ASSET PURCHASE AGREEMENT

 

 

TABLE OF CONTENTS

 

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ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1.	Assets		1
1.2.	Excluded Assets		3
ARTICLE II
THE CLOSING
2.1.	Place and Date		4
2.2.	Purchase Price		4
2.3.	Allocation of Purchase Price		4
2.4.	Trade Accounts Payable Adjustment		4
2.5.	Purchase Price Adjustment		5
2.6.	Assumption of Liabilities		6
2.7.	Retained Liabilities		7
2.8.	Consents of Third Parties		7
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1.	Representations and Warranties of the Sellers		8
	3.1.1.	Organization; Ownership	8
	3.1.2.	Authorization, etc.	8
	3.1.3.	No Conflicts, etc.	8
	3.1.4.	Financial Statements	9
	3.1.5.	Books and Records	9
	3.1.6.	Taxes	9
	3.1.7.	Events Subsequent to the Unaudited Balance Sheet Date	10
	3.1.8.	Litigation	11
	3.1.9.	Compliance with Laws; Governmental Approvals	11
	3.1.10.	Assets	12
	3.1.11.	Contracts	12
	3.1.12.	Inventories	13
	3.1.13.	Customers	13
	3.1.14.	Suppliers; Raw Materials	13
	3.1.15.	Products; Product and Service Warranties; Product Liability; Selling Material and Policies	13
	3.1.16.	Intellectual Property	13
	3.1.17.	Insurance	14
	3.1.18.	Real Property	15
	3.1.19.	Environmental Matters	16
	3.1.20.	Employees, Labor Matters, etc.	16
	3.1.21.	Employee Benefit Plans and Related Matters	17

 

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	3.1.22.	Brokers, Finders, etc.	17
	3.1.23.	Sufficiency of Assets	18
3.2.	Representations and Warranties of the Buyer		18
	3.2.1.	Corporate Status; Authorization, etc.	18
	3.2.2.	No Conflicts, etc.	18
	3.2.3.	Litigation	19
	3.2.4.	Brokers, Finders, etc.	19
	3.2.5.	Financing	19
ARTICLE IV
COVENANTS
4.1.	Covenants of the Sellers		19
	4.1.1.	Conduct of Business	19
	4.1.2.	Access and Information	20
	4.1.3.	Public Announcements	21
	4.1.4.	Further Actions	21
	4.1.5.	Further Assurances	21
	4.1.6.	Transfer Taxes	22
	4.1.7.	Bulk Sales Laws	22
	4.1.8.	Exclusivity	22
	4.1.9.	Other Actions	22
	4.1.10.	Minerva, Ohio Site	23
4.2.	Covenants of the Buyer		23
	4.2.1.	Public Announcements	23
	4.2.2.	Further Actions	23
	4.2.3.	Further Assurances	23
	4.2.4.	Use of Business Names and Marks by the Buyer	24
	4.2.5.	Confidentiality	24
	4.2.6.	Bulk Sales Laws	24
	4.2.7.	Minerva, Ohio Site	24
	4.2.8.	Other Agreements	24
4.3.	Baseline Environmental Assessment		25
ARTICLE V
CONDITIONS PRECEDENT
5.1.	Conditions to Obligations of Each Party		25
	5.1.1.	HSR Act Notification	25
	5.1.2.	No Injunction, etc.	25
5.2.	Conditions to Obligations of the Buyer		25
	5.2.1.	Representations; Performance	26
	5.2.2.	Consents	26
	5.2.3.	Collateral Agreements	26
	5.2.4.	Transfer Documents	26
	5.2.5.	Indiana Responsible Property Transfer Law	27
	5.2.6.	FIRPTA Certificate	27
5.3.	Conditions to Obligations of the Sellers		27

 

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	5.3.1.	Representations, Performance, etc.	28
	5.3.2.	Consents	28
	5.3.3.	Assumption Agreement	28
	5.3.4.	Collateral Agreements	28
	5.3.5.	Bank Consent	28
ARTICLE VI
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
6.1.	Employment of the Sellers’ Employees		28
	6.1.1.	Non-Solicitation	28
	6.1.2.	Employees Represented by a Labor Organization	28
	6.1.3.	Transferred Employees	29
	6.1.4.	Responsibility Under the Worker Adjustment and Retraining Notification Act (WARN)	30
6.2.	Worker’s Compensation Claims		30
6.3.	Welfare Benefit Plans		30
	6.3.1.	Transferred Employees	30
	6.3.2.	Cooperation	31
6.4.	Information; Cooperation		31
ARTICLE VII
TERMINATION
7.1.	Termination		31
7.2.	Effect of Termination		32
ARTICLE VIII
GUARANTY
8.1.	Guaranty of Sellers’ Obligations		32
8.2.	Subrogation		33
8.3.	Representations and Warranties		33
8.4.	Liquidation, Winding Up, etc.		34
ARTICLE IX
DEFINITIONS; MISCELLANEOUS
9.1.	Definition of Certain Terms		34
9.2.	Indemnification		40
9.3.	Survival of Representations and Warranties, etc.		43
9.4.	Exclusive Remedy		44
9.5.	No Special Damages		44
9.6.	Expenses		44
9.7.	Severability		44
9.8.	Notices		44
9.9.	Miscellaneous		46

 

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	9.9.1.		Headings	46
	9.9.2.		Entire Agreement	46
	9.9.3.		Counterparts	46
	9.9.4.		Governing Law, etc.	46
	9.9.5.		Binding Effect	47
	9.9.6.		Assignment	47
	9.9.7.		No Third Party Beneficiaries	47
	9.9.8.		Amendment; Waivers, etc.	47
	9.9.9.		Sellers’ Obligations	48
EXHIBITS
EXHIBIT A		Form of Supply Agreement
EXHIBIT B		Form of Escrow Agreement
EXHIBIT C		Form of Assignment and Assumption

 

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ASSET PURCHASE AGREEMENT

 

ASSET PURCHASE AGREEMENT, dated as of January 7, 2006, between Forming Technologies, Inc., a Delaware corporation (the “ Buyer ”), Metaldyne Company LLC, a Delaware limited liability company (“ Metaldyne LLC ”), Metaldyne Precision Forming — Fort Wayne, Inc., an Indiana corporation (“ Metaldyne Precision ” and, together with Metaldyne LLC, the “ Sellers ”), and Metaldyne Corporation, a Delaware corporation (the “ Guarantor ”).

 

W I T N E S S E T H :

 

WHEREAS, the Sellers are in the business of supplying forged metal components to the automotive light vehicle market (the “ Business ”);

 

WHEREAS, the Buyer wishes to purchase or acquire from the Sellers, and the Sellers wish to sell, assign and transfer to the Buyer, all of the Assets, and the Buyer has agreed to assume the Assumed Liabilities, all for the purchase price and upon the terms and subject to the conditions hereinafter set forth;

 

WHEREAS, in connection with the transactions contemplated hereby, the Sellers and the Buyer wish to enter into a Transition Services Agreement and Supply Agreement, as set forth in Section 5.2.3, each on the terms and subject to the conditions set forth therein; and

 

WHEREAS, Guarantor, the holder of all of the outstanding capital stock of each of the Sellers, desires that Buyer purchase from Sellers all of the Assets and assume the Assumed Liabilities, and desires to guarantee to Buyer payment and performance of the obligations of Sellers set forth in this Agreement and in the Collateral Agreements.

