EX-10.15
Published on December 27, 2002
STOCK PURCHASE AGREEMENT
BETWEEN
HONEYWELL ELECTRONIC MATERIALS, INC.
AND
TTM TECHNOLOGIES, INC.
DATED AS OF DECEMBER 24, 2002
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December 24
2002, between TTM Technologies, Inc., a Washington corporation ("Buyer"), and
Honeywell Electronic Materials, Inc., a Washington corporation ("Seller").
WITNESSETH:
WHEREAS, Seller is the record and beneficial owner of the Shares and desires to
sell the Shares to Buyer, and Buyer desires to purchase the Shares from Seller,
upon terms and subject to the conditions hereinafter set forth; and
WHEREAS, as an inducement to Buyer to purchase the Shares, Honeywell
International Inc., a Delaware corporation ("Honeywell"), the ultimate parent
corporation of Seller, has agreed to enter into a Guaranty Agreement of even
date herewith with Buyer in form and substance as set forth in Exhibit A hereto
(the "Guaranty Agreement"); The parties hereto agree as follows:
1. PURCHASE AND SALE OF THE SHARES. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees
to purchase from Seller, the Shares at Closing. The purchase price for the
Shares (the "Purchase Price") is $1.00 in cash.
2. DEFINITIONS.
2.1. "ADJUSTMENT AMOUNT" has the meaning found in Section
3.1.3 below.
2.2. "AFFILIATE" means, as to any specified Person, any other
Person, which, directly or indirectly, at the time such determination
is being made, controls, is controlled by or is under common control
with, such specified Person.
2.3. "AFFILIATED GROUP" has the meaning found in Section 5.8
below.
2.4. "AGREEMENT" has the meaning found in the preamble, above.
2.5. "ANCILLARY DOCUMENTS" means, collectively, (1) the Seller
Disclosure Schedule; (2) the Buyer Disclosure Schedule; (3) the
Guaranty Agreement; (4) the Transition Services Agreement; (5) the
Cross License and Transfer Agreement; (6) the certificate delivered by
Seller pursuant to Section 4.1.1 below; (7) the certificate delivered
by Buyer pursuant to Section 4.2.1 below; and (8) the Deed Restriction.
2.6. "BALANCE SHEET" has the meaning found in Section 5.6.1
below.
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2.7. "BALANCE SHEET DATE" has the meaning found in Section
5.6.1 below.
2.8. "BANKED LIABILITY" has the meaning found in Section 2.65
below.
2.9. "BENEFIT PLANS" means employee benefit plans (as defined
in Section 3(3) of ERISA), programs and arrangements providing
disability benefits, supplemental unemployment benefits, vacation
benefits, severance benefits, retirement benefits, life, health,
retiree life, retiree health, accident benefits (including, any
"voluntary employees' beneficiary association" as defined in Section
501(c)(9) of the Code providing for the same or other benefits), or
providing for bonuses, profit-sharing bonuses, stock options, stock
purchases, restricted stock, stock appreciation rights or other forms
of incentive compensation, maintained or contributed to or sponsored
by, or with respect to which any liability may be imposed upon, the
Company with respect to any Employees or Former Employees (or their
spouses, dependents or beneficiaries), whether or not such plans,
programs and arrangements are written or oral.
2.10. "BENEFIT TRANSITION DATE" means (1) the Closing Date; or
(2) such later date as defined and agreed to in the Transition Services
Agreement for each specific administrative service or Benefit Plan.
2.11. "BUSINESS DAY" means any day on which banks located in
New York, New York are open for the purpose of conducting commercial
banking business.
2.12. "BUYER" has the meaning found in the preamble, above.
2.13. "BUYER DISCLOSURE SCHEDULE" means the disclosure
schedule of Buyer delivered to Seller simultaneously with the execution
and delivery hereof.
2.14. "BUYER'S 401(K) PLANS" has the meaning found in Section
10.4 below.
2.15. "CHANGE IN CONTROL" shall mean, with respect to Buyer or
the Company, either (i) the sale or transfer of all or substantially
all of the Buyer's or the Company's assets to any Person or group (as
defined in Section 12(d)(3) of the Exchange Act), of Persons (other
than a Subsidiary), (ii) the acquisition of the Buyer or the Company by
another Person by means of any transaction or series of related
transactions (including, without limitation, any reorganizations,
merger or consolidations, whether of the Buyer or the Company with or
into any other Person or Persons, but excluding (x) any merger effected
exclusively for changing the domicile of the Buyer or the Company or
(y) any consolidation or merger following which holders of equity
securities outstanding immediately prior to such merger or
consolidation hold more than fifty percent (50%) of the equity
securities of the entity surviving such consolidation or merger or an
entity
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controlling such surviving entity after such consolidation or merger);
or (iii) a transaction or series of transactions in which a Person or
group of Persons acquires beneficial ownership (as determined in
accordance with Rule 13d-3 of the Exchange Act) of more than fifty
percent (50%) of the voting power of the Buyer.
2.16. "CHIPPEWA FALLS PROPERTY" has the meaning found in
Section 8.6 below.
2.17. "CISCO" has the meaning found in Section 9.4 below.
2.18. "CISCO SETTLEMENT AGREEMENT" has the meaning found in
Section 9.4 below.
2.19. "CLAIMS" means lawsuits, claims, proceedings,
investigations or orders issued by any Governmental Authority.
2.20. "CLOSING" has the meaning found in Section 3 below.
2.21. "CLOSING DATE" has the meaning found in Section 3 below.
2.22. "CLOSING DATE NET WORKING CAPITAL" means, as of the
Closing Date, the Company's accounts receivable plus inventory
(assuming the net value of maintenance spares is zero) minus the
Company's accounts payable as calculated in accordance with the
management accounts maintained in the ordinary course prior to the
Closing Date.
2.23. "CODE" means the Internal Revenue Code of 1986, as
amended.
2.24. "COMPANY" means Honeywell Advanced Circuits, Inc., a
Minnesota corporation.
2.25. "COMPANY PROPERTY" has the meaning found in Section 5.10
below.
2.26. "COMMON STOCK" means the common stock, par value $.10
per share, of the Company.
2.27. "CONFIDENTIALITY AGREEMENT" means the Mutual
Nondisclosure Agreement, dated April 29, 2002, by and between Buyer and
Honeywell.
2.28. "CONTRACTS" has the meaning found in Section 5.12 below.
2.29. "CROSS LICENSE AND TRANSFER AGREEMENT" has the meaning
found in Section 4.1.6 below.
2.30. "EMPLOYEES" has the meaning found in Section 10 below.
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2.31. "EMPLOYEE SALES BONUS" has the meaning found in Section
2.65 below.
2.32. "ENVIRONMENTAL CLAIM" has the meaning found in Section
11.7.1 below.
2.33. "ENVIRONMENTAL LAWS" means Federal, state, local or
foreign statutes, laws, ordinances, rules, orders and regulations
relating to the protection of the environment, as currently in effect.
2.34. "ENVIRONMENTAL PERMITS" means licenses, permits,
authorizations and approvals required under Environmental Laws.
2.35. "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
2.36. "ERISA AFFILIATE" has the meaning found in Section
5.15.4 below.
2.37. "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934.
2.38. "FINANCIAL STATEMENTS" has the meaning found in Section
5.6.1 below.
2.39. "FORMER EMPLOYEES" has the meaning found in Section 10
below.
2.40. "GOVERNMENTAL AUTHORITY" means any court, government
(Federal, state or local), department, commission, board, agency,
bureau, official or other regulatory, administrative or governmental
authority, domestic or foreign.
2.41. "GUARANTY AGREEMENT" has the meaning found in the
preamble above.
2.42. "GUST" as described and used in Section 5.15.10 below,
means, collectively, (1) the General Agreement on Tariffs and Trade, as
amended; (2) the Uniformed Services Employment and Reemployment Rights
Act, as amended; (3) the Small Business Job Protection Act, as amended;
and (4) the Tax Reform Act of 1997, as amended.
2.43. "HIPI" has the meaning found in Section 4.1.6 below.
2.44. "HONEYWELL" has the meaning found in the preamble above.
2.45. "INDEMNIFIED PARTY" has the meaning found in Section
11.5 below.
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2.46. "INDEMNIFYING PARTY" has the meaning found in Section
11.5 below.
2.47. "LEASED PROPERTY" has the meaning found in Section 5.10
below.
2.48. "LEAVE EMPLOYEES" has the meaning found in Section 10.1
below.
2.49. "LIENS" means liens, claims, encumbrances, security
interests, options, charges and restrictions of any kind.
2.50. "MATERIAL ADVERSE EFFECT" means an adverse effect on the
business, assets or results of operation of the Company taken as a
whole, excluding (1) any effect generally applicable to the economy or
the industry in which the Company conducts its business or (2) changes
in the Company's employee population arising from or related to this
Agreement or the transactions contemplated today.
2.51. "OWNED PROPERTY" has the meaning found in Section 5.10
below.
2.52. "PBGC" means the Pension Benefit Guaranty Corporation.
2.53. "PERMITTED LIENS" means (1) Liens disclosed in Section
5.9 of the Seller Disclosure Schedule; (2) Liens disclosed on the
Balance Sheet and Liens arising in the ordinary course since the
Balance Sheet Date; (3) mechanics', carriers', workmen's, repairmen's
or other like Liens arising or incurred in the ordinary course of
business; (4) Liens arising under original purchase price conditional
sales contracts and equipment leases with third parties entered into in
the ordinary course of business; (5) Liens for Taxes which are not due
and payable or which may thereafter be paid without penalty; and (6)
other Liens which would not have a Material Adverse Effect.
2.54. "PERSON" means an individual, corporation, partnership,
limited liability company, association, trust or other entity or
organization, including a government or political subdivision or an
agency or instrumentality thereof.
2.55. "PRE-CLOSING DIVIDEND" means a dividend that may be paid
by the Company to Seller on or before Closing consisting of (1) cash
equal to the Company's cash balance; plus (2) the Company's 12.375%
ownership interest in American Tax Credit Corporate Fund, L.P.; plus
(3) those assets of the Company, including without limitation owned
real property, leased real property and equipment which are described
in Section 2.55 of the Seller Disclosure Schedule.
2.56. "PURCHASE PRICE" has the meaning found in Section 1
above.
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2.57. "RECORDS" means agreements, documents, books, records
and files.
2.58. "RIGHTS" means patents, patent rights, trademarks,
trademark rights, trade names, trade name rights, copyright
registrations, know-how and other proprietary information.
2.59. "SAVINGS PLAN COMMENCEMENT DATE" has the meaning found
in Section 10.4 below.
2.60. "SELLER" has the meaning found in the preamble above.
2.61. "SELLER DISCLOSURE SCHEDULE" means the disclosure
schedule of Seller delivered to Buyer simultaneously with the execution
and delivery hereof.
2.62. "SELLER'S 401(K) PLAN" has the meaning found in Section
10.4 below.
2.63. "SELLER'S KNOWLEDGE" has the meaning found in Section 21
below.
2.64. "SHARES" means 100 shares of Common Stock.
2.65. "SPECIFIED LIABILITIES" means:
(1) (a) all liabilities for income Taxes of the Company for
any period ending on or prior to the Closing Date, and (b) all
liabilities of the Company as a result of the applicability of Treas.
Reg. Section 1.1502-6 or otherwise for Taxes of the Seller, the Company
or any other corporation that is now or was affiliated with the Seller
or the Company on or prior to the Closing Date;
(2) all liabilities and obligations of the Company and its
affiliates existing on or prior to the Closing Date (whether accrued,
absolute, contingent, known, unknown or otherwise, and whether or not
of a nature required to be reflected or reserved against in a balance
sheet prepared in accordance with generally accepted accounting
principles) except (a) the liabilities reflected on the Balance Sheet,
other than accruals for (A) "banked" vacation time owed to employees of
the Company in the amount set forth in account #25412 of the Company's
balance sheet as of the Closing Date ("Banked Liability") and (B) sales
bonuses to the extent earned on or prior to December 31, 2002
("Employee Sales Bonus"), it being understood the liabilities described
in the foregoing clauses (A) and (B) will remain the obligations of
Seller and the Seller will pay such liabilities on a timely basis, (b)
trade payables and accrued expenses incurred by the Company in the
ordinary course of business since the Balance Sheet Date, (c) executory
contract obligations under (i) agreements listed on the Seller
Disclosure Schedule, and (ii) Company agreements not required to be
listed on
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the Seller Disclosure Schedule, and (d) the liabilities expressly set
forth in Section 2.65 of the Seller Disclosure Schedule; and
(c) any liability arising under or relating to the leases for
the properties located at 1632 Terrace Drive, Roseville, Minnesota and
560 - 16th Avenue So., Hopkins, Minnesota, it being understood that the
Seller will use reasonable efforts to have such leases assigned to the
Seller as promptly as practicable after the Closing Date;
it being expressly acknowledged and agreed that Specified Liabilities will
include all liabilities of the Company accrued on or prior to Closing under or
with respect to (1) the Company's Benefit Plans; (2) violations of law; (3)
product liability claims pertaining to products manufactured prior to the
Closing Date; (4) defaults taking place before the Closing Date under Company
agreements; (5) obligations owed to Affiliates of the Company; and (6) Company
litigation or similar proceedings pending or threatened as of the Closing Date,
in each case whether or not described on the Seller Disclosure Schedule.
2.66. "STRADDLE PERIOD" has the meaning found in Section 11.6
below.
