AGREEMENT AND PLAN OF MERGER

EXECUTION COPY

AGREEMENT AND PLAN OF MERGER

among

DUNDEE HOLDING, INC.,

DUNDEE MERGERCO, INC.

and

DONCASTERS GROUP LTD.,

as Guarantor

and

FASTECH, INC.

and

Charles E. Corpening II,

as Stockholder Representative

dated as of February 23, 2007

TABLE OF CONTENTS

 

 

ii

EXHIBITS

 

SCHEDULES

 

 

iii

DEFINED TERMS

 

 

iv

 

v

 

vi

 

vii

Exhibit 10.1

AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of February 23, 2007 (this “ Agreement ”), among Dundee Holding, Inc., a Delaware corporation (“ Parent ”), Dundee MergerCo, Inc., a Delaware corporation and a direct wholly-owned subsidiary of Parent (“ Merger Sub ”), Doncasters Group Ltd., a company incorporated in England and Wales, as guarantor solely for the purpose and to the extent set forth in Section 9.16 (the “ Guarantor ”), and FasTech, Inc., a Delaware corporation (the “ Company ”) and, Charles E. Corpening II, solely in its capacity as Stockholder Representative and for purposes of Sections 2.8 and 2.9, Article VIII and Article IX hereof (the “ Stockholder Representative ”) sets forth the binding agreement of the parties.

W I T N E S S E T H:

WHEREAS, the Board of Directors of the Company has determined that it is fair to and advisable and in the best interests of the Company and its stockholders, and consistent with and in furtherance of its business strategies and goals, for Parent to acquire all of the outstanding shares of the Company through the merger of Merger Sub with and into the Company (the “ Merger ”) in accordance with the applicable provisions of the Delaware General Corporation Law (the “ DGCL ”) and upon the terms and subject to the conditions set forth herein;

WHEREAS, the Board of Directors of Parent and Merger Sub have each approved and declared advisable this Agreement and the transactions contemplated hereby;

WHEREAS, in furtherance of such combination, the Boards of Directors of Parent, Merger Sub and the Company have each adopted this Agreement providing for the Merger and the Board of Directors of the Company has resolved to recommend that the holders of the Company Class A Common Stock vote to adopt this Agreement providing for the Merger upon the terms and subject to the conditions set forth herein;

WHEREAS, (i) holders of a majority of the outstanding Company Class A Common Stock (as defined below), have executed and delivered to the Company on the date hereof a valid written consent approving the Merger, (ii) the holders of a majority of voting capital stock of Parent have executed and delivered to Parent on the date hereof a valid written consent approving the Merger, (iii) holders of a majority of 12% Series B Cumulative Preferred Stock, par value $0.01 per share, of the Company (the “ Company Series B Preferred Stock ”) and a majority of 12% Series C Cumulative Preferred Stock, par value $0.01 per share, of the Company (the “ Company Series C Preferred Stock ” and, collectively with the Company Series B Preferred Stock, the “ Company Preferred Stock ”) have executed and delivered to the Company on the date hereof a valid written consent approving the Merger and (iv) Parent, as the holder of all of the outstanding shares of common stock of Merger Sub, has executed and delivered to Merger Sub on the date hereof a valid written consent approving the Merger;

WHEREAS, pursuant to the Merger, each outstanding share of (i) Class A Common Stock, par value $0.01 per share, of the Company (the “ Company Class A Common Stock ”) and (ii) Class B Common Stock, par value $0.01 per share, of the Company (the

“ Company Class B Common Stock ” and, collectively with the Company Class A Common Stock, the “ Company Common Stock ” and, the Company Common Stock collectively with the Company Preferred Stock, the “ Company Stock ”), issued and outstanding immediately prior to the Effective Time (as defined in Section 1.3), other than shares owned or held directly or indirectly by Parent, Merger Sub or their respective Subsidiaries or the Company or its Subsidiaries, will be converted into the right to receive (i) the Per Share Closing Common Merger Consideration, (ii) the Per Share Holdback Consideration and (iii) the Per Share Stockholder Representative Expense Amount, in each case, without interest (except interest on any escrowed funds) and subject to adjustment as contemplated hereby;

WHEREAS, pursuant to the Merger, each outstanding share of (i) Company Series B Preferred Stock, and (ii) Company Series C Preferred Stock, issued and outstanding immediately prior to the Effective Time, other than shares owned or held directly or indirectly by Parent, Merger Sub or their respective Subsidiaries or the Company or its Subsidiaries, will be converted into the right to receive an amount in cash, without interest (except interest on any escrowed funds), equal to the Preferred Per Share Merger Consideration;

WHEREAS, the Holdback Consideration shall be placed in escrow for purposes of (i) satisfying damages, losses, expenses and other similar charges which result from breaches of the representations, warranties, covenants and agreements of the Company and (ii) the adjustment, if any, to the Common Stock Merger Consideration; and

WHEREAS, the Stockholder Representative Expense Amount shall be deposited with the Stockholder Representative for the purpose of funding the Stockholder Representative’s expenses in connection with its performance of its duties as Stockholder Representative; and

WHEREAS, Parent, Merger Sub and the Company desire to make certain representations, warranties, covenants and agreements in connection with the transactions contemplated hereby and also to prescribe various conditions to the transactions contemplated hereby.

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth herein, and intending to be legally bound hereby, the parties hereto agree as follows:

ARTICLE I

THE MERGER

1.1. The Merger . Upon the terms and subject to the conditions set forth in this Agreement, and in accordance with the DGCL, Merger Sub shall be merged with and into the Company at the Effective Time, and the separate corporate existence of Merger Sub shall thereupon cease in accordance with the provisions of the DGCL. The Company shall be the surviving corporation in the Merger and shall continue to exist as said surviving corporation under its present name pursuant to the provisions of the DGCL. The separate corporate existence of the Company with all its rights, privileges, powers and franchises shall continue unaffected by the Merger. The Merger shall have the effects specified in the DGCL. From and

 

2

after the Effective Time, the Company is sometimes referred to herein as the “ Surviving Corporation .”

1.2. Closing . The closing of the Merger (the “ Closing ”) will take place at 10:00 a.m. (New York City time) as expeditiously as possible but no later than the fifth Business Day after the satisfaction or waiver of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Closing Date) set forth in Article VI (the “ Closing Date ”), unless another time or date is agreed to in writing by the parties hereto. The Closing shall be held at the offices of Morrison & Foerster LLP, 1290 Avenue of the Americas, New York, New York 10104, unless another place is agreed to in writing by the parties hereto.

1.3. Effective Time . As part of the Closing, the parties hereto shall (a) file a certificate of merger (the “ Certificate of Merger ”) in such form as is required by and executed in accordance with the relevant provisions of the DGCL and (b) make all other filings or recordings required under the DGCL. The Merger shall become effective at such time as the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware or at such subsequent time as Parent and the Company shall agree and be specified in the Certificate of Merger (the date and time the Merger becomes effective being the “ Effective Time ”).

1.4. Effects of the Merger . At and after the Effective Time, the Merger will have the effects set forth in the DGCL. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time, all property, rights, privileges, powers and franchises of the Company and Merger Sub shall be vested in the Surviving Corporation, and all debts, liabilities and duties of the Company and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

1.5. Certificate of Incorporation . The certificate of incorporation of Merger Sub as in effect at the Effective Time shall be the certificate of incorporation of the Surviving Corporation (the “ Certificate of Incorporation ”) until thereafter changed or amended as provided therein and under applicable law.

1.6. Bylaws . The bylaws of Merger Sub as in effect at the Effective Time shall be the bylaws of the Surviving Corporation until thereafter changed or amended as provided therein and under applicable law.

1.7. Officers and Directors of Surviving Corporation . The officers of the Company immediately prior to the Effective Time shall be the officers of the Surviving Corporation, until the earlier of their death, resignation or removal or otherwise ceasing to be an officer or until their respective successors are duly elected or appointed and qualified. The parties hereto shall take all requisite action so that the directors of Merger Sub immediately prior to the Effective Time shall be the directors of the Surviving Corporation until the earlier of their death, resignation or removal or otherwise ceasing to be a director or until their respective successors are duly elected and qualified.

1.8. Effect on Capital Stock . At the Effective Time, by virtue of the Merger and without any action on the part of Parent, Merger Sub, the Company or the holders of any of the following securities:

 

3

(a) Conversion of Company Common Stock . Each share of Company Common Stock issued and outstanding immediately prior to the Effective Time (other than shares canceled pursuant to Section 1.8(d)) shall be converted into the right to receive, upon surrender of a Certificate formerly representing such share in the manner provided in Section 2.2, the Per Share Closing Common Merger Consideration, the Per Share Holdback Consideration as contemplated by Section 8.3 and the Per Share Stockholder Representative Expense Amount, in each case, without interest (except interest on any escrowed funds) and subject to adjustment as contemplated hereby, including Sections 2.1(c), 2.9(d) and 8.3.

(b) Conversion of Company Preferred Stock . Each share of Company Preferred Stock issued and outstanding immediately prior to the Effective Time (other than shares cancelled pursuant to Section 1.8(d)) shall be converted into the right to receive, upon surrender of a Certificate formerly representing such share in the manner provided in Section 2.2, the Preferred Per Share Merger Consideration, without interest.

(c) Cancellation of Company Stock . As of the Effective Time, all shares of Company Stock issued and outstanding immediately prior to the Effective Time (other than shares canceled pursuant to Section 1.8(d)) shall no longer be outstanding and shall automatically be canceled and shall cease to exist, and each holder of a certificate which immediately prior to the Effective Time represented any such shares of Company Stock (a “ Certificate ”) shall, to the extent such Certificate represents such shares, upon surrender of such Certificate in accordance with Article II, cease to have any rights with respect thereto, except the right to receive the applicable Per Share Merger Consideration, without interest (except interest on any escrowed funds).

(d) Cancellation of Treasury Stock and Parent-Owned Stock . Each share of Company Stock held in the treasury of the Company and each share of Company Stock owned or held, directly or indirectly, by the Company or its Subsidiaries or Parent, Merger Sub or their respective Subsidiaries, in each case, immediately prior to the Effective Time, shall be canceled and retired without any conversion thereof and no payment of cash or any other distribution or consideration shall be made with respect thereto.

(e) Capital Stock of Merger Sub . Each share of common stock, par value $0.001 per share, of Merger Sub issued and outstanding immediately prior to the Effective Time shall, by virtue of the Merger, be converted into and exchanged for one fully paid and non-assessable share of common stock, par value $0.001 per share, of the Surviving Corporation.

