ASSET PURCHASE AGREEMENT

EXHIBIT 2.2

 

EXECUTION COPY

 

ASSET PURCHASE AGREEMENT

 

BETWEEN

 

DRESSER, INC.

 

AS SELLER

 

AND

 

ASHCROFT HOLDINGS, INC.

 

AS BUYER

 

Dated

 

September 2, 2005

TABLE OF CONTENTS

 

 

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SELLER’S DISCLOSURE SCHEDULE

BUYER’S DISCLOSURE SCHEDULE

 

EXHIBIT A Working Capital Calculation

EXHIBIT B Form of Bill of Sale

EXHIBIT C Forms of Intellectual Property Assignment Agreements

EXHIBIT D Form of Real Property Transfer Agreement

EXHIBIT E Form of Transition Services Agreement

EXHIBIT F Form of Cross-License

 

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ASSET PURCHASE AGREEMENT

 

This Asset Purchase Agreement (this “ Agreement ”) is entered into on September 2, 2005 by and between Dresser, Inc., a Delaware corporation (“ Seller ”), and Ashcroft Holdings, Inc., a Delaware corporation (“ Buyer ”). Buyer and Seller are referred to collectively herein as the “ Parties .”

 

PRELIMINARY STATEMENTS

 

A. Seller, on its own and through its Instruments Subsidiaries and the Joint Ventures, owns and operates the Business.

 

B. Buyer desires to purchase substantially all of the assets used or held for use in the Business and to assume certain Liabilities of the Business, in each case on the terms and subject to the conditions set forth in this Agreement.

 

C. The assets to be sold include (i) Business-related assets owned by Seller and the Asset Selling Subsidiaries and (ii) Shares of the Standalone Subsidiaries and the Joint Ventures that operate a portion of the Business and whose Shares are held by the Share Selling Subsidiaries.

 

AGREEMENT

 

The Parties, intending to be legally bound, agree as follows.

 

ARTICLE 1

 

CONSTRUCTION AND DEFINITIONS

 

1.1 CONSTRUCTION

 

Any reference in this Agreement to an “Article,” “Section,” “Schedule” or “Exhibit” refers to the corresponding Article, Section, Schedule or Exhibit of or to this Agreement, unless the context indicates otherwise. The headings of Articles and Sections are provided for convenience only and should not affect the construction or interpretation of this Agreement. All words used in this Agreement should be construed to be of such gender or number as the circumstances require. The terms “include” and “including” indicate examples of a foregoing general statement and not a limitation on that general statement. Any reference to a statute refers to the statute, any amendments or successor legislation, and all regulations promulgated under or implementing the statute, as in effect at the relevant time. Any reference to a Contract or other document as of a given date means the Contract or other document as amended, supplemented and modified from time to time through such date. The terms ”deliver,” “provide,” “made available” and similar terms for purposes of Seller providing information or documents on or prior to the execution and delivery of this Agreement by the parties hereto to Buyer under Article 3 shall mean uploading or “posting” such information or documents to the due diligence website maintained by Seller in connection with the Acquisition.

1.2 DEFINITIONS

 

For the purposes of this Agreement, the following terms and variations on them have the meanings set forth below:

 

(a) “ 2001 Halliburton Agreement ” is defined in Section 8.2(b)(iii)(6).

 

(b) “ Accountants ” is defined in Section 2.6(c) .

 

(c) “ Accounts Receivable ” means, other than with respect to the Joint Ventures, (i) all trade accounts receivable, net of the allowance for doubtful accounts and reserve for returns and allowances, if any, and other rights to payment from customers of the Business (including from Seller and its Affiliates for the purchase of goods and services by the Business in the Ordinary Course of Business) (“ Bona Fide Affiliate Receivables ”), relating to the Business and the full benefit of all security for such accounts or rights to payment, including all trade accounts receivable representing amounts receivable in respect of goods shipped or products sold or services rendered to customers of the Business, (ii) all other accounts or notes receivable relating to the Business and the full benefit of all security for such accounts or notes, and (iii) any claims, remedies and other rights related to any of the foregoing; provided that in no event shall any intercompany accounts, accounts receivables or other receivables due from Seller or its Affiliates that are not Bona Fide Affiliate Receivables be included as an Accounts Receivable.

 

(d) “ Accounts Receivable Claim ” is defined in Section 5.11(d) .

 

(e) “ Actions ” is defined in Section 5.15(c) .

 

(f) “ Acquisition ” means the sale and purchase of the Assets and the Assumed Liabilities as contemplated hereby.

 

(g) “ Adjustment Amount ” (which may be a positive or negative number) will be equal to (i) the Working Capital of the Business as of the Closing Date determined in accordance with Section 2.6 , minus (ii) $26,588,903, the components of which include the Current Assets included in the Assets and the Current Liabilities included in the Assumed Liabilities, as calculated in accordance with Exhibit A .

 

(h) “ Affiliate ” means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under common control with, such Person at any time during the period for which the determination of affiliation is being made. The term “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with respect to any Person, means the possession, directly or indirectly, of the power to elect a majority of the board of directors (or other governing body) or to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise.

 

(i) “ Agreement ” is defined in the first paragraph of this Agreement, as the same may be amended or supplemented from time to time in accordance with the terms hereof.

 

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(j) “ Allocation ” is defined in Section 2.7 .

 

(k) “ Ancillary Agreements ” means, collectively, the Transition Services Agreement, the Supply Agreement, any intellectual property license agreements and other Contracts ancillary to this Agreement executed by the Parties in connection with the transactions contemplated by this Agreement, but expressly not including any Implementing Agreements.

 

(l) “ Approved Leave ” is defined in the definition of “Employee.”

 

(m) “ Assets ” means (i) the Shares and (ii) all of Seller’s and each Asset Selling Subsidiary’s right, title and interest in and to all of Seller’s and each Asset Selling Subsidiary’s property, rights and assets (real, personal or mixed, tangible and intangible) which are used exclusively or primarily in or otherwise relate exclusively or primarily to the Business. The Assets expressly exclude (y) the Excluded Assets and (z) Assets transferred or otherwise disposed of by Seller or any of its Affiliates in the Ordinary Course of Business after the date hereof and prior to Closing pursuant to Section 5.2 . For the avoidance of doubt, unless expressly provided otherwise herein, the Assets will include, without limitation, the following:

 

(i) Owned Real Property;

 

(ii) Real Property Leases;

 

(iii) Tangible Personal Property;

 

(iv) Tangible Personal Property Leases;

 

(v) Assumed Contracts;

 

(vi) Inventory;

 

(vii) Accounts Receivable;

 

(viii) Business Intellectual Property;

 

(ix) intangible rights and property of any of Seller or any of the Instruments Subsidiaries relating exclusively or primarily to the Business (other than the Business Intellectual Property which is addressed in clause (viii) above);

 

(x) transferable Governmental Authorizations required for the operation of the Business (and pending applications and renewals therefor) owned, utilized or licensed (subject to the terms of such licenses) by or to any of Seller or any of the Instruments Subsidiaries;

 

(xi) prepaid expenses of Seller or any of the Instruments Subsidiaries relating to the Business (not including any Excluded Liabilities);

 

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(xii) all books, records, files, documents, computer files and other computer readable data, papers and Contracts pertaining to the Assets, the Assumed Liabilities or otherwise relating to the Business that are individually or in the aggregate necessary or material to the continuing operation of the Business as a going concern, subject to (A) Seller retaining copies in whatever form of the same, if and as it so chooses (subject to Section 5.18 regarding confidentiality), and (B) Seller being permitted by Law to transfer them to Buyer; provided that if Seller is not permitted by Law to transfer such documents to Buyer, Buyer shall have reasonable access to such documents upon reasonable prior written notice to Seller; provided further that with respect to any such books, records, files, documents, computer files and other computer readable data, papers and Contracts that Seller or its Affiliates transfer to Buyer, Buyer shall grant Seller and its Affiliates and Representatives such reasonable access upon prior written notice to such items (including to copy) as they may require to fulfill its and their obligations under this Agreement or the Contemplated Transactions (including under Article 8 ) or as Seller or its Affiliates require for the conduct of its business or in evaluating or defending any claim or Proceeding;

 

(xiii) all customer lists, supplier lists, catalogs, brochures, sales literature, promotional material and other selling material relating solely to the products or services of the Business; and

 

(xiv) all assets and documentation relating to any Assumed Benefit Plan or any other Seller Plan provided in Section 10.3 .

 

(n) [Intentionally left blank]

 

(o) “ Asset Selling Subsidiaries ” are those subsidiaries of Seller listed in Section 1.2(o) of Seller’s Disclosure Schedule, which subsidiaries own non-Share Assets.

 

(p) “ Assumed Benefit Plans ” is defined in Section 10.3 .

 

(q) “ Assumed Contracts ” means all Contracts of Seller or any Asset Selling Subsidiary that relate primarily or exclusively to the ownership, operation or conduct of the Business (including, without limitation, any Contract material to the conduct of the Business); provided , however , Assumed Contracts shall not include any Contract between or among Seller and/or an Affiliate of Seller (other than the Contracts set forth or Section 5.4 of Seller’s Disclosure Schedule or a Contract with a Joint Venture) that does not provide for the provision, sale or purchase of goods by the Business in the Ordinary Course of Business or the ownership or operation of a Joint Venture.

 

(r) “ Assumed Liabilities ” means all Liabilities to the extent relating to the Business and the Assets (whether arising before, on or after the Closing Date), other than the Excluded Liabilities, of Seller and the Asset Selling Subsidiaries, including assumption by Buyer of those Liabilities described in Article 10 and Section 5.16 .

 

(s) “ Balance Sheet ” is defined in Section 3.5 .

 

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(t) “ Bill of Sale ” means the bill of sale relating to the applicable U.S. portion of the Assets to be sold in the Acquisition in the form included in Exhibit B .

 

(u) “ Bona Fide Affiliate Receivables ” is defined in the definition of “Accounts Receivable.”

 

(v) “ Brazil HoldCo ” is defined in Section 5.9(c) .

 

(w) “ Business ” means the instruments business owned and operated by Seller on its own and through the Instruments Subsidiaries and the Joint Ventures. The Business expressly does not include any other lines of business operated by Seller or any of its Affiliates.

 

(x) “ Business Day ” means a day on which national banks are open for business in Wilmington, Delaware.

 

(y) “ Business Intellectual Property ” means the Intellectual Property and the rights associated therewith that are owned (i) by Seller or any Instruments Subsidiary and that relate exclusively to the Business (the “ Standalone Intellectual Property ”) or (ii) by Seller or any Instruments Subsidiary that are primarily Used in the Business (the “ Mixed Intellectual Property ”), in each case including:

 

(i) the Trademarks listed on Section 3.9(a) of Seller’s Disclosure Schedule, and goodwill associated therewith;

 

(ii) the Patents listed on Section 3.9(a) of Seller’s Disclosure Schedule, including all continuations, continuations-in-part, divisionals, and all foreign applications related thereto;

 

(iii) the IP Licenses relating to the Business listed on Section 3.9(a) of Seller’s Disclosure Schedule; and

 

(iv) related domain names, Copyrights (including mask works), Trade Secrets and Software that are exclusively or primarily Used in the Business.

 

Intellectual Property specifically excludes the Excluded Intellectual Property.

 

(z) “ Business Permits ” is defined in Section 3.22 .

 

(aa) “ Business Transfer Agreements ” means the Business transfer agreements in a form to be mutually and reasonably agreed between the Parties relating to the portion of the Acquisition involving the Asset Selling Subsidiaries. Such agreements are solely intended to ensure compliance with local Laws relating to the transfer of the Assets and Assumed Liabilities and will not modify or alter the provisions of this Agreement.

 

(bb) “ Buyer ” is defined in the first paragraph of this Agreement.

 

(cc) “ Buyer 401(k) Plans ” is defined in Section 10.4(b) .

 

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(dd) “ Buyer Indemnitees ” is defined in Section 8.2(a) .

 

(ee) “ Buyer Material Adverse Effect ” means a material adverse effect on, or a material adverse change in, the business, financial condition or operations of Buyer, including any such effect or change that would prevent Buyer from funding the Purchase Price in cash at Closing.

 

(ff) “ Buyer’s Disclosure Schedule ” means the disclosure schedule delivered pursuant to Article 4 by Buyer to Seller concurrently with the execution and delivery of this Agreement.

 

(gg) “ Buyer’s Flexible Benefit Plans ” is defined in Section 10.2(b) .

 

(hh) “ Buyer’s Pension Plan ” is defined in Section 10.9(b) .

 

(ii) “ Cap ” is defined in Section 8.5(b) .

 

(jj) “ Cash Equivalents ” means cash, checks, money orders, marketable securities, short-term instruments and other cash equivalents, funds in time and demand deposits or similar accounts, and any evidence of indebtedness issued or guaranteed by any Governmental Body.

 

(kk) “ CERCLA ” is defined in the definition of “Environmental Law.”

 

(ll) “ Closing ” means the consummation and completion of the Acquisition.

 

(mm) “ Closing Balance Sheet ” is defined in Section 2.6(a) .

 

(nn) “ Closing Date ” means the date on which the Closing actually occurs.

 

(oo) “ Closing Date Benefits ” is defined in Section 10.9(a) .

 

(pp) “ Code ” means the Internal Revenue Code of 1986, as amended to the date hereof.

 

(qq) “ Closing Permitted Encumbrances ” means Permitted Encumbrances that do not relate to Excluded Liabilities.

 

(rr) “ Confidentiality Agreement ” means the Confidentiality Agreement between Seller and KPS Special Situations Fund II, L.P., dated April 27, 2005.

 

(ss) “ Connecticut Transfer Act ” refers to Connecticut General Statutes sections 22a-134 through 22a-134s, as amended and any guidelines, standards or precedents of the Connecticut Department of Environmental Protection related to the implementation or enforcement thereof.

 

(tt) “ Consent ” means any approval, consent, ratification, waiver or other authorization.

 

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(uu) “ Contemplated Transactions ” means all of the transactions to be carried out in accordance with this Agreement, including the Acquisition, the performance by the Parties of their other obligations under this Agreement, and the execution, delivery and performance of the Implementing Agreements and Ancillary Agreements.

 

(vv) “ Contract ” means any written or oral contract, agreement, commitment, understanding, lease, license, franchise, warranty, guaranty, mortgage, note, bond or other instrument of consensual obligation that is legally binding.

