EXHIBIT 2.1
STOCK AND ASSET PURCHASE AGREEMENT
STOCK AND ASSET PURCHASE AGREEMENT (together with the Schedules and
Appendices hereto, the "Agreement"), dated as of February 19, 2002, by and among
Xxxxxxx-Xxxxxx Flight Systems, Inc., a Delaware corporation (together with its
permitted assigns, the "Purchaser"); and Spirent International Incorporated, a
Delaware corporation ("SII"); Autronics Corporation, a Delaware corporation
("Autronics US"); Spirent plc, a company formed under the laws of England and
Wales ("Spirent plc"); Xxxxx & Xxxxx International plc, a company formed under
the laws of England and Wales ("P&G plc"); and Spirent GmbH, a German company
("Spirent GmbH"). SII, Autronics US, Spirent plc, P&G plc, and Spirent GmbH are
sometimes referred to herein collectively as the "Sellers" and individually as a
"Seller."
W I T N E S S E T H:
WHEREAS, SII is the owner of all of the issued and outstanding shares
(the "US Shares") of the capital stock of Xxxxx & Xxxxx Controls, Inc., a Rhode
Island corporation ("P&G Controls US"); and
WHEREAS, Autronics US owns or otherwise holds or has rights in certain
assets described on Appendix A-1 hereto and defined therein as the "US Assets"
(the "US Assets"), is the obligor of certain liabilities described on Appendix
A-1 hereto and defined therein as the "US Liabilities" (the "US Liabilities"),
and operates the US Business; and
WHEREAS, Spirent plc is the owner of all of the entire issued share
capital (the "Spirent UK Shares") of Xxxxx & Xxxxx Controls Limited, a company
formed under the laws of England and Wales ("P&G Controls UK"); and
WHEREAS, P&G plc is the owner of all of the entire issued share capital
(the "P&G UK Shares") of Xxxxx & Xxxxx Aerospace Limited, a company formed under
the laws of England and Wales ("P&G Aerospace UK"); and
WHEREAS, P&G plc owns or otherwise holds or has rights in certain
assets described on Appendix A-2 hereto and defined therein as the "UK Assets"
(the "UK Assets") and is the obligor of certain liabilities described on
Appendix A-2 hereto and defined therein as the "UK Liabilities" (the "UK
Liabilities"), and the UK Business is operated on behalf of P&G plc by P&G
Aerospace UK as its agent pursuant to an agency agreement dated 31 March 1996;
and
WHEREAS, Spirent GmbH owns or otherwise holds or has rights in certain
assets described on Appendix A-3 hereto and defined therein as the "German
Assets" (the "German Assets"), is the obligor of certain liabilities described
on Appendix A-3 hereto and defined therein as the "German Liabilities" (the
"German Liabilities"), and operates the German Business; and
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WHEREAS, the Sellers desire to sell to the Purchaser, and the Purchaser
desires to purchase from the Sellers, all of the US Shares, the Spirent UK
Shares, and the P&G UK Shares (collectively, the "Shares"), the US Business, the
UK Business, and the German Business, and all the goodwill associated therewith;
all for the consideration and on the terms set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter
set forth, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I.
Purchase and Sale
Section 1.1 Sale of Shares and Assets. Subject to the terms and
conditions of this Agreement, at the Closing the Sellers will sell, transfer,
convey, assign and set over ("Transfer") to the Purchaser, and the Purchaser
will purchase and acquire from the Sellers, all of the Sellers' right, title and
interest in and to the Shares, the US Business, the UK Business and the German
Business.
Section 1.2 Closing Obligations.
A. Seller Deliveries. At the Closing, the Sellers will deliver
to the Purchaser:
(i) (1) duly executed forms of transfer in
respect of, and share certificates for, the
US Shares; and (2) duly executed forms of
transfer in respect of, and share
certificates for, the Spirent UK Shares and
the P&G UK Shares; in both cases either duly
endorsed in blank for transfer or otherwise
in a form transferable by delivery, or
accompanied by duly executed stock transfer
powers in blank;
(ii) the US Assignment and Assumption Agreement,
substantially in the form of Appendix A-1
(the "US Business Transfer Agreement"),
executed by Autronics US;
(iii) the UK Asset Purchase Agreement,
substantially in the form of Appendix A-2
(the "UK Business Transfer Agreement"),
executed by P&G plc;
(iv) the German Asset Purchase Agreement,
substantially in the form of Appendix A-3
(the "German Business Transfer Agreement"),
executed by Spirent GmbH;
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(v) four transfers whereby Spirent plc assigns
and the Purchaser assumes each of the four
leases particulars of each of which are set
out in the definition of UK Lease Sites and
such assignments shall be in the respective
forms attached to Appendix B-1, (the "Lease
Assignments"), executed by Spirent plc; and
(vi) the additional agreements, documents,
certificates and materials listed on
Appendix C-1.
B. Purchaser Deliveries. At the Closing, the Purchaser will
deliver to the Sellers:
(i) an aggregate amount of Sixty Million Dollars
($60,000,000) (the "Purchase Price"), by
wire transfer of immediately available
funds, to accounts specified by SII for
itself and as agent of all of the Sellers
pursuant to Section 9.15;
(ii) the US Business Transfer Agreement, executed
by the Purchaser;
(iii) the UK Business Transfer Agreement, executed
by the Purchaser;
(iv) the German Business Transfer Agreement,
executed by the Purchaser;
(v) the Lease Assignments, executed by the
Purchaser; and
(vi) the additional agreements, documents,
certificates and materials listed on
Appendix C-1.
The stock certificates and stock power and transfer documents described
in Section 1.2(A)(i), the US Business Transfer Agreement, the UK Business
Transfer Agreement and the German Business Transfer Agreement are referred to
collectively as the "Additional Transfer Documents, the Lease Assignments and
the other documents listed in Appendix C-1 are referred to collectively as the
"Ancillary Agreements".
Section 1.3 Post-Closing Adjustment.
A. Within thirty (30) days following the Closing, Sellers shall, at
their own expense, prepare or cause to be prepared, and deliver to Purchaser a
balance sheet (the "Closing Balance Sheet"), which shall set forth the assets
and liabilities of the Businesses, on a combined basis, as of the Closing Date
calculated in accordance with the Applicable Accounting Standards (as defined
below), and a calculation of the Net Worth of the Businesses as of the Closing
Date ("Closing Net Worth") derived therefrom, each such calculation to be made
in accordance with the standards, principles and methods set forth on Schedule
1.3(A) (the "Applicable Accounting
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Standards"). As used herein "Business Day" means any day other than a Saturday,
Sunday or other day on which commercial banks in the City of New York are
authorized by law to close.
B. Within ninety (90) days after its receipt of the Closing Balance
Sheet, Purchaser shall cause its accountants to review the Closing Balance Sheet
and the calculation of the Closing Net Worth set forth therein. If Purchaser has
any objection to any such calculations, or to any of the figures shown on the
Closing Balance Sheet, Purchaser shall, within such ninety (90) day period,
inform Sellers in writing thereof (the "Purchaser's Objection"), setting forth
in reasonable detail the basis for its objection and the adjustments to the
Closing Net Worth of the Businesses shown in the Closing Balance Sheet which
Purchaser believes should be made, based on the Applicable Accounting Standards.
Sellers shall then have thirty (30) days after their receipt of a Purchaser's
Objection to review and respond to the Purchaser's Objection ("Sellers' Review
Period"). If Purchaser and Sellers are unable to resolve all of their
disagreements with respect to the determination of the Closing Net Worth of the
Businesses within ten (10) days after the end of the Sellers' Review Period,
they shall refer their remaining disagreements to KPMG (the "Accounting Firm"),
who shall determine, on the basis of the standards, principles and methods set
forth on Schedule 1.3(A), and only with respect to the remaining disagreements
submitted to them, whether and to what extent the Closing Net Worth of the
Businesses shown on the Closing Balance Sheet requires adjustment. The Purchaser
and the Sellers shall direct the Accounting Firm to deliver its report and
determination of such adjustments as quickly as reasonably possible. The
Accounting Firm's determination shall be final, conclusive and binding upon
Purchaser and Sellers. The fees and disbursements of the Accounting Firm shall
be shared equally by Purchaser and Sellers. Purchaser and Sellers shall make
readily available to the Accounting Firm all relevant books and records and any
work papers (including those of the parties' respective accountants) relating to
the Financial Statements and the Closing Balance Sheet and all other items
reasonably requested by the Accounting Firm. The "Adjusted Closing Balance
Sheet" shall be (i) the Closing Balance Sheet in the event that (x) no
Purchaser's Objection is delivered to Sellers during the ninety (90) day period
specified above, or (y) Sellers and Purchaser so agree, (ii) the Closing Balance
Sheet, adjusted in accordance with the Purchaser's Objection in the event that
Sellers do not respond to Purchaser's Objection within the Sellers' Review
Period, or (iii) the Closing Balance Sheet, as adjusted by either (x) the
agreement of Sellers and the Purchaser or (y) the Accounting Firm.
C. Purchaser shall provide Sellers and their accountants full access to
the books and records of the Businesses, to any other information, including
work papers of its accountants (to the extent available to the Purchaser), and
to any employees to the extent necessary for Sellers to prepare the Closing
Balance Sheet. Purchaser and its accountants shall have full access to all
information used by Sellers in preparing the Closing Balance Sheet, including
the work papers of their accountants (to the extent available to the Sellers).
D. Within ten (10) days following issuance of the Adjusted Closing
Balance Sheet, the adjustment payments payable pursuant to this Section 1.3(D)
shall be paid by wire transfer of immediately available funds to a bank account
designated by Purchaser or Sellers, as the case may be. Purchaser or Sellers, as
the case may be, shall make an adjustment payment in an amount equal to the
difference between (x) the Benchmark Net Worth and (y) the Closing Net
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Worth as derived from the Adjusted Closing Balance Sheet, as follows: (1) the
adjustment payment will be made by Sellers to Purchaser to the extent that such
Closing Net Worth is less than the Benchmark Net Worth; and the adjustment
payment will be made by Purchaser to Sellers to the extent that such Closing Net
Worth Sheet is greater than the Benchmark Net Worth; plus, in either case,
interest thereon from the Closing Date through the date of payment at the rate
of interest publicly announced by Citibank, N.A. or any successor thereto in New
York, New York from time to time as its "base rate".
E. As used herein, the term "Benchmark Net Worth" means the amount
equal to $21,694,000. The parties agree that the Benchmark Net Worth represents
the Net Worth of the Businesses at June 30, 2001, and has been calculated in
accordance with the Applicable Accounting Standards, and the summary of such
calculation is attached hereto as Schedule 1.3(E). As used herein, the term "Net
Worth" means the aggregate assets of the Businesses, less the Liabilities of the
Businesses, in each case of the types included in the calculation of the
Benchmark Net Worth and calculated in accordance with the Applicable Accounting
Standards consistent with Schedule 1.3(E).
ARTICLE II.
Closing
Section 2.1 Closing Date. The closing of the transactions contemplated
hereby (the "Closing")" will be held at the offices of Goulston & Storrs, P.C.,
Boston, MA, USA on the date which is the later of (a) March 22, 2002 or (b) the
date upon which the closing conditions set forth in Articles VI and VII have
been satisfied or waived; or such other date as the parties may agree in writing
(such date of Closing, the "Closing Date"). The Closing shall be deemed
effective as of 12:01 a.m. Eastern Time on the Closing Date.
Section 2.2 Effect of Closing. All matters at the Closing shall be
considered to take place simultaneously, and no delivery of any document or
instrument shall be deemed complete until all transactions and deliveries of
documents and instruments and payments contemplated by this Agreement are
completed or have been waived by the party to whom delivery or payment was due
hereunder. Upon the Closing, each of the conditions in Article VI and Article
VII shall be deemed to have been satisfied or waived by the respective parties
entitled to waive such conditions.
ARTICLE III.
Representations and Warranties by the Sellers
Section 3.1 Representations and Warranties. Each of the Sellers hereby
jointly and severally represents and warrants to the Purchaser that, except as
set forth in the Disclosure Schedule:
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A. Corporate Existence and Qualification of the Companies and the
Sellers; Due Execution, Ownership of Shares, Etc.
(i) Each of P&G Controls US, Autronics US and SII is a
corporation duly organized and validly existing under the Laws of the respective
states set forth on Schedule 3.1(A)(i), and each is duly qualified to do
business in each jurisdiction in which the failure to be so qualified would
reasonably be expected to have a Material Adverse Effect. Each of the UK
Companies, Spirent plc and P&G plc is duly incorporated under the laws of
England and Wales and is duly qualified to do business in each jurisdiction in
which the failure to be so qualified would reasonably be expected to have a
Material Adverse Effect. Spirent GmbH is a German corporation duly organized and
validly existing under the laws of Germany and is duly qualified to do business
in each jurisdiction in which the failure to be so qualified would reasonably be
expected to have a Material Adverse Effect. Schedule 3.1(A)(i) sets forth a
complete and accurate list for each Company of its name and capitalization
(including the authorized capital of each Company and the identity of each
record holder of equity securities issued by such Company and the number of
shares thereof held by each).
As used herein, the term "UK Companies" means, collectively,
P&G Controls UK and P&G Aerospace UK; and the term "UK Company" means each of
the foregoing individually.
(ii) Each Company has the requisite corporate power and
authority to own, lease or otherwise hold its Assets and to conduct its
Business, and each Seller has the requisite corporate power and authority to
own, lease or otherwise hold its assets and to conduct its business as currently
conducted by it. Other than as set forth on Schedule 3.1(A)(ii), no Company has
any Subsidiaries. Each Seller has all requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by each Seller
and the consummation by such Seller of the transactions contemplated hereby have
been duly authorized by all requisite corporate action and, assuming the due
execution of this Agreement by the Purchaser, this Agreement constitutes the
valid and binding obligation of such Seller enforceable against such Seller in
accordance with its terms, subject only to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar Laws relating to creditors' rights
generally and to general principles of equity (regardless of whether such
enforcement is considered in a proceeding at law or in equity).
As used herein, the terms (i) "Subsidiary" (a) when used with
respect to P&G Controls US, means, with respect to any Person (the "Owner"), any
corporation or other Person of which securities or other interests having the
power to elect a majority of that corporation's or other Person's board of
directors or similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other than securities
or other interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its Subsidiaries,
and (b) when used with respect to the UK Companies, has the meaning given in
Sections 736 and 736A of the Companies Xxx 0000, as amended by the Companies Xxx
0000; and (ii) "Business" means (a) with respect to each
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Company, the business of such Company as described on Schedule 3.1(A)(ii), (b)
with respect to Autronics US, the US Business, (c) with respect to P&G plc, the
UK Business, and (d) with respect to Spirent GmbH, the German Business; and the
term "Businesses" means all of the foregoing collectively.
As used herein, the term "US Business" has the meaning
assigned thereto in the US Business Transfer Agreement.
As used herein, the term "UK Shares" means the Spirent UK
Shares and the P&G UK Shares, collectively.
As used herein, the term "UK Business" has the meaning
assigned thereto within the UK Business Transfer Agreement.
As used herein, the term "UK Lease Sites" means the following
properties (along with all buildings, fixtures and leasehold improvements
located at such properties):
1. Xxxx 0 Xxxxxxxx Xxx Xxxxxxxxxxxx described in a lease
dated 6 November 1980 made between (1) Borough
Council of Christchurch (landlord) and (2) Xxxxx &
Xxxxx Transducers Limited (original tenant) and
registered at HM Land Registry under title number DT
154811 (current tenant Spirent plc);
2. Xxxx 00 Xxxxxxxx Xxxx Xxxxxxxxxxxx described in a
lease dated 6 November 1980 made between (1) Borough
Council of Christchurch (landlord) and (2) Xxxxx &
Xxxxx Data Recorders Limited (original tenant) and
registered at HM Land Registry under title number DT
79216 (current tenant Spirent plc);
3. Xxxxx 0, 0, 0 xxx 0 Xxxxxxxx Xxx Christchurch
described in a lease dated 6 November 1980 made
between (1) Borough Council of Christchurch
(landlord) and (2) Xxxxx & Xxxxx Potentiometers
Limited (original tenant) and registered at HM Land
Registry under title number DT 79217 (current tenant
Spirent plc); and
4. Land on the north east side of Leyside Christchurch
described in a supplemental deed dated 11 November
1941 made between (1) Borough Council of Christchurch
(landlord) and (2) Xxxxx & Xxxxx International plc
(original tenant) and registered at HM Land Registry
under title number DT 192449 (current tenant Spirent
plc).
As used herein, the term "UK Lease Site Lease" means the
leases of the UK Lease Sites as set forth above in the definition of UK Lease
Sites.
As used herein, the term "German Business" has the meaning
assigned thereto within the German Business Transfer Agreement.
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(iii) Except as set forth on Schedule 3.1(A)(iii), (A) the US
Shares are owned beneficially and of record by SII, free and clear of all Liens,
other than Permitted Liens; and (B) the Spirent UK Shares are owned beneficially
and of record by Spirent plc, free and clear of all Liens, other than Permitted
Liens. All of the entire issued share capital of P&G Aerospace UK is owned
beneficially and of record by P&G plc, free and clear of all Liens, other than
Permitted Liens. As used herein the term "Lien" means any charge, claim, option,
lien, mortgage, encumbrance, or restriction of any kind, including any
restriction on use, voting, transfer, receipt of income or exercise of any other
attribute of ownership.
(iv) The US Shares constitute all of the issued and
outstanding capital stock of P&G Controls US, are duly authorized, validly
issued and are fully paid and non-assessable. Other than the proposed Transfer
of the US Shares to the Purchaser under this Agreement, there are no outstanding
options, warrants, preemptive rights, or other rights of any Person to acquire,
or any other Liens (other than Permitted Liens) on, any capital stock of P&G
Controls US. The P&G UK Shares constitute all of the entire issued share capital
of P&G Aerospace UK, and the Spirent UK Shares constitute all of the entire
issued share capital of P&G Controls UK; and all of such P&G UK Shares and
Spirent UK Shares are validly issued and fully paid up. Other than the proposed
Transfer of the UK Shares to the Purchaser under this Agreement, there is no
agreement or option outstanding, which calls for the allotment, issue or
transfer, or accords to any Person the right to call for the allotment or issue
of, or otherwise constitutes a Lien on, any of the UK Shares.
(v) No reference to any purported "Lien appears on any
certificate, which is to be provided by the Sellers pursuant to Section 1.2(A)
and representing US Shares or UK Shares.
B. No Violation.
(i) Neither the execution, delivery and performance by the
Sellers of this Agreement, the Additional Transfer Documents or the Ancillary
Agreements, nor the consummation of the Contemplated Transactions by the
Sellers, will (A) violate any order, ruling, writ, judgment, injunction or
decree of any Governmental Entity (an "Order") applicable to any Seller or any
Company; (B) result in a breach of, or default under, the Charter Documents of
any Company or any Seller; or (C) result in the imposition of any Lien on the
Shares, the US Assets, the UK Assets, the UK Lease Sites, or the German Assets,
except for such violations, breaches, defaults or Liens (other than Permitted
Liens) which would not reasonably be expected to have a Material Adverse Effect.
(ii) Neither the execution, delivery and performance by the
Sellers of this Agreement, the Additional Transfer Documents or the Ancillary
Agreements, nor the consummation of the Contemplated Transactions by the
Sellers, will violate any Commitment (other than as disclosed on Schedule 3.1(B)
or Schedule 3.1(E)) or Law applicable to any Seller or any Company; except for
such violations which would not reasonably be expected to have a Material
Adverse Effect.
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(iii) Except as set forth on Schedule 3.1(B), no consent,
authorization, or approval from, or registration or filing with, any
Governmental Entity or other third party (not obtained or made as of the date
hereof), including without limitation under the HSR Act, is required to be
obtained or made by any Seller in connection with the execution and delivery of
this Agreement, the Additional Transfer Documents or the Ancillary Agreements,
or the consummation by such Seller of the transactions contemplated hereby and
thereby, except for such consents, authorizations, or approvals which if not
obtained would not reasonably be expected to have a Material Adverse Effect.
As used herein, the term "Governmental Entity" means any
domestic, foreign, or multinational court, government, governmental agency,
arbitrator, authority, entity or instrumentality.
As used herein, the term "Charter Documents" means (a) in the
case of SII, Autronics US or P&G Controls US, the current articles or
certificate of incorporation or organization and the bylaws of such entity; (b)
in the case of Spirent plc, P&G plc, or any UK Company, the current memorandum
and articles of association of such entity; and (c) in the case of Spirent GmbH,
the current Articles of Association ("Satzung") of such entity.
As used herein, the term "HSR Act" means the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended.
C. Financial Information
(i) Complete and correct copies of unaudited balance sheets
and related statements of income of the Companies, the US Business, the UK
Business and the German Business, on a combined basis, for the years ended
December 31, 1999, 2000 and 2001, respectively, are attached hereto as Schedule
3.1(C)(i) (collectively, the "Financial Statements"). The Financial Statements
were prepared in accordance with GAAP applied on a consistent basis throughout
the periods presented (except as required to comply with changes to GAAP),
except that the Financial Statements do not contain footnotes, and the Financial
Statements present fairly in all material respects the financial condition and
results of operations of the Companies, the US Business, the UK Business and the
German Business on a combined basis as of the dates or for the periods
presented. The income statements included in the Financial Statements reflect
all of the business conducted by the Companies, the US Business, the UK Business
and the German Business during the periods presented. The aforementioned balance
sheet as of December 31, 2001, is sometimes referred to herein as the "December
31, 2001 Balance Sheet." Notwithstanding the foregoing, the Purchaser
acknowledges that the Financial Statements (A) may include up to $100,000 in
Excluded Business Assets, and (B) do not include the UK Lease Sites; and the
foregoing shall not be considered in determining the accuracy and completeness
of this Section 3.1(C)(i).
