser’s accountants or advisors, including the working papers of Seller and (subject to customary indemnification letters) its accountants and representatives, if any, prepared in connection with the Adjustment Statement. Seller hereby agrees that following the Closing Date and prior to the completion of the determination of any Adjustment and any amount payable pursuant to Section 2.9(f) hereunder, Seller shall preserve and not alter or destroy any of the books, records or other documents on which the Seller Proposed Adjustment is based, or which may be reasonably required by Purchaser’s accountants or advisors.
(d) In the event Purchaser disagrees with any or all of the Seller Proposed Adjustment, Purchaser shall deliver to Seller within the Adjustment Review Period a written notice of dispute (a “Dispute Notice”), which shall set forth, in reasonable detail, the items and amounts in dispute. Purchaser and Seller shall use reasonable efforts to resolve the dispute within twenty (20) Business Days (the “Discussion Period”), commencing on the date Seller receives the Dispute Notice from Purchaser. If Seller and Purchaser do not agree upon a final resolution within the Discussion Period, then the proper amount of the Purchaser Proposed Adjustment, if any, shall be submitted for resolution to the Accounting Firm, and in determining the appropriate amount of the Purchaser Proposed Adjustment, if any, the Accounting Firm shall determine the amount of the Purchaser Proposed Adjustment that is necessary so that the cost of sales and operating expenses of the Business for the period of January 1, 2016 to June 30, 2016 as originally presented by Seller to Purchaser for such period are properly reflected in accordance with the Adjustment Standard. The parties agree to follow the dispute procedures set forth in Section 2.10(e) below.
(e) The right to have the Base Purchase Price adjusted pursuant to this Section 2.9 is the sole and exclusive remedy of the Purchaser with respect to the QOE and any results thereof, except for claims for fraud. The earliest to occur of (i) mutual agreement by Purchaser and Seller on the proper amount of the Adjustment; (ii) the delivery of the Determination with respect to the Adjustment; (iii) the delivery by Purchaser of written confirmation that it accepts the Seller Proposed Adjustment; and (iv) the first day following the end of the Adjustment Review Period if no Dispute Notice has been delivered by Purchaser, shall be the date upon which the Adjustment Statement and the amount of the Adjustment is deemed final (such date, the “Adjustment Determination Date”).
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(f) Within ten (10) Business Days after the Adjustment Determination Date, Seller shall pay to Purchaser by wire transfer of immediately available funds, to an account or accounts specified by Purchaser, an amount equal to (A) 5.861 multiplied by (B) the amount of the Adjustment (as finally determined pursuant to Section 2.9(e)). Notwithstanding the foregoing, in no event shall any amount be paid pursuant to this Section 2.9(f) in the event the amount payable pursuant to Section 2.9(f) is less than or equal to $50,000.
(b) Within sixty (60) days following the Closing, Purchaser shall prepare and deliver to Seller (i) a closing statement (the “Closing Statement”) setting forth the Net Working Capital, (ii) the Retention Bonus Amount and (iii) the amount payable (if any) by Purchaser or Seller pursuant to Section 2.10(g). The Closing Statement shall be prepared in accordance with the same accounting principles, practices, methodologies and policies, including the use of the same line items and line item entries, set forth on and used in the preparation of the Sample Closing Statement; provided, however, that assets newly acquired and liabilities newly incurred following the date of the Sample Closing Statement which cannot be appropriately placed in line items previously used by Seller, but that constitute Purchased Assets or Assumed Liabilities will also be included to the extent consistent with the accounting principles, practices, methodologies and policies applied in preparing the Sample Closing Statement (the principles, practices, methodologies and policies so determined, the “Accounting Principles”). Seller and Purchaser acknowledge that (A) the sole purpose of the determination of the Closing Statement is to adjust the Purchase Price so as to reflect the change in Net Working Capital resulting only from the operation of the Business and (B) such change can only be measured properly only if the calculation is done using the same Accounting Principles.
(c) Seller shall have sixty (60) days (the “Review Period”) from the date of receipt by Seller of the Closing Statement to review the calculations set forth therein and the Retention Bonus Amount. During the Review Period and, if applicable, the Discussion Period (as defined below), Seller and its accountants, attorneys and other Representatives shall have reasonable access during normal business hours to the books and records of Purchaser or any other documents on which the calculations set forth in the Closing Statement or the calculations of the Retention Bonus Amount are based, or which may be reasonably required by Seller’s accountants or advisors, including the working papers of Purchaser and (subject to customary indemnification letters) its accountants and representatives, if any, prepared in connection with the Closing Statement or the Retention Bonus Amount. Purchaser hereby agrees that following the Closing Date and prior to the completion of the determination of the final Net Working Capital, the final Retention Bonus Amount and any amount payable pursuant to Section 2.10(g) hereunder, Purchaser shall preserve and not alter or destroy any of the books and records relating to the Purchased Assets or the Assumed Liabilities, or any other documents on which the calculations set forth in the Closing Statement or the calculations for the Retention Bonus Amount are based, or which may be reasonably required by Seller’s accountants or advisors.
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(d) In the event Seller disagrees with any or all of the Closing Statement or the Retention Bonus Amount, Seller shall deliver to Purchaser within the Review Period a Dispute Notice, which shall set forth, in reasonable detail, the items and amounts in dispute. Purchaser and Seller shall use reasonable efforts to resolve the dispute within the Discussion Period commencing on the date Purchaser receives the Dispute Notice from Seller. If Seller and Purchaser do not agree upon a final resolution within the Discussion Period, then the items remaining in dispute may be submitted thereafter for resolution to an independent accounting firm of nationally recognized standing and mutually acceptable to Purchaser and Seller (the “Accounting Firm”).
