ASSET PURCHASE AGREEMENT

Exhibit 10.1

 

[Execution Version]

 

 

ASSET PURCHASE AGREEMENT

 

by and among

 

REMY INTERNATIONAL, INC.,

 

UPC ACQUISITION CORP.,

 

UNIT PARTS COMPANY,

 

GHKR, INC.,

 

GHKR SRL,

 

AURRA INDUSTRIES, INC.,

 

QAPI S.A de C.V.,

 

UNIT PARTS COAHUILA S.A. de C.V.

 

PRESTADORA de SERVICIOS JALISCO S.A. de C.V,

 

THE STOCKHOLDER OF

 

UNIT PARTS COMPANY

 

and

 

THE OTHER PARTIES HERETO

 

 

Dated February 25, 2005

TABLE OF CONTENTS

 

 

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(continued)

 

 

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TABLE OF CONTENTS

(continued)

 

 

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EXHIBITS

 

ASSET PURCHASE AGREEMENT

 

THIS ASSET PURCHASE AGREEMENT (this “ Agreement “) is made and entered into as of February 25, 2005, by and among Remy International, Inc., a Delaware corporation (“ Parent “), UPC Acquisition Corporation, a Delaware corporation (“ Remy ,” collectively, Parent and Remy are sometimes referred to herein as the “ Buyers “), Unit Parts Company, a Delaware corporation (“ UPC “), GHKR, Inc., a Nevada corporation and wholly owned subsidiary of UPC (“ GHKR “), GHKR SRL, a company organized under Costa Rican law and wholly owned subsidiary of GHKR (“ GHKR (Costa Rica) “), QAPI S.A. de C.V., a company organized under Mexican law (“ QAPI “), Unit Parts Coahuila S.A. de C.V., a company organized under Mexican law (“ Coahuila “), Prestadora de Servicios Jalisco S.A. de C.V., a company organized under Mexican law, (“ Prestadora “), Aurra Industries, Inc., an Oklahoma corporation (“ Aurra “), Vollbrecht Family Investments, a Limited Partnership, a Texas limited partnership and the sole stockholder of UPC, (the “ Stockholder “), Jack Vollbrecht, Thomas Vollbrecht, Robin Constantine and Stephen Constantine (the “ Other Selling Stockholders , “ collectively, the Stockholder and the Other Selling Stockholders are sometimes referred to herein as the “ UPC Stockholders “) and Jack Vollbrecht, as the Sellers Representative. Each of UPC, GHKR, GHKR (Costa Rica) and Aurra are hereinafter sometimes referred to individually as a “ Seller “ and collectively as the “ Sellers “. Each of QAPI, Coahuila and Prestadora are sometimes hereinafter referred to individually as an “ Acquired Subsidiary “ and collectively as the “ Acquired Subsidiaries “. The Sellers and the Acquired Subsidiaries are sometimes hereinafter referred to as a “ Company “ and collectively as the “ Companies “.

 

RECITALS

 

A. The Stockholder owns all of the issued and outstanding shares of common stock, $100.00 par value per share, of UPC. Stockholder is the direct or indirect owner of all of the issued and outstanding shares of common stock of each other Company.

 

B. The Sellers engage in the business of manufacturing and selling new and remanufactured alternators and starters to the original equipment market and aftermarket for the automotive industry (the “ Business “). The Buyers desire to purchase substantially all of the assets, properties and rights of the Business, and the Sellers desire to sell such assets, properties and rights on the terms and subject to the conditions set forth in this Agreement.

 

AGREEMENTS

 

NOW, THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained herein and for other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and upon the terms and subject to the conditions hereinafter set forth, the parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I.

THE TRANSACTION

 

1.1. Sale and Purchase of Assets .

 

(a) Subject to the terms and conditions of this Agreement, the Sellers shall sell, assign, transfer, deliver and convey to the Buyers or Buyers’ assignees or designees pursuant to Section 10.3 of this Agreement and Buyers shall purchase from Sellers, the Acquired Assets, free and clear of all Encumbrances of every kind, nature and description (except for the Permitted Encumbrances referred to in Section 3.8) for the Purchase Price specified below in Section 1.4

 

(b) As used herein, the term “ Acquired Assets “ means all of the Sellers’, the UPC Stockholders’ or any of their Affiliates’ (as defined in Section 11.1), except the Acquired Subsidiaries’, right, title, and interest in, under and to all of the assets, properties and rights constituting, or primarily used or held primarily for use in, the Business as a going concern of every kind, nature and description existing on the Closing Date, wherever such assets, properties and rights are located and whether such assets, properties and rights are real, personal or mixed, tangible or intangible, and whether or not any of such assets, properties and rights have any value for accounting purposes or are carried or reflected on or specifically referred to in the Sellers’, the UPC Stockholders’ or any of their Affiliates’, except the Acquired Subsidiaries’, respective books or financial statements, except for the Excluded Assets, including, without limitation, all of the assets, properties and rights of the Business enumerated below:

 

(i) owned and leased real property, leaseholds and subleaseholds therein, together with all fixtures, fittings, buildings, structures and other improvements erected thereon, and easements, rights of way, water lines, uses, licenses, hereditaments, tenements, privileges and other appurtenances thereto (such as appurtenant rights in and to public streets), as more particularly described in Schedule 1.1(b)(i) hereto (the “ Real Estate “);

 

(ii) all machinery, equipment motor vehicles (including trucks, tractors and trailers), goods, furnishings, jigs, tools, dies, furniture, fixtures, office equipment, office supplies, production and other supplies and spare and repair parts, tools, stores, rolling stock and other tangible personal property, whether located at or on the Real Estate, in transit or otherwise, including all such property more particularly described in Schedule 1.1(b)(ii) hereto;

 

(iii) all inventory, whether located at or on the Real Estate, in transit, at customer locations or otherwise, including finished goods and consigned goods, work-in-process, supplies, storehouse stocks, raw materials, scrap, containers, and spare parts (collectively, the “ Inventory “);

 

(iv) accounts, notes, and other receivables;

 

(v) all cash and cash equivalents in transit, in hand or in bank accounts and all prepaid and similar items, including without limitation, expenses, advance payments, deferred charges, deposits, rights of offset and other prepaid items;

 

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(vi) Intellectual Property, goodwill, licenses and sublicenses granted and obtained with respect thereto, and rights and remedies against infringements thereof, and rights to protection of interests therein under the laws of all jurisdictions, including all such property more particularly described on Schedule 1.1(b)(vi) hereto;

 

(vii) subject to Sections 1.2 and 1.3 hereof, all rights under (a) contracts, agreements and instruments (written or oral) relating to the sale of any assets, services, properties, materials or products, including all customer, operating, distribution and sales representative contracts; (b) orders, contracts, supply agreements, manufacturing agreements and other agreements relating to the purpose of any assets, services, properties, materials, or products; and (c) all other contracts, agreements, and instruments (oral or written), including in each case all the Material Contracts (as defined in Section 11.13 hereto) (collectively, the “ Contracts “);

 

(viii) to the extent transferable, the Permits;

 

(ix) books, records, ledgers, files, documents (including originally executed copies of all Contracts), correspondence, Tax Returns, memoranda, forms, lists, plats, architectural plans, drawings, and specifications, new product development materials, creative materials, marketing, advertising, sales and promotional materials, studies, reports, whether in hard copy or magnetic format, in each instance, to the extent relating to, or otherwise material to the conduct of, the Acquired Assets, the Business or the Transferring Employees;

 

(x) all capital stock of the Acquired Subsidiaries;

 

(xi) to the extent transferable, all rights or choses in action whether arising out of occurrences before or after the Closing Date, including third party warranties and guarantees and other similar contractual rights as to third parties held by or in favor of Seller, any Stockholder or any of their Affiliates, other than the Acquired Subsidiaries, with respect to any of the Acquired Assets; and

 

(xii) all rights to insurance and condemnation proceeds relating to the damage, destruction or impairment of assets, properties or other rights described in this Section 1.1(b), which damage, destruction or impairment occurs on, prior to or after the Closing.