All employee related costs in respect of all Company employees and all
Seller employees who devote at least a majority of their working time to the
Businesses are fully reflected in the Financial Statements to the extent
required by GAAP.
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The goodwill impairment of 'L'248,000,000 within Spirent plc's
interim results for the half year ended June 30, 2001 does not include any
impairment of goodwill attributable to the Businesses.
(ii) Except as set forth on Schedule 3.1(C)(ii), to the
knowledge of the Sellers, the Companies have no Liabilities, other than and
excluding, in any event, any (A) Liabilities reflected or reserved against in
the Financial Statements, (B) Liabilities incurred in the Ordinary Course of
Businesses since December 31, 2001, or (C) Liabilities that will be discharged
prior to the Closing, (D) Liabilities arising under Commitments or Licenses
(including those listed or referred to on Schedule 3.1(E)), (E) Liabilities
which arise from or relate to: (1) the title to or condition or sufficiency of
the Leased Realty, or any other Assets; (2) intellectual property; (3) Legal
Proceedings; (4) any compliance or non-compliance with any Laws, including
Environmental Laws; (5) any release or threatened release of, or presence,
generation, transportation or storage of, any Hazardous Material; (6) employees
or former employees, employee benefits, or labor relations; (7) insurance; or
(8) Taxes; or (F) other Liabilities which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect; provided,
however, that nothing in this Section 3.1(C)(ii) shall limit any of the Sellers'
other representations and warranties set forth elsewhere in this Agreement.
As used herein, the "Ordinary Course of Business" means the
ordinary course of the Businesses, as operated by each Company (with respect to
the Business of such Company), Autronics US (with respect to the US Business),
P&G plc (with respect to the UK Business), and Spirent GmbH (with respect to the
German Business), respectively, in each case consistent with past practices.
(iii) A year end adjustment for fiscal year ended 2001 was
made in the books of P&G Controls UK to correct an over-statement of inventory
associated with sub-contract costs not being correctly relieved from inventory.
The Seller represents and warrants that this issue occurred only with respect to
the 2001 financial statements. This representation and warranty in no way
derogates from the Sellers' representations and warranties in Section 3.1(C)(i).
D. Absence of Certain Changes or Events. Except as set forth on
Schedule 3.1(D), since December 31, 2001, the Companies, Autronics US, P&G plc
and Spirent GmbH have conducted their Businesses only in the Ordinary Course of
Business, and to the Sellers' knowledge no Material Adverse Effect has occurred,
and neither any Company nor, where applicable to the US Business, the UK
Business or the German Business, Autronics US, P&G plc or Spirent GmbH, as the
case may be, has:
(i) changed its authorized or issued capital stock; or
purchased or redeemed its capital stock; or granted any stock options or rights
to purchase shares of its capital stock or other securities, issued any
securities convertible into capital stock, or granted any registration rights
with respect to any securities;
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(ii) amended its Charter Documents (excluding any such
amendments to effect a name change pursuant to Section 5.7);
(iii) paid any bonuses, or increase in salaries or other
compensation, by any Company to any of its directors, officers, or employees
except for bonus awards and increases in salaries in the Ordinary Course of
Business, as required by applicable Laws or pursuant to any Commitment listed or
referred to on Schedule 3.1(E);
(iv) mortgaged, pledged or subjected to any Lien any of its
Assets (including the US Assets, the UK Assets and the German Assets), other
than Permitted Liens;
(v) sold or otherwise disposed of any Asset material to the
operation of the Businesses, except in the Ordinary Course of Business;
(vi) cancelled or waived any claims or rights against third
Persons, except in the Ordinary Course of Business;
(vii) materially changed its accounting methods or principles,
except for any such changes required by GAAP;
(viii) entered into or terminated or received notice of
termination of any Commitment material to the operation of the Businesses,
except in the Ordinary Course of Business;
(ix) suffered any damage to or destruction or loss of any
asset or property: (1) of any Company or (2) which is used in connection with
any of the Businesses (including the UK Lease Sites); in each case that would
reasonably be expected to have a Material Adverse Effect;
(x) adopted or increased any payments to or benefits under any
US Company Plans or German Plans, except in the Ordinary Course of Business
(excluding, in any event, the grant of any options to purchase or otherwise
acquire any capital stock of Spirent plc); or
(xi) agreed, orally or in writing, to do any of the
foregoing.
E. Contracts.
(i) Schedule 3.1(E) lists or references all contracts,
agreements, or obligations, whether written or oral, including all amendments
thereto (collectively, "Commitments") to which (A) any Company is currently a
party or by which it or any of its Assets is or may be bound; or (B) Autronics
US, P&G plc, Spirent plc (with respect to the UK Lease Sites) or Spirent GmbH is
currently a party or by which it or any of its Assets is or may be bound and, in
the case of this clause (B), such Commitment was entered into or incurred in
connection with the US Business, the UK Business or the German Business, as the
case may be, of the following types:
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(a) Any such Commitment relating to the employment of any
current employee of such Company, Autronics US, P&G plc or Spirent GmbH or any
employee of Spirent plc or any of its Affiliates whose activities as an employee
relate primarily to any of the Businesses, or any labor contract or collective
bargaining agreement, or any Commitment providing for payments to any Person
based upon sales, purchases or profits other than direct payment for goods and
which require minimum payments of at least $100,000 per year;
(b) Any such Commitment or series of related Commitments for
capital expenditures or the acquisition or construction of fixed assets which
requires or require aggregate future payments or expenditures in excess of
$300,000 in total;
(c) Any such Commitment granting to any Person a
first-refusal, first-offer or other right to purchase, acquire or use (1) any of
the Assets of such Company or any US Asset, UK Asset or German Asset(other than
purchase or sales orders or other such Commitments entered into in the Ordinary
Course of Business), which pursuant to the terms thereof requires aggregate
annual payments to or by such Company, Autronics US, P&G plc or Spirent GmbH in
excess of $100,000, or (2) the Shares; or (3) the UK Lease Sites;
(d) Any such Commitment with respect to a joint venture or
partnership arrangement, under which such Company, Autronics US, P&G plc or
Spirent GmbH is or has agreed to become a joint venturer or partner or otherwise
has agreed to share profits, losses, costs or liabilities with any other Person;
(e) Any such Commitment pursuant to which such Company,
Autronics US, P&G plc or Spirent GmbH, Spirent plc (with respect to the UK Lease
Sites) is a lessee of any Leased Realty requiring annual payments by such
Company, Autronics US, P&G plc or Spirent GmbH in excess of $100,000;
(f) Any powers of attorney to which such Company, Autronics
US, P&G plc or Spirent GmbH is a party (other than powers of attorney entered
into in the Ordinary Course of Business);
(g) Any such Commitment (other than agreements both (A) with
distributors or other resellers granting geographic or market exclusivity
entered into in the Ordinary Course of Business and (B) not required to be
disclosed under Section 3.1(E)(i)(h)) that contains any provision that in any
material way prohibits any Company from engaging in any line of business or
competing with another Person within the geographic territory in which the
Company sells goods and/or services;
(h) Any such Commitment with distributors or other resellers
of Business products which grant geographic or market exclusivity, except for
any such Commitment which is cancelable on 60 days or less notice without
penalty or liability on account of such termination in excess of $100,000; and
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(i) Any other such Commitment which is not cancelable on 60
days or less notice and which pursuant to the terms thereof requires annual
payments by such Company, Autronics US, P&G plc or Spirent GmbH in excess of
$100,000 (other than purchase or sales orders or other such Commitments entered
into in the Ordinary Course of Business) (any such Commitment under this
sub-clause (i), a "Material Commitment").
(ii) Except as set forth on Schedule 3.1(E)(ii), (a) all
Commitments listed on Schedule 3.1(E) are now and will be, immediately following
the Transfer of the Shares and the Assets at the Closing, in full force and
effect, and represent the valid and binding obligation of the applicable
Company, Autronics US, P&G plc, Spirent plc (with respect to the UK Lease Site
Leases) or Spirent GmbH, and, to the knowledge of the Sellers, each of the other
parties thereto; and (b) the execution, delivery and performance of the
Commitments listed on Schedule 3.1(E) by the applicable Company, Autronics US,
P&G plc, Spirent plc (with respect to the UK Lease Site Leases) or Spirent GmbH
are not in violation of the Charter Documents of such applicable Company,
Autronics US, P&G plc, Spirent plc (with respect to the UK Lease Site Leases) or
Spirent GmbH, except to the extent that such a violation would not reasonably be
expected to have a Material Adverse Effect.
(iii) Each Company and each of Autronics US, P&G plc, Spirent
GmbH and Spirent plc holds all permits, licenses, approvals, consents and
authorizations issued by any Governmental Entity or other Person and which are
required by applicable Laws and material to the operation of its respective
Business (or, in the case of Spirent plc, material to its tenancy of the UK
Lease Sites) (collectively, "Licenses") and obtained each such License in
compliance with all Laws applicable to its issuance, and a complete and accurate
list of all such Licenses is set forth on Schedule 3.1(E)(iii). No Company or
Seller has received notice of any Legal Proceeding and, to the knowledge of the
Sellers, no such Legal Proceeding has been threatened, which would, if
successful on the merits, lead to a revocation, suspension, or limitation of the
rights of any such Licenses, and each Company, and each of Autronics US, P&G plc
and Spirent GmbH, and Spirent plc (with respect to the UK Lease Sites) as
applicable, is in material compliance with each of such Licenses. To the
knowledge of the Sellers, all applications required to have been filed for
renewal of any such Licenses have been duly filed on a timely basis with all
appropriate Governmental Entities or other Persons and all other filings
required to have been made with respect to such Licenses have been made on a
timely basis with all appropriate Governmental Entities or other Persons, except
to the extent any such failure to file or make filings would not reasonably be
expected to have a Material Adverse Effect.
F. Title to and Condition of Properties.
(i) Schedule 3.1(F) lists all material real estate owned or
leased by any Company, Autronics US, P&G plc or Spirent GmbH and lists the UK
Lease Sites (the "Leased Realty"), provided, however, that the term "Leased
Realty" shall mean, in addition to the UK Lease Sites, in the case of Autronics
US, only such material leased real estate where the leasehold is included within
the US Assets, in the case of P&G plc, only such material leased real estate
where the leasehold is included within the UK Assets, and in the case of Spirent
GmbH, only such material leased real estate where the leasehold is included
within the German
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Assets. Each of Autronics US, P&G plc and Spirent GmbH, has valid leasehold
interests in any Leased Realty identified on said schedule as being leased to
such entity as lessee; in each case free and clear of Liens other than Permitted
Liens. Spirent plc has valid leasehold interests in the UK Lease Sites free and
clear of Liens other than Permitted Liens.
As used herein, the term "Permitted Liens" means any Liens
which (1) are listed on Schedule 3.1(F); (2) are reflected in the Financial
Statements; (3) are for Taxes or other charges or assessments of any
Governmental Entity which are not yet due and owing or are subject to a good
faith dispute, are not material in amount and are being pursued diligently by
appropriate Legal Proceedings; (4) constitute Liens of carriers, warehousemen,
mechanics and materialmen, or similar Liens, incurred in the Ordinary Course of
Business; (5) constitute statutory Liens in favor of landlords with respect to
real property leased, or protective UCC filings in favor of lessors of personal
property leased, to any Company, Autronics US, P&G plc or Spirent GmbH;or (6)
with respect to real property only, are minor imperfections in title, are not
substantial in amount, and do not materially detract from the value or interfere
with the current use of the property subject to such Liens; (7) restrictions on
transfer or change in control provisions which are disclosed in Schedule 3.1(B)
or Schedule 3.1(E); (8) restrictions or limitations arising under Laws
(including zoning and land use restrictions and restrictions relating to the
transfer of securities); or (9) restrictions created by or arising under any of
the Commitments disclosed in Schedule 3.1(E).
(ii) No Company or Seller has received notice of any
condemnation proceedings and, to the knowledge of the Sellers, no condemnation
proceedings have been threatened, in each case with respect to any of the Leased
Realty, and no such property has been condemned. No Company or Seller has
received notice of any Legal Proceedings, and, to the knowledge of the Sellers,
no Legal Proceedings have been threatened, that could, with the passage of time
or otherwise, give rise to a Lien (excluding a Permitted Lien) against the
Leased Realty.
(iii) Autronics US has legal and beneficial ownership of all
of the US Assets, P&G plc has legal and beneficial ownership of all of the UK
Assets, and Spirent GmbH has legal and beneficial ownership of all of the German
Assets, in each case free and clear of Liens other than Permitted Liens. The
Assets of the Companies, along with the US Assets, the UK Assets, the UK Lease
Sites, and German Assets, which include buildings, plants, structures,
machinery, equipment, leasehold improvements, business machines, tooling,
vehicles, parts, furniture, furnishings, plant and office equipment are, taken
as a whole, structurally sound and of a condition and state of repair adequate
for the uses to which they are being put.
The Assets of the Companies, along with the US Assets, the UK
Assets, German Assets, the UK Lease Sites, the UK Lease Site Leases and the
Excluded Business Assets, are all those material to the operation of the
Businesses as they are currently operated.
For purposes of the preceding sentence only, the term "Assets"
shall include those assets which are disclosed on the Disclosure Schedule as
being held or owned by an Affiliate of
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the Companies or any Seller and which are to be transferred to the Purchaser or
to a Company at or prior to Closing.
G. Intellectual Property Assets.
(i) Set forth on Schedule 3.1(G) is a list of all material
patents and patent applications, registered service marks and trademarks and
service xxxx and trademark applications, registered copyrights and copyright
applications, and similar intangible rights which are owned by or licensed to
any Company and used in the Businesses, or which are owned by or licensed to
Autronics US, P&G plc or Spirent GmbH and included in the US Assets, the UK
Assets or the German Assets; excluding in any case "off the shelf" software or
similar property which is readily available on a commercial or retail basis
(collectively, the "Intellectual Property"). To the knowledge of the Sellers (1)
the use of the Intellectual Property and the Additional Intellectual Property,
as currently used by the Companies, Autronics US, P&G plc and Spirent GmbH in
the Businesses, does not conflict with or infringe in any material respect upon
any intellectual property rights of others; and (2) no other Person is
infringing in any material respect on the rights of the Companies, Autronics US,
P&G plc or Spirent GmbH in such owned Intellectual Property or such Additional
Intellectual Property.
As used herein the term "Additional Intellectual Property" means
know-how, trade secrets, confidential information, customer lists, software,
technical information, data, process technology, plans, drawings, and blue
prints to the extent any of the foregoing is material to the operation of the
Businesses.
(ii) One or more of the Companies or the Sellers (in
connection with the Businesses) is the owner of all right, title, and interest
in and to the Intellectual Property, free and clear of all Liens (other than
Permitted Liens) and has the right to use without payment to a third party all
of the such Intellectual Property (except for payments due under Material
Commitments). To the knowledge of the Sellers one or more of the Companies or
the Sellers (in connection with the Businesses) is the owner of all right,
title, and interest in and to, or otherwise has all rights to use (as currently
being used) the Additional Intellectual Property, free and clear of all Liens
(other than Permitted Liens). Any such usage rights do not require payment to a
third party on account of such Additional Intellectual Property (except for
payments due under Material Commitments)
H. Compliance With Laws. Except as set forth on Schedule 3.1(H), each
of the Companies is and at all times since February 19, 1996 has been in
compliance with all Laws (including the provisions of the Occupational Safety
and Health Act (29 U.S.C.A. 'SS' 651 et seq.) ("OSHA") other than those portions
of such Act addressed in Section 3.1(J)) applicable to the ,Companies; and each
of Autronics US, P&G plc and Spirent GmbH is, and at all times since February
19, 1996 has been, in compliance with all Laws (including the provisions of OSHA
other than those portions of such Act addressed in Section 3.1(J)) applicable to
the ownership of its assets and operation of its Business; and Spirent plc is,
and at all times since February 19, 1996 has been, in compliance with all Laws
(including the provisions of OSHA other than those portions of such Act
addressed in Section 3.1(J)) applicable to its tenancy of the UK Lease Sites;
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in each case except for such non-compliance as would not reasonably be expected
to result in a Material Adverse Effect. This Section 3.1(H) is not intended to
cover Laws relating to the issuance of Licenses, which are addressed in Section
3.1(E)(iii), Environmental Laws, which are addressed in Section 3.1(J), ERISA
and other employee benefit Laws (including Laws relating to pension matters),
which are addressed in Section 3.1(K), Tax Laws, which are addressed in Section
3.1(N), or Laws relating to payments to third parties, which are addressed in
Section 3.1(R).
I. Litigation. Except as set forth on Schedule 3.1(I) or as would not
reasonably be expected to result in a Material Adverse Effect, there are no
Legal Proceedings pending or, to the knowledge of the Sellers, threatened
against any Company or any Seller that seek to enjoin or obtain damages in
respect of the consummation of the transactions contemplated by this Agreement,
or that relate to or may affect any of the Businesses or Assets.
J. Compliance With Environmental Laws. To the Sellers' knowledge,
except as set forth on Schedule 3.1(J) or as would not reasonably be expected to
result in a Material Adverse Effect (and excluding the Dorset Environmental
Matter, which is governed by Section 9.14(A)(2)):
(a) Each Company is in compliance with all Environmental Laws
applicable to the operation of its Business; Autronics US is in compliance with
all Environmental Laws applicable to the operation of the US Business; Spirent
GmbH is in compliance with all Environmental Laws applicable to the operation of
the German Business; P&G plc is in compliance with all Environmental Laws
applicable to the operation of the UK Business; and Spirent plc is in compliance
with all Environmental Laws applicable to its tenancy of the UK Lease Sites.
(b) Within the past three (3) years: (i) no Company or Seller
has received any written notice from any Governmental Entity asserting a
violation of any Environmental Law in connection with the operation of any
Business of any Company; and (ii) none of Autronics US, P&G plc and Spirent GmbH
or any other Seller has received any written notice from any Governmental Entity
asserting a violation of any Environmental Law in connection with the operation
of the US Business, the UK Business or the German Business.
(c) As used herein:
(i) The term "Environmental Law" means: (A) with
respect to P&G Controls US and Autronics US: (1) the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C.'SS'9601 et seq.; (2) the
Toxic Substances Control Act, 15 U.S.C.'SS'2101 et seq.; (3) the Hazardous
Materials Transportation Act, 49 U.S.C.'SS'5101 et seq.; (4) the Federal Water
Pollution Control Act, 32 U.S.C.'SS'1251 et seq.; (5) the Federal Solid Waste
Disposal Act, 42 U.S.C.'SS'6901 et seq.; (6) the Federal Clean Air Act, 42
U.S.C.'SS'1857 et seq. and (7) OSHA (but only to the extent such law in this
clause (7) applies to the use, storage, transportation, discharge, or release of
Hazardous Materials by such company), each as amended to date; (B) with respect
to each UK Company and P&G plc, and Spirent plc (with respect to the
-16-
UK Lease Sites), all laws directly applicable in the UK with regard to the
pollution or protection of the environment (the term "environment" for this
purpose having the same meaning as is set out in Section 1(2) of Environmental
Protection Act 1990); and (C) with respect to Spirent GmbH the following German
Laws: (1) Umwelthaftungsgesetz; (2) Verordnung uber gefahrliche Stoffe
(Gefahrstoffverordnung); (3) Verordnung zur Transportgenehmigung
(Transportgenehmigungsverordnung); (4) Gesetz zur Ordnung des Wasserhaushalts
(Wasserhaushaltsgesetz); (5) Gesetz zur Forderung der Kreislaufwirtschaft und
Sicherung der umweltvertraglichen Beseitigung von Abfallen
(Kreislaufwirtschafts- und Abfallgesetz); (6) Gesetz uber die Vermeidung und
Entsorgung von Abfallen (Abfallgesetz); (7) Gesetz zum Xxxxxx vor schadlichen
Umwelteinwirkungen durch Luftverunreinigungen, Gerausche, Erschutterungen und
ahnliche Vorgange (Bundes-Immisionsschutzgesetz); (8) Erste Allgemeine
Verwaltungsvorschrift zum Bundes-Immissionsschutzgesetz (Technische Anleitung
zur Reinhaltung der Xxxx); and (9) Gesetz zum Xxxxxx vor schadlichen
Bodenveranderungen und zur Sanierung von Altlasten (Bundes-Bodenschutzgesetz).
(ii) the term "Hazardous Material" means any
pollutant, toxic substance, hazardous waste, hazardous material, or hazardous
substance, as any of the foregoing may be defined in any Environmental Law
applicable to a particular Business.
Notwithstanding anything herein to the contrary, all matters
relating to Laws applicable to the protection of the environment generally, or
of land, water or air specifically, or to discharges, releases, creation,
storage or transportation of Hazardous Materials, including any Liabilities
arising thereunder, shall be governed exclusively by this Section 3.1(J).
