Exhibit 99.2
EXECUTION VERSION
STOCK PURCHASE AGREEMENT
by and among
THE FALK CORPORATION;
HAMILTON SUNDSTRAND CORPORATION;
and
REXNORD CORPORATION
Dated as of April 5, 2005
TABLE OF CONTENTS
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Exhibits
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Exhibit A
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Form of Transitional Services
Agreements
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Exhibit B
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Form of Guaranties
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Exhibit C
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Financing Commitment
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Exhibit D
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Certain Transactions
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Exhibit E
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Form of Amendment of Wauwatosa
Lease
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STOCK PURCHASE
AGREEMENT
STOCK PURCHASE AGREEMENT, dated as
of April 5, 2005 (this “ Agreement ”), by
and among THE FALK CORPORATION, a Delaware corporation (the “
Company ”), HAMILTON SUNDSTRAND CORPORATION, a
Delaware corporation (“ Seller ”); and REXNORD
CORPORATION, a Delaware corporation (“ Buyer
”).
W I T N E S S E T H
WHEREAS, Seller owns all of the
issued and outstanding Shares (as defined in Section 2.2
hereof) of the Company; and
WHEREAS, Buyer desires to acquire
all of the issued and outstanding Shares from Seller, and Seller
desires to sell such Shares to Buyer upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE, in consideration of
the representations, warranties, covenants, agreements and
conditions hereafter set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
SECTION 1.1 Purchase of Shares .
(a)
Upon the terms and subject to the
conditions hereof, Buyer agrees (i) to purchase, acquire and
accept from Seller all of the issued and outstanding Shares at the
Closing (as defined in Section 1.2 hereof) for a price equal
to Two Hundred Ninety Five Million Dollars ($295,000,000) (such
aggregate amount, as adjusted prior to Closing pursuant to
Section 1.5 hereof and after Closing pursuant to
Section 1.4 hereof, the “ Purchase Price
”). Upon the terms and subject to the conditions
hereof, Seller agrees to sell, convey, assign, transfer and deliver
to Buyer at the Closing, free and clear of all Encumbrances (as
defined in Section 2.3 hereof), each Share owned by Seller, as
set forth in Section 1.1(a) of the disclosure
schedule of Seller attached hereto (the “ Seller
Disclosure Schedule ”).
SECTION 1.2 Closing.
(a)
The closing of the transactions
contemplated by this Agreement (the “ Closing ”)
shall take place at the offices of Latham & Watkins LLP,
885 Third Avenue, Suite 1000, New York, New York, at
10:00 a.m., New York City time (but effective as of
11:59 p.m. New York City time), on May 16, 2005 unless
the conditions set forth in Articles VI and VII hereof shall not
have been satisfied or duly waived in which case the Closing shall
occur on the next business day following such satisfaction or
waiver; or if Seller and Buyer mutually agree on a different date,
the date upon which they have mutually agreed. The date on
which the Closing
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occurs and the transactions contemplated hereby
become effective is referred to herein as the “ Closing
Date ”.
(b)
At the Closing, Seller shall deliver
the following to Buyer:
(i)
stock certificates representing all
issued and outstanding Shares and associated stock transfer powers
endorsed in blank;
(ii)
transitional services agreements in
the forms attached hereto as Exhibits A-1 , A-2 ,
A-3 and A-4 executed by UTC (collectively, the
“ Transitional Services Agreements
”);
(iii)
guaranties in the forms attached as
Exhibit B-1 and B-2 hereto executed by
UTC;
(iv)
an amendment, in the form attached
as Exhibit E hereto (the “ Wauwatosa
Amendment ”) and executed by Seller and the Company, of
the Lease Agreement, dated as of March 23, 2005, between
Seller and the Company (the “ Wauwatosa Lease
”); and
(v)
the certificate described in the
final sentence of Section 6.1(b), and each other document
required to be delivered by Seller on or prior to the Closing Date
pursuant to this Agreement or otherwise required from Seller in
connection herewith.
(c)
At the Closing, the Company shall
deliver the following to Buyer:
(i)
the certificate described in the
final sentence of Section 6.1(a), the certificate described in
Section 5.8(e), and each other document required to be
delivered by the Company on or prior to the Closing Date pursuant
to this Agreement or otherwise required from the Company in
connection herewith;
(ii)
the resignations of the members of
the Company Board (as defined in Section 2.1 hereof) and each
of its Subsidiaries (as defined in Section 2.3 hereof), except
to the extent that Buyer has requested that any such member(s)
continue to serve in such capacity(ies) after Closing;
and
(iii)
the stock books, stock ledgers,
minute books and corporate seal of the Company; provided
that any of the foregoing items shall be deemed to have been
delivered pursuant to this Section 1.2(c)(iii) if such
item has been delivered to or is otherwise located at the Company
or any offices of the Company or its Subsidiaries.
(d)
At the Closing, Buyer:
(i)
shall deliver to Seller the Purchase
Price by wire transfer of immediately available funds to the bank
account designated by Seller prior to the Closing; and
(ii)
shall deliver to Seller the
certificate described in the final sentence of Section 7.1,
the Transitional Services Agreements executed by Buyer, and each
other
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document required to be delivered by Buyer on or
prior to the Closing Date pursuant to this Agreement or otherwise
required from Buyer in connection herewith.
SECTION 1.3 Certain Definitions . For
purposes of this Agreement, the following terms shall have the
respective meanings set forth below:
“ GAAP ” shall
mean United States generally accepted accounting
principles.
“ Working Capital
” shall mean the pro forma combined working capital of the
Company and its Subsidiaries, determined as of 11:59 p.m. New
York City time on the Closing Date, on the basis solely of the line
item components of “Working Capital” set forth in the
statement of Working Capital set forth on
Section 1.3(a) of the Company Disclosure Schedule, and
determined and calculated on a basis consistent with that used in
the preparation of such statement; provided , however
, that for purposes of such calculation of Working Capital
(i) ”Cash-foreign” shall not include Trapped Cash
and (ii) any cash (or cash equivalents) denominated in
currencies other than United States Dollars shall be converted into
United States Dollar amounts using the applicable exchange rate
published in the Wall Street Journal on the Closing
Date.
“ Target Working
Capital ” shall mean Sixty Million Three Hundred Sixty
Five Thousand Dollars ($60,365,000).
“ Trapped Cash ”
means any cash and cash equivalents held by any Subsidiaries of the
Company that are organized outside of the United States other than
cash and cash equivalents that may, immediately following the
Closing, be (i) distributed or paid to the Company without
violation of any law or the imposition of any Tax or similar fee or
charge or any adverse Tax consequences on Buyer, the Company or any
Subsidiary of the Company or (ii) be applied to repay any
Indebtedness of the Company or any Subsidiary immediately following
the Closing (other than any Indebtedness owed by the Company or a
Subsidiary of the Company to the Company or another Subsidiary of
the Company) without the violation of any law or the imposition of
any Tax or similar fee or charge or any adverse Tax consequences on
Buyer, the Company or any Subsidiary of the Company;
provided , however , that (i) cash and cash
equivalents of not more than $500,000 held by Falk Australia Pty.
Ltd. on the Closing Date shall not be considered Trapped Cash,
(ii) cash and cash equivalents of not more than $1.0 million
held by Falk Canada Inc. on the Closing Date shall not be
considered Trapped Cash and (iii) cash and cash equivalents of
not more than $1.4 million held by Falk Shanghai Co., Ltd. (“
Falk Shanghai ”) on the Closing Date shall not be
considered Trapped Cash.
SECTION 1.4 Post-Closing Adjustment
.
(a)
Within forty-five (45) calendar days
following the Closing Date, Seller shall prepare and deliver to
Buyer an unaudited pro forma combined balance sheet of the Company
and its Subsidiaries as of the Closing Date (the “ Closing
Balance Sheet ”) prepared on a basis consistent with the
principles applied in the preparation of the balance sheet attached
as Exhibit 2 to the pro forma combined financial statements
attached as Section 1.4(a) to the Company Disclosure
Schedule, and a statement (the “ Closing Statement
”) that sets forth the Working Capital as derived from such
Closing Balance Sheet (it being acknowledged that, to
the
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extent any principle applied in the
determination of Working Capital pursuant to the definition thereof
in Section 1.3 conflicts with any principle applied in the
preparation of the Closing Balance Sheet, the definition of Working
Capital shall control in the preparation of the Closing
Statement). Following the Closing, the Company and Buyer
shall provide, upon reasonable notice, to Seller and its
Representatives (as defined in Section 5.2(a) hereof)
full access to the properties, books, records, work papers and
personnel of the Company (provided that any such access shall not
unreasonably interfere with the operation of the Company’s or
any of its Subsidiaries’ businesses) and shall cooperate
fully with Seller for purposes of preparing the Closing Balance
Sheet and the Closing Statement. Buyer shall have thirty (30)
calendar days after delivery to Buyer of the Closing Balance Sheet
and Closing Statement during which to notify Seller of any dispute
of any item contained in the Closing Statement (including any item
contained in the Closing Balance Sheet to the extent such item
impacts the Closing Statement), which notice shall set forth in
reasonable detail the basis for such dispute. If Buyer fails
to notify Seller of any such dispute within such thirty (30)
calendar day period, the Closing Statement shall be deemed to be
the final statement (the Closing Statement as finally determined
pursuant to this Section 1.4(a) or Section 1.4(b),
the “ Final Statement ”). In the event
that Buyer shall so notify Seller of any dispute, Buyer and Seller
and their respective accountants shall cooperate in good faith to
resolve such dispute as promptly as possible.