 

(c) Excluded Assets . Notwithstanding any other provision of this Agreement, the Sellers shall retain and the Acquired Assets shall not include the following assets (collectively, the “ Excluded Assets “):

 

(i) all of the rights, claims or causes of action of the Sellers against third parties to the extent they relate to the Retained Liabilities (as hereinafter defined);

 

(ii) any claim, right or interest of the Sellers in and to any refund of Taxes of any kind relating to any period prior to the Closing Date;

 

(iii) the Sellers’ stock books, minute books and other similar records; and

 

(iv) any assets listed on Schedule 1.1(c) hereto.

 

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1.2. Assumption of Certain Liabilities .

 

(a) Subject to the terms and conditions of this Agreement, except as otherwise specifically provided in this Section 1.2 (including in respect of the Retained Liabilities, as set forth in paragraph (b) below), on the Closing Date, the Buyers will assume and agree to pay, discharge or perform, as appropriate, the following specific liabilities and obligations of the Sellers (the “ Assumed Liabilities “):

 

(i) all executory liabilities and obligations of the Sellers arising under or relating to any Contract, including liabilities or obligations under any Contract arising in the ordinary course of business where the payment, discharge, fulfillment, or performance of such liability or obligation would normally occur after the Closing, except that the Buyers shall not assume or agree to pay, discharge or perform any liabilities or obligations arising out of any breach or default (including for this purpose any event which, with notice or lapse of time would constitute such a breach or default) by the Sellers, the UPC Stockholders or any of their Affiliates of any provision of any Contract, including liabilities or obligations arising out of the Sellers’, the UPC Stockholders’ or any of their Affiliates’ failure to perform any Contract in accordance with its terms prior to the Closing;

 

(ii) the accounts payable (other than the Retained Payables) of the Business as of the Closing Date and the accrued liabilities of the Business as of the Closing Date, in each case solely to the extent reflected on the Balance Sheet or incurred in the ordinary course of business consistent with past practice since the Balance Sheet Date;

 

(iii) the liabilities and obligations expressly assumed by the Buyers pursuant to Section 5.13 hereof;

 

(iv) the excess, if any, of (i) any and all federal and state income Taxes of the Sellers that are incurred in connection with the receipt of $14,000,000 cash (the “ Net Cash Amount “) by the Sellers and the Stockholder in connection with the receipt of the Net Cash Amount by the Sellers and the distribution of the Net Cash Amount to the Stockholder over (ii) the federal and state income Taxes that would have been incurred by the Stockholder if the Stockholder had received such Net Cash Amount directly from the Buyers in exchange for the stock of UPC (the “ Assumed Tax Liabilities “); provided that for purposes of determining the Taxes incurred in connection with the Net Cash Amount, the value of the Earn Out shall be disregarded; and

 

(v) Any ad valorem taxes, property taxes or similar taxes related to the Acquired Assets which taxes are not yet due and payable as of the Closing even if the same may relate to periods prior to the Closing.

 

(b) The Buyers shall not assume any liabilities, commitments or obligations (known or unknown, contingent or absolute and whether or not determinable as of the Closing) of the Sellers, the UPC Stockholders or any of their Affiliates, other than the Acquired Subsidiaries, except for the Assumed Liabilities as specifically and expressly provided for above, whether such liabilities or obligations relate to payment, performance or otherwise, and all

 

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liabilities, commitments or obligations (known or unknown, contingent or absolute and whether or not determinable as of the Closing) not expressly transferred to the Buyers hereunder as Assumed Liabilities are being retained by the Sellers, the UPC Stockholders or their Affiliates (the “ Retained Liabilities “), who shall remain liable therefor unconditionally and without right of set-off. Each of the Sellers and the UPC Stockholders, on behalf of itself and its or their Affiliates, hereby irrevocably and unconditionally waives and releases the Buyers from all Retained Liabilities, including any Retained Liabilities created by statute or common law.

 

Without limitation to the foregoing, all of the following shall be considered Retained Liabilities and not Assumed Liabilities (except as specified below) for the purposes of this Agreement:

 

(i) except as set forth in Section 1.2(a)(v), any Taxes (i) attributable to the Sellers’ ownership of the Acquired Assets or operation of the Business for all taxable periods (or portions thereof) ending on or before the Closing Date (subject to the proration of certain Taxes as set forth in Section 5.11) or (ii) for which the Sellers may be otherwise liable for any taxable period prior to the Closing, including by reason of (A) being a successor to another person, (B) being a party to a tax sharing, tax indemnity or similar agreement, or (C) being a member of a consolidated, combined or unitary group of corporations for tax purposes;

 

(ii) any liabilities or obligations for any bank or other funded debt of the Sellers, the UPC Stockholders or any of their Affiliates, other than the Acquired Subsidiaries, including, without limitation, the loans, notes and indebtedness, obligations and liabilities of the Sellers, the UPC Stockholders or any of their Affiliates, other than the Acquired Subsidiaries, to Bank of Oklahoma, N.A., Local Oklahoma Bank, N.A., Massachusetts Mutual Life Insurance Company, C.M. Life Insurance Company, J. Romeo & Co., Principal Life Insurance Company and any transferees, but excluding obligations of the Companies arising under the POS Contracts;

 

(iii) any liability or obligation with respect to compensation or employee benefits of any nature owed to any employees, former employees, agents or independent contractors of the Sellers, the UPC Stockholders or any of their Affiliates, whether or not employed by the Buyers after the Closing, that (A) arises out of or relates to the employment or service provider relationship (including the termination of such employment or service provider relationship) between the Sellers, the UPC Stockholders or such Affiliates and any such individuals, (B) arises out of or relates to any Benefit Plan (including any grant of stock options or Company sponsored option plan) or (C) arises out of or relates to events or conditions occurring on or before the Closing Date, that are not explicitly assumed by Buyers under Section 5.13 hereof;

 

(iv) any liability or obligation with respect to any grant of stock options by any Company or option plan sponsored by any Company;

 

(v) any liability or obligation of the Sellers, the UPC Stockholders or their Affiliates, arising or incurred in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, and fees and expenses of counsel, accountants, brokers, finders and other experts;

 

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(vi) any liability or obligation of the Sellers, the UPC Stockholders or any of their Affiliates existing as a result of any act, failure to act or other state of facts or occurrence which constitutes a breach or violation of the Sellers’ representations, warranties and covenants contained in this Agreement or the other Ancillary Agreements;

 

(vii) any Environmental Liability except as set forth on Schedule 1.2(b)(vii) (as defined in Section 11.8);

 

(viii) any liability of the Sellers or the Business to the UPC Stockholders or any of their Affiliates incurred prior to the Closing, including any intercompany payables or receivable credits;

 

(ix) any liability under applicable bulk transfer laws, or similar statutes, laws or regulations; provided , that the Buyers shall be responsible for the payment of any Transfer Taxes relating to the purchase of the Acquired Assets;

 

(x) any liability or obligation with respect to the payment of certain accounts payable of the Business as of the Closing Date to be identified by the Buyers not less than three business days prior to Closing in an amount equal to $10,000,000 (the “ Retained Payables “); or

 

(xi) any other liability of the Sellers, the UPC Stockholders or their Affiliates, other than the Acquired Subsidiaries, whatsoever, including any liability arising out of or relating to the Excluded Assets, the ownership or operation of the Acquired Assets and the Business on or prior to the Closing Date (including any predecessor operations), including any claims, obligations or litigation arising out of or relating to events or conditions occurring on or before the Closing Date (including the threatened or pending litigation set forth on Schedule 3.12 hereto), regardless of when made or asserted, except for the Assumed Liabilities as specifically and expressly set forth herein.

