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ARCH CHEMICALS INC | ADVANTIS TECHNOLOGIES, INC | ROCKWOOD SPECIALTIES INC | ROCKWOOD HOLDINGS, INC. RealDealDocs™ contains millions of easily searchable legal documents and clauses from top law firms. Search for free - click here. |
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Exhibit 2.1
ASSET PURCHASE AGREEMENT
AMONG
ARCH CHEMICALS, INC.
ROCKWOOD SPECIALTIES INC.
AND
ADVANTIS TECHNOLOGIES, INC.
Dated as of September 5, 2008
ASSET PURCHASE AGREEMENT (this “ Agreement ”) dated as of September 5, 2008, among ROCKWOOD SPECIALTIES INC., a Delaware corporation (“ Parent ”), ADVANTIS TECHNOLOGIES, INC., a Delaware corporation and a direct, wholly owned subsidiary of Parent (“ Seller ”), ARCH CHEMICALS, INC., a Virginia corporation (“ Purchaser ”), and, solely for the purposes of Section 5.05, Section 5.10 and Article IX, ROCKWOOD HOLDINGS, INC., a Delaware corporation (“ Holdings ”).
WHEREAS Seller is engaged in the business of (i) developing, manufacturing, marketing and selling pool and spa treatment chemicals and water treatment chemicals for professional aquatic applicators, turf and ornamental, aquaculture, vegetation management and agricultural irrigation industries and (ii) professional treatment services relating to the application of such chemicals in lakes, ponds, irrigation systems, reservoirs and other agricultural applications (the “ Business ”);
WHEREAS Seller owns the Acquired Assets and, upon the terms and conditions set forth in this Agreement, desires to transfer, sell, convey, assign and deliver to Purchaser, and Purchaser desires to purchase, acquire and accept, the Acquired Assets, free and clear of all liabilities (other than Assumed Liabilities);
NOW, THEREFORE, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, and subject to the conditions set forth in this Agreement, the parties hereto hereby agree as follows:
Purchase and Sale of Acquired Assets
SECTION 1.01. Purchase and Sale . On the terms and subject to the conditions of this Agreement, at the Closing, Seller shall transfer, sell, convey, assign and deliver to Purchaser, and Purchaser shall purchase, acquire and accept from Seller, free and clear of all liabilities (other than Assumed Liabilities) and all Liens (other than Permitted Liens), all the right, title and interest as of the Closing of Seller in, to and under the Acquired Assets, for (i) an aggregate purchase price of $130,000,000 (the “ Purchase Price ”), payable as set forth in Section 2.02 and subject to adjustment as set forth in Section 2.03 (the Purchase Price, as so adjusted, the “ Final Purchase Price ”), and (ii) the assumption of the Assumed Liabilities. The transactions described in the immediately preceding sentence are collectively referred to in this Agreement as the “ Acquisition ”.
SECTION 1.02. Acquired Assets and Excluded Assets . (a) The term “ Acquired Assets ” means all the business, properties, assets, goodwill, rights and claims of Seller, of whatever kind and nature, real or personal, tangible or intangible, that are owned, leased or licensed by or on behalf of Seller on the Closing Date and used or held for use in, or arising from, the operation or conduct of the Business, except to the extent constituting Excluded Assets, including (to the extent not constituting an Excluded Asset) all of Seller’s right, title and interest in and to the following:
(i) all leaseholds and other interests (including all prepaid rent, security deposits and options to renew or purchase) in the real property listed on Section 1.02(a)(i) of the Seller Disclosure Letter, in each case together with all right, title and interest of Seller to and in all buildings, improvements and fixtures thereon and all other appurtenances thereto;
(ii) all raw materials, work-in-process, finished goods, supplies, parts, spare parts, packaging materials and other inventories, wherever located (including in transit, on consignment or in the possession of any third party), that are used or held for use in, or arise from, the operation or conduct of the Business (collectively, the “ Inventory ”);
(iii) all other tangible personal property and interests therein, including all apparatus, materials, office supplies, fixtures, tools, toolings, machinery, equipment, furniture, furnishings and vehicles, wherever located, that are used or held for use in, or arise from, the operation or conduct of the Business (the “ Personal Property ”);
(iv) all accounts, accounts receivable, pre-paid expenses, advance payments, prepayments, security deposits, deferred charges, letters of credit, deposits, notes receivable and other rights to payment (excluding any such items to the extent relating solely to Contracts that are not Assigned Contracts) arising from the operation or conduct of the Business (the “ Receivables ”);
(v) (A) all patents (including all reissues, divisions, continuations and extensions thereof), patent applications, trademarks, trademark registrations, trademark applications, servicemarks, trade names, business names, domain names, brand names, copyrights, copyright registrations, written invention disclosures, mask work rights, designs, design registrations, chemical formulas and processes and all licenses and other rights to any of the foregoing (“ Intellectual Property ”), that are used or held for use in, or arise from, the operation or conduct of the Business (such Intellectual Property, together with the Assigned Technology, the “ Assigned Intellectual Property ”), including all of the Intellectual Property listed on Section 3.07(a) of the Seller Disclosure Letter and all rights of Seller under confidentiality agreements or other agreements designed to protect for Seller its interests in the Assigned Intellectual Property and (B) all websites to the extent used or held for use in, or that arise from, the operation or conduct of the Business;
(vi) all trade secrets, confidential information, inventions, know-how, formulae, processes, procedures, research records, records of inventions, test information, market surveys and marketing know-how (“ Technology ”) of Seller that are used or held for use in, or arise from, the operation or conduct of the Business (such Technology being the “ Assigned Technology ”);
(vii) (A) all Permits issued to or owned, used or possessed by Seller that are used or held for use in, or arise from, the operation or conduct of the Business, to the extent transferable to Purchaser under Applicable Law (the “ Transferred Permits ”), and (B) all data and records relating to pesticide registrations, including all data or submittal packages, specification proposals and scientific, toxicological and technical studies, relating to the products of the Business;
(viii) all Contracts that are listed on Section 1.02(a)(viii) of the Seller Disclosure Letter, and all other Contracts (including purchase orders and sales orders) (A) that are used or held for use in, or arise from, the operation or conduct of the Business or (B) to which any Acquired Asset is subject, in each case other than any guarantee issued by Parent or any of its affiliates (other than Seller) in respect of any obligations of the Business (but without limitation of Purchaser’s obligations to discharge and perform any liabilities guaranteed thereunder that constitute Assumed Liabilities) (collectively, the “ Assigned Contracts ”);
(ix) the assets listed on Section 1.02(a)(ix) of the Seller Disclosure Letter and any other information technology assets primarily related to the Business (collectively, the “ Specified Information Technology Assets ”);
(x) all rights in and to products sold or leased (including products returned after the Closing and rights of rescission, replevin and reclamation) by Seller in the operation or conduct of the Business;
(xi) all rights, claims, causes of action and credits of Seller to the extent relating to any Acquired Asset or any Assumed Liability or arising from the operation or conduct of the Business, including all guarantees, warranties, indemnities and similar rights in favor of Seller in respect of any Acquired Asset or any Assumed Liability;
(xii) all customer, vendor and supplier lists, other distribution lists, files, documents and correspondence relating to customers, suppliers and vendors of the Business, all sales and promotional literature, manuals, product drawings, blueprints and schematics and all other general, business, financial, accounting records, personnel records (to the extent relating to Transferred Employees and permitted to be provided to Purchaser pursuant to Applicable Laws), files, invoices and documents (including books of account, ledgers and other records, and, in all cases, in any form or medium), of Seller to the extent used or held for use in, or arising from, the conduct or operation of the Business;
(xiii) all assets of or relating to any Seller Benefit Plan that (A) are transferred to any employee benefit plan maintained by Purchaser or any of its affiliates as expressly provided in Section 5.07 or (B) transfer automatically to Purchaser or any of its affiliates either pursuant to Applicable Law or in connection with any liability expressly assumed by Purchaser pursuant to this Agreement (collectively, “ Transferred Benefit Plan Assets ”);
(xiv) all refunds, credits and offsets with respect to real property Taxes, personal property Taxes and similar ad valorem obligations levied with respect to the Acquired Assets or the operation or conduct of the Business, in each case, for any Post-Closing Tax Period; and
(xv) all goodwill generated by or associated with the Business.
