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EXECUTION COPY
ASSET PURCHASE AGREEMENT
Dated as of December 22, 2006
By and Among
Electrical Components International,
Inc.,
Noma Holding Inc.,
and
GenTek Inc.
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS; INTERPRETIVE
MATTERS
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1
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1.1 Certain Definitions
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1
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1.2 Terms Defined Elsewhere in this
Agreement
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7
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1.3 Other Definitional and Interpretive
Matters
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10
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1.4 Construction
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11
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ARTICLE II TRANSFER OF ASSETS AND
LIABILITIES
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11
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2.1 Assets to be Sold
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11
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2.2 Excluded Assets
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13
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2.3 Assumed Liabilities
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15
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2.4 Excluded Liabilities
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15
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2.5 Transfer of Assets and Assumption of
Liabilities
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17
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2.6 Non-assignable Contracts
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18
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2.7 Payments Post-Closing
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18
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2.8 Withholding
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19
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ARTICLE III CONSIDERATION
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19
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3.1 Consideration
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19
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ARTICLE IV CLOSING AND TERMINATION
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23
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4.1 Closing Date
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23
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4.2 Closing Deliveries
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23
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4.3 Termination of Agreement
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25
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4.4 Procedure Upon Termination
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25
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4.5 Effect of Termination
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25
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF
PARENT AND SELLER
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26
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5.1 Organization and Good Standing;
Authorization
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26
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5.2 Conflicts; Consents of Third
Parties
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26
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5.3 Subsidiaries
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27
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5.4 Financial Statements
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28
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5.5 No Undisclosed Liabilities
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30
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5.6 Absence of Certain Developments
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30
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5.7 Taxes
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30
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5.8 Real Property
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31
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5.9 Tangible Personal Property
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32
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5.10 Intellectual Property
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32
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5.11 Material Contracts
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35
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5.12 Employee Benefits Plans
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37
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5.13 Labor Matters
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39
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i
TABLE OF CONTENTS
(continued)
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Page
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5.14 Litigation
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40
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5.15 Compliance with Laws; Permits
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41
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5.16 Environmental Matters
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41
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5.17 Financial Advisors
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42
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5.18 Related Party Transactions
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43
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5.19 Insurance
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43
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5.20 Foreign Corrupt Practices Act
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43
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5.21 Customers
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43
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5.22 Suppliers
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44
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5.23 Product Recalls
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44
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5.24 Title to Assets
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44
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5.25 Sufficiency of Assets
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44
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5.26 Disclaimer of other Representations and
Warranties
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44
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ARTICLE VI REPRESENTATIONS AND WARRANTIES OF
PURCHASER
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45
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6.1 Organization and Good Standing
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45
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6.2 Authorization of Agreement
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45
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6.3 Conflicts; Consents of Third
Parties
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45
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6.4 Litigation
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46
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6.5 Investment Intention
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46
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6.6 Financial Advisors
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46
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6.7 Sufficient Funds
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46
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6.8 No Knowledge of Breach
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46
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ARTICLE VII COVENANTS
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46
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7.1 Access to Information; Financing
Cooperation
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46
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7.2 Conduct of the Business Pending the
Closing
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47
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7.3 Consents
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50
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7.4 Further Assurances
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50
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7.5 Confidentiality
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50
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7.6 Preservation of Records
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51
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7.7 Publicity
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51
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7.8 Employees and Employee Benefits
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52
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7.9 Supply Agreement; Transition Services
Agreement
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56
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7.10 Tax Matters
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57
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7.11 Use of Name
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61
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7.12 Termination of Intercompany
Obligations
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62
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7.13 Non-Competition
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63
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7.14 Non-Solicitation
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64
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7.15 Insurance
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65
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7.16 No Solicitation or Negotiation
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65
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7.17 Certain Notices
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66
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7.18 Successors
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66
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ii
TABLE OF CONTENTS
(continued)
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Page
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7.19 Bulk Sales
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67
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ARTICLE VIII CONDITIONS TO CLOSING
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67
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8.1 Conditions Precedent to Obligations of
Purchaser
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67
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8.2 Conditions Precedent to Obligations of
Seller
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68
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8.3 Frustration of Closing Conditions
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69
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ARTICLE IX INDEMNIFICATION
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69
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9.1 Indemnification
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69
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9.2 Limitations on Indemnification for Breaches
of Representations and Warranties
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71
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9.3 Indemnification Procedures
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71
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9.4 Sole Remedy
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73
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9.5 Limitation on Losses
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73
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9.6 Tax Treatment of Indemnity
Payments
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74
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9.7 Environmental Losses
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74
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9.8 Subrogation
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74
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ARTICLE X MISCELLANEOUS
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75
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10.1 Survival of Representations, Warranties and
Covenants
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75
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10.2 Expenses
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75
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10.3 Submission to Jurisdiction; Consent to
Service of Process
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75
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10.4 Entire Agreement; Amendments and
Waivers
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76
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10.5 Governing Law
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76
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10.6 Notices
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76
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10.7 Severability
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77
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10.8 Binding Effect; Assignment
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78
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10.9 Counterparts
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78
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iii
Schedules
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Schedule 1.1
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Knowledge of Seller
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Schedule 2.1(c)
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Tangible Personal Property
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Schedule 2.1(f)(i)
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Leased Real Property
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Schedule 2.1(f)(ii)
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Owned Properties
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Schedule 2.1(j)
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Inventory
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Schedule 2.2(k)
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Excluded Litigation
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Schedule 2.2(m)
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Other Excluded Assets
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Schedule 3.1(b)
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Accounting Principles and
Methodologies
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Schedule 5.2(a)
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Conflicts
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Schedule 5.2(b)
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Required Consents
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Schedule 5.3(a)
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Subsidiaries
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Schedule 5.4(a)(i)
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Financial Statement Assumptions and
Methodologies
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Schedule 5.4(a)(ii)
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Business Balance Sheet
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Schedule 5.4(b)
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Books and Records
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Schedule 5.4(d)
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Accounts Receivable
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Schedule 5.4(e)
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Inventory
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Schedule 5.7
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Taxes
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Schedule 5.7(g)
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Transferred Subsidiary Tax Returns
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Schedule 5.7(j)
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Foreign Transferred Subsidiary Tax
Incentives
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Schedule 5.8(a)
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Owned Properties
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Schedule 5.8(b)
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Real Property Leases
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Schedule 5.8(d)
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Subleases
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Schedule 5.9(i)
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Tangible Personal Property
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Schedule 5.9(ii)
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Remaining Concord Assets
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Schedule 5.10(a)
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Products
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Schedule 5.10(b)
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Liens on Intellectual Property
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Schedule 5.10(c)
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Registered Intellectual Property
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Schedule 5.10(e)
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Licenses
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Schedule 5.10(f)
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In-Licensed IP
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Schedule 5.11(a)
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Material Contracts
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Schedule 5.11(b)
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Assigned Agreement Default
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Schedule 5.11(c)
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Shared Contracts
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Schedule 5.12(a)
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Employee Benefit Plans
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Schedule 5.12(g)
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Retiree Plans
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Schedule 5.12(h)
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Foreign Benefit Plans
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Schedule 5.12(i)
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Unfunded Plans
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Schedule 5.12(j)
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Incentive Bonuses
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Schedule 5.13(a)
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Collective Bargaining Agreements
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Schedule 5.13(b)
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Labor Issues
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Schedule 5.13(c)
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Employees
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Schedule 5.13(d)
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Inactive Employees
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Schedule 5.13(e)
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Closed Facilities
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Schedule 5.14
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Litigation
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Schedule 5.15
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Compliance with Laws; Permits
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iv
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Schedule 5.16
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Environmental Matters
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Schedule 5.16(h)
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Environmental Reports and Permits
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Schedule 5.17
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Financial Advisors
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Schedule 5.18
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Related Party Transactions
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Schedule 5.19
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Insurance
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Schedule 5.21
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Customers
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Schedule 5.22
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Suppliers
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Schedule 5.23
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Product Recalls
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Schedule 5.25
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Sufficiency of Assets
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Schedule 7.2
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Conduct of Business Pending the
Closing
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Schedule 7.2(b)(xv)
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Open Sales and Management Positions
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Schedule 7.8(d)
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KERP
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Schedule 7.12
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Termination of Intercompany
Obligations
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Schedule 8.1(f)(i)
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Required Consents
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Schedule 8.1(f)(ii)
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Governmental Approvals
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Schedule 8.1(h)
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Release of Guarantees
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Schedule 8.2(d)
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Required Consents
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v
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT , dated as of December 22,
2006 (this " Agreement "), by and among Electrical
Components International, Inc., a Delaware corporation ("
Purchaser "), Noma Holding Inc., a Delaware corporation ("
Seller "), and GenTek Inc., a Delaware corporation and the
indirect parent of Seller (" Parent ").
RECITALS:
WHEREAS , Seller, including through its Subsidiaries, is
engaged in the business of designing, manufacturing, assembling and
marketing wire harness and cable assembly components at their
operations located at McAllen, Texas, Nogales, Arizona, Ontario
(Concord and Tillsonburg), Canada, Sonora (Nogales and Imuris),
Mexico, Juárez, Mexico, Reynosa, Mexico, and Gujarat, India,
and at Parent’s offices in Westland, Michigan, providing
cable assembly services at certain of these facilities, and
licensing certain of its Marks for other fields of use, excluding
the CableTech Business (the " Business ");
WHEREAS , Seller’s and its Subsidiaries’
operations at the Concord Facility are in the process of being shut
down and relocated to other facilities included in the
Business;
WHEREAS , Seller desires to sell to Purchaser, and Purchaser
desires to purchase from Seller, free and clear of all liabilities,
obligations, claims, liens and encumbrances (other than the
liabilities, obligations and claims assumed pursuant to this
Agreement and the liens and encumbrances permitted by this
Agreement), substantially all of the property, assets (other than
Excluded Assets) and rights of the Business, and to assume certain
liabilities of the Business, upon the terms and subject to the
conditions hereinafter set forth;
WHEREAS , Parent desires that the aforesaid sale be
consummated on the terms and conditions set forth in this
Agreement, and in connection therewith Parent acknowledges that its
non-competition covenant to Purchaser, as provided for in
Section 7.13 , and the non-competition covenant of
Canadian Seller, as provided in the Canada Non-Competition
Covenant, are essential elements of the aforesaid sale and but for
the agreement of Parent to comply with such covenant and to cause
Canadian Seller to enter into and comply with the Canada
Non-Competition Covenant, Purchaser would not have entered into
this Agreement; and
NOW, THEREFORE , in consideration of the premises and the
mutual covenants and agreements hereinafter contained, the parties
hereby agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETIVE MATTERS
1.1
Certain Definitions . For purposes of this Agreement, the
following terms shall have the meanings specified in this
Section 1.1 :
"
Affiliate " means, with respect to any Person, any other
Person that, directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person, and the term "control" (including the
terms "controlled by" and
"under common control with") means the possession, directly or
indirectly, of the power to direct or cause the direction of the
management and policies of such Person, whether through ownership
of voting securities, by Contract or otherwise.
"
Business Day " means any day of the year on which national
banking institutions in New York, New York are open to the public
for conducting business and are not required or authorized by Law
to close.
"
Business Employee " means any current or former employee,
director, independent contractor or consultant of the Business.
"
Business Intellectual Property " means all Intellectual
Property used or held for use primarily in the Business or included
or incorporated in the Products.
"
Canadian Purchaser " means a corporation or company to be
incorporated by the Purchaser as a wholly-owned subsidiary under
the laws of Canada or any province thereof.
"
Canadian Seller " means Noma Company, a Nova Scotia
company.
