Dated as of December 22,
2006
Electrical Components
International, Inc.,
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Page
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ARTICLE I DEFINITIONS; INTERPRETIVE
MATTERS
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1
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1
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1.2 Terms Defined Elsewhere in this
Agreement
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7
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1.3 Other Definitional and Interpretive
Matters
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10
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11
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ARTICLE II TRANSFER OF ASSETS AND
LIABILITIES
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11
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11
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13
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15
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15
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2.5 Transfer of Assets and Assumption of
Liabilities
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17
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2.6 Non-assignable Contracts
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18
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2.7 Payments Post-Closing
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18
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19
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ARTICLE III CONSIDERATION
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19
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19
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ARTICLE IV CLOSING AND TERMINATION
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23
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23
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23
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4.3 Termination of Agreement
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25
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4.4 Procedure Upon Termination
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25
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4.5 Effect of Termination
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25
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF
PARENT AND SELLER
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26
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5.1 Organization and Good Standing;
Authorization
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26
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5.2 Conflicts; Consents of Third
Parties
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26
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27
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28
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5.5 No Undisclosed Liabilities
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30
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5.6 Absence of Certain Developments
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30
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30
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31
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5.9 Tangible Personal Property
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32
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5.10 Intellectual Property
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32
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35
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5.12 Employee Benefits Plans
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37
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39
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i
TABLE OF CONTENTS
(continued)
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Page
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40
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5.15 Compliance with Laws; Permits
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41
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5.16 Environmental Matters
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41
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42
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5.18 Related Party Transactions
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43
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43
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5.20 Foreign Corrupt Practices Act
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43
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43
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44
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44
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44
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5.25 Sufficiency of Assets
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44
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5.26 Disclaimer of other Representations and
Warranties
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44
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF
PURCHASER
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45
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6.1 Organization and Good Standing
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45
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6.2 Authorization of Agreement
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45
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6.3 Conflicts; Consents of Third
Parties
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45
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46
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46
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46
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46
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6.8 No Knowledge of Breach
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46
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46
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7.1 Access to Information; Financing
Cooperation
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46
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7.2 Conduct of the Business Pending the
Closing
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47
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50
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50
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50
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7.6 Preservation of Records
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51
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51
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7.8 Employees and Employee Benefits
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52
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7.9 Supply Agreement; Transition Services
Agreement
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56
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57
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61
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7.12 Termination of Intercompany
Obligations
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62
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63
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64
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65
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7.16 No Solicitation or Negotiation
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65
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66
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66
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ii
TABLE OF CONTENTS
(continued)
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Page
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67
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ARTICLE VIII CONDITIONS TO CLOSING
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67
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8.1 Conditions Precedent to Obligations of
Purchaser
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67
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8.2 Conditions Precedent to Obligations of
Seller
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68
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8.3 Frustration of Closing Conditions
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69
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ARTICLE IX INDEMNIFICATION
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69
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69
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9.2 Limitations on Indemnification for Breaches
of Representations and Warranties
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71
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9.3 Indemnification Procedures
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71
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73
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73
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9.6 Tax Treatment of Indemnity
Payments
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74
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74
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74
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75
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10.1 Survival of Representations, Warranties and
Covenants
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75
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75
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10.3 Submission to Jurisdiction; Consent to
Service of Process
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75
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10.4 Entire Agreement; Amendments and
Waivers
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76
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76
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76
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77
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10.8 Binding Effect; Assignment
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78
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78
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iii
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Knowledge of
Seller
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Tangible
Personal Property
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Leased Real
Property
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Owned
Properties
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Inventory
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Excluded
Litigation
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Other Excluded
Assets
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Accounting
Principles and Methodologies
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Conflicts
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Required
Consents
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Subsidiaries
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Financial
Statement Assumptions and Methodologies
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Business
Balance Sheet
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Books and
Records
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Accounts
Receivable
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Inventory
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Taxes
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Transferred
Subsidiary Tax Returns
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Foreign
Transferred Subsidiary Tax Incentives
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Owned
Properties
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Real Property
Leases
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Subleases
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Tangible
Personal Property
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Remaining
Concord Assets
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Products
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Liens on
Intellectual Property
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Registered
Intellectual Property
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Licenses
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In-Licensed
IP
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Material
Contracts
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Assigned
Agreement Default
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Shared
Contracts
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Employee
Benefit Plans
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Retiree
Plans
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Foreign Benefit
Plans
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Unfunded
Plans
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Incentive
Bonuses
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Collective
Bargaining Agreements
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Labor
Issues
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Employees
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Inactive
Employees
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Closed
Facilities
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Litigation
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Compliance with
Laws; Permits
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iv
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Environmental
Matters
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Environmental
Reports and Permits
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Financial
Advisors
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Related Party
Transactions
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Insurance
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Customers
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Suppliers
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Product
Recalls
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Sufficiency of
Assets
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Conduct of
Business Pending the Closing
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Open Sales and
Management Positions
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KERP
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Termination of
Intercompany Obligations
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Required
Consents
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Governmental
Approvals
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Release of
Guarantees
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Required
Consents
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v
ASSET PURCHASE AGREEMENT , dated as of December 22,
2006 (this “ Agreement ”), by and among
Electrical Components International, Inc., a Delaware corporation
(“ Purchaser ”), Noma Holding Inc., a Delaware
corporation (“ Seller ”), and GenTek Inc., a
Delaware corporation and the indirect parent of Seller (“
Parent ”).
WHEREAS , Seller, including through its Subsidiaries, is
engaged in the business of designing, manufacturing, assembling and
marketing wire harness and cable assembly components at their
operations located at McAllen, Texas, Nogales, Arizona, Ontario
(Concord and Tillsonburg), Canada, Sonora (Nogales and Imuris),
Mexico, Juárez, Mexico, Reynosa, Mexico, and Gujarat, India,
and at Parent’s offices in Westland, Michigan, providing
cable assembly services at certain of these facilities, and
licensing certain of its Marks for other fields of use, excluding
the CableTech Business (the “ Business
”);
WHEREAS , Seller’s and its Subsidiaries’
operations at the Concord Facility are in the process of being shut
down and relocated to other facilities included in the
Business;
WHEREAS , Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller, free and clear of all liabilities,
obligations, claims, liens and encumbrances (other than the
liabilities, obligations and claims assumed pursuant to this
Agreement and the liens and encumbrances permitted by this
Agreement), substantially all of the property, assets (other than
Excluded Assets) and rights of the Business, and to assume certain
liabilities of the Business, upon the terms and subject to the
conditions hereinafter set forth;
WHEREAS , Parent desires that the aforesaid sale be
consummated on the terms and conditions set forth in this
Agreement, and in connection therewith Parent acknowledges that its
non-competition covenant to Purchaser, as provided for in
Section 7.13 , and the non-competition covenant of
Canadian Seller, as provided in the Canada Non-Competition
Covenant, are essential elements of the aforesaid sale and but for
the agreement of Parent to comply with such covenant and to cause
Canadian Seller to enter into and comply with the Canada
Non-Competition Covenant, Purchaser would not have entered into
this Agreement; and
NOW, THEREFORE , in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties
hereby agree as follows:
DEFINITIONS; INTERPRETIVE
MATTERS
1.1
Certain Definitions . For purposes of this Agreement, the
following terms shall have the meanings specified in this
Section 1.1 :
“
Affiliate ” means, with respect to any Person, any
other Person that, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person, and the term “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 such Person, whether through ownership
of voting securities, by Contract or otherwise.
“
Business Day ” means any day of the year on which
national banking institutions in New York, New York are open to the
public for conducting business and are not required or authorized
by Law to close.
“
Business Employee ” means any current or former
employee, director, independent contractor or consultant of the
Business.
“
Business Intellectual Property ” means all
Intellectual Property used or held for use primarily in the
Business or included or incorporated in the Products.
“
Canadian Purchaser ” means a corporation or company to
be incorporated by the Purchaser as a wholly-owned subsidiary under
the laws of Canada or any province thereof.
“
Canadian Seller ” means Noma Company, a Nova Scotia
company.
“
Code ” means the Internal Revenue Code of 1986, as
amended.
“
Confidential Information ” means inventions,
algorithms, formulas, schematics, technical drawings, ideas,
know-how, processes not otherwise protected by patents or patent
applications, source and object code, program listings and trade
secrets arising from, used in, or otherwise relating to the
Business.
“
Contract ” means any written, oral or other agreement,
contract, subcontract, lease, mortgage, indenture, understanding,
arrangement, instrument, note, bond, option, warranty, purchase
order, license, sublicense or other instrument, obligation or
commitment or undertaking of any nature (excluding insurance
policies, benefit plans and permits).
“
Environmental Law ” means any applicable foreign
federal, state, provincial or local statute, regulation, ordinance,
rule of common law, Order, Permit or other legal requirement
currently in effect relating to (i) the protection of human
health and safety as they relate to environmental protection,
(ii) the environment, natural resources and wildlife,
(iii) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release,
threatened Release, abatement, removal, remediation or handling of,
or exposure to, any Hazardous Material, or (iv) pollution,
including without limitation, the Solid Waste Disposal Act, 42
U.S.C. § 6901 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. § 1251, et seq., including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq. ), the Hazardous Materials
Transportation Act (49 U.S.C. App. § 1801 et
seq. ), the Resource Conservation and Recovery Act (42
U.S.C. § 6901 et seq. ), the Clean Water Act (33
U.S.C. § 1251 et seq. ), the Clean Air Act (42
U.S.C. § 7401 et seq. ) the Toxic Substances
Control Act (15 U.S.C. § 2601 et seq. ), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
§ 136 et seq. ), the Ontario Environmental
Protection Act , the federal (Canada) Fisheries Act ,
the Ontario Water Resources Act , and the Canadian
Environmental Protection Act, 1999 , as each has been amended
and the regulations promulgated pursuant thereto.
2
“
GAAP ” means generally accepted accounting principles
in the United States as of the date of determination.
“
Governmental Body ” means any government or
governmental or regulatory or administrative body thereof, or
political subdivision thereof, whether national, federal, state,
provincial, municipal, local, foreign or multinational, or any
agency, instrumentality, commission or authority thereof, or any
court, tribunal or arbitrator (public or private), or any other
body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing
authority or power of any nature.
“
Hazardous Material ” means any substance which is
regulated under Environmental Law including any substance
(i) defined as a hazardous or deleterious substance, hazardous
material, hazardous waste, pollutant or contaminant under any
Environmental Laws, (ii) a petroleum hydrocarbon, including
crude oil or any fraction thereof, (iii) classified under any
Environmental Law as hazardous, toxic, corrosive, flammable,
explosive, infectious, radioactive or carcinogenic, or
(iv) contains asbestos or PCBs.
“
HSR Act ” means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
promulgated thereunder.
“
In-Licensed IP ” means all Intellectual Property
licensed by a third party to Seller or any of its Subsidiaries and
used primarily in the Business or included or incorporated into the
Products, except for Off-the-Shelf Software.