 

1.3. Consent of Third Parties . On the Closing Date, the Sellers will assign to the Buyers, and the Buyers will assume, the Contracts which are to be transferred to the Buyers as and to the extent provided in this Agreement by means of the Assignment and Assumption Agreement referred to in Section 2.2. To the extent that the assignment of all or any portion of any Contract shall require the consent of the other party thereto or any other third party, this Agreement and the Assignment and Assumption Agreement shall not constitute an agreement to assign any such Contract included in the Acquired Assets if an attempted assignment without any such consent would constitute a breach or violation thereof. In order, however, to provide the Buyers the full realization and value of every Contract of the character described in the immediately preceding sentence, the Sellers agree that on and after the Closing, they will, at the request and under the direction of the Buyers, in the name of the Sellers or otherwise as the Buyers shall specify, take all reasonable actions (including the appointment of the Buyers or any of their Affiliates as attorney-in-fact for the Sellers) and do or cause to be done all such things as shall in the reasonable opinion of the Buyers or its counsel be necessary or proper (a) to assure that the rights of the Sellers under such Contracts shall be preserved for the benefit of or transferred or issued to the Buyers and (b) to facilitate receipt of the consideration to be received by the Sellers in and under every such Contract, which consideration shall be held for the benefit

 

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of, and shall be delivered to, the Buyers. Nothing in this Section 1.3 shall in any way diminish the Sellers’ obligations under Section 5.5 with regard to consents and approvals and to take all such other actions prior to or at Closing as are necessary to enable the Sellers to convey or assign good and marketable title free and clear of Encumbrances (other than Permitted Encumbrances) to all the Acquired Assets to the Buyers.

 

1.4. Purchase Price; Payment .

 

(a) Purchase Price . The aggregate purchase price for all of the Acquired Assets purchased by Remy pursuant to Section 1.1 and the non-compete arrangements contemplated hereby (the “ Purchase Price “) shall consist of (i) cash in an aggregate amount equal to the Net Cash Amount plus $10,000,000 (the “ Aggregate Cash Amount “); plus (ii) the aggregate amount required to pay the Repaid Indebtedness (as defined in Section 1.4(b)) of the Companies on the Closing Date, which amount shall not exceed $30,000,000 (the Aggregate Cash Amount and the cash payment required pursuant to this Section 1.4(a)(ii) is referred to herein as “Closing Cash Consideration“; plus (iii) the potential right to receive additional cash consideration in accordance with the terms and conditions of Exhibit 1.4A attached hereto (the “ Earn Out “); plus (iv) the assumption by the Buyers of the Assumed Liabilities.

 

(b) Repaid Indebtedness . It is contemplated by the Parties that, upon the Closing, all indebtedness of the Companies outstanding immediately prior to the Closing and expressly set forth on Schedule 1.4(b) will be fully repaid (the “ Repaid Indebtedness “). To facilitate such repayment, no less than three (3) days prior to the Closing Date, the Sellers shall obtain payoff letters for all Repaid Indebtedness of the Companies, which payoff letters shall indicate the amount necessary to repay such creditors in full and that such creditors have agreed to release all Encumbrances in respect of such Repaid Indebtedness relating to the assets and properties of the Companies upon receipt of the amounts indicated in such payoff letters. Subject to the satisfaction of all of the conditions, covenants and obligations of the Sellers and the Companies to be satisfied prior to the Closing, in connection with the Closing, the Sellers and the Companies hereby instruct the Buyers to make the payments referenced in such payoff letters on the Closing Date to discharge the Indebtedness covered thereby.

 

(c) Payments . At the Closing, Remy shall pay to the Sellers (i) the Net Cash Amount, by wire transfer of immediately available funds to the account that has been designated by the Sellers to Remy at least three days prior to the Closing and (ii) $10,000,000 of the Aggregate Cash Amount, by wire transfer of immediately available funds to an account in the Sellers name, which amount shall be used solely to pay the Retained Payables.

 

1.5. Allocation .

 

(a) The consideration paid by the Buyers to the Sellers shall be allocated among the Acquired Assets and the non-compete arrangements in accordance with the principles set forth on Schedule 1.5 (the “ Allocation Principles “). Within forty-five (45) days following the Closing, the Buyers shall deliver to the Sellers a proposed final allocation schedule (the “ Allocation Schedule “) prepared in accordance with the Allocation Principles. Within 21 days following receipt of the Allocation Schedule, the Sellers shall notify the Buyers of any disputed amounts or items with respect to the Allocation Schedule, and the Buyers and the Sellers shall

 

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attempt in good faith to promptly resolve such disputes. If the Buyers and the Sellers are unable to resolve such disputes within 21 days following the Sellers’ delivery of notice of any disputed items, such disputed items shall be submitted to Deloitte & Touche (such independent accounting firm being herein referred to as the “ Third Accounting Firm “), which shall, within 30 days after such submission, determine and report to the parties upon such remaining disputed amounts, and such report shall be final, binding and conclusive on the parties hereto with respect to the amounts disputed; provided that any such final determination shall be in accordance with the Allocation Principles. The fees and disbursements of the Third Accounting Firm shall be allocated between the Buyers and the Sellers so that the Sellers’ share of such fees and disbursements shall be in the same proportion that the aggregate amount of such remaining disputed amounts so submitted by the Sellers to the Third Accounting Firm that is unsuccessfully disputed by the Sellers (as finally determined by the Third Accounting Firm) bears to the total amount of such remaining disputed amounts so submitted by the Sellers to the Third Accounting Firm, with all remaining fees to be paid by Buyers.

 

(b) The Buyers and the Sellers shall each report the federal, state and local income and other Tax consequences of the transactions contemplated by this Agreement (which for purposes of this Agreement includes the Transaction Documents) in a manner consistent with the final allocation as determined pursuant to Section 1.5(a), including the preparation and filing of Form 8594 under the Code (or any successor form or successor provision of any future Tax law, or any comparable provision of state, or local tax law) with their respective Tax returns for the taxable year that includes the Closing Date and shall not take any position contrary thereto in connection with any amended return.

 

(c) The Buyers shall pay the fees and expenses of the Buyers’ accountants (the “ Buyers’ Accountants “) incurred in connection with this Section 1.5. The Sellers agree to cooperate, and agree to cause PricewaterhouseCoopers (“ Sellers’ Accountants “) to cooperate, with the Buyers and the Buyers’ Accountants in connection with the preparation of the Allocation Schedule and related information, and shall provide to the Buyers and the Buyers’ Accountants books, records and information as may be reasonably requested from time to time. The Sellers shall pay the fees and expenses of the Sellers’ Accountants incurred in connection with this Section 1.5.

 

ARTICLE II.

CLOSING

 

2.1. Closing Date . The closing of the transactions contemplated hereby (the “ Closing “) shall take place at the offices of Dechert LLP in Philadelphia, Pennsylvania at 9:30 a.m. EST on the later of March 17, 2005 and the second business day following the satisfaction of all of the conditions set forth in Articles VI and VII , or at such other place, time or date as Buyers and the Sellers may agree in writing (such time and date being referred to herein as the “ Closing Date “). For financial accounting and tax purposes, to the extent permitted by Law, the Closing shall be deemed to have become effective as of 12:01 a.m. on the Closing Date.

 

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2.2. Closing Deliveries .

 

(a) Deliveries by the Sellers and the Stockholder . At the Closing, the Sellers and the UPC Stockholders, as the case may be, shall deliver or cause to be delivered the following to Buyers:

 

(i) assignments of all transferable or assignable Contracts, Intellectual Property, Permits (including Environmental Permits), and warranties relating to the Acquired Assets, each duly executed and, where necessary or desirable, in recordable form substantially in the form of Exhibit 2.2A hereto (the “ Assignment and Assumption Agreement “);

 

(ii) a bill of sale and instrument of assignment to the Acquired Assets, duly executed by the Sellers, substantially in the form of Exhibit 2.2B hereto (the “ Bill of Sale “);

 

(iii) the shares of the capital stock of the Acquired Subsidiaries, duly endorsed for transfer or accompanied by duly executed stock transfer powers, free and clear of all Encumbrances (as hereinafter defined).