"
Code " means the Internal Revenue Code of 1986, as
amended.
"
Confidential Information " means inventions, algorithms,
formulas, schematics, technical drawings, ideas, know-how,
processes not otherwise protected by patents or patent
applications, source and object code, program listings and trade
secrets arising from, used in, or otherwise relating to the
Business.
"
Contract " means any written, oral or other agreement,
contract, subcontract, lease, mortgage, indenture, understanding,
arrangement, instrument, note, bond, option, warranty, purchase
order, license, sublicense or other instrument, obligation or
commitment or undertaking of any nature (excluding insurance
policies, benefit plans and permits).
"
Environmental Law " means any applicable foreign federal,
state, provincial or local statute, regulation, ordinance, rule of
common law, Order, Permit or other legal requirement currently in
effect relating to (i) the protection of human health and
safety as they relate to environmental protection, (ii) the
environment, natural resources and wildlife, (iii) the
management, manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation or handling of, or
exposure to, any Hazardous Material, or (iv) pollution,
including without limitation, the Solid Waste Disposal Act, 42
U.S.C. § 6901 et seq., the Federal Water Pollution Control
Act, 33 U.S.C. § 1251, et seq., including the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
§ 9601 et seq. ), the Hazardous Materials
Transportation Act (49 U.S.C. App. § 1801 et
seq. ), the Resource Conservation and Recovery Act (42
U.S.C. § 6901 et seq. ), the Clean Water Act (33
U.S.C. § 1251 et seq. ), the Clean Air Act (42
U.S.C. § 7401 et seq. ) the Toxic Substances
Control Act (15 U.S.C. § 2601 et seq. ), the
Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
§ 136 et seq. ), the Ontario Environmental
Protection Act , the federal (Canada) Fisheries Act ,
the Ontario Water Resources Act , and the Canadian
Environmental Protection Act, 1999 , as each has been amended
and the regulations promulgated pursuant thereto.
2
"
GAAP " means generally accepted accounting principles in the
United States as of the date of determination.
"
Governmental Body " means any government or governmental or
regulatory or administrative body thereof, or political subdivision
thereof, whether national, federal, state, provincial, municipal,
local, foreign or multinational, or any agency, instrumentality,
commission or authority thereof, or any court, tribunal or
arbitrator (public or private), or any other body exercising, or
entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory or taxing authority or power of any
nature.
"
Hazardous Material " means any substance which is regulated
under Environmental Law including any substance (i) defined as
a hazardous or deleterious substance, hazardous material, hazardous
waste, pollutant or contaminant under any Environmental Laws,
(ii) a petroleum hydrocarbon, including crude oil or any
fraction thereof, (iii) classified under any Environmental Law
as hazardous, toxic, corrosive, flammable, explosive, infectious,
radioactive or carcinogenic, or (iv) contains asbestos or
PCBs. !
"
HSR Act " means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated
thereunder.
"
In-Licensed IP " means all Intellectual Property licensed by
a third party to Seller or any of its Subsidiaries and used
primarily in the Business or included or incorporated into the
Products, except for Off-the-Shelf Software.
"
Intellectual Property " means all worldwide intellectual
property rights, including, without limitation, the following:
(i) all patents and applications therefor, including
continuations, divisionals, continuations-in-part, or reissues of
patent applications and patents issuing thereon (collectively, "
Patents "); (ii) all trademarks, service marks, trade
names, service names, brand names, trade dress rights, logos,
Internet domain names and corporate names, together with the
goodwill associated with any of the foregoing, and all
applications, registrations and renewals thereof, (collectively, "
Marks "); (iii) copyrights and registrations and
applications therefor, works of authorship and mask work rights
(collectively, " Copyrights "); (iv) trade secrets and
confidential information; and (v) all Software and
Technology.
"
IRS " means the Internal Revenue Service.
"
Knowledge of Seller " means the actual knowledge of the
Persons set forth on Schedule 1.1 .
"
Law " means any law, statute, code, ordinance, rule,
regulation, Order or other legally binding requirement of any
Governmental Body.
"
Legal Proceeding " means any judicial, administrative or
arbitral actions, claims, suits, arbitrations, investigations or
proceedings (public or private) by or before a Governmental
Body.
"
Liabilities " means any direct or indirect liability,
indebtedness, claim, loss, damage, deficiency, obligation or
responsibility, fixed or unfixed, choate or inchoate,
liquidated
3
or unliquidated, secured or unsecured, accrued, absolute, known
or unknown, contingent or otherwise.
"
Lien " means any lien, encumbrance, pledge, mortgage, deed
of trust, security interest, claim, lease, charge, option, right of
first refusal, preemptive right, preferential right, easement,
right of way, servitude or restriction.
"
Material Adverse Effect " means any circumstance, effect,
change, event or development that, individually or together with
any other circumstance, effect, change, event or development, is or
would reasonably be expected to be, materially adverse to
(i) the Assets, Assumed Liabilities, business, condition
(financial or otherwise) or results of operations of the Business,
taken as a whole, or (ii) the ability of Seller and Parent to
consummate the transactions contemplated by this Agreement or by
the other Transaction Documents to which either of them are or may
become a party; provided , however , that none of the
following shall be deemed in themselves, either alone or in
combination, to constitute, and that none of the following shall be
taken into account in determining whether there has been or will
be, a Material Adverse Effect: (A) any adverse circumstance,
effect, change, event or development to the extent attributable to
the impact of the announcement or pendency of the transactions
contemplated hereby or the identity or involvement of Purchaser on
relationships, contractual or otherwise, with customers, suppliers
or employees of the Business; (B) any adverse circumstance,
effect, change, event or development attributable to conditions
generally affecting the industry in which the Business operates or
generally affecting the economy of any country in which the
Business has material operations or the U.S. or global economy
generally, in each case, which do not disproportionately affect the
Business; (C) any adverse circumstance, effect, change, event
or development arising from or relating to any action taken, or
failure to act, to which Purchaser has expressly consented in
writing; (D) changes in Laws after the date hereof;
(E) changes in GAAP or the regulatory or interpretative
guidance relating thereto after the date hereof; and (F) acts
of war, sabotage or terrorism, or any escalation or material
worsening of any such acts of war, sabotage or terrorism underway
as of the date of this Agreement.
"
NDAs " means (i) non-disclosure agreements;
(ii) confidentiality agreements; and (iii) confidentiality and
invention assignment agreements.
"
Off-the-Shelf Software " means Software that is widely
available and licensed to the public on standard terms, including
without limitation software licensed pursuant to "shrink-wrap" and
"click-wrap" licenses.
"
Order " means any order, injunction, judgment, decision,
decree, ruling, writ, assessment or arbitration award of a
Governmental Body.
"
Ordinary Course of Business " means the ordinary and usual
course of the Business, consistent with past practices (including
with respect to quantity and frequency).
"
Permits " means any approvals, authorizations, consents,
licenses, permits or certificates of a Governmental Body.
"
Permitted Exceptions " means (i) all defects,
exceptions, restrictions, easements, rights of way and encumbrances
disclosed in public records or in policies of, or commitments
4
for, title insurance and/or plats or surveys which have been
made available to Purchaser; (ii) statutory liens for current
Taxes, assessments or other governmental charges not yet delinquent
or the amount or validity of which is being contested in good faith
by appropriate proceedings, provided an appropriate reserve is
established therefor on the Financial Statements or the Closing
Date Statement; (iii) landlords’, mechanics’,
carriers’, workers’, repairers’ and similar Liens
arising by operation of law and/or incurred in the Ordinary Course
of Business; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body; (v) title
of a lessor under a capital or operating lease; and (vi) such
other imperfections in title and other Liens which would not,
individually or in the aggregate, reasonably be expected to
materially detract from the value, or materially impair the use, of
such property as it presently used.
"
Person " means any individual, corporation, partnership,
firm, joint venture, association, joint-stock company, limited
liability company, limited liability partnership, labor union,
trust, unincorporated organization, Governmental Body or other
entity.
"
Post-Closing Tax Period " shall mean any taxable period
beginning after the Closing Date and, with respect to any Straddle
Period, the portion of such Straddle Period beginning after the
Closing Date.
"
Pre-Closing Tax Period " shall mean any taxable period
ending on or before the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period ending on the
Closing Date.
"
Products " means all products or services sold, distributed
or otherwise disposed of by Seller or any of its Subsidiaries in
connection with the Business, and all products or service offerings
in development for the purpose of being sold, distributed or
otherwise disposed of in connection with the Business.
"
Rebate " means all rebates granted or accrued or committed
to be granted or accrued by Seller or any Subsidiary to or for the
benefit of any customer of the Business, including any amounts
prepaid, paid or credited, or committed to be prepaid, paid or
credited, including in connection with any volume discount, price
protection, price reduction avoidance, prepaid price reduction,
contract extension or similar arrangement.
"
Release " means any release, spill, emission, leaking,
pumping, pouring, escaping, dumping, injection, deposit, disposal,
discharge, dispersal, migration or leaching into the environment,
including, without limitation, the abandonment or disposal of
barrels, containers or other receptacles.
"
Remedial Action " means all actions required by
Environmental Laws to clean up, remove, treat or address any
Hazardous Material in the environment at levels exceeding those
allowed by applicable Environmental Laws, including pre-remedial
studies and investigations or post-remedial monitoring and
care.
"
Representative " of any Person means such Person’s
officers, directors, employees, agents, accountants, counsel,
advisors, consultants or other representatives.
5
"
Retained Subsidiaries " means the Subsidiaries other than
the Transferred Subsidiaries.
"
Software " means any and all (i) computer programs,
including any and all software implementations of algorithms,
models and methodologies, whether in source code or object code,
(ii) databases and compilations, including any and all data
and collections of data, whether machine readable or otherwise,
(iii) descriptions, flow-charts and other work product used to
design, plan, organize and develop any of the foregoing, screens,
user interfaces, report formats, firmware, development tools,
templates, menus, buttons and icons and (iv) all documentation
including user manuals and other training documentation related to
any of the foregoing.
"
Straddle Period " shall mean any taxable period that begins
on or before and ends after the Closing Date.
"
Subsidiaries " means the entities set forth on
Schedule 5.3(a) .
"
Tangible Personal Property " means furniture, fixtures,
mobile and immobile equipment, machinery, vehicles, supplies,
inventories, materials, apparatus, tools, implements, appliances,
computers, servers, communications and networking equipment, office
equipment, parts and supplies and other tangible personal property
of every kind and description.
"
Target Working Capital " shall mean an amount equal to
$48,319,167.00.
"
Tax " or " Taxes " shall mean any taxes of any kind,
including those measured on, measured by or referred to as, income,
alternative or add-on minimum, gross receipts, escheat, capital,
capital gains, sales, use, ad valorem , franchise, profits,
license, transfer, withholding, distribution, payroll, employment,
social, excise, severance, stamp, occupation, premium, goods and
services, value added, property, environmental or windfall profits
taxes, customs, duties or similar fees, assessments or charges,
together with any surcharge, interest and any penalties, additions
to tax or additional amounts (including any interest thereon)
imposed by any Governmental Body.
"
Tax Authority " means the Internal Revenue Service and any
other domestic or foreign Governmental Body responsible for the
administration or collection of any Taxes.
"
Tax Laws " means all Laws relating to Taxes.
