STOCK PURCHASE AGREEMENT

Exhibit 10.1

Execution Version

STOCK PURCHASE AGREEMENT

by and among

NOBLE TUBE TECHNOLOGIES, LLC

(“Buyer”),

NOBLE INTERNATIONAL, LTD.

(“Noble”),

and

THE SHAREHOLDERS OF

PULLMAN INDUSTRIES, INC.

(“Sellers”)

October 12, 2006

TABLE OF CONTENTS

 

 

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STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (the “Agreement”) is made as of October 12, 2006, by and among NOBLE TUBE TECHNOLOGIES, LLC, a Michigan limited liability company (“Buyer”), NOBLE INTERNATIONAL, LTD., a Delaware corporation (“Noble”), and each shareholder (each a “Seller” and collectively “Sellers”) of Pullman Industries, Inc., a Michigan corporation (the “Company”). Buyer, Noble and Sellers are sometimes individually referred to in this Agreement as a “Party” and collectively as the “Parties.” Other capitalized terms used in this Agreement and not otherwise defined are defined in Article 6 .

The Company and the Subsidiaries are engaged in the business of manufacturing and selling products utilizing the roll forming and/or stretch bending process in the automotive and office furniture markets (the “Business”). Buyer desires to purchase from Sellers, and Sellers desire to sell to Buyer, all of the outstanding capital stock of the Company on the terms and subject to the conditions of this Agreement. Noble joins in this Agreement to guaranty Buyer’s performance pursuant to the terms of this Agreement.

ACCORDINGLY, in consideration of the representations, warranties, covenants and agreements contained in this Agreement, the Parties agree as follows:

ARTICLE 1

PRINCIPAL TRANSACTION

Section 1.1. Sale and Purchase of Stock . On the terms and subject to the conditions of this Agreement, Sellers agree to sell and transfer to Buyer, and Buyer agrees to purchase from Sellers, all of the issued and outstanding shares of capital stock of the Company, consisting of 6,000,000 shares of common stock, no par value per share (the “Shares”), free and clear of all Encumbrances.

Section 1.2. Purchase Price; Payment .

(a) Subject to adjustment under Section 1.3 , if applicable, in consideration of the transfer of the Shares to Buyer and the other undertakings of Sellers set forth in this Agreement, Buyer agrees to pay to Sellers, in the aggregate, the sum of (i) $49,976,000 plus (ii) the Deferred Payment Amount, plus (iii) the Tax Refund Amount (in the aggregate, as adjusted, the “Purchase Price”).

(b) Subject to adjustment under Section 1.3 , if applicable, $42,476,000 of the Purchase Price (the “Initial Payment”) will be paid to Sellers at Closing by wire transfer of immediately available funds to an account designated by Sellers Representative, and $7,500,000 of the Purchase Price will be paid into escrow pending (i) the collection by the Company or a Subsidiary of those accounts receivable set forth on Exhibit 1.2(b) (estimated by Sellers not to exceed $257,724), and (ii) resolution of any claims for indemnification that may be made by Buyer under Article 5 during the stated duration of the escrow, as more fully set forth in the escrow agreement (the “Escrow Agreement”).

 

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(c) The Deferred Payment Amount, which will not exceed $14,000,000 in the aggregate, will be paid to Sellers within 10 days after each month end in which any Deferred Payment Amount due Sellers hereunder is received by wire transfer of immediately available funds to an account designated by Sellers Representative, subject to satisfaction of the payment conditions set forth on Exhibit 1.2(c) . Buyer shall use commercially reasonable efforts in good faith to collect the payments indicated on Exhibit 1.2(c) (the “Tooling Receivables”) according to the schedule indicated therein, but will not be required to commence any Proceeding, utilize any collection or similar agency, or cease doing business with any applicable account debtor. In connection with the collection of the Tooling Receivables, Buyer will not reduce or otherwise compromise any Tooling Receivable in exchange for, or to influence an account debtor to give, any concession or other accommodation to Buyer or any of its Affiliates that is unrelated to the applicable Tooling Receivable, and Buyer will not be required to grant any concession or other accommodation to collect any Tooling Receivable. Buyer will provide Sellers Representative with a monthly status report of Tooling Receivables collections. If Tooling Receivables are not collected within 60 days of the applicable invoice date, Sellers Representative or his or her designee will have the opportunity to discuss and review a summary of the efforts of Buyer to obtain payment of the outstanding Tooling Receivables and may participate in joint discussions and other communications with Buyer and the applicable account debtor; provided , however , that Buyer may reasonably limit the scope of such communications if Buyer believes that such communications would be reasonably likely to adversely affect the customer relationship between Buyer and the applicable account debtor; and provided , further , that Sellers Representative or his or her designee must conduct himself or herself in such a manner as to not adversely affect the customer relationship between Buyer and the applicable account debtor.

(d) One half of any Tax Refund Amount will be paid to Sellers within three business days following receipt by the Company of such Tax Refund Amount, by wire transfer of immediately available funds to an account designated by Sellers Representative. Buyer will promptly notify Sellers of receipt of any Tax Refund Amount. Any Tax Refund Amount payable to Sellers under this Section 1.2(d) not paid when due will bear interest at 12% per annum from the date such amount is required to be paid hereunder until paid, increasing to 15% per annum from and after 30 days of the due date and increasing to 18% per annum from and after 60 days of the date due.

Section 1.3. Adjustments to Purchase Price .

(a) On October 2, 2006, Sellers delivered to Buyer their good faith estimate of the U.S. Closing Date Debt, which was estimated by Sellers to be $44,339,385, and the Mexican Closing Date Debt, which was estimated by Sellers to be $21,347,825.

(b) The Initial Payment will be decreased on a dollar-for-dollar basis to the extent that the Closing Date U.S. Net Working Capital is less than $10,000,000. Sellers have estimated Closing Date U.S. Net Working Capital to be $10,164,820, as calculated on Exhibit 1.3(b) .

(c) Within 30 days after the Closing Date, Buyer will cause to be prepared and delivered to Sellers Representative (i) an itemized calculation (each a “Closing Date Debt Statement” and collectively, the “Closing Date Debt Statements”) of actual Closing Date Debt of the Company and the U.S. Subsidiaries and the Mexican Subsidiaries, exclusive of debt owed by

 

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WLP Properties S. de R.L. de C.V. to TMW Enterprises de Juarez, S.A. de C.V., TMW Enterprises de Mexico, S.A. de C.V. and TMW Enterprises de Torreon, S.A. de C.V. not in excess of an aggregate amount of $1,200,000 (the “Mexican Closing Date Debt”), and (ii) an itemized calculation of Closing Date U.S. Net Working Capital (the “Closing Date U.S. Net Working Capital Statement”). Sellers will have the opportunity to review the Closing Date Debt Statements and the Closing Date U.S. Net Working Capital Statement for 20 days following receipt thereof (the “Review Period”). During the Review Period, Buyer and its Representatives will provide to Sellers and their Representatives access to all information to enable Sellers and their Representatives to review and evaluate the Closing Date Debt Statements and the Closing Date U.S. Net Working Capital Statement. Each of the applicable Closing Date Debt Statements and the Closing Date U.S. Net Working Capital Statement will become final, conclusive and binding on Sellers unless, prior to the end of the Review Period, Sellers Representative notifies Buyer in writing of Sellers’ objections to the Closing Date Debt Statement and/or the Closing Date U.S. Net Working Capital Statement, identifying the disputed items, the estimated amounts of the disputed items if then calculable and the basic facts underlying Sellers’ objections. If Sellers Representative gives such an objection notice, the Parties will try in good faith to resolve the objections within 30 days. If the Parties resolve some or all of the objections within that time period, they will promptly record their resolution in a writing signed by each of them, and such resolution will be final, conclusive and binding on each of them. If the Parties are unable to resolve all of the objections within the 30-day time period, they will promptly refer any matters still in dispute for resolution as provided in Section 1.3(g) . Each Closing Date Debt Statement, in the form that is final, conclusive and binding on the Parties hereunder, is referred to as the “Final Closing Date Debt Statement” and, collectively as the “Final Closing Date Debt Statements”. The Closing Date U.S. Net Working Capital Statement, in the form that is final, conclusive and binding on the Parties hereunder, is referred to as the “Final Closing Date U.S. Net Working Capital Statement”.