 

(ww) “ Copyrights ” means, as they exist anywhere in the world, copyrights and mask works, including all renewals and extensions thereof, copyright registrations and applications for registration thereof, and non-registered copyrights and including, with respect to mask works, all tape-outs, simulation extractions, test vectors, simulation and test programs, related documentation and any other materials associated with the design, development and production of devices based on mask works, and all rights therein provided by international treaties or otherwise.

 

(xx) “ CTDEP ” is defined in Section 5.12(a) .

 

(yy) “ Current Assets ” shall mean the aggregate of the balances on the Closing Balance Sheet of the balance sheet asset accounts shown in the chart of accounts for the Business set forth on Section 2.6 of Seller’s Disclosure Schedule, which shall not include Cash Equivalents and shall only include those current assets that are actually conveyed as part of the Assets.

 

(zz) “ Current Liabilities ” shall mean the aggregate of the balances on the Closing Balance Sheet of the balance sheet Liability accounts shown in the chart of accounts for the Business set forth on Section 2.6 of Seller’s Disclosure Schedule which in no event shall include (i) any Liability that is not an Assumed Liability, (ii) any Indebtedness, (iii) Liabilities owed to Seller or any Affiliate, other than relating to the purchase of goods by the Business in the Ordinary Course of Business or as it relates to the Contracts set forth on Section 5.4 of Seller’s Disclosure Schedule, or (iv) any other Liability that would not constitute a “current liability” under GAAP.

 

(aaa) “ DARVICO ” is defined in Section 5.10(a) .

 

(bbb) “ DARVICO Reorganization ” is defined in Section 5.10(a) .

 

(ccc) “ Dispute ” is defined in Section 11.16(b) .

 

(ddd) “ Effective Time ” means 11:59 p.m. local time on the Closing Date.

 

(eee) “ Employee ” means any individual who, as of the Closing Date, is an employee of Seller or any Instruments Subsidiary, or an Affiliate of any of the aforementioned, and who performs services primarily relating to, or primarily on behalf of, the Business. An individual who would otherwise satisfy this definition but who is absent from active employment on the Closing Date on account of vacation, sick leave, disability leave, leave under any local Law which preserves employment or reemployment rights for

 

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the individual, in each case, that has been approved by Seller or an Instruments Subsidiary (“ Approved Leave ”), shall nonetheless be an “Employee,” provided , that, to the extent permitted by Law, such individual commences employment with the Buyer or its Affiliate upon the termination of such Approved Leave and in any event, within the longer of (a) the period provided by Law or (b) 60 days from the Closing Date.

 

(fff) “ Employee Benefit Plan ” means any “employee pension benefit plan,” as defined in Section 3(2) of ERISA, any “employee welfare benefit plan,” as defined in Section 3(1) of ERISA, or any Contract, plan, program, fund, policy or arrangement (whether written or unwritten) providing compensation, deferred compensation, pension, retirement, superannuation, profit sharing, thirteenth month, severance, termination indemnity, redundancy pay, bonus, incentive compensation, group insurance, death benefit, health, cafeteria, flexible benefit, medical expense reimbursement, dependent care, stock option, stock purchase, stock appreciation rights, equity-related compensation, savings, consulting, vacation pay, holiday pay, life insurance, or other employee benefit or fringe benefit plan, program or arrangement covering any Employee, and the beneficiaries and dependents of any Employee, regardless of whether it is private, sponsored by multiple employers, sponsored by an unrelated party, a “multiemployer plan” (as defined in Section 3(37) of ERISA), funded, unfunded, financed by the purchase of insurance, contributory or non-contributory.

 

(ggg) “ Encumbrance ” means any claim, mortgage, servitude, easement, encroachment, restrictive covenant, right of way, survey defect, equitable interest, lease or other possessory interest, lien, option, pledge, security interest, preference, priority, right of first refusal, environmental use restriction or similar restriction.

 

(hhh) “ Entity ” shall mean any corporation (including any non profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any company limited by shares, limited liability company or joint stock company), firm, society or other enterprise, association, organization or entity.

 

(iii) “ Environmental Law ” means any Law of a Governmental Body relating to the pollution, protection of the environment or exposure to Hazardous Substances, including, without limitation, provisions pertaining to or regulating air pollution, water pollution, noise control, wetlands, water courses, natural resources, wildlife, Hazardous Substances, or any other activities or conditions which affect or relate to the environment or nature. U.S. Environmental Laws shall include, without limitation, the Comprehensive Environmental Response, Compensation, and Recovery Act (“ CERCLA ”), 42 U.S.C. Section 9601 et seq. , the Resource Conservation and Recovery Act (“ RCRA ”), 42 U.S.C. Section 6901 et seq. , the Clean Air Act, 42 U.S.C. Section 7401 et seq. , the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq. , the Emergency Planning and Community Right to Know Act, 42 U.S.C. Section 11001 et seq. , the Oil Pollution Act, 33 U.S.C. Section 2701 et seq. , and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq. , each as amended, and Connecticut General Statutes Title 22a, and all Connecticut State regulations decreed thereunder.

 

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(jjj) “ Environmental Permits ” shall mean any and all permits, authorizations, approvals, registrations, orders, waivers, variances, activity identification numbers, or other approvals and licenses (i) under any Environmental Law or (ii) granted by any Governmental Body, with respect to environmental matters.

 

(kkk) “ Environmental Reports ” is defined in Section 3.14(d) .

 

(lll) “ ERISA ” means the Employee Retirement Income Security Act of 1974.

 

(mmm) “ Excluded Assets ” means:

 

(i) all Cash Equivalents of Seller or its Affiliates (other than the Joint Ventures) (including for this purpose, all collected funds received in bank accounts owned by Seller or any Instruments Subsidiary through the Effective Time);

 

(ii) all bank and brokerage accounts of Seller or its Affiliates (other than the Joint Ventures);

 

(iii) all rights of Seller or its Affiliates to receive refunds with respect to any and all Taxes, to the extent attributable to the Pre-Closing Period and Pre-Closing Straddle Period, including any interest payable thereon, whether or not the foregoing are derived from the Business;

 

(iv) all shares of capital stock or other securities of Seller or any of its Affiliates or Joint Venture partners (other than the Shares and the Joint Venture Interests);

 

(v) all prepaid expenses of Seller or its Affiliates (other than the Joint Ventures) relating to the Excluded Assets and all claims for refunds and rights to off-set in respect thereof;

 

(vi) all rights in connection with, and assets of, any Seller Plan (other than any Assumed Benefit Plan), except as otherwise provided in Sections 10.3 and 10.4 ;

 

(vii) the Excluded Intellectual Property;

 

(viii) rights of Seller or its Affiliates (other than the Joint Ventures), with respect to the litigation matters set forth on Section 1.2(ooo)(iii) of Seller’s Disclosure Schedule;

 

(ix) all rights of Seller under this Agreement and of Seller or any of its Affiliates (other than the Standalone Subsidiaries or any Joint Venture) under any of the Ancillary Agreements and Implementing Agreements to which Seller or any of its Affiliates (other than the Standalone Subsidiaries or any Joint Venture) is a party;

 

(x) the leases set forth on Section 1.2(mmm)(x) of Seller’s Disclosure Schedule;

 

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(xi) any Contracts of Seller and any Asset Selling Subsidiaries that are not included in the definition of “Assumed Contracts”;

 

(xii) all insurance arrangements, and any and all related claims and benefits of Seller and its Affiliates (other than the Joint Ventures) except to the extent relating to any Assumed Liabilities;

 

(xiii) property, rights and assets (real, personal or mixed, tangible and intangible) relating to any Joint Venture, which assets are and shall remain the property of such Joint Venture (other than rights Buyer may acquire as a holder of Shares in a Joint Venture or pursuant to the Governing Documents of a Joint Venture); and

 

(xiv) all other tangible and intangible property, rights and assets of Seller and the Asset Selling Subsidiaries (real, personal or mixed, tangible and intangible), of every kind and description, wherever located, not primarily or exclusively related to the ownership, operation or conduct of the Business.

 

(nnn) “ Excluded Intellectual Property ” means the “Dresser” name and logo, domain names that include the term “dresser,” trademarks, service marks, trade dress, and all rights and goodwill associated therewith, and all other Intellectual Property that is not primarily or exclusively Used in the Business and that is set forth on Section 3.9(b) of Seller’s Disclosure Schedule.

 

(ooo) “ Excluded Liabilities ” means:

 

(i) all Liabilities with respect to the Excluded Assets or for which Seller or the Selling Subsidiaries have expressly assumed responsibility for under this Agreement;

 

(ii) all Liabilities arising in connection with any Seller Plan, other than those Liabilities with respect to an Assumed Benefit Plan or other assumed Liability for any Seller Plan to the extent assumed by Buyer in, or for which Buyer is obligated under, Article 10 ;

 

(iii) any Liability with respect to (a) any claim or Proceeding set forth in Section 1.2(ooo)(iii) of Seller’s Disclosure Schedule (including any reserve thereon) or (b) any claim or Proceeding against Seller or its Affiliates that relates to any time prior to the Effective Time (regardless of whether such claim or action is commenced before or after the Effective Time and whether or not it relates to or arises out of the Business), with respect to any product manufactured or sold by the Business prior to the Effective Time or any claim made by an employee, consultant or agent (or former employee, consultant or agent) that relates to any period prior to the Effective Time (other than as expressly set forth otherwise in Article 10 );

 

(iv) any and all Liabilities arising under any Environmental Law with respect to operations or real property that are no longer part of the Business and are not part of the Assets;

 

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(v) any and all Indebtedness of the Business existing as of the Effective Time (other than any Indebtedness incurred by Buyer or its Affiliates);

 

(vi) any Liabilities not related to the Business;

 

(vii) any and all Liabilities to any employees of the Business, Seller or its Affiliates relating to “change in control,” stay bonus or other similar payments, payable as a result of the consummation of the Acquisition and any Liabilities relating to 2004 and 2005 EBITDA based bonuses, including the accruals related thereto for such Liabilities on the Interim Balance Sheet (or any further accruals related thereto through the Effective Time) or pursuant to Seller’s or its Affiliates’ Employee Benefit Plans (except as otherwise expressly provided under Article 10 );

 

(viii) any Liability related to or arising out of any Contract of Seller or the Asset Selling Subsidiaries that is not an Assumed Contract;

 

(ix) any and all Liabilities relating to Pre-Closing Taxes; and

 

(x) any and all Liabilities relating to the Shelton, Connecticut and Berea, Kentucky leases, and Seller shall retain any and all related security deposits due from or due to third parties (or any further accruals immediately preceding the Effective Time) whether as an Excluded Liability or an Excluded Asset.

 

(ppp) “ Expiration Date ” is defined in Section 8.1.

 

(qqq) “ Financial Statements ” is defined in Section 3. 5.

 

(rrr) “ GAAP ” means generally accepted accounting principles for financial reporting in the United States, applied on a consistent basis during the relevant periods.

 

(sss) “ GIC ” is defined in Section 3.13(m) .

 

(ttt) “ Governing Document ” means any charter, articles, bylaws, certificate, statement, statutes or similar document adopted, filed or registered in connection with the creation, formation, organization, or governance of an Entity, and any Contract among the equityholders, partners or members of an Entity, each in effect as of the date of this Agreement.

 

(uuu) “ Governmental Authorization ” means any Consent, franchise, license, permit (including Environmental Permits) or registration issued, granted, given or otherwise made available by or under the authority of any Governmental Body or pursuant to any Law.

 

(vvv) “ Governmental Body ” means any (i) nation, region, state, province, county, municipality, city, town, village, district or other jurisdiction, (ii) federal, state, provincial, local, municipal, foreign or other government, (iii) governmental or quasi-governmental authority of any nature (including any governmental agency, branch, department or other Entity and any court or other tribunal), (iv) multinational organization, (v) body exercising, or entitled to exercise, any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power of any nature or (vi) official of any of the foregoing.

 

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(www) “ Hazardous Substance ” means any hazardous material, contaminant, pollutant, or waste as defined by any Environmental Law or listed in any regulations as required by Environmental Laws, and includes but is not limited to any petroleum, petroleum products, petroleum by-products, petroleum-derived waste, oil, fuel oil, gas, explosives, reactive materials, ignitable materials, corrosive material, hazardous chemicals, hazardous waste, toxic substance, toxic chemicals, chemicals, metals or any derivatives of any such materials; radon, asbestos, methane gas, polychlorinated biphenyls, radioactive materials, and any other element, compound, mixture, solution, substance, material, waste, or the like which may pose a present or potential risk to human health, safety and the environment.

 

(xxx) “ HIPAA ” is defined in Section 3.13(j) .

 

(yyy) “ Implementing Agreements ” means the Bills of Sale, Business Transfer Agreements, Real Property Transfer Agreements, Share Transfer Documents, Intellectual Property Assignment Agreements and other agreements, documents and instruments to be executed by Seller, any Selling Subsidiary, Buyer or any of their respective Affiliates or Representatives, at or after the Closing for the purpose of consummating the Acquisition, but expressly not including any Ancillary Agreements.

 

(zzz) “ Indebtedness ” of any Person will mean, without duplication, (i) all obligations of such Person for money borrowed, (ii) all obligations of such Person evidenced by notes, debentures, bonds or other similar instruments for the payment of which such Person is responsible or liable, (iii) all obligations of such Person issued or assumed for deferred purchase price payments, (iv) all obligations of such Person under leases required to be capitalized in accordance with GAAP, as consistently applied by such Person, (v) all obligations of such Person for the reimbursement of any obligor on any letter of credit, banker’s acceptance, guarantees or similar credit transaction, in each case, that has been drawn or claimed against, (vi) all interest rate and currency swaps, caps, collars and similar agreements or hedging devices under which payments are obligated to be made by such Person, whether periodically or upon the happening of a contingency, (vii) all obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired by such Person (even though the rights and remedies of the seller or lender under such agreement in the event of default are limited to repossession or sale of such property), (viii) all obligations of another Person secured by an Encumbrance on any asset of such first Person, whether or not such Indebtedness is assumed by such first Person and (ix) any guaranty of, or any Indebtedness of any other Person excluding in all cases in clauses (i) through (ix) of this definition ordinary course trade payables and accrued Liabilities (including operating Leases) incurred in the Ordinary Course of Business, but only to the extent that such Liabilities are included as Current Liabilities in the determination of Working Capital.

