Dated as of October 31,
2006
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DEFINITIONS
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1
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Certain Defined
Terms
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1
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Table of
Definitions
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6
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Construction
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8
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PURCHASE AND
SALE
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9
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Purchase and
Sale of Assets
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9
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Excluded
Assets
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10
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Assumed
Liabilities
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11
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Excluded
Liabilities
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12
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Consideration
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13
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Closing
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13
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Transactions to
be Effected at the Closing
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13
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Risk of
Loss
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14
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Post-Closing
Adjustment of Purchase Price
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14
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Allocation
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16
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REPRESENTATIONS
AND WARRANTIES OF THE SELLER
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17
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Organization
and Qualification
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17
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Authority
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17
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No Conflict;
Required Filings and Consents
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17
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Transferred
Assets
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18
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Financial
Statements; No Undisclosed Liabilities
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19
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Absence of
Certain Changes or Events
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20
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Compliance with
Law; Permits
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20
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Litigation
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21
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Employee
Plans
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21
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Labor and
Employment Matters
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21
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Insurance
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22
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Real
Property
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22
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Intellectual
Property
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22
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Taxes
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24
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Environmental
Matters
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26
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Material
Contracts
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26
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Receivables
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28
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Customers and
Suppliers; Product Retrievals
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28
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Inventory
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29
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Tangible
Personal Property
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29
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Brokers
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29
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EMS
Brazil
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29
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WARN
Act
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30
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i
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REPRESENTATIONS
AND WARRANTIES OF THE BUYER
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30
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Organization
and Qualification
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30
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Authority
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30
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No Conflict;
Required Filings and Consents
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31
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Financing
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31
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Brokers
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32
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Litigation
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32
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COVENANTS
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32
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Conduct of
Business Prior to the Closing
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32
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Covenants
Regarding Information
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33
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Update of
Disclosure Schedules; Knowledge of Breach
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34
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Notification of
Certain Matters
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35
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Intercompany
Arrangements
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35
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Employee
Benefits
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35
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Confidentiality
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38
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Consents;
Further Assurances
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38
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Corporate
Name
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40
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Refunds and
Remittances
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40
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No
Solicitation
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40
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Agreement Not
to Compete
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41
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Bulk Transfer
Laws
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41
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Public
Announcements
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41
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SelectaCell
Payments
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42
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Authority to
Collect Receivables
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42
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Product
Warranties
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42
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Product
Authorizations
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43
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TAX
MATTERS
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43
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Liability for
Taxes
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43
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Assistance and
Cooperation
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44
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Section 338(g)
Election
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45
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CONDITIONS TO
CLOSING
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45
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General
Conditions
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45
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Conditions to
Obligations of the Seller
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45
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Conditions to
Obligations of the Buyer
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46
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INDEMNIFICATION
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46
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Survival of
Representations, Warranties and Covenants
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46
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Indemnification
by the Seller
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47
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Indemnification
by the Buyer
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47
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Procedures
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48
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ii
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Limits on
Indemnification
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49
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Exclusivity
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50
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Disclaimer of
Implied Warranties
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51
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Adjustment to
Purchase Price
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51
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TERMINATION
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51
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Termination
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51
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Effect of
Termination
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52
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GENERAL
PROVISIONS
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52
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Fees and
Expenses
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52
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Amendment and
Modification
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52
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Waiver
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52
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Notices
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53
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Entire
Agreement
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53
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No Third-Party
Beneficiaries
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54
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Governing
Law
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54
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Dispute
Resolution
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54
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Disclosure
Generally
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54
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Personal
Liability
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54
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Assignment;
Successors
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55
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Enforcement
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55
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No Presumption
Against Drafting Party
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55
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Severability
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55
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Waiver of Jury
Trial
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55
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Counterparts
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55
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Facsimile
Signature
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56
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Time of
Essence
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56
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Exchange
Rate
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56
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iii
This ASSET
PURCHASE AGREEMENT , dated as of October 31, 2006 (this
“ Agreement ”), is between ANDREW
CORPORATION , a Delaware corporation (the “ Buyer
”), and EMS TECHNOLOGIES, INC. , a Georgia corporation
(the “ Seller ”). Each of the Buyer and the
Seller is referred to individually in this Agreement as a “
Party ” and collectively as the “ Parties
.”
A. The
Seller, through its EMS Wireless division (including its Subsidiary
EMS Brazil), is engaged in the business of designing, manufacturing
and marketing a line of radio frequency products and services,
including base-station antennas, repeaters and accessories and
related maintenance and services used by service providers in
cellular and PCS telecommunications networks, primarily in the
United States and Brazil (the “ Business
”).
B. The Seller
wishes to sell to the Buyer, and the Buyer wishes to purchase from
the Seller, the Business, and in connection therewith the Buyer is
willing to assume certain specified liabilities and obligations of
the Seller relating thereto, all upon the terms and subject to the
conditions set forth in this Agreement.
In consideration
of the foregoing, the mutual covenants and agreements contained in
this Agreement, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, agree as
follows:
DEFINITIONS
Section 1.1
Certain Defined Terms . For purposes of this
Agreement:
“
Action ” means any claim, action, suit, arbitration or
proceeding by or before any Governmental Authority.
“
Affiliate ”, with respect to any specified Person,
means any other Person that directly, or indirectly through one or
more intermediaries, Controls, is Controlled by, or is under common
Control with, such specified Person.
“
Ancillary Agreements ” means the Bill of Sale, the
Intellectual Property Assignments, the Assumption Agreement and the
Transition Services Agreement.
“
Assumption Agreement ” means an instrument of
assignment and assumption, in substantially the form set forth in
Exhibit A , pursuant to which the Buyer shall assume
all of the liabilities of the Seller as of the Closing Date that
are included in the Assumed Liabilities.
1
“
Bill of Sale ” means a bill of sale, in substantially
the form set forth in Exhibit B , transferring to the
Buyer all of the tangible personal property owned or held by the
Seller as of the Closing Date that is included in the Transferred
Assets.
“
Business Day ” means any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by
Law to be closed in the city of Atlanta, Georgia or the city of
Chicago, Illinois.
“
Business Employees ” means all individuals set forth
on Annex 1 .
“
Buyer Material Adverse Effect ” means any event,
change, circumstance, effect or state of facts that is materially
adverse to the ability of the Buyer to perform its obligations
under this Agreement or to consummate the transactions contemplated
by this Agreement.
“
Code ” means the Internal Revenue Code of 1986, as
amended through the date hereof.
“
Control ”, including the terms “Controlled
by” and “under common Control with”, means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, as trustee or executor,
as general partner or managing member, by contract or
otherwise.
“
Employee Plans ” means all “employee benefit
plans” within the meaning of Section 3(3) of ERISA, all
formal written plans and all other compensation and benefit plans,
contracts, policies, programs and arrangements of the Seller (other
than routine administrative procedures) in connection with the
Business in effect as of the date of this Agreement, including all
pension, profit sharing, savings and thrift, bonus, stock bonus,
stock option or other cash or equity-based incentive or deferred
compensation, severance pay and medical and life insurance plans in
which any of the Business Employees or their dependents
participate.
“
EMS Brazil ” means EMS Wireless do Brasil Ltda.,
enrolled with the National Legal Entities Registry (CNPJ) in
Brazil under No. 03.945.567/0001-29.
“
Encumbrance ” means any charge, claim, mortgage, lien,
option, pledge, security interest or other restriction of any
kind.
“
Environmental Laws ” means any Laws of any
Governmental Authority or applicable jurisdiction relating to
protection and clean up of the air, the land, the water and the
environment and activities or conditions related thereto including
those relating to the generation, handling, disposal,
transportation, or release of or exposure to Hazardous
Material.