(d) The Purchase Price will be decreased on a dollar-for-dollar basis to the extent that the U.S. Closing Date Debt as reflected on the applicable Final Closing Date Debt Statement is greater than the Maximum U.S. Debt. The Purchase Price will also be decreased on a dollar-for-dollar basis to the extent that the Mexican Closing Date Debt as reflected on the applicable Final Closing Date Debt Statement is greater than $21,347,825. Any decrease in the Purchase Price pursuant to this Section 1.3(d) will be paid by Sellers to Buyer within seven days following the date the applicable Final Closing Date Debt Statement becomes final, conclusive and binding, together with interest thereon at 8% per annum from the Closing Date until paid; provided , however , that any amount not timely paid under this Section 1.3(d) will bear interest at 12% per annum from and after the date such amount is required to be paid hereunder until paid, increasing to 15% per annum from and after 30 days of the date due and increasing to 18% per annum from and after 60 days of the date due.

(e) If the Closing Date U.S. Net Working Capital as reflected on the Final Closing Date U.S. Net Working Capital Statement is less than $10,000,000, Sellers will pay the amount of such deficiency to Buyer within seven days following the date that the Final Closing Date U.S. Net Working Capital Statement becomes final, conclusive and binding, together with interest thereon at 8% per annum from the Closing Date until paid; provided , however , that any amount not timely paid under this Section 1.3(e) will bear interest at 12% per annum from and after the date such amount is required to be paid hereunder until paid, increasing to 15% per annum from and after 30 days of the date due and increasing to 18% per annum from and after 60 days of the date due.

 

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(f) If Sellers fail to pay any amount owed under this Section 1.3 in a timely manner, in addition to any other remedies that Buyer may have under applicable Legal Requirements or this Agreement (including commencing a Proceeding for indemnification) (i) Buyer may withdraw from the escrow fund under the Escrow Agreement the dollar amount owed to it under this Section 1.3 , without any right of Sellers or Sellers Representative to object to such withdrawal and neither Sellers nor Sellers Representative will object to such withdrawal and (ii) Sellers will, within three business days of such withdrawal, transfer to the escrow fund held under the Escrow Agreement the amount of such withdrawal. Any amount not timely paid into the escrow fund under this Section 1.3(f) will bear interest thereon at 12% per annum from the date such amount is required to be paid hereunder until paid, increasing to 15% per annum from and after 30 days of the date due and increasing to 18% per annum from and after 60 days of the date due.

(g) Any unresolved dispute under Section 1.3(c) above will be promptly referred for resolution to the Detroit office of the Transaction Services Group of Ernst & Young LLP who will be jointly retained by the Parties. If the Parties are unable to engage Ernst & Young LLP for any reason, or Ernst & Young LLP is no longer independent at the time a dispute is submitted to it, then Buyer and Sellers Representative will each designate a nationally or regionally recognized independent accounting firm with whom neither they nor any of their respective Affiliates has any current professional relationship, and the accounting firm to resolve the dispute will be chosen by lot (Ernst & Young LLP or any other chosen accounting firm is referred to as the “Accounting Firm”). Buyer will pay one-half, and Sellers will pay one-half of the fees and expenses of the Accounting Firm. The Accounting Firm will act as a neutral arbitrator and, to the extent GAAP leaves room for discretion, will exercise that discretion independently, but within the range of the differences between the Parties. Buyer and Sellers Representative each will provide the Accounting Firm with all data and documents relevant to the determinations to be made by it, and copies of all materials provided to the Accounting Firm will simultaneously be provided to all Parties. Neither Buyer nor Sellers will meet or discuss any substantive matters with the Accounting Firm without the other Parties or their Representatives present or having the opportunity following at least three business days notice to be present, either in person or by telephone. Prior to making a final determination, the Accounting Firm will have the power to require any Party to provide to it and the other Parties such Books and Records and other information it deems relevant to the resolution of the dispute, and to require any Party to answer questions that it deems relevant to the resolution of the dispute. The Accounting Firm will revise the Closing Date Debt Statements to reflect its resolution under Section 1.3 of all disputed matters, and its resolution will be final, conclusive and binding on the Parties.

(h) Sellers Representative will be permitted to review and make copies of all workpapers, schedules and calculations used in determining the Deferred Payment Amount and the overdue accounts receivable set forth in Schedule 1.2(b) and to otherwise have access to and be permitted to make copies of such books and records as he or she may reasonably need to determine the accuracy of such calculations.

 

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Section 1.4. Closing . The consummation of the transactions contemplated by this Agreement (the “Closing”) are taking place at 10:00 a.m. local time on October 12, 2006 (the “Closing Date”). The Closing Date will be deemed effective as of the start of business on the Closing Date.

Section 1.5. Deliveries at the Closing .

 

(a)

At the Closing, Buyer will deliver to Sellers:

(i) the Initial Payment;

(ii) the Escrow Agreement, duly executed by Buyer, and evidence that the escrow under the Escrow Agreement has been fully funded in accordance with Section 1.2(b) ;

(iii) payment in full of the promissory note referenced in Section 1.5(b)(xii) below; and

(iv) any and all other agreements, certificates, instruments and documents as may be reasonably required of Buyer under this Agreement.

 

(b)

At the Closing, Sellers will deliver to Buyer:

(i) stock certificates representing the Shares duly endorsed in blank or accompanied by irrevocable stock powers duly endorsed in blank, in either case sufficient to transfer the Shares to Buyer free and clear of all Encumbrances;

(ii) the Escrow Agreement, duly executed by Sellers Representative;

(iii) mutual releases, in forms reasonably acceptable to Buyer, duly executed by the Company and each director and officer of the Company and the Subsidiaries and resignations of each director and the following officers: Douglas S. Soifer and Paul Oster;

(iv) mutual releases of the Company and the Subsidiaries, in forms reasonably acceptable to Buyer, duly executed by the Company and each Seller, Pullman Industries IC-DISC, Inc. and TMW Enterprises Inc. (except with respect to the fees to be paid post-Closing under Sections 4.5 and 4.14 ) or any Affiliate to which management or other fees have been paid by the Company or any Subsidiary;

(v) a legal opinion of Honigman Miller Schwartz and Cohn LLP, in the form attached as Exhibit 1.5(b)(v) ;

(vi) copies of all consents (if applicable) and estoppel certificates, in forms reasonably acceptable to Buyer, duly executed by each lessor of each Real Property Lease;

 

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(vii) evidence of the release of all Encumbrances, other than Permitted Encumbrances, on the property and assets of the Company and the Subsidiaries;

(viii) bank-payoff letters and related Encumbrance discharges with respect to indebtedness to JPMorgan Chase (“JPMC Debt”), the form of which payoff letter is attached as Exhibit 1.5(b)(viii) ;