K. Employees and Employee Benefit Programs.
(a) Employees. Schedule 3.1(K) contains a complete and
accurate list of (a) the senior management and other key employees of each US
Company and Autronics US (to the extent devoting a majority of their employment
time to the US Business) as of the date hereof; (b) a list of all senior
employees of each of the UK Companies and the UK Business as of the date hereof
and (c) the senior management and other key employees devoting at least a
majority of their working time to the performance of services for the German
Business as of the date hereof (the ""German P&G Employees"").
(b) Employee Benefit Programs.
(i) P&G Controls US and Autronics US.
(1) Set forth on Schedule 3.1(K)(b)(i) is a complete
and correct list of (1) each "employee benefit plan" (within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")). All such plans are collectively referred to as the "US Company
Plans."
(2) Each US Company Plan has been established and
administered in accordance with its terms, and in material compliance with the
applicable provisions of ERISA
-17-
and the Internal Revenue Code of 1986, as amended (the "Code"). The terms of
each US Company Plan that is intended to be qualified within the meaning of Code
Section 401(a) have been determined by the Internal Revenue Service to be so
qualified, and neither P&G Controls US nor any of the Sellers is aware of any
event or circumstance that could cause the Internal Revenue Service to
disqualify any US Company Plan that is intended to qualify under section 401(a)
of the Code. With respect to any US Company Plan, no actions, audits,
examinations, suits or claims (other than routine claims for benefits in the
ordinary course) are pending or to Sellers' knowledge threatened. Neither P&G
Controls US nor Autronics US nor any ERISA Affiliate has engaged in a prohibited
transaction, as such term is defined under Code section 4975 or ERISA section
406, which would subject P&G Controls US or Autronics US to any Taxes, penalties
or other Liabilities under Code section 4975 or ERISA sections 409 or 502(i). No
US Company Plan has incurred any "accumulated funding deficiency" as such term
is defined in ERISA section 302 and Code section 412 (whether or not waived),
and, except with respect to the following plans relating to Keystone
Thermometrics Corporation: (1) the Group Pension Plan for Hourly Employees of
Keystone Thermometrics Corporation, and (2) the Group Pension Plan for Salaried
Employees of Keystone Thermometrics Corporation (the "Keystone Plans"); neither
P&G Controls US, Autronics US nor any of their respective Affiliates that was at
any time during the six-year period ending on the date of this Agreement treated
as a single employer together with any of them under section 414 of the Code (an
"ERISA Affiliate"), has ever maintained, had an obligation to contribute to,
contributed to, or incurred any Liability with respect to, a pension plan that
is or was subject to Title IV of ERISA or section 412 of the Code.
(3) With respect to each US Company Plan, P&G
Controls US or Autronics US, as the case may be, has heretofore delivered to the
Purchaser, as applicable, complete and correct copies of each of the following
documents:
A. the US Company Plan and any amendments
thereto (or if the US Company Plan is not a written
agreement, a description thereof),
B. the three most recent annual Form 5500
reports filed with the Internal Revenue Service,
C. the most recent statement filed with the
Department of Labor pursuant to 29
U.S.C.'SS'2520.104-23,
D. the most recent summary plan description
and summaries of material modifications thereto,
E. the trust agreement, group annuity
contract or other funding agreement that provides for
the funding of the US Company Plan,
F. the most recent determination letter
received from the Internal Revenue Service with
respect to each US Company Plan that is intended to
qualify under section 401.
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(4) There are no U.S. Company Plans required to
satisfy the requirements of Section 501(c)(9) of the Code. Except for the
bonuses described in Section 5.6(G), the consummation of the transactions
contemplated by this Agreement, either alone or in conjunction with another
event (such as a termination of employment), will not (i) entitle any current or
former employee or officer of P&G Controls US, to severance pay, or any other
payment under a US Company Plan, (ii) accelerate the time of payment or vesting
of benefits under a US Company Plan, or (iii) increase the amount of
compensation due any such employee or officer. Neither P&G Controls US nor
Autronics US, nor any of their respective Subsidiaries, or Affiliates
contributes to, has any obligation to contribute to, or has any Liability
(including withdrawal liability as defined in ERISA 'SS'4201) under or with
respect to any Multiemployer Plan (as defined in Section 3(37)(A) of ERISA).
None of the US Company Plans is a Pension Plan (as defined in Section 3(2)(A) of
ERISA).
(ii) UK Companies and P&G plc.
(1) Set forth on Schedule 3.1(K)(b)(ii) are details
of material employee benefits and remuneration and employee benefit schemes
applicable to the employees of each of the UK Companies and the UK Business
(collectively referred to herein as the "UK Company Plans"). There are no
outstanding disputes or claims (other than routine claims in the Ordinary Course
of Business) in respect of such UK Company Plans. Except pursuant to the UK
Company Plans the UK Companies and the UK Business have not paid, provided or
contributed towards, and are not under any obligation or commitment (whether or
not legally enforceable or written or unwritten or of an individual or
collective nature) to pay, provide or contribute towards, any pension, lump sum,
gratuity, indemnity, deferred compensation, payment of expenses, bonus or
incentive benefit, or other benefit similar to any of these, given or to be
given on or following leaving employment, death, ill-health, injury or
disablement or in anticipation of leaving employment or after leaving employment
or after death, or be given on or in anticipation of or in connection with any
change in the nature of the employment of the employee concerned for or in
respect of any present employee, director or other officer (or any spouse, child
or dependant thereof) of the UK Companies and the UK Business.
(2) For purposes of this Section 3.1(K)(ii), the term
"UK Pension Schemes" means the following: (I) the Spirent Staff Pension and Life
Assurance Plan (the "Staff Plan"); and (II) the Spirent Retirement Cash and Life
Assurance Plan (the "Cash Plan").
A. The UK Pension Schemes are the only pension
schemes or plans under which the UK Companies
whose registered office is in the United Kingdom
(the "UK Employer Companies") or the UK Business
are under any obligation to provide retirement,
death or life assurance benefits or under which
any such benefit may be provided for any of the
employees or officers or former employees or
officers of the UK Employer Companies or any of
the UK Business Employees (as defined in the UK
Business Transfer Agreement) or for any dependent
of any such person (such persons collectively,
the "Relevant Members").
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B. The Staff Plan trust deed and rules dated 28
December 1994, and the deed of rectification
dated 26 March 1996 (such deeds collectively, the
"Staff Plan Rules"), disclosed to the Purchaser
are a complete and accurate consolidation of the
deed and rules of the Staff Plan as in force as
at the date of this Agreement.
C. The Cash Plan rules dated 7 December 1983, and
the subsequent deeds of amendment dated 14
December 1983, 1 November 1984, 16 March 1993 and
10 October 1997 (collectively, the "Cash Plan
Rules") disclosed to the Purchaser in aggregate
comprise the current rules of the Cash Plan at
the date of this Agreement.
D. The Sellers have given to the Purchaser copies of
all current explanatory guides and announcements
relating to the Staff Plan and the Cash Plan,
which have been issued to the employees of the UK
Employer Companies and to the UK Business
Employees.
E. The Staff Plan Rules and the Cash Plan Rules,
together with the explanatory guides and
announcements referred to in clause (D) above,
fully define the current benefits of Relevant
Members under the Staff Plan and the Cash Plan,
and no augmentation, discretion or practice has
created an obligation to provide benefits or an
expectation of receiving benefits in excess of or
different from those set out in those documents
in respect of any Relevant Member.
F. The UK Pension Schemes are exempt approved by the
UK Inland Revenue within the meaning of Chapter 1
of Part XIV of the Income and Corporation Taxes
Xxx 0000, and there is in force in respect of the
employments to which the Staff Plan relates an
appropriate contracting-out certificate within
the meaning of the Xxxxxxx Xxxxxxx Xxx 0000.
G. All amounts due to the UK Pension Schemes or in
respect of life assurance coverage by or in
respect of Relevant Members as at the Closing
Date have been paid.
H. A list of the employees of the UK Employer
Companies and of the UK Business Employees who
are active members of the UK Pension Schemes
setting out all information required to determine
their entitlements to benefits under the UK
Pension Schemes has been made available by the
Sellers to the Purchaser.
I. The UK Employer Companies, the UK Business and
the provisions of the UK Pension Schemes have not
discriminated, whether directly or indirectly,
between male and female employees who are or have
been employed by any of the UK Employer Companies
or who are currently employed in theUK Business
with respect to eligibility, the rate of
contributions, the amount of any benefits
provided or the date from which such benefit will
or may be provided in any way which is contrary
to Article 141 of the Treaty of Rome or any
statute under the Laws of the United Kingdom.
-20-
J. There is no dispute with regard to the benefits
payable to or in respect of any of the employees
of the UK Employer Companies or any of the UK
Business Employees under the UK Company Plans. No
legal proceedings in connection with the UK
Company Plans are pending, threatened or expected
against any of the UK Employer Companies or the
UK Business, and so far as the Sellers are aware
there is no fact or circumstance likely to give
rise to any such proceedings.
K. All relevant benefits (as defined in section
612(1) of the United Kingdom Income & Corporation
Taxes Act 1988) promised by the UK Employer
Companies for former employees of the UK Employer
Companies are fully secured by funded pension
schemes and no claims will be made against the UK
Employer Companies in respect of such relevant
benefits.
L. The UK Employer Companies have observed and
performed all their obligations under the UK
Company Plans.
(iii) Spirent GmbH. Set forth on Schedule
3.1(K)(b)(iii) is a list of each employee benefit plan and any other plans,
programs, policies or other arrangements covering the German P&G Employees,
including profit sharing, pension, retirement, bonus, incentive compensation,
stock option, deferred compensation or other written material employee benefit
plans, agreements, contracts or commitments for the benefit of the German P&G
Employees ("German Plans").
(c) Autronics US Workforce Reduction. The termination by
Autronics US of 11 employees as part of a reduction in work force in October
2001 was conducted in full compliance with applicable Laws and with any
Commitment or Commitments to which Autronics was then subject.
L. Labor Relations. Except as set forth on Schedule 3.1(L), no Company
is a party to any collective bargaining agreement or other similar labor
Commitment, and none of Autronics US, P&G plc and Spirent GmbH is a party to any
collective bargaining agreement or other similar labor Commitment covering
employees of its Business. Except as set forth on Schedule 3.1(L): (i) there
are, and since January 1, 1998 have been, no strikes, work slowdowns or
stoppages, widespread picketing, or formal employee grievance processes pending
or, to the knowledge of the Sellers, threatened, against or affecting the
Businesses, and (ii) no Company or Seller (with respect to its Business) is
currently a party to, or, to the knowledge of the Sellers, currently threatened
with, any Legal Proceeding by any employee or former employee or Governmental
Entity relating to any alleged violation of Law pertaining to labor relations or
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employment matters, including any Laws relating to wages and hours, worker's
compensation or immigration.
M. Insurance. All policies of insurance relating to the Businesses with
respect to any periods which include the Closing Date are valid and enforceable
and in full force and effect. Complete and accurate schedules of such policies
as of July 31, 2001, showing the amounts and types of coverage, have been
delivered to the Purchaser. All premiums, including any current or retrospective
premiums or other like arrangement with respect to such policies of insurance
which are currently maintained, have been paid when due with respect to all
periods prior to the Closing. No notice of cancellation or termination has been
received by any Company or Seller with respect to any such policy of insurance,
and except as set forth on Schedule 3.1(M) no claim relating to the Businesses
is currently reserved or, to the knowledge of the Sellers, should be reserved,
under any such policy of insurance involving an amount in excess of $250,000
(excluding provisional notices of prospective non-renewal for US insurance
policies which are routinely sent, not in response to any specific casualty
event or loss history, by US insurance companies within a certain period before
such policy would normally expire).
(b) All claims relating to the Businesses that have become
known to the Spirent plc risk management department and that may be insured
under applicable policies of insurance have been reported to the applicable
insurer. Complete and accurate reports of all claims above local working
deductibles relating to the Businesses as of July 31, 2001 have been delivered
to the Purchaser with respect to the past five (5) years or such shorter period
that the particular Business has been controlled by Spirent plc.
(c) There are no self-insurance arrangements by or affecting
any Company or Business other than normal working policy deductibles.
N. Taxes.
(a) P&G Controls US and Autronics. Each of P&G Controls US and
Autronics US (with respect to the US Business) has timely filed all Tax Returns
and reports required to be filed by or with respect to it pursuant to applicable
Law, and such Tax Returns are accurate, complete and correct in all material
respects. Each of P&G Controls US and Autronics US (with respect to the US
Business) has paid all Taxes shown on such Tax Returns as being due and payable
by it, and there are no other Taxes payable on account of P&G Controls US's
Business or by Autronics US (with respect to the US Business) except for Taxes
arising from the conduct of such Business and ownership of its properties which
are not yet due and for which P&G Controls US or Autronics US has made adequate
reserves, accruals and charges in its books and records of account in accordance
with GAAP. Schedule 3.1(N)(a) lists the dates since January 1, 1995 as of and
for which the federal and state corporate income/franchise, sales/use and other
Tax Returns of any P&G Controls US and Autronics US (with respect to the US
Business) were audited and closed and lists the jurisdictions in which P&G
Controls US and Autronics US (with respect to the US Business) files any such
Tax Return. Except as set forth on Schedule 3.1(N)(a), there is no Tax audit or
examination now pending or, to the Sellers' knowledge, threatened with respect
to P&G Controls US or Autronics US (with respect to the US Business). Except as
set forth on Schedule 3.1(N)(a), since January 1, 1995, no correspondence has
been received by P&G Controls US or Autronics US (with respect to the US
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Business) from any US state or foreign taxing authority of any jurisdiction in
which P&G Controls US or Autronics US (with respect to the US Business) does not
file Tax Returns requesting information concerning the extent of the nexus of
P&G Controls US or Autronics US with such jurisdiction or asserting that there
is such a nexus so as to impose such jurisdiction's taxing jurisdiction on P&G
Controls US or Autronics US (with respect to the US Business). All Taxes which
P&G Controls US or Autronics US (with respect to the US Business) was or is
required by Law to withhold or collect have been and are being withheld or
collected by it and have been paid over to the proper Governmental Entities or,
if not yet due, are being held by any P&G Controls US or Autronics US for such
payment. Except as set forth on Schedule 3.1(N)(a), neither P&G Controls US nor
Autronics US (with respect to the US Business) has waived or extended any
applicable statute of limitations relating to the assessment of any Tax. Neither
P&G Controls US nor Autronics US (with respect to the US Business) has any
Liability for Taxes of any Person (other than P&G Controls US or Autronics US
(with respect to the US Business)) under Treasury Regulation 'SS' 1.1502-6 (or
any similar provision of state, local or foreign law), as a transferee or
successor by contract or otherwise. Except as set forth on Schedule 3.1(N)(a),
each of P&G Controls US and Autronics US (with respect to the US Business)
believes that it has entered into all transactions with its overseas Affiliates
on an arms length basis and has documentation and records which justify such
belief.
(b) UK Companies. Except as set forth on Schedule 3.1(N)(b):
(i) the UK Companies have at all times submitted all Tax
Returns which are required to be submitted to any Tax authority;
(ii) the UK Companies have properly made all deductions,
withholdings, payments and retentions in respect of Tax (including PAYE and
National Insurance) required to be made in respect of any actual or deemed
payment made or benefit provided and have, to the extent required by Law,
accounted for all such deductions, withholdings, payments and retentions;
(iii) in the last three years the UK Companies have not been,
and so far as Spirent plc and P&G plc are aware are not likely to be, subject to
any investigation or non-routine audit or visit by any UK Tax authority;
(iv) the amount of Tax chargeable on the UK Companies does not
depend upon any informal concessions or informal arrangements with any Tax
authority;
(v) the most recent audited accounts of the UK Companies make
proper provision for deferred Tax in accordance with GAAP;
(vi) the UK Companies have paid all Tax that has become due
and are under no liability to pay any penalty, interest, surcharge or fine in
connection with any Tax;
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(vii) the disposal of the UK Companies in accordance with this
Agreement will not give rise to any charge under the provisions of section 179
Taxation of Chargeable Gains Xxx 0000 (English law);
(viii) except to the extent reflected in the deferred tax
provision in the last audited accounts of the UK Companies, no chargeable gain
would arise in respect of any capital asset of the UK Companies (1) treated as
such in those accounts if that asset were to be sold for a consideration equal
to the value attributed to it in those accounts; or (2) acquired after the date
to which those accounts were prepared if that asset were to be sold for a
consideration equal to the consideration given for its acquisition;
(ix) except to the extent reflected in the deferred tax
provision in the last audited accounts of the UK Companies, if all the assets of
each UK Company were to be sold at an aggregate value equal to the value
attributed to those assets in those accounts, no capital allowances balancing
charge would be made on that UK Company;
(x) the UK Companies are not close companies as defined in
section 414 Income and Corporation Taxes Act 1988 (English law);
(xi) each UK Company is duly registered for the purpose of UK
Value Added Tax;
(xii) none of the UK Companies owns any asset which is a
capital item for the purposes of part XV Value Added Tax Regulations 1995;
(xiii) none of the UK Companies has entered into a transaction
wholly or mainly for the avoidance of Tax or to which any UK anti-avoidance
legislation may apply;
(xiv) With respect to the UK Business only (and not, for the
avoidance of doubt, in respect of P&G Aerospace UK) (1) all documentation
required to be stamped by P&G plc to prove title to the UK Assets has been duly
stamped; (2) none of the UK Assets is subject to the provisions of part XV of
the Value Added Tax Regulations 1995 (the capital goods scheme); (3) over the
last three years P&G plc in relation to the UK Business has not been subject to
any investigation or non-routine audit or visit by any tax authority of the UK;
(4) the profits of the UK Business have not been calculated as a result of any
special practice or concession or adopted by the Inland Revenue; and (5) the
Sellers have not elected to charge VAT in respect of any real estate assets of
the UK Business;
(xv) the UK Companies have filed all Tax Returns required to
be filed on US Form 1120F;
(xvi) there are no circumstances in which the UK Companies
could be held liable to pay the Taxes of any other persons;
(xvii) the UK Companies believe that they have entered into
all transactions with their overseas Affiliates on an arms length basis and have
documentation and records which justify such belief;
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(xviii) the UK Companies shall incur no liability to UK tax by
virtue of any write off or capitalisation of debts owed by the UK Companies on
or before Closing; and
(xix) the UK Companies are resident for tax purposes solely in
the UK and they do not have and have not in the last four (4) years had any
permanent establishment outside the UK.
(c) Spirent GmbH. Spirent GmbH has filed all Tax Returns
required to be filed by it in respect of its Business, including Tax Returns for
all applicable Taxes, and such Tax Returns are accurate, complete and correct in
all material respects. Spirent GmbH has paid all Taxes shown on such Tax Returns
as being due and payable, and there are no other Taxes payable on account of
Spirent GmbH's operation of its Business except: (1) as are reflected or
reserved against on the December 31, 2001 Balance Sheet; or (2) for Taxes
arising from the conduct of such Business and ownership of its properties for
and during periods subsequent to such date which are not yet due and for which
Spirent GmbH has made adequate reserves in its books and records of account.
Schedule 3.1(N)(c) lists the dates since January 1, 1995 as of and for which the
Tax Returns of Spirent GmbH were audited and closed. Except as set forth on
Schedule 3.1(N)(c), there is no Tax audit or examination now pending or, to the
Sellers' knowledge, threatened with respect to Spirent GmbH. All Taxes which
Spirent GmbH was or is required by Law to withhold or collect in relation to its
Business have been and are being withheld or collected by it and have been paid
over to the proper Governmental Entities or, if not yet due, are being held by
Spirent GmbH for such payment. Except as set forth on Schedule 3.1(N)(c),
Spirent GmbH has not waived or extended any applicable statute of limitations
relating to the assessment of any Tax. Except as set forth on Schedule
3.1(N)(c), Spirent GmbH believes that is has entered into all transactions with
its overseas Affiliates on an arms length basis and has documentation and
records which justify such belief.
O. Banking Matters. Schedule 3.1(O) sets forth (1) a list of each bank
or other financial institution at which any Company, Autronics US, P&G plc or
Spirent GmbH has a deposit account or safe deposit box for use in the
Businesses; and (2) the names of those employees authorized to access any such
account or safe deposit box.
P. Affiliated Transactions. Except as set forth on Schedule 3.1(P) or
pursuant to any of the contracts listed on Schedule 3.1(E), no Company, and none
of Autronics US, P&G plc and Spirent GmbH is a party to any written agreement
for the provision of goods or services, or is otherwise obligated to make any
payments to or is entitled to receive any payments from (in the case of
Autronics US, P&G plc and Spirent GmbH, to or from their Businesses), (1) any of
its directors or officers or (2) any other Company or any Seller, or any
Affiliate of any other Company or any Seller; excluding, in any event, (a) trade
payables or receivables incurred in the Ordinary Course of Business or (b) any
such Commitment which requires minimum annual payments of less than $100,000
individually or in the aggregate and which is terminated at or prior to Closing
without any further Liability to any Company or the US Business, the UK Business
or the German Business, respectively. Except as set forth on Schedule 3.1(P) or
pursuant to any of the contracts listed on Schedule 3.1(E), other than the
Excluded Business Assets and the UK Lease Sites, no Company, and none of
Autronics US, P&G plc and Spirent
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GmbH (in the case of Autronics US, P&G plc and Spirent GmbH, in relation to
their respective Businesses) uses any asset which is owned by any Affiliate
(other than a Company, or Autronics US, P&G plc or Spirent GmbH with respect to
the US Business, the UK Business or the German Business, respectively) and is
material to the operation of the Businesses.
