ASSET PURCHASE AGREEMENT

EXHIBIT 10.38

ASSET PURCHASE AGREEMENT

between

ANDREW CORPORATION,

as the Buyer,

and

EMS TECHNOLOGIES, INC.,

as the Seller,

 

Dated as of October 31, 2006

TABLE OF CONTENTS

 

 

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ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT , dated as of October 31, 2006 (this “ Agreement ”), is between ANDREW CORPORATION , a Delaware corporation (the “ Buyer ”), and EMS TECHNOLOGIES, INC. , a Georgia corporation (the “ Seller ”). Each of the Buyer and the Seller is referred to individually in this Agreement as a “ Party ” and collectively as the “ Parties .”

RECITALS

A. The Seller, through its EMS Wireless division (including its Subsidiary EMS Brazil), is engaged in the business of designing, manufacturing and marketing a line of radio frequency products and services, including base-station antennas, repeaters and accessories and related maintenance and services used by service providers in cellular and PCS telecommunications networks, primarily in the United States and Brazil (the “ Business ”).

B. The Seller wishes to sell to the Buyer, and the Buyer wishes to purchase from the Seller, the Business, and in connection therewith the Buyer is willing to assume certain specified liabilities and obligations of the Seller relating thereto, all upon the terms and subject to the conditions set forth in this Agreement.

AGREEMENT

In consideration of the foregoing, the mutual covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Certain Defined Terms . For purposes of this Agreement:

“ Action ” means any claim, action, suit, arbitration or proceeding by or before any Governmental Authority.

“ Affiliate ”, with respect to any specified Person, means any other Person that directly, or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such specified Person.

“ Ancillary Agreements ” means the Bill of Sale, the Intellectual Property Assignments, the Assumption Agreement and the Transition Services Agreement.

“ Assumption Agreement ” means an instrument of assignment and assumption, in substantially the form set forth in Exhibit A , pursuant to which the Buyer shall assume all of the liabilities of the Seller as of the Closing Date that are included in the Assumed Liabilities.

 

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“ Bill of Sale ” means a bill of sale, in substantially the form set forth in Exhibit B , transferring to the Buyer all of the tangible personal property owned or held by the Seller as of the Closing Date that is included in the Transferred Assets.

“ Business Day ” means any day that is not a Saturday, a Sunday or other day on which banks are required or authorized by Law to be closed in the city of Atlanta, Georgia or the city of Chicago, Illinois.

“ Business Employees ” means all individuals set forth on Annex 1 .

“ Buyer Material Adverse Effect ” means any event, change, circumstance, effect or state of facts that is materially adverse to the ability of the Buyer to perform its obligations under this Agreement or to consummate the transactions contemplated by this Agreement.

“ Code ” means the Internal Revenue Code of 1986, as amended through the date hereof.

“ Control ”, including the terms “Controlled by” and “under common Control with”, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, as trustee or executor, as general partner or managing member, by contract or otherwise.

“ Employee Plans ” means all “employee benefit plans” within the meaning of Section 3(3) of ERISA, all formal written plans and all other compensation and benefit plans, contracts, policies, programs and arrangements of the Seller (other than routine administrative procedures) in connection with the Business in effect as of the date of this Agreement, including all pension, profit sharing, savings and thrift, bonus, stock bonus, stock option or other cash or equity-based incentive or deferred compensation, severance pay and medical and life insurance plans in which any of the Business Employees or their dependents participate.

“ EMS Brazil ” means EMS Wireless do Brasil Ltda., enrolled with the National Legal Entities Registry (CNPJ) in Brazil under No. 03.945.567/0001-29.

“ Encumbrance ” means any charge, claim, mortgage, lien, option, pledge, security interest or other restriction of any kind.

“ Environmental Laws ” means any Laws of any Governmental Authority or applicable jurisdiction relating to protection and clean up of the air, the land, the water and the environment and activities or conditions related thereto including those relating to the generation, handling, disposal, transportation, or release of or exposure to Hazardous Material.

“ Environmental Permits ” means all Permits under any Environmental Law reasonably required in the operation or conduct of the Business as currently conducted.

“ Final Working Capital ” means the current assets of the Business less the current liabilities of the Business (in each case including EMS Brazil on a consolidated basis, including cash and cash equivalents of EMS Brazil) as of 11:59 p.m. Atlanta, Georgia time on the day

 

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immediately prior to the Closing Date, prepared in accordance with the guidelines on Exhibit C , and as reflected on the Working Capital Schedule.

“ First Commercial Sale ” means, with respect to the SelectaCell Products, the date any such product is first sold by the Buyer or an Affiliate of the Buyer to a non-affiliated third party.

“ GAAP ” means United States generally accepted accounting principles as in effect on the date of this Agreement.

“ Governmental Authority ” means any United States or non-United States national, federal, state or local governmental, regulatory or administrative authority, agency or commission or any judicial or arbitral body.

“ Hazardous Material ” means any pollutant, contaminant, waste, hazardous substance, hazardous waste, toxic substance, petroleum or petroleum-based substance or waste, asbestos or asbestos-containing materials, polychlorinated biphenyls, or any other material or substance which is defined in, regulated under or for which liability or standards of care are imposed by any Environmental Law.

“ Intellectual Property ” means all intellectual property rights arising under the Laws of the United States or any other jurisdiction with respect to the following: (a) trade names, trademarks and service marks (registered and unregistered), domain names, trade dress and similar rights and applications to register any of the foregoing (collectively, “ Marks ”); (b) patents and patent applications and rights in respect of utility models or industrial designs (collectively, “ Patents ”); (c) copyrights and registrations and applications therefor (collectively, “ Copyrights ”); (d) know-how, ideas, inventions, invention records or disclosures, discoveries, methods, processes, technical data, specifications, research and development information, technology, Software, data bases, test information and other proprietary or confidential information, including marketing strategies and customer lists that are the subject of reasonable efforts under the circumstances to maintain the confidentiality thereof and derive economic value from not being generally known (collectively, “ Trade Secrets ”).

“ Intellectual Property Assignments ” means instruments of assignment in substantially the form of Exhibit D , transferring to the Buyer all of the Owned Business Registered IP.

“ Known ,” with respect to the Seller or the Buyer, means the actual or constructive knowledge of the persons listed under the appropriate caption in Schedule 1.1(a) of the Disclosure Schedules, including the knowledge such persons would have following reasonable inquiry, as of the date the applicable representation or warranty is made or deemed made hereunder (or, with respect to a certificate delivered pursuant to this Agreement, as of the date of delivery of such certificate).