(b)
If Buyer and Seller and their
respective accountants are unable to resolve any dispute within
fifteen (15) calendar days of Buyer’s delivery of any notice
of dispute provided pursuant to subsection (a) above,
such dispute shall be resolved by a jointly selected nationally
recognized accounting firm retained to resolve any disputes between
Buyer and Seller over any items contained in the Closing Statement
(including any item contained in the Closing Balance Sheet to the
extent such item impacts the Closing Statement) (the “
Independent Accounting Firm ”), which shall make its
determination as promptly as practicable, and such determination
shall be final and binding on the parties. The Independent
Accounting Firm shall determine on the basis of the standards set
forth in Sections 1.3 and 1.4(a) hereof whether and to what
extent, if any, the Closing Statement (including any item contained
in the Closing Balance Sheet to the extent such item impacts the
Closing Statement) requires adjustment; provided ,
however , that the amount of Working Capital as set forth on
the Final Statement (the “ Closing Working Capital
”) as determined by the Independent Accounting Firm must fall
within the bounds of Seller’s and Buyer’s calculations
of Working Capital as of the Closing Date. If Seller and
Buyer cannot jointly agree on the identity of the Independent
Accounting Firm, Seller and the Company shall each submit to their
respective accountants the name of an accounting firm which does
not at the time and has not in the prior two (2) years
provided material services to Seller or Buyer or any of their
respective Affiliates (as such term is defined in
Section 2.4(b) hereof), and the Independent Accounting
Firm shall be selected by lot from these two firms by the
respective accountants of the two parties. Seller shall bear
the percentage of the expenses relating to the engagement of the
Independent Accounting Firm that equals the result, expressed as a
percentage, obtained by dividing (a) the absolute value of the
difference
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between (w) Seller’s calculation of
Working Capital as of the Closing Date and (x) the Closing Working
Capital as finally determined by the Independent Accounting Firm,
by (b) the absolute value of the difference between (y)
Seller’s calculation of Working Capital as of the Closing
Date and (z) Buyer’s calculation of Working Capital as of the
Closing Date. Buyer shall bear the percentage of the expenses
relating to the engagement of the Independent Accounting Firm that
equals the result, expressed as a percentage, obtained by dividing
(a) the absolute value of the difference between (w)
Buyer’s calculation of Working Capital as of the Closing Date
and (x) the Closing Working Capital as finally determined by the
Independent Accounting Firm, by (b) the absolute value of the
difference between (y) Seller’s calculation of Working
Capital as of the Closing Date and (z) Buyer’s calculation of
Working Capital as of the Closing Date. The Independent
Accounting Firm shall be instructed to use every reasonable effort
to perform its services within fifteen (15) business days of
submission of the Closing Statement to it and, in any case, as soon
as practicable after submission. The Closing Statement, as
modified by resolution of any disputes by the Company and Seller or
by the Independent Accounting Firm, shall be the Final
Statement.
(c)
The Purchase Price shall be adjusted
on the basis of the Final Statement as follows:
(i)
If the Closing Working Capital is
greater than the Target Working Capital, the Purchase Price shall
be increased dollar for dollar by the amount of such excess, up to
a maximum increase of Five Million Dollars ($5,000,000).
(ii)
If the Closing Working Capital is
less than the Target Working Capital, the Purchase Price shall be
decreased dollar for dollar by the amount of such
shortfall.
The aggregate increase or decrease in the
Purchase Price (after giving effect only to the adjustment pursuant
to this Section 1.4) is referred to in this Agreement as the
“ Purchase Price Increase ” or the “
Purchase Price Decrease ” respectively and,
collectively, as the “ Post-Closing Adjustment
.” To the extent there is a Purchase Price Increase,
(i) Buyer shall within five (5) business days after
delivery of the Final Statement make payment to Seller by wire
transfer of immediately available funds of the amount of the
Purchase Price Increase, together with interest thereon at a fixed
rate equal to the prime rate per annum as quoted in the Wall Street
Journal from the Closing Date to the date of payment. To the extent
that there is a Purchase Price Decrease, Seller shall within five
(5) business days after delivery of the Final Statement make
payment to Buyer, by wire transfer of immediately available funds
of the amount of the Purchase Price Decrease, together with
interest thereon at a fixed rate equal to the prime rate per annum
as quoted in the Wall Street Journal from the Closing Date to the
date of payment.
SECTION 1.5 Audit Adjustment .
(a)
Seller shall cause
PriceWaterhouseCoopers LLP to deliver to Buyer, not less than five
(5) business days prior to the Closing Date, copies of
(i) an audited combined balance sheet of the Company and its
Subsidiaries at December 31, 2004 (the “ Audited
December 31, 2004 Balance Sheet ”), and
(ii) audited combined statements of operations, invested
capital and cash flows for the fiscal year ended December 31,
2004 (the “ Audited December 31, 2004 Income
Statement ”). The Audited December 31, 2004
Balance Sheet and the Audited December 31, 2004 Income
Statement (together, the “ Audited December 31, 2004
Financial Statements ”) shall be prepared in accordance
with GAAP and the requirements of Regulation S-X promulgated by the
United States Securities and Exchange Commission applicable to
companies required to file current and periodic reports under the
Securities Exchange Act of 1934, as amended, and shall fairly
present, in all material respects, the financial condition,
invested capital, cash flows and results of operations of the
Company and its
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Subsidiaries of and for the fiscal year then
ended. In addition, Seller shall cause PriceWaterhouseCoopers
LLP to deliver a report describing procedures applied to a written
calculation, based upon the Audited December 31, 2004 Income
Statement, of 2004 EBITDA, in substantially the form of
Exhibit 6 to the unaudited combined financial statements
attached as Section 1.4(a) to the Company Disclosure
Schedule (the “ EBITDA Statement ”).
Such procedures shall include recalculation of the EBITDA
Statement, comparison of amounts on the EBITDA Statement to the
Audited December 31, 2004 Financial Statements and such other
procedures as may be mutually agreed by Buyer and Seller. The
determination of 2004 EBITDA set forth on the EBITDA Statement
shall be the final and conclusive determination of the same for all
purposes under this Agreement. All costs and expenses of the
preparation of the Audited December 31, 2004 Financial
Statements up to an aggregate of $300,000 shall be paid by the
Company, but shall be deemed not to have been incurred for purposes
of the calculation of the adjustments provided for in
Section 1.4 and this Section 1.5, it being the intent of
the parties that the economic effect of such preparation shall to
such extent be borne by Buyer. Any costs or expenses for such
preparation in excess of such $300,000 limit shall be reimbursed by
Seller promptly after written notice from Buyer accompanied by
copies of third-party invoices demonstrating that such limit has
been exceeded and the amount of such excess.
(b)
To the extent that 2004 EBITDA is
less than Thirty-Three Million Five Hundred Twenty Nine Thousand
Dollars ($33,529,000) (the “ Initial EBITDA Threshold
”), the Purchase Price shall be decreased at Closing by an
amount equal to the product of (x) the excess of the Initial EBITDA
Threshold over 2004 EBITDA, up to a maximum of One Million Dollars
($1,000,000), multiplied by (y) nine (9), it being acknowledged
that the maximum Purchase Price reduction possible under this
Section 1.5(b) shall be Nine Million Dollars
($9,000,000).
(c)
“ 2004 EBITDA ”
means the pro forma combined EBITDA of the Company and its
Subsidiaries for the fiscal year ended December 31, 2004,
determined on the basis of the line items included, and consistent
with the principles applied, in the calculation of “Proforma
Combined EBITDA” under the column headed
“December 31, 2004 Proforma Combined I/S” of
Exhibit 6 to the combined financial statements attached as
Section 1.4(a) to the Company Disclosure
Schedule.
Except as set forth in the
disclosure schedule of the Company (the “ Company
Disclosure Schedule ”), the Company represents and
warrants to Buyer as follows:
SECTION 2.1 Corporate Organization and
Authority .
(a)
Except as set forth in
Section 2.1(a) of the Company Disclosure Schedule, each
of the Company and its Subsidiaries is (i) duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, and (ii) duly
qualified to do business in each jurisdiction in which the property
owned, leased or operated by it, in each case except in such
jurisdictions where such failure would not have a Material Adverse
Effect (as defined in Section 10.1 hereof).
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(b)
The Company has the requisite
corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of its obligations
hereunder have been duly and validly authorized by the Board of
Directors of the Company (the “ Company Board ”)
and no other corporate proceedings on the part of the Company are
necessary to authorize the execution, delivery and performance of
this Agreement. This Agreement has been duly executed and
delivered by the Company and constitutes, assuming due
authorization, execution and delivery of this Agreement by Buyer
and Seller, a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms,
except that such enforcement may be subject to or limited by
(i) the effect of bankruptcy, insolvency, reorganization,
moratorium and similar laws relating to or affecting the rights of
creditors generally and (ii) the effect of general principles
of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
SECTION 2.2 Capitalization . The
authorized capital stock of the Company consists of 1,000 shares of
common stock, par value $1.00 per share (the “ Shares
”). As of the date of this Agreement, there are 1,000
Shares issued and outstanding, and Seller is the record and
beneficial owner of all 1,000 Shares, free and clear of any and all
Encumbrances (as defined in Section 2.3(a) below).
All outstanding Shares have been duly authorized and validly
issued, are fully paid and nonassessable, and were not issued in
violation of any preemptive rights. Except as set forth in
Section 2.2 of the Company Disclosure Schedule, there are no
outstanding (i) shares of capital stock or other voting
securities of the Company; (ii) securities of the Company
convertible into or exchangeable for shares of capital stock or
voting securities of the Company; or (iii) options, warrants
or other rights to acquire from the Company, or any obligation of
the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or
voting securities of the Company. Except as set forth in
Section 2.2 of the Company Disclosure Schedule, there are no
outstanding obligations of the Company to issue, sell, repurchase,
redeem or otherwise acquire any capital stock of the Company or any
Shares. Except as set forth in Section 2.2 of the
Company Disclosure Schedule, there are no outstanding or authorized
stock appreciation, phantom stock or similar rights. Except
as set forth in Section 2.2 of the Company Disclosure
Schedule, there are no voting trusts, stockholder agreements,
proxies or similar voting arrangements with respect to the
Company’s capital stock or any agreement relating to the
issuance, sale, redemption, transfer or other disposition of the
capital stock of the Company.