(f) Treatment of Outstanding Options . (i) As of the Effective Time, each outstanding and unexercised Company Option (whether vested or unvested) shall be canceled, and, in consideration for the cancellation of such Company Option, the holder of such Company Option shall be entitled to receive (A) at the Effective Time or as soon as practicable thereafter (but in no event later than three Business Days after the Effective Time) an amount in cash from the Company or the Surviving Corporation, as applicable, equal to the product of (x) the number of shares of Company Class A Common Stock subject to such Company Option held by the holder of such Company Option and (y) the excess of the Per Share Closing Common Merger Consideration over the exercise price per share required to be paid to acquire the corresponding share of Company Class A Common Stock (it being understood and agreed that such exercise

 

4

price shall not actually be paid by a holder of a Company Option), less any required employment and income withholding taxes, (B) distributions in accordance with Section 8.3 in an amount equal to the product of (xx) the number of shares of Company Class A Common Stock subject to such Company Option held by the holder of such Company Option and (yy) the portion of the Per Share Holdback Consideration so distributed, less any required withholding taxes and (C) distributions in accordance with Section 2.1(c) in an amount equal to the product of (xxx) the number of shares of Company Class A Common Stock subject to such Company Option held by the holder of the Company Option and (yyy) the portion of the distributed amount of the Per Share Stockholder Representative Expense Amount attributable to such shares. Payment of each of the Per-Share Holdback Consideration and the Per-Share Stockholder Representative Expense Amount to the holders of Company Options shall be made no later than five (5) years after the Effective Time in accordance with Proposed Regulation Section 1.409A-3(g)(5)(iv).

(ii) Prior to the Effective Time, the Company’s Board of Directors shall adopt any resolutions and take any actions which are necessary to effectuate this Section 1.8(f), the Company shall (A) take all appropriate or necessary steps to effect the termination of the Company Option Plans as of the Effective Time, and (B) take all actions necessary so that following the Effective Time, there shall be no outstanding Company Options as of the Effective Time and each such Company Option have then been converted to the right to receive the payment described in Section 1.8(f)(i) above. In addition, prior to the Effective Time, the Company shall provide notice (subject to prior reasonable review by Parent) to each holder of Company Options describing the treatment of such Company Options in accordance with this Section 1.8(f).

1.9. Dissenting Shares . Notwithstanding anything to the contrary contained herein, each share of Company Stock issued and outstanding immediately prior to the Effective Time held by holders who shall have properly exercised their appraisal rights with respect thereto under Section 262 of the DGCL (“ Dissenting Shares ”) shall not be converted into the right to receive the Per Share Merger Consideration, but shall be entitled only to such rights as may be granted to them in accordance with the provisions of Section 262 of the DGCL, except that each Dissenting Share held by a holder who shall thereafter withdraw his or her demand for appraisal or shall fail to perfect or otherwise waive or lose his or her right to such payment as provided in such Section 262 shall be deemed to be converted, as of the Effective Time, into the right to receive the applicable Per Share Merger Consideration, without interest (except interest on any escrowed funds), in the form such holder otherwise would have been entitled to receive as a result of the Merger. The Company will enforce any contractual waivers that holders of Company Common Stock have granted regarding appraisal rights that would apply to the Merger. The Company shall give Parent (i) prompt notice of any demands for appraisal of any shares of Company Stock, the withdrawals of such demands, any other instrument served on the Company under the provisions of Section 262 of the DGCL and any other matters relating to such demands, and (ii) the right to direct all negotiations and proceedings with respect to demands for appraisal under the DGCL; provided that the Company shall be entitled to participate in any such negotiations and proceedings. Prior to the Effective Time, the Company shall not settle, offer to settle or make any payment with respect to any demands for appraisal without the prior written consent of Parent (which consent shall not be unreasonably conditioned, delayed or withheld).

 

5

1.10. Further Assurances . At and after the Effective Time, the officers and directors of the Surviving Corporation will be authorized to execute and deliver, in the name and on behalf of the Company or Merger Sub, any deeds, bills of sale, assignments or assurances and to take and do, in the name and on behalf of the Company or Merger Sub, any other actions and things to vest, perfect or confirm of record or otherwise in the Surviving Corporation any and all right, title and interest in, to and under any of the rights, properties or assets acquired or to be acquired by the Surviving Corporation as a result of, or in connection with, the Merger.

ARTICLE II

EXCHANGE AND PAYMENT

2.1. Exchange Agent; Payment Funds .

(a) Prior to the Effective Time, Parent shall appoint a bank or trust company, as may be approved by the Company (which approval shall not be unreasonably delayed, conditioned or withheld) as exchange and paying agent (the “ Exchange Agent ”), for the exchange and payment of the Merger Consideration.

(b) At or prior to the Effective Time, Parent shall deposit with the Exchange Agent in trust for the benefit of holders of shares of Company Stock and Company Options, an amount in cash sufficient to make all payments pursuant to Section 2.2 (other than the Holdback Consideration, which shall be deposited by Parent with the Escrow Agent at or prior to the Effective Time, and the Stockholder Representative Expense Amount, which shall be deposited by Parent with the Stockholder Representative at or prior to the Effective Time). Any cash deposited with the Exchange Agent pursuant to this Section 2.1(b) shall hereinafter be referred to as the “ Exchange Fund .”

(c) At or prior to the Effective Time, Parent shall deposit with the Stockholder Representative for the benefit of the Stockholder Representative, the holders of shares of Company Common Stock and Company Options, as their interests may appear, an amount equal to the Stockholder Representative Expense Amount. The Stockholder Representative Expense Amount shall be used by the Stockholder Representative to fund the Stockholder Representative’s expenses in the performance of its duties as the Stockholder Representative. To the extent any portion of the Stockholder Representative Expense Amount is not so utilized on or prior to the three year anniversary of the Closing Date or is not expected to be so utilized, within ten (10) Business Days after the forty-second month anniversary of the Closing Date, the Stockholder Representative shall deliver any remaining portion of the Stockholder Representative Expense Amount to the holders of shares Company Common Stock and Company Options in proportion to their respective holdings of shares of Company Common Stock and Company Options, as the case may be, at the Effective Time. Notwithstanding the foregoing, the Stockholder Representative may in its sole discretion, deliver at any time any portion of the Stockholder Representative Expense Amount to the holders of shares Company Common Stock and Company Options in proportion to their respective holdings of shares of Company Common Stock and Company Options, as the case may be, at the Effective Time.

2.2. Exchange Procedures .

 

6

(a) Promptly following the Effective Time, Parent shall, or shall cause the Exchange Agent to, deliver to each record holder of a Certificate (a) a letter of transmittal which shall specify that delivery shall be effected, and risk of loss and title to the Certificates shall pass, only upon proper delivery of the Certificates to the Exchange Agent, and which letter shall be substantially in the form attached as Exhibit A hereto (the “ Letter of Transmittal ”) and have such other provisions as Parent and the Company may reasonably agree, and (b) instructions for effecting the surrender of such Certificates in exchange for the Per Share Closing Common Merger Consideration, Preferred Per Share Merger Consideration and the right to the Per Share Holdback Consideration and the Per Share Stockholder Representative Expense Amount, as applicable. Upon surrender of a Certificate to the Exchange Agent together with such Letter of Transmittal, duly executed and completed in accordance with the instructions thereto, the holder of such Certificate shall be entitled to receive promptly in exchange therefor the Per Share Closing Common Merger Consideration or the Preferred Per Share Merger Consideration, as applicable (less any required withholding of Taxes in accordance with Section 2.2(b)) for each share of Company Common Stock or Company Preferred Stock, as applicable, formerly represented by such Certificate, and such Certificate shall then be canceled. Any Person entitled to a portion of the Closing Merger Consideration who has provided wire instructions to the Exchange Agent no later than one (1) Business Day prior to the Effective Time shall be entitled to payments of the Closing Merger Consideration by wire transfer on the Closing Date in accordance with the instructions specified in such Person’s Letter of Transmittal. No interest will be paid or will accrue for the benefit of holders of the Certificates on the Closing Merger Consideration payable upon the surrender of the Certificates. In the event of a transfer of ownership of Company Common Stock or Company Preferred Stock which is not registered in the transfer records of the Company, payment of the Per Share Merger Consideration may be made with respect to such Company Common Stock or Company Preferred Stock to such a transferee if the Certificate formerly representing such shares of Company Common Stock or Company Preferred Stock is presented to the Exchange Agent, accompanied by all documents required to evidence and effect such transfer and to evidence that any applicable stock transfer taxes have been paid or are not applicable.

(b) Parent, the Surviving Corporation and the Exchange Agent shall be entitled to deduct and withhold from any Merger Consideration payable under this Agreement such amounts as may be required to be deducted or withheld therefrom under (i) the Code or (ii) any applicable state, local or foreign Tax laws and shall thereafter pay all such amounts so deducted or withheld to the proper taxing authorities. To the extent that amounts are so deducted and withheld, such amounts shall be treated for all purposes under this Agreement as having been paid to the Person in respect of which such deduction and withholding was made.

2.3. No Further Ownership Rights in Company Stock . The Closing Merger Consideration paid upon conversion of shares of Company Stock in accordance with the terms of Article I and this Article II and the right to the Holdback Consideration as contemplated by Section 8.3 and the Stockholder Representative Expense Amount as contemplated by Section 2.1(c) shall be deemed to have been paid and given in full satisfaction of all rights pertaining to the shares of Company Stock. If any Certificates shall not have been surrendered prior to one hundred eighty (180) days after the Effective Time (or immediately prior to such earlier date on which any Per Share Merger Consideration in respect to such Certificate would otherwise escheat to or become the property or any Governmental Authority), any such cash shall, to the

 

7

extent permitted by applicable law, be delivered to and become property of the Surviving Corporation. If, no later than eighteen (18) months after the Effective Time, subject to the terms and conditions of this Agreement, Certificates formerly representing shares of Company Stock are presented to the Surviving Corporation, they shall be canceled and exchanged for the applicable Per Share Merger Consideration in accordance with this Article II. If any Certificates shall not have been surrendered immediately prior to the date on which any Merger Consideration would otherwise become subject to any abandoned property, escheat or similar law, the Merger Consideration payable in respect of such Certificates shall, to the extent permitted by applicable law, on the Business Day immediately prior to such date become the property of Surviving Corporation, free and clear of any claim or interest of any Person previously entitled thereto.