“
Intellectual Property ” means all worldwide
intellectual property rights, including, without limitation, the
following: (i) all patents and applications therefor,
including continuations, divisionals, continuations-in-part, or
reissues of patent applications and patents issuing thereon
(collectively, “ Patents ”); (ii) all
trademarks, service marks, trade names, service names, brand names,
trade dress rights, logos, Internet domain names and corporate
names, together with the goodwill associated with any of the
foregoing, and all applications, registrations and renewals
thereof, (collectively, “ Marks ”);
(iii) copyrights and registrations and applications therefor,
works of authorship and mask work rights (collectively, “
Copyrights ”); (iv) trade secrets and
confidential information; and (v) all Software and
Technology.
“
IRS ” means the Internal Revenue Service.
“
Knowledge of Seller ” means the actual knowledge of
the Persons set forth on Schedule 1.1 .
“
Law ” means any law, statute, code, ordinance, rule,
regulation, Order or other legally binding requirement of any
Governmental Body.
“
Legal Proceeding ” means any judicial, administrative
or arbitral actions, claims, suits, arbitrations, investigations or
proceedings (public or private) by or before a Governmental
Body.
“
Liabilities ” means any direct or indirect liability,
indebtedness, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate,
liquidated
3
or
unliquidated, secured or unsecured, accrued, absolute, known or
unknown, contingent or otherwise.
“
Lien ” means any lien, encumbrance, pledge, mortgage,
deed of trust, security interest, claim, lease, charge, option,
right of first refusal, preemptive right, preferential right,
easement, right of way, servitude or restriction.
“
Material Adverse Effect ” means any circumstance,
effect, change, event or development that, individually or together
with any other circumstance, effect, change, event or development,
is or would reasonably be expected to be, materially adverse to
(i) the Assets, Assumed Liabilities, business, condition
(financial or otherwise) or results of operations of the Business,
taken as a whole, or (ii) the ability of Seller and Parent to
consummate the transactions contemplated by this Agreement or by
the other Transaction Documents to which either of them are or may
become a party; provided , however , that none of the
following shall be deemed in themselves, either alone or in
combination, to constitute, and that none of the following shall be
taken into account in determining whether there has been or will
be, a Material Adverse Effect: (A) any adverse circumstance,
effect, change, event or development to the extent attributable to
the impact of the announcement or pendency of the transactions
contemplated hereby or the identity or involvement of Purchaser on
relationships, contractual or otherwise, with customers, suppliers
or employees of the Business; (B) any adverse circumstance,
effect, change, event or development attributable to conditions
generally affecting the industry in which the Business operates or
generally affecting the economy of any country in which the
Business has material operations or the U.S. or global economy
generally, in each case, which do not disproportionately affect the
Business; (C) any adverse circumstance, effect, change, event
or development arising from or relating to any action taken, or
failure to act, to which Purchaser has expressly consented in
writing; (D) changes in Laws after the date hereof;
(E) changes in GAAP or the regulatory or interpretative
guidance relating thereto after the date hereof; and (F) acts
of war, sabotage or terrorism, or any escalation or material
worsening of any such acts of war, sabotage or terrorism underway
as of the date of this Agreement.
“
NDAs ” means (i) non-disclosure agreements;
(ii) confidentiality agreements; and (iii) confidentiality and
invention assignment agreements.
“
Off-the-Shelf Software ” means Software that is widely
available and licensed to the public on standard terms, including
without limitation software licensed pursuant to
“shrink-wrap” and “click-wrap”
licenses.
“
Order ” means any order, injunction, judgment,
decision, decree, ruling, writ, assessment or arbitration award of
a Governmental Body.
“
Ordinary Course of Business ” means the ordinary and
usual course of the Business, consistent with past practices
(including with respect to quantity and frequency).
“
Permits ” means any approvals, authorizations,
consents, licenses, permits or certificates of a Governmental
Body.
“
Permitted Exceptions ” means (i) all defects,
exceptions, restrictions, easements, rights of way and encumbrances
disclosed in public records or in policies of, or
commitments
4
for, title
insurance and/or plats or surveys which have been made available to
Purchaser; (ii) statutory liens for current Taxes, assessments
or other governmental charges not yet delinquent or the amount or
validity of which is being contested in good faith by appropriate
proceedings, provided an appropriate reserve is established
therefor on the Financial Statements or the Closing Date Statement;
(iii) landlords’, mechanics’, carriers’,
workers’, repairers’ and similar Liens arising by
operation of law and/or incurred in the Ordinary Course of
Business; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body; (v) title
of a lessor under a capital or operating lease; and (vi) such
other imperfections in title and other Liens which would not,
individually or in the aggregate, reasonably be expected to
materially detract from the value, or materially impair the use, of
such property as it presently used.
“
Person ” means any individual, corporation,
partnership, firm, joint venture, association, joint-stock company,
limited liability company, limited liability partnership, labor
union, trust, unincorporated organization, Governmental Body or
other entity.
“
Post-Closing Tax Period ” shall mean any taxable
period beginning after the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period beginning
after the Closing Date.
“
Pre-Closing Tax Period ” shall mean any taxable period
ending on or before the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period ending on the
Closing Date.
“
Products ” means all products or services sold,
distributed or otherwise disposed of by Seller or any of its
Subsidiaries in connection with the Business, and all products or
service offerings in development for the purpose of being sold,
distributed or otherwise disposed of in connection with the
Business.
“
Rebate ” means all rebates granted or accrued or
committed to be granted or accrued by Seller or any Subsidiary to
or for the benefit of any customer of the Business, including any
amounts prepaid, paid or credited, or committed to be prepaid, paid
or credited, including in connection with any volume discount,
price protection, price reduction avoidance, prepaid price
reduction, contract extension or similar arrangement.
“
Release ” means any release, spill, emission, leaking,
pumping, pouring, escaping, dumping, injection, deposit, disposal,
discharge, dispersal, migration or leaching into the environment,
including, without limitation, the abandonment or disposal of
barrels, containers or other receptacles.
“
Remedial Action ” means all actions required by
Environmental Laws to clean up, remove, treat or address any
Hazardous Material in the environment at levels exceeding those
allowed by applicable Environmental Laws, including pre-remedial
studies and investigations or post-remedial monitoring and
care.
“
Representative ” of any Person means such
Person’s officers, directors, employees, agents, accountants,
counsel, advisors, consultants or other representatives.
5
“
Retained Subsidiaries ” means the Subsidiaries other
than the Transferred Subsidiaries.
“
Software ” means any and all (i) computer
programs, including any and all software implementations of
algorithms, models and methodologies, whether in source code or
object code, (ii) databases and compilations, including any
and all data and collections of data, whether machine readable or
otherwise, (iii) descriptions, flow-charts and other work
product used to design, plan, organize and develop any of the
foregoing, screens, user interfaces, report formats, firmware,
development tools, templates, menus, buttons and icons and
(iv) all documentation including user manuals and other
training documentation related to any of the foregoing.
“
Straddle Period ” shall mean any taxable period that
begins on or before and ends after the Closing Date.
“
Subsidiaries ” means the entities set forth on
Schedule 5.3(a) .
“
Tangible Personal Property ” means furniture,
fixtures, mobile and immobile equipment, machinery, vehicles,
supplies, inventories, materials, apparatus, tools, implements,
appliances, computers, servers, communications and networking
equipment, office equipment, parts and supplies and other tangible
personal property of every kind and description.
“
Target Working Capital ” shall mean an amount equal to
$48,319,167.00.
“
Tax ” or “ Taxes ” shall mean any
taxes of any kind, including those measured on, measured by or
referred to as, income, alternative or add-on minimum, gross
receipts, escheat, capital, capital gains, sales, use, ad
valorem , franchise, profits, license, transfer, withholding,
distribution, payroll, employment, social, excise, severance,
stamp, occupation, premium, goods and services, value added,
property, environmental or windfall profits taxes, customs, duties
or similar fees, assessments or charges, together with any
surcharge, interest and any penalties, additions to tax or
additional amounts (including any interest thereon) imposed by any
Governmental Body.
“
Tax Authority ” means the Internal Revenue Service and
any other domestic or foreign Governmental Body responsible for the
administration or collection of any Taxes.
“
Tax Laws ” means all Laws relating to
Taxes.
“
Tax Returns ” shall mean all reports, declarations of
estimated Tax, claims for refund, withholding Tax returns,
information statements and returns which have been filed or which
are required to be filed with a Tax Authority in connection with
any Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
“
Technology ” means, collectively, all designs,
formulae, algorithms, procedures, methods, techniques, know-how,
research and development, technical data, programs, subroutines,
tools, materials, specifications, processes, inventions (whether
patentable or unpatentable and whether or not reduced to practice),
apparatus, creations, improvements, works of authorship and other
similar materials, and all recordings, graphs, drawings, reports,
analyses,
6
and other
writings, and other tangible embodiments of the foregoing, in any
form whether or not specifically listed herein, and all related
technology.
“
Transaction Documents ” means each agreement,
document, instrument or certificate contemplated by this Agreement
or to be executed by any party to this Agreement in connection with
the consummation of the transactions contemplated by this
Agreement.