 

NOW, THEREFORE, in consideration of the mutual covenants, representations and warranties made herein, and of the mutual benefits to be derived hereby, the parties hereto agree as follows:

 

ARTICLE I

 

SALE AND PURCHASE OF THE ASSETS

 

1.1.                               Assets . Subject to and upon the terms and conditions set forth in this Agreement, at the Closing, the Sellers will, or will cause their Affiliates (including, without limitation, with respect to clauses 1.1(i) and 1.1(o) below, the Guarantor) to, sell, transfer, convey, assign and deliver to the Buyer, and the Buyer will purchase or acquire, all right, title and interest of the Sellers and their Affiliates in and to all of the following properties, assets and rights of every nature, kind and description, tangible and intangible (including goodwill), wherever located, whether real, personal or mixed, whether accrued, contingent or otherwise (other than the Excluded Assets), primarily used in the Business, including the following assets (collectively, the “ Assets ”), in each case as the same may exist on the Closing Date:

 

(a)                         all machinery, equipment, furniture, furnishings, automobiles, trucks, vehicles, tools, dies, molds and parts and similar property (including, but not limited to, any of the foregoing purchased subject to any conditional sales or title retention agreement) listed or generally described in Section 1.1(a) of the Company Disclosure Letter ( provided , however , that each such item that has an acquired value or original asset cost, as shown in Section 1.1(a) of the Company Disclosure Letter, of less than $10,000 shall be conveyed hereunder at the Closing Date only if such item is (i) located on or at the Real Property, (ii) in transit to or from the Real Property or

 

 

 

(iii) held at or by a third party for purposes of repairs, cleaning, maintenance, storage or the like and only such items so located, in transit or held shall be “ Assets ”);

 

(b)                        all inventories of raw materials, work in process, finished products and office and other supplies (collectively, the “ Inventories ”), including Inventories held at any location controlled by either Seller, held on behalf of either Seller (by outside processors or other Persons) or deposited by either Seller with a bailee or in a warehouse and Inventories previously purchased and in transit to either Seller, in each case at or to such locations listed or generally described in Section 1.1(b) of the Company Disclosure Letter;

 

(c)                         subject to Section 2.8, all rights of the Sellers (including but not limited to any and all Intellectual Property rights) in and to the products sold in connection with the Business;

 

(d)                        subject to Section 2.8, all of the rights of the Sellers and Guarantor under all contracts, arrangements, licenses, leases and other agreements, including, without limitation, any right to receive payment for products sold or services rendered, and to receive goods and services, pursuant to such agreements and to assert claims and take other rightful actions in respect of breaches, defaults and other violations of such contracts, arrangements, licenses, leases and other agreements listed or generally described in Section 1.1(d) of the Company Disclosure Letter;

 

(e)                         all credits, prepaid expenses, deferred charges, advance payments, security deposits and prepaid items reflected in the Closing Statement of Net Assets Sold;

 

(f)                           subject to Section 2.8, all Intellectual Property of the Sellers and all rights thereunder or in respect thereof, including all goodwill associated therewith, all Owned Intellectual Property, all rights to sue for and remedies against past, present and future infringements thereof, and rights of priority and protection of interests therein under the laws of any jurisdiction worldwide and all tangible embodiments thereof (together with all Intellectual Property rights and all rights thereunder or in respect thereof included in the other clauses of this Section 1.1, the “ Intellectual Property Assets ”) listed or generally described in Section 1.1(f) of the Company Disclosure Letter;

 

(g)                        all books, records, manuals and other materials (in any form or medium), including, without limitation, all records and materials maintained at the headquarters of the Sellers, advertising matter, catalogues, price lists, correspondence, mailing lists, lists of customers, distribution lists, photographs, production data, sales and promotional materials and records, purchasing materials and records, personnel records, manufacturing and quality control records and procedures, blueprints, research and development files, records, data and laboratory books, media materials and plates, accounting records and sales order files relating to the Business, subject to Sections 1.2(b) and 4.2.4;

 

(h)                        to the extent their transfer is permitted by law, all Governmental Approvals (including all applications therefor and pending renewals), including those listed or described in Section 1.1(h) of the Company Disclosure Letter;

 

(i)                            the Real Property listed or described in Section 1.1(i) of the Company Disclosure Letter;

 

(j)                            all insurance benefits, including rights and proceeds, arising from or relating to the Assets or the Assumed Liabilities subsequent to the date hereof and prior to the Closing Date, unless expended in accordance with this Agreement;

 

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(k)                         all rights to causes of action, lawsuits, judgments, claims and demands of any nature available to or being pursued by the Sellers relating to the Business or the ownership, use, function or value of any Asset, whether arising by way of counterclaim or otherwise, listed or described in Section 1.1(k) of the Company Disclosure Letter;

 

(l)                            subject to Section 2.8, all air emissions credits and allowances Sellers have, are entitled to or applied for, including any air emissions where Sellers have credit for or have banked, applied to bank or agreed to sell or trade;

 

(m)                      all outstanding written offers or solicitations made by or to the Sellers to enter into any Contracts, provided , however , that for purposes of the representations and warranties in Article III, the term “Assets” shall not include such offers or solicitations;

 

(n)                        all rights of Sellers relating to the accrued volume discounts from MacSteel (the “ MacSteel Accrued Volume Discount ”);

 

(o)                        all of the Sellers’ and Guarantor’s rights under customer Contracts of the Business (including rights under expired and/or terminated Contracts) described in Section 2.6(a)(vi); and

 

(p)                        subject to Section 2.8, all guarantees, warranties, indemnities and similar rights in favor of the Sellers with respect to any Asset listed in Section 1.1(a)-(o) of the Company Disclosure Letter.

 

Subject to the terms and conditions hereof, at the Closing, the Sellers’ or their Affiliates’ interest in the Assets shall be transferred or otherwise conveyed to the Buyer free and clear of all liabilities, obligations, liens and encumbrances excepting only Assumed Liabilities, Liens listed in Section 3.1.9 of the Company Disclosure Letter and Permitted Liens.

 

1.2.                     Excluded Assets . The Sellers will retain and not transfer, and the Buyer will not purchase or acquire, the following assets (collectively, the “ Excluded Assets ”):

 

(a)                         the assets listed or described in Section 1.2 of the Company Disclosure Letter;

 

(b)                        the name and mark “Metaldyne” and any variations thereof in whole or in part;

 

(c)                         all cash and cash equivalents;

 

(d)                        accounts receivable for all products shipped prior to the Closing Date; and

 

(e)                         any intercompany receivables or intercompany indebtedness.

 

Within 30 days after the date hereof, the Sellers and the Buyer agree to develop a transition plan for the removal of the pinion gear assets and side gear assets set forth in Section 1.2 of the Company Disclosure Letter.

 

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ARTICLE II

 

THE CLOSING

 

2.1.                               Place and Date . The closing of the sale and purchase of the Assets (the “Closing”) shall take place at 10:00 A.M. local time on the second Business Day following the satisfaction or waiver of all conditions to Closing set forth in Article V hereof at the offices of Cahill Gordon & Reindel LLP, 80 Pine Street, New York, New York 10005, or such other time and place upon which the parties may agree. The day on which the Closing actually occurs is herein sometimes referred to as the “ Closing Date .”

 

2.2.                               Purchase Price .

 

(a)                                   On the terms and subject to the conditions set forth in this Agreement, the Buyer agrees to pay or cause to be paid to the Sellers an aggregate of $79,200,000, as adjusted pursuant to Section 2.5 (the “ Purchase Price ”), and to assume the Assumed Liabilities as provided in Section 2.6. An amount equal to the Purchase Price less the Deposit and the interest earned thereon shall be payable by Buyer at the Closing, by wire transfer in immediately available funds to such bank account or accounts as per written instructions of the Sellers given to the Buyer at least two (2) Business Days prior to the Closing.