(ix) evidence that all patents used by the Company or a Subsidiary and invented by an employee of the Company or a Subsidiary or on behalf of the Company or a Subsidiary have been validly assigned to the Company or a Subsidiary;

(x) affirmation that all loans by the Company or any Subsidiary to any officer or director or former officer or director of the Company or any Subsidiary have been paid in full;

(xi) copy of a quit claim deed transferring the Company’s real property in Bloomingdale, Michigan ( located at CR 388, Bloomingdale, Michigan, as more fully described in Item 3 of Schedule 2.8(a) ) to Bloomingdale Holdings LLC, a newly formed limited liability company owned by the Company, and evidence of the distribution of all of the outstanding membership interests in such limited liability company to Sellers or their designee(s), in form reasonably acceptable to Buyer;

(xii) evidence of the distribution by the Company, immediately prior to Closing, of a $4,000,000 promissory note to Sellers and surrender of such promissory note against the payment described in Section 1.5(a)(iii) ;

(xiii) except for the rights and obligations set forth in the Pullman IC-DISC Stock Purchase Agreement and as otherwise set forth in Exhibit 4.14 , evidence of termination of all of the Company’s or any Subsidiaries’ commission and similar agreements with Pullman Industries IC-DISC, Inc. from and after the Closing Date;

(xiv) evidence of termination of the employment agreement between any Mexican Subsidiary and Ruiz Mateos and the transfer to Pullman de Mexico and Pullman de Puebla of all equity interest of Ruiz Mateos in any of the Mexican Subsidiaries for payment not to exceed $275,000 from existing cash of one or more of the Mexican Subsidiaries, and a release of the Company and the Subsidiaries, in form reasonably acceptable to Buyer, duly executed by Mr. Mateos;

(xv) evidence that the terms of the indebtedness of WLP Properties S. de R.L. de C.V. to TMW Enterprises de Juarez, S.A. de C.V., TMW Enterprises de Mexico, S.A. de C.V. and TMW Enterprises de Torreon, S.A. de C.V. have been amended to Buyer’s satisfaction;

 

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(xvi) a consent of GE CF Mexico, S.A. de C.V. to the transactions contemplated by this Agreement and waiver of any default or event of default arising therefrom;

(xvii) evidence of the settlement of Jorge Suarez Gomez v. Linde Pullman de Queretaro, S.A. de CV.; and

(xviii) any and all other agreements, certificates, instruments and documents as may be reasonably required of Sellers, or any of them, under this Agreement.

(c) At the Closing Buyer, on behalf of the Company, will cause the JPMC Debt to be paid and discharged and will provide replacement letters of credit in respect of the JPMorgan Chase letters of credit set forth on Schedule 2.12(a)(iii) .

ARTICLE 2

REPRESENTATIONS AND WARRANTIES OF SELLERS

Sellers, jointly and severally, make the following representations and warranties to Buyer to induce Buyer to enter into this Agreement and the other Transaction Documents and consummate the transactions contemplated hereby and thereby. These representations and warranties will survive the Closing for the periods specified in Section 7.1 .

Section 2.1. Organization; Capitalization; Ownership .

(a) The Company and each Subsidiary is a corporation or limited liability company, as applicable, duly organized, validly existing and in good standing under the applicable Legal Requirements of the jurisdiction of its organization. Copies of the Organizational Documents for the Company and each Subsidiary have been provided to Buyer. The Company and each Subsidiary has the requisite corporate or limited liability company power and authority, as the case may be, to conduct the Business as it is now being conducted, to own and use the properties and assets that it purports to own and use and to perform its obligations under the Applicable Contracts. The Company and each Subsidiary is duly qualified to do business as a foreign corporation and is in good standing in each state or other jurisdiction in which either the ownership or use of the properties owned or used by it or the nature of the activities conducted by it requires such qualification, as identified on Schedule 2.1(a) .

(b) The authorized capital stock of the Company consists of 7,000,000 shares of common stock, no par value per share, of which 6,000,000 shares (the “Shares”) are issued and outstanding. All of the Shares were validly issued, are fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of any Person. Except as provided on Schedule 2.1(b ), there are no outstanding Contracts that require any Seller or the Company to sell or issue any capital stock or other securities of the Company, including any securities convertible into or exchangeable for any capital stock or other securities of the Company. Except as provided on Schedule 2.1(b) , there is no outstanding subscription, option, warrant or other right, call or commitment to issue, or any obligation or commitment to purchase, any capital stock or other securities of the Company or any securities convertible into or exchangeable for any capital stock or other securities of the Company.

 

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(c) Each Seller owns, beneficially and of record, his, her or its Shares free and clear of all Encumbrances, and Sellers collectively own, beneficially and of record, all outstanding Shares. Each Seller owns the number of Shares set forth next to his, her or its name on Schedule 2.1(c) . Except as set forth on Schedule 2.1(c) , no Seller owns his, her or its Shares jointly with any other Person, and no other Person has any right to consent to or vote upon the transactions contemplated by this Agreement or any other Transaction Document. At the Closing, each Seller will transfer to Buyer valid title to all of the Shares free and clear of all Encumbrances.

(d) Schedule 2.1(d) sets forth the authorized, issued and outstanding capital stock or other equity securities, as applicable, of each Subsidiary. All of the capital stock or other equity securities of each Subsidiary were validly issued, are fully paid and nonassessable and were not issued in violation of any preemptive or similar rights of any Person. There are no outstanding Contracts that require any Seller, the Company or any Subsidiary to sell or issue any capital stock or other equity securities of any Subsidiary, including any securities convertible into or exchangeable for any capital stock or other equity securities of a Subsidiary. There is no outstanding subscription, option, warrant or other right, call or commitment to issue, or any obligation or commitment to purchase, any capital stock or other equity securities of a Subsidiary or any securities convertible into or exchangeable for any capital stock or other equity securities of a Subsidiary. Except for the Subsidiaries, neither the Company nor any Subsidiary owns, or has any right to acquire, any equity interest or other equity securities in any other Person. The Company or a Subsidiary owns, beneficially and of record, all of the outstanding capital stock or other equity securities of each Subsidiary free and clear of all Encumbrances.

Section 2.2. Financial Statements and Financial Matters .

(a) Copies of the audited consolidated financial statements of the Company, Pullman Industries of Indiana, Inc. and Pullman Investments, LLC, at and for the fiscal years ended December 31, 2005, December 31, 2004 and December 31, 2003 are attached to Schedule 2.2(a) (the “Financial Statements”). Also attached to Schedule 2.2(a) are copies of the unaudited consolidated interim balance sheets and interim statements of income of the Company and Pullman Industries of Indiana, Inc. at and for the month-ended August 27, 2006 (the “Interim Financial Statements”). The Interim Financial Statements include the consolidated balance sheet of the Company and Pullman Industries of Indiana, Inc., at August 27, 2006 (the “Balance Sheet”). The Financial Statements and Interim Financial Statements (subject, in the case of the Interim Financial Statements, to normal year end adjustments and the absence of footnotes thereto which, if presented would not differ materially from those included in the Financial Statements) are accurate and complete in all material respects and, except as set forth in Schedule 2.2(a) , present fairly the financial condition of the Company and Pullman Industries of Indiana, Inc. (and in the case of the Financial Statements, Pullman Investments, LLC), at the dates indicated and their results of operations for the periods then ended. The Financial Statements and Interim Financial Statements were prepared in accordance with GAAP (subject, in the case of the Interim Financial Statements, to normal recurring year-end adjustments and any other adjustments described therein, the effect of which would not individually or in the aggregate have a Company Material Adverse Effect, and the absence of footnotes thereto which,

 

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if presented would not differ materially from those included in the Financial Statements). Each of Pullman AG, Zug and Pullman Investments LLC are holding companies that are not currently engaged in business operations, and, except as set forth on Schedule 2.2(a) , neither of them has any liabilities or assets other than the stock of their respective subsidiaries as set forth on Schedule 2.1(d) and, in the case of Pullman AG, Zug, certain Intellectual Property Assets described on Schedule 2.9(c) .