Q. Brokers' Fees. Neither any Company nor any Seller has entered into
any Commitment which will cause the Purchaser or the Companies (following the
Closing) to become obligated for any broker's, finder's or other similar fee or
commission in connection with this Agreement or the consummation of any of the
transactions contemplated hereby, except for Xxxxxx Xxxxxxx & Co. Limited (or
its Affiliates), whose fees and expenses in respect of such transactions shall
be paid by the Sellers.
R. Absence of Certain Payments. During the five (5) year period prior
to the date of this Agreement, neither any of the Companies nor any of the
Sellers (or any of their respective Subsidiaries or Affiliates) has (nor has any
director, officer, agent, or employee of any of them nor any other Person,
acting on behalf of any of them; in the case of any such agent, to the Seller's
knowledge) directly or indirectly used, or offered or promised to use, any
Company's, Seller's or any of their respective Subsidiaries' or Affiliates'
funds or other thing of value for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity; made or transferred
any unlawful payment other thing of value to foreign or domestic government
officials or employees or to candidates for political or political party office
or to foreign or domestic political parties or campaigns; violated any provision
of the Foreign Corrupt Practices Act of 1977 or any other similar Law which
makes unlawful payments to Government Entities or international non-governmental
agencies and their employees in exchange for favorable treatment or benefits not
otherwise available but for such payments; established or maintained any
unlawful fund of any Company's, Seller's or any of their respective
Subsidiaries' or Affiliates' monies or other assets; made any unlawful and false
or fictitious entry on the books or records of any Company, Seller or any of
their respective Subsidiaries or Affiliates; or made any unlawful bribe, rebate,
payoff, influence payment, kickback, or other unlawful payment, to any Person,
regardless of form, whether in money, property, or services, to obtain favorable
treatment in securing business or to obtain special concessions for any Company,
Seller or any of their respective Subsidiaries, or to pay for favorable
treatment for business secured or for special concessions already obtained for
any of them, provided that this Section 3.1(R) shall relate only to payments or
other activities as described above to the extent that such payments or
activities violate applicable Laws and such violations would reasonably be
expected to have a Material Adverse Effect.
Section 3.2. No Implied Representations. Notwithstanding anything to
the contrary herein and without in any way affecting Purchaser's right to rely
on the accuracy and completeness of the representations and warranties set forth
herein and in any agreement, certificate or other document delivered to
Purchaser pursuant to Section 1.2(A) of this Agreement: (1) it is the explicit
intent of each party hereto that the Sellers have not made and are not making
any representation or warranty whatsoever, express or implied, beyond those
expressly given in this Agreement, or in any agreement, certificate or other
document delivered to Purchaser pursuant to Section 1.2(A) of this Agreement,
including, but not limited to, any
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such implied warranty or representation as to the post-Closing business, results
of operations, financial condition or prospects of any Company or the
Businesses, or as to the post-Closing value, condition, merchantability or
suitability of any Company, such Company's post-Closing Business, the
post-Closing US Business, the post-Closing UK Business or the post-Closing
German Business; and the Purchaser is not relying on any other statement,
representation or warranty, oral or written, express or implied, made by any
Seller or any Company or their respective Affiliates, representatives or agents,
including any such statement, representation or warranty contained in any
offering memorandum or any information, document or material made available to
the Purchaser or its Affiliates, representatives or agents in certain "data
rooms", management presentations or any other form in expectation of the
transactions contemplated by this Agreement and the Additional Transfer
Documents and Ancillary Agreements, except for the representations and
warranties expressly set forth in this Agreement , or in any agreement,
certificate or other document delivered to Purchaser pursuant to Section 1.2(A)
of this Agreement; and (2) the Purchaser has undertaken its own analyses and
methodologies to value the Businesses of the Companies, the US Business, the UK
Business, the German Business and the Shares, and in no event shall the Sellers
be charged with knowledge of, or have responsibility for, such analyses or
methodologies or the valuation resulting therefrom. EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN SECTION 3.1 OF THIS AGREEMENT, THE SELLERS EXPRESSLY
DISCLAIM ANY IMPLIED WARRANTY OR REPRESENTATION.
ARTICLE IV.
Representations and Warranties of the Purchaser
Section 4.1 Representations and Warranties. The Purchaser represents
and warrants to the Sellers that:
A. Corporate Existence and Qualification; Due Execution, Etc.
The Purchaser is a corporation duly organized and validly existing under the
Laws of the Delaware and has the requisite corporate power and authority to
execute, deliver and perform this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Purchaser and the consummation by the Purchaser of the transactions contemplated
hereby have been duly authorized by all requisite corporate action and, assuming
the due execution of this Agreement by the Sellers, this Agreement constitutes
the valid and binding obligations of the Purchaser enforceable against the
Purchaser in accordance with its terms, subject only to applicable bankruptcy,
insolvency, reorganization, moratorium or other similar Laws relating to
creditors' rights generally and to general principles of equity (regardless of
whether such enforcement is considered in a proceeding at law or in equity).
B. No Violation.
(i) Neither the execution, delivery and performance by the
Purchaser of this Agreement, the Additional Transfer Documents or the Ancillary
Agreements, nor the consummation of the Contemplated Transactions by the
Purchaser, will (A) violate any Order applicable to the Purchaser or (B) result
in a breach of or default under, the charter or bylaws of
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the Purchaser; except for such violations which would not reasonably be expected
to have a material adverse effect on the Purchaser's ability to perform its
obligations under this Agreement, the Additional Transfer Documents or the
Ancillary Agreements, or to consummate the Contemplated Transactions.
(ii) Neither the execution, delivery and performance by the
Purchaser of this Agreement, the Additional Transfer Documents or the Ancillary
Agreements, nor the consummation of the Contemplated Transactions by the
Purchaser, will violate any agreement or Law applicable to the Purchaser; except
for such violations which would not reasonably be expected to have a material
adverse effect on the Purchaser's ability to perform its obligations under this
Agreement, the Additional Transfer Documents or the Ancillary Agreements, or to
consummate the Contemplated Transactions.
(iii) No consent, authorization, or approval from, or
registration or filing with, any Governmental Entity or other third party (not
obtained or made as of the date hereof) is required to be obtained or made by or
with respect to the Purchaser in connection with the execution and delivery of
this Agreement or the consummation by the Purchaser of the transactions
contemplated hereby; except for such violations which would not reasonably be
expected to have a material adverse effect on the Purchaser's ability to perform
its obligations under this Agreement, the Additional Transfer Documents or the
Ancillary Agreements, or to consummate the Contemplated Transactions.
C. Litigation. There are no Legal Proceedings pending or, to
the knowledge of the Purchaser, threatened against the Purchaser that seek to
enjoin or obtain damages in respect of the consummation of the transactions
contemplated by this Agreement.
D. Financial Ability to Perform. The Purchaser has available
cash funds sufficient to consummate the transactions contemplated by this
Agreement.
E. Purchase for Investment. The Purchaser is acquiring the
Shares for investment and not with a view toward any resale or distribution
thereof except in compliance with applicable Laws, including the United States
Securities Act of 1933, as amended.
F. No Knowledge of Breach. The Purchaser has no actual
knowledge of any breach of any of the Sellers' representations or warranties set
forth in Article III hereof.
G. Brokers' Fees. The Purchaser has not made any agreement,
which will cause any Company, or any Seller to become obligated for any broker's
or other similar fee or commission as a result of any of the transactions
contemplated by this Agreement.
ARTICLE V
Covenants and Agreements
Section 5.1 Satisfaction of Closing Conditions; Consents;
Transfer of Benefits.
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A. Covenants Regarding Closing Conditions. The parties shall
use their respective reasonable efforts to bring about the satisfaction as soon
as practicable of all the conditions to Closing contained in Articles VI and
VII. Without limiting the generality of the foregoing, the parties shall apply
for and diligently prosecute all applications for, and shall use their
respective reasonable efforts promptly to obtain, (1) such consents, waivers,
releases, authorizations and approvals from such Governmental Entities as shall
be necessary to permit the consummation of the Contemplated Transactions; (2)
such consents, waivers, valuations, authorizations and approvals as may be
required under the Sellers' Charter Documents; and (3) such consents, waivers,
releases, authorizations and approvals from such third parties as shall be
necessary to permit the consummation of the Contemplated Transactions, provided,
in the case of the Sellers, that this Section 5.1(A)(3) shall only be applicable
to such consents, waivers, releases, authorizations as are described in Section
6.4.
B. Non-Assignability. To the extent that any Commitment, claim
or other Asset intended to be assigned to Purchaser or from which Purchaser is
intended to receive benefits or obligations hereunder is not assignable without
the consent of another Person, and such consent is not obtained by Closing, this
Agreement shall not constitute an assignment or an attempted assignment thereof
to Purchaser or an assumption of Sellers' obligations thereunder by Purchaser if
such assignment or attempted assignment and assumption would constitute a breach
thereof. If any such consent or assignment cannot be obtained, then the Seller
or the Company party to, or who owns, the relevant Commitment, claim or other
Asset intended to be assigned to Purchaser or from which Purchaser is intended
to receive benefits or obligations thereunder shall be deemed to hold the
benefit of that Commitment, claim or other Asset in trust for the Purchaser, and
the Purchaser shall (if sub-contracting or agency is permissible under the
relevant Commitment, claim or other Asset) as Seller's sub-contractor or agent
perform on behalf of Seller (but at the Purchaser's expense) all the obligations
of Seller under such Commitment, claim or other Asset; and the Purchaser shall
indemnify such Seller against all costs, expenses or Liabilities incurred by
such Seller as a result of any act, neglect, default or omission on the part of
the Purchaser to perform or comply with any such obligation of such Seller. Such
Seller shall, at the Purchaser's expense, do all such acts and things as the
Purchaser may reasonably request to enable performance of the relevant
Commitment, claim or other Asset and to provide the Purchaser with the benefit
of the relevant Commitment, claim or other Asset (including the enforcement of
any right of such Seller against the other party to the relevant Commitment,
claim or other Asset). Such Seller shall account to the Purchaser for all
monies, goods or other benefits received by Seller under the relevant
Commitment, claim or other Asset in respect of the period after the Closing Date
as soon as reasonably practicable after receipt. Provided Purchaser is not in
breach of this Section 5.1, such Seller shall not agree to any amendment or
termination of the relevant Commitment, claim or other Asset or any waiver by
Seller of its rights under the relevant Commitment, claim or other Asset without
the Purchaser's prior written consent, which shall not be unreasonably withheld
or delayed.
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In the event of a direct conflict between this Section 5.1(B) and
Article VI of the UK Business Transfer Agreement, this Section 5.1(B) shall
control.
Section 5.2 Tax Matters.
A. Tax Periods Ending on or before the Closing Date. The Sellers shall
prepare and file or cause to be prepared and filed all Tax Returns for the
Companies and the Businesses for all periods ending on or prior to the Closing
Date which are filed after the Closing Date including income Tax Returns with
respect to periods for which a consolidated, unitary or combined income Tax
Return of all or any number of the Sellers will include the operations of one or
more of the Companies and the Businesses; provided, however, with respect to the
UK Companies, this Section 5.2(A) shall apply only with respect to UK
corporation Tax Returns. Subject to Section 5.2(L) and Section 9.14(C)(vii), the
Sellers shall pay and be liable for all Taxes of the Companies with respect to
such periods or which arise in respect of any event, action, or transaction
which occurred during such periods, or, alternatively with respect to the UK
Companies, shall procure the surrender or transfer to the UK Companies for zero
consideration of sufficient tax reliefs to discharge such Taxes, provided,
further, with respect to the UK Companies any amounts payable by the Sellers
under this Section 5.2(A) shall be due and payable to the Purchaser on an after
tax basis. In relation to UK corporation Tax Returns which are relevant for the
purposes of this Section 5.2(A), the Sellers shall also have responsibility for
the agreement of such Tax Returns at Sellers' expense. Where a liability to Tax
arises on the UK Companies under section 179 Taxation of Chargeable Gains Xxx
0000 the Seller shall, if possible, procure that either it or a company which
remains under the control of the Seller after the date of Closing shall enter
together with the such UK Company into a joint election as referred to in
section 179B Taxation of Chargeable Gains Xxx 0000. In relation to the UK
Companies, the Sellers shall not submit any Tax Return to any Tax authority or
enter into any communication with any Tax authority without seeking the
Purchaser's consent, which shall not be unreasonably withheld or delayed, unless
such action is consistent with past practices of the UK Companies and does not
involve a Tax liability in excess of $500,000.
B. Tax Periods Beginning on or after the Closing Date. The Purchaser
shall prepare and file or cause to be prepared and filed when due all Tax
Returns for the Companies for all periods beginning on or after the Closing Date
including income Tax Returns with respect to periods for which a consolidated,
unitary or combined income Tax Return of the Purchaser will include the
operations of one or more of the Companies. The Purchaser shall pay all Taxes of
the Companies with respect to such periods.
C. Tax Periods Beginning Before and Ending After the Closing Date. The
Purchaser shall prepare and file or cause to be prepared and filed when due any
Tax Returns of the Companies for Tax periods which begin before the Closing Date
and end after the Closing Date. The Purchaser shall permit the Sellers to review
and comment on each such Tax Return described in the preceding sentence prior to
filing. Subject to Section 5.2(G), the Sellers shall deliver to the Purchaser,
at least three (3) business days prior to the date on which such Taxes are
required to be paid, that portion of the Taxes which relates to the portion of
such taxable period
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ending on the Closing Date. For purposes of this Section 5.2(C), in the case of
any Taxes that are imposed on a periodic basis and are payable for a taxable
period that includes (but does not end on) the Closing Date, the portion of such
Tax which relates to the portion of such taxable period ending on the Closing
Date shall (i) in the case of any Taxes other than Taxes based upon or related
to income or receipts, be deemed to be the amount of such Tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (ii) in the case
of any Tax based upon or related to income or receipts be deemed equal to the
amount which would be payable if the relevant taxable period ended on the
Closing Date. Subject to the proration provisions of the preceding sentence, any
credits or refunds relating to a taxable period that begins before and ends
after the Closing Date shall be taken into account as though the relevant
taxable period ended on the Closing Date. All determinations necessary to give
effect to the foregoing allocations shall be made in a manner consistent with
prior practice of the Companies.
D. US Business, UK Business and German Business. Except as specifically
set forth in the US Business Transfer Agreement, the UK Business Transfer
Agreement (including without limitation Article 4 thereof), or the German
Business Transfer Agreement, the provisions of this Section 5.2 shall apply to
Taxes and Tax Returns relating to the US Business, the UK Business or the German
Business. The Sellers shall prepare and file, or cause to be prepared and filed,
all Tax Returns for Spirent GmbH in relation to the German Business for the
period up to and including the Closing Date. The Sellers shall pay, or reimburse
the Purchaser for, those Taxes in relation to the German Business with respect
to such period and for which the Purchaser may become liable according to
Section 75 of the German Tax Code (Abgabenordnung).
E. Contest Proceedings. With respect to any Tax Returns for any Tax
periods, the party hereto responsible for the preparation and filing of such Tax
Return shall control the defense of any audits thereof or other Legal
Proceedings relating thereto, provided that the costs of any such defense shall
be shared by the parties hereto, pro rata based on their responsibility for
Taxes due under any such Tax Return, and provided further that no such audits or
other Legal Proceedings shall be settled in a manner which would adversely
affect the other party hereto without the prior written consent of such other
party, which consent shall not be unreasonably withheld.
F. Determination and Allocation of Consideration. The parties to this
Agreement agree to allocate the total consideration transferred by the Purchaser
to the Sellers pursuant to this Agreement (the "Consideration") amongst the
various assets and liabilities in accordance with Schedule 5.2(F). The Sellers
and the Purchaser agree to prepare, or cause to be prepared, and file, or cause
to be filed, an IRS Form 8594 in a timely fashion in accordance with the rules
under Section 1060 of the Code, consistent with such schedule. To the extent
that the Consideration is adjusted after the Closing Date, the parties agree to
revise and amend the schedule and IRS Form 8594 in a manner consistent with that
used in developing the allocation on said Schedule 5.2(F). The determination and
allocation of the Consideration derived pursuant to this subsection shall be
binding on the parties hereto and their Affiliates for all Tax reporting
purposes.
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G. Transfer Taxes. Payment by the Purchaser to the Sellers of the
Purchase Price shall be made in full without any deduction or withholding,
whether in respect of set-off, counterclaim, or Taxes (other than any Taxes
imposed on the Sellers that are based on net income or profits), unless the
deduction or withholding is required by Law, in which event the Purchaser shall
(1) ensure that such deduction or withholding does not exceed the minimum amount
legally required; (2) pay to the Sellers such additional amount so that the net
amount received by the Sellers shall be the full amount which would have been
received by the Sellers had no such deduction or withholding been made, except
that no additional amount shall be payable to the extent such deduction or
withholding relates to a Tax liability of the Sellers; (3) pay to the relevant
Governmental Entities within the period for payment permitted by applicable Law
the full amount of the deduction or withholding; and (4) furnish to the Sellers
within the period for payment permitted by the relevant Law, a certificate of
deduction or equivalent evidence of the relevant deduction or withholding;
provided that if California Laws require a withholding of part of the
Consideration in connection with the transfer of the US Assets under the US
Business Transfer Agreement on account of unpaid California Taxes owing from
Autronics US, then the parties shall use all commercially reasonable efforts to
obtain a release of such requirement from the applicable authorities by Closing;
if notwithstanding the foregoing no such release can be obtained, then the
Purchaser shall be entitled to make such withholding until such withholding is
no longer required under California Law (at which time the Purchaser shall pay
over such withheld amount to the Sellers), provided such withholding does not
exceed, in any event, $2,000,000. Except as set forth in the foregoing proviso,
all sales, use, transfer, stamp, conveyance, value added or other similar taxes,
duties, excises or governmental charges imposed by any taxing jurisdiction,
domestic or foreign, and all recording or filing fees, notarial fees and other
similar costs with respect to the Transfer of the Shares, the US Assets, the UK
Assets and the German Assets will be borne by the Purchaser.
H. Cooperation on Tax Matters. The Purchaser, the Companies and the
Sellers shall cooperate (and cause their respective Affiliates to cooperate)
fully, as and to the extent reasonably requested by the other parties, in
connection with the preparation and filing of Tax Returns pursuant to this
Section 5.2 and any Tax Audit, litigation or other proceeding with respect to
Taxes and payments in respect thereof. Such cooperation shall include the
retention and (upon the other parties' request) the provision of records and
information which are reasonably relevant to any such Tax Audit, litigation or
other proceeding and making employees available on a mutually convenient basis
to provide additional information and explanation of any material provided
hereunder. The parties shall provide timely notice to the other in writing of
any pending or proposed Tax Audits or assessments with respect to Taxes for
which the other may have an indemnification obligation under this Agreement. The
parties shall furnish the other with copies of all relevant correspondence
received from any taxing authority in connection with any Tax Audit or
information request with respect to any Taxes for which the other may have an
indemnification obligation under this Agreement.
X. Xxxxxx of Attorney. At least five (5) days prior to Closing, the
Purchaser shall provide Spirent plc with a schedule listing which powers of
attorney disclosed under Schedule 3.1(E) which Purchaser wants terminated as of
the Closing, and immediately prior to the Closing
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Spirent plc (or the respective Company) will use its reasonable efforts to
terminate, or cause to be terminated, each such power of attorney appearing on
the schedule provided by the Purchaser.
J. Tax Sharing Agreements. All tax sharing agreements or similar
agreements with respect to or involving any Company shall be terminated as to
the Companies as of the Closing Date. After the Closing Date, no Company shall
be bound by or have any Liability under any such tax sharing agreement or
similar agreement.
X. Xxxxxxx' Control of UK Tax Matter. If the disposal of the UK
Companies in accordance with this Agreement gives rise to any charge to UK tax
under section 179 Taxation of Chargeable Gains Xxx 0000 (or if the UK Inland
Revenue assert that such a charge arise) and provided that neither Purchaser nor
any of its Affiliates including the UK Companies, shall be liable in respect of
any such charge, then the following provisions shall apply:
(i) the Sellers shall have the full conduct of
negotiating and agreeing such charge with the Inland
Revenue;
(ii) the Purchaser shall and shall procure that any
relevant UK Company shall as soon as is reasonably
practicable notify the Sellers of any information
which comes to the attention of the Purchaser and/or
the UK Company which indicates that such a charge
will arise or has arisen, and shall provide the
Sellers with such information and assistance as the
Sellers shall reasonably require to negotiate and
agree the charge with the Inland Revenue; and
(iii) the Sellers shall keep the Purchaser promptly
informed of the progress of such negotiations and
agreement.
L. UK Tax Reliefs.
(i) This Section 5.2(L) shall apply in respect of all
Schedule D Case I corporation tax losses held by any
UK Companies at the Closing which are not reflected
in the balance sheets included in the Financial
Statements and which are capable of being surrendered
by the UK Companies to the Sellers or any other
Person connected with the Sellers ("Relevant
Reliefs").