 

(aaaa) “ Indefinite Items ” is defined in Section 8.1 .

 

(bbbb) “ Indemnified Person ” is defined in Section 8.7(a) .

 

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(cccc) “ Indemnifying Person ” is defined in Section 8.7(a) .

 

(dddd) “ Instruments Confidential Information ” is defined in Section 5.18(a) .

 

(eeee) “ Instruments Subsidiaries ” means the Standalone Subsidiaries and the Asset Selling Subsidiaries, but not any Joint Venture.

 

(ffff) “ Intellectual Property ” means all Copyrights, Internet Assets, Patents, Software, Trade Secrets, Trademarks and IP Licenses, and all rights to enforce the foregoing and collect damages related to such enforcement.

 

(gggg) “ Intellectual Property Assignment Agreements ” means the intellectual property assignment agreements relating to the Intellectual Property in the forms of Exhibit C .

 

(hhhh) “ Internet Assets ” means, as they exist anywhere in the world, domain names, Internet addresses and other computer identifiers, web sites, web pages and similar rights and items.

 

(iiii) “ Interim Balance Sheet ” is defined in Section 3.5 .

 

(jjjj) “ Inventory ” means, other than with respect to the Joint Ventures, (a) all inventory, raw materials and work-in-progress relating to the Business, and (b) any and all rights to the warranties received from suppliers with respect to such inventory (to the extent assignable) and related claims, credits, rights of recover and set off with respect thereto, in each case, net of existing reserves for shrinkage and obsolescence as determined consistent with past practices, but excluding LIFO reserves, if any.

 

(kkkk) “ IP Licenses ” means all licenses, sublicenses, distribution agreements, development agreements, research agreements, consent to use agreements, covenants not to sue and permissions, whether written or otherwise, including, the right to receive royalties or any other consideration relating to Copyrights, Internet Assets, Patents, Software, Trade Secrets and Trademarks.

 

(llll) “ Joint Venture Interests ” is defined in Section 3.4(a).

 

(mmmm) “ Joint Ventures ” are those entities listed on Section 1.2(mmmm) of Seller’s Disclosure Schedule in which Seller or a Share Selling Subsidiary owns an equity interest, but a portion of whose equity is owned by Persons other than Seller or a Share Selling Subsidiary.

 

(nnnn) “ Knowledge ” means, with respect to Seller, each Share Selling Subsidiary and each Asset Selling Subsidiary, the actual knowledge of each of: Scott Matthews, John Biggs, Rod Nesbit, John McKenna, John Vuono, Phil Martin, Stanley Alpert, Bob Thomas, John Turbeville, Dave Dolan, Chuck Gilstrap, Martha Bixby, Gene Urbinati, Steve Culmone, Bill Ridolfi and G. Harvey Dunn, in each case assuming the reasonable discharge of such person’s professional responsibility. Neither Seller, any Share Selling Subsidiary nor any Asset Selling Subsidiary or any of their Affiliates will be deemed to have knowledge (actual, constructive or otherwise) of any fact, event, condition or occurrence known or deemed to be known by any other Person other than as expressly set forth in the foregoing sentence.

 

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(oooo) “ Known Environmental Matters ” means (i) any Area of Concern identified on Environ’s Tables III-1 and III-2 for the Stratford, Connecticut Owned Real Property with respect to which Seller is required to undertake Remediation as part of the Transfer Act Work or the RCRA Work and (ii) any other environmental conditions that exist at the Closing Date with respect to which Seller is required to undertake Remediation as part of the Transfer Act Work or the RCRA Work.

 

(pppp) “ Law ” means any constitution, law, statute, treaty, rule, regulation, by-law, ordinance, code, binding case law, principle of common law or notice of any Governmental Body.

 

(qqqq) “ Leased Real Property ” is defined in Section 3.8(a) .

 

(rrrr) “ Liabilities ” includes liabilities or obligations of any nature, whether known or unknown, whether absolute, accrued, contingent, choate, inchoate or otherwise, whether due or to become due, and whether or not required to be reflected on a balance sheet prepared in accordance with GAAP, and expressly include accounts payable, payroll and other compensation, accrued liabilities and purchase Contracts.

 

(ssss) “ Licensed Intellectual Property ” means all Intellectual Property that is not Standalone Intellectual Property or Mixed Intellectual Property, but that is nevertheless Used in the conduct of the Business.

 

(tttt) “ Loss ” means any loss, Liability, damage, cost, deficiency or expense (including reasonable costs of investigation and defense, penalties and reasonable legal fees and costs), whether or not involving a third-party claim.

 

(uuuu) “ Material Adverse Effect ” means a material adverse effect on, or a material adverse change in the assets, liabilities, business, financial condition or operations of the Business, taken as a whole; provided , however , that a Material Adverse Effect will not be deemed to result from or arise out of (i) any change in the general economic conditions in the United States or any other country or region in which the Business operates which do not disproportionately impact the Business compared to other businesses in the same industry as the Business, (ii) any change in the securities, foreign exchange or other markets of the United States or any other country or region in which Business operates which do not disproportionately impact the Business compared to other businesses in the same industry as the Business in such jurisdiction, (iii) any change generally affecting businesses operating in the industries or markets in which the Business operates which do not disproportionately impact the Business compared to other businesses in the same industry as the Business, (iv) any change in the accounting requirements applicable to the Business, (v) the payment of any amounts due to, or the provision of any other benefits to, any officers or other employees under employment contracts, non-competition agreements, Seller Plans, Assumed Benefit Plans, severance arrangements or other arrangements in existence as of the date of this Agreement, (vi) the taking of any action by the Seller, any Asset Selling Subsidiary or any

 

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Share Selling Subsidiary which is expressly approved or consented to in writing by Buyer, (vii) any action taken by Buyer with the intention of willfully disrupting the operation of the Business following the date hereof through the Closing Date, or (viii) any breach of this Agreement by Buyer. References in this Agreement to dollar amount thresholds will not be deemed to be evidence of materiality or of a Material Adverse Effect. For the avoidance of doubt, a Material Adverse Effect shall not be deemed to have occurred solely as a result of the failure on the part of Seller, any Instruments Subsidiary or any Joint Venture to meet internal, published or other estimates, predictions, projections or forecasts of revenue, net income or any other measure of financial performance regarding the Business.

 

(vvvv) “ Material Contracts ” is defined in Section 3.10(a) .

 

(wwww) “ Mex HoldCo ” is defined in Section 5.9(b) .

 

(xxxx) “ Mixed Intellectual Property ” is defined in the definition of “Business Intellectual Property.”

 

(yyyy) “ Non-Transferred Employees ” is defined in Section 10.1 .

 

(zzzz) “ Non-Basket/Cap Items ” is defined in Section 8.1.

 

(aaaaa) “ Occupational Safety and Health Law ” means the Occupational Safety and Health Act (29 U.S.C. Section 651 et seq. ) and any state or local Law in effect as of the date of this Agreement designed primarily to provide safe and healthful working conditions and to reduce occupational safety and health hazards, and any Law of any foreign jurisdiction designed primarily to provide safe and healthful working conditions and to reduce occupational safety and health hazards.

 

(bbbbb) “ Off-the-Shelf Software ” means off-the-shelf personal computer software as such term is commonly understood, that is commercially available under non-discriminatory pricing terms on a retail basis for less than $500 per seat and $25,000 in the aggregate, and used solely on the desktop personal computers of the Business.

 

(ccccc) “ Order ” means any order, injunction, judgment, decree, ruling, assessment or arbitration award of any Governmental Body or arbitrator, and any Contract with any Governmental Body relating to compliance with Law.

 

(ddddd) “ Ordinary Course of Business ” means, with respect to any Person, an action taken by such Person if such action is consistent with the past practices of such Person.

 

(eeeee) “ Other Intellectual Property ” means any intellectual property owned by third parties that is (i) Used in the Business, Used to the conduct of the Business and (ii) is listed in Section 1.2(eeeee) of Seller’s Disclosure Schedule.

 

(fffff) “ Outside Date is defined in Section 5.10(b) .

 

(ggggg) “ Owned Real Property ” is defined in Section 3.8(b) .

 

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(hhhhh) “ Party ” and “ Parties ” is defined in the first paragraph of this Agreement.

 

(iiiii) “ Patents ” means, as they exist anywhere in the world, patents, patent applications and statutory invention registrations, designs and improvements described and claimed therein, patentable inventions and other patent rights (including any divisions, continuations, continuations-in-part, reissues, reexaminations, or interferences thereof, whether or not patents are issued on any such applications and whether or not any such applications are modified, withdrawn, or resubmitted), and all rights therein provided by international treaties or otherwise.

 

(jjjjj) “ Permitted Encumbrance ” means (i) mechanic’s, materialman’s or similar liens with respect to amounts that are not yet due and payable or that are being contested in good faith by appropriate Proceedings and reserved on the Closing Balance Sheet, (ii) liens for Taxes that are not yet due and payable or that are being contested in good faith by appropriate Proceedings and reserved on the Closing Balance Sheet, (iii) liens securing rental payments under capital lease arrangements, (iv) restrictions on the transferability of securities arising under applicable securities Laws, (v) restrictions arising under applicable zoning and other land use Laws that do not, individually or in the aggregate, (A) materially affect the use, operation or occupancy of the property subject thereto as currently used, operated or occupied or as intended to be used, operated or occupied or (B) materially reduce the fair market value of the real property subject thereto below the fair market value such real property would have had but for such Encumbrance, (vi) defects, easements, rights of way, restrictions, covenants, claims, subleases or similar items relating to real property that do not, individually or in the aggregate, (A) materially affect the use, operation or occupancy of the real property subject thereto as currently used, operated or occupied or as intended to be used, operated or occupied or (B) materially reduce the fair market value of the real property subject thereto below the fair market value such real property would have had but for such Encumbrance, (vii) statutory Encumbrances arising out of operation of Law with respect to a Liability incurred in the Ordinary Course of Business and which are not delinquent or are being contested in good faith or (viii) matters arising under the Governing Documents of any Joint Venture.

 

(kkkkk) “ Person ” refers to an individual or an Entity, including a corporation, share company, limited liability company, partnership, trust, association, Governmental Body or any other body with legal personality separate from its equityholders or members.

 

(lllll) “ Post-Signing Returns ” is defined in Section 5.15(a) .

 

(mmmmm) “ Pre-Closing Straddle Period ” means the portion of the Straddle Period that begins before the Effective Time and ends on the Effective Time.

 

(nnnnn) “ Pre-Closing Taxes ” is defined in Section 9.1(a) .

 

(ooooo) “ Prejudicial Event ” is defined in Section 8.7(b) .

 

(ppppp) “ Proceeding ” means any action, arbitration, audit, examination, investigation, hearing, litigation, suit or appeal (whether civil, criminal, administrative,

 

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judicial or investigative, whether formal or informal, and whether public or private) commenced, brought, conducted, heard by or before or otherwise involving any Governmental Body or arbitrator.

 

(qqqqq) “ Purchase Price ” is defined in Section 2.5 .

 

(rrrrr) “ RCRA ” is defined in the definition of “Environmental Law.”

 

(sssss) “ RCRA Work ” is defined in Section 5.14(d) .

 

(ttttt) “ Real Property ” is defined in Section 3.8(e) .

 

(uuuuu) “ Real Property Leases ” is defined in Section 3.8(d) .

 

(vvvvv) “ Real Property Transfer Agreement ” means the real property transfer agreement relating to the applicable U.S. portion of the Assets to be sold in the Acquisition in the forms of Exhibit D .

 

(wwwww) “ Reasonable Best Efforts ” means the commercially reasonable efforts that a prudent Person desirous of achieving a result would use in similar circumstances to ensure that such result is achieved expeditiously; provided , however , that a Person required to use its Reasonable Best Efforts will not be required to make any material change to its business, dispose of any material asset, expend material funds, incur any material burden or take actions that would result in a materially adverse change in the benefits to such Person under this Agreement and the Contemplated Transactions; provided , further , that a Person required to use its Reasonable Best Efforts hereunder will not be required to commence any litigation or offer or grant any accommodation (financial or otherwise) to any third party.

 

(xxxxx) “ Remediation ” means response action or corrective action required under (i) CERCLA, RCRA, the Connecticut Transfer Act or the Connecticut Remediation Standards Regulations, Regulations of Connecticut State Agencies 22a-133k-1-22a-133k-3, or other applicable or relevant and appropriate requirements of any Governmental Body as they apply to any Real Property transferred under this Agreement, and (ii) with respect to any foreign jurisdiction, any analogous remediation requirements as they apply to the use of Owned Real Property and Leased Real Property in Brazil and Germany as of the Closing Date.

 

(yyyyy) “ Reorganization ” is defined in Section 5.9(a) .

 

(zzzzz) “ Representative ” means, with respect to a particular Person, any director, officer, employee, agent, consultant, advisor, legal counsel, accountant or other representative of that Person.

 

(aaaaaa) “ Securities Act ” means the Securities Act of 1933, as amended.

 

(bbbbbb) “ Seller ” is defined in the first paragraph of this Agreement.

 

(cccccc) “ Seller 401(k) Plans ” is defined in Section 10.4(b).

 

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(dddddd) “ Seller Confidential Information ” is defined in Section 5.18(b) .

 

(eeeeee) “ Seller’s Disclosure Schedule ” means the disclosure schedule delivered pursuant to Article 3 by Seller to Buyer concurrently with the execution and delivery of this Agreement.

 

(ffffff) “ Seller’s Flexible Benefit Plans ” is defined in Section 10.2(b) .

 

(gggggg) “ Seller’s Indemnitor ” is defined in Section 8.2(b)(iii)(6) .

 

(hhhhhh) “ Seller Indemnitees ” is defined in Section 8.3 .

 

(iiiiii) “ Seller Plan ” means, as at the Closing Date, each Employee Benefit Plan maintained by or contributed to by Seller or any Selling Subsidiary or Instruments Subsidiary other than (i) a plan, program or arrangement required to be maintained or contributed to by the Laws of the non-U.S. jurisdiction in which the Employee is working or (ii) a governmental plan or program requiring the mandatory payment of social insurance Taxes or similar contributions to a governmental fund with respect to the wages of an Employee.

 

(jjjjjj) “ Selling Subsidiaries ” means Asset Selling Subsidiaries and Share Selling Subsidiaries.