 

(iv) the Sellers’ Closing Certificates (as such term is defined in Section 6.3 );

 

(v) the UPC Stockholders’ Closing Certificates (as such term is defined in Section 6.3 );

 

(vi) title certificates to any motor vehicles or other certificated assets included in the Acquired Assets, duly executed by the Sellers (together with any other transfer forms necessary to transfer title to such vehicles);

 

(vii) special warranty deeds for the Owned Real Estate of the Sellers, duly executed and acknowledged by the Sellers and in recordable form, each substantially in the form of Exhibit 2.2C hereto;

 

(viii) assignments or subleases for all Leased Real Estate (excluding Leased Real Estate of the Acquired Subsidiaries) duly executed and acknowledged by the Sellers and in recordable form, each substantially in the form of Exhibit 2.2D hereto;

 

(ix) a duly endorsed power of attorney from the Sellers as contemplated by Section 5.19 hereof;

 

(x) the certificates, opinions and other documents required to be delivered by the Sellers pursuant to Article VI hereof and certified resolutions evidencing the authority of the Sellers as set forth in Section 2.2 hereof;

 

(xi) legal opinions of the Sellers’ Oklahoma, Nevada and Mexico counsel addressed to the Buyers in a form reasonably satisfactory to the Buyers;

 

(xii) a certificate of each Seller, reasonably satisfactory to the Buyers, prepared in accordance with Treasury regulations sections 1.1445-2(c) (3) promulgated under the Code and dated as of the Closing Date; and

 

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(xiii) a receipt for the payment of the Closing Cash Consideration duly executed by Seller;

 

(xiv) the title commitments referenced in Section 5.19;

 

(xv) the surveys referenced in Section 5.16;

 

(xvi) the Consent Estoppel and Non-Disturbance Certificates;

 

(xvii) such other agreements, certificates and documents as may be reasonably requested by the Buyers;

 

(xviii) the release of liens under the Companies’ existing credit agreements and secured notes;

 

(xix) duly executed counterparts of the Employment Agreements for Jack and Thomas Vollbrecht substantially in the form set forth in Exhibit 2.2E (the “ Employment Agreements “); and

 

(xx) all such other instruments of conveyance as shall, in the reasonable opinion of the Buyers and its counsel, be necessary to vest in the Buyers good, valid and, with respect to the Owned Real Estate, marketable, title to the Acquired Assets in accordance with Section 1.1 hereof, including time-stamped instruments and releases, in form and substance satisfactory to the Buyers, evidencing release and removal of all Encumbrances on the Acquired Assets other than Permitted Encumbrances, and standard owner’s affidavits required by the Buyers’ title insurance company.

 

(b) Deliveries by the Buyers to the Sellers . At the Closing, Parent and Remy shall deliver or cause to be delivered the following to the Sellers:

 

(i) the Closing Cash Consideration;

 

(ii) the Buyers’ Closing Certificate (as such term is defined in Section 7.3 );

 

(iii) the Ancillary Agreements (as hereinafter defined) to which Buyers are a party, executed by the Buyers;

 

(iv) the duly executed Assignment and Assumption Agreement;

 

(v) duly executed counterparts of the Employment Agreements;

 

(vi) a legal opinion of the Buyers’ counsel addressed to the Sellers in the form of Exhibit 7.7 hereto; and

 

(vii) the certificates, opinions and other documents required to be delivered by the Buyers pursuant to Article VII hereof.

 

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2.3. Sellers Representative .

 

(a) Jack Vollbrecht is hereby constituted and appointed by the Sellers and the UPC Stockholders as agent (the “ Sellers Representative “) for and on behalf of the Sellers and the UPC Stockholders, with full and unqualified power to delegate to one or more Persons the authority granted to him hereunder, to act as each of their agent and attorney-in-fact, with full power of substitution, to take all actions called for by this Agreement and the Ancillary Agreements, on their individual and collective behalf, as such Sellers Representative shall deem necessary and appropriate in connection with the transactions contemplated under this Agreement, including, without limitation, the power:

 

(i) to execute and deliver all ancillary agreements, certificates, statements, notices, approvals, extensions, waivers, undertakings, amendments and other documents required or permitted to be given in connection with the consummation of the transactions contemplated by this Agreement;

 

(ii) to give and receive all notices and communications to be given or received under this Agreement or the Ancillary Agreements and to receive service of process in connection with any claims under this Agreement or the Ancillary Agreements;

 

(iii) to agree to, negotiate, enter into settlements and compromises of, and demand arbitration and comply with orders of courts and awards of arbitrators with respect to such claims, and to take all actions necessary or appropriate in the judgment of the Sellers Representative for the accomplishment of the foregoing; and

 

(iv) to take all actions which under this Agreement and the Ancillary Agreements may be taken by the Sellers Representative and to do or refrain from doing any further act or deed on behalf of the Sellers or UPC Stockholders that the Sellers Representative deems necessary or appropriate in his sole discretion relating to the subject matter of this Agreement as fully and completely as such Sellers or UPC Stockholders could do if personally present.

 

All decisions and acts by the Sellers Representative shall be binding upon all of the Sellers and UPC Stockholders and no Seller or UPC Stockholder shall have the right to object, dissent, protest or otherwise contest the same. Without limiting the generality of the foregoing, any notice delivered by the Buyers to the Sellers Representative shall be treated as having been delivered to each Seller and UPC Stockholder entitled thereto, regardless of the actions taken by the Sellers Representative following receipt of such notice.

 

(b) The Buyers shall be entitled to deal exclusively with the Sellers Representative on all matters relating to this Agreement and the Ancillary Agreements, and shall be entitled to rely conclusively (without further evidence of any kind whatsoever) on any document executed or purported to be executed on behalf of any Seller or UPC Stockholder by the Sellers Representative, and on any other action taken or purported to be taken on behalf of the Sellers or UPC Stockholders by the Sellers Representative, as fully binding upon such Sellers or UPC Stockholders.

 

(c) In the event of the death or permanent disability of the Sellers Representative, or his resignation, Thomas Vollbrecht, if alive and at his election, will be the

 

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successor to the Sellers Representative. If Thomas Vollbrecht is not the successor, a successor to the Sellers Representative shall be appointed by a majority vote of the UPC Stockholders, with each such UPC Stockholder to be given an equal vote.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES OF THE COMPANIES AND THE UPC STOCKHOLDERS

 

The Companies and the UPC Stockholders jointly and severally represent and warrant to the Buyers as follows:

 

3.1. Capitalization . (a) The authorized and outstanding capital stock of each Company as of the date hereof is set forth on Schedule 3.1 of the Disclosure Schedules delivered by the Sellers and the UPC Stockholders to the Buyers in connection herewith (the “ Disclosure Schedules “). As of the date hereof, all of the capital stock of each Company is owned of record and beneficially by the Stockholder, UPC or such other Seller, as the case may be, free and clear of all liens, security interests, pledges, equities, proxies, claims, charges, adverse claims, mortgages, rights of first refusal, preemptive rights, restrictions, encumbrances, easements, covenants, licenses, options or title defects of any kind whatsoever (“ Encumbrances “). As of the date hereof, the capital stock set forth on Schedule 3.1 of the Disclosure Schedules (the “ Seller Stock “) represents all of the issued and outstanding equity securities of the Companies, and all of the outstanding stock of the Acquired Subsidiaries is duly authorized, validly issued, fully paid, and non-assessable, was not issued in violation of the terms of any agreement or other understanding binding upon the Companies, or any UPC Stockholder, as the case may be, and was issued in compliance with all applicable federal and state securities or “blue-sky” laws and regulations. Except as disclosed on Schedule 3.1 of the Disclosure Schedules, there are outstanding no securities convertible into, exchangeable for or carrying the right to acquire equity securities of any of the Companies, or subscriptions, warrants, options, rights (including, without limitation, preemptive rights or stock appreciation rights), or other arrangements or commitments obligating any of the Companies to issue or dispose of any of their respective equity securities or any ownership interest therein. The consummation of the transactions contemplated hereby will not cause any Encumbrances to be created or suffered on the capital stock of the Acquired Subsidiaries, other than Encumbrances created or suffered by the Buyers.

 

3.2. Organization . Each Company is a corporation duly organized, validly existing, and in good standing under the laws of the jurisdiction of its organization or incorporation, as the case may be, and has all requisite corporate power and authority to carry on its business as it now is being conducted. Each Company is duly qualified to do business and is in good standing as a foreign corporation in all jurisdictions listed on Schedule 3.2 of the Disclosure Schedules, which are the only jurisdictions where the failure to qualify to do business could have a material adverse effect. True and complete copies of the Articles of Incorporation, Bylaws or other organizational documents and corporate proceedings of each Company previously have been made available to the Buyers.