2.4. Termination of Exchange Fund . Any portion of the Exchange Fund constituting the Merger Consideration that remains undistributed to the holders of Certificates after one hundred eighty (180) days after the Effective Time (including any interest thereon) shall be delivered to the Surviving Corporation or otherwise on the instruction of the Surviving Corporation, and any holders of the Certificates who have not theretofore complied with this Article II shall thereafter look only to the Surviving Corporation and Parent for the applicable Per Share Merger Consideration with respect to the shares of Company Stock formerly represented thereby to which such holders are entitled pursuant to Sections 1.8 and 2.2 (other than any distribution of the remainder of the Stockholder Representative Expense Amount for which such holder shall look only to the Stockholder Representative).

2.5. No Liability . None of Parent, Merger Sub, the Company, the Surviving Corporation or the Exchange Agent shall be liable to any Person in respect of any Merger Consideration from the Exchange Fund properly paid from the Exchange Fund or delivered to a public official pursuant to any applicable abandoned property, escheat or similar law.

2.6. Lost Certificates . If any Certificate shall have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such Certificate to be lost, stolen or destroyed in form and substance reasonably acceptable to Parent and Merger Sub (if such affidavit is accepted before the Effective Time) or the Surviving Corporation (if such affidavit is accepted after the Effective Time), and, if required by the Surviving Corporation, the posting by such Person of a bond in such form and reasonable amount as the Surviving Corporation may reasonably require as indemnity against any claim that may be made against the Surviving Corporation with respect to the alleged loss, theft or destruction of such Certificate, the Exchange Agent will deliver in exchange for such lost, stolen or destroyed Certificate the applicable Per Share Merger Consideration with respect to the shares of Company Stock formerly represented thereby in the manner set forth in Sections 1.8 and 2.2.

2.7. Stock Transfer Books . Upon and after the Effective Time, the stock transfer books of the Company shall be closed and there shall be no further registration of transfers of shares of Company Stock thereafter on the records of the Company. From and after the Effective Time, the holders of Certificates shall cease to have any rights with respect to such shares of Company Stock formerly represented thereby, except as otherwise provided herein or by law. On or after the Effective Time, any Certificates presented to the Exchange Agent or Parent for any reason shall be canceled and exchanged for the applicable Per Share Merger

 

8

Consideration with respect to the shares of Company Stock formerly represented thereby in accordance with the provisions of this Agreement.

2.8. Debt and Working Capital Estimate . No later than six (6) Business Days prior to the anticipated Closing Date, the Company shall deliver to Parent a good faith estimate of (x) Debt as of the close of business on the Closing Date (“ Estimated Debt ”) and (y) Working Capital as of the close of business on the Closing Date (“ Estimated Working Capital ”), together with (i) a statement of the calculation of Estimated Debt and Estimated Working Capital and (ii) a certificate signed by the Company to the effect that Estimated Debt and Estimated Working Capital were determined in good faith in accordance with the provisions of this Agreement (the “ Estimated Closing Statement ”). The parties agree that Estimated Debt shall be adjusted as necessary on or prior to the Closing Date to reflect the actual payoff amounts with respect to those components of Estimated Debt for which payoff information has been received by the Company from the applicable creditors as of the Closing Date. Parent shall have five (5) Business Days to review the Estimated Closing Statement and the calculations set forth therein and during such time the Company shall make its senior financial officers reasonably available to answer any questions of Parent regarding the preparation of the Estimated Closing Statement. Parent shall have the right to reasonably object to the Estimated Closing Statement within such five (5) Business Day period, by delivering to the Company (i) a statement describing its objections and setting forth Parent’s estimate of the Estimated Working Capital and the Estimated Debt and (ii) a certificate signed by the Parent to the effect that the Parent’s calculations of Estimated Working Capital and the Estimated Debt were determined in good faith, in light of the information available to it, in accordance with the provisions of this Agreement. Parent and the Stockholder Representative will use good faith efforts to resolve any dispute regarding the determination of the Estimated Working Capital and/or the Estimated Debt on or prior to the Closing Date; provided , that in the event that the parties are not able to resolve the computation of the Estimated Working Capital and/or the Estimated Debt on or prior to such time and the aggregate amount of Parent’s objections to the Estimated Closing Statement is Two Million Dollars ($2,000,000) or less, then the Estimated Working Capital and/or the Estimated Debt will be deemed to be equal to the average of Parent’s and the Stockholder Representative’s determinations thereof as provided hereunder, as applicable; provided , further , that if the aggregate amount of Parent’s objections to the Estimated Closing Statement exceeds Two Million Dollars ($2,000,000), then the Estimated Working Capital and/or the Estimated Debt will be deemed to be equal to the average of Parent’s and the Stockholder Representative’s determinations thereof as provided hereunder, as applicable, and notwithstanding anything to the contrary in Section 2.9(c), when, in connection with the adjustment provisions set forth in Section 2.9, the Estimated Closing Statement and Parent’s objections are submitted to the Arbiter for review and resolution, fees, costs and expenses of the Arbiter shall be borne completely by the party whose estimated amounts had the greater deviation (whether positive or negative) from the final resolution of such amounts by the Arbiter.

2.9. Closing Statement; Adjustment to Merger Consideration .

(a) Within ninety (90) days after the Closing Date, the Surviving Corporation shall cause to be prepared and shall deliver to the Stockholder Representative a statement (the “ Closing Statement ”), setting forth in reasonable detail (i) Working Capital as of the close of

 

9

business on the Closing Date (“ Closing Date Working Capital ”) and (ii) Debt as of the close of business on the Closing Date (“ Closing Date Debt ”), in each case, of the Surviving Corporation and its Subsidiaries, which shall have been prepared in accordance with GAAP Consistently Applied. The Closing Statement shall be accompanied by an accountant’s report issued by PriceWaterhouseCoopers LLP or another internationally recognized third party accounting firm selected by Parent, in its sole discretion, to the effect that the Closing Statement has been reviewed by it and that the Closing Statement has been prepared in accordance with GAAP Consistently Applied.

(b) Each of the Surviving Corporation, the Stockholder Representative and Parent agrees that it will, and it will use reasonable efforts to cause its respective agents and representatives to, cooperate and assist in the preparation of the Closing Statement and the calculation of the Closing Date Working Capital and the Closing Date Debt and in the conduct of the reviews and dispute resolution process referred to in this Section 2.9.

(c) During the twenty (20)-day period following the Stockholder Representative’s receipt of the Closing Statement, the Stockholder Representative and its independent accountants shall, at the Stockholder Representative’s expense, be permitted to review, and the Surviving Corporation shall make available to the Stockholder Representative, the supporting schedules, analyses, working papers and other documentation of the Surviving Corporation and its independent accountant (with respect to working papers, subject to the execution and delivery by the Stockholder Representative and its independent accountants and other agents of customary confidentiality undertakings, waivers, releases and indemnification in favor of such independent accountant) relating to the Closing Statement and to ask questions, receive answers and request such other data and information from its senior financial officers and its independent accountants as shall be reasonably related to the adjustment to the Merger Consideration contemplated by this Section 2.9. The Closing Statement shall become final and binding upon the parties at 5:00 p.m. (New York City time) on the Business Day following the 20 ^th day following delivery thereof (and the Working Capital amount reflected therein shall be deemed to be Final Working Capital and the Debt amount reflected therein shall be deemed to be Final Debt), unless the Stockholder Representative gives written notice of its disagreement with the Closing Statement (a “ Notice of Disagreement ”) to the Surviving Corporation prior to such time. Any Notice of Disagreement shall specify in reasonable detail the nature of any disagreement so asserted. Parent, at its expense, shall be permitted to review the supporting schedules, analyses, working papers and other documentation with respect to such Notice of Disagreement (with respect to working papers, subject to the execution and delivery by Parent and its independent accountants and other agents of customary confidentiality undertakings, waivers, releases and indemnification in favor of such independent accountant). Except for such items that are specifically disputed in the Notice of Disagreement, the amounts set forth on the Closing Statement shall be final.

During the 15-day period following the delivery of a Notice of Disagreement or such longer period as the Stockholder Representative and Parent shall mutually agree, the Stockholder Representative and Parent shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement, and in the event that the Stockholder Representative and Parent are able to reach such resolution, then the amount so agreed by them in writing shall be deemed to be Final

 

10

Working Capital and/or Final Debt, as the case may be. If, at the end of such 15-day period (or such longer period as mutually agreed between the Stockholder Representative and Parent), the Stockholder Representative and Parent have not so resolved such differences, the Stockholder Representative and Parent shall submit the dispute for resolution to an independent accounting firm (the “ Arbiter ”) for review and resolution of any and all matters which remain in dispute and which were included in the Notice of Disagreement in accordance with this Section 2.9. The Arbiter shall be a mutually acceptable internationally recognized independent public accounting firm agreed upon by the Stockholder Representative and Parent in writing; provided , however , that in the event the parties are not able to mutually agree on an accounting firm, the Arbiter shall be Deloitte & Touche LLP. The Stockholder Representative and Parent shall use reasonable efforts to cause the Arbiter to render a decision resolving the matters in dispute within thirty (30) days following the submission of such matters to the Arbiter, or such longer period as the Stockholder Representative and Parent shall mutually agree. The Stockholder Representative and Parent agree that the determination of the Arbiter shall be final and binding upon the parties and that judgment may be entered upon the determination of the Arbiter in any court having jurisdiction over the party against which such determination is to be enforced. The Arbiter shall determine, based solely on presentations by the Surviving Corporation, Parent and the Stockholder Representative and their respective representatives, and not by independent review, only those issues in dispute specifically set forth on the Notice of Disagreement and shall prepare the Final Closing Statement and render a written report as to the dispute and the resulting calculation of Closing Date Working Capital and/or Closing Date Debt, as appropriate, which shall be conclusive and binding upon the parties as Final Working Capital and Final Debt, respectively. In resolving any disputed item, the Arbiter: (i) shall be bound by the principles set forth in this Section 2.9 (including that Closing Date Working Capital and Closing Date Debt be determined in accordance with GAAP Consistently Applied), (ii) shall limit its review to matters specifically set forth in the Notice of Disagreement and (iii) shall not assign a value to any item greater than the greatest value for such item claimed by either party or less than the smallest value for such item claimed by either party. Except as provided in the second proviso of the last sentence of Section 2.8, with regard to the payment of the Arbiter’s fees for resolving differences with regard to the Estimated Closing Statement, the fees, costs and expenses of the Arbiter (x) shall be borne by the Surviving Corporation in the proportion that the aggregate dollar amount of such disputed items so submitted that are successfully disputed by the Stockholder Representative (as finally determined by the Arbiter) bears to the aggregate dollar amount of such items so submitted and (y) shall be borne by holders of Company Common Stock and Company Options in the proportion that the aggregate dollar amount of such disputed items so submitted that are unsuccessfully disputed by the Stockholder Representative (as finally determined by the Arbiter) bears to the aggregate dollar amount of such items so submitted. The fees and expenses of the Surviving Corporation and Parent incurred in connection with the preparation of the Closing Statement and the review of any Notice of Disagreement shall be borne by the Surviving Corporation, and the fees and expenses of the Stockholder Representative’s independent accountants incurred in connection with their review of the Closing Statement shall be borne by the holders of Company Common Stock and Company Options.