“
Environmental Permits ” means all Permits under any
Environmental Law reasonably required in the operation or conduct
of the Business as currently conducted.
“
Final Working Capital ” means the current assets of
the Business less the current liabilities of the Business (in each
case including EMS Brazil on a consolidated basis, including cash
and cash equivalents of EMS Brazil) as of 11:59 p.m. Atlanta,
Georgia time on the day
2
immediately
prior to the Closing Date, prepared in accordance with the
guidelines on Exhibit C , and as reflected on the Working
Capital Schedule.
“
First Commercial Sale ” means, with respect to the
SelectaCell Products, the date any such product is first sold by
the Buyer or an Affiliate of the Buyer to a non-affiliated third
party.
“
GAAP ” means United States generally accepted
accounting principles as in effect on the date of this
Agreement.
“
Governmental Authority ” means any United States or
non-United States national, federal, state or local governmental,
regulatory or administrative authority, agency or commission or any
judicial or arbitral body.
“
Hazardous Material ” means any pollutant, contaminant,
waste, hazardous substance, hazardous waste, toxic substance,
petroleum or petroleum-based substance or waste, asbestos or
asbestos-containing materials, polychlorinated biphenyls, or any
other material or substance which is defined in, regulated under or
for which liability or standards of care are imposed by any
Environmental Law.
“
Intellectual Property ” means all intellectual
property rights arising under the Laws of the United States or any
other jurisdiction with respect to the following: (a) trade
names, trademarks and service marks (registered and unregistered),
domain names, trade dress and similar rights and applications to
register any of the foregoing (collectively, “ Marks
”); (b) patents and patent applications and rights in respect
of utility models or industrial designs (collectively, “
Patents ”); (c) copyrights and registrations and
applications therefor (collectively, “ Copyrights
”); (d) know-how, ideas, inventions, invention records
or disclosures, discoveries, methods, processes, technical data,
specifications, research and development information, technology,
Software, data bases, test information and other proprietary or
confidential information, including marketing strategies and
customer lists that are the subject of reasonable efforts under the
circumstances to maintain the confidentiality thereof and derive
economic value from not being generally known (collectively,
“ Trade Secrets ”).
“
Intellectual Property Assignments ” means instruments
of assignment in substantially the form of Exhibit D ,
transferring to the Buyer all of the Owned Business Registered
IP.
“
Known ,” with respect to the Seller or the Buyer,
means the actual or constructive knowledge of the persons listed
under the appropriate caption in Schedule 1.1(a) of the
Disclosure Schedules, including the knowledge such persons would
have following reasonable inquiry, as of the date the applicable
representation or warranty is made or deemed made hereunder (or,
with respect to a certificate delivered pursuant to this Agreement,
as of the date of delivery of such certificate).
“
Law ” means any statute, law (including common law),
ordinance, regulation, rule, code, injunction, judgment, decree or
order of any Governmental Authority.
“
LXE ” means LXE Inc., a Georgia
corporation.
3
“
Material Adverse Effect ” means any event, change,
circumstance, effect or state of facts that is materially adverse
to (a) the business, assets, condition (financial or
otherwise) or results of operations of the Business or (b) the
ability of the Seller timely to perform its obligations under the
Transaction Documents or timely to consummate the transactions
contemplated thereby; provided , however , that
“Material Adverse Effect” shall not include the effect
of any event, change, circumstance, effect, or state of facts
arising out of or attributable to any of the following, either
alone or in combination: (i) the base-station antenna and
repeater business generally, (ii) general economic or
political conditions in the United States or Brazil, (iii) the
public announcement of this Agreement or of the consummation of the
transactions contemplated by this Agreement or (iv) acts of
war (whether or not declared), sabotage or terrorism, military
actions or the escalation thereof or other force majeure events
occurring after the date of this Agreement, in each case, occurring
after the date hereof and, in the case of clauses (i),
(ii) and (iv), that does not materially and adversely affect
the Business in a manner that is substantially different from the
impact to the other businesses in the industry.
“
Net Sales ” means the sum of (a) the net sales
recognized with respect to the SelectaCell Products, by the Buyer
or any Affiliate of the Buyer (or any successor to the ownership of
the SelectaCell Products), to any non-Affiliate third party, for
all the units of such SelectaCell Products so sold, and
(b) any net licensing revenues recognized by the Buyer or any
Affiliate of the Buyer (or any successor to the ownership of the
technology associated with the SelectaCell Products) relating to
the license of the Intellectual Property included within the
SelectaCell Products in connection with the sale of SelectaCell
Products or any OEM program relating to the SelectaCell Products,
in each case, in accordance with United States generally accepted
accounting principles, applied on a basis consistent with the
Buyer’s past practice, as in effect at the time such net
sales or net revenues are recognized; provided ,
however , that Net Sales shall not be affected by payments
by the Buyer to the Seller pursuant to Section 5.15
.
“
Permitted Encumbrance ” means, with respect to any
Transferred Asset, (a) statutory liens for current Taxes not
yet due or the validity or amount of which is being contested in
good faith by appropriate proceedings, (b) mechanics’,
carriers’, workers’, repairers’ and other similar
liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the part
of the Seller for a period greater than 60 days, or the
validity or amount of which is being contested in good faith by
appropriate proceedings, or pledges, deposits or other liens
securing the performance of bids, trade contracts, leases or
statutory obligations (including workers’ compensation,
unemployment insurance or other social security legislation), (c)
zoning, entitlement, conservation restriction and other similar
land use and environmental regulations by Governmental Authorities
and (d) all exceptions, restrictions, easements, imperfections
of title, charges, rights of way and other Encumbrances that do
not, individually or in the aggregate, materially interfere with
the present use of such Transferred Asset in the Business as
presently conducted.
“
Person ” means an individual, corporation,
partnership, limited liability company, limited liability
partnership, syndicate, person, trust, association, organization or
other entity, including any Governmental Authority, and including
any successor, by merger or otherwise, of any of the
foregoing.
4
“
Products ” means any and all products manufactured,
marketed, distributed or sold by the Business prior to the Closing
Date.
“
Product Warranty Costs ” means all costs and expenses
reasonably incurred by the Buyer or any of its Affiliates from and
after the Closing Date, including manufacturing overhead but
excluding general and administrative overhead, to the extent
arising out of or resulting from any warranty obligations existing
with respect to the Products on the Closing Date, including any
such reasonable costs and expenses relating to refunds, repairs,
exchanges, adjustments or returns made by customers of the Business
with respect to such Products pursuant to rights under such
warranty obligations.
“
Purchase Price ” means $50,500,000.
“
Release ” means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of a Hazardous Material into the indoor or
outdoor environment or into or out of any property, including the
movement of Hazardous Material through or into the air, soil,
surface water, groundwater or other environmental media.
“
Restricted Activities ” means any of the development,
manufacture, distribution or sale of tower-mounted and other fixed
terrestrial base station antennas and fixed terrestrial indoor and
outdoor signal repeaters intended for use as part of, or in
connection with the use of, any terrestrial cellular or PCS
wireless telecommunications network, in each case, anywhere in
North America, Central America or South America; provided, however,
that, notwithstanding the foregoing, the Seller shall not be
prohibited from developing, manufacturing, distributing or selling
any product for end use by any government in military and defense
applications.
“
SelectaCell Patents ” means those Patents included
within the Transferred Assets identified in Exhibit E
.
“
SelectaCell Products ” means the product of the
Business known as the SelectaCell 1900 MHz indoor repeater and any
other indoor repeater product that is (a) covered by one or
more claims of the SelectaCell Patents and (b) derived from
and has substantially the same functional specifications as the
SelectaCell 1900 MHz indoor repeater.