(b) The term “ Excluded Assets ” means:
(i) all cash and cash equivalents (other than petty cash) and short-term investments of Seller;
(ii) all bank, brokerage and investment accounts of Seller;
(iii) all rights, claims, causes of action and credits of Seller to the extent relating to any Excluded Asset or any Excluded Liability, including all guarantees, warranties, indemnities and similar rights in favor of Seller in respect of any Excluded Asset or any Excluded Liability;
(iv) all assets of the Seller Benefit Plans, other than Transferred Benefit Plan Assets;
(v) all rights of Parent or Seller under this Agreement and the other agreements and instruments executed and delivered in connection with this Agreement (the “ Ancillary Agreements ”);
(vi) all refunds, credits and offsets with respect to Taxes (A) arising out of or relating to the Acquired Assets or the operation of the Business, in each case, for any Pre-Closing Tax Period or (B) of Seller for any taxable period (other than the refunds, credits and offsets referred to in Section 1.02(a)(xiv) above);
(vii) all assets of Parent and its affiliates that are used to provide general corporate services to Seller in the same manner as generally provided to other affiliates of Parent, such as accounting, insurance, tax, risk management, information technology, legal, cash management and treasury services, other than the Specified Information Technology Assets (collectively, “ Administrative Assets ”);
(viii) insurance policies carried by or for the benefit of Seller or any affiliate of Seller, and all recoveries thereunder and rights to assert claims thereunder (other than any insurance policy listed on Section 1.02(a)(viii) of the Seller Disclosure Letter);
(ix) the name “Rockwood” and any variations and derivations thereof and goodwill associated therewith; and
(x) the assets listed on Section 1.02(b)(x) of the Seller Disclosure Letter.
SECTION 1.03. Assumption of Certain Liabilities . (a) Upon the terms and subject to the conditions of this Agreement, Purchaser shall assume, effective as of the Closing, and from and after the Closing Purchaser shall pay, perform and discharge when due, only the following liabilities, obligations and commitments of Seller (the “ Assumed Liabilities ”), except to the extent constituting Excluded Liabilities:
(i) all liabilities, obligations and commitments of Seller under the Assigned Contracts and Transferred Permits to the extent such liabilities, obligations and commitments arise from the operation or conduct of the Business after the Closing;
(ii) all liabilities, obligations and commitments to the extent arising from the ownership of the Acquired Assets or the operation of the Business after the Closing;
(iii) all liabilities, obligations and commitments of Seller that constitute “current liabilities”, but only to the extent expressly set forth and quantified on the final and binding Closing Statement and taken into account in the Closing Working Capital Amount (as set forth on the final and binding Closing Statement);
(iv) all liabilities, obligations and commitments for Taxes arising out of or relating to the Acquired Assets or the operation or conduct of the Business, in each case, for any Post-Closing Tax Period; and
(v) all liabilities, obligations and commitments with respect to the Transferred Employees relating to employment or employee benefits that Purchaser has specifically agreed to assume pursuant to this Agreement (the “ Covered Employee Liabilities ”).
(b) Notwithstanding anything in Section 1.03(a) or any other provision of this Agreement or any Ancillary Agreement to the contrary, and regardless of any disclosure to Purchaser, Purchaser shall not assume or be liable for any liabilities, commitments or obligations of Parent, Seller or any of their affiliates, of any kind, other than the Assumed Liabilities (the “ Excluded Liabilities ”), all of which shall be retained and paid, performed and discharged when due by Parent, Seller or their affiliates, as applicable, including the following:
(i) any Indebtedness of Parent, Seller or any of their affiliates, or any Guarantee by Parent, Seller or any of their affiliates of any Indebtedness;
(ii) any liability, obligation or commitment (A) arising out of any actual or alleged breach by Parent, Seller or any of their affiliates of, or nonperformance by Seller under, any Contract (including any Assigned Contract) prior to the Closing or (B) accruing under any Assigned Contract or Transferred Permit with respect to any period prior to the Closing;
(iii) any liability, obligation or commitment arising out of (A) any Proceeding, whether or not such Proceeding is pending as of the Closing, arising from the operation or conduct of the Business prior to the Closing or Seller’s ownership of any Acquired Asset or Excluded Asset prior to the Closing or (B) any actual or alleged violation by Parent, Seller or any of their affiliates of any Applicable Law prior to the Closing;
(iv) any “current liability” of Seller to the extent not expressly identified and quantified on the final and binding Closing Statement and taken into account in the Closing Working Capital Amount (as set forth on the final and binding Closing Statement);
(v) any liability, obligation or commitment of Seller that relates to, or that arises from, any Excluded Asset, or that arises out of the distribution to, or ownership or operation by, Seller of the Excluded Assets or associated with the realization of the benefits of any Excluded Asset;
(vi) any liability, obligation or commitment for Taxes, whether or not accrued, assessed or currently due and payable, (A) arising out of or relating to the Acquired Assets or the operation or conduct of the Business, in each case, for any Pre-Closing Tax Period or (B) of Seller for any taxable period, except as provided in Section 1.03(a)(iv) (provided that for purposes of this clause (vi), Section 1.02(a)(xiv), Section 1.02(b)(vi) and Section 1.03(a)(iv), all real property Taxes, personal property Taxes and similar ad valorem obligations levied with respect to the Acquired Assets for a taxable period that includes (but does not end on) the Closing Date shall be allocated between the Pre-Closing Tax Period and the Post-Closing Tax Period based on the number of days during such taxable period elapsed on or prior to the Closing Date and the number of days during such taxable period elapsed after the Closing Date);
(vii) any liability, obligation or commitment for transfer, documentary, sales, use, registration, value-added and other similar Taxes (including all applicable real estate transfer Taxes and real property transfer gains Taxes) and related amounts (including any penalties, interest and additions to Tax) incurred in connection with this Agreement, the Ancillary Agreements, the Acquisition and the other transactions contemplated hereby and thereby (“ Transfer Taxes ”);
(viii) any liability, obligation or commitment, including any On-Site Environmental Liability, arising out of (A) any actual or alleged violation of any Environmental Law prior to the Closing, (B) any Release of Hazardous Materials at any location prior to the Closing, or (C) any Environmental Claim arising from, based upon or relating to conditions existing or events or omissions occurring prior to the Closing, in each case to the extent arising out of or relating to the operation of the Business, the Business Property or any other property currently or formerly owned, leased or operated in connection with the Business;
(ix) any liability, obligation or commitment relating to employment or employee benefits, other than the Covered Employee Liabilities, including any liability, obligation or commitment relating to any Business Employee receiving long-term disability benefits from Seller or any of its affiliates or pursuant to any Seller Benefit Plan as of the Closing Date;
(x) except to the extent expressly provided to the contrary in Section 2.03(c), any liability, obligation or commitment for any fees or expenses incurred by Parent, Seller or any of their affiliates (including the fees and expenses of legal counsel, and fees and expenses of any accountant, auditor, broker, financial advisor or consultant retained by or on behalf of Parent, Seller or any of their affiliates) arising from or in connection with this Agreement, the Ancillary Documents, the Acquisition, any of the other transactions contemplated hereby or thereby or any liquidation or dissolution of Seller following the Closing;
(xi) except as provided in Section 5.15, any liability, obligation or commitment arising out of or relating to any Inventory manufactured, or any service provided, by Parent, Seller or the Business prior to the Closing Date;
(xii) any liability, obligation or commitment of Seller to Parent or any of their respective affiliates; and
(xiii) except as otherwise provided in Section 1.03(a), any liability, obligation or commitment of Parent or any of its affiliates other than Seller.