 

3.3. Subsidiaries . Except as set forth on Schedule 3.3 of the Disclosure Schedules , other than the Companies, none of the Sellers directly or indirectly owns any stock of, equity

 

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interest in, or other investment in any other corporation, limited liability company, joint venture, partnership, trust or other person engaged in whole or in part in the Business. The Acquired Subsidiaries, do not directly or indirectly own any stock of, equity interest in, or other investment in any other corporation, limited liability company, joint venture, partnership, trust or other person.

 

3.4. Financial Statements; Undisclosed Liabilities .

 

(a) The books of account and related records of the Companies related to the Business fairly reflect in all material respects the assets, liabilities and transactions relating to the Business in accordance with GAAP. The (a) balance sheet for the Companies on a combined basis for the years ended on the Saturday closest to January 31, 2004, 2003 and 2002 and the related statements of income and retained earnings and cash flows for the years then ended, each of which has been audited by PricewaterhouseCoopers LLP, and (b) the unaudited balance sheet of the Business on a combined basis for the eleven-month period ended December 25, 2004, and the related statements of income and retained earnings and cash flows for the eight-month period ended December 25, 2004 (the “ Unaudited Financial Statements “), have been previously delivered to Buyers and (i) are true and correct in all material respects, (ii) were prepared in accordance with GAAP (except as specifically otherwise noted therein or, in the case of the Unaudited Financial Statements, except for the absence of footnotes), and (iii) present fairly the financial position, results of operations and cash flows of the Business on a combined basis as of such dates and for the periods then ended in accordance with GAAP(except as specifically otherwise noted therein). The audited balance sheet of the Sellers on a combined basis as at January 31, 2004 is attached hereto as Schedule 3.4 of the Disclosure Schedules(the “ Balance Sheet “).

 

(b) The Companies have no material liability or obligation of any nature, whether due or to become due, absolute, contingent or otherwise, except (a) to the extent fully reflected as a liability on the Balance Sheet, (b) liabilities incurred in the ordinary course of business after January 31, 2004 and not material in amount and (c) liabilities disclosed on Schedule 3.4 of the Disclosure Schedules.

 

3.5. Absence of Certain Changes or Events . Except as set forth on Schedule 3.5 of the Disclosure Schedules, since January 31, 2004 (the “ Balance Sheet Date “), the Companies have conducted the Business only in the ordinary course consistent with past practice and there has been no Material Adverse Effect. Without limiting the foregoing, except as reflected in the Balance Sheet or as set forth on Schedule 3.5 of the Disclosure Schedules, since the Balance Sheet Date, the Companies have not:

 

(a) purchased or redeemed any shares of its stock (including, without limitation, the Acquired Subsidiaries Stock), or granted or issued any option, warrant or other right to purchase or acquire any such shares;

 

(b) incurred any liabilities or obligations (whether absolute, accrued, contingent or otherwise), except liabilities and obligations incurred in the ordinary course of business which would not have a Material Adverse Effect;

 

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(c) encumbered any of its properties or assets, tangible or intangible, except for Encumbrances incurred in the ordinary course of business, consistent with past practice, such Encumbrances not having a Material Adverse Effect, neither individually nor in aggregate;

 

(d) granted any increase in the salaries or other compensation payable or to become payable to, or any advance (excluding advances for ordinary business expenses consistent with past practice) or loan to, any officer or employee of each Company (other than normal merit increases for employees averaging not more than two percent (2%) per annum per employee made in the ordinary course of business and consistent with past practice, or as required by collective bargaining agreements), or any increase in, or any addition to, other benefits (including any bonus, profit-sharing, pension or other plan) to which any of the officers and employees may be entitled, or any payments to any pension, retirement, profit-sharing, bonus or similar plan except payments in the ordinary course of business and consistent with past practice made pursuant to the Benefit Plans (as hereinafter defined), or any other payment of any kind to or on behalf of any officer or employee other than payment of base compensation and reimbursement for reasonable expenses in the ordinary course of business;

 

(e) suffered any change or, to the to Sellers’ or the UPC Stockholders’ knowledge, received any threat of any change in any of its relations with, or any loss or, to Sellers’ or the UPC Stockholders’ knowledge, threat of loss of, any of the suppliers, clients, distributors, customers or employees that are material to the Business, including any loss or change which may result from the transactions contemplated by this Agreement;

 

(f) suffered any strike or other material labor trouble, or has entered into any material agreement or material negotiation with any labor union or other collective bargaining representative or any employees;

 

(g) disposed of or has failed to keep in effect any rights in, to or for the use of any property, leasehold, easement, asset, franchise, license, permit or certificate material to the Business;

 

(h) changed any method of keeping of its books of account or accounting practices;

 

(i) disposed of or failed to keep in effect any rights in, to or for the use of any of the Intellectual Property (as hereinafter defined) material to the Business;

 

(j) sold, transferred or otherwise disposed of any assets, properties or rights of any of the Business, except inventory sold in the ordinary course of business consistent with past practice;

 

(k) entered into any transaction, agreement or event outside the ordinary course of the conduct of the Business;

 

(l) made nor authorized any single capital expenditure in excess of $50,000, or capital expenditures in excess of $100,000 in the aggregate;

 

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(m) changed or modified in any manner its existing credit, collection and payment policies, procedures and practices with respect to accounts receivable and accounts payable, respectively, including without limitation, acceleration of collections of receivables, failure to make or delay in making collections of receivables (whether or not past due), acceleration of payment of payables or failure to pay or delay in payment of payables;

 

(n) incurred any damage, destruction, loss, condemnation, or encroachment, whether covered by insurance or not, that would have a Material Adverse Effect;

 

(o) made any declaration, payment or setting aside for payment of any dividend or other distribution (whether in cash, stock or property) with respect to any securities of the Companies; or

 

(p) waived or released any material right or claim of the Companies.

 

3.6. Condition of Assets . Except as set forth on Schedule 3. 6 of the Disclosure Schedules, the buildings, machinery, equipment, tools, furniture, improvements and other tangible assets of the Business included in the Acquired Assets are in good operating condition and adequate for the purposes for which they are used in the Business, subject to normal maintenance requirements and normal wear and tear reasonably expected in the ordinary course of business, and shall be maintained by the Companies in such good operating condition and repair as of the Closing Date so as to have the capacity to permit the operation of the Business. Except as set forth on Schedule 3.6 of the Disclosure Schedules, all significant properties, leaseholds, easements, and assets used or useful in the operation of the Business, including those reflected on the Balance Sheet, are adequate for the purposes for which they are presently used in the conduct of such business.

 

3.7. Real Estate .

 

(a) Owned Real Estate .

 

(i) Schedule 1.1(b)(i) sets forth a list of all of the real estate owned by the Companies or one or more of their Affiliates (collectively, the “ Business Entities “) or otherwise owned (beneficially or of record) and used or operated now or previously in the Business (such real estate, together with all beneficial, appurtenant easements and other appurtenances thereto and with all buildings, structures and other improvements thereon and all fixtures attached thereto or forming a part thereof, is collectively referred to herein as the “ Owned Real Estate “), and includes the street address of each parcel of the Owned Real Estate. Except as set forth on Schedule 1.1(b)(i) , the Sellers have good, valid, marketable and indefeasible fee simple title to, and are in actual, exclusive possession of, the Owned Real Estate. The Companies have made available to Buyer true, correct and complete copies of all (i) title reports, title insurance policies and commitments therefore, (ii) surveys, (iii) licenses, certificates of occupancy, plans, specifications and permits, pertaining to the Owned Real Estate that are in the possession or control of any of the Business Entities.

 

(ii) No portion of any of the Owned Real Estate is subject to a special ad valorem Tax valuation or rate that will be lost as a result of the transfer to the Buyers pursuant to the provisions hereof.

 

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(iii) The Owned Real Estate and the use thereof by the Business Entities in connection with the Business as currently used and consistent with past practice complies with all covenants, easements and restrictions of record affecting the Owned Real Estate.

