EXHIBIT 2-A
STOCK AND ASSET PURCHASE AGREEMENT
BY AND BETWEEN
AAG OPCO CORP.
AND
▇▇▇▇ CORPORATION
Dated as of July 8, 2004
TABLE OF CONTENTS
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RECITALS......................................................................................................... 1
ARTICLE I THE PURCHASE AND SALE....................................................................... 1
Section 1.1. Purchase and Sale of Shares........................................................... 1
Section 1.2. Purchase and Sale of the Purchased Assets............................................. 1
Section 1.3. Excluded Assets....................................................................... 3
Section 1.4. Assumed Liabilities................................................................... 5
Section 1.5. Excluded Liabilities.................................................................. 6
ARTICLE II CONSIDERATION............................................................................... 8
Section 2.1. Amount and Form of Consideration...................................................... 8
Section 2.2. Payment of Cash Consideration......................................................... 8
Section 2.3. Purchase Price Adjustment............................................................. 8
Section 2.4. Allocation of Consideration........................................................... 10
ARTICLE III THE CLOSING................................................................................. 11
Section 3.1. Closing Date.......................................................................... 11
Section 3.2. Deliveries by Seller to Purchaser..................................................... 11
Section 3.3. Deliveries by Purchaser to Seller..................................................... 13
Section 3.4. Proceedings at Closing................................................................ 13
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER.................................................... 14
Section 4.1. Organization and Good Standing........................................................ 14
Section 4.2. Capital Structure of Purchased Companies.............................................. 14
Section 4.3. Subsidiaries and Transferred JVs...................................................... 15
Section 4.4. Authorization of Agreement............................................................ 16
Section 4.5. No Conflicts; Consents of Third Parties............................................... 16
Section 4.6. Financial Statements.................................................................. 17
Section 4.7. Material Adverse Changes.............................................................. 18
Section 4.8. Taxes................................................................................. 19
Section 4.9. Real Property......................................................................... 20
Section 4.10. Tangible Personal Property............................................................ 22
Section 4.11. Intellectual Property................................................................. 22
Section 4.12. Contracts............................................................................. 22
Section 4.13. Employee Benefits..................................................................... 25
Section 4.14. Labor................................................................................. 27
Section 4.15. Litigation............................................................................ 28
Section 4.16. Compliance with Other Laws; Permits................................................... 28
Section 4.17. Environmental Matters................................................................. 29
Section 4.18. Ownership of Necessary Assets and Rights.............................................. 29
Section 4.19. Product Liability..................................................................... 29
Section 4.20. Affiliate Transactions................................................................ 30
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Section 4.21. Customers and Suppliers............................................................... 30
Section 4.22. Brokers............................................................................... 30
Section 4.23. No Other Representations or Warranties................................................ 30
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER................................................. 31
Section 5.1. Organization and Good Standing........................................................ 31
Section 5.2. Authorization of Agreement............................................................ 31
Section 5.3. No Conflicts; Consents of Third Parties............................................... 31
Section 5.4. Litigation............................................................................ 32
Section 5.5. Financing............................................................................. 32
Section 5.6. Purchaser Status...................................................................... 32
Section 5.7. Brokers............................................................................... 32
Section 5.8. Independent Assessment................................................................ 33
Section 5.9. No Other Representations or Warranties................................................ 33
ARTICLE VI COVENANTS OF SELLER......................................................................... 33
Section 6.1. Access to Documents; Opportunity to Ask Questions..................................... 33
Section 6.2. Conduct of Business................................................................... 34
Section 6.3. Consents and Conditions............................................................... 37
Section 6.4. Public Statements..................................................................... 38
Section 6.5. Confidentiality....................................................................... 38
Section 6.6. Intercompany Accounts................................................................. 39
Section 6.7. Litigation Support.................................................................... 39
Section 6.8. Further Actions....................................................................... 39
Section 6.9. Acquisition Proposals................................................................. 39
Section 6.10. Acquisition Financing................................................................. 40
Section 6.11. Affidavits............................................................................ 40
ARTICLE VII COVENANTS OF PURCHASER...................................................................... 40
Section 7.1. Confidentiality....................................................................... 40
Section 7.2. Public Statements..................................................................... 41
Section 7.3. Consents and Conditions............................................................... 41
Section 7.4. Seller's Access to Documents.......................................................... 43
Section 7.5. Further Actions....................................................................... 43
Section 7.6. Guarantees; Letters of Credit......................................................... 43
Section 7.7. Use of Seller's Name.................................................................. 44
Section 7.8. Litigation Support.................................................................... 46
Section 7.9. Bulk Sales Law........................................................................ 46
ARTICLE VIII CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS............................................. 46
Section 8.1. Accuracy of Representations and Warranties............................................ 46
Section 8.2. Performance of Covenants.............................................................. 47
Section 8.3. Antitrust Laws........................................................................ 47
Section 8.4. No Injunctions........................................................................ 47
Section 8.5. Officer's Certificate................................................................. 47
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Section 8.6. Debt Financing........................................................................ 47
Section 8.7. Transferred Permits and Business Contracts............................................ 48
ARTICLE IX CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS................................................ 48
Section 9.1. Accuracy of Representations and Warranties............................................ 48
Section 9.2. Performance of Covenants.............................................................. 48
Section 9.3. Antitrust Laws........................................................................ 48
Section 9.4. No Injunctions........................................................................ 48
Section 9.5. Officer's Certificate................................................................. 48
ARTICLE X ADDITIONAL POST-CLOSING COVENANTS........................................................... 49
Section 10.1. Certain Employment Matters............................................................ 49
Section 10.2. Transition Agreements; Ancillary Agreements........................................... 56
Section 10.3. Further Assurances; Further Conveyances and Assumptions;
Consent of Third Parties.............................................................. 56
ARTICLE XI SURVIVAL, INDEMNIFICATION AND RELATED MATTERS............................................... 58
Section 11.1. Survival.............................................................................. 58
Section 11.2. Indemnification....................................................................... 60
Section 11.3. Procedures for Indemnification........................................................ 62
Section 11.4. Knowledge............................................................................. 63
ARTICLE XII NONCOMPETITION; NONSOLICITATION............................................................. 63
Section 12.1. Noncompetition........................................................................ 63
Section 12.2. Nonsolicitation of Purchaser Employees................................................ 65
Section 12.3. Nonsolicitation of Seller Employees................................................... 65
Section 12.4. Remedies.............................................................................. 65
ARTICLE XIII TERMINATION................................................................................. 66
Section 13.1. Termination........................................................................... 66
Section 13.2. Procedure and Effect of Termination................................................... 66
ARTICLE XIV TAX MATTERS................................................................................. 67
Section 14.1. Tax Indemnification................................................................... 67
Section 14.2. Preparation and Filing of Tax Returns................................................. 67
Section 14.3. Refunds, Credits and Carrybacks....................................................... 68
Section 14.4. Tax Contests.......................................................................... 69
Section 14.5. Cooperation........................................................................... 69
Section 14.6. Tax Benefits.......................................................................... 70
Section 14.7. Tax Treatment of Indemnification Payments............................................. 70
Section 14.8. Section 338(g) Elections.............................................................. 70
Section 14.9. Transfer Taxes and VAT................................................................ 71
Section 14.10. Section 338(h)(10) Elections.......................................................... 72
Section 14.11. UK Degrouping Charge.................................................................. 72
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ARTICLE XV MISCELLANEOUS............................................................................... 73
Section 15.1. Certain Definitions................................................................... 73
Section 15.2. Entire Agreement...................................................................... 85
Section 15.3. Governing Law......................................................................... 85
Section 15.4. Jurisdiction.......................................................................... 85
Section 15.5. Expenses.............................................................................. 86
Section 15.6. Table of Contents and Headings........................................................ 86
Section 15.7. Notices............................................................................... 86
Section 15.8. Severability.......................................................................... 87
Section 15.9. Binding Effect; No Third-Party Beneficiaries; No Assignment........................... 87
Section 15.10. Amendments............................................................................ 88
Section 15.11. Waiver................................................................................ 88
Section 15.12. Counterparts.......................................................................... 88
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STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT, dated as of July 8, 2004 (this
"AGREEMENT"), by and between AAG Opco Corp., a Delaware corporation
("PURCHASER"), and ▇▇▇▇ Corporation, a Virginia corporation ("SELLER").
Unless otherwise indicated, capitalized terms used herein have the
respective meanings set forth in Section 15.1.
RECITALS
WHEREAS, Seller and its Subsidiaries are, among other things,
engaged through Seller's Automotive Aftermarket Group in the manufacture and
distribution of automotive aftermarket components in North America, Europe, Asia
and South America, as described in Exhibit A (the "BUSINESS"); and
WHEREAS, upon the terms and subject to the conditions hereinafter
set forth, the parties desire that Seller and its Subsidiaries sell, assign and
transfer to Purchaser, and that Purchaser purchase and acquire from Seller and
its Subsidiaries, all of the right, title and interest of Seller and its
Subsidiaries in and to the Purchased Shares and the Purchased Assets, and that
Purchaser assume the Assumed Liabilities.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements hereinafter set forth, and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
THE PURCHASE AND SALE
Section 1.1 Purchase and Sale of Shares. On the terms and subject to
the conditions set forth herein, at the Closing, Seller shall sell and deliver,
or cause one or more of its Subsidiaries to sell and deliver, to Purchaser, and
Purchaser shall purchase, acquire and accept from Seller, or the applicable
Subsidiary or Subsidiaries of Seller, legal and beneficial ownership of (a) all
of the issued and outstanding capital stock (the "PURCHASED ENTITY SHARES") of
each of the Persons on Schedule 1.1(a) (each, a "PURCHASED ENTITY" and,
collectively, the "PURCHASED ENTITIES") and (b) the issued and outstanding
equity interests held by Seller or its Subsidiaries (the "PURCHASED VENTURE
SHARES" and together with the Purchased Entity Shares, the "PURCHASED SHARES")
of each of the Persons on Schedule 1.1(b) (each, a "PURCHASED VENTURE" and
together with the Purchased Entities, the "PURCHASED COMPANIES" and collectively
with their Subsidiaries, the "ACQUIRED COMPANIES"), in each case free and clear
of any Lien other than pursuant to any certificate or articles of incorporation,
bylaws or similar organizational documents of any Acquired Companies.
Section 1.2 Purchase and Sale of the Purchased Assets. Except as set
forth on Schedule 1.2(a), on the terms and subject to the conditions set forth
herein, and subject to the exclusions set forth in Section 1.3, at the Closing,
Seller shall sell, assign, transfer, convey and de-
liver, or cause one or more of its Subsidiaries (other than an Acquired Company)
to sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall
purchase, acquire and accept from Seller, or the applicable Subsidiary or
Subsidiaries of Seller (other than an Acquired Company), all of the right, title
and interest of Seller, or the applicable Subsidiary or Subsidiaries of Seller
(other than an Acquired Company), in, to and under all of the assets,
properties, rights, Contracts and claims of Seller, or such Subsidiary or
Subsidiaries, wherever located, whether tangible or intangible, real, personal
or mixed, in each case, Related to the Business, but excluding the Excluded
Assets (collectively, the "PURCHASED ASSETS"), including by way of example and
not limitation, all of the following assets, properties, rights, Contracts and
claims of Seller or its Subsidiaries (other than an Acquired Company):
(a) (i) the real property listed on Schedule 1.2(a)(i) together with
any and all buildings, structures, improvements and fixtures located
thereon (together with any of the foregoing owned by the Acquired
Companies, the "OWNED REAL PROPERTY") and (ii) the real property leases
listed on Schedule 1.2(a)(ii) and, to the extent covered by such leases,
any and all buildings, structures, improvements and fixtures located
thereon (together with any of the foregoing leased by the Acquired
Companies, the "REAL PROPERTY LEASES");
(b) all machinery, equipment, furniture, automobiles, trucks,
tractors, trailers, tools and other tangible personal property Related to
the Business (collectively, the "PURCHASED EQUIPMENT");
(c) all inventories and supplies of raw materials, works-in-process,
finished goods, spare parts, supplies, storeroom contents and other
inventoried items Related to the Business;
(d) all trade accounts and notes receivable and other receivables
(other than those associated with Seller's accounts receivables
securitization program described on Schedule 1.2(d)) as of the Closing
Date arising out of the sale or other disposition of goods or services
Related to the Business;
(e) all deposits and prepayments Related to the Business (other than
(i) any deposits made in connection with any Seller Employee Benefit Plan
or, to the extent specifically provided otherwise herein, any Acquired
Company Plan and (ii) deposits of cash or cash equivalents in bank
accounts, prepaid insurance premiums, prepaid interest, prepaid Taxes, or
refunds or credits of Excluded Taxes (except to the extent such Tax items
are reflected as an asset in Final Closing Date Working Capital));
(f) all rights and incidents of interests of, and benefits accruing
to, Seller or any Subsidiary of Seller (other than an Acquired Company) as
of the Closing Date in, to and under all Business Contracts, including
personal property leases and all open purchase and sales orders Related to
the Business;
(g) all Intellectual Property Related to the Business, including the
Intellectual Property identified on Schedule 1.2(g), and all rights
thereunder, including the right to
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bring suit and recover for the past infringement thereof, other than any
rights primarily related to any Existing Litigation (collectively, the
"PURCHASED INTELLECTUAL PROPERTY");
(h) all books and records (other than Tax Returns) or true and
correct copies thereof, including all computerized books and records, and
all files, papers, tapes, disks, keys, correspondence, reports, plans,
drawings and specifications, invoices, forms, customer records, catalogs,
sales, promotional and advertising materials, technical data, operating
records, operating manuals, instructional documents, employee files (to
the extent permitted under applicable Law) for Transferred Employees and
other printed or written materials, in each case, Related to the Business
and to the extent available to Seller or its Subsidiaries;
(i) subject to Section 10.3(b), Permits Related to the Business
(such Permits, the "TRANSFERRED PERMITS");
(j) all rights under or pursuant to all warranties, representations
and guarantees, whether express or implied, made by suppliers,
manufacturers, contractors and other third parties with respect to any of
the other Purchased Assets, other than any of the foregoing that primarily
relate to any Excluded Asset or Excluded Liability;
(k) all claims, defenses, causes of action, choses in action, rights
of recovery, rights of set off, and rights of recoupment Related to the
Business or primarily related to the Purchased Assets or Assumed
Liabilities, other than any of the foregoing that primarily relate to any
Excluded Asset or Excluded Liability;
(l) all equity interests held by Seller or any of its Subsidiaries
(other than an Acquired Company) in the joint ventures identified on
Schedule 1.2(l) (such equity interests being referred to as the
"TRANSFERRED JV INTERESTS" and the joint ventures being referred to as the
"TRANSFERRED JVS");
(m) assets held or set aside specifically to fund any liabilities
assumed pursuant to Section 10.1 and Section 1.4 (including, without
limitation, any assets set aside by any Acquired Company under any
severance plan of the Seller) and any trusts, insurance arrangements or
other assets held pursuant to, or set aside to fund the obligations under,
any Acquired Company Plan; and
(n) the Business as carried on and conducted by Seller and its
Subsidiaries (other than an Acquired Company) as a going concern,
including any and all goodwill.
Section 1.3 Excluded Assets. Notwithstanding anything to the
contrary contained in Section 1.2, the parties expressly understand and agree
that the Purchased Assets shall not include, and neither Seller nor any of its
Subsidiaries (other than an Acquired Company) is selling, assigning,
transferring or conveying to Purchaser pursuant to Section 1.2 any right to or
interest in, any of the following assets, properties, rights, Contracts and
claims, whether tangible or intangible, real, personal or mixed (except with
respect to assets sold, assigned, transferred or conveyed with the Acquired
Companies) (collectively, the "EXCLUDED ASSETS"):
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(a) all cash, cash equivalents, bank deposits, investment accounts,
lockboxes, certificates of deposit, marketable securities or similar cash
items, of Seller or any of its Subsidiaries (other than the Acquired
Companies);
(b) subject to Sections 1.2 and 10.1, any Seller Employee Benefit
Plan, any trusts, insurance arrangements or other assets held pursuant to,
or set aside to fund the obligations of Seller or its Subsidiaries under,
any such Seller Employee Benefit Plan, any data and records (or copies
thereof) required to administer the benefits of Acquired Company Employees
and Business Employees under any Seller Employee Benefit Plan and, except
as set forth in Section 1.4(a)(ii), the retention agreements with the
Business Employees and Acquired Company Employees listed on Schedule
1.3(b) (the "RETENTION AGREEMENTS");
(c) any and all insurance policies, binders and claims and rights
thereunder and the proceeds thereof and all prepaid insurance premiums;
(d) subject to Section 7.7, all of Seller's right, title and
interest in any name, Trademark, trade dress, internet address, trade
name, service ▇▇▇▇ or logo, or any derivation of any of the foregoing,
together with all of the goodwill represented thereby, or pertaining
thereto in each case listed on Schedule 1.3(d) (collectively, the
"EXCLUDED IP ASSETS");
(e) the assets and Contracts listed on Schedule 1.3(e);
(f) any books, records and other materials that Seller or any of its
Subsidiaries (other than an Acquired Company) is required by Law to retain
(provided that Seller or any of its Subsidiaries shall make available to
Purchaser copies of any such books, records and other materials to the
extent permitted by Law), all Tax Returns and all "▇▇▇▇" marked sales and
promotional materials and brochures;
(g) all claims, defenses, causes of action, choses in action or
claims of any kind that are available to or being pursued by Seller or any
of its Subsidiaries whether as plaintiff, claimant, counterclaimant or
otherwise, in each case, primarily relating to any other Excluded Asset or
any Excluded Liability;
(h) all assets, business lines, properties, rights, Contracts and
claims of Seller or any of its Subsidiaries (other than the Acquired
Companies) not Related to the Business, wherever located, whether tangible
or intangible, real, personal or mixed;
(i) all assets located at facilities Related to the Business which
have ceased operations prior to the date hereof, except to the extent that
such assets are reflected as assets of the Business on the Benchmark
Balance Sheet and are owned or held by Seller or its Subsidiaries (other
than an Acquired Company) as of the Closing;
(j) all refunds or credits of or against any Excluded Taxes and any
interest or penalty rebate with respect to such refunds or credits (except
to the extent that such Tax items are reflected as an asset in the Final
Closing Date Working Capital); and
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(k) except as set forth on Schedule 1.3(k), all intercompany
receivables, payables, loans and guarantees (i) between Seller or any of
its wholly owned Subsidiaries (other than an Acquired Company), on the one
hand, and Seller or any of its wholly owned Subsidiaries (other than an
Acquired Company), on the other hand, or (ii) required to be settled in
accordance with Section 6.6.
Section 1.4 Assumed Liabilities. Simultaneously with the Closing, on
the terms and subject to the conditions set forth herein, Purchaser shall assume
and be liable for, and shall pay, perform and discharge when due, all
obligations and Liabilities of Seller and its Subsidiaries (other than the
Acquired Companies), whether occurring or accruing before, on or after the
Closing Date, whether known or unknown, fixed or contingent, asserted or
unasserted, and not satisfied or extinguished as of the Closing Date, primarily
relating to, primarily arising out of or primarily resulting from the Business
(collectively, and excluding the Excluded Liabilities, the "ASSUMED
LIABILITIES"), including, by way of example and not limitation, all of the
following obligations and Liabilities of Seller and its Subsidiaries (other than
the Acquired Companies):
(a) (i) except as set forth in Section 10.1 and Section 1.5, all
Liabilities relating to, arising out or resulting from the employment of
the Transferred Employees and their dependents and beneficiaries,
including accrued obligations for salaries, wages, accrued vacation,
personal days and floating holidays and sick pay of the Transferred
Employees and Liabilities relating to, arising out of or resulting from
any collective bargaining agreement covering the Transferred Employees;
and (ii) the Liabilities and obligations of Seller for severance payments
under the Retention Agreements;
(b) accounts and trade payables primarily relating to, primarily
arising out of or primarily resulting from the Business;
(c) Liabilities for utility, telephone and other services and goods
primarily relating to, primarily arising out of or primarily resulting
from the Business;
(d) all Liabilities arising from commitments (in the form of
accepted purchase orders, or otherwise) to sell, distribute, manufacture
or market products, or outstanding quotations, proposals or bids,
primarily relating to, primarily arising out of or primarily resulting
from the Business;
(e) all Liabilities arising from commitments (in the form of issued
purchase orders, or otherwise) or outstanding quotations, proposals or
bids, to purchase or acquire raw materials, components, supplies or
services primarily relating to, primarily arising out of or primarily
resulting from the Business;
(f) all Liabilities under Business Contracts;
(g) all Liabilities with respect to any return, rebate, recall,
warranty or similar liabilities primarily relating to, primarily arising
out of or primarily resulting from the Business;
(h) other than Liabilities arising from or relating to any actual or
alleged human exposure to asbestos or asbestos-containing materials
manufactured, serviced, or
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sold by Seller or its Subsidiaries (other than an Acquired Company) prior
to Closing, all Liabilities for death, personal injury, advertising
injury, other injury to persons or property damage occurring after the
Closing primarily relating to, primarily resulting from, primarily caused
by or primarily arising out of, directly or indirectly, use of or exposure
to any of the products (or any part or component) designed, manufactured,
serviced or sold, or services performed, by Seller or its Subsidiaries
(other than an Acquired Company), primarily relating to, primarily arising
out of or primarily resulting from the Business, including any such
Liabilities for negligence, strict liability, design or manufacturing
defect, conspiracy, failure to warn, or breach of express or implied
warranties or merchantability or fitness for any purpose or use;
(i) other than Liabilities arising from or relating to any actual or
alleged human exposure occurring prior to the Closing to asbestos or
asbestos-containing materials (such Liabilities being governed by Section
1.5), (i) all Liabilities primarily relating to, primarily arising out of
or primarily resulting from the Business as a result of, directly or
indirectly, violations of Environmental Laws or Releases or threatened
Releases of Hazardous Materials and existing or occurring at the Owned
Real Property or the Leased Real Property, and (ii) all Liabilities
relating to any actual or alleged human exposure occurring after the
Closing to asbestos or asbestos-containing materials existing or occurring
at the Owned Real Property or the Leased Real Property;
(j) all Liabilities under the intercompany receivables, payables,
loans and investments set forth on Schedule 1.5(j); and
(k) all Taxes imposed on or payable with respect to the Acquired
Companies or the Business for which Purchaser is responsible pursuant to
Section 14.1(b).
Section 1.5 Excluded Liabilities. Notwithstanding the provisions of
Section 1.4, it is expressly understood and agreed that there shall be excluded
from the liabilities and obligations being assumed by Purchaser pursuant to
Section 1.4 all Liabilities of Seller or any of its Subsidiaries (other than an
Acquired Company) that are not Assumed Liabilities and the following liabilities
and obligations of Seller or any of its Subsidiaries (other than an Acquired
Company) (collectively, the "EXCLUDED LIABILITIES"):
(a) the debt and other Liabilities, including any interest or other
amounts in connection therewith, listed on Schedule 1.5(a) and all
indebtedness for borrowed money, including any interest or other amounts
in connection therewith;
(b) all Liabilities for which Seller or any of its Subsidiaries
(other than an Acquired Company) is expressly made responsible pursuant
hereto or the Transition Agreements;
(c) all Liabilities for death, personal injury, advertising injury,
other injury to persons or property damage occurring prior to the Closing
relating to, resulting from, caused by or arising out of, directly or
indirectly, use of or exposure to any of the products (or any part or
component) designed, manufactured, serviced or sold, or services
performed, by Seller or its Subsidiaries (other than an Acquired Company),
including any
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such Liabilities for negligence, strict liability, design or manufacturing
defect, conspiracy, failure to warn, or breach of express or implied
warranties or merchantability or fitness for any purpose or use;
(d) all Liabilities arising from or relating to any actual or
alleged human exposure to asbestos or asbestos-containing materials in any
of the products (or any part or component) manufactured, serviced or sold,
or services performed, by Seller or its Subsidiaries (other than an
Acquired Company) prior to the Closing, including any such Liabilities for
negligence, strict liability, design or manufacturing defect, conspiracy,
failure to warn, or breach of express or implied warranties or
merchantability or fitness for any purpose or use;
(e) all Liabilities to the extent arising out of Legal Proceedings
commenced prior to the Closing relating to, arising out of or resulting
from the Business or an Acquired Company ("EXISTING LITIGATION");
(f) all Liabilities relating to, arising out of or resulting from
any actual or alleged human exposure occurring prior to the Closing to
asbestos or asbestos-containing materials at any property or facility
currently or formerly owned, leased, operated or used in connection with
the Business, including the Owned Real Property and the Leased Real
Property;
(g) (i) all Liabilities with respect to the real property currently
or formerly owned, leased or used by Seller or any of its Subsidiaries
other than the Owned Real Property or the Leased Real Property, including
all Liabilities under or relating to Environmental Laws to the extent
relating to any property, facility or location not included among the
Owned Real Property or the Leased Real Property, and (ii) any such
Liabilities relating to the disposal, prior to the Closing Date, of
Hazardous Materials generated or otherwise originating at the Owned Real
Property or the Leased Real Property at or to a location other than the
Owned Real Property or the Leased Real Property;
(h) any indebtedness or other Liabilities resulting from Seller's
accounts receivable securitization program;
(i) all Excluded Taxes (except to the extent that such Excluded
Taxes are reflected as a liability in the Final Closing Date Working
Capital);
(j) except as set forth on Schedule 1.5(j), all intercompany
receivables, payables, loans and guarantees (i) between Seller or any of
its Subsidiaries (other than an Acquired Company), on the one hand, and
Seller or any of its Subsidiaries (other than an Acquired Company), on the
other hand, or (ii) required to be settled in accordance with Section 6.6;
(k) fees, expenses, indemnification obligations and other
Liabilities owed by Seller or its Subsidiaries (other than an Acquired
Company) to their respective advisors, including Credit Suisse First
Boston LLC and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and their respective Affiliates, on
account of the acquisition advisory services provided to Seller and its
Subsidiaries by such advisors, including Credit Suisse First Boston LLC,
▇▇▇▇▇▇▇, Sachs &
7
Co. or their respective Affiliates, in connection with the transactions
contemplated hereby; and
(l) except as set forth in Section 10.1, (i) any Liability under or
relating to any Seller Employee Benefit Plan, whether or not such
liability or obligation arises prior to, on or after the Closing Date,
(ii) any other Liability relating to the employment or termination of
employment of any Business Employee who is not a Transferred Employee
arising from or related to the operation of the Business on, prior to or
after the Closing or the transactions contemplated by this Agreement
(including but not limited to, any severance), (iii) any obligation for
retention payments or other benefits (other than severance benefits) under
the Retention Agreements or (iv) any liability relating to any severance
benefits payable to any Business Employees as a result of any transactions
contemplated by this Agreement.
ARTICLE II
CONSIDERATION
Section 2.1 Amount and Form of Consideration. The consideration to
be paid by Purchaser to Seller and its Subsidiaries (other than an Acquired
Company) in full consideration of the Purchased Shares and the Purchased Assets
shall consist of:
(a) U.S.$1,105 million (the "INITIAL CASH CONSIDERATION") in cash,
subject to adjustment as set forth in Section 2.3 (the Initial Cash
Consideration, as so adjusted, the "FINAL CASH CONSIDERATION"), to be paid
in the manner and at the time set forth in Sections 2.2 and 2.3; and
(b) the assumption by Purchaser on and as of the Closing Date of the
Assumed Liabilities.
Section 2.2 Payment of Cash Consideration. At the Closing, the
Closing Date Cash Consideration, shall be paid by wire transfer of immediately
available funds in U.S. Dollars to an account or accounts designated by Seller,
such designation to be made in writing at least three Business Days prior to the
Closing Date.
Section 2.3 Purchase Price Adjustment. (a) At least three Business
Days prior to the Closing Date, Seller shall prepare, or cause to be prepared,
and deliver to Purchaser a good-faith estimated statement of Working Capital of
the Business as of the opening of business on the Closing Date (the "ESTIMATED
CLOSING DATE WORKING CAPITAL STATEMENT"), and a certificate setting forth a
good-faith estimate of Working Capital as of the opening of business on the
Closing Date (the "ESTIMATED CLOSING DATE WORKING CAPITAL") and a good-faith
estimate of the Closing Date Cash (the "ESTIMATED CLOSING DATE CASH"). The
Estimated Closing Date Working Capital Statement shall be prepared in accordance
with GAAP, as modified by the accounting policies specified on Schedule 2.3(a)
(the "SPECIFIED ACCOUNTING POLICIES"), consistent with the accounting
principles, procedures, policies and methods that were employed in preparing the
Benchmark Balance Sheet. The Initial Cash Consideration shall be (i)(A)
increased dollar for dollar to the extent the Estimated Closing Date Working
Capital exceeds the Target Working
8
Capital, or (B) decreased dollar for dollar to the extent the Estimated Closing
Date Working Capital is less than the Target Working Capital and (ii)(A)
increased dollar for dollar to the extent that the Estimated Closing Date Cash
is greater than U.S.$0 or (B) decreased dollar for dollar to the extent that the
Estimated Closing Date Cash is less than U.S.$0 (the Initial Cash Consideration,
as adjusted pursuant to this sentence, the "CLOSING DATE CASH CONSIDERATION").
(b) Within 70 calendar days following the Closing Date, Seller shall
prepare, or cause to be prepared, and deliver to Purchaser a statement of
Working Capital of the Business as of the opening of business on the Closing
Date (as such may be adjusted following resolution of disputes in accordance
with Section 2.3(d), the "CLOSING DATE WORKING CAPITAL STATEMENT"), and a
certificate setting forth a calculation of Working Capital as of the opening of
business on the Closing Date ("CLOSING DATE WORKING CAPITAL") and a calculation
of Closing Date Cash. The Closing Date Working Capital Statement shall be
prepared in accordance with GAAP, as modified by the Specified Accounting
Policies, using the same accounting principles, procedures, policies and methods
that were employed in preparing the Benchmark Balance Sheet.
(c) During the preparation of the Closing Date Working Capital
Statement and the calculation of Closing Date Working Capital and Closing Date
Cash (the "CLOSING DATE FINANCIAL DATA"), and the period of any dispute within
the contemplation of this Section 2.3, Purchaser shall, and shall cause the
Acquired Companies to: (i) provide Seller and its authorized representatives
with full access to all relevant books, records, facilities and employees of
Purchaser and the Acquired Companies to the extent reasonably necessary to
prepare the Closing Date Financial Data; and (ii) cooperate fully with Seller
and its authorized representatives, including by providing on a timely basis all
information to the extent necessary or useful in preparing the Closing Date
Financial Data.