SECTION 1.04. Consents of Third Parties; Certain Permits . (a) Notwithstanding anything in this Agreement to the contrary, this Agreement shall not constitute an agreement to assign any Acquired Asset if an attempted assignment thereof, without the consent of a third party, would constitute a breach or other contravention of the rights of such third party, would be ineffective with respect to any party to a Contract concerning such Acquired Asset, or would in any way adversely affect the rights of Seller or, upon transfer, Purchaser under such Acquired Asset. If any transfer or assignment by Seller to, or any assumption by Purchaser of, any interest in, or liability, obligation or commitment under, any Acquired Asset requires the consent of a third party, then such assignment or assumption shall be made subject to such consent being obtained. To the extent any Acquired Asset may not be assigned to Purchaser by reason of the absence of any such consent, Purchaser shall not be required to assume any Assumed Liabilities arising under such Acquired Asset.
(b) If any consent referred to in Section 1.04(a) is not obtained prior to the Closing, the failure of such consent to be obtained shall not (subject to the parties’ compliance with the provisions of Section 5.05) constitute a breach of any representation, warranty, agreement or covenant contained herein, and Parent, Seller and Purchaser shall cooperate (each at their own expense) in any lawful and reasonable arrangement reasonably proposed by Purchaser under which Purchaser shall obtain the economic claims, rights and benefits under the Acquired Asset with respect to which such consent has not been obtained in accordance with this Agreement. Such reasonable arrangement may include (i) the subcontracting, sublicensing or subleasing to Purchaser of any and all rights of Seller against the other party to such third-party agreement arising out of a breach or cancelation thereof by the other party, and (ii) the enforcement by Seller of such rights. To the extent, and only to the extent, Purchaser is able to receive the economic claims, rights and benefits under such Acquired Asset, Purchaser shall be responsible for the Assumed Liabilities, if any, arising under such Acquired Asset.
(c) If any Transferred Permit is not transferred to Purchaser at Closing, or any Permit issued to or owned, used or possessed by Seller that is used or held for use in, or arises from, the operation or conduct of the Business is to any extent not transferable to Purchaser under Applicable Law (such Permits, the “ Non-Transferable Permits ” and, together with the Transferred Permits, the “ Business Permits ”):
(i) Parent, Seller and Purchaser shall cooperate (each at their own expense), to the extent permitted by Applicable Law and, without limiting the agreements set forth in Section 1.04(b), in a manner that complies with the terms of each Contract pursuant to which such Non-Transferable Permit is granted, to transfer to or otherwise make available to Purchaser at the Closing, for two years following the Closing, all the rights and benefits of Seller under such Business Permit and access to all data packages (or the equivalent thereof) necessary in connection with such Business Permit (whether through subregistrations, sublicenses, supplemental Permits or other arrangements) in order to enable Purchaser to sell and distribute such products of the Business that are manufactured under such Business Permit, using product labels used by Seller in connection with such Business Permit, in substantially the same manner as such products are currently sold and distributed by Seller;
(ii) at all times during such two-year period, each of Parent and Seller shall use its commercially reasonable efforts to maintain such Business Permit in full force and effect at the expense of Purchaser (other than, for the avoidance of doubt, any attorneys’ fees, internal costs and other similar costs and expenses incurred by Parent, Seller or their respective affiliates in the course of performing their obligations pursuant to this Section 1.04(c)); and
(iii) to the extent, and only to the extent, Purchaser is able to receive the claims, rights and benefits under such Business Permit, Purchaser shall be responsible for the Assumed Liabilities, if any, arising under such Business Permit.
Purchaser shall indemnify Parent, Seller and their respective affiliates and Representatives against, and hold them harmless from, any Losses arising from, in connection with, as a result of or otherwise with respect to the arrangements described in this Section 1.04(c), other than, for the avoidance of doubt, any Losses with respect to which Seller or Parent has expressly provided an indemnity to Purchaser hereunder and other than any Losses to the extent constituting attorneys’ fees, internal costs and other similar costs and expenses incurred by Parent, Seller or their respective affiliates in the course of performing their obligations pursuant to this Section 1.04(c). Notwithstanding anything to the contrary in this Section 1.04(c), Purchaser shall be responsible for all filing, administrative and other similar fees payable to any Governmental Entity in connection with the arrangements contemplated by this Section 1.04(c) with respect to any Business Permit.
The Closing and Purchase Price Adjustment
SECTION 2.01. Closing Date . The closing of the Acquisition (the “ Closing ”) shall take place at the offices of Cravath, Swaine & Moore LLP, 825 Eighth Avenue, New York, New York 10019, at 10:00 a.m. on the fifth business day following the satisfaction (or, to the extent permitted, waiver by the party or parties entitled to the benefits thereof) of the conditions set forth in Article VI, or at such other place, time and date as shall be agreed between Seller and Purchaser. The date on which the Closing occurs is referred to in this Agreement as the “ Closing Dat e”. The Closing shall be deemed to be effective at 11:59 p.m. New York time on the Closing Date.
SECTION 2.02. Transactions To Be Effected at the Closing . At the Closing:
(a) Seller shall deliver to Purchaser (i) such appropriately executed deeds (in recordable form), bills of sale, assignments and other instruments of transfer relating to the Acquired Assets in form and substance reasonably satisfactory to Purchaser and its counsel and (ii) such other documents as Purchaser or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement; and
(b) Purchaser shall deliver to Seller (i) payment, by wire transfer to a bank account designated in writing by Seller (such designation to be made at least three business days prior to the Closing Date), immediately available funds in an amount in U.S. dollars equal to the Estimated Purchase Price and (ii) such other documents as Seller or its counsel may reasonably request to demonstrate satisfaction of the conditions and compliance with the covenants set forth in this Agreement.
SECTION 2.03. Estimated Working Capital; Purchase Price Adjustment . (a) At least three business days prior to the Closing Date, Seller shall deliver to Purchaser a written statement setting forth its good faith estimate of the Closing Working Capital Amount (the “ Estimated Working Capital Amount ”), calculated in accordance with this Section 2.03. The Purchase Price payable on the Closing Date shall be preliminarily adjusted in accordance with Section 1.01 and the manner contemplated by this Section 2.03 as if the Estimated Working Capital Amount was the actual Closing Working Capital Amount. The Purchase Price as so preliminarily adjusted is referred to as the “ Estimated Purchase Price ”.
(b) Within 60 days after the Closing Date, Purchaser shall prepare and deliver to Seller a statement (the “ Closing Statement ”) setting forth its calculation of the Working Capital Amount as of the close of business on the Closing Date (the “ Closing Working Capital Amount ”). In no event shall any actions taken by or relating to Purchaser or the Business following the Closing with respect to the accounting books and records of the Business on which the Closing Statement is to be based (including changes in any reserve or other account) or with respect to the operations or results of the Business be considered in the determination of, or otherwise have any effect on, the Closing Working Capital Amount.