(e) The Accounting Firm shall be engaged to serve as an accountant, and not as an arbitrator, and the terms of appointment and engagement of the Accounting Firm shall be consistent therewith, consistent with this Section 2.10, and otherwise as agreed upon between Seller and Purchaser. The fees, costs and expenses of the Accounting Firm shall be allocated to and borne by Seller and Purchaser based on the inverse of the percentage that the Accounting Firm’s determination (before such allocation) bears to the total amount of the total items in dispute as originally submitted to the Accounting Firm. Purely by way of illustration, if the items in dispute were to amount to $1,000 and the Accounting Firm were to award $600 in favor of Seller’s position, 60% of the cost of its review would be borne by Purchaser and 40% of the cost of its review would be borne by Seller. Seller and Purchaser shall use their reasonable best efforts to direct the Accounting Firm to render a determination (the “Determination”) of the dispute within thirty (30) Business Days after referral of the matter to the Accounting Firm, which Determination must be in writing and must set forth, in reasonable detail, the basis therefor. In making the Determination regarding such dispute, the Accounting Firm shall select, with respect to each item in dispute, an amount equal to either Purchaser’s position as set forth in the Closing Statement or the calculation of the Retention Bonus Amount, as applicable, or Seller’s position, as set forth in the Dispute Notice or an amount within the range of the respective positions. Each of Seller and Purchaser and their respective representatives shall be afforded the opportunity to present to the Accounting Firm any material such party deems relevant to the Determination, and shall have a continuing opportunity to discuss the matter and its position with the Accounting Firm, but no such presentation of materials or communication shall be on an ex parte basis unless agreed to in writing by the other party. The Determination shall be final, conclusive and binding upon Seller and Purchaser. If Seller does not timely deliver a Dispute Notice or delivers a notice of acceptance of the Closing Statement and the Retention Bonus Amount as prepared by Purchaser, the Closing Statement and Purchaser's calculation of the Retention Bonus Amount shall be deemed final, conclusive and binding upon Seller and Purchaser.
(f) The procedures set forth in this Section 2.10 are the sole and exclusive mechanism for the adjustment of the Base Purchase Price for the Net Working Capital and the Retention Bonus Amount adjusted as set forth herein. The earliest to occur of (i) mutual agreement by Purchaser and Seller; (ii) the delivery of the Determination; (iii) the delivery by Seller of written confirmation that it accepts the Closing Statement and the Retention Bonus Amount as delivered by Purchaser; and (iv) the first day following the end of the Review Period if no Dispute Notice has been delivered by Seller, shall be the date upon which the Closing Statement and the Retention Bonus Amount is deemed final (such date, the “Determination Date”).
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(g) The Base Purchase Price shall be (i) increased by the amount by which the Net Working Capital (as finally determined pursuant to Section 2.10(f)) exceeds the Target Net Working Capital, if any or (ii) decreased by the amount by which the Net Working Capital (as finally determined pursuant to Section 2.10(f)) is less than the Target Net Working Capital, if any. The Base Purchase Price, as adjusted pursuant to this Section 2.10(f), is referred to as the “Working Capital Adjusted Purchase Price”. If the Base Purchase Price is less than the Working Capital Adjusted Purchase Price by at least $100,000, Purchaser shall pay to Seller dollar for dollar the amount by which the Working Capital Adjusted Purchase Price exceeds the Base Purchase Price by wire transfer of immediately available funds, to an account or accounts specified by Seller, within ten (10) Business Days after the Determination Date. If the Base Purchase Price is more than the Working Capital Adjusted Purchase Price by at least $100,000, Seller shall pay to Purchaser dollar for dollar the amount by which the Base Purchase Price exceeds the Working Capital Adjusted Purchase Price by wire transfer of immediately available funds, to an account or accounts specified by Purchaser, within ten (10) Business Days after the Determination Date.
(h) Seller shall pay to Purchaser dollar for dollar the Retention Bonus Amount (as finally determined pursuant to Section 2.10(f)) by wire transfer of immediately available funds, to an account or accounts specified by Purchaser, within ten (10) Business Days after the Determination Date.
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ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE SELLER
Except as set forth in, or qualified by any matter set forth in the Seller Disclosure Schedules (it being agreed that the disclosure of any matter in any section in the Seller Disclosure Schedules shall be deemed to have been disclosed in any other section in the Seller Disclosure Schedules to which the applicability of such disclosure is reasonably apparent from the face of such disclosure), Seller hereby represents and warrants to Purchaser as follows:
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Section 3.8 Title to and Sufficiency of Assets.
(a) Except as set forth in Section 3.8(a) of the Seller Disclosure Schedules, as of the Closing, (a) the Purchased Assets, (i) taking into account the Transaction Documents and all of the assets, services, products, Intellectual Property and Know-How to be provided, acquired, leased or licensed under the Transaction Documents and (ii) assuming all Approvals and Business Permits have been obtained or transferred, together with all services described in Section 4.7, constitute all of the assets necessary to conduct the Business in all material respects in the manner currently conducted and (b) the tangible property of the Business included in the Transferred Assets is in good operating condition and repair, ordinary wear and tear excepted.
(b) Except as set forth in Section 3.8(b) of the Seller Disclosure Schedules, Seller has good and valid title to, or a valid leasehold interest in or other right to use under the Assigned Contracts, each of the Transferred Assets, free and clear of all Liens other than Permitted Liens.
(b) (i) none of the Business Intellectual Property is subject to any Judgment adversely affecting the use thereof or rights thereto by Seller and its Subsidiaries; (ii) to the Knowledge of Seller, there is no opposition or cancellation Proceeding pending against Seller and its Subsidiaries concerning the ownership, validity, enforceability or infringement of any Business Intellectual Property; (iii) to the Knowledge of Seller, there is no infringement or misappropriation, or other violation, or any written allegation made thereof, of any Business Intellectual Property; and (iv) neither Seller nor its Subsidiaries has received any written notice within the one (1)-year period prior to the date of this Agreement alleging that any of the Business Intellectual Property infringes, misappropriates, violates or otherwise conflicts with the Intellectual Property of any other Person or challenging the validity, enforceability or ownership of any Business Intellectual Property.
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(c) The Seller owns, is licensed or otherwise possesses rights to use or exploit all Business Intellectual Property necessary to conduct the Business as presently conducted. The Patents included in the Business Intellectual Property do not infringe, misappropriate, violate or otherwise conflict with the Intellectual Property of any other Person in any material respect.
(d) The Business Intellectual Property, together with the Transferred Names and the Copyrights and Trademarks included in the Purchased Assets, taking into account the Intellectual Property and Know-How to be licensed under the Proprietary Information License Agreement, constitute all of the Intellectual Property necessary to conduct the Business in the manner currently conducted in all material respects.