 

(kkkkkk) “ Share Selling Subsidiaries ” are those subsidiaries of Seller listed in Section 1.2(kkkkkk) of Seller’s Disclosure Schedule, which subsidiaries own Shares, including Shares of Joint Ventures. Solely for purposes of this definition, Share Selling Subsidiaries includes Seller as owner of Shares in the Dresser-Nagano, Inc., a Delaware corporation, Joint Venture.

 

(llllll) “ Share Transfer Documents ” means any Share transfer documents in a form mutually and reasonably agreed between the parties relating to the sale of the Shares by the Share Selling Subsidiaries. Such agreements are solely intended to ensure compliance with local Laws relating to the transfer of the Shares and will not modify or alter the provisions of this Agreement.

 

(mmmmmm) “ Shares ” means the equity interests in Standalone Subsidiaries and the Joint Ventures owned by Seller and the Share Selling Subsidiaries, as described on Section 3.4 of Seller’s Disclosure Schedule.

 

(nnnnnn) “ Software ” means, as they exist anywhere in the world, computer software programs, including all source code, object code (to the extent of existing license or ownership rights), specifications, databases and documentation related to such programs. As used herein, the term “Software” shall not include “Off-the-Shelf Software.”

 

(oooooo) “ Standalone Intellectual Property ” is defined in the definition of “Business Intellectual Property.”

 

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(pppppp) “ Standalone Subsidiaries ” are the entities listed on Section 1.2(pppppp) of Seller’s Disclosure Schedule that operate a portion of the Business, but do not own Assets that are primarily used in unrelated businesses of Seller.

 

(qqqqqq) “ Straddle Period ” means any taxable period beginning on or before the Closing Date and ending after the Closing Date.

 

(rrrrrr) “ Stratford Business ” is defined in Section 5.12(b) .

 

(ssssss) “ Supply Agreement ” means an agreement between Seller and Buyer or its Affiliate relating to the sale of NGS temperature probes to Seller.

 

(tttttt) “ Tangible Personal Property ” means the furniture, equipment, machinery, supplies, materials, vehicles, spare parts, tools, office equipment, computer hardware, personal property and other tangible property (other than Inventories) owned or leased by Seller or any Asset Selling Subsidiary and used primarily in the Business.

 

(uuuuuu) “ Tangible Personal Property Leases ” means the leases relating to the Tangible Personal Property, so leased by any of Seller or any Asset Selling Subsidiary.

 

(vvvvvv) “ Tax ” or “ Taxes ” means all federal, state, provincial, local, foreign and other taxes, charges, fees, duties (including customs duties), levies or assessments, including income, gross receipts, net proceeds, alternative or add-on minimum, ad valorem, turnover, real and personal property (tangible and intangible), sales, use, goods and services, franchise, excise, value added, stamp, registration, leasing, lease, user, transfer, fuel, excess profits, occupational, interest equalization, windfall profits, severance, license, payroll, environmental, capital stock, disability, employee’s income withholding, other withholding, unemployment, social security (or similar) and estimated taxes that are imposed by any Governmental Body, and including any interest, penalties or additions to tax attributable thereto.

 

(wwwwww) “ Tax Indemnified Buyer Party ” or “ Tax Indemnified Buyer Parties ” is defined in Section 9.1(a) .

 

(xxxxxx) “ Tax Loss ” or “ Tax Losses ” is defined in Section 9.1(a) .

 

(yyyyyy) “ Tax Return ” means any report, return or other information required to be supplied to a Governmental Body in connection with any Taxes.

 

(zzzzzz) “ Tax Sharing Agreements ” is defined in Section 3.12(f) .

 

(aaaaaaa) “ Title Company ” is defined in Section 6.2(f) .

 

(bbbbbbb) “ Trade Secrets ” means, as they exist anywhere in the world, trade secrets, know-how, invention disclosures, processes, procedures, customer lists and personally-identifiable information, databases, confidential business information, concepts, ideas, designs, research or development information, techniques, technical information, specifications, operating and maintenance manuals, engineering drawings, methods,

 

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technical data, discoveries, modifications, extensions, improvements, and other proprietary information and rights (whether or not patentable or subject to copyright or mask work protection); provided , however , that “Trade Secrets” shall not include information which, at the time of Closing, is generally known within the industry or available in the public domain or readily ascertainable from information available in the public domain.

 

(ccccccc) “ Trademarks ” means, as they exist anywhere in the world, trademarks, service marks, trade dress, trade names, brand names, designs, logos, or corporate names, whether registered or unregistered, and all registrations and applications for registration thereof, and all goodwill associated therewith, and all rights therein provided by international treaties or otherwise.

 

(ddddddd) “ Transfer Act Work ” is defined in Section 5.12(b) .

 

(eeeeeee) “ Transferring Employee ” is defined in Section 10.1.

 

(fffffff) “ Transition Services Agreement ” means the transition services agreement relating to the Acquisition in the form included in Exhibit E .

 

(ggggggg) “ Union Pension Plans ” means, collectively, each of the following Seller Plans: (i) Dresser, Inc. Retirement Plan for Local Number 145 of International Brotherhood of Teamsters, Office Unit, Instrument Division, Stratford, Connecticut and (ii) Dresser, Inc. Retirement Plan for Local Number 145 of International Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America, Hourly Employees and Draftsmen, Instrument Division, Stratford, Connecticut.

 

(hhhhhhh) “ Unknown Environmental Matters ” means (i) any Areas of Concern at the Stratford Owned Real Property with respect to which Seller is not required to undertake Remediation as part of the Transfer Act Work or the RCRA Work, (ii) those matters identified as “Noteworthy Issues” in the July-August 2005 Environmental Reviews prepared by ENVIRON for the Owned Real Properties in São Paulo, Brazil, Ingolstadt, Germany, and Baesweiler, Germany, and (iii) any Key Issues from ENSR’s August 17, 2005 Memorandum regarding the São Paulo, Brazil Leased Real Property that Environ does not agree to include as additional Noteworthy Issues.

 

(iiiiiii) “ Use ” means to use, reproduce, prepare derivative works based upon, distribute, perform, display, make, have made, sell, offer to sell, export, import, license, sublicense and otherwise exploit.

 

(jjjjjjj) “ WARN ” means the Worker Adjustment and Retraining Notification Act, as amended.

 

(kkkkkkk) “ Working Capital ” means Current Assets minus Current Liabilities.

 

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ARTICLE 2

 

PURCHASE AND SALE; CLOSING

 

2.1 PURCHASE AND SALE OF ASSETS

 

On the terms and subject to the conditions of this Agreement, at the Closing (a) Seller will, and will cause each of its respective Selling Subsidiaries as applicable, to, sell, convey, assign, transfer and deliver to Buyer, all of the Assets existing as of the Closing Date (free and clear of all Encumbrances (other than Closing Permitted Encumbrances), and in the case of the Shares and the Joint Venture Interests, free and clear of all Encumbrances (other than restrictions on transferability of such securities under applicable securities Laws, and in the case of the Joint Venture Interests, matters arising under the Governing Documents of the Joint Ventures) and the Assumed Liabilities and (b) Buyer will (i) purchase, acquire and accept the Assets, (ii) accept, assume and agree to pay, perform or otherwise discharge when due the Assumed Liabilities, and (iii) pay to Seller the Purchase Price in accordance with Section 2.5 . The Purchase Price shall be paid to Seller without set off or other reduction for any transfer Taxes described in Section 9.5 . The Assets and Assumed Liabilities expressly exclude the Excluded Assets and Excluded Liabilities.

 

2.2 CLOSING

 

The Closing shall occur at the offices of Baker & McKenzie LLP, Houston, Texas, commencing at 10:00 a.m. Central Time five Business Days following the satisfaction or waiver of all conditions to the obligations of the Parties to consummate the Acquisition and other Contemplated Transactions required to be completed before Closing (other than conditions with respect to actions the respective Parties will take at the Closing itself) or such other date as the Parties may mutually determine; provided , however , that the Closing Date shall be no later than 90 calendar days from the date hereof, which date may be extended by either party for 30 days to ensure compliance with any Law required to complete, or to otherwise satisfactorily structure, the Reorganization on reasonable terms and conditions. All of the actions to be taken and documents to be executed and delivered at the Closing (under this Agreement and each of the Ancillary Agreements and Implementing Agreements) will be deemed to be taken, executed and delivered simultaneously, and no such action, execution or delivery will be effective until all are complete, except as specifically provided herein. The Closing will be deemed to be effective as of the Effective Time.

 

2.3 EXCLUDED ASSETS

 

(a) While the Buyer will acquire the Assets at the Closing, notwithstanding anything to the contrary contained in this Agreement, it is hereby acknowledged and agreed that Buyer will not acquire any right, title or interest in and to the Excluded Assets.

 

(b) Notwithstanding any other provision in this Agreement to the contrary, Seller will take and will cause the Share Selling Subsidiaries and Instruments Subsidiaries to take such action as is necessary or advisable for the applicable Person to transfer, on or prior to

 

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the Closing Date and effective as of the Effective Time (or earlier), the Excluded Assets owned by any of Seller or the Instruments Subsidiaries to Seller or Affiliates of Seller and the Excluded Liabilities for such consideration or for no consideration, as may be determined by Seller in its sole discretion and at its own cost and expense. After the Closing Date, Buyer will take all action (and will cause any Affiliates of Buyer (including the Standalone Subsidiaries) to take all action) reasonably requested by Seller to assist in the aforementioned transfer of the Excluded Assets and the Excluded Liabilities.

 

2.4 EXCLUDED LIABILITIES

 

Notwithstanding anything to the contrary contained in this Agreement, it is hereby acknowledged and agreed that Buyer will not assume or be responsible for, and will not be deemed to have assumed or become responsible for, and Seller and the Selling Subsidiaries, as the case may be, will retain and be solely responsible for, and will pay, perform and discharge, the Excluded Liabilities.

 

2.5 PURCHASE PRICE; PAYMENT

 

Buyer (on behalf of Buyer and its Affiliates) agrees to pay to Seller (on behalf of Seller and its Affiliates) at the Closing $38,750,000 in immediately available funds (which amount includes the portion of the purchase price allocable to the Assets transferred under the Business Transfer Agreements) (the “ Purchase Price ”) payable by wire transfer or delivery of other immediately available funds to one or more accounts as designated by Seller, which funds shall be allocated pursuant to Section 2.7 . The Purchase Price is subject to a post-Closing adjustment as set forth in Section 2.6 .

 

2.6 POST-CLOSING PURCHASE PRICE ADJUSTMENT

 

(a) Buyer will prepare a consolidated balance sheet (the “ Closing Balance Sheet ”) of the Business as of the Effective Time. Buyer will prepare the Closing Balance Sheet in accordance with GAAP and using Seller’s accounting policies and procedures applied on a basis consistent with the preparation of the Interim Balance Sheet. Buyer will deliver the Closing Balance Sheet to Seller within 60 Business Days after the Closing Date. In order to facilitate Seller’s review of the Closing Balance Sheet, Buyer will promptly provide Seller with calculations, work papers (subject to the execution of customary agreements to the extent requested by the preparer of such work papers) or other information compiled or prepared by Buyer or its Representatives in the preparation of the Closing Balance Sheet (including the results of any audit) and Buyer will make itself and its Representatives reasonably available to Seller and its Representatives to discuss such matters.

 

(b) Seller may object to the Closing Balance Sheet by delivering written notice of objection to Buyer within 20 Business Days following delivery of the Closing Balance Sheet prepared by Buyer. If Seller does not deliver written notice of objection to the Closing Balance Sheet prior to the expiration of the foregoing period, then the Closing Balance Sheet will be conclusive and binding on the Parties and the Working Capital reflected in the Closing Balance Sheet will be used in calculating the Adjustment Amount. Any notice of

 

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objection delivered by Seller must contain a reasonably detailed statement of the basis of all objections of Seller. Seller may not deliver more than one notice of objection and may not amend its initial notice of objection once it is delivered to Buyer.

 

(c) If Seller delivers a notice of objection to the Closing Balance Sheet in accordance with Section 2.6(b) , Seller and Buyer will act in good faith and use commercially reasonable efforts to resolve amongst themselves any objections raised by Seller. If they are unable to do so within 15 Business Days after Buyer’s receipt of Seller’s notice of objection, then the matters in dispute will be promptly submitted to Grant Thornton LLP, independent public accountants (the “ Accountants ”), for resolution. The Accountants will act as experts in accounting, and not as arbitrators, in connection with their resolution of the disputed matters submitted by Seller and Buyer. In the event the Accountants are not available, Seller and Buyer shall act in good faith to retain mutually acceptable independent public accountants to act as the Accountants for purposes of this Section 2.6 . Seller and Buyer shall execute any agreement(s) required by the Accountants to accept their engagement pursuant to this Section 2.6 .

 

(i) Seller and Buyer will each submit a written statement setting forth in reasonable detail their respective positions with respect to only the disputed matters set forth in Seller’s notice of objection. Seller and Buyer will furnish to the Accountants such work papers and other documents and information relating to the disputed issues as the Accountants may request and are available to that Party (or its independent public accountants). Seller and Buyer will not be afforded the opportunity to present to the Accountants materials relating to the remaining disputed matters or to discuss such matters with the Accountants unless the other party is present.

 

(ii) The Accountants will review only those disputed matters submitted for resolution by the Parties in accordance with Section 2.6(c)(i) and will base their review solely on the written statements prepared by the Parties and supporting documents provided by the Parties and not on an independent examination or audit of the financial or accounting records of the Business. In resolving any individual disputed matter, the Accountants may not assign a dollar amount or value to such matter that is more than the greatest amount or value, or less than the lowest amount or value, proposed by the Parties in their written statements submitted to the Accountants. The resolution by the Accountants of the issues in dispute, as set forth in a written notice to be delivered to Seller and Buyer by the Accountants, will be conclusive and binding on the Parties. Judgment may be entered upon the determination of the Accountants in any court having jurisdiction over the party against which such determination is to be enforced. Seller and Buyer will mutually revise the Closing Balance Sheet to reflect the resolution of the matters in dispute, and the Working Capital reflected in the revised Closing Balance Sheet will be used in calculating the Adjustment Amount.