“ Law ” means any statute, law (including common law), ordinance, regulation, rule, code, injunction, judgment, decree or order of any Governmental Authority.

“ LXE ” means LXE Inc., a Georgia corporation.

 

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“ Material Adverse Effect ” means any event, change, circumstance, effect or state of facts that is materially adverse to (a) the business, assets, condition (financial or otherwise) or results of operations of the Business or (b) the ability of the Seller timely to perform its obligations under the Transaction Documents or timely to consummate the transactions contemplated thereby; provided , however , that “Material Adverse Effect” shall not include the effect of any event, change, circumstance, effect, or state of facts arising out of or attributable to any of the following, either alone or in combination: (i) the base-station antenna and repeater business generally, (ii) general economic or political conditions in the United States or Brazil, (iii) the public announcement of this Agreement or of the consummation of the transactions contemplated by this Agreement or (iv) acts of war (whether or not declared), sabotage or terrorism, military actions or the escalation thereof or other force majeure events occurring after the date of this Agreement, in each case, occurring after the date hereof and, in the case of clauses (i), (ii) and (iv), that does not materially and adversely affect the Business in a manner that is substantially different from the impact to the other businesses in the industry.

“ Net Sales ” means the sum of (a) the net sales recognized with respect to the SelectaCell Products, by the Buyer or any Affiliate of the Buyer (or any successor to the ownership of the SelectaCell Products), to any non-Affiliate third party, for all the units of such SelectaCell Products so sold, and (b) any net licensing revenues recognized by the Buyer or any Affiliate of the Buyer (or any successor to the ownership of the technology associated with the SelectaCell Products) relating to the license of the Intellectual Property included within the SelectaCell Products in connection with the sale of SelectaCell Products or any OEM program relating to the SelectaCell Products, in each case, in accordance with United States generally accepted accounting principles, applied on a basis consistent with the Buyer’s past practice, as in effect at the time such net sales or net revenues are recognized; provided , however , that Net Sales shall not be affected by payments by the Buyer to the Seller pursuant to Section 5.15 .

“ Permitted Encumbrance ” means, with respect to any Transferred Asset, (a) statutory liens for current Taxes not yet due or the validity or amount of which is being contested in good faith by appropriate proceedings, (b) mechanics’, carriers’, workers’, repairers’ and other similar liens arising or incurred in the ordinary course of business relating to obligations as to which there is no default on the part of the Seller for a period greater than 60 days, or the validity or amount of which is being contested in good faith by appropriate proceedings, or pledges, deposits or other liens securing the performance of bids, trade contracts, leases or statutory obligations (including workers’ compensation, unemployment insurance or other social security legislation), (c) zoning, entitlement, conservation restriction and other similar land use and environmental regulations by Governmental Authorities and (d) all exceptions, restrictions, easements, imperfections of title, charges, rights of way and other Encumbrances that do not, individually or in the aggregate, materially interfere with the present use of such Transferred Asset in the Business as presently conducted.

“ Person ” means an individual, corporation, partnership, limited liability company, limited liability partnership, syndicate, person, trust, association, organization or other entity, including any Governmental Authority, and including any successor, by merger or otherwise, of any of the foregoing.

 

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“ Products ” means any and all products manufactured, marketed, distributed or sold by the Business prior to the Closing Date.

“ Product Warranty Costs ” means all costs and expenses reasonably incurred by the Buyer or any of its Affiliates from and after the Closing Date, including manufacturing overhead but excluding general and administrative overhead, to the extent arising out of or resulting from any warranty obligations existing with respect to the Products on the Closing Date, including any such reasonable costs and expenses relating to refunds, repairs, exchanges, adjustments or returns made by customers of the Business with respect to such Products pursuant to rights under such warranty obligations.

“ Purchase Price ” means $50,500,000.

“ Release ” means any release, spill, emission, leaking, pumping, injection, deposit, disposal, discharge, dispersal, leaching or migration of a Hazardous Material into the indoor or outdoor environment or into or out of any property, including the movement of Hazardous Material through or into the air, soil, surface water, groundwater or other environmental media.

“ Restricted Activities ” means any of the development, manufacture, distribution or sale of tower-mounted and other fixed terrestrial base station antennas and fixed terrestrial indoor and outdoor signal repeaters intended for use as part of, or in connection with the use of, any terrestrial cellular or PCS wireless telecommunications network, in each case, anywhere in North America, Central America or South America; provided, however, that, notwithstanding the foregoing, the Seller shall not be prohibited from developing, manufacturing, distributing or selling any product for end use by any government in military and defense applications.

“ SelectaCell Patents ” means those Patents included within the Transferred Assets identified in Exhibit E .

“ SelectaCell Products ” means the product of the Business known as the SelectaCell 1900 MHz indoor repeater and any other indoor repeater product that is (a) covered by one or more claims of the SelectaCell Patents and (b) derived from and has substantially the same functional specifications as the SelectaCell 1900 MHz indoor repeater.

“ Seller’s Product Warranty Share ” means seventy-five percent (75%) of all Product Warranty Costs incurred by the Buyer or any of its Affiliates with respect to any individual product model (as determined by SKU number) or component, or any particular design or manufacturing defect common to multiple product models or components (a “ Significant Warranty Event ”), during the two-year period immediately following the Closing Date; provided , however , that (a) the Seller shall not have any responsibility or liability for such Product Warranty Costs with respect to any Significant Warranty Event until the aggregate Product Warranty Costs with respect to such Significant Warrant Event exceed $300,000, in which case Seller’s Product Warranty Share shall be calculated from the first dollar of the Product Warranty Costs associated with such Significant Warranty Event, and (b) in no event shall the aggregate amount of Seller’s Product Warranty Share for all Significant Warranty Events exceed $1,200,000.

 

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“ Software ” means computer software programs and related documentation and materials, whether in source code, object code or human readable form; provided , however , that Software does not include software that is available generally through retail stores, distribution networks or is otherwise subject to “shrink-wrap” license or “click-through” agreements, including any software pre-installed in the ordinary course of business as a standard part of hardware, equipment or fixtures purchased by the Seller or EMS Brazil and used in the Business.

“ Subsidiary ” of any Person means any other Person of which an amount of the outstanding voting securities or other voting equity interests sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, 50% or more of the equity interests) is owned, directly or indirectly, by such first Person.

“ Target Working Capital Amount ” means $16,657,014, which reflects the current assets and the current liabilities of the Business (in each case including EMS Brazil on a consolidated basis, but excluding cash and cash equivalents of EMS Brazil) as of 11:59 p.m. Atlanta, Georgia time on September 30, 2006, prepared in accordance with the guidelines on Exhibit C .