(d)After receipt of the Closing Date Working Capital Statement,
Purchaser shall have 60 calendar days to review the Closing Date Financial Data,
together with the workpapers used in the preparation thereof. During the review
of the Closing Date Financial Data, and the period of any dispute within the
contemplation of this Section 2.3, Seller shall, and shall cause its
Subsidiaries to: (i) provide Purchaser and its authorized representatives with
full access to all relevant books, records, facilities and employees of Seller
and its Subsidiaries to the extent reasonably necessary to complete their review
of the Closing Date Financial Data; and (ii) cooperate fully with Purchaser and
its authorized representatives, including by providing on a timely basis all
information to the extent reasonably necessary or useful in reviewing the
Closing Date Financial Data. Purchaser may dispute items reflected in the
calculation of Closing Date Working Capital and Closing Date Cash only on the
basis that such amounts (i) were not determined in conformity with GAAP, as
modified by the Specified Accounting Policies applied by Seller on a consistent
basis or (ii) contain arithmetic error. Unless Purchaser delivers written notice
to Seller on or prior to the 60th calendar day after Purchaser's receipt of the
Closing Date Working Capital Statement specifying in reasonable detail the
amount, nature and basis of all disputed items, Purchaser shall be deemed to
have accepted and agreed to the calculation of Closing Date Working Capital and
Closing Date Cash. If Purchaser so notifies Seller of its objection to the
calculation of Closing Date Working Capital and Closing Date Cash, Purchaser and
Seller shall, within 30 calendar days following such notice (the "RESOLUTION
PERIOD"), attempt to resolve their differences and any resolution by them as to
any disputed amounts shall be final, binding and conclusive.
9
(e) If, at the conclusion of the Resolution Period, any amounts
remain in dispute with respect to either Closing Date Working Capital or Closing
Date Cash, then all amounts remaining in dispute shall be submitted to KPMG (the
"NEUTRAL AUDITORS"). Each party agrees to execute, if requested by the Neutral
Auditors, a reasonable engagement letter, including customary indemnities in
favor of the Neutral Auditors. All fees and expenses relating to the work, if
any, to be performed by the Neutral Auditors shall be borne pro rata as between
Seller, on the one hand, and Purchaser, on the other, in proportion to the
allocation of the dollar value of the amounts remaining in dispute between
Seller and Purchaser made by the Neutral Auditors such that the prevailing party
pays the lesser proportion of the fees and expenses. The Neutral Auditors shall
act as an arbitrator to determine, based solely on the provisions of this
Section 2.3 and the presentations by Seller and Purchaser, and not by
independent review, only those issues still in dispute and only as to whether
such amounts were arrived at in conformity with GAAP, as modified by the
Specified Accounting Policies, and Section 2.3(b). Seller and Purchaser agree
that (i) they shall request the Neutral Auditors to make their determination
within 30 calendar days of their selection, in a written statement delivered to
Seller and Purchaser and (ii) such determination shall be final, binding and
conclusive. The term "FINAL CLOSING DATE WORKING CAPITAL" shall mean the
definitive Closing Date Working Capital and the term "FINAL CLOSING DATE CASH"
shall mean the definitive Closing Date Cash, respectively, agreed to (or deemed
to be agreed to) by Purchaser and Seller in accordance with the terms of Section
2.3(d) or the definitive Closing Date Financial Data resulting from the
determinations made by the Neutral Auditors in accordance with this Section
2.3(e) (in addition to those items theretofore agreed to by Seller and
Purchaser).
(f)The Closing Date Cash Consideration shall be (i)(A) increased
dollar for dollar to the extent the Final Closing Date Working Capital exceeds
the Estimated Closing Date Working Capital, or (B) decreased dollar for dollar
to the extent the Final Closing Date Working Capital is less than the Estimated
Closing Date Working Capital and (ii)(A) increased dollar for dollar to the
extent that the Final Closing Date Cash is greater than the Estimated Closing
Date Cash or (B) decreased dollar for dollar to the extent that the Final
Closing Date Cash is less than the Estimated Closing Date Cash. Any adjustments
to the Closing Date Cash Consideration made pursuant to this Section 2.3(f)
shall be paid by wire transfer of immediately available funds (together with
interest thereon at the Applicable Rate from and including the Closing Date to,
but excluding, the date of such payment) to the account or accounts specified by
Seller, if Seller is owed payment, or to the account or accounts specified by
Purchaser, if Purchaser is owed payment, within five Business Days after the
Final Closing Date Working Capital and Final Closing Date Cash are agreed to by
Purchaser and Seller or any remaining disputed items are ultimately determined
by the Neutral Auditors.
(g)The parties agree to work together, between the date hereof and
the Closing, to prepare in good faith an allocation of $5,000,000 of the
$5,126,419 described in the definition of "Closing Date Cash" to each of the
non-U.S. Acquired Companies based on such non-U.S. Acquired Companies' relative
working capital needs.
Section 2.4 Allocation of Consideration. Seller and Purchaser agree
to allocate the Initial Cash Consideration among the Purchased Shares and the
Purchased Assets in the manner set forth on Schedule 2.4. Within 60 calendar
days following the determination of the Final Consideration, Purchaser and
Seller shall attempt in good faith to agree upon the allocation of the
10
difference between the Initial Cash Consideration and the Final Consideration
among the Purchased Shares and the Purchased Assets. The allocation of this
amount shall take into account (i) the item or items to which it is attributable
and (ii) the notes on Schedule 2.4, and shall, to the extent such allocation is
agreed by Purchaser and Seller, be reflected on a revised Schedule 2.4. In the
event that Purchaser and Seller are unable to reach an agreement within such 60
calendar day period, the allocation of any disputed item or items shall be
resolved within the next 30 calendar days by an independent accounting firm or
valuation expert that is mutually acceptable to both parties and whose fees
shall be borne equally by Purchaser and Seller. Such determination by the
accounting firm or valuation expert shall be binding on the parties without
further adjustment and shall be reflected on a revised Schedule 2.4. Except as
otherwise required pursuant to a "determination" under Section 1313(a) of the
Code (or any comparable provision of state, local or foreign Law), Purchaser and
Seller agree to act in accordance with the allocations contained in Schedule
2.4, as revised in accordance with this Section, for all Tax purposes and that
neither of them will (or will permit any of its Affiliates to) take any position
inconsistent therewith in any Tax Returns or similar filings (including IRS Form
8594 or any similar form required to be filed under state, local or foreign
Law), any refund claim, litigation, or otherwise. Purchaser and Seller each
agree to provide the other party with any additional information reasonably
required to complete IRS Form 8594 (or any similar form required to be filed
under state, local or foreign Law) and with completed copies of such forms.
ARTICLE III
THE CLOSING
Section 3.1 Closing Date. Except as hereinafter provided, the
closing of the transactions contemplated hereunder (the "CLOSING") shall take
place at the offices of Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m. (local time) on (i) the third Business Day
following the date on which the last of the conditions set forth in Articles
VIII and IX have been satisfied (other than Sections 8.5, 8.6 and 9.5 and those
conditions that by their terms are not expected to be satisfied until the
Closing Date) or, in the case of Article VIII, waived by Purchaser, or, in the
case of Article IX, waived by Seller, or (ii) at such other place and at such
other time and date as may be mutually agreed upon by Purchaser and Seller (such
date and time being referred to herein as the "CLOSING DATE").
Section 3.2 Deliveries by Seller to Purchaser. At the Closing,
Seller shall deliver, or shall cause to be delivered, to Purchaser the
following:
(a) stock certificates or appropriate certificates of ownership, as
applicable, representing all of the Purchased Shares and all of the equity
interests of each Acquired Company (other than the Purchased Companies)
held by another Acquired Company (other than those that are in book-entry
form or not certificated), in each case accompanied by stock powers duly
executed in blank or other duly executed instruments of transfer and
requisite transfer tax stamps, if any, as may be necessary to effect the
transactions contemplated in Section 1.1;
(b) one or more duly executed bills of sale, substantially in the
form of Exhibit B, or local transfer agreements as may be necessary or
desirable under applicable
11
Law, or comparable instruments of transfer transferring to Purchaser all
of the Purchased Assets, duly executed by Seller;
(c) special warranty deeds, or comparable instruments of transfer
and assignment in recordable form (collectively, the "TRANSFER DEEDS"),
substantially in the form of Exhibit C and which shall include any
modifications as may be required by the applicable local jurisdiction,
with respect to the Owned Real Properties owned by Seller or any of its
Subsidiaries (other than Acquired Companies);
(d) duly executed instruments of assignment of or licenses to assign
the Real Property Leases (collectively, the "ASSIGNMENTS OF LEASES") to
which Seller or any of its Subsidiaries (other than Acquired Companies) is
a party, substantially in the form of Exhibit D, subject to Sections
6.3(b) and 10.3(b);
(e) duly executed instruments of assignment or transfer of the
Purchased Intellectual Property, substantially in the form of Exhibit E or
local assignment agreements as may be necessary or desirable under
applicable Law;
(f) the certificates referred to in Section 8.5 signed by a duly
authorized officer of Seller;
(g) the resignations or evidence of removal of the officers, as
corporate officers, and directors of the Acquired Companies set forth on
Schedule 3.2(g) to the extent requested by Purchaser;
(h) the Transition Agreements, duly executed by Seller;
(i) a certificate of non-foreign status meeting the requirements of
Treasury Regulations Section 1.1445-2(b)(2) from Seller and each
Subsidiary of Seller that transfers (A) Purchased Shares of an entity
treated as a domestic corporation for United States federal income tax
purposes or (B) Purchased Assets that are treated as "United States real
property interests" within the meaning of Section 897(c) of the Code, in
each case, pursuant to this Agreement;
(j) a duly executed assignment and assumption agreement or other
comparable instrument of assignment and assumption, substantially in the
form of Exhibit F, evidencing assumption of the Assumed Liabilities and
all other instruments or documents as shall be necessary in the reasonable
judgment of Purchaser to evidence the assignment by Seller or its
Subsidiaries of the Purchased Assets and the assumption by Purchaser or
its Subsidiaries of the Assumed Liabilities, subject to Section 6.3(b) and
10.3(b);
(k) a receipt, duly executed by Seller, acknowledging on behalf of
Seller and its Subsidiaries, payment by Purchaser of the Closing Date Cash
Consideration pursuant to Section 2.2;
(l) a receipt, duly executed by Seller, acknowledging, on behalf of
Seller and each of its Subsidiaries, settlement of all intercompany
receivables, payables, loans and guarantees then existing between Seller
or any of its Subsidiaries (other than any Ac-
12
quired Company), on the one hand, and the Acquired Companies, on the other
hand, pursuant to Section 6.6;
(m) to the extent obtained at or prior to Closing, consents to
transfer the Transferred Permits and Business Contracts to Purchaser;
(n) all minute books, stock record books (or similar registries) and
corporate records and seals of each Acquired Company by Seller or its
Subsidiaries (other than the Acquired Companies); provided that such
materials may be delivered to a mutually agreeable location other than the
Closing; and
(o) such other documents and instruments as Purchaser and Seller
shall mutually agree to be reasonably necessary to consummate the
transactions described herein.
Section 3.3 Deliveries by Purchaser to Seller. At the Closing,
Purchaser shall deliver to Seller the following:
(a) the Closing Date Cash Consideration (together with any
additional amounts required to be paid pursuant to Section 14.9(b)) by
wire transfer of immediately available funds in the manner provided in
Section 2.2;
(b) a duly executed assignment and assumption agreement or other
comparable instrument of assignment and assumption, substantially in the
form of Exhibit F, evidencing assumption of the Assumed Liabilities and
all other instruments or documents as shall be necessary in the reasonable
judgment of Seller to evidence the assignment by Seller of the Purchased
Assets and the assumption by Purchaser or its Subsidiaries of the Assumed
Liabilities, subject to Sections 6.3(b) and 10.3(b);
(c) the certificate referred to in Section 9.5 signed by a duly
authorized officer of Purchaser;
(d) the Transition Agreements, duly executed by Purchaser;
(e) the appointment of the persons selected by Purchaser to fill the
corporate officer and director positions of the Acquired Companies;
(f) a receipt, duly executed by Purchaser, acknowledging on behalf
of Purchaser, the sale, assignment, transfer, conveyance and delivery of
the Purchased Shares and the Purchased Assets by Seller and its
Subsidiaries pursuant to the terms of Sections 1.1 and 1.2; and
(g) such other documents and instruments as Purchaser and Seller
shall mutually agree to be reasonably necessary to consummate the
transactions described herein.
Section 3.4 Proceedings at Closing. All acts and proceedings to be
taken and all documents to be executed and delivered by the parties at the
Closing shall be deemed to have been taken and executed simultaneously, and,
except as permitted hereunder, no acts or proceed-
13
ings shall be deemed taken nor any documents executed or delivered until all
have been taken, executed and delivered.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Purchaser to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller hereby represents and
warrants to Purchaser that, except as set forth in the applicable corresponding
section of the Disclosure Schedule dated as of the date hereof and delivered by
Seller to Purchaser (the "SELLER DISCLOSURE SCHEDULE"):
Section 4.1 Organization and Good Standing. Each of Seller, the
Seller Subs, the Acquired Companies and the Transferred JVs is an entity duly
organized or formed, validly existing and (to the extent that the concept of
good standing exists in the applicable jurisdiction with respect to such entity)
in good standing under the laws of the jurisdiction of its organization or
formation, and each of the Acquired Companies, the Transferred JVs and, with
respect to the Business, Seller and the Seller Subs has all requisite corporate
power and authority to own or lease and operate its properties and to carry on,
in all material respects, the Business as now being conducted. Each of Seller,
the Seller Subs, the Acquired Companies and the Transferred JVs is duly
qualified, authorized or licensed to conduct its business as a foreign
corporation in, and, if applicable, is in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership, lease or
operation of its properties requires such qualification, authorization or
license, except where the failure to be so qualified, authorized or licensed or
to be in good standing would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect. Section 4.1 of the Seller
Disclosure Schedule sets forth a true and complete list, as of the date hereof,
of all jurisdictions in which each of the Acquired Companies, the Transferred
JVs and, with respect to the Business, each of Seller and its other Subsidiaries
are qualified or licensed to do business as a foreign corporation. Seller has
made available to Purchaser true and correct copies of the Acquired Companies
and the Transferred JVs' respective certificates of incorporation, bylaws and
similar organizational documents, as in effect as of the date hereof.
Section 4.2 Capital Structure of Purchased Companies. The authorized
capital stock of each of the Purchased Entities, the number of shares of such
capital stock that are issued and outstanding and the name, jurisdiction of
organization and record owner of the capital stock of each of the Purchased
Entities are set forth on Section 4.2 of the Seller Disclosure Schedule. The
authorized capital stock of each of the Purchased Ventures, the number of shares
of such capital stock that are issued and outstanding and, as of the date
hereof, the name, jurisdiction of organization and record owner of the equity
interests in each of the Purchased Ventures are set forth on Section 4.2 of the
Seller Disclosure Schedule. The Purchased Shares are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with (and
since such issuance, have not been transferred except in compliance with) all
applicable securities Laws. The Purchased Shares are not subject to any
preemptive rights, rights of first refusal or similar rights of any Person, and
there are no voting trusts, proxies or other agreements with respect to the
voting of the Purchased Shares, other than as set forth in any certificate or
articles of incorporation, bylaws or similar organizational documents of the
Purchased Companies. Ex-
14
cept as set forth on Section 4.2 of the Seller Disclosure Schedule, the
Purchased Companies do not have any other capital stock or equity securities
issued or outstanding other than the Purchased Shares, and neither Seller nor
any Purchased Company has issued any outstanding right or security or is party
to any existing agreement that requires Seller or any of the Purchased Companies
to issue or sell any shares of capital stock of the Purchased Companies to any
Person (including any warrant, option, call, preemptive right, convertible debt
obligation, subscription for stock or securities convertible into stock of such
companies or any other similar right, security, instrument or agreement), other
than as set forth in any certificate or articles of incorporation, bylaws or
similar organizational documents of the Purchased Companies. Except as set forth
in Section 4.2 of the Seller Disclosure Schedule, Seller, directly or indirectly
through one or more wholly owned Subsidiaries of Seller, beneficially owns and
has good and valid title to all of the Purchased Shares, free and clear of all
Liens other than as set forth in any certificate or articles of incorporation,
bylaws or similar organizational documents of the Purchased Companies.
Section 4.3 Subsidiaries and Transferred JVs. (a) Section 4.3(a) of
the Seller Disclosure Schedule sets forth each Subsidiary of Seller (other than
any Acquired Company) that, as of the date hereof, owns a Purchased Asset or a
Purchased Share, is liable for an Assumed Liability or is otherwise engaged in
the Business (such Subsidiaries and any Subsidiary of Seller (other than an
Acquired Company) that, immediately prior to the Closing, owns a Purchased Asset
or a Purchased Share, is liable for an Assumed Liability or is otherwise engaged
in the Business, the "SELLER SUBS").
(b)Except as set forth on Section 4.3(b) of the Seller Disclosure
Schedule, all of the outstanding shares of capital stock or equity securities of
the Acquired Companies other than the Purchased Companies (collectively, the
"SUBSIDIARY EQUITY SECURITIES") are owned directly or indirectly by the
Purchased Companies. Other than as set forth in any certificate or articles of
incorporation, bylaws or similar organizational documents of the Acquired
Companies, (i) the Subsidiary Equity Securities are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with (and
since such issuance, have not been transferred except in compliance with) all
applicable securities Laws and any preemptive rights, rights of first refusal or
similar rights of any Person; (ii) no Acquired Company has issued any
outstanding right or security or is a party to any existing agreement that
requires any such Acquired Company to issue or sell any Subsidiary Equity
Securities to any Person (including any warrant, option, call, preemptive right,
convertible debt obligation, subscription for stock or securities convertible
into Subsidiary Equity Securities or any other similar right, security,
instrument or agreement); (iii) there are no voting trusts, proxies or other
agreements with respect to the voting of the Subsidiary Equity Securities; and
(iv) the Purchased Companies (or a wholly owned Acquired Company) has good and
valid title to the Subsidiary Equity Securities, free and clear of all Liens.
(c) To the Knowledge of Seller, Section 4.3(c) of the Seller
Disclosure Schedule sets forth the holders of record of all of the outstanding
shares of capital stock or equity securities of each Transferred JV
(collectively, the "JV EQUITY SECURITIES"). Except as set forth on Section
4.3(c) of the Seller Disclosure Schedule, (i) the JV Equity Securities set forth
on Section 4.3(c) of the Seller Disclosure Schedule as being owned by Seller or
its Subsidiaries are duly authorized, validly issued, fully paid and
nonassessable, have been issued in compliance with
15
(and since such issuance, have not been transferred except in compliance with)
all applicable securities Laws and any preemptive rights, rights of first
refusal or similar rights of any Person; (ii) no Transferred JV has issued any
outstanding right or security or is a party to any existing agreement that
requires such Transferred JV to issue or sell any JV Equity Security to any
Person (including any warrant, option, call, preemptive right, convertible debt
obligation, subscription for stock or securities convertible into JV Equity
Securities or any other similar right, security, instrument or agreement), other
than as set forth in any certificate or articles of incorporation, bylaws or
similar organizational documents of a Transferred JV; (iii) there are no voting
trusts, proxies or other agreements with respect to the voting of the JV Equity
Securities set forth on Section 4.3(c) of the Seller Disclosure Schedule as
being owned by Seller or its Subsidiaries, other than as set forth in any
certificate or articles of incorporation, bylaws or similar organizational
documents of a Transferred JV; and (iv) Seller and its Subsidiaries set forth on
Section 4.3(c) of the Seller Disclosure Schedule have good and valid title to
the JV Equity Securities set forth on Section 4.3(c) of the Seller Disclosure
Schedule as being owned by Seller or its Subsidiaries, free and clear of all
Liens, other than as set forth in any certificate or articles of incorporation,
bylaws or similar organizational documents of a Transferred JV.
Section 4.4 Authorization of Agreement. Each of Seller and its
Subsidiaries has all requisite corporate power and authority to execute and
deliver (or cause to be executed and delivered), as applicable, this Agreement
and each other agreement, document, instrument or certificate contemplated
hereby to be executed or delivered by Seller or its Subsidiaries in connection
herewith and to consummate the transactions contemplated hereby (all such other
agreements, documents, instruments and certificates required to be executed or
delivered by Seller or any of its Subsidiaries being hereinafter referred to,
collectively, as the "SELLER DOCUMENTS"), and to perform (or cause to be
performed) fully the obligations of Seller and its Subsidiaries, as applicable,
hereunder and thereunder. The execution, delivery and performance by Seller of
this Agreement and by Seller or its Subsidiaries of each of the Seller Documents
and the consummation of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action on the part of Seller or
such Subsidiaries, as applicable, and no other corporate proceeding on the part
of Seller or any Subsidiary is necessary to authorize the execution, delivery or
performance hereof or thereof or the consummation of the transactions
contemplated hereby or thereby. This Agreement has been, and each of the Seller
Documents will be, when delivered to Purchaser, duly executed and delivered by
Seller and its Subsidiaries, as applicable, and (assuming the due authorization,
execution and delivery by the other parties hereto and thereto) this Agreement
constitutes, and each of the Seller Documents when so executed and delivered
will constitute valid and legally binding obligations of Seller and its
Subsidiaries, as applicable, enforceable against each in accordance with its
terms.
Section 4.5 No Conflicts; Consents of Third Parties. (a) Except as
set forth in Section 4.5(a) of the Seller Disclosure Schedule, none of the
execution and delivery by Seller of this Agreement and by Seller or its
Subsidiaries of the Seller Documents, the consummation of the transactions
contemplated hereby or thereby or compliance by Seller, its Subsidiaries or any
Acquired Company or Transferred JV with any of the provisions hereof or thereof
will (i) conflict with, or result in the breach of, any provision of the
certificate or articles of incorporation, bylaws or similar organizational
documents of Seller, its Subsidiaries or any Acquired Company; (ii) conflict
with, violate, result in the breach or termination of, or constitute (with or
without notice or lapse of time or both) a default, give rise to any right of
consent, cancellation, termination
16
or acceleration or right to increase the obligations or otherwise modify the
terms under, or result in the creation of any Lien on, the Purchased Assets or
the assets of the Acquired Companies, under any indenture, mortgage, loan,
agreement, Contract, lease, license, instrument or other arrangement to which
any Acquired Company is a party or to which any of Seller and its Subsidiaries
is a party with respect to the Business, except in the case of this clause (ii)
as would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect or a material adverse effect on Seller's ability to
perform its obligations hereunder; or (iii) conflict with in any material
respect or constitute a material violation of any material Law applicable to
Seller, its Subsidiaries or any Acquired Company, except in the case of this
clause (iii) as would not reasonably be expected to, individually or in the
aggregate, have a material adverse effect on Seller's ability to perform its
obligations hereunder.
(b) Except as set forth on Section 4.5(b) of the Seller Disclosure
Schedule, no consent, waiver, approval, Order, Permit or authorization of, or
declaration or filing with, or notification or report to, any Person or
Governmental Body is required to be obtained or made by Seller, its Subsidiaries
or any Acquired Company in connection with the execution, delivery and
performance of this Agreement or the Seller Documents, the consummation of the
transactions contemplated hereby and thereby or the compliance by Seller, its
Subsidiaries or any Acquired Company with any of the provisions hereof or
thereof, except for (i) compliance with the applicable requirements of (x) the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 and the rules and
regulations promulgated thereunder (the "HSR ACT") or (y) Council Regulation
(EEC) No. 4064/89 of the Commission of the European Communities (the "EC
COMPETITION REGULATION"), if necessary, and (ii) other than those relating to
the HSR Act and EC Competition Regulation, such consents, waivers, approvals,
Orders, Permits or authorizations of, or declarations or filings with, or
notifications to, any Person or Governmental Body the failure of which to be
received or made would not reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect or a material adverse effect on
Seller's ability to perform its obligations hereunder.
Section 4.6 Financial Statements. (a) Seller has made available to
Purchaser true and correct copies of the audited combined balance sheet of the
Business (including the Acquired Companies), as of December 31, 2003 and
December 31, 2002, and the audited combined statement of income and combined
statements of cash flows of the Business (including the Acquired Companies) for
the fiscal years ended December 31, 2003, December 31, 2002 and December 31,
2001 (collectively, the "FINANCIAL Statements"). Each of the Financial
Statements has been prepared in accordance with GAAP. The Financial Statements
were prepared on the basis of the books and records of the Business (including
the Acquired Companies), in each case as of the date of such Financial
Statements, and present fairly, in all material respects, the financial position
of the Business (including the Acquired Companies) as of the dates thereof and
the results of its operations for each of the periods then ended in conformity
with GAAP.
(b) Seller has made available to Purchaser a true and correct copy
of the unaudited pro forma balance sheet of the Business (including the Acquired
Companies), as of December 31, 2003 (the "BALANCE SHEET DATE" and such balance
sheet being the "BENCHMARK BALANCE SHEET"). The Benchmark Balance Sheet has been
prepared in accordance with GAAP, as modified by the Specified Accounting
Policies. The Benchmark Balance Sheet was prepared on the basis of the books and
records of the Business (including the Acquired Companies) as of the
17
date thereof and presents fairly, in all material respects, the financial
position of the Business (including the Acquired Companies) as of the date
thereof in conformity with GAAP, as modified by the Specified Accounting
Policies.
(c) The Business and the Acquired Companies have no Liabilities or
obligations of any kind, whether absolute, accrued, contingent or otherwise,
except for Liabilities (i) incurred in the ordinary course of business
consistent with past practice since the Benchmark Balance Sheet Date, (ii)
reflected on, accrued or reserved against, in the Benchmark Balance Sheet, (iii)
that, if known, would not be required by GAAP to be reflected or reserved
against on a balance sheet (or in the notes thereto) of the Business and the
Acquired Companies, (iv) as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect or (v) set forth on Section
4.6(c) of the Seller Disclosure Schedule.
(d) The amount set forth on Section 4.6(d)(i) of the Seller
Disclosure Schedule is, in all material respects, the amount included as an
expense of the Business and the Acquired Companies in the audited combined
statement of income included in the Financial Statements for the fiscal year
ended December 31, 2003 with respect to the North American and European shared
services listed on the Schedule to the Transition Services Agreement provided by
Seller to the Business and the Acquired Companies for such fiscal year. The
amount set forth on Section 4.6(d)(ii) of the Seller Disclosure Schedule
represents, in all material respects, the pro forma annualized expense, on a net
basis and based on historical costs, of the South American shared services
listed on the Schedules to the Transition Services Agreement provided by Seller
to the Business and the Acquired Companies for 2004. The aggregate of all
expenses actually incurred for the fiscal year ended December 31, 2003 for the
equivalent South American shared services listed on the Schedules to the
Transition Services Agreement is equal, on a net basis and in all material
respects, to the aggregate of all expenses charged and recorded in the
applicable financial statements for the fiscal year ended December 31, 2003. The
amounts set forth on Section 4.6(d)(iii) of the Seller Disclosure Schedule
represent, in all material respects, the actual amounts charged by Seller to the
Business and the Acquired Companies with respect to the services described in
Section 4.6(d)(iii) of the Seller Disclosure Schedule for the fiscal year ended
December 31, 2003, and which is included as an expense of the Business and the
Acquired Companies in the audited combined statement of income included in the
Financial Statements for the fiscal year ended December 31, 2003. The amount set
forth on Section 4.6(d)(iv) of the Seller Disclosure Schedule for "Group
health/dental (US)" is, in all material respects, the actual amount charged by
unaffiliated third parties to the Seller and passed through to the Business and
the Acquired Companies, and is recorded in the Financial Statements for the
fiscal year ended December 31, 2003. The amount set forth on Section 4.6(d)(iv)
of the Seller Disclosure Schedule for "▇▇▇▇ Global Freight/Logistics" is, in all
material respects, the actual amount recorded in the Financial Statements for
the fiscal year ended December 31, 2003. The components of these charges include
the actual amount charged by unaffiliated third parties to the Seller and passed
through to the Business and the Acquired Companies by DTF Trucking, Inc.,
including contract carriage, logistics services, freight payment fees and
document retention and retrieval fees.
Section 4.7 Material Adverse Changes. (a) Except as contemplated by
this Agreement or as set forth on Section 4.7(a) of the Seller Disclosure
Schedule, since December 31, 2003, (i) the business of the Acquired Companies
and the Business has been conducted in all material respects in the ordinary
course of business consistent with past practice, and (ii) there
18
has not been and does not exist any change or event or effect that, individually
or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect.
(b) Except as contemplated by this Agreement or as set forth on
Section 4.7(b) of the Seller Disclosure Schedule, since the Benchmark Balance
Sheet Date and through the date of this Agreement, there has not occurred any
action, event or failure to act that, if it had occurred after the date of this
Agreement, would have required the consent of Purchaser under clauses (e), (f),
(q) and (s) of Section 6.2.
Section 4.8 Taxes. Except as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect:
(a) all Tax Returns required to be filed by or with respect to the
Acquired Companies or the Business have been timely filed (taking into
account extensions) and all such Tax Returns are complete and accurate;
(b) all Taxes due (whether or not shown on such Tax Returns) or
payable pursuant to any assessments with respect to such Tax Returns have
been or will be timely paid;
(c) there is no action, suit, investigation, audit, claim or
assessment pending, with respect to Taxes of the Acquired Companies or the
Business;
(d) none of the Acquired Companies (or any affiliated group of which
an Acquired Company is a member) has in effect any waiver of any statute
of limitations in respect of Taxes or any extension of time with respect
to a Tax assessment or deficiency;
(e) all amounts required to be withheld or collected for payment by
the Acquired Companies, including from employee salaries, wages and other
compensation, have been collected or withheld and paid to the appropriate
taxing authorities;
(f) (i) no property of the Acquired Companies and none of the
Purchased Assets is "tax exempt use property" within the meaning of
Section 168(h) of the Code and (ii) none of the Acquired Companies is a
party to and none of the Purchased Assets is subject to any lease made
pursuant to Section 168(f)(8) of the Internal Revenue Code of 1954;
(g) none of the Acquired Companies (A) has been a member of an
affiliated group filing a consolidated federal income Tax Return (other
than a group the common parent of which was Seller) or (B) has any
liability for Taxes of any Person (other than Seller or any of its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as transferee or successor, by
contract or otherwise;
(h) the Acquired Companies are not bound by any Tax sharing or Tax
allocation agreement or arrangement that will be effective as of the
Closing Date or that will have further effect for any taxable year (other
than any agreement exclusively between or among the Acquired Companies);
19
(i) none of the Acquired Companies will be required to include any
item of income in, or exclude any item of deduction from, taxable income
for any taxable period (or portion thereof) ending after the Closing Date
(A) as a result of any change in method of accounting for a taxable period
ending on or prior to the Closing Date, (B) pursuant to a "closing
agreement" as described in Section 7121 of the Code (or any corresponding
or similar provision of state, local or foreign income Tax law) executed
on or prior to the Closing Date, (C) as a result of an "intercompany
transaction" consummated prior to the Closing or an "excess loss account"
existing at the Closing as such terms are defined in Treasury Regulations
under Section 1502 of the Code (or any corresponding or similar provision
of state, local or foreign income Tax law), (D) pursuant to an installment
sale or open transaction disposition made prior to the Closing, or (E) as
a result of any prepaid amount received prior to the Closing;
(j) within the last three years, none of the Acquired Companies has
been a "distributing corporation" or a "controlled corporation" in a
distribution that was purported or intended to be governed by Section
355(a) of the Code;
(k) none of the Acquired Companies will, directly or indirectly
(through a transfer of an interest in an entity that is treated as a
corporation or a partnership for United States federal income tax
purposes), sell, assign, transfer or convey any Purchased Assets or
Purchased Shares to Purchaser pursuant to Section 1.2; and
(l) none of the Acquired Companies that is organized under the laws
of Canada has distributed the stock of another Person, or has had its
stock distributed by another Person, in a transaction that was purported
to be governed, in whole or in part, by paragraph 55(3)(a) of the Canadian
Income Tax Act, in either case in anticipation of or as part of a plan
with the transactions contemplated by this Agreement.
