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Exhibit 2.01
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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ARTICLE I
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DEFINITIONS
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1
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Section 1.1
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Certain Defined Terms
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1
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Section 1.2
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Table of Definitions
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6
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Section 1.3
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Construction
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8
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ARTICLE II
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PURCHASE AND SALE
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9
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Section 2.1
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Purchase and Sale of Assets
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9
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Section 2.2
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Excluded Assets
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10
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Section 2.3
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Assumed Liabilities
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11
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Section 2.4
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Excluded Liabilities
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12
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Section 2.5
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Consideration
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13
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Section 2.6
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Closing
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13
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Section 2.7
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Transactions to be Effected at the
Closing
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13
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Section 2.8
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Risk of Loss
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14
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Section 2.9
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Post-Closing Adjustment of Purchase
Price
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14
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Section 2.10
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Allocation
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16
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ARTICLE III
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REPRESENTATIONS AND WARRANTIES OF THE
SELLER
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17
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Section 3.1
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Organization and Qualification
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17
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Section 3.2
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Authority
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17
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Section 3.3
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No Conflict; Required Filings and
Consents
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17
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Section 3.4
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Transferred Assets
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18
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Section 3.5
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Financial Statements; No Undisclosed
Liabilities
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19
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Section 3.6
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Absence of Certain Changes or Events
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20
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Section 3.7
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Compliance with Law; Permits
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20
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Section 3.8
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Litigation
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21
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Section 3.9
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Employee Plans
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21
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Section 3.10
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Labor and Employment Matters
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21
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Section 3.11
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Insurance
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22
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Section 3.12
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Real Property
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22
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Section 3.13
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Intellectual Property
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22
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Section 3.14
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Taxes
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24
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Section 3.15
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Environmental Matters
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26
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Section 3.16
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Material Contracts
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26
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Section 3.17
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Receivables
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28
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Section 3.18
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Customers and Suppliers; Product
Retrievals
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28
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Section 3.19
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Inventory
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29
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Section 3.20
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Tangible Personal Property
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29
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Section 3.21
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Brokers
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29
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Section 3.22
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EMS Brazil
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29
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Section 3.23
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WARN Act
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30
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i
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ARTICLE IV
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REPRESENTATIONS AND WARRANTIES OF THE
BUYER
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30
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Section 4.1
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Organization and Qualification
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30
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Section 4.2
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Authority
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30
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Section 4.3
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No Conflict; Required Filings and
Consents
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31
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Section 4.4
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Financing
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31
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Section 4.5
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Brokers
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32
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Section 4.6
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Litigation
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32
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ARTICLE V
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COVENANTS
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32
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Section 5.1
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Conduct of Business Prior to the
Closing
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32
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Section 5.2
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Covenants Regarding Information
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33
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Section 5.3
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Update of Disclosure Schedules; Knowledge of
Breach
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34
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Section 5.4
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Notification of Certain Matters
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35
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Section 5.5
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Intercompany Arrangements
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35
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Section 5.6
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Employee Benefits
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35
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Section 5.7
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Confidentiality
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38
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Section 5.8
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Consents; Further Assurances
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38
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Section 5.9
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Corporate Name
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40
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Section 5.10
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Refunds and Remittances
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40
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Section 5.11
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No Solicitation
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40
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Section 5.12
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Agreement Not to Compete
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41
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Section 5.13
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Bulk Transfer Laws
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41
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Section 5.14
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Public Announcements
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41
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Section 5.15
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SelectaCell Payments
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42
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Section 5.16
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Authority to Collect Receivables
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42
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Section 5.17
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Product Warranties
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42
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Section 5.18
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Product Authorizations
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43
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ARTICLE VI
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TAX MATTERS
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43
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Section 6.1
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Liability for Taxes
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43
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Section 6.2
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Assistance and Cooperation
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44
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Section 6.3
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Section 338(g) Election
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45
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ARTICLE VII
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CONDITIONS TO CLOSING
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45
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Section 7.1
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General Conditions
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45
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Section 7.2
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Conditions to Obligations of the
Seller
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45
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Section 7.3
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Conditions to Obligations of the Buyer
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46
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ARTICLE VIII
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INDEMNIFICATION
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46
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Section 8.1
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Survival of Representations, Warranties and
Covenants
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46
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Section 8.2
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Indemnification by the Seller
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47
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Section 8.3
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Indemnification by the Buyer
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47
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Section 8.4
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Procedures
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48
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ii
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Section 8.5
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Limits on Indemnification
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49
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Section 8.6
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Exclusivity
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50
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Section 8.7
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Disclaimer of Implied Warranties
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51
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Section 8.8
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Adjustment to Purchase Price
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51
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ARTICLE IX
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TERMINATION
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51
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Section 9.1
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Termination
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51
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Section 9.2
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Effect of Termination
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52
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ARTICLE X
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GENERAL PROVISIONS
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52
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Section 10.1
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Fees and Expenses
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52
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Section 10.2
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Amendment and Modification
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52
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Section 10.3
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Waiver
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52
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Section 10.4
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Notices
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53
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Section 10.5
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Entire Agreement
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53
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Section 10.6
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No Third-Party Beneficiaries
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54
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Section 10.7
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Governing Law
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54
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Section 10.8
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Dispute Resolution
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54
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Section 10.9
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Disclosure Generally
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54
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Section 10.10
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Personal Liability
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54
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Section 10.11
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Assignment; Successors
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55
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Section 10.12
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Enforcement
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55
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Section 10.13
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No Presumption Against Drafting Party
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55
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Section 10.14
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Severability
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55
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Section 10.15
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Waiver of Jury Trial
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55
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Section 10.16
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Counterparts
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55
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Section 10.17
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Facsimile Signature
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56
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Section 10.18
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Time of Essence
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56
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Section 10.19
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Exchange Rate
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56
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iii
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.
1
"
Bill of Sale " means a bill of sale, in substantially the
form set forth in Exhibit B , transferring to the Buyer
all of the tangible personal property owned or held by the Seller
as of the Closing Date that is included in the Transferred
Assets.
"
Business Day " means any day that is not a Saturday, a
Sunday or other day on which banks are required or authorized by
Law to be closed in the city of Atlanta, Georgia or the city of
Chicago, Illinois.
"
Business Employees " means all individuals set forth on
Annex 1 .
"
Buyer Material Adverse Effect " means any event, change,
circumstance, effect or state of facts that is materially adverse
to the ability of the Buyer to perform its obligations under this
Agreement or to consummate the transactions contemplated by this
Agreement.
"
Code " means the Internal Revenue Code of 1986, as amended
through the date hereof.
"
Control ", including the terms "Controlled by" and "under
common Control with", means the possession, directly or indirectly,
of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting
securities, as trustee or executor, as general partner or managing
member, by contract or otherwise.
"
Employee Plans " means all "employee benefit plans" within
the meaning of Section 3(3) of ERISA, all formal written plans
and all other compensation and benefit plans, contracts, policies,
programs and arrangements of the Seller (other than routine
administrative procedures) in connection with the Business in
effect as of the date of this Agreement, including all pension,
profit sharing, savings and thrift, bonus, stock bonus, stock
option or other cash or equity-based incentive or deferred
compensation, severance pay and medical and life insurance plans in
which any of the Business Employees or their dependents
participate.