 

(iv) The Companies have not received any notice for assessments for public improvements against the Real Estate which remains unpaid, and, to Sellers’ or the UPC Stockholders’ knowledge, no such assessment has been proposed. There is no pending condemnation, expropriation, eminent domain or similar proceeding affecting all or any portion of any of the Real Estate and, to Sellers’ or the UPC Stockholders’ knowledge, no such proceeding is contemplated. None of the Real Estate is located within or abuts a 100-year floodplain or body of water, tideland, wetland, marshland or other area subject to state, federal or local regulation, control or protection. The water, gas, electricity and other utilities serving the Real Estate are adequate to service the normal operations of the Real Estate and are not subject to any pending or, to Sellers’ or the UPC Stockholders’ knowledge, threatened suspension, reduction or moratorium.

 

(v) The Companies have obtained all authorizations, Permits and rights of way, including proof of dedication, which are necessary to ensure vehicular and pedestrian ingress and egress to and from the Owned Real Estate. There are no restrictions on entrance to or exit from the Real Estate to adjacent public streets and, to Sellers’ or the UPC Stockholders’ knowledge, no conditions which will result in the termination of the present access from the Real Estate to existing highways and roads adjoining or shared on the Real Estate.

 

(vi) The Companies have not received written notice from any Authority that the assessed value of the Owned Real Estate has been determined to be greater than that upon which county, township or school tax was paid for the 2004 Tax year applicable to each such tax, or from any insurance carrier any Seller or their Affiliates of fire hazards with respect to the Owned Real Estate.

 

(b) Leased Real Estate .

 

(i) Schedule 1.1(b)(i) sets forth a list of all of the real property leases that are included in the Acquired Assets and Schedule 3.7(b) of the Disclosure Schedules sets forth a list of all of the real property leases of the Acquired Subsidiaries (collectively, as heretofore modified, amended or extended, the “ Leases “), including the street addresses of all of the real estate demised under each of the Leases (collectively, the “ Leased Real Estate “). Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, one or more of the Business Entities is the lessee under all Leases, and no party other than one or more of the Business Entities has any right to possession, occupancy or use of any of the Leased Real Estate. True and correct copies of (i) leasehold title insurance policies and commitments therefor, title reports, surveys, licenses, certificates of occupancy, plans, specifications, permits and other documents, pertaining to the Leased Real Estate that are in the possession or control of any of the Business Entities, and (ii) each of the Leases, including all amendments, modifications and extensions, and together with all subordination, non-disturbance and/or attornment agreements related thereto have been made available by the Business Entities to the Buyers. Each of the Leases is valid and in full force and effect and is binding and enforceable in accordance with its terms. Except as set forth

 

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on Schedule 3.7(b) of the Disclosure Schedules, no Company has received any written notice of default under any provision of any of the Leases. Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, to Sellers’ and the UPC Stockholders’ knowledge, none of the Business Entities and none of the lessors under any of the Leases is in default under any of the Leases and no event has occurred that with notice, the passage of time of both would constitute such a default.

 

(ii) Except as set forth in Schedule 3.7(b) of the Disclosure Schedules, the Business Entities are in actual, exclusive possession of the Leased Real Estate. The Business Entities have good, valid and indefeasible title to all the leasehold estates conveyed under the Leases free and clear of all Encumbrances, except Permitted Encumbrances.

 

(iii) Except as set forth in Schedule 3.7(b) of the Disclosure Schedules, the basic rent, all additional rent and all other charges and amounts payable under the Leases by the lessee thereunder have been paid to date. All work required to be performed under the Leases by the lessors thereunder or by any of the Business Entities has been performed in all material respects, and, to the extent that any of the Business Entities is responsible for payment of such work, has been fully paid for, whether directly to the contractor performing such work or to such lessor as reimbursement therefor, except for items which any of the Companies is disputing in good faith (which items are set forth in Schedule 3.7(b) of the Disclosure Schedules).

 

(iv) Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, there are no brokerage commissions or finder’s fees due from any of the Business Entities which are unpaid with regard to any of the Leases or the Leased Real Estate, or which will become due at any time in the future with regard to the Leases or the Leased Real Estate.

 

(v) Except as set forth on Schedule 3.7(b) of the Disclosure Schedules, there have been no casualties which could result in the termination of any of the Leases.

 

(vi) Except as set forth on Schedule 3.7(b) of the Disclosure Schedules: (i) no consent of any of the lessors under any of the Leases is required by reason of any of the transactions contemplated by this Agreement, and (ii) none of the rights of any of the Business Entities under any of the Leases will be impaired by the consummation of the transactions contemplated by this Agreement and all of such rights will be enforceable by the Buyers after the date of the Closing without the consent or agreement of any other party.

 

(c) General .

 

(i) Each parcel of the Real Estate has physical and, to Sellers’ or the UPC Stockholders’ knowledge, legal vehicular and pedestrian access to and from public roadways. To the Sellers’ or the UPC Stockholders’ knowledge, no fact or condition exists which would result in the termination of the current access from the Real Estate to any presently existing highways and roads adjoining or situated on the Real Estate.

 

(ii) Except as set forth on Schedule 3.7(c) of the Disclosure Schedules, no Business Entity has received any written or, to the Sellers’ or the UPC Stockholders’ knowledge, oral notice or order from any Authority, insurance company which has issued a

 

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policy with respect to any of the Real Estate or any board of fire underwriters or other body performing similar functions or any other Person which (a) relates to or alleges a violation of or nonconformity with any zoning, building, safety, subdivision, wetlands or other similar law, code, rule, regulation, ordinance, permit, license, certificate, covenant, restriction or condition with respect to any of the Real Estate or the use thereof which violation of nonconformity could reasonably be expected to have a Material Real Estate Impairment, or (b) requests the performance of any material repairs, alterations or other work that have not yet been cured or performed, as applicable. None of the Sellers has received any written notice from any Authority or other Person of any condemnation action, eminent domain proceeding or other similar proceeding concerning any of the Real Estate. There is no pending condemnation, expropriation, eminent domain, or similar proceeding affecting any of the Real Estate and, to the Sellers’ or the UPC Stockholders’ knowledge, no such action, proceeding or litigation is threatened.

 

(iii) All of the buildings and improvements situated upon the Real Estate are operable and in good condition and repair, subject to ordinary wear and tear and to the items set forth on Schedule 3.7(c) of the Disclosure Schedules.

 

(iv) Other than: (i) the Owned Real Estate, and (ii) the Leased Real Estate, no other real estate or rights, titles, estates or interest therein is necessary to the conduct of the Business as currently conducted and consistent with past practice.

 

3.8. Title . The Sellers will convey to the Buyers at Closing (by special warranty deed in the case of Owned Real Estate and assignments in the case of Leased Real Estate), indefeasible, good and valid title to all of the Acquired Assets constituting personal property and good, valid and marketable fee simple absolute title and interest to all of the Acquired Assets constituting Owned Real Estate and a good, valid indefeasible and marketable leasehold interest in all Leased Real Estate, subject only to the Permitted Encumbrances. None of the Acquired Assets is subject to any Encumbrance (including any restriction, encumbrance, tenancy, license, encroachment, covenant, right of way, easement, or any other matter affecting title), except (a) in the case of real property, minor imperfections of title, none of which, individually or in the aggregate, materially detracts from the value of the affected property or impairs the use of the affected property or the conduct of the Business thereon as it is currently being used and conducted and as it has been used and conducted consistent with past practice or materially detracts from the value of such property or impairs any operations of the Business or the ability of the Buyers to obtain direct or indirect financing for the Acquired Assets, (b) in the case of real property, Encumbrances for current real estate Taxes not yet due and payable, (c) as to the Leased Real Estate only, the terms and conditions of the Leases with respect thereto, and (d) with respect to leased or licensed personal property, the terms and conditions of the lease or license applicable thereto, (collectively, the “ Permitted Encumbrances “).

 

3.9. Working Capital Assets .

 

(a) Except as set forth on Schedule 3.9 of the Disclosure Schedules, all of the accounts and notes receivable of the Business represent amounts receivable for merchandise actually delivered or services actually provided (or, in the case of non-trade accounts or notes represent amounts receivable in respect of other bona-fide business transactions), have arisen in

 

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the ordinary course of business, are not subject to any defenses, counterclaims or offsets and have been billed and are generally due within thirty (30) days after such billing. All such receivables are fully collectible in the normal and ordinary course of business, except to the extent of a reserve in an amount not in excess of the reserve for doubtful accounts reflected on the Balance Sheet. Schedule 3.9 of the Disclosure Schedules sets forth (a) the total amount of accounts receivable of the Business outstanding as of December 25, 2004 and (b) the agings of such receivables based on the following schedule: 0-30 days, 31-60 days, 61-90 days, and over 90 days, from the date of invoice.