(b) Except as set forth on Schedule 2.2(b) and except for (i) executory obligations under Applicable Contracts and (ii) liabilities expressly set forth in the Schedules to this Agreement, neither the Company nor any U.S. Subsidiary has any liabilities or obligations of any nature (whether known or unknown, absolute, accrued, contingent or otherwise), required to be reflected on a balance sheet (or in the notes thereto) in accordance with GAAP, except for (A) liabilities or obligations expressly reflected or reserved against in the Balance Sheet, and (B) balance sheet liabilities incurred in the Ordinary Course of Business since the date of the Balance Sheet.

(c) All accounts receivable of the Company and the U.S. Subsidiaries as of the Closing Date (the “Accounts Receivable”) will represent only valid obligations due to the Company or a U.S. Subsidiary arising from bona fide arm’s length transactions actually made by the Company or a U.S. Subsidiary in the Ordinary Course of Business and are not in dispute. All of the Tooling Receivables were outstanding as of September 30, 2006, and, if collected, will be handled as set forth in Section 1.2(c) and Exhibit 1.2(c) .

(d) Except for obsolete items and items below standard quality, all of which have been written off or written down to net realizable value on the Balance Sheet giving effect to any inventory related reserves set forth on the Balance Sheet, all of the inventory of the Company and the U.S. Subsidiaries as of the Closing Date will (i) consist of inventory manufactured or acquired in bona fide transactions in the Ordinary Course of Business and (ii) be of a quality and quantity usable and salable in the Ordinary Course of Business. All inventories of the Company and the U.S. Subsidiaries not written off are reflected in the Financial Statements and Interim Financial Statements at the lower of cost or market on a first in, first out basis, net of any reserves on the Balance Sheet. As of the Closing Date, the quantities of each item of inventory (whether raw materials, work-in-process or finished goods) of the Company and the U.S. Subsidiaries will not be excessive, but will be reasonable in the circumstances of the Business. All work-in-process inventory of the Company or a U.S. Subsidiary constitutes items in process of production pursuant to Contracts entered into in the Ordinary Course of Business, from customers in bona fide arms length transactions. All work in process inventory of the Company or a U.S. Subsidiary is of a quality ordinarily produced in accordance with the requirements of the orders to which such work in process is identified.

(e) Except as set forth in Schedule 2.2(e) , neither the Company nor any U.S. Subsidiary has any outstanding indebtedness to any Seller or any Related Person, and no Seller or any Related Person (other than the Mexican Subsidiaries) has any outstanding indebtedness to the Company or a U.S. Subsidiary.

 

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(f) The Company received an annual management review by Plante & Moran, PLLC containing a certification of the internal controls of the Company, a copy of which has been provided to Buyer.

(g) The amount accrued as a liability on the Company’s September 30, 2006 consolidated balance sheet attached as Exhibit 8.2 with respect to the Pullman Industries, Inc. Amended and Restated 2001 Equity Participation Plan were accrued in accordance with such plan and in a manner consistent with past practice.

Section 2.3. Books and Records . The Books and Records of the Company and the U.S. Subsidiaries, all of which have been made available to Buyer, are complete and correct in all material respects and have been maintained in accordance with sound business practices. All of the Books and Records will be in the possession of the Company or a U.S. Subsidiary, as applicable. The corporate minute book and stock records of the Company and each U.S. Subsidiary, which have been furnished to Buyer for inspection, are complete and correct in all material respects and accurately reflect all material corporate action taken by the Company and the respective U.S. Subsidiaries. The directors and officers of the Company and each U.S. Subsidiary are listed in Schedule 2.3 .

Section 2.4. Taxes .

(a) Schedule 2.4(a) contains a list of states, territories and jurisdictions to which any Taxes have been claimed to be, or are, payable by the Company or a U.S. Subsidiary. All Tax Returns of the Company and each U.S. Subsidiary required under applicable Legal Requirements to be filed prior to the Closing Date have been filed within the times (including extensions) and in the manner prescribed by applicable Legal Requirements. The Company and each U.S. Subsidiary has paid, or caused to be paid, all Taxes due and owing by it, whether or not shown or required to be shown on a Tax Return, and the Company and each U.S. Subsidiary has provided on the Balance Sheet a sufficient reserve for the payment of all Taxes associated with their respective business operations through the date thereof but not yet due and payable by it. Taxes paid or provided for on the Balance Sheet include all Taxes for which the Company or a U.S. Subsidiary may be liable in their own right or as the transferee of the assets of, or as successor to, any other Person as of such date. Neither the Company nor any U.S. Subsidiary is responsible for the payment of Taxes of another Person (other than the Company or a U.S. Subsidiary) by reason of the application of Treas. Reg. §1.1502-6 or other Legal Requirement.

(b) All Taxes required to have been collected or withheld by the Company or a U.S. Subsidiary before the Closing Date have been duly collected or withheld and, to the extent required before the Closing Date, have been duly paid to the proper Governmental Body. Except as set forth in Schedule 2.4(b) , all Tax deficiencies asserted in writing or, to Sellers Knowledge verbally, by the IRS or other Governmental Body against the Company or a U.S. Subsidiary have been paid or finally settled and in the case of the Company and Pullman Industries of Indiana, Inc., recorded on the Balance Sheet. Except as set forth on Schedule 2.4(b) , there are no audits of or other Proceedings pending with respect to any Tax Returns of the Company or a U.S. Subsidiary, and there are no outstanding waivers of statutes of limitations regarding any Taxes payable by the Company or a U.S. Subsidiary.

 

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(c) The Company and each U.S. Subsidiary has delivered or made available to Buyer copies of (i) all Tax Returns with respect to all open years, and all amendments thereto, and (ii) all audit or examination reports or written proposed adjustments (whether formal or informal) received from any Governmental Body relating to any Tax Return. The charges, accruals and reserves with respect to the Taxes on the Balance Sheet are adequate under GAAP and are at least equal to the aggregate Tax liability of the Company and the U.S. Subsidiaries (including any other Person whose Tax liability the Company or a U.S. Subsidiary may have any responsibility for).

(d) Since January 1, 2006, the Company has validly elected to be treated as an “S Corporation” under Sections 1361 and 1362 of the Code, and it will continue to be so treated until the date immediately prior to the Closing Date. Since January 1, 2006, Pullman Industries of Indiana, Inc. has validly elected to be treated as a “qualified Subchapter S Subsidiary” within the meaning of Section 1361(b)(3), and it will continue to be so treated until the date immediately prior to the Closing Date. Except as set forth in Schedule 2.4(d) , neither the Company nor any U.S. Subsidiary has (i) applied for any Tax ruling, (ii) in the immediately preceding three years, entered into or is proposing to enter into a Contract with any Governmental Body regarding Taxes, (iii) filed an election under Section 338(g) or Section 338(h)(10) of the Code (nor has a deemed election under Section 338(e) of the Code occurred), (iv) made any payments, or been a party to an Contract (including this Agreement), that under any circumstances could obligate it to make payments that will not be deductible because of Section 280G of the Code, or (v) been a party to any Tax allocation or Tax sharing Contract or similar arrangement, other than a Contract or arrangement solely among the Company and the U.S. Subsidiaries or certain of them. Neither the Company nor any U.S. Subsidiary is a “United States real property holding corporation” within the meaning of Section 897 of the Code.