(e) All personnel and contractors who have been or are involved in the creation of any Business Intellectual Property are subject to a corporate procedure that requires them to execute an agreement to assign any Business Intellectual Property to Seller, and such agreements are effective to assign all Business Intellectual Property to Seller. Agreements have been executed in accordance with this procedure for (i) all contractors and current personnel, and (ii) any Patents listed in Section 2.4(c) of the Seller Disclosure Schedules. For all other personnel, subject to Seller’s Knowledge, such agreements have been executed in accordance with this corporate procedure. No personnel or contractors have disputed Seller’s rights in any Business Intellectual Property. No inventor compensation is due or payable or will become due or payable on the Business Intellectual Property.
(f) Any other representation and warranty contained in this Agreement notwithstanding, the representations and warranties set forth in Section 3.9 constitute the sole representations and warranties of Seller relating to the Business Intellectual Property.
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(i) Any Contract (or group of related Contracts) for the lease of personal property from any Person providing for lease payments in excess of $50,000 per annum;
(ii) Any Contract (or group of related Contracts) for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of goods or services, the performance of which will involve annual consideration in excess of $100,000 and any Contract with a Material Customer or Material Supplier;
(iii) Any Contract concerning a partnership or joint venture involving the Business;
(iv) Any contract (or group of related Contracts) under which it has created, incurred, assumed, or guaranteed any Indebtedness;
(v) Any collective bargaining agreement;
(vi) Any Contract with any Employee regarding severance or which imposes material obligations on the Business which will continue after Closing (other than at-will offer letters and benefits which are made available to all employees);
(vii) Any Contract for the sale of any assets or properties other than in the ordinary course of business or Contracts with respect to mergers or acquisitions or other rights to purchase any of the assets or properties of the Business;
(viii) Any Contract for the lease of real property;
(ix) Any Contract solely with respect to the Business Intellectual Property included in the Purchased Assets;
(x) Any Contract that provides any customer with pricing, discounts or benefits that change based on the pricing, discounts or benefits offered to other customers of the Business, including any Contract which contains a “most favored nation” provision; and
(xi) Any Contract containing covenants purporting to limit the freedom of the Business to compete in any business, to compete in any geographic area or to solicit any customers or personnel.
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(b) Each Material Contract been made available to Purchaser, is legal, valid and binding on the Business and is in full force and effect in accordance with its terms (subject to applicable bankruptcy, insolvency, reorganization, moratorium Laws or other laws affecting generally the enforcement of creditors’ rights and subject to general principles of equity). No Material Contract has been breached in any material respect by the Seller or, to the Knowledge of Seller, by any other party thereto, nor does any condition exist which, with or without notice or lapse of time, or both, would cause the Seller, or, to the Knowledge of Seller, any other party, to be in default under any of the Material Contracts or would constitute a breach or default or permit termination, modification or acceleration under any such Material Contract. Seller has (i) not received any written notice of cancellation or termination or, other than pursuant to the terms of such Material Contract existing as of the date hereof, change in material terms (including, pricing, term and volume) of any such Material Contract or (ii) during the two (2) years prior to the date hereof, obtained or granted any material waiver of or under any provision of any such Material Contract except for routine waivers granted or sought in the Ordinary Course of the Business. To the Knowledge of Seller no default has been threatened under any Material Contract. Except as set forth on Section 3.11 of the Seller Disclosure Schedules, the consummation of the transactions contemplated by this Agreement shall not afford any other party the right to terminate, modify or accelerate any such Material Contract or impose any fees, costs or penalties.
(b) The Seller or the Business hold all Permits necessary for the conduct of the Business as presently conducted, other than any such Permits the absence of which would not reasonably be expected to be material, all of which are set forth on Section 3.12(b) of the Seller Disclosure Schedules (the “Business Permits”). The Seller and the Business are in compliance with the terms of the Business Permits, except, in each case, as would not reasonably be expected to result in a Material Adverse Effect. All Business Permits are in full force and effect and no approval or consent of any Person is needed in order that the Business Permits continue in full force and effect with respect to the Business without breach as a result of the consummation of the transactions contemplated by this Agreement, except for those approvals or consents which, if not obtained, would not reasonably be expected to be material.
This Section 3.12 does not relate to matters with respect to Environmental Laws, Taxes or Seller Benefit Plans, such items being exclusively governed by Sections 3.13, 3.14 and 3.15, respectively.
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(b) There is no material dispute or claim concerning any Tax Liability with respect to the Purchased Assets or the Business either (i) claimed or raised by any Governmental Entity in writing or (ii) as to which Seller has Knowledge. The Seller has not waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency of Taxes with respect to the Business, which waiver or extension currently remains in effect.
(c) No written claim has been made during the three (3) year period prior to the date of the Agreement by a Governmental Entity in a jurisdiction where the Business does not file Tax Returns that the Business is or may be subject to taxation by that jurisdiction or require to file any franchise, income or other Tax Return in such jurisdiction. The Seller is not nor has it been a party to any ‘‘listed transaction,’’ as defined in Code Section 6707A(c)(2) and Treasury Regulation Section 1.6011-4(b)(2)
(b) Seller has not, in the previous ninety (90) days from the date hereof, with respect to the Business, effectuated (i) a "plant closing" (as defined in the WARN Act) affecting any site of employment or one or more facilities or operating units within any site of employment or facility of the Business, or (ii) a "mass layoff" (as defined in the WARN Act) affecting any site of employment or facility of the Business, nor has the Business been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar Law. None of Seller's personnel working in the Business has suffered an “employment loss” (as defined in the WARN Act) during the previous six (6) months.
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(c) Seller has made available to Purchaser a complete and accurate list of all Employees as of the date of this Agreement.
(d) Section 3.15 of the Seller Disclosure Schedules sets forth a complete list of each Seller Benefit Plan.
(e) For each Seller Benefit Plan that is intended to be qualified under Section 401(a) of the Code, the Seller or its ERISA Affiliate has obtained a favorable Internal Revenue Service determination, opinion or advisory letter to such effect.
(f) each Seller Benefit Plan is in material compliance with the provisions of ERISA, the Code, its governing documents and all other applicable Laws.
(g) Neither the execution and delivery of this Agreement nor the consummation of any or all of the contemplated transactions will: (i) entitle any Employee to compensation, (ii) accelerate the time of payment or vesting or increase the amount of any compensation due to any such Employee or (iii) directly or indirectly result in any payment made or to be made to or on behalf of any Person that would constitute a “parachute payment” within the meaning of Section 280G of the Code.