"
Tax Returns " shall mean all reports, declarations of
estimated Tax, claims for refund, withholding Tax returns,
information statements and returns which have been filed or which
are required to be filed with a Tax Authority in connection with
any Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"
Technology " means, collectively, all designs, formulae,
algorithms, procedures, methods, techniques, know-how, research and
development, technical data, programs, subroutines, tools,
materials, specifications, processes, inventions (whether
patentable or unpatentable and whether or not reduced to practice),
apparatus, creations, improvements, works of authorship and other
similar materials, and all recordings, graphs, drawings, reports,
analyses,
6
and other writings, and other tangible embodiments of the
foregoing, in any form whether or not specifically listed herein,
and all related technology.
"
Transaction Documents " means each agreement, document,
instrument or certificate contemplated by this Agreement or to be
executed by any party to this Agreement in connection with the
consummation of the transactions contemplated by this
Agreement.
1.2
Terms Defined Elsewhere in this Agreement . For purposes of
this Agreement, the following terms have meanings set forth in the
sections indicated:
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Term
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|
Section
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338 Election
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7.10(d)
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401(k) Plan
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5.12(c)
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Accounts Payable
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2.3(a)
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Accounts Receivable
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2.1(i)
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Adverse Post-Closing Tax Proceeding
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7.10(a)
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Adverse Pre-Closing Tax Proceeding
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7.10(a)
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Affiliate
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1.1
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Agreement
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Preamble
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Allocation Schedule
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7.10(d)
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Annual Financial Statements
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5.4(a)
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Assets
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2.1
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Assigned Agreements
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2.1(e)
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Assumed Liabilities
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2.3
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Balance Sheet Date
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5.4(a)
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Benefit Plans
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5.12(a)
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Bill of Sale
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2.5(a)
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Books and Records
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2.1(h)
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Business
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Recitals
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Business Balance Sheet
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5.4(a)
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Business Day
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1.1
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Business Employee
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1.1
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Business Intellectual Property
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1.1
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CableTech Business
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2.2(h)
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Canada Employees
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5.13(c)
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Canada Non-Competition Covenant
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7.13(a)(i)
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Canadian Purchaser
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1.1
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Canadian Seller
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1.1
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Cap
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9.2(a)(ii)
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Capital Leases
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5.11(a)(xv)
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Clearance Certificate
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7.10(e)
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Closing
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4.1
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Closing Date
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4.1
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Closing Date Statement
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3.1(b)(ii)
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Closing Date Working Capital
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3.1(b)(ii)
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COBRA
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5.12(h)
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7
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Term
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Section
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Code
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1.1
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Concord Facility
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2.2(h)
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Confidential Information
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1.1
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Confidentiality Agreement
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7.5(a)
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Consent
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5.2(b)
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Contract
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1.1
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Copyrights
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1.1
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Deductible
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9.2(a)(i)
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Draft Transfer Report
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7.8(g)(i)
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Environmental Law
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1.1
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Environmental Permits
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5.16(a)
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Estimated Statement
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3.1(b)(i)
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Estimated Working Capital
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3.1(b)(i)
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Excluded Assets
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2.2
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Excluded Claim
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9.3(c)(i)
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Excluded Liabilities
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2.4
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Final Determination
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9.3(c)
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Final Working Capital
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3.1(b)(v)
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Financial Statements
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5.4(a)
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Foreign Benefit Plan
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5.12(h)
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Foreign Transferred Subsidiaries
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5.7(f)
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GAAP
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1.1
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General Assignment
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2.5(a)
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Governmental Body
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1.1
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Hazardous Material
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1.1
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HSR Act
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1.1
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Independent Accountants
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7.8(g)(i)
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Independent Accounting Firm
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3.1(b)(iii)(2)
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In-Licensed IP
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1.1
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In-Licenses
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5.10(f)
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Instruments of Assignment
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2.5(a)
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Instruments of Assumption
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2.5(b)
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Intellectual Property
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1.1
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Interim Financial Statements
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5.4(a)
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Inventory
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2.1(j)
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IRS
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1.1
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KERP
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7.8(d)
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Knowledge of Seller
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1.1
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Law
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1.1
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Lease Assignments
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2.5(a)
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Leased Real Property
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2.1(f)
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Legal Proceeding
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1.1
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Liabilities
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1.1
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Lien
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1.1
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Losses
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9.1(a)
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Marks
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1.1
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8
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Term
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Section
|
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Material Adverse Effect
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1.1
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Material Contracts
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5.11(a)
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NDAs
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1.1
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Noncompetition Period
|
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7.13(a)(i)
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Off-the-Shelf Software
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1.1
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Order
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1.1
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Ordinary Course of Business
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1.1
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Other Instruments
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2.5(a)
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Owned Properties
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5.8(a)
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Owned Property
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5.8(a)
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Parent
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Preamble
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Parent Plans
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5.12(a)
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Patent Assignment
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2.5(a)
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Patents
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1.1
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Permits
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1.1
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Permitted Exceptions
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1.1
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Person
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1.1
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Post-Closing Tax Period
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1.1
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Pre-Closing Tax Period
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|
1.1
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Pre-Closing Tax Proceeding
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|
7.10(a)
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Preliminary Purchase Price
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3.1(a)
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Products
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1.1
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Purchase Price
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3.1(b)(vi)
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Purchaser
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Preamble
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Purchaser Canadian Plan
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7.8(g)(i)
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Purchaser Indemnified Parties
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9.1(a)
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Purchaser Plans
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7.8(b)
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Real Property Lease
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5.8(b)
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Real Property Leases
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5.8(b)
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Rebate
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1.1
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Registered IP
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5.10(c)
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Release
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1.1
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Remaining Concord Assets
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5.9
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Remedial Action
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1.1
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Representative
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1.1
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Retained Aviation Products
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5.19
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Retained Subsidiaries
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1.1
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Securities Act
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6.5
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Seller
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Preamble
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Seller Acquisition Date
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5.4(b)
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Seller Canadian Plan
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7.8(g)(i)
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Seller Indemnified Parties
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|
9.1(b)
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Seller Marks
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7.11(a)
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Software
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1.1
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Stock Powers
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2.5(a)
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Straddle Period
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1.1
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9
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Term
|
|
Section
|
|
Subsidiaries
|
|
1.1
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|
Superintendent
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|
7.8(g)(i)
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Supply Agreement
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|
7.9(a)
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|
Survival Period
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|
10.1
|
|
Tangible Personal Property
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|
1.1
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|
Target Working Capital
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|
1.1
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|
Tax
|
|
1.1
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|
Tax Authority
|
|
1.1
|
|
Tax Laws
|
|
1.1
|
|
Tax Proceeding
|
|
7.10(a)
|
|
Tax Returns
|
|
1.1
|
|
Taxes
|
|
1.1
|
|
Technology
|
|
1.1
|
|
Third Party Claim
|
|
9.3(b)
|
|
Trademark Assignment
|
|
2.5(a)
|
|
Transaction Documents
|
|
1.1
|
|
Transfer Report
|
|
7.8(g)(i)
|
|
Transfer Taxes
|
|
7.10(d)
|
|
Transferred Benefit Plans
|
|
5.12(a)
|
|
Transferred Employees
|
|
7.8(a)
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|
Transferred Marks
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|
7.11(a)
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|
Transferred Securities
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|
2.1(b)
|
|
Transferred Subsidiaries
|
|
2.1(b)
|
|
Transferred Subsidiary
|
|
2.1(b)
|
|
Transferred Subsidiary Tax Returns
|
|
7.10(b)
|
|
Transition Services Agreement
|
|
7.9(b)
|
|
Undertaking
|
|
2.5(b)
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|
WARN Act
|
|
5.13(b)
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|
Working Capital
|
|
3.1(b)(i)
|
1.3
Other Definitional and Interpretive Matters . Unless
otherwise expressly provided, for purposes of this Agreement, the
following rules of interpretation shall apply:
(a) Calculation of Time
Periods . When calculating the period of time before which,
within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such
period is a non-Business Day, the period in question shall end on
the next succeeding Business Day.
(b) Dollars . Any
reference in this Agreement to $ shall mean U.S. dollars, and any
amounts denominated in U.S. dollars shall mean the amount set forth
or the equivalent of such amount in any other currency or
currencies.
(c) Headings . The
headings contained in this Agreement and the Schedules hereto are
for purposes of convenience only and will not affect the meaning or
interpretation of this Agreement or any such Schedule. Unless
otherwise expressly indicated, any reference in this Agreement
(including any Schedule hereto) to an "Article," "Section,"
"subsection,"
10
"paragraph" or "subparagraph" followed by a number or letter or
combination of the two will be a reference to the particular
Article, Section, subsection, paragraph or subparagraph of this
Agreement bearing such number, letter or combination thereof.
(d) Hereof and Herein
. The terms "hereof," "herein," "hereunder" and comparable terms
refer, unless otherwise expressly indicated, to this Agreement as a
whole and not to any particular Article, Section, subsection,
paragraph, subparagraph or other subdivision hereof or any
Schedule, Exhibit or other attachment hereto.
(e) Including . The
terms "include," "includes" and "including" will be deemed to be
followed by the words "without limitation."
(f) Gender and Number
. Whenever the context so requires, the singular number will
include the plural and the plural will include the singular, and
the gender of any pronoun will include the other gender or neuter,
as applicable.
(g) Statutes and
Regulations . Any reference in this Agreement to a particular
statute, regulation or code (including any specific provision
thereof) includes all regulations and rules thereunder, all
amendments thereto in force at the applicable time (including
amendments to provision references).
1.4
Construction . The parties hereto have participated jointly
in the negotiation and drafting of this Agreement and, in the event
an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as jointly drafted by the parties
hereto and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any
provision of this Agreement.