“ Tax ” (and, with correlative meaning, “ Taxes ”) means (a) any federal, state, local or foreign income, gross receipts, property, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value added, transfer or excise tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, imposed by any Governmental Authority; and (b) any liability of the Seller or EMS Brazil for the payment of amounts described in clause (a) as a result of being a member of an affiliated, consolidated, combined or unitary group or as a result of any obligation of under any Tax sharing agreement or Tax indemnity agreement.

“ Tax Return ” means any return, declaration, report, statement, information statement and other document required to be filed with respect to Taxes.

“ Transaction Documents ” means this Agreement, the Ancillary Agreements and the documents delivered in connection herewith and therewith.

“ Transition Services Agreement ” means the agreement, in substantially the form set forth in Exhibit F , pursuant to which the Seller will provide certain services to the Buyer for the period of time set forth in such agreement.

“ Working Capital Schedule ” means a statement of the current assets and the current liabilities of the Business (in each case including EMS Brazil on a consolidated basis) as of 11:59 p.m. Atlanta, Georgia time on the day immediately prior to the Closing Date, prepared in accordance with the guidelines on Exhibit C .

 

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Section 1.2 Table of Definitions . The following terms have the meanings set forth in the Sections referenced below:

 

 

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Section 1.3 Construction .

(a) Unless the context of this Agreement otherwise clearly requires, (i) references to the plural include the singular, and references to the singular include the plural, (ii) references to one gender include the other gender, (iii) the words “include,” “includes” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation”, (iv) the terms “hereof”, “herein”, “hereunder”, “hereto” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement, (v) the terms “day” and “days” mean and refer to calendar day(s), and (vi) the terms “year” and “years” mean and refer to calendar year(s).

(b) Unless otherwise set forth in this Agreement, references in this Agreement to any document, instrument or agreement (including this Agreement) (i) includes and incorporates all exhibits, schedules and other attachments thereto, (ii) includes all documents, instruments or agreements issued or executed in replacement thereof and (iii) means such document, instrument or agreement, or replacement or predecessor thereto, as amended, modified or supplemented from time to time in accordance with its terms and in effect at any

 

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given time. All Article, Section, Exhibit and Schedule references herein are to Articles, Sections, Exhibits and Schedules of this Agreement, unless otherwise specified.

ARTICLE II

PURCHASE AND SALE

Section 2.1 Purchase and Sale of Assets . Upon the terms and subject to the conditions of this Agreement, at the Closing, the Seller shall sell, assign, transfer, convey and deliver to the Buyer all of the Seller’s right, title and interest as of the Closing Date in, to and under the Transferred Assets, and the Buyer shall purchase, acquire, accept and pay for the Transferred Assets and assume the Assumed Liabilities. “ Transferred Assets ” shall mean all of the Seller’s right, title and interest in, to and under all of the business, the assets, properties, rights and goodwill (wherever located), real or personal, whether tangible or intangible, that are owned by or leased or licensed to the Seller and used, held for use or intended to be used primarily in the Business (other than the Excluded Assets), as of the Closing Date, including the assets, properties and rights referred to below:

(a) all contracts and agreements, oral or written, to which the Seller is a party or by which the Seller is bound that are used, held for use or intended to be used primarily in the Business, or that arise primarily out of the operation or conduct of the Business or to which the Transferred Assets are subject including all contracts and agreements listed in Schedule 3.16 of the Disclosure Schedules (collectively, the “ Contracts ”);

(b) all real property, leaseholds and other interests in real property leased by the Seller and used, held for use or intended to be used primarily in the Business, together with the Seller’s right, title and interest in, to and under all structures, facilities or improvements located thereon, all fixtures, systems, equipment and other items of personal property attached or appurtenant thereto and all easements, licenses, rights and appurtenances relating to the foregoing (the “ Real Property ”);

(c) all Intellectual Property owned by or licensed to the Seller and used, held for use or intended to be used primarily in the Business (including any confidentiality agreements to protect the Seller’s interest therein) (the “ Business Intellectual Property ”);

(d) all accounts receivable, notes receivable and other receivables due to the Seller in connection with the Business (the “ Receivables ”), together with any unpaid interest or fees accrued thereon or other amounts due with respect thereto;

(e) all machinery, equipment, furniture, furnishings, parts, spare parts, vehicles and other tangible personal property or interests therein owned or leased by the Seller and used, held for use or intended to be used primarily in the Business (the “ Tangible Personal Property ”);

(f) all raw materials, work-in-progress, finished goods, supplies, packaging materials and other inventories (including in transit, on consignment or in the possession of any third party) owned by the Seller (including any of the foregoing in possession of third parties) and used, held for use or intended to be used primarily in the Business (the “ Inventory ”);

 

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(g) all Permits of the Seller used, held for use or intended to be used primarily in the Business (the “ Business Permits ”);

(h) all files, invoices, customers’ and suppliers’ lists, other distribution lists, billing records, sales and promotional literature, manuals and customer and supplier correspondence of the Seller relating primarily to the Business;

(i) all credits, prepaid expenses, deferred charges (other than deferred Taxes), advance payments, prepaid items and security deposits that are used, held for use or intended to be used primarily in, or arising primarily out of or relating primarily to, the Business;

(j) 1,936,560 quotas in EMS Brazil (including the quota currently held by LXE) representing 100% of its capital, free and clear of any Encumbrances (the “ Quotas ”);

(k) all rights to causes of action, lawsuits, judgments, claims, credits and demands of any nature in favor of the Seller to the extent relating to the Business or the Transferred Assets, including all rights under all guarantees, warranties, indemnities and similar rights in favor of the Seller;

(l) all goodwill generated by or associated with the Business; and

(m) all rights in and to products sold in the operation or conduct of the Business.