"
EMS Brazil " means EMS Wireless do Brasil Ltda., enrolled
with the National Legal Entities Registry (CNPJ) in Brazil
under No. 03.945.567/0001-29.
"
Encumbrance " means any charge, claim, mortgage, lien,
option, pledge, security interest or other restriction of any
kind.
"
Environmental Laws " means any Laws of any Governmental
Authority or applicable jurisdiction relating to protection and
clean up of the air, the land, the water and the environment and
activities or conditions related thereto including those relating
to the generation, handling, disposal, transportation, or release
of or exposure to Hazardous Material.
"
Environmental Permits " means all Permits under any
Environmental Law reasonably required in the operation or conduct
of the Business as currently conducted.
"
Final Working Capital " means the current assets of the
Business less the current liabilities of the Business (in each case
including EMS Brazil on a consolidated basis, including cash and
cash equivalents of EMS Brazil) as of 11:59 p.m. Atlanta,
Georgia time on the day
2
immediately prior to the Closing Date, prepared in accordance
with the guidelines on Exhibit C , and as reflected on the
Working Capital Schedule.
"
First Commercial Sale " means, with respect to the
SelectaCell Products, the date any such product is first sold by
the Buyer or an Affiliate of the Buyer to a non-affiliated third
party.
"
GAAP " means United States generally accepted accounting
principles as in effect on the date of this Agreement.
"
Governmental Authority " means any United States or
non-United States national, federal, state or local governmental,
regulatory or administrative authority, agency or commission or any
judicial or arbitral body.
"
Hazardous Material " means any pollutant, contaminant,
waste, hazardous substance, hazardous waste, toxic substance,
petroleum or petroleum-based substance or waste, asbestos or
asbestos-containing materials, polychlorinated biphenyls, or any
other material or substance which is defined in, regulated under or
for which liability or standards of care are imposed by any
Environmental Law.
"
Intellectual Property " means all intellectual property
rights arising under the Laws of the United States or any other
jurisdiction with respect to the following: (a) trade names,
trademarks and service marks (registered and unregistered), domain
names, trade dress and similar rights and applications to register
any of the foregoing (collectively, " Marks "); (b) patents
and patent applications and rights in respect of utility models or
industrial designs (collectively, " Patents ");
(c) copyrights and registrations and applications therefor
(collectively, " Copyrights "); (d) know-how, ideas,
inventions, invention records or disclosures, discoveries, methods,
processes, technical data, specifications, research and development
information, technology, Software, data bases, test information and
other proprietary or confidential information, including marketing
strategies and customer lists that are the subject of reasonable
efforts under the circumstances to maintain the confidentiality
thereof and derive economic value from not being generally known
(collectively, " Trade Secrets ").
"
Intellectual Property Assignments " means instruments of
assignment in substantially the form of Exhibit D ,
transferring to the Buyer all of the Owned Business Registered
IP.
"
Known ," with respect to the Seller or the Buyer, means the
actual or constructive knowledge of the persons listed under the
appropriate caption in Schedule 1.1(a) of the
Disclosure Schedules, including the knowledge such persons would
have following reasonable inquiry, as of the date the applicable
representation or warranty is made or deemed made hereunder (or,
with respect to a certificate delivered pursuant to this Agreement,
as of the date of delivery of such certificate).
"
Law " means any statute, law (including common law),
ordinance, regulation, rule, code, injunction, judgment, decree or
order of any Governmental Authority.
"
LXE " means LXE Inc., a Georgia corporation.
3
"
Material Adverse Effect " means any event, change,
circumstance, effect or state of facts that is materially adverse
to (a) the business, assets, condition (financial or
otherwise) or results of operations of the Business or (b) the
ability of the Seller timely to perform its obligations under the
Transaction Documents or timely to consummate the transactions
contemplated thereby; provided , however , that
"Material Adverse Effect" shall not include the effect of any
event, change, circumstance, effect, or state of facts arising out
of or attributable to any of the following, either alone or in
combination: (i) the base-station antenna and repeater
business generally, (ii) general economic or political
conditions in the United States or Brazil, (iii) the public
announcement of this Agreement or of the consummation of the
transactions contemplated by this Agreement or (iv) acts of
war (whether or not declared), sabotage or terrorism, military
actions or the escalation thereof or other force majeure events
occurring after the date of this Agreement, in each case, occurring
after the date hereof and, in the case of clauses (i),
(ii) and (iv), that does not materially and adversely affect
the Business in a manner that is substantially different from the
impact to the other businesses in the industry.
"
Net Sales " means the sum of (a) the net sales
recognized with respect to the SelectaCell Products, by the Buyer
or any Affiliate of the Buyer (or any successor to the ownership of
the SelectaCell Products), to any non-Affiliate third party, for
all the units of such SelectaCell Products so sold, and
(b) any net licensing revenues recognized by the Buyer or any
Affiliate of the Buyer (or any successor to the ownership of the
technology associated with the SelectaCell Products) relating to
the license of the Intellectual Property included within the
SelectaCell Products in connection with the sale of SelectaCell
Products or any OEM program relating to the SelectaCell Products,
in each case, in accordance with United States generally accepted
accounting principles, applied on a basis consistent with the
Buyer’s past practice, as in effect at the time such net
sales or net revenues are recognized; provided ,
however , that Net Sales shall not be affected by payments
by the Buyer to the Seller pursuant to Section 5.15
.
"
Permitted Encumbrance " means, with respect to any
Transferred Asset, (a) statutory liens for current Taxes not
yet due or the validity or amount of which is being contested in
good faith by appropriate proceedings, (b) mechanics’,
carriers’, workers’, repairers’ and other similar
liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the part
of the Seller for a period greater than 60 days, or the
validity or amount of which is being contested in good faith by
appropriate proceedings, or pledges, deposits or other liens
securing the performance of bids, trade contracts, leases or
statutory obligations (including workers’ compensation,
unemployment insurance or other social security legislation), (c)
zoning, entitlement, conservation restriction and other similar
land use and environmental regulations by Governmental Authorities
and (d) all exceptions, restrictions, easements, imperfections
of title, charges, rights of way and other Encumbrances that do
not, individually or in the aggregate, materially interfere with
the present use of such Transferred Asset in the Business as
presently conducted.
"
Person " means an individual, corporation, partnership,
limited liability company, limited liability partnership,
syndicate, person, trust, association, organization or other
entity, including any Governmental Authority, and including any
successor, by merger or otherwise, of any of the foregoing.
4
"
Products " means any and all products manufactured,
marketed, distributed or sold by the Business prior to the Closing
Date.
"
Product Warranty Costs " means all costs and expenses
reasonably incurred by the Buyer or any of its Affiliates from and
after the Closing Date, including manufacturing overhead but
excluding general and administrative overhead, to the extent
arising out of or resulting from any warranty obligations existing
with respect to the Products on the Closing Date, including any
such reasonable costs and expenses relating to refunds, repairs,
exchanges, adjustments or returns made by customers of the Business
with respect to such Products pursuant to rights under such
warranty obligations.