(d) Upon determination of Final Working Capital and Final Debt, the Common Stock Merger Consideration shall be further adjusted as follows:

 

11

(i) If Final Working Capital is greater than the High Reference Amount, then the Common Stock Merger Consideration shall be increased (if the amount calculated under this clause (i) is positive) or decreased (if the amount calculated under this clause (i) is negative), dollar-for-dollar by the amount equal to (x) the amount by which Final Working Capital exceeds the High Reference Amount, minus (y) the Positive EWC Adjustment, plus (z) the Negative EWC Adjustment;

(ii) If Final Working Capital is less than the Low Reference Amount, then the Common Stock Merger Consideration shall be increased (if the amount calculated under this clause (ii) is positive) or decreased (if the amount calculated under this clause (ii) is negative), dollar-for-dollar by the amount equal to (xx) the Negative EWC Adjustment, minus (yy) the Positive EWC Adjustment, minus (zz) the amount by which the Low Reference Amount exceeds Final Working Capital;

(iii) If Final Working Capital is equal to or less than the High Reference Amount and equal to or greater than the Low Reference Amount, then the Common Stock Merger Consideration shall be increased (if the amount calculated under this clause (iii) is positive) or decreased (if the amount calculated under this clause (iii) is negative), dollar-for-dollar by the amount equal to the Negative EWC Adjustment, minus the Positive EWC Adjustment;

(iv) The Common Stock Merger Consideration shall be increased dollar-for-dollar by the amount, if any, by which Estimated Debt exceeds Final Debt; and

(v) The Common Stock Merger Consideration shall be reduced dollar-for-dollar by the amount, if any, by which Final Debt exceeds Estimated Debt.

(e) The cumulative net adjustment to the Common Stock Merger Consideration pursuant to Section 2.9(d) above, whether a net increase or reduction, is the “ Final Adjustment Amount .” Within ten (10) Business Days after the Closing Statement becomes final and binding upon the parties, (i) if the net effect pursuant to this Section 2.9 is an increase in the Common Stock Merger Consideration, Parent shall make a cash payment equal to the Final Adjustment Amount to the Exchange Agent, to be distributed pro rata to each holder of Company Common Stock or Company Options held by such holder immediately prior to the Effective Time, such further cash payments to be made to (A) each holder of Company Common Stock in an amount equal to the product of (x) the number of shares of Company Common Stock held by such holder immediately prior to the Effective Time and (y) the Per Share Adjustment Consideration and (B) each holder of Company Option in an amount equal to the product of (x) the number of shares of Company Class A Common Stock subject to such Company Option held by such holder immediately prior to the Effective Time and (y) the Per Share Adjustment Consideration, and (ii) if the net effect pursuant hereto is a reduction in the Common Stock Merger Consideration, each holder of Company Common Stock and each holder of Company Options, shall, by virtue of payments by the Escrow Agent from the Escrow Fund in accordance with this Agreement and the Escrow Agreement, be deemed to have made a payment to the Surviving Corporation to an account designated in writing by the Surviving Corporation, by wire transfer in immediately available funds, of the amount of such Final Adjustment Amount, in either case under clause (i) or (ii) of this Section 2.9(e), together with interest thereon from the

 

12

Closing Date to the date of actual payment at a variable rate equal to the prime rate (as reported in the Wall Street Journal (National Edition) “Money Rates ”) from and including the Closing Date to, but not including, the date of payment. For the avoidance of doubt, each of the parties hereto herby confirms that each of the Exchange Agent and the Escrow Agent is authorized and instructed to make any of the payments provided for in this Section 2.9(e), in the case of the Exchange Agent, upon receipt of funds so designated from Parent, and, in the case of the Escrow Agent, upon written instructions from Parent and the Stockholder Representative in accordance with this Agreement and the Escrow Agreement.

2.10. Withholding Taxes . Parent shall be entitled to deduct and withhold from any consideration payable or otherwise deliverable pursuant to this Agreement such amounts, if any, as may be required to be deducted or withheld therefrom under any provision of federal, state, local or foreign tax law or under any applicable law and shall thereafter pay all such amounts so deducted or withheld to the proper taxing or other Governmental Authorities. Any such amounts shall be withheld or deducted from the purchase price payable pursuant to this Agreement, and such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the relevant Person.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1. Representations and Warranties of the Company . Except as specifically set forth in the corresponding section of the Company Disclosure Schedule (and giving effect to Section 9.10 hereto) and except as set forth in the SEC Reports filed at least three (3) Business Days prior to the date of this Agreement, the Company represents and warrants to Parent as follows:

(a) Organization, Standing and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, has all requisite power and authority to own, lease and operate its properties and to carry on the business of the Company as now being conducted and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, other than in such jurisdictions where the failure to so qualify or be in good standing would not have a Material Adverse Effect. The Company has made available to Parent true, correct and complete copies of (i) the certificate of incorporation and bylaws of the Company, in each case, as in effect on the date of this Agreement and (ii) the minutes of all meetings of the stockholders, board of directors and each committee of the board of directors of the Company since January 1, 2004.

(b) Subsidiaries . Each of the Company’s Subsidiaries is a corporation duly incorporated or otherwise organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, has all requisite power and authority to own, lease and operate its properties and to carry on its business as now being conducted and is duly qualified and in good standing to do business in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification necessary, other than in such jurisdictions where the failure to so qualify or be in good standing would not have a Material Adverse Effect. The Company has made available to Parent true, correct and complete

 

13

copies of (i) the certificate of incorporation and bylaws (or the equivalent organizational documents) of each of the Company’s Subsidiaries, in each case, as in effect on the date of this Agreement (collectively, together with the certificate of incorporation and bylaws of the Company, the “ Company Organizational Documents ”) and (ii) the minutes of all meetings of the stockholders, boards of directors and each committee of the boards of directors of each of the Company’s Subsidiaries since January 1, 2004. A true, correct and complete list of all Subsidiaries of the Company and their respective jurisdictions of organization is set forth in Section 3.1(b) of the Company Disclosure Schedule. Except as set forth in Section 3.1(b) of the Company Disclosure Schedule, the Company does not own, directly or indirectly, any capital stock of, or any other securities convertible or exchangeable into or exercisable for capital stock of, any Person other than the Subsidiaries of the Company.

(c) Capital Structure .

(i) As of the date of this Agreement, the authorized capital stock of the Company consisted solely of (A) 2,500,000 shares of Company Class A Common Stock, of which 366,925.6 shares are issued and outstanding, (B) 2,500,000 shares of Company Class B Common Stock, of which 1,655,364 shares are issued and outstanding, (C) 900,000 shares of Company Series B Preferred Stock, of which 613,265.8 shares are issued and outstanding and (D) 950,000 shares of Company Series C Preferred Stock, of which 483,604 shares are issued and outstanding. The Company is current, as of the date of this Agreement, and shall be current, as of the Closing Date, with respect to all dividend payments due and payable to holders of Company Preferred Stock. Since September 30, 2006, there have been no issuances of shares of the capital stock of the Company or securities convertible into or exercisable for capital stock of the Company except shares of Company Common Stock issued upon exercise of Company Options. All issued and outstanding shares of the capital stock of the Company are duly authorized, validly issued, fully paid and nonassessable, and, except as provided in the Company Stockholders Agreement, no class of capital stock is entitled to preemptive rights. As of the date of this Agreement, 16,593.5 shares of Company Class A Common Stock were issuable upon exercise of the Company Options. Except as provided in the Company’s certificate of incorporation and Section 3.1(c)(i) of the Company Disclosure Schedule and except for the Company Options, there are no options, warrants, calls, conversion rights, stock appreciation rights, redemption rights, repurchase rights or other rights, agreements, arrangements or commitments to which the Company or any of its Subsidiaries is a party (A) relating to the issued or unissued capital stock or other securities of the Company or any of its Subsidiaries or (B) obligating the Company or any of its Subsidiaries to issue or sell any shares of their capital stock or other securities. The Company has made available to Parent true, correct and complete copies of all Company Option Plans and all forms of options outstanding under those Company Option Plans. Section 3.1(c)(i) of the Company Disclosure Schedule sets forth a true, correct and complete list of the capitalization of the Company, as of the date of this Agreement, including, (A) with respect to the Company Common Stock, all of the issued and outstanding shares and the names of the holders thereof, (B) with respect to the Company Preferred Stock, all of the issued and outstanding shares and the names of the holders thereof and the Preferred Per Share Merger Consideration payable to each such holder of Company Preferred Stock calculated as of February 15, 2007 and (C) with respect to each Company Option: (i) the name of the holder of that option; (ii) the exercise price for that option; (iii) the number and class of shares of

 

14

Company Stock subject to that option; (iv) the Company Option Plan under which that option was granted; and (v) the dates on which that option was granted, will vest and will expire.

(ii) Except as disclosed in Section 3.1(c)(ii) of the Company Disclosure Schedule and Liens granted in connection with the Credit Agreement, all of the outstanding shares of capital stock of each of the Company’s Subsidiaries are beneficially owned by the Company, directly or indirectly, and all such shares have been validly issued and are fully paid and nonassessable and are owned by either the Company or one or more of its Subsidiaries, free and clear of all liens, charges, mortgages, pledges, security interests, easements, claims, options, rights of first offer or refusal, voting trusts, restrictions on transfer (except pursuant to federal and state securities laws), hypothecation, preference, priority or other encumbrances (collectively, “ Liens ”).