“
Seller’s Product Warranty Share ” means
seventy-five percent (75%) of all Product Warranty Costs incurred
by the Buyer or any of its Affiliates with respect to any
individual product model (as determined by SKU number) or
component, or any particular design or manufacturing defect common
to multiple product models or components (a “ Significant
Warranty Event ”), during the two-year period immediately
following the Closing Date; provided , however , that
(a) the Seller shall not have any responsibility or liability
for such Product Warranty Costs with respect to any Significant
Warranty Event until the aggregate Product Warranty Costs with
respect to such Significant Warrant Event exceed $300,000, in which
case Seller’s Product Warranty Share shall be calculated from
the first dollar of the Product Warranty Costs associated with such
Significant Warranty Event, and (b) in no event shall the
aggregate amount of Seller’s Product Warranty Share for all
Significant Warranty Events exceed $1,200,000.
5
“
Software ” means computer software programs and
related documentation and materials, whether in source code, object
code or human readable form; provided , however ,
that Software does not include software that is available generally
through retail stores, distribution networks or is otherwise
subject to “shrink-wrap” license or
“click-through” agreements, including any software
pre-installed in the ordinary course of business as a standard part
of hardware, equipment or fixtures purchased by the Seller or EMS
Brazil and used in the Business.
“
Subsidiary ” of any Person means any other Person of
which an amount of the outstanding voting securities or other
voting equity interests sufficient to elect at least a majority of
its Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests) is
owned, directly or indirectly, by such first Person.
“
Target Working Capital Amount ” means $16,657,014,
which reflects the current assets and the current liabilities of
the Business (in each case including EMS Brazil on a consolidated
basis, but excluding cash and cash equivalents of EMS Brazil) as of
11:59 p.m. Atlanta, Georgia time on September 30, 2006,
prepared in accordance with the guidelines on Exhibit C
.
“
Tax ” (and, with correlative meaning, “
Taxes ”) means (a) any federal, state, local or
foreign income, gross receipts, property, sales, use, license,
excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, value added, transfer or excise tax, or
any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any Governmental Authority; and
(b) any liability of the Seller or EMS Brazil for the payment
of amounts described in clause (a) as a result of being a
member of an affiliated, consolidated, combined or unitary group or
as a result of any obligation of under any Tax sharing agreement or
Tax indemnity agreement.
“
Tax Return ” means any return, declaration, report,
statement, information statement and other document required to be
filed with respect to Taxes.
“
Transaction Documents ” means this Agreement, the
Ancillary Agreements and the documents delivered in connection
herewith and therewith.
“
Transition Services Agreement ” means the agreement,
in substantially the form set forth in Exhibit F ,
pursuant to which the Seller will provide certain services to the
Buyer for the period of time set forth in such
agreement.
“
Working Capital Schedule ” means a statement of the
current assets and the current liabilities of the Business (in each
case including EMS Brazil on a consolidated basis) as of 11:59 p.m.
Atlanta, Georgia time on the day immediately prior to the Closing
Date, prepared in accordance with the guidelines on
Exhibit C .
6
Section 1.2
Table of Definitions . The following terms have the meanings
set forth in the Sections referenced below:
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Definition
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Location
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2.9(d)
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2.9(e)
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Preamble
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2.10
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Amendment to
the Articles of Association
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2.7(a)(iii)
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2.3
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3.5(a)
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Recitals
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Business
Intellectual Property
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2.1(c)
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2.1(g)
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Preamble
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Buyer
Indemnified Parties
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8.2
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5.6(d)
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Buyer Welfare
Benefit Plans
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5.6(e)(i)
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Certidão
Negativa perante o INSS
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2.7(a)(iv)
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Certificado de
Regularidade perante o FGTS
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2.7(A)(v)
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Certidão
Conjunta de Débitos Relativos a Tributos Federais e à
Dívida Ativa da União
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2.7(a)(vi)
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Certidão
Negative de Débitos da Receita Estadual
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27(A)(vii)
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2.6
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2.6
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2.7(b)
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5.6(e)(i)
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Confidentiality
Agreement
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5.7
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2.1(a)
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Article III
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3.5(b)
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3.16(a)
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EMS Brazil
Financial Statements
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3.5(b)
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3.17
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EMS Brazil
Unaudited Balance Sheet
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3.5(b)
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3.7(c)
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2.2
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2.4
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3.5(a)
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Fundamental
Representations
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8.1
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3.36b)
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8.4(a)
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8.4(a)
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Independent
Accounting Firm
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2.9(c)
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2.1(f)
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5.8(e)
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3.12
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8.2
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3.16(a)
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5.9
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2.9(b)
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7
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Definition
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Location
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3.13(a)
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Owned Business
Registered Copyrights
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3.13(a)
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Owned Business
Registered IP
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3.13(a)
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Owned Business
Registered Marks
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3.13(a)
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Preamble
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3.7(b)
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6.1(b)
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6.1(b)
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3.3(b)
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Product
Warranties Notice of Disagreement
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5.17(a)
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Product
Warranty Costs Schedule
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5.17(a)
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2.1(j)
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2.1(b)
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2.1(d)
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5.2(a)
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5.8(a)
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5.15(a)
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5.15(a)
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Preamble
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Seller
Indemnified Parties
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8.3
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Tangible
Personal Property
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2.1(e)
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5.15(a)
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Target
SelectaCell Payment
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5.15(a)
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9.1(d)
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8.4(a)
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6.1(a)
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2.1
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5.6(a)
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3.23
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Section 1.3
Construction .
(a) Unless
the context of this Agreement otherwise clearly requires,
(i) references to the plural include the singular, and
references to the singular include the plural, (ii) references
to one gender include the other gender, (iii) the words
“include,” “includes” and
“including” do not limit the preceding terms or words
and shall be deemed to be followed by the words “without
limitation”, (iv) the terms “hereof”,
“herein”, “hereunder”, “hereto”
and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement,
(v) the terms “day” and “days” mean
and refer to calendar day(s), and (vi) the terms
“year” and “years” mean and refer to
calendar year(s).
(b) Unless
otherwise set forth in this Agreement, references in this Agreement
to any document, instrument or agreement (including this Agreement)
(i) includes and incorporates all exhibits, schedules and
other attachments thereto, (ii) includes all documents,
instruments or agreements issued or executed in replacement thereof
and (iii) means such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified or
supplemented from time to time in accordance with its terms and in
effect at any
8
given time. All
Article, Section, Exhibit and Schedule references herein are to
Articles, Sections, Exhibits and Schedules of this Agreement,
unless otherwise specified.