(e) To Sellers’ Knowledge, the gross amount of the Tax Refund Amount is approximately $1,400,000. Sellers’ reasonable estimate of the Tax Refund Amount is set forth on Schedule 2.4(e) .

(f) Pullman Industries Ltd. filed its final Tax Returns as a foreign sales corporation for 2001 on or before September 15, 2002 and all applicable statutes of limitation with respect thereto have expired on or before September 15, 2005. Pullman Industries Ltd. was properly liquidated in 2005.

(g) Pullman Industries Ltd. claimed no Tax benefits as a foreign sales corporation not permitted under applicable Legal Requirements.

Section 2.5. Business Operations .

(a) Except as set forth in Schedule 2.5(a) , since December 31, 2005, (i) the operations and affairs of the Company and each U.S. Subsidiary have been conducted only in the Ordinary Course of Business and (ii) no Restricted Event has occurred.

(b) No Seller, Related Person or any of any of their respective Affiliates is an owner, shareholder, creditor or agent of, or consultant or lender to, any Person engaged in a business that acts as a supplier or purchaser of any goods or services to or from the Company or any U.S. Subsidiary or any part of which is in actual or potential competition with the Company or any U.S. Subsidiary.

 

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(c) Schedule 2.5(c)(1) sets forth a list of the 10 largest customers and 10 largest suppliers (by dollar volume) of the Company and the U.S. Subsidiaries, collectively, in terms of sales or purchases for the eight months ended August 27, 2006 and the 12 months ended December 31, 2005. Except as set forth on Schedule 2.5(c)(2) , (i) neither the Company nor any U.S. Subsidiary has received any written notice with respect to the re-sourcing of any customer Contract or business, (ii) to Sellers’ Knowledge no customer or supplier has expressly informed the Company or any U.S. Subsidiary that it has any present plan to discontinue any Contract or terminate its business relationship with the Company or a U.S. Subsidiary, and (iii) while customer programs are subject to market testing from time to time, neither the Company nor any U.S. Subsidiary has received written notice that any customer program is being market tested. Since December 31, 2005, neither the Company nor any U.S. Subsidiary has extended credit to any customer (including a distributor) on terms or in amounts that are materially more favorable than those extended in the past or otherwise materially changed the terms of credit extended to any such customer outside the Ordinary Course of Business. Since December 31, 2005, neither the Company nor any U.S. Subsidiary has materially changed its credit policies governing the extension of credit to customers.

(d) Schedule 2.5(d) lists all warranties applicable to products designed, developed, manufactured, sold, to be sold or subject to a pending bid by the Company or a U.S. Subsidiary. There are no claims outstanding against the Company or any U.S. Subsidiary in excess of the reserves established therefore on the Balance Sheet to return products by reason of alleged overshipments, early or late shipments, defective delivery, defective merchandise or otherwise, and there is no Proceeding pending, or to Sellers’ Knowledge Threatened, against the Company or a U.S. Subsidiary under any product warranty. No product warranty claims have been asserted against the Company or a U.S. Subsidiary within the past three years.

(e) Neither the Company nor any U.S. Subsidiary has received written notice of any, and there is no, unresolved claim of personal injury, death or property or economic damage, or any unresolved claim for injunctive relief in connection with any product manufactured or sold by the Company or a U.S. Subsidiary. There are no defects in design, construction or manufacture of products sold or held in inventory for sale that would adversely affect their performance or create an unusual risk of injury to persons or property. Except as disclosed in Schedule 2.5(e) , none of the Company’s or a U.S. Subsidiary’s products has been the subject of any replacement, field fix, retrofit, modification or recall campaign. Such products have been designed and manufactured so as to meet and comply sufficiently to avoid any Adverse Consequences arising from a failure to comply with all governmental standards and applicable purchase specifications currently in effect, and have received all Governmental Authorization necessary to allow their sale and use. No product liability claims have been asserted against the Company or a U.S. Subsidiary within the past three years.

(f) Schedule 2.5(f) lists the names, account numbers and locations of all banks and other financial institutions at which the Company and each U.S. Subsidiary has any account or safe deposit box and the names of all Persons authorized to draft on or have access to any such accounts or safe deposit box.

 

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(g) None of the Company, any U.S. Subsidiary, any Seller or, to Sellers’ Knowledge, any of their respective Representatives, has in connection with the Business (i) used any corporate or other funds of the Company or a U.S. Subsidiary for unlawful contributions, payments, gifts or gratuities, or made any unlawful expenditures relating to political or administrative activity to officials of a Governmental Body or to any other Person, or established or maintained any unlawful or unrecorded funds in violation of any Legal Requirement, or (ii) accepted or received any unlawful contributions, payments, expenditures or gifts.

Section 2.6. Employees .

(a) Schedule 2.6(a) contains, as of a recent date specified therein, the following information for each employee of the Company and each U.S. Subsidiary (including, as designated thereon, each employee on leave of absence or layoff status): name; job title; hire date; and current compensation paid or payable on an annualized basis. Neither the Company nor a U.S. Subsidiary has received notice that a Key Employee intends to terminate his or her employment relationship with the Company or a U.S. Subsidiary, as applicable. All Key Employees of the Company and each U.S. Subsidiary are either U.S. citizens or permanent resident aliens or are otherwise authorized to be lawfully employed in the United States. Except as set forth in Schedule 2.6(a) , each employee of the Company and each U.S. Subsidiary is employed on an “at will” basis and is terminable by the Company or the U.S. Subsidiary, as applicable, without any penalty or severance obligation. A copy of the current version of each policy manual and handbook provided to or governing the employees of the Company and the U.S. Subsidiaries, and a copy of the application forms currently being used by the Company and the U.S. Subsidiaries in connection with the hiring of new employees, has been provided to Buyer.

(b) Except as set forth in Schedule 2.6(b) , neither the Company nor any U.S. Subsidiary is now or in the past three years has been a party to any collective bargaining or other similar labor Contract. A copy of each such Contract has been provided to Buyer. Since January 1, 2004, with respect to the Company or any U.S. Subsidiary, there has not been, there is not now pending or existing and to Sellers’ Knowledge there is not Threatened: (i) any strike, slowdown, picketing, work stoppage, lockout, union organizational activity or other labor dispute or Proceeding (excluding routine labor grievances); (ii) any application, written complaint or charge filed by any employee or union with any Governmental Body or any grievance filed pursuant to a collective bargaining agreement for which any Seller, the Company or a U.S. Subsidiary has Knowledge or has received written notice or (iii) any application or demand for recognition or certification of a collective bargaining agent for which a Seller, the Company or a U.S. Subsidiary has Knowledge or has received written notice. Except as set forth on Schedule 2.6(b) , there is not currently, nor has there been in the past three years, any internal investigation of any charge or complaint by any employee of the Company or a U.S. Subsidiary alleging harassment, discrimination or other employment conduct. All Legal Requirements relating to the employees of the Company and each U.S. Subsidiary, including Legal Requirements relating to terms of employment, immigration and employment of illegal aliens, the payment of social security and other payroll Taxes, the payment of employee wages and benefits (including minimum wage and overtime pay) and Occupational Safety and Health Law, have been complied with.