 

(b) All of the inventories of the Business, including that reflected in the Balance Sheet, are valued at the lower of cost or market, the cost thereof being determined on a first-in, first-out basis, except as disclosed in the Balance Sheet. Except as disclosed on Schedule 3.9 of the Disclosure Schedules, all of the inventories of the Business reflected in the Balance Sheet and all inventories acquired since the Balance Sheet Date consist of items that are marketable and fit for their particular use, are not defective and are of a quality and quantity usable and saleable in the ordinary course of the Business within a reasonable period of time and at normal profit margins, and all of the raw materials and work in process inventory of the Business reflected on the Balance Sheet and all such inventories acquired since the Balance Sheet Date can reasonably be expected to be consumed in the ordinary course of business within a reasonable period of time. Except as disclosed on Schedule 3.9 of the Disclosure Schedules, none of the inventory of the Business is obsolete or slow moving. Schedule 3.9 of the Disclosure Schedules is a summary of the Business’ inventory of finished goods, work in process and raw materials as of December 25, 2004.

 

3.10. Patents, Trademarks, Etc .

 

(a) Schedule 3.10 of the Disclosure Schedules sets forth a list of all United States or foreign: (i) patents and patent applications; (ii) trademarks, service marks, trade names, domain names, trade dress, logos and other indicators of source and all applications for and registrations of any of the foregoing; and (iii) registered copyrights and all applications for the registration of copyrightable works (including without limitation, computer software, proprietary databases, catalogues and other works of authorship); all of the foregoing of which are owned or used by the Companies in, and which are material to, the conduct of the Business (specifying as to each such item, as applicable (A) the owner of the item, (B) the jurisdiction in which the item is issued or registered or in which any application for issuance or registration has been filed, where applicable, including the respective issuance, registration or application number, (C) the date of application and issuance or registration of the item, and (D) with respect to any registrations and applications for registration of trademarks or service marks, the class and classes of goods or services on which each such trademark or service mark is or is intended to be used) (“ Patent Trademark and Copyright Rights “).

 

(b) Except as set forth on Schedule 3.10 of the Disclosure Schedules: (i) the Companies own or possess adequate licenses or other valid rights to use all Patent Trademark and Copyright Rights and all material know-how, trade secrets (including, without limitation, all results of research and development), product formulas, franchises, inventions, rights-to-use, unregistered copyrights, publicity rights, and all other industrial and intellectual property rights (together with Patent Trademark and Copyright Rights, “ Intellectual Property “) used in the

 

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Business by the Companies, (ii) the conduct of the Business by the Companies as now being conducted does not knowingly misappropriate, violate or conflict with any intellectual property of others and there are no pending claims, suits, judgments, settlements or allegations by others that the operation of the Business by the Companies infringe, misappropriate, violate or otherwise conflict with such other party’s intellectual property, (iii) no current or former employee of the Companies and no other person owns or has claimed any material proprietary, financial or other interest, direct or indirect, in whole or in part, and including any rights to royalties or other compensation, in any of the Intellectual Property, (iv) there is no agreement or other contractual restriction affecting the use by any Company of any of the Intellectual Property, (v) the Intellectual Property (other than the patents) is, and the Companies’ patents are believed to be, valid and in full force, held of record in the Sellers’ name and is not subject to any cancellation or reexamination proceeding or any other proceeding challenging the extent or validity of the Intellectual Property (or any item of the Intellectual Property), (vi) a Company is the applicant of record in all patent applications and applications for trademarks, and no opposition, extension of time to oppose, interference, rejection, or refusal to register has been received in connection with any such applications, and (vii) neither the Companies nor the UPC Stockholders are aware of any present infringement or misappropriation of any of the Intellectual Property by any person, neither the Companies nor the UPC Stockholders have asserted or threatened any claim or objection against any person for any such infringement or misappropriation nor is there any basis in fact for any such objection or claim. No Intellectual Property other than the Intellectual Property comprising part of the Acquired Assets is required to conduct the Business in the ordinary course consistent with past practices.

 

(c) The information technology and process automation systems owned, licensed, leased, operated on behalf of, or otherwise held for use in the business of the Sellers, including all computer hardware, software, firmware and telecommunications systems used in the Business by the Companies, perform reliably and in material conformance with the appropriate specifications or documentation for such systems. Except for scheduled or routine maintenance and occasional, expected disruptions, the information technology and process automation systems of the Companies are fully available for use in the Business and, as applicable, by the customers and clients of the Companies, 24 hours a day, 7 days a week. The Companies have taken commercially reasonable steps to provide for the archival, back-up, recovery and restoration of the critical business data of the Business.

 

3.11. Material Contracts . Schedule 3.11 of the Disclosure Schedules contains a complete and accurate list of all outstanding Material Contracts (classified (a) through (m), as applicable, based on the definition of Material Contracts set forth in Section 11.13 hereof). Each such Contract is valid, binding and enforceable against any Seller and the other parties thereto in accordance with its terms and is in full force and effect. Except as set forth in Schedule 3.11 of the Disclosure Schedules, the Companies, and to the knowledge of the Sellers and the UPC Stockholders, each of the other parties thereto, have performed in all material respects all obligations required to be performed by them under, and are not in material default under, any of such Material Contracts and no event has occurred which, with notice or lapse of time, or both, would constitute such a default. The Companies have not received any written claim from any other party to any Material Contract that any Company has breached any obligations to be performed by it thereunder, or is otherwise in default or delinquent in performance thereunder.

 

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3.12. Litigation . Except as set forth in Schedule 3.12 of the Disclosure Schedules, there is no action, suit, review, proceeding or investigation in any court or before any governmental agency or authority (“ Litigation “) pending or, to the Sellers’ or the UPC Stockholders’ knowledge, threatened against any Company or, with respect to the Stockholder, pertaining to the ownership of the Seller Stock or the relationship of the Stockholder with the Companies. Except as set forth in Schedule 3.12 of the Disclosure Schedules, none of the Sellers is a party to, or bound by, any outstanding orders, rulings, judgments, settlements, arbitration awards or decrees (or agreement entered into or any administrative, judicial or arbitration award with any governmental authority) with respect to or affecting the properties, assets, personnel or business of the Companies, the enforcement of which or compliance with which (a) could have a Material Adverse Effect, or (b) could reasonably be expected to affect the (i) validity of this Agreement or its enforceability against the Sellers, (ii) consummation by the Companies of the transactions contemplated by this Agreement, or (iii) compliance by the Companies with the terms of this Agreement. The Companies have provided the Buyers with a list setting forth a general description of settlements occurring since January 1, 2002 regarding actual threatened lawsuits (excluding worker’s compensation claims) binding on any Company.

 

3.13. Compliance with Laws .

 

(a) Set forth on Schedule 3.13(a)(i) of the Disclosure Schedules is a list of all franchises, approvals, permits, authorizations, applications, licenses, orders, registrations, certificates, variances and other similar permits or rights obtained from any Authority and all pending applications therefor necessary for the conduct of the Business as currently conducted (the “ Permits “). The Companies possess and are in compliance with all Permits required to operate the Business and own, lease or otherwise hold the Acquired Assets under all applicable laws, rules, regulations, ordinances and codes. The Companies have conducted the Business and are now doing so in material compliance with all applicable laws, zoning, building and similar laws, rules, regulations, ordinances, codes, judgments and orders (including the Occupational Safety and Health Act and the rules and regulations thereunder (“ OSHA “) and the Americans with Disabilities Act and the rules and regulations thereunder. All Permits of the Companies relating to the operation of the Business are in full force and effect, and there are no proceedings pending or, to the Sellers’ and the UPC Stockholders’ knowledge, threatened that seek the revocation, cancellation, suspension or any adverse modification of any such Permits presently possessed by the Companies. The Permits set forth on Schedule 3.13(a)(ii) of the Disclosure Schedules are the Permits that are transferable and will be transferred to the Buyers as part of the Acquired Assets.