PURCHASE AND SALE
Section 2.1
Purchase and Sale of Assets . Upon the terms and subject to
the conditions of this Agreement, at the Closing, the Seller shall
sell, assign, transfer, convey and deliver to the Buyer all of the
Seller’s right, title and interest as of the Closing Date in,
to and under the Transferred Assets, and the Buyer shall purchase,
acquire, accept and pay for the Transferred Assets and assume the
Assumed Liabilities. “ Transferred Assets ”
shall mean all of the Seller’s right, title and interest in,
to and under all of the business, the assets, properties, rights
and goodwill (wherever located), real or personal, whether tangible
or intangible, that are owned by or leased or licensed to the
Seller and used, held for use or intended to be used primarily in
the Business (other than the Excluded Assets), as of the Closing
Date, including the assets, properties and rights referred to
below:
(a) all
contracts and agreements, oral or written, to which the Seller is a
party or by which the Seller is bound that are used, held for use
or intended to be used primarily in the Business, or that arise
primarily out of the operation or conduct of the Business or to
which the Transferred Assets are subject including all contracts
and agreements listed in Schedule 3.16 of the
Disclosure Schedules (collectively, the “ Contracts
”);
(b) all
real property, leaseholds and other interests in real property
leased by the Seller and used, held for use or intended to be used
primarily in the Business, together with the Seller’s right,
title and interest in, to and under all structures, facilities or
improvements located thereon, all fixtures, systems, equipment and
other items of personal property attached or appurtenant thereto
and all easements, licenses, rights and appurtenances relating to
the foregoing (the “ Real Property
”);
(c) all
Intellectual Property owned by or licensed to the Seller and used,
held for use or intended to be used primarily in the Business
(including any confidentiality agreements to protect the
Seller’s interest therein) (the “ Business
Intellectual Property ”);
(d) all
accounts receivable, notes receivable and other receivables due to
the Seller in connection with the Business (the “
Receivables ”), together with any unpaid interest or
fees accrued thereon or other amounts due with respect
thereto;
(e) all
machinery, equipment, furniture, furnishings, parts, spare parts,
vehicles and other tangible personal property or interests therein
owned or leased by the Seller and used, held for use or intended to
be used primarily in the Business (the “ Tangible Personal
Property ”);
(f) all
raw materials, work-in-progress, finished goods, supplies,
packaging materials and other inventories (including in transit, on
consignment or in the possession of any third party) owned by the
Seller (including any of the foregoing in possession of third
parties) and used, held for use or intended to be used primarily in
the Business (the “ Inventory ”);
9
(g) all
Permits of the Seller used, held for use or intended to be used
primarily in the Business (the “ Business Permits
”);
(h) all
files, invoices, customers’ and suppliers’ lists, other
distribution lists, billing records, sales and promotional
literature, manuals and customer and supplier correspondence of the
Seller relating primarily to the Business;
(i) all
credits, prepaid expenses, deferred charges (other than deferred
Taxes), advance payments, prepaid items and security deposits that
are used, held for use or intended to be used primarily in, or
arising primarily out of or relating primarily to, the
Business;
(j) 1,936,560
quotas in EMS Brazil (including the quota currently held by LXE)
representing 100% of its capital, free and clear of any
Encumbrances (the “ Quotas ”);
(k) all
rights to causes of action, lawsuits, judgments, claims, credits
and demands of any nature in favor of the Seller to the extent
relating to the Business or the Transferred Assets, including all
rights under all guarantees, warranties, indemnities and similar
rights in favor of the Seller;
(l) all
goodwill generated by or associated with the Business;
and
(m) all
rights in and to products sold in the operation or conduct of the
Business.
Section 2.2
Excluded Assets . Notwithstanding anything contained in
Section 2.1 to the contrary, the Seller is not selling, and
the Buyer is not purchasing, any of the following assets of the
Seller (except to the extent that such assets are assets directly
owned by EMS Brazil), all of which shall be retained by the Seller
(collectively, the “ Excluded Assets
”):
(a) all
of the Seller’s cash and cash equivalents as of
11:59 p.m. Atlanta, Georgia time on the day immediately prior
to the Closing Date;
(b) the
Seller’s corporate books and records of internal corporate
proceedings, Tax Returns, taxpayer and other identification
numbers;
(c) all
rights in the following names and marks and any variation or
derivation thereof: “EMS,” “EMS
Technologies” and “EMS Wireless”;
(d) all
of the Seller’s bank accounts;
(e) all
(i) accounting records (including records relating to Taxes)
and internal reports relating to the business activities of the
Seller that are not Transferred Assets, and (ii) work papers
and books and records relating to the Business that the Seller is
required by Law to retain; provided , however , that
the Seller shall provide copies of such accounting records,
internal reports, work papers and books and records to the extent
that they would reasonably be expected to relate primarily to the
operation and conduct of the Business following the
Closing;
10
(f) any
interest in or right to any refund of any Taxes for which the
Seller is liable pursuant to this Agreement, except to the extent
such refund is treated as a current asset in the calculation of
Final Working Capital;
(g) any
insurance policies and rights, claims or causes of action
thereunder;
(h) except
as specifically provided in Section 5.6 , any assets
relating to any Employee Plan;
(i) all
rights, claims and causes of action to the extent relating to any
Excluded Asset or any Excluded Liability;
(j) the
assets of the Seller listed in Exhibit G ;
and
(k) all
rights of the Seller under the Transaction Documents.
Section 2.3
Assumed Liabilities . In connection with the purchase and
sale of the Transferred Assets pursuant to this Agreement, as of
the Closing, the Buyer shall assume and pay, discharge, perform or
otherwise satisfy the following liabilities and obligations of the
Seller relating to the Business (the “ Assumed
Liabilities ”):
(a) all
liabilities (other than liabilities for Taxes) of the Business
reflected or reserved against in the Balance Sheet;
(b) all
liabilities (other than liabilities for Taxes) accruing, arising
out of or relating to the conduct or operation of the Business
incurred subsequent to the date of the Balance Sheet in the
ordinary course of business consistent with past practice that
would have been required by GAAP to be reflected or reserved
against in the Balance Sheet had such liabilities existed as of the
date of the Balance Sheet; provided , however , that
in no event shall the Assumed Liabilities include indebtedness for
borrowed money or guarantees thereof;
(c) all
liabilities accruing, arising out of or relating to the conduct or
operation of the Business by the Buyer or the ownership or use of
the Transferred Assets by the Buyer from and after the Closing
Date;
(d) all
liabilities for Taxes accrued as current liabilities in the
calculation of Final Working Capital (but only to the extent of the
amount so accrued) and for Taxes allocated to the Buyer pursuant to
Article VI ;
(e) all
liabilities and obligations of the Seller under the Contracts and
the Business Permits to the extent such liabilities and obligations
are not required to be performed prior to the Closing Date;
provided , however , that if such liability or
obligation relates to an obligation of the Seller to make a cash
payment under a Contract relating to the period prior to the
Closing Date, then the Buyer shall assume such liability or
obligation only to the extent it is included in the calculation of
Final Working Capital;
(f) all
rights of return and warranty obligations of the Seller or EMS
Brazil associated with the Products (other than Seller’s
Product Warranty Share); and
11
(g) all
liabilities assumed by the Buyer pursuant to
Section 5.6 .
Section 2.4
Excluded Liabilities . Notwithstanding any other provision
of this Agreement to the contrary, the Buyer is not assuming and
the Seller shall pay, perform or otherwise satisfy, all
liabilities, obligations or commitments other than the Assumed
Liabilities specifically listed in Section 2.3 (the
“ Excluded Liabilities ”) (in the case of
liabilities, obligations or commitments of EMS Brazil, solely for
purposes of Article VIII ), including the
following:
(a) all
liabilities for Taxes of the Seller except those allocated to the
Buyer pursuant to Section 2.3(d) ;
(b) any
liability that is not assumed by the Buyer pursuant to
Section 5.6 , including any liability with respect to
any retention plans implemented by the Seller or by EMS Brazil
prior to the Closing;
(c) any
indebtedness for borrowed money or guarantees thereof of the Seller
or EMS Brazil outstanding as of the Closing Date;
(d) any
liability or obligation relating to an Excluded Asset;
(e) any
Losses to the extent arising out of or resulting from any actual,
material breach by the Seller or EMS Brazil under any Contract
prior to the Closing (other than any right of return or warranty
obligation of the Seller or EMS Brazil associated with the
Products, which shall be assumed by the Buyer to the extent
provided in Section 2.3(f) );
(f) any
liability, obligation or commitment of the Seller or EMS Brazil,
whether express or implied, liquidated, absolute, accrued,
contingent or otherwise, or known or unknown, arising primarily out
of the operation or conduct by the Seller or EMS Brazil of any
business other than the Business;
(g) any
Losses to the extent arising out of or resulting from (i) any
Action pending or threatened against the Seller or EMS Brazil as of
the Closing Date, (ii) any actual, material violation by the
Seller or EMS Brazil of any Applicable Law prior to the Closing, or
(iii) any action, omission or event prior to the Closing
relating to any of the matters described on
Schedule 3.7 (for the avoidance of doubt, any rights of
return and warranty obligations relating to such matters shall be
Excluded Liabilities notwithstanding Section 2.3(f) or
any other provision hereof);
(h) any
liability of the Seller or EMS Brazil pursuant to any Environmental
Law arising from or relating to any action, event, circumstance or
condition occurring or existing on or prior to the Closing
Date;
(i) any
liability, obligation or commitment of the Seller or EMS Brazil to
any of their respective Affiliates; and
(j) all
liabilities for the Taxes of EMS Brazil (or any predecessor
thereof) for any taxable period ending prior to the Closing Date
except those allocated to the Buyer pursuant to Section
2.3(d) .