2.67. "SUBSIDIARY" means any entity of which securities or
other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned by the Company.
2.68. "TAX" or "Taxes" means all Federal, state, local and
foreign taxes and assessments, including all interest, penalties and
additions imposed with respect to such amounts.
2.69. "TAX CLAIM" has the meaning found in Section 11.6 below.
2.70. "TAX LOSSES" has the meaning found in Section 11.1
below.
2.71. "TAX RETURN" means any return, declaration, report,
claim for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto and including any
amendment thereof.
2.72. "THIRD PARTY CLAIM" has the meaning found in Section
11.5 below.
2.73. "TRANSFERRED EMPLOYEES" has the meaning found in Section
10.1 below.
2.74. "TRANSITION SERVICES AGREEMENT" has the meaning found in
Section 4.1.5 below.
2.75. "WARN ACT" means the Worker Adjustment and Retraining
Notification Act, as amended.
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2.76. "WORKING CAPITAL REQUIREMENT" means $13,900,000.
3. CLOSING. The completion ("Closing") of the purchase and sale of the
Shares hereunder will take place at the offices of the Company, 234 Cashman
Drive, Chippewa Falls, Wisconsin, as soon as possible, but in no event later
than December 26, 2002, after satisfaction of the conditions set forth in
Section 4.1 below, or at such other time or place as Buyer and Seller may agree
(the "Closing Date").
3.1. TRANSACTIONS AT CLOSING. At Closing:
3.1.1. CASH. Buyer will deliver to Seller $1.00 in
cash.
3.1.2. CERTIFICATES. Seller will deliver to Buyer one
or more certificates for the Shares, duly endorsed or
accompanied by stock powers duly endorsed or accompanied by
stock powers duly endorsed in blank, with any required
transfer stamps affixed thereto.
3.1.3. CLOSING DATE NET WORKING CAPITAL ADJUSTMENT.
As soon as reasonably practicable and not more than thirty
(30) days following the Closing Date, Buyer shall cause to be
prepared and delivered to Seller a calculation of the Closing
Date Net Working Capital. Upon delivery of the calculation of
the Closing Date Net Working Capital, the Buyer will provide
Seller access to Buyer's records to the extent reasonably
related to Buyer's evaluation of the calculation of the
Closing Date Net Working Capital. If the Seller is in
agreement with the Buyer's calculation of the Closing Date Net
Working Capital and the Closing Date Net Working Capital is
less than the Working Capital Requirement (the amount of such
difference, the "Adjustment Amount"), the Seller will, as
promptly as practicable, pay to Buyer an amount of cash equal
to the Adjustment Amount. In the event of any disagreement
regarding the Closing Date Net Working Capital, Buyer and
Seller will use commercially reasonable efforts for period of
twenty (20) days (or such longer period as they may mutually
agree) to resolve any disagreements with respect to the
calculation of the Closing Date Net Working Capital. If, at
the end of such period, they are unable to resolve such
disagreements, then an independent accounting firm of
recognized national standing mutually selected by the Buyer
and Seller shall resolve any remaining disagreements within
thirty (30) days after such accounting firm is engaged by the
Buyer and Seller. Once the auditor has made a determination
regarding the calculation of the Closing Date Net Working
Capital, the Seller will, as promptly as practicable, pay to
Buyer in cash the Adjustment Amount, if any. Buyer hereby
waives any right to disagree or object to the reserve for
doubtful accounts and excess inventory maintained by Seller as
of the Closing Date. For purposes of the preceding sentence,
Buyer agrees and acknowledges that the amount of
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the reserve for doubtful accounts and excess inventory
maintained by Seller as of the Closing Date is equal to
$311,519 and $4,583,430, respectively.
4. CONDITIONS TO CLOSING.
4.1. BUYER'S OBLIGATION. The obligation of Buyer to purchase
and pay for the Shares is subject to the satisfaction (or waiver by
Buyer) at Closing of the following conditions:
4.1.1. REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller made in this
Agreement, qualified as to materiality, will be true and
correct at Closing, and those not so qualified will be true
and correct in all material respects at Closing, in each case
as though made on and as of the Closing Date, and Seller will
have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by Seller by Closing; and Seller
will have delivered to Buyer a certificate dated the Closing
Date and signed by an authorized officer of Seller confirming
the foregoing.
4.1.2. NO ACTION. No action, suit or other proceeding
by any Person will be pending or threatened which seeks to
restrain or prohibit the purchase and sale of the Shares, the
Closing or the consummation of the transactions contemplated
hereby or seeking material damages against Buyer or the
Company as a result of the consummation of such transactions.
4.1.3. NO ORDER. No injunction or order of any court
or administrative agency of competent jurisdiction will be in
effect at Closing that restrains or prohibits the purchase and
sale of the Shares.
4.1.4. GUARANTY AGREEMENT. Honeywell will have
delivered an executed Guaranty Agreement.
4.1.5. TRANSITION SERVICES AGREEMENT. Seller will
have delivered an executed agreement covering transitional
services to be provided by or to Buyer, the Company and/or
their Affiliates after Closing, substantially in the form of
Exhibit B (the "Transition Services Agreement").
4.1.6. CROSS LICENSE AND TRANSFER AGREEMENT. Seller
will have delivered an executed agreement in respect of (1)
the transfer of certain intellectual property from the Company
to Honeywell Intellectual Properties, Inc. ("HIPI"); (2) the
license of certain intellectual property by HIPI to the
Company; and (3) the license of certain intellectual property
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by the Company to HIPI, substantially in the form of Exhibit C
(the "Cross License and Transfer Agreement").
4.1.7. CORPORATE DOCUMENTS. Buyer will have received
all documents it may reasonably request relating to the
existence of Seller, the Company and the authority of Seller
for this Agreement, all in form and substance reasonably
satisfactory to Buyer.
4.1.8. CONSENTS. Buyer will have received written
evidence, in form and substance reasonably satisfactory to
Buyer, of the consents described in Section 4.1.8 of the
Seller Disclosure Schedule.
4.1.9. FINANCIAL STATEMENTS. Buyer will have received
the Financial Statements and the consent of PriceWaterhouse
Coopers to include the Financial Statements in Buyer's current
report on Form 8-K; provided, however, that Buyer shall be
deemed to have waived this condition if Buyer's failure to
receive such consent is due to its failure to pay any amounts
due to PriceWaterhouse Coopers (subject to a maximum amount of
Ten Thousand Dollars ($10,000)), pursuant to Section 8.4
below.
4.1.10. MATERIAL ADVERSE EFFECT. Since the Balance
Sheet Date and up to and including the Closing, there will not
have been any event, circumstance, change or effect that,
individually or in the aggregate, had or could reasonably be
expected to have a Material Adverse Effect.
4.2. SELLER'S OBLIGATION. The obligation of Seller to sell and
deliver the Shares to Buyer is subject to the satisfaction (or waiver
by Seller) at Closing of the following conditions:
4.2.1. REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer made in this
Agreement, qualified as to materiality, will be true and
correct at Closing, and those not so qualified will be true
and correct in all material respects at Closing, in each case
as though made on and as of the Closing Date, and Buyer will
have performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by Buyer by Closing; and Buyer will
have delivered to Seller a certificate dated the Closing Date
and signed by an authorized officer of Buyer confirming the
foregoing.
4.2.2. NO ACTION. No action, suit or other proceeding
by any Person will be pending or threatened which seeks to
restrain or prohibit the purchase and sale of the Shares, the
Closing or the consummation of the transactions contemplated
hereby or seeking material damages
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against Seller or the Company as a result of the consummation
of such transactions.
4.2.3. NO ORDER. No injunction or order of any court
or administrative agency or instrumentality will be in effect
at Closing that restrains or prohibits the purchase and sale
of the Shares.
4.2.4. GUARANTY AGREEMENT. Buyer will have delivered
an executed Guaranty Agreement.
4.2.5. TRANSITION SERVICES AGREEMENT. Buyer will have
delivered an executed Transition Services Agreement.
4.2.6. CROSS LICENSE AND TRANSFER AGREEMENT. Buyer
will have delivered an executed Cross License and Transfer
Agreement.
4.2.7. CORPORATE DOCUMENTS. Seller will have received
all documents it may reasonably request relating to the
existence of Buyer and the authority of Buyer for this
Agreement, all in form and substance reasonably satisfactory
to Seller.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to Buyer that the following statements are true and correct:
5.1. AUTHORITY. Seller is a corporation duly organized and
validly existing under the laws of Washington. Seller has all requisite
corporate power and authority to enter into this Agreement and each of
the Ancillary Agreements and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by Seller to authorize the execution,
delivery and performance of this Agreement and each of the Ancillary
Agreements and the consummation of the transactions contemplated hereby
and thereby have been duly and properly taken. This Agreement has been
duly executed and delivered by Seller and constitutes, and each of the
Ancillary Agreements when executed will constitute, a valid and binding
obligation of Seller, enforceable against Seller in accordance with its
terms. Except as set forth in Section 5.1 of the Seller Disclosure
Schedule, the execution and delivery of this Agreement and each of the
Ancillary Agreements does not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the terms hereof
and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of the
Company (including without limitation any Rights of the Company) under,
any provision of (1) the Washington Business Corporation Act; (2) the
certificate of incorporation or by-
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laws or comparable organizational documents of Seller or the Company;
(3) any material note, bond, mortgage, indenture, deed of trust,
license (including with out limitation any license agreement pertaining
to Rights), lease, contract, commitment, agreement or arrangement to
which Seller or the Company is a party or by which any of their
respective properties or assets are bound; or (4) any judgment, order
or decree, or material statute, law, ordinance, rule or regulation
applicable to Seller or to the Company or to the property or assets of
Seller or of the Company; other than, in the case of clause (3) above,
any such conflicts, violations, defaults, rights, losses or Liens that,
individually or in the aggregate, would not have a Material Adverse
Effect. Except as set forth in Section 5.1 of the Seller Disclosure
Schedule, no material consent, approval, license, permit, order or
authorization of, or registration, declaration or filing with, any
Governmental Authority, is required to be obtained or made by or with
respect to Seller or the Company in connection with the execution and
delivery of this Agreement or the consummation of the transactions
contemplated hereby, other than (a) compliance with and filings under
the competition laws of any jurisdiction outside of the United States,
if applicable; (b) compliance with and filings under various state
environmental laws; and (c) those that may be required solely by reason
of Buyer's (as opposed to any other third party's) participation in the
transactions contemplated hereby.
5.2. SHARES. Seller has good and valid title to the Shares
free and clear of any Liens. Assuming Buyer has the requisite power and
authority to be the lawful owner of the Shares, upon delivery to Buyer
at Closing of certificates representing the Shares, duly endorsed for
transfer to, and upon Seller's receipt of the Purchase Price, good and
valid title to the Shares will pass to Buyer, free and clear of any
Liens other than those arising from acts of Buyer or its Affiliates.
Other than this Agreement, the Shares are not subject to any voting
trust agreement or other contract, agreement, arrangement, commitment
or understanding, including any such agreement, arrangement, commitment
or understanding restricting or otherwise relating to the voting,
dividend rights or disposition of the Shares.
5.3. ORGANIZATION AND STANDING OF THE COMPANY. The Company is
a corporation duly organized and validly existing under the laws of the
state of Minnesota. The Company has full corporate power and authority
and possesses all governmental franchises, licenses, permits,
authorizations and approvals necessary to enable it to use its
corporate name and to own, lease or otherwise hold its properties and
assets and to carry on its businesses as presently conducted, except
such franchises, licenses, permits, authorizations and approvals the
lack of which, individually or in the aggregate, would not have a
Material Adverse Effect. The Company is duly qualified and in good
standing to do business in each jurisdiction in which the nature of its
business or the ownership, leasing or holding of its properties makes
such qualification necessary, except such jurisdictions where the
failure so to qualify, individually or
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in the aggregate, would not have a Material Adverse Effect. Seller has
made available to Buyer true and complete copies of its certificate of
incorporation and by-laws, each as in effect on the date hereof, of the
Company.
5.4. CAPITAL STOCK. The authorized capital stock of the
Company consists of 10,000,000 shares of Common Stock, of which 100,
constituting the Shares, are duly authorized and validly issued and
outstanding, fully paid and nonassessable. Seller is the registered
holder of the Shares. The Shares have not been issued in violation of,
and none of the Shares is subject to, any preemptive or subscription
rights. Except as set forth above, there are no shares of capital stock
or other equity securities of the Company outstanding. There are no
outstanding warrants, options, agreements, convertible or exchangeable
securities or other commitments (other than this Agreement) pursuant to
which Seller nor the Company is or may become obligated to issue, sell,
purchase, return or redeem any shares of capital stock or other
securities of the Company, and there are not any equity securities of
the Company reserved for issuance for any purpose. The Company does not
have any Subsidiaries.
5.5. EQUITY INTERESTS. The Company does not directly or
indirectly own any capital stock of or other equity interests in any
corporation, partnership or other entity.
5.6. FINANCIAL STATEMENTS.
5.6.1. PREPARATION. Section 5.6 of the Seller
Disclosure Schedule sets forth the audited balance sheets of
the Company as of September 30, 2002 (the "Balance Sheet"; the
"Balance Sheet Date") and December 31, 2001, respectively, and
the related audited statements of income, shareholders' equity
and cash flows for the nine-month period ended September 30,
2002 and the twelve-month periods ended December 31, 2001 and
December 31, 2000, together with the notes to such financial
statements (such financial statements and notes, collectively,
the "Financial Statements"). The Financial Statements have
been prepared in conformity with U.S. generally-accepted
accounting principles consistently applied and on that basis
fairly present in all material respects the financial
condition and the results of operations of the Company as of
and for the periods indicated.