(iii) As of the date of this Agreement, no bonds, debentures, notes or other indebtedness of the Company having the right to vote on any matters on which stockholders may vote are issued or outstanding.

(d) Authority; No Violations .

(i) The Company has all requisite corporate power and corporate authority to enter into this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company. This Agreement has been duly executed and delivered by the Company and constitutes a valid and binding agreement of the Company enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors rights generally, or by general equity principles.

(ii) Except as set forth in Section 3.1(d)(ii) of the Company Disclosure Schedule, the execution, delivery and performance by the Company of this Agreement do not, and the consummation by the Company of the Merger and the other transactions contemplated hereby will not result in any violation of, or constitute a default (with or without notice or lapse of time, or both) under, or give rise to the creation of a Lien on any assets (any such conflict, violation, default or creation, a “ Violation ”) pursuant to: (A) any provision of the Company Organizational Documents (B) subject to obtaining or making the consents, approvals, orders, permits, authorizations, registrations, declarations, notices and filings referred to in Section 3.1(d)(iii) below, other than the Credit Agreement and the Indenture or as would not have a Material Adverse Effect, any loan or credit agreement, note, mortgage, bond, indenture, lease, benefit plan or other agreement, obligation, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries or their respective properties or assets; or (C) any Company Material Contract (or require the consent, approval or other authorization of, or filing with or notification to, any Person under any Company Material Contract, other than as set forth in Section 3.1(d)(ii) of the Company Disclosure Schedule).

 

15

(iii) Except as would not reasonably be expected to have a Material Adverse Effect on the Company, no consent, approval, order, permit or authorization of, or registration, declaration, notice or filing with, any federal, state, municipal or other governmental body, department, commission, board, bureau, agency, court or instrumentality thereof, domestic or foreign (a “ Governmental Authority ”), is required by or with respect to the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement by the Company or the consummation by the Company of the Merger and the other transactions contemplated hereby, except for those required under or in relation to (A) the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”); (B) filings required under any applicable federal, state, foreign or supranational law, regulation, legislation or decree of any other jurisdiction designed to prohibit, restrict or regulate actions for the purpose or effect of monopolization, restraint of trade or merger control (collectively, “ Foreign Antitrust Laws ”); (C) the applicable requirements of the Committee on Foreign Investment in the United States (“ CFIUS ”) under the Exon-Florio Amendment to the Defense Production Act of 1950 (“ Exon-Florio ”); and (D) the DGCL with respect to the filing of the Certificate of Merger.

(e) Compliance; Permits .

(i) Except as would not have a Material Adverse Effect:

(1) each of the Company and its Subsidiaries owns or possesses all Licenses and Permits;

(2) no loss, suspension or cancellation of any Licenses and Permits is pending in any Proceeding or, to the Knowledge of the Company, has been threatened by a Governmental Authority, except for normal expirations in accordance with the terms thereof; and

(3) each of the Company and its Subsidiaries has complied in all material respects with (A) all terms and conditions of all material Licenses and Permits and (B) all laws and regulations of all Governmental Authorities applicable to the business of the Company and its Subsidiaries, and the Company or any of its Subsidiaries have not received any written notice of any pending Proceeding alleging a failure to comply with either (A) or (B) of this Section 3.1(e)(i)(3).

(ii) The Company, its Subsidiaries and their business have, within the past three (3) years, been and are currently in compliance with all applicable laws, regulations, rules, orders, permits, judgments, decrees and other requirements and policies imposed by any Governmental Authority, including the False Claims Act, the anti-fraud provisions of the Contract Disputes Act, the Anti-Kickback Act, the Federal Election Campaign Act, the Sherman Act, the Clayton Act, the Truth in Negotiations Act, the Services Contract Act, the Procurement Integrity Act, the Byrd Amendment (31 U.S.C. § 1352), the Arms Export Control Act, the Export Administration Act of 1979, as amended, and each act’s respective regulations, except where the failure to comply would not have a Material Adverse Effect. To the Knowledge of the Company, neither the Company, its Subsidiaries nor their business has, nor any of their employees, partners, principals, agents or assignees have committed (or taken any action to promote or conceal) any violation of the Foreign Corrupt Practices Act, 15 U.S.C. sections 78dd-

 

16

1, -2, or any equivalent foreign law or otherwise paid or made any bribe, illegal rebate, payoff, influence payment, kickback or other unlawful payment. Section 3.1(e)(ii) of the Company Disclosure Schedule sets forth all Licenses and Permits which terminate or become renewable at any time prior to the first anniversary of the date of this Agreement.

(iii) Notwithstanding the foregoing, no representation or warranty is made under this Section 3.1(e) in respect of any (A) matters relating to Taxes which are addressed in Sections 3.1(n) and 3.1(o) (as to which no representation or warranty is made except as set forth in Sections 3.1(n) and 3.1(o)), (B) matters relating to Environmental Laws which are addressed in Section 3.1(r) (as to which no representation or warranty is made except as set forth in Section 3.1(r)) and (C) benefit plans and labor matters which are addressed in Sections 3.1(m), 3.1(o) and 3.1(p) (as to which no representation or warranty is made except as set forth in Sections 3.1(m), 3.1(o) and 3.1(p)).

(f) Reports and Financial Statements . None of the reports, schedules and forms filed or required to be filed by FastenTech with the Securities and Exchange Commission (the “ SEC ”) since December 31, 2004 (collectively, including all exhibits thereto and any reports incorporated by reference therein, the “ SEC Reports ”), as of their respective dates (and, if amended or superseded by a filing three (3) Business Days prior to the date hereof, then on the date of such filing) contained or will contain any untrue statement of a material fact or omitted or will omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Each of the financial statements of FastenTech (including the related notes) included in the SEC Reports, including the consolidated balance sheet of the Company and its Subsidiaries as of September 30, 2006 (the “ Balance Sheet ”) and the related statement of income and cash flow for the period ended September 30, 2006 presents fairly, in all material respects, the consolidated financial position and consolidated results of operations and cash flows of the Company and its consolidated Subsidiaries as of the respective dates or for the respective periods set forth therein, all in conformity with GAAP consistently applied during the periods involved, except as otherwise noted therein, and subject, in the case of the unaudited interim financial statements, to the absence of footnotes and to normal year-end adjustments that are not material in amount, and has been derived from the Books and Records (which are true, correct and complete in all material respects). All of such SEC Reports, as of their respective dates (and as of the date of any amendment to the respective SEC Report), complied as to form in all material respects with the applicable requirements of the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder and the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder (the “ Exchange Act ”). No Subsidiary of the Company is required to file any form, report or other document with the SEC, any foreign Governmental Authority that performs a similar function to that of the SEC or any securities exchange or quotation service.

(g) Board Approval . The Board of Directors of the Company, by resolutions duly adopted at a meeting duly called and held (the “ Company Board Approval ”), has approved this Agreement and (i) determined that this Agreement and the Merger are advisable, (ii) approved the transactions contemplated by this Agreement, including the Merger, and (iii) recommended that the holders of the Company Class A Common Stock adopt this Agreement

 

17

and the Merger. No other corporate proceedings on the part of the Company are necessary to authorize the Merger other than as described in Section 3.1(h).

(h) Vote Required . The affirmative vote of the holders of a majority of the total number of outstanding shares of the Company Class A Common Stock to adopt and approve this Agreement (the “ Required Company Vote ”) is the only vote of the holders of any class or series of Company Stock necessary to adopt this Agreement and approve the transactions contemplated hereby. The Required Company Vote was obtained by written consent, dated as of a date not later than the date hereof.

(i) Absence of Certain Changes or Events . Since September 30, 2006, the business of the Company and its Subsidiaries has been conducted in the Ordinary Course of Business and (A) there has been no Material Adverse Effect and (B) neither the Company nor any of its Subsidiaries has taken any action which, if taken after the date of this Agreement, would be prohibited by clauses (a), (b), (d), (f), (g), (h) and (k) of Section 4.1, other than as set forth in Section 3.1(i) of the Company Disclosure Schedule.

(j) Absence of Undisclosed Liabilities . Neither the Company nor any of its Subsidiaries has any material liabilities or obligations of any kind, whether accrued, contingent, absolute, inchoate or otherwise (collectively, “ Liabilities ”) which are required to be recorded or reflected on a consolidated balance sheet, including the footnotes thereto, under GAAP, except (A) Liabilities recorded or reflected in the consolidated balance sheet of FastenTech and its consolidated Subsidiaries as of September 30, 2006 and the footnotes thereto set forth in FastenTech’s Annual Report on Form 10-K for the fiscal year ended September 30, 2006; (B) Liabilities incurred since September 30, 2006 in the Ordinary Course of Business that would not have a Material Adverse Effect; (C) Liabilities disclosed in the Company Disclosure Schedule; (D) Liabilities that constitute Debt under this Agreement; (E) Liabilities in connection with the Holdco Financing; (F) Liabilities in connection with the Tender of the Senior Subordinated Notes and (G) Liabilities that would not have a Material Adverse Effect.

(k) Real Property; Assets .