SECTION 2.3 Subsidiaries .
(a)
Section 2.3(a) of the
Company Disclosure Schedule sets forth the name of each
Subsidiary of the Company as of the date of this Agreement, and
with respect to each such Subsidiary, the jurisdiction in which it
is incorporated or organized. The Company owns, directly or
indirectly, all outstanding shares of each of its Subsidiaries,
free and clear of any and all Encumbrances, and all such shares of
each Subsidiary of the Company have been validly issued and are
fully paid and nonassessable. There is no existing option,
warrant, call, commitment or agreement to which any Subsidiary of
the Company is a party requiring, and there are no convertible
securities of any such Subsidiary outstanding which upon conversion
would require, the issuance of any additional shares of capital
stock or other equity
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interests of any such Subsidiary or other
securities convertible into shares of capital stock or other equity
interests of any such Subsidiary or other equity security of any
such Subsidiary. Neither the Company nor any Subsidiary of
the Company is a party to any voting trust, stockholder agreement,
proxy or other voting agreement with respect to any of the shares
or other equity interests of any such Subsidiary or to any
agreement relating to the issuance, sale, redemption, transfer or
other disposition of the capital stock of any such
Subsidiary. For purposes of this Agreement, “
Encumbrance ” shall mean any lien, encumbrance,
security interest, charge, mortgage, option, pledge or restriction
on transfer of any nature whatsoever. For purposes of this
Agreement, “ Subsidiary ” means with respect to
any Person, any corporation or other legal entity of which such
Person owns, directly or indirectly, more than fifty percent (50%)
of the outstanding stock or other equity interests, the holders of
which are entitled to vote for the election of the board of
directors or other governing body of such corporation or other
legal entity; provided , however , that a
“Subsidiary” of the Company shall be deemed to include
Falk Shanghai (except for purposes of representations and
warranties with respect to ownership thereof). For purposes
of this Agreement, “ Person ” means an
individual, a corporation, a partnership, a limited liability
company, an association, a joint-stock company, a trust, any
unincorporated organization, a government or political subdivision
thereof or any other entity.
(b)
Section 2.3(b) of the
Company Disclosure Schedule sets forth the name of each entity
in which the Company or any Subsidiary of the Company owns less
than a majority of the outstanding voting securities or other
voting equity interests (each a “ Falk Affiliate
”) and, with respect to each such entity, the jurisdiction in
which it is incorporated or organized.
SECTION 2.4 Consents and Approvals; No
Violations .
(a)
Except as set forth in
Section 2.4(a) of the Company Disclosure Schedule,
neither the execution and delivery of this Agreement nor the
performance by the Company of its obligations hereunder will
(i) conflict with or result in any breach of any provision of
the certificate of incorporation or bylaws (or similar
organizational documents) of the Company or any of its
Subsidiaries; (ii) result in a violation or breach of, or
constitute a default (or give rise to any right of termination,
cancellation or acceleration) or result in the creation of any
Encumbrance under any of the terms, conditions or provisions of any
note, mortgage, letter of credit, other evidence of indebtedness,
guarantee, license, lease or agreement or similar instrument or
obligation to which the Company or any of its Subsidiaries is a
party or by which they or any of their assets may be bound; or
(iii) assuming that the filings, registrations, notifications,
authorizations, consents and approvals referred to in
subsection (b) below have been obtained or made, as the
case may be, violate any material order, injunction, decree,
statute, rule or regulation of any governmental agency or
authority or court to which the Company or any of its Subsidiaries
is subject, excluding from the foregoing clauses (ii) and
(iii) such requirements, defaults, breaches, rights or
violations that would not individually or in the aggregate have or
reasonably be expected to have a Material Adverse Effect or that
would not prevent and delay the consummation of the transactions
contemplated hereby.
(b)
Except as set forth in
Section 2.4(b) of the Company Disclosure Schedule, no
material filing or registration with, material notification to, or
material authorization, consent or approval of, any local, state,
federal or foreign court, legislative, executive, governmental or
regulatory authority or agency (each, a “ Governmental
Authority ”) is required in connection with the execution
and delivery of this Agreement by the Company or the performance by
the
8
Company of its obligations hereunder, except
(i) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the “ HSR Act ”), or any other competition or
antitrust law in relevant jurisdictions; and (ii) those that
become applicable as a result of the matters specifically related
to Buyer or its Affiliates (as defined below. In this
Agreement, the term “ Affiliate ” shall, in
respect of any Person, mean an “affiliate” of such
person as such term is defined in Rule 12b-2 of the Securities
Exchange Act of 1934, as amended.
SECTION 2.5 Financial Statements .
Attached to Section 2.5 of the Company Disclosure
Schedule is a true and complete copy of the unaudited combined
balance sheets of the Company and its Subsidiaries as of
December 31, 2003 and December 31, 2004 (the latter, the
“ Unaudited December 31, 2004 Balance Sheet
”), and of the unaudited combined statements of income of the
Company and its Subsidiaries as of December 31, 2003 and
December 31, 2004 (the latter, the “ Unaudited
December 31, 2004 Income Statement ”) and the
unaudited combined statement of cash flows of the Company and its
Subsidiaries as of December 31, 2004 (including, in each case,
any notes thereto) (the foregoing balance sheets, income statements
and statement of cash flow collectively, the “ Unaudited
Company Financial Statements ”). The Unaudited
Company Financial Statements were prepared in accordance with GAAP
consistently applied and fairly present, in all material respects,
the financial condition of the Company and its Subsidiaries as of
the dates thereof and the results of operations of the Company and
its Subsidiaries for the periods then ended (subject to normal,
recurring and year-end audit adjustments and the exclusion of
certain footnotes thereto).
SECTION 2.6 Absence of Certain Changes .
Except as set forth in Section 2.6 of the Company Disclosure
Schedule, as reflected on or reserved against on the Unaudited
December 31, 2004 Balance Sheet, or as otherwise contemplated
by this Agreement, since December 31, 2004, there has not
occurred a Material Adverse Effect. Without limiting the
generality of the foregoing, except as set forth in
Section 2.6 of the Company Disclosure Schedule, since such
date neither the Company nor any of its Subsidiaries has:
A
(a)
purchased or redeemed any shares of
its capital stock;
(b)
incurred any long-term indebtedness
for borrowed money (except for intercompany borrowing that is
recorded on the books of the Company);
(c)
mortgaged, pledged or subjected to
any Encumbrance any property or asset having a value in excess of
$1,000,000, except for Encumbrances incurred in the ordinary course
of business or Permitted Encumbrances;
(d)
except as required by GAAP, made any
material change in its accounting principles or the methods by
which such principles are applied for financial reporting
purposes;
(e)
increased the compensation of any
officer or employee, or adopted any new or amended any existing
Company Plans (as defined in Section 2.9 hereof), other than
(i) in the ordinary course of business consistent with past
practice or (ii) to comply with applicable law;
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(f)
disposed or agreed to dispose of any
property or asset having a value in excess of $1,000,000 that is
necessary for the conduct of the business of the Company and its
Subsidiaries as currently conducted, other than in the ordinary
course of business; or
(g)
canceled or forgiven any debt or
claim in an amount in excess of $1,000,000, except in the ordinary
course of business;
provided, however, that no provision of this
Agreement shall restrict or otherwise adversely affect the ability
of the Company or its Subsidiaries to distribute all of its cash,
cash equivalents and intercompany accounts receivable or use all of
its cash and cash equivalents on or prior to the close of business
on the Closing Date, through legal dividends to its stockholders,
repayment of outstanding liabilities or otherwise.
SECTION 2.7 Absence of Undisclosed Liabilities
. Except as and to the extent set forth in this Agreement,
the Company Disclosure Schedule or reflected or reserved
against on the Unaudited December 31, 2004 Balance Sheet, none
of the Company or any of its Subsidiaries has any liabilities or
obligations that would be required to be so reflected or reserved
against on a balance sheet (or disclosed in the footnotes thereto)
prepared in accordance with GAAP consistently applied other than
liabilities incurred in the ordinary course of business since
December 31, 2004, except liabilities or obligations which,
individually or in the aggregate, would not reasonably be expected
to have a Material Adverse Effect.
SECTION 2.8 Taxes .
(a)
Except as set forth in
Section 2.8 of the Company Disclosure Schedule:
(i)
Except as would not have a Material
Adverse Effect, the Company and its Subsidiaries have timely and
properly filed all Tax Returns (as defined below) required to be
filed through the date hereof. All such Tax Returns are true,
correct and complete in all material respects.
(ii)
Except as would not have a Material
Adverse Effect, the Company and its Subsidiaries have paid in full
and satisfied on or before their respective due dates all Taxes (as
defined below) due and owing by them, including any Taxes owed with
respect to any completed and settled audit, examination or
deficiency. The unpaid Taxes of each of the Company and its
Subsidiaries attributable to the Pre-Closing Tax Period will not,
as of the Closing Date, exceed the reserve for Tax liability (other
than a reserve for deferred Taxes established to reflect timing
differences between book and Tax income) set forth on the face of
the Closing Balance Sheet and taken into account in determining
Closing Working Capital, and will not exceed that reserve as
adjusted through the Closing Date in accordance with the past
custom and practice of Company and its Subsidiaries in filing their
Tax Returns.