12
Section 2.5
Consideration .
(a) In
full consideration for the sale, assignment, transfer, conveyance
and delivery of the Transferred Assets to the Buyer, at the
Closing, the Buyer shall (a) pay to the Seller an amount equal
to the Purchase Price and (b) assume the Assumed Liabilities.
The Purchase Price shall be payable in accordance with
Section 2.7 and shall be subject to adjustment as
provided in Section 2.9 .
(b) Notwithstanding
anything to the contrary, the Purchase Price will be reduced by the
amount of any withholding income tax that, in the Buyer’s
reasonable discretion, may be imposed by the Brazilian Taxing
Authority on capital gain, if any, realized by the Seller as a
result of the sale of the Quotas.
Section 2.6
Closing . The sale and purchase of the Transferred Assets
and the assumption of the Assumed Liabilities contemplated by this
Agreement shall take place at a closing (the “ Closing
”) to be held at the offices of King & Spalding LLP, 1180
Peachtree Street, Atlanta, GA 30309, at 10:00 A.M. Atlanta
time on the second Business Day following the satisfaction or, to
the extent permitted by applicable Law, waiver by the Party
entitled to the benefit thereof of all conditions to the
obligations of the Parties set forth in Article VII
(other than such conditions as may, by their terms, only be
satisfied at the Closing or on the Closing Date but subject to the
satisfaction of such conditions), or at such other place or at such
other time or on such other date as the Seller and the Buyer
mutually may agree in writing. The day on which the Closing takes
place is referred to as the “ Closing Date
.”
Section 2.7
Transactions to be Effected at the Closing . At the
Closing:
(a) The
Seller shall deliver to the Buyer
(i) an
appropriately executed Bill of Sale;
(ii) an
appropriately executed Intellectual Property
Assignments;
(iii) an
amendment to the articles of association of EMS Brazil (“
Amendment to the Articles of Association ”), duly
executed by the Seller and by LXE in the form of Exhibit H ,
reflecting (A) transfer of the Quotas from the Seller and LXE
to the Buyer, and (B) modification of the corporate name of the
company so as to exclude the expression
“EMS”;
(iv) a
valid negative certificate issued by the Social Security National
Institute attesting that EMS Brazil has no outstanding debts
(“ Certidão Negativa perante o INSS (CND INSS)
”);
(v) a
valid Certificate issued by the Federal Unemployment Fund attesting
that EMS Brazil is in good standing with such Fund (“
Certificado de Regularidade perante o FGTS
”);
13
(vi) a
valid Certificate issued by the Federal Government attesting that
EMS Brazil has no pending debts with the Federal Government
(“ Certidão Conjunta de Débitos Relativos a
Tributos Federais e à Dívida Ativa da União
”);
(vii) a
valid Certificate issued by the State Government of Paraná
stating that EMS Brazil has no pending debts with the State
Government of Paraná (“ Certidão Negative de
Débitos da Receita Estadual ”);
(viii) duly
signed resignations (from the applicable board of directors and
officers), effective immediately after the Closing, of all
applicable directors and officers of EMS Brazil; and
(ix) the
consents referred to in Section 7.3(a) and such other
appropriately executed deeds (in recordable form), bills of sale,
assignments, instruments of transfer and other documents as the
Buyer or its counsel may reasonably request to effect the transfer
of the Transferred Assets, and to demonstrate satisfaction of the
conditions and compliance with the covenants set forth in this
Agreement; and
(b) The
Buyer shall deliver to the Seller (i) payment, by wire
transfer to a bank account designated in writing by the Seller
(such designation to be made at least two business days prior to
the Closing Date), in immediately available funds in U.S. dollars
in an amount (the “ Closing Date Amount ”) equal
to (A) the Purchase Price plus or minus (B) an estimate,
prepared by the Seller (and reasonably satisfactory to the Buyer)
and delivered to the Buyer at least two Business Days prior to the
Closing Date, of any adjustment to the Purchase Price under
Section 2.9 based on the most recent date practicable,
(ii) an appropriately executed Assumption Agreement and
(iii) such other documents as the Seller or its counsel may
reasonably request to demonstrate satisfaction of the conditions
and compliance with the covenants set forth in this Agreement;
and
(c) The
Buyer and the Seller shall execute and deliver the Ancillary
Agreements (other than the Bill of Sale and the Assumption
Agreement).
Section 2.8
Risk of Loss . Until the Closing, any loss of or damage to
the Transferred Assets from fire, casualty or any other occurrence
shall be the sole responsibility of the Seller.
Section 2.9
Post-Closing Adjustment of Purchase Price .
(a) During
the 60 days after the Closing Date, the Buyer shall prepare
the Working Capital Schedule. The Buyer shall consult with the
Seller and the parties shall cooperate with one another in the
preparation of the Working Capital Schedule. Within 60 days
after the Closing Date, the Buyer shall deliver to the Seller the
Working Capital Schedule certified by an officer of the Buyer that
it has been prepared in accordance with the requirements of
Section 2.9 .
(b) During
the 20 Business Day period following the Seller’s receipt of
the Working Capital Schedule, the Buyer shall cooperate with the
Seller and its Representatives to provide them with any information
used in preparing the Working Capital Schedule reasonably requested
by the Seller and its Representatives and reasonably available to
the Buyer. The
14
Working Capital
Schedule shall become final and binding on the 20
th Business Day following delivery thereof, unless
prior to the end of such period, the Seller delivers to the Buyer
written notice of its disagreement (a “ Notice of
Disagreement ”) specifying the nature and amount of any
disputed item. The Seller shall be deemed to have agreed with all
items and amounts in the Working Capital Schedule not specifically
referenced in the Notice of Disagreement, and such items and
amounts shall not be subject to review in accordance with
Section 2.9(c) . Any Notice of Disagreement may reference
only disagreements based on mathematical errors or based on amounts
reflected on the Working Capital Schedule not being calculated in
accordance with this Section 2.9 .