"
Purchase Price " means $50,500,000.
"
Release " means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of a Hazardous Material into the indoor or
outdoor environment or into or out of any property, including the
movement of Hazardous Material through or into the air, soil,
surface water, groundwater or other environmental media.
"
Restricted Activities " means any of the development,
manufacture, distribution or sale of tower-mounted and other fixed
terrestrial base station antennas and fixed terrestrial indoor and
outdoor signal repeaters intended for use as part of, or in
connection with the use of, any terrestrial cellular or PCS
wireless telecommunications network, in each case, anywhere in
North America, Central America or South America; provided, however,
that, notwithstanding the foregoing, the Seller shall not be
prohibited from developing, manufacturing, distributing or selling
any product for end use by any government in military and defense
applications.
"
SelectaCell Patents " means those Patents included within
the Transferred Assets identified in Exhibit E .
"
SelectaCell Products " means the product of the Business
known as the SelectaCell 1900 MHz indoor repeater and any other
indoor repeater product that is (a) covered by one or more
claims of the SelectaCell Patents and (b) derived from and has
substantially the same functional specifications as the SelectaCell
1900 MHz indoor repeater.
"
Seller’s Product Warranty Share " means seventy-five
percent (75%) of all Product Warranty Costs incurred by the Buyer
or any of its Affiliates with respect to any individual product
model (as determined by SKU number) or component, or any particular
design or manufacturing defect common to multiple product models or
components (a " Significant Warranty Event "), during the
two-year period immediately following the Closing Date;
provided , however , that (a) the Seller shall
not have any responsibility or liability for such Product Warranty
Costs with respect to any Significant Warranty Event until the
aggregate Product Warranty Costs with respect to such Significant
Warrant Event exceed $300,000, in which case Seller’s Product
Warranty Share shall be calculated from the first dollar of the
Product Warranty Costs associated with such Significant Warranty
Event, and (b) in no event shall the aggregate amount of
Seller’s Product Warranty Share for all Significant Warranty
Events exceed $1,200,000.
5
"
Software " means computer software programs and related
documentation and materials, whether in source code, object code or
human readable form; provided , however , that
Software does not include software that is available generally
through retail stores, distribution networks or is otherwise
subject to "shrink-wrap" license or "click-through" agreements,
including any software pre-installed in the ordinary course of
business as a standard part of hardware, equipment or fixtures
purchased by the Seller or EMS Brazil and used in the Business.
"
Subsidiary " of any Person means any other Person of which
an amount of the outstanding voting securities or other voting
equity interests sufficient to elect at least a majority of its
Board of Directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interests) is
owned, directly or indirectly, by such first Person.
"
Target Working Capital Amount " means $16,657,014, which
reflects the current assets and the current liabilities of the
Business (in each case including EMS Brazil on a consolidated
basis, but excluding cash and cash equivalents of EMS Brazil) as of
11:59 p.m. Atlanta, Georgia time on September 30, 2006,
prepared in accordance with the guidelines on Exhibit C
.
"
Tax " (and, with correlative meaning, " Taxes ")
means (a) any federal, state, local or foreign income, gross
receipts, property, sales, use, license, excise, franchise,
employment, payroll, withholding, alternative or add-on minimum, ad
valorem, value added, transfer or excise tax, or any other tax,
custom, duty, governmental fee or other like assessment or charge
of any kind whatsoever, together with any interest or penalty,
imposed by any Governmental Authority; and (b) any liability
of the Seller or EMS Brazil for the payment of amounts described in
clause (a) as a result of being a member of an affiliated,
consolidated, combined or unitary group or as a result of any
obligation of under any Tax sharing agreement or Tax indemnity
agreement.
"
Tax Return " means any return, declaration, report,
statement, information statement and other document required to be
filed with respect to Taxes.
"
Transaction Documents " means this Agreement, the Ancillary
Agreements and the documents delivered in connection herewith and
therewith.
"
Transition Services Agreement " means the agreement, in
substantially the form set forth in Exhibit F ,
pursuant to which the Seller will provide certain services to the
Buyer for the period of time set forth in such agreement.
"
Working Capital Schedule " means a statement of the current
assets and the current liabilities of the Business (in each case
including EMS Brazil on a consolidated basis) as of 11:59 p.m.
Atlanta, Georgia time on the day immediately prior to the Closing
Date, prepared in accordance with the guidelines on
Exhibit C .
6
Section 1.2 Table of
Definitions . The following terms have the meanings set forth
in the Sections referenced below:
|
|
|
|
|
Definition
|
|
Location
|
|
Adjusted Purchase Price
|
|
2.9(d)
|
|
Agreed Rate
|
|
2.9(e)
|
|
Agreement
|
|
Preamble
|
|
Allocation Schedule
|
|
2.10
|
|
Amendment to the Articles of
Association
|
|
2.7(a)(iii)
|
|
Assumed Liabilities
|
|
2.3
|
|
Balance Sheet
|
|
3.5(a)
|
|
Business
|
|
Recitals
|
|
Business Intellectual Property
|
|
2.1(c)
|
|
Business Permits
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|
2.1(g)
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Buyer
|
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Preamble
|
|
Buyer Indemnified Parties
|
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8.2
|
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Buyer Savings Plan
|
|
5.6(d)
|
|
Buyer Welfare Benefit Plans
|
|
5.6(e)(i)
|
|
Certidão Negativa perante o INSS
|
|
2.7(a)(iv)
|
|
Certificado de Regularidade perante o
FGTS
|
|
2.7(A)(v)
|
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Certidão Conjunta de Débitos Relativos
a Tributos Federais e à Dívida Ativa da
União
|
|
2.7(a)(vi)
|
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Certidão Negative de Débitos da Receita
Estadual
|
|
27(A)(vii)
|
|
Closing
|
|
2.6
|
|
Closing Date
|
|
2.6
|
|
Closing Date Amount
|
|
2.7(b)
|
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COBRA Coverage
|
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5.6(e)(i)
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|
Confidentiality Agreement
|
|
5.7
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Contracts
|
|
2.1(a)
|
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Disclosure Schedules
|
|
Article III
|
|
EMS Brazil Balance Sheet
|
|
3.5(b)
|
|
EMS Brazil Contracts
|
|
3.16(a)
|
|
EMS Brazil Financial Statements
|
|
3.5(b)
|
|
EMS Brazil Receivables
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3.17
|
|
EMS Brazil Unaudited Balance Sheet
|
|
3.5(b)
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EMS Permits
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3.7(c)
|
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Excluded Assets
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2.2
|
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Excluded Liabilities
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|
2.4
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Financial Statements
|
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3.5(a)
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Fundamental Representations
|
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8.1
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HSR Act
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3.36b)
|
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Indemnified Party
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8.4(a)
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Indemnifying Party
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8.4(a)
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Independent Accounting Firm
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2.9(c)
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Inventory
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2.1(f)
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Landlord Estoppels
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5.8(e)
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Leased Real Property
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3.12
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Losses
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|
8.2
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Material Contracts
|
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3.16(a)
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Names
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5.9
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Notice of Disagreement
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2.9(b)
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7
|
|
|
|
|
Definition
|
|
Location
|
|
Owned Business Patents
|
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3.13(a)
|
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Owned Business Registered Copyrights
|
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3.13(a)
|
|
Owned Business Registered IP
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3.13(a)
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|
Owned Business Registered Marks
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3.13(a)
|
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Party
|
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Preamble
|
|
Permits
|
|
3.7(b)
|
|
Pre-Closing Tax Period
|
|
6.1(b)
|
|
Post-Closing Tax Period
|
|
6.1(b)
|
|
Product Authorizations
|
|
3.3(b)
|
|
Product Warranties Notice of
Disagreement
|
|
5.17(a)
|
|
Product Warranty Costs Schedule
|
|
5.17(a)
|
|
Quotas
|
|
2.1(j)
|
|
Real Property
|
|
2.1(b)
|
|
Receivables
|
|
2.1(d)
|
|
Representatives
|
|
5.2(a)
|
|
Required Consents
|
|
5.8(a)
|
|
Royalty Payment
|
|
5.15(a)
|
|
Royalty Period
|
|
5.15(a)
|
|
Seller
|
|
Preamble
|
|
Seller Indemnified Parties
|
|
8.3
|
|
Tangible Personal Property
|
|
2.1(e)
|
|
Target Amount
|
|
5.15(a)
|
|
Target SelectaCell Payment
|
|
5.15(a)
|
|
Termination Date
|
|
9.1(d)
|
|
Third Party Claim
|
|
8.4(a)
|
|
Transfer Taxes
|
|
6.1(a)
|
|
Transferred Assets
|
|
2.1
|
|
Transferred Employees
|
|
5.6(a)
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|
WARN Act
|
|
3.23
|
Section 1.3
Construction .