(iii)
Except as would not have a Material
Adverse Effect, no deficiencies for any Tax have been proposed,
asserted or assessed in writing or, to the Knowledge of the
Company, threatened by any taxing authority against the Company or
any of its Subsidiaries. No audit, action, proceeding or
claim is currently being conducted and to the Knowledge of the
Company no unresolved audit, action or proceeding has been
threatened with
10
respect to the assessment or collection of Tax
with respect to the Companies or any of its
Subsidiaries.
(iv)
Neither the Company nor any of its
Subsidiaries is a party to any tax sharing, tax indemnity or tax
allocation agreement or other similar arrangement.
(v)
There are no agreements to extend
the period of assessment or collection of Taxes of the Company or
any of its Subsidiaries.
(vi)
Except as would not have a Material
Adverse Effect, there are no liens for Taxes on any asset of the
Company or any of its Subsidiaries other than Permitted
Encumbrances (as defined in
Section 2.14(a) hereof).
(vii)
Neither the Company nor any of its
Subsidiaries is (as of the date hereof) or has been (during the
applicable period specified in Section 897(c)(1)(A) of
the Code) a “United States real property holding
corporation” within the meaning of
Section 897(c)(2) of the Code.
(viii)
Each of the Company and its
Subsidiaries (A) has withheld from any employee, customer,
independent contractor, creditor, stockholder and any other
applicable payee proper and accurate amounts for all taxable
periods in compliance with all Tax withholding provisions of
applicable federal, state, local and foreign laws, (B) has
remitted, or will remit on a timely basis, such amounts to the
appropriate taxing authority, and (C) has furnished properly
completed exemption certificates for all exempt
transactions.
(ix)
Since June 10, 1999, neither
the Company nor any of its Subsidiaries is or has ever been a
member of an affiliated group of corporations within the meaning of
Section 1504 of the Code or of any group that has filed a
combined, consolidated or unitary state or local return (other than
as a member of an affiliated group of which the common parent is
United Technologies Corporation (such affiliated group, the
“Group”)). None of the Target Companies nor any
of their Subsidiaries has any liability for the Taxes of any other
person under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee
or successor, by contract or otherwise (other than for Taxes of
other members of the Group).
(x)
Neither the Company nor any of its
Subsidiaries shall be required to include in a taxable period
ending after the Closing Date taxable income attributable to income
of the Company or any Subsidiary that accrued in a prior taxable
period but was not recognized in any prior taxable period as a
result of (A) the installment method of accounting,
(B) the long-term contract method of accounting, (C) a
“closing agreement” as described in Section 7121
of the Code (or any provision of any foreign, state or local Tax
law having similar effect) or (D) Section 481 of the Code
(or any provision of any foreign, state or local Tax law having
similar effect).
(xi)
Neither the Company nor any of its
Subsidiaries has (A) consented at any time under former
Section 341(f)(1) of the Code to have the provisions of
former Section 341(f)(2) of the Code apply to any
disposition of any assets; (B) agreed, or is
required,
11
to make any adjustment under
Section 481(a) of the Code by reason of a change in
accounting method or otherwise; (C) made an election, or is
required, to treat any asset as owned by another person pursuant to
the provisions of former Section 168(f) of the Code or as
tax-exempt bond financed property or tax-exempt use property within
the meaning of Section 168 of the Code; (D) acquired or
owns any assets that directly or indirectly secure any debt the
interest on which is tax exempt under Section 103(a) of
the Code; or (E) made any of the foregoing elections or is
required to apply any of the foregoing rules under any
comparable state or local Tax provision.
(xii)
The Company and each of its
Subsidiaries has disclosed on its federal income Tax Returns all
positions taken therein that would give rise to a substantial
understatement of federal income Tax within the meaning of
Section 6662 of the Code. Neither the Company nor any of
its Subsidiaries has participated in a “reportable
transaction” within the meaning of Treasury Regulation
Section 1.6011-4(b).
(xiii)
In the two years prior to the date
of this Agreement, the Company has not distributed the stock of any
other person, or has had its stock distributed by another person,
in a transaction that was purported or intended to satisfy in whole
or in part the requirements of Section 355 or Section 361
of the Code.
(xiv)
The Company on the Closing Date will
be a “consolidated target” within the meaning of
Treasury Regulation Section 1.338(h)(10)-1, and the Group will
be a “selling consolidated group” on the Closing Date
within the meaning of such regulations and will be eligible to make
an election under Section 338(h)(10) of the
Code.
(xv)
Except as would not have a Material
Adverse Effect, neither the Company nor any of its Subsidiaries has
claimed nor will it claim any reserve under any provision of the
Income Tax Act (Canada), if any amount could be included in the
income of the Company or its Subsidiaries for any period ending
after the Closing Date.
(b)
For purposes of this Agreement,
(i) ” Code ” means the Internal Revenue
Code of 1986, as amended; (ii) ” Taxes ”
means all taxes, levies or other like assessments, charges or fees
(including estimated taxes, charges and fees), including income,
corporation, gross receipts, transfer, excise, property, sales,
use, value-added, license, employment related (including employee
withholding or employee payroll, FICA or FUTA) pay as you earn,
withholding, social security, severance, stamp, alternative or add
on minimum, capital stock, customs duties and franchise or other
governmental taxes or charges, imposed by any Governmental
Authority, and such term shall include any interest, penalties or
additions to tax or additional amount attributable to such taxes;
and (iii) ” Tax Return ” means any report,
return, statement, claim for refund, information return or other
written information supplied to a taxing authority in connection
with Taxes.
SECTION 2.9 Employee Benefit Plans
.
(a)
Section 2.9(a) of the
Company Disclosure Schedule lists, as of the date of this
Agreement, each deferred compensation and each bonus or other
incentive compensation arrangement, stock option, and other equity
compensation plan, program or arrangement; each severance, medical,
surgical, hospitalization, life insurance and other
“welfare” plan, fund or
12
program (within the meaning of
Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended (“ ERISA ”)); each
profit-sharing, 401(k) savings or other “pension” plan,
fund or program (within the meaning of Section 3(2) of
ERISA); each employment, retention or severance agreement; and each
other employee benefit plan, program, policy or agreement (whether
or not subject to ERISA), in each case, that is sponsored,
maintained or contributed to or required to be contributed to by
the Company or its Subsidiaries for the benefit of any current or
former employee of the Company or any Subsidiary of the Company
(the “ Company Plans ”). Accurate and
complete copies of all such Company Plans have been made available
to Buyer. Each Company Plan which is a defined contribution
plan intended to qualify under Section 401 of the Code is so
qualified and has received a current and valid determination letter
from the Internal Revenue Service.
(b)
Except as set forth in
Section 2.9(b) of the Company Disclosure
Schedule and except as would not have a Material Adverse
Effect: (i) all contributions required to be made by the
Company with respect to each Company Plan on or prior to the
Closing Date have been timely made or have been properly accrued on
the Unaudited Company Financial Statements; (ii) each Company
Plan has been operated substantially in accordance with its terms
and the requirements of applicable law; (iii) the Company and
its Subsidiaries have not incurred any direct or indirect liability
under, arising out of or by operation of Title IV of ERISA, in
connection with the termination of, or withdrawal from, any Company
Plan or other retirement plan or arrangement that the Company or
any Subsidiary of the Company maintains or to which any of them
contributes or has contributed nor will the Company or any of its
Subsidiaries be subject to any direct or indirect liability under
Title IV of ERISA as a result of any retirement plan or arrangement
that any entity under common control with Seller within the meaning
with of Section 4001(b)(1) of ERISA maintains or to which
any such entity contributes or has contributed, and, to the
Knowledge of the Company, no fact or event exists that could
reasonably be expected to give rise to any liability to the
Company; and (iv) neither the Company or any Subsidiary of the
Company, nor any Company Plan has engaged in a transaction in
connection with which the Company or any Subsidiary of the Company,
any Company Plan, or any trustee or administrator thereof, could be
subject to either a civil penalty assessed pursuant to
Section 409 or 502(i) of ERISA or a tax imposed pursuant
to Section 4975 or 4976 of the Code.
(c)
Except as set forth in
Section 2.9(c) of the Company Disclosure Schedule, no
Company Plan is subject to Title IV of ERISA or Section 302 of
ERISA. Neither the Company nor any Subsidiary of the Company
is or has at any time during the past six years been required to
contribute to a “multiemployer pension plan,” as
defined in Section 3(37) of ERISA. Neither the Company
nor any Subsidiary of the Company has any liability or could incur
any liability under any Company Plan not maintained or sponsored by
the Company or any Subsidiary of the Company.
(d)
With respect to any foreign Company
Plan which is a registered pension plan under the Pension Benefits
Act of Ontario, (i) no such plan has received a transfer of
assets from or been merged with another registered pension plan,
(ii) no such plan has been subject to a partial wind-up in
respect of which surplus assets relating to the partial wind-up
group were not dealt with at the time of partial wind-up,
(iii) no surplus assets have been withdrawn, other than proper
payments of benefits to eligible beneficiaries, refunds of
over-contributions and permit payments of reasonable expenses
incurred by or in respect of such foreign Company Plan
and
13
(iv) no material conditions have otherwise
been imposed by any Person and no undertakings or commitments have
been given to any employee or any other Person concerning the use
of assets relating to any such foreign Company Plan or any related
funding medium. All employee data necessary to administer
each foreign Company Plan in accordance with its terms and
conditions and all Laws is in possession of the Company or its
Subsidiaries and such data is complete, correct and in a form which
is sufficient for the proper administration of each foreign Company
Plan.