Section 2.2 Excluded Assets . Notwithstanding anything contained in Section 2.1 to the contrary, the Seller is not selling, and the Buyer is not purchasing, any of the following assets of the Seller (except to the extent that such assets are assets directly owned by EMS Brazil), all of which shall be retained by the Seller (collectively, the “ Excluded Assets ”):

(a) all of the Seller’s cash and cash equivalents as of 11:59 p.m. Atlanta, Georgia time on the day immediately prior to the Closing Date;

(b) the Seller’s corporate books and records of internal corporate proceedings, Tax Returns, taxpayer and other identification numbers;

(c) all rights in the following names and marks and any variation or derivation thereof: “EMS,” “EMS Technologies” and “EMS Wireless”;

(d) all of the Seller’s bank accounts;

(e) all (i) accounting records (including records relating to Taxes) and internal reports relating to the business activities of the Seller that are not Transferred Assets, and (ii) work papers and books and records relating to the Business that the Seller is required by Law to retain; provided , however , that the Seller shall provide copies of such accounting records, internal reports, work papers and books and records to the extent that they would reasonably be expected to relate primarily to the operation and conduct of the Business following the Closing;

 

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(f) any interest in or right to any refund of any Taxes for which the Seller is liable pursuant to this Agreement, except to the extent such refund is treated as a current asset in the calculation of Final Working Capital;

(g) any insurance policies and rights, claims or causes of action thereunder;

(h) except as specifically provided in Section 5.6 , any assets relating to any Employee Plan;

(i) all rights, claims and causes of action to the extent relating to any Excluded Asset or any Excluded Liability;

(j) the assets of the Seller listed in Exhibit G ; and

(k) all rights of the Seller under the Transaction Documents.

Section 2.3 Assumed Liabilities . In connection with the purchase and sale of the Transferred Assets pursuant to this Agreement, as of the Closing, the Buyer shall assume and pay, discharge, perform or otherwise satisfy the following liabilities and obligations of the Seller relating to the Business (the “ Assumed Liabilities ”):

(a) all liabilities (other than liabilities for Taxes) of the Business reflected or reserved against in the Balance Sheet;

(b) all liabilities (other than liabilities for Taxes) accruing, arising out of or relating to the conduct or operation of the Business incurred subsequent to the date of the Balance Sheet in the ordinary course of business consistent with past practice that would have been required by GAAP to be reflected or reserved against in the Balance Sheet had such liabilities existed as of the date of the Balance Sheet; provided , however , that in no event shall the Assumed Liabilities include indebtedness for borrowed money or guarantees thereof;

(c) all liabilities accruing, arising out of or relating to the conduct or operation of the Business by the Buyer or the ownership or use of the Transferred Assets by the Buyer from and after the Closing Date;

(d) all liabilities for Taxes accrued as current liabilities in the calculation of Final Working Capital (but only to the extent of the amount so accrued) and for Taxes allocated to the Buyer pursuant to Article VI ;

(e) all liabilities and obligations of the Seller under the Contracts and the Business Permits to the extent such liabilities and obligations are not required to be performed prior to the Closing Date; provided , however , that if such liability or obligation relates to an obligation of the Seller to make a cash payment under a Contract relating to the period prior to the Closing Date, then the Buyer shall assume such liability or obligation only to the extent it is included in the calculation of Final Working Capital;

(f) all rights of return and warranty obligations of the Seller or EMS Brazil associated with the Products (other than Seller’s Product Warranty Share); and

 

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(g) all liabilities assumed by the Buyer pursuant to Section 5.6 .

Section 2.4 Excluded Liabilities . Notwithstanding any other provision of this Agreement to the contrary, the Buyer is not assuming and the Seller shall pay, perform or otherwise satisfy, all liabilities, obligations or commitments other than the Assumed Liabilities specifically listed in Section 2.3 (the “ Excluded Liabilities ”) (in the case of liabilities, obligations or commitments of EMS Brazil, solely for purposes of Article VIII ), including the following:

(a) all liabilities for Taxes of the Seller except those allocated to the Buyer pursuant to Section 2.3(d) ;

(b) any liability that is not assumed by the Buyer pursuant to Section 5.6 , including any liability with respect to any retention plans implemented by the Seller or by EMS Brazil prior to the Closing;

(c) any indebtedness for borrowed money or guarantees thereof of the Seller or EMS Brazil outstanding as of the Closing Date;

(d) any liability or obligation relating to an Excluded Asset;

(e) any Losses to the extent arising out of or resulting from any actual, material breach by the Seller or EMS Brazil under any Contract prior to the Closing (other than any right of return or warranty obligation of the Seller or EMS Brazil associated with the Products, which shall be assumed by the Buyer to the extent provided in Section 2.3(f) );

(f) any liability, obligation or commitment of the Seller or EMS Brazil, whether express or implied, liquidated, absolute, accrued, contingent or otherwise, or known or unknown, arising primarily out of the operation or conduct by the Seller or EMS Brazil of any business other than the Business;

(g) any Losses to the extent arising out of or resulting from (i) any Action pending or threatened against the Seller or EMS Brazil as of the Closing Date, (ii) any actual, material violation by the Seller or EMS Brazil of any Applicable Law prior to the Closing, or (iii) any action, omission or event prior to the Closing relating to any of the matters described on Schedule 3.7 (for the avoidance of doubt, any rights of return and warranty obligations relating to such matters shall be Excluded Liabilities notwithstanding Section 2.3(f) or any other provision hereof);

(h) any liability of the Seller or EMS Brazil pursuant to any Environmental Law arising from or relating to any action, event, circumstance or condition occurring or existing on or prior to the Closing Date;

(i) any liability, obligation or commitment of the Seller or EMS Brazil to any of their respective Affiliates; and

(j) all liabilities for the Taxes of EMS Brazil (or any predecessor thereof) for any taxable period ending prior to the Closing Date except those allocated to the Buyer pursuant to Section 2.3(d) .

 

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Section 2.5 Consideration .

(a) In full consideration for the sale, assignment, transfer, conveyance and delivery of the Transferred Assets to the Buyer, at the Closing, the Buyer shall (a) pay to the Seller an amount equal to the Purchase Price and (b) assume the Assumed Liabilities. The Purchase Price shall be payable in accordance with Section 2.7 and shall be subject to adjustment as provided in Section 2.9 .

(b) Notwithstanding anything to the contrary, the Purchase Price will be reduced by the amount of any withholding income tax that, in the Buyer’s reasonable discretion, may be imposed by the Brazilian Taxing Authority on capital gain, if any, realized by the Seller as a result of the sale of the Quotas.

Section 2.6 Closing . The sale and purchase of the Transferred Assets and the assumption of the Assumed Liabilities contemplated by this Agreement shall take place at a closing (the “ Closing ”) to be held at the offices of King & Spalding LLP, 1180 Peachtree Street, Atlanta, GA 30309, at 10:00 A.M. Atlanta time on the second Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver by the Party entitled to the benefit thereof of all conditions to the obligations of the Parties set forth in Article VII (other than such conditions as may, by their terms, only be satisfied at the Closing or on the Closing Date but subject to the satisfaction of such conditions), or at such other place or at such other time or on such other date as the Seller and the Buyer mutually may agree in writing. The day on which the Closing takes place is referred to as the “ Closing Date .”