(c) During the 30-day period following receipt by Seller of the Closing Statement, Seller and any of its Representatives shall be permitted to review all books and records and other information of Purchaser and its Representatives relating to the Closing Statement. The Closing Statement shall become final and binding upon the parties on the 30th day following delivery thereof, unless Seller gives written notice of its disagreement with the Closing Statement (the “ Notice of Disagreement ”) to Purchaser prior to such date which shall specify the nature of any disagreement so asserted. Any Notice of Disagreement shall (x) specify in reasonable detail the nature of the disagreement so asserted and (y) only include disagreements that are based on mathematical errors or based on the Closing Working Capital Amount not being calculated in accordance with this Section 2.03. If a Notice of Disagreement is given by Seller in a timely manner, then the Closing Statement (as revised in accordance with this sentence) shall become final and binding upon Seller and Purchaser on the earlier of (i) the date Seller and Purchaser resolve in writing any differences they have with respect to the matters specified in the Notice of Disagreement and (ii) the date any disputed matters specified in the Notice of Disagreement are finally resolved in writing by PricewaterhouseCoopers LLP (unless the parties agree in writing upon an alternative nationally recognized independent public accounting firm, which shall not be Purchaser’s or Seller’s or any of their respective affiliates’ independent accountants) (the “ Accounting Firm ”). During the 30-day period following the delivery of a Notice of Disagreement, Seller and Purchaser shall seek in good faith to resolve in writing any differences that they may have with respect to the matters specified in the Notice of Disagreement. During such 30-day period, Purchaser and any of its Representatives shall be permitted to review all books and records and other information of Seller and its Representatives relating to the Notice of Disagreement. If, at the end of such 30-day period, Seller and Purchaser are unable to so resolve any such differences, Seller and Purchaser shall submit to the Accounting Firm for resolution any and all matters that remain in dispute and that were included in the Notice of Disagreement. The Accounting Firm, acting as experts and not as arbitrators, shall be instructed to render its determination of all matters submitted to it within 60 days following submission. Purchaser and Seller agree that they shall be bound by the determination of the Accounting Firm. Judgment may be entered upon the determination of the Accounting Firm in any court having jurisdiction over the party against which such determination is to be enforced. The fees and expenses of the Accounting Firm incurred pursuant to this Section 2.03 shall be borne 50% by Seller and 50% by Purchaser. The fees and disbursements of Seller’s advisors incurred in connection with review of the Closing Statement and any Notice of Disagreement shall be borne by Seller, and the fees and expenses of Purchaser’s advisors incurred in connection with the Final Closing Statement and any Notice of Disagreement shall be borne by Purchaser.
(d) For purposes of this Agreement:
(i) “ Target Working Capital Amount ” means $22.225 million.
(ii) “ Working Capital Amount ” means an amount equal to (a) the amount of current assets of the Business, minus (b) the amount of current liabilities of the Business, in the case of each of clauses (a) and (b), as indicated on the Closing Statement and calculated in accordance with GAAP, applied on a basis consistent with the application of such principles in the preparation of the Financial Statements (it being understood that notwithstanding anything herein to the contrary, in determining the Working Capital Amount all Excluded Assets and Excluded Liabilities shall be deemed not to be assets or liabilities, as applicable, of the Business, as demonstrated in the illustrative calculation of the Working Capital Amount as of the close of business on June 30, 2008 set forth on Section 2.03(d) of the Seller Disclosure Letter).
(e) The Final Purchase Price shall be an amount equal to the Purchase Price adjusted as follows:
(i) if the Closing Working Capital Amount is less than the Target Working Capital Amount, an amount equal to the excess of the Target Working Capital Amount over the Closing Working Capital Amount shall be deducted in calculating the Final Purchase Price; and
(ii) if the Closing Working Capital Amount is greater than the Target Working Capital Amount, an amount equal to the excess of the Closing Working Capital Amount over the Target Working Capital Amount shall be added in calculating the Final Purchase Price.
(f) If the Estimated Purchase Price is less than the Final Purchase Price, Purchaser shall, and if the Estimated Purchase Price is greater than the Final Purchase Price, Seller shall, within five business days after the Closing Statement becomes final and binding on the parties hereto, make payment to the bank account designated in writing by Seller or Purchaser, as applicable, of an amount in cash in U.S. dollars equal to such difference, together with interest thereon at a rate equal to the rate of interest from time to time announced publicly by JPMorgan Chase Bank, N.A., as its prime rate, calculated on the basis of the actual number of days elapsed, divided by 365, from the Closing Date to the date of such payment.
Seller hereby represents and warrants to Purchaser that the statements contained in this Article III are true and correct as of the date of this Agreement and as of the Closing Date, except as set forth in the disclosure letter delivered by Seller to Purchaser on or prior to the date of the execution and delivery by Parent and Seller of this Agreement (the “ Seller Disclosure Letter ”). The Seller Disclosure Letter shall be arranged in numbered and lettered sections corresponding to the numbered and lettered sections contained in this Article III, and the disclosure in any section shall be deemed to qualify other sections in this Article III to the extent (and only to the extent) that it is readily apparent from the face of such disclosure that such disclosure also qualifies, applies or relates to such other sections.
SECTION 3.01. Organization, Standing and Power . Each of Parent and Seller is duly organized, validly existing and in good standing under the laws of the State of Delaware and Seller has full corporate power and authority necessary to enable it to own, lease or otherwise hold its properties and assets and to conduct the Business as currently conducted. Seller is duly qualified to do business as a foreign corporation in each jurisdiction where the character of the Acquired Assets held by it or the nature of the Business make such qualification necessary for it to conduct the Business as currently conducted, except where the failure to so qualify has not had and could not reasonably be expected to have, individually or in the aggregate, a Seller Material Adverse Effect. Seller has delivered to Purchaser true and complete copies of the certificate of incorporation and by-laws of Seller, in each case as amended through the date of this Agreement. Seller is a direct, wholly owned subsidiary of Parent. Seller does not own, directly or indirectly, any capital stock of, or other voting securities or other equity interests in, any corporation, partnership, joint venture, association or other entity that does not constitute a wholly owned subsidiary of Seller.
SECTION 3.02. Authority; Execution and Delivery; Enforceability . Each of Parent and Seller has full corporate power and authority to execute this Agreement and the Ancillary Agreements to which it is, or is specified to be, a party and to consummate the Acquisition and the other transactions contemplated hereby and thereby. The execution and delivery by each of Parent and Seller of this Agreement and the Ancillary Agreements to which it is, or is specified to be, a party and the consummation by each of Parent and Seller of the Acquisition and the other transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of Parent and Seller, and no other corporate proceedings on the part of Parent or Seller are necessary to authorize this Agreement and the Ancillary Agreements or the consummation of the Acquisition and the other transactions contemplated hereby or thereby. Each of Parent and Seller has duly executed and delivered this Agreement and, prior to the Closing, will have duly executed and delivered each Ancillary Agreement to which it is, or is specified to be, a party, and, assuming the due execution and delivery of this Agreement and each Ancillary Agreement by the other parties hereto and thereto, this Agreement constitutes, and each Ancillary Agreement to which it is, or is specified to be, a party will after the Closing constitute, its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to bankruptcy, insolvency or similar laws relating to creditors’ rights generally and to general principles of equity.
SECTION 3.03. No Conflicts; Consents . The execution and delivery by Parent and Seller of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party, the consummation by Parent and Seller of the Acquisition and the other transactions contemplated hereby and thereby and compliance by Parent and Seller with the terms hereof and thereof do not and will not conflict with, or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancelation or acceleration of any obligation or to loss of a benefit under, or to increased, additional, accelerated or guaranteed rights or entitlements of any person under, or result in the creation of any Lien upon any of the properties or assets of Parent or Seller under (any of the foregoing, a “ Conflict ”), any provision of (i) the certificate of incorporation or by-laws of Parent or Seller, (ii) any Contract to which Parent or Seller is a party or to which the Business, Parent, Seller or any of its properties or assets is subject, other than Assigned Contracts, or (iii) any judgment, order, writ, injunction, legally binding agreement with a Governmental Entity, stipulation or decree (“ Judgment ”) or any statute, law (including common law), ordinance, rule or regulation (“ Applicable Law ”) applicable to Parent or Seller or any of their respective properties or assets (other than in connection with the transfer of Permits of the Business), other than, in the case of clauses (ii) and (iii) above, any such items that, individually or in the aggregate, have not had and could not reasonably be expected to have a Seller Material Adverse Effect. No consent or Permit (“ Consent ”) of, or registration, declaration or filing with, any Federal, state or local government or any court of competent jurisdiction, administrative agency or commission or other governmental authority or instrumentality, in each case whether domestic or foreign (each, a “ Governmental Entity ”), is required to be obtained or made by or with respect to Parent or Seller in connection with the execution and delivery of this Agreement or any Ancillary Agreement, the consummation of the Acquisition or the other transactions contemplated hereby and thereby or compliance with the terms hereof and thereof, in each case other than compliance with and filings under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “ HSR Act ”) and in connection with the transfer of Permits of the Business.