5.6.2. UNDISCLOSED LIABILITIES. To Seller's
knowledge, the Company does not have any material liabilities
or obligations of any nature (whether accrued, absolute,
contingent, unasserted or otherwise), except (1) to the extent
disclosed, reflected or reserved against in the Balance Sheet
and the notes thereto; (2) for items disclosed in the Seller
Disclosure Schedule; (3) for liabilities and obligations
incurred in the ordinary course of business consistent with
past practice since the Balance
13
CONFIDENTIAL
Sheet Date and not in violation of this Agreement; (4) for
Taxes; and (5) other liabilities which do not, individually or
in the aggregate, have a Material Adverse Effect.
5.7. TRANSACTIONS WITH AFFILIATES. Except as set forth in the
notes to the Financial Statements or Sections 5.7 or 5.21 of the Seller
Disclosure Schedule, the Company does not have any outstanding contract
or agreement with Seller or any of its Affiliates that will continue in
effect subsequent to Closing.
5.8. TAXES. The Company, and any affiliated group, within the
meaning of Section 1504 of the Code, of which the Company is or has
been a member (an "Affiliated Group"), has filed or caused to be filed
in a timely manner (within any applicable extension periods) all
material Tax returns, reports and forms required to be filed by the
Code or by applicable state, local or foreign tax laws. As of the time
of filing, such returns, reports and forms were accurate and complete
in all material respects. All Taxes shown to be due on such returns,
reports and forms have been timely paid in full or will be timely paid
in full by the due date thereof. No material tax liens have been filed
and no material claims are being asserted in writing with respect to
any Taxes.
5.8.1. WITHHOLDS. The Company has withheld and paid
all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other third
party.
5.8.2. AFFILIATED GROUPS. Except for the Affiliated
Group of which the Seller is a member, the Company (1) has not
been a member of an Affiliated Group filing a consolidated
Federal income Tax Return; and (2) has no liability for the
Taxes of any Person under Treasury Regulation section 1.1502-6
(or any similar provision of state, local or foreign law), as
a transferee or successor, by contract or otherwise.
5.8.3. PERIOD SHIFT. The Company will not be required
to include in a taxable period ending after the Closing Date
taxable income attributable to income that accrued in a prior
taxable period but was not recognized in any prior taxable
period as a result of the installment method of accounting,
the completed contract method of accounting, the long-term
contract method of accounting, the cash method of accounting
or Section 481 of the Code or any comparable provision of
state, local or foreign tax law.
5.8.4. TAX PARTNERSHIPS. Except as set forth in
Section 5.8.4 of the Seller Disclosure Schedule, the Company
is not a party to any joint
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CONFIDENTIAL
venture, partnership or other arrangement or contract that
could be treated as a partnership for Federal income tax
purposes.
5.8.5. LEVERAGED LEASE TRANSACTIONS. Except as set
forth in Section 5.8.5 of the Seller Disclosure Schedule, the
Company has not entered into any sale leaseback or leveraged
lease transaction that fails to satisfy the requirements of
Revenue Procedure 75-21 (or similar provisions of foreign law)
or any safe harbor lease transaction.
5.8.6. SECTION 338. Neither the Seller nor the
Company has taken any action or will take any action that
could result in a deemed election under Section 338 of the
Code with respect to the Company.
5.8.7. REAL PROPERTY HOLDING CORPORATION. The Company
has never been a real property holding corporation within the
meaning of Section 897(c) of the Code.
5.8.8. TAX BASIS IN ASSETS. Section 5.8.8 of the
Seller Disclosure Schedule sets forth, as of the most recent
date practicable, the basis of the Company in its assets and
the amount of any net operating loss, net operating loss
carryover, net capital loss, net capital loss carryover, tax
credits and tax credit carryovers.
5.9. ASSETS OTHER THAN REAL PROPERTY INTERESTS. The Company
has good and valid title or a valid leasehold interest to all material
assets reflected on the Balance Sheet or thereafter acquired, except
those since sold or otherwise disposed of in the ordinary course of
business consistent with past practice, in each case free and clear of
all Liens except Permitted Liens. All the material tangible personal
property of the Company has been maintained in all material respects in
accordance with past practice of the Company. This Section 5.9 does not
relate to real property or interests in real property, such items being
the subject of Section 5.10 below.
5.10. TITLE TO REAL PROPERTY. Section 5.10 of the Seller
Disclosure Schedule sets forth a complete list of all real property and
interests in real property owned in fee by the Company (individually,
an "Owned Property"). Section 5.10 of the Seller Disclosure Schedule
also sets forth a complete list of all real property and interests in
real property leased by the Company (individually, a "Leased
Property"). The Company has (1) good and insurable fee title to all
Owned Property; and (2) valid leasehold estates in all Leased Property
(an Owned Property or Leased Property being sometimes referred to
herein individually as a "Company Property" and collectively as
"Company Properties"), in each case free and clear of all Liens,
mortgages, easements, covenants, rights-of-
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CONFIDENTIAL
way, zoning restrictions and other similar restrictions of any nature
whatsoever, except (a) Permitted Liens; (b) (i) easements, covenants,
rights-of-way, zoning restrictions and other similar restrictions of
record, and (ii) any conditions that may be shown by a current,
accurate survey or physical inspection of any Company Property, none of
which items set forth in clauses (b)(i) and (b)(ii), individually or in
the aggregate, materially impair the continued use and operation of the
Company Property to which they relate in the business of the Company,
taken as a whole, as currently conducted; and (c) (i) zoning, building
and other similar restrictions, (ii) Liens or mortgages that have been
placed by any developer, landlord or other third party on property over
which the Company has easement rights or on any Leased Property and
subordination or similar agreements relating thereto, and (iii)
unrecorded easements, covenants, rights-of-way, or other similar
restrictions, none of which items set forth in clauses (c)(i), (c)(ii)
and (c)(iii), individually or in the aggregate, materially impair the
continued use and operation of the Company Property to which they
relate in the business of the Company, taken as a whole, as currently
conducted.
5.11. INTELLECTUAL PROPERTY. Section 5.11 of the Seller
Disclosure Schedule sets forth a true and complete list of all patents,
trademarks (registered or unregistered), trade names, copyright
registrations, mask work registrations and applications therefor now
used or presently proposed to be used in the conduct of the business of
the Company, excluding computer software which is widely available.
Except as set forth in such section, (1) the Company, to Seller's
knowledge, owns all right, title and interest in and to, free and clear
of all encumbrances, or possess adequate licenses or other valid rights
to use, all Rights necessary to the conduct of its business as
presently being conducted, except where the failure to have such
licenses or rights would not have a Material Adverse Effect; (2) the
Company has not licensed any Rights to any third party except pursuant
to (a) the Cross License and Transfer Agreement, and (b) that certain
License and Co-Development Agreement, dated effective as of May 22,
2002, between the Company, Honeywell Intellectual Properties Inc. and
Samsung Electro-Mechanics Co., Ltd.; (3) the validity of such Rights
and the title thereto of the Company has not been questioned in any
litigation to which the Company is a party, nor is any such litigation
threatened, nor have any claims to such effect been made to the
Company; (4) to Seller's knowledge, the conduct of the business of the
Company as now conducted does not and will not conflict with Rights of
others in any way which is material; and (5) no proceedings are pending
against the Company nor, to Seller's knowledge, are any proceedings
threatened against the Company alleging any violation of Rights of any
third party. Seller does not know of (a) any use that has heretofore
been or is now being made of any Rights owned by the Company, except by
the Company or by an entity duly licensed by it to use the same; or (b)
any material infringement of any Right owned by or licensed by or to
the Company. Closing and the consummation of the transactions
contemplated hereby will not alter or impair the rights and interests
of the Company in any of the items listed in Section 5.11 of the Seller
Disclosure Schedule.
16
CONFIDENTIAL
5.12. CONTRACTS. Except as described in Section 5.12 of the
Seller Disclosure Schedule, the Company is not a party to or bound by
any:
(1) employment agreement or employment contract that has, or
could reasonably be expected to have, an aggregate future liability in
excess of $100,000;
(2) collective bargaining agreement or other contract with any
labor union covering Employees;
(3) covenant not to compete;
(4) agreement or contract with any officer or director of the
Company or any other Employee or Former Employee (other than employment
agreements covered by clause (1) above);
(5) lease or similar agreement under which the Company is a
lessor or sublessor of, or makes available for use by any third party,
any Owned Property or Leased Property;
(6) (a) continuing contract for the future purchase of
materials, supplies or equipment (other than purchase contracts and
orders for inventory in the ordinary course of business consistent with
past practice), (b) management, service, consulting or other similar
type of contract, or (c) advertising agreement or contract, in any such
case which has, or could reasonably be expected to have, an aggregate
future liability in excess of $100,000;
(7) material license or other agreement relating in whole or
in part to patents, trademarks, trade names, service marks or
copyrights (including any license or other agreement under which the
Company has the right to use any of the same owned or held by a third
party);
(8) agreement or contract under which the Company has borrowed
or loaned any money or issued any note, bond, indenture or other
evidence of indebtedness or directly or indirectly guaranteed
(including without limitation through so-called take-or-pay or keep
well agreements) indebtedness, liabilities or obligations of others
(other than endorsements for the purpose of collection in the ordinary
course of business), or any other note, bond, indenture or other
evidence of indebtedness, except as set forth in Sections 5.7 and 5.21
of the Seller Disclosure Schedule;
(9) agreement or contract under which any other Person has
directly or indirectly guaranteed indebtedness, liabilities or
obligations of the Company (other than endorsements for the purpose of
collection in the ordinary course of business);
(10) mortgage, pledge, security agreement, deed of trust or
other document granting a Lien (including without limitation Liens upon
any Company Property or any properties acquired under conditional
sales, capital leases or other title retention or security devices
other than any original purchase price
17
conditional sales contracts or equipment leases entered into in the
ordinary course of business); or
(11) other agreement, contract, lease, license, commitment or
instrument (a) to which the Company is a party, (b) by or to which it,
its assets or its business is bound or subject, and (c) which has an
aggregate future liability in excess of $100,000.
Each agreement, contract, lease, license, commitment or instrument of the
Company described in Section 5.12 of the Seller Disclosure Schedule
(collectively, the "Contracts") is valid, binding and in full force and effect
and is enforceable by the Company in accordance with its terms, subject to
applicable bankruptcy, reorganization, fraudulent transfer, moratorium,
insolvency and other similar laws affecting creditors' rights generally from
time to time in effect and to general principles of equity (whether considered
in a proceeding in equity or at law). Each of Seller and the Company has
performed all material obligations required to be performed by them to date
under the Contracts and they are not (with or without the lapse of time or the
giving of notice, or both) in breach or default in any material respect
thereunder and, to Seller's knowledge, no other party to any of the Contracts is
(with or without the lapse of time or the giving of notice, or both) in breach
or default in any material respect thereunder.
5.13. LITIGATION; DECREES. Except as listed in Section 5.13 to
the Seller Disclosure Schedule, there is no action, suit, investigation
or proceeding against, or to the knowledge of Seller, threatened
against or affecting, Seller or the Company or any of their respective
properties before any court or arbitrator or any governmental body,
agency or official which is reasonably likely to have a Material
Adverse Effect or which in any manner challenges or seeks to prevent,
enjoin, alter or materially delay the transactions contemplated by this
Agreement.
5.14. INSURANCE. Seller or the Company maintains policies of
fire and casualty, liability and other forms of insurance in such
amounts, with such deductibles and against such risks and losses as
are, in Seller's judgment, reasonable for the business and assets of
the Company and will continue such insurance in effect through Closing.
The insurance policies currently maintained with respect to the Company
are listed in Section 5.14 of the Seller Disclosure Schedule.
5.15. EMPLOYEE BENEFITS.
5.15.1. PLANS. Section 5.15.1 of the Seller Disclosure
Schedule lists all Benefit Plans. Seller has made available to Buyer
a complete and accurate copy of each material document prepared in
connection with each Benefit Plan including (1) a copy of each trust
or other funding arrangement; (2) the most recently distributed
summary plan description and summary of material modifications; (3)
the most recently filed IRS
18
Form 5500; (4) the most recently received IRS determination letter
for each Benefit Plan which is an employee pension benefit plan as
defined in Section 3(2) of ERISA; and (5) the most recently prepared
actuarial report and financial statements.
5.15.2. MODIFICATIONS. Neither the Seller nor the
Company has made any legally binding commitment to amend or to
modify any Benefit Plan in any material respect or to create any
additional Benefit Plans.
5.15.3. COMPLIANCE. The Benefit Plans comply in all
material respects with, and have been administered in accordance
with, applicable requirements of ERISA, the Code and other
applicable law, regulations and rulings.
5.15.4. PBGC LIABILITY. No liability to the PBGC, or to
any other Person under Title IV of ERISA or under the Code, has been
incurred, or is reasonably expected to be incurred, by Seller or any
entity that is or has been at any time aggregated with the Seller
within the meaning of Section 414(b) or 414(c) of the Code or
Section 4001(a)(14) or 4001(b)(1) of ERISA (an "ERISA Affiliate")
with respect to any Benefit Plan other than premium payments
pursuant to Sections 4006 and 4007 of ERISA.