(a) Unless
the context of this Agreement otherwise clearly requires,
(i) references to the plural include the singular, and
references to the singular include the plural, (ii) references
to one gender include the other gender, (iii) the words
"include," "includes" and "including" do not limit the preceding
terms or words and shall be deemed to be followed by the words
"without limitation", (iv) the terms "hereof", "herein",
"hereunder", "hereto" and similar terms in this Agreement refer to
this Agreement as a whole and not to any particular provision of
this Agreement, (v) the terms "day" and "days" mean and refer
to calendar day(s), and (vi) the terms "year" and "years" mean
and refer to calendar year(s).
(b) Unless
otherwise set forth in this Agreement, references in this Agreement
to any document, instrument or agreement (including this Agreement)
(i) includes and incorporates all exhibits, schedules and
other attachments thereto, (ii) includes all documents,
instruments or agreements issued or executed in replacement thereof
and (iii) means such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified or
supplemented from time to time in accordance with its terms and in
effect at any
8
given time. All Article, Section, Exhibit and Schedule
references herein are to Articles, Sections, Exhibits and Schedules
of this Agreement, unless otherwise specified.
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 ");
9
(g) all
Permits of the Seller used, held for use or intended to be used
primarily in the Business (the " Business Permits ");
(h) all
files, invoices, customers’ and suppliers’ lists, other
distribution lists, billing records, sales and promotional
literature, manuals and customer and supplier correspondence of the
Seller relating primarily to the Business;
(i) all
credits, prepaid expenses, deferred charges (other than deferred
Taxes), advance payments, prepaid items and security deposits that
are used, held for use or intended to be used primarily in, or
arising primarily out of or relating primarily to, the
Business;
(j) 1,936,560
quotas in EMS Brazil (including the quota currently held by LXE)
representing 100% of its capital, free and clear of any
Encumbrances (the " Quotas ");
(k) all
rights to causes of action, lawsuits, judgments, claims, credits
and demands of any nature in favor of the Seller to the extent
relating to the Business or the Transferred Assets, including all
rights under all guarantees, warranties, indemnities and similar
rights in favor of the Seller;
(l) all
goodwill generated by or associated with the Business; and
(m) all
rights in and to products sold in the operation or conduct of the
Business.
Section 2.2 Excluded
Assets . Notwithstanding anything contained in Section
2.1 to the contrary, the Seller is not selling, and the Buyer
is not purchasing, any of the following assets of the Seller
(except to the extent that such assets are assets directly owned by
EMS Brazil), all of which shall be retained by the Seller
(collectively, the " Excluded Assets "):
(a) all
of the Seller’s cash and cash equivalents as of
11:59 p.m. Atlanta, Georgia time on the day immediately prior
to the Closing Date;
(b) the
Seller’s corporate books and records of internal corporate
proceedings, Tax Returns, taxpayer and other identification
numbers;
(c) all
rights in the following names and marks and any variation or
derivation thereof: "EMS," "EMS Technologies" and "EMS
Wireless";
(d) all
of the Seller’s bank accounts;
(e) all
(i) accounting records (including records relating to Taxes)
and internal reports relating to the business activities of the
Seller that are not Transferred Assets, and (ii) work papers
and books and records relating to the Business that the Seller is
required by Law to retain; provided , however , that
the Seller shall provide copies of such accounting records,
internal reports, work papers and books and records to the extent
that they would reasonably be expected to relate primarily to the
operation and conduct of the Business following the Closing;
10
(f) any
interest in or right to any refund of any Taxes for which the
Seller is liable pursuant to this Agreement, except to the extent
such refund is treated as a current asset in the calculation of
Final Working Capital;
(g) any
insurance policies and rights, claims or causes of action
thereunder;
(h) except
as specifically provided in Section 5.6 , any assets
relating to any Employee Plan;
(i) all
rights, claims and causes of action to the extent relating to any
Excluded Asset or any Excluded Liability;
(j) the
assets of the Seller listed in Exhibit G ; and
(k) all
rights of the Seller under the Transaction Documents.
Section 2.3 Assumed
Liabilities . In connection with the purchase and sale of the
Transferred Assets pursuant to this Agreement, as of the Closing,
the Buyer shall assume and pay, discharge, perform or otherwise
satisfy the following liabilities and obligations of the Seller
relating to the Business (the " Assumed Liabilities "):
(a) all
liabilities (other than liabilities for Taxes) of the Business
reflected or reserved against in the Balance Sheet;
(b) all
liabilities (other than liabilities for Taxes) accruing, arising
out of or relating to the conduct or operation of the Business
incurred subsequent to the date of the Balance Sheet in the
ordinary course of business consistent with past practice that
would have been required by GAAP to be reflected or reserved
against in the Balance Sheet had such liabilities existed as of the
date of the Balance Sheet; provided , however , that
in no event shall the Assumed Liabilities include indebtedness for
borrowed money or guarantees thereof;
(c) all
liabilities accruing, arising out of or relating to the conduct or
operation of the Business by the Buyer or the ownership or use of
the Transferred Assets by the Buyer from and after the Closing
Date;
(d) all
liabilities for Taxes accrued as current liabilities in the
calculation of Final Working Capital (but only to the extent of the
amount so accrued) and for Taxes allocated to the Buyer pursuant to
Article VI ;
(e) all
liabilities and obligations of the Seller under the Contracts and
the Business Permits to the extent such liabilities and obligations
are not required to be performed prior to the Closing Date;
provided , however , that if such liability or
obligation relates to an obligation of the Seller to make a cash
payment under a Contract relating to the period prior to the
Closing Date, then the Buyer shall assume such liability or
obligation only to the extent it is included in the calculation of
Final Working Capital;
(f) all
rights of return and warranty obligations of the Seller or EMS
Brazil associated with the Products (other than Seller’s
Product Warranty Share); and
11
(g) all
liabilities assumed by the Buyer pursuant to
Section 5.6 .