(c) During
the ten-Business Day period following delivery of a Notice of
Disagreement by the Seller to the Buyer, if any, the Parties in
good faith shall seek to resolve in writing any differences that
they may have with respect to the matters specified therein. During
such ten-Business Day period, the Seller shall cooperate with the
Buyer and its Representatives to provide them with any information
used in preparing the Notice of Disagreement reasonably requested
by the Buyer or its Representatives and reasonably available to the
Seller. Any disputed items resolved in writing between the Buyer
and the Seller within such ten Business Day period shall be final
and binding with respect to such items, and if the Seller and the
Buyer agree in writing on the resolution of each disputed item
specified by the Seller in the Notice of Disagreement and the
amount of the Final Working Capital, the amount so determined shall
be final and binding on the Parties for all purposes hereunder. If
the Seller and the Buyer have not resolved all such differences by
the end of such ten Business Day period, the Seller and the Buyer
shall submit, in writing, to an independent public accounting firm
(the “ Independent Accounting Firm ”), their
briefs detailing their views as to the correct nature and amount of
each item remaining in dispute and the amount of the Final Working
Capital, and the Independent Accounting Firm shall make a written
determination as to each such disputed item and the amount of the
Final Working Capital, which determination shall be final and
binding on the Parties for all purposes hereunder. The
determination of the Independent Accounting Firm shall be
accompanied by a certificate of the Independent Accounting Firm
that it reached such determination in accordance with the
provisions of this Section 2.9 . The Independent
Accounting Firm shall be Deloitte & Touche or, if such firm is
unable or unwilling to act, such other independent public
accounting firm as shall be agreed in writing by the Seller and the
Buyer. The Seller and the Buyer shall use their commercially
reasonable efforts to cause the Independent Accounting Firm to
render a written decision resolving the matters submitted to it
within 20 Business Days following the submission thereof. The
Independent Accounting Firm shall be authorized to resolve only
those items remaining in dispute between the Parties in accordance
with the provisions of this Section 2.9 within the
range of the difference between the Buyer’s position with
respect thereto and the Seller’s position with respect
thereto. The Seller and the Buyer agree that judgment may be
entered upon the written determination of the Independent
Accounting Firm in any court referred to in
Section 10.8 . The costs of any dispute resolution
pursuant to this Section 2.9(c) , including the fees
and expenses of the Independent Accounting Firm and of any
enforcement of the determination thereof, shall be borne by the
Parties in inverse proportion as they may prevail on the matters
resolved by the Independent Accounting Firm, which proportionate
allocation shall be calculated on an aggregate basis based on the
relative dollar values of the amounts in dispute and shall be
determined by the Independent Accounting Firm at the time the
determination of such firm is rendered on the merits of the matters
submitted. The fees and disbursements of the Representatives of
each Party
15
incurred in
connection with their preparation or review of the Working Capital
Schedule and preparation or review of any Notice of Disagreement,
as applicable, shall be borne by such Party.
(d) The
Purchase Price shall be adjusted (the “ Adjusted Purchase
Price ”), upwards or downwards, as follows:
(i) if
the Final Working Capital as finally determined pursuant to this
Section 2.9 is greater than the Target Working Capital
Amount, the Purchase Price shall be adjusted upwards in an amount
equal to the difference between the Final Working Capital and the
Target Working Capital Amount; and
(ii) if
the Target Working Capital Amount is greater than the Final Working
Capital as finally determined pursuant to this
Section 2.9 , the Purchase Price shall be adjusted
downwards in an amount equal to the difference between the Target
Working Capital Amount and the Final Working Capital.
(e) If
the Adjusted Purchase Price is more than the Closing Date Amount,
then the Buyer shall pay to the Seller, and if the Adjusted
Purchase Price is less than the Closing Date Amount, the Seller
shall pay to the Buyer, within five Business Days after the Final
Working Capital becomes final, the amount of such difference by
wire transfer in immediately available funds in U.S. dollars.
Amounts to be paid pursuant to this Section 2.9(e)
shall bear interest from the Closing Date to the date of such
payment at an annual rate equal to the three-month LIBOR rate in
effect as of the third Business Day prior to the date the payment
is made (the “ Agreed Rate ”). Payments in
respect of this Section 2.9(e) shall be made within
three Business Days of final determination of the Final Working
Capital pursuant to the provisions of this Section 2.9
by wire transfer of United States dollars in immediately available
funds to such account or accounts as may be designated in writing
by the Party entitled to such payment at least two Business Days
prior to such payment date.
Section 2.10
Allocation . Within 30 days after the determination of
the Final Working Capital, the Buyer shall deliver to the Seller a
schedule (the “ Allocation Schedule ”)
allocating the Purchase Price (and any other items treated as
consideration for the Transferred Assets, except the Quotas, for
Tax purposes) among the Transferred Assets and the covenant of the
Seller set forth in Section 5.12 ; provided ,
however , that the portion of the Purchase Price related to
the Quotas will be agreed by the Buyer and the Seller prior to the
Closing and reflected in the Amendment to the Articles of
Association executed on the Closing Date. The remaining portion of
the consideration will be allocated to the remainder of the
Transferred Assets in accordance with this Section 2.10
. The Allocation Schedule shall be reasonable and shall be prepared
in accordance with Section 1060 of the Code and the Treasury
Regulations thereunder. Such allocation shall be deemed final
unless the Seller has notified the Buyer of any disagreement with
the Allocation Schedule within 20 Business Days after submission
thereof by the Buyer. In the event of such disagreement, the
Parties hereto shall use reasonable efforts to reach agreement on a
reasonable allocation of consideration among the Transferred
Assets. In the event that the Parties hereto do not agree to a
Purchase Price allocation in accordance with this
Section 2.10 , the Independent Accounting Firm shall
make a determination as to each disputed item which shall be
binding upon the Parties. The Buyer and the Seller each agrees to
file Internal Revenue Service Form 8594, and all federal,
state, local and foreign Tax Returns, in accordance with
the
16
Allocation
Schedule as finally determined by the Parties or the Independent
Accounting Firm, as the case may be. The Buyer and Seller each
agrees to provide the other promptly with any other information
required to complete Form 8594.
REPRESENTATIONS AND
WARRANTIES
OF THE SELLER
Except as set
forth in the Disclosure Schedules attached to this Agreement
(collectively, the “ Disclosure Schedules ”),
the Seller hereby represents and warrants to the Buyer, as of the
date of this Agreement and as of the Closing Date, as
follows:
Section 3.1
Organization and Qualification .
(a) The
Seller is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Georgia and has full
corporate power and authority to own, lease and operate the
Transferred Assets and to carry on the Business as it is now being
conducted. The Seller is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each
jurisdiction where the ownership or operation of the Transferred
Assets or the conduct or operation of the Business makes such
qualification or licensing necessary, except, in each case, for any
such failures that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The
certificate of incorporation and bylaws of the Seller, as amended,
that are filed with the Securities and Exchange Commission are true
and complete in all material respects.
(b) EMS
Brazil is an entity duly organized and validly existing under the
Laws of Brazil and has the power and authority to own, lease and
operate its assets and to carry on its business as it is now being
conducted.
Section 3.2
Authority . The Seller has full corporate power and
authority to execute and deliver each of the Transaction Documents,
to perform its obligations thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and
delivery by the Seller of the Transaction Documents and the
consummation by the Seller of the transactions contemplated thereby
have been duly and validly authorized by all necessary corporate
action. This Agreement has been, and upon their execution each of
the Ancillary Agreements to which the Seller will be a party will
have been, duly executed and delivered by the Seller. This
Agreement constitutes, and upon their execution each of the
Ancillary Agreements will constitute, the legal, valid and binding
obligations of the Seller, enforceable against the Seller in
accordance with their respective terms, except as enforcement may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditors’ rights
generally and by general principles of equity (regardless of
whether considered in a proceeding in equity or at Law).
Section 3.3
No Conflict; Required Filings and Consents .