 

(b)                                  No later than the close of business on Wednesday, January 11, 2006, the Buyer shall pay to an escrow agent selected by the Sellers (“ Escrow Agent ”) $1,000,000 (the “ Deposit ”) in immediately available funds, pursuant to an Escrow Agreement in the form of Exhibit B. The Deposit and the interest earned on it shall be paid to the Sellers and applied to the Purchase Price at Closing. If Closing does not occur because a condition set forth in Article V of this Agreement is not satisfied or waived, the Escrow Agent shall return the Deposit to the Buyer. If Closing does not occur due to the default of the Buyer and all conditions set forth in Article V have been satisfied or waived, the Escrow Agent shall pay the Deposit to the Sellers. The Deposit shall be held by the Escrow Agent in an interest bearing money market account. The interest on the Deposit will be paid to the party to this Agreement that receives the Deposit. In the event of a dispute between the Sellers and the Buyer concerning the Deposit, the Escrow Agent shall hold the Deposit until ordered by a court having jurisdiction to pay the Deposit to the Sellers, the Buyer or into the court.

 

2.3.                               Allocation of Purchase Price . The Purchase Price, the Assumed Liabilities and all other capitalized costs shall be allocated among the Assets as set forth in Section 2.3 of the Company Disclosure Letter. The Sellers and the Buyer shall, and shall cause each of their Affiliates to, (i) prepare and file all statements or other information required to be furnished to any Taxing Authority pursuant to section 1060 of the Code and the Treasury Regulations or other applicable tax law in a manner consistent with such allocations and (ii) prepare their respective financial statements and all Tax Returns and reports required to be filed by them in a manner consistent with such allocations, and shall not take any position contrary to such allocations with any government agency or Taxing Authority without the express written consent of the other.

 

2.4.                               Trade Accounts Payable Adjustment .

 

(a)                                   Not later than five Business Days prior to the Closing Date, the Sellers shall deliver to the Buyer a certificate setting forth the Trade Accounts Payable as of the close of business on the immediately preceding Business Day, certified by an officer of the Sellers (the “ Trade Accounts Payable Statement ”).

 

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(b)                                  If the Trade Accounts Payable set forth in the Trade Accounts Payable Statement are greater than $27,200,000, the Sellers will satisfy or pay those Trade Accounts Payable, beginning with those Trade Accounts Payable that have the greatest period of delinquency, so that the aggregate amount of such Trade Accounts Payable will not exceed $27,200,000. Any payment to be made by the Sellers prior to the Closing Date of a Trade Account Payable will be excluded from the calculation of Net Working Capital as shown on the Closing Net Working Capital Statement prepared in accordance with Section 2.5(a).

 

2.5.                               Purchase Price Adjustment .

 

(a)                                   As soon as practicable, but in any event not more than 60 days following the Closing Date, unless otherwise extended by the mutual agreement of the Sellers and the Buyer, the Sellers shall deliver to the Buyer a statement of Net Working Capital as of the Closing Date (the “ Closing Net Working Capital Statement ”), together with an Agreed upon Procedures Letter of the Sellers’ Accountants thereon to the effect that such statement fairly presents the Net Working Capital of the Business as of said date, and that such statement has been prepared in accordance with the Net Working Capital Principles (as defined below). “ Net Working Capital ” shall mean the sum of (a) net total Inventory, total prepaids, and unbilled tooling of the Business, excluding cash and cash equivalents and intercompany receivables, minus (b) the sum of net Trade Accounts Payable and other accrued expenses of the Business, all of which are presented on line items shown in Section 2.5(a) of the Company Disclosure Letter. The Net Working Capital set forth in the Closing Net Working Capital Statement shall be prepared applying the accounting principles and policies to be reasonably agreed by the Buyer and Sellers within 16 days after the date of this Agreement (collectively, the “ Net Working Capital Principles ”).

 

(b)                                  The Purchase Price shall be adjusted as follows: subject to Section 2.5(d), (i) if Net Working Capital on the Closing Date as reflected on the Closing Net Working Capital Statement is less than $3,500,000 (the “ Target Net Working Capital ”), the difference between Net Working Capital and the Target Net Working Capital shall be paid by the Sellers to the Buyer or (ii) if Net Working Capital on the Closing Date as reflected on the Net Working Capital Statement is more than the Target Net Working Capital, the difference between Net Working Capital and the Target Net Working Capital shall be paid by the Buyer to the Sellers.

 

(c)                                   Subject to Section 2.5(d), payments required pursuant to Section 2.5(b) shall be made within 60 days after the delivery by the Sellers of the Closing Net Working Capital Statement by wire transfer of immediately available funds to one or more accounts specified at least two Business Days prior to such date by the party who shall receive the funds. Any such payment shall be made together with interest thereon at the rate of 6% per annum, payable for the period commencing on the Closing Date and ending on the day immediately prior to the date such payment is made.

 

(d)                                  The Buyer may dispute the accounting treatment of any amounts reflected on the Closing Net Working Capital Statement, including as not being in accordance with the Net Working Capital Principles; provided , however , that the Buyer shall notify the Sellers in writing (the “ Dispute Notice ”) of each disputed item, specifying the amount thereof in dispute and setting forth, in reasonable detail, the basis for such dispute, within 60 days of the Sellers’ delivery of the Closing Net Working Capital Statement. In the event of such a dispute, the Sellers and the Buyer shall attempt to reconcile their differences and any resolution by them as to any disputed amounts shall be final, binding and conclusive. If the Sellers and the Buyer are unable to reach a resolution with such effect within 30 days of the receipt by the Sellers of the Dispute Notice, the Sellers and the Buyer shall submit the accounting treatment in accordance with the Net Working Capital Principles of the items remaining in dispute for resolution to the Independent Accounting Firm, which shall, within 30 days after submission, determine and report to the parties upon such remaining disputed items, and such report shall be final, binding and conclusive on the

 

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parties hereto. All costs and expenses of the Independent Accounting Firm relating to the disputed items shall be allocated between the Sellers and the Buyer in the same proportion that the aggregate dollar amount of the items unsuccessfully disputed by each party bears to the total dollar amount of the items disputed hereunder. The term “ Independent Accounting Firm ” shall mean a nationally recognized accounting firm which is not otherwise retained by the Sellers or Buyer and their respective Affiliates as the Sellers and the Buyer shall agree.

 

(e)                                   Notwithstanding any dispute pursuant to Section 2.5(d) of any amounts payable pursuant to this Section 2.5, the applicable party shall at the time specified in this Section 2.5 pay the net amount payable by it pursuant to this Section 2.5 that is not subject to any dispute. Any amount payable following resolution of a matter specified in a Dispute Notice shall be paid within five Business Days following the resolution thereof.

 

(f)                                     During the periods in which (i) the Closing Net Working Capital Statement is being prepared or (ii) any dispute is raised as contemplated by Section 2.5(d), the Sellers and the Buyer shall provide each other, including their authorized agents and Representatives, with reasonable access, during normal business hours and without disruption to their day-to-day business, to their respective books, records and facilities pertaining to the Business, including any consolidated or combined returns, schedules, consolidated or combined work papers (including accountants’ work papers) and other related documents; provided , however , that with respect to consolidated, combined, unitary or similar Tax Returns of the Sellers (or any Subsidiary of the Sellers), the Buyer shall only have access to portions of such Tax Returns relevant to the Business and provided further , however , that any access to accountant’s work papers shall be subject to the policies and requirements of such accounting firm.