1.2
Terms Defined Elsewhere in this Agreement . For purposes of
this Agreement, the following terms have meanings set forth in the
sections indicated:
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|
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Term
|
|
Section
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338
Election
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7.10(d)
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401(k)
Plan
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5.12(c)
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Accounts
Payable
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|
2.3(a)
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Accounts
Receivable
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2.1(i)
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Adverse
Post-Closing Tax Proceeding
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7.10(a)
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Adverse
Pre-Closing Tax Proceeding
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7.10(a)
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Affiliate
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1.1
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Agreement
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Preamble
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Allocation
Schedule
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7.10(d)
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Annual
Financial Statements
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5.4(a)
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Assets
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2.1
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Assigned
Agreements
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2.1(e)
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Assumed
Liabilities
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2.3
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Balance Sheet
Date
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5.4(a)
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Benefit
Plans
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5.12(a)
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Bill of
Sale
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2.5(a)
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Books and
Records
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2.1(h)
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Business
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Recitals
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Business
Balance Sheet
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5.4(a)
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Business
Day
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1.1
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Business
Employee
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1.1
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Business
Intellectual Property
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1.1
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CableTech
Business
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2.2(h)
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Canada
Employees
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5.13(c)
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Canada
Non-Competition Covenant
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7.13(a)(i)
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Canadian
Purchaser
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1.1
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Canadian
Seller
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1.1
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Cap
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9.2(a)(ii)
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Capital
Leases
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5.11(a)(xv)
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Clearance
Certificate
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7.10(e)
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Closing
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4.1
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Closing
Date
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4.1
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Closing Date
Statement
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3.1(b)(ii)
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Closing Date
Working Capital
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3.1(b)(ii)
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COBRA
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5.12(h)
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7
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Term
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Section
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Code
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1.1
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Concord
Facility
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2.2(h)
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Confidential
Information
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1.1
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Confidentiality
Agreement
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7.5(a)
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Consent
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5.2(b)
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Contract
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1.1
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Copyrights
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1.1
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Deductible
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9.2(a)(i)
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Draft Transfer
Report
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7.8(g)(i)
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Environmental
Law
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1.1
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Environmental
Permits
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5.16(a)
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Estimated
Statement
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3.1(b)(i)
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Estimated
Working Capital
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3.1(b)(i)
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Excluded
Assets
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2.2
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Excluded
Claim
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9.3(c)(i)
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Excluded
Liabilities
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2.4
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Final
Determination
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9.3(c)
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Final Working
Capital
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3.1(b)(v)
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Financial
Statements
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5.4(a)
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Foreign Benefit
Plan
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5.12(h)
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Foreign
Transferred Subsidiaries
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5.7(f)
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GAAP
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1.1
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General
Assignment
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2.5(a)
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Governmental
Body
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1.1
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Hazardous
Material
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1.1
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HSR
Act
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1.1
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Independent
Accountants
|
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7.8(g)(i)
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Independent
Accounting Firm
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3.1(b)(iii)(2)
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In-Licensed
IP
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1.1
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In-Licenses
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5.10(f)
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Instruments of
Assignment
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2.5(a)
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Instruments of
Assumption
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2.5(b)
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Intellectual
Property
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1.1
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Interim
Financial Statements
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5.4(a)
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Inventory
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2.1(j)
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IRS
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1.1
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KERP
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7.8(d)
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Knowledge of
Seller
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1.1
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Law
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1.1
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Lease
Assignments
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2.5(a)
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Leased Real
Property
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2.1(f)
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Legal
Proceeding
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1.1
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Liabilities
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1.1
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Lien
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1.1
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Losses
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9.1(a)
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Marks
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1.1
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8
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Term
|
|
Section
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Material
Adverse Effect
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1.1
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Material
Contracts
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5.11(a)
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NDAs
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1.1
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Noncompetition
Period
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7.13(a)(i)
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Off-the-Shelf
Software
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1.1
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Order
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1.1
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Ordinary Course
of Business
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1.1
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Other
Instruments
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2.5(a)
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Owned
Properties
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5.8(a)
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Owned
Property
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5.8(a)
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Parent
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Preamble
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Parent
Plans
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5.12(a)
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Patent
Assignment
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2.5(a)
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Patents
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1.1
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Permits
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1.1
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Permitted
Exceptions
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1.1
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Person
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1.1
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Post-Closing
Tax Period
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1.1
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Pre-Closing Tax
Period
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1.1
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Pre-Closing Tax
Proceeding
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7.10(a)
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Preliminary
Purchase Price
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3.1(a)
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Products
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1.1
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Purchase
Price
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3.1(b)(vi)
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Purchaser
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Preamble
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Purchaser
Canadian Plan
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7.8(g)(i)
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Purchaser
Indemnified Parties
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9.1(a)
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Purchaser
Plans
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7.8(b)
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Real Property
Lease
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5.8(b)
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Real Property
Leases
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5.8(b)
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Rebate
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1.1
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Registered
IP
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5.10(c)
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Release
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1.1
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Remaining
Concord Assets
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5.9
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Remedial
Action
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1.1
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Representative
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1.1
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Retained
Aviation Products
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5.19
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Retained
Subsidiaries
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1.1
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Securities
Act
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|
6.5
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|
Seller
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|
Preamble
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|
Seller
Acquisition Date
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|
5.4(b)
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|
Seller Canadian
Plan
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|
7.8(g)(i)
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|
Seller
Indemnified Parties
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|
9.1(b)
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|
Seller
Marks
|
|
7.11(a)
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|
Software
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|
1.1
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|
Stock
Powers
|
|
2.5(a)
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|
Straddle
Period
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|
1.1
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9
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Term
|
|
Section
|
|
Subsidiaries
|
|
1.1
|
|
Superintendent
|
|
7.8(g)(i)
|
|
Supply
Agreement
|
|
7.9(a)
|
|
Survival
Period
|
|
10.1
|
|
Tangible
Personal Property
|
|
1.1
|
|
Target Working
Capital
|
|
1.1
|
|
Tax
|
|
1.1
|
|
Tax
Authority
|
|
1.1
|
|
Tax
Laws
|
|
1.1
|
|
Tax
Proceeding
|
|
7.10(a)
|
|
Tax
Returns
|
|
1.1
|
|
Taxes
|
|
1.1
|
|
Technology
|
|
1.1
|
|
Third Party
Claim
|
|
9.3(b)
|
|
Trademark
Assignment
|
|
2.5(a)
|
|
Transaction
Documents
|
|
1.1
|
|
Transfer
Report
|
|
7.8(g)(i)
|
|
Transfer
Taxes
|
|
7.10(d)
|
|
Transferred
Benefit Plans
|
|
5.12(a)
|
|
Transferred
Employees
|
|
7.8(a)
|
|
Transferred
Marks
|
|
7.11(a)
|
|
Transferred
Securities
|
|
2.1(b)
|
|
Transferred
Subsidiaries
|
|
2.1(b)
|
|
Transferred
Subsidiary
|
|
2.1(b)
|
|
Transferred
Subsidiary Tax Returns
|
|
7.10(b)
|
|
Transition
Services Agreement
|
|
7.9(b)
|
|
Undertaking
|
|
2.5(b)
|
|
WARN
Act
|
|
5.13(b)
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|
Working
Capital
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3.1(b)(i)
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1.3
Other Definitional and Interpretive Matters . Unless
otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:
(a)
Calculation of Time Periods . When calculating the period of
time before which, within which or following which any act is to be
done or step taken pursuant to this Agreement, the date that is the
reference date in calculating such period shall be excluded. If the
last day of such period is a non-Business Day, the period in
question shall end on the next succeeding Business Day.
(b)
Dollars . Any reference in this Agreement to $ shall mean
U.S. dollars, and any amounts denominated in U.S. dollars shall
mean the amount set forth or the equivalent of such amount in any
other currency or currencies.
(c)
Headings . The headings contained in this Agreement and the
Schedules hereto are for purposes of convenience only and will not
affect the meaning or interpretation of this Agreement or any such
Schedule. Unless otherwise expressly indicated, any reference in
this Agreement (including any Schedule hereto) to an
“Article,” “Section,”
“subsection,”
10
“paragraph” or
“subparagraph” followed by a number or letter or
combination of the two will be a reference to the particular
Article, Section, subsection, paragraph or subparagraph of this
Agreement bearing such number, letter or combination
thereof.
(d)
Hereof and Herein . The terms “hereof,”
“herein,” “hereunder” and comparable terms
refer, unless otherwise expressly indicated, to this Agreement as a
whole and not to any particular Article, Section, subsection,
paragraph, subparagraph or other subdivision hereof or any
Schedule, Exhibit or other attachment hereto.
(e)
Including . The terms “include,”
“includes” and “including” will be deemed
to be followed by the words “without
limitation.”
(f)
Gender and Number . Whenever the context so requires, the
singular number will include the plural and the plural will include
the singular, and the gender of any pronoun will include the other
gender or neuter, as applicable.
(g)
Statutes and Regulations . Any reference in this Agreement
to a particular statute, regulation or code (including any specific
provision thereof) includes all regulations and rules thereunder,
all amendments thereto in force at the applicable time (including
amendments to provision references).
1.4
Construction . The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and, in the event
an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as jointly drafted by the parties
hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
TRANSFER OF ASSETS AND
LIABILITIES
2.1
Assets to be Sold . On the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall and
shall cause the Retained Subsidiaries to sell, convey, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase,
acquire and accept from Seller and the Retained Subsidiaries, all
of Seller’s and the Subsidiaries’ right, title and
interest in and to all of the properties, assets, rights and claims
of Seller and the Subsidiaries used or held for use primarily in
the Business (other than Excluded Assets), of every kind, character
and description, whether tangible, intangible, personal or mixed
and wherever located, whether or not carried on the books of Seller
and the Subsidiaries (collectively, the “ Assets
”), free and clear of all liabilities, obligations and Liens,
except the Assumed Liabilities and Permitted Exceptions, including,
without limitation, the following:
(a) All of
the Business Intellectual Property;
(b) All of
the capital stock or other equity interests (collectively, the
“ Transferred Securities ”) of each of Noma
O.P., Inc., a Delaware corporation, Noma de Reynosa, S.A. de C.V.,
a company organized and existing under the laws of Mexico, GenTek
Technology Pvt. Ltd., a company organized and existing under the
laws of India, and Sistemas y Conexiones
11
Integradas,
S.A. de C.V., a company organized and existing under the laws of
Mexico (each, a “ Transferred Subsidiary ” and,
collectively, the “ Transferred Subsidiaries
”);
(c) All
Tangible Personal Property owned, leased or held for use by Seller
or a Subsidiary and located at the Leased Real Property or the
Owned Properties (other than the Remaining Concord Assets), in the
possession or control of Transferred Employees for use primarily in
the operation of the Business, or otherwise used or held for use
primarily in connection with the Business, a schedule of which
Tangible Personal Property used in the Business and carried on the
books of account of the Business with a value in excess of $50,000
is set forth on Schedule 2.1(c) ;
(d) All
claims, deposits, prepayments and similar items arising primarily
out of, or relating primarily to, the Business, the Assets or the
Assumed Liabilities, and the full benefit of any and all security
for such items;
(e) All
Contracts to which any Seller or a Subsidiary is a party and which
arise primarily out of or relate primarily to the Assets (including
Capital Leases), the Assumed Liabilities or the conduct of the
Business (collectively, the “ Assigned Agreements
”), including all rights to receive goods and services
purchased pursuant to such Contracts and all claims and rights to
take any other actions arising out of or related to such Contracts
or in respect thereof;
(f) The Real
Property Leases set forth on Schedule 2.1(f)(i) (the
“ Leased Real Property ”) and the Owned
Properties set forth on Schedule 2.1(f)(ii) and, in
each case, all buildings, structures and other improvements
situated thereon;
(g) To the
extent transferable, all Permits of Seller and the Subsidiaries
used or held for use primarily in connection with the ownership,
lease or operation of the Assets or the conduct of the
Business;
(h) Subject
to Section 2.2(c) , originals or true copies of all
books, records, agreements, invoices, correspondence, files and
other documents (whether on paper, computer diskette, tape or other
storage media) prepared for or associated primarily with the
Assets, the Assumed Liabilities or the operation of the Business
(“ Books and Records ”), including, but not
limited to, stock records, minute books, other corporate records,
property records, production records, purchase and sales records,
credit data, marketing, advertising and promotional materials,
sales literature, personnel and payroll records pertaining to
Transferred Employees (to the extent not prohibited under
applicable Law), accounting records, financial reports, Tax Returns
in the possession or control of Seller or a Subsidiary (other than
Tax Returns of or that include (where such return is prepared on a
consolidated, combined, unitary or affiliated basis) Seller or any
Subsidiary and income Tax Returns of any Retained Subsidiary),
fixed asset lists, customer, vendor, supplier, distributor and
sales prospect lists, records and information, parts lists,
manuals, technical and repair data, correspondence, files and any
similar items;
(i) All
billed and unbilled accounts and notes receivable to the extent
arising out of or associated with the operation of the Business or
the Assets (“ Accounts Receivable ”), and the
full benefit of any and all security for such Accounts Receivable
and any unpaid financing charges accrued thereon;
12
(j) All raw
material inventories, work-in-process, consignment inventory,
inventory being tolled and finished products, in any case, which
are located at the Leased Real Property or the Owned Properties, in
transit to the Leased Real Property or the Owned Properties, in the
possession or control of any customer of the Business, or located
at any location set forth on Schedule 2.1(j) (the “
Inventory ”);
(k) Subject
to Section 2.2(g) , all information systems, hardware,
telephone systems, software systems, database and database systems
used or held for use primarily in the conduct or operation of the
Business and any and all rights thereunder;
(l) All
express or implied warranties, representations or guarantees made
by suppliers furnishing goods (including the Tangible Personal
Property) or services to Seller or any Subsidiary used primarily in
the Business, including warranties, representations, guarantees or
other obligations related to product support or
maintenance;
(m) Subject
to Section 2.2(d) , all rights, claims and causes of
action against third parties to the extent relating to the Assets
or the operation of the Business, including, but not limited to,
all such claims against customers;
(n) Any
assets relating to the Transferred Benefit Plans as provided in
Section 7.8 ;
(o) All
insurance proceeds received by Parent, Seller or any of their
subsidiaries to the extent related to the Business (other than the
Excluded Assets and the Excluded Liabilities) or any Assets as a
result of any damage or claim occurring between the date of this
Agreement and the Closing Date and any rights, claims or causes of
action existing or arising primarily in respect of the Business
(other than the Excluded Assets and the Excluded Liabilities) and
the Assets (to the extent such proceeds have not been applied to
mitigate such damage or claim);
(p) All
prepaid expenses, including prepaid real estate and ad
valorem Taxes, leases and rentals, to the extent related to the
Business, Assets or Assumed Liabilities;
(q) All
stationery, forms, labels, shipping materials, brochures, art work,
photographs, advertising materials and any similar items used or
held for use primarily in the Business;
(r) All
goodwill associated with the Business or the Assets; and
(s) All other
properties, assets, rights and claims reflected on the Business
Balance Sheet or accrued after the date thereof and which would
reasonably be expected to be reflected thereon if the Business
Balance Sheet were prepared as of the Closing Date, or otherwise
used or held for use primarily in the conduct or operation of the
Business, including all properties, assets, rights and claims
included in the definition of Working Capital and reflected on the
Closing Date Statement, but not otherwise described in this
Section 2.1 .