Section 4.9 Real Property. Except as set forth on Section 4.9 of the
Seller Disclosure Schedule and except as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect:
(a) Section 4.9(a) of the Seller Disclosure Schedule contains a true
and complete list of all real property (i) owned by Seller or its
Subsidiaries Related to the Business and (ii) owned by any Acquired
Company, and for each such properties, contains a correct street address
and the record owner of such property. Copies of title reports or policies
obtained by Seller with respect to each of the Owned Real Properties have
previously been made available to Purchase to the extent that such reports
and policies are in Seller's possession and control, as applicable.
(b) Section 4.9(b) of the Seller Disclosure Schedule contains a true
and complete list of (i) all real property Related to the Business that
Seller or its Subsidiaries lease, sublease, license or otherwise occupies
(whether as landlord, tenant, subtenant or other occupancy arrangement)
and (ii) all real property that any Acquired Company leases, subleases,
licenses or otherwise occupies (whether as landlord, tenant, subtenant or
other occupancy arrangement) (collectively, the "LEASED REAL PROPERTY"),
and for each Leased Real Property, identifies the street address of such
Leased Real Property. True
20
and complete copies of all agreements pertaining to the Leased Real
Property that have not been terminated or expired as of the date hereof
have been made available to Purchaser.
(c) Seller, its applicable Subsidiary or an Acquired Company has
good and valid title to all Owned Real Property and valid leasehold
estates in all the Leased Real Properties, in each case free and clear of
all Liens except Permitted Exceptions.
(d) None of the Owned Real Properties and the Leased Real Properties
is subject to any lease, sublease, license or other agreement granting to
any other Person any right to the use, occupancy or enjoyment of such
Owned Real Property or Leased Real Property or any part thereof.
(e) Each Real Property Lease is in full force and effect and is
valid and enforceable in accordance with its terms, and there is no
default under any Real Property Lease either by Seller, its Subsidiaries
or any Acquired Company or, to the Knowledge of Seller, by any other party
thereto, and no event has occurred that, with the lapse of time or the
giving of notice or both, would constitute a default by Seller, its
Subsidiaries or any Acquired Company thereunder.
(f) To the Knowledge of Seller, each Owned Real Property and Leased
Real Property complies with all applicable Laws and, since December 31,
2003, no written notice of violation of any Law has been received by
Seller, any of its Subsidiaries or any Acquired Company or has been issued
by any Governmental Body with respect thereto.
(g) To the Knowledge of Seller, (i) Seller, its Subsidiaries or any
Acquired Company have all certificates of occupancy and other Permits of
any Governmental Body necessary for the current use and operation by
Seller, its Subsidiaries or any Acquired Company of each Owned Real
Property and Leased Real Property, (ii) Seller, its Subsidiaries or any
Acquired Company have complied with all applicable conditions of each such
Permit, and (iii) no default or violation by Seller, its Subsidiaries or
any Acquired Company, or event that with the lapse of time or giving of
notice or both would become a default or violation by Seller, its
Subsidiaries or any Acquired Company, has occurred in the due observance
of any such Permit.
(h) There does not exist any actual, pending or, to the Knowledge of
Seller, threatened condemnation or eminent domain proceedings that affect
any Owned Real Property or Leased Real Property, and Seller, its
Subsidiaries or any Acquired Company have not received any written notice
of the intention of any Governmental Body or other Person to take or use
any Owned Real Property or Leased Real Property that is material the
Business.
(i) To the Knowledge of Seller, no portion of any facility,
building, improvement or other structure located on any of the Owned Real
Property or the Leased Real Property has suffered any material damage by
fire or other casualty within the past five years which has not been
substantially repaired or restored.
21
Section 4.10 Tangible Personal Property. Except as would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect:
(a) each lease of personal property (i) included in the Purchased
Assets or to which any Acquired Company is a party requiring lease
payments equal to or exceeding U.S.$100,000 per annum, or (ii) the loss of
which, individually or in the aggregate with other such losses, would
reasonably be expected to have a Material Adverse Effect (collectively,
the "PERSONAL PROPERTY LEASES") is in full force and effect and is valid
and enforceable in accordance with its terms, and there is no default
under any Personal Property Lease either by Seller or its Subsidiaries or,
to the Knowledge of Seller, by any other party thereto, and no event has
occurred that, with the lapse of time or the giving of notice or both,
would constitute a default by Seller or its Subsidiaries thereunder.
(b) Seller, its Subsidiaries or an Acquired Company has good and
valid title to each item of tangible personal property in the Assets
purported to be owned by Seller, its Subsidiaries or an Acquired Company
on the books and records of such Seller, Subsidiaries or Acquired Company,
free and clear of any and all Liens other than Permitted Exceptions.
Section 4.11 Intellectual Property. (a) As of the date hereof, there
is no material Legal Proceeding pending and served or, to the Knowledge of
Seller, pending and not served or threatened against Seller or any of its
Subsidiaries, with respect to the Business, or any Acquired Company (i)
regarding the ownership or scope of any of the Acquired Intellectual Property or
is otherwise adverse to the use, registration, right to use, validity or
enforceability of the Acquired Intellectual Property or (ii) that asserts that
the operations by any Acquired Company or the operations of the Business as
conducted by Seller or any of its Subsidiaries is or was infringing or otherwise
in violation of any Intellectual Property of any other Person. To Seller's
Knowledge, no Person is infringing or otherwise in violation of any of the
Acquired Intellectual Property.
(b) To Seller's Knowledge, no breach or default by Seller, its
Subsidiaries or the Acquired Companies or any other party thereto exists
under any Contract pursuant to which Seller or any of its Subsidiaries
uses Acquired Intellectual Property.
(c) Seller, its Subsidiaries and the Acquired Companies have taken
reasonable steps to protect the material Acquired Intellectual Property.
Section 4.12 Contracts. Section 4.12 of the Seller Disclosure
Schedule sets forth a true, complete and correct list, as of the date hereof, of
each of the following (1) to which any Acquired Company is a party or (2) that
is Related to the Business to which Seller or any of its Subsidiaries (other
than an Acquired Company) is a party (the Contracts set forth in clauses (a)
through (s) below, collectively, the "MATERIAL BUSINESS CONTRACTS"):
(a) any Contract not made in the ordinary course of business;
(b) any Contract or binding commitment for, or setting forth any of
the terms or conditions relating to, the employment or termination of
employment of any officer or
22
employee whose basic annual compensation (excluding bonus or commission)
is in excess of U.S. $150,000;
(c) any severance Contract with any Person that provides for
severance compensation in excess of U.S.$100,000 individually or
U.S.$1,000,000 in the aggregate, including such Contracts (i) to employ or
terminate executive officers or other personnel and other Contracts with
present or former officers, directors or shareholders of any Acquired
Company or any Business Employee or Acquired Company Employee or (ii) that
will result in the payment by, or the creation of any commitment or
obligation (absolute or contingent) to pay any severance, termination,
"golden parachute," or other similar payments to any present or former
personnel resulting from the consummation of the transactions contemplated
by this Agreement, regardless of whether paid during, or following
termination of, employment;
(d) non-competition agreements;
(e) any employee collective bargaining agreement with any labor
union covering any Acquired Company Employee, Business Employee or Former
Acquired Company Employee;
(f) franchise, distributorship, dealer, advertising, manufacturer's
representative or sales agency agreement involving annual payments in
excess of U.S.$100,000;
(g) any Contracts (other than purchase orders) to acquire or sell
goods with respect to the suppliers and customers set forth on Section
4.12(g) of the Seller Disclosure Schedule;
(h) any option, other agreement or right to purchase or otherwise
acquire or sell or otherwise dispose of any interest in real property
involving payments by Seller, its Subsidiaries or the Acquired Companies
in excess of U.S.$250,000;
(i) any commitment to make any capital expenditure or to purchase a
capital asset in excess of U.S.$250,000;
(j) any commitment for the purchase or sale of any of material
portion of its assets other than in the ordinary course of business, or
any capital stock of the Acquired Companies or any capital stock of Seller
or Seller Subs;
(k) (i) any indenture, note, loan or credit agreement or other
Contract relating to indebtedness or to the direct or indirect guarantee
or assumption of the obligations of any other Person for borrowed money,
other than indebtedness that is repaid prior to Closing or that does not
constitute an Assumed Liability and (ii) any Contract or other currently
outstanding instrument under which Seller or any of its Subsidiaries, with
respect to the Business, or any of the Acquired Companies has, directly or
indirectly, made any advance, loan, extension of credit (other than an
account receivable) to any Person in excess of U.S.$100,000;
23
(l) any lease or similar agreement under which (i) any of the
Acquired Companies, or, with respect to the Business, Seller or any of its
Subsidiaries is the lessee of, or holds or uses, any machinery, equipment,
vehicle or other tangible personal property owned by any third Person for
an annual rent in excess of U.S.$500,000 or (ii) any of the Acquired
Companies or, with respect to the Business, Seller or any of its
Subsidiaries is the lessor of, or makes available for use by any third
Person, any tangible personal property owned by Seller, its Subsidiaries
or the Acquired Companies for an annual rent in excess of U.S.$500,000;
(m) any material licenses, licensing arrangements and other
Contracts providing in whole or in part for the use of, or limiting the
use of, the Acquired Intellectual Property;
(n) any Contract entered into or assumed by the Acquired Companies
or, with respect to the Business, Seller or any of its Subsidiaries
providing for indemnification of any Person with respect to material
Liabilities relating to any disposition, sale or other transfer or any
present or former business or commercial activity which was either (A)
entered into after January 1, 1999 and remains in effect or (B) pursuant
to which there are any outstanding or unresolved indemnification claims in
excess of U.S.$500,000 against the Acquired Companies;
(o) any Contract for the creation or formation of any joint venture,
partnership or limited liability company that is not wholly owned,
directly or indirectly, by Seller;
(p) Contracts providing for any sharing of revenues or similar
arrangements;
(q) material Contracts containing any provision that provides for a
breach, default, violation or acceleration thereof, or creates in any part
the right to accelerate, terminate, modify or cancel any obligation
thereunder or creates any Lien on any of the Purchased Assets or the
assets of the Acquired Companies, in each case as a result of the
transactions contemplated by this Agreement or the Seller Documents;
(r) any Contracts to which Seller, its Subsidiaries or the Acquired
Companies is a party or is otherwise bound, which is reasonably expected
to result in an annual expenditure by or revenue to Seller, it
Subsidiaries or the Acquired Companies after the Closing Date of more than
U.S.$500,000 for any such individual Contract; and
(s) any Contracts not otherwise described in clauses (a) through (r)
above to which Seller, its Subsidiaries or the Acquired Companies is a
party or is otherwise bound, which is material to the Acquired Companies
or the Business.
Seller has made available to Purchaser true and complete copies of each Material
Business Contract that is in writing and, if not in writing, a written summary
thereof, including in each case amendments or waivers thereto, in each case, as
in effect as of the date hereof. Except as would not reasonably be expected to,
individually or in the aggregate, have a Material Adverse Effect, Seller, its
Subsidiaries or the Acquired Companies, as applicable, have performed all of the
obligations required to be performed by them to date under, and are not in
breach of or default under, any of the Material Business Contracts, and, to the
Knowledge of Seller, no other party to one of
24
the Material Business Contracts is in material default thereunder. Except as
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, none of Seller, its Subsidiaries or the Acquired
Companies has received prior to the date hereof written notice of (x)
noncompliance by Seller, its Subsidiaries or the Acquired Companies or by any
counter party under any Material Business Contract, (y) early termination of, or
request for a concession by, Seller, its Subsidiaries or the Acquired Companies
under any Material Business Contract or (z) the intent of the counterparty to
alter the provisions of any Material Business Contract by reason of the
transactions contemplated by this Agreement or the Seller Documents. Except as
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect, each Material Business Contract is in full force and
effect and constitutes as of the date hereof the valid and legally binding
obligation of Seller, its Subsidiaries or the Acquired Company party thereto
(and, to the Knowledge of Seller, each other party thereto) enforceable in
accordance with its terms, except as may be limited by applicable bankruptcy,
insolvency, moratorium or other laws affecting the enforcement of creditors'
rights generally or by general principles of equity.
Section 4.13 Employee Benefits. (a) Section 4.13(a)(i) of the Seller
Disclosure Schedule sets forth a true and correct list, as of the date hereof,
of all material Employee Benefit Plans. Section 4.13(a)(ii) of the Seller
Disclosure Schedule identifies each material Employee Benefit Plan that is
sponsored, maintained or contributed to solely by one or more of the Acquired
Companies, or to which solely the Acquired Companies are required to contribute
(collectively, together with the Canadian Pension Plan, the "ACQUIRED COMPANY
PLANS") and each employment change in control or severance agreement to which
any Business Employee or Acquired Company Employee is a party (with the
exception of the Retention Agreements, the "INDIVIDUAL AGREEMENTS").
(b) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, nothing has occurred with
respect to any Acquired Company Plan in a jurisdiction other than the United
States that could reasonably be expected to cause the loss of any tax approval
or qualification of such plan in such jurisdiction. Except as would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect, (i) each Acquired Company Plan has been established and
administered in accordance with its terms, and in compliance with the applicable
provisions of ERISA, the Code and other applicable laws, rules and regulations;
(ii) each Acquired Company Plan which is intended to be qualified within the
meaning of Section 401(a) of the Code is so qualified and has received a
favorable determination letter as to its qualification; and (iii) no event has
occurred and no condition exists that would subject Purchaser or the Acquired
Companies or its Subsidiaries, by reason of the Acquired Companies or its
Subsidiaries affiliation with any member of their "Controlled Group" (defined as
any organization which is a member of a controlled group of organization within
the meaning of Sections 414(b), (c), (m) or (o) of the Code), to any tax, fine,
lien, penalty or other liability imposed by ERISA, the Code or other applicable
laws, rules and regulations.
(c) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, all contributions, premiums
and expenses required to be made by Law or by the terms of each Acquired Company
Plan or any agreement relating thereto have been timely made.
25
(d) True and correct copies, as of the date hereof, of the most
recent plan summaries, if any, and all amendments or supplements thereto, with
respect to each of the Employee Benefit Plans (as applicable) have been made
available by Seller to Purchaser. With respect to each Acquired Company Plan,
Seller has provided or made available or, with respect to certain Acquired
Company Plans listed on Section 4.13(a)(i) of the Seller Disclosure Schedules
under the headings "Europe Overview" and "Mexico Overview," will provide or make
available to Purchaser as soon as practicable following the date hereof a
current, accurate and complete copy (or, to the extent no such copy exists, an
accurate description) thereof and, to the extent applicable: (i) any related
trust agreement or other funding instrument; (ii) the most recent determination
letter, if applicable, (iii) any summary plan description and other material
written communications by Seller or its Subsidiaries to the Acquired Company
Employees concerning the extent of the benefits provided under an Acquired
Company Plan; and (iv) for the most recent year (A) the Form 5500 and attached
schedules, (B) audited financial statements and (C) actuarial valuation reports.
(e) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, there are no pending or, to
the Knowledge of Seller, threatened Legal Proceedings, audits, actions, suits,
claims or investigations against or involving any Acquired Company Plan, the
assets of any such plan or the plan administrator or fiduciary of any Acquired
Company Plan (other than routine benefit claims).
(f) Except as required by Law, neither the execution of this
Agreement nor the consummation of the transactions contemplated hereby will
(whether alone or together with any other event or events) (i) entitle any
current or former Acquired Company Employee or Business Employee to any increase
in any compensation or benefits (including any cash or equity award or benefit),
(ii) accelerate the time at which any compensation, benefits or award may become
payable, vested or required to be funded in respect of any Acquired Company
Employee or Business Employee, and (iii) entitle any current or former Acquired
Company Employee or Business Employee to any additional compensation, benefits
or award. There is no Contract, plan or arrangement (written or otherwise)
covering any current or Former Acquired Company Employee, Business Employee or
independent contractor providing services to the Business that, individually or
collectively, would be reasonably expected to give rise to the payment of any
amount that would not be deductible pursuant to the terms of Section 280G of the
Code.
(g) Except as set forth on Section 4.13(g) of the Seller Disclosure
Schedules, no Acquired Company Plan is subject to Title IV of ERISA and neither
the Acquired Companies nor their Subsidiaries has at any time sponsored or
contributed to, or has had or had any liability or obligation in respect of, any
such plan. With respect to any multiemployer plan (within the meaning of Section
4001(a)(3) of ERISA) to which Seller, its Subsidiaries or any member of their
Controlled Group has any liability or contributes (or has at any time
contributed or had an obligation to contribute): (i) none of Seller, its
Subsidiaries or any member of their Controlled Group has incurred any material
withdrawal liability under Title IV of ERISA which remains unsatisfied; and (ii)
to the Knowledge of Seller, no such multiemployer plan is in reorganization or
insolvent (as those terms are defined in Sections 4241 and 4245 of ERISA,
respectively).
(h) With respect to any Employee Benefit Plan, (1) no written
communication has been received, within the immediately prior two-year period,
from the Pension Benefit Guar-
26
anty Corporation (the "PBGC") in respect of any Employee Benefit Plan subject
to Title IV of ERISA concerning the funded status of any such plan and (2) no
administrative investigation, audit or other administrative proceeding by the
Department of Labor, the PBGC, the Internal Revenue Service or other
governmental agencies are pending, in progress or, to the Knowledge of Seller,
threatened (including any routine requests for information from the PBGC).
(i) Except as set forth on Section 4.13(i) of the Seller Disclosure
Schedules, no Employee Benefit Plan is maintained outside the jurisdiction of
the United States, or covers any employee residing or working outside the United
States (any such Employee Benefit Plan set forth on Section 4.13(i) of the
Seller Disclosure Schedules, "FOREIGN BENEFIT PLANS").
(j) All current and former participants in the Canadian Pension
Plans and the Acquired Company Plans are Business Employees, former Business
Employees, Acquired Company Employees or former Acquired Company Employees.
Section 4.14. Labor. (a) Set forth on Section 4.14(a) of the Seller
Disclosure Schedule is a true and correct list, as of the date hereof, of each
labor or collective bargaining agreement to which Seller, any of its
Subsidiaries or any Acquired Company is a party that apply to Acquired Company
Employees or Business Employees.
(b) No labor organization representing any Acquired Company
Employees or Business Employees or group of Acquired Company Employees or
Business Employees has made a written demand against Seller, any of its
Subsidiaries or any Acquired Companies for recognition; and there are no
representation proceedings or written petitions seeking a representation
proceeding presently pending against Seller, any of its Subsidiaries or any
Acquired Companies involving any Acquired Company Employees or Business
Employees or, to the Knowledge of Seller, threatened in writing to be brought or
filed against Seller, any of its Subsidiaries or any Acquired Companies Related
to the Business with the United States National Labor Relations Board or other
labor relations tribunal. To the Knowledge of Seller, there is no ongoing
organizing activity involving Acquired Company Employees or Business Employees
pending or, to the Knowledge of Seller, threatened in writing by any labor
organization or group of Acquired Company Employees or Business Employees.
(c) Except as set forth on Section 4.14(c) of the Seller Disclosure
Schedules, to the Knowledge of Seller, there are no (i) strikes, work stoppages,
slowdowns, lockouts or arbitrations, (ii) material grievances or other material
labor disputes or proceedings pending or threatened in writing against or
involving any Acquired Company Employees or Business Employees, or (iii) unfair
labor practice charges, grievances or complaints, actions, inquiries,
proceedings or investigations pending or threatened in writing by or on behalf
of any Acquired Company Employees or Business Employees, nor has the Seller or
any of its Subsidiaries, with respect to the Business, or any Acquired Company
experienced any such labor controversies within the past three years.
(d) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect, the Acquired Companies and,
with respect to the Business, Seller and its Subsidiaries are in compliance with
all Laws and Orders Related to the Business relating to the employment of their
respective employees, including all such Laws and Or-
27
ders relating to wages, hours, collective bargaining, terms and conditions of
employment, termination of employment, employment discrimination, immigration,
disability, civil rights, occupational safety and health, workers' compensation,
pay equity and the collection and payment of withholding and/or social
contribution taxes and similar Taxes.
(e) Except as set forth on Section 4.14(e) of the Seller Disclosure
Schedule, and except as would not reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect, no Acquired Company has, and,
with respect to the Business, none of Seller and its Subsidiaries has, closed
any plant or facility, effectuated any layoffs of employees or implemented any
early retirement, separation or window program material to the Business within
the past two years, nor has Seller, any of its Subsidiaries or any Acquired
Company announced any such action or program material to the Business for the
future.
(f) No Acquired Company is a party to or otherwise bound by any
consent decree with, or citation by, any Governmental Body related to employees
or employment practices material to the Business.
Section 4.15. Litigation. (a) As of the date hereof, there is no
material Legal Proceeding pending and served or, to the Knowledge of Seller,
pending and not served or threatened against Seller, any of its Subsidiaries or
any Acquired Company that challenges, or questions the validity of, this
Agreement, any Seller Document or any action taken or to be taken by Seller, any
of its Subsidiaries or any Acquired Company in connection with, or which seeks
to enjoin or obtain monetary damages in respect of, the consummation of the
transactions contemplated hereby or thereby.
(b) Section 4.15(b) of the Seller Disclosure Schedule sets forth a
true and correct list, as of the date hereof, of all material pending and served
or, to the Knowledge of Seller, pending and not served or threatened Legal
Proceedings relating to any Acquired Company or Related to the Business to which
Seller, any of its Subsidiaries or any Acquired Company is, or is threatened to
be, a party.
(c) There is no Legal Proceeding or governmental investigation
pending and served or, to the Knowledge of Seller, pending and not served or
threatened against Seller, any of its Subsidiaries or any Acquired Company that
would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect.
Section 4.16. Compliance with Other Laws; Permits. (a) Each
Acquired Company is and, with respect to the Business, each of Seller and its
Subsidiaries is, in compliance with all applicable Laws and all decrees, Orders,
judgments and Permits of or from Governmental Bodies, except for instances of
noncompliance or possible noncompliance that would not reasonably be expected
to, individually or in the aggregate, have a Material Adverse Effect.
(b) Except as would not reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect: (i) Each Acquired Company has,
and, with respect to the Business, each of Seller and its Subsidiaries has, all
Permits and other authorizations of or from all Governmental Bodies that are
necessary in the conduct of the Business as presently being conducted, (ii) such
Permits and other authorizations are in full force and effect and (iii) no
28
violations or claimed violations are pending before any Governmental Body with
respect to such Permits and other authorizations nor, to the Knowledge of
Seller, threatened, to suspend, revoke, revise, limit, restrict or terminate any
such Permit or other authorizations or declare any such Permit or other
authorizations invalid.
Section 4.17. Environmental Matters. Except as would not reasonably
be expected to, individually or in the aggregate, have a Material Adverse
Effect: (a) the Business, the Acquired Companies, the Purchased Assets and, with
respect to the Business, Seller and its Subsidiaries are, and since January 1,
2001 have been, in compliance with all applicable Environmental Laws, and Seller
and its Subsidiaries have conducted the Business in compliance with all
applicable Environmental Laws; (b) since January 1, 2003, neither Seller nor its
Subsidiaries has received any written notices, demand letters or written
requests for information from any federal, state, local or foreign Governmental
Body indicating that Seller or any of its Subsidiaries may be in violation of,
or liable under, any Environmental Law in connection with the ownership or
operation of the Businesses; (c) there are no civil, criminal or administrative
actions, suits, demands, claims, hearings, investigations or proceedings pending
or threatened in writing against Seller, any of its Subsidiaries or any of the
Purchased Assets relating to any violation, or alleged violation of, or to any
liability or alleged liability relating to any Environmental Law in connection
with or relating to the Business or the Acquired Companies; (d) Seller and its
Subsidiaries are, and since January 1, 2001 have been, in compliance with, all
Permits required under Environmental Laws in order to conduct the Business
("ENVIRONMENTAL PERMITS"), and each of the Environmental Permits relating to the
Business as currently conducted may be validly transferred to Purchaser without
any alteration or amendment or any notice to or consent of any third Person; (e)
Hazardous Materials have not been generated, transported, treated, stored,
disposed of, arranged to be disposed of, Released or threatened to be Released
at, on, from or under any of the Real Owned Property or the Leased Real Property
in violation of, or in a manner or to a location that would reasonably be
expected to give rise to liability under any Environmental Laws; and (f) to the
Knowledge of Seller, none of the Acquired Companies, and with respect to the
Business none of Seller and its Subsidiaries, has, since January 1, 2001,
assumed by contract any liabilities or obligations under or relating to any
Environmental Laws.
Section 4.18. Ownership of Necessary Assets and Rights. Except for
the (a) Excluded Assets, (b) the Intellectual Property covered by the Transition
Intellectual Property License Agreement, (c) those assets and services to be
provided pursuant to the terms of the Transition Agreements, (d) the assets and
services provided to the Business by Seller or its Subsidiaries prior to the
Closing set forth on Section 4.18 of the Seller Disclosure Schedule and (e) the
Assets of which the Seller or its Subsidiaries transfers the benefits and
burdens to Purchaser as of the Closing Date on the terms described in Section
10.3, the Assets to be transferred to Purchaser on the Closing Date and the
assets held by the Acquired Companies, taken together, are in all material
respects sufficient for the conduct of the Business immediately following the
Closing in substantially the same manner as currently conducted.
Section 4.19. Product Liability. Except for matters which would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect, no Acquired Company has, and, with respect to the Business, none
of Seller and its Subsidiaries has, received any written notice relating to any
claim involving use of or exposure to any of the products (or any part or
component) designed, manufactured, serviced or sold, or services performed, by
the
29
Business or any Acquired Company, including for negligence, strict liability,
design or manufacturing defect, conspiracy, failure to warn, or breach of
express or implied warranties or merchantability or fitness for any purpose or
use, or from any alleged breach of implied warranties or representations, or any
alleged noncompliance with any applicable Laws pertaining to products liability
matters.
Section 4.20. Affiliate Transactions. Except as set forth on Section
4.20 of the Seller Disclosure Schedule, immediately following the Closing, other
than this Agreement and the other documents and agreements contemplated herein,
including the Transition Agreements, there will not be any Contracts or other
transactions between any of Purchaser (as an assignee of Seller or a Seller Sub
in respect of a Purchased Asset), the Acquired Companies or the Transferred JVs,
on the one hand, and any of (a) Seller and its Subsidiaries (other than the
Acquired Companies or a Transferred JV) or (b) the directors, officers or
employees (or any immediate family member thereof) of any of Seller and its
Subsidiaries (other than the Acquired Companies or a Transferred JV) (except
those of a type available to employees generally), on the other hand.
Section 4.21. Customers and Suppliers. Except as would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect, since January 1, 2004 until the date hereof, none of the
suppliers or customers identified on Section 4.12(g) of the Seller Disclosure
Schedule, respectively, has significantly reduced the aggregate monthly dollar
volume of business with the Acquired Companies or, with respect to the Business,
Seller or any of its Subsidiaries (taken together as a whole) or provided
written notice prior to the date hereof that such customer or supplier intends
to significantly reduce the aggregate monthly dollar volume of business with the
Acquired Companies and, with respect to the Business, Seller or any of its
Subsidiaries (taken together as a whole).
Section 4.22. Brokers. Except for Credit Suisse First Boston LLC and
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co., no Person has acted directly or indirectly as a broker,
finder or financial advisor for Seller or any of its Subsidiaries in connection
with the negotiations relating to or the transactions contemplated hereby, and
no Person is entitled to, or will become entitled to, any fee or commission or
like payment in respect thereof from Purchaser or, after the Closing, an
Acquired Company based in any way on any agreement, arrangement or understanding
made by or on behalf of Seller or any of its Subsidiaries. Seller is solely
responsible for the fees and expenses of Credit Suisse First Boston LLC and
▇▇▇▇▇▇▇, Sachs & Co., payable by Seller in connection with any acquisition
advisory services provided to Seller and its Subsidiaries by Credit Suisse First
Boston LLC and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. or any of their respective Affiliates in
connection with the transactions contemplated by this Agreement.
Section 4.23. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV and the Seller
Documents, none of Seller, any Affiliate of Seller or any other Person makes any
representations or warranties, and Seller hereby disclaims any other
representations or warranties, whether made by Seller or any Affiliate of
Seller, or any of their respective officers, directors, employees, agents or
representatives, with respect to the execution and delivery of this Agreement or
any Seller Document, the transactions contemplated hereby or the Business,
notwithstanding the delivery or disclosure to Purchaser or its representatives
of any documentation or other information with respect to any one or more of the
foregoing. Except, in each case, for the representations and warranties
contained in this Arti-
30
cle IV and the Seller Documents, Seller excludes and disclaims all warranties,
including implied warranties of merchantability and fitness for a particular
purpose, with respect to the Business or the Purchased Assets.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Purchaser hereby represents and
warrants to Seller that, except as set forth in the applicable corresponding
section of the Disclosure Schedule dated as of the date hereof and delivered by
Purchaser to Seller (the "PURCHASER DISCLOSURE SCHEDULE"):
Section 5.1. Organization and Good Standing. Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of Delaware.
Section 5.2. Authorization of Agreement. Purchaser has all requisite
corporate power and authority to execute and deliver this Agreement and each
other agreement, document, instrument or certificate contemplated hereby or to
be executed or delivered by Purchaser in connection herewith and to consummate
the transactions contemplated hereby and thereby (all of such agreements,
documents, instruments and certificates required to be executed or delivered by
Purchaser and any of its Subsidiaries being hereinafter referred to,
collectively, as the "PURCHASER DOCUMENTS"), and to perform fully its
obligations hereunder and thereunder. The execution, delivery and performance by
Purchaser of this Agreement and by Purchaser of each Purchaser Document has been
duly authorized by all necessary corporate action on the part of Purchaser, and
no other corporate proceeding on the part of Purchaser is necessary to authorize
the execution, delivery or performance hereof or thereof or the consummation of
the transactions contemplated hereby or thereby. This Agreement has been, and
each of Purchaser Documents will be, when delivered to Seller, duly executed and
delivered by Purchaser and (assuming the due authorization, execution and
delivery by the other parties hereto) this Agreement constitutes, and each of
Purchaser Documents when so executed and delivered will constitute, the valid
and legally binding obligations of Purchaser, enforceable against Purchaser in
accordance with its terms.