Section 2.7 Transactions to be Effected at the Closing . At the Closing:

(a) The Seller shall deliver to the Buyer

(i) an appropriately executed Bill of Sale;

(ii) an appropriately executed Intellectual Property Assignments;

(iii) an amendment to the articles of association of EMS Brazil (“ Amendment to the Articles of Association ”), duly executed by the Seller and by LXE in the form of Exhibit H , reflecting (A) transfer of the Quotas from the Seller and LXE to the Buyer, and (B) modification of the corporate name of the company so as to exclude the expression “EMS”;

(iv) a valid negative certificate issued by the Social Security National Institute attesting that EMS Brazil has no outstanding debts (“ Certidão Negativa perante o INSS (CND INSS) ”);

(v) a valid Certificate issued by the Federal Unemployment Fund attesting that EMS Brazil is in good standing with such Fund (“ Certificado de Regularidade perante o FGTS ”);

 

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(vi) a valid Certificate issued by the Federal Government attesting that EMS Brazil has no pending debts with the Federal Government (“ Certidão Conjunta de Débitos Relativos a Tributos Federais e à Dívida Ativa da União ”);

(vii) a valid Certificate issued by the State Government of Paraná stating that EMS Brazil has no pending debts with the State Government of Paraná (“ Certidão Negative de Débitos da Receita Estadual ”);

(viii) duly signed resignations (from the applicable board of directors and officers), effective immediately after the Closing, of all applicable directors and officers of EMS Brazil; and

(ix) the consents referred to in Section 7.3(a) and such other appropriately executed deeds (in recordable form), bills of sale, assignments, instruments of transfer and other documents as the Buyer or its counsel may reasonably request to effect the transfer of the Transferred Assets, and to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement; and

(b) The Buyer shall deliver to the Seller (i) payment, by wire transfer to a bank account designated in writing by the Seller (such designation to be made at least two business days prior to the Closing Date), in immediately available funds in U.S. dollars in an amount (the “ Closing Date Amount ”) equal to (A) the Purchase Price plus or minus (B) an estimate, prepared by the Seller (and reasonably satisfactory to the Buyer) and delivered to the Buyer at least two Business Days prior to the Closing Date, of any adjustment to the Purchase Price under Section 2.9 based on the most recent date practicable, (ii) an appropriately executed Assumption Agreement and (iii) such other documents as the Seller or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement; and

(c) The Buyer and the Seller shall execute and deliver the Ancillary Agreements (other than the Bill of Sale and the Assumption Agreement).

Section 2.8 Risk of Loss . Until the Closing, any loss of or damage to the Transferred Assets from fire, casualty or any other occurrence shall be the sole responsibility of the Seller.

Section 2.9 Post-Closing Adjustment of Purchase Price .

(a) During the 60 days after the Closing Date, the Buyer shall prepare the Working Capital Schedule. The Buyer shall consult with the Seller and the parties shall cooperate with one another in the preparation of the Working Capital Schedule. Within 60 days after the Closing Date, the Buyer shall deliver to the Seller the Working Capital Schedule certified by an officer of the Buyer that it has been prepared in accordance with the requirements of Section 2.9 .

(b) During the 20 Business Day period following the Seller’s receipt of the Working Capital Schedule, the Buyer shall cooperate with the Seller and its Representatives to provide them with any information used in preparing the Working Capital Schedule reasonably requested by the Seller and its Representatives and reasonably available to the Buyer. The

 

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Working Capital Schedule shall become final and binding on the 20 ^th Business Day following delivery thereof, unless prior to the end of such period, the Seller delivers to the Buyer written notice of its disagreement (a “ Notice of Disagreement ”) specifying the nature and amount of any disputed item. The Seller shall be deemed to have agreed with all items and amounts in the Working Capital Schedule not specifically referenced in the Notice of Disagreement, and such items and amounts shall not be subject to review in accordance with Section 2.9(c) . Any Notice of Disagreement may reference only disagreements based on mathematical errors or based on amounts reflected on the Working Capital Schedule not being calculated in accordance with this Section 2.9 .

(c) During the ten-Business Day period following delivery of a Notice of Disagreement by the Seller to the Buyer, if any, the Parties in good faith shall seek to resolve in writing any differences that they may have with respect to the matters specified therein. During such ten-Business Day period, the Seller shall cooperate with the Buyer and its Representatives to provide them with any information used in preparing the Notice of Disagreement reasonably requested by the Buyer or its Representatives and reasonably available to the Seller. Any disputed items resolved in writing between the Buyer and the Seller within such ten Business Day period shall be final and binding with respect to such items, and if the Seller and the Buyer agree in writing on the resolution of each disputed item specified by the Seller in the Notice of Disagreement and the amount of the Final Working Capital, the amount so determined shall be final and binding on the Parties for all purposes hereunder. If the Seller and the Buyer have not resolved all such differences by the end of such ten Business Day period, the Seller and the Buyer shall submit, in writing, to an independent public accounting firm (the “ Independent Accounting Firm ”), their briefs detailing their views as to the correct nature and amount of each item remaining in dispute and the amount of the Final Working Capital, and the Independent Accounting Firm shall make a written determination as to each such disputed item and the amount of the Final Working Capital, which determination shall be final and binding on the Parties for all purposes hereunder. The determination of the Independent Accounting Firm shall be accompanied by a certificate of the Independent Accounting Firm that it reached such determination in accordance with the provisions of this Section 2.9 . The Independent Accounting Firm shall be Deloitte & Touche or, if such firm is unable or unwilling to act, such other independent public accounting firm as shall be agreed in writing by the Seller and the Buyer. The Seller and the Buyer shall use their commercially reasonable efforts to cause the Independent Accounting Firm to render a written decision resolving the matters submitted to it within 20 Business Days following the submission thereof. The Independent Accounting Firm shall be authorized to resolve only those items remaining in dispute between the Parties in accordance with the provisions of this Section 2.9 within the range of the difference between the Buyer’s position with respect thereto and the Seller’s position with respect thereto. The Seller and the Buyer agree that judgment may be entered upon the written determination of the Independent Accounting Firm in any court referred to in Section 10.8 . The costs of any dispute resolution pursuant to this Section 2.9(c) , including the fees and expenses of the Independent Accounting Firm and of any enforcement of the determination thereof, shall be borne by the Parties in inverse proportion as they may prevail on the matters resolved by the Independent Accounting Firm, which proportionate allocation shall be calculated on an aggregate basis based on the relative dollar values of the amounts in dispute and shall be determined by the Independent Accounting Firm at the time the determination of such firm is rendered on the merits of the matters submitted. The fees and disbursements of the Representatives of each Party

 

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incurred in connection with their preparation or review of the Working Capital Schedule and preparation or review of any Notice of Disagreement, as applicable, shall be borne by such Party.