Section 2.4 Excluded
Liabilities . Notwithstanding any other provision of this
Agreement to the contrary, the Buyer is not assuming and the Seller
shall pay, perform or otherwise satisfy, all liabilities,
obligations or commitments other than the Assumed Liabilities
specifically listed in Section 2.3 (the " Excluded
Liabilities ") (in the case of liabilities, obligations or
commitments of EMS Brazil, solely for purposes of Article
VIII ), including the following:
(a) all
liabilities for Taxes of the Seller except those allocated to the
Buyer pursuant to Section 2.3(d) ;
(b) any
liability that is not assumed by the Buyer pursuant to
Section 5.6 , including any liability with respect to
any retention plans implemented by the Seller or by EMS Brazil
prior to the Closing;
(c) any
indebtedness for borrowed money or guarantees thereof of the Seller
or EMS Brazil outstanding as of the Closing Date;
(d) any
liability or obligation relating to an Excluded Asset;
(e) any
Losses to the extent arising out of or resulting from any actual,
material breach by the Seller or EMS Brazil under any Contract
prior to the Closing (other than any right of return or warranty
obligation of the Seller or EMS Brazil associated with the
Products, which shall be assumed by the Buyer to the extent
provided in Section 2.3(f) );
(f) any
liability, obligation or commitment of the Seller or EMS Brazil,
whether express or implied, liquidated, absolute, accrued,
contingent or otherwise, or known or unknown, arising primarily out
of the operation or conduct by the Seller or EMS Brazil of any
business other than the Business;
(g) any
Losses to the extent arising out of or resulting from (i) any
Action pending or threatened against the Seller or EMS Brazil as of
the Closing Date, (ii) any actual, material violation by the
Seller or EMS Brazil of any Applicable Law prior to the Closing, or
(iii) any action, omission or event prior to the Closing
relating to any of the matters described on
Schedule 3.7 (for the avoidance of doubt, any rights of
return and warranty obligations relating to such matters shall be
Excluded Liabilities notwithstanding Section 2.3(f) or
any other provision hereof);
(h) any
liability of the Seller or EMS Brazil pursuant to any Environmental
Law arising from or relating to any action, event, circumstance or
condition occurring or existing on or prior to the Closing
Date;
(i) any
liability, obligation or commitment of the Seller or EMS Brazil to
any of their respective Affiliates; and
(j) all
liabilities for the Taxes of EMS Brazil (or any predecessor
thereof) for any taxable period ending prior to the Closing Date
except those allocated to the Buyer pursuant to Section
2.3(d) .
12
Section 2.5
Consideration .
(a) In
full consideration for the sale, assignment, transfer, conveyance
and delivery of the Transferred Assets to the Buyer, at the
Closing, the Buyer shall (a) pay to the Seller an amount equal
to the Purchase Price and (b) assume the Assumed Liabilities.
The Purchase Price shall be payable in accordance with
Section 2.7 and shall be subject to adjustment as
provided in Section 2.9 .
(b) Notwithstanding
anything to the contrary, the Purchase Price will be reduced by the
amount of any withholding income tax that, in the Buyer’s
reasonable discretion, may be imposed by the Brazilian Taxing
Authority on capital gain, if any, realized by the Seller as a
result of the sale of the Quotas.
Section 2.6 Closing .
The sale and purchase of the Transferred Assets and the assumption
of the Assumed Liabilities contemplated by this Agreement shall
take place at a closing (the " Closing ") to be held at the
offices of King & Spalding LLP, 1180 Peachtree Street, Atlanta,
GA 30309, at 10:00 A.M. Atlanta time on the second Business
Day following the satisfaction or, to the extent permitted by
applicable Law, waiver by the Party entitled to the benefit thereof
of all conditions to the obligations of the Parties set forth in
Article VII (other than such conditions as may, by
their terms, only be satisfied at the Closing or on the Closing
Date but subject to the satisfaction of such conditions), or at
such other place or at such other time or on such other date as the
Seller and the Buyer mutually may agree in writing. The day on
which the Closing takes place is referred to as the " Closing
Date ."
Section 2.7 Transactions
to be Effected at the Closing . At the Closing:
(a) The
Seller shall deliver to the Buyer
(i) an
appropriately executed Bill of Sale;
(ii) an
appropriately executed Intellectual Property Assignments;
(iii) an
amendment to the articles of association of EMS Brazil ("
Amendment to the Articles of Association "), duly executed
by the Seller and by LXE in the form of Exhibit H ,
reflecting (A) transfer of the Quotas from the Seller and LXE
to the Buyer, and (B) modification of the corporate name of the
company so as to exclude the expression "EMS";
(iv) a
valid negative certificate issued by the Social Security National
Institute attesting that EMS Brazil has no outstanding debts ("
Certidão Negativa perante o INSS (CND INSS) ");
(v) a
valid Certificate issued by the Federal Unemployment Fund attesting
that EMS Brazil is in good standing with such Fund ("
Certificado de Regularidade perante o FGTS ");
13
(vi) a
valid Certificate issued by the Federal Government attesting that
EMS Brazil has no pending debts with the Federal Government ("
Certidão Conjunta de Débitos Relativos a Tributos
Federais e à Dívida Ativa da União ");
(vii) a
valid Certificate issued by the State Government of Paraná
stating that EMS Brazil has no pending debts with the State
Government of Paraná (" Certidão Negative de
Débitos da Receita Estadual ");
(viii) duly
signed resignations (from the applicable board of directors and
officers), effective immediately after the Closing, of all
applicable directors and officers of EMS Brazil; and
(ix) the
consents referred to in Section 7.3(a) and such other
appropriately executed deeds (in recordable form), bills of sale,
assignments, instruments of transfer and other documents as the
Buyer or its counsel may reasonably request to effect the transfer
of the Transferred Assets, and to demonstrate satisfaction of the
conditions and compliance with the covenants set forth in this
Agreement; and
(b) The
Buyer shall deliver to the Seller (i) payment, by wire
transfer to a bank account designated in writing by the Seller
(such designation to be made at least two business days prior to
the Closing Date), in immediately available funds in U.S. dollars
in an amount (the " Closing Date Amount ") equal to
(A) the Purchase Price plus or minus (B) an estimate,
prepared by the Seller (and reasonably satisfactory to the Buyer)
and delivered to the Buyer at least two Business Days prior to the
Closing Date, of any adjustment to the Purchase Price under
Section 2.9 based on the most recent date practicable,
(ii) an appropriately executed Assumption Agreement and
(iii) such other documents as the Seller or its counsel may
reasonably request to demonstrate satisfaction of the conditions
and compliance with the covenants set forth in this Agreement;
and
(c) The
Buyer and the Seller shall execute and deliver the Ancillary
Agreements (other than the Bill of Sale and the Assumption
Agreement).