SECTION 3.04. Financial Statements; Undisclosed Liabilities; Internal Controls. (a) Section 3.04(a) of the Seller Disclosure Letter sets forth (i) the unaudited balance sheet of the Business as of December 31, 2007, and the unaudited consolidated statements of operations of the Business for the fiscal year ended on December 31, 2007 (collectively, the “ Fiscal 2007 Financial Statements ”) and (ii) the unaudited consolidated balance sheet of the Business as of June 30, 2008 (the “ Balance Sheet ”) and the unaudited statement of operations for the six-month period ended on such date (collectively, the “ Interim Financial Statements ” and, together with the Fiscal 2007 Financial Statements, the “ Financial Statements ”). The Financial Statements (A) were derived from and are in accordance with the books and records of Seller, (B) have been prepared in accordance with GAAP, consistently applied throughout the periods covered thereby, and (C) fairly present in all material respects the financial condition and results of operations of the Business as of the respective dates thereof and for the respective periods indicated, except that (x) the Financial Statements do not include footnotes (and the disclosure required therein) and (y) the Interim Financial Statements would be subject to normal and recurring year-end audit adjustments, which adjustments would not be material.
(b) The Business does not have any liabilities or obligations of any nature (whether accrued, absolute, contingent, unasserted or otherwise) that would be required to be reflected on a balance sheet of the Business or required to be disclosed in footnotes thereto, in each case prepared in accordance with GAAP applied on a basis consistent with the application of such principles in the preparation of the Financial Statements, except (i) as expressly set forth in the Balance Sheet, (ii) liabilities incurred after the date of the Balance Sheet in the ordinary course of the Business consistent with past practice, (iii) Excluded Liabilities and (iv) post-Closing performance obligations under the terms of Transferred Permits and Assigned Contracts that would not be required to be reflected on a balance sheet of the Business prepared in accordance with GAAP.
(c) Parent and its consolidated subsidiaries (including Seller) (the “ Parent Consolidated Group ”) have a system of internal controls over financial reporting (as such term is used in Rule 13a-15 under the Securities and Exchange Act of 1934, as amended) that is sufficient to provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements of the Parent Consolidated Group for external purposes in accordance with GAAP.
SECTION 3.05. Title to Assets . Seller has good and valid title to all the Acquired Assets, in each case free and clear of all mortgages, liens, security interests, charges, easements, leases, subleases, covenants, rights of way, options, claims, restrictions or encumbrances of any kind (collectively, “ Liens ”), except (a) the Liens set forth on Section 3.05(a) of the Seller Disclosure Letter (the Liens on such schedule marked with an asterisk to be discharged prior to the Closing), (b) mechanics’, carriers’, workmen’s, repairmen’s or other like Liens arising or incurred in the ordinary course of business that, assuming that Purchaser pays all Assumed Liabilities when due, individually or in the aggregate, do not materially impair, and could not reasonably be expected to materially impair, the continued use and operation of the assets to which they relate in the operation or conduct of the Business, (c) Liens for Taxes or governmental assessments, charges or claims of payment not yet due or that are being contested in good faith and which constitute Excluded Liabilities, (d) the anti-assignment provisions of any Assigned Contract to which Seller is a Party and (e) zoning restrictions, easements or other similar restrictions, so long as the same do not, individually or in the aggregate, materially interfere with or impair the use of such Business Property in the manner normally used in the Business (the Liens described in clauses (a) through (e) above, “ Permitted Liens ”).
SECTION 3.06. Real Property . Neither Parent nor Seller holds any fee or other ownership interest in any real property that is used in the operation or conduct of the Business. Section 3.06 of the Seller Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of all real property in which Parent or Seller holds any leasehold interest and that is used in the operation or conduct of the Business (each such property, a “ Business Property ”), which list also sets forth the date of the lease, sublease, license or other occupancy agreement constituting each such leasehold interest and the date of any amendments and supplements thereto (collectively, a “ Real Property Lease ”), as well as the names of the parties thereto. Seller has delivered to Purchaser true and complete copies of each Real Property Lease. Each Real Property Lease is in full force and effect and neither Seller nor, to the knowledge of Seller, any of the other parties to such Real Property Lease has received or given any notice of material default thereunder which was not cured within the applicable grace period, no event has occurred which, with the giving of notice or the passage of time, or both, would constitute a material default by Parent, Seller or any of their affiliates under any Real Property Lease and, to the knowledge of Parent or Seller, no event has occurred which, with the giving of notice or the passage of time, or both, would constitute a material default by any person (other than Parent, Seller or any of their affiliates) under any Real Property Lease. The execution and delivery by Parent and Seller of this Agreement and each Ancillary Agreement to which it is, or is specified to be, a party, the consummation by Parent and Seller of the Acquisition and the other transactions contemplated hereby and thereby and compliance by Parent and Seller with the terms hereof and thereof do not and will not constitute or result in a Conflict under any provision of any Real Property Lease. Each Business Property is in compliance in all material respects with all applicable provisions of any agreements to which such Business Property is subject, local zoning requirements and all other Applicable Laws. There are no pending or, to the knowledge of Parent or Seller, threatened Proceedings that could have the effect of materially impairing or restricting Seller’s access to any Business Property or the use thereof in the conduct of the Business.
SECTION 3.07. Intellectual Property . (a) Section 3.07(a) of the Seller Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of all patents and applications therefor, registered trademarks and applications therefor, copyright registrations and all other product names of the Business (whether or not constituting a trademark or trade name) that, in each case, are owned, used, filed by or licensed to Seller and used or held for use in, or arising from, the operation or conduct of the Business (such Intellectual Property, the “ Scheduled Intellectual Property ”). Such list clearly indicates whether such Scheduled Intellectual Property is owned or licensed by Seller. All Scheduled Intellectual Property has been duly registered and filed with or issued by each appropriate Governmental Entity in each jurisdiction indicated for such Scheduled Intellectual Property in Section 3.07(a) of the Seller Disclosure Letter, all necessary affidavits of continuing use have been filed with respect to such Scheduled Intellectual Property and all necessary maintenance fees have been paid to continue all rights relating to such Scheduled Intellectual Property in effect.
(b) Seller owns, or is licensed or otherwise has the right to use (in each case without payments to third parties and free and clear of any Liens), all Assigned Intellectual Property (other than ordinary course license payments in respect of generally available desktop software). Seller’s rights in and to the Assigned Intellectual Property constitute sufficient rights in and to the Intellectual Property used in the Business (other than Administrative Assets) such that the rights in and to the Assigned Intellectual Property transferred to Purchaser at Closing will be sufficient to enable Purchaser to operate the Business following the Closing in all material respects in the same manner as presently conducted by Seller.
(c) The operation of the Business by Seller does not infringe or violate in any material respect the rights of any person with regard to any Intellectual Property. There is no Proceeding pending or, to the knowledge of Parent or Seller, threatened with respect to, and during the past three years neither Parent nor Seller nor, to the knowledge of Seller, any of Seller’s customers or indemnitees has been notified of any possible material infringement or other material violation by the Business of the rights of any person with regard to any Intellectual Property.
(d) To the knowledge of Seller, no person is infringing on or otherwise violating any right of Seller in any material respect with respect to any Assigned Intellectual Property.