(e)
All Company Plans that are subject
to the laws of any jurisdiction outside the United States are in
material compliance with such applicable laws, including relevant
Tax laws relating thereto, and the requirements of any trust deed
under which they are established. Neither the Company nor any
of its Subsidiaries has incurred any obligations in connection with
the termination or withdrawal from any such foreign Company Plans,
or has any unfunded liability that is not reflected in the Company
financial statements with respect to any such plans.
(f)
Except as set forth on
Section 2.9(f) of the Company Disclosure Schedule, and
except as required by applicable law, none of the Company Plans
provide for medical or life insurance benefits to retired or former
employees.
(g)
Except with respect to the
agreements set forth on Section 5.7(g) of the Company
Disclosure Schedule, none of the execution, delivery or performance
of this Agreement or the consummation of the transactions
contemplated hereby, or compliance by the Company and its
Subsidiaries with any provisions hereof (whether alone or in
connection with a subsequent event), will result in the accrual,
acceleration of the time of payment or vesting of any material
compensation or employee benefits under any Company Plans, whether
or not any such payment, right or benefit would constitute a
parachute payment within the meaning of Section 280G of the
Code. With respect to the agreements set forth on
Section 5.7(g) of the Company Disclosure Schedule, none
provide for a payment, right or benefit that would constitute an
excess parachute payment within the meaning of Section 280G of
the Code.
(h)
Neither the Company nor any
Subsidiary has made any payments, is obligated to make any
payments, or is a party to any agreement or agreements that,
individually or collectively, provide for the payment by either the
Company or any Subsidiary of any amount that is an “excess
parachute payment” pursuant to Section 280G of the
Code.
SECTION 2.10 Environmental Matters
.
(a)
(i)
“ Environmental Claim
” means any claim, action, litigation, notice of violation,
cause of action, consent order, consent decree, investigation or
written notice by any Person alleging potential liability arising
out of, based on or resulting from (a) the presence or Release
(as defined below) of any Hazardous Materials (as defined below)
in, on, from or under any of the Real Property (as defined in
Section 2.14(a) hereof) or at any third party location to
which the Company sent, or caused to be sent, Hazardous Materials
or (b) any violation or alleged violation of any Environmental
Law (as defined below).
(ii)
“ Environmental Laws
” means all federal, state, local and foreign laws and
regulations, all common law and all other provisions having the
force or effect of law
14
relating to pollution or protection of the
environment, including those relating to Releases or threatened
Releases of Hazardous Materials or otherwise relating to the use,
treatment, storage, transport or handling of Hazardous Materials,
including the Clean Air Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended (“CERCLA”), the Federal Water Pollution Control
Act, as amended, the Resource Conservation and Recovery Act of
1976, as amended, the Safe Drinking Water Act, as amended, the
Toxic Substances Control Act, as amended, and the Hazardous
Materials Transportation Act, as amended.
(iii)
“ Hazardous Materials
” means all materials, wastes or substances (A) defined
as Hazardous Substances, Oils, Pollutants or Contaminants in the
National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. § 300.5, or (B) defined by, or regulated
under, any Environmental Law as a hazardous waste, hazardous
material, hazardous substance, extremely hazardous waste,
restricted hazardous waste, contaminant, pollutant, toxic waste, or
toxic substance, including petroleum, petroleum products, asbestos,
urea formaldehyde, radioactive materials and polychlorinated
biphenyls.
(iv)
“ Release ” means
any release, spill, emission, discharge, leaking, pumping, pouring,
dumping, injection, deposit, disposal, dispersal, leaching or
migration of Hazardous Materials into the environment (including,
ambient air, surface water, groundwater and surface or subsurface
strata).
(b)
Except as set forth in
Section 2.10(b) of the Company Disclosure
Schedule and except as would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse
Effect:
(i)
The Company and its Subsidiaries are
in compliance with all applicable Environmental Laws (which
compliance includes, but is not limited to, the possession by the
Company and its Subsidiaries of all permits and other governmental
authorizations required under applicable Environmental Laws, which
are in full force and effect, and compliance with the terms and
conditions thereof). The Company and its Subsidiaries have
not received since January 1, 2002 any written communication,
whether from a Governmental Authority, citizens’ group,
employee or any other Person, alleging that the Company and its
Subsidiaries are not in such compliance.
(ii)
There is no Environmental Claim
pending or, to the Knowledge of the Company, threatened against the
Company and its Subsidiaries or against any Person whose liability
for any Environmental Claim the Company and its Subsidiaries has or
may have retained or assumed either contractually or by operation
of law.
(iii)
None of the Real Property (as
defined in Section 2.14 hereof) is listed on the National
Priorities List pursuant to CERCLA, or to the Knowledge of the
Company, on an equivalent foreign, federal or state list of sites
required to be investigated or cleaned up under an Environmental
Law. To the Knowledge of the Company, neither the Company nor
any of its Subsidiaries has since January 1, 2002, has
received any written CERCLA Section 104(e) request, or
potentially responsible party or “PRP” notice or any
similar information request or notice under CERCLA or any similar
state law.
15
(iv)
To the Knowledge of the Company, no
Person has treated, stored, disposed of, arranged for the disposal
of, transported to, or Released in reportable quantities any
Hazardous Materials from, on or under any Real Property since
January 1, 2002 except (A) in compliance with applicable
Environmental Laws, and (B) in a manner that has not resulted
in and is not reasonably likely to result in an Environmental Claim
or required remediation under any Environmental
Law.
(v)
Neither the Company nor its
Subsidiaries is responsible for, or party to any contract or other
agreement entered into after January 1, 2002 and by which it
is currently obligated to indemnify any other person with respect
to, or be reasonably responsible for, any Environmental Claims,
violations, obligations or liabilities under any applicable
Environmental Law, including, without limitation, related to any
real property formerly owned or operated by the Company or any
Subsidiary of the Company.
(c)
To the Knowledge of the Company,
except as set forth on Section 2.10(c) of the Company
Disclosure Schedule the Company has provided to Buyer true and
correct copies of all material written environmental reports or
studies prepared by third parties since January 1, 2000
relating to the current condition of the Real Property and are in
possession of the Company, Seller or any of their Affiliates, other
than reports in respect of the Real Properties located at 12001 and
12009 W. Capital Drive, Wauwatosa, Wisconsin (the “
Wauwatosa Facility ”).
(d)
To the Knowledge of the Company,
other than de minimis quantities, all foundry sand and related
substances used, sold, transferred or distributed by the Company or
its Subsidiaries for beneficial reuse purposes are and have been in
material compliance with, and have met either Category 1 or
Category 2 levels as defined in, Wisconsin Administrative Code
Chapter NR 538.
(e)
With respect to any environmental
matter, and except as set forth in Section 2.10(e) of the
Company Disclosure Schedule,
(i) there are no suits,
actions, claims, proceedings or investigations pending or, to the
Knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries (or any of its stockholders or
shareholders, as the case may be, officers or directors in
connection with the business or affairs of the Company or any of
its Subsidiaries), before any arbitrator or Governmental Authority
that either (i) if adversely determined, would result in the
payment of monetary damages or other amounts in excess of $50,000
in any instance or (ii) request or seek the issuance of an
injunction or restraining order or the granting of any equitable
relief, and
(ii) there are no outstanding
judgments, decrees, injunctions, or orders issued against the
Company or any of its Subsidiaries by any (i) United States
court or (ii) to the Company’s Knowledge, any other
Governmental Authority or arbitrator.
(f)
Notwithstanding any other provision
of this Agreement, the representations and warranties made in this
Section 2.10 are the sole and exclusive representations and
warranties made in this Agreement by Seller, the Company and its
Subsidiaries with respect to environmental matters. For
purposes of this Section 2.10,
16
“environmental” shall not include
any matter pertaining to compliance with the rules or
regulations promulgated by the Occupational Safety and Health
Administration.
SECTION 2.11 Legal Proceedings, etc .
Except as set forth in Section 2.11 of the Company Disclosure
Schedule, there are no suits, actions, claims, proceedings or
investigations pending or, to the Knowledge of the Company,
threatened against or involving the Company or any of its
Subsidiaries (or any of its stockholders or shareholders, as the
case may be, officers or directors in connection with the business
or affairs of the Company or any of its Subsidiaries), before any
arbitrator or Governmental Authority that either (i) if
adversely determined, would result in the payment of monetary
damages or other amounts in excess of $50,000 in any instance or
(ii) request or seek the issuance of an injunction or
restraining order or the granting of any equitable relief.
There are no outstanding judgments, decrees, injunctions, or orders
issued against the Company or any of its Subsidiaries by any
(i) United States court or (ii) to the Company’s
Knowledge, any other Governmental Authority or
arbitrator.
SECTION 2.12 Compliance with Applicable Law
. Except (a) as set forth in Section 2.12 of the
Company Disclosure Schedule and (b) for any matter that
is a subject of the representations and warranties in Sections 2.1,
2.8, 2.9 or 2.10 hereof,
(i)
each of the Company and its
Subsidiaries is in material compliance with all applicable laws,
ordinances, rules and regulations of any Governmental
Authority applicable to its business and operations,
(ii)
each of the Company and its
Subsidiaries has during the past three (3) years been in
material compliance with all applicable laws, ordinances,
rules and regulations of any Governmental Authority applicable
to its business and operations, except for such non-compliance as
has not resulted in and is not reasonably likely to result in any
criminal sanction or any fine or penalty of greater than $500,000
in any instance, and
(iii)
all governmental approvals, permits,
licenses and other governmental authorizations (collectively,
“ Permits ”) required to conduct the business of
the Company and its Subsidiaries are in the possession of the
Company or any of its Subsidiaries, are in full force and effect
and are being complied with in all material respects.