5.15.5. PENALTIES. To Seller's knowledge, there has been
no transaction with respect to any Benefit Plan which has or could
result in the imposition of any tax or penalty imposed by ERISA or
the Code, including without limitation any tax imposed under Section
4975 of the Code or Part 5 Subtitle B of Title I of ERISA. To
Seller's knowledge, neither Seller nor any ERISA Affiliate has
engaged in, nor is a successor or parent corporation to an entity
that has engaged in, a transaction described in Section 4069 of
ERISA. There has been no "reportable event" (as defined in Section
4043(c) of ERISA and the PBGC regulations under such section) with
respect to any Benefit Plan. Seller has not made any filing with the
PBGC, and no proceeding has been commenced or threatened by the
PBGC, to terminate any Benefit Plan. No condition exists and no
event has occurred that could constitute grounds for the termination
of any Benefit Plan by the PBGC. To Seller's knowledge, neither
Seller nor any ERISA Affiliate has at any time (1) ceased operations
at a facility so as to become subject to the provisions of Section
4062(e) of ERISA; (2) withdrawn as a substantial employer so as to
become subject to the provisions of Section 4063 of ERISA; or (3)
ceased making contributions on or before the Closing Date to any
Benefit Plan subject to Section 4064(a) of ERISA to which Seller or
ERISA Affiliates have made contributions during the six years prior
to the Closing Date.
19
5.15.6. MULTI-EMPLOYER PLANS. None of the Benefit Plans
is a multi-employer plan within the meaning of Section 3(37)(A) of
ERISA.
5.15.7. GROUP HEALTH PLANS. Each Benefit Plan which is a
group health plan (as such term is defined in Section 607 of ERISA)
complies with and has complied in all material respects with the
applicable requirements of Part 6 Subtitle B of Title I of ERISA.
5.15.8. COMPLAINTS. No suit, action, litigation, claim,
complaint, charge, proceeding, hearing, investigation or demand
(excluding claims for benefits incurred in the ordinary course of
plan activities) has been or is expected to be brought against or
with respect to any Benefit Plans, and to Seller's knowledge there
are no facts or circumstances which could give rise to or which
could be expected to give rise to any such suit, action, litigation,
claim, complaint, charge, proceeding, hearing, investigation or
demand.
5.15.9. PAYMENTS. All payments, premiums, reimbursements
or accruals relating to each Benefit Plan, for all periods ending
prior to or as of the Closing Date, whether or not yet due, will
have been timely made or properly accrued as of the Closing Date by
the Company. All required or recommended contributions relating to
each Benefit Plan that is subject to the funding requirements of
Section 412 of the Code and Section 302 of ERISA, and for all
periods ending prior to or as of the Closing Date (including periods
from the first day of the then-current plan year to the Closing Date
and including all quarterly contributions required in accordance
with Section 412(m) of the Code), will have been timely made or
properly accrued as of the Closing Date by the Company. No Benefit
Plan has incurred any "accumulated funding deficiency," as such term
is defined in such Section 412 of the Code and Section 302 of ERISA,
whether or not waived.
5.15.10. QUALIFICATION. Each of the Benefit Plans which
is intended to be "qualified" within the meaning of Section 401 of
the Code has received a favorable determination letter from the IRS
and has or will, within the applicable remedial amendment period, be
amended to comply with the applicable Federal laws, known by the
acronym "GUST" (as defined in Section 2.42 above), and submitted to
the IRS for a favorable determination letter with respect to such
GUST changes, and no events have occurred and no conditions exist
which would reasonably be expected to result in the revocation of
any such determination letter or could adversely affect the
tax-qualified status of any such Benefit Plan.
5.15.11. CHANGE IN CONTROL. No Benefit Plan obligates
the Company to pay separation, severance, termination or other
benefits or
20
compensation as a result of, or that are contingent upon, any
transaction contemplated by this Agreement or the occurrence of a
"change in control," which payment would constitute a "parachute
payment," as such term is defined in Section 280G of the Code.
5.15.12. COMPANY LIABILITY. Except as set forth Section
5.15.12 of the Seller Disclosure Schedule, the Company has no
liability or potential liability with respect to any welfare benefit
plan providing medical, health or life insurance or other
welfare-type benefits for current or future retired or terminated
Employees or Former Employees (or their spouses or dependents),
other than in accordance with COBRA.
5.15.13. CONTRIBUTIONS. Neither the Company, Seller nor
any ERISA Affiliate contributes to, has any obligation to contribute
to or has any liability (including any withdrawal liability (within
the meaning of Subtitle E of Title IV of ERISA)) under or with
respect to any multi-employer plan (as defined in Section 3(37)(A)
of ERISA).
5.15.14. UNDERFUNDED PLANS. No Benefit Plan which is a
defined benefit plan under Section 401(a) of the Code has been,
during the five years preceding the Closing Date, transferred in an
underfunded state out of the "controlled group of companies" (within
the meaning of Section 414 of the Code) of which Seller or an ERISA
Affiliate are members or were members during such five-year period.
5.16. ABSENCE OF CHANGES OR EVENTS. Except as disclosed in
Section 5.16 of the Seller Disclosure Schedule, since the Balance Sheet
Date, the business of the Company has been conducted in the ordinary
course consistent with past practices and there has not been:
(1) any event, occurrence or development which has had a
Material Adverse Effect;
(2) any repurchase, redemption or other acquisition by the
Company of any outstanding shares of capital stock or other securities
of the Company;
(3) any amendment of any material term of any outstanding
security of the Company;
(4) any incurrence, assumption or guaranty by the Company of
any indebtedness for borrowed money other than in the ordinary course
of business consistent with past practices;
(5) any making of any loan, advance or capital contributions
to or investment in any Person other than loans, advances or capital
contributions to or investments made in the ordinary course of business
consistent with past practices;
21
(6) any transaction or commitment made, or any contract or
agreement entered into, by the Company relating to its assets or
business, in either case, material to the Company taken as a whole,
other than transactions and commitments in the ordinary course of
business consistent with past practices and those contemplated by this
Agreement;
(7) any material change in any method of accounting or
accounting practice by the Company except for any such change required
by reason of a concurrent change in generally accepted accounting
principles; or
(8) any of the following, entered into with, granted to or
payable to any officer or director of the Company or any other Employee
or Former Employee, in each case other than in the ordinary course of
business consistent with past practices, (a) employment, deferred
compensation, severance, retirement or other similar agreement (or any
amendment to any such existing agreement), (b) grant of any severance
or termination pay, or (c) change in compensation or other benefits
pursuant to any severance or retirement plans or policies thereof.
5.17. COMPLIANCE WITH APPLICABLE LAWS.
5.17.1. ENVIRONMENTAL LAWS AND ENVIRONMENTAL PERMITS. To
Seller's knowledge, except as set forth in Section 5.17.1 of the
Seller Disclosure Schedule:
(1) no written notice, request for information, order,
complaint or penalty has been received, and there are no judicial,
administrative or other actions , suits or proceedings pending or
threatened which allege a violation of any Environment Law, in each
case relating to the Company and arising out of any Environmental Law;
and
(2) the Company has all Environmental Permits necessary for
its operations to comply with all applicable Environmental Laws and is
in compliance with the terms of such permits and with all other
applicable Environmental Laws, except where failure to have an
Environmental Permit or to be in such compliance would not have a
Material Adverse Effect.
5.17.2. OTHER THAN ENVIRONMENTAL LAWS OR ENVIRONMENTAL
PERMITS. To Seller's knowledge, except as set forth in Section
5.17.2 of the Seller Disclosure Schedule, the Company is in
compliance with all applicable statutes, laws, ordinances, rules,
orders and regulations of any Governmental Authority (other than
Environmental Laws, which are exclusively the subject of Section
5.17.1 above), except where noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. Seller has not
received any written or, to its knowledge, oral communication from a
Governmental Authority that alleges that the Company is not in
compliance, in all material respects, with all Federal, state, local
or foreign laws, ordinances, rules and regulations.
22
5.18. EMPLOYEE AND LABOR RELATIONS. Section 5.18 of the Seller
Disclosure Letter lists the following information for all Employees:
(1) name; (2) job title; (3) status as a full-time or part-time
employee; (4) base salary or wage rate; and (5) 2001 bonus. Section
5.18 of the Seller Disclosure Letter also lists all individuals who
perform services for the Company as an independent contractor or as a
leased employee and the services they perform. To Seller's knowledge,
(a) there is no labor strike, dispute, or work stoppage or lockout
actually pending or threatened against or affecting the Company and
during the past two years there has not been any such action; (b) no
union organizational campaign is in progress with respect to any
Employees, and no question concerning representation exists respecting
such Employees; (c) there is no unfair labor practice charge or
complaint against the Company pending, or, to Seller's knowledge,
threatened, before the National Labor Relations Board; (d) there is no
pending or threatened grievance that, if adversely decided, would have
an adverse effect exceeding $500,000; and (e) (i) no charges with
respect to or relating to the Company are pending before the Equal
Employment Opportunity Commission or any state or local agency
responsible for the prevention of unlawful employment practices that,
if adversely decided, would have an adverse effect exceeding $500,000,
and (ii) none of Seller nor the Company has received notice of the
intent of any Federal, state or local agency responsible for the
enforcement of labor or employment laws to conduct an investigation
with respect to or relating to the Company and no such investigation is
in progress.
5.19. LICENSES; PERMITS. Section 5.19 of the Seller Disclosure
Schedule sets forth a true and complete list of all material licenses,
permits and authorizations issued or granted to the Company by local,
state or Federal governmental authorities or agencies. The Company
validly holds all material licenses, permits or authorizations of the
Company, and the Company has complied with all material requirements in
connection therewith.
5.20. CORPORATE NAME. Except as set forth in Section 5.20 of
the Seller Disclosure Schedule, to Seller's knowledge, the Company has
the exclusive right to use its name as the name of a corporation in any
jurisdiction in which it does business, and has not received any notice
of conflict with respect to the rights of others regarding its
corporate name. No Person, firm or corporation or other business
association is, to Seller's knowledge, presently authorized by Seller
or the Company to use the name of the Company. Seller has heretofore
delivered to Buyer copies of any documents in the possession of Seller
granting authorization of the type referred to in the previous
sentence.
5.21. INTERCOMPANY ACCOUNTS. Section 5.21 of the Seller
Disclosure Schedule contains a complete list of all intercompany
balances as of the Balance Sheet Date between Seller and its
Affiliates, on the one hand, and the Company on the other hand. Since
the Balance Sheet Date there has not been any accrual
23
of liability by the Company to Seller or any of its Affiliates or other
transaction between the Company and Seller and any of its Affiliates,
except in the ordinary course of business consistent with past practice
or as provided in Section 5.21 of the Seller Disclosure Schedule.
5.22. SUPPLIERS AND CUSTOMERS. Section 5.22 of the Seller
Disclosure Schedule sets forth (1) the ten principal suppliers of the
Company during the fiscal year ended December 31, 2001 and the nine
months ended September 30, 2002, together with the dollar amount of
goods purchased by the Company from each such supplier during each such
period; and (2) the ten principal customers of the Company during the
fiscal year ended December 31, 2001 and the nine months ended September
30, 2002, together with the dollar amount of goods and/or services sold
by the Company to each such customer during each such period. Except as
otherwise set forth in Section 5.22 of the Seller Disclosure Schedule,
the Company maintains good relations with all suppliers and customers
listed or required to be listed in Section 5.22 of the Seller
Disclosure Schedule as well as with governments, partners, financing
sources and other parties with whom the Company has significant
relations, and no such party has canceled, terminated or made any
threat to the Company to cancel or otherwise terminate its relationship
with the Company or to materially decrease its services or supplies to
the Company or its direct or indirect purchase or usage of the products
or services of the Company.
5.23. CLAIMS AGAINST COMPANY. To the Seller's knowledge,
Seller is not aware of any potential claims or causes of action against
the Company for any Company conduct that occurred prior to the Closing
Date.
6. COVENANTS OF SELLER. Seller covenants and agrees as follows:
6.1. ACCESS. Prior to Closing, Seller will cause the Company
to give Buyer and its representatives, employees, counsel and
accountants reasonable access, during normal business hours and upon
reasonable notice, to the personnel, books and records of the Company;
provided that, such access does not unreasonably disrupt the normal
operations of the Company.
6.2. ORDINARY CONDUCT. Except as otherwise permitted by the
terms of this Agreement (which permission includes without limitation
the distribution of the Pre-Closing Dividend; it being Seller's
intention to remove the Company's cash balance on or before to
Closing), from the date hereof to Closing, Seller will cause the
business of the Company to be conducted in the ordinary course in
substantially the same manner as presently conducted and will make all
reasonable efforts consistent with past practices to preserve its
relationships with customers, suppliers and others with whom the
Company deals. In addition, except as otherwise permitted by the terms
of this Agreement or as contemplated by Section 6.2 of the Seller
Disclosure Schedule, Seller will not
24
permit the Company to do any of the following without the prior written
consent of Buyer:
(1) adopt or propose any change in its certificate of
incorporation or bylaws;
(2) merge or consolidate with any other Person or acquire a
material amount of assets from any other Person;
(3) sell, lease, license or otherwise dispose of any material
assets or property except (a) pursuant to existing contracts or
commitments, or (b) otherwise in the ordinary course consistent with
past practice;
(4) except for the Pre-Closing Dividend, declare, set aside or
pay any dividends, or make any distributions or other payments in
respect of its equity securities, or repurchase, redeem or otherwise
acquire any such securities;
(5) enter into, amend or terminate any material agreement;
(6) accelerate collection of any notes or accounts receivable
in advance of their regular due dates or the dates when they would have
been collected in the ordinary course of business consistent with past
practices;
(7) delay payment of any accrued expense, trade payable or
other liability beyond its due date or the date when such liability
would have been paid in the ordinary course of business consistent with
past practices; or
(8) agree to do any of the foregoing.