(h) No event has occurred, and, to the Knowledge of Seller, there exists no condition or set of circumstances, which would reasonably be expected to result in the imposition of any Liability on Purchaser under ERISA, the Code or other applicable Law with respect to any Seller Benefit Plan.
(i) No Seller Benefit Plan provides welfare benefits that continue after retirement or other termination of employment (excluding benefits which continue only to the extent required by COBRA) that would result in the imposition of any Liability on Purchaser.
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Section 3.19 Customers; Suppliers.
(a) Section 3.19(a) of the Seller Disclosure Schedules lists each of the top five (5) customers of the Business for the twelve (12) month period ended on the Balance Sheet Date (based on the total revenues of the Business for that period) (collectively, “Material Customers”). No written notice has been received by the Business within the past twelve (12) months which indicates that any customer of the Business identified above intends to terminate or materially modify its relationship or applicable Contract(s) with the Business.
(b) Section 3.19(b) of the Seller Disclosure Schedules lists each of the top ten (10) suppliers to the Business for the twelve (12) month period ended on the Balance Sheet Date (based on the total cost of goods of the Business for that period) (collectively, “Material Suppliers”). No written notice has been received by the Business within the past twelve (12) months which indicates that any supplier of the Business identified above intends to terminate or materially modify its relationship or applicable Contract(s) with the Business.
(a) Except as set forth on Section 3.20 of the Seller Disclosure Schedules, no Product manufactured, sold or delivered by, or service rendered by or on behalf of, Seller in the Business is subject to any guaranty, warranty or other indemnity, express or implied, beyond the terms and conditions set forth in the Assigned Contract relating to the Sale of such Products.
(b) None of the Assigned Contracts obligates Seller to make any rebates, discounts, promotional allowances or similar payments or arrangements with or to any customer or other business relation. Seller has paid all such rebates, discounts, promotional allowances or similar payments or arrangements due and owing by it, and has adequately accrued for any such rebates, discounts, promotional allowances or similar payments or arrangements in the Business Financial Statements.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
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(a) Subject to the terms and conditions herein provided, each of the parties to this Agreement shall use their reasonable best efforts to take, or cause to be taken, all action and to do, or cause to be done, all things reasonably necessary, proper or advisable to consummate and make effective as promptly as practicable the transactions contemplated by this Agreement (including the satisfaction, but not waiver, of the closing conditions set forth in Article VI). Each of the parties hereto shall use reasonable best efforts to obtain consents of all Governmental Entities necessary to consummate the transactions contemplated by this Agreement.
(b) In the event any claim, action, suit, investigation or other Proceeding by any Governmental Entity or other Person is commenced which questions the validity or legality of the transactions contemplated hereby or seeks damages in connection therewith, the parties hereto agree to cooperate and use reasonable best efforts to defend against such claim, action, suit, investigation or other proceeding and, if an injunction or other order is issued in any such action, suit or other proceeding, to use reasonable best efforts to have such injunction or other order lifted, and to cooperate reasonably regarding any other impediment to the consummation of the transactions contemplated hereby.
(c) Each party hereto shall promptly notify the other parties hereto of any communication it or its Affiliates receives from any Governmental Entity relating to the matters that are the subject of this Agreement and permit the other parties hereto to review in advance any proposed communication by it to any Governmental Entity. No party hereto shall agree to participate in any meeting with any Governmental Entity in respect of any filings, investigation or other inquiry unless it consults with the other parties hereto in advance and, to the extent permitted by such Governmental Entity, gives the other parties hereto the opportunity to attend and participate at such meeting. Each party hereto will provide the other parties hereto with copies of all correspondence, filings or communications between it or any of its representatives, on the one hand, and any Governmental Entity or members of its staff, on the other hand, with respect to this Agreement and the transactions contemplated by this Agreement. In addition, subject to applicable Law, the parties hereto shall consult and cooperate with each other in advance in connection with any analyses, appearances, presentations, memoranda, briefs, arguments, and proposals made or submitted to any Governmental Entity regarding the transactions contemplated by this Agreement by or on behalf of any party hereto.
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(d) Purchaser shall not, and shall cause its Affiliates and ultimate parent entities not to, acquire or agree to acquire, by merging with or into or consolidating with, or by purchasing a portion of the assets of or equity in, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof, or otherwise acquire or agree to acquire any assets or equity interests, if the entering into of a definitive agreement relating to, or the consummation of such acquisition, merger or consolidation would reasonably be expected to: (i) impose any delay in the obtaining of, or increase the risk of not obtaining, any consents of any Governmental Entity necessary to consummate the transactions contemplated by this Agreement or the expiration or termination of any applicable waiting period; (ii) increase the risk of any Governmental Entity seeking or entering an order prohibiting the consummation of the transactions contemplated by this Agreement; (iii) increase the risk of not being able to remove any such order on appeal or otherwise; or (iv) delay or prevent the consummation of the transactions contemplated by this Agreement.
(i) fail to conduct its business in the Ordinary Course;
(ii) sell, lease, transfer, assign remove from the Leased Property or otherwise dispose of any of the Purchased Assets, tangible or intangible for more than $50,000 in the aggregate (other than sales of inventory in the Ordinary Course);
(iii) impose any Lien (other than Permitted Liens) upon any of its assets, tangible or intangible;
(iv) undertake or commit to undertake any acquisition or expenditure in excess of $100,000,
(v) make any capital investment in, any loan to, or any acquisition of the securities or assets of, any other Person (or series of related capital investments, loans, and acquisitions);
(vi) adopt, amend, modify, or terminate any Benefit Plan, any profit sharing, incentive, severance, or other plan or Contract for the benefit of any Employee, except as may be required for continued compliance with Law;
(vii) except as contemplated by this Agreement and other than in the Ordinary Course, adopt, amend, modify, waive or terminate any Assigned Contract or Business Permit;
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(viii) write-off or write-down any assets in excess of $100,000 in the aggregate or sell, factor, or transfer any receivable or marketable securities; or
(ix) authorize, approve, agree or commit (whether or not in writing) to do any of the foregoing.
(b) Anything to the contrary in this Agreement notwithstanding, the parties acknowledge and agree that nothing in this Section 5.2 shall be deemed to limit the transfer of Excluded Assets prior to, at or after the Closing.