(e) Each inventor of the claims of any patent that is material to the conduct of the Business and constitutes Assigned Intellectual Property (each such patent, a “ Material Patent ”) and each current or former director, officer, employee, contractor or consultant of Seller has assigned or otherwise transferred to Seller all ownership and other rights of any nature whatsoever of such person in any Material Patent and no such person has a valid claim against Seller in connection with the involvement of such person in the conception and development of any rights in any Material Patent that could reasonably be expected to materially and adversely affect Purchaser’s ability to exercise full rights of ownership of such Material Patent after the Closing.
(f) The execution and delivery of this Agreement and the Ancillary Agreements, the consummation of the Acquisition and the other transactions contemplated hereby and thereby and the compliance with the provisions hereof and thereof do not and will not conflict with, or result in any violation or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancelation or acceleration of any material Assigned Intellectual Property right or obligation relating to any material Assigned Intellectual Property set forth in any Contract to which Seller is a party, or to a loss of any material benefit related thereto, or result in the creation of any Lien in or upon any Assigned Intellectual Property related thereto, or give rise to any increased, additional, accelerated or guaranteed rights or entitlements of any person relating to material Assigned Intellectual Property under any such Contract, or result in the creation of any Lien on any material Assigned Intellectual Property.
(g) Section 3.07(g) of the Seller Disclosure Letter sets forth a complete and accurate list of all options, rights, licenses or interests of any kind relating to Assigned Intellectual Property granted (i) to Seller (other than software licenses for generally available desktop software and except pursuant to employee proprietary inventions agreements (or similar employee agreements), non-disclosure agreements and consulting agreements entered into by Seller in the ordinary course of business), or (ii) by Seller to any other person (including any obligations of such other person to make any fixed or contingent payments, including royalty payments). All Contracts relating to the options, rights, licenses and interests referred to in clause (i) of the immediately preceding sentence (such Contracts, “ Material Licenses ”) are valid, binding and in full force and effect and are enforceable by Seller in accordance with their terms, subject to bankruptcy, insolvency or similar laws relating to creditors’ rights generally and to general principles of equity. Seller has performed all material obligations required to be performed by it to date under each Material License and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and, to the knowledge of Parent or Seller as of the date of this Agreement, no other party to any Material License is (with or without lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder.
(h) The Acquired Assets (including the Specified Information Technology Assets), when taken together with the Administrative Assets, are sufficient information technology assets for the conduct of the Business as presently conducted by Seller.
SECTION 3.08. Contracts . (a) Section 3.08(a) of the Seller Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of each Assigned Contract (a “ Material Assigned Contract ”) to or by which Seller is a party or bound, or to which any of the Business or the Acquired Assets are subject, that is or includes:
(i) an employment agreement or employment contract;
(ii) a collective bargaining agreement or other Contract with any labor organization, union or association;
(iii) a covenant not to compete or not to engage in any activity or business, or pursuant to which any benefit is required to be given or lost as a result of so competing or engaging;
(iv) a Contract with (A) any shareholder or affiliate of Seller or (B) any officer, director or employee of Seller or any of its affiliates (other than employment agreements covered by clause (i) above);
(v) a lease, sublease or similar Contract (including any sale-leaseback arrangement) with any person under which Seller is a lessor or sublessor of, or makes available for use to any person, (A) any Business Property or (B) any portion of any premises otherwise occupied by Seller;
(vi) a lease, sublease or similar Contract (including any sale-leaseback arrangement) with any person under which (A) Seller is lessee of, or holds or uses, any machinery, equipment, vehicle or other tangible personal property owned by any person that is material to the conduct of the Business or (B) Seller is a lessor or sublessor of, or makes available for use by any person, any tangible personal property owned or leased by Seller that is material to the conduct of the Business;
(vii) a Contract under which Seller has, directly or indirectly, made any advance, loan, extension of credit or capital contribution to, or other investment in, any person (other than extensions of trade credit in the ordinary course of the Business);
(viii) a Contract granting a Lien upon any Business Property, Assigned Intellectual Property or any other Acquired Asset;
(ix) a Contract providing for indemnification of any person with respect to liabilities relating to the Business or any Acquired Asset, other than such provisions given in connection with the sales of goods and services of the Business in the ordinary course of business;
(x) a Contract (including consulting and services agreements) which provides for “exclusivity” or any similar requirement in favor of any person other than Seller or that requires or obligates Seller to purchase specified minimum amounts of any product;
(xi) a nondisclosure agreement, confidentiality agreement or similar Contract entered into outside of the ordinary course of the Business;
(xii) a Contract (excluding any purchase order in the ordinary course of business) (A) involving future payment of more than $50,000 by or to Seller (unless terminable without payment or penalty upon no more than 30 days’ notice) or (B) providing for future performance by the Business or Seller in consideration of amounts previously paid to the Business or Seller, or which has resulted in deferred revenue under GAAP of more than $50,000;
(xiii) a Contract for the sale of any Acquired Asset in excess of $5,000 (other than Inventory sales in the ordinary course of business) or the grant of any preferential rights to purchase any Acquired Asset in excess of $5,000 or requiring the consent of any party to the transfer thereof;
(xiv) a Contract with any Governmental Entity;
(xv) a currency exchange, interest rate exchange, commodity exchange or similar Contract;
(xvi) a Contract relating to any completed, pending or proposed (A) joint venture, partnership or similar arrangement, (B) acquisition or divestiture of any person, business or division or (C) merger or reorganization;
(xvii) a Contract granting the other party to such Contract or a third party “most favored nation” or similar status;
(xviii) a Contract that prohibits the hiring or solicitation for employment of employees of another person;
(xix) a Contract that would purport to bind any affiliate of Purchaser after it is assigned to Purchaser;
(xx) a Contract entered into in connection with the settlement or other resolution of any Proceeding pursuant to which Seller has any ongoing performance obligations; or
(xxi) a Contract other than as set forth above to which Seller is a party or by which it or any of its assets or businesses is bound or subject that is material to the Business or the use or operation of the Acquired Assets.
(b) All Material Assigned Contracts are valid, binding and in full force and effect and are enforceable by Seller in accordance with their terms, subject to bankruptcy, insolvency or similar laws relating to creditors’ rights generally and to general principles of equity. Section 3.08(b)(i) of the Seller Disclosure Letter sets forth a list as of the date of this Agreement of all Material Assigned Contracts which require consent to assignment by Seller to Purchaser in connection with the Acquisition or in respect of which the execution and delivery of this Agreement or any of the Ancillary Agreements or the consummation of the Acquisition or of any of the other transactions contemplated hereby or thereby or the compliance with the provisions hereof or thereof would cause a Conflict. Seller has performed all material obligations required to be performed by it to date under the Material Assigned Contracts, and it is not (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder and, to the knowledge of Parent or Seller as of the date of this Agreement, no other party to any Material Assigned Contract is (with or without the lapse of time or the giving of notice, or both) in breach or default in any material respect thereunder. Neither Parent nor Seller has received any notice of the intention of any party to terminate any Material Assigned Contract. Complete and correct copies of all Material Assigned Contracts listed in or referred to in the Seller Disclosure Letter, together with all modifications and amendments thereto, have been delivered to Purchaser.
SECTION 3.09. Inventory . All Inventory set forth on the Balance Sheet, and all Inventory set forth on the Closing Statement, is (a) free of any material defect or deficiency and (b) properly stated on the Balance Sheet or Closing Statement, as applicable, in accordance with GAAP (applied on a consistent basis). Since the date of the Balance Sheet, there have not been any write-downs of the value of, or establishment of any reserves against, any inventory of the Business, except for write-downs and reserves in the ordinary course of business and consistent with past practice.