(i) Section 3.1(k)(i) of the Company Disclosure Schedule contains a true, correct and complete list and street addresses of all the real property owned by the Company and its Subsidiaries (the “ Owned Real Property ”), and a true, correct and complete list and street addresses of all the real property leased by the Company and its Subsidiaries (the “ Leased Real Property ” and together with the Owned Real Property, the “ Real Property ”). Except as set forth in Section 3.1(k)(i) of the Company Disclosure Schedule, the Company or its Subsidiaries has valid and legal fee title to the Owned Real Property, including any rights of way or easements running to the benefit of such Owned Real Property, free and clear of all Liens (except Permitted Liens). The Company has provided to Parent true, correct and complete copies of all deeds and other title documents set forth in Section 3.1(k)(i)(A) of the Company Disclosure Schedule pertaining to such Owned Real Property. Except as set forth in Section 3.1(k)(i) of the Company Disclosure Schedule, the Company or its Subsidiaries has a valid leasehold interest in all Leased Real Property. Each Contract relating to such Leased Real Property is in full force and effect on the date hereof and will be in full force and effect on the Closing Date. There does not exist under any Contract governing the Leased Real Property any

 

18

default or condition or event that, after notice or lapse of time or both, would constitute a default on the part of the Company or such Subsidiary or, to the Knowledge of the Company, on the part of any other parties to such lease governing the Leased Real Property. The consummation of the transactions contemplated hereby shall not under the terms of any Contract governing the Leased Real Property, (i) impose any material penalty or additional fee upon Parent, Merger Sub or the Company, (ii) cause the provisions of any such lease to be altered in any material and adverse respect, or (iii) cause a material breach or default with respect to any existing Contract governing Leased Real Property. With respect to the Real Property, except as disclosed in Section 3.1(k)(i) of the Company Disclosure Schedule: (A) neither the Company nor any of its Subsidiaries has entered into any written sublease, license, option, right, concession or other agreement or arrangement granting to any Person the right to use or occupy such parcel of Real Property or any portion thereof or interest therein, except for Permitted Liens; (B) within the last 12 months, neither the Company nor any of its Subsidiaries has received written notice of any pending or threatened condemnation or eminent domain proceedings or their local equivalent affecting or relating to such Real Property; (C) within the last 12 months, neither the Company nor any of its Subsidiaries has received written notice from any Governmental Authority or other Person that the use and occupancy of any of the Real Property, as currently used and occupied, and the conduct of the business thereon, as currently conducted, violates in any material respect any deed restrictions or applicable law, consisting of building codes, zoning, subdivision or other land use or similar laws; (D) all improvements on the Real Property (i) substantially conform to all applicable state and local laws, including zoning and building ordinances and health and safety ordinances, and such Real Property is zoned for the various purposes for which the Real Property and improvements thereon are presently being used, (ii) are in good repair (ordinary wear and tear excepted) and are reasonably suitable for the use presently being made of such improvements and (iii) are adequate and sufficient to the operation of the business of the Company and its Subsidiaries as presently conducted. Except as disclosed in Section 3.1(k)(i) of the Company Disclosure Schedule, all improvements on Owned Real Property are wholly within the boundaries of such property, are owned by the Company or one of its Subsidiaries and do not encroach upon the property or otherwise conflict with the property rights of any Person; (E) no claim or right of adverse possession has been claimed or threatened in writing to the Company or its Subsidiaries; and (F) any and all rights and easements (including ingress to and egress from the Real Property) necessary for the Company and its Subsidiaries to conduct the business as presently conducted on such Real Property are vested in the Company and its Subsidiaries.

(ii) Except as set forth in Section 3.1(k)(ii) of the Company Disclosure Schedule, the Company and its Subsidiaries have valid and legal title to, a valid leasehold interest in, or rights to the, tangible personal property and assets which are shown on the Balance Sheet or acquired thereafter or used by the Company and its Subsidiaries in their business as presently conducted. The tangible assets and properties (whether real or personal) owned or leased by the Company and its Subsidiaries constitute all of the material tangible assets and properties necessary to operate the business of the Company and its Subsidiaries in the Ordinary Course of Business. Except for normal wear and tear, the machinery and equipment of the Company and its Subsidiaries necessary for the continued conduct of their respective businesses in accordance with current practices are in good operating condition and in a state of reasonable maintenance and repair.

(l) Intellectual Property .

 

19

(i) Section 3.1(l)(i) of the Company Disclosure Schedule sets forth a true, correct and complete list of all of the patents and patent applications (including all provisionals, continuations, continuations in part, divisionals, extensions, patents of addition, reissues, substitutions, confirmations, registrations, revalidations, reexamination certificates, and renewals and additions of or to any of the foregoing), trademark registrations and applications for registration of trademarks, copyright registrations and applications for registration of copyrights, and domain name registrations and applications for registrations of domain names, in each case, owned or held by the Company or any of its Subsidiaries (collectively, the “ Company Registered Intellectual Property ”), and all Intellectual Property that is licensed to the Company or any of its Subsidiaries and that is material to the business of the Company and its Subsidiaries, as currently conducted (the “ Third Party Licensed Intellectual Property ”).

(ii) Except as set forth in Section 3.1(l)(ii) of the Company Disclosure Schedule: (A) the Company and/or its Subsidiaries own, control, license, sublicense or otherwise possess sufficient rights to use all Intellectual Property that is utilized in the business of, respectively, the Company or such Subsidiaries as currently conducted; (B) all Intellectual Property owned by the Company and/or its Subsidiaries (the “ Company Intellectual Property ”) is free and clear of all Liens, except Permitted Liens; (C) no Proceedings have been asserted in writing, are pending, or, to the Knowledge of the Company, have been threatened against Company or its Subsidiaries challenging any of the foregoing entities’ ownership of or right to use any of the Company Intellectual Property or any of the Third Party Licensed Intellectual Property; (D) to the Knowledge of the Company, the Company Intellectual Property is enforceable, subsisting and valid, and has not been adjudicated invalid or unenforceable in whole or in part; (E) to the Knowledge of the Company, the operation of the business of the Company and its Subsidiaries as currently conducted, the use of any Company Intellectual Property in connection therewith, or the use of any Third Party Licensed Intellectual Property, in connection therewith, do not infringe, dilute, or misappropriate or otherwise violate any Intellectual Property owned by third parties; (F) to the Knowledge of the Company, no third party is engaging in any activity that infringes, dilutes, or misappropriates the Company Intellectual Property, and neither Company nor any of its Subsidiaries have any pending Proceeding that any third party is engaging in any activity that infringes, dilutes, or misappropriates or otherwise violates the Company Intellectual Property; (G) each of the Company and its Subsidiaries has taken reasonable measures to maintain and protect its Company Intellectual Property (including the Company Registered Intellectual Property), and has maintained the confidentiality of its trade secrets and other confidential Company Intellectual Property, and (1) to the Knowledge of the Company, there has been no misappropriation of any trade secrets or other confidential Company Intellectual Property, (2) no employee, independent contractor, or agent of the Company or its Subsidiaries has misappropriated any trade secrets or other confidential Intellectual Property of any Person and (3) to the Knowledge of the Company, no employee, independent contractor, or agent of the Company or its Subsidiaries is in default or breach of any term of any employment agreement, nondisclosure agreement, assignment of invention agreement or similar agreements; (H) the Company and its Subsidiaries have sufficient rights to access and use the computer systems, networks, hardware, software, databases, and related equipment used in connection with the operation of the business (the “ Business IT Systems ”), and the Company and its Subsidiaries have taken commercially reasonable steps to secure the Business IT Systems from unauthorized access or use; (I) neither Company nor any of its Subsidiaries has granted any material license or other right to any Person with respect to the Company Intellectual Property; and (J) the

 

20

consummation of the transactions contemplated by this Agreement will not result in the termination or impairment of any Company Intellectual Property.

Notwithstanding any other representations and warranties in this Agreement, the representations and warranties in this Section 3.1(l) and those relating to IP Contracts in Section 3.1(m) shall be deemed the only representations and warranties in this Agreement with respect to matters relating to Intellectual Property.

(m) Contracts . Section 3.1(m) of the Company Disclosure Schedule sets forth a complete and correct list as of the date of this Agreement of all of the following Contracts to which the Company or any of its Subsidiaries is a party or under which the Company or any of its Subsidiaries may be liable: (i) any Contract with any current director or shareholder, any Contract executed within in the last three years with any former director or shareholder, and any material Contract with any consultant, agent or other representative, of the Company or any of its Subsidiaries or with an entity in which any of the foregoing is a controlling person or has an interest; (ii) any Contract for any joint venture, partnership or similar arrangement; (iii) mortgages, indentures, loan or credit agreements, security agreements and other agreements and instruments relating to the borrowing of money or extension of credit in excess of $300,000; (iv) any Contract (including, with respect to purchase orders, a list of purchase orders) for the sale or purchase of goods or performance of services by or with any customer or vendor (or any group of related customers or vendors) that had or is reasonably expected to have annual aggregate payments exceeding $300,000; (v) lease agreements for machinery and equipment, motor vehicles, or furniture and office equipment or other personal property by or with any vendor (or any group of related vendors) that had or is reasonably expected to have annual aggregate payments exceeding $300,000; (vi) any performance guaranties, performance, bid or completion bonds, surety and appeal bonds, return of money bonds, and surety or indemnification agreements; (vii) any custom bonds and standby letters of credit; (viii) any IP Contracts; (ix) any employment agreement that has a future liability (A) in any one year greater than $100,000, or (B) during the term of such agreement in excess of $200,000, and is not terminable by the Company or any of its Subsidiaries by notice of not more than thirty (30) days for a cost of less than $50,000; (x) all recruiter, distributor, dealer, agency, sales promotion, market research, marketing consulting and advertising Contracts that had or is reasonably expected to have annual aggregate payments exceeding $300,000; (xi) any purchase or sale Contract entered into by the Company or any of its Subsidiaries relating to the acquisition or divestiture of a business during the past five (5) years; (xii) any Contract (including any so-called take-or-pay or keepwell agreements) under which (A) any Person other than the Company or a Subsidiary, has directly or indirectly guaranteed indebtedness, Liabilities or obligations of the Company or a Subsidiary or (B) the Company or its Subsidiary has directly or indirectly guaranteed indebtedness, Liabilities or obligations of any Person, other than the Company or any Subsidiary (in each case other than endorsements for the purpose of collection in the Ordinary Course of Business and any Contract that had or is reasonably expected to have annual aggregate payments less than $300,000); (xiii) any Contract granting a Lien upon any assets owned by the Company or any of its Subsidiaries other than Liens described in clauses (iv), (vi) and (ix) of the definition of Permitted Liens; (xiv) any Contract outside the Ordinary Course of Business to which the Company or any Subsidiary is a party which cannot be terminated by the Company or any of its Subsidiaries on notice of thirty (30) days or less and without payment by the Company or any of its Subsidiaries of less than $20,000 upon such termination; (xv) any Contract

 

21

containing covenants of the Company or any of its Subsidiaries not to compete in any line of business or with any Person in any geographical area; and (xvi) any Contract which includes or constitutes a power of attorney.

All of the foregoing are collectively referred to in this Agreement as the “ Company Material Contracts .” Each Company Material Contract is enforceable against the Company or its Subsidiary and, to the Knowledge of the Company, each other Person that is a party thereto in accordance with its terms. Except as set forth in Section 3.1(m) of the Company Disclosure Schedule, there does not exist under any Company Material Contract any default or condition or event that, after notice or lapse of time or both, would constitute a default on the part of the Company or such Subsidiary or, to the Knowledge of the Company, on the part of any other parties to such Company Material Contract, except for such defaults, conditions or events that would not result in a Material Adverse Effect. Section 3.1(m) of the Company Disclosure Schedule lists each Company Material Contracts required to be described in, or filed as an exhibit to, any SEC Report. The Company has made available to Parent true, correct and complete copies of all Company Material Contracts.