(d) The Purchase Price shall be adjusted (the “ Adjusted Purchase Price ”), upwards or downwards, as follows:

(i) if the Final Working Capital as finally determined pursuant to this Section 2.9 is greater than the Target Working Capital Amount, the Purchase Price shall be adjusted upwards in an amount equal to the difference between the Final Working Capital and the Target Working Capital Amount; and

(ii) if the Target Working Capital Amount is greater than the Final Working Capital as finally determined pursuant to this Section 2.9 , the Purchase Price shall be adjusted downwards in an amount equal to the difference between the Target Working Capital Amount and the Final Working Capital.

(e) If the Adjusted Purchase Price is more than the Closing Date Amount, then the Buyer shall pay to the Seller, and if the Adjusted Purchase Price is less than the Closing Date Amount, the Seller shall pay to the Buyer, within five Business Days after the Final Working Capital becomes final, the amount of such difference by wire transfer in immediately available funds in U.S. dollars. Amounts to be paid pursuant to this Section 2.9(e) shall bear interest from the Closing Date to the date of such payment at an annual rate equal to the three-month LIBOR rate in effect as of the third Business Day prior to the date the payment is made (the “ Agreed Rate ”). Payments in respect of this Section 2.9(e) shall be made within three Business Days of final determination of the Final Working Capital pursuant to the provisions of this Section 2.9 by wire transfer of United States dollars in immediately available funds to such account or accounts as may be designated in writing by the Party entitled to such payment at least two Business Days prior to such payment date.

Section 2.10 Allocation . Within 30 days after the determination of the Final Working Capital, the Buyer shall deliver to the Seller a schedule (the “ Allocation Schedule ”) allocating the Purchase Price (and any other items treated as consideration for the Transferred Assets, except the Quotas, for Tax purposes) among the Transferred Assets and the covenant of the Seller set forth in Section 5.12 ; provided , however , that the portion of the Purchase Price related to the Quotas will be agreed by the Buyer and the Seller prior to the Closing and reflected in the Amendment to the Articles of Association executed on the Closing Date. The remaining portion of the consideration will be allocated to the remainder of the Transferred Assets in accordance with this Section 2.10 . The Allocation Schedule shall be reasonable and shall be prepared in accordance with Section 1060 of the Code and the Treasury Regulations thereunder. Such allocation shall be deemed final unless the Seller has notified the Buyer of any disagreement with the Allocation Schedule within 20 Business Days after submission thereof by the Buyer. In the event of such disagreement, the Parties hereto shall use reasonable efforts to reach agreement on a reasonable allocation of consideration among the Transferred Assets. In the event that the Parties hereto do not agree to a Purchase Price allocation in accordance with this Section 2.10 , the Independent Accounting Firm shall make a determination as to each disputed item which shall be binding upon the Parties. The Buyer and the Seller each agrees to file Internal Revenue Service Form 8594, and all federal, state, local and foreign Tax Returns, in accordance with the

 

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Allocation Schedule as finally determined by the Parties or the Independent Accounting Firm, as the case may be. The Buyer and Seller each agrees to provide the other promptly with any other information required to complete Form 8594.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE SELLER

Except as set forth in the Disclosure Schedules attached to this Agreement (collectively, the “ Disclosure Schedules ”), the Seller hereby represents and warrants to the Buyer, as of the date of this Agreement and as of the Closing Date, as follows:

Section 3.1 Organization and Qualification .

(a) The Seller is a corporation duly organized, validly existing and in good standing under the Laws of the State of Georgia and has full corporate power and authority to own, lease and operate the Transferred Assets and to carry on the Business as it is now being conducted. The Seller is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the ownership or operation of the Transferred Assets or the conduct or operation of the Business makes such qualification or licensing necessary, except, in each case, for any such failures that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The certificate of incorporation and bylaws of the Seller, as amended, that are filed with the Securities and Exchange Commission are true and complete in all material respects.

(b) EMS Brazil is an entity duly organized and validly existing under the Laws of Brazil and has the power and authority to own, lease and operate its assets and to carry on its business as it is now being conducted.

Section 3.2 Authority . The Seller has full corporate power and authority to execute and deliver each of the Transaction Documents, to perform its obligations thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Seller of the Transaction Documents and the consummation by the Seller of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action. This Agreement has been, and upon their execution each of the Ancillary Agreements to which the Seller will be a party will have been, duly executed and delivered by the Seller. This Agreement constitutes, and upon their execution each of the Ancillary Agreements will constitute, the legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether considered in a proceeding in equity or at Law).

Section 3.3 No Conflict; Required Filings and Consents .

(a) The execution, delivery and performance by the Seller of this Agreement do not and the execution, delivery and performance of each of the Ancillary Agreements, and the consummation of the transactions contemplated hereby and thereby, will not:

 

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(i) conflict with or violate the certificate of incorporation or bylaws of the Seller or similar organizational documents of EMS Brazil;

(ii) conflict with or violate in any material respect any material Law applicable to the Seller or EMS Brazil, the Business or any of the Transferred Assets or by which the Seller or EMS Brazil, the Business or any of the Transferred Assets may be bound or affected; or

(iii) except as set forth in Schedule 3.3(a) , conflict with, result in any breach of, constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, require any approval, consent or authorization of any Person pursuant to, or give to others any rights of termination, acceleration or cancellation of, any Material Contract;

except, in the case of clause (iii), for any such conflicts, violations, breaches, defaults or other occurrences that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b) Neither the Seller nor EMS Brazil is required to file, seek or obtain any notice, authorization, approval, order, permit or consent of or with any Governmental Authority in connection with the execution, delivery and performance by the Seller or EMS Brazil of each of the Transaction Documents to which the Seller or EMS Brazil will be a party or the consummation of the transactions contemplated thereby or in order to prevent the termination of any right, privilege, license or qualification of the Business, except for (i) any filings required to be made under the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”), (ii) any filings required to be made to the Brazilian Antitrust Authority which may be necessary or advisable to obtain consent for the transactions contemplated by the Transaction Documents, (iii) any notice, authorization, approval, order, permit or consent of any Governmental Authority required for the Buyer to manufacture, market, distribute, sell, service or repair the Products (the “ Product Authorizations ”), (iv) where failure to obtain such consent, approval, authorization or action, or to make such filing or notification, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or (v) as may be necessary as a result of any facts or circumstances relating to the Buyer or any of its Affiliates (as opposed to any other third party).