(c) Anything to the contrary in this Agreement notwithstanding, nothing in this Section 5.2 shall prohibit or otherwise restrict in any way the operation of the business of UTC, Seller or their respective Affiliates, except solely with respect to the conduct of the Business by UTC, Seller and their respective Affiliates.
(b) Any information provided to or obtained by Purchaser or its authorized representatives pursuant to paragraph (a) above shall be treated as confidential and governed by the terms of the Letter Agreement, dated June 20, 2016, by and between Seller and Purchaser (the “Confidentiality Agreement”). Notwithstanding anything to the contrary herein, the terms and provisions of the Confidentiality Agreement shall survive the termination of this Agreement in accordance with the terms therein. In the event of the termination of this Agreement for any reason, Purchaser shall comply with the terms and provisions of the Confidentiality Agreement, including returning or destroying all confidential information.
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(c) Each party agrees to provide the other party with reasonable access to the books and records of the other party related to the Business for periods on or prior to the Closing Date after the Closing Date for the purpose of preparing Tax Returns, defending claims or other reasonable business purposes. Without limitation, after the Closing, each party shall make available to the other party and its counsel, accountants and other Representatives, as reasonably requested, and to any Taxing Authority that is legally permitted to receive the following pursuant to its subpoena power or the equivalent, the books, records and other information relating to Tax Liabilities or potential Tax Liabilities for all periods prior to or including the Closing Date and shall preserve all such books, records and other information until the expiration of any applicable statute of limitations for assessment or refund of Taxes or extensions thereof. Subject to the previous sentence, for a period of seven (7) years after the Closing Date, (x) Purchaser shall not, nor shall it permit its Affiliates to, destroy or otherwise dispose of any of the books, records or other information described in this Section 5.3(c) without first offering in writing to surrender such books, records and other information to Seller, and (y) Seller shall not, nor shall it permit its Affiliates to, destroy or otherwise dispose of any of the books, records or other information described in this Section 5.3(c) without first offering in writing to surrender such books, records and other information to Purchaser. Seller or Purchaser, as applicable, shall have thirty (30) days after such offer to agree in writing to take possession of such books, records or other information. Notwithstanding the provisions of this Section 5.3(c), while the existence of an adversarial proceeding between the parties will not abrogate or suspend the provisions of this Section 5.3(c), as to such records or other information directly pertinent to such dispute, the parties may not utilize this Section 5.3(c) but rather, absent agreement, must utilize the applicable rules of discovery.
(d) Parties will use commercially reasonable efforts to perform or cause to be performed prior to Closing (or if not prior to Closing, within twenty four (24) hours following the Closing Date), a heavy inventory cycle count and a physical inventory of up to 70% of the existing inventory, by dollar value, in each case with respect to the inventory of the Business located in Pleasant Prairie, Wisconsin; provided, however, that all inventory shall be made available for count and analysis. If such activities are to occur prior to Closing, (i) they shall be conducted during normal business hours, shall not include a shutdown of Seller's facility and shall be conducted in a manner not to materially interfere with Seller's day-to-day operations and (ii) Seller shall provide Purchaser and its representatives with such access and information as may be needed in order for Purchaser or its representatives to perform such activities. Representatives from each party shall have a right to be present during such activities.
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Section 5.5 [Intentionally Omitted].
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(c) Administration, Employee Communications, Cooperation. Following the date of this Agreement, Seller and Purchaser (and their Affiliates) shall reasonably cooperate and use good faith efforts in all matters reasonably necessary to effect the transactions contemplated by this Section 5.6, including exchanging information and data relating to workers’ compensation, employee benefits and employee benefit plan coverages (except to the extent prohibited by applicable Laws), making any and all required filings and notices, preparing and delivering any and all required communications with Employees and obtaining any approvals of Governmental Entity required hereunder.
(f) COBRA and HIPAA. Effective as of the Closing, Seller shall, and shall cause its Affiliates to, assume all obligations, liabilities and commitments with respect to Employees and their eligible dependents, in respect of health insurance under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, the Health Insurance Portability and Accountability Act of 1996, Sections 601 et seq. and Sections 701 et seq. of ERISA, Section 4980B and Sections 9801 et seq. of the Code and applicable state or similar laws, including assuming full responsibility and liability for offering and providing “continuation coverage” to any “M&A qualified beneficiary”, to any “covered employee” who is an Employee or former employee of the Business, and to any “qualified beneficiary” who is covered by a “group health plan” sponsored or contributed to by Seller and who has experienced a “qualifying event” or who is receiving “continuation coverage” on or prior to the Closing. “Continuation coverage,” “M&A qualified beneficiary,” “covered employee,” qualified beneficiary,” “qualifying event” and “group health plan” all shall have the meanings given such terms under the Consolidated Omnibus Budget Reconciliation Act of 1986, and the regulations promulgated thereunder.
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Section 5.7 [Intentionally Omitted].
Section 5.8 Names Following Closing.
(a) Neither Purchaser nor any of its Affiliates shall use, or have the right to use, the “United Technologies,” “United Technologies Corporation,” “UTC,” “UTX,” “UTC Aerospace Systems,” “Xxxxxxxx,” or “Xxxxxxxx Sundstrand,” names or any variations or derivatives thereof or any trademarks or logos of Seller or any of its Affiliates (the “Names”), or any name that, in the reasonable judgment of Seller, is similar to the Names, except as provided in Section 5.8(b).
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(b) The Business may continue to use the Names following the Closing so long as Purchaser uses and causes its Affiliates to use commercially reasonable efforts to minimize use of the Names by the Business from and after the Closing, and as soon as practicable after the Closing Date (and in any event within thirty (30) days thereafter). Purchaser shall and shall cause each of its Affiliates (including the Business) to (i) cease and discontinue use of all Names and (ii) complete the removal of the Names from all Products, signage, vehicles, properties, technical information and promotional or other marketing materials and other assets. Notwithstanding the foregoing provisions of this Section 5.8, Purchaser may (i) use the Names for up to ninety (90) days following the Closing in connection with (A) the use of Names on or in Products in inventory and work-in-process manufactured or assembled prior to the Closing Date; (B) in connection with the provision of services by Seller pursuant to the Transition Services Agreement; and (C) existing supplier specifications, name plates on fixtures, tooling and equipment, internal signage or other similar internal items, as applicable; and (ii) use the Names for up to six (6) months following the Closing in connection with technical drawings not made available outside the Business.