 

2.6.                               Assumption of Liabilities .

 

(a)                                   Subject to the terms and conditions set forth herein, at the Closing the Buyer shall assume and agree to pay, honor and discharge when due only the following liabilities relating to the Assets and existing at or arising on or after the Closing Date (collectively, the “ Assumed Liabilities ”):

 

(i)                                      any and all liabilities, obligations and commitments relating to the Business or the Assets that are reflected on the Closing Net Working Capital Statement as finally determined pursuant to Section 2.5;

 

(ii)                                   any and all liabilities, obligations and commitments with respect to the IRB Loan Documents (other than any liabilities, obligations or commitments arising out of or relating to a breach with respect thereto that occurred prior to the Closing Date);

 

(iii)                                any and all liabilities, obligations and commitments under the agreements, contracts and commitments set forth in Section 1.1(d) of the Company Disclosure Letter (or not required to be set forth therein because of the amount involved) or in Section 1.1(f) (other than, except as set forth in Section 2.6(a)(v) below, any liabilities, obligations or commitments arising out of or relating to a breach with respect thereto that occurred prior to the Closing Date);

 

(iv)                               liabilities in respect of Transferred Employees to the extent assumed by the Buyer pursuant to Article VI;

 

(v)                                  any warranty or product liability claim first made after the Closing Date and arising out of products of the Business manufactured or sold prior to the Closing Date, including, but not limited to, the design, manufacture, use, service, repair or sale thereof;

 

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(vi)                               all of the Sellers’ and Guarantor’s obligations to supply service parts under customer Contracts of the Business (including obligations under expired and/or terminated Contracts); and

 

(vii)                            the Transfer Taxes borne by the Buyer pursuant to Section 4.1.6.

 

(b)                                  At the Closing, the Buyer shall assume the Assumed Liabilities by executing and delivering to the Sellers an assumption agreement in a form reasonably satisfactory to the Sellers (the “ Assumption Agreement ”).

 

2.7.                               Retained Liabilities . The Retained Liabilities shall remain the sole responsibility of and shall be retained, paid, performed and discharged solely by the Sellers. “ Retained Liabilities ” shall mean each and every liability of the Sellers other than the Assumed Liabilities, including, without limitation, all Environmental Liabilities arising out of (A) the operation of the Business prior to the Closing Date and (B) the Sellers’ leasing, ownership and operation of the Real Property used in the Business prior to the Closing Date.

 

2.8.                               Consents of Third Parties .

 

(a)                                   Notwithstanding anything to the contrary herein, this Agreement shall not constitute an agreement to assign or transfer any instrument, contract, lease or other agreement or arrangement or any claim, right or benefit arising thereunder or resulting therefrom if an assignment or transfer or an attempt to make such an assignment or transfer without the consent of a third party would constitute a breach or violation thereof or adversely affect the rights of the Buyer or the Sellers thereunder; and any transfer or assignment to the Buyer by the Sellers of any interest under any such instrument, contract, lease or other agreement or arrangement that requires the consent or approval of a third party shall be made subject to such consent or approval being obtained. In the event any such consent or approval is not obtained (or otherwise is not in full force and effect) on or prior to the Closing Date, the Sellers shall continue to use commercially reasonable efforts to obtain any material consent or approval as quickly as reasonably practicable for 120 days after the Closing Date. Pending the obtaining of any such consent or approval as set forth above, the parties shall cooperate with each other in any reasonable, lawful and economically feasible arrangements designed to provide to the Buyer the benefits of and use of such instrument, contract, lease or other agreement or arrangement for its term (or any right or benefit arising hereunder, including the enforcement for the benefit of the Buyer of any and all rights of the Sellers against a third party thereunder), including, without limitation, by subleasing any Leased Real Property to the Buyer, subject to obtaining any required consent from the owner of such Leased Real Property; provided that the Buyer shall undertake to pay or satisfy the corresponding liabilities for the enjoyment of such benefit to the extent the Buyer would have been responsible therefor hereunder if such consent or approval had been obtained. Once the consent or approval of the assignment of such instrument, contract, lease or other agreement or arrangement is obtained, the Sellers shall promptly assign, transfer, convey and deliver such instrument, contract, lease or other agreement or arrangement, and the Buyer shall assume the obligations thereunder from and after the date of assignment to the Buyer pursuant to a special-purpose assignment and assumption agreement substantially similar in terms to those of the Assumption Agreement (which special-purpose agreement the parties shall prepare, execute and deliver in good faith at the time of such transfer, all at no additional cost to the Buyer or the Seller).

 

(b)                                  Except as set forth in the next sentence, in no event will the Sellers be required to alter the terms of any agreement or pay any fee in connection with obtaining such consent or approval, unless such consent or transfer fee is provided for in such instrument, contract, lease or other agreement or arrangement as in effect on the date hereof, in which case the Sellers shall be required to pay such fee in connection therewith (to the extent required by the party entitled thereto). With respect to the leases of

 

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Real Property used in the Business listed or described in Section 2.8(b) of the Company Disclosure Letter, the Sellers shall be required to obtain such consent or approval and pay all such fees in connection therewith; provided , however , that the Sellers shall have the right to sublease any such properties in accordance with Section 2.8(a) to the Buyer, provided that on or prior to the Closing Date, the Sellers have obtained any required consents to such sublease. Notwithstanding anything to the contrary contained herein, in no event will the Buyer be required to pay any fee in connection with obtaining any consent or approval required for the assignment of any Contract from the Sellers to the Buyer.

 

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

 

3.1.                               Representations and Warranties of the Sellers . Except as set forth in the Company Disclosure Letter (in the section or subsections thereof corresponding to the section or subsection of this Agreement) delivered by the Sellers to the Buyer prior to execution of this Agreement (the “ Company Disclosure Letter ”), the Sellers, jointly and severally, represent and warrant to the Buyer as follows:

 

3.1.1.                      Organization; Ownership . Each Seller is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or formation, with full power and authority to carry on its business (including its portion of the Business) and to own or lease and to operate its properties. Each Seller is duly qualified to do business as a foreign corporation and is in good standing under the laws of each state or other jurisdiction 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 where the lack of such qualification would not reasonably be expected to result in a Material Adverse Effect. Guarantor holds, beneficially and of record, all of the issued and outstanding membership and other equity or ownership interests of each Seller. Complete and accurate copies of the certificate of incorporation and bylaws of Metaldyne Precision, and the articles of organization and operating agreement of Metaldyne LLC, as currently in effect, have been provided to the Buyer.

 

3.1.2.                      Authorization, etc . Each Seller has the corporate power and authority to execute and deliver this Agreement and each of the Collateral Agreements to which it will be a party, to perform fully its obligations hereunder and thereunder, and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Sellers of this Agreement and the Collateral Agreements, and the consummation of the transactions contemplated hereby and thereby, have been duly authorized by all requisite corporate and stockholder action of the Sellers. The Sellers have duly executed and delivered this Agreement and on the Closing Date each Seller will have duly executed and delivered each of the Collateral Agreements to which it is a party. This Agreement is, and on the Closing Date each of the Collateral Agreements to which either Seller is a party will be, a legal, valid and binding obligation of the Sellers, enforceable against them in accordance with its terms.

 

3.1.3.                      No Conflicts, etc .

 

(a)           The execution, delivery and performance by each Seller of this Agreement and each of the Collateral Agreements to which it is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not (with or without the giving of notice or the lapse of time or both):

 

(i)                                      conflict with or result in a material violation of or a material default under any Applicable Law applicable to either Seller or any of the Assets;

 

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(ii)                                   conflict with or breach any provision of the certificate of incorporation or bylaws or other organizational documents of either Seller;

 

(iii)                                contravene, conflict with or result in a violation or breach of any terms or requirements of, or give any Governmental Authority the right to revoke, withdraw, suspend, cancel, terminate or modify, any material Governmental Approval that is held by either Seller or that is otherwise necessary for conduct of the Business; or

 

(iv)                               result in the imposition or creation of any Lien upon or with respect to any other Assets.

 

(b)                                  Subject to Section 2.8, neither Seller is required to give any notice to or obtain any consent from any Person in connection with the execution and deliver of this Agreement or the Collateral Agreements or the consummation or performance of the transactions contemplated thereby.