Section 5.3. No Conflicts; Consents of Third Parties. (a) None of
the execution and delivery by Purchaser of this Agreement and Purchaser
Documents, the consummation of the transactions contemplated hereby or thereby
or compliance by Purchaser with any of the provisions hereof or thereof will (i)
conflict with, or result in the breach of, any provision of the certificate or
articles of incorporation, by-laws or similar organizational documents of
Purchaser or (ii) conflict with, violate, result in the breach or termination
of, or constitute (with or without notice or lapse of time or both) a default,
give rise to any right of consent, cancellation, termination or acceleration or
right to increase the obligations or otherwise modify the terms under, or result
in the creation of any Lien on, any material assets of Purchaser, under any
indenture, mortgage, loan agreement, Contract, lease, license, instrument or
other arrangement to which Purchaser is a party or to which any of such assets
are subject; or (iii) conflict with or constitute a violation of any material
Law applicable to Purchaser, except in the case of each of clause (ii) or (iii),
as
31
would not reasonably be expected to, individually or in the aggregate, have a
material adverse effect on Purchaser's ability to perform its obligations
hereunder.
(b) No consent, waiver, approval, Order, Permit or authorization of,
or declaration or filing with, or notification or report to, any Person or
Governmental Body is required to be obtained or made by Purchaser in connection
with the execution, delivery and performance of this Agreement or the Purchaser
Documents, the consummation of the transactions contemplated hereby and thereby
or the compliance by Purchaser with any of the provisions hereof or thereof,
except for (i) compliance with the applicable requirements of (x) the HSR Act or
(y) the EC Competition Regulation, if necessary and (ii) other than those
relating to the HSR Act and the EC Competition Regulation, such consents,
waivers, approvals, Orders, Permits or authorizations of, or declarations or
filings with, or notifications to, any Person or Governmental Body, the failure
of which to be received or made would not reasonably be expected to,
individually or in the aggregate, have a material adverse effect on Purchaser's
ability to perform its obligations hereunder.
Section 5.4. Litigation. As of the date hereof, there is no material
Legal Proceeding pending or, to the knowledge of Purchaser, threatened against
Purchaser that challenges, or questions the validity of, this Agreement, any
Purchaser Document or any action taken or to be taken by Purchaser in connection
with, or that seeks to enjoin or obtain monetary damages in respect of, the
consummation of the transactions contemplated hereby or thereby.
Section 5.5. Financing. Section 5.5 of the Purchaser Disclosure
Schedule sets forth true, accurate and complete copies of (a) an executed equity
commitment letter to provide equity financing to Purchaser, (b) an executed debt
commitment letter and related term sheets (the "DEBT COMMITMENT LETTER" and
together with the equity commitment letter described in subclause (a), the
"FINANCING COMMITMENTS") pursuant to which, and subject to the terms and
conditions thereof, certain lenders have committed to provide Purchaser with
financing (the "DEBT FINANCING" and together with the equity financing referred
to in clause (a), the "ACQUISITION FINANCING"). As of the date hereof, the
Financing Commitments are in full force and effect and have not been withdrawn
or terminated or otherwise amended or modified in any respect. The proceeds from
such Acquisition Financing constitute all of the financing required to be
provided by Purchaser for the consummation of the transactions contemplated
hereby. The Debt Commitment Letter contains all of the conditions precedent to
the obligations of the lenders thereunder to make the Debt Financing available
to Purchaser on the terms therein, and the equity commitment letter contains all
of the conditions precedent to the obligations of the funding party to make the
equity financing thereunder available to the Purchaser on the terms therein.
Section 5.6. Purchaser Status. Purchaser (a) has not incurred any
Liabilities or (b) engaged in any business activity of any kind or entered into
any Contract with any Person or become subject to or bound by any Contract,
other than, in each case, in connection with the transactions contemplated by
this Agreement or relating to the transactions contemplated hereby (including
the Acquisition Financing) or Contracts with Seller.
Section 5.7. Brokers. Seller will not be responsible for any
commission, brokerage, finder's fee or like payment to any broker, finder, other
intermediary or other Person in connection with the negotiations relating to or
the transactions contemplated hereby, and no Per-
32
son is entitled to any fee or commission or like payment in respect thereof
from Seller, based in each case referred to above on agreements, arrangements or
understandings made by or on behalf of Purchaser or any of its Affiliates.
Section 5.8. Independent Assessment. Purchaser acknowledges that it
has made its own assessment of the present condition and the future prospects of
the Business and is sufficiently experienced to make an informed judgment with
respect thereto. Purchaser acknowledges that, except as explicitly set forth
herein, neither Seller nor any of its Affiliates has made any warranty, express
or implied, as to the prospects of the Business or its profitability for
Purchaser, or with respect to any forecasts, projections or business plans
prepared by or on behalf of Seller and delivered to Purchaser in connection with
Purchaser's review of the Business and the negotiation and the execution of this
Agreement. Nothing in this Section 5.8 shall constitute a waiver of any rights
of Purchaser in the case of fraud by any Person.
Section 5.9. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article V and the Purchaser
Documents, none of Purchaser, any Affiliate of Purchaser or any other Person
makes any representations or warranties, and Purchaser hereby disclaims any
other representations or warranties, whether made by Purchaser or any Affiliate
of Purchaser, or any of their respective officers, directors, employees, agents
or representatives, with respect to the execution and delivery of this Agreement
or any Purchaser Document, the transactions contemplated hereby or the Business,
notwithstanding the delivery or disclosure to Seller or its representatives of
any documentation or other information with respect to any one or more of the
foregoing.
ARTICLE VI
COVENANTS OF SELLER
From and after the date hereof and until the Closing (except with
respect to Sections 6.3(b), 6.5, 6.7 and 6.8, which shall continue to be
required to be performed in accordance with their terms), Seller hereby
covenants and agrees that:
Section 6.1. Access to Documents; Opportunity to Ask Questions.
Seller shall, and shall cause its Subsidiaries to, (a) afford to Purchaser, its
representatives and financing sources and the representatives of such financing
sources ("REPRESENTATIVES") reasonable access to (i) senior management of the
Business to answer questions concerning the business operations and affairs of
the Business, and (ii) (A) corporate records, Tax Returns, books of accounts,
Business Contracts, any Contract to which an Acquired Company is a party, and
financial statements Related to the Business or the Acquired Companies and (B)
all other documents (excluding confidential portions of personnel and medical
records) Related to the Business or related to the Acquired Companies reasonably
requested by Purchaser or its Representatives on behalf of Purchaser and (b)
shall permit Purchaser and its Representatives reasonable access to the Owned
Real Property and the Leased Real Property (including access to perform Phase I
environmental assessments for those Owned Real Properties and Leased Real
Properties for which a Phase I environmental assessment has not been performed
prior to the date hereof or for which a Phase I environmental assessment has not
been made available to Purchaser (or such other Owned Real Properties and Leased
Real Properties as to be mutually agreed by the parties acting reasonably
33
and in good faith), but excluding the Excluded Assets and Excluded Liabilities
and subject to any limitations that are reasonably required to preserve any
applicable attorney-client privilege or third-party confidentiality obligation);
provided, that in each case, such access shall be given at reasonable times and
upon reasonable notice and without undue interruption to Seller's business or
personnel. Notwithstanding the foregoing, nothing contained herein shall permit
Purchaser to conduct any on-site environmental investigations or examinations,
except to the extent permitted under clause (b) of the first sentence of this
Section 6.1. All requests for access shall be made to such representatives of
Seller as Seller shall designate, who shall be solely responsible for
coordinating all such requests and access thereunder.
Section 6.2. Conduct of Business. Until the Closing Date, Seller
shall, solely with respect to the operation of the Business or otherwise Related
to the Business, and shall cause (x) its Subsidiaries to, solely with respect to
the operation of the Business or otherwise Related to the Business, and (y) the
Acquired Companies to (in each case, unless Purchaser shall otherwise consent in
writing (which consent shall not be unreasonably withheld, conditioned or
delayed) or except as otherwise contemplated hereby or by any Transition
Agreement or as disclosed on Section 6.2 of the Seller Disclosure Schedule), to
the extent permitted by applicable Law:
(a) use reasonable best efforts to (i) operate in the ordinary
course in all material respects consistent with past practice (including
with respect to capital expenditure spending), (ii) preserve its present
material business operations, organization and goodwill, (iii) keep
available the services of its present officers and key employees, (iv)
preserve its present relationships with Persons having business dealings
with it, (v) except for changes resulting from transactions in the
ordinary course, manage inventories, supplies, accounts receivable and
accounts payables reasonably consistent in all material respects with past
practice, (vi) maintain in full force and effect substantially the same
levels of insurance coverage with respect to its assets, operations and
activities as are in effect as of the date of this Agreement and (vii)
maintain books and records consistent in all material respects with past
practice;
(b) with respect to any Acquired Company, (i) not declare, set aside
or pay any non-cash dividends or non-cash distributions on, or make any
other non-cash distributions in respect of, any Acquired Company Equity
Securities, (ii) not split, combine or reclassify any of its outstanding
Acquired Company Equity Securities or issue or authorize the issuance of
any Acquired Company Equity Securities, (iii) not purchase, redeem or
otherwise acquire or dispose of any securities of the Acquired Companies,
including Acquired Company Equity Securities or (iv) not issue, sell,
transfer, grant, pledge, dispose of or otherwise encumber any Acquired
Company Equity Securities except to a wholly owned Acquired Company;
(c) not repurchase, repay, incur, assume or guarantee any
indebtedness, other than (i) repayments and repurchases contemplated by
Section 6.6 or (ii) indebtedness of Seller and its Subsidiaries (other
than an Acquired Company) incurred for borrowed money or guarantees
entered into in the ordinary course of business or in an amount in excess
of U.S.$20 million in the aggregate;
34
(d) not enter into any waiver, release, assignment, compromise or
settlement of, or take any material action with respect to, any pending or
threatened Legal Proceeding to the extent that any liabilities of such
Legal Proceedings are Assumed Liabilities or are liabilities of an
Acquired Company other than any Existing Litigation, other than the
prosecution, defense and settlement (for monetary damages only) of Legal
Proceedings not material to the Business and the Acquired Companies in the
ordinary course of business consistent with past practice;
(e) not cancel any debts or waive any claims or rights of
substantial value (including the cancellation, compromise, release or
assignment of any indebtedness owed to, or claims held by, any of Seller
and its Subsidiaries), except for cancellations made or waivers granted in
the ordinary course of business consistent with past practice which, in
the aggregate, are not material;
(f) except in the ordinary course of business consistent with past
practice, not acquire, lease, license, assign, sell, transfer or dispose,
in whole or in material part, of any material non-cash property, rights,
businesses or non-cash assets (including by merger, consolidation or
acquisition of stock or assets), or create or permit to exist any Lien on
any such non-cash property, rights, businesses or non-cash assets;
(g) (i) not enter into any new lease or modify, renew, extend or
terminate any existing lease or purchase or acquire any real estate,
except in the ordinary course of business consistent with past practice
and except to the extent required by any Material Business Contracts and
(ii) not enter into any agreement to acquire, assign, sell, transfer or
dispose of any real estate;
(h) not make any investment in, or make any loan, advance or capital
contributions (including any "keep well" or other Contract to maintain any
financial statement condition of another Person) to, any Person (other
than a wholly owned Acquired Company) either outside the ordinary course
of business consistent with past practice or in an amount in excess of
U.S.$1 million, other than routine advances to employees in the ordinary
course of business consistent with past practice;
(i) not enter into any Business Contracts, except Contracts made in
the ordinary course of business consistent with past practice;
(j) not amend, supplement, waive, modify, terminate, annul, cancel,
assign, convey, encumber or otherwise transfer, in whole or in part, its
rights and interest in or under any Material Business Contract or enter
into any Contract that, in the ordinary course of business, would require
the approval of the President of the Business to enter into such Contract;
(k) not accelerate the rate of collection of accounts receivable
other than in the ordinary course of business consistent with past
practice;
(l) not enter into any Contract containing covenants binding on
Seller or its Subsidiaries not to, or otherwise limiting the freedom of
Seller or its Subsidiaries to,
35
(i) compete in any line of business with any Person or in any geographic
area or (ii) hire any individual or group of individuals;
(m) not permit inventory purchases or commitments to exceed in
material respects seasonal levels consistent with past practices or make
any material changes or modification to any pricing policies.
(n) not enter into, adopt, amend or terminate any contract relating
to the compensation or severance entitlement of any employee employed in
the Business or by any Acquired Company, except in the ordinary course of
business consistent with past practice or except to the extent required by
Law or any existing Business Contracts;
(o) except to the extent required by Law, any Business Contract or
any Employee Benefit Plan or in the ordinary course of business consistent
with past practice, (i) increase the compensation or benefits (except for
non-material increases in benefits that apply to employees of Seller and
its Subsidiaries generally pursuant to amendments or modifications to
Employee Benefit Plans that are not Acquired Company Plans) of any present
or Former Acquired Company Employee or Business Employee, (ii) grant any
severance or termination pay to any present or Former Acquired Company
Employee or Business Employee, (iii) loan or advance any money or other
property to any present or Former Acquired Company Employee or Business
Employee (other than routine advances to employees in the ordinary course
of business consistent with past practice and other than pursuant to the
terms of any Seller Savings Plan), (iv) establish, adopt, enter into,
amend (in a manner to increase costs or benefits) or terminate any
Acquired Company Plan or any plan, agreement, program, policy, trust, fund
or other arrangement that would be an Acquired Company Plan if it were in
existence as of the date of this Agreement or (v) grant any equity or
equity-based awards with respect to Acquired Company Equity Securities;
(p) not amend the organizational documents of any Acquired Company
or consent to any amendment of the organizational documents of any
Transferred JVs;
(q) not make any change in any method of pension or accounting
practice, policy or principle, except as required by any changes in GAAP
or applicable Law or except as would not be material to the Business or
the Acquired Companies;
(r) not make or change any Tax election, change an annual accounting
period, adopt or change any accounting method, file any amended Tax
Return, enter into any closing agreement, settle any Tax claim or
assessment, or surrender any right to claim a refund of Taxes, in each
case, for any of the Acquired Companies, except as required by applicable
Law or except as would not be material to the Business or the Acquired
Companies, taken as a whole;
(s) not adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or
other reorganization;
(t) not incur, authorize or commit to make any capital expenditures
in excess of the Capital Expenditure Budget;
36
(u) not change, or agree to change, any business policies which
relate to advertising, promotional activities, pricing, personnel, labor
relations, sales, returns or product acquisitions, in each case in any
material respect; and
(v) not authorize, commit or agree to take any action or actions
prohibited by any of the foregoing clauses (a) through (u).
Section 6.3. Consents and Conditions. (a) Seller shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with Purchaser in doing, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby as promptly as practicable, including, but not
limited to: (i) promptly obtaining all necessary consents, approvals or waivers
from, and giving any necessary notifications to, third parties; provided,
however, that such efforts shall not require Seller or any of its Subsidiaries
to make any payment to obtain any such consent, approval or waiver or to give
such notice, other than nominal transfer fees or costs and expenses of third
parties expressly required to be paid pursuant to the terms of any Business
Contract; (ii) promptly making all registrations and filings with, and obtaining
all necessary or advisable actions or non-actions, waivers, consents and
approvals from, all Governmental Bodies (including those in connection with the
HSR Act and the EC Competition Regulation) and taking all reasonable steps as
may be necessary or advisable to obtain an approval or waiver from, or to avoid
an action or proceeding by, a Governmental Body; and (iii) defending any Legal
Proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby, including seeking to have any Order, stay or temporary
restraining order or preliminary or permanent injunction entered by any
Governmental Body vacated or reversed; provided, however, that, in connection
with the foregoing, Seller and its Subsidiaries shall not make any commitment or
undertaking or incur any liability or obligation with respect to the Business or
the Acquired Companies without the consent of Purchaser, which consent shall not
be unreasonably withheld (it being understood that such consent may be withheld
with respect to any matter that would reasonably be expected to increase in any
material respect the financial obligations of Purchaser or the Acquired
Companies, except as required by Section 7.3).
(b) If any consent of a third party that is required in order to
assign or transfer any Contract or Permit, or any claim, right or benefit
arising thereunder or resulting therefrom, is not obtained prior to the Closing
Date, or if an attempted assignment would be ineffective or would adversely
affect the ability of Seller to convey its interest in question to Purchaser or
its Affiliates, Seller will cooperate with Purchaser in any lawful arrangement
to provide that Purchaser or its Affiliates shall receive the interest of Seller
in the benefits and obligations under any such Contract or Permit until such
consent is obtained. In the event that any Transferred JV Interests are
transferred to any third party in accordance with the applicable provisions of
any existing contractual obligations of Seller or any of its Subsidiaries (or
the applicable provisions of the joint venture agreement, limited liability
company agreement or other constitutive document of any joint venture), the
Final Cash Consideration shall be reduced by an amount equal to the amount of
consideration allocable to such Transferred JV Interests pursuant to Schedule
2.4.
(c) Seller shall keep Purchaser reasonably apprised of the status of
matters relating to the completion of the transactions contemplated hereby and
shall promptly furnish Purchaser with copies of notices or other communications
received by Seller or by any of its Sub-
37
sidiaries or its or their Representatives from any third party and/or any
Governmental Body with respect to the transactions contemplated hereby and, if
material, the Business or the Acquired Companies. Seller shall promptly furnish
to Purchaser such necessary information and reasonable assistance as Purchaser
may request in connection with the foregoing and shall promptly provide counsel
for Purchaser with copies of all filings made by Seller, and all correspondence
between Seller (and its Representatives) with any Governmental Body and any
other information supplied by Seller and its Affiliates to a Governmental Body
in connection herewith and the transactions contemplated hereby and, if
material, the Business or the Acquired Companies, provided, however, that
Seller may, as it deems advisable and necessary to protect privilege or to
comply with contractual arrangements, reasonably designate any competitively
sensitive material provided to Purchaser as "outside counsel only," and
materials may be redacted to remove references concerning the valuation of the
Business. Materials designated as for "outside counsel only" and the information
contained therein shall be given only to the outside legal counsel of Purchaser
and will not be disclosed by such outside counsel to employees, officers or
directors of Purchaser unless express permission is obtained in advance from
Seller or its legal counsel. Seller shall, subject to applicable Law, permit
counsel for Purchaser reasonable opportunity to review in advance, and consider
in good faith the views of Seller in connection with, any proposed written
communication to any Governmental Body. Seller agrees not to participate, or to
permit its Affiliates and Representatives to participate, in any substantive
meeting or discussion, either in person or by telephone, with any Governmental
Body in connection herewith and the transactions contemplated hereby unless it
consults with Purchaser in advance and, to the extent not prohibited by such
Governmental Body, gives Purchaser the opportunity to attend and participate.
Section 6.4. Public Statements. Seller shall make a press release
announcing the execution of this Agreement and the transactions contemplated
hereby, which release shall be reasonably acceptable to Purchaser. Before
Seller, its Affiliates or their respective Representatives shall issue any press
release or otherwise make any public statement concerning this Agreement or the
transactions contemplated hereby, Seller shall so advise and cooperate with
Purchaser and shall not, and shall use reasonable best efforts to cause its
Affiliates and their respective Representatives not to, release such information
without Purchaser's consent (which consent shall not be unreasonably withheld,
conditioned or delayed), unless (a) such information is otherwise publicly
available other than as a result of a disclosure by Seller, its Affiliates or
their respective Representatives made in breach of this Section 6.4 or (b) the
release thereof is, in the reasonable judgment of Seller, required by any Law
(including any rule of any securities exchange on which Seller's securities are
traded) or Order to which Seller is bound or subject (in which case Seller shall
use its reasonable best efforts to consult with Purchaser before releasing such
information).
Section 6.5. Confidentiality. From and after the Closing Date until
the thirty-month anniversary of the Closing Date, Seller shall, and shall cause
its Subsidiaries (other than an Acquired Company) and use reasonable best
efforts to cause its Representatives to, hold in strict confidence all
confidential information primarily relating to the Business and the Acquired
Companies as conducted prior to the Closing; provided, however, that such
confidential information shall not include information that (a) is or becomes
generally available to the public other than as a result of a disclosure by
Seller or its Subsidiaries or its or their Representatives after the Closing
Date, or (ii) becomes available to Seller or its Subsidiaries on a
non-confidential basis
38
from a source other than Seller or its Subsidiaries. Seller shall use reasonable
best efforts to assign to Purchaser its rights of confidentiality under any
confidentiality agreement (other than the Confidentiality Agreement) between
Seller and any other Person executed after January 1, 2004 in connection with
the possible sale of the Business, subject to any limitation contained in such
confidentiality agreements; provided that Seller shall not assign, and shall
retain, all other rights and interests under such confidentiality agreements,
including rights of non-solicitation and standstill provisions.
Section 6.6. Intercompany Accounts. Effective as of the Closing
Date, except as otherwise contemplated hereby or by any Transition Agreement or
as contemplated by Schedule 1.3(k) or Schedule 1.5(j), all intercompany
receivables, payables, loans and guarantees then existing between Seller or any
of its Subsidiaries that is not an Acquired Company, on the one hand, and any
Acquired Company, on the other hand, shall be settled, including by way of
capital contribution (with respect to intercompany payables or loans due to
Seller or any of its Subsidiaries that is not an Acquired Company) or by way of
dividend in kind (with respect to intercompany payables or loans owed by Seller
or any of its Subsidiaries that is not an Acquired Company or investments by the
Acquired Companies).
Section 6.7. Litigation Support. In the event and for so long as
Purchaser actively is prosecuting, contesting or defending any Legal Proceeding,
action, investigation, charge, claim, or demand by or against a third party in
connection with (i) any transaction contemplated under this Agreement or (ii)
any fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Business or the Acquired Companies, Seller shall, and shall cause its
Subsidiaries and its controlled Affiliates to, cooperate with Purchaser and its
counsel in the prosecution, contest or defense, make available its personnel,
and provide such testimony and access to its books and records and facilities as
shall be reasonably necessary in connection with the contest or defense, all at
the sole control, cost and expense of Purchaser (unless Purchaser is entitled to
indemnification therefor or Seller elects to assume the defense of such action
under Article XI).
Section 6.8. Further Actions. Seller, whether before, at or after
the Closing, shall execute and deliver such instruments and take such other
actions as may reasonably be required to (a) carry out the intent hereof and of
the Transition Agreements and (b) consummate the transactions contemplated
hereby and thereby, including the taking of all acts necessary to cause the
conditions to Closing to be satisfied as promptly as possible.
Section 6.9. Acquisition Proposals. Following the execution of this
Agreement, Seller shall, and shall cause its Representatives to, immediately
cease any existing discussions or negotiations, if any, with any Persons
conducted heretofore with respect to any Acquisition Proposal, and shall not,
and shall cause it Representatives to not, directly or indirectly, (a) initiate,
solicit or intentionally facilitate or encourage, directly or indirectly, the
making of any Acquisition Proposal, (b) provide any non-public information
regarding the Business or the Acquired Companies to, or enter into or maintain
or continue any discussions or negotiations with, any Person that has made an
Acquisition Proposal or (c) enter into any agreement providing for any
Acquisition Proposal.
39
Section 6.10. Acquisition Financing. Seller agrees to provide, and
to cause its Subsidiaries and the Acquired Companies to provide, reasonable
cooperation in connection with the arrangement of the Acquisition Financing,
including (a) participation in meetings, drafting sessions, due diligence
sessions, management presentation sessions, road shows and sessions with rating
agencies and (b) providing reasonable assistance with the preparation of
business projections, financial statements, offering memoranda, private
placement memoranda, prospectuses and similar documents. Seller shall provide
its reasonable cooperation in connection with seeking from
PricewaterhouseCoopers, the independent auditors of the Business and the
Acquired Companies, any unqualified opinions, consents or customary comfort
letters with respect to the financial statements contained in the private
placement memoranda or prospectuses in connection with the arrangement of the
Acquisition Financing. Seller agrees to allow Purchaser's accounting
representatives the opportunity to review such financial statements in draft
form and to allow such representatives access to the Acquired Companies and the
Business' supporting documentation with respect to the preparation of such
financial statements and the independent auditors' working papers relating to
the procedures performed relating to such financial statements; provided that,
upon the earlier of Closing or the termination of this Agreement pursuant to
Section 13.1(c) (in respect of a breach of this Section) or 13.1(d) (as a result
of the failure of the Closing to occur solely as a result of the failure of the
condition set forth in Section 8.6), Purchaser shall reimburse Seller up to an
amount equal to U.S.$300,000 of the costs and expenses, including costs of
accountants, in connection with the preparation of any financial statements used
in connection with the arrangement of the Acquisition Financing.
Section 6.11. Affidavits. Seller hereby agrees to execute standard
and customary title affidavits that may be required by Purchaser's title
insurance company in order to issue standard owner's coverage and customary
lender's coverage; provided that such affidavits are standard, customary and
consistent with local practice in the respective jurisdiction of the applicable
Owned Real Property.
ARTICLE VII
COVENANTS OF PURCHASER
From and after the date hereof and until the Closing (except with
respect to Sections 7.4, 7.5, 7.6, 7.7, 7.8 and 7.9, which shall continue to be
required to be performed in accordance with their terms), Purchaser hereby
covenants and agrees that:
Section 7.1. Confidentiality. Without the prior written consent of
Seller, which may not be unreasonably withheld, Purchaser shall not contact any
suppliers to, or customers of, the Business or any Business Employees in
connection with or pertaining to any subject matter of this Agreement or the
Transition Agreements; provided, however, that if Seller shall have provided its
written consent to such contacts, Seller shall have the right to accompany
Purchaser and participate in Purchaser's contacts with suppliers, customers or
Business Employees pursuant to this Section 7.1. Prior to the Closing Date and
after any termination of this Agreement, Purchaser and its Affiliates will hold,
and will use their reasonable best efforts to cause their respective officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold, in strict confidence, unless compelled to disclose by judicial or
administrative process or by
other requirements of law, all confidential documents and information concerning
any of Seller, its Subsidiaries (including the Acquired Companies) and the
Business furnished to Purchaser, its Affiliates or its officers, directors,
employees, accountants, counsel, consultants, advisors and agents in connection
with the transactions contemplated by this Agreement; provided that Purchaser
may disclose such information to its officers, directors, employees,
accountants, counsel, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement and to its financing sources in
connection with obtaining the financing for the transactions contemplated by
this Agreement so long as such Persons are informed by Purchaser of the
confidential nature of such information and are directed by Purchaser to treat
such information confidentially. If this Agreement is terminated, Purchaser and
its Affiliates will, and will use their reasonable best efforts to cause their
respective officers, directors, employees, accountants, counsel, consultants,
advisors and agents to, destroy or deliver to the Seller, upon request, all
documents and other materials, and all copies thereof, obtained by Purchaser or
its Affiliates or on their behalf from Seller or its Subsidiaries in connection
with this Agreement that are subject to such confidence.
Section 7.2. Public Statements. Purchaser shall make a press release
announcing the execution of this Agreement and the transactions contemplated
hereby, which release will be reasonably acceptable to Seller. Before Purchaser,
its Affiliates or their respective Representatives shall issue any press release
or otherwise make any public statement concerning this Agreement or the
transactions contemplated hereby, Purchaser shall so advise and cooperate with
Seller and shall not, and shall use reasonable best efforts to cause its
Affiliates and their respective Representatives not to, release such information
without Seller's consent (which consent shall not be unreasonably withheld,
conditioned or delayed), unless (a) such information is otherwise publicly
available other than as a result of a disclosure by Purchaser, its Affiliates or
their respective Representatives made in breach of this Section 7.2 or (b) the
release thereof is, in the reasonable judgment of Purchaser, required by any Law
(including any rule of any securities exchange on which Purchaser's or its
Affiliates' securities are traded) or Order to which Purchaser is bound or
subject (in which case, Purchaser shall use its reasonable best efforts to
consult with Seller before releasing such information).
Section 7.3. Consents and Conditions. (a) Purchaser shall use its
reasonable best efforts to take, or cause to be taken, all actions, and to do,
or cause to be done, and to assist and cooperate with Seller in doing, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated hereby as promptly as practicable, including, but not
limited to: (i) promptly obtaining all necessary consents, approvals or waivers
from, and giving any necessary notifications to, third parties; provided,
however, that such efforts shall not require Purchaser to make any payment to
obtain any such consent, approval or waiver or to give such notice; (ii)
promptly making all registrations and filings with, and obtaining all necessary
or advisable actions or non-actions, waivers, consents and approvals from, all
Governmental Bodies (including those in connection with the HSR Act and the EC
Competition Regulation) and taking all steps as may be necessary or advisable to
obtain an approval or waiver from, or to avoid an action or proceeding by, a
Governmental Body; and (iii) defending any Legal Proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby, including
seeking to have any Order, stay or temporary restraining order or preliminary or
permanent injunction entered by any Governmental Body or third party vacated or
reversed. In furtherance of, and without in any way limiting, the foregoing,
Purchaser shall use reasonable best efforts to
41
avoid the issuance of a Request for Additional Information and Documentary
Material ("SECOND REQUEST") under 15 U.S.C. Section 18a(e)(2) in the United
States or the issuance of a decision under Article 6(1)(c) of the EC Competition
Regulation initiating a "Second Phase" investigation ("SECOND PHASE"); provided
that Purchaser shall not be required to take any action to the extent that such
action would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect. If the staff of a competition authority indicates the
intention to issue a Second Request in the U.S. or to initiate a Second Phase
investigation in the EU, then Purchaser shall offer undertakings acceptable to
the relevant competition authority, including proposing, negotiating, committing
to and effecting, by consent decree, undertaking, hold separate order or
otherwise, the sale, divestiture or disposition of, or the imposition of any
limitation upon, such assets or businesses of Purchaser (including its
subsidiaries) or the Business (so long as conditioned upon, and not occurring
prior to, the Closing), along with any ancillary agreements (all such
undertakings, the "REMEDIATIONS"); provided, however, that Purchaser shall not
be required to offer any Remediation to the extent that such Remediation would
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect. In the case of the European Commission, Purchaser shall make the
offer no later than the end of the three-week period provided by law for the
acceptance of undertakings after submission of a final notification on Form CO.
(b) Purchaser must continue to offer the Remediations required in
Section 7.3(a) until the earlier of (i) the conclusion of any antitrust
investigation in the U.S. or the EU or (ii) the termination of this Agreement.
(c) Purchaser shall keep Seller reasonably apprised of the status of
matters relating to the completion of the transactions contemplated hereby,
including promptly furnishing Seller with copies of notices or other
communications received by Purchaser or by any of its Subsidiaries from any
third party and/or any Governmental Body with respect to the transactions
contemplated hereby. Purchaser shall promptly furnish to Seller such necessary
information and reasonable assistance as Seller may request in connection with
the foregoing and shall promptly provide counsel for Seller with copies of all
filings made by Purchaser, and all correspondence between Purchaser (and its
advisors) with any Governmental Body and any other information supplied by
Purchaser and its Affiliates to a Governmental Body in connection herewith and
the transactions contemplated hereby, provided, however, that Purchaser may, as
it deems advisable and necessary to protect privilege or to comply with
contractual arrangements, reasonably designate any competitively sensitive
material provided to Seller as "outside counsel only," and materials may be
redacted to remove references concerning the valuation of the Business.