 

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(c) Except as set forth in Schedule 2.6(c) , neither the Company nor any U.S. Subsidiary is a party to any Contract, with any present or former director, officer, employee, agent or consultant with respect to length, duration or conditions of employment or engagement (or the termination thereof), salaries, bonuses, compensation, deferred compensation, health Insurance, severance, any other form of remuneration or otherwise, the obligations of which could be asserted following the Closing against the Company, a U.S. Subsidiary or Buyer.

(d) Neither the Company nor any U.S. Subsidiary has effectuated a “mass layoff” (as defined in the WARN Act) affecting any single site of employment (as defined in the WARN Act), and neither the Company nor any U.S. Subsidiary has engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state or local Legal Requirement. None of the employees of the Company or a U.S. Subsidiary will have suffered an “employment loss” under the WARN Act in the six months prior to the Closing Date or any similar state or local Legal Requirement in the twelve months prior to the Closing Date.

(e) The Company has made all required payments to its unemployment compensation reserve accounts with the appropriate Governmental Bodies of the states or other jurisdictions where it is required to maintain such accounts, and each of such accounts has a positive balance.

Section 2.7. Employee Benefit Plans .

(a) Schedule 2.7(a) sets forth all Employee Benefit Plans. Copies of Employee Benefit Plans and all Contracts relating to Employee Benefit Plans (including descriptions of vacation, separation and other personnel policies) have been provided to Buyer. Neither the Company nor any U.S. Subsidiary is bound by any unwritten Employee Benefit Plan or Contract relating to any Employee Benefit Plan.

(b) Except as set forth on Schedule 2.7(b) , the Company and each U.S. Subsidiary has timely complied with all obligations under the Employee Benefit Plans (including, to the extent applicable, reporting, disclosure, prohibited transaction, IRS qualification, ERISA and funding obligations). Each Employee Benefit Plan, and the administration of each Employee Benefit Plan, complies and has at all relevant times complied with all applicable Legal Requirements, including the Code and ERISA. No prohibited transaction within the meaning of Section 406 of ERISA or Section 4975 of the Code for which a statutory or administrative exemption does not exist has occurred with respect to any Employee Benefit Plan.

(c) Each Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code has received a favorable determination or opinion letter from the IRS as to its qualified status under the Code, and each Employee Benefit Plan that is a funded welfare plan and whose trust is intended to be exempt from federal taxation under Section 501(a) of the Code has received recognition of exemption from federal income taxation from the IRS. Nothing has occurred since the date of such determination or recognition of exemption that could adversely affect the qualification of such Employee Benefit Plan or the Tax exempt status of any related trust. Sellers have delivered to Buyer copies of the following:

(i) the most recent determination or opinion letter issued by the IRS with respect to each Employee Benefit Plan that is intended to be qualified under Section 401(a) and/or 501(a) of the Code; and

 

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(ii) the two most recent Annual Reports (IRS Forms 5500 series), including Schedules A and B, if applicable, required to be filed with respect to each Employee Benefit Plan.

(d) Neither the Company, a U.S. Subsidiary nor any of their respective predecessors or Affiliates has ever established, maintained or contributed to or otherwise participated in, or has or has had an obligation to establish, maintain, contribute to or otherwise participate in, or has any obligation or liability in connection with, any Multi-Employer Retirement Plan.

(e) Except as set forth in Schedule 2.7(e) , neither the Company, a U.S. Subsidiary nor any of their respective predecessors or Affiliates has any obligation to provide post-retirement medical or other benefits to any director, employee or agent or former director, employee or agent or their survivors, dependents or beneficiaries, except as may be required by Section 4980B of the Code or Part 6 of Title I of ERISA or applicable Legal Requirements concerning medical benefits continuation.

(f) Neither the Company, a U.S. Subsidiary nor any of their respective predecessors or Affiliates maintains or has maintained or has had any obligation to contribute to a defined benefit plan as defined in Section 3(35) of ERISA.

(g) There is no Proceeding pending (other than routine claims for benefits) against or in respect of any Employee Benefit Plan or the assets of any Employee Benefit Plan. No civil or criminal action brought pursuant to the provisions of Title I, Subtitle B, Part 5 of ERISA is pending, or to Sellers’ Knowledge Threatened, against any fiduciary of any Employee Benefit Plan. To Sellers’ Knowledge none of the Employee Benefit Plans or any fiduciary thereof has been the direct or indirect subject of an audit, investigation or examination by any Governmental Body.

(h) No Contract or other obligation exists to increase any benefits under any Employee Benefit Plan or to adopt any new Employee Benefit Plan.

(i) Except as set forth in Schedule 2.7(i) , the consummation of the transactions contemplated by this Agreement will not (i) entitle any current or former director or employee of the Company or any U.S. Subsidiary to severance pay, unemployment compensation or any other payment, except as expressly provided in this Agreement; (ii) accelerate the time of payment or vesting, or increase the amount, of compensation due to any director or employee or former director or employee either under an Employee Benefit Plan or otherwise; or (iii) result in any prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code for which an exemption is not available.

(j) Neither the Company nor any U.S. Subsidiary, with respect to any Employee Benefit Plan, is subject to any Tax under Code Sections 4972 or 4979 or to any loss of Tax deduction under Code Sections 162(m) and 280G.

 

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(k) Except as set forth in Schedule 2.7(k) , each Employee Benefit Plan that is subject to the provisions of the Health Insurance Portability and Accountability Act of 1996, as amended (“HIPAA”), has complied with HIPAA in all material respects.

(l) With respect to the Pullman Industries, Inc. Amended and Restated Equity Participation Plan (the “EPP”), the committee designated to administer the EPP pursuant to Section 1.4(e) of the EPP (the “EPP Committee”) has not taken any action to terminate the EPP or accelerate the vesting of any Units (as defined in the EPP) or other benefits under the EPP. With respect to 2006, the EPP Committee has not determined any benefits under the EPP, including distributions or any value associated with the Units.

Section 2.8. Real Property .

(a) The Company and each U.S. Subsidiary has good and marketable fee simple title to or valid leaseholds in all of the real property owned or used in connection with the Business (“Real Property”), including all of the Real Property reflected on the Balance Sheet. The Real Property owned by the Company or a U.S. Subsidiary (“Owned Real Property”) is not subject to any lease, tenancy, occupancy Contract, license or option. Except as set forth in Schedule 2.8(a) , neither the Company nor any U.S. Subsidiary is a party to or the beneficiary of any Tax abatement or similar agreement or any Tax abatement or similar appeal in respect of any Real Property. Except as set forth in Schedule 2.8(a) , neither the Company nor any U.S. Subsidiary owns any interest in, nor have they ever owned or had any interest in (other than a leasehold interest in), any Real Property. All of the Real Property identified as currently owned by the Company or a U.S. Subsidiary on Schedule 2.8(a) is free and clear of all Encumbrances other than Permitted Encumbrances.

(b) Schedule 2.8(b) contains, with respect to all Real Property leased by the Company or a U.S. Subsidiary, the term, base rent, any component of additional rent and any option to purchase, and lists each lease, sublease, license and occupancy Contract concerning Real Property to which the Company or any U.S. Subsidiary is a signatory or by which any of them are bound or affected (individually a “Real Property Lease” and collectively the “Real Property Leases”). A copy of each Real Property Lease has been provided to Buyer. The Company or a U.S. Subsidiary has a valid and binding leasehold interest in each of the Real Property Leases. None of the Company or any U.S. Subsidiary, or to Sellers’ Knowledge, any other Person, is in default in respect of its obligations or liabilities pertaining to any Real Property Lease.