 

3.1.4.                      Financial Statements .

 

(a)                                   The Sellers have delivered to the Buyer audited financial statements of the Business for the years ended December 31, 2003 and 2004 (the “ Audited Financial Statements ”), unaudited reviewed financial statements for the six months ended July 3, 2005 and June 27, 2004 (the “ Unaudited Reviewed Financial Statements ”), an unaudited unreviewed balance sheet of the Business as of September 30, 2005 (the “ Unaudited Balance Sheet ”) and related unaudited unreviewed statements of income and cash flows of the Business for the nine months then ended (the “ Unaudited Unreviewed Financial Statements ” and, together with the Unaudited Reviewed Financial Statements, the “ Unaudited Financial Statements ” and, collectively with the Audited Financial Statements, the “ Financial Statements ”).

 

(b)                                  The Financial Statements have been prepared in all material respects in accordance with GAAP applied on a consistent basis, and fairly present the financial condition and results of operations of the Business as of the dates and for such periods, provided, however, that the Unaudited Financial Statements are subject to normal year end adjustments and lack footnotes and other presentation items. Except for (i) liabilities which are not required under GAAP to be disclosed in the Unaudited Financial Statements or referred to in the footnotes to the Unaudited Financial Statements and (ii) liabilities incurred in the Ordinary Course of Business since the Unaudited Balance Sheet Date, neither Seller has any material liability not disclosed, reserved for or otherwise reflected in the Unaudited Financial Statements.

 

3.1.5.                      Books and Records . The books of account and other financial Records of the Sellers related to the Business, all of which have been made available to the Buyer, are complete and correct in all material respects and represent actual, bona fide transactions and have been maintained in accordance with sound business practices.

 

3.1.6.                      Taxes .

 

(a)                                   Each of the Sellers has duly prepared and timely filed all material Tax Returns that it was required to file. All such Tax Returns were correct and complete in all material respects and were prepared in material compliance with all applicable laws and regulations. All material Taxes owed by the Sellers (whether or not shown on any Tax Return) have been paid. No claim has ever been made by a Taxing Authority in a jurisdiction where any of the Sellers do not file Tax Returns that it is or may be subject to taxation by that jurisdiction.

 

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(b)                                  Each of the Sellers has in all material respects 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 and all Forms W-2 and 1099 required with respect thereto have in all material respects been properly completed and timely filed.

 

(c)                                   No Tax Return is in the process of or within the last five years has been examined by any Taxing Authority and the Sellers have no Knowledge of a Taxing Authority proposing to examine any Tax Return or assess additional Taxes for any period for which Tax Returns have been filed.

 

(d)                                  Neither Seller has waived any statute of limitations in respect of Taxes or agreed to any extension of time with respect to a Tax assessment or deficiency.

 

(e)                                   None of the Assumed Liabilities is an obligation to make a payment that will not be deductible under section 280G of the Code based on facts and circumstances as of the Closing.

 

(f)                                     The Buyer will not be required to deduct and withhold any amount pursuant to section 1445(a) of the Code upon the transfer of the Business to the Buyer.

 

3.1.7.                      Events Subsequent to the Unaudited Balance Sheet Date .

 

(a)                                   Since the Unaudited Balance Sheet Date, there has been no Material Adverse Effect.

 

(b)                                  Since the Unaudited Balance Sheet Date, the Business has not engaged in any material practice, taken any material action or entered into any material transaction outside the Ordinary Course of Business (other than the transactions contemplated by this Agreement). Without limiting the generality of the foregoing, since that date:

 

(i)            there has been no change made or authorized in the certificate of incorporation, bylaws or other organizational documents of either Seller;

 

(ii)                                   neither Seller has granted any increase in the compensation or employee benefits payable to or to become payable to any officer, director or employee of the Sellers, other than increases required by law or in the Ordinary Course of Business or as disclosed in Section 3.1.7 of the Company Disclosure Schedule;

 

(iii)                                there has been no material damage to or destruction or loss of any Asset with a value greater than $100,000, whether or not covered by insurance;

 

(iv)                               neither Seller has entered into, terminated or received written notice of termination of (i) any license, distributorship, dealer, sales representative, joint venture, credit or similar Contract to which either Seller is a party, or (ii) any Contract or transaction involving a total commitment by either Seller of at least $100,000;

 

(v)                                  there has been no sale (other than sales of Inventory in the Ordinary Course of Business), lease, license or other disposition (other than dispositions in the Ordinary Course of Business) of any Asset or property of either Seller (including the Intellectual Property Assets) or the creation of any Lien on any Asset;

 

(vi)                               there has been no cancellation or waiver of any claims or rights with a value to the Business in excess of $100,000;

 

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(vii)                            there has been no material change in the accounting methods used by the Business;

 

(viii)                         there has been no transfer or removal of any Asset or property of either Seller with an acquired value or original asset cost exceeding $10,000 from any of the Owned Real Property or Leased Real Property (other than the sales of Inventory in the Ordinary Course of Business);

 

(ix)                                 there has been no Contract by either Seller to do any of the foregoing; or

 

(x)                                    neither Seller has received written notice of termination or discontinuance of any customer Contract.

 

3.1.8.                      Litigation .

 

(a)                                   There is no Proceeding pending or, to the Knowledge of the Sellers, threatened against either Seller in connection with the Assets or the Business or the transactions contemplated by this Agreement or the Collateral Agreements that (i) would reasonably be expected to have a Material Adverse Effect or (ii) that challenges, or that may have the effect of preventing, delaying, making illegal, making unenforceable or otherwise interfering with the transactions contemplated by this Agreement or the Collateral Agreements. Section 3.1.8(a) of the Company Disclosure Letter lists each proceeding pending against either Seller in connection with the Assets or the Business that seeks injunctive relief or specifies damage claims in excess of $250,000. The Sellers have made available to the Buyer copies of all pleadings, correspondence and other documents relating to each Proceeding listed in Section 3.1.8(a) of the Company Disclosure Letter;

 

(b)                                  There is no Order to which the Business or any of the Assets is subject, and, to the Knowledge of the Sellers, no agent or employee of any Seller is subject to any Order that prohibits such agent or employee from engaging in or continuing any conduct, activity or practice relating to the Business;

 

(c)                                   No event has occurred or circumstances exist that is reasonably likely to constitute or result in (with or without notice or lapse of time) a violation of or failure to comply with any material term or requirement of any Order to which either the Seller (with respect to the Business) or any of the Assets is subject; and

 

(d)                                  Neither Seller has received, at any time since December 31, 2002, any written notice from any Governmental Authority regarding any actual, alleged or potential violation of, or failure to comply with, any term or requirement of any Order to which the Sellers (with respect to the Business) or any Assets are or have been subject.

 

3.1.9.                      Compliance with Laws; Governmental Approvals .

 

(a)                                   To the Knowledge of the Sellers, the Business as presently conducted does not violate in any material respect any Applicable Laws applicable to the Business or the Assets.

 

(b)                                  Notwithstanding the provisions of Section 3.1.9(a) above, and in addition thereto, the Business as presently conducted does not violate in any material respect any Applicable Laws relating specifically to workplace safety and applicable to the Business or the Assets.

 

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(c)                                   Section 1.1(h) of the Company Disclosure Letter sets forth (i) all Governmental Approvals (other than Environmental Permits) necessary for the conduct of the Business, (ii) the expiration dates of all such Governmental Approvals, and (iii) all pending applications therefor and renewals thereof. All such Governmental Approvals (other than Environmental Permits) listed on Section 1.1(h) of the Company Disclosure Letter have been duly obtained and are in full force and effect, except as would not, individually or in the aggregate, have a Material Adverse Effect.