(ii) At any time following the Closing, the Sellers shall
be able to request in writing that the UK Companies
surrender the Relevant Reliefs to the Sellers or such
other Person as the Sellers shall direct to the
extent that this is permissible by Law. It is
acknowledged that prior to Closing payment will be
made to the UK Companies in consideration of such
surrenders.
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(iii) The Purchaser shall procure that the UK Companies
sign such elections and take such other actions as
the Sellers shall require procuring the effective and
prompt surrender of the Relevant Reliefs.
(iv) The Purchaser shall be under no obligation to procure
that the UK Companies make any election under Section
171A TCGA.
(v) The Sellers shall not use their powers under this
Section 5.2(L) so as to create a Tax charge in the UK
Companies.
M. Certain Definitions. For purposes of this Agreement:
(i) "Tax" or "Taxes" means all federal, state,
provincial, territorial, local, foreign and other
taxes, assessments, or governmental charges in each
case in the nature of a tax, including income,
capital, franchise, capital stock, excise, property,
sales, use, service, service use, leasing, leasing
use, goods and services, gross receipts, value added,
single business, alternative or add-on minimum,
occupation, real and personal property, stamp,
workers' compensation, severance, windfall profits,
customs, duties, disability, registration, estimated,
environmental (including Taxes under Code Section
59A), transfer, payroll, withholding, employment,
unemployment, social security taxes or premiums, or
other taxes of the same or similar nature, together
with any interest, penalties or additions thereon and
estimated payments thereof, whether disputed or not;
(ii) "Tax Return" or "Tax Returns" includes all returns,
reports, information returns, forms, declarations,
claims for refund, statements and other documents
(including any amendments thereto and including any
schedule or attachment thereto) in connection with
Taxes that are required to be filed with a
Governmental Entity or other tax authority, or sent
or provided to another party under applicable Law,
and all citations of the Code or to the Treasury
Regulations promulgated thereunder will include any
amendments or successor provisions thereto;
(iii) "Sellers' Tax Payment Covenants" means, collectively,
(A) the covenants and agreements of the Sellers with
respect to the payment of Taxes contained in Section
5.2, (B) the covenants and agreements of Autronics US
with respect to the payment of Taxes, including any
indemnification agreements relating thereto, set
forth in the US Business Transfer Agreement; (C) the
covenants and agreements of P&G plc with respect to
the payment of Taxes, including without limitation
any indemnification agreements relating thereto, set
forth in the UK Business Transfer Agreement, and (D)
the covenants and agreements of Spirent GmbH with
respect to the payment of Taxes set forth in Section
5.2(D); and
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(iv) "Purchaser's Tax Payment Covenants" means,
collectively, (A) the covenants and agreements of the
Purchaser with respect to the payment of Taxes
contained in Section 5.2, and (B) the covenants and
agreements of the Purchaser with respect to the
payment of Taxes, including any indemnification
agreements relating thereto, set forth in the US
Business Transfer Agreement and the UK Business
Transfer Agreement.
N. Jurisdiction of Execution.
(i) The parties hereto hereby acknowledge and agree that the
Agreement, Additional Transfer Documents and Ancillary Agreements have all been
executed (to the extent executed by the parties) and delivered in the United
States of America and Sellers hereby further covenant and agree with Purchaser
that the original copies of the Agreement, the Additional Transfer Documents and
the Ancillary Agreements shall not be permitted to leave the jurisdiction of the
United States of America without the prior written consent of the Purchaser.
Notwithstanding the foregoing, the Sellers shall be entitled to remove the
original copies of the Agreement, the Additional Transfer Documents and the
Ancillary Agreements outside of the jurisdiction of the United States of America
without the prior written consent of the Purchaser in the event that such
removal is required for the Sellers to enforce any rights under the Agreement,
the Additional Transfer Documents and the Ancillary Agreements (and in which
case the Purchaser shall pay the stamp duty or other Taxes, if any, resulting
from such removal), provided the Sellers are then not in breach of Section 9.13.
(ii) The Purchaser acknowledges and agrees with the Sellers
that all UK stamp duty payable in connection with the Contemplated Transactions
and the execution and delivery of the Agreement, the Additional Transfer
Documents and the Ancillary Agreements shall be payable by the Purchaser. If in
relation to any action taken by or matter affecting the Sellers:
(A) A judge, arbitrator or other Person responsible
for the determination of any proceedings, whether in a
tribunal or whether judicial, arbitral, administrative or
otherwise requires or a Seller reasonably considers that such
judge, arbitrator or other Person would require, that this
Agreement, the Additional Transfer Documents or the Ancillary
Agreements are stamped prior to such document being accepted
as evidence in the proceedings before them; or
(B) Any Governmental Entity (including any taxation
authority) or any Person (acting within its powers) acting on
behalf of a Governmental Entity requires the stamping of this
Agreement, the Additional Transfer Documents or the Ancillary
Agreements;
then the Purchaser agrees that and undertakes to the Sellers that it will pay
any stamp duty (and related interest or penalty charges) which may be payable on
this Agreement, the Additional Transfer Documents or the Ancillary Agreements.
The Sellers shall use all reasonable endeavours to procure that the
Persons mentioned above accept unstamped copies of this Agreement, the
Additional Transfer Documents or the
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Ancillary Agreements. However, the obligation accepted by the Sellers
under this Section 5.2(N)(ii) shall not extend to incurring any cost, taking any
action against or appealing any decision of the relevant Person.
If the Purchaser fails to comply with its obligations under this
Section 5.2(N)(ii) the Sellers shall be entitled (but not obliged) to pay the
relevant stamp duty (and related interest and penalty charges) and the Purchaser
shall be obliged immediately on demand to pay to the Sellers an amount by way of
liquidated damages (on an after tax basis) equal to the amount paid by the
Sellers.
O. Certain Payment Covenants. The Sellers covenant with and undertake
to the Purchaser to pay the Purchaser an amount equal to:
(i) any Liability to repay in whole or in part any
payment received or receivable by the UK Companies or
any liability of the UK Companies to make any payment
for the surrender of Group Relief (within the meaning
of Chapter IV Part X Income and Corporation Taxes Act
1988) pursuant to any arrangement or agreement
entered into on or before the Closing Date; and
(ii) the loss in whole or in part of the right to receive
any payment for Group Relief from any company
pursuant to any arrangement or agreement entered into
on or before the Closing Date.
P. Prior Dispositions of Assets. The Sellers shall pay (a) the Taxes
due under Section 179 of the United Kingdom Taxation of Chargeable Gains Xxx
0000 as a result of their transfer of the Xxxxx & Xxxxx sensors division from
P&G plc to P&G Controls UK on 1 January 1998; and (b) the Taxes incurred by or
due from Xxxxx & Xxxxx Studio Equipment Limited, a former Affiliate of P&G
Controls UK, relating to periods prior to May 7, 1998.
..
Q. Certain VAT Matters Regarding Lease Assignments. It is hereby agreed
by the Purchaser that VAT is payable on the consideration paid or to be paid by
the Purchaser in respect of each of the Lease Assignments which shall be in
addition to, in each case, the consideration set out in the Lease Assignments.
The Purchaser hereby agrees to pay to Spirent plc all such VAT payable on each
and all of the Assignments and such payment of VAT shall be paid by the
Purchaser to Spirent plc on or before Friday 31 May 2002. Payment of such sums
shall be received in cleared funds in GB Sterling by Spirent plc by electronic
transfer so that Spirent plc shall receive such sum in its bank account before
2pm (GMT) on Friday 31 May 2002.
Section 5.3 Books and Records. Until the earlier of (i) the expiration
of the applicable statute of limitations (including periods of waiver) or (ii)
six (6) years after the Closing Date (or such longer period as may be required
by any Law or any ongoing Legal Proceeding), (1) the Purchaser shall cause the
Companies to maintain all books and records of the Companies material to the
Businesses; and (2) the Sellers shall maintain those books and records which (I)
are material to the US Business, the UK Business and the German Business and
(II) are not provided to Purchaser at or in connection with the Closing; in each
case with respect to the
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period up to and including the Closing; and (3) the Purchaser and the Sellers,
respectively, shall permit the Sellers and the Purchaser, respectively, to have
reasonable access to such books, records and data for inspection and copying by
Sellers or Purchaser, respectively, or their respective duly authorized
representatives (at Sellers' or Purchaser's respective expense) upon reasonable
prior written notice, in connection with the preparation of financial reports,
Tax Returns, Tax Audits, the defense or prosecution of litigation, or any other
reasonable need of the Sellers or Purchaser, respectively, to consult such
records and data.
Section 5.4 Discharge of Liabilities.
A. The Purchaser acknowledges that (1) any and all Liabilities
of the Companies at Closing shall continue to be Liabilities of such Companies
unaffected by the Closing and the Transfer of the Shares hereunder, and (2)
without limiting the foregoing, the Sellers are not retaining or assuming any
such Liabilities of the Companies; and the Purchaser covenants and warrants to
the Sellers that following the Closing all such Liabilities of the Companies
shall be paid, discharged and performed by the Companies in accordance with
their respective terms, and all US Liabilities, UK Liabilities and German
Liabilities shall be paid, discharged and performed by the Purchaser in
accordance with their respective terms.
B. With respect to any regularly recurring rents, water,
telephone, electricity or other utility charge which is imposed on a periodic
basis and is payable for a period that includes (but does not end on) the
Closing Date, the portion of such charge which relates to the portion of such
period ending on the Closing Date shall be deemed to be the amount of such
charge for such entire period multiplied by a fraction the numerator of which is
the number of days in such period ending on the Closing Date and the denominator
of which is the number of days in the entire such period. The Sellers shall pay
the amount so deemed to relate to the portion of such period prior to Closing,
and the Purchaser shall pay the amount so deemed to relate to the portion of
such period following Closing.
Section 5.5 Insurance. To the extent that any of the Assets suffer
damage prior to the Closing or the Businesses suffer a Liability prior to the
Closing, and both: (a) such Asset or Liability is to be included in Closing Net
Worth but the Closing Net Worth does not reflect such damage or Liability; and
(b) the Sellers (but not the Purchaser or the Companies) are entitled to receive
insurance proceeds on account of such damage or Liability; then at the request
of the Purchaser the Sellers shall take commercially reasonable efforts to
collect such proceeds, and to pay such proceeds to the Purchaser, in each case
to the extent of the amount of such damage or Liability not so reflected in
Closing Net Worth; provided that such obligation of the Sellers shall only be
applicable if the Purchaser reimburses and indemnifies the Sellers from and
against any costs or expenses reasonably incurred in connection with such
collection and payment efforts (including the cost of any deductible).
Notwithstanding the foregoing, the Sellers may, but shall not be obligated to,
elect to pay the amount of such proceeds to which is entitled directly to the
Purchaser without obligation to collect the same under any such insurance
policy. Prior to the Closing, the Sellers shall and shall cause the Companies to
maintain (and not cancel) any insurance in place in the Ordinary Course of
Business under which any Company is an insured or
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each of the Sellers is an insured with respect to the US Business, the UK
Business or the German Business, as the case may be.
Section 5.6 Employee/ERISA Transition.
A. To the extent that any employee of one of the US Companies
or Autronics US has an outstanding loan under a US Company Plan as of Closing,
the Purchaser shall cause its Code Section 401(k) plan to accept and assume such
loan and allow for repayment under substantially similar terms and conditions.
In addition, the Purchaser and the Sellers agree that they shall reasonably
cooperate with each other with respect to the Sellers' termination of any US
Company Plans. Neither the Purchaser nor the Companies shall have any rights
under or with respect to any such US Company Plans terminated by the Sellers. To
the extent that any provision of this Section 5.6 or the Purchaser Employer
Indemnification is inconsistent with the provisions of the UK Business Transfer
Agreement, the provisions of the UK Business Transfer Agreement, and not this
Section 5.6 or the Purchaser Employer Indemnification, as the case may be, shall
apply to the UK Business Employees (as defined in the UK Business Transfer
Agreement).
Life insurance will be offered without pre-existing condition only up
to the amount that transferred employees would have been covered under insurance
policies issued by the prior carriers. If the pre-existing condition was
satisfied under the prior carrier's policy then no pre-existing condition
requirement will be required under the Purchaser's plan. The Sellers will be
required to administer and be responsible for all COBRA requirements as
established by Law for all participants prior to the Closing. The Sellers agree
to fully vest all US transferred employees' Code Section 401(k) assets at 100%
at the Closing.
B. The Purchaser agrees that, under any employee benefit plan
made available or established by the Purchaser or P&G Controls US after the
Closing, employees of P&G Controls US and Autronics US will receive credit for
their years of service with P&G Controls US or Autronics US, as the case may be,
prior to the Closing in determining eligibility and vesting thereunder and in
determining the amount of benefits under any applicable sick leave, vacation or
severance plan. The Purchaser will cover employees of the US Companies and the
US Business as of the Closing under a group health plan and waive any
pre-existing condition limitations applicable to employees of the US Companies
or the US Business under any group health plan made available to employees of
the US Companies or the US Business to the extent that an employee's condition
would not have operated as a pre-existing condition limitation under any
applicable group health plan of or sponsored by the US Companies or Autronics US
prior to the Closing, and the Purchaser will take all action necessary to ensure
that employees of the US Companies and the US Business are given full credit for
all co-payments and deductibles incurred under any group health plan for the
year that includes the Closing Date.
C. If any Spirent Business Employee is neither employed nor
engaged by one of the Companies nor employed nor engaged by P&G plc wholly
engaged in the UK Business immediately before the Closing, then:
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(i) the Sellers shall notify the Purchaser on or before the
Closing Date that such Spirent Business Employee is not so employed or
engaged;
(ii) the Purchaser may on or before the Closing Date make or
cause the relevant Company to make an offer of employment or
appointment to such Spirent Business Employee to employ or engage such
Spirent Business Employee with effect from the Closing Date; and
(iii) the Sellers may terminate the employment or engagement
of such Spirent Business Employee with immediate effect without notice
or payment in lieu within 14 days after the offer in clause (ii) above
being made or within 14 days after the Closing Date, whichever is
later. If no offer is made under such clause (ii), the Sellers may
terminate such Spirent Business Employee's employment or engagement
within 14 days after the Closing Date with immediate effect without
notice or payment in lieu.
As used herein, the term "Spirent Business Employee" means each and all of the
following people: Xxxxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxx Xxxxx, Xxx Xxxxxx,
Xxxxxxx New, Xxxxx Xxxxxx, and Xxxxxxx Xxxxxx Xxxxx.
D. The Purchaser shall indemnify the Sellers in full for and against
all Liabilities whatsoever and howsoever arising incurred or suffered by any of
the Sellers in relation to the employment or engagement and/or the termination
of employment or engagement of the Spirent Business Employees and/or any other
event or occurrence in respect of the Spirent Business Employees at any time
before, on or after the Closing.
E. The Purchaser agrees that Xxxxxx Xxxxxxx, Xxxxx Xxxxxxxx, Xxxxx
Xxxxx, Xxxx Xxxxx, Xxxx Xxxxxx and Xxxxxx Burkies, all of whom are, or will be
at Closing, employees of an Affiliate of a Seller (other than another Company)
shall be allowed to continue to utilize their existing work space at the UK
Lease Sites, at no rental charge, for a period of 12 months following Closing.
For as long as such persons are employed by a Seller or an Affiliate of the
Seller and continue to utilize such existing work space, the Sellers shall
indemnify the Purchaser for the Purchaser's Liability including its reasonable
costs or expenses caused by any non-compliance by such person with the
Purchaser's reasonable safety and operational requirements generally applicable
to the Purchaser's employees at the UK Lease Sites (provided such persons are
made aware of such requirements), and for the charges for long-distance phone
calls made by such persons from such work space. In connection therewith, to the
extent that any of the foregoing are currently employed by a Company or the UK
Business, the Sellers shall be entitled, prior to Closing, to transfer such
employment arrangement to an Affiliate of a Seller (and to the extent such
employment is transferred to another Seller, such arrangement shall not be
transferred to the Purchaser as part of the Contemplated Transactions); subject
to the Sellers' indemnification obligations set forth in the preceding sentence,
if and as applicable.
F. To the extent that any of the Sellers or the Companies are
obligated to pay life insurance premiums through age 65 for former employees of
P&G Controls or the UK
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Businesses and who are pensioners of a Spirent pension plan, then the Sellers
following the Closing shall continue to pay these premiums in accordance with
such obligations.
G. The Sellers hereby covenant and agree to satisfy prior to
or promptly after Closing, all obligations to pay employee bonuses entitled to
be received by all employees in the Businesses attributable to periods ending on
or prior to Closing or which are due and payable as a result of the consummation
of the Contemplated Transactions; provided such bonuses are not reflected in
Closing Net Worth.
Section 5.7 Use of Spirent Name. The Purchaser acknowledges
that it is not acquiring by reason of the Transfer of the Shares, the US
Business, the UK Business or the German Business hereby, any rights to use the
name "Spirent" or any other names, service marks or trademarks of the Sellers
(other than, in the case of such other names, service marks, or trademarks,
those identified as comprising Assets of the US Business, the UK Business and
the German Business in the Additional Transfer Documents); provided, however,
that following the Closing the Companies, the US Business, the UK Business and
the German Business shall be entitled to use (a) the existing inventory of
promotional material, labels, packaging and nameplates with respect to products
manufactured and sold by Sellers prior to the Closing and bearing the Spirent
name or any variation thereof, and to sell existing inventory bearing the
Spirent name, if any, and to use existing signage, stationery, invoices and
other office supplies bearing the Spirent name, if any, in the Ordinary Course
of their Businesses, provided that (1) in the case of promotional materials
only, such usage is terminated as soon as is reasonably practical following the
Closing Date; and (2) in the case of all of the foregoing other than promotional
materials: (A) from and after the date which is 90 days following the Closing
Date (subject to the succeeding sub-clause (B)), the Spirent name is stickered
over or otherwise deleted from any of the foregoing; and (B) such usage does
not, in any event, extend past the date which is one hundred eighty (180) days
following the Closing Date. The parties agree that as a result of the
transactions contemplated by this Agreement and the Additional Transfer
Documents, the Purchaser will thereby be acquiring royalty free and unrestricted
rights to use the names "Xxxxx & Xxxxx" and "P&G." The Purchaser acknowledges
that such rights are non-exclusive, in that Spirent plc or its Affiliates have
previously granted third parties certain rights to use such names to the
entities set forth on Schedule 5.7, but Spirent plc represents that such no such
third party grantees are using such names in any material commercial respect
except as set disclosed on Schedule 5.7; and that such previous grants do not
(A) materially impair the usage rights of the Purchaser referred to in the
preceding sentence; or (B) require any payments by, or continuing obligations
of, the Purchaser. Spirent plc agrees that neither it nor its Affiliates will
(a) after the Closing hold themselves out as doing business under such names
(provided that this covenant shall not prohibit Spirent plc or such Affiliates
from using existing stationery and other office supplies bearing the Spirent
name, if any, in the Ordinary Course of their Businesses, but in no event past
the date which is sixty (60) days following the Closing Date); or (b) after the
date hereof grant to any Person any rights to use such names and in furtherance
of the foregoing Spirent plc agrees that it shall cause P & G plc to change its
corporate name at or prior to the Closing and to delete therefrom any reference
to "Xxxxx & Xxxxx", "P&G" or any variation thereof. Notwithstanding the
foregoing, Spirent plc shall cause "Xxxxx & Xxxxx Drives Technology Ltd," "Xxxxx
& Xxxxx Drives Technology Division of Autronics Corporation" and
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"Xxxxx & Xxxxx Drives Technology Asia" to change its corporate name at or prior
to the Closing and to delete therefrom any reference to "Xxxxx & Xxxxx", "P&G"
or any variation thereof, provided that any such new corporate name may include
the letters "PG." The Purchaser hereto acknowledges that neither it nor the
Companies will have any rights from and after the Closing to create or maintain
any website links to or from any website of Spirent plc or its Affiliates. The
Sellers acknowledge they will not have any rights from and after the Closing to
create or maintain any website links to or from any website of any Company.
Section 5.8 Guarantees. The Purchaser shall use best efforts to (a)
deliver on or prior to the Closing Date but effective as of the Closing,
Guaranty/Bond Replacements for each Guaranty or Bond listed on Schedule 5.8; and
(b) procure, after the Closing, Guaranty/Bond Replacements for any Guaranty or
Bond not listed on Schedule 5.8 and issued or obtained in the Ordinary Course of
Business prior to the Closing Date, with such Guaranty/Bond Replacements to be
so obtained as promptly as reasonably practicable after the Purchaser learns of
the same; provided that, in the case of this clause (b): (1) the procurement of
any such Guaranty/Bond Replacement shall not constitute a waiver of any breach
of this Agreement by the Sellers; and (2) the Purchaser shall not be required to
procure any such Guaranty/Bond Replacement following the Closing to the extent
that the same will result in more than $1,000 of cost or expense to the
Purchaser, unless the Sellers agree to reimburse the Purchaser for such cost or
expense. Pending such procurement as described in the foregoing clause (b)
(including if such procurement is not required by sub-clause (2) of the
foregoing clause (b)), the Purchaser shall indemnify the Sellers and each such
Non-Company Affiliate against all and any liabilities, losses, costs, charges,
proceedings, actions, claims, demands or expenses arising out of or in
connection with any such Guaranty or Bond.