Materials designated as for "outside counsel only" and the information contained
therein shall be given only to the outside legal counsel of Seller and will not
be disclosed by such outside counsel to employees, officers or directors of
Seller unless express permission is obtained in advance from Purchaser or its
legal counsel. Purchaser shall, subject to applicable Law, permit counsel for
Seller reasonable opportunity to review in advance, and consider in good faith
the views of Purchaser in connection with, any proposed written communication to
any Governmental Body. Purchaser agrees not to participate, or to permit its
Affiliates to participate, in any substantive meeting or discussion, either in
person or by telephone, with any Governmental Body in connection herewith and
the transactions contemplated hereby unless it consults with Seller in advance
and, to the extent not prohibited by such Governmental Body, gives Seller the
opportunity to attend and participate.
42
Section 7.4. Seller's Access to Documents. Purchaser shall, and
shall cause its Subsidiaries to, afford to Seller's representatives, upon
reasonable notice and without undue interruption to Purchaser's business, access
during normal business hours to the books and records of Purchaser pertaining to
the operations of the Business prior to the Closing Date for a period of seven
years following the Closing Date, including in connection with financial
statements and U.S. Securities and Exchange Commission reporting obligations,
Excluded Liabilities, Excluded Assets and other reasonable business purposes;
provided that nothing herein shall limit Seller's rights of discovery and that,
in each case, such access shall be given at reasonable times and upon reasonable
notice and without undue interruption to Purchaser's business or personnel. All
requests for access shall be made to such Representatives of Purchaser as
Purchaser shall designate, who shall be solely responsible for coordinating all
such requests and access thereunder. Purchaser agrees to hold all of the books
and records of the Business (other than records relating to Taxes, which shall
be governed by Section 14.5) existing on the Closing Date or included in the
Purchased Assets in accordance with Purchaser's standard record retention
policies provided that Purchaser shall not destroy, alter or dispose of any of
such books and records for a period of seven years from the Closing Date or such
longer time as may be required by Law without first offering in writing at least
90 calendar days prior to such destruction or disposition to surrender them to
Seller.
Section 7.5. Further Actions. (a) Purchaser, whether before, at or
after the Closing, shall execute and deliver such instruments and take such
other actions as may reasonably be required to (i) carry out the intent hereof
and of the Transition Agreements and (ii) consummate the transactions
contemplated hereby and thereby including the taking of all acts necessary to
cause the conditions to Closing to be satisfied as promptly as possible.
(b) Purchaser shall use its reasonable best efforts to obtain the
Acquisition Financing on the terms and conditions described in the Financing
Commitments, including using reasonable best efforts (i) to negotiate definitive
agreements with respect thereto on the terms and conditions contained in the
Financing Commitments and (ii) to satisfy all conditions applicable to Purchaser
in such definitive agreements. In the event that any portion of the Acquisition
Financing becomes unavailable in the manner or from the sources contemplated in
the Financing Commitments, Purchaser shall use reasonable best efforts to
arrange any such portion from alternative sources on comparable or more
favorable terms in the aggregate to Purchaser (as determined in the reasonable
judgment of Purchaser) to satisfy the condition in Section 8.6.
Section 7.6. Guarantees; Letters of Credit. (a) Prior to the
Closing, Purchaser shall use its reasonable best efforts to cause itself or one
or more of its Subsidiaries to be substituted in all respects for Seller or any
of its Subsidiaries that is not an Acquired Company, effective as of the Closing
Date, in respect of all obligations of Seller and any such Subsidiary that is
not an Acquired Company under each of the guarantees, letters of credit, letters
of comfort, bid bonds and performance bonds obtained by Seller or any of its
Subsidiaries that is not an Acquired Company for the benefit of the Business
(and Seller and its Subsidiaries shall be released from any such obligations),
including those guarantees, letters of credit, letters of comfort, bid bonds and
performance bonds are set forth on Section 7.6 of the Seller Disclosure Schedule
(the "GUARANTEES"), so that as a result of such substitution, Seller and its
Subsidiaries that are not Acquired Companies shall, to the extent such
substitution is available, from and after the Closing cease to have any
obligation whatsoever arising from or in connection with the Guarantees;
pro-
43
vided, however, that such efforts shall not require Purchaser to make any
payment to the beneficiary of such guarantees, letters of credit, letters of
comfort, bid bonds or performance bonds to obtain such substitution, other than
nominal transfer fees or costs.
(b) If Purchaser is unable to effect such a substitution with
respect to any Guarantee effective as of Closing (each a "NON-SUBSTITUTED
GUARANTEE"): (i) Purchaser shall continue to use its reasonable best efforts to
effect such a substitution of each Non-Substituted Guarantee as soon as
commercially practicable after Closing; provided, however, that such efforts
shall not require Purchaser to make any payment to the beneficiary of such
guarantees, letters of credit, letters of comfort, bid bonds or performance
bonds to obtain such substitution, other than nominal transfer fees or costs and
expenses of third parties; (ii) after the Closing, Purchaser will indemnify
Seller and any of its Subsidiaries (other than an Acquired Company) against any
Losses that Seller or any of its Subsidiaries (other than an Acquired Company)
suffers, incurs or is liable for by reason of or arising out of or in
consequence of: (A) Seller or any of its Subsidiaries (other than an Acquired
Company) making payment under any Non-Substituted Guarantee; or (B) any claim
for payment made on Seller or any of its Subsidiaries (other than an Acquired
Company) under a Non-Substituted Guarantee; and (iii) Purchaser may, at its
option, obtain letters of credit, on terms and from financial institutions
reasonably satisfactory to Seller, with respect to the obligations covered by
each of the Non-Substituted Guarantee and, as and from the date of the delivery
of such a letter of credit to Seller in relation to a Non-Substituted Guarantee,
the indemnity in clause (ii) of this Section 7.6(b) shall cease to apply in
relation to that Non-Substituted Guarantee.
Section 7.7. Use of Seller's Name. Purchaser and Seller agree that,
subject to the terms and conditions of the Transition Intellectual Property
License Agreement:
(a) within six months after the Closing Date, Purchaser shall remove
"▇▇▇▇," the ▇▇▇▇ ▇▇▇▇▇▇▇ logo and any other similar ▇▇▇▇ (the "SELLER
NAME") and any other Trademark, design or logo currently owned by Seller
or any of its Subsidiaries that is not part of the Acquired Intellectual
Property from all buildings, signs and vehicles of the Business;
(b) within six months after the Closing Date, Purchaser shall cease
using the Excluded IP Assets and the Seller Name and any other Trademark,
design or logo currently owned by Seller or any of its Subsidiaries that
is not part of the Acquired Intellectual Property in all invoices,
purchase orders, packing slips, acknowledgment forms, letterhead, domain
names and web sites, advertising and promotional materials, office forms
and business cards; provided that (i) Purchaser may continue to use the
Seller Name in a neutral non-trademark manner to describe the history of
the Business; and (ii) on the six-month anniversary of the Closing Date,
Purchaser shall have a right to continue to use all such invoices,
purchase orders, packing slips and acknowledgment forms that contain
Excluded IP Assets, the Seller Name or any other Trademark, design or logo
currently owned by Seller or its Subsidiaries for up to three additional
one-month periods so long as Purchaser shall be using its reasonable best
efforts to cease to use such invoices, purchase orders, packing slips and
acknowledgment forms during each one-month period and so long as Purchaser
shall provide Seller with written notice at least four Business
44
Days prior to the termination of the applicable one-month period that it
desires to extend such use for an additional one-month period.
(c) (i) on or prior to the 30-month anniversary of the Closing Date
Purchaser shall cease to use the Confetti Design Packaging on the
inventory of packaging materials of the Business; provided, however, that
Purchaser shall have the right to use the Confetti Design Packaging until
the third anniversary of the Closing Date for the inventory packaged in
the Confetti Design Packaging bearing the "▇▇▇▇▇▇" trademark; (ii) after
the 30-month anniversary of the Closing Date, Purchaser shall remove the
Confetti Design Packaging from the inventory of packaging materials of the
Business (other than the Confetti Design Packaging with the "▇▇▇▇▇▇"
trademark, which Purchaser shall have the right to use until the third
anniversary of the Closing Date);
(d) (i) within three months after the Closing Date, Purchaser shall
cease to order any new packaging material that contains the Seller Name,
any other "▇▇▇▇" identity or the "People Finding a Better Way" phrase;
(ii) within six months after the Closing Date, Purchaser shall cease to
order new packaging containing the Confetti Design or any other Excluded
IP Assets and any other Trademark, design or logo currently owned by
Seller or any of its Subsidiaries that is not part of the Acquired
Intellectual Property;
(e) except as otherwise provided in Section 7.7(b), within the six
months after the Closing, Purchaser shall remove the Seller Name and any
other Trademark, design or logo currently used or owned by Seller that is
not part of the Acquired Intellectual Property from those assets of the
Business that are not packaging materials, including those assets (such
as, but not limited to, tools, molds and machines) used in association
with the manufacture of the products of the Business or otherwise
reasonably used in the conduct of the Business after the Closing Date
(such assets, "OTHER MARKED ASSETS");
(f) at the Closing, Seller will grant, or cause its Subsidiaries to
grant, Purchaser, for the term set forth in Schedule 7.7(f), a
royalty-free, non-exclusive license to use the "▇▇▇▇▇▇" brand name for
aftermarket chassis products produced, manufactured and distributed for
use in the United States and Canada; provided, however, that Purchaser
shall not obtain from Seller or its Subsidiaries the right to use the
"▇▇▇▇▇▇" Web domain name ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or "▇▇▇▇▇▇" promotional
materials, except that Purchaser shall be permitted to use the "▇▇▇▇▇▇"
Website during the term of the license on the same basis as used by the
Business as of the date hereof;
(g) at the Closing, Seller will grant, or cause its Subsidiaries to
grant, Purchaser, for the term set forth in Schedule 7.7(f), a
royalty-free, non-exclusive license to use the "Perfect Circle" brand name
for aftermarket chassis products produced, manufactured and distributed
for use in the United States; provided, however, that Purchaser shall not
obtain from Seller or its Subsidiaries the right to use Perfect Circle in
any Web domain name or "Perfect Circle" promotional materials;
(h) at the Closing, Seller will, or will cause its Subsidiaries to,
grant, transfer and convey to Purchaser all of Seller's and its
Subsidiaries' respective right, title and interest in, to and under the
"Nakata" brand name, and immediately after Closing, Pur-
45
chaser will grant to Seller and its Subsidiaries, for the term set forth
in Schedule 7.7(f), a royalty-free, non-exclusive license to use the
"Nakata" brand name for chassis products produced, manufactured and
distributed for use in all countries (except for in the United States)
where Sellers and its Subsidiaries currently distribute "Nakata"-branded
chassis products; provided, however, that (i) Seller shall have the right
to extend the royalty-free license for the duration of the distribution
agreement described in the Schedule of Ancillary Agreements; and (ii)
Seller shall not obtain from Purchaser the right to use the "Nakata" Web
domain name;
(i) in no event shall Purchaser or any Affiliate of Purchaser
advertise or hold itself out as Seller or an Affiliate of Seller at any
time before, on or after the Closing Date; and
(j) as soon as reasonably practicable after the Closing Date, but in
no event later than three months following the Closing Date, Purchaser
shall file to change the name of the Acquired Companies, to the extent
applicable, to delete any references to "▇▇▇▇."
Seller shall not, and shall cause its Subsidiaries and controlled Affiliates not
to, disclose to any person the terms of the Transition Intellectual Property
License Agreement.
Section 7.8. Litigation Support. In the event and for so long as
Seller actively is prosecuting, contesting or defending any Legal Proceeding,
action, investigation, charge, claim, or demand by a third party in connection
with (a) any transactions contemplated under this Agreement or (b) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction involving
the Business or the Acquired Companies, Purchaser shall, and shall cause its
Subsidiaries and controlled Affiliates to, cooperate with Seller and its counsel
in the prosecution, contest or defense, make available its personnel, and
provide such testimony and access to its books and records as shall be
reasonably necessary in connection with the prosecution, contest or defense, all
at the sole control, cost and expense of Seller (unless Seller is entitled to
indemnification therefor or Purchaser elects to assume the defense of such
action under Article XI).
Section 7.9. Bulk Sales Law. Purchaser hereby waives compliance by
Seller, in connection with the transactions contemplated hereby, with the
provisions of any applicable bulk sales law.
ARTICLE VIII
CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATIONS
The obligation of Purchaser to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction (or, if
permitted, waiver by Purchaser in its sole discretion) of each of the following
conditions:
Section 8.1. Accuracy of Representations and Warranties. (a) Each of
the representations and warranties of Seller contained herein that is qualified
as to Material Adverse Ef-
46
fect shall be true and correct in all respects at and as of the Closing Date
(except, in each case, to the extent that any such representation or warranty
speaks as of a specific date, in which case such representation or warranty
shall be, subject to the qualifications set forth above, true and correct as of
such specific date), and (b) each of the representations and warranties of
Seller contained herein that is not qualified by Material Adverse Effect
(reading such representations and warranties, other than any representations or
warranties contained in Section 4.6(a), without regard to any materiality
qualifications contained therein) shall be true and correct in all material
respects with the same force as if made on and as of the Closing Date (except,
in each case, to the extent any such representation or warranty speaks as of a
specific date, in which case such representation or warranty shall be, subject
to the qualifications set forth above, true and correct as of such specific
date). For purposes of this Section 8.1, the parties agree that (x) with respect
to clause (b) above, any representation or warranty shall be true and correct
"in all material respects" unless the breach of such representation or warranty
would reasonably be expected to result in a material diminution of value to the
Purchaser of the aggregate value of the transactions contemplated by this
Agreement, and (y) Excluded Liabilities and any impairment to an Excluded Asset
shall not be considered in determining whether any representation or warranty is
"true and correct".
Section 8.2. Performance of Covenants. Seller shall have performed
and complied, in all material respects, with the covenants and provisions hereof
required to be performed or complied with by it between the date hereof and the
Closing Date.
Section 8.3. Antitrust Laws. Receipt of clearances or approvals
under the antitrust laws of the United States, Germany, Poland, Canada, Spain
and Portugal, in each case if required by law, as well as any other requisite
antitrust clearances or approvals the failure of which to obtain would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
Section 8.4. No Injunctions. No preliminary, temporary or permanent
injunction or other Order of any Governmental Body enacted, entered, enforced or
promulgated by any Governmental Body which prohibits the consummation of the
transactions contemplated hereby shall be in effect.
Section 8.5. Officer's Certificate. Purchaser shall have received a
certificate from Seller to the effect set forth in Sections 8.1 and 8.2, dated
the Closing Date, signed on behalf of Seller by the Chief Executive Officer,
Chief Financial Officer or any Vice President of Seller.
Section 8.6. Debt Financing. The Debt Financing, or alternative
financing as provided in Section 7.5, shall have been obtained by Purchaser;
provided that this condition shall be satisfied in the event that (a) Purchaser
shall have breached in any material respect any representation or warranty in
Section 5.5 and such breach cannot be cured or is not cured prior to the
termination of the Debt Commitments or (b) the Debt Financing is not available
because Purchaser breached in any material respect any of its covenants or
obligations in Section 7.5(b) and such breach cannot be cured or is not cured
prior to the termination of the Debt Commitments.
47
Section 8.7. Transferred Permits and Business Contracts. Sellers
shall have caused the assignment, transfer or conveyance of all Business
Contracts (other than any Business Contracts that are Excluded Assets) and the
Transferred Permits to Purchaser, except to the extent that the failure to
obtain any such assignments, transfers or conveyances would not reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.
ARTICLE IX
CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS
The obligation of Seller to consummate the transactions
contemplated hereby on the Closing Date is subject to the satisfaction (or, if
permitted, waiver by Seller in its sole discretion) of each of the following
conditions:
Section 9.1. Accuracy of Representations and Warranties. (a) Each of
the representations and warranties of Purchaser contained herein that is
qualified as to material adverse effect shall be true and correct in all
respects at and as of the Closing Date with the same force as if made on and as
of the Closing Date (except, in each case, to the extent any such representation
and warranty speaks as of a specific date, in which case such representation and
warranty shall be true and correct, or true and correct in all material
respects, as the case may be, as of such specific date), and (b) each of the
representations and warranties of Purchaser contained herein that is not
qualified by material adverse effect (reading such representations and
warranties without regard to any materiality qualifications contained therein)
shall be true and correct in all material respects at and as of the Closing Date
with the same force as if made on and as of the Closing Date (except, in each
case, to the extent any such representation and warranty speaks as of a specific
date, in which case such representation and warranty shall be true and correct,
or true and correct in all material respects, as the case may be, as of such
specific date).
Section 9.2. Performance of Covenants. Purchaser shall have
performed and complied, in all material respects, with the covenants and
provisions hereof required herein to be performed or complied with by it between
the date hereof and the Closing Date.
Section 9.3. Antitrust Laws. Receipt of clearances or approvals
under the antitrust laws of the United States, Germany, Poland, Canada, Spain
and Portugal, in each case if required by law, as well as any other requisite
antitrust clearances or approvals the failure of which to obtain would not
reasonably be expected to, individually or in the aggregate, have a Material
Adverse Effect.
Section 9.4. No Injunctions. No preliminary, temporary or permanent
injunction or other Order of any Governmental Body enacted, entered, enforced or
promulgated by any Governmental Body which prohibits the consummation of the
transactions contemplated hereby shall be in effect.
Section 9.5. Officer's Certificate. Seller shall have received a
certificate from Purchaser to the effect set forth in Sections 9.1 and 9.2,
dated the Closing Date, signed by an executive officer of Purchaser.
48
ARTICLE X
ADDITIONAL POST-CLOSING COVENANTS
Section 10.1. Certain Employment Matters. (a) Offer of Employment.
The parties hereto intend that there will be a continuity of employment for all
Acquired Company Employees and Business Employees following the Closing Date. In
order to effectuate such transfer of employment as of the Closing Date, except
as otherwise provided herein, at least five days prior to the Closing Date and
effective as of the Closing Date, Purchaser shall make a general offer of
employment with base salary or hourly wage rate and annual bonus opportunity,
basic skills and location no less favorable than the employees' current base
salary or hourly wage rate and annual bonus opportunity, basic skills and
location, through a general notice of transfer (pursuant to methodologies
mutually agreed upon by Seller and Purchaser) to each Business Employee
(including any individuals on maternity leave, short-term disability leave or
another approved leave of absence) (each an "OFFER EMPLOYEE"). Such general
offer of employment will be deemed accepted by each Offer Employee unless (A)
expressly rejected by the Offer Employee prior to the Closing Date or (B) if the
Offer Employee otherwise indicates by his or her actions that such offer of
employment has not been accepted and Purchaser notifies Seller within 30 days
following the Closing Date of such non-acceptance of the offer (each Offer
Employee who acts under (A) or (B), a "NON-ACCEPTANCE OFFER EMPLOYEE"). The
parties will cooperate to comply with legal and regulatory requirements to
accomplish the employment transfers described in this Section 10.1, including
the transfer of the employment of all Acquired Company Employees pursuant to the
purchase of the beneficial ownership of all of the issued and outstanding
capital stock of the Purchased Companies pursuant to this Agreement. No later
than 45 days after the date of this Agreement, and subject to applicable
regulatory, confidentiality, or privacy laws of a particular jurisdiction,
Seller shall provide Purchaser with respect to each Acquired Company Employee or
Business Employee (i) years of service; (ii) job title; (iii) base salary or
current wages; (iv) date of hire; (v) employment status; (vi) work location and
(vii) current address.
(b) Employee Benefit Plans. Effective as of the Closing, Seller
shall cause the Acquired Companies to cease to sponsor or constitute a
participating employer in all Seller Employee Benefit Plans and, except as
otherwise provided in this Section 10.1, as of the Closing Date all Transferred
Employees will cease to accrue benefits under and participate as active
participants in all Seller Employee Benefit Plans. Except as specifically
provided in this Section 10.1 or in Section 1.4(c)(ii), Seller shall remain
solely responsible for any and all Liabilities and obligations arising under, in
connection with or in respect of the Seller Employee Benefit Plans, and all
rights and entitlements under such plans of all current and former employees
employed in connection with the Business (including the rights and entitlements
of the Business Employees and Acquired Company Employees thereunder) and neither
Purchaser nor any of its Subsidiaries (including, after the Closing Date, the
Acquired Companies) shall have any responsibility or obligation in respect of
any such plan. Effective as of the Closing Date, and except as otherwise
provided in this Section 10.1, Purchaser and its Subsidiaries (including, as of
the Closing Date, the Acquired Companies) shall be solely responsible for any
and all Liabilities and obligations arising under, in connection with or in
respect of the Acquired Company Plans and neither Seller nor any of its
Subsidiaries (other than the Acquired Companies) shall have any responsibility
or obligation in respect of any such plan. Except as set forth in Section 1.2,
no assets held in trust
49
for any Seller Employee Benefit Plan will be transferred to Purchaser or to any
employee benefit plan adopted or maintained by Purchaser or any of its
Subsidiaries.
(c) Other Employment-Related Liabilities. Without limiting the
generality of Section 1.4, Purchaser and its Subsidiaries (including the
Acquired Companies) shall be solely responsible for any Liabilities: (i) in
respect of any Offer Employee (x) to whom Purchaser or one of its Subsidiaries
does not make an offer complying with the requirements of Section 10.1(a) and
(y) who otherwise does not accept employment with Purchaser effective as of the
Closing Date, arising in connection with or as a result of any claim of actual
or constructive termination of the employment of any Business Employee as a
result of the consummation of the transactions contemplated hereby; and (ii)
except as otherwise specifically set forth in this Section 10.1, otherwise
arising out of the employment or termination of employment of any Transferred
Employee on or after the Closing Date (other than with respect to any claim of
actual or constructive termination of the employment of any Business Employee to
whom Purchaser or one of its Subsidiaries does make an offer complying with the
requirements of Section 10.1(a) arising in connection with and as a result of
the consummation of the transactions contemplated hereby).
(d) Welfare Benefits. (i) Seller shall retain responsibility for and
continue to pay all medical, life insurance, disability and other welfare plan
expenses and benefits for each current or former Business Employee or Acquired
Company Employee with respect to claims incurred by such Employees or their
covered dependents on or prior to the Closing Date. Expenses and benefits with
respect to claims incurred by Transferred Employees or their covered dependents
after the Closing Date shall be the responsibility of Purchaser. For purposes of
this paragraph, a claim is deemed incurred when the services that are the
subject of the claim are performed; in the case of life insurance, when the
death occurs, in the case of long-term disability benefits, when the disability
occurs and, in the case of a hospital stay, when the employee first enters the
hospital.
(ii) Following the Closing Date, Seller shall retain all
liabilities, obligations and responsibilities to provide post-retirement
medical, health and life insurance benefits ("RETIREE MEDICAL BENEFITS") to any
Former Acquired Company Employees, Acquired Company Employees, Transferred
Employees and Business Employees who (x) are retired on or prior to the Closing
Date or (y) would have, had they retired on or prior to Closing Date, been
entitled, or (except with respect to any Employee Benefit Plan providing Retiree
Medical Benefits that as of the date hereof does not provide participants with
continuing credit for age and service) with three additional years of age and
service (the "ADDITIONAL YEARS") been entitled, to Retiree Medical Benefits
pursuant to the terms of any of the Employee Benefit Plans listed on Section
10.1(d)(ii) of the Seller Disclosure Schedule (the "RETIREE MEDICAL PLANS") (the
individual's described in clauses (x) and (y) of this Section 10.1(d)(ii), the
"DEEMED RETIREES"); provided that no credit for additional age and service
pursuant to this Section 10.1(d) shall be granted to the extent such grant of
additional age and service credit would be deemed a violation of applicable Law;
provided, further, that Deemed Retirees who are granted credit for additional
years of age and service under the Retiree Medical Plans pursuant to this
Section 10.1(d) shall only be deemed eligible for Retiree Medical Benefits at
such time, assuming they had continued employment with Seller or any of its
affiliates following the Closing Date, as they would otherwise have been
eligible for such benefits. Seller shall credit the Deemed Retirees with the
Additional
50
Years and Sellers shall, in Seller's discretion (unless the applicable Retiree
Medical Plan provides the Deemed Retirees with a more favorable election right)
either (A) provide the Deemed Retirees with the opportunity to elect to begin
coverage under the applicable Retiree Medical Plan as of the date of their
termination of employment from Purchaser or any of its affiliates (including,
following Closing, the Acquired Companies) or, if later, the date a Deemed
Retiree becomes eligible for Retiree Medical Benefits pursuant to this Section
10.1(d) or (B) provide that the Deemed Retirees shall begin coverage under the
Retiree Medical Plans on the Closing Date or, if later, the date a Deemed
Retiree becomes eligible for Retiree Medical Benefits pursuant to this Section
10.1(d) and Seller shall pay all premiums in respect of any Deemed Retiree's
coverage under the Retiree Medical Plans during the period of his or her
continuous employment with Purchaser or any of its affiliates following Closing.
For the avoidance of doubt, Seller reserves the right to amend or terminate any
Retiree Medical Plan pursuant to its terms.
(e) U.S. Business Employees. The provisions of this Section 10.1(e)
apply only to United States-based Business Employees and Acquired Company
Employees.
(i) Workers' Compensation. Notwithstanding anything herein
to the contrary, Seller and its Subsidiaries shall be
solely responsible for claims for workers' compensation
that are incurred with respect to any United
States-based Business Employee or Acquired Company
Employee prior to the Closing Date and Purchaser shall
be solely responsible for claims for workers
compensation that are incurred with respect to any
Transferred Employee on or after the Closing Date.
(ii) Cobra Coverage. Beginning as of the Closing, Purchaser
shall be responsible for, and shall assume all Liability
and indemnify and hold Seller and its Subsidiaries and
Affiliates harmless with respect to, providing the
notices and making available the health care
continuation coverage, all as required by Code Section
4980B ("COBRA COVERAGE"), for all United States-based
Transferred Employees who are employed immediately prior
to Closing and who become eligible for Cobra Coverage
following Closing; provided, however, that Seller and
its Subsidiaries and Affiliates shall provide Purchaser
with the records reasonably necessary to identify and
administer such responsibilities.
(f) Benefits; Compensation. (i) Purchaser agrees that, from the
Closing Date until the first anniversary thereof it shall maintain employee
benefit and compensation (including incentive bonus opportunity) plans, programs
and arrangements for the benefit of the Transferred Employees who are not
Represented Employees (the "NON-REPRESENTED EMPLOYEES") that, when taken as a
whole, are at least as favorable as those provided to such employees as of
immediately prior to the Closing Date (other than specific equity-based
compensation and retiree medical and life benefits); provided, that,
notwithstanding the foregoing, Purchaser agrees that it shall, or shall cause
its applicable Subsidiary, to employ each Non-Represented Employee at a base
salary or base wage that is at least the rate of base salary or wages paid to
such Non-Represented Employee on the day immediately prior to the Closing Date.
51
(ii) For all purposes (other than benefit accrual under a
defined benefit pension plan) under the employee benefit plans of Purchaser and
its Subsidiaries providing benefits to any Non-Represented Employees after the
Closing (the "NEW PLANS"), each Non-Represented Employee shall be credited with
his or her years of service with Seller and its Subsidiaries (including the
Acquired Companies) as of the Closing Date (and any additional service credited
under the Employee Benefit Plans), to the same extent as such Non-Represented
Employee was entitled, before the Closing, to credit for such service under any
similar Employee Benefit Plans, except to the extent such credit would result in
a duplication of benefits. In addition, and without limiting the generality of
the foregoing: (A) each Non-Represented Employee shall be immediately eligible
to participate, without any waiting time, in any and all New Plans to the extent
coverage under such New Plan replaces coverage under a comparable Employee
Benefit Plan in which such Non-Represented Employee previously participated
(such plans, collectively, the "OLD PLANS"); and (B) for purposes of each New
Plan providing medical, dental, pharmaceutical, vision and/or disability
benefits to any Non-Represented Employee, Purchaser shall cause all preexisting
condition exclusions and actively-at-work requirements of such New Plan to be
waived for such employee and his or her covered dependents, to the extent such
exclusions and requirements were waived under comparable Old Plans, and
Purchaser shall cause any eligible expenses incurred by such Non-Represented
Employee and his or her covered dependents during the portion of the plan year
of the Old Plan ending on the date such Non-Represented Employee's participation
in the corresponding New Plan begins to be taken into account under such New
Plan for purposes of satisfying all deductible, coinsurance and maximum
out-of-pocket requirements applicable to such Non-Represented Employee and his
or her covered dependents for the applicable plan year as if such amounts had
been paid in accordance with such New Plan.
(iii) This Section 10.1(f)(iii) applies only to Transferred
Employees whose terms of employment are governed by a collective bargaining
agreement listed on Section 10.1(f)(iii) of the Seller Disclosure Schedule
("REPRESENTED EMPLOYEES"). Purchaser shall assume the collective bargaining
agreements applicable to the Represented Employees as of the Closing and shall
continue all terms and conditions of employment under such assumed collective
bargaining agreements through the expiration or other termination of such
agreements in conformity with labor laws and regulations of the applicable
country and the terms of such agreements.
(iv) Notwithstanding anything herein to the contrary, Seller
and its Subsidiaries shall retain all Liabilities for long-term disability
salary continuation income benefits in respect of the individuals listed on
Section 10.1(f)(iv) of the Seller Disclosure Schedule (the "LTD EMPLOYEES")
under any long-term disability plan of Seller and its Subsidiaries.
(g) Annual Bonus. Without limiting the generality of the foregoing
provisions of Sections 1.4 and 10.1, Seller shall pay a bonus for the year in
which the Closing occurs prorated through the Closing Date (and based upon
performance through the Closing Date) to each Transferred Employee who is or
would be eligible to receive an annual bonus under any Employee Benefit Plan
(who would meet the service requirements assuming continued participation in
such Employee Benefit Plan) pursuant to the terms thereof and subject to
achieving the performance goals of such annual bonus and who meets the service
requirements to receive such a bonus before the Closing. Without limiting the
generality of the foregoing provisions of Sec-
52
tions 1.4 and 10.1, Purchaser shall pay, or shall cause one of its Subsidiaries
to pay, an annual bonus for the year in which the Closing occurs (less any
amounts payable by Seller pursuant to this Section 10.1(g)) to each Transferred
Employee who is or would be eligible to receive an annual bonus under any
Employee Benefit Plan pursuant to the terms thereof and subject to achieving the
performance goals of such annual bonus and who meets the service requirements to
receive such a bonus, based upon service with Seller and its Subsidiaries
(including the Acquired Companies) before the Closing and service with Purchaser
and its Subsidiaries (including the Acquired Companies) after the Closing
(taking into account to the extent applicable such service as if it were service
with Seller and its Subsidiaries).
(h) Severance Policy. From the Closing Date until the first
anniversary thereof, Purchaser will provide each Transferred Employee with a
severance policy comparable in the aggregate to that provided by Seller and its
Subsidiaries, respectively, to each Transferred Employee immediately prior to
the Closing Date and listed on Section 10.1(h) of the Seller Disclosure Schedule
and, for all purposes with respect to such severance policies, will provide each
of the Transferred Employees and Acquired Company Employees credit for past
service with Seller and its Subsidiaries and Affiliates to the extent such
service was credited under severance plans of Seller, its Subsidiaries and its
Affiliates.