 

(iii) Buyer and Seller will bear one-half of the cost of the Accountant’s fees and expenses. In the event that the engagement agreement(s) referred to in this Section 2.6(c) may require the Parties to be bound jointly and severally to the Accountants for those fees and costs, and in the event either Seller or Buyer pays to the Accountants any amount in excess of their Liability under this Section 2.6(c)(iii) , the

 

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other Party agrees to reimburse Seller or Buyer, as applicable, to the extent required to equalize the payments made by Seller and Buyer with respect to the fees and costs of the Accountants.

 

(d) On the 10th Business Day following (i) the expiration of the twenty (20) Business Day objection period in Section 2.6(b) , if Seller makes no objection, (ii) the resolution by Seller and Buyer of all of Seller’s objections pursuant to Section 2.6(c) or (iii) the date of the Accountants’ notice pursuant to Section 2.6(c)(ii) , as the case may be, if the Adjustment Amount is positive, Buyer will pay that amount to Seller, and if the Adjustment Amount is negative, Seller will pay that amount to Buyer. The Adjustment Amount will be paid by wire transfer to an account specified by Buyer (if the Adjustment Amount is negative) or Seller (if the Adjustment Amount is positive). The Adjustment Amount shall bear interest at a rate per annum equal to 1% over the “prime rate” (as announced by CitiBank, N.A. on the Closing Date) beginning on the Closing Date and ending on the date of payment.

 

(e) The Parties acknowledge and agree that the provisions of this Section 2.6 shall be the sole and exclusive remedies for the determination of Working Capital.

 

2.7 ALLOCATION

 

Seller, on its own behalf and on behalf of its Affiliates, and Buyer, on its own behalf and on behalf of its Affiliates, have agreed to the allocation of the Purchase Price among the Shares and Assets in accordance with Section 1060 of the Code, as set forth in Section 2.7 of Seller’s Disclosure Schedule, subject to such adjustment as may occur pursuant to Section 2.6 (the “ Allocation ”). Any such adjustment to the Purchase Price will be allocated in accordance with Section 1060 of the Code. Each of Seller and its Affiliates, on the one hand, and each of Buyer and its Affiliates, on the other, will (a) be bound by the Allocation for purposes of determining any Taxes, (b) prepare and file its Tax Returns, including IRS Form 8594, on a basis consistent with the Allocation, and (c) take no position inconsistent with the Allocation on any applicable Tax Return or in any Proceeding before any Governmental Body or otherwise. In the event that the Allocation is disputed by any Governmental Body, the Party receiving notice of the dispute will promptly notify the other Party concerning resolution of the dispute. Each of Seller and Buyer acknowledge that the Allocation was done on an arm’s length basis based upon a good faith estimate of fair market values of the Shares and Assets.

 

2.8 CLOSING DELIVERIES

 

(a) Upon the terms and subject to the conditions of this Agreement, at the Closing, Seller, for itself and as agent for the Selling Subsidiaries, will deliver or cause to be delivered to Buyer the instruments and documents set forth in Section 6.2 .

 

(b) Upon the terms and subject to the conditions of this Agreement, at the Closing, Buyer will deliver to Seller the following: (i) the Purchase Price, in accordance with Section 2.5 , and (ii) the instruments and documents set forth in Section 6.3 .

 

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2.9 CONSENTS

 

(a) Subject to Sections 5.10 , and 6.2(c) , there will be excluded from the Contemplated Transactions any Real Property Lease, Tangible Personal Property Lease, Assumed Contract, Governmental Authorization or other license or right which is not assignable or transferable without the Consent of any Person other than Seller, Buyer, or any of their respective Affiliates, to the extent that such Consent will not have been given prior to the Closing; provided , however , that at the Seller’s expense, each of Seller and Buyer will have the continuing obligation for a reasonable period not to exceed six months commencing on the Closing Date to use its Reasonable Best Efforts to endeavor to obtain all necessary Consents to the assignment thereof and, upon obtaining the requisite third party Consents thereto, such Real Property Leases, Tangible Personal Property Leases, Assumed Contracts, Governmental Authorizations, and other licenses and rights, if otherwise included in the Assets or the Contemplated Transactions, will be assigned to Buyer hereunder; provided , further , that after the Closing, the Parties will cooperate with each other, upon written request, (i) in endeavoring to obtain the requisite third party Consent(s) to the assignment thereof to Buyer, and (ii) if any such requisite Consent cannot be obtained, in endeavoring to obtain for Buyer a reasonable and lawful arrangement for such items that are material to the Business, which is designed to provide for Buyer the benefits thereof in some other manner.

 

(b) Subject to Section 6.2(c) , Buyer acknowledges that certain Consents to the Contemplated Transactions may be required from parties to the Real Property Leases, Tangible Personal Property Leases, Assumed Contracts, Governmental Authorizations, or other licenses or rights and that such Consents have not been and may not be obtained.

 

ARTICLE 3

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Buyer as follows:

 

3.1 ORGANIZATION; GOOD STANDING

 

Each of Seller, the Instruments Subsidiaries, the Share Selling Subsidiaries and the Joint Ventures is an Entity duly organized, validly existing and in good standing (to the extent such concept is applicable in the relevant jurisdiction) under the Laws of its respective jurisdiction of organization, with full power and authority to conduct its business as presently conducted, to own or use the properties that it purports to own or use and to perform all its obligations under this Agreement. With respect to the Business, each of Seller, the Instruments Subsidiaries and the Joint Ventures is duly qualified to do business and is in good standing (to the extent such concept is applicable in the relevant jurisdiction) in all jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification, except for those jurisdictions where the failure to be so qualified or in good standing would not be material.

 

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3.2 ENFORCEABILITY; NO CONFLICT

 

(a) Seller has full power and authority to execute and deliver this Agreement, and Seller and any of its Affiliates which will be a party to any Ancillary Agreement or Implementing Agreement have or will have on the Closing Date full power and authority to execute and deliver each Ancillary Agreement and Implementing Agreement to which it will be a party, and to perform its obligations hereunder and thereunder (as the case may be). Without limiting the generality of the foregoing, the board of directors of Seller has duly authorized the execution, delivery and performance of this Agreement by Seller and the consummation of the Contemplated Transactions. Seller does not require any additional corporate or stockholder approval for the execution, delivery and performance of this Agreement or the consummation of the Acquisition. Assuming due authorization, execution and delivery of this Agreement by Buyer, this Agreement constitutes a legal, valid and binding obligation of Seller, enforceable in accordance with its terms and conditions. Assuming due authorization, execution and delivery of the Ancillary Agreements and Implementing Agreements by Buyer or any of its Affiliates (as the case may be), each Ancillary Agreement and Implementing Agreement to be executed by Seller or any of its Affiliates, when delivered hereunder, will be duly and validly executed and delivered, and will constitute a legal, valid and binding obligation of Seller or its applicable Affiliates (as the case may be), enforceable in accordance with its terms and conditions. The foregoing representations and warranties are qualified to the extent enforcement of this Agreement, the Ancillary Agreements or the Implementing Agreements may be limited by (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or similar Laws affecting creditors’ rights generally and (ii) principles of equity affecting the availability of specific performance and other equitable remedies.

 

(b) The execution and delivery of this Agreement by Seller, the execution and delivery of the Ancillary Agreements and Implementing Agreements by Seller or any of its Affiliates (as the case may be), the performance of such agreements by any of the aforementioned, and the consummation of the Contemplated Transactions, do not (with respect to Seller) and will not (with respect to Seller and its Affiliates) (i) violate any provision of the Governing Documents of Seller or any of its Affiliates, as applicable, (ii) assuming compliance with the matters set forth in Sections 3.3 and 4.3 , and subject to Section 2.9 , violate, or result in the breach of, or constitute a default under, or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of Seller or any of its Affiliates under any Material Contract to which it is a party or to which any Assets are subject, (iii) assuming compliance with the matters set forth in Sections 3.3 and 4.3 , and subject to Section 2.9 , violate any Law applicable to Seller or any of its Affiliates, or any Order to which Seller or any of its Affiliates is subject, or (iv) result in the creation or imposition of any Encumbrance (other than Permitted Encumbrances) upon the Assets, except with respect to clauses (ii), (iii) and (iv) for violations, conflicts, breaches, defaults, terminations, cancellations, accelerations, modifications, revocations or suspensions that would not be material.

 

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3.3 SELLER CONSENTS AND APPROVALS

 

The execution and delivery of this Agreement by Seller and the execution and delivery of the Ancillary Agreements and Implementing Agreements by Seller and each of its Affiliates which are a party to such documents, and the performance of their respective obligations hereunder and thereunder, do not require on the part of Seller or any Affiliate of Seller any filing with, or clearance or Consent of, any Governmental Body or other Person, except (a) for filings, clearances or Consents, the failure of which to effect or obtain will not be material and (b) as set forth in Section 3.3 of Seller’s Disclosure Schedule.

 

3.4 CAPITALIZATION; TITLE TO SHARES

 

(a) The authorized and outstanding equity securities of each Standalone Subsidiary and Joint Venture are as set forth in Section 3.4 of Seller’s Disclosure Schedule. The Shares represent (i) all of the issued and outstanding shares of capital stock or equity interests in the Standalone Subsidiaries and (ii) the relevant percentage interest of all of the issued and outstanding shares or equity interests in each Joint Venture owned by Seller or its Affiliates (the “ Joint Venture Interests ”). All of the outstanding equity securities of each Standalone Subsidiary or the Joint Venture Interests owned by Seller or its Affiliates have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights (other than pursuant to the Governing Documents of any Joint Venture). Except as set forth in Section 3.4 of Seller’s Disclosure Schedule, there are no other shares of capital stock or other equity securities of any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture, authorized, issued, reserved for issuance or outstanding and no outstanding or authorized options, warrants, convertible or exchangeable securities, subscriptions, rights (including any preemptive rights), calls or commitments of any character whatsoever, relating to the capital stock of, or other equity or voting interest in, any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture requiring the issuance, delivery or sale of shares of capital stock of or equity interests in, any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture. Except as set forth in Section 3.4 of Seller’s Disclosure Schedule, there are no outstanding or authorized stock appreciation, phantom stock, profit participation or similar rights with respect to the capital stock of, or other equity or voting interest in, any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture. Neither any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture, has any authorized or outstanding bonds, debentures, notes or other indebtedness the holders of which have the right to vote (or convertible into, exchangeable for, or evidencing the right to subscribe for or acquire securities having the right to vote) with the stockholders or equityholders of any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture, on any matter. Except as set forth in Section 3.4 of Seller’s Disclosure Schedule, there are no Contracts to which any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture, to (x) repurchase, redeem or otherwise acquire any shares of capital stock of, or other equity or voting interest in, any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture or (y) vote or dispose of any shares of capital stock of, or other equity or voting interest in, any Standalone Subsidiary or, to Seller’s Knowledge, any Joint Venture. None of the Shares or other securities of any Standalone Subsidiary or Joint Venture owned by Seller or its Affiliates were issued in violation of any Law.

 

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(b) Each of the Share Selling Subsidiaries is the record and beneficial holder of, and has good and valid title to its respective Shares and Joint Venture Interests set forth opposite such Share Selling Subsidiary’s name on Section 3.4 of Seller’s Disclosure Schedule, free and clear of any Encumbrances (other than as set forth on Section 3.4 of Seller’s Disclosure Schedule, restrictions on transferability of such securities under applicable securities Laws and, in the case of the Joint Venture Interests, matters arising under the Governing Documents of the Joint Ventures) whatsoever and, on the Closing Date, subject to the Reorganization contemplated under Section 5.9 , will have good, valid and marketable title to such Shares and Joint Venture Interests, free and clear of all Encumbrances (other than restrictions on transferability of such securities under applicable securities laws and, in the case of the Joint Venture Interests, matters arising under the Governing Documents of the Joint Ventures). Upon delivery of the Shares and the Joint Venture Interests at the Closing Date as herein provided, the Buyer will acquire good and valid title thereto, free and clear of all Encumbrances (other than restrictions on transferability of such securities under applicable securities laws and, in the case of the Joint Venture Interests, matters arising under the Governing Documents of the Joint Ventures).

 

(c) Other than the Shares and the Joint Venture Interests, the Assets do not include any equity interests or capital stock of any Person.

 

3.5 FINANCIAL STATEMENTS

 

Seller has delivered to Buyer true and correct copies of: (a) an unaudited consolidated pro forma balance sheet of the Business as at December 31, 2004 (the “ Balance Sheet ”) and the related unaudited statement of income for the year then ended; and (b) an unaudited consolidated pro forma balance sheet of the Business as at July 31, 2005 (the “ Interim Balance Sheet ”) and the related unaudited statement of income for the seven months then ended (together, the “ Financial Statements ”). The Financial Statements present fairly, in all material respects, the financial condition, results of operations, assets and Liabilities of the Business as of the date of and the period referred to in such Financial Statements, all in accordance with GAAP. The Financial Statements have been prepared from and are in accordance with the books and records of the Business. The Financial Statements reflect the consistent application of GAAP through the periods involved, except as otherwise disclosed in Section 3.5 of Seller’s Disclosure Schedule or in the notes to such financial statements.

 

3.6 NO MATERIAL ADVERSE EFFECT

 

Since the date of the Interim Balance Sheet, no event has occurred or condition has arisen that has had, or would reasonably be expected to result in, individually or in the aggregate, a Material Adverse Effect.

 

3.7 ABSENCE OF CERTAIN CHANGES AND EVENTS

 

Since the date of the Interim Balance Sheet, Seller and the Instruments Subsidiaries have conducted the Business in all material respects in the Ordinary Course of Business and, except as set forth in Section 3.7 of Seller’s Disclosure Schedule, there has not been any action of the types described in Section 5.2 which had such action been taken after the date of this Agreement, would be in violation of such Section.

 

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3.8 PROPERTIES; ASSETS; ENCUMBRANCES

 

(a) “ Leased Real Property ” means all leased real properties, including the land, buildings and other improvements located thereon, used exclusively or primarily in connection with the Business, other than the Excluded Assets. Each parcel of Leased Real Property is listed in Section 3.8(a) of Seller’s Disclosure Schedule.

 

(b) “ Owned Real Property ” means those owned real properties used exclusively or primarily in connection with the Business, other than the Excluded Assets. Each Owned Real Property is set forth in Section 3.8(b) of Seller’s Disclosure Schedule.