As used herein, the term "Guaranty/Bond Replacement" means any
guaranties, bonds, consideration or other undertakings, as the case may be,
needed to replace and terminate any Guaranty or Bond and so as to obtain the
complete and unconditional release of the Sellers and any Non-Company Affiliates
from all obligations in connection with each such Guaranty or Bond.
As used herein, the term "Guaranty or Bond" means any
guaranty, keepwell agreement, comfort letter, or similar undertaking issued
prior to the Closing Date to or for the benefit of, or any letter of credit,
surety bond, performance bond, customs bond, excise bond or similar undertaking
obtained prior to the Closing Date by, any Seller or any Non-Company Affiliate
to support or facilitate business transactions by a Company, the US Business,
the UK Business or the German Business, and any security furnished by a Seller
or any such Non-Company Affiliate in connection therewith.
As used herein, the term "Non-Company Affiliate" means any
Affiliate of any Seller or of any Company, but such term shall not include any
Company.
Section 5.9 Intercompany Accounts. All intercompany accounts or loans
between any Company, the US Business, the UK Business or the German Business, on
the one hand, and any Seller or other Affiliate (other than another Company) or
non-transferred employee, on the other
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hand, shall be repaid, capitalized or otherwise eliminated by such Seller or
such Affiliate or such non-transferred employee, on the one hand, and such
Company, the US Business, the UK Business or the German Business, on the other
hand, as applicable, not later than as of the close of business on the Business
Day immediately preceding the Closing Date, except for trade payables and
receivables arising in the Ordinary Course of Business.
Section 5.10 Indemnification of Directors and Officers. Following the
Closing, the Purchaser shall cause each Company to honor its obligations, if
any, to indemnify and advance defense costs to each present and former officer
or director of such Company pursuant to its Charter Documents and shall not
permit the Charter Documents of any Company to be amended for a period of six
years in a manner which materially adversely affects the indemnification rights,
if any, of present and former directors and officers of such Company, except as
required by applicable Laws or unless such obligations are fully covered by
insurance secured by Purchaser or such former officers or directors are fully
covered under comparable provisions of the Charter Documents of Affiliates of
Purchaser, or successors in interest of any Company, in either case during such
six year period, provided that the Purchaser or any such Affiliate, as
applicable, is reasonably comparable in financial strength and credit-worthiness
to such Company.
Section 5.11. Contact with Customers and Suppliers. After the date
hereof but prior to the Closing Date, except as specifically authorized herein,
none of the Purchaser or any of its agents, Affiliates, employees, directors or
officers shall contact or communicate with any employees, customers, suppliers
or licensors of any Company, the US Business, the UK Business or the German
Business in connection with the transactions contemplated hereby except with the
prior written consent of Spirent plc, which shall not be unreasonably withheld
or delayed.
Section 5.12 Access and Investigation. Prior to the Closing, upon
reasonable notice from the Purchaser to the Sellers given in accordance with
this Agreement, the Sellers will afford to the officers, attorneys, accountants
or other authorized representatives of the Purchaser reasonable access during
normal business hours to the facilities, assets, books and records, and
management personnel of the Companies, Autronics US (to the extent relating to
the US Business), P&G plc (to the extent relating to the UK Business) Spirent
plc (with respect to the UK Lease Sites), and Spirent GmbH (to the extent
relating to the German Business), so as to afford the Purchaser a reasonable
opportunity to make, at its sole cost and expense, such additional review,
examination and investigation of the Companies, the Assets, the US Business, the
UK Business, and the German Business as the Purchaser may reasonably desire to
make; provided, however, that the Purchaser shall not be permitted such access
to the extent that the Sellers or the Companies are prohibited from granting
such access pursuant to any Law, Order or rule of any regulatory body applicable
to any Seller or any Company wherever located. Sellers shall instruct their
accountants and advisers to reasonably cooperate with the Purchaser and to
provide Purchaser with reasonable access to such accountants (including their
work papers to the extent available to the Sellers) and advisers, all at
Purchaser's cost and expense. Whether or not the Closing occurs, the Purchaser
will, and will cause each of its Affiliates and authorized representatives to,
treat in confidence and not disclose any and all documents, materials and
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other information disclosed by or on behalf of the Sellers, the Companies or any
of their respective Affiliates, whether before, during or after the course of
the negotiations leading to the execution of this Agreement or thereafter, in
accordance with that certain Confidentiality Agreement between the Sellers and
the Purchaser dated October 3, 2001 (the "Confidentiality Agreement"), provided
that if the Closing occurs, the Confidentiality Agreement shall no longer be
applicable to any such documents, materials or other information which relate to
the Companies or the Businesses, or which constitute Assets.
Section 5.13 Operation of the Businesses. Between the date of this
Agreement and the Closing, except as otherwise expressly provided in or
contemplated by this Agreement or waived or consented to by Purchaser in
writing, the Sellers shall cause the Companies to, and each of Autronics US, P&G
plc, Spirent plc (with respect to the UK Lease Sites) and Spirent GmbH shall:
A. conduct their respective Businesses only in the Ordinary
Course of Business;
B. use their commercially reasonable efforts to: (i) keep
available the services of the current officers, employees and agents of each
Company and of Autronics US (to the extent relating to the US Business), P&G plc
(to the extent relating to the UK Business) and Spirent GmbH (to the extent
relating to the German Business), and (ii) maintain the relations and good will
with suppliers, customers, landlords, creditors and others having material
business relationships with any Company, Autronics US (to the extent relating to
the US Business), P&G plc (to the extent relating to the UK Business), Spirent
plc (to the extent relating to the UK Lease Sites) and Spirent GmbH (to the
extent relating to the German Business);
X. xxxxxx with the Purchaser concerning operational and
financial matters regarding the Businesses which are of a material nature, it
being understood that, notwithstanding anything to the contrary herein, until
the Closing the Sellers and the Companies shall have sole authority to operate
the Businesses;
D. maintain all leased and owned real property comprising any
of the Assets in accordance with the Ordinary Course of Business;
E. not approve any new capital expenditure or other financial
commitment in excess of $100,000;
F. not dispose of or incur, create or assume any Lien, other
than Permitted Liens, on any individual capital asset of the Companies or the
Businesses if the greater of the book value or the fair market value of such
capital asset exceeds $100,000;
G. not incur any indebtedness for money borrowed (excluding
trade payables incurred in the Ordinary Course of Business or intercompany
borrowings) that constitutes a Liability of the Companies in excess of $100,000;
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H. not permit any Company to (1) amend its Charter Documents,
(2) issue, sell, redeem or otherwise acquire any capital stock, bonds,
debentures, notes or other securities or grant any options (including any
employee stock options), warrants or other rights entitling any Person to
require the issuance or delivery of any capital stock, bonds, debentures, notes
or other securities, or (3) declare, or set aside for payment, any dividend to
be paid subsequent to the Closing Date;
I. shall not enter into any material transaction with any
Affiliate except on commercially reasonable terms and in the Ordinary Course of
Business;
J. not grant material salary or wage increases, or change or
amend any benefit plan covering transferred employees in any way that materially
changes the amount such employees are entitled to receive under such plan other
than pursuant to existing salary and wage plans except in the Ordinary Course of
Business; and
K. not take any action or otherwise omit to take any
action which would reasonably be expected to cause a
breach of the Sellers' representations, warranties,
covenants and agreements herein set forth.
provided, however, that no provision of this Agreement (including Section
3.1(D) and this Section 5.13) shall restrict the ability of any Company,
Autronics US, P&G plc or Spirent GmbH, on or prior to the close of the Business
Day immediately preceding the Closing Date, to distribute all or any portion of
its cash, cash equivalents and intercompany accounts receivable or use all or
any portion of its cash and cash equivalents. The Sellers shall, prior to the
Closing Date transfer to any Affiliate the capital stock of, the companies
listed on Schedule 5.13.
Section 5.14 Notification. Between the date of this Agreement and the
Closing, the Sellers will promptly notify the Purchaser in writing if the
Sellers become aware of any fact or condition that causes or constitutes a
breach of any of the Sellers' representations and warranties as of the date of
this Agreement, or if the Sellers become aware of the occurrence after the date
of this Agreement of any fact or condition that would (except as expressly
required by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as of
the time of occurrence or discovery of such fact or condition. Should any such
fact or condition require any change in the Disclosure Schedule hereto if such
Disclosure Schedule were dated the date of the occurrence or discovery of any
such fact or condition, the Sellers will promptly deliver to the Purchaser a
supplement to the Disclosure Schedule (a "Disclosure Supplement") specifying
such change. No Material Supplement delivered pursuant to this Section 5.14
shall be deemed to cure any breach of any representation or warranty made in
this Agreement for the purposes of a determination by the Purchaser that the
conditions of Article VI shall have been met, but pursuant to Section 6.1(A), if
the Closing occurs, the Disclosure Schedule as so supplemented by a Material
Supplement shall be the Disclosure Schedule for all purposes under this
Agreement. A Disclosure Supplement other than a Material Supplement shall be
deemed to cure any breach of any representation or
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warranty made in this Agreement for the purposes of a determination by the
Purchaser that the conditions of Article VI shall have been met.
As used herein, the term "Material Supplement" means a Disclosure
Supplement delivered by the Sellers to the Purchaser pursuant to this Section
5.14 and which discloses a fact or condition which is reasonably likely to
result in a Material Adverse Effect and has not previously been disclosed within
the Disclosure Schedule.
Section 5.15 No Solicitation or Negotiation. The Sellers will not, nor
will they authorize any Company or any other Affiliate or any officer, director
or employee of, or any investment banker, attorney or other advisor or
representative of, the Sellers or any Company or any Affiliate to, directly or
indirectly, solicit, initiate, or encourage any inquiries or proposals from any
Person (other than the Purchaser) relating to any transaction involving the sale
of all or any part of the Shares or the Businesses, other than sales of Assets
in the Ordinary Course of Business, or any merger, consolidation, business
combination, or similar transaction involving any Company (any such transaction,
a "Competing Transaction") or participate in any discussions or negotiations
regarding, or furnish to any Person any information with respect to, any
Competing Transaction.
Section 5.16 Publicity. No press release or public announcement related
to this Agreement, or the transactions contemplated hereby, shall be issued or
made without the joint approval of Spirent plc and the Purchaser, unless
required by Law (in the reasonable opinion of counsel) or London Stock Exchange
Limited, the United Kingdom Panel on Mergers and Acquisitions, New York Stock
Exchange or US Securities and Exchange Commission or other Governmental Entity
rule or regulation, in which case Spirent plc and the Purchaser shall use
reasonable efforts to give the other the opportunity to review such press
release or announcement prior to publication and, where practicable, agree to
the form and wording of such release or announcement.
Section 5.17 Non-Competition and Non-Solicitation. Prior to the third
anniversary of the Closing Date, the Sellers shall not engage in any Competitive
Business, and the Sellers shall cause their Affiliates not to, directly or
indirectly, own, manage, operate, engage in or control, anywhere in the world,
any Competitive Business; provided that this Section 5.17 shall not prevent any
of the Sellers or any of their respective Affiliates from (i) owning, solely as
an investment, publicly traded company securities issued by a Person engaged in
a Competitive Business so long as such Seller or Affiliate does not own or
control, in the aggregate, more than 15% of any class of such securities; or
(ii) acquiring or holding any interest in, or managing, operating or
controlling, any Person engaged in Competitive Business if less than 30% of the
total revenues attributable to such Person in the 12 months prior to such
acquisition, or the commencement of the management, operation or control of such
Person by any such Seller or Affiliate, arose out of or were related to such
Competitive Business.
Prior to the third anniversary of the Closing Date, the Sellers shall
not, and the Sellers shall cause their Affiliates not to, solicit or attempt to
hire or retain any employee of Purchaser, except pursuant to a general
solicitation not aimed at the Purchaser's employees, provided this
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covenant shall not prohibit the Sellers or any Affiliate of the Sellers
from hiring any person who leaves the employment of the Purchaser not in
response to a solicitation by the Sellers or their Affiliates.
As used above, the term "Competitive Business" means each of the
following businesses: (1) the manufacture and sale of aerospace sensors and
controls hardware; and (2) the manufacture and sale of aerospace quick access
recorders, primary air data computers, crash protected flight recorders and
cockpit voice recorders; (3) the manufacture and sale of industrial sensors,
industrial joysticks, and industrial studio faders; (4) the manufacture and sale
of aerospace fire protection equipment including smoke detectors and associated
cockpit and control units; (5) the manufacture and sale of aerospace control
electronics including electronic flap controllers, data converter/concentration
units, engine overspeed detectors and sensors, torque sensors and current
detectors; and (6) the manufacture and sale of power supplies for
In-Flight-Entertainment (IFE) and military applications, but only to the extent
any such sales referred to in the foregoing clauses (1) through (6), inclusive,
are for military and commercial aircraft OEMs, aircraft operators or aircraft
suppliers; in each case as conducted as of the Closing Date by the US Business,
the UK Business and the German Business; provided, however, that the term
"Competitive Business" shall not include, in any event:
(A) the design, development or sale of software applications
focused on operational performance, safety assurance, improved
efficiency or customer service; or systems integration, implementation
and consultancy services for such performance software products;
(B) the design, development or sale of aerospace maintenance,
repair and overhaul (MRO) software packages;
(C) the design, development or sale of aerospace data
acquisition, networking and display devices;
(D) the performance by Spirent Systems Wichita, Inc. under its
contract with Gulfstream for the SSCVR, Part Number 89095-0031, and any
follow on business relating to such contract; or
(E) the distribution or supply of hardware products
manufactured by Persons which are not Affiliates of the Sellers, as
part of any of the foregoing.
If a final judgment of a court or tribunal of competent
jurisdiction determines that any term or provision contained in this Section
5.17 is invalid or unenforceable, then the parties agree that the court or
tribunal will have the power to reduce the scope, duration or geographic area of
the term or provision, to delete specific words or phrases or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision. This
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Section 5.17 will be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. This Section 5.17 is reasonable and
necessary to protect and preserve Purchaser's legitimate business interests and
the value of the Assets and to prevent any unfair advantage conferred on
Sellers.
Section 5.18 Further Assurances. At any time and from time to time,
Sellers on the one hand, and Purchaser, on the other hand, shall promptly
execute, acknowledge and deliver any other assurances or documents reasonably
requested by the other, as the case may be, and necessary for it, as the case
may be, to satisfy its respective obligations hereunder or obtain the benefits
contemplated hereby. The Sellers shall pay over to the Purchaser, as promptly as
reasonably practical, any amounts received by the Sellers from account debtors
in payment of accounts receivable arising prior to Closing and constituting
Assets.
Section 5.19 Certain Matters Involving Intellectual Property. As soon
as practicable after the Closing Date, Sellers and the Purchaser will cooperate
to take, or cause to be taken, at the Purchaser's expense, all necessary steps
to record with the appropriate United States Governmental Entities the transfer
from the Sellers or any of their Affiliates, as the case may be, to the
Purchaser or other Person designated in writing to Spirent plc at least five (5)
days prior to the Closing Date, of all Intellectual Property previously
registered or patented in the United States and identified as such on Schedule
3.1(G). As soon as practicable after the Closing Date, Sellers and the Purchaser
will cooperate to take, or cause to be taken, at the Purchaser's expense, all
necessary steps to record with the appropriate foreign Governmental Entities or
agents the transfer of all Intellectual Property previously registered or
patented in such jurisdictions and identified as such on Schedule 3.1(G) and to
otherwise record or evidence Purchaser's or its designees' rights in and to such
Intellectual Property, including the filing or amendment of any registered user
certificates, licenses, agreements or similar documents.
Section 5.20 Transition Services. Spirent plc shall provide the use of
Spirent plc's head office server for the purpose of maintaining the German
Business's global address book for a period of up to 1 month from the Closing
Date and at no cost to the Purchaser or the German Business. Spirent GmbH shall
provide, with respect to the German Business, such accounting, administrative
and human resource services as were provided prior to the Closing Date for a
period of up to six months from the Closing Date at a cost to the Purchaser of
$4,500 per month. The cost of such services will be paid to Spirent GmbH by the
Purchaser within 14 days of receipt from Spirent GmbH of the appropriate
invoice. For the avoidance of doubt Spirent GmbH shall not be required to assist
the Purchaser in respect of the hiring of any further employees for the German
Business in the period referred to above. The Purchaser shall use its best
commercially practicable efforts to replace the services provided by the Spirent
plc and Spirent GmbH with its own arrangements as soon as possible after the
Closing Date. In addition, the Purchaser shall cause the Companies to continue
to host the internet links for Spirent plc's Affiliates to the Companies'
current aerospace wide area network (WAN), at no charge, for three months
following the Closing.
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ARTICLE VI
Conditions Precedent to the Purchaser's Obligation to Close
The Purchaser's obligation to purchase the Shares, the US
Business, the UK Business and the German Business, and to take the other actions
required to be taken by the Purchaser at the Closing, is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by the Purchaser, in whole or in part):
Section 6.1 Accuracy of Representations. The Sellers'
representations and warranties in this Agreement, taken as a whole, must have
been materially accurate as of the date of this Agreement, and must have been
materially accurate as of the Closing Date as if made on the Closing Date
(provided that with respect to any specific representations and warranties which
are qualified by materiality or Material Adverse Effect, the term "materially
accurate" as used in this sentence shall be deemed to be interpreted as "fully
accurate"); and the Sellers' representation and warranty in Section 3.1(B)(ii)
must have been fully accurate as of the date of this Agreement, and must have
been fully accurate as of the Closing Date as if made on the Closing Date; in
each case giving effect to each Disclosure Supplement which is not a Material
Supplement, provided that if the Closing occurs, the Disclosure Schedule as so
supplemented by a Material Supplement shall be the Disclosure Schedule for all
purposes under this Agreement.
Section 6.2 Sellers' Performance. Each of the covenants and obligations
that the Sellers are required to perform or to comply with pursuant to this
Agreement at or prior to the Closing must have been duly performed and complied
with in all material respects, and the Sellers must have executed and delivered
each of the documents required to be delivered by them, except to the extent
that any such failure to so perform, comply or deliver (other than for the
obligation to execute and deliver the Additional Transfer Documents and
Ancillary Agreements) does not (a) result in a Material Adverse Effect or (b)
substantially impair the Sellers' ability to satisfy their obligations hereunder
and under the Additional Transfer Documents and the Ancillary Agreements.
Section 6.3 No Injunction. Since the date of this Agreement, there must
not be in effect any injunction or other Order issued by a court of competent
jurisdiction restraining or prohibiting the consummation of the transactions
contemplated by this Agreement, or in any Additional Transfer Document or any
Ancillary Agreement, including the Transfer of the Shares, the US Business, the
UK Business and the German Business (collectively, the "Contemplated
Transactions").
Section 6.4 Consents. So long as the Purchaser shall have satisfied its
respective reasonable efforts promptly to obtain the consents listed on Schedule
6.4 pursuant to Section 5.1(B)(2), each such consent must have been obtained and
must be in full force and effect; provided, however, that, with respect to any
such consent, other than the consents required for the transfer of the (i) UK
Lease Site Leases; and (ii) and the Autronics US lease; as identified on said
Schedule, this condition shall be deemed to have been satisfied with respect to
such consent even if such consent has not been so obtained (or is not in full
force and effect), provided that the
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Sellers have complied with their obligations under Section 5.1(B)(2) with
respect to the relevant Commitment, claim or other Asset intended to be assigned
to Purchaser whose Transfer requires such consent; provided further, however,
that such condition shall be deemed to have been satisfied with respect to such
consent pursuant to the foregoing proviso of this Section 6.4 if the Sellers
elect to agree to indemnify, from and after the Closing, the Purchaser and the
Companies from and against all Liabilities, costs and expenses incurred by the
Purchaser or the Companies as a result of the Seller's failure to obtain such
consent (or to keep such consent in full force and effect). Such indemnification
obligation, if so elected, is referred to as the "Sellers' Consent
Indemnification."
Section 6.5 No Prohibition. The proposed Transfer of the Shares, the US
Business, the UK Business and the German Business contemplated hereunder will
not materially contravene, or materially conflict with, or result in a material
violation of any applicable Law or Order, provided that the Purchaser shall have
used commercially reasonable efforts with the Sellers to restructure such
Transfer in a manner which will not so contravene, conflict with or violate such
Law or Order, provided that the foregoing proviso shall not obligate the
Purchaser to agree to any such restructuring to the extent materially altering
the responsibilities, obligations or Liabilities of the Purchaser or the value
of the acquired Businesses or Assets, as determined by the Purchaser in the
Purchaser's reasonable discretion.
ARTICLE VII
Conditions Precedent to the Sellers' Obligation to Close
The Sellers' obligation to sell the Shares, the US Business, the UK
Business and the German Business, and to take the other actions required to be
taken by the Sellers at the Closing, is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by the Sellers, in whole or in part):
Section 7.1 Accuracy of Representations. The Purchaser's
representations and warranties in this Agreement, taken as a whole, must have
been materially accurate as of the date of this Agreement and must be materially
accurate as of the Closing Date as if made on the Closing Date; and the
Purchaser's representation and warranty in Section 4.1(B)(ii) must have been
fully accurate as of the date of this Agreement, and must have been fully
accurate as of the Closing Date as if made on the Closing Date.