Section 3.4 Transferred Assets .

(a) Upon consummation of the transactions contemplated by this Agreement, at the Closing the Seller will have assigned, transferred and conveyed to the Buyer good, valid and marketable title to all of the Transferred Assets, free and clear of all Encumbrances (other than Permitted Encumbrances), subject to Section 2.5 .

(b) Except as set forth in Schedule 3.4 of the Disclosure Schedules, the transfer to the Buyer of the Transferred Assets pursuant to this Agreement, together with the Buyer’s rights under the Transaction Documents, comprise all the assets required to operate the Business in substantially the same manner as such operations are being conducted on the date hereof. Except as set forth in Schedule 3.4 of the Disclosure Schedules, the Seller and its

 

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Affiliates (other than EMS Brazil) do not provide any corporate support or other services to the Business.

Section 3.5 Financial Statements; No Undisclosed Liabilities .

(a) True and complete copies of the unaudited consolidated balance sheet of the Business (including EMS Brazil on a consolidated basis) as at September 30, 2006 (the “ Balance Sheet ”), and the related unaudited consolidated statements of results of operations and cash flows of the Business (including EMS Brazil on a consolidated basis) for the nine-month period ending September 30, 2006, together with all related notes and schedules thereto (collectively referred to as the “ Financial Statements ”) are attached as Schedule 3.5(a) of the Disclosure Schedules. The Financial Statements (i) have been prepared based on the books and records of the Seller and EMS Brazil pertaining to the Business; (ii) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated; and (iii) fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of the Business (including EMS Brazil on a consolidated basis) as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and subject to normal and recurring year-end audit adjustments and the absence of notes, in each case, that will not, individually or in the aggregate, be material.

(b) True and complete copies of (i) the unaudited consolidated balance sheet of EMS Brazil as of December 31, 2005 (the “ EMS Brazil Balance Sheet ”), and the related unaudited consolidated statements of results of operations and cash flows of EMS Brazil for the fiscal year ended December 31, 2005, together with all related notes and schedules thereto, and (ii) the unaudited consolidated balance sheet of EMS Brazil as of September 30, 2006 (the “ EMS Brazil Unaudited Balance Sheet ”), and the related unaudited consolidated results of operations and cash flows for the nine-month period ended September 30, 2006, are attached as Schedule 3.5(b) of the Disclosure Schedules (collectively referred to as the “ EMS Brazil Financial Statements ”). The EMS Brazil Financial Statements (x) have been prepared based on the books and records of EMS Brazil; (y) have been prepared on a consistent basis throughout the periods indicated; and (z) fairly present, in all material respects, the consolidated financial position, results of operations and cash flows of EMS Brazil as at the respective dates thereof and for the respective periods indicated therein, except as otherwise noted therein and subject to normal and recurring year-end audit adjustments and the absence of notes, in each case, that will not, individually or in the aggregate, be material.

(c) Insofar as is Known to the Seller, there are no debts, liabilities, obligations, or commitments, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, of the Business of a nature required to be reflected on a balance sheet prepared in accordance with GAAP, other than any such debts, liabilities, obligations and commitments (i) reflected or reserved against on the Financial Statements and on the EMS Brazil Financial Statements, (ii) incurred since the date of the Balance Sheet in the ordinary course of business consistent with past practice, or (iii) that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(d) There are no debts, liabilities, obligations or commitments, whether accrued or fixed, absolute or contingent, matured or unmatured or determined or determinable, of

 

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EMS Brazil, other than any such debts, liabilities, obligations and commitments (i) reflected or reserved against on the EMS Brazil Unaudited Balance Sheet or (ii) incurred since the date of the EMS Brazil Unaudited Balance Sheet in the ordinary course of business consistent with past practice.

Section 3.6 Absence of Certain Changes or Events . Since the date of the Balance Sheet: (a) the Seller and EMS Brazil have conducted the Business, in all material respects, in the ordinary course of business and consistent with past practice; (b) there has not occurred any Material Adverse Effect; (c) there has been no physical damage, destruction or loss in respect of the Transferred Assets that would, after taking into account any recoveries under the Seller or EMS Brazil’s insurance policies that would be payable to the Buyer in connection therewith, reasonably be expected to have a Material Adverse Effect; and (d) the Seller and EMS Brazil have not taken any action that, if taken after the date of this Agreement, would constitute a breach of any of the covenants set forth in Section 5.1 .

Section 3.7 Compliance with Law; Permits .

(a) Except as set forth on Schedule 3.7 , the Seller and EMS Brazil are and have been in compliance with all Laws applicable to them in connection with the conduct or operation of the Business and the ownership or use of the Transferred Assets, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Seller nor EMS Brazil has received any written communication during the past three years that alleges that the Business is not in compliance in any material respect with any Applicable Law.

(b) The Seller or EMS Brazil is in possession of all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations of any Governmental Authority necessary for it to own, lease and operate the Transferred Assets and to carry on the Business as currently conducted (the “ Permits ”), except where the failure to have, or the suspension or cancellation of, any of the Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Seller or EMS Brazil is in compliance with the Permits and no suspension or cancellation of any of the Permits is pending or, insofar as is Known to the Seller or EMS Brazil, threatened, except, in each case, where the failure to so comply, or the suspension or cancellation of, any of the Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Seller nor EMS Brazil has received any written notice of any Actions relating to the revocation or modification of any such Permits and none of such Permits will be subject to suspension, modification, revocation or nonrenewal as a result of the execution and delivery of the Transaction Documents or the consummation of the transactions contemplated thereby.

(c) EMS Brazil is in possession of all permits, licenses, franchises, approvals, certificates, consents, waivers, concessions, exemptions, orders, registrations, notices or other authorizations of any Governmental Authority necessary for it to own, lease and operate its assets and to carry on its business as currently conducted (the “ EMS Permits ”), except where the failure to have, or the suspension or cancellations of, any of the EMS Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, EMS

 

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Brazil is in compliance with the EMS Permits and no suspension or cancellation of any of the EMS Permits is pending or, insofar as is Known to Seller or EMS Brazil, threatened, except, in each case, where the failure to so comply, or the suspension or cancellation of, any of the EMS Permits would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Neither the Seller nor EMS Brazil has received any written notice of any Actions relating to the revocation or modification of any such EMS Permits and none of such EMS Permits will be subject to suspension, modification, revocation or nonrenewal as a result of the execution and delivery of the Transaction Documents or the consummation of the transactions contemplated thereby.