(i) Accrued Vacation. To the extent such vacation is accrued on the
Benchmark Balance Sheet or as required by Law, Purchaser will (i) permit
Transferred Employees to carry over and take earned, but unused, vacation days
with pay in accordance with the applicable policies of Seller and the Acquired
Companies as in effect as of the Closing Date and (ii) assume any Liabilities to
Transferred Employees for payments in respect of earned but unused vacations
that arise as a result of the transfer of employment contemplated by Section
10.1(a).
(j) Pension Plans. Except as explicitly provided otherwise in this
Section 10.1, Seller shall retain all assets and Liabilities accrued through the
Closing Date under the Seller Employee Benefit Plans that are pension plans, and
shall make all contributions required to be made under the terms of each such
plan for periods ending on or before the Closing Date. With respect to each
Seller Employee Benefit Plan other than the UK Schemes that is an employee
pension plan (as defined in Section 3(2) of ERISA), the accrued benefits and/or
the account balance of each Transferred Employee shall, as of the Closing, fully
vest.
(k) Cooperation. After the Closing, Purchaser will cooperate with
Seller (and its Subsidiaries and Affiliates) in providing access to relevant
data and employment records of Transferred Employees reasonably necessary to
administer the benefits of Acquired Company Employees and Business Employees
under any Seller Employee Benefit Plan.
(l) Cambridge Plant Pension Plan. (i) Effective as of the Closing
Date, Seller shall cause ▇▇▇▇ Canada Corporation ("▇▇▇▇ CANADA") to assign and
transfer to Purchaser or its subsidiary or affiliate, as applicable, its rights,
obligations and liabilities with respect to the Pension Plan for Members of
Local ▇▇▇▇ ▇.▇.▇. at the Cambridge Plant of ▇▇▇▇ Canada (the "CANADIAN PENSION
PLAN") and its related funding medium (the "CANADIAN PENSION FUND"). Effective
as of the Closing Date, Purchaser or its subsidiary or affiliate, as applicable,
shall accept such assignment and transfer, provided that any required approvals
of the employee association or bargaining agent are obtained. Seller shall cause
▇▇▇▇ Canada to cause to be filed
53
with the applicable federal and provincial regulatory authorities, as soon as
possible after the Closing Date, such documentation as may be required with
respect to the assumption of sponsorship of the Canadian Pension Plan and the
Canadian Pension Fund as provided for hereunder. Purchaser agrees to do all
things required of it under applicable laws to establish that it or its
affiliate or subsidiary, as applicable, is the successor sponsor under the terms
of the Canadian Pension Plan and the Canadian Pension Fund as provided
hereunder.
(ii) Seller shall cause ▇▇▇▇ Canada to be responsible for
satisfying any and all governmental reporting and/or disclosure requirements
applicable to the Canadian Pension Plan and the Canadian Pension Fund with
respect to plan years ending prior to the Closing Date and the Purchaser shall
be responsible for satisfying any and all governmental reporting and/or
disclosure requirements with respect to plan years ending on or after the
Closing Date. Seller shall cause ▇▇▇▇ Canada to reasonably co-operate with the
Purchaser with respect to such reporting requirements for the plan year in which
the Closing occurs. Prior to and following the Closing Date, Seller shall cause
▇▇▇▇ Canada to provide the Purchaser with such books, records and other relevant
data within its reasonable control or access relating to the Canadian Pension
Plan and the Canadian Pension Fund as Purchaser shall reasonably request.
(iii) The parties acknowledge that ▇▇▇▇ Canada and the
Canadian Pension Fund participate in the ▇▇▇▇ Canada Master Trust Fund. The
parties shall co-operate with each other to effect the removal of the Canadian
Pension Fund and its assets (in cash or in kind, as agreed to by the parties)
from the ▇▇▇▇ Canada Master Trust Fund. Without limiting the generality of the
foregoing, the removal shall occur on a fair market value basis, determined as
of the date immediately preceding the date of removal.
(m) Savings Plans. (i) As of the date of this Agreement, Acquired
Company Employees and Business Employees participate in the defined contribution
plans listed in Section 10.1(m) of the Seller Disclosure Schedule (collectively
referred to as the "SELLER SAVINGS PLANS"). Transferred Employees shall not be
entitled to make contributions to or to benefit from matching or other
contributions under the Seller Savings Plans on and after the Closing Date.
(ii) Purchaser shall take all action necessary and appropriate
to ensure that, as soon as practicable after the Closing Date, Purchaser
maintains or adopts one or more savings plans (hereinafter referred to in the
aggregate as the "PURCHASER SAVINGS PLANS" and individually as the "PURCHASER
SAVINGS PLAN") effective as soon as practicable following the Closing Date and
to ensure that each Purchaser Savings Plan satisfies the following requirements
as soon as practicable following the Closing Date: (A) the Purchaser Savings
Plan is a qualified, single-employer individual account plan under Section
401(a) of the Code; (B) each Transferred Employee is eligible to participate in
a Purchaser Savings Plan that permits him or her to make before-tax
contributions (under Section 401(k) of the Code) and receive loans on a basis at
least as favorable as under the applicable Seller Savings Plan and provides for
matching contributions by Purchaser; and (C) the Purchaser Savings Plan does not
violate the requirements of any applicable collective bargaining agreement.
(iii) The terms of the Purchaser Savings Plans, or each such
Purchaser Savings Plan, shall provide that each Transferred Employee shall have
the right to make a direct rollover to a Purchaser Savings Plan of his or her
account in a Seller Savings Plan, including a
54
direct rollover of any notes evidencing loans made to such Acquired Company
Employee or Transferred Employee; provided that each Transferred Employee who
elects to roll over an account in a Seller Savings Plan must roll over his or
her entire account balance (including a rollover of any notes evidencing loans
made to such Transferred Employee).
(iv) Within 60 days after the Closing Date, Seller shall
deliver to Purchaser a list of the Transferred Employees covered by the Seller
Savings Plans, together with each Transferred Employee's service under each of
the Seller Savings Plans as of the Closing Date.
(n) UK Employee Benefit Plans. (i) In the United Kingdom, effective
as of the Closing Date, Sellers shall cause the Acquired Companies to cease to
sponsor or constitute a participating employer in the UK Schemes, and as of the
Closing Date, Transferred Employees and Acquired Company Employees will cease to
accrue benefits under and participate as active participants in the UK Schemes.
Except as specifically provided in this Section 10.1, Sellers shall remain
solely responsible for any and all Liabilities and obligations arising under, in
connection with or in respect of the UK Schemes in relation to the period prior
to Closing, including all rights and entitlements under the UK Schemes of all
current and former Acquired Company Employees and Transferred Employees and
neither Purchaser not any of its Subsidiaries (including, after the Closing
Date, the Acquired Companies) shall have any responsibility or obligation in
respect of the UK Schemes in relation to the period prior to and including the
Closing Date.
(ii) Sellers shall use their reasonable endeavours to procure
that an actuarial assessment is made of any deficits in the UK Schemes as of the
Closing Date, and shall be solely responsible for any debt under any UK Scheme
arising against any employer under: (A) section 75 of the Pensions ▇▇▇ ▇▇▇▇; or
(B) any additional obligation arising under the trust deed and rules governing
any UK Scheme or any agreement between that employer and the trustees of the UK
Scheme, in each of case (A) or (B), in respect of the period prior to and
including the Closing Date.
(iii) No assets held in trust for any UK Scheme will be
transferred to Purchaser or to any employee benefit plan adopted or maintained
by Purchaser or any of its Subsidiaries. If, as a consequence of any action by
the Purchaser after Closing which directly or indirectly results in the
termination of the contract of employment of any Acquired Company Employee or
Transferred Employee, any Acquired Company Employee or Transferred Employee
becomes entitled to or claims any retirement benefit (including a pension, lump
sum or similar benefit) (other than any benefits in respect of the period up to
and including the Closing Date for which the Sellers are responsible under
Section 10.1(n)(i) above), the Purchaser shall indemnify the Seller against any
Liabilities incurred by the Sellers in providing such additional benefits or in
dealing with any such claims for such benefits from any Acquired Company
Employee or Transferred Employee. Where the Sellers becomes aware of any claim
or proceeding or any threat thereof to which this Section 10.1(n)(iii) relates
(Proceedings):
(A) the Sellers shall give notice to the Purchaser as
soon as reasonably practicable together with all
information in the Seller's possession and which
is, in its reasonable opinion, relevant to the
Proceedings;
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(B) the Sellers shall not respond in any way (save as
reasonably directed or allowed by the Purchaser or by
way of acknowledgement) to the Proceedings and in
particular (without prejudice to the generality of this
condition) make any admission of any kind. This is
subject to the Purchaser giving the appropriate
direction within a reasonable time (and in any event in
good time for the Sellers to meet any applicable time
limits);
(C) the Purchaser shall at its discretion be permitted to
assume conduct of any matter to which this Section
10.1(n)(iii) relates (including all communication and
negotiation with the person or persons concerned in the
Proceedings or their representatives), having due regard
to any continuing relationship the Sellers may have with
the said person or persons. The Sellers shall render to
the Purchaser all such assistance in relation thereto as
the Purchaser reasonably requires and as lies within the
Sellers's power to provide (provided the Purchaser
reimburses the Sellers the costs and expenses of doing
so);
(D) the Purchaser shall, in the conduct of any matter to
which this Section 10.1(n)(iii) relates, keep the
Sellers fully informed and act in a prompt and proper
manner;
(E) the Sellers may take such action as is necessary to
prevent it losing the right to defend any claim if the
Purchaser, having received notification under paragraph
(A), has not provided the Sellers with evidence of the
Purchaser having taken action necessary to defend or
settle the claim or confirmation that such action is
being duly taken.
Section 10.2. Transition Agreements; Ancillary Agreements. Effective
at the Closing, Purchaser and Seller, or such of their respective Subsidiaries
as appropriate, shall enter into one or more transition services agreements
substantially in the form of Exhibit H (the "TRANSITION SERVICES AGREEMENTS" and
together with the Transition Intellectual Property License Agreement, the
"TRANSITION AGREEMENTS"). On and after the date hereof and until the one-month
anniversary of the Closing, Purchaser and Seller agree to negotiate in good
faith to enter into agreements on the terms and conditions set forth in the
schedule of ancillary agreements attached as Exhibit I (the "SCHEDULE OF
ANCILLARY AGREEMENTS").
Section 10.3. Further Assurances; Further Conveyances and
Assumptions; Consent of Third Parties. (a) From time to time following the
Closing, Seller and Purchaser shall, and shall cause their respective
Subsidiaries to, execute, acknowledge and deliver all such further conveyances,
notices, assumptions, releases and acquittances and such other instruments, and
shall take such further actions, as may be necessary or appropriate to assure
fully to Purchaser and its respective successors or assigns, all of the
properties, rights, titles, interests, estates, remedies, powers and privileges
intended to be conveyed to Purchaser under this Agreement and
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the Transition Agreements and to assure fully to Seller and its Subsidiaries and
their successors and assigns, the assumption of the Liabilities intended to be
assumed by Purchaser under this Agreement and the Transition Agreements, and to
otherwise make effective the transactions contemplated hereby and thereby
(including (i) transferring back to Seller or the applicable Subsidiary any
asset or Liability not contemplated by this Agreement to be a Purchased Asset or
an Assumed Liability, respectively, which asset or Liability was transferred to
Purchaser at the Closing, (ii) transferring back to Seller any asset or
Liability of the Acquired Companies set forth on Schedules 1.3(d) and 1.3(e) and
(iii) transferring to Purchaser any asset or Liability contemplated by this
Agreement to be a Purchased Asset or an Assumed Liability, respectively, which
was not transferred to Purchaser at the Closing).
(b) Nothing in this Agreement nor the consummation of the
transactions contemplated hereby shall be construed as an attempt or agreement
to assign any Purchased Asset, including any Contract, Permit, certificate,
approval, authorization or other right, which by its terms or by Law is
nonassignable without the consent of a third party or a Governmental Body or is
cancelable by a third party in the event of an assignment ("NONASSIGNABLE
ASSETS") unless and until such consent shall have been obtained. Seller shall,
and shall cause its Subsidiaries to, use reasonable best efforts to cooperate
with Purchaser at its request in endeavoring to obtain such consents promptly;
provided, however, that such cooperation shall not require Seller or any of its
Subsidiaries to remain secondarily liable or to make any payment to obtain any
such consent with respect to any Nonassignable Asset.
(c) To the extent permitted by applicable Law, in the event consents
to the assignment thereof cannot be obtained, such Nonassignable Assets shall be
held, as of and from the Closing Date, by Seller or the applicable Subsidiaries
of Seller in trust for Purchaser and the covenants and obligations thereunder
shall be performed by Purchaser in Seller's or such Subsidiaries' name and all
benefits and obligations existing thereunder shall be for Purchaser's account.
Seller shall take or cause to be taken such actions in its name or otherwise as
Purchaser may reasonably request so as to provide Purchaser with the benefits of
the Nonassignable Assets and to effect collection of money or other
consideration that becomes due and payable under the Nonassignable Assets, and
Seller or the applicable Subsidiaries of Seller shall promptly pay over to
Purchaser all money or other consideration received by it in respect of all
Nonassignable Assets.
(d) As of and from the Closing Date, Seller on behalf of itself and
its Subsidiaries authorizes Purchaser, to the extent permitted by applicable Law
and the terms of the Nonassignable Assets, at Purchaser's expense, to perform
all the obligations and receive all the benefits of Seller or its Subsidiaries
under the Nonassignable Assets and appoints Purchaser its attorney-in-fact to
act in its name on its behalf or in the name of the applicable Subsidiary of
Seller and on such Subsidiary' behalf with respect thereto.
(e) Notwithstanding anything in this Agreement to the contrary,
unless and until any consent or approval with respect to any Nonassignable Asset
is obtained, such Nonassignable Asset shall not constitute a Purchased Asset and
any associated Liability shall not constitute an Assumed Liability for any
purpose under this Agreement, and the failure of any such consent or approval to
be obtained or the failure of any such Nonassignable Asset to constitute a
Purchased Asset or any circumstances resulting therefrom shall not, individually
or in the aggregate,
57
constitute a Material Adverse Effect or a breach by Seller of any
representation, warranty, covenant or agreement contained in this Agreement or a
failure of any condition under this Agreement to the extent that Seller or the
applicable Subsidiary of Seller shall have transferred, or shall have caused the
transfer of, the benefits and burdens of such Nonassignable Asset to Purchaser
as of Closing, and Purchaser shall have received appropriate documentation,
substantially in the form attached as Exhibit J, evidencing such transfer of
benefits and burdens from Seller or such applicable Subsidiary of Seller.
(f) Prior to the Closing, Seller and its Subsidiaries, with respect
to the Business, and the Acquired Companies shall use reasonable best efforts to
apply all insurance proceeds from coverage relating to the Business or the
Acquired Companies to restore the assets of the Seller, its Subsidiaries and the
Acquired Companies or hold such proceeds for Purchaser's account.
ARTICLE XI
SURVIVAL, INDEMNIFICATION AND RELATED MATTERS
Section 11.1. Survival. (a) All representations and warranties
contained herein, and the right to commence any claim with respect thereto,
shall terminate at the close of business on the date that is twelve months after
the Closing Date, and except with respect to claims asserted prior to such date,
neither Purchaser nor Seller nor their respective Subsidiaries shall have any
Liability whatsoever with respect to such representations or warranties after
such date, except that the representations and warranties (i) set forth in
Sections 4.1, 4.2, 4.3, 4.4, 5.1, 5.2, and 5.3 shall survive indefinitely, (ii)
set forth in Section 4.13 shall survive until the expiration of the statute of
limitations applicable to the matters covered thereby and (iii) set forth in
Sections 4.17 and 4.18 shall survive the Closing until the fourth anniversary of
the Closing Date. All representations and warranties contained in any Seller
Document or in any Purchaser Document, and the right to commence any claim with
respect thereto, shall survive as provided in such Seller Document or such
Purchaser Document (or, if no survival period is specified herein, such
covenants and agreements shall survive indefinitely). The covenants and
agreements of the parties hereto contained herein, in any Seller Document and in
any Purchaser Document that contemplate actions to be taken or restrict certain
actions from being taken before the Closing shall, solely for purposes of
indemnification pursuant to this Article XI, survive the Closing and remain in
full force and effect in accordance with their terms. The covenants and
agreements of the parties hereto contained herein, in any Seller Document and in
any Purchaser Document that contemplate actions to be taken or restrict certain
actions from being taken after the Closing shall, for purposes of
indemnification pursuant to this Article XI, remain in full force and effect in
accordance with their terms.
(b) After the Closing, the indemnification expressly provided for
herein shall be the sole and exclusive remedy for monetary damages for any
breach of representations, warranties, covenants or agreements herein by either
party hereto; provided, however, the foregoing shall not limit the right of
either party hereto to seek recovery for fraud pursuant to applicable Law or to
seek specific enforcement for a breach of such covenants or agreements. Except
with respect to the contractual rights and remedies of Purchaser under this
Agreement, Purchaser hereby releases Seller from any claims or causes of action
that it may have relating to claims for
58
contribution or cost recovery under CERCLA. Each Person entitled to
indemnification hereunder shall use its reasonable best efforts to mitigate
Losses for which it seeks indemnification hereunder.
(c) In calculating any amount of Losses recoverable pursuant to this
Section 11.1, the amount of such Losses shall be reduced by (i) any insurance
proceeds actually received from any unaffiliated insurance carrier offsetting
the amount of such Loss, net of any expenses incurred by the Indemnified Party
in obtaining such insurance proceeds, (ii) any actual recoveries from third
parties pursuant to indemnification (or otherwise) (including any insurer) with
respect thereto, net of any expenses incurred by the Indemnified Party in
obtaining such third party payment and (iii) any net Tax benefit actually
realized by the Indemnified Party in respect of any Losses for which such
indemnification payment is made, and shall be increased by any net Tax cost
incurred by the Indemnified Party as a result of the receipt of the indemnity
payment (other than Taxes resulting from a reduction in Tax basis). If any
Losses for which indemnification is provided hereunder are subsequently reduced
by any net Tax benefit, insurance payment or other recovery from a third party,
the Indemnified Party shall promptly remit the amount of such reduction to the
Indemnifying Party when, as, and if actually realized (provided that such amount
shall not exceed, in any event, the amount so previously paid in respect thereof
by the Indemnifying Party).
(d) Notwithstanding anything herein to the contrary, no party shall
be liable to any Indemnified Party for (i) punitive or exemplary Losses or (ii)
special, incidental, indirect or consequential Losses, except to the extent that
applicable Law would permit a party to recover lost or anticipated profits of
the Business that are reasonably foreseeable to Seller; provided, however, that
the foregoing limitations shall not apply to the extent that such Losses consist
of a payment by the Indemnified Party in defense of or in respect of a
third-party claim.
(e) Anything in this Article XI to the contrary notwithstanding,
indemnification for any and all Tax matters and the procedures with respect
thereto shall be governed exclusively by Article XIV.
(f) Notwithstanding anything herein to the contrary, as to
indemnification for any matters set forth in Section 4.17: (i) Seller shall have
the right to conduct and retain exclusive control over any remedial action,
correction of noncompliance or other action; provided, however, that Seller
shall provide Purchaser with a reasonable opportunity to review and comment on
such remedial correction or non-compliance or other action (within the
applicable time period available to Seller for review and comment), which
comments Seller shall not unreasonably disregard; (ii) any such remedial action,
correction of noncompliance or other action to be undertaken shall be the most
reasonable cost-effective method under the circumstances and based upon the
assumption that the Owned Real Property or Leased Real Property is and will
continue to be used for industrial or commercial, as applicable, (as opposed to
residential) purposes and shall not exceed either the least stringent
requirements of any applicable Environmental Law or any request or order of any
Government Body having jurisdiction over such remedial action, correction of
noncompliance or action (as to any Owned Real Property, Purchaser shall agree to
a deed restriction on that real property which is subject to any such action
provided that such deed restriction does not materially affect Purchaser's use
of the applicable real property if such use has been consistent with Seller's
use of such real property); (iii) any such remedial
59
action, correction of noncompliance or action shall be conducted in compliance
in all material respects with all Environmental Laws and; (iv) Seller and
Purchaser mutually agree to cooperate in connection with any such remedial
action, correction of noncompliance, or action and upon request, Purchaser shall
provide Seller, including its agents, representatives and contractors,
unrestricted access (subject to the requirements not to unreasonably disrupt the
business or operations of Purchaser) to Owned Real Estate or Leased Real Estate
for the purpose of conducting any such action.
Section 11.2. Indemnification. (a) Seller hereby agrees, from and
after Closing, to indemnify, defend and hold the Purchaser Indemnified Group
harmless from and against any and all claims, judgments, fines, causes of
action, demands, complaints, arbitrations, assessments, liabilities,
obligations, damages, losses, deficiencies, costs, penalties, interest and
expenses (including the reasonable fees and expenses of counsel whether
involving a third-party claim or solely between the parties to this Agreement)
(collectively, "LOSSES") arising out of or resulting from the following (without
duplication):
(i) any inaccuracy or breach of any representation or
warranty (other than any representation or warranty
contained in Section 4.8 or 4.21) on the part of Seller
herein or in any Seller Document (reading such
representations and warranties, other than any
representation or warranty contained in Section
4.7(a)(ii), 4.7(b), 4.12(j), 4.12(m), 4.12(n), 4.12(q),
4.12(s), 4.13(a) or 4.15(b), without regard to any
materiality qualifications, including "Material Adverse
Effect");
(ii) any non-fulfillment or breach of any covenant or
agreement on the part of Seller herein or in any Seller
Document, other than Section 6.2(r), which shall be
governed by Article XIV;
(iii) (A) any Excluded Liability and (B) any Liability of an
Acquired Company or a Transferred JV that would
constitute an Excluded Liability if such Acquired
Company or Transferred JV were the Seller or any of its
Subsidiaries (other than an Acquired Company or a
Transferred JV); and
(iv) the failure of Seller to comply with any applicable bulk
sales law, except that this clause (iv) shall not affect
the obligation of Purchaser to pay and discharge the
Assumed Liabilities.
Seller shall not be liable for any Losses with respect to the
matters set forth in Section 11.2(a)(i) unless (x) a claim is timely asserted
during the survival period specified in Section 11.1(a), and (y) the aggregate
of all Losses (other than any Losses arising out of or resulting from any
inaccuracy or breach of any representation set forth in Sections 4.1, 4.2, 4.3,
4.4, 4.18, 4.20, or 4.22) under Section 11.2(a)(i) exceeds, on a cumulative
basis, U.S. $10 million (and then only to the extent of such excess); provided,
however, notwithstanding anything herein to the contrary, Seller shall not be
required to pay an aggregate amount in excess of 20% of the Initial Cash
Consideration in respect of Losses for the matters set forth in Sections
11.2(a)(i)
60
(provided that the foregoing limitation in this proviso shall not apply to any
obligation or liability under Section 11.2(a)(i) arising out of or related to
any breach of any of the representations set forth in Sections 4.1, 4.2, 4.3,
4.4, 4.18, 4.20 and 4.22). For the avoidance of doubt, the limitations in this
paragraph do not apply to clauses (ii), (iii) or (iv) of Section 11.2(a). No
indemnification shall be made by Seller with respect to any Loss to the extent
that (A) such Loss was reflected as a Liability on, or constitutes the payment
of or satisfaction of a Liability reflected on, the Closing Date Working Capital
Statement or (B) such Loss was the subject of a dispute resolved as contemplated
by Section 2.3(e).
(b) Purchaser hereby agrees, from and after Closing, to indemnify,
defend and hold the Seller Indemnified Group harmless from and against any and
all Losses arising out of or resulting from the following (without duplication):
(i) any inaccuracy or breach of any representation or
warranty on the part of Purchaser herein or in any
Purchaser Document(reading such representations and
warranties without regard to any materiality
qualifications, including "material adverse effect,"
contained therein);
(ii) any non-fulfillment or breach of any covenant or
agreement on the part of Purchaser herein or in any
Purchaser Document;
(iii) Purchaser's and any of its Subsidiaries' ownership or
operation of the Business, the Acquired Companies or the
Purchased Assets from and after the Closing Date,
including all Liabilities arising from or relating to
any actual or alleged human exposure to asbestos or
asbestos-containing materials in any of the products (or
any part or component) manufactured, serviced or sold,
or services performed after the Closing with respect to
the Business or any Acquired Company, including any such
Liabilities for negligence, strict liability, design or
manufacturing defect, conspiracy, failure to warn, or
breach of express or implied warranties or
merchantability or fitness for any purpose or use, other
than any Liability indemnifiable by Seller under Section
11.2(a); and
(iv) other than any Liability indemnifiable by Seller under
Section 11.2(a), any Assumed Liabilities or any
Liabilities of any Acquired Companies (or their
successors or assigns).
Purchaser shall not be liable for any Losses with respect to the
matters set forth in Section 11.2(b)(i) unless (x) a claim is timely asserted
during the survival period specified in Section 11.1(a), and (y) the aggregate
of all Losses under Section 11.2(b)(i) exceeds, on a cumulative basis, U.S. $10
million (and then only to the extent of such excess) (provided that the
foregoing limitation in clause (y) shall not apply to any obligation or
liability under Section 11.2(b)(i) arising out of or related to any breach of
any of the representations set forth in Section 5.1, 5.2, or 5.6); provided,
however, notwithstanding anything herein to the contrary, Purchaser shall not be
required to pay an aggregate amount in excess of 20% of the Initial Cash
Consideration
61
in respect of Losses for the matters set forth in Section 11.2(b)(i) (provided
that the foregoing limitation in this proviso shall not apply to any obligation
or liability under Section 11.2(b)(i) arising out of or related to any breach of
any of the representations set forth in Sections 5.1, 5.2, or 5.6). For the
avoidance of doubt, the limitations in this paragraph do not apply to clauses
(ii), (iii) or (iv) of Section 11.2(b).
Section 11.3. Procedures for Indemnification. Whenever a claim shall
arise for indemnification under this Article XI, the party entitled to
indemnification (the "INDEMNIFIED PARTY") shall promptly notify the party from
which indemnification is sought (the "INDEMNIFYING PARTY") of such claim and,
when known, the facts constituting the basis for such claim; provided, however,
that in the event of any claim for indemnification hereunder resulting from or
in connection with any claim or Legal Proceeding by a third party, the
Indemnified Party shall give such notice thereof to the Indemnifying Party not
later than ten Business Days prior to the time any response to the asserted
claim is required, if possible, and in any event within five Business Days
following receipt of notice thereof. Failure to give such notice in a timely
manner shall not release the Indemnifying Party from its obligations under
Section 11.2, except to the extent that the Indemnifying Party is prejudiced by
such failure. In the event of any such claim for indemnification resulting from
or in connection with a claim or Legal Proceeding by a third party, the
Indemnifying Party may, at its sole cost and expense, assume the defense thereof
by written notice within 30 calendar days, using counsel that is reasonably
satisfactory to the Indemnified Party (and whose fees shall be borne by the
Indemnifying Party). If an Indemnifying Party assumes the defense of, and the
full responsibility for paying or otherwise discharging, any such claim or Legal
Proceeding, the Indemnifying Party shall be entitled to take all steps necessary
in the defense thereof including the settlement of any case that involves solely
monetary damages without the consent of the Indemnified Party; provided,
however, that the Indemnified Party may, at its own expense, participate in any
such proceeding with the counsel of its choice without any right of control
thereof. The Indemnifying Party, if it has assumed the defense of any claim or
Legal Proceeding by a third party as provided herein, shall not consent to, or
enter into, any compromise or settlement of (which settlement (i) commits the
Indemnified Party to take, or to forbear to take, any action or (ii) does not
provide for a full and complete written release by such third party of the
Indemnified Party), or consent to the entry of any judgment that does not relate
solely to monetary damages arising from, any such claim or Legal Proceeding by a
third party without the Indemnified Party's prior written consent, which shall
not be unreasonably withheld, conditioned or delayed. The Indemnifying Party and
the Indemnified Party shall cooperate fully in all aspects of any investigation,
defense, pre-trial activities, trial, compromise, settlement or discharge of any
claim in respect of which indemnity is sought pursuant to this Article XI,
including by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information at the Indemnifying
Party's expense. So long as the Indemnifying Party is in good faith defending
such claim or proceeding, the Indemnified Party shall not compromise or settle
such claim without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld, conditioned or delayed. If the
Indemnifying Party does not assume the defense of any such claim or litigation
in accordance with the terms hereof, the Indemnified Party may defend against
such claim or litigation in such manner as it may deem appropriate, including
settling such claim or litigation (after giving prior written notice of the same
to the Indemnifying Party and obtaining the prior written consent of the
Indemnifying Party, which consent shall not be unreasonably withheld,
conditioned or delayed) on such terms as the Indemnified Party may reasonably
deem appropriate, and the Indemnifying
62
Party will promptly indemnify the Indemnified Party in accordance with the
provisions of this Article XI.
Section 11.4. Knowledge. The representations and warranties of each
party contained herein shall not be deemed to be waived or otherwise affected by
any investigation made by or knowledge of the other party hereto.
ARTICLE XII
NONCOMPETITION; NONSOLICITATION
Section 12.1. Noncompetition. (a) Subject to Section 12.1(c), Seller
covenants and agrees that:
(i) for a period of three years following the Closing Date
(the "COVENANT TERM") it shall not, and shall cause its
Subsidiaries and controlled Affiliates not to, directly
or indirectly, own, manage, operate, control or
participate in the ownership, management, operation or
control of any entity engaged in the manufacture or sale
of products that are within the scope of the Business as
currently conducted (a "SELLER COMPETITIVE BUSINESS") ,
whether as employer, proprietor, partner, stockholder,
consultant, agent, lender or guarantor or otherwise; or
(ii) following the Closing Date, it shall not, and shall
cause its Subsidiaries and controlled Affiliates not to,
directly or indirectly, make use of any proprietary
information of the Business or other Acquired
Intellectual Property to the extent such information and
Intellectual Property is exclusively owned by Purchaser,
including mailing lists, customer lists, subscription
lists, processes, Trade Secrets, software, research,
techniques, designs or other technical data, know-how,
in each case to the extent such information is
proprietary or confidential information used by Seller
or any of its Subsidiaries as of the Closing in
connection with the Business or that constitutes a
Purchased Asset, except to the extent that Purchaser may
so authorize in writing.