ARTICLE II
TRANSFER OF ASSETS AND LIABILITIES
2.1
Assets to be Sold . On the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall and
shall cause the Retained Subsidiaries to sell, convey, assign,
transfer and deliver to Purchaser, and Purchaser shall purchase,
acquire and accept from Seller and the Retained Subsidiaries, all
of Seller’s and the Subsidiaries’ right, title and
interest in and to all of the properties, assets, rights and claims
of Seller and the Subsidiaries used or held for use primarily in
the Business (other than Excluded Assets), of every kind, character
and description, whether tangible, intangible, personal or mixed
and wherever located, whether or not carried on the books of Seller
and the Subsidiaries (collectively, the " Assets "), free
and clear of all liabilities, obligations and Liens, except the
Assumed Liabilities and Permitted Exceptions, including, without
limitation, the following:
(a) All of the Business
Intellectual Property;
(b) All of the capital stock
or other equity interests (collectively, the " Transferred
Securities ") of each of Noma O.P., Inc., a Delaware
corporation, Noma de Reynosa, S.A. de C.V., a company organized and
existing under the laws of Mexico, GenTek Technology Pvt. Ltd., a
company organized and existing under the laws of India, and
Sistemas y Conexiones
11
Integradas, S.A. de C.V., a company organized and existing under
the laws of Mexico (each, a " Transferred Subsidiary " and,
collectively, the " Transferred Subsidiaries ");
(c) All Tangible Personal
Property owned, leased or held for use by Seller or a Subsidiary
and located at the Leased Real Property or the Owned Properties
(other than the Remaining Concord Assets), in the possession or
control of Transferred Employees for use primarily in the operation
of the Business, or otherwise used or held for use primarily in
connection with the Business, a schedule of which Tangible Personal
Property used in the Business and carried on the books of account
of the Business with a value in excess of $50,000 is set forth on
Schedule 2.1(c) ;
(d) All claims, deposits,
prepayments and similar items arising primarily out of, or relating
primarily to, the Business, the Assets or the Assumed Liabilities,
and the full benefit of any and all security for such items;
(e) All Contracts to which
any Seller or a Subsidiary is a party and which arise primarily out
of or relate primarily to the Assets (including Capital Leases),
the Assumed Liabilities or the conduct of the Business
(collectively, the " Assigned Agreements "), including all
rights to receive goods and services purchased pursuant to such
Contracts and all claims and rights to take any other actions
arising out of or related to such Contracts or in respect
thereof;
(f) The Real Property Leases
set forth on Schedule 2.1(f)(i) (the " Leased Real
Property ") and the Owned Properties set forth on
Schedule 2.1(f)(ii) and, in each case, all buildings,
structures and other improvements situated thereon;
(g) To the extent
transferable, all Permits of Seller and the Subsidiaries used or
held for use primarily in connection with the ownership, lease or
operation of the Assets or the conduct of the Business;
(h) Subject to
Section 2.2(c) , originals or true copies of all books,
records, agreements, invoices, correspondence, files and other
documents (whether on paper, computer diskette, tape or other
storage media) prepared for or associated primarily with the
Assets, the Assumed Liabilities or the operation of the Business ("
Books and Records "), including, but not limited to, stock
records, minute books, other corporate records, property records,
production records, purchase and sales records, credit data,
marketing, advertising and promotional materials, sales literature,
personnel and payroll records pertaining to Transferred Employees
(to the extent not prohibited under applicable Law), accounting
records, financial reports, Tax Returns in the possession or
control of Seller or a Subsidiary (other than Tax Returns of or
that include (where such return is prepared on a consolidated,
combined, unitary or affiliated basis) Seller or any Subsidiary and
income Tax Returns of any Retained Subsidiary), fixed asset lists,
customer, vendor, supplier, distributor and sales prospect lists,
records and information, parts lists, manuals, technical and repair
data, correspondence, files and any similar items;
(i) All billed and unbilled
accounts and notes receivable to the extent arising out of or
associated with the operation of the Business or the Assets ("
Accounts Receivable "), and the full benefit of any and all
security for such Accounts Receivable and any unpaid financing
charges accrued thereon;
12
(j) All raw material
inventories, work-in-process, consignment inventory, inventory
being tolled and finished products, in any case, which are located
at the Leased Real Property or the Owned Properties, in transit to
the Leased Real Property or the Owned Properties, in the possession
or control of any customer of the Business, or located at any
location set forth on Schedule 2.1(j) (the "
Inventory ");
(k) Subject to
Section 2.2(g) , all information systems, hardware,
telephone systems, software systems, database and database systems
used or held for use primarily in the conduct or operation of the
Business and any and all rights thereunder;
(l) All express or implied
warranties, representations or guarantees made by suppliers
furnishing goods (including the Tangible Personal Property) or
services to Seller or any Subsidiary used primarily in the
Business, including warranties, representations, guarantees or
other obligations related to product support or maintenance;
(m) Subject to
Section 2.2(d) , all rights, claims and causes of
action against third parties to the extent relating to the Assets
or the operation of the Business, including, but not limited to,
all such claims against customers;
(n) Any assets relating to
the Transferred Benefit Plans as provided in
Section 7.8 ;
(o) All insurance proceeds
received by Parent, Seller or any of their subsidiaries to the
extent related to the Business (other than the Excluded Assets and
the Excluded Liabilities) or any Assets as a result of any damage
or claim occurring between the date of this Agreement and the
Closing Date and any rights, claims or causes of action existing or
arising primarily in respect of the Business (other than the
Excluded Assets and the Excluded Liabilities) and the Assets (to
the extent such proceeds have not been applied to mitigate such
damage or claim);
(p) All prepaid expenses,
including prepaid real estate and ad valorem Taxes, leases
and rentals, to the extent related to the Business, Assets or
Assumed Liabilities;
(q) All stationery, forms,
labels, shipping materials, brochures, art work, photographs,
advertising materials and any similar items used or held for use
primarily in the Business;
(r) All goodwill associated
with the Business or the Assets; and
(s) All other properties,
assets, rights and claims reflected on the Business Balance Sheet
or accrued after the date thereof and which would reasonably be
expected to be reflected thereon if the Business Balance Sheet were
prepared as of the Closing Date, or otherwise used or held for use
primarily in the conduct or operation of the Business, including
all properties, assets, rights and claims included in the
definition of Working Capital and reflected on the Closing Date
Statement, but not otherwise described in this
Section 2.1 .
2.2
Excluded Assets . Notwithstanding any other provision of
this Agreement, the Assets shall not include, and Seller and the
Retained Subsidiaries shall retain all of their right, title and
interest in and to, all of the following properties, assets, rights
and claims of Seller and the Subsidiaries (collectively, the "
Excluded Assets "), which shall not be sold, conveyed,
assigned, transferred or delivered to Purchaser:
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(a) All cash on hand and
short-term instruments and all similar types of investments, such
as certificates of deposit, treasury bills and other marketable
securities as of the Closing Date (other than any of the foregoing
held by any Transferred Subsidiary as of the Closing Date);
(b) All insurance policies
and bonds of Parent, Seller or any of their subsidiaries or
otherwise (other than any such insurance policies and bonds
maintained by the Transferred Subsidiaries), including, except as
set forth in Section 2.1(o) , all rights, claims and
causes of action of every nature and description under or arising
out of such insurance policies;
(c) All original Books and
Records that would otherwise constitute Assets but for the fact
that Seller or a Retained Subsidiary is required to retain such
original books and records pursuant to applicable Law (in which
case copies of such Books and Records shall be included in the
Assets);
(d) All claims, rights,
interests and proceeds with respect to Tax refunds relating to any
Pre-Closing Period as set forth in Section 7.10 ;
(e) All assets of the
Business sold or otherwise disposed of not in violation of the
terms of this Agreement during the period from the date of this
Agreement until the Closing Date;
(f) The minute books,
incorporation documents, stock transfer, and Tax Returns of or that
include (where such return is prepared on a consolidated, combined,
unitary or affiliated basis) the Seller or any Subsidiary and the
income Tax Returns of any Retained Subsidiary or similar related
corporate records of Seller and the Retained Subsidiaries;
(g) The assets being provided
to Purchaser pursuant to the Transition Services Agreement;
(h) The Owned Real Property
located in Concord, Ontario, and all buildings, structures and
other improvements thereon (the " Concord Facility "), and
the Remaining Concord Assets;
(i) All of the properties,
assets, rights and claims used or held for use primarily in
Seller’s insulated wire business located in Mineral Wells,
Texas (the " CableTech Business "), and all other assets
located in Mineral Wells, Texas that are used or held for use
primarily in any business other than the Business;
(j) All equity interests held
by Seller or any Retained Subsidiary (other than equity interests
in the Transferred Subsidiaries);
(k) All rights, claims and
causes of action of Seller or any Subsidiary (i) described on
Schedule 2.2(k) , or (ii) against any third party
arising out of any facts or circumstances relating to any claim by
a third party against Seller that constitutes an Excluded
Liability;
(l) All Benefit Plans, except
Transferred Benefit Plans, and all assets related thereto; and
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(m) All assets, rights and
properties listed on Schedule 2.2(m) .
2.3
Assumed Liabilities . Upon the terms and subject to the
conditions of this Agreement, at the Closing, Purchaser shall
assume only the following Liabilities of Seller and the
Subsidiaries (collectively, the " Assumed Liabilities
"):
(a) All accounts payable of
the Business as of the Closing (to the extent that such accounts
payable relate to the Business and other than any accounts payable
to Seller or any Affiliate of Seller) to the extent reflected in
Working Capital as of the Closing Date (" Accounts Payable
");
(b) All accrued expenses of
the Business as of the Closing (to the extent such accrued expenses
relate to the Business) to the extent reflected in Working Capital
as of the Closing Date, including, for the avoidance of doubt,
liabilities for non-income Taxes in the amount reflected in Working
Capital as of the Closing Date;
(c) All obligations of Seller
and the Subsidiaries under the Assigned Agreements, to the extent
such obligations (i) were not due to have been satisfied or
discharged at or prior to the Closing, (ii) are reflected on
the Closing Date Statement, or (iii) are not required to be
reflected on the Closing Date Statement and have not arisen as a
result of a default or breach of such Assigned Agreement or this
Agreement by Seller or any Subsidiary;
(d) All Permitted Exceptions
to which the Assets are subject;
(e) The Liabilities assumed
pursuant to Section 7.8 (including any Liabilities
resulting from the failure of Purchaser to comply with
Section 7.8 );
(f) The Liabilities listed on
Schedule 5.11(b)(1); and
(g) All other Liabilities of
the Business arising after the Closing.
2.4
Excluded Liabilities . Notwithstanding any other provision
in this Agreement, Purchaser is assuming only the Assumed
Liabilities and is not assuming any other Liability of Seller or
the Subsidiaries or their respective Affiliates of whatever nature,
whether presently in existence or arising hereafter (all such
liabilities and obligations not being assumed being herein referred
to as the " Excluded Liabilities "), and, notwithstanding
anything to the contrary, the Assumed Liabilities shall not include
for the purposes of this Agreement, without limitation, any of the
following:
(a) Except as set forth in
Section 7.12 and except for indebtedness under Capital
Leases, any indebtedness of Seller or any of the Subsidiaries;
(b) Any Liabilities to the
extent arising out of or relating to an Excluded Asset;
(c) Any Liabilities to the
extent arising from or as a result of the conduct of any business
of Seller or any of the Subsidiaries other than the Business;
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(d) Liabilities with respect
to any Legal Proceedings (including all Legal Proceedings set forth
on Schedules 2.2(k) and 5.14 );
(e) Except for any non-income
Taxes in the amount assumed by Purchaser pursuant to Section
2.3(b) and any Transfer Taxes to be paid by Purchaser pursuant
to Section 7.10(d) hereof, (A) any Liabilities of
Seller or any Affiliate of Seller (other than the Transferred
Subsidiaries) for the Taxes of Seller or its Affiliates (other than
the Transferred Subsidiaries) and (B) all Taxes of any Person
imposed on Seller or any of its Affiliates (other than the
Transferred Subsidiaries) as a result of being a member of any
consolidated, combined, affiliated or unitary Tax group or as a
transferee or successor, by contract, or otherwise;
(f) Any Liabilities and
expenses for any accounting, legal, investment banking, brokerage
or similar fees or expenses incurred by Seller or any of its
Affiliates in connection with the negotiation and preparation of
this Agreement and each of the Transaction Documents and the
consummation of the transactions contemplated hereby and
thereby;
(g) Any Liabilities relating
to Business Employees of Seller and the Subsidiaries with respect
to their employment or service relationship with Seller and/or its
Subsidiaries, whether or not arising under any Benefit Plan, other
than a Transferred Benefit Plan as provided in Section 7.8 ,
for periods ending on or prior to the Closing Date, other than
those expressly assumed by Purchaser pursuant to this Agreement or
which are reflected in Working Capital as of the Closing Date;
(h) any Liabilities relating
to the design, manufacture, marketing, sale, distribution or other
disposition of Retained Aviation Products, including any obligation
to maintain any insurance with respect thereto;
(i) Any Liabilities relating
to any stock option or other equity-based award granted by Parent
or any of its Affiliates to any Transferred Employee;
(j) Any Liabilities relating
to any bonus that may become payable to a Transferred Employee as a
result of the transactions contemplated by this Agreement (other
than any such bonus agreement between Purchaser or any of its
Affiliates and such Transferred Employee);
(k) Any Liabilities relating
to any claim for personal injury and/or property damage to the
extent arising out of pre-Closing occurrences or the operation of
the Business or the sale of Products prior to the Closing Date and
based on product liability, strict liability or other similar
theories of recovery, but excluding any Liabilities arising under
worker’s compensation legislation to the extent such
Liabilities would be covered by worker’s compensation
insurance coverage required by applicable Law to be maintained by
Purchaser;
(l) Any Liabilities of Seller
and the Subsidiaries existing as of the Closing Date which should
have been reflected on the Business Balance Sheet or the Closing
Date Statement and which are not so reflected, unless they are
Assumed Liabilities;
(m) Any Liabilities
(including, without limitation, any severance, restructuring,
relocation, and environmental and clean up costs) to the extent
arising from or related to the closing of the Concord Facility;
16
(n) Any Liabilities arising
from or related to the sale of the facility located in Stouffville,
Ontario to Southwire Canada Company, including all Liabilities
arising under all Contracts entered into in connection with such
sale;
(o) Subject to
Section 7.8 , any Liabilities arising under the WARN
Act and other similar applicable Laws due to any actions taken by
Seller or any Subsidiary prior to the Closing Date with regard to
any site of employment, facility, operating unit or employee
affected by this Agreement (including the Concord Facility), except
for any Liability resulting from any action taken by Purchaser;
and
(p) Any Liabilities or
obligations owed to Parent, Seller or any of their respective
Affiliates to the extent not reflected in Working Capital as of the
Closing Date, other than pursuant to the Transaction Documents and
the Assigned Agreements.