 

(c) Owned Real Property . Except as set forth in Section 3.8(b) of Seller’s Disclosure Schedule, Seller or an Affiliate of Seller (as the case may be) is the owner of good, marketable and insurable fee title to each parcel of Owned Real Property and to all of the buildings, structures and other improvements located thereon, free and clear of all Encumbrances (other than Permitted Encumbrances). The Owned Real Property constitutes all of the real property owned by Seller, its Affiliates or any Instruments Subsidiary that is used exclusively in connection with the Business on the date hereof.

 

(d) Leased Real Property . Section 3.8(a) of Seller’s Disclosure Schedule sets forth a true, correct and complete schedule of all leases, subleases, licenses and other agreements (collectively, the “ Real Property Leases ”) under which Seller and each Instruments Subsidiary, as applicable, uses or occupies, or has the right to use or occupy, now or in the future, any Leased Real Property. Seller has heretofore delivered to Buyer true, correct and complete copies of all Real Property Leases (including all modifications, amendments and supplements thereto). Each Real Property Lease is valid, binding and in full force and effect, all rent and other sums and charges payable by Seller or any Instruments Subsidiary, as applicable, as tenant thereunder, are current, no notice of default or termination under any Real Property Lease is outstanding, no termination event or condition or uncured material default on the part of Seller or any Instruments Subsidiary, as applicable, or, to the best of Seller’s Knowledge, the landlord, exists under any Real Property Lease, and no event has occurred and no condition exists which, with the giving of notice or the lapse of time or both, would constitute such a material default or termination event or condition. Except as set forth in Section 3.8(a) of Seller’s Disclosure Schedule, Seller holds the leasehold estate under and interest in each Real Property Lease free and clear of all Encumbrances (other than Permitted Encumbrances).

 

(e) Entire Premises . All of the land, buildings, structures and other improvements used by Seller or any Instruments Subsidiary exclusively or primarily in connection with the Business are included in the Owned Real Property and the Leased Real Property (except as specifically excluded in the definition of “Excluded Assets”). The Leased Real Property and the Owned Real Property are hereinafter collectively referred to as the “ Real Property ”.

 

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(f) Space Leases . Except as set forth in Section 3.8(f) of Seller’s Disclosure Schedule, there are no leases, subleases, licenses or other agreements granting to any Person other than Seller or any Instruments Subsidiary any right to the possession, use, occupancy or enjoyment of the Real Property or any portion thereof.

 

(g) Condemnation . Neither Seller nor any Instruments Subsidiary has received notice, and neither Seller nor any Instruments Subsidiary has Knowledge, of any pending, threatened or contemplated condemnation proceeding affecting the Real Property or any part thereof or of any sale or other disposition of the Real Property or any part thereof in lieu of condemnation.

 

(h) Except as set forth in Section 3.8(h) of Seller’s Disclosure Schedule, Seller and each Instruments Subsidiary (as the case may be) has good title to or, in the case of material property the subject of a Tangible Personal Property Lease, a valid leasehold interest or license, or its reasonable equivalent outside the United States (subject to the terms of the relevant lease or license) in, all its Tangible Personal Property free and clear of all Encumbrances other than Closing Permitted Encumbrances.

 

3.9 INTELLECTUAL PROPERTY

 

(a) Section 3.9(a) of Seller’s Disclosure Schedule sets forth a true and complete list of all (i) registered, issued and applied for Patents, Trademarks, Copyrights and domain names, except for those domain names including in any part thereof the term “Dresser” or “dresser,” and (ii) material IP Licenses included in the Business Intellectual Property. At the Closing, Seller will deliver to Buyer correct and complete copies of all patents and patent applications, trademark registrations and applications, and licenses referenced on Section 3.9(a) of Seller’s Disclosure Schedule. Seller or one of its Affiliates is owner of the Business Intellectual Property, or Seller or one of its Affiliates otherwise has (or will have before Closing) the right to transfer or license, as applicable, the Business Intellectual Property and Licensed Intellectual Property to Buyer, and on or prior to Closing Seller shall obtain any Consents, or provide any notifications required, to transfer or license, as applicable, the Business Intellectual Property, Licensed Intellectual Property or Other Intellectual Property to Buyer. Seller or one of its Selling Subsidiaries, or one of the Joint Ventures listed on Section 1.2(mmmm) of Seller’s Disclosure Schedule is listed in the records of the appropriate United States, state or foreign Governmental Body as, the sole owner of record for each application and registration listed in Section 3.9(a) of Seller’s Disclosure Schedule. To Seller’s Knowledge, all such items of Business Intellectual Property are valid, subsisting, enforceable, in full force and effect, and have not been or are not, as applicable, cancelled, expired, abandoned or otherwise terminated, and payment of all renewal and maintenance fees in respect thereof, and all filings related thereto, have been duly made.

 

(b) Except as set forth in Section 3.9(b) of Seller’s Disclosure Schedule, there is no notice of any objection, opposition or claim being asserted by any Person with respect to the ownership, validity or enforceability of any Business Intellectual Property which in the aggregate would be material, and there are no Encumbrances (other than Permitted Encumbrances) on any Business Intellectual Property, which would be material.

 

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(c) Upon Closing, Buyer will acquire all right, title and interest, except for interests held by entities identified as Joint Ventures, in the (i) Standalone Intellectual Property and (ii) the Mixed Intellectual Property, subject to the grant back of a royalty-free, world-wide, transferable, license (with right to sublicense) in the form of the license attached as Exhibit F to Seller to use the Mixed Intellectual Property, as applicable, in Seller’s and its Affiliates’ businesses.

 

(d) Neither the Business Intellectual Property nor the Business (or its products or services) is currently subject to any (i) Proceeding related to intellectual property infringement or misappropriation claims which would be material or (ii) Order that would prevent Buyer from using any such Intellectual Property after Closing in substantially the same manner as used now by Seller and its Affiliates which would be material. Further, Seller has not received any notice alleging that any Business Intellectual Property or the Business (or its products or services) infringes or misappropriates the Intellectual Property rights of third parties which would be material.

 

(e) Since April 10, 2001, none of the Intellectual Property, business operations, products or services owned, used, developed, provided, sold, licensed, imported or otherwise exploited by Seller or any of the Selling Subsidiaries in connection with the Business, or made for, used or sold by or licensed to Seller or any of the Selling Subsidiaries by any Person in connection with the Business, nor the conduct of the Business infringes upon, misappropriates or otherwise violates any Intellectual Property rights of others, where such infringements, misappropriations, or violations would in the aggregate be material. Except as disclosed in Section 3.9(e) of Seller’s Disclosure Schedule, to Seller’s Knowledge, no Person is infringing upon or otherwise violating the Intellectual Property rights of Seller or any of the Selling Subsidiaries relating to the Business where such infringements or violations would in the aggregate be material.

 

(f) All of the rights of Seller and each of the Selling Subsidiaries in the material Business Intellectual Property are valid and enforceable. Each of Seller and the Selling Subsidiaries has taken all necessary and desirable actions to maintain and protect each item of material Business Intellectual Property owned or purported to be owned by Seller or any of the Selling Subsidiaries. Each of Seller and the Selling Subsidiaries has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets and the proprietary nature and value of the Business Intellectual Property. Each of Seller and the Selling Subsidiaries is reasonably prosecuting all Patent applications it has filed.

 

(g) Except as set forth in Section 3.9(g) of Seller’s Disclosure Schedule, it is not necessary for the Business to Use any Intellectual Property owned by any present or past director, officer, employee or consultant of Seller or any of the Selling Subsidiaries (or Persons Seller or any of the Selling Subsidiaries intends to hire).

 

(h) Section 3.9(h) of Seller’s Disclosure Schedule sets forth a true and complete list and description of all material Software Used in the Business. Promptly following consummation of the Contemplated Transactions, each of Seller and the Selling Subsidiaries will furnish all material documentation relating to the use, maintenance and operation of such Software, such documentation provided in the form it exists on the date hereof and

 

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immediately prior to the Closing. To Seller’s Knowledge, none of the Software owned by Seller or a Selling Subsidiary contains or requires use of any “open source” code, shareware or other software that is made generally available to the public without requiring payment of fees or royalties or does or may require disclosure or licensing of any such Software or any other Intellectual Property owned by Seller or a Selling Subsidiary.

 

(i) After Closing, Seller shall direct its outside intellectual property counsel to provide to Buyer, upon Buyer’s request, in a timely manner after such request is made by Buyer: (i) a paper docket with a listing of the patents and trademarks listed on Section 3.9(a) of Seller’s Disclosure Schedule with an indication of the date of the next action as docketed on the records of outside counsel in connection with said patents and trademarks; and (ii) an electronic version of the information stored in outside counsel’s docketing system for each of the patents and trademarks listed on Section 3.9(a) of Seller’s Disclosure Schedule. Seller makes no representation and provides no warranty with regard to the docketing or docketing program. Buyer acknowledges that Seller’s outside counsel will not be instructed to provide the docketing software itself or any translation software, but will be instructed only to provide the subject data in electronic form which may downloaded without modification or reprogramming from said counsel’s docketing system.

 

(j) After the consummation of the Contemplated Transactions, Buyer will own all right, title, and interest in and to or have a valid written license to Use all material Intellectual Property currently Used in the Business on functionally equivalent terms and conditions as Seller and its applicable Selling Subsidiaries enjoyed on the date hereof and immediately prior to such transactions. Seller has no Knowledge of any facts that would cause it to reasonably believe that the Contemplated Transactions (including the assignment by operation of law of any contract to the Buyer) would result in: (A) the granting by any of Buyer’s Affiliates of any rights or licenses to any Intellectual Property to any third party (including any covenant not to sue with respect to any Intellectual Property of Buyer or any Affiliate of Buyer) or (B) Buyer or any of its Affiliates being bound by any non-compete or other material restriction on the operation of any business of Buyer or its Affiliates.

 

3.10 MATERIAL CONTRACTS; NO DEFAULT

 

(a) Section 3.10 of Seller’s Disclosure Schedule lists each of the following Contracts (i) that is an Assumed Contract or (ii) to which any Standalone Subsidiary is a party or which their respective assets or properties are bound (collectively, the “ Material Contracts ”):

 

(i) Any Contract for the lease of personal property to or from any Person providing for lease payments in excess of $100,000 per annum;

 

(ii) Any Contract for the purchase or sale of raw materials, commodities, supplies, products, or other personal property, or for the furnishing or receipt of services, the performance of which will extend over a period of more than one year and involve consideration in excess of $100,000;

 

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(iii) Any Contract concerning a partnership, joint venture or similar arrangement, including between Seller or its Affiliates and any Joint Venture;

 

(iv) Any Contract containing a non-competition clause;

 

(v) Any Contract for the employment of any individual on a full-time, part-time, consulting, or other basis providing annual compensation in excess of $100,000, provided that for purposes of Section 3.10(b) , it shall be sufficient in cases where employment offer letters and standard consultant contracts have been used, to provide the form of such offer letters and standard consultant Contracts;

 

(vi) Any Contract under which there has been an advance or loan any other Person amounts in the aggregate exceeding $100,000;

 

(vii) Any Contract containing an obligation to indemnify any other Person for a potential value in excess of $50,000 other than in connection with the operation of the Business in the Ordinary Course of Business;

 

(viii) Any Contract containing a “most favored nation” or other similar provision;

 

(ix) Contracts (other than purchase orders) with the ten largest suppliers and Contracts with any customer or distributor who represents at least two percent of the revenue of the Business measured by dollar value for the twelve calendar months ended December 31, 2004;

 

(x) Contracts since April 10, 2001 for acquisitions of capital stock or assets of another Person (whether by merger, stock or asset purchase) that is included as part of the Assets or the Assumed Liabilities;

 

(xi) Contracts since April 10, 2001 regarding dispositions of any of the Assets or any assets of the Standalone Subsidiaries other than the sale of inventory in the Ordinary Course of Business or with a value less than $200,000;

 

(xii) Contracts entered into since April 10, 2001 involving any resolution or settlement of any actual or threatened litigation, arbitration, claim or other dispute with a value of greater than $100,000; and

 

(xiii) any Contract that is material to the operation of the Business.

 

(b) There have been delivered to Buyer true and complete copies of all of the Material Contracts (including any material amendments, modifications and supplements, thereto. Each such Contract is valid and in full force and effect and constitutes the legal, valid, and binding obligation of Seller and its Affiliates enforceable against Seller and its Affiliates, as applicable, and to Seller’s Knowledge, the other parties thereto, other than as may be limited by (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or similar Laws affecting creditors’ rights generally and (ii) principles of equity affecting the availability of specific performance and other equitable remedies.

 

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Neither Seller nor any of its Affiliates is in default in any material respect under any of such Contracts, nor does any condition exist that with notice or lapse of time or both would constitute such a material default thereunder. To the Knowledge of Seller, no other party to any such Contract is in default thereunder in any material respect nor does any condition exist that with notice or lapse of time or both would constitute such a material default thereunder. If under any circumstance a Contract of the type enumerated in Section 3.10(a) is not listed on Section 3.10 of Seller’s Disclosure Schedule, such failure to list shall not create any implication that it is not an Assumed Contract or that it is not material to the Business.

 

3.11 INSURANCE

 

Seller and the Instruments Subsidiaries are covered by valid, binding and currently effective insurance policies relating to the Business that are customary for companies in the same or similar lines of business and of similar size and financial condition. Seller has delivered a true and correct copy of the loss-runs for the Business for the period beginning on January 1, 2002 through December 31, 2004.

 

3.12 TAXES

 

(a) Except as set forth in Section 3.12 of Seller’s Disclosure Schedule, each of the Standalone Subsidiaries has filed all Tax Returns that it was required to file on or before the date of this Agreement (taking into account applicable extensions) and all such Tax Returns were correct and complete in all material respects. All Taxes shown as due on such Tax Returns have been paid and each Standalone Subsidiary has withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, stockholder, or other third party.

 

(b) The Standalone Subsidiaries have given or otherwise made available to Buyer true, correct and complete copies of all material Tax Returns, and Seller and the Standalone Subsidiaries have given or otherwise made available to Buyer true, correct and complete copies of all material examination reports and statements of deficiencies of, in each case, the Standalone Subsidiaries for all taxable periods, or transactions consummated, for which the applicable statutory periods of limitations have not expired.