(b) Purchaser covenants and agrees that, for the Covenant Term, it
shall not, and shall cause its Subsidiaries or controlled Affiliates not to,
directly or indirectly engage in (i) the marketing, distribution or sale of
heavy duty (Class 5, 6, 7 and 8) brake hard parts (excluding friction material
(including heavy duty brake-block and associated heavy duty hardware which for
the avoidance of doubt does not include hubs, drums or rotors) and brake shoes)
to "Original Equipment" (commonly known as "OE") or "Original Equipment Services
(commonly known as "OES") customers, (ii) as long as Purchaser is the exclusive
distributor in South America of the products referred to in this clause (ii),
the manufacture, marketing, distribution or sale in South America of chassis
products substitutable for the chassis products manufactured at the Diadema,
Brazil facility or the El Talar, Argentina facility (provided, however, that
Purchaser
63
may market, distribute and sell such chassis products in South America provided
that Purchaser has purchased such chassis products from such facilities) or
(iii) the marketing, distribution or sale of sealing products or engine hard
parts using, directly or indirectly, the assets acquired under this Agreement in
direct competition with Seller's retained sealing products or engine hard parts
businesses, in each case whether as employer, proprietor, partner, stockholder,
consultant, agent, lender or guarantor or otherwise; provided, however, that
Purchaser shall be permitted to acquire any business that would otherwise
violate this Section 12.1(b).
(c) Notwithstanding anything to the contrary contained in Section
12.1(a):
(i) in the event that during the Covenant Term Seller
completes a business combination transaction with a
Person that is engaged in any Seller Competitive
Business, which transaction results in the holders of
the voting securities of Seller outstanding immediately
prior to the consummation of such transaction owning
less than 50% of the voting power of the voting
securities of Seller or the surviving entity in the
transaction or any parent thereof (any such entity, an
"ACQUIROR") outstanding immediately after the
consummation of such transaction, such Acquiror or any
of its Subsidiaries or Affiliates (other than Seller or
its Subsidiaries) may engage in any activity prohibited
or restricted by Section 12.1(a);
(ii) Seller may directly or indirectly hold securities listed
on a stock exchange or automated quotation system of any
Person to the extent that such investment does not
directly or indirectly confer on Seller more than 10% of
the voting power with respect to, or interest in the
profits of, such Person (it being agreed that interests
in or securities of any Person acquired or held by any
pension fund or any other benefit plan of Seller shall
not be subject to any limitation hereunder and shall not
be considered in determining voting power for purposes
of this Section 12.1(c)(ii));
(iii) Seller may conduct any business relating to the
provision of goods or services to OEM and OES customers,
and Seller may maintain, develop and continue the
operations of Seller and its Subsidiaries that are not
being transferred to Purchaser hereunder, including its
original equipment and aftermarket heavy duty brake
businesses, in accordance with current and past
practices;
(iv) Seller may acquire interests in or securities of any
Person that derived 25% or less of its total annual
revenues in its most recent fiscal year from activities
that constitute Seller Competitive Businesses;
(v) Seller may acquire a business, assets and/or more than
50% of the outstanding capital stock or other equity
interests in any Person (or any lesser percentage if,
pursuant to contractual or other arrangements,
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Seller has the right to cause such Person to take the
actions specified in the following proviso) that derived
in excess of 25% but not more than 50% of its total
annual revenues in its most recent fiscal year from
activities that constitute Seller Competitive
Businesses; provided; however, that Seller shall use
reasonable best efforts to divest that portion of such
Person that engages in activities constituting Seller
Competitive Businesses on commercially reasonable terms
as soon as reasonably practicable following the
acquisition of such ownership or interest;
(vi) Seller may acquire or use any product for internal uses
or to conduct Seller's or its Subsidiaries' other
businesses that consume, use, contain, depend upon or
otherwise incorporate any such product; and
(vii) Seller may perform any act or conduct any business
contemplated hereby or the Transition Agreements.
(d) The parties hereto acknowledge and agree that nothing herein
shall be deemed to require Seller to give notice to or obtain the consent of
Purchaser in order to engage in any activity or transaction of the types
described in Section 12.1(c) or otherwise.
Section 12.2. Nonsolicitation of Purchaser Employees. Seller
covenants and agrees that for a period of one year following the Closing Date it
shall not, and shall cause its Subsidiaries not to, solicit any Acquired Company
Employee or Transferred Employee (at a time when such person is an employee of
Purchaser or any of its Subsidiaries) to terminate his or her employment
relationship with Purchaser or any of its Subsidiaries; provided, however, that
nothing herein shall prohibit Seller or any of its Subsidiaries from advertising
publicly or from employing persons who respond to any such advertising whether
or not such persons are then employed by Purchaser or any of its Subsidiaries,
or from employing any individual who contacts Seller or any of its Subsidiaries
on an unsolicited basis.
Section 12.3. Nonsolicitation of Seller Employees. Purchaser
covenants and agrees that for a period of one year following the Closing Date it
shall not, and shall cause its Subsidiaries not to, solicit any employee of
Seller or any of its Subsidiaries (at a time when such person is an employee of
Seller or any of its Subsidiaries) to terminate his or her employment
relationship with Seller or any of its Subsidiaries; provided, however, that
nothing herein shall prohibit Purchaser or any of its Subsidiaries from
advertising publicly or from employing persons who respond to any such
advertising whether or not such persons are then employed by Seller or any of
its Subsidiaries, or from employing any individual who contacts Purchaser or any
of its Subsidiaries on an unsolicited basis.
Section 12.4. Remedies. Purchaser and Seller each acknowledge that
the time, scope and other provisions of this Article XII have been specifically
negotiated by sophisticated commercial parties and specifically hereby agree
that such time, scope and other provisions are reasonable under the
circumstances. It is further agreed that other remedies cannot fully compensate
Purchaser for a violation by Seller of the terms of this Article XII and that
Purchaser
65
shall be entitled to injunctive relief to prevent any such violation or
continuing violation by Seller. It is the intent and understanding of each party
hereto that if, in any Legal Proceeding, any term, restriction, covenant or
promise herein is found to be unreasonable and for that reason unenforceable,
then such term, restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable.
ARTICLE XIII
TERMINATION
Section 13.1. Termination. This Agreement may be terminated and the
transactions contemplated hereby abandoned any time prior to the Closing:
(a) upon the written agreement of Purchaser and Seller;
(b) by Purchaser, upon ten Business Days prior written notice to
Seller, if there has been a material violation or breach by Seller of any
covenant, representation or warranty contained in this Agreement which
would prevent the satisfaction of any of the conditions set forth in
Section 8.1 or 8.2, and such material violation or breach could not be
cured, and such condition could not be satisfied, on or prior to the
Outside Date, and such violation or breach has not been waived by
Purchaser; provided, that the right to terminate this Agreement under this
Section 13.1(b) shall not be available to Purchaser if the violation or
breach by Seller arises out of, is result of or is related to any breach
by Purchaser of any of its representations, warranties, covenants,
obligations or agreements;
(c) by Seller, upon ten Business Days prior written notice to
Purchaser, if there has been a material violation or breach by Purchaser
of any covenant, representation or warranty contained in this Agreement
which would prevent the satisfaction of any of the conditions set forth in
Section 9.1 or 9.2, and such material violation or breach could not be
cured, and such condition could not be satisfied, on or prior to the
Outside Date, and such violation or breach has not been waived by Seller;
provided, that the right to terminate this Agreement under this Section
13.1(c) shall not be available to Seller if the violation or breach by
Purchaser arises out of, is result of or is related to any breach by
Seller of any of its representations, warranties, covenants, obligations
or agreements; or
(d) by Purchaser or by Seller if (i) the Closing has not occurred on
or prior to the six-month anniversary of the date hereof (the "OUTSIDE
DATE") or (ii) if either a Governmental Body issues a permanent injunction
or other Order prohibiting the Closing or if the European Commission
issues a final, non-appealable Order prohibiting the Closing; provided,
that the right to terminate this Agreement under this Section 13.1(d)
shall not be available to any party hereto whose failure to perform any
covenant or obligation hereunder or other breach has caused or resulted
into the failure of the Closing to occur on or before such date or the
Outside Date.
Section 13.2. Procedure and Effect of Termination. In the event of
termination under Section 13.1(b), (c), (d) or (e), written notice thereof shall
be given to the other party and this Agreement shall terminate and the
transactions contemplated hereby shall be abandoned,
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without further action by either party, upon delivery of such notice, except
that the Confidentiality Agreement shall survive in accordance with its terms
and Sections 13.2, 15.3, 15.4 and 15.5 shall also survive such termination. Upon
any termination hereof pursuant to Section 13.1, no party hereto shall
thereafter have any further liability or obligation hereunder or under any
Transition Agreement (except as expressly provided therein); provided, however,
that no such termination shall relieve any party hereto or thereto of any
liability for any breach of any term hereof prior to the date of such
termination.
ARTICLE XIV
TAX MATTERS
Section 14.1. Tax Indemnification. (a) Seller shall indemnify
Purchaser and its Affiliates and hold them harmless from all liability for (i)
Excluded Taxes (except to the extent such Excluded Taxes are reflected as a
liability in Final Closing Date Working Capital), (ii) Transfer Taxes and VAT
required to be borne by Seller pursuant to Section 14.9, (iii) Taxes arising
from or in connection with any breach by Seller or any of its Affiliates of any
covenant contained in this Agreement (but only to the extent appropriate to
reflect the relative fault of Seller, on the one hand, and Purchaser, on the
other hand) and (iv) all costs and expenses, including reasonable legal fees and
expenses, attributable to any item in clauses (i) through (iii).
(b) Purchaser shall indemnify Seller and its Affiliates and hold
them harmless from all liability for (i) any and all Taxes imposed on or payable
with respect to the Acquired Companies or the Business, other than Excluded
Taxes (except to the extent that such Excluded Taxes are reflected as a
liability in Final Closing Date Working Capital), (ii) Transfer Taxes and VAT
required to be borne by Purchaser pursuant to Section 14.9, (iii) Taxes arising
from or in connection with any breach by Purchaser or any of its Affiliates of
any covenant contained in this Agreement (but only to the extent appropriate to
reflect the relative fault of Purchaser, on the one hand, and Seller, on the
other hand), (iv) an amount equal to the product of (A) 28% and (B) Incremental
Subpart F Income, and (v) all costs and expenses, including reasonable legal
fees and expenses, attributable to any item in clauses (i) through (iv).
(c) Any indemnity payment to be made pursuant to Section 14.1 shall
be paid no later than the later of (i) ten days after the indemnified party
makes written demand upon the indemnifying party and (ii) five days prior to the
date on which the underlying amount is required to be paid by the indemnified
party (provided, that, where no payment is required to be made by the
indemnified party, the indemnity payment shall be made at the time specified in
clause (i)).
(d) The indemnification provisions in this Section 14.1 shall
survive the Closing until 90 days after the expiration of the applicable statute
of limitations.
Section 14.2. Preparation and Filing of Tax Returns. (a) Seller
shall timely prepare and file or shall cause to be timely prepared and filed (i)
any combined, consolidated or unitary Tax Return that includes Seller or any of
its Affiliates, and (ii) any Tax Return of the Acquired Companies for any
Pre-Closing Tax Period, which Tax Returns shall be prepared in a
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manner consistent with past practices of the Acquired Companies. Purchaser shall
not amend or revoke such Tax Returns (or any notification or election relating
thereto).
(b) Purchaser shall, except to the extent that such Tax Returns are
the responsibility of Seller under Section 14.2(a), timely prepare and file or
shall cause to be timely prepared and filed all Tax Returns with respect to the
Acquired Companies. For any Straddle Period Tax Return of the Acquired Companies
that is the responsibility of Purchaser under this Section 14.2(b), Purchaser
shall, and shall cause its Affiliates to, prepare such Tax Return in a manner
consistent with past practices of the Acquired Companies and Purchaser shall
deliver to Seller for its review, comment and approval (which approval shall not
be unreasonably withheld) a copy of such proposed Tax Return (accompanied, in
the case of a Straddle Period Tax Return, by an allocation between the
Pre-Closing Tax Period and the Post-Closing Tax Period of the Taxes shown to be
due on such Tax Return) at least twenty days prior to the due date (giving
effect to any validly obtained extensions) thereof. Purchaser shall reflect in
good faith any reasonable comments received from Seller within ten days
following Seller's receipt of such Tax Return. Purchaser shall not amend or
revoke any Straddle Period Tax Return (or any notification or election relating
thereto) without the prior consent of Seller, which consent shall not be
unreasonably withheld. Purchaser shall promptly reimburse Seller for any actual
overpayment of Taxes with respect to a Pre-Closing Tax Period, including by
reason of the payment of any estimated Taxes by Seller or its Affiliates.
Section 14.3. Refunds, Credits and Carrybacks. (a) Subject to
Section 14.6, Seller shall be entitled to any refunds or credits of or against
any Excluded Taxes (and any interest or penalty rebate with respect to such
refund or credit) except to the extent such refunds or credits are reflected as
an asset in Final Closing Date Working Capital. Purchaser shall, at Seller's
reasonable request and at Seller's expense, cause the relevant entity to file
for and use reasonable best efforts to obtain any refund or credit to which
Seller is entitled, provided that such actions would not have a significant
adverse effect on Purchaser and its Affiliates in a Post-Closing Tax Period.
Subject to Sections 14.3(c) and 14.6, Purchaser shall be entitled to any refunds
or credits of or against any Taxes (and any interest or penalty rebate with
respect to such refund or credit) other than refunds or credits of or against
Excluded Taxes (except to the extent such refunds or credits are reflected as an
asset in Final Closing Date Working Capital).
(b) Purchaser shall, and shall cause the Acquired Companies to,
promptly forward to Seller or reimburse Seller for any refunds or credits of
Taxes (and any interest or penalty rebate with respect to such refund or credit)
due Seller (pursuant to the terms of this Article XIV) after receipt thereof,
and Seller shall promptly forward to Purchaser or reimburse Purchaser for any
refunds or credits of Taxes (and any interest or penalty rebate with respect to
such refund or credit) due Purchaser (pursuant to the terms of this Article XIV)
after receipt thereof. If any such refunds or credits are subsequently
disallowed, the Purchaser or the Seller, as the case may be, shall promptly pay
such amount to the other party.
(c) Purchaser shall cause the Acquired Companies to elect, where
permitted by applicable Law, to carry forward any item of loss, deduction or
credit which arises in any Post-Closing Tax Period.
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Section 14.4. Tax Contests. (a) If any taxing authority asserts a
Tax Claim in respect of the Acquired Companies, then the party hereto first
receiving notice of such Tax Claim shall provide written notice thereof to the
other party or parties hereto within fourteen (14) calendar days; provided,
however, that the failure of such party to give timely notice shall not relieve
the other party of any of its obligations under this Article XIV, except to the
extent that the other party is actually prejudiced thereby. Such notice shall
specify in reasonable detail the basis for such Tax Claim and shall include a
copy of the relevant portion of any correspondence received from the taxing
authority.
(b) Seller shall have the right to control, any audit, examination,
contest, litigation or other proceeding by or against any taxing authority (a
"TAX PROCEEDING") of the Acquired Companies for any taxable period that ends on
or before the Closing Date; provided, however, that with respect to any Tax
Proceeding solely in respect of the Acquired Companies that would reasonably be
expected to have a significant adverse impact on Purchaser and its Affiliates
(i) Seller shall consult with Purchaser before taking any significant action in
connection with such Tax Proceeding and (ii) Seller shall not settle, compromise
or abandon any such Tax Proceeding, without obtaining the prior written consent
of Purchaser, which consent shall not be unreasonably withheld, conditioned or
delayed. Without limiting the foregoing, Seller shall consult with Purchaser
before taking any significant action in connection with the Tax Proceedings
involving intercompany transfer pricing between Brake Parts Canada, Inc. and
Brake Parts Inc. or any related Tax Proceeding.
(c) In the case of a Tax Proceeding for a Straddle Period of the
Acquired Companies, Purchaser shall have the right to control such Tax
Proceeding; provided, however, that (i) Purchaser shall provide Seller with a
timely and reasonably detailed account of each phase of such Tax Proceeding,
(ii) Purchaser shall consult with Seller before taking any significant action in
connection with such Tax Proceeding, (iii) Purchaser shall consult with Seller
and offer Seller an opportunity to comment before submitting any written
materials prepared or furnished in connection with such Tax Proceeding, (iv)
Purchaser shall defend such Tax Proceeding diligently and in good faith as if it
were the only party in interest in connection with such Tax Proceeding, (v)
Seller shall be entitled to participate in such Tax Proceeding, at its own
expense, if such Tax Proceeding could have a significant adverse impact on
Purchaser or any of its Affiliates and (vi) Purchaser shall not settle,
compromise or abandon any such Tax Proceeding without obtaining the prior
written consent of Seller, which consent shall not be unreasonably withheld,
conditioned or delayed, if such settlement, compromise or abandonment would have
a significant adverse impact on Seller or any of its Affiliates.
(d) Purchaser shall have the right to control any Tax Proceeding
involving the Acquired Companies (other than a Tax Proceeding described in
Section 14(b) or (c)); provided, however, that Purchaser shall not settle,
compromise or abandon any such Tax Proceeding, if such action would reasonably
be expected to have a significant adverse impact on Seller or any Affiliate of
Seller, without obtaining the prior written consent of Seller, which consent
shall not be unreasonably withheld, conditioned or delayed.
Section 14.5. Cooperation. Each party hereto shall, and shall cause
its Affiliates to, provide the other party hereto with such cooperation,
documentation and information as either of them reasonably may request in (a)
filing any original or amended Tax Return or claim for
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refund, (b) determining a liability for Taxes, an indemnity or payment
obligation under this Article XIV or a right to refund of Taxes, (c) conducting
any Tax Proceeding or (d) determining an allocation of Taxes between a
Pre-Closing Tax Period and Post-Closing Tax Period. Such cooperation and
information shall include providing copies of all relevant portions of relevant
Tax Returns, together with all relevant accompanying schedules and work papers
(or portions thereof) and other supporting documentation, relevant documents
relating to rulings or other determinations by taxing authorities and relevant
records concerning the ownership and Tax basis of property and any other
relevant information, which any such party may possess. Each party will retain
all Tax Returns, schedules and work papers, and all material records and other
documents relating to Tax matters, of the relevant entities for their respective
Tax periods ending on or prior to or including the Closing Date until the later
of (x) the expiration of the statute of limitations for the Tax periods to which
the Tax Returns and other documents relate or (y) eight years following the due
date (without extension) for such Tax Returns. Thereafter, the party holding
such Tax Returns or other documents may dispose of them after offering the other
party reasonable notice and opportunity to take possession of such Tax Returns
and other documents at such other party's own expense. Each party shall make its
employees reasonably available on a mutually convenient basis at its cost to
provide explanation of any documents or information so provided.
Section 14.6. Tax Benefits. Purchaser agrees that if as a result of
any adjustment pursuant to a Tax Proceeding with respect to any Acquired Company
for a Pre-Closing Tax Period, Purchaser or any Affiliate of Purchaser (or any
consolidated, combined or unitary group of which Purchaser or such Affiliate is
a member), actually realizes a Tax benefit in a Post-Closing Tax Period (through
a reduction in the amount of Tax required to be paid or through an increase in
the amount of a Tax refund received) attributable solely to an increase in net
operating losses or Tax credits, then Purchaser shall pay to Seller the amount
of such Tax benefit when, as and if actually realized. Seller agrees that if as
a result of any adjustment pursuant to a Tax Proceeding with respect to any
Acquired Company for a Post-Closing Tax Period, Seller or any Affiliate of
Seller (or any consolidated, combined or unitary group of which Seller or such
Affiliate is a member), actually realizes a Tax benefit in a Pre-Closing Tax
Period (through a reduction in the amount of Tax required to be paid or through
an increase in the amount of a Tax refund received) attributable solely to an
increase in net operating losses or Tax credits, then Seller shall pay to
Purchaser the amount of such Tax benefit when, as and if actually realized.
Section 14.7. Tax Treatment of Indemnification Payments. Except as
otherwise required pursuant to a "determination" under Section 1313(a) of the
Code (or any comparable provision of state, local, or foreign Law), Seller,
Purchaser, the Acquired Companies and their respective Affiliates shall treat
any and all payments under Article XI or XIV as an adjustment to the purchase
price for all Tax purposes. Seller and Purchaser agree, for all Tax purposes, to
allocate any such adjustment among the Acquired Companies and/or the Purchased
Assets based upon the item or items to which such adjustment is principally
attributable and in accordance with Section 2.4 and Schedule 2.4.
Section 14.8. Section 338(g) Elections. Purchaser and its Affiliates
shall be permitted to make an election under Section 338(g) of the Code and the
Treasury Regulations promulgated thereunder (or any comparable election under
state, local or foreign tax law) ("SECTION 338(g) ELECTIONS") with respect to
any Acquired Company that is characterized as a foreign
70
corporation for U.S. federal income tax purposes, except with respect to the
Acquired Companies set forth on Schedule 14.8(a). Except as expressly permitted
by the preceding sentence, Purchaser shall not make, and shall cause its
Affiliates not to make, Section 338(g) Elections with respect to any of the
Acquired Companies.
Section 14.9. Transfer Taxes and VAT.
(a) Purchaser shall be responsible for and shall pay any and all
sales, use, registration, transfer (including all real estate transfer and
conveyance and recording fees, if any), stamp, stamp duty reserve, stamp duty
land tax, or other similar Taxes (other than VAT) and all notarial fees that may
be imposed upon, payable, collectible or incurred in connection herewith and the
transactions contemplated by this Agreement (collectively, "TRANSFER TAXES") up
to and not to exceed $1 million, regardless of the Person liable for such Taxes
under applicable Law. Seller shall be responsible for and shall pay all Transfer
Taxes in excess of $1 million, regardless of the Person liable for such Taxes
under applicable Law. The parties hereto shall reasonably cooperate to reduce or
eliminate any potential Transfer Taxes, including obtaining available Transfer
Tax exemption certificates (such as sales and use Tax blanket exemption
certificates) from the applicable state, local or foreign taxing jurisdictions.
(b) The amount of any payment for a supply of goods and services or
the value of any supply made or deemed to be made by Seller or any of its
Affiliates pursuant to this Agreement or pursuant to any agreement that is
intended to effect the transfer of the Purchased Assets and the Assumed
Liabilities shall be exclusive of any VAT properly chargeable on the supply
(such amount to be agreed by Purchaser and Seller prior to Closing), and the
amount of such VAT shall be paid by the recipient of such supply (the "VAT
PAYOR") in addition to any payment due under this Agreement (provided that the
party making the supply of goods or services (the "VAT PAYEE") has issued a
proper VAT invoice), or if no payment is due, shall be paid at the time a proper
VAT invoice is issued. The parties intend that the Purchased Assets and the
Assumed Liabilities shall, wherever possible, be sold as a going concern for
purposes of any applicable VAT legislation, so that such sale is outside the
scope of VAT, and, in each jurisdiction where the parties consider this
possible, Seller and Purchaser shall, and shall cause their respective
Affiliates to, use reasonable efforts to secure the availability of such
treatment.
(c) In the event that a VAT Payor (or another member of such VAT
Payor's VAT group) has not obtained the benefit of a refund, offset, or credit
of the full amount of VAT paid by such VAT Payor to the relevant VAT Payee
pursuant to this Agreement within three years of the date such VAT was paid,
Seller shall pay to Purchaser 50% of the amount of any VAT for which no such
refund, offset, or credit was obtained. In the event that a VAT Payor (or
another member of such VAT Payor's VAT group) subsequently receives the benefit
of a refund, offset, or credit relating to such VAT, Purchaser shall promptly
pay to Seller 50% of any such refund, offset, or credit. Purchaser shall
promptly provide Seller with a reasonably detailed written account of each
refund, repayment, or credit of VAT paid pursuant to this Agreement obtained by
the VAT Payor. Purchaser and Seller shall, and shall cause their respective
Affiliates to, use commercially reasonable efforts to obtain and maximize the
recovery of all refunds, offsets or credits relating to VAT payable pursuant to
this Agreement and to minimize the amount of nonrecoverable VAT. Subject to the
foregoing, (i) Purchaser shall control the preparation of all Tax returns
relating to VAT payable pursuant to this Agreement, and (ii) any Tax Proceeding
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relating to VAT payable pursuant to this Agreement or any refund, offset, or
credit of such VAT shall be conducted in accordance with the principles set
forth in Section 14.4(b). This Section 14.9(c) shall not apply to any VAT paid
pursuant to a Transition Agreement.
Section 14.10. Section 338(h)(10) Elections.
(a) Seller and Purchaser shall, or shall cause their relevant
Affiliates to, jointly make a timely and irrevocable election under Section
338(h)(10) of the Code and, if permissible, similar elections under applicable
state or local income Tax Law (collectively, the "SECTION 338(h)(10) ELECTIONS")
with respect to the acquisition of ▇▇▇▇/Arnley Worldparts Corp. Seller shall
cause to be included in the Seller's Tax Return and be responsible for and shall
pay (or cause to be paid) any Taxes arising in any Pre-Closing Tax Period as a
result of the deemed sale of assets pursuant to the Section 338(h)(10)
Elections. Buyer shall prepare an allocation of the purchase price, which shall
be determined in a manner consistent with Section 2.4 and Schedule 2.4, (the
"SECTION 338 ALLOCATION") among the assets of ▇▇▇▇/Arnley Worldparts Corp. (as
required pursuant to Section 338(h)(10) of the Code and the Treasury Regulations
promulgated thereunder), subject to the consent of Seller, which shall not be
unreasonably withheld. Except to the extent required pursuant to a
"determination" under Section 1313(a) of the Code (or any comparable provision
of state, local or foreign Law), Purchaser and Seller agree to report the
acquisition of ▇▇▇▇/Arnley Worldparts Corp. consistent with such Section
338(h)(10) Elections and the Section 338 Allocation and shall take no position
contrary thereto.
(b) Seller and Purchaser shall cooperate in the preparation of all
forms, attachments and schedules necessary to effectuate the Section 338(h)(10)
Elections (including, IRS Forms 8023 and 8883 and any similar forms under
applicable state or local income tax laws) (the "SECTION 338 FORMS"). Seller and
Purchaser shall, or shall cause their relevant Affiliates, to execute and timely
file such Section 338 Forms with the applicable taxing authorities. Seller and
Purchaser agree that neither of them shall, or shall permit any of its
Affiliates to, revoke the Section 338(h)(10) Elections following the filing of
the Section 338 Forms, without the written consent of Seller or Purchaser, as
the case may be.
Section 14.11. UK Degrouping Charge. If as a result of the Closing,
an Acquired Company is treated by virtue of Section 179(3) or (6) TCGA as having
sold and immediately reacquired any asset at market value and a chargeable gain
or an allowable loss accrues to the Acquired Company on such deemed sale, the
Seller shall procure that its relevant UK Affiliate shall and the Purchaser
shall procure that the relevant Acquired Company shall make a joint election
pursuant to Section 179A(10) TCGA to treat such chargeable gain or allowable
loss as accruing to the Seller's UK Affiliate and not to the Acquired Company.
For the avoidance of doubt, no payment shall be made by the Acquired Company to
the Seller or its UK Affiliate as consideration for making the election
described in the preceding sentence.
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ARTICLE XV
MISCELLANEOUS
Section 15.1. Certain Definitions.
"ACQUIRED COMPANIES" has the meaning set forth in Section 1.1.
"ACQUIRED COMPANY EMPLOYEE" means any individual who is employed by
an Acquired Company immediately before the Closing, including any individual who
absent due to vacation, holiday, sickness or other approved leave of absence.
"ACQUIRED COMPANY INTELLECTUAL PROPERTY" means the Intellectual
Property to the extent owned by any Acquired Company.
"ACQUIRED COMPANY PLANS" has the meaning set forth in Section
4.13(a).
"ACQUIRED INTELLECTUAL PROPERTY" means the Purchased Intellectual
Property and the Acquired Company Intellectual Property.
"ACQUIROR" has the meaning set forth in Section 12.1(c)(i).
"ACQUISITION FINANCING" has the meaning set forth in Section 5.5.
"ACQUISITION PROPOSAL" means any inquiry, proposal or offer from any
Person (other than Purchaser or any of its Affiliates) relating to (a) any
merger, consolidation, recapitalization, tender offer, liquidation or other
direct or indirect business combination involving an Acquired Company or, to the
extent Related to the Business, Seller or any of its Subsidiaries, (b) any
acquisition of, share exchange or exchange offer with respect to or other
similar transaction involving, the capital stock of any Acquired Company Equity
Securities, including any such single or multi-step transaction or series of
related transactions, or (c) any acquisition, lease, license, purchase or other
disposition of a substantial portion of the business or assets of any of the
Acquired Companies or, with respect to the Business only, the Seller or its
Subsidiaries.
"AFFILIATE" means, as to any Person, (a) any Subsidiary of such
Person and (b) any other Person that, directly or indirectly, controls, is
controlled by, or is under common control with, such Person. For the purposes of
this definition, "control" means the possession of the power to direct or cause
the direction of management and policies of Person, whether through the
ownership of voting securities, by contract or otherwise. Following the Closing,
none of the Acquired Companies shall be considered to be an Affiliate of Seller.
"AGREEMENT" has the meaning set forth in the preamble.
"APPLICABLE RATE" means a rate per annum equal to the "prime rate"
as set forth from time to time in The Wall Street Journal, Eastern Edition,
"Money Rates" column.
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"ASSETS" means, collectively, and excluding the Excluded Assets, the
Purchased Assets and any and all items of like kind owned, leased or used by an
Acquired Company and that do not constitute Excluded Assets.
"ASSIGNMENTS OF LEASES" has the meaning set forth in Section 3.2(d).
"ASSUMED LIABILITIES" has the meaning set forth in Section 1.4.
"BALANCE SHEET DATE" has the meaning set forth in Section 4.6(b).
"BENCHMARK BALANCE SHEET" has the meaning set forth in Section
4.6(b).
"BUSINESS" has the meaning set forth in the Recitals.
"BUSINESS CONTRACTS" means all Contracts Related to the Business
(other than this Agreement, the Transition Agreements, the Seller Documents, the
Purchaser Documents and the Confidentiality Agreement), including the Contracts
listed on Schedule 15.1(a).
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which banks in New York, New York are authorized or obligated by Law to
close.
"BUSINESS EMPLOYEE" means the individuals listed on Schedule
15.1(b).
"CANADIAN PENSION FUND" has the meaning set forth in Section
10.1(l)(i).
"CANADIAN PENSION PLAN" has the meaning set forth in Section
10.1(l)(i).
"CAPITAL EXPENDITURE BUDGET" means the capital expenditure budget of
Seller and its Subsidiaries Related to the Business, as set forth on Schedule
15.1(c).
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, 42 USC 9601 et seq.
"CLOSING" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 3.1.
"CLOSING DATE CASH" means the sum of (a) the cash less cash
overdrafts plus short-term investments, in each case, that constitute Assets of
those U.S. domestic Acquired Companies that are wholly owned, directly or
indirectly, by Seller, and (b) an amount equal to the product of (i) the cash
less cash overdrafts plus and short-term investments, in each case, that
constitute Assets of those U.S. domestic Acquired Companies that are not wholly
owned, directly or indirectly, by Seller multiplied by (ii) the percentage of
the outstanding capital stock or equity interests in such Acquired Companies
held, directly or indirectly, by Seller on the Closing Date, (c) the cash less
cash overdrafts plus short-term investments (together, the "WHOLLY OWNED FOREIGN
SUB CASH"), in each case, that constitute Assets of those non-U.S. Acquired
Companies that are wholly owned, directly or indirectly, by Seller, and (d) an
amount (the "NON-WHOLLY OWNED FOREIGN SUB CASH" and together with the Wholly
Owned Foreign Sub Cash, the "FOR-
74
EIGN SUB CASH") equal to the product of (i) cash less cash overdrafts plus
short-term investments, in each case, that constitute Assets of those non-U.S.
domestic Acquired Companies that are not wholly owned, directly or indirectly,
by Seller multiplied by (ii) the percentage of the outstanding capital stock or
equity interests in such Acquired Companies held, directly or indirectly, by
Seller on the Closing Date; provided, however, that if and to the extent that
the Foreign Sub Cash as of the Closing shall be in excess of $5,126,419 (such
excess, the "FOREIGN CASH EXCESS"), the Closing Date Cash shall be reduced by
an amount equal to (x) the Foreign Cash Excess multiplied by (y) the Tax rate
applicable if the non-U.S. Acquired Companies holding the Foreign Sub Cash
were to cause all of the Foreign Cash Excess to be distributed to Purchaser
immediately following the Closing.