2.5
Transfer of Assets and Assumption of Liabilities .
(a) At the Closing, Seller
and the Subsidiaries shall effectuate the sale, conveyance,
assignment, transfer and delivery of the Assets to Purchaser by
delivering to Purchaser or its designees each of the following:
(i) a duly executed bill of sale, in a customary form as shall
be mutually agreed to by Seller and Purchaser (the " Bill of
Sale "); (ii) a duly executed assignment and assumption
agreement relating to the Assigned Agreements, Permits and other
Assets held by Seller and the Retained Subsidiaries, in a customary
form as shall be mutually agreed to by Seller and Purchaser (the "
General Assignment "); (iii) a duly executed assignment
of Marks with respect to the Marks included in the Business
Intellectual Property and held by Seller and the Retained
Subsidiaries, in a customary form as shall be mutually agreed to by
Seller and Purchaser (the " Trademark Assignment ");
(iv) a duly executed assignment of Patents with respect to the
Patents included in the Business Intellectual Property and held by
Seller and the Retained Subsidiaries, in a customary form as shall
be mutually agreed to by Seller and Purchaser (the " Patent
Assignment "); (v) certificates representing the
Transferred Securities, duly endorsed to Purchaser and/or its
designee(s) (it being understood and agreed that Purchaser may
designate any one or more Person(s), whether or not an Affiliate,
to acquire any portion of the Transferred Securities by providing
written notice of such designation to Seller not less than three
(3) Business Days prior to the Closing Date and by certifying
that Purchaser’s representations and warranties set forth in
Section 6.5 hereof also apply to, and are true and accurate in
all respects with regard to, such designee(s); provided,
that no such designation shall relieve Purchaser of any obligation
hereunder) or accompanied by stock powers duly executed in blank or
duly executed instruments of transfer with appropriate stock
transfer tax stamps, if any, affixed, and any other documents, in
form and substance satisfactory to Purchaser, that are necessary to
transfer good and valid title to such capital stock or other equity
interest of the Transferred Subsidiaries to Purchaser and/or its
designee(s) (collectively, the " Stock Powers ");
(vi) a duly executed assignment and assumption of lease for
each of the Leased Real Properties (collectively, the " Lease
Assignments "); and (vii) such other good and sufficient
instruments of conveyance and transfer (collectively, the "
Other Instruments " and, collectively with the Bill of Sale,
the General Assignment, the Trademark Assignment, the Patent
Assignment, the Stock Powers, and the Lease Assignments, the "
Instruments of Assignment ") as are reasonably necessary to
vest in Purchaser good and valid title to the Assets, free and
clear of all liabilities, obligations, claims and Liens except the
Assumed Liabilities and Permitted Exceptions.
17
(b) At the Closing, Purchaser
shall deliver to Seller and the Subsidiaries a duly executed
undertaking, in a customary form as shall be mutually agreed to by
Seller and Purchaser (the " Undertaking "), whereby
Purchaser shall assume and agree to perform, pay, or discharge,
when due, the Assumed Liabilities, effective as of the Closing, and
such other instruments, documents or agreements (collectively, the
" Instruments of Assumption ") as are reasonably necessary
to evidence Purchaser’s assumption of and agreement to pay
and discharge the Assumed Liabilities.
2.6
Non-assignable Contracts .
(a) To the extent that any
Assigned Agreement is not capable of being assigned to Purchaser at
the Closing without the Consent of any other party thereto or any
Person, or if such assignment or attempted assignment would
constitute a breach thereof, or a violation of any applicable Law,
this Agreement shall not constitute an assignment or an attempted
assignment thereof, unless and until such Consent has been
obtained.
(b) In the event that any
Consent referred to in Section 2.6(a) has not been
obtained prior to the Closing, at Seller’s sole cost and
expense, Seller shall use its commercially reasonable efforts, and
Purchaser and Parent shall cooperate with Seller, to obtain each
and every such Consent and to resolve the impracticalities of
assignment referred to in Section 2.6(a) after the
Closing.
(c) To the extent that the
Consents referred to in Section 2.6(a) have not been
obtained prior to the Closing, until the impracticalities of
assignment referred to in Section 2.6(a) hereof are
resolved, Seller and the applicable Retained Subsidiary shall use
their commercially reasonable efforts to (i) cooperate with
Purchaser in any reasonable and lawful arrangement designed to
provide Purchaser the benefits of any Assigned Agreement referred
to in Section 2.6(a) , and (ii) enforce, for the
account and benefit of Purchaser, any and all rights of Seller and
the applicable Retained Subsidiary arising from the Assigned
Agreements referred to in Section 2.6(a) against all
other parties thereto (including the right to elect to terminate in
accordance with the terms thereof on the advice of Purchaser). To
the extent that Purchaser is provided the benefits pursuant to this
Section 2.6(c) of any Assigned Agreement, Purchaser
shall perform, on behalf of Seller and the applicable Retained
Subsidiary, for the benefit of all other parties thereto, the
obligations of Seller and the applicable Retained Subsidiary
thereunder or in connection therewith (and in the event that any
action by Purchaser results in any material default thereunder or
in connection therewith, and any such material default results in
the termination of such Assigned Agreement, Purchaser shall no
longer be entitled to receive the benefits of such Assigned
Agreement). Any failure by Purchaser to perform the obligations of
Seller or the applicable Retained Subsidiary under any such
Assigned Agreement or in connection therewith shall constitute a
breach by Purchaser of its covenants under this
Section 2.6(c) . Nothing contained in this
Section 2.6 shall constitute a waiver of, or impair,
Purchaser’s rights under Section 8.1 or ARTICLE
IX.
2.7
Payments Post-Closing .
(a) If, following the Closing
Date, Seller or any of its Affiliates receives any payment or other
proceeds (including the benefit of a mistaken payment) relating to
any Assets or
18
otherwise relating to the conduct or operation of the Business
after Closing (excluding any payment or other proceeds relating to
or included in the Excluded Assets and excluding refunds for Taxes
that are allocable to a Pre-Closing Tax Period), including with
respect to any Accounts Receivable or Inventory purchased by
Purchaser hereunder, Seller shall, and shall cause its Affiliates
to, promptly remit to Purchaser the amount of any such payments or
other proceeds. On the last day of each month during the six
(6) month period beginning on the Closing Date, Seller shall
report to Purchaser the amount of all such payments or proceeds so
received.
(b) If, following the Closing
Date, Purchaser or any of its Affiliates receives any payment or
other proceeds (including the benefit of a mistaken payment)
relating to any Excluded Assets, the conduct or operation of the
Business prior to Closing (excluding any payment or other proceeds
relating to or included in the Assets), or otherwise relating to
the conduct or operation of Seller and its Subsidiaries other than
the Business, Purchaser shall, and shall cause its Affiliates to,
promptly remit to Seller the amount of any such payments or other
proceeds. On the last day of each month during the six
(6) month period beginning on the Closing Date, Purchaser
shall report to Seller the amount of all such payments or proceeds
so received.
2.8
Withholding . Purchaser (or any other Person responsible for
withholding any amount with respect to any payment made under this
Agreement) shall be entitled to deduct and withhold from the
consideration otherwise payable pursuant to this Agreement such
amounts as are required to be deducted and withheld with respect to
the making of such payment under the Code, or any provision of
state, local or foreign Tax Law (including the Tax Laws of Mexico
and India). Purchaser shall timely remit or deposit all withheld
amounts with the applicable Governmental Body and provide Seller or
the applicable Retained Subsidiary with any return or other
document required to be prepared with respect to such deposit or
remittance or other evidence of deposit or remittance acceptable to
Seller or such Retained Subsidiary, as the case may be. To the
extent that amounts are so deducted, withheld and timely and
appropriately remitted or deposited with the relevant Governmental
Body, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the Person in respect of
which such deduction and withholding was made.
ARTICLE III
CONSIDERATION
3.1
Consideration .
(a) Preliminary Purchase
Price . The preliminary purchase price for the Assets and the
covenant not to compete contained in Section 7.13
(Non-Competition) and in the Canada Non-Competition Covenant shall
be an amount of cash equal to Seventy-Five Million Dollars
($75,000,000), less (x) the amount of any indebtedness
of the Transferred Subsidiaries (other than any indebtedness owed
by a Transferred Subsidiary to another Transferred Subsidiary) and
indebtedness under Capital Leases as of the Closing Date,
plus (y) the amount of cash (not to exceed One Million
Five Hundred Thousand Dollars ($1,500,000)) of the Transferred
19
Subsidiaries as of the Closing Date (the " Preliminary
Purchase Price "). On the Closing Date, Purchaser shall pay the
Preliminary Purchase Price, as adjusted pursuant to Section
3.1(b)(i), to Seller in cash, which shall be paid by wire
transfer of immediately available United States funds into an
account or accounts designated by Seller in writing not less than
three (3) Business Days prior to the Closing Date. For Tax
purposes, the Preliminary Purchase Price and the adjustment to the
Preliminary Purchase Price shall be allocated in accordance with
Section 7.10(f) .
(b) Adjustment of
Preliminary Purchase Price . The Preliminary Purchase Price
shall be subject to adjustment as provided in this
Section 3.1(b) .
(i) Estimated Statement .