2.2
Excluded Assets . Notwithstanding any other provision of
this Agreement, the Assets shall not include, and Seller and the
Retained Subsidiaries shall retain all of their right, title and
interest in and to, all of the following properties, assets, rights
and claims of Seller and the Subsidiaries (collectively, the
“ Excluded Assets ”), which shall not be sold,
conveyed, assigned, transferred or delivered to
Purchaser:
13
(a) All cash
on hand and short-term instruments and all similar types of
investments, such as certificates of deposit, treasury bills and
other marketable securities as of the Closing Date (other than any
of the foregoing held by any Transferred Subsidiary as of the
Closing Date);
(b) All
insurance policies and bonds of Parent, Seller or any of their
subsidiaries or otherwise (other than any such insurance policies
and bonds maintained by the Transferred Subsidiaries), including,
except as set forth in Section 2.1(o) , all rights,
claims and causes of action of every nature and description under
or arising out of such insurance policies;
(c) All
original Books and Records that would otherwise constitute Assets
but for the fact that Seller or a Retained Subsidiary is required
to retain such original books and records pursuant to applicable
Law (in which case copies of such Books and Records shall be
included in the Assets);
(d) All
claims, rights, interests and proceeds with respect to Tax refunds
relating to any Pre-Closing Period as set forth in
Section 7.10 ;
(e) All
assets of the Business sold or otherwise disposed of not in
violation of the terms of this Agreement during the period from the
date of this Agreement until the Closing Date;
(f) The
minute books, incorporation documents, stock transfer, and Tax
Returns of or that include (where such return is prepared on a
consolidated, combined, unitary or affiliated basis) the Seller or
any Subsidiary and the income Tax Returns of any Retained
Subsidiary or similar related corporate records of Seller and the
Retained Subsidiaries;
(g) The
assets being provided to Purchaser pursuant to the Transition
Services Agreement;
(h) The Owned
Real Property located in Concord, Ontario, and all buildings,
structures and other improvements thereon (the “ Concord
Facility ”), and the Remaining Concord Assets;
(i) All of
the properties, assets, rights and claims used or held for use
primarily in Seller’s insulated wire business located in
Mineral Wells, Texas (the “ CableTech Business
”), and all other assets located in Mineral Wells, Texas that
are used or held for use primarily in any business other than the
Business;
(j) All
equity interests held by Seller or any Retained Subsidiary (other
than equity interests in the Transferred Subsidiaries);
(k) All
rights, claims and causes of action of Seller or any Subsidiary
(i) described on Schedule 2.2(k) , or
(ii) against any third party arising out of any facts or
circumstances relating to any claim by a third party against Seller
that constitutes an Excluded Liability;
(l) All
Benefit Plans, except Transferred Benefit Plans, and all assets
related thereto; and
14
(m) All
assets, rights and properties listed on Schedule 2.2(m)
.
2.3
Assumed Liabilities . Upon the terms and subject to the
conditions of this Agreement, at the Closing, Purchaser shall
assume only the following Liabilities of Seller and the
Subsidiaries (collectively, the “ Assumed Liabilities
”):
(a) All
accounts payable of the Business as of the Closing (to the extent
that such accounts payable relate to the Business and other than
any accounts payable to Seller or any Affiliate of Seller) to the
extent reflected in Working Capital as of the Closing Date (“
Accounts Payable ”);
(b) All
accrued expenses of the Business as of the Closing (to the extent
such accrued expenses relate to the Business) to the extent
reflected in Working Capital as of the Closing Date, including, for
the avoidance of doubt, liabilities for non-income Taxes in the
amount reflected in Working Capital as of the Closing
Date;
(c) All
obligations of Seller and the Subsidiaries under the Assigned
Agreements, to the extent such obligations (i) were not due to
have been satisfied or discharged at or prior to the Closing,
(ii) are reflected on the Closing Date Statement, or
(iii) are not required to be reflected on the Closing Date
Statement and have not arisen as a result of a default or breach of
such Assigned Agreement or this Agreement by Seller or any
Subsidiary;
(d) All
Permitted Exceptions to which the Assets are subject;
(e) The
Liabilities assumed pursuant to Section 7.8 (including
any Liabilities resulting from the failure of Purchaser to comply
with Section 7.8 );
(f) The
Liabilities listed on Schedule 5.11(b)(1); and
(g) All other
Liabilities of the Business arising after the Closing.
2.4
Excluded Liabilities . Notwithstanding any other provision
in this Agreement, Purchaser is assuming only the Assumed
Liabilities and is not assuming any other Liability of Seller or
the Subsidiaries or their respective Affiliates of whatever nature,
whether presently in existence or arising hereafter (all such
liabilities and obligations not being assumed being herein referred
to as the “ Excluded Liabilities ”), and,
notwithstanding anything to the contrary, the Assumed Liabilities
shall not include for the purposes of this Agreement, without
limitation, any of the following:
(a) Except as
set forth in Section 7.12 and except for indebtedness
under Capital Leases, any indebtedness of Seller or any of the
Subsidiaries;
(b) Any
Liabilities to the extent arising out of or relating to an Excluded
Asset;
(c) Any
Liabilities to the extent arising from or as a result of the
conduct of any business of Seller or any of the Subsidiaries other
than the Business;
15
(d) Liabilities
with respect to any Legal Proceedings (including all Legal
Proceedings set forth on Schedules 2.2(k) and 5.14
);
(e) Except
for any non-income Taxes in the amount assumed by Purchaser
pursuant to Section 2.3(b) and any Transfer Taxes to be paid
by Purchaser pursuant to Section 7.10(d) hereof,
(A) any Liabilities of Seller or any Affiliate of Seller
(other than the Transferred Subsidiaries) for the Taxes of Seller
or its Affiliates (other than the Transferred Subsidiaries) and
(B) all Taxes of any Person imposed on Seller or any of its
Affiliates (other than the Transferred Subsidiaries) as a result of
being a member of any consolidated, combined, affiliated or unitary
Tax group or as a transferee or successor, by contract, or
otherwise;
(f) Any
Liabilities and expenses for any accounting, legal, investment
banking, brokerage or similar fees or expenses incurred by Seller
or any of its Affiliates in connection with the negotiation and
preparation of this Agreement and each of the Transaction Documents
and the consummation of the transactions contemplated hereby and
thereby;
(g) Any
Liabilities relating to Business Employees of Seller and the
Subsidiaries with respect to their employment or service
relationship with Seller and/or its Subsidiaries, whether or not
arising under any Benefit Plan, other than a Transferred Benefit
Plan as provided in Section 7.8 , for periods ending on or
prior to the Closing Date, other than those expressly assumed by
Purchaser pursuant to this Agreement or which are reflected in
Working Capital as of the Closing Date;
(h) any
Liabilities relating to the design, manufacture, marketing, sale,
distribution or other disposition of Retained Aviation Products,
including any obligation to maintain any insurance with respect
thereto;
(i) Any
Liabilities relating to any stock option or other equity-based
award granted by Parent or any of its Affiliates to any Transferred
Employee;
(j) Any
Liabilities relating to any bonus that may become payable to a
Transferred Employee as a result of the transactions contemplated
by this Agreement (other than any such bonus agreement between
Purchaser or any of its Affiliates and such Transferred
Employee);
(k) Any
Liabilities relating to any claim for personal injury and/or
property damage to the extent arising out of pre-Closing
occurrences or the operation of the Business or the sale of
Products prior to the Closing Date and based on product liability,
strict liability or other similar theories of recovery, but
excluding any Liabilities arising under worker’s compensation
legislation to the extent such Liabilities would be covered by
worker’s compensation insurance coverage required by
applicable Law to be maintained by Purchaser;
(l) Any
Liabilities of Seller and the Subsidiaries existing as of the
Closing Date which should have been reflected on the Business
Balance Sheet or the Closing Date Statement and which are not so
reflected, unless they are Assumed Liabilities;
(m) Any
Liabilities (including, without limitation, any severance,
restructuring, relocation, and environmental and clean up costs) to
the extent arising from or related to the closing of the Concord
Facility;
16
(n) Any
Liabilities arising from or related to the sale of the facility
located in Stouffville, Ontario to Southwire Canada Company,
including all Liabilities arising under all Contracts entered into
in connection with such sale;
(o) Subject
to Section 7.8 , any Liabilities arising under the WARN
Act and other similar applicable Laws due to any actions taken by
Seller or any Subsidiary prior to the Closing Date with regard to
any site of employment, facility, operating unit or employee
affected by this Agreement (including the Concord Facility), except
for any Liability resulting from any action taken by Purchaser;
and
(p) Any
Liabilities or obligations owed to Parent, Seller or any of their
respective Affiliates to the extent not reflected in Working
Capital as of the Closing Date, other than pursuant to the
Transaction Documents and the Assigned Agreements.
2.5
Transfer of Assets and Assumption of Liabilities
.