SECTION 3.10. Personal Property . Each material item of Personal Property is in all material respects in good working order (ordinary wear and tear and obsolescence excepted). All leased Personal Property of the Business is in all material respects in the condition required of such property by the terms of the lease applicable thereto.
SECTION 3.11. Receivables . All the Receivables (a) represent actual obligations incurred by the applicable account debtors and (b) have arisen from bona fide transactions in the ordinary course of the Business. All the Receivables set forth on the Balance Sheet, and all the Receivables set forth on the Closing Statement, are properly stated thereon in accordance with GAAP (applied on a consistent basis). Since the date of the Balance Sheet, there have not been any write-offs as uncollectible of any receivables, except for write-offs in the ordinary course of the Business and consistent with past practice.
SECTION 3.12. Permits . Section 3.12 of the Seller Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of all certificates, registrations, franchises, licenses, permits, authorizations, variances, exemptions, orders and approvals (“ Permits ”) issued or granted to Seller by Governmental Entities and all pending applications of Seller to any Governmental Entity for any of the foregoing that are used or held for use in, and that are material to, the operation or conduct of the Business (such permits, the “ Material Permits ”). Seller has, directly or beneficially through an Assigned Contract, been granted, holds, and has made, all Material Permits necessary to the conduct of the Business as currently conducted. All such Material Permits are validly held by Seller, and Seller is in compliance in all material respects with all terms and conditions thereof. Seller is the sole and exclusive owner of all such Material Permits and, except to the extent restricted by Applicable Law, and subject to obtaining consents to assignment of any applicable Assigned Contract identified on Section 3.08(b)(i) of the Seller Disclosure Letter, has full right, power and authority to transfer all such Material Permits to Purchaser or to grant to Purchaser subregistrations, sublicenses and supplemental Permits thereunder that are sufficient to transfer to Purchaser all the claims, rights and benefits of Seller under such Material Permits. During the past three years, neither Parent nor Seller has received notice of any Proceedings relating to the revocation or modification of any such Material Permits. No Proceeding is pending or, to the knowledge of Parent or Seller, threatened which challenges the validity of any such Material Permit. None of such Material Permits will be subject to suspension, modification, revocation or nonrenewal as a result of the execution and delivery of this Agreement and the Ancillary Agreements or the consummation of the Acquisition and the other transactions contemplated hereby and thereby, except to the extent arising from restrictions under Applicable Law.
SECTION 3.13. Insurance . Seller has in effect policies of fire, liability, product liability, workers’ compensation, health and other forms of insurance that provide insurance coverage for the Business and the assets of the Business of the kinds, in the amounts and against the risks required to comply with Applicable Law and against the risks of the sort normally insured by similar businesses. During the past three years, Seller has not been refused any insurance with respect to any property or asset relating to, or any other aspect of, the Business, nor has such coverage been limited by any insurance carrier to which it has applied for insurance or with which it has carried insurance, and no notice of cancelation or termination has been received with respect to any insurance policy with respect to the Business.
SECTION 3.14. Sufficiency of Acquired Assets . The Acquired Assets (together with the Excluded Assets specified in Section 1.02(b)(i)-(x)), comprise all the assets used or held for use by Seller in connection with the Business. The Acquired Assets (together with the Excluded Assets specified in Section 1.02(b)(i)-(x) and the provision by Seller of the services under the Transition Services Agreement) are sufficient for the operation and conduct of the Business by Purchaser immediately following the Closing in substantially the same manner as currently conducted by Seller. Other than Excluded Assets, none of Parent and its affiliates (other than Seller) owns any properties, assets, goodwill or rights of whatever kind and nature, real or personal, tangible or intangible, that are used or held for use in, or arising from, the operation or conduct of the Business.
SECTION 3.15. Taxes . (a) (i) All material Tax Returns required to be filed by the Code or by applicable state, provincial, local or foreign Tax laws to the extent such Tax Returns relate to the Acquired Assets or the Business for Pre-Closing Tax Periods have been timely filed or will be timely filed by Seller, (ii) all Taxes due on such Tax Returns that could result in a Lien on the Acquired Assets or for which Purchaser could be liable have been paid in full or will be timely paid in full by the due date thereof, (iii) to the knowledge of Parent or Seller, no claims are being asserted with respect to any Taxes with respect to the Acquired Assets or the Business that could result in a Lien on the Acquired Assets and (iv) no Tax Liens with respect to the Acquired Assets or the Business have been filed.
(b) Seller is not a “foreign person” within the meaning of Section 1445 of the Code.
SECTION 3.16. Proceedings . There is no material Proceeding pending or, to the knowledge of Parent or Seller, threatened by or against Seller or any of its affiliates with respect to the Business, nor is there any material Judgment outstanding against, or, to the knowledge of Parent or Seller, material investigation by any Governmental Entity involving, Seller or any of its affiliates with respect to the Business.
SECTION 3.17. Benefit Plans . (a) Section 3.17(a) of the Seller Disclosure Letter sets forth a true and complete list, as of the date of this Agreement, of each individual employment, retention, indemnification, severance, change of control and consulting agreement with any employee of the Business to which Seller is a party, each “employee benefit plan” within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA ”) and each severance, retention, employment, consulting, “change of control”, bonus, incentive (equity-based, equity-related or otherwise), deferred compensation, employee loan, welfare benefit, fringe benefit and other benefit plan, agreement, program, policy, commitment or other arrangement, in each case sponsored, maintained or contributed to, or required to be sponsored, maintained or contributed to, by Seller or any other person that, together with Seller, is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code (each, a “ Commonly Controlled Entity ”), or with respect to which Seller or any Commonly Controlled Entity has any liability, in each case providing any compensation or benefits to any employee of the Business (each such arrangement described in this sentence is referred to herein as a “ Seller Benefit Plan ”). Each Seller Benefit Plan or portion thereof that Purchaser or any of its affiliates has explicitly agreed to assume pursuant to this Agreement is referred to herein as an “ Assumed Benefit Plan ”. Seller has (A) delivered to Purchaser true, complete and correct copies of each Assumed Benefit Plan (or, in the case of any unwritten Assumed Benefit Plans, written descriptions thereof), and (B) will deliver promptly upon Purchaser’s request true and complete copies of (i) any related trust agreement or funding instrument with respect to any Assumed Benefit Plan, (ii) the most recent annual report on Form 5500 (including all schedules and attachments thereto) filed with the Internal Revenue Service (“ IRS ”) with respect to each Assumed Benefit Plan (if any such report was required by Applicable Laws) and (iii) the most recent IRS determination or opinion letter, if applicable, with respect to each Assumed Benefit Plan.
(b) Each Assumed Benefit Plan has been administered in accordance with its terms and in compliance with the applicable provisions of ERISA, the Code, all other Applicable Laws and the terms of all applicable collective bargaining agreements, in each case in all material respects. Neither Parent nor Seller has received written notice of any pending or in progress, and, to the knowledge of Parent or Seller, there are no threatened (A) investigations by any Governmental Entity, termination proceedings or other claims with respect to any Assumed Benefit Plan (except routine claims for benefits payable under the Assumed Benefit Plans) or (B) litigation against or involving any Assumed Benefit Plan or asserting any rights to or claims for benefits under any Assumed Benefit Plan. The Seller 401(k) Plan and corresponding trust intended to be qualified under Sections 401(a) and 501(a) of the Code have received a favorable determination letter from the IRS (or an application is pending) as to their qualification under Sections 401(a) and 501(a) of the Code, and, nothing has occurred that would reasonably be expected to cause the Seller 401(k) Plan or corresponding trust to fail to qualify under Section 401(a) or 501(a) of the Code.