Section 7.2 Purchaser's Performance. Each of the covenants and
obligations that the Purchaser is required to perform or to comply with pursuant
to this Agreement at or prior to the Closing must have been duly performed and
complied with in all material respects, and the Purchaser must have delivered
each of the documents required to be delivered by it, except to the extent that
any such failure to so perform, comply or deliver does not (a) result in a
material adverse effect on the Purchaser or (b) substantially impair the
Purchaser's ability to satisfy its obligations hereunder and under the
Additional Transfer Documents and Ancillary Agreements.
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Section 7.3 No Injunction. There shall not be in effect any injunction
or other Order issued by a court of competent jurisdiction restraining or
prohibiting the consummation of the Contemplated Transactions.
Section 7.4 No Prohibition. The proposed Transfer of the Shares, the US
Business, the UK Business and the German Business contemplated hereunder will
not materially contravene, or materially conflict with, or result in a material
violation of any applicable Law or Order, provided that the Sellers shall have
used commercially reasonable efforts with the Purchaser to restructure such
Transfer in a manner which will not so contravene, conflict with or violate such
Law or Order, provided that the foregoing proviso shall not obligate the Sellers
to agree to any such restructuring to the extent materially altering the
responsibilities, obligations or Liabilities of the Sellers, as determined by
the Sellers in the Sellers' reasonable discretion.
ARTICLE VIII
Termination Events
Section 8.1 Termination Events. This Agreement may, by notice given
prior to or at the Closing, be terminated:
A. by mutual consent of the Purchaser and the Sellers;
B. (i) by the Purchaser, if any of the conditions in Article
VI has not been satisfied as of the Closing or if satisfaction of any such
condition is or becomes impossible (other than through the failure of the
Purchaser to comply with its obligations under this Agreement) and the Purchaser
has not waived such condition at or before the Closing; or (ii) by the Sellers,
if any of the conditions in Article VII has not been satisfied as of the Closing
or if satisfaction of any such condition is or becomes impossible (other than
through the failure of the Sellers to comply with their obligations under this
Agreement) and the Sellers have not waived such condition at or before the
Closing; or
C. by either the Purchaser or the Sellers if the Closing has
not occurred (other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligations under this Agreement) on or
before July 1, 2002 or such later date as the parties may agree upon.
Section 8.2 Procedures for Termination. In the event of termination by
the Sellers or the Purchaser pursuant to Section 8.1, written notice thereof
shall forthwith be given to the other party in accordance with Section 9.8, and
the Contemplated Transactions shall be terminated without further action by any
party. If the transactions contemplated by this Agreement are terminated as
provided herein, the Purchaser shall return to the Sellers all documents and
other materials received from the Sellers, the Companies and their respective
Affiliates, representatives and agents relating to the transactions contemplated
hereby, whether obtained before or after the execution hereof, along with all
copies of such documents and other materials; and the Purchaser shall return to
the Sellers or destroy all materials developed by the Purchaser
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or any of its Affiliates, representatives or agents from any such documents or
other materials. All confidential information received by the Purchaser with
respect to the Sellers and their respective Affiliates shall be treated in
accordance with the terms of the Confidentiality Agreement, which, subject to
the last sentence of Section 5.12, shall remain in full force and effect
notwithstanding the termination of this Agreement.
Section 8.3 Effect of Termination. If this Agreement is terminated
pursuant to Section 8.1, all further obligations of the parties under this
Agreement will terminate, except that the obligations in Section 5.16
(Publicity) and Section 9.7 (Expenses) of this Agreement, and the
Confidentiality Agreement, will survive notwithstanding such termination;
provided, however, that nothing in this Section 8.3 shall be deemed to adversely
affect any terminating party's right to pursue all legal remedies available to
such party or to release any party from any liability for any breach of this
Agreement prior to such termination, which remedies and liability shall survive
such termination; provided further, however, that if the Purchaser terminates
this Agreement under Section 8.1(b)(i) on the basis that the condition in
Section 6.1 has failed to have been satisfied given the facts or matters
disclosed in a Material Supplement, then such termination shall be Purchaser's
sole remedy, and neither the Sellers nor the Purchaser shall have any further
liability or obligation, with respect to the same.
ARTICLE IX
Miscellaneous
Section 9.1 Entire Agreement. This Agreement (including the Disclosure
Schedule, the Additional Transfer Documents and the Ancillary Agreements)
supersedes any other agreement, whether written or oral, that may have been made
or entered into by any party or any of their respective Affiliates (or by any
director, officer or representative thereof) with respect to the subject matter
hereof. This Agreement (including the Disclosure Schedule, the Additional
Transfer Documents and the Ancillary Agreements) constitutes the entire
agreement of the parties hereto with respect to the matters provided for herein,
and there are no agreements or commitments by or among such parties or their
Affiliates with respect to the subject matter hereof except as expressly set
forth in this Agreement, the Disclosure Schedule, the Additional Transfer
Documents and the Ancillary Agreements.
Section 9.2 Amendments. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by the Purchaser and the Sellers.
Section 9.3 Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. This Agreement may not be assigned by any
party without the prior written consent of the other parties; provided, however,
that Purchaser may assign any or all of its rights and obligations under this
Agreement , the Additional Transfer Documents or any Ancillary Agreement to any
direct or indirect wholly owned subsidiary, limited partnership, limited
liability company or
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similar business entity without the consent of the other parties hereto but such
assignment shall not relieve the Purchaser of any of its obligations hereunder.
Section 9.4 Counterparts. This Agreement may be executed and delivered
in two or more counterparts, each of which shall be deemed to be an original for
all purposes and all of which together shall constitute one and the same
instrument.
Section 9.5 Headings and Section References. The headings of the
sections and paragraphs of this Agreement are included for convenience only and
are not intended to be a part of, or to affect the meaning or interpretation of,
this Agreement. All Article and section references herein, unless otherwise
clearly indicated, are to Articles and sections within this Agreement.
Section 9.6 Waiver. No failure or delay by either the Purchaser or the
Sellers in exercising any right, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies otherwise provided by law.
Section 9.7 Expenses. Except as otherwise specifically provided for in
this Agreement, any Additional Transfer Document or any Ancillary Agreement, the
Sellers and the Purchaser shall each pay all costs and expenses incurred by it
or on its behalf in connection with this Agreement and the Contemplated
Transactions, including fees and expenses of its own financial consultants,
accountants and counsel.
Section 9.8 Notices. Any notice, request, instruction or other document
to be given under this Agreement by any party hereto to any other party shall be
in writing and delivered personally or sent by an internationally recognized
overnight courier service or by registered or certified mail, postage prepaid:
If to any Seller, or to any Company prior to the Closing, to such party
c/o the Seller Agent, at the following address:
Spirent International Incorporated
0000 Xxxxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxx Xxxx 00000
XXX
Attn: President
with copies to each of :
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Spirent plc
Spirent House
Xxxxxxx Business Quarter
Xxxxxxx Xxx
Xxxxxxx, Xxxx Xxxxxx
XX00 0XX
Xxxxxx Xxxxxxx
Attn: General Counsel;
and
Goulston & Storrs, P.C.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000-0000
XXX
Attn: Xxxxxx X. Xxxxx, Esq.
If to the Purchaser, or to any Company following the Closing, to:
Xxxxxxx-Xxxxxx Flight Systems, Inc.
0000 Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx, X.X. 00000-0000
Attn: President
with a copy to:
Xxxxxxx-Xxxxxx Corporation
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Lyndhurst, N.J. 07171
Attn: General Counsel
or at such other address for a party or as shall be specified by like notice.
Any notice that is delivered personally in the manner provided herein shall be
deemed to have been duly given to the Person to which it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice that is
addressed as provided herein and mailed by registered or certified mail shall be
conclusively presumed to have been duly given to the Person to which it is
addressed at the close of business, local time of such party, on the fifth
calendar day after the day it is so placed in the mail. Any notice that is
addressed as provided herein and sent by an internationally recognized overnight
courier service shall be conclusively presumed to have been duly given to the
Person to which it is addressed at the close of business, local time of such
Person, on the next business day following its deposit with such courier service
for next day delivery.
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Section 9.9 Governing Law. Except as otherwise provided (a) with
respect to the Transfer of the UK Business pursuant to the provisions of the UK
Business Transfer Agreement; and (b) with respect to the Transfer of the German
Business pursuant to the provisions of the German Business Transfer Agreement;
this Agreement and the legal relations among the parties hereto shall be
governed and construed in accordance with the substantive Laws of the State of
New York, USA, without giving effect to the principles of conflict of laws
thereof. Without limiting the generality of the foregoing, all claims for
indemnification under Section 9.14 of this Agreement shall be governed by such
Laws as aforesaid, even if any such claim for indemnification relates to the UK
Business or the German Business.
Section 9.10 Severability. If any provisions hereof shall be held by
any court of competent jurisdiction to be illegal, void, or unenforceable, such
provisions shall be of no force and effect, but the illegality or
unenforceability shall have no effect upon, and shall not impair the
enforceability of, any other provision of this Agreement.
Section 9.11 Knowledge. Whenever "to its knowledge," "known" "aware,"
"awareness," or a similar phrase is used with respect to any Seller to qualify a
representation or warranty of such Seller, the "knowledge" or "awareness" so
referred to shall be deemed to be the actual and conscious (and not
constructive) knowledge of the Named Individuals. As used above, the term "Named
Individuals" means those individuals listed on Schedule 9.11. Whenever "to its
knowledge," "known" or a similar phrase is used with respect to the Purchaser to
qualify a representation or warranty of the Purchaser, or as used in Section
4.1(F) and Section 9.14(C)(iii)(c), the "knowledge" so referred to shall be
deemed to be the actual and conscious (and not constructive) knowledge of Xxxxx
Xxxxx, Xxxxxxx Xxxxxx, Xxxxxx Xxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xx
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxxx, Xxxxxxxx Xxxxxxx, and Xxxxxx Xxxxxx;
provided, however, that for purposes of Section 4.1(F) and Section
9.14(C)(iii)(c), such "knowledge" shall be deemed to exclude the knowledge of
any of the matters set forth in the "data room" made available, at the offices
of Goulston & Storrs. P.C., to the Purchaser in connection with this Agreement
or in any statement, representation or warranty or other information contained
in any offering memorandum, management presentation or any other document or
material provided by the Sellers or their representatives or agents to the
Purchaser or its Affiliates in connection with this Agreement.
Section 9.12 Rights of Third Parties. Nothing expressed or implied in
this Agreement is intended or will be construed to confer upon or give any
Person other than the parties hereto and their respective successors and
permitted assigns any rights or remedies under or by reason of this Agreement or
any transaction contemplated hereby.
Section 9.13 Consent to Jurisdiction and Service of Process. Except as
otherwise provided with respect to the Transfer of the UK Business pursuant to
the provisions of the UK Business Transfer Agreement and with respect to the
Transfer of the German Business pursuant to the provisions of the German UK
Transfer Agreement, the Purchaser and each of the Sellers hereby irrevocably
consents that any legal action or proceeding against it under, arising out of,
or in any manner relating to this Agreement or any other agreement, document or
instrument arising out of or executed in connection with this Agreement shall be
brought only in a state or federal
-54-
court of competent jurisdiction located within the Southern District of New York
and in all appellate courts associated therewith. Each party by the execution
and delivery of this Agreement expressly and irrevocably consents and submits to
the personal jurisdiction of any of such courts in any such action or
proceeding. Each party hereby expressly and irrevocably waives any claim or
defense in any action or proceeding based on any alleged lack of personal
jurisdiction, improper venue, forum non conveniens, or any similar basis.
Section 9.14 Indemnification; Survival of Representations and
Warranties.
A. Indemnification by Sellers. Each Seller shall jointly and
severally indemnify, defend and hold harmless the Purchaser and its Affiliates
and their respective employees, officers, directors, stockholders, partners and
representatives from and against any losses, assessments, Liabilities, claims,
damages, costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by such indemnified party as the result of:
(1) any misrepresentation in, breach of or failure to comply
with, any of the representations, warranties, covenants or agreements of the
Sellers contained in this Agreement or any Additional Transfer Document or
Ancillary Agreement;
(2) the Dorset Environmental Matter (as defined below);
(3) any failure by the Sellers or their Affiliates to make the
minimum contributions to the Keystone Plans as required by Title IV of ERISA or
Section 412 of the Code;
(4) any and all debts payable by the UK Employer Companies or
either of them to the UK Company Plans or either of them which arise under
section 75 of the United Kingdom Pensions Xxx 0000;
(5) any and all claims for pensions or other relevant benefits
(as defined in section 612(1) of the United Kingdom Income & Corporation Taxes
Act 1988) in respect of any current or former employees of the Xxxxx & Xxxxx
group of companies who were members of the Xxxxx & Xxxxx International Plc &
Associated Companies Pension & Assurance Scheme or who otherwise claim to be
entitled to benefits as set out in clause 9 of the main terms and conditions of
employment issued in February 1986 by Xxxxx & Xxxxx Transducers Limited insofar
as such claims relate to a promise made and service prior to Closing and insofar
as such pension or other relevant benefits will not be paid from either or both
of the UK Company Plans; or
(6) any claims in respect of the exclusion prior to Closing of
UK Employee Companies from membership of the UK Company Plans for service prior
to October 1991 on the grounds of their part time employee status and for
service between October 1991 and 28 December 1994 on the grounds of earnings
less than the National Insurance lower earnings limit in breach of article 141
of the Treaty of Rome or of any statute under the laws of the United Kingdom
prior to Closing;
-56-
and all such losses, assessments, Liabilities, claims, damages, costs and
expenses are referred to hereinafter as the "Purchaser's Losses."
As used herein, the term "Dorset Environmental Matter" means the
release or alleged release of Hazardous Material on the car park at the 0
Xxxxxxxx Xxxx, Xxxxxxxxxxxx, XX facility on Monday 3 December 2001, which
resulted from damage to a waste tank valve caused in connection with the removal
by Linkwaste of waste varnish from that facility.
B. Indemnification by the Purchaser. The Purchaser shall
indemnify, defend and hold harmless each Seller and its Affiliates and their
respective employees, officers, directors, stockholders, partners and
representatives from and against any losses, assessments, Liabilities, claims,
damages, costs and expenses (including reasonable attorneys' fees and
disbursements) incurred by such indemnified party as the result of:
(1) any misrepresentation in, breach of or failure to comply
with, any of the representations, warranties, covenants or agreements of the
Purchaser contained in this Agreement or any Additional Transfer Document or
Ancillary Agreement ; or
(2) without limiting the generality of the foregoing, the
failure or alleged failure of the Companies to pay, discharge and perform, from
and after Closing, all Liabilities of the Companies, in accordance with their
respective terms, or the failure or alleged failure of the Purchaser to (a) pay,
discharge and perform all US Liabilities, UK Liabilities and German Liabilities
in accordance with their respective terms, (b) to perform its obligations
pursuant to Section 5.1 of the UK Business Transfer Agreement, Section 6.6 of
the UK Business Transfer Agreement, Section 7.1 of the UK Business Transfer
Agreement and Section 7.2 of the UK Business Transfer Agreement (the "Purchaser
Payment Indemnification");
(3) any failure or alleged failure by the Purchaser to cause
the Companies, the US Business, the UK Business and the German Business to
continue the employment of all employees (including with respect to US
employees, employees taking advantage of the Family and Medical Leave Act of
1993) of the Companies, the US Business, the UK Business and the German Business
employed at Closing, on comparable terms and conditions to those applicable to
such employment immediately prior to the Closing, and otherwise in accordance
with all applicable Laws and other obligations (the "Purchaser Employment
Indemnification");
and all such losses, assessments, Liabilities, claims, damages, costs and
expenses are referred to hereinafter as the "Sellers' Losses."
C. Survival; Limitations. Notwithstanding anything else in
this Agreement or any Additional Transfer Document or Ancillary Agreement to the
contrary:
(i) Except as set forth in Section 9.14(C)(vi), the
representations and warranties of the Seller and the Purchaser, respectively,
under this Agreement and any Additional Transfer Document or Ancillary
Agreement, and any indemnification obligations
-56-
arising therefrom, shall survive the Closing and shall expire and terminate on
the date which is 18 months following the Closing Date; provided, however, that
the Sellers' representations and warranties in Section 3.1(B)(ii), and the
Purchaser's representations and warranties in Section 4.1(B)(ii), shall expire
and terminate upon the Closing. The covenants of the parties shall expire in
accordance with their terms, and the indemnification obligations of the
Purchaser or the Seller, respectively, on account of the Special Indemnification
Obligations (as defined in Section 9.14(C)(ii), below) shall continue in full
force and effect following Closing (provided that the time limit applicable to
indemnification obligations relating to Section 3.1(N) , the Sellers' Tax
Payment Covenant, the Purchaser's Tax Payment Covenant and Article IV of the UK
Business Transfer Agreement, as the case may be, shall be as set forth in
Section 9.14(C)(vi)), in each case subject to the other limitations of this
Section 9.14.
(ii) The Sellers shall not have any indemnification
obligations under Section 9.14(A) or otherwise under this Agreement, and the
Purchaser shall not have any indemnification obligations under Section 9.14(B)
or otherwise under this Agreement: (a) except to the full extent that the
Purchaser's Losses, or the Sellers' Losses, respectively, with respect to any
individual claim or any related claims arising from the same or substantially
similar factual circumstances, exceed $15,000 (a "Material Claim"), in which
event such indemnification shall be required to the extent of such Purchaser's
Losses or the Sellers' Losses, respectively, including such $15,000 amount
(subject also to the limitations provided in succeeding clauses (b) and (c) of
this Section 9.14(C)(ii)); (b) except to the extent that the Purchaser's Losses,
or the Sellers' Losses, respectively, with respect to all such Material Claims
in the aggregate exceed $500,000 (the "Indemnification Threshold"), in which
event such indemnification shall be required only to the full extent of the
Purchaser's Losses or the Sellers' Losses, respectively, in excess of the
Indemnification Threshold (subject also to the preceding clause (a) and the
succeeding clause (c) of this Section 9.14(C)(ii)); and (c) to the extent that
the Purchaser's Losses in the aggregate, or the Sellers' Losses in the
aggregate, respectively, exceed $15,000,000 (the "Cap"), in which event such
indemnification shall be required only to the extent of the Purchaser's Losses
or the Sellers' Losses, respectively, below the Cap (subject also to the
preceding clauses (a) and (b) of this Section 9.14(C)(ii)); provided, however
that neither the limitation to Material Claims set forth in clause (a), above,
nor the Basket nor the Cap, shall apply to:
(1) the Seller's indemnification obligations
with respect to the Dorset Environmental Matter pursuant to Section
9.14(A)(2);
(2) the Sellers' Consent Indemnification, if
applicable under Section 6.4;
(3) the Sellers' indemnification obligations
with respect to the Keystone Plans pursuant to Section 9.14(A)(3);
(4) the Sellers' indemnification obligations
pursuant to Section 9.14(A)(4), Section 9.14(A)(5) and Section
9.14(A)(6);
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(5) the Sellers' indemnification obligations
with respect to its covenants or agreements in Section 5.2(P) and
Section 5.4(B),
(6) the Sellers' indemnification obligations
with respect to its covenants or agreements in Section 5.6(E), Section
5.6(F) and Section 5.6(G);
(7) the Purchaser's indemnification
obligations with respect to the Purchaser Payment Indemnification
pursuant to Section 9.14(B)(2)
(8) the Purchaser's indemnification
obligations with respect to the Purchaser Employment Indemnification
pursuant to Section 9.14(B)(3);
(9) the Purchaser's indemnification
obligations with respect to its agreements and covenants in Section
5.1(B) of this Agreement and Section 6.4 of the UK Business Transfer
Agreement;
(10) the Purchaser's indemnification
obligations with respect to its covenants or agreements under Section
8.2 of the UK Business Transfer Agreement;
(11) the Purchaser's indemnification
obligations with respect to its covenants or agreements under Section
10.1 of the UK Business Transfer Agreement and Section 10.2 of the UK
Business Transfer Agreement; and
(12) the Purchaser's indemnification
obligations with respect to its covenants or agreements in Section
5.2(N), Section 5.2 (Q), Section 5.4(A), Section 5.4(B) and Section
5.6(D), and in the last sentence of Section 5.2(G), and in Article 4
(Tax Provisions) of the UK Business Transfer Agreement.
The indemnification obligations which are described in the
foregoing clauses (1) through (12), inclusive, are referred to as the
"Special Indemnification Obligations."
(iii) (a) With respect to any matter for which
indemnification has been provided hereunder, the Indemnitee (as defined below)
hereby covenants and agrees to use all commercially reasonable efforts to
collect amounts payable to the Indemnitee under any applicable insurance policy
of the Indemnitee, and any such amounts so paid to the Indemnitee shall reduce
the indemnification obligations of the Indemnitor (as defined below) with
respect to such matters.
(b) The amount of Sellers' Losses or
Purchaser's Losses shall be calculated taking into account (and reducing such
Sellers' Losses or Purchaser's Losses to reflect) the Tax benefits, if any,
inuring to any such Indemnitee, on account of such Indemnitee's incurring the
losses, assessments, Liabilities, claims, damages, costs or expenses (including
reasonable attorneys' fees and disbursements) giving rise to such Sellers'
Losses or Purchaser's
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Losses, .respectively; provided that such Tax benefits, if any, shall be as
reasonably determined by the Indemnitee.