SECTION 2.13 Certain Contracts and Arrangements
. Section 2.13 of the Company Disclosure
Schedule sets forth all contracts or group of related
contracts with the same party of the following types to which the
Company or any Subsidiary of the Company is a party:
(a)
Contracts for the purchase or sale
of supplies, products or other personal property or for the
furnishing or receipt of services which involves a sum in excess of
$1,000,000 for calendar year 2004 (excluding any tooling
orders);
(b)
Joint venture, partnership or
limited liability company agreements or other similar agreements
(however named) involving an equity investment by the Company or
any Subsidiary of the Company in any other Person;
17
(c)
Contracts containing covenants of
the Company or any Subsidiary of the Company that would
(i) prohibit the Company or any of its Subsidiaries from
conducting its respective business as currently conducted in the
geographical areas in which it currently operates or (ii) to
the Company’s Knowledge, restrict the Company or any of its
Subsidiaries in conducting any business anywhere in the
world;
(d)
Contracts with Seller, UTC or any
UTC Affiliate (as such terms are defined in Section 5.11
hereof);
(e)
Contracts entered into after
June 30, 1999 relating to the acquisition or disposition by
the Company or any Subsidiary of the Company or any operating
business or business unit or the capital stock or other equity
interest of any other Person;
(f)
Contracts relating to Indebtedness
(as defined in Section 5.18 hereof), guarantee, loan, letter
of credit, surety bond or financing agreement or instrument of
other contract for money borrowed, including any agreement or
commitment for future loans, credit or financing entered into by
the Company or any of its Subsidiaries; and
(g)
Any licensing agreement relating to
any material intellectual property used in the business as
currently conducted by the Company and its Subsidiaries, other than
(x) licenses with respect to software that is generally
commercially available to the public, (y) licenses with
respect to intellectual property that is subject to the
Transitional Services Agreements, and (z) the licenses of
intellectual property separately identified on Section 2.13 of
the Company Disclosure Schedule as being intellectual property
of UTC or a UTC Affiliate that is not to be subject to the
Transitional Services Agreements
(collectively, the “ Material
Contracts ”). Except as set forth in
Section 2.13 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries, or, to the Knowledge of the
Company, any other party thereto, is in breach of, or default
under, any of the Material Contracts, and no event has occurred
that with notice or passage of time or both would constitute such a
breach or default thereunder by the Company or any of its
Subsidiaries, or, to the Knowledge of the Company, any other party
thereto, except for such breaches and defaults as individually or
in the aggregate would not have a Material Adverse Effect.
The Company has delivered or made available to Buyer copies of the
Material Contracts.
SECTION 2.14 Real Property .
(a)
For purposes of this Agreement, a
“ Permitted Encumbrance ” means any
(i) mechanics’, carriers’, workers’,
repairers’, materialmen’s, warehousemen’s,
landlord’s and other similar Encumbrances arising or incurred
in the ordinary course of business; (ii) Encumbrance arising
or resulting from any action taken by Buyer; (iii) Encumbrance
for current Taxes, assessments and other governmental charges not
yet due and payable or that may subsequently be paid without
penalty; (iv) Encumbrance for current Taxes, assessments and
other governmental charges that have become due and payable that
are being contested in good faith by appropriate proceedings for
which appropriate reserves in accordance with GAAP have been
established; (v) Encumbrance which would appear on an accurate
survey of Real Property (as defined below) that do not materially
adversely affect the current use of such Real Property;
18
(vi) other covenant, condition,
restriction, reservation, right, claim, right-of-way, easement or
other Encumbrance or matter of record affecting title that does not
materially adversely affect the current use of the assets and
property of the Company and its Subsidiaries; (vii) zoning,
building, land use, and other similar restrictions imposed by law,
statute, rule, regulation, ordinance, order or process promulgated
by any Governmental Authority; (viii) matters of public record
set forth in the title materials made available to Buyer; and
(ix) the terms of the Leases and liens of the lessor under the
Leases for sums not yet due and payable. “
Leases ” means the real property leases, subleases,
licenses and use or occupancy agreements pursuant to which the
Company or any Subsidiary of the Company is the lessee, sublessee,
licensee, user or occupant of real property, or interests therein,
necessary for the conduct of, or otherwise material to, the
business of the Company and its Subsidiaries as it is currently
conducted. “ Leased Real Property ” means
all real property and interests in real property leased, subleased,
licensed, used or occupied by the Company or any Subsidiary of the
Company pursuant to the Leases. “ Owned Real
Property ” means all real property and interests in real
property owned by the Company or any Subsidiary of the
Company. “ Real Property ” means,
collectively, the Owned Real Property and the Leased Real
Property.
(b)
Section 2.14(b) of the
Company Disclosure Schedule contains a complete and correct
list of all Owned Real Property setting forth information
sufficient to identify specifically such Owned Real Property and
the record owner thereof. The Company or its applicable
Subsidiary has good and valid fee title to the Owned Real Property,
free and clear of any material Encumbrances other than Permitted
Encumbrances. Except as set forth in
Section 2.14(b) of the Company Disclosure Schedule, there
are no outstanding options or rights of first refusal to purchase
the Owned Real Property or any material portion thereof.
Except as set forth on Section 2.14(b) of the Company
Disclosure Schedule, there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting to any
Person the right of use or occupancy of any portion of the Owned
Real Property.
(c)
Section 2.14(c) of the
Company Disclosure Schedule sets forth a complete and correct
list of all Leased Real Property setting forth information
sufficient to identify specifically such Leased Real
Property. Each such Lease grants the Company or its
applicable Subsidiary the right to use and occupy the applicable
Leased Real Property in accordance with the terms thereof, subject
to Permitted Encumbrances. The Company or its applicable
Subsidiary has a valid leasehold estate in such Leased Real
Property created under the respective Lease, which leasehold estate
is free and clear of any Encumbrances other than Permitted
Encumbrances. Notwithstanding the foregoing or any other
provision hereof to the contrary, as provided by Section 5.11
hereof each Lease under which the lessor is Seller, UTC or any UTC
Affiliate shall terminate as of Closing without further obligation
or liability of such lessor.
(d)
The Real Property constitutes all
the fee, leasehold and other interests in real property
(i) held by the Company and its Subsidiaries and
(ii) necessary for the conduct of, or otherwise material to,
the business of the Company and its Subsidiaries as it is currently
conducted, except for any fee, leasehold or other interest acquired
or disposed of in the ordinary course of business after the date
hereof.
SECTION 2.15 Labor Matters . Except as
set forth in Section 2.15 of the Company Disclosure Schedule,
(i) neither the Company nor any of its Subsidiaries is a party
to
19
or bound by any labor union contract or
collective bargaining agreement and there are no labor union
contracts or collective bargaining agreements which pertain to
persons employed by the Company or any of its Subsidiaries;
(ii) during the past three (3) years there have been no
labor organization or group of employees of the Company or any
Subsidiary of the Company has made in writing a pending demand for
recognition, and during the past three (3) years there have
been no representation proceedings or petitions seeking a
representation proceeding pending or, to the Knowledge of the
Company, threatened to be brought or filed with the National Labor
Relations Board or other labor relations tribunal nor, to the
Knowledge of the Company, are there any activities or proceedings
on behalf of or by any labor union to organize any such employees;
(iii) there are no material unfair labor practice charges or
complaints, or any current union representation questions,
involving employees or former employees of the Company or any of
its Subsidiaries pending against the Company before the National
Labor Relations Board or similar foreign entity; and
(iv) there are no strikes, work stoppages, unfair labor
practice charges, slowdowns, lockouts or other material labor
disputes pending or, to the Knowledge of the Company, threatened
against or involving the Company or any of its Subsidiaries.
In the past three (3) years neither the Company nor any of its
Subsidiaries has experienced any such strike, work stoppage or
other labor dispute. The Company has delivered or otherwise
made available to Buyer true, correct and complete copies of the
labor or collective bargaining agreements listed on
Section 2.15 of the Company Disclosure Schedule, together with
all amendments, modifications or supplements thereto.
SECTION 2.16 Insurance . The Company or
its parent(s) maintains insurance policies with respect to the
property, assets, operation and business of the Company and its
Subsidiaries, and all such insurance policies are in full force and
effect; provided , however , that at and after
Closing the availability of the past and present policies of the
Company or any Subsidiary to cover any occurrences or claims shall
be limited as set forth in Section 5.12 hereof. Neither
the execution and delivery of this Agreement, the performance of
this Agreement by the parties hereto nor the consummation of the
transactions contemplated hereby will terminate, result in the
termination or cancellation of, or (except as among the parties
hereto and their affiliates as expressly contemplated by
Section 5.12) limit any insurance policy held by the Company
or any of its Subsidiaries.
SECTION 2.17 Intellectual Property .
(a)
To the Knowledge of the Company,
except ( x ) as set forth on Section 2.17 of the
Company Disclosure Schedule, ( y ) for intellectual property
specifically identified on Section 2.13 of the Company
Disclosure Schedule pursuant to clause (z) of
Section 2.13(g), and ( z ) for intellectual property
and services to be provided under the Transitional Services
Agreements, the Company and its Subsidiaries own or have the right
to use all patents, trademarks and service marks, domain names,
copyrights, computer software, trade secrets and know how,
including any applications and registrations of any of the
foregoing, necessary in any material respect for the operation of
the business of the Company and its Subsidiaries as currently
conducted (collectively, the “ Company Intellectual
Property ”).
(b)
Section 2.17 of the Company
Disclosure Schedule sets forth a complete list of all patents,
trademarks and service marks and any applications or registrations
for any of the foregoing owned or held by the Company and its
Subsidiaries.
20
(c)
Except as provided in
Section 2.17 of the Company Disclosure Schedule, there are no
pending or, to the Knowledge of the Company, threatened proceedings
or litigation or other adverse claims by any Person against the use
by the Company and its Subsidiaries of any Company Intellectual
Property.