(c) No Seller Benefit Plan is subject to Title W of ERISA or Section 412 of the Code or is otherwise a defined benefit pension plan. Neither Purchaser nor any of its affiliates will incur any liability under Section 302 of ERISA, Title IV of ERISA, Section 412 of the Code or the Coal Industry Retiree Health Benefit Act of 1992, as amended, in each case, in connection with the Acquisition or any of the other transactions contemplated by this Agreement or the Ancillary Agreements. All payments, benefits, contributions and premiums relating to each Assumed Benefit Plan have been timely paid or made in accordance with the terms of such Assumed Benefit Plan and the terms of all Applicable Laws or have been accrued in accordance with GAAP.
(d) (A) No Assumed Benefit Plan (i) provides for deferred compensation, (ii) provides any welfare benefits (other than on a self-pay basis) following termination of service or employment or (iii) is a “multiple employer welfare arrangement” (as defined in Section 3(40) of ERISA) and (B) no employee of the Business (i) has received any loan from Parent or Seller that has an outstanding balance, (ii) has a right, contingent or otherwise, to receive any guaranteed bonus (including any retention bonus) from Parent or Seller, (iii) has the right to receive any severance or separation pay or benefits from Parent or Seller, (iv) could reasonably be expected to receive any payment or benefit from Seller or any of its affiliates that would not be deductible to Purchaser as a result of Section 280G of the Code, (v) is entitled to any tax indemnification or tax gross-up from the Parent or Seller or (vi) is, or at any time will become, entitled to any payment, benefit or right, or any increased and/or accelerated payment, benefit or right, as a result of (x) such employee’s termination of employment with, or services to Seller or (y) the execution of this Agreement or the consummation of the transactions contemplated by this Agreement.
SECTION 3.18. Absence of Changes or Events . Since the date of the Balance Sheet, there has not been any state of facts, change, effect, condition, development, event or occurrence that has had or could reasonably be expected to have a Seller Material Adverse Effect. Since the date of the Balance Sheet, Seller has caused the Business to be conducted in the usual, regular and ordinary course and in substantially the same manner as previously conducted. Since the date of the Balance Sheet to the date of this Agreement, neither Parent nor Seller has taken any action that, if taken after the date of this Agreement without Purchaser’s consent, would constitute a breach of Section 5.01.
SECTION 3.19. Compliance with Applicable Laws; Environmental Matters . (a) The Business is in compliance in all material respects with all Applicable Laws. Neither Parent nor Seller has received any communication during the past three years from a Governmental Entity or any other person that alleges that the Business is not in compliance in any material respect with any Applicable Law. This Section 3.19(a) does not relate to matters with respect to Taxes, which are the subject of Section 3.15, or to environmental matters, which are the subject of Section 3.19(b).
(b) During the past three years, neither Parent nor Seller has received any communication from a Governmental Entity or other person that alleges that the Business is not in compliance in any material respect with, or has or may have material liability under, any Environmental Law. Each of Seller and the Business has been and is in compliance in all material respects with applicable Environmental Laws, including possession of and compliance with all material Permits required to conduct the Business under applicable Environmental Laws. There are no Environmental Claims pending or, to the knowledge of Parent or Seller, threatened against or affecting Seller with respect to the Business, and none of the Business or Seller (with respect to the Business) or the Acquired Assets is subject to, and neither the Business nor Seller has entered into or agreed to, any Judgment relating to compliance with any Environmental Law or to investigation or remediation of Hazardous Materials. No Hazardous Materials have been generated, stored, used, transported or Released in, on, at, under or from any Business Property, or any other property in connection with the Business, in each case except in compliance in all material respects with, and in a manner not reasonably expected to result in material liability under, applicable Environmental Laws. No underground storage tanks, material amounts of asbestos-containing materials or articles or equipment containing polychlorinated biphenyls are currently located at, on, in or under any Business Property. Seller has delivered to Parent true and complete copies of all environmental studies, investigations and similar evaluations and reports performed or obtained in connection with the facilities currently owned or leased by the Business on or after May 12, 1995. Notwithstanding any other provision of this Agreement (other than Sections 3.03, 3.04, 3.12 and 3.13), no representation or warranty is made in this Agreement except in this Section 3.19(b) as to compliance with, or violation of, Environmental Laws. For purposes of this Agreement:
(i) The term “ Environmental Claim ” means any administrative, regulatory or judicial Proceeding, Judgment, investigation or written or oral notice of noncompliance or violation by or from any person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resource damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from (A) the presence or Release of, or exposure to, any Hazardous Materials at any location; or (B) the failure to comply with any Environmental Law.
(ii) The term “ Environmental Laws ” means any and all Applicable Laws, Judgments and Permits issued, promulgated or entered into by any Governmental Entity, relating to pollution, preservation or reclamation of natural resources, or to the protection of human health (including occupational exposure to hazardous or harmful materials but excluding worker safety) or the environment, in each case as in effect from time to time before the Closing.
(iii) The term “ Hazardous Materials ” means all explosive or radioactive materials or substances, hazardous or toxic substances, wastes or chemicals, petroleum (including crude oil or any fraction thereof) or petroleum distillates, asbestos or asbestos containing materials, and all other materials, chemicals or wastes regulated pursuant to any Environmental Law.
(iv) The term “ Release ” means any spill, emission, leaking, pouring, emptying, pumping, injection, deposit, disposal, discharge, dispersal, leaching, emanation or migration in, into, onto, or through the environment (including ambient air, surface water, ground water, soils, land surface or subsurface strata).
(c) Each product of the Business (a “ FIFRA Product ”) that is subject to regulation under the Federal Insecticide, Fungicide and Rodenticide Act (“ FIFRA ”) (i) is currently registered under FIFRA by the U.S. Environmental Protection Agency (the “ EPA ”), (ii) carries an EPA-approved label and (iii) is currently manufactured and sold by the Business in compliance in all material respects with all applicable statutory and regulatory requirements. Section 3.19(c) of the Seller Disclosure Letter sets forth a true and complete list as of the date of this Agreement of each FIFRA Product of the Business. All registration fees and other financial obligations of the Business relating to the registration under FIFRA of FIFRA Products and payable prior to the date hereof have been paid in full, and all such amounts payable prior to the Closing will be paid in full prior to the Closing. All FIFRA Products are supported by data that either is owned by Seller or that Seller otherwise has sufficient rights to use for support of such FIFRA Products and in respect of which has satisfied all compensation obligations. Seller has full right, power and authority to transfer to Purchaser ownership of all data or citation rights for all FIFRA Products, other than to the extent restricted under Applicable Law and subject to obtaining consents to assignment of any applicable Assigned Contract identified on Section 3.08(b)(i) of the Seller Disclosure Letter. There are no pending Proceedings or, to the knowledge of Parent or Seller, threatened Proceedings or pending or threatened investigations by any Governmental Entity relating to any FIFRA Product.
(d) Each product of the Business listed on Section 3.19(d) of the Seller Disclosure Letter is currently registered in each state or territory listed next to such product on Section 3.19(d) of the Seller Disclosure Letter. Seller has paid (i) as of the date of this Agreement, all state and territorial fees relating to the registration of such products that are required to be paid on or prior to December 31, 2008 and (ii) all state and territorial fees relating to the registration of such products that are required to be paid on or prior to the Closing Date will be paid on or prior to the Closing Date.
SECTION 3.20. Employee and Labor Matters . (a) There is not any, and during the past three years, there has not been any, material labor strike, dispute, work stoppage or lockout pending, or, to the knowledge of Parent or Seller, threatened, against or affecting the Business. None of the employees of the Business is represented by a union or any other similar labor organization and, to the knowledge of Parent or Seller, as of the date of this Agreement no union organizational campaign is in progress with respect to the employees of the Business and no question concerning representation of such employees exists. Neither Parent nor Seller is engaged in any unfair labor practice in connection with the operation or conduct of the Business. There are not as of the date of this Agreement any pending, or, to the knowledge of Seller, threatened, charges in connection with the operation or conduct of the Business against or affecting Parent or Seller or any current or former employee of | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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