As of the close of business on the fifth (5th) Business Day
immediately preceding the Closing Date, Seller will deliver to
Purchaser a statement (the " Estimated Statement ") setting
forth (A) Seller’s reasonable good faith estimate of
(i) the sum of (w) Accounts Receivable, net of applicable
reserves (to the extent such reserves are not reflected in clause
(ii) below), (x) prepaid expenses of the Business,
(y) Inventory, net of applicable reserves (to the extent such
reserves are not reflected in clause (ii) below), and
(z) other current assets of the Business, minus
(ii) the sum of (x) Accounts Payable, (y) accrued
compensation of the Business, and (z) other current
liabilities of the Business (excluding Excluded Liabilities and the
current portion of any indebtedness referred to in clause
(x) of Section 3.1(b) ), in each case, calculated
as of the Closing Date in accordance with the accounting principles
and methodologies (including GAAP) employed by Seller in preparing
the Business Balance Sheet and those set forth on
Schedule 3.1(b) consistently applied (such amount
generally, " Working Capital ," and such amount estimated as
of the Closing Date, the " Estimated Working Capital "), and
(B) the calculation of the Preliminary Purchase Price, as
adjusted pursuant to this Section 3.1(b)(i) (including
(i) the amount of indebtedness of the Transferred Subsidiaries
(other than any indebtedness owed by a Transferred Subsidiary to
another Transferred Subsidiary) and indebtedness under Capital
Leases and (ii) the amount of cash of the Transferred
Subsidiaries, in each case estimated as of the Closing Date). The
Estimated Statement shall be signed by Seller’s Chief
Financial Officer and accompanied by reasonable supporting
documentation. Purchaser shall have the right to review the
Estimated Statement and such supporting documentation or data of
Seller and its Subsidiaries as Purchaser may reasonably request. In
the event that Purchaser does not agree with Seller’s
estimate, Seller and Purchaser shall negotiate in good faith to
mutually agree on an acceptable estimate of the Estimated Working
Capital, and Seller shall consider in good faith any proposed
comments or changes that Purchaser may reasonably suggest;
provided , however , that Seller’s failure to
include in the Estimated Statement any changes proposed by
Purchaser, or the acceptance by Purchaser of the Estimated
Statement, shall not limit or otherwise affect Purchaser’s
remedies under this Agreement, including Purchaser’s right to
include such changes or other changes in the Closing Date
Statement, or constitute an acknowledgment by Purchaser of the
accuracy of the Estimated Statement. If the Estimated Working
Capital is less than the Target Working Capital, the Preliminary
Purchase Price payable by Purchaser to Seller at Closing shall be
reduced by the amount of such shortfall,
20
and if the Estimated Working Capital is greater than the Target
Working Capital, the Preliminary Purchase Price payable by
Purchaser to Seller at Closing shall be increased by the amount of
such excess; provided , however , that
if the amount of such reduction or increase is less than One
Million Dollars ($1,000,000), then for purposes of this
Section 3.1(b)(i) , no adjustment shall be made to the
Preliminary Purchase Price.
(ii) Closing Date Statement
. No later than sixty (60) calendar days after the Closing
Date, Purchaser shall prepare and deliver to Seller a statement
(the " Closing Date Statement ") of the actual
(x) Working Capital as of the Closing Date (such amount, the "
Closing Date Working Capital "), (y) amount of
indebtedness of the Transferred Subsidiaries (other than any
indebtedness owed by a Transferred Subsidiary to another
Transferred Subsidiary) and indebtedness under Capital Leases as of
the Closing Date, and (z) amount of cash of the Transferred
Subsidiaries as of the Closing Date, which Closing Date Statement
shall be prepared in accordance with the accounting principles and
methodologies (including GAAP) employed by Seller in preparing the
Business Balance Sheet and those set forth on
Schedule 3.1(b) consistently applied. The Closing Date
Statement shall be signed by Purchaser’s Chief Financial
Officer and accompanied by reasonable supporting documentation.
Following the Closing, each of Purchaser and Seller shall give the
other party reasonable access at all reasonable times to the
properties, books, records and personnel of the Business for
purposes of preparing, reviewing and resolving any disputes
concerning the Closing Date Statement. Seller shall, and shall use
commercially reasonable efforts to cause its accountants to,
cooperate with Purchaser and its accountants to the extent required
to enable Purchaser to prepare the Closing Date Statement in
accordance with this Agreement.
(iii) Disputes.
(1)
Subject to clause (2) of this Section 3.1(b)(iii)
, the Closing Date Statement delivered by Purchaser to Seller shall
be deemed to be and shall be final, binding and conclusive on the
parties hereto.
(2)
Seller may dispute any amounts reflected on the Closing Date
Statement; provided , however , that Seller shall be
deemed to have agreed to each item or amount set forth in the
Closing Date Statement (and waived any right to dispute the same)
unless Seller has notified Purchaser in writing of each disputed
item, specifying the amount thereof in dispute and setting forth,
in reasonable detail, the basis for such dispute, within thirty
(30) calendar days after Purchaser’s delivery of the Closing
Date Statement to Seller. In the event of such a dispute, Seller
and Purchaser shall attempt to reconcile their differences, and any
resolution by them as to any disputed amounts shall be final,
binding and conclusive on the parties hereto; provided ,
that such amounts shall not be less, with respect to assets, or
more, with respect to liabilities, than the amounts shown in
Purchaser’s calculation delivered pursuant to
21
Section 3.1(b)(ii) nor more, with respect to assets,
or less, with respect to liabilities, than the amounts shown in
Seller’s calculation delivered pursuant to this Section
3.1(b)(iii)(2) . If Seller and Purchaser are unable to reach a
resolution with such effect within thirty (30) calendar days
after receipt by Purchaser of Seller’s written notice of
dispute, Seller and Purchaser shall submit the items remaining in
dispute for resolution to an independent accounting firm of
international reputation mutually acceptable to Purchaser and
Seller (such accounting firm being referred to herein as the "
Independent Accounting Firm "), which shall, within forty
five (45) calendar days after such submission, determine and report
to Purchaser and Seller upon such remaining disputed items, and
such report shall be final, binding and conclusive on the parties
hereto. The fees and disbursements of the Independent Accounting
Firm shall be allocated between Seller and Purchaser in the same
proportion that the aggregate amount of such remaining disputed
items so submitted to the Independent Accounting Firm that are
unsuccessfully disputed by each such party (as finally determined
by the Independent Accounting Firm) bears to the total amount of
such remaining disputed items so submitted.
(iv) Final Closing Date
Statement . The Closing Date Statement shall be deemed final
and binding for the purposes of this Section 3.1(b)
upon the earliest of (A) the failure of Seller to notify
Purchaser of a dispute within thirty (30) calendar days of
Purchaser’s delivery of the Closing Date Statement to Seller,
(B) the resolution of all disputes, pursuant to
Section 3.1(b)(iii)(2) , by Purchaser and Seller and
(C) the resolution of all disputes, pursuant to Section
3.1(b)(iii)(2) , by the Independent Accounting Firm.
(v) Purchase Price
Adjustment . Within three (3) Business Days after the
Closing Date Statement is deemed final and binding pursuant to
Section 3.1(b)(iv) (the Working Capital amount reflected on
such final Closing Date Statement, the " Final Working
Capital "), the Preliminary Purchase Price shall be, if
necessary, further adjusted such that Purchaser and Seller receive
or make payments to each other so that, after taking into account
any prior payments under Section 3.1(b)(i) , each party
receives or makes payments in an amount exactly equal to the amount
that would have been made under Section 3.1(b)(i) if
the Estimated Working Capital had equaled the Final Working Capital
and if the amount of indebtedness and cash reflected on the
Estimated Statement had equaled the amount of indebtedness and cash
reflected on such final Closing Date Statement. All payments to be
made under this Section 3.1(b)(v) shall be made on a
net basis taking into account payments received under
Section 3.1(b)(i) .
(vi) Payment . If the
amount of any adjustment pursuant to clause (v) above results in an
increase in the Preliminary Purchase Price, then Purchaser shall,
within three (3) Business Days after the Closing Date
Statement is deemed final, pay to Seller the amount of such
increase by wire transfer of immediately available funds to the
account specified by Seller. If the amount of any adjustment
pursuant to clause (v) above results in a decrease in the
Preliminary
22
Purchase Price, then Seller shall, within three
(3) Business Days after the Closing Date Statement is deemed
final, pay to Purchaser the amount of such decrease by wire
transfer of immediately available funds to the account specified by
Purchaser. The Preliminary Purchase Price as so adjusted by
Section 3.1(b) , is referred to herein as the "
Purchase Price ." Any payment amount shall bear interest
thereon from the Closing Date to the date of payment at the rate
equal to one percent (1%) above the prime rate of JPMorgan Chase
Bank, N.A. on the Closing Date.
ARTICLE IV
CLOSING AND TERMINATION
4.1
Closing Date . Subject to the satisfaction of the conditions
set forth in Sections 8.1 and 8.2 hereof (or the
waiver thereof by the party entitled to waive that condition), the
closing of the transactions contemplated by this Agreement (the "
Closing ") shall take place at the offices of
O’Melveny & Myers LLP located at Embarcadero Center West,
275 Battery Street, 26th Floor, San Francisco, California
94111-3305 (or at such other place as the parties may designate in
writing) at 10:00 a.m. (San Francisco time) on a date to be
specified by the parties, which date shall be no later than the
second Business Day after the satisfaction or waiver of each
condition to the Closing set forth in Article VIII
(other than conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of such
conditions), unless another time or date, or both, are agreed to in
writing by the parties hereto. The date on which the Closing shall
be held is referred to in this Agreement as the " Closing
Date ."
4.2
Closing Deliveries . At the Closing:
(a) Seller and, where
applicable, Parent or the applicable Subsidiary shall deliver or
cause to be delivered to Purchaser:
(i) a receipt for the Preliminary
Purchase Price;
(ii) the Bill of Sale;
(iii) the General Assignment;
(iv) the Trademark Assignment;
(v) the Patent Assignment;
(vi) all certificates representing
the Transferred Securities, duly endorsed or accompanied by the
Stock Powers duly executed in blank with appropriate transfer
stamps, if any, affixed, and otherwise sufficient to transfer title
to such shares or other equity interests to Purchaser and/or its
designee, free and clear of any and all Liens, along with any
further documents and evidence of any Third Party Consents that may
be required to properly transfer the Transferred Securities;
23
(vii) the Lease Assignments;
(viii) the Other Instruments, if
any;
(ix) the Transition Services
Agreement, in a form as shall be mutually agreed to by Seller and
Purchaser in accordance with Section 7.9(b) ;
(x) the Supply Agreement, in a
form as shall be mutually agreed to by Seller and Purchaser in
accordance with Section 7.9(a) ;
(xi) the Canada Non-Competition
Covenant executed by Canadian Seller pursuant to
Section 7.13(a)(ii) ;
(xii) duly executed counterparts
of the Consents, approvals and registrations referred to in
Section 8.1(f) ;
(xiii) a certificate executed by a
duly authorized officer of Seller and Parent certifying as to the
matters set forth in Sections 8.1(a) , (b) and
8.1(e); and
(xiv) all other documents,
certificates, instruments, Books and Records or writings required
to be delivered by Parent, Seller or any Subsidiary at or prior to
the Closing pursuant to this Agreement or otherwise required in
connection with the consummation of the transactions contemplated
hereby.
(b) Purchaser shall deliver
or cause to be delivered to Seller:
(i) evidence of the wire transfer
of the Preliminary Purchase Price pursuant to
Section 3.1(a) ;
(ii) the Undertaking;
(iii) the Instruments of
Assumption, if any;
(iv) the General Assignment;
(v) the Lease Assignments;
(vi) the Transition Services
Agreement;
(vii) the Supply Agreement;
(viii) a certificate executed by a
duly authorized officer of Purchaser, certifying as to the matters
set forth in Sections 8.2(a) and (b) ; and
(ix) all other documents,
certificates, instruments or writings required to be delivered by
Purchaser at or prior to the Closing pursuant to this Agreement or
otherwise required in connection with the consummation of the
transactions contemplated hereby.
24
(c) All deliveries at the
Closing as provided for in this Section 4.2 shall be
deemed to be made and effected simultaneously and all such
deliveries shall be deemed to be in escrow until all such
deliveries have been made and effected.
4.3
Termination of Agreement . This Agreement may be terminated
prior to the Closing as follows:
(a) at the election of Seller
or Purchaser on or after April 30, 2007, if the Closing shall
not have occurred by the close of business on such date;
provided , however , that the terminating party is
not in material default of any of its obligations hereunder.