(n) Tax Matters . Except as set forth in Section 3.1(n)(i) of the Company Disclosure Schedule, (i) the Company and each of its Subsidiaries, and any consolidated, combined, unitary or aggregate group for tax purposes of which the Company or any of its Subsidiaries is or has been a member has timely filed all material Tax Returns required to be filed by it in the manner provided by law (taking into account all applicable extensions) and such Tax Returns are true, complete, and correct in all material respects, and all Taxes shown to be due and payable on the Tax Returns or on subsequent assessments with respect thereto have been paid in full on a timely basis. No material amount of other Taxes are payable by the Company or any of its Subsidiaries with respect to items or periods covered by such Tax Returns (whether or not shown on or reportable on such Tax Returns) or with respect to any period prior to the date of the Balance Sheet, except for Taxes that have been adequately provided for on the Balance Sheet. Neither the Company nor any of its Subsidiaries has incurred any liability for Taxes since the date of the Balance Sheet other than as a result of operations in the Ordinary Course of Business. The Company and each of its Subsidiaries has withheld and paid over all material Taxes required to have been withheld and paid over, and complied in all material respects with all information reporting and backup withholding requirements, including maintenance of required records with respect thereto, in connection with amounts paid or owing to any employee, creditor, independent contractor, or other third party. There are no liens on any of the assets of the Company or any of its Subsidiaries with respect to Taxes, other than liens for Taxes not yet due and payable or for Taxes that the Company or any of its Subsidiaries is contesting in good faith through appropriate proceedings and for which appropriate reserves have been established.

(ii) Except as set forth in Section 3.1(n)(ii) of the Company Disclosure Schedule, Parent has been furnished by the Company and each of its Subsidiaries true, complete and correct copies of (i) relevant portions of income tax audit reports, statements of deficiencies, closing or other agreements received by the Company and each of its Subsidiaries relating to Taxes received since December 31, 2001, and (ii) all federal and state income or franchise tax returns for the Company and each of its Subsidiaries for all periods ending on and after December 31, 2001. Except as set forth in Section 3.1(n)(ii) of the Company Disclosure

 

22

Schedule, neither the Company nor any of its Subsidiaries has ever been a member of an affiliated group filing consolidated returns other than a group for which the Company or FastenTech was the common parent. Neither the Company nor any of its Subsidiaries has taxable nexus with any state, local, territorial or foreign taxing jurisdiction prior to the Closing other than those for which all Tax Returns have been furnished or made available to Parent.

(iii) Except as set forth in Section 3.1(n)(iii) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is the subject of any audit or examination with respect to Taxes, nor has any such audit been threatened (either in writing or orally). No deficiencies exist or have been asserted (either in writing or orally) with respect to Taxes of the Company or any of its Subsidiaries, and neither the Company nor any of its Subsidiaries has received notice (either in writing or orally) that it has not filed a Tax Return or paid Taxes required to be filed or paid by it. Neither the Company nor any of its Subsidiaries is a party to any action or proceeding for assessment or collection of Taxes, nor has such event been asserted or threatened (either in writing or orally) against any of its Subsidiaries or any of their assets. No material issues were raised by the relevant taxing authority during any prior period audit or examination that might reasonably be expected to recur and result in a deficiency in a taxable period other than the taxable period to which such audit or examination related. Neither the Company nor any of its Subsidiaries has waived any statute of limitations with respect to Taxes. The Company and each of its Subsidiaries has never participated in a “listed transaction” within the meaning of Treasury Regulations Section 1.6011-4T(b)(2) (determined without regard to whether such transaction is a “reportable transaction” under such regulation).

(iv) Except as set forth in Section 3.1(n)(iv) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to any tax sharing agreement or Tax indemnity agreement and neither the Company nor any of its Subsidiaries has assumed the Tax liability of any other person under contract. Neither the Company nor any of its Subsidiaries will be required to recognize for income tax purposes in a taxable period ending after Closing any amount of income or gain that economically accrued in a Pre-Closing Tax Period, whether as a result of the installment method of accounting, the completed contract method of accounting, the cash method of accounting, or otherwise. Neither the Company nor any of its Subsidiaries will be required in a taxable period ending after Closing to include any amount in income pursuant to Section 481 of the Code (or any comparable provision of state, local or foreign law), by reason of a change in accounting method or otherwise, as a result of actions taken prior to Closing.

(v) Neither the Company nor any of its Subsidiaries is a party to any safe harbor lease within the meaning of Section 168(f)(8) of the Code, as in effect prior to amendment by the Tax Equity and Fiscal Responsibility Act of 1982. Neither the Company nor any of its Subsidiaries is, and has ever been, a United States real property holding corporation within the meaning of Section 897(c)(2) of the Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code. Neither the Company nor any of its Subsidiaries has entered into any compensatory agreements with respect to the performance of services which payment thereunder would result in a nondeductible expense to the Company or any of its Subsidiaries pursuant to Section 280G of the Code or an excise tax to the recipient of such payment pursuant to Section 4999 of the Code. Neither the Company nor any of its Subsidiaries has been the “distributing corporation” (within the meaning of Section 355(c)(2) of the Code)

 

23

with respect to a transaction described in Section 355 of the Code within the 3-year period ending as of the date of this Agreement. Neither the Company nor any of its Subsidiaries has participated in an international boycott as defined in Code Section 999. Neither the Company nor any of its Subsidiaries has agreed, or is required to make, any adjustment under Code Section 481(a) by reason of a change in accounting method or otherwise. Except as set forth in Section 3.1(n)(v) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has a permanent establishment in any foreign country, as defined in any applicable Tax treaty or convention between the United States of America and such foreign country. The Company and its Subsidiaries have complied in all material respects with all applicable reporting and record maintenance requirements of Section 6038A of the Code. Neither the Company nor any of its Subsidiaries is a party to any joint venture, partnership or other agreement, contract or arrangement (either in writing or orally, formally or informally) which could be treated as a partnership for federal income tax purposes. The Company and each of its Subsidiaries is in compliance with the terms and conditions of any applicable Tax exemptions, Tax agreements or Tax orders of any government to which it may be subject or which it may have claimed.

(vi) Neither the Company nor any of its Subsidiaries has any net operating losses or other tax attributes presently subject to limitation under Code Sections 382, 383, or 384, without regard to the transactions contemplated by this Agreement.

Notwithstanding any other representations and warranties in this Agreement, the representations and warranties in Sections 3.1(n) and 3.1(o) shall be deemed the only representations and warranties in this Agreement with respect to matters relating to Taxes.

(o) Benefit Plans . (i) The only Benefit Plans presently in effect, or pursuant to which the Company, any of its Subsidiaries or any ERISA Affiliate may have any actual or contingent liability in excess of $50,000 in the aggregate, that are or were maintained by, or contributed to by, or required to be maintained by or contributed to by the Company, any Subsidiary or any ERISA Affiliate for the benefit of employees or former employees of the Company or any Subsidiary, including any multiemployer plan as defined in Section 3(37) of ERISA, are those listed in Section 3.1(o)(i) of the Company Disclosure Schedule. A true, correct and complete copy of each Benefit Plan with respect to which the Company or any Subsidiary has or could reasonable be expected to have an annual continuing liability in excess of $50,000, and, where applicable, a summary plan description, a copy of the most recent IRS determination or opinion letter received, any related trust agreements, insurance contracts, insurance policies or other documents of any funding arrangements, any notices to or from the IRS or any office or representative of the DOL or any similar Governmental Authority relating to any material compliance issues in respect of any such Benefit Plan, the most recent IRS Forms 5500 and PBGC Forms 1 filed, and all material amendments, modifications or supplements to any such document with respect to each such Benefit Plan, has been made available to Parent.

(ii) Except as set forth in Section 3.1(o)(ii) of the Company Disclosure Schedule, each Benefit Plan is in compliance in all material respects with the applicable requirements of applicable law, including ERISA and the Code and has been administered in accordance with its terms.

 

24

(iii) Section 3.1(o)(iii) of the Company Disclosure Schedule contains a true, correct and complete list of (A) each Contract maintained or entered into by the Company or any of its Subsidiaries and relating to the Company Employees or other persons providing services to the Company or any of its Subsidiaries which provides for severance payments or benefits, and (B) each Contract maintained or entered into by the Company or any of its Subsidiaries with or relating to Company Employees which provides for acceleration of benefits or payments upon a change in control. Copies of each such Contract have been made available to Parent.

(iv) Each Benefit Plan that is intended to be qualified under Section 401(a) of the Code either is a prototype plan with respect to which the IRS has issued an opinion letter approving the form of such plan upon which the Company or the relevant ERISA Affiliate is entitled to rely, or has received a determination letter from the IRS that it is so qualified, and, to the Knowledge of the Company, no fact or event has occurred since the date of such opinion letter or determination letter that could reasonably be expected to adversely affect the qualified status of any such Benefit Plan.

(v) Except as disclosed in Section 3.1(o)(v) of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate contributes to, or has within the past six (6) years contributed to, or has within the past six (6) years been required to contribute to, any multiemployer plan, as defined in Section 3(37) of ERISA. With respect to each multiemployer plan listed in Section 3.1(o)(i) of the Company Disclosure Schedule, neither the Company nor any ERISA Affiliate has incurred any material withdrawal liability, within the meaning of Section 4201 of ERISA, which has not been satisfied, nor does the Company or any ERISA Affiliate have any potential material withdrawal liability arising from a transaction described in Section 4204 of ERISA. Except as would not have a Material Adverse Effect, all required contributions, withdrawal liability payments or other payments of any type that the Company or any ERISA Affiliate has been obligated to make to any such multiemployer plan have been duly and timely made. Neither the Company nor, to the Knowledge of the Company, any ERISA Affiliate presently expects to withdraw in a complete or partial withdrawal (within the meaning of Section 4203 and 4205 of ERISA) from any multiemployer plan. Neither the Company nor, to the Knowledge of the Company, any ERISA Affiliate has received notice from the PBGC or from any such multiemployer plan to the effect that any such plan is in reorganization within the meaning of Section 4241 of ERISA so as to result in any material increase in contributions by the Company or any ERISA Affiliate under Section 4243 of ERISA or in material liability to the Company or any ERISA Affiliate.