Section 2.8 Risk of
Loss . Until the Closing, any loss of or damage to the
Transferred Assets from fire, casualty or any other occurrence
shall be the sole responsibility of the Seller.
Section 2.9 Post-Closing
Adjustment of Purchase Price .
(a) During
the 60 days after the Closing Date, the Buyer shall prepare
the Working Capital Schedule. The Buyer shall consult with the
Seller and the parties shall cooperate with one another in the
preparation of the Working Capital Schedule. Within 60 days
after the Closing Date, the Buyer shall deliver to the Seller the
Working Capital Schedule certified by an officer of the Buyer that
it has been prepared in accordance with the requirements of
Section 2.9 .
(b) During
the 20 Business Day period following the Seller’s receipt of
the Working Capital Schedule, the Buyer shall cooperate with the
Seller and its Representatives to provide them with any information
used in preparing the Working Capital Schedule reasonably requested
by the Seller and its Representatives and reasonably available to
the Buyer. The
14
Working Capital Schedule shall become final and binding on the
20 th Business Day
following delivery thereof, unless prior to the end of such period,
the Seller delivers to the Buyer written notice of its disagreement
(a " Notice of Disagreement ") specifying the nature and
amount of any disputed item. The Seller shall be deemed to have
agreed with all items and amounts in the Working Capital Schedule
not specifically referenced in the Notice of Disagreement, and such
items and amounts shall not be subject to review in accordance with
Section 2.9(c) . Any Notice of Disagreement may reference
only disagreements based on mathematical errors or based on amounts
reflected on the Working Capital Schedule not being calculated in
accordance with this Section 2.9 .
(c) During
the ten-Business Day period following delivery of a Notice of
Disagreement by the Seller to the Buyer, if any, the Parties in
good faith shall seek to resolve in writing any differences that
they may have with respect to the matters specified therein. During
such ten-Business Day period, the Seller shall cooperate with the
Buyer and its Representatives to provide them with any information
used in preparing the Notice of Disagreement reasonably requested
by the Buyer or its Representatives and reasonably available to the
Seller. Any disputed items resolved in writing between the Buyer
and the Seller within such ten Business Day period shall be final
and binding with respect to such items, and if the Seller and the
Buyer agree in writing on the resolution of each disputed item
specified by the Seller in the Notice of Disagreement and the
amount of the Final Working Capital, the amount so determined shall
be final and binding on the Parties for all purposes hereunder. If
the Seller and the Buyer have not resolved all such differences by
the end of such ten Business Day period, the Seller and the Buyer
shall submit, in writing, to an independent public accounting firm
(the " Independent Accounting Firm "), their briefs
detailing their views as to the correct nature and amount of each
item remaining in dispute and the amount of the Final Working
Capital, and the Independent Accounting Firm shall make a written
determination as to each such disputed item and the amount of the
Final Working Capital, which determination shall be final and
binding on the Parties for all purposes hereunder. The
determination of the Independent Accounting Firm shall be
accompanied by a certificate of the Independent Accounting Firm
that it reached such determination in accordance with the
provisions of this Section 2.9 . The Independent
Accounting Firm shall be Deloitte & Touche or, if such firm is
unable or unwilling to act, such other independent public
accounting firm as shall be agreed in writing by the Seller and the
Buyer. The Seller and the Buyer shall use their commercially
reasonable efforts to cause the Independent Accounting Firm to
render a written decision resolving the matters submitted to it
within 20 Business Days following the submission thereof. The
Independent Accounting Firm shall be authorized to resolve only
those items remaining in dispute between the Parties in accordance
with the provisions of this Section 2.9 within the
range of the difference between the Buyer’s position with
respect thereto and the Seller’s position with respect
thereto. The Seller and the Buyer agree that judgment may be
entered upon the written determination of the Independent
Accounting Firm in any court referred to in
Section 10.8 . The costs of any dispute resolution
pursuant to this Section 2.9(c) , including the fees
and expenses of the Independent Accounting Firm and of any
enforcement of the determination thereof, shall be borne by the
Parties in inverse proportion as they may prevail on the matters
resolved by the Independent Accounting Firm, which proportionate
allocation shall be calculated on an aggregate basis based on the
relative dollar values of the amounts in dispute and shall be
determined by the Independent Accounting Firm at the time the
determination of such firm is rendered on the merits of the matters
submitted. The fees and disbursements of the Representatives of
each Party
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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
16
Allocation Schedule as finally determined by the Parties or the
Independent Accounting Firm, as the case may be. The Buyer and
Seller each agrees to provide the other promptly with any other
information required to complete Form 8594.
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:
17
(i) conflict
with or violate the certificate of incorporation or bylaws of the
Seller or similar organizational documents of EMS Brazil;
(ii) conflict
with or violate in any material respect any material Law applicable
to the Seller or EMS Brazil, the Business or any of the Transferred
Assets or by which the Seller or EMS Brazil, the Business or any of
the Transferred Assets may be bound or affected; or
(iii) except
as set forth in Schedule 3.3(a) , conflict with, result
in any breach of, constitute a default (or an event that, with
notice or lapse of time or both, would become a default) under,
require any approval, consent or authorization of any Person
pursuant to, or give to others any rights of termination,
acceleration or cancellation of, any Material Contract;
except, in the case of clause (iii), for any such conflicts,
violations, breaches, defaults or other occurrences that would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) Neither
the Seller nor EMS Brazil is required to file, seek or obtain any
notice, authorization, approval, order, permit or consent of or
with any Governmental Authority in connection with the execution,
delivery and performance by the Seller or EMS Brazil of each of the
Transaction Documents to which the Seller or EMS Brazil will be a
party or the consummation of the transactions contemplated thereby
or in order to prevent the termination of any right, privilege,
license or qualification of the Business, except for (i) any
filings required to be made under the Hart Scott Rodino Antitrust
Improvements Act of 1976, as amended (the " HSR Act "),
(ii) any filings required to be made to the Brazilian
Antitrust Authority which may be necessary or advisable to obtain
consent for the transactions contemplated by the Transaction
Documents, (iii) any notice, authorization, approval, order, permit
or consent of any Governmental Authority required for the Buyer to
manufacture, market, distribute, sell, service or repair the
Products (the " Product Authorizations "), (iv) where
failure to obtain such consent, approval, authorization or action,
or to make such filing or notification, would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect or (v) as may be necessary as a result of any facts or
circumstances relating to the Buyer or any of its Affiliates (as
opposed to any other third party).
Section 3.4 Transferred
Assets .
(a) Upon
consummation of the transactions contemplated by this Agreement, at
the Closing the Seller will have assigned, transferred and conveyed
to the Buyer good, valid and marketable title to all of the
Transferred Assets, free and clear of all Encumbrances (other than
Permitted Encumbrances), subject to Section 2.5 .