(b) by mutual written consent
of Seller and Purchaser;
(c) by Seller or Purchaser if
there shall have been enacted, issued, promulgated or enforced any
Law that makes the consummation of the transactions contemplated
hereby illegal, or if there shall be in effect a final
nonappealable Order of a Governmental Body of competent
jurisdiction permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated
hereby; it being agreed that the parties hereto shall promptly
appeal any adverse determination which is not nonappealable (and
pursue such appeal with reasonable diligence);
(d) by Seller if there shall
have been a breach of any representation, warranty, covenant or
agreement of Purchaser set forth in this Agreement, which breach
would give rise to a failure of a condition set forth in
Sections 8.2(a) or (b) , and such breach shall
not have been cured within thirty (30) days following receipt
by Purchaser of written notice of such breach from Seller; or
(e) by Purchaser if there
shall have been a breach of any representation, warranty, covenant
or agreement of Parent or Seller set forth in this Agreement, which
breach would give rise to a failure of a condition set forth in
Sections 8.1(a) and (b) , and such breach shall
not have been cured within thirty (30) days following receipt
by Seller of written notice of such breach from Purchaser.
4.4
Procedure Upon Termination . In the event of termination by
Purchaser or Seller, or both, pursuant to Section 4.3 ,
written notice thereof shall forthwith be given to the other party
or parties, specifying the provision of Section 4.3
pursuant to which such termination is made, and this Agreement
shall terminate, and the transactions contemplated hereby shall be
abandoned, without further action by Purchaser or Seller.
4.5
Effect of Termination . In the event that this Agreement is
validly terminated in accordance with Section 4.3 , then
each of the parties shall be relieved of its duties and obligations
arising under this Agreement after the date of such termination and
such termination shall be without liability to Purchaser, Parent,
Seller or any Subsidiary, provided , that no such
termination shall relieve any party hereto from liability for any
breach of this Agreement and, provided , further ,
that the obligations of the parties set forth in
Sections 7.5 and ARTICLE X (other than
Section 10.1 ) hereof shall survive any such
termination and shall be enforceable hereunder.
25
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND
SELLER
Parent
and Seller hereby represent and warrant to Purchaser as
follows:
5.1
Organization and Good Standing; Authorization .
(a) Each of Parent and Seller
is a corporation duly organized, validly existing, and in good
standing under the Laws of the State of Delaware and has all
requisite corporate power and authority to own, lease and operate
its properties and to carry on its business (including the
Business) as now conducted. Seller is duly qualified or authorized
to do business as a foreign corporation and is in good standing
under the Laws of each jurisdiction in which it owns or leases real
property and each other jurisdiction in which the conduct of its
business or the ownership of its assets requires such qualification
or authorization, except where the failure to be so qualified,
authorized or in good standing would not have a Material Adverse
Effect.
(b) Each of Parent, Seller
and the Subsidiaries have all requisite power and authority to
execute and deliver this Agreement and each other Transaction
Document to which it is a party in connection with the consummation
of the transactions contemplated by this Agreement, and to
consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Transaction
Documents to which Parent, Seller or any such Subsidiary is a party
and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action
on the part of Parent, Seller and such Subsidiary. This Agreement
has been, and each of the Transaction Documents to which Parent,
Seller or any such Subsidiary is a party will be at or prior to the
Closing, duly and validly executed and delivered by Parent, Seller
and such Subsidiary, and (assuming the due authorization, execution
and delivery by the other parties hereto and thereto) this
Agreement constitutes, and each Transaction Document to which
Parent, Seller or such Subsidiary is a party, when so executed and
delivered, will constitute, the legal, valid and binding
obligations of Parent, Seller and such Subsidiary, enforceable
against each of them in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies
generally, and subject, as to enforceability, to general principles
of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought
in a proceeding at law or in equity).
5.2
Conflicts; Consents of Third Parties .
(a) Except as set forth on
Schedule 5.2(a) , none of the execution and delivery by
Parent, Seller or the Subsidiaries of this Agreement or the
Transaction Documents to which Parent, Seller or any such
Subsidiary is a party, the consummation of the transactions
contemplated hereby or thereby, or compliance by Parent, Seller or
such Subsidiary with any of the provisions hereof or thereof will
conflict with, or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a
right of termination or cancellation under, any provision of
(i) the constituent documents of Parent, Seller or such
Subsidiary; (ii) any Contract or Permit to which Parent,
Seller or such Subsidiary is a party or by which any of their
respective properties or assets are bound; (iii) any Order of
any Governmental
26
Body applicable to Parent, Seller or such Subsidiary or by which
any of their respective properties or assets are bound; or
(iv) any applicable Law, other than, in the case of clauses
(ii), (iii) and (iv), such conflicts, violations, defaults,
terminations or cancellations that would not reasonably be expected
to have a Material Adverse Effect.
(b) Except as set forth on
Schedule 5.2(b) , no consent, waiver, approval, Order,
Permit or authorization of, or declaration or filing with, or
notification to (each, a " Consent "), any Person or
Governmental Body is required on the part of Parent, Seller or the
Subsidiaries in connection with the execution and delivery of this
Agreement or the Transaction Documents to which Parent, Seller or
any such Subsidiary is a party or the compliance by Parent, Seller
or such Subsidiary with any of the provisions hereof or thereof, or
the consummation of the transactions contemplated hereby or
thereby, except for (i) compliance with the applicable
requirements of the HSR Act and (ii) such Consents, the
failure of which to obtain or make would not reasonably be expected
to have a Material Adverse Effect.
5.3
Subsidiaries .
(a)
Schedule 5.3(a) hereto sets forth the name of each
Subsidiary and (i) with respect to each Transferred
Subsidiary, the jurisdiction in which it is incorporated or
organized, the number of shares of its authorized capital stock or
aggregate equivalent equity interests, the number and class of
shares or other equity interests thereof duly issued and
outstanding, the names of all stockholders or other equity owners
and the number of shares of stock owned by each stockholder or the
amount of equity owned by each equity owner, and (ii) with
respect to each Retained Subsidiary, whether it is wholly-owned by
Seller or another Retained Subsidiary and, if not so wholly-owned,
the names of all stockholders or other equity owners and the number
of shares of stock owned by each stockholder or the amount of
equity owned by each equity owner. All of the issued and
outstanding shares of capital stock or equity interests of each
Transferred Subsidiary were duly authorized for issuance and are
validly issued, fully paid and non-assessable and are not subject
to, nor were they issued in violation of, preemptive rights, and
all such shares or other equity interests represented as being
owned (directly or indirectly) by Seller or a Subsidiary are owned
by it free and clear of any and all Liens except as set forth on
Schedule 5.3(a) hereto. There is no existing option,
warrant, call, right, phantom stock right, stock appreciation right
or Contract of any character to which any Subsidiary or Seller is a
party requiring, and there are no securities of any Transferred
Subsidiary outstanding which upon conversion, exercise or exchange
would require, the issuance or transfer of any shares of capital
stock or other equity securities of any Transferred Subsidiary or
other securities convertible into, exercisable or exchangeable for
or evidencing the right to subscribe for or purchase shares of
capital stock or other equity securities of any Transferred
Subsidiary, nor are there any equity equivalent interests or other
similar rights in the ownership or earnings of any Transferred
Subsidiary. No Transferred Subsidiary or stockholder thereof is a
party to any voting trust or other Contract with respect to the
voting of the shares of capital stock or other equity interests of
such Transferred Subsidiary, or any other agreement relating to the
issuance, redemption, registration, sale, transfer or other
disposition of any capital stock or other equity interests of such
Transferred Subsidiary.
(b) Each Subsidiary is a
corporation or other entity duly organized, validly existing, and
in good standing or its equivalent under the Laws of the
jurisdiction of its organization and
27
has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business (including
the Business) as now conducted. Each Subsidiary is duly qualified
or authorized to do business as a foreign corporation and is in
good standing under the Laws of each jurisdiction in which it owns
or leases real property or in which the conduct of its business or
the ownership of its assets requires such qualification or
authorization (except for any jurisdictions in which the failure to
be so qualified, authorized or in good standing would not have a
Material Adverse Effect).
(c) Except as set forth on
Schedule 5.3(a) , neither Seller nor the Subsidiaries,
directly or indirectly, owns any voting securities or other voting
equity interests in any entity (other than the Subsidiaries) that
owns assets or properties or conducts operations used or held for
use primarily in, or related primarily to, the Business. Neither
Seller nor any of the Subsidiaries has, owns or controls (of record
or beneficially), directly or indirectly, any interest in any other
Person (other than the Subsidiaries), or is a party to or
participant in any partnership, joint venture or other similar
investment, related to the Business. Neither Seller nor any of the
Subsidiaries is subject to any obligation or requirement to provide
funds to or make any investment (whether in the form of a loan,
capital contribution or otherwise) in any Person related to the
Business.
5.4
Financial Statements .
(a) Seller has delivered to
Purchaser copies of (i) the unaudited balance sheets of the
Business as of December 31, 2004 and 2005 and the related
unaudited statements of income and of cash flows of the Business
for the years ended December 31, 2003, 2004 and 2005, and
(ii) the unaudited balance sheet of the Business as of
November 30, 2006 and the related unaudited statements of
income and cash flows of the Business for the nine month period
then ended (such annual statements described in clause (i),
including the related notes and schedules thereto, are referred to
herein as the " Annual Financial Statements ," and such
interim statements described in clause (ii) are referred to
herein as the " Interim Financial Statements ," and,
together with the Annual Financial Statements, the " Financial
Statements "). Except as set forth in the notes thereto, each
of the Financial Statements has been prepared on a stand-alone
basis with respect to the Business in accordance with GAAP
consistently applied and consistent with the assumptions and
methodologies set forth on Schedule 5.4(a)(i) and
presents fairly in all material respects the financial position,
results of operations and cash flows of the Business as at the
dates and for the periods indicated therein. For the purposes
hereof, the unaudited balance sheet of the Business as at
November 30, 2006 (a copy of which is attached to Schedule
5.4(a)(ii) ) is referred to as the " Business Balance
Sheet " and November 30, 2006 is referred to as the "
Balance Sheet Date ."
(b) Books and Records
. Except as set forth on Schedule 5.4(b) , the books of
account and other records of the Business, and the stock record and
minute books and other corporate records of the Transferred
Subsidiaries, all of which have been made available to Purchaser,
(i) with respect to Seller and the Retained Subsidiaries (and
the Business as it relates to Seller and the Retained Subsidiaries)
(ii) with respect to each Transferred Subsidiary (and the
Business as it relates to such Transferred Subsidiary) since the
Seller Acquisition Date (as defined below), and (iii) to the
Knowledge of Seller, with respect to each Transferred Subsidiary
(and the Business as it relates to such Transferred Subsidiary)
prior to the Seller Acquisition Date (as
28
defined below), are in each case in all material respects
complete and correct and have been maintained in accordance with
sound business practices. Except as set forth on Schedule
5.4(b) , he minute books of the Transferred Subsidiaries
contain accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the boards of
directors and any committees of the boards of directors of the
Transferred Subsidiaries since the date that Seller acquired or
formed such Transferred Subsidiary (the " Seller Acquisition
Date " for such Subsidiary), and no meeting of any of the
stockholders, board of directors or committees of any of the
Transferred Subsidiaries has been held since its respective Seller
Acquisition Date for which minutes have not been prepared and are
not contained in such minute books. To the Knowledge of Seller, no
meeting of any of the stockholders, board of directors or
committees of any of the Transferred Subsidiaries has been held
prior to its respective Seller Acquisition Date for which minutes
have not been prepared and are not contained in such minute books.
At the Closing, all of such books and records, to the extent they
constitute Books and Records, will be in the possession of Seller
and the Subsidiaries.
(c) Internal Controls
. Parent and Seller have established and maintain, adhere to and
enforce a system of internal accounting controls with respect to
the Business which are in all material respects effective in
providing reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements
(including the Financial Statements) in accordance with GAAP and
Schedule 5.4(a)(i) .