(a) The
execution, delivery and performance by the Seller of this Agreement
do not and the execution, delivery and performance of each of the
Ancillary Agreements, and the consummation of the transactions
contemplated hereby and thereby, will not:
17
(i) conflict
with or violate the certificate of incorporation or bylaws of the
Seller or similar organizational documents of EMS
Brazil;
(ii) conflict
with or violate in any material respect any material Law applicable
to the Seller or EMS Brazil, the Business or any of the Transferred
Assets or by which the Seller or EMS Brazil, the Business or any of
the Transferred Assets may be bound or affected; or
(iii) except
as set forth in Schedule 3.3(a) , conflict with, result
in any breach of, constitute a default (or an event that, with
notice or lapse of time or both, would become a default) under,
require any approval, consent or authorization of any Person
pursuant to, or give to others any rights of termination,
acceleration or cancellation of, any Material Contract;
except, in the
case of clause (iii), for any such conflicts, violations, breaches,
defaults or other occurrences that would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
(b) Neither
the Seller nor EMS Brazil is required to file, seek or obtain any
notice, authorization, approval, order, permit or consent of or
with any Governmental Authority in connection with the execution,
delivery and performance by the Seller or EMS Brazil of each of the
Transaction Documents to which the Seller or EMS Brazil will be a
party or the consummation of the transactions contemplated thereby
or in order to prevent the termination of any right, privilege,
license or qualification of the Business, except for (i) any
filings required to be made under the Hart Scott Rodino Antitrust
Improvements Act of 1976, as amended (the “ HSR Act
”), (ii) any filings required to be made to the
Brazilian Antitrust Authority which may be necessary or advisable
to obtain consent for the transactions contemplated by the
Transaction Documents, (iii) any notice, authorization, approval,
order, permit or consent of any Governmental Authority required for
the Buyer to manufacture, market, distribute, sell, service or
repair the Products (the “ Product Authorizations
”), (iv) where failure to obtain such consent, approval,
authorization or action, or to make such filing or notification,
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect or (v) as may be necessary
as a result of any facts or circumstances relating to the Buyer or
any of its Affiliates (as opposed to any other third
party).
Section 3.4
Transferred Assets .
(a) Upon
consummation of the transactions contemplated by this Agreement, at
the Closing the Seller will have assigned, transferred and conveyed
to the Buyer good, valid and marketable title to all of the
Transferred Assets, free and clear of all Encumbrances (other than
Permitted Encumbrances), subject to Section 2.5
.
(b) Except
as set forth in Schedule 3.4 of the Disclosure
Schedules, the transfer to the Buyer of the Transferred Assets
pursuant to this Agreement, together with the Buyer’s rights
under the Transaction Documents, comprise all the assets required
to operate the Business in substantially the same manner as such
operations are being conducted on the date hereof. Except as set
forth in Schedule 3.4 of the Disclosure Schedules, the
Seller and its
18
Affiliates
(other than EMS Brazil) do not provide any corporate support or
other services to the Business.
Section 3.5
Financial Statements; No Undisclosed Liabilities
.
(a) True
and complete copies of the unaudited consolidated balance sheet of
the Business (including EMS Brazil on a consolidated basis) as at
September 30, 2006 (the “ Balance Sheet ”),
and the related unaudited consolidated statements of results of
operations and cash flows of the Business (including EMS Brazil on
a consolidated basis) for the nine-month period ending
September 30, 2006, together with all related notes and
schedules thereto (collectively referred to as the “
Financial Statements ”) are attached as
Schedule 3.5(a) of the Disclosure Schedules. The
Financial Statements (i) have been prepared based on the books
and records of the Seller and EMS Brazil pertaining to the
Business; (ii) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods indicated; and
(iii) fairly present, in all material respects, the consolidated
financial position, results of operations and cash flows of the
Business (including EMS Brazil on a consolidated basis) as at the
respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein and subject to normal
and recurring year-end audit adjustments and the absence of notes,
in each case, that will not, individually or in the aggregate, be
material.
(b) True
and complete copies of (i) the unaudited consolidated balance
sheet of EMS Brazil as of December 31, 2005 (the “
EMS Brazil Balance Sheet ”), and the related unaudited
consolidated statements of results of operations and cash flows of
EMS Brazil for the fiscal year ended December 31, 2005,
together with all related notes and schedules thereto, and
(ii) the unaudited consolidated balance sheet of EMS Brazil as
of September 30, 2006 (the “ EMS Brazil Unaudited
Balance Sheet ”), and the related unaudited consolidated
results of operations and cash flows for the nine-month period
ended September 30, 2006, are attached as Schedule
3.5(b) of the Disclosure Schedules (collectively referred to as
the “ EMS Brazil Financial Statements ”). The
EMS Brazil Financial Statements (x) have been prepared based
on the books and records of EMS Brazil; (y) have been prepared
on a consistent basis throughout the periods indicated; and
(z) fairly present, in all material respects, the consolidated
financial position, results of operations and cash flows of EMS
Brazil as at the respective dates thereof and for the respective
periods indicated therein, except as otherwise noted therein and
subject to normal and recurring year-end audit adjustments and the
absence of notes, in each case, that will not, individually or in
the aggregate, be material.
(c) Insofar
as is Known to the Seller, there are no debts, liabilities,
obligations, or commitments, whether accrued or fixed, absolute or
contingent, matured or unmatured or determined or determinable, of
the Business of a nature required to be reflected on a balance
sheet prepared in accordance with GAAP, other than any such debts,
liabilities, obligations and commitments (i) reflected or reserved
against on the Financial Statements and on the EMS Brazil Financial
Statements, (ii) incurred since the date of the Balance Sheet
in the ordinary course of business consistent with past practice,
or (iii) that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse
Effect.
(d) There
are no debts, liabilities, obligations or commitments, whether
accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, of
19
EMS Brazil,
other than any such debts, liabilities, obligations and commitments
(i) reflected or reserved against on the EMS Brazil Unaudited
Balance Sheet or (ii) incurred since the date of the EMS
Brazil Unaudited Balance Sheet in the ordinary course of business
consistent with past practice.
Section 3.6
Absence of Certain Changes or Events . Since the date of the
Balance Sheet: (a) the Seller and EMS Brazil have conducted
the Business, in all material respects, in the ordinary course of
business and consistent with past practice; (b) there has not
occurred any Material Adverse Effect; (c) there has been no
physical damage, destruction or loss in respect of the Transferred
Assets that would, after taking into account any recoveries under
the Seller or EMS Brazil’s insurance policies that would be
payable to the Buyer in connection therewith, reasonably be
expected to have a Material Adverse Effect; and (d) the Seller
and EMS Brazil have not taken any action that, if taken after the
date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 5.1 .
Section 3.7
Compliance with Law; Permits .
(a) Except
as set forth on Schedule 3.7 , the Seller and EMS
Brazil are and have been in compliance with all Laws applicable to
them in connection with the conduct or operation of the Business
and the ownership or use of the Transferred Assets, except as would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Neither the Seller nor EMS Brazil
has received any written communication during the past three years
that alleges that the Business is not in compliance in any material
respect with any Applicable Law.
(b) The
Seller or EMS Brazil is in possession of all permits, licenses,
franchises, approvals, certificates, consents, waivers,
concessions, exemptions, orders, registrations, notices or other
authorizations of any Governmental Authority necessary for it to
own, lease and operate the Transferred Assets and to carry on the
Business as currently conducted (the “ Permits
”), except where the failure to have, or the suspension or
cancellation of, any of the Permits would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect. The Seller or EMS Brazil is in compliance with the Permits
and no suspension or cancellation of any of the Permits is pending
or, insofar as is Known to the Seller or EMS Brazil, threatened,
except, in each case, where the failure to so comply, or the
suspension or cancellation of, any of the Permits would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Neither the Seller nor EMS Brazil has
received any written notice of any Actions relating to the
revocation or modification of any such Permits and none of such
Permits will be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of the
Transaction Documents or the consummation of the transactions
contemplated thereby.