Section 3.8 Litigation . As of the date hereof, there is no Action by or against the Seller or EMS Brazil in connection with the Business pending, or insofar as is Known to the Seller or EMS Brazil, threatened in writing (a) pursuing any criminal sanctions or penalties, (b) seeking equitable or injunctive relief, (c) that relates to or involves more than $50,000, or (d) that would otherwise, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or would affect the legality, validity or enforceability of any of the Transaction Documents or the consummation of the transactions contemplated thereby. Neither the Seller nor EMS Brazil is a party or subject to, in violation of, or in default under any material Judgment applicable to the conduct of the Business or any Transferred Asset or Assumed Liability. As of the date hereof, there is not any Action by the Seller or EMS Brazil pending, or which the Seller or EMS Brazil intends to initiate, against any other Person arising out of the conduct of the Business. Insofar as is Known to the Seller or EMS Brazil, there is no pending or threatened investigation of or affecting the conduct of the Business or any Transferred Asset or Assumed Liability

Section 3.9 Employee Plans . Schedule 3.9 of the Disclosure Schedules sets forth all material Employee Plans. The Seller has made available to the Buyer a true and complete copy of the following documents: (a) each writing constituting an Employee Plan, (b) the current summary description of each Employee Plan and any material modifications thereto, (c) the most recent determination letter from the IRS, if any, with respect to any Employee Plan qualified under Section 401(a) of the Code and (d) the most recent annual report on IRS Form 5500, if any, filed by the Seller for each Employee Plan. Seller represents and warrants that Annex 1 includes the name of each employee whose duties, as of the date of this Agreement, relate primarily to the operations of the Business.

Section 3.10 Labor and Employment Matters . Neither the Seller nor EMS Brazil is a party to any labor or collective bargaining contract that pertains to any Business Employees. Insofar as is Known to the Seller or EMS Brazil, (a) there are no organizing activities or collective bargaining arrangements that could affect the Business pending or under discussion with any labor organization or Business Employees and (b) there are no lockouts, strikes, slowdowns or work stoppages pending or threatened by or with respect to any Business Employees. Neither the Seller nor EMS Brazil is engaged in any unfair labor practice in connection with the conduct of the Business. There are no pending, or, insofar as is Known to Seller or EMS Brazil, threatened, charges in connection with the conduct of the Business against the Seller, EMS Brazil or any current or former employee of the Business before the Equal Employment Opportunity Commission or any state or local agency responsible for the prevention of unlawful employment practices. Neither the Seller nor EMS Brazil has not

 

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received any written notice during the past three years of the intent of any Governmental Authority responsible for the enforcement of labor or employment laws to conduct an investigation of or affecting the Business and, insofar as is Known to Seller or EMS Brazil, no such investigation is in progress.

Section 3.11 Insurance . The Business and the Transferred Assets are covered by insurance coverage with reputable insurers in such amounts and covering such risks as are in accordance with normal industry practice for similar businesses (taking into account the cost and availability of such insurance). No notice of cancellation or termination has been received with respect to any such policy as of the date hereof, the premium with respect to such policies have been paid and all such insurance policies are in full force and effect and will remain in full force and effect up to and including the time of the Closing (other than those that have been retired or expired in the ordinary course).

Section 3.12 Real Property . Schedule 3.12 of the Disclosure Schedules lists the street address of each parcel of Real Property leased by the Seller or by EMS Brazil and used, held for use or intended to be used in the conduct of the Business (the “ Leased Real Property ”) and the identity of the lessor of each such parcel of Leased Real Property. The Seller or EMS Brazil, as the case may be, has a valid leasehold estate in all Leased Real Property, free and clear of all Encumbrances other than Permitted Encumbrances. Neither the Seller nor EMS Brazil has received written notice from any Governmental Authority that any of the Leased Real Property is not in material compliance with all applicable Laws, except for such failures to comply, if any, which have been remedied. All leases in respect of the Leased Real Property are in full force and effect, neither the Seller nor EMS Brazil has received any written notice of a breach or default thereunder, and insofar as is Known to the Seller or EMS Brazil, no event has occurred that, with notice or lapse of time or both, would constitute a breach or default thereunder. Insofar as is Known to the Seller or EMS Brazil, there is no pending or written threat of condemnation or similar proceeding affecting the Leased Real Property or any portion thereof. The Seller has made available to the Buyer true and complete copies of the leases in effect at the date hereof relating to the Leased Real Property. There has not been any sublease or assignment entered into by the Seller or by EMS Brazil in respect of the leases relating to the Leased Real Property. Neither the Seller nor EMS Brazil own any Real Property used, held for use or intended to be used primarily in the conduct of the Business. EMS Brazil does not own any United States real property interest as defined in Section 897 of the Code and the regulations promulgated thereunder.

Section 3.13 Intellectual Property .

(a) Schedule 3.13(a)(i) of the Disclosure Schedules sets forth an accurate and complete list of all registered Marks and applications for registration of Marks owned by the Seller or by EMS Brazil and included in the Business Intellectual Property (collectively, the “ Owned Business Registered Marks ”), Schedule 3.13(a)(ii) of the Disclosure Schedules sets forth an accurate and complete list of all Patents owned by the Seller or by EMS Brazil and included in the Business Intellectual Property (collectively, the “ Owned Business Patents ”) and Schedule 3.13(a)(iii) of the Disclosure Schedules sets forth an accurate and complete list of all registered Copyrights and all pending applications for registration of Copyrights owned by the Seller or EMS Brazil and included in the Business Intellectual Property (collectively, the

 

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“ Owned Business Registered Copyrights ” and, together with the Owned Business Patents and Owned Business Registered Marks, the “ Owned Business Registered IP ”). Schedule 3.13(a)(iv) of the Disclosure Schedules sets forth all Software owned by or licensed to and used by the Seller or EMS Brazil which is material to the conduct of the Business as currently conducted.

(b) Schedules 3.13(a)(i)–3.13(a)(iii) of the Disclosure Schedules set forth a list of all jurisdictions in which each item of listed Owned Business Registered IP is registered or registrations have been applied for and all registration and application numbers thereof. Except as set forth in Schedules 3.13(a)(i)-3.13(a)(iii) of the Disclosure Schedules, no Owned Business Registered IP has been or is now involved in any interference, reissue, reexamination, opposition or cancellation proceed