 

(c) There are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or assessment or reassessment of, Taxes due from Seller or any of the Standalone Subsidiaries relating to the Business for any taxable period and no request for any such waiver or extension is currently pending, provided , however , that this sentence is limited to Seller’s Knowledge with respect to matters outside of the United States.

 

(d) No audit or other proceeding by any Governmental Body is pending or threatened in writing with respect to any Taxes relating to the Business due from or with respect to Seller or any of the Standalone Subsidiaries, no Governmental Body has given written notice of any intention to assert any deficiency or claim for additional Taxes relating to the Business against Seller or any of the Standalone Subsidiaries, and no claim in writing

 

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has been made by any Governmental Body in a jurisdiction where Seller or any Standalone Subsidiary does not file a Tax Return that the activities of the Business are or may be subject to taxation by that jurisdiction, and all deficiencies for Taxes relating to the Business asserted or assessed in writing against Seller or any of the Standalone Subsidiaries have been fully and timely paid, settled or properly reflected in the Balance Sheet, Interim Balance Sheet or the books and records maintained for the Business; provided , however , that this sentence is limited to Seller’s Knowledge with respect to matters outside of the United States.

 

(e) There are no Liens for Taxes relating to the Business upon the assets or properties of Seller or any of the Standalone Subsidiaries, except for statutory Liens for current Taxes not yet due.

 

(f) None of the Standalone Subsidiaries is a party to any agreement relating to the sharing, allocation or indemnification of Taxes, or any similar agreement, contract or arrangement, (collectively, “ Tax Sharing Agreements ”) or has any liability for Taxes of any Person (other than members of the affiliated group, within the meaning of Section 1504(a) of the Code, filing consolidated federal income tax returns of which Seller is the common parent under Treasury Regulation § 1.1502-6, Treasury Regulation § 1.1502-78 or similar provision of state, local or foreign law), as a transferee or successor, by contract, or otherwise.

 

(g) Notwithstanding anything to the contrary contained in this Agreement, the representations and warranties set forth in this Section 3.12 that relate to Taxes of Seller or any Asset Selling Subsidiary are made only to the extent that such Taxes (i) are or may become liens on the Assets or (ii) are or become a liability of Buyer.

 

(h) The Tax Laws of Brazil do not require the Buyer to withhold any Tax on the portion of the Purchase Price allocated to the Shares of Brazil HoldCo.

 

3.13 LABOR RELATIONS; EMPLOYEE BENEFITS

 

(a) Except as set forth in Section 3.13(a) of Seller’s Disclosure Schedule, to Seller’s Knowledge, in the United States, there are no Proceedings involving Seller, any Selling Subsidiary or Instruments Subsidiary and any of the Employees, or any association or group of Employees, relating to the employment, or termination of employment, of any Employee and outside the United States, there are no material Proceedings involving Seller, any Selling Subsidiary or Instruments Subsidiary and any of the Employees, or any association or group of Employees, relating to the employment, or termination of employment, of any Employee.

 

(b) Section 3.13(b) of Seller’s Disclosure Schedule sets forth a list of, and Seller has provided to Buyer a copy of, (i) each employment agreement with any Employee who is employed in the United States of America, except in cases where a standard offer letter was provided to the Employee, in such case, the form of standard offer letter satisfies the disclosure obligation and (ii) the form of employment agreement for each non-U.S. jurisdiction in which Employees are employed.

 

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(c) Except as set forth in Section 3.13(c) of Seller’s Disclosure Schedule, none of Seller or any Selling Subsidiary or Instruments Subsidiary is a party to any collective bargaining agreement or other labor union Contract (or similar Contract) applicable to the Employees. Seller has made available to Buyer copies of all such Contracts. With respect to any Employee, and except as set forth in Section 3.13(a) of Seller’s Disclosure Schedule, no complaint against Seller or any Selling Subsidiary or Instruments Subsidiary is currently pending before the National Labor Relations Board or the Equal Employment Opportunity Commission or before any similar entity in any country. With respect to the Business, no labor strike, labor dispute, organizing effort or material concerted work stoppage is pending or, to Sellers’ Knowledge, threatened, and since January 1, 2002 the Business has not experienced any such labor strike, labor dispute, organizing effort or material concerted work stoppage. Seller has made available to Buyer copies of any written material relating to the material personnel policies of Seller or any Selling Subsidiary or Instruments Subsidiary that are applicable to Employees.

 

(d) Each Seller Plan is listed in Section 3.13(d) of Seller’s Disclosure Schedule. Seller has delivered or made available to Buyer copies (or written description, if (i) not in writing or (ii) in cases where the non-U.S. plan will not be an Assumed Benefit Plan and Seller will not be replicating a substantially similar plan) of each Seller Plan and, to the extent applicable, copies of the related trust agreements, annuity contracts and all other funding instruments, the most recent annual report (Form 5500 including, if applicable, Schedule B thereto), determination or opinion letter issued by the Internal Revenue Service, the most recent summary plan description, summary of material modifications and any other material written communication (or a description of any material oral communications) by Seller or any Selling Subsidiary or Instruments Subsidiary to Employees concerning the extent of the benefits provided under any Seller Plan, audited financial statements, actuarial valuation reports (if applicable) and Form 990.

 

(e) With respect to any Employee, other than routine claims for benefits and except as set forth in Section 3.13(e) of Seller’s Disclosure Schedule, no lawsuits or complaints to or by any Person or Governmental Body have been filed or made against any Seller Plan or against any of Seller or any Selling Subsidiary or Instruments Subsidiary in respect of any Seller Plan or, to Sellers’ Knowledge, against any other person or party in respect of any Assumed Benefit Plan and, to Sellers’ Knowledge, no such lawsuits or complaints are contemplated, threatened or reasonably likely to occur. No individual who has performed services for the Business has been improperly excluded from participation in any Seller Plan.

 

(f) All contributions required to be made by Seller or any Selling Subsidiary or Instruments Subsidiary to each Assumed Benefit Plan under the terms of such Assumed Benefit Plan or applicable Law have been timely made.

 

(g) Each Assumed Benefit Plan materially complies with the requirements of applicable Law.

 

(h) Each Union Pension Plan has received a favorable determination letter from the Internal Revenue Service and has been maintained in material compliance with its terms

 

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and with the applicable requirements of Law and to Sellers’ Knowledge, there has been no event or occurrence which should preclude each Union Pension Plan from being qualified under Code Section 401(a).

 

(i) Seller and each Selling Subsidiary or Instruments Subsidiary is not, and do not expect to be, in respect of any of the Assets, subject to any lien pursuant to Section 412(n) of the Code or Title IV of ERISA.

 

(j) Except as set forth in Section 3.13(j) of Seller’s Disclosure Schedule, with respect to any Employee, neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated hereby will (either alone or in combination with another event) (i) result in any payment becoming due, or increase the amount of any compensation due to such Employee; (ii) increase any benefits otherwise payable under any Seller Plan; (iii) result in the acceleration of the time of payment or vesting of any such compensation or benefits; (iv) result in the payment of any amount or the provision of any benefit that could, individually or in combination with any other such payment or benefit, constitute an “excess parachute payment,” as defined in Section 280G(b)(1) of the Code; or (v) result in a violation of the privacy requirements of the Heath Insurance Portability and Accountability Act of 1996 (“ HIPAA ”) and the regulations promulgated thereunder, in this regard, the Transition Services Agreement shall comply with Section 11.3(c) and the parties shall enter into a HIPAA Business Associate agreement, if necessary to comply with HIPAA.

 

(k) Seller and each Selling Subsidiary or Instruments Subsidiary has no plan, contract or commitment, whether written or oral or legally binding or not, to create any additional Employee Benefit Plans that are intended to cover Employees or, except as may be required by applicable Law or as required under this Agreement, to modify any Seller Plan in a manner that could affect the benefits provided to any Employees thereunder.

 

(l) With respect to the Business, Seller and each Selling Subsidiary or Instruments Subsidiary has not incurred any Liability under WARN or the regulations promulgated thereunder, or any similar state or local law, which remains unsatisfied.

 

(m) Each Seller 401(k) Plan has received a favorable determination letter from the Internal Revenue Service and has been maintained in material compliance with its terms and with the applicable requirements of Law and to Sellers’ Knowledge, there has been no event or occurrence which should preclude each Seller 401(k) Plan from being qualified under Section 401(a) of the Code. There is no stock of Seller invested in the Seller 401(k) Plans and no assets in the Seller 401(k) Plans are invested in guaranteed investment contracts (“ GIC ”).

 

3.14 ENVIRONMENTAL, HEALTH AND SAFETY MATTERS

 

(a) To Seller’s Knowledge, and except as set forth in Section 3.14(a) of Seller’s Disclosure Schedule, the Business and the Assets are, and have been since April 10, 2001, in material compliance with, and are not subject to any material Liability under, any Environmental Law. All Environmental Permits listed in Section 5.13(a) of Seller’s

 

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Disclosure Schedule are in full force and effect and each of Seller and each Instrument Subsidiary is, and since April 10, 2001 has been, in compliance in all material respects with such Environmental Permits. No Governmental Proceeding is pending nor, to Seller’s Knowledge, is there any threat by any Governmental Body to cancel, modify or fail to renew any such Environmental Permits.

 

(b) Except as set forth in Section 3.14(b) of Seller’s Disclosure Schedule, neither Seller nor any Selling Subsidiary has received any written notice from any Governmental Body or any other Person regarding (i) any actual, alleged or potential violation or failure to comply with any Environmental Law, Environmental Permit or Occupational Safety and Health Law with respect to the Business and the Assets; (ii) any actual, alleged or potential obligation on the part of Seller or any Selling Subsidiary to undertake, or to bear all or any portion of the cost of, any Remediation of any nature or any other Liability under any Environmental Law, Environmental Permit or Occupational Safety and Health Law; or (iii) any actual, alleged or potential third-party claim under any Environmental Law or Occupational Safety and Health Law.

 

(c) Except as set forth in Section 3.14(c) of Seller’s Disclosure Schedule, there are no pending or, to Seller’s Knowledge, threatened Proceedings arising under any Environmental Law with respect to the Business and the Assets or affecting any of the Leased Real Property or Owned Real Property.

 

(d) To Seller’s Knowledge, Seller and the Selling Subsidiaries have delivered or made available to Buyer copies of all material reports, studies, analyses, tests or monitoring data (collectively, “ Environmental Reports ”) in the possession or control of Seller or any Selling Subsidiary pertaining to the environmental condition of the Leased Real Property or Owned Real Property or the compliance of the Business or the Assets with Environmental Law. A list of Environmental Reports made available to Buyer is set forth in Section 3.14(d) of Seller’s Disclosure Schedule. Seller does not represent or warrant the accuracy or completeness of any Environmental Reports or whether the Environmental Reports comply with any applicable U.S. or Foreign Environmental Laws or are based on prevailing standards and methodologies.

 

(e) To Seller’s Knowledge, and except as set forth in Section 3.14(e) of Seller’s Disclosure Schedule, the Business and the Assets are, and have been since April 10, 2001, in material compliance with, and are not subject to any material Liability under, any Occupational Safety and Health Law.

 

(f) Except as set forth in Section 3.14(f) of Seller’s Disclosure Schedule, there are no pending or, to Seller’s Knowledge, threatened Proceedings arising under any Occupational Safety and Health Law with respect to the Business and the Assets or affecting any of the Leased Real Property or Owned Real Property.

 

(g) The Parties agree that the only representations and warranties of Seller as to any matters, compliance, claims, conditions, or permits relating to Environmental Law or Occupational Safety and Health Law are those contained in this Sections 3.14 . Without limiting the generality of the foregoing, Buyer specifically acknowledges that the representations and warranties contained in Sections 3.15 , 3.16 and 3.22 do not relate to such matters.

 

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3.15 COMPLIANCE WITH LAWS

 

(a) The Business is, and for the last 3 years has been, in compliance in all material respects with all Laws applicable to the ownership of the Assets and operation of the Business, to the extent applicable to it and no material action, Proceeding, investigation, complaint, demand or notice has been filed or commenced, or to Seller’s Knowledge, threatened against Seller, any Share Selling Subsidiary or any Instrument Subsidiary alleging any failure to so comply.

 

(b) Buyer acknowledges and agrees that no representation or warranty is made pursuant this Section 3.15 with respect to compliance with (i) Laws relating to Taxes and Tax Returns, as to which the exclusive representations and warranties of Seller are set forth in Section 3.12 , (ii) ERISA, the Code and other Laws relating to the Seller Plans, as to which the exclusive representations and warranties of Seller are set forth in Section 3.13 , (iii) Laws relating to employment practices, terms and conditions of employment, equal employment opportunity, nondiscrimination, immigration, wages, hours, benefits, collective bargaining and plant closing, as to which the exclusive representations and warranties of Seller are set forth in Section 3.13 , or (iv) Environmental Laws or Occupational Safety and Health Laws, as to which the exclusive representations and warranties of Seller are set forth in Section 3.14 .

 

3.16 PROCEEDINGS

 

Except as set forth in Section 1.2(ooo)(iii) or 3.16 of Seller’s Disclosure Schedule, there is no Proceeding at law or in equity or any arbitration, administrative or other Proceeding pending, or, to Seller’s Knowledge, threatened, involving the Business, the Assets or the Assumed Liabilities or the Instrument Subsidiaries. Except as set forth in Section 1.2(ooo)(iii) or 3.16 of Seller’s Disclosure Schedule, neither the Business, any Instrument Subsidiary or the Assets is subject to any Order. There is no claim or Proceeding or, to Seller’s Knowledge, governmental investigation pending or, to Seller’s Knowledge, threatened against Seller or the Business by or before any court or Governmental Body that would have or would reasonably be expected to impede the ability of Seller, the Asset Selling Subsidiaries or the Share Selling Subsidiaries to complete the Acquisition in any respect.

 

3.17 BROKERS OR FINDERS

 

Other than with respect to UBS Investment Bank, neither Seller nor any Selling Subsidiary, nor any of their respective Representatives, has incurred any Liability for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with the Contemplated Transactions.

 

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3.18 CUSTOMERS, DISTRIBUTORS AND SUPPLIERS

 

(a) Section 3.18(a) of Seller’s Disclosure Schedule sets forth the names of the ten largest suppliers of the Business (measured by dollar value for the twelve calendar months ended December 31, 2004). None of such suppliers has notified Seller or any Instruments Subsidiary in writing (including by e-mail) that it is (i) canceling or terminating its relationship with the Business, or (ii) materially modifying its relationship with the Business.