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Section 5.12 Acknowledgement by Purchaser.
(a) Purchaser acknowledges that it has conducted to its satisfaction an independent investigation and verification of the financial condition, results of operations, assets, liabilities, properties and projected operations of the Business, and, in making its determination to proceed with the transactions contemplated by this Agreement, Purchaser has relied solely on the results of its own independent investigation and verification and the representations and warranties of the Seller expressly and specifically set forth in Article III as qualified by the attached Seller Disclosure Schedules. The representations and warranties by the Seller expressly and specifically set forth in Article III and in the other Transaction Documents constitute the sole and exclusive representations, warranties, and statements of any kind of the Seller to Purchaser in connection with the transactions contemplated hereby, and Purchaser understands, acknowledges and agrees that all other representations, warranties, and statements of any kind or nature expressed or implied (including any relating to the future or historical financial condition, results of operations, prospects, assets or liabilities of the Business, or the quality, quantity or condition of the Business’ assets) are specifically disclaimed by the Seller. PURCHASER SPECIFICALLY ACKNOWLEDGES AND AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN ARTICLE III AND IN THE OTHER TRANSACTION DOCUMENTS, NEITHER THE SELLER NOR ANY OTHER PERSON (INCLUDING, ANY EQUITYHOLDER, OFFICER, DIRECTOR, MANAGER, EMPLOYEE OR AGENT OF ANY OF THE FOREGOING, WHETHER IN ANY INDIVIDUAL, CORPORATE OR ANY OTHER CAPACITY) IS MAKING, AND PURCHASER IS NOT RELYING ON, ANY REPRESENTATIONS, WARRANTIES, OR OTHER STATEMENTS OF ANY KIND WHATSOEVER, WHETHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, AS TO ANY MATTER CONCERNING THE BUSINESS, SELLER, THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, OR THE ACCURACY OR COMPLETENESS OF ANY INFORMATION PROVIDED TO (OR OTHERWISE ACQUIRED BY) PURCHASER OR ANY OF PURCHASER’S REPRESENTATIVES.
(b) Except as may be subject to a representation or warranty by Seller set forth in Article III or in any other Transaction Documents, neither Seller, nor any officer, director, manager, employee or agent of Seller or its Affiliates, whether in an individual or corporate capacity, will have or be subject to any liability or indemnification obligation to Purchaser or any other Person resulting from (nor shall Purchaser have any claim with respect to) the distribution to Purchaser, or Purchaser’s use of, or reliance on, any information, documents, projections, forecasts or other material made available to Purchaser in certain “data rooms,” confidential information memoranda or management presentations in expectation of, or in connection with, the transactions contemplated by this Agreement, regardless of the legal theory under which such liability or obligation may be sought to be imposed, whether sounding in contract or tort, or whether at law or in equity, or otherwise.
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(c) In connection with the investigation by Purchaser of the Business, Purchaser has received or may receive from the Seller certain projections, forward-looking statements and other forecasts and certain business plan information. Purchaser acknowledges that there are uncertainties inherent in attempting to make such estimates, projections and other forecasts and plans, that Purchaser is familiar with such uncertainties, that Purchaser is taking full responsibility for making its own evaluation of the adequacy and accuracy of all estimates, projections and other forecasts and plans so furnished to it (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans), and that Purchaser shall have no claim against anyone with respect thereto, except as may be subject to a representation or warranty by Seller set forth in Article III or in any other Transaction Documents. Accordingly, Purchaser acknowledges that neither Seller, nor any equityholder, officer, director, manager, employee or agent of Seller or its Affiliates, whether in an individual, corporate or any other capacity, make any representation, warranty, or other statement with respect to, and Purchaser is not relying on, such estimates, projections, forecasts or plans (including the reasonableness of the assumptions underlying such estimates, projections, forecasts or plans), except as may be subject to a representation or warranty by Seller set forth in Article III or in any other Transaction Documents.
(d) The provisions contained in this Section 5.12 shall in no event relieve any party to this Agreement from liability resulting from fraudulently making any representation or intentionally breaching any representation contained in this Agreement.
(a) For a period of thirty-six (36) months from and after the Closing Date, Seller shall not, directly or indirectly: (i) solicit, induce or attempt to solicit or induce any Key Employee to leave the employ of Purchaser, or (ii) hire any Key Employee; provided, however, that the foregoing restrictions shall not apply with respect to any Key Employee that is no longer, and has not been within the prior twelve (12) months, an employee of Purchaser at the time of such hire, recruitment or solicitation and provided, further, that Seller shall not be restricted from engaging in good faith general or public solicitations or advertising not targeted at any such Persons described above. “Key Employee” means any of the individuals set forth on Section 5.13(a) of the Seller Disclosure Schedules.
(b) For a period of twenty-four (24) months from and after the Closing Date, Seller’s Electric Systems business unit located in Rockford, Illinois, shall not, directly or indirectly: (i) solicit, induce or attempt to solicit or induce any Identified Employee to leave the employ of Purchaser, or (ii) hire any Identified Employee; provided, however, that the foregoing restrictions shall not apply with respect to any Identified Employee that is no longer, and has not been within the prior three (3) months, an employee of Purchaser at the time of such hire, recruitment or solicitation and provided, further, that Seller’s engaging in or hiring as a result of good faith general or public solicitations or advertising not targeted at any such Identified Employee shall not be a violation of Section 5.13(b)(i) or (ii). From the date of this Agreement through one (1) week from and after the Closing Date, Seller’s Electric Systems business unit located in Rockford, Illinois, shall not, directly or indirectly: (x) solicit, induce or attempt to solicit or induce any Identified Employee to leave the employ of Seller dedicated to the Business, or (y) hire any Identified Employee; provided, however, that Seller’s engaging in good faith general or public solicitations or advertising not targeted at any such Identified Employee shall not be a violation of Section 5.13(b)(y). “Identified Employee” means any of the individuals set forth on Section 5.13(b) of the Seller Disclosure Schedules.
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Section 5.15 Carrier Margin Guarantee.