"CLOSING DATE CASH CONSIDERATION" has the meaning set forth in
Section 2.3(a).
"CLOSING DATE FINANCIAL DATA" has the meaning set forth in Section
2.3(c).
"CLOSING DATE WORKING CAPITAL" has the meaning set forth in Section
2.3(b).
"CLOSING DATE WORKING CAPITAL STATEMENT" has the meaning set forth
in Section 2.3(b).
"COBRA COVERAGE" has the meaning set forth in Section 10.1(e)(ii).
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIALITY AGREEMENT" means the confidentiality agreement
between The Cypress Group, L.L.C. and Seller, dated February 5, 2004.
"CONTRACT" means any contract, agreement, indenture, note, bond,
loan, instrument, lease (including real property leases), conditional sale
contract, purchase or sales orders, mortgage, license, Permit, franchise,
undertaking, commitment or other enforceable arrangement or agreement, whether
written or oral.
"COVENANT TERM" has the meaning set forth in Section 12.1(a).
"▇▇▇▇ CANADA" has the meaning set forth in Section 10.1(l)(i).
"DEBT COMMITMENT LETTER" has the meaning set forth in Section 5.5.
"DEBT FINANCING" has the meaning set forth in Section 5.5.
"DESIGNATED AFFILIATE" means an Affiliate of Purchaser which is
designated by Purchaser and such designation (a) is reasonably acceptable to the
Seller, (b) does not impede or delay in any way the ability of the parties to
consummate the transactions contemplated by this Agreement, (c) does not
directly or indirectly prejudice or increase the costs (including Tax costs) to
the Seller; and (d) is made in accordance with Section 15.9.
"EC COMPETITION REGULATION" has the meaning set forth in Section
4.5(b).
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"EMPLOYEE BENEFIT PLANS" means all written employee benefit plans,
and any other written incentive compensation or employee benefit plan,
arrangement or agreement (including retention, change in control, severance,
disability, fringe benefit, deferred compensation, bonus or other incentive
compensation and stock option, purchase or other equity based plans, agreements
and arrangements), but excluding payroll practices and plans, agreements and
arrangements that are mandated by Law, (i) that are sponsored or maintained by
Seller or any of its Subsidiaries, to which Seller or any of its Subsidiaries
contributes or is obligated to contribute, in any such case, for the benefit of
current or former Acquired Company Employees, Business Employees or independent
contractors or (ii) under which any of the Acquired Companies has any liability.
"ENVIRONMENT" means any surface water, groundwater, land surface,
subsurface strata, river sediment, plant or animal life, natural resources, air
and soil and occupied structure.
"ENVIRONMENTAL LAW" means any Law concerning: (a) the Environment,
including pollution, contamination, cleanup, preservation, protection, and
reclamation of the Environment; (b) health or safety, including occupational
safety and the exposure of employees and other persons to any Hazardous
Material; (c) any Release or threatened Release of any Hazardous Material,
including investigation, monitoring, clean up, removal, treatment, or any other
action to address such Release or threatened Release; and (d) the management of
any Hazardous Material, including the manufacture, generation, formulation,
processing, labelling, distribution, introduction into commerce, registration,
use, treatment, handling, storage, disposal, transportation, re-use, recycling
or reclamation of any Hazardous Material, including CERCLA, RCRA, the Hazardous
Materials Transportation Act, 49 USC 1802 et seq., the Toxic Substances Control
Act, 15 USC 2601 et seq., the Federal Water Pollution Control Act, 33 USC 1251
et seq., the Clean Water Act, 33 USC 1321 et seq., the Clean Air Act, 42 USC
7401 et seq.
"ENVIRONMENTAL PERMITS" has the meaning set forth in Section
4.17(d).
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended, and the regulations promulgated thereunder.
"ESTIMATED CLOSING DATE CASH" has the meaning set forth in Section
2.3(a).
"ESTIMATED CLOSING DATE WORKING CAPITAL" has the meaning set forth
in Section 2.3(a).
"ESTIMATED CLOSING DATE WORKING CAPITAL STATEMENT" has the meaning
set forth in Section 2.3(a).
"EXCLUDED ASSETS" has the meaning set forth in Section 1.3.
"EXCLUDED IP ASSETS" has the meaning set forth in Section 1.3(d).
"EXCLUDED LIABILITIES" has the meaning set forth in Section 1.5.
"EXCLUDED TAXES" means (a) any Taxes imposed on or payable with
respect to any of the Acquired Companies or the Business for any Pre-Closing Tax
Period (other than
76
Taxes resulting from any act or transaction taken by Purchaser or its Affiliates
after the Closing), (b) any Taxes of Seller or any of its Affiliates (other than
the Acquired Companies) for which the Acquired Companies may be liable under
Section 1.1502-6 of the Treasury Regulations (or any similar provision of state,
local, or foreign Tax law) and (c) any Taxes of Seller or any of its Affiliates
(other than the Acquired Companies) as a result of the sale and purchase of the
Purchased Shares and the Purchased Assets; provided, that, in each case, (i)
Excluded Taxes shall not include any Transfer Taxes or VAT governed by Section
14.9, and (ii) with respect to any Acquired Company that is not wholly owned
(directly or indirectly) by Seller on the Closing Date, Excluded Taxes that are
imposed on or payable by an Acquired Company (or for which an Acquired Company
may be liable) shall be multiplied by the percentage of the outstanding capital
stock or equity interests in such Acquired Company held (directly or indirectly)
by Seller on the Closing Date. For purposes of this Agreement, in the case of
any Straddle Period, (x) Property Taxes of the Acquired Companies or the
Business allocable to the Pre-Closing Tax Period shall be equal to the amount of
such Property Taxes for the entire period multiplied by a fraction, the
numerator of which is the number of calendar days during such period that are in
the Pre-Closing Period and the denominator of which is the number of calendar
days in the entire period, and (y) Taxes (other than Property Taxes) of the
Acquired Companies or the Business allocable to the Pre-Closing Tax Period shall
be computed as if such taxable period ended as of the Closing, provided that
exemptions, allowances or deductions that are calculated on an annual basis
(including, but not limited to, depreciation and amortization deductions) shall
be allocated between the period ending on the Closing Date and the period
beginning after the Closing Date in proportion to the number of days in each
period.
"EXISTING INVENTORY" has the meaning set forth in Section 7.7(c).
"EXISTING LITIGATION" has the meaning set forth in Section 1.5(e).
"FINAL CASH CONSIDERATION" has the meaning set forth in Section
2.1(a).
"FINAL CONSIDERATION" means the sum of the Final Cash Consideration
and the Assumed Liabilities (other than liabilities or obligations of the
Acquired Companies).
"FINAL CLOSING DATE CASH" has the meaning set forth in Section
2.3(e).
"FINAL CLOSING DATE WORKING CAPITAL" has the meaning set forth in
Section 2.3(e).
"FINANCIAL STATEMENTS" has the meaning set forth in Section 4.6(a).
"FINANCING COMMITMENTS" has the meaning set forth in Section 5.5.
"FOREIGN BENEFIT PLANS" has the meaning set forth in Section
4.13(i).
"FORMER ACQUIRED COMPANY EMPLOYEE" means any individual who is not
an Acquired Company Employee but who was, at any time before the Closing, an
employee of an Acquired Company.
77
"GAAP" means generally accepted accounting principles in the United
States of America, which are applicable to the circumstances as of the date of
determination.
"GOVERNMENTAL BODY" means any government or governmental or
regulatory body thereof, or political subdivision thereof, of any country or
subdivision thereof, whether international, supranational, national, federal,
state or local, or any agency or instrumentality thereof, or any court or
arbitrator (public or private) or regulatory (including a stock exchange or
other self-regulatory body) authority or agency.
"GUARANTEES" has the meaning set forth in Section 7.6(a).
"HAZARDOUS MATERIAL" means collectively, any material defined as, or
considered to be, a "hazardous waste," "waste," "hazardous substance," regulated
substance, pollutant or contaminant (or any other substantially similar item)
under any Environmental Law including asbestos, PCBs, oil, petroleum or any
fraction thereof.
"HSR ACT" has the meaning set forth in Section 4.5(b).
"INCREMENTAL SUBPART F INCOME" means, with respect to any of the
Acquired Companies (i) that is characterized as a "controlled foreign
corporation" for federal income Tax purposes and (ii) for which Purchaser has
not made an election under Section 338(g) of the Code (or for which Purchaser
has made an election under Section 338(g) of the Code in contravention of
Section 14.8), the excess, if any, of (A) the sum of the amounts required to be
included in gross income by Seller or any of its Affiliates for the taxable
period that includes the Closing Date (1) under Section 951(a) of the Code
(except to the extent attributable to the amount, if any, of United States
property (within the meaning of Section 956(c) of the Code and the Treasury
Regulations promulgated thereunder) held, directly or indirectly, by the
controlled foreign corporation as of the Closing) and (2) as a dividend under
Section 1248(a) of the Code with respect to any of the Acquired Companies, over
(B) the sum of the amounts that would have been required to be in included in
gross income by Seller or any of its Affiliates under clause (A) had such
amounts been determined based on a closing of the books as of the Closing.
"INDEMNIFIED PARTY" has the meaning set forth in Section 11.3.
"INDEMNIFYING PARTY" has the meaning set forth in Section 11.3.
"INDIVIDUAL AGREEMENTS" has the meaning set forth in Section
4.13(a).
"INITIAL CASH CONSIDERATION" has the meaning set forth in Section
2.1(a).
"INITIAL CONSIDERATION" means the sum of the Initial Cash
Consideration and the Assumed Liabilities (other than liabilities or obligations
of the Acquired Companies).
"INTELLECTUAL PROPERTY" means all intellectual or industrial
property rights or other similar proprietary rights in any jurisdiction owned or
held for use under license, including such rights in and to: (a) Trademarks; (b)
copyrights and copyrightable works including software; (c) Patents; (d)
invention disclosures, discoveries and improvements, whether or not patentable;
(e) Trade Secrets; (f) rights to limit the use or disclosure of confidential
information by any Per-
78
son; (g) Internet domain names; (h) registrations of, and applications to
register, any of the foregoing with any Governmental Body and any renewals or
extensions thereof; and (i) the goodwill associated with each of the foregoing.
"IRS" means the Internal Revenue Service.
"JV EQUITY SECURITIES" has the meaning set forth in Section 4.3(c).
"KNOWLEDGE" means the actual knowledge as of the applicable date of
determination, or on the Closing Date with respect to those representations and
warranties that are deemed to be made as of the Closing Date pursuant to Section
8.1 of the individuals set forth on Schedule 15.1(d).
"LAW" means any international, supranational, national, federal,
state or local law (including common law), statute, constitutional provision,
treaty, code, ordinance, rule, regulation, directive, concession, Order or other
requirement or guideline of any country or subdivision thereof.
"LEASED REAL PROPERTY" has the meaning set forth in Section 4.9(b).
"LEGAL PROCEEDING" means any judicial, administrative or arbitral
action, suit, proceeding (public or private) or proceeding before a Governmental
Body, other than a Tax Proceeding.
"LIABILITIES" means any indebtedness, obligations or liabilities of
any kind (whether accrued, absolute, contingent or otherwise, and whether or not
due or to become due or asserted or unasserted), including guarantees of the
foregoing.
"LIEN" means any lien (statutory or otherwise), pledge, mortgage,
deed of trust, security interest, charge, option, right of first refusal, title
retention agreement, easement, covenant, condition, restriction, servitude,
transfer restriction or encumbrance.
"LOSSES" has the meaning set forth in Section 11.2(a).
"LTD EMPLOYEE" has the meaning set forth in Section 10.1(f)(iv).
"MATERIAL ADVERSE EFFECT" means any state of facts, change or event
or effect that is materially adverse to (i) the condition (financial or
otherwise), (ii) results of operations, (iii) business, (iv) properties, (v)
assets, or (vi) Liabilities of the Business and the Acquired Companies (taking
items (i) through (vi) together as a whole), except for any such state of facts,
change, event or effect resulting from or arising out of (a) changes or
developments in Laws or changes or developments in the enforcement thereof, (b)
changes or developments in international, national, regional, state or local
wholesale or retail markets for automotive aftermarket products, (c) changes or
developments resulting from any action taken by Purchaser or Seller or any of
their respective representatives expressly required pursuant to this Agreement,
or resulting from Purchaser's consent, or Purchaser's failure to consent in
violation of Section 6.2, to Seller's request to take any action set forth in
clauses (a) through (v) of Section 6.2, (d) changes or developments in financial
or securities markets or the economy in general, including changes in cur-
79
rency exchange or interest rates, or (e) changes or developments resulting from
acts of terrorism or war (whether or not declared), except to the extent causing
damage to the properties and assets of the Business, shall not constitute a
Material Adverse Effect, except, in the case of each of clauses (a) through (e),
to the extent such changes or developments have a materially disproportionate
effect on the Business and the Acquired Companies relative to other Persons
engaged in the manufacture and sale of products that are within the scope of the
Business. The parties agree that, in determining whether there has been a
"Material Adverse Effect," both the adverse and the favorable aspects of any
state of facts, change or event or effect shall be taken into account.
"MATERIAL BUSINESS CONTRACTS" has the meaning set forth in Section
4.12.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" within the meaning
of Section 4001(a)(3) of ERISA.
"NEW PLANS" has the meaning set forth in Section 10.1(f)(ii).
"NEUTRAL AUDITORS" has the meaning set forth in Section 2.3(e).
"NON-ACCEPTANCE OFFER EMPLOYEE" has the meaning set forth in Section
10.1(a).
"NON-REPRESENTED EMPLOYEE" has the meaning set forth in Section
10.1(f)(i).
"NON-SUBSTITUTED GUARANTEE" has the meaning set forth in Section
7.6(b).
"NONASSIGNABLE ASSETS" has the meaning set forth in Section 10.3(b).
"OFFER EMPLOYEE" has the meaning set forth in Section 10.1(a).
"OLD PLANS" has the meaning set forth in Section 10.1(f)(ii).
"ORDER" means any order, injunction, judgment, decree, ruling, stay,
writ, assessment or arbitration award of any Governmental Body.
"OTHER MARKED ASSETS" has the meaning set forth in Section 7.7(e).
"OUTSIDE DATE" has the meaning set forth in Section 13.1(d)(i).
"OWNED REAL PROPERTY" has the meaning set forth in Section
1.2(a)(i).
"PATENTS" means patents, including design patents and utility
patents, reissues, divisions, continuations, continuations-in-part,
reexaminations and extensions thereof, in each case including all applications
therefor.
"PBGC" has the meaning set forth in Section 4.13(h).
"PERMIT" means any approval, authorization, consent, franchise,
license, permit or certificate by any Governmental Body.
80
"PERMITTED EXCEPTIONS" means (a) liens for current Taxes,
assessments or other claims by a Governmental Body not yet delinquent or the
amount or validity of which is being contested in good faith by appropriate
proceedings or for which an appropriate reserve or security deposit is
established by Seller therefor if such reserve or security deposit is a
Purchased Asset; (b) mechanics', carriers', workers', repairers' and similar
Liens arising or incurred in the ordinary course of business that are not
material to the Business; (c) zoning, entitlement and other land use and
environmental regulations by Governmental Bodies; and (d) such other
imperfections in title, charges, easements, restrictions and encumbrances which
do not materially detract from or diminish the value of or materially interfere
with the present use of such property (real or personal) or asset used in the
Business.
"PERSON" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, representative office, branch, Governmental Body or
other similar entity.
"PERSONAL PROPERTY LEASES" has the meaning set forth in Section
4.10(a).
"POST-CLOSING TAX PERIOD" means any taxable period (or portion
thereof) beginning after the Closing Date.
"PRE-CLOSING TAX PERIOD" means any taxable period (or portion
thereof) ending on or before the Closing Date.
"PROPERTY TAXES" means real, personal, and intangible ad valorem
property Taxes.
"PURCHASED ASSETS" has the meaning set forth in Section 1.2.
"PURCHASED COMPANY" has the meaning set forth in Section 1.1.
"PURCHASED COMPANIES" has the meaning set forth in Section 1.1.
"PURCHASED ENTITY" has the meaning set forth in Section 1.1.
"PURCHASED ENTITY SHARES" has the meaning set forth in Section 1.1.
"PURCHASED EQUIPMENT" has the meaning set forth in Section 1.2(b).
"PURCHASED INTELLECTUAL PROPERTY" has the meaning set forth in
Section 1.2(g).
"PURCHASED SHARES" has the meaning set forth in Section 1.1.
"PURCHASED VENTURE" has the meaning set forth in Section 1.1.
"PURCHASED VENTURE SHARES" has the meaning set forth in Section 1.1.
"PURCHASER" has the meaning set forth in the preamble.
"PURCHASER DISCLOSURE SCHEDULE" has the meaning set forth in Article
V.
81
"PURCHASER DOCUMENTS" has the meaning set forth in Section 5.2.
"PURCHASER INDEMNIFIED GROUP" means Purchaser, its Subsidiaries and
their respective Affiliates (including, after the Closing Date, the Acquired
Companies), together with their successors and permitted assigns, and their
officers, directors, employees and agents.
"PURCHASER SAVINGS PLANS" has the meaning set forth in Section
10.1(m)(ii).
"RCRA" means the Resource Conservation and Recovery Act, 42 USC 6901
et seq.
"REAL PROPERTY LEASES" has the meaning set forth in Section
1.2(a)(ii).
"RELATED TO THE BUSINESS" means primarily related to or used
primarily in the Business as conducted by Seller and its Subsidiaries.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching, or migration at,
into or onto the Environment, including movement or migration through or in the
air, soil, surface water or groundwater, whether sudden or non-sudden and
whether accidental or non-accidental, or any release, emission or discharge as
those terms are defined in any applicable Environmental Law.
"REMEDIATIONS" has the meaning set forth in Section 7.3(a).
"REPRESENTATIVES" has the meaning set forth in Section 6.1.
"REPRESENTED EMPLOYEES" has the meaning set forth in Section
10.1(f)(iii).
"RESOLUTION PERIOD" has the meaning set forth in Section 2.3(d).
"RETENTION AGREEMENTS" has the meaning set forth in Section 1.3(b).
"RETIREE MEDICAL BENEFITS" has the meaning set forth in Section
10.1(d)(ii).
"RETIREE MEDICAL PLANS" has the meaning set forth in Section
10.1(d)(ii).
"SCHEDULE OF ANCILLARY SERVICES" has the meaning set forth in
Section 10.2.
"SECOND PHASE" has the meaning set forth in Section 7.3(a).
"SECOND REQUEST" has the meaning set forth in Section 7.3(a).
"SECTION 338(g) ELECTIONS" has the meaning set forth in Section
14.8.
"SECTION 338(h)(10) ELECTIONS" has the meaning set forth in Section
14.10(a).
"SECTION 338 ALLOCATION" has the meaning set forth in Section
14.10(a).
"SECTION 338 FORMS" has the meaning set forth in Section 14.10(b).
82
"SELLER" has the meaning set forth in the preamble.
"SELLER COMPETITIVE BUSINESS" has the meaning set forth in Section
12.1(a)(i).
"SELLER DISCLOSURE SCHEDULE" has the meaning set forth in Article
IV.
"SELLER DOCUMENTS" has the meaning set forth in Section 4.4.
"SELLER EMPLOYEE BENEFIT PLAN" means any Employee Benefit Plan that
is not an Acquired Company Plan.
"SELLER INDEMNIFIED GROUP" means Seller, its Subsidiaries and their
respective Affiliates, together with their successors and permitted assigns, and
their officers, directors, employees and agents.
"SELLER NAME" has the meaning set forth in Section 7.7(a).
"SELLER SAVINGS PLANS" has the meaning set forth in Section
10.1(m)(i).
"SELLER SUBS" has the meaning set forth in Section 4.3(a).
"SPECIFIED ACCOUNTING POLICIES" has the meaning set forth in Section
2.3(a).
"STRADDLE PERIOD" means any taxable period beginning on or prior to
and ending after the Closing Date.
"SUBSIDIARY" means, with respect to any Person, any other Person of
which such Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, a majority of the outstanding equity
securities or securities carrying a majority of the voting power in the election
of the board of directors or other governing body of such Person.
"SUBSIDIARY EQUITY SECURITIES" has the meaning set forth in Section
4.3(b).
"TARGET WORKING CAPITAL" means U.S.$611 million.
"TAX" or "TAXES" means all federal, state, local or foreign taxes,
charges, fees, imposts, levies or other assessments, including all net income,
gross receipts, capital, sales, use, ad valorem, VAT, transfer, franchise,
profits, inventory, capital stock, license, withholding, payroll, employment,
social security, unemployment, excise, severance, stamp, occupation, property
and estimated taxes, customs duties, fees, assessments and other governmental
charges of any kind whatsoever, together with all interest, penalties, fines,
additions to tax or additional amounts imposed by any taxing authority with
respect to such amounts.
"TAX CLAIM" means any claim with respect to Taxes made by any taxing
authority that, if pursued successfully, would reasonably be expected to serve
as the basis for a claim for indemnification under Article XIV.
"TAX PROCEEDING" has the meaning set forth in Section 14.4(b).
83
"TAX RETURN" means a report, return or other information required to
be supplied to a governmental entity with respect to Taxes (including any
amendments thereto).
"TCGA" means the UK Taxation of Chargeable Gains ▇▇▇ ▇▇▇▇.
"TRADEMARKS" means trademarks, service marks, brand names, logos,
certification marks, trade dress, assumed names and trade names, including all
applications for registration therefor and all renewals, modifications and
extensions thereof.
"TRADE SECRETS" means trade secrets and other similar confidential
or non-public business information including ideas, formulas, compositions,
technical documentation, operating manuals and guides, plans, designs, sketches,
inventions, production molds, product specifications, equipment lists,
engineering reports and drawings, architectural and engineering plans,
manufacturing and production processes and techniques; drawings, specifications,
plans, proposals, research records, inspection processes invention records and
technical data; financial, marketing and business data, pricing and cost
information, business and marketing plans and customer and supplier lists and
information, licensing records, advertising and promotional materials, service
and parts records, warranty records, maintenance records and similar records;
and all other know-how in each case, as recognized under patent, copyright,
trade secret law or similar law.
"TRANSFERRED EMPLOYEE" means (a) each Offer Employee other than a
Non-Acceptance Offer Employee; provided that, in the case of Offer Employees on
short term disability or other approved leaves of absence, such employees must
commence service with Purchaser prior to the six-month anniversary of the
Closing Date to become Transferred Employees and (b) each Acquired Company
Employee.
"TRANSFERRED JV INTERESTS" has the meaning set forth in Section 1.2
(l).
"TRANSFERRED JVS" has the meaning set forth in Section 1.2(l).
"TRANSFERRED PERMITS" has the meaning set forth in Section 1.2(i).
"TRANSFER DEEDS" has the meaning set forth in Section 3.2(c).
"TRANSFER TAXES" has the meaning set forth in Section 14.9(a).
"TRANSITION AGREEMENTS" has the meaning set forth in Section 10.2.
"TRANSITION INTELLECTUAL PROPERTY LICENSE AGREEMENT" means the
agreement substantially in the form of Exhibit G.
"TRANSITION SERVICES AGREEMENT" has the meaning set forth in Section
10.2.
"UK SCHEMES" means each of the QH Pension Scheme, the ▇▇▇▇
Manufacturing Pension Scheme and the ▇▇▇▇ UK Pension Scheme.
"U.S.$" means United States Dollars.
84
"VAT" means any value added Tax, goods and services Tax, sales or
turnover Tax or similar Tax, including such Tax as may be imposed by the Sixth
Council Directive of the European Communities and national legislation
implementing or supplemental to that directive.
"VAT PAYEE" has the meaning set forth in Section 14.9(b).
"VAT PAYOR" has the meaning set forth in Section 14.9(b).
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as
those terms are defined in Part I of Subtitle E of Title IV of ERISA.
"WORKING CAPITAL" means the current asset accounts set forth on
Schedule 15.1(e) less the current liabilities accounts set forth on Schedule
15.1(e) (in each case, as determined in accordance with GAAP, as modified by the
Specified Accounting Policies).
This Agreement is the result of the joint efforts of Purchaser and
Seller, and each provision hereof has been subject to the mutual consultation,
negotiation and agreement of the parties and there is to be no construction
against either party based on any presumption of that party's involvement in the
drafting thereof. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. Whenever used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders, and the terms "include" and
"including" shall be inclusive and not exclusive and shall be deemed to be
followed by the following phrase "without limitation." Unless otherwise
specified, the terms "hereof," "herein," "hereunder," "herewith" and similar
terms refer to this Agreement as a whole (including the schedules and disclosure
letters to this Agreement), and references herein to Sections and Articles refer
to sections and articles of this Agreement.
Section 15.2. Entire Agreement. The Schedules and Exhibits attached
to this Agreement shall be construed with and as an integral part of this
Agreement to the same extent as if the same had been set forth verbatim herein.
Any matter disclosed by Seller on any one Schedule shall be deemed disclosed for
purposes of any other Schedule in which the inclusion of such information
therein would be reasonably apparent. This Agreement (together with the
Schedules, Exhibits and other agreements referenced herein) and the
Confidentiality Agreement contain, and are intended as, a complete statement of
all of the terms and the arrangements between the parties hereto with respect to
the matters provided for herein, and supersede any previous agreements and
understandings between the parties hereto with respect to those matters.
Section 15.3. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made in and to be wholly performed in such state,
without regard to principles of conflicts of laws.
Section 15.4. Jurisdiction. (a) Each of Seller and Purchaser
irrevocably submits to the jurisdiction of the Courts of the State of New York
sitting in the City of New York, Borough of Manhattan and the United States
District Court for the Southern District of New York in
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connection with any Legal Proceeding arising out of or relating hereto or the
transactions contemplated hereby, and hereby irrevocably agrees that all claims
in respect of such Legal Proceeding shall be heard and determined in such state
or federal court. Each of Seller and Purchaser hereby irrevocably waives (and
agrees not to plead or claim) any objection to the laying of venue of any Legal
Proceeding arising out of or relating hereto or the transactions contemplated
hereby in the Courts of the State of New York sitting in the City of New York,
Borough of Manhattan or the United States District Court for the Southern
District of New York and the defense of an inconvenient forum to the maintenance
of such action or proceeding. The parties hereto further agree, to the fullest
extent permitted by law, that final and unappealable judgment against any of
them in any Legal Proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified copy of which shall be conclusive evidence of the
fact and amount of such judgment. Each of Seller and Purchaser agrees that
service of process, summons, notice or document by U.S. registered mail to such
person's respective address set forth in Section 15.7 shall be effective service
of process for any Legal Proceeding with respect to any matters to which it has
submitted to jurisdiction pursuant to this Section 15.4(a).
(b) To the extent that Purchaser or Seller have or hereafter may
acquire any immunity from jurisdiction of any court or from any legal process
(whether through service or notice, attachment prior to judgment, attachment in
aid of execution, execution or otherwise) with respect to itself or its
property, each of Purchaser and Seller hereby irrevocably waives such immunity
in respect of its obligations hereunder.
Section 15.5. Expenses. Subject to Sections 7.3 and 13.2, each of
the parties hereto shall bear its own expenses (including fees and disbursements
of its counsel, accountants and other experts) incurred by it in connection with
the preparation, negotiation, execution, delivery and performance hereof, each
of the other documents and instruments executed in connection herewith or
contemplated hereby and the consummation of the transactions contemplated hereby
and thereby.
Section 15.6. Table of Contents and Headings. The table of contents
and section headings hereof are for convenience of reference only and are to be
given no effect in the construction, interpretation or effect hereof.
Section 15.7. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally or by overnight mail or to the extent receipt is confirmed, facsimile
or other electronic transmission service, or five calendar days after being
mailed by registered mail, return receipt requested, to a party at the following
address (or to such other address as such party may have specified by notice
given to the other parties pursuant to this Section 15.7):
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If to Seller, to:
▇▇▇▇ Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Wachtell, Lipton, ▇▇▇▇▇ & ▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser, to:
AAG Opco Corp.
c/o The Cypress Group L.L.C.
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 15.8. Severability. The invalidity or unenforceability of
any provision hereof shall not affect the validity or enforceability of any
other provision hereof, each of which shall remain in full force and effect.
Section 15.9. Binding Effect; No Third-Party Beneficiaries; No
Assignment. This Agreement shall be legally binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Nothing herein shall create or be deemed to create any third-party beneficiary
rights in any Person not a party hereto (except for Indemnified Parties in
Article XI). Prior to the Closing, no assignment hereof or of any rights or
obligations hereunder may be made by any party hereto (by operation of law or
otherwise) without the prior written consent of the other party hereto and any
attempted assignment without such required consent
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shall be without effect; provided that Purchaser may assign its rights and
obligations hereunder (including the right to acquire any asset and/or the
obligation to pay all or part of the consideration and to assume any Liability
pursuant to Articles I and II) to any wholly owned Subsidiary without the prior
written consent of the other party hereto; provided, further, that no such
assignment by Purchaser shall relieve Purchaser of any of its obligations
hereunder. At and following the Closing, Purchaser may from time to time assign
any rights hereunder for collateral purposes or in connection with a sale or
transfer of all or a portion of the assets of Purchaser or its Subsidiaries;
provided that such assignment complies with any other agreement that may exist
between Seller and Purchaser. Purchaser shall be permitted to assign its rights
hereunder to purchase ▇▇▇▇/Arnley Worldparts Corp. to a Designated Affiliate;
provided that no such assignment shall relieve Purchaser of any of its
obligations hereunder.
Section 15.10. Amendments. This Agreement may be amended,
supplemented or modified, and any provision hereof may be waived, only pursuant
to a written instrument making specific reference hereto signed by each of the
parties hereto.
Section 15.11. Waiver. At any time prior to the Closing Date, the
parties may, in their sole discretion, (a) extend the time for the performance
of any of the obligations or other acts of the parties, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein, to the extent permitted by applicable
Law. Any agreement on the part of a party hereto to any such extension or waiver
will be valid only if set forth in a writing signed on behalf of such party. No
waiver by any party of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed to extend to any
prior or subsequent default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising by virtue of any such
prior or subsequent occurrence.
Section 15.12. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
AAG OPCO CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
--------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ III
Title: President, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ &
Global Initiatives