Seller will not take, and will not permit the Company to take any action that
would make any representation or warranty of Seller hereunder inaccurate in any
material respect at the Closing Date.
6.3. INSURANCE. Seller will keep, or cause to be kept, all
insurance policies set forth in Section 5.14 of the Seller Disclosure
Schedule, or suitable replacements therefor, in full force and effect
through the close of business on the Closing Date.
6.4. RESIGNATIONS. On the Closing Date, Seller will cause to
be delivered to Buyer duly signed resignations, effective immediately
after the Closing Date, of all directors of the Company and will take
such other action as is necessary to accomplish the foregoing.
6.5. OTHER TRANSACTIONS. Prior to Closing, none of Seller, the
Company nor any other Affiliate of Seller will, nor will they permit
any of their respective officers, directors, stockholders or other
representatives to, directly or indirectly, encourage, solicit,
initiate or participate in discussions or negotiations with, or provide
any information or assistance to, any corporation, partnership, person
or other entity or group (other than Buyer and its representatives)
concerning any
25
merger, sale of securities, sale of substantial assets or similar
transaction involving the Company.
6.6. CISCO SETTLEMENT AGREEMENT. On or prior to December 31,
2002, the Seller covenants and agrees to pay Cisco Fifteen Million
Dollars ($15,000,000) under the Cisco Settlement Agreement.
7. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Seller that the following statements are true and correct:
7.1. AUTHORITY. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of Washington. Buyer has
all requisite corporate power and authority to enter into this
Agreement and each of the Ancillary Agreements to which it is a
signatory and to consummate the transactions contemplated hereby and
thereby. All corporate acts and other proceedings required to be taken
by Buyer to authorize the execution, delivery and performance of this
Agreement and each of the Ancillary Agreements to which it is a
signatory and the consummation of the transactions contemplated hereby
and thereby have been duly and properly taken. This Agreement has been
duly executed and delivered by Buyer and constitutes, and each of the
Ancillary Agreements to which Buyer is a signatory when executed will
constitute, a valid and binding obligation of Buyer, enforceable
against Buyer in accordance with its terms. The execution and delivery
of this Agreement and each of the Ancillary Agreements to which it is a
signatory does not, and the consummation of the transactions
contemplated hereby and thereby and compliance with the terms hereof
and thereof will not, conflict with, or result in any violation of or
default (with or without notice or lapse of time, or both) under, or
give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the
creation of any Lien upon any of the properties or assets of Buyer or
any of its subsidiaries under, any provision of (1) the Washington
Business Corporations Act; (2) the certificate of incorporation or
by-laws or comparable organizational documents of Buyer or any of its
subsidiaries; (3) any material note, bond, mortgage, indenture, deed of
trust, license, lease, contract, commitment, agreement or arrangement
to which Buyer or any of its subsidiaries is a party or by which any of
their respective properties or assets are bound; or (4) any judgment,
order, or decree, or material statute, law, ordinance, rule or
regulation applicable to Buyer, any of its subsidiaries or their
respective properties or assets, other than, in the case of clause (3)
above, any such conflicts, violations, defaults, rights, losses or
Liens that, individually or in the aggregate, would not have a material
adverse effect. No material consent, approval, license, permit order or
authorization of, or registration, declaration or filing with, any
Governmental Authority is required to be obtained or made by or with
respect to Buyer in connection with the execution and delivery of this
Agreement or the consummation by Buyer of the transactions contemplated
hereby, other than (a)
26
compliance with and filings under the competition laws of jurisdictions
outside of the United States, if applicable; and (b) compliance with
and filings under Section 13(a) or 15(d), as the case may be, of the
Securities Exchange Act of 1934, as amended.
7.2. SECURITIES ACT OF 1933. The Shares purchased by Buyer
pursuant to this Agreement are being acquired for investment only and
not with a view to any public distribution or resale thereof, and Buyer
will not offer to sell or otherwise dispose of the Shares so acquired
by it in violation of any of the registration requirements of the
Securities Act of 1933, as amended, or of any state "Blue Sky" law.
Buyer (either alone or together with its advisers) has sufficient
knowledge and experience in financial and business matters so as to be
capable of evaluating the merits and risks of its investment in the
Shares and its capable of bearing the economic risks of such
investment.
7.3. ACTIONS AND PROCEEDINGS, ETC. There are no (1)
outstanding judgments, orders, writs, injunctions or decrees of any
Governmental Authority against Buyer which have a material adverse
effect on the ability of Buyer to consummate the transactions
contemplated hereby; or (2) actions, suits, claims or legal,
administrative or arbitration proceedings or investigations pending or,
to Buyer's knowledge, threatened, against Buyer, which are likely to
have a material adverse effect on the ability of Buyer to consummate
the transactions contemplated hereby.
7.4. FINDERS' FEES. Except for T.C. Management, L.L.C., T.C.
Management IV, L.L.C. and Brockway Moran & Partners Management, L.P.,
whose fees will be paid by Buyer, there is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Buyer who might be entitled to any fee
or commission from Seller or any of its Affiliates upon consummation of
the transactions contemplated by this Agreement.
7.5. NO KNOWLEDGE OF MATERIAL ADVERSE EVENTS. Buyer has no
knowledge of any circumstance, change or effect that has arisen or
occurred on or subsequent to the Balance Sheet, and has not otherwise
become aware of any circumstance, change or effect subsequent to the
Balance Sheet, that, individually or in the aggregate, had or could
reasonably be expected to have a Material Adverse Effect.
7.6. NO PLANS TO TERMINATE EMPLOYEES. Buyer does not currently
intend, nor does it presently have any plans, to terminate the
employment of any Transferred Employee after the Closing Date.
8. COVENANTS OF BUYER. Buyer covenants and agrees as follows:
27
8.1. CONFIDENTIALITY. Buyer acknowledges that the information
being provided to it by Seller is subject to the Confidentiality
Agreement, the terms of which are incorporated herein by reference.
Effective upon, and only upon, Closing, the Confidentiality Agreement
will terminate, except to the extent that information provided
thereunder relates to Seller or other members of Seller's corporate
group other than the Company.
8.2. NO ADDITIONAL REPRESENTATIONS. Buyer acknowledges that
none of Seller, the Company or any other person has made any
representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding the Company except as
expressly set forth in this Agreement or the Seller Disclosure
Schedule, and none of Seller, the Company, or any other person will
have or be subject to any liability to Buyer or any other person
resulting from the distribution to Buyer, or Buyer's use of, any such
information (including, without limiting the generality of the
foregoing, the information furnished to Buyer under cover of the letter
from Salomon Smith Barney Inc. to Buyer dated May 15, 2002).
8.3. CHANGE OF NAME; NO USE OF LOGO. Within 60 days after the
Closing Date, Buyer will cause the Company to (1) change all their
respective corporate and trade names to the extent required such that
they no longer contain references to "Honeywell," "AlliedSignal" or
"Johnson Matthey"; and (2) cease all use of logo trademarks (or any
logo or symbol similar thereto) belonging to Seller or Johnson Matthey;
provided that, inventory and supplies existing at Closing may be
shipped or consumed, respectively, for 180 days after the Closing Date;
and provided further that, following the Closing Date, the Company will
be permitted to use or continue to use corporate and trade names using
the phrase "Advanced Circuits," except in combination with trade names
and trademarks the use of which is otherwise prohibited under this
Section 8.3.
8.4. PRICEWATERHOUSE COOPERS. Buyer agrees to pay, up to a
maximum amount of Ten Thousand Dollars ($10,000), all of the fees,
costs and expenses necessary to obtain the consent of PriceWaterhouse
Coopers to include any financial statements of the Company that have
been audited, compiled or reviewed by PriceWaterhouse Coopers, and any
report of PriceWaterhouse Coopers related thereto, in any filing made
by Buyer with the SEC, and will pay such fees, costs and expenses to
either PriceWaterhouse Coopers or to Seller, as requested by Seller.
8.5. PHASE II. From and after the Closing Date, Buyer agrees
to cause the Company to afford to Seller and its representatives such
access to the Company's real property located in Chippewa Falls,
Wisconsin and to the facilities located thereon and the books and
records related thereto to allow Seller to conduct, or have conducted,
a Phase II environmental assessment on such real property and Buyer
agrees to cause the Company to offer such other cooperation
28
and assistance as is reasonably necessary to allow Seller to conduct,
or have conducted, such Phase II environmental assessment. All costs
related to the Phase II environmental assessment shall be borne by
Seller. In conducting, or having conducted, such Phase II environmental
assessment, Seller shall use commercially reasonable efforts to
minimize the disruption to Company's business and will, to the extent
practicable, notify Buyer of any testing plans prior to implementation
and work with Buyer to resolve any reasonable objections Buyer may
raise with respect thereto.
8.6. DEED RESTRICTION. Promptly after the Closing but in any
event prior to January 31, 2003, Buyer, at Buyer's sole cost and
expense, agrees to record with the Chippewa County, WI recorder's
office or other appropriate office having jurisdiction over the
Chippewa Falls Property (as hereinafter defined) the Land Use
Restriction in form and substance as set forth on Exhibit D hereto with
respect to the property located at 850 Industrial Boulevard, Chippewa
Falls, WI and 234 Cashman Drive, Chippewa Falls, WI (collectively, the
"Chippewa Falls Property"), which Land Use Restriction shall run with
the land and bind Buyer and all future owners of the Chippewa Falls
Property. Buyer shall furnish evidence to Seller of such recordation
promptly after such recordation is made.
9. MUTUAL COVENANTS. Each of Seller and Buyer covenants and agrees as
follows:
9.1. PUBLICITY. Notwithstanding the Confidentiality Agreement,
Seller and Buyer agree that, from the date hereof through the Closing
Date, neither party may make any public release or announcement
concerning the execution of this Agreement or the transactions
contemplated hereby except (1) with the written consent of the other
party; or (2) as such release or announcement may be required by law or
the rules or regulations of any United States or foreign securities
exchange, in which case the party required to make the release or
announcement, subject thereto, will allow the other party reasonable
time to comment on such release or announcement in advance of such
issuance.
9.2. BEST EFFORTS; FURTHER ASSURANCES. Subject to the terms
and conditions of this Agreement, Buyer and Seller will use their best
efforts to take, or cause to be taken, all actions and to do, or cause
to be done, all things necessary or desirable under applicable laws and
regulations to consummate the transactions contemplated by this
Agreement. Seller and Buyer agree, and Seller, prior to Closing, and
Buyer, after Closing, agree to cause the Company, to execute and
deliver such other documents, certificates, agreement and other
writings and to take such other actions as may be necessary or
desirable in order to consummate or implement expeditiously the
transactions contemplated by this Agreement.
9.3. RECORDS.
29
9.3.1. REPORTS; ACCESS TO BOOKS AND RECORDS. After
Closing, Buyer will permit Seller to have reasonable access to and
the right to make copies of the Company's books, records and files
for any reasonable purpose of Seller, such as for use in litigation,
financial reporting, tax return preparation, or tax compliance
matters. In addition, Buyer will make available to Seller, upon
Seller's reasonable request, personnel of the Company who are
familiar with any such matter requested. Buyer agrees to use all
reasonable commercial efforts to preserve and keep all of the books,
records and files of the Business included in the Assets for a
period of not less than five years after the Closing Date, or for
any longer period as may be required (1) by any Governmental
Authority; (2) by any Law; or (3) as may reasonably be requested by
Seller in connection with any ongoing litigation, suit or
proceeding.
9.3.2. COOPERATION IN LITIGATION. Buyer and Seller will
reasonably cooperate with each other at the requesting party's
expense in the prosecution or defense of any claim, litigation or
other proceeding arising from their respective conduct of the
business of the Company and involving one or more third parties. The
party requesting such cooperation will pay the reasonable
out-of-pocket expenses incurred in providing such cooperation
(including reasonable legal fees and disbursements) by the party
providing such cooperation and by its officers, directors, employees
and agents. Until the five (5) year anniversary of the Closing Date,
prior to disposing of any such information, Buyer will give Seller a
reasonable opportunity to segregate, remove or copy such books,
records and files as Seller may select.
9.4. CISCO. Seller shall be responsible for twenty-five
percent (25%) (the "Seller Retained Portion") and Buyer shall be
responsible for seventy-five percent (75%) of the net sales rebates
that are due Cisco Systems, Inc. ("Cisco") under the settlement
agreement between Cisco and the Company dated December 6, 2002 (the
"Cisco Settlement Agreement"). Notwithstanding the foregoing, the
Company shall pay directly to Cisco all amounts that are owed to Cisco
under the Cisco Settlement Agreement (including the Seller Retained
Portion). At the end of each fiscal quarter during the year commencing
on the Closing Date, the Company shall send to Seller an invoice for
the Seller Retained Portion during such fiscal quarter together with
documentation setting forth the calculation in reasonable detail of all
rebate payments made pursuant to the Cisco Settlement Agreement,
including the Seller Retained Portion, and evidence that all such
payments were made in accordance with the Cisco Settlement Agreement.