(a) If there is a Shortfall in any Applicable Year, Purchaser shall deliver to Seller a certificate (the “Shortfall Certificate”) setting forth Purchaser’s calculation of the Shortfall and the Seller Payment not later than ninety (90) after the end of such Applicable Year and certifying to Purchaser’s full compliance with Section 5.15(b). Seller shall have sixty (60) days from the date of receipt of the Shortfall Certificate (the “Shortfall Review Period”) to review the Shortfall Certificate. In the course of that review, Seller shall have reasonable access to the books and records of Purchaser related to the Carrier Agreement, Carrier’s purchase of Products for the Applicable Year and Purchaser’s operation of the Business in accordance with Section 5.15(b). In the event Seller disagrees with any or all of the Shortfall Certificate, Seller shall deliver to Purchaser within the Shortfall Review Period a written notice of dispute (the “Shortfall Dispute Notice”), which shall set forth, in reasonable detail, the basis for the dispute. Purchaser and Seller shall use reasonable efforts to resolve the dispute within twenty (20) Business Days commencing on the date Purchaser receives the Shortfall Dispute Notice from Seller. If Seller and Purchaser do not obtain a final resolution within such period, then the items remaining in dispute may be submitted thereafter for resolution in the same manner described in Section 2.10(e). If Seller does not deliver a Shortfall Dispute Notice, Seller shall pay the Seller Payment to Purchaser no later than ninety (90) days after receipt by Seller of the Shortfall Certificate.
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(b) Until December 31, 2019, except with the consent of Seller, not to be unreasonably withheld or delayed, Purchaser shall maintain the current operations in Pleasant Prairie, Wisconsin for the Products sold to Carrier; provided, however, that Purchaser may upgrade the line to accommodate development and shipment of Products so long as Purchaser maintains the Performance Metrics in all material respects. In addition and not in limitation of the foregoing sentence, Purchaser shall not, directly or indirectly, until December 31, 2019, (i) take any actions in bad faith that would have the purpose of causing a Shortfall; or (ii) eliminate or discontinue any of the Products that Purchaser sells to Carrier without Carrier’s consent. Purchaser’s failure to comply with any provision of this Section 5.15(b) in any material respect for an Applicable Year shall eliminate any obligation of Seller to pay any Seller Payment to Purchaser as a result of a Shortfall for such Applicable Year and, if the failure also constitutes a Major Quality Escape, any subsequent Applicable Year. Notwithstanding the foregoing, Purchaser may give notice to Seller at any time that it elects to forfeit its rights under Section 5.15(a), and in such case, it shall cease to have any obligations or rights to a Shortfall under this Section 5.15 for the period after the date of such notice.
ARTICLE VI. CERTAIN TAX MATTERS
(b) Notwithstanding anything to the contrary in this Agreement, in no event shall either party be required to provide any Person with any Tax Return or copy of any Tax Return of (i) such party or any of its Affiliates or (ii) a consolidated, combined or unitary group that includes such party or any of its Affiliates.
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ARTICLE VII. CONDITIONS PRECEDENT
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(b) Performance of Obligations of Purchaser. The covenants and agreements of Purchaser to be performed on or before the Closing Date in accordance with this Agreement shall have been performed in all material respects.
ARTICLE VIII. TERMINATION; EFFECT OF TERMINATION
(a) by mutual written consent of Seller and Purchaser;
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(b) by Seller, if any of Purchaser’s representations and warranties contained in Article IV of this Agreement shall fail to be true and correct or Purchaser shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in this Agreement, and such failure or breach would give rise to the failure of a condition set forth in Section 7.2(a) or Section 7.2(b) and has not been cured, if capable of cure, by the date that is ten (10) days after the date that Seller has notified Purchaser of such failure or breach; provided, that Seller is not then in breach of any of its representations, warranties, covenants or agreements contained in this Agreement such that the conditions set forth in Section 7.1(a) or Section 7.1(b) would fail to be satisfied;
(c) by Purchaser, if any of Seller’s representations and warranties contained in Article III of this Agreement shall fail to be true and correct or Seller shall have breached or failed to perform in any material respect any of its covenants or other agreements contained in this Agreement, and such failure or breach would give rise to the failure of a condition set forth in Section 7.1(a) or Section 7.1(b) and has not been cured, if capable of cure, by the date that is ten (10) days after the date that Purchaser has notified Seller of such failure or breach; provided, that Purchaser is not then in breach of any of their respective representations, warranties, covenants or agreements contained in this Agreement such that the conditions set forth in Section 7.2(a) or Section 7.2(b) would fail to be satisfied; or
(d) by Seller or by Purchaser, if the Closing shall not have occurred on or prior to November 9, 2016 (the “Outside Date”); provided, however, that the right to terminate this Agreement under this Section 8.1(d) shall not be available to any party whose failure to perform any material covenant or obligation under this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before such date.
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(b) The representations and warranties of Purchaser contained in this Agreement shall survive the Closing until the first (1st) anniversary of the Closing Date; provided, that the representations and warranties made pursuant to Sections 4.1 (Organization; Standing; Power), 4.2 (Authority; Execution and Delivery; Enforceability), 4.4 (Financial Ability to Perform) and 4.6 (Brokers) shall survive until the expiration of the applicable statute of limitations. Written notice of a claim must be given by Seller to Purchaser in accordance with the provisions hereof prior to the expiration of the applicable representations and warranties.
(c) No covenant or agreement contained herein that is to be performed on or prior to the Closing shall survive the Closing unless otherwise expressly agreed by the parties; provided, however, that the foregoing shall in no respect limit the rights of the parties to seek indemnification for any breach of such covenant or agreement occurring before the Closing. Any covenant and agreement to be performed, in whole or in part, after the Closing shall survive the Closing in accordance with its terms.