(b) Except
as set forth in Schedule 3.4 of the Disclosure
Schedules, the transfer to the Buyer of the Transferred Assets
pursuant to this Agreement, together with the Buyer’s rights
under the Transaction Documents, comprise all the assets required
to operate the Business in substantially the same manner as such
operations are being conducted on the date hereof. Except as set
forth in Schedule 3.4 of the Disclosure Schedules, the
Seller and its
18
Affiliates (other than EMS Brazil) do not provide any corporate
support or other services to the Business.
Section 3.5 Financial
Statements; No Undisclosed Liabilities .
(a) True
and complete copies of the unaudited consolidated balance sheet of
the Business (including EMS Brazil on a consolidated basis) as at
September 30, 2006 (the " Balance Sheet "), and the
related unaudited consolidated statements of results of operations
and cash flows of the Business (including EMS Brazil on a
consolidated basis) for the nine-month period ending
September 30, 2006, together with all related notes and
schedules thereto (collectively referred to as the " Financial
Statements ") are attached as Schedule 3.5(a) of
the Disclosure Schedules. The Financial Statements (i) have
been prepared based on the books and records of the Seller and EMS
Brazil pertaining to the Business; (ii) have been prepared in
accordance with GAAP applied on a consistent basis throughout the
periods indicated; and (iii) fairly present, in all material
respects, the consolidated financial position, results of
operations and cash flows of the Business (including EMS Brazil on
a consolidated basis) as at the respective dates thereof and for
the respective periods indicated therein, except as otherwise noted
therein and subject to normal and recurring year-end audit
adjustments and the absence of notes, in each case, that will not,
individually or in the aggregate, be material.
(b) True
and complete copies of (i) the unaudited consolidated balance
sheet of EMS Brazil as of December 31, 2005 (the " EMS
Brazil Balance Sheet "), and the related unaudited consolidated
statements of results of operations and cash flows of EMS Brazil
for the fiscal year ended December 31, 2005, together with all
related notes and schedules thereto, and (ii) the unaudited
consolidated balance sheet of EMS Brazil as of September 30,
2006 (the " EMS Brazil Unaudited Balance Sheet "), and the
related unaudited consolidated results of operations and cash flows
for the nine-month period ended September 30, 2006, are
attached as Schedule 3.5(b) of the Disclosure Schedules
(collectively referred to as the " EMS Brazil Financial
Statements "). The EMS Brazil Financial Statements
(x) have been prepared based on the books and records of EMS
Brazil; (y) have been prepared on a consistent basis
throughout the periods indicated; and (z) fairly present, in
all material respects, the consolidated financial position, results
of operations and cash flows of EMS Brazil as at the respective
dates thereof and for the respective periods indicated therein,
except as otherwise noted therein and subject to normal and
recurring year-end audit adjustments and the absence of notes, in
each case, that will not, individually or in the aggregate, be
material.
(c) Insofar
as is Known to the Seller, there are no debts, liabilities,
obligations, or commitments, whether accrued or fixed, absolute or
contingent, matured or unmatured or determined or determinable, of
the Business of a nature required to be reflected on a balance
sheet prepared in accordance with GAAP, other than any such debts,
liabilities, obligations and commitments (i) reflected or reserved
against on the Financial Statements and on the EMS Brazil Financial
Statements, (ii) incurred since the date of the Balance Sheet
in the ordinary course of business consistent with past practice,
or (iii) that would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(d) There
are no debts, liabilities, obligations or commitments, whether
accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, of
19
EMS Brazil, other than any such debts, liabilities, obligations
and commitments (i) reflected or reserved against on the EMS
Brazil Unaudited Balance Sheet or (ii) incurred since the date
of the EMS Brazil Unaudited Balance Sheet in the ordinary course of
business consistent with past practice.
Section 3.6 Absence of
Certain Changes or Events . Since the date of the Balance
Sheet: (a) the Seller and EMS Brazil have conducted the
Business, in all material respects, in the ordinary course of
business and consistent with past practice; (b) there has not
occurred any Material Adverse Effect; (c) there has been no
physical damage, destruction or loss in respect of the Transferred
Assets that would, after taking into account any recoveries under
the Seller or EMS Brazil’s insurance policies that would be
payable to the Buyer in connection therewith, reasonably be
expected to have a Material Adverse Effect; and (d) the Seller
and EMS Brazil have not taken any action that, if taken after the
date of this Agreement, would constitute a breach of any of the
covenants set forth in Section 5.1 .
Section 3.7 Compliance
with Law; Permits .
(a) Except
as set forth on Schedule 3.7 , the Seller and EMS
Brazil are and have been in compliance with all Laws applicable to
them in connection with the conduct or operation of the Business
and the ownership or use of the Transferred Assets, except as would
not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Neither the Seller nor EMS Brazil
has received any written communication during the past three years
that alleges that the Business is not in compliance in any material
respect with any Applicable Law.
(b) The
Seller or EMS Brazil is in possession of all permits, licenses,
franchises, approvals, certificates, consents, waivers,
concessions, exemptions, orders, registrations, notices or other
authorizations of any Governmental Authority necessary for it to
own, lease and operate the Transferred Assets and to carry on the
Business as currently conducted (the " Permits "), except
where the failure to have, or the suspension or cancellation of,
any of the Permits would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. The
Seller or EMS Brazil is in compliance with the Permits and no
suspension or cancellation of any of the Permits is pending or,
insofar as is Known to the Seller or EMS Brazil, threatened,
except, in each case, where the failure to so comply, or the
suspension or cancellation of, any of the Permits would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Neither the Seller nor EMS Brazil has
received any written notice of any Actions relating to the
revocation or modification of any such Permits and none of such
Permits will be subject to suspension, modification, revocation or
nonrenewal as a result of the execution and delivery of the
Transaction Documents or the consummation of the transactions
contemplated thereby.
(c) EMS
Brazil is in possession of all permits, licenses, franchises,
approvals, certificates, consents, waivers, concessions,
exemptions, orders, registrations, notices or other authorizations
of any Governmental Authority necessary for it to own, lease and
operate its assets and to carry on its business as currently
conducted (the " EMS Permits "), except where the failure to
have, or the suspension or cancellations of, any of the EMS Permits
would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect, EMS
20
Brazil is in compliance with the EMS Permits and no suspension
or cancellation of any of the EMS Permits is pending or, insofar as
is Known to Seller or EMS Brazil, threatened, except, in each case,
where the failure to so comply, or the suspension or cancellation
of, any of the EMS Permits would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect. Neither the Seller nor EMS Brazil has received any written
notice of any Actions relating to the revocation or modification of
any such EMS Permits and none of such EMS Permits will be subject
to suspension, modification, revocation or nonrenewal as a result
of the execution and delivery of the Transaction Documents or the
consummation of the transactions contemplated thereby.