(a) At the
Closing, Seller and the Subsidiaries shall effectuate the sale,
conveyance, assignment, transfer and delivery of the Assets to
Purchaser by delivering to Purchaser or its designees each of the
following: (i) a duly executed bill of sale, in a customary
form as shall be mutually agreed to by Seller and Purchaser (the
“ Bill of Sale ”); (ii) a duly executed
assignment and assumption agreement relating to the Assigned
Agreements, Permits and other Assets held by Seller and the
Retained Subsidiaries, in a customary form as shall be mutually
agreed to by Seller and Purchaser (the “ General
Assignment ”); (iii) a duly executed assignment of
Marks with respect to the Marks included in the Business
Intellectual Property and held by Seller and the Retained
Subsidiaries, in a customary form as shall be mutually agreed to by
Seller and Purchaser (the “ Trademark Assignment
”); (iv) a duly executed assignment of Patents with
respect to the Patents included in the Business Intellectual
Property and held by Seller and the Retained Subsidiaries, in a
customary form as shall be mutually agreed to by Seller and
Purchaser (the “ Patent Assignment ”);
(v) certificates representing the Transferred Securities, duly
endorsed to Purchaser and/or its designee(s) (it being understood
and agreed that Purchaser may designate any one or more Person(s),
whether or not an Affiliate, to acquire any portion of the
Transferred Securities by providing written notice of such
designation to Seller not less than three (3) Business Days
prior to the Closing Date and by certifying that Purchaser’s
representations and warranties set forth in Section 6.5 hereof
also apply to, and are true and accurate in all respects with
regard to, such designee(s); provided, that no such
designation shall relieve Purchaser of any obligation hereunder) or
accompanied by stock powers duly executed in blank or duly executed
instruments of transfer with appropriate stock transfer tax stamps,
if any, affixed, and any other documents, in form and substance
satisfactory to Purchaser, that are necessary to transfer good and
valid title to such capital stock or other equity interest of the
Transferred Subsidiaries to Purchaser and/or its designee(s)
(collectively, the “ Stock Powers ”);
(vi) a duly executed assignment and assumption of lease for
each of the Leased Real Properties (collectively, the “
Lease Assignments ”); and (vii) such other good
and sufficient instruments of conveyance and transfer
(collectively, the “ Other Instruments ” and,
collectively with the Bill of Sale, the General Assignment, the
Trademark Assignment, the Patent Assignment, the Stock Powers, and
the Lease Assignments, the “ Instruments of Assignment
”) as are reasonably necessary to vest in Purchaser good and
valid title to the Assets, free and clear of all liabilities,
obligations, claims and Liens except the Assumed Liabilities and
Permitted Exceptions.
17
(b) At the
Closing, Purchaser shall deliver to Seller and the Subsidiaries a
duly executed undertaking, in a customary form as shall be mutually
agreed to by Seller and Purchaser (the “ Undertaking
”), whereby Purchaser shall assume and agree to perform, pay,
or discharge, when due, the Assumed Liabilities, effective as of
the Closing, and such other instruments, documents or agreements
(collectively, the “ Instruments of Assumption
”) as are reasonably necessary to evidence Purchaser’s
assumption of and agreement to pay and discharge the Assumed
Liabilities.
2.6
Non-assignable Contracts .
(a) To the
extent that any Assigned Agreement is not capable of being assigned
to Purchaser at the Closing without the Consent of any other party
thereto or any Person, or if such assignment or attempted
assignment would constitute a breach thereof, or a violation of any
applicable Law, this Agreement shall not constitute an assignment
or an attempted assignment thereof, unless and until such Consent
has been obtained.
(b) In the
event that any Consent referred to in Section 2.6(a)
has not been obtained prior to the Closing, at Seller’s sole
cost and expense, Seller shall use its commercially reasonable
efforts, and Purchaser and Parent shall cooperate with Seller, to
obtain each and every such Consent and to resolve the
impracticalities of assignment referred to in Section 2.6(a)
after the Closing.
(c) To the
extent that the Consents referred to in Section 2.6(a)
have not been obtained prior to the Closing, until the
impracticalities of assignment referred to in Section 2.6(a)
hereof are resolved, Seller and the applicable Retained Subsidiary
shall use their commercially reasonable efforts to
(i) cooperate with Purchaser in any reasonable and lawful
arrangement designed to provide Purchaser the benefits of any
Assigned Agreement referred to in Section 2.6(a) , and
(ii) enforce, for the account and benefit of Purchaser, any
and all rights of Seller and the applicable Retained Subsidiary
arising from the Assigned Agreements referred to in
Section 2.6(a) against all other parties thereto
(including the right to elect to terminate in accordance with the
terms thereof on the advice of Purchaser). To the extent that
Purchaser is provided the benefits pursuant to this
Section 2.6(c) of any Assigned Agreement, Purchaser
shall perform, on behalf of Seller and the applicable Retained
Subsidiary, for the benefit of all other parties thereto, the
obligations of Seller and the applicable Retained Subsidiary
thereunder or in connection therewith (and in the event that any
action by Purchaser results in any material default thereunder or
in connection therewith, and any such material default results in
the termination of such Assigned Agreement, Purchaser shall no
longer be entitled to receive the benefits of such Assigned
Agreement). Any failure by Purchaser to perform the obligations of
Seller or the applicable Retained Subsidiary under any such
Assigned Agreement or in connection therewith shall constitute a
breach by Purchaser of its covenants under this
Section 2.6(c) . Nothing contained in this
Section 2.6 shall constitute a waiver of, or impair,
Purchaser’s rights under Section 8.1 or ARTICLE
IX.
2.7
Payments Post-Closing .
(a) If,
following the Closing Date, Seller or any of its Affiliates
receives any payment or other proceeds (including the benefit of a
mistaken payment) relating to any Assets or
18
otherwise
relating to the conduct or operation of the Business after Closing
(excluding any payment or other proceeds relating to or included in
the Excluded Assets and excluding refunds for Taxes that are
allocable to a Pre-Closing Tax Period), including with respect to
any Accounts Receivable or Inventory purchased by Purchaser
hereunder, Seller shall, and shall cause its Affiliates to,
promptly remit to Purchaser the amount of any such payments or
other proceeds. On the last day of each month during the six
(6) month period beginning on the Closing Date, Seller shall
report to Purchaser the amount of all such payments or proceeds so
received.
(b) If,
following the Closing Date, Purchaser or any of its Affiliates
receives any payment or other proceeds (including the benefit of a
mistaken payment) relating to any Excluded Assets, the conduct or
operation of the Business prior to Closing (excluding any payment
or other proceeds relating to or included in the Assets), or
otherwise relating to the conduct or operation of Seller and its
Subsidiaries other than the Business, Purchaser shall, and shall
cause its Affiliates to, promptly remit to Seller the amount of any
such payments or other proceeds. On the last day of each month
during the six (6) month period beginning on the Closing Date,
Purchaser shall report to Seller the amount of all such payments or
proceeds so received.
2.8
Withholding . Purchaser (or any other Person responsible for
withholding any amount with respect to any payment made under this
Agreement) shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement such
amounts as are required to be deducted and withheld with respect to
the making of such payment under the Code, or any provision of
state, local or foreign Tax Law (including the Tax Laws of Mexico
and India). Purchaser shall timely remit or deposit all withheld
amounts with the applicable Governmental Body and provide Seller or
the applicable Retained Subsidiary with any return or other
document required to be prepared with respect to such deposit or
remittance or other evidence of deposit or remittance acceptable to
Seller or such Retained Subsidiary, as the case may be. To the
extent that amounts are so deducted, withheld and timely and
appropriately remitted or deposited with the relevant Governmental
Body, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the Person in respect of
which such deduction and withholding was made.
(a)
Preliminary Purchase Price . The preliminary purchase price
for the Assets and the covenant not to compete contained in
Section 7.13 (Non-Competition) and in the Canada
Non-Competition Covenant shall be an amount of cash equal to
Seventy-Five Million Dollars ($75,000,000), less
(x) the amount of any indebtedness of the Transferred
Subsidiaries (other than any indebtedness owed by a Transferred
Subsidiary to another Transferred Subsidiary) and indebtedness
under Capital Leases as of the Closing Date, plus
(y) the amount of cash (not to exceed One Million Five Hundred
Thousand Dollars ($1,500,000)) of the Transferred
19
Subsidiaries as
of the Closing Date (the “ Preliminary Purchase Price
”). On the Closing Date, Purchaser shall pay the Preliminary
Purchase Price, as adjusted pursuant to Section 3.1(b)(i),
to Seller in cash, which shall be paid by wire transfer of
immediately available United States funds into an account or
accounts designated by Seller in writing not less than three
(3) Business Days prior to the Closing Date. For Tax purposes,
the Preliminary Purchase Price and the adjustment to the
Preliminary Purchase Price shall be allocated in accordance with
Section 7.10(f) .
(b)
Adjustment of Preliminary Purchase Price . The Preliminary
Purchase Price shall be subject to adjustment as provided in this
Section 3.1(b) .
(i) Estimated
Statement . As of the close of business on the fifth (5th)
Business Day immediately preceding the Closing Date, Seller will
deliver to Purchaser a statement (the “ Estimated
Statement ”) setting forth (A) Seller’s
reasonable good faith estimate of (i) the sum of
(w) Accounts Receivable, net of applicable reserves (to the
extent such reserves are not reflected in clause (ii) below),
(x) prepaid expenses of the Business, (y) Inventory, net
of applicable reserves (to the extent such reserves are not
reflected in clause (ii) below), and (z) other current
assets of the Business, minus (ii) the sum of
(x) Accounts Payable, (y) accrued compensation of the
Business, and (z) other current liabilities of the Business
(excluding Excluded Liabilities and the current portion of any
indebtedness referred to in clause (x) of
Section 3.1(b) ), in each case, calculated as of the
Closing Date in accordance with the accounting principles and
methodologies (including GAAP) employed by Seller in preparing the
Business Balance Sheet and those set forth on
Schedule 3.1(b) consistently applied (such amount
generally, “ Working Capital ,” and such amount
estimated as of the Closing Date, the “ Estimated Working
Capital ”), and (B) the calculation of the
Preliminary Purchase Price, as adjusted pursuant to this Section
3.1(b)(i) (including (i) the amount of indebtedness of the
Transferred Subsidiaries (other than any indebtedness owed by a
Transferred Subsidiary to another Transferred Subsidiary) and
indebtedness under Capital Leases and (ii) the amount of cash
of the Transferred Subsidiaries, in each case estimated as of the
Closing Date). The Estimated Statement shall be signed by
Seller’s Chief Financial Officer and accompanied by
reasonable supporting documentation. Purchaser shall have the right
to review the Estimated Statement and such supporting documentation
or data of Seller and its Subsidiaries as Purchaser may reasonably
request. In the event that Purchaser does not agree with
Seller’s estimate, Seller and Purchaser shall negotiate in
good faith to mutually agree on an acceptable estimate of the
Estimated Working Capital, and Seller shall consider in good faith
any proposed comments or changes that Purchaser may reasonably
suggest; provided , however , that Seller’s
failure to include in the Estimated Statement any changes proposed
by Purchaser, or the acceptance by Purchaser of the Estimated
Statement, shall not limit or otherwise affect Purchaser’s
remedies under this Agreement, including Purchaser’s right to
include such changes or other changes in the Closing Date
Statement, or constitute an acknowledgment by Purchaser of the
accuracy of the Estimated Statement. If the Estimated Working
Capital is less than the Target Working Capital, the Preliminary
Purchase Price payable by Purchaser to Seller at Closing shall be
reduced by the amount of such shortfall,
20
and if the
Estimated Working Capital is greater than the Target Working
Capital, the Preliminary Purchase Price payable by Purchaser to
Seller at Closing shall be increased by the amount of such excess;
provided , however , that if the amount
of such reduction or increase is less than One Million Dollars
($1,000,000), then for purposes of this
Section 3.1(b)(i) , no adjustment shall be made to the
Preliminary Purchase Price.