(vi) Except as set forth in Section 3.1(o)(vi) of the Company Disclosure Schedule, all contributions to, and payments from, the Benefit Plans which may have been required to be made in accordance with the Benefit Plans and, when applicable, Section 302 of ERISA or Section 412 of the Code, or any other provision of ERISA or the Code, have been in all material respects timely made. All such contributions with respect to the period ending on the date of this Agreement either have been paid or properly accrued on the Balance Sheet.

(vii) Except as set forth in Section 3.1(o)(vii) of the Company Disclosure Schedule all Forms 5500, Benefit Plan financial statements, summary plan descriptions and summaries of material modifications with respect to the Benefit Plans required

 

25

to be filed with any government agency or distributed to any Benefit Plan participant have been duly and timely filed or distributed and are accurate and complete in all material respects.

(viii) The Company and each ERISA Affiliate have complied with the notice and continuation coverage requirements of Section 4980B of the Code and the regulations thereunder, including with respect to any “M&A qualified beneficiaries” as defined by Treasury Regulation Section 54.4980B-9, with respect to each Benefit Plan that is, or was during any taxable year of the Company or any ERISA Affiliate for which the statute of limitations on the assessment of federal income taxes remains open, by consent or otherwise, a group health plan within the meaning of Section 5000(b)(1) of the Code.

(ix) Except as set forth in Section 3.1(o)(ix) of the Company Disclosure Schedule, there are no pending investigations by any Governmental Authority involving the Benefit Plans, no termination proceedings involving the Benefit Plans, and no pending, or to the Knowledge of the Company threatened, claims (except for claims for benefits payable in the normal operation of the Benefit Plans), suits or Proceedings against any Benefit Plan or asserting any rights or claims to benefits under any Benefit Plan which could give rise to any material liability of the Company or any Subsidiary nor, to the Knowledge of the Company, are there any facts which could give rise to any such material liability in the event of any such investigation, claim, suit or Proceeding.

(x) Except as set forth in Section 3.1(o)(x) of the Company Disclosure Schedule, as of the Effective Time, unpaid or unreimbursed claims for benefits under any self-funded Benefit Plan which is a “welfare plan” under Section 3(1) of ERISA do not exceed an amount reasonably expected to have a Material Adverse Effect and an excess loss insurance policy with a terminal liability rider is in effect with respect to the liability under each such Benefit Plan.

(xi) (A) Neither the Benefit Plans, the Company, any Subsidiary of the Company nor, to the Knowledge of the Company, any employee of the Company or any of its Subsidiaries, any trusts created thereunder, nor any trustee, administrator or other fiduciary thereof, has engaged in a “prohibited transaction” (as such term is defined in Section 4975 of the Code or Section 406 of ERISA) which could subject any thereof to the tax or penalty on prohibited transactions imposed by such Section 4975 or the sanctions imposed under Title I of ERISA; and (B) none of the Benefit Plans listed in Section 3.1(o)(i) of the Company Disclosure Schedule has been terminated nor have there been any “reportable events” (as defined in Section 4043 of ERISA and the regulations thereunder), other than events with respect to which the notice requirement has been waived, with respect to any such Benefit Plans.

(xii) Except as set forth in Section 3.1(o)(xii) of the Company Disclosure Schedule, or as would not have a Material Adverse Effect, neither the Company nor any ERISA Affiliate has incurred any material liability to the Pension Benefit Guaranty Corporation (“ PBGC ”) with respect to any Benefit Plan subject to Title IV of ERISA, other than for the payment of premiums, which have been paid when due. No Benefit Plan has applied for or received a waiver of the minimum funding standards imposed by Section 412 of the Code. The Company has made available to Parent the most recent actuarial report with respect to each Benefit Plan that is a defined benefit pension plan, as defined by Section 3(35) of ERISA. To the

 

26

Knowledge of the Company, no event has occurred since the date of any such actuarial report that had, or is likely to have, a Materially Adverse Effect on the ratio of plan assets to the actuarial present value of plan obligations for accumulated benefits shown in such report.

(xiii) Except as set forth in Section 3.1(o)(xiii) of the Company Disclosure Schedule, no Benefit Plan that is a “welfare benefit plan” within the meaning of Section 3(1) of ERISA provides benefits to former employees of the Company or its ERISA Affiliates, other than pursuant to Section 4980B of the Code or any similar state, local or foreign law.

(xiv) Except as set forth in Section 3.1(o)(xiv) of the Company Disclosure Schedule, each Benefit Plan that is subject to Section 409A of the Code has been in all material respects operated and administered in good faith compliance with Section 409A of the Code from the period beginning December 31, 2004 through the date hereof.

(xv) Non-U.S. Benefit Plans .

(1) German Benefit Plans .

(A) Except for (A) employee benefits referenced in this Section 3.1(o), (B) employer’s contributions to mandatory benefit schemes under applicable law, (C) sick pay for a period to which any employee is entitled under mandatory law or under applicable collective agreements as listed on Section 3.1(p)(i) of the Company Disclosure Schedule or under any individual agreement the terms of which have been disclosed to Parent prior to signing of this Agreement, (D) the individual commitments and Benefit Plans set forth in the Company Disclosure Schedule together with their relevant conditions (for each beneficiary: amount of the granted benefits, amount of the granted contributions to pension funds, to insurance companies or to any other external provider, date of grant, indication of any agreed non-forfeitable rights or expectancies, indication of any agreed indexation or adjustment of pension payments), the Subsidiaries of the Company located in Germany (the “ German Subsidiaries ”) are under no obligation to pay, and have not agreed to pay or are not paying on a customary or voluntary basis (A) any pension (including retirement and early-retirement payments, disability pensions and pensions for surviving spouses or dependants, whether forfeitable or non-forfeitable and irrespective whether on the basis of current pension payments or on the basis of a one time capital payment) or any other retirement, death, sickness, disability or medical benefit or (B) any contributions to any pension fund, insurance company or other entity with respect to any such pension or benefit to any current or former employees or managing directors.

(B) True, correct and complete copies of any such pension plans, old-age and other benefit programs and of any other pension commitments have been made available to Parent prior to the date of this Agreement.

(C) Any such pension or other obligations of the German Subsidiaries under such commitments and plans are fully reflected on the respective Balance Sheets for the year as of September 30, 2006 in accordance with the relevant accounting principles in the highest amount possible under the applicable law. Attached to the Company

 

27

Disclosure Schedule is a copy of the latest actuarial report with respect to all pension obligations of the German Subsidiaries for the year as of September 30, 2006, which sets forth a true, correct and complete evaluation of all pension obligations of the German Subsidiaries.

(2) Other Non-U.S. Benefit Plans . Except as set forth in the Company Disclosure Schedule and exclusive of any employee benefit plans, programs, or arrangements described in Section 3.1(o)(xv)(1) above, there are no material pension, welfare, bonus, stock purchase, stock ownership, stock option, deferred compensation, incentive, severance, termination or other compensation plan or arrangement, or other employee fringe benefit plan presently maintained by, or contributed to by the Company or any of its Subsidiaries for the benefit of any employee of the Company or any of its Subsidiaries, including any such plan required to be maintained or contributed to by the law of the relevant jurisdiction, which would be described in Section 3.1(o)(i) above, but for the fact that such plans are maintained outside the jurisdiction of the United States (the “ Non-U.S. Benefit Plans ”). The Company has furnished or made available to Parent copies, summaries or written descriptions of each Non-U.S. Benefit Plan. Each Non-U.S. Benefit Plan has been administered and is in compliance with its terms and applicable law in all material respects. With respect to all Non-U.S. Benefit Plans, all employer and employee contributions to each Non-U.S. Benefit Plan required by law or by the terms of such Non-U.S. Benefit Plan have been timely made (except for any instances of noncompliance that would not have a Material Adverse Effect), or, if applicable, accrued in accordance with normal accounting practices, and a pro rata contribution for the period prior to and including the date of this Agreement has made or accrued; each Non-U.S. Benefit Plan required to be registered has been registered and maintained in good standing with applicable Governmental Authorities and is approved by any applicable tax authorities to the extent such approval is available. There are no actions, suits or claims (other than routine claims for benefits) pending or, to the Knowledge of the Company, threatened with respect to any of its Non-U.S. Benefit Plan that could result in any material liability for Company or any of its Subsidiaries or, from and after the Closing Date, any material liability for Parent.

Notwithstanding any other representations and warranties in this Agreement, the representations and warranties in this Section 3.1(o) shall be deemed the only representations and warranties in this Agreement with respect to matters relating to Benefit Plans.

(p) Labor Matters . (i) Except as set forth in Section 3.1(p)(i) of the Company Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement, collective agreement or other labor-related agreement with any labor union or labor organization with respect to Company Employees. The Company and each of its Subsidiaries are in material compliance with the terms, conditions and obligations contained in each such agreement set forth in Section 3.1(p)(i) of the Company Disclosure Schedule.

(ii) The German Subsidiaries are neither currently member of any employer’s association nor were a member of any employer’s association in the past five (5) years except as set forth in Section 3.1(p)(ii) of the Company Disclosure Schedule. Section 3.1(p)(ii) of the Company Disclosure Schedule contains a complete and correct list of all bodies of employee representatives (including supervisory boards) of the German Subsidiaries. There are no agreements stipulating a composition of these bodies which differs from the composition

 

28

required by law. Except as set forth in Section 3.1(p)(ii) of the Company Disclosure Schedule, no works agreements, general works agreements, group works agreements or other agreements with bodies of employee representation apply to the German Subsidiaries and/or employees of the German Subsidiaries. True, complete and correct copies of these works agreements, general works agreements, group works agreements or other agreements with bodies of employee representation have been made available to Parent prior to the date of this Agreement. The German Subsidiaries have complied with all provisions of such applicable works agreements, general works agreements, group works agreements or other agreements with bodies of employee representation except as would not have a Material Adverse Effect. Except as set forth in Section 3.1(p)(ii) of the Company Disclosure Schedule, no company exercises (betriebliche Übungen), general agreements and/or other general labor law agreements apply to the German Subsidiaries and or employees of the German Subsidiaries.

(iii) There is no labor strike, work stoppage, work slowdown, or labor disturbance pending or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries. The Company has not experienced a labor strike, work stoppage or work slowdown at any time during the five (5) years immediately preceding the date of this Agreement.

(iv) There are no grievances, unfair labor practice complaints, or other Proceedings pending or, to the Knowledge of the Company, threatened relating to any labor, safety or discrimination matters involving an