Seller shall pay such invoice at the time of the Seller's next check
run, but in no event no later than fourteen (14) days of receipt of
both the invoice and such evidence.
30
10. EMPLOYEE AND RELATED MATTERS. This Section 10 contains the
covenants and agreements of the parties with respect to (1) the status of
employment of the employees of the Company as of the Closing Date ("Employees");
and (2) the employee benefits and employee benefit plans provided or covering
such Employees and former employees of the Company who terminated employment
with, or who retired from, the Company prior to Closing ("Former Employees").
10.1. EMPLOYMENT. Effective as of the Closing Date, Buyer will
cause the Company to continue the employment of all salaried and hourly
Employees who are designated on the records of the Company as of the
Closing Date as employees (other than those employees, if any, that
have been notified by the Company that their employment with the
Company will terminate on a date after the Closing Date), including any
employees who are on vacation leave, leave of absence and sick leave
("Transferred Employees"); provided that, no provision of this
Agreement will (1) alter the status of Transferred Employees on or
after the Closing Date as "employees-at-will"; (2) obligate Buyer or
any of its Affiliates to continue the employment of any Transferred
Employee; or (3) impair, deny or limit the right of Buyer or any of its
Affiliates to terminate the employment of any Transferred Employee at
any time. Prior to the Closing Date, Seller will cause the Company to
transfer to Seller or an Affiliate of Seller the employment of
individuals who are then employed by the Company but are on short-term
or long-term disability leave ("Leave Employees") as well as those
employees of the Company that have been terminated by the Company or to
whom a notification of termination has been delivered, in either case,
on or prior to the Closing Date. Buyer shall cause the Company to offer
employment to any Leave Employee receiving short-term disability
benefits on the Closing Date to the extent the Leave Employee notifies
the Company that he or she wishes to return to work. Buyer shall cause
the Company to offer employment to any Leave Employee receiving
long-term disability benefits on the Closing Date to the extent (i) the
Leave Employee is released to work by the Employee's physician, and
(ii) required by applicable law. Any Leave Employee who is offered
employment consistent with the foregoing and accepts such offer of
employment shall become a Transferred Employee when employment with the
Company commences; provided, however, nothing contained herein shall
limit the Company's ability to thereafter terminate the Leave
Employee's employment in accordance with applicable law. For a period
of six (6) months after the Closing Date, or for the duration of a
Transferred Employee's employment with the Company, if less, Buyer will
cause the Company to maintain the base salary or wage rate of each
Transferred Employee at the same level as in existence on the day prior
to the Closing Date. On and after the Closing Date, Buyer will comply
at its expense with all employment laws with respect to Transferred
Employees, including the Family and Medical Leave Act, the Americans
with Disabilities Act and Federal or state laws concerning military
leave.
31
10.2. SEVERANCE PROTECTION. Seller will be responsible for,
and will timely pay, any and all severance benefits that are owed to
employees of the Company who have been terminated by the Company (or
notified of such termination) prior to the Closing Date. From and after
the Closing Date, Transferred Employees will be entitled to the benefit
of such severance plan or policy, if any, as Buyer may have in effect
from time to time; provided that, service with the Company and with
Buyer will be taken into account in computing the amount of such
benefit. To the extent any Transferred Employee is terminated by the
Company, other than for cause, within nine (9) months after the Closing
Date, such Transferred Employee will be entitled to severance benefits
in an amount not less than the cash severance benefit that the
Transferred Employee would have received from the Company had the
Seller's severance plan (as in effect on the day prior to the Closing
Date) been in effect on such date of termination, subject to the
Company's right to receive a standard release of all employment related
claims in consideration for such benefits.
10.3. COOPERATION. Seller agrees to use reasonable efforts to
facilitate the transition of Transferred Employees to employment with
Buyer or any of its Affiliates as of the Closing Date.
10.4. SAVINGS PLAN. Effective as of the Closing Date or as
soon as practicable thereafter (the "Savings Plan Commencement Date"),
but in no event later than March 15, 2003, Buyer will establish or
otherwise maintain one or more tax-qualified defined contribution
savings plans ("Buyer's 401(k) Plans") which will (1) permit immediate
participation as of the Savings Plan Commencement Date for all
Transferred Employees; (2) credit all service with the Company that was
credited under Seller's savings plan ("Seller's 401(k) Plan") for
purposes of the eligibility and vesting requirements of the Buyer's
401(k) Plans; and (3) provide for tax-deferred contributions by
Transferred Employees pursuant to Section 401(k) of the Code.
Transferred Employees will be eligible to effect a direct rollover (as
described in Section 401(a)(31) of the Code) of all or a portion of any
such Transferred Employee's balance (including outstanding loan
balances) under Seller's 401(k) Plan (subject to the terms and
conditions of Seller's 401(k) Plan) to Buyer's 401(k) Plan; provided
that, any such direct rollover will be subject to the terms and
conditions of Buyer's 401(k) Plan applicable to rollover contributions
and shall be conditioned upon the Buyer being reasonably satisfied that
Seller's 401(k) Plan is a qualified plan under Section 401(a) of the
Code and has been administered in compliance with said Code.
10.5. EMPLOYEE WELFARE PLANS.
10.5.1. BENEFITS. Except as otherwise provided in the
Transition Services Agreement, Buyer or its Affiliates will, not
later than the Benefit Transition Date, provide the Transferred
Employees and their beneficiaries
32
with medical and life insurance plans and programs that are
comparable to the medical and life insurance plans and programs
being provided by Buyer to its similarly situated employees on the
day prior to the Closing or as such plans and programs may be
amended or revised by Buyer in the ordinary course from time to
time. Buyer or its Affiliates will, not later than the Closing Date,
provide the Transferred Employees and their beneficiaries with
disability, severance, vacation and other welfare benefit plans and
programs that are comparable, in the aggregate, to the welfare
benefits being provided by Buyer to its similarly situated employees
the day prior to the Closing or as such plans and programs may be
amended or revised by Buyer in the advisory course from time to
time.
10.5.2. TERMS. Any plans or programs established or
maintained by Buyer to provide medical and life insurance,
disability, severance, vacation, cafeteria, flexible spending,
dependent care and other welfare benefits in respect of the
Transferred Employees will credit all service with the Company for
purposes of eligibility, participation and benefit entitlement, in
accordance with applicable law.
10.5.3. MEDICAL CLAIMS. Except as otherwise provided in
the Transition Services Agreement, Seller will be responsible for,
and will timely pay, all medical claims incurred by any Transferred
Employee before the Closing Date under any Benefit Plan, and Buyer
will be responsible for, and will timely pay, any medical claim
incurred by any Transferred Employee on or after the Closing Date
under any health plan maintained by Buyer.
10.5.4. SHORT-TERM AND LONG-TERM DISABILITY. Except as
otherwise provided in the Transition Services Agreement, Seller will
be responsible for, and will timely pay, all short-term and
long-term disability benefits which are owed to any Transferred
Employee before the Closing Date under any Benefit Plan and which
can be satisfied through insurance. Buyer will be responsible for,
and will timely pay, any short-term and long-term disability
benefits owed to any Transferred Employee on or after the Closing
Date under any health or disability plan maintained by Buyer.
10.6. SEVERANCE AND WARN ACT LIABILITY. Buyer agrees to cause
the Company to pay and be responsible for all liability, cost, expense
and sanctions resulting from any failure to comply with the WARN Act,
and the regulations thereunder, in connection with events which occur
on or after the Closing Date.
10.7. HEALTH CARE CONTINUATION COVERAGE. Seller will be
responsible for any continuation of group health coverage required
under Section 4980B of the Code or Sections 601-608 of ERISA with
respect to any employee of
33
Company or any "qualified beneficiary" (as defined in Section 4980B of
the Code) of any such employee who incurs a "qualifying event" (as
defined in Section 4980B of the Code) on or before to Closing. Buyer
will cause the Company to be responsible for any continuation of group
health coverage required under Section 4980B of the Code or Sections
601-608 of ERISA with respect to any Transferred Employee or any
"qualified beneficiary" (as defined in Section 4980B of the Code) of
any such employee who incurs a "qualifying event" (as defined in
Section 4980B of the Code) after Closing.
10.8. WORKER'S COMPENSATION. Buyer will be responsible for the
administration and the financial obligation of all worker's
compensation claims with respect to Transferred Employees arising out
of or relating to occurrences on or after the Closing Date and the
Seller will be responsible for the administration and the financial
obligation of all worker's compensation claims arising out of or
relating to occurrences before the Closing Date.
10.9. NO ASSUMPTION OF PLANS. Neither Buyer nor its Affiliates
will assume or be responsible for any liabilities or obligations under
any Benefit Plan, and Seller will remain solely responsible for all
liabilities and obligations under all Benefit Plans. Seller will cause
the Company to withdraw from or otherwise terminate its participation
in each Benefit Plan, with such withdrawal of participation effective
no later than the Benefit Transition Date.
11. INDEMNIFICATION.
11.1. INDEMNIFICATION BY SELLER. Seller will indemnify Buyer,
its Affiliates (including, after the Closing Date, the Company) and
each of their respective officers, directors, employees and agents
against, and hold them harmless from, any loss, liability, claim,
damage or expense (including reasonable legal fees and expenses)
suffered or incurred by any such indemnified party to the extent
arising from (1) any breach of any representation or warranty of Seller
contained in this Agreement or in any Ancillary Document; (2) any
breach of any covenant of Seller contained in this Agreement requiring
performance after the Closing Date (including without limitation Tax
covenants contained in Section 12.1 below), which breach continues for
ten Business Days after notice thereof has been furnished by Buyer to
Seller; (3) subject to Section 11.7.7 below, any liability of the
Company under any Environmental Law resulting from hazardous waste or
other environmental contaminants existing, prior to Closing, on or
under any real property owned or leased by the Company; or (4) any and
all Specified Liabilities; provided that, except (a) as provided under
clause (1) of the definition of Specified Liabilities found in Section
2.65 above, and for the representation contained in Section 5.8 above
(collectively, "Tax Losses"), (b) for the Banked Liability, (c) for any
covenant of the Seller contained in this Agreement, (d) for the
litigation matters disclosed in Section 5.13 to the Seller Disclosure
Schedule, (e) the September 4, 2002 effluent silver
34
excursion referred to on Schedule 5.17.1 to the Seller Disclosure
Schedule, (f) any Environmental Claim relating to any properties other
than the Chippewa Falls Facility, (g) any liabilities arising under (1)
the Request for Quotation/ Purchase Order P069189 between the Company
and HBS Equipment Corporation and (2) Packaging Research Center
Membership Agreement between Johnson Matthey Electronics, Inc. and
Georgia Tech Research Corporation (both of which are disclosed in
Section 5.12 to the Seller Disclosure Schedule) and (h) any liabilities
arising under those leases referenced in clause (3) of the definition
of Specified Liabilities found in Section 2.65 above, Seller will not
have any liability under this Agreement unless the aggregate of all
losses, liabilities, claims, damages and expenses relating thereto for
which Seller would, but for this proviso, be liable exceeds on a
cumulative basis an amount equal to Three Hundred Thousand Dollars
($300,000) and then, with respect to clause (1) of this Section 11.1,
only to the extent of such excess and subject to a maximum liability of
$5,000,000.
Buyer acknowledges and agrees that, from and after Closing, its sole and
exclusive remedy with respect to any and all claims relating to the subject
matter of this Agreement (other than claims of fraud) will be pursuant to the
indemnification provisions set forth in Section 11. In furtherance of the
foregoing, Buyer hereby waives, and releases and discharges Seller and its
Affiliates in respect of, from and after Closing, to the fullest extent
permitted under applicable law, any and all rights, claims and causes of action
(other than claims of, or causes of action arising from, fraud) it or the
Company may have against Seller, its Affiliates, directors, officers, employees,
agents or assigns relating to the subject matter of this Agreement or the
ownership prior to Closing of the Company by Seller or its Affiliates or the
Company's operations and activities, and arising under or based upon any
Federal, state, local or foreign statute, law, ordinance, rule or regulation.
11.2. INDEMNIFICATION BY BUYER. Buyer will indemnify, and will
cause the Company to indemnify, Seller, its Affiliates and each of
their respective officers, directors, employees and agents against, and
hold them harmless from, any loss, liability, claim, damage or expense
(including reasonable legal fees and expenses) suffered or incurred by
any such indemnified party to the extent arising from (1) any breach of
any representation or warranty of Buyer contained in this Agreement or
in any Ancillary Document; or (2) any breach of any covenant of Buyer
contained in this Agreement requiring performance after the Closing
Date, which breach continues for ten Business Days after notice thereof
has been furnished by Seller to Buyer or (3) any violation of any
Environmental Law relating to the Chippewa Falls Facility that a court
of competent jurisdiction determines was caused by the Buyer after the
Closing Date; provided that, Buyer will not have any liability under
clause (1) above unless the aggregate of all losses, liabilities,
claims, damages and expenses relating thereto for which Buyer would,
but for this proviso, be liable exceeds on a cumulative basis an amount
equal to Four Hundred Thousand Dollars ($400,000) and then only to the
extent of such excess and subject to a maximum Buyer liability of
$5,000,000.