 

(b) Other than as disclosed on Schedule 3.13 , no notice, citation, summons or order has been issued, no complaint has been filed, no penalty has been assessed and no investigation or review is pending or, to the Sellers’ or the UPC Stockholders’ knowledge, threatened, by any Authority or other Person with respect to any alleged (i) violation by any Company, any Affiliate of the Companies or any other Person relating to the Business of any law, ordinance, rule, regulation, code or order of any Authority; or (ii) failure by any Company, any Affiliate of the Companies or any other Person to have any Permit required in connection with the conduct of the Business or otherwise applicable to the Business. Except as may be otherwise disclosed on Schedule 3.13 of the Disclosure Schedules, neither the Sellers nor the UPC Stockholders have knowledge of any claims or violations of any such law, regulation,

 

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ordinance, order, covenant, condition, restriction or easement. Except as may be otherwise disclosed on Schedule 3.13 of the Disclosure Schedules, there is no proceeding pending or, to Sellers’ or the UPC Stockholders’ knowledge, threatened which is reasonably likely to materially and adversely affect, as to any material portion of the Acquired Assets, the zoning classification in effect or the Sellers’ right to own, operate and occupy the Real Estate and use and possess the other Acquired Assets in the manner in which it currently owns, operates and occupies the Real Estate and uses and possesses the other Acquired Assets, and no zoning, building or similar law, regulation, ordinance or order is, or on the Closing Date will be, violated in any material respect.

 

3.14. Environmental Matters .

 

(a) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, the Companies have conducted and are now conducting their operations in compliance in all material respects with all applicable Environmental Laws.

 

(b) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, the Companies hold and have been and are in compliance with all permits, certificates, licenses, approvals, registrations and authorizations required under applicable Environmental Laws with respect to the Acquired Assets and the Acquired Subsidiaries (“ Environmental Permits “), all such Environmental Permits are in full force and effect, and, if assignable or transferable, will remain in full force and effect after the approval of that assignment or transfer is obtained from the applicable governmental authority, so as to allow the Business and the Acquired Subsidiaries to operate their business after that approval is obtained as it is currently operating such business without interruption. The Companies have made or will make before the Closing timely application or notification for the renewal of all Environmental Permits for which Environmental Laws require that applications or notices must be filed on or before the Closing to maintain the Environmental Permits in full force and effect up to, through and after the Closing. Schedule 3.14 of the Disclosure Schedules lists all Environmental Permits.

 

(c) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, the Companies have not in the past nor do the Companies presently use, possess, generate, treat, manufacture, process, handle, store, recycle, transport or dispose of (“ Manages “ or “ Management ,” as the context requires) hazardous or toxic materials, substances, wastes, pollutants or contaminants (including, without limitation, petroleum, petroleum products, polychlorinated biphenyls (“ PCBs “), radioactive materials, asbestos, or asbestos-containing materials) (“ Hazardous Materials “) in quantities or in a manner which requires Environmental Permits or in a manner which has caused, causes or threatens to cause a Release (as hereinafter defined).

 

(d) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, neither the Companies nor the UPC Stockholders have received any notice, citation, summons, order or complaint, no penalty has been assessed or is pending or, to the knowledge of the Sellers and the UPC Stockholders, after due inquiry, threatened by any third party (including, without limitation, any governmental agency) with respect to (i) the Management, Release or threatened Release of Hazardous Materials by or on behalf of the Companies or any of their predecessors or in relation to its past or present operations or with respect to exposure to

 

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Hazardous Materials, (ii) non-compliance with Environmental Laws or (iii) failure to hold or comply with Environmental Permits. Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, neither the Sellers nor the UPC Stockholders have received and, to the best of their respective knowledge after due inquiry, no one else has received, any request for information, notice of claims, demand or other notification that the Sellers or the UPC Stockholders (or any of their respective predecessors) are or may be potentially responsible with respect to any investigation, cleanup, remedial action or other response action (“ Remediation “) of Hazardous Materials with respect to presence, release or threatened release of any Hazardous Materials at or from any Acquired Asset or any of the properties, assets or facilities of any Acquired Subsidiary.

 

(e) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, none of the Owned Real Estate, the Leased Real Estate nor any property owned, operated or leased or, to the Sellers’ or the UPC Stockholders’ knowledge, formerly owned, operated or leased by any of the Acquired Subsidiaries or any of their predecessors or in connection with operation of the Companies or any of its business, is listed or proposed for listing on any list maintained by any governmental agency of sites requiring Remediation, and no Hazardous Materials generated or Managed by or on behalf of any Acquired Subsidiary or any of their predecessors has come to be located at any site identified on such list or otherwise requiring Remediation.

 

(f) Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, there are no underground storage tanks, above ground storage tanks, asbestos containing materials or PCB-containing equipment located at, on or under the Owned Real Estate, the Leased Real Estate or, to the Sellers’ or the UPC Stockholders’ knowledge, after due inquiry, at any property formerly owned, operated or leased by the Companies or the UPC Stockholders or any of their respective predecessors. Except as specifically disclosed on Schedule 3.14 of the Disclosure Schedules, any underground storage tanks, above ground storage tanks or wastewater treatment systems which have been removed or closed by or on behalf of the Companies or the UPC Stockholders or any of their respective predecessors or for which any of them is or may be responsible have been removed or closed in compliance with applicable Environmental Laws and require no further Remediation under Environmental Laws.

 

(g) No Hazardous Materials have been, to the Companies’ knowledge, or threaten to be released, spilled, leaked, discharged, disposed of, pumped, poured, emitted, emptied, injected, leached, dumped or allowed to escape (“ Release “) or are present in an uncontained state at, on, about, under or from the Owned Real Estate, the Leased Real Estate, any property owned, operated or leased or, to the Sellers’ or the UPC Stockholders’ knowledge, formerly owned, operated or leased by any of the Acquired Subsidiaries or any of their predecessors or in connection with operation of the Companies or any of their business, except when such Release or presence would not have a Material Adverse Effect.

 

(h) All environmental inspections, investigations, studies, audits, tests, reviews or other analysis conducted in relation to the Companies, the Owned Real Estate, the properties subject to the Real Estate Leases or any property formerly owned, operated or leased by the Companies or the UPC Stockholders or any of their respective predecessors or the operation of their business (collectively, “ Environmental Audits “) in the possession or control of the Companies or the UPC Stockholders have been provided or made available to the Buyers, and all such Environmental Audits are listed on Schedule 3.14 of the Disclosure Schedules.

 

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(i) Neither the Companies nor the UPC Stockholders know of any facts or circumstances related to environmental matters concerning the Owned Real Estate, the properties subject to the Real Estate Leases or any property formerly owned, operated or the leased by the Companies or the UPC Stockholders or any of their respective predecessors or the operation of the Business that could lead to any future environmental claims, liabilities, expenses or responsibilities against the Buyers, the Acquired Assets or the Acquired Subsidiaries, and, except as disclosed on Schedule 3.14 of the Disclosure Schedules, neither the Companies nor the UPC Stockholders have retained or assumed, by contract, law or otherwise, any liability or responsibility for any environmental claims or conditions, including, but not limited to, in connection with a Release or Remediation of Hazardous Materials, that affect or relate to the Acquired Assets, the Acquired Subsidiaries or any liability of Buyers following the Closing Date.

 

3.15. Employee Benefit Matters .

 

(a) Schedule 3.15 of the Disclosure Schedules lists all “employee benefit plans,” as defined in Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ ERISA “) and all retirement, stock, stock option, welfare benefit, savings, deferred compensation, incentive compensation, paid time off, severance pay, salary continuation, disability, fringe benefit and other employee benefit arrangements, plans, policies, or practices maintained, contributed to, or required to be contributed by the Companies or any ERISA Affiliate (as hereinafter defined) or with respect to which the Companies or any ERISA Affiliate may have any liability (the “ Benefit Plans “). None of the Benefit Plans is maintained, contributed to or required to be contributed to by the Sellers or any ERISA Affiliate outside the United States. For purposes of this Section 3.15, the term “ ERISA Affiliate “ means any person, entity