(d) Accounts
Receivable . Seller has made available to Purchaser a list of
all Accounts Receivable as of the Balance Sheet Date, together with
a range of days elapsed since invoice. Except to the extent, if
any, reserved for on the Financial Statements, and except as set
forth on Schedule 5.4(d) , all Accounts Receivable
reflected on the Financial Statements arose from, and all Accounts
Receivable of Seller and the Subsidiaries existing on the Closing
Date will have arisen from, the sale of Inventory or services
rendered in the Ordinary Course of Business to Persons not
Affiliated with Parent, Seller or the Subsidiaries. All such
Accounts Receivable are carried on the Books and Records of Seller
or the applicable Subsidiary, as the case may be, at values, net of
allowance for doubtful accounts, determined in accordance with GAAP
consistently applied, and are collectible except to the extent of
the reserves therefor set forth in the Business Balance Sheet or,
for receivables arising subsequent to the Balance Sheet Date, as
reflected on the Books and Records of Seller (which are in each
case prepared in accordance with GAAP consistently applied and the
reserve practices and methodology used in preparation of the
Business Balance Sheet), and none of such accounts receivable is,
or at the Closing Date will be, subject to any counterclaim or
set-off, except for counterclaims or set-offs in the Ordinary
Course of Business. Except as set forth on
Schedule 5.4(d) , no person has any lien on any of the
Accounts Receivable.
(e) Inventory .
Except as set forth on Schedule 5.4(e) , the Inventory
is or as of the Closing Date will be in the physical possession of
Seller or a Subsidiary, or will be in transit to the Leased Real
Property or the Owned Properties, or will be in the possession or
control of a customer of the Business. Subject to amounts reserved
therefor on the Financial Statements, (i) none of the
Inventory has been pledged as collateral or otherwise is subject to
any Lien (other than a Permitted Exception or as set forth on
Schedule 5.4(e) ) or is held on consignment from
others, (ii) the values at which all Inventory is carried on
the Financial Statements reflect the historical inventory valuation
policy of the Business, and (iii) the Inventory is in good
and
29
merchantable condition in all material respects and is suitable
and usable in all material respects for the purposes for which it
is intended in the Ordinary Course of Business. All of the
Inventory has been acquired by Seller or a Subsidiary only in bona
fide, arms-length transactions entered into in the Ordinary Course
of Business.
(f) Rebates . The
Business Balance Sheet reflects all Rebates granted or accrued or
committed to be granted or accrued by Seller or any Subsidiary
prior to the Balance Sheet Date, and Seller and the Subsidiaries
have not granted or accrued or committed to grant or accrue any
Rebates since the Balance Sheet Date except in the Ordinary Course
of Business and in an amount that would result in a decrease of no
more than 5% in annual revenue attributable to any such customer on
an individual basis.
5.5
No Undisclosed Liabilities . All of the Liabilities
reflected on the Business Balance Sheet are related to the
Business. Except (i) to the extent reflected or reserved
against in the Business Balance Sheet, (ii) for Liabilities
that are incurred after the date of the Business Balance Sheet and
prior to the date hereof in the Ordinary Course of Business
consistent with past practices, (iii) for Liabilities that are
incurred after the date hereof in accordance with the terms hereof,
or (iv) for Excluded Liabilities, there are no material
Liabilities or other material obligations of any nature whatsoever
relating to the Business or of the Transferred Subsidiaries.
5.6
Absence of Certain Developments . Except as expressly
contemplated hereby, from the Balance Sheet Date to the date of
this Agreement, (i) Seller and the Subsidiaries have conducted
the operations of the Business only in the Ordinary Course of
Business consistent with past practice and have not taken any
action that would have been prohibited by Section 7.2
if this Agreement had been in effect at the time such action was
taken and (ii) there has not been any Material Adverse
Effect.
5.7
Taxes . Except as set forth on Schedule 5.7
:
(a) All Tax Returns required
to be filed by each of the Transferred Subsidiaries have been
timely filed. All Taxes required to be paid (whether or not shown
to be due on such Tax Returns) by each of the Transferred
Subsidiaries have been timely paid. All such Tax Returns are true,
correct and complete in all material respects. All material Tax
Returns required to be filed by each of Seller and the Retained
Subsidiaries in connection with the Business have been timely
filed. Seller and the Retained Subsidiaries each has paid all Taxes
required to be paid by them, the nonpayment of which would result
in a Lien or other encumbrance on the Assets in the hands of
Purchaser, excepting in each case such Taxes as will not be due
until after the Closing Date.
(b) There is no Legal
Proceeding, investigation, audit or examination proposed in writing
or currently pending against or with respect to any of the
Transferred Subsidiaries or in connection with the Business in
respect of any Tax. No deficiencies for any Taxes which have not
been resolved have been proposed in writing, asserted or assessed
in writing against any of the Transferred Subsidiaries or in
connection with the Business.
(c) All material Taxes
required to have been withheld by each of the Transferred
Subsidiaries or in connection with the Business have been withheld
and paid over to the proper Governmental Body.
30
(d) There are no Liens for
Taxes upon any property or assets of any of the Transferred
Subsidiaries or the Assets (other than for Taxes not yet due and
payable).
(e) None of the Transferred
Subsidiaries has any liability for the Taxes of any Person
including under Section 1.1502-6 of the Treasury Regulations
(or any similar provision of state, local or foreign law), as a
transferee or successor (other than for Taxes of an affiliated
group of which the common parent is Parent). None of the
Transferred Subsidiaries is a party to, is bound by or has any
obligation under, any tax sharing agreement or similar contract or
any agreement that obligates it to make any payment for Taxes of
any other Person (other than an obligation (x) in any customary
agreements with customers, vendors or the like entered into in the
Ordinary Course of Business or in any customary credit agreement
and (y) with respect to property taxes payable for properties
leased to the Transferred Subsidiaries).
(f) None of the Transferred
Subsidiaries organized under the Laws of a country other than the
United States (the " Foreign Transferred Subsidiaries ") has
a permanent establishment in a jurisdiction other than the
jurisdiction of its incorporation.
(g)
Schedule 5.7(g) sets forth each jurisdiction in which
each of the Transferred Subsidiaries files a Tax Return.
(h) None of the Transferred
Subsidiaries will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any period
(or any portion thereof) ending after the Closing Date as a result
of any: (i) installment sale or other open transaction
disposition made on or prior to the Closing Date; or
(ii) prepaid amount received on or prior to the Closing
Date.
(i) All charges for amounts
payable or amounts receivable among any of Seller or the Retained
Subsidiaries, on the one hand, and any of the Transferred
Subsidiaries, on the other hand, have been made at arms’
length for fair value.
(j)
Schedule 5.7(j) sets forth a complete and accurate list
of all material agreements, rulings, settlements or other similar
Tax documents relating to Tax incentives between any of the Foreign
Transferred Subsidiaries and a Governmental Body.
(k) All conditions (including
filing of Tax or any other information or regulatory returns)
relating to grant of any license or approval for claiming any Tax
holiday or any other Tax benefit by GenTek Technology Pvt. Ltd.
have been fulfilled. Further, there is no litigation challenging
the availability of any such Tax holiday or Tax benefit.
(l) Canadian Seller is not a
non-resident of Canada for purposes of the Income Tax Act
(Canada).
5.8
Real Property .
(a)
Schedule 5.8(a) sets forth a true and complete list of
all real property and interests in real property owned in fee by
Seller and the Subsidiaries that are primarily used or held for use
in connection with the Business, other than the Concord Facility
(individually, an " Owned Property " and collectively, the "
Owned Properties "). Seller or the Subsidiaries, as
applicable,
31
have good and marketable fee title to all Owned Properties, free
and clear of all Liens of any nature whatsoever except
(i) Liens set forth on Schedule 5.8(a) and
(ii) Permitted Exceptions. Seller has made available to
Purchaser copies of all deeds, title reports and policies and
surveys for the Owned Properties in the possession of Seller or the
Subsidiaries.
(b)
Schedule 5.8(b) sets forth a true and complete list of
all leases of real property by Seller and the Subsidiaries that are
primarily used or held for use in connection with the Business
(individually, a " Real Property Lease " and collectively,
the " Real Property Leases "). The Real Property Leases,
together with the Owned Properties, constitute all material
interests in real property currently used or currently held for use
primarily in connection with the Business. There does not exist any
actual or, to the Knowledge of Seller, threatened or contemplated
condemnation or eminent domain proceedings that affect the Real
Property Leases or any part thereof, and Seller has not received
any written notice of the intention of any Governmental Body or
other Person to take or use all or any part thereof. Each of the
Owned Properties and real property subject to any Real Property
Lease, and all buildings, fixtures and improvements thereon, are
adequate in all material respects for their intended use in the
operation of the Business as currently conducted.
(c) The zoning and land use
regulation of each parcel of Owned Property and real property
subject to any Real Property Lease permits the presently existing
improvements located thereon and the continuation of the business
presently being conducted on such parcel. There is no pending or,
to the Knowledge of Seller, contemplated rezoning of any Owned
Property or Real Property Lease. Each Owned Property and Real
Property Lease is in compliance with applicable state law and local
subdivision ordinances.
(d) There are no contracts or
options to sell the Owned Property or any portion of the Owned
Property which are presently in effect. Except as set forth on
Schedule 5.8(d), neither Seller nor any of its Subsidiaries
have entered into any leases with respect to the Owned Property or
subleases of the Real Property Leases.
5.9
Tangible Personal Property . Except as set forth on
Schedule 5.9(i) , Seller or the Subsidiaries, as
applicable, have good and marketable title to, or a valid leasehold
interest in, each of the items of Tangible Personal Property
reflected in the Business Balance Sheet (except as sold or disposed
of subsequent to the date thereof in the Ordinary Course of
Business consistent with past practice) or otherwise included in
the Assets, free and clear of any and all Liens other than the
Permitted Exceptions. All of such Tangible Personal Property, taken
as a whole, is in good operating condition and repair, reasonable
wear and tear excepted, has been reasonably maintained in
accordance with normal industry practice, and is usable in the
Ordinary Course of Business and is suitable, sufficient in amount,
size and type and adequate, in each case, in all material respects,
for the uses for which they are used to carry on the Business as
now conducted. Schedule 5.9(ii) sets forth a list of
all Tangible Personal Property that will remain at the Concord
Facility following the shutdown of operations currently in progress
at the Concord Facility (the "Remaining Concord Assets").
5.10
Intellectual Property .
32
(a)
Schedule 5.10(a) contains a list (by name, part number
and other appropriate product identifiers) of all products
(excluding products in development) sold, distributed or otherwise
disposed of during 2005 and 2006 by Seller or any of the
Subsidiaries in connection with the Business, and such list is
complete and accurate in all material respects. None of such
products, nor any other Product, is a Retained Aviation
Product.
(b) The Business Intellectual
Property constitutes all the Intellectual Property necessary for
Purchaser to conduct the Business in substantially the same manner
as it is currently operated or included or incorporated in the
Products as currently sold, distributed or otherwise disposed of.
Seller or its Subsidiaries is the exclusive owner of all right,
title and interest in and to (free and clear of all encumbrances
except Permitted Exceptions or as set forth on Schedule
5.10(b) ) the Business Intellectual Property other than
In-Licensed IP.
(c)
Schedule 5.10(c) sets forth a list (as of the date of
this Agreement) of all U.S. and foreign Patents, Marks and
Copyrights, in each case included in the Business Intellectual
Property, registered by or on behalf of Seller or any Subsidiary
with any Governmental Body, such list including the
jurisdiction
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