 

3.1.10.                Assets . The Sellers or their affiliates have a valid leasehold interest in all of their leases of personalty, have good title to all the Assets owned by the Sellers or their affiliates, and have a valid legal right under contract to use all other personalty used by the Sellers in the Business, including all personalty reflected on the Unaudited Balance Sheet and all personalty acquired since the Unaudited Balance Sheet Date, other than personalty disposed of since such date in the Ordinary Course of Business and in accordance with the terms of this Agreement, free and clear of any and all Liens other than Permitted Liens. The Assets which are significant to the Business are in all material respects adequate for the purposes for which such assets are currently used and are in reasonably good repair and operating condition (subject to normal wear and tear).

 

3.1.11.                Contracts.

 

(a)                                   Section 1.1(d) of the Company Disclosure Letter lists or generally describes all Contracts included in the Assets except for (i) this Agreement and the Collateral Agreements, (ii) purchase orders for the purchase of products, merchandise, raw materials or other goods or services by the Sellers issued in the Ordinary Course of Business and purchase orders for the sale of goods or services by the Sellers to customers issued in the Ordinary Course of Business and (iii) Contracts involving payments to or by the Sellers of less than $100,000.

 

(b)                                  All Contracts set forth in Section 1.1(d) of the Company Disclosure Letter are in full force and effect and enforceable against the Seller which is a party thereto in accordance with their terms.

 

(c)                                   Each Seller is in material compliance with all applicable terms and requirements of the IRB Loan Documents and each Contract set forth in Section 1.1(d) of the Company Disclosure Letter, and, to the Knowledge of the Sellers, each other Person that has or had any obligation or liability under any Contract set forth in Section 1.1(d) of the Company Disclosure Letter is in compliance in all material respects with all applicable terms and requirements of such Contract.

 

(d)                                  To the Knowledge of the Sellers, no event has occurred or circumstance exists that (with or without notice or lapse of time) would reasonably be expected in any material respect to contravene, conflict with or result in a breach of, or give either Seller or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or payment under, or to cancel, terminate or modify, the IRB Loan Documents or any Contract set forth in Section 1.1(d) of the Company Disclosure Letter.

 

(e)                                   No event has occurred or circumstance exists under or by virtue of any Contract set forth in Section 1.1(d) of the Company Disclosure Letter that (with or without notice or lapse of time) would cause the creation of any Lien (other than Permitted Liens) affecting any of the Assets.

 

(f)                                     To the Knowledge of Sellers, the Sellers are not party to any Contract that contains any covenant that prohibits Sellers from engaging in any line of business or competing with any Person, or that materially restricts Sellers’ ability to solicit, either directly or indirectly, through agents or consultants, or hire, potential officers, employees or consultants.

 

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3.1.12.                Inventories . The aggregate Inventories (net of the aggregate reserves reflected in the Closing Net Working Capital Statement) are usable and salable in the usual and Ordinary Course of Business and are not obsolete or discontinued. All Inventories are recorded on the books of the Business at the lower of cost or market value determined in accordance with the Working Capital Principles.

 

3.1.13.                Customers . Section 3.1.13 of the Company Disclosure Letter lists the names and addresses of all customers of each Seller that ordered goods and services from such Seller with an aggregate value for each such customer of $1,000,000 or more during the twelve-month period ended July 31, 2005.

 

3.1.14.                Suppliers; Raw Materials . Section 3.1.14 of the Company Disclosure Letter lists the names of all suppliers from which the Business ordered raw materials, supplies, merchandise and other goods and services with an aggregate purchase price for each such supplier of $1,000,000 or more during the twelve-month period ended July 31, 2005.

 

3.1.15.                Products; Product and Service Warranties; Product Liability; Selling Material and Policies . Except for normal customer returns and allowances made in the Ordinary Course of Business and except for those instances which would not, individually or in the aggregate, have a Material Adverse Effect, (a) the products manufactured and sold and the services provided by the Sellers in connection with the Business conform with applicable contractual commitments in all material respects, and (b) no product manufactured and sold and no service provided by the Sellers in connection with the Business is subject to any guaranty, warranty or indemnity beyond the applicable customer terms and conditions of purchase. Since January 1, 2002, the Sellers have received no written claims alleging liability on the part of either Seller in connection with the Business (and, to the Knowledge of the Sellers, there is no basis for any present or future Proceeding against them that would give rise to any such liability in connection with the Business) arising out of any injury to any individual or property as a result of the use of any product manufactured and sold or any service provided by the Sellers in connection with the Business in the manner intended, on account of a defect in the manufacture of any such product that is currently offered for sale by either Seller. Section 3.1.15 of the Company Disclosure Letter sets forth a summary of all claims from customers since January 1, 2002 that the products purchased by them from Sellers were not manufactured in accordance with applicable specifications or were otherwise defective for which the aggregate sales price of products covered by such claims (together with all claims from other customers alleging similar matters with respect to such products) exceeds $250,000.

 

3.1.16.                Intellectual Property .

 

(a)                                   Title . Section 1.1(f) of the Company Disclosure Letter lists or generally describes all Intellectual Property that is owned by either Seller and exclusively used in, held for use in or necessary for the conduct of the Business (the “ Owned Intellectual Property ”) other than (i) inventions, trade secrets, processes, formulas, compositions, designs and confidential business and technical information and (ii) Intellectual Property that is not registered and not material to the Business. The Sellers own or have the right to use pursuant to license, sublicense, agreement or permission all Intellectual Property Assets, free from any Liens (other than Permitted Liens). The Intellectual Property Assets comprise all of the Intellectual Property necessary for the Buyer to conduct and operate the Business as now being conducted by the Sellers. No Owned Intellectual Property is assigned or registered jointly with a person other than a Seller.

 

(b)                                  Transfer . Immediately after the Closing, the Buyer will own all of the Owned Intellectual Property and, upon receipt of any necessary consents to assignment set forth on Section 1.1(f) of

 

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the Company Disclosure Letter, will have a right to use all other Intellectual Property Assets permitted by law, free from any Liens (other than Permitted Liens).

 

(c)                                   No Infringement . To the Knowledge of the Sellers, the conduct of the Business or any product or service of Sellers does not infringe, misappropriate or otherwise violate any rights of any Person in respect of any Intellectual Property.

 

(d)                                  Licensing Arrangements . Section 1.1(f) of the Company Disclosure Letter lists or generally describes all agreements other than customer and supplier purchase orders (i) pursuant to which either Seller has licensed any material Intellectual Property Assets to, or the use of any material Intellectual Property Assets is otherwise permitted (through non-assertion, settlement or similar agreements or otherwise) by, any other Person and (ii) pursuant to which either Seller has had any material Intellectual Property licensed to it, or has otherwise been permitted to use Intellectual Property (through non-assertion, settlement or similar agreements or otherwise). All of the agreements set forth in Section 1.1(f) of the Company Disclosure Letter (x) are in full force and effect in accordance with their terms and no default exists thereunder by either Seller or by any other party thereto and (y) are free and clear of all Liens other than Permitted Liens.

 

(e)                                   No Intellectual Property Litigation . No written claim or demand of any Person has been made nor is there any Proceeding that is pending or, to the Knowledge of the Sellers, threatened that (i) challenges the rights of the Sellers or the validity or enforceability in respect of any Intellectual Property Assets material to the Business, (ii) asserts that any Seller is infringing, misappropriating or otherwise in conflict with, or is required to pay any additional royalty, license fee, charge or other amount with regard to, any Intellectual Property, other than maintenance and registration fees in the ordinary course of business, or (iii) claims that any material default exists under any agreement or arrangement set forth in Section 1.1(f) of the Company Disclosure Letter. None of the Owned Intellectual Property is subject to any outstanding order, ruling, decree, judgment or stipulation by or with any court, arbitrator or administrative agency, or has been the subject of any litigation within the last five years, whether or not resolved in favor of the Sellers.