(b) Notwithstanding any other provision to the contrary:
(i) Seller shall not be required to indemnify, defend or hold harmless any Purchaser Indemnified Party against, or reimburse any Purchaser Indemnified Party for, any Covered Losses pursuant to (A) Section 9.2(a)(i), to the extent (and only to the extent) such Covered Losses are specifically reflected, recorded or included in Net Working Capital on the Closing Statement; and (B) Section 9.2(a)(i), until the aggregate amount of the Purchaser Indemnified Parties’ Covered Losses under Section 9.2(a)(i) exceeds $700,000 (the “Deductible”), after which Seller shall be obligated for all the Purchaser Indemnified Parties’ Covered Losses under Section 9.2(a)(i) in excess of the Deductible, subject to Section 9.2(b)(i)(A), Section 9.2(b)(ii) and Section 9.2(b)(iii); provided that if the total amount of Covered Losses with respect to any individual item does not exceed $20,000 (a “De Minimis Claim”), the amount of such De Minimis Claim shall not be taken into account in determining whether or not or to the extent to which the Deductible has been exceeded unless and until the aggregate amount of De Minimis Claims exceeds the Deductible in which case the Purchaser Indemnified Parties shall be entitled payment for all Covered Losses, subject to Section 9.2(b)(i)(A), Section 9.2(b)(ii) and Section 9.2(b)(iii);
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(ii) the cumulative indemnification obligation of Seller under Section 9.2(a)(i) shall in no event exceed $10,500,000 (the “Cap”); provided, however, that the Deductible and the Cap shall not apply to Covered Losses for breach of any of the Fundamental Representations;
(iii) the cumulative indemnification obligation of Seller under Section 9.2(a)(i) with respect to breaches of Fundamental Representations, together with indemnification obligations of Seller previously paid under Section 9.2(a)(i) with respect to breaches of other representations and warranties shall in no event exceed the Purchase Price; and
(iv) for purposes of calculating the amount of Covered Losses hereunder (and not for purposes of determining breach), each qualification to a representation or warranty by use of the word “material” or “materially” shall be disregarded.
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(b) Upon receipt of a notice of a Third Party Claim for indemnity from an Indemnified Party pursuant to Section 9.2 or Section 9.3, the Indemnifying Party will be entitled, by notice to the Indemnified Party delivered within twenty (20) Business Days of the receipt of notice of such Third Party Claim, to assume the defense and control of such Third Party Claim (at the expense of such Indemnifying Party); provided, that the Indemnifying Party shall allow the Indemnified Party a reasonable opportunity to participate in the defense of such Third Party Claim with its own counsel and at its own expense. If the Indemnifying Party does not assume the defense and control of any Third Party Claim pursuant to this Section 9.4(b), the Indemnified Party shall be entitled to assume and control such defense, but the Indemnifying Party may nonetheless participate in the defense of such Third Party Claim with its own counsel and at its own expense. Purchaser or Seller, as the case may be, shall, and shall cause each of its Affiliates and Representatives to, reasonably cooperate with the Indemnifying Party in the defense of any Third Party Claim, including by furnishing books and records, personnel and witnesses, as appropriate for any defense of such Third Party Claim. If the Indemnifying Party has assumed the defense and control of a Third Party Claim, it shall be authorized to consent to a settlement or compromise of, or the entry of any judgment arising from, any Third Party Claim, in its sole discretion and without the consent of any Indemnified Party; provided, that such settlement or judgment (i) is solely for monetary damages paid by the Indemnifying Party and provides a complete release of the Indemnified Party and (ii) does not involve any injunctive relief or finding or admission of any violation of Law or admission of any wrongdoing by any Indemnified Party. No Indemnified Party will consent to the entry of any judgment or enter into any settlement or compromise with respect to a Third Party Claim to which the Indemnifying Party assumed the defense and control pursuant to this Section 9.4(b) without the prior written consent of the Indemnifying Party. Notwithstanding the foregoing, the Indemnifying Party shall not have the right to assume the defense and control of a Third Party Claim if such Third Party Claim (A) seeks non-monetary relief, (B) involves a criminal allegation by a Governmental Entity, (C) is asserted directly by or on behalf of a Person that is a supplier or customer of the Business, to the extent such Person is not a supplier or customer of Seller or any of Seller’s Affiliates, (D) involves, in the opinion of counsel of the Indemnified Party, a conflict of interest between the Indemnifying Party and the Indemnified Party, or (E) involves a claim that, in the good faith judgment of the Indemnified Party, the Indemnifying Party failed or is failing to vigorously prosecute or defend.
(c) Notwithstanding any of the foregoing, Seller shall have the exclusive right to control in all respects, and neither Purchaser nor any of its Affiliates shall be entitled to participate in, any Tax Proceeding with respect to any Tax Return of (i) Seller or any of its Affiliates or (ii) a consolidated, combined or unitary group that includes Seller or any of its Affiliates.
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(i) if to Purchaser,
SL Montevideo Technology, Inc. 0000 Xxxxx Xxx Xxx.
Xxxxxxxxxx, XX 00000 Facsimile: (000) 000-0000 Attention: Xxxxx Xxxxxx
with copies (which shall not constitute notice) to:
Handy & Xxxxxx Ltd.
c/o Steel Partners
000 Xxxxxxx Xxxxxx
00xx Xxxxx
XX, XX 00000 Facsimile: (000) 000-0000 Attention: Xxxxxxx Xxxxxxxx, VP and General Counsel
Ice Xxxxxx LLP Xxx Xxxxxxxx Xxxxxx, Xxxxx 0000 Xxxxxxxxxxxx, Xxxxxxx 00000 Facsimile: (000) 000-0000 Attention: Xxxx X. Xxxxxxxxxx, Esq.
(ii) if to Seller,
c/o UTC Aerospace Systems
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
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Section 10.7 Governing Law and Jurisdiction. This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of New York, without regard to any choice or conflict of law provision or rule (whether of the State of New York or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of New York. In addition, each of the parties hereto (a) submits to the exclusive jurisdiction of any state court sitting in New York, New York, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such dispute, the United States District Court for the Southern District of New York, in the event any dispute (whether in contract, tort or otherwise) arises out of this Agreement or the Transaction or the other transactions contemplated hereby, (b) agrees that it will not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from any such court, (c) agrees that it will not bring any Proceeding relating to this Agreement or the Transaction or the other transactions contemplated hereby in any court other than state court in New York, New York, or in the event (but only in the event) that such court does not have subject matter jurisdiction over such Proceeding, the United States District Court for the Southern District of New York. Each party agrees that service of process upon such party in any such Proceeding shall be effective if notice is given in accordance with Section 10.5.
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XXXXXXXX SUNDSTRAND CORPORATION
By: /s/ Xxxxxxx X. Xxxxx Name: Xxxxxxx X. Xxxxx Title: President, Electric, Environmental & Engine Systems
SL Montevideo Technology, Inc.
By: /s/ Xxxxxxx X. Xxxxx, Xx. Name: Xxxxxxx X. Xxxxx, Xx. Title: Senior Vice President, Handy & Xxxxxx Ltd.; President and Chief Executive Officer, Handy & Xxxxxx Group Ltd. |