(c) Neither the Company nor any U.S. Subsidiary uses Real Property other than the Real Property identified on Schedule 2.8(a) and Schedule 2.8(b) . All buildings or improvements used by the Company or a U.S. Subsidiary lie wholly within the boundaries of the applicable Real Property and do not encroach on any easement or property owned by another Person, and no building or improvement owned or used by another Person encroaches on any property that the Company or a U.S. Subsidiary owns or uses or on any easement the benefit of which runs to the Company or a U.S. Subsidiary to the lessor under any Real Property Lease. The Real Property and the use of the Real Property by the Company and each U.S. Subsidiary complies, with all Applicable Contracts and applicable Legal Requirements. To Sellers’ Knowledge, there are no material ground subsidences or slides on or affecting any Real Property. None of the Real Property is the subject of any condemnation action and, to Sellers’ Knowledge, there is no

 

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proposal under consideration by any Governmental Body to take or use any of the Real Property. All such Real Property has access on a public way sufficient for the current use of the Real Property by the Company or a U.S. Subsidiary, as applicable. Neither the Company nor a U.S. Subsidiary is in violation of any zoning regulation, building restriction, restrictive covenant, ordinance or other Legal Requirement relating to any Real Property. The Real Property, and all components thereof, including the electrical systems, mechanical systems, roof, plumbing and fire/safety systems are in good working order and will perform the work or function for which intended.

Section 2.9. Other Properties and Assets .

(a) All other properties and assets (in addition to Owned Real Property) owned by the Company or any U.S. Subsidiary are free and clear of all Encumbrances other than Permitted Encumbrances. Except as set forth on Schedule 2.9(a) , none of the Company’s or a U.S. Subsidiary’s properties or assets is subject to any restrictions with respect to the transferability thereof, and the Company’s and each U.S. Subsidiary’s title thereto will not be affected in any way by the transactions contemplated by this Agreement. Schedule 2.9(a) lists each lease by the Company or a U.S. Subsidiary of property and assets (other than Real Property), including the commencement and termination dates of each such lease (collectively, “Personal Property Leases”). A copy of each Personal Property Lease has been provided to Buyer. All properties and assets owned or leased by the Company or a U.S. Subsidiary will be in the possession of the Company or a U.S. Subsidiary on the Closing Date .

(b) The buildings, structures and equipment owned, leased or used by the Company or a U.S. Subsidiary: (i) are in good operating condition and repair, reasonable wear and tear excepted, (ii) are adequately serviced by all required utilities and are adequate for the uses to which they are being put; and (iii) to Sellers’ Knowledge are free of material defects; and (iv) are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted before the Closing. The Company and each U.S. Subsidiary has maintained their buildings, structures and equipment in accordance with their established maintenance schedules in all material respects.

(c) Schedule 2.9(c) sets forth: (i) all Intellectual Property Assets owned by the Company or a U.S. Subsidiary (“Company Intellectual Property Assets”); (ii) all Intellectual Property Assets used but not owned by the Company or a U.S. Subsidiary (“Other Intellectual Property Assets”); and (iii) a list of all Contracts relating to Intellectual Property Assets to which the Company or a U.S. Subsidiary is a party or by which the Company or a U.S. Subsidiary is bound or affected (copies of which have been provided to Buyer), including: (1) all of the Company’s or any U.S. Subsidiaries’ Contracts for the license of Intellectual Property Assets; and (2) all royalty fee arrangements to which the Company or any U.S. Subsidiary is bound. Schedule 2.9(c) also lists (i) all disputes involving the Company or any U.S. Subsidiary relating to any Contracts relating to any Intellectual Property Assets or royalty fee arrangements in the last three years; and (ii) all improvements made or claimed to be made by the Company or any U.S. Subsidiary to any Other Intellectual Property Asset.

(d) On and following the Closing Date, the Company or a U.S. Subsidiary will own the entire right, title and interest in and to Company Intellectual Property Assets free and clear of

 

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all Encumbrances other than Permitted Encumbrances. Except as set forth in Schedule 2.9(d) , on and following the Closing Date, the Company or a U.S. Subsidiary will have the right to continue to use the Company Intellectual Property Assets and Other Intellectual Property Assets without payment or other liability to any Person. Neither the Company nor any U.S. Subsidiary has infringed or unlawfully used any Intellectual Property Asset of any other Person. To Sellers’ Knowledge there is no infringement of or unlawful use by any other Person of any of the Company Intellectual Property Assets. None of the Company Intellectual Property Assets is subject to any pending, or to Sellers’ Knowledge Threatened, Proceeding, and none of Company Intellectual Property Assets or Other Intellectual Property Assets is subject to any outstanding Order restricting use by the Company or a U.S. Subsidiary (or by Buyer or an Affiliate of Buyer following the Closing) of that Intellectual Property Asset. The Company Intellectual Property Assets and the Other Intellectual Property Assets are all of those necessary for the operation of the Business as now conducted and are sufficient in form and quality so that, following the Closing, Buyer, the Company and each U.S. Subsidiary will be able to continue to operate the Business as now conducted.

Section 2.10. Litigation . Except as set forth in Schedule 2.10 , there is no Proceeding (excluding employee grievances and routine workers’ compensation Proceedings in the Ordinary Course of Business) or Order pending with respect to the Company, any U.S. Subsidiary, the Business or any of the properties or assets owned or used by the Company or a U.S. Subsidiary. To Sellers’ Knowledge, no such Proceeding or Order has been Threatened.

Section 2.11. Authorization and Enforceability; No Conflict .

(a) Each Seller has the requisite capacity, power and authority to enter into and perform the Transaction Documents to which such Seller is a party and to carry out the transactions contemplated by the Transaction Documents to which he, she or it is a party (including any Transaction Document executed by Sellers Representative on each Seller’s behalf). Each Transaction Document to which a Seller is a signatory or to which Sellers Representative has signed on each Seller’s behalf is binding upon such Seller and is enforceable against such Seller in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally.

(b) Except as set forth in Schedule 2.11(b) , the execution, delivery and performance of the Transaction Documents and the consummation of the transactions contemplated thereby will not (i) contravene any Organizational Documents of the Company or a Subsidiary or result in a breach of any provision of, or constitute a default under, any Applicable Contract, or to Seller’s Actual Knowledge a Mexican Contract which would have a Mexican Company Adverse Effect; (ii) violate any Legal Requirement or Order or give any Governmental Body the right to revoke, withdraw, suspend, cancel, terminate or modify any Governmental Authorization; (iii) result in the imposition of any Tax on the Company, a Subsidiary or Buyer; (iv) result in the acceleration of any liability of the Company or a Subsidiary, or adversely modify terms of any such liability; (v) result in any Encumbrance being created or imposed upon any property or asset of the Company or a Subsidiary; or (vi) except for filings under the HSR Act, require any authorization, consent, approval, exemption or other authority or notice to any Governmental Body. The representations and warranties set forth in clauses (ii)-(vi) in the preceding sentence

 

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and those set forth in the succeeding sentence, as they relate to the Mexican Subsidiaries, are provided only on the basis of Sellers’ Actual Knowledge and each shall only be deemed Breached if any Breach or Breaches in the aggregate give rise to a Mexican Company Material Adverse Effect. All consents, approvals or authorizations of, or declarations, filings or registrations with, any Person required (including those required under the terms of any Applicable Contract or to Sellers’ Actual Knowledge any Mexican Contract to avoid a breach or default thereunder) in connection with the execution, delivery or performance of the Transaction Documents by Sellers or the consummation of the transactions contemplated thereby are set forth in Schedule 2.11(b) and, except as set forth in Schedule 2.11(b) , have been obtained or made, as applicable, by Sellers.