(ii) Closing
Date Statement . No later than sixty (60) calendar days
after the Closing Date, Purchaser shall prepare and deliver to
Seller a statement (the “ Closing Date Statement
”) of the actual (x) Working Capital as of the Closing
Date (such amount, the “ Closing Date Working Capital
”), (y) amount of indebtedness of the Transferred
Subsidiaries (other than any indebtedness owed by a Transferred
Subsidiary to another Transferred Subsidiary) and indebtedness
under Capital Leases as of the Closing Date, and (z) amount of
cash of the Transferred Subsidiaries as of the Closing Date, which
Closing Date Statement shall be prepared in accordance with the
accounting principles and methodologies (including GAAP) employed
by Seller in preparing the Business Balance Sheet and those set
forth on Schedule 3.1(b) consistently applied. The
Closing Date Statement shall be signed by Purchaser’s Chief
Financial Officer and accompanied by reasonable supporting
documentation. Following the Closing, each of Purchaser and Seller
shall give the other party reasonable access at all reasonable
times to the properties, books, records and personnel of the
Business for purposes of preparing, reviewing and resolving any
disputes concerning the Closing Date Statement. Seller shall, and
shall use commercially reasonable efforts to cause its accountants
to, cooperate with Purchaser and its accountants to the extent
required to enable Purchaser to prepare the Closing Date Statement
in accordance with this Agreement.
(1)
Subject to clause (2) of this Section 3.1(b)(iii)
, the Closing Date Statement delivered by Purchaser to Seller shall
be deemed to be and shall be final, binding and conclusive on the
parties hereto.
(2)
Seller may dispute any amounts reflected on the Closing Date
Statement; provided , however , that Seller shall be
deemed to have agreed to each item or amount set forth in the
Closing Date Statement (and waived any right to dispute the same)
unless Seller has notified Purchaser in writing of each disputed
item, specifying the amount thereof in dispute and setting forth,
in reasonable detail, the basis for such dispute, within thirty
(30) calendar days after Purchaser’s delivery of the Closing
Date Statement to Seller. In the event of such a dispute, Seller
and Purchaser shall attempt to reconcile their differences, and any
resolution by them as to any disputed amounts shall be final,
binding and conclusive on the parties hereto; provided ,
that such amounts shall not be less, with respect to assets, or
more, with respect to liabilities, than the amounts shown in
Purchaser’s calculation delivered pursuant to
21
Section 3.1(b)(ii) nor more, with respect to assets, or less, with
respect to liabilities, than the amounts shown in Seller’s
calculation delivered pursuant to this Section
3.1(b)(iii)(2) . If Seller and Purchaser are unable to reach a
resolution with such effect within thirty (30) calendar days
after receipt by Purchaser of Seller’s written notice of
dispute, Seller and Purchaser shall submit the items remaining in
dispute for resolution to an independent accounting firm of
international reputation mutually acceptable to Purchaser and
Seller (such accounting firm being referred to herein as the
“ Independent Accounting Firm ”), which shall,
within forty five (45) calendar days after such submission,
determine and report to Purchaser and Seller upon such remaining
disputed items, and such report shall be final, binding and
conclusive on the parties hereto. The fees and disbursements of the
Independent Accounting Firm shall be allocated between Seller and
Purchaser in the same proportion that the aggregate amount of such
remaining disputed items so submitted to the Independent Accounting
Firm that are unsuccessfully disputed by each such party (as
finally determined by the Independent Accounting Firm) bears to the
total amount of such remaining disputed items so
submitted.
(iv) Final
Closing Date Statement . The Closing Date Statement shall be
deemed final and binding for the purposes of this
Section 3.1(b) upon the earliest of (A) the
failure of Seller to notify Purchaser of a dispute within thirty
(30) calendar days of Purchaser’s delivery of the
Closing Date Statement to Seller, (B) the resolution of all
disputes, pursuant to Section 3.1(b)(iii)(2) , by
Purchaser and Seller and (C) the resolution of all disputes,
pursuant to Section 3.1(b)(iii)(2) , by the Independent
Accounting Firm.
(v) Purchase
Price Adjustment . Within three (3) Business Days after
the Closing Date Statement is deemed final and binding pursuant to
Section 3.1(b)(iv) (the Working Capital amount reflected on
such final Closing Date Statement, the “ Final Working
Capital ”), the Preliminary Purchase Price shall be, if
necessary, further adjusted such that Purchaser and Seller receive
or make payments to each other so that, after taking into account
any prior payments under Section 3.1(b)(i) , each party
receives or makes payments in an amount exactly equal to the amount
that would have been made under Section 3.1(b)(i) if
the Estimated Working Capital had equaled the Final Working Capital
and if the amount of indebtedness and cash reflected on the
Estimated Statement had equaled the amount of indebtedness and cash
reflected on such final Closing Date Statement. All payments to be
made under this Section 3.1(b)(v) shall be made on a
net basis taking into account payments received under
Section 3.1(b)(i) .
(vi)
Payment . If the amount of any adjustment pursuant to clause
(v) above results in an increase in the Preliminary Purchase Price,
then Purchaser shall, within three (3) Business Days after the
Closing Date Statement is deemed final, pay to Seller the amount of
such increase by wire transfer of immediately available funds to
the account specified by Seller. If the amount of any adjustment
pursuant to clause (v) above results in a decrease in the
Preliminary
22
Purchase Price,
then Seller shall, within three (3) Business Days after the
Closing Date Statement is deemed final, pay to Purchaser the amount
of such decrease by wire transfer of immediately available funds to
the account specified by Purchaser. The Preliminary Purchase Price
as so adjusted by Section 3.1(b) , is referred to
herein as the “ Purchase Price .” Any payment
amount shall bear interest thereon from the Closing Date to the
date of payment at the rate equal to one percent (1%) above the
prime rate of JPMorgan Chase Bank, N.A. on the Closing
Date.
4.1
Closing Date . Subject to the satisfaction of the conditions
set forth in Sections 8.1 and 8.2 hereof (or the
waiver thereof by the party entitled to waive that condition), the
closing of the transactions contemplated by this Agreement (the
“ Closing ”) shall take place at the offices of
O’Melveny & Myers LLP located at Embarcadero Center West,
275 Battery Street, 26th Floor, San Francisco, California
94111-3305 (or at such other place as the parties may designate in
writing) at 10:00 a.m. (San Francisco time) on a date to be
specified by the parties, which date shall be no later than the
second Business Day after the satisfaction or waiver of each
condition to the Closing set forth in Article VIII
(other than conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of such
conditions), unless another time or date, or both, are agreed to in
writing by the parties hereto. The date on which the Closing shall
be held is referred to in this Agreement as the “ Closing
Date .”
4.2
Closing Deliveries . At the Closing:
(a) Seller
and, where applicable, Parent or the applicable Subsidiary shall
deliver or cause to be delivered to Purchaser:
(i) a receipt for
the Preliminary Purchase Price;
(iii) the General
Assignment;
(iv) the Trademark
Assignment;
(v) the Patent
Assignment;
(vi) all
certificates representing the Transferred Securities, duly endorsed
or accompanied by the Stock Powers duly executed in blank with
appropriate transfer stamps, if any, affixed, and otherwise
sufficient to transfer title to such shares or other equity
interests to Purchaser and/or its designee, free and clear of any
and all Liens, along with any further documents and evidence of any
Third Party Consents that may be required to properly transfer the
Transferred Securities;
23
(vii) the Lease
Assignments;
(viii) the Other
Instruments, if any;
(ix) the
Transition Services Agreement, in a form as shall be mutually
agreed to by Seller and Purchaser in accordance with
Section 7.9(b) ;
(x) the Supply
Agreement, in a form as shall be mutually agreed to by Seller and
Purchaser in accordance with Section 7.9(a)
;
(xi) the Canada
Non-Competition Covenant executed by Canadian Seller pursuant to
Section 7.13(a)(ii) ;
(xii) duly
executed counterparts of the Consents, approvals and registrations
referred to in Section 8.1(f) ;
(xiii) a
certificate executed by a duly authorized officer of Seller and
Parent certifying as to the matters set forth in
Sections 8.1(a) , (b) and 8.1(e); and
(xiv) all other
documents, certificates, instruments, Books and Records or writings
required to be delivered by Parent, Seller or any Subsidiary at or
prior to the Closing pursuant to this Agreement or otherwise
required in connection with the consummation of the transactions
contemplated hereby.
(b) Purchaser
shall deliver or cause to be delivered to Seller:
(i) evidence of
the wire transfer of the Preliminary Purchase Price pursuant to
Section 3.1(a) ;
(iii) the
Instruments of Assumption, if any;
(iv) the General
Assignment;
(v) the Lease
Assignments;
(vi) the
Transition Services Agreement;
(vii) the Supply
Agreement;
(viii) a
certificate executed by a duly authorized officer of Purchaser,
certifying as to the matters set forth in
Sections 8.2(a) and (b) ; and
(ix) all other
documents, certificates, instruments or writings required to be
delivered by Purchaser at or prior to the Closing pursuant to this
Agreement or otherwise required in connection with the consummation
of the transactions contemplated hereby.
24
(c) All
deliveries at the Closing as provided for in this
Section 4.2 shall be deemed to be made and effected
simultaneously and all such deliveries shall be deemed to be in
escrow until all such deliveries have been made and
effected.
4.3
Termination of Agreement . This Agreement may be terminated
prior to the Closing as follows:
(a) at the
election of Seller or Purchaser on or after April 30, 2007, if
the Closing shall not have occurred by the close of business on
such date; provided , however , that the terminating
party is not in material default of any of its obligations
hereunder.
(b) by mutual
written consent of Seller and Purchaser;
(c) by Seller
or Purchaser if there shall have been enacted, issued, promulgated
or enforced any Law that makes the consummation of the transactions
contemplated hereby illegal, or if there shall be in effect a final
nonappealable Order of a Governmental Body of competent
jurisdiction permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated
hereby; it being agreed that the parties hereto shall promptly
appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence);
(d) by Seller
if there shall have been a breach of any representation, warranty,
covenant or agreement of Purchaser set forth in this Agreement,
which breach would give rise to a failure of a condition set forth
in Sections 8.2(a) or (b) , and such breach
shall not have been cured within thirty (30) days following
receipt by Purchaser of written notice of such breach from Seller;
or
(e) by
Purchaser if there shall have been a breach of any representation,
warranty, covenant or agreement of Parent or Seller set forth in
this Agreement, which breach would give rise to a failure of a
condition set forth in Sections 8.1(a) and (b) ,
and such breach shall not have been cured within thirty
(30) days following receipt by Seller of written notice of
such breach from Purchaser.