(d)
Except as provided in
Section 2.17 of the Company Disclosure Schedule, to the
Knowledge of the Company, (i) the business of the Company and
its Subsidiaries as currently conducted does not infringe upon or
violate the intellectual property rights of any third party and
(ii) no third party is infringing upon or violating the
Company Intellectual Property that is owned by the Company and it
Subsidiaries.
21
(c)
Except as provided in
Section 2.17 of the Company Disclosure Schedule, there are no
pending or, to the Knowledge of the Company, threatened proceedings
or litigation or other adverse claims by any Person against the use
by the Company and its Subsidiaries of any Company Intellectual
Property.
(d)
Except as provided in
Section 2.17 of the Company Disclosure Schedule, to the
Knowledge of the Company, (i) the business of the Company and
its Subsidiaries as currently conducted does not infringe upon or
violate the intellectual property rights of any third party and
(ii) no third party is infringing upon or violating the
Company Intellectual Property that is owned by the Company and it
Subsidiaries.
SECTION 2.18 Certain Fees . Except as set
forth in Section 2.18 of the Company Disclosure Schedule,
(i) the Company has not employed any financial advisor or
finder and (ii) the Company has not incurred any liability for
any financial advisory or finders’ fees or similar
compensation in connection with this Agreement or the transactions
contemplated hereby.
SECTION 2.19 Sufficiency of Assets . Except
(i) for subcontracting activities in the ordinary course of
business, and (ii) for those assets and services that are to
be provided under the Transitional Services Agreements, the assets
owned, leased or held for use by the Company and its Subsidiaries
are sufficient to permit the Company and its Subsidiaries to
conduct their businesses as currently conducted in all material
respects. The Company and its Subsidiaries hold valid title
to all owned personal property of the Company and its Subsidiaries,
free and clear of all Encumbrances other than Permitted
Encumbrances.
SECTION 2.20 Customers, Suppliers and
Distributors . Except as disclosed in Section 2.20
of the Company Disclosure Schedule or in the ordinary course
of the Company’s business, as of the date of this Agreement
neither the Company nor any of its Subsidiaries has received any
written notice that any (i) Material Customer has ceased, or
will cease, to use its products, equipment, goods or services, or
has materially reduced, or will materially reduce, the use of such
products, equipment, goods or services at any time,
(ii) Material Supplier will not sell raw materials, supplies,
merchandise and other goods to the Company or any of its
Subsidiaries at any time after the Closing Date on terms and
conditions substantially similar to those currently in effect,
subject only to general and customary price increases, or
(iii) Material Distributor will not sell the Company or any of
its Subsidiaries’ goods or merchandise at any time after the
Closing Date on terms and conditions substantially similar to those
currently in effect. “ Material Customer
”, “ Material Supplier ” and “
Material Distributor ” shall respectively mean
(i) the top ten (10) customers of the Company and its
Subsidiaries for the twelve months ended December 31, 2004,
determined on the basis of the gross revenues for such year
attributable to such customers, (ii) the top ten
(10) suppliers of the Company and its Subsidiaries for the
twelve months ended December 31, 2004, determined on the basis
of the gross expenditures for such year attributable to such
suppliers, and (iii) the top ten (10) distributors of the
Company and its Subsidiaries for the twelve months ended
December 31, 2004, determined on the basis of the gross
revenues for such year attributable to such
distributors.
SECTION 2.21 Intercompany Indebtedness and Accounts
Payable . Section 2.21 of the Company Disclosure
Schedule accurately describes all Indebtedness or other
accounts payable (including the principal amount thereof) as of
February 28, 2005, owed by the Company
21
or any of its Subsidiaries to any of the
Company, any of its Subsidiaries or Seller, UTC or any UTC
Affiliate.
SECTION 2.22 Disclaimer of Warranties .
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE II,
NEITHER THE COMPANY NOR SELLER, NOR ANY PERSON ACTING ON THEIR
BEHALF, MAKES NOR HAS MADE ANY REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING ANY REPRESENTATION OR
WARRANTY AS TO THE FUTURE SALES OR PROFITABILITY OF THE
COMPANY’S BUSINESS, OR REPRESENTATIONS OR WARRANTIES ARISING
BY STATUTE OR OTHERWISE IN LAW, FROM A COURSE OF DEALING OR USAGE
OF TRADE. ALL SUCH OTHER REPRESENTATIONS AND WARRANTIES ARE
HEREBY EXPRESSLY DISCLAIMED BY THE COMPANY.
In order to induce Buyer to enter
into this Agreement, Seller represents and warrants to Buyer as
follows:
SECTION 3.1 Authority and Related Matters .
Seller has all requisite corporate power, authority and legal
capacity to execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized and approved by
Seller, including by the Board of Directors of Seller, and no other
corporate or similar proceedings on the part of Seller and, as the
case may be, its Board of Directors are necessary to authorize the
execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by
Seller, and constitutes, assuming the due authorization, execution
and delivery of this Agreement by Buyer, a valid and binding
obligation of Seller, enforceable against Seller in accordance with
its terms, except that such enforcement may be subject to or
limited by (i) the effect of any bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or
affecting the rights of creditors generally and (ii) the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity). Seller is duly organized, validly existing and in
good standing under the laws of its state of
organization.
SECTION 3.2 Share Ownership . Except as
set forth in Section 3.2 of the Seller Disclosure
Schedule attached hereto, Seller is the record and beneficial
owner of the Shares, free and clear of any and all Encumbrances,
and the Shares have been validly issued and are fully paid and
non-assessable. Except for this Agreement and the
transactions contemplated hereby, and except as disclosed in
Section 2.2 of the Company Disclosure Schedule, there are no
agreements, arrangements, warrants, options, puts, calls, rights or
other commitments or understandings of any character to which
Seller or any Affiliate of Seller is a party or by which any of its
assets is bound and relating to the issuance, sale, purchase,
redemption, conversion, exchange, registration, voting or transfer
of any Shares or other capital stock of the Company or other
securities convertible into capital stock of the
Company.
22
SECTION 3.3 Consents and Approvals; No
Violations .
(a)
Neither the execution and delivery
by Seller of this Agreement nor the performance by Seller of its
obligations hereunder will (i) conflict with or result in any
breach of any provision of any certificate of incorporation or
bylaws of Seller; (ii) result in the creation or imposition of
any Encumbrance upon the Shares; or (iii) assuming that the
filings, registrations, notifications, authorizations, consents and
approvals referred to in subsection (b) below have been
obtained or made, as the case may be, violate any order,
injunction, decree, statute, rule or regulation of any
Governmental Authority to which Seller is subject, excluding from
the foregoing clauses (ii) and (iii) such requirements,
defaults, breaches, rights or violations that would not
individually, or in the aggregate, have a material effect on the
ability of Seller to consummate the transactions contemplated
hereby.
(b)
Except as set forth in
Section 2.4(b) of the Company Disclosure Schedule or
Section 3.3(b) of the Seller Disclosure Schedule, no
filing, declaration or registration with, notification to, or
waiver, permit, order, authorization, consent or approval of any
Governmental Authority or any other Person is required in
connection with the execution and delivery of this Agreement by
Seller or the performance by Seller of its obligations hereunder,
except (i) compliance with any applicable requirements of the
HSR Act or any other competition or antitrust law in relevant
jurisdictions; (ii) those that become applicable as a result
of matters specifically related to Buyer or its Affiliates; or
(iii) such other consents, approvals orders, authorizations,
notifications, registrations, declarations and filings, the failure
of which to be obtained or made would not, individually or in the
aggregate, have a material effect on the ability of Seller to
consummate the transactions contemplated hereby.
SECTION 3.4 Certain Fees . Except as set
forth in Section 3.4 of the Seller Disclosure Schedule,
(i) Seller has not employed any financial advisor or finder
and (ii) Seller has not incurred any liability for any
financial advisor or finders’ fees or similar compensation in
connection with this Agreement or the transactions contemplated
hereby.
SECTION 3.5 Legal Proceedings . As of
the date of this Agreement, there are no suits, actions, claims,
proceedings, or investigations pending against Seller before any
court, arbitrator or administrative or governmental body, United
States or foreign which, if adversely determined, would have a
material effect on the ability of Seller to consummate the
transactions contemplated hereby.
SECTION 3.6 Disclaimer of Warranties .
EXCEPT AS EXPRESSLY SET FORTH IN THIS ARTICLE III,
SELLER DOES NOT MAKE AND HAS NOT MADE ANY REPRESENTATIONS OR
WARRANTIES WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING ANY
REPRESENTATIONS OR WARRANTIES AS TO THE FUTURE SALES OR
PROFITABILITY OF THE COMPANY’S BUSINESS, OR REPRESENTATIONS
OR WARRANTIES ARISING BY STATUTE OR OTHERWISE IN LAW, FROM A COURSE
OF DEALING OR USAGE OF TRADE. ALL SUCH OTHER REPRESENTATIONS
AND WARRANTIES ARE HEREBY EXPRESSLY DISCLAIMED BY
SELLER.
23
In order to induce the Company and
Seller to enter into this Agreement, Buyer hereby represents and
warrants to each of the Company and Seller as follows:
SECTION 4.1 Corporate Organization and
Authority .
(a)
Buyer is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation.
(b)
Buyer has the requisite power,
authority and legal capacity to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and
delivery of this Agreement and the performance of its obligations
hereunder have been duly and validly authorized by Buyer, including
by the board of directors of Buyer, and no other corporate or
similar proceedings on the part of Buyer are necessary to authorize
the execution, delivery and performance of this Agreement, or the
consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Buyer
and constitutes, assuming due authorization, execution and delivery
of this Agreement by the Company and Seller, a valid and binding
obligation of Buyer, enforceable against Buyer in accordance with
its terms, except that such enforcement may be subject to or
limited by (i) the effect of bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or
affecting the rights of creditors generally and (ii) the
effect of general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity).