Section 2.12. Applicable Contracts; Insurance .

(a) All of the following Applicable Contracts of the Company and the U.S. Subsidiaries are listed on Schedule 2.12(a) and copies of which have been provided to Buyer:

(i) Any power of attorney;

(ii) Any joint venture or similar Contracts;

(iii) Any loan agreement, promissory note, letter of credit, or other evidence of indebtedness as a signatory, and any guarantee by the Company or a U.S. Subsidiary of the payment or performance of any Person, Contract to indemnify any Person or act as a surety or other Contract to be contingently or secondarily liable for the obligations of any Person;

(iv) Any broker, sales representative, vendor, distributor or similar Contract;

(v) Any Contract under which the Company or a U.S. Subsidiary has made or received payments in excess of $100,000 in the current fiscal year or anticipates making or receiving payments in excess of $100,000 in the current fiscal year (other than purchase orders that have been fulfilled on or prior to the Closing Date);

(vi) Any Contract prohibiting or restricting the Company or a U.S. Subsidiary from competing in any business or geographical area or from soliciting any customer or purchasing from any supplier, or otherwise restricting it from carrying on its business anywhere in the world, or any Contract requiring the Company or a U.S. Subsidiary to assign any interest in any trade secret, proprietary information or Intellectual Property Asset;

(vii) Any Contract that is so burdensome as to cause a Company Material Adverse Effect; and

(viii) Any other Contracts with value in excess of $200,000 not included elsewhere in the Disclosure Schedule (other than purchase orders that have been fulfilled on or prior to the Closing Date).

 

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(b) Each Applicable Contract (including each Contract required to be provided elsewhere in this Article 2 ) is in full force and effect and is valid and enforceable in accordance with its terms. The Company and each U.S. Subsidiary, and to Sellers’ Knowledge, each other Person that is a party to an Applicable Contract, has complied and is complying with the terms of each Applicable Contract sufficiently to avoid any breach or default thereunder, and no event has occurred or circumstance exists that (with or without notice or lapse of time) would contravene, conflict with or result in a violation or breach of, or give the Company or a U.S. Subsidiary, or to Sellers’ Knowledge any other Person, the right to declare a default under, any Applicable Contract.

(c) Schedule 2.12(c) sets forth a list of all of the policies of Insurance for the Company and the U.S. Subsidiaries or covering any of their respective properties, assets, directors, employees, products or operations, and for each policy indicates: (i) the name of the insurer; (ii) the amount of coverage; (iii) the type of Insurance; (iv) the policy number; (v) the expiration date; and (vi) all pending claims under the policy (other than routine employee claims for benefits under the Company’s health and welfare plans in the Ordinary Course of Business). Copies of each such policy have been provided to Buyer. Each such policy of Insurance is outstanding and will be in full force and effect and will remain in full force through the Closing Date. All premiums with respect to such policies are currently paid, and all duties of the insureds under such policies have been fully discharged. Neither the Company nor a U.S. Subsidiary has been refused Insurance by any carrier to which it has applied for Insurance within the past five years. In the past five years, all products liability and general liability Insurance policies maintained by or for the benefit of the Company have been “occurrence” policies and not “claims made” policies.

Section 2.13. Permits and Licenses; Compliance with Legal Requirements .

(a) All Governmental Authorizations necessary for the Company and the U.S. Subsidiaries to carry on the Business as now conducted are set forth in Schedule 2.13(a) , have been timely obtained, are in full force and effect and have been complied with. Other than in respect of any filings required by the HSR Act, no Governmental Authorization is required, nor will any Governmental Authorization be voided, nullified or impacted by or in connection with the transactions contemplated by this Agreement. All fees and charges incident to the Company’s or a U.S. Subsidiary’s Governmental Authorizations have been fully paid and are current, and no suspension or cancellation of any Governmental Authorization has been Threatened. The Company and each U.S. Subsidiary has filed all reports and returns required to be filed with any Governmental Body, and all such reports and returns were complete and correct in all material respects when filed.

(b) None of the Company, any U.S. Subsidiary or any of the properties and assets owned or used by the Company or any U.S. Subsidiary is subject to, nor to Sellers’ Knowledge has the Company or a U.S. Subsidiary been Threatened with, any Adverse Consequence as the result of a failure to comply with any Legal Requirement. The Company and each U.S. Subsidiary is now, and during all applicable statutory of limitation periods has been, in compliance with all applicable Legal Requirements.

 

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Section 2.14. Environmental Matters .

(a) Except as set forth in Schedule 2.14(a) : (i) the Company and each U.S. Subsidiary is and during all applicable statute of limitation periods has been in compliance with all applicable Environmental Laws; (ii) the Company and each U.S. Subsidiary possesses all Governmental Authorizations required under applicable Environmental Laws and has complied, and is complying with the terms and conditions thereof; and (iii) the Company and each U.S. Subsidiary is in compliance with all notification, reporting and registration provisions under applicable Environmental Laws.

(b) Neither the Company nor any U.S. Subsidiary has received any written communication, whether from a Governmental Body, citizens group, employee or otherwise, alleging that the Company or a U.S. Subsidiary is not in full compliance with any Environmental Laws. All Governmental Authorizations and compliance schedules currently held by the Company or a U.S. Subsidiary pursuant to any Environmental Laws are identified in Schedule 2.14(b) , and copies thereof have been provided to Buyer.

(c) Except as set forth on Schedule 2.14(c) , there is no Environmental Liability existing or, to Sellers’ Knowledge, Threatened against the Company or any U.S. Subsidiary or against any Person whose liability for any Environmental Liability the Company or a U.S. Subsidiary has or may have retained or assumed, either contractually or by operation of applicable Legal Requirements. Except as set forth on Schedule 2.14(c) , there is no past or present action, activity, circumstance, condition, event or incident, including the release, emission, discharge, presence, treatment or disposal of any Hazardous Substance or Material, that would form the basis for any Environmental Liability of the Company, a U.S. Subsidiary or of any Person whose responsibility for any such Environmental Liability the Company or a U.S. Subsidiary has or may have retained or assumed, either contractually or by operation of applicable Legal Requirements.

(d) Except as set forth on Schedule 2.14(d) : (i) none of the Real Property is listed on, or to Sellers’ Knowledge is being considered for listing on, any list of contaminated sites maintained under any Environmental Law or is subject to, or to Sellers’ Knowledge is being considered for enforcement action under, any Environmental Law; (ii) none of the Real Property has been designated as an area under the control of any conservation authority; (iii) the Real Property is free of the presence of any waste or any Hazardous Substance or Material in, on or under the Environment in a quantity or concentration that could result in any Environmental Liability; (iv) no underground storage tanks, receptacles or other similar containers or depositories are, or ever have been, present on the Real Property; (v) none of the buildings, building components, structures or improvements owned, leased or used by the Company or a U.S. Subsidiary is constructed in whole or in part of any material (including asbestos, except to the extent properly encapsulated in accordance with Environmental Laws) that releases or may release any substance, whether gaseous, liquid or solid, that may give rise to any Environmental Liability; (vi) neither the Business nor its properties or assets constitutes or has constituted a nuisance and no claim of nuisance ha