4.4
Procedure Upon Termination . In the event of termination by
Purchaser or Seller, or both, pursuant to Section 4.3 ,
written notice thereof shall forthwith be given to the other party
or parties, specifying the provision of Section 4.3
pursuant to which such termination is made, and this Agreement
shall terminate, and the transactions contemplated hereby shall be
abandoned, without further action by Purchaser or
Seller.
4.5
Effect of Termination . In the event that this Agreement is
validly terminated in accordance with Section 4.3 , then
each of the parties shall be relieved of its duties and obligations
arising under this Agreement after the date of such termination and
such termination shall be without liability to Purchaser, Parent,
Seller or any Subsidiary, provided , that no such
termination shall relieve any party hereto from liability for any
breach of this Agreement and, provided , further ,
that the obligations of the parties set forth in
Sections 7.5 and ARTICLE X (other than
Section 10.1 ) hereof shall survive any such
termination and shall be enforceable hereunder.
25
REPRESENTATIONS AND WARRANTIES OF
PARENT AND SELLER
Parent
and Seller hereby represent and warrant to Purchaser as
follows:
5.1
Organization and Good Standing; Authorization .
(a) Each of
Parent and Seller is a corporation duly organized, validly
existing, and in good standing under the Laws of the State of
Delaware and has all requisite corporate power and authority to
own, lease and operate its properties and to carry on its business
(including the Business) as now conducted. Seller is duly qualified
or authorized to do business as a foreign corporation and is in
good standing under the Laws of each jurisdiction in which it owns
or leases real property and each other jurisdiction in which the
conduct of its business or the ownership of its assets requires
such qualification or authorization, except where the failure to be
so qualified, authorized or in good standing would not have a
Material Adverse Effect.
(b) Each of
Parent, Seller and the Subsidiaries have all requisite power and
authority to execute and deliver this Agreement and each other
Transaction Document to which it is a party in connection with the
consummation of the transactions contemplated by this Agreement,
and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Transaction
Documents to which Parent, Seller or any such Subsidiary is a party
and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action
on the part of Parent, Seller and such Subsidiary. This Agreement
has been, and each of the Transaction Documents to which Parent,
Seller or any such Subsidiary is a party will be at or prior to the
Closing, duly and validly executed and delivered by Parent, Seller
and such Subsidiary, and (assuming the due authorization, execution
and delivery by the other parties hereto and thereto) this
Agreement constitutes, and each Transaction Document to which
Parent, Seller or such Subsidiary is a party, when so executed and
delivered, will constitute, the legal, valid and binding
obligations of Parent, Seller and such Subsidiary, enforceable
against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
5.2
Conflicts; Consents of Third Parties .
(a) Except as
set forth on Schedule 5.2(a) , none of the execution
and delivery by Parent, Seller or the Subsidiaries of this
Agreement or the Transaction Documents to which Parent, Seller or
any such Subsidiary is a party, the consummation of the
transactions contemplated hereby or thereby, or compliance by
Parent, Seller or such Subsidiary with any of the provisions hereof
or thereof will conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under,
or give rise to a right of termination or cancellation under, any
provision of (i) the constituent documents of Parent, Seller
or such Subsidiary; (ii) any Contract or Permit to which
Parent, Seller or such Subsidiary is a party or by which any of
their respective properties or assets are bound; (iii) any
Order of any Governmental
26
Body applicable
to Parent, Seller or such Subsidiary or by which any of their
respective properties or assets are bound; or (iv) any
applicable Law, other than, in the case of clauses (ii),
(iii) and (iv), such conflicts, violations, defaults,
terminations or cancellations that would not reasonably be expected
to have a Material Adverse Effect.
(b) Except as
set forth on Schedule 5.2(b) , no consent, waiver,
approval, Order, Permit or authorization of, or declaration or
filing with, or notification to (each, a “ Consent
”), any Person or Governmental Body is required on the part
of Parent, Seller or the Subsidiaries in connection with the
execution and delivery of this Agreement or the Transaction
Documents to which Parent, Seller or any such Subsidiary is a party
or the compliance by Parent, Seller or such Subsidiary with any of
the provisions hereof or thereof, or the consummation of the
transactions contemplated hereby or thereby, except for
(i) compliance with the applicable requirements of the HSR Act
and (ii) such Consents, the failure of which to obtain or make
would not reasonably be expected to have a Material Adverse
Effect.
(a)
Schedule 5.3(a) hereto sets forth the name of each
Subsidiary and (i) with respect to each Transferred
Subsidiary, the jurisdiction in which it is incorporated or
organized, the number of shares of its authorized capital stock or
aggregate equivalent equity interests, the number and class of
shares or other equity interests thereof duly issued and
outstanding, the names of all stockholders or other equity owners
and the number of shares of stock owned by each stockholder or the
amount of equity owned by each equity owner, and (ii) with
respect to each Retained Subsidiary, whether it is wholly-owned by
Seller or another Retained Subsidiary and, if not so wholly-owned,
the names of all stockholders or other equity owners and the number
of shares of stock owned by each stockholder or the amount of
equity owned by each equity owner. All of the issued and
outstanding shares of capital stock or equity interests of each
Transferred Subsidiary were duly authorized for issuance and are
validly issued, fully paid and non-assessable and are not subject
to, nor were they issued in violation of, preemptive rights, and
all such shares or other equity interests represented as being
owned (directly or indirectly) by Seller or a Subsidiary are owned
by it free and clear of any and all Liens except as set forth on
Schedule 5.3(a) hereto. There is no existing option,
warrant, call, right, phantom stock right, stock appreciation right
or Contract of any character to which any Subsidiary or Seller is a
party requiring, and there are no securities of any Transferred
Subsidiary outstanding which upon conversion, exercise or exchange
would require, the issuance or transfer of any shares of capital
stock or other equity securities of any Transferred Subsidiary or
other securities convertible into, exercisable or exchangeable for
or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of any Transferred
Subsidiary, nor are there any equity equivalent interests or other
similar rights in the ownership or earnings of any Transferred
Subsidiary. No Transferred Subsidiary or stockholder thereof is a
party to any voting trust or other Contract with respect to the
voting of the shares of capital stock or other equity interests of
such Transferred Subsidiary, or any other agreement relating to the
issuance, redemption, registration, sale, transfer or other
disposition of any capital stock or other equity interests of such
Transferred Subsidiary.
(b) Each
Subsidiary is a corporation or other entity duly organized, validly
existing, and in good standing or its equivalent under the Laws of
the jurisdiction of its organization and
27
has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business (including the
Business) as now conducted. Each Subsidiary is duly qualified or
authorized to do business as a foreign corporation and is in good
standing under the Laws of each jurisdiction in which it owns or
leases real property or in which the conduct of its business or the
ownership of its assets requires such qualification or
authorization (except for any jurisdictions in which the failure to
be so qualified, authorized or in good standing would not have a
Material Adverse Effect).
(c) Except as
set forth on Schedule 5.3(a) , neither Seller nor the
Subsidiaries, directly or indirectly, owns any voting securities or
other voting equity interests in any entity (other than the
Subsidiaries) that owns assets or properties or conducts operations
used or held for use primarily in, or related primarily to, the
Business. Neither Seller nor any of the Subsidiaries has, owns or
controls (of record or beneficially), directly or indirectly, any
interest in any other Person (other than the Subsidiaries), or is a
party to or participant in any partnership, joint venture or other
similar investment, related to the Business. Neither Seller nor any
of the Subsidiaries is subject to any obligation or requirement to
provide funds to or make any investment (whether in the form of a
loan, capital contribution or otherwise) in any Person related to
the Business.
5.4
Financial Statements .
(a) Seller
has delivered to Purchaser copies of (i) the unaudited balance
sheets of the Business as of December 31, 2004 and 2005 and
the related unaudited statements of income and of cash flows of the
Business for the years ended December 31, 2003, 2004 and 2005,
and (ii) the unaudited balance sheet of the Business as of
November 30, 2006 and the related unaudited statements of
income and cash flows of the Business for the nine month period
then ended (such annual statements described in clause (i),
including the related notes and schedules thereto, are referred to
herein as the “ Annual Financial Statements ,”
and such interim statements described in clause (ii) are
referred to herein as the “ Interim Financial
Statements ,” and, together with the Annual Financial
Statements, the “ Financial Statements ”).
Except as set forth in the notes thereto, each of the Financial
Statements has been prepared on a stand-alone basis with respect to
the Business in accordance with GAAP consistently applied and
consistent with the assumptions and methodologies set forth on
Schedule 5.4(a)(i) and presents fairly in all material
respects the financial position, results of operations and cash
flows of the Business as at the dates and for the periods indicated
therein. For the purposes hereof, the unaudited balance sheet of
the Business as at November 30, 2006 (a copy of which is
attached to Schedule 5.4(a)(ii) ) is referred to as the
“ Business Balance Sheet ” and November 30,
2006 is referred to as the “ Balance Sheet Date
.”
(b) Books
and Records . Except as set forth on
Schedule 5.4(b) , the books of account and other
records of the Business, and the stock record and minute books and
other corporate records of the Transferred Subsidiaries, all of
which have been made available to Purchaser, (i) with respect
to Seller and the Retained Subsidiaries (and the Business as it
relates to Seller and the Retained Subsidiaries) (ii) with
respect to each Transferred Subsidiary (and the Business as it
relates to such Transferred Subsidiary) since the Seller
Acquisition Date (as defined below), and (iii) to the
Knowledge of Seller, with respect to each Transferred Subsidiary
(and the Business as it relates to such Transferred Subsidiary)
prior to the Seller Acquisition Date (as
28
defined below),
are in each case in all material respects complete and correct and
have been maintained in accordance with sound business practices.
Except as set forth on Schedule 5.4(b) , he minute books of
the Transferred Subsidiaries contain accurate and complete records
of all meetings held of, and corporate action taken by, the
stockholders, the boards of directors and any committees of the
boards of directors of the Transferred Subsidiaries since the date
that Seller acquired or formed such Transferred Subsidiary (the
“ Seller Acquisition Date ” for such
Subsidiary), and no meeting of any of the stockholders, board of
directors or committees of any of the Transferred Subsidiaries has
been held since its respective Seller Acquisition Date for which
minutes have not been prepared and are not contained in such minute
books. To the Knowledge of Seller, no meeting of any of the
stockholders, board of directors or committees of any of the
Transferred Subsidiaries has been held prior to its respective
Seller Acquisition Date for which minutes have not been prepared
and are not contained in such minute books. At the Closing, all of
such books and records, to the extent they constitute Books and
Records, will be in the possession of Seller and the
Subsidiaries.