SECTION 4.2 Consents and Approvals; No
Violations .
(a)
Except as set forth in
Section 4.2(a) of the disclosure schedule of Buyer
(the “ Buyer Disclosure Schedule ”), neither the
execution and delivery of this Agreement nor the performance by
Buyer of its obligations hereunder will (i) conflict with or
result in any breach of any provision of the certificate of
incorporation or bylaws (or similar organizational documents) of
Buyer and its Subsidiaries; (ii) result in a violation or
breach of, or default (or give rise to any right of termination,
cancellation or acceleration) or result in the creation of any
Encumbrance under any of the terms, conditions or provisions of any
note, mortgage, letter of credit, other evidence of indebtedness,
guarantee, license, lease or agreement or similar instrument or
obligation relating to the business of Buyer or to which Buyer or
any of its Subsidiaries is a party or by which Buyer or any of its
Subsidiaries or any of the assets used or held for use by Buyer or
any of its Subsidiaries may be bound; or (iii) assuming that
the filings, registrations, notifications, authorizations, consents
and approvals referred to in subsection (b) below have
been obtained or made, as the case may be, violate any order,
injunction, decree, statute, rule or regulation of any
Governmental Authority to which Buyer is subject, excluding from
the foregoing clauses (ii) and (iii) such requirements,
defaults, breaches, rights or violations that would not
individually, or in the aggregate, reasonably be expected to
materially impact the ability of Buyer to perform its obligations
under, and to consummate the transactions contemplated by, this
Agreement.
24
(b)
Except as set forth in
Section 4.2(b) of the Buyer Disclosure Schedule, no
filing, declaration or registration with, notification to, or
waiver, permit, order, authorization, consent or approval of, any
Governmental Authority or any other Person is required in
connection with the execution and delivery of this Agreement by
Buyer or the performance by Buyer of its obligations hereunder,
except (i) compliance with any applicable requirements of the
HSR Act or any other competition or antitrust law in relevant
jurisdictions and (ii) such other consents, approvals, orders,
authorizations, notifications, registrations, declarations and
filings the failure of which to be obtained or made would not,
individually or in the aggregate, reasonably be expected to
materially impact the ability of Buyer to perform its obligations
under, and to consummate the transactions contemplated by, this
Agreement.
SECTION 4.3 Legal Proceedings, etc .
Except as set forth in Section 4.3 of the Buyer
Disclosure Schedule, as of the date of this Agreement, there are no
suits, actions, claims, proceedings or investigations pending, or,
to the knowledge of Buyer, threatened against or involving Buyer or
any of its Subsidiaries (or any of their respective officers or
directors in connection with the business or affairs of Buyer and
its Subsidiaries) before any arbitrator or Governmental Authority
which, if adversely determined, would reasonably be expected to
materially impact the ability of Buyer to perform its obligations
under, and to consummate the transactions contemplated by, this
Agreement. As of the date of this Agreement, there are no
such suits, actions, claims, proceedings or investigations pending
or, to the knowledge of Buyer, threatened challenging the validity
or propriety of the transactions contemplated by this
Agreement. Neither Buyer nor any of its Subsidiaries is
subject to any judgment, decree, injunction or orders of any court,
which would reasonably be expected to materially impact the ability
of Buyer to perform its obligations under, and to consummate the
transactions contemplated by, this Agreement.
SECTION 4.4 Certain Fees . Except as set
forth in Section 4.4 of the Buyer Disclosure Schedule,
(i) Buyer has not employed any financial advisor or finder and
(ii) Buyer has not incurred any liability for any financial
advisory or finders’ fees or similar compensation in
connection with this Agreement or the transactions contemplated
hereby.
SECTION 4.5 Acquisition of Shares for
Investment . Buyer has such knowledge and experience in
financial and business matters that it is capable of evaluating the
merits and risks of its purchase of the Shares. Buyer
confirms that the Company and Seller have made available to Buyer
the opportunity to ask questions of the officers and management
employees of the Company and to acquire additional information
about the business and financial condition of the Company and its
Subsidiaries. Buyer is acquiring the Shares for investment
and not with a view toward or for sale in connection with any
distribution thereof, or with any present intention of distributing
or selling the Shares. Buyer agrees that the Shares may not
be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act
of 1933, as amended, or any applicable state securities laws,
except pursuant to an exemption from such registration available
under the Securities Act of 1933, as amended, or any applicable
state securities laws.
SECTION 4.6 Solvency . At and
immediately following the Closing, the Company and its Subsidiaries
will be, on a consolidated basis, Solvent (as defined below) after
giving effect to the purchase and sale of the Shares and any other
transactions contemplated by
25
Buyer or any of its Affiliates on such date or
which would be otherwise taken into account in determining whether
the transactions contemplated hereby were a fraudulent conveyance
or impermissible dividend under applicable law. For purposes
of this Agreement, “ Solvent ” shall mean with
respect to any Person that (i) the fair saleable value of the
property of such Person is, on the date of determination, greater
than the total amount of liabilities (including contingent and
unliquidated liabilities) of such Person as of such date;
(ii) as of such date, such Person is able to pay all of its
liabilities as such liabilities mature; (iii) such Person does
not have unreasonably small capital for conducting the business
theretofore or proposed to be conducted by such Person and its
Subsidiaries; and (iv) such Person has not incurred nor does
it plan to incur debts beyond its ability to pay as they
mature.
SECTION 4.7 Financing . Buyer currently
has financing commitments issued by Deutsche Bank Trust Company
Americas and Credit Suisse First Boston, as attached as
Exhibit C to this Agreement (collectively, the “
Financing Commitment ”) and, assuming consummation of
the financing transaction contemplated by the Financing Commitment,
as of the Closing will have immediately available all funds
necessary to consummate the transactions contemplated by this
Agreement, including the payment at Closing of the Purchase Price,
any Post-Closing Adjustment described in Section 1.4, and the
payment of all expenses incurred by Buyer in connection with the
transactions contemplated by this Agreement.
SECTION 4.8 Investigation by Buyer; Seller’s
Liability . Buyer has conducted its own independent
review and analysis of the business, operations, assets,
liabilities, results of operations, financial condition, software,
technology and prospects of the Company and acknowledges that Buyer
has been provided access to the personnel, properties, premises and
records of the Company for such purpose. In entering into
this Agreement, Buyer has relied solely upon its own investigation
and analysis, and Buyer: (i) acknowledges that none of
Seller, the Company or any of their respective directors, officers,
shareholders, employees, Affiliates, controlling Persons, agents,
advisors or Representatives makes or has made any representation or
warranty, either express or implied, as to the accuracy of
completeness of any of the information provided or made available
to Buyer or its directors, officers, employees, Affiliates,
controlling Persons, agents, advisors or Representatives and
(ii) agrees, to the fullest extent permitted by law, that none
of Seller, the Company or any of their respective directors,
officers, employees, stockholders or shareholders, as the case may
be, Affiliates, controlling Persons, agents, advisors or
Representatives shall have any liability or responsibility
whatsoever to Buyer or its directors, officers, employees,
Affiliates, controlling Persons, agents, advisors or
Representatives on any basis (including in contract or tort, under
federal or state securities laws or otherwise) based upon any
information provided or made available, or statements made, to
Buyer or its directors, officers, employees, Affiliates,
controlling Persons, advisors, agents or Representatives (or any
omissions therefrom), including in respect of the specific
representations and warranties of Seller set forth in this
Agreement, except that the foregoing limitations in clauses
(i) and (ii) shall not apply (A) in any case of
fraud by Seller, the Company or any of their respective directors,
officers, employees, stockholders or shareholders, as the case may
be, Affiliates, controlling Persons, agents, advisors or
Representatives and (B) to the extent the Company or Seller
make the specific representations and warranties set forth in
Article II or Article III of this Agreement,
respectively, but always subject to the limitations and
restrictions contained herein.
26
SECTION 5.1 Conduct of the Business .
The Company agrees that, during the period from the date
hereof until the earlier of the Closing or the termination of this
Agreement, except as (i) otherwise expressly contemplated
hereby; (ii) set forth in Section 5.1 of the Company
Disclosure Schedule; or (iii) consented to by Buyer, in
writing (which consent shall not be unreasonably withheld), the
Company shall, and shall use its commercially reasonable efforts in
its capacity as sole shareholder to cause each of its Subsidiaries
to (and Seller agrees in its capacity as sole shareholder of the
Company to cause the Company and its Subsidiaries to):
(a)
conduct their respective businesses,
and maintain their respective assets, properties, business
organizations and relationships with customers, suppliers and
employees, in each case in the ordinary course consistent with past
practice;
(b)
not amend the certificate of
incorporation or bylaws or other organizational documents of the
Company or any of its Subsidiaries;
(c)
not transfer, issue, deliver, sell,
pledge, dispose of or encumber, or authorize or commit to the
issuance, sale, pledge, disposition or encumbrance of any shares of
capital stock of any class of the Company or any of its
Subsidiaries, or any options, warrants, convertible securities or
other rights of any kind to acquire any shares of capital stock of,
or any other ownership interest in, the Company or any of its
Subsidiaries;
(d)
not repurchase, redeem or otherwise
acquire any outstanding shares of the capital stock or other
securities, or other ownership interests in, the Company or any of
its Subsidiaries;
(e)
not reclassify, combine, split,
subdivide or redeem, purchase or otherwise acquire, directly or
indirectly, any of its capital stock,