(c) EMS
Brazil is in possession of all permits, licenses, franchises,
approvals, certificates, consents, waivers, concessions,
exemptions, orders, registrations, notices or other authorizations
of any Governmental Authority necessary for it to own, lease and
operate its assets and to carry on its business as currently
conducted (the “ EMS Permits ”), except where
the failure to have, or the suspension or cancellations of, any of
the EMS Permits would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect,
EMS
20
Brazil is in
compliance with the EMS Permits and no suspension or cancellation
of any of the EMS Permits is pending or, insofar as is Known to
Seller or EMS Brazil, threatened, except, in each case, where the
failure to so comply, or the suspension or cancellation of, any of
the EMS Permits would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither
the Seller nor EMS Brazil has received any written notice of any
Actions relating to the revocation or modification of any such EMS
Permits and none of such EMS Permits will be subject to suspension,
modification, revocation or nonrenewal as a result of the execution
and delivery of the Transaction Documents or the consummation of
the transactions contemplated thereby.
Section 3.8
Litigation . As of the date hereof, there is no Action by or
against the Seller or EMS Brazil in connection with the Business
pending, or insofar as is Known to the Seller or EMS Brazil,
threatened in writing (a) pursuing any criminal sanctions or
penalties, (b) seeking equitable or injunctive relief,
(c) that relates to or involves more than $50,000, or
(d) that would otherwise, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect or would
affect the legality, validity or enforceability of any of the
Transaction Documents or the consummation of the transactions
contemplated thereby. Neither the Seller nor EMS Brazil is a party
or subject to, in violation of, or in default under any material
Judgment applicable to the conduct of the Business or any
Transferred Asset or Assumed Liability. As of the date hereof,
there is not any Action by the Seller or EMS Brazil pending, or
which the Seller or EMS Brazil intends to initiate, against any
other Person arising out of the conduct of the Business. Insofar as
is Known to the Seller or EMS Brazil, there is no pending or
threatened investigation of or affecting the conduct of the
Business or any Transferred Asset or Assumed Liability
Section 3.9
Employee Plans . Schedule 3.9 of the Disclosure
Schedules sets forth all material Employee Plans. The Seller has
made available to the Buyer a true and complete copy of the
following documents: (a) each writing constituting an Employee
Plan, (b) the current summary description of each Employee
Plan and any material modifications thereto, (c) the most
recent determination letter from the IRS, if any, with respect to
any Employee Plan qualified under Section 401(a) of the Code and
(d) the most recent annual report on IRS Form 5500, if
any, filed by the Seller for each Employee Plan. Seller represents
and warrants that Annex 1 includes the name of each employee whose
duties, as of the date of this Agreement, relate primarily to the
operations of the Business.
Section 3.10
Labor and Employment Matters . Neither the Seller nor EMS
Brazil is a party to any labor or collective bargaining contract
that pertains to any Business Employees. Insofar as is Known to the
Seller or EMS Brazil, (a) there are no organizing activities
or collective bargaining arrangements that could affect the
Business pending or under discussion with any labor organization or
Business Employees and (b) there are no lockouts, strikes,
slowdowns or work stoppages pending or threatened by or with
respect to any Business Employees. Neither the Seller nor EMS
Brazil is engaged in any unfair labor practice in connection with
the conduct of the Business. There are no pending, or, insofar as
is Known to Seller or EMS Brazil, threatened, charges in connection
with the conduct of the Business against the Seller, EMS Brazil or
any current or former employee of the Business before the Equal
Employment Opportunity Commission or any state or local agency
responsible for the prevention of unlawful employment practices.
Neither the Seller nor EMS Brazil has not
21
received any
written notice during the past three years of the intent of any
Governmental Authority responsible for the enforcement of labor or
employment laws to conduct an investigation of or affecting the
Business and, insofar as is Known to Seller or EMS Brazil, no such
investigation is in progress.
Section 3.11
Insurance . The Business and the Transferred Assets are
covered by insurance coverage with reputable insurers in such
amounts and covering such risks as are in accordance with normal
industry practice for similar businesses (taking into account the
cost and availability of such insurance). No notice of cancellation
or termination has been received with respect to any such policy as
of the date hereof, the premium with respect to such policies have
been paid and all such insurance policies are in full force and
effect and will remain in full force and effect up to and including
the time of the Closing (other than those that have been retired or
expired in the ordinary course).
Section 3.12
Real Property . Schedule 3.12 of the Disclosure
Schedules lists the street address of each parcel of Real Property
leased by the Seller or by EMS Brazil and used, held for use or
intended to be used in the conduct of the Business (the “
Leased Real Property ”) and the identity of the lessor
of each such parcel of Leased Real Property. The Seller or EMS
Brazil, as the case may be, has a valid leasehold estate in all
Leased Real Property, free and clear of all Encumbrances other than
Permitted Encumbrances. Neither the Seller nor EMS Brazil has
received written notice from any Governmental Authority that any of
the Leased Real Property is not in material compliance with all
applicable Laws, except for such failures to comply, if any, which
have been remedied. All leases in respect of the Leased Real
Property are in full force and effect, neither the Seller nor EMS
Brazil has received any written notice of a breach or default
thereunder, and insofar as is Known to the Seller or EMS Brazil, no
event has occurred that, with notice or lapse of time or both,
would constitute a breach or default thereunder. Insofar as is
Known to the Seller or EMS Brazil, there is no pending or written
threat of condemnation or similar proceeding affecting the Leased
Real Property or any portion thereof. The Seller has made available
to the Buyer true and complete copies of the leases in effect at
the date hereof relating to the Leased Real Property. There has not
been any sublease or assignment entered into by the Seller or by
EMS Brazil in respect of the leases relating to the Leased Real
Property. Neither the Seller nor EMS Brazil own any Real Property
used, held for use or intended to be used primarily in the conduct
of the Business. EMS Brazil does not own any United States real
property interest as defined in Section 897 of the Code and
the regulations promulgated thereunder.
Section 3.13
Intellectual Property .
(a)
Schedule 3.13(a)(i) of the Disclosure Schedules sets
forth an accurate and complete list of all registered Marks and
applications for registration of Marks owned by the Seller or by
EMS Brazil and included in the Business Intellectual Property
(collectively, the “ Owned Business Registered Marks
”), Schedule 3.13(a)(ii) of the Disclosure
Schedules sets forth an accurate and complete list of all Patents
owned by the Seller or by EMS Brazil and included in the Business
Intellectual Property (collectively, the “ Owned Business
Patents ”) and Schedule 3.13(a)(iii) of the
Disclosure Schedules sets forth an accurate and complete list of
all registered Copyrights and all pending applications for
registration of Copyrights owned by the Seller or EMS Brazil and
included in the Business Intellectual Property (collectively,
the
22
“
Owned Business Registered Copyrights ” and, together
with the Owned Business Patents and Owned Business Registered
Marks, the “ Owned Business Registered IP ”).
Schedule 3.13(a)(iv) of the Disclosure Schedules sets forth
all Software owned by or licensed to and used by the Seller or EMS
Brazil which is material to the conduct of the Business as
currently conducted.
(b)
Schedules 3.13(a)(i)–3.13(a)(iii) of the Disclosure
Schedules set forth a list of all jurisdictions in which each item
of listed Owned Business Registered IP is registered or
registrations have been applied for and all registration and
application numbers thereof. Except as set forth in Schedules
3.13(a)(i)-3.13(a)(iii) of the Disclosure Schedules, no Owned
Business Registered IP has been or is now involved in any
interference, reissue, reexamination, opposition or
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