 

(b) Section 3.18(b) of Seller’s Disclosure Schedule sets forth the names of the current suppliers of the Business with whom Seller or any Instruments Subsidiary has had a dispute (whether written or oral) with a value in excess of $125,000 at any time during the last two years.

 

(c) None of the customers and distributors who, individually, represent at least two percent of the revenue of the Business (measured by dollar value for the twelve calendar months ended December 31, 2004) has notified Seller or any Instruments Subsidiary in writing (including by e-mail) that it is (i) canceling or terminating its relationship with the Business, or (ii) materially modifying its relationship with the Business.

 

(d) Section 3.18(d) of Seller’s Disclosure Schedule sets forth the names of the customers and distributors of Business with whom Seller or any Instruments Subsidiary has had a dispute (whether written or oral) in excess of $125,000 at any time during the last two years.

 

3.19 WARRANTIES; PRODUCT CLAIMS

 

All of the products manufactured, sold, leased, and delivered by the Business have conformed in all material respects with applicable Contracts and all warranties applicable to the Business and such products at the time of such manufacture, sale, lease or delivery. Neither Seller nor any Instruments Subsidiary has any material Liability for products manufactured since April 10, 2001 for replacement or repair thereof or other damages in connection therewith, subject only to the reserve for product warranty claims that will be set forth on the face of the Closing Balance Sheet. Seller has provided Buyer with copies of the standard terms and conditions of sale or lease for each Instruments Subsidiary. Except as set forth in Section 1.2(ooo)(iii) or 3.16 of the Seller’s Disclosure Schedule, during the past three years, there have been no product liability claims, or Proceedings relating to products or services manufactured, sold or provided by the Business, nor, to Seller’s Knowledge, has any such claim, or Proceeding been threatened, nor does any circumstance exist that would reasonably be expected to result in any of the foregoing for any material Liability. Section 3.19 of Seller’s Disclosure Schedule sets forth all product liability claims of the Business claiming in excess of $100,000 settled during the past three years.

 

3.20 TITLE, CONDITION AND SUITABILITY OF ASSETS

 

(a) Seller and the Asset Selling Subsidiaries at the Closing will have the power and right to deliver to Buyer all of the Assets free and clear of all Encumbrances other than Closing Permitted Encumbrances, and in the case of the Shares and the Joint Venture

 

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Interests, free and clear of all Encumbrances (other than restrictions on transferability of such securities under applicable securities Laws, and in the case of the Joint Venture Interests, matters arising under the Governing Documents of the Joint Ventures).

 

(b) The Assets, taken as a whole: (i) constitute all the material assets and properties used or held for use in connection with the Business; (ii) are in good and working order (subject to normal wear and tear); and (iii) include all personal property of Seller necessary to conduct the Business in substantially the same manner as presently conducted by Seller.

 

3.21 ACCOUNTS RECEIVABLE

 

All Accounts Receivable have arisen in the Ordinary Course of Business, represent valid obligations payable to Seller and the Instruments Subsidiaries and, subject only to reserves for bad debts calculated in a manner consistent with the Instruments Subsidiaries’ past practices, have been collected or are collectible in the aggregate recorded amounts thereof in accordance with their terms.

 

3.22 PERMITS

 

Section 3.22 of Seller’s Disclosure Schedule sets forth a true and correct list of permits that relate to the Business or any of the Assets (other than the Joint Ventures) the failure of which to have would impair the conduct, use or operation or ownership thereof (the “ Business Permits ”). All such Business Permits are in full force and effect and each of Seller, and each Instrument Subsidiary is in compliance in all material respects with such Business Permit. No governmental Proceeding is pending nor, to Seller’s Knowledge, is there any threat by any Governmental Body to cancel, modify, or fail to renew any such Business Permit.

 

3.23 AFFILIATE TRANSACTIONS

 

Except as set forth on Section 3.23 of Seller’s Disclosure Schedule or as it relates to (a) the Joint Ventures, (b) employment relationships or (c) the payment of compensation in the Ordinary Course of Business, no Affiliate of Seller (other than any Instrument Subsidiary or any Joint Venture) is a party to, or the beneficiary of, any Assumed Contract or transaction material to the conduct or operation of the Business, including any Contract providing for any loans, advances, the employment of, furnishing of services by, rental of its assets from or to, or otherwise requiring payments to or from, any such Person in excess of $50,000.

 

3.24 FOREIGN CORRUPT PRACTICES ACT AND INTERNATIONAL TRADE SANCTIONS

 

Since April 10, 2001, and except as set forth in Section 1.2(ooo)(iii) of Seller’s Disclosure Schedule, neither Seller, nor any Instruments Subsidiaries, nor any of their respective directors, officers, agents, employees or any other persons acting on behalf of the Business has, in connection with the operation of the Business, (i) used any corporate or

 

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other funds for unlawful contributions, payments, gifts or entertainment, or made any unlawful expenditures relating to political activity, to government officials, candidates or members of political parties or organizations, or established or maintained any unlawful or unrecorded funds in violation of Section 104 of the Foreign Corrupt Practices Act of 1977, as amended, or any other similar applicable foreign, Federal, state or provincial Law, (ii) paid, accepted or received any unlawful contributions, payments, expenditures or gifts, or (iii) violated or operated in noncompliance with any export restrictions, anti-boycott regulations, embargo regulations or other applicable domestic or foreign Laws.

 

3.25 NO UNDISCLOSED LIABILITIES/DEBT

 

(a) Neither Seller nor the Instruments Subsidiaries have any material Liabilities with respect to the Business, that constitute Assumed Liabilities, other than (i) Liabilities reflected in the Financial Statements, (ii) Liabilities accruing after the date of the Interim Balance Sheet in the Ordinary Course of Business or in accordance with this Agreement, or (iii) Liabilities otherwise specifically identified in this Agreement or in the schedules to the Closing Balance Sheet.

 

3.26 INVESTMENT COMPANY

 

Seller is not and is not controlled by or affiliated with an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

 

3.27 PRIVATE OFFERING

 

No form of general solicitation or general advertising was used by Seller, the Share Selling Subsidiaries or their representatives in connection with the offer or sale of the Shares.

 

3.28 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES

 

EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE 3 OR IN THE IMPLEMENTING AGREEMENTS, NEITHER SELLER NOR ANY OF ITS AFFILIATES MAKES ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, RELATING TO THE SHARES, ASSETS, ASSUMED LIABILITIES, INSTRUMENTS SUBSIDIARIES, THE BUSINESS OR ANY OTHER MATTER, INCLUDING SOLELY WITH REGARD TO ANY NON-SHARE ASSETS, ANY REPRESENTATION OR WARRANTY AS TO MERCHANTABILITY, HABITABILITY, WORKMANSHIP, PROFITABILITY, FUTURE PERFORMANCE, FITNESS FOR A PARTICULAR PURPOSE OR NON-INFRINGEMENT, AND THE PURCHASE AND SALE OF THE NON-SHARE ASSETS AND ASSUMED LIABILITIES IS BEING MADE ON AN “AS IS, WHERE IS” BASIS.

 

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ARTICLE 4

 

REPRESENTATIONS AND WARRANTIES OF BUYER

 

Buyer represents and warrants to Seller as follows:

 

4.1 ORGANIZATION; GOOD STANDING

 

Buyer is an Entity duly organized, validly existing and in good standing under the Laws of its jurisdiction of organization, with full power and authority to conduct its business as presently conducted, to own or use the properties that it purports to own or use and to perform all its obligations under this Agreement. Buyer is newly-formed and has no prior history. Buyer is (and each of its Affiliates participating in the Contemplated Transactions will be on the Closing Date) duly qualified to do business and is in good standing in all jurisdictions in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such qualification.

 

4.2 ENFORCEABILITY; NO CONFLICT

 

(a) Buyer has full power and authority to execute and deliver this Agreement, and Buyer and any of its Affiliates which will be a party to any Ancillary Agreement or Implementing Agreement will have full power and authority to execute and deliver each Ancillary Agreement and Implementing Agreement to which it will be a party, and to perform its obligations hereunder and thereunder (as the case may be). Without limiting the generality of the foregoing, the board of directors or other managing or governing body or Person of Buyer has duly authorized the execution, delivery and performance of this Agreement by Buyer and the consummation of the Contemplated Transactions. Assuming due authorization, execution and delivery of this Agreement by Seller, this Agreement constitutes a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms and conditions. Assuming due authorization, execution and delivery of the Ancillary Agreements and Implementing Agreements by Seller or any of its Affiliates (as the case may be), each Ancillary Agreement and Implementing Agreement to be executed by Buyer or any of its Affiliates, when delivered hereunder, will be duly and validly executed and delivered, and will constitute a legal, valid and binding obligation of Buyer or its Affiliates (as the case may be) enforceable in accordance with its terms and conditions. The foregoing representations and warranties are qualified to the extent enforcement of this Agreement, the Ancillary Agreements or the Implementing Agreements may be limited by (i) applicable bankruptcy, insolvency, moratorium, reorganization, fraudulent conveyance or similar Laws affecting creditors’ rights generally and (ii) principles of equity affecting the availability of specific performance and other equitable remedies.

 

(b) The execution and delivery of this Agreement by Buyer, the execution and delivery of the Ancillary Agreements and Implementing Agreements by Buyer and its Affiliates (as the case may be), the performance of such agreements by any of the aforementioned, and the consummation of the Contemplated Transactions, do not and will not (i) violate any provision of the Governing Documents of Buyer or any of its Subsidiaries, (ii) assuming compliance with the matters set forth in Sections 3.3 and 4.3 , and subject to

 

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Section 2.9 , violate, or result in the breach of, or constitute a default under, or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of Buyer or any of its Subsidiaries under any Contract to which it is a party or to which any of its properties or assets are subject, or (iii) assuming compliance with the matters set forth in Sections 3.3 and 4.3 , and subject to Section 2.9 , violate any Law applicable to Buyer or any of its Affiliates, or any Order to which Buyer or any of its Affiliates is subject, except with respect to clauses (ii) or (iii), for violations, conflicts, breaches, defaults, terminations, cancellations, accelerations, modifications, revocations or suspensions that would not be material.

 

4.3 BUYER CONSENTS AND APPROVALS

 

The execution and delivery of this Agreement by Buyer and the execution and delivery of the Ancillary Agreements and Implementing Agreements by Buyer and each of its Affiliates which are a party to such documents, and the performance of their respective obligations hereunder and thereunder, do not require on the part of Buyer, or any Affiliate of Buyer, any filing with, or clearance or Consent of, any Governmental Body or other Person, except as set forth in Section 4.3 of Buyer’s Disclosure Schedule.

 

4.4 PROCEEDINGS

 

There are no pending Proceedings against or, to Buyer’s knowledge, threatened against Buyer or any of its Affiliates that challenge, or that are reasonably likely to have the effect of preventing, restraining, delaying, prohibiting, making illegal or otherwise interfering with, the Acquisition or any other Contemplated Transaction, the carrying out of this Agreement, including the Acquisition and the other Contemplated Transactions or any of the Ancillary Agreements or Implementing Agreements or otherwise would not, individually or in the aggregate, have a Buyer Material Adverse Effect.

 

4.5 SUFFICIENT FUNDS

 

Buyer has available or has access to, and on the Closing Date will have immediately available funds necessary to consummate all of Buyer’s obligations under this Agreement, the Ancillary Agreements and the Implementing Agreements that are required to be consummated at Closing.

 

4.6 PURCHASE FOR OWN ACCOUNT; ACCREDITED INVESTOR

 

Buyer represents and warrants that it is acquiring the Shares pursuant to the terms and conditions of this Agreement for Buyer’s own account and for investment purposes only and not with a view towards, and Buyer has no present intention, agreement or arrangement regarding, the distribution, transfer, assignment, resale or subdivision of the Shares. Buyer represents that it is experienced in investment matters, fully understands the Contemplated Transactions, has the knowledge and experience in financial matters as to be capable of evaluating the merits and risks of its investment in the Shares and has had the financial ability and resources to bear the economic risks of its investment in the Shares. Buyer represents that it is an “Accredited Investor” as that term is defined in Rule 501 of Regulation D of the Securities Act.

 

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4.7 BROKERS OR FINDERS

 

Neither Buyer nor any of its Representatives has incurred any Liability for brokerage or finders’ fees or agents’ commissions or other similar payment in connection with the Contemplated Transactions.

 

ARTICLE 5

 

COVENANTS

 

5.1 ACCESS AND INVESTIGATION

 

(a) Between the date of this Agreement and the Closing, upon reasonable advance notice from Buyer, Seller will, and will cause the Instruments Subsidiaries to, (i) afford Buyer and its Representatives reasonable access, during normal business hours, to the properties, books, records, employees, consultants, advisors (including accountants and, to the extent available, relevant work papers) and Contracts of Seller and each Instruments Subsidiary relating to the Business, and (ii) furnish such Persons with copies of all such written information relating to the Business as Buyer may reasonably request; provided , however , no aspect of Buyer’s and its Representatives’ investigation pursuant to this Section 5.1 may unreasonably interfere with the operations of Seller or any of its Affiliates, subsidiaries or Joint Ventures, including, but not limited to, with respect to the Business. The foregoing covenant will not require Seller or any of its Affiliates, subsidiaries or Joint Ventures to provide Buyer or its Representatives with access to any document or other information that Seller believes in good faith upon advice of counsel may be covered by any attorney-client privilege, the work product doctrine or subject to restrictions under any applicable Laws (including antitrust, privacy or similar Laws). The foregoing covenant will not require Seller or any Instruments Subsidiaries to permit Buyer or its Representatives to conduct any Phase II or other invasive environmental testing procedures, including conducting soil, ground water, air emissions or other testing relating to any of the facilities on, or any of, the Leased Real Property or Owned Real Property. None of Buyer nor any of its Representatives shall contact (i) any customers, suppliers or Joint Venture partners relating to the Business (other than in connection with bona fide, non-Acquisition related business purposes) without Seller’s prior consent (not to be unreasonably withheld, conditioned or delayed) or (ii) Seller’s or its Affiliates’ employees without the prior consent of Seller (not to be unreasonably withheld, conditioned or delayed).

 

(b) All information received by Buyer or its Representatives and given by or on behalf of Seller or any of its Affiliates or subsidiaries in connection with this Agreem