35
11.3. LOSSES NET OF INSURANCE, ETC. The amount of any loss,
liability, claim, damage, expense or Tax for which indemnification is
provided under Section 11 will be net of any amounts recovered or
recoverable by the indemnified party under insurance policies with
respect to such loss, liability, claim, damage, expense or Tax and will
be (1) increased to take account of any net Tax cost incurred by the
indemnified party arising from the receipt of indemnity payments
hereunder (grossed up for such increase); and (2) reduced to take
account of any net Tax benefit realized by the indemnified party
arising from the incurrence or payment of any such loss, liability,
claim, damage, expense or Tax. In computing the amount of any such Tax
cost or Tax benefit, the indemnified party will be deemed to recognize
all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt of any indemnity payment
hereunder or the incurrence or payment of any indemnified loss,
liability, claim, damage, expense or Tax. Any indemnity payment under
this Agreement will be treated as an adjustment to the Purchase Price
for Tax purposes, unless a final determination (which will include the
execution of a Form 870 or successor form) with respect to the
indemnified party or any of its Affiliates causes any such payment not
to be treated as an adjustment to the Purchase Price for United States
Federal income Tax purposes.
11.4. TERMINATION OF INDEMNIFICATION. The obligations to
indemnify and hold harmless a party hereto pursuant to clause (1) of
Section 11.1 above and clause (1) of Section 11.2 above will terminate
when the applicable representation or warranty terminates pursuant to
Section 16 below; provided that, such obligations to indemnify and hold
harmless will not terminate with respect to any item as to which the
person to be indemnified or the related party hereto will have, before
the expiration of the applicable period, previously made a claim by
delivering a notice (stating in reasonable detail the basis of such
claim) to the indemnifying party.
11.5. PROCEDURES RELATING TO INDEMNIFICATION (OTHER THAN FOR
TAX CLAIMS). In order for a party (the "Indemnified Party") to be
entitled to any indemnification provided for under this Agreement
(other than in respect of a Tax Claim) in respect of, arising out of or
involving a claim or demand made by any person, firm, Governmental
Authority or corporation against the Indemnified Party (a "Third Party
Claim"), the Indemnified Party must notify the other party (the
"Indemnifying Party") in writing, and in reasonable detail, of the
Third Party Claim within ten Business Days after receipt by such
Indemnified Party of written notice of the Third Party Claim; provided
that, failure to give such notification will not affect the
indemnification provided hereunder except to the extent the
Indemnifying Party will have been actually prejudiced as a result of
such failure (except that the Indemnifying Party will not be liable for
any expenses incurred during the period in which the Indemnified Party
failed to give such notice). Thereafter, the Indemnified Party will
deliver to the Indemnifying Party, within five Business Days after the
Indemnified Party's receipt thereof, copies of all
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notices and documents (including court papers) received by the
Indemnified Party relating to the Third Party Claim.
If a Third Party Claim is made against an Indemnified Party, the Indemnifying
Party will be entitled to participate in the defense thereof and, if it so
chooses, to assume the defense thereof with counsel selected by the Indemnifying
Party and reasonably satisfactory to the Indemnified Party. Should the
Indemnifying Party so elect to assume the defense of a Third Party Claim, the
Indemnifying Party will not be liable to the Indemnified Party for legal
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof. If the Indemnifying Party assumes such defense, the Indemnified
Party will have the right to participate in the defense thereof and to employ
counsel, at its own expense, separate from the counsel employed by the
Indemnifying Party, it being understood that the Indemnifying Party will control
such defense. The Indemnifying Party will be liable for the fees and expenses of
counsel employed by the Indemnified Party for any period during which the
Indemnifying Party has not assumed the defense thereof (other than during any
period in which the Indemnified Party will have failed to give notice of the
Third Party Claim as provided above). If the Indemnifying Party chooses to
defend or prosecute any Third Party Claim, all the parties hereto will cooperate
in the defense or prosecution thereof. Such cooperation will include the
retention and (upon the Indemnifying Party's request) the provision to the
Indemnifying Party of records and information that are reasonably relevant to
such Third Party Claim, and making employees available on a mutually convenient
basis to provide additional information and explanation of any material provided
hereunder. Whether or not the Indemnifying Party will have assumed the defense
of a Third Party Claim, the Indemnified Party will not admit any liability with
respect to, or settle, compromise or discharge, such Third Party Claim without
the Indemnifying Party's prior written consent (which consent will not be
unreasonably withheld). All Tax Claims will be governed by Section 11.6 below.
11.6. PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS. If
a claim is made by any taxing authority, which, if successful, might
result in an indemnity payment to Buyer or one of its Affiliates
pursuant to Section 11.5 above, Buyer will promptly notify Seller in
writing of such claim (a "Tax Claim"). If notice of a Tax Claim is not
given to Seller within a sufficient period of time to allow Seller to
effectively contest such Tax Claim, or in reasonable detail to apprise
Seller of the nature of the Tax Claim, in each case taking into account
the facts and circumstances with respect to such Tax Claim, Seller will
not be liable to Buyer or any of its Affiliates to the extent that
Seller's position is actually prejudiced as a result thereof.
With respect to any Tax Claim (other than a Tax Claim relating solely to Taxes
of the Company for any taxable period that includes (but does not end on) the
Closing Date (a "Straddle Period"), Seller will control all proceedings taken in
connection with such Tax Claim (including without limitation selection of
counsel) and, without limiting the foregoing, may in its sole discretion pursue
or forego any and all administrative appeals,
37
proceedings, hearings and conferences with any taxing authority with respect
thereto, and may, in its sole discretion, either pay the Tax claimed and sue for
a refund where applicable law permits such refund suits or contest the Tax Claim
in any permissible manner. Buyer will control all proceedings taken in
connection with any Tax Claim relating solely to Taxes of the Company for a
Straddle Period. Buyer, the Company, and each of their respective Affiliates
will cooperate with Seller in contesting any Tax Claim, which cooperation will
include, without limitation, the retention and (upon Seller's request) the
provision to Seller of records and information that are reasonably relevant to
such Tax Claim, and making employees available on a mutually convenient basis to
provide additional information or explanation of any material provided hereunder
or to testify at proceedings relating to such Tax Claim.
In no case will Buyer or the Company settle or otherwise compromise any
Tax Claim without Seller's prior written consent. In no case will the Seller be
entitled to settle or to contest any claim relating to Taxes if the settlement
of, or an adverse judgment with respect to, the claim would be likely, in the
good faith judgment of the Indemnified Party, to cause the liability for any Tax
of the Indemnified Party or of any Affiliate of the Indemnified Party for any
taxable period ending after the Closing Date to increase (including without
limitation by making any election or taking any action having the effect of
making any election, by deferring the inclusion of any amount in income or by
accelerating the deduction of any amount or the claiming of any credit) or to
take a position that, if applied to any taxable period ending after the Closing
Date, would be adverse to the interest of the Indemnified Party or any Affiliate
of the Indemnified Party.
11.7. PROCEDURES RELATING TO INDEMNIFICATION OF ENVIRONMENTAL
CLAIMS.
11.7.1. NOTICE. Buyer will promptly notify Seller in
writing in the event that Buyer becomes aware of facts or
circumstances indicating that Seller is in breach of Section 5.17.1
above or may otherwise be or become liable to Buyer by virtue of the
presence of hazardous wastes or other environmental contaminants on
or under any real property owned or leased by the Company or with
respect to any substance which has been produced, stored or
processed by any third party for or on behalf of the Company (an
"Environmental Claim"). Seller will promptly notify Buyer in writing
in the event that Seller becomes aware of facts or circumstances
indicating that Seller is in breach of Section 5.17.1 above or may
otherwise be or become liable to Buyer by virtue of an Environmental
Claim.
11.7.2. RIGHT TO REMEDY. Seller has the right, upon at
least thirty (30) days prior written notice to Buyer and subject to
the provisos below, to assume exclusive control of the resolution
and remedy of any Environmental Claim, including without limitation
(1) investigating the
38
matter, obtaining tests, reports, and surveys necessary to define
and delineate the extent of any contamination; (2) subject to
Section 11.7.5 below, contacting Governmental Authorities, making
reports to such authorities, submitting remediation plans to such
authorities, negotiating with such authorities or other third
parties and otherwise dealing with such authorities; (3) preparing
the work plan for any investigation or remediation; and (4)
conducting or directing any such investigation or remediation.
Seller's election to assume control of the resolution and remedy of
any Environmental Claim shall conclusively establish for purposes of
this Agreement that such Environmental Claim, to the extent relating
to periods prior to the Closing Date, is within the scope of and
subject to indemnification by Seller under Section 11.1(3) of this
Agreement. Buyer agrees neither to: (a) enter into negotiations or
settlements with any Governmental Authority or third parties; nor
(b) at any time, take or offer to any Governmental Authority or
third party any position inconsistent with reasonable positions
taken or offered by Seller; provided that that Buyer shall have the
right to (A) receive copies of all correspondence between Seller and
Governmental Authorities relating to Environmental Claims and (B)
advance notice of and the right to participate in any meeting with
Governmental Authorities relating to Environmental Claims and
provided further that Seller shall not, without the prior written
approval of Buyer, which such approval shall not be unreasonably
withheld or delayed, enter into any settlement, agreement, consent
decree, order, remediation plan or deed restriction or similar land
use restriction involving an Environmental Claim.
11.7.3. COOPERATION. Buyer and Seller will cooperate in
good faith and make available to each other such information as is
reasonably necessary to carry out the purposes of this Section 11.7.
Buyer will provide any and all reasonable assistance in securing any
permits or approvals (including without limitation by holding in its
name any such permit where necessary or appropriate) reasonably
required to perform any investigatory or remedial activities;
provided that, reasonable, out of pocket expenses incurred by Buyer
in performing such assistance will be reimbursed by Seller. Buyer
will provide Seller with, or cause Seller to be provided with,
reasonable access (without charge) to relevant documents and records
and to the real property of the Company in order to perform any
remediation, investigation, assessment, sampling, monitoring,
treatment, removal, cleanup or other action required to fulfill
Seller's obligations under this Agreement. Seller agrees that any
access to the Company's premises necessary to carry out the purposes
of this Section 11.7 will only be at hours and for periods agreed to
by Buyer in its reasonable discretion and that such access will not
unduly interfere with the Company's business activities conducted at
such premises.
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11.7.4. SATISFACTION OF OBLIGATION. Seller will be
deemed to have satisfied its obligations under this Agreement with
respect to any Environmental Claim when (i) the result meets or
exceeds the least stringent standards provided by Environmental Laws
(including any lesser standards, such as deed or land use
restrictions, institutional controls or other lesser standards
resulting from any site-specific risk assessments), based on the use
of the property on the Closing Date and applicable Environmental
Laws as in effect on the Closing Date (or, at Seller's option, as in
effect on the date the relevant action is concluded) and (ii) with
respect to any Environmental Claim initiated by any Governmental
Authority, upon receipt of a "no further action" letter, site
cleanup rehabilitation order or the functional equivalent from the
Governmental Authorities with competent jurisdiction with respect to
such Environmental Claim. Subject to Section 11.7.2, Buyer will
fully cooperate with Seller by accepting and filing any necessary
deed restrictions and by otherwise cooperating with Seller in the
implementation of any remedial activities, to the extent such
activities do not materially interfere with normal business
activities conducted at the Company facilities.
11.7.5. DISCLOSURE. Each party will keep the other party
reasonably informed regarding any investigatory or remediation
activities with respect to Environmental Claims and will provide the
other party with copies of all material monitoring, sampling and
other data relating to such matters. Seller shall provide Buyer, or
cause Buyer to be provided with, true and correct copies (without
charge) of all relevant documents and records which Seller obtains
or prepares in order to perform any remediation, investigation,
assessment, sampling, monitoring, treatment, removal, cleanup or
other action required to fulfill Seller's obligations under this
Agreement (including by way of illustration and not limitation any
Phase I Environmental Reports and any Phase II Environmental Reports
(collectively, the "Reports"). Neither party will notify any
Governmental Authority or third party of the existence or substance
of facts and circumstances giving rise to an Environmental Claim
except as required by law or the Buyer's written code of conduct
applicable to all real property owned or used by the Buyer. If a
party believes it is necessary or appropriate, pursuant to a law or
such code of conduct, to disclose any such information, that party
will first promptly notify the other party of such requirement and
the content and timing of any disclosure that it proposes to make.
Unless Buyer determines that to do so violates a law or the Buyer's
code of conduct, Buyer will follow the reasonable directions of
Seller in disclosing such information.
11.7.6. INVESTIGATIONS. Buyer will not engage in, permit
or cause any subsurface investigations at or adjacent to the Company
Property, including sampling of soil or groundwater, except (1) in
the
40
ordinary course in connection with construction activities
(including by way of illustration and not limitation obtaining any
construction financing for any such construction activities or
entering into any construction contracts wherein Reports are
required with respect to any such construction activities by the
Company) by Buyer at the Company Property; (2) in connection with
the release of any hazardous material regulated by Environmental Law
when in the Buyer's reasonable judgement such release requires any
Reports in order to ensure that such release does not cause or has
not caused an Environmental Claim; (3) in connection with any sale,
transfer, leasing, mortgaging or recording of other encumbrances,
pledges or hypothecation of any of the Company Property or Change of
Control (collectively, a "Transfer") in the event the Company or
Buyer is required in connection with any such Transfer by any third
party to obtain any Reports; (4) in connection with any pending or
threatened claims of injury to person (each, a "Personal Injury
Claim") by any officer, director, employee, agent or invitee of
Company or Buyer (each, a "Company Affected Person") or the
reasonable belief by Buyer that any such Company Affected Person may
have a Personal Injury Claim; (5) as may be recommended in a Phase 1
Environmental Report with respect to the Company Property, upon the
written consent of Honeywell, such consent not to be unreasonably
withheld; or (6) as required by any Governmental Authority pursuant
to Environmental Laws to the extent that such requirement is not
attributable to a request or notification by Buyer not required by
Environmental Laws.