Section 3.8 Litigation
. As of the date hereof, there is no Action by or against the
Seller or EMS Brazil in connection with the Business pending, or
insofar as is Known to the Seller or EMS Brazil, threatened in
writing (a) pursuing any criminal sanctions or penalties,
(b) seeking equitable or injunctive relief, (c) that
relates to or involves more than $50,000, or (d) that would
otherwise, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect or would affect the legality,
validity or enforceability of any of the Transaction Documents or
the consummation of the transactions contemplated thereby. Neither
the Seller nor EMS Brazil is a party or subject to, in violation
of, or in default under any material Judgment applicable to the
conduct of the Business or any Transferred Asset or Assumed
Liability. As of the date hereof, there is not any Action by the
Seller or EMS Brazil pending, or which the Seller or EMS Brazil
intends to initiate, against any other Person arising out of the
conduct of the Business. Insofar as is Known to the Seller or EMS
Brazil, there is no pending or threatened investigation of or
affecting the conduct of the Business or any Transferred Asset or
Assumed Liability
Section 3.9 Employee
Plans . Schedule 3.9 of the Disclosure Schedules
sets forth all material Employee Plans. The Seller has made
available to the Buyer a true and complete copy of the following
documents: (a) each writing constituting an Employee Plan,
(b) the current summary description of each Employee Plan and
any material modifications thereto, (c) the most recent
determination letter from the IRS, if any, with respect to any
Employee Plan qualified under Section 401(a) of the Code and
(d) the most recent annual report on IRS Form 5500, if
any, filed by the Seller for each Employee Plan. Seller represents
and warrants that Annex 1 includes the name of each employee whose
duties, as of the date of this Agreement, relate primarily to the
operations of the Business.
Section 3.10 Labor and
Employment Matters . Neither the Seller nor EMS Brazil is a
party to any labor or collective bargaining contract that pertains
to any Business Employees. Insofar as is Known to the Seller or EMS
Brazil, (a) there are no organizing activities or collective
bargaining arrangements that could affect the Business pending or
under discussion with any labor organization or Business Employees
and (b) there are no lockouts, strikes, slowdowns or work
stoppages pending or threatened by or with respect to any Business
Employees. Neither the Seller nor EMS Brazil is engaged in any
unfair labor practice in connection with the conduct of the
Business. There are no pending, or, insofar as is Known to Seller
or EMS Brazil, threatened, charges in connection with the conduct
of the Business against the Seller, EMS Brazil or any current or
former employee of the Business before the Equal Employment
Opportunity Commission or any state or local agency responsible for
the prevention of unlawful employment practices. Neither the Seller
nor EMS Brazil has not
21
received any written notice during the past three years of the
intent of any Governmental Authority responsible for the
enforcement of labor or employment laws to conduct an investigation
of or affecting the Business and, insofar as is Known to Seller or
EMS Brazil, no such investigation is in progress.
Section 3.11 Insurance
. The Business and the Transferred Assets are covered by insurance
coverage with reputable insurers in such amounts and covering such
risks as are in accordance with normal industry practice for
similar businesses (taking into account the cost and availability
of such insurance). No notice of cancellation or termination has
been received with respect to any such policy as of the date
hereof, the premium with respect to such policies have been paid
and all such insurance policies are in full force and effect and
will remain in full force and effect up to and including the time
of the Closing (other than those that have been retired or expired
in the ordinary course).
Section 3.12 Real
Property . Schedule 3.12 of the Disclosure
Schedules lists the street address of each parcel of Real Property
leased by the Seller or by EMS Brazil and used, held for use or
intended to be used in the conduct of the Business (the " Leased
Real Property ") and the identity of the lessor of each such
parcel of Leased Real Property. The Seller or EMS Brazil, as the
case may be, has a valid leasehold estate in all Leased Real
Property, free and clear of all Encumbrances other than Permitted
Encumbrances. Neither the Seller nor EMS Brazil has received
written notice from any Governmental Authority that any of the
Leased Real Property is not in material compliance with all
applicable Laws, except for such failures to comply, if any, which
have been remedied. All leases in respect of the Leased Real
Property are in full force and effect, neither the Seller nor EMS
Brazil has received any written notice of a breach or default
thereunder, and insofar as is Known to the Seller or EMS Brazil, no
event has occurred that, with notice or lapse of time or both,
would constitute a breach or default thereunder. Insofar as is
Known to the Seller or EMS Brazil, there is no pending or written
threat of condemnation or similar proceeding affecting the Leased
Real Property or any portion thereof. The Seller has made available
to the Buyer true and complete copies of the leases in effect at
the date hereof relating to the Leased Real Property. There has not
been any sublease or assignment entered into by the Seller or by
EMS Brazil in respect of the leases relating to the Leased Real
Property. Neither the Seller nor EMS Brazil own any Real Property
used, held for use or intended to be used primarily in the conduct
of the Business. EMS Brazil does not own any United States real
property interest as defined in Section 897 of the Code and
the regulations promulgated thereunder.
Section 3.13 Intellectual
Property .
(a)
Schedule 3.13(a)(i) of the Disclosure Schedules sets
forth an accurate and complete list of all registered Marks and
applications for registration of Marks owned by the Seller or by
EMS Brazil and included in the Business Intellectual Property
(collectively, the " Owned Business Registered Marks "),
Schedule 3.13(a)(ii) of the Disclosure Schedules sets
forth an accurate and complete list of all Patents owned by the
Seller or by EMS Brazil and included in the Business Intellectual
Property (collectively, the " Owned Business Patents ") and
Schedule 3.13(a)(iii) of the Disclosure Schedules sets
forth an accurate and complete list of all registered Copyrights
and all pending applications for registration of Copyrights owned
by the Seller or EMS Brazil and included in the Business
Intellectual Property (collectively, the
22
" Owned Business Registered Copyrights " and, together
with the Owned Business Patents and Owned Business Registered
Marks, the " Owned Business Registered IP "). Schedule
3.13(a)(iv) of the Disclosure Schedules sets forth all Software
owned by or licensed to and used by the Seller or EMS Brazil which
is material to the conduct of the Business as currently
conducted.
(b)
Schedules 3.13(a)(i)–3.13(a)(iii) of the Disclosure
Schedules set forth a list of all jurisdictions in which each item
of listed Owned Business Registered IP is registered or
registrations have been applied for and all registration and
application numbers thereof. Except as set forth in Schedules
3.13(a)(i)-3.13(a)(iii) of the Disclosure Schedules, no Owned
Business Registered IP has been or is now involved in any
interference, reissue, reexamination, opposition or cancellation
proceeding, and insofar as is Known to the Seller or EMS Brazil, no
such action is or has been threatened with respect to any of the
Owned Business Registered IP. Insofar as is Known to the Seller or
EMS Brazil, the Owned Business Registered IP is valid and
subsisting, and no written claim challenging the validity or
enforceability of any of the Owned Business Registered IP has been
received by the Seller or EMS Brazil. All filing, examination,
issuance, post registration and maintenance fees, annuities and the
like associated with or required with respect to any of the Owned
Business Registered IP have been paid.
(c)
Schedule 3.13(c) of the Disclosure Schedule sets forth
an accurate and complete list of all material
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