(c) The Purchaser shall not be entitled to
make a claim for indemnification under this Section 9.14 for any breach by any
Seller of any covenant, representation or warranty set forth in this Agreement
if the Purchaser had actual knowledge of such breach prior to or at the Closing;
provided that this 9.14(C)(iii)(c) shall not apply to the Special
Indemnification Obligations.
(iv) In no event shall Sellers' Losses or Purchaser's
Losses, as the case may be, include amounts arising from consequential, special,
exemplary, or punitive damages; provided that with respect to the Special
Indemnification Obligations only, Sellers' Losses or Purchaser's Losses, as the
case may be, on account of such Special Indemnification Obligations may include
amounts arising from consequential damages.
(v) In no event shall this Section 9.14 require
duplicative payments or indemnities by the Sellers (in the case of Purchaser's
Losses) or the Purchaser (in the case of Sellers' Losses).
(vi) No claim for indemnification by the Purchaser on
account of the Sellers' breach of the Sellers' Tax Payment Covenant or of
Section 3.1(N), and no claim for indemnification by the Sellers on account of
the Purchaser's breach of the Purchaser's Tax Payment Covenant, may be made
after the 60th day following the expiration of the applicable statutes of
limitations with respect to the Taxes in question, giving effect to any
extension thereof, provided that in relation to any obligation of the Sellers
hereunder in respect of UK Tax, such obligation shall remain in force for a
period of six (6) years from the end of the accounting period in which Closing
occurred, and if the UK, US or German tax authorities allege fraud or negligence
in the preparation of a Tax Return there shall be no time limit on the Sellers'
obligations with respect to the Sellers' Tax Payment Covenant or Section 3.1(N).
(vii) The Sellers shall have no liability under this
Agreement (including under Section 3.1(N), Section 5.2 and Section 9.14(A)) in
relation to any Liability or matter to the extent that: (a) such matter or
Liability was included in the determination of Closing Net Worth or falls within
one of the categories of assets or liabilities to be included in Closing Net
Worth; or (b) such matter or Liability arises by reference to an event occurring
on or prior to December 31, 2001 and an amount is provided for such matter or
Liability in the Financial Statements for the year ending on December 31, 2001,
provided the limitation on such liability shall be restricted solely to the
amount so provided in such Financial Statements; or (c) such matter or Liability
arises after December 31, 2001 and in the Ordinary Course of the Businesses; or
(d) such matter or Liability has been discharged prior to Closing (provided that
this clause (d) shall not apply to the extent such discharge would reasonably be
expected to result in a Material Adverse Effect or otherwise materially impairs
the future operations of the Businesses); provided that the foregoing clauses
(b) and (c) of this 9.14(C)(vii) shall not apply to the Special Indemnification
Obligations.
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(viii) No Indemnitor (as defined below) shall have
any indemnification obligations with respect to the indemnification obligations
described in clauses (1), (2), (3), (4), (6), (8), and (9) of Section
9.14(C)(ii) except to the extent that the Purchaser's Losses or Seller's Losses,
as the case may be, of the Indemnitee (as defined below) with respect thereto
arise as the result of a claim asserted by a third party (including a
Governmental Entity) which is not the Indemnitee or an Affiliate of the
Indemnitee (and which claim does not result from the actions of the Indemnitee
or such Affiliate, and in this regard each of the Sellers and the Purchaser, as
Indemnitee, agrees that neither it nor its Affiliates will take any actions
reasonably likely to result in any such third party claim). For purposes of the
foregoing in this Section 9.14(C)(viii), the term "Affiliate" shall not include
any officer, director or employee acting in their individual capacities.
(ix) The parties acknowledge that the limitations set
forth in the preceding clauses (i), (ii), (iii), (iv), (v), (vi), (vii), and
(viii) of this Section 9.14(C) are not mutually exclusive, but rather are
separate and independent limitations, and that each and all such limitations
may, alone or together, apply to a party's indemnification obligations in
accordance with their respective terms.
D. Notwithstanding anything herein to the contrary, each
party's sole and exclusive remedy against any other party for any breach of a
representation, warranty, covenant or other obligation made in or imposed by
this Agreement or any Additional Transfer Document, or otherwise in connection
with the Transfer of the Shares, the US Business, the UK Business or the German
Business or the other transactions contemplated hereunder or under the
Additional Transfer Documents shall be a claim for indemnification under this
Section 9.14, subject to all of the limitations of this Section 9.14, including
under Section 9.14(C).
E. Procedures.
(i) In the event that any Legal Proceeding shall be
instituted with respect to which indemnification may be sought by one party
hereto from another party under the provisions of this Section 9.14, the party
seeking indemnification ("Indemnitee") shall, promptly after acquiring knowledge
of such Legal Proceeding, cause written notice in reasonable detail of such
Legal Proceeding which is covered by this indemnification to be forwarded to the
other party from which indemnification is being sought ("Indemnitor"), provided,
however, the failure to notify the Indemnitor will not relieve the Indemnitor of
any liability it may have to indemnify the Indemnitee except to the extent that
the Indemnitor's defense of such action, or any of the Indemnitor's rights with
respect to the same, including any rights under insurance or against any third
parties, is actually prejudiced or impaired by the Indemnitee's failure to give
such notice.
(ii) In the event of the initiation of any such Legal
Proceeding against an Indemnitee, the Indemnitor shall have the absolute right
after the receipt of the notice described iI Section 9.14(E)(i), at its option
and at its own expense, to be represented by counsel of its choice, and (subject
to Section 9.14(E)(iii)) to defend against, negotiate, settle or otherwise deal
with any Legal Proceeding or demand that relates to any Purchaser's Losses or
Sellers' Losses, as the case may be, indemnified against hereunder, and, in such
event, the Indemnitee
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will reasonably cooperate with the Indemnitor and its representatives in
connection with such defense, negotiation, settlement or dealings; provided,
however, that the Indemnitee may directly participate in any such Legal
Proceeding so defended with counsel of its choice at its own expense.
(iii) Without the prior written consent of the
Indemnitee, which shall not be unreasonably withheld, the Indemnitor will not
enter into any settlement of any third party claim which would lead to Liability
or create any financial or other obligation on the part of the Indemnitee which
is not paid or reimbursed in full by the Indemnitor on account of its
indemnification obligation hereunder; provided, however, notwithstanding
anything herein provided to the contrary, Indemnitee may refuse to consent to a
settlement which imposes continuing obligations on Indemnitee or involves any
non-monetary relief, does not result in a complete release of Indemnitee from
any and all Liability or involves a finding or admission of any violation of
Legal Requirements or any violation of the rights of any Person by Indemnitee.
If a firm offer is made to settle a third party claim without leading to
Liability or the creation of a financial or other obligation on the part of the
Indemnitee for which the Indemnitee is not entitled to indemnification hereunder
and the Indemnitor desires to accept and agree to such offer, the Indemnitor
will give written notice to the Indemnitee to that effect. If the Indemnitee
notifies the Indemnitor that it does not consent to such firm offer within ten
(10) Business Days after its receipt of such notice from the Indemnitor, the
Indemnitee may continue to contest or defend such third party claim and, in such
event, the maximum Liability of the Indemnitor as to such third party claim will
not exceed the amount of such settlement offer, plus the Purchaser's Losses or
Sellers' Losses, as the case may be, reasonably paid or incurred by the
Indemnitee through the end of such 10-Business Day period.
(iv) After any final judgment or award shall have
been rendered by a Governmental Entity of competent jurisdiction, and the time
in which to appeal therefrom has expired, or a settlement shall have been
consummated, or the Indemnitee and the Indemnitor shall have arrived at a
mutually binding agreement with respect to each separate matter alleged to be
indemnified against by the Indemnitor hereunder, the Indemnitee shall forward to
the Indemnitor notice of any sums due and owing with respect to such matter, and
the Indemnitor shall pay all of the sums so owing to the Indemnitee by wire
transfer or certified or bank cashier's check within thirty (30) days after the
date of such notice.
(v) A claim for indemnification for any matter not
involving a third party claim may be asserted by notice to the party from whom
indemnification is sought.
Section 9.15 Seller Agent. Each of the Sellers does hereby irrevocably
appoint SII as its agent and attorney-in-fact to act on behalf of such Seller
with respect to the sale and transfer of the Shares, the Assets, the US
Business, the UK Business and the German Business hereunder, to act on behalf of
each Seller in any litigation or arbitration involving this Agreement or the
transactions contemplated hereby, and to act on behalf of each Seller for
purposes of any and all communications with the Purchaser, and SII hereby
accepts such appointment. The Purchaser shall be entitled to rely without
inquiry on any actions taken and any notices and communications given by SII on
behalf of any such Seller as being from such Seller directly.
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Section 9.16. Certain Definitions and Interpretative Matters
A. Definitions. As used herein, the following terms have the
meanings set forth as follows:
(1) "Affiliate" means, with respect to any Person, any other
Person controlling, controlled by, or under common control
with, such first Person.
(2) "Assets" means, with respect to any Company, the
properties and assets of such Company; and, with respect to
the US Business, the UK Business and the German Business, the
US Assets, the UK Assets and the German Assets, respectively,
but excluding, in any event, the Excluded Business Assets.
(3) "Companies" means, collectively: P&G Controls US; P&G
Controls UK; and P&G Aerospace UK the term "Company" means
each of the foregoing individually.
(4) "Disclosure Schedule" means the Disclosure Schedule
attached hereto, which Disclosure Schedule is incorporated
herein and made a part hereof, fully as if the same were
herein set forth in its entirety.
(5) "Excluded Business Assets" means, collectively (a) the
"Excluded Assets" as defined in the US Business Transfer
Agreement and the "Excluded Assets" as defined in the UK
Business Transfer Agreement; (b) any intercompany accounts or
loans described in Section 5.9, and any intercompany
arrangements described on Schedule 3.1(P) (other than the four
Commitments described on Part C of such Schedule); (c) any
insurance policies relating to the Businesses; (d) up to
$100,000 in fixed assets utilized by the persons identified in
Section 5.6(E) in connection with their employment; and the
employment arrangements with such persons described in said
section and (e) those other assets set forth on Schedule
9.16(A)(5).
(6) "GAAP" means United Kingdom generally accepted accounting
principles consistently applied with prior periods.
(7) "Laws" means any foreign or domestic, federal, state,
provincial, territorial, county or local constitution,
statute, law, principle of common law, ordinance, rule,
regulation, treaty or court or administrative order, decree,
judgment or ruling.
(8) "Legal Proceeding" means any claim, action, suit,
proceeding or investigation before any Governmental Entity,
whether brought, initiated, asserted or maintained by a
Governmental Entity or any other Person.
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(9) "Liabilities" means all liabilities, claims, obligations,
expenses or damages, whether known or unknown, fixed or
contingent.
(10) "Material Adverse Effect" means a material adverse effect
on the business and assets of any Company, the US Business,
the UK Business and the German Business, in each case taken as
whole, excluding any such effect resulting from the
transactions contemplated hereby or relating to general
economic conditions.
(11) "Person" means any individual, person, corporation,
trust, partnership, limited liability company, unincorporated
association, joint venture, Governmental Entity or other
entity of any kind.
B. Cross References. The following defined terms are defined
in the respective Sections of this Agreement as set forth below:
Table of Defined Terms
-------------------------------------------------------------------------------------------
Term Section Defined In
-------------------------------------------------------------------------------------------
Accounting Firm 1.3(B)
-------------------------------------------------------------------------------------------
Additional Transfer Documents 1.2(B)
-------------------------------------------------------------------------------------------
Additional Intellectual Property 3.1(G)
-------------------------------------------------------------------------------------------
Adjusted Closing Balance Sheet 1.3(B)
-------------------------------------------------------------------------------------------
Affiliate 9.16(A)(1)
-------------------------------------------------------------------------------------------
Agreement Preamble
-------------------------------------------------------------------------------------------
Ancillary Agreements 1.2(B)
-------------------------------------------------------------------------------------------
Applicable Accounting Standards 1.3(A)
-------------------------------------------------------------------------------------------
Assets 9.16(A)(2)
-------------------------------------------------------------------------------------------
Autronics US Preamble
-------------------------------------------------------------------------------------------
aware 9.11
-------------------------------------------------------------------------------------------
awareness 9.11
-------------------------------------------------------------------------------------------
Benchmark Net Worth 1.3(E)
-------------------------------------------------------------------------------------------
Business 3.1(A)(ii)
-------------------------------------------------------------------------------------------
Business Day 1.3(A)
-------------------------------------------------------------------------------------------
Businesses 3.1(A)(ii)
-------------------------------------------------------------------------------------------
Cap 9.14(C)(ii)
-------------------------------------------------------------------------------------------
Cash Plan 3.1(K)(ii)(2)
-------------------------------------------------------------------------------------------
Cash Plan Rules 3.1(K)(ii)(2)(C)
-------------------------------------------------------------------------------------------
Charter Documents 3.1(B)(iii)
-------------------------------------------------------------------------------------------
Closing 2.1(a)
-------------------------------------------------------------------------------------------
Closing Balance Sheet 1.3(A)
-------------------------------------------------------------------------------------------
Closing Date 2.1(a)
-------------------------------------------------------------------------------------------
Closing Net Worth 1.3(A)
-------------------------------------------------------------------------------------------
Code 3.1(K)(i)(2)
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Table of Defined Terms
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Term Section Defined In
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Commitments 3.1(E)(i)
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Companies 9.16(A)(3)
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Company 9.16(A)(3)
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Competing Transaction 5.15
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Competitive Business 5.17
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Confidentiality Agreement 5.12
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Contemplated Transactions 6.3
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Consideration 5.2(F)
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December 31, 2001 Balance Sheet 3.1(C)(i)
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Disclosure Schedule 9.16(A)(4)
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Disclosure Supplement 5.14
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Dorset Environmental Matter 9.14(A)
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Environmental Law 3.1(J)(c)(i)
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ERISA Affiliate 3.1(K)(B)(i)(2)
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ERISA 3.1(K)(i)(1)
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Excluded Business Assets 9.16(A)(5)
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Financial Statements 3.1(C)(i)
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GAAP 9.16(A)(6)
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German Assets Sixth WHEREAS Clause
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German Business 3.1(A)(ii)
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German Business Transfer Agreement 1.2(A)(iv)
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German Liabilities Sixth WHEREAS Clause
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German Plans 3.1(K)(iii)
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Governmental Entity 3.1(B)(iii)
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Guaranty or Bond 5.8
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Guaranty/Bond Replacement 5.8
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Hazardous Material 3.1(J)(c)(ii)
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Indemnification Threshold 9.14(C)(ii)
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Indemnitee 9.14(E)(i)
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Indemnitor 9.14(E)(i)
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Intellectual Property 3.1(G)(i)
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Keystone Plans 3.1(K)(B)(i)(2)
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knowledge 9.11
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known 9.11
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Laws 9.16(A)(7)
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Lease Assignments 1.2(A)(v)
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Leased Realty 3.1(F)(i)
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Legal Proceeding 9.16(A)(8)
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Liabilities 9.16(A)(9)
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Licenses 3.1(E)(iii)
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Lien 3.1(A)(iii)
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Table of Defined Terms
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Term Section Defined In
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Losses 9.14(B)
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Material Adverse Effect 9.16(A)(10)
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Material Claim 9.14(C)(ii)
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Material Commitment 3.1(E)
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Material Supplement 5.14
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Named Individuals 9.11
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Net Worth 1.3(E)
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Non-Company Affiliate 5.8
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Order 3.1(B)(i)
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Ordinary Course of Business 3.1(C)(ii)
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OSHA 3.1(H)
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Owner 3.1(A)(ii)
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P&G Aerospace UK Fourth WHEREAS Clause
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P&G Controls UK Third WHEREAS Clause
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P&G Controls US First WHEREAS Clause
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P&G plc Preamble
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P&G UK Shares Fourth WHEREAS Clause
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Permitted Liens 3.1(F)(i)
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Person 9.16(A)(11)
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Purchase Price 1.2(B)(i)
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Purchaser Preamble
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Purchaser Employment Indemnification 9.14(B)(2)
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Purchaser Payment Indemnification 9.14(B)(3)
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Purchaser's Losses 9.14(A)
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Purchaser's Objection 1.3(B)
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Purchaser's Tax Payment Covenants 5.2(M)(iv)
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Relevant Members 3.1(K)(ii)(2)(A)
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Relevant Reliefs 5.2(L)(i)
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Seller Preamble
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Sellers Preamble
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Sellers' Consent Indemnification 6.4
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Sellers' Losses 9.14(B)
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Sellers' Review Period 1.3(B)
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Sellers' Tax Payment Covenants 5.2(M)(iii)
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Shares Seventh WHEREAS Clause
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SII Preamble
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Spirent Business Employee 3.1(K)(B)(i)(2)
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Spirent GmbH Preamble
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Spirent plc Preamble
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Spirent UK Shares Third WHEREAS Clause
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Staff Plan 3.1(K)(ii)(2)
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Table of Defined Terms
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Term Section Defined In
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Staff Plan Rules 3.1(K)(ii)(2)(B)
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Subsidiary 3.1(A)(ii)
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Tax 5.2(M)(i)
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Tax Return 5.2(M)(ii)
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Tax Returns 5.2(M)(ii)
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Taxes 5.2(M)(i)
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to its knowledge 9.11
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Transfer 1.1
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UK Assets Fifth WHEREAS Clause
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UK Business 3.1(A)(ii)
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UK Business Transfer Agreement 1.2(A)(iii)
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UK Companies 3.1(A)(i)
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UK Company 3.1(A)(i)
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UK Company Plans 3.1(K)(ii)(1)
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UK Employer Companies 3.1(K)(ii)(2)(A)
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UK Lease Sites 3.1(A)(ii)
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UK Liabilities Fifth WHEREAS Clause
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UK Pension Schemes 3.1(K)(ii)(2)
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UK Shares 3.1(A)(ii)
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US Assets Second WHEREAS Clause
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US Business 3.1(A)(ii)
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US Business Transfer Agreement 1.2(A)(ii)
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US Company Plans 3.1(K)(i)(1)
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UK Lease Site Lease 3.1(A)(ii)
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US Liabilities Second WHEREAS Clause
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US Shares First WHEREAS Clause
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C. Certain Interpretive Matters. Unless the context otherwise requires,
(i) each accounting term not otherwise defined in this Agreement has the meaning
assigned to it in accordance with GAAP, (ii) "or" is disjunctive but not
necessarily exclusive, (iii) all words used in this Agreement will be construed
to be of such gender or number as the circumstances require, (iv) unless
otherwise expressly provided, the word "including" does not limit the preceding
words or terms and shall mean "including without limitation", (v) the words
"herein", "hereunder" and words of similar import shall refer to this Agreement,
(vi) all references to $ or dollar amounts mean lawful currency of the United
States of America. No provision of this Agreement will be interpreted in favor
of, or against, any of the parties hereto by reason of the extent to which any
such party or its counsel participated in the drafting thereof or by reason of
the extent to which any such provision is inconsistent with any prior draft
hereof or thereof.
D. Disclosure Schedules. The disclosure of any matter in any Disclosure
Schedule shall also qualify the representations and warranties contained in
Sections of this Agreement
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other than the Section to which such Schedule specifically relates only to the
extent that it provides on its face a reasonable correlation to the subject
matter of such other Sections or otherwise provides a cross-reference to such
other Section (or to the Schedule specifically relating to such other Section).
Because of the different jurisdictions in which the Companies, the UK Business
and the German Business are located, and because of the different management
teams having day-to-day responsibility for the operations of the Companies, the
UK Business and the German Business, information contained in the Disclosure
Schedule was collected and is organized in separate sets included in the
Disclosure Schedule. Although the Sellers have endeavoured to prepare the
schedules comprising the Disclosure Schedule in a consistent manner, some of the
schedules differ in format or style according to local practice in the
jurisdictions where particular Companies, the UK Business and the German
Business are located. The disclosure of any matter in any schedule shall
expressly not be deemed to constitute an admission by the Sellers, or to
otherwise imply, that any such matter is material for the purposes of this
Agreement or that any other schedule (or set of schedules) is incomplete by
virtue of the omission of such disclosure.
[Signatures Begin on Next Page]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first written above.
PURCHASER:
Xxxxxxx-Xxxxxx Flight Systems, Inc.
------------------------
By: Xxxxxx X. Xxxxxxxx
Its: President
SELLERS:
Spirent International Incorporated
------------------------
By: Xxxxxx Xxxxx
Its: Attorney in fact under Power of Attorney dated
February 17, 2002
Autronics Corporation
------------------------
By: Xxxxxx Xxxxx
Its: Attorney in fact under Power of Attorney
dated February 17, 2002
Spirent plc
------------------------
By: Xxxxxx Xxxxx
Its: Attorney in fact under Power of Attorney dated
February 19, 2002
Xxxxx & Xxxxx International plc
------------------------
By: Xxxxxx Xxxxx
Its: Attorney in fact under Power of Attorney dated
February 19, 2002
Spirent GmbH
------------------------
By: Xxxxxx Xxxxx
Its: Attorney in fact under Power of Attorney dated
February 2002
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