11.7.7. BUYER BREACH. Buyer's breach of Section 11.7.6,
as determined by a court of competent jurisdiction, will relieve
Seller, to the extent of the losses, liabilities, claims or expenses
suffered or incurred by such breach, of its obligation to indemnify
Buyer for any Environmental Claim if and to the extent that such
breach is materially prejudicial to Seller's ability to remediate
such Environmental Claim.
12. TAX MATTERS.
12.1. RETURNS. For any Straddle Period of the Company, Buyer
will timely prepare and file with the appropriate authorities all Tax
returns, reports and forms required to be filed and will pay all Taxes
due with respect to such returns, reports and forms. For any taxable
period of the Company that ends on or before the Closing Date, Seller
will timely prepare and file with the appropriate authorities all Tax
returns, reports and forms required to be filed, and will pay all Taxes
due with respect to such taxable periods (whether or not shown as due
on such returns, reports and forms and regardless of whether or when
such returns, reports and forms were or are filed).
41
12.2. COOPERATION. Seller, the Company, and Buyer will
reasonably cooperate, and will cause their respective Affiliates,
officers, employees, agents, auditors and representatives reasonably to
cooperate, in preparing and filing all returns, reports and forms
relating to Taxes, including maintaining and making available to each
other all records necessary in connection with Taxes and in resolving
all disputes and audits with respect to all taxable periods relating to
Taxes. Buyer and Seller recognize that Seller and its Affiliates will
need access, from time to time, after the Closing Date, to certain
accounting and Tax records and information held by the Company to the
extent such records and information pertain to events occurring prior
to the Closing Date; therefore, Buyer agrees, and agrees to cause the
Company, (1) to use its best efforts to properly retain and maintain
such records until such time as Seller agrees that such retention and
maintenance is no longer necessary; and (2) to allow Seller and its
agents and representatives (and agents or representatives of any of its
Affiliates), at times and dates mutually acceptable to the parties, to
inspect, review and make copies of such records as Seller may deem
necessary or appropriate from time to time, such activities to be
conducted during normal business hours and at Seller's expense. Buyer
will, at its own cost and expense, fully and accurately complete and
submit any tax data packages required by Seller within the time period
established by the Seller's tax department consistent with past
practices.
12.3. REFUNDS. Any refunds or credits of Taxes of the Company
for any taxable period ending on or before the Closing Date will be for
the account of Seller. Any other refunds or credits of Taxes of the
Company will be for the account of Buyer. Buyer will, if Seller so
requests and at Seller's expense, cause the Company to file for and
obtain any refunds or credits to which Seller is entitled under this
Section 12.3; provided that, Seller will not be entitled to cause the
Company to file a claim for refund if such claim would be likely, in
the good faith judgment of the Buyer, to cause the liability for Tax of
the Company, the Buyer or any Affiliate of the Buyer for any taxable
period ending after the Closing Date to increase or, if applied to any
taxable period ending after the Closing Date, would be adverse to the
interest of the Company, the Buyer or any Affiliate of the Buyer. Buyer
will permit Seller to control the prosecution of any such refund claim
and, where deemed appropriate by Seller, will cause the Company to
authorize by appropriate powers of attorney such persons as Seller will
designate to represent the Company with respect to such refund claim.
Buyer will cause the Company to forward to Seller any such refund
within ten days after the refund is received (or reimburse Seller for
any such credit within ten days after the credit is allowed or applied
against other Tax liability). Notwithstanding the foregoing, the
control of the prosecution of a claim for refund of Taxes paid pursuant
to a deficiency assessed subsequent to the Closing Date as a result of
an audit will be governed by the provisions of Section 11.6 above.
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12.4. TAX SHARING. Seller will cause the provisions of any Tax
sharing agreement to which the Company is a party to be terminated on
or before the Closing Date.
13. ASSIGNMENT. This Agreement and the rights and obligations hereunder
will not be assignable or transferable by Buyer or Seller (including by
operation of law in connection with a merger, or sale of substantially all of
the assets or stock, of Buyer or Seller) without the prior written consent of
the other party hereto; provided that, Buyer may, upon written notification to
Seller delivered thirty (30) days prior to such assignment (to the extent such
advance notice is permitted by applicable law and to the extent practicable),
assign its rights hereunder upon the occurrence of a Change of Control,
provided, however, that no assignment of Honeywell's indemnification obligations
in respect of the Chippewa Falls Property or any Environmental Claim related
thereto shall be valid or binding against Honeywell or any of its Affiliates
unless (x) Buyer has complied with the provisions of Section 8.6 and (y) the
assignee (A) agrees to be bound by the provisions of Sections 11.1 through 11.7
(inclusive) in a writing satisfactory to Honeywell in its reasonable discretion
to which Honeywell is a party, and (B) uses the Chippewa Falls Property
exclusively for industrial purposes; provided further that, no assignment or
grant of a security interest will limit or affect the assignor's obligations
hereunder.
14. NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole
benefit of the parties hereto and their permitted assigns and nothing herein
expressed or implied will give or be construed to give to any person or entity,
other than the parties hereto and permitted assigns, any legal or equitable
rights hereunder.
15. TERMINATION.
15.1. EVENTS. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(1) by mutual written consent of Seller and Buyer;
(2) by Seller if any of the conditions set forth in Section
4.2 above will have become incapable of fulfillment, and will not have
been waived by Seller;
(3) by Buyer if any of the conditions set forth in Section 4.1
above will have become incapable of fulfillment, and will not have been
waived by Buyer; or
(4) by either party hereto if Closing does not occur on or
before 5:00 p.m. on December 26, 2002;
provided that, the party seeking termination pursuant to clause (2), (3) or (4)
above is not in breach of any of its representations, warranties, covenants or
agreements contained in this Agreement.
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15.2. NOTICE. In the event of termination by Seller or Buyer
pursuant to Section 15, written notice thereof will forthwith be given
to the other party and the transactions contemplated by this Agreement
will be terminated without further action by either party. If the
transactions contemplated by this Agreement are terminated as provided
herein:
(1) Buyer will return all documents and other material
received from Seller, the Company relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to Seller; and
(2) all confidential information received by Buyer with
respect to the business of the Company will be treated in accordance
with the Confidentiality Agreement, which will remain in full force and
effect notwithstanding the termination of this Agreement.
15.3. SURVIVING PROVISIONS. If this Agreement is terminated
and the transactions contemplated hereby are abandoned as described in
Section 15, this Agreement will become void and of no further force and
effect, except for the provisions of (1) Section 8.1 above relating to
the obligation of Buyer to keep confidential certain information and
data obtained by it from Seller; (2) Section 17 below relating to
certain expenses; (3) Section 9.1 above relating to publicity; (4)
Section 24 below relating to finder's fees and broker's fees; (5)
Section 26 below relating to consent to jurisdiction; (6) Section 27
below relating to governing law; and (7) Section 15. Nothing in Section
15 will be deemed to release either party from any liability for any
breach by such party of the terms and provisions of this Agreement or
to impair the right of either party to compel specific performance by
the other party of its obligations under this Agreement.
16. SURVIVAL OF REPRESENTATIONS. The representations and warranties in
this Agreement (other than representations and warranties relating to Taxes and
employee benefit plans) and in any Ancillary Document will survive Closing
solely for purposes of Sections 11.1 and 11.2 above and will terminate at the
close of business eighteen months following the Closing Date. Representations
and warranties relating to Taxes and employee benefit plans will survive until
15 days after the expiration of the applicable statute of limitations (giving
effect to any extension thereof).
17. EXPENSES. Whether or not the transactions contemplated hereby are
consummated, each party will pay all of the costs and expenses it incurs in
connection with this Agreement and the transactions contemplated hereby.
18. ATTORNEY FEES. Should any litigation be commenced concerning this
Agreement or the rights and duties of any party with respect to it, the party
prevailing will be entitled, in addition to such other relief as may be granted,
to a reasonable sum for such party's attorney fees and expenses determined by
the court in such litigation or in a separate action brought for that purpose.
44
19. AMENDMENTS. No amendment to this Agreement will be effective unless
it will be in writing and signed by both parties hereto.
20. NOTICES. All notices or other communications required or permitted
to be given hereunder will be in writing and will be delivered by hand or
telecopy, or sent, postage prepaid, by registered, certified or express mail, or
reputable overnight courier service and will be deemed given when so delivered
by hand or telecopied, or if mailed, three Business Days after mailing (one
Business Day in the case of express mail or overnight courier service), as
follows:
21. INTERPRETATION. The headings contained in this Agreement and in the
table of contents to this Agreement are for reference purposes only and will not
affect in any way the meaning or interpretation of this Agreement. References
herein to sections are to Sections of this Agreement unless the context
otherwise requires. The phrase, "to Seller's knowledge" and similar phrases
refers to the actual knowledge of Dean Vlasak, Mark Kinning, Paul Cress, Bob
Walther, Tom Zwiefelhofer, Brian Moynihan, Mark Moncuso and Carl Baranowski
following reasonable inquiry.
22. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which will be considered one and the same agreement, and
will become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
23. ENTIRE AGREEMENT. This Agreement and the Confidentiality Agreement
contain the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
24. FEES. Seller hereby represents and warrants that (1) the only
broker or finder that has acted for Seller in connection with this Agreement or
the transactions
45
contemplated hereby or that may be entitled to any brokerage fee, finder's fee
or commission in respect thereof is Salomon Smith Barney Inc.; and (2) Seller
will pay all fees or commissions which may be payable to Salomon Smith Barney
Inc. Buyer hereby represents and warrants that (1) the only brokers or finders
that have acted for Buyer in connection with this Agreement or the transactions
contemplated hereby or that may be entitled to any brokerage fee, finder's fee
or commission in respect thereof are T.C. Management, L.L.C., T.C. Management
IV, L.L.C. and Brockway Moran & Partners Management, L.P.; and (2) Buyer will
pay all fees or commissions which may be payable to T.C. Management, L.L.C.,
T.C. Management IV, L.L.C. and Brockway Moran & Partners Management, L.P.
25. SEVERABILITY. If any provision of this Agreement or the application
of any such provision to any person or circumstance will be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability will not affect any other
provision hereof.
26. CONSENT TO JURISDICTION. Each of Buyer and Seller irrevocably
submits to the jurisdiction of (1) the Supreme Court of the State of New York,
New York County; and (2) the United States District Court for the Southern
District of New York, for the purposes of any suit, action or other proceeding
arising out of this Agreement or any transaction contemplated hereby. Each of
Buyer and Seller agrees to commence any action, suit or proceeding relating
hereto either in the United States District Court for the Southern District of
New York or, if, for jurisdictional reasons, such suit, action or other
proceeding may not be brought in such court, in the Supreme Court of the State
of New York, New York County. Each of Buyer and Seller further agrees that
service of any process, summons, notice or document by United States registered
mail to such party's respective address in the United States set forth above
will be effective service of process for any action, suit or proceeding in New
York with respect to any matters to which it has submitted to jurisdiction as
set forth above in the immediately preceding sentence. Each of Buyer and Seller
irrevocably and unconditionally waives any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in (a) the Supreme Court of the State of New York, New York
County; or (b) the United States District Court for the Southern District of New
York, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
27. GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED IN
ACCORDANCE WITH AND ENFORCED UNDER THE INTERNAL LAWS OF THE STATE OF NEW YORK
APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
WITHOUT REGARD TO THE CONFLICTS OF LAW PRINCIPLES OF SUCH STATE.
28. CONFIDENTIALITY AGREEMENTS WITH THIRD PARTIES. Seller hereby
assigns to Buyer, or will cause its Affiliates to assign to Buyer, all rights of
Seller under any
46
confidentiality agreements between Seller and third parties relating to
potential transactions regarding the Company.
29. SELLER DISCLOSURE SCHEDULES. The parties acknowledge and agree that
(1) the Seller Disclosure Schedule may include certain items and information
solely for informational purposes for the convenience of Buyer; (2) the
disclosure by Seller of any matter in the Seller Disclosure Schedule will not be
deemed to constitute an acknowledgement by Seller that the matter is required to
be disclosed by the terms of this Agreement or that the matter is material; (3)
the disclosure by Seller of any matter in the Seller Disclosure Schedule will
not be deemed or interpreted to broaden or otherwise amplify the Seller's
representations and warranties or covenants contained in this Agreement, and
nothing in the Seller Disclosure Schedule will influence the construction or
interpretation of any of the representations and warranties contained in this
Agreement. If any section of the Seller Disclosure Schedule discloses an item or
information in such a way as to make its relevance and the scope of modification
to the disclosure required by another Section readily apparent, the matter will
be deemed to have been disclosed in such other Section, notwithstanding the
omission of an appropriate cross-reference to such other Section.
(continued on next page)
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IN WITNESS WHEREOF, the parties have caused this Stock Purchase
Agreement to be duly executed as of the date first written above.
48