 

(f)                                     No Conflicts . To the Knowledge of the Sellers, the Intellectual Property Assets are valid and enforceable and all due maintenance and annuity fees have been paid and, to the Knowledge of the Sellers, are not being infringed, misappropriated or otherwise violated by any Person. No Owned Intellectual Property which are material to the Business are being used or enforced in a manner that would reasonably be expected to result in the abandonment, cancellation or unenforceability of any Intellectual Property Asset.

 

(g)                                  Intellectual Property Opinions . Neither Seller nor the Guarantor has obtained any opinion of counsel regarding any third party Intellectual Property or any Intellectual Property Asset related to the Business.

 

(h)                                  Owned Shared Intellectual Property . Section 1.1(f) of the Company Disclosure Letter lists or generally describes all Intellectual Property that is owned by either Seller and exclusively used in, held for use in or necessary for the conduct of the Business, as well as other businesses of Sellers, as currently conducted (“ Owned Shared Intellectual Property ”) other than (i) inventions, trade secrets, processes, formulas, compositions, designs and confidential business and technical information and (ii) Intellectual Property that is not registered and not material to the Business.

 

3.1.17.                Insurance . Section 3.1.17 of the Company Disclosure Letter lists all insurance policies maintained by either Seller for the benefit of or in connection with the Assets or the Business. Section 3.1.17 of the Company Disclosure Letter lists all material claims made by the Sellers

 

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under any policy of insurance during the past two years with respect to the Business. All premiums due and payable for the insurance listed in Section 3.1.17 of the Company Disclosure Letter have been duly paid, and such policies or extensions or renewals thereof in such amounts will be outstanding and duly in full force without interruption until the Closing Date.

 

3.1.18.                Real Property .

 

(a)                                   Owned Real Property . Section 3.1.18(a) of the Company Disclosure Letter lists all Owned Real Property, setting forth the address and owner of each parcel of Owned Real Property including, without limitation, the properties reflected as being so owned on the Financial Statements. Each Seller has, or on the Closing Date will have, good, valid and marketable fee simple title to the Owned Real Property indicated in Section 3.1.18(a) of the Company Disclosure Letter as being owned by it, free and clear of all Liens other than Permitted Liens. There are no outstanding options or rights of first refusal to purchase the Owned Real Property, or any portion thereof or interest therein.

 

(b)                                  Leases . Section 3.1.18(b) of the Company Disclosure Letter lists all Leases, setting forth the address, landlord and tenant for each Lease. The Sellers have delivered to the Buyer correct and complete copies of the Leases. Each Lease is legal, valid, binding, enforceable and in full force and effect, except as may be limited by bankruptcy, insolvency, reorganization and similar Applicable Laws affecting creditors generally and by the availability of equitable remedies. Neither the Sellers nor, to the Knowledge of the Sellers, any other party is in default, violation or breach in any material respect under any Lease, and no event has occurred and is continuing that constitutes or, with notice or the passage of time or both, would constitute a default, violation or breach in any material respect under any Lease. Each Lease grants the tenant under the Lease the exclusive right to use and occupy the demised premises thereunder. The Sellers have a good and valid title to the leasehold estate under each Lease free and clear of all Liens other than Permitted Liens. Each Seller enjoys peaceful and undisturbed possession under its respective Leases for the Leased Real Property.

 

(c)                                   No Proceedings . There are no eminent domain or other similar Proceedings pending or, to the Knowledge of the Sellers, threatened affecting any portion of the Real Property. There is no writ, injunction, decree, order or judgment outstanding, nor any action, claim, suit or Proceeding pending or, to the Knowledge of the Sellers, threatened, relating to the ownership, lease, use, occupancy or operation by any Person of any Real Property, except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

 

(d)                                  Current Use . The use and operation of the Owned Real Property in the conduct of the Business does not violate in any material respect any instrument of record or agreement affecting the Owned Real Property. There is no violation of any covenant, condition, restriction, easement or order of any Governmental Authority having jurisdiction over such property or of any other Person entitled to enforce the same affecting the Owned Real Property or the use or occupancy thereof that would have a Material Adverse Effect. No material damage or destruction, other than normal wear and tear, has occurred with respect to any of the Owned Real Property since January 1, 2002.

 

(e)                                   Compliance with Real Property Laws . The Owned Real Property is in material compliance with all applicable building, zoning, subdivision and other land use and similar Applicable Laws affecting the Owned Real Property (collectively, the “ Real Property Laws ”), and no Seller has received any notice of violation or claimed violation of any Real Property Law. No current use by any Seller of the Owned Real Property is dependent on a nonconforming use or other Governmental Approval the absence of which would materially limit the use of any properties or assets used in connection with or otherwise material to the Business.

 

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3.1.19.                Environmental Matters .

 

(a)                                   Permits . All active material Environmental Permits are identified in Section 3.1.19(a) of the Company Disclosure Letter, the Sellers currently hold all such Environmental Permits material to the Business and renewal of Environmental Permits if currently required have been timely applied for. No Seller has received written notice from any relevant Governmental Authority that any Environmental Permit will be modified, suspended, canceled or revoked, or cannot be renewed in the Ordinary Course of Business.

 

(b)                                  No Violations . Each of the Sellers and their respective Affiliates is in material compliance with all Environmental Permits and all applicable Environmental Laws pertaining to the Real Property and the Business. The Sellers have not received any written notice of any violation by either Seller of any Environmental Permit or any applicable Environmental Law relating to the conduct of the Business or the Real Property. Sellers have made available to Buyer copies of any material, investigations, studies, audits and inspections concerning Environmental Liabilities or the part of Sellers in connection with the Business or Real Property, including the Phase I and Phase II environmental reports listed on Section 3.1.19(b) of the Company Disclosure Schedule in the Sellers’ possession. The Sellers have made available to the Buyer copies of all Occupational Health and Safety (“ OSHA ”) correspondence and documents regarding worker accidents or injuries, including OSHA 300 logs, investigations, and written notices of violations (and the dispositions thereof) issued by OSHA or analogous state or local agencies to the Sellers since January 1, 2003 related to the Business or the Real Property.

 

(c)                                   No Actions . To the Knowledge of the Sellers, neither of the Sellers or any of their respective Affiliates has taken any action in the conduct of the Business or affecting the Real Property that would reasonably be expected to result in material liability of any of them under any Environmental Law, including the treatment, generation, storage or Release of any Hazardous Substances.

 

(d)                                  Investigations and Remediations . Neither Seller is financing or conducting any investigation or remediation involving any Hazardous Substances related to the conduct of the Business at any location under any Environmental Law.

 

(e)                                   Orders, etc . Neither Seller is a party to any outstanding order, judgment, injunction, decree or agreement with any Governmental Authority which requires any action under any Environmental Law by either Seller.

 

(f)                                     Disposal of Hazardous Substances . The Sellers have not, and, to the Knowledge of the Sellers, no other Person has, stored, discharged, buried, or disposed of Hazardous Substances resulting from, any business, commercial or industrial activities, operations or processes, on or beneath the Real Property, other than in material compliance with applicable Environmental Laws and, to the Knowledge of the Sellers, the Sellers have not disposed of or arranged for the disposal or treatment of Hazardous Substances generated by them in the conduct of the Business at any other location in a manner which would be expected to result in any material Environmental Liability being asserted against the Sellers.