(c)
Internal Controls . Parent and Seller have established and
maintain, adhere to and enforce a system of internal accounting
controls with respect to the Business which are in all material
respects effective in providing reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements (including the Financial Statements) in accordance with
GAAP and Schedule 5.4(a)(i) .
(d)
Accounts Receivable . Seller has made available to Purchaser
a list of all Accounts Receivable as of the Balance Sheet Date,
together with a range of days elapsed since invoice. Except to the
extent, if any, reserved for on the Financial Statements, and
except as set forth on Schedule 5.4(d) , all Accounts
Receivable reflected on the Financial Statements arose from, and
all Accounts Receivable of Seller and the Subsidiaries existing on
the Closing Date will have arisen from, the sale of Inventory or
services rendered in the Ordinary Course of Business to Persons not
Affiliated with Parent, Seller or the Subsidiaries. All such
Accounts Receivable are carried on the Books and Records of Seller
or the applicable Subsidiary, as the case may be, at values, net of
allowance for doubtful accounts, determined in accordance with GAAP
consistently applied, and are collectible except to the extent of
the reserves therefor set forth in the Business Balance Sheet or,
for receivables arising subsequent to the Balance Sheet Date, as
reflected on the Books and Records of Seller (which are in each
case prepared in accordance with GAAP consistently applied and the
reserve practices and methodology used in preparation of the
Business Balance Sheet), and none of such accounts receivable is,
or at the Closing Date will be, subject to any counterclaim or
set-off, except for counterclaims or set-offs in the Ordinary
Course of Business. Except as set forth on
Schedule 5.4(d) , no person has any lien on any of the
Accounts Receivable.
(e)
Inventory . Except as set forth on
Schedule 5.4(e) , the Inventory is or as of the Closing
Date will be in the physical possession of Seller or a Subsidiary,
or will be in transit to the Leased Real Property or the Owned
Properties, or will be in the possession or control of a customer
of the Business. Subject to amounts reserved therefor on the
Financial Statements, (i) none of the Inventory has been
pledged as collateral or otherwise is subject to any Lien (other
than a Permitted Exception or as set forth on
Schedule 5.4(e) ) or is held on consignment from
others, (ii) the values at which all Inventory is carried on
the Financial Statements reflect the historical inventory valuation
policy of the Business, and (iii) the Inventory is in good
and
29
merchantable
condition in all material respects and is suitable and usable in
all material respects for the purposes for which it is intended in
the Ordinary Course of Business. All of the Inventory has been
acquired by Seller or a Subsidiary only in bona fide, arms-length
transactions entered into in the Ordinary Course of
Business.
(f)
Rebates . The Business Balance Sheet reflects all Rebates
granted or accrued or committed to be granted or accrued by Seller
or any Subsidiary prior to the Balance Sheet Date, and Seller and
the Subsidiaries have not granted or accrued or committed to grant
or accrue any Rebates since the Balance Sheet Date except in the
Ordinary Course of Business and in an amount that would result in a
decrease of no more than 5% in annual revenue attributable to any
such customer on an individual basis.
5.5
No Undisclosed Liabilities . All of the Liabilities
reflected on the Business Balance Sheet are related to the
Business. Except (i) to the extent reflected or reserved
against in the Business Balance Sheet, (ii) for Liabilities
that are incurred after the date of the Business Balance Sheet and
prior to the date hereof in the Ordinary Course of Business
consistent with past practices, (iii) for Liabilities that are
incurred after the date hereof in accordance with the terms hereof,
or (iv) for Excluded Liabilities, there are no material
Liabilities or other material obligations of any nature whatsoever
relating to the Business or of the Transferred
Subsidiaries.
5.6
Absence of Certain Developments . Except as expressly
contemplated hereby, from the Balance Sheet Date to the date of
this Agreement, (i) Seller and the Subsidiaries have conducted
the operations of the Business only in the Ordinary Course of
Business consistent with past practice and have not taken any
action that would have been prohibited by Section 7.2
if this Agreement had been in effect at the time such action was
taken and (ii) there has not been any Material Adverse
Effect.
5.7
Taxes . Except as set forth on Schedule 5.7
:
(a) All Tax
Returns required to be filed by each of the Transferred
Subsidiaries have been timely filed. All Taxes required to be paid
(whether or not shown to be due on such Tax Returns) by each of the
Transferred Subsidiaries have been timely paid. All such Tax
Returns are true, correct and complete in all material respects.
All material Tax Returns required to be filed by each of Seller and
the Retained Subsidiaries in connection with the Business have been
timely filed. Seller and the Retained Subsidiaries each has paid
all Taxes required to be paid by them, the nonpayment of which
would result in a Lien or other encumbrance on the Assets in the
hands of Purchaser, excepting in each case such Taxes as will not
be due until after the Closing Date.
(b) There is
no Legal Proceeding, investigation, audit or examination proposed
in writing or currently pending against or with respect to any of
the Transferred Subsidiaries or in connection with the Business in
respect of any Tax. No deficiencies for any Taxes which have not
been resolved have been proposed in writing, asserted or assessed
in writing against any of the Transferred Subsidiaries or in
connection with the Business.
(c) All
material Taxes required to have been withheld by each of the
Transferred Subsidiaries or in connection with the Business have
been withheld and paid over to the proper Governmental
Body.
30
(d) There are
no Liens for Taxes upon any property or assets of any of the
Transferred Subsidiaries or the Assets (other than for Taxes not
yet due and payable).
(e) None of
the Transferred Subsidiaries has any liability for the Taxes of any
Person including under Section 1.1502-6 of the Treasury
Regulations (or any similar provision of state, local or foreign
law), as a transferee or successor (other than for Taxes of an
affiliated group of which the common parent is Parent). None of the
Transferred Subsidiaries is a party to, is bound by or has any
obligation under, any tax sharing agreement or similar contract or
any agreement that obligates it to make any payment for Taxes of
any other Person (other than an obligation (x) in any customary
agreements with customers, vendors or the like entered into in the
Ordinary Course of Business or in any customary credit agreement
and (y) with respect to property taxes payable for properties
leased to the Transferred Subsidiaries).
(f) None of
the Transferred Subsidiaries organized under the Laws of a country
other than the United States (the “ Foreign Transferred
Subsidiaries ”) has a permanent establishment in a
jurisdiction other than the jurisdiction of its
incorporation.
(g)
Schedule 5.7(g) sets forth each jurisdiction in which
each of the Transferred Subsidiaries files a Tax Return.
(h) None of
the Transferred Subsidiaries will be required to include any item
of income in, or exclude any item of deduction from, taxable income
for any period (or any portion thereof) ending after the Closing
Date as a result of any: (i) installment sale or other open
transaction disposition made on or prior to the Closing Date; or
(ii) prepaid amount received on or prior to the Closing
Date.
(i) All
charges for amounts payable or amounts receivable among any of
Seller or the Retained Subsidiaries, on the one hand, and any of
the Transferred Subsidiaries, on the other hand, have been made at
arms’ length for fair value.
(j)
Schedule 5.7(j) sets forth a complete and accurate list
of all material agreements, rulings, settlements or other similar
Tax documents relating to Tax incentives between any of the Foreign
Transferred Subsidiaries and a Governmental Body.
(k) All
conditions (including filing of Tax or any other information or
regulatory returns) relating to grant of any license or approval
for claiming any Tax holiday or any other Tax benefit by GenTek
Technology Pvt. Ltd. have been fulfilled. Further, there is no
litigation challenging the availability of any such Tax holiday or
Tax benefit.
(l) Canadian
Seller is not a non-resident of Canada for purposes of the Income
Tax Act (Canada).
(a)
Schedule 5.8(a) sets forth a true and complete list of
all real property and interests in real property owned in fee by
Seller and the Subsidiaries that are primarily used or held for use
in connection with the Business, other than the Concord Facility
(individually, an “ Owned Property ” and
collectively, the “ Owned Properties ”). Seller
or the Subsidiaries, as applicable,
31
have good and
marketable fee title to all Owned Properties, free and clear of all
Liens of any nature whatsoever except (i) Liens set forth on
Schedule 5.8(a) and (ii) Permitted Exceptions.
Seller has made available to Purchaser copies of all deeds, title
reports and policies and surveys for the Owned Properties in the
possession of Seller or the Subsidiaries.
(b)
Schedule 5.8(b) sets forth a true and complete list of
all leases of real property by Seller and the Subsidiaries that are
primarily used or held for use in connection with the Business
(individually, a “ Real Property Lease ” and
collectively, the “ Real Property Leases ”). The
Real Property Leases, together with the Owned Properties,
constitute all material interests in real property currently used
or currently held for use primarily in connection with the
Business. There does not exist any actual or, to the Knowledge of
Seller, threatened or contemplated condemnation or eminent domain
proceedings that affect the Real Property Leases or any part
thereof, and Seller has not received any written notice of the
intention of any Governmental Body or other Person to take or use
all or any part thereof. Each of the Owned Properties and real
property subject to any Real Property Lease, and all buildings,
fixtures and improvements thereon, are adequate in all material
respects for their intended use in the operation of the Business as
currently conducted.
(c) The
zoning and land use regulation of each parcel of Owned Property and
real property subject to any Real Property Lease permits the
presently existing improvements located thereon and the
continuation of the business presently being conducted on such
parcel. There is no pending or, to the Knowledge of Seller,
contemplated rezoning of any Owned Property or Real Property Lease.
Each Owned Property and Real Property Lease is in compliance with
applicable state law and local subdivision ordinances.
(d) There are
no contracts or options to sell the Owned Property or any portion
of the Owned Property which are presently in effect. Except as set
forth on Schedule 5.8(d), neither Seller nor any of its
Subsidiaries have entered into any leases with respect to the Owned
Property or subleases of the Real Property Leases.
5.9
Tangible Personal Property . Except as set forth on
Schedule 5.9(i) , Seller or the Subsidiaries, as
applicable, have good and marketable title to, or a valid leasehold
interest in, each of the items of Tangible Personal Property
reflected in the Business Balance Sheet (except as sold or disposed
of subsequent to the date thereof in the Ordinary Course of
Business consistent with past practice) or otherwise included in
the Assets, free and clear of any and all Liens other than the
Permitted Exceptions. All of such Tangible Personal Property, taken
as a whole, is in good operating condition and repair, reasonable
wear and tear excepted, has been reasonably maintained in
accordance with normal industry practice, and is usable in the
Ordinary Course of Business and is suitable, sufficient in amount,
size and type and adequate, in each case, in all material respects,
for the uses for which they are used to carry on the Business as
now conducted. Schedule 5.9(ii) sets forth a list of
all Tangible Personal Property that will remain at the Concord
Facility following the shutdown of operations currently in progress
at the Concord Facility (the “Remaining Concord
Assets”).
5.10
Intellectual Property .
32
(a)
Schedule 5.10(a) contains a list (by name, part number
and other appropriate product identifiers) of all products
(excluding products in development) sold, distributed or otherwise
disposed of during 2005 and 2006 by Seller or any of the
Subsidiaries in connection with the Business, and such list is
complete and accurate in all material respects. None of such
products, nor any other Product, is a Retained Aviation
Product.
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