 

3.1.20.                Employees, Labor Matters, etc .

 

(a)                                   Section 3.1.20(a) of the Company Disclosure Letter lists all collective bargaining agreements of the Sellers specifically relating to each company facility that is represented by a labor organization and all known or threatened current labor organizing activities that relate to the Business. The Sellers are in material compliance with all collective bargaining agreements of the Sellers regarding each company facility associated with the Business that is represented by a labor organization, including any provision requiring notice of the transactions contemplated by this Agreement. Since January 1, 2000

 

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there has not occurred or, to the Knowledge of the Sellers, been threatened any strike, slowdown, picketing, work stoppage, concerted refusal to work overtime or other similar labor activity with respect to any employees employed in the operation of the Business. There are no labor disputes currently subject to any arbitration or litigation and there is no representation petition pending or, to the Knowledge of the Sellers, threatened with respect to any employee employed in the operation of the Business. Each Seller has complied in all material respects with Applicable Law in effect as of the date of this Agreement pertaining to the employment of employees, including, without limitation, all such laws relating to labor relations, wages, hours, working conditions, occupational safety and health, workers’ compensation, plant closings and mass layoffs, immigration, equal employment, fair employment practices, entitlements, prohibited discrimination or other similar employment acts (collectively, “ Labor Laws ”). The Sellers have not received notice of the intent of any Governmental Authority responsible for the enforcement of any Labor Law to conduct an investigation with respect to any employees employed in the operation of the Business and, to the Knowledge of the Sellers, no such investigation is threatened. There exists no pending or, to the Knowledge of Sellers, threatened lawsuit, administrative proceeding or investigation involving the Business and any current or former director, officer or employee of the Business, including under any Labor Law or any claim for wrongful termination or breach of an express or implied contract of employment, other than routine employee grievances.

 

(b)                                  Section 3.1.20(b) of the Company Disclosure Letter lists all written (and, to the Knowledge of the Sellers, oral) agreements (other than “at-will” employment or consulting agreements) (i) for the employment of any individual employed in the operation of the Business on a full-time, part-time, consulting or other basis and (ii) to provide to any individual employed in the operation of the Business any severance benefits upon the termination of such individual’s employment with the Sellers.

 

3.1.21.                Employee Benefit Plans and Related Matters .

 

(a)                                   Employee Benefit Plans . Section 3.1.21(a) of the Company Disclosure Letter lists each “employee benefit plan,” as such term is defined in section 3(3) of ERISA, whether or not subject to ERISA, and each bonus, incentive or deferred compensation, severance, termination, retention, change of control, stock option or other equity-based plan that (i) provides benefits or compensation in respect of any employee employed in the operation of the Business (the “ Employees ”) or the beneficiaries or dependents of any such Employee and (ii) is maintained or contributed to by the Sellers (collectively, the “ Plans ”). The Sellers have provided the Buyer complete and correct copies of all written Plans.

 

(b)                                  Qualification . Each Plan intended to be qualified under section 401(a) of the Code has received a favorable determination letter from the IRS as to its qualification under the Code and, to the Knowledge of the Sellers, nothing has occurred since the date of such determination letter that could reasonably be expected to adversely affect such qualification or tax-exempt status.

 

(c)                                   Compliance; Liability .

 

(i)                                      Each of the Plans has been operated and administered in compliance with all Applicable Laws, except for any failure so to comply that, individually or in the aggregate, would not result in a Material Adverse Effect.

 

(ii)                                   No Plan is a “multiemployer plan” within the meaning of section 4001(a)(3) of ERISA or is a “multiple employer plan” within the meaning of section 4063 or 4064 of ERISA.

 

3.1.22.                Brokers, Finders, etc . All negotiations relating to this Agreement, the Collateral Agreements, and the transactions contemplated hereby and thereby, have been carried on with-

 

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out the participation of any Person acting on behalf of either Seller or its Affiliates and in such manner as not to give rise to any valid claim against the Buyer or any of its Subsidiaries for any brokerage or finder’s commission, fee or similar compensation.

 

3.1.23.                Sufficiency of Assets .

 

(a)                                   Section 3.1.23(a) of the Company Disclosure Letter lists all Assets consisting of machinery, equipment, vehicles, furniture or other tangible personal property owned by the Sellers having any original individual cost in excess of $10,000 and the location thereof.

 

(b)                                  Section 3.1.23(b) of the Company Disclosure Letter lists all Assets consisting of property and assets (other than the Real Property) used in the Business that are leased by the Sellers and that involve payments by such Seller in excess of $30,000 per year. For all such leased assets, Sellers have made available to the Buyer true and complete copies of all leased and other agreements affecting such assets.

 

(c)                                   The Assets, together with the services to be provided under the Collateral Agreements, (a) constitute all of the assets, tangible and intangible, of any nature whatsoever, necessary to operate the Sellers’ business in the manner presently operated by the Sellers and (b) include all of the operating assets of the Sellers.

 

(d)                                  As of the date of this Agreement, the aggregate amount owing under the IRB Loan Agreement is a principal amount of $7,500,000 plus accrued and unpaid interest since December 31, 2005.

 

3.2.                               Representations and Warranties of the Buyer . Except as set forth in the Buyer Disclosure Letter (in the section or subsections thereof corresponding to the section or subsection of this Agreement) delivered by the Buyer to the Sellers prior to execution of this Agreement (the “ Buyer Disclosure Letter ”), the Buyer represents and warrants to the Sellers as follows:

 

3.2.1.                      Corporate Status; Authorization, etc . The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation with full corporate power and authority to execute and deliver this Agreement and the Collateral Agreements, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by the Buyer of this Agreement, and the consummation of the transactions contemplated hereby, have been, and on the Closing Date the execution and delivery by the Buyer of the Collateral Agreements will have been, duly authorized by all requisite corporate action of the Buyer. The Buyer has duly executed and delivered this Agreement and on the Closing Date the Buyer will have duly executed and delivered the Collateral Agreements. This Agreement is, and on the Closing Date each of the Collateral Agreements will be, a valid and legally binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms.

 

3.2.2.                      No Conflicts, etc . The execution, delivery and performance by the Buyer of this Agreement and each of the Collateral Agreements, and the consummation of the transactions contemplated hereby and thereby, do not and will not conflict with or result in a violation of or under (with or without the giving of notice or the lapse of time, or both) (i) the certificate of incorporation or bylaws or other organizational documents of the Buyer, (ii) any Applicable Law applicable to the Buyer or any of its Affiliates or any of its or their properties or assets or (iii) any contract, agreement or other instrument applicable to the Buyer or any of its Affiliates or any of its or their properties or assets, except, in the case of clause (iii), for violations and defaults that, individually and in the aggregate, have not and will not materially impair the ability of the Buyer to perform its obligations under this Agreement or under any of the

 

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Collateral Agreements. No Governmental Approval is required to be obtained by the Buyer in connection with the execution and delivery of this Agreement or the Collateral Agreements or the consummation of the transactions contemplated hereby or thereby.

 

3.2.3.                      Litigation . There is no action, claim, suit or proceeding pending, or to the Buyer’s knowledge threatened, by or against or affecting the Buyer in connection with or relating to the transactions contemplated by this Agreement or any action taken or to be taken in connection herewith or the consummation of the transactions contemplated hereby.

 

3.2.4. Brokers, Finders, etc . All negotiations relating to this Agreement, the Collateral Agreements and the transactions contemplated hereby and thereby have been carried on without the participation of any Person acting on behalf of the Buyer or its Affiliates and in such manner as to not give rise to any valid claim against the Sellers or their Affiliates for any brokerage or finder’s commission, fee or similar compensation.

 

3.2.5. Financing . The Buyer has, and will at the Closing Date have, funds available in amounts sufficient to pay the Purchase Price and related expenses of the transactions contemplated hereby to be paid by it hereunder.

 

ARTICLE IV

 

COVENANTS

 

4.1.                               Covenants of the Sellers .

 

4.1.1.                      Conduct of Business . From the date hereof to the Closing Date, except as expressly permitted or required by this Agreement or as otherwise consented to by the Buyer in writing,